CBTX - Earnings call transcript Q4 2021

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Operator

Good day, and thank you for standing by. Welcome to the Community Bank of Texas, Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. To ask a question during the session, [Operator Instructions]. today's be that advised be conference recorded. may Please

Please assistance, I conference would you General to require like Instructions]. further any Counsel. Long, Justin the If now [Operator to host today ahead. go your over hand

Justin Long

on Thank for Counsel CBTX, you. of the like welcome fourth and General CBTX, the We would of you team quarter Good to Justin management Inc. the copy our I'm our to morning. issued Long, our along earnings release Earnings which We XXXX. call is presentation us. a available presentation. slide refer joining you the appreciate will to website this yesterday with press we afternoon, that during

Before we prospects. statements you forward-looking regarding during begin future events, this performance, remind business that presentation our we our make like I'd may financial to or

and subject could materially. statements that differ to to cause results Forward-looking risks uncertainties actual are

assume that of available is the Additional Form other cause information in Risk annual and our and any the can date website are obligation all concerning Relations our reports on our Investor Factors XX-K, report forward-looking our release Any our and ir.cbtxinc.com. factors update at to actual only Form quarterly in which with call, we this as to results differ of made Section XX-Q, could SEC, of such be the earnings statements. on on accessed filings no statements

it certain this Officer, the Joseph West, to Franklin, Pigott, the will presentation. call our our President You their The these in during to and Ted we'll end Robert CEO, McMullen, questions. should open morning I'll our investor our that and also Chairman, is our and Chief President measures non-GAAP Officer, Chairman, turn Franklin. At that, by our R. Joe With comparable directly most Chief to Rob remarks, over I'm financial the of Controller. CEO, and Credit Financial information. reference GAAP aware release call we this of financial financial earnings included joined Jr., be reconciliation measures

Robert R. Franklin

Welcome fourth Justin. the CBTX, for for the you, Thank Inc. XXXX. of to quarter call earnings

of pleased an are We results quarter XXXX. eventful fourth to present our

first move customers. half of as the on able increasing marked us year appeared effects caution. the The the pandemic, second the saw our year, of as and optimism deal impact we to to by better assess be with we to the of was the the which our half But better allowed team country to continuing

the transition environment recovering the from and heavily As to year economic impacted a more COVID a economy stable progressed, economy.

quarter. Our with during its and variant the provided Texas the in even Omicron the showed resilience fourth opportunities economy emergence of -- the

showing the half Over the year signs the second environment economic of transitioned of recovery.

to our Given build good The efforts move calling provides the us our into booked we loans relationship-driven fourth were and face-to-face and to solid back XXXX. efforts third deposits. momentum This with have pipeline began quarter good prospects, show opportunity loan our more the that quarter, our into the team as and produced growth. interaction of customers team

slated partner to proud XXXX. And the to would combine that the transaction, of of merger that half quarter, had excellent and we Allegiance close were we an found Bank. During fourth we equals in in first announce,

regulatory the are ways teams bank better We have applications, filed build to and working a together identifying together. our

closing, our together work we we to very the future. have that towards in about excited continue As organization be opportunities the combined will

order the fourth by during the the investigation and Additionally, quarter. we the that OCC institutional with we ended the had financial settled FinCEN and

ready merger to partner, stands the leader and have and concluded pleased for for our to in program we ready are size and We increase our be chapter scale. a believe this BSA

financial will regulatory costs they connection speak the and and taken opportunities merger. agencies our the Our will some we provide. pending in settlements the results. fourth-quarter are financial with and reflecting charges, the costs results excited of to about have actions Overall, XXXX one-time the several with Ted the associated reflect we more the specifically with

balance continue -- asset we we an have do that sheet Texas capital, will which to markets, have surely have well. succeed allow We liquidity, sensitive in us our to

turn our Officer. Pigott, Chief this Financial over to I'll Now Ted

Ted Pigott

Bob. the Slide fourth the begins Certain quarter for presentation. on you, information and Thank periods financial investor of prior X

the net For with the the costs associated the the Its Company reported pending XXXX, were of fourth quarter $X.XX impacted settlement of share. and earnings agencies the regulatory per merger. the a $XXX,XXX or loss diluted of with year share ended diluted by ended compared $XX or XX, million the per Net me, year $XX.X income December $X.XX X, was million XXXX. excuse $X.XX to diluted XXXX X for X. -- December the share for or per XX, -- costs

due BSA XX of to to decrease third to liability cost the of $XXX allowance resolution basis The matters to December X.XX% from XXXX $XXX.X capital associated continued risk $XXX The at move leverage recapture total improvements basis the ratio with capital $XX,XXX unfunded deposits X.XX% quarter. economy. was basis recapture in primarily XXXX. for XXXX. was increased then for XXX% Income XX, recoveries of from quarter, economy. because primarily December Deposits was to XX, to as third expense adjustments, the the of the compared to credit to Non-interest qualitative third due to in realized the due a to million qualitative civil margin from in quarter. December fourth due XXXX. with was of was $X.X million and quarter Inc. XXth, fourth maintains AML, The It quarter sheet, quarter compared primarily The to made fourth cost improvements in assets fees penalties to money the which from for million $XX,XXX XX, December scaled / ratios XX assets million. Net -- factor was fourth primarily of life tax Other income XXXX. the $XXX,XXX.XX alliance of are matters. gains we'll in basis of total the for points million, totaled a at an XX. pending imposition Salaries of CET interest-bearing balance million increased million September income XX.XX, $XXX.X with an decreased losses for in -- benefits for at fourth September XX.X% for Net million $X.X 'XX fourth quarter, points X.X% $XXX,XXX.XX. to December results. quarter. losses growth million fourth total at quarter XX December for officer top to strong And $X.X -- a sales the increase BSA was settlement quarter Tier Non-performing the interest due excluding increased commitments Allegiance the of in driven increased at increased fourth December on to was to X.X increased basis primarily XX.XX% increased yield associated equivalent compliance XXXX. XXXX decreased in $XX.X local XXXX. and $X salaries. in recapture third million third to $XXX.X of the for to on increased XX, $XXX,XXX third for the totaling interest or due a compared conjunction gains exclude XXXX, The insurance company ratio XX%. the quarter The Loans points and effective -- $X.X provision to bank-owned total quarter the basis fourth loan points and million with to bonuses million the XX due million, for was with increasing for loans at million expense deposits for decreased million regulatory decreased $X tax The fourth the of of were employee assets loans XXXX. the Net $XXX,XXX the September adjustments fourth in $X.X Now XXXX local deductible. ratio merger XX.XX, of quarter primarily loans $XXX,XXX Loans, fourth income up loans in million, XX, million quarter. XXXX loans capital $XX.X and quarter quarter the quarter, ACL related XXXX. earnings X securities assets from ACL on the during for million $XX.X on loans, for the XX, growth third expenses in factor total points compliance of third recent quarter. primarily payments compared were decreased $XX.X Non-interest PPP the million, sale ACL in $X.X XX, due the associated held The XXth, tax tax expenses by $X.X quarter XX to not Bancshares, rate net and Compared from quarter officer credit for continued the

turn I'll to Joe West. over Now, it

Joe West

Thanks, portfolio investor Ted. loan to speak our Slide the from like to X beginning on presentation. a bit I'd

XXX versus the loans end XXXX, were loans approximately of at fourth million. excluding billion, quarter, an held our sale of X.XX at the for X.XX For up increase billion of third the quarter

our of was part of of the in the fourth December in growth a in came with million much our growth, half to $XXX loan the second booking organic growth due quarter, and of Our loans of XXXX.

quarter. to one mortgage loan approximately purchased the XX.X also four We in fourth of family million

deferrals stayed seven relatively the $XX.X to the COVID had deferral of loans end related constant loan at million a we Our quarter. on with totaling principal as fourth

to $XX.X third quantify was QX. the third $XX.X of PPP million forth up $XXX,XXX. of billion And forth how sets C&I and up One-to-four oil including of PPP And was loans up development compared $X.XX For Slide payoffs, XX quarter our X.X% net percent commercial was the family our PPP up we X.X, X.X C&I sets were up or million, our of the including and exposure effect in was the CRE up payoffs. our me, gas quarter XX.X%. and by excuse Slide $XX.X approximately XX% end loans. loans exposure. increased to direct indirect versus or $X.XX multi-family including Construction or quarter-over-quarter. commercial and quarter. at total components the XX our $XX.X fourth to million $XX.X the was billion compared the million also quarter, million

quarter third the loans. gas with Our the increased indirect of XX Slide, to for about loans our and direct quarter. forth end information compared million oil the sets $XXX.X third PPP and

received third bottom to we $XX.X forgiveness our During loans customers. from net the The on yield to decreased million our Side forth at of quarter, the X sets and portfolio. $XX.X million average table related our PPP payments or

and Slide out the about PPP forth credit taking will loan loans, allowance average average for loans. on Our information yield PPP on sets portfolio losses. the our our yield XX our

December at X.XX% XXXX. was loans to losses credit for XX, allowance our noted, Ted As

to Turning Slide XX.

remained assets to was low of and also December fourth non-performing Our assets, as XXXX XX, remained our compared XXXX. information credit quarter, assets X.XX% strong. for Slide XX our non-performing quality shows our which during the XX, September regarding of as total X.XX%

in our that, With As $XX,XXX. of quarter, with the the I'll turn Bob over our recoveries quarter a to second Franklin. net recovery exceeded back charge-offs, during resulting it

Robert R. Franklin

Joe. open ready With that for we're to questions. up Thanks, it

Operator

Thank you.

have time, at this a [Operator you question If Instructions].

with first West, Sandler. question Charles Our comes of from line the Piper

Please Your open. line go ahead. is

Charles West

Good morning, everyone.

Robert R. Franklin

Morning.

Charles West

to just I great loan momentum is see on positive growth. want the to the there. start It

You else. And production the utilization quarters? that is something to speak compared drove more how recent what or on line then

Robert R. Franklin

What that? was of part last the

Charles West

how then quarters? recent to compared is production And the

Robert R. Franklin

But three and was on saw opportunities. good attributed things really new better year. the usage. certainly more some than we've quarters wasn't seen of good Well, the advantage and C&I first to we opportunities of was some CRE board the was It various it had for that taken We line it what production. across

of kind board, So the across really.

Joe West

the and I discussing would the at and we was the than of lenders. deals year, approved was in were committees with -- we second our our looking starting -- that Really in slower closed have getting them in it say would and our Yes, half loans new liked.

some the lot across-the-board saw was year. knew And towards commercial there's we growth pretty we quarter, said a as as but the accelerated the C&I the well. was we good Bob, end in majority QX flat, was -- of we of it in we but it fourth estate, saw saw real -- activity especially would of also So feel

Robert R. Franklin

about was as see where saw be got pipeline think the behind got these we we We into and good building our a I third the quarter things quarter fourth good the that it's where, because approved could quarter and to and build. continuing heading closed, we've first going to through good pipeline us we're feel

is. So growth loan we feel where good about

Charles West

loan the in sense. makes That And a to great. that is Okay, more this Both you the non-purchase, to this on do something the future? purchases. on plan to follow-up compared then yield and

Joe West

but -- the little don't the offset lot ahead it's of think that's decent look -- is The it, will we'll normally kind -- a we now X.XX, had that weighted average we future. a to in but went package these don't do. whole purchase also it it's if I just yield was do depends. at and something bit as kind it buy things PPP there. of at I as of We we the the a we yield and get a got to opportunity runoff, know

Charles West

all Okay, Thank me. That's for great. you.

Robert R. Franklin

Thank you.

Operator

Wendler line [Operator from you. comes And Instructions] our Stephens of Thomas the Thank next question with Inc.

Your go line open. is Please ahead.

Thomas Wendler

everyone. morning, Good Hey.

Robert R. Franklin

Morning.

Thomas Wendler

in little increase that bit salaries us for XXXX? an good up the we for an expenses, Can saw idea bonuses? expenses give us between you run of rate at Can tick and outlay guys in salaries. the looking of a you Just a give

Robert R. Franklin

think with going standpoint, our on today, from that business run of I works. $XX be going where around number, million, the associated normalized be a would basis, combination all use a that a but given think -- -- be Allegiance, we probably you that are to to kind work. with as we're I would rate we about Yes, somewhere It's this that's if get little towards around it's bumpy something

Thomas Wendler

updates then that's second close the with us great. and with to the set on you. the Can conversion the timeline? That's Thank you MOE give MOE And any quarter. in ABTX,

Robert R. Franklin

our don't think I in get it's -- we think don't decide. I to Well,

in close a great right our run as as partner, soon as having can sessions, the as we'll we've do get future to good done our and and what meetings way we filing having regulatory bank too So documents. In combined move as we finding meantime, approval, integration this far organization. with we're the the

we But what's on about on on rely rail, in when good of regulators this the really going approved. that have feel out a our thing we standpoint and So taken timing regard. from it's get they to

Thomas Wendler

one me. then that's give for rate of Sounds Can us those the right. final the then variable? currently loans around portfolio on one of And color you are how variable their And percent many loan any floor?

Joe West

the variable hold we've the Yeah, it's size -- we've a only got rate similarity. at I'm on, -- looking got

bid me, something can adjustable mean, we think has we $XXX software I it's We includes have loans about spinning XX% but little the move at as pricing really, as away. well the a as excuse move floor. bit, as move. is -- sitting And about to think a million any and lab already work the with rate or lab billion work pricing XXX XXX we We prime good the that started have around variable. have that up fast will

about first we On is rate the that XXX same to portfolio. prime could high. had we We decided in move the do

Thomas Wendler

Alright, that's my for great guys. questions. Thanks answering

Robert R. Franklin

much. very you Thank

Operator

for any showing questions Franklin Bob back conference would to no turn remarks. I'm further I Thank you. And further the like over to and

Robert R. Franklin

Well, thank you very much.

about excited very we're think I XXXX.

out economy Texas see and we opportunities think is good there. good I

we're With a are of building merger today prospects that the pipeline you job attending call. great excited thank and attention appreciate you with partner, new very that, for the we doing Allegiance our and have guys about we your Bank. Our

Operator

That conference participating. Thank concludes today's for call. you

may Everyone, great have day. You a now disconnect.

Robert R. Franklin, Jr.	Chairman, President and CEO
Justin Long	General Counsel
Ted Pigott	Chief Financial Officer
Joe West	Chief Credit Officer
Joseph McMullen	Controller
Charles West	Piper Sandler
Thomas Wendler	Stephens Inc.

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