Stellar Bancorp, Inc. Reports Third Quarter 2022 Results

Rhea-AI Summary

Stellar Bancorp, Inc. (NASDAQ: STEL), formed from the merger of CBTX and Allegiance, reported its Q3 2022 financial performance. Stellar's net income was $12.7 million, down from $14.4 million in Q3 2021, while diluted EPS decreased to $0.52 from $0.59. Allegiance's net income fell to $14.3 million from $19.1 million, with diluted EPS at $0.71 versus $0.93. Notably, total loans at CBTX grew 12.3%, and Allegiance's loans increased 22.4%. However, both firms faced rising noninterest expenses due to merger-related costs.

Positive

• CBTX's loans held for investment grew by 12.3%, or $93.5 million, reaching $3.13 billion.
• Allegiance's loans held for investment saw a significant increase of 22.4%, or $243.1 million, totaling $4.59 billion.
• Stellar's net interest income rose by 23.3%, or $8.1 million compared to Q2 2022.

Negative

• Stellar's net income decreased by $1.7 million compared to Q3 2021.
• Allegiance's net income fell by $4.8 million year-over-year.
• Noninterest expenses surged by 20.3% for CBTX and 28.4% for Allegiance due to merger-related costs.

HOUSTON, Oct. 28, 2022 (GLOBE NEWSWIRE) -- (NASDAQ: STEL) The merger of equals between CBTX, Inc. (CBTX) and Allegiance Bancshares, Inc. (Allegiance) became effective as of October 1, 2022, with the combined company renamed Stellar Bancorp, Inc. This press release includes the pre-merger financial results of stand-alone CBTX and stand-alone Allegiance for the periods presented. As such, these financial results do not include the impact of purchase accounting adjustments related to the merger.

Stellar Bancorp, Inc. (Stellar), formerly known as CBTX, reported net income of $12.7 million and diluted earnings per share of $0.52 for the third quarter 2022 compared to net income of $14.4 million and diluted earnings per share of $0.59 for the third quarter 2021. Net income for the nine months ended September 30, 2022 was $35.0 million, or $1.43 per diluted share, compared to $36.1 million, or $1.47 per diluted share, for the nine months ended September 30, 2021.

Allegiance reported net income of $14.3 million and diluted earnings per share of $0.71 for the third quarter 2022 compared to net income of $19.1 million and diluted earnings per share of $0.93 for the third quarter 2021. Net income for the nine months ended September 30, 2022 was $49.4 million, or $2.42 per diluted share, compared to $60.0 million, or $2.95 per diluted share, for the nine months ended September 30, 2021.

Third Quarter 2022 Financial Highlights

• CBTX highlights
  • Loans held for investment grew 12.3% (annualized), or $93.5 million, during the third quarter 2022 to $3.13 billion
  • Net interest income increased 23.3%, or $8.1 million, compared to the second quarter of 2022
  • Tax equivalent net interest margin increased 76 basis points to 4.25% compared to the second quarter of 2022

• Allegiance highlights
  • Loans held for investment grew 22.4% (annualized), or $243.1 million, during the third quarter 2022 to $4.59 billion
  • Net interest income increased 5.6%, or $3.2 million, compared to the second quarter of 2022
  • Tax equivalent net interest margin increased 32 basis points to 3.85% compared to the second quarter of 2022

	CBTX, Inc.								Allegiance Bancshares, Inc.
	3Q 2022				2Q 2022				3Q 2022				2Q 2022
	(Dollars in thousands, except per share data)
Net income	$	12,747			$	11,707			$	14,286			$	16,437
Pre-tax, pre-provision income(A)	$	17,140			$	14,660			$	19,654			$	22,282
Earnings per share, diluted	$	0.52			$	0.48			$	0.71			$	0.80
Efficiency ratio(B)		63.11	%			61.84	%			69.18	%			62.96	%
Acquisition and merger-related expenses	$	5,897			$	1,100			$	10,551			$	1,667
Adjusted pre-tax, pre-provision income(A)(C)	$	23,037			$	15,760			$	30,205			$	23,949
Adjusted efficiency ratio(A)(C)		50.42	%			58.98	%			52.61	%			60.19	%

(A)     Refer to the calculation of these non-GAAP financial measures and a reconciliation to their most directly comparable GAAP financial measures on pages 11 and 18 of this Earnings Release.
(B)     Refer to the calculation of the efficiency ratio on pages 5 and 12 for CBTX and Allegiance, respectively.
(C)     Adjusted results exclude the impact of acquisition and merger-related expenses.

“We are proud to have closed the merger between CBTX and Allegiance to become Stellar,” said Stellar’s Chief Executive Officer Robert R. Franklin, Jr. “Both of our organizations entered this merger from tremendous positions of strength and with great momentum, providing Stellar a solid foundation upon which to build.”

“Our teams have worked diligently to ensure a successful integration of these two organizations. Together we are stronger and committed to providing value for our shareholders as we drive purposeful growth, deliver continued personalized service and invest in the communities that we serve,” concluded Franklin.

CBTX, Inc. Third Quarter 2022 Results

CBTX’s net interest income in the third quarter 2022 increased $11.8 million, or 37.6%, to $43.0 million from $31.2 million for the third quarter 2021 and increased $8.1 million, or 23.3%, from $34.9 million for the second quarter 2022. These increases were primarily due to increased interest income on loans and interest-bearing deposits at other financial institutions as a result of changes in market interest rates and increases in average loans and securities. The net interest margin on a tax equivalent basis increased 103 basis points to 4.25% for the third quarter 2022 from 3.22% for the third quarter 2021 and increased 76 basis points from 3.49% for the second quarter 2022.

Noninterest income for the third quarter 2022 was $3.4 million, a decrease of $2.1 million, or 38.0%, compared to $5.6 million for the third quarter 2021 and a decrease of $97 thousand, or 2.7%, compared to $3.5 million for the second quarter 2022. The decrease in noninterest income of $2.1 million during the three months ended September 30, 2022 compared to the three months ended September 30, 2021, was primarily due to the impact of earnings on bank-owned life insurance and related gains of $1.9 million during the third quarter of 2021.

Noninterest expense for the third quarter 2022 increased $4.9 million, or 20.3%, to $29.3 million from $24.4 million for the third quarter 2021 and increased $5.6 million, or 23.4%, compared to the second quarter of 2022. The increase in noninterest expense for the third quarter of 2022 compared to the third quarter of 2021, was primarily due to acquisition and merger-related expenses associated with the merger with Allegiance, partially offset by a decrease in professional and director fees, primarily related to BSA/AML compliance matters and legal fees incurred during the third quarter of 2021. The increase in noninterest expense for the third quarter of 2022 compared to the second quarter of 2022 was primarily due to greater acquisition and merger-related expenses.

CBTX’s efficiency ratio decreased to 63.11% for the third quarter 2022 compared to 66.21% for the third quarter 2021 and increased from 61.84% for the second quarter 2022. Third quarter 2022 annualized returns on average assets, average equity and average tangible equity were 1.16%, 9.40% and 11.15%, respectively, compared to 1.37%, 10.15% and 11.95% for the third quarter 2021. Annualized returns on average assets, average equity and average tangible equity for the second quarter 2022 were 1.08%, 8.75% and 10.38%, respectively. Return on average tangible equity is a non-GAAP measure. Please refer to the non-GAAP reconciliation on page 11.

Financial Condition

CBTX’s total assets at September 30, 2022 increased $62.7 million, or 1.5%, to $4.27 billion compared to $4.21 billion at September 30, 2021 and decreased $50.5 million, or 4.6% (annualized), compared to $4.32 billion at June 30, 2022.

Total gross loans at September 30, 2022 increased $517.7 million, or 19.8%, to $3.13 billion compared to $2.61 billion at September 30, 2021, primarily due to organic loan growth, and increased $93.5 million, or 12.3% (annualized) compared to $3.03 billion at June 30, 2022 due to the increase in organic loans.

Deposits at September 30, 2022 increased $192.1 million, or 5.4%, to $3.72 billion compared to $3.53 billion at September 30, 2021 and decreased $32.9 million, or 3.5% (annualized), compared to $3.76 billion at June 30, 2022.

Asset Quality

CBTX’s nonperforming assets totaled $22.4 million, or 0.52% of total assets, at September 30, 2022 compared to $20.6 million, or 0.49% of total assets, at September 30, 2021 and $28.3 million, or 0.65% of total assets at June 30, 2022. The allowance for credit losses on loans as a percentage of total loans, excluding loans held for sale, was 1.04% at September 30, 2022, 1.23% at September 30, 2021 and 1.06% at June 30, 2022.

The provision for credit losses for the third quarter 2022 was $1.0 million compared to the recapture of provision for credit losses of $4.9 million for the third quarter 2021 and the provision for credit losses of $126 thousand for the second quarter 2022.

Third quarter 2022 net charge-offs were $33 thousand, or 0.00% (annualized) of average loans, compared to net recoveries of $82 thousand, or 0.01% (annualized) of average loans, for the third quarter 2021 and net recoveries of $166 thousand, or 0.02% (annualized) of average loans, for the second quarter 2022.

Allegiance Bancshares, Inc. Third Quarter 2022 Results

Allegiance’s net interest income in the third quarter 2022 increased $2.5 million, or 4.3%, to $60.7 million from $58.2 million for the third quarter 2021 and increased $3.2 million, or 5.6%, from $57.5 million for the second quarter 2022. These increases were primarily due to increased interest income on securities and loans as a result of changes in market interest rates. The net interest margin on a tax equivalent basis decreased 5 basis points to 3.85% for the third quarter 2022 from 3.90% for the third quarter 2021 and increased 32 basis points from 3.53% for the second quarter 2022. The decrease in the margin over the prior year was primarily due to the increase in funding costs. The increase in the margin over the prior quarter was primarily due to changes in market interest rates and the composition of earning assets.

Noninterest income for the third quarter 2022 was $3.0 million, an increase of $896 thousand, or 42.7%, compared to $2.1 million for the third quarter 2021 and an increase of $291 thousand, or 10.8%, compared to $2.7 million for the second quarter 2022. Third quarter 2022 other noninterest income included increased income from Small Business Investment Company investments.

Noninterest expense for the third quarter 2022 increased $9.7 million, or 28.4%, to $44.0 million from $34.3 million for the third quarter 2021 and increased $6.1 million, or 16.2%, compared to the second quarter of 2022. These increases in noninterest expense over the prior periods were primarily due to greater acquisition and merger-related expenses associated with the merger with CBTX.

Allegiance’s efficiency ratio increased to 69.18% for the third quarter 2022 compared to 56.91% for the third quarter 2021 and 62.96% for the second quarter 2022. Third quarter 2022 annualized returns on average assets, average equity and average tangible equity were 0.84%, 7.90% and 11.78%, respectively, compared to 1.14%, 9.45% and 13.49% for the third quarter 2021. Annualized returns on average assets, average equity and average tangible equity for the second quarter 2022 were 0.94%, 8.86% and 13.00%, respectively. Return on average tangible equity is a non-GAAP measure. Please refer to the non-GAAP reconciliation on page 18.  

        Financial Condition

Allegiance’s total assets at September 30, 2022 decreased $29.4 million, or 0.4%, to $6.73 billion compared to $6.76 billion at September 30, 2021 and decreased $1.4 million, or 0.1% (annualized), compared to $6.73 billion at June 30, 2022.

Total gross loans at September 30, 2022 increased $302.4 million, or 7.1%, to $4.59 billion compared to $4.29 billion at September 30, 2021, primarily due to organic loan growth, and increased $243.1 million, or 22.4% (annualized) compared to $4.35 billion at June 30, 2022, primarily due to the increase in organic loans. Core loans, which exclude Paycheck Protection Program (PPP) loans, increased $574.6 million, or 14.4%, to $4.57 billion at September 30, 2022 from $4.00 billion at September 30, 2021 and increased $257.1 million, or 23.8% (annualized), from $4.32 billion at June 30, 2022.

Deposits at September 30, 2022 decreased $6.2 million, or 0.1%, to $5.66 billion compared to $5.67 billion at September 30, 2021 and decreased $219.9 million, or 15.0% (annualized), compared to $5.88 billion at June 30, 2022.

        Asset Quality

Allegiance’s nonperforming assets totaled $21.6 million, or 0.32% of total assets, at September 30, 2022 compared to $29.8 million, or 0.44% of total assets, at September 30, 2021 and $28.2 million, or 0.42% of total assets at June 30, 2022. The allowance for credit losses on loans as a percentage of total loans was 1.14% at September 30, 2022, 1.18% at September 30, 2021 and 1.16% at June 30, 2022.

The provision for credit losses for the third quarter 2022 was $2.0 million compared to the provision for credit losses of $2.3 million for the third quarter 2021 and the provision for credit losses of $2.1 million for the second quarter 2022.

Third quarter 2022 net recoveries were $245 thousand, or 0.02% (annualized) of average loans, compared to net charge-offs of $450 thousand, or 0.04% (annualized) of average loans, for the third quarter 2021 and net charge-offs of $571 thousand, or 0.05% (annualized) of average loans, for the second quarter 2022.

Share Repurchase Authorization

On September 22, 2022, the Board of Directors of CBTX authorized the repurchase of up to $40 million of outstanding CBTX (now Stellar) common stock through September 30, 2023. Repurchases under this program may be made from time to time through open market purchases, privately negotiated transactions or such other manners as will comply with applicable laws and regulations. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, market conditions and other corporate liquidity requirements and priorities. The repurchase program does not obligate Stellar to purchase any particular number of shares and there is no guarantee as to the exact dollar amount or number of shares that will be repurchased by Stellar. Stellar may suspend, modify or terminate the program at any time and for any reason, without prior notice.

GAAP Reconciliation of Non-GAAP Financial Measures

Stellar’s management uses certain non-GAAP financial measures to evaluate its performance. Please refer to the GAAP Reconciliation and Management’s Explanation of Non-GAAP Financial Measures on pages 11 and 18 of this earnings release for a reconciliation of these non-GAAP financial measures.

Conference Call

As previously announced, Stellar’s management team will host a conference call and webcast on Friday, October 28, 2022 at 8:00 a.m. Central Time (9:00 a.m. Eastern Time) to discuss third quarter 2022 results of stand-alone CBTX and stand-alone Allegiance. Individuals and investment professionals may register for the conference call at https://register.vevent.com/register/BId5b581acd6f143fdb46c9666597c0d84 to receive the dial-in numbers and unique PIN to access the call. If you need assistance in obtaining a dial-in number, please contact IR@stellarbancorpinc.com. A simultaneous audio-only webcast may be accessed via the Investor Relations section of Stellar’s website at https://IR.stellarbancorpinc.com/events-and-presentations. If you are unable to participate during the live webcast, the webcast will be accessible via the Investor Relations section of Stellar’s website at IR.stellarbancorpinc.com.

About Stellar Bancorp, Inc.

Stellar Bancorp, Inc. is a bank holding company headquartered in Houston, Texas. Stellar’s principal banking subsidiary, created by the merger of Allegiance Bank and CommunityBank of Texas, N.A. and to be renamed Stellar Bank upon system conversion, provides a diversified range of commercial banking services primarily to small- to medium-sized businesses and individual customers across the Houston, Dallas, Beaumont and surrounding communities in Texas.

Investor relations:
IR@stellarbancorpinc.com  

Forward-Looking Statements

Certain statements in this press release which are not historical in nature are intended to be, and are hereby identified as, “forward-looking statements” for purposes of the safe harbor provided by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include, but are not limited to, statements about the benefits of the merger of CBTX, Inc. (now Stellar Bancorp, Inc.)(the "Company") and Allegiance Bancshares, Inc. ("Allegiance"), including future financial performance and operating results, the combined company’s plans, business and growth strategies, objectives, expectations and intentions, and other statements that are not historical facts, including projections of macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact economic trends, and any such variations may be material. Forward-looking statements may be identified by terminology such as “may,” “will,” “should,” “could,” “scheduled,” “plans,” “intends,” “projects,” “anticipates,” “expects,” “believes,” “estimates,” “potential,” “would,” or “continue” or negatives of such terms or other comparable terminology.

All forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors that may cause the actual results, performance or achievements of Stellar to differ materially from any results expressed or implied by such forward-looking statements. Such factors include, among others: (1) the risk that the cost savings and any revenue synergies from the merger may not be fully realized or may take longer than anticipated to be realized; (2) disruption to our business as a result of the merger; (3) the risk that the integration of our operations will be materially delayed or will be more costly or difficult than we expected or that we are otherwise unable to successfully integrate our legacy businesses; (4) the amount of the costs, fees, expenses and charges related to the merger; (5) reputational risk and the reaction of our customers, suppliers, employees or other business partners to the merger; (6) the possibility that the merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events; (7) the dilution caused by Stellar’s issuance of additional shares of its common stock in the merger; (8) general competitive, economic, political and market conditions; and (9) other factors that may affect future results of Stellar including changes in asset quality and credit risk; the inability to sustain revenue and earnings growth; changes in interest rates and capital markets; inflation; customer borrowing, repayment, investment and deposit practices; the impact, extent and timing of technological changes; capital management activities; and other actions of the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation and Texas Department of Banking and legislative and regulatory actions and reforms.

Additional factors which could affect the Company’s future results can be found in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K and the Joint Proxy Statement/Prospectus regarding the merger that CBTX filed with the SEC on April 7, 2022 pursuant to Rule 424(b)(3) and Allegiance’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, in each case filed with the SEC and available on the SEC’s website at https:// www.sec.gov. We disclaim any obligation and do not intend to update or revise any forward-looking statements contained in this communication, which speak only as of the date hereof, whether as a result of new information, future events or otherwise, except as required by federal securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements.

CBTX, Inc.
Financial Highlights
(Unaudited)

	Three Months Ended																				Nine Months Ended
		2022												2021								2022				2021
	September 30				June 30				March 31				December 31				September 30				September 30				September 30
	(Dollars and share amounts in thousands, except per share data)
Net income (loss)	$	12,747			$	11,707			$	10,595			$	(545	)		$	14,421			$	35,049			$	36,143
Earnings (loss) per share, basic	$	0.52			$	0.48			$	0.43			$	(0.02	)		$	0.59			$	1.43			$	1.48
Earnings (loss) per share, diluted	$	0.52			$	0.48			$	0.43			$	(0.02	)		$	0.59			$	1.43			$	1.47
Dividends per share	$	0.13			$	0.13			$	0.13			$	0.13			$	0.13			$	0.39			$	0.39
Return on average assets(A)		1.16	%			1.08	%			0.97	%			(0.05	%)			1.37	%			1.07	%			1.19	%
Return on average equity(A)		9.40	%			8.75	%			7.67	%			(0.38	%)			10.15	%			8.60	%			8.70	%
Return on average tangible equity(A)(B)		11.15	%			10.38	%			9.03	%			(0.45	%)			11.95	%			10.18	%			10.27	%
Net interest margin (tax equivalent)(A)(C)		4.25	%			3.49	%			3.22	%			3.07	%			3.22	%			3.65	%			3.40	%
Efficiency ratio(D)		63.11	%			61.84	%			64.94	%			99.78	%			66.21	%			63.28	%			67.76	%
Capital Ratios
CBTX, Inc.(Consolidated)
Equity to assets		11.74	%			12.19	%			12.14	%			12.53	%			13.41	%			11.74	%			13.41	%
Tangible equity to tangible assets(B)		9.96	%			10.44	%			10.44	%			10.85	%			11.64	%			9.96	%			11.64	%
Estimated common equity tier 1 capital		14.05	%			14.49	%			14.97	%			15.31	%			16.87	%			14.05	%			16.87	%
Estimated tier 1 risk-based capital		14.05	%			14.49	%			14.97	%			15.31	%			16.87	%			14.05	%			16.87	%
Estimated total risk-based capital		15.09	%			15.53	%			16.06	%			16.42	%			18.12	%			15.09	%			18.12	%
Estimated tier 1 leverage capital		11.42	%			11.48	%			11.08	%			11.22	%			11.69	%			11.42	%			11.69	%
CommunityBank of Texas
Estimated common equity tier 1 capital		13.81	%			13.77	%			14.13	%			14.43	%			15.88	%			13.81	%			15.88	%
Estimated tier 1 risk-based capital		13.81	%			13.77	%			14.13	%			14.43	%			15.88	%			13.81	%			15.88	%
Estimated total risk-based capital		14.85	%			14.82	%			15.22	%			15.54	%			17.13	%			14.85	%			17.13	%
Estimated tier 1 leverage capital		11.22	%			10.91	%			10.47	%			10.58	%			11.01	%			11.22	%			11.01	%
Other Data
Weighted average shares:
Basic		24,345				24,493				24,497				24,437				24,432				24,445				24,462
Diluted		24,464				24,593				24,605				24,575				24,544				24,552				24,572
Period end shares outstanding		24,015				24,425				24,502				24,488				24,420				24,015				24,420
Book value per share	$	20.88			$	21.56			$	22.03			$	22.96			$	23.12			$	20.88			$	23.12
Tangible book value per share(B)	$	17.38			$	18.11			$	18.58			$	19.50			$	19.65			$	17.38			$	19.65
Employees - full-time equivalents		487				491				503				506				520				487				520

(A)     Interim periods annualized.
(B)     Refer to the calculation of these non-GAAP financial measures and a reconciliation to their most directly comparable GAAP financial measures on page 11 of this Earnings Release.
(C)     Net interest margin represents net interest income divided by average interest-earning assets.
(D)     Represents total noninterest expense divided by the sum of net interest income plus noninterest income.

CBTX, Inc.
Financial Highlights
(Unaudited)

			2022												2021
		September 30				June 30				March 31				December 31				September 30
		(Dollars in thousands)
ASSETS
Cash and due from banks		$	41,219			$	41,951			$	47,718			$	27,689			$	50,642
Interest-bearing deposits at other financial institutions			329,229				442,015				723,273				922,457				948,143
Total cash and cash equivalents			370,448				483,966				770,991				950,146				998,785
Available for sale securities, at fair value			511,282				550,083				547,979				425,046				359,539
Equity investments			17,835				18,073				17,101				17,727				17,349
Loans held for sale			—				—				748				164				327
Loans held for investment			3,126,421				3,032,914				2,879,880				2,867,524				2,608,402
Less: allowance for credit losses on loans			(32,577	)			(32,087	)			(31,442	)			(31,345	)			(32,208	)
Loans, net			3,093,844				3,000,827				2,848,438				2,836,179				2,576,194
Premises and equipment, net			55,594				56,010				56,665				58,417				59,235
Goodwill			80,950				80,950				80,950				80,950				80,950
Other intangible assets, net			3,188				3,353				3,540				3,658				3,702
Bank owned life insurance			74,274				73,898				73,527				73,156				72,771
Operating lease right-to-use assets			10,992				11,324				10,850				11,191				11,527
Deferred tax assets, net			29,581				22,699				16,724				9,973				9,760
Other assets			23,843				21,120				18,464				19,394				18,980
Total assets		$	4,271,831			$	4,322,303			$	4,445,977			$	4,486,001			$	4,209,119
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES:
Deposits:
Noninterest-bearing		$	1,780,473			$	1,810,275			$	1,801,323			$	1,784,981			$	1,628,144
Interest-bearing
	Demand		415,970				445,149				444,571				468,361				386,196
	Money market and savings		1,273,855				1,239,978				1,348,300				1,336,690				1,257,961
	Certificates and other time		253,476				261,232				227,031				241,252				259,334
	Total interest-bearing deposits		1,943,301				1,946,359				2,019,902				2,046,303				1,903,491
	Total deposits		3,723,774				3,756,634				3,821,225				3,831,284				3,531,635
Operating lease liabilities			13,748				14,169				13,752				14,142				14,556
Federal Home Loan Bank advances			—				—				50,000				50,000				50,000
Other liabilities			32,884				24,821				21,277				28,450				48,335
	Total liabilities		3,770,406				3,795,624				3,906,254				3,923,876				3,644,526
SHAREHOLDERS’ EQUITY:
Common stock			240				253				253				253				253
Capital surplus			308,197				334,104				336,214				335,846				335,226
Retained earnings			262,804				253,180				244,672				237,165				241,012
Treasury stock			—				(14,046	)			(14,196	)			(14,196	)			(14,334	)
Accumulated other comprehensive (loss) income			(69,816	)			(46,812	)			(27,220	)			3,057				2,436
	Total shareholders’ equity		501,425				526,679				539,723				562,125				564,593
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	4,271,831			$	4,322,303			$	4,445,977			$	4,486,001			$	4,209,119

CBTX, Inc.
Financial Highlights
(Unaudited)

	Three Months Ended																		Nine Months Ended
		2022										2021								2022			2021
	September 30			June 30				March 31			December 31				September 30				September 30			September 30
	(Dollars in thousands, except per share data)
INTEREST INCOME:
Interest and fees on loans	$	39,058		$	31,768			$	31,221		$	29,882			$	30,765			$	102,047		$	94,723
Securities		3,046			2,937				2,292			1,796				1,435				8,275			3,940
Interest-bearing deposits at other financial institutions		2,408			1,238				348			383				340				3,994			740
Equity investments		161			158				154			168				157				473			461
Total interest income		44,673			36,101				34,015			32,229				32,697				114,789			99,864
INTEREST EXPENSE:
Deposits		1,661			1,178				1,164			1,180				1,227				4,003			3,844
Federal Home Loan Bank advances		—			51				221			222				221				272			663
Other interest-bearing liabilities		—			—				—			17				—				—			—
Total interest expense		1,661			1,229				1,385			1,419				1,448				4,275			4,507
NET INTEREST INCOME		43,012			34,872				32,630			30,810				31,249				110,514			95,357
Provision (recapture) for credit losses for loans		523			479				20			(901	)			(5,057	)			1,022			(8,961	)
Provision (recapture) for credit losses for unfunded commitments		489			(353	)			415			(306	)			162				551			(605	)
Total provision (recapture) for credit losses		1,012			126				435			(1,207	)			(4,895	)			1,573			(9,566	)
Net interest income after provision (recapture) for credit losses		42,000			34,746				32,195			32,017				36,144				108,941			104,923
NONINTEREST INCOME:
Deposit account service charges		1,320			1,386				1,370			1,370				1,352				4,076			3,712
Card interchange fees		1,056			1,135				1,037			1,081				1,048				3,228			3,119
Earnings on bank-owned life insurance		376			371				371			385				2,323				1,118			3,103
Net gain on sales of assets		85			58				530			910				360				673			918
Other		612			596				2,021			354				479				3,229			1,312
Total noninterest income		3,449			3,546				5,329			4,100				5,562				12,324			12,164
NONINTEREST EXPENSE:
Salaries and employee benefits		14,706			14,698				15,254			16,609				15,000				44,658			43,922
Occupancy expense		2,595			2,386				2,371			2,606				2,660				7,352			7,778
Professional and director fees		836			1,140				879			756				1,167				2,855			5,271
Data processing and software		1,502			1,210				1,763			1,716				1,629				4,475			4,866
Regulatory fees		599			803				614			8,366				478				2,016			1,535
Advertising, marketing and business development		350			366				249			263				493				965			1,288
Telephone and communications		348			349				454			471				516				1,151			1,529
Security and protection expense		386			170				324			439				425				880			1,352
Amortization of intangibles		165			172				181			179				182				518			559
Acquisition and merger-related expenses		5,897			1,100				784			1,293				400				7,781			1,689
Other expenses		1,937			1,364				1,779			2,134				1,422				5,080			3,065
Total noninterest expense		29,321			23,758				24,652			34,832				24,372				77,731			72,854
INCOME BEFORE INCOME TAXES		16,128			14,534				12,872			1,285				17,334				43,534			44,233
Provision for income taxes		3,381			2,827				2,277			1,830				2,913				8,485			8,090
NET INCOME (LOSS)	$	12,747		$	11,707			$	10,595		$	(545	)		$	14,421			$	35,049		$	36,143
EARNINGS PER SHARE
Basic	$	0.52		$	0.48			$	0.43		$	(0.02	)		$	0.59			$	1.43		$	1.48
Diluted	$	0.52		$	0.48			$	0.43		$	(0.02	)		$	0.59			$	1.43		$	1.47

CBTX, Inc.
Financial Highlights
(Unaudited)

	Three Months Ended
	September 30, 2022										June 30, 2022										September 30, 2021
	Average Outstanding Balance				Interest Earned/ Interest Paid			Average Yield/ Rate(A)			Average Outstanding Balance				Interest Earned/ Interest Paid			Average Yield/ Rate(A)			Average Outstanding Balance				Interest Earned/ Interest Paid			Average Yield/ Rate(A)
	(Dollars in thousands)
Assets
Interest-Earning Assets:
Total loans(B)	$	3,074,655			$	39,058		5.04	%		$	2,897,335			$	31,768		4.40	%		$	2,702,248			$	30,765		4.52	%
Securities		552,901				3,046		2.19	%			562,518				2,937		2.09	%			327,968				1,435		1.74	%
Interest-bearing deposits at other financial institutions		428,196				2,408		2.23	%			593,255				1,238		0.84	%			854,406				340		0.16	%
Equity investments		13,393				161		4.77	%			13,386				158		4.73	%			13,367				157		4.66	%
Total interest-earning assets		4,069,145			$	44,673		4.36	%			4,066,494			$	36,101		3.56	%			3,897,989			$	32,697		3.33	%
Allowance for credit losses on loans		(32,106	)									(31,081	)									(36,945	)
Noninterest-earning assets		318,761										315,133										313,901
Total assets	$	4,355,800									$	4,350,546									$	4,174,945
Liabilities and Shareholders' Equity
Interest-Bearing Liabilities:
Interest-bearing deposits	$	1,954,854			$	1,661		0.34	%		$	1,939,990			$	1,178		0.24	%		$	1,895,617			$	1,227		0.26	%
Federal Home Loan Bank advances		—				—		0.00	%			5,495				51		3.72	%			50,000				221		1.75	%
Total interest-bearing liabilities		1,954,854			$	1,661		0.34	%			1,945,485			$	1,229		0.25	%			1,945,617			$	1,448		0.30	%
Noninterest-Bearing Liabilities:
Noninterest-bearing demand deposits		1,822,323										1,825,400										1,612,985
Other liabilities		40,684										42,861										52,712
Total noninterest-bearing liabilities		1,863,007										1,868,261										1,665,697
Shareholders' equity		537,939										536,800										563,631
Total liabilities and shareholders' equity	$	4,355,800									$	4,350,546									$	4,174,945
Net interest income					$	43,012									$	34,872									$	31,249
Net interest spread(C)								4.02	%									3.31	%									3.03	%
Net interest margin(D)								4.19	%									3.44	%									3.18	%
Net interest margin - tax equivalent(E)								4.25	%									3.49	%									3.22	%

(A)     Annualized.
(B)     Includes average outstanding balances related to loans held for sale.
(C)     Net interest spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
(D)     Net interest margin is equal to net interest income divided by average interest-earning assets.
(E)     Tax equivalent adjustments of $578 thousand, $478 thousand and $369 thousand for the three months ended September 30, 2022, June 30, 2022 and September 30, 2021, respectively, were computed using a federal income tax rate of 21%.

CBTX, Inc.
Financial Highlights
(Unaudited)

	Nine Months Ended September 30,
		2022										2021
	Average Outstanding Balance				Interest Earned/ Interest Paid			Average Yield/ Rate(A)			Average Outstanding Balance				Interest Earned/ Interest Paid			Average Yield/ Rate(A)
	(Dollars in thousands)
Assets
Interest-Earning Assets:
Total loans(B)	$	2,953,607			$	102,047		4.62	%		$	2,812,449			$	94,723		4.50	%
Securities		537,889				8,275		2.06	%			296,958				3,940		1.77	%
Interest-bearing deposits at other financial institutions		595,458				3,994		0.90	%			668,119				740		0.15	%
Equity investments		13,386				473		4.72	%			14,679				461		4.20	%
Total interest-earning assets		4,100,340			$	114,789		3.74	%			3,792,205			$	99,864		3.52	%
Allowance for credit losses on loans		(31,599	)									(39,594	)
Noninterest-earning assets		313,938										318,009
Total assets	$	4,382,679									$	4,070,620
Liabilities and Shareholders' Equity
Interest-Bearing Liabilities:
Interest-bearing deposits	$	1,971,247			$	4,003		0.27	%		$	1,846,211			$	3,844		0.28	%
Federal Home Loan Bank advances		18,315				272		1.99	%			50,000				663		1.77	%
Total interest-bearing liabilities		1,989,562			$	4,275		0.29	%			1,896,211				4,507		0.32	%
Noninterest-Bearing Liabilities:
Noninterest-bearing demand deposits		1,803,702										1,568,071
Other liabilities		44,479										50,966
Total noninterest-bearing liabilities		1,848,181										1,619,037
Shareholders' equity		544,936										555,372
Total liabilities and shareholders' equity	$	4,382,679									$	4,070,620
Net interest income					$	110,514									$	95,357
Net interest spread(C)								3.45	%									3.20	%
Net interest margin(D)								3.60	%									3.36	%
Net interest margin - tax equivalent(E)								3.65	%									3.40	%

(A)     Annualized.
(B)     Includes average outstanding balances related to loans held for sale.
(C)     Net interest spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
(D)     Net interest margin is equal to net interest income divided by average interest-earning assets.
(E)     Tax equivalent adjustments of $1.5 million and $989 thousand for the nine months ended September 30, 2022 and 2021, respectively, were computed using a federal income tax rate of 21%.

CBTX, Inc.
Financial Highlights
(Unaudited)

	Three Months Ended
		2022												2021
	September 30				June 30				March 31				December 31				September 30
	(Dollars in thousands)
Loan Portfolio:
Commercial and industrial	$	568,071			$	581,443			$	600,990			$	634,384			$	596,251
Real estate:
Commercial real estate		1,242,118				1,181,620				1,142,646				1,091,969				1,029,137
Construction and development		507,570				560,903				473,326				460,719				393,541
1-4 family residential		288,456				264,428				263,213				277,273				204,151
Multi-family residential		370,391				300,582				279,099				286,396				285,852
Consumer		24,509				26,810				28,230				28,090				27,930
Agriculture		11,185				8,036				6,287				7,941				8,780
Other		123,591				118,153				95,187				89,655				71,915
Gross loans		3,135,891				3,041,975				2,888,978				2,876,427				2,617,557
Less allowance for credit losses		(32,577	)			(32,087	)			(31,442	)			(31,345	)			(32,208	)
Less deferred fees and unearned discount		(9,470	)			(9,061	)			(8,350	)			(8,739	)			(8,828	)
Less loans held for sale		—				—				(748	)			(164	)			(327	)
Loans, net	$	3,093,844			$	3,000,827			$	2,848,438			$	2,836,179			$	2,576,194
Deposits:
Interest-bearing demand accounts	$	415,970			$	445,149			$	444,571			$	468,361			$	386,196
Money market accounts		1,144,969				1,109,265				1,218,082				1,209,659				1,139,167
Savings accounts		128,886				130,713				130,218				127,031				118,794
Certificates and other time deposits, $100,000 or greater		161,975				169,616				127,798				134,775				140,740
Certificates and other time deposits, less than $100,000		91,501				91,616				99,233				106,477				118,594
Total interest-bearing deposits		1,943,301				1,946,359				2,019,902				2,046,303				1,903,491
Noninterest-bearing deposits		1,780,473				1,810,275				1,801,323				1,784,981				1,628,144
Total deposits	$	3,723,774			$	3,756,634			$	3,821,225			$	3,831,284			$	3,531,635
Asset Quality:
Nonaccrual loans	$	22,410			$	28,273			$	22,083			$	22,568			$	20,585
Accruing loans 90 or more days past due		—				—				—				—				—
Total nonperforming loans		22,410				28,273				22,083				22,568				20,585
Other real estate		—				—				—				—				—
Total nonperforming assets	$	22,410			$	28,273			$	22,083			$	22,568			$	20,585
Net charge-offs (recoveries)	$	33			$	(166	)		$	(77	)		$	(38	)		$	(82	)
Nonaccrual loans:
Commercial and industrial	$	7,985			$	8,312			$	8,765			$	9,090			$	9,773
Real estate:
Commercial real estate		11,076				16,481				11,363				11,512				10,419
Construction and development		139				143				140				142				—
1-4 family residential		3,176				3,302				1,777				1,784				351
Multi-family residential		—				—				—				—				—
Consumer		—				—				—				—				—
Agriculture		—				—				—				—				—
Other		34				35				38				40				42
Total nonaccrual loans	$	22,410			$	28,273			$	22,083			$	22,568			$	20,585
Asset Quality Ratios:
Nonperforming assets to total assets		0.52	%			0.65	%			0.50	%			0.50	%			0.49	%
Nonperforming loans to loans excluding loans held for sale		0.72	%			0.93	%			0.77	%			0.79	%			0.79	%
Allowance for credit losses on loans to nonperforming loans		145.37	%			113.49	%			142.38	%			138.89	%			156.46	%
Allowance for credit losses on loans to loans excluding loans held for sale		1.04	%			1.06	%			1.09	%			1.09	%			1.23	%
Net charge-offs (recoveries) to average loans (annualized)		0.00	%			(0.02	%)			(0.01	%)			(0.01	%)			(0.01	%)

CBTX, Inc.
GAAP Reconciliation and Management’s Explanation of Non-GAAP Financial Measures
(Unaudited)

CBTX’s management uses certain non-GAAP (generally accepted accounting principles) financial measures to evaluate its performance. CBTX believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and that management and investors benefit from referring to these non-GAAP financial measures in assessing CBTX’s performance and when planning, forecasting, analyzing and comparing past, present and future periods. Specifically, CBTX reviews pre-tax, pre-provision income, adjusted pre-tax, pre-provision income, adjusted efficiency ratio, tangible book value per share, return on average tangible equity and the ratio of tangible equity to tangible assets for internal planning and forecasting purposes. CBTX has included in this earnings release information relating to these non-GAAP financial measures for the applicable periods presented.  These non-GAAP measures should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner in which CBTX calculates the non-GAAP financial measures may differ from that of other companies reporting measures with similar names.

	Three Months Ended																				Nine Months Ended
		2022												2021								2022				2021
	September 30				June 30				March 31				December 31				September 30				September 30				September 30
	(Dollars and share amounts in thousands, except per share data)
Net income	$	12,747			$	11,707			$	10,595			$	(545	)		$	14,421			$	35,049			$	36,143
Add: Provision for credit losses		1,012				126				435				(1,207	)			(4,895	)			1,573				(9,566	)
Add: Provision for income taxes		3,381				2,827				2,277				1,830				2,913				8,485				8,090
Pre-tax, pre-provision income	$	17,140			$	14,660			$	13,307			$	78			$	12,439			$	45,107			$	34,667
Pre-tax, pre-provision income	$	17,140			$	14,660			$	13,307			$	78			$	12,439			$	45,107			$	34,667
Add: Acquisition and merger-related expenses		5,897				1,100				784				1,293				400				7,781				1,689
Adjusted pre-tax, pre-provision income	$	23,037			$	15,760			$	14,091			$	1,371			$	12,839			$	52,888			$	36,356
Total noninterest expense	$	29,321			$	23,758			$	24,652			$	34,832			$	24,372			$	77,731			$	72,854
Acquisition and merger-related expenses		5,897				1,100				784				1,293				400				7,781				1,689
Net interest income		43,012				34,872				32,630				30,810				31,249				110,514				95,357
Total noninterest income		3,449				3,546				5,329				4,100				5,562				12,324				12,164
Adjusted efficiency ratio(A)		50.42	%			58.98	%			62.88	%			96.07	%			65.12	%			56.94	%			66.19	%
Total shareholders' equity	$	501,425			$	526,679			$	539,723			$	562,125			$	564,593			$	501,425			$	564,593
Less:  Goodwill and other intangible assets, net		84,138				84,303				84,490				84,608				84,652				84,138				84,652
Tangible shareholders’ equity	$	417,287			$	442,376			$	455,233			$	477,517			$	479,941			$	417,287			$	479,941
Shares outstanding at end of period		24,015				24,425				24,502				24,488				24,420				24,015				24,420
Tangible book value per share	$	17.38			$	18.11			$	18.58			$	19.50			$	19.65			$	17.38			$	19.65
Net income	$	12,747			$	11,707			$	10,595			$	(545	)		$	14,421			$	35,049			$	36,143
Average shareholders' equity	$	537,939			$	536,800			$	560,315			$	568,167			$	563,631			$	544,936			$	555,372
Less:  Average goodwill and other intangible assets, net		84,242				84,413				84,584				84,643				84,753				84,413				84,901
Average tangible shareholders’ equity	$	453,697			$	452,387			$	475,731			$	483,524			$	478,878			$	460,523			$	470,471
Return on average tangible equity(B)		11.15	%			10.38	%			9.03	%			(0.45	%)			11.95	%			10.18	%			10.27	%
Total assets	$	4,271,831			$	4,322,303			$	4,445,977			$	4,486,001			$	4,209,119			$	4,271,831			$	4,209,119
Less:  Goodwill and other intangible assets, net		84,138				84,303				84,490				84,608				84,652				84,138				84,652
Tangible assets	$	4,187,693			$	4,238,000			$	4,361,487			$	4,401,393			$	4,124,467			$	4,187,693			$	4,124,467
Tangible equity to tangible assets		9.96	%			10.44	%			10.44	%			10.85	%			11.64	%			9.96	%			11.64	%

(A)     Represents total noninterest expense, excluding acquisition and merger-related expenses, divided by the sum of net interest income plus noninterest income. Additionally, taxes and provision for credit losses are not part of this calculation.
(B)     Interim periods annualized.

Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)

	Three Months Ended																				Nine Months Ended
		2022												2021								2022				2021
	September 30				June 30				March 31				December 31				September 30				September 30				September 30
	(Dollars and share amounts in thousands, except per share data)
Net income	$	14,286			$	16,437			$	18,657			$	21,558			$	19,060			$	49,380			$	59,995
Earnings per share, basic	$	0.72			$	0.81			$	0.92			$	1.06			$	0.94			$	2.44			$	2.97
Earnings per share, diluted	$	0.71			$	0.80			$	0.91			$	1.06			$	0.93			$	2.42			$	2.95
Dividends per share	$	0.14			$	0.14			$	0.14			$	0.12			$	0.12			$	0.42			$	0.36
Return on average assets(A)		0.84	%			0.94	%			1.04	%			1.23	%			1.14	%			0.94	%			1.25	%
Return on average equity(A)		7.90	%			8.86	%			9.40	%			10.60	%			9.45	%			8.74	%			10.30	%
Return on average tangible equity(A)(B)		11.78	%			13.00	%			13.35	%			15.05	%			13.49	%			12.75	%			14.89	%
Net interest margin (tax equivalent)(A)(C)		3.85	%			3.53	%			3.30	%			3.57	%			3.90	%			3.55	%			4.03	%
Efficiency ratio(D)		69.18	%			62.96	%			58.32	%			60.68	%			56.91	%			63.62	%			58.24	%
Capital Ratios
Allegiance Bancshares, Inc.(Consolidated)
Equity to assets		9.75	%			10.48	%			10.52	%			11.49	%			11.81	%			9.75	%			11.81	%
Tangible equity to tangible assets(B)		6.47	%			7.21	%			7.44	%			8.42	%			8.58	%			6.47	%			8.58	%
Estimated common equity tier 1 capital		11.39	%			12.06	%			12.28	%			12.47	%			12.37	%			11.39	%			12.37	%
Estimated tier 1 risk-based capital		11.58	%			12.26	%			12.49	%			12.69	%			12.60	%			11.58	%			12.60	%
Estimated total risk-based capital		14.66	%			15.47	%			15.76	%			16.08	%			16.13	%			14.66	%			16.13	%
Estimated tier 1 leverage capital		9.00	%			8.65	%			8.37	%			8.53	%			8.76	%			9.00	%			8.76	%
Allegiance Bank
Estimated common equity tier 1 capital		12.20	%			12.51	%			12.48	%			12.63	%			12.81	%			12.20	%			12.81	%
Estimated tier 1 risk-based capital		12.20	%			12.51	%			12.48	%			12.63	%			12.81	%			12.20	%			12.81	%
Estimated total risk-based capital		14.12	%			14.50	%			14.50	%			14.71	%			14.98	%			14.12	%			14.98	%
Estimated tier 1 leverage capital		9.49	%			8.83	%			8.37	%			8.49	%			8.91	%			9.49	%			8.91	%
Other Data
Weighted average shares:
Basic		19,942				20,357				20,363				20,260				20,221				20,219				20,188
Diluted		20,114				20,530				20,526				20,423				20,411				20,376				20,369
Period end shares outstanding		19,837				20,154				20,378				20,337				20,218				19,837				20,218
Book value per share	$	33.08			$	35.00			$	36.90			$	40.15			$	39.50			$	33.08			$	39.50
Tangible book value per share(B)	$	21.19			$	23.25			$	25.24			$	28.43			$	27.67			$	21.19			$	27.67
Employees - full-time equivalents		562				578				586				594				603				562				603

(A)     Interim periods annualized.
(B)     Refer to the calculation of these non-GAAP financial measures and a reconciliation to their most directly comparable GAAP financial measures on page 18 of this Earnings Release.
(C)     Net interest margin represents net interest income divided by average interest-earning assets.
(D)     Represents total noninterest expense divided by the sum of net interest income plus noninterest income, excluding net gains and losses on the sale of loans, securities and assets. Additionally, taxes and provision for credit losses are not part of this calculation.

Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)

			2022												2021
		September 30				June 30				March 31				December 31				September 30
		(Dollars in thousands)
ASSETS
Cash and due from banks		$	16,449			$	17,547			$	26,629			$	23,961			$	23,903
Interest-bearing deposits at other financial institutions			102,118				275,290				672,755				733,548				879,858
Total cash and cash equivalents			118,567				292,837				699,384				757,509				903,761
Available for sale securities, at fair value			1,618,995				1,709,321				1,790,707				1,773,765				1,211,476
Loans held for investment			4,591,912				4,348,833				4,283,514				4,220,486				4,289,469
Less: allowance for credit losses on loans			(52,147	)			(50,242	)			(49,215	)			(47,940	)			(50,491	)
Loans, net			4,539,765				4,298,591				4,234,299				4,172,546				4,238,978
Accrued interest receivable			29,697				29,882				31,505				33,392				33,523
Premises and equipment, net			57,837				58,482				62,168				63,708				65,140
Other real estate owned			—				—				—				—				1,397
Federal Home Loan Bank stock			16,843				4,078				9,376				9,358				8,326
Bank owned life insurance			28,305				28,170				28,374				28,240				28,101
Goodwill			223,642				223,642				223,642				223,642				223,642
Core deposit intangibles, net			12,406				13,156				13,907				14,658				15,482
Other assets			84,285				73,605				56,001				28,136				29,935
Total assets		$	6,730,342			$	6,731,764			$	7,149,363			$	7,104,954			$	6,759,761
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES:
Deposits:
Noninterest-bearing		$	2,465,839			$	2,394,719			$	2,353,604			$	2,243,085			$	2,086,683
Interest-bearing
	Demand		956,920				1,016,381				1,070,855				869,984				594,959
	Money market and savings		1,471,690				1,510,008				1,552,853				1,643,745				1,604,222
	Certificates and other time		766,270				959,524				1,185,015				1,290,825				1,381,014
	Total interest-bearing deposits		3,194,880				3,485,913				3,808,723				3,804,554				3,580,195
	Total deposits		5,660,719				5,880,632				6,162,327				6,047,639				5,666,878
Accrued interest payable			2,673				1,500				3,086				1,753				3,296
Borrowed funds			257,000				—				89,959				89,956				139,954
Subordinated debt			109,241				109,109				108,978				108,847				108,715
Other liabilities			44,407				35,194				33,073				40,291				42,326
Total liabilities			6,074,040				6,026,435				6,397,423				6,288,486				5,961,169
SHAREHOLDERS’ EQUITY:
Common stock			19,837				20,154				20,378				20,337				20,218
Capital surplus			491,878				504,165				512,284				510,797				507,948
Retained earnings			307,975				296,477				282,896				267,092				247,966
Accumulated other comprehensive (loss) income			(163,388	)			(115,467	)			(63,618	)			18,242				22,460
Total shareholders’ equity			656,302				705,329				751,940				816,468				798,592
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	6,730,342			$	6,731,764			$	7,149,363			$	7,104,954			$	6,759,761

Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)

		Three Months Ended																	Nine Months Ended
		2022										2021							2022			2021
		September 30			June 30				March 31			December 31				September 30			September 30			September 30
		(Dollars in thousands, except per share data)
INTEREST INCOME:
Loans, including fees		$	58,025		$	53,835			$	52,370		$	56,855			$	58,176		$	164,230		$	173,858
Securities:
	Taxable		6,655			5,571				5,068			3,933				2,998			17,294			7,956
	Tax-exempt		2,594			2,557				2,525			2,526				2,498			7,676			7,383
Deposits in other financial institutions			608			877				340			317				221			1,825			356
	Total interest income		67,882			62,840				60,303			63,631				63,893			191,025			189,553
INTEREST EXPENSE:
Demand, money market and savings deposits			3,527			1,859				1,347			1,277				1,267			6,733			4,088
Certificates and other time deposits			1,664			1,922				2,156			2,391				2,583			5,742			9,237
Borrowed funds			499			114				186			434				436			799			1,444
Subordinated debt			1,502			1,463				1,442			1,425				1,441			4,407			4,324
	Total interest expense		7,192			5,358				5,131			5,527				5,727			17,681			19,093
NET INTEREST INCOME			60,690			57,482				55,172			58,104				58,166			173,344			170,460
Provision for credit losses			1,962			2,143				1,814			(2,577	)			2,295			5,919			255
Net interest income after provision for credit losses			58,728			55,339				53,358			60,681				55,871			167,425			170,205
NONINTEREST INCOME:
Nonsufficient funds fees			145			126				116			156				131			387			308
Service charges on deposit accounts			527			560				527			476				425			1,614			1,195
Gain (loss) on sale of securities			42			(17	)			—			—				—			25			49
Loss on sale of other real estate and repossessed assets			—			—				—			(89	)			—			—			(176	)
Bank owned life insurance			135			342				133			139				125			610			415
Debit card and ATM card income			869			880				819			834				771			2,568			2,162
Other			1,277			813				2,423			938				647			4,513			2,155
	Total noninterest income		2,995			2,704				4,018			2,454				2,099			9,717			6,108
NONINTEREST EXPENSE:
Salaries and employee benefits			22,013			21,864				22,728			22,918				22,335			66,605			67,259
Net occupancy and equipment			2,129			2,220				2,205			2,194				2,335			6,554			6,950
Depreciation			1,003			1,012				1,033			1,103				1,060			3,048			3,151
Data processing and software amortization			2,541			2,522				2,498			2,264				2,222			7,561			6,598
Professional fees			485			662				138			1,008				620			1,285			2,017
Regulatory assessments and FDIC insurance			1,134			1,256				1,261			949				883			3,651			2,458
Core deposit intangibles amortization			750			751				751			824				824			2,252			2,472
Communications			359			363				341			395				358			1,063			1,011
Advertising			385			483				462			481				481			1,330			1,211
Other real estate expense			93			65				59			69				137			217			479
Acquisition and merger-related expenses			10,551			1,667				451			1,408				603			12,669			603
Other			2,588			5,039				2,590			3,131				2,438			10,217			8,601
	Total noninterest expense		44,031			37,904				34,517			36,744				34,296			116,452			102,810
INCOME BEFORE INCOME TAXES			17,692			20,139				22,859			26,391				23,674			60,690			73,503
Provision for income taxes			3,406			3,702				4,202			4,833				4,614			11,310			13,508
NET INCOME		$	14,286		$	16,437			$	18,657		$	21,558			$	19,060		$	49,380		$	59,995
EARNINGS PER SHARE
Basic		$	0.72		$	0.81			$	0.92		$	1.06			$	0.94		$	2.44		$	2.97
Diluted		$	0.71		$	0.80			$	0.91		$	1.06			$	0.93		$	2.42		$	2.95

Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)

	Three Months Ended
	September 30, 2022										June 30, 2022										September 30, 2021
	Average Balance				Interest Earned/ Interest Paid			Average Yield/ Rate			Average Balance				Interest Earned/ Interest Paid			Average Yield/ Rate			Average Balance				Interest Earned/ Interest Paid			Average Yield/ Rate
	(Dollars in thousands)
Assets
Interest-Earning Assets:
Loans	$	4,456,174			$	58,025		5.17	%		$	4,303,714			$	53,835		5.02	%		$	4,336,443			$	58,176		5.32	%
Securities		1,709,470				9,249		2.15	%			1,778,745				8,128		1.83	%			1,070,851				5,496		2.04	%
Deposits in other financial institutions		160,340				608		1.50	%			535,546				877		0.66	%			588,859				221		0.15	%
Total interest-earning assets		6,325,984			$	67,882		4.26	%			6,618,005			$	62,840		3.81	%			5,996,153			$	63,893		4.23	%
Allowance for credit losses on loans		(50,609	)									(49,290	)									(49,381	)
Noninterest-earning assets		442,511										450,584										680,682
Total assets	$	6,717,886									$	7,019,299									$	6,627,454
Liabilities and Shareholders' Equity
Interest-Bearing Liabilities:
Interest-bearing demand deposits	$	978,531			$	2,380		0.96	%		$	1,044,493			$	927		0.36	%		$	576,144			$	324		0.22	%
Money market and savings deposits		1,500,083				1,147		0.30	%			1,566,376				932		0.24	%			1,565,965				943		0.24	%
Certificates and other time deposits		877,231				1,664		0.75	%			1,088,664				1,922		0.71	%			1,363,121				2,583		0.75	%
Borrowed funds		68,752				499		2.88	%			50,116				114		0.91	%			139,844				436		1.24	%
Subordinated debt		109,177				1,502		5.46	%			109,045				1,463		5.38	%			108,652				1,441		5.26	%
Total interest-bearing liabilities		3,533,774			$	7,192		0.81	%			3,858,694			$	5,358		0.56	%			3,753,726			$	5,727		0.61	%
Noninterest-Bearing Liabilities:
Noninterest-bearing demand deposits		2,424,884										2,382,230										2,031,399
Other liabilities		41,792										34,249										42,183
Total liabilities		6,000,450										6,275,173										5,827,308
Shareholders' equity		717,436										744,126										800,146
Total liabilities and shareholders' equity	$	6,717,886									$	7,019,299									$	6,627,454
Net interest rate spread								3.45	%									3.25	%									3.62	%
Net interest income and margin					$	60,690		3.81	%						$	57,482		3.48	%						$	58,166		3.85	%
Net interest income and net interest margin (tax equivalent)					$	61,418		3.85	%						$	58,238		3.53	%						$	58,873		3.90	%

Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)

	Nine Months Ended September 30,
		2022										2021
	Average Balance				Interest Earned/ Interest Paid			Average Yield/ Rate			Average Balance				Interest Earned/ Interest Paid			Average Yield/Rate
	(Dollars in thousands)
Assets
Interest-Earning Assets:
Loans	$	4,331,288			$	164,230		5.07	%		$	4,482,684			$	173,858		5.19	%
Securities		1,774,149				24,970		1.88	%			913,078				15,339		2.25	%
Deposits in other financial institutions		498,456				1,825		0.49	%			328,238				356		0.15	%
Total interest-earning assets		6,603,893			$	191,025		3.87	%			5,724,000			$	189,553		4.43	%
Allowance for credit losses on loans		(49,422	)									(51,802	)
Noninterest-earning assets		441,767										758,774
Total assets	$	6,996,238									$	6,430,972
Liabilities and Shareholders' Equity
Interest-Bearing Liabilities:
Interest-bearing demand deposits	$	1,031,006			$	3,856		0.50	%		$	523,272			$	1,021		0.26	%
Money market and savings deposits		1,549,969				2,877		0.25	%			1,555,791				3,067		0.26	%
Certificates and other time deposits		1,069,011				5,742		0.72	%			1,354,000				9,237		0.91	%
Borrowed funds		69,492				799		1.54	%			146,244				1,444		1.32	%
Subordinated debt		109,046				4,407		5.40	%			108,522				4,324		5.33	%
Total interest-bearing liabilities		3,828,524			$	17,681		0.62	%			3,687,829				19,093		0.69	%
Noninterest-Bearing Liabilities:
Noninterest-bearing demand deposits		2,373,489										1,923,584
Other liabilities		39,123										40,568
Total liabilities		6,241,136										5,651,981
Shareholders' equity		755,102										778,991
Total liabilities and shareholders' equity	$	6,996,238									$	6,430,972
Net interest rate spread								3.25	%									3.74	%
Net interest income and margin					$	173,344		3.51	%						$	170,460		3.98	%
Net interest income and net interest margin (tax equivalent)					$	175,578		3.55	%						$	172,477		4.03	%

Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)

	Three Months Ended
		2022												2021
	September 30				June 30				March 31				December 31				September 30
	(Dollars in thousands)
Period-end Loan Portfolio:
Commercial and industrial	$	732,636			$	727,068			$	714,450			$	693,559			$	728,897
Paycheck Protection Program (PPP)		17,827				31,855				78,624				145,942				290,028
Real estate:
Commercial real estate (including multi-family residential)		2,407,039				2,265,155				2,197,502				2,104,621				2,073,521
Commercial real estate construction and land development		513,248				450,694				453,473				439,125				382,610
1-4 family residential (including home equity)		699,636				682,066				669,306				685,071				683,919
Residential construction		183,563				155,017				136,760				117,901				104,638
Consumer and other		37,963				36,978				33,399				34,267				25,856
Total loans	$	4,591,912			$	4,348,833			$	4,283,514			$	4,220,486			$	4,289,469
Deposits:
Interest-bearing demand accounts	$	956,920			$	1,016,381			$	1,070,855			$	869,984			$	594,959
Money market and savings		1,471,690				1,510,008				1,552,853				1,643,745				1,604,222
Certificates and other time		766,270				959,524				1,185,015				1,290,825				1,381,014
Total interest-bearing deposits		3,194,880				3,485,913				3,808,723				3,804,554				3,580,195
Noninterest-bearing deposits		2,465,839				2,394,719				2,353,604				2,243,085				2,086,683
Total deposits	$	5,660,719			$	5,880,632			$	6,162,327			$	6,047,639			$	5,666,878
Asset Quality:
Nonaccrual loans	$	21,551			$	28,225			$	26,275			$	24,127			$	28,369
Accruing loans 90 or more days past due		—				—				—				—				—
Total nonperforming loans		21,551				28,225				26,275				24,127				28,369
Other real estate		—				—				—				—				1,397
Total nonperforming assets	$	21,551			$	28,225			$	26,275			$	24,127			$	29,766
Net (recoveries) charge-offs	$	(245	)		$	571			$	317			$	1,353			$	450
Nonaccrual loans:
Commercial and industrial	$	6,916			$	9,145			$	7,809			$	8,358			$	10,247
Real estate:
Commercial real estate (including multi-family residential)		10,392				14,409				15,259				12,639				14,629
Commercial real estate construction and land development		241				1,511				—				63				53
1-4 family residential (including home equity)		3,854				3,040				3,065				2,875				3,224
Residential construction		—				—				—				—				—
Consumer and other		148				120				142				192				216
Total nonaccrual loans	$	21,551			$	28,225			$	26,275			$	24,127			$	28,369
Asset Quality Ratios:
Nonperforming assets to total assets		0.32	%			0.42	%			0.37	%			0.34	%			0.44	%
Nonperforming loans to total loans		0.47	%			0.65	%			0.61	%			0.57	%			0.66	%
Allowance for credit losses on loans to nonperforming loans		241.97	%			178.01	%			187.31	%			198.70	%			177.98	%
Allowance for credit losses on loans to total loans		1.14	%			1.16	%			1.15	%			1.14	%			1.18	%
Net (recoveries) charge-offs to average loans (annualized)		(0.02	%)			0.05	%			0.03	%			0.13	%			0.04	%

Allegiance Bancshares, Inc.
GAAP Reconciliation and Management’s Explanation of Non-GAAP Financial Measures
(Unaudited)

Allegiance’s management uses certain non-GAAP (generally accepted accounting principles) financial measures to evaluate its performance. Allegiance believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and that management and investors benefit from referring to these non-GAAP financial measures in assessing Allegiance’s performance and when planning, forecasting, analyzing and comparing past, present and future periods. Specifically, Allegiance reviews pre-tax, pre-provision income, adjusted pre-tax, pre-provision income, adjusted efficiency ratio, tangible book value per share, return on average tangible equity and the ratio of tangible equity to tangible assets for internal planning and forecasting purposes. Allegiance has included in this Earnings Release information relating to these non-GAAP financial measures for the applicable periods presented.  These non-GAAP measures should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner in which Allegiance calculates the non-GAAP financial measures may differ from that of other companies reporting measures with similar names.

	Three Months Ended																				Nine Months Ended
		2022												2021								2022				2021
	September 30				June 30				March 31				December 31				September 30				September 30				September 30
	(Dollars and share amounts in thousands, except per share data)
Net income	$	14,286			$	16,437			$	18,657			$	21,558			$	19,060			$	49,380			$	59,995
Add: Provision for credit losses		1,962				2,143				1,814				(2,577	)			2,295				5,919				255
Add: Provision for income taxes		3,406				3,702				4,202				4,833				4,614				11,310				13,508
Pre-tax, pre-provision income	$	19,654			$	22,282			$	24,673			$	23,814			$	25,969			$	66,609			$	73,758
Pre-tax, pre-provision income	$	19,654			$	22,282			$	24,673			$	23,814			$	25,969			$	66,609			$	73,758
Add: Acquisition and merger-related expenses		10,551				1,667				451				1,408				603				12,669				603
Adjusted pre-tax, pre-provision income	$	30,205			$	23,949			$	25,124			$	25,222			$	26,572			$	79,278			$	74,361
Total noninterest expense	$	44,031			$	37,904			$	34,517			$	36,744			$	34,296			$	116,452			$	102,810
Acquisition and merger-related expenses		10,551				1,667				451				1,408				603				12,669				603
Net interest income		60,690				57,482				55,172				58,104				58,166				173,344				170,460
Total noninterest income		2,995				2,704				4,018				2,454				2,099				9,717				6,108
Gain on sale of securities		42				(17	)			—				—				—				25				49
Adjusted efficiency ratio(A)		52.61	%			60.19	%			57.55	%			58.35	%			55.91	%			56.69	%			57.87	%
Total shareholders' equity	$	656,302			$	705,329			$	751,940			$	816,468			$	798,592			$	656,302			$	798,592
Less:  Goodwill and core deposit intangibles, net		236,048				236,798				237,549				238,300				239,124				236,048				239,124
Tangible shareholders’ equity	$	420,254			$	468,531			$	514,391			$	578,168			$	559,468			$	420,254			$	559,468
Shares outstanding at end of period		19,837				20,154				20,378				20,337				20,218				19,837				20,218
Tangible book value per share	$	21.19			$	23.25			$	25.24			$	28.43			$	27.67			$	21.19			$	27.67
Net income	$	14,286			$	16,437			$	18,657			$	21,558			$	19,060			$	49,380			$	59,995
Average shareholders' equity	$	717,436			$	744,126			$	804,704			$	806,941			$	800,146			$	755,102			$	778,991
Less:  Average goodwill and core deposit intangibles, net		236,399				237,153				237,925				238,700				239,497				237,153				240,325
Average tangible shareholders’ equity	$	481,037			$	506,973			$	566,779			$	568,241			$	560,649			$	517,949			$	538,666
Return on average tangible equity(B)		11.78	%			13.00	%			13.35	%			15.05	%			13.49	%			12.75	%			14.89	%
Total assets	$	6,730,342			$	6,731,764			$	7,149,363			$	7,104,954			$	6,759,761			$	6,730,342			$	6,759,761
Less: Goodwill and core deposit intangibles, net		236,048				236,798				237,549				238,300				239,124				236,048				239,124
Tangible assets	$	6,494,294			$	6,494,966			$	6,911,814			$	6,866,654			$	6,520,637			$	6,494,294			$	6,520,637
Tangible equity to tangible assets		6.47	%			7.21	%			7.44	%			8.42	%			8.58	%			6.47	%			8.58	%

(A)     Represents total noninterest expense, excluding acquisition and merger-related expenses, divided by the sum of net interest income plus noninterest income, excluding net gains and losses on the sale of loans, securities and assets. Additionally, taxes and provision for credit losses are not part of this calculation.
(B)     Interim periods annualized.

 

FAQ

What is Stellar Bancorp's net income for Q3 2022?

Stellar Bancorp reported a net income of $12.7 million for Q3 2022.

How much did Allegiance's net income decrease in Q3 2022 compared to 2021?

Allegiance's net income decreased by $4.8 million, from $19.1 million in Q3 2021 to $14.3 million in Q3 2022.

What were the diluted earnings per share for Stellar Bancorp in Q3 2022?

The diluted earnings per share for Stellar Bancorp in Q3 2022 were $0.52.

How much did CBTX's loans held for investment grow in Q3 2022?

CBTX's loans held for investment grew by 12.3%, or $93.5 million, in Q3 2022.

What are the future plans for share repurchase under Stellar's authorization?

Stellar has authorized a repurchase of up to $40 million of outstanding common stock through September 30, 2023.