Item 1.01 Entry into a Material Definitive Agreement.
On June 18, 2020, CommunityBank of Texas, N.A. (the “Bank”), a wholly-owned subsidiary of CBTX, Inc. (the “Company”), and the Office of the Comptroller of the Currency (the “OCC”) entered into a Formal Agreement (the “Agreement”) with regard to Bank Secrecy Act/Anti-Money Laundering (“BSA/AML”) compliance matters. The Agreement generally requires that the Bank enhance its policies and procedures to ensure compliance with BSA/AML laws and regulations. Specifically, the Agreement requires the Bank to take certain actions, including, but not limited to: (1) establishing a Compliance Committee to oversee the Bank’s compliance with the Agreement; (2) ensuring that the BSA/AML staff has sufficient authority and resources to fulfill its responsibilities; (3) developing, implementing, and adhering to a written program of policies and procedures to provide for compliance with the BSA, including with respect to model risk management for automated monitoring systems; (4) establishing policies and procedures for performing customer due diligence/enhanced due diligence and customer risk identification processes; (5) adopting and adhering to an independent BSA/AML audit program; (6) developing, implementing, and adhering to a comprehensive training program for all appropriate Bank employees to ensure their awareness of their responsibility for compliance with the requirements of the BSA, the Bank’s relevant policies, procedures, and processes, and of relevant examples of red flags for money laundering, terrorist financing, and suspicious activity; and (7) performing a review of account and transaction activity for certain time periods.
The Bank’s Board of Directors and management are committed to taking the necessary actions to fully address the provisions of the Agreement within the timeframes identified in the Agreement. Numerous actions have already been taken or commenced by the Bank to strengthen its BSA/AML compliance practices, policies, procedures and controls. However, a finding by the OCC that the Bank failed to comply with the Agreement could result in additional regulatory scrutiny, further constraints on the Bank’s business, or a further enforcement action, including civil money penalties. Any of those events could have a material adverse impact on the Company’s future operations, financial condition, growth, or other aspects of its business.
The foregoing description of the Agreement does not purport to be complete and is qualified in its entirety by reference to the Agreement, a copy of which is included as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 8.01 Other Events.
On June 19, 2020, the Company issued a press release announcing that its Board of Directors declared a quarterly cash dividend in the amount of $0.10 per share of common stock. The dividend will be payable on July 15, 2020 to shareholders of record as of the close of business on July 1, 2020. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference, including the cautionary language regarding forward-looking statements.
FORWARD-LOOKING STATEMENTS
This Current Report on Form 8-K contains forward-looking statements. These forward-looking statements reflect the Company’s current views with respect to, among other things, future events and the Company’s financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would” and “outlook,” or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about the Company’s industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond the Company’s control. These statements include future payment of dividends, future compliance with the details of the Agreement and its effect on the Company and the Company’s financial performance and results of operations. Accordingly, the Company cautions you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict, including the risk that the Company may not adequately meet the requirements of the Agreement in the opinion of the OCC, the risk that such Agreement may have a negative impact on the Company’s financial performance and results of operations, regulatory risks and the costs, effects, and results of regulatory examinations, reviews, or investigations,
