Stellar Bancorp, Inc. · NYSE:STEL
Stellar Bancorp — CBTX — Q2 2020 Earnings Presentation
26 slides from Stellar Bancorp's earnings presentation, Jul 29, 2020
Slide 1: CBTX, Inc. Investor Presentation Second Quarter 2020
CBTX, Inc. Investor Presentation Second Quarter 2020 NASDAQ: CBTX
Slide 2: Safe Harbor Statement and Non-GAAP Financial Measures
2 SAFE HARBOR STATEMENT AND NON-GAAP FINANCIAL MEASURES NON-GAAP FINANCIAL MEASURES This presentation contains certain non-GAAP (generally accepted accounting principles) financial measures, including tangible equity, tangible assets, tangible book value per share, tangible equity to tangible assets
Slide 3: COVID-19 Response
3 COVID-19 RESPONSE • Activated business continuity plan the first part of March • Implemented social distancing in our facilities allowing flexible work arrangements and restricted travel • Deployed remote working strategy to allow 63% of employees to operate remotely • Granted additional PTO • Pus
Slide 4: Financial Highlights
4 FINANCIAL HIGHLIGHTS (1) PPP loans are included in Loans, Net above. See page 14 for further details. (2) See Appendix for reconciliation of non-GAAP financial measures. (3) Pre-provision net revenue is net income, with the provision for credit losses and income tax expense added back. Financial H
Slide 5: Financial Highlights (Continued)
5 FINANCIAL HIGHLIGHTS (Continued) (1) See Appendix for reconciliation of non-GAAP financial measures. (2) Annualized. (3) Efficiency ratio is calculated by dividing noninterest expense by the sum of net interest income and noninterest income. Financial Highlights Q2 2020 Q1 2020 Q4 2019 Q2 2020 vs
Slide 6: Financial Highlights (Continued)
6 FINANCIAL HIGHLIGHTS (Continued) (1) See Appendix for reconciliation of non-GAAP financial measures. Financial Highlights Q2 2020 Q1 2020 Q4 2019 Q2 2020 vs Q1 2020 Q2 2020 vs Q4 2019 Credit Quality Allowance for Credit Losses / Loans 1.35 % 1.17 % 0.96 % 0.18 % 0.39 % Allowance for Credit Losses
Slide 7: Capital and Liquidity / Revenue Growth
The Bank Built or Business CAPITAL AND LIQUIDITY 7 REVENUE GROWH • Stable net interest margin (NIM) • Asset sensitive, with 54% variable rate loans as of March 31, 2020 • Increasing revenue and improving efficiency ratio (2) (1) See Appendix for reconciliation of non-GAAP financial measure. • Total
Slide 8: Stable Core Deposits
The Bank Built or Business 8 Stable Core Deposit(2) (1) Commercial loans defined as total loans less 1-4 family residential, consumer, agriculture and other loans. (2) Figures as of year end 12/31. Q2 2020 as of 6/30/2020. DEPOSITS • Gross loans increased from March by $269.4 million due to originat
Slide 9: Loan Portfolio
Loan Portfolio 6/30/2020 (000) (%) Commercial and Industrial $ 837,667 28.4 % Real Estate Commercial Real Estate 908,027 30.8 Construction and Development 552,879 18.8 1-4 Family Residential 272,253 9.2 Multi-family Residential 255,273 8.7 Consumer, Agriculture and Other 121,668 4.1 Gross Loans $ 2,
Slide 10: Commercial Loans
The Bank Built or Business COMMERCIAL LOANS 10 Multi-family ($418M) (% Commercial Total) Commercial and Industrial: PPP loans $ 330,449 12.9% Industrial Construction/Equipment Rental 120,008 4.7% Oil and Gas 126,333 4.9% Manufacturing 39,794 1.6% Professional/Medical 58,770 2.3% Other 162,313 6.4% T
Slide 11: Construction and Development Loans
The Bank Built or Business CONSTRUCTION AND DEVELOPMENT LOANS 11 (1) Total capital of CommunityBank of Texas, N.A., the wholly-owned subsidiary of the Company. (2) Average of full commitment amount to appraised value of collateral.
Slide 12: Oil and Gas Loans
The Bank Built or Business OIL AND GAS LOANS 12 • DIRECT - Loans to an entity with more than 50% of its revenue related to the well-head, oil in the ground or extracting oil or gas. This includes any activity, product or service related to the oil and gas industry, such as exploration and production
Slide 13: Oil and Gas Loans Components
The Bank Built or Business OIL AND GAS LOANS COMPONENTS 13
Slide 14: Paycheck Protection Program
14 Paycheck Protection Program (1) All PPP loans are classified as Commercial and Industrial loans per regulatory guidelines.
Slide 15: Loan Deferrals
15 LOAN DEFERRALS • Leveraging our experience from past hurricanes to develop our program for working with our customers through the impact of the pandemic • Helping to help customers maintain financial strength through the pandemic as much as possible and in line with regulatory guidance • Generall
Slide 16: Deferrals 6/30/2020
Deferrals 6/30/2020 (1) Number of Loans Prinicipal Amount (000) Percentage of Gross Loans (2) Total Principal and Interest Deferred (000) Percentage of Total Deferrals Commercial and Industrial 297 105,063 $ 3.6% 6,800 $ 39.9% Real Estate: Commercial Real Estate 175 305,162 10.4% 7,725 45.3% Constru
Slide 17: COVID-19 At Risk Loans
The Bank Built or Business COVID-19 AT RISK LOANS 17 • Participating in the Paycheck Protection Program offered under the Cares Act •____ PPP loans outstanding, with average loan size of ___ at June 30, 2020 • SBA origination fees of $11.2 M through 6/30/2020. • Processing additional applications (1
Slide 18: Allowance for Credit Losses - Loans
The Bank Built or Business ALLOWANCE FOR CREDIT LOSSES - LOANS 18 • Participating in the Paycheck Protection Program offered under the Cares Act •____ PPP loans outstanding, with average loan size of ___ at June 30, 2020 • SBA origination fees of $11.2 M through 6/30/2020. • Processing additional ap
Slide 19: ACL - Unfunded Commitments
• The Company has unfunded commitments comprised of letters of credit and commitments to extend credit which have similar risk characteristics as funded loans of the same type. • Q2 2020 increase of $1.3 million driven by the impact of COVID-19 and the sustained instability of the oil and gas indust
Slide 20: Net Charge-Offs
The Bank Built or Business NET CHARGE-OFFS 20 • CHIEF CREDIT OFFICER WITH 40 YEARS OF EXPERIENCE Seasoned Regional Credit Officers located in Houston and Beaumont • CENTRALIZED UNDERWRITING, TIERED APPROVAL REUIREMENT BASED ON AGGREGATED REALTIONSHIP SIZE Officer credit authority, credit executive c
Slide 21: Nonperforming Assets
The Bank Built or Business NONPERFORMING ASSETS 21 • CHIEF CREDIT OFFICER WITH 40 YEARS OF EXPERIENCE Seasoned Regional Credit Officers located in Houston and Beaumont • CENTRALIZED UNDERWRITING, TIERED APPROVAL REUIREMENT BASED ON AGGREGATED REALTIONSHIP SIZE Officer credit authority, credit execut
Slide 22: Revenue and Efficiency
The Bank Built or Business REVENUE AND EFFICIENCY 22 REVENUE • Net interest margin (NIM) remained strong, impacted by lower interest rates and lower yielding PPP loans • Average loan yield (excluding PPP loans) of 4.75% for Q2 2020 • • Average loan yield on PPP loans of 2.28% • Cost of interest bear
Slide 23: CommunityBank of Texas: Here to Serve
23 At CommunityBank of Texas, we’re committed to building strong honest relationships. We strive to keep our clients’ and partners’ needs at the forefront of everything we do. And we measure our success by the success we help create for them. OUR VISION Here to Serve. OUR POSITIONING To experienced
Slide 24: Appendix
APPENDIX
Slide 25: Non-GAAP Reconciliations
25NON-GAAP RECONCILIATIONS Our management uses certain non-GAAP financial measures to evaluate performance. We have included in this presentation information related these non-GAAP financial measures for the applicable periods presented. The following tables reconcile, as of the dates set forth belo
Slide 26: Non-GAAP Reconciliations (Continued)
26 NON-GAAP RECONCILIATIONS (Continued) (000) 12/31/2019 Total Shareholders' Equity $ 537,356 $ 536,874 $ 535,721 Goodwill (80,950) (80,950) (80,950) Other Intangibles (4,496) (4,700) (4,938) Tangible Equity $ 451,910 $ 451,224 $ 449,833 Total Assets 3,901,725 3,425,650 3,478,544 Goodwill (80,950) (