S-1

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TABLE OF CONTENTS
INDEX TO FINANCIAL STATEMENTS

As filed with the Securities and Exchange Commission on October 13, 2017

Registration No. 333-            

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

CBTX, INC.
(Exact Name of Registrant as Specified in Its Charter)

Texas
(State or Other Jurisdiction of
Incorporation or Organization) 6021
(Primary Standard Industrial
Classification No.) 20-8339782
(I.R.S. Employer
Identification No.)

9 Greenway Plaza, Suite 110
Houston, Texas 77046
(713) 210-7600
(Address, Including Zip Code, of Registrant's Principal Executive Offices)

Robert R. Franklin, Jr.
Chairman, President and Chief Executive Officer
9 Greenway Plaza, Suite 110
Houston, Texas 77046
(713) 210-7600
(Name, Address and Telephone Number, Including Area Code, of Agent For Service)

Copies to:
Justin M. Long, Esq. Michael G. Keeley, Esq. Norton Rose Fulbright US LLP 98 San Jacinto Blvd., Suite 1100 Austin, TX 78701 (512) 474-5201 (512) 536-4598 (facsimile)	Frank M. Conner III, Esq. Michael P. Reed, Esq. Christopher J. DeCresce, Esq. Covington & Burling LLP One CityCenter 850 Tenth Street, NW Washington, DC 20001 (202) 662-6000 (202) 662-6291 (facsimile)

Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.

           If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.    o

           If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

           If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

           If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

           Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o Accelerated filer o Non-accelerated filer ý
(Do not check if a
smaller reporting company) Smaller reporting company o Emerging growth company ý

           If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.    ý

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered	Proposed Maximum Aggregate Offering Price(1)(2)	Amount of Registration Fee
Common Stock, $0.01 par value per share	$50,000,000	$6,225

(1)

Includes the aggregate offering price of additional shares of common stock that the underwriters have the option to purchase from the Registrant in this offering.

(2)

Estimated solely for purposes of calculating the registration fee in accordance with Rule 457(o) under the Securities Act of 1933, as amended. This amount represents the proposed maximum aggregate offering price of the securities registered hereunder to be sold by the Registrant.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file an amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to completion, dated October 13, 2017

PRELIMINARY PROSPECTUS

            Shares

CBTX, Inc.

Common Stock

        This prospectus relates to the initial public offering of CBTX, Inc.'s common stock. We are the bank holding company for CommunityBank of Texas, N.A., with operations in Houston and Beaumont, Texas. We are offering            shares of our common stock.

        Prior to this offering there has been no established public market for our common stock. We currently estimate that the public offering price of our common stock will be between $            and $            per share. We have applied to list our common stock on the Nasdaq Global Select Market under the symbol "CBTX."

Investing in our common stock involves a high degree of risk. See "Risk Factors" beginning on page 17.

We are an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, and are subject to reduced public company reporting requirements. See "Implications of Being an Emerging Growth Company."

	Per share	Total
Initial public offering price	$	$
Underwriting discounts(1)	$	$
Proceeds, before expenses, to us	$	$

(1)

See "Underwriting" for additional information regarding underwriting discounts and certain expenses payable to the underwriters by us.

        We have granted the underwriters an option to purchase up to an additional          shares of our common stock at the initial public offering price, less underwriting discounts, within 30 days from the date of this prospectus.

Neither the Securities and Exchange Commission, nor any other state securities commission nor any other regulatory authority has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

Our common stock is not a deposit or savings account. Our common stock is not insured by the Federal Deposit Insurance Corporation or any other governmental agency or instrumentality.

        The underwriters expect to deliver the shares of our common stock to purchasers on or about                        , 2017, subject to customary closing conditions.

Stephens Inc.	Keefe, Bruyette & Woods
	A Stifel Company
Sandler O'Neill + Partners, L.P.

The date of this prospectus is                            , 2017

TABLE OF CONTENTS

	Page
About this Prospectus		ii
Market and Industry Data		ii
Implications of Being an Emerging Growth Company		iii
Prospectus Summary		1
The Offering		11
Selected Historical Consolidated Financial Data		13
Non-GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures		15
Risk Factors		17
Cautionary Note Regarding Forward-Looking Statements		51
Use of Proceeds		53
Dividend Policy		54
Capitalization		56
Dilution		58
Price Range of Our Common Stock		60
Business		61
Management's Discussion and Analysis of Financial Condition and Results of Operations		82
Management		121
Executive Compensation		133
Security Ownership of Beneficial Owners and Management		145
Certain Relationships and Related Persons Transactions		147
Description of Capital Stock		149
Shares Eligible for Future Sale		155
Supervision and Regulation		157
Certain Material U.S. Federal Income Tax Consequences for Non-U.S. Holders of Common Stock		171
Underwriting		175
Legal Matters		180
Experts		180
Where You Can Find More Information		180
Index to Financial Statements		F-1

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ABOUT THIS PROSPECTUS

        You should rely only on the information contained in this prospectus and any free writing prospectus prepared by us or on our behalf that we have referred you to. We and the underwriters have not authorized anyone to provide you with additional or different information. If anyone provides you with additional, different or inconsistent information, you should not rely on it. We and the underwriters take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the shares offered hereby, and only under circumstances and in jurisdictions where it is lawful to do so. We are not making an offer of these securities in any state, country or other jurisdiction where the offer is not permitted. You should not assume that the information in this prospectus or any free writing prospectus is accurate as of any date other than the date of the applicable document regardless of its time of delivery or the time of any sales of our common stock. Our business, financial condition, results of operations and cash flows may have changed since the date of the applicable document.

        In this prospectus, unless otherwise indicated or the context otherwise requires, all references in this prospectus to "we," "our," "us," "ourselves," and "the Company" refer to CBTX, Inc., a Texas corporation, and its consolidated subsidiaries. All references in this prospectus to "CommunityBank of Texas" or "the Bank" refer to CommunityBank of Texas, N.A., our wholly-owned bank subsidiary. Additionally, references in this prospectus to "Houston" refer to the Houston-The Woodlands-Sugar Land Metropolitan Statistical Area, or MSA, and surrounding counties. References in this prospectus to "Beaumont" refer to the Beaumont-Port Arthur MSA and surrounding counties.

        This prospectus describes the specific details regarding this offering and the terms and conditions of our common stock being offered hereby and the risks of investing in our common stock. For additional information, please see the section entitled "Where You Can Find More Information."

        You should not interpret the contents of this prospectus to be legal, business, investment or tax advice. You should consult with your own advisors for that type of advice and consult with them about the legal, tax, business, financial and other issues that you should consider before investing in our common stock.

        Unless otherwise stated, all information in this prospectus gives effect to a 2-for-1 stock split, whereby each shareholder of our common stock received one additional share of common stock for each share owned as of the record date of September 30, 2017, in the form of a stock dividend that was distributed on October 13, 2017. The effect of the stock dividend on outstanding shares and per share figures has been retroactively applied to all periods presented in this prospectus.

        Unless otherwise stated, all information in this prospectus assumes that the underwriters have not exercised their option to purchase additional shares of our common stock.

MARKET AND INDUSTRY DATA

        This prospectus includes industry and trade association data, forecasts and information that we have prepared based, in part, upon data, forecasts and information obtained from independent trade associations, industry publications and surveys, government agencies and other independent information publicly available to us. Statements as to our market position are based on market data currently available to us. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable. Although we believe these sources are reliable, we have not independently verified the information. Some data is also based on our good faith estimates, which are derived from management's knowledge of the industry and independent sources. We believe our internal research is reliable, even though such research has not been verified by any independent sources. While we are not aware of any misstatements regarding our industry data presented herein, our estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under the heading "Risk Factors" in this prospectus. Trademarks used in this prospectus are the property of their respective owners, although for presentational convenience we may not use the ® or the ™ symbols to identify such trademarks.

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IMPLICATIONS OF BEING AN EMERGING GROWTH COMPANY

        We are an "emerging growth company" as defined in the Jumpstart our Business Startups Act of 2012, or the JOBS Act. For as long as we are an emerging growth company, unlike other public companies that are not emerging growth companies under the JOBS Act, we are not required to:

•

provide an auditor's attestation report on management's assessment of the effectiveness of our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act;

•

provide more than two years of audited financial statements and related management's discussion and analysis of financial condition and results of operations;

•

comply with any new requirements adopted by the Public Accounting Oversight Board, or the PCAOB, requiring mandatory audit firm rotation or a supplement to the auditor's report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer;

•

provide certain disclosure regarding executive compensation required of larger public companies or hold shareholder advisory votes on executive compensation as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act; or

•

obtain shareholder approval of any golden parachute payments not previously approved.

        We will cease to be an "emerging growth company" upon the earliest of:

•

the last day of the fiscal year in which we have $1.07 billion or more in total annual gross revenues;

•

the date on which we become a "large accelerated filer" (the fiscal year end on which the total market value of our common equity securities held by non-affiliates is $700 million or more as of June 30);

•

the date on which we issue more than $1.00 billion of non-convertible debt over a three-year period; or

•

the last day of the fiscal year following the fifth anniversary of our initial public offering.

        We have elected to adopt the reduced disclosure requirements above for purposes of the registration statement of which this prospectus is a part. In addition, we expect to take advantage of certain of the reduced reporting and other requirements of the JOBS Act with respect to the periodic reports we will file with the Securities and Exchange Commission, or the SEC, and proxy statements that we use to solicit proxies from our shareholders.

        In addition, Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, or the Securities Act, for complying with new or revised accounting standards, but we have irrevocably opted out of the extended transition period, and as a result, we will adopt new or revised accounting standards on the relevant dates in which adoption of such standards is required for other public companies.

iii

PROSPECTUS SUMMARY

This summary highlights selected information contained elsewhere in this prospectus and may not contain all of the information that you should consider before investing in our common stock. You should carefully read the entire prospectus, including the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," together with our consolidated financial statements and the related notes that are included herein, before making an investment decision. Additionally, references in this prospectus to "Houston" refer to the Houston-The Woodlands-Sugar Land Metropolitan Statistical Area, or MSA, and surrounding counties. References in this prospectus to "Beaumont" refer to the Beaumont-Port Arthur MSA and surrounding counties. Unless otherwise stated, all information in this prospectus gives effect to a 2-for-1 stock split, whereby each shareholder of our common stock received one additional share of common stock for each share owned as of the record date of September 30, 2017, in the form of a stock dividend that was distributed on October 13, 2017. The effect of the stock dividend on outstanding shares and per share figures has been retroactively applied to all periods presented in this prospectus.

Our Company

        We are a bank holding company that operates through our wholly-owned subsidiary, CommunityBank of Texas, in Houston and Beaumont, Texas. We focus on providing commercial banking solutions to local small and mid-sized businesses and professionals in our markets. Our market expertise, coupled with a deep understanding of our customers' needs, allows us to deliver tailored financial products and services. As of June 30, 2017, we had total assets of $2.9 billion, total loans of $2.2 billion, total deposits of $2.5 billion and total shareholders' equity of $372.0 million.

        Our vision and focus is to continue to build a premier business bank that combines the sophisticated banking products of a large financial institution with the personalized service of a community bank. Our management team and board of directors, led by our Chairman, President and Chief Executive Officer, Robert R. Franklin, Jr., have extensive commercial banking experience as well as long-term relationships and deep ties in the markets we serve. We believe that our future growth and profitability will be predicated on the successful execution of our relationship-driven business model and our ongoing commitment to understanding and meeting the needs of our customers. In addition, we expect that recent investments in our infrastructure and the hiring of additional experienced banking professionals will facilitate growth and increased profitability. While we are primarily focused on organic growth, we plan to pursue strategic acquisitions as an additional means of increasing scale, profitability and shareholder value.

Our History and Growth

        We are a Texas corporation that was incorporated on January 26, 2007. We were originally founded by a group of Beaumont business and community leaders, including Pat Parsons as our Chief Executive Officer. We began operations in 2007 with the acquisition of CountyBank, N.A., an institution with $130 million in assets with operations in Beaumont and surrounding counties. Mr. Parsons and our other founders envisioned a community bank in Beaumont committed to creating long-term relationships with small and mid-sized businesses and professionals. Our management and board had a long-term strategic vision to expand the Bank's presence west into Houston through strategic acquisitions, hiring experienced banking professionals, and focused de novo branching.

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        Today, our company reflects the successful execution of our vision, as we have built and expanded into the attractive Houston market and have added experience and depth to our leadership team. Our merger and acquisition and expansion history includes the following:

Franchise Expansion and Market Extension

        The following illustrations reflect the transformation of our loan portfolio from year-end 2009 through June 30, 2017 and highlight our successful expansion into the Houston market.

        We have utilized our strategic mergers to add valuable members to our team, including to our executive management team. Our current Chairman, President and Chief Executive Officer, Robert R. Franklin, Jr., Chief Financial Officer, Robert "Ted" Pigott, Jr., Chief Credit Officer, Joe F. West and Chief Risk Officer, James L. Sturgeon, joined us through our merger of equals with VB Texas, Inc. In addition, we believe we have been successful in our mergers in retaining key personnel throughout our organization, including in key areas such as lending, human resources and compliance.

        In addition to mergers and acquisitions, we have strategically added to our branch footprint by opening de novo locations around teams of seasoned lenders with a realistic plan to achieve branch profitability in a short period of time. We intend to continue to seek out experienced lenders and lending teams around whom we will build necessary infrastructure, including de novo branches if appropriate, to facilitate such lenders' success and integration into our franchise.

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        We are focused on controlled, profitable growth. Our track record demonstrates this ability, as illustrated in the following chart. Since December 31, 2009, our total assets increased from approximately $1.3 billion to approximately $2.9 billion as of June 30, 2017, and our return on average assets improved from 0.16% for the year ended December 31, 2009 to 1.08% for the six months ended June 30, 2017. We believe that there are significant ongoing growth opportunities for us in our markets.

Assets and Earnings Growth
(Dollars in millions)

Our Competitive Strengths

        We believe our competitive strengths include the following:

        Deep and Experienced Management Team.    Our Chairman, President and Chief Executive Officer, Robert R. Franklin, Jr., our Vice Chairman Pat Parsons, and our Chief Financial Officer, Robert "Ted" Pigott, Jr., have more than 115 years of combined experience acquiring, growing, operating and selling banks within our markets. Certain biographical information for our selected senior executives is as follows:

        Robert R. Franklin, Jr., Chairman, President and Chief Executive Officer.    Mr. Franklin began his 36-year Houston banking career working for a small community bank in Houston upon graduation from the University of Texas. He then moved to a large, regional bank before gravitating back to his primary interest of community banking. He became President of American Bank in 1988 where he served until the bank was sold to Whitney Holding Corp. in early 2001. Mr. Franklin and his team then joined Horizon Capital Bank where Mr. Franklin raised sufficient capital to match the bank's existing capital and took the position of President. He served as President until the bank was sold to Cullen/Frost Bankers, Inc. in 2005. Mr. Franklin then started VB Texas, Inc. in November of 2006 as Chairman, President and Chief Executive Officer, serving until a "merger of equals" between VB Texas, Inc. and CBTX, Inc. in 2013, where he currently serves as Chairman, President and Chief Executive Officer.

        Pat Parsons, Vice Chairman of the Board.    Mr. Parsons has 44 years of banking experience and served as the founding Chairman and Chief Executive Officer of CommunityBank of Texas, and the President and Chief Executive Officer of CBTX, Inc. for seven years. He began his banking career in 1973 with First City National Bank of Houston as a Management Trainee and has served in various capacities at numerous commercial banks within our market areas, including Community Bank & Trust, SSB, as President and Chief Operating Officer. From 1992 to 2004, Mr. Parsons oversaw Community Bank & Trust, SSB's expansion, through organic growth and five acquisitions, to over $1.1 billion in assets and a network spanning 15 Southeast Texas communities. In 2004, Community Bank & Trust, SSB was acquired by Texas Regional Bancshares, Inc.

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        Robert "Ted" Pigott, Jr., Chief Financial Officer.    Mr. Pigott has over 35 years of commercial banking experience, having served as Chief Financial Officer for both privately held and publicly-traded Texas banking institutions in the Houston, Dallas/Fort Worth, Austin and McAllen markets, including Texas Regional Bancshares, Inc. Mr. Pigott joined VB Texas, Inc. as Chief Financial Officer in 2010 and became our Chief Financial Officer in 2013 following the merger of CBTX, Inc. and VB Texas, Inc. He also spent six years in public accounting with Arthur Andersen & Co., a national accounting firm.

        The Bank is managed by an executive committee consisting of ten highly qualified and experienced bankers with an average of 38 years of banking experience. The members of the executive committee oversee various aspects of our organization including lending, credit administration, treasury services, finance, operations, information technology, regulatory compliance and risk management. Additionally, we have four regional CEOs with an average of 27 years of banking experience who oversee loan and deposit production and performance in their respective markets. Our team has a demonstrated track record of achieving profitable growth, maintaining a strong credit culture, implementing a relationship-driven approach to banking and successfully executing acquisitions.

        We believe our continued growth and success will benefit from a commitment to developing our next generation of bankers. Our commitment to talent development includes a mentorship program, which provides our junior bankers with an opportunity to take a hands-on approach to interacting with our customers and learning directly from our successful senior banking team members. We also provide formal in-house training for our junior bankers, which enhances their professional experience and provides for greater organic growth opportunities and employee retention. We believe that our commitment to the development of talent leads to long-term continuity and the recruitment and retention of high quality bankers in our markets. These aspects lay the foundation for the long-term growth potential of the Bank.

        Strength of Our Operating Markets.    As further described in "Our Market Areas" below, we believe that our two primary markets provide us with an advantage over other community banks in Texas in terms of growing our loans and deposits, as well as increasing profitability and building shareholder value. Houston is the fastest growing major MSA in the country measured by population growth. With an estimated population of approximately 7.0 million people living in a diverse economy with a robust job market, we believe it is one of the most dynamic banking markets in the country. Our management, team of lenders and well positioned branch network should afford us the ability to capitalize on the projected growth in the Houston MSA.

        Our team's history of operating successful banking institutions in the Beaumont market spans decades, and we have a strong reputation for delivering superior service in the market. Our deep ties to the community have led to a dominant market share, and we are ranked number one in deposits in the Beaumont-Port Arthur MSA, with over 20% market share as of June 30, 2017. Our branches in the Beaumont-Port Arthur MSA provide a stable, low-cost core funding base of approximately $1.1 billion in deposits.

        True Relationship-Based Community Banking.    We believe that banking is a profession, and we expect our bankers to be more than just salesmen. With an active knowledge of our markets and skilled analytical capabilities, our bankers serve as financial partners to our customers, helping them to grow their businesses. We strive to provide complete and comprehensive loan and deposit options to our customers, and we believe that the most effective way to win business is to develop relationships with our customers by spending time with them at their places of business. Our bankers make these customer visits a priority, and we take a team-based approach by including treasury services professionals and senior management on many customer meetings. Our bankers strive to gain a comprehensive understanding of how our customers' businesses operate, which helps us craft financial solutions to fulfill their needs. We are active and diligent in this effort to organically source business, as we believe it allows us to be more selective in our approach to lending. As a testament to our

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relationship approach to banking, as of June 30, 2017, approximately 83% of our loan customers also have deposit relationships with us.

        Growing Core Deposit Franchise.    Noninterest-bearing deposits represented 40.96% of our total deposits as of June 30, 2017, and our cost of deposits was 0.30% for the first six months of 2017. Developing low-cost deposit relationships with our business customers is a key component of our growth strategy. Our strong deposit base serves as a major driver of our operating results, as we utilize our core deposits primarily to fund our loan growth. We believe that our relationship-based approach to banking, combined with our ability to offer a full suite of sophisticated treasury services, enhances our ability to source low-cost, core deposits to fund organic growth.

        Maintain Strong Asset Quality.    Preserving sound credit underwriting standards as we grow our loan portfolio will continue to be integral to our strategy. We place a considerable emphasis on effective risk management as an essential component of our organizational culture. We use our risk management infrastructure to monitor existing operations, support decision-making and improve the success rate of new initiatives. To maintain strong asset quality, we employ centralized and thorough loan underwriting, a diversified loan portfolio and highly experienced credit officers and credit analysts, including two Regional Credit Officers, one for each of our primary markets. We believe the long-term success of our business hinges on maintaining sound credit quality. Our nonperforming assets to total assets ratio was 0.52% as of December 31, 2015, 0.27% as of December 31, 2016 and 0.33% as of June 30, 2017.

        Proven Ability to Acquire and Integrate Banks.    We have completed five whole-bank acquisitions and, as a result, we believe we have developed an experienced and disciplined acquisition and integration approach capable of identifying candidates, conducting thorough due diligence, determining financial attractiveness and integrating the acquired institution. We believe that we have built a corporate infrastructure capable of supporting additional continued growth both organically and through strategic acquisitions. Our acquisition experience and our reputation as a successful acquirer should position us well to capitalize on additional opportunities in the future.

Our Banking Strategy

        Our executive management team and board of directors have focused on building a premier banking franchise that is capable of yielding sustainable growth and long-term profitability that enhances value for our shareholders, which we intend to accomplish through:

        Strong Credit Culture.    Our approach to credit begins with a thorough understanding of our customers' businesses. When underwriting a potential lending opportunity, we analyze our customer's balance sheet with a focus on liquidity, and the income statement with emphasis on cash flow and the cash cycle of the business. Additionally, we receive personal guarantees from the principal or principals on the majority of our commercial credits. All credit relationships greater than $1.0 million must be approved by our internal loan committee, and all credit relationships greater than $2.5 million must be approved by the Bank's active Directors Loan Committee, which meets twice per week.

        Our credit officers are involved in the underwriting structuring and pricing process at inception of the lending opportunity and remain involved through approval. We manage risk in the portfolio with prudent underwriting and proactive credit administration, utilizing a Regional Credit Officer and credit analysts located in each of our two primary markets. Furthermore, we believe our individual lending authority is low relative to our peers. This combined with the Bank's active Directors Loan Committee allows us to maintain centralized underwriting, which we believe gives us consistency across our loan portfolio and allows us to be responsive to our customers' timing needs.

        Diversified Loan Portfolio.    Our focus on lending to small to medium-sized businesses and professionals in our market areas results in a diverse loan portfolio comprised primarily of core relationships, where our bankers support clients through tailored financial solutions. Additionally, we

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carefully monitor exposure to certain asset classes to minimize the impact of a downturn in the value of such assets. Finally, we are currently expanding our commercial and industrial, medical and SBA lending products as we see an attractive opportunity and believe this will further diversify our loan portfolio across lending verticals.

        Comprehensive Suite of Financial Solutions.    We provide a comprehensive suite of financial solutions that competes with large, national competitors, but with the personalized attention and nimbleness of a relationship-focused community bank. We offer a full range of banking products, including commercial and industrial loans (including equipment loans and working capital lines of credit), commercial real estate loans (including owner-occupied and investor real estate loans), construction and development loans, SBA loans, treasury services and commercial deposits. Other banking products we offer include traditional retail deposits, mortgage origination and online banking. We have recently expanded our treasury services platform by hiring additional personnel in order to more effectively provide treasury services solutions to our customers. We believe our clients prefer to obtain their banking services from local institutions able to provide the sophistication of larger banks, but with a local and agile decision-making process, personal connections, and an interest in investing in the local economy and community. This also allows us to gather core, low-cost deposit relationships, high credit quality loans and fee income generated by value-added services.

        Organic Growth.    We aim to continuously enhance our customer base, increase loans and deposits and expand our overall market share, and believe that Houston specifically has significant organic growth opportunities. Through the successful implementation of our relationship-driven, community banking strategy, a significant portion of our organic growth has been through referral business from our current customers and professionals in our markets including attorneys, accountants and other professional service providers. We plan to continue our organic growth by leveraging the extensive experience of our board of directors, executive management team and senior bankers, all of which give us market insight and familiarity with our customers. By understanding our customers' businesses, appropriately structuring our loans, and applying a solution-minded approach and attitude to our customers' needs, we believe that we will continue to attract customers who value our approach of being their financial partners. Our team of seasoned bankers has been, and will continue to be, an important driver of our organic growth by further developing banking relationships with current and potential customers.

        We have a track record of hiring experienced bankers to enhance our organic growth, and sourcing and hiring talent will continue to be a core focus for us. We believe that this initial public offering will enhance our ability to attract and retain this talent. We have identified areas of opportunity within certain lending verticals and plan to hire additional bankers to focus on these efforts. While we currently offer commercial and industrial, medical and SBA lending products, we have recently added bankers focused on these products in order to expand in these verticals.

        Strategic Acquisitions.    We intend to continue to supplement our organic growth through strategic acquisitions, and we believe obtaining a publicly traded common stock will improve our ability to compete for these opportunities. Many small to medium-sized banking organizations face significant scale and operational challenges, regulatory pressure, management succession issues and shareholder liquidity needs. Although we have no current plans, arrangements or understandings to make any material acquisitions, we expect our markets will afford us opportunities to identify and execute acquisitions designed to strengthen our franchise and increase shareholder value. In addition to meeting our financial thresholds, we place critical importance on the target contributing meaningful strategic enhancements, including talented bankers that will be additive to our franchise, a sound credit culture and a complementary branch footprint.

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        Increase Operational Efficiency.    We are focused on improving our operational efficiency and expect these efforts to drive future profitability and increase shareholder value. We have upgraded our operating capabilities and created a platform for continued efficiencies in the areas of risk management, technology, data processing, regulatory compliance and human resources that is capable of handling our continued growth, which we believe will help us to achieve increased scale without incurring significant incremental noninterest expense. In addition, we have streamlined our branch footprint by closing three smaller branches and utilizing our central Houston location. This centralized corporate lending structure combined with our robust treasury services, which has led to approximately 83% of our loan customers having deposit relationships with us as of June 30, 2017, provides us with a more efficient path to profitable growth. Our efficiency ratio has improved from 67.8% for the year ended December 31, 2012, to 62.7% for the year ended December 31, 2016, and was 62.8% for the six months ended June 30, 2017.

        Our net income increased from $11.4 million in 2012 to $27.2 million in 2016, for a compound annual growth rate, or CAGR, of 24.2%, and our return on average assets improved from 0.74% in 2012 to 0.94% in 2016. For the six months ended June 30, 2017, our net income was $15.6 million compared to $12.9 million for the six months ended June 30, 2016, and our return on average assets improved to 1.08% from 0.92% over the same time periods, respectively.

        In addition to continued improvements in our operational efficiencies, we expect our profitability to increase in a rising interest rate environment due to our asset-sensitive balance sheet, which has resulted from our focus on commercial and industrial lending and the quality of our deposit franchise. As of June 30, 2017, 58.3% of our loans had a variable interest rate, and we believe we are well positioned to experience net interest margin expansion in a rising rate environment.

Our Market Areas

        We classify our branch footprint in two primary market areas, Houston and Beaumont. We have 18 branches located in Houston, and our Beaumont presence, concentrated in Southeast Texas, includes 16 branches.

Houston Metropolitan Area

        The Houston MSA is comprised of nine counties spanning over nine thousand square miles. The Houston MSA has the fifth largest population nationwide based on estimated 2018 population statistics provided by Nielsen. Houston is poised for continued robust growth, and ranks first for projected five-year population growth through 2023 among the 25 largest MSAs in the United States, according to Nielsen. According to the Greater Houston Partnership, Houston's 2015 gross domestic product, or GDP, of $503 billion ranks it as the fourth largest economy in the United States and would rank it as the 26^th largest economy for a country in the world.

		Population (millions)
Top 5 Growth Growth Rank	Top 5 Large MSAs by Population Growth	2018 Estimated		2023 Projected		Population % D
1	Houston-The Woodlands-Sugar Land, TX		7.0		7.6		8.3	%
2	Orlando-Kissimmee-Sanford, FL		2.5		2.7		8.2	%
3	San Antonio-New Braunfels, TX		2.5		2.7		8.1	%
4	Dallas-Fort Worth-Arlington, TX		7.4		8.0		7.7	%
5	Denver-Aurora-Lakewood, CO		2.9		3.2		7.7	%
	Texas		28.5		30.6		7.1	%
	Nationwide		326.5		337.9		3.5	%

        We believe that our 18 branches are strategically located throughout Houston, which will help drive loan growth and improve deposit market share as we execute our strategy.

7

        Attractive Business Climate.    The favorable business environment in Texas includes a large and growing workforce, low business tax, no personal income tax and a reasonable cost of housing, which has resulted in business relocation to the state, and to Houston, in particular. Houston is the home of 20 Fortune 500 companies.

        Sizable Workforce and Diverse Job Market.    According to the Greater Houston Partnership, there are approximately three million jobs in Houston, which is greater than 35 states combined. While energy companies contribute significantly to Houston's GDP, the economy in Houston has become more diverse over the last three decades and several industries contribute to the economy's growth and diversification. Major industries for employment include energy, healthcare, transportation, manufacturing, education and finance. The Texas Medical Center is the world's largest medical complex, with industry leading specialties in research and treatment for cancer and cardiovascular disease. Growth of the medical center remains robust and there are currently approximately $3 billion in medical construction projects underway.

        Strategic Location.    Houston's location in the South Central U.S. along the Gulf of Mexico provides businesses and individuals with unmatched access to all modes of transportation and a centralized location with efficient access to other areas of the country. In 2015, the Port of Houston ranked first in both export and import tonnage among all U.S. ports, and second in total tonnage, according to the Greater Houston Partnership. Houston also boasts two international airports which offered non-stop flights to 124 domestic destinations and 74 international destinations in 2016. In 2015, the Houston Airport System processed over 441 metric tons of air freight and served over 55 million travelers, according to the Greater Houston Partnership.

Beaumont Market Area

        Our deep ties to the Beaumont area and long history of providing tailored financial products and services have led us to become the market share leader in the Beaumont-Port Arthur MSA in terms of deposits, with over 20% market share as of June 30, 2017. Our branches in the Beaumont-Port Arthur MSA, which is located adjacent to Houston, approximately 85 miles east of downtown Houston, provide a stable, low-cost core funding base of approximately $1.1 billion in deposits. Our Beaumont footprint includes 12 branches located in Beaumont and four located in its surrounding areas.

        The cities of Beaumont, Port Arthur and Orange are all located in the Beaumont-Port Arthur MSA and form what is known as the "Golden Triangle," a major industrial and petrochemical complex located on the Gulf of Mexico, according to Forbes. Other leading industries in the market include transportation, defense and education. Petrochemical production and processing has grown significantly along the Gulf of Mexico in recent years, as six of the eight new U.S. ethylene projects under construction are being built on the Texas Gulf Coast, according to the Beaumont Enterprise. Beaumont has benefitted from the growth in the industry, as ExxonMobil recently announced the expansion of its Beaumont polyethylene plant by 65%, which is expected to add 1,400 jobs to the local economy.

Recent Developments

Effects of Hurricane Harvey

        In August 2017, Hurricane Harvey, a Category 4 hurricane, caused extensive and costly damage across Southeast Texas. The Houston and Beaumont areas received over 40 inches of rainfall, which resulted in catastrophic flooding and unprecedented damage to residences and businesses. We worked diligently throughout Hurricane Harvey and during its aftermath to ensure the safety of our employees and customers, as well as to continue to provide the financial services on which our customers greatly depend.

8

        The operational impact to our Houston branches and infrastructure was minor. After Hurricane Harvey made landfall in Houston, we operated limited services in Houston from August 28, 2017 until August 31, 2017, which was largely due to the inability of our employees and customers to use the roadways or public transportation. Despite widespread flooding in Houston, none of our Houston branches flooded and all but one of our branches were open and operating at full capacity as of September 1, 2017. The remaining Houston branch reopened on September 6, 2017, after its electricity was restored.

        Likewise, the operational impact to our Beaumont branches and infrastructure was minor and none of our Beaumont branches flooded. After Hurricane Harvey shifted course away from Houston and toward Beaumont, we operated limited services in Beaumont from August 29, 2017 until September 4, 2017. In Beaumont, all but one of our branches were open and operating at full capacity as of September 5, 2017. The remaining Beaumont branch reopened on September 11, 2017, after its utilities were restored.

        Furthermore, our technology environment, bolstered by our business continuity plan, was fully operational and supported our customers and employees across all of our branches during Hurricane Harvey. Our call center, wire transfer, ATM and treasury services continued to provide telephone and electronic access for customers during the storm. During Hurricane Harvey, our business continuity plan worked as intended and is being reviewed for continued updates and improvements based on the experience.

        We have begun to evaluate Hurricane Harvey's impact on our customers and our business, including our properties, assets and loan portfolios. Some of our customers were, and continue to be, adversely impacted by Hurricane Harvey. As part of the recovery process, we have contacted our customers to assist with their needs, as well as waived or refunded (i) late fees for loans with payments due from August 25, 2017 through September 10, 2017, and (ii) overdraft and ATM fees incurred from August 25, 2017 through September 10, 2017.

        We have also engaged directly with customers through telephone calls to evaluate the impact of Hurricane Harvey on our consumer, real estate and business loan exposures. As of September 25, 2017, our real estate loan exposures in Houston and Beaumont consist primarily of commercial properties. Based on initial conversations with customers, we have determined that the majority of our significant commercial real estate customers are characterized as low risk (i.e., sustained minimal property damage). As of October 6, 2017, we do not anticipate that Hurricane Harvey will result in significant losses and as of October 6, 2017, only one loan relationship in the principal amount of approximately $400,000 appears to have significant uninsured damage and is being monitored by our loan officers and our Senior Credit Officer. Additionally, as of October 6, 2017, we have granted temporary payment deferrals on loans with an aggregate principal amount of approximately $48.6 million, largely to assist customers whose operations were impacted by Hurricane Harvey.

        While we do not anticipate that Hurricane Harvey will have significant long-term effects on our business, financial condition or operations, we are unable to predict with certainty the short- and long-term impact that Hurricane Harvey may have on the markets in which we operate, including the impact on our customers and our loan and deposit activities and credit exposures. We will continue to monitor the residual effects of Hurricane Harvey on our business and customers.

Amendment and Restatement of Certificate of Formation

        On September 19, 2017, we amended and restated our certificate of formation to, among other things, change our name from CBFH, Inc. to CBTX, Inc., increase the number of authorized common and preferred shares and reduce the par value of our common and preferred shares to $0.01 per share. For a detailed description of our amended and restated certificate of formation, see "Description of Capital Stock."

9

Second Amendment and Restatement of Bylaws

        On October 10, 2017, we amended and restated our bylaws to provide that our board of directors will be divided into three classes commencing with our annual shareholders' meeting to be held in 2018, with members of each class serving a three-year term upon completion of a phase-in period. For a detailed description of the classification of our board of directors, see "Management" and "Description of Capital Stock—Classified Board of Directors."

Stock Split

        On September 20, 2017, our board of directors approved a 2-for-1 stock split, whereby each shareholder of our common stock received one additional share of common stock for each share owned as of the record date of September 30, 2017 in the form of a stock dividend that was distributed on October 13, 2017. The effect of the stock dividend has been retroactively applied to all periods presented in this prospectus.

Sale of Two Branches

        Huffman Branch.    On September 8, 2017, the Bank completed the sale of its branch located in Huffman, Texas, referred to as the Huffman Branch. Pursuant to a purchase and assumption agreement, the Bank sold certain assets associated with the Huffman Branch valued at approximately $1.4 million, other than loans, and the purchaser assumed approximately $15.3 million in deposits at the Huffman Branch. We believe that the sale of the Huffman Branch will reduce our noninterest expense going forward and we do not believe it will impact our liquidity.

        Deweyville Branch.    On September 14, 2017, we sold the real estate associated with our Deweyville, Texas branch, referred to as the Deweyville Branch, and we leased the facility back for approximately 120 days while we finalize the regulatory process for approval of closing this branch. We expect to complete the closing of the Deweyville Branch on December 18, 2017. The $4.7 million in deposits and $50,000 of loans at the Deweyville Branch will be transferred to one of our other nearby branch locations. We believe that the closure of the Deweyville Branch will reduce our noninterest expense going forward and we do not believe it will impact our liquidity.

        We do not believe that the sale of our Huffman and Deweyville branches represents any strategic shift in our operations.

Corporate Information

        Ours and the Bank's headquarters are located at 5999 Delaware Street, Beaumont, Texas 77706, and our telephone number is (409) 861-7200. The majority of our executives, including our Chairman, President and Chief Executive Officer, Robert R. Franklin, Jr., are located in our Houston office at 9 Greenway Plaza, Suite 110, Houston, Texas 77046, and the telephone number is (713) 210-7600. Our website is www.communitybankoftx.com. The information contained on or accessible from our website does not constitute a part of this prospectus and is not incorporated by reference herein.

10

THE OFFERING

Common stock offered by us	shares of our common stock, par value $0.01 per share (or            shares if the underwriters exercise in full their option to purchase          additional shares).
Underwriters' option to purchase additional shares	We have granted the underwriters an option to purchase up to an additional        shares within 30 days of the date of this prospectus.
Common stock to be outstanding after this offering	shares (or            shares if the underwriters exercise in full their option to purchase additional shares).
Use of proceeds	Assuming an initial public offering price of $            per share, which is the midpoint of the price range set forth on the cover page of this prospectus, we estimate that the net proceeds to us from this offering, after deducting estimated underwriting discounts but before payment of estimated offering expenses payable by us, will be approximately $            million (or approximately $            million if the underwriters exercise in full their option to purchase additional shares). We intend to use the net proceeds from this offering to support our organic growth and for general corporate purposes, including maintenance of our required regulatory capital, and potential future acquisition opportunities. See "Use of Proceeds" on page 53 of this prospectus.
Dividend policy	Holders of our common stock are only entitled to receive dividends when, as and if declared by our board of directors out of funds legally available for dividends. We currently expect to pay (when, as and if declared by our board of directors) regular quarterly cash dividends of $0.05 per share. Our ability to pay dividends to our shareholders in the future will depend on regulatory restrictions, liquidity and capital requirements, our earnings and financial condition, the general economic climate, contractual restrictions, our ability to service any equity or debt obligations senior to our common stock and other factors deemed relevant by our board of directors. For additional information, see "Dividend Policy" on page 54 of this prospectus.
Directed share program	The underwriters have reserved for sale at the initial public offering price up to            % of the shares of our common stock pursuant to this prospectus for sale to certain of our employees, executive officers, directors, business associates and related persons who have expressed an interest in purchasing our common stock in this offering. We do not know if these persons will choose to purchase all or any portion of the reserved shares, but any purchases they do make will reduce the number of shares available to the general public. See "Underwriting" on page 175 of this prospectus.

11

Nasdaq Global Select Market listing	We have applied to list our common stock on the Nasdaq Global Select Market under the trading symbol "CBTX."
Risk factors	Investing in our common stock involves certain risks. See "Risk Factors," beginning on page 17, for a discussion of factors that you should carefully consider before investing in our common stock.

        Except as otherwise indicated, all information in this prospectus:

•

gives effect to a 2-for-1 stock split, whereby each shareholder of our common stock received one additional share of common stock for each share owned as of the record date of September 30, 2017 in the form of a stock dividend that was distributed on October 13, 2017;

•

assumes no exercise by the underwriters of their option to purchase          additional shares of our common stock;

•

does not attribute to any director, executive officer or principal shareholder any purchase of shares of our common stock in the offering, including through the directed share program described in "Underwriting—Directed Share Program;"

•

excludes 295,314 shares of our common stock issuable upon the exercise of outstanding stock options with a weighted exercise price of $14.15 per share, as of June 30, 2017; and

•

assumes an initial public offering price of $            per share, which is the midpoint of the price range set forth on the cover page of this prospectus.

12

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

        You should read the following selected historical consolidated financial data in conjunction with our consolidated financial statements and related notes and the sections entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Capitalization" included elsewhere in this prospectus. The following tables set forth selected historical consolidated financial data (i) as of and for the six months ended June 30, 2017 and 2016 and (ii) as of and for the years ended December 31, 2016, 2015, 2014, 2013 and 2012. Selected financial data as of and for the years ended December 31, 2016 and 2015, have been derived from our audited financial statements included elsewhere in this prospectus. We have derived the selected financial data as of and for the years ended December 31, 2014, 2013 and 2012 from our audited financial statements not included in this prospectus. We have derived selected financial data as of June 30, 2016 from our unaudited financial statements not included in this prospectus. Selected financial data as of and for the six months ended June 30, 2017, has been derived from our unaudited financial statements included elsewhere in this prospectus and has not been audited but, in the opinion of our management, contain all adjustments (consisting of only normal or recurring adjustments) necessary to present fairly in all material respects our financial position and results of operations for the period in accordance with generally accepted accounting principles, or GAAP. Our historical results are not necessarily indicative of any future period. The performance, asset quality and capital ratios are unaudited and derived from our audited and unaudited financial statements as of and for the periods presented. Average balances have been calculated using daily averages. The information presented in the table below has been adjusted to give effect to a 2-for-1 stock split, whereby each shareholder of our common stock received one additional share of common stock for each share owned as of the record date of September 30, 2017, in the form of a stock dividend that was distributed on October 13, 2017. The effect of the stock split on outstanding share and per share figures has been retroactively applied to all periods presented.

	As of and for the Six Months Ended June 30,				As of and for the Years Ended December 31,
(Dollars in thousands, except share and per share data)	2017		2016		2016		2015		2014		2013		2012 (as restated)(7)
Balance Sheet Data:
Cash and cash equivalents	$	307,173	$	336,014	$	382,103	$	434,901	$	490,748	$	424,544	$	333,752
Securities		220,330		170,656		205,978		145,789		96,052		102,228		87,188
Total loans(1)		2,192,443		2,153,091		2,154,885		2,092,010		1,876,593		1,757,431		1,158,897
Allowance for loan losses		25,187		26,716		25,006		25,315		24,952		23,843		17,498
Goodwill and intangible assets, net		88,248		89,314		88,741		89,829		67,952		69,274		58,651
Total assets		2,940,877		2,872,687		2,951,522		2,882,625		2,628,587		2,450,865		1,711,467
Noninterest-bearing deposits		1,030,865		1,047,606		1,025,425		1,053,957		974,571		824,870		566,680
Interest-bearing deposits		1,485,919		1,420,990		1,515,335		1,429,409		1,294,482		1,290,357		900,861
Total deposits		2,516,784		2,468,596		2,540,760		2,483,366		2,269,053		2,115,227		1,467,541
Total shareholders' equity		371,964		347,316		357,637		344,313		329,252		311,139		222,901
Income Statement Data:
Interest income	$	56,724	$	54,245	$	109,951	$	105,525	$	96,458	$	80,049	$	64,391
Interest expense		4,366		3,983		8,405		7,654		6,371		6,414		5,707
Net interest income		52,358		50,262		101,546		97,871		90,087		73,635		58,684
Provision for loan losses		266		2,700		4,575		6,950		3,766		10,255		5,719
Net interest income after provision for loan losses		52,092		47,562		96,971		90,921		86,321		63,380		52,965
Noninterest income		6,974		7,798		15,749		14,967		13,356		11,716		10,265
Noninterest expense		37,286		36,834		73,502		70,961		66,359		56,508		46,772
Income before income tax expense		21,780		18,526		39,218		34,927		33,318		18,588		16,458
Income tax expense		6,213		5,656		12,010		10,791		10,476		5,685		5,017
Net income	$	15,567	$	12,870	$	27,208	$	24,136	$	22,842	$	12,903	$	11,441
Share and Per Share Data:
Earnings per share—Basic	$	0.71	$	0.58	$	1.23	$	1.07	$	1.01	$	0.69	$	0.73
Earnings per share—Diluted		0.70		0.58		1.22		1.06		1.00		0.68		0.73
Dividends per share		0.10		0.10		0.20		0.20		0.20		0.20		0.20
Book value per share(2)		16.86		15.88		16.21		15.44		14.61		13.80		14.31
Tangible book value per share(3)		12.86		11.80		12.19		11.41		11.60		10.73		10.55

13

	As of and for the Six Months Ended June 30,						As of and for the Years Ended December 31,
(Dollars in thousands, except share and per share data)	2017			2016			2016			2015			2014			2013			2012 (as restated)(7)
Weighted average common shares outstanding—Basic		22,062,210			22,166,844			22,048,724			22,462,176			22,529,778			18,783,146			15,592,950
Weighted average common shares outstanding—Diluted		22,148,736			22,312,750			22,235,056			22,675,046			22,764,994			19,019,064			15,592,950
Common shares outstanding at end of period		22,063,072			21,870,418			22,062,072			22,303,474			22,533,930			22,543,954			15,575,418
Performance Ratios:
Return on average assets(8)		1.08	%		0.92	%		0.94	%		0.85	%		0.90	%		0.65	%		0.74	%
Return on average shareholders' equity(8)		8.58	%		7.50	%		7.79	%		7.16	%		7.07	%		4.86	%		5.21	%
Net interest margin(4)		4.05	%		4.02	%		3.96	%		3.85	%		3.92	%		4.02	%		4.31	%
Noninterest expense to average assets(8)		2.58	%		2.62	%		2.55	%		2.49	%		2.61	%		2.83	%		3.02	%
Efficiency ratio(5)		62.84	%		63.44	%		62.66	%		62.89	%		64.15	%		66.21	%		67.83	%
Selected Ratios:
Loans to deposits		87.11	%		87.22	%		84.81	%		84.24	%		82.70	%		83.08	%		79.36	%
Noninterest-bearing deposits to total deposits		40.96	%		42.44	%		40.36	%		42.44	%		42.95	%		39.00	%		38.61	%
Cost of deposits		0.30	%		0.27	%		0.28	%		0.26	%		0.28	%		0.35	%		0.42	%
Credit Quality Ratios:
Nonperforming assets to total assets		0.33	%		0.48	%		0.27	%		0.52	%		0.93	%		0.65	%		0.94	%
Nonperforming loans to total loans		0.38	%		0.53	%		0.29	%		0.66	%		1.23	%		0.73	%		1.12	%
Allowance for loan losses to nonperforming loans		305.11	%		232.82	%		400.80	%		183.28	%		107.76	%		185.59	%		133.93	%
Allowance for loan losses to total loans		1.15	%		1.24	%		1.16	%		1.21	%		1.33	%		1.36	%		1.51	%
Net charge-offs to average loans(8)		0.01	%		0.12	%		0.23	%		0.32	%		0.15	%		0.28	%		0.33	%
Capital Ratios:
Total shareholders' equity to total assets		12.65	%		12.09	%		12.12	%		11.94	%		12.53	%		12.70	%		13.02	%
Tangible equity to tangible assets(6)		9.95	%		9.27	%		9.39	%		9.11	%		10.20	%		10.16	%		9.94	%
Common equity tier 1 capital ratio		12.00	%		10.68	%		11.52	%		10.89	%		N/A			N/A			N/A
Tier 1 leverage ratio		10.39	%		9.71	%		9.78	%		9.34	%		10.71	%		10.72	%		11.00	%
Tier 1 risk-based capital ratio		12.26	%		10.94	%		11.78	%		11.16	%		13.41	%		13.37	%		13.79	%
Total risk-based capital ratio		13.33	%		12.06	%		12.85	%		12.24	%		14.66	%		14.62	%		15.03	%

(1)

Total loans does not include loans held for sale of $559 and $1,971 on June 30, 2017 and June 30, 2016, respectively, and $613, $1,562, $620, $1,155, and $5,723, at December 31, 2016, 2015, 2014, 2013 and 2012, respectively. Also, total loans is net of deferred fees and unearned discounts of $4,436 and $5,580 at June 30, 2017 and 2016, respectively, and $4,548, $5,680, $3,124, $1,240, and $594 at December 31, 2016, 2015, 2014, 2013 and 2012, respectively.

(2)

We calculate book value per share as total shareholders' equity at the end of the relevant period divided by the outstanding number of shares of our common stock at the end of the relevant period.

(3)

Tangible book value per share is a non-GAAP financial measure. The most directly comparable GAAP financial measure is book value per share. We calculate tangible book value per share as total shareholders' equity, less goodwill and other intangible assets, net of accumulated amortization at the end of the relevant period, divided by the outstanding number of shares of our common stock at the end of the relevant period. See our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures under the caption "Non-GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures."

(4)

Net interest margin is shown on a fully taxable equivalent basis.

(5)

Efficiency ratio represents noninterest expense divided by the sum of net interest income and noninterest income.

(6)

Tangible equity to tangible assets is a non-GAAP financial measure. The most directly comparable GAAP financial measure is total shareholders' equity to total assets. We calculate tangible equity as total shareholders' equity, less goodwill and other intangible assets, net of accumulated amortization, and we calculate tangible assets as total assets, less goodwill and other intangible assets, net of accumulated amortization. See our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures under the caption "Non-GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures."

(7)

The financial information as of and for the year ended December 31, 2012 included in this prospectus derived from our audited financial statements not included herein has been restated. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Restatement of 2012 Financial Statements."

(8)

The ratio calculations as of and for the six months ended June 30, 2017 and 2016 represent the annualized calculations.

14

Non-GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures

        Our accounting and reporting policies conform to GAAP and the prevailing practices in the banking industry. However, we also evaluate our performance based on certain additional financial measures discussed in this prospectus as being non-GAAP financial measures. We classify a financial measure as a non-GAAP financial measure if that financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, that are not included or excluded, as the case may be, in the most directly comparable measure calculated and presented in accordance with GAAP as in effect from time to time in the United States in our statements of income, balance sheets or statements of cash flows. Non-GAAP financial measures do not include operating and other statistical measures or ratios or statistical measures calculated using exclusively financial measures calculated in accordance with GAAP.

        The non-GAAP financial measures that we discuss in this prospectus 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 we calculate the non-GAAP financial measures that we discuss in this prospectus may differ from that of other companies reporting measures with similar names. It is important to understand how other banking organizations calculate their financial measures with names similar to the non-GAAP financial measures we have discussed in this prospectus when comparing such non-GAAP financial measures.

        Tangible Book Value Per Share.    We calculate (1) tangible equity as total shareholders' equity, less goodwill and other intangible assets, net of accumulated amortization, and (2) tangible book value per share as tangible equity divided by shares of common stock outstanding at the end of the relevant period. The most directly comparable GAAP financial measure for tangible book value per share is book value per share.

        We believe that the tangible book value per share measure is important to many investors in the marketplace who are interested in changes from period to period in book value per share exclusive of changes in intangible assets. Goodwill and other intangible assets have the effect of increasing total book value while not increasing our tangible book value.

        The book value per share and tangible book value per share have been adjusted in the table below to give effect to a 2-for-1 stock split, whereby each shareholder of our common stock received one additional share of common stock for each share owned as of the record date of September 30, 2017, in the form of a stock dividend that was distributed on October 13, 2017. The effect of the stock split on outstanding share and per share figures has been retroactively applied to all periods presented.

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        The following tables reconcile, as of the dates set forth below, total shareholders' equity to tangible equity and presents tangible book value per share compared to book value per share:

	As of June 30,				As of December 31,
(Dollars in thousands, except per share data)	2017		2016		2016		2015		2014		2013		2012 (as restated)(2)
Tangible Equity
Total shareholders' equity	$	371,964	$	347,316	$	357,637	$	344,313	$	329,252	$	311,139	$	222,901
Adjustments:
Goodwill		80,950		80,950		80,950		80,950		59,049		59,049		57,667
Other intangibles		7,298		8,364		7,791		8,879		8,903		10,225		984
Tangible equity	$	283,716	$	258,002	$	268,896	$	254,484	$	261,300	$	241,865	$	164,250
Common shares outstanding(1)		22,063,072		21,870,418		22,062,072		22,303,474		22,533,930		22,543,954		15,575,418
Book value per share	$	16.86	$	15.88	$	16.21	$	15.44	$	14.61	$	13.80	$	14.31
Tangible Book Value per Share	$	12.86	$	11.80	$	12.19	$	11.41	$	11.60	$	10.73	$	10.55

(1)

Excludes the dilutive effect, if any, of 295,314 and 445,030 shares of common stock issuable upon exercise of outstanding stock options as of June 30, 2017 and 2016, respectively, and 248,314, 647,074, 575,326, 593,812 and 0 shares of common stock issuable upon exercise of outstanding stock options as of December 31, 2016, 2015, 2014, 2013 and 2012, respectively.

(2)

The financial information as of and for the year ended December 31, 2012 included in this prospectus derived from our audited financial statements not included herein has been restated. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Restatement of 2012 Financial Statements."

        Tangible Equity to Tangible Assets.    We calculate tangible equity as described above, and tangible assets as total assets, less goodwill and other intangible assets, net of accumulated amortization. The most directly comparable GAAP financial measure for tangible equity to tangible assets is total shareholders' equity to total assets.

        We believe that this measure is important to many investors in the marketplace who are interested in the relative changes from period to period of tangible equity to tangible assets, each exclusive of changes in intangible assets. Goodwill and other intangible assets have the effect of increasing both total shareholders' equity and assets while not increasing our tangible equity or tangible assets.

        The following tables reconcile, as of the dates set forth below, total shareholders' equity to tangible equity and total assets to tangible assets, and presented tangible equity to tangible assets compared to total shareholders equity to total assets.

	As of June 30,						As of December 31,
(Dollars in thousands)	2017			2016			2016			2015			2014			2013			2012 (as restated)(1)
Tangible Equity
Total shareholders' equity	$	371,964		$	347,316		$	357,637		$	344,313		$	329,252		$	311,139		$	222,901
Adjustments:
Goodwill		80,950			80,950			80,950			80,950			59,049			59,049			57,667
Other intangibles		7,298			8,364			7,791			8,879			8,903			10,225			984
Tangible equity	$	283,716		$	258,002		$	268,896		$	254,484		$	261,300		$	241,865		$	164,250
Tangible Assets
Total assets	$	2,940,877		$	2,872,687		$	2,951,522		$	2,882,625		$	2,628,587		$	2,450,865		$	1,711,467
Adjustments
Goodwill		80,950			80,950			80,950			80,950			59,049			59,049			57,667
Other intangibles		7,298			8,364			7,791			8,879			8,903			10,225			984
Tangible assets	$	2,852,629		$	2,783,373		$	2,862,781		$	2,792,796		$	2,560,635		$	2,381,591		$	1,652,816
Tangible Equity to Tangible Assets		9.95	%		9.27	%		9.39	%		9.11	%		10.20	%		10.16	%		9.94	%
Total Shareholders' Equity to Total Assets		12.65	%		12.09	%		12.12	%		11.94	%		12.53	%		12.70	%		13.02	%

(1)

The financial information as of and for the year ended December 31, 2012 included in this prospectus derived from our audited financial statements not included herein has been restated. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Restatement of 2012 Financial Statements."

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RISK FACTORS

Investing in our common stock involves a significant degree of risk. You should carefully consider the following risk factors, in addition to the other information contained in this prospectus, including our consolidated financial statements and related notes, before deciding to invest in our common stock. Any of the following risks could have a material adverse effect on our business, financial condition, results of operations and future prospects. As a result, the trading price of our common stock could decline, and you could lose all or part of your investment. Some statements in this prospectus, including statements in the following risk factors section, constitute forward-looking statements. Please refer to "Cautionary Note Regarding Forward-Looking Statements."

Risks Related to Our Business

Hurricanes or other adverse weather events in Texas can have an adverse impact on our business, financial condition and operations.

        Hurricanes, tropical storms, natural disasters and other adverse weather events can have an adverse impact on our business, financial condition and operations, cause widespread property damage and have the potential to significantly depress the local economies in which we operate. We operate banking locations throughout Beaumont and Houston, areas which are susceptible to hurricanes, tropical storms and other natural disasters and adverse weather conditions. For example, in late August 2017, Hurricane Harvey, a Category 4 hurricane, caused extensive and costly damage across Southeast Texas. The Houston and the Beaumont areas received over 40 inches of rainfall, which resulted in catastrophic flooding and unprecedented damage to residences and businesses. Although based on our initial assessment we do not believe that Hurricane Harvey will have significant long-term effects on our business, financial condition or operations, we are unable to predict with certainty the full impact of the storm on the markets in which we operate, including any adverse impact on our customers and our loan and deposit activities and credit exposures.

        Similar future adverse weather events in Texas could potentially result in extensive and costly property damage to businesses and residences, force the relocation of residents and significantly disrupt economic activity in the region. We cannot predict the extent of damage that may result from such adverse weather events, which will depend on a variety of factors that are beyond our control, including, but not limited to, the severity and duration of the event, the timing and level of government responsiveness and the pace of economic recovery. If a significant adverse weather event were to occur, it could have a materially adverse impact on our financial condition, results of operations and our business, as well as potentially increase our exposure to credit and liquidity risks.

Our primary markets are susceptible to natural disasters and other catastrophes that could negatively impact the economies of our markets, our operations or our customers, any of which could have a material adverse effect on our business, financial condition and results of operations.

        A substantial majority of our business is generated from our Beaumont and Houston markets, which are susceptible to damage by hurricanes, such as Hurricane Harvey and Hurricane Ike, which struck the Gulf Coast in 2017 and 2008, respectively. We are also subject to tornadoes, floods, droughts and other natural disasters and adverse weather. In addition to natural disasters, man-made events, such as acts of terror and governmental responses to acts of terror, malfunctions of the electronic grid and other infrastructure breakdowns, could adversely affect economic conditions in our primary markets. These catastrophic events can disrupt our operations, cause widespread property damage, severely depress the local economies in which we operate and adversely affect our customers. If the economies in our primary markets experience an overall decline as a result of a catastrophic event, demand for loans and our other products and services could decline. In addition, the rates of delinquencies, foreclosures, bankruptcies and losses on our loan portfolios may increase substantially

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after events such as hurricanes, as uninsured property losses, interruptions of our customers' operations or sustained job interruption or loss may materially impair the ability of borrowers to repay their loans. Moreover, the value of real estate or other collateral that secures our loans could be materially and adversely affected by a catastrophic event. A natural disaster or other catastrophic event could, therefore, result in decreased revenue and loan losses that have a material adverse effect on our business, financial condition and results of operations.

Our business is concentrated in, and largely dependent upon, the continued growth and welfare of our primary markets of Beaumont and Houston, and adverse economic conditions in these markets could negatively impact our operations and customers.

        Our business, financial condition and results of operations are affected by changes in the economic conditions of our primary markets of Beaumont and Houston. Our success depends to a significant extent upon the business activity, population, income levels, employment trends, deposits and real estate activity in our primary markets. Economic conditions within our primary markets, and the state of Texas in general, are influenced by the energy sector generally and the price of oil and gas specifically. Although our customers' business and financial interests may extend well beyond our primary markets, adverse conditions that affect our primary markets, including future declines in oil or real estate prices, could reduce our growth rate, affect the ability of our customers to repay their loans, affect the value of collateral underlying our loans, affect our ability to attract deposits and generally affect our business, financial condition, results of operations and future prospects. Due to our geographic concentration within our primary markets, we may be less able than other larger regional or national financial institutions to diversify our credit risks across multiple markets. See "Risk Factors—Risks Related to Our Business—Our primary markets are susceptible to natural disasters and other catastrophes that could negatively impact the economies of our markets, our operations or our customers, any of which could have a material adverse effect on our business, financial condition and results of operations."

We may not be able to implement our expansion strategy, which may adversely affect our ability to maintain our historical earnings trends.

        Our expansion strategy focuses on organic growth, supplemented by strategic acquisitions and expansion of the Bank's banking location network, or de novo branching. We may not be able to execute on aspects of our expansion strategy, which may impair our ability to sustain our historical rate of growth or prevent us from growing at all. More specifically, we may not be able to generate sufficient new loans and deposits within acceptable risk and expense tolerances, obtain the personnel or funding necessary for additional growth or find suitable acquisition candidates. Various factors, such as economic conditions and competition with other financial institutions, may impede or prohibit the growth of our operations, the opening of new banking locations and the consummation of acquisitions. Further, we may be unable to attract and retain experienced bankers, which could adversely affect our growth. The success of our strategy also depends on our ability to effectively manage growth, which is dependent upon a number of factors, including our ability to adapt our credit, operational, technology and governance infrastructure to accommodate expanded operations. If we fail to implement one or more aspects of our strategy, we may be unable to maintain our historical earnings trends, which could have a material adverse effect on our business, financial condition and results of operations.

We may not be able to manage the risks associated with our anticipated growth and expansion through de novo branching, which could have a material adverse effect on our business, financial condition and results of operations.

        Our business strategy includes evaluating strategic opportunities to grow through de novo branching, and we believe that banking location expansion has been meaningful to our growth since

18

inception. De novo branching carries with it certain potential risks, including significant startup costs and anticipated initial operating losses; an inability to gain regulatory approval; an inability to secure the services of qualified senior management to operate the de novo banking locations and successfully integrate and promote our corporate culture; poor market reception for de novo banking locations established in markets where we do not have a preexisting reputation; challenges posed by local economic conditions; challenges associated with securing attractive locations at a reasonable cost; and the additional strain on management resources and internal systems and controls. Failure to adequately manage the risks associated with our anticipated growth through de novo branching could have a material adverse effect on our business, financial condition and results of operations.

We rely heavily on our executive management team and other key employees, and we could be adversely affected by the unexpected loss of their services.

        Our success depends in large part on the performance of our executive management team and other key personnel, as well as on our ability to attract, motivate and retain highly qualified senior and middle management and other skilled employees. Competition for qualified employees is intense, and the process of locating key personnel with the combination of skills, attributes and business relationships required to execute our business plan may be lengthy. We may not be successful in retaining our key employees, and the unexpected loss of services of one or more of our key personnel could have an adverse effect on our business because of their skills, knowledge of and business relationships within our primary markets, years of industry experience and the difficulty of promptly finding qualified replacement personnel. If the services of any of our key personnel should become unavailable for any reason, we may not be able to identify and hire qualified persons on terms acceptable to us, or at all, which could have a material adverse effect on our business, financial condition, results of operations and future prospects.

We may not be able to adequately measure and limit our credit risk, which could lead to unexpected losses.

        The business of lending is inherently risky, including risks that the principal of or interest on any loan will not be repaid timely or at all or that the value of any collateral supporting the loan will be insufficient to cover our outstanding exposure. These risks may be affected by the strength of the borrower's business sector and local, regional and national market and economic conditions. Many of our loans are made to small to medium-sized businesses that may be less able to withstand competitive, economic and financial pressures than larger borrowers. Our risk management practices, such as monitoring the concentration of our loans within specific industries and our credit approval practices, may not adequately reduce credit risk, and our credit administration personnel, policies and procedures may not adequately adapt to changes in economic or any other conditions affecting customers and the quality of the loan portfolio. A failure to effectively measure and limit the credit risk associated with our loan portfolio could lead to unexpected losses and have a material adverse effect on our business, financial condition and results of operations.

Our allowance for loan losses may prove to be insufficient to absorb potential losses in our loan portfolio, which may adversely affect our business, financial condition and results of operations.

        We maintain an allowance for loan losses that represents management's judgment of probable losses and risks inherent in our loan portfolio. As of June 30, 2017, our allowance for loan losses totaled $25.2 million, which represents approximately 1.15% of our total loans. The level of the allowance reflects management's continuing evaluation of general economic conditions, diversification and seasoning of the loan portfolio, historic loss experience, identified credit problems, delinquency levels and adequacy of collateral. The determination of the appropriate level of the allowance for loan losses is inherently highly subjective and requires us to make significant estimates of and assumptions regarding current credit risks and future trends, all of which may undergo material changes. Inaccurate

19

management assumptions, deterioration of economic conditions affecting borrowers, new information regarding existing loans, identification or deterioration of additional problem loans, acquisition of problem loans and other factors, both within and outside of our control, may require us to increase our allowance for loan losses.

        In addition, our regulators, as an integral part of their periodic examination, review our methodology for calculating, and the adequacy of, our allowance for loan losses and may direct us to make additions to the allowance based on their judgments about information available to them at the time of their examination. Further, if actual charge-offs in future periods exceed the amounts allocated to the allowance for loan losses, we may need additional provisions for loan losses to restore the adequacy of our allowance for loan losses. Finally, the measure of our allowance for loan losses is dependent on the adoption and interpretation of accounting standards. The Financial Accounting Standards Board, or FASB, recently issued a new credit impairment model, the Current Expected Credit Loss, or CECL model, which will become applicable to us on January 1, 2020, though we may choose, or may be encouraged by our regulators, to adopt CECL on January 1, 2019. CECL will require financial institutions to estimate and develop a provision for credit losses at origination for the lifetime of the loan, as opposed to reserving for incurred or probable losses up to the balance sheet date. Under the CECL model, credit deterioration would be reflected in the income statement in the period of origination or acquisition of the loan, with changes in expected credit losses due to further credit deterioration or improvement reflected in the periods in which the expectation changes. Accordingly, implementation of the CECL model will change our current method of providing allowances for loan losses, which would likely require us to increase our allowance for loan losses. Moreover, the CECL model likely would create more volatility in our level of allowance for loan losses. If we are required to materially increase our level of allowance for loan losses for any reason, such increase could adversely affect our business, financial condition and results of operations.

The amount of nonperforming and classified assets may increase significantly, resulting in additional losses, and costs and expenses that will negatively affect our operations and financial condition.

        At June 30, 2017, we had a total of approximately $9.7 million of nonperforming assets, or approximately 0.33% of total assets. Total loans classified as "substandard," "doubtful" or "loss" as of June 30, 2017 were approximately $55.6 million, or approximately 1.89% of total assets.

        An asset is generally considered "substandard" if it is inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged, if any. Assets so classified must have a well-defined weakness(es) that jeopardize the liquidation of the debt. "Substandard" assets include those characterized by the "distinct possibility" that we will sustain "some loss" if the deficiencies are not corrected. Assets classified as "doubtful" have all of the weaknesses inherent in those classified "substandard" with the added characteristic that the weaknesses present make "collection or liquidation in full," on the basis of currently existing facts, conditions and values, "highly questionable and improbable." Assets classified as "loss" are those considered "uncollectible" and of such little value that their continuance as assets is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be effected in the future.

        Should the amount of nonperforming assets increase in the future, we may incur losses, and the costs and expenses to maintain such assets likewise can be expected to increase and potentially negatively affect earnings. An additional increase in losses due to such assets could have a material adverse effect on our business, financial condition and results of operations. Such effects may be particularly pronounced in a market of reduced real estate values and excess inventory.

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Nonperforming assets take significant time and resources to resolve and adversely affect our results of operations and financial condition.

        Nonperforming assets adversely affect our net income in various ways. We generally do not record interest income on other owned real estate, or OREO, or on nonperforming loans, thereby adversely affecting our income and increasing loan administration costs. When we take collateral in foreclosures and similar proceedings, we are required to mark the related asset to the then fair market value of the collateral, which may ultimately result in a loss. An increase in the level of nonperforming assets increases our risk profile and may impact the capital levels regulators believe are appropriate in light of the ensuing risk profile. While we seek to reduce problem assets through loan workouts, restructurings and otherwise, decreases in the value of the underlying collateral, or in these borrowers' performance or financial condition, whether or not due to economic and market conditions beyond our control, could have a material effect on our business, financial condition and results of operations. In addition, the resolution of nonperforming assets requires significant commitments of time from management, which may materially and adversely impact their ability to perform their other responsibilities. We may not experience future increases in the value of nonperforming assets.

We are subject to interest rate risk and fluctuations in interest rates may adversely affect our earnings.

        The majority of our banking assets and liabilities are monetary in nature and subject to risk from changes in interest rates. Like most financial institutions, our earnings are significantly dependent on our net interest income, the principal component of our earnings, which is the difference between interest earned by us from our interest-earning assets, such as loans and investment securities, and interest paid by us on our interest-bearing liabilities, such as deposits and borrowings. We expect that we will periodically experience "gaps" in the interest rate sensitivities of our assets and liabilities, meaning that either our interest-bearing liabilities will be more sensitive to changes in market interest rates than our interest-earning assets, or vice versa. In either event, if market interest rates should move contrary to our position, this "gap" will negatively impact our earnings. The impact on earnings is more adverse when the slope of the yield curve flattens, that is, when short-term interest rates increase more than long-term interest rates or when long-term interest rates decrease more than short-term interest rates. Many factors impact interest rates, including governmental monetary policies, inflation, recession, changes in unemployment, the money supply and international economic weakness and disorder and instability in domestic and foreign financial markets. Our interest rate sensitivity profile was asset sensitive as of June 30, 2017, meaning that we estimate our net interest income would increase more from rising interest rates than from falling interest rates.

        Interest rate increases often result in larger payment requirements for our borrowers, which increases the potential for default and could result in a decrease in the demand for loans. At the same time, the marketability of the property securing a loan may be adversely affected by any reduced demand resulting from higher interest rates. In a declining interest rate environment, there may be an increase in prepayments on loans as borrowers refinance their loans at lower rates. In addition, in a low interest rate environment, loan customers often pursue long-term fixed rate credits, which could adversely affect our earnings and net interest margin if rates increase. Changes in interest rates also can affect the value of loans, securities and other assets. An increase in interest rates that adversely affects the ability of borrowers to pay the principal or interest on loans may lead to an increase in nonperforming assets and a reduction of income recognized, which could have a material adverse effect on our results of operations and cash flows. Further, when we place a loan on nonaccrual status, we reverse any accrued but unpaid interest receivable, which decreases interest income. At the same time, we continue to have a cost to fund the loan, which is reflected as interest expense, without any interest income to offset the associated funding expense. Thus, an increase in the amount of nonperforming assets would have an adverse impact on net interest income. If short-term interest rates continue to remain at their historically low levels for a prolonged period, and assuming longer-term interest rates

21

fall further, we could experience net interest margin compression as our interest-earning assets would continue to reprice downward while our interest-bearing liability rates could fail to decline in tandem. Such an occurrence would have an adverse effect on our net interest income and could have a material adverse effect on our business, financial condition and results of operations.

We may not be able to overcome the integration and other risks associated with acquisitions, which could have a material adverse effect on our ability to implement our business strategy.

        Although we plan to continue to grow our business organically and through de novo branching, we also intend to pursue acquisition opportunities that we believe complement our activities and have the ability to enhance our profitability and provide attractive risk-adjusted returns. Our acquisition activities could be material to our business and involve a number of risks, including the following:

•

intense competition from other banking organizations and other acquirers for potential merger candidates;

•

market pricing for desirable acquisitions resulting in returns that are less attractive than we have traditionally sought to achieve;

•

incurring time and expense associated with identifying and evaluating potential acquisitions and negotiating potential transactions, resulting in our attention being diverted from the operation of our existing business;

•

using inaccurate estimates and judgments to evaluate credit, operations, management and market risks with respect to the target institution or assets;

•

failure to achieve expected revenues, earnings or synergies from an acquisition;

•

potential exposure to unknown or contingent liabilities of banks and businesses we acquire, including compliance and regulatory issues;

•

the time and expense required to integrate the operations and personnel of the combined businesses;

•

experiencing higher operating expenses relative to operating income from the new operations and the failure to achieve expected cost savings;

•

losing key employees and customers;

•

reputational issues if the target's management does not align with our culture and values;

•

significant problems relating to the conversion of the financial and customer data of the target;

•

integration of acquired customers into our financial and customer product systems;

•

risks of impairment to goodwill; or

•

regulatory timeframes for review of applications may limit the number and frequency of transactions we may be able to consummate.

        Depending on the condition of any institution or assets or liabilities that we may acquire, that acquisition may, at least in the near term, adversely affect our capital and earnings and, if not successfully integrated with our organization, may continue to have such effects over a longer period. We may not be successful in overcoming these risks or any other problems encountered in connection with pending or potential acquisitions, and any acquisition we may consider will be subject to prior regulatory approval. Our inability to overcome these risks could have an adverse effect on our ability to implement our business strategy, which, in turn, could have a material adverse effect on our business, financial condition and results of operations.

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A component of our strategy is a focus on decision-making authority at the branch and market level, and our business, financial condition, results of operations and prospects could be adversely affected if our local teams do not follow our internal policies or are negligent in their decision-making.

        In order to be able to provide the responsive and individualized customer service that distinguishes us from competitors and in order to attract and retain management talent, we empower our local management teams to make certain business decisions on the local level. Certain operational and lending authorities are assigned to managers and their banking teams based on their experience, with all loan relationships in excess of internal specified maximums being reviewed by the Bank's Directors Loan Committee, comprised of senior management of the Bank, or the Bank's board of directors, as the case may be. Our local management teams may not follow our internal procedures or otherwise act in our best interests with respect to their decision-making. A failure of our employees to follow our internal policies, or actions taken by our employees that are negligent or not in our best interests could have a material adverse effect on our business, financial condition and results of operations.

Difficult market conditions and economic trends have recently and adversely affected the banking industry and could adversely affect our business, financial condition and results of operations in the future.

        We are operating in an uncertain economic environment, including generally uncertain conditions nationally and locally in our industry and markets. Although economic conditions have improved in recent years, financial institutions continue to be affected by volatility in the real estate market in some parts of the country and uncertain regulatory and interest rate conditions. We retain direct exposure to the residential and commercial real estate markets in Texas and are affected by these events. In addition, financial institutions in Texas have been affected by the recent volatility in the oil and gas industry and significant decrease in energy prices. Our markets have also recently been affected by Hurricane Harvey, which may have an adverse impact on our business, financial condition and operations. See "Risk Factors—Risks Related to Our Business—Hurricanes or other adverse weather events in Texas can have an adverse impact on our business, financial condition and operations."

        Our ability to assess the creditworthiness of customers and to estimate the losses inherent in our loan portfolio is made more complex by uncertain market and economic conditions. Another national economic downturn or deterioration of conditions in our markets could result in losses beyond those that are provided for in our allowance for loan losses and lead to the following consequences:

•

increases in loan delinquencies;

•

increases in nonperforming assets and foreclosures;

•

decreases in demand for our products and services, which could adversely affect our liquidity position; and

•

decreases in the value of the collateral securing our loans, especially real estate, which could reduce customers' borrowing power and repayment ability.

        While economic conditions in Texas and the United States continue to show signs of recovery, there can be no assurance that these conditions will continue to improve. Although real estate markets have generally stabilized in portions of the United States, including Texas, a resumption of declines in real estate values and home sales volumes, as well as financial stress on borrowers as a result of the uncertain economic environment, including job losses, could have an adverse effect on our borrowers or their customers, which could adversely affect our business, financial condition and results of operations. In addition, continued volatility in the oil and gas industry and relatively low energy prices could have an adverse effect on our borrowers or their customers, including declines in real estate values and job losses, which could adversely affect our business, financial condition and results of operations.

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Sustained low oil prices, volatility in oil prices and downturns in the energy industry, including in Texas, could materially and adversely affect us.

        The economy in Texas has dependence on the energy industry. A downturn or lack of growth in the energy industry and energy-related business, including sustained low oil prices or the failure of oil prices to rise in the future, could adversely affect our results of operations and financial condition. A prolonged period of low oil prices could also have a negative impact on the U.S. economy and, in particular, the economies of energy-dominant states such as Texas. Accordingly, a prolonged period of low oil prices could have a material adverse effect on our business, financial condition and results of operations. As of June 30, 2017, our direct and indirect energy lending comprised approximately 6.2% of our gross loans. Prolonged or heightened pricing pressure on oil and gas could lead to increased credit stress in our energy portfolio, increased losses associated with our energy portfolio, increased utilization of our contractual obligations to extend credit and weaker demand for energy lending. Such a decline or general uncertainty resulting from continued volatility could have other adverse impacts such as job losses in industries tied to energy, increased spending habits, lower borrowing needs, higher transaction deposit balances or a number of other effects that are difficult to isolate or quantify, particularly in states with significant dependence on the energy industry, such as Texas, all of which could have a material adverse effect on our business, financial condition and results of operations.

The small to medium-sized businesses that we lend to may have fewer resources to endure adverse business developments, which may impair our borrowers' ability to repay loans.

        We focus our business development and marketing strategy primarily on small to medium-sized businesses. Small to medium-sized businesses frequently have smaller market shares than their competition, may be more vulnerable to economic downturns, often need substantial additional capital to expand or compete and may experience substantial volatility in operating results, any of which may impair a borrower's ability to repay a loan. In addition, the success of a small and medium-sized business often depends on the management skills, talents and efforts of a small group of people, and the death, disability or resignation of one or more of these people could have an adverse effect on the business and its ability to repay its loan. If our borrowers are unable to repay their loans, our business, financial condition and results of operations could be adversely affected.

A portion of our loan portfolio is comprised of commercial loans secured by receivables, inventory, equipment or other commercial collateral, which we refer to generally as commercial and industrial loans, and the deterioration in value of which could expose us to credit losses.

        As of June 30, 2017, commercial and industrial loans represented approximately $535.1 million, or 24.4%, of our gross loans. In general, these loans are collateralized by general business assets, including, among other things, accounts receivable, inventory and equipment, and most are backed by a personal guaranty of the borrower or principal. These commercial and industrial loans are typically larger in amount than loans to individuals and, therefore, have the potential for larger losses on a single loan basis. Additionally, the repayment of commercial and industrial loans is subject to the ongoing business operations of the borrower. The collateral securing such loans generally includes moveable property such as equipment and inventory, which may decline in value more rapidly than we anticipate, thus exposing us to increased credit risk. In addition, a portion of our customer base, including customers in the energy and real estate business, may be in industries which are particularly sensitive to commodity prices or market fluctuations, such as energy and real estate prices. Accordingly, negative changes in commodity prices and real estate values and liquidity could impair the value of the collateral securing these loans. Significant adverse changes in the economy, local market conditions or adverse weather events in the markets in which our commercial and industrial lending customers operate could cause rapid declines in loan collectability and the values associated with general business assets resulting in inadequate collateral coverage that may expose us to credit losses and could

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adversely affect our business, financial condition and results of operations. See "Risk Factors—Risks Related to Our Business—Hurricanes or other adverse weather events in Texas can have an adverse impact on our business, financial condition and operations."

Our commercial real estate and real estate construction and development loan portfolio exposes us to credit risks that may be greater than the risks related to other types of loans.

        As of June 30, 2017, approximately $898.3 million, or 40.9%, of our gross loans were nonresidential real estate loans (including owner-occupied commercial real estate loans) and approximately $434.0 million, or 19.8%, of our total loans were construction and development loans. These loans typically involve repayment dependent upon income generated, or expected to be generated, by the property securing the loan in amounts sufficient to cover operating expenses and debt service. The availability of such income for repayment may be adversely affected by changes in the economy or local market conditions. Owner-occupied commercial real estate is generally less dependent upon income generated directly from the property but still carries risks from the successful operation of the underlying business or adverse economic conditions. These loans expose a lender to greater credit risk than loans secured by other types of collateral because the collateral securing these loans is typically more difficult to liquidate due to the fluctuation of real estate values. Additionally, non-owner-occupied commercial real estate loans generally involve relatively large balances to single borrowers or related groups of borrowers. Unexpected deterioration in the credit quality of our non-owner-occupied commercial real estate loan portfolio could require us to increase our allowance for loan losses, which would reduce our profitability and could have a material adverse effect on our business, financial condition and results of operations.

        Construction and development loans also involve risks because loan funds are secured by a project under construction and the project is of uncertain value prior to its completion. It can be difficult to accurately evaluate the total funds required to complete a project, and construction and development lending often involves the disbursement of substantial funds with repayment dependent, in part, on the success of the ultimate project rather than the ability of a borrower or guarantor to repay the loan. If we are forced to foreclose on a project prior to completion, we may be unable to recover the entire unpaid portion of the loan. In addition, we may be required to fund additional amounts to complete a project, incur taxes, maintenance and compliance costs for a foreclosed property and may have to hold the property for an indeterminate period of time, any of which could adversely affect our business, financial condition and results of operations.

Because a significant portion of our loan portfolio is comprised of real estate loans, negative changes in the economy affecting real estate values and liquidity could impair the value of collateral securing our real estate loans and result in loan and other losses.

        As of June 30, 2017, approximately $1.6 billion, or 71.6%, of our gross loans were loans with real estate as a primary or secondary component of collateral. Real estate values in many Texas markets have experienced periods of fluctuation over the last five years. The market value of real estate can fluctuate significantly in a short period of time. As a result, adverse developments affecting real estate values and the liquidity of real estate in our primary markets or in Texas generally could increase the credit risk associated with our loan portfolio, and could result in losses that adversely affect credit quality, financial condition and results of operations. Negative changes in the economy affecting real estate values and liquidity in our market areas could significantly impair the value of property pledged as collateral on loans and affect our ability to sell the collateral upon foreclosure without a loss or additional losses. Collateral may have to be sold for less than the outstanding balance of the loan, which could result in losses on such loans. Such declines and losses would have a material adverse effect on our business, financial condition and results of operations. If real estate values decline, it is also more likely that we would be required to increase our allowance for loan losses, which would

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adversely affect our business, financial condition and results of operations. In addition, adverse weather events, including hurricanes and flooding, can cause damages to the property pledged as collateral on loans, which could result in additional losses upon a foreclosure. See "Risk Factors—Risks Related to Our Business—Hurricanes or other adverse weather events in Texas can have an adverse impact on our business, financial condition and operations."

Appraisals and other valuation techniques we use in evaluating and monitoring loans secured by real property, other real estate owned and repossessed personal property may not accurately describe the net value of the asset.

        In considering whether to make a loan secured by real property, we generally require an appraisal of the property. However, an appraisal is only an estimate of the value of the property at the time the appraisal is made, and, as real estate values may change significantly in relatively short periods of time (especially in periods of heightened economic uncertainty), this estimate may not accurately describe the net value of the real property collateral after the loan is made. As a result, we may not be able to realize the full amount of any remaining indebtedness when we foreclose on and sell the relevant property. In addition, we rely on appraisals and other valuation techniques to establish the value of our OREO, and personal property that we acquire through foreclosure proceedings and to determine certain loan impairments. If any of these valuations are inaccurate, our combined and consolidated financial statements may not reflect the correct value of our OREO, and our allowance for loan losses may not reflect accurate loan impairments. This could have a material adverse effect on our business, financial condition or results of operations. As of June 30, 2017, we held approximately $1.4 million of OREO and did not hold any repossessed property and equipment.

We engage in lending secured by real estate and may be forced to foreclose on the collateral and own the underlying real estate, subjecting us to the costs and potential risks associated with the ownership of the real property, or consumer protection initiatives or changes in state or federal law may substantially raise the cost of foreclosure or prevent us from foreclosing at all.

        Since we originate loans secured by real estate, we may have to foreclose on the collateral property to protect our investment and may thereafter own and operate such property, in which case we would be exposed to the risks inherent in the ownership of real estate. As of June 30, 2017, we held approximately $1.4 million of OREO. The amount that we, as a mortgagee, may realize after a default is dependent upon factors outside of our control, including, but not limited to general or local economic condition, environmental cleanup liability, assessments, interest rates, real estate tax rates, operating expenses of the mortgaged properties, ability to obtain and maintain adequate occupancy of the properties, zoning laws, governmental and regulatory rules, and natural disasters. Our inability to manage the amount of costs or size of the risks associated with the ownership of real estate, or write-downs in the value of other real estate owned, could have a material adverse effect on our business, financial condition and results of operations.

        Additionally, consumer protection initiatives or changes in state or federal law may substantially increase the time and expense associated with the foreclosure process or prevent us from foreclosing at all. While historically Texas has had foreclosure laws that are favorable to lenders, a number of states in recent years have either considered or adopted foreclosure reform laws that make it substantially more difficult and expensive for lenders to foreclose on properties in default, and we cannot be certain that Texas will not adopt similar legislation in the future. Additionally, federal regulators have prosecuted a number of mortgage servicing companies for alleged consumer law violations. If new state or federal laws or regulations are ultimately enacted that significantly raise the cost of foreclosure or raise outright barriers, such could have a material adverse effect on our business, financial condition and results of operations.

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Our largest loan relationships currently make up a material percentage of our total loan portfolio.

        As of June 30, 2017 our 15 largest loan relationships (including related entities) totaled approximately $255.9 million in loans, or 10.3% of the total loan portfolio. The concentration risk associated with having a small number of large loan relationships is that, if one or more of these relationships were to become delinquent or suffer default, we could be at serious risk of material losses. The allowance for loan losses may not be adequate to cover losses associated with any of these relationships, and any loss or increase in the allowance would negatively affect our earnings and capital. Even if the loans are collateralized, the large increase in classified assets could harm our reputation with our regulators and inhibit our ability to execute our business plan.

Our largest deposit relationships currently make up a material percentage of our deposits and the withdrawal of deposits by our largest depositors could force us to fund our business through more expensive and less stable sources.

        As of June 30, 2017, our 15 largest depositors (including related entities) accounted for $286.0 million in deposits, or approximately 11.4% of our total deposits. Further, our brokered deposit account balance was $99.2 million, or approximately 3.94% of our total deposits, as of June 30, 2017. Several of our large depositors have business, family, or other relationships with each other, which creates a risk that any one customer's withdrawal of its deposit could lead to a loss of other deposits from customers within the relationship.

        Withdrawals of deposits by any one of our largest depositors or by one of our related customer groups could force us to rely more heavily on borrowings and other sources of funding for our business and withdrawal demands, adversely affecting our net interest margin and results of operations. We may also be forced, as a result of any withdrawal of deposits, to rely more heavily on other, potentially more expensive and less stable funding sources. Consequently, the occurrence of any of these events could have a material adverse effect on our business, financial condition and results of operations.

A material portion of our loans and deposits are with related parties and our ability to continue do business with such related parties is highly regulated.

        We have made loans to and accepted deposits from certain of our directors and officers and the directors and officers of the Bank in compliance with applicable regulations and our written policies. As of June 30, 2017, we had approximately $157.3 million of loans outstanding and approximately $69.4 million in unfunded loan commitments to such persons. In addition, we held related party deposits of approximately $239.5 million at June 30, 2017. Our business relationships with related parties are highly regulated. In particular, our ability to do business with related parties is limited with respect to, among other things, extensions of credit described in the Board of Governors of the Federal Reserve System's, or Federal Reserve's, Regulation O, and covered transactions described in sections 23A and 23B of the Federal Reserve Act and the Federal Reserve's Regulation W. These regulations could prevent us from pursuing activities that would otherwise be in our and our shareholders' best interests. Moreover, if we were to fail to comply with any of these regulations, we could be subject to enforcement and other legal actions by the Federal Reserve, which could have a material adverse effect on our business, financial condition and results of operations. See "Supervision and Regulation—CommunityBank of Texas, N.A.—Restrictions on Transactions with Affiliates and Insiders."

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We had significant deficiencies in internal control over financial reporting in the past and cannot assure you that additional significant deficiencies or material weaknesses will not be identified in the future. Our failure to implement and maintain effective internal control over financial reporting could result in material misstatements in our financial statements which could require us to restate financial statements, cause investors to lose confidence in our reported financial information and have a negative effect on the trading price of our common stock.

        In the past, significant deficiencies have been identified in our internal controls over financial reporting. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of the company's financial reporting. Specifically, a significant deficiency was identified related to management's recorded amount of the Company's net deferred tax asset in 2014 that affected our financial statements for the fiscal years ended December 31, 2013 and prior periods, which resulted in a restatement of our financial statements for the year ended December 31, 2013. In 2015, significant deficiencies were identified including the Company's process related to our accounting for allowance for loan losses and related disclosures of impaired loans, business combination purchase accounting, and loan sales process. In addition, in 2015 and 2016, a significant deficiency was identified relating to financial statement disclosures and related review controls.

        We have implemented measures designed to address the internal control significant deficiencies and expect to continue to implement measures designed to improve our internal control over financial reporting and disclosure controls and procedures. However, we cannot be certain that, at some point in the future, a significant deficiency or material weakness will not be identified or our internal controls will not fail to detect a matter they are designed to prevent, and failure to remedy such significant deficiencies or material weaknesses could result in a material misstatement in our financial statements and have a material adverse effect on our business, financial condition and results of operations. The identification of any additional significant deficiency or material weakness could also result in investors losing confidence in our internal controls and questioning our reported financial information, which, among other things, could have a negative effect on the trading price of our common stock. Additionally, we could become subject to increased regulatory scrutiny and a higher risk of shareholder litigation, which could result in significant additional expenses and require additional financial and management resources.

If we fail to maintain effective internal control over financial reporting, we may not be able to report our financial results accurately and timely, in which case our business may be harmed, investors may lose confidence in the accuracy and completeness of our financial reports, we could be subject to regulatory penalties and the price of our common stock may decline.

        Our management is responsible for establishing and maintaining adequate internal control over financial reporting and for evaluating and reporting on that system of internal control. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. As a public company, we will be required to comply with the Sarbanes-Oxley Act and other rules that govern public companies. In particular, we will be required to certify our compliance with Section 404 of the Sarbanes-Oxley Act beginning with our second annual report on Form 10-K, which will require us to furnish annually a report by management on the effectiveness of our internal control over financial reporting. In addition, unless we remain an emerging growth company and elect additional transitional relief available to emerging growth companies, our independent registered public accounting firm may be required to report on the effectiveness of our internal control over financial reporting beginning as of that second annual report on Form 10-K.

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        We will continue to periodically test and update, as necessary, our internal control systems, including our financial reporting controls. In addition, we have hired additional accounting personnel in anticipation of our transition from a private company to a public company. Our actions, however, may not be sufficient to result in an effective internal control environment, and any future failure to maintain effective internal control over financial reporting could impair the reliability of our financial statements which in turn could harm our business, impair investor confidence in the accuracy and completeness of our financial reports, impair our access to the capital markets, cause the price of our common stock to decline and subject us to regulatory penalties.

We are dependent on the use of data and modeling in our management's decision-making, and faulty data or modeling approaches could negatively impact our decision-making ability or possibly subject us to regulatory scrutiny in the future.

        The use of statistical and quantitative models and other quantitative analyses is endemic to bank decision-making, and the employment of such analyses is becoming increasingly widespread in our operations. Liquidity stress testing, interest rate sensitivity analysis, and the identification of possible violations of anti-money laundering regulations are all examples of areas in which we are dependent on models and the data that underlies them. The use of statistical and quantitative models is also becoming more prevalent in regulatory compliance. While we are not currently subject to annual Dodd-Frank Act stress testing, or DFAST, and the Comprehensive Capital Analysis and Review, or CCAR, submissions, we anticipate that model-derived testing may become more extensively implemented by regulators in the future.

        We anticipate data-based modeling will penetrate further into bank decision-making, particularly risk management efforts, as the capacities developed to meet rigorous stress testing requirements are able to be employed more widely and in differing applications. While we believe these quantitative techniques and approaches improve our decision-making, they also create the possibility that faulty data or flawed quantitative approaches could negatively impact our decision-making ability or, if we become subject to regulatory stress testing in the future, adverse regulatory scrutiny. Further, because of the complexity inherent in these approaches, misunderstanding or misuse of their outputs could similarly result in suboptimal decision-making.

Delinquencies, defaults and foreclosures in residential mortgages create a higher risk of repurchases and indemnity requests.

        We originate residential mortgage loans for sale to correspondent banks who may resell such mortgages to government-sponsored enterprises, such as Fannie Mae, Freddie Mac and other investors. As a part of this process, we make various representations and warranties to the purchasers that are tied to the underwriting standards under which the investors agreed to purchase the loan. If a representation or warranty proves to be untrue, we could be required to repurchase one or more of the mortgage loans or indemnify the investor. Repurchase and indemnity obligations tend to increase during weak economic times, as investors seek to pass on the risks associated with mortgage loan delinquencies to the originator of the mortgage. Although we did not repurchase any residential mortgage loans sold to correspondent banks in 2015 or 2016, if we are forced to repurchase mortgage loans in the future that we have previously sold to investors, or indemnify those investors, our business, financial condition and results of operations could be adversely affected.

A lack of liquidity could impair our ability to fund operations and could have a material adverse effect on our business, financial condition and results of operations.

        Liquidity is essential to our business. Liquidity risk is the potential that we will be unable to meet our obligations as they become due because of an inability to liquidate assets or obtain adequate funding. We require sufficient liquidity to meet customer loan requests, customer deposit maturities

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and withdrawals, payments on our debt obligations as they come due and other cash commitments under both normal operating conditions and other unpredictable circumstances, including events causing industry or general financial market stress. We rely on our ability to generate deposits and effectively manage the repayment and maturity schedules of our loans and investment securities, respectively, to ensure that we have adequate liquidity to fund our operations. An inability to raise funds through deposits, borrowings, the sale of our investment securities, the sale of loans, and other sources could have a substantial negative effect on our liquidity. Our most important source of funds is deposits. As of June 30, 2017, approximately $2.2 billion, or 85.9%, of our total deposits were noninterest-bearing deposits, negotiable order of withdrawal, or NOW, savings and money market accounts. Historically our savings, money market deposit accounts, NOW and demand accounts have been stable sources of funds. However, these deposits are subject to potentially dramatic fluctuations in availability or price due to certain factors that may be outside of our control, such as a loss of confidence by customers in us or the banking sector generally, customer perceptions of our financial health and general reputation, increasing competitive pressures from other financial services firms for consumer or corporate customer deposits, changes in interest rates and returns on other investment classes, which could result in significant outflows of deposits within short periods of time or significant changes in pricing necessary to maintain current customer deposits or attract additional deposits, increasing our funding costs and reducing our net interest income and net income.

        The $355.5 million remaining balance of deposits consisted of certificates of deposit, of which $217.6 million, or 8.6% of our total deposits, were due to mature within one year. Historically, a majority of our certificates of deposit are renewed upon maturity as long as we pay competitive interest rates. These customers are, however, interest-rate conscious and may be willing to move funds into higher-yielding investment alternatives. If customers transfer money out of the Bank's deposits and into other investments such as money market funds, we would lose a relatively low-cost source of funds, increasing our funding costs and reducing our net interest income and net income.

        Other primary sources of funds consist of cash flows from operations, maturities and sales of investment securities, and proceeds from the issuance and sale of our equity and debt securities to investors. Additional liquidity is provided by our ability to borrow from the Federal Reserve Bank of Dallas and the Federal Home Loan Bank of Dallas, or the FHLB. We also may borrow funds from third-party lenders, such as other financial institutions. Our access to funding sources in amounts adequate to finance or capitalize our activities, or on terms that are acceptable to us, could be impaired by factors that affect us directly or the financial services industry or economy in general, such as disruptions in the financial markets or negative views and expectations about the prospects for the financial services industry. Our access to funding sources could also be affected by a decrease in the level of our business activity as a result of a downturn in Texas or by one or more adverse regulatory actions against us.

        Any decline in available funding could adversely impact our ability to originate loans, invest in securities, meet our expenses, or fulfill obligations such as repaying our borrowings or meeting deposit withdrawal demands, any of which could, in turn, have a material adverse effect on our business, financial condition and results of operations.

We may need to raise additional capital in the future, and such capital may not be available when needed or at all.

        We may need to raise additional capital, in the form of additional debt or equity, in the future to have sufficient capital resources and liquidity to meet our commitments and fund our business needs and future growth, particularly if the quality of our assets or earnings were to deteriorate significantly. Our ability to raise additional capital, if needed, will depend on, among other things, conditions in the capital markets at that time, which are outside of our control, and our financial condition. Economic conditions and a loss of confidence in financial institutions may increase our cost of funding and limit

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access to certain customary sources of capital or make such capital only available on unfavorable terms, including interbank borrowings, repurchase agreements and borrowings from the discount window of the Federal Reserve. We may not be able to obtain capital on acceptable terms or at all. Any occurrence that may limit our access to the capital markets, such as a decline in the confidence of debt purchasers, depositors of our bank or counterparties participating in the capital markets or other disruption in capital markets, may adversely affect our capital costs and our ability to raise capital and, in turn, our liquidity. Further, if we need to raise capital in the future, we may have to do so when many other financial institutions are also seeking to raise capital and would then have to compete with those institutions for investors. An inability to raise additional capital on acceptable terms when needed could have a material adverse effect on our business, financial condition and results of operations.

The borrowing needs of our clients may increase, especially during a challenging economic environment, which could result in increased borrowing against our contractual obligations to extend credit.

        A commitment to extend credit is a formal agreement to lend funds to a client as long as there is no violation of any condition established under the agreement. The actual borrowing needs of our clients under these credit commitments have historically been lower than the contractual amount of the commitments. A significant portion of these commitments expire without being drawn upon. Because of the credit profile of our clients, we typically have a substantial amount of total unfunded credit commitments, which is not reflected on our balance sheet. As of June 30, 2017, we had $552.4 million in unfunded credit commitments to our clients. Actual borrowing needs of our clients may exceed our expectations, especially during a challenging economic environment when our clients' companies may be more dependent on our credit commitments due to the lack of available credit elsewhere, the increasing costs of credit, or the limited availability of financings from venture firms. This could adversely affect our liquidity, which could impair our ability to fund operations and meet obligations as they become due and could have a material adverse effect on our business, financial condition and results of operations. See "Risk Factors—Risks Relating to Our Business—A lack of liquidity could impair our ability to fund operations and could have a material adverse effect on our business, financial condition and results of operations."

We face strong competition from financial services companies and other companies that offer banking services.

        We operate in the highly competitive financial services industry and face significant competition for customers from financial institutions located both within and beyond our principal markets. We compete with commercial banks, savings banks, credit unions, nonbank financial services companies and other financial institutions operating within or near the areas we serve. Additionally, certain large banks headquartered outside of our markets and large community banking institutions target the same customers we do. In addition, as customer preferences and expectations continue to evolve, technology has lowered barriers to entry and made it possible for banks to expand their geographic reach by providing services over the internet and for nonbanks to offer products and services traditionally provided by banks, such as automatic transfer and automatic payment systems. The banking industry is experiencing rapid changes in technology, and, as a result, our future success will depend in part on our ability to address our customers' needs by using technology. Customer loyalty can be influenced by a competitor's new products, especially offerings that could provide cost savings or a higher return to the customer. Increased lending activity of competing banks following the recent downturn has also led to increased competitive pressures on loan rates and terms for high-quality credits. We may not be able to compete successfully with other financial institutions in our markets, and we may have to pay higher interest rates to attract deposits, accept lower yields to attract loans and pay higher wages for new employees, resulting in lower net interest margins and reduced profitability.

        Many of our nonbank competitors are not subject to the same extensive regulations that govern our activities and may have greater flexibility in competing for business. The financial services industry

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could become even more competitive as a result of legislative, regulatory and technological changes and continued consolidation. In addition, some of our current commercial banking customers may seek alternative banking sources as they develop needs for credit facilities larger than we may be able to accommodate. Our inability to compete successfully in the markets in which we operate could have a material adverse effect on our business, financial condition or results of operations.

Negative public opinion regarding our company or failure to maintain our reputation in the communities we serve could adversely affect our business and prevent us from growing our business.

        As a community bank, our reputation within the communities we serve is critical to our success. We believe we have set ourselves apart from our competitors by building strong personal and professional relationships with our customers and being active members of the communities we serve. As such, we strive to enhance our reputation by recruiting, hiring and retaining employees who share our core values of being an integral part of the communities we serve and delivering superior service to our customers. If our reputation is negatively affected by the actions of our employees or otherwise, we may be less successful in attracting new talent and customers or may lose existing customers, and our business, financial condition and results of operations could be adversely affected. Further, negative public opinion can expose us to litigation and regulatory action and delay and impede our efforts to implement our expansion strategy, which could further adversely affect our business, financial condition and results of operations.

We could recognize losses on investment securities held in our securities portfolio, particularly if interest rates increase or economic and market conditions deteriorate.

        While we attempt to invest a significant majority of our total assets in loans (our loan-to-asset ratio was 74.6% as of June 30, 2017), we invest a percentage of our total assets (7.5% as of June 30, 2017) in investment securities with the primary objectives of providing a source of liquidity, providing an appropriate return on funds invested, managing interest rate risk, meeting pledging requirements and meeting regulatory capital requirements. As of June 30, 2017, the fair value of our available for sale investment securities portfolio was $220.3 million, which included a net unrealized loss of $17.0 million. Factors beyond our control can significantly and adversely influence the fair value of securities in our portfolio. For example, fixed-rate securities are generally subject to decreases in market value when interest rates rise. Additional factors include, but are not limited to, rating agency downgrades of the securities, defaults by the issuer or individual borrowers with respect to the underlying securities, and instability in the credit markets. Any of the foregoing factors could cause other-than-temporary impairment in future periods and result in realized losses. The process for determining whether impairment is other-than-temporary usually requires difficult, subjective judgments about the future financial performance of the issuer and any collateral underlying the security in order to assess the probability of receiving all contractual principal and interest payments on the security. Although we have not recognized other-than-temporary impairment related to our investment portfolio as of June 30, 2017, changing economic and market conditions affecting interest rates, the financial condition of issuers of the securities and the performance of the underlying collateral, among other factors, may cause us to recognize realized and/or unrealized losses in future periods, which could have a material adverse effect on our business, financial condition and results of operations.

The accuracy of our financial statements and related disclosures could be affected if the judgments, assumptions or estimates used in our critical accounting policies are inaccurate.

        The preparation of financial statements and related disclosures in conformity with GAAP requires us to make judgments, assumptions and estimates that affect the amounts reported in our consolidated financial statements and accompanying notes. Our critical accounting policies, which are included in the section captioned "Management's Discussion and Analysis of Financial Condition and Results of

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Operations" in this prospectus, describe those significant accounting policies and methods used in the preparation of our consolidated financial statements that we consider "critical" because they require judgments, assumptions and estimates that materially affect our consolidated financial statements and related disclosures. As a result, if future events or regulatory views concerning such analysis differ significantly from the judgments, assumptions and estimates in our critical accounting policies, those events or assumptions could have a material impact on our consolidated financial statements and related disclosures, in each case resulting in our needing to revise or restate prior period financial statements, cause damage to our reputation and the price of our common stock, and adversely affect our business, financial condition and results of operations.

There could be material changes to our financial statements and disclosures if there are changes in accounting standards or regulatory interpretations of existing standards.

        From time to time the FASB or the SEC may change the financial accounting and reporting standards that govern the preparation of our financial statements. Such changes may result in us being subject to new or changing accounting and reporting standards. In addition, the bodies that interpret the accounting standards (such as banking regulators or outside auditors) may change their interpretations or positions on how new or existing standards should be applied. These changes may be beyond our control, can be hard to predict and can materially impact how we record and report our financial condition and results of operations. In some cases, we could be required to apply a new or revised standard retrospectively, or apply an existing standard differently and retrospectively, in each case resulting in our needing to revise or restate prior period financial statements, which could materially change our financial statements and related disclosures, cause damage to our reputation and the price of our common stock, and adversely affect our business, financial condition and results of operations.

We depend on our information technology and telecommunications systems of third parties, and any systems failures, interruptions or data breaches involving these systems could adversely affect our operations and financial condition.

        Our business depends on the successful and uninterrupted functioning of our information technology and telecommunications systems including with third-party servicers and financial intermediaries. We outsource many of our major systems. Specifically, we rely on third parties for certain services, including, but not limited to, core systems processing, website hosting, internet services, monitoring our network and other processing services. Our business depends on the successful and uninterrupted functioning of our information technology and telecommunications systems and third-party servicers. The failure of these systems, a cyber security breach involving any of our third-party service providers, or the termination or change in terms of a third-party software license or service agreement on which any of these systems is based, could interrupt our operations. Because our information technology and telecommunications systems interface with and depend on third-party systems, we could experience service denials if demand for such services exceeds capacity or such third-party systems fail or experience interruptions. Replacing vendors or addressing other issues with our third-party service providers could entail significant delay, expense and disruption of service.

        As a result, if these third-party service providers experience difficulties, are subject to cyber security breaches, or terminate their services, and we are unable to replace them with other service providers, particularly on a timely basis, our operations could be interrupted. If an interruption were to continue for a significant period of time, our business, financial condition and results of operations could be adversely affected. Even if we are able to replace third-party service providers, it may be at a higher cost to us, which could adversely affect our business, financial condition and results of operations.

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        In addition, the Bank's primary federal regulator, the Office of the Comptroller of the Currency, or OCC, has recently issued guidance outlining the expectations for third-party service provider oversight and monitoring by financial institutions. The federal banking agencies, including the OCC, have recently issued enforcement actions against financial institutions for failure in oversight of third-party providers and violations of federal banking law by such providers when performing services for financial institutions. Accordingly, our operations could be interrupted if any of our third-party service providers experience difficulty, are subject to cyber security breaches, terminate their services or fail to comply with banking regulations, which could adversely affect our business, financial condition and results of operations. In addition, our failure to adequately oversee the actions of our third-party service providers could result in regulatory actions against the Bank, which could adversely affect our business, financial condition and results of operations.

System failure or cyber security breaches of our network security could subject us to increased operating costs as well as litigation and other potential losses.

        Our computer systems and network infrastructure could be vulnerable to hardware and cyber security issues. Our operations are dependent upon our ability to protect our computer equipment against damage from fire, power loss, telecommunications failure or a similar catastrophic event. We could also experience a breach by intentional or negligent conduct on the part of employees or other internal sources. Any damage or failure that causes an interruption in our operations could have an adverse effect on our financial condition and results of operations. In addition, our operations are dependent upon our ability to protect our computer systems and network infrastructure, including our digital, mobile and internet banking activities, against damage from physical break-ins, cyber security breaches and other disruptive problems caused by the internet or other users. Such computer break-ins and other disruptions would jeopardize the security of information stored in and transmitted through our computer systems and network infrastructure, which may result in significant liability, damage our reputation and inhibit the use of our internet banking services by current and potential customers. We regularly add additional security measures to our computer systems and network infrastructure to mitigate the possibility of cyber security breaches, including firewalls and penetration testing. However, it is difficult or impossible to defend against every risk being posed by changing technologies as well as acts of cyber-crime. Increasing sophistication of cyber criminals and terrorists make keeping up with new threats difficult and could result in a system breach. Controls employed by our information technology department and cloud vendors could prove inadequate. A breach of our security that results in unauthorized access to our data could expose us to a disruption or challenges relating to our daily operations, as well as to data loss, litigation, damages, fines and penalties, significant increases in compliance costs and reputational damage, any of which could have an adverse effect on our business, financial condition and results of operations.

We have a continuing need for technological change and we may not have the resources to effectively implement new technology, or we may experience operational challenges when implementing new technology, or technology needed to compete effectively with larger institutions may not be available to us on a cost effective basis.

        The financial services industry is undergoing rapid technological changes with frequent introductions of new technology-driven products and services. In addition to better serving customers, the effective use of technology increases efficiency and enables financial institutions to reduce costs. Our future success will depend, at least in part, upon our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer demands for convenience as well as to create additional efficiencies in our operations as we continue to grow and expand our products and service offerings. We may experience operational challenges as we implement these new technology enhancements or products, which could impair our ability to realize the

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anticipated benefits from such new technology or require us to incur significant costs to remedy any such challenges in a timely manner.

        Many of our larger competitors have substantially greater resources to invest in technological improvements. Third parties upon which we rely for our technology needs may not be able to develop on a cost-effective basis systems that will enable us to keep pace with such developments. As a result, they may be able to offer additional or superior products compared to those that we will be able to provide, which would put us at a competitive disadvantage. We may lose customers seeking new technology-driven products and services to the extent we are unable to provide such products and services. Accordingly, the ability to keep pace with technological change is important and the failure to do so could adversely affect our business, financial condition and results of operations.

We are subject to laws regarding the privacy, information security and protection of personal information and any violation of these laws or another incident involving personal, confidential or proprietary information of individuals could damage our reputation and otherwise adversely affect our operations and financial condition.

        Our business requires the collection and retention of large volumes of customer data, including personally identifiable information in various information systems that we maintain and in those maintained by third parties with whom we contract to provide data services. We also maintain important internal company data such as personally identifiable information about our employees and information relating to our operations. We are subject to complex and evolving laws and regulations governing the privacy and protection of personal information of individuals (including customers, employees, suppliers and other third parties). For example, our business is subject to the Gramm-Leach-Bliley Act which, among other things: (i) imposes certain limitations on our ability to share nonpublic personal information about our customers with nonaffiliated third parties; (ii) requires that we provide certain disclosures to customers about our information collection, sharing and security practices and afford customers the right to "opt out" of any information sharing by us with nonaffiliated third parties (with certain exceptions); and (iii) requires that we develop, implement and maintain a written comprehensive information security program containing appropriate safeguards based on our size and complexity, the nature and scope of our activities, and the sensitivity of customer information we process, as well as plans for responding to data security breaches. Various state and federal banking regulators and states have also enacted data security breach notification requirements with varying levels of individual, consumer, regulatory or law enforcement notification in certain circumstances in the event of a security breach. Ensuring that our collection, use, transfer and storage of personal information complies with all applicable laws and regulations can increase our costs.

        Furthermore, we may not be able to ensure that all of our clients, suppliers, counterparties and other third parties have appropriate controls in place to protect the confidentiality of the information that they exchange with us, particularly where such information is transmitted by electronic means. If personal, confidential or proprietary information of customers or others were to be mishandled or misused (in situations where, for example, such information was erroneously provided to parties who are not permitted to have the information, or where such information was intercepted or otherwise compromised by third parties), we could be exposed to litigation or regulatory sanctions under personal information laws and regulations. Concerns regarding the effectiveness of our measures to safeguard personal information, or even the perception that such measures are inadequate, could cause us to lose customers or potential customers for our products and services and thereby reduce our revenues. Accordingly, any failure or perceived failure to comply with applicable privacy or data protection laws and regulations may subject us to inquiries, examinations and investigations that could result in requirements to modify or cease certain operations or practices or in significant liabilities, fines or penalties, and could damage our reputation and otherwise adversely affect our operations and financial condition.

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We are subject to certain operational risks, including, but not limited to, customer, employee or third-party fraud and data processing system failures and errors.

        Because we are a financial institution, employee errors and employee or customer misconduct could subject us in particular to financial losses or regulatory sanctions and seriously harm our reputation. Misconduct by our employees could include hiding unauthorized activities from us, improper or unauthorized activities on behalf of our customers or improper use of confidential information, each of which can be particularly damaging for financial institutions. It is not always possible to prevent employee errors and misconduct, and the precautions we take to prevent and detect this activity may not be effective in all cases. Employee errors could also subject us to financial claims for negligence.

        We maintain a system of internal controls to mitigate operational risks, including data processing system failures and errors and customer or employee fraud, as well as insurance coverage designed to protect us from material losses associated with these risks, including losses resulting from any associated business interruption. If our internal controls fail to prevent or detect an occurrence, or if any resulting loss is not insured or exceeds applicable insurance limits, it could adversely affect our business, financial condition and results of operations.

We depend on the accuracy and completeness of information provided to us by our borrowers and counterparties and any misrepresented information could adversely affect our business, results of operations and financial condition.

        In deciding whether to approve loans or to enter into other transactions with borrowers and counterparties, we rely on information furnished to us by, or on behalf of, borrowers and counterparties, including financial statements, credit reports and other financial information. We also rely on representations of borrowers and counterparties as to the accuracy and completeness of that information and, with respect to financial statements, on reports of independent auditors. If any of this information is intentionally or negligently misrepresented and such misrepresentation is not detected prior to loan funding, the value of the loan may be significantly lower than expected and we may be subject to regulatory action. Whether a misrepresentation is made by the loan applicant, another third party, or one of our employees, we generally bear the risk of loss associated with the misrepresentation. Our controls and processes may not have detected, or may not detect all, misrepresented information in our loan originations or from our business clients. Any such misrepresented information could adversely affect our business, financial condition and results of operations.

We may be subject to environmental liabilities in connection with the real properties we own and the foreclosure on real estate assets securing our loan portfolio.

        In the course of our business, we may purchase real estate in connection with our acquisition and expansion efforts, or we may foreclose on and take title to real estate or otherwise be deemed to be in control of property that serves as collateral on loans we make. As a result, we could be subject to environmental liabilities with respect to those properties. We may be held liable to a governmental entity or to third parties for property damage, personal injury, investigation and clean-up costs incurred by these parties in connection with environmental contamination, or we may be required to investigate or clean up hazardous or toxic substances or chemical releases at a property. The costs associated with investigation or remediation activities could be substantial. In addition, if we are the owner or former owner of a contaminated site, we may be subject to common law claims by third parties based on damages and costs resulting from environmental contamination emanating from the property.

        The cost of removal or abatement may substantially exceed the value of the affected properties or the loans secured by those properties, we may not have adequate remedies against the prior owners or other responsible parties and we may not be able to resell the affected properties either before or after

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completion of any such removal or abatement procedures. If material environmental problems are discovered before foreclosure, we generally will not foreclose on the related collateral or will transfer ownership of the loan to a subsidiary. It should be noted, however, that the transfer of the property or loans to a subsidiary may not protect us from environmental liability. Furthermore, despite these actions on our part, the value of the property as collateral will generally be substantially reduced or we may elect not to foreclose on the property and, as a result, we may suffer a loss upon collection of the loan. Any significant environmental liabilities could have a material adverse effect on our business, financial condition and results of operations.

We are subject to claims and litigation pertaining to intellectual property in addition to other litigation in the ordinary course of business.

        Banking and other financial services companies, such as our company, rely on technology companies to provide information technology products and services necessary to support their day-to-day operations. Technology companies frequently enter into litigation based on allegations of patent infringement or other violations of intellectual property rights. In addition, patent holding companies seek to monetize patents they have purchased or otherwise obtained. Competitors of our vendors, or other individuals or companies, may from time to time claim to hold intellectual property sold to us by our vendors. Such claims may increase in the future as the financial services sector becomes more reliant on information technology vendors. The plaintiffs in these actions frequently seek injunctions and substantial damages.

        Regardless of the scope or validity of such patents or other intellectual property rights, or the merits of any claims by potential or actual litigants, we may have to engage in protracted litigation. Such litigation is often expensive, time-consuming, disruptive to our operations and distracting to management. If we are found to infringe one or more patents or other intellectual property rights, we may be required to pay substantial damages or royalties to a third party. In certain cases, we may consider entering into licensing agreements for disputed intellectual property, although no assurance can be given that such licenses can be obtained on acceptable terms or that litigation will not occur. These licenses may also significantly increase our operating expenses. If legal matters related to intellectual property claims were resolved against us or settled, we could be required to make payments in amounts that could have a material adverse effect on our business, financial condition and results of operations.

        In addition to litigation relating to intellectual property, we are regularly involved in litigation matters in the ordinary course of business. While we believe that these litigation matters should not have a material adverse effect on our business, financial condition, results of operations or future prospects, we may be unable to successfully defend or resolve any current or future litigation matters, in which case those litigation matters could have a material adverse effect on our business, financial condition and results of operations.

We have entered into employment agreements with certain of our officers, which may increase our compensation costs upon the occurrence of certain events or increase the cost of acquiring us.

        We have entered into employment agreements with certain of our officers, which may increase our compensation costs upon the occurrence of certain events or increase the cost of acquiring us. In the event of termination of employment other than for cause, or in the event of certain types of termination following a change in control, as set forth in the relevant employment agreement, the agreement will provide for cash severance benefits based on such officer's current base salary and the terms of such agreement. For additional information see "Executive Compensation."

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If the goodwill that we have recorded or may record in connection with a business acquisition becomes impaired, it could require charges to earnings, which could have a material adverse effect on our business, financial condition and results of operations.

        Goodwill represents the amount by which the cost of an acquisition exceeded the fair value of net assets we acquired in connection with the purchase of another financial institution. We review goodwill for impairment at least annually, or more frequently if a triggering event occurs which indicates that the carrying value of the asset might be impaired.

        Our goodwill impairment test involves a two-step process. Under the first step, the estimation of fair value of the reporting unit is compared to its carrying value including goodwill. If step one indicates a potential impairment, the second step is performed to measure the amount of impairment, if any. If the carrying amount of the reporting unit goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. Any such adjustments are reflected in our results of operations in the periods in which they become known. As of June 30, 2017, our goodwill totaled $81.0 million. While we have not recorded any impairment charges since we initially recorded the goodwill, there can be no assurance that our future evaluations of our existing goodwill or goodwill we may acquire in the future will not result in findings of impairment and related write-downs, which could adversely affect our business, financial condition and results of operations.

Risks Related to the Regulation of Our Industry

We operate in a highly regulated environment and the laws and regulations that govern our operations, corporate governance, executive compensation and accounting principles, or changes in them, or our failure to comply with them, could adversely affect us.

        Banking is highly regulated under federal and state law. As such, we are subject to extensive regulation, supervision and legal requirements that govern almost all aspects of our operations. These laws and regulations are not intended to protect our shareholders. Rather, these laws and regulations are intended to protect customers, depositors, the Deposit Insurance Fund and the overall financial stability of the United States. These laws and regulations, among other matters, prescribe minimum capital requirements, impose limitations on the business activities in which we can engage, limit the dividend or distributions that the Bank can pay to us, restrict the ability of institutions to guarantee our debt and impose certain specific accounting requirements on us that may be more restrictive and may result in greater or earlier charges to earnings or reductions in our capital than GAAP would require. Compliance with laws and regulations can be difficult and costly, and changes to laws and regulations often impose additional operating costs. Our failure to comply with these laws and regulations, even if the failure follows good faith effort or reflects a difference in interpretation, could subject us to restrictions on our business activities, enforcement actions and fines and other penalties, any of which could adversely affect our results of operations, regulatory capital levels and the price of our securities. Further, any new laws, rules and regulations, such as the Dodd-Frank Act, could make compliance more difficult or expensive or otherwise adversely affect our business, financial condition and results of operations.

The ongoing implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, could adversely affect our business, financial condition, and results of operations.

        On July 21, 2010, the Dodd-Frank Act was signed into law, and the process of implementation is ongoing. The Dodd-Frank Act imposes significant regulatory and compliance changes on many industries, including ours. There remains significant uncertainty surrounding the manner in which the provisions of the Dodd-Frank Act will ultimately be implemented by the various regulatory agencies and the full extent of the impact of the requirements on our operations is unclear, especially in light of the Trump administration's recent executive order calling for a full review of the Dodd-Frank Act and

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the regulations promulgated under it. The changes resulting from the Dodd-Frank Act may impact the profitability of our business activities, require changes to certain of our business practices, require the development of new compliance infrastructure, impose upon us more stringent capital, liquidity and leverage requirements or otherwise adversely affect our business. These changes may also require us to invest significant management attention and resources to evaluate and make any changes necessary to comply with new statutory and regulatory requirements. Failure to comply with the new requirements or with any future changes in laws or regulations could adversely affect our business, financial condition and results of operations.

Federal banking agencies periodically conduct examinations of our business, including compliance with laws and regulations, and our failure to comply with any supervisory actions to which we are or become subject as a result of such examinations could adversely affect us.

        As part of the bank regulatory process, the OCC and the Federal Reserve System periodically conduct examinations of our business, including compliance with laws and regulations. If, as a result of an examination, one of these federal banking agencies were to determine that the financial condition, capital resources, asset quality, earnings prospects, management, liquidity, asset sensitivity, risk management or other aspects of any of our operations have become unsatisfactory, or that our Company, the Bank or their respective management were in violation of any law or regulation, it may take a number of different remedial actions as it deems appropriate. These actions include the power to enjoin "unsafe or unsound" practices, to require affirmative actions to correct any conditions resulting from any violation or practice, to issue an administrative order that can be judicially enforced, to direct an increase in our capital levels, to restrict our growth, to assess civil monetary penalties against us, the Bank or their respective officers or directors, to remove officers and directors and, if it is concluded that such conditions cannot be corrected or there is an imminent risk of loss to depositors, to terminate the Bank's deposit insurance. If we become subject to such regulatory actions, our business, financial condition, results of operations and reputation could be adversely affected.

We recently became subject to more stringent capital requirements, which may result in lower returns on equity, require the raising of additional capital, limit our ability to repurchase shares or pay dividends and discretionary bonuses, or result in regulatory action.

        The Dodd-Frank Act requires the federal banking agencies to establish stricter risk-based capital requirements and leverage limits to apply to banks and bank and savings and loan holding companies. In July 2013, the federal banking agencies published new capital rules, referred to herein as the Basel III capital rules, which revised their risk-based and leverage capital requirements and their method for calculating risk-weighted assets. The Basel III capital rules apply to all bank holding companies with $1.0 billion or more in consolidated assets and all banks regardless of size. The Basel III capital rules became effective as applied to us on January 1, 2015, with a phase-in period for the new capital conservation buffer that generally extends from January 1, 2015 through January 1, 2019. See "Supervision and Regulation—CBTX, Inc.—Revised Rules on Regulatory Capital."

        As a result of the enactment of the Basel III capital rules, we became subject to increased required capital levels. Our inability to comply with these more stringent capital requirements could, among other things, result in lower returns on equity; require the raising of additional capital; limit our ability to repurchase shares or pay dividends and discretionary bonuses; or result in regulatory actions, any of which could adversely affect our business, financial condition and results of operations.

Many of our new activities and expansion plans require regulatory approvals, and failure to obtain them may restrict our growth.

        We intend to complement and expand our business by pursuing strategic acquisitions of financial institutions and other complementary businesses, and expansion of the Bank's banking location

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network, or de novo branching. Generally, we must receive federal regulatory approval before we can acquire a depository institution or related business insured by the Federal Deposit Insurance Corporation, or FDIC, or before we open a de novo branch. In determining whether to approve a proposed acquisition, federal banking regulators will consider, among other factors, the effect of the acquisition on competition, our financial condition, our future prospects, and the impact of the proposal on U.S. financial stability. The regulators also review current and projected capital ratios and levels, the competence, experience and integrity of management and its record of compliance with laws and regulations, the convenience and needs of the communities to be served (including the acquiring institution's record of compliance under the Community Reinvestment Act, or the CRA) and the effectiveness of the acquiring institution in combating money laundering activities. Such regulatory approvals may not be granted on terms that are acceptable to us, or at all. We may also be required to sell banking locations as a condition to receiving regulatory approval, which condition may not be acceptable to us or, if acceptable to us, may reduce the benefit of any acquisition.

Financial institutions, such as the Bank, face a risk of noncompliance and enforcement action with the Bank Secrecy Act and other anti-money laundering statutes and regulations.

        The Bank Secrecy Act, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, or the USA PATRIOT Act, and other laws and regulations require financial institutions, among other duties, to institute and maintain an effective anti-money laundering program and file suspicious activity and currency transaction reports as appropriate. The Financial Crimes Enforcement Network, established by the U.S. Department of the Treasury, or the Treasury Department, to administer the Bank Secrecy Act, is authorized to impose significant civil money penalties for violations of those requirements and has recently engaged in coordinated enforcement efforts with the individual federal banking regulators, as well as the U.S. Department of Justice, Drug Enforcement Administration and the Internal Revenue Service. There is also increased scrutiny of compliance with the sanctions programs and rules administered and enforced by the Treasury Department's Office of Foreign Assets Control.

        In order to comply with regulations, guidelines and examination procedures in this area, we have dedicated significant resources to our anti-money laundering program. If our policies, procedures and systems are deemed deficient, we could be subject to liability, including fines and regulatory actions such as restrictions on our ability to pay dividends and the inability to obtain regulatory approvals to proceed with certain aspects of our business plans, including acquisitions and de novo branching.

We are subject to numerous laws designed to protect consumers, including the Community Reinvestment Act, or CRA, and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions.

        The CRA, the Equal Credit Opportunity Act, the Fair Housing Act and other fair lending laws and regulations impose nondiscriminatory lending requirements on financial institutions. The Consumer Financial Protection Bureau, or CFPB, the U.S. Department of Justice and other federal agencies are responsible for enforcing these laws and regulations. The CFPB was created under the Dodd-Frank Act to centralize responsibility for consumer financial protection with broad rulemaking authority to administer and carry out the purposes and objectives of federal consumer financial laws with respect to all financial institutions that offer financial products and services to consumers. The CFPB is also authorized to prescribe rules applicable to any covered person or service provider, identifying and prohibiting acts or practices that are "unfair, deceptive, or abusive" in connection with any transaction with a consumer for a consumer financial product or service, or the offering of a consumer financial product or service. The ongoing broad rulemaking powers of the CFPB have potential to have a significant impact on the operations of financial institutions offering consumer financial products or services. The CFPB has indicated that it may propose new rules on overdrafts and other consumer financial products or services, which could have a material adverse effect on our business, financial

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condition and results of operations if any such rules limit our ability to provide such financial products or services.

        A successful regulatory challenge to an institution's performance under the CRA, fair lending laws or regulations, or consumer lending laws and regulations could result in a wide variety of sanctions, including damages and civil money penalties, injunctive relief, restrictions on mergers and acquisitions activity, restrictions on expansion, and restrictions on entering new business lines. Private parties may also have the ability to challenge an institution's performance under fair lending laws in private class action litigation. Such actions could have a material adverse effect on our business, financial condition and results of operations.

Failure to comply with economic and trade sanctions or with applicable anti-corruption laws could have a material adverse effect on our business, financial condition and results of operations.

        The Office of Foreign Assets Control, or OFAC, administers and enforces economic and trade sanctions against targeted foreign countries and regimes, under authority of various laws, including designated foreign countries, nationals and others. We are responsible for, among other things, blocking accounts of, and transactions with, such persons and countries, prohibiting unlicensed trade and financial transactions with them and reporting blocked transactions after their occurrence. Through our Company and the Bank, and our agents and employees, we are subject to the Foreign Corrupt Practices Act, or the FCPA, which prohibits offering, promising, giving, or authorizing others to give anything of value, either directly or indirectly, to a non-U.S. government official in order to influence official action or otherwise gain an unfair business advantage. The Company is also subject to applicable anti-corruption laws in the jurisdictions in which it may operate. The Company has implemented policies, procedures and internal controls that are designed to comply with economic and trade sanctions or with applicable anti-corruption laws, including the FCPA. Failure to comply with economic and trade sanctions or with applicable anti-corruption laws, including the FCPA, could have serious legal and reputational consequences for us.

Federal, state and local consumer lending laws may restrict our ability to originate certain mortgage loans or increase our risk of liability with respect to such loans and could increase our cost of doing business.

        Federal, state and local laws have been adopted that are intended to eliminate certain lending practices considered "predatory." These laws prohibit practices such as steering borrowers away from more affordable products, selling unnecessary insurance to borrowers, repeatedly refinancing loans and making loans without a reasonable expectation that the borrowers will be able to repay the loans irrespective of the value of the underlying property. It is our policy not to make predatory loans, but these laws create the potential for liability with respect to our lending and loan investment activities. They increase our cost of doing business and, ultimately, may prevent us from making certain loans and cause us to reduce the average percentage rate or the points and fees on loans that we do make.

The expanding body of federal, state and local regulations and/or the licensing of loan servicing, collections or other aspects of our business and our sales of loans to third parties may increase the cost of compliance and the risks of noncompliance and subject us to litigation.

        We service some of our own loans, and loan servicing is subject to extensive regulation by federal, state and local governmental authorities, as well as various laws and judicial and administrative decisions imposing requirements and restrictions on those activities. The volume of new or modified laws and regulations has increased in recent years and, in addition, some individual municipalities have begun to enact laws that restrict loan servicing activities, including delaying or temporarily preventing foreclosures or forcing the modification of certain mortgages. If regulators impose new or more restrictive requirements, we may incur additional significant costs to comply with such requirements, which may further adversely affect us. In addition, were we to be subject to regulatory investigation or

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regulatory action regarding our loan modification and foreclosure practices, our financial condition and results of operation could be adversely affected.

        In addition, we and our legacy companies have sold loans to third parties. In connection with these sales, we or certain of our subsidiaries or legacy companies make or have made various representations and warranties, breaches of which may result in a requirement that we repurchase the loans, or otherwise make whole or provide other remedies to counterparties. These aspects of our business or our failure to comply with applicable laws and regulations could possibly lead to: civil and criminal liability; loss of licensure; damage to our reputation in the industry; fines and penalties and litigation, including class action lawsuits; and administrative enforcement actions. Any of these outcomes could materially and adversely affect us.

Potential limitations on incentive compensation contained in proposed federal agency rulemaking may adversely affect our ability to attract and retain our highest performing employees.

        In April 2011 and May 2016, the Federal Reserve, other federal banking agencies and the SEC jointly published proposed rules designed to implement provisions of the Dodd-Frank Act prohibiting incentive compensation arrangements that would encourage inappropriate risk taking at covered financial institutions, which includes a bank or bank holding company with $1 billion or more in assets, such as the Bank. It cannot be determined at this time whether or when a final rule will be adopted and whether compliance with such a final rule will substantially affect the manner in which we structure compensation for our executives and other employees. Depending on the nature and application of the final rules, we may not be able to successfully compete with certain financial institutions and other companies that are not subject to some or all of the rules to retain and attract executives and other high performing employees. If this were to occur, relationships that we have established with our clients may be impaired and our business, financial condition and results of operations could be adversely affected, perhaps materially.

Increases in FDIC insurance premiums could adversely affect our earnings and results of operations.

        We are generally unable to control the amount of premiums that we are required to pay for FDIC insurance. As a result of economic conditions and the enactment of the Dodd-Frank Act, the FDIC has in recent years increased deposit insurance assessment rates, which in turn raised deposit premiums for many insured depository institutions. In 2010, the FDIC increased the Deposit Insurance Fund's target reserve ratio to 2.0% of insured deposits following the Dodd-Frank Act's elimination of the 1.5% cap on the insurance fund's reserve ratio, and the FDIC has put in place a restoration plan to restore the Deposit Insurance Fund to its 1.35% minimum reserve ratio managed by the Dodd-Frank Act by September 30, 2020. If recent increases in premiums are insufficient for the Deposit Insurance Fund to meet its funding requirements, further special assessments or increases in deposit insurance premiums may be required. Further, if there are additional financial institution failures that affect the Deposit Insurance Fund, we may be required to pay higher FDIC premiums. Our FDIC insurance related costs were approximately $1.7 million for the years ended December 31, 2016 and December 31, 2015. Any future additional assessments, increases or required prepayments in FDIC insurance premiums could adversely affect our earnings and results of operations.

The Federal Reserve may require us to commit capital resources to support the Bank.

        The Federal Reserve requires a bank holding company to act as a source of financial and managerial strength to its subsidiary banks and to commit resources to support its subsidiary banks. Under the "source of strength" doctrine that was codified by the Dodd-Frank Act, the Federal Reserve may require a bank holding company to make capital injections into a troubled subsidiary bank at times when the bank holding company may not be inclined to do so and may charge the bank holding company with engaging in unsafe and unsound practices for failure to commit resources to such a

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subsidiary bank. Accordingly, we could be required to provide financial assistance to the Bank if it experiences financial distress.

        A capital injection may be required at a time when our resources are limited, and we may be required to borrow the funds or raise capital to make the required capital injection. Any loan by a bank holding company to its subsidiary bank is subordinate in right with payment to deposits and certain other indebtedness of such subsidiary bank. In the event of a bank holding company's bankruptcy, the bankruptcy trustee will assume any commitment by the holding company to a federal bank regulatory agency to maintain the capital of a subsidiary bank. Moreover, bankruptcy law provides that claims based on any such commitment will be entitled to a priority of payment over the claims of the holding company's general unsecured creditors, including the holders of any note obligations. Thus, any borrowing by a bank holding company for the purpose of making a capital injection to a subsidiary bank often becomes more difficult and expensive relative to other corporate borrowings.

We could be adversely affected by the soundness of other financial institutions.

        Financial services institutions are interrelated as a result of trading, clearing, counterparty or other relationships. We have exposure to many different industries and counterparties, and routinely execute transactions with counterparties in the financial services industry, including commercial banks, brokers and dealers, investment banks and other institutional clients. Many of these transactions expose us to credit risk in the event of a default by a counterparty or client. In addition, our credit risk may be exacerbated when our collateral cannot be foreclosed upon or is liquidated at prices not sufficient to recover the full amount of the credit or derivative exposure due. Any such losses could adversely affect our business, financial condition and results of operations.

Monetary policies and regulations of the Federal Reserve could adversely affect our business, financial condition and results of operations.

        In addition to being affected by general economic conditions, our earnings and growth are affected by the policies of the Federal Reserve. An important function of the Federal Reserve is to regulate the U.S. money supply and credit conditions. Among the instruments used by the Federal Reserve to implement these objectives are open market purchases and sales of securities by the Federal Reserve, adjustments of both the discount rate and the federal funds rate and changes in reserve requirements against bank deposits. These instruments are used in varying combinations to influence overall economic growth and the distribution of credit, bank loans, investments and deposits. Their use also affects interest rates charged on loans or paid on deposits.

        The monetary policies and regulations of the Federal Reserve have had a significant effect on the operating results of commercial banks in the past and are expected to continue to do so in the future. Although we cannot determine the effects of such policies on us at this time, such policies could adversely affect our business, financial condition and results of operations.

We are subject to commercial real estate lending guidance issued by the federal banking regulators that impacts our operations and capital requirements.

        The OCC and the other federal bank regulatory agencies have promulgated joint guidance on sound risk management practices for financial institutions regarding concentrations in commercial real estate lending. Under the guidance, a financial institution that, like us, is actively involved in commercial real estate lending should perform a risk assessment to identify concentrations. A financial institution may have a concentration in commercial real estate lending if, among other factors, (1) total reported loans for construction, land acquisition and development, and other land represent 100% or more of total capital, or (2) total reported loans secured by multi-family and nonfarm residential properties, loans for construction, land acquisition and development and other land, and loans

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otherwise sensitive to the general commercial real estate market, including loans to commercial real estate related entities, represent 300% or more of total capital. At June 30, 2017, the Bank's ratios under these tests were 125.1% and 300.0%, respectively. The particular focus of the guidance is on exposure to commercial real estate loans that are dependent on the cash flow from the real estate held as collateral and that are likely to be at greater risk to conditions in the commercial real estate market (as opposed to real estate collateral held as a secondary source of repayment or as an abundance of caution). The purpose of the guidance is to guide banks in developing risk management practices and capital levels commensurate with the level and nature of real estate concentrations. The guidance states that management should employ heightened risk management practices including board and management oversight and strategic planning, development of underwriting standards, risk assessment and monitoring through market analysis and stress testing. While we believe we have implemented policies and procedures with respect to our commercial real estate loan portfolio consistent with this guidance, bank regulators could require us to implement additional policies and procedures consistent with their interpretation of the guidance that may result in additional costs to us or that may result in a curtailment of our commercial real estate lending and/or the requirement that we maintain higher levels of regulatory capital, either of which would adversely affect our loan originations and profitability.

Risks Related to an Investment in our Common Stock

There is currently no regular market for our common stock. An active, liquid market for our common stock may not develop or be sustained upon completion of this offering, which may impair your ability to sell your shares.

        Our common stock is not currently traded on an established public trading market. As a result, there is no regular market for our common stock. We have applied to list our common stock on the Nasdaq Global Select Market, but an active, liquid trading market for our common stock may not develop or be sustained following this offering. A public trading market having the desired characteristics of depth, liquidity and orderliness depends upon the presence in the marketplace and independent decisions of willing buyers and sellers of our common stock, over which we have no control. Without an active, liquid trading market for our common stock, shareholders may not be able to sell their shares at the volume, prices and times desired. Moreover, the lack of an established market could materially and adversely affect the value of our common stock. The market price of our common stock could decline significantly due to actual or anticipated issuances or sales of our common stock in the future.

The market price of our common stock may be subject to substantial fluctuations, which may make it difficult for you to sell your shares at the volume, prices and times desired.

        The market price of our common stock may be highly volatile, which may make it difficult for you to resell your shares at the volume, prices and times desired. There are many factors that may affect the market price and trading volume of our common stock, including, without limitation:

•

actual or anticipated fluctuations in our operating results, financial condition or asset quality;

•

changes in economic or business conditions;

•

the effects of, and changes in, trade, monetary and fiscal policies, including the interest rate policies of the Federal Reserve;

•

publication of research reports about us, our competitors, or the financial services industry generally, or changes in, or failure to meet, securities analysts' estimates of our financial and operating performance, or lack of research reports by industry analysts or ceasing of coverage;

•

operating and stock price performance of companies that investors deemed comparable to us;

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•

additional or anticipated sales of our common stock or other securities by us or our existing shareholders;

•

additions or departures of key personnel;

•

perceptions in the marketplace regarding our competitors or us, including the perception that investment in Texas is unattractive or less attractive during periods of low oil prices;

•

significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving our competitors or us;

•

other economic, competitive, governmental, regulatory and technological factors affecting our operations, pricing, products and services; and

•

other news, announcements or disclosures (whether by us or others) related to us, our competitors, our primary markets or the financial services industry.

        The stock market and, in particular, the market for financial institution stocks have experienced substantial fluctuations in recent years, which in many cases have been unrelated to the operating performance and prospects of particular companies. In addition, significant fluctuations in the trading volume in our common stock may cause significant price variations to occur. Increased market volatility may materially and adversely affect the market price of our common stock, which could make it difficult to sell your shares at the volume, prices and times desired.

The market price of our common stock could decline significantly due to actual or anticipated issuances or sales of our common stock in the future.

        Actual or anticipated issuances or sales of substantial amounts of our common stock following this offering could cause the market price of our common stock to decline significantly and make it more difficult for us to sell equity or equity-related securities in the future at a time and on terms that we deem appropriate. The issuance of any shares of our common stock in the future also would, and equity-related securities could, dilute the percentage ownership interest held by shareholders prior to such issuance. Our certificate of formation authorizes us to issue up to 90,000,000 shares of our common stock,            of which will be outstanding following the completion of this offering (or            shares if the underwriters exercise in full their option to purchase additional shares). All of the shares of common stock sold in this offering will be freely tradable, except that any shares purchased by our "affiliates" (as that term is defined in Rule 144 under the Securities Act of 1933, as amended, or the Securities Act) may be resold only in compliance with the limitations described under "Shares Eligible for Future Sale." The remaining            outstanding shares of our common stock will be deemed to be "restricted securities" as that term is defined in Rule 144, and may be resold in the United States only if they are registered for resale under the Securities Act or an exemption, such as Rule 144, is available. We also intend to file a registration statement on Form S-8 under the Securities Act to register an aggregate of approximately 895,314 shares of common stock issued or reserved for issuance under our equity incentive plans. We may issue all of these shares without any action or approval by our shareholders, and these shares, once issued (including upon exercise of outstanding options), will be available for sale into the public market, subject to the restrictions described above, if applicable, for affiliate holders.

        Further, in connection with this offering, we, our directors, our executive officers and certain shareholders have agreed to enter into lock-up agreements that restrict the sale of their holdings of our common stock for a period of 180 days from the date of this prospectus, subject to an extension in certain circumstances. The underwriters, in their discretion, may release any of the shares of our common stock subject to these lock-up agreement at any time without notice. In addition, after this offering, approximately            shares of our common stock will not be subject to lock-up. The resale of such shares could cause the market price of our stock to drop significantly, and concerns that those

45

sales may occur could cause the trading price of our common stock to decrease or to be lower than it should be.

        In addition, we may issue shares of our common stock or other securities from time to time as consideration for future acquisitions and investments and pursuant to compensation and incentive plans. If any such acquisition or investment is significant, the number of shares of our common stock, or the number or aggregate principal amount, as the case may be, of other securities that we may issue may in turn be substantial. We may also grant registration rights covering those shares of our common stock or other securities in connection with any such acquisitions and investments.

        We cannot predict the size of future issuances of our common stock or the effect, if any, that future issuances and sales of our common stock will have on the market price of our common stock. Sales of substantial amounts of our common stock (including shares of our common stock issued in connection with an acquisition or under a compensation or incentive plan), or the perception that such sales could occur, may adversely affect prevailing market prices for our common stock and could impair our ability to raise capital through future sales of our securities.

The obligations associated with being a public company will require significant resources and management attention, which will increase our costs of operations and may divert focus from our business operations.

        As a public company, we will face increased legal, accounting, administrative and other costs and expenses that we have not incurred as a private company, particularly after we no longer qualify as an emerging growth company. We expect to incur incremental costs related to operating as a public company of approximately $700,000 annually, although there can be no assurance that these costs will not be higher, particularly when we no longer qualify as an emerging growth company. After the completion of this offering, we will be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which requires that we file annual, quarterly and current reports with respect to our business and financial condition and proxy and other information statements, and the rules and regulations implemented by the SEC, the Sarbanes-Oxley Act, the Dodd-Frank Act, the PCAOB and the Nasdaq Global Select Market, each of which imposes additional reporting and other obligations on public companies. As a public company, compliance with these reporting requirements and other SEC and the Nasdaq Global Select Market rules will make certain operating activities more time-consuming, and we will also incur significant new legal, accounting, insurance and other expenses. Furthermore, the need to establish the corporate infrastructure demanded of a public company may divert management's attention from implementing our operating strategy, which could prevent us from successfully implementing our strategic initiatives and improving our results of operations. We have made, and will continue to make, changes to our internal controls and procedures for financial reporting and accounting systems to meet our reporting obligations as a public company. However, we cannot predict or estimate the amount of additional costs we may incur in order to comply with these requirements. We anticipate that these costs will materially increase our general and administrative expenses and such increases will reduce our profitability.

Investors in this offering will experience immediate and substantial dilution.

        The initial public offering price is expected to be substantially higher than the tangible book value per share of our common stock immediately following this offering. Therefore, if you purchase shares in this offering, you will experience immediate and substantial dilution in tangible book value per share in relation to the price that you paid for your shares. We expect the dilution as a result of this offering to be $      per share, based on an assumed initial public offering price of $            per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and our pro forma tangible book value of $      per share as of June 30, 2017. Accordingly, if we were liquidated at our pro forma tangible book value, you would not receive the full amount of your investment. See "Dilution."

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Securities analysts may not initiate or continue coverage on us.

        The trading market for our common stock will depend, in part, on the research and reports that securities analysts publish about us and our business. We do not have any control over these securities analysts, and they may not cover us. If one or more of these analysts cease to cover us or fail to publish regular reports on us, we could lose visibility in the financial markets, which could cause the price or trading volume of our common stock to decline. If we are covered by securities analysts and are the subject of an unfavorable report, the price of our common stock may decline.

Our management and board of directors have significant control over our business.

        As of October 6, 2017, our directors and named executive officers beneficially owned an aggregate of 7,126,792 shares, or approximately 32.2% of our issued and outstanding shares of common stock.

        Following the completion of this offering, our directors and named executive officers will beneficially own approximately            % of our outstanding common stock as a group (or       % if the underwriters exercise in full their option to purchase additional shares). Consequently, our management and board of directors may be able to significantly affect our affairs and policies, including the outcome of the election of directors and the potential outcome of other matters submitted to a vote of our shareholders, such as mergers, the sale of substantially all of our assets and other extraordinary corporate matters. This influence may also have the effect of delaying or preventing changes of control or changes in management, or limiting the ability of our other shareholders to approve transactions that they may deem to be in the best interests of our Company. The interests of these insiders could conflict with the interests of our other shareholders, including you.

We have broad discretion in the use of the net proceeds to us from this offering, and our use of these proceeds may not yield a favorable return on your investment.

        We intend to use the net proceeds to us from this offering to further implement our expansion strategy, fund organic growth in our banking markets and for general corporate purposes. We have not specifically allocated the amount of net proceeds to us that will be used for these purposes and our management will have broad discretion over how these proceeds are used and could spend these proceeds in ways with which you may not agree. In addition, we may not use the net proceeds to us from this offering effectively or in a manner that increases our market value or enhances our profitability. We have not established a timetable for the effective deployment of the net proceeds to us, and we cannot predict how long it will take to deploy these proceeds. Investing the net proceeds to us in securities until we are able to deploy these proceeds will provide lower yields than we generally earn on loans, which may have an adverse effect on our profitability. Although we may, from time to time in the ordinary course of business, evaluate potential acquisition opportunities that we believe provide attractive risk-adjusted returns, we do not have any immediate plans, arrangements or understandings relating to any acquisitions, nor are we engaged in negotiations with any potential acquisition targets. Likewise, although we regularly consider establishing de novo banking locations and organic growth initiatives within our current and potential new markets, we do not have any immediate plans, arrangements or understandings relating to the establishment of any de novo banking locations or any other organic growth initiatives outside of the ordinary course of business.

The holders of our existing debt obligations, as well as debt obligations that may be outstanding in the future, will have priority over our common stock with respect to payment in the event of liquidation, dissolution or winding up and with respect to the payment of interest.

        In the event of any liquidation, dissolution or winding up of the Company, our common stock would rank below all claims of debt holders against us. As of June 30, 2017, we had outstanding approximately $25.5 million of senior debt obligations relating to advances on our line of credit loan

47

secured by the capital stock of the Bank, and approximately $6.7 million in aggregate principal amount of junior subordinated debentures issued to statutory trusts that, in turn, have issued and outstanding $10.5 million of trust preferred securities. Payments of the principal and interest on the trust preferred securities are conditionally guaranteed by us. Our debt obligations are senior to our shares of common stock. As a result, we must make payments on our debt obligations before any dividends can be paid on our common stock. In the event of our bankruptcy, dissolution or liquidation, the holders of our debt obligations must be satisfied before any distributions can be made to the holders of our common stock. We have the right to defer distributions on our junior subordinated debentures (and the related trust preferred securities) for up to five years, during which time no dividends may be paid to holders of our common stock. To the extent that we issue additional debt obligations or junior subordinated debentures, the additional debt obligations or additional junior subordinated debentures will be of equal rank with, or senior to, our existing debt obligations and senior to our shares of common stock.

We may issue shares of preferred stock in the future, which could make it difficult for another company to acquire us or could otherwise adversely affect holders of our common stock, which could depress the price of our common stock.

        Our certificate of formation authorizes us to issue up to 10,000,000 shares of one or more series of preferred stock. Our board of directors will have the authority to determine the preferences, limitations and relative rights of shares of preferred stock and to fix the number of shares constituting any series and the designation of such series, without any further vote or action by our shareholders. Our preferred stock could be issued with voting, liquidation, dividend and other rights superior to the rights of our common stock. The potential issuance of preferred stock may delay or prevent a change in control of us, discourage bids for our common stock at a premium over the market price and materially adversely affect the market price and the voting and other rights of the holders of our common stock.

We are dependent upon the Bank for cash flow, and the Bank's ability to make cash distributions is restricted.

        Our primary tangible asset is the stock of the Bank. As such, we depend upon the Bank for cash distributions (through dividends on the Bank's common stock) that we use to pay our operating expenses, satisfy our obligations (including our subordinated debentures and our other debt obligations) and to pay dividends on our common stock. Federal statutes, regulations and policies restrict the Bank's ability to make cash distributions to us. These statutes and regulations require, among other things, that the Bank maintain certain levels of capital in order to pay a dividend. Further, the OCC has the ability to restrict the Bank's payment of dividends by supervisory action. If the Bank is unable to pay dividends to us, we will not be able to satisfy our obligations or pay dividends on our common stock.

Our dividend policy may change without notice, and our future ability to pay dividends is subject to restrictions.

        Historically, our board of directors has declared dividends on our common stock payable in the month following the end of each calendar quarter, and we anticipate that following this offering, we will continue paying a quarterly dividend on our common stock in an amount equal to approximately $0.05 per share per quarter. Although we have historically paid dividends to our shareholders and currently intend to generally maintain our current dividend levels, we have no obligation to continue doing so and may change our dividend policy at any time without notice to holders of our common stock. Holders of our common stock are only entitled to receive such cash dividends as our board of directors, in its discretion, may declare out of funds legally available for such payments. Furthermore, consistent with our strategic plans, growth initiatives, capital availability, projected liquidity needs, and other factors, we have made, and will continue to make, capital management decisions and policies that could adversely impact the amount of dividends paid to holders of our common stock.

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        We are a separate and distinct legal entity from the Bank. We receive substantially all of our revenue from dividends paid to us by the Bank, which we use as the principal source of funds to pay our expenses and to pay dividends to our shareholders, if any. Various federal and/or state laws and regulations limit the amount of dividends that the Bank may pay us. If the Bank does not receive regulatory approval or does not maintain a level of capital sufficient to permit it to make dividend payments to us while maintaining adequate capital levels, our ability to pay our expenses and our business, financial condition or results of operations could be materially and adversely impacted.

        As a bank holding company, we are subject to regulation by the Federal Reserve. The Federal Reserve has indicated that bank holding companies should carefully review their dividend policy in relation to the organization's overall asset quality, current and prospective earnings and level, composition and quality of capital. The guidance provides that we inform and consult with the Federal Reserve prior to declaring and paying a dividend that exceeds earnings for the period for which the dividend is being paid or that could result in an adverse change to our capital structure, including interest on the subordinated debentures underlying our trust preferred securities and our other debt obligations. If required payments on our outstanding junior subordinated debentures, held by our unconsolidated subsidiary trusts, or our other debt obligations, are not made or are deferred, or dividends on any preferred stock we may issue are not paid, we will be prohibited from paying dividends on our common stock.

Our corporate organizational documents and provisions of federal and state law to which we are subject contain certain provisions that could have an anti-takeover effect and may delay, make more difficult or prevent an attempted acquisition that you may favor or an attempted replacement of our board of directors or management.

        Our certificate of formation and our bylaws (each as amended and restated and in effect prior to the completion of this offering) may have an anti-takeover effect and may delay, discourage or prevent an attempted acquisition or change of control or a replacement of our incumbent board of directors or management. Our governing documents include provisions that:

•

empower our board of directors, without shareholder approval, to issue our preferred stock, the terms of which, including voting power, are to be set by our board of directors;

•

establish a classified board of directors, with directors of each class serving a three-year term upon completion of a phase-in period;

•

provide that directors may only be removed from office for cause and only upon a majority shareholder vote;

•

eliminate cumulative voting in elections of directors;

•

permit our board of directors to alter, amend or repeal our amended and restated bylaws or to adopt new bylaws;

•

require the request of holders of at least 50.0% of the outstanding shares of our capital stock entitled to vote at a meeting to call a special shareholders' meeting;

•

prohibit shareholder action by less than unanimous written consent, thereby requiring virtually all actions to be taken at a meeting of the shareholders;

•

require shareholders that wish to bring business before annual or special meetings of shareholders, or to nominate candidates for election as directors at our annual meeting of shareholders, to provide timely notice of their intent in writing; and

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•

enable our board of directors to increase, between annual meetings, the number of persons serving as directors and to fill the vacancies created as a result of the increase by a majority vote of the directors present at a meeting of directors.

        In addition, certain provisions of Texas law, including a provision which restricts certain business combinations between a Texas corporation and certain affiliated shareholders, may delay, discourage or prevent an attempted acquisition or change in control. Furthermore, banking laws impose notice, approval, and ongoing regulatory requirements on any shareholder or other party that seeks to acquire direct or indirect "control" of an FDIC-insured depository institution or its holding company. These laws include the Bank Holding Company Act of 1956, as amended, or the BHC Act, and the Change in Bank Control Act, or the CBCA. These laws could delay or prevent an acquisition.

        Furthermore, our amended and restated certificate of formation provides that the state courts located in Jefferson County, Texas, the county in which Beaumont is located, will be the exclusive forum for: (a) any actual or purported derivative action or proceeding brought on our behalf; (b) any action asserting a claim of breach of fiduciary duty by any of our directors or officers; (c) any action asserting a claim against us or our directors or officers arising pursuant to the Texas Business Organizations Code, or TBOC, our certificate of formation, or our amended and restated bylaws; or (d) any action asserting a claim against us or our officers or directors that is governed by the internal affairs doctrine. By becoming a shareholder of our Company, you will be deemed to have notice of and have consented to the provisions of our amended and restated certificate of formation related to choice of forum. The choice of forum provision in our amended and restated certificate of formation may limit our shareholders' ability to obtain a favorable judicial forum for disputes with us. Alternatively, if a court were to find the choice of forum provision contained in our amended and restated certificate of formation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business, operating results and financial condition.

The return on your investment in our common stock is uncertain.

        An investor in our common stock may not realize a substantial return on his or her investment, or may not realize any return at all. Further, as a result of the uncertainty and risks associated with our operations, many of which are described in this "Risk Factors" section, it is possible that an investor could lose his or her entire investment.

An investment in our common stock is not an insured deposit and is subject to risk of loss.

        Any shares of our common stock you purchase in this offering will not be savings accounts, deposits or other obligations of any of our bank or nonbank subsidiaries and will not be insured or guaranteed by the FDIC or any other government agency. Your investment will be subject to investment risk, and you must be capable of affording the loss of your entire investment.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

        This prospectus contains forward-looking statements. These forward-looking statements reflect our current views with respect to, among other things, future events and our 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 our industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution 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. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.

        There are or will be important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements, including, but not limited to, the following:

•

the effect of Hurricane Harvey on our markets and business;

•

natural disasters and adverse weather, acts of terrorism, an outbreak of hostilities or other international or domestic calamities, and other matters beyond our control;

•

the geographic concentration of our markets in Beaumont and Houston, Texas;

•

our ability to prudently manage our growth and execute our strategy;

•

risks associated with our acquisition and de novo branching strategy;

•

changes in management personnel;

•

the amount of nonperforming and classified assets that we hold;

•

time and effort necessary to resolve nonperforming assets;

•

deterioration of our asset quality;

•

interest rate risk associated with our business;

•

business and economic conditions generally and in the financial services industry, nationally and within our primary markets;

•

volatility and direction of oil prices and the strength of the energy industry, generally and within Texas;

•

the composition of our loan portfolio, including the identity of our borrowers and the concentration of loans in specialized industries;

•

changes in the value of collateral securing our loans;

•

our ability to maintain important deposit customer relationships and our reputation;

•

our ability to maintain effective internal control over financial reporting;

•

operational risks associated with our business;

•

increased competition in the financial services industry, particularly from regional and national institutions;

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•

volatility and direction of market interest rates;

•

liquidity risks associated with our business;

•

systems failures or interruptions involving our information technology and telecommunications systems or third-party servicers;

•

environmental liability associated with our lending activities;

•

the institution and outcome of litigation and other legal proceedings against us or to which we may become subject;

•

changes in the laws, rules, regulations, interpretations or policies relating to financial institution, accounting, tax, trade, monetary and fiscal matters;

•

further government intervention in the U.S. financial system; and

•

other factors that are discussed in the section entitled "Risk Factors," beginning on page 17.

        The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this prospectus. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New factors emerge from time to time, and it is not possible for us to predict which will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

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USE OF PROCEEDS

        Assuming an initial public offering price of $        per share, which is the midpoint of the price range set forth on the cover page of this prospectus, we estimate that the net proceeds to us from the sale of our common stock in this offering, after deducting underwriting discounts and estimated offering expenses payable by us, will be approximately $         million, or approximately $        million if the underwriters exercise in full their option to purchase additional shares.

        Each $1.00 increase (decrease) in the assumed initial public offering price would increase (decrease) the net proceeds to us of this offering by $        million, or $        million if the underwriters exercise in full their option to purchase additional shares, after deducting underwriting discounts and estimated offering expenses payable by us.

        We intend to use the net proceeds from this offering to support our organic growth and for general corporate purposes, including maintenance of our required regulatory capital, and potential future acquisition opportunities. From time to time, we evaluate and conduct due diligence with respect to potential acquisition candidates and may enter into letters of intent, although we do not have any current plans, arrangements or understandings to make material acquisitions. Our management will retain broad discretion to allocate the net proceeds of this offering and we may elect to contribute a portion of the net proceeds to the Bank as regulatory capital. The precise amounts and timing of our use of the proceeds will depend upon market conditions and other factors.

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DIVIDEND POLICY

Dividends

        It has been our policy to pay a dividend to our shareholders as a return on their investment. We have historically declared dividends in the amount of $0.05 per share payable in the month following the end of each calendar quarter.

        We intend to continue our current dividend policy of quarterly dividends of $0.05 per share; however, our dividend policy may change with respect to the payment of dividends as a return on investment, and our board of directors may change or eliminate the payment of future dividends at its discretion, without notice to our shareholders. Any future determination to pay dividends to holders of our common stock will be dependent upon our results of operations, financial condition, capital requirements, banking regulations, contractual restrictions (including the restrictions discussed below), and any other factors that our board of directors may deem relevant.

        The following table shows recent quarterly dividends that have been paid on our common stock with respect to the periods indicated. The amounts set forth in the following table have been adjusted to give effect to a 2-for-1 stock split, whereby each shareholder of our common stock received one additional share of common stock for each share owned as of the record date of September 30, 2017, in the form of a stock dividend that was distributed on October 13, 2017. The effect of the stock split on per share figures has been retroactively applied to all periods presented.

(Dollars in thousands, except per share data)	Per share dividend amount		Total cash dividends declared
2015:
First quarter	$	0.05	$	1,125
Second quarter		0.05		1,125
Third quarter		0.05		1,122
Fourth quarter		0.05		1,115
Total 2015	$	0.20	$	4,487
2016:
First quarter	$	0.05	$	1,120
Second quarter		0.05		1,090
Third quarter		0.05		1,083
Fourth quarter		0.05		1,103
Total 2016	$	0.20	$	4,396
2017:
First quarter	$	0.05	$	1,103
Second quarter		0.05		1,103
Third quarter	$	0.05	$	1,103

Dividend Restrictions

        As a bank holding company, our ability to pay dividends is affected by the policies and enforcement powers of the Federal Reserve. See "Supervision and Regulation—CBTX, Inc.—Regulatory Restrictions on Dividends; Source of Strength." In addition, because we are a holding company, we are dependent upon the payment of dividends by the Bank to us as our principal source of funds to pay dividends in the future, if any, and to make other payments. The Bank is also subject to various legal, regulatory and other restrictions on its ability to pay dividends and make other distributions and payments to us. See "Supervision and Regulation—CommunityBank of Texas, N.A.—Restrictions on Distribution of Bank Dividends and Assets." The present and future dividend policy of

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the Bank is subject to the discretion of the board of directors of the Bank. The Bank is not obligated to pay us dividends.

        As a Texas corporation, we are subject to certain restrictions on distributions under TBOC. Generally, a Texas corporation may not make a distribution to its shareholders if, after giving it effect, the corporation would not be able to pay its debts as they become due in the usual course of business, or the corporation's total assets would be less than the sum of its total liabilities plus the amount that would be needed if the corporation were to be dissolved at the time of the distribution to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those receiving the distribution. In addition, if required payments on our outstanding debt obligations, including our junior subordinated debentures held by our unconsolidated subsidiary trusts, are not made or suspended, we may be prohibited from paying dividends on our common stock. We are also subject to certain restrictions on our right to pay dividends to our shareholders in the event we default under the terms of our note payable.

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CAPITALIZATION

        The following table sets forth our capitalization, including regulatory capital ratios, on a consolidated basis, as of June 30, 2017 on:

•

an actual basis; and

•

an as adjusted basis after giving effect to the net proceeds from the sale by us of shares of common stock in this offering (assuming the underwriters do not exercise their option to purchase additional shares) at the initial public offering price of $        per share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting underwriting discounts and estimated offering expenses payable by us.

        This table should be read in conjunction with "Use of Proceeds," "Selected Historical Consolidated Financial Data," "Description of Capital Stock," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the related notes included elsewhere in this prospectus. The outstanding share and per share data set forth in the following table have been adjusted to give effect to a 2-for-1 stock split, whereby each shareholder of our common stock received one additional share of common stock for each share owned as of the record date of September 30, 2017 in the form of a stock dividend that was distributed on October 13, 2017.

	As of June 30, 2017
(Dollars in thousands, except per share data)	Actual			As adjusted for the offering(1)
Long-term Indebtedness:
Junior subordinated debt(2)	$	6,726		$	6,726
Notes payable		25,464			25,464
Shareholders' Equity:
Preferred Stock, par value $0.01 per share, 10,000,000 shares authorized, no shares issued	$	—		$
Common stock, par value $0.01 per share, 90,000,000 shares authorized, 22,971,504 shares issued and 22,063,072 outstanding (actual); and          shares issued and          outstanding (as adjusted)		230
Additional Paid in Capital		278,517
Retained earnings		108,635			108,635
Treasury stock (908,432 shares)		(15,429	)		(15,429	)
Accumulated other comprehensive income		11			11
Total shareholders' equity		371,964
Total capitalization	$	404,154		$
Per Share Data:
Book value per share(3)	$	16.86		$
Tangible book value per share(4)	$	12.86		$
Capital Ratios:
Total shareholders' equity to total assets		12.65	%			%
Tangible equity to tangible assets(5)		9.95	%			%
Common equity tier 1 capital ratio		12.00	%			%
Tier 1 leverage ratio		10.39	%			%
Tier 1 risk-based capital ratio		12.26	%			%
Total risk-based capital ratio		13.33	%			%

(1)

References in this section to the number of shares of our common stock issued and outstanding after this offering are based on shares of our common stock issued and outstanding as of June 30,

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2017 after giving effect to the 2-for-1 stock split previously described. Unless otherwise noted, these references exclude any shares reserved for issuance under our equity compensation plans.

(2)

Consists of debt issued in connection with our trust preferred securities.

(3)

We calculate book value per share as total shareholders' equity at the end of the relevant period divided by the outstanding number of shares of our common stock at the end of the relevant period.

(4)

Tangible book value per share is a non-GAAP financial measure. The most directly comparable GAAP financial measure is book value per share. We calculate tangible book value per share as total shareholders' equity, less goodwill and other intangible assets, net of accumulated amortization at the end of the relevant period, divided by the outstanding number of shares of our common stock at the end of the relevant period. See our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures under the caption "Non-GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures."

(5)

Tangible equity to tangible assets is a non-GAAP financial measure. The most directly comparable GAAP financial measure is total shareholders' equity to total assets. We calculate tangible equity as total shareholders' equity, less goodwill and other intangible assets, net of accumulated amortization, and we calculate tangible assets as total assets, less goodwill and other intangible assets, net of accumulated amortization. See our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures under the caption "Non-GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures."

        Each $1.00 increase (decrease) in the assumed initial public offering price of $        per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease), respectively, the amount of total shareholders' equity and total capitalization by approximately $        million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and estimated offering expenses payable by us.

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DILUTION

        If you invest in our common stock, your ownership interest will be diluted to the extent that the initial public offering price per share of our common stock exceeds the tangible book value per share of our common stock immediately following this offering. Tangible book value per share is equal to our total shareholders' equity, less goodwill and other intangible assets, net of accumulated amortization at the end of the relevant period, divided by the outstanding number of shares of our common stock at the end of the relevant period. At June 30, 2017, the tangible book value of our common stock was $283.7 million, or $12.86 per share.

        After giving effect to our sale of            shares of common stock in this offering (assuming the underwriters do not exercise their option to purchase additional shares) at an assumed initial public offering price of $            per share, which is the midpoint of the price range on the cover page of this prospectus, and after deducting underwriting discounts and estimated offering expenses payable by us, the pro forma tangible book value of our common stock at June 30, 2017 would have been approximately $            million, or $            per share. Therefore, this offering will result in an immediate increase of $            in the tangible book value per share of our common stock of existing shareholders and an immediate dilution of $            in the tangible book value per share of our common stock to investors purchasing shares in this offering, or approximately        % of the assumed initial public offering price of $            per share.

        The following table illustrates the calculation of the amount of dilution per share that a purchaser of our common stock in this offering will incur given the assumptions discussed above:

Assumed initial public offering price per share			$
Tangible book value per share at June 30, 2017	$	12.86
Increase in tangible book value per share of common stock attributable to new investors purchasing shares in this offering	$
Pro forma tangible book value per share upon completion of this offering			$
Dilution per share to new investors in this offering			$

        A $1.00 increase (decrease) in the assumed initial public offering price of $            per share, which is the midpoint of the price range on the cover page of this prospectus, would increase (decrease) the tangible book value of our common stock by $            million, or $            per share, and the dilution to new investors by $            per share, assuming no change to the number of shares offered by us as set forth on the cover page of this prospectus, and after deducting underwriting discounts and estimated offering expenses payable by us.

        If the underwriters exercise in full their option to purchase additional shares, the pro forma tangible book value after giving effect to this offering would be $            per share. This represents an increase in tangible book value of $            per share to existing shareholders and dilution of $            per share to new investors.

        The following table summarizes, as of June 30, 2017, the total consideration paid to us and the average price per share paid by existing shareholders and investors purchasing common stock in this offering. This information is presented on a pro forma basis after giving effect to the sale of            shares of common stock in this offering (assuming the underwriters do not exercise their option to purchase additional shares) at an assumed initial public offering price of $            per share, which is

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the midpoint of the price range on the cover page of this prospectus, after deducting underwriting discounts and estimated offering expenses payable by us.

	Shares Purchased/ Issued
					Total Consideration
									Average Price Per Share
	Number	Percent			Amount	Percent
					(in millions)
Existing shareholders as of June 30, 2017				%	$			%	$
New investors in this offering				%	$			%	$
Total			100	%	$		100	%	$

        In addition, if the underwriters' option to purchase additional shares is exercised in full, the number of shares of common stock held by existing shareholders will be further reduced to         % of the total number of shares of common stock to be outstanding upon the completion of this offering, and the number of shares of common stock held by investors participating in this offering will be further increased to        shares, or        % of the total number of shares of common stock to be outstanding upon the completion of this offering.

        The number of shares of our common stock to be outstanding after this offering is based on 22,063,072 shares of common stock outstanding as of June 30, 2017 and excludes (i) 600,000 shares that will be reserved for issuance under our CBTX, Inc. 2017 Omnibus Incentive Plan and (ii) 157,314 and 138,000 shares issuable upon the exercise of outstanding options under our VB Texas, Inc. 2006 Stock Option Plan, or the 2006 Plan, and CBFH, Inc. 2014 Stock Option Plan, or the 2014 Plan, respectively. To the extent that the outstanding but unexercised options under our equity compensation plans are exercised or other equity awards are issued under our equity compensation plans, investors participating in this offering will experience further dilution. We may choose to raise additional capital through the sale of equity or convertible debt securities due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. To the extent we issue additional shares of common stock or other equity or convertible debt securities in the future, there will be further dilution to investors participating in this offering.

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PRICE RANGE OF OUR COMMON STOCK

        Prior to this offering, our common stock has not been traded on an established public trading market and quotations for our common stock were not reported on any market. As a result, there has been no regular market for our common stock. Although our shares may have been sporadically traded in private transactions, the prices at which such transactions occurred may not necessarily reflect the price that would be paid for our common stock in an active market. As of October 6, 2017, there were approximately 836 holders of record of our common stock.

        We anticipate that this offering and the listing of our common stock on the Nasdaq Global Select Market will result in a more active trading market for our common stock. However, we cannot assure you that a liquid trading market for our common stock will develop or be sustained after this offering. You may not be able to sell your shares quickly or at the market price if trading in our common stock is not active. See "Underwriting" for more information regarding our arrangements with the underwriters and the factors considered in setting the initial public offering price.

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BUSINESS

Our Company

        We are a bank holding company that operates through our wholly-owned subsidiary, CommunityBank of Texas, in Houston and Beaumont, Texas. We focus on providing commercial banking solutions to local small and mid-sized businesses and professionals in our markets. Our market expertise, coupled with a deep understanding of our customers' needs, allows us to deliver tailored financial products and services. As of June 30, 2017, we had total assets of $2.9 billion, total loans of $2.2 billion, total deposits of $2.5 billion and total shareholders' equity of $372.0 million.

        Our vision and focus is to continue to build a premier business bank that combines the sophisticated banking products of a large financial institution with the personalized service of a community bank. Our management team and board of directors, led by our Chairman, President and Chief Executive Officer, Robert R. Franklin, Jr., have extensive commercial banking experience as well as long-term relationships and deep ties in the markets we serve. We believe that our future growth and profitability will be predicated on the successful execution of our relationship-driven business model and our ongoing commitment to understanding and meeting the needs of our customers. In addition, we expect that recent investments in our infrastructure and the hiring of additional experienced banking professionals will facilitate growth and increased profitability. While we are primarily focused on organic growth, we plan to pursue strategic acquisitions as an additional means of increasing scale, profitability and shareholder value.

Our History and Growth

        We are a Texas corporation that was incorporated on January 26, 2007. We were originally founded by a group of Beaumont business and community leaders, including Pat Parsons as our Chief Executive Officer. We began operations in 2007 with the acquisition of CountyBank, N.A., an institution with $130 million in assets with operations in Beaumont and surrounding counties. Mr. Parsons and our other founders envisioned a community bank in Beaumont committed to creating long-term relationships with small and mid-sized businesses and professionals. Our management and board had a long-term strategic vision to expand the Bank's presence west into Houston through strategic acquisitions, hiring experienced banking professionals, and focused de novo branching.

        Today, our company reflects the successful execution of our vision, as we have built and expanded into the attractive Houston market and have added experience and depth to our leadership team. Our merger and acquisition and expansion history includes the following:

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Franchise Expansion and Market Extension

        The following illustrations reflect the transformation of our loan portfolio from year-end 2009 through June 30, 2017 and highlight our successful expansion into the Houston market.

        We have utilized our strategic mergers to add valuable members to our team, including to our executive management team. Our current Chairman, President and Chief Executive Officer, Robert R. Franklin, Jr., Chief Financial Officer, Robert "Ted" Pigott, Jr., Chief Credit Officer, Joe F. West and Chief Risk Officer, James L. Sturgeon, joined us through our merger of equals with VB Texas, Inc. In addition, we believe we have been successful in our mergers in retaining key personnel throughout our organization, including in key areas such as lending, human resources and compliance.

        In addition to mergers and acquisitions, we have strategically added to our branch footprint by opening de novo locations around teams of seasoned lenders with a realistic plan to achieve branch profitability in a short period of time. We intend to continue to seek out experienced lenders and lending teams around whom we will build necessary infrastructure, including de novo branches if appropriate, to facilitate such lenders' success and integration into our franchise.

        We are focused on controlled, profitable growth. Our track record demonstrates this ability, as illustrated in the following chart. Since December 31, 2009, our total assets increased from approximately $1.3 billion to approximately $2.9 billion as of June 30, 2017, and our return on average assets improved from 0.16% for the year ended December 31, 2009 to 1.08% for the six months ended June 30, 2017. We believe that there are significant ongoing growth opportunities for us in our markets.

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Assets and Earnings Growth
(Dollars in millions)

Our Competitive Strengths

        We believe our competitive strengths include the following:

        Deep and Experienced Management Team.    Our Chairman, President and Chief Executive Officer, Robert R. Franklin, Jr., our Vice Chairman Pat Parsons, and our Chief Financial Officer, Robert "Ted" Pigott, Jr., have more than 115 years of combined experience acquiring, growing, operating and selling banks within our markets. Certain biographical information for our selected senior executives is as follows:

        Robert R. Franklin, Jr., Chairman, President and Chief Executive Officer.    Mr. Franklin began his 36-year Houston banking career working for a small community bank in Houston upon graduation from the University of Texas. He then moved to a large, regional bank before gravitating back to his primary interest of community banking. He became President of American Bank in 1988 where he served until the bank was sold to Whitney Holding Corp. in early 2001. Mr. Franklin and his team then joined Horizon Capital Bank where Mr. Franklin raised sufficient capital to match the bank's existing capital and took the position of President. He served as President until the bank was sold to Cullen/Frost Bankers, Inc. in 2005. Mr. Franklin then started VB Texas, Inc. in November of 2006 as Chairman, President and Chief Executive Officer, serving until a "merger of equals" between VB Texas, Inc. and CBTX, Inc. in 2013, where he currently serves as Chairman, President and Chief Executive Officer.

        Pat Parsons, Vice Chairman of the Board.    Mr. Parsons has 44 years of banking experience and served as the founding Chairman and Chief Executive Officer of CommunityBank of Texas, and the President and Chief Executive Officer of CBTX, Inc. for seven years. He began his banking career in 1973 with First City National Bank of Houston as a Management Trainee and has served in various capacities at numerous commercial banks within our market areas, including Community Bank & Trust, SSB, as President and Chief Operating Officer. From 1992 to 2004, Mr. Parsons oversaw Community Bank & Trust, SSB's expansion, through organic growth and five acquisitions, to over $1.1 billion in assets and a network spanning 15 Southeast Texas communities. In 2004, Community Bank & Trust, SSB was acquired by Texas Regional Bancshares, Inc.

        Robert "Ted" Pigott, Jr., Chief Financial Officer.    Mr. Pigott has over 35 years of commercial banking experience, having served as Chief Financial Officer for both privately held and publicly-traded Texas banking institutions in the Houston, Dallas/Fort Worth, Austin and McAllen markets, including Texas Regional Bancshares, Inc. Mr. Pigott joined VB Texas, Inc. as Chief Financial Officer in 2010 and became our Chief Financial Officer in 2013 following the merger of CBTX, Inc. and VB Texas, Inc. He also spent six years in public accounting with Arthur Andersen & Co., a national accounting firm.

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        The Bank is managed by an executive committee consisting of ten highly qualified and experienced bankers with an average of 38 years of banking experience. The members of the executive committee oversee various aspects of our organization including lending, credit administration, treasury services, finance, operations, information technology, regulatory compliance and risk management. Additionally, we have four regional CEOs with an average of 27 years of banking experience who oversee loan and deposit production and performance in their respective markets. Our team has a demonstrated track record of achieving profitable growth, maintaining a strong credit culture, implementing a relationship-driven approach to banking and successfully executing acquisitions.

        We believe our continued growth and success will benefit from a commitment to developing our next generation of bankers. Our commitment to talent development includes a mentorship program, which provides our junior bankers with an opportunity to take a hands-on approach to interacting with our customers and learning directly from our successful senior banking team members. We also provide formal in-house training for our junior bankers, which enhances their professional experience, and provides for greater organic growth opportunities and employee retention. We believe that our commitment to the development of talent leads to long-term continuity and the recruitment and retention of high quality bankers in our markets. These aspects lay the foundation for the long-term growth potential of the Bank.

        Strength of Our Operating Markets.    As further described in "Our Market Areas" below, we believe that our two primary markets provide us with an advantage over other community banks in Texas in terms of growing our loans and deposits, as well as increasing profitability and building shareholder value. Houston is the fastest growing major MSA in the country measured by population growth. With an estimated population of approximately 7.0 million people living in a diverse economy with a robust job market, we believe it is one of the most dynamic banking markets in the country. Our management, team of lenders and well positioned branch network should afford us the ability to capitalize on the projected growth in the Houston MSA.

        Our team's history of operating successful banking institutions in the Beaumont market spans decades, and we have a strong reputation for delivering superior service in the market. Our deep ties to the community have led to a dominant market share, and we are ranked number one in deposits in the Beaumont-Port Arthur MSA, with over 20% market share as of June 30, 2017. Our branches in the Beaumont-Port Arthur MSA provide a stable, low-cost core funding base of approximately $1.1 billion in deposits.

        True Relationship-Based Community Banking.    We believe that banking is a profession, and we expect our bankers to be more than just salesmen. With an active knowledge of our markets and skilled analytical capabilities, our bankers serve as financial partners to our customers, helping them to grow their businesses. We strive to provide complete and comprehensive loan and deposit options to our customers, and we believe that the most effective way to win business is to develop relationships with our customers by spending time with them at their places of business. Our bankers make these customer visits a priority, and we take a team-based approach by including treasury services professionals and senior management on many customer meetings. Our bankers strive to gain a comprehensive understanding of how our customers' businesses operate, which helps us craft financial solutions to fulfill their needs. We are active and diligent in this effort to organically source business, as we believe it allows us to be more selective in our approach to lending. As a testament to our relationship approach to banking, as of June 30, 2017, approximately 83% of our loan customers also have deposit relationships with us.

        Growing Core Deposit Franchise.    Noninterest-bearing deposits represented 40.96% of our total deposits as of June 30, 2017, and our cost of deposits was 0.30% for the first six months of 2017. Developing low-cost deposit relationships with our business customers is a key component of our growth strategy. Our strong deposit base serves as a major driver of our operating results, as we utilize

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our core deposits primarily to fund our loan growth. We believe that our relationship-based approach to banking, combined with our ability to offer a full suite of sophisticated treasury services, enhances our ability to source low-cost, core deposits to fund organic growth.

        Maintain Strong Asset Quality.    Preserving sound credit underwriting standards as we grow our loan portfolio will continue to be integral to our strategy. We place a considerable emphasis on effective risk management as an essential component of our organizational culture. We use our risk management infrastructure to monitor existing operations, support decision-making and improve the success rate of new initiatives. To maintain strong asset quality, we employ centralized and thorough loan underwriting, a diversified loan portfolio and highly experienced credit officers and credit analysts, including two Regional Credit Officers, one for each of our primary markets. We believe the long-term success of our business hinges on maintaining sound credit quality. Our nonperforming assets to total assets ratio was 0.52% as of December 31, 2015, 0.27% as of December 31, 2016 and 0.33% as of June 30, 2017.

        Proven Ability to Acquire and Integrate Banks.    We have completed five whole-bank acquisitions and, as a result, we believe we have developed an experienced and disciplined acquisition and integration approach capable of identifying candidates, conducting thorough due diligence, determining financial attractiveness and integrating the acquired institution. We believe that we have built a corporate infrastructure capable of supporting additional continued growth both organically and through strategic acquisitions. Our acquisition experience and our reputation as a successful acquirer should position us well to capitalize on additional opportunities in the future.

Our Banking Strategy

        Our executive management team and board of directors have focused on building a premier banking franchise that is capable of yielding sustainable growth and long-term profitability that enhances value for our shareholders, which we intend to accomplish through:

        Strong Credit Culture.    Our approach to credit begins with a thorough understanding of our customers' businesses. When underwriting a potential lending opportunity, we analyze our customer's balance sheet with a focus on liquidity, and the income statement with emphasis on cash flow and the cash cycle of the business. Additionally, we receive personal guarantees from the principal or principals on the majority of our commercial credits. All credit relationships greater than $1.0 million must be approved by our internal loan committee, and all credit relationships greater than $2.5 million must be approved by the Bank's active Directors Loan Committee, which meets twice per week.

        Our credit officers are involved in the underwriting structuring and pricing process at inception of the lending opportunity and remain involved through approval. We manage risk in the portfolio with prudent underwriting and proactive credit administration, utilizing a Regional Credit Officer and credit analysts located in each of our two primary markets. Furthermore, we believe our individual lending authority is low relative to our peers. This combined with the Bank's active Directors Loan Committee allows us to maintain centralized underwriting, which we believe gives us consistency across our loan portfolio and allows us to be responsive to our customers' timing needs.

        Diversified Loan Portfolio.    Our focus on lending to small to medium-sized businesses and professionals in our market areas results in a diverse loan portfolio comprised primarily of core relationships, where our bankers support clients through tailored financial solutions. Additionally, we carefully monitor exposure to certain asset classes to minimize the impact of a downturn in the value of such assets. Finally, we are currently expanding our commercial and industrial, medical and SBA lending products as we see an attractive opportunity and believe this will further diversify our loan portfolio across lending verticals.

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        Comprehensive Suite of Financial Solutions.    We provide a comprehensive suite of financial solutions that competes with large, national competitors, but with the personalized attention and nimbleness of a relationship-focused community bank. We offer a full range of banking products, including commercial and industrial loans (including equipment loans and working capital lines of credit), commercial real estate loans (including owner-occupied and investor real estate loans, construction and development loans), SBA loans, treasury services and commercial deposits. Other banking products we offer include traditional retail deposits, mortgage origination and online banking. We have recently expanded our treasury services platform by hiring additional personnel in order to more effectively provide treasury services solutions to our customers. We believe our clients prefer to obtain their banking services from local institutions able to provide the sophistication of larger banks, but with a local and agile decision-making process, personal connections, and an interest in investing in the local economy and community. This also allows us to gather core, low-cost deposit relationships, high credit quality loans and fee income generated by value-added services.

        Organic Growth.    We aim to continuously enhance our customer base, increase loans and deposits and expand our overall market share, and believe that Houston specifically has significant organic growth opportunities. Through the successful implementation of our relationship-driven, community banking strategy, a significant portion of our organic growth has been through referral business from our current customers and professionals in our markets including attorneys, accountants and other professional service providers. We plan to continue our organic growth by leveraging the extensive experience of our board of directors, executive management team and senior bankers, all of which give us market insight and familiarity with our customers. By understanding our customers' businesses, appropriately structuring our loans, and applying a solution-minded approach and attitude to our customers' needs, we believe that we will continue to attract customers who value our approach of being their financial partners. Our team of seasoned bankers has been, and will continue to be, an important driver of our organic growth by further developing banking relationships with current and potential customers.

        We have a track record of hiring experienced bankers to enhance our organic growth, and sourcing and hiring talent will continue to be a core focus for us. We believe that this initial public offering will enhance our ability to attract and retain this talent. We have identified areas of opportunity within certain lending verticals and plan to hire additional bankers to focus on these efforts. While we currently offer commercial and industrial, medical and SBA lending products, we have recently added bankers focused on these products in order to expand these verticals.

        Strategic Acquisitions.    We intend to continue to supplement our organic growth through strategic acquisitions, and we believe obtaining a publicly-traded common stock will improve our ability to compete for these opportunities. Many small to medium-sized banking organizations face significant scale and operational challenges, regulatory pressure, management succession issues and shareholder liquidity needs. Although we have no current plans, arrangements or understandings to make any material acquisitions, we expect our markets will afford us opportunities to identify and execute acquisitions designed to strengthen our franchise and increase shareholder value. In addition to meeting our financial thresholds, we place critical importance on the target contributing meaningful strategic enhancements, including talented bankers that will be additive to our franchise, a sound credit culture and a complementary branch footprint.

        Increase Operational Efficiency.    We are focused on improving our operational efficiency and expect these efforts to drive future profitability and increase shareholder value. We have upgraded our operating capabilities and created a platform for continued efficiencies in the areas of risk management, technology, data processing, regulatory compliance and human resources that is capable of handling our continued growth, which we believe will help us to achieve increased scale without incurring significant incremental noninterest expense. In addition, we have streamlined our branch

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footprint by closing three smaller branches and utilizing our central Houston location. This centralized corporate lending structure combined with our robust treasury services, which has led to approximately 83% of our loan customers having deposit relationships with us as of June 30, 2017, provides us with a more efficient path to profitable growth. Our efficiency ratio has improved from 67.8% for the year ended December 31, 2012, to 62.7% for the year ended December 31, 2016, and was 62.8% for the six months ended June 30, 2017.

        Our net income increased from $11.4 million in 2012 to $27.2 million in 2016, for a CAGR of 24.2%, and our return on average assets improved from 0.74% in 2012 to 0.94% in 2016. For the six months ended June 30, 2017, our net income was $15.6 million compared to $12.9 million for the six months ended June 30, 2016, and our return on average assets improved to 1.08% from 0.92% over the same time periods, respectively.

        In addition to continued improvements in our operational efficiencies, we expect our profitability to increase in a rising interest rate environment due to our asset-sensitive balance sheet, which has resulted from our focus on commercial and industrial lending and the quality of our deposit franchise. As of June 30, 2017, 58.3% of our loans had a variable interest rate, and we believe we are well positioned to experience net interest margin expansion in a rising rate environment.

Our Market Areas

        We classify our branch footprint in two primary market areas, Houston and Beaumont. We have 18 branches located in Houston, and our Beaumont presence, concentrated in Southeast Texas, includes 16 branches.

Houston Metropolitan Area

        The Houston MSA is comprised of nine counties spanning over nine thousand square miles. The Houston MSA has the fifth largest population nationwide based on estimated 2018 population statistics provided by Nielsen. Houston is poised for continued robust growth, and ranks first for projected five-year population growth through 2023 among the 25 largest MSAs in the United States, according to Nielsen. According to the Greater Houston Partnership, Houston's 2015 gross domestic product, or GDP, of $503 billion ranks it as the fourth largest economy in the United States and would rank it as the 26^th largest economy for a country in the world.

		Population (millions)
Top 5 Growth Growth Rank	Top 5 Large MSAs by Population Growth	2018 Estimated		2023 Projected		Population % D
1	Houston-The Woodlands-Sugar Land, TX		7.0		7.6		8.3	%
2	Orlando-Kissimmee-Sanford, FL		2.5		2.7		8.2	%
3	San Antonio-New Braunfels, TX		2.5		2.7		8.1	%
4	Dallas-Fort Worth-Arlington, TX		7.4		8.0		7.7	%
5	Denver-Aurora-Lakewood, CO		2.9		3.2		7.7	%
	Texas		28.5		30.6		7.1	%
	Nationwide		326.5		337.9		3.5	%

        We believe that our 18 branches are strategically located throughout Houston, which will help drive loan growth and improve deposit market share as we execute our strategy.

        Attractive Business Climate.    The favorable business environment in Texas includes a large and growing workforce, low business tax, no personal income tax and a reasonable cost of housing, which has resulted in business relocation to the state, and to Houston, in particular. Houston is the home of 20 Fortune 500 companies.

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        Sizable Workforce and Diverse Job Market.    According to the Greater Houston Partnership, there are approximately three million jobs in Houston, which is greater than 35 states combined. While energy companies contribute significantly to Houston's GDP, the economy in Houston has become more diverse over the last three decades and several industries contribute to the economy's growth and diversification. Major industries for employment include energy, healthcare, transportation, manufacturing, education and finance. The Texas Medical Center is the world's largest medical complex, with industry leading specialties in research and treatment for cancer and cardiovascular disease. Growth of the medical center remains robust and there are currently approximately $3 billion in medical construction projects underway.

        Strategic Location.    Houston's location in the South Central U.S. along the Gulf of Mexico provides businesses and individuals with unmatched access to all modes of transportation and a centralized location with efficient access to other areas of the country. In 2015, the Port of Houston ranked first in both export and import tonnage among all U.S. ports, and second in total tonnage, according to the Greater Houston Partnership. Houston also boasts two international airports which offered non-stop flights to 124 domestic destinations and 74 international destinations in 2016. In 2015, the Houston Airport System processed over 441 metric tons of air freight and served over 55 million travelers, according to the Greater Houston Partnership.

Beaumont Market Area

        Our deep ties to the Beaumont area and long history of providing tailored financial products and services have led us to become the market share leader in the Beaumont-Port Arthur MSA in terms of deposits, with over 20% market share as of June 30, 2017. Our branches in this market, which is located adjacent to Houston, approximately 85 miles east of downtown Houston, provide a stable, low-cost core funding base of approximately $1.1 billion in deposits. Our Beaumont footprint includes 12 branches located in Beaumont and four located in its surrounding areas.

        The cities of Beaumont, Port Arthur and Orange are all located in the Beaumont-Port Arthur MSA and form what is known as the "Golden Triangle," a major industrial and petrochemical complex located on the Gulf of Mexico, according to Forbes. Other leading industries in the market include transportation, defense and education. Petrochemical production and processing has grown significantly along the Gulf of Mexico in recent years, as six of the eight new U.S. ethylene projects under construction are being built on the Texas Gulf Coast, according to the Beaumont Enterprise. Beaumont has benefitted from the growth in the industry, as ExxonMobil recently announced the expansion of its Beaumont polyethylene plant by 65%, which is expected to add 1,400 jobs to the local economy.

Our Banking Services

Lending Activities

        We offer a variety of loans, including commercial and industrial, commercial real estate-backed loans (including loans secured by owner-occupied commercial properties), commercial lines of credit, working capital loans, term loans, equipment financing, acquisition, expansion and development loans, borrowing base loans, construction and development loans, homebuilder loans, agricultural loans, SBA loans, letters of credit and other loan products to small and medium-sized businesses, real estate developers, mortgage lenders, manufacturing and industrial companies and other businesses. We also offer various consumer loans to individuals and professionals including residential real estate loans, home equity loans, home equity lines of credit, or HELOCs, installment loans, unsecured and secured personal lines of credit, overdraft protection and letters of credit. Lending activities originate from the relationships and efforts of our bankers, with an emphasis on providing banking solutions tailored to meet our customers' needs while maintaining our underwriting standards.

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        For additional information concerning our loan portfolio, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Financial Condition—Loan Portfolio."

        Concentrations of Credit Risk.    Most of our lending activity is conducted with businesses and individuals in our Houston and Beaumont markets. Our loan portfolio consists primarily of commercial and industrial loans, which were $535.1 million and constituted 24.4% of our total loans as of June 30, 2017, and commercial real estate and multi-family loans, which were $898.3 million and constituted 40.9% of our total loans as of June 30, 2017. Our commercial real estate and multi-family loans are generally secured by first liens on real property. Our commercial and industrial loans are typically secured by general business assets, accounts receivable, inventory, and/or the corporate guaranty of the borrower and personal guaranty of its principals. The geographic concentration subjects the loan portfolio to the general economic conditions within Texas and, in particular, our Houston and Beaumont markets. The risks created by such concentrations have been considered by management in the determination of the adequacy of the allowance for loan losses. Management believes the allowance for loan losses is adequate to absorb incurred losses in our loan portfolio as of June 30, 2017.

        Sound risk management practices and appropriate levels of capital are essential elements of a sound commercial real estate lending program. Concentrations of commercial real estate exposures add a dimension of risk that compounds the risk inherent in individual loans. Interagency guidance on commercial real estate concentrations describe sound risk management practices which include board and management oversight, portfolio management, management information systems, market analysis, portfolio stress testing and sensitivity analysis, credit underwriting standards, and credit risk review functions. Management believes it has implemented these practices in order to monitor concentrations in commercial real estate in our loan portfolio.

        Large Credit Relationships.    As of June 30, 2017, our 15 largest loan relationships (including related entities) totaled approximately $255.9 million in loans, or 10.3% of the total loan portfolio. See "Risk Factors—Risks Related to Our Business—Our largest loan relationships currently make up a material percentage of our total loan portfolio."

        Loan Underwriting and Approval.    Historically, we believe we have made sound, high quality loans while recognizing that lending money involves a degree of business risk. We have loan policies designed to assist us in managing this business risk. These policies provide a general framework for our loan origination, monitoring and funding activities, while recognizing that not all risks can be anticipated. Our board of directors delegates loan authority up to board-approved hold limits collectively to our active Directors Loan Committee, which is comprised of members of our board of directors. Our board of directors also delegates limited lending authority to our internal loan committee, which is comprised of the following members of our executive management team: Chief Executive Officer, Vice Chairman, President, Chief Credit Officer, credit risk personnel, and, on a further limited basis, to selected lending managers in each of our target markets. Lending officers and relationship managers, including our bankers, have further limited individual loan authority. When the total relationship exceeds an individual's loan authority, a higher authority or credit committee approval is required. The objective of our approval process is to provide a disciplined, collaborative approach to larger credits while maintaining responsiveness to client needs.

        Loan decisions are documented as to the borrower's business, purpose of the loan, evaluation of the repayment source and the associated risks, evaluation of collateral, covenants and monitoring requirements, and the risk rating rationale. Our strategy for approving or disapproving loans is to follow conservative loan policies and consistent underwriting practices which include:

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granting credit on a sound basis with full knowledge of the purpose and source of repayment for such credit;

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ensuring that primary and secondary sources of repayment are adequate in relation to the amount of the loan;

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developing and maintaining targeted levels of diversification for our loan portfolio as a whole and for loans within each category; and

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ensuring that each loan is properly documented and that any insurance coverage requirements are satisfied.

        Managing credit risk is an enterprise-wide process. Our strategy for credit risk management includes well-defined, centralized credit policies, uniform underwriting criteria and ongoing risk monitoring and review processes for all credit exposures. Our processes emphasize early-stage review of loans, regular credit evaluations and management reviews of loans, which supplement the ongoing and proactive credit monitoring and loan servicing provided by our bankers. Our Chief Credit Officer provides company-wide credit oversight and reviews credit risk portfolios as economic conditions or portfolio health dictate to ensure that the risk identification processes are functioning properly and that our credit standards are followed. In addition, a third-party loan review is performed to assist in the identification of problem assets and to confirm our internal risk rating of loans. We also maintain close relationships with our customers, which allows the responsible banker an opportunity to engage in ongoing credit monitoring and loan servicing. We attempt to identify potential problem loans early in an effort to seek aggressive resolution of these situations before the loans become a loss, record any necessary charge-offs promptly and maintain adequate allowance levels for probable loan losses inherent in the loan portfolio.

        Our loan policies generally include other underwriting guidelines for loans collateralized by real estate. These underwriting standards are designed to determine the maximum loan amount that a borrower has the capacity to repay based upon the type of collateral securing the loan and the borrower's income. Such loan policies include maximum amortization schedules and loan terms for each category of loans collateralized by liens on real estate.

        In addition, our loan policies provide guidelines for personal guarantees; an environmental review; loans to employees, executive officers and directors; problem loan identification; maintenance of an adequate allowance for loan losses and other matters relating to lending practices.

        Lending Limits.    Our lending activities are subject to a variety of lending limits imposed by federal law. In general, the Bank is subject to a legal lending limit on loans to a single borrower based on the Bank's capital level. The dollar amounts of the Bank's lending limit increases or decreases as the Bank's capital increases or decreases. The Bank is able to sell participations in its larger loans to other financial institutions, which allows it to manage the risk involved in these loans and to meet the lending needs of its customers requiring extensions of credit in excess of these limits.

        The Bank's legal lending limit as of June 30, 2017 on loans to a single borrower was $51.0 million, and will increase following the consummation of this offering. However, we typically maintain an in-house limit of $25 million for loans to a single borrower. While in some cases, we may make loans that exceed the in-house limits if approved by our Directors Loan Committee, as discussed further below, we have strict policies and procedures in place for the establishment of hold limits with respect to specific products and businesses and evaluating exceptions to the hold limits for individual relationships.

        Our loan policies provide general guidelines for loan-to-value ratios that restrict the size of loans to a maximum percentage of the value of the collateral securing the loans, which percentage varies by the type of collateral. Our internal loan-to-value limitations follow limits established by applicable law.

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        Loan Types.    At June 30, 2017, we had total loans of $2.2 billion representing 74.6% of our total assets. We provide a variety of loans to meet our customers' needs and the table and section below discusses our general loan categories as of June 30, 2017:

	As of June 30, 2017
(Dollars in thousands) Loan Type	Amount		Percent
Commercial and industrial	$	535,116		24.4	%
Commercial real estate and multi-family		898,266		40.9	%
Construction and development		433,966		19.8	%
1-4 family residential		240,073		10.9	%
Consumer, agriculture and other		90,017		4.0	%
Gross loans	$	2,197,438		100.0	%
Less deferred fees and unearned discount		4,436
Less loans held for sale		559
Total loans	$	2,192,443

        Our commercial loan portfolio includes commercial and industrial, commercial real estate and multi-family, and construction and development loans. The $1.9 billion commercial loan portfolio represents approximately 85% of gross loans and the following chart presents a detailed composition of those loans as of June 30, 2017.

Commercial and Industrial Loans.    We make commercial and industrial loans, including commercial lines of credit, working capital loans, term loans, equipment financing, acquisition, expansion and development loans, borrowing base loans, restaurant franchisees, SBA loans, letters of

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credit and other loan products, primarily in our target markets, that are underwritten on the basis of the borrower's ability to service the debt from income. We take as collateral a lien on general business assets including, among other things, available real estate, accounts receivable, inventory and equipment and generally obtain a personal guaranty of the borrower or principal. Our commercial and industrial loans generally have variable interest rates and terms that typically range from one to five years depending on factors such as the type and size of the loan, the financial strength of the borrower/guarantor and the age, type and value of the collateral. Fixed rate commercial and industrial loan maturities are generally short-term, with three- to five-year maturities, or include periodic interest rate resets. Terms greater than five years may be appropriate in some circumstances, based upon the useful life of the underlying asset being financed or if some form of credit enhancement, such as an SBA guarantee, is obtained. As of June 30, 2017, we had $48.9 million of commercial and industrial loans due after five years. These loans had a weighted average maturity of approximately 7.5 years.

        In general, commercial and industrial loans may involve increased credit risk and, therefore, typically yield a higher return. As a result of these additional complexities, variables and risks, commercial and industrial loans require extensive underwriting and servicing.

Commercial Real Estate and Multi-Family Loans.    We make commercial mortgage loans collateralized by real estate, which may be owner-occupied or non-owner-occupied real estate, as well as multi-family residential loans. Commercial real estate lending typically involves higher loan principal amounts and the repayment is dependent, in large part, on sufficient income from the properties securing the loans to cover operating expenses and debt service. We require our commercial real estate loans to be secured by well-managed property with adequate margins and generally obtain a guaranty from responsible parties. Our commercial mortgage loans are generally collateralized by first liens on real estate, have variable or fixed interest rates and typically amortize over a 10-to-20 year period with balloon payments or rate adjustments at the end of three to seven years.

        Our multi-family residential loan portfolio is comprised of loans secured by properties deemed multi-family, which includes apartment buildings. Our multi-family residential loan portfolio is primarily comprised of and collateralized by Texas-based community development and affordable housing projects and is the result of the conversion of construction and development loans on such projects into permanent loans upon the successful completion of projects. Repayment is largely based on the successful management of the project and the success of leasing the units and the terms of the loans generally can vary up to between 30 to 35 years.

Construction and Development Loans.    We make loans to finance the construction of residential and non-residential properties. Construction and development loans generally are collateralized by first liens on real estate and generally have floating interest rates. We conduct periodic inspections, either directly or through an agent, prior to approval of periodic draws on these loans. Underwriting guidelines similar to those described above also are used in our construction and development lending activities. Our construction and development loans typically have terms that range from six months to two years depending on factors such as the type and size of the development and the financial strength of the borrower/guarantor. Loans are typically structured with an interest only construction period. Loans are underwritten to either mature at the completion of construction, or transition to a traditional amortizing commercial real estate facility at the completion of construction, the terms and characteristics of which are generally in line with other commercial real estate loans we hold in our portfolio.

1-4 Family Residential.    We originate residential mortgages to be held for investment or for sale into the secondary market through the mortgage division of our Bank. We have developed a scalable platform for mortgage originations within this division and believe that we have significant opportunities to grow the business. The mortgage division handles loan processing, underwriting and closings in-house. Typically, loans with a fixed interest rate of greater than 10 years are sold on the

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secondary market, and adjustable rate mortgages are held for investment. Loans sold are subject to certain indemnification provisions with investors, including the repurchase of loans sold and the repayment of sales proceeds to investors under certain conditions. In addition, if a customer defaults on a mortgage payment shortly after the loan is originated, the purchaser of the loan may have a put right, whereby they can require us to repurchase the loan at the full amount paid by the purchaser. Loans collateralized by 1-4 family residential real estate generally are originated in amounts of no more than 80% of appraised value. Home equity loans and HELOCs are generally limited to a combined loan-to-value ratio of 80%, including the subordinate lien. We retain a valid lien on real estate, obtain a title insurance policy that insures that the property is free from encumbrances and require hazard insurance.

        From time to time we have purchased residential mortgages in our primary market areas originated by other financial institutions to hold for investment with the intent to diversify our residential mortgage loan portfolio, meet certain regulatory requirements and increase our interest income. These loans purchased typically have a fixed rate with a term of 15 to 30 years, and are collateralized by 1-4 family residential real estate. We have a defined set of credit guidelines that we use when evaluating these credits. Although these loans were originated and underwritten by another institution, our mortgage and credit departments conduct an independent review of these loans. As of June 30, 2017, we had balances of $14.2 million in purchased residential real estate mortgages. At June 30, 2017, all of the residential mortgages purchased were performing in accordance with their contractual terms.

Consumer and Other Loans.    We make a variety of loans to individuals for personal and household purposes, including secured and unsecured term loans and home improvement loans. Consumer loans are underwritten based on the individual borrower's income, current debt level, past credit history and the value of any available collateral. The terms of consumer loans vary considerably based upon the loan type, nature of collateral and size of the loan. We also make loans to borrowers that in turn provide financing to their clients as part of their businesses. A small portion, approximately 0.4% at June 30, 2017, of our gross loans are agricultural loans. In addition to both fixed rate and adjustable rate agricultural real estate loans, we also make loans to finance the purchase of machinery, equipment, and breeding stock, as well as operating and revolving loans for seasonal crop production and livestock operations.

Credit Policies and Procedures

        General.    Preserving sound credit underwriting standards as we grow our loan portfolio will continue to be integral to our strategy. We place a considerable emphasis on effective risk management as an essential component of our organizational culture. We use our risk management infrastructure to monitor existing operations, support decision-making and improve the success rate of new initiatives. To maintain strong asset quality, we employ centralized and thorough loan underwriting, a diversified loan portfolio and highly experienced credit officers and credit analysts, including our Chief Credit Officer and two Regional Credit Officers, one located in each of our primary markets.

        Our approach to credit begins with a thorough understanding of our customer's business. When underwriting a potential lending opportunity, we analyze our customer's balance sheet with a focus on liquidity, and the income statement with emphasis on cash flow and the cash cycle of the business. Additionally, we receive personal guarantees from the principal or principals on the majority of our commercial credits. Substantially all of our loans are made to borrowers located or operating in our primary market areas with whom we have ongoing relationships across various product lines. We believe that our future growth and profitability will be predicated on the successful execution of our relationship-driven business model and our ongoing commitment to understanding and meeting the needs of our customers.

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        Credit Concentrations.    In connection with the management of our credit portfolio, we actively manage the composition of our loan portfolio, including credit concentrations. Our management administers a risk-based approach to effectively identify, measure, monitor, mitigate, control and manage concentration risks. The Bank's board of directors establishes capital limits for concentrations based on collateral. Sub-limits within concentration are considered and assessed, when necessary, to mitigate risk. Board-approved limits take into account capital, asset quality earnings, liquidity compliance, competition, reputation and legal considerations. The Bank's board of directors reviews capital limitations, at least annually, or more frequently when dictated by changing conditions. Our Credit Administration Department monitors the levels of concentrations relative to the specified limit approved by the Bank's board of directors.

        Loan Approval Process.    We maintain a credit culture that actively supports the extension of credit on the basis of sound, fundamental lending principles, and we selectively extend credit for the purpose of establishing long-term relationships with our customers. As of June 30, 2017, the Bank had a legal lending limit of approximately $51.0 million, and our board had established an "in-house" lending limit to any single customer of $25.0 million. Our board evaluates the in-house limit from time to time and adjusts it based on, among other things, its consideration of the Bank's operations, economic conditions and other factors it deems relevant. Additionally, we may make loans that exceed our in-house limit if such loans are approved by our Directors Loan Committee. Our credit approval policies provide for various levels of officer and senior management lending authority for new credits and renewals, which are based on position, capability and experience. We believe our individual lending authority is low relative to our peers. All credit relationships greater than $250,000 must be approved by our Regional Credit Officers. All credit relationships greater than $1.0 million must be approved by our internal loan committee, consisting of the Bank's Chairman of the Board and Chief Executive Officer, President, Vice Chairman of the Board and Senior Credit Officer. Our Directors Loan Committee, which meets twice per week, must approve all credit relationships greater than $2.5 million. These limits are reviewed periodically by the Bank's board of directors. Our credit officers are involved in the underwriting, structuring, and pricing process at inception of the lending opportunity and remain involved through approval, and we believe that our credit approval process provides for thorough underwriting and efficient decision-making.

        Credit Risk Management.    We manage risk in our portfolio with prudent underwriting and proactive credit administration, utilizing a Regional Credit Officer and credit analysts located in each of our two primary markets. We have lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk. Our management and board of directors review and approve these policies and procedures on a regular basis. A reporting system supplements the review process by providing management and our board of directors with frequent reports related to loan production, loan quality, concentrations of credit, loan delinquencies and non-performing and potential problem loans. Diversification in our loan portfolio is a means of managing risk associated with fluctuations in economic conditions.

        Our loan review function is designed to ensure the early identification of problem loans. In particular, our loan review policy seeks to provide for (i) the timely identification of potential and existing credit weaknesses in individual loans, significant customer relationships, and within our loan portfolio in general, (ii) the prompt assignment of credit risk grades, where appropriate, and (iii) the maintenance of an adequate allowance for loan loss account by making timely and appropriate provisions for probable, estimated and identifiable losses. Our loan review process involves evaluating credit quality, sufficiency of credit and collateral documentation, proper collateral lien perfections, proper collateral loan approval for new loans and subsequent renewals, formal extensions, restructurings and renegotiations, customer adherence to loan covenants and approved modifications, compliance with our loan policy and applicable laws and regulations, and the accuracy and timeliness of

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credit risk grades being assigned from time to time by our loan officers, our Senior Credit Officer or the Directors Loan Committee.

        Our loan review function involves early-stage reviews from all of our loan officers with respect to their assigned portfolios. Our loan officers report problem past due credits to our Senior Credit Officer on a timely basis to allow our management an opportunity to assess whether collection procedures are being adhered to in a consistent manner. Our loan officers are responsible for initiating prompt customer contacts and for thorough review of customer financial statements upon receipt by the Bank, maturing loan reports, delinquent loan reports, customer correspondence, credit and collateral exception reports, and collateral documents and valuation reports. Based on these ongoing reviews and analyses, our loan officers submit recommendations directly to the Bank's President, Senior Credit Officer, or Directors Loan Committee regarding the designation of appropriate credit risk grades for individual loans and customer relationships, as well as recommendations for the upgrading or downgrading of previously adversely-graded loans, where justified.

        Our Senior Credit Officer and the Directors Loan Committee have secondary responsibilities for review and analysis of individual loans, customer relationships and our portfolio as a whole. Based upon the periodic review of internally generated bank reports and discussion of information on individual loan customers, our Senior Credit Officer or the Directors Loan Committee will recommend the designation of credit risk grades and upgrades or downgrades, where justified. Final responsibility for loan review and assignment of credit risk grades lies with the Bank's board of directors, which reviews our Watch/Problem Loan List at least quarterly. The Directors Loan Committee and the Bank's board of directors also review loan portfolio composition and customer and industry sector concentrations and verify adherence to established prudent parameters.

        We retain an independent third party to review and validate our credit risk program on a periodic basis. Results of these reviews are presented to our management and board of directors. The loan review process supplements the risk identification and assessment decisions made by lenders and credit personnel, as well as our policies and procedures. We believe our conservative lending approach and focused management of nonperforming assets has resulted in sound asset quality and timely resolution of problem assets. We have several procedures in place to assist us in maintaining the overall quality of our loan portfolio. We have established underwriting guidelines to be followed by our bankers, and we also monitor our delinquency levels for any negative or adverse trends.

Deposits

        Our deposits serve as the primary funding source for lending, investing and other general banking purposes. We provide a full range of deposit products and services, including a variety of checking and savings accounts, certificates of deposit, money market accounts, debit cards, remote deposit capture, online banking, mobile banking, e-Statements, bank-by-mail and direct deposit services. We also offer business accounts and cash management services, including business checking and savings accounts and treasury services. We solicit deposits through our relationship-driven team of dedicated and accessible bankers and through community-focused marketing. We also seek to cross-sell deposit products at loan origination. Our centralized corporate lending structure combined with our robust treasury services has led to approximately 83% of our loan customers having deposit relationships with us as of June 30, 2017.

        Developing low-cost, core deposit relationships with our business customers is a key component of our growth strategy. As of June 30, 2017, we held approximately $2.5 billion of total deposits, and from December 31, 2012 to June 30, 2017, our total deposits increased at a compound annual growth rate of approximately 12.7%. Our core deposit to total deposit ratio has ranged from 90.7% as of December 31, 2012 to 92.8% as of June 30, 2017. Our cost of total deposits was 0.30% and

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noninterest-bearing deposits comprised approximately 41.0% of total deposits for the six months ended June 30, 2017.

        Our strong deposit base serves as a major driver of our operating results, as we utilize our core deposits primarily to fund our loan growth. We believe that our relationship-based approach to banking, combined with our ability to offer a sophisticated full suite of treasury services, enhances our ability to source low-cost, core deposits to fund organic growth.

        Between year-end 2012 and June 30, 2017 we increased deposits by $1.05 billion while, as illustrated in the chart below, decreasing our percentage of time deposits over $100,000 and maintaining our percentage of noninterest-bearing deposits at approximately 40%.

        The following table presents the composition of our deposits as of June 30, 2017:

	As of June 30, 2017
(Dollars in thousands)	Amount		Percent
Noninterest-bearing deposits	$	1,030,865		41.0	%
Interest-bearing demand accounts		343,826		13.7	%
Savings accounts		88,083		3.5	%
Money market accounts		698,546		27.7	%
Certificates and other time deposits, greater than $100,000		182,143		7.2	%
Certificates and other time deposits, less than $100,000		173,321		6.9	%
Total deposits	$	2,516,784		100.0	%

Other Products and Services

        We offer competitively priced banking products and services with a focus on customer convenience and accessibility. We offer a full suite of online banking services including access to account balances, online transfers, online bill payment and electronic delivery of customer statements, as well as ATMs,

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and banking by telephone, mail and personal appointment. We also offer debit cards, night depository, direct deposit, cashier's checks and letters of credit, as well as treasury services, including lockbox, wire transfer services, remote deposit capture and automated clearinghouse services.

        We are currently focused on expanding noninterest income through increased income from our treasury services, which also serves as an attractive source of core deposits. We offer a full array of commercial treasury services designed to be competitive with banks of all sizes. Treasury services include balance reporting (including current day and previous day activity), transfers between accounts, wire transfer initiation, automated clearinghouse origination and stop payments. We have recently expanded our treasury services platform by hiring additional personnel to provide treasury solutions to our customers more effectively. Treasury services deposit products consist of remote deposit capture, merchant services, positive pay and reverse positive pay (automated fraud detection tools), account reconciliation services, zero balance accounts and sweep accounts, including loan sweep.

Investments

        We manage our investment portfolio to provide a source of liquidity, to provide an appropriate return on funds invested, to manage interest rate risk, to meet pledging requirements and to meet regulatory capital requirements. As of June 30, 2017, the amortized cost of our investment portfolio totaled $220.3 million, with an average yield of 2.45% and an estimated modified duration of approximately 4.1 years.

        The Bank's board of directors annually reviews the investment policy and has delegated the responsibility of monitoring our investment activities to the Funds Management Committee. Day-to-day activities pertaining to the investment portfolio are conducted within our finance department under the supervision of our Chief Financial Officer.

Information Technology Systems

        We continue to make significant investments in our information technology systems for our banking and lending operations and treasury services. We believe that these investments are essential to enhance our capabilities to offer new products and overall customer experience, to provide scale for future growth and acquisitions, and to increase controls and efficiencies in our back-office operations. We have obtained our core data processing platform from a nationally recognized bank processing vendor providing us with capabilities to support the continued growth of the Bank. Our internal network and e-mail systems are maintained in-house. We leverage the capabilities of a third-party service provider to provide the technical expertise around network design and architecture that is required for us to operate as an effective and efficient organization. We actively manage our business continuity plan. We strive to follow all recommendations outlined by the Federal Financial Institutions Examination Council in an effort to provide that we have effectively identified our risks and documented contingency plans for key functions and systems including providing for back-up sites for all critical applications. We perform tests of the adequacy of these contingency plans on at least an annual basis.

        The majority of our other systems, including electronic funds transfer and transaction processing, are operated in-house. Online banking services and other public-facing web services are performed using third-party service providers. The scalability of this infrastructure is designed to support our expansion strategy. These critical business applications and processes are included in the business continuity plans referenced above.

Enterprise Risk Management

        We place significant emphasis on risk mitigation as an integral component of our organizational culture. We believe that our emphasis on risk management is manifested in our solid asset quality

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statistics and in our historically low charge-offs and losses on deposit-related services due to debit card, ACH or wire fraud. All of the Bank's executive officers serve on the Bank's Management Risk Committee, which is chaired by our Chief Risk Officer. Risk management, with respect to our lending philosophy, focuses on structuring credits to provide for multiple sources of repayment, coupled with strong underwriting and monitoring undertaken by the Bank's experienced officers and credit policy personnel.

        Our risk mitigation techniques include weekly Directors Loan Committee meetings where loan pricing, allowance for loan losses methodology and level, and loan concentrations are reviewed and discussed. In addition, the Bank's board of directors reviews portfolio composition reports on a monthly basis. The Bank's Special Assets Committee also meets monthly to discuss criticized assets and set action plans for those borrowers who display deteriorating financial condition, to monitor those relationships and to implement corrective measures on a timely basis to minimize losses. We also perform an annual stress test on our loan portfolio, in which we evaluate the impact on the portfolio of declining economic conditions on the portfolio.

        We also focus on risk management in numerous other areas throughout our organization, including asset/liability management, regulatory compliance and strategic and operational risk. We have implemented an extensive asset/liability management process, and utilize a well-known and experienced third party to run our interest rate risk model on a quarterly basis. Our policies provide that we may utilize hedging techniques whenever our models indicate short-term (net interest income) or long-term (economic value of equity) risk-to-interest rate movements, although historically we have not done so.

        As of December 31, 2016, management assessed the effectiveness of the Company's internal control over financial reporting based on the criteria for effective internal control over financial reporting established in "Internal Control—Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. This assessment included controls over the preparation of the schedules equivalent to the basic financial statements in accordance with the instructions for the Consolidated Financial Statements for Bank Holding Companies (Form FR Y-9C) to meet the reporting requirements of Section 112 of the Federal Deposit Insurance Corporation Improvement Act. Based on the assessment, management determined that the Company maintained effective internal control over financial reporting as of December 31, 2016. We also annually engage an experienced third party to review and assess our controls with respect to technology, as well as to perform penetration and vulnerability testing to assist us in managing the risks associated with information security.

Competition

        The banking and financial services industry is highly competitive, and we compete with a wide range of financial institutions within our markets, including local, regional and national commercial banks and credit unions. We also compete with mortgage companies, brokerage firms, consumer finance companies, mutual funds, securities firms, insurance companies, third-party payment processors, financial technology (fintech) companies and other financial intermediaries for certain of our products and services. Some of our competitors are not subject to the regulatory restrictions and level of regulatory supervision applicable to us.

        Interest rates on loans and deposits, as well as prices on fee-based services, are typically significant competitive factors within the banking and financial services industry. Many of our competitors are much larger financial institutions that have greater financial resources than we do and compete aggressively for market share. These competitors attempt to gain market share through their financial product mix, pricing strategies and banking center locations. Other important competitive factors in our industry and markets include office locations and hours, quality of customer service, community reputation, continuity of personnel and services, capacity and willingness to extend credit, and ability to

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offer sophisticated banking products and services. While we seek to remain competitive with respect to fees charged, interest rates and pricing, we believe that our broad and sophisticated suite of financial solutions, our high-quality customer service culture, our positive reputation and our long-standing community relationships will enable us to compete successfully within our markets and enhance our ability to attract and retain customers.

Our Employees

        As of June 30, 2017, we employed 472 full-time equivalent persons. We provide extensive training to our employees in an effort to ensure that our customers receive superior customer service. None of our employees are represented by any collective bargaining unit or are parties to a collective bargaining agreement. We consider our relations with our employees to be good.

Our Properties

        The Bank currently operates 34 banking locations, all of which are located in Texas. The headquarters of the Bank is located at 5999 Delaware Street, Beaumont, Texas 77706, and the telephone number is (409) 861-7200. The majority of the Bank's and our executive officers, including Robert R. Franklin, Jr., our Chairman, President and Chief Executive Officer, are located in Houston at 9 Greenway Plaza, Suite 110, Houston, Texas 77046, and the telephone number is (713) 210-7600. The Bank currently operates banking locations in the following Texas locations: Baytown, Beaumont (four locations), Boling, Buna, Crosby (two locations), Deweyville, Houston (eight locations), Huffman, Humble, Jasper, Kirbyville, Lumberton, Nederland, Newton, Orange, Pasadena, Port Arthur, Silsbee, Sugar Land, The Woodlands, Tomball, Vidor, Wharton, and Woodville. We own all of our banking locations, except for five banking locations in Houston, one banking location in Sugar Land, one banking location in The Woodlands, one banking location in Wharton, and two banking locations in Beaumont, at which we either lease the banking location entirely, own the building and have a ground lease, or own the drive-in and lease the branch. We believe that the 10 leases to which we are subject are generally on terms consistent with prevailing market terms. We believe that our facilities are in good condition and are adequate to meet our operating needs for the foreseeable future.

        On September 8, 2017, the Bank completed the sale of its Huffman Branch. Pursuant to a purchase and assumption agreement, the Bank sold certain assets associated with the Huffman Branch valued at approximately $1.4 million, other than loans, and the purchaser assumed approximately $15.3 million in deposits at the Huffman Branch. We believe that the sale of the Huffman Branch will reduce our noninterest expense going forward and we do not believe it will impact our liquidity.

        On September 14, 2017, we sold the real estate associated with our Deweyville Branch and we leased the facility back for approximately 120 days while we finalize the regulatory process for approval of closing this branch office. We expect to complete the closing of the Deweyville Branch on December 18, 2017. The $4.7 million in deposits and $50,000 of loans at the Deweyville Branch will be transferred to one of our other nearby branch locations. We believe that the closure of the Deweyville Branch will reduce our noninterest expense going forward and we do not believe it will impact our liquidity.

        We do not believe that the sale of our Huffman and Deweyville branches represents any strategic shift in our operations.

Legal Proceedings

        We are not currently subject to any material legal proceedings. We are from time to time subject to claims and litigation arising in the ordinary course of business. These claims and litigation may include, among other things, allegations of violation of banking and other applicable regulations, competition law, labor laws and consumer protection laws, as well as claims or litigation relating to

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intellectual property, securities, breach of contract and tort. We intend to defend ourselves vigorously against any pending or future claims and litigation.

        At this time, in the opinion of management, the likelihood is remote that the impact of such proceedings, either individually or in the aggregate, would have a material adverse effect on our consolidated results of operations, financial condition or cash flows. However, one or more unfavorable outcomes in any claim or litigation against us could have a material adverse effect for the period in which they are resolved. In addition, regardless of their merits or their ultimate outcomes, such matters are costly, divert management's attention and may materially and adversely affect our reputation, even if resolved in our favor.

Effects of Hurricane Harvey

        In August 2017, Hurricane Harvey, a Category 4 hurricane, caused extensive and costly damage across Southeast Texas. The Houston and Beaumont areas received over 40 inches of rainfall, which resulted in catastrophic flooding and unprecedented damage to residences and businesses. We worked diligently throughout Hurricane Harvey and during its aftermath to ensure the safety of our employees and customers, as well as to continue to provide the financial services on which our customers greatly depend.

        The operational impact to our Houston branches and infrastructure was minor. After Hurricane Harvey made landfall in Houston, we operated limited services in Houston from August 28, 2017 until August 31, 2017, which was largely due to the inability of our employees and customers to use the roadways or public transportation. Despite widespread flooding in Houston, none of our Houston branches flooded and all but one of our branches were open and operating at full capacity as of September 1, 2017. The remaining Houston branch reopened on September 6, 2017, after its electricity was restored.

        Likewise, the operational impact to our Beaumont branches and infrastructure was minor and none of our Beaumont branches flooded. After Hurricane Harvey shifted course away from Houston and toward Beaumont, we operated limited services in Beaumont from August 29, 2017 until September 4, 2017. In Beaumont, all but one of our branches were open and operating at full capacity as of September 5, 2017. The remaining Beaumont branch reopened on September 11, 2017, after its utilities were restored.

        Furthermore, our technology environment, bolstered by our business continuity plan, was fully operational and supported our customers and employees across all of our branches during Hurricane Harvey. Our call center, wire transfer, ATM and treasury services continued to provide telephone and electronic access for customers during the storm. During Hurricane Harvey, our business continuity plan worked as intended and is being reviewed for continued updates and improvements based on the experience.

        We have begun to evaluate Hurricane Harvey's impact on our customers and our business, including our properties, assets and loan portfolios. Some of our customers were, and continue to be, adversely impacted by Hurricane Harvey. As part of the recovery process, we have contacted our customers to assist with their needs, as well as waived or refunded (i) late fees for loans with payments due from August 25, 2017 through September 10, 2017, and (ii) overdraft and ATM fees incurred from August 25, 2017 through September 10, 2017.

        We have also engaged directly with customers through telephone calls to evaluate the impact of Hurricane Harvey on our consumer, real estate and business loan exposures. As of September 25, 2017, our real estate loan exposures in Houston and Beaumont consist primarily of commercial properties. Based on initial conversations with customers, we have determined that the majority of our significant commercial real estate customers are characterized as low risk (i.e., sustained minimal property

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damage). As of October 6, 2017, we do not anticipate that Hurricane Harvey will result in significant losses and as of October 6, 2017, only one loan relationship in the principal amount of approximately $400,000 appears to have significant uninsured damage and is being monitored by our loan officers and our Senior Credit Officer. Additionally, as of October 6, 2017, we have granted temporary payment deferrals on loans with an aggregate principal amount of approximately $48.6 million, largely to assist customers whose operations were impacted by Hurricane Harvey.

        While we do not anticipate that Hurricane Harvey will have significant long-term effects on our business, financial condition or operations, we are unable to predict with certainty the short- and long-term impact that Hurricane Harvey may have on the markets in which we operate, including the impact on our customers and our loan and deposit activities and credit exposures. We will continue to monitor the residual effects of Hurricane Harvey on our business and customers.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with "Selected Historical Consolidated Financial Data" and our consolidated financial statements and the accompanying notes included elsewhere in this prospectus. This discussion and analysis contains forward-looking statements that are subject to certain risks and uncertainties and are based on certain assumptions that we believe are reasonable but may prove to be inaccurate. Certain risks, uncertainties and other factors, including those set forth under "Cautionary Note Regarding Forward-Looking Statements," "Risk Factors" and elsewhere in this prospectus, may cause actual results to differ materially from those projected results discussed in the forward-looking statements appearing in this discussion and analysis. We assume no obligation to update any of these forward-looking statements. Unless otherwise stated, all information in this prospectus gives effect to a 2-for-1 stock split, whereby each shareholder of our common stock received one additional share of common stock for each share owned as of the record date of September 30, 2017, in the form of a stock dividend that was distributed on October 13, 2017. The effect of the stock split on outstanding shares and per share figures has been retroactively applied to all periods presented.

Overview

        We are a bank holding company that operates through our wholly-owned subsidiary, CommunityBank of Texas N.A., in Houston and Beaumont, Texas. We focus on providing commercial banking solutions to small and mid-sized businesses and professionals with operations in our markets. Our market expertise, coupled with a deep understanding of our customers' needs, allows us to deliver tailored financial products and services. We currently operate 18 branches located in the Houston market and our Beaumont market presence includes 16 branches. We have experienced significant organic growth since commencing banking operations in 2007, as well as through multiple mergers of equals, strategic acquisitions and de novo branches. With this growth, we built and expanded our market from Beaumont and East Texas to the growing Houston market. As of June 30, 2017, we had, on a consolidated basis, total assets of $2.9 billion, total loans of $2.2 billion, total deposits of $2.5 billion and total shareholders' equity of $372.0 million.

        The following discussion and analysis presents our financial condition and results of operations on a consolidated basis. However, because we conduct all of our material business operations through CommunityBank of Texas, N.A., the discussion and analysis relates to activities primarily conducted by the Bank. As a result of our acquisition of MC Bancshares, Inc., which we completed in February 2015, the results of the acquired operations of MC Bancshares, Inc. were included in our results of operations for a portion of 2015 compared to the full year in 2016.

        As a bank holding company that operates through one segment, community banking, we generate most of our revenue from interest on loans and investments, customer service and loan fees, and fees related to the sale of mortgage loans. We incur interest expense on deposits and other borrowed funds, as well as noninterest expense, such as salaries and employee benefits and occupancy expenses. We analyze our ability to maximize income generated from interest-earning assets and control the interest expenses of our liabilities, measured as net interest income, through our net interest margin and net interest spread. Net interest income is the difference between interest income on interest-earning assets, such as loans and securities, and interest expense on interest-bearing liabilities, such as deposits and borrowings, which are used to fund those assets. Net interest margin is a ratio calculated as net interest income divided by average interest-earning assets. Net interest spread is the difference between average rates earned on interest-earning assets and average rates paid on interest-bearing liabilities.

        Changes in market interest rates and the interest rates we earn on interest-earning assets or pay on interest-bearing liabilities, as well as in the volume and types of interest-earning assets, interest-

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bearing and noninterest-bearing liabilities, are usually the largest drivers of periodic changes in net interest spread, net interest margin and net interest income. Fluctuations in market interest rates are driven by many factors, including governmental monetary policies, inflation, deflation, macroeconomic developments, changes in unemployment, the money supply, political and international conditions and conditions in domestic and foreign financial markets. Periodic changes in the volume and types of loans in our loan portfolio are affected by, among other factors, economic and competitive conditions in Texas, as well as developments affecting the real estate, technology, financial services, insurance, transportation, manufacturing and energy sectors within our target markets and throughout the state of Texas.

Results of Operations

Net Interest Income

        Our operating results depend primarily on our net interest income, calculated as the difference between interest income on interest-earning assets, such as loans and securities, and interest expense on interest-bearing liabilities, such as deposits and borrowings. Fluctuations in market interest rates impact the yield and rates paid on interest-earning assets and interest-bearing liabilities, respectively. Changes in the amount and type of interest-earning assets and interest-bearing liabilities also impact our net interest income. To evaluate net interest income, we measure and monitor (1) yields on our loans and other interest-earning assets, (2) the costs of our deposits and other funding sources, (3) our net interest spread and (4) our net interest margin. Because noninterest-bearing sources of funds, such as noninterest-bearing deposits and shareholders' equity, also fund interest-earning assets, net interest margin includes the benefit of these noninterest-bearing sources.

        Six Months Ended June 30, 2017 vs. Six Months Ended June 30, 2016.    Net interest income for the six months ended June 30, 2017 was $52.4 million compared to $50.3 million for six months ended June 30, 2016, an increase of $2.1 million, or 4.17%. For the six months ended June 30, 2017, net interest margin and net interest spread were 3.96% and 3.71%, respectively, compared to 3.92% and 3.68% for the six months ended June 30, 2016. The consistency of net interest margin and net interest spread is primarily attributed to the increase in the average outstanding balances of loans and securities. The increases offset decreases in the average yields in our loan and securities portfolios. Changes in rates paid on interest-bearing deposits for the six months ended June 30, 2017 and June 30, 2016 had a minimal impact on the net interest margin.

        Tax equivalent net interest margin, which is defined as net interest income adjusted for tax-free income divided by average interest-earning assets, was 4.05% for the six months ended June 30, 2017, consistent with 4.02% for the six months ended June 30, 2016. Tax equivalent adjustments to net interest margin are the result of increasing income from tax-free securities and loans by an amount equal to the taxes that would have been paid if the income were fully taxable based on a 35% federal tax rate, thus making tax-exempt yields comparable to taxable asset yields. For the six months ended June 30, 2017 and 2016, the adjustments were approximately $1.2 million and $1.2 million, respectively.

        The following table presents an analysis of net interest income and net interest spread for the periods indicated, including average outstanding balances for each major category of interest-earning assets and interest-bearing liabilities, the interest earned or paid on such amounts, and the average rate earned or paid on such assets or liabilities, respectively. The table also sets forth the net interest margin on average total interest-earning assets for the same periods. Interest earned on loans that are classified as nonaccrual is not recognized in income; however, the balances are reflected in average outstanding balances for the period. For the six months ended June 30, 2017 and 2016, the amount of

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interest income not recognized on nonaccrual loans was not material. Any nonaccrual loans have been included in the table as loans carrying a zero yield.

	For the Six Months Ended June 30,
	2017								2016
(Dollars in thousands)	Average Outstanding Balance			Interest Earned/ Interest Paid		Average Yield/ Rate			Average Outstanding Balance			Interest Earned/ Interest Paid		Average Yield/ Rate
Assets
Interest-earnings assets:
Total loans(1)	$	2,190,953		$	52,513		4.83	%	$	2,116,681		$	51,304		4.89	%
Securities (available for sale and held to maturity)		219,005			2,656		2.45	%		154,032			1,773		2.32	%
Federal funds sold and other interest-earning assets		244,053			1,186		0.98	%		299,003			810		0.55	%
Nonmarketable equity securities		14,688			369		5.07	%		14,684			358		4.92	%
Total interest-earning assets		2,668,699		$	56,724		4.29	%		2,584,400		$	54,245		4.23	%
Allowance for loan losses		(25,932	)							(26,491	)
Noninterest-earnings assets		275,208								265,754
Total assets	$	2,917,975							$	2,823,663
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing deposits	$	1,495,867		$	3,695		0.50	%	$	1,417,969		$	3,308		0.47	%
Repurchase agreements		2,412			3		0.25	%		2,020			3		0.30	%
Note payable		26,400			515		3.93	%		30,641			545		3.59	%
Junior subordinated debt		10,826			153		2.85	%		10,826			127		2.37	%
Total interest-bearing liabilities		1,535,505		$	4,366		0.57	%		1,461,456		$	3,983		0.55	%
Noninterest-bearing liabilities:
Noninterest-bearing deposits		998,326								1,002,732
Other liabilities		18,157								13,370
Total noninterest-bearing liabilities		1,016,483								1,016,102
Shareholders' equity		365,987								346,105
Total liabilities and shareholders' equity	$	2,917,975							$	2,823,663
Net interest income				$	52,358							$	50,262
Net interest spread(2)							3.71	%							3.68	%
Net interest margin(3)							3.96	%							3.92	%
Net interest margin—tax equivalent(4)							4.05	%							4.02	%

(1)

Includes average outstanding balances of loans held for sale of $730,000 and $1.0 million for the six months ended June 30, 2017 and 2016, respectively.

(2)

Net interest spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.

(3)

Net interest margin is equal to net interest income divided by average interest-earning assets.

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(4)

In order to make pre-tax income and resultant yields on tax-exempt investments and loans comparable to those on taxable investments and loans, a tax equivalent adjustment has been computed using a federal income tax rate of 35% for six months ended June 30, 2017.

        The following table presents information regarding the dollar amount of changes in interest income and interest expense for the periods indicated for each major component of interest-earning assets and interest-bearing liabilities and distinguishes between the changes attributable to changes in volume and changes attributable to changes in interest rates. For purposes of this table, changes attributable to both rate and volume that cannot be segregated have been allocated to rate.

	For the Six Months Ended June 30, 2017 Compared to 2016
	Increase (Decrease) due to
							Total Increase (Decrease)
(Dollars in thousands)	Volume			Rate
Interest-earning assets:
Total loans	$	1,800		$	(591	)	$	1,209
Securities (available for sale and held to maturity)		748			135			883
Federal funds sold and other interest-earning assets		(149	)		525			376
Nonmarketable equity securities		—			11			11
Total increase (decrease) in interest income	$	2,399		$	80		$	2,479
Interest-bearing liabilities:
Interest-bearing deposits	$	182		$	205		$	387
Repurchase agreements		—			—			—
Note payable		(75	)		45			(30	)
Junior subordinated debt		—			26			26
Total increase (decrease) in interest expense	$	107		$	276		$	383
Increase (decrease) in net interest income	$	2,292		$	(196	)	$	2,096

        Year Ended December 31, 2016 vs. Year Ended December 31, 2015.    Net interest income for 2016 was $101.5 million compared to $97.9 million for 2015, an increase of $3.7 million, or 3.75%. The increase in net interest income was comprised of a $4.4 million, or 4.19%, increase in interest income offset by a $751,000, or 9.81%, increase in interest expense. The growth in interest income was primarily attributable to a $72.1 million, or 3.48%, increase in average loans outstanding for the year ended December 31, 2016, compared to 2015, partially offset by a three basis point decrease in the yield on total loans. The increase in average loans outstanding was primarily due to organic growth in both of our markets, and specifically loan growth in the Houston market, including from the maturing of our Westchase and The Woodlands branches. The $751,000 increase in interest expense for the year ended December 31, 2016 was primarily related to a $16.4 million, or 1.14%, increase in average interest-bearing deposits over the same period in 2015. The majority of this increase is due to organic growth, primarily in interest-bearing demand deposits, NOW and money market accounts. For the year ended December 31, 2016, net interest margin and net interest spread were 3.87% and 3.63%, respectively, compared to 3.77% and 3.54% for the same period in 2015, which reflects the increases in interest income discussed above relative to the increases in interest expense.

        Tax equivalent net interest margin, defined as net interest income adjusted for tax-free income divided by average interest-earning assets, for 2016 was 3.96%, an increase of 11 basis points compared with 3.85% for 2015. This net interest margin increase was primarily due to growth of higher-yielding interest-earning assets, in both our loan portfolio and the state and municipal securities portion of our

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investment portfolio. For the years ended December 31, 2016 and 2015, the adjustments were approximately $2.4 million and $2.1 million, respectively.

        The following table presents an analysis of net interest income, net interest spread and net interest margin for the periods indicated in the manner presented for the six months ended June 30, 2017 and 2016 above. For the years ended December 31, 2016 and 2015, the amount of interest income not recognized on nonaccrual loans was not material. Any nonaccrual loans have been included in the table as loans carrying a zero yield.

	For the Years Ended December 31,
	2016								2015
(Dollars in thousands)	Average Outstanding Balance			Interest Earned/ Interest Paid		Average Yield/ Rate			Average Outstanding Balance			Interest Earned/ Interest Paid		Average Yield/ Rate
Assets
Interest-earnings assets:
Total loans(1)	$	2,140,917		$	103,723		4.84	%	$	2,068,827		$	100,786		4.87	%
Securities (available for sale and held to maturity)		169,509			3,801		2.24	%		117,883			2,814		2.39	%
Federal funds sold and other interest-earning assets		301,018			1,732		0.58	%		402,391			1,392		0.35	%
Nonmarketable equity securities		14,683			695		4.73	%		9,653			533		5.52	%
Total interest-earning assets		2,626,127		$	109,951		4.19	%		2,598,754		$	105,525		4.06	%
Allowance for loan losses		(26,826	)							(27,325	)
Noninterest-earnings assets		276,413								282,482
Total assets	$	2,875,714							$	2,853,911
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing deposits	$	1,458,566		$	7,073		0.48	%	$	1,442,194		$	6,501		0.45	%
Repurchase agreements		1,918			5		0.26	%		1,473			4		0.27	%
Note payable		29,624			1,061		3.58	%		28,113			932		3.32	%
Junior subordinated debt		10,826			266		2.46	%		10,815			217		2.01	%
Total interest-bearing liabilities		1,500,934		$	8,405		0.56	%		1,482,595		$	7,654		0.52	%
Noninterest-bearing liabilities:
Noninterest-bearing deposits		1,010,403								1,014,897
Other liabilities		15,270								19,380
Total noninterest-bearing liabilities		1,025,673								1,034,277
Shareholders' equity		349,107								337,039
Total liabilities and shareholders' equity	$	2,875,714							$	2,853,911
Net interest income				$	101,546							$	97,871
Net interest rate spread(2)							3.63	%							3.54	%
Net interest margin(3)							3.87	%							3.77	%
Net interest margin—tax equivalent(4)							3.96	%							3.85	%

(1)

Includes average outstanding balances of loans held for sale of $905,000 and $637,000 for the years ended December 31, 2016 and 2015, respectively.

(2)

Net interest spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.

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(3)

Net interest margin is equal to net interest income divided by average interest-earning assets.

(4)

In order to make pre-tax income and resultant yields on tax-exempt investments and loans comparable to those on taxable investments and loans, a tax equivalent adjustment has been computed using a federal income tax rate of 35% for the years ended December 31, 2016 and 2015.

        The following table presents information regarding the dollar amount of changes in interest income and interest expense for the periods indicated for each major component of interest-earning assets and interest-bearing liabilities and distinguishes between the changes attributable to changes in volume and changes attributable to changes in interest rates. For purposes of this table, changes attributable to both rate and volume that cannot be segregated have been allocated to rate.

	For the Year Ended December 31, 2016 Compared to 2015
	Increase (Decrease) due to
							Total Increase (Decrease)
(Dollars in thousands)	Volume			Rate
Interest-earning assets:
Total loans	$	3,512		$	(575	)	$	2,937
Securities (available for sale and held to maturity)		1,232			(245	)		987
Federal funds sold and other interest-earning assets		(351	)		691			340
Nonmarketable equity securities		278			(116	)		162
Total increase (decrease) in interest income	$	4,671		$	(245	)	$	4,426
Interest-bearing liabilities:
Interest-bearing deposits	$	74		$	498		$	572
Repurchase agreements		1			—			1
Note payable		50			79			129
Junior subordinated debt		—			49			49
Total increase (decrease) in interest expense	$	125		$	626		$	751
Increase (decrease) in net interest income	$	4,546		$	(871	)	$	3,675

Provision for Loan Losses

        The provision for loan losses is an expense we use to maintain an allowance for loan losses at a level which is deemed appropriate by management to absorb inherent losses on existing loans. For a description of the factors taken into account by our management in determining the allowance for loan losses see "—Financial Condition—Allowance for Loan Losses."

        The provision for loan losses for the six months ended June 30, 2017 was $266,000 compared to $2.7 million for the six months ended June 30, 2016. The decrease in the provision for loan losses is primarily the result of pay-offs and charge-offs of certain classified and problem loans.

        The provision for loan losses for the year ended December 31, 2016 was $4.6 million compared to $7.0 million for the year ended December 31, 2015. The decrease of $2.4 million was primarily due to the decrease in net charge-offs for the year ended December 31, 2016 compared to the same period in 2015 offset by our growth in loans for the year end December 31, 2016.

        Net charge-offs for the year ended December 31, 2016 totaled $4.9 million, or 0.23% of total average loans, including loans held for sale, as compared to net charge-offs of $6.6 million, or 0.32%, for the same period in 2015. Loans increased to $2.2 billion for the year ended December 31, 2016, from $2.1 billion for the year ended December 31, 2015, an increase of $62.9 million or 3.01%.

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Noninterest Income

        Our primary sources of recurring noninterest income are deposit account service charges, gains on the sale of assets, card interchange fees and income from bank-owned life insurance. Noninterest income does not include loan origination fees to the extent they exceed the direct loan origination costs, which are generally recognized over the life of the related loan as an adjustment to yield using the interest method.

        Six Months Ended June 30, 2017 vs. Six Months Ended June 30, 2016.    For the six months ended June 30, 2017, noninterest income totaled $7.0 million, a decrease of $824,000, or 10.57%, compared to $7.8 million for the six months ended June 30, 2016. The following table presents, for the periods indicated, the major categories of noninterest income:

	For the Six Months Ended June 30,
(Dollars in thousands)	2017		2016		Increase (Decrease)
Noninterest income:
Deposit account service charges	$	3,017	$	3,252	$	(235	)	(7.23	)%
Net gain on sale of assets		703		533		170		31.89	%
Card interchange fees		1,709		1,685		24		1.42	%
Earnings on bank-owned life insurance		661		677		(16	)	(2.36	)%
Other		884		1,651		(767	)	(46.46	)%
Total noninterest income	$	6,974	$	7,798	$	(824	)	(10.57	)%

        Year Ended December 31, 2016 vs. Year Ended December 31, 2015.    For the year ended December 31, 2016, noninterest income totaled $15.7 million, an increase of $782,000, or 5.22%, compared to $15.0 million for the year ended December 31, 2015. The following table presents, for the periods indicated, the major categories of noninterest income:

	For the Years Ended December 31,
					Increase (Decrease)
(Dollars in thousands)	2016		2015
Noninterest income:
Deposit account service charges	$	6,538	$	6,912	$	(374	)	(5.41	)%
Net gain on sale of assets		1,922		783		1,139		145.47	%
Gain on redemption of junior subordinated debt		—		1,025		(1,025	)	(100.00	)%
Card interchange fees		3,352		3,331		21		0.63	%
Earnings on bank-owned life insurance		1,356		1,357		(1	)	(0.07	)%
Other		2,581		1,559		1,022		65.55	%
Total noninterest income	$	15,749	$	14,967	$	782		5.22	%

        Deposit Account Service Charges.    We earn fees from our customers for deposit-related services, and these fees constitute a significant component of our noninterest income. Service charges on deposit accounts were $3.0 million for the six months ended June 30, 2017, a decrease of $235,000, or 7.23%, over the same period in 2016. Service charges on deposit accounts were $6.5 million for the year ended December 31, 2016, a decrease of $374,000, or 5.41%, over the same period in 2015. The decreases in these periods were due to a reduction of non-sufficient and overdraft charges incurred by our deposit customers.

        Net Gain on Sale of Assets.    Net gain on sale of assets consists of the gains associated with the sale of fixed assets, SBA loans, mortgage loans and other assets, including OREO and repossessed assets. Net gain on sale of assets was $703,000 for the six months ended June 30, 2017, an increase of

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$170,000, or 31.89%, over the same period in 2016. Net gain on sale of assets was $1.9 million for the year ended December 31, 2016, which was a $1.1 million, or 145.47%, increase over the same period in 2015. This increase was primarily attributed to the sale of one of our branch locations.

        Other.    This category includes a variety of other income-producing activities, including partnership and investment fund income, other loan fees, swap origination charges, wire transfer fees, credit card program income and other fee income.

        Other noninterest income decreased $767,000, or 46.46%, from $1.7 million for the six months ended June 30, 2016 to $884,000 for the six months ended June 30, 2017. The decrease is primarily due to the income generated during the six months ended June 30, 2016 by our investments in partnerships and funds associated with the Small Business Investment Company program of the U.S. Small Business Administration of $629,000. Our investments in these partnerships and funds aid the Company in meeting the requirements of the Community Reinvestment Act. The partnerships and funds are licensed small business investment companies whose income is primarily derived from investment in small businesses and ultimate liquidation of these investments at a future date for profit.

        Other noninterest income increased $1.0 million, or 65.55%, in 2016 compared to 2015 due primarily to income recognized on our investments in partnerships and funds licensed under the Small Business Investment Company program of the U.S. Small Business Administration of $629,000 and origination fees associated with swaps originated with, and on behalf of, our loan customers of $174,000.

Noninterest Expense

        Generally, noninterest expense is composed of all employee expenses and costs associated with operating our facilities, obtaining and retaining customer relationships and providing bank services. The largest component of noninterest expense is salaries and employee benefits. Noninterest expense also includes operational expenses, such as occupancy expenses, depreciation and amortization of our facilities and our furniture, fixtures and office equipment, professional and director fees, regulatory fees, including FDIC assessments, data processing expenses, printing and office supplies, amortization of intangibles, and advertising and marketing expenses.

        Six Months Ended June 30, 2017 vs. Six Months Ended June 30, 2016.    For the six months ended June 30, 2017, noninterest expense totaled $37.3 million, an increase of $452,000, or 1.23%, compared to $36.8 million for the six months ended June 30, 2016.

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        The following table presents, for the periods indicated, the major categories of noninterest expense:

	For the Six Months Ended June 30,
(Dollars in thousands)	2017		2016		Increase (Decrease)
Salaries and employee benefits	$	22,723	$	22,061	$	662		3.00	%
Non-staff expenses:
Net occupancy expense		4,584		5,330		(746	)	(14.00	)%
Regulatory fees		1,231		1,148		83		7.23	%
Data processing		1,293		1,240		53		4.27	%
Printing, stationery and office		717		699		18		2.58	%
Amortization of intangibles		549		594		(45	)	(7.58	)%
Professional and director fees		1,331		1,186		145		12.33	%
Correspondent bank and customer related expense		152		161		(9	)	(5.59	)%
Loan processing		205		240		(35	)	(14.58	)%
Advertising, marketing and business development		687		397		290		73.05	%
Repossessed real estate and other assets		203		121		82		67.77	%
Security and protection expense		724		882		(158	)	(17.91	)%
Other expense		2,887		2,775		112		4.04	%
Total noninterest expense	$	37,286	$	36,834	$	452		1.23	%

        Year Ended December 31, 2016 vs. Year Ended December 31, 2015.    For the year ended December 31, 2016, noninterest expense totaled $73.5 million, an increase of $2.5 million, or 3.58%, compared to $71.0 million for the year ended December 31, 2015.

        The following table presents, for the periods indicated, the major categories of noninterest expense:

	For the Years Ended December 31,
					Increase (Decrease)
(Dollars in thousands)	2016		2015
Salaries and employee benefits	$	44,239	$	41,601	$	2,638		6.34	%
Non-staff expenses:
Net occupancy expense		10,100		9,844		256		2.60	%
Regulatory fees		2,300		2,206		94		4.26	%
Data processing		2,484		2,416		68		2.81	%
Printing, stationery and office		2,981		2,959		22		0.74	%
Amortization of intangibles		1,167		1,305		(138	)	(10.57	)%
Professional and director fees		2,481		2,462		19		0.77	%
Correspondent bank and customer related expense		320		325		(5	)	(1.54	)%
Loan processing		509		619		(110	)	(17.77	)%
Advertising, marketing and business development		789		925		(136	)	(14.70	)%
Repossessed real estate and other assets		318		228		90		39.47	%
Security and protection expense		1,718		1,619		99		6.11	%
Merger expense		—		1,374		(1,374	)	(100.00	)%
Other expense		4,096		3,078		1,018		33.07	%
Total noninterest expense	$	73,502	$	70,961	$	2,541		3.58	%

        Salaries and Employee Benefits.    Salaries and employee benefits are the largest component of noninterest expense and include payroll expense, the cost of incentive compensation, benefit plans, health insurance and payroll taxes.

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        Salaries and employee benefits were $22.7 million for the six months ended June 30, 2017, an increase of $662,000, or 3.00%, compared to $22.1 million for the same period in 2016. The increase was due to increases in salaries and incentive compensation resulting from bonuses and deferred compensation expense. As of June 30, 2017 and 2016, the number of full-time equivalent employees was 472 and 480, respectively.

        Salaries and employee benefits were $44.2 million for the year ended December 31, 2016, an increase of $2.6 million, or 6.34%, compared to $41.6 million for the same period in 2015. The increase was due primarily to an increase in incentive compensation, health insurance expenses, benefit plan expenses and payroll taxes. As of December 31, 2016 and 2015, we had 479 and 481 full-time equivalent employees, respectively.

        Net Occupancy Expenses.    Net occupancy expenses were $4.6 million and $5.3 million for the six months ended June 30, 2017 and 2016 respectively. These decreases are primarily due to the closing of multiple branches during 2016 and 2017, and a reduction in repairs, maintenance and janitorial services. This category includes building, leasehold, furniture, fixtures and equipment depreciation totaling $1.7 million and $1.6 million for the six months ended June 30, 2017 and 2016, respectively.

        Net occupancy expenses were $10.1 million and $9.8 million for the years ended December 31, 2016 and 2015, respectively. This category includes building, leasehold, furniture, fixtures and equipment depreciation totaling $3.3 million for the year ended December 31, 2016 and $3.6 million for the same period in 2015. The increase of $256,000, or 2.60%, in occupancy expenses for 2016 compared to 2015 was due primarily to increased lease expense due to new corporate location and renewal of leases for existing locations, offset by the decrease in depreciation of leasehold improvement, furniture, fixtures and office equipment.

        Amortization of Intangibles.    Amortization costs were $549,000 for the six months ended June 30, 2017, a decrease of $45,000, or 7.58%, compared to $594,000 for the same period in 2016. Amortization costs were $1.2 million for the year ended December 31, 2016, a decrease of $138,000, or 10.57%, compared to $1.3 million for the same period of 2015. The decreases in amortization costs for the six months ended June 30, 2017 and in 2016 were primarily due to amortization of intangibles on an accelerated basis over their designated useful life, which ranges from seven to 15 years.

        Professional and Director Fees.    Professional and director fees, which include legal, audit, loan review and consulting fees, were $1.3 million and $1.2 million for the six months ended June 30, 2017 and 2016, respectively. The increase of $145,000, or 12.23%, was primarily due to increases in consulting and audit fees. Professional fees and director fees were $2.5 million for each of the years ended December 31, 2016 and 2015.

        Loan Processing Expense.    Loan processing expense was $205,000 and $240,000 for the six months ended June 30, 2017 and 2016, respectively. Loan processing expense consists of expense associated with the origination of loans—title policies, appraisals, filing and recording fees, and collection expenses associated with problem loans. The decrease of $35,000, or 14.58%, for the six months ended June 30, 2017 and 2016, was primarily due to changes in collection expense associated with problem loans and the reimbursement of origination costs by the borrowers. Loan processing expense was $509,000 and $619,000 for the years ended December 31, 2016 and 2015, respectively. The decrease of $110,000, or 17.77%, was primarily due to decrease in collection expenses associated with problem loans.

        Advertising and Marketing Expenses.    Advertising and promotion-related expenses were $687,000 and $397,000 for the six months ended June 30, 2017 and 2016, respectively, primarily due to an increase in media costs associated with the Company's branding campaign that began early in the second quarter of 2017. Advertising and marketing-related expenses were $789,000 and $925,000 for the years ended December 31, 2016 and 2015, respectively. This decrease of $136,000, or 14.70%, for the

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year ended December 31, 2016 compared to the year ended December 31, 2015, was primarily due to our development of an internal marketing department to handle advertising.

        Repossessed Real Estate and Other Asset Expense.    Repossessed real estate and other asset expense consists of carrying and disposition expenses associated with other real estate and repossessed assets, which were $203,000 and $121,000 for the six months ended June 30, 2017 and 2016, respectively. The increase of $82,000, or 67.77%, for the six month periods was due to the write-downs taken on other real estate during the first quarter of 2017. Repossessed real estate and other asset expense was $318,000 and $228,000 for the years ended December 31, 2016 and 2015, respectively. The increase of $90,000, or 39.47%, for the year ended December 31, 2016 compared to the year ended December 31, 2015, was due to increase in carrying costs associated with other real estate.

        Merger Expense.    Merger expense represents expenses incurred in, and related to, the acquisition of MC Bancshares, Inc. The Company entered into the definitive agreement in March 2014 and consummated the acquisition in February 2015. There were no merger expenses incurred in 2016 or 2017.

        Other.    This category includes operating and administrative expenses, such as ATM expenses, wire transfer expense, payroll processing expense, amortization of non-compete agreements, operational losses (debit cards, check fraud, etc.), software licenses, business development expenses (i.e., travel and entertainment, charitable contributions and club memberships), and insurance.

        Other noninterest expense was $2.9 million for the six months ended June 30, 2017, an increase of $112,000, or 4.04%, compared to the same period in 2016, primarily due to an increase in software licenses. Other noninterest expense increased to $4.1 million for the year ended December 31, 2016, compared to $3.1 million for the same period in 2015, an increase of $1.0 million, or 33.07%. The increase was primarily due to operational losses incurred on customer debit card transactions, losses associated with customer transactional accounts, amortization of non-compete agreements for a full year, and an increase in software licenses.

Income Tax Expense

        The amount of income tax expense we incur is impacted by the amounts of our pre-tax income, tax-exempt income and other nondeductible expenses. Deferred tax assets and liabilities are reflected at current income tax rates in effect for the period in which the deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

        Six Months Ended June 30, 2017 vs. Six Months Ended June 30, 2016.    For the six months ended June 30, 2017 and 2016, income tax expense totaled $6.2 million and $5.7 million, respectively, and our effective tax rate for those periods was 28.5% and 30.5%, respectively. The increase in income tax expense is due to higher pre-tax income and the lower effective tax rate is due to true-ups and return to provision adjustments booked during the six months ended June 30, 2017.

        Year Ended December 31, 2016 vs. Year Ended December 31, 2015.    For the years ended December 31, 2016 and 2015, income tax expense totaled $12.0 million and $10.8 million, respectively. Our effective tax rate for the years ended December 31, 2016 and 2015 was generally consistent and was 30.7% and 30.9%, respectively.

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Financial Condition

        Total assets were $2.9 billion as of June 30, 2017 compared to $3.0 billion as of December 31, 2016, a decrease of $10.6 million, or 0.40%, due primarily to decrease in cash and cash equivalents of $74.9 million which was partially offset by a $14.4 million increase in securities, a $15.7 million increase in the cash surrender value of insurance due to purchase of $15 million, as well as loan growth of $37.4 million. Our total assets increased $68.9 million, or 2.39%, from $2.9 billion as of December 31, 2015, to $3.0 billion as of December 31, 2016. Our asset growth in 2016 was primarily due to focus and growth in the Houston market, maturity and growth of existing banking locations, along with those locations acquired in 2015 with the MC Bancshares, Inc. acquisition.

Loan Portfolio

        Our primary source of income is derived through interest earned on loans to small to medium-sized businesses, commercial companies, professionals and individuals located in our primary market areas. A substantial portion of our loan portfolio consists of commercial and industrial loans and real estate loans secured by commercial real estate properties located in our primary market areas. Our loan portfolio represents the highest yielding component of our earning assets.

        As of June 30, 2017, gross loans were $2.2 billion, an increase of $37.4 million, or 0.02%, compared to $2.2 billion at December 31, 2016. Loan growth was primarily due to an increase in loans in the Houston market. As of December 31, 2016, gross loans were $2.2 billion, an increase of $60.8 million, or 2.90%, compared to $2.1 billion as of December 31, 2015. These increases were primarily due to our continued organic growth in the Houston market including from the maturing of our Westchase and The Woodlands branches, and new locations opened or acquired in the MC Bancshares, Inc. acquisition.

        Total loans as a percentage of deposits were 87.11%, 84.81% and 84.24% as of June 30, 2017, December 31, 2016 and 2015, respectively. Total loans as a percentage of assets were 74.55%, 73.01% and 72.57% as of June 30, 2017, December 31, 2016 and 2015, respectively.

        The following table summarizes our loan portfolio by type of loan as of the dates indicated:

						As of December 31,
	As of June 30, 2017
						2016					2015					2014					2013					2012
(Dollars in thousands)	Amount		Percent			Amount		Percent			Amount		Percent			Amount		Percent			Amount		Percent			Amount		Percent
Commercial and industrial	$	535,116		24.4	%	$	511,554		23.7	%	$	504,750		24.0	%	$	485,318		25.8	%	$	521,360		29.6	%	$	404,990		34.9	%
Real estate:
Commercial real estate		690,044		31.4	%		697,794		32.3	%		693,421		33.0	%		691,724		36.8	%		675,406		38.4	%		422,022		36.4	%
Construction and development		433,966		19.8	%		491,626		22.8	%		451,219		21.5	%		327,280		17.4	%		268,798		15.3	%		144,262		12.5	%
1-4 family residential		240,073		10.9	%		236,882		11.0	%		217,301		10.4	%		187,585		10.0	%		175,844		10.0	%		117,631		9.7	%
Multi-family residential		208,222		9.5	%		133,210		6.2	%		114,366		5.4	%		73,246		3.9	%		28,467		1.6	%		10,463		0.9	%
Consumer		41,130		1.9	%		39,694		1.8	%		41,006		2.0	%		47,451		2.5	%		48,897		2.8	%		45,020		3.9	%
Agricultural		10,650		0.4	%		11,106		0.5	%		12,737		0.6	%		16,842		0.9	%		14,055		0.8	%		14,275		1.2	%
Other		38,237		1.7	%		38,180		1.7	%		64,452		3.1	%		50,891		2.7	%		26,999		1.5	%		6,551		0.5	%
Gross loans	$	2,197,438		100	%	$	2,160,046		100	%	$	2,099,252		100	%	$	1,880,337		100	%	$	1,759,826		100	%	$	1,165,214		100	%
Less deferred fees and unearned discount		4,436					4,548					5,680					3,124					1,240					594
Less loans held for sale		559					613					1,562					620					1,155					5,723
Total loans	$	2,192,443				$	2,154,885				$	2,092,010				$	1,876,593				$	1,757,431				$	1,158,897

        Commercial and Industrial Loans.    Commercial and industrial loans are underwritten after evaluating and understanding the borrower's ability to operate profitably and effectively. These loans are primarily made based on the borrower's ability to service the debt from income. Most commercial and industrial loans are secured by the assets being financed or other business assets, such as accounts receivable or inventory, and generally include personal guarantees.

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        Commercial and industrial loans increased $23.6 million, or 4.61%, to $535.1 million as of June 30, 2017 from $511.6 at December 31, 2016. Commercial and industrial loans increased $6.8 million, or 1.35%, to $511.6 million as of December 31, 2016, from $504.8 million as of December 31, 2015. The increases were due to organic growth in our markets.

        Commercial Real Estate Loans.    Commercial real estate loans are underwritten primarily based on projected cash flows and, secondarily, as loans secured by commercial real estate, both owner-occupied and non-owner-occupied. These loans may be more adversely affected by conditions in the real estate markets or in the general economy. The properties securing the portfolio are located primarily throughout our markets and are generally diverse in terms of type. This diversity helps reduce the exposure to adverse economic events that affect any single industry.

        Commercial real estate loans decreased $7.8 million, or 1.11%, to $690.0 million as of June 30, 2017 from $697.8 million as of December 31, 2016. Commercial real estate loans increased $4.4 million, or 0.63%, to $697.8 million as of December 31, 2016 from $693.4 million as of December 31, 2015. The increases were due to organic growth in our markets.

        Construction and Development Loans.    Construction and development loans are comprised of loans to fund construction, land acquisition and land development construction. The properties securing the portfolio are primarily located in the Houston and Beaumont markets and are generally diverse in terms of type.

        Construction and Development loans decreased $57.7 million, or 11.73%, to $434.0 million as of June 30, 2017 from $491.6 million as of December 31, 2016, a result of community development construction loans moving to multi-family residential as construction is completed. Construction and development loans increased $40.4 million, or 8.95%, to $491.6 million as of December 31, 2016 from $451.2 million as of December 31, 2015, due to organic growth, especially in the Houston market.

        1-4 Family Residential.    Our 1-4 family residential loan portfolio is comprised of loans secured by 1-4 family homes, which are both owner-occupied and investor-owned. Our 1-4 family residential loans have relatively small balances spread between many individual borrowers compared to our other loan categories.

        Our 1-4 family residential loans were $240.1 million at June 30, 2017 and increased $19.6 million, or 9.02%, to $236.9 million as of December 31, 2016, from $217.3 million as of December 31, 2015. These increases were primarily a result of continued organic growth.

        Multi-Family Residential.    Our multi-family residential loan portfolio is comprised of loans secured by properties deemed multi-family, which includes apartment buildings. Our multi-family residential loan portfolio is primarily comprised and collateralized by Texas-based community development and affordable housing projects. Repayment is largely based on the successful management of the project and the success of leasing the units.

        Multi-family residential loans increased $75.0 million, or 56.31%, to $208.2 million as of June 30, 2017 from $133.2 million as of December 31, 2016 and increased $18.8 million, or 16.43%, as of December 31, 2016, from $114.4 million as of December 31, 2015. The growth during these periods was primarily a result of community development construction loans moving to multi-family residential as construction is completed.

        Other Loan Categories.    Other categories of loans included in our loan portfolio include consumer loans and agricultural loans made to farmers and ranchers relating to their operations. None of these categories of loans represents a material portion of our total loan portfolio.

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        The contractual maturity ranges of loans in our loan portfolio, including loans held for sale, and the amount of such loans with fixed and floating interest rates in each maturity range as of date indicated are summarized in the following tables:

	As of June 30, 2017
(Dollars in thousands)	One Year or Less		One Through Five Years		After Five Years		Total
Commercial and industrial	$	309,848	$	176,399	$	48,869	$	535,116
Real estate:
Commercial real estate		69,326		418,954		201,764		690,044
Construction and development		145,160		203,613		85,193		433,966
1-4 family residential		13,149		52,651		174,273		240,073
Multi-family residential		62,330		48,033		97,859		208,222
Consumer		25,032		15,485		613		41,130
Agricultural		9,299		1,351		—		10,650
Other		32,245		3,993		1,999		38,237
Total loans	$	666,389	$	920,479	$	610,570	$	2,197,438
Amounts with fixed rates	$	173,582	$	515,727	$	229,868	$	919,177
Amounts with floating rates		492,807		404,752		380,702		1,278,261

	As of December 31, 2016
(Dollars in thousands)	One Year or Less		One Through Five Years		After Five Years		Total
Commercial and industrial	$	288,458	$	191,859	$	31,237	$	511,554
Real estate:
Commercial real estate		72,635		409,423		215,736		697,794
Construction and development		175,017		208,483		108,126		491,626
1-4 family residential		16,753		49,879		170,250		236,882
Multi-family residential		16,316		41,552		75,342		133,210
Consumer		24,169		15,396		129		39,694
Agricultural		9,257		1,587		262		11,106
Other		31,578		3,851		2,751		38,180
Total loans	$	634,183	$	922,030	$	603,833	$	2,160,046
Amounts with fixed rates	$	158,024	$	539,891	$	229,507	$	927,422
Amounts with floating rates		476,159		382,139		374,326		1,232,624

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	As of December 31, 2015
(Dollars in thousands)	One Year or Less		One Through Five Years		After Five Years		Total
Commercial and industrial	$	261,039	$	223,517	$	20,194	$	504,750
Real estate:
Commercial real estate		75,561		401,355		216,505		693,421
Construction and development		137,971		168,217		145,031		451,219
1-4 family residential		11,223		59,877		146,201		217,301
Multi-family residential		22,059		42,927		49,380		114,366
Consumer		23,988		16,760		258		41,006
Agricultural		10,075		2,370		292		12,737
Other		40,952		20,853		2,647		64,452
Total loans	$	582,868	$	935,876	$	580,508	$	2,099,252
Amounts with fixed rates	$	144,474	$	561,005	$	226,082	$	931,561
Amounts with floating rates		438,394		374,871		354,426		1,167,691

Nonperforming Assets

        Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are placed on nonaccrual status when, in management's opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provisions. Loans may be placed on nonaccrual status regardless of whether or not such loans are considered past due. In general, we place loans on nonaccrual status when they become 90 days past due. We also place loans on nonaccrual status if they are less than 90 days past due if the collection of principal or interest is in doubt. When interest accrual is discontinued, all unpaid accrued interest is reversed from income. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are, in management's opinion, reasonably assured.

        We believe our conservative lending approach and focused management of nonperforming assets has resulted in sound asset quality and timely resolution of problem assets. We have several procedures in place to assist us in maintaining the overall quality of our loan portfolio. We have established underwriting guidelines to be followed by our bankers, and we also monitor our delinquency levels for any negative or adverse trends. There can be no assurance, however, that our loan portfolio will not become subject to increasing pressures from deteriorating borrower credit due to general economic conditions.

        We had $9.7 million in nonperforming assets as of June 30, 2017, compared to $8.1 million as of December 31, 2016, and $14.9 million as of December 31, 2015 and we had $8.3 million in nonperforming loans as of June 30, 2017, compared to $6.2 million as of December 31, 2016, and $13.8 million as of December 31, 2015. The increase in nonperforming assets and nonperforming loans as of June 30, 2017 from December 31, 2016 was due to the deteriorating financial performance of certain commercial relationships. The decrease from December 31, 2015 to December 31, 2016 was primarily attributable to pay-offs, charge-offs and improvements in overall asset quality.

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        The following table presents information regarding nonperforming assets at the dates indicated:

				As of December 31,
	As of June 30, 2017
(Dollars in thousands)				2016			2015			2014			2013			2012
Nonaccrual loans(1)(2)	$	8,255		$	6,239		$	13,722		$	22,878		$	12,822		$	12,936
Accruing loans 90 or more days past due		—			—			90			278			25			127
Total nonperforming loans		8,255			6,239			13,812			23,156			12,847			13,063
Foreclosed assets, including other real estate:
Commercial real estate, construction and development, land and land development		1,018			1,077			1,079			1,077			2,813			1,827
Residential real estate		417			—			—			192			126			358
Other		—			783			13			132			196			791
Total foreclosed assets		1,435			1,860			1,092			1,401			3,135			2,976
Total nonperforming assets	$	9,690		$	8,099		$	14,904		$	24,557		$	15,982		$	16,039
Restructured loans—nonaccrual	$	3,818		$	4,326		$	11,915		$	3,881		$	5,347		$	7,732
Restructured loans—accruing	$	20,826		$	21,213		$	8,497		$	1,246		$	2,370		$	2,437
Ratio of nonperforming loans to total loans		0.38	%		0.29	%		0.66	%		1.23	%		0.73	%		1.12	%
Ratio of nonperforming assets to total assets		0.33	%		0.27	%		0.52	%		0.93	%		0.65	%		0.94	%

			As of December 31,
	As of June 30, 2017
(Dollars in thousands)			2016		2015		2014		2013		2012
Nonaccrual loans by category:(1)(2)
Commercial and industrial	$	2,348	$	2,318	$	8,020	$	15,396	$	7,863	$	5,003
Real estate:
Commercial real estate		4,964		2,118		3,721		5,180		2,631		4,432
Construction and development		362		458		1,046		1,856		1,676		2,670
1-4 family residential		578		1,302		915		405		564		526
Multi-family residential		3		7		14		22		32		—
Consumer		—		—		6		19		34		284
Agricultural		—		36		—		—		—		—
Other		—		—		—		—		22		21
Total nonaccrual loans	$	8,255	$	6,239	$	13,722	$	22,878	$	12,822	$	12,936

(1)

Excludes loans held for sale of $559,000 as of June 30, 2017 and $613,000, $1.6 million, $620,000, $1.2 million and $5.7 million as of December 31, 2016, 2015, 2014, 2013 and 2012, respectively.

(2)

Restructured loans-nonaccrual are included in nonaccrual loans, which are a component of nonperforming loans.

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Potential Problem Loans

        From a credit risk standpoint, we classify loans in one of five categories: pass, special mention, substandard, doubtful or loss. Within the pass category, we classify loans into one of the following three subcategories based on perceived credit risk, including repayment capacity and collateral security: high quality, good and satisfactory. The classifications of loans reflect a judgment about the risks of default and loss associated with the loan. We review the ratings of our credits on a monthly basis. Ratings are adjusted to reflect the degree of risk and loss that is believed to be inherent in each credit as of each monthly reporting period. Our methodology is structured so that specific reserve allocations are increased in accordance with deterioration in credit quality (and a corresponding increase in risk and loss) or decreased in accordance with improvement in credit quality (and a corresponding decrease in risk and loss).

        Credits rated special mention show clear signs of financial weaknesses or deterioration in creditworthiness; however, such concerns are not so pronounced that we generally expect to experience significant loss within the short-term. Such credits typically maintain the ability to perform within standard credit terms and credit exposure is not as prominent as credits with a lower rating.

        Credits rated substandard are those in which the normal repayment of principal and interest may be, or has been, jeopardized by reason of adverse trends or developments of a financial, managerial, economic or political nature, or important weaknesses in the collateral for the loan. A protracted workout on these credits is a distinct possibility. Prompt corrective action is therefore required to reduce exposure and to assure that adequate remedial measures are taken by the borrower. Credit exposure becomes more likely in such credits and a serious evaluation of the secondary support to the credit is performed.

        Credits rated as doubtful have weaknesses of substandard assets that are sufficient to make collection or liquidation in full questionable and there is a high probability of loss based on currently existing facts, conditions and values.

        Credits rated as loss are charged-off. We have no expectation of the recovery of any payments in respect of credits rated as loss.

        The following table summarizes the internal ratings of our loans as of the dates indicated:

	As of June 30, 2017
(Dollars in thousands)	Pass		% of Total			Special Mention		% of Total			Substandard		% of Total			Total
Commercial and industrial	$	490,933		23.1	%	$	8,312		38.8	%	$	35,871		64.5	%	$	535,116
Real estate:
Commercial real estate		671,958		31.7	%		4,143		19.4	%		13,943		25.0	%		690,044
Construction and development		432,216		20.4	%		636		3.0	%		1,114		2.0	%		433,966
1-4 family residential		235,016		11.1	%		409		1.9	%		4,648		8.4	%		240,073
Multi-family residential		200,700		9.5	%		7,519		35.0	%		3		0.0	%		208,222
Consumer		40,721		1.9	%		409		1.9	%		—		0.0	%		41,130
Agricultural		10,615		0.5	%		—		0.0	%		35		0.1	%		10,650
Other		38,234		1.8	%		—		0.0	%		3		0.0	%		38,237
Total	$	2,120,393		100.0	%	$	21,428		100.0	%	$	55,617		100.0	%	$	2,197,438

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	As of December 31, 2016
(Dollars in thousands)	Pass		% of Total			Special Mention		% of Total			Substandard		% of Total			Total
Commercial and industrial	$	483,399		23.2	%	$	2,207		11.4	%	$	25,948		45.5	%	$	511,554
Real estate:
Commercial real estate		674,445		32.4	%		7,731		40.0	%		15,618		27.5	%		697,794
Construction and development		485,823		23.3	%		933		4.8	%		4,870		8.5	%		491,626
1-4 family residential		234,473		11.3	%		797		4.1	%		1,612		2.8	%		236,882
Multi-family residential		125,553		6.0	%		7,650		39.6	%		7		0.0	%		133,210
Consumer		39,684		1.9	%		10		0.1	%		—		0.0	%		39,694
Agricultural		11,033		0.5	%		—		0.0	%		73		0.1	%		11,106
Other		29,335		1.4	%		—		0.0	%		8,845		15.6	%		38,180
Total	$	2,083,745		100.0	%	$	19,328		100.0	%	$	56,973		100.0	%	$	2,160,046

	As of December 31, 2015
(Dollars in thousands)	Pass		% of Total			Special Mention		% of Total			Substandard		% of Total			Total
Commercial and industrial	$	476,933		23.5	%	$	1,462		7.9	%	$	26,355		52.6	%	$	504,750
Real estate:
Commercial real estate		659,909		32.5	%		15,910		86.5	%		17,602		35.1	%		693,421
Construction and development		447,222		22.0	%		—		0.0	%		3,997		8.0	%		451,219
1-4 family residential		214,339		10.6	%		843		4.6	%		2,119		4.2	%		217,301
Multi-family residential		114,180		5.6	%		172		0.9	%		14		0.0	%		114,366
Consumer		40,975		2.0	%		17		0.1	%		14		0.0	%		41,006
Agricultural		12,695		0.6	%		—		0.0	%		42		0.1	%		12,737
Other		64,452		3.2	%		—		0.0	%		—		0.0	%		64,452
Total	$	2,030,705		100.0	%	$	18,404		100.0	%	$	50,143		100.0	%	$	2,099,252

Allowance for Loan Losses

        We maintain an allowance for loan losses that represents management's best estimate of the loan losses and risks inherent in our loan portfolio. The amount of the allowance for loan losses should not be interpreted as an indication that charge-offs in future periods will necessarily occur in those amounts. In determining the allowance for loan losses, we estimate losses on specific loans, or groups of loans, where the probable loss can be identified and reasonably determined. The balance of the allowance for loan losses is based on internally assigned risk classifications of loans, historical loan loss rates, changes in the nature of our loan portfolio, overall portfolio quality, industry concentrations, delinquency trends, current economic factors and the estimated impact of current economic conditions on certain historical loan loss rates. Please see "—Critical Accounting Policies—Loans and Allowance for Loan Losses."

        In connection with the review of our loan portfolio, we consider risk elements applicable to particular loan types or categories in assessing the quality of individual loans. Some of the risk elements we consider include:

•

for commercial and industrial loans, the debt service coverage ratio (income from the business in excess of operating expenses compared to loan repayment requirements), the operating results of the commercial, industrial or professional enterprise, the borrower's business, professional and

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financial ability and expertise, the specific risks and volatility of income and operating results typical for businesses in that category and the value, nature and marketability of collateral;

•

for commercial real estate loans and multi-family residential loans, the debt service coverage ratio, operating results of the owner in the case of owner-occupied properties, the loan-to-value ratio, the age and condition of the collateral and the volatility of income, property value and future operating results typical of properties of that type;

•

for 1-4 family residential mortgage loans, the borrower's ability to repay the loan, including a consideration of the debt-to-income ratio and employment and income stability, the loan-to-value ratio, and the age, condition and marketability of the collateral; and

•

for construction and development loans, the perceived feasibility of the project including the ability to sell developed lots or improvements constructed for resale or the ability to lease property constructed for lease, the quality and nature of contracts for presale or prelease, if any, experience and ability of the developer and loan-to-value ratio.

        As of June 30, 2017, the allowance for loan losses totaled $25.2 million, or 1.15% of total loans. As of December 31, 2016, the allowance for loan losses totaled $25.0 million, or 1.16% of total loans. Our allowance for loan losses as of June 30, 2017 increased by $181,000, or 0.72%, compared to December 31, 2016 primarily due to the organic growth of our loan portfolio. As of December 31, 2015, the allowance for loan losses totaled $25.3 million, or 1.21% of total loans. Our allowance for loan losses as of December 31, 2016, decreased $309,000, or 1.22%, compared to December 31, 2015, primarily due to an improvement in the overall credit quality of the loan portfolio.

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        The following tables present, as of and for the periods indicated, an analysis of the allowance for loan losses and other related data:

	For the Six Months Ended June 30, 2017
				For the Years Ended December 31,
(Dollars in thousands)				2016			2015			2014			2013			2012
Average loans outstanding(1)	$	2,190,953		$	2,140,917		$	2,068,827		$	1,814,994		$	1,374,270		$	1,069,066
Total loans outstanding at end of period(2)	$	2,192,443		$	2,154,885		$	2,092,010		$	1,876,593		$	1,757,431		$	1,158,897
Allowance for loan losses at beginning of period	$	25,006		$	25,315		$	24,952		$	23,843		$	17,498		$	15,294
Provision for loan losses		266			4,575			6,950			3,766			10,255			5,719
Charge-offs:
Commercial and industrial		713			4,884			7,210			1,597			3,622			3,041
Real estate:
Commercial real estate		—			589			27			1,082			555			841
Construction and development		—			—			—			315			5			328
1-4 family residential		—			3			263			110			181			32
Multi-family residential		—			—			—			—			—			—
Consumer		83			277			102			70			234			5
Agricultural		—			267			—			—			290			—
Other		—			59			—			2			0			233
Total charge-offs		796			6,079			7,602			3,176			4,887			4,480
Recoveries:
Commercial and industrial		662			1,010			524			391			239			894
Real estate:
Commercial real estate		5			108			289			26			488			7
Construction and development		—			—			—			—			—			—
1-4 family residential		10			6			142			23			89			13
Multi-family residential		—			—			—			—			—			—
Consumer		20			45			60			79			161			8
Agricultural		6			26			—			—			—			—
Other		8			—			—			—			—			43
Total recoveries		711			1,195			1,015			519			977			965
Net charge-offs		85			4,884			6,587			2,657			3,910			3,515
Allowance for loan losses at end of period	$	25,187		$	25,006		$	25,315		$	24,952		$	23,843		$	17,498
Ratio of allowance to end of period loans		1.15	%		1.16	%		1.21	%		1.33	%		1.36	%		1.51	%
Ratio of net charge-offs to average loans(3)		0.01	%		0.23	%		0.32	%		0.15	%		0.28	%		0.33	%

(1)

Includes average outstanding balances of loans held for sale of $730,000 for the six months ended June 30, 2017 and $905,000, $637,000, $829,000, $2.90 million and $2.47 million for the years ended December 31 2016, 2015, 2014, 2013 and 2012, respectively.

(2)

Excludes loans held for sale of $559,000 at June 30, 2017 and $613,000, $1.6 million, $620,000, $1.2 million and $5.7 million at December 31, 2016, 2015, 2014, 2013 and 2012, respectively.

(3)

The ratio calculations for the six months ended June 30, 2017 represent the annualized calculations.

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        We believe the successful execution of our expansion strategy through organic growth, focused de novo branching and strategic acquisitions is generally demonstrated by the upward trend in loan balances from December 31, 2012 to December 31, 2016. Total loans increased from $1.2 billion as of December 31, 2012, to $2.2 billion as of December 31, 2016. Net charge-offs were minimal, representing on average 0.26% of average loan balances during the same period. Total loans increased $37.4 million from December 31, 2016, to $2.2 billion as of June 30, 2017. Net charge-offs were minimal, representing on average 0.01% of average loan balances during the six months ended June 30, 2017.

        Although we believe that we have established our allowance for loan losses in accordance with GAAP and that the allowance for loan losses was adequate to provide for known and inherent losses in the portfolio at all times shown above, future provisions for loan losses will be subject to ongoing evaluations of the risks in our loan portfolio. If our primary market areas experience economic declines, if asset quality deteriorates or if we are successful in growing the size of our loan portfolio, our allowance could become inadequate and material additional provisions for loan losses could be required.

        The following table shows the allocation of the allowance for loan losses among loan categories and certain other information as of the dates indicated. The allocation of the allowance for loan losses as shown in the table should neither be interpreted as an indication of future charge-offs, nor as an indication that charge-offs in future periods will necessarily occur in these amounts or in the indicated proportions. The total allowance is available to absorb losses from any loan category.

						As of December 31,
	As of June 30, 2017					2016					2015					2014					2013					2012
(Dollars in thousands)	Amount		Percent to Total			Amount		Percent to Total			Amount		Percent to Total			Amount		Percent to Total			Amount		Percent to Total			Amount		Percent to Total
Commercial and industrial	$	8,466		33.6	%	$	6,409		25.6	%	$	4,746		18.7	%	$	7,160		28.7	%	$	9,581		40.2	%	$	8,011		45.8	%
Real estate:
Commercial real estate		10,000		39.7	%		10,770		43.1	%		7,058		27.9	%		6,985		28.0	%		5,792		24.3	%		4,604		26.3	%
Construction and development		3,313		13.2	%		4,598		18.4	%		4,504		17.8	%		2,991		12.0	%		3,148		13.2	%		3,115		17.8	%
1-4 family residential		1,138		4.5	%		1,286		5.1	%		2,295		9.1	%		1,843		7.4	%		1,677		7.0	%		925		5.3	%
Multi-family residential		1,341		5.3	%		916		3.7	%		762		3.0	%		500		2.0	%		228		1.0	%		74		0.4	%
Consumer		599		2.4	%		353		1.4	%		363		1.4	%		423		1.7	%		404		1.7	%		631		3.6	%
Agricultural		64		0.3	%		79		0.3	%		93		0.4	%		118		0.4	%		111		0.4	%		37		0.2	%
Other		266		1.0	%		595		2.4	%		5,494		21.7	%		4,932		19.8	%		2,902		12.2	%		101		0.6	%
Total allowance for loan losses	$	25,187		100.0	%	$	25,006		100	%	$	25,315		100	%	$	24,952		100	%	$	23,843		100	%	$	17,498		100	%

Securities

        We use our securities portfolio to provide a source of liquidity, provide an appropriate return on funds invested, manage interest rate risk, meet collateral requirements and meet regulatory capital requirements.

        As of June 30, 2017, the carrying amount of our investment securities totaled $220.3 million compared to $206.0 million as of December 31, 2016, an increase of $14.4 million, or 6.97%. The increase was largely the result of our continued evaluation of our securities portfolio and our purchase of $16.4 million of collateralized mortgage obligations, $7.0 million of municipal securities, and $4.1 million of mortgage-backed securities. These purchases were offset by $14.8 million of pay downs and maturities. As of December 31, 2016, the carrying amount of our investment securities totaled $206.0 million, an increase of $60.2 million, or 41.29%, compared to $145.8 million as of December 31,

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2015. The increase in the securities portfolio during all of these periods is due primarily to the investment of excess cash and cash equivalent balances. Investment securities represented 7.49%, 6.98% and 5.06% of total assets as of June 30, 2017, December 31, 2016 and 2015, respectively.

        Our investment portfolio consists of securities classified as available for sale and one security classified as held to maturity. The carrying values of our investment securities classified as available for sale are adjusted for unrealized gain or loss, and any gain or loss is reported on an after-tax basis as a component of other comprehensive income in shareholders' equity.

        The following table summarizes the amortized cost and estimated fair value of our investment securities as of the dates shown:

	As of June 30, 2017
(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Securities Available for Sale:
State and municipal securities	$	61,191	$	1,048	$	(275	)	$	61,964
U.S. agency securities
Debt securities		20,795		2		(350	)		20,447
Collateralized mortgage obligations		47,668		187		(202	)		47,653
Mortgage-backed securities		89,533		493		(875	)		89,151
Other securities		1,092		—		(11	)		1,081
Total available for sale securities	$	220,279	$	1,730	$	(1,713	)	$	220,296
Held to Maturity Securities:
Mortgage-backed securities	$	34	$	3	$	—		$	37
Total held to maturity securities	$	34	$	3	$	—		$	37

	As of December 31, 2016
(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Securities Available for Sale:
State and municipal securities	$	58,991	$	638	$	(650	)	$	58,979
U.S. agency securities
Debt securities		20,795		—		(454	)		20,341
Collateralized mortgage obligations		34,005		90		(325	)		33,770
Mortgage-backed securities		92,489		516		(1,215	)		91,790
Other securities		1,081		—		(17	)		1,064
Total available for sale securities	$	207,361	$	1,244	$	(2,661	)	$	205,944
Held to Maturity Securities:
Mortgage-backed securities	$	34	$	3	$	—		$	37
Total held to maturity securities	$	34	$	3	$	—		$	37

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	As of December 31, 2015
(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Securities Available for Sale:
State and municipal securities	$	49,401	$	1,624	$	(3	)	$	51,022
U.S. agency securities
Debt securities		11,994		2		(35	)		11,961
Collateralized mortgage obligations		24,890		122		(64	)		24,948
Mortgage-backed securities		56,235		704		(174	)		56,765
Other securities		1,057		—		—			1,057
Total available for sale securities	$	143,577	$	2,452	$	(276	)	$	145,753
Held to Maturity Securities:
Mortgage-backed securities	$	36	$	3	$	—		$	39
Total held to maturity securities	$	36	$	3	$	—		$	39

        All of our mortgage-backed securities are agency securities. We do not hold any Fannie Mae or Freddie Mac preferred stock, corporate equity, collateralized debt obligations, collateralized loan obligations, structured investment vehicles, private label collateralized mortgage obligations, subprime, Alt-A or second lien elements in our investment portfolio. As of June 30, 2017, our investment portfolio did not contain any securities that are directly backed by subprime or Alt-A mortgages.

        Our management evaluates securities for other-than-temporary impairment on at least a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. The following table sets forth the amortized cost of held to maturity securities and the fair value of available for sale securities, maturities and approximated weighted average yield based on estimated annual income divided by the average amortized cost of our securities portfolio as of the dates indicated. The contractual maturity of a mortgage-backed security is the date at which the last underlying mortgage matures.

	As of June 30, 2017
	Within One Year					After One Year but Within Five Years					After Five Years but Within Ten Years					After Ten Years					Total
(Dollars in thousands)	Amount		Yield			Amount		Yield			Amount		Yield			Amount		Yield			Total		Yield
State and municipal securities	$	4,964		1.96	%	$	12,979		2.40	%	$	2,667		2.54	%	$	40,581		2.86	%	$	61,191		2.67	%
U.S. agency securities
Debt securities		—					12,799		1.70	%		7,996		1.83	%		—					20,795		1.75	%
Collateralized mortgage obligations		—					—					—					47,668		2.42	%		47,668		2.42	%
Mortgage-backed securities		—					2,275		2.77	%		5,745		3.52	%		81,513		2.40	%		89,533		2.48	%
Other securities		1,092		2.08	%		—					—					—					1,092		2.08	%
Total securities	$	6,056		1.98	%	$	28,053		2.11	%	$	16,408		2.54	%	$	169,762		2.52	%	$	220,279		2.45	%

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	As of December 31, 2016
	Within One Year					After One Year but Within Five Years					After Five Years but Within Ten Years					After Ten Years					Total
(Dollars in thousands)	Amount		Yield			Amount		Yield			Amount		Yield			Amount		Yield			Total		Yield
State and municipal securities	$	4,506		1.86	%	$	15,303		2.27	%	$	4,353		2.45	%	$	34,817		2.87	%	$	58,979		2.61	%
U.S. agency securities
Debt securities		—					10,589		1.64	%		9,752		1.87	%		—					20,341		1.75	%
Collateralized mortgage obligations		—					—					—					33,770		2.47	%		33,770		2.47	%
Mortgage-backed securities		—					3,045		2.80	%		6,775		3.53	%		82,004		2.49	%		91,824		2.57	%
Other securities		1,064		2.25	%		—					—					—					1,064		2.25	%
Total securities	$	5,570		1.93	%	$	28,937		2.09	%	$	20,880		2.51	%	$	150,591		2.57	%	$	205,978		2.48	%

	As of December 31, 2015
	Within One Year					After One Year but Within Five Years					After Five Years but Within Ten Years					After Ten Years					Total
(Dollars in thousands)	Amount		Yield			Amount		Yield			Amount		Yield			Amount		Yield			Total		Yield
State and municipal securities	$	2,530		1.91	%	$	17,750		2.22	%	$	9,886		2.56	%	$	20,856		3.25	%	$	51,022		2.69	%
U.S. agency securities
Debt securities		—					9,977		1.84	%		1,984		2.01	%		—					11,961		1.87	%
Collateralized mortgage obligations		—					—					—					24,948		2.46	%		24,948		2.46	%
Mortgage-backed securities		—					3,639		2.65	%		9,493		3.44	%		43,669		2.53	%		56,801		2.69	%
Other securities		1,057		2.09	%		—					—					—					1,057		2.09	%
Total securities	$	3,587		1.96	%	$	31,366		2.14	%	$	21,363		2.90	%	$	89,473		2.68	%	$	145,789		2.59	%

        The contractual maturity of mortgage-backed securities and collateralized mortgage obligations is not a reliable indicator of their expected life because borrowers have the right to prepay their obligations at any time. Mortgage-backed securities and collateralized mortgage obligations are typically issued with stated principal amounts and are backed by pools of mortgage loans and other loans with varying maturities. The terms of the underlying mortgages and loans may vary significantly due to the ability of a borrower to prepay. Monthly pay downs on mortgage-backed securities tend to cause the average life of the securities to be much different than the stated contractual maturity. During a period of increasing interest rates, fixed rate mortgage-backed securities do not tend to experience heavy prepayments of principal, and, consequently, the average life of the security is typically lengthened. If interest rates begin to fall, prepayments may increase, thereby shortening the estimated life of the security. The weighted average life of our investment portfolio was 4.6 years with an estimated modified duration of 4.1 years as of June 30, 2017. The weighted average life of our investment portfolio was 5.1 years with an estimated modified duration of 4.5 years as of December 31, 2016.

        As of June 30, 2017, we did not own securities of any one issuer, other than the U.S. government and its agencies, for which aggregate adjusted cost exceeded 10.0% of the consolidated shareholders' equity. As of December 31, 2016 and 2015, we did not own securities of any one issuer, other than the U.S. government and its agencies, for which aggregate adjusted cost exceeded 10.0% of the consolidated shareholders' equity.

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Deposits

        We offer a variety of deposit products, which have a wide range of interest rates and terms, including demand, savings, money market and time accounts. We rely primarily on competitive pricing policies, convenient locations, electronic delivery channels, and personalized service to attract and retain these deposits.

        Total deposits as of June 30, 2017 were $2.5 billion, a decrease of $24 million, or 0.94%, compared to $2.5 billion as of December 31, 2016. Total deposits as of December 31, 2016, increased $57.4 million, or 2.31%, compared to $2.5 billion as of December 31, 2015. The increase in each period was primarily related to organic growth in our locations with focus on interest bearing demand deposit categories, specifically NOW and money market accounts.

        Noninterest-bearing deposits as of June 30, 2017 were $1.0 billion, an increase of $5.4 million, or 0.53%, compared to $1.0 billion as of December 31, 2016. The December 31, 2016 balance represented a decrease of $28.5 million, or 2.71%, compared to $1.1 billion as of December 31, 2015, which was due to normal fluctuation in customer activities.

        Total interest-bearing account balances as of June 30, 2017 were $1.5 billion, a decrease of $29.4 million, or 1.94% from $1.5 billion as of December 31, 2016. The December 31, 2016 balance represented an increase of $85.9 million, or 6.01% from $1.4 billion as of December 31, 2015.

						As of December 31,
	As of June 30, 2017					2016					2015
(Dollars in thousands)	Amount		Percent			Amount		Percent			Amount		Percent
Interest-bearing demand accounts	$	343,826		13.7	%	$	359,560		14.2	%	$	318,609		12.8	%
Savings accounts		88,083		3.5	%		85,927		3.4	%		81,575		3.3	%
Money market accounts		698,546		27.7	%		731,942		28.8	%		707,651		28.5	%
Certificates and other time deposits, greater than $100,000		182,143		7.2	%		179,621		7.1	%		204,384		8.3	%
Certificates and other time deposits, less than $100,000		173,321		6.9	%		158,285		6.2	%		117,190		4.7	%
Total interest-bearing deposits		1,485,919		59.0	%		1,515,335		59.7	%		1,429,409		57.6	%
Noninterest bearing deposits		1,030,865		41.0	%		1,025,425		40.3	%		1,053,957		42.4	%
Total deposits	$	2,516,784		100.0	%	$	2,540,760		100.0	%	$	2,483,366		100.0	%

        Total certificate of deposit balances as of June 30, 2017 were $355.5 million, an increase of $17.6 million, or 5.20%, from the total certificate of deposit balances of $337.9 million as of December 31, 2016. Total certificate of deposit balances as of December 31, 2016 increased $16.3 million, or 5.08%, from the total certificate of deposit balances of $321.6 million as of December 31, 2015. These increases in our total certificate of deposit balances during these periods were primarily attributable to our increase in brokered certificates of deposit.

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        The following table sets forth the Company's certificates of deposit by time remaining until maturity as of the dates indicated:

			As of December 31,
	As of June 30, 2017
(Dollars in thousands)			2016		2015
Three months or less	$	61,673	$	82,348	$	94,685
Over three months through six months		52,180		47,735		67,024
Over six months through 12 months		103,718		93,988		88,170
Over 12 months through three years		93,298		66,976		55,941
Over three years		44,595		46,859		15,754
Total	$	355,464	$	337,906	$	321,574

        Average deposits for the six months ended June 30, 2017 were $2.5 billion, compared to average deposits at December 31, 2016 of $2.5 billion, an increase of $25.2 million. Average deposits for the year ended December 31, 2016 were $2.5 billion, an increase of $11.9 million, or 0.48%, compared to the year ended December 31, 2015. The increases in average deposits in each of these periods was primarily due to our continued growth in our primary market areas and the increase in commercial lending relationships for which we also seek deposit balances.

        The average rate paid on total interest-bearing deposits was consistent during this period at 0.50%, 0.48% and 0.45% for the six months ended June 30, 2017, and the years ended December 31, 2016 and 2015, respectively. The following table presents the average balances and average rates paid on deposits for the periods indicated:

						For the Years Ended December 31,
	For the Six Months Ended June 30, 2017
						2016					2015
(Dollars in thousands)	Average Balance		Average Rate			Average Balance		Average Rate			Average Balance		Average Rate
Noninterest-bearing deposits	$	998,326		—		$	1,010,403		—		$	1,014,897		—
Interest-bearing demand accounts		354,072		0.22	%		318,043		0.22	%		313,647		0.21	%
Savings accounts		86,948		0.06	%		84,360		0.06	%		79,041		0.06	%
Money market accounts		713,789		0.56	%		714,997		0.55	%		706,878		0.53	%
Certificates and other time deposits, less than $100,000		167,630		0.99	%		151,201		0.87	%		120,013		0.63	%
Certificates and other time deposits, greater than $100,000		173,428		0.56	%		189,965		0.58	%		222,615		0.58	%
Total interest-bearing deposits		1,495,867		0.50	%		1,458,566		0.48	%		1,442,194		0.45	%
Total deposits	$	2,494,193		0.30	%	$	2,468,969		0.29	%	$	2,457,091		0.26	%

        The ratio of average noninterest-bearing deposits to average total deposits for the six months ended June 30, 2017 was 40.03% and for the years ended December 31, 2016 and 2015 was 40.92% and 41.30%, respectively.

        Factors affecting the cost of funding interest-bearing assets include the volume of noninterest- and interest-bearing deposits, changes in market interest rates and economic conditions in our primary market areas and their impact on interest paid on deposits, as well as the ongoing execution of our balance sheet management strategy. Cost of total interest-bearing liabilities is calculated as total interest expense divided by average total interest-bearing deposits plus average total borrowings. Our cost of total interest-bearing liabilities was 0.57% for the six months ended June 30, 2017 and 0.56% and 0.52% for the years ended 2016 and 2015, respectively. The increase in our cost of funds for 2016 and 2015 was primarily due to an increase in our average rates on our note payable, which were 3.58% in 2016 and 3.32% in 2015, and our junior subordinated debt, which were 2.46% in 2016 and 2.01% in 2015.

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Borrowings

        We have the ability to utilize short-term and long-term borrowings to supplement deposits to fund our lending and investment activities, each of which is discussed below.

        Federal Home Loan Bank (FHLB) Advances.    The FHLB allows us to borrow on a blanket floating lien status collateralized by certain loans. As of June 30, 2017 and December 31, 2016 and 2015, total borrowing capacity of $780.3 million, $767.8 million and $719.4 million, respectively, was available under this arrangement. As of June 30, 2017 and December 31, 2016 and 2015, there were no outstanding borrowings on this line, nor did the Company draw on this line during the periods then ended.

        Note Payable.    In conjunction with the acquisition of MC Bancshares, Inc., the Company entered into a loan agreement with a correspondent financial institution for $31.0 million. The note is payable in quarterly installments beginning May 2015, with the first four installments being interest-only payments. The remaining quarterly installments will be in amounts necessary to amortize the unpaid principal balance over a period of seven years from February 2016 to maturity in February 2023. The interest rate will be the prime rate charged by the lender, as established from time to time.

        Junior Subordinated Debentures.    In connection with the acquisition of Crosby Bancshares, Inc. in 2008, we assumed $5.2 million in floating junior subordinated debentures underlying common securities and preferred securities, or the Crosby Trust Securities, issued by Crosby Statutory Trust I, a statutory trust and acquired wholly-owned subsidiary, or the Crosby Trust. We assumed the guarantor position and, as such, unconditionally guarantee payment of accrued and unpaid distributions required to be paid on the Crosby Trust Securities subject to certain exceptions, the redemption price when a capital security is called for redemption and amounts due if the Crosby Trust is liquidated or terminated.

        We own all of the outstanding common securities of the Crosby Trust. The Crosby Trust used the proceeds from the issuance of its Crosby Trust Securities to buy the debentures originally issued by Crosby Bancshares, Inc. These debentures are the Crosby Trust's only assets and the interest payments from the debentures finance the distribution paid on the preferred securities. The Crosby Trust Securities pay cumulative cash distributions quarterly at a rate per annum equal to the 3-month LIBOR plus 1.44%. The effective rate as of December 31, 2016 and 2015 was 2.40% and 2.05%, respectively. The preferred securities are subject to mandatory redemption in whole or in part, upon repayment of the debentures at the stated maturity in the year 2035 or their earlier redemption, in each case at a redemption price equal to the aggregate liquidation preference of the preferred securities plus any accumulated and unpaid distributions thereon to the date of redemption. Prior redemption is permitted under certain circumstances.

        In connection with the acquisition of County Bancshares, Inc. in 2007, we assumed $5.7 million in floating junior subordinated debentures underlying common securities and preferred securities, or the County Trust Securities, issued by County Bancshares Trust I, a statutory trust and acquired wholly-owned subsidiary, or the County Trust. We assumed the guarantor position and, as such, unconditionally guarantee payment of accrued and unpaid distributions required to be paid on the County Trust Securities subject to certain exceptions, the redemption price when a capital security is called for redemption and amounts due if the County Trust is liquidated or terminated.

        We own all of the outstanding common securities of the County Trust. The County Trust used the proceeds from the issuance of its County Trust Securities to buy the debentures originally issued by County Bancshares, Inc. These debentures are the County Trust's only assets and the interest payments from the debentures finance the distribution paid on the preferred securities. The County Trust Securities pay cumulative cash distributions quarterly at a rate per annum equal to the 3-month LIBOR plus 2.00%. The effective rate as of December 31, 2016 and 2015 was 2.88% and 2.61%, respectively. The preferred securities are subject to mandatory redemption in whole or in part, upon repayment of

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the debentures at the stated maturity in the year 2035 or their earlier redemption, in each case at a redemption price equal to the aggregate liquidation preference of the preferred securities plus any accumulated and unpaid distributions thereon to the date of redemption. Prior redemption is permitted under certain circumstances.

        In December 2015, the Company purchased approximately $4.1 million of the outstanding County Trust preferred securities for $3.1 million, reducing the outstanding preferred securities to $1.6 million.

Liquidity and Capital Resources

Liquidity

        Liquidity involves our ability to raise funds to support asset growth and acquisitions or reduce assets to meet deposit withdrawals and other payment obligations, to maintain reserve requirements and otherwise to operate on an ongoing basis and manage unexpected events.

        For each of the six months ended June 30, 2017 and the years ended December 31, 2016 and 2015, liquidity needs were primarily met by core deposits, security and loan maturities and amortizing investment and loan portfolios. Although access to advances from the FHLB are available as discussed above, we do not generally rely on this external funding source.

        As of June 30, 2017, December 31, 2016 and December 31, 2015, we maintained four federal funds lines of credit with commercial banks that provide for the availability to borrow up to an aggregate of $75.0 million, $75.0 million and $55.0 million, respectively, in federal funds. There were no funds under these lines of credit outstanding as of June 30, 2017, December 31, 2016 and December 31, 2015.

        The following table illustrates, during the periods presented, the composition of our funding sources and the average assets in which those funds are invested as a percentage of average total assets for the periods indicated. Average assets were $2.9 billion for the six months ended June 30, 2017, $2.9 billion for the year ended December 31, 2016 and $2.9 billion for the year ended December 31, 2015.

	For the Six Months Ended June 30,			For the Years Ended December 31,
	2017			2016			2015
Sources of Funds:
Deposits:
Noninterest-bearing		34.2	%		35.1	%		35.6	%
Interest-bearing		51.3	%		50.7	%		50.5	%
Repurchase agreements		0.1	%		0.1	%		0.1	%
Note payable		0.9	%		1.0	%		1.0	%
Junior subordinated debt		0.4	%		0.4	%		0.4	%
Other liabilities		0.6	%		0.6	%		0.6	%
Shareholders' equity		12.5	%		12.1	%		11.8	%
Total		100.0	%		100.0	%		100.0	%
Uses of Funds:
Loans		75.1	%		74.4	%		72.5	%
Securities (available for sale and held to maturity)		7.5	%		5.9	%		4.1	%
Federal funds sold and other interest-earning assets		8.4	%		10.5	%		14.1	%
Nonmarketable equity securities		0.5	%		0.5	%		0.4	%
Other noninterest-earning assets		8.5	%		8.7	%		8.9	%
Total		100.0	%		100.0	%		100.0	%
Average noninterest-bearing deposits to average deposits		40.0	%		40.9	%		41.3	%
Average loans to average deposits		87.8	%		86.7	%		83.8	%

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        Our primary source of funds is deposits, and our primary use of funds is loans. We do not expect a change in the primary source or use of our funds in the foreseeable future.

        Our average loans, including average loans held for sale, increased 2.34% for the six months ended June 30, 2017 compared to December 31, 2016. Our average loans, including average loans held for sale, increased 3.48% for the year ended December 31, 2016 compared to the same period in 2015. Our securities portfolio had a weighted average life of 4.6 years and an effective duration of 4.1 years as of June 30, 2017, a weighted average life of 5.1 years and a modified duration of 4.5 years as of December 31, 2016, and a weighted average life of 4.2 years and a modified duration of 3.8 years as of December 31, 2015. We predominantly invest excess deposits in overnight deposits with our correspondent banks, federal funds sold, securities, interest-bearing deposits at other banks or other short-term liquid investments until needed to fund loan growth.

        As of June 30, 2017, we had $552.4 million in outstanding commitments to extend credit and $31.6 million in commitments associated with outstanding standby and commercial letters of credit. As of December 31, 2016, we had $607.4 million in outstanding commitments to extend credit and $26.7 million in commitments associated with outstanding standby and commercial letters of credit. As of December 31, 2015, we had $688.2 million in outstanding commitments to extend credit and $36.9 million in commitments associated with outstanding standby and commercial letters of credit. Since commitments associated with letters of credit and commitments to extend credit may expire unused, the total outstanding may not necessarily reflect the actual future cash funding requirements.

        As of June 30, 2017 and 2016, we had no exposure to future cash requirements associated with known uncertainties or capital expenditure of a material nature. As of June 30, 2017, we had cash and cash equivalents of $307.2 million, compared to $336.0 million as of June 30, 2016. The decrease was primarily due to an increase of in loans of $39.5 million, an increase in deposits of $48.2 million and an increase in our securities portfolio of $49.7 million during the period.

        As of December 31, 2016 and 2015, we had no exposure to future cash requirements associated with known uncertainties or capital expenditures of a material nature. As of December 31, 2016, we had cash and cash equivalents of $382.1 million, compared to $434.9 million as of December 31, 2015. The decrease was primarily due to an increase in loans of $62.9 million and an increase in our securities portfolio of $60.2 million.

Capital Resources

        Total shareholders' equity increased to $372.0 million as of June 30, 2017, compared to $357.6 million as of December 31, 2016, an increase of $14.3 million, or 4.01%, after giving effect to $2.2 million in dividends declared to common shareholders during the six months ended June 30, 2017.

        Total shareholders' equity increased to $357.6 million as of December 31, 2016, compared to $344.3 million as of December 31, 2015, an increase of $13.3 million, or 3.87%, after giving effect to $4.4 million in dividends paid to common shareholders in 2016. This increase was primarily the result of $27.2 million in net income for the period as well as the issuance of 393,698 shares of treasury stock for $3.9 million in conjunction with the exercise of stock options, partially offset by the dividends paid and the purchase of 635,100 shares of treasury stock for $11.1 million.

        Capital management consists of providing equity and other instruments that qualify as regulatory capital to support current and future operations. Banking regulators view capital levels as important indicators of an institution's financial soundness. As a general matter, FDIC-insured depository institutions and their holding companies are required to maintain minimum capital relative to the amount and types of assets they hold. We are subject to regulatory capital requirements at the bank holding company and bank levels. See "Supervision and Regulation—CommunityBank of Texas, N.A.—

110

Capital Adequacy Requirements" for additional discussion regarding the regulatory capital requirements applicable to us and the Bank.

        As of each of June 30, 2017 and 2016, and December 31, 2016 and 2015, the Company and the Bank were in compliance with all applicable regulatory capital requirements, and the Bank was classified as "well capitalized" for purposes of the FDIC's prompt corrective action regulations. As we deploy our capital and continue to grow our operations, our regulatory capital levels may decrease depending on our level of earnings. However, we expect to monitor and control our growth in order to remain in compliance with all regulatory capital standards applicable to us.

        The following table presents the regulatory capital ratios for our Company and the Bank as of the dates indicated.

Capital Adequacy Analysis As of June 30, 2017
	Actual					Minimum Required for Capital Adequacy Phase-in Schedule Purposes					To be Categorized as Well Capitalized Under Prompt Corrective Action Provisions
(Dollars in thousands)	Amount		Ratio			Amount		Ratio			Amount		Ratio
CBTX, Inc.(1)
Tier 1 capital (to risk weighted assets)	$	293,508		12.3	%	$	143,671		6.0	%	$	191,561		8.0	%
Common equity tier 1 capital (to risk weighted assets)		287,108		12.0	%		107,753		4.5	%		155,644		6.5	%
Total capital (to risk weighted assets)		319,074		13.3	%		191,561		8.0	%		239,452		10.0	%
Tier 1 leverage capital (to average assets)		293,508		10.4	%		112,988		4.0	%		141,236		5.0	%
CommunityBank of Texas, N.A.(2)
Tier 1 capital (to risk weighted assets)	$	313,946		13.1	%	$	143,589		6.0	%	$	191,452		8.0	%
Common equity tier 1 capital (to risk weighted assets)		313,946		13.1	%		107,692		4.5	%		155,555		6.5	%
Total capital (to risk weighted assets)		339,512		14.2	%		191,452		8.0	%		239,315		10.0	%
Tier 1 leverage capital (to average assets)		313,946		11.1	%		112,988		4.0	%		141,236		5.0	%

(1)

The Federal Reserve may require the Company to maintain capital ratios above the required minimums.

(2)

The OCC or the FDIC may require the Bank to maintain capital ratios above the required minimums.

Contractual Obligations

        We acquired subordinated debentures relating to the issuance of trust preferred securities. In 2007, we acquired the County Trust, formed in 2005, which issued $5.5 million in trust preferred securities to a third party in a private placement. Concurrent with the issuance of the trust preferred securities, the County Trust issued common securities to us in the aggregate liquidation value of $171,000. The County Trust invested the total proceeds from the sale of the trust preferred securities and the common securities in $5.7 million of our junior subordinated debentures, which will mature on April 7, 2035. In December 2015, we purchased approximately $4.1 million of the outstanding preferred securities, reducing the number of outstanding preferred securities to $1.6 million.

        In 2008, we acquired the Crosby Trust, formed in 2005, which issued $5.0 million in trust preferred securities to a third party in a private placement. Concurrent with the issuance of the trust preferred securities, the Crosby Trust issued common securities to us in the aggregate liquidation value of $155,000. The Crosby Trust invested the total proceeds from the sale of the trust preferred securities and the common securities in $5.2 million of our junior subordinated debentures, which will mature on December 15, 2035.

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        With certain exceptions, the amount of the principal and any accrued and unpaid interest on the debentures are subordinated in right of payment to the prior payment in full of all senior indebtedness of the Company. The terms of the debentures are such that they qualify as Tier 1 capital under the Federal Reserve's regulatory capital guidelines applicable to bank holding companies. Interest on County Bancshares Trust I Debentures is payable at a variable rate per annum, reset quarterly, equal to the 3-month LIBOR plus 2.00%. Interest on the Crosby Statutory Trust I debentures is at variable rate per annum, reset quarterly, equal to the 3-month LIBOR plus 1.44%.

        The following table summarizes contractual obligations and other commitments to make future payments (other than non-time deposit obligations), which consist of future cash payments associated with our contractual obligations, as of June 30, 2017 and December 31, 2016.

	As of June 30, 2017
(Dollars in thousands)	1 year or less		More than 1 year but less than 3 years		3 years or more but less than 5 years		5 years or more		Total
Non-cancelable future operating leases	$	1,699	$	2,823	$	2,914	$	11,582	$	19,018
Time deposits		217,571		93,298		44,595		—		355,464
Note payable		4,428		8,857		8,857		3,322		25,464
Junior subordinated debt		—		—		—		6,726		6,726
Total	$	223,698	$	104,978	$	56,366	$	21,630	$	406,672

	As of December 31, 2016
(Dollars in thousands)	1 year or less		More than 1 year but less than 3 years		3 years or more but less than 5 years		5 years or more		Total
Non-cancelable future operating leases	$	1,671	$	2,968	$	2,830	$	12,322	$	19,791
Time deposits		224,071		66,976		46,859		—		337,906
Note payable		4,429		8,857		8,857		5,536		27,679
Junior subordinated debt		—		—		—		6,726		6,726
Total	$	230,171	$	78,801	$	58,546	$	24,584	$	392,102

Off-Balance Sheet Items

        In the normal course of business, we enter into various transactions, which, in accordance with GAAP, are not included in our consolidated balance sheets. We enter into these transactions to meet the financing needs of our customers. These transactions include commitments to extend credit and standby and commercial letters of credit, which involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amounts recognized in our consolidated balance sheets.

        Our commitments associated with outstanding standby and commercial letters of credit and commitments to extend credit expiring by period as of the date indicated are summarized below. Since commitments associated with letters of credit and commitments to extend credit may expire unused, the amounts shown do not necessarily reflect the actual future cash funding requirements.

	As of June 30, 2017
(Dollars in thousands)	1 year or less		More than 1 year but less than 3 years		3 years or more but less than 5 years		5 years or more		Total
Standby and commercial letters of credit	$	30,337	$	1,296	$	10	$	—	$	31,643
Commitments to extend credit		422,141		96,293		13,214		20,733		552,381
Total	$	452,478	$	97,589	$	13,224	$	20,733	$	584,024

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	As of December 31, 2016
(Dollars in thousands)	1 year or less		More than 1 year but less than 3 years		3 years or more but less than 5 years		5 years or more		Total
Standby and commercial letters of credit	$	19,909	$	6,773		—		—	$	26,682
Commitments to extend credit		450,834		102,627		32,663		21,335		607,459
Total	$	470,743	$	109,400	$	32,663	$	21,335	$	634,141

        Standby and commercial letters of credit are conditional commitments issued by us to guarantee the performance of a customer to a third party. In the event of nonperformance by the customer, we have rights to the underlying collateral, which can include commercial real estate, physical plant and property, inventory, receivables, cash and/or marketable securities. Our credit risk associated with issuing letters of credit is essentially the same as the risk involved in extending loan facilities to our customers.

        Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being fully drawn upon, the total commitment amounts disclosed above do not necessarily represent future cash requirements. We evaluate each customer's creditworthiness on a case-by-case basis. The amount of collateral obtained, if considered necessary by us, upon extension of credit, is based on management's credit evaluation of the customer.

Interest Rate Sensitivity and Market Risk

        As a financial institution, our primary component of market risk is interest rate volatility. Our asset liability and funds management policy provides management with the guidelines for effective funds management, and we have established a measurement system for monitoring our net interest rate sensitivity position. We have historically managed our sensitivity position within our established guidelines.

        Fluctuations in interest rates will ultimately impact both the level of income and expense recorded on most of our assets and liabilities, and the market value of all interest-earning assets and interest-bearing liabilities, other than those which have a short term to maturity. Interest rate risk is the potential of economic losses due to future interest rate changes. These economic losses can be reflected as a loss of future net interest income and/or a decrease in current fair market values. The objective is to measure the effect on net interest income and to adjust the balance sheet to minimize the inherent risk while at the same time maximizing income.

        We manage our exposure to interest rates by structuring our balance sheet in the ordinary course of business. We do not enter into instruments such as leveraged derivatives, financial options, financial future contracts or forward delivery contracts for the purpose of reducing interest rate risk. Based upon the nature of our operations, we are not subject to foreign exchange or commodity price risk. We do not own any trading assets.

        Our exposure to interest rate risk is managed by the Funds Management Committee of the Bank, in accordance with policies approved by the Bank's board of directors. The committee formulates strategies based on appropriate levels of interest rate risk. In determining the appropriate level of interest rate risk, the committee considers the impact on earnings and capital on the current outlook on interest rates, potential changes in interest rates, regional economies, liquidity, business strategies and other factors. The committee meets regularly to review, among other things, the sensitivity of assets and liabilities to interest rate changes, the book and market values of assets and liabilities, unrealized gains and losses, purchase and sale activities, commitments to originate loans and the maturities of

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investments and borrowings. Additionally, the committee reviews liquidity, cash flow flexibility, maturities of deposits and consumer and commercial deposit activity. Management employs methodologies to manage interest rate risk, which include an analysis of relationships between interest-earning assets and interest-bearing liabilities and an interest rate shock simulation model.

        We use interest rate risk simulation models and shock analyses to test the interest rate sensitivity of net interest income and fair value of equity, and the impact of changes in interest rates on other financial metrics. Contractual maturities and re-pricing opportunities of loans are incorporated in the model, as are prepayment assumptions, maturity data and call options within the investment portfolio. Average life of non-maturity deposit accounts are based on standard regulatory decay assumptions and are incorporated into the model. The assumptions used are inherently uncertain and, as a result, the model cannot precisely measure future net interest income or precisely predict the impact of fluctuations in market interest rates on net interest income. Actual results will differ from the model's simulated results due to timing, magnitude and frequency of interest rate changes as well as changes in market conditions and the application and timing of various management strategies.

        On a quarterly basis, we run two simulation models including a static balance sheet and dynamic growth balance sheet. These models test the impact on net interest income and fair value of equity from changes in market interest rates under various scenarios. Under the static and dynamic growth models, rates are shocked instantaneously and ramped rate changes over a 12-month horizon based upon parallel and non-parallel yield curve shifts. Parallel shock scenarios assume instantaneous parallel movements in the yield curve compared to a flat yield curve scenario. Non-parallel simulation involves analysis of interest income and expense under various changes in the shape of the yield curve. Our internal policy regarding internal rate risk simulations currently specifies that for instantaneous parallel shifts of the yield curve, estimated net income at risk for the subsequent one-year period should not decline by more than 10% for a 100 basis point shift, 20% for a 200 basis point shift and 30% for a 300 basis point shift.

        The following tables summarize the simulated change in net interest income and fair value of equity over a 12-month horizon as of the dates indicated:

	As of June 30,
	2017						2016
Change in Interest Rates (Basis Points)	Percent Change in Net Interest Income			Percent Change in Fair Value of Equity			Percent Change in Net Interest Income			Percent Change in Fair Value of Equity
+ 300		19.5	%		8.8	%		16.9	%		25.2	%
+ 200		13.5	%		10.0	%		10.0	%		23.6	%
+ 100		6.7	%		8.4	%		3.5	%		13.8	%
Base		—	%		—	%		—	%		—	%
–100		(6.4	)%		(14.9	)%		(1.7	)%		(24.8	)%

	As of December 31,
	2016						2015
Change in Interest Rates (Basis Points)	Percent Change in Net Interest Income			Percent Change in Fair Value of Equity			Percent Change in Net Interest Income			Percent Change in Fair Value of Equity
+ 300		19.9	%		3.1	%		7.4	%		4.2	%
+ 200		13.2	%		7.9	%		4.4	%		7.1	%
+ 100		5.9	%		5.6	%		1.5	%		4.2	%
Base		—	%		—	%		—	%		—	%
–100		(4.0	)%		(14.6	)%		(1.4	)%		(14.8	)%

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        The results are primarily due to behavior of demand, money market and savings deposits during such rate fluctuations. We have found that, historically, interest rates on these deposits change more slowly than changes in the discount and federal funds rates. This assumption is incorporated into the simulation model and is generally not fully reflected in a gap analysis. The assumptions incorporated into the model are inherently uncertain and, as a result, the model cannot precisely measure future net interest income or precisely predict the impact of fluctuations in market interest rates on net interest income. Actual results will differ from the model's simulated results due to timing, magnitude and frequency of interest rate changes as well as changes in market conditions and the application and timing of various strategies.

Restatement of 2012 Financial Statements

        In 2014, our predecessor independent auditor identified an error related to the recorded amount of our net deferred tax asset that affected our financial statements for the fiscal years ended December 31, 2013 and prior periods, resulting in a restatement of our financial statements for the year ended December 31, 2013. The 2013 financial statements were reissued and made available to the users of the financial statements. Accordingly, the financial information as of and for the year ended December 31, 2012 included in this prospectus derived from our audited financial statements not included herein, has been restated to include an adjustment to increase the deferred tax liability by $1,382,000 and an offsetting increase in goodwill. These adjustments related to the acquired land and buildings from our acquisition of Crosby Bancshares, Inc. in 2008. Additionally, our financial statements as of and for the year ended December 31, 2012 have been restated to correctly reflect the tax effect of the financial reporting basis versus tax reporting basis of the Company's fixed assets which resulted in an entry to credit the deferred tax liability and debit retained earnings for $1,051,000.

Impact of Inflation

        Our consolidated financial statements and related notes included elsewhere in this prospectus have been prepared in accordance with GAAP. GAAP requires the measurement of financial position and operating results in terms of historical dollars, without considering changes in the relative value of money over time due to inflation or recession.

        Unlike many industrial companies, substantially all of our assets and liabilities are monetary in nature. As a result, interest rates have a more significant impact on our performance than the effects of general levels of inflation. Interest rates may not necessarily move in the same direction or in the same magnitude as the prices of goods and services. However, other operating expenses do reflect general levels of inflation.

Critical Accounting Policies

        Our accounting policies are integral to understanding our results of operations. Our accounting policies are described in greater detail in Note 1 to our annual and interim consolidated financial statements included elsewhere is this prospectus. We believe that of our accounting policies, the following may involve a higher degree of judgment and complexity:

Securities

        Securities are classified as available for sale when they might be sold before maturity. Securities available for sale are carried at fair value. Unrealized gains and losses are excluded from earnings and reported, net of tax, as a separate component of stockholders' equity until realized. Securities within the available for sale portfolio may be used as part of our asset/liability strategy and may be sold in response to changes in interest rate risk, prepayment risk or other similar economic factors. Securities

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held to maturity are carried at cost, adjusted for the amortization of premiums and the accretion of discounts.

        Interest earned on these assets is included in interest income. Interest income includes amortization of purchase premium or discount. Premiums and discounts on securities are amortized on the level-yield method, except for mortgage backed securities where prepayments are anticipated. Gains and losses on sales are recorded on the trade date and determined using the specific identification method.

        Management evaluates debt securities for other-than-temporary impairment, or OTTI, on at least an annual basis, and more frequently when economic or market conditions warrant such an evaluation. For securities in an unrealized loss position, management considers the extent and duration of the unrealized loss, and the financial condition and near-term prospects of the issuer. Management also assesses whether it intends to sell, or it is more likely than not that it will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For debt securities that do not meet the aforementioned criteria, the amount of impairment is split into two components as follows: (1) OTTI related to credit loss, which must be recognized in the income statement, and (2) OTTI related to other factors, which is recognized in other comprehensive income, net of applicable taxes. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. The previous amortized cost basis less the OTTI recognized in earnings becomes the new amortized cost basis of the security.

Loans Held for Investment

        Loans held for investment are those that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of deferred loan fees and costs, and an allowance for loan losses. Loans are typically secured by specific items of collateral including business assets, consumer assets, and commercial and residential real estate. Commercial loans are expected to be repaid from cash flow from operations of businesses. Interest income is accrued on the unpaid principal balance. Loan origination fees and certain direct origination costs are deferred and recognized as adjustments to interest income using a level yield methodology without anticipating payoffs.

Allowance for Loan Losses

        The allowance for loan losses represents management's estimate of probable and reasonably estimable credit losses inherent in the loan portfolio. In determining the allowance, the Company estimates losses on individual impaired loans, or groups of loans which are not impaired, where the probable loss can be identified and reasonably estimated. On a quarterly basis, the Company assesses the risk inherent in the Company's loan portfolio based on qualitative and quantitative trends in the portfolio, including the internal risk classification of loans, historical loss rates, changes in the nature and volume of the loan portfolio, industry or borrower concentrations, delinquency trends, detailed reviews of significant loans with identified weaknesses and the impacts of local, regional and national economic factors on the quality of the loan portfolio. Based on this analysis, the Company records a provision for loan losses to maintain the allowance at appropriate levels.

        Determining the amount of the allowance is considered a critical accounting estimate, as it requires significant judgment and the use of subjective measurements, including management's assessment of overall portfolio quality. The Company maintains the allowance at an amount the Company believes is sufficient to provide for estimated losses inherent in the Company's loan portfolio at each balance sheet date, and fluctuations in the provision for loan losses may result from

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management's assessment of the adequacy of the allowance. Changes in these estimates and assumptions are possible and may have a material impact on the Company's allowance, and therefore the Company's financial position, liquidity or results of operations.

Transfers of Financial Assets

        Management accounts for the transfers of financial assets as sales when control over the assets has been surrendered. Control is surrendered when the assets have been isolated, a transferee obtains the right to pledge or exchange the transferred assets and there is no agreement to repurchase the assets before their maturity. Management believes the loan participations sold subject to this guidance met the condition to be treated as a sale. For securities sold under agreements to repurchase, these did not meet the criteria and are included in securities available for sale and repurchase agreements in the consolidated balance sheets.

Goodwill and Other Intangibles

        The excess purchase price over the fair value of net assets from acquisitions, or goodwill, is evaluated for impairment at least annually and on an interim basis if an event or circumstance indicates that it is likely an impairment has occurred. The Company first assesses qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, the Company determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing a two-step impairment test is unnecessary. If the Company concludes otherwise, then it is required to perform a first step of the two-step impairment test by calculating the fair value of the reporting unit and comparing the fair value with the carrying amount of the reporting unit. In testing for impairment in the past, the fair value of net assets is estimated based on an analysis of the Company's market value.

        Determining the fair value of goodwill is considered a critical accounting estimate because the allocation of the fair value of goodwill to assets and liabilities requires significant management judgment and the use of subjective measurements. Variability in the market and changes in assumptions or subjective measurements used to allocate fair value are reasonably possible and may have a material impact on the Company's financial position, liquidity or results of operations.

        Other intangible assets, identified in the form or core deposit, loan servicing assets and customer relationship intangibles, are acquired customer relationships that lack physical substance but can be distinguished from goodwill because of contractual or other legal rights or because the asset is capable of being sold or exchanged either on its own or in combination with a related contract, asset or liability. Core deposit intangibles are being amortized over their estimated useful lives. Other intangible assets tested for impairment whenever events or changes in circumstances indicate the carrying amount of the assets may not be recoverable from future undiscounted cash flows. If impaired, the assets are recorded at fair value.

Emerging Growth Company

        The JOBS Act permits an "emerging growth company" to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. However, we have decided not to take advantage of this provision. As a result, we will comply with new or revised accounting standards to the same extent that compliance is required for non-emerging growth companies. Our decision to opt out of the extended transition period under the JOBS Act is irrevocable.

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Recently Issued Accounting Pronouncements

        ASU 2014-09, Revenue from Contracts with Customers (Topic 606) Section A—Summary and Amendments That Create Revenue from Contracts with Customers (Topic 606) and Other Assets and Deferred Costs—Contracts with Customers (Subtopic 340-40).    In May 2014, the FASB issued Accounting Standards Update ASU 2014-09 which supersedes the revenue recognition requirements in Topic 605, Revenue Recognition. ASU 2014-09 requires entities to recognize revenue in a way that depicts the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606), which defers the effective date of ASU 2014-09 by one year to January 1, 2018.

        The Company's revenue is comprised of net interest income on financial assets and financial liabilities, which is explicitly excluded from the scope of ASU 2014-09, and noninterest income. Management continues to assess the potential impact of ASU 2014-09 on the noninterest income components. Adoption is expected in the first quarter of 2018 with a cumulative effect adjustment to opening retained earnings, if such adjustment is deemed to be significant.

        ASU 2016-01, Financial Instruments—Overall (Subtopic 825-10)—Recognition and Measurement of Financial Assets and Financial Liabilities.    The amendments in this update address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. ASU 2016-01, among other things, (i) requires equity investments, with certain exceptions, to be measured at fair value with changes in fair value recognized in net income, (ii) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment, (iii) eliminates the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet, (iv) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, (v) requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments, (vi) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements and (viii) clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale investments. This update will be effective for the Company on January 1, 2018. The Company is currently evaluating this update and does not expect it to have a significant impact to the Company's consolidated financial statements.

        ASU 2016-02, Leases (Topic 842).    ASU 2016-02 will, among other things, require lessees to recognize a lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee's right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 does not significantly change lease accounting requirements applicable to lessors; however, certain changes were made to align, where necessary, lessor accounting with the lessee accounting model and ASC Topic 606, "Revenue from Contracts with Customers." ASU 2016-02 will be effective for the Company on January 1, 2019 and will require transition using a modified retrospective approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The Company is currently evaluating the potential impact of ASU 2016-02 on the consolidated financial statements.

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        ASU 2016-05, Derivatives and Hedging (Topic 815) Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships.    ASU 2016-05 clarifies that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument under ASC Topic 815 does not, in and of itself, require redesignation of that hedging relationship provided that all other hedge accounting criteria continue to be met. ASU 2016-05 was effective on January 1, 2017 and it did not have a significant impact on the consolidated financial statements.

        ASU 2016-07, Investments—Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting.    The amendments affect all entities that have an investment that becomes qualified for the equity method of accounting as a result of an increase in the level of ownership interest or degree of influence. ASU 2016-07 simplifies the transition to the equity method of accounting by eliminating retroactive adjustment of the investment when an investment qualifies for use of the equity method, among other things. ASU 2016-07 became effective on January 1, 2017 and did not have a significant impact on the consolidated financial statements.

        ASU 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.    ASU 2016-09 simplifies several aspects of the accounting for employee share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. Per ASU 2016-09: (1) all excess tax benefits and tax deficiencies should be recognized as income tax expense or benefit in the income statement, rather than in additional paid-in capital under current guidance; (2) excess tax benefits should be classified along with other income tax cash flows as an operating activity on the from operating activities under current guidance; (3) cash paid by an employer when directly withholding shares for tax-withholding purposes should be classified as a financing activity; and (4) an entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest, as under current guidance, or account for forfeitures when they occur. Effective January 1, 2017, the Company adopted ASU 2016-09. There was no material impact for the six months ended June 30, 2017, and the Company does not expect a material impact in future periods. The Company prospectively applied the guidance for the presentation of excess tax benefits as an operating cash flow with no impact for the six months ended June 30, 2017. Finally, the Company elected to account for forfeitures as they occur.

        ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.    ASU 2016-13 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts and requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization's portfolio. In addition, ASU 2016-13 amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. ASU 2016-13 will be effective on January 1, 2020. The Company is currently evaluating the potential impact of ASU 2016-13 on the consolidated financial statements.

        ASU 2016-15, Statement of Cash Flows (Topic 230)—Classification of Certain Cash Receipts and Cash Payments.    ASU 2016-15 provides guidance related to certain cash flow issues in order to reduce the current and potential future diversity in practice. ASU 2016-15 will be effective on January 1, 2018 and is not expected to have a significant impact on the consolidated financial statements.

        ASU 2016-16, Income Taxes (Topic 740)—Intra-Entity Transfers of Assets Other Than Inventory.    ASU 2016-16 provides guidance stating that an entity should recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. ASU 2016-16 will be effective on January 1, 2018 and is not expected to have a significant impact on the consolidated financial statements.

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        ASU 2016-18, Statement of Cash Flows (Topic 230)—Restricted Cash.    ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 will be effective on January 1, 2018 and is not expected to have a significant impact on the consolidated financial statements.

        ASU 2017-01, Business Combinations (Topic 805)—Clarifying the Definition of a Business.     ASU 2017-01 clarifies the definition and provides a more robust framework to use in determining when a set of assets and activities constitutes a business. ASU 2017-01 is intended to provide guidance when evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU 2017-01 will be effective on January 1, 2018 and is not expected to have a significant impact on the consolidated financial statements.

        ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.    ASU 2017-04 eliminates Step 2 from the goodwill impairment test. In addition, the amendment eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. For public companies, ASU 2017-04 is effective for fiscal years beginning after December 15, 2019 with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the potential impact of this pronouncement.

ASU 2017-09, Compensation—Stock Compensation provides guidance about which changes in terms or conditions of a share-based award require application of modification accounting. ASU 2017-09 will be effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017, and is not expected to have a significant impact on the Company's consolidated financial statements.

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MANAGEMENT

General

        We have a seasoned executive management team and board of directors. The Bank's executive management team has a combined 374 years of financial services experience, including extensive experience in the commercial banking industry.

        Prior to completion of this offering, our board of directors will be composed of 11 members who previously were elected by our shareholders at each annual shareholders' meeting for a term of one year. Pursuant to our amended and restated bylaws, commencing with our annual shareholders' meeting to be held in 2018, our board of directors will be classified into the following three classes, with members of each class serving a three-year term: (i) Class I, which will consist of four directors to be originally elected for a term expiring at the annual shareholders' meeting to be held in 2019; (ii) Class II, which will consist of four directors to be originally elected for a term expiring at the annual shareholders' meeting to be held in 2020; and (iii) Class III, which will consist of three directors to be originally elected for a term expiring at the annual shareholders' meeting to be held in 2021. At each succeeding annual shareholders' meeting, commencing with the annual shareholders' meeting to be held in 2019, directors elected to succeed those directors whose terms then expire will be elected for a term of office to expire at the third succeeding annual shareholders' meeting after their election. Our directors hold office until their successors are elected and qualified, or until such director's earlier death, resignation or removal. Our executive officers are appointed by our board of directors and hold office until their successors are duly appointed and qualified, or until their earlier death, resignation or removal.

        The board of directors of CommunityBank of Texas consists of 24 members, ten of whom will serve on our board of directors upon completion of this offering. As the sole shareholder of CommunityBank of Texas, we elect the directors of the Bank annually for a term of one year and the directors of the Bank hold office until their successors are elected and qualified or until such director's earlier death, resignation or removal. The executive officers of CommunityBank of Texas are appointed by the Bank's board of directors and hold office until their successors are duly appointed and qualified or until their earlier death, resignation or removal.

Our Directors and Executive Officers

        The following table states our directors' names, their ages as of June 30, 2017, and the years that they began serving as directors of the Company.

Name	Position(s) with the Company	Age at June 30, 2017		Director Since
Robert R. Franklin, Jr.	Chairman, President and Chief Executive Officer		62		2013
J. Pat Parsons	Vice Chairman		68		2007
Michael A. Havard	Director		60		2017
Tommy W. Lott	Director		80		2013
Glen W. Morgan	Director		64		2007
Joe E. Penland, Sr.	Director		67		2007
Wayne A. Reaud	Director		69		2007
Joseph B. Swinbank	Director		65		2013
Sheila G. Umphrey	Director		77		2017
John E. Williams, Jr.	Director		63		2007
William E. Wilson, Jr.	Director		62		2017

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        The following table sets forth information regarding our executive officers and their ages as of June 30, 2017.

Name	Position(s) with the Company	Age at June 30, 2017
Robert R. Franklin, Jr.	Chairman, President and Chief Executive Officer		62
J. Pat Parsons	Vice Chairman		68
Robert T. Pigott, Jr.	Chief Financial Officer		62

        In addition to the executive officers of the Company, CommunityBank of Texas is managed by ten highly qualified and experienced bankers who oversee various aspects of our organization including lending, credit administration, treasury services, finance, operations, information technology, regulatory compliance, risk management and human resources. Additionally, we have four Regional CEOs who oversee loan and deposit production and performance in their respective markets. Our team has a demonstrated track record of achieving profitable growth, maintaining a strong credit culture, implementing a relationship-driven approach to banking and successfully executing acquisitions. The depth of our team's experience, market knowledge and long-term relationships in Houston and Beaumont provide us with a steady source of referral business. The following table sets forth information regarding our executive officers who, in addition to Messrs. Franklin, Parsons and Pigott, are members of the executive committee of the Bank and their ages as of June 30, 2017.

Name	Position(s) with the Bank	Age at June 30, 2017
Donna B. Dillon	Senior Executive Vice President and Chief Administration Officer		62
Deborah Dinsmore	Senior Executive Vice President and Chief Information Officer		57
W. Allen Gage	Senior Executive Vice President Special Projects		78
Travis Jaggers	President		68
Tracy O'Neil	Senior Executive Vice President and Chief Human Resources Officer		56
James L. Sturgeon	Senior Executive Vice President and Chief Risk Officer		66
Joe F. West	Senior Executive Vice President and Chief Credit Officer		62

        We also manage our operations through Regional CEOs. The Regional CEOs of the Bank and the region that each oversees are set forth in the table below.

Name	Region
Chris Bezdek	Southeast—Houston
Brandon Burk	Northwest—Houston
Phil Davis	Southwest—Houston
Gary Englert	Northeast—Houston

Background and Experience of Our Directors and Executive Officers

        The following is a brief discussion of the business and banking background and experience of our directors and executive officers. With respect to our directors, the biographies also contain information regarding the person's experience, qualifications, attributes or skills that led to the conclusion that the person should serve as a director. Unless otherwise indicated, directors have held their positions for the

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past five years. No director or executive officer has any family relationship, as defined in Item 401 of Regulation S-K, with any other director or with any of our executive officers.

Our Directors

        Robert R. Franklin, Jr.    Mr. Franklin serves as our Chairman, President and Chief Executive Officer and has served as a director of the Company and the Bank since 2013. Mr. Franklin joined the Company in 2013 in connection with our merger of equals with VB Texas, Inc. From June 2013 until January 2014, Mr. Franklin served as the Co-Chief Executive Officer of the Company and the Bank. In January 2014, he became Chief Executive Officer of the Bank and the Company. He became Chairman of the Bank in January 2015 and Chairman and President of the Company in December 2015. Mr. Franklin began his 36-year Houston banking career working for a small community bank in Houston upon graduation from the University of Texas. He then moved to a large, regional bank before gravitating back to his primary interest of community banking. He became President of American Bank in 1988 where he served until the bank was sold to Whitney Holding Corp. in early 2001. Mr. Franklin and his team then joined Horizon Capital Bank, where Mr. Franklin raised sufficient capital to match the bank's existing capital and took the position of President of Horizon Capital Bank. He served as President until the bank was sold to Cullen/Frost Bankers, Inc. in 2005. Mr. Franklin then started VB Texas, Inc. in November of 2006 as Chairman, President and Chief Executive Officer, serving until a "merger of equals" between VB Texas, Inc. and the Company in 2013. Mr. Franklin graduated from the University of Texas in 1977 with a B.B.A. in Finance. He is currently serving on the Board of Junior Achievement of Southeast Texas and the Texas Bankers Association. Mr. Franklin has actively served various charitable organizations over the years, along with serving on the board of a local private school. Mr. Franklin adds financial services experience, especially lending, oil and gas expertise and asset liability management to our board of directors, as well as a deep understanding of the Company's business and operations. Mr. Franklin also brings risk and operations management and strategic planning expertise to our board of directors, skills that are important as we continue to implement our business strategy and acquire and integrate growth opportunities.

        Michael A. Havard.    Mr. Havard has served as a director since September 2017. Mr. Havard has served as a director of the Bank since 2007, serving on the audit, compensation, funds management and loan committees of the Bank. Mr. Havard has been an attorney at Michael A. Havard, P.C. since June 2017, where he handles complex business and commercial litigation. From January 2000 to June 2017, he was an attorney at Provost Umphrey Law Firm L.L.P. Mr. Havard previously served as an auditor with Peat Marwick Mitchell, a predecessor of KPMG, and has experience as a Certified Public Accountant. Since 2002, Mr. Havard has, in his capacity as an attorney, overseen the Umphrey family business holdings which includes real estate, motorcycle dealerships, automobile dealerships, and personal investments. He currently serves as a director of the Umphrey II Family Limited Partnership and Walter Umphrey, P.C., as well as an officer and/or director of various other entities including many of the personal holdings of the Umphrey family related entities. Mr. Havard graduated from Lamar University in 1979 with a B.B.A. in Accounting and received a J.D. from the University of Houston Law Center in 1988. Mr. Havard's prior experience as a Certified Public Accountant and auditor, which included performing audits on various banks and savings and loans associations in the Houston marketplace, qualify him to serve on our board. In addition, his knowledge accumulated from serving on the audit, compensation, funds management and loan committees of the Bank provide him with a unique perspective of the inner workings of our organization.

        Tommy W. Lott.    Mr. Lott has served as a director of the Company and the Bank since 2013. Mr. Lott served as a director of VB Texas, Inc. and Vista Bank Texas from 2006 until the merger of equals with the Company and the Bank in 2013. Since 2014, he has been a consultant for Acosta, Inc., a company that provides sales, marketing and retail merchandising solutions to consumer packaged goods companies and retailers in the U.S. and Canada. Mr. Lott founded Lott Marketing, Inc. in 1970

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and served as its Chairman and Chief Executive Officer until its sale to Acosta Inc. in 2012. Lott Marketing, Inc. was a sales and marketing agency representing a wide array of food and nonfood products to the food service industry. Mr. Lott has served as a director of Horizon Bank and currently serves as a director of Enviro Water Minerals Company, Inc. Mr. Lott has also been a partner and developer of apartment and independent living complexes in the Houston area over the last 20 years. Mr. Lott received his B.B.A. in Marketing from the University of Houston in 1959. Mr. Lott's broad experience serving on boards of banks and other companies provide us with important skills regarding the oversight of our business.

        Glen W. Morgan.    Mr. Morgan has served as a director of the Company and the Bank since 2007. Mr. Morgan has been the managing partner of Reaud, Morgan & Quinn, L.L.P. since 1996, where he has practiced since 1978. Mr. Morgan is a trial lawyer who specializes in personal injury and business litigation. Mr. Morgan has been named a Super Lawyer by the Texas Monthly's Super Lawyer Section Top Texas Lawyers from 2004 to 2017. He has been listed in Best Lawyers in America since 2006 and National Law Journal Top 50 Verdicts. He is a member of the Texas Bar Association, Jefferson County Bar Association, State Bar of Texas, Association of Trial Lawyers of America, and a Life Fellow of the Texas Bar Foundation. In addition to his leadership of many organizations in his profession, Mr. Morgan has served as a board member of the Lamar University Foundation and the Lamar University College of Education and Human Development Advisory Board, is an honorary member of the International Brotherhood of Electrical Workers' Local 479, Beaumont Professional Firefighters Local 399, Beaumont Police Officers Association and Texas State Building and Construction Trades Association. A strong supporter of Lamar University, he contributes to Cardinal Athletics, the Cardinal Club, and Friends of the Arts. He also established the Donald E. Morgan Scholarship at Lamar University in honor of his father, created the Morgan Charitable Fund, and established and is a permanent board member of the Cris E. Quinn Charitable Foundation. Mr. Morgan earned a B.B.A. from Lamar University and a J.D. from South Texas College of Law. Mr. Morgan has significant management, risk management and strategic planning skills important to the oversight of our enterprise and operational risk management.

        J. Pat Parsons.    Mr. Parsons serves as Vice Chairman of the Company and the Bank. Mr. Parsons was one of the original founders of the Company and has served as a director of the Company and the Bank since 2007. He served as President and Chief Executive Officer of the Company from 2007 until 2013. Mr. Parsons also served as the Bank's Chairman and Chief Executive Officer from 2007 until 2013. From June 2013 until January 2014, Mr. Parsons served as the Co-Chief Executive Officer of the Company and Chairman and Co-Chief Executive Officer of the Bank. In January 2014, he became Chairman of the Bank and President of the Company. In January 2015, Mr. Parsons was named Vice Chairman of the Company and the Bank. He began his banking career in 1973 with First City National Bank of Houston as a Management Trainee and has served in various capacities at numerous commercial banks within our market areas, including Community Bank & Trust, SSB, as President and Chief Operating Officer. From 1992 until its sale to Texas Regional Bancshares, Inc. in 2004, Mr. Parsons oversaw Community Bank & Trust's expansion, through organic growth and five acquisitions, to over $1.1 billion in assets and a network spanning 15 Southeast Texas communities. He currently serves on the board of directors of the Lamar University Foundation. Mr. Parsons earned a B.B.A. in Accounting from Lamar University in 1971 and an M.B.A. in Finance from the University of Houston in 1973. With more than 44 years of experience working in the banking industry in Texas and serving as chief executive officer of several institutions, Mr. Parsons brings significant leadership skills and a deep understanding of the local banking market and issues facing the banking industry to our board of directors.

        Joe Penland, Sr.    Mr. Penland has served as a director of the Company and the Bank since 2007. Mr. Penland founded Quality Mat Company, based in Beaumont, Texas, and has served as its President since 1974. Quality Mat Company is one of the largest mat producers in the world and is one of the

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oldest companies in the business, with the capabilities of producing everything from logging mats to temporary road matting. Quality Mat Company's products carry exclusive patents that serve a variety of major industries. Mr. Penland started the Penland Foundation in 2006, a foundation that helps local organizations in his community. Mr. Penland has significant experience serving on both public and private boards of directors for community banks. Prior to joining our board of directors, Mr. Penland served as a director of Texas Regional Bancshares, Inc., a Nasdaq listed bank holding company, from 2004 until its merger with BBVA in 2006, and as a director of Southeast Texas Bancshares, Inc. prior to its acquisition by Texas Regional Bancshares, Inc. Mr. Penland brings key leadership, risk management, operations, strategic planning and oil and gas industry expertise that assist our board of directors in overseeing the company's operations in addition to his knowledge of the communities we serve. See "—Involvement in Certain Legal Proceedings" for certain details regarding historical administrative and legal proceedings involving Mr. Penland.

        Wayne A. Reaud.    Mr. Reaud has served as a director of the Company and the Bank since 2007. Mr. Reaud is the founder of the law firm Reaud, Morgan & Quinn, L.L.P. in Beaumont, Texas where he practices law in the areas of personal injury, products and premises liability, toxic torts and business litigation. He also serves as Chairman of the Board of the Beaumont Foundation of America, Member of the Board of Directors of Huntsman Corporation, and President and Director of the Reaud Charitable Foundation. Mr. Reaud earned a B.S. from the University of Texas and a J.D. from Texas Tech University School of Law. He is a Life Fellow of the Texas Bar Foundation and a Fellow of the International Society of Barristers, a member of the Philosophical Society and a member of the State Bar of Texas Grievance Committee. Mr. Reaud was chosen as the Most Distinguished Alumni of Texas Tech University Law School in 1998. Mr. Reaud was awarded the Honorary Order of the Coif by the University of Texas in 2011. He is listed in Best Lawyers in America. Mr. Reaud's legal expertise and extensive experience with complex and high-profile litigation enable him to advise our board of directors on enterprise risk management and litigation risks and strategies. In addition, his commitment to and knowledge of the communities we serve is valuable to our board of directors.

        Joseph B. Swinbank.    Mr. Swinbank has served as a director of the Company and the Bank since 2013. Mr. Swinbank served as a director of VB Texas, Inc. and Vista Bank Texas from 2006 until the merger of equals with the Company and the Bank in 2013. Mr. Swinbank is the co-founder of The Sprint Companies, Inc., a Houston based sand and gravel company, and is Partner of Sprint Ft. Bend County Landfill, Sprint Sand & Clay, Sprint Waste Services, and Sprint Transports. In 2014, he became a Partner of River Aggregates and A & B Valves. He became a partner of Sun Industrial in 2016. Mr. Swinbank received his B.S. in Agricultural Economics from Texas A&M University in 1974. Mr. Swinbank's brings a wealth of business experience, as well as a sharp focus on the financial efficiency and profitability of our customers, to our board of directors.

        Sheila G. Umphrey.    Ms. Umphrey has served as a director since September 2017. Ms. Umphrey is owner of The Decorating Depot Inc., an interior and exterior design firm, where she has served as President since 1990. In her 27 years of experience, Ms. Umphrey has served on the board of Christus St. Elizabeth Hospital, as well as the Foundations Board of Christus St. Elizabeth, the Education Board at Lamar University Port Arthur, and the Board of Gift of Life Beaumont, which is a charitable organization. She is also active with the Humane Society of Beaumont. Ms. Umphrey studied Fine Arts at the University of Colorado and Commercial Art at Lamar University. Ms. Umphrey brings vast business and management experience as a business owner for 27 years, as well as deep knowledge of the communities that we serve through active involvement with local charities and on numerous boards and foundations.

        John E. Williams, Jr.    Mr. Williams has served as a director of the Company and the Bank since 2007. Mr. Williams is the Managing Partner of Williams Kherker Hart Boundas Law Firm, L.L.P. in Houston, Texas, where he practices in the area of mass tort cases. Mr. Williams currently serves on the

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Board of Directors for the Houston Astros, and the Houston Police Foundation and serves on the Board of Advisors for the James A. Baker III Institute for Public Policy at Rice University. Mr. Williams is listed in Top Attorneys in Texas, Best Attorneys in Texas, The Best Lawyers in America, and Texas' Best Lawyers, and he has been selected as a Super Lawyer every year since 2003. Mr. Williams received a B.B.A. from Baylor University and a J.D. from Baylor School of Law, where he graduated first in his class. Mr. Edwards has significant risk management and strategic planning skills. In addition, he brings strong legal, lending and financial skills important to the oversight of our enterprise and operational risk management.

        William E. Wilson, Jr.    Mr. Wilson has served as a director since September 2017. Mr. Wilson has served as a director of the Bank since 2007. He became Chairman of the Bank's Audit Committee in 2008. Since 1979, Mr. Wilson has served as President and Chief Executive Officer of Bar C Ranch Company, a real estate development company developing and investing in industrial, commercial and office properties in Texas. He has served as Manager and General Partner of Wilson Realty, Ltd., an owner of industrial buildings in Beaumont, Texas, since 1977. As Trustee of the Caldwell McFaddin Mineral Trust and the Rosine Blount McFaddin Mineral Trust, Mr. Wilson has managed large oil and gas mineral holdings across the State of Texas, creating operating leases and purchasing minerals on behalf of the trusts. Mr. Wilson founded Wilson Realty, Ltd. and Wilson & Company, a brokerage and management company. He is a licensed Real Estate Broker in the State of Texas and has served as a director and President of the Beaumont Board of Realtors and a director of Texas Association of Realtors. Mr. Wilson has also served on numerous civic and charitable boards in the southeast Texas region. He joined the board of directors of First Security National Bank of Beaumont in 1979 and joined its audit committee in 1981, serving First Security National Bank of Beaumont and its holding company until the bank was acquired by First City Bancorporation of Texas. From 1994 until 2004, he was a director of Community Bank of Texas, serving on the loan committee and investment committee and as Chairman of the audit committee. Mr. Wilson received his B.B.A. in Accounting from The University of Texas at Austin in 1976 and is a licensed Certified Public Accountant. Mr. Wilson's service as a bank director at other institutions, coupled with his investment, accounting and financial skills adds administration and operational management experiences, as well as corporate governance expertise to our board of directors. In addition, as a certified public accountant, Mr. Wilson brings extensive accounting, management, strategic planning and financial skills important to the oversight of our financial reporting, enterprise and operational risk management.

Our Officers

        Robert T. Pigott, Jr.    Mr. Pigott serves as Chief Financial Officer of the Company and Senior Executive Vice President and Chief Financial Officer of the Bank. He also serves as an advisory director on the boards of directors for the Company and the Bank. He served as Chief Financial Officer and a director of VB Texas, Inc. and Vista Bank Texas from 2010 to 2013 and was appointed to his current positions with the Company and the Bank in 2013 following the Company's merger of equals with VB Texas, Inc. and Vista Bank Texas. In his capacity, he oversees all finance activities, including accounting, financial reporting, investments, and interest rate risk management. Mr. Pigott has over 35 years of financial services experience, having served as Chief Financial Officer for both privately held and publicly-traded institutions in the Houston, Dallas/Fort Worth, Austin and McAllen, Texas markets, including Texas Regional Bancshares, Inc. He also spent six years in public accounting with Arthur Andersen & Co., a national accounting firm. Mr. Pigott graduated from the University of Mississippi, with a B.B.A. in Accounting, in 1976 and is a licensed Certified Public Accountant.

Involvement in Certain Legal Proceedings

        In July 2009, the SEC filed a complaint against Mr. Penland, among others, alleging that Mr. Penland through Quality Mat Company aided and abetted other defendants engaged in violations

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of the antifraud, registration and reporting provisions of the federal securities laws. More specifically, the SEC alleged that Mr. Penland was part of a fraudulent accounting scheme that allowed Newpark Resources, Inc., a customer of Quality Mat Company, in fiscal year 2003 to avoid writing off approximately $4.2 million in aging debt. Mr. Penland denied those allegations. In October of 2009, Mr. Penland, without admitting the allegations, consented to the entry of a permanent injunction as to future violations of the federal securities laws and agreed to pay a $70,000 civil penalty.

Director Independence

        Under the rules of the Nasdaq Global Select Market, independent directors must comprise a majority of our board of directors within a specified period of time of this offering. The rules of the Nasdaq Global Select Market, as well as those of the SEC, also impose several other requirements with respect to the independence of our directors.

        Our board of directors has evaluated the independence of its members based upon the rules of the Nasdaq Global Select Market and the SEC. Applying these standards, our board of directors has affirmatively determined that, with the exception of Messrs. Franklin, Jr. and Parsons and Ms. Umphrey, each of our directors is an "independent director" under the applicable rules.

Leadership Structure

        Our board of directors meets quarterly, and the board of directors of CommunityBank of Texas meets monthly. Our board of directors does not have a policy regarding the separation of the roles of Chief Executive Officer and Chairman of our board of directors, as our board of directors believes that it is in the best interests of our organization to make that determination from time to time based on the position and direction of our organization and the membership of our board of directors. Our board of directors has determined that having our Chief Executive Officer serve as Chairman of our board of directors is in the best interests of our shareholders at this time. Our board of directors believes that this structure makes best use of the Chief Executive Officer's extensive knowledge of our organization and the banking industry and views this arrangement as also providing an efficient nexus between our organization and our board of directors, facilitating our Chairman's ability to communicate information to our board of directors in a timely manner enabling the board to obtain information pertaining to operational matters expeditiously and enabling our Chairman to bring areas of concern before the board in a timely manner.

Compensation Committee Interlocks and Insider Participation

        Upon completion of the offering, none of the members of our Compensation Committee will be or will have been an officer or employee of the Company or CommunityBank of Texas. In addition, none of our executive officers serves or has served as a member of the board of directors, compensation committee or other board committee performing equivalent functions of any entity that has one or more executive officers serving as one of our directors or on our Compensation Committee.

Board Committees

        Our board of directors has established standing committees in connection with the discharge of its responsibilities, which will be effective upon completion of this offering. These committees include the Audit Committee, the Compensation Committee and the Corporate Governance and Nominating Committee. Our board of directors also may establish such other committees as it deems appropriate, in accordance with applicable law and regulations and our corporate governance documents.

        Audit Committee.    The members of our Audit Committee are Messrs. Wilson (Chairman), Havard, Lott and Swinbank. Our board of directors has evaluated the independence of each of the members of our Audit Committee and has affirmatively determined that each of the members of our Audit

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Committee (1) is an "independent director" under Nasdaq Global Select Market rules, (2) satisfies the additional independence standards under applicable SEC rules for audit committee service, and (3) has the ability to read and understand fundamental financial statements. In addition, our board of directors has determined that Mr. Wilson is a financial expert and has the financial sophistication required of at least one member of the Audit Committee by the rules of the Nasdaq Global Select Market due to his experience and background. Our board of directors has also determined that Mr. Wilson qualifies as an "audit committee financial expert" under the rules and regulations of the SEC.

        The Audit Committee oversees our accounting and financial reporting processes and the audits of our financial statements and, in that regard, assists our board of directors in its oversight of the integrity of our financial statements, the selection, engagement, management and performance of our independent auditor that audits and reports on our consolidated financial statements, the performance of our internal audit function, the review of reports of bank regulatory agencies and monitoring management's compliance with the recommendations contained in those reports and our compliance with legal and regulatory requirements related to our financial statements and reporting. Among other things, our Audit Committee has responsibility for:

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selecting and reviewing the performance of our independent auditor and approving, in advance, all engagements and fee arrangements;

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reviewing reports from the independent auditor regarding its internal quality control procedures and any material issues raised by the most recent internal quality-control or peer review or by governmental or professional authorities, and any steps taken to deal with such issues;

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reviewing the independence of our independent auditor and setting policies for hiring employees or former employees of our independent auditor and for audit partner rotation and independent auditor rotation in accordance with applicable laws, rules and regulations;

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resolving any disagreements regarding financial reporting between management and the independent auditor, and reviewing with our independent auditor any audit problems, disagreements or difficulties and management's response thereto;

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overseeing our internal audit function;

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reviewing operating and control issues identified in internal audit reports, management letters, examination reports of regulatory agencies and monitoring management's compliance with recommendations contained in those reports;

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meeting with management and the independent auditor to review the effectiveness of our system of internal control and internal audit procedures, and to address any deficiencies in such procedures;

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monitoring management's compliance with all applicable laws, rules and regulations;

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reviewing regulatory authorities' examination reports pertaining to the Company or our subsidiaries;

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reviewing and overseeing all related person transactions in accordance with our policies and procedures;

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reviewing our earnings releases and reports filed with the SEC;

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preparing the Audit Committee report required by SEC rules to be included in the proxy statement relating to our annual meeting of shareholders;

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reviewing the adequacy and effectiveness of our accounting and financial controls, including guidelines and policies for assessing and managing our risk exposure;

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•

establishing and overseeing procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and for the confidential anonymous submission by Company employees of concerns regarding questionable accounting or auditing matters;

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conducting an annual evaluation of the performance of the Audit Committee and the adequacy of its charter and recommending to our board of directors any changes that it deems necessary; and

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handling such other matters that are specifically delegated to the Audit Committee by our board of directors from time to time.

        Our board of directors will adopt a written charter, which sets forth the committee's duties and responsibilities. The charter of the Audit Committee will be available on our website at www.communitybankoftx.com upon completion of this offering.

        Compensation Committee.    The members of our Compensation Committee are Messrs. Havard (Chairman), Lott, Penland, Reaud and Swinbank. Our board of directors has evaluated the independence of each of the members of our Compensation Committee and has affirmatively determined that each of the members of our Compensation Committee meets the definition of an "independent director" under Nasdaq Global Select Market rules.

        With the exception of Mr. Reaud, our board of directors has also determined that each of the members of the Compensation Committee qualifies as a "nonemployee director" within the meaning of Rule 16b-3 under the Exchange Act and an "outside director" within the meaning of Section 162(m) of the Internal Revenue Code. All compensation, equity awards and transactions subject to Section 162(m) of the Internal Revenue Code or Section 16 of the Exchange Act will be approved by a committee or subcommittee of the board of directors that is composed solely of two or more "non employee directors" or "outside directors," as applicable.

        The Compensation Committee assists our board of directors in its oversight of our overall compensation structure, policies and programs and assessing whether such structure establishes appropriate incentives and meets our corporate objectives, the compensation of our executive officers and the administration of our compensation and benefit plans.

        Among other things, our Compensation Committee has responsibility for:

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reviewing and determining, and recommending to our board of directors for its confirmation, the annual compensation, annual incentive opportunities and any other matter relating to the compensation of our executive officers; all employment agreements, severance or termination agreements, change in control agreements or similar agreements proposed to be entered into between any executive officer and us; and modifications to our philosophy and compensation practices relating to compensation of our directors and management;

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reviewing and determining, and recommending to our board of directors for its confirmation, the establishment of performance measures and the applicable performance targets for each performance-based cash and equity incentive award to be made under any benefit plan;

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taking all actions required or permitted under the terms of our benefit plans, with separate but concurrent authority, and reviewing at least annually the overall performance, operation and administration of our benefit plans;

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reviewing and recommending action by our board of directors with respect to various other matters in connection with each of our benefit plans;

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reviewing with our Chief Executive Officer the compensation payable to employees other than our executive officers, including equity and non-equity incentive compensation and other benefits and our total incentive compensation program envisioned for each fiscal year;

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consulting with our Chief Executive Officer regarding a succession plan for our executive officers, including our Chief Executive Officer, and the review of our leadership development process for senior management positions;

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reviewing the performance of our executive officers for each fiscal year;

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reviewing annually and recommending to our board of directors the non-management director compensation program for each year;

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retaining, or obtaining the advice of, such compensation consultants, legal counsel or other advisers as the Compensation Committee deems necessary or appropriate for it to carry out its duties, with direct responsibility for the appointment, compensation and oversight of the work of such consultant, counsel or adviser;

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overseeing and making recommendations to our board of directors regarding the Company's compliance with SEC rules and regulations regarding shareholder approval of certain executive compensation matters, including advisory votes on executive compensation and golden parachute compensation and approval of equity compensation plans;

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conducting an annual evaluation of the performance of the Compensation Committee and the adequacy of its charter and recommending to our board of directors any changes that it deems necessary; and

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handling such other matters that are specifically delegated to the Compensation Committee by our board of directors from time to time.

        Our board of directors will adopt a written charter, which sets forth the committee's duties and responsibilities. The charter of the Compensation Committee will be available on our website at www.communitybankoftx.com upon completion of this offering.

        Corporate Governance and Nominating Committee.    The members of our Corporate Governance and Nominating Committee are Messrs. Williams (Chairman), Havard, Lott, Morgan, Penland, Reaud, Swinbank and Wilson. Our board of directors has evaluated the independence of each of the members of our Corporate Governance and Nominating Committee and has affirmatively determined that each of the members of our Corporate Governance and Nominating Committee meets the definition of an "independent director" under Nasdaq Global Select Market rules.

        The Corporate Governance and Nominating Committee assists our board of directors in its oversight of identifying and recommending persons to be nominated for election as directors and to fill any vacancies on our board of directors, monitoring the composition and functioning of the standing committees of our board of directors, developing, reviewing and monitoring our corporate governance policies and practices, and otherwise taking a leadership role in shaping the corporate governance of the Company.

        Among other things, our Corporate Governance and Nominating Committee is responsible for:

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reviewing the performance of our board of directors and each of its committees;

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identifying, assessing and determining the qualification, attributes and skills of, and recommending, persons to be nominated by our board of directors for election as directors and to fill any vacancies on our board of directors;

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reviewing the background, qualifications and independence of individuals being considered as director candidates, including persons proposed by our shareholders;

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reviewing and recommending to our board of directors each director's suitability for continued service as a director upon the expiration of his or her term and upon any material change in his or her status;

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reviewing the size and composition of our board of directors as a whole, and recommending any appropriate changes to reflect the appropriate balance of required independence, knowledge, experience, skills, expertise and diversity;

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monitoring the function of our standing committees and recommending any changes, including the director assignments, creation or elimination of any committee;

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developing, reviewing and monitoring compliance with our corporate governance guidelines and policies and the corporate governance provisions of the federal securities laws and the listing rules applicable to us;

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investigating any alleged violations of such guidelines and the applicable corporate governance provisions of federal securities laws and listing rules, and reporting such violations to our board of directors with recommended corrective actions;

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reviewing our corporate governance practices in light of best corporate governance practices among our peers and determining whether any changes in our corporate governance practices are necessary;

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considering any resignation tendered to our board of directors by a director and recommending the acceptance of such resignation if appropriate;

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considering questions of possible conflicts of interest involving directors, including operations that could be considered competitive with our operations or otherwise present a conflict of interest;

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reviewing all related person transactions in accordance with our policy and procedures;

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overseeing our director orientation and continuing education programs for our board of directors;

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reviewing its charter and recommending to our board of directors any modifications or changes; and

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handling such other matters that are specifically delegated to the Corporate Governance and Nominating Committee by our board of directors from time to time.

        Our board of directors will adopt a written charter, which sets forth the committee's duties and responsibilities. The charter of the Corporate Governance and Nominating Committee will be available on our website at www.communitybankoftx.com upon completion of this offering.

        In carrying out its functions, the Corporate Governance and Nominating Committee will develop qualification criteria for all potential nominees for election, including incumbent directors, board nominees and shareholder nominees to be included in the Company's future proxy statements. These criteria may include the following attributes:

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adherence to high ethical standards and high standards of integrity;

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sufficient educational background, professional experience, business experience, service on other boards of directors and other experience, qualifications, diversity of viewpoints, attributes and skills that will allow the candidate to serve effectively on our board of directors and the specific committee for which he or she is being considered;

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evidence of leadership, sound professional judgment and professional acumen;

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evidence the nominee is well recognized in the community and has a demonstrated record of service to the community;

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a willingness to abide by each published code of conduct or ethics for the Company and to objectively appraise management performance;

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the ability and willingness to devote sufficient time to carrying out the duties and responsibilities required of a director;

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any related person transaction in which the candidate has or may have a material direct or indirect interest and in which we participate; and

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the fit of the individual's skills and personality with those of other directors and potential directors in building a board of directors that is effective, collegial and responsive to the needs of the Company and the interests of our shareholders.

        The Corporate Governance and Nominating Committee will also evaluate potential nominees for our board of directors to determine if they have any conflicts of interest that may interfere with their ability to serve as effective board members and to determine whether they are "independent" in accordance with applicable SEC and Nasdaq Global Select Market rules (to ensure that, at all times, at least a majority of our directors are independent). Although we do not have a separate diversity policy, the committee considers the diversity of the Company's directors and nominees in terms of knowledge, experience, skills, expertise and other demographics that may contribute to our board of directors.

        Prior to nominating or, if applicable, recommending an existing director for re-election to our board of directors, the Corporate Governance and Nominating Committee will consider and review the following attributes with respect to each existing director:

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attendance and performance at meetings of our board of directors and the committees on which such director serves;

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length of service on our board of directors;

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experience, skills and contributions that the existing director brings to our board of directors;

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independence and any conflicts of interest; and

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any significant change in the director's status, including the attributes considered for initial membership on our board of directors.

Code of Business Conduct and Ethics

        Our board of directors has adopted a Code of Business Conduct and Ethics that applies to all of our directors, officers and employees. The Code of Business Conduct and Ethics sets forth the standard of conduct that we expect all of our directors, officers and employees to follow, including our Chairman, President and Chief Executive Officer and Chief Financial Officer. Our Code of Business Conduct and Ethics will be available on our website at www.communitybankoftx.com upon completion of this offering. We expect that any amendments to the Code of Business Conduct and Ethics, or any waivers of its requirements, will be disclosed on our website, as well as by any other means required by Nasdaq Global Select Market rules or the SEC.

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EXECUTIVE COMPENSATION

        Our named executive officers for the year ended December 31, 2016, which consist of our Chief Executive Officer and our two other most highly compensated executive officers who were serving as executive officers as of December 31, 2016, are as follows:

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Robert R. Franklin, Jr.—Chairman, President and Chief Executive Officer

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J. Pat Parsons—Vice Chairman

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Robert T. Pigott, Jr.—Chief Financial Officer

Summary Compensation Table

        The following table presents summary information regarding the total compensation awarded to, earned by, and paid to our named executive officers for services rendered in all capacities during the fiscal year ended December 31, 2016. Except as set forth in the notes to the table, all cash compensation for each of our named executive officers was paid by the Bank, where Mr. Franklin, Mr. Parsons and Mr. Pigott each serve in the same capacity. Narrative disclosure regarding the compensation elements set forth below follows this table.

Name and Principal Position	Year		Salary ($)		Nonequity Incentive Plan Compensation ($)(1)		Nonqualified Deferred Compensation Earnings ($)(2)		All Other Compensation ($)			Total ($)
Robert R. Franklin, Jr.		2016		450,000		600,000		6,471		62,907	(3)		1,112,907
Chairman of the Board, President and Chief Executive Officer
J. Pat Parsons		2016		300,000		450,000		14,391		188,432	(4)		938,432
Vice Chairman
Robert T. Pigott, Jr.		2016		245,864		125,000		—		44,226	(5)		415,090
Chief Financial Officer

(1)

The amounts in this column represent the aggregate amount of annual discretionary cash bonuses earned by our named executive officers for fiscal year 2016 performance. For Messrs. Franklin and Parsons, 75% of the amount reported was paid in February 2017, and the remaining 25% will be paid (plus interest accrued at the rate of 7% per year) in February 2019, subject to their continuing employment through such date.

(2)

Represents above-market earnings credited in fiscal year 2016 to deferred compensation and holdback bonus arrangements.

(3)

This amount includes $24,250 of director fees, $12,692 of country club dues, $15,900 of matching contributions to Mr. Franklin's 401(k) account, $750 of contributions to Mr. Franklin's health savings account, $2,150 of contribution for annual physical, $3,326 of life insurance premiums and $3,839 attributable to the use of a Company car.

(4)

This amount includes $24,250 of director fees, $15,900 of matching contributions to Mr. Parsons' 401(k) account, $2,220 of contribution towards Mr. Parsons' home security system, $6,401 of life insurance premiums and $7,313 attributable to the use of a Company car. This amount additionally reflects the cash compensation received by Mr. Parsons pursuant to his employment agreement which entitles him to receive $100,000 annually for a period of 10 years upon reaching the age of 65 and the earnings of $32,348 on Mr. Parsons' deferred compensation arrangement in fiscal 2016.

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(5)

This amount includes $24,250 for services advising the board of directors, $15,900 of matching contributions to Mr. Pigott's 401(k) account, $750 of contributions to Mr. Pigott's health savings account and $3,326 of life insurance premiums.

Narrative Description to the Summary Compensation Table for the 2016 Fiscal Year

        The compensation reported in the Summary Compensation Table above is not necessarily indicative of how we will compensate our named executive officers in the future. We have begun the process of reviewing our executive compensation program with the goal of modifying it to be more suitable for a public company. To aid in this process, we have engaged Hunt Financial Group, or Hunt, a professional services firm, as our compensation consultant. The process of modifying our executive compensation program is still underway, but we have received recommendations from Hunt that we expect will be used to implement new compensation arrangements in connection with this offering. The following discussion describes the elements of our fiscal year 2016 executive compensation program and identifies any changes that are contemplated to be made in connection with this offering.

Base Salary

        Each named executive officer's base salary is a fixed component of compensation for each year for performing specific job duties and functions. Historically, we have established annual base salary rates for Messrs. Franklin, Parsons and Pigott, subject in each case to their employment agreements, at a level necessary to retain the individual's services and we have reviewed base salaries on an annual basis at the end of each year, with adjustments implemented at the beginning of the next year. We have historically made adjustments to the base salary rates of the named executive officers upon consideration of any factors that our board of directors deems relevant, including but not limited to (a) any increase or decrease in the executive's responsibilities, (b) the executive's job performance, and (c) the level of compensation paid to executives of other companies with which we compete for executive talent, as estimated based on publicly available information and the experience of members of the board of directors and management.

        In connection with this offering, the board of directors analyzed the appropriateness of the base salary for each of our named executive officers in light of the base salaries of other executives in the peer group that we identified with the assistance of Hunt, both on a stand-alone basis and as a component of total compensation. This review resulted in no change to annual base salaries for each of our named executive officers, which, effective upon the closing of the offering will continue to be $450,000 for Mr. Franklin, $300,000 for Mr. Parsons and $245,684 for Mr. Pigott.

Discretionary Bonus

        Historically, our annual cash bonus awards for named executive officers have been discretionary awards awarded by the board of directors after the end of each fiscal year. The determination of the amount of these discretionary cash bonus awards, if any, has been made based on an overall assessment of our performance in light of overall market conditions, along with these named executive officers' individual performance, for the fiscal year. The annual bonuses earned by Messrs. Franklin and Parsons have historically been paid in two installments, with 75% of the approved bonus amount paid in the first quarter of the calendar year following the year in which the bonus was earned and the remaining 25% paid (with interest accrued at the rate of 7% per year) in February of the third calendar year following the year in which the bonus was earned, subject to the named executive officer's continuing employment with us through such date.

        We intend to continue to provide annual incentive cash bonuses to reward achievement of financial or operational goals so that total compensation reflects actual company and individual performance. Following the conclusion of the review by our board of directors of our compensation policies with data

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supplied by Hunt, our annual bonus program may change. We expect that our new compensation committee may establish performance goals to be used following the offering in determining amounts the cash bonuses that may become payable for future performance periods. However, no decisions have yet been made regarding the bonus program structure that will be in place following our initial public offering.

Employment Agreements with Executive Officers

        We have entered into employment agreements with each of our named executive officers. The following is a summary of the material terms of each such agreement.

Employment Agreement with Robert R. Franklin, Jr.

        We entered into an employment agreement with Mr. Franklin on March 6, 2013, pursuant to which he serves as our President and Chief Executive Officer and as Chairman and Chief Executive Officer of the Bank. In connection with this offering, we and Mr. Franklin agreed to amend and restate his employment agreement effective as of the effective date of the registration statement of which this prospectus forms a part. His amended and restated employment agreement (which has an initial term of five years that extends for successive one-year renewal terms unless either party gives 60-days' advance notice of non-renewal) provides that Mr. Franklin will continue to serve as our President and Chief Executive Officer and the Bank's Chief Executive Officer, and as a member of our board of directors (subject to re-election by our shareholders) and the board of directors of the Bank. As consideration for these services, the amended and restated employment agreement provides Mr. Franklin with the following compensation and benefits:

•

A minimum annual base salary of $450,000, subject to annual review by our Compensation Committee.

•

Annual cash performance bonus opportunity in the amount of 25% of base salary.

•

An award of 30,000 shares of restricted stock, after giving effect to the 2-for-1 stock split described herein (subject to adjustment for any stock splits, etc.), under our 2017 Omnibus Incentive Plan. These shares will vest in five equal annual installments beginning on the first anniversary of the grant date of the award, subject to Mr. Franklin's continuous employment through each vesting date.

•

Participation in a Supplemental Executive Retirement Plan, or SERP, to be adopted and maintained by the Bank. On or before March 15 of each calendar year during the term of the amended and restated employment agreement beginning with the 2018 calendar year, we will credit Mr. Franklin's notional account under the SERP with an amount, if any, approved by our Compensation Committee in its sole discretion and in an amount no less favorable in the aggregate than that provided to any of our other senior executive officers. For the 2018 calendar year, the amended and restated employment agreement provides that Mr. Franklin's notional account under the SERP will be credited with the amount of $200,000.

•

Certain severance benefits in the event of a qualifying termination of employment (including in connection with a change of control). See "—Potential Payments upon a Termination or a Change in Control."

•

Certain other employee benefits and perquisites, including a company-provided car and reimbursement of country club dues.

        Pursuant to the amended and restated employment agreement, Mr. Franklin will be subject to a confidentiality covenant, a two-year post-termination non-competition covenant and a two-year post-termination non-solicitation covenant.

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Employment Agreement with J. Pat Parsons

        We entered into an employment agreement with Mr. Parsons on February 28, 2008 and May 21, 2008 (which was amended on December 30, 2008 and March 6, 2013), pursuant to which he serves as the Vice Chairman of our board of directors and as Vice Chairman of the board of directors of the Bank. The employment agreement provides for an initial term of five years and automatically renews each year. Pursuant to the employment agreement, Mr. Parsons is entitled to an annual base salary of $300,000, subject to annual review by our board of directors, and is eligible to receive a discretionary bonus payment for each fiscal year. Mr. Parsons is also eligible to receive employee benefits, fringe benefits, and perquisites in accordance with the employment agreement. In addition, Mr. Parsons' employment agreement provides for certain severance benefits in the event of a qualifying termination of employment and certain payments in connection with a "change of control" of the Company. See "—Potential Payments upon a Termination of Employment or a Change in Control." Pursuant to the employment agreement, Mr. Parsons is eligible to receive an additional annual payment of $100,000 for a period of 10 years upon reaching the age of 65, subject to certain restrictions.

Employment Agreement with Robert T. Pigott, Jr.

        We entered into an employment agreement with Mr. Pigott on March 6, 2013, pursuant to which he serves as our Chief Financial Officer and the Chief Financial Officer of the Bank. The employment agreement provides for an initial term of five years and automatic renewals thereafter for successive one-year terms, unless either party provides notice of non-renewal at least 60 days prior to the renewal date. Pursuant to the employment agreement, Mr. Pigott is entitled to an annual base salary of $225,000, subject to annual review by our board of directors, and is eligible to receive a discretionary bonus payment for each fiscal year. Mr. Pigott is also eligible to receive employee benefits, fringe benefits, and perquisites in accordance with the employment agreement. In addition, Mr. Pigott's employment agreement provides for certain severance benefits in the event of a qualifying termination of employment. See "—Potential Payments upon a Termination of Employment or a Change in Control."

Deferred Compensation Arrangements under Annual Bonus Plan

        The Bank had in the past established unfunded deferred compensation arrangements with executive officers at the Bank, including Mr. Parsons, and highly compensated employees who contributed to the continued growth, development and future business success of the Bank. Pursuant to these arrangements we contributed between 25% and 33% of the incentive bonus amount into a deferred compensation account. Since 2014, the participants in these deferred compensation arrangements have been prohibited from further contributing to these arrangements. Despite the restriction on further contributions, we recorded a continuing liability under these arrangements of approximately $2,013,000 for the year ended December 31, 2016. Mr. Parsons' deferred compensation account continues to hold the amounts deferred in previous years and the entire amount (plus interest accrued at the rate of 7% per month) will become payable on March 31, 2018.

Employee Retirement Benefit Plan

        Our named executive officers are each eligible to participate in our 401(k) plan, which is designed to provide retirement benefits to all eligible employees. Our 401(k) plan provides employees with the opportunity to save for retirement on a tax-deferred basis, and permits employees to defer between 1% and 100% of eligible compensation, subject to statutory limits. Under the 401(k) plan, we may make discretionary matching contributions or any additional contributions.

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Outstanding Equity Awards at Fiscal Year-End

        The following table sets forth information relating to the unexercised options held by our named executive officers as of December 31, 2016 granted under the 2006 Plan. Under both the 2006 Plan and the 2014 Plan, all of the stock options were granted with a per share exercise price equal to the fair market value of our common stock on the grant date, except for an employee who owns more than 10% of total combined voting power of the Company or the Bank, whose exercise price would then be at least 110% of the fair market value on the date of the grant. There were no options granted during the fiscal year ended December 31, 2016. Narrative disclosure regarding awards made pursuant to the Company's equity compensation plans are set forth below following this table.

	Options Awards
Name	Number of Securities Underlying Unexercised Options (exercisable)			Number of Securities Underlying Unexercised Options (unexercisable)		Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options		Option Exercise Price		Option Expiration Date
Robert T. Pigott, Jr.		9,320	(1)		—		—	$	10.73		12/12/2021
Robert T. Pigott, Jr.		8,834	(2)		—		—	$	11.32		12/19/2022

(1)

Options granted on December 13, 2011 and, pursuant to the merger with VB Texas, Inc., vested on July 22, 2013.

(2)

Options granted on December 20, 2012 and, pursuant to the merger with VB Texas, Inc., vested on July 22, 2013.

VB Texas, Inc. 2006 Stock Option Plan

        In connection with our merger with VB Texas, Inc., we assumed the VB Texas, Inc. 2006 Stock Option Plan, or the 2006 Plan, and each outstanding option to acquire shares of VB Texas, Inc. common stock that was outstanding at the effective time of the merger was converted into an option to purchase our common stock equal to the number of shares of VB Texas, Inc. common stock into which such options were exercisable immediately before the effective time multiplied by an exchange ratio. All of these options under the 2006 Plan became fully vested and immediately exercisable at the time of the merger with VB Texas, Inc. As of the date of this prospectus, there were options outstanding to acquire 157,314 shares of our common stock under the 2006 Plan. The 2006 Plan expired by its terms on October 25, 2016, and no additional options may be granted under its terms.

        As of December 31, 2016, the VB Texas, Inc., 2011 Stock Option Plan that the Company had assumed in connection with our merger of equals with VB Texas, Inc., was in existence. However, it has since been terminated.

CBFH, Inc. 2014 Stock Option Plan

        In May 2014 our board of directors adopted the CBFH, Inc. 2014 Stock Option Plan, or the 2014 Plan, which was approved by our shareholders in May 2014. The 2014 Plan was adopted to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentives to selected employees and to promote the success of the Company's business by offering these individuals an opportunity to acquire a proprietary interest in the success of the Company, or to increase this interest, by permitting them to receive shares of common stock of the Company. The maximum number of shares which may be issued pursuant to grants under the 2014 Plan is 1,127,200 shares of our common stock. As of the date of this prospectus, there were options outstanding to acquire 138,000 shares of our common stock under the 2014 Plan.

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CBTX, Inc. 2017 Omnibus Incentive Plan

Introduction

        In September 2017 our shareholders approved the CBTX, Inc. 2017 Omnibus Incentive Plan, or the 2017 Plan, which was previously approved by our board of directors. The purposes of the 2017 Plan will be to provide additional incentives to selected officers, employees, non-employee directors and consultants, to strengthen their commitment, motivate them to faithfully and diligently perform their responsibilities and to attract and retain competent and dedicated persons who are essential to the growth and success of our business and whose efforts will impact our long-term growth and profitability.

Summary of Expected Plan Terms

        Types of Awards.    The 2017 Plan will provide for the issuance of stock options, stock appreciation rights, or SARs, restricted stock, restricted stock units, or RSUs, stock bonuses, other stock-based awards and cash awards.

        Shares Available; Certain Limitations.    We expect to reserve for issuance under the 2017 Plan 600,000 shares of our common stock. When Section 162(m) of the Internal Revenue Code (Code) becomes applicable to us, (i) no individual will be granted options or SARs for more than 100,000 shares during any calendar year and (ii) no individual who is likely to be a "covered employee" for purposes of Section 162(m) of the Code will be granted either restricted stock, RSUs, a stock bonus, or other stock-based awards for more than 100,000 shares during any calendar year or a cash award in excess of $1,500,000 during any calendar year. No non-employee director may receive awards under the 2017 Plan during any calendar year covering more than 30,000 shares, and no non-employee director may receive cash awards under the 2017 Plan during any single calendar year in excess of $500,000.

        The total number of shares reserved for issuance and the individual award limitations are subject to equitable adjustment upon the occurrence of any extraordinary dividend or other distribution, recapitalization, stock split, reorganization, merger, consolidation, combination, repurchase, or share exchange, or other similar corporate transaction or event.

        Any shares subject to an award that remain unissued upon the cancellation or termination of the award will again become available for grant under the 2017 Plan. In addition, shares that are exchanged by a participant or withheld as payment in connection with any option or SAR under the 2017 Plan, as well as any shares exchanged by a participant or withheld to satisfy tax withholding obligations related to any option or SAR, will be available for subsequent awards under the 2017 Plan. If an award is denominated in shares, but settled in cash, the number of shares previously subject to the award will again be available for grants under the 2017 Plan. If an award can only be settled in cash, it will not be counted against the total number of shares available for grants under the 2017 Plan.

        Administration.    The 2017 Plan will be administered by our board of directors, or if our board of directors does not administer the 2017 Plan, a committee of our board of directors that complies with the applicable requirements of Section 162(m) of the Code, Section 16 of the Exchange Act and any other applicable legal or stock exchange listing requirements (the board or committee being sometimes referred to as the plan administrator).

        Eligibility.    Our officers, including the named executive officers listed in the Summary Compensation Table, employees, non-employee directors and consultants are eligible to receive awards under the 2017 Plan at the discretion of the plan administrator. It is expected that approximately individuals will be eligible to participate in the 2017 Plan.

        Exercisability and Vesting.    Awards will become exercisable or otherwise vest at the times and upon the conditions that the plan administrator may determine, as reflected in an applicable award

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agreement. The plan administrator has the authority to accelerate the vesting and/or exercisability of any outstanding award at such times and under such circumstances as it deems appropriate.

        Performance Goals.    The vesting of awards that are intended to qualify as performance-based compensation for purposes of Section 162 (m) of the Code will be based upon one or more of the following business criteria: earnings, including one or more of operating income, earnings before or after taxes, earnings before or after interest, depreciation and amortization, adjusted EBITDA, economic earnings, or extraordinary or special items or book value per share (which may exclude nonrecurring items); pre-tax income, after-tax income or adjusted net income; earnings per share (basic or diluted); operating profit; revenue, revenue growth or rate of revenue growth; return on assets (gross or net), return on investment, return on capital, or return on equity; returns on sales or revenues; operating expenses; stock price appreciation; cash flow, free cash flow, cash flow return on investment (discounted or otherwise), net cash provided by operations, or cash flow in excess of cost of capital; implementation or completion of critical projects or processes; cumulative earnings per share growth; operating margin or profit margin; cost targets, reductions and savings, productivity and efficiencies; strategic business criteria, consisting of one or more objectives based on meeting specified market penetration, geographic business expansion, customer satisfaction, employee satisfaction, human resources management, supervision of litigation and/or information technology goals, and goals relating to acquisitions, divestitures, joint ventures and similar transactions, and budget comparisons; personal professional objectives, including any of the foregoing performance goals, the implementation of policies and plans, the negotiation of transactions, the development of long term business goals, formation of joint ventures, research or development collaborations, and the completion of other corporate transactions; and any combination of, or a specified increase in, any of the foregoing.

        The business criteria may be expressed in terms of attaining a specified level of the particular criteria or the attainment of a percentage increase or decrease in the particular criteria, and may be applied to the Company or an affiliate, or a division or strategic business unit of the Company or any affiliate, or may be applied to our performance relative to a market index, a group of other companies or a combination thereof, all as determined by the compensation committee of our board of directors. The business criteria may also be subject to a threshold level of performance below which no payment will be made, levels of performance at which specified payments will be made, and a maximum level of performance above which no additional payment will be made. Where applicable, business criteria will be determined in accordance with generally accepted accounting principles (with such adjustments as our compensation committee may prescribe) and achievement of the criteria will require certification by the compensation committee. The compensation committee will have the authority under the 2017 Plan to make equitable adjustments to the business criteria in recognition of unusual or non-recurring events, in response to changes in applicable laws or regulations, or to account for items of gain, loss or expense determined to be extraordinary or unusual in nature or infrequent in occurrence or related to the disposal of a segment of a business or related to a change in accounting principles.

        Stock Options.    Options entitle the participant to purchase shares during a specified period at a purchase price specified by the plan administrator (at a price not less than 100% of the fair market value of a share on the day the option is granted). Each option will have a maximum term of ten years from the date of grant, or such lesser period as the plan administrator may determine. Each option will be identified in the applicable award agreement as either a non-qualified stock option or an option intended to qualify as an "incentive stock option," or ISO, under Section 422 of the Code. ISOs are required to have specific terms contained in Section 422 of the Code, which will be set forth in the applicable award agreement. Options may not be re-priced to lower the exercise price or be cancelled in exchange for another type of award or cash payment without shareholder approval.

        Stock Appreciation Rights.    A SAR may be granted in connection with an option, either at the time of grant or at any time thereafter during the term of the option, or may be granted unrelated to an

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option. SARs generally permit the participant to receive cash or shares equal to the difference between the exercise price of the SAR (which must equal or exceed the fair market value of the common stock at the date of grant) and the fair market value of the related shares on the date of exercise for a period of no more than ten years. SARs may not be re-priced to lower the exercise price or be cancelled in exchange for another type of award or cash payment without shareholder approval.

        Restricted Stock.    The plan administrator may grant restricted shares to such persons, in such amounts, and subject to such terms and conditions (including the attainment of performance goals) as it may determine in its discretion. Except for restrictions on transfer and such other restrictions as the plan administrator may impose, participants will have all the rights of a shareholder with respect to the restricted stock.

        Restricted Stock Units.    A restricted stock unit award is an award of the right to receive an amount of cash or shares at a future date based upon the value of the shares at the time of vesting of the award, or if the award is denominated in cash, the right to receive an amount of cash per unit that is determined by the plan administrator.

        Other Stock-Based Awards.    Other stock-based awards, valued in whole or in part by reference to, or otherwise based on, shares (including dividend equivalents) may be granted under the 2017 Plan. The plan administrator will determine the terms and conditions of these awards, including the number of shares to be granted pursuant to the award, the manner in which the award will be settled (e.g., in shares, cash or other property), and the conditions to vesting and payment of the award (including the achievement of performance objectives).

        Stock Bonus Awards; Cash Awards.    Stock bonuses payable in fully vested shares and awards that are payable solely in cash may also be granted under the 2017 Plan.

        Change in Control.    Unless otherwise provided by the plan administrator or set forth in an award agreement or otherwise, following a "change in control" of the Company (as described below), (i) each outstanding award that is assumed or substituted in connection with the change in control will become fully vested and exercisable, free of all applicable restrictions, and all applicable performance objectives will be deemed to be achieved at target levels if the participant's employment or service is terminated pursuant to a qualifying termination (as defined in the 2017 Plan) within 24 months following the change in control, and (ii) each outstanding award that is not assumed or substituted in connection with the change in control will become fully vested and exercisable, free of all applicable restrictions, and all applicable performance objectives will be deemed to be achieved at target levels immediately upon the occurrence of the change in control. In addition, the plan administrator may, in its discretion, cancel outstanding awards in exchange for a payment in cash, shares, or any combination of cash or shares, equal to the value of the award based on the price per share received by other shareholders.

        For purposes of the 2017 Plan a "change in control" means, in general: (i) a person or entity acquires securities of ours representing 50% or more of our combined voting power; (ii) an unapproved change in the majority membership of our board of directors; (iii) consummation of a merger or consolidation of us or any of our subsidiaries, other than (x) a merger or consolidation that results in both our voting securities continuing to represent more than 50% of the combined voting power of the surviving entity or its parent and the individuals constituting our board of directors immediately prior to the transaction continuing to constitute at least a majority of the board of the surviving entity or its ultimate parent, or (y) a merger or consolidation effected to implement a recapitalization in which no person or entity acquires 50% or more of our combined voting power; or (iv) shareholder approval of a plan of our complete liquidation or dissolution or the consummation of an agreement for the sale or disposition of all or substantially all of our assets, other than a sale or disposition to an entity, at least 50% of the combined voting power of which is owned by our shareholders in substantially the same proportions as their ownership of us immediately prior to such sale.

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        Amendment and Termination of the 2017 Plan.    The 2017 Plan may be amended by our board of directors, subject to shareholder approval where necessary to satisfy legal or regulatory requirements. The 2017 Plan will terminate not later than the tenth anniversary of its effective date, but awards granted before the termination of the 2017 Plan may extend beyond that date in accordance with their terms.

        Form S-8.    We intend to file with the SEC a registration statement on Form S-8 covering the shares issuable under the 2017 Plan.

United States Federal Income Tax Consequences of 2017 Plan Awards

        The following is a summary of certain United States federal income tax consequences of awards under the 2017 Plan. It does not purport to be a complete description of all applicable rules, and those rules (including those summarized here) are subject to change.

        Incentive Stock Options.    In general, no taxable income is realized by a participant upon the grant of an ISO. If shares are issued to a participant pursuant to the exercise of an ISO, then, generally (i) the participant will not realize ordinary income with respect to the exercise of the option, (ii) upon sale of the underlying shares acquired upon the exercise of an ISO, any amount realized in excess of the exercise price paid for the shares will be taxed to the participant as capital gain and (iii) we will not be entitled to a deduction. The amount by which the fair market value of the stock on the exercise date of an ISO exceeds the purchase price generally will, however, constitute an item which increases the participant's income for purposes of the alternative minimum tax. However, if the participant disposes of the shares acquired on exercise before the later of the second anniversary of the date of grant or one year after the receipt of the shares by the participant (a "disqualifying disposition"), the participant generally would include in ordinary income in the year of the disqualifying disposition an amount equal to the excess of the fair market value of the shares at the time of exercise (or, if less, the amount realized on the disposition of the shares), over the exercise price paid for the shares. If ordinary income is recognized due to a disqualifying disposition, we would generally be entitled to a deduction in the same amount. Subject to certain exceptions, an ISO generally will not be treated as an ISO if it is exercised more than three months following termination of employment. If an ISO is exercised at a time when it no longer qualifies as an ISO, it will be treated for tax purposes as a non-qualified stock option, as discussed below.

        Non-Qualified Stock Options.    In general, no taxable income will be realized by a participant upon the grant of a non-qualified stock option. Upon exercise of an non-qualified stock option, the participant generally will include in ordinary income at the time of exercise an amount equal to the excess, if any, of the fair market value of the shares at the time of exercise over the exercise price paid for the shares. At the time the participant recognizes ordinary income, we generally will be entitled to a deduction in the same amount. In the event of a subsequent sale of shares received upon the exercise of the option, any appreciation after the date on which taxable income is realized by the participant in respect of the option exercise will be taxed as capital gain in an amount equal to the excess of the sales proceeds for the shares over the participant's basis in such shares. The participant's basis in the shares will generally equal the amount paid for the shares plus the amount included in ordinary income by the participant upon exercise of the option.

        Stock Appreciation Rights.    In general, no taxable income will be realized by a participant upon the grant of a SAR. Upon the settlement of a SAR, the participant will recognize ordinary income equal to the aggregate value of the payment received, and we generally will be entitled to a tax deduction at such time in the same amount.

        Restricted Stock.    In general, no taxable income will be realized by a participant upon the grant of restricted stock, unless the participant elects under Section 83(b) of the Code, within thirty days after

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such grant, to recognize ordinary income in an amount equal to the fair market value of the restricted stock at the time of grant, less any amount paid for the shares. If the election is made, the participant will not be allowed a deduction for amounts subsequently required to be returned to us. If the election is not made, the participant will generally recognize ordinary income on the date that the restrictions with respect to the restricted stock lapse, in an amount equal to the fair market value of such shares on such date, less any amount paid for the shares. At the time the participant recognizes ordinary income, we generally will be entitled to a deduction in the same amount. Generally, upon a sale or other disposition of restricted stock with respect to which the participant has recognized ordinary income (i.e., where a Section 83(b) election was previously made or the restrictions were previously removed), the participant will recognize capital gain or loss in an amount equal to the difference between the amount realized on such sale or other disposition and the participant's basis in such shares.

        Restricted Stock Units.    In general, no taxable income will be realized by a participant upon the grant of RSUs. Rather, upon the settlement of the RSUs, the participant will recognize ordinary income equal to the amount of cash or the fair market value of the shares of common stock received, as applicable. We will generally be entitled to a tax deduction at such time equal to the amount of income recognized by the participant.

        Other Awards.    With respect to other awards granted under the 2017 Plan, including stock bonuses, other stock-based award and cash awards, generally when the participant receives payment with respect to an award, the amount of cash and/or the fair market value of any shares of common stock or other property received will be ordinary income to the participant, and we will generally be entitled to a tax deduction in the same amount.

        Section 162(m).    At the time when Section 162(m) of the Code becomes applicable to us, annual compensation in excess of $1 million paid to individuals who are "covered employees" will not be deductible by us unless it is "performance-based compensation." The plan administrator may make awards under the 2017 Plan to eligible participants who are covered employees (or to individuals whom the plan administrator believes may become covered employees) that are intended to qualify as performance-based compensation under Section 162(m) of the Code, to the extent it is applicable to us. To qualify, the exercisability and/or payment of such awards will be subject to the achievement of performance criteria based upon one or more performance goals set forth in the 2017 Plan and to certification of such achievement in writing by the compensation committee of our board of directors. The performance criteria will be established in writing by that committee not later than the time period prescribed under Section 162(m) of the Code.

Potential Payments upon a Termination of Employment or a Change in Control

        Below we have described the severance and other change in control benefits to which our named executive officers would be entitled upon a termination of employment and in connection with a change in control.

Termination of Employment without Cause or Resignation with Good Reason

        The employment agreements with each of our named executive officers provides for severance benefits if we terminate the executive without "cause" or the executive resigns with "good reason" (as each of those terms is defined in the applicable employment agreement), which circumstances we refer to as a "qualifying termination of employment." Upon a qualifying termination of employment, the executive will be entitled to the following payments and benefits under his employment agreement:

•

an amount equal to the accrued but unpaid base salary and unused vacation pay, which we refer to as the "accrued obligations";

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•

a lump sum cash payment consisting of $1,500,000 for Mr. Franklin (unless termination occurs during the 27-month period that begins three months prior to a change in control; see "—Change in Control"); 100% of one year's annual base salary for Mr. Parsons (unless termination occurs due to change of control; see "—Change in Control"); and $550,000 for Mr. Pigott;

•

pro-rata portion of the executive's annual bonus, except for Mr. Parsons, which we refer to as the "unpaid incentive payment";

•

medical benefits coverage for Mr. Franklin and Mr. Pigott and their dependents for 18 months and 24 months, respectively, following the date of termination of employment, and medical benefits coverage for Mr. Parsons and his dependents for the lesser of the period of time that the employment agreement would have been in effect, or 12 months, which we refer to as the "health and welfare benefits"; and

•

Mr. Franklin will fully vest in all outstanding unvested equity awards that would have vested based solely on Mr. Franklin's continued employment (i.e., all time-based equity awards).

Change in Control

Mr. Franklin

        Pursuant to his amended and restated employment agreement, if Mr. Franklin is terminated by us or the Bank other than for "cause" or he resigns for "good reason" (as each of those terms is defined in Mr. Franklin's amended and restated employment agreement) during the 27-month period that begins three months prior to a change in control (as such term is defined in Mr. Franklin's amended and restated employment agreement) and ends 24 months following such change in control, then, in lieu of the $1,500,000 cash severance payment otherwise payable to him, Mr. Franklin will be entitled to receive a cash severance payment equal to the greater of (a) $1,500,000 and (b) the amount equal to three times the sum of his then-current base salary and target annual bonus for the calendar year in which the termination occurs.

Mr. Parsons

        Under his employment agreement, Mr. Parsons is entitled to a lump sum cash payment in an amount equal to 100% of one year's base salary upon termination without "cause" or if he resigns with "good reason," unless the termination occurs during the 180-day period immediately following a "change in control" of the Company (as that term is defined in the employment agreement), in which case Mr. Parsons will be entitled to receive a lump sum cash payment in an amount equal to 150% of one year's base salary.

Compensation of Directors

        We pay our directors based on the director's participation in board of directors meetings held throughout the year, and the Bank pays its directors based on the director's participation in board of directors and committee meetings. During 2016, directors initially received $1,250 per board meeting attended which was increased to $2,500 per board meeting attended in March 2016. Directors also received $1,000 per Bank board meeting attended and $200 per Bank committee meeting attended for their services as directors of the Bank. During 2016, directors also received an additional one-time payment of an amount equivalent to the Bank board meeting fee at Christmas.

        In connection with this offering, we amended our director's compensation program. Pursuant to this change, chairman of each committee will receive a fee of $5,000 per meeting attended, and the other members of each committee will receive a fee of $2,500 per meeting attended.

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        The following table sets forth compensation paid, earned or awarded during 2016 to each of our directors other than Robert R. Franklin, Jr. and Pat Parsons, whose compensation is described above in "Summary Compensation Table." The table also includes compensation earned by each director that is attributable to his service as a director of the Bank.

Name	Fees Earned or Paid in Cash			All Other Compensation		Total Compensation
Tommy W. Lott	$	22,950		$	—	$	22,950
Glen W. Morgan		15,250			—		15,250
Joe E. Penland, Sr.		24,250			—		24,250
Wayne A. Reaud		21,750			—		21,750
Joseph B. Swinbank		32,850			—		32,850
John E. Williams, Jr.		24,250			—		24,250
William E. Wilson, Jr.		14,800	(1)		—		14,800
Sheila G. Umphrey		—	(2)		—		—
Michael A. Havard	$	26,450	(3)	$	—	$	26,450

(1)

This amount represents fees paid to Mr. Wilson for his service as a director of the Bank during 2016. Mr. Wilson joined our board of directors in September 2017.

(2)

Ms. Umphrey joined our board of directors in September 2017 and therefore did not receive any compensation during 2016.

(3)

This amount represents (i) $15,200 for fees paid to Mr. Havard for his service as a director of the Bank during 2016 and (ii) $11,250 for fees paid to Mr. Havard for serving as an advisory director to the Company. Mr. Havard joined our board of directors in September 2017.

        Directors are also entitled to the protection provided by the indemnification provisions in our amended and restated certificate of formation and amended and restated bylaws, and, to the extent they are directors of the Bank, the articles of association and bylaws of CommunityBank of Texas.

Payments to Employees Other than Named Executive Officers Pursuant to this Offering

        VB Texas, Inc. and Vista Bank Texas entered into change of control and non-competition agreements with certain former employees of VB Texas, Inc., who are now employed with the Bank. Under their respective agreements, upon a "change of control" (as that term is defined in the agreements) of the Company or an "involuntary termination" (as that term is defined in the agreements), each of these employees will be entitled to receive an amount equal to two times the sum of his or her (i) base salary plus (ii) the average bonus paid to the officer during the three years preceding the "change of control" or "involuntary termination," as applicable. "Change of control," as that term is defined in the agreements, also includes an initial public offering of common stock by VB Texas, Inc., pursuant to an effective registration statement filed under the Securities Act. As successor to VB Texas, Inc., the Company plans to pay these employees approximately $2.5 million in aggregate upon the completion of this offering.

IPO Awards

        In connection with this offering, our board of directors approved the award of a special one-time grant of 155,110 shares of restricted stock under the 2017 Plan to certain key employees, including Messrs. Franklin, Parsons and Pigott, to be effective when the registration statement of which this prospectus forms a part is declared effective by the SEC. Mr. Franklin will receive an award of 30,000 restricted shares (valued at $            based on the price per share our common stock in the initial public offering), Messrs. Parsons and Pigott will receive awards of 10,000 restricted shares (valued at $            based on the price per share of our common stock in this offering). The award agreements for these awards provide that the shares of restricted stock will vest in equal increments on an annual basis over a five-year period beginning on the first anniversary of the effective date of the registration statement of which this prospectus forms a part.

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SECURITY OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT

        The following table sets forth the beneficial ownership of our common stock, both immediately prior to and immediately after the completion of this offering by:

•

each person known to us to be the beneficial owner of more than five percent of our outstanding common stock;

•

each of our directors and named executive officers; and

•

all directors and executive officers, as a group.

        Beneficial ownership is determined in accordance with the rules of the SEC and generally includes shares over which a person exercises sole or shared voting and/or investment power. Shares of common stock subject to options and warrants currently exercisable or exercisable within 60 days are deemed outstanding for purposes of computing the percentage ownership of the person holding the options or warrants but are not deemed outstanding for purposes of computing the beneficial ownership of any other person. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the tables below have sole voting and investment power with respect to all shares of common stock that they beneficially own, subject to applicable community property laws. Other than the directors and entities affiliated with such directors set forth in the table below, no person is known to us to be the beneficial owner of more than five percent of our outstanding common stock. Unless otherwise noted, the address for each shareholder listed on the table below is: c/o CBTX, Inc., 9 Greenway Plaza, Suite 110, Houston, Texas 77046.

        The table below calculates the percentage of beneficial ownership based on 22,063,072 shares of common stock outstanding as of October 6, 2017 and            shares of common stock outstanding upon completion of this offering, assuming no exercise of the underwriters' option to purchase additional shares, and            shares of our common stock to be outstanding after the completion of this offering, assuming the underwriters exercise in full their option to purchase additional shares. The table below does not reflect shares that may be purchased in this offering by the shareholders listed in the table through the directed share program described under "Underwriting."

	Shares Beneficially Owned Prior to this Offering					Shares Beneficially Owned After Giving Effect to this Offering		Shares Beneficially Owned if Underwriters Exercise Their Option to Purchase Additional Shares
Name of Beneficial Owner	Number		Percentage			Number	Percentage	Number	Percentage
Directors and Named Executive Officers
Robert R. Franklin, Jr.(1)		243,830		1.1	%
Robert T. Pigott, Jr.(2)		50,800		*
Michael A. Havard(3)		40,080		*
Tommy W. Lott		203,200		*
Glen W. Morgan(4)		1,216,000		5.5	%
J. Pat Parsons(5)		111,080		*
Joe Penland, Sr.(6)		1,216,000		5.5	%
Wayne A. Reaud(7)		1,222,000		5.5	%
Joe B. Swinbank(8)		226,060		1.0	%
Sheila G. Umphrey(9)		1,216,080		5.5	%
John E. Williams, Jr.(10)		1,216,000		5.5	%
William E. Wilson, Jr.(11)		32,000		*
All directors and executive officers, as a group (18 persons)(12)		7,126,792		32.2	%

*

Represents beneficial ownership of less than 1%.

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(1)

Includes 243,830 shares held by Mr. Franklin individually. Mr. Franklin has pledged 203,200 shares as collateral to secure outstanding debt obligations. Shares beneficially owned after the completion of this offering include 30,000 shares of restricted stock to be granted to Mr. Franklin in connection with the completion of our initial public offering. The award agreements for this award provide that the shares of restricted stock will vest in equal increments on an annual basis over a five-year period beginning on the first anniversary of the effective date of the registration statement of which this prospectus forms a part.

(2)

Includes (i) 32,646 shares held by Mr. Pigott's individual retirement accounts and (ii) 18,154 shares issuable upon the exercise of stock options within 60 days of October 6, 2017. Shares beneficially owned after the completion of this offering include 10,000 shares of restricted stock to be granted to Mr. Pigott in connection with the completion of our initial public offering. The award agreements for this award provide that the shares of restricted stock will vest in equal increments on an annual basis over a five-year period beginning on the first anniversary of the effective date of the registration statement of which this prospectus forms a part.

(3)

Includes (i) 40,000 shares held by Mr. Havard individually and (ii) 80 shares that Mr. Havard has shared voting and investment power pursuant to a power of attorney.

(4)

Includes (i) 574,974 shares held by Mr. Morgan individually and (ii) 641,026 shares held by the Grace Trust of which Mr. Morgan serves as the trustee.

(5)

Includes (i) 31,080 shares held by Mr. Parsons individually and (ii) 80,000 shares held jointly by Mr. Parsons and his spouse. Shares beneficially owned after the completion of this offering include 10,000 shares of restricted stock to be granted to Mr. Parsons in connection with the completion of our initial public offering. The award agreements for this award provide that the shares of restricted stock will vest in equal increments on an annual basis over a five-year period beginning on the first anniversary of the effective date of the registration statement of which this prospectus forms a part.

(6)

Includes (i) 331,364 shares held by Mr. Penland individually, (ii) 160,000 shares held by the Penland Foundation of which Mr. Penland serves as the trustee and (iii) 724,636 shares held by Tram Road Partners LP of which Mr. Penland is the trustee. Tram Road Partners LP has pledged 724,636 shares as collateral to secure outstanding debt obligations.

(7)

Includes (i) 1,216,000 shares held by Mr. Reaud individually, (ii) 2,000 shares held by the Adriana Victoria Oxford Trust of which Mr. Reaud serves as trustee, (iii) 2,000 shares held by the Alaina Daniell Oxford Trust of which Mr. Reaud serves as trustee and (iv) 2,000 shares held by the Gabriella Elizabeth Oxford Trust of which Mr. Reaud serves as trustee.

(8)

Includes (i) 124,460 shares held by Mr. Swinbank individually and (ii) 101,600 shares held by the JBS/STS Grandchildren's Trust of which Mr. Swinbank has voting power.

(9)

Includes (i) 1,216,000 shares held by the Umphrey II Family Limited Partnership of which Ms. Umphrey is a limited partner and has shared voting and investment power, and (ii) 80 shares held by Ms. Umphrey's spouse individually.

(10)

Mr. Williams has pledged 1,216,000 shares as collateral to secure outstanding debt obligations.

(11)

Includes (i) 24,000 shares held by Mr. Wilson's individual retirement account and (ii) 8,000 shares held by the Caldwell McFadden Mineral Trust of which Mr. Wilson serves as the trustee.

(12)

Includes (i) 7,077,398 shares held by the directors and executive officers and (ii) 49,394 shares issuable upon the exercise of stock options within 60 days of October 6, 2017. Shares beneficially owned after the completion of this offering include 110,000 shares of restricted stock to be granted to our directors and executive officers in connection with the completion of our initial public offering. The award agreements for these awards provide that the shares of restricted stock will vest in equal increments on an annual basis over a five-year period beginning on the first anniversary of the effective date of the registration statement of which this prospectus forms a part. Individuals in this group have separately pledged a total of 2,169,236 shares as collateral to secure outstanding debt obligations of such individuals.

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CERTAIN RELATIONSHIPS AND RELATED PERSONS TRANSACTIONS

        In addition to the compensation arrangements with directors and executive officers described in "Executive Compensation" above, the following is a description of each transaction since January 1, 2014, and each proposed transaction in which:

•

we have been or are to be a participant;

•

the amount involved exceeds or will exceed $120,000; and

•

any of our directors, executive officers or beneficial holders of more than five percent of our capital stock, or any immediate family member of or person sharing the household with any of these individuals (other than tenants or employees), had or will have a direct or indirect material interest.

Shareholders' Agreement

        The Company, Mr. Penland, Mr. Morgan, Mr. Williams, Mr. Reaud, and Ms. Umphrey are party to a shareholders' agreement that, among other things, provides for restrictions on transfer of the common stock and a right of right of first refusal. This shareholders' agreement will terminate upon completion of this offering.

Repurchase of Shares After Exercise of Options

        In February 2016, Mr. Franklin exercised options to purchase 149,260 shares, consisting of 40,630 shares of incentive stock options and 108,360 shares of nonqualified stock options, for an aggregate exercise price of $1,469,465. On March 8, 2016, we repurchased the 108,630 shares that were issued pursuant to the nonqualified stock options from Mr. Franklin for an aggregate price of $1,941,761 at the then current price of $17.88 per share. The net result of the exercise and repurchase was that Mr. Franklin received $472,296 of proceeds from the sale of his stock.

Other Related Party Transactions

        In 2014 and 2015, we hired Decorating Depot, Inc. to provide interior decorating, furniture and accessories for our branch locations. We paid Decorating Depot, Inc. $214,360 and $266,886 in 2014 and 2015, respectively. Decorating Depot, Inc. is wholly-owned by Ms. Umphrey, a member of our board of directors.

        Lindsay, Lindsay & Parsons, Attorneys at Law has represented us in various legal matters. Mr. Parsons is a member of our board of directors and his son is a partner at Lindsay, Lindsay & Parsons, Attorneys at Law. We paid legal fees of $163,425, $130,218 and $79,700 to Lindsay, Lindsay & Parsons, Attorneys at Law for the years ended December 31, 2014, 2015 and 2016, respectively.

        We routinely purchase advertising space in local newspapers in the areas in which the Company operates. The Examiner is the primary local newspaper for the Beaumont, Texas area and is a publication of The Examiner Corporation. Mr. Reaud is the sole shareholder of The Examiner Corporation. We paid The Examiner Corporation the following amounts since January 1, 2014, approximately: $82,782 in fiscal year 2014; $101,011 in fiscal year 2015; $94,336 in fiscal year 2016; and $48,982 in fiscal year 2017 through June 30, 2017.

Ordinary Banking Relationships

        Certain of our officers, directors and principal shareholders, as well as their immediate family members and affiliates, are customers of, or have or have had transactions with, CommunityBank of Texas or us in the ordinary course of business. These transactions include deposits, loans, and other financial services related transactions. Related person transactions are made in the ordinary course of

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business, on substantially the same terms, including interest rates and collateral (where applicable), as those prevailing at the time for comparable transactions with persons not related to us, and do not involve more than normal risk of collectability or present other features unfavorable to us. Our loans and deposits with these parties have been made and accepted in compliance with applicable regulations and our written policies. As of June 30, 2017, we had approximately $157.3 million of loans outstanding to our directors and officers and those of the Bank and we had approximately $69.4 million in unfunded loan commitments to related parties. As of June 30, 2017, no related person loans were categorized as nonaccrual, past due, restructured or potential problem loans. We expect to continue to enter into transactions in the ordinary course of business on similar terms with our officers, directors and principal shareholders, as well as their immediate family members and affiliates. See "Risk Factors—A material portion of our loans and deposits are with related parties and our ability to continue do business with such related parties is highly regulated."

Directed Share Program

        At our request, the underwriters have reserved up to            shares of our common stock offered by this prospectus for sale, at the initial public offering price, to our directors, executive officers, employees and certain other persons who have expressed an interest in purchasing our common stock in this offering. We will offer these shares to the extent permitted under applicable regulations in the United States through a directed share program. See "Underwriting—Directed Share Program."

Policies and Procedures Regarding Related Person Transactions

        Transactions by CommunityBank of Texas or us with related persons are subject to a formal written policy, as well as regulatory requirements and restrictions. These requirements and restrictions include Sections 23A and 23B of the Federal Reserve Act and the Federal Reserve's Regulation W (which govern certain transactions by CommunityBank of Texas with its affiliates) and the Federal Reserve's Regulation O (which governs certain loans by CommunityBank of Texas to its executive officers, directors, and principal shareholders). We have adopted policies to comply with these regulatory requirements and restrictions.

        In addition, our board of directors will adopt a written policy governing the approval of related person transactions that complies with all applicable requirements of the SEC and the Nasdaq Global Select Market concerning related person transactions. Related person transactions are transactions in which we are a participant, the amount involved exceeds $120,000 and a related person has or will have a direct or indirect material interest. Related persons of the Company include directors (including nominees for election as directors), executive officers, beneficial holders of more than five percent of our capital stock and the immediate family members of these persons. Our executive management team, in consultation with outside counsel, as appropriate, will review potential related person transactions to determine if they are subject to the policy. If so, the transaction will be referred to the Audit Committee of the board of directors for approval. The committee of the board of directors shall review the related person transaction in accordance with the criteria set forth in policy, taking into account all of the relevant facts and circumstances available to the committee of the board of directors. Based on the conclusions reached, the committee of the board of directors shall evaluate all options, including, without limitation, approval, ratification, amendment or termination of the related person transaction or, with respect to any related person transaction that is no longer pending or ongoing, rescission and/or disciplinary action. Approval of such transactions shall be given only if it is determined by the committee of the board of directors that such transaction is in, or not inconsistent with, the best interests of the Company and our shareholders. Upon completion of the offering, our Related Person Transactions Policy will be available on our website at https://www.communitybankoftx.com.

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DESCRIPTION OF CAPITAL STOCK

The following descriptions include summaries of the material terms of our amended and restated certificate of formation and our amended and restated bylaws. Reference is made to the more detailed provisions of, and the descriptions are qualified in their entirety by reference to, our amended and restated certificate of formation and our amended and restated bylaws, copies of which will be filed with the SEC as exhibits to the registration statement of which this prospectus is a part, and applicable law.

General

        We are incorporated in the state of Texas. The rights of our shareholders are generally covered by Texas law and our certificate of formation and bylaws (each as amended and restated and in effect as of consummation of this offering). The terms of our capital stock are therefore subject to Texas law, including the TBOC, and the common and constitutional law of Texas.

        Our amended and restated certificate of formation authorizes us to issue up to 90,000,000 shares of common stock, par value $0.01 per share, and 10,000,000 shares of preferred stock, par value $0.01 per share. The authorized but unissued shares of our capital stock are available for future issuance without shareholder approval, unless otherwise required by applicable law or the rules of any applicable securities exchange.

        On September 20, 2017, our board of directors approved a 2-for-1 stock split, whereby each shareholder of our common stock received one additional share of common stock for each share owned as of the record date of September 30, 2017, in the form of a stock dividend that was distributed on October 13, 2017. The effect of the stock dividend has been retroactively applied to all periods presented in this prospectus.

Common Stock

        Shares Outstanding.    As of October 6, 2017, 22,063,072 shares of our common stock were issued and outstanding and held by approximately 836 shareholders of record. We have reserved shares of our common stock for issuance upon the exercise of outstanding stock options issued under our existing stock option plans as follows: 157,314 shares under our 2006 Plan; and 138,000 shares under our 2014 Plan. The 2006 Plan was assumed by us in connection with our merger of equals with VB Texas, Inc. No further awards may be granted under the 2006 Plan or the 2014 Plan. We have also reserved 600,000 shares of our common stock for issuance upon awards and exercise of stock options under the 2017 Plan that is to be adopted in connection with the consummation of this offering.

        Voting.    Each holder of our common stock is entitled to one vote for each share held of record on all matters on which shareholders generally are entitled to vote, except as otherwise required by law. Rights of common stock to vote on certain matters may be subject to the rights and preferences of the holders of any outstanding shares of any preferred stock that we may issue. Our amended and restated certificate of formation expressly prohibits cumulative voting.

        Dividends and Other Distributions.    Subject to certain regulatory restrictions and to the rights of holders of our preferred stock and any other class or series of stock having a preference as to dividends over the common shares then outstanding, dividends may be paid on the shares of common stock out of assets legally available for dividends, but only at such times and in such amounts as our board of directors shall determine and declare. Subject to applicable law, upon any voluntary or involuntary liquidation, dissolution or winding up of our affairs, all shares of our common stock would be entitled to share, ratably in proportion to the number of shares held by them, in all of our remaining assets available for distribution to our shareholders after payment of creditors and subject to any prior distribution rights related to our preferred stock and any other class or series of stock having a preference over the common shares then outstanding. See "Supervision and Regulation—CBTX,

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Inc.—Regulatory Restrictions on Dividends; Source of Strength" and "—CommunityBank of Texas, N.A.—Restrictions on Distribution of Bank Dividends and Assets."

        Preemptive Rights.    Holders of our common stock do not have preemptive or subscription rights to acquire any authorized but unissued shares of our capital stock upon any future issuance of shares.

        Other.    Our holders of common stock have no conversion rights or other subscription rights. There are no other redemption or sinking fund provisions that are applicable to our common stock.

Preferred Stock

        Upon authorization of our board of directors and without any action by the holders of our common stock, we may issue shares of one or more series of our preferred stock from time to time. Upon establishing such a series of preferred stock, the board will determine the number of shares of preferred stock of that series that may be issued and the rights and preferences of that series of preferred stock. Our board of directors has not designated or established any series of preferred stock. The rights of any series of preferred stock may include, among others:

•

the designation of such series, and the number of shares to constitute such series;

•

whether the shares of such series shall have voting rights, in addition to any voting rights provided by law, and, if so, the terms of such voting rights, which may be full or limited;

•

the dividends, if any, payable on such series, and at what rates, whether any such dividends shall be cumulative, and if so, from what dates, the conditions and dates upon which such dividends shall be payable, the preference or relation which such dividends shall bear to the dividends payable on any shares of stock of any other class or any other series of this class;

•

whether the shares of such series shall be subject to redemption by us, and, if so, the times, prices and other terms and conditions of such redemption;

•

the amount or amounts payable upon shares of such series upon, and the rights of the holders of such series in, the voluntary or involuntary liquidation, dissolution, or winding up of the Company;

•

whether the shares of such series shall be subject to the operation of a retirement or sinking fund and, if so, the extent to and manner in which any such retirement or sinking fund shall be applied to the purchase or redemption of the shares of such series for retirement or other corporate purposes and the terms and provisions relative to the operation thereof;

•

whether the shares of such series shall be convertible into, or exchangeable for, shares of stock of any other class or any other series of this class or any other class or classes of securities and, if so, the price or prices or the rate or rates of conversion or exchange and the method, if any, of adjusting the same, and any other terms and conditions of conversion or exchange;

•

the limitations and restrictions, if any, to be effective while any shares of such series are outstanding upon the payment of dividends or the making of other distributions on, and upon the purchase, redemption or other acquisition by the Company of, the common stock or shares of stock of any other class or any other series of this class;

•

the conditions or restrictions, if any, upon the creation of indebtedness of the Company or upon the issue of any additional stock, including additional shares of such series or of any other series of this class or of any other class; and

•

any other powers, preferences and relative, participating, optional and other special rights, and any qualifications, limitations and restrictions thereof.

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        We may issue shares of, or rights to purchase shares of, one or more series of our preferred stock that have been designated from time to time, the terms of which might:

•

adversely affect voting or other rights evidenced by, or amounts otherwise payable with respect to, the common stock or other series of preferred stock by providing superior rights;

•

dilute the ownership of the holders of our common stock;

•

discourage unsolicited proposals to acquire us; or

•

facilitate a particular business combination involving us.

        Any of these actions could have an anti-takeover effect and discourage a transaction that some or a majority of our shareholders might believe to be in their best interests or in which our shareholders might receive a premium for their stock over our then market price.

Business Combinations under Texas Law

        A number of provisions of Texas law, our amended and restated certificate of formation and our amended and restated bylaws could have an anti-takeover effect and make more difficult the acquisition of the Company by means of a tender offer, a proxy contest or otherwise and the removal of our directors or management. These provisions are intended to discourage coercive takeover practices and inadequate takeover bids and to encourage persons seeking to acquire control of the Company to negotiate first with our board of directors.

        We are subject to the provisions of Title 2, Chapter 21, Subchapter M of the TBOC, which we refer to in this prospectus as the Texas Business Combination Law. This law provides that a Texas corporation that qualifies as an "issuing public corporation" (as defined in the Texas Business Combination Law) may not engage in specified types of business combinations, including mergers, consolidations and asset sales, with a person, or an affiliate or associate of that person, who is an "affiliated shareholder." For purposes of this law, an "affiliated shareholder" is a shareholder who is, or was, during the prior three years, the beneficial owner of 20.0% or more of the corporation's voting shares. The prohibition on certain transactions with such affiliated shareholders extends for a three-year period from the date such shareholder first becomes an affiliated shareholder. These prohibitions do not apply if:

•

the business combination or the acquisition of shares by the affiliated shareholder was approved by the board of directors of the corporation before the affiliated shareholder became an affiliated shareholder; or

•

the business combination was approved by the affirmative vote of the holders of at least two-thirds of the outstanding voting shares of the corporation not beneficially owned by the affiliated shareholder or an affiliate or associate of the affiliated shareholder, at a meeting of shareholders called for that purpose, not less than six months after the affiliated shareholder became an affiliated shareholder.

        As we currently have more than 100 shareholders, we are considered an "issuing public corporation" for purposes of this law. The Texas Business Combination Law does not apply to the following:

•

the business combination of an issuing public corporation where the corporation's original certificate of formation or bylaws contain a provision expressly electing not to be governed by the Texas Business Combination Law, or its certificate of formation or bylaws have been amended by the affirmative vote of the holders, other than affiliated shareholders, of at least two-thirds of the outstanding voting shares of the corporation, expressly electing not to be governed by the Texas Business Combination Law and so long as the amendment does not take

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effect for 18 months following the date of the vote and does not apply to a business combination with an affiliated shareholder who became affiliated on or before the effective date of the amendment;

•

a business combination of an issuing public corporation with an affiliated shareholder that became an affiliated shareholder inadvertently, if the affiliated shareholder divests itself, as soon as possible, of enough shares to no longer be an affiliated shareholder and would not at any time within the three-year period preceding the announcement of the business combination have been an affiliated shareholder but for the inadvertent acquisition;

•

a business combination with an affiliated shareholder who became an affiliated shareholder through a transfer of shares by will or intestacy and continuously was an affiliated shareholder until the announcement date of the business combination; or

•

a business combination of an issuing public corporation with its wholly-owned subsidiary, if the subsidiary is a Texas entity and not an affiliate or associate of the affiliated shareholder other than by reason of the affiliated shareholder's beneficial ownership of voting shares of the issuing public corporation.

        Neither our amended and restated certificate of formation nor our amended and restated bylaws contain any provision expressly providing that we will not be subject to the Texas Business Combination Law. As a result, the Texas Business Combination Law may prevent a non-negotiated merger or other business combination involving us, even if such a merger or combination would be beneficial to our shareholders.

Certain Certificate of Formation and Bylaw Provisions Potentially Having an Anti-takeover Effect

        Our amended and restated certificate of formation and our amended and restated bylaws contain certain provisions that may have the effect of deterring or discouraging, among other things, a non-negotiated tender or exchange offer for our common stock, a proxy contest for control of the Company, the assumption of control of the Company by a holder of a large block of our common stock and the removal of our incumbent board of directors or management. These provisions:

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empower our board of directors, without shareholder approval, to issue our preferred stock, the terms of which, including voting power, are set by our board of directors;

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establish a classified board of directors, with directors of each class serving a three-year term upon completion of a phase-in period;

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provide that directors may only be removed from office for cause by a majority shareholder vote;

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eliminate cumulative voting in elections of directors;

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permit our board of directors to alter, amend or repeal our amended and restated bylaws or to adopt new bylaws;

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require the request of holders of at least 50.0% of the outstanding shares of our capital stock entitled to vote at a meeting to call a special shareholders' meeting;

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prohibit shareholder action by less than unanimous written consent, thereby requiring virtually all shareholder actions to be taken at a meeting of the shareholders;

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require any shareholder derivative suit or shareholder claim against an officer or director of breach of fiduciary duty or violation of the TBOC, certificate of formation, or bylaws to be brought in Jefferson County in the State of Texas;

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require shareholders that wish to bring business before our annual meeting of shareholders or nominate candidates for election as directors at our annual meeting of shareholders to provide timely notice of their intent in writing; and

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enable our board of directors to increase, at any annual, regular or special meetings of directors, the number of persons serving as directors and to fill vacancies created as a result of the increase by a majority vote of the directors present at a meeting of directors.

        Our amended and restated bylaws may have the effect of precluding a contest for the election of directors or the consideration of shareholder proposals if the established procedures for advance notice are not followed, or of discouraging or deterring a third party from conducting a solicitation of proxies to elect its own slate of directors or to approve its proposal without regard to whether consideration of the nominees or proposals might be harmful or beneficial to us and our shareholders.

Classified Board of Directors

        Prior to completion of this offering, our board of directors will be composed of 11 members who previously were elected by our shareholders at each annual shareholders' meeting for a term of one year. Pursuant to our amended and restated bylaws, commencing with the annual shareholders' meeting to be held in 2018, our board of directors will be classified into three classes, Class I, Class II and Class III, with members of each class serving a three-year term. The classification of our board of directors promotes continuity and stability of our business strategies and management; however, it also makes it more difficult for our shareholders to change a majority of our directors given that it will generally take a minimum of two annual elections for this to occur. Further, our amended and restated bylaws provide that directors may be removed by the affirmative vote of a majority of our shareholders only for cause and that vacancies on our board of directors may be filled only by the affirmative vote of a majority of the remaining directors.

Exclusive Forum

        Our amended and restated bylaws provide that the state courts located in Jefferson County, Texas, the county in which our headquarters in Beaumont lie, shall be the sole and exclusive forum for certain shareholder litigation matters, unless the Company consents in writing to the selection of an alternative forum. Although we believe this provision benefits us by providing increased consistency in the application of Texas law in the types of lawsuits to which it applies and in limiting our litigation costs, the provision may have the effect of discouraging lawsuits against our directors and officers and may limit our shareholders' ability to obtain a favorable judicial forum for disputes with us. However, it is possible that a court could rule that this provision is unenforceable or inapplicable to a particular dispute.

Limitation of Liability and Indemnification of Officers and Directors

        Under the TBOC, the certificate of formation of a corporation may provide that a director of the corporation is not liable, or is liable only to the extent provided by the certificate of formation to the corporation or its shareholders for monetary damages for an act or omission by the person in the person's capacity as a director.

        Our amended and restated certificate of formation provides that our directors are not liable to the Company or our shareholders for monetary damages for an act or omission in their capacity as a director to the fullest extent provided by applicable Texas law. A director may, however, be found liable for:

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any breach of the director's duty of loyalty to the Company or our shareholders;

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acts or omissions not in good faith that constitute a breach of the director's duty to the Company;

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acts or omissions not in good faith that involve intentional misconduct or a knowing violation of law;

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any transaction from which the director receives an improper benefit, whether or not the benefit resulted from an action taken with the scope of the director's duties; and

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acts or omissions for which the liability of the director is expressly provided by an applicable statute.

        The TBOC provides that a corporation must indemnify a director for his service at the corporation and for service at the corporation as a representative of another entity against reasonable expenses actually incurred by the director in connection with a proceeding because of such service if the director is wholly successful, on the merits or otherwise, in the defense of the proceeding. If a court determines that a director, former director or representative is entitled to indemnification, the court will order indemnification by the corporation and award the person expenses incurred in securing the indemnification. The TBOC also permits corporations to indemnify present or former directors and representatives of other entities serving as such directors in certain situations where indemnification is not mandated by law; however, such permissive indemnification is subject to various limitations. Section 8.105 of the TBOC provides that a court may also order indemnification under various circumstances, and officers must be indemnified to the same extent as directors.

        Our amended and restated certificate of formation and amended and restated bylaws also provide that we will indemnify our directors, officers and delegates (those serving at the request of the Company as a director, officer, or representative of another company) and may indemnify our employees and agents, to the fullest extent permitted by applicable Texas law from any expenses, liabilities or other matters. To the extent that indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons, we have been advised that, in the opinion of the SEC, this indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. Finally, our ability to provide indemnification to our directors and officers is limited by federal banking laws and regulations.

        The TBOC permits us to purchase insurance on behalf of an existing or former officers, employees, directors or agents against any liability asserted against and incurred by that person in such capacity, or arising out of that person's status in such capacity. Pursuant to this authority, we maintain such insurance for the officers, employees, directors and agents of the Company and its subsidiaries.

Transfer Agent and Registrar

        Computershare Trust Company, N.A. will serve as our transfer agent and registrar.

Listing and Trading

        We have applied to list our common stock on the Nasdaq Global Select Market under the symbol "CBTX".

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SHARES ELIGIBLE FOR FUTURE SALE

        Future sales of substantial amounts of our common stock in the public market could adversely affect prevailing market prices. Furthermore, since only a limited number of shares will be available for sale shortly after the offering because of contractual and legal restrictions on resale described below, sales of substantial amounts of shares of common stock in the public market after the restrictions lapse could adversely affect the prevailing market price for shares of our common stock as well as our ability to raise equity capital in the future.

        Upon completion of this offering, we will have            shares of our common stock issued and outstanding (or            shares if the underwriters exercise in full their option to purchase additional            shares). In addition,            shares of our common stock will be issuable upon the vesting and settlement of outstanding equity awards.

        The shares sold in this offering will be freely tradable without further restriction or registration under the Securities Act, except that any shares purchased by our affiliates may generally only be sold in compliance with Rule 144, which is described below. The remaining outstanding shares will be deemed "restricted securities" under the Securities Act. Restricted securities may be sold in the public market only if they qualify for an exemption from registration under Rule 144 or any other applicable exemption.

Lock-Up Agreements

        We, all of our directors and executive officers and certain other shareholders, who will own in the aggregate approximately 7,126,792 shares of our outstanding common stock, are expected to agree not to sell any shares of common stock or securities convertible into or exchangeable for shares of common stock for a period of 180 days from the date of this prospectus, subject to certain exceptions. See "Underwriting" for a description of these lock-up provisions.

Stock Issued Under Employee Plans

        We intend to file one or more registration statements on Form S-8 under the Securities Act to register the offer and sale of shares of our common stock that are issuable under our 2006 Plan, 2014 Plan and 2017 Plan. This registration statement on Form S-8 is expected to be filed following the effective date of the registration statement of which this prospectus is a part and will be effective upon filing. Accordingly, shares registered under such registration statement will be available for sale in the open market following the effective date, unless such shares are subject to vesting restrictions with us, Rule 144 restrictions applicable to our affiliates or the lock-up restrictions described above.

Rule 144

        In general, under Rule 144 as currently in effect, once we have been subject to public company reporting requirements of Section 13 or Section 15(d) of the Exchange Act for at least 90 days, an eligible shareholder is entitled to sell such shares without complying with the manner of sale, volume limitation, or notice provisions of Rule 144, subject to compliance with the public information requirements of Rule 144. To be an eligible shareholder under Rule 144, such shareholder must not be deemed to have been one of our affiliates for purposes of the Securities Act at any time during the 90 days preceding a sale and who has beneficially owned the shares proposed to be sold for at least six months, including the holding period of any prior owner other than our affiliates. If such a person has beneficially owned the shares proposed to be sold for at least one year, including the holding period of any prior owner other than our affiliates, then such person is entitled to sell such shares without complying with any of the requirements of Rule 144, subject to the expiration of the lock-up agreements described above.

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        Rule 144 also provides that a person who is not deemed to have been an affiliate of ours at any time during the three months preceding a sale, and who has for at least six months beneficially owned shares of our common stock that are restricted securities, will be entitled to freely sell such shares of our common stock without regard to the limitations described above, provided that such sales comply with the current public information requirements of Rule 144 and we were subject to the Exchange Act periodic reporting requirements for at least 90 days immediately before the sale. A person who is not deemed to have been an affiliate of ours at any time during the three months preceding a sale, and who has beneficially owned for at least one year shares of our common stock that are restricted securities, will be entitled to freely sell such shares of our common stock under Rule 144 without regard to the current public information requirements of Rule 144, provided that we were subject to the Exchange Act periodic reporting requirements for at least 90 days immediately before the sale.

        In general, under Rule 144, as currently in effect, our affiliates or persons selling shares on behalf of our affiliates are entitled to sell on expiration of the lock-up agreements described below. Beginning 90 days after the date of this prospectus, within any three-month period, such shareholders may sell a number of shares that does not exceed the greater of:

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1% of the number of shares of common stock then outstanding, which will equal approximately            shares immediately after this offering; or

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the average weekly trading volume of our common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to such sale.

        Sales under Rule 144 by our affiliates or persons selling shares on behalf of our affiliates are also subject to certain manner of sale provisions and notice requirements and to the availability of current public information about us.

Rule 701

        In general, under Rule 701 under the Securities Act, an employee, consultant or advisor who purchases shares of our common stock from us in connection with a compensatory stock or option plan or other written agreement is eligible to resell those shares 90 days after the effective date of the registration statement of which this prospectus forms a part in reliance on Rule 144, but without compliance with some of the restrictions, including the holding period restriction, contained in Rule 144.

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SUPERVISION AND REGULATION

General

        The U.S. banking industry is highly regulated under federal and state law. Consequently, our growth and earnings performance will be affected not only by management decisions and general and local economic conditions, but also by the statutes administered by, and the regulations and policies of, various governmental regulatory authorities. These authorities include the Federal Reserve, FDIC, CFPB, OCC, Internal Revenue Service, or IRS, and state taxing authorities. The effect of these statutes, regulations and policies, and any changes to such statutes, regulations and policies, can be significant and cannot be predicted.

        The primary goals of the bank regulatory scheme are to maintain a safe and sound banking system, facilitate the conduct of sound monetary policy and promote fairness and transparency for financial products and services. The system of supervision and regulation applicable to us and our subsidiaries establishes a comprehensive framework for their respective operations and is intended primarily for the protection of the FDIC's Deposit Insurance Fund, the Bank's depositors and the public, rather than our shareholders or creditors. The description below summarizes certain elements of the applicable bank regulatory framework. This description is not intended to describe all laws and regulations applicable to us and our subsidiaries, and the description is qualified in its entirety by reference to the full text of the statutes, regulations, policies, interpretive letters and other written guidance that are described herein.

CBTX, Inc.

        As a bank holding company, we are subject to regulation under the Bank Holding Company Act of 1956, as amended, or BHC Act, and to supervision, examination and enforcement by the Federal Reserve. The BHC Act and other federal laws subject bank holding companies to particular restrictions on the types of activities in which they may engage, and to a range of supervisory requirements and activities, including regulatory enforcement actions for violations of laws and regulations. The Federal Reserve's jurisdiction also extends to any company that we directly or indirectly control, such as any nonbank subsidiaries and other companies in which we own a controlling investment.

        Financial Services Industry Reform.    On July 21, 2010, the Dodd-Frank Act was enacted. The Dodd-Frank Act broadly affects the financial services industry by implementing changes to the financial regulatory landscape aimed at strengthening the sound operation of the financial services sector, including provisions that, among other things:

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establish the CFPB, an independent organization, dedicated to promulgating and enforcing consumer protection laws applicable to all entities offering consumer financial products or services;

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apply the same leverage and risk-based capital requirements that apply to insured depository institutions to most bank holding companies, which, among other things, will require us to deduct all trust preferred securities issued on or after May 19, 2010 from our Tier 1 capital (existing trust preferred securities issued prior to May 19, 2010 for all bank holding companies with less than $15.0 billion in total consolidated assets as of December 31, 2009 are exempt from this requirement);

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broaden the base for FDIC insurance assessments from the amount of insured deposits to average total consolidated assets less average tangible equity during the assessment period (subject to risk-based adjustments that would further reduce the assessment base for custodial banks) rather than domestic deposits;

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permanently increase FDIC deposit insurance maximum to $250,000;

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eliminate the upper limit for the reserve ratio designated by the FDIC each year, increase the minimum designated reserve ratio of the deposit insurance fund from 1.15% to 1.35% of the estimated amount of total insured deposits by September 30, 2020 and eliminate the requirement that the FDIC pay dividends to depository institutions when the reserve ratio exceeds certain thresholds;

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permit banking organizations with less than $15 billion in consolidated assets as of December 31, 2009 to include in Tier 1 capital trust preferred securities and cumulative perpetual preferred stock issued and included in Tier 1 capital prior to May 19, 2010 on a permanent basis, without any phase-out;

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permit banks to engage in de novo interstate branching if the laws of the state where the new branch is to be established would permit the establishment of the branch if it were part of a bank that were chartered by such state;

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repeal the federal prohibitions on the payment of interest on demand deposits, thereby permitting depository institutions to pay interest on business transaction and other accounts;

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require bank holding companies and banks to be "well capitalized" and "well managed" in order to acquire banks located outside of their home state and requires any bank holding company electing to be treated as a financial holding company to be "well capitalized" and "well managed";

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direct the Federal Reserve to establish interchange fees for debit cards under a "reasonable and proportional cost" per transaction standard, as discussed further below;

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increase regulation of consumer protections regarding mortgage originations, including originator compensation, minimum repayment standards, and prepayment consideration;

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restrict the preemption of select state laws by federal banking law applicable to national banks and remove federal preemption for subsidiaries and affiliates of national banks;

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implement corporate governance revisions, including with regard to executive compensation and proxy access by shareholders, that apply to all public companies, not just financial institutions; and

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increase the authority of the Federal Reserve to examine us and any nonbank subsidiaries.

        In addition, the Dodd-Frank Act addresses many investor protection, corporate governance and executive compensation matters that will affect publicly traded companies. However, under the JOBS Act, there are exceptions to certain of these requirements for so long as a publicly traded company qualifies as an emerging growth company.

        In addition, the Company and the Bank would be affected by the Durbin Amendment to the Dodd-Frank Act regarding limits on debit card interchange fees if it reaches $10 billion of assets. The Durbin Amendment gave the Federal Reserve the authority to establish rules regarding interchange fees charged for electronic debit transactions by a payment card issuer that, together with its affiliates, has assets of $10 billion or more and to enforce a statutory requirement that such fees be reasonable and proportional to the actual cost of a transaction to the issuer. The Federal Reserve has adopted rules under this provision that limit the maximum permissible interchange fee that a debit card issuer can charge a merchant for a transaction to the sum of 21 cents and five basis points times the value of the transaction, plus up to one cent for fraud prevention costs.

        The requirements of the Dodd-Frank Act are still in the process of being implemented over time and most will be subject to regulations implemented over the course of several years. Given the uncertainty associated with the manner in which the provisions of the Dodd-Frank Act will be implemented by the various regulatory agencies and through regulations, the full extent of the impact

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such requirements will have on our operations is unclear. Further, the Trump administration issued an executive order on February 3, 2017, outlining a number of "Core Principles" of regulation of the industry and directing the Secretary of the Treasury to submit a report by June 3, 2017, identifying any laws, rules or regulations (including those promulgated under the auspices of the Dodd-Frank Act) that are determined to be inconsistent with those principles. The Secretary of Treasury submitted a report in June 2017 addressing the depository system, covering banks, savings associations and credit unions. The report made recommendations for regulatory reform, including, improving regulatory efficiency and effectiveness, aligning the financial system, reducing the regulatory burden, tailoring the regulatory approach based on size and complexity of regulated firms and aligning the regulations to support market liquidity and investment. The Trump administration and House of Representatives have proposed various changes to the Dodd-Frank Act and related regulations and supervisory guidance. We cannot predict whether any or all of these proposals will be enacted or finalized. Any changes resulting from further implementation of, changes to, or repeal of the Dodd-Frank Act may impact the profitability of our business activities, require changes to certain of our business practices, impose upon us more stringent capital, liquidity and leverage requirements or otherwise adversely affect our business.

        Revised Rules on Regulatory Capital.    Regulatory capital rules pursuant to the Basel III requirements, released in July 2013 and effective January 1, 2015, increased the minimum capital requirements for bank holding companies and banks. These rules included a common equity Tier 1, or CET1, capital requirement and establish criteria that instruments must meet to be considered common equity Tier 1 capital, additional Tier 1 capital or Tier 2 capital. These enhancements are designed to both improve the quality and increase the quantity of capital required to be held by banking organizations, better equipping the U.S. banking system to cope with adverse economic conditions. The revised capital rules require banks and bank holding companies to maintain a minimum CET1 capital ratio of 4.5% of risk-based assets, a Tier 1 capital ratio of 6.0% of risk-based assets, a total capital ratio of 8.0% of risk-based assets and a leverage ratio of 4.0% of average assets.

        The capital rules also call for bank holding companies and banks to maintain a "capital conservation buffer" on top of the minimum risk-based capital requirements. The buffer must be composed of common equity Tier 1 capital. This buffer is intended to help to ensure that banking organizations conserve capital when it is most needed, allowing them to better weather periods of economic stress. When it is fully phased in on January 1, 2019, the buffer will be 2.5% of risk-weighted assets. For 2017, the buffer is 1.25%.

        The new capital rules also attempt to improve the quality of capital by implementing changes to the definition of capital. Among the most important changes are stricter eligibility criteria for regulatory capital instruments that would disallow the inclusion of certain instruments, such as trust preferred securities (other than grandfathered trust preferred securities such as those issued by the Company), in Tier 1 capital going forward and new constraints on the inclusion of minority interests, mortgage-servicing assets, deferred tax assets and certain investments in the capital of unconsolidated financial institutions. In addition, the new rule requires that most regulatory capital deductions be made from CET1 capital.

        The Federal Reserve may also set higher capital requirements for holding companies whose circumstances warrant it. For example, holding companies experiencing internal growth or making acquisitions are expected to maintain strong capital positions substantially above the minimum supervisory levels, without significant reliance on intangible assets. At this time, the bank regulatory agencies are more inclined to impose higher capital requirements to meet well capitalized standards and future regulatory change could impose higher capital standards as a routine matter. The Company's regulatory capital ratios and those of the Bank are in excess of the levels established for "well capitalized" institutions under the rules.

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        These rules also set forth certain changes in the methods of calculating certain risk-weighted assets, which in turn will affect the calculation of risk-based ratios. Under the new rules, higher or more sensitive risk weights have been assigned to various categories of assets, including, certain credit facilities that finance the acquisition, development or construction of real property, certain exposures or credits that are 90 days past due or on nonaccrual status, foreign exposures and certain corporate exposures. In addition, these rules include greater recognition of collateral and guarantees, and revised capital treatment for derivatives and repo-style transactions.

        Imposition of Liability for Undercapitalized Subsidiaries.    Bank regulators are required to take prompt corrective action to resolve problems associated with insured depository institutions whose capital declines below certain levels as further described below. In the event an institution becomes undercapitalized, it must submit a capital restoration plan. The capital restoration plan will not be accepted by the regulators unless each company having control of the undercapitalized institution guarantees the subsidiary's compliance with the capital restoration plan up to a certain specified amount. Any such guarantee from a depository institution's holding company is entitled to a priority of payment in bankruptcy.

        The aggregate liability of the holding company of an undercapitalized bank is limited to the lesser of 5.0% of the institution's assets at the time it became undercapitalized and the amount necessary to cause the institution to become adequately capitalized. The bank regulators have greater power in situations where an institution becomes significantly or critically undercapitalized or fails to submit a capital restoration plan. For example, a bank holding company controlling such an institution can be required to obtain prior Federal Reserve approval of proposed dividends, or might be required to consent to a consolidation or to divest the troubled institution or other affiliates.

        Acquisitions by Bank Holding Companies.    The BHC Act requires every bank holding company to obtain the prior approval of the Federal Reserve before it acquires all or substantially all of the assets of any bank, or ownership or control of any voting shares of any bank or bank holding company if after such acquisition it would own or control, directly or indirectly, more than 5.0% of the voting shares of such bank or bank holding company. In approving bank or bank holding company acquisitions by bank holding companies, the Federal Reserve is required to consider, among other things, the effect of the acquisition on competition, the financial condition, managerial resources and future prospects of the bank holding company and the banks concerned, the convenience and needs of the communities to be served (including the record of performance under the CRA), the effectiveness of the applicant in combating money laundering activities and the extent to which the proposed acquisition would result in greater or more concentrated risks to the stability of the U.S. banking or financial system. Our ability to make future acquisitions will depend on our ability to obtain approval for such acquisitions from the Federal Reserve. The Federal Reserve could deny our application based on the above criteria or other considerations. For example, we could be required to sell banking centers as a condition to receiving regulatory approval, which condition may not be acceptable to us or, if acceptable to us, may reduce the benefit of a proposed acquisition.

        Control Acquisitions.    Under the BHC Act, a company may not acquire "control" of a bank holding company or a bank without the prior approval of the Federal Reserve Board. The statute defines control as ownership or control of 25% or more of any class of voting securities, control of the election of a majority of the board of directors, or any other circumstances in which the Federal Reserve Board determines that a company directly or indirectly exercises a controlling influence over the management or policies of the bank holding company or bank. The Federal Reserve Board regulations include a presumption that control does not exist only when a company owns or controls less than 5% of the outstanding shares of any class of voting securities. Companies that propose to acquire between 5% and 25% of any class of voting securities usually consult with the Federal Reserve Board in advance and often must make written commitments not to exercise control. As a matter of

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policy, the Federal Reserve Board has in a number of cases required a company to take certain actions to avoid control if it proposes to acquire 25% or more but less than 33% of the total equity of a bank or bank holding company through the acquisition of both voting and non-voting shares, even if the voting shares are less than 25% of a class. The Federal Reserve Board deems the acquisition of 33% or more of the total equity of a bank or bank holding company to represent control.

        The BHC Act does not apply to acquisitions by individuals or certain trusts, but if an individual, trust, or company proposes to acquire control of a bank or bank holding company, the Change in Bank Control Act, or CIBC Act, requires prior notice to the bank's primary federal regulator or to the Federal Reserve Board in the case of a bank holding company. The CIBC Act uses the same definition of control as the BHC Act, but agency regulations under the CIBC Act presume in many cases that a change in control occurs when an individual, trust, or company acquires 10% or more of any class of voting securities. The notice is not required for a company required to file an application under the BHC Act for the same transaction.

        The requirements of the BHC Act and the CBCA could limit our access to capital and could limit parties who could acquire shares of our common stock.

        Regulatory Restrictions on Dividends; Source of Strength.    We are regarded as a legal entity separate and distinct from CommunityBank of Texas, N.A. The principal source of our revenues is dividends received from the Bank. Federal law currently imposes limitations upon certain capital distributions by national banks, such as certain cash dividends, payments to repurchase or otherwise acquire its shares, payments to shareholders of another institution in a cash-out merger and other distributions charged against capital. The Federal Reserve and OCC regulate all capital distributions by the Bank directly or indirectly to the Company, including dividend payments. The Federal Reserve Board regulates capital dividends paid by the Company. The Federal Reserve has issued a policy statement that provides that a bank holding company should not pay dividends unless (1) its net income over the last four quarters (net of dividends paid) has been sufficient to fully fund the dividends, (2) the prospective rate of earnings retention appears to be consistent with the capital needs, asset quality and overall financial condition of the bank holding company and its subsidiaries and (3) the bank holding company will continue to meet minimum required capital adequacy ratios. Accordingly, we should not pay cash dividends that exceed our net income in any year or that can only be funded in ways that weaken our financial strength, including by borrowing money to pay dividends.

        Under Federal Reserve policy, bank holding companies have historically been required to act as a source of financial and managerial strength to each of their banking subsidiaries, and the Dodd-Frank Act codified this policy as a statutory requirement. Under this requirement, we are expected to commit resources to support the Bank, including at times when we may not be in a financial position to provide such resources. Any capital loans by a bank holding company to any of its subsidiary banks are subordinate in right of payment to deposits and to certain other indebtedness of such subsidiary banks. As discussed above, a bank holding company, in certain circumstances, could be required to guarantee the capital restoration plan of an undercapitalized banking subsidiary. If the capital of the Bank were to become impaired, the Federal Reserve could assess us for the deficiency. If we failed to pay the assessment within three months, the Federal Reserve could order the sale of our stock in the Bank to cover the deficiency.

        In the event of a bank holding company's bankruptcy under Chapter 11 of the U.S. Bankruptcy Code, the trustee will be deemed to have assumed and will be required to cure immediately any deficit under any commitment by the debtor holding company to any of the federal banking agencies to maintain the capital of an insured depository institution, and any claim for breach of such obligation will generally have priority over most other unsecured claims.

        Scope of Permissible Activities.    Under the BHC Act, we may engage or acquire a company engaged solely in certain types of nonbanking activities. Permissible activities include banking, managing

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or controlling banks or furnishing services to or performing services for the Bank, and certain activities found by the Federal Reserve to be so closely related to banking or managing and controlling banks as to be a proper incident thereto. These activities include, among others, operating a mortgage, finance, credit card or factoring company; performing certain data processing operations; providing investment and financial advice; acting as an insurance agent for certain types of credit-related insurance; leasing personal property on a full-payout, nonoperating basis; and providing certain stock brokerage and investment advisory services. The BHC Act also permits certain other specific activities. In order to do so, we would in many cases be required to obtain the prior approval of the Federal Reserve. In its review of applications, the Federal Reserve considers, among other things, whether the acquisition or the additional activities can reasonably be expected to produce benefits to the public, such as greater convenience, increased competition, or gains in efficiency, that outweigh such possible adverse effects as undue concentration of resources, decreased or unfair competition, conflicts of interest or unsound banking practices.

        The Gramm-Leach-Bliley Act, also known as the Financial Services Modernization Act of 1999, effective March 11, 2000, or the GLB Act, amended the BHC Act to expand the scope of activities available to a bank holding company. The amendments allow a qualifying bank holding company to elect "financial holding company" status. A financial holding company may affiliate with securities firms and insurance companies and engage in other activities that are "financial in nature." Such activities include, among other things, securities underwriting, dealing and market making; sponsoring mutual funds and investment companies; insurance underwriting and agency; merchant banking activities; and activities that the Federal Reserve has determined to be closely related to banking. No regulatory approval is required for a financial holding company to acquire a company, other than a bank or savings association, engaged in activities that are financial in nature or incidental to activities that are financial in nature, as determined by the Federal Reserve. We qualify for financial holding company status, but we have not made such an election. We would make such an election in the future if we plan to engage in any lines of business that are impermissible for bank holding companies but permissible for financial holding companies.

        Safe and Sound Banking Practices.    Bank holding companies are not permitted to engage in unsafe and unsound banking practices. The Federal Reserve's Regulation Y, for example, generally requires a bank holding company to provide the Federal Reserve with prior notice of any redemption or repurchase of its own equity securities, if the consideration to be paid, together with the consideration paid for any repurchases or redemptions in the preceding year, is equal to 10.0% or more of the bank holding company's consolidated net worth. The Federal Reserve may oppose the transaction if it believes that the transaction would constitute an unsafe or unsound practice or would violate any law or regulation. In certain circumstances, the Federal Reserve could take the position that paying a dividend would constitute an unsafe or unsound banking practice.

        The Federal Reserve has broad authority to prohibit activities of bank holding companies and their nonbanking subsidiaries which represent unsafe and unsound banking practices, result in breaches of fiduciary duty or which constitute violations of laws or regulations, and to assess civil money penalties or impose enforcement action for such activities. The penalties can be as high as $1,000,000 for each day the activity continues.

        Anti-tying Restrictions.    Bank holding companies and their affiliates are prohibited from tying the provision of certain services, such as extensions of credit, to other nonbanking services offered by a bank holding company or its affiliates.

CommunityBank of Texas, N.A.

        The Bank is subject to various requirements and restrictions under the laws of the United States, and to regulation, supervision and examination by the OCC. The Bank is also an insured depository

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institution and, therefore, subject to regulation by the FDIC, although the OCC is the Bank's primary federal regulator. The OCC and the FDIC have the power to enforce compliance with applicable banking statutes and regulations. Such requirements and restrictions include requirements to maintain reserves against deposits, restrictions on the nature and amount of loans that may be made and the interest that may be charged thereon and restrictions relating to investments and other activities of the Bank.

        Capital Adequacy Requirements.    The OCC monitors the capital adequacy of the Bank by using a combination of risk-based guidelines and leverage ratios. The OCC considers the Bank's capital levels when taking action on various types of applications and when conducting supervisory activities related to the safety and soundness of the Bank and the banking system. Under the revised capital rules which became effective on January 1, 2015, national banks are required to maintain four minimum capital standards: (1) a Tier 1 capital-to-adjusted total assets ratio, or "leverage capital ratio," of at least 4.0%; (2) a Tier 1 capital to risk-weighted assets ratio, or "Tier 1 risk-based capital ratio," of at least 6.0%; (3) a total risk-based capital (Tier 1 plus Tier 2) to risk-weighted assets ratio, or "total risk-based capital ratio," of at least 8.0%; and (4) a CET1 capital ratio of 4.5%. In addition, the OCC's prompt corrective action standards discussed below, in effect, increase the minimum regulatory capital ratios for banking organizations. These capital requirements are minimum requirements. Higher capital levels may be required if warranted by the particular circumstances or risk profiles of individual institutions, or if required by the banking regulators due to the economic conditions impacting our markets. For example, OCC regulations provide that higher capital may be required to take adequate account of, among other things, interest rate risk and the risks posed by concentrations of credit, nontraditional activities or securities trading activities.

        Corrective Measures for Capital Deficiencies.    The federal banking regulators are required by the Federal Deposit Insurance Act, or FDI Act, to take "prompt corrective action" with respect to capital-deficient institutions that are FDIC-insured. Agency regulations define, for each capital category, the levels at which institutions are "well capitalized," "adequately capitalized," "undercapitalized," "significantly undercapitalized" and "critically undercapitalized." Under the revised capital rules, which became effective on January 1, 2015, a "well capitalized" bank has a total risk-based capital ratio of 10.0% or higher, a Tier 1 risk-based capital ratio of 8.0% or higher, a leverage ratio of 5.0% or higher, a CETI capital ratio of 6.5% or higher, and is not subject to any written agreement, order or directive requiring it to maintain a specific capital level for any capital measure. An "adequately capitalized" bank has a total risk-based capital ratio of 8.0% or higher, a Tier 1 risk-based capital ratio of 6.0% or higher, a leverage ratio of 4.0% or higher (3.0% or higher if the bank was rated a composite 1 in its most recent examination report and is not experiencing significant growth), a CETI capital ratio of 4.5% or higher, and does not meet the criteria for a well capitalized bank. A bank is "undercapitalized" if it fails to meet any one of the ratios required to be adequately capitalized.

        In addition to requiring undercapitalized institutions to submit a capital restoration plan, agency regulations contain broad restrictions on certain activities of undercapitalized institutions including asset growth, acquisitions, branch establishment and expansion into new lines of business. With certain exceptions, an insured depository institution is prohibited from making capital distributions, including dividends, and is prohibited from paying management fees to control persons if the institution would be undercapitalized after any such distribution or payment.

        As a national bank's capital decreases, the OCC's enforcement powers become more severe. A significantly undercapitalized national bank is subject to mandated capital raising activities, restrictions on interest rates paid and transactions with affiliates, removal of management and other restrictions. The OCC has very limited discretion in dealing with a critically undercapitalized national bank and is virtually required to appoint a receiver or conservator.

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        Banks with risk-based capital and leverage ratios below the required minimums may also be subject to certain administrative actions, including the termination of deposit insurance upon notice and hearing, or a temporary suspension of insurance without a hearing in the event the institution has no tangible capital.

        Branching.    National banks are required by the National Bank Act to adhere to branching laws applicable to state banks in the states in which they are located. Under the Dodd-Frank Act, de novo interstate branching by national banks is permitted if, under the laws of the state where the branch is to be located, a state bank chartered in that state would have been permitted to establish a branch. Under current Texas law, state banks are permitted to establish branch offices throughout Texas with prior regulatory approval. In addition, with prior regulatory approval, state banks are permitted to acquire branches of existing banks located in Texas. State banks located in Texas may also branch across state lines by merging with banks or by purchasing a branch of another bank in other states if allowed by the applicable states' laws.

        Restrictions on Transactions with Affiliates and Insiders.    Transactions between the Bank and its nonbanking subsidiaries and/or affiliates, including the Company, are subject to Section 23A and 23B of the Federal Reserve Act and Regulation W promulgated under such Sections. In general, Section 23A of the Federal Reserve Act imposes limits on the amount of such transactions, and also requires certain levels of collateral for loans to affiliated parties. It also limits the amount of advances to third parties which are collateralized by the securities or obligations of the Company or its subsidiaries. Covered transactions with any single affiliate may not exceed 10.0% of the capital stock and surplus of the Bank, and covered transactions with all affiliates may not exceed, in the aggregate, 20.0% of the Bank's capital and surplus. For a bank, capital stock and surplus refers to the bank's Tier 1 and Tier 2 capital, as calculated under the risk-based capital guidelines, plus the balance of the allowance for credit losses excluded from Tier 2 capital. The Bank's transactions with all of its affiliates in the aggregate are limited to 20.0% of the foregoing capital. "Covered transactions" are defined by statute to include a loan or extension of credit to an affiliate, as well as a purchase of securities issued by an affiliate, a purchase of assets (unless otherwise exempted by the Federal Reserve) from the affiliate, the acceptance of securities issued by the affiliate as collateral for a loan, and the issuance of a guarantee, acceptance or letter of credit on behalf of an affiliate. In addition, in connection with covered transactions that are extensions of credit, the Bank may be required to hold collateral to provide added security to the Bank, and the types of permissible collateral may be limited. The Dodd-Frank Act generally enhances the restrictions on transactions with affiliates, including an expansion of what types of transactions are covered transactions to include credit exposures related to derivatives, repurchase agreement and securities lending arrangements and an increase in the amount of time for which collateral requirements regarding covered transactions must be satisfied. Affiliate transactions are also subject to Section 23B of the Federal Reserve Act which generally requires that certain transactions between the Bank and its affiliates be on terms substantially the same, or at least as favorable to the Bank, as those prevailing at the time for comparable transactions with or involving other nonaffiliated persons.

        The restrictions on loans to directors, executive officers, principal shareholders and their related interests (collectively referred to herein as "insiders") contained in Section 22(h) of the Federal Reserve Act and in Regulation O promulgated by the Federal Reserve apply to all insured institutions and their subsidiaries and bank holding companies. These restrictions include limits on loans to one borrower and conditions that must be met before such a loan can be made. There is also an aggregate limitation on all loans to insiders and their related interests. Generally, the aggregate of these loans cannot exceed the institution's total unimpaired capital and surplus, although a bank's regulators may determine that a more stringent limit is appropriate. Loans to senior executive officers of a bank are even further restricted. Insiders are subject to monetary penalties for knowingly accepting loans in violation of applicable restrictions.

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        Restrictions on Distribution of Bank Dividends and Assets.    Dividends paid by the Bank have provided a substantial part of our operating funds and for the foreseeable future it is anticipated that dividends paid by the Bank to us will continue to be our principal source of operating funds. Earnings and capital adequacy requirements serve to limit the amount of dividends that may be paid by the Bank. In general terms, federal law provides that the Bank's board of directors may, from time to time and as it deems expedient, declare a dividend out of its net profits. Generally, the total of all dividends declared in a year shall not, unless approved by the OCC, exceed the net profits of that year combined with its net profits of the past two years. At June 30, 2017, the Bank had $21.5 million available for payment of dividends.

        In addition, under the Federal Deposit Insurance Corporation Improvement Act of 1991, or FDICIA, the Bank may not pay any dividend if it is undercapitalized or the payment of the dividend would cause it to become undercapitalized. The OCC may further restrict the payment of dividends by requiring that the Bank maintain a higher level of capital than otherwise required for it to be adequately capitalized for regulatory purposes. Moreover, if, in the opinion of the OCC, the Bank is engaged in an unsound practice (which could include the payment of dividends), it may require, generally after notice and hearing, that the Bank cease such practice. The OCC has indicated that paying dividends that deplete a depository institution's capital base to an inadequate level would be an unsafe banking practice. The OCC has also issued policy statements providing that insured depository institutions generally should pay dividends only out of current operating earnings.

        Further, in the event of a liquidation or other resolution of an insured depository institution, the claims of depositors and other general or subordinated creditors are entitled to a priority of payment over the claims of holders of any obligation of the institution to its shareholders, including any depository institution holding company (such as us) or any shareholder or creditor thereof.

        Incentive Compensation Guidance.    The federal banking agencies have issued comprehensive guidance on incentive compensation policies intended to help ensure that the incentive compensation policies of banking organizations do not undermine the safety and soundness of those organizations by encouraging excessive risk-taking. The incentive compensation guidance sets expectations for banking organizations concerning their incentive compensation arrangements and related risk management, control and governance processes. The incentive compensation guidance, which covers all employees that have the ability to materially affect the risk profile of an organization, either individually or as part of a group, is based upon three primary principles: (1) balanced risk-taking incentives, (2) compatibility with effective controls and risk management and (3) strong corporate governance. Any deficiencies in compensation practices that are identified may be incorporated into the organization's supervisory ratings, which can affect its ability to make acquisitions or take other actions. In addition, under the incentive compensation guidance, a banking organization's federal supervisor may initiate enforcement action if the organization's incentive compensation arrangements pose a risk to the safety and soundness of the organization. Further, a provision of the Basel III capital standards described above would limit discretionary bonus payments to bank executives if the institution's regulatory capital ratios fail to exceed certain thresholds. A number of federal regulatory agencies proposed rules that would require enhanced disclosure of incentive-based compensation arrangements initially in April 2011, and again in April and May 2016. The scope and content of the U.S. banking regulators' policies on executive compensation are continuing to develop and are likely to continue evolving in the near future.

        Audit Report.    For insured institutions with total assets of $500.0 million or more, financial statements prepared in accordance with GAAP, as well as management's certifications signed by our and the Bank's chief executive officer and chief accounting or financial officer concerning management's responsibility for the financial statements, must be submitted to the FDIC. If the insured institution has consolidated total assets of more than $1.0 billion, it must additionally submit an attestation by the auditors regarding the institution's internal controls. For large insured depository

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institutions, independent auditors may be required to review quarterly financial statements. The FDICIA requires that the Bank have an independent audit committee, consisting of outside directors only, or if its total assets exceed $1.0 billion, it have an audit committee that is entirely independent. The committees of institutions with total assets of more than $3.0 billion must include members with experience in banking or financial management, must have access to outside counsel and must not include representatives of large customers. The Bank's audit committee consists entirely of independent directors.

        Deposit Insurance Assessments.    The FDIC insures the deposits of federally insured banks up to prescribed statutory limits for each depositor through the Deposit Insurance Fund and safeguards the safety and soundness of the banking and thrift industries. The maximum amount of deposit insurance for banks and savings institutions is $250,000 per depositor. The amount of FDIC assessments paid by each insured depository institution is based on its relative risk of default as measured by regulatory capital ratios and other supervisory factors and is calculated based on an institution's average consolidated total assets minus average tangible equity.

        We are generally unable to control the amount of premiums that we are required to pay for FDIC insurance. At least semi-annually, the FDIC will update its loss and income projections for the Deposit Insurance Fund and, if needed, will increase or decrease assessment rates, following notice-and-comment rulemaking, if required. If there are additional bank or financial institution failures or if the FDIC otherwise determines to increase assessment rates, the Bank may be required to pay higher FDIC insurance premiums. Any future increases in FDIC insurance premiums may have a material and adverse effect on our earnings.

        In addition, all FDIC-insured institutions are required to pay assessments to the FDIC to fund interest payments on bonds issued by the Financing Corporation, or FICO, an agency of the federal government established to recapitalize the predecessor to the Deposit Insurance Fund. These assessments, which are included in Deposit Insurance Premiums on the Consolidated Statements of Income, will continue until the FICO bonds mature between 2017 and 2019.

        Financial Modernization.    Under the GLB Act, banks may establish financial subsidiaries and engage, subject to limitations on investment, in activities that are financial in nature, other than insurance underwriting as principal, insurance company portfolio investment, real estate development, real estate investment, annuity issuance and merchant banking activities. To do so, a bank must be well capitalized, well managed and have a CRA rating from its primary federal regulator of satisfactory or better. Subsidiary banks of financial holding companies or banks with financial subsidiaries must remain well capitalized and well managed in order to continue to engage in activities that are financial in nature without regulatory actions or restrictions. Such actions or restrictions could include divestiture of the "financial in nature" subsidiary or subsidiaries. In addition, a financial holding company or a bank may not acquire a company that is engaged in activities that are financial in nature unless each of the subsidiary banks of the financial holding company or the bank has a CRA rating of satisfactory of better.

        Brokered Deposit Restrictions.    Insured depository institutions that are categorized as adequately capitalized institutions under the FDI Act and corresponding federal regulations cannot accept, renew or roll over brokered deposits, without receiving a waiver from the FDIC, and are subject to restrictions on the interest rates that can be paid on any deposits. Insured depository institutions that are categorized as undercapitalized institutions under the FDI Act and corresponding federal regulations may not accept, renew or roll over brokered deposits. The Bank is not currently subject to such restrictions.

        Concentrated Commercial Real Estate Lending Regulations.    The federal banking regulatory agencies have promulgated guidance governing financial institutions with concentrations in commercial

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real estate lending. The guidance provides that a bank has a concentration in commercial real estate lending if (1) total reported loans for acquisition, construction, land development, and other land represent 100.0% or more of total capital or (2) total reported loans secured by multi-family and nonfarm residential properties and loans for acquisition, construction, land development, and other land represent 300.0% or more of total capital and the bank's commercial real estate loan portfolio has increased 50% or more during the prior 36 months. Owner-occupied loans are excluded from this second category. If a concentration is present, management must employ heightened risk management practices that address, among other things, board and management oversight and strategic planning, portfolio management, development of underwriting standards, risk assessment and monitoring through market analysis and stress testing, and maintenance of increased capital levels as needed to support the level of commercial real estate lending.

        Community Reinvestment Act.    The CRA and the regulations issued thereunder are intended to encourage banks to help meet the credit needs of their entire assessment area, including low- and moderate-income neighborhoods, consistent with the safe and sound operations of such banks. These regulations also provide for regulatory assessment of a bank's record in meeting the needs of its assessment area when considering applications to establish branches, merger applications and applications to acquire the assets and assume the liabilities of another bank. The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 requires federal banking agencies to make public a rating of a bank's performance under the CRA. In the case of a bank holding company, the CRA performance record of the banks involved in the transaction are reviewed in connection with the filing of an application to acquire ownership or control of shares or assets of a bank or to merge with any other bank holding company. An unsatisfactory CRA record could substantially delay approval or result in denial of an application. The Bank received a "satisfactory" rating in its most recent CRA examination.

        Consumer Laws and Regulations.    The Bank is subject to numerous laws and regulations intended to protect consumers in transactions with the Bank. These laws include, among others, laws regarding unfair, deceptive and abusive acts and practices, usury laws, and other federal consumer protection statutes. These federal laws include the Electronic Fund Transfer Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Real Estate Procedures Act of 1974, the S.A.F.E. Mortgage Licensing Act of 2008, the Truth in Lending Act and the Truth in Savings Act, among others. Many states and local jurisdictions have consumer protection laws analogous, and in addition, to those enacted under federal law. These laws and regulations mandate certain disclosure requirements and regulate the manner in which financial institutions must deal with customers when taking deposits, making loans and conducting other types of transactions. Failure to comply with these laws and regulations could give rise to regulatory sanctions, customer rescission and registration rights, action by state and local attorneys general and civil or criminal liability.

        In addition, the Dodd-Frank Act created the CFPB. The CFPB has broad authority to regulate the offering and provision of consumer financial products. The CFPB officially came into being on July 21, 2011, and rulemaking authority for a range of consumer financial protection laws (such as the Truth in Lending Act, the Electronic Funds Transfer Act and the Real Estate Settlement Procedures Act, among others) transferred from the Federal Reserve and other federal regulators to the CFPB on that date. The Dodd-Frank Act gives the CFPB authority to supervise and examine depository institutions with more than $10.0 billion in assets for compliance with these federal consumer laws. The authority to supervise and examine depository institutions with $10.0 billion or less in assets for compliance with federal consumer laws remains largely with those institutions' primary regulators. However, the CFPB may participate in examinations of these smaller institutions on a "sampling basis" and may refer potential enforcement actions against such institutions to their primary regulators. Accordingly, the CFPB may participate in examinations of the Bank, which currently has assets of less than $10.0 billion, and could supervise and examine our other direct or indirect subsidiaries that offer consumer financial

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products or services. The CFPB also has supervisory and examination authority over certain nonbank institutions that offer consumer financial products. The Dodd-Frank Act identifies a number of covered nonbank institutions, and also authorizes the CFPB to identify additional institutions that will be subject to its jurisdiction. In addition, the Dodd-Frank Act permits states to adopt consumer protection laws and regulations that are stricter than those regulations promulgated by the CFPB, and state attorneys general are permitted to enforce consumer protection rules adopted by the CFPB against certain institutions.

        Mortgage Lending Rules.    The Dodd-Frank Act authorized the CFPB to establish certain minimum standards for the origination of residential mortgages, including a determination of the borrower's ability to repay. Under the Dodd-Frank Act, financial institutions may not make a residential mortgage loan unless they make a "reasonable and good faith determination" that the consumer has a "reasonable ability" to repay the loan. The Dodd-Frank Act allows borrowers to raise certain defenses to foreclosure but provides a full or partial safe harbor from such defenses for loans that are "qualified mortgages." On January 10, 2013, the CFPB published final rules to, among other things, specify the types of income and assets that may be considered in the ability-to-repay determination, the permissible sources for income verification, and the required methods of calculating the loan's monthly payments. Since then the CFPB made certain modifications to these rules. The rules extend the requirement that creditors verify and document a borrower's income and assets to include all information that creditors rely on in determining repayment ability. The rules also provide further examples of third-party documents that may be relied on for such verification, such as government records and check-cashing or funds-transfer service receipts. The new rules became effective on January 10, 2014. The rules also define "qualified mortgages," imposing both underwriting standards—for example, a borrower's debt-to-income ratio may not exceed 43.0%—and limits on the terms of their loans. Points and fees are subject to a relatively stringent cap. Certain loans, including interest-only loans and negative amortization loans, cannot be qualified mortgages.

        Anti-Money Laundering and OFAC.    Under federal law, including the Bank Secrecy Act, or BSA, and the USA PATRIOT Act, certain financial institutions, such as the Bank, must maintain anti-money laundering programs that include established internal policies, procedures and controls; a designated BSA officer; an ongoing employee training program; and testing of the program by an independent audit function. Financial institutions are also prohibited from entering into specified financial transactions and account relationships and must meet enhanced standards for due diligence and customer identification especially in their dealings with foreign financial institutions and foreign customers. Financial institutions must take reasonable steps to conduct enhanced scrutiny of account relationships to guard against money laundering and to report any suspicious transactions, and law enforcement authorities have been granted increased access to financial information maintained by financial institutions. The Financial Crimes Enforcement Network (FinCEN) issued final rules under the BSA in July 2016 that clarify and strengthen the due diligence requirements for banks with regard to their customers, which must be complied with no later than May 2018.

        The Office of Foreign Assets Control, or OFAC, administers laws and Executive Orders that prohibit U.S. entities from engaging in transactions with certain prohibited parties. OFAC publishes lists of persons and organizations suspected of aiding, harboring or engaging in terrorist acts, known as Specially Designated Nationals and Blocked Persons. Generally, if a bank identifies a transaction, account or wire transfer relating to a person or entity on an OFAC list, it must freeze the account or block the transaction, file a suspicious activity report and notify the appropriate authorities.

        Bank regulators routinely examine institutions for compliance with these obligations and they must consider an institution's compliance in connection with the regulatory review of applications, including applications for bank mergers and acquisitions. Failure of a financial institution to maintain and implement adequate programs to combat money laundering and terrorist financing and comply with

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OFAC sanctions, or to comply with relevant laws and regulations, could have serious legal, reputational and financial consequences for the institution.

        Privacy.    The federal banking regulators have adopted rules that limit the ability of banks and other financial institutions to disclose non-public information about consumers to non-affiliated third parties. These limitations require disclosure of privacy policies to consumers and, in some circumstances, allow consumers to prevent disclosure of certain personal information to a non-affiliated third party. These regulations affect how consumer information is transmitted through financial services companies and conveyed to outside vendors. In addition, consumers may also prevent disclosure of certain information among affiliated companies that is assembled or used to determine eligibility for a product or service, such as that shown on consumer credit reports and asset and income information from applications. Consumers also have the option to direct banks and other financial institutions not to share information about transactions and experiences with affiliated companies for the purpose of marketing products or services. In addition to applicable federal privacy regulations, the Bank is subject to certain state privacy laws.

        Federal Home Loan Bank System.    The FHLB system, of which the Bank is a member, consists of 11 regional FHLBs governed and regulated by the Federal Housing Finance Board, or FHFB. The FHLBs serve as reserve or credit facilities for member institutions within their assigned regions. The reserves are funded primarily from proceeds derived from the sale of consolidated obligations of the FHLB system. The FHLBs make loans (i.e., advances) to members in accordance with policies and procedures established by the FHLB and the boards of directors of each regional FHLB.

        As a system member, according to currently existing policies and procedures, the Bank is entitled to borrow from the Dallas FHLB, provided it posts acceptable collateral. The Bank is also required to own a certain amount of capital stock in the FHLB. The Bank is in compliance with the stock ownership rules with respect to such advances, commitments and letters of credit and collateral requirements with respect to home mortgage loans and similar obligations. All loans, advances and other extensions of credit made by the FHLB to the Bank are secured by a portion of the respective mortgage loan portfolio, certain other investments and the capital stock of the FHLB held by the Bank.

        Enforcement Powers.    The federal banking agencies, including our primary federal regulator, the OCC, have broad enforcement powers, including the power to terminate deposit insurance, impose substantial fines and other civil and criminal penalties, and appoint a conservator or receiver. Failure to comply with applicable laws, regulations and supervisory agreements, breaches of fiduciary duty or the maintenance of unsafe and unsound conditions or practices could subject the Company or the Bank and their subsidiaries, as well as their respective officers, directors, and other institution-affiliated parties, to administrative sanctions and potentially substantial civil money penalties. For example, the regulatory authorities may appoint the FDIC as conservator or receiver for a banking institution (or the FDIC may appoint itself, under certain circumstances) if any one or more of a number of circumstances exist, including, without limitation, the fact that the banking institution is undercapitalized and has no reasonable prospect of becoming adequately capitalized, fails to become adequately capitalized when required to do so, fails to submit a timely and acceptable capital restoration plan or materially fails to implement an accepted capital restoration plan.

Effect of Governmental Monetary Policies

        The commercial banking business is affected not only by general economic conditions but also by U.S. fiscal policy and the monetary policies of the Federal Reserve. Some of the instruments of monetary policy available to the Federal Reserve include changes in the discount rate on member bank borrowings, the fluctuating availability of borrowings at the "discount window," open market operations, the imposition of and changes in reserve requirements against member banks' deposits and certain borrowings by banks and their affiliates and assets of foreign branches. These policies influence

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to a significant extent the overall growth of bank loans, investments, and deposits and the interest rates charged on loans or paid on deposits. We cannot predict the nature of future fiscal and monetary policies or the effect of these policies on our operations and activities, financial condition, results of operations, growth plans or future prospects.

Impact of Current Laws and Regulations

        The cumulative effect of these laws and regulations, while providing certain benefits, adds significantly to the cost of our operations and thus may have a negative impact on our profitability. There has also been a notable expansion in recent years of financial service providers that are not subject to the examination, oversight, and other rules and regulations to which we are subject. Those providers, because they are not so highly regulated, may have a competitive advantage over us and may continue to draw large amounts of funds away from traditional banking institutions, with a continuing adverse effect on the banking industry in general.

Future Legislation and Regulatory Reform

        In recent years, regulators have increased their focus on the regulation of financial institutions. From time to time, various legislative and regulatory initiatives are introduced in Congress and state legislatures. New regulations and statutes are regularly proposed that contain wide-ranging proposals for altering the structures, regulations and competitive relationships of financial institutions operating in the United States. We cannot predict whether or in what form any proposed regulation or statute will be adopted or the extent to which our business may be affected by any new regulation or statute. Future legislation, regulation and policies, and the effects of such legislation, regulation and policies, may have a significant influence on our operations and activities, financial condition, results of operations, growth plans or future prospects and the overall growth and distribution of loans, investments and deposits. Such legislation, regulation and policies have had a significant effect on the operations and activities, financial condition, results of operations, growth plans and future prospects of commercial banks in the past and are expected to continue to do so.

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CERTAIN MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES
FOR NON-US HOLDERS OF COMMON STOCK

        The following is a general discussion of the material U.S. federal income tax consequences of the ownership and disposition of our common stock by a non-U.S. holder (as defined below) that purchases our common stock pursuant to this offering and holds such common stock as a capital asset (generally, property held for investment). This discussion is based on current provisions of the Internal Revenue Code of 1986, as amended, or the Code, U.S. Treasury regulations promulgated thereunder, judicial decisions, and rulings and pronouncements of the IRS, all as in effect on the date hereof and all of which are subject to change, possibly with retroactive effect, or subject to different interpretation. We have not sought any ruling from the IRS with respect to the statements made and conclusions reached in the following discussion, and there can be no assurance that the IRS will agree with such statements and conclusions. We cannot assure you that a change in law will not significantly alter the tax considerations that we describe in this discussion.

        This discussion does not address all tax consequences that may be relevant to specific holders in light of their particular circumstances or to holders subject to special treatment under U.S. federal income tax laws (such as financial institutions, insurance companies, tax-exempt organizations, controlled foreign corporations, passive foreign investment companies, pension plans, retirement plans, partnerships, or other entities classified as partnerships, dealers in securities, brokers, U.S. expatriates or former long-term residents of the U.S., hybrid entities, persons subject to the alternative minimum tax, persons who have acquired our common stock as compensation or otherwise in connection with the performance of services, persons who have elected to mark securities to market, or persons who have acquired our common stock as part of a straddle, hedge, conversion transaction or other integrated investment). In addition, this discussion addresses only U.S. federal income tax consequences and does not address any other U.S. federal tax consequences (such as the Medicare contribution tax or U.S. federal estate or gift tax) or any aspects of state, local, or foreign tax laws.

        If a partnership or other entity or arrangement treated as a partnership for U.S. federal income tax purposes holds our common stock, the U.S. federal income tax treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. A partnership that holds our common stock and any partner who owns an interest in such a partnership should consult their tax advisors regarding the U.S. federal income tax consequences of an investment in our common stock.

        THIS DISCUSSION IS PROVIDED FOR GENERAL INFORMATION ONLY AND DOES NOT CONSTITUTE LEGAL ADVICE TO ANY PROSPECTIVE PURCHASER OF OUR COMMON STOCK. YOU ARE URGED TO CONSULT YOUR TAX ADVISOR WITH RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO YOUR PARTICULAR SITUATION, AS WELL AS ANY TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF OUR COMMON STOCK ARISING UNDER THE U.S. FEDERAL ESTATE OR GIFT TAX RULES OR UNDER THE LAWS OF ANY STATE, LOCAL, NON-U.S. OR OTHER TAXING JURISDICTION OR UNDER ANY APPLICABLE TAX TREATY.

        As used in this discussion, the term "non-U.S. holder" or "you" refers to a beneficial owner of our common stock that for U.S. federal income tax purposes is neither a partnership (including any entity or arrangement treated as a partnership for such purposes) nor:

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an individual who is a citizen or resident of the United States (including certain former citizens and former long-term residents of the United States);

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a corporation (or other entity taxable as a corporation) created or organized in or under the laws of the United States or any state thereof, including the District of Columbia;

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an estate the income of which is subject to U.S. federal income tax regardless of its source; or

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a trust which (1) is subject to the primary supervision of a court within the United States and one or more United States persons as defined under the Code have the authority to control all substantial decisions of the trust, or (2) has a valid election in effect under applicable Treasury regulations to be treated as a United States person as defined under the Code.

Dividends and Distributions

        In the event that we make a distribution of cash or other property (other than certain distributions of our stock) in respect of our common stock, the distribution generally will be treated as a dividend to the extent of our current or accumulated earnings and profits as determined under U.S. federal income tax principles. To the extent those distributions exceed both our current and our accumulated earnings and profits, they will first constitute a nontaxable return of capital, on a share-by-share basis, and will first reduce your basis in our common stock, but not below zero, and then will be treated as gain from the disposition of the common stock, the tax treatment of which is discussed below under "Sale, Exchange or Other Taxable Disposition."

        Subject to the discussions below and under the headings, "Information Reporting and Backup Withholding" and "Foreign Account Tax Compliance Act," distributions that constitute dividends paid to a non-U.S. holder of our common stock generally will be subject to U.S. withholding tax either at a rate of 30.0% of the gross amount of the dividend or such lower rate as may be specified by an applicable income tax treaty between the United States and the non-U.S. holder's country of residence. In order to receive a reduced treaty withholding rate, you must provide us with an IRS Form W-8BEN or IRS Form W-8BEN-E (or other applicable form) and satisfy applicable certification and other requirements, including providing us with a U.S. taxpayer identification number, and certifying qualification for the reduced rate. If the non-U.S. holder holds the stock through a financial institution or other agent acting on the non-U.S. holder's behalf, the non-U.S. holder will be required to provide appropriate documentation to the agent, which then will be required to provide certification to us or our paying agent, either directly or through other intermediaries.

        Dividends received by you that are effectively connected with your conduct of a U.S. trade or business (and, if an income tax treaty applies, that are attributable to a permanent establishment maintained by you in the United States), are exempt from such withholding tax. In order to obtain this exemption, you must provide us with an IRS Form W-8ECI (or successor form) or other applicable IRS Form W-8 (or successor form) properly certifying such exemption. Such effectively connected dividends, although not subject to withholding tax, generally are taxed at the same graduated rates applicable to U.S. persons, net of certain deductions and credits. In addition, if you are a corporate non-U.S. holder, dividends you receive that are effectively connected with your conduct of a U.S. trade or business may also be subject to a branch profits tax at a rate of 30.0% or such lower rate as may be specified by an applicable income tax treaty.

        A non-U.S. holder eligible for a reduced rate of U.S. withholding tax pursuant to an income tax treaty may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the IRS.

Sale, Exchange or Other Taxable Disposition

        Subject to the discussion below under the headings "Information Reporting and Backup Withholding" and "Foreign Account Tax Compliance Act," you generally will not be required to pay U.S. federal income tax on any gain realized upon the sale or other disposition of our common stock unless:

•

the gain is effectively connected with your conduct of a U.S. trade or business (and, if an income tax treaty applies, the gain is attributable to a permanent establishment maintained by you in the United States);

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•

you are an individual who is present in the United States for a period or periods aggregating 183 days or more during the calendar year in which the sale or disposition occurs and certain other conditions are met; or

•

our common stock constitutes a U.S. real property interest by reason of our status as a United States real property holding corporation, or USRPHC, for U.S. federal income tax purposes at any time within the shorter of the five-year period preceding your disposition of, or your holding period for, our common stock.

        If you are a non-U.S. holder described in the first bullet above, you will be required to pay tax on the net gain derived from the sale under regular graduated U.S. federal income tax rates, and a corporate non-U.S. holder described in the first bullet above also may be subject to the branch profits tax at a 30.0% rate, or such lower rate as may be specified by an applicable income tax treaty. If you are an individual non-U.S. holder described in the second bullet above, you will be required to pay a flat 30.0% tax on the gain derived from the sale, which tax may be offset by U.S.-source capital losses for the year.

        We believe that we are not currently and will not become a USRPHC. However, because the determination of whether we are a USRPHC depends on the fair market value of our U.S. real property relative to the fair market value of our other business assets, there can be no assurance that we will not become a USRPHC in the future. Generally, a corporation is a USRPHC only if the fair market value of its U.S. real property interests equals or exceeds 50% of the sum of the fair market value of its worldwide real property interests plus certain other assets used or held for use in a trade or business. Even if we become a USRPHC, however, as long as our common stock is regularly traded on an established securities market (within the meaning of Section 897(c)(3) of the Code), such common stock will be treated as U.S. real property interests only if you actually or constructively hold more than 5.0% of such regularly traded common stock at any time during the shorter of the five-year period preceding your disposition of, or your holding period for, our common stock.

Information Reporting and Backup Withholding

        Information returns will be filed annually with the IRS in connection with payments of dividends and the proceeds from a sale or other disposition of our common stock, regardless of whether withholding was required. A non-U.S. holder may have to comply with certification procedures to establish that it is not a U.S. person in order to avoid backup withholding tax (currently at a rate of 28%). The certification procedures required to claim a reduced rate of withholding under an applicable income tax treaty generally should satisfy the certification requirements necessary to avoid backup withholding tax as well.

        Notwithstanding the foregoing, information reporting and backup withholding may apply if either we or our paying agent has actual knowledge, or reason to know, that the holder is a U.S. person. Even if a non-U.S. holder establishes an exemption from information reporting, we or our paying agent may still be required to report annually to the IRS the amount of dividends paid, the name and address of the recipient, and the amount, if any, of tax withheld. A similar report is sent to the non-U.S. holder. Pursuant to tax treaties or other agreements, the IRS may make its reports available to tax authorities in the recipient's country of residence.

        Under U.S. Treasury regulations, the payment of proceeds from the disposition of our common stock by a non-U.S. holder effected at a U.S. office of a broker generally will be subject to information reporting and backup withholding, unless the beneficial owner, under penalties of perjury, certifies, among other things, its status as not a United States person or otherwise establishes an exemption. The payment of proceeds from the disposition of our common stock by a non-U.S. holder effected at a non-U.S. office of a broker generally will not be subject to backup withholding and information

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reporting, except as noted below. Information reporting will apply in the case of proceeds from a disposition of our common stock by a non-U.S. holder effected at a non-U.S. office of a broker that is:

•

a "United States person" for U.S. federal income tax purposes;

•

a "controlled foreign corporation" for U.S. federal income tax purposes;

•

a foreign person 50% or more of whose gross income from certain periods is effectively connected with a U.S. trade or business; or

•

a foreign partnership if at any time during its tax year (a) one or more of its partners are U.S. persons who, in the aggregate, hold more than 50% of the income or capital interests of the partnership or (b) the foreign partnership is engaged in a U.S. trade or business.

        Information reporting will apply unless the broker has documentary evidence in its files that the owner is not a United States person and certain other conditions are satisfied, or the beneficial owner otherwise establishes an exemption (and the broker has no knowledge or reason to know to the contrary). Backup withholding will apply if the sale is subject to information reporting and the broker has actual knowledge that the owner is a "United States person" for U.S. federal income tax purposes.

        U.S. backup withholding tax is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against a non-U.S. holder's U.S. federal income tax liability provided the required information is timely furnished to the IRS.

Foreign Account Tax Compliance Act

        The Foreign Account Tax Compliance Act, or FATCA, imposes a 30% withholding tax on certain types of payments made to "foreign financial institutions" and other specified non-U.S. entities unless certain due diligence, reporting, withholding and certification requirements are satisfied.

        The Treasury Department has issued final regulations under FATCA. As a general matter, FATCA imposes a 30% withholding tax on dividends on, and the gross proceeds from the sale or other disposition of, our common stock if paid to a foreign entity unless:

•

the foreign entity is a "foreign financial institution" that undertakes specified due diligence, reporting, withholding and certification obligations or, in the case of a foreign financial institution that is a resident in a jurisdiction that has entered into an intergovernmental agreement to implement FATCA, the entity complies with the diligence and reporting requirements of such an agreement;

•

the foreign entity is not a "foreign financial institution" and identifies certain of its U.S. investors; or

•

the foreign entity otherwise is exempted under FATCA.

        An intergovernmental agreement between the United States and an applicable non-U.S. government may modify these rules. Withholding is required with respect to dividends on our common stock and for dispositions that occur on or after January 1, 2019, with respect to gross proceeds from a sale or other disposition of our common stock.

        Under certain circumstances, a non-U.S. holder might be eligible for refunds or credits of such withholding taxes by filing a U.S. federal income tax return (which may entail a significant administrative burden).

        Prospective investors should consult their tax advisors regarding the effect of FATCA on their ownership and disposition of our common stock.

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UNDERWRITING

        We are offering the shares of our common stock described in this prospectus in an underwritten offering in which we, and Stephens Inc. and Keefe, Bruyette & Woods, Inc., as representatives of the underwriters named below, are entering into an underwriting agreement with respect to the shares of our common stock being offered hereby. Subject to certain conditions, each underwriter has severally agreed to purchase, and we have agreed to sell, the number of shares of our common stock indicated in the following table:

Underwriter	Number of Shares
Stephens Inc.
Keefe, Bruyette & Woods, Inc.
Sandler O'Neill & Partners, L.P.
Total

        The underwriters are offering the shares of our common stock subject to a number of conditions, including receipt and acceptance of our common stock by the underwriters. The obligations of the underwriters to pay for and accept delivery of the shares offered by this prospectus are subject to these conditions. The underwriting agreement between us, and the underwriters provides that if any underwriter defaults, the purchase commitments of the non-defaulting underwriters may be increased or this offering may be terminated.

        In connection with this offering, the underwriters or securities dealers may distribute offering documents to investors electronically. See "—Electronic Distribution."

Underwriting Discounts

        Shares of our common stock sold by the underwriters to the public will be offered at the initial public offering price set forth on the cover page of this prospectus. Any shares of our common stock sold by the underwriters to securities dealers may be sold at a discount of up to $            per share from the initial public offering price. Any of these securities dealers may resell any shares of our common stock purchased from the underwriters to other brokers or dealers at a discount of up to $            per share from the initial public offering price. If all of the shares of our common stock are not sold at the initial public offering price, the representatives may change the offering price and the other selling terms. Sales of shares of our common stock made outside of the U.S. may be made by affiliates of the underwriters.

        The following table shows the initial public offering price, underwriting discounts and proceeds before expenses to us. The information assumes either no exercise or full exercise by the underwriters of their option to purchase an additional                        shares of our common stock, discussed below:

	Per Share	No Exercise	Full Exercise
Public offering price	$	$	$
Underwriting discounts
Proceeds to us, before expenses

        We estimate the expenses of this offering, not including underwriting discounts, to be $            , and such expenses will be payable by us. We also have agreed to reimburse the underwriters up to $        for certain of their offering expenses, including their counsel fees for expenses related to FINRA matters and the directed share program and certain costs related to the road show. In accordance with FINRA Rule 5110, these reimbursed fees are deemed underwriting compensation for this offering.

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Option to Purchase Additional Shares

        We have granted the underwriters an option to purchase up to                additional shares of our common stock, at the initial public offering price, less underwriting discounts. The underwriters may exercise this option, in whole or in part, from time to time for a period of 30 days from the date of this prospectus. If the underwriters exercise this option, each underwriter will be obligated, subject to the conditions in the underwriting agreement, to purchase a number of additional shares of our common stock proportionate to the number of shares reflected next to such underwriter's name in the table above relative to the total number of shares reflected in such table. If any additional shares of our common stock are purchased, the underwriters will offer the additional shares on the same terms as those on which the shares are being offered.

Lock-Up Agreements

        We, our executive officers and our directors are expected to enter into lock-up agreements with the underwriters. Under these agreements, we and each of these persons may not, without the prior written approval of the representatives and subject to limited exceptions:

•

offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant for the sale of, hypothecate, establish an open "put equivalent position" within the meaning of Rule 16a-1(h) under the Exchange Act, or otherwise dispose of or transfer any shares of our common stock or any securities convertible into or exchangeable or exercisable for our common stock, whether now owned or hereafter acquired or with respect to which such person has or hereafter acquires the power of disposition, or exercise any right with respect to the registration thereof, or file or cause to be filed any registration statement under the Securities Act, with respect to any of the foregoing;

•

enter into any swap, hedge, or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of the shares of our common stock or such other securities, whether any such swap or transaction is to be settled by delivery of shares of our common stock or other securities, in cash or otherwise; or

•

publicly disclose the intention to make any such offer, pledge, sale or disposition, or to enter into any such swap, hedge, transaction or other arrangement.

        These restrictions will be in effect for a period of 180 days after the completion of this offering. At any time and without public notice, the representatives may, in their sole discretion, waive or release all or some of the securities from these lock-up agreements. However, as to any of our executive officers or directors, the representatives have agreed to notify us at least three business days before the effective date of any release or waiver, and we have agreed to announce the impending release or waiver by press release through a major news service at least two business days before the effective date of the release or waiver.

        These restrictions also apply to securities convertible into or exchangeable or exercisable for or repayable with our common stock to the same extent as they apply to our common stock. They also apply to common stock owned now or later acquired by the person executing the agreement or for which the person executing the agreement later acquires the power of disposition.

Pricing of the Offering

        Prior to this offering, there has been no public market for our common stock. The initial public offering price will be determined by negotiations between us and the representatives of the underwriters. In addition to prevailing market conditions, among the factors to be considered in determining the initial public offering price of our common stock will be our historical performance, our business potential and our earnings prospects, an assessment of our management, the recent

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market prices of, and demand for, publicly-traded common stock of comparable companies, the consideration of the above factors in relation to market valuation of comparable companies in related businesses and other factors deemed relevant by the underwriters and us. The estimated initial public offering price range set forth on the cover page of this preliminary prospectus is subject to change as a result of market conditions and other factors. Neither we nor the underwriters can assure investors that an active trading market for the shares of our common stock may not develop. It is also possible that the shares of our common stock will not trade in the public market at or above the initial public offering price following the completion of this offering.

Exchange Listing

        We have applied for our common stock approved to be listed on the Nasdaq Global Select Market under the symbol "CBTX."

Indemnification and Contribution

        We have agreed to indemnify the underwriters and their affiliates, selling agents, and controlling persons against certain liabilities, including under the Securities Act. If we are unable to provide this indemnification, we will contribute to the payments the underwriters and their affiliates, selling agents, and controlling persons may be required to make in respect of those liabilities.

Price Stabilization, Short Positions, and Penalty Bids

        To facilitate this offering and in accordance with Regulation M under the Exchange Act, or Regulation M, the underwriters may engage in transactions that stabilize, maintain, or otherwise affect the price of our common stock, including:

•

stabilizing transactions;

•

short sales; and

•

purchases to cover positions created by short sales.

        Stabilizing transactions consist of bids or purchases made for the purpose of preventing or retarding a decline in the market price of our common stock while this offering is in progress. These transactions may also include making short sales of our common stock, which involve the sale by the underwriters of a greater number of shares of common stock than they are required to purchase in this offering. Short sales may be "covered short sales," which are short positions in an amount not greater than the underwriters' option to purchase additional shares referred to above, or may be "naked short sales," which are short positions in excess of that amount.

        The underwriters may close out any covered short position either by exercising their option to purchase additional shares, in whole or in part, or by purchasing shares in the open market. In making this determination, the underwriters will consider, among other things, the price of shares available for purchase in the open market compared to the price at which they may purchase shares through the option to purchase additional shares described above. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of our common stock in the open market that could adversely affect investors who purchased in this offering.

        As an additional means of facilitating our initial public offering, the underwriters may bid for, and purchase, shares of our common stock in the open market. The underwriting syndicate also may reclaim selling concessions allowed to an underwriter or a dealer for distributing shares of our common stock in this offering, if the syndicate repurchases previously distributed shares of our common stock to cover syndicate short positions or to stabilize the price of our common stock.

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        As a result of these activities, the price of our common stock may be higher than the price that otherwise might exist in the open market. Neither we nor the underwriters make any representation or prediction as to the effect that the transactions described above may have on the price of our common stock. If these activities are commenced, they may be discontinued by the underwriters at any time without notice. The underwriters may carry out these transactions on the Nasdaq Global Select Market, in the over-the-counter market or otherwise.

Passive Market Making

        In connection with this offering, the underwriters may engage in passive market making transactions in our common stock on the Nasdaq Global Select Market in accordance with Rule 103 of Regulation M during a period before the commencement of offers or sales of our common stock and extending through the completion of the distribution of this offering. A passive market maker must generally display its bid at a price not in excess of the highest independent bid of that security. However, if all independent bids are lowered below the passive market maker's bid, the passive market maker may continue to bid and effect purchases at a price exceeding the then highest independent bid until specified purchase limits are exceeded, at which time such bid must be lowered to an amount no higher than the then highest independent bid. Passive market making may cause the price of our common stock to be higher than the price that otherwise would exist in the open market in the absence of those transactions. The underwriters engaged in passive market making are not required to engage in passive market making and may end passive market making activities at any time.

Electronic Distribution

        A prospectus in electronic format may be made available by e-mail or on the websites or through online services maintained by one or more of the underwriters or their affiliates. In those cases, prospective investors may view offering terms online and may be allowed to place orders online. The underwriters may agree with us to allocate a specific number of shares for sale to online brokerage account holders. Any such allocation for online distributions will be made by the underwriters on the same basis as other allocations. Other than the prospectus in electronic format, the information on the underwriters' websites and any information contained on any other website maintained by any of the underwriters is not part of this prospectus, has not been approved and/or endorsed by the underwriters or us, and should not be relied upon by investors.

Directed Share Program

        At our request, the underwriters have reserved for sale, at the initial public offering price, up to             shares of our common stock, which represents           % of the shares of our common stock offered by this prospectus for sale, at the initial public offering price to our directors, officers, employees, business associates, and related persons. Reserved shares purchased by our directors and executive officers will be subject to the lock-up provisions described above. The number of shares of our common stock available for sale to the general public will be reduced to the extent these persons purchase the reserved shares. We do not know if these persons will choose to purchase all or any portion of these reserved shares. Any reserved shares of our common stock that are not so purchased will be offered by the underwriters to the general public on the same terms as the other shares of common stock offered by this prospectus.

Affiliations

        The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment advisory, investment research, principal investment, hedging, financing, loan referrals, valuation, and brokerage activities. From time to time, the

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underwriters and/or their respective affiliates have directly and indirectly engaged, and may in the future engage, in various financial advisory, investment banking loan referrals, and commercial banking services with us and our affiliates, for which they received or paid, or may receive or pay, customary compensation, fees, and expense reimbursement. In the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and those investment and securities activities may involve securities and/or instruments of ours. The underwriters and their respective affiliates may also make investment recommendations and/or publish or express independent research views in respect of those securities or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in those securities and instruments.

Selling Restrictions

European Economic Area

        In relation to each member state of the European Economic Area that has implemented the Prospectus Directive, each referred to as a Relevant Member State, an offer to the public of any securities which are the subject of the offering contemplated by this prospectus may not be made in that Relevant Member State, except that an offer to the public in that Relevant Member State of any securities may be made at any time under the following exemptions under the Prospectus Directive:

•

to any legal entity which is a "qualified investor" as defined in the Prospectus Directive;

•

to fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive), subject to obtaining the prior consent of the underwriters for any such offer; or

•

in any other circumstances falling within Article 3(2) of the Prospectus Directive,

        provided that no such offer of securities shall require us or any of the underwriters to publish a prospectus pursuant to Article 3 of the Prospectus Directive.

        For the purposes of this provision, the expression "an offer to the public" in relation to any securities in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the securities to be offered so as to enable an investor to decide to purchase or subscribe to the securities, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State and the expression "Prospectus Directive" means Directive 2003/71/EC (and amendments thereto, including by Directive 2010/73/EU) and includes any relevant implementing measure in each Relevant Member State.

United Kingdom

        This prospectus is only being distributed to, and is only directed at, persons in the United Kingdom that are qualified investors within the meaning of Article 2(1)(e) of the Prospectus Directive that are also (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended, referred to herein as the Order, and/or (ii) high net worth entities falling within Article 49(2)(a) to (d) of the Order and other persons to whom it may lawfully be communicated. Each such person is referred to herein as a Relevant Person.

        This prospectus and its contents are confidential and should not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other persons in the United Kingdom. Any person in the United Kingdom that is not a Relevant Person should not act or rely on this document or any of its contents.

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LEGAL MATTERS

        The validity of our common stock offered by this prospectus will be passed upon for us by Norton Rose Fulbright US LLP, Austin, Texas. Certain legal matters in connection with this offering will be passed upon for the underwriters by Covington & Burling LLP, Washington, D.C.

EXPERTS

        The audited consolidated financial statements included in this prospectus and elsewhere in the registration statement have been so included in reliance upon the report of Grant Thornton LLP, independent registered public accountants, upon the authority of said firm as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

        We have filed with the SEC a registration statement on Form S-1 under the Securities Act relating to the shares of common stock offered by this prospectus that includes important business and financial information about us that is not included in or delivered with this prospectus. If we have made references in this prospectus to any contracts, agreements or other documents and also filed any of those contracts, agreements or other documents as exhibits to the registration statement, you should read the relevant exhibit for a more complete understanding of the document or the matter involved.

        You may read and copy the registration statement and the related exhibits, and the reports, proxy statements and other information we will file with the SEC, at the SEC's public reference room maintained by the SEC at Room 1580, 100 F Street N.E., Washington, D.C. 20549. You can also request copies of those documents, upon payment of a duplicating fee, by writing to the SEC. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference room. The SEC also maintains an internet site that contains reports, proxy and information statements and other information regarding issuers that file with the SEC. The site's internet address is www.sec.gov. We also maintain a website at www.communitybankoftx.com. Upon completion of this offering, you may access these materials free of charge as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. Information contained on our website is not a part of this prospectus and the inclusion of our website address in this prospectus is an inactive textual reference only. You should not rely on any such information in making your decision whether to purchase our securities.

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INDEX TO FINANCIAL STATEMENTS

Condensed Consolidated Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of June 30, 2017 and December 31, 2016 (Unaudited)	F-2
Condensed Consolidated Statements of Income for the Three and Six Months Ended June 30, 2017 and 2016 (Unaudited)	F-3
Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2017 and 2016 (Unaudited)	F-4
Condensed Consolidated Statements of Changes in Shareholders' Equity for the Six Months Ended June 30, 2017 and 2016 (Unaudited)	F-5
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2017 and 2016 (Unaudited)	F-6
Notes to Condensed Consolidated Financial Statements (Unaudited)	F-7
Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm	F-50
Consolidated Balance Sheets as of December 31, 2016 and December 31, 2015	F-51
Consolidated Statements of Income for the Years Ended December 31, 2016 and December 31, 2015	F-52
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2016 and December 31, 2015	F-53
Consolidated Statements of Changes in Shareholders' Equity for the Years Ended December 31, 2016 and December 31, 2015	F-54
Consolidated Statements of Cash Flows for the Years Ended December 31, 2016 and December 31, 2015	F-55
Notes to Consolidated Financial Statements	F-56

F-1

CBTX, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

AS OF JUNE 30, 2017 AND DECEMBER 31, 2016

	(Dollars in Thousands)
	(Except for Per Share Amounts)
	June 30, 2017			December 31, 2016
ASSETS
Cash and due from banks	$	58,124		$	53,000
Interest-bearing deposits at other financial institutions		249,049			329,103
Total Cash and Cash Equivalents		307,173			382,103
Time deposits in other banks		600			600
Securities		220,330			205,978
Other investments		12,088			12,063
Loans held for sale		559			613
Loans, net of allowance for loan loss of $25,187 and $25,006 at June 30, 2017 and December 31, 2016, respectively		2,167,256			2,129,879
Premises and equipment, net		56,609			57,514
Goodwill		80,950			80,950
Other intangible assets, net of accumulated amortization of $13,400 and $12,851 at June 30, 2017 and December 31, 2016, respectively		7,298			7,791
Cash value of life insurance		67,091			51,430
Deferred tax asset, net		8,195			9,031
Repossessed real estate and other assets		1,435			1,861
Other assets		11,293			11,709
Total Assets	$	2,940,877		$	2,951,522
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Noninterest-bearing deposits	$	1,030,865		$	1,025,425
Interest-bearing deposits		1,485,919			1,515,335
Total Deposits		2,516,784			2,540,760
Repurchase agreements		2,179			2,343
Junior subordinated debt		6,726			6,726
Note payable		25,464			27,679
Other liabilities		17,760			16,377
Total Liabilities		2,568,913			2,593,885
Commitments and Contingencies (Note 10)
Shareholders' Equity
Preferred stock, $0.01 par value, 10,000,000 shares authorized, no shares issued		—			—
Common stock, $0.01 par value; 90,000,000 shares authorized, 22,971,504 shares issued at June 30, 2017 and December 31, 2016, 22,063,072 shares outstanding at June 30, 2017 and 22,062,072 shares outstanding at December 31, 2016		230			230
Additional paid in capital		278,517			278,501
Retained earnings		108,635			95,274
Treasury stock, at cost (908,432 shares held at June 30, 2017 and 909,432 held at December 31, 2016)		(15,429	)		(15,446	)
Accumulated other comprehensive income/(loss)		11			(922	)
Total Shareholders' Equity		371,964			357,637
Total Liabilities and Shareholders' Equity	$	2,940,877		$	2,951,522

See accompanying notes to condensed consolidated financial statements.

F-2

CBTX, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2017 AND 2016

	(Dollars in Thousands)
	(Except for Per Share Amounts)
	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2017			2016			2017			2016
INTEREST INCOME
Interest and fees on loans	$	26,560		$	25,986		$	52,513		$	51,304
Securities		1,353			915			2,656			1,773
Federal Funds and interest-bearing deposits		813			541			1,555			1,168
Total Interest Income		28,726			27,442			56,724			54,245
INTEREST EXPENSE
Deposits		1,857			1,715			3,695			3,308
Repurchase agreements		1			2			3			3
Note payable		264			271			515			545
Junior subordinated debt		79			67			153			127
Total Interest Expense		2,201			2,055			4,366			3,983
NET INTEREST INCOME		26,525			25,387			52,358			50,262
PROVISION FOR LOAN LOSS		(694	)		975			266			2,700
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSS		27,219			24,412			52,092			47,562
NONINTEREST INCOME
Deposit account service charges		1,517			1,620			3,017			3,252
Net gain on sale of assets		339			350			703			533
Card interchange fees		877			841			1,709			1,685
Earnings on bank-owned life insurance		335			336			661			677
Other		458			425			884			1,651
Total Noninterest Income		3,526			3,572			6,974			7,798
NONINTEREST EXPENSE
Salaries and employee benefits		11,299			11,069			22,723			22,061
Net occupancy expense		2,351			2,934			4,584			5,330
Regulatory fees		621			547			1,231			1,148
Data processing		651			620			1,293			1,240
Printing, stationery and office		370			348			717			699
Amortization of intangibles		271			295			549			594
Professional and director fees		706			693			1,331			1,186
Correspondent bank and customer related transaction expenses		78			80			152			161
Loan processing costs		133			97			205			240
Advertising, marketing and business development		508			212			687			397
Repossessed real estate and other asset expense		85			99			203			121
Security and protection expense		352			448			724			882
Other expenses		1,434			1,326			2,887			2,775
Total Noninterest Expense		18,859			18,768			37,286			36,834
NET INCOME BEFORE INCOME TAX EXPENSE		11,886			9,216			21,780			18,526
INCOME TAX EXPENSE		(3,181	)		(2,845	)		(6,213	)		(5,656	)
CONSOLIDATED NET INCOME	$	8,705		$	6,371		$	15,567		$	12,870
EARNINGS PER COMMON SHARE
Basic	$	0.39		$	0.29		$	0.71		$	0.58
Diluted	$	0.39		$	0.29		$	0.70		$	0.58

See accompanying notes to condensed consolidated financial statements.

F-3

CBTX, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2017 AND 2016

	(Dollars in Thousands)
	Three Months Ended Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Consolidated net income	$	8,705		$	6,371		$	15,567		$	12,870
Unrealized gains on securities available for sale arising during the period, net		1,055			894			1,420			2,122
Reclassification adjustment for realized gains included in net income		14			28			14			28
Change in related deferred income tax		(374	)		(323	)		(501	)		(753	)
Other comprehensive income		695			599			933			1,397
Total comprehensive income	$	9,400		$	6,970		$	16,500		$	14,267

See accompanying notes to condensed consolidated financial statements.

F-4

CBTX, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(UNAUDITED)

FOR THE SIX MONTHS ENDED JUNE 30, 2017 AND 2016

	Common Stock										Treasury Stock						Accumulated Other Comprehensive Income (Loss)
					Additional Paid In Capital			Retained Earnings
(Dollars in Thousands)	Shares		Amount								Shares			Amount						Total
Balance, January 1, 2017		22,971,504	$	230	$	278,501		$	95,274			(909,432	)	$	(15,446	)	$	(922	)	$	357,637
Issuance of Shares of Treasury Stock by Exercise of Stock Options		—		—		—			—			1,000			17			—			17
Stock-based Compensation Expense		—		—		16			—			—			—			—			16
Dividends on Common Stock, $0.10 per share		—		—		—			(2,206	)		—			—			—			(2,206	)
Consolidated Net Income		—		—		—			15,567			—			—			—			15,567
Change in Unrealized Loss on Securities, net of tax of $(501)		—		—		—			—			—			—			933			933
Balance, June 30, 2017		22,971,504	$	230	$	278,517		$	108,635			(908,432	)	$	(15,429	)	$	11		$	371,964
Balance, January 1, 2016		22,971,504	$	230	$	281,163		$	72,462			(668,030	)	$	(10,955	)	$	1,414		$	344,314
Purchase of Shares of Treasury Stock		—		—		—			—			(635,100	)		(11,079	)		—			(11,079	)
Issuance of Shares of Treasury Stock by Exercise of Stock Options		—		—		(1,336	)		—			202,044			3,333			—			1,997
Stock-based Compensation Expense		—		—		27			—			—			—			—			27
Dividends on Common Stock, $0.10 per share		—		—		—			(2,210	)		—			—			—			(2,210	)
Consolidated Net Income		—		—		—			12,870			—			—			—			12,870
Change in Unrealized Gain on Securities, net of tax of $(753)		—		—		—			—			—			—			1,397			1,397
Balance, June 30, 2016		22,971,504	$	230	$	279,854		$	83,122			(1,101,086	)	$	(18,701	)	$	2,811		$	347,316

See accompanying notes to condensed consolidated financial statements.

F-5

CBTX, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

FOR THE SIX MONTHS ENDED JUNE 30, 2017 AND 2016

	(Dollars in Thousands)
	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net income	$	15,567		$	12,870
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Provision for loan losses		266			2,700
Depreciation		1,703			1,644
Deferred income tax provision		334			(137	)
Amortization of intangibles		549			594
Valuation write downs on repossessed real estate and other assets		51			—
Net realized gain on securities		(14	)		(28	)
Net realized gain on other securities		(11	)		(11	)
(Gain) loss on sale of repossessed real estate and other assets		(271	)		1
Gain on sale of loans held for sale		(220	)		(219	)
Gain on sale of loans		(149	)		(315	)
Gain on sale of fixed assets		(63	)		—
Net income on bank-owned life insurance		(661	)		(677	)
Amortization of premiums on investment securities, net		625			593
Stock-based compensation expense		16			27
Change in operating assets and liabilities:
Net decrease (increase) in loans held for sale		274			(189	)
Other assets		359			(2,709	)
Other liabilities		(696	)		1,195
Total adjustments		2,092			2,469
Net cash provided by operating activities		17,659			15,339
CASH FLOWS FROM INVESTING ACTIVITIES:
Activity in available for sale securities:
Purchases		(178,534	)		(186,964	)
Proceeds from sales, calls, and maturities		155,230			158,430
Principal repayments		9,402			7,365
Activity in held to maturity securities:
Principal repayments		1			1
Redemption of other investments		130			93
Purchase of other investments		(155	)		(2	)
Increase in loans, net		(63,929	)		(69,818	)
Loan participation sales		24,978			2,967
Loan participations purchased		(1,297	)		—
Sale of U.S. Small Business Administration loans		2,173			3,490
Purchase of bank-owned life insurance		(15,000	)		—
Proceeds from sale of repossessed other assets		958			12
Proceeds from sale of repossessed real estate		942			—
Purchases of premises and equipment		(627	)		(2,269	)
Sales of premises and equipment		580			—
Net cash used in investing activities		(65,148	)		(86,695	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in noninterest-bearing deposits		5,440			(6,351	)
Net decrease in interest-bearing deposits		(29,416	)		(8,420	)
Net decrease in securities sold under agreements to repurchase		(164	)		(350	)
Purchase of treasury stock		—			(11,079	)
Proceeds from issuance of treasury stock for exercise of stock options		17			1,997
Repayment of note payable		(2,215	)		(1,107	)
Dividends paid on common stock		(1,103	)		(2,221	)
Net cash used in financing activities		(27,441	)		(27,531	)
NET DECREASE IN CASH AND CASH EQUIVALENTS		(74,930	)		(98,887	)
CASH AND CASH EQUIVALENTS, BEGINNING		382,103			434,901
CASH AND CASH EQUIVALENTS, ENDING	$	307,173		$	336,014

See accompanying notes to condensed consolidated financial statements.

F-6

CBTX, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(DOLLARS IN THOUSANDS)

NOTE 1: BASIS OF PRESENTATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES

Nature of Operations—The Company was formed on January 26, 2007, and through its Bank subsidiary, operates 37 locations throughout Southeast Texas in Chambers, Fort Bend, Hardin, Harris, Jasper, Jefferson, Newton, Orange, Tyler, and Wharton counties. The Company's primary source of revenue is from investing funds received from depositors and from providing loan and other financial services to its customers. The Bank operates under a national charter and therefore is subject to regulation by the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC). The Company is subject to regulation by the Federal Reserve Board.

Basis of Presentation—The accompanying unaudited condensed consolidated financial statements include the accounts of CBTX, Inc. (the Company) and CommunityBank of Texas, N.A. (the Bank) a wholly owned subsidiary of the Company. All material intercompany balances and transactions have been eliminated in consolidation.

        The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP), but do not include all of the information and footnotes required for complete consolidated financial statements. In management's opinion, these interim unaudited condensed consolidated financial statements include all adjustments of a normal recurring nature necessary for a fair statement of the Company's consolidated financial position at June 30, 2017, consolidated results of operations for the three and six months ended June 30, 2017 and 2016, consolidated stockholders' equity for the six months ended June 30, 2017 and 2016 and consolidated cash flows for the six months ended June 30, 2017 and 2016.

        Accounting measurements at interim dates inherently involve greater reliance on estimates than at year end and the results for the interim periods shown in this report are not necessarily indicative of results to be expected for the full year due in part to global economic and financial market conditions, interest rates, access to sources of liquidity, market competition and interruptions of business processes. These interim unaudited condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto for the years ended December 31, 2016 and 2015 included within this Form S-1 registration statement.

Segment Reporting—The Company has one reportable segment. All of the Company's activities are interrelated and each activity is dependent and assessed based on how each of the activities of the Company supports the others. For example, lending is dependent upon the ability of the Company to fund itself with deposits and borrowings while managing the interest rate and credit risk. Accordingly, all significant operating decisions are based upon analysis of the Bank as one segment or unit. The Company's chief operating decision-maker, the CEO, uses the consolidated results to make operating and strategic decisions.

Use of Estimates—In preparing financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated balance sheets and reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates. Material estimates that are particularly susceptible to significant change in the near term relate primarily to the determination

F-7

CBTX, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(DOLLARS IN THOUSANDS)

NOTE 1: BASIS OF PRESENTATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (Continued)

of the allowance for loan losses, the fair value of the Company's investment securities, repossessed assets, deferred tax assets, financial instruments and intangible assets.

Summary of Significant Accounting and Reporting Policies—The accounting and reporting policies of the Company and the Bank conform to U.S. GAAP and to prevailing practices within the banking industry. The Company's significant accounting and reporting policies have not changed materially from those disclosed in the December 31, 2016 audited financials included in this registration statement.

New Accounting Standards and Disclosure Requirements—The Jumpstart Our Business Startups (JOBS) Act permits an "emerging growth company" to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. However, the Company has decided not to take advantage of this provision. As a result, the Company will comply with new or revised accounting standards to the same extent that compliance is required for non-emerging growth companies. Our decision to opt out of the extended transition period under the JOBS Act is irrevocable.

        In May 2014, the FASB issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606 ("ASU 2014-09"), which supersedes the revenue recognition requirements in Topic 605, Revenue Recognition. ASU 2014-09 requires entities to recognize revenue in a way that depicts the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606) ("ASU 2015-14"), which defers the effective date of ASU 2014-09 by one year to January 1, 2018.

        The Company's revenue is comprised of net interest income on financial assets and financial liabilities, which is explicitly excluded from the scope of ASU 2014-09, and non-interest income. Management continues to assess the potential impact of ASU 2014-09 on the non-interest income components. This update will be effective for the Company in the first quarter of 2018 with a cumulative effect adjustment to opening retained earnings, if such adjustment is deemed to be significant.

        ASU 2016-01, Financial Instruments-Overall (Subtopic 825-10)—Recognition and Measurement of Financial Assets and Financial Liabilities. The amendments in this Update address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. ASU 2016-01, among other things, (i) requires equity investments, with certain exceptions, to be measured at fair value with changes in fair value recognized in net income, (ii) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment, (iii) eliminates the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet, (iv) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes,

F-8

CBTX, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(DOLLARS IN THOUSANDS)

NOTE 1: BASIS OF PRESENTATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (Continued)

(v) requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments, (vi) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements and (viii) clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale investments. This update will be effective for the Company on January 1, 2018. The Company is currently evaluating this update and does not expect it to have a significant impact to the Company's consolidated financial statements.

        ASU 2016-02, Leases (Topic 842). ASU 2016-02 will, among other things, require lessees to recognize a lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee's right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 does not significantly change lease accounting requirements applicable to lessors; however, certain changes were made to align, where necessary, lessor accounting with the lessee accounting model and ASC Topic 606, "Revenue from Contracts with Customers." ASU 2016-02 will be effective for the Company on January 1, 2019 and will require transition using a modified retrospective approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The Company is currently evaluating the potential impact of ASU 2016-02 on the consolidated financial statements.

        ASU 2016-05, Derivatives and Hedging (Topic 815) Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships. ASU 2016-05 clarifies that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument under ASC Topic 815 does not, in and of itself, require redesignation of that hedging relationship provided that all other hedge accounting criteria continue to be met. ASU 2016-05 was effective on January 1, 2017 and it did not have a significant impact on the consolidated financial statements.

        ASU 2016-07, Investments—Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting. The amendments affect all entities that have an investment that becomes qualified for the equity method of accounting as a result of an increase in the level of ownership interest or degree of influence. ASU 2016-07 simplifies the transition to the equity method of accounting by eliminating retroactive adjustment of the investment when an investment qualifies for use of the equity method, among other things. ASU 2016-07 was effective on January 1, 2017 and did not have a significant impact on the consolidated financial statements.

        ASU 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 simplifies several aspects of the accounting for employee share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. Per ASU 2016-09: (1) all excess tax benefits and tax deficiencies should be recognized as income tax expense or benefit in the income statement, rather than in additional paid-in capital under current guidance; (2) excess tax benefits should be classified along with other income tax cash flows as an operating activity on the

F-9

CBTX, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(DOLLARS IN THOUSANDS)

NOTE 1: BASIS OF PRESENTATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (Continued)

statement of cash flows, rather than as a separate cash inflow from financing activities and cash outflow from operating activities under current guidance; (3) cash paid by an employer when directly withholding shares for tax-withholding purposes should be classified as a financing activity; and (4) an entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest, as under current guidance, or account for forfeitures when they occur.

        Effective January 1, 2017, the Company adopted ASU 2016-09. There was no material impact for the six months ended June 30, 2017, and the Company does not expect a material impact in future periods. The Company prospectively applied the guidance for the presentation of excess tax benefits as an operating cash flow with no impact for the six months ended June 30, 2017. Finally, the Company elected to account for forfeitures as they occur.

        ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts and requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization's portfolio. In addition, ASU 2016-13 amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. ASU 2016-13 will be effective on January 1, 2020. The Company is currently evaluating the potential impact of ASU 2016-13 on the consolidated financial statements.

        ASU 2016-15, Statement of Cash Flows (Topic 230)—Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 provides guidance related to certain cash flow issues in order to reduce the current and potential future diversity in practice. ASU 2016-15 will be effective on January 1, 2018 and is not expected to have a significant impact on the consolidated financial statements.

        ASU 2016-16, Income Taxes (Topic 740)—Intra-Entity Transfers of Assets Other Than Inventory. ASU 2016-16 provides guidance stating that an entity should recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. ASU 2016-16 will be effective on January 1, 2018 and is not expected to have a significant impact on the consolidated financial statements.

        ASU 2016-18, Statement of Cash Flows (Topic 230)—Restricted Cash. ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 will be effective on January 1, 2018 and is not expected to have a significant impact on the consolidated financial statements.

        ASU 2017-01, Business Combinations (Topic 805)—Clarifying the Definition of a Business. ASU 2017-01 clarifies the definition and provides a more robust framework to use in determining when a set of assets and activities constitutes a business. ASU 2017-01 is intended to provide guidance when evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or

F-10

CBTX, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(DOLLARS IN THOUSANDS)

NOTE 1: BASIS OF PRESENTATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (Continued)

businesses. ASU 2017-01 will be effective on January 1, 2018 and is not expected to have a significant impact on the consolidated financial statements.

        ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment eliminates Step 2 from the goodwill impairment test. In addition, the amendment eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. For public companies, ASU 2017-04 is effective for fiscal years beginning after December 15, 2019 with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the potential impact of this pronouncement.

        ASU 2017-09, Compensation—Stock Compensation provides guidance about which changes in terms or conditions of a share-based award require application of modification accounting. ASU 2017-09 will be effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017, and is not expected to have a significant impact on the consolidated financial statements.

Cash Flow Reporting—Cash and cash equivalents include cash, interest-bearing and noninterest-bearing transaction accounts with other banks, and federal funds sold. Generally, federal funds are sold for one-day periods. Cash flows are reported net for loans, deposits, and short term borrowings.

        Supplemental disclosures of cash flow information are as follows for the six months ended June 30, 2017 and 2016:

	Six Months Ended June 30,
	2017		2016
Cash flow information:
Cash paid for taxes	$	5,550	$	5,651
Cash paid for interest on deposits and repurchase agreements	$	3,751	$	3,303
Cash paid for interest on notes payable	$	512	$	539
Cash paid for interest on junior subordinated debt	$	149	$	124
Non-cash flow information
Real estate acquired through foreclosure	$	583	$	1,119

F-11

CBTX, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(DOLLARS IN THOUSANDS)

NOTE 2: SECURITIES

        The amortized cost and estimated fair values of investments in securities at June 30, 2017 and December 31, 2016, are summarized in the following table:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
June 30, 2017
Securities Available for Sale:
State and municipal securities	$	61,191	$	1,048	$	(275	)	$	61,964
U.S. Agency Securities:
Debt securities		20,795		2		(350	)		20,447
Collateralized mortgage obligations		47,668		187		(202	)		47,653
Mortgage-backed securities		89,533		493		(875	)		89,151
Other securities		1,092		—		(11	)		1,081
Total	$	220,279	$	1,730	$	(1,713	)	$	220,296
Securities Held to Maturity:
Collateralized mortgage obligations/mortgage-backed securities	$	34	$	3	$	—		$	37

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
December 31, 2016
Securities Available for Sale:
State and municipal securities	$	58,991	$	638	$	(650	)	$	58,979
U.S. Agency Securities:
Debt securities		20,795		—		(454	)		20,341
Collateralized mortgage obligations		34,005		90		(325	)		33,770
Mortgage-backed securities		92,489		516		(1,215	)		91,790
Other securities		1,081		—		(17	)		1,064
Total	$	207,361	$	1,244	$	(2,661	)	$	205,944
Securities Held to Maturity:
Collateralized mortgage obligations/mortgage backed securities	$	34	$	3	$	—		$	37

F-12

CBTX, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(DOLLARS IN THOUSANDS)

NOTE 2: SECURITIES (Continued)

        The amortized cost and estimated fair value of securities at June 30, 2017 and December 31, 2016, by contractual maturities, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Securities Available for Sale				Securities Held to Maturity
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
June 30, 2017
Amounts Maturing In:
1 year or less	$	6,056	$	6,068	$	—	$	—
1 year through 5 years		28,053		28,116		—		—
5 years through 10 years		16,408		16,530		—		—
After 10 years		169,762		169,582		34		37
	$	220,279	$	220,296	$	34	$	37
December 31, 2016
Amounts Maturing In:
1 year or less	$	5,579	$	5,570	$	—	$	—
1 year through 5 years		28,946		28,937		—		—
5 years through 10 years		20,834		20,880		—		—
After 10 years		152,002		150,557		34		37
	$	207,361	$	205,944	$	34	$	37

        Securities with a carrying amount of approximately $444 and $302 were sold during the six months ended June 30, 2017 and 2016, respectively. Net gains of $14 and $28 were recognized, which is reflected in other non-interest income in the Company's condensed consolidated statements of income for the six months ended June 30, 2017 and 2016, respectively. At June 30, 2017 and December 31, 2016, securities with a carrying amount of approximately $58,967 and $53,993, respectively, were pledged to secure public deposits and for other purposes required or permitted by law.

        The Company held 92 securities at June 30, 2017 that were in a gross unrealized loss position as illustrated in the table below. Management does not have the intent to sell any of the securities classified as available for sale in an unrealized loss position and believes that it is more likely than not that the Company will not have to sell any of these securities before a recovery of cost. The unrealized losses are attributable primarily to changes in market interest rates relative to those available when the securities were acquired. The fair value of these securities is expected to recover as the securities reach their maturity or re-pricing date, or if changes in market rates for such investments decline. Management does not believe that any of the securities are impaired due to reasons of credit quality. Accordingly, as of June 30, 2017 and December 31, 2016, management believes the impairments detailed in the table below are temporary and no impairment loss has been recorded in the Company's condensed consolidated statements of income for the six months and the year then ended.

F-13

CBTX, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(DOLLARS IN THOUSANDS)

NOTE 2: SECURITIES (Continued)

        Information pertaining to securities with gross unrealized losses at June 30, 2017 and December 31, 2016 aggregated by investment category follows:

	Less Than Twelve Months					Twelve Months or More
	Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value
June 30, 2017
Securities Available for Sale:
State and municipal securities	$	(275	)	$	13,088	$	—		$	—
U.S. Agency Securities:
Debt securities		(350	)		18,445		—			—
Collateralized mortgage obligations		(202	)		16,922		—			—
Mortgage-backed securities		(875	)		56,583		—			—
Other securities		(11	)		1,081		—			—
	$	(1,713	)	$	106,119	$	—		$	—
December 31, 2016
Securities Available for Sale:
State and municipal securities	$	(647	)	$	22,856	$	(3	)	$	313
U.S. Agency Securities:
Debt securities		(454	)		18,341		—			—
Collateralized mortgage obligations		(325	)		24,800		—			—
Mortgage-backed securities		(1,215	)		67,500		—			—
Other securities		(17	)		1,064		—			—
	$	(2,658	)	$	134,561	$	(3	)	$	313

F-14

CBTX, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(DOLLARS IN THOUSANDS)

NOTE 3: LOANS

        Loans, including loans held for sale, by portfolio segment, at June 30, 2017 and December 31, 2016 are summarized as follows:

	June 30, 2017					December 31, 2016
Commercial and industrial	$	535,116		24.4	%	$	511,554		23.7	%
Real estate:
Commercial real estate		690,044		31.4	%		697,794		32.3	%
Construction and development		433,966		19.8	%		491,626		22.8	%
1-4 family residential		240,073		10.9	%		236,882		11.0	%
Multi-family residential		208,222		9.5	%		133,210		6.2	%
Consumer		41,130		1.9	%		39,694		1.8	%
Agriculture		10,650		0.4	%		11,106		0.5	%
Other		38,237		1.7	%		38,180		1.7	%
Total gross loans		2,197,438		100.0	%		2,160,046		100.0	%
Less deferred loan fees		(4,184	)				(4,321	)
Less unearned discount on retained portion of loans sold		(252	)				(227	)
Less allowance for loan loss		(25,187	)				(25,006	)
Total loans, net		2,167,815					2,130,492
Less loans held for sale		559					613
Loans, net	$	2,167,256				$	2,129,879

        Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off, which are measured at historical cost, are generally reported at their outstanding unpaid principal balances net of any unearned income, charge-offs, and unamortized deferred fees and costs on originated loans. Interest income is accrued on the unpaid principal balance. Loan origination fees and certain direct origination costs are deferred and recognized as adjustments to interest income over the lives of the related loans. Unearned income is amortized to interest income using a level yield methodology without anticipating payoffs.

        The Company has certain lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk. Management and the Board of Directors review and approve these policies and procedures on a regular basis. A reporting system supplements the review process by providing management and the Board of Directors with frequent reports related to loan production, loan quality, concentrations of credit, loan delinquencies and non-performing and potential problem loans. Diversification in the loan portfolio is a means of managing risk associated with fluctuations in economic conditions.

        The majority of the loan portfolio is comprised of loans to businesses and individuals in the Houston metropolitan and Beaumont area. This geographic concentration subjects the loan portfolio to the general economic conditions within this area. The risks created by this concentration have been considered by management in the determination of the adequacy of the allowance for loan losses.

F-15

CBTX, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(DOLLARS IN THOUSANDS)

NOTE 3: LOANS (Continued)

Management believes the allowance for loan losses is adequate to cover estimated losses on loans as of June 30, 2017 and December 31, 2016.

        The Company's loans are segmented by type as noted in the preceding table. The Company sub-segments real estate loans into the following classes: commercial real estate, construction and development, 1-4 family residential and multi-family residential.

Loan Participations Purchased and Sold

        From time to time, the Company will acquire and dispose of interests in loans under participating agreements with other financial institutions. Loan participations purchased and sold during the six months ending June 30, 2017 and 2016, by loan class, are summarized as follows:

	Participations Purchased During the Period		Participations Sold During the Period
June 30, 2017
Commercial and industrial	$	—	$	10,230
Commercial real estate		—		12,298
Construction and development		1,297		2,450
	$	1,297	$	24,978
June 30, 2016
Commercial real estate	$	—	$	654
Construction and development		—		2,313
	$	—	$	2,967

Loans Guaranteed by the United States Small Business Administration

        The Company participates in the United States Small Business Administration (SBA) loan program.

        The Company originates loans under the SBA chapter 7(a) and 504 programs which allows for federal guarantees of 75% to 90% of principal and accrued interest. When advantageous, the Company will sell the guaranteed portions of these loans with servicing retained. The majority of the nonguaranteed portion of these loans are reported as commercial real estate or commercial and industrial loans. At June 30, 2017 and 2016, sales activity related to SBA loans is as follows:

	June 30, 2017		June 30, 2016
Sold and serviced	$	2,173	$	3,490
Nonguaranteed portion retained		725		1,163
SBA loans subject to sale of guaranteed portion, net of payments	$	2,898	$	4,653

F-16

CBTX, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(DOLLARS IN THOUSANDS)

NOTE 4: LOAN PERFORMANCE

        Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. When the payment of principal or interest on a loan is delinquent for 90 days, or earlier in some cases, the loan is placed on nonaccrual status, unless the loan is in the process of collection or renewal and the underlying collateral fully supports the carrying value of the loan.

        When a loan is placed on nonaccrual status, interest accrued and uncollected during the current year prior to the judgment of uncollectability, is charged to operations unless the loan is well secured with collateral values sufficient to ensure collection of both principal and interest. Generally, any payments received on nonaccrual loans are applied first to outstanding loan amounts, reducing the Company's recorded investment in the loan, and next to the recovery of charged-off principal or interest amounts. Any excess is treated as recovery of lost interest. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

        A loan is defined as impaired if, based on current information and events, it is probable that the Company will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreement, including scheduled principal and interest payments.

        Included in the nonperforming loan category are loans which have been categorized by management as nonaccrual because of delinquency status or because collection of interest is doubtful and loans which have been restructured to provide a reduction in the interest rate or a deferral of interest or principal payments.

        Nonaccrual loans, segregated by loan class, at June 30, 2017 and December 31, 2016 are as follows:

	June 30, 2017		December 31, 2016
Commercial and industrial	$	2,348	$	2,318
Real estate:
Commercial real estate		4,964		2,118
Construction and development		362		458
1-4 family residential		578		1,302
Multi-family residential		3		7
Consumer		—		—
Agriculture		—		36
Other		—		—
Total loans	$	8,255	$	6,239

F-17

CBTX, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(DOLLARS IN THOUSANDS)

NOTE 4: LOAN PERFORMANCE (Continued)

        The following is an aging analysis of loans past due (including both accruing and nonaccruing loans), segregated by loan class, as of June 30, 2017 and December 31, 2016.

	30 to 59 days past due		60 to 89 days past due		90 days or greater past due		Total past due		Total current loans		Total loans		Total 90 days past due and still accruing
June 30, 2017
Commercial and industrial	$	51	$	2	$	2,269	$	2,322	$	532,794	$	535,116	$	—
Real estate:
Commercial real estate		1,636		—		1,865		3,501		686,543		690,044		—
Construction and development		—		—		—		—		433,966		433,966		—
1-4 family residential		94		—		—		94		239,979		240,073		—
Multi-family residential		—		—		—		—		208,222		208,222		—
Consumer		13		—		—		13		41,117		41,130		—
Agriculture		—		—		—		—		10,650		10,650		—
Other		—		—		—		—		38,237		38,237		—
Total loans	$	1,794	$	2	$	4,134	$	5,930	$	2,191,508	$	2,197,438	$	—
December 31, 2016
Commercial and industrial	$	378	$	68	$	2,273	$	2,719	$	508,835	$	511,554	$	—
Real estate:
Commercial real estate		352		75		1,865		2,292		695,502		697,794		—
Construction and development		19		—		—		19		491,607		491,626		—
1-4 family residential		377		688		757		1,822		235,060		236,882		—
Multi-family residential		—		—		—		—		133,210		133,210		—
Consumer		—		—		—		—		39,694		39,694		—
Agriculture		—		—		—		—		11,106		11,106		—
Other		3		2		—		5		38,175		38,180		—
Total loans	$	1,129	$	833	$	4,895	$	6,857	$	2,153,189	$	2,160,046	$	—

        Interest income that would have been earned under the original terms of the nonaccrual loans was $53 and $110 for the three months ended June 30, 2017 and 2016 and $91 and $211 for the six months ended June 30, 2017 and 2016, respectively. The Company has no commitment to loan additional funds to borrowers whose loans have been classified as impaired.

        The Company will classify a loan as a troubled debt restructuring (TDR) if both (i) the borrower is experiencing financial difficulties and (ii) the borrower has been granted a concession. Concessions may include interest rate reductions or below market interest rates, principal forgiveness, restructuring amortization schedules and other actions intended to minimize potential losses. Interest is generally accrued on such loans in accordance with the new terms.

F-18

CBTX, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(DOLLARS IN THOUSANDS)

NOTE 4: LOAN PERFORMANCE (Continued)

        The following tables illustrate loans, segregated by loan class, which were restructured due to the borrower's financial difficulties during the six months ending June 30, 2017 and 2016:

			During the six months ended June 30, 2017
					Post-modification recorded investment
	Number of Loans		Pre-modification outstanding Recorded Investment		Restructured Payments		Extended Maturity		Extended Maturity and Restructured Payments		Extended Maturity, Restructured Payments and Adjusted Interest Rate
Commercial and industrial		4	$	2,203	$	2,019	$	—	$	184	$	—
Real estate:
Commercial real estate		3		994		277		717		—		—
Construction and development		—		—		—		—		—		—
1-4 family residential		—		—		—		—		—		—
Multi-family residential		—		—		—		—		—		—
Consumer		—		—		—		—		—		—
Agriculture		—		—		—		—		—		—
Other		—		—		—		—		—		—
Total loans		7	$	3,197	$	2,296	$	717	$	184	$	—

			During the six months ended June 30, 2016
					Post-modification recorded investment
	Number of Loans		Pre-modification outstanding Recorded Investment		Restructured Payments		Extended Maturity		Extended Maturity and Restructured Payments		Extended Maturity, Restructured Payments and Adjusted Interest Rate
Commercial and industrial		4	$	5,838	$	5,285	$	—	$	27	$	526
Real estate:
Commercial real estate		—		—		—		—		—		—
Construction and development		—		—		—		—		—		—
1-4 family residential		—		—		—		—		—		—
Multi-family residential		—		—		—		—		—		—
Consumer		—		—		—		—		—		—
Agriculture		—		—		—		—		—		—
Other		2		9,592		—		—		9,592		—
Total loans		6	$	15,430	$	5,285	$	—	$	9,619	$	526

        A significant portion of the loans identified as troubled debt restructurings by the Company were previously on nonaccrual status and reported as impaired loans prior to restructuring. The

F-19

CBTX, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(DOLLARS IN THOUSANDS)

NOTE 4: LOAN PERFORMANCE (Continued)

modifications primarily related to extending the amortization periods of the loans, converting the loans to interest only, or adjusting payment amounts for principal and interest. A majority of the loans restructured during the six months ended June 30, 2017 and 2016 that remain outstanding are on nonaccrual status as of June 30, 2017 and 2016. Because the loans were classified and on nonaccrual status, both before and after restructuring, the modifications did not impact the Company's determination of the allowance for loan losses. At June 30, 2017 and December 31, 2016, the Company has no commitments to loan additional funds to borrowers whose loans are classified as troubled debt restructuring. The recorded investment in troubled debt restructurings was $24,644 and $25,539 as of June 30, 2017 and December 31, 2016.

        There were no loans modified as a troubled debt restructured loan within the previous 12 months and for which there was a payment default during the six months ended June 30, 2017 and 2016. A default for purposes of this disclosure is a TDR loan in which the borrower is 90 days past due or results in the foreclosure and repossession of the applicable collateral.

NOTE 5: ALLOWANCE FOR LOAN LOSSES

        For purposes of determining the allowance for loan losses, the Company considers the loans in its portfolio by segment, class, and risk grade. Management uses judgment to determine the estimation method that fits the credit risk characteristics of each portfolio segment or class. To facilitate the assessment of risk, management reviews reports related to loan production, loan quality, concentrations of credit, loan delinquencies, and nonperforming and potential problem loans. The Company utilizes an independent third party loan review service to review the credit risk assigned to loans on a periodic basis and the results are presented to management for review.

        The following table presents a detail of the activity in the allowance for loan losses segregated by loan class for the six months ended June 30, 2017 and 2016 and the year ended December 31, 2016. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

				Real Estate
	Commercial and industrial			Commercial real estate			Construction and development			1-4 family residential			Multi-family residential		Consumer			Agriculture			Other			Total
June 30, 2017
Beginning balance	$	6,409		$	10,770		$	4,598		$	1,286		$	916	$	353		$	79		$	595		$	25,006
Provision for loan loss		2,108			(775	)		(1,285	)		(158	)		425		309			(21	)		(337	)		266
Charge-offs		(713	)		—			—			—			—		(83	)		—			—			(796	)
Recoveries		662			5			—			10			—		20			6			8			711
Net charge-offs		(51	)		5			—			10			—		(63	)		6			8			(85	)
Ending balance	$	8,466		$	10,000		$	3,313		$	1,138		$	1,341	$	599		$	64		$	266		$	25,187
Period-end amount allocated to:
Specific reserve	$	1,231		$	—		$	—		$	—		$	—	$	—		$	—		$	—		$	1,231
General reserve		7,235			10,000			3,313			1,138			1,341		599			64			266			23,956
Total	$	8,466		$	10,000		$	3,313		$	1,138		$	1,341	$	599		$	64		$	266		$	25,187

F-20

CBTX, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(DOLLARS IN THOUSANDS)

NOTE 5: ALLOWANCE FOR LOAN LOSSES (Continued)

				Real Estate
	Commercial and industrial			Commercial real estate			Construction and development		1-4 family residential			Multi-family residential		Consumer			Agriculture			Other			Total
December 31, 2016
Beginning balance	$	4,746		$	7,058		$	4,504	$	2,295		$	762	$	363		$	93		$	5,494		$	25,315
Provision for loan loss		5,537			4,193			94		(1,012	)		154		222			227			(4,840	)		4,575
Charge-offs		(4,884	)		(589	)		—		(3	)		—		(277	)		(267	)		(59	)		(6,079	)
Recoveries		1,010			108			—		6			—		45			26			—			1,195
Net charge-offs		(3,874	)		(481	)		—		3			—		(232	)		(241	)		(59	)		(4,884	)
Ending balance	$	6,409		$	10,770		$	4,598	$	1,286		$	916	$	353		$	79		$	595		$	25,006
Period-end amount allocated to:
Specific reserve	$	462		$	206		$	—	$	—		$	—	$	—		$	—		$	—		$	668
General reserve		5,947			10,564			4,598		1,286			916		353			79			595			24,338
Total	$	6,409		$	10,770		$	4,598	$	1,286		$	916	$	353		$	79		$	595		$	25,006

				Real Estate
	Commercial and industrial			Commercial real estate			Construction and development		1-4 family residential		Multi-family residential			Consumer			Agriculture			Other			Total
June 30, 2016
Beginning balance	$	4,746		$	7,058		$	4,504	$	2,295	$	762		$	363		$	93		$	5,494		$	25,315
Provision for loan loss		5,492			846			706		119		(762	)		246			(93	)		(3,854	)		2,700
Charge-offs		(811	)		(549	)		—		—		—			(270	)		—			—			(1,630	)
Recoveries		258			3			—		—		—			38			—			32			331
Net charge-offs		(553	)		(546	)		—		—		—			(232	)		—			32			(1,299	)
Ending balance	$	9,685		$	7,358		$	5,210	$	2,414	$	—		$	377		$	—		$	1,672		$	26,716
Period-end amount allocated to:
Specific reserve	$	1,689		$	—		$	26	$	—	$	—		$	1		$	—		$	—		$	1,716
General reserve		7,996			7,358			5,184		2,414		—			376			—			1,672			25,000
Total	$	9,685		$	7,358		$	5,210	$	2,414	$	—		$	377		$	—		$	1,672		$	26,716

        In addition to the amounts indicated in the table above, the Company has an accumulated reserve for loan losses on unfunded commitments of $378 and $366 recorded in other liabilities as of June 30, 2017 and December 31, 2016, respectively.

Risk Grading

        As part of the on-going monitoring of the credit quality of the Company's loan portfolio and methodology for calculating the allowance for loan losses, management assigns and tracks loan grades to be used as credit quality indicators. The following is a general description of the loan grades used as of June 30, 2017 and December 31, 2016.

F-21

CBTX, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(DOLLARS IN THOUSANDS)

NOTE 5: ALLOWANCE FOR LOAN LOSSES (Continued)

Pass—Credits in this category are considered "pass" which indicates prudent underwriting and a normal amount of risk. The range of risk within these credits can vary from little to no risk with cash securing a credit, to a level of risk that requires a strong secondary source of repayment on the debt. Pass credits with a higher level of risk may be to borrowers that are higher leveraged, less well capitalized or in an industry or economic area that is known to carry a higher level of risk, volatility, or susceptibility to weaknesses in the economy. This higher risk grade may be assigned due to out of date credit information, as well as collateral information which may need to be updated for current market value in order to allow a credit quality analysis of the credit.

Special Mention—Credits in this category contain more than the normal amount of risk and are referred to as "special mention" in accordance with regulatory guidelines. These credits possess clearly identifiable temporary weaknesses or trends that, if not corrected or revised, may result in a condition that exposes the Company to higher level of risk of loss.

Substandard—Credits in this category are "substandard" in accordance with regulatory guidelines and of unsatisfactory credit quality with well-defined weaknesses or weaknesses that jeopardize the liquidation of the debt. Credits in this category are inadequately protected by the current sound worth and paying capacity of the obligor or the collateral pledged, if any. These credits are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Often, the assets in this category will have a valuation allowance representative of management's estimated loss that is probable to be incurred. Substandard loans may also be placed on nonaccrual status as deemed appropriate by management. Loans substandard and on nonaccrual status are considered impaired and are evaluated for impairment.

Doubtful—Credits in this category are considered "doubtful" in accordance with regulatory guidelines, are placed on non-accrual status and may be dependent upon collateral having a value that is difficult to determine or upon some near-term event which lacks certainty. Generally, these credits will have a valuation allowance based upon management's best estimate of the losses probable to occur in the liquidation of the debt.

Loss—Credits in this category are considered "loss" in accordance with regulatory guidelines and are considered uncollectible and of such little value as to question their continued existence as assets on the Company's financial statements. Such credits are to be charged off or charged down when payment is acknowledged to be uncertain or when the timing or value of payments cannot be determined. This category does not intend to imply that the debt or some portion of it will never be paid, nor does it in any way imply that the debt will be forgiven.

F-22

CBTX, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(DOLLARS IN THOUSANDS)

NOTE 5: ALLOWANCE FOR LOAN LOSSES (Continued)

        The following table presents risk grades and classified loans by loan class at June 30, 2017 and December 31, 2016. The Company had no loans graded Loss or Doubtful at June 30, 2017 and December 31, 2016.

	Pass		Special Mention		Substandard		Total Loans
June 30, 2017
Commercial and industrial	$	490,933	$	8,312	$	35,871	$	535,116
Real estate:
Commercial real estate		671,958		4,143		13,943		690,044
Construction and development		432,216		636		1,114		433,966
1-4 family residential		235,016		409		4,648		240,073
Multi-family residential		200,700		7,519		3		208,222
Consumer		40,721		409		—		41,130
Agriculture		10,615		—		35		10,650
Other		38,234		—		3		38,237
Total loans	$	2,120,393	$	21,428	$	55,617	$	2,197,438

	Pass		Special Mention		Substandard		Total Loans
December 31, 2016
Commercial and industrial	$	483,399	$	2,207	$	25,948	$	511,554
Real estate:
Commercial real estate		674,445		7,731		15,618		697,794
Construction and development		485,823		933		4,870		491,626
1-4 family residential		234,473		797		1,612		236,882
Multi-family residential		125,553		7,650		7		133,210
Consumer		39,684		10		—		39,694
Agriculture		11,033		—		73		11,106
Other		29,335		—		8,845		38,180
Total loans	$	2,083,745	$	19,328	$	56,973	$	2,160,046

F-23

CBTX, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(DOLLARS IN THOUSANDS)

NOTE 5: ALLOWANCE FOR LOAN LOSSES (Continued)

Loan Impairment Assessment

        The Company's recorded investment in impaired loans, as of June 30, 2017, December 31, 2016 and June 30, 2016, by loan class and disaggregated on the basis of the Company's impairment methodology is as follows:

	Unpaid contractual principal balance		Recorded investment with no allowance		Recorded investment with allowance		Total recorded investment		Related allowance		Average recorded investment year-to-date
June 30, 2017
Commercial and industrial	$	21,631	$	12,361	$	5,110	$	17,471	$	1,231	$	14,316
Real estate:
Commercial real estate		10,930		10,726		—		10,726		—		9,201
Construction and development		399		362		—		362		—		366
1-4 family residential		2,279		2,201		—		2,201		—		1,588
Multi-family residential		9		3		—		3		—		3
Consumer		—		—		—		—		—		56
Agriculture		272		—		—		—		—		2
Other		9,483		9,478		—		9,478		—		9,244
Total loans	$	45,003	$	35,131	$	5,110	$	40,241	$	1,231	$	34,776

	Unpaid contractual principal balance		Recorded investment with no allowance		Recorded investment with allowance		Total recorded investment		Related allowance		Average recorded investment year-to-date
December 31, 2016
Commercial and industrial	$	16,483	$	8,088	$	4,227	$	12,315	$	462	$	15,550
Real estate:
Commercial real estate		6,454		4,398		1,866		6,264		206		5,903
Construction and development		506		476		—		476		—		754
1-4 family residential		1,781		1,712		—		1,712		—		1,403
Multi-family residential		13		7		—		7		—		10
Consumer		—		—		—		—		—		8
Agriculture		307		36		—		36		—		34
Other		8,849		8,845		—		8,845		—		5,540
Total loans	$	34,393	$	23,562	$	6,093	$	29,655	$	668	$	29,202

F-24

CBTX, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(DOLLARS IN THOUSANDS)

NOTE 5: ALLOWANCE FOR LOAN LOSSES (Continued)

	Unpaid contractual principal balance		Recorded investment with no allowance		Recorded investment with allowance		Total recorded investment		Related allowance		Average recorded investment year-to-date
June 30, 2016
Commercial and industrial	$	23,381	$	15,231	$	1,689	$	16,920	$	1,689	$	16,029
Real estate:
Commercial real estate		3,273		3,157		—		3,157		—		4,319
Construction and development		1,404		373		492		865		26		924
1-4 family residential		1,325		1,278		—		1,278		—		1,362
Multi-family residential		17		11		—		11		—		12
Consumer		2		—		1		1		1		16
Agriculture		—		—		—		—		—		—
Other		9,592		9,592		—		9,592		—		2,114
Total loans	$	38,994	$	29,642	$	2,182	$	31,824	$	1,716	$	24,776

        Interest income earned on impaired loans was $653 and $267 for the six months ended June 30, 2017 and 2016, respectively.

        The Company's recorded investment in loans as of June 30, 2017 and December 31, 2016 related to the balance in the allowance for loan losses on the basis of the Company's impairment methodology is as follows:

			Real Estate
	Commercial and industrial		Commercial real estate		Construction and development		1-4 family residential		Multi-family residential		Consumer		Agriculture		Other		Total
June 30, 2017
Loans individually evaluated for impairment	$	17,471	$	10,726	$	362	$	2,201	$	3	$	—	$	—	$	9,478	$	40,241
Loans collectively evaluated for impairment		517,645		679,318		433,604		237,872		208,219		41,130		10,650		28,759		2,157,197
Total	$	535,116	$	690,044	$	433,966	$	240,073	$	208,222	$	41,130	$	10,650	$	38,237	$	2,197,438
December 31, 2016
Loans individually evaluated for impairment	$	12,315	$	6,264	$	476	$	1,712	$	7	$	—	$	36	$	8,845	$	29,655
Loans collectively evaluated for impairment		499,239		691,530		491,150		235,170		133,203		39,694		11,070		29,335		2,130,391
Total	$	511,554	$	697,794	$	491,626	$	236,882	$	133,210	$	39,694	$	11,106	$	38,180	$	2,160,046

        An impairment analysis is performed for all loans graded substandard and placed on nonaccrual status. If management determines a loan is impaired, the loan is written down to its estimated realizable value through a charge to the allowance for loan losses. At June 30, 2017 and December 31, 2016, the allowance allocated to specific reserves for loans individually evaluated for impairment was $1,231 and $668, respectively.

F-25

CBTX, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(DOLLARS IN THOUSANDS)

NOTE 6: PREMISES AND EQUIPMENT

        Premises and equipment are carried at cost less accumulated depreciation and amortization. Depreciation expense is computed principally on the straight-line method over the estimated useful lives of the assets. Land is carried at cost. Leasehold improvements are amortized over the life of the lease plus renewal options or the estimated useful lives, whichever is shorter. Buildings are depreciated over a period not to exceed thirty-two years. Depending upon the type of furniture and equipment, the depreciation period will range from three to ten years. Bank vehicles are amortized over a period of three years. Accumulated depreciation was $25,557 and $24,562 at June 30, 2017 and December 31, 2016, respectively, Depreciation expense was $885 and $792 for the three months ended June 30, 2017 and 2016 and $1,703 and $1,606 for the six months ended June 30, 2017 and 2016, respectively, which is included in net occupancy expense on the Company's condensed consolidated statements of income. Net gains and losses on dispositions of premises and equipment of $63 for the three and six months ended June 30, 2017 were recognized and are included in net gain on sale of assets on the condensed consolidated statements of income. There were no such gains or losses for the three and six months ended June 30, 2016. During periods of real estate development, interest on construction costs is capitalized if considered material by management.

NOTE 7: DEPOSITS

        Deposits in the accompanying condensed consolidated balance sheets are summarized below:

	June 30		December 31,
	2017		2016
Noninterest-bearing deposits	$	1,030,865	$	1,025,425
Interest-bearing demand accounts		343,826		359,560
Money market accounts		698,546		731,942
Saving accounts		88,083		85,927
Certificates of deposits, greater than $100,000		182,143		179,621
Certificates of deposits, less than $100,000		173,321		158,285
Total	$	2,516,784	$	2,540,760

        Interest expense for time deposits in denominations of $100 or more excluding brokered deposits was $228 and $279 for the three months ended June 30, 2017 and 2016 and $479 and $559 for the six months ended June 30, 2017 and 2016, respectively.

        At June 30, 2017 and December 31, 2016, the Company had $40,694 and $49,235 in deposits from public entities, respectively. At June 30, 2017 and December 31, 2016, the Company had brokered deposits of $99,211 and $81,370, respectively. The Company had no major concentrations of deposits at June 30, 2017 or December 31, 2016 from any single or related groups of depositors. Interest payable at June 30, 2017 and December 31, 2016 on all interest-bearing deposits was approximately $313 and $366, respectively, and is included in other liabilities in the Company's condensed consolidated balance sheets.

F-26

CBTX, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(DOLLARS IN THOUSANDS)

NOTE 8: GOODWILL AND OTHER INTANGIBLE ASSETS

        The Company has recorded goodwill and amortizable identifiable intangibles, which are being amortized over the estimated useful life, generally determined by management, to be seven to fifteen years. Goodwill is not amortized and there have been no changes in goodwill for the periods ending June 30, 2017 and December 31, 2016. Management determined no impairment existed related to these intangibles at June 30, 2017 and December 31, 2016. Intangibles, net of accumulated amortization, are as follows at June 30, 2017 and December 31, 2016:

	Gross Intangible Assets		Accumulated Amortization			Net Intangible Assets
June 30, 2017
Other Intangible Assets, net
Core deposits	$	13,750	$	(11,761	)	$	1,989
Customer relationships		6,629		(1,547	)		5,082
Servicing asset		319		(92	)		227
Total Other Intangible Assets, net	$	20,698	$	(13,400	)	$	7,298
December 31, 2016
Other Intangible Assets, net
Core deposits	$	13,750	$	(11,448	)	$	2,302
Customer relationships		6,629		(1,326	)		5,303
Servicing asset		263		(77	)		186
Total Other Intangible Assets, net	$	20,642	$	(12,851	)	$	7,791

Servicing Assets

        Capitalized servicing assets are amortized into noninterest expense in proportion to, and over the period of, the estimated future net servicing income of the underlying financial assets. The servicing asset is assessed for impairment or increased obligation based on fair value at each reporting date. Fair value is based on the gross coupon less an assumed contractual servicing cost, or based upon discounted cash flows using market-based assumptions.

        Servicing fee income is recorded for fees earned from servicing loans. The fees are based on a contractual percentage of the outstanding principal or a fixed amount per loan and are recorded as income when earned. Servicing fee income was $96 and $285 for the six months ended June 30, 2017 and 2016, respectively and is included in interest and fees on loans on the Company's condensed consolidated statements of income.

F-27

CBTX, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(DOLLARS IN THOUSANDS)

NOTE 8: GOODWILL AND OTHER INTANGIBLE ASSETS (Continued)

        A summary of the changes in the related servicing assets are as follows:

	Six Months Ended June 30,
	2017			2016
Balance at beginning of year	$	186		$	136
Increase from loan sales		56			80
Amortization charges		(15	)		(14	)
Balance at end of period	$	227		$	202

NOTE 9: RELATED PARTY TRANSACTIONS

        In the ordinary course of business, the Company, through its Bank subsidiary, has and expects to continue to conduct routine banking business with related parties, including its executive officers and directors. Related parties also include stockholders, and their affiliates in which they directly or indirectly have 5% or more beneficial ownership in the Company.

Loans—In the opinion of management, loans to related parties were on substantially the same terms, including interest rates and collateral, as those prevailing at the time of comparable transactions with other persons and did not involve more than a normal risk of collectability or present any other unfavorable features to the Company. The Company had approximately $157,276 and $142,516 in loans to related parties at June 30, 2017 and December 31, 2016, respectively.

        As of June 30, 2017 and December 31, 2016, there were no loans made to related parties deemed nonaccrual, past due, restructured or classified as potential problem loans.

Unfunded Commitments—At June 30, 2017 and December 31, 2016, the Company had approximately $69,376 and $48,636 in unfunded loan commitments to related parties, respectively.

Deposits—The Company held related party deposits of approximately $239,496 and $254,687 at June 30, 2017 and December 31, 2016, respectively.

Rents—The Company makes rental payments to a related party on a month to month basis. Total rent expense to related parties for operating leases of premises was approximately $5 for the three months ended June 30, 2017 and 2016 and $10 for the six months ended June 30, 2017 and 2016.

Advertising—The company incurred advertising expenses of approximately $49 and $47 for the six months ended June 30, 2017 and 2016, respectively, to a vendor that is solely owned by a director of the Company.

F-28

CBTX, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(DOLLARS IN THOUSANDS)

NOTE 10: COMMITMENTS AND CONTINGENCIES, INCLUDING FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK

Unfunded Loan Commitments

        The Company is party to various financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit for loans in process, commercial lines of credit, overdraft protection lines, and standby letters of credit at both fixed and variable rates of interest. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amounts recognized in the consolidated balance sheets. The contract or notional amounts of those instruments reflect the extent of the involvement the Company has in particular classes of financial instruments. The Company's exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual notional amount of those instruments.

        The Company uses the same credit policies in making these commitments and conditional obligations as it does for on-balance-sheet instruments. The Company evaluates each customer's credit worthiness on a case-by-case basis. The amount of collateral obtained, if considered necessary by the Company upon extension of credit, is based on management's credit evaluation of the customer.

        The following is a summary of the various financial instruments whose contract amounts represent credit risk at June 30, 2017 and December 31, 2016:

	June 30, 2017		December 31, 2016
Commitments to extend credit, variable	$	467,484	$	493,740
Commitments to extend credit, fixed		84,897		113,719
	$	552,381	$	607,459
Standby letters of credit	$	31,643	$	26,682

        Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being fully drawn upon, the total commitment amounts disclosed above do not necessarily represent future cash requirements.

        Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to its customers.

Derivative Financial Instruments

        The Company has outstanding interest rate swap contracts in which the Bank entered into an interest rate swap with a customer while at the same time entering into an offsetting interest rate swap with another financial institution. These interest rate swap contracts are not designated as hedging

F-29

CBTX, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(DOLLARS IN THOUSANDS)

NOTE 10: COMMITMENTS AND CONTINGENCIES, INCLUDING FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK (Continued)

instruments for mitigating interest rate risk of the Bank. The objective of the transactions allow the Bank's customers to effectively convert a variable rate loan to a fixed rate.

        In connection with each swap transaction, the Bank agrees to pay interest to the customer on a notional amount at a variable interest rate and receive interest from the customer on a similar notional amount at a fixed interest rate. At the same time, the Bank agrees to pay a third-party financial institution the same fixed interest rate on the same notional amount and receive the same variable interest rate on the same notional amount. Because the Bank acts as an intermediary for its customer, changes in the fair value of the underlying derivative contracts are designed to offset each other and would not significantly impact the Company's operating results except in certain situations where there is a significant deterioration in the customer's credit worthiness or that of the counterparties. At June 30, 2017 and December 31, 2016, no such deterioration was determined by management.

        At June 30, 2017 and December 31, 2016, the Company had eleven interest rate swap agreements outstanding with borrowers, with a corresponding number outstanding with correspondent financial institutions. These derivative instruments are not designated as accounting hedges and changes in the net fair value are recognized in noninterest income or expense. Fair value amounts are included in other assets and other liabilities. The table below sets forth a summary of the derivative instruments outstanding as of June 30, 2017 and December 31, 2016, respectively.

	Notional Amounts		Fair Value			Fixed Rate	Floating Rate	Maturity
June 30, 2017
Interest rate swaps with customers (other assets)	$	15,715	$	433		4.75% - 7.25%	LIBOR 1M + 2.50% - 3.25%	Wtd avg 6.70 yrs
Interest rate swaps with financial institution (other assets)		14,060		307		4.00% - 4.75%	LIBOR 1M + 2.50% - 3.00%	Wtd avg 8.95 yrs
Interest rate swaps with customers (other liabilities)		14,060		(307	)	4.00% - 4.75%	LIBOR 1M + 2.50% - 3.00%	Wtd avg 6.70 yrs
Interest rate swaps with financial institution (other liabilities)		15,715		(433	)	4.75% - 7.25%	LIBOR 1M + 2.50% - 3.25%	Wtd avg 8.95 yrs
Total derivatives not designated as hedging instruments	$	59,550	$	—

F-30

CBTX, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(DOLLARS IN THOUSANDS)

NOTE 10: COMMITMENTS AND CONTINGENCIES, INCLUDING FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK (Continued)

	Notional Amounts		Fair Value			Fixed Rate	Floating Rate	Maturity
December 31, 2016
Interest rate swaps with customers (other assets)	$	13,637	$	430		5.10% - 7.25%	LIBOR 1M + 2.50% - 3.25%	Wtd avg 6.60 yrs
Interest rate swaps with financial institution (other assets)		14,399		350		4.00% - 4.75%	LIBOR 1M + 2.50% - 3.00%	Wtd avg 9.45 yrs
Interest rate swaps with customers (other liabilities)		14,399		(350	)	4.00% - 4.75%	LIBOR 1M + 2.50% - 3.00%	Wtd avg 6.60 yrs
Interest rate swaps with financial institution (other liabilities)		13,637		(430	)	5.10% - 7.25%	LIBOR 1M + 2.50% - 3.25%	Wtd avg 9.45 yrs
Total derivatives not designated as hedging instruments	$	56,072	$	—

Repurchase Agreements

        At June 30, 2017 and December 31, 2016, the Company had outstanding funds amounting to $2,179 and $2,343 respectively, received from the sale of securities that were sold under agreements to repurchase. Securities subject to the transfer of ownership under the repurchase agreements are included in pledged securities, and the carrying value of these securities is disclosed in Note 2. The Company transacts these repurchase agreements with its customers and pays interest rates on these funds according to the terms of each repurchase agreement.

Contingent Liabilities

        The Company is committed to contribute capital into two private investment funds under the Small Business Investment Company (SBIC) program of the U.S. Small Business Administration. The funds' goals are to provide investment capital to small and middle market businesses throughout Texas and the South Central United States.

        At June 30, 2017 and December 31, 2016, $410 in unfunded commitments were outstanding and subject to call by the first fund. Cumulative capital contributions of $424 and $553 are included in other investments in the Company's condensed consolidated balance sheets at June 30, 2017 and December 31, 2016, respectively.

        In 2016, an initial investment of $105 was made into the second fund and is included in other investments in the Company's consolidated balance sheet at December 31, 2016. An additional investment of $145 was made in the six months ended June 30, 2017 and the total amount invested at June 30, 2017 was $250. At June 30, 2017, the Company's unfunded commitment to the second fund was $2,250 and is subject to call by that fund.

F-31

CBTX, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(DOLLARS IN THOUSANDS)

NOTE 10: COMMITMENTS AND CONTINGENCIES, INCLUDING FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK (Continued)

        The Company has also committed to contribute capital into a limited partnership (as a limited partner) under the SBIC program of the U.S. Small Business Administration. At June 30, 2017 and December 31, 2016, $1,180 in unfunded commitments were outstanding and subject to call by the fund. Cumulative capital contributions of $820 are included in other investments in the Company's condensed consolidated balance sheets at June 30, 2017 and December 31, 2016.

        The Company is subject to claims and lawsuits which arise primarily in the ordinary course of business. Based on information presently available and advice received from legal counsel representing the Company, it is the opinion of management that the disposition or ultimate determination of such claims and lawsuits will not have a material adverse effect on the financial position or results of operations of the Company.

Lease Commitments

        The Company leases several of its banking facilities under operating leases. Total rent expense for operating leases of premises and equipment was approximately $456 and $1,179 for the three months ended June 30, 2017 and 2016 and $912 and $1,717 for the six months ended June 30, 2017 and 2016, respectively, and is reflected in net occupancy expense on the condensed consolidated statements of income.

NOTE 11: NOTE PAYABLE

        In conjunction with the acquisition of MC Bancshares, Inc., the Company entered into a loan agreement on February 1, 2015 with a correspondent financial institution for $31,000. The note is payable in quarterly installments beginning May 2015 with the first four installments interest only. The remaining quarterly installments will be in an amount necessary to amortize the unpaid principal balance over a period of seven years from February 2016 to February 2023. The interest rate will be the prime rate, adjusted for any change in prime rate at the time such change is made. As of June 30, 2017 and December 31, 2016 the balance outstanding was $25,464 and $27,679, respectively with interest accrued of approximately $175 and $172, respectively included in other liabilities on the condensed consolidated balance sheets. Interest paid was $512 and $539 for the six months ended June 30, 2017 and 2016, respectively.

        Covenants include tangible net worth not less than $200 million, cash flow coverage ratio not less than 1.25, Texas ratio (nonperforming assets plus loans 90 or more days past due as a percentage of tangible equity and reserves) not to exceed 15.00%, and additional debt not to exceed $50 million. As of June 30, 2017 and December 31, 2016, the Company was in compliance with all covenants required by the loan agreement.

F-32

CBTX, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(DOLLARS IN THOUSANDS)

NOTE 12: INCOME TAXES

        The provision for income tax expense and effective tax rates for the three months ended June 30, 2017 and 2016 are as follows:

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2017			2016			2017			2016
Provision for income tax expense	$	3,181		$	2,845		$	6,213		$	5,656
Effective tax rate		26.76	%		30.87	%		28.53	%		30.53	%

        The differences between the statutory rate of 35.0% and the effective tax rates presented in the table above were primarily attributable to permanent differences related to state income tax, tax exempt interest, bank-owned life insurance, and other non-deductible expenses.

NOTE 13: JUNIOR SUBORDINATED DEBT

Crosby Statutory Trust I

        During 2005, Crosby Bancshares, Inc., which was acquired by CBTX, Inc. in 2008, received proceeds of junior subordinated debt held by a trust (Crosby Statutory Trust I) that is funded by common securities, all of which were purchased by Crosby Bancshares, Inc., and trust preferred securities in the amount of $5,000 that are held by other investors. Funds raised by the trust totaling $5,155 were then loaned to Crosby Bancshares, Inc. in the form of junior subordinated debt. This debt was assumed by CBTX, Inc. at the date of acquisition. This debt is generally subordinated to other debt and deposits reflected on the consolidated balance sheets. The subordinated debt securities have a due date of December 15, 2035, with interest payable quarterly, due March 15, June 15, September 15, and December 15, of each year during the term of the debt.

        The interest rate of the debt is equal to the London Interbank Offered Rate of U.S. Dollar deposits in Europe (LIBOR), plus 1.44%, reset quarterly, which was 2.69% at June 30, 2017. CBTX, Inc. has the right to redeem these debt securities in whole, or from time to time in part, provided that all accrued and unpaid interest has been paid. Interest expense recorded in the condensed consolidated statements of income on this debt was approximately $34 and $27 for the three months ended June 30, 2017 and 2016, and $66 and $52 for the six months ended June 30, 2017 and 2016, respectively.

        The investment in common securities of the trust by the Company totals $155 and is reflected in other assets in the June 30, 2017 and December 31, 2016 condensed consolidated balance sheets.

County Bancshares Trust I

        During 2005, County Bancshares, Inc., which was acquired by CBTX, Inc. in 2007, received proceeds of junior subordinated debt held by a trust (County Bancshares Trust I) that is funded by common securities, all of which were purchased by County Bancshares, Inc., and trust preferred securities in the amount of $5,500 that are held by other investors. Funds raised by the trust totaling $5,671 were then loaned to County Bancshares, Inc. in the form of junior subordinated debt. This debt was transferred to CBTX, Inc. at the date of acquisition. This debt is generally subordinated to other

F-33

CBTX, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(DOLLARS IN THOUSANDS)

NOTE 13: JUNIOR SUBORDINATED DEBT (Continued)

debt and deposits reflected on the consolidated balance sheets presented. The subordinated debt securities have a due date of April 7, 2035, with interest payable quarterly, due January 7, April 7, July 7, and October 7 of each year during the term of the debt.

        The interest rate of the debt is equal to the London Interbank Offered Rate of U.S. Dollar deposits in Europe (LIBOR), plus 2%, and is reset quarterly. The rate of interest at June 30, 2017 was 3.16%. CBTX has the right to redeem these debt securities in whole or from time to time in part (provided that all accrued and unpaid interest has been paid). Interest expense recorded in the condensed consolidated statements of income on this debt was approximately $45 and $38 during the three months ended June 30, 2017 and 2016, and $87 and $73 for the six months ended June 30, 2017 and 2016, respectively.

        The investment in common securities of the trust by the Company totals $171 and is reflected in other assets in the June 30, 2017 and December 31, 2016 condensed consolidated balance sheets.

        In December 2015, the Company purchased approximately $4,100 of the outstanding preferred securities for $3,075, reducing the outstanding preferred securities to $1,571.

NOTE 14: EMPLOYEE BENEFIT PLANS AND DEFERRED COMPENSATION ARRANGEMENTS

Employee Benefit Plans

        The Company maintains a 401(k) employee benefit plan in which substantially all employees that complete three months of service may participate. The Company, at its discretion, may match a portion of each employee's contribution. The Company, also at its discretion, may make additional contributions during the Plan year. For the six months ended June 30, 2017 and 2016, the Company made $965 and $937 in contributions to the plan, respectively.

Executive Deferred Compensation Arrangements

        The Company established an executive incentive compensation arrangement with several officers of the Bank, in which the executive is eligible for performance based incentive bonus compensation. As part of this compensation arrangement, the Company will contribute one-fourth of the incentive bonus amount into a deferred compensation account. The deferred amounts accrue a market rate of interest and are payable to the employees upon separation from the Bank provided the Plan's vesting arrangements have been met. At June 30, 2017 and December 31, 2016, the amount payable, including interest, for this deferred plan was approximately $2,224 and $2,013 respectively, and is included in other liabilities in the condensed consolidated balance sheets.

Salary Continuation Agreement

        The Company entered into a salary continuation arrangement in 2008 with the Company's then President and CEO that calls for payments of $100 per year for a period of 10 years commencing at age 65. Payments under the plan began during 2014. The Company's liability is approximately $543 and $583 at June 30, 2017 and December 31, 2016, respectively, and is included in other liabilities in the consolidated balance sheets. The Company recognized approximately $6 and $6 in expenses during

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NOTE 14: EMPLOYEE BENEFIT PLANS AND DEFERRED COMPENSATION ARRANGEMENTS (Continued)

three months ended June 30, 2017 and 2016, and approximately $11 and $12 in expenses during six months ended June 30, 2017 and 2016, respectively.

Change of Control and Non-Competition Agreements

        The Company is party to change of control and non-competition agreements with certain employees of the Bank. Under their respective agreements, upon a "change of control" of the Company (as that term is defined in the agreements) or an "involuntary termination" (as that term is defined in the agreements), each of these employees will be entitled to receive an amount equal to two times the sum of (i) base salary plus (ii) the average bonus paid to the officer during the three years preceding the "change of control" or "involuntary termination", as applicable. "Change of control", as that term is defined in the agreements, also includes an initial public offering of common stock by the Company, pursuant to an effective registration statement filed under the Securities Act. Upon a change of control, including completion of an initial public offering, the Company plans to pay these employees in accordance with the terms of their respective agreements an aggregate amount of approximately $2.5 million. No compensation expense has been recognized to date as the change in control condition is not yet considered probable.

NOTE 15: STOCK OPTION PLANS

        The Company acquired a Stock Option Plan which originated under VB Texas, Inc. in 2006 (2006 Plan) whereby participants may purchase shares of Company stock. The 2006 Plan limits the number of shares that may be optioned to 746,220. The Plan provides that no options may be granted after October 24, 2016.

        The Company also acquired a Stock Option Plan that originated in May 2011 under VB Texas, Inc. (2011 Plan). The 2011 Plan limits the number of shares that may be optioned to 406,400. The 2011 Plan provides that no options may be granted after May 18, 2021. The options granted under the plans shall be Incentive Stock Options intended to qualify as such under the provisions of Section 422 of the Internal Revenue code of 1986. On August 7, 2017, the board of directors of the Company terminated the 2011 Plan. At the date of termination, there were no options outstanding under this plan.

        The options granted to employees must be exercised within 10 years from the date of grant and vesting schedules are determined on an individual basis. At the merger date, all outstanding options became fully vested and were converted to options of the Company's common stock at an exchange ratio equal to the acquisition exchange rate for common shares. The Company will not issue any additional options under the two VB Texas plans.

        In May 2014, the Company adopted the 2014 stock option plan. The 2014 Plan limits the number of shares that may be optioned to 1,127,200. The Plan provides that no options may be granted after May 20, 2024. The options granted under this plan shall be Incentive Stock Options intended to qualify as such under the provisions of Section 422 of the Internal Revenue code of 1986. Options granted under the Plan expire ten years from the date of grant and become exercisable in installments over a

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NOTE 15: STOCK OPTION PLANS (Continued)

period of one to five years, beginning on the first anniversary of the grant. At June 30, 2017 and December 31, 2016, total options available for future grant amounted to 985,200.

        On September 13, 2017, the Company's shareholders approved the CBTX, Inc. 2017 Stock Incentive Plan (the "2017 Plan"), which was previously approved by the Company's board of directors. The 2017 Plan authorizes the Company to grant options and restricted stock awards to eligible employees, consultants and non-employee directors up to an aggregate of 600,000 shares of common stock.

        Cash received in exercise of share options during the six months ended June 30, 2017 and 2016 was $17 and $1,997, respectively.

        The following table summarizes activity under the stock option plans as of June 30, 2017 and 2016:

	June 30, 2017							June 30, 2016
(Dollars in thousands, except per share data) Options summary	Number of Shares Underlying Options			Weighted Average Exercise Prices		Weighted Average Contractual Term (in years)		Number of Shares Underlying Options			Weighted Average Exercise Prices		Weighted Average Contractual Term (in years)
Outstanding, beginning of period		248,314		$	12.80		4.96		647,074		$	10.99		2.83
Granted		50,000		$	21.00		9.96		—			0.00		—
Forfeited		(2,000	)	$	16.80		7.80		—			0.00		—
Exercised		(1,000	)	$	16.80		—		(202,044	)	$	9.88		—
Outstanding, end of period		295,314		$	14.15		5.36		445,030		$	11.50		3.21
Exercisable, end of period		191,114		$	11.58		—		371,230		$	10.42		—
Unvested, end of period		104,200		$	18.88		—		73,800		$	16.91		—

        The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. The following assumptions were used for the 2017 grants. There were no options granted during 2016.

	Six Months Ended June 30, 2017
Dividend yield		0.95	%
Expected volatility		35.97	%
Risk free interest rate		2.42	%
Expected life in years		6.0

        The dividend yield assumption is based on the Company's history and expectation of dividend payouts. Expected volatility is based on the volatility of certain comparable public company peers. The risk-free interest rate is based upon the U.S. Treasury yield curve in effect at the time of grant. And expected life is based on the ten year term or historical exercise experience.

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NOTE 15: STOCK OPTION PLANS (Continued)

        The total intrinsic value of all options at June 30, 2017 and December 31, 2016 was estimated to be $2,023 and $2,036, respectively, of which $1,801 and $1,736, respectively is attributable to vested options. The intrinsic value at exercise date of options exercised during the six months ended June 30, 2017 and 2016 was less than $1 and $1,337, respectively.

        There were 104,200 options unvested at June 30, 2017, each with a grant date weighted average fair value of $4.43.

        The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. There were 50,000 options granted during the six months ended June 30, 2017 and there were no options granted in the six months ended June 30, 2016.

        The dividend yield assumption is based on the Company's history and expectation of dividend payouts. Expected volatility is based on the Company's historical volatility of its common stock. The risk-free interest rate is based upon the U.S. Treasury yield curve in effect at the time of grant and expected life is based on the ten-year term or historical exercise experience.

        For options granted, compensation costs are recognized in the condensed consolidated statements of income based on their fair values on the date of the grant. For the three months ended June 30, 2017 and 2016, stock compensation expense was $7 and $8 and for the six months ended June 30, 2017 and 2016, stock compensation expense was $16 and $27, respectively. As of June 30, 2017, there was approximately $454 of total unrecognized compensation expense related to the stock-based compensation arrangements. That cost is expected to be recognized in the Company's consolidated statements of income over a weighted average period of 3.4 years.

NOTE 16: REGULATORY MATTERS

Regulatory Capital

        Banks and bank holding companies are subject to various regulatory capital requirements administered by state and federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weighting and other factors.

        The Company and Bank's Common Equity Tier 1 capital includes common stock and related capital surplus, net of treasury stock, and retained earnings. In connection with the adoption of the Basel III Capital Rules, the Company and Bank elected to opt-out of the requirement to include most components of accumulated other comprehensive income in Common Equity Tier 1. Common Equity Tier 1 for both the Company and Bank is reduced by goodwill and other intangible assets, net of associated deferred tax liabilities, and subject to transition provisions.

        When fully phased in on January 1, 2019, the Basel III Capital Rules will require the Company and Bank to maintain (i) a minimum ratio of Common Equity Tier 1 capital to risk-weighted assets of at least 4.5%, plus a 2.5% "capital conservation buffer" (which is added to the 4.5% Common Equity Tier 1 capital ratio as that buffer is phased in, effectively resulting in a minimum ratio of Common

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NOTE 16: REGULATORY MATTERS (Continued)

Equity Tier 1 capital to risk-weighted assets of at least 7.0% upon full implementation), (ii) a minimum ratio of Tier 1 capital to risk-weighted assets of at least 6.0%, plus the capital conservation buffer (which is added to the 6.0% Tier 1 capital ratio as that buffer is phased in, effectively resulting in a minimum Tier 1 capital ratio of 8.5% upon full implementation), (iii) a minimum ratio of Total capital (that is, Tier 1 plus Tier 2) to risk-weighted assets of at least 8.0%, plus the capital conservation buffer (which is added to the 8.0% total capital ratio as that buffer is phased in, effectively resulting in a minimum total capital ratio of 10.5% upon full implementation) and (iv) a minimum leverage ratio of 4.0%, calculated as the ratio of Tier 1 capital to average quarterly assets.

        The implementation of the capital conservation buffer began on January 1, 2016 at the 0.625% level and will be phased in over a four-year period (increasing by that amount on each subsequent January 1, until it reaches 2.5% on January 1, 2019). The Basel III Capital Rules also provide for a "countercyclical capital buffer" that is applicable to only certain covered institutions and does not have any current applicability to the Company and Bank. The capital conservation buffer is designed to absorb losses during periods of economic stress and, as detailed above, effectively increases the minimum required risk-weighted capital ratios. Banking institutions with a ratio of Common Equity Tier 1 capital to risk-weighted assets below the effective minimum (4.5% plus the capital conservation buffer and, if applicable, the countercyclical capital buffer) will face constraints on dividends, equity repurchases and compensation based on the amount of the shortfall.

        The following table presents actual and required capital ratios as of June 30, 2017 and December 31, 2016 for the Company and Bank under the Basel III Capital Rules:

	Actual					Minimum Capital Required-Basel III Phase-in Schedule					Minimum Capital Required-Basel III Fully Phased-in					Required to be Considered Well Capitalized
	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
June 30, 2017
Common Equity Tier I to Risk-Weighted Assets
Consolidated	$	287,108		12.0	%	$	107,753		4.5	%	$	167,616		7.0	%	$	155,644		6.5	%
Bank Only	$	313,946		13.1	%	$	107,692		4.5	%	$	167,520		7.0	%	$	155,555		6.5	%
Tier I Capital to Risk-Weighted Assets
Consolidated	$	293,508		12.3	%	$	143,671		6.0	%	$	203,534		8.5	%	$	191,561		8.0	%
Bank Only	$	313,946		13.1	%	$	143,589		6.0	%	$	203,418		8.5	%	$	191,452		8.0	%
Total Capital to Risk-Weighted Assets
Consolidated	$	319,074		13.3	%	$	191,561		8.0	%	$	251,424		10.5	%	$	239,452		10.0	%
Bank Only	$	339,512		14.2	%	$	191,452		8.0	%	$	251,281		10.5	%	$	239,315		10.0	%
Leverage Ratio
Consolidated	$	293,508		10.4	%	$	112,988		4.0	%	$	112,988		4.0	%	$	141,236		5.0	%
Bank Only	$	313,946		11.1	%	$	112,988		4.0	%	$	112,988		4.0	%	$	141,236		5.0	%

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NOTE 16: REGULATORY MATTERS (Continued)

	Actual					Minimum Capital Required-Basel III Phase-in Schedule					Minimum Capital Required-Basel III Fully Phased-in					Required to be Considered Well Capitalized
	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
December 31, 2016
Common Equity Tier I to Risk-Weighted Assets
Consolidated	$	274,516		11.5	%	$	107,272		4.5	%	$	166,867		7.0	%	$	154,948		6.5	%
Bank Only	$	304,058		12.8	%	$	107,209		4.5	%	$	166,770		7.0	%	$	154,844		6.5	%
Tier I Capital to Risk-Weighted Assets
Consolidated	$	280,916		11.8	%	$	143,029		6.0	%	$	202,624		8.5	%	$	190,705		8.0	%
Bank Only	$	304,058		12.8	%	$	142,946		6.0	%	$	202,507		8.5	%	$	190,594		8.0	%
Total Capital to Risk-Weighted Assets
Consolidated	$	306,287		12.9	%	$	190,705		8.0	%	$	250,300		10.5	%	$	238,381		10.0	%
Bank Only	$	329,428		13.8	%	$	190,594		8.0	%	$	250,155		10.5	%	$	238,243		10.0	%
Leverage Ratio
Consolidated	$	280,916		9.8	%	$	114,872		4.0	%	$	114,872		4.0	%	$	143,590		5.0	%
Bank Only	$	304,058		10.6	%	$	114,872		4.0	%	$	114,872		4.0	%	$	143,590		5.0	%

        Management believes that, as of June 30, 2017 and December 31, 2016, CBTX, Inc. and its bank subsidiary, CommunityBank of Texas, N.A., were "well capitalized" based on the ratios presented above.

        The Company and Bank are subject to the regulatory capital requirements administered by the Federal Reserve Board and, for the Bank, the Office of the Comptroller of the Currency. Regulatory authorities can initiate certain mandatory actions if Company or Bank fail to meet the minimum capital requirements, which could have a direct material effect on our financial statements. Management believes, as of June 30, 2017 and December 31, 2016, that the Company and Bank meet all capital adequacy requirements to which they are subject.

Dividend Restrictions

        In the ordinary course of business, the Company may be dependent upon dividends from the Bank to provide funds for the payment of dividends to shareholders and to provide for other cash requirements. Banking regulations may limit the amount of dividends that may be paid. Approval by regulatory authorities is required if the effect of dividends declared would cause the regulatory capital of the Bank to fall below specified minimum levels. Approval is also required if dividends declared exceed the net profits for that year combined with the retained net profits for the preceding two years.

NOTE 17: FAIR VALUE DISCLOSURES

        The authoritative guidance for fair value measurements defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market

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NOTE 17: FAIR VALUE DISCLOSURES (Continued)

participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability shall not be adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact and (iv) willing to transact.

        The authoritative guidance requires the use of valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert future amounts, such as cash flows or earnings, to a single present amount on a discounted basis. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement costs). Valuation techniques should be consistently applied. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. In that regard, the authoritative guidance establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

Level 1 Inputs—Inputs are based upon unadjusted quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date. The fair values of the Company's equity securities were measured using Level 1 inputs.

Level 2 Inputs—Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (for example, interest rates, volatilities, prepayment speeds, loss severities, credit risks and default rates) or inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 2 investments consist primarily of obligations of U.S. government sponsored enterprises and agencies, obligations of state and municipal subdivisions, corporate bonds and mortgage-backed securities.

Level 3 Inputs—Significant unobservable inputs that reflect an entity's own assumptions that market participants would use in pricing the assets or liabilities.

        During the six months ending June 30, 2017 and 2016, there were no transfers of assets or liabilities within the levels of the fair value hierarchy.

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NOTE 17: FAIR VALUE DISCLOSURES (Continued)

        In general, fair value is based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use observable market-based parameters as inputs. Valuation adjustments may be made to ensure that assets and liabilities are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality and creditworthiness, among other things, as well as unobservable parameters. Any such valuation adjustments are applied consistently over time.

        The Company's valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. While management believes the Company's valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

Financial Instruments Recorded at Fair Value

        Assets and liabilities measured at fair value on a recurring basis include the following:

        Securities Available for Sale:    Securities classified as available for sale are reported at fair value utilizing Level 2 inputs. For those securities classified as Level 2, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U. S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayments speeds, credit information and the bond's terms and conditions, among other things.

        Interest Rate Swaps with Customers:    For interest rate swaps with customers classified as Level 2, the Company obtains fair value measurements from an independent pricing service which uses the "income approach" as defined by ASC 820. Income approach calls for the utilization of valuation techniques to convert future cash flows as due to be exchanged per the terms of the financial instrument, into a single present value amount. Measurement is based on the value indicated by the market expectations about those future amounts as of the measurement date. The proprietary curves of the independent pricing service utilize pricing models derived from industry standard analytic tools, taking into account both Level 1 and Level 2 inputs.

        Interest Rate Swaps with Financial Institutions:    For interest rate swaps with financial institutions classified as Level 2, the Company obtains fair value measurements from an independent pricing service which uses the "income approach" as defined by ASC 820. Income approach calls for the utilization of valuation techniques to convert future cash flows as due to be exchanged per the terms of the financial instrument, into a single present value amount. Measurement is based on the value indicated by the market expectations about those future amounts as of the measurement date. The proprietary curves of the independent pricing service utilize pricing models derived from industry standard analytic tools, taking into account both Level 1 and Level 2 inputs.

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NOTE 17: FAIR VALUE DISCLOSURES (Continued)

        The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of June 30, 2017 and December 31, 2016, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

	June 30, 2017
	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total
Financial Assets
Securities available for sale
State and municipal securities	$	—	$	61,964	$	—	$	61,964
U.S. Agency Securities:
Debt securities		—		20,447		—		20,447
Collateralized mortgage obligations		—		47,653		—		47,653
Mortgage-backed securities		—		89,151		—		89,151
Other securities		1,081		—		—		1,081
Interest rate swaps with customers		—		433		—		433
Interest rate swaps with financial institutions		—		307		—		307
Total financial assets	$	1,081	$	219,955	$	—	$	221,036
Financial liabilities
Interest rate swaps with customers	$	—	$	307	$	—	$	307
Interest rate swaps with financial institutions		—		433		—		433
Total financial liabilities	$	—	$	740	$	—	$	740

	December 31, 2016
	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total
Financial Assets
Securities available for sale
State and municipal securities	$	—	$	58,979	$	—	$	58,979
U.S. Agency Securities:
Debt securities		—		20,341		—		20,341
Collateralized mortgage obligations		—		33,770		—		33,770
Mortgage-backed securities		—		91,790		—		91,790
Other securities		1,064		—		—		1,064
Interest rate swaps with customers		—		430		—		430
Interest rate swaps with financial institutions		—		350		—		350
Total financial assets	$	1,064	$	205,660	$	—	$	206,724
Financial liabilities
Interest rate swaps with customers	$	—	$	350	$	—	$	350
Interest rate swaps with financial institutions		—		430		—		430
Total financial liabilities	$	—	$	780	$	—	$	780

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NOTE 17: FAIR VALUE DISCLOSURES (Continued)

        Certain financial assets and financial liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). Financial assets measured at fair value on a non-recurring basis during the reported periods include certain impaired loans reported at the fair value of the underlying collateral if repayment is expected solely from the collateral. Repossessed real estate and other assets as well as collateral values are estimated using Level 2 inputs based on observable market data, typically in the case of real estate collateral, or Level 3 inputs based on customized discounting criteria, typically in the case of non-real estate collateral such as inventory, accounts receivable, equipment or other business assets.

        The table below outlines certain assets measured on a non-recurring basis at June 30, 2017 and December 31, 2016.

	June 30, 2017
	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total
Loans
Commercial and industrial	$	—	$	—	$	3,879	$	3,879
Real estate:
1-4 family residential		—		—		—		—
Total loans	$	—	$	—	$	3,879	$	3,879
Repossessed real estate and other assets	$	—	$	—	$	176	$	176

	December 31, 2016
	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total
Loans
Commercial and industrial	$	—	$	—	$	3,765	$	3,765
Real estate:
Commercial real estate		—		—		1,660		1,660
Total loans	$	—	$	—	$	5,425	$	5,425
Repossessed real estate and other assets	$	—	$	—	$	—	$	—

Non-Financial Assets and Non-Financial Liabilities

        The Company does not have any non-financial assets or non-financial liabilities measured at fair value on a recurring basis. Certain non-financial assets measured at fair value on a non-recurring basis include foreclosed assets (upon initial recognition or subsequent impairment), non-financial assets and non-financial liabilities measured at fair value in the second step of a goodwill impairment test, and intangible assets and other non-financial long-lived assets measured at fair value for impairment assessment. Non-financial assets measured at fair value on a non-recurring basis during the reported periods include certain foreclosed assets which, upon initial recognition, were remeasured and reported

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NOTE 17: FAIR VALUE DISCLOSURES (Continued)

at fair value through a charge-off to the allowance for loan losses and certain foreclosed assets which, subsequent to their initial recognition, were remeasured at fair value through a write-down included in other non-interest expense. The fair value of a foreclosed asset is estimated using Level 2 inputs based on observable market data or Level 3 inputs based on customized discounting criteria. During the reported periods, all fair value measurements for foreclosed assets utilized Level 2 inputs.

        The following table presents foreclosed assets that were remeasured subsequent to initial recognition and reported at fair value:

	June 30, 2017			December 31, 2016
Foreclosed assets remeasured at initial recognition:
Carrying value of foreclosed assets prior to measurement	$	583		$	2,018
Charge-offs recognized in the allowance for loan losses		—			(47	)
Fair value	$	583		$	1,971
Foreclosed assets remeasured subsequent to initial recognition:
Carrying value of foreclosed assets prior to measurement	$	227		$	630
Write-downs included in other noninterest expense		(51	)		(65	)
Fair value	$	176		$	565

Fair Value Disclosure for all Financial Instruments

        The Company is required to disclose the fair value of all financial instruments, including those financial assets and financial liabilities not recorded at fair value in its consolidated balance sheets, for which it is practicable to estimate fair value. Below is a table that summarizes the fair market values of all financial instruments of the Company at June 30, 2017 and December 31, 2016 followed by methods and assumptions that were used by the Company in estimating the fair value.

F-44

CBTX, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(DOLLARS IN THOUSANDS)

NOTE 17: FAIR VALUE DISCLOSURES (Continued)

        The estimated fair values of the Company's financial instruments are as follows:

	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value		Carrying Amount
June 30, 2017
Financial Assets:
Cash and due from banks	$	58,124	$	—	$	—	$	58,124	$	58,124
Interest bearing deposits in banks		249,049		—		—		249,049		249,049
Time deposits in other banks		—		600		—		600		600
Securities available for sale		—		219,215		—		219,215		219,215
Other securities		1,081		—		—		1,081		1,081
Securities held to maturity		—		37		—		37		34
Other investments		—		—		12,088		12,088		12,088
Loans, including held for sale, net		—		—		2,168,732		2,168,732		2,167,815
Cash surrender value of life insurance		—		67,091		—		67,091		67,091
Servicing asset		—		227		—		227		227
Accrued interest receivable		—		6,031		—		6,031		6,031
Interest rate swaps with customers		—		433		—		433		433
Interest rate swaps with financial institutions		—		307		—		307		307
Total financial assets	$	308,254	$	293,941	$	2,180,820	$	2,783,015	$	2,782,095
Financial Liabilities:
Noninterest-bearing deposits	$	1,030,865	$	—	$	—	$	1,030,865	$	1,030,865
Interest-bearing deposits		—		1,439,461		—		1,439,461		1,485,919
Repurchase agreements		—		2,179		—		2,179		2,179
Junior subordinated debt		—		6,726		—		6,726		6,726
Note payable		—		25,464		—		25,464		25,464
Accrued interest payable		—		536		—		536		536
Interest rate swaps with customers		—		307		—		307		307
Interest rate swaps with financial institutions		—		433		—		433		433
Total financial liabilities	$	1,030,865	$	1,475,106	$	—	$	2,505,971	$	2,552,429

F-45

CBTX, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(DOLLARS IN THOUSANDS)

NOTE 17: FAIR VALUE DISCLOSURES (Continued)

	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value		Carrying Amount
December 31, 2016
Financial Assets:
Cash and due from banks	$	53,000	$	—	$	—	$	53,000	$	53,000
Interest bearing deposits in banks		329,103		—		—		329,103		329,103
Time deposits in other banks		—		600		—		600		600
Securities available for sale		—		204,880		—		204,880		204,880
Other securities		1,064		—		—		1,064		1,064
Securities held to maturity		—		37		—		37		34
Other investments		—		—		12,063		12,063		12,063
Loans, including held for sale, net		—		—		2,139,645		2,139,645		2,130,492
Cash surrender value of life insurance		—		51,430		—		51,430		51,430
Servicing asset		—		186		—		186		186
Accrued interest receivable		—		6,674		—		6,674		6,674
Interest rate swaps with customers		—		430		—		430		430
Interest rate swaps with financial institutions		—		350		—		350		350
Total financial assets	$	383,167	$	264,587	$	2,151,708	$	2,799,462	$	2,790,306
Financial Liabilities:
Noninterest-bearing deposits	$	1,025,425	$	—	$	—	$	1,025,425	$	1,025,425
Interest-bearing deposits		—		1,451,512		—		1,451,512		1,515,335
Repurchase agreements		—		2,342		—		2,342		2,343
Junior subordinated debt		—		6,726		—		6,726		6,726
Note payable		—		27,679		—		27,679		27,679
Accrued interest payable		—		582		—		582		582
Interest rate swaps with customers		—		350		—		350		350
Interest rate swaps with financial institutions		—		430		—		430		430
Total financial liabilities	$	1,025,425	$	1,489,621	$	—	$	2,515,046	$	2,578,870

        The estimated fair value amounts of financial instruments have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. The fair values of all financial instruments have been determined as follows:

Cash and Cash Equivalents and Time Deposits in Other Banks—For these short-term instruments, the carrying amount is a reasonable estimate of fair value.

F-46

CBTX, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(DOLLARS IN THOUSANDS)

NOTE 17: FAIR VALUE DISCLOSURES (Continued)

Other Investments—Other investments consist of other correspondent bank stocks and CRA investments. For these investments, cost, which is generally the carrying amount, is a reasonable estimate of fair value due to redemption restrictions.

Loans—Fair values of loans are estimated for segregated groupings of loans with similar financial characteristics. Loans are segregated by segment such as real estate, commercial and agricultural, consumer, and other loans. Each of these categories is further subdivided into fixed and adjustable rate loans and performing and nonperforming loans. The fair value of performing loans is calculated by discounting scheduled cash flows through the estimated maturity using estimated market discount rates that reflect the credit and interest rate risk inherent in the various types of loans. Discount rates ranged from 2.30% to 16.50%. These rates reflect the rate environment for repricing the respective category of loans at June 30, 2017 and December 31, 2016. The fair value of the residential mortgage loans that are sold in the secondary market is estimated to be the carrying amount due to the short-term nature of these loans.

Bank-owned Life Insurance—The carrying value for the cash value of life insurance is based on information received from the insurance carriers indicating the financial performance of the policies and the amount the Company would receive should the policies be surrendered and is considered a reasonable estimate of fair value.

Deposits—The fair values for demand deposits are reported at a value equal to the amount payable on demand at the reporting date. Fair values for certificates of deposit, savings accounts, and money market deposits are estimated using a discounted cash flow calculation that applies interest rates currently being offered on similar deposits to a schedule of aggregated expected monthly maturities.

Repurchase Agreements—For these short-term borrowings, carrying value is deemed to be a reasonable estimate of their fair value.

Junior Subordinated Debentures—The fair value for these debentures is considered to be the carrying value due to the variable rate feature of the instruments.

Servicing Assets—Fair value of the servicing assets is estimated using discounted cash flows based on current market interest rates.

Accrued Interest—The carrying amounts of accrued interest approximate their fair value due to short term maturity.

NOTE 18: EARNINGS PER SHARE

        Basic earnings per common share is computed as net income available to common shareholders divided by the weighted average number of common shares outstanding during the period.

        Diluted earnings per common share is computed using the weighted-average number of shares determined for the basic earnings per common share computation plus the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common

F-47

CBTX, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(DOLLARS IN THOUSANDS)

NOTE 18: EARNINGS PER SHARE (Continued)

stock using the treasury stock method. Outstanding stock options issued by the Company represent the only dilutive effect reflected in diluted weighted average shares.

        The following table illustrates the computation of basic and diluted earnings per share:

	Three Months Ended June 30,								Six Months Ended June 30,
	2017				2016				2017				2016
(Dollars in thousands, except per share data)	Amount		Per Share Amount		Amount		Per Share Amount		Amount		Per Share Amount		Amount		Per Share Amount
Net income for common stockholders	$	8,705			$	6,371			$	15,567			$	12,870
Basic:
Weighted average shares outstanding (shares in thousands)		22,062	$	0.39		22,056	$	0.29		22,062	$	0.71		22,166	$	0.58
Diluted:
Add incremental shares for:
Effect of dilutive securities—options		86				124				86				146
Adjusted weighted average shares outstanding (shares in thousands)		22,148	$	0.39		22,180	$	0.29		22,148	$	0.70		22,312	$	0.58

NOTE 19: SUBSEQUENT EVENTS

Par value and stock split dividend change

        On September 19, 2017, the Company amended and restated the Company's certificate of formation to, among other things, change the Company's name to CBTX, Inc., to increase the number of authorized preferred and common shares which the Company has the authority to issue and to reduce the par value of these shares to $0.01. The par value per share and the authorized number of shares of each class of stock changed resulting from this amendment to the certificate of formation is as follows:

Line Item	Par Value per Share Prior to Amendment		Par Value per Share Post Amendment		Authorized Number of Shares Prior to Amendment		Authorized Number of Shares Post Amendment
Preferred Stock	$	10.00	$	0.01		1,000,000		10,000,000
Common Stock	$	10.00	$	0.01		15,000,000		90,000,000

        Also, on September 20, 2017, the board of directors of the Company approved a 2-for-1 stock split, whereby each shareholder of the Company's common stock received one additional share of common stock for each share owned at the record date of September 30, 2017 in the form of a stock dividend that was distributed on October 13, 2017.

F-48

CBTX, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(DOLLARS IN THOUSANDS)

NOTE 19: SUBSEQUENT EVENTS (Continued)

        The effects of the change in par value of the Company's shares and the stock split on outstanding shares and per share figures have been retroactively applied to all periods presented as if the transaction had occurred as of the beginning of the earliest period presented. In addition, the number of shares of common stock underlying the Company's stock options were proportionately increased and the exercise price of each stock option was proportionately decreased retroactively for all periods presented.

Sale of Branches

        On September 8, 2017, the Bank completed the sale of its branch located in Huffman, Texas, referred to as the Huffman Branch. Pursuant to a purchase and assumption agreement, the Bank sold certain assets associated with the Huffman Branch valued at approximately $1.4 million, other than loans, and the purchaser assumed approximately $15.3 million in deposits at the Huffman Branch. We believe that the sale of the Huffman Branch will reduce our non-interest expense going forward and we do not believe it will impact our liquidity.

        On September 13, 2017, the Company's shareholders approved the CBTX, Inc. 2017 Stock Incentive Plan (the "2017 Plan"), which was previously approved by the Company's board of directors. The 2017 Plan authorizes the Company to grant options and restricted stock awards to eligible employees, consultants and non-employee directors up to an aggregate of 600,000 shares of common stock.

        On September 14, 2017, we sold the real estate associated with our Deweyville, Texas branch, referred to as the Deweyville Branch, and we leased the facility back for approximately 120 days while we finalize the regulatory process for approval of closing this branch office. We expect to complete the closing of the Deweyville Branch on December 18, 2017. The $4.7 million in deposits and $50,000 of loans at the Deweyville Branch will be transferred to one of our other nearby branch locations. We believe that the closure of the Deweyville Branch will reduce our non-interest expense going forward and we do not believe it will impact our liquidity.

        On October 10, 2017, the Company's board of directors approved a special one-time grant of 155,110 shares of restricted stock under the 2017 Plan to certain key employees to be effective when the Company's registration statement relating to the public offering of its shares of common stock is declared effective by the Securities and Exchange Commission. The award agreements for these awards provide that the shares of restricted stock will vest in equal increments on an annual basis over a five-year period beginning on the first anniversary of the effective date of such registration statement.

        The Company does not believe that the sale of our Huffman and Deweyville branches represents any strategic shift in the Company's operations.

        There were no subsequent events, other than previously disclosed, to report between June 30, 2017, the date of the financial statements, and October 13, 2017, the date the consolidated financial statements were available to be issued.

F-49

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors
CBTX, Inc.

        We have audited the accompanying consolidated balance sheets of CBTX, Inc. (formerly known as CBFH, Inc.) (a Texas corporation) and its subsidiary (the "Company") as of December 31, 2016 and 2015, and the related consolidated statements of income, comprehensive income, changes in shareholders' equity, and cash flows for each of the two years in the period ended December 31, 2016. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

        We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of CBTX, Inc. and its subsidiary as of December 31, 2016 and 2015, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2016 in conformity with accounting principles generally accepted in the United States of America.

/s/ GRANT THORNTON LLP

Dallas, Texas

August 14, 2017 (except for the effects of the par value change described in Note 1, as to which the date is September 26, 2017 and except for the effects of the stock split dividend described in Note 1, as to which the date is October 13, 2017.)

F-50

CBTX, INC.

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2016 AND 2015

	2016			2015
ASSETS
Cash and due from banks	$	53,000,463		$	51,720,854
Interest bearing deposits at other financial institutions		329,102,689			383,179,938
Total Cash and Cash Equivalents		382,103,152			434,900,792
Time deposits in other banks		600,000			400,000
Securities		205,977,884			145,788,640
Other investments		12,063,413			12,006,364
Loans held for sale		613,100			1,562,385
Loans, net of allowance for loan lossess of $25,005,527 and $25,315,310, respectively		2,129,879,059			2,066,694,266
Premises and equipment, net		57,514,266			60,930,985
Goodwill		80,950,439			80,950,439
Other intangible assets, net of accumulated amortization of $12,851,308 and $11,683,820, respectively		7,790,696			8,878,615
Cash value of life insurance		51,429,709			50,440,926
Deferred tax asset, net		9,031,269			8,430,392
Repossessed real estate and other assets		1,860,947			1,091,782
Other assets		11,708,469			10,549,045
Total Assets	$	2,951,522,403		$	2,882,624,631
LIABILITIES AND SHAREHOLDERS' EQUITY
Non-interest bearing deposits	$	1,025,424,756		$	1,053,957,308
Interest bearing deposits		1,515,334,989			1,429,408,899
Total Deposits		2,540,759,745			2,483,366,207
Repurchase agreements		2,342,961			2,090,149
Junior subordinated debt		6,726,000			6,726,000
Notes Payable		27,678,571			31,000,000
Other liabilities		16,377,532			15,129,232
Total Liabilities		2,593,884,809			2,538,311,588
Commitments and Contingencies (Note 14)
Shareholders' Equity
Preferred stock, $0.01 par value, 10,000,000 shares authorized, no shares issued		—			—
Common stock, $0.01 par value, 90,000,000 shares authorized, 22,971,504 shares issued, 22,062,072 and 22,303,474 outstanding at December 31, 2016 and 2015, respectively		229,715			229,715
Additional Paid in Capital		278,501,143			281,162,818
Retained earnings		95,274,351			72,461,900
Treasury stock, at cost (909,432 and 668,030 shares held at December 31, 2016 and 2015, respectively)		(15,446,026	)		(10,955,466	)
Accumulated other comprehensive income (loss)		(921,589	)		1,414,076
Total Shareholders' Equity		357,637,594			344,313,043
Total Liabilities and Shareholders' Equity	$	2,951,522,403		$	2,882,624,631

See accompanying notes to consolidated financial statements.

F-51

CBTX, INC.

CONSOLIDATED STATEMENTS OF INCOME

DECEMBER 31, 2016 AND 2015

	2016			2015
INTEREST INCOME
Interest and fees on loans	$	103,722,976		$	100,785,572
Securities		3,801,497			2,814,682
Federal funds sold and interest bearing deposits		2,426,912			1,924,897
Total Interest Income		109,951,385			105,525,151
INTEREST EXPENSE
Deposits		7,073,213			6,500,526
Repurchase agreements		4,802			3,674
Notes Payable		1,061,107			932,368
Junior subordinated debt		265,720			217,583
Total Interest Expense		8,404,842			7,654,151
NET INTEREST INCOME		101,546,543			97,871,000
PROVISION FOR LOAN LOSSES		4,575,000			6,950,000
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		96,971,543			90,921,000
NON-INTEREST INCOME
Deposit account service charges		6,537,987			6,911,265
Net gain on sale of assets		1,922,556			783,061
Gain on redemption of junior subordinated debt		—			1,025,000
Card interchange fees		3,352,311			3,331,304
Earnings on bank owned life insurance		1,355,678			1,356,622
Other		2,580,678			1,559,394
Total Non-Interest Income		15,749,210			14,966,646
NON-INTEREST EXPENSE
Salaries and employee benefits		44,238,882			41,601,414
Net occupancy expense		10,100,111			9,844,127
Regulatory fees		2,299,729			2,205,723
Data processing		2,483,534			2,415,886
Printing, stationery and office		2,981,434			2,959,345
Amortization of intangibles		1,167,487			1,304,928
Professional and directors fees		2,480,534			2,461,531
Correspondent bank and customer related transaction expenses		320,399			325,285
Loan processing costs		508,508			619,010
Advertising, marketing and business development		789,404			924,674
Repossessed real estate and other asset expense		318,195			227,519
Security and protection expense		1,717,632			1,619,405
Merger expense		—			1,373,814
Other expenses		4,096,457			3,077,842
Total Non-Interest Expense		73,502,306			70,960,503
NET INCOME BEFORE INCOME TAX EXPENSE		39,218,447			34,927,143
INCOME TAX EXPENSE		(12,010,386	)		(10,790,751	)
CONSOLIDATED NET INCOME	$	27,208,061		$	24,136,392
EARNINGS PER COMMON SHARE
Basic	$	1.23		$	1.07
Diluted	$	1.22		$	1.06

See accompanying notes to consolidated financial statements.

F-52

CBTX, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

	2016			2015
Consolidated Net income	$	27,208,061		$	24,136,392
Unrealized (loss) gains on securities available for sale arising during the period, net		(3,621,768	)		(527,317	)
Reclassification adjustment from net gains included in net income		28,438			—
Change in related deferred income tax		1,257,665			184,561
Other Comprehensive (loss) income		(2,335,665	)		(342,756	)
Total Comprehensive Income	$	24,872,396		$	23,793,636

See accompanying notes to consolidated financial statements.

F-53

CBTX, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

	Common Stock										Treasury Stock						Accumulated Other Comprehensive Income (Loss)
					Additional Paid in Capital			Retained Earnings
	Shares		Amount								Shares			Amount						Total
Balance, December 31, 2014		22,971,504	$	229,715	$	281,247,544		$	52,812,233			(437,574	)	$	(6,794,163	)	$	1,756,832		$	329,252,161
Purchase Shares of Treasury Stock												(246,708	)		(4,417,840	)					(4,417,840	)
Issuance of Shares of Treasury Stock by Exercise of Stock Options						(96,551	)					16,252			256,537						159,986
Stock Based Compensation Expense						11,825															11,825
Dividends paid on Common Stock, $0.20 per share									(4,486,725	)											(4,486,725	)
Consolidated Net Income									24,136,392												24,136,392
Change in Unrealized Gain on Securities, net of Tax of $(184,561)		—		—		—			—			—			—			(342,756	)		(342,756	)
Balance, Decemeber 31, 2015		22,971,504		229,715		281,162,818			72,461,900			(668,030	)		(10,955,466	)		1,414,076			344,313,043
Purchase of Treasury Stock												(635,100	)		(11,078,436	)					(11,078,436	)
Issuance of Shares of Treasury Stock						(2,704,963	)					393,698			6,587,876						3,882,913
Stock Based Compensation Expense						43,288															43,288
Dividends paid on Common Stock, $0.20 per share									(4,395,610	)											(4,395,610	)
Consolidated Net Income									27,208,061												27,208,061
Change in Unrealized Loss on Securities, net of Tax of $(1,257,665)		—		—		—			—			—			—			(2,335,665	)		(2,335,665	)
Balance, December 31, 2016		22,971,504	$	229,715	$	278,501,143		$	95,274,351			(909,432	)	$	(15,446,026	)	$	(921,589	)	$	357,637,594

See accompanying notes to consolidated financial statements.

F-54

CBTX, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

	2016			2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net income	$	27,208,061		$	24,136,392
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Provision for loan losses		4,575,000			6,950,000
Depreciation		3,259,250			3,642,753
Deferred federal income tax provision		600,877			(1,664,182	)
Amortization of intangibles		1,167,487			1,304,928
Valuation write downs on repossessed real estate and other assets		65,000			115,275
Net realized gain on securities		(28,437	)		—
Net realized gain on other securities		(23,933	)		(22,119	)
Loss on sale of repossessed real estate and other assets		179,422			154,421
Gain on sale of loans held for sale		(458,316	)		(369,584	)
Gain on sale of loans		(315,370	)		(547,911	)
(Gain) loss on sale of fixed assets		(1,328,292	)		(19,828	)
Gain on redemption of junior subordinated debt		—			(1,025,000	)
Net income on bank owned life insurance		(1,355,678	)		(1,356,622	)
Amortization of premiums on investment securities, net		1,266,833			907,069
Stock based compensation expense		43,288			11,825
Change in operating assets and liabilities:
Net decrease (increase) in loans held for sale		1,407,601			(573,301	)
Other assets		(1,187,980	)		2,459,336
Other liabilities		967,509			(1,269,254	)
Total adjustments		8,834,261			8,697,806
Net cash provided by operating activities		36,042,322			32,834,198
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of MCBI, net of cash acquired		—			(5,936,355	)
Activity in available for sale securities:
Purchases		(406,172,733	)		(383,162,399	)
Proceeds from sales, calls, and maturities		322,861,312			321,135,000
Principal repayments		18,593,791			10,876,850
Activity in held to maturity securities:
Principal repayments		1,385			2,116
Redemption of other investments		327,395			241,211
Purchase of other investments		(379,544	)		(2,128,000	)
Net (increase) decrease in time deposits in other banks		(200,000	)		251
Increase in loans, net		(78,552,952	)		(36,341,716	)
Purchases of loan participations		—			(6,771,511	)
Sales of loan participations		4,948,305			26,755,259
Sale of SBA loans		3,489,542			3,593,195
Redemption (purchase) of bank owned lfe insurance		366,895			(15,000,000	)
Proceeds from sale of repossessed other assets		365,799			163,309
Proceeds from sale of repossessed real estate		1,291,295			698,841
Purchases of premises and equipment		(1,882,497	)		—
Sales of premises and equipment		3,368,258			(2,790,403	)
Net cash (used) by investing activities		(131,573,749	)		(88,664,352	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) increase in noninterest-bearing deposits		(28,532,552	)		1,185,549
Net increase (decrease) in interest-bearing deposits		85,926,090			(14,253,772	)
Net increase (decrease) in securities sold under agreements to repurchase		252,812			(2,096,126	)
Purchase of treasury stock		(11,078,436	)		(4,417,841	)
Proceeds from issuance of treasury stock for exercise of stock options		3,882,913			159,987
Purchase of trust preferred securities		—			(3,075,000	)
Proceeds from note payable		—			31,000,000
Repayment of note payable		(3,321,429	)		—
Repayment of Federal Home Loan Bank Advances		—			(4,032,831	)
Dividends paid on common stock		(4,395,610	)		(4,486,725	)
Net cash provided (used in) financing activities		42,733,788			(16,759	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(52,797,639	)		(55,846,913	)
CASH AND CASH EQUIVALENTS, BEGINNING		434,900,792			490,747,705
CASH AND CASH EQUIVALENTS, ENDING	$	382,103,153		$	434,900,792

See accompanying notes to consolidated financial statements.

F-55

CBTX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2016 and 2015

NOTE 1: BASIS OF PRESENTATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES

Basis of Presentation—The accompanying consolidated financial statements include the accounts of CBTX, Inc. (the Company) and CommunityBank of Texas, N.A. (the Bank), a wholly owned subsidiary of the Company. All material intercompany balances and transactions have been eliminated in consolidation.

Nature of Operations—The Company was formed on January 26, 2007, and through its Bank subsidiary, operates 37 locations throughout Southeast Texas in Chambers, Fort Bend, Hardin, Harris, Jasper, Jefferson, Newton, Orange, Tyler, and Wharton counties. The Company's primary source of revenue is from investing funds received from depositors and from providing loan and other financial services to its customers. The Bank operates under a national charter and therefore is subject to regulation by the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC). The Company is subject to regulation by the Federal Reserve Board.

Summary of Significant Accounting and Reporting Policies—The accounting and reporting policies of the Company and the Bank conform to generally accepted accounting principles in the United States of America (U.S. GAAP) and to prevailing practices within the banking industry. A summary of significant accounting policies follows.

Segment Reporting—The Company has one reportable segment. All of the Company's activities are interrelated, and each activity is dependent and assessed based on how each of the activities of the Company supports the others. For example, lending is dependent upon the ability of the Company to fund itself with deposits and borrowings while managing the interest rate and credit risk. Accordingly, all significant operating decisions are based upon analysis of the Bank as one segment or unit. The Company's chief operating decision-maker, the CEO, uses the consolidated results to make operating and strategic decisions.

Use of Estimates—In preparing financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated balance sheets and reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates. Material estimates that are particularly susceptible to significant change in the near term relate primarily to the determination of the allowance for possible credit losses, the fair value of the Company's investment securities, repossessed assets, deferred tax assets, financial instruments and intangible assets.

Cash and Due from Banks—The Bank, as a correspondent of the Federal Reserve Bank, is required to maintain reserves for the purpose of facilitating the implementation of monetary policy. These reserves may be maintained in the form of balances at the Federal Reserve Bank or by vault cash maintained at the Bank. The reserve requirements for the Bank were approximately $16,120,000 and $14,546,000 at December 31, 2016 and 2015, respectively. Accordingly, cash and due from banks balances were restricted to that extent.

        The majority of cash, cash equivalents and time deposits of the Company are maintained with major financial institutions in the United States and have original maturities less than 90 days. Interest bearing account deposits with these financial institutions may exceed the amount of insurance provided on such deposits; however, these deposits typically may be redeemed upon demand and therefore, bear

F-56

CBTX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 1: BASIS OF PRESENTATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (Continued)

minimal risk. In monitoring this credit risk, the Company periodically evaluates the stability of the financial institutions with which it has deposits. The Company has cash deposits in correspondent financial institutions in excess of the amount insured by the FDIC in the amount of $79,240,679 and $94,304,407 at December 31, 2016 and 2015, respectively.

Securities—Securities are accounted for on a trade date basis. Premiums and discounts are amortized and accreted to operations using the level-yield method of accounting, adjusted for prepayments as applicable. Interest earned on these assets is included in interest income. The specific identification method of accounting is used to compute gains or losses on the sales of these assets.

        Securities available for sale are carried at fair value. Unrealized gains and losses are excluded from earnings and reported as a separate component of shareholders' equity until realized. Securities within the available for sale portfolio may be used as part of the Company's asset/liability strategy and may be sold in response to changes in interest risk, prepayment risk or other similar economic factors.

        Securities held to maturity are carried at cost, adjusted for the amortization of premiums and the accretion of discounts. Management has the positive intent and the ability to hold these long-term securities until their scheduled maturities.

        Investment securities classified as available for sale or held to maturity are generally evaluated for other-than-temporary impairment (OTTI) under the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 320, Investments—Debt and Equity Securities. In determining OTTI, management considers many factors, including: (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer, and (iii) the intent and the ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. The assessment of whether an other-than-temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time.

        When OTTI occurs, the amount of the OTTI recognized in earnings depends on whether the Company intends to sell the security or will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss. If the Company intends to sell the security or it is more likely that the Company will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss, the OTTI shall be recognized in earnings equal to the entire difference between the investment's amortized cost basis and its fair value at the balance sheet date. If the Company does not intend to sell the security and it is not likely that the Company will be required to sell the security before recovery of its amortized cost basis less any current-period loss, the OTTI shall be separated into the amount representing the credit loss and the amount related to all other factors. The amount of the total OTTI related to the credit loss is determined based on the present value of cash flows expected to be collected and is recognized in earnings. The amount of the total OTTI related to other factors shall be recognized in other comprehensive income, net of applicable taxes. The previous amortized cost basis less the OTTI recognized in earnings shall become the new amortized cost basis of the investment.

F-57

CBTX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 1: BASIS OF PRESENTATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (Continued)

Other Investments—Banks that are members of the Federal Home Loan Bank (FHLB) are required to maintain a stock investment in the FHLB calculated as a percentage of aggregate outstanding mortgages, outstanding FHLB advances, and other financial instruments. FHLB stock is capital stock that is bought from and sold to the FHLB at $100 par value. Both stock and cash dividends may be received on FHLB stock and are recorded when received as interest income. At December 31, 2016 and 2015, the Company held $1,172,600 and $1,167,700 in Federal Home Loan Bank stock, respectively.

        Banks that are members of the Federal Reserve System are required to annually subscribe to Federal Reserve Bank (FRB) stock in specific ratios to the Bank's equity. Although the par value of the stock is $100 per share, member banks pay only $50 per share at the time of purchase with an understanding that the other half of the subscription amount is subject to call at any time. The stock does not provide the owner with control or financial interest in the FRB, is non-transferable, and cannot be used as collateral. Dividends are received in the form of cash and are recorded as interest income when received. At December 31, 2016 and 2015, the Company held $9,271,300 and $9,279,500 in Federal Reserve Bank stock which is included in other investments on the consolidated balance sheets.

        The Company also held $141,150 in the stock of The Independent Bankers Financial Corporation (TIB) at December 31, 2016 and 2015, which is included in other investments on the consolidated balance sheets. Investments in stock of the FHLB, the FRB, and TIB are included in other investments in the consolidated balance sheets, are considered to be restricted investments due to limited marketability, and are stated at cost as management believes their cost value is ultimately recoverable.

        The Company has two private investment funds and a limited partnership (as a limited partner) in other investments. All of these investments are qualified Community Reinvestment Act (CRA) investments under the Small Business Investment Company (SBIC) program of the U.S. Small Business Administration. The investments are stated at cost which management believes to be recoverable and have required periodic capital calls which are described further in Note 15. Unfunded commitments related to these investments are described in Note 14 as well. In addition, the Company has an investment in a CRA mutual fund which is adjusted each month for earnings. The investment is carried at fair value. The CRA Mutual Fund has been included as available for sale other securities in Note 3.

Loans Held for Sale—Loans held for sale include mortgage loans originated with intent to sell on the secondary market. These loans are held for an interim period, usually less than 30 days. Accordingly, these loans are classified as held for sale and are carried at cost which is determined on an aggregate basis and deemed to be the equivalent of fair value based on the short term nature of the loans. See Note 4 for more information on these loans.

Loans—The Company, through its Bank subsidiary grants mortgage, commercial and consumer loans to customers throughout counties located in Southeast Texas. The ability of the Company's debtors to honor their contracts is dependent in part upon the general economic conditions in these areas.

F-58

CBTX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 1: BASIS OF PRESENTATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (Continued)

        Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off, which are measured at historical cost, are generally reported at their outstanding unpaid principal balances net of any unearned income, charge-offs, and unamortized deferred fees and costs on originated loans. Interest income is accrued on the unpaid principal balance. Loan origination fees and certain direct origination costs are deferred and recognized as adjustments to interest income over the lives of the related loans. Unearned income is amortized to interest income using a level yield methodology without anticipating payoffs.

        The Company records lines of credit at their funded portion. All unfunded amounts for loans in process and credit lines are reported as unfunded commitments, as reflected in Note 14. Interest income is accrued on the unpaid principal balance.

        Accounting guidance defines a portfolio segment as the level at which an entity develops and documents a systematic methodology to determine the allowance for credit losses, and a class of financing receivables as the level of disaggregation of portfolio segments based on the initial measurement attribute, risk characteristics and methods for assessing risk. The Company's portfolio segments are Commercial and Industrial, Real Estate, Consumer, Agriculture, and Other. The classes of financing receivables within the Real Estate segment are Commercial Real Estate, Construction and development, 1-4 Family Residential, and Multifamily Residential. The remaining portfolio segments contain a single class of financing receivables. The allowance for credit losses is presented by portfolio segment and class of financing receivable.

        The Company selectively extends credit for the purpose of establishing long-term relationships with its customers. The Company mitigates the risks inherent in lending by focusing on businesses and individuals with demonstrated payment history, historically favorable profitability trends and stable cash flows. In addition to these primary sources of repayment, the Company looks to tangible collateral and personal guarantees as secondary sources of repayment. Lending officers are provided with detailed underwriting policies covering all lending activities in which the Company is engaged and that require all lenders to obtain appropriate approvals for the extension of credit. The Company also maintains documentation requirements and extensive credit quality assurance practices in order to identify credit portfolio weaknesses as early as possible so any exposures that are discovered may be reduced.

        The Company has certain lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk. Management and the Board of Directors review and approve these policies and procedures on a regular basis. A reporting system supplements the review process by providing management and the Board of Directors with frequent reports related to loan production, loan quality, concentrations of credit, loan delinquencies and non-performing and potential problem loans. Diversification in the loan portfolio is a means of managing risk associated with fluctuations in economic conditions.

        The Company retains an independent third party to review and validate the credit risk program on a periodic basis. Results of these reviews are presented to management and the Board of Directors. The loan review process supplements the risk identification and assessment decisions made by lenders and credit personnel, as well as the Company's policies and procedures.

F-59

CBTX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 1: BASIS OF PRESENTATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (Continued)

Government Guaranteed Loans—The Company originates loans that are partially guaranteed by the U.S. Small Business Administration (SBA) and as is customary with these loans, the Company will often sell the guaranteed portion of these loans as market conditions and pricing allow for a gain to be recorded on the sale. Loan sales are recorded when control over the transferred asset has been relinquished. Control over the transferred portion is deemed to be surrendered when the assets have been removed from the Company, the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

        In calculating the gain on sale of SBA loans, the Company's investment in the loan is allocated among the unguaranteed portion of the loan, the servicing amount retained, and the guaranteed portion of the loan sold, based on the relative fair market value of each portion. The gain on the sold portion of the loan is recognized based on the difference between the sale proceeds and the allocated investment.

Loan Servicing—Servicing assets are recognized as separate assets when rights are acquired through the sale of financial assets. Servicing assets are initially recorded at fair market value and amortized in proportion to and over the period of net servicing income (if servicing revenues exceed servicing costs) or net servicing loss (if servicing costs exceed servicing revenues), and assessed for impairment or increased obligation based on fair value at each reporting date. Fair market value is based on the gross coupon less an assumed contractual servicing cost.

        Servicing fee income is recorded for fees earned from servicing loans. The fees are based on a contractual percentage of the outstanding principal and are recorded as income when earned. The amortization of the loan servicing rights is netted against loan servicing fee income.

Nonrefundable Fees and Costs Associated With Lending Activities—Loan origination and commitment fees are deferred and accreted into income over the term of the loan. The unamortized balance of deferred loan fees reduces the investment in loans on the balance sheet. In addition, direct origination costs are deferred and amortized against interest income over the term of the loan. The unamortized balance of deferred origination costs is added to the investment in loans on the balance sheet.

Nonperforming Loans and Past Due Loans—Included in the nonperforming loan category are loans which have been categorized by management as nonaccrual because of delinquency status or because collection of interest is doubtful and loans which have been restructured to provide a reduction in the interest rate or a deferral of interest or principal payments.

        When the payment of principal or interest on a loan is delinquent for 90 days, or earlier in some cases, the loan is placed on nonaccrual status, unless the loan is in the process of collection or renewal and the underlying collateral fully supports the carrying value of the loan. If the decision is made to continue accruing interest on the loan, periodic reviews are made to confirm the accruing status of the loan and the probability that the Company will collect all principal and interest amounts outstanding.

F-60

CBTX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 1: BASIS OF PRESENTATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (Continued)

        When a loan is placed on nonaccrual status, interest accrued and uncollected during the current year prior to the judgment of uncollectability, is charged to operations unless the loan is well secured with collateral values sufficient to ensure collection of both principal and interest. Generally, any payments received on nonaccrual loans are applied first to outstanding loan amounts, reducing the Company's recorded investment in the loan, and next to the recovery of charged-off principal or interest amounts. Any excess is treated as recovery of lost interest. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

        A loan is defined as impaired if, based on current information and events, it is probable that the Company will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreement, including scheduled principal and interest payments.

        The allowance for loan losses related to impaired loans is determined based on the difference between the carrying value of loans and the present value of expected cash flows discounted at the loan's effective interest rate or, as a practical expedient, the loan's observable market price or the fair value of the collateral if the loan is collateral dependent.

        Interest income received on impaired loans is either applied against principal or realized as interest income, according to management's judgment as to the collectability of principal.

Troubled Debt Restructurings—The Company will classify a loan as a troubled debt restructuring if both (i) the borrower is experiencing financial difficulties and (ii) the borrower has been granted a concession. Concessions may include interest rate reductions or below market interest rates, principal forgiveness, restructuring amortization schedules and other actions intended to minimize potential losses. Interest is generally accrued on such loans in accordance with the new terms.

Allowance for Loan Losses—The allowance for loan losses represents management's estimate of probable losses inherent in the Company's lending portfolio. Credit exposures deemed to be uncollectible are charged against these accounts. Cash recovered on previously charged-off amounts is recorded as a recovery to these accounts. The allowance for loan losses does not include amounts related to accrued interest receivable as accrued interest receivable is reversed when a loan is placed on nonaccrual or is charged-off.

        The Company employs a systematic methodology for determining the allowance for loan losses that consists of two components: (i) specific valuation allowances determined in accordance with ASC Topic 310—Receivables based on probable losses on specific loans; (ii) historical valuation allowances determined in accordance with ASC Topic 450—Contingencies based on historical average loss experience for similar loans with similar characteristics and trends adjusted, as necessary, to reflect the impact of current conditions; and further adjusted for general economic conditions and other risk factors both internal and external to the Company.

        A loan, with the exception of groups of smaller-balance homogenous loans, is considered impaired and subject to ASC Topic 310 when, based on current information, it is probable that the borrower will be unable to pay contractual interest or principal payments as scheduled in the loan agreement. Loans

F-61

CBTX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 1: BASIS OF PRESENTATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (Continued)

that experience insignificant payment delays and payment shortfalls generally are not classified as impaired.

        The specific allowance related to an impaired loan is established when the carrying value of the loan is more than the present value of expected cash flows discounted at the loan's effective interest rate or, as a practical expedient, the loan's observable market price or the fair value of the collateral if the loan is collateral dependent. The Company uses fair market value less reasonable and customary costs to sell for collateral dependent loans. In certain instances, a specific allowance will be established to protect against market deterioration.

        The allowance on the remaining portfolio segments is calculated using historical loss rates adjusted for qualitative factors in accordance with ASC Topic 450. Criticized and classified loans, not deemed impaired, are subject to an allowance based on the historical loss migration analysis by grade adjusted for qualitative factors. Pass loans are subject to an allowance based on historical losses by product type adjusted for qualitative factors.

        The general component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and historical losses in the portfolio. The general valuation factor is based upon a more qualitative analysis of risk. Various risks are considered in the determination of the environmental adjustment factor such as asset quality, lending management and staff, loan policies and procedures, loan review, credit concentrations, loan volumes, collateral values, compliance, and economic trends.

Concentrations of Risk—The Company's investments are potentially subject to various levels of risk associated with economic and political events beyond management's control. Consequently, management's judgment as to the level of losses that currently exist or may develop in the future involves the consideration of current and anticipated conditions and their potential effects on the Company's investments. In determining fair value of these investments, management obtains information, which is considered reliable, from third parties in order to value its investments. Due to the level of uncertainty related to changes in the value of investment securities, it is possible that changes in risks could materially impact the amounts reflected herein.

        Generally all of the Company's loans, loan commitments, and letters of credit have been granted to customers in the counties in Texas in which it operates branch facilities. The Company's loans are generally secured by specific items of collateral including real property, consumer assets, and business assets.

        Although the Company has a diversified loan portfolio, a substantial portion of its debtors' ability to honor their contracts is dependent on local economic conditions. Concentrations of credit by type of loan are set forth in Note 4. It is the Company's policy to not extend credit to any single borrower or group of related borrowers in excess of its subsidiary Bank's legal lending limits as defined by state and federal banking regulations. The regional economy of certain counties where the Company operates depends heavily on the forestry and oil and gas industries. The ultimate collectability and performance of a substantial portion of the Company's loan portfolio is dependent on the local market conditions in all counties in which the Company operates.

F-62

CBTX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 1: BASIS OF PRESENTATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (Continued)

Interest Rate Risk—The Company is principally engaged in providing short-term commercial loans with interest rates that fluctuate with various market indices and intermediate-term, fixed rate real estate loans. These loans are primarily funded through short-term demand deposits and longer-term certificates of deposit with fixed rates. Deposits that are not utilized to fund loans are invested in federal funds or securities that meet the Company's investment quality guidelines. Unrealized investment gains and losses on securities available for sale resulting from changing market interest rates are reflected in other comprehensive income or loss.

        A portion of the Company's investments that are available for sale have contractual maturities extending beyond 10 years (as reflected in the maturity table in Note 3), bear fixed rates of interest and are collateralized by residential mortgages. Repayment of principal on these bonds is primarily dependent on the cash flows received from payments on the underlying collateral to the bond issuer and therefore, the likelihood of prepayment is impacted by the current economic environment. Reduced prepayments could extend the Company's original anticipated holding period, or duration, and thus increases interest rate risk over time, should market rates increase.

Premises and Equipment—Premises and equipment are carried at cost less accumulated depreciation and amortization. Depreciation expense is computed principally on the straight-line method over the estimated useful lives of the assets. Land is carried at cost. Leasehold improvements are amortized over the life of the lease plus renewal options or the estimated useful lives, whichever is shorter. Buildings are depreciated over a period not to exceed thirty two years. Depending upon the type of furniture and equipment, the depreciation period will range from three to ten years. Bank vehicles are amortized over a period of three years. Gains and losses on dispositions are included in other non-interest income. During periods of real estate development, interest on construction costs is capitalized if considered material by management.

Bank owned life insurance—The Company owns cash value life insurance policies which pay benefits to the Bank upon the death of certain employees. For each policy, the Bank is a general creditor of the insurance company. Increases to the cash surrender value of the policies are non-cash earnings and are recorded in noninterest income. Expenses related to life insurance policies are recorded in other noninterest expense.

Repossessed Real Estate and Other Assets—Real estate and other assets acquired through repossession or foreclosure are held for sale and are initially recorded at the fair value of the asset less any selling costs, establishing a new cost basis. Outstanding loan balances are reduced to reflect this value through charges to the allowance for possible credit losses. Subsequent to repossession or foreclosure, the asset is carried at the lower of its new cost basis or fair value, less estimated costs to sell. Subsequent adjustments to reflect changes in value below the recorded amounts are recognized in income in the period such determinations are assessed. Required developmental costs associated with foreclosed property under construction are capitalized and considered in determining the fair value of the property. Operating expenses of these assets, net of related income, and gains and losses on their disposition are included in other non-interest income or expense.

Other Assets—Included in other assets on the Company's consolidated balance sheets are accrued interest receivable on loans and investments, prepaid expenses, and other miscellaneous assets.

F-63

CBTX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 1: BASIS OF PRESENTATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (Continued)

Goodwill, Servicing Assets and Intangible Assets—ASC Topic 350, Intangibles—Goodwill and Other Intangible Assets, requires an annual assessment for impairment of goodwill, and a write down of the goodwill if impairment occurs. In accordance with ASC Topic 350, goodwill will not be amortized but will be periodically tested for impairment based on the reporting unit.

        Impairment would exist if the fair value of the reporting unit at the date of the test is less than the goodwill recorded on the financial statements. If an impairment of goodwill exists, loss would then be recognized in the consolidated financial statements to the extent of the impairment.

        ASC Topic 350 also requires that identifiable intangibles be amortized over their estimated useful life. The Company has identified intangibles in the form of core deposit, loan servicing assets and customer relationship intangibles. The core deposit intangible is being amortized over a seven to ten year period using an accelerated method in keeping with the anticipated benefits derived from those core deposits. The customer relationship intangible is being amortized over a fifteen year period. The Company also has loan servicing assets that are being amortized over the term of the related loans. Based on the results of the Company's assessment, management does not believe any impairment of goodwill or other intangible assets exists at December 31, 2016 or 2015.

Income Taxes—The Company prepares and reports income taxes on a consolidated basis. Income taxes are accounted for under the guidance of ASC Topic 740, Income Taxes, and are provided for the tax effects of the transactions reported in the consolidated financial statements and consist of taxes currently due plus deferred taxes related primarily to differences between the book and tax basis of the allowance for possible credit losses, the amortization of identifiable intangibles, and accumulated depreciation. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will be either taxable or deductible when the assets and liabilities are recovered or settled. Deferred tax assets and liabilities are reflected at income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.

        A valuation allowance, if needed, reduces deferred tax assets to the expected amount most likely to be realized. Realization of deferred tax assets is dependent upon the generation of a sufficient level of future taxable income and recoverable taxes paid in prior years. Although realization is not assured, management believes it is more likely than not that all of the deferred tax assets will be realized. In addition, management does not believe there are any unrecorded deferred tax liabilities that are material to the financial statements.

        The Company believes that all significant tax positions utilized by the Company will more likely than not be sustained upon examination by the taxing authorities based on the technical merits of the position. For tax positions meeting the more likely than not threshold, the amount recognized in the financial statements would be the benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. For the years ended December 31, 2016 and 2015, management has determined there are no material uncertain tax positions.

F-64

CBTX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 1: BASIS OF PRESENTATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (Continued)

        The Company is subject to Texas Margin Tax. Texas Margin Tax amounted to $140,000 and $102,427 for the years ended December 31, 2016 and 2015, respectively, and is recorded in income tax expense in the consolidated statements of income.

        As of December 31, 2016, the tax years that remain subject to examination by the major tax jurisdictions under the statute of limitations are from the year 2011 forward for the State of Texas and from the year 2012 forward for federal. When necessary, the Company would include interest expense assessed by taxing authorities in interest expense and penalties related to income taxes in other expense on its consolidated statements of income. The Company did not record any interest or penalties related to income tax for the years ended December 31, 2016 and 2015.

Derivative Financial Instruments—The Company's hedging policies permit the use of various derivative financial instruments to manage interest rate risk or to hedge specified assets and liabilities. All derivatives are recorded at fair value on the balance sheet. Derivatives executed with the same counterparty are generally subject to master netting arrangements; however, fair value amounts recognized for derivatives and fair value amounts recognized for the right/obligation to reclaim/return cash collateral are not offset for financial reporting purposes. The Company may be required to recognize certain contracts and commitments as derivatives when the characteristics of those contracts and commitments meet the definition of a derivative.

        To qualify for hedge accounting, derivatives must be highly effective at reducing the risk associated with the exposure being hedged and must be designated as a hedge at the inception of the derivative contract. If derivative instruments are designated as hedges of fair values, and such hedges are highly effective, both the change in the fair value of the hedge and the hedged item are included in current earnings. Fair value adjustments related to cash flow hedges are recorded in other comprehensive income and are reclassified to earnings when the hedged transaction is reflected in earnings. Ineffective portions of hedges are reflected in earnings as they occur. Actual cash receipts and/or payments and related accruals on derivatives related to hedges are recorded as adjustments to the interest income or interest expense associated with the hedged item. During the life of the hedge, the Company formally assesses whether derivatives designated as hedging instruments continue to be highly effective in offsetting changes in the fair value or cash flows of hedged items. If it is determined that a hedge has ceased to be highly effective, the Company will discontinue hedge accounting prospectively. At such time, previous adjustments to the carrying value of the hedged item are reversed into current earnings and the derivative instrument is reclassified to a trading position recorded at fair value.

        The Company does not currently have derivative instruments that qualify for hedge accounting. Further discussion of the Company's outstanding derivative instruments can be found in Note 14.

Fair Value Measurements—ASC Topic 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and requires certain disclosures about fair value measurements. In general, fair values of financial instruments are based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 1: BASIS OF PRESENTATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (Continued)

credit quality and the entity's creditworthiness, among other things, as well as unobservable parameters. Any such valuation adjustments are applied consistently over time.

        The Company has not elected to account for any financial assets or liabilities as trading instruments under ASC Topic 825, The Fair Value Option for Financial Assets and Liabilities, for which changes in market value on these instruments would be recorded in the Company's consolidated statements of income.

Transfers of Financial Assets—Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (i) the assets have been isolated from the Company, (ii) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (iii) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

        If a transfer of an entire financial asset, a group of entire financial assets, or a participating interest in an entire financial asset does not meet the conditions for sale treatment, or if a transfer of a portion of an entire financial interest does not meet the definition of a participating interest, the transferor and the transferee shall account for the transfer as a secured borrowing with pledge of collateral. The transferor shall continue to report the transferred financial assets in its financial statements with no change in their measurement.

        At December 31, 2016 and 2015 all of the Company's significant loan participations sold subject to this guidance met the conditions to be treated as a sale. Securities sold under agreements to repurchase did not meet the criteria and are included in securities available for sale and repurchase agreements in the Company's consolidated balance sheets.

Treasury Stock—The Company has repurchased shares of its authorized and issued common stock which is now held in treasury pending use for general corporate purposes or retirement. In 2016 and 2015, 317,550 and 123,354 shares of stock were purchased at an average price of $35.12 and $35.20 per share, respectively. At December 31, 2016 and 2015, the Company held 454,716 and 334,015 treasury shares, respectively, which are reflected as a component of shareholders' equity on the accompanying consolidated balance sheets.

Repurchase Agreements—The Company utilizes securities sold under agreements to repurchase to facilitate the needs of our customers and to facilitate short-term funding needs. Securities sold under agreements to repurchase are stated at the amount of cash received in connection with the transaction. The Company monitors collateral levels on a continuous basis and may be required to provide additional collateral based on the fair value of the underlying securities. Pledged securities are maintained with our safekeeping agent.

Accounting for Stock-Based Compensation—Stock based compensation is recognized as compensation cost in the consolidated income statements based on the fair value on the date of grant. A Black-Scholes model is utilized to estimate the fair value of stock options. Compensation expense is recognized over the required service period, generally defined as the vesting period. See Note 20 for further discussion.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 1: BASIS OF PRESENTATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (Continued)

Comprehensive Income—Accounting principles generally require that recognized revenue, expenses, gains, and losses be included in net income. Although certain changes in assets and liabilities such as unrealized gains and losses on available for sale securities are reported as a separate component in the equity section of the consolidated balance sheets, such items, along with net income, are components of comprehensive income.

Advertising and Marketing—Advertising and marketing consists of the Company's advertising and marketing in its local markets. Advertising and marketing is expensed as incurred.

New Accounting Standards and Disclosure Requirements—The Jumpstart Our Business Startups (JOBS) Act permits an "emerging growth company" to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. However, the Company has decided not to take advantage of this provision. As a result, the Company will comply with new or revised accounting standards to the same extent that compliance is required for non-emerging growth companies. Our decision to opt out of the extended transition period under the JOBS Act is irrevocable.

        Accounting Standards Update (ASU) No. 2015-01—Income Statement—Extraordinary and Unusual Items (Subtopic 225-20)—Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. ASU 2015-01 eliminates from U.S. GAAP the concept of extraordinary items, which, among other things, required an entity to segregate extraordinary items considered to be unusual and infrequent from the results of ordinary operations and show the item separately in the income statement, net of tax, after income from continuing operations. ASU 2015-01 was effective for the Company beginning January 1, 2016. Adoption of ASU 2015-01 did not have an impact on the Company's financial statements.

        ASU 2015-16, Business Combinations (Topic 805)—Simplifying the Accounting for Measurement—Period Adjustments. The amendments in ASU 2015-16 require that an acquirer recognize adjustments to estimated amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments require that the acquirer record, in the same period's financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the estimated amounts, calculated as if the accounting had been completed at the acquisition date. This update was effective for the Company on January 1, 2016 and did not have an impact on the Company's financial statements.

        In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) Section A—Summary and Amendments That Create Revenue from Contracts with Customers (Topic 606) and Other Assets and Deferred Costs—Contracts with Customers (Subtopic 340-40) ("ASU 2014-09"), which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition. ASU 2014-09 requires entities to recognize revenue in a way that depicts the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 1: BASIS OF PRESENTATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (Continued)

        In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606) ("ASU 2015-14"), which defers the effective date of ASU 2014-09 by one year to January 1, 2018. The Company's revenue is comprised of net interest income on financial assets and financial liabilities, which is explicitly excluded from the scope of ASU 2014-19, and non-interest income. Management continues to assess the potential impact of ASU 2014-19 on the non-interest income components. Adoption is expected in the first quarter of 2018 with a cumulative effect adjustment to opening retained earnings, if such adjustment is deemed to be significant.

        ASU 2016-01, Financial Instruments—Overall (Subtopic 825-10)—Recognition and Measurement of Financial Assets and Financial Liabilities. The amendments in this Update address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. ASU 2016-01, among other things, (i) requires equity investments, with certain exceptions, to be measured at fair value with changes in fair value recognized in net income, (ii) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment, (iii) eliminates the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet, (iv) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, (v) requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments, (vi) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements and (viii) clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale investments. This update will be effective for the Company on January 1, 2018. The Company is currently evaluating the impact and does not expect the adoption to have a significant impact on the financial statements.

        ASU 2016-02, Leases (Topic 842). ASU 2016-02 will, among other things, require lessees to recognize a lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee's right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 does not significantly change lease accounting requirements applicable to lessors; however, certain changes were made to align, where necessary, lessor accounting with the lessee accounting model and ASC Topic 606, "Revenue from Contracts with Customers." ASU 2016-02 will be effective for the Company on January 1, 2019 and will require transition using a modified retrospective approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The Company is currently evaluating the potential impact of ASU 2016-02 on the financial statements.

        ASU 2016-05 Derivatives and Hedging (Topic 815) Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships. ASU 2016-05 clarifies that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument under ASC Topic 815 does not, in and of itself, require redesignation of that hedging relationship provided that all other hedge accounting

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 1: BASIS OF PRESENTATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (Continued)

criteria continue to be met. ASU 2016-05 was effective on January 1, 2017 and did not have a significant impact on the financial statements.

        ASU 2016-07, Investments—Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting. The amendments affect all entities that have an investment that becomes qualified for the equity method of accounting as a result of an increase in the level of ownership interest or degree of influence. ASU 2016-07 simplifies the transition to the equity method of accounting by eliminating retroactive adjustment of the investment when an investment qualifies for use of the equity method, among other things. ASU 2016-07 was effective on January 1, 2017 and did not have a significant impact on the financial statements.

        ASU 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 simplifies several aspects of the accounting for employee share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. Per ASU 2016-09: (1) all excess tax benefits and tax deficiencies should be recognized as income tax expense or benefit in the income statement, rather than in additional paid-in capital under current guidance; (2) excess tax benefits should be classified along with other income tax cash flows as an operating activity on the statement of cash flows, rather than as a separate cash inflow from financing activities and cash outflow from operating activities under current guidance; (3) cash paid by an employer when directly withholding shares for tax-withholding purposes should be classified as a financing activity; and (4) an entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest, as under current guidance, or account for forfeitures when they occur. The Company adopted this standard on January 1, 2017 and it did not have a significant impact on the financial statements.

        ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts and requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization's portfolio. In addition, ASU 2016-13 amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. ASU 2016-13 will be effective on January 1, 2020. The Company is currently evaluating the potential impact of ASU 2016-13 on the financial statements.

        ASU 2016-15, Statement of Cash Flows (Topic 230)—Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 provides guidance related to certain cash flow issues in order to reduce the current and potential future diversity in practice. ASU 2016-15 will be effective on January 1, 2018 and is not expected to have a significant impact on the financial statements.

        ASU 2016-16, Income Taxes (Topic 740)—Intra-Entity Transfers of Assets Other Than Inventory. ASU 2016-16 provides guidance stating that an entity should recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. ASU 2016-16 will be effective on January 1, 2018 and is not expected to have a significant impact on the financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 1: BASIS OF PRESENTATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (Continued)

        ASU 2016-18, Statement of Cash Flows (Topic 230)—Restricted Cash. ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 will be effective on January 1, 2018 and is not expected to have a significant impact on the financial statements.

        ASU 2017-01, Business Combinations (Topic 805)—Clarifying the Definition of a Business. ASU 2017-01 clarifies the definition and provides a more robust framework to use in determining when a set of assets and activities constitutes a business. ASU 2017-01 is intended to provide guidance when evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU 2017-01 will be effective on January 1, 2018 and is not expected to have a significant impact on the financial statements.

Cash Flow Reporting—Cash and cash equivalents include cash, interest-bearing and noninterest-bearing transaction accounts with other banks, and federal funds sold. Generally, federal funds are sold for one-day periods. Cash flows are reported net for loans, deposits, and short term borrowings.

        Supplemental disclosures of cash flow information are as follows for the years ended December 31, 2016 and 2015:

	2016		2015
Cash flow information:
Cash paid for taxes	$	11,390,215	$	11,050,000
Cash paid for interest on deposits and repurchase agreements	$	7,051,375	$	6,452,377
Cash paid for interest on notes payable	$	1,063,472	$	758,379
Cash paid for interest on junior subordinated debt	$	257,902	$	220,136
Non-cash flow information:
Real estate acquired through foreclosure	$	2,670,681	$	822,658

Immaterial Corrections to Previously Issued Financial Statements—The Company has made immaterial corrections to its non-publicly issued consolidated financial statements as of and for the years ended December 31, 2016 and 2015. All corrections below were discovered and evaluated during the preparation of its financial statements for the registration statement filing and were deemed not material to the Company's non-publicly issued consolidated financial statements. However, management has elected to make the following corrections:

•

Management determined that it had incorrectly disclosed the cash flows from the sale of loans held for sale in investing activities on the consolidated statements of cash flows as a component of increase in loans, net. These activities have been reclassified within operating activities as gain on sale of loans held for sale of $458,316 and $369,584 for 2016 and 2015, respectively, and net decrease (increase) in loans held for sale of $1,407,601 and ($573,301) for 2016 and 2015, respectively. In addition, management also determined that it had incorrectly included such gains

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 1: BASIS OF PRESENTATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (Continued)

on loans held for sale within interest income on the consolidated statements of income. These gains have been reclassified to net gain on sale of assets within non-interest income on the consolidated statements of income.

•

Related to Note 23, Earnings Per Share, management determined it had incorrectly calculated diluted earnings per share by not including all outstanding stock options as part of the calculation of the incremental average shares outstanding. The calculation has been corrected which revised the effect of dilutive securities—options from 41,329 to 92,258 at December 31, 2016 and from 111,838 to 106,394 at December 31, 2015. This resulted in a $0.01 decrease in diluted earnings per share at December 31, 2016 and no change to the reported amount at December 31, 2015.

•

Related to Note 4, Loans, for the year ended December 31, 2015, management determined it had incorrectly allocated and disclosed a general reserve as a specific reserve on impaired loans (loans individually evaluated for impairment). The Company has revised this disclosure which resulted in a change in the allocated specific reserve from $5,999,714 to $389,225 for impaired loans and a change in the general reserve from $19,319,596 to $24,930,085. There was no change in the Company's total allowance for loan losses at December 31, 2015. The Company also discovered certain errors in classification and disclosure of impaired loans by loan class and has corrected the disclosures related to the classification of impaired loans in the current financial statements.

•

Related to Note 4, Loans, management revised its disclosure for loan participations purchased and sold to separately disclose, for 2016 and 2015, loans sold and serviced related to loan sales under the SBA loan program. The Company has also separately disclosed proceeds from sales of loan participations and sale of SBA loans within cash flows from investing activity within the consolidated statements of cash flows.

•

Related to Note 17, Income Taxes, management determined that the allocation between current and deferred income tax expense was incorrectly disclosed at December 31, 2016 and 2015. The Company has updated this disclosure to correctly reflect these amounts which resulted in a change in deferred income taxes from ($600,878) to $600,877 for 2016 and from ($2,470,411) to ($1,664,182) for 2015, with the offsetting amounts reflected as a change in current federal income taxes. There is no change in overall income tax expense for any of the periods reported.

Par value and stock split dividend change

        On September 19, 2017, the Company amended and restated the Company's certificate of formation to, among other things, change the Company's name to CBTX, Inc., to increase the number of authorized preferred and common shares which the Company has the authority to issue and to reduce the par value of these shares to $0.01. The par value per share and the authorized number of

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 1: BASIS OF PRESENTATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES (Continued)

shares of each class of stock changed resulting from this amendment to the certificate of formation is as follows:

Line Item	Par Value per Share Prior to Amendment		Par Value per Share Post Amendment		Authorized Number of Shares Prior to Amendment		Authorized Number of Shares Post Amendment
Preferred Stock	$	10.00	$	0.01		1,000,000		10,000,000
Common Stock	$	10.00	$	0.01		15,000,000		90,000,000

        Also, on September 20, 2017, the board of directors of the Company approved a 2-for-1 stock split, whereby each shareholder of the Company's common stock received one additional share of common stock for each share owned at the record date of September 30, 2017 in the form of a stock dividend that was distributed on October 13, 2017.

        The effects of the change in par value of the Company's shares and the stock split on outstanding shares and per share figures have been retroactively applied to all periods presented as if the transaction had occurred as of the beginning of the earliest period presented. In addition, the number of shares of common stock underlying the Company's stock options were proportionately increased and the exercise price of each stock option was proportionately decreased retroactively for all periods presented. The following table presents the previously reported and the revised balances as of and for the fiscal years ended December 31, 2016 and 2015, which are impacted by this par value change and stock split:

		December 31, 2016				December 31, 2015
Financial Statements	Line Item	As Previously Reported		As Adjusted		As Previously Reported		As Adjusted
Balance Sheets	Common Stock	$	114,857,250	$	229,715	$	114,857,520	$	229,715
Balance Sheets	Additional Paid in Capital		163,758,481		278,501,143		166,420,156		281,162,818
Balance Sheets	Retained Earnings		95,389,208		95,274,351		72,576,757		72,461,900
Statements of Income	Earnings per Common Share:
	Basic	$	2.47	$	1.23	$	2.15	$	1.07
	Diluted		2.45		1.22		2.13		1.06

NOTE 2: MERGER ACTIVITIES

MC Bancshares, Inc.

        In February 2015, the Company completed its acquisition of MC Bancshares, Inc. (MCBI), including its subsidiary Memorial City Bank (MCB), a privately-held bank holding company and bank located in Houston, Texas. The Company purchased all the outstanding shares of MCBI for $56,891,195 in cash. MCBI and MCB were integrated into the Company as of the close of business on February 6, 2015.

        The acquisition of MCBI was accounted for using the acquisition method with all cash consideration funded through a note payable in the amount of $31,000,000 from a correspondent bank

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 2: MERGER ACTIVITIES (Continued)

and a special distribution from the Bank in the amount of $25,000,000. The operating results of MCBI are included with the Company's results of operations since the date of acquisition. The total purchase price paid for the acquisition of MCBI was allocated based on the estimated fair values of the assets acquired and liabilities assumed as set forth below.

Cash and due from banks	$	45,910,840
Fed Funds Sold		5,044,000
Securities		511,164
Loans, net		209,512,561
Premises and equipment		2,858,277
Core deposit intangible		1,189,000
Non-compete agreements		544,200
Other assets		1,962,694
Deposits		(227,381,550	)
Federal Home Loan Bank advances		(4,032,831	)
Other liabilities		(1,128,818	)
Net assets acquired		34,989,537
Consideration paid		56,891,195
Excess consideration paid over net asset acquired	$	21,901,658

        The loans acquired in this transaction were recorded at fair value with no carryover of any existing allowance for possible loan losses. Loans that were not deemed to be credit impaired at acquisition were subsequently considered as a part of the Company's determination of the adequacy of the allowance for possible loan losses. Purchased credit-impaired loans, meaning those loans with evidence of credit quality deterioration at acquisition, were not significant. The core deposit intangible asset acquired in this transaction will be amortized using an accelerated method over a period of 10 years.

        Expenditures related to the acquisition of MCBI totaled $1,373,814 during 2015 and are reported as a component of other non-interest expense in the accompanying consolidated income statements.

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DECEMBER 31, 2016 and 2015

NOTE 3: SECURITIES

        The amortized cost and estimated fair values of investments in debt and equity securities at December 31, 2016 and 2015, are summarized in the following table:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
2016
Securities Available For Sale:
State and municipal securities	$	58,991,200	$	637,856	$	(649,700	)	$	58,979,356
U.S. Agency Securities:
Debt securities		20,795,289		40		(454,489	)		20,340,840
Collateralized mortgage obligations		34,004,981		90,059		(324,811	)		33,770,229
Mortgage-backed securities		92,488,947		515,667		(1,215,047	)		91,789,567
Other securities		1,080,908		—		(17,404	)		1,063,504
Total	$	207,361,325	$	1,243,622	$	(2,661,451	)	$	205,943,496
Securities Held to Maturity:
Collateralized mortgage obligations/mortgage-backed securities	$	34,388	$	2,963	$	—		$	37,351
2015
Securities Available For Sale:
State and municipal securities	$	49,400,546	$	1,624,194	$	(2,531	)	$	51,022,209
U.S. Agency Securities:
Debt securities		11,995,119		1,540		(35,499	)		11,961,160
Collateralized mortgage obligations		24,890,120		121,806		(64,425	)		24,947,501
Mortgage-backed securities		56,234,573		704,396		(173,934	)		56,765,035
Other securities		1,056,975		—		(46	)		1,056,929
Total	$	143,577,333	$	2,451,936	$	(276,435	)	$	145,752,834
Securities Held to Maturity:
Collateralized mortgage obligations/mortgage-backed securities	$	35,806	$	3,446	$	—		$	39,252

        The amortized cost and estimated fair value of debt securities at December 31, 2016, by contractual maturities, are shown below. Expected maturities will differ from contractual maturities

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 3: SECURITIES (Continued)

because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	At December 31, 2016
	Securities Available for Sale				Securities Held to Maturity
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Amounts Maturing In:
1 year or less	$	5,579,322	$	5,569,821	$	—	$	—
1 year through 5 years		28,945,904		28,937,077		—		—
5 years through 10 years		20,833,531		20,879,954		—		—
After 10 years		152,002,568		150,556,644		34,388		37,351
	$	207,361,325	$	205,943,496	$	34,388	$	37,351

        The Company sold one municipal security during the year ended December 31, 2016. Proceeds from the sale were approximately $330,540, with gains recognized of $28,437. Gains were recorded in other non-interest income on the consolidated statements of income. There were no security sales during the year ended December 31, 2015.

        At December 31, 2016 and 2015, debt securities with a carrying amount of approximately $53,993,000 and $58,727,000, respectively, were pledged to secure public deposits and for other purposes required or permitted by law.

        The Company held 121 and 30 debt securities at December 31, 2016 and 2015, respectively that were in a gross unrealized loss position. One security at December 31, 2016 and 2015, respectively was in a continuous loss position for over 12 months.

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DECEMBER 31, 2016 and 2015

NOTE 3: SECURITIES (Continued)

        Information pertaining to debt securities with gross unrealized losses at December 31, 2016 and 2015 aggregated by investment category follows:

	Less Than Twelve Months					Over Twelve Months
	Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value
2016
Securities Available for Sale:
State and municipal securities	$	(646,486	)	$	22,855,810	$	(3,214	)	$	312,573
U.S. Agency Securities:
Agency bonds		—			—		—			—
Debt securities		(454,489	)		18,340,800		—			—
Collateralized mortgage obligations		(324,811	)		24,800,532		—			—
Mortgage-backed securities		(1,215,047	)		67,500,704		—			—
Other Securities		(17,404	)		1,063,504		—			—
	$	(2,658,237	)	$	134,561,350	$	(3,214	)	$	312,573
2015
Securities Available for Sale:
State and municipal securities	$	(2,531	)	$	1,359,612	$	—		$	—
U.S. Agency Securities:
Agency bonds		—			—		—			—
Debt securities		(35,499	)		3,959,620		—			—
Collateralized mortgage obligations		(64,425	)		13,218,076		—			—
Mortgage-backed securities		(148,624	)		31,172,189		(25,310	)		1,801,497
Other Securities		(46	)		1,056,929		—			—
	$	(251,125	)	$	50,766,426	$	(25,310	)	$	1,801,497

        Management does not have the intent to sell any of the securities classified as available for sale in an unrealized loss position, as illustrated in the table above, and believes that it is more likely than not that the Company will not have to sell any of these securities before a recovery of cost. The unrealized losses are attributable primarily to changes in market interest rates relative to those available when the securities were acquired. The fair value of these securities is expected to recover as the securities reach their maturity or re-pricing date, or if changes in market rates for such investments decline. Management does not believe that any of the securities are impaired due to reasons of credit quality. Accordingly, as of December 31, 2016 and 2015, management believes the impairments detailed in the above table are temporary and no impairment loss has been realized in the Company's Consolidated Statements of Income for the years then ended.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 4: LOANS

        Loans, including loans held for sale, by portfolio segment, at December 31, 2016 and 2015 are summarized as follows:

	2016					2015
Commercial and industrial	$	511,553,661		23.7	%	$	504,749,567		24.0	%
Real estate:
Commercial real estate		697,794,115		32.3			693,420,591		33.0
Construction and development		491,626,074		22.8			451,219,392		21.5
1-4 family residential		236,882,011		11.0			217,300,833		10.4
Multi-family residential		133,209,502		6.2			114,366,822		5.4
Consumer		39,694,230		1.8			41,005,868		2.0
Agriculture		11,106,404		0.4			12,737,119		0.6
Other		38,179,563		1.8			64,452,236		3.1
Loans, gross		2,160,045,560		100.0			2,099,252,428		100.0
Less deferred loan fees		(4,320,742	)				(5,511,951	)
Less unearned discount on retained portion of loans sold		(227,132	)				(168,516	)
Less allowance for possible credit losses		(25,005,527	)				(25,315,310	)
Total loans, net		2,130,492,159					2,068,256,651
Less loans held for sale		613,100					1,562,385
Loans, net	$	2,129,879,059				$	2,066,694,266

        At December 31, 2016 and 2015, overdrawn deposit accounts included in other loans amounted to $780,673 and $517,149, respectively.

Loan Portfolio Segments and Loan Classes

        The Company's loans are segmented by type as noted in the preceding table. The Company sub-segments real estate loans into the following classes: commercial real estate, construction and development, 1-4 family residential and multi-family residential.

Commercial and Industrial—The Company's commercial loans include asset based revolving lines of credit, equipment purchase money, and unsecured loans and are underwritten on the basis of the borrower's ability to service the debt from income. The Company's commercial loans represent credit extended to small to medium sized businesses generally for the purpose of providing working capital and equipment purchase financing. Commercial loans often are dependent on the profitable operations of the borrower. These credits are primarily made based on the identified cash flow of the borrower and secondarily on the underlying collateral provided by the borrower. Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and may also incorporate a personal guarantee. Some shorter term loans may be extended on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 4: LOANS (Continued)

        The cash flows of borrowers may not be as expected and the collateral securing these loans may fluctuate, increasing the risk associated with this loan segment. As a result of the additional complexities, variables, and risks, commercial loans typically require more thorough underwriting and servicing than other types of loans.

Commercial Real Estate—The Company makes nonfarm, nonresidential real estate mortgage loans, also referred to as commercial real estate mortgage, which are primarily viewed as cash flow loans and secondarily as loans secured by commercial real estate. The properties securing the Company's commercial real estate mortgage loans can be owner occupied or non-owner-occupied. Concentrations within the various types of commercial properties are monitored by management in order to assess the risks in the portfolio. The repayment of these loans is largely dependent on the successful operation of the property securing the loan or the business conducted on the property and securing the loan. Accordingly, repayment of these loans may be subject to adverse conditions in the real estate market or the economy to a greater extent than other types of loans. The Company seeks to minimize these risks in a variety of ways in connection with underwriting these loans including giving careful consideration to the property's operating history, future operating projections, current and projected occupancy, location and the physical condition of the property.

Construction and Development—Construction loans for use as owner or non-owner occupied are subject to certain risks attributable to the fact that loan funds are advanced over the construction phase and the project is of uncertain value prior to its completion. Construction loans are generally based upon estimates of costs and value associated with the completed project with repayment dependent, in part, on the success of the ultimate project rather than the ability of the borrower or guarantor to repay the loan. The Company has underwriting and funding procedures designed to address what it believes to be the risks associated with such loans; however, no assurance can be given the procedures will prevent losses resulting from the risks described above.

Residential Real Estate—The Company's lending activities also include the origination of 1-4 family residential and multi-family residential loans. These loans are typically amortizing mortgages with maturities ranging from 15 to 30 years. The Company incurs interest rate risk as well as the risk associated with non-payment on such loans. The Company generally requires the borrowers obtain a mortgagee title insurance policy, appraisal, survey, hazard insurance and flood insurance if the property lies within a required flood risk area. The Company will sell residential real estate loans to secondary market investors. When loans are originated with intent to sell, they are classified on the Company's consolidated balance sheet as held for sale.

Consumer—The Company's consumer loans include lines of credit, automobile and motorcycle loans, personal loans (collateralized and uncollateralized) and deposit account collateralized loans. The terms of these loans typically range from one to ten years and vary based on the nature of collateral and size of the loan. Consumer loan collections are dependent on the borrower's continuing financial stability, and thus more likely to be adversely affected by job loss, illness or personal bankruptcy. Furthermore, the application of various federal and state laws may limit the amount which can be recovered on such loans. To monitor and manage consumer loan risk, policies and procedures are developed and modified, as deemed appropriate by management.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 4: LOANS (Continued)

Agriculture—The Company provides crop production and farm equipment loans to local area farmers. The Company evaluates agricultural borrowers primarily based on their historical profitability, level of experience in their particular agricultural industry, overall financial capacity and the availability of secondary collateral to withstand economic and natural variations common to the industry.

        The Company also extends credit to local farmers secured by farmland and improvements thereon. Agriculture includes those loans known to be used for agricultural purposes, such as crop and livestock. Other farmland related loans are included in nonfarm, nonresidential loans.

Other Loans—Other loans consist primarily of smaller loans to business entities and individuals for various personal and business purposes.

Loan Participations Purchased and Sold

        From time to time, the Company will acquire and dispose of interests in loans under participating agreements with other financial institutions. Loan participations purchased and sold during the years ending December 31, 2016 and 2015, by loan class, are summarized as follows:

	Participations Purchased During the Year		Participations Sold During the Year
2016
Commercial and industrial	$	—	$	653,994
Construction and development		—		4,294,311
	$	—	$	4,948,305
2015
Commercial and industrial	$	1,674,569	$	—
Loans to nondepository financial institutions		—		5,000,000
Construction and development		5,096,942		21,755,259
	$	6,771,511	$	26,755,259

Loans Guaranteed by the Unites States Small Business Administration

        The Company participates in the United States Small Business Administration (SBA) loan program.

        At December 31, 2016 and 2015, the Company originated loans under the SBA chapter 7(a) and 504 programs which allows for federal guarantees of 75% to 90% of principal and accrued interest. When advantageous, the Company will sell the guaranteed portions of these loans with servicing retained. The majority of the nonguaranteed portion of these loans are reported as commercial real

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 4: LOANS (Continued)

estate or commercial and industrial loans. At December 31, 2016 and 2015, sales activity related to SBA loans is as follows:

	2016		2015
Sold and serviced	$	3,489,542	$	3,593,195
Nonguaranteed portion retained		1,163,181		1,197,732
SBA loans subject to sale of guaranteed portion net of payments	$	4,652,723	$	4,790,927

        For the year ending December 31, 2016 and 2015, the Company recorded activity related to SBA loans in the consolidated statements of income as follows:

	2016		2015
Gain on sale of SBA loans	$	325,901	$	381,820
Servicing income on SBA loans	$	92,107	$	45,152
Commissions and fees paid related to SBA loans	$	210,345	$	105,766

NOTE 5: LOAN PERFORMANCE

        Year end nonaccrual loans, segregated by class of loans, at December 31, 2016 and 2015 were as follows:

	December 31,
	2016		2015
Commercial and industrial	$	2,318,462	$	8,020,445
Real estate:
Commercial real estate		2,118,249		3,720,824
Construction and development		458,083		1,045,636
1-4 family residential		1,302,423		914,633
Multi-family residential		6,603		14,322
Consumer		—		5,911
Agriculture		35,619		—
	$	6,239,439	$	13,721,771

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CBTX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 5: LOAN PERFORMANCE (Continued)

        The following is an aging analysis of loans past due (including both accruing and nonaccruing loans), segregated by loan class, as of December 31, 2016 and 2015.

	December 31, 2016
	30 to 59 days		60 to 89 days		90 days or greater		Total Past Due		Total Current		Total Loans		Total 90 days past due and still accruing
Commercial and Industrial	$	377,567	$	68,305	$	2,272,717	$	2,718,589	$	508,835,071	$	511,553,660	$	—
Real Estate
Commercial real estate		351,962		74,944		1,865,551		2,292,457		695,501,658		697,794,115		—
Construction and development		19,195		—		—		19,195		491,606,879		491,626,074		—
1-4 family residential		377,154		687,620		756,965		1,821,739		235,060,272		236,882,011		—
Multi-family residential		—		—		—		—		133,209,502		133,209,502		—
Consumer		—		—		—		—		39,694,230		39,694,230		—
Agriculture		—		—		—		—		11,106,404		11,106,404		—
Other		2,803		2,558		—		5,361		38,174,203		38,179,564		—
Total	$	1,128,681	$	833,427	$	4,895,233	$	6,857,341	$	2,153,188,219	$	2,160,045,560	$	—

	December 31, 2015
	30 to 59 days		60 to 89 days		90 days or greater		Total Past Due		Total Current		Total Loans		Total 90 days past due and still accruing
Commercial and Industrial	$	1,278,185	$	4,246	$	7,969,639	$	9,252,070	$	495,497,497	$	504,749,567	$	—
Real Estate
Commercial real estate		644,262		200,000		2,215,114		3,059,376		690,361,215		693,420,591		91,420
Construction and development		485,811		—		1,045,636		1,531,447		449,687,945		451,219,392		—
1-4 family residential		597,449		235,639		247,850		1,080,938		216,219,895		217,300,833		—
Multi-family residential		—		—		—		—		114,366,822		114,366,822		—
Consumer		67,771		1,919		—		69,690		40,936,178		41,005,868		—
Agriculture		—		—		—		—		12,737,119		12,737,119		—
Other		—		—		—		—		64,452,236		64,452,236		—
Total	$	3,073,478	$	441,804	$	11,478,239	$	14,993,521	$	2,084,258,906	$	2,099,252,428	$	91,420

        Interest income that would have been earned under the original terms of the nonaccrual loans was $779,134 and $775,620 for the years ended December 31, 2016 and 2015, respectively. The Company has no commitment to loan additional funds to borrowers whose loans have been classified as impaired.

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CBTX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 5: LOAN PERFORMANCE (Continued)

        The following table illustrates loans, segregated by loan class, which were restructured due to the borrower's financial difficulties during the years ending December 31, 2016 and 2015:

					During the year ended December 31, 2016
					Post-Modification Outstanding Recorded Investments
	Number of Loans		Pre-modification outstanding Recorded Investment		Restructured Payments		Extended Maturity		Extended Maturity and Restructured Payments		Extended Maturity, Restructured Payments and Adjusted Interest Rate
Commercial and industrial		6	$	5,615,537	$	—	$	4,936,058	$	679,479	$	—
Commercial real estate		2		3,520,070		—		3,520,070		—		—
Other		2		8,213,084		—		8,213,084		—		—
Total		10	$	17,348,691	$	—	$	16,669,212	$	679,479	$	—

					During the year ended December 31, 2015
					Post-Modification Outstanding Recorded Investments
	Number of Loans		Pre-modification outstanding Recorded Investment		Restructured Payments		Extended Maturity		Extended Maturity and Restructured Payments		Extended Maturity, Restructured Payments and Adjusted Interest Rate
2015
Commercial and industrial		10	$	12,888,982	$	2,901,351	$	4,296,948	$	5,690,683	$	—
1-4 Family Residential		1		468,104		—		468,104		—		—
Commercial real estate		5		3,690,731		—		1,825,181		1,865,550		—
Total		16	$	17,047,817	$	2,901,351	$	6,590,233	$	7,556,233	$	—

        A significant portion of the loans identified as troubled debt restructurings (TDR) by the Company were previously on nonaccrual status and reported as impaired loans prior to restructuring. The modifications primarily related to extending the amortization periods of the loans, converting the loans to interest only, or adjusting payment amounts for principal and interest. A majority of the loans restructured during 2015 and 2014 that remain outstanding are on nonaccrual status as of December 31, 2016 and 2015. Because the loans were classified and on nonaccrual status, both before and after restructuring, the modifications did not impact the Company's determination of the allowance for loan losses. At December 31, 2016 and 2015, the Company has no commitments to loan additional funds to borrowers whose loans are classified as troubled debt restructuring. The recorded investment in TDRs was approximately $25,539,000 and $20,412,000 as of December 31, 2016 and 2015, respectively.

        There were no loans modified as a troubled debt restructured loan within the previous 12 months and for which there was a payment default. A default for purposes of this disclosure is a troubled debt restructured loan in which the borrower is 90 days past due or results in the foreclosure and repossession of the applicable collateral.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 6: ALLOWANCE FOR LOAN LOSSES

        For purposes of determining the allowance for loan losses, the Company considers the loans in its portfolio by segment, class, and risk grade. Management uses judgment to determine the estimation method that fits the credit risk characteristics of each portfolio segment or class. To facilitate the assessment of risk, management reviews reports related to loan production, loan quality, concentrations of credit, loan delinquencies, and nonperforming and potential problem loans. The Company utilizes an independent third party loan review service to review the credit risk assigned to loans on a periodic basis and the results are presented to management for review.

        An analysis of the activity in the allowance for loan losses for the years ended December 31, 2016 and 2015 is as follows:

	For the Year Ended,
	December 31, 2016			December 31, 2015
Balance at beginnig of year	$	25,315,310		$	24,951,782
Provision for loan losses		4,575,000			6,950,000
Charge-offs		(6,079,963	)		(7,601,946	)
Recoveries		1,195,180			1,015,474
Net charge-offs		(4,884,783	)		(6,586,472	)
Balance at end of year	$	25,005,527		$	25,315,310

        The following table presents a detail of the activity in the allowance for loan losses segregated by loan class for the years ended December 31, 2016 and 2015. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

	Year ended December 31, 2016
				Real Estate
	Commercial and Industrial			Commercial Real Estate			Construction and Development		1-4 family residential			Multi-family residential		Consumer			Agriculture			Other			Total
Balance at beginning of year	$	4,746,245		$	7,058,495		$	4,503,958	$	2,295,129		$	761,998	$	363,152		$	92,900		$	5,493,433		$	25,315,310
Provision for loan losses		5,536,787			4,192,680			94,316		(1,012,132	)		154,042		222,022			226,557			(4,839,272	)		4,575,000
Charge-offs		(4,884,002	)		(589,240	)		—		(2,995	)		—		(277,577	)		(266,546	)		(59,603	)		(6,079,963	)
Recoveries		1,009,660			107,752			—		6,377			—		45,664			25,727			—			1,195,180
Net charge-offs		(3,874,342	)		(481,488	)		—		3,382			—		(231,913	)		(240,819	)		(59,603	)		(4,884,783	)
Balance at end of year	$	6,408,690		$	10,769,687		$	4,598,274	$	1,286,379		$	916,040	$	353,261		$	78,638		$	594,558		$	25,005,527
Period-end amount allocated to:
Specific allowance	$	462,179		$	205,884		$	—	$	—		$	—	$	—		$	—		$	—		$	668,063
General allowance		5,946,511			10,563,803			4,598,274		1,286,379			916,040		353,261			78,638			594,558			24,337,464
Total	$	6,408,690		$	10,769,687		$	4,598,274	$	1,286,379		$	916,040	$	353,261		$	78,638		$	594,558		$	25,005,527

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 6: ALLOWANCE FOR LOAN LOSSES (Continued)

	Year ended December 31, 2015
				Real Estate
	Commercial and Industrial			Commercial Real Estate			Construction and Development		1-4 family residential			Multi-family residential		Consumer			Agriculture			Other		Total
Balance at beginning of year	$	7,160,199		$	6,984,713		$	2,991,469	$	1,842,800		$	500,167	$	422,873		$	117,810		$	4,931,751	$	24,951,782
Provision for loan losses		4,272,451			(188,395	)		1,512,489		572,843			261,831		(17,991	)		(24,910	)		561,682		6,950,000
Charge-offs		(7,210,067	)		(27,301	)		—		(262,467	)		—		(102,111	)		—			—		(7,601,946	)
Recoveries		523,662			289,478			—		141,953			—		60,381			—			—		1,015,474
Net charge-offs		(6,686,405	)		262,177			—		(120,514	)		—		(41,730	)		—			—		(6,586,472	)
Balance at end of year	$	4,746,245		$	7,058,495		$	4,503,958	$	2,295,129		$	761,998	$	363,152		$	92,900		$	5,493,433	$	25,315,310
Period-end amount allocated to:
Specific allowance	$	356,824		$	—		$	26,490	$	—		$	—	$	5,911		$	—		$	—	$	389,225
General allowance		4,389,421			7,058,495			4,477,468		2,295,129			761,998		357,241			92,900			5,493,433		24,926,085
Total	$	4,746,245		$	7,058,495		$	4,503,958	$	2,295,129		$	761,998	$	363,152		$	92,900		$	5,493,433	$	25,315,310

        In addition to the amounts indicated in the table above, the Company has an accumulated reserve for loan losses on unfunded commitments of $366,280 and $552,719 for the years ended December 31, 2016 and 2015, respectively. Management reduced the reserve amount by $186,439 and $7,000 during 2016 and 2015, respectively, based on an analysis of the amount required. The accumulated reserve is included in other liabilities on the consolidated balance sheet.

Risk Grading

        As part of the on-going monitoring of the credit quality of the Company's loan portfolio and methodology for calculating the allowance for possible credit losses, management assigns and tracks loan grades to be used as credit quality indicators. The following is a general description of the loan grades used as of December 31, 2016 and 2015.

Pass—Credits in this category are considered "pass" which indicates prudent underwriting and a normal amount of risk. The range of risk within these credits can vary from little to no risk with cash securing a credit, to a level of risk that requires a strong secondary source of repayment on the debt. Pass credits with a higher level of risk may be to borrowers that are higher leveraged, less well capitalized or in an industry or economic area that is known to carry a higher level of risk, volatility, or susceptibility to weaknesses in the economy. This higher risk grade may be assigned due to out of date credit information, as well as collateral information which may need to be updated for current market value in order to allow a credit quality analysis of the credit.

Special Mention—Credits in this category contain more than the normal amount of risk and are referred to as "special mention" in accordance with regulatory guidelines. These credits possess clearly identifiable temporary weaknesses or trends that, if not corrected or revised, may result in a condition that exposes the Company to higher level of risk of loss.

Substandard—Credits in this category are "substandard" in accordance with regulatory guidelines and of unsatisfactory credit quality with well defined weaknesses or weaknesses that jeopardize the liquidation of the debt. Credits in this category are inadequately protected by the current sound worth

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 6: ALLOWANCE FOR LOAN LOSSES (Continued)

and paying capacity of the obligor or the collateral pledged, if any. These credits are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Often, the assets in this category will have a valuation allowance representative of management's estimated loss that is probable to be incurred. Substandard loans may also be placed on nonaccrual status as deemed appropriate by management. Loans substandard and on nonaccrual status are considered impaired and are evaluated for impairment.

Doubtful—Credits in this category are considered "doubtful" in accordance with regulatory guidelines, are placed on nonaccrual status and may be dependent upon collateral having a value that is difficult to determine or upon some near-term event which lacks certainty. Generally, these credits will have a valuation allowance based upon management's best estimate of the losses probable to occur in the liquidation of the debt.

Loss—Credits in this category are considered "loss" in accordance with regulatory guidelines and are considered uncollectible and of such little value as to question their continued existence as assets on the Company's financial statements. Such credits are to be charged-off or charged down when payment is acknowledged to be uncertain or when the timing or value of payments cannot be determined. This category does not intend to imply that the debt or some portion of it will never be paid, nor does it in any way imply that the debt will be forgiven.

        The following table presents risk grades and classified loans by loan class at December 31, 2016 and 2015. The Company had no loans graded Loss or Doubtful at December 31, 2016 and 2015.

	Pass		Special Mention		Substandard		Total Loans
2016
Commercial and industrial	$	483,398,247	$	2,207,410	$	25,948,004	$	511,553,661
Real estate:
Commercial real estate		674,445,178		7,731,353		15,617,584		697,794,115
Construction and development		485,823,903		932,591		4,869,580		491,626,074
1-4 family residential		234,472,902		796,546		1,612,563		236,882,011
Multi-family residential		125,553,144		7,649,755		6,603		133,209,502
Consumer		39,683,739		10,491		—		39,694,230
Agriculture		11,033,334		—		73,070		11,106,404
Other		29,334,537		—		8,845,026		38,179,563
Total	$	2,083,744,984	$	19,328,146	$	56,972,430	$	2,160,045,560

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CBTX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 6: ALLOWANCE FOR LOAN LOSSES (Continued)

	Pass		Special Mention		Substandard		Total Loans
2015
Commercial and industrial	$	476,932,520	$	1,461,685	$	26,355,362	$	504,749,567
Real estate:
Commercial real estate		659,909,143		15,909,924		17,601,524		693,420,591
Construction and development		447,222,303		—		3,997,089		451,219,392
1-4 family residential		214,338,563		843,151		2,119,119		217,300,833
Multi-family residential		114,180,087		172,413		14,322		114,366,822
Consumer		40,974,823		17,197		13,848		41,005,868
Agriculture		12,695,318		—		41,801		12,737,119
Other		64,452,236		—		—		64,452,236
Total	$	2,030,704,993	$	18,404,370	$	50,143,065	$	2,099,252,428

Loan Impairment Assessment

        The Company's recorded investment in loans, as of December 31, 2016 and 2015, by loan class and disaggregated on the basis of the Company's impairment methodology is as follows:

	Loans individually evaluated for impairment		Loans collectively evaluated for impairment		Total loans
2016
Commercial and industrial	$	12,315,011	$	499,238,650	$	511,553,661
Real estate:
Commercial real estate		6,263,123		691,530,992		697,794,115
Construction and development		475,808		491,150,266		491,626,074
1-4 family residential		1,711,951		235,170,060		236,882,011
Multi-family residential		6,603		133,202,899		133,209,502
Consumer		—		39,694,230		39,694,230
Agriculture		35,619		11,070,785		11,106,404
Other		8,845,026		29,334,537		38,179,563
Total	$	29,653,141	$	2,130,392,419	$	2,160,045,560

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 6: ALLOWANCE FOR LOAN LOSSES (Continued)

	Loans individually evaluated for impairment		Loans collectively evaluated for impairment		Total loans
2015
Commercial and industrial	$	15,356,353	$	489,393,214	$	504,749,567
Real estate:
Commercial real estate		4,414,220		689,006,371		693,420,591
Construction and development		1,045,636		450,173,756		451,219,392
1-4 family residential		1,382,737		215,918,096		217,300,833
Multi-family residential		14,322		114,352,500		114,366,822
Consumer		5,911		40,999,957		41,005,868
Agriculture		—		12,737,119		12,737,119
Other		—		64,452,236		64,452,236
Total	$	22,219,179	$	2,077,033,249	$	2,099,252,428

        An impairment analysis is performed for all loans graded substandard and nonaccrual, or worse. If management determines a loan is impaired, the loan is written down to its estimated realizable value through a charge to the allowance for possible credit losses. If in management's opinion, potential for loss remains, a specific reserve is allocated in the allowance for the potential loss. At December 31, 2016 and 2015, the portion of the allowance allocated to specific reserves for loans individually evaluated for impairment was $668,083 and $389,225, respectively.

Recorded Investment in Impaired Loans and Related Allowance

        For the years ending December 31, 2016 and 2015, the following table reflects the unpaid principal balances for impaired loans, segregated by loan class, with the associated reserves allocated within the allowance for possible credit losses.

	Unpaid Contractual Principal Balance		Recorded Investment with No Allowance		Recorded Investment with Allowance		Total Recorded Investment		Related allowance		Average Recorded Investment YTD
2016
Commercial and industrial	$	16,483,248	$	8,087,762	$	4,227,249	$	12,315,011	$	462,179	$	15,549,832
Real estate:
Commercial real estate		6,454,421		4,397,572		1,865,551		6,263,123		205,884		5,902,504
Construction and development		505,797		475,808		—		475,808		—		754,386
1-4 family residential		1,780,763		1,711,951		—		1,711,951		—		1,402,936
Multi-family residential		12,898		6,603		—		6,603		—		10,146
Consumer		—		—		—		—		—		7,807
Agriculture		306,898		35,619		—		35,619		—		34,418
Other		8,848,943		8,845,026		—		8,845,026		—		5,539,937
Total	$	34,392,968	$	23,560,341	$	6,092,800	$	29,653,141	$	668,063	$	29,201,966

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 6: ALLOWANCE FOR LOAN LOSSES (Continued)

	Unpaid Contractual Principal Balance		Recorded Investment with No Allowance		Recorded Investment with Allowance		Total Recorded Investment		Related allowance		Average Recorded Investment YTD
2015
Commercial and industrial	$	22,409,271	$	14,999,529	$	356,824	$	15,356,353	$	356,824	$	15,525,402
Real estate:
Commercial real estate		5,127,957		4,414,220		—		4,414,220		—		4,332,398
Construction and development		1,579,315		527,146		518,490		1,045,636		26,490		2,497,233
1-4 family residential		1,426,320		1,382,737		—		1,382,737		—		1,005,593
Multi-family residential		19,702		14,322		—		14,322		—		18,428
Consumer		6,790		—		5,911		5,911		5,911		30,134
Agriculture		—		—		—		—		—		—
Other		—		—		—		—		—		—
Total	$	30,560,355	$	21,337,954	$	881,225	$	22,219,179	$	389,225	$	23,409,188

        Interest income earned on impaired loans was $647,538 and $200,883 for the years ended December 31, 2016 and 2015, respectively.

NOTE 7: PREMISES AND EQUIPMENT

        Premises and equipment at December 31, 2016 and 2015, are summarized as follows:

	2016			2015
Land	$	14,685,763		$	15,687,664
Buildings and leasehold improvements		52,230,501			53,100,905
Furniture and equipment		14,814,372			13,771,503
Vehicles		202,040			206,458
Construction in progress		143,842			93,210
		82,076,518			82,859,740
Less accumulated depreciation and amortization		(24,562,252	)		(21,928,755	)
Premises and equipment, net	$	57,514,266		$	60,930,985

        During 2016, the Company sold its Washington branch land and building in Houston, Texas and leased space from the owner for the retail branch operations for a ten year period. The Company determined it has no continuing involvement with the property other than a normal leaseback and therefore the transaction qualifies as a sale. The land had a cost of $1,001,901 and the building had a net book value of $963,020 at time of sale. A gain of $1,447,378 was recorded on the sale and included in net gain on sale of assets on the consolidated statement of income.

        The Company recorded depreciation expense of $3,259,250 and $3,642,753 for the years ended December 31, 2016 and 2015, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 8: ACCRUED INTEREST RECEIVABLE

        Accrued interest receivable is included in other assets in the consolidated balance sheets and consists of the following at December 31, 2016 and 2015:

	2016		2015
Loans	$	5,512,600	$	4,674,263
Securities and other investments		1,161,776		913,216
	$	6,674,376	$	5,587,479

NOTE 9: GOODWILL AND OTHER INTANGIBLE ASSETS

        The Company has recorded goodwill and amortizable identifiable intangibles, which are being amortized over the estimated useful life, generally determined by management, to be seven to fifteen years. Goodwill is not amortized. Management determined no impairment existed related to these intangibles at December 31, 2016 and 2015. Other intangibles, net of accumulated amortization, are as follows at December 31, 2016 and 2015:

	Weighted Amortization Period	Gross Intangible Assets		Accumulated Amortization			Net Intangible Assets
2016
Other Intagbile Assets, net
Core deposits	7.1 years	$	13,750,228	$	(11,448,100	)	$	2,302,128
Customer relationships	12.0 years		6,629,000		(1,325,800	)		5,303,200
Servicing Asset	16.8 years		262,776		(77,408	)		185,368
Total Other Intangible Assets, net		$	20,642,004	$	(12,851,308	)	$	7,790,696

		Gross Intangible Assets		Accumulated Amortization			Net Intangible Assets
2015
Other Intagbile Assets, net
Core deposits	8.1 years	$	13,750,228	$	(10,753,215	)	$	2,997,013
Customer relationships	13.0 years		6,629,000		(883,866	)		5,745,134
Servicing Asset	19.8 years		183,207		(46,739	)		136,468
Total Other Intangible Assets, net		$	20,562,435	$	(11,683,820	)	$	8,878,615

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 9: GOODWILL AND OTHER INTANGIBLE ASSETS (Continued)

Core Deposit and Customer Relationships Intangibles

        Aggregated amortization expense was $1,136,818 and $1,272,872 for 2016 and 2015, respectively. The estimated future remaining amortization expense related to the core deposit intangible and other customer relationships will be as follows at December 31, 2016:

2017	$	1,044,531
2018		952,245
2019		859,957
2020		767,671
2021		675,383
Thereafter		3,305,541
	$	7,605,328

Goodwill

        Changes in the carrying amount of goodwill are summarized as follows:

	December 31,
	2016		2015
Balance at beginning of year	$	80,950,439	$	59,048,782
Acquisitions		—		21,901,657
Impairment		—		—
Balance at end of year	$	80,950,439	$	80,950,439

Servicing Assets

        Capitalized servicing assets are amortized into non-interest expense in proportion to, and over the period of, the estimated future net servicing income of the underlying financial assets. The servicing asset is assessed for impairment or increased obligation based on fair value at each reporting date. Fair value is based on the gross coupon less an assumed contractual servicing cost, or based upon discounted cash flows using market-based assumptions.

        Servicing fee income is recorded for fees earned from servicing loans. The fees are based on a contractual percentage of the outstanding principal or a fixed amount per loan and are recorded as income when earned.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 9: GOODWILL AND OTHER INTANGIBLE ASSETS (Continued)

        At December 31, 2016 and 2015, the balance of loan servicing rights related to SBA loans sold, which is included in intangible assets in the Company's consolidated balance sheets, follows:

	Year Ended December 31,
	2016			2015
Balance at beginning of year	$	136,468		$	76,692
Increase from loan sales		79,568			91,832
Amortization		(30,668	)		(32,056	)
Balance at end of year	$	185,368		$	136,468

NOTE 10: BANK OWNED LIFE INSURANCE

        The Company carries Bank owned life insurance on the lives of certain officers for which it has an insurable interest. The policies may be secured by either the general assets of the insurance companies or by identifiable assets of the insurance company.

        Bank owned life insurance policies and the net change in cash surrender value at December 31, 2016 and 2015 are summarized as follows:

	2016			2015
Balance at beginning of year	$	50,440,926		$	34,084,304
Purchases		—			15,000,000
Redemptions		(366,895	)		—
Earnings on the policies, net		1,355,678			1,356,622
Balance at end of year	$	51,429,709		$	50,440,926

NOTE 11: REPOSSESSED REAL ESTATE AND OTHER REPOSSESSED ASSETS

        An analysis of activity for repossessed real estate and other repossessed assets owned for the years ended December 31, 2016 and 2015 is reflected below.

	2016			2015
Balance at beginning of year	$	1,091,782		$	1,400,970
Foreclosures		2,670,681			822,658
Proceeds from sale		(1,657,094	)		(862,150	)
Loss on sales		(179,422	)		(154,421	)
Valuation write downs		(65,000	)		(115,275	)
Balance at end of year	$	1,860,947		$	1,091,782

        In addition to the write downs recorded to reflect assets held for sale at fair value less cost to sell, expenses related to repossessed assets that were charged against earnings amounted to $253,195 and $112,244 for the years ended December 31, 2016 and 2015, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 11: REPOSSESSED REAL ESTATE AND OTHER REPOSSESSED ASSETS (Continued)

        Predominately, these expenses were attributable to property taxes, repair, maintenance, insurance and other expenditures for repossessed real estate.

NOTE 12: DEPOSITS

        Deposits in the accompanying consolidated balance sheets are summarized as follows:

	December 31,
	2016		2015
Non-interest bearing deposits	$	1,025,424,756	$	1,053,957,308
Interest bearing deposits:
NOW		359,560,461		318,608,703
Money market accounts		731,941,501		707,651,288
Saving accounts		85,927,259		81,574,788
Certificates of deposits, greater than $100,000		179,620,416		204,384,328
Certificates of deposits, less than $100,000		158,285,352		117,189,792
Total interest bearing deposits		1,515,334,989		1,429,408,899
Total deposits	$	2,540,759,745	$	2,483,366,207

        Interest expense for time deposits in denominations of $100,000 or more excluding brokered deposits was $1,098,358 and $1,307,505 for the years ended December 31, 2016 and 2015, respectively.

        At December 31, 2016, the scheduled maturities of all time deposits, including brokered deposits, are as follows:

2017	$	224,071,047
2018		34,805,694
2019		32,170,032
2020		33,143,867
2021		13,715,128
	$	337,905,768

        At December 31, 2016 and 2015, the Company had $49,235,323 and $69,457,928 in deposits from public entities, respectively. At December 31, 2016 and 2015, the Company had brokered deposits of $81,370,000 and $32,549,000, respectively. The Company had no major concentrations of deposits in 2016 or 2015 from any single or related groups of depositors. Interest payable at December 31, 2016 and 2015 on all interest bearing deposits was approximately $366,000 and $339,000, respectively, and is included in other liabilities in the Company's consolidated balance sheets.

NOTE 13: RELATED PARTY TRANSACTIONS

        In the ordinary course of business, the Company, through its Bank subsidiary, has and expects to continue to conduct routine banking business with related parties, including its executive officers and

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 13: RELATED PARTY TRANSACTIONS (Continued)

directors. Related parties also include stockholders, and their affiliates in which they directly or indirectly have 5% or more beneficial ownership in the Company.

Loans—In the opinion of management, loans to related parties were on substantially the same terms, including interest rates and collateral, as those prevailing at the time of comparable transactions with other persons and did not involve more than a normal risk of collectability or present any other unfavorable features to the Company.

        For the years ended December 31, 2016 and 2015, loans to such borrowers are summarized as follows:

	2016			2015
Balance, beginning of year	$	136,514,934		$	162,138,166
New loans		81,301,838			90,050,269
Repayments		(75,300,422	)		(115,673,501	)
Balance, end of year	$	142,516,350		$	136,514,934

        As of December 31, 2016 and 2015, there were no loans made to related parties deemed nonaccrual, past due, restructured or classified as potential problem loans.

Unfunded Commitments—At December 31, 2016 and 2015, the Company had approximately $48,636,000 and $40,963,000 in unfunded loan commitments to related parties, respectively.

Deposits—The Company held related party deposits of approximately $254,687,000 and $213,948,000 at December 31, 2016 and 2015, respectively.

Premises—The Company made payments to related parties for costs associated with the acquisition, construction and improvements made to the Company's premises which totaled $266,886 for the year ended December 31, 2015. There were no related party payments during 2016.

Rents—The Company makes rental payments to a related party on a month to month basis. Total rent expense to related parties for operating leases of premises was approximately $18,000 for each year ended December 31, 2016 and 2015, respectively.

NOTE 14: COMMITMENTS AND CONTINGENCIES, INCLUDING FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

Unfunded Loan Commitments

        The Company is party to various financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit for loans in process, commercial lines of credit, overdraft protection lines, and standby letters of credit at both fixed and variable rates of interest. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amounts recognized in the consolidated balance sheets. The contract or notional amounts of those instruments reflect the extent of the involvement the Company has in particular classes of financial instruments.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 14: COMMITMENTS AND CONTINGENCIES, INCLUDING FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK (Continued)

The Company's exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual notional amount of those instruments.

        The Company uses the same credit policies in making these commitments and conditional obligations as it does for on-balance-sheet instruments.

        The Company evaluates each customer's creditworthiness on a case-by-case basis. The amount of collateral obtained, if considered necessary by the Company upon extension of credit, is based on management's credit evaluation of the customer.

        The following is a summary of the various financial instruments whose contract amounts represent credit risk at December 31, 2016 and 2015:

	2016		2015
Commitments to extend credit, variable	$	493,739,596	$	569,647,625
Commitments to extend credit, fixed	$	113,719,357	$	118,541,531
	$	607,458,953	$	688,189,156
Standby letters of credit	$	26,681,842	$	36,859,102

        Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being fully drawn upon, the total commitment amounts disclosed above do not necessarily represent future cash requirements.

        Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third-party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to its customers.

Derivative Financial Instruments

        The Company has outstanding interest rate swap contracts in which the Bank entered into an interest rate swap with a customer while at the same time entering into an offsetting interest rate swap with another financial institution. These interest rate swap contracts are not designated as hedging instruments for mitigating interest rate risk of the Bank. The objective of the transactions allow the Bank's customers to effectively convert a variable rate loan to a fixed rate.

        In connection with each swap transaction, the Bank agrees to pay interest to the customer on a notional amount at a variable interest rate and receive interest from the customer on a similar notional amount at a fixed interest rate. At the same time, the Bank agrees to pay a third-party financial institution the same fixed interest rate on the same notional amount and receive the same variable interest rate on the same notional amount. Because the Bank acts as an intermediary for its customer, changes in the fair value of the underlying derivative contracts are designed to offset each other and would not significantly impact the Company's operating results except in certain situations where there is a significant deterioration in the customer's credit worthiness. At December 31, 2016 and 2015, no such deterioration was determined by management.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 14: COMMITMENTS AND CONTINGENCIES, INCLUDING FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK (Continued)

        At December 31, 2016 and 2015, the Company had eleven and nine interest rate swap agreements, respectively, outstanding with borrowers, with a corresponding number outstanding with correspondent financial institutions. These derivative instruments are not designated as accounting hedges and changes in the net fair value are recognized in non-interest income or expense. Fair value amounts are included in other assets and other liabilities. The table sets forth a summary of the derivative instruments outstanding as of December 31, 2016 and 2015, respectively.

	Notional Amounts		Fair Value			Fixed Rate	Floating Rate	Maturity
2016
Interest rate swaps with customers (other assets)	$	13,637,279	$	430,630		5.10%-7.25%	LIBOR 1M + 2.50%-3.25%	Wtd avg 6.60 yrs
Interest rate swaps with financial institution (other assets)		14,398,477		350,217		4.00%-4.75%	LIBOR 1M + 2.50%-3.00%	Wtd avg 9.45 yrs
Interest rate swaps with customers (other liabilities)		14,398,477		(350,217	)	4.00%-4.75%	LIBOR 1M + 2.50%-3.00%	Wtd avg 9.45 yrs
Interest rate swaps with financial institution (other liabilities)		13,637,279		(430,630	)	5.10%-7.25%	LIBOR 1M + 2.50%-3.25%	Wtd avg 6.60 yrs
Total derivatives not designated as hedging instruments	$	56,071,512	$	—
2015
Interest rate swaps with customers (other assets)	$	14,362,945	$	645,180		5.10%-7.25%	LIBOR 1M + 3.00%-3.25%	Wtd avg 6.30 yrs
Interest rate swaps with financial institution (other liabilities)		14,362,945		(645,180	)	5.10%-7.25%	LIBOR 1M + 3.00%-3.25%	Wtd avg 6.30 yrs
Total derivatives not designated as hedging instruments	$	28,725,890	$	—

Repurchase Agreements

        At December 31, 2016 and 2015, the Company had outstanding funds amounting to $2,342,961 and $2,090,149 respectively, received from the sale of securities that were sold under agreements to repurchase. Securities subject to the transfer of ownership under the repurchase agreements are included in pledged securities, and the carrying value of these securities is disclosed in Note 3. The Company transacts these repurchase agreements with its customers and pays interest rates on these funds according to the terms of each repurchase agreement.

Contingent Liabilities

        The Company is committed to contribute capital into two private investment funds under the Small Business Investment Company (SBIC) program of the U.S. Small Business Administration. The funds' goals are to provide investment capital to small and middle market businesses throughout Texas and the South Central United States.

        At December 31, 2016 and 2015, $409,602 and $514,121, respectively, in unfunded commitments were outstanding and subject to call by the first fund. Cumulative capital contributions of $553,339 and

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 14: COMMITMENTS AND CONTINGENCIES, INCLUDING FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK (Continued)

$768,014 are included in other investments in the Company's consolidated balance sheets at December 31, 2016 and 2015, respectively.

        In 2016, an initial investment of $105,024 was made into the second fund and is included in other investment in the Company's consolidated balance sheet. At December 31, 2016, $2,394,976 in unfunded commitment is outstanding and subject to by call by the second fund.

        During 2014, the Company also committed to contribute capital into a limited partnership (as a limited partner) under the SBIC program of the U.S. Small Business Administration. At December 31, 2016 and 2015, $1,180,000 and $1,350,000, respectively, in unfunded commitments were outstanding and subject to call by the fund. Cumulative capital contributions of $820,000 and $650,000 are included in other investments in the Company's consolidated balance sheets at December 31, 2016 and 2015, respectively.

        The Company is subject to claims and lawsuits which arise primarily in the ordinary course of business. Based on information presently available and advice received from legal counsel representing the Company, it is the opinion of management that the disposition or ultimate determination of such claims and lawsuits will not have a material adverse effect on the financial position or results of operations of the Company.

Lease Commitments

        Pursuant to the terms of non-cancelable lease agreements in effect at December 31, 2016, future minimum rent commitments under various leases are as follows:

2017	$	1,670,846
2018		1,563,799
2019		1,404,611
2020		1,382,829
2021		1,447,243
Thereafter		12,321,676
	$	19,791,004

        It is expected that in the normal course of business, leases that expire will be renewed or replaced by leases on other property or equipment.

        Total rent expense for operating leases of premises and equipment was approximately $2,936,000 and $2,226,000 for the years ended December 31, 2016 and 2015, respectively, and is reflected in net occupancy expense on the consolidated statements of income.

        The Company leases office space to third parties in each of the Port Arthur, Texas and Sugar Land, Texas branches. For the years ended December 31, 2016 and 2015, lease income related to these facilities was approximately $223,000 and $235,000, respectively, and is reflected as a reduction to net occupancy expense on the consolidated statements of income.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 15: BORROWINGS

        At December 31, 2016 and 2015, the Company had established lines of credit totaling $842,794,592 and $774,365,506 respectively, with correspondent financial institutions. Included in these available borrowings at December 31, 2016 and 2015 is a line of credit with the Federal Home Loan Bank in the amount of $767,794,592 and $719,365,506, respectively, that is secured under a blanket lien on certain eligible investment securities and eligible commercial and real estate loans. The remainder of the available borrowings are extended on an unsecured basis among four correspondent banks. At December 31, 2016 and 2015, there were no outstanding borrowings on these lines, nor did the Company draw on these lines during the years ended December 31, 2016 and 2015.

NOTE 16: NOTES PAYABLE

        In conjunction with the acquisition of MCBI, the Company entered into a loan agreement on February 1, 2015 with a correspondent financial institution for $31,000,000. The note is payable in quarterly installments beginning May 2015 with the first four installments interest only. The remaining quarterly installments will be in an amount necessary to amortize the unpaid principal balance over a period of seven years from February 2016 to February 2023. The interest rate will be the prime rate, adjusted for any change in prime rate at the time such change is made. For the period February 1, 2015 to December 17, 2015, prime rate was 3.25%. Prime rate was changed to 3.50% on December 18, 2015 and to 3.75% on December 15, 2016. As of December 31, 2016 the balance outstanding was $27,678,571 with interest accrued of approximately $172,000 included in other liabilities on the consolidated balance sheets. Interest paid in 2016 was approximately $1,061,000.

        Future principle payments of notes payable are as follows:

2017	$	4,428,571
2018		4,428,571
2019		4,428,572
2020		4,428,572
2021		4,428,571
Thereafter		5,535,714
	$	27,678,571

        As of December 31, 2016, the Company was in compliance with all covenants required by the loan agreement. Covenants include tangible net worth not less than $200 million, cash flow coverage ratio not less than 1.25, Texas ratio not to exceed 15.00%, and additional debt not to exceed $50 million. Texas ratio is defined as nonperforming assets plus loans 90 or more days past due as a percent of tangible equity and reserves.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 17: INCOME TAXES

        The components of the provision for income tax expense at December 31, 2016 and 2015 are as follows:

	2016		2015
Current federal income tax	$	11,269,509	$	12,352,506
Current state income tax		140,000		102,427
Deferred income tax		600,877		(1,664,182	)
Income tax expense	$	12,010,386	$	10,790,751

        Income tax expense at the statutory rate of 35% for the years ended December 31, 2016 and 2015, respectively, differs from federal income tax for financial reporting purposes as follows:

	2016					2015
Income before provision for income tax	$	39,218,448				$	34,927,143
Tax expense calculated at statutory rate	$	13,726,457		35.0	%	$	12,224,500		35.0	%
Increase (decrease) resulting from:
State income tax		140,000		0.4			102,427		0.3
Tax exempt interest income		(1,585,278	)	(4.0	)		(1,349,331	)	(3.9	)
Life insurance		(485,134	)	(1.2	)		(464,265	)	(1.3	)
Other		214,341		0.5			277,420		0.8
Total income tax expense	$	12,010,386		30.7	%	$	10,790,751		30.9	%

        Deferred income taxes are provided for differences between the financial statement carrying amount of existing assets and liabilities and their respective tax basis. The components of the net deferred tax asset at December 31, 2016 and 2015 are as follows:

	2016			2015
Deferred Tax Asset:
Allowance for possible credit losses	$	8,751,934		$	8,860,358
Compensation related		1,333,695			1,566,925
Deferred loan origination fees and loan costs		1,512,260			1,929,183
Loan related		1,037,125			1,490,960
Unrealized loss on securities available for sale		496,240			—
Other		787,813			1,729,646
Subtotal		13,919,067			15,577,072
Deferred Tax Liability:
Accumulated depreciation		(2,205,169	)		(2,872,741	)
Core deposit intangible		(2,661,865	)		(3,059,751	)
Unrealized gain on securities available for sale		—			(761,425	)
Other		(20,764	)		(452,763	)
Subtotal		(4,887,798	)		(7,146,680	)
Net Deferred Tax Asset	$	9,031,269		$	8,430,392

F-98

CBTX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 17: INCOME TAXES (Continued)

        With its acquisition of MCBI in 2015, the Company had approximately $1.5 million tax-effected federal net operating loss carryforwards. The utilization of these carryforwards as an avialable offset to future taxable income is subject to limitations under U.S. federal income tax laws. As of December 31, 2016, the Company has federal net operating loss carryforwards of approximately $479,000 included in other deferred tax assets. The net operating loss carryforwards will expire in 2017. Based on historical earnings and expected sufficient future taxable income, management believes it will be able to fully utilize the net operating loss carryforwards, and therefore no valuation allowance was assessed at December 31, 2016.

NOTE 18: JUNIOR SUBORDINATED DEBT

Crosby Statutory Trust I

        During 2005, Crosby Bancshares, Inc., which was acquired by CBTX, Inc. in 2008, received proceeds of junior subordinated debt held by a trust (Crosby Statutory Trust I) that is funded by common securities, all of which were purchased by Crosby Bancshares, Inc., and trust preferred securities in the amount of $5,000,000 that are held by other investors. Funds raised by the trust totaling $5,155,000 were then loaned to Crosby Bancshares, Inc. in the form of junior subordinated debt. This debt was assumed by CBTX, Inc. at the date of acquisition. This debt is generally subordinated to other debt and deposits reflected on the consolidated balance sheets. The subordinated debt securities have a due date of December 15, 2035, with interest payable quarterly, due March 15, June 15, September 15, and December 15, of each year during the term of the debt.

        The interest rate of the debt is equal to the London Interbank Offered Rate of U.S. Dollar deposits in Europe (LIBOR), plus 1.44%, reset quarterly, which was 2.40% at December 31, 2016. CBTX, Inc. has the right to redeem these debt securities in whole, or from time to time in part, provided that all accrued and unpaid interest has been paid. Interest expense recorded in the consolidated statements of income on this debt was approximately $118,000 and $91,000 for the years ended December 31, 2016 and 2015, respectively.

        The investment in common securities of the trust by the Company totals $155,000 and is reflected in other assets in the December 31, 2016 and 2015 consolidated balance sheets.

County Bancshares Trust I

        During 2005, County Bancshares, Inc., which was acquired by CBTX, Inc. in 2007, received proceeds of junior subordinated debt held by a trust (County Bancshares Trust I) that is funded by common securities, all of which were purchased by County Bancshares, Inc., and trust preferred securities in the amount of $5,500,000 that are held by other investors. Funds raised by the trust totaling $5,671,000 were then loaned to County Bancshares, Inc. in the form of junior subordinated debt. This debt was transferred to CBTX, Inc. at the date of acquisition. This debt is generally subordinated to other debt and deposits reflected on the consolidated balance sheets presented. The subordinated debt securities have a due date of April 7, 2035, with interest payable quarterly, due January 7, April 7, July 7, and October 7 of each year during the term of the debt.

        The interest rate of the debt is equal to the London Interbank Offered Rate of U.S. Dollar deposits in Europe (LIBOR), plus 2%, and is reset quarterly. The rate of interest at December 31,

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 18: JUNIOR SUBORDINATED DEBT (Continued)

2016 was 2.88%. CBTX, Inc. has the right to redeem these debt securities in whole or from time to time in part (provided that all accrued and unpaid interest has been paid). Interest expense recorded in the consolidated statements of income on this debt was approximately $148,000 and $127,000 during the years ended December 31, 2016 and 2015, respectively.

        The investment in common securities of the trust by the Company totals $171,000 and is reflected in other assets in the December 31, 2016 and 2015 consolidated balance sheets.

        In December 2015, the Company purchased approximately $4,100,000 of the outstanding preferred securities for $3,075,000, reducing the outstanding preferred securities to $1,571,000. The purchase transaction generated a gain of $1,025,000 which was recorded in other non-interest income.

NOTE 19: EMPLOYEE BENEFIT PLANS AND DEFERRED COMPENSATION ARRANGEMENTS

Employee Benefit Plans

        The Company maintains a 401(k) employee benefit plan in which substantially all employees that complete three months of service may participate. The Company, at its discretion, may match a portion of each employee's contribution. The Company, also at its discretion, may make additional contributions during the Plan year. For the years ended December 31, 2016 and 2015, the Company made $1,658,703 and $1,555,021 in contributions to the plan, respectively.

Executive Deferred Compensation Arrangements

        The Company established an executive incentive compensation arrangement with several officers of the Bank, in which the executive is eligible for performance based incentive bonus compensation. As part of this compensation arrangement, the Company will contribute one-fourth of the incentive bonus amount into a deferred compensation account. The deferred amounts accrue a market rate of interest and are payable to the employees upon separation from the Bank provided the Plan's vesting arrangements have been met. At December 31, 2016 and 2015, the amount payable, including interest, for this deferred plan was approximately $2,013,000 and $2,012,000 respectively, and is included in other liabilities in the consolidated balance sheets.

Salary Continuation Agreement

        The Company entered into a salary continuation arrangement in 2008 with the Company's then President and CEO that calls for payments of $100,000 per year for a period of ten years commencing at age 65. Payments under the plan began during 2014. The Company's liability is approximately $583,000 and $659,000 at December 31, 2016 and 2015, respectively, and is included in other liabilities in the consolidated balance sheets. The Company recognized approximately $23,000 and $26,000 in expenses during 2016 and 2015, respectively.

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CBTX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 19: EMPLOYEE BENEFIT PLANS AND DEFERRED COMPENSATION ARRANGEMENTS (Continued)

Change of Control and Non-Competition Agreements

        The Company is party to change of control and non-competition agreements with certain employees of the Bank. Under their respective agreements, upon a "change of control" of the Company (as that term is defined in the agreements) or an "involuntary termination" (as that term is defined in the agreements), each of these employees will be entitled to receive an amount equal to two times the sum of (i) base salary plus (ii) the average bonus paid to the officer during the three years preceding the "change of control" or "involuntary termination", as applicable. "Change of control", as that term is defined in the agreements, also includes an initial public offering of common stock by the Company, pursuant to an effective registration statement filed under the Securities Act. Upon a change of control, including completion of an initial public offering, the Company plans to pay these employees in accordance with the terms of their respective agreements an aggregate amount of approximately $2.5 million. No compensation expense has been recognized to date as the change in control condition is not yet considered probable.

NOTE 20: STOCK OPTION PLANS

        The Company acquired a Stock Option Plan which originated under VB Texas, Inc. in 2006 (2006 Plan) whereby participants may purchase shares of Company stock. The 2006 Plan limits the number of shares that may be optioned to 746,220. The Plan provides that no options may be granted after October 24, 2016.

        The Company also acquired a Stock Option Plan that originated in May 2011 under VB Texas, Inc. (2011 Plan). The 2011 Plan limits the number of shares that may be optioned to 406,400. The 2011 Plan provides that no options may be granted after May 18, 2021. The options granted under the plans shall be Incentive Stock Options intended to qualify as such under the provisions of Section 422 of the Internal Revenue code of 1986.

        At December 31, 2016, the total options available for future grant amounted to 406,400 shares. The options granted to employees must be exercised within ten years from the date of grant and vesting schedules are determined on an individual basis. At the merger date, all outstanding options became fully vested and were converted to options of the Company's common stock at an exchange ratio equal to the acquisition exchange rate for common shares. The Company will not issue any additional options under the two VB Texas plans. At December 31, 2016 and 2015 the total shares outstanding and exercisable under the Plans were 175,514 and 555,874, respectively.

        In May 2014, the Company adopted the 2014 stock option plan. The 2014 Plan limits the number of shares that may be optioned to 1,127,200. The Plan provides that no options may be granted after May 20, 2024. The options granted under this plan shall be Incentive Stock Options intended to qualify as such under the provisions of Section 422 of the Internal Revenue code of 1986. Options granted under the Plan expire ten years from the date of grant and become exercisable in installments over a period of one to five years, beginning on the first anniversary of the grant. At December 31, 2016, total options available for future grant amounted to 1,035,200.

        Shares issued in connection with the exercise of stock options are issued from available treasury shares. If no treasury shares are available, new shares are issued from available authorized shares. All

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 20: STOCK OPTION PLANS (Continued)

shares issued in connection with the exercise of stock options were issued from treasury shares for the years ending December 31, 2016 and 2015.

        Cash received in exercise of share options during the years ended December 31, 2016 and 2015 was $3,882,912 and $159,986, respectively. There were no tax benefits realized from stock options exercised during December 31, 2016 and 2015, respectively.

        The following table summarizes additional information about stock options outstanding at December 31, 2016 and 2015:

	2016					2015
	Number of Shares Underlying Options			Weighted Average Exercise Prices		Number of Shares Underlying Options			Weighted Average Exercise Prices
Outstanding, beginning of year		647,074		$	10.99		575,326		$	10.06
Granted		—		$	0.00		88,000		$	16.87
Forfeited		(5,062	)	$	9.85		—		$	0.00
Exercised		(393,698	)	$	9.87		(16,252	)	$	9.85
Outstanding, end of year		248,314		$	12.80		647,074		$	10.99
Exerciseable at end of year		175,514		$	11.11		555,874		$	10.03
Unvested at end of year		72,800		$	16.88		91,200		$	16.88

        The following table summarizes information about stock options outstanding at December 31, 2016:

	Options Outstanding						Options Exerciseable
Exercise Price	Number Outstanding		Intrinsic Value per Option		Weighted Average Remaining Contractual Life		Number Outstanding		Weighted Average Exercise Price		Intrinsic Value per Option
$9.85		88,360	$	11.16		.95 years		88,360	$	9.85	$	11.16
$10.34		3,048	$	10.67		4.62 years		3,048	$	10.34	$	10.67
$10.73		9,320	$	10.27		4.95 years		9,320	$	10.73	$	10.27
$11.32		56,586	$	9.68		5.97 years		56,586	$	11.32	$	9.68
$16.65		9,000	$	4.35		8.30 years		1,000	$	16.65	$	4.35
$16.80		73,000	$	4.20		8.24 years		14,600	$	16.80	$	4.20
$17.20		4,000	$	3.80		7.31 years		1,600	$	17.20	$	3.80
$18.25		5,000	$	2.75		8.92 years		1,000	$	18.25	$	2.75
		248,314				4.96 years		175,514

        The total intrinsic value of all options at December 31, 2016 was estimated to be $2,036,332 of which $1,736,132 is attributable to vested options. The intrinsic value at grant date of options exercised during 2016 and 2015 was $2,756,602 and $159,986, respectively.

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CBTX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 20: STOCK OPTION PLANS (Continued)

        There were 72,800 and 91,200 options unvested at December 31, 2016 and 2015, respectively, each with a grant date weighted average fair value of $1.76. The total number of shares vested during the periods ending December 31, 2016 and 2015 were 18,400 and 800, respectively. Total fair value of options vested during the years ending December 31, 2016 and 2015 was $32,324 and $1,404, respectively.

        The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. The following assumptions were used for the 2015 grants. There were no options granted during 2016.

	Year ended December 31, 2015
Dividend yield		1.19	%
Expected volatility		8.96	%
Risk free interest rate		2.05	%
Expected life in years		6.0

        The dividend yield assumption is based on the Company's history and expectation of dividend payouts. Expected volatility is based on the Company's historical volatility of its common stock. The risk-free interest rate is based upon the U.S. Treasury yield curve in effect at the time of grant. And expected life is based on the ten year term or historical exercise experience.

        For options granted compensation costs are recognized in the consolidated statements of earnings based on their fair values on the date of the grant. For the years ended December 31, 2016 and 2015, compensation expense of $43,288 and $11,825 was recorded. The total recognized tax benefit was $224 and $4,139 for the years ended December 31, 2016 and 2015, respectively. As of December 31, 2016, there was approximately $103,000 of total unrecognized compensation expense related to the stock-based compensation arrangements. That cost is expected to be recognized over a weighted average period of 3.3 years.

NOTE 21: REGULATORY MATTERS

Regulatory Capital

        Banks and bank holding companies are subject to various regulatory capital requirements administered by state and federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weighting and other factors.

        The Basel III Capital Rules, a new comprehensive capital framework for U.S. banking organizations, became effective for the Company and Bank on January 1, 2015 (subject to a phase-in period for certain provisions). Quantitative measures established by the Basel III Capital Rules to ensure capital adequacy require the maintenance of minimum amounts and ratios (set forth in the table below) of Common Equity Tier 1 capital, Tier 1 capital and Total capital (as defined in the regulations)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 21: REGULATORY MATTERS (Continued)

to risk-weighted assets (as defined), and of Tier 1 capital to adjusted quarterly average assets (as defined).

        The Company and Bank's Common Equity Tier 1 capital includes common stock and related paid-in capital, net of treasury stock, and retained earnings. In connection with the adoption of the Basel III Capital Rules, the Company and Bank elected to opt-out of the requirement to include most components of accumulated other comprehensive income in Common Equity Tier 1. Common Equity Tier 1 for both the Company and Bank is reduced by goodwill and other intangible assets, net of associated deferred tax liabilities, and subject to transition provisions.

        Tier 1 capital includes Common Equity Tier 1 capital and additional Tier 1 capital. For the Bank at December 31, 2016 and 2015, there were no additional Tier 1 Capital components. Under the Basel III Capital Rules, trust preferred securities qualify as Tier 1 capital instruments with a limitation of 25 percent of Tier 1 capital elements. At December 31, 2016 and 2015, $6.4 million of trust preferred securities were included in the Company's additional Tier 1 capital.

        Total capital includes Tier 1 capital and Tier 2 capital. Tier 2 capital for both the Company and Bank includes a permissible portion of the allowance for loan losses.

        The Common Equity Tier 1, Tier 1 and Total capital ratios are calculated by dividing the respective capital amounts by risk-weighted assets. Risk-weighted assets are calculated based on regulatory requirements and include total assets, with certain exclusions, allocated by risk weight category, and certain off-balance-sheet items, among other things. The leverage ratio is calculated by dividing Tier 1 capital by adjusted quarterly average total assets, which exclude goodwill and other intangible assets, among other things.

        When fully phased in on January 1, 2019, the Basel III Capital Rules will require the Company and Bank to maintain (i) a minimum ratio of Common Equity Tier 1 capital to risk-weighted assets of at least 4.5%, plus a 2.5% "capital conservation buffer" (which is added to the 4.5% Common Equity Tier 1 capital ratio as that buffer is phased in, effectively resulting in a minimum ratio of Common Equity Tier 1 capital to risk-weighted assets of at least 7.0% upon full implementation), (ii) a minimum ratio of Tier 1 capital to risk-weighted assets of at least 6.0%, plus the capital conservation buffer (which is added to the 6.0% Tier 1 capital ratio as that buffer is phased in, effectively resulting in a minimum Tier 1 capital ratio of 8.5% upon full implementation), (iii) a minimum ratio of Total capital (that is, Tier 1 plus Tier 2) to risk-weighted assets of at least 8.0%, plus the capital conservation buffer (which is added to the 8.0% total capital ratio as that buffer is phased in, effectively resulting in a minimum total capital ratio of 10.5% upon full implementation) and (iv) a minimum leverage ratio of 4.0%, calculated as the ratio of Tier 1 capital to average quarterly assets.

        The implementation of the capital conservation buffer began on January 1, 2016 at the 0.625% level and will be phased in over a four-year period (increasing by that amount on each subsequent January 1, until it reaches 2.5% on January 1, 2019). The Basel III Capital Rules also provide for a "countercyclical capital buffer" that is applicable to only certain covered institutions and does not have any current applicability to the Company and Bank. The capital conservation buffer is designed to absorb losses during periods of economic stress and, as detailed above, effectively increases the minimum required risk-weighted capital ratios. Banking institutions with a ratio of Common Equity Tier 1 capital to risk-weighted assets below the effective minimum (4.5% plus the capital conservation

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 21: REGULATORY MATTERS (Continued)

buffer and, if applicable, the countercyclical capital buffer) will face constraints on dividends, equity repurchases and compensation based on the amount of the shortfall.

        The following table presents actual and required capital ratios as of December 31, 2016 for the Company and Bank under the Basel III Capital Rules. The minimum required capital amounts presented include the minimum required capital levels as of December 31, 2016 based on the phase-in provisions of the Basel III Capital Rules and the minimum required capital levels as of January 1, 2019 when the Basel III Capital Rules have been fully phased-in. Capital levels required to be considered well capitalized are based upon prompt corrective action regulations, as amended to reflect the changes under the Basel III Capital Rules.

	Actual					Minimum Capital Required- Basel III Phase-In Schedule					Minimum Capital Required- Basel III Fully Phased-in					Required to be Considered Well Capitalized
	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
2016
Common Equity Tier I to Risk-Weighted Assets
Consolidated	$	274,516		11.5	%	$	107,272		4.5	%	$	166,867		7.0	%	$	154,948		6.5	%
Bank Only	$	304,058		12.8	%	$	107,209		4.5	%	$	166,770		7.0	%	$	154,844		6.5	%
Tier I Capital to Risk-Weighted Assts
Consolidated	$	280,916		11.8	%	$	143,029		6.0	%	$	202,624		8.5	%	$	190,705		8.0	%
Bank Only	$	304,058		12.8	%	$	142,946		6.0	%	$	202,507		8.5	%	$	190,594		8.0	%
Total Capital to Risk-Weighted Assets
Consolidated	$	306,287		12.9	%	$	190,705		8.0	%	$	250,300		10.5	%	$	238,381		10.0	%
Bank Only	$	329,428		13.8	%	$	190,594		8.0	%	$	250,155		10.5	%	$	238,243		10.0	%
Leverage Ratio
Consolidated	$	280,916		9.8	%	$	114,872		4.0	%	$	114,872		4.0	%	$	143,590		5.0	%
Bank Only	$	304,058		10.6	%	$	114,872		4.0	%	$	114,872		4.0	%	$	143,590		5.0	%

	Actual					Minimum Capital Required- Basel III Phase-In Schedule					Minimum Capital Required- Basel III Fully Phased-In					Required to be Considered Well Capitalized
	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
2015
Common Equity Tier I to Risk-Weighted Assets
Consolidated	$	259,620		10.9	%	$	107,299		4.5	%	$	166,910		7.0	%	$	154,988		6.5	%
Bank Only	$	288,648		12.1	%	$	107,199		4.5	%	$	166,755		7.0	%	$	154,844		6.5	%
Tier I Capital to Risk-Weighted Assts
Consolidated	$	266,020		11.2	%	$	143,066		6.0	%	$	202,676		8.5	%	$	190,754		8.0	%
Bank Only	$	288,648		12.1	%	$	142,933		6.0	%	$	202,488		8.5	%	$	190,577		8.0	%
Total Capital to Risk-Weighted Assets
Consolidated	$	291,888		12.2	%	$	190,754		8.0	%	$	250,365		10.5	%	$	238,443		10.0	%
Bank Only	$	314,516		13.2	%	$	190,577		8.0	%	$	250,132		10.5	%	$	238,221		10.0	%
Leverage Ratio
Consolidated	$	266,020		9.3	%	$	113,958		4.0	%	$	113,958		4.0	%	$	142,448		5.0	%
Bank Only	$	288,648		10.1	%	$	113,958		4.0	%	$	113,958		4.0	%	$	142,448		5.0	%

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CBTX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 21: REGULATORY MATTERS (Continued)

        Management believes that, as of December 31, 2016 and 2015, CBTX, Inc. and its bank subsidiary, CommunityBank of Texas, N.A., were "well capitalized" based on the ratios presented above.

        The Company and Bank are subject to the regulatory capital requirements administered by the Federal Reserve Board and, for the Bank, the Office of the Comptroller of the Currency (OCC). Regulatory authorities can initiate certain mandatory actions if Company or Bank fail to meet the minimum capital requirements, which could have a direct material effect on our financial statements. Management believes, as of December 31, 2016 and 2015, that the Company and Bank meet all capital adequacy requirements to which they are subject.

Dividend Restrictions

        In the ordinary course of business, the Company may be dependent upon dividends from the Bank to provide funds for the payment of dividends to shareholders and to provide for other cash requirements. Banking regulations may limit the amount of dividends that may be paid. Approval by regulatory authorities is required if the effect of dividends declared would cause the regulatory capital of the Bank to fall below specified minimum levels. Approval is also required if dividends declared exceed the net profits for that year combined with the retained net profits for the preceding two years.

NOTE 22: FAIR VALUE DISCLOSURES

        The authoritative guidance for fair value measurements defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability shall not be adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact and (iv) willing to transact.

        The authoritative guidance requires the use of valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert future amounts, such as cash flows or earnings, to a single present amount on a discounted basis. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement costs). Valuation techniques should be consistently applied. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. In that regard, the authoritative guidance establishes a fair value hierarchy for

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 22: FAIR VALUE DISCLOSURES (Continued)

valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

Level 1 Inputs—Inputs are based upon unadjusted quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date. The fair values of the Company's equity securities were measured using Level 1 inputs.

Level 2 Inputs—Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (for example, interest rates, volatilities, prepayment speeds, loss severities, credit risks and default rates) or inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 2 investments consist primarily of obligations of U.S. government sponsored enterprises and agencies, obligations of state and municipal subdivisions, corporate bonds and mortgage-backed securities.

Level 3 Inputs—Significant unobservable inputs that reflect an entity's own assumptions that market participants would use in pricing the assets or liabilities.

        During the years ending December 31, 2016 and 2015, there were no transfers of assets or liabilities within the levels of the fair value hierarchy.

        In general, fair value is based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use observable market-based parameters as inputs. Valuation adjustments may be made to ensure that assets and liabilities are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality and creditworthiness, among other things, as well as unobservable parameters. Any such valuation adjustments are applied consistently over time.

        The Company's valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. While management believes the Company's valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

Financial Instruments Recorded at Fair Value

        Assets and liabilities measured at fair value on a recurring basis include the following:

        Securities Available For Sale:    Securities classified as available for sale are reported at fair value utilizing Level 2 inputs. For those securities classified as Level 2, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U. S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond's terms and conditions, among other things.

F-107

CBTX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 22: FAIR VALUE DISCLOSURES (Continued)

        Interest Rate Swaps with Customers:    For interest rate swaps with customers classified as Level 2, the Company obtains fair value measurements from an independent pricing service which uses the "income approach" as defined by ASC 820. Income approach calls for the utilization of valuation techniques to convert future cash flows as due to be exchanged per the terms of the financial instrument, into a single present value amount. Measurement is based on the value indicated by the market expectations about those future amounts as of the measurement date. The proprietary curves of the independent pricing service utilizes pricing models derived from industry standard analytic tools, taking into account both Level 1 and Level 2 inputs.

        Interest Rate Swaps with Financial Institutions:    For interest rate swaps with financial institutions classified as Level 2, the Company obtains fair value measurements from an independent pricing service which uses the "income approach" as defined by ASC 820. Income approach calls for the utilization of valuation techniques to convert future cash flows as due to be exchanged per the terms of the financial instrument, into a single present value amount. Measurement is based on the value indicated by the market expectations about those future amounts as of the measurement date. The proprietary curves of the independent pricing service utilizes pricing models derived from industry standard analytic tools, taking into account both Level 1 and Level 2 inputs.

        The following table summarizes financial assets measured at fair value on a recurring basis as of December 31, 2016 and 2015, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

	December 31, 2016
	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total
Financial assets
Securities Available For Sale:
State and municipal securities	$	—	$	58,979,356	$	—	$	58,979,356
U.S. Agency Securities:
Debt securities		—		20,340,840		—		20,340,840
Collateralized mortgage obligations/mortgage backed securities		—		125,559,796		—		125,559,796
Other securities		1,063,504		—		—		1,063,504
Interest rate swaps with customers		—		430,630		—		430,630
Interest rate swaps with financial institutions		—		350,217		—		350,217
Total financial assets	$	1,063,504	$	205,660,839	$	—	$	206,724,343
Financial liabilities:
Interest rate swaps with customers	$	—	$	350,217	$	—	$	350,217
Interest rate swaps with financial institutions		—		430,630		—		430,630
Total financial liabilities	$	—	$	780,847	$	—	$	780,847

F-108

CBTX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 22: FAIR VALUE DISCLOSURES (Continued)

	December 31, 2015
	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total
Financial assets
Securities Available For Sale:
State and municipal securities	$	—	$	51,022,209	$	—	$	51,022,209
U.S. Agency Securities:
Debt securities		—		11,961,160		—		11,961,160
Collateralized mortgage obligations/mortgage backed securities		—		81,712,536		—		81,712,536
Other securities		1,056,929		—		—		1,056,929
Interest rate swaps with customers		—		645,180		—		645,180
Total financial assets	$	1,056,929	$	145,341,085	$	—	$	146,398,014
Financial liabilities:
Interest rate swaps with financial institutions	$	—	$	645,180	$	—	$	645,180
Total financial liabilities	$	—	$	645,180	$	—	$	645,180

        Certain financial assets and financial liabilities are measured at fair value on a non-recurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). Financial assets measured at fair value on a non-recurring basis during the reported periods include repossessed real estate and other assets and certain impaired loans reported at the fair value of the underlying collateral if repayment is expected solely from the collateral. Repossessed real estate and other asset and collateral values are estimated using Level 2 inputs based on observable market data, typically in the case of real estate, or Level 3 inputs based on customized discounting criteria, typically in the case of non-real estate collateral such as inventory, accounts receivable, equipment or other business assets.

        The table below outlines the financial assets and financial liabilities measured on a non-recurring basis.

	December 31, 2016
	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
Loans
Commercial and industrial	$	—	$	—	$	3,765,070
Real estate:
Commercial real estate		—		—		1,659,667
Total loans	$	—	$	—	$	5,424,737
Repossessed real estate and other assets	$	—	$	—	$	—

F-109

CBTX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 22: FAIR VALUE DISCLOSURES (Continued)

	December 31, 2015
	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
Real estate:
Construction and development	$	—	$	—	$	492,000
Total	$	—	$	—	$	492,000
Repossessed real estate and other assets	$	—	$	—	$	246,994

Non-financial Assets and Non-financial Liabilities

        The Company does not have any non-financial assets or non-financial liabilities measured at fair value on a recurring basis. Certain non-financial assets measured at fair value on a non-recurring basis include foreclosed assets (upon initial recognition or subsequent impairment), non-financial assets and non-financial liabilities measured at fair value in the second step of a goodwill impairment test, and intangible assets and other non-financial long-lived assets measured at fair value for impairment assessment. Non-financial assets measured at fair value on a non-recurring basis during the reported periods include certain foreclosed assets which, upon initial recognition, were remeasured and reported at fair value through a charge-off to the allowance for loan losses and certain foreclosed assets which, subsequent to their initial recognition, were remeasured at fair value through a write-down included in other non-interest expense. The fair value of a foreclosed asset is estimated using Level 2 inputs based on observable market data or Level 3 inputs based on customized discounting criteria. During the reported periods, all fair value measurements for foreclosed assets utilized Level 2 inputs.

        The following table presents foreclosed assets that were remeasured subsequent to initial recognition and reported at fair value:

	December 31,
	2016			2015
Foreclosed assets remeasured at initial recognition:
Carrying value of foreclosed assests prior to remeasurement	$	2,017,682		$	892,785
Charge-offs recognized in the allowance for loan losses		(47,099	)		(70,127	)
Fair Value	$	1,970,583		$	822,658
Foreclosed assets remeasured subsequent to intial recognition:
Carrying value of foreclosed assests prior to remeasurement	$	630,000		$	575,881
Write-downs included in other non-interest expense		(65,000	)		(115,275	)
Fair Value	$	565,000		$	460,606

F-110

CBTX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 22: FAIR VALUE DISCLOSURES (Continued)

Fair Value Disclosure for all Financial Instruments

        The Company is required to disclose the fair value of all financial instruments, including those financial assets and financial liabilities not recorded at fair value in its consolidated balance sheets, for which it is practicable to estimate fair value. Below is a table that summarizes the fair market values of all financial instruments of the Company at December 31, 2016 and 2015 followed by methods and assumptions that were used by the Company in estimating the fair value.

        The estimated fair values of the Company's financial instruments are as follows (in thousands):

	December 31, 2016
	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value		Carrying Amount
Financial assets:
Cash and cash equivalents	$	53,000,463	$	—	$	—	$	53,000,463	$	53,000,463
Interest bearing deposits in banks		329,102,689		—		—		329,102,689		329,102,689
Time deposits in other banks		—		600,000		—		600,000		600,000
Other securities		1,063,504		—		—		1,063,504		1,063,504
Securities available for sale		—		204,879,992				204,879,992		204,879,992
Securities held to maturity		—		37,351		—		37,351		34,388
Other investments		—		—		12,063,413		12,063,413		12,063,413
Loans, including loans held for sale, net		—		—		2,139,645,159		2,139,645,159		2,130,492,159
Cash surrender value of life insurance		—		51,429,709		—		51,429,709		51,429,709
Accrued interest receivable		—		6,674,376		—		6,674,376		6,674,376
Servicing asset		—		185,368		—		185,368		185,368
Interest rate swaps with customers		—		430,630		—		430,630		430,630
Interest rate swaps with financial institutions		—		350,217		—		350,217		350,217
Total financial assets	$	383,166,656	$	264,587,643	$	2,151,708,572	$	2,799,462,871	$	2,790,306,908
Financial liabilities:
Noninterest-bearing deposits	$	1,025,424,756	$	—	$	—	$	1,025,424,756	$	1,025,424,756
Interest-bearing deposits		—		1,451,512,000		—		1,451,512,000		1,515,334,989
Repurchase agreements		—		2,342,961		—		2,342,961		2,342,961
Junior subordinated debt		—		6,726,000		—		6,726,000		6,726,000
Notes payable		—		27,678,571		—		27,678,571		27,678,571
Accrued interest payable		—		582,117		—		582,117		582,117
Interest rate swaps with customers		—		350,217		—		350,217		350,217
Interest rate swaps with financial institutions		—		430,630		—		430,630		430,630
Total financial liabilities	$	1,025,424,756	$	1,489,622,496	$	—	$	2,515,047,252	$	2,578,870,241

F-111

CBTX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 22: FAIR VALUE DISCLOSURES (Continued)

	December 31, 2015
	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value		Carrying Amount
Financial assets:
Cash and cash equivalents	$	51,720,854	$	—	$	—	$	51,720,854	$	51,720,854
Interest bearing deposits in banks		383,179,938		—		—		383,179,938		383,179,938
Time deposits in other banks		—		400,000		—		400,000		400,000
Other securities		1,056,929		—		—		1,056,929		1,056,929
Securities available for sale		—		144,695,905		—		144,695,905		144,695,905
Securities held to maturity		—		39,252		—		39,252		35,806
Other investments		—		—		12,006,364		12,006,364		12,006,364
Loans, including loans held for sale, net		—		—		2,109,199,000		2,109,199,000		2,068,256,651
Cash surrender value of life insurance		—		50,440,926		—		50,440,926		50,440,926
Accrued interest receivable		—		5,587,479		—		5,587,479		5,587,479
Servicing asset		—		136,468		—		136,468		136,468
Interest rate swaps with customers		—		645,180		—		645,180		645,180
Total financial assets	$	435,957,721	$	201,945,210	$	2,121,205,364	$	2,759,108,295	$	2,718,162,500
Financial liabilities:
Noninterest-bearing deposits	$	1,053,957,308	$	—	$	—	$	1,053,957,308	$	1,053,957,308
Interest-bearing deposits		—		1,398,104,000		—		1,398,104,000		1,429,408,899
Repurchase agreements		—		2,090,149		—		2,090,149		2,090,149
Junior subordinated debt		—		6,726,000		—		6,726,000		6,726,000
Notes payable		—		31,000,000		—		31,000,000		31,000,000
Accrued interest payable		—		550,025		—		550,025		550,025
Interest rate swaps with financial institutions		—		645,180		—		645,180		645,180
Total financial liabilities	$	1,053,957,308	$	1,439,115,354	$	—	$	2,493,072,662	$	2,524,377,561

        The estimated fair value amounts of financial instruments have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. The fair values of all financial instruments have been determined as follows:

Cash and Cash Equivalents and Time Deposits in Other Banks—For these short term instruments, the carrying amount is a reasonable estimate of fair value.

Other Investments—Other investments consist of other correspondent bank stocks and CRA investments. For these investments, cost, which is generally the carrying amount, is a reasonable estimate of fair value due to redemption restrictions.

F-112

CBTX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 22: FAIR VALUE DISCLOSURES (Continued)

Loans—Fair values of loans are estimated for segregated groupings of loans with similar financial characteristics. Loans are segregated by segment such as real estate, commercial and agricultural, consumer, and other loans. Each of these categories is further subdivided into fixed and adjustable rate loans and performing and nonperforming loans. The fair value of performing loans is calculated by discounting scheduled cash flows through the estimated maturity using estimated market discount rates that reflect the credit and interest rate risk inherent in the various types of loans. Discount rates ranged from 2.30% to 16.50%. These rates reflect the rate environment for repricing the respective category of loans at December 31, 2016 and 2015. The fair value of the residential mortgage loans that are sold in the secondary market is estimated to be the carrying amount due to the short-term nature of these loans.

Bank Owned Life Insurance—The carrying value for the cash value of life insurance is based on information received from the insurance carriers indicating the financial performance of the policies and the amount the Company would receive should the policies be surrendered and is considered a reasonable estimate of fair value.

Deposits—The fair values for demand deposits are reported at a value equal to the amount payable on demand at the reporting date. Fair values for certificates of deposit, savings accounts, and money market deposits are estimated using a discounted cash flow calculation that applies interest rates currently being offered on similar deposits to a schedule of aggregated expected monthly maturities.

Repurchase Agreements—For these short-term borrowings, carrying value is deemed to be a reasonable estimate of their fair value.

Junior Subordinated Debentures—The fair value for these debentures is considered to be the carrying value due to the variable rate feature of the instruments.

NOTE 23: EARNINGS PER SHARE

        Basic earnings per common share is computed as net income available to common shareholders divided by the weighted average number of common shares outstanding during the period.

        Diluted earnings per common share is computed using the weighted average number of shares determined for the basic earnings per common share computation plus the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock using the treasury stock method. Outstanding stock options issued by the Company represent the only dilutive effect reflected in diluted weighted average shares.

F-113

CBTX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 23: EARNINGS PER SHARE (Continued)

        The following table illustrates the computation of basic and diluted earnings per share:

	December 31, 2016				December 31, 2015
	Amount		Per Share Amount		Amount		Per Share Amount
Net income	$	27,208,061			$	24,136,392
Basic:
Weighted average shares outstanding		22,048,724	$	1.23		22,462,176	$	1.07
Diluted:
Add incremental shares for:
Effect of dilutive securities—options		186,332				212,870
Adjusted weighted average shares outstanding		22,235,056	$	1.22		22,675,046	$	1.06

NOTE 24: OTHER COMPREHENSIVE INCOME

        Comprehensive income includes all changes in shareholders' equity during a period, except those resulting from transactions from shareholders. In addition to net income, comprehensive income includes the net effect of change in fair value of securities available for sale, net of tax. The tax effects allocated to each component of other comprehensive income (loss) is as follows:

	Before Tax Amount			Tax Expense (Benefit)			Net of Tax Amount
2016
Securities available for sale:
Unrealized gains on securities available for sale arising druing the period, net	$	(3,621,768	)	$	(1,267,618	)	$	(2,354,150	)
Reclassification adjustment for realized gains included in net income		28,438			9,953			18,485
Total other comprehensive income	$	(3,593,330	)	$	(1,257,665	)	$	(2,335,665	)
2015
Securities available for sale:
Unrealized gains on securities available for sale arising druing the period, net	$	(527,317	)	$	(184,561	)	$	(342,756	)
Reclassification adjustment for realized gains included in net income		—			—			—
Total other comprehensive income	$	(527,317	)	$	(184,561	)	$	(342,756	)

F-114

CBTX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 25: PARENT COMPANY ONLY FINANCIAL STATEMENTS

        The following balance sheets, statements of income and statements of cash flow for CBTX, Inc. should be read in conjunction with the consolidated financial statements and the notes thereto.

Balance Sheet

	December 31,
	2016			2015
Assets
Cash and cash equivalents	$	5,057,441		$	6,887,738
Investment in subsidiary		387,179,370			373,339,760
Deferred tax asset, net		463,594			758,894
Other assets		1,243,528			3,051,934
Total assets	$	393,943,933		$	384,038,326
Liabilities and Shareholders' Equity
Junior subordinated debt		6,726,000			6,726,000
Notes Payable		27,678,571			31,000,000
Other liabilities		1,901,768			1,999,283
Total liabilities		36,306,339			39,725,283
Shareholders' Equity
Preferred stock		—			—
Common stock		114,857,520			114,857,520
Additional Paid in Capital		163,758,481			166,420,156
Retained earnings		95,389,208			72,576,757
Treasury stock		(15,446,026	)		(10,955,466	)
Accumulated other comprehensive income (loss)		(921,589	)		1,414,076
Total shareholders' equity		357,637,594			344,313,043
Total liabilities and shareholders' equity	$	393,943,933		$	384,038,326

F-115

CBTX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 25: PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

Statements of Income

	Year Ended December 31,
	2016			2015
Interet income
Other	$	120,057		$	10,004
Interest expense
Notes payable		1,061,107			932,368
Junior subordinated debt		265,720			217,583
Net interest expense		(1,206,770	)		(1,139,947	)
Non-interest income
Dividend income from subsidiary		12,250,000			30,400,000
Other		—			1,025,000
Total non-interest income		12,250,000			31,425,000
Non-interest expense
Salaries and employee benefits		225,250			196,601
Net occupancy expense		13,735			—
Data processing		28,171			26,270
Printing, stationery and office		9,686			4,584
Professional and directors fees		341,257			275,549
Merger expense		—			545,978
Other expenses		31,533			38,042
Total non-interest expense		649,632			1,087,024
Loss before income tax benefit and equity in undistributed income of subsidiary		10,393,598			29,198,029
Income tax benefit		639,188			326,224
Income before equity in undistributed income(loss) of subsidiary		11,032,786			29,524,253
Equity in undistributed income(loss) of subsidiary		16,175,275			(5,387,861	)
Net income	$	27,208,061		$	24,136,392

F-116

CBTX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 25: PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

Statements of Cash Flows

	Year Ended December 31,
	2016			2015
Cash flows from operating activities:
Net income	$	27,208,061		$	24,136,392
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Gain on redemption of junior subordinated debt		—			(1,025,000	)
Stock based compensation expense		43,288			11,825
Equity in undistributed net (income) loss of subsidiary		(16,175,275	)		5,387,861
Deferred federal income tax provision		295,300			(502,370	)
Change in operating assets and liabilities:
Other assets		1,808,406			2,378,083
Other liabilities		(97,515	)		28,308
Total adjustments		(14,125,796	)		6,278,707
Net cash provided by operating activities		13,082,265			30,415,099
Cash flows from investing activities:
Acquisition of MCBI, net of cash acquired		—			(50,414,015	)
Net cash (used) by investing activities		—			(50,414,015	)
Cash flows from financing activities:
Purchase of treasury stock		(11,078,436	)		(4,417,841	)
Proceeds from issuance of treasury stock		3,882,913			159,987
Purchase of trust preferred securities		—			(3,075,000	)
Repayment (proceeds) from note payable		(3,321,429	)		31,000,000
Dividends paid on common stock		(4,395,610	)		(4,486,725	)
Net cash provided (used in) financing activities		(14,912,562	)		19,180,421
Net decrease in cash and cash equivalents		(1,830,297	)		(818,495	)
Cash and cash equivalents, beginning		6,887,738			7,706,233
Cash and cash equivalents, ending	$	5,057,441		$	6,887,738

NOTE 26: SUBSEQUENT EVENTS

        On March 15, 2017, the Company's Board of Directors approved a dividend of approximately $1,100,000 which was paid on April 14, 2017.

        On May 17, 2017, the Company's Board of Directors approved a dividend of approximately $1,100,000 which was paid on July 14, 2017.

        On August 7, 2017, the board of directors of the Company terminated the VB Texas, Inc. 2011 Stock Option Plan. At the date of termination, there were no options outstanding thereunder.

F-117

CBTX, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2016 and 2015

NOTE 26: SUBSEQUENT EVENTS (Continued)

        The Company evaluated all events or transactions that occurred after December 31, 2016 through April 24, 2017, the date the consolidated financial statements were available to be issued, and updated the evaluation through August 14, 2017, the date the revised consolidated financial statements were issued.

F-118

            Shares

CBTX, Inc.

Common Stock

PROSPECTUS

Stephens Inc.	Keefe, Bruyette & Woods, Inc.
	A Stifel Company
Sandler O'Neill + Partners, L.P.

The date of this prospectus is                , 2017

Through and including                , 2017 (25 days after the date of this prospectus), all dealers that buy, sell or trade our common stock, whether or not participating in this offering, may be required to deliver a prospectus. This delivery requirement is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13.    OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

        Estimated expenses, other than underwriting discounts, of the sale of our common stock, are as follows:

SEC registration fee	$	*
FINRA filing fee		*
Listing fees and expenses		*
Transfer agent and registrar fees and expenses		*
Printing fees and expenses		*
Legal fees and expenses		*
Accounting expenses		*
Miscellaneous expenses		*
Total	$	*

*

To be furnished by amendment.

ITEM 14.    INDEMNIFICATION OF DIRECTORS AND OFFICERS.

        The TBOC permits a corporation to indemnify a director who was, is or is threatened to be a named defendant or respondent in a proceeding as a result of the performance of his duties if such person acted in good faith and, in the case of conduct in the person's official capacity as a director, in a manner he reasonably believed to be in the best interests of the corporation and, in all other cases, that the person's conduct was not opposed to the best interests of the corporation and with respect to any criminal action or proceeding, that such person had no reasonable cause to believe his conduct was unlawful. The TBOC further permits a corporation to eliminate in its charter all monetary liability of the corporation's directors to the corporation or its shareholders for conduct in performance of such director's duties. Our amended and restated certificate of formation provides that our directors are not liable to the Company or our shareholders for monetary damages for an act or omission in their capacity as a director, except that there will be no limitation of liability to the extent the director has been found liable under applicable law for: (i) breach of the director's duty of loyalty owed to the Company or our shareholders; (ii) an act or omission not in good faith that constitutes a breach of duty of the director to the Company or that involves intentional misconduct or a knowing violation of the law; (iii) a transaction from which the director received an improper benefit, regardless of whether the benefit resulted from an action taken within the scope of the director's duties; or (iv) an act or omission for which the liability of the director is expressly provided for by an applicable statute.

        Sections 8.101 and 8.103 of the TBOC provide that a corporation may indemnify a person who was, is or is threatened to be a named defendant or respondent in a proceeding because the person is or was a director only if a determination is made that such indemnification is permissible under the TBOC: (i) by a majority vote of the directors who at the time of the vote are disinterested and independent, regardless of whether such directors constitute a quorum; (ii) by a majority vote of a board committee designated by a majority of disinterested and independent directors and consisting solely of disinterested and independent directors; (iii) by special legal counsel selected by the board of directors or a committee of the board of directors as set forth in (i) or (ii); (iv) by the shareholders in a vote that excludes the shares held by directors who are not disinterested and independent; or (v) by a unanimous vote of the shareholders.

        Section 8.104 of the TBOC provides that the corporation may pay or reimburse, in advance of the final disposition of the proceeding, reasonable expenses incurred by a present director who was, is or is

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threatened to be made a named defendant or respondent in a proceeding after the corporation receives a written affirmation by the director of his good faith belief that he has met the standard of conduct necessary for indemnification under Section 8.101 and a written undertaking by or on behalf of the director to repay the amount paid or reimbursed if it is ultimately determined that he has not met that standard or if it is ultimately determined that indemnification of the director is not otherwise permitted under the TBOC. Section 8.105 also provides that reasonable expenses incurred by a former director or officer, or a present or former employee or agent of the corporation, who was, is or is threatened to be made a named defendant or respondent in a proceeding may be paid or reimbursed by the corporation, in advance of the final disposition of the action, as the corporation considers appropriate.

        Section 8.105 of the TBOC provides that a corporation may indemnify and advance expenses to a person who is not a director, including an officer, employee or agent of the corporation as provided by: (i) the corporation's governing documents; (ii) an action by the corporation's governing authority; (iii) resolution by the shareholders; (iv) contract; or (v) common law. As consistent with Section 8.105, a corporation may indemnify and advance expenses to persons who are not directors to the same extent that a corporation may indemnify and advance expenses to directors.

        Further, our amended and restated certificate of formation and amended and restated bylaws provide that we must indemnify our directors and officers to the fullest extent authorized by law. We are also expressly required to advance certain expenses to our directors and officers. We may also purchase insurance on behalf of an existing or former officer, employee, director or agent against any liability asserted against and incurred by that person in such capacity, or arising out of that person's status in such capacity. We believe that these indemnification provisions and the directors' and officers' insurance are useful to attract and retain qualified directors and executive officers.

        We will enter into, prior to the completion of this offering, indemnification agreements with each of our directors and certain of our officers. The indemnification agreements will provide, among other things, for indemnification to the fullest extent permitted by law and our amended and restated certificate of formation and amended and restated bylaws against (i) any and all direct and indirect liabilities and reasonable expenses, including judgments, fines, penalties, interest and amounts paid in settlement of any claim with our approval and reasonable counsel fees and disbursements, (ii) any liability pursuant to a loan guarantee, or otherwise, for any of our indebtedness and (iii) any liabilities incurred as a result of acting on behalf of us (as a fiduciary or otherwise) in connection with an employee benefit plan. The indemnification agreements will provide for, the advancement or payment of expenses to the indemnitee and for reimbursement to us if it is found that such indemnitee is not entitled to such indemnification under applicable law and our amended and restated certificate of formation and amended and restated bylaws.

        Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us under any of the foregoing provisions, in the opinion of the SEC, that indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. Finally, our ability to provide indemnification to our directors and officers is limited by federal banking laws and regulations, including, but not limited to, 12 U.S.C. 1828(k).

ITEM 15.    RECENT SALES OF UNREGISTERED SECURITIES.

        In the three years preceding the filing of this registration statement, the we have not issued any securities that were not registered under the Securities Act, other than in connection with the transactions described herein that were exempt from registration.

        We periodically issue grants of certain equity based awards to our executive officers, directors and other key employees pursuant to our CBFH, Inc. 2014 Stock Option Plan. Between January 1, 2014 and the filing of this registration statement, we granted options to purchase an aggregate of 92,000

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shares of our common stock at exercise prices ranging from $16.65 to $18.25 per share under the CBFH, Inc. 2014 Stock Option Plan.

        The issuances of securities described in the preceding paragraph were made in reliance upon the exemption from registration under Section 4(2) or its successor 4(a)(2) of the Securities Act of 1933, as amended, or Rule 701 promulgated under Section 3(b) of the Securities Act as transactions by an issuer not involving any public offering or pursuant to benefit plans and contracts relating to compensation. All of the foregoing securities are deemed restricted securities for purposes of the Securities Act. The recipients of securities in the transactions exempt under Section 4(2) or its successor 4(a)(2) of the Securities Act represented their intention to acquire the securities for investment purposes only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the stock certificates and instruments issued in such transactions.

ITEM 16.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a)

Exhibits.

        See the Exhibit Index on the page immediately preceding the signature page for a list of exhibits filed as part of this registration statement on Form S-1, which Exhibit Index is incorporated herein by reference.

(b)

Financial Statement Schedules.

        All financial statement schedules are omitted because the information required to be set forth therein is not applicable or is shown in the consolidated financial statements or the notes thereto.

ITEM 17.    UNDERTAKINGS.

        The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

        Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

        The registrant hereby further undertakes that:

        (1)   For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective; and

        (2)   For purposes of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

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EXHIBIT INDEX

NUMBER			DESCRIPTION
	1.1		Underwriting Agreement*
	3.1		Amended and Restated Certificate of Formation
	3.2		Second Amended and Restated Bylaws
	4.1		Form of Common Stock Certificate
	4.2		Certain Instruments defining the rights of holders of long-term debt securities of the registrant and its subsidiaries are omitted pursuant to Item 601(b)(4)(iii) of Regulation S-K. The registrant hereby undertakes to furnish to the SEC, upon request, copies of any such instruments.
	5.1		Opinion of Norton Rose Fulbright US LLP*
	10.1		Loan Agreement between CBFH, Inc., as borrower, and Frost Bank, as lender, dated as of February 1, 2015
	10.2		Promissory Note between CBFH, Inc., as borrower, and Frost Bank, as lender, dated February 1, 2015
	10.3		Pledge and Security Agreement between CBFH, Inc., as borrower, and Frost Bank, as lender, dated February 1, 2015
	10.4	†	Form of Amended and Restated Employment Agreement between CBTX, Inc. and Robert R. Franklin, Jr.*
	10.5	†	Employment Agreement between CBFH, Inc. and Robert T. Pigott, dated March 6, 2013
	10.6	†	Employment Agreement between CBFH, Inc. and J. Pat Parsons, dated May 21, 2008
	10.7	†	Amendment to Employment Agreement between CBFH, Inc. and J. Pat Parsons, dated December 31, 2008
	10.8	†	Amendment to Employment Agreement between CBFH, Inc. and J. Pat Parsons, dated March 6, 2013
	10.9	†	Form of CBTX, Inc. 2017 Omnibus Incentive Plan
	10.10	†	Form of Restricted Stock Award Agreement under the CBTX, Inc. 2017 Omnibus Incentive Plan
	10.11	†	Form of Restricted Stock Unit Award Agreement under the CBTX, Inc. 2017 Omnibus Incentive Plan
	10.12	†	Form of Stock Option Award Agreement under the CBTX, Inc. 2017 Omnibus Incentive Plan
	10.13	†	Form of Stock Appreciation Right Award Agreement under the CBTX, Inc. 2017 Omnibus Incentive Plan
	10.14	†	VB Texas, Inc. 2006 Stock Option Plan
	10.15	†	CBFH, Inc. 2014 Stock Option Plan
	10.16	†	Form of Stock Option Award Agreement and Notice of Stock Option Award under the CBFH, Inc. 2014 Stock Option Plan

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NUMBER			DESCRIPTION
	10.17	†	Executive Deferred Compensation Agreement between CommunityBank of Texas, NA and J. Pat Parsons, dated December 30, 2011
	10.18	†	Acknowledgment Agreement between CommunityBank of Texas, NA and J. Pat Parsons, effective as of January 1, 2015
	10.19	†	Form of Indemnification Agreement between CBTX, Inc. and its directors and certain officers
	21.1		Subsidiaries of CBTX, Inc.
	23.1		Consent of Norton Rose Fulbright US LLP (contained in Exhibit 5.1)*
	23.2		Consent of Grant Thornton LLP
	24.1		Powers of attorney (included on signature page to the Registration Statement)

*

To be filed by amendment.

†

Indicates a management contract or compensatory plan.

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SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in Houston, Texas, on the 13^th day of October, 2017.

CBTX, INC.
By:	/s/ Robert R. Franklin, Jr.
	Robert R. Franklin, Jr.
	Chairman, President and Chief Executive Officer

POWERS OF ATTORNEY

        Each of the undersigned officers and directors of CBTX, Inc. hereby severally constitutes and appoints Robert R. Franklin, Jr. and Robert T. Pigott, Jr., and each one of them, as his or her true and lawful attorney-in-fact and agent, with full power of substitution and re-substitution, in his or her name, place and stead and on his or her behalf, and in any and all capacities, to sign any and all amendments (including post-effective amendments) and exhibits to this Registration Statement, and any other registration statement for the same offering pursuant to Rule 462(b) under the Securities Act of 1933, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing which said attorney-in-fact and agent may deem necessary or advisable to be done or performed in connection with any or all of the above-described matters, as fully as each of the undersigned could do if personally present and acting, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on the dates set forth below.

Signature		Title	Date
By:	/s/ Robert R. Franklin, Jr. Robert R. Franklin, Jr.	Chairman, President and Chief Executive Officer (Principal Executive Officer)	October 13, 2017
By:	/s/ Robert T. Pigott, Jr. Robert T. Pigott, Jr.	Chief Financial Officer (Principal Financial and Accounting Officer)	October 13, 2017
By:	/s/ Michael A. Havard Michael A. Havard	Director	October 13, 2017
By:	/s/ Tommy W. Lott Tommy W. Lott	Director	October 13, 2017

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Signature		Title	Date
By:	/s/ Glen W. Morgan Glen W. Morgan	Director	October 13, 2017
By:	/s/ J. Pat Parsons J. Pat Parsons	Vice Chairman	October 13, 2017
By:	/s/ Joe E. Penland, Sr. Joe E. Penland, Sr.	Director	October 13, 2017
By:	/s/ Wayne A. Reaud Wayne A. Reaud	Director	October 13, 2017
By:	/s/ Joseph B. Swinbank Joseph B. Swinbank	Director	October 13, 2017
By:	/s/ Sheila G. Umphrey Sheila G. Umphrey	Director	October 13, 2017
By:	/s/ John E. Williams, Jr. John E. Williams, Jr.	Director	October 13, 2017
By:	/s/ William E. Wilson, Jr. William E. Wilson, Jr.	Director	October 13, 2017

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EX-3.1

Exhibit 3.1

FIRST AMENDED AND RESTATED

CERTIFICATE OF FORMATION

OF

CBTX, Inc.

ARTICLE I

Name

The name of the corporation is CBTX, Inc. (the “Corporation”). The Corporation is a for-profit corporation.  The file number issued to the Corporation by the Secretary of State is 800765321. The date of formation of the Corporation was January 26, 2007.

ARTICLE II

Registered Agent

The address of the registered office of the Corporation is c/o Capitol Corporate Services, Inc., 206 E 9th Street, Suite No. 1300, Austin, Texas 78701, and the name of its registered agent at such address is Capitol Services, Inc.

ARTICLE III

Purpose and Duration

The purpose for which the Corporation is organized is the transaction of any or all lawful business for which a for-profit corporation may be organized under the Texas Business Organizations Code, as such may be amended from time to time (the “TBOC”).

ARTICLE IV

Capital Stock

A.Authorized Shares.  The Corporation is authorized to issue two classes of shares designated “Common” and “Preferred.” The aggregate number of shares of all classes which the Corporation is authorized to issue is 100,000,000, consisting of (i) 90,000,000 Common shares, having a par value of $0.01 per share (“Common Shares”), and (ii) 10,000,000 Preferred shares, having a par value of $0.01 per share (“Preferred Shares”).

B.Preferred.  The Board of Directors is hereby expressly authorized, by resolution or resolutions from time to time adopted, to provide, out of the unissued Preferred Shares, for the issuance of one or more series of Preferred Shares. Before any shares of any such series are issued, the Board of Directors shall fix and state, and hereby is expressly empowered to fix, by resolution or resolutions, the relative rights and preferences of the shares of each such series, and the qualifications, limitations, or restrictions thereon, including, but not limited to, determination of any of the following:

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1.the designation of such series, and the number of shares to constitute such series;

2.whether the shares of such series shall have voting rights, in addition to any voting rights provided by law, and, if so, the terms of such voting rights, which may be full or limited;

3.the dividends, if any, payable on such series, and at what rates, whether any such dividends shall be cumulative, and if so, from what dates, the conditions and dates upon which such dividends shall be payable, the preference or relation which such dividends shall bear to the dividends payable on any shares of stock of any other class or any other series of this class;

4.whether the shares of such series shall be subject to redemption by the Corporation, and, if so, the times, prices and other terms and conditions of such redemption;

5.the amount or amounts payable upon shares of such series upon, and the rights of the holders of such series in, the voluntary or involuntary liquidation, dissolution, or winding up of the Corporation;

6.whether the shares of such series shall be subject to the operation of a retirement or sinking fund and, if so, the extent to and manner in which any such retirement or sinking fund shall be applied to the purchase or redemption of the shares of such series for retirement or other corporate purposes and the terms and provisions relative to the operation thereof;

7.whether the shares of such series shall be convertible into, or exchangeable for, shares of stock of any other class or any other series of this class or any other class or classes of securities and, if so, the price or prices or the rate or rates of conversion or exchange and the method, if any, of adjusting the same, and any other terms and conditions of conversion or exchange;

8.the limitations and restrictions, if any, to be effective while any shares of such series are outstanding upon the payment of dividends or the making of other distributions on, and upon the purchase, redemption or other acquisition by the Corporation of, the Common Shares or shares of stock of any other class or any other series of this class;

9.the conditions or restrictions, if any, upon the creation of indebtedness of the Corporation or upon the issue of any additional stock, including additional shares of such series or of any other series of this class or of any other class; and

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10.any other powers, preferences and relative, participating, optional and other special rights, and any qualifications, limitations and restrictions thereof.

The relative rights and preferences of each series of Preferred Shares, and the qualifications, limitations or restrictions thereof, if any, may differ from those of any and all other series of Preferred Shares at any time outstanding; provided, that all shares of any one series of Preferred Shares shall be identical in all respects with all other shares of such series. Any of the designations, preferences, limitations, or relative rights, including the voting rights, of any series of shares may be dependent upon facts ascertainable outside the Certificate of Formation, provided that the manner in which such facts operate upon the designations, preferences, and relative rights, including the voting rights, of such series of shares is clearly set forth in the Certificate of Formation. The Board of Directors may increase the number of Preferred Shares designated for any existing series by a resolution adding to such series authorized and unissued Preferred Shares not designated for any other series. The Board of Directors may decrease the number of Preferred Shares designated for any existing series by a resolution subtracting from such series unissued Preferred Shares designated for such series, and the shares so subtracted shall become authorized, unissued, and undesignated Preferred Shares.

C.Voting and Dividends.  Each holder of Common Shares shall be entitled to one vote for each Common Share held of record on all matters on which shareholders generally are entitled to vote. Subject to applicable law and the rights of the Preferred Shares and any other class or series of stock having a preference as to dividends over the Common Shares then outstanding, dividends may be paid on the Common Shares out of assets legally available for dividends, but only at such times and in such amounts as the Board of Directors shall determine and declare. Subject to applicable law, upon the dissolution, liquidation or winding up of the Corporation, after any preferential amounts to be distributed to the holders of the Preferred Shares and any other class or series of stock having a preference over the Common Shares then outstanding have been paid or declared and set apart for payment, the holders of the Common Shares shall be entitled to receive all the remaining assets of the Corporation available for distribution to its shareholders ratably in proportion to the number of shares held by them, respectively.

D.No Cumulative Voting.  The right to accumulate votes in the election of directors or cumulative voting by any shareholder is hereby expressly denied.

E.No Preemptive Rights. No shareholder of this Corporation shall, by reason of his holding shares of any class of stock of this Corporation, have any preemptive or preferential right to purchase or subscribe for any shares of any class of stock of this Corporation, now or hereafter to be authorized (or any notes, debentures, bonds or other securities convertible into or carrying options, warrants or rights to purchase shares of any class, now or hereafter to be authorized, whether or not the issuance of any such shares or such notes, debentures, bonds or other securities would adversely affect the dividend or voting rights of any such shareholder), other than such rights, if any, as the Board of Directors, at its discretion, from time to time may grant, and at such price as the Board of Directors at its discretion may fix; and the Board of Directors may issue shares of any class of stock of this Corporation or any notes, debentures, bonds or other securities convertible into or carrying options, or warrants

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or rights to purchase shares of any class without offering any such shares of any class of such notes, debentures, bonds or other securities, either in whole or in part, to the existing shareholders of any class.

ARTICLE V

Written Consent of Shareholders

Any action required by the TBOC to be taken at any annual or special meeting of shareholders, or any action which may be taken at any annual or special meeting of shareholders, may be taken without a meeting, without prior notice, and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by all of the shareholders entitled to vote with respect to the action that is the subject of the consent.

ARTICLE VI

Directors

A.Powers. The property, business and affairs of the Corporation and all corporate powers shall be managed by the Board of Directors, subject to any limitation imposed by statute, the Certificate of Formation or the Bylaws.

B.Number of Directors. The number of directors shall be fixed and determined from time to time by resolution of a majority of the full Board of Directors at any annual, regular, or special meeting, provided that any decrease in the number of directors does not shorten the time of any incumbent director. Directors need not be residents of the State of Texas. The number of directors currently constituting the Board of Directors is eleven.  The names and addresses of the current directors are as follows:

Name	Address
Robert R. Franklin, Jr.	9 Greenway Plaza, Suite 110 Houston, Texas 77046
Michael A. Havard	9 Greenway Plaza, Suite 110 Houston, Texas 77046
Tommy W. Lott	9 Greenway Plaza, Suite 110 Houston, Texas 77046
Glen W. Morgan	9 Greenway Plaza, Suite 110 Houston, Texas 77046
J. Pat Parsons	9 Greenway Plaza, Suite 110 Houston, Texas 77046
Joe E. Penland, Sr.	9 Greenway Plaza, Suite 110 Houston, Texas 77046

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Wayne A. Reaud	9 Greenway Plaza, Suite 110 Houston, Texas 77046
Joseph B. Swinbank	9 Greenway Plaza, Suite 110 Houston, Texas 77046
Sheila G. Umphrey	9 Greenway Plaza, Suite 110 Houston, Texas 77046
John E. Williams, Jr.	9 Greenway Plaza, Suite 110 Houston, Texas 77046
William E. Wilson, Jr.	9 Greenway Plaza, Suite 110 Houston, Texas 77046

C.Resignation. A director may resign at any time on written notice to the Board of Directors or to the Chairman of the Board. A director’s resignation is effective when the notice is delivered unless the notice specifies a later effective date.

D.Election of Directors. Directors shall be elected by a plurality of the voting power of the shares entitled to vote who are present, in person or by proxy, at any such meeting and entitled to vote on the election of directors.

E.Vacancies and Removal. Subject to applicable law, unless the Board of Directors otherwise determines, vacancies resulting from death, resignation, retirement, disqualification, removal from office or other cause, and newly created directorships resulting from any increase in the authorized number of directors, may be filled only by the affirmative vote of a majority of the remaining directors, even though less than a quorum of the Board of Directors, and in the event that there is only one director remaining in office, by such sole remaining director, and directors so chosen shall hold office until such director’s successor shall have been duly elected and qualified.

Any director, or the entire Board of Directors, may be removed from office at any time but only for cause by the affirmative vote of the holders of at least a majority of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors.

Notwithstanding the foregoing in this Article, whenever the holders of any class or series of shares are entitled to elect one or more directors by the provisions of the Certificate of Formation, only the holders of shares of that class or series shall be entitled to vote for or against the removal of any director elected by the holders of shares of that class or series; and any vacancies in such directorships and any newly created directorships of such class or series to be filled by reason of an increase in the number of such directors may be filled by the affirmative vote of a majority of the directors elected by such class or series then in office or by a sole remaining director so elected, and such directorships shall not in any case be filled by the vote of the remaining directors unless otherwise provided in the Certificate of Formation.

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ARTICLE VII

Special Meetings

Special meetings of the shareholders for any purpose or purposes may be called by (A) the Chairman of the Board or (B) a majority of the entire Board of Directors. In addition, a special meeting of the shareholders shall be called at the request in writing of shareholders owning 50% or more of the issued and outstanding shares of the Corporation entitled to vote at such meeting by the Chairman of the Board or the Secretary. Such request for a special meeting shall state the purpose or purposes of the proposed meeting, which purpose or purposes shall be stated in the notice of the meeting. Business transacted at any special meeting of shareholders shall be limited to the purposes stated in the notice. Notwithstanding anything set forth in the Certificate of Formation to the contrary, at a special meeting requested by the shareholders of the Corporation, only the Corporation and the shareholders who participated in the written meeting request may propose any item for consideration or nominate directors for election at such meeting.

ARTICLE VIII

Amendment of Bylaws

The Board of Directors of the Corporation may alter, amend, or repeal the bylaws of the Corporation or may adopt new bylaws.

ARTICLE IX

Liabilities of Directors

No director of the Corporation will have any liability to the Corporation or its shareholders for monetary damages for any act or omission by the director in the director’s capacity as a director of the Corporation, except that this provision does not eliminate or limit the liability of a director to the extent the director is found liable under applicable law for:

A.a breach of the director’s duty of loyalty to the Corporation or its shareholders;

B.an act or omission not in good faith that constitutes a breach of duty of the director to the Corporation or that involves intentional misconduct or a knowing violation of law;

C.a transaction from which the director received an improper benefit, regardless of whether the benefit resulted from an action taken within the scope of the director’s duties; or

D.an act or omission for which the liability of the director is expressly provided for by an applicable statute.

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If the TBOC is amended to authorize action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the TBOC as so amended. Any repeal or modification of this Article shall not adversely affect any right of protection of a director of the Corporation existing at the time of such repeal or modification.

ARTICLE X

Indemnification

A.Right to Indemnification.  The Corporation shall indemnify and hold harmless, to the greatest extent permitted by applicable law, any director or officer of the Corporation, any former director or officer of the Corporation, or any current or former delegate of the Corporation who was, is, or is threatened to be made a respondent in any proceeding because the person is or was a director, officer or delegate of the Corporation from and against all expenses actually incurred by such person in connection with such proceeding, and such indemnification shall continue as to a person who has ceased to be a director, officer, or delegate of the Corporation and shall inure to the benefit of his or her heirs, executors and administrators; provided, however, that the Corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the Board of Directors. The right to indemnification conferred in this Article shall be a contract right. The right to indemnification conferred by this Article shall, to the extent permitted by the TBOC, include the right to be paid by the Corporation the expenses incurred in defending or otherwise participating in any proceeding in advance of its final disposition.  The Corporation may, by action of the Board of Directors, provide indemnification to employees and agents of the Corporation with the same scope and effect as the foregoing indemnification of directors, officers, and delegates. The terms “delegate”, “expenses”, and “enterprise” shall have the meaning given to them in the Section 8.001 of the TBOC, or any successor provision thereto. Nothing in this Article shall be construed as a limitation on any rights of the Corporation to indemnify or insure any person that is otherwise permitted by applicable law.

B.Insurance.  The Corporation may, in its discretion, purchase or procure or establish and maintain insurance or another arrangement to indemnify and hold harmless an existing or former director, delegate, officer, employee, or agent against any liability: asserted against and incurred by the person in that capacity, or arising out of the person’s status in that capacity.

C.Non-Exclusivity.  The power to indemnify or obtain insurance provided in this Article shall be cumulative and non-exclusive of any other power of the Board of Directors, the Corporation, or any rights to which such a person or entity may be entitled by law, the Certificate of Formation, the bylaws of the Corporation, contract, other agreement, vote, or otherwise.  Any repeal or modification of this Article shall be prospective only, and shall not adversely affect any right of a person to indemnification by the Corporation existing at the time of such repeal or modification.

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D.Validity.  Notwithstanding any provision of this Article to the contrary, all indemnification payments must be consistent with the requirements of Section 18(k) of the Federal Deposit Insurance Act and the implementing regulations thereunder. The invalidity of any provision of this Article will not affect the validity of the remaining provisions of this Article.

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EX-3.2

Exhibit 3.2

SECOND AMENDED AND RESTATED BYLAWS OF
CBTX, INC.

TABLE OF CONTENTS

		Page
ARTICLE I - NAME AND OFFICES		1
1.01.	Registered Office Address	1
1.02.	Other Offices	1
ARTICLE II - SHAREHOLDERS’ MEETINGS		1
2.01.	Place of Meetings	1
2.02.	Annual Meeting	1
2.03.	Special Meetings	1
2.04.	Notice	1
2.05.	Quorum	2
2.06.	Method of Voting	2
2.07.	Record Date	3
2.08.	Voting List	4
2.09.	Procedure	4
2.10.	Action by Consent	9
2.11.	Presence at Meetings by Means of Communication Equipment	9
ARTICLE III - DIRECTORS		9
3.01.	Powers	9
3.02.	Number of Directors	9
3.03.	Resignation	9
3.04.	Election and Qualification of Directors	10
3.05.	Vacancies and Removal	10
3.06.	Meetings	11
3.07.	Regular Meetings	11
3.08.	Special Meetings	11
3.09.	Quorum and Action of Directors	11
3.10.	Presumption of Assent	12
3.11.	Committees	12
3.12.	Compensation	12
3.13.	Action by Unanimous Consent	12
3.14.	Presence at Meetings by Means of Communications Equipment	12
ARTICLE IV - OFFICERS		12
4.01.	Election, Number, Qualifications	12
4.02.	Terms of Offices; Removal	13
4.03.	Vacancies	13

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TABLE OF CONTENTS

(continuation)

		Page
4.04.	Authority and Compensation	13
4.05.	Chairman of the Board	13
4.06.	Vice Chairman	13
4.07.	Chief Executive Officer; President	13
4.08.	Senior Executive Vice Presidents, Executive Vice Presidents and Senior Vice Presidents	14
4.09.	Vice President	14
4.10.	Secretary	14
4.11.	Treasurer	14
4.12.	Assistant Secretary and Assistant Treasurer	15
ARTICLE V - GENERAL PROVISIONS		15
5.01.	Fiscal Year	15
5.02.	Notice and Waiver of Notice	15
5.03.	Seal	15
5.04.	Amendment	15
5.05.	Dividends and Reserves	15
ARTICLE VI - CAPITAL SHARES		16
6.01.	Certificates for Shares and Unrestricted Shares	16
6.02.	Lost, Stolen or Destroyed Certificates	16
6.03.	Registration of Transfers	17
6.04.	Registered Shareholders	17
ARTICLE VII - INDEMNIFICATION		17
7.01.	Indemnification	17
7.02.	Mandatory Advancement of Expenses	18
7.03.	Claims	19
7.04.	Contract Rights; Amendment and Repeal; Non-exclusivity of Rights	19
7.05.	Insurance, Other Indemnification and Advancement of Expenses	20
7.06.	Definitions	20
7.07.	Severability	21
ARTICLE VIII — EXCLUSIVE FORUM		21
8.01.	Exclusive Forum	21

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SECOND AMENDED AND RESTATED BYLAWS OF
CBTX, INC.

ARTICLE I - NAME AND OFFICES

1.01.       Registered Office Address. The registered office of the Corporation shall be located in the City of Austin, Travis County, Texas, or such other location as the Board of Directors may from time to time determine.  The registered agent of the Corporation shall be as designated by the Board of Directors from time to time pursuant to applicable law

1.02.       Other Offices. The Corporation may also have offices at such other places both within and without the State of Texas as the Board of Directors may from time to time determine or the business of the Corporation may require.

ARTICLE II - SHAREHOLDERS’ MEETINGS

2.01.       Place of Meetings. Meetings of the shareholders shall be held at the principal business office of the Corporation or at any other place (inside or outside the State of Texas) as selected from time to time by the Board of Directors and stated in the notice of the meeting.

2.02.       Annual Meeting. The annual meeting of the shareholders of the Corporation shall be held to elect directors, subject to Section 3.04 below, and to transact such other business as may properly be brought before the meeting. The annual meeting shall be held on such date and at such time as may be fixed by the Board of Directors and stated in the notice of the meeting. Failure to hold any annual meeting shall not result in the winding up or termination of the Corporation.

2.03.       Special Meetings. Special meetings of the shareholders for any purpose or purposes may be called by (a) the Chairman of the Board or (b) a majority of the entire Board of Directors. In addition, a special meeting of the shareholders shall be called by the Chairman of the Board or the Secretary at the request in writing of shareholders owning not less than 50% of the issued and outstanding shares of the Corporation entitled to vote at such meeting. Such request for a special meeting shall state the purpose or purposes of the proposed meeting, which purpose or purposes shall be stated in the notice of the meeting. Business transacted at any special meeting of shareholders shall be limited to the purposes stated in the notice. Notwithstanding anything set forth in these Bylaws to the contrary, at a special meeting requested by the shareholders of the Corporation, only the Corporation, the Board of Directors, and the shareholders who participated in the written meeting request may propose any item for consideration or nominate directors for election at such meeting.

2.04.       Notice. Written notice stating the place, day and hour of any shareholders’ meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than 10 nor more than 60 days before the date of the meeting, by or at the direction of the Chairman of the Board, the Secretary, or the officer or persons calling the meeting, to each shareholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, postage prepaid, addressed to the shareholder at his address as it appears on the share transfer records of the Corporation. A shareholder’s attendance at a meeting, in person or by proxy, waives such

shareholder’s right to object to (a) lack of notice or defective notice of the meeting, unless, at the start of the meeting, the shareholder objects to holding the meeting or transacting business at the meeting on the ground that the meeting is not lawfully called, and (b) consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the shareholder objects to considering the matter when it is presented.

2.05.       Quorum. A quorum shall be present at a meeting of shareholders if the holders of shares having a majority of the voting power represented by all of the issued and outstanding shares entitled to vote at the meeting are present in person or represented by proxy at such meeting unless otherwise provided by the Certificate of Formation or the Texas Business Organization Code (the “TBOC”). Once a share is represented for any purpose at a meeting, other than for the purpose of objecting to holding the meeting or transacting business at the meeting, it is considered present for purposes of determining whether a quorum exists, for the remainder of the meeting and for any adjournment of that meeting unless a new record date is or must be set for that adjourned meeting. If, however, a quorum shall not be present at any meeting of shareholders, the shareholders entitled to vote, present in person or represented by proxy, shall have the power to adjourn the meeting, without notice other than announcement at the meeting, until such time and to such place as may be determined by the Board of Directors or by a vote of the holders of a majority of the shares represented in person or by proxy at such meeting until a quorum shall be present. At an adjourned meeting at which a quorum is present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed.

2.06.Method of Voting.

(a)Where a quorum is present at any meeting of the shareholders, each outstanding share, regardless of class, shall be entitled to one vote on each matter submitted to a vote at the meeting of shareholders, except to the extent that the voting rights of the shares of any class or classes are altered, limited, or denied by the Certificate of Formation. If a quorum exists, action on any matter, except the election of directors, by a voting group shall be approved by the affirmative vote of a majority of the votes cast (meaning only votes for or against the matter and not counting abstentions), unless the Certificate of Formation, these Bylaws, or the TBOC require a greater number of affirmative votes.

(b)A shareholder may vote either in person or by proxy executed in writing by the shareholder or by his duly authorized attorney-in-fact. An electronic mail message or similar transmission by the shareholder, or a photographic, photostatic facsimile, or similar reproduction of a writing executed by the shareholder, or any other means permitted by the TBOC, shall be treated as an execution in writing for the purposes of this Section 2.06. No proxy shall be valid after 11 months from the date of its execution, unless otherwise provided in the proxy. Each proxy shall be revocable unless (i) the proxy form conspicuously states that the proxy is irrevocable, and (ii) the proxy is coupled with an interest, as defined in the TBOC and other Texas law. All proxies shall be filed with the Secretary (or the Corporation’s transfer agent, as designated by the Secretary) before any meeting, before the same shall become effective. Any shareholder, by written notice to the Secretary before any meeting, may withdraw a previously filed proxy and vote the shares thereon in person, unless the proxy is irrevocable.

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(c)Shares standing in the name of another entity may be voted by such officer, agent or proxy as the bylaws of such entity may prescribe or, in the absence of such provision, as the board of directors of such entity may determine. Shares held by an administrator, executor, guardian or conservator may be voted by him, either in person or by proxy, without a transfer of such shares into his name if such authority is contained in an appropriate order of the court that appointed such administrator, executor, guardian or conservator. Shares standing in the name of a trustee may be voted by him, either in person or by proxy, but no trustee shall be entitled to vote shares held by him, without a transfer of such shares into his name as trustee. Shares standing in the name of a receiver may be voted by such receiver, and shares held by or under the control of a receiver may be voted by such receiver without being transferred into his name, if such authority is contained in an appropriate order of the court that appointed the receiver. A shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote the shares so transferred.

(d)The right to cumulate votes in the election of directors and the right to cumulative voting by any shareholder in any other matter are hereby expressly denied.

2.07.Record Date.

(a)For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to receive payment of any distribution or share dividend, or in order to make a determination of shareholders for any other proper purpose (other than determining shareholders entitled to consent to action by shareholders proposed to be taken without a meeting of shareholders), the Board of Directors may provide that the share transfer records shall be closed for a stated period but not to exceed, in any case, 60 days. If the share transfer records shall be closed for the purpose of determining shareholders, such record shall be closed for at least 10 days immediately preceding such meeting. In lieu of closing the share transfer records, the Board of Directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than 60 days and, in the case of a meeting of shareholders, not less than 10 days, prior to the date on which the particular action requiring such determination of shareholders is to be taken.

(b)If the share transfer records are not closed and no record date is fixed for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders, or shareholders entitled to receive payment of a distribution (other than a distribution involving a purchase or redemption by the Corporation of any of its own shares) or share dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the Board of Directors declaring such distribution or share dividend is adopted, as the case may be, shall be the record date for such determination of shareholders.

(c)When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof except where the determination has been made through the closing of share transfer records and the stated period of closing has expired.

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2.08.Voting List.

(a)The officer or agent of the Corporation having charge of the share transfer books of the Corporation shall make, at least 10 days before each meeting of shareholders, a complete list of the shareholders entitled to vote at such meeting or any adjournment thereof, arranged in alphabetical order, with the address of and the number of shares held by each, which list, for a period of 10 days prior to such meeting, shall be kept on file at the registered office or principal place of business of the Corporation and shall be subject to inspection by any shareholder at any time during usual business hours of the Corporation. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any shareholder during the whole time of the meeting. The original share transfer records shall be prima-facie evidence as to who are the shareholders entitled to examine such list or transfer records or to vote at any meeting of shareholders.

(b)Failure to comply with the requirements of this section shall not affect the validity of any action taken at such meeting.

2.09.Procedure.

(a)The Chairman of the Board, and in his absence, the Chief Executive Officer, the President, or any Director designated by the Board of Directors for such purposes, will call meetings of the shareholders to order and will act as presiding officer at the meetings. Unless otherwise determined by the Board of Directors prior to the meeting, the presiding officer of the meeting of the shareholders will also determine the order of business and have the authority in his or her sole discretion to regulate the conduct of any such meeting, including without limitation by imposing restrictions on the persons (other than shareholders of the Corporation or their duly appointed proxies) who may attend such shareholders’ meeting, by ascertaining whether any shareholder or his proxy may be excluded from any meeting of the shareholders based upon any determination by the presiding officer, in his sole discretion, that any such person has unduly disrupted or is likely to disrupt the proceedings, and by determining the circumstances in which any person may make a statement or ask questions at any meeting of the shareholders.

(b)At an annual meeting of the shareholders, only such business will be conducted or considered as is properly brought before the meeting. To be properly brought before an annual meeting, business must be (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors in accordance with Section 2.04, (ii) otherwise properly brought before the meeting by the presiding officer or by or at the direction of a majority of the Board of Directors, or (iii) otherwise properly requested to be brought before the meeting by a shareholder in accordance with Sections 2.09(c) and (d).

(c)A shareholder who wishes to submit business, other than nominations of directors, for consideration at an annual meeting must comply with this Section 2.09(c). A shareholder who wishes to include business in a proxy statement prepared by the Corporation must also comply with Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). For business, other than nominations of directors, to be properly requested by a shareholder for consideration at an annual meeting, the shareholder must (i) be a shareholder of

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record of the Corporation at the time of the giving of the notice for such meeting provided for in these Bylaws and at the time of the annual meeting, (ii) be entitled to vote at such meeting, and (iii) have given timely notice in writing to the Secretary, and such business must be a proper matter for shareholder action. To be timely in connection with an annual meeting, a shareholder’s notice must be delivered to or mailed and received at the principal executive offices of the Corporation not less than 90 nor more than 120 calendar days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is advanced more than 30 calendar days prior to such anniversary date or delayed more than 60 calendar days after such anniversary date then to be timely such notice must be received by the Corporation no later than the later of 70 calendar days prior to the date of the annual meeting or the close of business on the 7th calendar day following the earlier of the date on which notice of the annual meeting is first mailed by or on behalf of the Corporation or the day on which public announcement is first made of the date of the annual meeting. In no event shall any adjournment or postponement of an annual meeting or the announcement thereof commence a new time period for the giving of the notice required by this Section 2.09(c).

A shareholder’s notice to the Secretary must set forth as to each matter the shareholder proposes to bring before the annual meeting: (A) a description in reasonable detail of the business desired to be brought before the meeting and the reasons for conducting such business at the meeting; (B) the name and address, as they appear on the Corporation’s books, of the shareholder proposing such business and any Shareholder Associated Person (defined below) covered by clauses (C) and (D) below; (C) the class or series and the number of shares of the Corporation that are, directly or indirectly, owned beneficially and of record by the shareholder proposing such business and by any Shareholder Associated Person with respect to the Corporation’s securities, and any derivatives, hedged positions, synthetic and temporary ownership techniques, swaps, securities loans, timed purchases and other economic and voting interests or similar positions, securities or interests held by such shareholder and Shareholder Associated Person with respect to the Corporation’s securities; (D) any material interest of the shareholder proposing such business or any Shareholder Associated Person in such business; and (E) any agreements the shareholder proposing such business or any Shareholder Associated Person has with other persons or entities in connection with such business.

“Shareholder Associated Person” of any shareholder means (i) any person controlling, directly or indirectly, or acting in concert with, such shareholder (including, without limitation, the members of any syndicate or group who, along with such shareholder or beneficial owner (as described in clause (ii) below), would be deemed a “person” for purposes of Section 13(d)(3) of the Exchange Act (“Group”)), (ii) any beneficial owner of shares of the Corporation owned of record or beneficially by such shareholder and (iii) any person controlling, controlled by or under common control with such shareholder.

Notwithstanding the foregoing provisions of this Section 2.09(c), a shareholder must also comply with all applicable requirements of the Exchange Act, and the rules and regulations thereunder with respect to the matters set forth in this Section 2.09(c). For purposes of this Section 2.09(c), “public announcement” means disclosure in a press release reported by a national news service or in a document filed by the Corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Exchange Act or furnished to shareholders. Nothing in this Section 2.09(c) will be deemed to affect any rights of shareholders

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to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.

(d)A shareholder who wishes to nominate a director or directors for election at an annual meeting must comply with this Section 2.09(d). A shareholder who wishes to include business in a proxy statement prepared by the Corporation must also comply with Rule 14a-8 under the Exchange Act.

For nominations of directors to be properly requested by a shareholder for consideration at an annual meeting, the shareholder must (i) be a shareholder of record of the Corporation at the time of the giving of the notice for such meeting provided for in these Bylaws and at the time of the annual meeting, (ii) be entitled to vote at such meeting, and (iii) have given timely notice in writing to the Secretary. To be timely in connection with an annual meeting, a shareholder’s notice must be delivered to or mailed and received at the principal executive offices of the Corporation not less than 120 nor more than 150 calendar days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is advanced more than 30 calendar days prior to such anniversary date or delayed more than 60 calendar days after such anniversary date then to be timely such notice must be received by the Corporation no later than the later of 70 calendar days prior to the date of the annual meeting or the close of business on the 7th calendar day following the earlier of the date on which notice of the annual meeting is first mailed by or on behalf of the Corporation or the day on which public announcement is first made of the date of the annual meeting. In no event shall any adjournment or postponement of an annual meeting or the announcement thereof commence a new time period for the giving of the notice required by this Section 2.09(d).

A shareholder’s notice to the Secretary must set forth: (A) as to each person whom the shareholder proposes to nominate for election or reelection as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act, including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director, if elected; (B) as to the shareholder giving the notice the name and address, as they appear on the Corporation’s books, of such shareholder and any Shareholder Associated Person covered by clause (C) below; (C) as to the shareholder giving the notice the class and number of shares of the Corporation that are owned beneficially and of record by such shareholder and by any Shareholder Associated Person with respect to the Corporation’s securities, and any derivatives, hedged positions, synthetic and temporary ownership techniques, swaps, securities loans, timed purchases and other economic and voting interests or similar positions, securities or interests held by such shareholder and Shareholder Associated Person with respect to the Corporation’s securities; (D) a description of any material relationships, including financial transactions and compensation, between the shareholder giving the notice and any Shareholder Associated Person, on the one hand, and the proposed nominee or nominees, and such nominee’s affiliates and associates, or others acting in concert with the nominee (including, without limitation, the members of any Group of such nominee), on the other hand, including, all information that would be required to be disclosed pursuant to Rule 404 promulgated under Regulation S-K if the shareholder making the nomination and any Shareholder Associated Person on whose behalf the nomination is made, were the “registrant” for purposes of such rule and the nominee were a director or executive officer of such registrant;

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(E) a completed independence questionnaire regarding the proposed nominee or nominees, in a form acceptable to the Corporation, which may be obtained from the Secretary of the Corporation; (F) a written representation from such proposed nominee or nominees that they do not have, nor will they have, any undisclosed voting commitments or other arrangements with respect to their actions as a director; (G) a written representation from such proposed nominee or nominees that they comply with all applicable corporate governance policies and eligibility requirements of the Corporation; and (H) any other information reasonably requested by the Corporation. At the request of the Board of Directors, any person nominated by the Board of Directors for election as a director shall furnish to the Secretary that information required to be set forth in a shareholder’s notice of nomination which pertains to the nominee. If a shareholder does not provide the information required by this Section 2.09(d) within 10 business days of the Corporation’s request, then such shareholder’s nomination shall be disregarded.

Notwithstanding the foregoing provisions of this Section 2.09(d), a shareholder must also comply with all applicable requirements of the Exchange Act, and the rules and regulations thereunder with respect to the matters set forth in this Section 2.09(d). For purposes of this Section 2.09(d), “public announcement” means disclosure in a press release reported by a national news service or in a document filed by the Corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Exchange Act or furnished to shareholders. Nothing in this Section 2.09(d) will be deemed to affect any rights of shareholders to request inclusion of nominations in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.

(e)At a special meeting of shareholders, only such business may be conducted or considered as is properly brought before the meeting. To be properly brought before a special meeting, business must be (i) specified in the notice of meeting (or any supplement thereto) given in accordance with Section 2.04 and (ii) if requested to be brought before the meeting by a shareholder, properly requested in accordance with Section 2.03 and this Section 2.09(e).

For business, other than nominations of directors, to be properly requested by a shareholder for consideration at a special meeting, the shareholder must (i) be a shareholder of record of the Corporation at the time of making the request and at the time of the special meeting, and (ii) be entitled to vote at such meeting. The shareholder’s request for a special meeting shall set forth as to each matter the shareholder proposes to bring before the special meeting: (A) a description in reasonable detail of the business desired to be brought before the meeting and the reasons for conducting such business at the meeting; (B) the name and address, as they appear on the Corporation’s books, of the shareholder proposing such business and any Shareholder Associated Person covered by clauses (C) and (D) below; (C) the class or series and the number of shares of the Corporation that are, directly or indirectly, owned beneficially and of record by the shareholder proposing such business and by any Shareholder Associated Person with respect to the Corporation’s securities, and any derivatives, hedged positions, synthetic and temporary ownership techniques, swaps, securities loans, timed purchases and other economic and voting interests or similar positions, securities or interests held by such shareholder and Shareholder Associated Person with respect to the Corporation’s securities; (D) any material interest of the shareholder proposing such business or any Shareholder Associated Person in such business; and (E) any agreements the shareholder proposing such business or any Shareholder Associated Person has with other persons or entities in connection with such business.

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For nominations of directors to be properly requested by a shareholder for consideration at a special meeting, the shareholder must (i) be a shareholder of record of the Corporation at the time of making the request and at the time of the special meeting, and (ii) be entitled to vote at such meeting. A shareholder’s request for a special meeting shall set forth: (A) as to each person whom the shareholder proposes to nominate for election or reelection as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act, including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director, if elected; (B) as to the shareholder giving the notice the name and address, as they appear on the Corporation’s books, of such shareholder and any Shareholder Associated Person covered by clause (C) below; (C) as to the shareholder giving the notice the class and number of shares of the Corporation that are owned beneficially and of record by such shareholder and by any Shareholder Associated Person with respect to the Corporation’s securities, and any derivatives, hedged positions, synthetic and temporary ownership techniques, swaps, securities loans, timed purchases and other economic and voting interests or similar positions, securities or interests held by such shareholder and Shareholder Associated Person with respect to the Corporation’s securities; (D) a description of any material relationships, including financial transactions and compensation, between the shareholder giving the notice and any Shareholder Associated Person, on the one hand, and the proposed nominee or nominees, and such nominee’s affiliates and associates, or others acting in concert with the nominee (including, without limitation, the members of any Group of such nominee), on the other hand, including, all information that would be required to be disclosed pursuant to Rule 404 promulgated under Regulation S-K if the shareholder making the nomination and any Shareholder Associated Person on whose behalf the nomination is made, were the “registrant” for purposes of such rule and the nominee were a director or executive officer of such registrant; (E) a completed independence questionnaire regarding the proposed nominee or nominees, in a form acceptable to the Corporation, which may be obtained from the Secretary of the Corporation; (F) a written representation from such proposed nominee or nominees that they do not have, nor will they have, any undisclosed voting commitments or other arrangements with respect to their actions as a director; (G) a written representation from such proposed nominee or nominees that they comply with all applicable corporate governance policies and eligibility requirements of the Corporation; and (H) any other information reasonably requested by the Corporation. At the request of the Board of Directors, any person nominated by the Board of Directors for election as a director shall furnish to the Secretary that information required to be set forth in a shareholder’s notice of nomination which pertains to the nominee. If a shareholder does not provide the information required by this Section 2.09(e) within 10 business days of the Corporation’s request, then such shareholder’s nomination shall be disregarded.

Notwithstanding the foregoing provisions of this Section 2.09(e), a shareholder must also comply with all applicable requirements of the Exchange Act, and the rules and regulations thereunder with respect to the matters set forth in this Section 2.09(e). Nothing in this Section 2.09(e) will be deemed to affect any rights of shareholders to request inclusion of nominations in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.

(f)            The determination of whether any business sought to be brought before any annual or special meeting of the shareholders is properly brought before such meeting in

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accordance with this Section 2.09 will be made by the presiding officer of such meeting. If the presiding officer determines that any business is not properly brought before such meeting, he will so declare to the meeting and any such business will not be conducted or considered.

2.10.       Action by Consent. Any action required by the TBOC to be taken at any annual or special meeting of shareholders, or any action which may be taken at any annual or special meeting of shareholders, may be taken without a meeting, without prior notice, and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by all of the shareholders entitled to vote with respect to the action that is the subject of the consent. Every written consent shall bear the date of signature of each shareholder who signs the consent. No written consent shall be effective to take the action that is the subject of the consent unless, within 60 days after the date of the earliest dated consent delivered to the Corporation as set forth below in this Section 2.10, the consent or consents signed by all of the shareholders entitled to vote with respect to the action that is the subject of the consent are delivered to the Corporation by delivery to its registered office, its principal place of business, or an officer or agent of the Corporation having custody of the records in which proceedings of meetings of shareholders are recorded. Delivery shall be by hand or certified or registered mail, return receipt requested. Delivery to the Corporation’s principal place of business shall be addressed to the Chief Executive Officer or the Chairman of the Board of the Corporation. An electronic mail message or similar transmission by a shareholder, or a photographic, photostatic, facsimile, or similar reproduction of a writing signed by a shareholder, or any other means permitted by the TBOC, shall be regarded as signed by the shareholder for the purposes of this Section 2.10.

2.11.       Presence at Meetings by Means of Communication Equipment. Shareholders may participate in and hold a meeting of the shareholders by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can communicate with each other, and participation in a meeting pursuant to this Section 2.11 shall constitute presence in person at such meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.

ARTICLE III - DIRECTORS

3.01.       Powers. The property, business and affairs of the Corporation and all corporate powers shall be managed by the Board of Directors, subject to any limitation imposed by statute, the Certificate of Formation, or these Bylaws.

3.02.       Number of Directors. The number of directors shall be fixed and determined from time to time by resolution of a majority of the full Board of Directors at any annual, regular, or special meeting, provided that any decrease in the number of directors does not shorten the time of any incumbent director. Directors need not be residents of the State of Texas. Each director to hold office until his or her successor shall have been duly elected and qualified.

3.03.       Resignation. A director may resign at any time on written notice to the Board of Directors or to the Chairman of the Board. A director’s resignation is effective when the notice is delivered unless the notice specifies a later effective date.

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3.04.       Election and Qualification of Directors. Except as provided in Section 3.05, and subject to applicable law, directors shall be classified, with respect to the time for which they severally hold office, into three (3) classes, as nearly equal in number as possible, one (1) class consisting of four (4) directors to be originally elected for a term expiring at the annual meeting of shareholders to be held in 2019 (“Class I”), another class consisting of four (4) directors to be originally elected for a term expiring at the annual meeting of shareholders to be held in 2020 (“Class II”), and another class consisting of three (3) directors to be originally elected for a term expiring at the annual meeting of shareholders to be held in 2021 (“Class III”), with each class to hold office until its successor is duly elected and qualified. At each succeeding annual meeting of shareholders, commencing with the annual meeting of shareholders to be held in 2019, (a) directors elected to succeed those directors whose terms then expire shall be elected for a term of office to expire at the third succeeding annual meeting of shareholders after their election, with each director to hold office until his or her successor shall have been duly elected and qualified, and (b) if authorized by a resolution of the Board of Directors, directors may be elected to fill any vacancy on the Board of Directors, regardless of how such vacancy shall have been created (as set forth in Section 3.05 below).

Directors shall be elected by a plurality of the voting power of the shares entitled to vote who are present, in person or by proxy, at any such meeting and entitled to vote on the election of directors.

3.05.       Vacancies and Removal. Subject to applicable law, unless the Board of Directors otherwise determines, vacancies resulting from death, resignation, retirement, disqualification, removal from office or other cause, and newly created directorships resulting from any increase in the authorized number of directors, may be filled only by the affirmative vote of a majority of the remaining directors, though less than a quorum of the Board of Directors, and in the event that there is only one director remaining in office, by such sole remaining director, and directors so chosen shall hold office until such director’s successor shall have been duly elected and qualified.  During a period between two successive annual meetings of shareholders, the Board of Directors may not fill more than two vacancies created by an increase in the number of directors.  Notwithstanding the foregoing, a vacancy to be filled because of an increase in the number of directors may be filled by election at an annual or special meeting of shareholders called for that purpose.

Any director, or the entire Board of Directors, may be removed from office at any time but only for cause by the affirmative vote of the holders of at least a majority of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors.

Notwithstanding the foregoing, whenever the holders of any class or series of shares are entitled to elect one or more directors by the provisions of the Certificate of Formation, only the holders of shares of that class or series shall be entitled to vote for or against the removal of any director elected by the holders of shares of that class or series; and any vacancies in such directorships and any newly created directorships of such class or series to be filled by reason of an increase in the number of such directors may be filled by the affirmative vote of a majority of the directors elected by such class or series then in office or by a sole remaining director so elected, and such directorships shall not in any case be filled by the vote of the remaining directors unless otherwise provided in the Certificate of Formation.

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3.06.       Meetings. Meetings of the Board of Directors shall be held at the principal business office of the Corporation or at any other place (inside or outside of the State of Texas) as the Chairman of the Board may from time to time select. The attendance of a director at any annual, special or regular meeting of the Board of Directors shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business at the meeting on the ground that the meeting is not lawfully called or convened. The Chairman of the Board, and in his absence, the Vice Chairman, the Chief Executive Officer, or any director appointed by the Board of Directors for such purpose, shall preside at all meetings of the Board of Directors. The Board of Directors shall annually appoint an officer of the Corporation to serve as secretary of the Board of Directors. Neither the business to be transacted at, nor the purpose of, any meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting.

3.07.       Regular Meetings. Regular meetings of the Board of Directors shall be held at such dates, times and places as is designated by the Chairman of the Board, or in the absence of such designation by the Chairman of the Board, as is designated by any three Directors. Written notice of each regular meeting, setting forth the date, time and place of the regular meeting, shall be given to each director.

3.08.       Special Meetings. Special meetings of the Board of Directors may be called at any time by or at the request of the Chairman of the Board, the Vice Chairman, the Chief Executive Officer or the President. In addition, a special meeting of the Board of Directors shall be called by the Secretary on the written request of any three Directors. Written notice of each special meeting, setting forth the date, time and place of the special meeting, shall be given to each director at least 24 hours prior to such meeting; provided, however, if such notice is given by mail, it shall be given at least 72 hours prior to such meeting.

3.09.       Quorum and Action of Directors. At all meetings of the Board of Directors, the presence of a majority of the number of directors fixed in the manner provided in Section 3.02 shall constitute a quorum for the transaction of business. At all meetings of committees of the Board of Directors (if one or more be designated in the manner described in Section 3.11), the presence of a majority of the number of directors fixed from time to time by resolution of the Board of Directors to serve as members of such committees shall constitute a quorum for the transaction of business. The affirmative vote of at least a majority of the directors present and entitled to vote at any meeting of the Board of Directors or a committee of the Board of Directors at which there is a quorum shall be the act of the Board of Directors or the committee, except as may be otherwise specifically provided by the TBOC, the Certificate of Formation, or these Bylaws. Directors with an interest in a business transaction of the Corporation and directors who are directors or officers or have a financial interest in any other corporation, partnership, association or other organization with which the Corporation is transacting business may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee of the Board of Directors to authorize such business transaction. If a quorum shall not be present at any meeting of the Board of Directors or a committee thereof, a majority of the directors present thereat may adjourn the meeting, without notice other than announcement at the meeting, until such time and to such place as may be determined by such majority of directors, until a quorum shall be present.

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3.10.       Presumption of Assent. A director who is present at any meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as secretary of the meeting before the adjournment or shall forward such dissent by registered mail to the Secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action.

3.11.       Committees. The Board of Directors may from time to time designate members of the Board to constitute committees, which shall in each case consist of such number of directors and shall have and may exercise such power, as the Board of Directors may determine and specify in the respective resolutions appointing them, subject to any restrictions or requirements in applicable law or the Corporation’s Certificate of Formation. A majority of all the members of any such committee may determine its action and fix the time and place of its meeting, unless the Board of Directors shall otherwise provide. The Board of Directors shall have the power at any time to change the number, subject as aforesaid, and members of any such committee, to fill vacancies and to discharge any such committee.

3.12.       Compensation. Directors shall receive such compensation for their services as directors as may be determined by resolution of the Board of Directors. The receipt of such compensation shall not preclude any Director from serving the Corporation in any other capacity and receiving compensation therefor.

3.13.       Action by Unanimous Consent. Any action that may be taken at a meeting of the Board of Directors or a committee thereof may be taken without a meeting if a consent in writing, setting forth the action taken, is signed by all of the members of the Board of Directors or the committee thereof, as the case may be, and such consent shall have the same force and effect as a unanimous vote at a meeting. Action taken under this section is effective when the written consents of all directors are delivered to the Corporation, unless a different effective date is specified therein.

3.14.       Presence at Meetings by Means of Communications Equipment. Members of the Board of Directors of the Corporation or any committee designated by the Board of Directors, may participate in and hold a meeting of such board or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can communicate with each other, and participation in a meeting pursuant to this Section 3.14 shall constitute presence in person at such meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.

ARTICLE IV - OFFICERS

4.01.       Election, Number, Qualifications. The officers of the Corporation shall be elected annually by the Board of Directors at the first meeting of the Board of Directors held after each annual meeting of shareholders and shall consist of a President and a Secretary. In its discretion, the Board of Directors may also elect a Chairman of the Board, a Vice Chairman, a Chief Executive Officer, a Treasurer, one or more Executive Vice Presidents, Senior Vice Presidents or

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Vice Presidents, one or more Assistant Secretaries and Assistant Treasurers and such other officers and assistant officers and agents as it shall deem necessary, who shall hold their offices for such terms and shall have such authority and exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors by resolution not inconsistent with these Bylaws. Two or more offices may be held by the same person. In its discretion, the Board of Directors may choose not to fill any office for any period as it may deem advisable, except that the offices of President and Secretary shall be filled as expeditiously as possible. In the event of an officer’s absence or inability to act in his official capacity as an officer of the Corporation, the Board of Directors may delegate the duties of such officer to any other officer or Director.

4.02.       Terms of Offices; Removal. The officers of the Corporation shall hold office until the next annual meeting of the Board of Directors and until their successors are elected or appointed and qualify, or until their death or until their resignation or removal from office. Any officer elected or appointed by the Board of Directors may be removed at any time by the Board whenever in its judgment the best interests of the Corporation will be served thereby. Such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment of an officer shall not of itself create contract rights.

4.03.       Vacancies. Subject to Section 4.01 of these Bylaws, any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise or the creation of any new office of the Corporation shall be filled by the Board of Directors from time to time, as applicable.

4.04.       Authority and Compensation. Officers and agents shall have such authority and perform such duties in the management of the Corporation as are provided in these Bylaws or as may be determined by the Board of Directors. The compensation of officers and agents shall be as fixed from time to time by the Board of Directors or a designated committee thereof.

4.05.       Chairman of the Board. The Chairman of the Board shall preside at all meetings of the Board of Directors and shall perform all duties incidental to the office of Chairman of the Board which may be required by law and all such other duties as may be prescribed by the Board of Directors from time to time. The Chairman of the Board may also serve as the Chief Executive Officer of the Corporation, as determined by the Board of Directors.

4.06.       Vice Chairman. The Vice Chairman shall perform all duties incidental to the office of Vice Chairman which may be required by law and such other duties as may be prescribed by the Board of Directors from time to time. In the absence of the Chairman of the Board, or in the event the Board of Directors shall not have designated a Chairman of the Board, the Vice Chairman shall preside at all meetings of the Board of Directors.

4.07.       Chief Executive Officer; President. The Chief Executive Officer shall be responsible for the general management of the business and affairs of the Corporation and shall perform all duties incidental to his office which may be required by law and such other duties as may be prescribed by the Board of Directors from time to time. The Chief Executive Officer shall make reports to the Board of Directors and the shareholders, and shall see that all orders and resolutions of the Board of Directors and of any committee thereof are carried into effect.

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The Chief Executive Officer shall also serve as the President of the Corporation. In the absence of the Chairman of the Board and the Vice Chairman, or in the event the Board of Directors shall not have designated a Chairman of the Board or a Vice Chairman, the Chief Executive Officer shall preside at all meetings of the Board of Directors.

4.08.       Senior Executive Vice Presidents, Executive Vice Presidents and Senior Vice Presidents. The Board of Directors may appoint one or more Senior Executive Vice Presidents, Executive Vice Presidents, and Senior Vice Presidents who will report to the Chairman of the Board, the Vice Chairman, the Chief Executive Officer, the President, or such other individual as designated by the Board of Directors. Any Senior Executive Vice Presidents, Executive Vice President, or Senior Vice President may sign with the Secretary or an Assistant Secretary, certificates for shares of the Corporation, and shall perform such other duties as from time to time may be assigned to him/her by the Chairman of the Board, the Vice Chairman, the Chief Executive Officer, the President, or the Board of Directors.

4.09.       Vice President. The Board of Directors may appoint one or more Vice Presidents. The Vice Presidents shall perform such other duties as from time to time may be assigned by the Chairman of the Board, the Vice Chairman, the Chief Executive Officer, the President, any Senior Executive Vice President, Executive Vice President, or Senior Vice President, or by the Board of Directors.

4.10.       Secretary. The Secretary shall attend all meetings of the Board of Directors and all meetings of shareholders and record all of the proceedings of the meetings of the Board of Directors and of the shareholders in a minute book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the shareholders and special and regular meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors. He shall keep in safe custody the seal, if any, of the Corporation and, when authorized by the Board of Directors, shall affix the same to any instrument requiring it and, when so affixed, it may be attested by his signature or by the signature of an Assistant Secretary or of the Treasurer. The Secretary shall also (a) sign all certificates of shares, (b) keep a share book of the Corporation, together with any and all other books, records, and papers belonging to the Corporation or pertaining to the business thereof, and (c) in general, perform all of the duties which are incident to the office of Secretary of the Corporation, subject to the Board of Directors. The Secretary may also attest contracts, bonds, deeds, leases or conveyances executed by the Corporation.

4.11.       Treasurer.

(a)           The Treasurer shall have custody of the corporate funds and securities and shall keep full and accurate accounts and records of receipts, disbursements and other transactions in books belonging to the Corporation, and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors.

(b)           The Treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render the Chairman of the Board and the Board of Directors, at its regular meetings, or when the Chairman

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of the Board or the Board of Directors so require, an account of all his transactions as Treasurer and of the financial condition of the Corporation.

4.12.       Assistant Secretary and Assistant Treasurer. In the absence of the Secretary or Treasurer, an Assistant Secretary or Assistant Treasurer, respectively, shall perform the duties of the Secretary or Treasurer. The Assistant Secretaries and Assistant Treasurers, in general, shall have such powers and perform such duties as the Treasurer or Secretary, respectively, or the Board of Directors or Chairman of the Board may prescribe.

ARTICLE V - GENERAL PROVISIONS

5.01.       Fiscal Year. The fiscal year of the Corporation shall begin on the first day of January in each year and end on the last day of December in each year.

5.02.       Notice and Waiver of Notice. Whenever any notice is required to be given to any shareholder or director by these Bylaws or the Certificate of Formation, it shall be deemed to be sufficient if given by mailing, postage paid, addressed to the person or persons entitled thereto at their post office addresses appearing on the books or other records of the Corporation, and such notice shall be deemed to have been given on the date of such mailing, but said notice shall also be deemed to be sufficient and to have been given and received if given in any other manner or by any other means authorized by law or provided for elsewhere in these Bylaws. A waiver or waivers of notice, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be equivalent to the giving of such notice.

5.03.       Seal. This Corporation is not obligated to have a seal, but one may be obtained.

5.04.       Amendment. These Bylaws may be altered, amended or repealed and new Bylaws may be adopted by the shareholders or by the Board of Directors. Except in the case of a special meeting of the shareholders, notice of the proposal shall not be required.

5.05.       Dividends and Reserves.

(a)           Subject to the TBOC and the Certificate of Formation, dividends may be declared by the Board of Directors at any regular or special meeting and may be paid in cash, in property, or in shares of the Corporation. The declaration and payment shall be at the discretion of the Board of Directors. The determination of shareholders entitled to receive payment of any distribution or dividend shall be made in accordance with Section 2.07.

(b)           By resolution the Board of Directors may create such reserve or reserves out of the earned surplus of the Corporation for any proper purpose or purposes and may abolish any such reserve in the same manner. Earned surplus to the extent so reserved shall not be available for the payment of dividends or other distributions by the Corporation except as expressly permitted by law.

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ARTICLE VI - CAPITAL SHARES

6.01.       Certificates for Shares and Unrestricted Shares.

(a)           The shares of the Corporation, or any class or series thereof, shall be represented by certificates as provided under the TBOC. Such certificates shall be in such form as shall be approved by the Board of Directors.

(b)           The certificates representing shares of each class shall be signed by, or in the name of the Corporation by, the Chairman of the Board, the President, a Vice President, or Chief Financial Officer, and by the Secretary or any Assistant Secretary. Any or all such signatures may be facsimiles if countersigned by a transfer agent or registrar. Although any officer, transfer agent or registrar whose manual or facsimile signature is affixed to such a certificate ceases to be such officer, transfer agent or registrar before such certificate has been issued, it may nevertheless be issued by the Corporation with the same effect as if such officer, transfer agent or registrar were still such at the date of its issue.

(c)           The share ledger and blank share certificates shall be kept by the Secretary or by a transfer agent or by a registrar or by any other officer or agent designated by the Board of Directors.

(d)           The Board of Directors may appoint one or more transfer agents or transfer clerks, and one or more registrars, at times and places that the requirements of the Corporation may necessitate and the Board of Directors may designate.

(e)           A person in whose name shares of the Corporation stand on the books of the Corporation will be deemed the owner of the shares, provided that whenever any transfer of shares will be made for collateral security, and not absolutely, and written notice of the transfer is given to the Secretary or the transfer agent, that fact will be stated in the entry of the transfer.

(f)            The Corporation may direct a new certificate or certificates to be issued in place of any certificate or certificates previously issued by the Corporation alleged to have been lost, stolen, or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen, or destroyed. When authorizing such issue of a new certificate or certificates, the Corporation may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen, or destroyed certificate or certificates, or his or her legal representative, to give the Corporation a bond or other indemnity sufficient to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate.

6.02.       Lost, Stolen or Destroyed Certificates. The holder of any certificate representing any shares of the Corporation shall immediately notify the Corporation of any loss, theft, destruction or mutilation of such certificate. The Corporation may issue to such holder a new certificate or certificates for shares, upon the surrender of the mutilated certificate or, in the case of loss, theft or destruction of the certificate, upon satisfactory proof of such loss, theft or destruction. The Board, or a committee designated thereby, or the transfer agents and registrars for the shares of the Corporation, may, in their discretion, require the owner of the lost, stolen or

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destroyed certificate, or such person’s legal representative, to give the Corporation a bond in such sum and with such surety or sureties as they may direct to indemnify the Corporation and said transfer agents and registrars against any claim that may be made on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate. Any such new certificate shall be plainly marked “DUPLICATE” on its face.

6.03.       Registration of Transfers. No transfer of shares shall be valid as against the Corporation, its shareholders and creditors for any purpose, except to render the transferee liable for the debts of the Corporation to the extent provided by law, until it shall have been entered in the share records of the Corporation by an entry showing from and to whom transferred. Upon surrender to the Corporation or a transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, a new certificate shall be issued to the person entitled thereto and the old certificate canceled and the transaction recorded upon the books of the Corporation.

6.04.       Registered Shareholders. The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Texas.

Each shareholder shall designate to the Secretary or transfer agent of the Corporation an address at which notices of meetings and all other corporate notices may be given to such person, and, if any shareholder shall fail to designate such address, corporate notices may be given to such person by mail directed to such person at such person’s post office address, if any, as the same appears on the share record books of the Corporation or at such person’s last known post office address.

ARTICLE VII - INDEMNIFICATION

7.01.       Indemnification.

(a)           Each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a “proceeding”), by reason of the fact that he or she or a person of whom he or she is the legal representative is or was, at any time during which this Article is in effect (whether or not such person continues to serve in such capacity at the time any indemnification or advancement of expenses pursuant hereto is sought or at the time any proceeding relating thereto exists or is brought), a director or officer of the Corporation or is or was at any such time serving at the request of the Corporation as a director, officer, trustee, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans maintained or sponsored by the Corporation, including any delegate (as defined in Section 8.001 of the TBOC (or any successor provision) (hereinafter, an “Indemnitee”), whether the basis of such proceeding is alleged action in an official capacity as a director, officer, trustee, employee or agent or in any other capacity while serving as a director, officer, trustee, employee or agent, shall be (and shall be deemed to have a contractual right to be) indemnified and held harmless by the Corporation

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(and any successor of the Corporation by merger or otherwise) to the fullest extent permitted by the TBOC as the same exists or may hereafter be amended or modified from time to time (but, in the case of any such amendment or modification, to the fullest extent permitted by applicable law, only to the extent that such amendment or modification permits the Corporation to provide greater indemnification rights than said law permitted the Corporation to provide prior to such amendment or modification), against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director, officer, trustee, employee or agent and shall inure to the benefit of his or her heirs, executors and administrators, and no determination under Section 8.101(a)(3) of the TBOC will be required; provided, however, that except as provided in paragraph (a) of Section 7.03, the Corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the Board of Directors.

(b)           To obtain indemnification under this Article, a claimant shall submit to the Corporation a written request, including therein or therewith such documentation and information as is reasonably available to the claimant and is reasonably necessary to determine whether and to what extent the claimant is entitled to indemnification. Upon written request by a claimant for indemnification, a determination, if required by applicable law, with respect to the claimant’s entitlement thereto shall be made as follows: (i) by a majority vote of the Disinterested Directors (as hereinafter defined) even though less than a quorum, or (ii) by a committee consisting of Disinterested Directors designated by majority vote of such Disinterested Directors even though less than a quorum, or (iii) if there are no Disinterested Directors or, if, such Disinterested Directors so direct, by Independent Counsel (as hereinafter defined) selected by the Board of Directors, in a written opinion to the Board of Directors, a copy of which shall be delivered to the claimant, or (iv) by a majority vote of the shareholders of the Corporation. In the event that there shall have occurred within two years prior to the date of the commencement of the proceeding for which indemnification is claimed a “Change of Control” (as defined in the 2017 CBTX, Inc. Omnibus Incentive Plan, as it may be amended from time to time), the determination of entitlement to indemnification is to be made by Independent Counsel, in which case the Independent Counsel shall be selected by the claimant unless the claimant shall request that such selection be made by the Board of Directors. If it is so determined that the claimant is entitled to indemnification, payment to the claimant shall be made within 10 days after such determination.

7.02.       Mandatory Advancement of Expenses. To the fullest extent permitted by the TBOC as the same exists or may hereafter be amended or modified from time to time (but, in the case of any such amendment or modification, only to the extent that such amendment or modification permits the Corporation to provide greater rights to advancement of expenses than said law permitted the Corporation to provide prior to such amendment or modification), each Indemnitee shall have (and shall be deemed to have a contractual right to have) the right, without the need for any action by the Board of Directors, to be paid by the Corporation (and any successor of the Corporation by merger or otherwise) the expenses incurred in connection with any proceeding in advance of its final disposition, such advances to be paid by the Corporation within 20 days after the receipt by the Corporation of a statement or statements from the claimant requesting such advance or advances from time to time; provided, however, that if the TBOC

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requires, the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking (hereinafter, the “undertaking”) by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right of appeal (a “final disposition”) that such director or officer is not entitled to be indemnified for such expenses under this Article or otherwise.

7.03.       Claims.

(a)           If a claim for indemnification under this Article is not paid in full by the Corporation within 30 days after a written claim pursuant to Section 7.01(b) of these Bylaws has been received by the Corporation or if a request for advancement of expenses under this Article is not paid in full by the Corporation within 20 days after a statement pursuant to Section 7.02 of these Bylaws and the required undertaking, if any, have been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim for indemnification or request for advancement of expenses and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim to the fullest extent permitted by applicable law. It shall be a defense to any such action that under the TBOC, the claimant has not met the standard of conduct which makes it permissible for the Corporation to indemnify the claimant for the amount claimed or that the claimant is not entitled to the requested advancement of expenses, but (except where the required undertaking, if any, has not been tendered to the Corporation) the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, Independent Counsel or shareholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the TBOC, nor an actual determination by the Corporation (including its Board of Directors, Independent Counsel or shareholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

(b)           If a determination shall have been made pursuant to Section 7.01(b) of these Bylaws that the claimant is entitled to indemnification, the Corporation shall be bound by such determination in any judicial proceeding commenced pursuant to paragraph (a) of this Section 7.03.

(c)           The Corporation shall be precluded from asserting in any judicial proceeding commenced pursuant to paragraph (a) of this Section 7.03 that the procedures and presumptions of this Article are not valid, binding and enforceable and shall stipulate in such proceeding that the Corporation is bound by all the provisions of this Article.

7.04.       Contract Rights; Amendment and Repeal; Non-exclusivity of Rights.

(a)           All of the rights conferred in this Article, as to indemnification, advancement of expenses and otherwise, shall be contract rights between the Corporation and each Indemnitee to

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whom such rights are extended that vest at the commencement of such Indemnitee’s service to or at the request of the Corporation and (x) any amendment or modification of this Article that in any way diminishes or adversely affects any such rights shall be prospective only and shall not in any way diminish or adversely affect any such rights with respect to such person, and (y) all of such rights shall continue as to any such Indemnitee who has ceased to be a director or officer of the Corporation or ceased to serve at the Corporation’s request as a director, officer, trustee, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, as described herein, and shall inure to the benefit of such Indemnitee’s heirs, executors and administrators.

(b)           All of the rights conferred in this Article, as to indemnification advancement of expenses and otherwise (i) shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the Certificate of Formation, Bylaws, agreement, vote of shareholders or Disinterested Directors or otherwise and (ii) cannot be terminated by the Corporation, the Board of Directors or the shareholders of the Corporation with respect to a person’s service prior to the date of such termination.

7.05.       Insurance, Other Indemnification and Advancement of Expenses.

(a)           The Corporation may maintain insurance, at its expense, to protect itself and any current or former director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the TBOC. To the extent that the Corporation maintains any policy or policies providing such insurance, each such current or former director or officer, and each such agent or employee to which rights to indemnification have been granted as provided in paragraph (b) of this Section 7.05, shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage thereunder for any such current or former director, officer, employee or agent.

(b)           The Corporation may, to the extent authorized from time to time by the Board of Directors or the Chief Executive Officer, grant rights to indemnification, and rights to advancement of expenses incurred in connection with any proceeding in advance of its final disposition, to any current or former employee or agent of the Corporation to the fullest extent of the provisions of this Article with respect to the indemnification and advancement of expenses of current or former directors and officers of the Corporation.

7.06.       Definitions.

(a)           For purposes of this Article:

(1)           “Disinterested Director” means a director of the Corporation who is not and was not a party to the matter in respect of which indemnification is sought by the claimant.

(2)           “Independent Counsel” means a law firm, a member of a law firm, or an independent practitioner, that is experienced in matters of corporation law and shall include any person who, under the applicable standards of professional conduct then prevailing, would not

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have a conflict of interest in representing either the Corporation or the claimant in an action to determine the claimant’s rights under this Article.

(b)           Any notice, request or other communication required or permitted to be given to the Corporation under this Article shall be in writing and either delivered in person or sent by telecopy, telex, telegram, overnight mail or courier service, or certified or registered mail, postage prepaid, return receipt requested, to the Secretary of the Corporation and shall be effective only upon receipt by the Secretary.

7.07.       Severability. If any provision or provisions of this Article shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (i) the validity, legality and enforceability of the remaining provisions of this Article (including, without limitation, each portion of any paragraph of this Article containing any such provision held to be invalid, illegal or unenforceable, that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (ii) to the fullest extent possible, the provisions of this Article (including, without limitation, each such portion of any paragraph of this Article containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.

ARTICLE VIII — EXCLUSIVE FORUM

8.01.       Exclusive Forum. Unless the Corporation consents in writing to the selection of an alternative forum for the following purposes, any state or federal court located in Jefferson County in the State of Texas shall be the sole and exclusive forum for (a) any actual or purported derivative action or proceeding brought on behalf of the Corporation, (b) any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, or other employee or agent of the Corporation to the Corporation or the Corporation’s shareholders or creditors, including a claim alleging the aiding and abetting of such a breach of fiduciary duty, (c) any action asserting a claim against the Corporation or any current or former director, officer, or other employee or agent of the Corporation arising pursuant to any provision of the TBOC, the Certificate of Formation, or the Bylaws of the Corporation (as any of the foregoing may be amended from time to time), or (d) any action asserting a claim against the Corporation or any (as any of the foregoing may be amended from time to time of the Corporation governed by the internal affairs doctrine, including any action to interpret, apply, enforce or determine the validity of any provision of the TBOC, the Certificate of Formation, or the Bylaws of the Corporation (as any of the foregoing may be amended from time to time).

[Signature Page Follows]

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IN WITNESS WHEREOF, the Corporation has caused these Second Amended and Restated Bylaws to be executed by a duly authorized officer on October 10, 2017.

CBTX, INC.
By:	/s/ Robert Franklin, Jr.
Name: Robert Franklin, Jr.
Title: Chief Executive Officer

[Signature Page to Second Amended and Restated Bylaws]

EX-4.1

Exhibit 4.1

ZQ|CERT#|COY|CLS|RGSTRY|ACCT#|TRANSTYPE|RUN#|TRANS# . COMMON STOCK PAR VALUE $.01 COMMON STOCK Shares * * 000000 * * * * * * * * * * * * * * * * * * * * * 000000 * * * * * * * * * * * * * * * * * * * * * 000000 * * * * * * * * * * * * * * * * * * * * * 000000 * * * * * * * * * * * * * * * * * * * * * 000000 * * * * * * * * * * * * * * Certificate Number ZQ00000000 CBTX, INC. INCORPORATED UNDER THE LAWS OF THE STATE OF TEXAS, ** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David SEE REVERSE FOR CERTAIN DEFINITIONS THIS CERTIFIES THAT Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander Alexander David SamMple ***R* Mr. A.lexaSnderADavidMSampPle ***L* MrE. Alexan&der DavMid SamRple **S** Mr.. AleSxandeAr DaMvid SamPple *L*** MEr. Alex&ander David Sample **** David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander DavidMSampRle ****.Mr. SAlexaAnderMDavidPSamLple *E*** Mr. &AlexandMer DavRid SaSmple.**** SMr. AAlexanMder DaPvid SLampEle **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Sample **** Mr. Sample is the owner of **000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares*** *000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares**** 000000**Shar*es****0*000Z00**SEhareRs****00O0000**ShHares**U**0000N00**SDhares*R***000E000**DShares**T**000H000**SOhares*U***000S000**AShareNs****00D0000**Shares****0 THIS CERTIFICATE IS TRANSFERABLE IN CITIES DESIGNATED BY THE TRANSFER AGENT, AVAILABLE ONLINE AT www.computershare.com 00000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****00 0000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000 000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****0000 00**Shares****0Z0000E0**ShRares***O*000000*H*ShareUs****0N00000D**SharRes****0E0000D0**ShareAs****0N00000D**SharesZ****00E0000R**SharOes****0*000*00**Shares****00000 0**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000 **Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000* *Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000** Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**S FULLY-PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK OF CBTX, Inc. (hereinafter called the “Company”), transferable on the books of the Company in person or by duly authorized attorney, upon surrender of this Certificate properly endorsed. This Certificate and the shares represented hereby, are issued and shall be held subject to all of the provisions of the Certificate of Formation, as amended, and the Bylaws, as amended, of the Company (copies of which are on file with the Company and with the Transfer Agent), to all of which each holder, by acceptance hereof, assents. This Certificate is not valid unless countersigned and registered by the Transfer Agent and Registrar. Witness the facsimile seal of the Company and the facsimile signatures of its duly authorized officers. DATED DD-MMM-YYYY COUNTERSIGNED AND REGISTERED: COMPUTERSHARE TRUST COMPANY, N.A. TRANSFER AGENT AND REGISTRAR, Robert R Franklin Jr. CHAIRMAN, PRESIDENT & CEO 2007 TEXAS Donna Dillon SECRETARY By AUTHORIZED SIGNATURE CUSIP Holder ID Insurance Value Number of Shares DTC Certificate Numbers 1234567890/1234567890 1234567890/1234567890 1234567890/1234567890 1234567890/1234567890 1234567890/1234567890 1234567890/1234567890 Total Transaction XXXXXX XX X XXXXXXXXXX 1,000,000.00 123456 12345678 123456789012345 PO BOX 43004, Providence, RI 02940-3004 Num/No. Denom. Total 1 2 3 4 5 6 7 1 2 3 4 5 6 1 2 3 4 5 6 MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4

. CBTX, INC. THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH SHAREHOLDER WHO SO REQUESTS, A SUMMARY OF THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OF THE COMPANY AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND RIGHTS, AND THE VARIATIONS IN RIGHTS, PREFERENCES AND LIMITATIONS DETERMINED FOR EACH SERIES, WHICH ARE FIXED BY THE CERTIFICATE OF FORMATION OF THE COMPANY, AS AMENDED, AND THE RESOLUTIONS OF THE BOARD OF DIRECTORS OF THE COMPANY, AND THE AUTHORITY OF THE BOARD OF DIRECTORS TO DETERMINE VARIATIONS FOR FUTURE SERIES. SUCH REQUEST MAY BE MADE TO THE OFFICE OF THE SECRETARY OF THE COMPANY OR TO THE TRANSFER AGENT. THE BOARD OF DIRECTORS MAY REQUIRE THE OWNER OF A LOST OR DESTROYED STOCK CERTIFICATE, OR HIS LEGAL REPRESENTATIVES, TO GIVE THE COMPANY A BOND TO INDEMNIFY IT AND ITS TRANSFER AGENTS AND REGISTRARS AGAINST ANY CLAIM THAT MAY BE MADE AGAINST THEM ON ACCOUNT OF THE ALLEGED LOSS OR DESTRUCTION OF ANY SUCH CERTIFICATE. (Cust) (Minor) (State) (Cust) and not as tenants in common (Minor) (State) PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE For value received, hereby sell, assign and transfer unto (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING POSTAL ZIP CODE, OF ASSIGNEE) Shares represented by the within Certificate, and do hereby irrevocably constitute and appoint Attorney to transfer the said stock on the books of the within-named Company with full power of substitution in the premises. Dated: 20 Signature: Signature: Notice: The signature to this assignment must correspond with the name as written upon the face of the certificate, in every particular, without alteration or enlargement, or any change whatever. The IRS requires that we report the cost basis of certain shares acquired after January 1, 2011. If your shares were covered by the legislation and you have sold or transferred the shares and requested a specific cost basis calculation method, we have processed as requested. If you did not specify a cost basis calculation method, we have defaulted to the first in, first out (FIFO) method. Please visit our website or consult your tax advisor if you need additional information about cost basis. If you do not keep in contact with us or do not have any activity in your account for the time periods specified by state law, your property could become subject to state unclaimed property laws and transferred to the appropriate state. Signature(s) Guaranteed: Medallion Guarantee Stamp THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (Banks, Stockbrokers, Savings and Loan Associations and Credit Unions) WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM, PURSUANT TO S.E.C. RULE 17Ad-15. The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM - as tenants in common UNIF GIFT MIN ACT - ............................................Custodian ................................................ TEN ENT - as tenants by the entireties under Uniform Gifts to Minors Act......................................................... JT TEN - as joint tenants with right of survivorship UNIF TRF MIN ACT - ............................................Custodian (until age ................................) .............................under Uniform Transfers to Minors Act ................... Additional abbreviations may also be used though not in the above list.

EX-10.1

Exhibit 10.1

LOAN AGREEMENT

Between

CBFH, INC.		FROST BANK
5999 Delaware Street		P.O. Box 34746
Beaumont, Texas 77706	and	San Antonio, Texas 78265

As of February 1, 2015

THIS LOAN AGREEMENT (the “Agreement”) will serve to set forth the terms of the financing transaction by and between CBFH, INC., a Texas corporation (“Borrower”), and FROST BANK, a Texas state bank (“Lender”):

WHEREAS, Borrower is desirous of obtaining a loan from Lender in the aggregate principal amount of THIRTY ONE MILLION AND NO/100 DOLLARS ($31,000,000.00) which shall be for the purpose of financing the acquisition of stock and other general corporate purposes; and

WHEREAS, Lender is desirous of making such loan to Borrower in the principal amount of THIRTY ONE MILLION AND NO/100 DOLLARS ($31,000,000.00) for the purposes set forth above, but on the terms, conditions and covenants hereafter contained.

NOW, THEREFORE, subject to all terms, conditions and covenants hereinafter set forth and in consideration of the premises and the mutual covenants contained herein, the parties hereto agree as follows:

ARTICLE I

Definitions

1.01Definitions. The terms defined in this Article I (except as otherwise expressly provided in this Agreement) for all purposes shall have the following meanings:

“Advance” shall mean the amounts requested by Borrower from time to time as set forth in Section 2.01 of this Agreement.

“Average Assets” shall mean the average of the assets most recently reported by a bank to its regulatory authorities calculated in accordance with regulatory accounting principles consistently applied.

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“Bank” shall mean CommunityBank of Texas, N.A. whose principal place of business is 5999 Delaware Street, Beaumont, Texas 77706, and all other banks and financial institutions whether chartered by the federal government or any State, which are acquired after the Closing Date by Borrower or its Subsidiaries with proceeds of the Loan evidenced by the Note.

“Business Day” shall mean a day on which Lender is open for transaction of its general banking business.

“Cash Flow Coverage Ratio” shall mean the ratio of (i) the Borrower’s consolidated Net Income after dividends plus Borrower’s unconsolidated interest expense for the preceding four fiscal quarters , to (ii) the scheduled principle and interest payment on the Borrower’s unconsolidated indebtedness (including Trust Preferred) for the preceding four fiscal quarters, all as determined in accordance with GAAP.

“Closing Date” shall mean the date this Agreement is executed by all parties hereto which shall be the day and year first written above unless otherwise indicated. The closing shall take place at such place as the parties shall mutually agree.

“Collateral” shall have the meaning ascribed to it in Section 2.03.

“Equity Capital” shall mean the sum of (i) preferred stock, (ii) common stock (iii) capital surplus, (iv) retained earnings, (v) accumulated other comprehensive income, all as determined by regulatory accounting principles consistently applied.

“Event of Default” means any event specified in Section 6.01 of this Agreement, provided that any requirement in connection with such event for the giving of notice or lapse of time or any other condition has been satisfied.

“GAAP” means generally accepted accounting principles, applied on a consistent basis, as set forth in Opinions of the Accounting Principles Board of the American Institute of Certified Public Accountants and/or in statements of the Financial Accounting Standards Board and/or their respective successors and which are applicable in the circumstances as of the date in question. Accounting principles are applied on a “consistent basis” when the accounting principles observed in a current period are comparable in all material respects to those accounting principles applied in a preceding period.

“Highest Lawful Rate” shall mean the maximum rate of nonusurious interest allowed from time to time by Law. In no event shall Chapter 346 of the Texas Finance Code (which regulates certain revolving loan accounts and revolving tri-party accounts) apply to this Loan. To the extent that Chapter 303 of the Texas Finance Code is applicable to this Loan, the “weekly ceiling” specified in such article is the applicable ceiling; provided that, if any applicable law permits greater interest, the law permitting the greatest interest shall apply.

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“Laws” shall mean all statutes, laws, ordinances, regulations, orders, writs, injunctions, or decrees of the United States, any state or commonwealth, any municipality, or any Tribunal.

“Loan” shall mean the extension of credit to Borrower pursuant to Section 2.01 of this Agreement.

“Loan Documents” shall mean this Agreement, the Note, the Security Instruments, and all instruments or documents executed and delivered pursuant to or in connection with this Agreement and any future amendments hereto or thereto, and all renewals and extensions thereof.

“Net Income” shall mean that amount of income remaining after deducting expenses (including provision for loan and lease losses) and payments of all taxes incurred on said income and after deducting securities transactions, all as calculated in accordance with GAAP.

“Non-Performing Assets” means loans on nonaccrual, loans on which the interest rate has been reduced other than to reflect the then prevailing market interest rates, or reduced pursuant to their expressed terms, loans which have been past due for ninety (90) days or more (specifically excluding all performing bankruptcy mortgages) and one hundred percent (100%) of Other Real Estate.

“Note” shall mean the promissory note evidencing the Loan executed pursuant to Section 2.02 of this Agreement and any promissory note issued in substitution therefore or in renewal or extension or rearrangement thereof.

“Obligations” shall mean the outstanding principal amounts of the Note and interest accrued thereon, and any and all other indebtedness, liabilities and obligations whatsoever of Borrower to Lender under the Note and/or the Security Instruments and all renewals, modifications and extensions thereof, plus interest accruing on any of the foregoing and all attorney fees and costs incurred in the enforcement of any of the foregoing.

“Other Real Estate” shall mean the real property owned by Bank as a result of foreclosure, deeds in lieu of foreclosure, or judicial process, or received as partial payment of a note, specifically excluding real estate occupied by Bank in the conduct of its ordinary course of business.

“Person” shall mean any individual, firm, corporation, association, partnership, joint venture, trust or other entity, or Tribunal.

“Security Instruments” shall mean the Pledge and Security Agreement referred to in Section 2.03 of this Agreement and any other documents securing the Obligations.

“Subsidiary” means any corporation or bank of which more than fifty (50%) of the issued and outstanding securities having ordinary voting power for the election of a majority of directors is

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owned or controlled, directly or indirectly, by Borrower; by Borrower with one or more Subsidiaries; or by just one or more Subsidiaries.

“Tangible Net Worth” means, at any particular time, all amounts which, in conformity with GAAP, would be included as stockholders’ equity on a balance sheet; provided, however, there is excluded therefrom: (i) any amount at which shares of capital stock of such entity (treasury shares) appears as an asset on the balance sheet, (ii) goodwill, including any amounts, however designated, that represent the excess of the purchase price paid for assets or stock over the value assigned thereto, (iii) patents, trademarks, trade names, and copyrights, and (iv) all other assets which are properly classified as intangible assets.

“Taxes” shall mean all taxes, assessments, fees, or other charges from time to time or at any time imposed by any Laws or by any Tribunal.

“Texas Ratio” means the ratio of Non-Performing Assets to Equity Capital plus reserves for loan losses.

“Tribunal” shall mean any state, commonwealth, federal, foreign, territorial, regulatory, or other court or governmental department, commission, board, bureau, agency or instrumentality.

1.02Other Definitional Provisions. All definitions contained in this Agreement are equally applicable to the singular and plural forms of the terms defined. The words “hereof,” “herein,” and “hereunder” and words of similar import referring to this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement. Unless otherwise specified, all Article and Section references pertain to this Agreement. All accounting terms not specifically defined herein shall be construed in accordance with GAAP.

ARTICLE II

Loan, Security and Conditions Precedent

2.01The Loan. Subject to the terms and conditions of this Agreement, Lender agrees to make a revolving line of credit Loan to Borrower in the principal amount of THIRTY ONE MILLION AND NO/100 DOLLARS ($31,000,000.00) which shall be for the purpose of financing the acquisition of stock and other general corporate purposes.

2.02The Note. The obligation of Borrower to pay the Loan shall be evidenced by a promissory note (the “Note”) executed by Borrower and payable to the order of Lender, in the principal amount of $31,000,000.00 bearing interest at the variable rate set forth in the Note. The Borrower shall pay principal and interest in accordance with the terms of the Note, with the maturity date being as set forth in the Note.

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2.03Security for the Loan. To secure full and complete payment and performance of the Obligations, Borrower shall execute and deliver a Pledge and Security Agreement (in form and substance acceptable to Lender) wherein the Borrower shall pledge and grant to Lender a first priority security interest in one hundred percent (100%) of the outstanding shares of common stock of CommunityBank of Texas, N.A. (which, together with all property which may hereafter be delivered to secure the Obligations, being herein called “Collateral”). The Lender shall maintain its security interest in such common stock until the Note is paid in full, regardless of the outstanding principal balance of the Note. Lender shall retain possession of the certificate(s) representing said common stock, together with stock powers executed in blank by Borrower.

2.04Conditions Precedent to Closing. The obligation of Lender to make the Loan shall be subject to the conditions precedent that Lender shall have received on or before the day of the making of the Loan, the following documents, in form and substance satisfactory to Lender:

(a)Note. The Note executed by Borrower.

(b)Security Instruments. The Security Instruments executed by Borrower granting to Lender a security interest in the Collateral.

(c)Stock Certificates, Powers, UCC-1. The original stock certificates pledged as collateral, the executed stock powers and financing statements (if requested by Lender) to evidence the security interest granted in the Security Instruments.

(d)Resolutions. Corporate resolutions of the Board of Directors of Borrower, certified by the Secretary or Assistant Secretary of such corporation, which resolutions authorize the execution, delivery and performance by the corporation of this Agreement and the other Loan Documents. Included in said resolutions or by separate document, the Lender shall receive a certificate of incumbency certified by the Secretary or Assistant Secretary of the corporation certifying the names of each officer authorized to execute this Agreement and the other Loan Documents, together with specimen signatures of such officers.

(e)Articles of Incorporation. Copies of the Articles of Incorporation of Borrower and the Articles of Association of Bank certified to be true and correct by the Secretary of Borrower and cashier of Bank, respectively.

(f)Bylaws. The Bylaws of Borrower and Bank certified to be true and correct by the Secretary of Borrower and cashier of Bank, respectively.

(g)Government Certificates. Certificates of Good Standing and Existence issued by the appropriate government entities for the Borrower and the Bank; and a copy of the Letter of Approval from the Board of Governors of the Federal Reserve Bank approving Borrower’s application as a bank holding company (or such other documentation acceptable to Lender to evidence the Borrower’s status as a bank holding company).

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(h)Opinion of Borrower’s Counsel. Lender shall have received from Borrower’s counsel an opinion satisfactory in form and substance to Lender and its counsel.

(i)Financial Statements. Borrower and its Subsidiaries shall have each delivered to Lender such financial statements as shall have been requested by Lender, in form and substance satisfactory to Lender in its sole discretion.

(j)Fees. Borrower shall pay a $2,500.00 loan processing fee to Lender plus all fees incurred by Lender in connection with the Loan, including without limitation, the Lender’s attorney’s fees.

(k)Additional Papers. Borrower shall have delivered to Lender such other documents, records, instruments, papers, opinions, and reports, as shall have been requested by Lender, to evidence the status or organization or authority of Borrower or to evidence or secure payment of the Obligations, all in form satisfactory to Lender and its counsel.

ARTICLE III

Representations and Warranties

To induce Lender to enter into this Agreement and upon which Lender has relied in entering into this Agreement and consummating the transactions herein described, Borrower represents and warrants to Lender that:

3.01Organization of Borrower. Borrower is a corporation duly organized, validly existing, and in good standing under the laws of the State of Texas; Borrower is duly authorized, qualified under all applicable Laws to conduct its businesses; and Borrower has full power, capacity, authority and legal right to conduct the businesses in which it does now, and propose to, engage; and Borrower has full power, capacity, authority and legal right to execute and deliver and to perform and observe the provisions of this Agreement, and the other Loan Documents, to which it is a party, all of which have been duly authorized and approved by all necessary corporate action. The Bank is a national bank; the Bank is duly authorized and qualified under all applicable Laws to conduct its businesses; and the Bank has full power, capacity, authority and legal right to conduct the businesses in which it does now, and proposes to, engage; and the Bank has full power, capacity, authority and legal right to execute and deliver and to perform and observe the provisions of this Agreement and the other Loan Documents to which it is a party, all of which have been duly authorized and approved by all necessary corporate action.

3.02Litigation. No action, suit or proceeding against or affecting Borrower or any Subsidiary is known to be pending, or to the knowledge of Borrower threatened, in any court or before any governmental agency or department, which, if adversely determined, could result in a

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final judgment or liability of a material amount not fully covered by insurance, or which may result in any material adverse change in the business, or in the condition, financial or otherwise, of Borrower. There are no outstanding judgments against Borrower or any Subsidiary.

3.03Compliance With Other Instruments. To the knowledge of Borrower, (i) there is no default in the performance of any material obligation, covenant, or condition contained in any agreement to which Borrower is a party which has not been waived, (ii) neither Borrower nor any Subsidiary is in material default with respect to any Law of any Tribunal, and (iii) the execution, delivery and performance of the terms of this Agreement, the Note and the other Loan Documents by Borrower will not violate the provisions of any Law applicable to Borrower, Borrower’s By-laws or Articles of Incorporation, or any order or regulation of any governmental authority to which the Borrower is subject will not conflict with or result in a material breach of any of the terms of any agreement or instrument to which Borrower is a party or by which Borrower is bound, or constitute a default thereunder, or result in the creation of a lien, charge, or encumbrance of any nature upon any of Borrower’s properties or assets.

3.04No Default. No Event of Default specified in Article VI has occurred and is continuing.

3.05Corporate Authorization. Borrower’s Board of Directors has duly authorized the execution and delivery of this Agreement and the other Loan Documents to which it is a party and the performance of their respective terms and no consent of the stockholders of Borrower or any other Person is a prerequisite thereto or if a prerequisite thereto, the same has been duly obtained. This Agreement and all other Loan Documents are valid, binding, and enforceable obligations of Borrower in accordance with their respective terms.

3.06Disclosure. Neither this Agreement nor any other document, certificate, Loan Document or statement furnished to Lender by or on behalf of Borrower in connection herewith is known to contain any untrue statement of a material fact or, to the knowledge of Borrower, omits to state a material fact necessary in order to make the statements contained herein and therein not misleading.

3.07Federal Reserve Board Regulations. Borrower is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation G, T, U, or X of the Board of Governors of the Federal Reserve System) and no part of the proceeds of the Loan will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock except as otherwise disclosed in writing to Lender. Neither Borrower nor any agent acting on its behalf has taken or will take any action which might cause Borrower’s execution of this Agreement to violate any regulation of the Board of Governors of the Federal Reserve System or to violate the Securities Act of 1933 or the Securities Exchange Act of 1934, as amended.

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3.08Stock and Stock Agreements. Neither Borrower nor any Subsidiary has any class of stock authorized other than common stock. Further, Borrower has furnished to Lender copies of all buy-sell agreements, stock redemption agreements, voting trust agreements and all other agreements and contracts involving the stock of Borrower and/or each of its Subsidiaries to which Borrower or any Subsidiary is a party and there are not now any agreements or terms of any agreements to which Borrower or any Subsidiary is a party which alter, impair, affect or abrogate the rights of Lender or the Obligations of Borrower under this Agreement or any other Loan Document.

3.09Financial Statements. The consolidated financial statements of Borrower, dated as of December 31, 2013, and furnished to Lender, were prepared in accordance with regulatory accounting principles or GAAP, as indicated upon such statements, and such statements fairly present, as appropriate, the consolidated financial conditions and the results of operations of Borrower as of, and for the portion of the fiscal year ending on, the date or dates thereof. There were no material adverse events or liabilities, direct or indirect, fixed or contingent, of Borrower as of the date or dates of such financial statements and known to Borrower, which are not reflected therein or in the notes thereto. Except for transactions directly related to, or specifically contemplated by, the Loan Documents and transactions heretofore disclosed in writing to Lender, there have been no material adverse changes in the respective financial conditions of Borrower and/or its Subsidiaries from those shown in such financial statements between such date or dates and the date hereof.

3.10Taxes. All federal, state, foreign, and other Tax returns of Borrower and each Subsidiary required to be filed have been filed, and all federal, state, foreign, and Taxes are shown thereon as owing have been paid. Borrower does not know of any pending audit or investigation of Borrower and/or any Subsidiary with any taxing authority.

3.11Title to Collateral. Borrower owns 100% of the stock of the Bank, free of any lien or claim or any right or option on the part of any third person to purchase or otherwise acquire the Collateral or any part thereof, except for the first priority lien granted pursuant to the Loan Documents. The Collateral is not subject to any restriction on transfer or assignment except for compliance with applicable federal and state laws and regulations promulgated thereunder. Borrower has the unrestricted right to pledge the Collateral as contemplated hereby. All of the Collateral has been, and with respect to Collateral delivered after the date hereof, will be duly and validly issued and fully paid and nonassessable.

3.12Use of Loan Proceeds. All loan proceeds or funds furnished by Lender to Borrower pursuant to this Agreement shall be used solely for the purpose specified in Article II of this Agreement.

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ARTICLE IV

Affirmative Covenants

While any part of the Obligations remains unpaid and unless otherwise waived in writing by Lender:

4.01Accounts, Reports and Other Information. Borrower shall maintain, and cause each Subsidiary to maintain, a standard system of accounting in accordance with regulatory accounting principles or GAAP, as applicable, and Borrower shall furnish to Lender the following:

(a)Quarterly Information. As soon as available, but no more than forty-five (45) days after the end of each quarter of Borrower’s fiscal year, (i) as to those Subsidiaries whose stock has been pledged hereunder as Collateral, copies of all FFIEC Call Reports furnished by each such Subsidiary to the appropriate Tribunal; (ii) a copy of the Federal Reserve Board Form Y-9C and Y-9LP; (iii) an officer’s certificate setting forth the information required to establish whether Borrower and its Subsidiaries were in compliance with the financial covenants and ratios set forth in Articles IV and V hereof during the period covered and that signer or signers have reviewed the relevant terms in this Agreement and have made, or caused to be made under their supervision, a review of the transactions of Bank from the beginning of the accounting period covered by the financial statements being delivered therewith to the date of the officer’s certificate and that such review has not disclosed any Event of Default, or material violation or breach in the due observance of any covenant, agreement or provision of this Agreement; (iv) such other information as Lender shall reasonably request.

(b)Annual Information. As soon as available, but no more than one hundred twenty (120) days after the end of each fiscal year of Borrower: (i) an opinion by an independent certified public accountant selected by Borrower, which opinion shall state that said consolidated financial statements have been prepared in accordance with GAAP and that such accountant’s audit of such financial statements has been made in accordance with generally accepted auditing standards and that said financial statements present fairly the consolidated financial condition of Borrower, and Bank and the results of their operations; (ii) a copy of the Federal Reserve Board Form Y-6 Annual Report of Borrower, as filed with the Board of Governors of the Federal Reserve System; and (iii) such other information as Lender may reasonably request.

(c)Other Reports and Information. As soon as available, copies of all other financial and other statements, reports, correspondence, notices and information of Borrower and each Subsidiary as may be requested, in form and substance reasonably satisfactory to Lender. The Borrower shall add Lender to its shareholder mailing list which will allow it to receive copies of correspondence with its shareholders.

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4.02Existence. Borrower and its Subsidiaries shall maintain their respective existence as a corporation and all of its privileges, franchises, agreements, qualifications and rights that are necessary or desirable in the ordinary course of business; and Borrower shall cause each of its Subsidiaries to maintain and preserve their respective good standing with all Tribunals.

4.03Observance of Terms. Borrower shall (i) pay the principal and interest on the Note in accordance with its terms; and (ii) observe, perform, and comply with every covenant, term and condition herein expressed or implied on the part of Borrower to be observed, performed or complied with.

4.04Compliance With Applicable Laws. Borrower and each Subsidiary shall in all material respects comply with the requirements of all applicable Laws of any Tribunal.

4.05Inspection. Upon prior reasonable notice and at the convenience of the Borrower, the Borrower and each Subsidiary shall permit an officer in the Correspondent Banking Department of Lender to visit, review and/or inspect any of its properties and assets at any reasonable time and to examine all books of account, records, reports, examinations and other papers (subject to applicable confidentiality requirements), to make copies therefrom at the expense of Borrower, and to discuss the affairs, finances and accounts of Borrower and each Subsidiary with their respective employees and officers at all such reasonable times and as often as may be reasonably requested.

4.06Change. Borrower shall promptly notify Lender of (i) all litigation affecting Borrower or any Subsidiary which is not (in the reasonable judgment of Borrower) adequately covered by insurance and which could have a material adverse effect on the financial condition or operations of the Borrower; (ii) any other matter which could have a material adverse effect on the financial condition or operations of Borrower or any Subsidiary.

4.07Payment of Taxes. Borrower and its Subsidiaries shall pay all lawful Taxes imposed upon them or upon their income or profits or upon any of their property before the same shall be delinquent; provided, however, that neither Borrower nor any Subsidiary shall be required to pay and discharge any such Taxes (i) so long as the validity thereof shall be contested in good faith by appropriate proceedings diligently pursued and such liable party shall set aside on its books adequate reserves with respect thereto and shall pay any such Taxes before any of its property shall be sold to satisfy any lien which has attached as a security therefore; and (ii) if Lender has been notified of such proceedings.

4.08Insurance. Borrower and each Subsidiary shall keep all property of a character usually insured by Persons engaged in the same or similar businesses, adequately insured by financially sound and reputable insurers, and shall furnish Lender evidence of such insurance immediately upon request in form satisfactory to Lender.

4.09Compliance With ERISA. Borrower and each Subsidiary shall comply, if applicable, in all material respects, with the provisions of the Employee Retirement Income Security

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Act of 1974, as amended, and furnish to Lender, upon Lender’s request, such information concerning any plan of Borrower or Bank subject to said Act as may be reasonably requested. Borrower and each Subsidiary shall notify Lender immediately of any fact or action arising in connection with any plan which might constitute grounds for the termination thereof by the Pension Benefit Guaranty Corporation or for the appointment by the appropriate United States district court of a trustee or administrator for such plan.

4.10Financial Condition. Subject to the provisions of Article V, Borrower shall cause each of its Subsidiaries to maintain the ratios of loans to deposits, loan loss reserves and liquidity at percentages acceptable to all Tribunals having jurisdiction over such Subsidiaries.

4.11Maintenance of Priority of Liens. Borrower and each Subsidiary shall each perform such acts and shall duly authorize, execute, acknowledge, deliver, file, and record such additional assignments, security agreements, and other agreements, documents, instruments, and certificates as Lender may deem reasonably necessary or appropriate in order to perfect and maintain the security interest created in favor of Lender in the Security Instruments.

4.12FDIC Insurance. Borrower shall cause each Subsidiary to maintain federal deposit insurance and to be a member of the Federal Deposit Insurance Corporation.

4.13Notices. Borrower shall promptly notify, and shall cause each Subsidiary to promptly notify, Lender of (i) the occurrence of an Event of Default, or of any event that with notice or lapse of time or both would be an Event of Default, (ii) the commencement of any action, suit, or proceeding against Borrower or any Subsidiary that might in the reasonable judgment of Borrower have a material adverse effect on the business, financial condition, or operations of Borrower or any Subsidiary, and (iii) any other matter that might in the reasonable judgment of Borrower have a material adverse effect on the business, financial condition, or operations of Borrower or any Subsidiary.

ARTICLE V

Negative Covenants

While any part of the Obligations remains unpaid and unless waived in writing by Lender:

5.01Tangible Net Worth. The Borrower shall not permit its Tangible Net Worth to at any time be less than Two Hundred Million and no/100 Dollars ($200,000,000), to be calculated at the end of each fiscal quarter.

5.02Cash Flow Coverage Ratio. The Borrower shall not permit its Cash Flow Coverage Ratio to be less than 1.25 to 1.0, to be calculated at the end of each fiscal quarter.

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5.03Texas Ratio. The Borrower shall not permit its Texas Ratio of the Bank to at any time exceed fifteen percent (15%), to be calculated at the end of each fiscal quarter.

5.04Dividends. Upon the occurrence and during the continuation of an Event of Default the Borrower shall not declare or pay any dividends, make any payment on account of any class of the capital stock of Borrower now or hereafter outstanding, or make any distribution of cash or property to holders of any shares of such stock.

5.05Business. Borrower and each Subsidiary shall not engage, directly or indirectly, in any business other than the businesses permitted by statute and the regulations of the appropriate governmental and regulatory agencies or Tribunals.

5.06Disposition of Assets. Neither Borrower nor any Subsidiary shall sell, pledge, lease, or otherwise dispose of any other assets or investments, except in the ordinary course of business.

5.07Limitation on Debt. Borrower shall not create, incur, assume, become liable in any manner in respect of, or suffer to exist, any debt for borrowed money except debt created under this Agreement. Borrower shall not allow any Subsidiary to, create, incur, assume, become liable in any manner in respect of, or suffer to exist, any debt for borrowed money except:

(a)debt, excluding debt created under this Agreement, not in excess of $500,000 (which amount shall not include any debt acquired by acquisition of another entity) at any one time outstanding;

(b)debt created under this Agreement;

(c)debt secured by a purchase money security interest; and

(d)$50,000,000 of federal funds purchased and advances from the Federal Home Loan Bank, calculated at the end of each fiscal quarter.

5.08Prepayment of Debt. Borrower shall not, and Borrower shall not permit its Subsidiaries to prepay any of their respective material debt, other than the debt created under this Agreement, or incurred in the ordinary course of business before the same becomes due.

5.09Acquisitions, Mergers, and Dissolutions. Except for the transaction(s) described in Section 2.01, Borrower shall not, and Borrower shall not permit any Subsidiary to, directly or indirectly, acquire all or any substantial portion of the property, assets, or stock of, or interest in, any Person, or merge or consolidate with any Person, or dissolve or liquidate except in the ordinary course of business without notifying Lender within thirty (30) days before the closing.

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5.10Issuance of Stock. No Subsidiary shall authorize or issue shares of stock of any class, common or preferred, or any warrant, right or option pertaining to its capital stock or issue any security convertible into capital stock, except for any issued to Borrower by any Subsidiary.

ARTICLE VI

Default

6.01Events of Default. Each of the following shall be deemed an “Event of Default”:

(a)Failure by Borrower to pay or perform any part or component of the Obligations, when due or declared due; or,

(b)Any representation or warranty made or deemed made by Borrower or any other Person in any Loan Documents, or in any certificate or financial or other statement furnished at any time to Lender by or on behalf of Borrower shall be false, misleading or erroneous in any material respect as of the date made, deemed made, or furnished; or,

(c)Failure to observe, perform or comply with any of the covenants, terms, or agreements contained in this Agreement or any other Loan Document; or,

(d)Failure by Borrower or any Subsidiary to pay any of its material indebtedness as the same becomes due or within any applicable grace period (other than indebtedness being actively contested in good faith and for which adequate reserves have been established in accordance with generally accepted accounting principles); or,

(e)Borrower or any Subsidiary shall file a petition for bankruptcy, liquidation or any answer seeking reorganization, rearrangement, readjustment of its debts or for any other relief under any applicable bankruptcy, insolvency, or similar act or law, now or hereafter existing, or any action consenting to, approving of, or acquiescing in, any such petition or proceeding; or the appointment by consent or acquiescence of, a receiver, trustee, liquidator, or custodian for all or a substantial part of its property; or the making of an assignment for the benefit of creditors; or the inability to pay its debts as they mature; or take any corporate action to authorize any of the foregoing; or,

(f)Filing of an involuntary petition against Borrower or any Subsidiary seeking reorganization, rearrangement, readjustment or liquidation of its debts or for any other relief under any applicable bankruptcy, insolvency or other similar act or law, now or hereafter existing, or the involuntary appointment of a receiver, trustee, liquidator or custodian of all or a substantial part of its property, and such involuntary proceeding or appointment remains unvacated, undismissed or unstayed for a period of ninety (90) days; or the issuance of a writ of attachment, execution, sequestration or similar process against any part of its property and

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same remains unbonded, undischarged, or undismissed for a period of thirty (30) days from the date of notice; or,

(g)Final judgment for the payment of money shall be rendered against Borrower or any Subsidiary and the same shall remain undischarged for a period during which execution shall not be effectively stayed; or,

(h)An event occurs which has a material adverse affect on the financial conditions or operation of Borrower or any Subsidiary; or,

(i)A change in control of any Subsidiary (as such or similar term is used in the Financial Institutions Regulatory and Interest Rate Control Act) shall occur, or action to change such control shall be commenced, without the prior written consent of Lender (which consent may be given or withheld in Lender’s sole discretion); or,

(j)This Agreement or any other Loan Document shall be declared null and void or the validity or enforceability thereof shall be contested or challenged by Borrower or any Subsidiary or Borrower shall deny that it has any further liability or obligation under any of the Loan Documents; or,

(k)Receipt by any Subsidiary of a notice from the Federal Deposit Insurance Corporation of intent to terminate status as an insured bank; or,

(l)The filing by any Subsidiary of an application for relief pursuant to section 13(c) of 13(i) of the Federal Deposit Insurance Act, as amended, or similar relief from any Tribunal; or,

(m)The filing by any Subsidiary of an application for capital forbearance from any Tribunal; or,

(n)The filing or notice from any Tribunal of regulatory enforcement action against the Borrower or Bank (including, without limitation, a cease and desist order or memorandum of understanding).

6.02Remedies Upon Default. Upon the occurrence of any Event of Default set forth in Section 6.01, at the option of Lender, the obligation of Lender to extend credit to Borrower pursuant hereto shall immediately terminate and the principal of and interest accrued on the Note if not earlier demanded, shall be immediately and automatically forthwith DEMANDED and due and payable without any notice or demand of any kind, and the same shall be due and payable immediately without any notice, presentment, acceleration, demand, protest, notice of acceleration, notice of intent to accelerate, notice of intent to demand, notice of protest or notice of any kind (except notice required by law which has not been waived herein), all of which are hereby waived. Upon the occurrence

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of any Event of Default, Lender may exercise all rights and remedies available to it in law or in equity, under any Loan Document or otherwise.

ARTICLE VII

Miscellaneous

7.01Notices. Unless otherwise provided herein, all notices, requests, consents and demands shall be in writing and delivered in person or mailed, postage prepaid, certified mail, return receipt requested, addressed as follows:

If intended for Borrower or its Subsidiaries, to:

CBFH, Inc.

5999 Delaware Street

Beaumont, Texas 77706

Attn: Robert R. Franklin, Jr.,

If intended for Lender, to:

FROST BANK

P.O. Box 1600

San Antonio, Texas 78296

Attn: Cliff McCauley

or to such other person or address as either party shall designate to the other from time to time in writing forwarded in like manner. All such notices, requests, consents and demands shall be deemed to have been given or made when delivered in person, or if mailed, when deposited in the mail.

7.02Place of Payment. All sums payable hereunder to Lender shall be paid at Lender’s banking office at P.O. Box 34746, San Antonio, Texas 78265. If any payment falls due on other than a Business Day, then such due date shall be extended to the next succeeding Business Day, and such amount shall be payable in respect to such extension.

7.03Survival of Agreement. All covenants, agreements, representations and warranties made in this Agreement shall survive the execution and delivery of this Agreement in the making of the Loan. All statements contained in any certificate or other instrument delivered by Borrower hereunder shall be deemed to constitute representations and warranties made by Borrower.

7.04No Waiver. No waiver or consent by Lender with respect to any act or omission of Borrower or any Subsidiary on one occasion shall constitute a waiver or consent with respect to any other act or omission by Borrower or any Subsidiary on the same or any other occasion, and no failure on the part of Lender to exercise and no delay in exercising any right hereunder shall operate

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as a waiver thereof, nor shall any single or partial exercise by Lender of any right hereunder preclude any other or further right of exercise thereof or the exercise of any other right. The rights and remedies provided for in this Agreement and the other Loan Documents are cumulative and not exclusive of any rights and remedies provided by Law.

7.05Accounting Terms. All accounting and financial terms used herein, and the compliance with each covenant herein which relates to financial matters, shall be determined in accordance with regulatory accounting principles or GAAP.

7.06Lender Not In Control. None of the covenants or other provisions contained in the Agreement shall, or shall be deemed to, give Lender the right or power to exercise control over the affairs and/or management of Borrower or any Subsidiary, the power of Lender being limited to those rights generally given to Lenders; provided that, if Lender becomes the owner of any stock or other equity interest in Borrower or any Subsidiary whether through foreclosure or otherwise, Lender shall be entitled to exercise such legal rights as it may have by being an owner of such stock, or other equity interest in Borrower or any Subsidiary.

7.07Joint Venture, Partnership, Etc. None of the covenants or other provisions contained in this Agreement shall, or shall be deemed to, constitute or create a joint venture, partnership or any other association, affiliation, or entity between Borrower or any Subsidiary and Lender.

7.08Successors and Assigns. All covenants and agreements contained in this Agreement and all other Loan Documents shall bind and inure to the benefit of the respective successors and assigns of the parties hereto, except that neither Borrower nor any Subsidiary may assign its rights herein, in whole or in part.

7.09Expenses. Borrower agrees to reimburse Lender for its out-of-pocket expenses, including reasonable attorneys’ fees, in connection with the negotiation, preparation, administration and enforcement of this Agreement or any of the Loan Documents, making the Loan hereunder, and in connection with amendments, consents and waivers hereunder.

7.10Governing Law. THIS AGREEMENT, THE NOTE, AND ALL OTHER LOAN DOCUMENTS SHALL BE DEEMED CONTRACTS UNDER THE LAWS OF THE STATE OF TEXAS AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS, EXCEPT TO THE EXTENT THAT FEDERAL LAWS MAY APPLY. THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE PERFORMED IN SAN ANTONIO, BEXAR COUNTY, TEXAS.

7.11Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future Laws effective during the term of this Agreement, such provision shall be fully severable; this Agreement shall be construed and enforced as if such illegal,

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invalid and unenforceable provision had never comprised a part of this Agreement; and remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement.

7.12Modification or Waiver. No modification or waiver of any provision of this Agreement, the Note, or any Loan Documents shall be effective unless such modification or waiver shall be in writing and executed by a duly authorized officer of Lender.

7.13Right of Setoff. Nothing in this Agreement shall be deemed a waiver of Lender’s right of Lender’s banker’s lien or setoff.

7.14Release. Lender will not be liable to Borrower for any claim arising from or relating to any of the Loan Documents or any transactions contemplated thereby except upon proof of Lender’s gross negligence or willful misconduct or willful breach of its agreements.

7.15Waiver of DTPA. Neither the Borrower nor its Subsidiary is in a significantly disparate bargaining position and they have both been represented by legal counsel in this transaction. The Borrower and its Subsidiaries hereby waive the applicability of the Texas Deceptive Trade Practices Act (other than §17.555) to the transaction and any and all rights or remedies that may be available to the Borrower or any Subsidiary in connection with this transaction.

7.16Counterparts, Faxes. This Agreement may be executed simultaneously in multiple counterparts, all of which together shall constitute one and the same instrument. If any Loan Document is transmitted by facsimile machine (“fax”), it shall be treated for all purposes as an original document. Additionally, the signature of any party on this document transmitted by way of fax shall be considered for all purposes as an original document and shall have the same binding effect as an original document.

7.17Headings. The headings, captions, and arrangements used in this Agreement are for convenience only and shall not affect the interpretation of this Agreement.

7.18Maximum Interest Rate. No provision of this Agreement or of the Note shall require the payment or the collection of interest in excess of the maximum amount permitted by applicable law. If any excess of interest in such respect is hereby provided for, or shall be adjudicated to be so provided, in the Note or otherwise in connection with this loan transaction, the provisions of this Section 7.18 shall govern and prevail and Borrower shall not be obligated to pay the excess amount of such interest or any other excess sum paid for use, forbearance, or detention of sums loaned pursuant hereto. In the event Lender ever receives, collects, or applies as interest any such sum, such amount which would be in excess of the maximum amount permitted by applicable law shall be applied as a payment and reduction of the principal of the indebtedness evidenced by the Note; and, if the principal of the Note has been paid in full, any remaining excess shall forthwith be paid to Borrower.

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7.19Assignment, Participation, or Pledge by Lender. Lender may from time to time, without notice to Borrower: (i) pledge or encumber or assign to any one or more Persons (including, but not limited to, one or more of Lender’s affiliates, subsidiaries, or subsidiaries of Lender’s affiliates) all of Lender’s right, title and interest in and to this Agreement, the Loan Documents and/or the collateral securing the Loan; or (ii) sell, to any one or more Persons, a participation or joint venture interest in all or any part of Lender’s right, title, and interest in and to this Agreement, the Loan Documents and/or such collateral; and Borrower hereby expressly consents to any such future transaction. Each participant or joint venturer shall be entitled to receive all information regarding the creditworthiness of Borrower, including, without limitation, all information required to be disclosed to a participant or joint venturer pursuant to any Law of any Tribunal.

7.20Patriot Act. All capitalized words and phrases and all defined terms used in the USA Patriot Act of 2001, 107 Public Law 56 (October 26, 2001) (the “Patriot Act”) and in other statutes and all orders, rules and regulations of the United States government and its various executive department, agencies and offices related to the subject matter of the Patriot Act, including, but not limited to, Executive Order 13224 effective September 24, 2001, are hereinafter collectively referred to as the “Patriot Rules” and are incorporated into this Agreement. Borrower represents and warrants to Lender that neither it nor any of its principals, shareholders, members, partners, or affiliates, as applicable, is a person named as a Specially Designated National and Blocked Person (as defined in Presidential Executive Order 13224) and that it is not acting, directly or indirectly, for or on behalf of any such person. Borrower further represents and warrants to Lender that Borrower and its principals, shareholders, members, partners, or affiliates, as applicable, are not, directly or indirectly, engaged in, nor facilitating, the transactions contemplated by this Agreement on behalf of any person named as a Specially Designated National and Blocked Person. Borrower hereby agrees to defend, indemnify and hold harmless Lender from and against any and all claims, damages, losses, risks, liabilities, and expenses (including reasonable attorneys’ fees and costs) arising from or related to any breach of the foregoing representations and warranties

7.21ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE AGREEMENT, UNDERSTANDING, REPRESENTATIONS AND WARRANTIES OF THE PARTIES HERETO AND SUPERSEDE ALL PRIOR AGREEMENTS, ARRANGEMENTS AND UNDERSTANDINGS BETWEEN THE PARTIES. THERE ARE NO ORAL AGREEMENTS BETWEEN THE PARTIES. SHOULD A CONFLICT IN ANY TERMS, CONDITIONS OR COVENANTS EXIST BETWEEN THIS AGREEMENT AND ANY OF THE LOAN DOCUMENTS, THIS AGREEMENT SHALL BE CONTROLLING.

[Signature Page to Follow]

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IN WITNESS HEREOF, Borrower and Lender, by and through their duly authorized officers, have caused this Agreement to be executed the day and year first above written.

BORROWER:	CBFH, INC.
	By:	/s/ Robert R. Franklin, Jr.,
		Robert R. Franklin, Jr.,
		Chief Executive Officer
LENDER:	FROST BANK
	By:	/s/ Cliff McCauley
		Cliff McCauley
		Executive Vice President

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EX-10.2

Exhibit 10.2

PROMISSORY NOTE

$31,000,000.00 February 1, 2015

For value received, CBFH, INC., a Texas corporation (“Borrower”, whether one or more) does hereby promise to pay to the order of FROST BANK, a Texas state bank (“Lender”), at P.O. Box 34746, San Antonio, Texas 78265, or at such other address as Lender shall from time to time specify in writing, in lawful money of the United States of America, the sum of THIRTY ONE MILLION AND NO/100 DOLLARS ($31,000,000.00), or so much thereof as from time to time may be disbursed by Lender to Borrower under the terms of that certain Loan Agreement dated of even date herewith between Borrower and Lender (the “Loan Agreement”), and be outstanding, together with interest from date hereof on the principal balance outstanding from time to time as hereinafter provided. Interest shall be computed on a per annum basis of a year of 360 days and for the actual number of days elapsed, unless such calculation would result in a rate greater than the highest rate permitted by applicable law, in which case interest shall be computed on a per annum basis of a year of 365 days or 366 days in a leap year, as the case may be.

1.Payment Terms. This Note shall be due and payable in thirty-two (32) quarterly payments, each being due and payable on the first day of February, May, August, and November of each year commencing May 1, 2015, with the first four (4) installments (through February 1, 2016) each in the amount of all accrued and unpaid interest and the fifth through thirty-first installments (May 1, 2016 through November 1, 2022) in the amount necessary to amortize the unpaid principal balance of this Note as of February 1, 2016 over a period of seven years from February 1, 2016 (the “Amortization Period) at the interest rate set forth in Section 3 below, with the thirty-second and final installment in the amount of all unpaid principal plus all accrued and unpaid interest being due and payable on February 1, 2023. It is intended by Lender and Borrower that the quarterly payments after February 1, 2016 shall always be sufficient to pay all accrued interest and some principal on this Note. Because of possible interest rate changes from time to time that could result in negative amortization of the principal balance hereof, and to maintain the present amortization schedule on this Note, Lender shall have the option, in its sole discretion, to adjust the payment amount on February 1st of each year during the term hereof, beginning February 1, 2017 to an amount satisfactory, in Lender’s sole discretion, to cover (i) all accrued, unpaid interest hereon, (ii) the principal reduction required to fully amortize the unpaid principal balance hereof in equal quarterly payments over the then remaining portion of the Amortization Period, and (iii) all interest anticipated to accrue on this Note during the one-year period following a payment adjustment. Lender may choose not to change the payments on this Note in any year throughout the term hereof. Interest shall be calculated on the unpaid principal balance each day principal is outstanding and all payments made credited to any collection costs and late charges, to the discharge of the interest accrued and to the reduction of the principal, in such order as Lender shall determine.

2.Late Charge. If a payment is made more than 10 days after it is due, Borrower will be charged, in addition to interest, a delinquency charge of (i) 5% of the unpaid portion of the regularly scheduled payment, or (ii) $250.00, whichever is less. Additionally, upon maturity of this Note, if the outstanding principal balance (plus all accrued but unpaid interest) is not paid within 10 days of the maturity date, Borrower will be charged a delinquency charge of (i) 5% of the sum of the

outstanding principal balance (plus all accrued but unpaid interest), or (ii) $250.00, whichever is less. Borrower agrees with Lender that the charges set forth herein are reasonable compensation to Lender for the handling of such late payments.

3.Interest Rate. Interest on the outstanding and unpaid principal balance hereof shall be computed at a per annum rate equal to the lesser of (a) a rate equal to the Prime Rate of Lender, with said rate to be adjusted to reflect any change in said Prime Rate at the time of any such change or (b) the highest rate permitted by applicable law, but in no event shall interest contracted for, charged or received hereunder plus any other charges in connection herewith which constitute interest exceed the maximum interest permitted by applicable law, said rate to be effective prior to maturity (however such maturity is brought about). The “Prime Rate” shall mean the prime rate of interest charged by Lender as established from time to time. The Prime Rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer.

4.Default Rate. For so long as any event of default exists under this Note or under any of the other Loan Documents (as defined herein), regardless of whether or not there has been an acceleration of the indebtedness evidenced by this Note, and at all times after the maturity of the indebtedness evidenced by this Note (whether by acceleration or otherwise), and in addition to all other rights and remedies of Lender hereunder, interest shall accrue at the rate stated above plus five percent (5%) per annum, but in no event in excess of the highest rate permitted by applicable law, and such accrued interest shall be immediately due and payable. Borrower acknowledges that it would be extremely difficult or impracticable to determine Lender’s actual damages resulting from any event of default, and such accrued interest is a reasonable estimate of those damages and does not constitute a penalty.

5.Revolving Line of Credit. Prior to February 1, 2016, Borrower may request advances and make payments hereunder from time to time, provided that it is understood and agreed that the aggregate principal amount outstanding from time to time hereunder shall not at any time exceed $31,000,000.00. The unpaid balance of this Note shall increase and decrease with each new advance or payment hereunder, as the case may be. This Note shall not be deemed terminated or canceled prior to the date of its maturity, although the entire principal balance hereof may from time to time be paid in full. Prior to February 1, 2016, Borrower may borrow, repay and re-borrow hereunder. All payments and prepayments of principal or interest on this Note shall be made in lawful money of the United States of America in immediately available funds, at the address of Lender indicated above, or such other place as the holder of this Note shall designate in writing to Borrower. If any payment of principal or interest on this Note shall become due on a day which is not a Business Day (as hereinafter defined), such payment shall be made on the next succeeding Business Day and any such extension of time shall be included in computing interest in connection with such payment. As used herein, the term “Business Day” shall mean any day other than a Saturday, Sunday or any other day on which commercial banks in the State of Texas are authorized to close or are in fact closed. The books and records of Lender shall be prima facie evidence of all outstanding principal of and accrued and unpaid interest on this Note. On February 1, 2016 this Note shall convert to a term loan and the unpaid principal balance on that date shall be repaid in quarterly installments as provided in paragraph 1 above.

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6.Prepayment. Borrower reserves the right to prepay, prior to maturity, all or any part of the principal of this Note without penalty. Any prepayments shall be applied first to accrued interest and then to principal. Borrower will provide written notice to the holder of this Note of any such prepayment of all or any part of the principal at the time thereof. All payments and prepayments of principal or interest on this Note shall be made in lawful money of the United States of America in immediately available funds, at the address of Lender indicated above, or such other place as the holder of this Note shall designate in writing to Borrower. All partial prepayments of principal shall be applied to the last installments payable in their inverse order of maturity.

7.Default. It is expressly provided that upon default in the punctual payment of any indebtedness evidenced by this Note or any part hereof, as the same shall become due and payable, or upon the occurrence of an event of default specified in any of the other Loan Documents (as defined herein), the holder of this Note may, at its option, without further notice or demand, (i) declare the outstanding principal balance of and accrued but unpaid interest on this Note at once due and payable, (ii) refuse to advance any additional amounts under this Note, (iii) foreclose all liens securing payment hereof, (iv) pursue any and all other rights, remedies and recourses available to the holder hereof, including but not limited to any such rights, remedies or recourses under the Loan Documents, at law or in equity, or (v) pursue any combination of the foregoing; and in the event default is made in the prompt payment of this Note when due or declared due, and the same is placed in the hands of an attorney for collection, or suit is brought on same, or the same is collected through probate, bankruptcy or other judicial proceedings, then the Borrower agrees and promises to pay all costs of collection, including reasonable attorney’s fees.

8.No Usury Intended; Usury Savings Clause. In no event shall interest contracted for, charged or received hereunder, plus any other charges in connection herewith which constitute interest, exceed the maximum interest permitted by applicable law. The amounts of such interest or other charges previously paid to the holder of the Note in excess of the amounts permitted by applicable law shall be applied by the holder of the Note to reduce the principal of the indebtedness evidenced by the Note, or, at the option of the holder of the Note, be refunded. To the extent permitted by applicable law, determination of the legal maximum amount of interest shall at all times be made by amortizing, prorating, allocating and spreading in equal parts during the period of the full stated term of the loan and indebtedness, all interest at any time contracted for, charged or received from the Borrower hereof in connection with the loan and indebtedness evidenced hereby, so that the actual rate of interest on account of such indebtedness is uniform throughout the term hereof.

9.Security. This Note has been executed and delivered pursuant the Loan Agreement, and is secured by, inter alia, the following:

(a)a Pledge and Security Agreement dated of even date herewith, by and between Borrower and Lender, covering certain collateral as more particularly described therein.

This Note, the Loan Agreement and all other documents evidencing, securing, governing, guaranteeing and/or pertaining to this Note, including but not limited to those documents described above, are collectively referred to as the “Loan Documents.” The holder of this Note is entitled to the benefits and security provided in the Loan Documents.

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10.Joint and Several Liability; Waiver. Each maker, signer, surety and endorser hereof, as well as all heirs, successors and legal representatives of said parties, shall be directly and primarily, jointly and severally, liable for the payment of all indebtedness hereunder. Lender may release or modify the obligations of any of the foregoing persons or entities, or guarantors hereof, in connection with this Note without affecting the obligations of the others. All such persons or entities expressly waive presentment and demand for payment, notice of default, notice of intent to accelerate maturity, notice of acceleration of maturity, protest, notice of protest, notice of dishonor, and all other notices and demands for which waiver is not prohibited by law, and diligence in the collection hereof; and agree to all renewals, extensions, indulgences, partial payments, releases or exchanges of collateral, or taking of additional collateral, with or without notice, before or after maturity. No delay or omission of Lender in exercising any right hereunder shall be a waiver of such right or any other right under this Note.

11.Texas Finance Code. In no event shall Chapter 346 of the Texas Finance Code (which regulates certain revolving loan accounts and revolving tri-party accounts) apply to this Note. To the extent that Chapter 303 of the Texas Finance Code is applicable to this Note, the “weekly ceiling” specified in such article is the applicable ceiling; provided that, if any applicable law permits greater interest, the law permitting the greatest interest shall apply.

12.Governing Law, Venue. This Note is being executed and delivered, and is intended to be performed in the State of Texas. Except to the extent that the laws of the United States may apply to the terms hereof, the substantive laws of the State of Texas shall govern the validity, construction, enforcement and interpretation of this Note. In the event of a dispute involving this Note or any other instruments executed in connection herewith, the undersigned irrevocably agrees that venue for such dispute shall lie in any court of competent jurisdiction in Bexar County, Texas.

13.Purpose of Loan. Borrower agrees that no advances under this Note shall be used for personal, family or household purposes, and that all advances hereunder shall be used solely for business, commercial, investment, or other similar purposes.

14.Captions. The captions in this Note are inserted for convenience only and are not to be used to limit the terms herein.

BORROWER:

CBFH, Inc., a Texas corporation
By:	/s/ Robert R. Franklin, Jr.,
	Robert R. Franklin, Jr.,
	Chief Executive Officer

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EX-10.3

Exhibit 10.3

PLEDGE AND SECURITY AGREEMENT

Borrower:	CBFH, Inc.	Lender/Secured Party: Frost Bank
Address:	5999 Delaware Street	Address:	P.O. Box 1600
	Beaumont, TX 77706		San Antonio, TX 78296

THIS PLEDGE AND SECURITY AGREEMENT (“Agreement”) is dated February 1, 2015, by and between Borrower and Lender (“Secured Party”).

1.Definitions. As used in this Agreement, the following terms shall have the meanings indicated below:

(a)The term “Code” shall mean the Uniform Commercial Code as in effect in the State of Texas or of any other state having jurisdiction with respect to any of the rights and remedies of Secured Party on the date of this Agreement or as it may hereafter be amended from time to time

(b)The term “Collateral” shall mean all personal property of Grantor specifically described on Schedule A attached hereto and made a part hereof. The term Collateral, as used herein, shall also include (i) all certificates, instruments and/or other documents evidencing the foregoing, (ii) all renewals, replacements and substitutions of all of the foregoing, (iii) all Additional Property (as hereinafter defined), and (iv) all PRODUCTS and PROCEEDS of all of the foregoing. The designation of proceeds does not authorize Grantor to sell, transfer or otherwise convey any of the foregoing property. The delivery at any time by Grantor to Secured Party of any property as a pledge to secure payment or performance of any indebtedness or obligation whatsoever shall also constitute a pledge of such property as Collateral hereunder.

(c)The term “Grantor” shall mean Borrower, a Texas corporation, whose organization number is 800765321 and who is organized in the State of Texas.

(d)The term “Indebtedness” shall mean (i) all indebtedness, obligations and liabilities of Borrower to Secured Party of any kind or character, now existing or hereafter arising, whether direct, indirect, related, unrelated, fixed, contingent, liquidated, unliquidated, joint, several or joint and several, and regardless of whether such indebtedness, obligations and liabilities may, prior to their acquisition by Secured Party, be or have been payable to or in favor of a third party and subsequently acquired by Secured Party (it being contemplated that Secured Party may make such acquisitions from third parties), including without limitation all indebtedness, obligations and liabilities of Borrower to Secured Party now existing or hereafter arising by note, draft, acceptance, guaranty, endorsement, letter of credit, assignment, purchase, overdraft, discount, indemnity agreement, Interest Rate

Protection Agreement (as hereafter defined), or otherwise, including, without limitation that one certain promissory note (“Note”) dated of even date herewith, in the original principal amount of $31,000,000.00 executed by Borrower and payable to the order of Secured Party, (ii) all accrued but unpaid interest on any of the indebtedness described in (i) above, (iii) all obligations of Borrower to Secured Party under any documents evidencing, securing, governing and/or pertaining to all or any part of the indebtedness described in (i) and (ii) above, (iv) all costs and expenses incurred by Secured Party in connection with the collection and administration of all or any part of the indebtedness and obligations described in (i), (ii) and (iii) above or the protection or preservation of, or realization upon, the collateral securing all or any part of such indebtedness and obligations, including without limitation all reasonable attorneys’ fees, and (v) all renewals, extensions, modifications and rearrangements of the indebtedness and obligations described in (i), (ii), (iii) and (iv) above.

(e)The term “Interest Rate Protection Agreement” shall mean any interest rate swap agreement, interest rate exchange agreement, currency exchange agreement, foreign exchange agreement, interest rate and currency exchange agreement, forward rate agreement, rate floor agreement, interest rate protection agreement, interest rate cap agreement, rate collar agreement, any option agreement respecting the foregoing, International Swaps and Derivatives Association, Inc. (ISDA) Master Agreement, or any similar agreement or arrangement and any schedule, confirmation, exhibit, document or instrument evidencing any interest in a transaction covered by any such agreement, now existing or hereafter entered into by Borrower and Secured Party or an affiliate of Secured Party in connection with any Indebtedness to hedge the risk of variable interest rate volatility or fluctuations of interest rates, as any such agreement or arrangement may be modified, supplemented, amended or revised and in effect from time to time.

(f)The term “Loan Documents” shall mean all instruments and documents evidencing, securing, governing, guaranteeing and/or pertaining to the Indebtedness.

(g)The term “Margin Stock” shall mean margin stock as defined in Section 221.3(v) of Regulation U, promulgated by the Board of Governers of the Federal Reserve System, 12 C.F.R. part 221, as amended.

(h)The term “Obligated Party” shall mean any party other than Borrower who secures, guarantees and/or is otherwise obligated to pay all or any portion of the Indebtedness, including Grantor, if different from Borrower.

All words and phrases used herein which are expressly defined in Section 1.201, Chapter 8 or Chapter 9 of the Code shall have the meaning provided for therein. Other words and phrases defined elsewhere in the Code shall have the meaning specified therein except to the extent such meaning is inconsistent with a definition in Section 1.201, Chapter 8 or Chapter 9 of the Code.

2.Security Interest. As security for the Indebtedness, Grantor, for value received, hereby grants to Secured Party a continuing security interest in the Collateral.

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3.Additional Property. Collateral shall also include the following property (collectively, the “Additional Property”) which Grantor becomes entitled to receive or shall receive in connection with any other Collateral: (a) any stock certificate, including without limitation, any certificate representing a stock dividend or any certificate in connection with any recapitalization, reclassification, merger, consolidation, conversion, sale of assets, combination of shares, stock split or spin-off; (b) any option, warrant, subscription or right, whether as an addition to or in substitution of any other Collateral; (c) any dividends or distributions of any kind whatsoever, whether distributable in cash, stock or other property; (d) any interest, premium or principal payments; and (e) any conversion or redemption proceeds; provided, however, that until the occurrence of an Event of Default (as hereinafter defined), Grantor shall be entitled to all cash dividends and all interest paid on the Collateral (except interest paid on any certificate of deposit pledged hereunder) free of the security interest created under this Agreement. All Additional Property received by Grantor shall be received in trust for the benefit of Secured Party. All Additional Property and all certificates or other written instruments or documents evidencing and/or representing the Additional Property that is received by Grantor, together with such instruments of transfer as Secured Party may request, shall immediately be delivered to or deposited with Secured Party and held by Secured Party as Collateral under the terms of this Agreement. If the Additional Property received by Grantor shall be shares of stock or other securities, such shares of stock or other securities shall be duly endorsed in blank or accompanied by proper instruments of transfer and assignment duly executed in blank with, if requested by Secured Party, signatures guaranteed by a bank or member firm of the New York Stock Exchange, all in form and substance satisfactory to Secured Party. Secured Party shall be deemed to have possession of any Collateral in transit to Secured Party or its agent.

4.Voting Rights. As long as no Event of Default shall have occurred hereunder, any voting rights incident to any stock or other securities pledged as Collateral may be exercised by Grantor; provided, however, that Grantor will not exercise, or cause to be exercised, any such voting rights, without the prior written consent of Secured Party, if the direct or indirect effect of such vote will result in an Event of Default hereunder.

5.Maintenance of Collateral. Other than the exercise of reasonable care to assure the safe custody of any Collateral in Secured Party’s possession from time to time, Secured Party does not have any obligation, duty or responsibility with respect to the Collateral. Without limiting the generality of the foregoing, Secured Party shall not have any obligation, duty or responsibility to do any of the following: (a) ascertain any maturities, calls, conversions, exchanges, offers, tenders or similar matters relating to the Collateral or informing Grantor with respect to any such matters; (b) fix, preserve or exercise any right, privilege or option (whether conversion, redemption or otherwise) with respect to the Collateral unless (i) Grantor makes written demand to Secured Party to do so, (ii) such written demand is received by Secured Party in sufficient time to permit Secured Party to take the action demanded in the ordinary course of its business, and (iii) Grantor provides additional collateral, acceptable to Secured Party in its sole discretion; (c) collect any amounts payable in respect of the Collateral (Secured Party being liable to account to Grantor only for what Secured Party may actually receive or collect thereon); (d) sell all or any portion of the Collateral to avoid market loss; (e) sell all or any portion of the Collateral unless and until (i) Grantor makes

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written demand upon Secured Party to sell the Collateral, and (ii) Grantor provides additional collateral, acceptable to Secured Party in its sole discretion; or (f) hold the Collateral for or on behalf of any party other than Grantor.

6.Representations and Warranties. Grantor hereby represents and warrants the following to Secured Party:

(a)Authority. The execution, delivery and performance of this Agreement and all of the other Loan Documents by Grantor have been duly authorized by all necessary corporate action of Grantor, to the extent Grantor is a corporation, by all necessary partnership action, to the extent Grantor is a partnership, by all necessary company action of Grantor, to the extent Grantor is a limited liability company, by the provisions of the trust documents, to the extent Grantor is a trust.

(b)Accuracy of Information. All information heretofore, herein or hereafter supplied to Secured Party by or on behalf of Grantor with respect to the Collateral is true and correct. The exact legal name and organization number of Grantor is correctly shown above.

(c)Enforceability. This Agreement and the other Loan Documents constitute legal, valid and binding obligations of Grantor, enforceable in accordance with their respective terms, except as limited by bankruptcy, insolvency or similar laws of general application relating to the enforcement of creditors’ rights and except to the extent specific remedies may generally be limited by equitable principles.

(d)Ownership and Liens. Grantor has good and marketable title to the Collateral free and clear of all liens, security interests, encumbrances or adverse claims, except for the security interest created by this Agreement. No dispute, right of setoff, counterclaim or defense exists with respect to all or any part of the Collateral. Grantor has not executed any other security agreement currently affecting the Collateral and no financing statement or other instrument similar in effect covering all or any part of the Collateral is on file in any recording office except as may have been executed or filed in favor of Secured Party.

(e)No Conflicts or Consents. Neither the ownership, the intended use of the Collateral by Grantor, the grant of the security interest by Grantor to Secured Party herein nor the exercise by Secured Party of its rights or remedies hereunder, will (i) conflict with any provision of (A) any domestic or foreign law, statute, rule or regulation, (B) the articles or certificate of incorporation, certificate of organization, charter, bylaws, partnership agreement or trust agreement, as the case may be, of Grantor, or (C) any agreement, judgment, license, order or permit applicable to or binding upon Grantor or otherwise affecting the Collateral, or (ii) result in or require the creation of any lien, charge or encumbrance upon any assets or properties of Grantor or of any person except as may be expressly contemplated in the Loan Documents. Except as expressly contemplated in the Loan Documents, no consent, approval, authorization or order of, and no notice to or filing with, any court, governmental authority or third party is required in connection with the grant

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by Grantor of the security interest herein or the exercise by Secured Party of its rights and remedies hereunder.

(f)Security Interest. Grantor has and will have at all times full right, power and authority to grant a security interest in the Collateral to Secured Party in the manner provided herein, free and clear of any lien, security interest or other charge or encumbrance. This Agreement creates a legal, valid and binding security interest in favor of Secured Party in the Collateral.

(g)Location/Identity. Grantor’s principal residence or place of business and chief executive office (as those terms are used in the Code), as the case may be is located at the address set forth herein. Except as specified elsewhere herein, all Collateral and records concerning the Collateral shall be kept at such address. Grantor’s organizational structure, state of organization, and organizational number (the “Organizational Information”) are as set forth herein. Except as specified herein, the Organizational Information shall not change.

(h)Solvency of Grantor. As of the date hereof, and after giving effect to this Agreement and the completion of all other transactions contemplated by Grantor at the time of the execution of this Agreement, (i) Grantor is and will be solvent, (ii) the fair saleable value of Grantor’s assets exceeds and will continue to exceed Grantor’s liabilities (both fixed and contingent), (iii) Grantor is paying and will continue to be able to pay its debts as they mature, and (iv) if Grantor is not an individual, Grantor has and will have sufficient capital to carry on Grantor’s businesses and all businesses in which Grantor is about to engage.

(i)Securities. Any certificates evidencing securities pledged as Collateral are valid and genuine and have not been altered. All securities pledged as Collateral have been duly authorized and validly issued, are fully paid and non-assessable, and were not issued in violation of the preemptive rights of any party or of any agreement by which Grantor or the issuer thereof is bound. No restrictions or conditions exist with respect to the transfer or voting of any securities pledged as Collateral, except as has been disclosed to Secured Party in writing. To the best of Grantor’s knowledge, no issuer of such securities (other than securities of a class which are publicly traded) has any outstanding stock rights, rights to subscribe, options, warrants or convertible securities outstanding or any other rights outstanding entitling any party to have issued to such party capital stock of such issuer, except as has been disclosed to Secured Party in writing.

(j)Margin Regulations: Investment Company Act; Public Utility Holding Company Act.

(i) Grantor is not engaged and will not engage, principally or as one of its important activities, in the business of purchasing or carrying Margin Stock or extending credit for the purpose of purchasing or carrying Margin Stock.

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(ii) None of Grantor, any person controlling Grantor, or any subsidiary (i) is a “holding company,” or a “subsidiary company” of a “holding company,” or an “affiliate” of a “holding company” or of a “subsidiary company” of a “holding company,” within the meaning of the Public Utility Holding Company Act of 1935, or (ii) is or is required to be registered as an “investment company” under the Investment Company Act of 1940.

(k)Patriot Act. All capitalized words and phrases and all defined terms used in the USA Patriot Act of 2001, 107 Public Law 56 (October 26, 2001) (the “Patriot Act”) and in other statutes and all orders, rules and regulations of the United States government and its various executive department, agencies and offices related to the subject matter of the Patriot Act, including, but not limited to, Executive Order 13224 effective September 24, 2001, are hereinafter collectively referred to as the “Patriot Rules” and are incorporated into this Agreement. Borrower (and Grantor, if different from Borrower) represents and warrants to Lender that neither it nor any of its principals, shareholders, members, partners, or affiliates, as applicable, is a person named as a Specially Designated National and Blocked Person (as defined in Presidential Executive Order 13224) and that it is not acting, directly or indirectly, for or on behalf of any such person. Borrower (and Grantor, if different from Borrower) further represents and warrants to Secured Party that Borrower and its principals, shareholders, members, partners, or affiliates, as applicable, are not, directly or indirectly, engaged in, nor facilitating, the transactions contemplated by this Agreement on behalf of any person named as a Specially Designated National and Blocked Person. Borrower (and Grantor, if different from Borrower) hereby agrees to defend, indemnify and hold harmless Secured Party from and against any and all claims, damages, losses, risks, liabilities, and expenses (including reasonable attorneys’ fees and costs) arising from or related to any breach of the foregoing representations and warranties.

7.Affirmative Covenants. Grantor will comply with the covenants contained in this Section at all times during the period of time this Agreement is effective unless Secured Party shall otherwise consent in writing.

(a)Ownership and Liens. Grantor will maintain good and marketable title to all Collateral free and clear of all liens, security interests, encumbrances or adverse claims, except for the security interest created by this Agreement and the security interests and other encumbrances expressly permitted by the other Loan Documents. Grantor will not permit any dispute, right of setoff, counterclaim or defense to exist with respect to all or any part of the Collateral. Grantor will cause any financing statement or other security instrument with respect to the Collateral to be terminated, except as may exist or as may have been filed in favor of Secured Party. Grantor hereby irrevocably appoints Secured Party as Grantor’s attorney-in-fact, such power of attorney being coupled with an interest, with full authority in the place and stead of Grantor and in the name of Grantor or otherwise, for the purpose of terminating any financing statements currently filed with respect to the Collateral. Grantor will defend at its expense Secured Party’s right, title and security interest in and to the Collateral against the claims of any third party.

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(b)Inspection of Books and Records. Grantor will keep adequate records concerning the Collateral and will permit Secured Party and all representatives and agents appointed by Secured Party to inspect Grantor’s books and records of or relating to the Collateral at any time during normal business hours, to make and take away photocopies, photographs and printouts thereof and to write down and record any such information.

(c)Adverse Claim. Grantor covenants and agrees to promptly notify Secured Party of any claim, action or proceeding affecting title to the Collateral, or any part thereof, or the security interest created hereunder and, at Grantor’s expense, defend Secured Party’s security interest in the Collateral against the claims of any third party. Grantor also covenants and agrees to promptly deliver to Secured Party a copy of all written notices received by Grantor with respect to the Collateral, including without limitation, notices received from the issuer of any securities pledged hereunder as Collateral.

(d)Further Assurances. Grantor will contemporaneously with the execution hereof and from time to time thereafter at its expense promptly execute and deliver all further instruments and documents and take all further action necessary or appropriate or that Secured Party may request in order (i) to perfect and protect the security interest created or purported to be created hereby and the first priority of such security interest, (ii) to enable Secured Party to exercise and enforce its rights and remedies hereunder in respect of the Collateral, and (iii) to otherwise effect the purposes of this Agreement, including without limitation: (A) executing (if requested) and filing any financing or continuation statements, or any amendments thereto; (B) obtaining written confirmation from the issuer of any securities pledged as Collateral of the pledge of such securities, in form and substance satisfactory to Secured Party; (C) cooperating with Secured Party in registering the pledge of any securities pledged as Collateral with the issuer of such securities; (D) delivering notice of Secured Party’s security interest in any securities pledged as Collateral to any financial intermediary, clearing corporation or other party required by Secured Party, in form and substance satisfactory to Secured Party; and (E) obtaining written confirmation of the pledge of any securities constituting Collateral from any financial intermediary, clearing corporation or other party required by Secured Party, in form and substance satisfactory to Secured Party. If all or any part of the Collateral is securities issued by an agency or department of the United States, Grantor covenants and agrees, at Secured Party’s request, to cooperate in registering such securities in Secured Party’s name or with Secured Party’s account maintained with a Federal Reserve Secured Party.

(e)Control Agreements. Grantor will cooperate with Secured Party in obtaining a control agreement in form and substance satisfactory to Secured Party with respect to Collateral for which such agreement is required for perfection of a security interest pursuant to the Code (as determined by Secured Party in its sole discretion).

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8.Negative Covenants. Grantor will comply with the covenants contained in this Section at all times during the period of time this Agreement is effective, unless Secured Party shall otherwise consent in writing.

(a)Transfer or Encumbrance. Grantor will not (i) sell, assign (by operation of law or otherwise) or transfer Grantor’s rights in any of the Collateral, (ii) grant a lien or security interest in or execute, authorize, file or record any financing statement or other security instrument with respect to the Collateral to any party other than Secured Party, or (iii) deliver actual or constructive possession of any certificate, instrument or document evidencing and/or representing any of the Collateral to any party other than Secured Party.

(b)Impairment of Security Interest. Grantor will not take or fail to take any action which would in any manner impair the value or enforceability of Secured Party’s security interest in any Collateral.

(c)Dilution of Ownership. As to any securities pledged as Collateral (other than securities of a class which are publicly traded), Grantor will not consent to or approve of the issuance of (i) any additional shares of any class of securities of such issuer (unless immediately upon issuance additional securities are pledged and delivered to Secured Party pursuant to the terms hereof to the extent necessary to give Secured Party a security interest after such issuance in at least the same percentage of such issuer’s outstanding securities as Secured Party had before such issuance), (ii) any instrument convertible voluntarily by the holder thereof or automatically upon the occurrence or non-occurrence of any event or condition into, or exchangeable for, any such securities, or (iii) any warrants, options, contracts or other commitments entitling any third party to purchase or otherwise acquire any such securities.

(d)Restrictions on Securities. Grantor will not enter into any agreement creating, or otherwise permit to exist, any restriction or condition upon the transfer, voting or control of any securities pledged as Collateral, except as consented to in writing by Secured Party.

9.Rights of Secured Party. Secured Party shall have the rights contained in this Section at all times during the period of time this Agreement is effective.

(a)Power of Attorney. Grantor hereby irrevocably appoints Secured Party as Grantor’s attorney-in-fact, such power of attorney being coupled with an interest, with full authority in the place and stead of Grantor and in the name of Grantor or otherwise, to take any action and to execute any instrument which Secured Party may from time to time in Secured Party’s discretion deem necessary or appropriate to accomplish the purposes of this Agreement, including without limitation, the following action: (i) transfer any securities, instruments, documents or certificates pledged as Collateral in the name of Secured Party or its nominee; (ii) use any interest, premium or principal payments, conversion or redemption proceeds or other cash proceeds received in connection with any Collateral to reduce any of the Indebtedness; (iii) exchange any of the securities pledged as Collateral for any other

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property upon any merger, consolidation, reorganization, recapitalization or other readjustment of the issuer thereof, and, in connection therewith, to deposit and deliver any and all of such securities with any committee, depository, transfer agent, registrar or other designated agent upon such terms and conditions as Secured Party may deem necessary or appropriate; (iv) exercise or comply with any conversion, exchange, redemption, subscription or any other right, privilege or option pertaining to any securities pledged as Collateral; provided, however, except as provided herein, Secured Party shall not have a duty to exercise or comply with any such right, privilege or option (whether conversion, redemption or otherwise) and shall not be responsible for any delay or failure to do so; and (v) file any claims or take any action or institute any proceedings which Secured Party may deem necessary or appropriate for the collection and/or preservation of the Collateral or otherwise to enforce the rights of Secured Party with respect to the Collateral.

(b)Performance by Secured Party. If Grantor fails to perform any agreement or obligation provided herein, Secured Party may itself perform, or cause performance of, such agreement or obligation, and the expenses of Secured Party incurred in connection therewith shall be a part of the Indebtedness, secured by the Collateral and payable by Grantor on demand.

Notwithstanding any other provision herein to the contrary, Secured Party does not have any duty to exercise or continue to exercise any of the foregoing rights and shall not be responsible for any failure to do so or for any delay in doing so.

10.Events of Default. Each of the following constitutes an “Event of Default” under this Agreement:

(a)Default in Payment. The failure, refusal or neglect of Borrower to make any payment of principal or interest on the Indebtedness, or any portion thereof, as the same shall become due and payable; or

(b)Non-Performance of Covenants. The failure of Borrower or any Obligated Party to timely and properly observe, keep or perform any covenant, agreement, warranty or condition required herein or in any of the other Loan Documents; or

(c)Default Under other Loan Documents. The occurrence of an event of default under any of the other Loan Documents; or

(d)False Representation. Any representation or warranty contained herein or in any of the other Loan Documents made by Borrower or any Obligated Party is false or misleading in any material respect; or

(e)Default to Third Party. The occurrence of any event which permits the acceleration of the maturity of any indebtedness owing by Borrower or any Obligated Party to Lender or any third party under any agreement or undertaking; or

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(f)Bankruptcy or Insolvency. If Borrower or any Obligated Party: (i) becomes insolvent, or makes a transfer in fraud of creditors, or makes an assignment for the benefit of creditors, or admits in writing its inability to pay its debts as they become due; (ii) generally is not paying its debts as such debts become due; (iii) has a receiver, trustee or custodian appointed for, or take possession of, all or substantially all of the assets of such party or any of the Collateral, either in a proceeding brought by such party or in a proceeding brought against such party and such appointment is not discharged or such possession is not terminated within sixty (60) days after the effective date thereof or such party consents to or acquiesces in such appointment or possession; (iv) files a petition for relief under the United States Bankruptcy Code or any other present or future federal or state insolvency, bankruptcy or similar laws (all of the foregoing hereinafter collectively called “Applicable Bankruptcy Law”) or an involuntary petition for relief is filed against such party under any Applicable Bankruptcy Law and such involuntary petition is not dismissed within sixty (60) days after the filing thereof, or an order for relief naming such party is entered under any Applicable Bankruptcy Law, or any composition, rearrangement, extension, reorganization or other relief now or hereafter existing is requested or consented to by such party; (v) fails to have discharged within a period of sixty (60) days any attachment, sequestration or similar writ levied upon any property of such party; or (vi) fails to pay within thirty (30) days any final money judgment against such party; or

(g)Execution on Collateral. The Collateral or any portion thereof is taken on execution or other process of law in any action against Grantor; or

(h)Abandonment. Grantor abandons the Collateral or any portion thereof; or

(i)Action by Other Lienholder. The holder of any lien or security interest on any of the assets of Grantor, including without limitation, the Collateral (without hereby implying the consent of Secured Party to the existence or creation of any such lien or security interest on the Collateral), declares a default thereunder or institutes foreclosure or other proceedings for the enforcement of its remedies thereunder; or

(j)Liquidation, Death and Related Events. If Borrower or any Obligated Party is an entity, the liquidation, dissolution, merger or consolidation of any such entity or, if Borrower or any Obligated Party is an individual, the death or legal incapacity of any such individual; or

(k)Dilution of Ownership. The issuer of any securities (other than securities of a class which are publicly traded) constituting Collateral hereafter issues any shares of any class of capital stock (unless immediately upon issuance, additional securities are pledged and delivered to Secured Party pursuant to the terms hereof to the extent necessary to give Secured Party a security interest after such issuance in at least the same percentage of such issuer’s outstanding securities as Secured Party had before such issuance) or any options, warrants or other rights to purchase any such capital stock;

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(l)Bankruptcy of Issuer. (i) The issuer of any securities constituting Collateral files a petition for relief under any Applicable Bankruptcy Law, (ii) an involuntary petition for relief is filed against any such issuer under any Applicable Bankruptcy Law and such involuntary petition is not dismissed within thirty (30) days after the filing thereof, or (iii) an order for relief naming any such issuer is entered under any Applicable Secured Bankruptcy Law, or

(m)Search Report. If Secured Party shall have elected to file any financing statement with respect to the Collateral, Secured Party shall receive at any time following the execution of this Agreement a search report indicating that Secured Party’s security interest is not prior to all other security interests or other interests reflected in the report.

11.Remedies and Related Rights. If an Event of Default shall have occurred, and without limiting any other rights and remedies provided herein, under any of the other Loan Documents or otherwise available to Secured Party, Secured Party may exercise one or more of the rights and remedies provided in this Section.

(a)Remedies. Secured Party may from time to time at its discretion, without limitation and without notice:

(i)exercise in respect of the Collateral all the rights and remedies of a secured party under the Code (whether or not the Code applies to the affected Collateral);

(ii)reduce its claim to judgment or foreclose or otherwise enforce, in whole or in part, the security interest granted hereunder by any available judicial procedure;

(iii)sell or otherwise dispose of, at its office, on the premises of Grantor or elsewhere, the Collateral, as a unit or in parcels, by public or private proceedings, and by way of one or more contracts (it being agreed that the sale or other disposition of any part of the Collateral shall not exhaust Secured Party’s power of sale, but sales or other dispositions may be made from time to time until all of the Collateral has been sold or disposed of or until the Indebtedness has been paid and performed in full), and at any such sale or other disposition it shall not be necessary to exhibit any of the Collateral;

(iv)buy the Collateral, or any portion thereof, at any public sale;

(v)buy the Collateral, or any portion thereof, at any private sale if the Collateral is of a type customarily sold in a recognized market or is of a type which is the subject of widely distributed standard price quotations;

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(vi)apply for the appointment of a receiver for the Collateral, and Grantor hereby consents to any such appointment; and

(vii)at its option, retain the Collateral in satisfaction of the Indebtedness whenever the circumstances are such that Secured Party is entitled to do so under the Code or otherwise, to the full extent permitted by the Code, Secured Party shall be permitted to elect whether such retention shall be in full or partial satisfaction of the Indebtedness.

In the event Secured Party shall elect to sell the Collateral, Secured Party may sell the Collateral without giving any warranties as and shall be permitted to specifically disclaim any warranties of title or the like. Further, if Secured Party sells any of the Collateral on credit, Grantor will be credited only with payments actually made by the purchaser, received by Secured Party and applied to the Indebtedness. In the event the purchaser fails to pay for the Collateral, Secured Party may resell the Collateral and Grantor shall be credited with the proceeds of the sale. Grantor agrees that in the event Grantor or any Borrower is entitled to receive any notice under the Code, as it exists in the state governing any such notice, of the sale or other disposition of any Collateral, reasonable notice shall be deemed given when such notice is deposited in a depository receptacle under the care and custody of the United States Postal Service, postage prepaid, at such party’s address set forth on the first page hereof, ten (10) days prior to the date of any public sale, or after which a private sale, of any of such Collateral is to be held. Secured Party shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. Secured Party may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. Grantor further acknowledges and agrees that the redemption by Secured Party of any certificate of deposit pledged as Collateral shall be deemed to be a commercially reasonable disposition under Section 9.610 of the Code.

(b)Private Sale of Securities. Grantor recognizes that Secured Party may be unable to effect a public sale of all or any part of the securities pledged as Collateral because of restrictions in applicable federal and state securities laws and that Secured Party may, therefore, determine to make one or more private sales of any such securities to a restricted group of purchasers who will be obligated to agree, among other things, to acquire such securities for their own account, for investment and not with a view to the distribution or resale thereof. Grantor acknowledges that each any such private sale may be at prices and other terms less favorable than what might have been obtained at a public sale and, notwithstanding the foregoing, agrees that each such private sale shall be deemed to have been made in a commercially reasonable manner and that Secured Party shall have no obligation to delay the sale of any such securities for the period of time necessary to permit the issuer to register such securities for public sale under any federal or state securities laws. Grantor further acknowledges and agrees that any offer to sell such securities which has been made privately in the manner described above to not less than five (5) bona fide offerees shall be deemed to involve a “public sale” for the purposes of Chapter 9 of the Code,

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notwithstanding that such sale may not constitute a “public offering” under any federal or state securities laws and that Secured Party may, in such event, bid for the purchase of such securities.

(c)Application of Proceeds. If any Event of Default shall have occurred, Secured Party may at its discretion apply or use any cash held by Secured Party as Collateral, and any cash proceeds received by Secured Party in respect of any sale or other disposition of, collection from, or other realization upon, all or any part of the Collateral as follows in such order and manner as Secured Party may elect:

(i)to the repayment or reimbursement of the reasonable costs and expenses (including, without limitation, reasonable attorneys’ fees and expenses) incurred by Secured Party in connection with (A) the administration of the Loan Documents, (B) the custody, preservation, use or operation of, or the sale of, collection from, or other realization upon, the Collateral, and (C) the exercise or enforcement of any of the rights and remedies of Secured Party hereunder;

(ii)to the payment or other satisfaction of any liens and other encumbrances upon the Collateral;

(iii)to the satisfaction of the Indebtedness;

(iv)by holding such cash and proceeds as Collateral;

(v)to the payment of any other amounts required by applicable law (including without limitation, Section 9.615(a)(3) of the Code or any other applicable statutory provision); and

(vi)by delivery to Grantor or any other party lawfully entitled to receive such cash or proceeds whether by direction of a court of competent jurisdiction or otherwise.

(d)Deficiency. In the event that the proceeds of any sale of, collection from, or other realization upon, all or any part of the Collateral by Secured Party are insufficient to pay all amounts to which Secured Party is legally entitled, Borrower and any party who guaranteed or is otherwise obligated to pay all or any portion of the Indebtedness shall be liable for the deficiency, together with interest thereon as provided in the Loan Documents, to the full extent permitted by the Code.

(e)Non-Judicial Remedies. In granting to Secured Party the power to enforce its rights hereunder without prior judicial process or judicial hearing, Grantor expressly waives, renounces and knowingly relinquishes any legal right which might otherwise require Secured Party to enforce its rights by judicial process. Grantor recognizes and concedes that non-judicial remedies are consistent with the usage of trade, are responsive to commercial

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necessity and are the result of a bargain at arm’s length. Nothing herein is intended to prevent Secured Party or Grantor from resorting to judicial process at either party’s option.

(f)Other Recourse. Grantor waives any right to require Secured Party to proceed against any third party, exhaust any Collateral or other security for the Indebtedness, or to have any third party joined with Grantor in any suit arising out of the Indebtedness or any of the Loan Documents, or pursue any other remedy available to Secured Party. Grantor further waives any and all notice of acceptance of this Agreement and of the creation, modification, rearrangement, renewal or extension of the Indebtedness. Grantor further waives any defense arising by reason of any disability or other defense of any third party or by reason of the cessation from any cause whatsoever of the liability of any third party. Until all of the Indebtedness shall have been paid in full, Grantor shall have no right of subrogation and Grantor waives the right to enforce any remedy which Secured Party has or may hereafter have against any third party, and waives any benefit of and any right to participate in any other security whatsoever now or hereafter held by Secured Party. Grantor authorizes Secured Party, and without notice or demand and without any reservation of rights against Grantor and without affecting Grantor’s liability hereunder or on the Indebtedness, to (i) take or hold any other property of any type from any third party as security for the Indebtedness, and exchange, enforce, waive and release any or all of such other property, (ii) apply such other property and direct the order or manner of sale thereof as Secured Party may in its discretion determine, (iii) renew, extend, accelerate, modify, compromise, settle or release any of the Indebtedness or other security for the Indebtedness, (iv) waive, enforce or modify any of the provisions of any of the Loan Documents executed by any third party, and (v) release or substitute any third party.

(g)Voting Rights. Upon the occurrence of an Event of Default, Grantor will not exercise any voting rights with respect to securities pledged as Collateral. Grantor hereby irrevocably appoints Secured Party as Grantor’s attorney-in-fact (such power of attorney being coupled with an interest) and proxy to exercise any voting rights with respect to Grantor’s securities pledged as Collateral upon the occurrence of an Event of Default.

(h)Dividend Rights and Interest Payments. Upon the occurrence of an Event of Default:

(i)all rights of Grantor to receive and retain the dividends and interest payments which it would otherwise be authorized to receive and retain pursuant to Section 3 shall automatically cease, and all such rights shall thereupon become vested with Secured Party which shall thereafter have the sole right to receive, hold and apply as Collateral such dividends and interest payments; and

(ii)all dividend and interest payments which are received by Grantor contrary to the provisions of clause (i) of this Subsection shall be received in trust for the benefit of Secured Party, shall be segregated from other funds of Grantor, and shall be

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forthwith paid over to Secured Party in the exact form received (properly endorsed or assigned if requested by Secured Party), to be held by Secured Party as Collateral.

12.INDEMNITY. GRANTOR (AND BORROWER, IF BORROWER IS NOT THE GRANTOR) EACH HEREBY INDEMNIFIES AND AGREES TO HOLD HARMLESS SECURED PARTY, AND ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS AND REPRESENTATIVES (EACH AN “INDEMNIFIED PERSON”) FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, CLAIMS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS OF ANY KIND OR NATURE (COLLECTIVELY, THE “CLAIMS”) WHICH MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST, ANY INDEMNIFIED PERSON ARISING IN CONNECTION WITH THE LOAN DOCUMENTS, THE INDEBTEDNESS OR THE COLLATERAL (INCLUDING WITHOUT LIMITATION, THE ENFORCEMENT OF THE LOAN DOCUMENTS AND THE DEFENSE OF ANY INDEMNIFIED PERSON’S ACTIONS AND/OR INACTIONS IN CONNECTION WITH THE LOAN DOCUMENTS). THE INDEMNIFICATION PROVIDED FOR IN THIS SECTION SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT AND SHALL EXTEND AND CONTINUE TO BENEFIT EACH INDIVIDUAL OR ENTITY WHO IS OR HAS AT ANY TIME BEEN AN INDEMNIFIED PERSON HEREUNDER.

13.Miscellaneous.

(a)Entire Agreement. This Agreement contains the entire agreement of Secured Party and Grantor (and Borrower, if Borrower is not the Grantor) with respect to the Collateral. If the parties hereto are parties to any prior agreement, either written or oral, relating to the Collateral, the terms of this Agreement shall amend and supersede the terms of such prior agreements as to transactions on or after the effective date of this Agreement, but all security agreements, financing statements, guaranties, other contracts and notices for the benefit of Secured Party shall continue in full force and effect to secure the Indebtedness unless Secured Party specifically releases its rights thereunder by separate release.

(b)Amendment. No modification, consent or amendment of any provision of this Agreement or any of the other Loan Documents shall be valid or effective unless the same is in writing and authenticated by the party against whom it is sought to be enforced, except to the extent of amendments specifically permitted by the Code without authentication by the Grantor.

(c)Actions by Secured Party. The lien, security interest and other security rights of Secured Party hereunder shall not be impaired by (i) any renewal, extension, increase or modification with respect to the Indebtedness, (ii) any surrender, compromise, release, renewal, extension, exchange or substitution which Secured Party may grant with respect to the Collateral, or (iii) any release or indulgence granted to any endorser, guarantor or surety of the Indebtedness. The taking of additional security by Secured Party shall not release or

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impair the lien, security interest or other security rights of Secured Party hereunder or affect the obligations of Grantor (or Borrower, if Borrower is not the Grantor) hereunder.

(d)Waiver by Secured Party. Secured Party may waive any Event of Default without waiving any other prior or subsequent Event of Default. Secured Party may remedy any default without waiving the Event of Default remedied. Neither the failure by Secured Party to exercise, nor the delay by Secured Party in exercising, any right or remedy upon any Event of Default shall be construed as a waiver of such Event of Default or as a waiver of the right to exercise any such right or remedy at a later date. No single or partial exercise by Secured Party of any right or remedy hereunder shall exhaust the same or shall preclude any other or further exercise thereof, and every such right or remedy hereunder may be exercised at any time. No waiver of any provision hereof or consent to any departure therefrom shall be effective unless the same shall be in writing and signed by Secured Party and then such waiver or consent shall be effective only in the specific instances, for the purpose for which given and to the extent therein specified. No notice to or demand in any case shall of itself entitle Grantor (or Borrower, if Borrower is not the Grantor) to any other or further notice or demand in similar or other circumstances.

(e)Costs and Expenses. Grantor (and Borrower, if Borrower is not the Grantor) will upon demand pay to Secured Party the amount of any and all costs and expenses (including without limitation, attorneys’ fees and expenses), which Secured Party may incur in connection with (i) the transactions which give rise to the Loan Documents, (ii) the preparation of this Agreement and the perfection and preservation of the security interests granted under the Loan Documents, (iii) the administration of the Loan Documents, (iv) the custody, preservation, use or operation of, or the sale of, collection from, or other realization upon, the Collateral, (v) the exercise or enforcement of any of the rights of Secured Party under the Loan Documents, or (vi) the failure by Grantor (or Borrower, if Borrower is not the Grantor) to perform or observe any of the provisions hereof.

(f)Controlling Law; Venue. This Agreement is executed and delivered as an incident to a lending transaction negotiated and consummated in Bexar County, Texas, and shall be governed by and construed in accordance with the laws of the State of Texas. Grantor (and Borrower, if Borrower is not the Grantor), for itself and its successors and assigns, hereby irrevocably (a) submits to the nonexclusive jurisdiction of the state and federal courts in Texas, (b) waives, to the fullest extent permitted by law, and objection that it may now or in the future have to the laying of venue of any litigation arising out of or in connection with any Loan Document brought in the District Court of Bexar County, Texas, or in the United States District Court for the Western District of Texas, San Antonio, Division, (c) waives any objection it may now or hereafter have as to the venue of any such action or proceeding brought in such court or that such court is an inconvenient forum, (d) agrees that any legal proceeding against any party to any Loan Document arising out of or in connection with any of the Loan Documents may be brought in one of the foregoing courts, and (e) agrees that service of process upon it may be made by certified or registered mail, return receipt requested, at its address specified herein. Nothing herein shall affect

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the right of Lender to serve process in any other manner permitted by law or shall limit the right of Lender to bring any action or proceeding against Grantor (and Borrower, if Borrower is not the Grantor) or with respect to any of Grantor’s (or Borrower’s, if Borrower is not the Grantor) property in courts in other jurisdictions. The scope of each of the foregoing waivers is intended to be all encompassing of any and all disputes that may be filed in any court and that relate to the subject matter of this transaction, including, without limitation, contract claims, tort claims, breach of duty claims, and all other common law and statutory claims. Grantor (and Borrower, if Borrower is not the Grantor) acknowledges that these waivers are a material inducement to Lender’s agreement to enter into agreements and obligations evidenced by the Loan Documents, that Lender has already relied on these waivers and will continue to rely on each of these waivers in related future dealings. The waivers in this section are irrevocable, meaning that they may not be modified either orally or in writing, and these waivers apply to any future renewals, extensions, amendments, modifications, or replacements in respect of the applicable Loan Document. In connection with any litigation, this Agreement may be filed as a written consent to a trial by the court.

(g)Severability. If any provision of this Agreement is held by a court of competent jurisdiction to be illegal, invalid or unenforceable under present or future laws, such provision shall be fully severable, shall not impair or invalidate the remainder of this Agreement and the effect thereof shall be confined to the provision held to be illegal, invalid or unenforceable.

(h)No Obligation. Nothing contained herein shall be construed as an obligation on the part of Secured Party to extend or continue to extend credit to Borrower.

(i)Notices. All notices, requests, demands or other communications required or permitted to be given pursuant to this Agreement shall be in writing and given by (i) personal delivery, (ii) expedited delivery service with proof of delivery, or (iii) United States mail, postage prepaid, registered or certified mail, return receipt requested, sent to the intended addressee at the address set forth on the first page hereof or to such different address as the addressee shall have designated by written notice sent pursuant to the terms hereof and shall be deemed to have been received either, in the case of personal delivery, at the time of personal delivery, in the case of expedited delivery service, as of the date of first attempted delivery at the address and in the manner provided herein, or in the case of mail, upon deposit in a depository receptacle under the care and custody of the United States Postal Service. Either party shall have the right to change its address for notice hereunder to any other location within the continental United States by notice to the other party of such new address at least thirty (30) days prior to the effective date of such new address.

(j)Binding Effect and Assignment. This Agreement (i) creates a continuing security interest in the Collateral, (ii) shall be binding on Grantor and the heirs, executors, administrators, personal representatives, successors and assigns of Grantor (and Borrower, if Borrower is not the Grantor), and (iii) shall inure to the benefit of Secured Party and its successors and assigns. Without limiting the generality of the foregoing, Secured Party may

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pledge, assign or otherwise transfer the Indebtedness and its rights under this Agreement and any of the other Loan Documents to any other party. Grantor’s (and Borrower’s, if Borrower is not the Grantor) rights and obligations hereunder may not be assigned or otherwise transferred without the prior written consent of Secured Party.

(k)Termination. It is contemplated by the parties hereto that from time to time there may be no outstanding Indebtedness, but notwithstanding such occurrences, this Agreement shall remain valid and shall be in full force and effect as to subsequent outstanding Indebtedness. Upon (i) the satisfaction in full of the Indebtedness, (ii) the termination or expiration of any commitment of Secured Party to extend credit to Borrower, (iii) written request for the termination hereof delivered by Grantor to Secured Party, and (iv) written release delivered by Secured Party to Grantor, this Agreement and the security interests created hereby shall terminate. Upon termination of this Agreement and Grantor’s written request, Secured Party will, at Grantor’s sole cost and expense, return to Grantor such of the Collateral as shall not have been sold or otherwise disposed of or applied pursuant to the terms hereof and execute and deliver to Grantor such documents as Grantor shall reasonably request to evidence such termination.

(l)Cumulative Rights. All rights and remedies of Secured Party hereunder are cumulative of each other and of every other right or remedy which Secured Party may otherwise have at law or in equity or under any of the other Loan Documents, and the exercise of one or more of such rights or remedies shall not prejudice or impair the concurrent or subsequent exercise of any other rights or remedies. Further, except as specifically noted as a waiver herein, no provision of this Agreement is intended by the parties to this Agreement to waive any rights, benefits or protection afforded to Secured Party under the Code.

(m)Gender and Number. Within this Agreement, words of any gender shall be held and construed to include the other gender, and words in the singular number shall be held and construed to include the plural and words in the plural number shall be held and construed to include the singular, unless in each instance the context requires otherwise.

(n)Descriptive Headings. The headings in this Agreement are for convenience only and shall in no way enlarge, limit or define the scope or meaning of the various and several provisions hereof.

14.Financing Statement Filings. Grantor recognizes that financing statements pertaining to the Collateral have been or may be filed in one or more of the following jurisdictions: the location of Grantor’s principal residence, the location of Grantor’s place of business, the location of Grantor’s chief executive office, or other such place as the Grantor may be “located” under the provisions of the Code; where Grantor maintains any Collateral, or has its records concerning any Collateral, as the case may be. Without limitation of any other covenant herein, Grantor will neither cause or permit any change in the location of (i) any Collateral, (ii) any records concerning any Collateral, or (iii) Grantor’s principal residence, the location of Grantor’s place of business, or the location of Grantor’s

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chief executive office, as the case may be, to a jurisdiction other than as represented in Subsection 6(g), nor will Grantor change its name or the Organizational Information as represented in Subsection 6(g), unless Grantor shall have notified Secured Party in writing of such change at least thirty (30) days prior to the effective date of such change, and shall have first taken all action required by Secured Party for the purpose of further perfecting or protecting the security interest in favor of Secured Party in the Collateral. In any written notice furnished pursuant to this Subsection, Grantor will expressly state that the notice is required by this Agreement and contains facts that may require additional filings of financing statements, amendments or other notices for the purpose of continuing perfection of Secured Party’s security interest in the Collateral.

Without limiting Secured Party’s rights hereunder, Grantor authorizes Secured Party to file financing statements or amendments thereto under the provisions of the Code as amended from time to time.

15.Consent to Disclose Information. Borrower (and Grantor, if Grantor is not the Borrower) authorizes and consents to the disclosure by Secured Party of all information relating to the Note to any other party to the account pledged as Collateral and upon which a security interest is granted herein, including, but not limited to, information regarding the name of the Borrower and the amount, date and maturity of the Note.

16.Counterparts; Facsimile Documents and Signatures. This Agreement may be separately executed in any number of counterparts, each of which will be an original, but all of which, taken together, will be deemed to constitute one and the same instrument. For purposes of negotiating and finalizing this Agreement, if this document or any document executed in connection with it is transmitted by facsimile machine, electronic mail or other electronic transmission, it will be treated for all purposes as an original document. Additionally, the signature of any party on this document transmitted by way of a facsimile machine or electronic mail will be considered for all purposes as an original signature. Any such transmitted document will be considered to have the same binding legal effect as an original document. At the request of any party, any faxed or electronically transmitted document will be re-executed by each signatory party in an original form.

17.Imaging of Documents. Grantor (and Borrower, if Borrower is not the Grantor) understands and agrees that (a) Lender’s document retention policy may involve the electronic imaging of executed Loan Documents and the destruction of the paper originals, and (b) Grantor (and Borrower, if Borrower is not the Grantor) waives any right that it may have to claim that the imaged copies of the Loan Documents are not originals.

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EXECUTED as of the date first written above.

BORROWER:		SECURED PARTY:
CBFH, INC.,		FROST BANK,
a Texas corporation		a Texas state bank
By:	/s/ Robert R. Franklin, Jr.,	By:	/s/ Cliff McCauley
	Robert R. Franklin, Jr.,
	Chief Executive Officer	Name:
		Cliff McCauley
		Title:
		SR. EVP

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SCHEDULE A

TO

PLEDGE AND SECURITY AGREEMENT

DATED FEBRUARY 1, 2015

BY AND BETWEEN

FROST BANK

AND

CBFH, INC.

The following property is a part of the Collateral as defined in Subsection 1(b):

100,000 shares of common stock (representing 100% of the outstanding shares of such stock) of COMMUNITYBANK OF TEXAS, N.A., as evidenced by certificate no. 004 issued in the name of Grantor

STOCK POWER

For value received, CBFH, Inc., hereby sells, assigns and transfers to                               , One Hundred Thousand (100,000) Shares of the Common Capital Stock of CommunityBank of Texas, N.A., standing in its name on the books of said corporation represented by Certificate No. 004 herewith, and hereby irrevocably constitute and appoint                               attorney to transfer the said stock on the books of the within named Company with full power of substitution in the premises.

Dated:
	CBFH, INC.
	By:	/s/ Robert R. Franklin, Jr.,
		Robert R. Franklin, Jr.,
		Chief Executive Officer
Guarantee of signature by a
bank official or registered
securities dealer:

POWER OF ATTORNEY - Solo Page

EX-10.5

Exhibit 10.5

EMPLOYMENT AGREEMENT

This Employment Agreement (Agreement) is made this 6th day of March, 2013 effective as hereinafter provided between Robert T. Pigott, Jr. (hereinafter “Employee”) and CBFH, Inc. (hereinafter “Company”).

WHEREAS, CBFH, Inc., a Texas corporation (“CBFH”), and VB Texas, Inc., a Texas corporation (“VBT”) propose to enter into and execute that certain Agreement and Plan of Merger dated as of the date hereof (the “Merger Agreement”), pursuant to which VBT will merge with and into CBFH in exchange for consideration as set forth in the Agreement (the “Merger”) and the Employee’s obligations under this Agreement are effective as of the Effective Time (as defined in the Merger Agreement) of the Merger (referred to herein as the “Effective Date”);

WHEREAS, Employee is a shareholder of VBT and as a result of the Merger will receive consideration in exchange for his shares of common stock of VBT;

WHEREAS, the Merger Agreement requires, as a condition to the closing, that Employee execute and deliver this Agreement to CBFH;

WHEREAS, Employee acknowledges that the restrictions against competition and the other agreements set forth in this Agreement have constituted a substantial inducement to CBFH to enter into the Merger Agreement, and that none of such restrictions or agreements set forth in the Merger Agreement will be unduly burdensome on Employee.

NOW, THEREFORE, in consideration of the receipt of consideration under the Merger Agreement and of the mutual promises set forth in this Agreement, the parties hereto agree as follows:

ARTICLE I

EMPLOYMENT, COMPENSATION, AND EXPENSES

1.1Employment. The Company employs Employee, and Employee accepts employment with the Company upon all of the terms and conditions described in this Agreement beginning at the Effective Date and for the term as set forth in Section 3.1 of this Agreement; provided that this Agreement and Employee’s employment may be terminated earlier as provided herein. If the Merger Agreement is terminated for any reason before the Effective Time occurs, Employee will not be employed under this Agreement, all of the provisions of this Agreement will terminate and there will be no liability of any kind under this Agreement.

1.2Work Responsibilities. Subject to the terms of this Agreement, Employee is employed in the position of Chief Financial Officer of Community Bank of Texas, National Association (“CBOT”), Vista Bank Texas (the “Bank”) and the Company and upon the merger of CBOT and the Bank, shall be the Chief Financial Officer of the surviving bank (the “Surviving Bank”). Employee’s position, job descriptions, duties and responsibilities may be modified from time to time in the sole discretion of the Board of Directors of the Company.

1.3Compensation. As consideration for the services and covenants described in this Agreement, the Company agrees to compensate Employee in the following manner:

a.Salary/Wages. The Company agrees to pay compensation as stated on the attached Exhibit A.

b.Employment Benefits and Compensation Plans, Policies, and Arrangements. Employee shall be entitled to employment benefits such as but not limited to vacation, holidays, leaves of absence, health insurance, dental insurance, etc., if any, available to employees of the Company generally, in accordance with any policies, procedures, or benefit plans adopted by the Company from time to time during the existence of this Agreement. Moreover, Employee shall be eligible to receive such other compensation as stated on Exhibit A. Employee’s rights or those of Employee’s dependents under any such benefits or compensation policies, plans or arrangements shall be governed solely by the terms of such policies, plans, or arrangements. The Company reserves to itself, or its designated administrators, exclusive authority and discretion to determine all issues of eligibility, interpretation and administration of each such benefit or compensation plan, policy or arrangement. The Company’s employment benefits and compensation arrangements, and policies related thereto, are subject to termination, modification or limitation at the Company’s sole discretion.

c.Total Compensation. Employee agrees that the compensation stated above and as stated on Exhibit A and the severance payments in Section 3.2 constitute the full and exclusive monetary consideration and compensation for all services rendered under this Agreement and for all promises and obligations under this Agreement.

1.4Business Expenses. The Company shall pay Employee’s reasonable business expenses, including expenses incurred for travel on Company business, in accordance with the policies and procedures of the Company, as may be adopted or amended from time to time at the Company’s sole discretion. If Employee incurs business expenses under this Agreement, the Employee shall submit to the Company a periodic request for reimbursement together with supporting documentation satisfactory to the Company.

1.5Loyal Performance Of Responsibilities. Employee shall devote the whole of Employee’s professional time, attention and energies to the performance of Employee’s work responsibilities and shall not, either directly or indirectly, alone or in partnership, consult with, advise, work for or have any interest in any other business or pursuit during Employee’s employment under this Agreement. Included in the foregoing, but not limited thereto, during the term of this Agreement Employee shall not, directly or indirectly, engage in, or serve as an officer, director, employee, partner, agent or consultant, or otherwise hold any ownership interest in any entity which engages in any business which competes with that of the Company. Any modification of this paragraph shall be made only by an agreement in writing signed by Employee and an authorized representative of the Company.

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ARTICLE II

CONFIDENTIAL INFORMATION; POST-EMPLOYMENT OBLIGATIONS; COMPANY

PROPERTY

2.1This Agreement. The monetary terms of this Agreement constitute confidential information, which Employee shall not disclose to anyone other than Employee’s spouse, attorneys, tax advisors, or as required by law. Unauthorized disclosure of these terms is a material breach of this Agreement and could subject Employee to disciplinary action, including without limitation, termination of employment.

2.2Company Property. All written materials, records, data, and other documents prepared by or provided to Employee in the course and scope of Employee’s employment by the Company are the Company’s property. All information, ideas, concepts, improvements, discoveries, and inventions that are conceived, made, developed, or acquired by Employee individually or in conjunction with others during Employee’s employment (whether during business hours and whether on Company’s premises or otherwise) which relate to Company business, products, or services are the Company’s sole and exclusive property. All memoranda, notes, records, files, correspondence, drawings, manuals, models, specifications, computer programs, maps, and all other documents, data, or materials of any type embodying such information, ideas, concepts, improvements, discoveries, and inventions are Company property. At the termination of Employee’s employment with the Company for any reason, Employee shall return all of the Company’s documents, data, or other Company property to the Company.

2.3Confidential Information, Non-Disclosure. Employee acknowledges that the business of the Company and its affiliates is highly competitive and that the Company will provide Employee with access to Confidential Information relating to the business of the Company and its affiliates. “Confidential Information” means and includes the Company’s confidential and/or proprietary information and/or trade secrets that have been developed or used and/or will be developed and that cannot be obtained readily by third parties from outside sources. Confidential Information includes, by way of example and without limitation, the following: information regarding customers, employees, contractors, and the industry not generally known to the public; strategies, methods, books, records, and documents; technical information concerning products, equipment, services, and processes; procurement procedures and pricing techniques; the names of and other information concerning customers, investors, and business affiliates (such as contact name, service provided, pricing for that customer, amount of services used, credit and financial data, and/or other information relating to the Company’s relationship with that customer); pricing strategies and price curves; plans and strategies for expansion or acquisitions; budgets; customer lists; research; financial and sales data; trading terms; evaluations, opinions, and interpretations of information and data; marketing and merchandising techniques; prospective customers’ names and marks; grids and maps; electronic databases; models; specifications; computer programs; internal business records; contracts benefiting or obligating the Company; bids or proposals submitted to any third party; technologies and methods; training methods and training processes; organizational structure; salaries of personnel; payment amounts or rates paid to consultants or other service providers; and other such confidential or proprietary information. Employee acknowledges that this Confidential Information constitutes a valuable, special, and unique asset used by the Company, or its affiliates in their business to obtain a competitive advantage over their competitors.

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Employee further acknowledges that protection of such Confidential Information against unauthorized disclosure and use is of critical importance to the Company and its affiliates in maintaining their competitive position.

Employee also will have access to, or knowledge of, Confidential Information of third parties, such as actual and potential customers, suppliers, partners, joint venturers, investors, financing sources and the like, of the Company and its affiliates.

Employee agrees that Employee will not, at any time during or after Employee’s employment with the Company, make any unauthorized disclosure of any Confidential Information of the Company or its affiliates, or make any use thereof, except in the carrying out of the Employee’s employment responsibilities hereunder. Employee also agrees to preserve and protect the confidentiality of third party Confidential Information to the same extent, and on the same basis, as the Company’s Confidential Information.

2.4Non-Competition Obligations. Employee acknowledges that the Company is providing Employee with access to Confidential Information. Ancillary to Employee’s agreement not to disclose Confidential Information, to protect the Confidential Information described above, and in consideration for Employee’s receiving access to this Confidential Information and compensation stated in this agreement, the Company and Employee agree to the following non-competition provisions. Employee agrees that during the period of Employee’s non-competition obligations as stated on Exhibit A, Employee will not, directly or indirectly, for Employee or others, in the geographic region stated on Exhibit A, or, if Employee’s geographic region has changed, in any and all geographic regions in which Employee has worked for the 12-month period immediately preceding Employee’s termination of Employment:

a.engage in any business conducted by the Company related to community banking and/or financial activities in which the Company is doing business, or has engaged in business in the preceding 12-month period; or

b.render advice or services to, or otherwise assist, any other person, association or entity in a business that directly competes with the Company.

Employee understands that the foregoing restrictions may limit Employee’s ability to engage in certain businesses in the geographic region and during the period provided for above, but acknowledges that these restrictions are necessary to protect the Confidential Information the Company has provided to Employee.

Employee agrees that this provision defining the scope of activities constituting prohibited competition with the Company is narrow and reasonable for the following reasons: (i) Employee is free to seek employment with other companies providing services that do not directly or indirectly compete with any business of the Company; (ii) Employee is free to seek employment with other companies in the banking business that do not directly or indirectly compete with any business of the Company; and (iii) there are many other companies in the banking business that do not directly or indirectly compete with any business of the Company. Thus, this restriction on Employee’s ability to compete does not prevent Employee from using

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and offering the skills that Employee possessed prior to receiving Confidential Information, specialized training, and knowledge from the Company.

2.5Non-Solicitation Of Customers. For a period of twelve (12) months following the termination of employment for any reason, Employee will not call on, service, solicit, or accept competing business from customers of the Company or its affiliates with whom Employee, within the previous twenty-four (24) months, (i) had or made contact, or (ii) reviewed information and files regarding. These restrictions are limited by geography to the specific places, addresses, or locations where a customer is present and available for soliciting or servicing.

2.6Non-Solicitation Of Employees. During Employee’s employment, and for a period of twelve (12) months following the termination of employment for any reason, Employee will not, either directly or indirectly, call on, solicit, or induce any other employee or officer of the Company or its affiliates whom Employee had contact with, knowledge of, or association with in the course of employment with the Company to terminate his or her employment, and will not assist any other person or entity in such a solicitation.

2.7Early Resolution Conference/Arbitration. The parties are entering into this Agreement with the express understanding that this Agreement is clear and fully enforceable as written. If Employee ever decides later to contend that any restriction on activities imposed by this Agreement no longer is enforceable as written or does not apply to an activity in which Employee intends to engage on behalf of a competing business, Employee first will notify the Company in writing and meet with a company representative at least fourteen (14) days before engaging in any activity that foreseeably could fall within the questioned restriction to discuss resolution of such claims (an “Early Resolution Conference”). Should the parties not be able to resolve disputes at the Early Resolution Conference, the parties agree to use confidential, binding arbitration to resolve the disputes. The arbitration shall be conducted in accordance with then-current employment arbitration rules of the Judicial Arbitration & Mediation Services, Inc. (JAMS) before an arbitrator licensed to practice law in the state in which the Early Resolution Conference occurred or should have occurred. Either party may seek a temporary restraining order, injunction, specific performance, or other equitable relief regarding the provisions of this Section if the other party fails to comply with obligations stated herein. The parties’ agreement to arbitrate applies only to the matters subject to an Early Resolution Conference. The Company shall pay all costs and fees charged by JAMS.

2.8Warranty. Employee warrants that Employee is not a party to any other restrictive agreement limiting Employee’s activities for the Company. Employee further warrants that at the time of the signing of this Agreement, Employee knows of no written or oral contract or of any other impediment that would inhibit or prohibit employment with the Company and that Employee will not knowingly use any trade secret, confidential information, or other intellectual property right of any other party in the performance of Employee’s duties hereunder.

2.9Equitable Relief. Employee and the Company agree that in the event of a breach or threatened breach by Employee of any paragraph in Article 2 of this Agreement, the Company will not have an adequate remedy at law. Thus, in the event of such a breach or threatened breach, the Company will be entitled to such equitable and injunctive relief as may be available

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to prevent and restrain Employee from breaching the provisions of any paragraph in Article 2. The availability to obtain injunctive relieve will not prevent the Company from pursuing any other equitable or legal relief, including the recovery of damages from such breach or threatened breach.

ARTICLE III

TERMINATION OF EMPLOYMENT.

3.1Term. The initial term of employment under this Agreement shall commence on the date of this Agreement and end five (5) years from the date of this Agreement. At the end of the initial term and any successive term, this Agreement shall be automatically renewed for a one (1) year term and for successive one (1) year terms thereafter, unless (a) Employee’s employment has been terminated prior to such day, or (b) not later than 60 days prior to such day, either party to this Agreement shall have given written notice to the other party that he or it does not wish to extend further the term. Employee agrees that, subject to Section 3.2, that the Company may terminate Employee with or without Cause.

3.2Severance. Notwithstanding the foregoing, in the event of termination by the Company without “Cause” or by Employee for “Good Reason,” the Company or its successor shall be obligated to pay to Employee only the following:

a.an amount equal to the sum of (1) the Employee’s base salary through the date of termination which has been earned but not paid, and (2) unused vacation pay, such amounts to be payable within fifteen days of the date of termination;

b.a lump sum payment of $550,000 such payment to be made within fifteen days of the date of termination;;

c.a pro-rata portion of Employee’s annual bonus, such pro-rata portion to be payable at such time as the annual bonus pool, if any, shall be determined and made payable by the Board with respect to other Company employees; and

d.medical benefits coverage for the Employee and his family for 24 months.

3.3Cause. For purposes of this Agreement, “Cause” shall mean:

a.an act or acts of intentional dishonesty by Employee materially and adversely affecting the Company;

b.employee’s material breach of any of his obligations of this Agreement;

c.employee’s gross negligence or willful misconduct in performance of the duties and services required of him under this Agreement; or

d.employee’s conviction of a felony or Employee’s conviction of a misdemeanor involving moral turpitude.

3.4Good Reason. For purposes of this Agreement, “Good Reason” shall mean:

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a.the assignment to the Employee of any duties materially inconsistent in any respect with the Employee’s position (including situs, office and title), authority, duties and responsibilities as contemplated by section 1.2 of this Agreement, excluding any isolated, insubstantial or inadvertent action not taken in bad faith and which is remedied by the Company promptly after notice of such action;

b.any material failure by the Company to comply with any of the provisions of this Agreement; or

c.the Company requiring the Employee to be based at any office outside the Houston metropolitan area or other mutually agreed location.

3.5Change In Control. The Company recognizes that the position held by Employee is one of those requiring high quality job performance in order to promote and protect the best interests of the Company. The Company further recognizes that (i) it is possible that a Change in Control (as defined herein) could occur at some time in the future, (ii) the uncertainty with such a possibility could result in the distraction of the Employee from his assigned duties and responsibilities, (iii) it is in the best interest of the Employer to assure the continued attention by the Employee to such duties and responsibilities without such distraction, and (iv) Employee must be able to participate in the assessment and evaluation of any proposal which could effect a Change in Control without the Employee being influenced in the exercise of his judgment by uncertainties, regarding his future financial security. A “Change in Control” is defined as any of the following:

a.a change in the ownership of the capital stock of the Company whereby a corporation, person, or group acting in concert (hereinafter this Agreement shall collectively refer, to any combination of these three (a corporation, person or group acting in concert) as a “Person” as described in Section 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), acquires, directly or indirectly, beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of a number of shares of CBOT, the Bank or the Surviving Bank or the Company which constitutes fifty percent (50%) or more of the combined voting power of the CBOT, the Bank or the Surviving Bank’s or the Company’s the outstanding capital stock then entitled to vote generally in the election of directors;

b.the persons who were members of the Board of Directors of the Company or the CBOT, the Bank or the Surviving Bank immediately prior to a tender offer, exchange offer or any combination of the foregoing, cease to constitute a majority of the Board of Directors of the Company or the CBOT or the Surviving Bank;

c.a tender offer or exchange offer is made by any Person which is successfully completed and which results in such Person beneficially owning (within the meaning of Rule 13d-3 promulgated under the Exchange Act) either (1) fifty percent (50%) or more of CBOT’s, the Bank’s, the Surviving Bank’s or the Company’s outstanding shares of common stock or (2) shares of capital stock having fifty percent (50%) or more of the combined voting power of CBOT’s, the Bank, the Surviving Bank’s or the Company’s then outstanding capital stock (other than an offer made by the CBOT, the Bank, the Surviving Bank or the Company), and sufficient shares are acquired under the offer to cause such Person to own fifty

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percent (50%) or more of the voting power of CBOT, the Bank, the Surviving Bank or the Company; or

d.the occurrence of any other transaction or series of related transactions which have substantially the same effect as the transactions specified in any of the preceding clauses (any one of the foregoing being herein called a “Transaction.”)

3.6Window Period. A “Window Period” shall mean the 180-day period immediately following any Change in Control.

3.7Notwithstanding any provisions of this Agreement to the contrary, in the event that the aggregate payments or benefits to be made or afforded pursuant to this Agreement, would be deemed to include an “excess parachute payment” under Section 280G of the Internal Revenue Code, then the termination benefits shall be reduced to an amount which is One Dollar ($1.00) less than the greatest amount allowed to be paid under Section 280G without constituting an “excess parachute payment”.

ARTICLE IV

MISCELLANEOUS

4.1Governing Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Texas.

4.2Interpretation. This Agreement shall be interpreted in accordance with the plain meaning of the terms and; Section 409A not strictly for or against either party. This Agreement is intended to comply with Section 409A of the Internal Revenue Code and the regulations thereunder (“Section 409A”) and will be interpreted and operated in a manner consistent with that intent. To the extent that any amounts paid to the Employee under this Agreement are subject to Section 409A and the Employee is a specified employee, as defined under Section 409A, any such amounts payable on account of the Employee’s separation from service shall be delayed six months following the Employee’s separation from service to the extent required by Section 409A. Any reimbursements of expenses that are subject to Section 409A under this Agreement shall be paid no later than the year following the year in which the expenses are incurred. All references in this Agreement to a termination of employment or any other similar reference shall be interpreted as references to a separation from service, within the meaning of Section 409A, with the Company and all entities treated as a single employer with the Company pursuant to Section 409A.

4.3Headings. The headings of this Agreement are intended solely for the convenience of reference and should be given no effect in the construction or interpretation of this Agreement.

4.4Entire Agreement. This Agreement embodies the complete agreement and understanding of the parties related to Employee’s employment by the Company, superseding any and all other prior or contemporaneous oral or written agreements between the parties hereto with respect to the employment of Employee by the Company, and contains all of the covenants and agreements of any kind whatsoever between the parties with respect to such employment. Each party acknowledges that no representations, inducements, promises or agreements, whether

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oral or written, express or implied, have been made by either party or anyone acting on behalf of a party, that are not incorporated herein and that no other agreement or promise not contained herein shall be valid or binding.

4.5Modification; Termination of Merger Agreement. This Agreement may be amended only by an agreement in writing signed by Employee and the Company. This Agreement will automatically terminate if the Merger Agreement is terminated. Employee agrees that if this Agreement is terminated he will keep confidential any confidential information received from Employer or its affiliates prior to such termination.

4.6Waiver. The failure of either party to insist, in any one or more instances, upon performance of the terms or conditions of this Agreement shall not be construed as a waiver or a relinquishment of any right granted under this Agreement or of the future performance of any such term, covenants or condition.

4.7Invalidity. Should any provision(s) in this Agreement be held by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions shall be unaffected and shall continue in full force and effect, and the invalid, void or unenforceable provision(s) shall be deemed not to be part of this Agreement.

4.8Voluntary Agreement. Employee and the Company represent and agree that each has reviewed all aspects of this Agreement, has carefully read and fully understands all provisions of this Agreement, and is voluntarily entering into this Agreement. Each party represents and agrees that such party has had the opportunity to review any and all aspects of this Agreement with the legal, tax or other advisor or advisors of such party’s choice before executing this Agreement.

4.9Successors And Assigns. This Agreement shall be binding upon and inure to the benefit of and shall be enforceable by and against Employee’s heirs, beneficiaries and legal representatives. It is agreed that the rights and obligations of Employee may not be delegated or assigned except as specifically set forth in this Agreement. In the event of a sale of all or substantially all of the Company’s capital stock, sale of all or substantially all of the Company’s assets, or consolidation or merger of the Company with or into another corporation or entity or individual, the Company may assign its rights and obligations under this Agreement to its successor-in-interest, and such successor-in-interest shall be deemed to have acquired all rights and assumed all obligations of the Company under this Agreement.

4.10Counterparts. This Agreement may be executed in counterparts and each counterpart, when executed, shall have the validity of a second original. Photographic or facsimile copies of any such signed counterparts may be used in lieu of the original for any purpose.

[Signature Page Follows]

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/s/ Robert T. Pigott, Jr.
Robert T. Pigott, Jr.
CBFH, Inc.
By:	/s/ J. Pat Parsons
Name:	J. Pat Parsons
Title:	CEO

[Signature Page to Employment Agreement]

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Exhibit “A” to

Employment Agreement

Between CBFH, Inc., and Robert T. Pigott, Jr.

Employee Name:	Robert T. Pigott, Jr.
Position:	Employee will serve as the Chief Financial Officer of CBOT, the Bank, the Surviving Bank and the Company.
Location:	Houston, Texas
Annual Base Salary:	$225,000 subject to annual review by the Company’s Board of Directors.
Bonus:	Employee will be included in the Company’s Annual Bonus plan in which other executive officers and/or employees may participate subject to the terms of the plans.
Director Fees:	Employee will be compensated for his service on the Board.
Vacation:	Four (4) weeks per year which shall accrue January 1 of each year. Weeks not taken during a calendar year shall not carry over to the next year. Accrued but unused vacation shall be paid upon termination.
Geographic Region of Non-Competition	Harris and contiguous counties.
Period of Non-Competition obligations:	During the term of this agreement and/or employment and for one year after termination of employment.

[Signature Page Follows]

CBFH, Inc.			Robert T. Pigott, Jr.
By:	/s/ J. Pat Parsons		/s/ Robert T. Pigott Jr.
	Name:	J. Pat Parsons	This 6th day of March, 2013
	Title:	CEO
	This 6th day of March, 2013

[Signature Page to Exhibit “A” to Employment Agreement]

EX-10.6

Exhibit 10.6

EMPLOYMENT AGREEMENT

This Employment Agreement (Agreement) is effective on the date of hire by and between J. Pat Parsons (hereinafter “Employee”) and CBFH, Inc. (hereinafter “Company”). In consideration of the mutual promises made herein, the Company and Employee agree as follows:

Article 1: Employment, Compensation, and Expenses

1.1EMPLOYMENT. The Company employs Employee, and Employee accepts employment with the Company upon all of the terms and conditions described in this Agreement and for the Term as set forth on Exhibit A.

1.2WORK RESPONSIBILITIES. Subject to the terms of this Agreement, Employee is employed in the position of Chairman and Chief Executive Officer (CEO) of Community Bank of Texas, N.A. (Bank), and President and CEO of the Company, and shall perform the functions and responsibilities of that position. Employee may elect to semi-retire upon reaching age 62 and shall have the title of Vice Chairman of the Board of Directors (Board), at a reduced salary as determined by the Board. Additional or different duties may be assigned by the Board. Employee’s position, job descriptions, duties and responsibilities may be modified from time to time in the sole discretion of the Board.

1.3COMPENSATION. As consideration for the services and covenants described in this Agreement, the Company agrees to compensate Employee in the following manner:

a.Salary/Wages. The Company agrees to pay monthly compensation as stated on the attached Exhibit A.

b.Employment Benefits and Compensation Plans, Policies, and Arrangements. Employee shall be entitled to employment benefits such as but not limited to vacation, holidays, leaves of absence, health insurance, dental insurance, etc., if any, available to employees of the Company generally, in accordance with any policies, procedures, or benefit plans adopted by the Company from time to time during the existence of this Agreement. Moreover, Employee shall be eligible to receive such other compensation as stated on Exhibit A. Employee’s rights or those of Employee’s dependents under any such benefits or compensation policies, plans or arrangements shall be governed solely by the terms of such policies, plans, or arrangements. The Company reserves to itself, or its designated administrators, exclusive authority and discretion to determine all issues of eligibility, interpretation and administration of each such benefit or compensation plan, policy or arrangement. The Company’s employment benefits and compensation arrangements, and policies related thereto, are subject to termination, modification or limitation at the Company’s sole discretion.

c.Total Compensation. Employee agrees that the compensation stated above and as stated on Exhibit A constitutes the full and exclusive monetary consideration and compensation for all services rendered under this Agreement and for all promises and obligations under this Agreement.

1.4BUSINESS EXPENSES. The Company shall pay Employee’s reasonable business expenses, including expenses incurred for travel on Company business, in accordance with the policies and procedures of the Company, as may be adopted or amended from time to time at the Company’s sole discretion. If Employee incurs business expenses under this Agreement, the Employee shall submit to the Company a periodic request for reimbursement together with supporting documentation satisfactory to the Company.

1.5LOYAL PERFORMANCE OF RESPONSIBILITIES. Employee shall devote the whole of Employee’s professional time, attention and energies to the performance of Employee’s work responsibilities and shall not, either directly or indirectly, alone or in partnership, consult with, advise

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work for or have any interest in any other business or pursuit during Employee’s employment under this Agreement. Included in the foregoing, but not limited thereto, during the term of this Agreement Employee shall not, directly or indirectly, engage in, or serve as an officer, director, employee, partner, agent or consultant, or otherwise hold any ownership interest in any entity which engages in any business which competes with that of the Company. Any modification of this paragraph shall be made only by an agreement in writing signed by Employee and an authorized representative of the Company.

Article 2: Confidential Information; Post-Employment Obligations; Company Property

2.1THIS AGREEMENT. The terms of this Agreement constitute confidential information, which Employee shall not disclose to anyone other than Employee’s spouse, attorneys, tax advisors, or as required by law. Disclosure of these terms is a material breach of this Agreement and could subject Employee to disciplinary action, including without limitation, termination of employment.

2.2COMPANY PROPERTY. All written materials, records, data, and other documents prepared or possessed by Employee during Employee’s employment by the Company are the Company’s property. All information, ideas, concepts, improvements, discoveries, and inventions that are conceived, made, developed, or acquired by Employee individually or in conjunction with others during Employee’s employment (whether during business hours and whether on Company’s premises or otherwise) which relate to Company business, products, or services are the Company’s sole and exclusive property. All memoranda, notes, records, files, correspondence, drawings, manuals, models, specifications, computer programs, maps, and all other documents, data, or materials of any type embodying such information, ideas, concepts, improvements, discoveries, and inventions are Company property. At the termination of Employee’s employment with the Company for any reason, Employee shall return all of the Company’s documents, data, or other Company property to the Company.

2.3CONFIDENTIAL INFORMATION, NON-DISCLOSURE. Employee acknowledges that the business of the Company and its affiliates is highly competitive and that the Company will provide Employee with access to Confidential Information relating to the business of the Company and its affiliates. “Confidential Information” means and includes the Company’s confidential and/or proprietary information and/or trade secrets that have been developed or used and/or will be developed and that cannot be obtained readily by third parties from outside sources. Confidential Information includes, by way of example and without limitation, the following: information regarding customers, employees, contractors, and the industry not generally known to the public; strategies, methods, books, records, and documents; technical information concerning products, equipment, services, and processes; procurement procedures and pricing techniques; the names of and other information concerning customers, investors, and business affiliates (such as contact name, service provided, pricing for that customer, amount of services used, credit and financial data, and/or other information relating to the Company’s relationship with that customer); pricing strategies and price curves; plans and strategies for expansion or acquisitions; budgets; customer lists; research; financial and sales data; trading terms; evaluations, opinions, and interpretations of information and data; marketing and merchandising techniques; prospective customers’ names and marks; grids and maps; electronic databases; models; specifications; computer programs; internal business records; contracts benefiting or obligating the Company; bids or proposals submitted to any third party; technologies and methods; training methods and training processes; organizational structure; salaries of personnel; payment amounts or rates paid to consultants or other service providers; and other such confidential or proprietary information. Employee acknowledges that this Confidential Information constitutes a valuable, special, and unique asset used by the Company, or its affiliates in their business to obtain a competitive advantage over their competitors. Employee further acknowledges that protection of such Confidential Information against unauthorized disclosure and use is of critical importance to the Company and its affiliates in maintaining their competitive position.

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Employee also will have access to, or knowledge of, Confidential Information of third parties, such as actual and potential customers, suppliers, partners, joint venturers, investors, financing sources and the like, of the Company and its affiliates.

Employee agrees that Employee will not, at any time during or after Employee’s employment with the Company, make any unauthorized disclosure of any Confidential Information of the Company or its affiliates, or make any use thereof, except in the carrying out of the Employee’s employment responsibilities hereunder. Employee also agrees to preserve and protect the confidentiality of third party Confidential Information to the same extent, and on the same basis, as the Company’s Confidential Information.

2.4NON-COMPETITION OBLIGATIONS. Employee acknowledges that the Company is providing Employee with access to Confidential Information. Ancillary to Employee’s agreement not to disclose Confidential Information, to protect the Confidential Information described above, and in consideration for Employee’s receiving access to this Confidential Information and compensation stated in this agreement, the Company and Employee agree to the following non-competition provisions. Employee agrees that during the period of Employee’s non-competition obligations as stated on Exhibit A, Employee will not, directly or indirectly, for Employee or others, in the geographic region stated on Exhibit A, or, if Employee’s geographic region has changed, in any and all geographic regions in which Employee has worked for the 12-month period immediately preceding Employee’s termination of Employment:

a.engage in any business conducted by the Company related to community banking and/or financial activities in which the Company is doing business, has plans to engage in business, or has engaged in business in the preceding 12-month period;

B.perform any job, task, function, or responsibility that Employee has provided for the Company in the preceding 12-month period; or

C.render advice or services to, or otherwise assist, any other person, association or entity in the business of “a,” or “b” above.

Employee understands that the foregoing restrictions may limit Employee’s ability to engage in certain businesses in the geographic region and during the period provided for above, but acknowledges that these restrictions are necessary to protect the Confidential Information the Company has provided to Employee.

Employee agrees that this provision defining the scope of activities constituting prohibited competition with the Company is narrow and reasonable for the following reasons: (i) Employee is free to seek employment with other companies providing services that do not directly or indirectly compete with any business of the Company; (ii) Employee is free to seek employment with other companies in the banking business that do not directly or indirectly compete with any business of the Company; and (iii) there are many other companies in the banking business that do not directly or indirectly compete with any business of the Company. Thus, this restriction on Employee’s ability to compete does not prevent Employee from using and offering the skills that Employee possessed prior to receiving Confidential Information, specialized training, and knowledge from the Company.

2.5NON-SOLICITATION OF CUSTOMERS. For a period of twelve (12) months following the termination of employment for any reason, Employee will not call on, service, solicit, or accept competing business from customers of the Company or its affiliates with whom Employee, within the previous twenty-four (24) months, (i) had or made contact, or (ii) had access to information and files regarding. These restrictions are limited by geography to the specific places, addresses, or locations where a customer is present and available for soliciting or servicing.

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2.6NON-SOLICITATION OF EMPLOYEES. During Employee’s employment, and for a period of twelve (12) months following the termination of employment for any reason, Employee will not, either directly or indirectly, call on, solicit, or induce any other employee or officer of the Company or its affiliates whom Employee had contact with, knowledge of, or association with in the course of employment with the Company to terminate his or her employment, and will not assist any other person or entity in such a solicitation.

2.7EARLY RESOLUTION CONFERENCE/ARBITRATION. The parties are entering into this Agreement with the express understanding that this Agreement is clear and fully enforceable as written. If Employee ever decides later to contend that any restriction on activities imposed by this Agreement no longer is enforceable as written or does not apply to an activity in which Employee intends to engage on behalf of a competing business, Employee first will notify the Company in writing and meet with a company representative at least fourteen (14) days before engaging in any activity that foreseeably could fall within the questioned restriction to discuss resolution of such claims (an “Early Resolution Conference”). Should the parties not be able to resolve disputes at the Early Resolution Conference, the parties agree to use confidential, binding arbitration to resolve the disputes. The arbitration shall be conducted in accordance with then-current employment arbitration rules of the Judicial Arbitration & Mediation Services, Inc. (JAMS) before an arbitrator licensed to practice law in the state in which the Early Resolution Conference occurred or should have occurred. Either party may seek a temporary restraining order, injunction, specific performance, or other equitable relief regarding the provisions of this Section if the other party fails to comply with obligations stated herein. The parties’ agreement to arbitrate applies only to the matters subject to an Early Resolution Conference.

2.8WARRANTY AND INDEMNIFICATION. Employee warrants that Employee is not a party to any other restrictive agreement limiting Employee’s activities for the Company. Employee further warrants that at the time of the signing of this Agreement, Employee knows of no written or oral contract or of any other impediment that would inhibit or prohibit employment with the Company and that Employee will not knowingly use any trade secret, confidential information, or other intellectual property right of any other party in the performance of Employee’s duties hereunder. Employee shall hold the Company harmless from any and all suits and claims arising out of any breach of such restrictive agreement or contracts.

2.9EQUITABLE RELIEF. Employee and the Company agree that in the event of a breach or threatened breach by Employee of any paragraph in Article 2 of this Agreement, the Company will not have an adequate remedy at law. Thus, in the event of such a breach or threatened breach, the Company will be entitled to such equitable and injunctive relief as may be available to prevent and restrain Employee from breaching the provisions of any paragraph in Article 2. The availability to obtain injunctive relieve will not prevent the Company from pursuing any other equitable or legal relief, including the recovery of damages from such breach or threatened breach.

Article 3: Termination of Employment.

3.1AT-WILL EMPLOYMENT. The Company and Employee acknowledge and agree that Employee’s employment is at-will and that either the Company or Employee may, at any time, with or without cause and with or without notice, terminate the employment relationship, including all compensation and benefits under this Agreement. It is the express intent of the parties that Employee is employed at-will; nothing in this Agreement or the relationship between the parties now or in the future may be construed or interpreted to create an employment relationship for a specific length of time or a right to continued employment Similarly, no manager, supervisor or employee of the Company has any authority to limit the Company’s discretion to modify terms and conditions of employment. Only the Company’s Board has the authority to make any such agreement and then only in writing. No implied contract concerning any employment-related decision or term or condition of employment can be established by any other statement, conduct, policy or practice. Examples of terms and conditions of employment that are within the sole discretion of the Company include, but are not limited to, the

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following: promotions; demotions; transfers; hiring and discharge decisions; compensation; training; benefits; qualifications; discipline; layoff or recall; rules; hours and schedules; work assignments; job duties and responsibilities; production standards; subcontracting; reduction, cessation or expansion of operations; sale, relocation, merger or consolidation of operations; determinations concerning the use of equipment, methods or facilities; or any other terms or conditions of employment that the Company may determine to be necessary for the safe, efficient and economic operation of its business.

3.2SEVERANCE. Notwithstanding the foregoing, in the event of termination by the Company without “Cause” or by Employee for “Good Reason,” the Company shall pay to Employee within fifteen days of the date of termination the following:

a.an amount equal to the sum of (1) the Employee’s base salary through the date of termination which has been earned but not paid, (2) any deferred compensation that was previously awarded to or earned by Employee, together with accrued interest or earnings thereon, and (3) unused vacation pay;

b.an amount equal to 100% of one year’s annual base salary; provided that if the termination occurs during a Window Period, because of a Change in Control, the amount shall be 150% of one year’s base salary; and

C.medical benefits coverage for the Employee and his family for the lesser of the period of time that this Agreement would have been in effect, or 12 calendar months.

3.3CAUSE. For purposes of this Agreement, “Cause” shall mean:

A.an act or acts of dishonesty or disloyalty by Employee materially and -adversely affecting the Company or any related entity;

B.employee’s material breach of any of his obligations of this Agreement;

C.employee’s gross negligence or willful misconduct in performance of the duties and services required of him under this Agreement; or

D.employee’s conviction of a felony or Employee’s conviction of a misdemeanor involving moral turpitude.

3.4GOOD REASON. For purposes of this Agreement, “Good Reason” shall mean’

a.the assignment to the Employee of any duties materially inconsistent in any respect with the Employee’s position (including situs, office and title), authority, duties and responsibilities as contemplated by section. 1.2 of this Agreement, excluding any isolated, insubstantial or inadvertent action not taken in bad faith and which is remedied by the Company promptly after notice of such, action;

B.any material failure by the Company to comply with any of the provisions of this Agreement;

C.the Company requiring the Employee to be based at any office outside the Beaumont metropolitan area or other mutually agreed location; or

D.any reduction in annual salary as stated in section 1.3 or as hereafter increased.

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3.5CHANGE IN CONTROL. The Company recognizes that the position held by Employee is one of those requiring high quality job performance in order to promote and protect the best interests of the Company. The Company further recognizes that (i) it is possible that a Change in control (as defined herein) could occur at some time in the future, (ii) the uncertainty with such a possibility could result in the distraction of the ‘Employee from his assigned duties and responsibilities, (iii) it is in the best interest of the Employer to assure the continued attention by the Employee to such duties and responsibilities without such distraction, and (iv) Employee must be able to participate in the assessment and evaluation of any proposal which could effect a Change in Control without the Employee being influenced in the exercise of his judgment by uncertainties, regarding his future financial security. A “Change in Control” is defined as any of the following:

a.a change in the ownership of the capital stock of the Company whereby a corporation, person, or group acting in concert (hereinafter this Agreement shall collectively refer, to any combination of these three (a corporation, person or group acting in concert) as a “Person” as described in Section 1 4(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), acquires, directly or indirectly, beneficial ownership (within the meaning of Rule I 3d-3 promulgated under the Exchange Act) of a number of shares of the Bank or the Company which constitutes fifty percent (50%) or more of the combined voting power of the Bank’s or the Company’s the outstanding capital stock then entitled to vote generally in the election of directors;

b.the persons who were members of the Board of Directors of the Company or the Bank immediately prior to a tender offer, exchange offer or any combination of the foregoing, cease to constitute a majority of the Board of Directors of the Company or the Bank;

c.a tender offer or exchange offer is made by any Person which is successfully completed and which results in such Person beneficially owning (within the meaning of Rule 13d-3 promulgated under the Exchange Act) either (1) fifty percent (50%) or more of the Bank’s or the Company’s outstanding shares of common stock or (2) shares of capital stock having fifty percent (50%) or more of the combined voting power of the Bank’s or the Company’s then outstanding capital stock (other than an offer made by the Bank or Employer), and sufficient shares are acquired under the offer to cause such Person to own fifty percent (50%) or more of the voting power of the Bank or the Company; or

d.the occurrence of any other transaction or series of related transactions which have substantially the same effect as the transactions specified in any of the preceding clauses (any one of the foregoing being herein called a “Transaction.”

3.6.WINDOW PERIOD. A “Window Period” shall mean the 180-day period immediately following any Change in Control.

3.7Notwithstanding any provisions of this Agreement to the contrary, in the event that the aggregate payments or benefits to be made or afforded pursuant to this Agreement, would be deemed to include an “excess parachute payment” under Section 2800 of the Internal Revenue Code, then the termination benefits shall be reduced to an amount which is One Dollar ($1.00) less than the greatest amount allowed to be paid under Section 2800 without constituting an “excess parachute payment”.

Article 4: Miscellaneous

4.1GOVERNING LAW. This Agreement shall be construed in accordance with and governed by the laws of the State of Texas.

4.2INTERPRETATION. This Agreement shall be interpreted in accordance with the plain meaning of its terms and-not strictly for or against either party.

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4.3HEADINGS. The headings of this Agreement are intended solely for the convenience of reference and should be given no effect in the construction or interpretation of this Agreement.

4.4ENTIRE AGREEMENT. This Agreement embodies the complete agreement and understanding of the parties related to Employee’s employment by the Company, superseding any and all other prior or contemporaneous oral or written agreements between the parties hereto with respect to the employment of Employee by the Company, and contains all of the covenants and agreements of any kind whatsoever between the parties with respect to such employment. Each party acknowledges that no representations, inducements, promises or agreements, whether oral or written, express or implied, have been made by either party or anyone acting on behalf of a party, that are not incorporated herein and that no other agreement or promise not contained herein shall be valid or binding.

4.5MODIFICATION. This Agreement may be amended only by an agreement in writing signed by Employee and the Company.

4.6WAIVER. The failure of either party to insist, in any one or more instances, upon performance of the terms or conditions of this Agreement shall not be construed as a waiver or a relinquishment of any right granted under this Agreement or of the future performance of any such term, covenants or condition.

4.7INVALIDITY. Should any provision(s) in this Agreement be held by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions shall be unaffected and shall continue in full force and effect, and the invalid, void or unenforceable provision(s) shall be deemed not to be part of this Agreement.

4.8VOLUNTARY AGREEMENT. Employee and the Company represent and agree that each has reviewed all aspects of this Agreement, has carefully read and fully understands all provisions of this Agreement, and is voluntarily entering into this Agreement. Each party represents and agrees that such party has had the opportunity to review any and all aspects of this Agreement with the legal, tax or other advisor or advisors of such party’s choice before executing this Agreement.

4.9SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of and shall be enforceable by and against Employee’s heirs, beneficiaries and legal representatives. It is agreed that the rights and obligations of Employee may not be delegated or assigned except as specifically set forth in this Agreement. In the event of a sale of all or substantially all of the Company’s capital stock, sale of all or substantially all of the Company’s assets, or consolidation or merger of the Company with or into another corporation or entity or individual, the Company may assign its rights and obligations under this Agreement to its successor-in-interest, and such successor-in-interest shall be deemed to have acquired all rights and assumed all obligations of the Company under this Agreement.

4.10COUNTERPARTS. This Agreement may be executed in counterparts and each counterpart, when executed, shall have the validity of a second original. Photographic or facsimile copies of any such signed counterparts may be used in lieu of the original for any purpose.

DATED:	2/28/08	/s/ J. Pat Parsons
		J. Pat Parsons
DATED:	5/21/08	/s/ Walter Umphrey
		For CBFH, Inc.

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Exhibit “A” to

Employment Agreement

Between CBFH, Inc. and J. Pat Parsons

Employee Name:	J. Pat Parsons
Term:	Five years from the date Employee signs this Agreement. Upon the completion of the first anniversary date and the completion of each anniversary date thereafter the agreement will extend for one (1) year automatically renewing for a five (5) year term, unless terminated as provided in the Employment Agreement.
Position:	Chairman and Chief Executive Officer of Community Bank of Texas, N.A., and President and Chief Executive Officer of the Company.
Location:	Beaumont, Texas
Monthly Base Salary:	$20,833.33 subject to annual review by the Company’s Board of Directors.
Deferred Compensation	$100,000 per year for ten years beginning at age 65 payable to Employee, Employee’s designee, or his Estate. This is intended to replace the BOLI that Employee forfeited upon leaving his former employer. Employee need not remain the President and CEO to continue to participate in the deferred compensation plan, although Employee must remain employed in some capacity up to age 65 to continue to participate, provided, if Employee dies prior to age 65 while employed by the Company, his designee and/or estate shall receive the remainder of his deferred compensation.
Bonus:	Participation in the Company’s Annual Bonus plan in which other executive officers and/or employees may participate subject to the terms of the plans.
Stock Grants	25,000 shares with cliff vesting at five years of 100% of shares. Employee need not remain the President and CEO to continue to vest in the stock grants. Should employee die before he reaches age 65, all shares shall immediately vest and shall be transferred to his estate. Notwithstanding the foregoing, the parties agree that the Company will convey the shares to minimize tax consequences to the entire shareholder group of the Company and that the Company will gross up, if necessary, this stock award, in cash, to keep Employee whole should tax rates increase from those in effect in 2007.
.
Annual Physical	The Company will pay the entire cost of an annual executive physical for Employee.
Vacation	Six weeks per year which shall accrue January 1 of each year. Weeks not taken during a calendar year shall not carry over to the next year. Accrued but unused vacation shall be paid upon termination.

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Geographic Region of Non-Competition:	100 miles surrounding any facility owned or operated by the Company.
Period of Non-Competition obligations:	During the term of this agreement and/or employment and for two years after termination of employment.

For CBFH, Inc.		J. Pat Parsons
By:	/s/ Walter Umphrey	/s/ J. Pat Parsons
	Name	This 28 day of Feb, 2008
	Title
	This 28 day of May, 08

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Exhibit “A” to

Employment Agreement

Between CBFH, Inc. and J. Pat Parsons

Employee Name:	J. Pat Parsons
Term:	Five years from the date Employee signs this Agreement. Upon the completion of the first anniversary date and the completion of each anniversary date thereafter the agreement will extend for one (1) year automatically renewing for a five (5) year term, unless terminated as provided in the Employment Agreement.
Position:	Chairman and Chief Executive Officer of Community Bank of Texas, N.A., and President and Chief Executive Officer of the Company.
Location:	Beaumont, Texas
Monthly Base Salary:	$25,000.00* subject to annual review by the Company’s Board of Directors.
Deferred Compensation	$100,000 per year for ten years beginning at age 65 payable to Employee, Employee’s designee, or his Estate. This is intended to replace the BOLI that Employee forfeited upon leaving his former employer. Employee need not remain the President and CEO to continue to participate in the deferred compensation plan, although Employee must remain employed in some capacity up to age 65 to continue to participate, provided, if Employee dies prior to age 65 while employed by the Company, his designee and/or estate shall receive the remainder of his deferred compensation.
Bonus:	Participation in the Company’s Annual Bonus plan in which other executive officers and/or employees may participate subject to the terms of the plans.
Stock Grants	25,000 shares with cliff vesting at five years of 100% of shares. Employee need not remain the President and CEO to continue to vest in the stock grants. Should employee die before he reaches age 65, all shares shall immediately vest and shall be transferred to his estate. Notwithstanding the foregoing, the parties agree that the Company will convey the shares to minimize tax consequences to the entire shareholder groups of the Company.
Annual Physical	The Company will pay the entire cost of an annual executive physical for Employee.
Vacation	Six weeks per year which shall accrue January 1 of each year. Weeks not taken during a calendar year shall not carry over to the next year. Accrued but unused vacation shall be paid upon termination.
Medical Plan Coverage	If Employee terminates employment after he turns age 62 and prior to age 65, Employee, Employee’s spouse and eligible dependents shall remain covered by the Bank’s medical plan until age 65 at Employee’s cost used for COBRA continuation coverage. Employee shall continue to be subject to all other terms of the medical plan.

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Geographic Region of Non- competition:	100 miles surrounding any facility owned or operated by the Company.
Period of Non-Competition obligations:	During the term of this agreement and/or employment and for two years after termination of employment.

For CBFH, Inc.		J. Pat Parsons
By:	/s/ Walter Umphrey	/s/ J. Pat Parsons
	Name	This 1 day of Oct, 2008
	Title
	This 1st day of October, 2008

*J. Pat Parsons’ base salary was adjusted as directed by George Simonton on 10/3/08. The effective date of this adjustment was 10/1/08.

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EX-10.7

Exhibit 10.7

AMENDMENT TO EMPLOYMENT AGREEMENT

THIS AMENDMENT TO THE EMPLOYMENT AGREEMENT entered into by and between CBFH, Inc. (hereinafter “Company”) and J. Pat Parsons (hereinafter “Employee”) (hereinafter collectively referred to as the “Parties”).

WHEREAS, the Parties entered into an Employment Agreement (hereinafter “Agreement”) which may be modified by a writing signed by the Parties pursuant to Section 4.5 of the Agreement; and

WHEREAS, the Parties desire to amend the Agreement to ensure compliance with Section 409A of the Internal Revenue Code.

NOW THEREFORE, the Agreement is hereby amended as follows, effective December 31,2008:

1.Section 3.2 will be amended to read as follows:

“3.2SEVERANCE. Notwithstanding the foregoing, in the event of termination by the Company without “Cause” or by the Employee for “Good Reason,”(i) the stock grants described in Exhibit A shall vest immediately, and (ii) the Company shall pay to Employee within fifteen days of the date of termination the following:

a.an amount equal to the sum of (1) the Employee’s base salary through the date of termination which has been earned but not paid and (2) unused vacation pay;

b.an amount equal to 100% of one year’s annual base salary paid in a lump sum; provided that if the termination occurs during a Window Period, because of a Change in Control, the amount shall be 150% of one year’s base salary; and

c.medical benefits coverage for the Employee and his family for the lesser of the period of time that this Agreement would have been in effect, or 12 months.”

2.Section 3.7 shall be amended by replacing the term “Section 2800” with the term “Section 280G.”

3.Section 4.2 shall be amended to read as follows:

“4.2INTERPRETATION. This Agreement shall be interpreted in accordance with the plain meaning of the terms and not strictly for or against either party. This Agreement is intended to comply with Section 409A of the Internal Revenue Code and the regulations thereunder (“Section 409A”) and will be interpreted and operated in a manner consistent with that intent. To the extent that any amounts paid to the Employee under this Agreement are subject to Section 409A and the Employee is a specified employee, as defined under Section 409A, any such amounts payable on account of the Employee’s separation from service shall be delayed six months following the Employee’s separation from service to the extent required by

Section 409A. Any reimbursements of expenses that are subject to Section 409A under this Agreement shall be paid no later than the year following the year in which the expenses are incurred. All references in this Agreement to a termination of employment or any other similar reference shall be interpreted as references to a separation from service, within the meaning of Section 409A, with the Company and all entities treated as a single employer with the Company pursuant to Section 409A.”

4.The “Deferred Compensation” section of Exhibit A to the Agreement shall be amended to read as follows:

“Deferred Compensation$100,000 per year for ten years beginning at age 65 payable to Employee, Employee’s designee, or his Estate. This is intended to replace the BOLI that Employee forfeited upon leaving his former employer. Employee need not remain the President and CEO to continue to participate in the deferred compensation plan, although Employee must remain employed in some capacity up to age 65 to continue to participate, provided, if Employee dies prior to age 65 while employed by the Company, his designee and/or estate shall receive the remainder of his deferred compensation in the same installments Employee would have received.”

5.The “Stock Grants” section of Exhibit A to the Agreement shall be amended to read as follows:

“Stock Grants25,000 shares with cliff vesting at five years of 100% of shares. Employee need not remain the President and CEO to vest in the stock grants, although Employee must remain employed in some capacity, provided, (i) if Employee’s employment is terminated by the Company without “Cause” or by Employee for “Good Reason,” all shares shall immediately vest as provided in Section 3.2, and (ii) if Employee dies prior to age 65, all shares shall immediately vest and shall be transferred to his estate. Notwithstanding the foregoing, the parties agree that the Company will convey the shares to minimize tax consequences to the entire shareholder groups of the Company.”

IN WITNESS WHEREOF, the Company has caused this amendment to be executed by its duly authorized officer, and the Employee has executed this amendment, on the dates shown below.

For CBFH, Inc.		J. Pat Parsons
By:	/s/ George Simonton	/s/ J. Pat Parsons
	Name George Simonton	This 30 day of DEC., 2008
	Title EVP
	This 30 day of December, 2008

EX-10.8

Exhibit 10.8

AMENDMENT TO EMPLOYMENT AGREEMENT

This Amendment to Employment Agreement (this “Amendment”) is made this 6th day of March, 2013 effective as hereinafter provided between J. Pat Parsons (hereinafter “Employee”) and CBFH, Inc. (hereinafter “Company”).

WHEREAS, Employee and the Company entered into that certain Employment Agreement executed February 28, 2008 and May 21, 2008, as amended from time to time (as amended, the “Employment Agreement”);

WHEREAS, the Company and VB Texas, Inc., a Texas corporation (“VBT”) propose to enter into and execute that certain Agreement and Plan of Merger dated as of the date hereof (the “Merger Agreement”), pursuant to which VBT will merge with and into CBFH in exchange for consideration as set forth in the Merger Agreement (the “Merger”);

WHEREAS, Employee’s obligations under this Agreement are effective as of the Effective Time (as defined in the Merger Agreement) of the Merger (referred to herein as the “Effective Date”);

WHEREAS, the Merger Agreement requires, as a condition to the closing, that Employee execute and deliver this Agreement to the Company;

NOW, THEREFORE, in consideration of the receipt of consideration under the Merger Agreement and of the mutual promises set forth in this Agreement, the parties hereto agree as follows, effective as of the Effective Date:

1.Section 1.2 of the Employment Agreement is hereby amended to read in full as follows:

1.2WORK RESPONSIBILITIES. Subject to the terms of this Agreement, Employee is employed in the position of Co-Chief Executive Officer and Chairman of Community Bank of Texas, National Association (“CBOT”), and President and Co-Chief Executive Officer of the Company and upon the merger of CBOT and the Vista Bank Texas, shall be the Co-Chief Executive Officer and Chairman of the surviving bank (the “Surviving Bank”), and shall perform the functions and responsibilities of that position through December 31, 2013. Effective January 1, 2014, Employee will be employed in the position of Chairman of CBOT and the Surviving Bank and President of the Company and will perform the functions and responsibilities of that position through December 31, 2014. Effective January 1, 2015, Employee will be employed in the position of Vice Chairman of CBOT, the Surviving Bank and the Company. Employee shall be appointed a director of CBOT and the Surviving Bank and, subject to shareholder approval, a director of the Company. Employee’s position, job descriptions, duties and responsibilities may be

modified from time to time in the sole discretion of the Board of Directors of the Company.

2.The “Position” section of Exhibit A to the Employment Agreement shall be amended to read in full as follows:

“PositionEmployee will serve as the Co-Chief Executive Officer and Chairman of CBOT and the Surviving Bank and President and Co-Chief Executive Officer of the Company through December 31, 2013. Effective January 1, 2014, Employee will serve as the sole Chairman of CBOT and the Surviving Bank and President of the Company. Effective January 1, 2015, Employee will serve as Vice Chairman of CBOT and the Surviving Bank and Vice Chairman of the Company. Employee shall be appointed a director of CBOT and the Surviving Bank and, subject to shareholder approval, a director of the Company.”

3.This Amendment may be amended only by an agreement in writing signed by Employee and the Company. This Amendment will automatically terminate if the Merger Agreement is terminated.

4.Except as herein provided, the terms of the Employment Agreement remain in full force and effect.

5.This Amendment may be executed in counterparts and each counterpart, when executed, shall have the validity of a second original. Photographic or facsimile copies of any such signed counterparts may be used in lieu of the original for any purpose.

IN WITNESS WHEREOF, the Company has caused this Amendment to be executed by its duly authorized officer, and the Employee has executed this Amendment on the date set forth above.

/s/ J. Pat Parsons
J. Pat Parsons
CBFH, Inc.
By:	/s/ Thomas Walter Umphrey
Name:	Thomas Walter Umphrey
Title:	Chairman of the Board

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EX-10.9

Exhibit 10.9

CBTX, INC.

2017 OMNIBUS INCENTIVE PLAN

CBTX, INC.
2017 OMNIBUS INCENTIVE PLAN

(adopted by the Company’s Board of Directors on August 7, 2017)
(approved by the Company’s shareholders on September 13, 2017)

1.Purpose.  The purpose of the CBTX, Inc. 2017 Omnibus Incentive Plan (the “Plan”) is to provide an additional incentive to selected officers, employees, non-employee directors and consultants of the Company or its Subsidiaries (as hereinafter defined) whose contributions are essential to the growth and success of the Company’s business, and to attract and retain competent and dedicated persons whose efforts will contribute to and promote the long-term growth and profitability of the Company. To accomplish such purposes, the Plan provides that the Company may grant Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Stock Bonuses, Other Stock-Based Awards, Cash Awards, Performance Awards or any combination of the foregoing.

2.Definitions.  Wherever the following terms are used they will have the meanings set forth below, unless the context clearly indicates otherwise:

(a)Administrator” means the Board, or, if and to the extent the Board delegates such responsibility, the Committee.

(b)“Affiliate” means a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the Person specified. An entity is an Affiliate of the Company for purposes of this definition only for such periods as the requisite ownership or control relationship is maintained.

(c)“Award” means any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Stock Bonus, Other Stock-Based Award, Cash Award or Performance Award, together with any other right or interest granted under the Plan to a Participant.

(d)“Award Agreement” means the writing evidencing an Award or a notice of an Award delivered to a Participant by the Company.

(e)“Bank” means CommunityBank of Texas, National Association.

(f)“Beneficial Owner” has the meaning set forth in Rule 13d-3 promulgated under the Exchange Act, as amended from time to time.

(g)“Board” means the Company’s Board of Directors.

(h)“Cash Award” means an Award granted under Section 13 of the Plan.

(i)“Change of Control” means, except as otherwise provided in an Award Agreement, the occurrence of any of the following:

(i)A transaction or series of related transactions (other than an offering of Stock to the general public through a registration statement filed with the Securities and Exchange Commission) whereby any Person directly or indirectly becomes the Beneficial Owner of securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding securities;

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(ii)During any twenty-four (24) consecutive month period, the individuals who, at the beginning of such period, constitute the Board (the “Incumbent Directors”) cease for any reason other than death to constitute at least a majority of the Board; provided, however, that an individual who becomes a member of the Board subsequent to the beginning of the twenty-four (24) month period will be deemed to have satisfied such twenty-four (24) month requirement (and be an Incumbent Director) if such director was elected by, or on the recommendation of or with the approval of, at least two-thirds (2/3) of the directors who then qualified as Incumbent Directors;

(iii)The consummation of a sale or disposition of all or substantially all the Company’s assets in one or a series of related transactions, other than (i) such a sale, disposition or lease to an entity, 50% or more of the combined voting power of the voting securities of which are owned by stockholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale or disposition or (ii) the distribution directly to the Company’s stockholders (in one distribution or a series of related distributions) of all of the stock of one or more Subsidiaries of the Company that represent substantially all of the Company’s assets;

(iv)There is consummated a merger or consolidation of the Company or any direct or indirect Subsidiary with any other corporation or other entity, other than (i) a merger or consolidation which results in (A) the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary under an employee benefit plan of the Company or any Subsidiary of the Company, more than 50% of the combined voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation and (B) the individuals who comprise the Board immediately prior thereto constituting immediately thereafter at least a majority of the board of directors of the Company, the entity surviving such merger or consolidation or, if the Company or the entity surviving such merger is then a Subsidiary, the ultimate parent thereof, or (ii) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities Beneficially Owned by such Person any securities acquired directly from the Company or its Affiliates) representing 50% or more of the combined voting power of the Company’s then outstanding securities; or

(v)The stockholders of the Company approve a plan of complete liquidation or dissolution of the Company.

(j)“Code” means the Internal Revenue Code of 1986, as amended.  Any reference herein to a section of the Code includes any successor provision to such section.

(k)“Committee” means a committee of two or more directors designated by the Board to administer this Plan, and, to the extent the Board determines it is appropriate for the compensation realized from Awards under the Plan to be “performance-based” compensation under Section 162(m) of the Code, will be a committee or subcommittee of the Board composed of two or more members, each of whom is an “outside director” within the meaning of Section 162(m) of the Code, and which, to the extent the Board determines it is appropriate for Awards under the Plan to qualify for the exemption available under Rule 16b-3, will be a committee or subcommittee of the Board composed of two or more members, each of whom is a “non-employee director” within the meaning of Rule 16b-3.

(l)“Company” means CBTX, Inc., and, where appropriate, each of its Affiliates and successors.

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(m)“Covered Employee” means an individual who is both (i) designated by the Committee as likely to be a “covered employee” within the meaning of Section 162(m)(3) of the Code, and (ii) expected by the Committee to be the recipient of compensation (other than “performance-based compensation” under Section 162(m)(3) of the Code) in excess of $1,000,000 for the tax year of the Company with regard to which a deduction for compensation paid to such Participant under the Plan would be allowed notwithstanding Section 162(m) of the Code.

(n)“Deferred Stock Unit” means a right granted to a Participant under Section 10 to receive shares of Stock (or the cash equivalent if the Committee so provides) at a future time as determined by the Committee, or as determined by the Participant within guidelines established by the Committee in the case of voluntary deferral elections.

(o)“Effective Date” means the date on which this Plan was adopted by the Board, as set forth in Section 37.

(p)“Exchange Act” means the Securities Exchange Act of 1934, as amended.

(q)“Fair Market Value” means, with respect to Stock as of any specified date, (i) if the Stock is traded on a national securities exchange, the closing price of the Stock on the immediately preceding date (or if no sales occur on that date, on the last preceding date on which such sales of the Stock are so reported); (ii) if the Stock is not traded on a national securities exchange but is traded over the counter, the average between the reported high and low or closing bid and asked prices of the Stock on the most recent date on which Stock was publicly traded; (iii) if the Stock is not publicly traded, the amount determined by the Administrator in its discretion in such manner as it deems appropriate; or (iii) if the specified date is the date of an initial public offering of Stock, the offering price under such initial public offering.  In all events, Fair Market Value will be determined pursuant to a method that complies with the requirements of Section 409A of the Code.

(r)“Incentive Stock Option” or “ISO” means an Option that is intended to qualify for special Federal income tax treatment pursuant to Sections 421 and 422 of the Code, and which is so designated in the applicable Award Agreement.

(s)“Non-Employee Director” means a member of the Board who is not an employee of the Company or any of its subsidiaries.

(t)“Nonqualified Stock Option” means an Option that is not an Incentive Stock Option.

(u)“Option” means a right granted to a Participant under Section 7 to purchase Stock at a specified price during specified time periods.

(v)“Other Stock-Based Award” means an Award granted to a Participant under Section 12.

(w)“Participant” means, as of a specified date, a person who holds an Award that is outstanding as of such specified date.

(x)“Performance Award” means a right, granted to a Participant under Section 14, to receive a cash payment, Stock or other Award based upon performance criteria specified by the Administrator (or the Committee if the Performance Award is a Qualified Performance-Based Award).

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(y)“Person” has the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term will not include (i) the Company or any Subsidiary thereof, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary thereof, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company.

(z)“Qualified Performance-Based Award” means a Performance Award granted to a Covered Person that is intended to qualify as “performance-based compensation” within the meaning of Section 162(m)(3) of the Code.

(aa)“Restricted Stock” means Stock granted to a Participant under Section 9, that is subject to certain restrictions and to a risk of forfeiture.

(bb)“Restricted Stock Unit” means an unfunded and unsecured right granted to a Participant under Section 10, to receive Stock, cash or a combination thereof at the end of a specified period, which right is subject to certain restrictions and to a risk of forfeiture.

(cc)“Rule 16b-3” means Rule 16b-3, promulgated by the Securities and Exchange Commission under Section 16 of the Exchange Act, applicable to the Plan and Participants.

(dd)“Section 162(m) Transition Period” has the meaning set forth in Section 14(a).

(ee)“Securities Act” means the Securities Act of 1933, as amended.

(ff)“Stock” means the Company’s common stock, par value $10.00 per share.

(gg)“Stock Bonus” means a bonus payable in fully vested shares of Stock granted pursuant to Section 11.

(hh)“Stock Appreciation Right” or “SAR” means a right to receive, upon exercise thereof, the excess of (i) the Fair Market Value of one share of Stock on the date of exercise over (ii) the exercise price of the SAR.

(ii)“Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership, association or business entity of which: (A) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof; or (B) if a limited liability company, partnership, association or other business entity (other than a corporation), a majority of partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination thereof.  For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association or other business entity (other than a corporation) if such Person or Persons shall be allocated a majority of limited liability company, partnership, association or other business entity gains or losses or shall be or control any managing member, general partner or analogous controlling Person of such limited liability company, partnership, association or other business entity.

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For purposes hereof, references to a “Subsidiary” of any Person shall be given effect only at such times that such Person has one or more Subsidiaries and, unless otherwise indicated, the term “Subsidiary” refers to a Subsidiary of the Company.

3.Administration.  The Plan shall be administered by the Administrator. The Administrator shall have the authority in its sole discretion, subject to and not inconsistent with the express provisions of the Plan, to administer the Plan and to exercise all the powers and authorities either specifically granted to it under the Plan or necessary or advisable in the administration of the Plan, including, without limitation, the authority (a) to the extent not inconsistent with the Plan, prescribe, amend and rescind rules and regulations relating to the Plan including rules governing its own operations, (b) make all determinations necessary or advisable in administering the Plan, (c) correct any defect, supply any omission and reconcile any inconsistency in the Plan, (d)  grant Awards and determine who will receive Awards, when such Awards will be granted and the terms of such Awards, including setting forth provisions with regard to the termination of a recipient’s employment or service, (e) accelerate the time or times at which an Award becomes vested, unrestricted or may be exercised, and (f) waive or amend any goals, restrictions or conditions set forth in an Award Agreement, unless otherwise provided in the Award Agreement.  The determinations of the Administrator will be final, binding and conclusive.  By accepting any Award under the Plan, each Participant and each person claiming under or through him or her will be conclusively deemed to have indicated his or her acceptance and ratification of, and consent to, any action taken under the Plan by the Administrator.

4.Stock Subject to Plan.

(a)Total Shares Available.  The maximum number of shares of Stock reserved for issuance under the Plan shall be 300,000 shares (subject to adjustment as provided by Section 4(b)(iii)), all of which may be granted in respect of Options (including Incentive Stock Options) or Stock Appreciation Rights. The shares of Stock that may be delivered pursuant to Awards may be authorized but unissued Stock or authorized and issued Stock held in the Company’s treasury, or otherwise acquired for purposes of the Plan.

(b)Individual Awards.  Except as provided under this Section 4(b), there is no limit on the amount of cash and securities (other than the overall Plan limit on shares of Stock as provided in Section 4(a)) that may be subject to Awards to any eligible individual under the Plan.

(i)Annual Limit on Qualified Performance-Based Awards.  The maximum number of shares of Stock with respect to which Qualified Performance-Based Awards may be granted during any calendar year to any Covered Employee shall be 50,000 (as adjusted pursuant to the provisions of Section 4(c)). The maximum payment under any Qualified Performance-Based Award denominated in dollars that may be granted during any calendar year to any Covered Employee shall be $1,500,000 for each 12-month period contained in the performance period for such Qualified Performance-Based Award.

(ii)Annual Limit on Options and SARs.  In any single calendar year no individual may be granted Options or SARs covering or relating to more than 50,000 shares of Stock, subject to adjustment in a manner consistent with any adjustment made pursuant to Section 4(c).

(iii)Annual Limit on Awards to Non-Employee Directors.  The maximum number of shares of Stock with respect to which Awards may be granted during any calendar year to any Non-Employee Director shall be 15,000 (as adjusted pursuant to the provisions of Section 4(c)). The maximum payment under any Award denominated in dollars that may be granted during any calendar year to any Non-Employee Director shall be $500,000.

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(c)Adjustment for Change in Capitalization.  In the event that any special or extraordinary dividend or other extraordinary distribution is declared (whether in the form of cash, Stock, or other property), or there occurs any recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, spin-off, combination, repurchase, share exchange or other similar corporate transaction or event, the Administrator shall adjust, as it deems necessary or appropriate, (i) the number and kind of shares of stock which may thereafter be issued in connection with Awards, (ii) the number and kind of shares of stock or other property, including cash, issued or issuable in respect of outstanding Awards, (iii) the exercise price, grant price or purchase price relating to any Award, and (iv) the limitations set forth in Section 4(a) and (b); provided that, with respect to Incentive Stock Options, such adjustment shall be made in accordance with Section 424 of the Code; and provided further that no such adjustment shall cause any Award hereunder which is or becomes subject to Section 409A of the Code to fail to comply with the requirements of such section.

(d)Reuse of Shares.  If any shares of Stock subject to an Award are forfeited, cancelled, exchanged or surrendered or if an Award otherwise terminates or expires without a distribution of shares to the Participant, the shares of Stock with respect to such Award shall, to the extent of any such forfeiture, cancellation, exchange, surrender, termination or expiration, again be available for Awards under the Plan.  In addition, any shares of Stock that are exchanged by a Participant or withheld by the Company as full or partial payment in connection with any Option or Stock Appreciation Right under the Plan, as well as any shares of Stock exchanged by a Participant or withheld by the Company or any Subsidiary to satisfy the tax withholding obligations related to any Option or Stock Appreciation Right under the Plan, shall again be available for Awards under the Plan.  Upon the exercise of any Award granted in tandem with any other Awards, such related Awards shall be cancelled to the extent of the number of shares of Stock as to which the Award is exercised and, notwithstanding the foregoing, such number of shares shall no longer be available for Awards under the Plan. In addition, (i) to the extent an Award is denominated in shares of Stock, but paid or settled in cash, the number of shares of Stock with respect to which such payment or settlement is made shall again be available for Awards under the Plan and (ii) shares of Stock underlying Awards that can only be settled in cash shall not be counted against the aggregate number of shares of Stock available for Awards under the Plan.

5.Eligibility.  The individuals who shall be eligible to receive Awards under the Plan shall be such employees of the Company and its Subsidiaries (including officers of the Company and its Subsidiaries, whether or not they are directors of the Company), consultants to the Company and Non-Employee Directors as the Administrator shall select from time to time. The grant of an Award hereunder in any year to any individual shall not entitle such individual to a grant of an Award in any future year.

6.Awards Under the Plan; Award Agreement.  The Administrator may grant Awards in such amounts and with such terms and conditions as the Administrator shall determine, subject to the provisions of the Plan.  Each Award granted under the Plan (except an unconditional Stock Bonus) shall be evidenced by an Award Agreement which shall contain such provisions as the Administrator may in its sole discretion deem necessary or desirable and which are not in conflict with the terms of the Plan. By accepting an Award, a Participant shall be deemed to agree that the Award shall be subject to all of the terms and provisions of the Plan and the applicable Award Agreement.

7.Options.  The Administrator is authorized to grant Options to eligible individuals on the following terms and conditions:

(a)Identification of Options.  Each Option shall be clearly identified in the applicable Award Agreement as either an Incentive Stock Option or a Nonqualified Stock Option.

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(b)Exercise Price.  Each Award Agreement with respect to an Option shall set forth the amount per share (the “option exercise price”) payable by the Participant to the Company upon exercise of the Option. The option exercise price shall be equal to or greater than the Fair Market Value of a share of Stock on the date of grant.  Other than with respect to an adjustment described in Section 4(c), in no event shall the exercise price of an Option be reduced following the grant of an Option, nor shall an Option be cancelled in exchange for a replacement Option with a lower exercise price or in exchange for another type of Award or cash payment without stockholder approval.

(c)Term and Exercise of Options.

(i)Each Option shall become exercisable at the time or times determined by the Administrator and set forth in the applicable Award Agreement.  At the time of grant of an Option, the Administrator may impose such restrictions or conditions to the exercisability of the Option as it, in its absolute discretion, deems appropriate, including, but not limited to, achievement of performance criteria. Subject to Section 7(d) hereof, the Administrator shall determine and set forth in the applicable Award Agreement the expiration date of each Option, which shall be no later than the tenth anniversary of the date of grant of the Option.

(ii)An Option shall be exercised by delivering the form of notice of exercise provided by the Company or in such other form as approved by the Company. Payment for shares of Stock purchased upon the exercise of an Option shall be made on the effective date of such exercise by one or a combination of the following means: (A) in cash or by personal check, certified check, bank cashier’s check or wire transfer; (B) in shares of Stock owned by the Participant and valued at their Fair Market Value on the effective date of such exercise; (C) broker assisted cashless exercise or net exercise; or (D) by any such other method as the Administrator may from time to time authorize in its sole discretion. Except as authorized by the Administrator, any payment in shares of Stock shall be effected by the delivery of such shares to the Secretary of the Company (or his designee), duly endorsed in blank or accompanied by stock powers duly executed in blank, together with any other documents and evidences as the Secretary of the Company shall require.

(iii)Shares of Stock purchased upon the exercise of an Option shall, as determined by the Administrator, be evidenced by a book entry record or certificate issued in the name of or for the account of the Participant or other individual entitled to receive such shares, and delivered to the Participant or such other individual as soon as practicable following the effective date on which the Option is exercised.

(d)Provisions Relating to Incentive Stock Options. Incentive Stock Options may only be granted to employees of the Company and its Subsidiaries, in accordance with the provisions of Section 422 of the Code. To the extent that the aggregate Fair Market Value of shares of Stock with respect to which Incentive Stock Options are exercisable for the first time by a Participant during any calendar year under the Plan and any other stock option plan of the Company or a Subsidiary shall exceed $100,000, such Options shall be treated as Nonqualified Stock Options. For purposes of this Section 7(d), Fair Market Value shall be determined as of the date on which each such Incentive Stock Option is granted. No Incentive Stock Option may be granted to an individual if, at the time of the proposed grant, such individual owns (or is deemed to own under the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company unless (i) the exercise price of such Incentive Stock Option is at least 110% of the Fair Market Value of a share of Stock at the time such Incentive Stock Option is granted and (ii) such Incentive Stock Option is not exercisable after the expiration of five years from the date such Incentive Stock Option is granted. For purposes of the grant of Incentive Stock Options, a “Subsidiary” shall mean a “subsidiary corporation” as defined in Section 424(f) of the Code.

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(e)Effect of Termination of Employment (or Provision of Services).  Except as may otherwise be provided in the applicable Award Agreement, and subject to the Administrator’s authority under Section 3 hereof:

(i)In the event that the employment of a Participant with the Company and its Subsidiaries (or the Participant’s service to the Company and its Subsidiaries) shall terminate for any reason other than death or disability, each Option granted to such Participant that is outstanding and exercisable as of the date of such termination shall remain exercisable for the 90-day period immediately following such termination, but in no event following the expiration of its term, and any Option that is not exercisable as of the date of such termination shall be terminated at the time of such termination.

(ii)In the event that the employment of a Participant with the Company and its Subsidiaries (or the Participant’s service to the Company and its Subsidiaries) shall terminate on account of the Participant’s death or disability, each Option granted to such Participant that is outstanding and exercisable as of the date of such termination shall remain exercisable for the one-year period immediately following such termination, but in no event following the expiration of its term, and any Option that is not exercisable as of the date of such termination shall be terminated at the time of such termination.

(f)Leave of Absence.  In the case of any Participant on an approved leave of absence, the Administrator may make such provision respecting the continuance of the Option while in the employ or service of the Company as it may deem equitable, except that in no event may an Option be exercised after the expiration of its term.

(g)No Repricing.  Except as otherwise provided in Section 4(c), without the prior approval of the stockholders of the Company: (i) the exercise price of an Option may not be reduced, directly or indirectly, (ii) an Option may not be cancelled in exchange for cash in an amount, or other Awards with a value, that exceeds the excess, if any, of the Fair Market Value of the shares of Stock subject to the Option at the time of the cancellation or exchange over the exercise price of such Option, or for Options or SARs with an exercise price that is less than the exercise price of the original Option, except as permitted in accordance with Section 15 and (iii) the Company may not repurchase an Option for value (in cash, substitutions, cash buyouts, or otherwise) from a Participant if the current Fair Market Value of the Stock underlying the Option is lower than the exercise price of the Option.

8.Stock Appreciation Rights.

(a)Grant; Term.  A Stock Appreciation Right may be granted in connection with an Option, either at the time of grant or, with respect to a Nonqualified Stock Option, at any time thereafter during the term of the Option, or may be granted unrelated to an Option. At the time of grant of a Stock Appreciation Right, the Administrator may impose such restrictions or conditions to the exercisability of the Stock Appreciation Right as it, in its absolute discretion, deems appropriate, including, but not limited to, achievement of performance criteria. The term of a Stock Appreciation Right granted without relationship to an Option shall not exceed ten years from the date of grant. In addition, the exercise price of a Stock Appreciation Right shall be equal to or greater than the Fair Market Value of a share of Stock on the date of grant.

(b)Tandem Awards.  A Stock Appreciation Right related to an Option shall require the holder, upon exercise, to surrender such Option with respect to the number of shares as to which such Stock Appreciation Right is exercised, in order to receive payment of any amount computed pursuant to Section 8(c). Such Option will, to the extent surrendered, then cease to be exercisable. Subject to such rules and restrictions as the Administrator may impose, a Stock Appreciation Right granted in connection

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with an Option will be exercisable at such time or times, and only to the extent that a related Option is exercisable.

(c)Exercise.  Upon the exercise of a Stock Appreciation Right whether related or unrelated to an Option, the holder will be entitled to receive payment of an amount determined by multiplying:

(i)the excess of the Fair Market Value of a share of Stock on the date of exercise of such Stock Appreciation Right over the exercise price of the Stock Appreciation Right, by

(ii)the number of shares as to which such Stock Appreciation Right is exercised.

(d)Limitations.  Notwithstanding subsection (c) above, the Administrator may place a limitation on the amount payable upon exercise of a Stock Appreciation Right. Any such limitation must be determined as of the date of grant and noted in the applicable Award Agreement.

(e)Form of Settlement.  Payment of the amount determined under subsection (c) above may be made solely in whole shares of Stock valued at their Fair Market Value on the date of exercise of the Stock Appreciation Right or alternatively, in the sole discretion of the Administrator, solely in cash or a combination of cash and shares, in each case as set forth in the applicable Award Agreement. If the Administrator decides that payment will be made in shares of Stock, and the amount payable results in a fractional share, payment for the fractional share will be made in cash.

(f)No Repricing.  Except as otherwise provided in Section 4(c), without the prior approval of the stockholders of the Company: (i) the exercise price of a SAR may not be reduced, directly or indirectly, (ii) a SAR may not be cancelled in exchange for cash in an amount, or other Awards with a value, that exceeds the excess, if any, of the Fair Market Value of the shares of Stock subject to the SAR at the time of the cancellation or exchange over the exercise price of such SAR, or for Options or SARs with an exercise price that is less than the exercise price of the original SAR, except as permitted in accordance with Section 15, and (iii) the Company may not repurchase a SAR for value (in cash, substitutions, cash buyouts, or otherwise) from a Participant if the current Fair Market Value of the Stock underlying the SAR is lower than the exercise price of the SAR.

9.Restricted Stock.

(a)Price.  At the time of the grant of shares of Restricted Stock, the Administrator shall determine the price, if any, to be paid by the Participant for each share of Restricted Stock subject to the Award.

(b)Vesting Date.  At the time of the grant of shares of Restricted Stock, the Administrator shall establish a vesting date or vesting dates with respect to such shares. The Administrator may divide such shares into classes and assign a different vesting date for each class. Provided that all conditions to the vesting of a share of Restricted Stock are satisfied, and subject to Section 9(h), upon the occurrence of the vesting date with respect to a share of Restricted Stock, such share shall vest and the restrictions of Section 9(d) shall lapse.

(c)Conditions to Vesting.  At the time of the grant of shares of Restricted Stock, the Administrator may impose such restrictions or conditions to the vesting of such shares as it, in its absolute discretion, deems appropriate, including, but not limited to, achievement of performance criteria. The Administrator may also provide that the vesting or forfeiture of shares of Restricted Stock may be based

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upon the achievement of, or failure to achieve, certain levels of performance and may provide for partial vesting of Restricted Stock in the event that the maximum level of performance is not met if the minimum level of performance has been equaled or exceeded.

(d)Restrictions on Transfer Prior to Vesting.  Prior to the vesting of a share of Restricted Stock, such Restricted Stock may not be transferred, assigned or otherwise disposed of, and no transfer of a Participant’s rights with respect to such Restricted Stock, whether voluntary or involuntary, by operation of law or otherwise, shall be permitted.

(e)Dividends on Restricted Stock.  The Administrator in its discretion may require that any dividends paid on shares of Restricted Stock be held in escrow until all restrictions on such shares have lapsed.

(f)Issuance of Certificates. The Administrator may, upon such terms and conditions as it determines, provide that (i) a certificate or certificates representing the shares of Restricted Stock shall be registered in the Participant’s name and bear an appropriate legend specifying that such shares are not transferable and are subject to the provisions of the Plan and the restrictions, terms and conditions set forth in the applicable Award Agreement, (ii) such certificate or certificates shall be held in escrow by the Company on behalf of the Participant until such shares become vested or are forfeited or (iii) the Participant’s ownership of the Restricted Stock shall be registered by the Company in book entry form.

(g)Consequences of Vesting. Upon the vesting of a share of Restricted Stock pursuant to the terms hereof, the restrictions of Section 9(d) shall lapse with respect to such share. Following the date on which a share of Restricted Stock vests, the Company shall, as determined by the Administrator, make a book entry record of such share or cause to be delivered to the Participant to whom such share was granted, a certificate evidencing such share, either of which may bear a restrictive legend, if the Administrator determines such a legend to be appropriate.

(h)Effect of Termination of Employment (or Provision of Services). Except as may otherwise be provided in the applicable Award Agreement, and subject to the Administrator’s authority under Section 3 hereof, upon the termination of a Participant’s employment with the Company and its Subsidiaries (or the Participant’s service to the Company and its Subsidiaries) for any reason, any and all shares to which restrictions on transferability apply shall be immediately forfeited by the Participant and transferred to, and reacquired by, the Company. In the event of a forfeiture of shares pursuant to this section, the Company shall repay to the Participant (or the Participant’s estate) any amount paid by the Participant for such shares.

10.Restricted Stock Units.

(a)Vesting Date. At the time of the grant of Restricted Stock Units, the Administrator shall establish a vesting date or vesting dates with respect to such units. The Administrator may divide such units into classes and assign a different vesting date for each class. Provided that all conditions to the vesting of the Restricted Stock Units imposed pursuant to Section 10(c) are satisfied, and subject to Section 10(d), upon the occurrence of the vesting date with respect to the Restricted Stock Units, such units shall vest.

(b)Benefit Upon Vesting.  Unless otherwise provided in an Award Agreement, upon the vesting of Restricted Stock Units, the Participant shall be paid, within 30 days of the date on which such units vest, an amount, in cash and/or shares of Stock, as determined by the Administrator. In the case of Awards denominated in shares of Stock, the amount per Restricted Stock Unit shall be equal to the sum of (i) the Fair Market Value of a share of Stock on the date on which such Restricted Stock Unit vests and

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(ii) the aggregate amount of cash dividends paid with respect to a share of Stock during the period commencing on the date on which the Restricted Stock Unit was granted and terminating on the date on which such unit vests. In the case of Awards denominated in cash, the amount per Restricted Stock Unit shall be equal to the cash value of the Restricted Stock Unit on the date on which such Restricted Stock Unit vests.

(c)Conditions to Vesting. At the time of the grant of Restricted Stock Units, the Administrator may impose such restrictions or conditions to the vesting of such units as it, in its absolute discretion, deems appropriate, including, but not limited to, achievement of performance criteria.

(d)Effect of Termination of Employment (or Provision of Services). Except as may otherwise be provided in the applicable Award Agreement, and subject to the Administrator’s authority under to Section 3 hereof, Restricted Stock Units that have not vested, together with any dividend equivalents deemed to have been credited with respect to such unvested units, shall be forfeited upon the Participant’s termination of employment (or upon cessation of such Participant’s services to the Company) for any reason.

11.Stock Bonuses. In the event that the Administrator grants a Stock Bonus, the shares of Stock constituting such Stock Bonus shall, as determined by the Administrator, be evidenced by a book entry record or a certificate issued in the name of the Participant to whom such grant was made and delivered to such Participant as soon as practicable after the date on which such Stock Bonus is payable.

12.Other Stock-Based Awards. Other forms of Awards valued in whole or in part by reference to, or otherwise based on, Stock, including but not limited to dividend equivalents, may be granted either alone or in addition to other Awards (other than in connection with Options or Stock Appreciation Rights) under the Plan. Subject to the provisions of the Plan, the Administrator shall have sole and complete authority to determine the individuals to whom and the time or times at which such Other Stock-Based Awards shall be granted, the number of shares of Stock to be granted pursuant to such Other Stock-Based Awards, or the manner in which such Other Stock-Based Awards shall be settled (e.g., in shares of Stock or cash), or the conditions to the vesting and/or payment or settlement of such Other Stock-Based Awards (which may include, but not be limited to, achievement of performance criteria) and all other terms and conditions of such Other Stock-Based Awards.

13.Cash Awards.  The Administrator may grant awards that are payable solely in cash, as deemed by the Administrator to be consistent with the purposes of the Plan, and such Cash Awards shall be subject to the terms, conditions, restrictions and limitations determined by the Administrator, in its sole discretion, from time to time.  Cash Awards may be granted with value and payment contingent upon the achievement of performance criteria.

14.Performance Awards.

(a)Performance Conditions.  The right of a Participant to exercise or receive a grant or settlement of any Award, and the timing thereof, may be subject to such performance conditions as may be specified by the Administrator.  The Administrator may use such business criteria and other measures of performance as it may deem appropriate in establishing any performance conditions, and may exercise its discretion to reduce or increase the amounts payable under any Award subject to performance conditions, except as limited under Section 14(b).

(b)Qualified Performance-Based Awards.  If the Administrator intends that a Performance Award to be granted to a Covered Person should qualify as “performance-based compensation” for purposes of Section 162(m) of the Code, the grant, exercise or settlement of such

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Qualified Performance-Based Award will be contingent upon achievement of pre-established performance goals and other terms set forth in this Section 14(b).  Notwithstanding anything to the contrary in the Plan, the Company intends to rely on the transition relief set forth in Treasury Regulation § 1.162-27(f) and, as such, the deduction limitation imposed by Section 162(m) of the Code will not apply to the Company until the earliest to occur of (i) the material modification of the Plan within the meaning of Treasury Regulation § 1.162-27(h)(1)(iii), or (ii) the first meeting of the shareholders of the Company at which directors are to be elected that occurs after December 31, 2020 (the “Section 162(m) Transition Period”).

(i)Performance Goals Generally.  The performance goals for such Qualified Performance-Based Awards will consist of one or more business criteria and a targeted level or levels of performance with respect to each of such criteria, as specified by the Administrator consistent with this Section 14(b).  Performance goals will be objective and will be designed to meet the requirements for “performance-based compensation” under Section 162(m) of the Code and may differ from Participant to Participant and from Award to Award.  The Administrator may determine that such Qualified Performance-Based Awards will be granted, exercised, or settled upon achievement of any one or more performance goals.

(ii)Performance Goals.  One or more of the following business criteria will be used by the Administrator in establishing performance goals for such Performance Awards: (1) earnings, including one or more of operating income, earnings before or after taxes, earnings before or after interest, depreciation, amortization, adjusted EBITDA, economic earnings, or extraordinary or special items or book value per share (which may exclude nonrecurring items); (2) earnings (as defined in (1), above) as a percentage of revenues; (3) pre-tax income, after-tax income or adjusted net income; (4) earnings per share (basic or diluted); (5) operating profit; (6) revenue, revenue growth or rate of revenue growth; (7) return on assets (gross or net), return on investment, return on capital, or return on equity; (8) returns on sales or revenues; (9) operating expenses; (10) stock price appreciation; (11) cash flow, free cash flow, cash flow return on investment (discounted or otherwise), net cash provided by operations, or cash flow in excess of cost of capital; (12) implementation or completion of critical projects or processes; (13) total stockholder return; (14) cumulative earnings per share growth; (15) operating margin or profit margin; (16) cost targets, reductions and savings, productivity and efficiencies; (17) strategic business criteria, consisting of one or more objectives based on meeting specified market penetration, geographic business expansion, customer satisfaction, employee satisfaction, human resources management, goals relating to acquisitions, divestitures, joint ventures and/or similar transactions and/or goals relating to budget comparisons; (18) working capital; (19) book value; (20) customer satisfaction; and (21) any combination of, or a specified increase or decrease in, any of the foregoing.  Such performance goals may be measured on a generally accepted accounting principles (GAAP) or non-GAAP basis, and be based solely by reference to the performance of the Company as a whole or any subsidiary, division, business segment or business unit of the Company, or any combination thereof or based upon the relative performance of other companies or upon comparisons of any of the indicators of performance relative to a peer group of other comparable companies, or as compared to the performance of a published or special index deemed applicable by the Administrator, including by not limited to, the Standard & Poor’s 500 Stock Index.  Unless otherwise stated in an Award Agreement a performance goal need not be based on an increase or positive result under a particular business criterion and could include, for example, maintaining the status quo or limiting economic losses (measured, in each case, by reference to specific business criteria).

(iii)Adjustments to Performance Goals.  The Administrator may provide for adjustment of performance goals for certain accounting charges as it determines is appropriate; provided, however, that any such adjustment not described in the immediately following sentence shall have been provided for by the Administrator in the performance goals that are established at the time such

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performance goals are established. The Administrator may also exclude the impact of any of the following events or occurrences which the Administrator determines should appropriately be excluded, but only to the extent such exclusions will not cause Awards intended to qualify as Qualified Performance-Based Compensation to fail to so qualify: (1) asset write-downs; (2) litigation, claims, judgments, or settlements; (3) the effect of changes in tax law or other such laws or regulations affecting reported results; (4) accruals for reorganization and restructuring programs; (5) any extraordinary, unusual, or nonrecurring items as described in the Accounting Standards Codification Topic 225, as the same may be amended or superseded from time to time; (6) any change in accounting principles as defined in the Accounting Standards Codification Topic 250, as the same may be amended or superseded from time to time; (7) any loss from a discontinued operation as described in the Accounting Standards Codification Topic 360, as the same may be amended or superseded from time to time; (8) goodwill impairment charges; (9) operating results for any business acquired during the calendar year; (10) third party expenses associated with any acquisition by the Company or any Subsidiary; and (11) any other extraordinary events or occurrences identified by the Administrator, to the extent set forth with reasonable particularity in connection with the establishment of performance goals.

(iv)Performance Period; Timing for Establishing Performance Goals.  Achievement of performance goals in respect of such Qualified Performance-Based Awards will be measured over a performance period of up to ten years, as specified by the Administrator.  Performance goals will be established not later than 90 days after the beginning of any performance period, or at such other date as may be required or permitted for “performance-based compensation” under Section 162(m) of the Code.

(v)Settlement of Qualified Performance-Based Awards; Other Terms.  After the end of each performance period, the Committee will determine the amount, if any, of the potential Qualified Performance-Based Award payable to each Participant.  Settlement of such Qualified Performance-Based Awards will be in cash, Stock, other Awards or other property, in the discretion of the Administrator.  The Administrator may reduce the amount of any settlement otherwise to be made in connection with such Qualified Performance-Based Awards, but the Administrator may not increase any such amount payable to a Covered Employee in respect of a Qualified Performance-Based Award.  The Administrator will specify the circumstances in which such Qualified Performance-Based Awards will be paid or forfeited in the event of a Participant’s termination of employment before the end of a performance period or settlement date.

(c)Performance Award Pool.  The Administrator may establish a Performance Award pool, which will be an unfunded pool, for purposes of measuring performance of the Company in connection with Performance Awards.  The amount of such Performance Award pool will be based upon the achievement of a performance goal or goals based on one or more of the criteria set forth in Section 14(b)(ii) hereof during the given performance period, as specified by the Administrator.  The Administrator may specify the amount of the Performance Award pool as a percentage of any of such criteria, a percentage thereof in excess of a threshold amount, or as another amount which need not bear a strictly mathematical relationship to such criteria.

(d)Written Determinations.  All determinations as to the establishment of performance goals, the amount of any performance award pool or potential individual Performance Awards, and the achievement of performance goals relating to and final settlement of Performance Awards, shall be made in writing by the Administrator in the case of any Award intended to be a Qualified Performance-Based Award. The Administrator may not delegate any responsibility relating to such Performance Awards.

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15.Change of Control Provisions.  Unless otherwise provided by the Administrator or in the applicable Award Agreement or otherwise, and subject to Section 4(c), in the event of a Change of Control:

(a)With respect to each outstanding Award that is not assumed or substituted in connection with a Change of Control, immediately upon the occurrence of the Change in Control, (i) such Award shall become fully vested and exercisable, (ii) the restrictions, payment conditions, and forfeiture conditions applicable to any such Award granted shall lapse, and (iii) any performance conditions imposed with respect to such Award shall be deemed to be achieved at target performance levels.

(b)For purposes of this Section 15, an Award shall be considered assumed or substituted for if, following the Change of Control, the Award is of substantially comparable value and remains subject to the same terms and conditions that were applicable to the Award immediately prior to the Change of Control except that, if the Award related to shares of Stock, the Award instead confers the right to receive common stock of the acquiring or ultimate parent entity.

(c)Notwithstanding any other provision of the Plan, in the event of a Change of Control, except as would otherwise result in adverse tax consequences under Section 409A of the Code, the Administrator may, in its discretion, provide that each Award shall, immediately upon the occurrence of a Change of Control, be cancelled in exchange for a payment in cash or securities in an amount equal to (i) the excess of the consideration paid per share of Stock in the Change of Control over the exercise or purchase price (if any) per share of Stock subject to the Award multiplied by (ii) the number of shares of Stock granted under the Award.

16.Rights as a Stockholder.  No individual shall have any rights as a stockholder with respect to any shares of Stock covered by or relating to any Award until the date of record issuance of such shares of Stock in the books of the Company or the issuance of a stock certificate with respect to such shares. Except for adjustments provided in Section 4(c), no adjustment to any Award shall be made for dividends or other rights for which the record date occurs prior to the date such stock certificate is issued.

17.No Employment Rights; No Right to Award.  Nothing contained in the Plan or any Award Agreement shall confer upon any individual any right with respect to the continuation of employment by or provision of services to the Company or interfere in any way with the right of the Company, subject to the terms of any separate agreement to the contrary, at any time to terminate such employment or service or to increase or decrease the compensation of such individual. No individual shall have any claim or right to receive an Award hereunder. The Administrator’s granting of an Award to a Participant at any time shall neither require the Administrator to grant any other Award to such Participant or other individual at any time nor preclude the Administrator from making subsequent grants to such Participant or any other individual.

18.Minimum Regulatory Capital Requirements.  Notwithstanding any provision of this Plan or any agreement to the contrary, Awards granted under the Plan will expire or be forfeited, to the extent not exercised or settled, within forty-five (45) days following the receipt of notice from the Company’s and/or the Bank’s primary federal or state regulator (“Regulator”) that (i) the Company and/or the Bank has not maintained its minimum capital requirements (as determined by the Regulator); and (ii) the Regulator is requiring termination or forfeiture of the Awards.  Upon receipt of such notice from the Regulator, the Company and/or the Bank will promptly notify each Participant that such Awards have become fully exercisable and vested to the full extent of the grant and that the Participant must exercise the Award or the Award must be settled, as applicable, prior to the end of the 45-day period or such earlier period as may be specified by the Regulator or the Participant will forfeit such Awards.  In case of

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forfeiture, no Participant will have a cause of action, of any kind or nature, with respect to the forfeiture against the Company, the Bank or any parent or Subsidiary.  None of the Company, the Bank, or any parent or Subsidiary will be liable to any Participant due to the failure or inability of the Company and/or the Bank to provide adequate notice to the Participant.

19.Securities Matters and Regulations.

(a)Notwithstanding anything herein to the contrary, the obligation of the Company to sell or deliver Stock with respect to any Award granted under the Plan shall be subject to all applicable laws, rules and regulations, including all applicable federal and state securities laws, and the obtaining of all such approvals by governmental agencies as may be deemed necessary or appropriate by the Administrator. The Administrator may require, as a condition of the issuance and delivery of certificates evidencing shares of Stock pursuant to the terms hereof, that the recipient of such shares make such agreements and representations, and that such certificates bear such legends, as the Administrator, in its sole discretion, deems necessary or advisable.

(b)Each Award is subject to the requirement that, if at any time the Administrator determines that the listing, registration or qualification of Stock issuable pursuant to the Plan is required by any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the grant of an Award or the issuance of Stock, no such Award shall be granted or payment made or Stock issued, in whole or in part, unless listing, registration, qualification, consent or approval has been effected or obtained free of any conditions not acceptable to the Administrator.

(c)In the event that the disposition of Stock acquired pursuant to the Plan is not covered by a then current registration statement under the Securities Act and is not otherwise exempt from such registration, such Stock shall be restricted against transfer to the extent required by the Securities Act or regulations thereunder, and the Administrator may require a Participant receiving Stock pursuant to the Plan, as a condition precedent to receipt of such Stock, to represent to the Company in writing that the Stock acquired by such Participant is acquired for investment only and not with a view to distribution.

20.Withholding Taxes.  Whenever cash is to be paid pursuant to an Award, the Company shall have the right to deduct therefrom an amount sufficient to satisfy any applicable withholding tax requirements related thereto. Whenever shares of Stock are to be delivered pursuant to an Award, the Company shall have the right to require the Participant to remit to the Company in cash an amount sufficient to satisfy any applicable withholding tax requirements related thereto. A Participant may satisfy the foregoing requirement by electing to have the Company withhold from delivery shares of Stock having a value equal to the minimum amount of tax required to be withheld. Such shares shall be valued at their Fair Market Value on the date of which the amount of tax to be withheld is determined. Fractional share amounts shall be settled in cash. Such a withholding election may be made with respect to all or any portion of the shares to be delivered pursuant to an Award.

21.Notification of Election Under Section 83(b) of the Code.  If any Participant shall, in connection with the acquisition of shares of Stock under the Plan, make the election permitted under Section 83(b) of the Code, such Participant shall notify the Company of such election within 10 days of filing notice of the election with the Internal Revenue Service.

22.Notification Upon Disqualifying Disposition Under Section 421(b) of the Code.  Each Award Agreement with respect to an Incentive Stock Option shall require the Participant to notify the Company of any disposition of shares of Stock issued pursuant to the exercise of such Option under the

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circumstances described in Section 421(b) of the Code (relating to certain disqualifying dispositions) within 10 days of such disposition.

23.Amendment or Termination of the Plan.  The Board may, at any time, suspend or terminate the Plan or revise or amend it in any respect whatsoever; provided, however, that stockholder approval shall be required for any such amendment if and to the extent such approval is required in order to comply with applicable law or stock exchange listing requirement. Nothing herein shall restrict the Administrator’s ability to exercise its discretionary authority pursuant to Section 3 and Section 4 which discretion may be exercised without amendment to the Plan. No action hereunder may, without the consent of a Participant, reduce the Participant’s rights under any outstanding Award.

24.Transferability of Awards.

(a)General.  No Award (or any rights and obligations thereunder) may be sold, exchanged, transferred or assigned, whether voluntarily or involuntarily, other than by will or by the laws of descent and distribution, and all such Awards (and any rights thereunder) will be exercisable during the life of the Participant only by the Participant or the Participant’s legal representative. Notwithstanding the preceding sentence, the Administrator may permit, under such terms and conditions that it deems appropriate in its sole discretion, (i) that a Participant may transfer an Award in whole or in part without payment of consideration to a member of the Participant’s immediate family, to a trust established for the benefit of a member of the Participant’s immediate family, or to a partnership whose only partners are members of the Participant’s immediate family, or (ii) that except as prohibited by Rule 16b-3, a Participant may transfer all or a portion of an Award to a person for which the Participant is entitled to a deduction for a “charitable contribution” under Section 170(a)(i) of the Code, provided in either case that no further transfer by such permitted transferee will be permitted, and provided further that the exercise of the Award remains the power and responsibility of the Participant or his or her legal representative. Any sale, exchange, transfer or assignment violation of the provisions of this Section 24 will be null and void. All of the terms and conditions of this Plan and the Award Agreements will be binding upon any permitted successors and assigns.

(b)Transfers Upon Death.  Upon the death of a Participant, outstanding Awards granted to such Participant may be exercised only by the executor or administrator of the Participant’s estate or by individual who shall have acquired the right to such exercise by will or by the laws of descent and distribution. No transfer of an Award by will or the laws of descent and distribution shall be effective to bind the Company unless the Administrator shall have been furnished with (i) written notice thereof and with a copy of the will and/or such evidence as the Administrator may deem necessary to establish the validity of the transfer and (ii) an agreement by the transferee to comply with all the terms and conditions of the Award that are or would have been applicable to the Participant and to be bound by the acknowledgments made by the Participant in connection with the grant of the Award.

25.Expenses and Receipts.  The expenses of the Plan shall be paid by the Company. Any proceeds received by the Company in connection with any Award may be used for general corporate purposes.

26.Term of Plan.  Unless earlier terminated by the Board pursuant to Section 23, the right to grant Awards under the Plan shall terminate on the tenth anniversary of the Effective Date. Awards outstanding at Plan termination shall remain in effect according to their terms and the provisions of the Plan.

27.Participant Rights.  No Participant shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment for Participants.

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28.Unfunded Status of Awards.  The Plan is intended to constitute an “unfunded” plan for incentive and deferred compensation. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Award Agreement shall give any such Participant any rights that are greater than those of a general creditor of the Company.

29.No Fractional Shares.  No fractional shares of Stock shall be issued or delivered pursuant to the Plan. The Administrator shall determine whether cash, other Awards, or other property shall be issued or paid in lieu of such fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.

30.Beneficiary.  A Participant may file with the Administrator a written designation of a beneficiary on such form as may be prescribed by the Administrator and may, from time to time, amend or revoke such designation. If no designated beneficiary survives the Participant, the executor or administrator of the Participant’s estate shall be deemed to be the Participant’s beneficiary.

31.Paperless Administration.  In the event that the Company establishes, for itself or using the services of a third party, an automated system for the documentation, granting or exercise of Awards, such as a system using an internet website or interactive voice response, then the paperless documentation, granting or exercise of Awards by a Participant may be permitted through the use of such an automated system.

32.Severability.  If any provision of the Plan is held to be invalid or unenforceable, the other provisions of the Plan shall not be affected but shall be applied as if the invalid or unenforceable provision had not been included in the Plan.

33.Applicable Law.  Except to the extent preempted by any applicable federal law, the Plan shall be construed and administered in accordance with the laws of the State of Texas without reference to its principles of conflicts of law.

34.Clawback.  Notwithstanding any other provisions in this Plan, any Award which is subject to recovery under any law, government regulation or stock exchange listing requirement, will be subject to such deductions and clawback as may be required to be made pursuant to such law, government regulation or stock exchange listing requirement (or any policy adopted by the Company pursuant to any such law, government regulation or stock exchange listing requirement).

35.Section 409A Compliance.  The Plan as well as payments and benefits under the Plan are intended to be exempt from, or to the extent subject thereto, to comply with Section 409A of the Code, and, accordingly, to the maximum extent permitted, the Plan shall be interpreted in accordance therewith. Notwithstanding anything contained herein to the contrary, to the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A of the Code, the Participant shall not be considered to have terminated employment with the Company for purposes of the Plan and no payment shall be due to the Participant under the Plan or any Award until the Participant would be considered to have incurred a “separation from service” from the Company within the meaning of Section 409A of the Code. Any payments described in the Plan that are due within the “short term deferral period” as defined in Section 409A of the Code shall not be treated as deferred compensation unless applicable law requires otherwise. Notwithstanding anything to the contrary in the Plan, to the extent that any Awards are payable upon a separation from service and such payment would result in the imposition of any individual tax and penalty interest charges imposed under Section 409A of the Code, the settlement and payment of such awards shall instead be made on the first business day after the date that is six (6) months following such separation from service (or death, if earlier). Each amount to be paid or benefit to be provided under this Plan shall be construed as a separate identified payment for purposes of Section 409A of the Code. The

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Company makes no representation that any or all of the payments or benefits described in this Plan will be exempt from or comply with Section 409A of the Code and makes no undertaking to preclude Section 409A of the Code from applying to any such payment. The Participant shall be solely responsible for the payment of any taxes and penalties incurred under Section 409A of the Code.

36.Correction of Errors.  Notwithstanding anything in this Plan or an Award Agreement to the contrary, the Administrator may amend an Award, to take effective retroactively or otherwise, as deemed necessary or advisable for the purpose of correcting errors occurring in connection with the grant or documentation of an Award, including rescinding an Award erroneously granted, including, but not limited to, an Award erroneously granted to an individual who is not eligible to receive on an Award on the date of grant of the Award.  By accepting an Award under the Plan, each Participant agrees to any amendment made pursuant to this Section 36 to any Award made under the Plan without further consideration or action.

37.Plan Establishment.  This Plan was adopted by the Board on August 7, 2017 and approved by the Company’s stockholders on September 13, 2017.

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EX-10.10

Exhibit 10.10

CBTX, INC.

2017 OMNIBUS INCENTIVE PLAN

FORM OF RESTRICTED STOCK AWARD GRANT NOTICE

CBTX, Inc., a Texas corporation, (the “Company”), pursuant to its 2017 Omnibus Incentive Plan, as the same may be amended from time to time (the “Plan”), hereby grants to the individual listed below (the “Participant”) the number of shares of Restricted Stock set forth below. This award of Restricted Stock is subject to all of the terms and conditions as set forth herein and in the Restricted Stock Award Agreement attached hereto as Exhibit A (the “Agreement”) (including without limitation the Restrictions on the Shares set forth in the Agreement) and the Plan, each of which is incorporated herein by reference. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Restricted Stock Award Grant Notice (the “Grant Notice”) and the Agreement.

Participant:	[               ]
Total Number of Shares of Restricted Stock:	[         ]
Grant Date:	, 20
Vesting Commencement Date:	, 20
Vesting Schedule:	Unless otherwise provided in the Agreement, the Award vest with respect to [   ] percent ([   ]%) of the total number of Shares of Restricted Stock on each of the first [  ] ([  ]) anniversaries of the Vesting Commencement Date, subject to the Participant’s continued status as an employee on each applicable vesting date, such that all Shares of Restricted Stock shall be fully vested on the [    ] anniversary of the Vesting Commencement Date.

By his or her signature below or by electronic acceptance or authentication in a form authorized by the Company, the Participant agrees to be bound by the terms and conditions of the Plan, the Agreement and this Grant Notice. The Participant has reviewed the Agreement, the Plan and this Grant Notice in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Grant Notice and fully understands all provisions of this Grant Notice, the Agreement and the Plan. The Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan, this Grant Notice or the Agreement. If the Participant is married, his or her spouse has signed the Consent of Spouse attached to this Grant Notice as Exhibit B.

{Signature Page Follows}

CBTX, INC.		PARTICIPANT
By:		By:
Print Name:		Print Name:
Title:
Address:	9 Greenway Plaza, Suite 110
	Houston, Texas 77046	Address:

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EXHIBIT A

RESTRICTED STOCK AWARD AGREEMENT

Pursuant to the Restricted Stock Award Grant Notice (the “Grant Notice”) to which this Restricted Stock Award Agreement (this “Agreement”) is attached, CBTX, Inc., a Texas corporation (the “Company”) has granted to the Participant the number set forth in the Grant Notice of shares of Restricted Stock under the Company’s 2017 Omnibus Incentive Plan, as amended from time to time (the “Plan”). Capitalized terms not specifically defined herein shall have the meanings specified in the Plan and Grant Notice.

1.             Incorporation of Terms of Plan. The Award (as defined below) is subject to the terms and conditions of the Plan, which are incorporated herein by reference. In the event of any inconsistency between the Plan and this Agreement, the terms of the Plan shall control.

2.             Award of Restricted Stock.

(a)           Grant of Restricted Stock. Pursuant to the Grant Notice and upon the terms and conditions set forth in the Plan, the Grant Notice, and this Agreement, the Company has granted to the Participant this award (this “Award”) of Restricted Stock under the Plan in consideration of the Participant’s past and/or continued employment with or service to the Company or any Affiliate, and for other good and valuable consideration. The number of shares of Restricted Stock subject to the Award is set forth in the Grant Notice.

(b)           Book Entry Form; Certificates. At the sole discretion of the Administrator, the Restricted Stock will be issued in either (i) uncertificated form, with the shares of Restricted Stock recorded in the name of the Participant in the books and records of the Company’s transfer agent with appropriate notations regarding the restrictions on transfer imposed pursuant to this Agreement, and upon vesting and the satisfaction of all conditions set forth in Sections 3(b) hereof, the Company shall remove such notations on any such vested shares of Restricted Stock in accordance with Section 2(e) below; or (ii) certificated form pursuant to the terms of Sections 2(c), (d) and (e) below.

(c)           Legend. Certificates representing the shares of Restricted Stock issued pursuant to this Agreement shall, until all Restrictions (as defined below) imposed pursuant to this Agreement lapse or have been removed and the shares have thereby become vested or forfeited hereunder, bear the following legend (or such other legend as shall be determined by the Administrator):

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN VESTING REQUIREMENTS AND MAY BE SUBJECT TO FORFEITURE UNDER THE TERMS OF A RESTRICTED STOCK AWARD AGREEMENT, BY AND BETWEEN CBTX, INC. AND THE REGISTERED OWNER OF SUCH SHARES, AND SUCH SHARES MAY NOT BE, DIRECTLY OR INDIRECTLY, OFFERED, TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNDER ANY CIRCUMSTANCES, EXCEPT PURSUANT TO THE PROVISIONS OF SUCH AGREEMENT.”

(d)           Escrow. The Secretary of the Company or such other escrow holder as the Administrator may appoint may retain physical custody of any certificates representing the Restricted Stock until all of the Restrictions on transfer imposed pursuant to this Agreement lapse or shall have been removed; in such event, the Participant shall not retain physical custody of any certificates representing unvested Restricted Stock issued to him or her. The Participant, by acceptance of the Award, shall be deemed to appoint, and does so appoint, the

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Company and each of its authorized representatives as the Participant’s attorney(s)-in-fact to effect any transfer of unvested forfeited Restricted Stock (or Restricted Stock otherwise reacquired by the Company hereunder) to the Company as may be required pursuant to the Plan or this Agreement and to execute such documents as the Company or such representatives deem necessary or advisable in connection with any such transfer.

(e)           Removal of Notations; Delivery of Certificates Upon Vesting. As soon as administratively practicable after the vesting of any Restricted Stock subject to the Award pursuant to Section 3(b) hereof, the Company shall, as applicable, either remove the notations on any shares subject to the Award issued in book entry form that have vested, or deliver to the Participant a certificate or certificates evidencing the shares subject to the Award that have vested. The Participant (or the beneficiary or personal representative of the Participant in the event of the Participant’s death or incapacity, as the case may be) shall deliver to the Company any representations or other documents or assurances required by the Company. The shares so delivered shall no longer be subject to the Restrictions hereunder.

3.             Restrictions.

(a)           Forfeiture. Should the Participant cease to provide services to the Company (or any Subsidiary or Affiliate) in the capacity of an employee, director or consultant (collectively referred to herein as “Service”) for any reason or no reason, any portion of the Award (and the Restricted Stock subject thereto) that has not vested prior to or in connection with such termination of Service (after taking into consideration any accelerated vesting and lapsing of Restrictions which may occur in connection with such termination of employment (if any)) shall thereupon be forfeited immediately and without any further action by the Company, and the Participant’s rights in any unvested Restricted Stock shall thereupon lapse and expire.  For purposes of this Agreement, “Restrictions” shall mean the restrictions on sale or other transfer set forth in Section 4(c) hereof and the risk of forfeiture set forth in this Section 3(a).  No Restricted Stock which has not become vested as of the date on which the Participant incurs a termination of Service shall thereafter become vested.

(b)           Vesting and Lapse of Restrictions. Subject to Section 3(a) above, the Award shall vest and Restrictions shall lapse in accordance with the vesting schedule set forth in the Grant Notice (rounding down to the nearest whole Share).  In the event of a Change of Control, all outstanding unvested Restricted Stock subject to this Award shall become immediately and fully vested effective as of immediately prior to the effective time of such Change of Control.

(c)           Tax Withholding. As set forth in Section 15 of the Plan, the Company shall have the authority and the right to deduct or withhold, or to require the Participant to remit to the Company, an amount sufficient to satisfy all applicable federal, state and local taxes required by law to be withheld with respect to any taxable event arising in connection with the Award. The Company shall not be obligated to deliver any new certificate representing shares of Restricted Stock to the Participant or the Participant’s legal representative or enter such shares of Restricted Stock in book entry form unless and until the Participant or the Participant’s legal representative shall have paid or otherwise satisfied in full the amount of all federal, state and local taxes applicable to the taxable income of the Participant resulting from the grant or vesting of the Award or the issuance of such shares of Restricted Stock.

(d)           Termination of Service. For purposes of this Agreement, the Participant’s date of termination of Service shall mean the date upon which the Participant ceases active performance of services for the Company, a Subsidiary or Affiliate, as determined by the Administrator following the provision of such notification of termination or resignation from Service and shall be determined solely by this Agreement and without reference to any other agreement, written or oral, including the Participant’s contract of employment (if any). Thus, in the event of termination of the Participant’s Service (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where Participant

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is employed or the terms of Participant’s contract of employment, if any), and unless otherwise expressly provided in this Agreement, any employment or consulting agreement with the Company or a Subsidiary, or determined by the Administrator, the Participant’s right to vest in the Award under the Plan, if any, will terminate as of such date.  The Administrator shall have the exclusive discretion to determine when the Participant is no longer actively performing Services for purposes of the Award (including whether the Participant may still be considered to be performing Services while on a leave of absence).

4.             Other Provisions.

(a)           Section 83(b) Election. If the Participant makes an election under Section 83(b) of the Code to be taxed with respect to the Restricted Stock as of the date of transfer of the Restricted Stock rather than as of the date or dates upon which the Participant would otherwise be taxable under Section 83(a) of the Code, the Participant hereby agrees to deliver a copy of such election to the Company promptly after filing such election with the Internal Revenue Service.

(b)           Administration. The Administrator shall have the power to interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret, amend or revoke any such rules. All actions taken and all interpretations and determinations made by the Administrator in good faith shall be final and binding upon the Participant, the Company and all other interested persons. No member of the Administrator or the Board shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan, this Agreement or the Award.

(c)           Restricted Stock Not Transferable. Until the Restrictions hereunder lapse or expire pursuant to this Agreement and the Restricted Stock vests, the Restricted Stock (including any shares received by holders thereof with respect to Restricted Stock as a result of stock dividends, stock splits or any other form of recapitalization) shall be subject to the restrictions on transferability set forth in Section 24 of the Plan.

(d)           Ownership of Shares. Subject to the restrictions set forth in the Plan and this Agreement, the Participant shall possess all incidents of ownership of the shares of Restricted Stock, including, without limitation, (i) the right to vote such shares of Restricted Stock, and (ii) subject to Section 4(d), the right to receive dividends with respect to such shares of Restricted Stock of (but only to the extent declared and paid to holders of shares by the Company in its sole discretion), provided, however, that any such dividends shall be treated, to the extent required by applicable law, as additional compensation for tax purposes if paid on the shares Restricted Stock.

(e)           Dividends. Any dividends with respect to the Restricted Stock (whether such dividends are paid in cash, stock or other property): (i) shall be subject to the same restrictions (including the risk of forfeiture) as the Restricted Stock with respect to which they are issued; (ii) shall herein be encompassed within the term “Restricted Stock”; (iii) may be held by the Company for the Participant prior to vesting; and (iv) if so held by the Company, shall be paid or otherwise released to the Participant, without interest, promptly after the vesting of the Restricted Stock with respect to which they were issued. If dividends are released to the Participant prior to the vesting of the Restricted Stock with respect to which they were issued, and such Restricted Stock fails to vest and is forfeited for any reason, the Participant shall return or repay such dividends to the Company, without interest, promptly following the forfeiture event.

(f)            Tax Advice.  The Participant represents, warrants and acknowledges that the Company has made no warranties or representations to the Participant with respect to the income tax, social contributions or other tax consequences of the transactions contemplated by this Agreement, and the Participant is in no manner relying on the Company or the Company’s representatives for an assessment of such tax consequences.  THE

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PARTICIPANT UNDERSTANDS THAT THE TAX AND SOCIAL SECURITY LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.  THE PARTICIPANT IS HEREBY ADVISED TO CONSULT WITH HIS OR HER OWN PERSONAL TAX, LEGAL AND FINANCIAL ADVISORS REGARDING THE PARTICIPANT’S PARTICIPATION IN THE PLAN BEFORE TAKING ANY ACTION RELATED TO THE PLAN. NOTHING STATED HEREIN IS INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, FOR THE PURPOSE OF AVOIDING TAXPAYER PENALTIES.

(g)           Adjustments Upon Specified Events. The Administrator may accelerate the vesting of the Restricted Stock in such circumstances as it, in its sole discretion, may determine. The Participant acknowledges that the Restricted Stock is subject to adjustment, modification and termination in certain events as provided in this Agreement and Section 4(c) of the Plan.

(h)           Notices. Any notice required to be given or delivered to the Company under the terms of this Agreement shall be in writing and addressed to the Company at its principal corporate offices.  Any notice required to be given or delivered to the Participant shall be in writing and addressed to the Participant at the address maintained for the Participant in the Company’s records or at the address of the local office of the Company or of a Subsidiary or Affiliate at which the Participant works.

(i)            Further Instruments and Imposition of Other Requirements. The parties agree to execute such further instruments and to take such further action as may be reasonably necessary to carry out the purposes and intent of this Agreement.  The Company reserves the right to impose other requirements on Participant’s participation in the Plan, on the Award and on any shares of Restricted Stock acquired under the Plan, to the extent the Company determines it is necessary or advisable in order to comply with local law or facilitate the administration of the Plan.

(j)            Participant Acknowledgements.  In accepting the Award, the Participant acknowledges, understands and agrees that:

(i)            the grant of the Award is voluntary and occasional and does not create any contractual or other right to receive future grants of shares of Restricted Stock, or benefits in lieu of shares of Restricted Stock, even if shares of Restricted Stock have been granted in the past;

(ii)           the Award and the Participant’s participation in the Plan shall not create a right to employment or be interpreted as forming an employment or service contract with the Company or any Subsidiary or Affiliate, and shall not interfere with the ability of the Company or any Subsidiary or Affiliate, as applicable, to terminate the Participant’s employment or service relationship (if any);

(iii)          the Award and any Shares acquired under the Plan are not intended to replace any pension rights or compensation;

(iv)          the Award and any Shares acquired under the Plan and the income and value of same, are not part of normal or expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments;

(v)           no claim or entitlement to compensation or damages shall arise from forfeiture of the Award resulting from the termination of the Participant’s Service (for any reason whatsoever, whether or not later found to be invalid or in breach of employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s contact of employment, if any), and in consideration of the grant of the Award to which the Participant is otherwise not entitled, the Participant irrevocably agrees never to institute any claim

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against the Company or any of its Subsidiaries or Affiliates, waives his or her ability, if any, to bring any such claim, and releases the Company and its Subsidiaries and Affiliates from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, the Participant shall be deemed irrevocably to have agreed not to pursue such claim and agree to execute any and all documents necessary to request dismissal or withdrawal of such claim;

(vi)          the future value of the shares of Restricted Stock is unknown, indeterminable, and cannot be predicted with certainty; and

(vii)         unless otherwise provided in the Plan or by the Company in its discretion, the Award and the benefits evidenced by this Agreement do not create any entitlement to have the Award or any such benefits transferred to, or assumed by, another company nor to be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the shares of Restricted Stock.

(k)           Participant’s Representations. If the shares of Restricted Stock issuable hereunder have not been registered under the Securities Act or any applicable state laws on an effective registration statement at the time of such issuance, the Participant shall, if required by the Company, concurrently with such issuance, make such written representations as are deemed necessary or appropriate by the Company and/or its counsel.

(l)            Titles. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.

(m)          Governing Law and Venue. The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of Texas, U.S.A. without regard to the conflict-of-laws rules thereof or of any other jurisdiction.  For purposes of litigating any dispute that arises under this grant or this Agreement, the parties hereby submit to and consent to the jurisdiction of the State of Texas, agree that such litigation shall be conducted in the courts of Jefferson County, Texas, or the federal courts for the United States for the Southern District of Texas, where this grant is made and/or to be performed.

(n)           Conformity to Securities Laws. The Participant acknowledges that the Plan and this Agreement are intended to conform to the extent necessary with all provisions of the Securities Act and the Exchange Act, and any and all applicable law. Notwithstanding anything herein to the contrary, the Plan shall be administered, and the Award is granted, only in such a manner as to conform to such applicable law. To the extent permitted by applicable law, the Plan and this Agreement shall be deemed amended to the extent necessary to conform to such applicable law.

(o)           Amendment, Suspension and Termination. To the extent permitted by the Plan, this Agreement may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Administrator or the Board; provided, however, that, except as may otherwise be provided by the Plan, no amendment, modification, suspension or termination of this Agreement shall adversely affect the Award in any material way without the prior written consent of the Participant.

(p)           Successors and Assigns. The Company or any Affiliate may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company and its Affiliates. Subject to the restrictions on transfer set forth in Section 4(c) hereof, this Agreement shall be binding upon the Participant and his or her heirs, executors, administrators, successors and assigns.

(q)           Not a Contract of Service Relationship. Nothing in this Agreement or in the Plan shall confer upon the Participant any right to continue to serve as an employee or other service provider of the

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Company or any of its Affiliates or shall interfere with or restrict in any way the rights of the Company and its Affiliates, which rights are hereby expressly reserved, to discharge or terminate the services of the Participant at any time for any reason whatsoever, with or without cause, except to the extent expressly provided otherwise in a written agreement between the Company or an Affiliate and the Participant.

(r)            Entire Agreement. The Plan, the Grant Notice and this Agreement (including all Exhibits thereto, if any) constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and its Affiliates and the Participant with respect to the subject matter hereof.

(s)            Limitation on the Participant’s Rights. Participation in the Plan confers no rights or interests other than as herein provided. This Agreement creates only a contractual obligation on the part of the Company as to amounts payable and shall not be construed as creating a trust. Neither the Plan nor any underlying program, in and of itself, has any assets. The Participant shall have only the rights of a general unsecured creditor of the Company and its Affiliates with respect to amounts credited and benefits payable, if any, with respect to the shares of Restricted Stock issuable hereunder.

(t)            Conformity to Securities Laws. The Participant acknowledges that the Plan and this Agreement are intended to conform to the extent necessary with all provisions of the Securities Act and the Exchange Act and any and all regulations and rules promulgated by the Securities and Exchange Commission thereunder, and State securities laws and regulations.  Notwithstanding anything herein to the contrary, the Plan shall be administered, and the Award is granted, only in such a manner as to conform to such laws, rules and regulations.  To the extent permitted by applicable law, the Plan and this Agreement shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.

(u)           Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan or this Agreement, if the Participant is subject to Section 16 of the Exchange Act, then the Plan, the Award and this Agreement shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the Exchange Act) that are requirements for the application of such exemptive rule. To the extent permitted by applicable law, this Agreement shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.

(v)           Administration. The Committee shall have the power to interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret, amend or revoke any such rules.  All actions taken and all interpretations and determinations made by the Committee in good faith shall be final and binding upon the Participant, the Company and all other interested persons.  No member of the Committee or the Board shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan, this Agreement or the Award.

(w)          Counterparts. The Grant Notice may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

(x)           Severability. If any provision of this Agreement is held to be unenforceable for any reason, it shall be adjusted rather than voided, if possible, in order to achieve the intent of the parties to the extent possible.  In any event, all other provisions of this Agreement shall be deemed valid and enforceable to the full extent possible.

(y)           Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means.  The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an online or electronic system established and maintained by the Company or a third party designated by the Company.

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(z)           Waiver. The Participant acknowledges that the Company’s waiver of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by the Participant or any other participant.

(aa)         Clawback. The Award and the shares of Restricted Stock subject to the Award shall be subject to the Clawback provisions contained in Section 34 of the Plan.

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EXHIBIT B

CONSENT OF SPOUSE

I,                    , spouse or domestic partner of                      , have read and approve the Restricted Stock Award Grant Notice (the “Grant Notice”) to which this Consent of Spouse is attached and the Restricted Stock Award Agreement (the “Agreement”) attached to the Grant Notice. In consideration of issuing to my spouse the shares of the common stock of CBTX, Inc. set forth in the Grant Notice, I hereby appoint my spouse as my attorney-in-fact in respect to the exercise of any rights under the Agreement and agree to be bound by the provisions of the Agreement insofar as I may have any rights in said Agreement or any shares of the common stock of CBTX, Inc. issued pursuant thereto under the community property laws or similar laws relating to marital property in effect in the state of our residence as of the date of the signing of the foregoing Agreement.

Dated:
	Signature of Spouse

EX-10.11

Exhibit 10.11

CBTX, INC.

2017 OMNIBUS INCENTIVE PLAN

FORM OF RESTRICTED STOCK UNIT AWARD GRANT NOTICE

CBTX, Inc., a Texas corporation, (the “Company”), pursuant to its 2017 Omnibus Incentive Plan, as the same may be amended from time to time (the “Plan”), hereby grants to the individual listed below (the “Participant”) the number of restricted stock units (“Restricted Stock Units” or “RSUs”) set forth below.  Each vested Restricted Stock Unit represents the right to receive, in accordance with the Restricted Stock Unit Award Agreement attached hereto as Exhibit A (the “Agreement”), one share of the Company’s common stock, par value $0.01 per share (“Share”). This award of Restricted Stock Units is subject to all of the terms and conditions set forth herein and in the Agreement and the Company’s 2017 Omnibus Incentive Plan (as amended from time to time, the “Plan”), each of which is incorporated herein by reference.

Participant:	[                 ]
Total Number of Restricted Stock Units:	[       ]
Grant Date:	, 20
Vesting Commencement Date:	, 20
Vesting Schedule:	Unless otherwise provided in the Agreement, the Award vest with respect to [      ] percent ([         ]%) of the total number of Restricted Stock Units on each of the first [      ] ([      ]) anniversaries of the Vesting Commencement Date, subject to the Participant’s continued status as an employee on each applicable vesting date, such that all Restricted Stock Units subject to this Award shall be fully vested on the [       ] anniversary of the Vesting Commencement Date.

By his or her signature below or by electronic acceptance or authentication in a form authorized by the Company, the Participant agrees to be bound by the terms and conditions of the Plan, the Agreement and this Grant Notice. The Participant has reviewed the Agreement, the Plan and this Grant Notice in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Grant Notice and fully understands all provisions of this Grant Notice, the Agreement and the Plan. The Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan, this Grant Notice or the Agreement. If the Participant is married, his or her spouse has signed the Consent of Spouse attached to this Grant Notice as Exhibit B.

{Signature Page Follows}

CBTX, INC.		PARTICIPANT
By:		By:
Print Name:		Print Name:
Title:
Address:	9 Greenway Plaza, Suite 110
	Houston, Texas 77046	Address:

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EXHIBIT A

RESTRICTED STOCK UNIT AWARD AGREEMENT

Pursuant to the Restricted Stock Unit Award Grant Notice (the “Grant Notice”) to which this Restricted Stock Unit Award Agreement (this “Agreement”) is attached, CBTX, Inc., a Texas corporation (the “Company”), has granted to the Participant the number of restricted stock units (“Restricted Stock Units” or “RSUs”) set forth in the Grant Notice under the Company’s 2017 Omnibus Incentive Plan, as amended from time to time (the “Plan”). Each vested Restricted Stock Unit represents the right to receive one share of the Company’s common stock, par value $0.01 per share (“Share”). Capitalized terms not specifically defined herein shall have the meanings specified in the Plan and Grant Notice.

1.Incorporation of Terms of Plan. The RSUs are subject to the terms and conditions of the Plan, which are incorporated herein by reference. In the event of any inconsistency between the Plan and this Agreement, the terms of the Plan shall control.

2.Award of Restricted Stock Units.

(a)Grant of RSUs. Pursuant to the Grant Notice and upon the terms and conditions set forth in the Plan, the Grant Notice, and this Agreement, the Company has granted to the Participant an award (the “Award”) of RSUs under the Plan in consideration of the Participant’s past and/or continued employment with or service to the Company or any Affiliate, and for other good and valuable consideration. The number of RSUs subject to the Award is set forth in the Grant Notice.

(b)Unsecured Obligation to RSUs. Unless and until the RSUs have vested in the manner set forth in Section 2(c) hereof, the Participant will have no right to receive Shares under any such RSUs. Prior to actual settlement of any vested RSUs, such RSUs will represent an unsecured obligation of the Company, payable (if at all) only from the general assets of the Company.

(c)Vesting Schedule. Subject to Section 2(d) hereof, the RSUs shall vest and become nonforfeitable with respect to the applicable portion thereof according to the vesting schedule set forth in the Grant Notice (rounding down to the nearest whole Share).  In the event of a Change of Control, all outstanding unvested Restricted Stock Units subject to this Award shall become immediately and fully vested effective as of immediately prior to the effective time of such Change of Control.

(d)Forfeiture, Termination and Cancellation upon Termination of Service. Notwithstanding any contrary provision of this Agreement or the Plan, should the Participant cease to provide services to the Company (or any Subsidiary or Affiliate) in the capacity of an employee, director or consultant (collectively referred to herein as “Service”), all Restricted Stock Units which have not vested prior to or in connection with such termination of Service (after taking into consideration any accelerated vesting which may occur in connection with such termination of Service (if any)) shall thereupon automatically be forfeited, terminated and cancelled as of the applicable termination date without payment of any consideration by the Company, and the Participant, or the Participant’s beneficiary or personal representative, as the case may be, shall have no further rights hereunder. No portion of the RSUs which has not become vested as of the date on which the Participant incurs a termination of Service shall thereafter become vested.

(e)Issuance of Shares upon Vesting.

(i)As soon as administratively practicable following the vesting of any Restricted Stock Units pursuant to Section 2(c) hereof, but in no event later than thirty (30) days after such vesting date (for

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the avoidance of doubt, this deadline is intended to comply with the “short term deferral” exemption from Section 409A of the Code), the Company shall deliver to the Participant (or any transferee permitted under Section 3(b) hereof) a number of Shares (either by delivering one or more certificates for such Shares or by entering such Shares in book entry form, as determined by the Administrator in its sole discretion) equal to the number of RSUs subject to this Award that vest on the applicable vesting date, unless such RSUs terminate prior to the given vesting date pursuant to Section 2(d) hereof. Notwithstanding the foregoing, in the event Shares cannot be issued pursuant to Section 19 of the Plan, the Shares shall be issued pursuant to the preceding sentence as soon as administratively practicable after the Administrator determines that Shares can again be issued in accordance with such Section.

(ii)As set forth in Section 20 of the Plan, the Company shall have the authority and the right to deduct or withhold, or to require the Participant to remit to the Company, an amount sufficient to satisfy all applicable federal, state and local taxes required by law to be withheld with respect to any taxable event arising in connection with the Restricted Stock Units. The Company shall not be obligated to deliver any new certificate representing Shares to the Participant or the Participant’s legal representative or enter such Shares in book entry form unless and until the Participant or the Participant’s legal representative shall have paid or otherwise satisfied in full the amount of all federal, state and local taxes applicable to the taxable income of the Participant resulting from the grant or vesting of the Restricted Stock Units or the issuance of Shares.

(f)Conditions to Delivery of Shares. The Shares deliverable hereunder may be either previously authorized but unissued Shares, treasury Shares or issued Shares which have then been reacquired by the Company. Such Shares shall be fully paid and nonassessable. The Company shall not be required to issue or deliver any certificates or make any book entries evidencing Shares deliverable hereunder prior to fulfillment of the conditions set forth in Section 19 of the Plan.  Notwithstanding the foregoing, the issuance of such Shares shall not be delayed if and to the extent that such delay would result in a violation of Section 409A of the Code. In the event that the Company delays the issuance of such Shares because it reasonably determines that the issuance of such Shares will violate applicable law, such issuance shall be made at the earliest date at which the Company reasonably determines that issuing such Shares will not cause such violation, as required by Treasury Regulation Section 1.409A-2(b)(7)(ii).

(g)Blackout Periods.  If any Restricted Stock Units vest during a “blackout” period wherein certain employees, including the Participant, are precluded from selling Shares, the Administrator retains the right, in its sole discretion, to defer the issuance of the Shares in settlement of such vested Restricted Stock Units; provided, however, that the Administrator will not exercise this right to defer issuance if such Shares are specifically covered by a Rule 10b5-1 trading plan of the Participant that causes such Shares to be exempt from any applicable blackout period then in effect.  In the event the issuance of any Shares is deferred hereunder due to the existence of a blackout period, such Shares will be issued to the Participant on or before the date that is ninety (90) days following the date on which the Shares were originally scheduled to be issued, but in no event later than: (i) the fifth (5th) business day following the termination of such blackout period or (ii) December 31 of the calendar year in which the Shares were originally due to be issued.

(h)Rights as Stockholder. The holder of the RSUs shall not be, nor have any of the rights or privileges of, a stockholder of the Company, including, without limitation, voting rights and rights to dividends, in respect of the RSUs and any Shares underlying the RSUs and deliverable hereunder unless and until such Shares shall have been issued by the Company and held of record by such holder (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). No adjustment shall be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 4(c) of the Plan.

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(i)Termination of Service. For purposes of this Agreement, the Participant’s date of termination of Service shall mean the date upon which the Participant ceases active performance of services for the Company, a Subsidiary or Affiliate, as determined by the Administrator following the provision of such notification of termination or resignation from Service and shall be determined solely by this Agreement and without reference to any other agreement, written or oral, including the Participant’s contract of employment (if any). Thus, in the event of termination of the Participant’s Service (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where Participant is employed or the terms of Participant’s contract of employment, if any), and unless otherwise expressly provided in this Agreement, any employment or consulting agreement with the Company or a Subsidiary, or determined by the Administrator, the Participant’s right to vest in the Award under the Plan, if any, will terminate as of such date.  The Administrator shall have the exclusive discretion to determine when the Participant is no longer actively performing Services for purposes of the Award (including whether the Participant may still be considered to be performing Services while on a leave of absence).

3.Other Provisions.

(a)Administration. The Administrator shall have the power to interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret, amend or revoke any such rules. All actions taken and all interpretations and determinations made by the Administrator in good faith shall be final and binding upon the Participant, the Company and all other interested persons. No member of the Administrator or the Board shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan, this Agreement or the Award.

(b)RSUs Not Transferable. The RSUs shall be subject to the restrictions on transferability set forth in Section 24 of the Plan.

(c)Dividends. Any dividends with respect to Restricted Stock Units (whether such dividends are paid in cash, stock or other property): (i) shall be subject to the same restrictions (including the risk of forfeiture) as the Restricted Stock Units with respect to which they are issued; (ii) shall herein be encompassed within the term “Restricted Stock Units”; (iii) may be held by the Company for the Participant prior to vesting; and (iv) if so held by the Company, shall be paid or otherwise released to the Participant, without interest, promptly after the vesting of the Restricted Stock Unit with respect to which they were issued. If dividends are released to the Participant prior to the vesting of the Restricted Stock Unit with respect to which they were issued, and such Restricted Stock Unit fails to vest and is forfeited for any reason, the Participant shall return or repay such dividends to the Company, without interest, promptly following the forfeiture event.

(d)Tax Advice.  The Participant represents, warrants and acknowledges that the Company has made no warranties or representations to the Participant with respect to the income tax, social contributions or other tax consequences of the transactions contemplated by this Agreement, and the Participant is in no manner relying on the Company or the Company’s representatives for an assessment of such tax consequences.  THE PARTICIPANT UNDERSTANDS THAT THE TAX AND SOCIAL SECURITY LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.  THE PARTICIPANT IS HEREBY ADVISED TO CONSULT WITH HIS OR HER OWN PERSONAL TAX, LEGAL AND FINANCIAL ADVISORS REGARDING THE PARTICIPANT’S PARTICIPATION IN THE PLAN BEFORE TAKING ANY ACTION RELATED TO THE PLAN. NOTHING STATED HEREIN IS INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, FOR THE PURPOSE OF AVOIDING TAXPAYER PENALTIES.

(e)Adjustments Upon Specified Events. The Administrator may accelerate the vesting of the Restricted Stock Units in such circumstances as it, in its sole discretion, may determine. The Participant

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acknowledges that the Restricted Stock Units are subject to adjustment, modification and termination in certain events as provided in this Agreement and Section 4(c) of the Plan.

(f)Notices. Any notice required to be given or delivered to the Company under the terms of this Agreement shall be in writing and addressed to the Company at its principal corporate offices.  Any notice required to be given or delivered to the Participant shall be in writing and addressed to the Participant at the address maintained for the Participant in the Company’s records or at the address of the local office of the Company or of a Subsidiary or Affiliate at which the Participant works.

(g)Further Instruments and Imposition of Other Requirements. The parties agree to execute such further instruments and to take such further action as may be reasonably necessary to carry out the purposes and intent of this Agreement.  The Company reserves the right to impose other requirements on Participant’s participation in the Plan, on the Award and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable in order to comply with local law or facilitate the administration of the Plan.

(h)Participant Acknowledgements.  In accepting the Award, the Participant acknowledges, understands and agrees that:

(i)the grant of the Award is voluntary and occasional and does not create any contractual or other right to receive future awards, or benefits in lieu awards, even if awards have been granted in the past;

(ii)the Award and the Participant’s participation in the Plan shall not create a right to employment or be interpreted as forming an employment or service contract with the Company or any Subsidiary or Affiliate, and shall not interfere with the ability of the Company or any Subsidiary or Affiliate, as applicable, to terminate the Participant’s employment or service relationship (if any);

(iii)the Award and any Shares acquired in settlement of vested RSUs are not intended to replace any pension rights or compensation;

(iv)the Award and any Shares acquired in settlement of vested RSUs and the income and value of same, are not part of normal or expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments;

(v)no claim or entitlement to compensation or damages shall arise from forfeiture of the Award resulting from the termination of the Participant’s Service (for any reason whatsoever, whether or not later found to be invalid or in breach of employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s contact of employment, if any), and in consideration of the grant of the Award to which the Participant is otherwise not entitled, the Participant irrevocably agrees never to institute any claim against the Company or any of its Subsidiaries or Affiliates, waives his or her ability, if any, to bring any such claim, and releases the Company, its Subsidiaries and Affiliates from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, the Participant shall be deemed irrevocably to have agreed not to pursue such claim and agree to execute any and all documents necessary to request dismissal or withdrawal of such claim;

(vi)the future value of the Shares subject to the RSUs is unknown, indeterminable, and cannot be predicted with certainty; and

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(vii)unless otherwise provided in the Plan or by the Company in its discretion, the Award and the benefits evidenced by this Agreement do not create any entitlement to have the Award or any such benefits transferred to, or assumed by, another company nor to be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the Shares of the Company.

(i)Participant’s Representations. If the Shares issuable hereunder have not been registered under the Securities Act or any applicable state laws on an effective registration statement at the time of such issuance, the Participant shall, if required by the Company, concurrently with such issuance, make such written representations as are deemed necessary or appropriate by the Company and/or its counsel.

(j)Titles. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.

(k)Governing Law and Venue. The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of Texas, U.S.A. without regard to the conflict-of-laws rules thereof or of any other jurisdiction.  For purposes of litigating any dispute that arises under this grant or this Agreement, the parties hereby submit to and consent to the jurisdiction of the State of Texas, agree that such litigation shall be conducted in the courts of Jefferson County, Texas, or the federal courts for the United States for the Southern District of Texas, where this grant is made and/or to be performed.

(l)Conformity to Securities Laws. The Participant acknowledges that the Plan and this Agreement are intended to conform to the extent necessary with all provisions of the Securities Act and the Exchange Act, and any and all applicable law. Notwithstanding anything herein to the contrary, the Plan shall be administered, and the Award is granted, only in such a manner as to conform to such applicable law. To the extent permitted by applicable law, the Plan and this Agreement shall be deemed amended to the extent necessary to conform to such applicable law.

(m)Amendment, Suspension and Termination. To the extent permitted by the Plan, this Agreement may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Administrator or the Board; provided, however, that, except as may otherwise be provided by the Plan, no amendment, modification, suspension or termination of this Agreement shall adversely affect the Award in any material way without the prior written consent of the Participant.

(n)Successors and Assigns. The Company or any Affiliate may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company and its Affiliates. Subject to the restrictions on transfer set forth in Section 3(b) hereof, this Agreement shall be binding upon the Participant and his or her heirs, executors, administrators, successors and assigns.

(o)Not a Contract of Service Relationship. Nothing in this Agreement or in the Plan shall confer upon the Participant any right to continue to serve as an employee or other service provider of the Company or any of its Affiliates or shall interfere with or restrict in any way the rights of the Company and its Affiliates, which rights are hereby expressly reserved, to discharge or terminate the services of the Participant at any time for any reason whatsoever, with or without cause, except to the extent expressly provided otherwise in a written agreement between the Company or an Affiliate and the Participant.

(p)Entire Agreement. The Plan, the Grant Notice and this Agreement (including all Exhibits thereto, if any) constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and its Affiliates and the Participant with respect to the subject matter hereof.

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(q)Limitation on the Participant’s Rights. Participation in the Plan confers no rights or interests other than as herein provided. This Agreement creates only a contractual obligation on the part of the Company as to amounts payable and shall not be construed as creating a trust. Neither the Plan nor any underlying program, in and of itself, has any assets. The Participant shall have only the rights of a general unsecured creditor of the Company and its Affiliates with respect to amounts credited and benefits payable, if any, with respect to the Shares issuable hereunder.

(r)Conformity to Securities Laws. The Participant acknowledges that the Plan and this Agreement are intended to conform to the extent necessary with all provisions of the Securities Act and the Exchange Act and any and all regulations and rules promulgated by the Securities and Exchange Commission thereunder, and State securities laws and regulations.  Notwithstanding anything herein to the contrary, the Plan shall be administered, and the Award is granted, only in such a manner as to conform to such laws, rules and regulations.  To the extent permitted by applicable law, the Plan and this Agreement shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.

(s)Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan or this Agreement, if the Participant is subject to Section 16 of the Exchange Act, then the Plan, the Award and this Agreement shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the Exchange Act) that are requirements for the application of such exemptive rule. To the extent permitted by applicable law, this Agreement shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.

(t)Administration. The Committee shall have the power to interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret, amend or revoke any such rules.  All actions taken and all interpretations and determinations made by the Committee in good faith shall be final and binding upon the Participant, the Company and all other interested persons.  No member of the Committee or the Board shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan, this Agreement or the Award.

(u)Counterparts. The Grant Notice may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

(v)Severability. If any provision of this Agreement is held to be unenforceable for any reason, it shall be adjusted rather than voided, if possible, in order to achieve the intent of the parties to the extent possible.  In any event, all other provisions of this Agreement shall be deemed valid and enforceable to the full extent possible.

(w)Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means.  The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an online or electronic system established and maintained by the Company or a third party designated by the Company.

(x)Waiver. The Participant acknowledges that the Company’s waiver of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by the Participant or any other participant.

(y)Clawback. The Award and the Shares subject to or delivered pursuant to the Award shall be subject to the Clawback provisions contained in Section 34 of the Plan.

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EXHIBIT B

CONSENT OF SPOUSE

I,                                     , spouse or domestic partner of                                          , have read and approve the Restricted Stock Unit Award Grant Notice (the “Grant Notice”) to which this Consent of Spouse is attached and the Restricted Stock Unit Award Agreement (the “Agreement”) attached to the Grant Notice. In consideration of issuing to my spouse the shares of the common stock of CBTX, Inc. set forth in the Grant Notice, I hereby appoint my spouse as my attorney-in-fact in respect to the exercise of any rights under the Agreement and agree to be bound by the provisions of the Agreement insofar as I may have any rights in said Agreement or any shares of the common stock of CBTX, Inc. issued pursuant thereto under the community property laws or similar laws relating to marital property in effect in the state of our residence as of the date of the signing of the foregoing Agreement.

Dated:
	Signature of Spouse

EX-10.12

Exhibit 10.12

CBTX, INC.

2017 OMNIBUS INCENTIVE PLAN

FORM OF STOCK OPTION AWARD GRANT NOTICE

CBTX, Inc. (the “Company”), pursuant to its 2017 Omnibus Incentive Plan (as amended from time to time, the “Plan”), hereby grants to the individual listed below (the “Participant”), an option (the “Option”) to purchase the number of shares set forth below of the Company’s common stock, par value $0.01 per share (the “Shares”).  This Option is subject to all of the terms and conditions set forth herein and in the Stock Option Award Agreement attached hereto as Exhibit A (the “Agreement”), and in the Plan, each of which is incorporated herein by reference.  Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Stock Option Award Grant Notice (this “Grant Notice) and the Agreement.

Participant:
Grant Date:
Vesting Commencement Date:
Number of Shares Subject to Option:
Exercise Price (Per Share):
Expiration Date:
Type of Grant:	oIncentive Stock Option	o Nonstatutory Stock Option
Vesting Schedule:	Unless otherwise provided in the Agreement, the Option shall vest with respect to [     ] percent ([        ]%) of the total number of Shares subject to the Option on each of the first [         ] ([        ]) anniversaries of the Vesting Commencement Date, subject to the Participant’s continued status as an employee on each applicable vesting date, such that all Shares subject to the Option shall be fully vested on the [        ] anniversary of the Vesting Commencement Date.

By his or her signature below or by electronic acceptance or authentication in a form authorized by the Company, the Participant agrees to be bound by the terms and conditions of the Plan, the Agreement, and this Grant Notice.  The Participant has reviewed the Agreement, the Plan and this Grant Notice in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Grant Notice and fully understands all provisions of this Grant Notice, the Agreement, the Appendix and the Plan.  The Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions arising under the Plan or relating to the Option.  If the Participant is married, his or her spouse has signed the Consent of Spouse attached to this Grant Notice as Exhibit B.

{Signature Page Follows}

CBTX, INC.		PARTICIPANT
By:		By:
Print Name:		Print Name:
Title:
Address:	9 Greenway Plaza, Suite 110	Address:
	Houston, Texas 77046

EXHIBIT A

STOCK OPTION AWARD AGREEMENT

Pursuant to the Stock Option Award Grant Notice (the “Grant Notice”) to which this Stock Option Award Agreement (this “Agreement”) is attached, CBTX, Inc., a Texas corporation (the “Company”), has granted to the Participant an option (the “Option”) to purchase the number of shares set forth in the Grant Notice of the Company’s common stock, par value $0.01 per share (the “Shares”).  Capitalized terms not specifically defined herein shall have the meanings specified in the Company’s 2017 Omnibus Incentive Plan, as amended from time to time (the “Plan”), and the Grant Notice.

1.Incorporation of Terms of Plan. The Option is subject to the terms and conditions of the Plan, which are incorporated herein by reference. In the event of any inconsistency between the Plan and this Agreement, the terms of the Plan shall control.

2.Award of Option.

(a)Award. Pursuant to the Grant Notice and upon the terms and conditions set forth in the Plan and this Agreement, effective as of the Grant Date, the Company has granted to the Participant an Option to purchase up to the number of Shares specified in the Grant Notice at the Exercise Price per Share set forth in the Grant Notice.

(b)Vesting. Except as otherwise provided in this Agreement, the Option shall vest and become exercisable for Shares in one or more installments as specified in the Grant Notice.  As the Option becomes exercisable for such installments, those installments shall accumulate, and the Option shall remain vested and exercisable for the accumulated installments until the Expiration Date or sooner termination of the Option term under Sections 3 or 6(b), below.

(c)Term of Option. The Option may be exercised only until the close of business on the Expiration Date, unless sooner terminated in accordance with Sections 3 or 6(b), below, and may be exercised during such term only in accordance with the Plan and the terms of the Agreement.  Notwithstanding the immediately preceding sentence, in no event shall the Option be exercisable more than ten (10) years from the Grant Date. If the Option is designated as an Incentive Stock Option and the Participant owned (within the meaning of Section 424(d) of the Code), at the time the Option was granted, more than 10% of the total combined voting power of all classes of stock of the Company or any “subsidiary corporation” of the Company or any “parent corporation” of the Company (each within the meaning of Section 424 of the Code), the term shall be in no event more than five (5) years from the Grant Date.

3.Termination of Service.

(a)General Rule.  If the Participant ceases to provide services to the Company (or any Subsidiary or Affiliate) in the capacity of an employee, director or consultant (collectively referred to herein as “Service”) for any reason other than death, Disability, or for Cause, then (i) that portion of the Option, if any, that is unvested as of the date of such termination of Service shall terminated and be cancelled for no consideration, and (ii) that portion of the Option, if any, that is vested as of the date of such termination of Service shall remain exercisable until the earlier of (i) the expiration of the three (3)-month period measured from the date of such termination of Service or (ii) the Expiration Date.

(b)Death or Disability. If the Participant’s Service terminates due to the Participant’s death or Disability (i) that portion of the Option, if any, that is unvested as of the date of

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such termination of Service shall terminated and be cancelled for no consideration, and (ii) that portion of the Option, if any, that is vested as of the date of such termination of Service shall remain exercisable until the earlier of (i) the expiration of the twelve (12)-month period measured from the date of such termination of Service or (ii) the Expiration Date..  For this purpose “Disability” shall have meaning set forth in the Participant’s employment agreement or similar arrangement with the Company or a Subsidiary; provided that if no such agreement or definition exists, “Disability” shall mean that the Participant would qualify to receive benefit payments under the long-term disability policy, as it may be amended from time to time, of the Company or the Subsidiary or Affiliate to which the Participant provides services regardless of whether the Participant is covered by such policy. If the Company or the Subsidiary or Affiliate to which the Participant provides service does not have a long-term disability plan in place, “Disability” means that a Participant is unable to carry out the responsibilities and functions of the position held by the Participant by reason of any medically determined physical or mental impairment for a period of not less than ninety (90) consecutive days. A Participant shall not be considered to have incurred a Disability unless he or she furnishes proof of such impairment sufficient to satisfy the Committee. Notwithstanding the foregoing, for purposes of Incentive Stock Options granted under the Plan, “Disability” means that the Participant is disabled within the meaning of Section 22(e)(3) of the Code.

(c)Number of Exercisable Shares Post-Service. During the applicable post-Service exercise period, the Option may not be exercised in the aggregate for more than the number of vested Shares for which the Option is exercisable on the date of the Participant’s termination of Service.  Upon the expiration of the applicable exercise period or (if earlier) upon the Expiration Date, the Option shall terminate and cease to be outstanding for any vested Shares for which the Option has not been exercised.

(d)Termination for Cause. If the Participant’s Service terminates for Cause or if the Participant engage in conduct constituting Cause while the Option is outstanding, then the Option (whether then vested or unvested) shall immediately terminate and be cancelled for no consideration.  In the event the Participant’s Service is suspended pending an investigation of whether the Participant’s Service will be terminated for Cause, all of the Participant’s rights under the Option, including the right to exercise the Option, shall be suspended during the investigation period. For this purpose, “Cause” shall have meaning set forth in the Participant’s employment agreement or similar arrangement with the Company or a Subsidiary; provided that if no such agreement or definition exists, “Cause” shall mean (i) the Participant’s willful failure to perform his or her duties to the Company and its Affiliates, which duties are commensurate with those of the position for which the Participant is then employed; (ii) the Participant’s failure to follow the express instructions of the Board or the Participant’s direct or indirect supervisors; (iii) any material violation by the Participant of the policies of the Company or an Affiliate thereof set forth in a written code of conduct or similar document and applicable to the Participant that is not cured within five (5) days after notice thereof to the Participant; (iv) any act of gross negligence, fraud or willful misconduct by the Participant materially injuring the interest, business or reputation of the Company or any Affiliate thereof; (v) the Participant’s commission of any felony or any crime involving moral turpitude; (vi) the Participant’s misappropriation or embezzlement of the property of the Company or any Affiliate thereof; or (vii) any material breach by the Participant of any written agreement between the Participant and the Company or any Affiliate thereof.

(e)Termination of Service. For purposes of this Agreement, the Participant’s date of termination of Service shall mean the date upon which the Participant ceases active performance of services for the Company, a Subsidiary or Affiliate, as determined by the Company following the provision of such notification of termination or resignation from Service and shall be determined solely by this Agreement and without reference to any other agreement, written or oral, including the Participant’s contract of employment (if any). Thus, in the event of termination of the Participant’s

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Service (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where Participant is employed or the terms of Participant’s contract of employment, if any), and unless otherwise expressly provided in this Agreement, and unless otherwise expressly provided in this Agreement, any employment or consulting agreement with the Company or a Subsidiary, or determined by the Committee, (i) the Participant’s right to vest in the Option under the Plan, if any, will terminate as of such date; and (ii) the period (if any) during which the Participant may exercise the Option after such termination of the Participant’s Service will commence on the date Participant ceases active performance of services; the Committee shall have the exclusive discretion to determine when the Participant is no longer actively providing services for purposes of the Option (including whether the Participant may still be considered to be providing services while on a leave of absence).

4.Exercise of Option.

(a)Method of Exercise. In order to exercise the Option with respect to all or any part of the Shares for which the Option is at the time vested and exercisable, the Participant (or any other person or persons exercising the Option) must take the following actions:

(i)Execute and deliver to the Company a notice of exercise (the “Notice of Exercise”) in the form authorized by the Company, which may be electronic or written. An electronic Notice of Exercise must be digitally signed or authenticated by the Participant in such manner as required by the notice and transmitted to the applicable authorized representative of the Company (including a Company-designated brokerage firm). In the event that the Participant is not authorized or is unable to provide an electronic Notice of Exercise, the Option shall be exercised by a written Notice of Exercise addressed to the Company, which shall be signed by the Participant and delivered in person, by certified or registered mail, return receipt requested, by confirmed e-mail transmission, or by such other means as the Company may permit, to the applicable authorized representative of the Company (including a Company-designated brokerage firm).  Each Notice of Exercise, whether electronic or written, must state the Participant’s election to exercise the Option, the number of whole Shares for which the Option is being exercised and such other representations and agreements as to the Participant’s investment intent with respect to such Shares as may be required pursuant to the provisions of this Agreement.  Further, each Notice of Exercise must be received by the Company prior to the termination of the Option as set forth in Sections 2(b), 3 or 6(b) of this Agreement.

(ii)Pay the aggregate Exercise Price for the purchased Shares in one or more of the following forms:

(A)cash or check which, in the Company’s sole discretion, shall be made payable to a Company-designated brokerage firm or the Company; or

(B)as permitted by applicable law, through a special sale and remittance procedure pursuant to which the Participant (or any other person or persons exercising the Option) shall concurrently provide irrevocable instructions (A) to a Company-designated brokerage firm to effect the immediate sale of the purchased Shares and remit to the Company, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate Exercise Price payable for the purchased Shares plus all applicable Tax-Related Items (as defined in Section 5(a)) and (B) to the Company to deliver the certificates for the purchased Shares directly to such brokerage firm in order to complete the sale.

(iii)Furnish to the Company appropriate documentation that the person or persons exercising the Option (if other than the Participant) have the right to exercise the Option.

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(iv)Make appropriate arrangements with the Company (or Subsidiary or Affiliate employing or retaining the Participant) for the satisfaction of all applicable Tax-Related Items requirements applicable to the Option exercise.

Except to the extent the sale and remittance procedure is utilized in connection with the exercise of the Option, payment of the Exercise Price must accompany the Notice of Exercise delivered to the Company (or a Company-designated brokerage firm) in connection with the Option exercise. Notwithstanding the foregoing, the Company reserves the right to restrict the methods of payment of the Exercise Price if necessary to comply with local law, as determined by the Company in its sole discretion.

As soon as practical after the exercise date, the Company shall issue to or on behalf of the Participant (or any other person or persons exercising the Option) the purchased Shares (as evidenced by an appropriate entry on the books of the Company or a duly authorized transfer agent of the Company), subject to the appropriate legends and/or stop transfer instructions.

Notwithstanding any other provisions of the Plan, this Agreement or any other agreement to the contrary, if at the time this Option is exercised, the Participant is indebted to the Company (or any Subsidiary or Affiliate) for any reason, the following actions shall be taken, as deemed appropriate by the Committee: (A) any Shares to be issued upon such exercise shall automatically be pledged against Participant’s outstanding indebtedness; and (B) if this Option is exercised in accordance with Section 4(a)(ii)(B) above, the after-tax proceeds of the sale of the Participant’s Shares shall automatically be applied to the outstanding balance of the Participant’s indebtedness.

(b)Restrictions on Exercise of the Option and Issuance of Shares. The exercise of the Option and issuance of Shares upon such exercise shall be subject to compliance with all applicable requirements of U.S. federal, state or foreign law with respect to such securities.  No Shares may be issued hereunder if the issuance of such Shares would constitute a violation of any applicable U.S. federal, state or foreign securities laws or other laws or regulations or the requirements of any stock exchange or market system upon which the Shares may then be listed.  The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance of any Shares subject to the Option shall relieve the Company of any liability in respect of the failure to issue such Shares as to which such requisite authority shall not have been obtained.  As a condition to the exercise of the Option, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company.  Further, regardless of whether the transfer or issuance of the Shares to be issued pursuant to the Option has been registered under the Securities Act or has been registered or qualified under the securities laws of any State, the Company may impose additional restrictions upon the sale, pledge, or other transfer of the Shares (including the placement of appropriate legends on stock certificates and the issuance of stop-transfer instructions to the Company’s transfer agent) if, in the judgment of the Company and the Company’s counsel, such restrictions are necessary in order to achieve compliance with the provisions of the Securities Act, the securities laws of any State, or any other law.

(c)Fractional Shares.  In no event may the Option be exercised for any fractional Shares.

(d)Excess Shares.  If the Shares covered by this Agreement exceed, as of the Grant Date, the number of Shares which may without stockholder approval be issued under the Plan, then the Option shall be void with respect to those excess Shares, unless stockholder approval of an amendment sufficiently increasing the number of Shares issuable under the Plan is obtained in accordance with the provisions of the Plan.

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(e)Financing.  To the extent the Participant is not an “executive officer” of the Company within the meaning of Section 13(k) of the Exchange Act, the Committee may, in its absolute discretion and without any obligation to do so, permit the Participant to pay the Exercise Price for the purchased Shares by delivering a full-recourse promissory note payable to the Company.  The terms of any such promissory note (including the interest rate, the requirements for collateral and the terms of repayment) shall be established by the Committee in its sole discretion.

5.Tax Withholding and Advice.

(a)In General. The Participant acknowledges that, regardless of any action taken by the Company or, if different, the Participant’s employer (the “Employer”), the ultimate liability for all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items related to the Participant’s participation in the Plan and legally applicable to the Participant or deemed by the Company or the Employer in its discretion to be an appropriate charge to the Participant even if legally applicable to the Company or the Employer (“Tax-Related Items”), is and remains the Participant’s responsibility and may exceed the amount actually withheld by the Company or the Employer. The Participant further acknowledges that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Option, including, but not limited to, the grant, vesting or exercise of the Option, the subsequent sale of Shares acquired pursuant to such exercise and the receipt of any dividends; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Option to reduce or eliminate the Participant’s liability for Tax-Related Items or achieve any particular tax result.  Further, if the Participant is subject to Tax-Related Items in more than one jurisdiction between the Grant Date and the date of any relevant taxable or tax withholding event, as applicable, the Participant acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

(b)Withholding of Taxes. Prior to the relevant taxable or tax withholding event, as applicable, the Participant agrees to make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items (including hypothetical withholding tax amounts if the Participant is covered under a Company tax equalization policy).  In this regard, the Participant authorizes the Company and/or the Employer, or their respective agents, at their discretion, to satisfy the obligations with regard to all Tax-Related Items by one or a combination of the following:

(i)withholding from the Participant’s wages or other cash compensation paid to the Participant by the Company or the Employer; or

(ii)withholding a number of whole Shares otherwise deliverable to the Participant upon exercise of the Option having a Fair Market Value equal to the Tax-Related Items obligations, as determined by the Company as of the date on which the Tax-Related Items obligations arise; or

(iii)withholding from the proceeds of the sale of Shares acquired upon exercise of the Option, either through a voluntary sale (specifically including where this Option is exercised in accordance with Section 4(a)(ii)(B) above) or through a mandatory sale arranged by the Company (on the Participant’s behalf pursuant to this authorization) without further consent; or

(iv)direct payment from the Participant.

Depending on the withholding method, the Company may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding amounts or other applicable withholding

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rates, including maximum applicable rates, in which case the Participant will receive a refund of any over-withheld amount in cash and will have no entitlement to the Share equivalent.  If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, the Participant is deemed to have been issued the full number of Shares subject to the exercised Option, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items.

(c)Tax Advice.  The Participant represents, warrants and acknowledges that the Company has made no warranties or representations to the Participant with respect to the income tax, social contributions or other tax consequences of the transactions contemplated by this Agreement, and the Participant is in no manner relying on the Company or the Company’s representatives for an assessment of such tax consequences.  THE PARTICIPANT UNDERSTANDS THAT THE TAX AND SOCIAL SECURITY LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.  THE PARTICIPANT IS HEREBY ADVISED TO CONSULT WITH HIS OR HER OWN PERSONAL TAX, LEGAL AND FINANCIAL ADVISORS REGARDING THE PARTICIPANT’S PARTICIPATION IN THE PLAN BEFORE TAKING ANY ACTION RELATED TO THE PLAN. NOTHING STATED HEREIN IS INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, FOR THE PURPOSE OF AVOIDING TAXPAYER PENALTIES.

6.Effect of Change of Control on Award.  This Agreement shall not in any way affect the right of the Company to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

(a)Acceleration of Vesting.  In the event of a Change of Control, the Option, to the extent outstanding at that time but not otherwise fully vested or exercisable, shall automatically accelerate so that the Option shall, effective immediately prior to the effective time of the Change of Control, be fully vested and exercisable.

(b)Termination of the Option Upon Change of Control.  Upon the consummation of the Change of Control, the Option, to the extent unexercised as of the effective time of such Change of Control, shall terminate and be cancelled for no consideration, except (i) to the extent assumed by the successor corporation (or parent thereof), (ii) expressly continued in full force and effect pursuant to the terms of the Change of Control.

7.Adjustments for Changes in Capital Structure.  The Participant acknowledges that the Option is subject to modification and termination in certain events as provided in this Agreement and Section 4(c) of the Plan.  Upon the occurrence of an event described in Section 4(c) of the Plan, any and all new, substituted or additional securities or other property to which a holder of a Share issuable in settlement of the Option would be entitled shall be immediately subject to the Agreement and included within the meaning of the term “Shares” for all purposes of the Option.  The Participant shall be notified of such adjustments and such adjustments shall be binding upon the Company and the Participant.

8.Miscellaneous Provisions.

(a)Rights as a Stockholder. The Participant shall not have any stockholder rights with respect to the Shares until the Participant exercises the Option, pays the Exercise Price and the purchased Shares are issued or the purchased Shares are deposited in a brokerage account (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company).  No adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date the Shares are issued, except as provided in Section 7.

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(b)Amendment. The Committee may amend this Agreement at any time; provided, however, that no such amendment may adversely affect the Participant’s rights under this Agreement without the consent of the Participant, except to the extent such amendment is desirable or necessary to comply with applicable law, including, but not limited to, Section 409A of the Code as further provided in the Plan.  No amendment or addition to this Agreement shall be effective unless in writing.

(c)Nontransferability of the Option. Prior to the issuance of Shares upon exercise, no right or interest of the Participant in the Option nor any Shares subject to the Option shall be in any manner pledged, encumbered, or hypothecated to or in favor of any party other than the Company or a Subsidiary or Affiliate or shall become subject to any lien, obligation, or liability of such Participant to any other party other than the Company, or a Subsidiary or Affiliate.  Except as otherwise provided by the Committee, no Option shall be assigned, transferred or otherwise disposed of other than by will or the laws of descent and distribution.  All rights with respect to the Option shall be exercisable during the Participant’s lifetime only by the Participant or the Participant’s guardian or legal representative.

(d)Further Instruments and Imposition of Other Requirements. The parties agree to execute such further instruments and to take such further action as may be reasonably necessary to carry out the purposes and intent of this Agreement.  The Company reserves the right to impose other requirements on Participant’s participation in the Plan, on the Option and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable in order to comply with local law or facilitate the administration of the Plan.

(e)Participant Acknowledgements.  In accepting the Option, the Participant acknowledges, understands and agrees that:

(i)the grant of the Option is voluntary and occasional and does not create any contractual or other right to receive future grants of options, or benefits in lieu of options, even if options have been granted in the past;

(ii)the Option grant and the Participant’s participation in the Plan shall not create a right to employment or be interpreted as forming an employment or service contract with the Company,  the Employer or any Subsidiary or Affiliate, and shall not interfere with the ability of the Company, the Employer or any Subsidiary or Affiliate, as applicable, to terminate the Participant’s employment or service relationship (if any);

(iii)the Option and any Shares acquired under the Plan are not intended to replace any pension rights or compensation;

(iv)the Option and any Shares acquired under the Plan and the income and value of same, are not part of normal or expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments;

(v)no claim or entitlement to compensation or damages shall arise from forfeiture of the Option resulting from the termination of the Participant’s Service (for any reason whatsoever, whether or not later found to be invalid or in breach of employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s contact of employment, if any), and in consideration of the grant of the Option to which the Participant is otherwise not entitled, the Participant irrevocably agrees never to institute any claim against the Company, any of its Subsidiaries or Affiliates or the Employer, waives his or her ability, if any, to bring any such claim, and releases the Company, its Subsidiaries and Affiliates and the Employer from any such claim; if, notwithstanding the foregoing, any

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such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, the Participant shall be deemed irrevocably to have agreed not to pursue such claim and agree to execute any and all documents necessary to request dismissal or withdrawal of such claim;

(vi)the future value of the Shares underlying the Option is unknown, indeterminable, and cannot be predicted with certainty;

(vii)if the underlying Shares do not increase in value, the Option will have no value; and

(viii)if the Participant exercises the Option and acquires Shares, the value of such Shares may increase or decrease in value, even below the Exercise Price.

(f)Binding Effect. This Agreement shall inure to the benefit of the successors and assigns of the Company and, subject to the restrictions on transfer set forth herein, be binding upon the Participant and the Participant’s heirs, executors, administrators, successors and assigns.

(g)Notices. Any notice required to be given or delivered to the Company under the terms of this Agreement shall be in writing and addressed to the Company at its principal corporate offices.  Any notice required to be given or delivered to the Participant shall be in writing and addressed to the Participant at the address maintained for the Participant in the Company’s records or at the address of the local office of the Company or of a Subsidiary or Affiliate at which the Participant works.

(h)Construction of Agreement. The Grant Notice, this Agreement, and the Option evidenced hereby (i) are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan, and (ii) constitute the entire agreement between the Participant and the Company on the subject matter hereof and supersede all proposals, written or oral, and all other communications between the parties related to the subject matter.  All decisions of the Committee with respect to any question or issue arising under the Grant Notice, this Agreement or the Plan shall be conclusive and binding on all persons having an interest in this Option.

(i)Governing Law and Venue. The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of Texas, U.S.A. without regard to the conflict-of-laws rules thereof or of any other jurisdiction.  For purposes of litigating any dispute that arises under this grant or this Agreement, the parties hereby submit to and consent to the jurisdiction of the State of Texas, agree that such litigation shall be conducted in the courts of Jefferson County, Texas, or the federal courts for the United States for the Southern District of Texas, where this grant is made and/or to be performed.

(j)Conformity to Securities Laws. The Participant acknowledges that the Plan and this Agreement are intended to conform to the extent necessary with all provisions of the Securities Act and the Exchange Act and any and all regulations and rules promulgated by the Securities and Exchange Commission thereunder, and State securities laws and regulations.  Notwithstanding anything herein to the contrary, the Plan shall be administered, and the Option is granted and may be exercised, only in such a manner as to conform to such laws, rules and regulations.  To the extent permitted by applicable law, the Plan and this Agreement shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.

(k)Section 409A. Notwithstanding any other provision of the Plan, this Agreement or the Grant Notice, the Plan, this Agreement and the Grant Notice shall be interpreted in accordance with, and incorporate the terms and conditions required by, Section 409A of the Code (with any

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Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the date hereof (“Section 409A”)).  The Company reserves the right, to the extent the Company deems necessary or advisable in its sole discretion, to unilaterally amend or modify the Plan, this Agreement or the Grant Notice or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, including amendments or actions that would result in a reduction in benefits payable under the Option, as the Committee determines are necessary or appropriate to ensure that this Option qualifies for exemption from, or complies with the requirements of, Section 409A or mitigate any additional tax, interest and/or penalties or other adverse tax consequences that may apply under Section 409A; provided, however, that the Company makes no representation that the Option will be exempt from, or will comply with, Section 409A, and makes no undertakings to preclude Section 409A from applying to the Option or to ensure that it complies with Section 409A.

(l)Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan or this Agreement, if the Participant is subject to Section 16 of the Exchange Act, the Plan, the Option and this Agreement shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the Exchange Act) that are requirements for the application of such exemptive rule.  To the extent permitted by applicable law, this Agreement shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.

(m)Administration. The Committee shall have the power to interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret, amend or revoke any such rules.  All actions taken and all interpretations and determinations made by the Committee in good faith shall be final and binding upon the Participant, the Company and all other interested persons.  No member of the Committee or the Board shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan, this Agreement or the Option.

(n)Counterparts. The Grant Notice may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

(o)Severability. If any provision of this Agreement is held to be unenforceable for any reason, it shall be adjusted rather than voided, if possible, in order to achieve the intent of the parties to the extent possible.  In any event, all other provisions of this Agreement shall be deemed valid and enforceable to the full extent possible.

(p)Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means.  The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an online or electronic system established and maintained by the Company or a third party designated by the Company.

(q)Waiver. The Participant acknowledges that the Company’s waiver of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by the Participant or any other participant.

(r)Clawback.  The Options shall be subject to the Clawback provisions contained in Section 34 of the Plan.

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EXHIBIT B

CONSENT OF SPOUSE

I,                              , spouse or domestic partner of                                     , have read and approve the Stock Option Award Grant Notice (the “Grant Notice”) to which this Consent of Spouse is attached and the Stock Option Award Agreement (the “Agreement”) attached to the Grant Notice. In consideration of issuing to my spouse the option to purchase the shares of the common stock of CBTX, Inc. set forth in the Grant Notice, I hereby appoint my spouse as my attorney-in-fact in respect to the exercise of any rights under the Agreement and agree to be bound by the provisions of the Agreement insofar as I may have any rights in said Agreement or any shares of the common stock of CBTX, Inc. issued pursuant thereto under the community property laws or similar laws relating to marital property in effect in the state of our residence as of the date of the signing of the foregoing Agreement.

Dated:
	Signature of Spouse

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EX-10.13

Exhibit 10.13

CBTX, INC.

2017 OMNIBUS INCENTIVE PLAN

FORM OF STOCK APPRECIATION RIGHT AWARD GRANT NOTICE

CBTX, Inc. (the “Company”), pursuant to its 2017 Omnibus Incentive Plan (as amended from time to time, the “Plan”), hereby grants to the individual listed below (the “Participant”) an award (this “Award”) of the number of Stock Appreciation Rights (“SARs”) set forth below.  This Award is subject to all of the terms and conditions set forth herein and in the Stock Appreciation Right Award Agreement attached hereto as Exhibit A (the “Agreement”), and in the Plan, each of which is incorporated herein by reference.  Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Stock Appreciation Right Award Grant Notice (this “Grant Notice) and the Agreement.

Participant:
Grant Date:
Vesting Commencement Date:
Number of Stock Appreciation Rights:
Exercise Price (Per Stock Appreciation Right):
Expiration Date:
Vesting Schedule:	Unless otherwise provided in the Agreement, the Award shall vest with respect to [         ] percent ([        ]%) of the total number of SARs subject to the Award on each of the first [        ] ([        ]) anniversaries of the Vesting Commencement Date, subject to the Participant’s continued status as an employee on each applicable vesting date, such that all SARs subject to the Award shall be fully vested on the [         ] anniversary of the Vesting Commencement Date.

By his or her signature below or by electronic acceptance or authentication in a form authorized by the Company, the Participant agrees to be bound by the terms and conditions of the Plan, the Agreement, and this Grant Notice.  The Participant has reviewed the Agreement, the Plan and this Grant Notice in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Grant Notice and fully understands all provisions of this Grant Notice, the Agreement, the Appendix and the Plan.  The Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan or relating to the Award.  If the Participant is married, his or her spouse has signed the Consent of Spouse attached to this Grant Notice as Exhibit B.

{Signature Page Follows}

CBTX, INC.		PARTICIPANT
By:		By:
Print Name:		Print Name:
Title:
Address:	9 Greenway Plaza, Suite 110	Address:
	Houston, Texas 77046

EXHIBIT A

STOCK APPRECIATION RIGHT AWARD AGREEMENT

Pursuant to the Stock Appreciation Right Award Grant Notice (the “Grant Notice”) to which this Stock Appreciation Right Award Agreement (this “Agreement”) is attached, CBTX, Inc., a Texas corporation (the “Company”), has granted to the Participant an award (this “Award”) of Stock Appreciation Rights. Capitalized terms not specifically defined herein shall have the meanings specified in the Company’s 2017 Omnibus Incentive Plan, as amended from time to time (the “Plan”), and the Grant Notice.

1.Incorporation of Terms of Plan. This Award is subject to the terms and conditions of the Plan, which are incorporated herein by reference. In the event of any inconsistency between the Plan and this Agreement, the terms of the Plan shall control.

2.Award of Stock Appreciation Rights.

(a)Grant of Stock Appreciation Rights. Pursuant to the Grant Notice and upon the terms and conditions set forth in the Plan and this Agreement, effective as of the Grant Date, the Company has granted to the Participant the number of SARs specified in the Grant Notice at the Exercise Price per SAR set forth in the Grant Notice.  Each SAR represents an unfunded, unsecured right to receive, upon exercise of the SAR, the whole number of shares of Stock whose value is an amount equal to the difference between the Fair Market Value of a share of Stock on the exercise date of the SAR and the Exercise Price. Fractional shares of Stock shall be paid in cash.

(b)Vesting. Except as otherwise provided in this Agreement, the SARs shall vest and become exercisable in one or more installments as specified in the Grant Notice.  As the SARs become exercisable for such installments, those installments shall accumulate, and the SARs shall remain vested and exercisable for the accumulated installments until the Expiration Date or sooner termination of the Award term under Sections 3 or 6(b), below.

(c)Term of Award. The SARs may be exercised only until the close of business on the Expiration Date, unless sooner terminated in accordance with Sections 3 or 6(b), below, and may be exercised during such term only in accordance with the Plan and the terms of the Agreement.  Notwithstanding the immediately preceding sentence, in no event shall an SAR be exercisable more than ten (10) years from the Grant Date.

3.Termination of Service.

(a)General Rule.  If the Participant ceases to provide services to the Company (or any Subsidiary or Affiliate) in the capacity of an employee, director or consultant (collectively referred to herein as “Service”) for any reason other than death, Disability, or for Cause, then (i) all unvested SARs as of the date of such termination of Service shall terminate and be cancelled for no consideration and (ii) any vested SARs as of the date of such termination of Service shall remain exercisable until the earlier of (A) the expiration of the three (3)-month period measured from the date of such termination of Service or (B) the Expiration Date.

(b)Death or Disability. If the Participant’s Service terminates due to the Participant’s death or Disability then (i) all unvested SARs as of the date of such termination of Service shall terminate and be cancelled for no consideration and (ii) any vested SARs as of the date of such termination of Service shall remain exercisable until the earlier of (A) the expiration of the twelve (12)-

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month period measured from the date of such termination of Service or (B) the Expiration Date.  For this purpose “Disability” shall have meaning set forth in the Participant’s employment agreement or similar arrangement with the Company or a Subsidiary; provided that if no such agreement or definition exists, “Disability” shall mean that the Participant would qualify to receive benefit payments under the long-term disability policy, as it may be amended from time to time, of the Company or the Subsidiary or Affiliate to which the Participant provides services regardless of whether the Participant is covered by such policy. If the Company or the Subsidiary or Affiliate to which the Participant provides service does not have a long-term disability plan in place, “Disability” means that a Participant is unable to carry out the responsibilities and functions of the position held by the Participant by reason of any medically determined physical or mental impairment for a period of not less than ninety (90) consecutive days. A Participant shall not be considered to have incurred a Disability unless he or she furnishes proof of such impairment sufficient to satisfy the Administrator.

(c)Termination for Cause. If the Participant’s Service terminates for Cause or if the Participant engages in conduct constituting Cause, then the Award shall terminate and be cancelled for no consideration. If the Participant’s Service is suspended pending an investigation of whether the Participant’s Service will be terminated for Cause, all of the Participant’s rights under the Award, including the right to exercise the SARs, shall be suspended during the investigation period. For this purpose, “Cause” shall have meaning set forth in the Participant’s employment agreement or similar arrangement with the Company or a Subsidiary; provided that if no such agreement or definition exists, “Cause” shall mean (i) the Participant’s willful failure to perform his or her duties to the Company and its Affiliates, which duties are commensurate with those of the position for which the Participant is then employed; (ii) the Participant’s failure to follow the express instructions of the Board or the Participant’s direct or indirect supervisors; (iii) any material violation by the Participant of the policies of the Company or an Affiliate thereof set forth in a written code of conduct or similar document and applicable to the Participant that is not cured within five (5) days after notice thereof to the Participant; (iv) any act of gross negligence, fraud or willful misconduct by the Participant materially injuring the interest, business or reputation of the Company or any Affiliate thereof; (v) the Participant’s commission of any felony or any crime involving moral turpitude; (vi) the Participant’s misappropriation or embezzlement of the property of the Company or any Affiliate thereof; or (vii) any material breach by the Participant of any written agreement between the Participant and the Company or any Affiliate thereof.

(d)Termination of Service. For purposes of this Agreement, the Participant’s date of termination of Service shall mean the date upon which the Participant ceases active performance of Services for the Company, a Subsidiary or Affiliate, as determined by the Administrator following the provision of such notification of termination or resignation from Service and shall be determined solely by this Agreement and without reference to any other agreement, written or oral, including the Participant’s contract of employment (if any). Thus, in the event of termination of the Participant’s Service (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where Participant is employed or the terms of Participant’s contract of employment, if any), and unless otherwise expressly provided in this Agreement, and unless otherwise expressly provided in this Agreement, any employment or consulting agreement with the Company or a Subsidiary, or determined by the Administrator: (i) the Participant’s right to vest in the SARs, if any, will terminate as of such date; and (ii) the period (if any) during which the Participant may exercise any vested SARs after such termination of Service will commence on the date Participant ceases active performance of Services.  The Administrator shall have the exclusive discretion to determine when the Participant is no longer actively performing Services for purposes of the Award (including whether the Participant may still be considered to be performing Services while on a leave of absence).

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4.Exercise of SARs.

(a)Method of Exercise. In order to exercise a vested SAR, the Participant (or any other person or persons exercising the SAR) must take the following actions:

(i)Execute and deliver to the Company a notice of exercise (the “Notice of Exercise”) in the form authorized by the Company, which may be electronic or written. An electronic Notice of Exercise must be digitally signed or authenticated by the Participant in such manner as required by the notice and transmitted to the applicable authorized representative of the Company (including a Company-designated brokerage firm). In the event that the Participant is not authorized or is unable to provide an electronic Notice of Exercise, the SAR shall be exercised by a written Notice of Exercise addressed to the Company, which shall be signed by the Participant and delivered in person, by certified or registered mail, return receipt requested, by confirmed e-mail transmission, or by such other means as the Company may permit, to the applicable authorized representative of the Company (including a Company-designated brokerage firm).  Each Notice of Exercise, whether electronic or written, must state the Participant’s election to exercise the SAR, the number of SARs being exercised, and such other representations and agreements as to the Participant’s investment intent with respect to the Stock issuable to the Participant upon exercise as may be required pursuant to the provisions of this Agreement.  Further, each Notice of Exercise must be received by the Company prior to the termination of the Award as set forth in Sections 2(c), 3 or 6(b) of this Agreement.

(ii)Pay the aggregate Exercise Price in one or more of the following forms:

(A)cash or check which, in the Company’s sole discretion, shall be made payable to a Company-designated brokerage firm or the Company; or

(B)as permitted by applicable law, through a special sale and remittance procedure pursuant to which the Participant (or any other person or persons exercising the SAR) shall concurrently provide irrevocable instructions (I) to a Company-designated brokerage firm to effect the immediate sale of the Stock issuable upon exercise of the SAR and remit to the Company, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate Exercise Price plus all applicable Tax-Related Items (as defined in Section 5(a)) and (II) to the Company to deliver the certificates for Stock issuable upon exercise of the SAR directly to such brokerage firm in order to complete the sale.

(iii)Furnish to the Company appropriate documentation that the person or persons exercising the SAR (if other than the Participant) have the right to exercise the SAR.

(iv)Make appropriate arrangements with the Company (or Subsidiary or Affiliate employing or retaining the Participant) for the satisfaction of all applicable Tax-Related Items requirements applicable to the exercise.

Except to the extent the sale and remittance procedure is utilized in connection with the exercise of the SAR, payment of the Exercise Price must accompany the Notice of Exercise delivered to the Company (or a Company-designated brokerage firm) in connection with the SAR exercise.

As soon as practical after the exercise date, the Company shall issue the Stock to or on behalf of the Participant (or any other person or persons exercising the SAR), as evidenced by an appropriate entry on the books of the Company or a duly authorized transfer agent of the Company, subject to the appropriate legends and/or stop transfer instructions.

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Notwithstanding any other provisions of the Plan, this Agreement or any other agreement to the contrary, if at the time an SAR is exercised, the Participant is indebted to the Company (or any Subsidiary or Affiliate) for any reason, the following actions shall be taken, as deemed appropriate by the Administrator: (A) any Shares to be issued upon such exercise shall automatically be pledged against Participant’s outstanding indebtedness; and (B) if this SAR is exercised in accordance with Section 4(a)(ii)(B) above, the after-tax proceeds of the sale of the Stock shall automatically be applied to the outstanding balance of the Participant’s indebtedness.

(b)Restrictions on Exercise of SARS and Issuance of Stock. The exercise of the SARs and issuance of Stock upon such exercise shall be subject to compliance with all applicable requirements of U.S. federal, state or foreign law with respect to such securities.  No Stock may be issued hereunder if the issuance of such Stock would constitute a violation of any applicable U.S. federal, state or foreign securities laws or other laws or regulations or the requirements of any stock exchange or market system upon which the Stock may then be listed.  The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance of any Stock upon exercise of an SAR shall relieve the Company of any liability in respect of the failure to issue such Stock as to which such requisite authority shall not have been obtained.  As a condition to the exercise of an SAR, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company.  Further, regardless of whether the transfer or issuance of the Stock to be issued upon exercise of an SAR has been registered under the Securities Act or has been registered or qualified under the securities laws of any State, the Company may impose additional restrictions upon the sale, pledge, or other transfer of the Stock (including the placement of appropriate legends on stock certificates and the issuance of stop-transfer instructions to the Company’s transfer agent) if, in the judgment of the Company and the Company’s counsel, such restrictions are necessary in order to achieve compliance with the provisions of the Securities Act, the securities laws of any State, or any other law.

(c)Fractional Shares.  In no event may an SAR be exercised for any fractional shares of Stock.  Fractional shares of Stock shall be paid in cash.

(d)Excess SARs.  If the SARs covered by this Agreement exceed, as of the Grant Date, the number of SARs which may without stockholder approval be issued under the Plan, then the Award shall be void with respect to those excess SARs unless stockholder approval of an amendment sufficiently increasing the number of SARs issuable under the Plan is obtained in accordance with the provisions of the Plan.

(e)Financing.  To the extent the Participant is not an “executive officer” of the Company within the meaning of Section 13(k) of the Exchange Act, the Administrator may, in its absolute discretion and without any obligation to do so, permit the Participant to pay the Exercise Price by delivering a full-recourse promissory note payable to the Company.  The terms of any such promissory note (including the interest rate, the requirements for collateral and the terms of repayment) shall be established by the Administrator in its sole discretion.

5.Tax Withholding and Advice.

(a)In General. The Participant acknowledges that, regardless of any action taken by the Company or, if different, the Participant’s employer (the “Employer”), the ultimate liability for all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items related to the Participant’s participation in the Plan and legally applicable to the Participant or deemed by the Company or the Employer in its discretion to be an appropriate charge to the Participant

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even if legally applicable to the Company or the Employer (“Tax-Related Items”), is and remains the Participant’s responsibility and may exceed the amount actually withheld by the Company or the Employer. The Participant further acknowledges that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the SARs, including, but not limited to, the grant, vesting or exercise of the SARs, the subsequent sale of shares of Stock acquired pursuant to such exercise and the receipt of any dividends; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the SARs to reduce or eliminate the Participant’s liability for Tax-Related Items or achieve any particular tax result.  Further, if the Participant is subject to Tax-Related Items in more than one jurisdiction between the Grant Date and the date of any relevant taxable or tax withholding event, as applicable, the Participant acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

(b)Withholding of Taxes. Prior to the relevant taxable or tax withholding event, as applicable, the Participant agrees to make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items (including hypothetical withholding tax amounts if the Participant is covered under a Company tax equalization policy).  In this regard, the Participant authorizes the Company and/or the Employer, or their respective agents, at their discretion, to satisfy the obligations with regard to all Tax-Related Items by one or a combination of the following:

(i)withholding from the Participant’s wages or other cash compensation paid to the Participant by the Company or the Employer; or

(ii)withholding a number of whole shares of Stock otherwise deliverable to the Participant upon exercise of the SARs having a Fair Market Value equal to the Tax-Related Items obligations, as determined by the Company as of the date on which the Tax-Related Items obligations arise; or

(iii)withholding from the proceeds of the sale of shares of Stock acquired upon exercise of the SARs, either through a voluntary sale (specifically including where the SARs are exercised in accordance with Section 4(a)(ii)(B) above) or through a mandatory sale arranged by the Company (on the Participant’s behalf pursuant to this authorization) without further consent; or

(iv)direct payment from the Participant.

Depending on the withholding method, the Company may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding amounts or other applicable withholding rates, including maximum applicable rates, in which case the Participant will receive a refund of any over-withheld amount in cash and will have no entitlement to the Share equivalent.  If the obligation for Tax-Related Items is satisfied by withholding in shares of Stock, for tax purposes, the Participant is deemed to have been issued the full number of shares of Stock subject to the exercised SARs, notwithstanding that a number of the shares of Stock are held back solely for the purpose of paying the Tax-Related Items.

(c)Tax Advice.  The Participant represents, warrants and acknowledges that the Company has made no warranties or representations to the Participant with respect to the income tax, social contributions or other tax consequences of the transactions contemplated by this Agreement, and the Participant is in no manner relying on the Company or the Company’s representatives for an assessment of such tax consequences.  THE PARTICIPANT UNDERSTANDS THAT THE TAX AND SOCIAL SECURITY LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.  THE PARTICIPANT IS HEREBY ADVISED TO CONSULT WITH HIS OR HER OWN PERSONAL TAX,

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LEGAL AND FINANCIAL ADVISORS REGARDING THE PARTICIPANT’S PARTICIPATION IN THE PLAN BEFORE TAKING ANY ACTION RELATED TO THE PLAN. NOTHING STATED HEREIN IS INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, FOR THE PURPOSE OF AVOIDING TAXPAYER PENALTIES.

6.Effect of Change of Control on Award.  This Agreement shall not in any way affect the right of the Company to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

(a)Acceleration of Vesting.  In the event of a Change of Control, the SARs, to the extent outstanding at that time but not otherwise fully vested and exercisable, shall automatically accelerate so that all then-outstanding and -unvested SARs shall, effective immediately prior to the effective time of the Change of Control, become fully vested and exercisable.

(b)Termination of the Award Upon Change of Control.  Upon the consummation of the Change of Control, the Award shall terminate and be cancelled for no consideration, except to the extent assumed by the successor corporation (or parent thereof) or otherwise expressly continued in full force and effect pursuant to the terms of the Change of Control.

7.Adjustments for Changes in Capital Structure.  The Participant acknowledges that the Award is subject to modification and termination in certain events as provided in this Agreement and Section 4(c) of the Plan.  The Participant shall be notified of such adjustments and such adjustments shall be binding upon the Company and the Participant.

8.Miscellaneous Provisions.

(a)Rights as a Stockholder. The Participant shall not have any stockholder rights with respect to the shares of Stock until the Participant exercises the SARs, pays the Exercise Price and the shares of Stock (if any) are issued or deposited in a brokerage account (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company).  No adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date the shares of Stock are issued.

(b)Amendment. The Administrator may amend this Agreement at any time; provided, however, that no such amendment may adversely affect the Participant’s rights under this Agreement without the consent of the Participant, except to the extent such amendment is desirable or necessary to comply with applicable law, including, but not limited to, Section 409A of the Code as further provided in the Plan.  No amendment or addition to this Agreement shall be effective unless in writing.

(c)Nontransferability of the SARs. Prior to the issuance of shares of Stock upon exercise of the SARs, no right or interest of the Participant in the Award shall be in any manner pledged, encumbered, or hypothecated to or in favor of any party other than the Company or a Subsidiary or Affiliate or shall become subject to any lien, obligation, or liability of such Participant to any other party other than the Company, or a Subsidiary or Affiliate.  Except as otherwise provided by the Administrator, no SAR shall be assigned, transferred or otherwise disposed of other than by will or the laws of descent and distribution.  All rights with respect to the SARs shall be exercisable during the Participant’s lifetime only by the Participant or the Participant’s guardian or legal representative.

(d)Further Instruments and Imposition of Other Requirements. The parties agree to execute such further instruments and to take such further action as may be reasonably necessary to carry

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out the purposes and intent of this Agreement.  The Company reserves the right to impose other requirements on Participant’s participation in the Plan, on the SARs and on any shares of Stock acquired under the Plan, to the extent the Company determines it is necessary or advisable in order to comply with local law or facilitate the administration of the Plan.

(e)Participant Acknowledgements.  In accepting the Award, the Participant acknowledges, understands and agrees that:

(i)the grant of the SARs is voluntary and occasional and does not create any contractual or other right to receive future grants of SARs, or benefits in lieu of SARs, even if SARs have been granted in the past;

(ii)the SARs granted and the Participant’s participation in the Plan shall not create a right to employment or be interpreted as forming an employment or service contract with the Company,  the Employer or any Subsidiary or Affiliate, and shall not interfere with the ability of the Company, the Employer or any Subsidiary or Affiliate, as applicable, to terminate the Participant’s employment or service relationship (if any);

(iii)the SARs and any shares of Stock acquired under the Plan are not intended to replace any pension rights or compensation;

(iv)the SARs and any shares of Stock acquired under the Plan and the income and value of same, are not part of normal or expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments;

(v)no claim or entitlement to compensation or damages shall arise from forfeiture of SARs resulting from the termination of the Participant’s Service (for any reason whatsoever, whether or not later found to be invalid or in breach of employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s contact of employment, if any), and in consideration of the grant of the SARs to which the Participant is otherwise not entitled, the Participant irrevocably agrees never to institute any claim against the Company, any of its Subsidiaries or Affiliates or the Employer, waives his or her ability, if any, to bring any such claim, and releases the Company, its Subsidiaries and Affiliates and the Employer from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, the Participant shall be deemed irrevocably to have agreed not to pursue such claim and agree to execute any and all documents necessary to request dismissal or withdrawal of such claim;

(vi)the future value of the shares of Stock issuable upon exercise of the SARs is unknown, indeterminable, and cannot be predicted with certainty;

(vii)if the underlying shares of Stock do not increase in value, the SARs will have no value; and

(viii)if the Participant exercises the SARs and acquires shares of Stock, the value of such shares may increase or decrease in value, even below the Exercise Price.

(f)Binding Effect. This Agreement shall inure to the benefit of the successors and assigns of the Company and, subject to the restrictions on transfer set forth herein, be binding upon the Participant and the Participant’s heirs, executors, administrators, successors and assigns.

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(g)Notices. Any notice required to be given or delivered to the Company under the terms of this Agreement shall be in writing and addressed to the Company at its principal corporate offices.  Any notice required to be given or delivered to the Participant shall be in writing and addressed to the Participant at the address maintained for the Participant in the Company’s records or at the address of the local office of the Company or of a Subsidiary or Affiliate at which the Participant works.

(h)Construction of Agreement. The Grant Notice, this Agreement, and the Award evidenced hereby (i) are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan, and (ii) constitute the entire agreement between the Participant and the Company on the subject matter hereof and supersede all proposals, written or oral, and all other communications between the parties related to the subject matter.  All decisions of the Administrator with respect to any question or issue arising under the Grant Notice, this Agreement or the Plan shall be conclusive and binding on all persons having an interest in this Award.

(i)Governing Law and Venue. The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of Texas, U.S.A. without regard to the conflict-of-laws rules thereof or of any other jurisdiction.  For purposes of litigating any dispute that arises under this grant or this Agreement, the parties hereby submit to and consent to the jurisdiction of the State of Texas, agree that such litigation shall be conducted in the courts of Jefferson County, Texas, or the federal courts for the United States for the Southern District of Texas, where this grant is made and/or to be performed.

(j)Conformity to Securities Laws. The Participant acknowledges that the Plan and this Agreement are intended to conform to the extent necessary with all provisions of the Securities Act and the Exchange Act and any and all regulations and rules promulgated by the Securities and Exchange Commission thereunder, and State securities laws and regulations.  Notwithstanding anything herein to the contrary, the Plan shall be administered, and the SARs are granted and may be exercised, only in such a manner as to conform to such laws, rules and regulations.  To the extent permitted by applicable law, the Plan and this Agreement shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.

(k)Section 409A. Notwithstanding any other provision of the Plan, this Agreement or the Grant Notice, the Plan, this Agreement and the Grant Notice shall be interpreted in accordance with, and incorporate the terms and conditions required by, Section 409A of the Code (with any Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the date hereof (“Section 409A”)).  The Company reserves the right, to the extent the Company deems necessary or advisable in its sole discretion, to unilaterally amend or modify the Plan, this Agreement or the Grant Notice or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, including amendments or actions that would result in a reduction in benefits payable under the Award, as the Administrator determines are necessary or appropriate to ensure that this Award qualifies for exemption from, or complies with the requirements of, Section 409A or mitigate any additional tax, interest and/or penalties or other adverse tax consequences that may apply under Section 409A; provided, however, that the Company makes no representation that the SARs will be exempt from, or will comply with, Section 409A, and makes no undertakings to preclude Section 409A from applying to the SARs or to ensure that the SARs comply with Section 409A.

(l)Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan or this Agreement, if the Participant is subject to Section 16 of the Exchange Act, the Plan, the SARs and this Agreement shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3

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of the Exchange Act) that are requirements for the application of such exemptive rule.  To the extent permitted by applicable law, this Agreement shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.

(m)Administration. The Administrator shall have the power to interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret, amend or revoke any such rules.  All actions taken and all interpretations and determinations made by the Administrator in good faith shall be final and binding upon the Participant, the Company and all other interested persons.  No member of the Administrator or the Board shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan, this Agreement or the Award.

(n)Counterparts. The Grant Notice may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

(o)Severability. If any provision of this Agreement is held to be unenforceable for any reason, it shall be adjusted rather than voided, if possible, in order to achieve the intent of the parties to the extent possible.  In any event, all other provisions of this Agreement shall be deemed valid and enforceable to the full extent possible.

(p)Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means.  The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an online or electronic system established and maintained by the Company or a third party designated by the Company.

(q)Waiver. The Participant acknowledges that the Company’s waiver of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by the Participant or any other participant.

(r)Clawback.  The SARs and any shares of Stock acquired pursuant to the exercise of the SARs shall be subject to the Clawback provisions contained in Section 34 of the Plan.

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EXHIBIT B

CONSENT OF SPOUSE

I,                                  , spouse or domestic partner of                                     , have read and approve the Stock Appreciation Right Award Grant Notice (the “Grant Notice”) to which this Consent of Spouse is attached and the Stock Appreciation Right Award Agreement (the “Agreement”) attached to the Grant Notice. In consideration of issuing to my spouse the Award set forth in the Grant Notice, I hereby appoint my spouse as my attorney-in-fact in respect to the exercise of any rights under the Agreement and agree to be bound by the provisions of the Agreement insofar as I may have any rights in said Agreement or any shares of the common stock of CBTX, Inc. issued pursuant thereto under the community property laws or similar laws relating to marital property in effect in the state of our residence as of the date of the signing of the foregoing Agreement.

Dated:
	Signature of Spouse

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EX-10.14

Exhibit 10.14

VB TEXAS, INC.

2006 STOCK OPTION PLAN

SECTION 1.Purpose of the Plan. The purpose of the VB Texas, Inc. 2006 Stock Option Plan (“Plan”) is to encourage ownership of common stock, $1.00 par value (“Common Stock”), of VB Texas, Inc., a Texas corporation (the “Company”), by key employees of the Company and its Affiliates (as defined below) and to provide increased incentive for such key employees and directors to render services and to exert maximum effort for the success of the Company. In addition, the Company expects that the Plan will further strengthen the identification of the key employees with the stockholders. Certain options to be granted under this Plan are intended to qualify as incentive stock options (“ISOs”) pursuant to Section 422 of the Internal Revenue Code of 1986, as amended (“Code”), while other options granted under this Plan will be nonqualified options which are not intended to qualify as ISOs (“Nonqualified Options”), either or both as provided in the agreements evidencing the options as provided in Section 6 hereof. As used in this Plan, the term “Affiliates” means any “parent corporation” of the Company and any “subsidiary corporation” of the Company within the meaning of Code Sections 424(e) and (f), respectively.

SECTION 2.Administration of the Plan.

(a)Composition of Committee. The Plan shall be administered by the Compensation Committee (the “Committee”) designated by the Board of Directors of the Company (the “Board”), which shall also designate the Chairman of the Committee. If the Company is governed by Section 16 of the Securities Exchange Act of 1934, as amended (“Exchange Act”), the Committee shall consist solely of two or more “Non-Employee Directors” within the meaning of Rule 16b-3 promulgated by the Securities and Exchange Commission (the “Commission”) under the Exchange Act.

(b)Committee Action. The Committee shall hold its meetings at such times and places as it may determine. A majority of its members shall constitute a quorum, and all determinations of the Committee shall be made by not less than a majority of its members. Any decision or determination reduced to writing and signed by a majority of the members shall be fully as effective as if it had been made by a majority vote of its members at a meeting duly called and held. The Committee may designate the Secretary of the Company or other Company employees to assist the Committee in the administration of the Plan, and may grant authority to such persons to execute award agreements or other documents on behalf of the Committee and the Company. Any duly constituted committee of the Board satisfying the qualifications of this Section may be appointed as the Committee.

(c)Committee Expenses. All expenses and liabilities incurred by the Committee in the administration of the Plan shall be borne by the Company. The Committee may employ attorneys, consultants, accountants or other persons.

SECTION 3.Stock Reserved for the Plan. Subject to adjustment as provided in Section 6 hereof, the aggregate number of shares of Common Stock that may be optioned under the Plan is 73, 447 . The shares subject to the Plan shall consist of authorized but unissued shares of Common Stock and such number of shares shall be and is hereby reserved for sale for such purpose. Any of such shares which may remain unsold and which are not subject to outstanding options at the termination of the Plan shall cease to be reserved for the purpose of the Plan, but until termination of the Plan or the termination of the last of the options granted under the Plan, whichever last occurs, the Company shall at all times reserve a sufficient number of shares to meet the requirements of the Plan. Should any option expire or be canceled prior to its exercise in full, the shares theretofore subject to such option may again be made subject to an option under the Plan.

SECTION 4.Eligibility. The persons eligible to participate in the Plan as a recipient of options (“Optionee”) shall include only key employees and directors of the Company or its Affiliates at the time the option is granted. A key employee who has been granted an option hereunder may be granted an additional option or options, if the Committee shall so determine.

SECTION 5.Grant of Options.

(a)Committee Discretion. The Committee shall have sole and absolute discretionary authority (i) to determine, authorize, and designate those persons pursuant to this Plan who are to receive options under the Plan, (ii) to determine the number of shares of Common Stock to be covered by such options and the terms thereof, and (iii) to determine the type of option granted: ISO, Nonqualified Option or a combination of ISO and Nonqualified Options. If the Company is governed by Section 16 of the Exchange Act, the Committee shall specifically pre-approve each grant to each Optionee subject to Section 16(b) in accordance with Rule 16b-3 as amended, unless such grant is or will be otherwise exempt from Section 16(b). The Committee shall thereupon grant options in accordance with such determinations as evidenced by a written option agreement. Subject to the express provisions of the Plan, the Committee shall have discretionary authority to prescribe, amend and rescind rules and regulations relating to the Plan, to interpret the Plan, to prescribe and amend the terms of the option agreements (which need not be identical) and to make all other determinations deemed necessary or advisable for the administration of the Plan.

(b)Stockholder Approval. All ISOs granted under this Plan are subject to, and may not be exercised before, the approval of this Plan by the stockholders prior to the first anniversary date of the Board meeting held to approve the Plan, by the affirmative vote of the holders of a majority of the shares of the Company present, or represented by proxy, and entitled to vote at a meeting at which a quorum is present, or by written consent in accordance with the laws of the United States and the State of Texas, as may be applicable; provided that if such approval by the stockholders of the Company is not forthcoming, all ISOs previously granted under this Plan shall be void. Nonqualified Options that are granted by the Committee are not subject to the approval of this Plan by the stockholders of the Company and may be exercised in accordance with the terms of the stock option agreement pursuant to which they are granted.

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(c)Limitation on Incentive Stock Options. The aggregate fair market value (determined in accordance with Section 6(b) of this Plan at the time the option is granted) of the Common Stock with respect to which ISOs may be exercisable for the first time by any Optionee during any calendar year under all such plans of the Company and its Affiliates shall not exceed $100,000.

SECTION 6.Terms and Conditions. Each option granted under the Plan shall be evidenced by an agreement, in a form approved by the Committee, which shall be subject to the following express terms and conditions and to such other terms and conditions as the Committee may deem appropriate.

(a)Option Period. The Committee shall promptly notify the Optionee of the option grant and a written agreement shall promptly be executed and delivered by and on behalf of the Company and the Optionee, provided that the option grant shall expire if a written agreement is not signed by said Optionee (or his agent or attorney) and returned to the Company within 60 days from date of receipt by the Optionee of such agreement. The date of grant shall be the date the option is actually granted by the Committee, even though the written agreement may be executed and delivered by the Company and the Optionee after that date. Each option agreement shall specify the period for which the option thereunder is granted (which in no event shall exceed ten years from the date of grant) and shall provide that the option shall expire at the end of such period. If the original term of an option is less than ten years from the date of grant, the option may be amended prior to its expiration, with the approval of the Committee and the Optionee, to extend the term so that the term as amended is not more than ten years from the date of grant. However, in the case of an ISO granted to an individual who, at the time of grant, owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or its Affiliate (“Ten Percent Stockholder”), such period shall not exceed five years from the date of grant.

(b)Option Price. The purchase price of each share of Common Stock subject to each option granted pursuant to the Plan shall be determined by the Committee at the time the option is granted and, in the case of ISOs, shall not be less than 100% of the fair market value of a share of Common Stock on the date the option is granted, as determined by the Committee. In the case of an ISO granted to a Ten Percent Stockholder, the option price shall not be less than 110% of the fair market value of a share of Common Stock on the date the option is granted. The purchase price of each share of Common Stock subject to a Nonqualified Option under this Plan shall be determined by the Committee prior to granting the option. The Committee shall set the purchase price for each share subject to a Nonqualified Option at either the fair market value of each share on the date the option is granted, or at such other price as the Committee in its sole discretion shall determine.

At the time a determination of the fair market value of a share of Common Stock is required to be made hereunder, the determination of its fair market value shall be made by the Committee in such manner as it deems appropriate.

(c)Exercise Period. The Committee may provide in the option agreement that an option may be exercised in whole, immediately, or is to be exercisable in increments. However, no

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portion of any ISO may be exercisable by an Optionee prior to the approval of the Plan by the stockholders of the Company.

(d)Procedure for Exercise. Options shall be exercised by the delivery of written notice to the Chief Executive Officer of the Company setting forth the number of shares with respect to which the option is being exercised. Such notice shall be accompanied by (i) cash, cashier’s check, bank draft, or postal or express money order payable to the order of the Company, (ii) subject to the approval by the Committee, certificates representing shares of Common Stock theretofore owned by the Optionee duly endorsed for transfer to the Company, or (iii) any combination of the preceding, equal in value to the full amount of the exercise price. Notice may also be delivered by fax or telecopy provided that the purchase price of such shares is delivered to the Company via wire transfer on the same day the fax is received by the Company. The notice shall specify the address to which the certificates for such shares are to be mailed. An Optionee shall be deemed to be a stockholder with respect to shares covered by an option on the date the Company receives such written notice and such option payment. As promptly as practicable after receipt of such written notification and payment, the Company shall deliver to the Optionee certificates for the number of shares with respect to which such option has been so exercised, issued in the Optionee’s name or such other name as Optionee directs; provided, however, that such delivery shall be deemed effected for all purposes when a stock transfer agent of the Company shall have deposited such certificates in the United States mail, addressed to the Optionee at the address specified pursuant to this Section 6(d).

(e)Termination of Employment or Service. If an Optionee to whom an option is granted ceases to be employed by the Company or its Affiliates for any reason other than death or disability, any option which is exercisable on the date of such termination of employment may be exercised during a three month period after such date, but in no event may the option be exercised after its expiration under the terms of the option agreement; provided, however, that if an Optionee’s employment is terminated because of the Optionee’s theft or embezzlement from the Company, disclosure of trade secrets of the Company or the commission of a willful, felonious act while in the employment of the Company (such reasons shall hereinafter be collectively referred to as “for cause”), and if said employee has an employment agreement with the Company or its Affiliates, any other reason that is described as “for cause” under the terms of such employment agreement, then any option or unexercised portion thereof granted to said Optionee shall expire upon such termination of employment.

(f)Disability or Death of Optionee. In the event of the determination of disability or death of an Optionee under the Plan while the Optionee is employed by the Company, the options previously granted to him may be exercised (to the extent he or she would have been entitled to do so at the date of the determination of disability or death) at any time and from time to time, after the date of such determination of disability or death, by the former employee, the guardian of his estate, the executor or administrator of his estate or by the person or persons to whom his rights under the option shall pass by will or the laws of descent and distribution, but in no event may the option be exercised after its expiration under the terms of the option agreement. An Optionee shall be deemed to be disabled if, in the opinion of a physician selected by the Committee, he or she is incapable of performing services for the Company or its Affiliates of the kind he or she was performing at the time the disability occurred by reason of any medically

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determinable physical or mental impairment which can be expected to result in death or to be of long, continued and indefinite duration. The date of determination of disability for purposes hereof shall be the date of such determination by such physician.

(g)Assignability. An option shall not be assignable or otherwise transferable except by will or by the laws of descent and distribution. During the lifetime of an Optionee, an option shall be exercisable only by him or his authorized legal representative.

(h)Incentive Stock Options. Each option agreement may contain such terms and provisions as the Committee may determine to be necessary or desirable in order to qualify an option designated as an ISO.

(i)No Rights as Stockholder. No Optionee shall have any rights as a stockholder with respect to shares covered by an option until the option is exercised by the written notice and accompanied by payment as provided in clause (d) above.

(j)Extraordinary Corporate Transactions. The existence of outstanding options shall not affect in any way the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations, exchanges or other changes in the Company’s capital structure or its business, or any merger or consolidation of the Company, or any issuance of Common Stock or other securities or subscription rights thereto, or any issuance of bonds, debentures, preferred or prior preference stock ahead of or affecting the Common Stock or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise. If the Company merges, consolidates, sells all of its assets or dissolves (each of the foregoing a “Fundamental Change”), then thereafter upon any exercise of an option theretofore granted the Optionee shall be entitled to purchase under such option, in lieu of the number of shares of Common Stock as to which option shall then be exercisable, the number and class of shares of stock and securities to which the Optionee would have been entitled pursuant to the terms of the Fundamental Change if, immediately prior to such Fundamental Change, the Optionee had been the holder of record of the number of shares of Common Stock as to which such option is then exercisable. If (i) the Company shall not be the surviving entity in any merger or consolidation (or survives only as a subsidiary of another entity), (ii) the Company sells all or substantially all of its assets to any other person or entity (other than a wholly-owned subsidiary), (iii) any person or entity (including a “group” as contemplated by Section 13(d)(3) of the Exchange Act) acquires or gains ownership or control of (including, without limitation, power to vote) more than 50% of the outstanding shares of Common Stock, (iv) the Company is to be dissolved and liquidated, or (v) as a result of or in connection with a contested election of directors, the persons who were directors of the Company before such election shall cease to constitute a majority of the Board (each such event in clauses (i) through (v) above is referred to herein as a “Corporate Change”), all of an Optionee’s options shall become immediately vested and may be exercised immediately before a Corporate Change or at any time within the six months after a Corporate Change.

(k)Changes in Company’s Capital Structure. If the outstanding shares of Common Stock or other securities of the Company, or both, for which the option is then exercisable shall at any

5

time be changed or exchanged by declaration of a stock dividend, stock split, combination of shares, recapitalization, or reorganization, the number and kind of shares of Common Stock or other securities which are subject to the Plan or subject to any options theretofore granted, and the option prices, shall be appropriately and equitably adjusted so as to maintain the proportionate number of shares or other securities without changing the aggregate option price.

(l)Acceleration of Options. Except as hereinbefore expressly provided, (i) the issuance by the Company of shares of stock or any class of securities convertible into shares of stock of any class, for cash, property, labor or services, upon direct sale, upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, (ii) the payment of a dividend in property other than Common Stock or (iii) the occurrence of any similar transaction, and in any case whether or not for fair value, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of shares of Common Stock subject to options theretofore granted or the purchase price per share, unless the Committee shall determine, in its sole discretion, than an adjustment is necessary to provide equitable treatment to Optionee. Notwithstanding anything to the contrary contained in this Plan, the Committee may, in its sole discretion, accelerate the time at which any option may be exercised, including, but not limited to, upon the occurrence of the events specified in this Section 6.

SECTION 7.Amendments or Termination. The Board may amend, alter or discontinue the Plan, but no amendment or alteration shall be made which would impair the rights of any Optionee, without his consent, under any option theretofore granted, or which, without the approval of the stockholders, would: (i) except as is provided in Section 6(k) of the Plan, increase the total number of shares reserved for the purposes of the Plan, (ii) change the class of persons eligible to participate in the Plan as provided in Section 4 of the Plan, (iii) extend the applicable maximum option period provided for in Section 6(a) of the Plan, (iv) extend the expiration date of this Plan set forth in Section 14 of the Plan, (v) except as provided in Section 6(k) of the Plan, decrease to any extent the option price of any option granted under the Plan or (vi) withdraw the administration of the Plan from the Committee.

SECTION 8.Compliance With Other Laws and Regulations. The Plan, the grant and exercise of options thereunder, and the obligation of the Company to sell and deliver shares under such options, shall be subject to all applicable federal and state laws, rules and regulations and to such approvals by any governmental or regulatory agency as may be required. The Company shall not be required to issue or deliver any certificates for shares of Common Stock prior to the completion of any registration or qualification of such shares under any federal or state law or issuance of any ruling or regulation of any government body which the Company shall, in its sole discretion, determine to be necessary or advisable. Any adjustments provided for in Sections 6(j), 6(k) and 6(1) shall be subject to any shareholder action required by Texas or federal law.

SECTION 9.Purchase for Investment. Unless the options and shares of Common Stock covered by this Plan have been registered under the Securities Act of 1933, as amended, or the Company has determined that such registration is unnecessary, each person exercising an option under this Plan may be required by the Company to give a representation in writing that

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he or she is acquiring such shares for his own account for investment and not with a view to, or for sale in connection with, the distribution of any part thereof.

SECTION 10.Taxes.

(a)The Company may make such provisions as it may deem appropriate for the withholding of any taxes which it determines is required in connection with any options granted under this Plan.

(b)Notwithstanding the terms of Section 10(a), any Optionee may pay all or any portion of the taxes required to be withheld by the Company or paid by him or her in connection with the exercise of a Nonqualified Option by electing to have the Company withhold shares of Common Stock, or by delivering previously owned shares of Common Stock, having a fair market value, determined in accordance with Section 6(b), equal to the amount required to be withheld or paid; provided, however, that, if the Optionee is subject to Section 16 of the Exchange Act, such tax withholding or delivery right must be specifically pre-approved by the Committee as a feature of the option or otherwise approved in accordance with Rule 16b-3. An Optionee must make the foregoing election on or before the date that the amount of tax to be withheld is determined.

SECTION 11.Replacement of Options. The Committee from time to time may permit an Optionee under the Plan to surrender for cancellation any unexercised outstanding option and receive from the Company in exchange an option for such number of shares of Common Stock as may be designated by the Committee. The Committee may, with the consent of the person entitled to exercise any outstanding option, amend such option, including reducing the exercise price of any option to not less than the fair market value of the Common Stock at the time of the amendment and extending the term thereof.

SECTION 12.No Right to Company Employment or Directorship. Nothing in this Plan or as a result of any option granted pursuant to this Plan shall confer on any individual any right to continue in the employ of the Company or to continue to serve on the Board or interfere in any way with the right of the Company to terminate an individual’s employment at any time. The option agreements may contain such provisions as the Committee may approve with reference to the effect of approved leaves of absence.

SECTION 13.Liability of Company. The Company and any Affiliate which is in existence or hereafter comes into existence shall not be liable to an Optionee or other persons as to:

(a)Non-Issuance of Shares. The non-issuance or sale of shares as to which the Company has been unable to obtain from any regulatory body having jurisdiction the authority deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any shares hereunder; and

(b)Tax Consequences. Any tax consequence expected, but not realized, by any Optionee or other person due to the exercise of any option granted hereunder.

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SECTION 14.Effectiveness and Expiration of Plan. The Plan shall be effective on the date the Board adopts the Plan. If the stockholders of the Company fail to approve the Plan within twelve months of the date the Board approved the Plan, the ISO provisions of the Plan shall terminate, all ISOs previously granted under the Plan shall become void and of no effect, and the Committee can only grant Nonqualified Options thereafter. The Plan shall expire ten years after the date the Board approves the Plan and thereafter no option shall be granted pursuant to the Plan.

SECTION 15.Non-Exclusivity of the Plan. Neither the adoption by the Board nor the submission of the Plan to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including without limitation, the granting of restricted stock or stock options otherwise than under the Plan, and such arrangements may be either generally applicable or applicable only in specific cases.

SECTION 16.Governing Law. This Plan and any agreements hereunder shall be interpreted and construed in accordance with the laws of the State of Texas and applicable federal law.

IN WITNESS WHEREOF, and as conclusive evidence of the adoption of the foregoing by directors of the Company, VB Texas, Inc. has caused these presents to be duly executed in its name and behalf by its proper officers thereunto duly authorized as of this 25th day of October, 2006.

		VB TEXAS, INC.
		By:	/s/ Robert R. Franklin
			Robert R. Franklin, President, Chief Executive
				Officer and Secretary
ATTEST:
/s/ A.F. Celinski
Name:	A.F. Celinski
Title:	EVP/CFO

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EX-10.15

Exhibit 10.15

CBFH, INC.

2014 STOCK OPTION PLAN

(adopted by the Company’s Board of Directors on May 21, 2014)

(approved by the Company’s shareholders on May 21, 2014)

1.Purposes of the Plan. The purposes of this Plan are to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentives to selected Employees and to promote the success of the Company’s business by offering these individuals an opportunity to acquire a proprietary interest in the success of the Company, or to increase this interest, by permitting them to receive Shares of the Company. The Plan provides for the grant of Options to purchase Shares. Options granted under the Plan may be Incentive Stock Options or Nonstatutory Stock Options, as determined by the Administrator at the time of grant.

2.Definitions. For purposes of this Plan, the following terms shall have the following meanings:

(a)“Administrator” means the Board of the Company or any of its Committees or designees as shall be administering the Plan in accordance with Section 4 hereof.

(b)“Applicable Law” means any applicable legal requirements relating to the administration of and the issuance of securities under equity securities-based compensation plans, including, without limitation, the requirements of U.S. state corporate laws, U.S. federal and state securities laws, U.S. federal law, the Code, the laws of Texas, and the requirements of any stock exchange or quotation system upon which the Shares may then be listed or quoted and the applicable laws of any other country or jurisdiction where Options are granted under the Plan. For all purposes of this Plan, references to statutes and regulations shall be deemed to include any successor statutes or regulations, to the extent reasonably appropriate as determined by the Administrator.

(c)“Bank” means the CommunityBank of Texas, N.A., a wholly-owned subsidiary of the Company, or any successor thereto.

(d)“Board” means the Board of Directors of the Company.

(e)“Cause” means, with respect to an Optionee’s termination by the Bank as an Employee, that such termination is for “Cause” as such term (or word of like import) is expressly defined in a then-effective written agreement between the Optionee and the Bank. In the absence of an effective written agreement that contains a definition of Cause, the term Cause shall mean any of the following: (i) any act or omission by the Optionee that constitutes a material breach by the Optionee of any of his or her obligations under the Plan or an applicable Option Agreement; (ii) the Optionee’s conviction of, or plea of nolo contendere to, (A) any felony or (B) another crime involving dishonesty or moral turpitude or a crime which could reflect negatively upon the Company or the Bank or otherwise impair or impede the operations of either; (iii) the Optionee engaging in any misconduct, negligence, act of dishonesty, violence

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or threat of violence (including any violation of federal securities laws or bank regulator laws) that is injurious to the Company or the Bank or any of its subsidiaries or affiliates; (iv) the Optionee’s material breach of a written policy of the Company or the Bank or the rules of any governmental or regulatory body applicable to the Company or the Bank; (v) the Optionee’s refusal to follow the directions of his or her superiors; and (vi) any other willful misconduct by the Optionee which is materially injurious to the financial condition or business reputation of the Company or the Bank or any of its subsidiaries or affiliates. Whether Cause exists, whether Cause is susceptible to correction and whether Cause has been corrected shall be determined in the sole and absolute discretion of the Administrator.

(f)“Change in Control” means, except as otherwise defined in an applicable Option Agreement, the occurrence of any of the following events:

(i)any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company or the Bank representing fifty percent (50%) or more of the total voting power represented by the Company’s or the Bank’s then outstanding voting securities;

(ii)the consummation of the sale, lease, transfer or disposition by the Company or the Bank of all or substantially all of the assets of the Company or the Bank to any third party;

(iii)the complete liquidation or dissolution of the Company or the Bank; or

(iv)the consummation of a merger or consolidation of the Company or the Bank with any other corporation, other than a merger or consolidation that would result in the voting securities of the Company or the Bank outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or the Bank, or such surviving entity or its parent outstanding immediately after such merger or consolidation, but excluding any series of transactions that the Administrator reasonably determines shall not be a Change in Control.

Notwithstanding this Section 2(f) to the contrary, a transaction shall not constitute a Change in Control if: (A) its sole purpose is to change the legal jurisdiction of the Company’s or the Bank’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the securities of the Company or the Bank immediately before such transaction; (B) the primary purpose of the transaction is to raise capital for the Company’s or the Bank’s operations and business activities, including, without limitation, an initial public offering of Shares under the Securities Act or other Applicable Law; or (C) the purpose of the transaction is to effectuate the implementation of an employee stock ownership plan, as such term is used under the Code.

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(g)“Code” means the U.S. Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.

(h)“Committee” means a committee appointed by the Company’s Board in accordance with Section 4 hereof.

(i)“Company” means CBFH, Inc., a Texas corporation, or any successor corporation thereto.

(j)“Date of Grant” means the date an Option is granted, to an Optionee in accordance with Section 12 hereof.

(k)“Director” means a member of the Board.

(l)“Disability” means, unless otherwise defined in an applicable Option Agreement, a total and permanent disability as defined in Section 22(e)(3) of the Code, provided that in the case of Nonstatutory Stock Options, the Administrator in its sole discretion may determine whether a total and permanent disability exists in accordance with uniform and nondiscriminatory standards adopted by the Administrator from time to time.

(m)“Employee” means any person, including officers, employed by the Company or the Bank, or any Parent or Subsidiary. An Employee shall not cease to be an Employee in the case of (i) any leave of absence approved by the Company, the Bank or any Parent or Subsidiary, including sick leave, military leave, or any other personal leave, or (ii) transfers between and among locations of the Company, the Bank or any Parent or Subsidiary, or any successor. For purposes of Incentive Stock Options, no such leave may exceed ninety (90) days, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company or the Bank is not so guaranteed, then three (3) months following the ninety first (91st) day of such leave, any Incentive Stock Option held by the Optionee shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory Stock Option. Neither service as a Director nor payment of a director’s fee by the Company, the Bank or any Parent or Subsidiary shall be sufficient to constitute “employment” by the Company, the Bank or any Parent or Subsidiary.

(n)“Exercise Price” means the amount for which one Share may be purchased upon exercise of an Option, as specified by the Administrator in the applicable Option Agreement in accordance with Section 6(d) hereof.

(o)“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

(p)“Fair Market Value” means, as of any date, the value of the Shares determined as follows:

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(i)if the Shares are listed on any established stock exchange or a national market system, including, without limitation, the NASDAQ Global Select Market, the NASDAQ Global Market or the NASDAQ Capital Market of the NASDAQ Stock Market, the Fair Market Value shall be the closing sales price for the Shares (or the closing bid, if no sales were reported) as quoted on such exchange or system on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

(ii)if the Shares are regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value shall be the mean of the high bid and low asked prices for the Shares on the day of determination, as reported in The Wall Street Journal or any other source as the Administrator deems reliable; or

(iii)in the absence of an established market for the Shares, the Fair Market Value thereof shall be determined by a valuation that is performed by an independent third-party, and in the absence of such valuation, then in good faith by the Administrator in accordance with Applicable Law.

(q)“Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code, as designated in the applicable Option Agreement.

(r)“Nonstatutory Stock Option” means an Option not intended to qualify as an Incentive Stock Option, as designated in the applicable Option Agreement, or an intended Incentive Stock Option that does not so qualify.

(s)“Option” means an option to purchase Shares that is granted pursuant to the Plan in accordance with Section 6 hereof.

(t)“Option Agreement” means the written agreement evidencing the grant of an Option executed by the Bank and the Optionee, including any amendments thereto. The Option Agreement may be in written or electronic format, in such form and with such terms as may be specified by the Administrator, evidencing the terms and conditions of an individual Option. Each Option Agreement is subject to the terms and conditions of the Plan.

(u)“Optioned Shares” means the Shares subject to an Option.

(v)“Optionee” means an Employee who has been granted an Option under the Plan.

(w)“Parent” means a “parent corporation” with respect to the Company or the Bank, whether now or hereafter existing, as defined in Section 424(e) of the Code.

(x)“Plan” means this 2014 Stock Option Plan, as amended from time to time.

(y)“Securities Act” means the U.S. Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

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(z)“Share” means the voting common stock of the Company, as adjusted in accordance with Section 11 hereof.

(aa)“Shareholders’ Agreement” means any agreement among, and covering, a majority of the shareholders of the Company.

(bb)“Subsidiary” means a “subsidiary corporation” with respect to the Company or the Bank, whether now or hereafter existing, as defined in Section 424(f) of the Code.

3.Shares Subject to the Plan.

(a)Basic Limitation. Subject to the provisions of Section 11 hereof, the number of Shares that shall be subject to the Plan and that may be issued under the Plan shall be 563,600 Shares, all of which may be subject to Incentive Stock Option treatment; provided, however, that, at no time while the Shares are not registered pursuant to the Securities Act or the Company is not otherwise subject to the public reporting requirements of the Exchange Act may the maximum aggregate number of Shares that may be issued upon the exercise of all outstanding Options and the aggregate number of Shares provided for under any other share bonus or similar plan of the Company exceed the number of Shares that the Company is permitted to issue pursuant to the exemption from registration provided by Rule 701 of the Securities Act or other exemption available under the Securities Act. The Shares may be authorized but unissued Shares. The number of Shares that are subject to Options outstanding under the Plan at any time shall not exceed the aggregate number of Shares that then remain available for issuance under the Plan. The Company, during the respective terms of the Plan, shall at all times reserve and keep available sufficient Shares to satisfy the requirements of outstanding Options granted under the Plan.

(b)Additional Shares. If an Option expires, becomes unexercisable, or is cancelled, forfeited or otherwise terminated without having been exercised or settled in full, as the case may be, the Shares allocable to the unexercised portion of the Option shall again become available for future grant or sale under the Plan (unless the Plan has terminated). Shares that actually have been issued under the Plan, upon exercise of an Option, shall not be returned to the Plan and shall not become available for future distribution under the Plan. However, the following shares shall again become available for future grant under the Plan: (i) any Shares that are reacquired by the Company pursuant to any forfeiture provision, right of repurchase or redemption, or (ii) any Shares that are retained by the Company upon the exercise of Shares under an Option in order to satisfy the Exercise Price for the Option or to satisfy any withholding taxes due with respect to such exercise.

(c)Shares under Plans of Acquired Companies. Shares issued or transferred pursuant to an Option granted in substitution for outstanding awards, or in connection with assumed awards, previously granted by a company or other entity acquired by the Company or with which the Company combines, shall not count against the limits in the first sentence of Section 3(a) hereof.

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4.Administration of the Plan.

(a)Administrator. Pursuant to a delegation of authority from the Company to the Administrator, the Plan shall be administered by the Company’s Board or a Committee or designee appointed by the Company’s Board, which Committee or designee shall be constituted to comply with Applicable Law.

(b)Powers of the Administrator. Subject to the provisions of the Plan and, in the case of a Committee or designee, the specific duties delegated by the Company’s Board to such Committee or designee, and subject to the approval of any relevant authorities, the Administrator shall have the authority in its discretion:

(i)to determine the Fair Market Value, in accordance with Section 2(p) hereof;

(ii)to select the Employees to whom Options may from time to time be granted hereunder;

(iii)to determine the number of Shares or cash to be covered by each Option granted hereunder;

(iv)to approve the form(s) of agreement for use under the Plan;

(v)to determine the terms and conditions of any Option granted hereunder including, but not limited to, the Exercise Price, the time or times when Options may be exercised (which may be based on performance criteria), the time or times when repurchase or redemption rights shall lapse, any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Option or the Shares relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine;

(vi)to implement a program where (i) outstanding Options are surrendered or cancelled in exchange for Options of the same type (which may have lower Exercise Prices and different terms), Options of a different type, or cash, or (ii) the Exercise Price of an outstanding Option is reduced, based in each case on terms and conditions determined by the Administrator in its sole discretion;

(vii)to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of satisfying applicable laws of jurisdictions other than the United States;

(viii)to allow Optionees to satisfy withholding tax obligations by electing to have the Company withhold from the Shares to be issued under an Option that number of Shares having a Fair Market Value equal to the minimum amount required to be withheld. The Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined. All elections by Optionees to have

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Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable;

(ix)to modify or amend each Option (subject to Section 16 hereof and Optionee consent if the modification or amendment is to the Optionee’s detriment), including, without limitation, the discretionary authority to extend the post-termination exercisability of an Option longer than is otherwise provided for in an Option Agreement or accelerate the vesting of an Option or exercisability of an Option or lapsing of a repurchase or redemption right to which Shares may be subject;

(x)to correct administrative errors;

(xi)to construe and interpret the terms of the Plan and Options granted pursuant to the Plan; and

(xii)to make any other determination and take any other action that the Administrator deems necessary or desirable for the administration of the Plan.

Notwithstanding anything in the foregoing to the contrary, only the Board (or its delegate, pursuant to a writing that specifically authorizes the delegate to effectuate grants of equity) shall have the authority to effectuate grants of equity under the Plan.

(c)Delegation of Authority to Officers. Subject to Applicable Law, the Administrator may delegate limited authority to specified officers of the Bank to execute on behalf of the Company and/or the Bank any instrument required to effect an Option previously granted by the Administrator, and, at the sole discretion of the Administrator, to delegate authority to effectuate grants of Shares under the Plan pursuant to a limited and written delegation.

(d)Effect of Administrator’s Decision. All decisions, determinations and interpretations of the Administrator shall be final and binding on all Optionees.

(e)Indemnification. In addition to such other rights of indemnification as they may have as members of the Board or as officers or Employees of the Company or the Bank, members of the Board and any officers or Employees of the Company to whom authority to act for the Board, the Administrator or the Company or the Bank is delegated shall be defended and indemnified by the Company or the Bank to the extent permitted by law. Such indemnification shall cover all reasonable expenses, including attorneys’ fees, actually and necessarily incurred in connection with the defense of any claim, investigation, action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan, or any Option granted hereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by the Company) or paid by them in satisfaction of a judgment in any such claim, investigation, action, suit or proceeding. Notwithstanding the foregoing, such indemnification shall not include any matters to which it shall be adjudged in the claim, investigation, action, suit or proceeding that the subject person is liable for gross negligence, bad

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faith or intentional misconduct; provided, however, that within thirty (30) days after the institution of such claim, investigation, action, suit or proceeding, such person shall offer to the Company or the Bank, in writing, the opportunity at the Company’s or the Bank’s expense to defend the same.

5.Eligibility.

(a)General Rule. Options may be granted only to Employees.

(b)Shareholder with Ten-Percent Holdings. An Employee who owns more than ten percent (10%) of the total combined voting power of all classes of outstanding securities of the Company or any Parent or Subsidiary shall not be eligible for the grant of an Incentive Stock Option unless (i) the Exercise Price is at least one hundred ten percent (110%) of the Fair Market Value on the Date of Grant, and (ii) the Incentive Stock Option by its terms is not exercisable after the expiration of five (5) years from the Date of Grant. For purposes of this Section 5(b), in determining ownership of securities, the attribution rules of Section 424(d) of the Code shall apply.

6.Terms and Conditions of Options.

(a)Option Agreement. Each grant of an Option under the Plan shall be evidenced by an Option Agreement between the Optionee and the Bank. Each Option shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions that are not inconsistent with the Plan and that the Administrator deems appropriate for inclusion in an Option Agreement. The provisions of the various Option Agreements entered into under the Plan need not be identical.

(b)Type of Option. Each Option shall be designated in the Option Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding a designation of an Option as an Incentive Stock Option, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by an Optionee during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds U.S. $100,000, such Options shall be treated as Nonstatutory Stock Options. For purposes of this Section 6(b), Incentive Stock Options shall be taken into account in the order in which they were granted. The Fair Market Value of the Shares shall be determined as of the Date of Grant.

(c)Number of Shares. Each Option Agreement shall specify the number of Shares that are subject to the Option and shall provide for the adjustment of such number in accordance with Section 11 hereof.

(d)Exercise Price. Each Option Agreement shall specify the Exercise Price. The Exercise Price of an Incentive Stock Option shall not be less than one hundred percent (100%) of the Fair Market Value of the Shares on the Date of Grant, and a higher percentage may be required by Section 5(b) hereof. Subject to the preceding sentence, the Exercise Price under any Option shall be determined by the Administrator in its sole discretion. The Exercise

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Price shall be payable in accordance with Section 8 hereof and the applicable Option Agreement. Notwithstanding anything to the contrary in the foregoing or in Section 5(b), in the event of a transaction described in Section 424(a) of the Code, then, consistent with Section 424(a) of the Code, Incentive Stock Options may be issued at an Exercise Price other than as required by the foregoing and Section 5(b).

(e)Term of Option. The Option Agreement shall specify the term of the Option; provided, however, that the term shall not exceed ten (10) years from the Date of Grant, and a shorter term may be required by Section 5(b) hereof. Subject to the preceding sentence, the Administrator in its sole discretion shall determine when an Option is to expire.

(f)Exercisability. Each Option Agreement shall specify the date when all or any installment of the Option is to become exercisable. The exercisability provisions of any Option Agreement shall be determined by the Administrator in its sole discretion.

(g)Exercise Procedure. Any Option granted hereunder shall be exercisable according to the terms hereof at such times and under such conditions as may be determined by the Administrator and as set forth in the Option Agreement; provided, however, that an Option shall not be exercised for a fraction of a Share.

(i)An Option shall be deemed exercised when the Company receives (A) written or electronic notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the Option, (B) full payment for the Shares with respect to which the Option is exercised, and (C) all representations, indemnifications and documents reasonably requested by the Administrator including, without limitation, any Shareholders’ Agreement. Full payment may consist of any consideration and method of payment authorized by the Administrator in accordance with Section 8 hereof and permitted by the Option Agreement.

(ii)Shares issued upon exercise of an Option shall be issued in the name of the Optionee or, if requested by the Optionee, in the name of the Optionee and his or her spouse. Subject to all the terms and conditions of the Plan and the Option Agreement, the Company shall issue (or cause to be issued) certificates evidencing the issued Shares promptly after the Option is exercised. Notwithstanding the foregoing, the Administrator in its discretion may require the Company to retain possession of any certificate evidencing Shares acquired upon the exercise of an Option, if those Shares remain subject to repurchase or redemption under the provisions of the Option Agreement, the Shareholders’ Agreement or any other agreement between the Company and the Optionee, or if those Shares are collateral for a loan or obligation due to the Company.

(iii)Exercise of an Option in any manner shall result in a decrease in the number of Shares thereafter available, both for purposes of the Plan (in accordance with Section 3(b)) and for sale under the Option, by the number of Shares as to which the Option is exercised.

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(h)Termination of Service (other than by death).

(i)If an Optionee ceases to be an Employee for any reason other than death, then the Optionee’s Options shall expire on the earlier of:

(A)The expiration date determined by Section 6(e) hereof;

(B)The ninetieth (90th) day following the termination of the Optionee’s relationship as an Employee for any reason other than Disability or Cause, or such other date as the Administrator may determine and specify in the Option Agreement, provided that no Option that is exercised after the ninetieth (90th) day following the termination of the Optionee’s relationship as an Employee shall be treated as an Incentive Stock Option; or

(C)The last day of the twelve (12) month period following the termination of the Optionee’s relationship as an Employee by reason of Disability, or such other date as the Administrator may determine and specify in the Option Agreement; provided that no Option that is exercised after the ninetieth (90th) day following the termination of the Optionee’s relationship as an Employee shall be treated as an Incentive Stock Option.

(ii)Following the termination of the Optionee’s relationship as an Employee, the Optionee may exercise all or part of the Optionee’s Option at any time before the expiration of the Option as set forth in Section 6(h)(i) hereof, but only to the extent that the Option was vested and exercisable as of the date of termination of the Optionee’s relationship as an Employee (or became vested and exercisable as a result of the termination). Any remaining Optioned Shares that are unvested as of the date of termination of the Optionee’s relationship as an Employee shall be immediately forfeited. In the event that the Optionee dies after the termination of the Optionee’s relationship as an Employee but before the expiration of the Optionee’s Option as set forth in Section 6(h)(i) hereof, all or part of the Option may be exercised (prior to expiration) by the executors or administrators of the Optionee’s estate or by any person who has acquired the Option directly from the Optionee by beneficiary designation, bequest or inheritance, but only to the extent that the Option was vested and exercisable as of the termination date of the Optionee’s relationship as an Employee (or became vested and exercisable as a result of the termination). Any Shares subject to the portion of the Option that are vested as of the termination date of the Optionee’s relationship as an Employee but that are not purchased prior to the expiration of the Option pursuant to this Section 6(h) shall be forfeited immediately following the Option’s expiration.

(i)Leaves of Absence. Unless otherwise determined by the Administrator, for purposes of Section 6 hereof, the service of an Optionee as an Employee shall be deemed to continue while the Optionee is on a bona fide leave of absence, if such leave was approved by the Bank in writing. Unless otherwise determined by the Administrator and subject to Applicable Law, vesting of an Option shall be suspended during any unpaid leave of absence.

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(j)Death of Optionee.

(i)If an Optionee dies while an Employee, then the Optionee’s Option shall expire on the earlier of the following dates:

(A)The expiration date determined by Section 6(e) hereof;

(B)The last day of the twelve (12) month period following the Optionee’s death, or such later date as the Administrator may determine and specify in the Option Agreement.

(ii)All or part of the Optionee’s Option may be exercised at any time before the expiration of the Option as set forth in Section 6(j)(i) hereof by the executors or administrators of the Optionee’s estate or by any person who has acquired the Option directly from the Optionee by beneficiary designation, bequest or inheritance, but only to the extent that the Option was vested and exercisable as of the date of the Optionee’s death or had became vested and exercisable as a result of the death. The balance of the Shares subject to the Option shall be forfeited upon the Optionee’s death. Any Optioned Shares subject to the portion of the Option that are vested as of the Optionee’s death but that are not purchased prior to the expiration of the Option pursuant to this Section 6(j) shall be forfeited immediately following the Option’s expiration.

(k)Restrictions on Transfer of Shares. Shares issued upon exercise of an Option shall be subject to such special forfeiture conditions, rights of repurchase or redemption, rights of first refusal, and other transfer restrictions as the Administrator may determine. The restrictions described in the preceding sentence shall be set forth in the applicable Option Agreement and shall apply in addition to any restrictions that may apply to holders of Shares generally.

7.Withholding Taxes. As a condition to the exercise of an Option, the Optionee shall make such arrangements as the Administrator may require for the satisfaction of any applicable withholding taxes arising in connection with the exercise of an Option under the laws of U.S. federal, state, local or non-U.S. jurisdictions. The Company shall not be required to issue any Shares under the Plan until the foregoing obligations are satisfied. Without limiting the generality of the foregoing, upon the exercise of any Option, the Bank shall have the right to withhold taxes from any compensation or other amounts that the Bank may owe to the Optionee, or to require the Optionee to pay to the Bank the amount of any taxes that the Bank may be required to withhold with respect to the Shares issued to the Optionee. Without limiting the generality of the foregoing, the Administrator in its sole discretion may authorize the Optionee to satisfy all or part of any withholding tax liability by: (i) having the Company withhold from the Shares that would otherwise be issued upon the exercise of an Option that number of Shares having a Fair Market Value, as of the date the withholding tax liability arises, equal to the portion of the Company’s withholding tax liability to be so satisfied; and/or (ii) delivering to the Company previously owned and unencumbered Shares having a Fair Market Value, as of the date the withholding tax liability arises, equal to the amount of the Bank’s withholding tax

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liability to be so satisfied. Subject to the preceding sentence, the exercisability or settlement of any Option Agreement shall be determined by the Administrator in its sole discretion.

8.Payment for Shares. The consideration to be paid for the Shares to be issued under the Plan, including the method of payment, shall be determined by the Administrator (and, in the case of an Incentive Stock Option, shall be determined on the Date of Grant), subject to the provisions in this Section 8.

(a)General Rule. The entire Exercise Price (as the case may be) for Shares issued under the Plan shall be payable in cash or cash equivalents at the time when the Shares are purchased, except as otherwise provided in this Section 8.

(b)Other Forms of Consideration. At the sole discretion of the Administrator, all or a portion of the Exercise Price may be paid by any other form of consideration and method of payment to the extent permitted by Applicable Law.

9.Nontransferability of Options. Unless otherwise determined by the Administrator and provided in the applicable Option Agreement (or be amended to provide), no Option shall be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner (whether by operation of law or otherwise) other than by will or applicable laws of descent and distribution or (except in the case of an Incentive Stock Option) pursuant to a qualified domestic relations order, and shall not be subject to execution, attachment, or similar process. In the event the Administrator in its sole discretion makes an Option transferable, only a Nonstatutory Stock Option may be transferred provided such Option is transferred without payment of consideration to members of the Optionee’s immediate family (as such term is defined in Rule 16a-1(e) of the Exchange Act) or to trusts or partnerships established exclusively for the benefit of the Optionee and the members of the Optionee’s immediate family, all as permitted by Applicable Law. Upon any attempt to pledge, assign, hypothecate, transfer, or otherwise dispose of any Option or of any right or privilege conferred by this Plan contrary to the provisions hereof, or upon the sale, levy or attachment or similar process upon the rights and privileges conferred by this Plan, such Option shall thereupon terminate and become null and void. Options may be exercised during the lifetime of the Optionee only by the Optionee.

10.Bound by Shareholders’ Agreement and Rights as a Shareholder. Notwithstanding anything in the Plan or an Option Agreement to the contrary, to the extent a Shareholders’ Agreement exists between the shareholders of the Company, no Option under the Plan shall be granted or exercised unless the Optionee timely agrees to and executes (to the Company’s satisfaction) the Company’s Shareholders’ Agreement, if any. Until the Shares actually are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Shares, notwithstanding the exercise of the Option. No adjustment shall be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 11 of the Plan. A failure by an Optionee to timely agree to and execute the Company’s Shareholders’ Agreement, as determined in the Company’s sole satisfaction, shall result in an immediate and automatic

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forfeiture of the Option; thereafter, no Shares shall be due or owing to the Optionee under such Option.

11.Adjustment of Shares.

(a)Changes in Capitalization. Subject to any required action by the shareholders of the Company, the class(es) and number and type of Shares that have been authorized for issuance under the Plan but as to which no Options have yet been granted or that have been returned to the Plan upon cancellation or expiration of an Option, and the class(es), number, and type of Shares covered by each outstanding Option, as well as the price per Share covered by each outstanding Option, shall be proportionately adjusted for any increase, decrease or change in the number or type of outstanding Shares or other securities of the Company or exchange of outstanding Shares or other securities of the Company into or for a different number or type of shares or other securities of the Company or successor entity, or for other property (including, without limitation, cash) or other change to the Shares resulting from a share split, reverse share split, share dividend, dividend in property other than cash, combination of shares, exchange of shares, combination, consolidation, spin-off, split-off, recapitalization, reincorporation, reorganization, change in corporate structure, reclassification, or other distribution of the Shares effected without receipt of consideration by the Company; provided, however, that the conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.” Whether the adjustment provisions of this Section 11(a) have been triggered shall be determined by the Board of the Company, whose determination shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of equity securities of the Company of any class, or securities convertible into equity securities of the Company of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number, type, or price of Shares subject to an Option. Where an adjustment under this Section 11(a) is made to an Incentive Stock Option, the adjustment shall be made in a manner that will not be considered a “modification” under the provisions of Section 424(h)(3) of the Code.

(b)Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each Optionee as soon as practicable prior to the effective date of such proposed transaction. The Administrator in its discretion may provide for an Optionee to have the right to exercise his or her Option until fifteen (15) days prior to the proposed dissolution or liquidation as to all of the Optioned Shares covered thereby, including Shares as to which the Option would not otherwise be exercisable. In addition, the Administrator may provide that any Company repurchase or redemption option applicable to any Shares purchased upon exercise of an Option shall lapse as to all such Shares, provided the proposed dissolution or liquidation takes place at the time and in the manner contemplated. To the extent it has not been previously exercised, an Option will terminate immediately prior to the consummation of such proposed action.

(c)Change in Control. Effective upon the consummation of a Change in Control, all outstanding Options under the Plan shall terminate to the extent they are not assumed. The Administrator shall have the sole and unilateral authority, exercisable either in advance of any actual or anticipated Change in Control or at the time of an actual Change in

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Control, to provide for the full or partial automatic vesting and exercisability of one or more outstanding unvested Options under the Plan and the release from restrictions on transfer and repurchase or forfeiture rights of such Options in connection with a Change in Control, on such terms and conditions as the Administrator may specify. Additionally, the Administrator shall have the sole and unilateral authority to effectuate the automatic cashout and termination of one or more Options immediately prior to the Change in Control and without regard to whether the Optionee consents to such cashout, with such cashout being equal to the positive “spread” (if any) between the price per Share provided in the Change in Control and the Exercise Price per Share, multiplied by the number of Optioned Shares. For avoidance of doubt, if no positive spread exists pursuant to the foregoing, then such cashout of the Option shall be effectuated with no cash payment to the Optionee holding such an Option.

(d)Reservation of Rights. Except as provided in this Section 11 and in the applicable Option Agreement, an Optionee shall have no rights by reason of (i) any subdivision or consolidation of Shares or other securities of any class, (ii) the payment of any dividend, or (iii) any other increase or decrease in the number of Shares or other securities of any class. Any issuance by the Company of equity securities of any class, or securities convertible into equity securities of any class, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or Exercise Price of Shares. The grant of an Option shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations, or changes of its capital or business structure, to merge or consolidate or to dissolve, liquidate, sell, or transfer all or any part of its business or assets.

12.Date of Grant. The Date of Grant of an Option shall, for all purposes, be the date on which the Administrator makes the determination to grant the Option, or such other later date as is determined by the Administrator; provided, however, that the Date of Grant of an Incentive Stock Option shall be no earlier than the date on which the Employee becomes an Employee.

13.Securities Law Requirements.

(a)Legal Compliance. Notwithstanding any other provision of the Plan or any agreement entered into by the Company or the Bank pursuant to the Plan, neither the Company nor the Bank shall be obligated, and shall have no liability for failure to deliver any Shares under the Plan unless the issuance and delivery of Shares comply with (or are exempt from) all Applicable Law, including, without limitation, the Securities Act, U.S. state securities laws and regulations, and the regulations of any stock exchange or other securities market on which the Company’s securities may then be traded, and shall be further subject to the approval of counsel for the Company with respect to such compliance.

(b)Investment Representations. Shares delivered under the Plan shall be subject to transfer restrictions, and the person acquiring the Shares shall, as a condition to the exercise of an Option if requested by the Company, provide such assurances and representations to the Company as the Company may deem necessary or desirable to assure compliance with Applicable Law, including, without limitation, the representation and warranty at the time of acquisition of the Shares that the Shares are being acquired only for investment purposes and without any present intention to sell, transfer, or distribute the Shares.

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14.Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

15.Approval by Shareholders. The Plan shall be subject to approval by the shareholders of the Company within twelve (12) months before or after the date the Plan is adopted by the Board. Such approval by shareholders of the Company shall be obtained in the degree and manner required under Applicable Law. Options may be granted, but Options may not be exercised prior to approval of the Plan by shareholders of the Company.

16.Duration and Amendment.

(a)Term of Plan. Subject to approval by shareholders of the Company in accordance with Section 15 hereof, the Plan shall become effective upon the earlier to occur of its adoption by the Board or its approval by the shareholders of the Company as described in Section 15 hereof. In the event that the shareholders of the Company fail to approve the Plan within twelve (12) months prior to or after its adoption by the Board, any Options that have been granted and any Shares that have been awarded or purchased under the Plan shall be rescinded, and no additional Options shall be granted thereafter. Unless sooner terminated under Section 16(b) hereof, the Plan shall continue in effect for a term of ten (10) years from the later of (i) the effective date of the Plan, or (ii) the date of the most recent Board approval of an increase in the number of Shares reserved for issuance under the Plan.

(b)Amendment and Termination. The Board may at any time amend, alter, suspend, or terminate the Plan.

(c)Approval by Shareholders. The Board shall obtain approval of the shareholders of any Plan amendment to the extent necessary and desirable to comply with Applicable Law.

(d)Effect of Amendment or Termination. No amendment, alteration, suspension, or termination of the Plan shall materially and adversely impair the rights of any Optionee with respect to an outstanding Option, unless mutually agreed otherwise between the Optionee and the Administrator, which agreement must be in writing and signed by the Optionee and the Company. Termination of the Plan shall not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Optons granted under the Plan prior to the date of such termination. No Shares shall be issued or sold under the Plan after the termination thereof, except upon exercise of an Option granted prior to the termination of the Plan. Notwithstanding the foregoing, or anything in the Plan to the contrary, the Administrator shall have unilateral authority to amend an Option, without Optionee consent, to the minimum extent necessary to comply with Section 409A of the Code and such amendment shall not be deemed to materially impair the rights of such Optionee.

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17.Legending Share Certificates. In order to enforce any restrictions imposed upon Shares issued upon the exercise of Options, including, without limitations, the restrictions described in Sections 6(k) hereof, the Administrator may cause a legend or legends to be placed on any share certificates representing the Shares, which legend or legends shall make appropriate reference to the restrictions, including, without limitation, a restriction against sale of the Shares for any period as may be required by Applicable Law.

18.No Rights as an Employee. Neither the Plan nor any Option shall confer upon any Optionee any right to continue his or her relationship as an Employee with the Bank for any period of specific duration or interfere in any way with his or her right or the right of the Bank (or any Parent or Subsidiary employing or retaining the Optionee), which rights are hereby expressly reserved by each, to terminate such relationship at any time, with or without cause, and with or without notice.

19.No Trust or Fund Created. Neither the Plan nor any Option shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Bank or any Parent or Subsidiary and an Optionee or any other person. To the extent that any Optionee acquires a right to receive payments from the Bank or any Parent or Subsidiary pursuant to an Option, such right shall be no greater than the right of any unsecured general creditor of the Bank, a Parent, or any Subsidiary.

20.No Rights to Options. No Optionee, eligible Employee, or other person shall have any claim to be granted any Option under the Plan, and there is no obligation for uniformity of treatment of an Employee, Optionee, or holders or beneficiaries of Options under the Plan. The terms and conditions of Options need not be the same with respect to any Optionee or with respect to different Optionees.

21.Minimum Regulatory Capital Requirements. Notwithstanding any provision of this Plan or any agreement to the contrary, all Options granted under the Plan will expire, to the extent not exercised, within 45 days following the receipt of notice from the Company’s and/or the Bank’s primary federal or state regulator (“Regulator”) that (i) the Company and/or the Bank has not maintained its minimum capital requirements (as determined by the Regulator); and (ii) the Regulator is requiring termination or forfeiture of Options. Upon receipt of such notice from the Regulator, the Company and/or the Bank will promptly notify each Optionee that all Options issued under this Plan have become fully vested to the full extent of the grant and that the Options must be exercised prior to the end of the 45-day period or such earlier period as may be specified by the Regulator or forfeit such Options. In case of forfeiture, no Optionee will have a cause of action, of any kind or nature, with respect to the forfeiture against the Company, the Bank or any Parent or Subsidiary. Neither the Company, the Bank, nor any Parent or Subsidiary will be liable to any Optionee due to the failure or inability of the Company and/or the Bank to provide adequate notice to the Optionee.

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EX-10.16

Exhibit 10.16

CBFH, INC.

2014 STOCK OPTION PLAN

STOCK OPTION AWARD AGREEMENT

Subject to the terms and conditions of the Notice of Stock Option Award (the “Notice”), this Stock Option Award Agreement (this “Option Agreement”) and the 2014 Stock Option Plan (the “Plan”), CBFH, Inc., a Texas corporation (the “Company”) hereby grants the individual set forth in the Notice (the “Optionee”) an option (the “Option”) to purchase shares of the Company’s common stock. Unless otherwise specifically indicated, all terms used in this Option Agreement shall have the meaning as set forth in the Notice or the Plan.

1.Grant of the Option. The principal features of the Option, including the number of Optioned Shares subject to the Option, are set forth in the Notice.

2.Vesting Schedule. Subject to the Optionee’s continuous service as an Employee, the Optioned Shares shall vest in accordance with the Vesting Schedule provided in the Notice.

3.Risk of Forfeiture. The Optioned Shares shall be subject to a risk of forfeiture until such time the risk of forfeiture lapses in accordance with the Vesting Schedule, and/or if the Optionee fails to timely comply with Section 12(b), below. All or any portion of the Optioned Shares subject to a risk of forfeiture shall automatically be forfeited and immediately returned to the Company if the Optionee’s continuous status as an Employee is interrupted or terminated for any reason other than as permitted under the Plan. Additionally, and notwithstanding anything in the Notice or this Option Agreement to the contrary, the vested and unvested Optioned Shares shall be forfeited if the Optionee’s continuous service as an Employee is teminated for Cause or if the Optionee breaches (as determined by the Board) any provisions of the Notice, this Option Agreement or the Plan. Finally, both vested and unvested Options shall automatically become forfeited if the Optionee’s status as an Employee is terminated for Cause.

4.Exercise of Option.

(a)Right to Exercise. The Optioned Shares shall be exercisable during its term cumulatively according to the Vesting Schedule set forth above and the applicable provisions of the Plan; however, the Optioned Shares shall not be exercised for a fraction of a Share. Additionally, and notwithstanding anything in the Notice, this Option Agreement, the Plan or any other agreement to the contrary, the Optionee’s right to exercise vested Optioned Shares shall automatically expire, and the vested Optioned Shares shall automatically terminate, upon the end of the period (the “Maximum Exercise Period”) prescribed in the Notice following the earliest of these events: (i) the termination of the status of the Optionee as an Employee (except as provided below); (ii) the termination of the status of the Optionee as an Employee due to Disability; and (iii) the termination of the status of the Optionee as an Employee due to death. As provided under the Plan, and notwithstanding anything to the contrary, all Optioned Shares shall automatically expire and terminate upon the Expiration Date (as set forth in the Notice) to the extent not then exercised. Thereafter, no vested Optioned Shares may be exercised.

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(b)Method of Exercise. The Option shall be exercisable to the extent then vested by delivery of a written exercise notice in the form attached hereto as EXHIBIT A (the “Exercise Notice”), which shall state the election to exercise the Option, the number of Shares with respect to which the Option is being exercised, and such other representations and agreements as may be required by the Company. The Exercise Notice shall be signed by the Optionee (or by the Optionee’s beneficiary or other person entitled to exercise the Option in the event of the Optionee’s death under the Plan) and shall be delivered in person or by certified mail to the Secretary of the Company. The Exercise Notice shall be accompanied by payment of the aggregate Exercise Price as to all Shares exercised. The Option shall be deemed to be exercised as of the date (the “Exercise Date”): (i) the date the Company receives (as determined by the Administrator in its sole, but reasonable, discretion) the fully executed Exercise Notice accompanied by payment of the aggregate Exercise Price, and (ii) all other applicable terms and conditions of this Option Agreement (including Section 10(a), below) are satisfied in the sole discretion of the Administrator.

(c)Approval by Shareholders and Compliance Restrictions on Exercise. Notwithstanding any other provision of this Option Agreement to the contrary, no portion of the Option shall be exercisable at any time prior to the approval of the Plan by the shareholders of the Company. No Shares shall be issued pursuant to the exercise of an Option unless the issuance and exercise, including the form of consideration used to pay the Exercise Price, comply with Applicable Laws.

(d)Issuance of Shares. After receiving the Exercise Notice, the Company shall cause to be issued a certificate or certificates for the Shares as to which the Option has been exercised, registered in the name of the person exercising this Option (or in the names of such person and his or her spouse as community property or as joint tenants with right of survivorship). The Company shall cause the certificate or certificates to be deposited in escrow or delivered to or upon the order of the person exercising the Option.

5.Optionee’s Representations. In the event the Shares have not been registered under the Securities Act on the Exercise Date, the Optionee shall, if required by the Company, concurrently with the exercise of all or any portion of the Option, deliver to the Company his or her Investment Representation Statement in the form attached hereto as EXHIBIT B, as well as any other representations necessary or appropriate, in the judgment of the Administrator, to comply with Applicable Laws.

6.Market Stand-Off.

(a)The Optionee agrees that the Optionee shall not directly or indirectly sell, make any short sale of, loan, hypothecate, pledge, offer, grant or sell any option or other contract for the purchase of, purchase any option or other contract for the sale of, or otherwise dispose of or transfer, or agree to engage in any of the foregoing transactions with respect to, any Shares acquired under this Option Agreement for a period specified by the Company or its underwriters. Such restriction (the “Market Stand-Off”) shall be in effect for such period of time commencing on and following the date of the final prospectus for the first Qualified Public Offering as may be requested by the Company or its underwriters. In no event, however, shall the Market Stand-Off period exceed 180 days following the first Qualified Public Offering. In the event of the

declaration of a share dividend, a spin-off, a share split, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Company’s outstanding securities without receipt of consideration, any new, substituted or additional securities that are by reason of such transaction distributed with respect to any Shares subject to the Market Stand-Off, or into which such Shares thereby become convertible, shall immediately be subject to the Market Stand-Off. In order to enforce the Market Stand-Off, the Company may impose stop-transfer instructions with respect to the Shares acquired under this Option Agreement until the end of the applicable Market Stand-Off period. The Company’s underwriters shall be beneficiaries of the agreement set forth in this Section 6, and the Optionee agrees that any transferee of any the Optionee shall be bound by the provisions of this Section 6. This Section 6 shall not apply to Shares registered in the first Qualified Public Offering.

(b)For purposes of this Section 6, a “Qualified Public Offering” shall mean the closing of an underwritten public offering, pursuant to an effective registration statement under the Securities Act or pursuant to a valid qualification or filing under Applicable Laws of another jurisdiction, of the Shares or other equity securities of the Company. Notwithstanding the foregoing, Qualified Public Offering shall not include a registration relating solely to employee benefit plans or to a Rule 145 transaction under the Securities Act or to similar registrations under Applicable Laws of another jurisdiction.

(c)The Optionee shall execute and deliver such other agreements as may be reasonably requested by the Company or its underwriters that are consistent with this Section 6 or that are necessary to give further effect thereto. In addition, if requested by the Company or its underwriters, the Optionee shall provide, within ten (10) days of this request, such information as may be required by the Company or its underwriters in connection with the completion of the Company’s first Qualified Public Offering.

7.Method of Payment. Payment of the aggregate Exercise Price shall be by cash or check, or a combination thereof, at the election of the Optionee.

8.Non-Transferability of Option. The Option and the rights and privileges conferred hereby shall not be sold, pledged or otherwise transferred (whether by operation of law or otherwise) in any manner otherwise than by will or by the laws of descent or distribution, shall not be subject to sale under execution, attachment, levy or similar process and may be exercised during the lifetime of the Optionee only by the Optionee. The terms of the Notice, this Option Agreement and the Plan shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee.

9.Term of Option. The Option shall in any event expire on the Expiration Date set forth in the Notice, and may be exercised prior to the Expiration Date only in accordance with the Plan and the terms of this Option Agreement.

10.Tax Obligations.

(a)Withholding Taxes. The Optionee shall make appropriate arrangements with the Company (or the Parent or Subsidiary employing or retaining the Optionee) for the satisfaction of all U.S. Federal, state, local and non-U.S. income and employment tax

withholding requirements applicable to the Option exercise. The Optionee hereby acknowledges, understands and agrees that the Company may refuse to honor the exercise and refuse to deliver Shares if the withholding amounts are not delivered at the time of exercise.

(b)Notice of Disqualifying Disposition of Shares. If the Option granted to the Optionee herein is designated as an Incentive Stock Option, and if the Optionee sells or otherwise disposes of any of the Shares acquired pursuant to the Incentive Stock Option on or before the later of: (i) the date two years after the Date of Grant and (ii) the date one year after the date of exercise, the Optionee shall immediately notify the Company in writing of such disposition. The Optionee hereby acknowledges and agrees that the Optionee may be subject to income tax withholding by the Company on the compensation income recognized by the Optionee in connection with the exercise of the Option.

11.Adjustment of Shares. In the event of any transaction described in Section 11 of the Plan, the terms of the Option (including, without limitation, the number and kind of the Optioned Shares and the Exercise Price) shall be adjusted as set forth therein. This Option Agreement shall in no way affect the right of the Company to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer any part of its business or assets.

12.Conditions Precedent.

(a)Initial Issuance. No Shares shall be issued upon the exercise of the Option unless and until the Company has determined that: (i) the Company and the Optionee have taken all actions required to register the Shares under the Securities Act or to perfect an exemption from the registration requirements thereof, if applicable; (ii) any other applicable provision of state or U.S. federal law or other Applicable Laws has been satisfied; (iii) the Optionee executes the Irrevocable Proxy and Power of Attorney in the form attached hereto as EXHIBIT C.

(b)Initial Grant of Option. Notwithstanding anything in this Option Agreement to the contrary, all Optioned Shares shall immediately and automatically be extinguished, for no consideration, if the Optionee fails to execute and return to the Company, within 30 days from the Date of Grant, the Confidentiality and Non-Solicitation Agreement in the form attached hereto as EXHIBIT D.

13.No Registration Rights. The Company may, but shall not be obligated to, register or qualify the sale of Shares under the Securities Act or any other Applicable Laws. The Company shall not be obligated to take any affirmative action in order to cause the sale of Shares under this Option Agreement to comply with any law.

14.Securities Law Restrictions. Regardless of whether the offering and sale of Shares under the Plan have been registered under the Securities Act or have been registered or qualified under the securities laws of any state, the Company at its discretion may impose restrictions upon the sale, pledge or other transfer of the Shares (including the placement of appropriate legends on share certificates or the imposition of stop-transfer instructions) if, in the judgment of the Company, such restrictions are necessary or desirable in order to achieve

compliance with the Securities Act, the securities laws of any state or any other Applicable Laws.

15.General Provisions.

(a)Notice. Any notice required by the terms of this Option Agreement shall be given in writing and shall be deemed effective upon personal delivery or upon deposit with the United States Postal Service, by registered or certified mail, with postage and fees prepaid. Notice shall be addressed to the Company at its principal executive office and to the Optionee at the address that he or she most recently provided to the Company.

(b)Successors and Assigns. Except as provided herein to the contrary, this Option Agreement shall be binding upon and inure to the benefit of the parties to this Option Agreement, their respective successors and permitted assigns.

(c)No Assignment. Except as otherwise provided in this Option Agreement, the Optionee shall not assign any of his or her rights under this Option Agreement without the prior written consent of the Company, which consent may be withheld in its sole discretion. The Company shall be permitted to assign its rights or obligations under this Option Agreement, but no such assignment shall release the Company of any obligations pursuant to this Option Agreement.

(d)Severability. The validity, legality or enforceability of the remainder of this Option Agreement shall not be affected even if one or more of the provisions of this Option Agreement shall be held to be invalid, illegal or unenforceable in any respect.

(e)Administration. Any determination by the Administrator in connection with any question or issue arising under the Plan or this Option Agreement shall be final, conclusive, and binding on the Optionee, the Company, and all other persons.

(f)Headings. The section headings in this Option Agreement are inserted only as a matter of convenience, and in no way define, limit or interpret the scope of this Option Agreement or of any particular section.

(g)Counterparts. This Option Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

(h)Entire Agreement; Governing Law. The provisions of the Plan are incorporated herein by reference. The Notice, this Option Agreement and the Plan constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing signed by the Company and the Optionee. The Notice and this Option Agreement are governed by the laws of the State of Texas applicable to contracts executed in and to be performed in that State.

16.No Guarantee of Continued Service. THE OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS AN EMPLOYEE AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THE OPTION OR ACQUIRING SHARES HEREUNDER). THE OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS OPTION AGREEMENT, THE OPTION GRANTED HEREUNDER, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS AN EMPLOYEE FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE IN ANY WAY WITH THE OPTIONEE’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE THE OPTIONEE’S RELATIONSHIP AS AN EMPLOYEE AT ANY TIME, WITH OR WITHOUT CAUSE.

17.Spousal Consent. To the extent the Optionee is married, the Optionee agrees to (i) provide the Optionee’s spouse with a copy of this Option Agreement prior to its execution by the Optionee and (ii) obtain such spouse’s consent to this Option Agreement as evidenced by such spouse’s execution of the Spousal Consent attached hereto as EXHIBIT E.

18.Venue. The Company, the Optionee and the Optionee’s assignees agree that any suit, action or proceeding arising out of or related to the Notice, this Option Agreement or the Plan shall be brought in the United States District Court for the Eastern District of Texas (or should such court lack jurisdiction to hear such action, suit or proceeding, in a state court in Jefferson County) and that all parties shall submit to the jurisdiction of such court. The parties irrevocably waive, to the fullest extent permitted by law, any objection the party may have to the laying of venue for any such suit, action or proceeding brought in such court. If any one or more provisions of this Section 18 shall for any reason be held invalid or unenforceable, it is the specific intent of the parties that such provisions shall be modified to the minimum extent necessary to make it or its application valid and enforceable.

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EXHIBIT A - 2014 PLAN EXERCISE NOTICE LONG FORM

CBFH, INC.

2014 STOCK OPTION PLAN

STOCK OPTION AWARD AGREEMENT

Exercise Notice

CBFH, Inc.

1415 Louisiana St. 4th Floor

Houston, Texas 77002

Attention: Secretary

1.Exercise of Option. Effective as of today,                                         ,                , the undersigned (the “Optionee”) hereby elects to exercise the Optionee’s option to purchase                       shares of common stock (the “Shares”) of CBFH, Inc., a Texas corporation (the “Company”), under and pursuant to the 2014 Stock Option Plan (the “Plan”) and the Stock Option Award Agreement dated                  ,                   (the “Option Agreement”). Unless otherwise defined herein, the capitalized terms in this notice of exercise (the “Exercise Notice”) shall have the meanings ascribed to those terms in the Plan and the Option Agreement.

2.Delivery of Payment. The Optionee herewith delivers to the Company the full Exercise Price of the Shares with respect to which the Optionee is exercising the Option, and any and all withholding taxes due in connection with the exercise of the Option.

3.Representations of the Optionee. The Optionee hereby acknowledges that the Optionee has received and read, and understands the Plan, the Notice, the Option Agreement and the Shareholders’ Agreement, and agrees to abide by and be bound by their terms and conditions.

4.Rights as a Shareholder. Until the issuance of the Shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Shares underlying an unexercised Option. The Shares shall be issued to the Optionee as soon as practicable after the Option is exercised in accordance with the Option Agreement and the Optionee has agreed (to the sole satisfaction of the Company) to be bound by the Shareholders’ Agreement. No adjustment shall be made for a dividend or other right for which the record date is prior to the date of issuance except as provided in Section 11 of the Plan.

5.Right of First Refusal.

(a)Transfer Notice. If at any time the Optionee proposes to sell, transfer, assign, encumber, hypothecate or otherwise dispose of in any way (each, a “Transfer”) all or any part of or any interest in the Shares to one or more third parties pursuant to an understanding with the third parties, then the Optionee (a “Selling Optionee”) shall first give the Company written notice of the Selling Optionee’s intention to make the Transfer (the “Transfer Notice”). The Transfer Notice shall include (i) a description of the Shares to be transferred (the “Offered Shares”), (ii) the identity of the prospective transferee(s), (iii) a certification as to the number of Shares currently owned, directly or indirectly, by the proposed transferee and its Affiliates and

(iv) the consideration and the material terms and conditions upon which the proposed Transfer is to be made. For purposes of this Exercise Notice, “Affiliate” shall mean any person or entity that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with such entity. The Transfer Notice shall certify that the Selling Optionee has received a firm offer from the prospective transferee(s) and in good faith believes a binding agreement for the Transfer is obtainable on the terms set forth in the Transfer Notice. The Transfer Notice shall also include a copy of any written proposal, term sheet or letter of intent or other agreement relating to the proposed Transfer and proof satisfactory to the Company that the proposed Transfer will not violate any applicable federal or state securities laws.

(b)Company’s Option. The Company and it assignee(s) shall have an option for a period of thirty (30) days from receipt of the Transfer Notice to elect to purchase the Offered Shares (or any portion thereof) at the same price and subject to the same material terms and conditions as described in the Transfer Notice. The Company and its assignee(s) may exercise such purchase option and, thereby, purchase all (or any portion of) the Offered Shares by notifying the Selling Optionee in writing before expiration of such thirty (30)-day period as to the number of Offered Shares that it wishes to purchase. If the Company or an assignee gives the Selling Optionee notice that it desires to purchase the Offered Shares, then payment for the Offered Shares shall be by check or wire transfer, against delivery of the Offered Shares to be purchased at a place agreed upon between the parties and at the time of the scheduled closing therefore. The time of scheduled closing shall be no later than thirty (30) days after the Company’s receipt of the Transfer Notice, unless the Transfer Notice contemplates a later closing with the prospective third party transferee(s) or unless the value of the purchase price has not yet been established pursuant to Section 5(c) hereof, and then the scheduled closing shall be as of that later time.

(c)Valuation of Property. Should the purchase price specified in any Transfer Notice be payable in property other than cash or evidences of indebtedness, the Company and its assignee(s) shall have the right to pay the purchase price in the form of cash equal in amount to the value of such property. If the Selling Optionee and the Company or its assignee(s) cannot agree on such cash value within ten (10) days after the Company notifies the Selling Optionee of its intent to purchase the Offered Shares pursuant to Section 5(b), the valuation shall be as determined in good faith by the Administrator. If the time for the closing of the purchase has expired but for the determination of the value of the purchase price offered by the prospective transferee(s), then such closing shall be held on or prior to the fifth (5th) business day after the valuation shall have been made pursuant to this Section 5(c).

(d)Non-Exercise of Right. To the extent that any Offered Share has not been purchased pursuant to Section 5(b) hereof and the Company has determined that the proposed Transfer of the unpurchased Offered Shares to the third party transferee identified in the Transfer Notices would not constitute a Change in Control, the Company shall promptly so notify the Selling Optionee. The Selling Optionee shall have a period of thirty (30) days from receipt of such notice in which to sell such unpurchased Offered Shares upon terms and conditions (including the purchase price) no more favorable than those specified in the Transfer Notice; provided, however, that the transferee shall agree in writing on a form prescribed by the Company to be bound by all provisions of this Exercise Notice, including the Shareholders’

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Agreement. In the event that the Selling Optionee does not consummate such sale or disposition within such thirty (30) day period, all rights of first refusal under this Section 5 shall restart and continue to be applicable to any disposition of the Offered Shares by the Selling Optionee until such rights lapse in accordance with the terms of this Section 5. Furthermore, the exercise or nonexercise of such rights shall not adversely affect the right of the Company and its assignee(s) to make subsequent purchases from the Selling Optionee of Shares.

(e)Additional Shares or Substituted Securities. In the event of the declaration of a share dividend, the declaration of an extraordinary dividend payable in a form other than shares, a spin-off, a share split, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Company’s outstanding securities without receipt of consideration, any new, substituted or additional securities or other property (including money paid other than as an ordinary cash dividend) that are by reason of such transaction distributed with respect to any Shares subject to this Section 5 or into which such Shares thereby become convertible shall immediately be subject to this Section 5. Appropriate adjustments to reflect the distribution of such securities or property shall be made to the number and/or class of Shares subject to this Section 5.

(f)Change in Control. In the event of a Change in Control, all rights of first refusal under this Section 5 shall remain in full force and effect and shall apply to the new shares of capital received in exchange for the Shares in consummation of the Change in Control, but only to the extent the Shares are at the time covered by the rights of first refusal under this Section 5.

(g)Lapse. Notwithstanding any other provision of this Section 5, any right of first refusal provided in this Section 5 shall terminate as to any Shares upon the earlier to occur of (i) a Qualified Public Offering (as defined in the Option Agreement) and (ii) a Change in Control in which the successor corporation has equity securities that are publicly traded.

6.Company’s Repurchase Right.

(a)Grant of Repurchase Right. The Company is hereby granted the right (the “Repurchase Right”), exercisable at any time (i) during the ninety (90) day period following the date the Optionee’s status as an Employee terminates (the “Termination Date”), or (ii) during the ninety (90) day period following an exercise of the Option that occurs after the Termination Date to repurchase all or any portion of the Offered Shares (the “Share Repurchase Period”).

(b)Exercise of the Repurchase Right. The Repurchase Right shall be exercisable by written notice delivered to each Selling Optionee of the Offered Shares prior to the expiration of the Share Repurchase Period. The notice shall indicate the number of Offered Shares to be repurchased and the date on which the repurchase is to be effected, such date to be not later than the last day of the Share Repurchase Period. On the date on which the repurchase is to be effected, the Company and/or its assigns shall pay to the Selling Optionee in cash or cash equivalents (including the cancellation of any purchase-money indebtedness) an amount equal to the Fair Market Value of the Offered Shares which are to be repurchased from the Selling Optionee as of the Termination Date. Upon such payment or deposit into escrow for the benefit

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of the Selling Optionee, the Company and/or its assigns shall become the legal and beneficial owner of the Offered Shares being repurchased and all rights and interest thereon or related thereto, and the Company shall have the right to transfer to its own name or its assigns the number of Offered Shares being repurchased, without further action by the Selling Optionee.

(c)Assignment. Whenever the Company shall have the right to buy Offered Shares under this Repurchase Right, the Company may designate and assign one or more Employees, officers, Directors or other persons or organizations, to exercise all or a part of the Company’s Repurchase Right.

(d)Termination of the Repurchase Right. The Repurchase Right shall terminate with respect to any Offered Shares for which it is not timely exercised. In addition, the Repurchase Right shall terminate and cease to be exercisable with respect to all Offered Shares upon the date the Company has a public market for its Shares.

(e)Additional Shares or Substituted Shares. In the event of the declaration of a share dividend, the declaration of an extraordinary dividend payable in a form other than shares, a spin-off, a share split, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Company’s outstanding securities without receipt of consideration, any new, substituted or additional securities or other property (including money paid other than as an ordinary cash dividend) that are by reason of such transaction distributed with respect to any Shares subject to this Section 6 or into which such Shares thereby become convertible shall immediately be subject to this Section 6. Appropriate adjustments to reflect the distribution of such securities or property shall be made to the number and/or class of Shares subject to this Section 6.

7.Drag-Along Rights.

(a)Actions to be Taken. In the event that either (i) the holders of at least fifty-one percent (51%) of the then issued shares of common stock of the Company (the “Selling Investors”) or (ii) the Board of Directors of the Company (collectively, (i) and (ii) being the “Electing Holders”) approve a Change in Control in writing, and such approval specifies that this Section 7 shall apply to such Change in Control, then:

(i)if such transaction requires shareholder approval, then with respect to all Shares owned by the Optionee, the Optionee hereby agrees to vote (in person, by proxy or by action by written consent, as applicable) all such Shares in favor of, and adopt, such Change in Control (together with any related amendment to the articles of incorporate or bylaws required in order to implement such Change in Control) and to vote in opposition to any and all other proposals that could reasonably be expected to delay or impair the ability of the Company to consummate such Change in Control;

(ii)if such transaction is a sale of common stock, the Optionee hereby agrees to sell the same proportion of Shares as is being sold by the Selling Investors to the same acquirer to whom the Selling Investors propose to sell their shares of common stock, and, except as permitted below, on the same terms and conditions as the Selling Investors;

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(iii)the Optionee hereby agrees to execute and deliver all related documentation and take such other action in support of the Change in Control as shall reasonably be requested by the Company or the Selling Investors in order to carry out the terms and provisions of this Section 7, including without limitation executing and delivering instruments of conveyance and transfer, and any purchase agreement, merger agreement, indemnity agreement, escrow agreement, consent, waiver, governmental filing, share certificate duly endorsed for transfer (free and clear of impermissible liens, claims and encumbrances) and any similar or related documents;

(iv)the Optionee hereby agrees (except as provided in the Irrevocable Proxy and Power of Attorney attached as EXHIBIT C to the Option Agreement) not to deposit, and to cause the Optionee’s affiliates not to deposit, except as provided in this Exercise Notice, any shares of common stock of the Company owned by such party or affiliate in a voting trust or subject any shares of common stock to any arrangement or agreement with respect to the voting of such shares, unless specifically requested to do so by the acquirer in connection with the Change in Control;

(v)the Optionee hereby agrees to refrain from exercising any dissenters’ rights or rights of appraisal under any applicable laws at any time with respect to such Change in Control; and

(vi)if the consideration to be paid in exchange for the shares of common stock of the Company pursuant to this Section 7 includes any securities and due receipt thereof by the Optionee would be required under applicable laws, then the Optionee hereby agrees to (x) the registration or qualification of such securities or of any person as a broker or dealer or agent with respect to such securities or (y) the provision to the Optionee of any information other than such information as a prudent issuer would generally furnish in an offering made solely to “accredited investors” as defined in Regulation D promulgated under the U.S. Securities Act of 1933, as amended, the Company may cause to be paid to the Optionee in lieu thereof, against surrender of the shares of common stock which would have otherwise been sold by the Optionee, an amount in cash equal to the fair market value (as reasonably determined by the Board) of the securities which the Optionee would otherwise receive as of the date of the issuance of such securities in exchange for the shares of common stock.

(b)Exceptions. Notwithstanding the foregoing, the Optionee shall not be required to comply with Section 7(a) in connection with any proposed Change in Control (the “Proposed Sale”) unless:

(i)any representations and warranties to be made by the Optionee in connection with the Proposed Sale are limited to representations and warranties that (A) the shares of common stock which the Optionee purports to hold are free and clear of all liens and encumbrances, (B) the obligations of the Optionee in connection with the transaction have been duly authorized, if applicable, (C) the documents to be entered into by the Optionee have been duly executed by the Optionee and delivered to the acquirer and are enforceable against the Optionee in accordance with their respective terms, and (D) neither the execution and delivery of the documents to be entered into in connection with the transaction, nor the performance of the

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Optionee’s obligations thereunder, will cause a breach or violation of the terms of any agreement, law or judgment, order or decree of any court or governmental agency;

(ii)the Optionee shall not be liable for the inaccuracy of any representation or warranty made by any other individual or entity in connection with the Proposed Sale, other than the Company (except to the extent that (A) funds may be paid out of an escrow established to cover breach of representations, warranties and covenants of the Company as well as breach by any shareholder of any of identical representations, warranties and covenants provided by all shareholders and (B) the inaccuracies were made by the Company in connection with the grant of the Shares under this Exercise Notice;

(iii)the liability for indemnification, if any, of the Optionee in the Proposed Sale and for the inaccuracy of any representations and warranties made by the Company or its shareholders in connection with such Proposed Sale, is several and not joint with any other individual or entity (except to the extent that funds may be paid out of an escrow established to cover breach of representations, warranties and covenants of the Company as well as breach by any shareholder of any of identical representations, warranties and covenants provided by all shareholders), and is pro rata in proportion to, and does not exceed, the amount of consideration paid to the Optionee in connection with such Proposed Sale;

(iv)liability shall be limited to the Optionee’s applicable shares of common stock (determined based on the respective proceeds payable to each shareholder in connection with such Proposed Sale in accordance with the provisions of the Company’s Articles of Incorporation and/or Bylaws) of a negotiated aggregate indemnification amount that applies equally to all shareholders but that in no event exceeds the amount of consideration otheiwise payable to the Optionee in connection with such Proposed Sale, except with respect to claims related to fraud by the Optionee, the liability for which need not be limited as to the Optionee;

(v)upon the consummation of the Proposed Sale, (A) each holder of each class or series of the Company’s shares of common stock will receive the same form of consideration for their shares of such class or series as is received by other shareholders in respect of their shares of such same class or series, and (B) each shareholder holding such shares will receive the same amount of consideration per share as is received by other shareholders in respect of their shares of such same series; provided, however, that, notwithstanding the foregoing, if the consideration to be paid in exchange for the shares of common stock, pursuant to this Section 7(b)(v) includes any securities and due receipt thereof by any shareholder would require under applicable law (x) the registration or qualification of such securities or of any person as a broker or dealer or agent with respect to such securities or (y) the provision to any shareholder of any information other than such information as a prudent issuer would generally furnish in an offering made solely to “accredited investors” as defined in Regulation D promulgated under the U.S. Securities Act of 1933, as amended, the Company may cause to be paid to any such shareholder in lieu thereof, against surrender of the shares, as applicable, which would have otherwise been sold by such shareholder, an amount in cash equal to the fan market value (as reasonably determined by the Board) of the securities which such shareholder would otherwise receive as of the date of the issuance of such securities in exchange for the shares, as applicable; and

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(vi)subject to Section 7(b)(v), requiring the same form of consideration to be available to the shareholders of any single class or series of shares, if any such shareholders of any shares of the Company are given an option as to the form and amount of consideration to be received as a result of the Proposed Sale, all shareholders of such shares will be given the same option; provided, however, that nothing in this Section 7(b)(vi) shall entitle any shareholder to receive any form of consideration that such shareholder would be ineligible to receive as a result of such shareholder’s failure to satisfy any condition, requirement or limitation that is generally applicable to the Company’s shareholders.

(c)Restrictions on Change in Control of the Company. No shareholder shall be a party to any sale of shares unless the Optonee is allowed to participate in such transaction and the consideration received pursuant to such transaction is allocated among the parties thereto in the manner specified in the Company’s Certificate of Formation, as amended, in effect immediately prior to the stock sale, unless the holders of at least a majority of the shares elect otherwise by written notice given to the Company at least fifteen (15) days prior to the effective date of any such transaction or series of related transactions.

8.Tag-Along Rights. Pursuant to the terms of this Section 8, in the event at least fifty-one percent (51%) of the then issued shares of common stock of the Company are proposed to be Transferred by any shareholder (or group of shareholders) to one or more third parties pursuant to an understanding with the third parties, the Optionee has the right but not the obligation to participate in such Transfer of common stock (the “Tag-Along Right”). The selling shareholder (or group of shareholders) is required to provide to the Optionee a notice of such a Transfer (the “Tag-Along Notice”) subject to the same requirements as the Transfer Notice set forth in Section 5.

(a)Exercise of Right. The Optionee may elect to exercise the Tag-Along Right and participate on a pro rata basis in the Transfer as set forth in Section 5 and otherwise on the same terms and conditions specified in the Tag-Along Notice. If the Optionee desires to exercise his/her Tag-Along Right, the Optionee must give the selling shareholder(s) written notice to that effect within thirty (30) days after the delivery date of the Tag-Along Notice, and upon giving such notice the Optionee shall be deemed to have effectively exercised the Tag-Along Right.

(b)Shares Includable. If the Optionee timely exercises the Tag-Along Right by delivering the written notice provided for in Section 5, the Optionee may include in the Transfer all or any part of the Shares equal to the product obtained by multiplying (i) the aggregate number of shares subject to the Transfer (excluding any shares purchased by the Company pursuant to any right of first refusal agreement with the selling shareholder(s)) by (ii) a fraction, the numerator of which is the number of shares owned by the Optionee immediately before consummation of the Transfer and the denominator of which is the total number of shares owned, in the aggregate, by all shareholders immediately prior to the consummation of the Transfer, plus the number of shares of stock shares held by the selling common stock shareholder(s). To the extent one or more of the shareholders have negotiated and may exercise a similar right of participation, the number of shares of stock that the selling common stock shareholder(s) may sell in the Transfer shall be correspondingly reduced.

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(c)Delivery of Certificates. The Optionee shall effect his/her participation in the Transfer by delivering to the selling shareholder(s), no later than fifteen (15) days after his/her exercise of the Tag-Along Right, one or more stock certificates, properly endorsed for transfer to the Prospective Transferee, representing the number of Shares that the Optionee elects to include in the Transfer.

(d)Purchase Agreement. The parties hereby agree that the terms and conditions of any sale pursuant to this Section 8 will be memorialized in, and governed by, a written purchase and sale agreement with customary terms and provisions for such a transaction and the parties further covenant and agree to enter into such an agreement as a condition precedent to any sale or other transfer pursuant to this Section 8.

(e)Deliveries. Each stock certificate the Optionee delivers to the selling shareholder(s) pursuant to Section 8 will be transferred to the Prospective Transferee against payment therefore in consummation of the Transfer pursuant to the terms and conditions specified in the Tag-Along Notice and the purchase and sale agreement, and the selling shareholder(s) shall concurrently therewith remit or direct payment to the Optionee the portion of the sale proceeds to which he is entitled by reason of his/her participation in such Transfer. No shareholder may sell any stock to any Prospective Transferee or Transferees refuse(s) to purchase securities subject to the Tag-Along Right from the Optionee exercising his/her Tag-Along Right hereunder, unless and until, simultaneously with such sale, such shareholder purchases all securities subject to the Tag-Along Right from the Optionee on the same terms and conditions (including the proposed purchase price) as set forth in the Tag-Along Notice.

9.Tax Consultation. The Optionee hereby acknowledges that he or she understands that the Optionee may suffer adverse tax consequences as a result of the Optionee’s purchase or disposition of the Shares. The Optionee hereby represents that the Optionee has consulted with any tax consultants the Optionee deems advisable in connection with the purchase or disposition of the Shares and that the Optionee is not relying on the Company for any tax advice.

10.Restrictions on Transfer.

(a)Legends. The Optionee hereby acknowledges that the Optionee understands and agrees that the Company may cause the legends set forth below or legends substantially equivalent thereto, to be placed upon any certificate(s) evidencing ownership of the Shares together with any other legends that may be required by the Company or by state or U.S. federal securities laws or other Applicable Laws:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED OR REGISTERED UNDER STATE SECURITIES OR BLUE SKY LAWS. THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION, AND NEITHER THESE SECURITIES NOR ANY INTEREST OR PARTICIPATION THEREIN MAY BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE

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TRANSFERRED OR DISPOSED OF EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT OF 1933, AS AMENDED, APPLICABLE STATE SECURITIES OR BLUE SKY LAWS AND THE APPLICABLE RULES AND REGULATIONS THEREUNDER. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER, A RIGHT OF FIRST REFUSAL, A REPURCHASE RIGHT HELD BY THE ISSUER OR ITS ASSIGNEE(S), DRAG-ALONG RIGHTS, TAG-ALONG RIGHTS AND IRREVOCABLE VOTING PROXY AS SET FORTH IN THE EXERCISE NOTICE BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, AND A SHAREHOLDERS’ AGREEMENT. A COPY OF THESE DOCUMENTS MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS, RIGHT OF FIRST REFUSAL, SHAREHOLDERS’ AGREEMENET, REPURCHASE RIGHTS, DRAG-ALONG RIGHTS, TAG-ALONG RIGHTS AND IRREVOCABLE VOTING PROXY ARE BINDING ON TRANSFEREES OF THESE SHARES.

(b)Stop-Transfer Notices. The Optionee agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate “stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.

(c)Rights of the Company. The Company shall not (i) record on its books the transfer of any Shares that have been sold or transferred in contravention of this Exercise Notice or (ii) treat as the owner of Shares, or otherwise to accord voting, dividend or liquidation rights to, any transferee to whom Shares have been transferred in contravention of this Exercise Notice. Any Transfer of Shares not made in conformance with this Exercise Notice shall be null and void and shall not be recognized by the Company.

(d)Removal of Legends. If, in the opinion of the Company and its counsel, any legend placed on a certificate of shares representing Shares sold under this Exercise Notice is no longer required, the holder of the certificate shall be entitled to exchange the certificate for a certificate representing the same number of Shares but without such legend.

(e)Purchase Entirely for Own Account. If the Shares have not been registered under the Securities Act as of the Exercise Date, the Optionee hereby acknowledges and agrees that the Optionee is purchasing the Shares as an investment for the Optionee’s own

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account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that the Optionee has no present intention of selling, granting any participation in, or otherwise distributing the same. The Optionee does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to any of the Shares.

(f)Reliance Upon Optionee’s Representations. The Optionee understands that the Shares are not registered under the Securities Act on the ground that the issuance of Shares hereunder is exempt from registration under the Securities Act, and that the Company’s reliance on such exemption is predicated on the Optionee’s representations set forth herein.

(g)Restricted Securities. The Optionee understands that the Shares may not be sold, transferred, or otherwise disposed of without registration under the Securities Act or an exemption therefrom, and that in the absence of an effective registration statement covering the Shares or an available exemption from registration under the Securities Act, the Shares must be held indefinitely. In particular, the Optionee is aware that the Shares may not be sold pursuant to Rule 144 promulgated under the Securities Act unless all of the conditions of that Rule are met. Among the conditions for use of Rule 144 may be the availability of current information to the public about the Company. The Optionee understands that such information is not now available and the Company has no present plans to make such information available.

11.Successors and Assigns. The Company may assign any of its rights under this Exercise Notice to single or multiple assignees, and the terms and conditions of this Exercise Notice shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, the terms and conditions of this Exercise Notice shall be binding upon the Optionee and his or her heirs, executors, administrators, successors and assigns.

12.Interpretation. Any dispute regarding the interpretation of this Exercise Notice shall be submitted by the Optionee or by the Company forthwith to the Administrator, which shall review such dispute at its next regular meeting. The resolution of such a dispute by the Administrator shall be final and binding on all parties.

13.Governing Law. This Exercise Notice is governed by the laws of the State of Texas applicable to contracts executed in and to be performed in that State.

14.Entire Agreement. The Notice, the Option Agreement and the Plan are incorporated herein by reference. This Exercise Notice, the Notice, the Option Agreement, the Plan and the Investment Representation Statement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing signed by the Company and the Optionee.

[SIGNATURES ON NEXT PAGE]

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IN WITNESS WHEREOF, this Exercise Notice is deemed made as of the date first set forth above.

Submitted by:	Accepted by:
OPTIONEE	CBFH, INC.
Signature	By
Print Name	Title
Address:
	Date Received

EXHIBIT B

CBFH, INC.

2014 STOCK OPTION PLAN

STOCK OPTION AWARD AGREEMENT

INVESTMENT REPRESENTATION STATEMENT

OPTIONEE:
COMPANY:	CBFH, INC.
SECURITIES:	COMMON STOCK
AMOUNT:
DATE:

In connection with the purchase of the above-listed Securities, the Optionee represents to the Company the following:

(a)The Optionee hereby acknowledges that the Optionee is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities. The Optionee is acquiring these Securities for investment for the Optionee’s own account only and not with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”).

(b)The Optionee hereby acknowledges and understands that the Securities constitute “restricted securities” under the Securities Act and have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of the Optionee’s investment intent as expressed herein. In this connection, the Optionee understands that, in the view of the Securities and Exchange Commission, the statutory basis for such exemption may be unavailable if the Optionee’s representation was predicated solely upon a present intention to hold these Securities for the minimum capital gains period specified under tax statutes, for a deferred sale, for or until an increase or decrease in the market price of the Securities, or for a period of one year or any other fixed period in the future. The Optionee further understands that the Securities must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. The Optionee further acknowledges and understands that the Company is under no obligation to register the Securities. The Optionee understands that the certificate evidencing the Securities will be imprinted with a legend that prohibits the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel satisfactory to the Company, and with any other legend required under applicable state securities laws.

(c)The Optionee hereby acknowledges that the Optionee is familiar with the provisions of Rule 701 and Rule 144, each promulgated under the Securities Act, which, in substance, permit limited public resale of “restricted securities” acquired, directly or indirectly from the issuer thereof, in a non-public offering subject to the satisfaction of certain conditions.

Rule 701 provides that if the issuer qualifies under Rule 701 at the time of the grant of the option to the Optionee, the exercise will be exempt from registration under the Securities Act. In the event the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), ninety (90) days thereafter (or such longer period as any market stand-off agreement may require) the Securities exempt under Rule 701 may be resold, subject to the satisfaction of certain of the conditions specified by Rule 144, including: (1) the resale being made through a broker in an unsolicited “broker’s transaction” or in transactions directly with a market maker (as this term is defined under the Exchange Act); and, in the case of an affiliate, (2) the availability of certain public information about the Company, (3) the amount of Securities being sold during any three month period not exceeding the limitations specified in Rule 144(e), and (4) the timely filing of a Form 144, if applicable.

In the event that the Company does not qualify under Rule 701 at the time of grant of the Option, then the Securities may be resold in certain limited circumstances subject to the provisions of Rule 144, which requires the resale to occur not less than one year after the later of the date the Securities were sold by the Company or the date the Securities were sold by an affiliate of the Company, within the meaning of Rule 144; and, in the case of acquisition of the Securities by an affiliate, or by a non-affiliate who subsequently holds the Securities less than two years, the satisfaction of the conditions set forth in sections (1), (2), (3) and (4) of the paragraph immediately above.

(d)The Optionee further understands that in the event all of the applicable requirements of Rule 701 or 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rules 144 and 701 are not exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and otherwise than pursuant to Rules 144 or 701 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk. The Optionee understands that no assurances can be given that any such other registration exemption will be available in such event.

Signature of the Optionee:

Date:

EXHIBIT C

CBFH, INC.

2014 STOCK OPTION PLAN

STOCK OPTION AWARD AGREEMENT

IRREVOCABLE PROXY AND POWER OF ATTORNEY

The undersigned (the “Optionee”) does hereby constitute and appoint the Chairperson of the Board of Directors (the “Chairperson”) of CBFH, Inc., a Texas corporation (the “Company”) and/or any other person designated by the Board of Directors (the “Board”) of the Company from time to time (collectively, the “Proxy”), as the Optionee’s true and lawful proxy and attorney-in-fact, with full power of substitution, for and in the Optionee’s name, place, and stead, to vote in accordance with the majority of Board all of the shares of common stock of the Company, now held or hereafter acquired or held by the Optionee pursuant to the CBFH, Inc. Stock Option Award Agreement (the “Option Agreement”) between the Company and the Optionee (such shares being the “Shares”), granting the Proxy complete and unlimited discretionary authority to act on the Optionee’s behalf, and appoint the Proxy as the Optionee’s agent, with respect to any matter whatsoever related to the Company (including but not limited to voting of shares as shareholders, designation of directors, executing any waivers, consents, amendments and agreements, etc.), giving the Proxy the most extended power permitted under applicable laws, and does hereby make, constitute and appoint the Proxy as the Optionee’s true and lawful proxy to sign, execute, certify, acknowledge, deliver, file and record in all necessary or appropriate places such agreements, instruments or documents as may be necessary or advisable hereunder or under the laws of any applicable jurisdiction. The Optionee further authorizes the Proxy to take any further action which the Proxy shall consider necessary or advisable in connection with any of the foregoing, hereby giving the Proxy full power and authority to do and perform each and every act or thing whatsoever requisite or advisable to be done in and about the foregoing as fully as the Optionee might or could do if personally present, and hereby ratifying and confirming all that the Proxy shall lawfully do or cause to be done by virtue hereof.

Without limiting the generality of the aforesaid, and for the avoidance of doubt, the Optionee hereby grants the Proxy full right and authority, in the name of the Optionee, to take, at the Proxy’s sole discretion, all the aforesaid actions also in connection with the Initial Public Offering of the Company’s securities and/or a Change in Control of the Company (both terms as defined in the Option Agreement). Without derogating from the above, the Optionee hereby grants the Proxy full right and authority, in the name of the Optionee, to sign, execute, deliver, file and/or fill in, in any and all necessary or appropriate places, any share assignments, share certificates, and any other applicable documentation required in connection with the transfer, exchange, sale or disposition of the Shares in connection with such merger, Change in Control or Initial Public Offering.

This Proxy: (i) is made and executed in furtherance of the grant by the Company to the Optionee of restricted shares of common stock pursuant to the Option Agreement and is a condition to such grant by the Company to the Optionee; (ii) is given by the undersigned in consideration of the foregoing grant by the Company and the undersigned’s engagement by the Company as an employee to the Company; (iii) is a special proxy and power of attorney coupled with an interest and is irrevocable; (iv) shall survive the bankruptcy, death, adjudication of

incompetence or insanity or dissolution of the Optionee and its transferees; and (v) shall survive the transfer of the Shares, until duly replaced by a similar proxy executed by the transferee. This Proxy replaces any proxy previously granted by the Optionee in connection with the Shares, if any.

This Proxy is intended to be effective until, and shall terminate upon, the consummation by the Company of an Initial Public Offering of its common stock or a Change in Control. This Proxy is governed by and shall be construed in accordance with the laws of the State of Texas.

OPTIONEE:

Signature:

Print Name:

Date:

EXHIBIT D — 2014 PLAN NEW AWARDS

CBFH, INC.

2014 STOCK OPTION PLAN

STOCK OPTION AWARD AGREEMENT

CONFIDENTIALITY AND NON-SOLICITATION AGREEMENT

As a condition of participation in the 2014 Stock Option Plan (the “Plan”) of CBFH, Inc., a Texas corporation, (together with its subsidiaries, affiliates, successors and assigns, including, without limitation, CommunityBank of Texas N.A., all of which are hereinafter collectively referred to as the “Company”), by the employee of the Company, whose name and address appear below (“Employee”), and in consideration of the Company’s agreement to provide Employee with access to the Company’s Confidential Information and Trade Secrets (as defined below), and its agreement to grant to Employee stock options in accordance with the Plan, Employee and the Company enter into this Confidentiality and Non-Solicitation Agreement (the “Agreement”), effective as of the date signed by Employee below.

1.Company’s Agreement. During the term of Employee’s employment with the Company, the Company agrees to provide to Employee: (i) with access to and the opportunity to become familiar with its Confidential Information and Trade Secrets (as defined below), which may be written, verbal or recorded by electronic, magnetic or other methods, whether or not expressly identified as “Confidential” by Company; (ii) the opportunity to develop relationships with its Customers (as defined below), their agents, employees and representatives; (iii) specialized training regarding the Company and the methods in which it conducts the Company’s Business (as defined below); and (iv) the opportunity to participate in the Plan and acquire stock options and/or stock in and to the Company.

2.Confidential Information and Trade Secrets. “Confidential Information and Trade Secrets” of the Company includes, but is not limited to, the following written, electronic, oral and visual information and materials:

(i)All non-public financial information of any kind pertaining to the Company, including, without limitation, information about the revenues, profit margins, profitability, pricing, income and expenses of the Company or any of its products or lines of business;

(ii)Lists of, and all information about, and all communications received from, sent to or exchanged between the Company and any person or entity: (i) which has made a deposit with or obtained a loan or other extension of credit from, the Company, or to which the Company has provided any of the banking products or services which comprise any part of the Company’s Business (as defined below); or (ii) from which the Company has obtained financial or other business information in connection with a proposal or request for the Company to provide a loan, extension of credit or other banking products or services to (all of which are hereinafter collectively referred to as “Customers” and which reference includes any parent, subsidiary or affiliate of any Customer);

(iii)All Customer contact information, which includes information about the identity and location of individuals with decision-making authority at the Customer and the particular preferences, needs or requirements of the Customer, or such individual, with respect to any of the products or services which comprise any part of the Company’s Business, and all information about the particular needs or requirements of a Customer based on its geographical, economic or other factors;

(iv)Financial or personal information or any kind about Customers, including deposit, loan and transaction information or histories, and information about the costs and expenses which the Company incurs to provide products or services to its Customers, or its profit margins on any Customer’s deposits or loans;

(v)The Company’s procedures, forms, methods, and systems for marketing to Customers and potential customers including all of its customer development techniques and procedures, including training and other internal manuals, forms and documents;

(vi)All of the Company’s business, expansion, marketing, development, financial or budgeting plans, strategies, forecasts or proposals;

(vii)Technical information about the Company, including all non-public information regarding the configuration or contents of any of the Company’s products or services, or any of its hardware, equipment, software, systems or other processes, or those of any of its Customers; and

(viii)Employee lists, phone numbers and addresses, pay rates, benefits and compensation packages, training programs and manuals, and other confidential information regarding the Company’s personnel.

(b)“Company’s Business” shall mean providing banking and financial services, including accepting, maintaining and servicing deposit accounts, making loans and other extensions of credit, or entering into financing agreements of any kind.

(c)Employee acknowledges that all notes, data, forms, reference and training materials, leads, memoranda, computer programs, computer print-outs, disks and the information contained in any computer, cell phone, IPad or other electronic communication or data storage device, and any other records which contain, reflect or describe any Confidential Information and Trade Secrets, belong exclusively to the Company. Upon the termination of Employee’s employment with the Company, Employee shall promptly return such materials and all copies thereof in Employee’s possession to the Company, regardless of the cause of the termination of Employee’s employment with the Company.

(d)During Employee’s employment with the Company and thereafter, Employee will not: (i) copy, publish, convey, transfer, disclose nor use, directly or indirectly, for Employee’s own benefit or for the benefit of any other person or entity (except Company) any Confidential Information and Trade Secrets; (ii) remove, transfer or download any Confidential Information and Trade Secrets other than in compliance with the Company’s policies, procedures or rules for remote access to, or the printing and use, its Confidential Information and Trade Secrets. Employee will abide by all rules, guidelines, policies and procedures relating to

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Confidential Information and Trade Secrets implemented and/or amended from time to time by the Company.

(e)Future Information. The Company and Employee agree that Confidential Information and Trade Secrets includes current, updated and future data, information, reports, evaluations and analyses of the Company, its financial performance and results, or its employees, including their compensation, performance or evaluation, as well as correspondence, proposals, contracts and other communications with, or financial, sales or other information about, the Company’s Customers, and includes (i) those which are provided to Employee after the date hereof, (ii) those which Employee creates, in whole or in part, (iii) those to which, or for which, Employee provides input or information; and (iv) those which Employee uses for the purpose of performing Employee’s duties for the Company or making decisions relating to the Company’s Business, the Company’s employees or its Customers or their employees

3.Employee Confidentiality Obligations. Employee agrees to keep all Confidential Information and Trade Secrets confidential and will not disclose any such Confidential Information and Trade Secrets, directly or indirectly, to any third party without the prior express written consent of the Company. Employee also agrees not to use such Confidential Information and Trade Secrets in any way, for the benefit of Employee or any other person or entity, other than the Company, either during the term of this Agreement or at any time thereafter, except as required in the course of employment with the Company.

4.Return of Documents, Equipment, Etc. Immediately upon the termination of Employee’s employment with the Company or whenever requested by the Company, Employee shall immediately deliver to the Company’s senior human resources officer all property of the Company in Employee’s possession or under Employee’s control, including but not limited to all items listed above and all other records, files, lists, supplies, and personal property of the Company, including, without limitation, any Confidential Information and Trade Secrets stored in electronic fashion on any cell phone, IPad or other electronic communication or data storage device.

5.Confidential Data of Customers of Company. In the course of performing duties under this Agreement, Employee will have access to and be handling substantial information concerning Customers of the Company. All such information constitutes Confidential Information and Trade Secrets and shall not be disclosed, directly or indirectly, to any person or entity prior to termination of this Agreement or thereafter without the prior written consent of the Company.

6.Inventions, Patents, and Copyright Works. Employee recognizes, acknowledges, and agrees that the Company is the owner of certain inventions (whether patentable or not), discoveries, improvements, designs, ideas (whether or not shown or described in writing or reduced to practice) scientific and technical information, data and know-how of any nature including, and in addition to, any Confidential Information and Trade Secrets, and certain trademarks, trade names, domain names, and copyrightable works including, but limited to, literary works (including all written material), books, brochures, catalogs, manuals, training materials, directories, compilations of information, compilations of inspection or testing

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procedures, computer programs, software (object and source code), protocols, system architectures, advertisements, artistic and graphic works (including designs, graphs, drawings, blueprints, and other works), recordings, models, photographs, slides, motion pictures, audio-visual works, and the like, regardless of the form or manner in which documented or recorded (collectively, “Intellectual Property”). Further, Employee agrees as follows:

(a)Keep Records. Employee agrees to keep and maintain adequate and current written records of all Intellectual Property made by Employee (solely or jointly with others) during the term of employment with the Company. The records will be in the form of notes, sketches, drawings and any other format that may be specified by the Company. The records will be available to and remain the sole property of the Company at all times.

(b)Notification of the Company. Employee agrees to promptly disclose to the Company all Intellectual Property and other proprietary information which Employee may author, create, make, conceive, or develop, either solely or jointly with others, whether inside or outside normal working hours or on or off Company premises, during the term of employment with the Company.

(c)Transfer of Rights. Employee agrees that all Intellectual Property that Employee develops (in whole or in part, either alone or jointly with others) shall be the sole property of the Company and its assigns, and the Company and its assigns shall be the sole owner of all patents, copyrights, mask-work rights, and registrations and other rights in connection therewith. Employee acknowledges that all original works of authorship that are made by Employee (solely or jointly with others) within the scope of and during the period of employment with the Company shall be considered “works made for hire” under applicable copyright law, to the extent possible. Employee agrees to and does hereby assign, grant, and convey to the Company, its successors and assigns, Employee’s entire right, title, and interest in and to all Intellectual Property and other proprietary rights and information which Employee may author, create, make, receive, or develop, either solely or jointly with others, whether inside or outside normal working hours or on or off Company premises, during the term of employment with the Company. To perfect the Company’s ownership of such Intellectual Property, Employee hereby assigns to the Company any rights that Employee may have or acquire in such Intellectual Property, including the right to modify such Intellectual Property, and otherwise waives and/or releases all rights of restraint and moral rights in the Intellectual Property.

(d)Assistance in Preparation of Applications. As to all such Intellectual Property, Employee further agrees to assist the Company in every proper way (but at the Company’s expense) to obtain and from time to time enforce patents, copyrights, trade secrets, or other intellectual property or propriety rights, mask-work rights or other rights in such Intellectual Property in any and all countries, and Employee will execute all documents for use in applying for and obtaining such rights and enforcing them as the Company may desire, together with any assignments of them to the Company or persons designated by the Company. If the Company is unable for any reason whatsoever to secure Employee’s signature to any lawful and necessary document required to apply for or execute any application with respect to such Intellectual Property (including renewals, extensions, continuations, divisions or continuations in whole or in part thereof), Employee hereby irrevocably designates and appoints the Company and its duly authorized officers and agents, as Employee’s agents and attorneys-in-fact to act for

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and in Employee’s behalf and to execute and file any such application and to do all other lawfully permitted acts to further the prosecution and issuance of patents, copyrights, trade secrets or other intellectual property or propriety rights, mask work rights or other rights thereon, with the same legal force and effect as if executed by Employee.

7.Non-Solicitation of Customers. Employee hereby acknowledges and recognizes that, throughout Employee’s employment with the Company, the Company agrees to give Employee access to its Confidential Information and Trade Secrets concerning Company’s Business and its employees, Customers and employees, agents and representatives of Customers. Company agrees to provide this information to Employee in order to allow Employee to perform Employee’s duties under this Agreement, and to develop relationships with customers, customer representatives, suppliers and supplier representatives of the Company.

(a)The Company agrees to provide, and to continue to provide, Employee with both specialized knowledge and education in the Company’s Business, in order to allow Employee to perform Employee’s duties in an efficient, proper and effective manner. Such knowledge and education may consist of verbal instructions and information, the furnishing of written materials, consultation and counseling, sales, staff and employee meetings, training sessions and seminars, in addition to formal or informal information and orientation methodologies and procedures. Employee will have access to certain of the Company’s transactional histories, and the details of prior purchases, sales, trades or exchanges, in order that Employee can learn the Company’s Business and/or improve Employee’s skills, experience and knowledge.

(b)In consideration of the Company’s agreements as contained herein, Employee agrees that during the term of Employee’s employment with the Company and for a period of one (1) year after the Employee’s employment with the Company terminates (the “Restricted Period”), regardless of whether the termination occurs with or without cause and regardless of who terminates this Agreement, Employee will not directly or indirectly, as an employee, officer, director, shareholder, proprietor, agent, partner, recruiter, consultant, independent contractor, lender, investor or in any other individual or representative capacity engage in any of the Restricted Activities within the Restricted Area.

(c)“Restricted Activities” means and includes the following:

(i)Recruiting, hiring, and/or attempting to recruit or hire, directly or by assisting others, any other employee, temporary or permanent, contract, part time or full time of the Company. For purposes of this covenant “any other employee” shall refer to employees who provide services to the Company and who are still actively employed by the Company at the time of the attempted recruiting or hiring, or were so employed at any time within six (6) months prior to the time of such attempted recruiting or hiring; and

(ii)Directly or indirectly, on behalf of Employee or in any capacity on behalf of any other person or entity: (i) calling upon, communicating with or soliciting, for the purpose of selling or marketing any products or services which comprise any part of the Company’s Business; (ii) causing, soliciting or requesting that any Customer terminate or reduce their deposit, banking or other relationship with the Company; or (iii) entering into any contract

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or agreement or providing any products or services which comprise any part of the Company’s Business to or for, or accepting any such business from, any of the following Customers, including any of their employees, agents or representatives (all of which are hereinafter collectively referred to as the “Restricted Customers”):

(1)Any Customer which, during Employee’s employment by the Company (i) was assigned to Employee; (ii) Employee provided loan, banking, deposit or other services to; or (iii) Employee communicated with in any way on behalf of the Company.

(2)Any Customer which employees of the Company who were being supervised, managed or directed by Employee, called upon, or solicited, or from whom deposits were received or loans or other extensions of credit were made or to whom banking services of any kind were made or offered.

(3)Any Customer which Employee learned about, or acquired information or documents about, or was exposed to Confidential Information and Trade Secrets concerning as a result of Employee’s employment by the Company, including attendance at meetings, accessing databases or communicating with other employees of the Company.

(4)Notwithstanding the foregoing, “Restricted Customers” shall only include those Customers which (i) had a deposit, loan or other relationship with the Company within the one (1) year period prior to the termination of Employee’s employment and were still a Customer at the time of the Employee’s termination of employment or (ii) applied for or provided information to the Company in connection with a request for a deposit, loan, extension of credit or other business relationship within the three (3) month period prior to the termination of Employee’s employment.

(d)“Restricted Area” shall mean the market areas in which the Company has conducted, or hereafter conducts, any part of the Company’s Business and shall mean and include specifically:

(1)For the Company’s branch banks located in Jefferson County, the Restricted Area shall mean Jefferson County together with Chambers, Hardin, Jasper, Liberty, Newton, Orange, and Tyler Counties;

(2)For the Company’s branch banks located in Harris County, the Restricted Area shall mean Harris County together with Brazoria, Fort Bend, Galveston, Montgomery and Waller Counties;

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(3)Any other county in Texas, or parish in Louisiana, in which the Company hereafter opens or operates a branch bank or other banking facility, and each county which adjoins such county; and

(4)Each plant, office, facility or other location owned, leased or used by any of the Restricted Customers.

(e)This Agreement prohibits Employee from performing any of the Restricted Activities within the Restricted Area and from initiating communications of any kind from outside the Restricted Area into any part of the Restricted Area.

(f)The Company and Employee acknowledge that the provisions contained in this Section 7 shall not prevent Employee or Employee’s Affiliates from owning solely as an investment, directly or indirectly, securities of any publicly traded corporation engaged in the Company’s Business if Employee and Employee’s Affiliates do not, directly or indirectly, beneficially own in the aggregate more than 5% of all classes of outstanding equity securities of such entity.

(g)Employee and the Company agree that the limitations as to time and scope of activity to be restrained are reasonable and do not impose a greater restraint on Employee than is necessary to protect the property rights and other business interests of Company.

8.Extraordinary Remedies and Attorneys’ Fees.

(a)The Company and Employee agree that any breach by Employee of any of the provisions or covenants contained in the Agreement would cause irreparable harm and damage to the Company, in an amount that would be difficult to quantify, measure, or ascertain. Therefore, in the event of a breach of this Agreement by Employee, the Company shall be entitled to relief through restraining order, injunction, and all other available remedies, including claims for monetary damages incurred because of such breach. These remedies may be pursued concurrently and in any order, and the pursuit of any of these remedies shall not be deemed to limit the other remedies available to the Company in law or in equity. If any action at law or in equity, including an action for declaratory or injunctive relief, is brought to enforce or interpret the provisions of this Agreement, the prevailing party shall be entitled to recover costs of court and reasonable attorneys’ fees from the other party or parties to such action, which fees may be set by the court in the trial of such action or may be enforced in a separate action brought for that purpose, and which fees shall be in addition to any other relief that may be awarded.

(b)Employee agrees and stipulates that in any action or claim brought by Employee or in any action or claim brought against Employee involving the provisions of this Agreement, Employee hereby expressly waives any claim or defense that the non-solicitation and non-disclosure covenants contained in this Agreement are unenforceable, void or voidable, for any reason, including, but not limited to, fraud, misrepresentation, illegality, unenforceable restraint of trade, failure of consideration, illusory contract, mistake, or any other substantive legal defense.

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(c)In the event Employee engages in conduct in violation of the covenants in this Agreement the applicable restricted period shall be extended for a period of time equal to the time in which Employee engaged in activity prohibited by this Agreement.

(d)If any part of this Agreement is adjudged by a court of competent jurisdiction or other tribunal asked to enforce it to exceed any lawfully permissible or reasonable limitations as to time, scope, geographic area or other aspects, then, in addition to all rights and remedies provided by applicable law, the parties agree that: (i) this Agreement shall be reformed and modified to extend only to the maximum time, scope, geographic area or other limitations permitted by applicable law; (ii) that such reformation may be made in and at any stage of, any legal proceeding, including, without limitation, at, or prior to the entry or enforcement of a temporary restraining order, temporary injunction or other ancillary proceeding; (iii) that the court or other tribunal shall have the full power and authority to so reform this Agreement at any such proceeding, and (iv) if so reformed, such reformation shall automatically relate back to, and be effective as of, the original date of execution of this Agreement, and such Agreement, as reformed, may be enforced by such court, arbitrator or other tribunal by entry of a temporary restraining order, temporary injunction or other equitable or ancillary order.

9.Survival of Provisions and Covenants. Each and every provision or covenant contained in this contract shall survive the termination of this Agreement as expressly provided herein, and shall constitute an independent agreement between Employee and the Company. Further, the existence of any claim by Employee against the Company shall not constitute a defense to the enforcement of its rights by the Company.

10.Severability. It is the intent and agreement of the parties to this Agreement that, in case any one or more of the provisions of this Agreement shall, for any reason, be held to be invalid, illegal or unenforceable, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. Notwithstanding the foregoing, any provision of this Agreement that is held to be invalid, illegal or unenforceable shall be reformed to the minimum extent possible under the terms of this Agreement to comply with applicable laws then in effect.

11.Assignment. This Agreement is binding upon and shall inure to the benefit of the parties hereto, together with their respective executors, administrators, successors, personal representatives, heirs, and assigns. Notwithstanding the foregoing, the rights, duties and benefits to Employee hereunder are personal to Employee, and no such right or benefit may be assigned by it. The Company shall have the right to assign or transfer this Agreement to its successors or assigns. The terms “successors” and “assigns” shall include any person, corporation, partnership or other entity that buys all or substantially all of Company’s assets or all of its stock, or with which Company merges or consolidates. Any purported assignment of this Agreement, other than as provided above, shall be void.

12.Previously Received Information. Employee hereby represents to the Company that Employee is under no obligation or agreement that would prevent Employee from becoming an employee of the Company or carrying out the duties of Employee’s proposed position of employment with the Company.

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13.Governing Law and Venue. This Agreement shall be governed by, and construed in accordance with, the procedural and substantive laws of the State of Texas. All amounts payable under this Agreement and all obligations performable under this Agreement shall be payable and performable at the offices of the Company in Beaumont, Jefferson County, Texas. The Company and Employee irrevocably and unconditionally consent to submit to the exclusive jurisdiction of the state or federal courts located in Jefferson County, Texas as the sole venue and location for any actions, suits, or proceedings arising out of or relating to any aspect of this Agreement and all issues arising out of or relating to the employment relationship between the Company and Employee.

14.Employee Acknowledgement. Employee recognizes and acknowledges that Employee has freely entered into this Agreement for the full consideration expressed herein, the sufficiency and receipt of which Employee hereby acknowledges, and that Employee has had the opportunity to consult with counsel of Employee’s choice with full knowledge and careful consideration of the consequences and meaning of execution of this Agreement.

15.Prior Agreements. To the extent that Employee has previously signed or otherwise entered into any agreements (the “Prior Agreements”) with the Company or any of its predecessors, that contain non-disclosure, non-solicitation or other post-employment obligations, the Prior Agreements are modified and amended so as to be consistent with the terms of this Agreement. Employee hereby acknowledges receipt of all consideration described in this Agreement and all the Prior Agreements and ratifies and affirms such agreements, which are renewed, extended and modified as provided in this Agreement.

16.Amendments. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, will be effective unless in writing signed by Employee and the Chief Executive Officer of the Company. Any subsequent change or changes in Employee’s duties, salary or compensation will not affect the validity or scope of this Agreement.

17.Agreement Ancillary to Other Agreements. This Agreement is ancillary to and part of other agreements between the Company and Employee, including the Company’s agreements to: (i) disclose, and to continue to disclose its Confidential Information and Trade Secrets to Employee; (ii) provide initial and continued training, education and development to Employee; (iii) provide Employee with Confidential Information and Trade Secrets about, and the opportunity to develop relationships with, the Company’s employees, Customers and its Customer’s employees and agents and (iv) to grant to Employee stock options and the right to acquire an ownership interest in and to the Company.

18.“At Will” and Termination. This Agreement does not alter in any way the at-will nature of employment between Employee and the Company, which may be terminated by the Company or by Employee with or without cause at any time without notice.

19.Enforceability. This Agreement shall be enforceable by the Company, and any of its successors, assigns, affiliates, subsidiaries, parent or related corporations or entities, including any person or entity to which the Company sells, transfers or assigns all or any part of its assets, or any entity to, in or with which the Company may hereafter enter into a merger

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transaction of any kind (all of which are hereinafter referred to as Successors). Anything herein to the contrary notwithstanding, Employee’s employment by any Successor shall be deemed to be a continuation of Employee’s employment hereunder, Employee’s employment shall be deemed not to have terminated, and none of Employee’s post-employment obligations shall begin until Employee’s employment with such Successor terminates. Without limiting the generality of the foregoing, it is understood and agreed that this Agreement shall inure to the benefit of any Successor, and the term “Company” as used herein shall mean and include any Successor. Employee shall have no right to transfer or assign Employee’s rights or obligations hereunder.

20.WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE COMPANY AND EMPLOYEE EACH HEREBY IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF EITHER THE COMPANY OR EMPLOYEE IN THE NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT THEREOF.

[SIGNATURES ON NEXT PAGE]

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BY SIGNING BELOW, EMPLOYEE REPRESENTS THAT EMPLOYEE HAS READ THIS AGREEMENT CAREFULLY AND UNDERSTANDS AND AGREES TO ITS TERMS, INCLUDING THOSE LIMITING EMPLOYEE’S RIGHTS TO SOLICIT CUSTOMERS OR EMPLOYEES OF THE COMPANY.

AGREED AND ACCEPTED:	AGREED AND ACCEPTED:
CBFH, INC.	“EMPLOYEE”
By:
	Signature
Its:
	Print Name
Date:	Date:

EXHIBIT E

CBFH, INC

2014 STOCK OPTION PLAN

STOCK OPTION AWARD AGREEMENT

SPOUSAL CONSENT

I, the undersigned, hereby certify that:

1.I am the spouse of                                        .

2.Each of the undersigned and the undersigned’s spouse is a resident of                                        .

3.I have read the CBFH, Inc. 2014 Stock Option Plan (the “Plan”), the Notice, the Stock Option Award Agreement (the “Option Agreement”), and the Shareholders’ Agreement by and between CBFH, Inc. (the “Company”), and my spouse. I have had the opportunity to consult independent legal counsel regarding the contents of the Plan, the Notice, the Option Agreement and the Shareholders’ Agreement.

4.I understand the terms and conditions of the Plan, the Notice, the Option Agreement and the Shareholders’ Agreement.

5.I hereby consent to the terms of the Plan, the Notice, the Option Agreement and the Shareholders’ Agreement and to their application to and binding effect upon any community property or other interest I may have in the Option (it being understood that this Spousal Consent shall in no way be construed to create any such interest). I agree that I will take no action at any time to hinder the operation of the transactions contemplated in and by the Plan, the Notice, the Option Agreement and the Shareholders’ Agreement.

IN WITNESS WHEREOF, this Spousal Consent has been executed as of                           , 2014.

Name:
	Signature
	Print Name

EX-10.17

Exhibit 10.17

COMMUNITYBANK OF TEXAS, NA

EXECUTIVE DEFERRED COMPENSATION AGREEMENT

THIS-EXECUTIVE DEFERRED COMPENSATION AGREEMENT (this “Agreement”) is adopted this 30TH day of December, 2011, by and between COMMUNITYBANK OF TEXAS, NA. a nationally-chartered commercial bank located in Beaumont, Texas (the “Bank”), and J Pat Parsons (the “Executive”).

The purpose of this Agreement is to provide specified benefits to the Executive, a member of a select group of management or highly compensated employees who contribute materially to the continued growth, development, and future business success of the Bank. This Agreement shall be unfunded for tax purposes and for purposes of Title I of the Employee Retirement Income Security Act (“ERISA”).

Article 1

Definitions

Whenever used in this Agreement, the following words and phrases shall have the meanings specified:

1.1“Administrator” means the Board or a committee or person the Board appoints to perform the administrative duties outlined in this Agreement.

1.2“Bank Contribution” means the contribution to the Holdback Account as set forth in Article 3.

1.3“Beneficiary Designation Form” means the form established from time to time by the Administrator that the Executive completes, signs, and returns to the Administrator to designate one or more beneficiaries.

1.4“Beneficiary” means each person or entity, or the estate of the deceased Executive, entitled to any benefits upon the death of the Executive pursuant to Article 6.

1.5‘‘Board” means the Board of Directors of the Bank as from time to time constituted.

1.6“Bonus” means the amount of compensation determined according to the terms of the attached Exhibit A; provided however, that the Bank retains the discretion to reduce the amount of Bonus at any time prior to the Contribution Date if in its discretion it determines that a reduction is appropriate given the Bank’s financial performance. Each Plan Year after 2011 the Bank may modify Exhibit A by providing a new Exhibit A to the Executive on or before the fifteenth day of March of the each Plan Year.

1.7“Change in Control” means a change in the ownership or effective control of the Bank, or in the ownership of a substantial portion of the assets of the Bank, as such change is defined in Code Section 409A and the regulations thereunder.

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1.8“Code” means the Internal Revenue Code of 1986, as amended, and all regulations and guidance thereunder.

1.9“Contribution Date” means March 1 of each Plan Year, which is the date the Bank is deemed to have credited the deferred portion of the Bonus to the Executive’s Holdback Account.

1.10“Crediting Rate” means an annual rate set by the Board.

1.11“Disability” means a condition that (i) renders the Executive unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months, or (ii) is a medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months for which the Executive is receiving income replacement benefits for period of not less than three months under an accident and health plan covering employees of the Bank.

1.12“Effective Date” means January 1, 2011.

1.13“Holdback Account” means the Bank’s accounting of Bank Contributions, plus accrued interest. A separate Holdback Account shall be established for each Plan Year.

1.14“Plan Year” means each twelve (12) month period commencing on January 1 and ending on December 31 of each year.

1.15“Retirement”, means a Separation from Service after attainment of age sixty-two (62).

1.16“Sales Multiple” means (a) the amount received by the Bank (or the Bank’s shareholders) in exchange for substantially all of the Bank’s assets (or substantially all of the Bank stock) in a Change in Control divided by (b) the Bank’s tangible book value as of the last day of the preceding Plan Year, as calculated by the Bank’s accountants.

1.17“Separation from Service” means termination of the Executive’s employment with the Bank for reasons other than death. Whether a Separation from Service has occurred is determined in accordance with the requirements of Code Section 409A based on whether the facts and circumstances indicate that the Bank and Executive reasonably anticipated that no further services would be performed after a certain date or that the level of bona fide services the Executive would perform after such date (whether as an employee or as an independent contractor) would permanently decrease to no more than twenty percent (20%) of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding thirty-six (36) month period (or the frill period of services to the Bank if the Executive has been providing services to the Bank less than thirty-six (36) months).

1.18“Specified Employee” means an employee who at the time-of Separation from Service is

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a key employee of the Bank, if any stock of the Bank is publicly traded on an established securities market or otherwise. For purposes of this Agreement, an employee is a key employee if the employee meets the requirements of Code Section 416(i)(1)(A)(i), (ii), or (iii) (applied in accordance with the regulations thereunder and disregarding section 416(i)(5)) at any time during the twelve (12) month period ending on December 31 (the “identification period”). If the employee is a key employee during an identification period, the employee is treated as a key employee for purposes of this Agreement during the twelve (12) month period that begins on the first day of April following the close of the identification period.

1.19“Termination for Cause” means a Separation from Service for:

(a)Gross negligence or gross neglect of duties to the Bank;

(b)Conviction of a felony or of a gross misdemeanor involving moral turpitude in connection with the Executive’s employment with the Bank; or

(c)Fraud, disloyalty, dishonesty or willful violation of any law. or significant Bank policy committed in connection with the Executive’s employment and resulting in a material adverse effect on the Bank.

1.20“Unforeseeable Emergency” means a severe financial hardship to the Executive resulting from an illness or accident of the Executive that results in the Executive’s Disability and that qualifies as an “Unforeseeable emergency” under Code Section 409A and the regulations thereunder.

Article 2

Bank Contributions

Bonuses shall be earned for each Plan Year pursuant to the performance requirements of Exhibit A, which shall be set no later than March 1 of the each Plan Year. If the Exhibit A performance requirements are met and if the Executive is actively employed by the Bank on the Contribution Date of the following Plan Year, the Bank shall make a Bank Contribution to the Executive’s Holdback Account equal to the percentage of the Bonus payable through this Agreement, as determined by the Board no later than the preceding December 31st. The remaining portion of the Bonus shall be paid to the Executive between January 1 and March 15 of the year immediately following the Plan Year in which it was earned, provided however that for the Bonus relating to the 2011 Plan Year, the Executive must be actively employed on the payment date or the full Bonus will be forfeited (both the portion otherwise payable and the Bank Contribution for 2011).

Article 3

Creation of Accounts

3.1Establishing and Crediting Holdback Account. The Bank shall establish a Holdback Account on its books for each Plan Year in which a Bonus is earned and shall credit to the Holdback Account the following amounts:

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(a)on the Contribution Date, the Bank Contribution earned for the prior Plan Year; and

(b)on the last day of each month following the Contribution Date and prior to the distribution of any benefits, interest shall be credited on the Holdback Account at an annual rate equal to the Crediting Rate, compounded monthly.

3.2Accounting Devices Only. The Holdback Accounts are solely devices for measuring amounts to be paid under this Agreement and not a trust fund of any kind. Bank Contributions are not actual payments, but rather bookkeeping entries only.

Article 4

Distributions During Lifetime

4.1Holdback Account Vesting. On the third anniversary of each Contribution Date, the percentage of the Holdback Account for such Plan Year that the Executive qualifies for under the provisions of Exhibit A shall vest, provided that the Executive is actively employed by the Bank on such date and all other amounts in such Account shall be permanently forfeited. For the Holdback Account relating to 2011, payment of the vested portion of the Holdback Account will occur on the date of vesting and the Executive must be employed on such date to be entitled to payment.

4.2Normal Benefit. Except as provided in Section 4.3, upon the earlier of the seventh anniversary of the Contribution Date or the Executive’s Separation from Service, the Bank shall distribute to the Executive the benefit described in this Section.

4.2.1Amount of Benefit. The benefit under this Section 4.2 is the vested portion of the Holdback Account balances as of the date of distribution below. Upon Separation from Service due to Disability, Retirement or termination by the Bank (or its successor) after a Change in Control other than a Termination for Cause, the Executive will be 100% vested in his Holdback Accounts.

4.2.2Distribution of Benefit. Except for Executives who separate from service due to Disability, the Bank shall distribute the vested balance of each Holdback Account to the Executive in a lump sum on the 90th day following the earlier of (i) the seventh anniversary of the Contribution Date for such Holdback Account or (ii) the date of the Executive’s Separation from Service. If the Executive has a Separation from Service due to Disability, distribution shall be made in a lump sun on the 90th day following the date of such Separation from Service. Notwithstanding the above, for the Holdback Account for 2011, payment will be made on the 90th day following the third anniversary of the Contribution Date for the 2011 Bonus if the Executive is employed by the Bank on such date. Otherwise the 2011 Holdback Account balance will be forfeited notwithstanding any other provisions of the Agreement.

4.2.3One Time Executive Election. The Executive shall be permitted a one-time election to have his Holdback Accounts for all Plan Years beginning after the date

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of such election distributed in a lump sum on the 90th day following his Separation from Service; provided that such election is made prior to the first day of the first Plan Year that the election affects (i.e. relates to) is written, irrevocable, made in a manner acceptable to the Administrator and complies with Code Section 409A. No election is permitted for the 2011 Holdback Account.

4.3Change in Control Benefit. The following provisions will control how the benefit is calculated if the Executive is employed by the Bank immediately prior to the Change in Control.

4.3.1Amount of Benefit. The Holdback Account balance at the date of the Change of Control shall be multiplied by the Sales Multiple. Any amounts contributed after the date of the Change in Control to the Holdback Account and earnings thereon shall be computed under Section 3.1 of the Agreement.

4.3.2Parachute Payments. Notwithstanding any provision of this Agreement to the contrary, and to the extent allowed by Code Section 409A, if any benefit payment under this Section 4.2 would be treated as an “excess parachute payment” under Code Section 280G, the Bank shall reduce such benefit payment to the extent necessary to avoid treating such benefit payment as an excess parachute payment.

4.4Hardship Distribution. If an Unforeseeable Emergency occurs, the Executive may petition the Board to receive a distribution (a “Hardship Distribution”). The Board in its sole discretion may grant such petition. If granted, the Executive shall receive, within sixty (60) days, a distribution from the Agreement only to the extent deemed necessary by the Board to remedy the Unforeseeable Emergency, plus an amount necessary to pay taxes reasonably anticipated as a result of the distribution. In any event, the maximum amount which may be paid out pursuant to this Section 4.3 is the vested portion of the Holdback Account balances as of the day that the Executive petitioned the Board to receive a Hardship Distribution. Such a distribution shall reduce each vested Holdback Account balance pro rata.

4.5Restriction on Commencement of Distributions. Notwithstanding any provision of this Agreement to the contrary, if the Executive is considered a Specified Employee, the provisions of this Section 4.3 shall govern all distributions hereunder, including any under Article 5. If a benefit distribution which would otherwise be made to due to Separation from Service is limited because the Executive is a Specified Employee, then such distribution shall not be made during the first six (6) months following Separation from Service. Rather, the distribution shall be paid to the Executive during the first fifteen (15) days of the seventh month following Separation from Service. If the Executive dies during the postponement period prior to the payment of benefits, the amounts withheld pursuant to this Section shall be paid to the Executive’s Beneficiary 60 days after the Executive’s death.

4.6Distributions Upon Taxation of Amounts Deferred. If, pursuant to Code Section 409A,

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the Federal Insurance Contributions Act or other state, local or foreign tax, the Executive becomes subject to tax on the amounts deferred hereunder, then the Bank may make a limited distribution to the Executive in a manner that conforms to the requirements of Code Section 409A. Any such distribution will decrease the Holdback Account balance.

4.7Change in Form or Timing of Distributions. For distribution of benefits under this Article 4, the Executive and the Bank may amend this Agreement to delay the timing or change the form of distributions. Any such amendment:

(a)may not accelerate the time or schedule of any distribution, except as provided in Code Section 409A;

(b)must, for benefits distributable under Sections 4.1 and 4.2, delay the commencement of distributions for a minimum of five (5) years from the date the first distribution was originally scheduled to be made; and

(c)must take effect not less than twelve (12) months after the amendment is made.

Article 5

Distributions at Death

5.1Amount of Benefit. If the Executive dies prior to Separation from Service, the Bank shall distribute to the Beneficiary the greater of either (i) the Holdback Account balance determined as of the date of the Executive’s death, or (ii) an amount equal to the Executive’s annual base pay at the date of his death. This benefit shall be distributed in lieu of the benefit under Article 4.

5.2Distribution of Benefit. The Bank shall distribute the benefit to the Beneficiary in a lump sum on the fifteenth day of the fourth month following the Executive’s death. The Beneficiary must provide to the Bank a certified copy of the Executive’s death certificate or other proof of death acceptable to the Administrator prior to that date or no payment shall be made.

Article 6

Beneficiaries

6.1In General. The Executive shall have the right to designate a Beneficiary to receive any benefit distributions under this Agreement upon the death of the Executive. The Beneficiary designated under this Agreement may be the same as or different from the beneficiary designated under any other Bank plan in which the Executive participates.

6.2Designation. The Executive shall designate a Beneficiary by completing and signing the Beneficiary Designation Form and delivering it to the Administiator or its designated agent. If the Executive names someone other than the Executive’s spouse as a Beneficiary, the Administrator may, in its sole discretion, determine that spousal consent is required to be provided in a form designated by the Administrator, executed by the

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Executive’s spouse and returned to the Administrator. The Executive’s beneficiary designation shall be deemed automatically revoked if the Beneficiary predeceases the Executive or if the Executive names a spouse as Beneficiary and the marriage is subsequently dissolved. The Executive shall have the right to change a Beneficiary by completing, signing and otherwise complying with the terms of the Beneficiary Designation Form and the Administrator’s rules and procedures. Upon the acceptance by the Administrator of a new Beneficiary Designation Form, all Beneficiary designations previously filed shall be cancelled. The Administrator shall be entitled to rely on the last Beneficiary Designation Form filed by the Executive and accepted by the Administrator prior to the Executive’s death.

6.3Acknowledgment. No designation or change in designation of a Beneficiary shall be effective until acknowledged in writing by the Administrator or its designated agent.

6.4No Beneficiary Designation. If the Executive dies without a valid Beneficiary designation, or if all designated Beneficiaries predecease the Executive, then the Executive’s spouse shall be the designated Beneficiary. If the Executive has no surviving spouse, any benefit shall be paid to the personal representative of the Executive’s estate.

6.5Facility of Distribution. If the Administrator determines in its discretion that a benefit is to be distributed to a minor, to a person declared incompetent or to a person incapable of handling the disposition of that person’s property, the Administrator may direct distribution of such benefit to the guardian, legal representative or person having the care or custody of such minor, incompetent person or incapable person. The Administrator may require proof of incompetence, minority or guardianship as it may deem appropriate prior to distribution of the benefit. Any distribution of a benefit shall be a distribution for the account of the Executive and the Beneficiary, as the case may be, and shall completely discharge any liability under this Agreement for such distribution amount.

Article 7

General Limitations

7.1Termination for Cause. Notwithstanding any provision of this Agreement to the contrary, the Bank shall not distribute any benefit (and the Executive will forfeit all unpaid benefits) under this Agreement if the Executive’s employment with the Bank is terminated by the Bank or an applicable regulator due to a Termination for Cause.

7.2Removal. Notwithstanding any provision of this Agreement to the contrary, the Bank shall not distribute any benefit (and the Executive will forfeit all unpaid benefits) under this Agreement if the Executive is subject to a final removal or prohibition order issued by an appropriate federal banking agency pursuant to Section 8(e) of the Federal Deposit Insurance Act.

7.3Golden Parachute Indemnification Payments. Notwithstanding anything herein to the contrary, any payments made to the Executive pursuant to this Agreement, or otherwise,

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shall be subject to and conditioned upon compliance with 12 U.S.C. 1828 and FDIC Regulation 12 CFR Part 359, Golden Parachute Indemnification Payments and any other regulations or guidance promulgated thereunder.

Article 8

Administration of Agreement

8.1Administrator Duties. The Administrator shall administer this Agreement according to its express terms and shall also have the discretion and authority to (i) make, amend, interpret and enforce all rules and regulations for the administration of this Agreement and (ii) decide or resolve any and all questions, including interpretations of this Agreement, as may arise in connection with this Agreement to the extent the exercise of such discretion and authority does not conflict with Code Section 409A.

8.2Agents. In the administration of this Agreement, the Administrator may employ agents and delegate to them such administrative duties as the Administrator sees fit, including acting through a duly appointed representative, and may from time to time consult with counsel who may be counsel to the Bank.

8.3Binding Effect of Decisions. Any decision or action of the Administrator with respect to any question arising out of or in connection with the administration, interpretation or application of this Agreement and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in this Agreement.

8.4Indemnity of Administrator. The Bank shall indemnify and hold harmless the Administrator against any and all claims, losses, damages, expenses or liabilities arising from any action or failure to act with respect to this Agreement, except in the case of willful misconduct by the Administrator.

8.5Bank Information. The Bank shall supply full and timely information to the Administrator on all matters relating to the date and circumstances of the Executive’s death or Separation from Service, and such other pertinent information as the Administrator may reasonably require.

8.6Statement of Accounts. The Administrator shall provide to the Executive, within one hundred twenty (120) days after the end of each Plan Year, a statement setting forth the benefits to be distributed under this Agreement.

Article 9

Claims and Review Procedures

9.1Claims Procedure. An Executive or Beneficiary (“claimant”) who has not received benefits under this Agreement that he or she believes should be distributed shall make a claim for such benefits as follows:

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9.1.1Initiation — Written Claim. The claimant initiates a claim by submitting to the Administrator a written claim for the benefits. If such a claim relates to the contents of a notice received by the claimant, the claim must be made within sixty (60) days after such notice was received by the claimant. All other claims must be made within one hundred eighty (180) days of the date on which the event that caused the claim to arise occurred. The claim must state with particularity the determination desired by the claimant.

9.1.2Timing of Administrator Response. The Administrator shall respond to such claimant within ninety (90) days after receiving the claim. If the Administrator determines that special circumstances require additional time for processing the claim, the Administrator can extend the response period by an additional ninety (90) days by notifying the claimant in writing, prior to the end of the initial ninety (90) day period, that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Administrator expects to render its decision.

9.1.3Notice of Decision. If the Administrator denies part or all of the claim, the Administrator shall notify the claimant in writing of such denial. The Administrator shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth:

(a)The specific reasons for the denial;

(b)A reference to the specific provisions of this Agreement on which the denial is based;

(c)A description of any additional information or material necessary for the claimant to perfect the claim and an explanation of why it is needed;

(d)An explanation of this Agreement’s review procedures and the time limits applicable to such procedures; and

(e)A statement of the claimant’s right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination on review.

9.2Review Procedure. If the Administrator denies part or all of the claim, the claimant shall have the opportunity for a full and fair review by the Administrator of the denial as follows:

9.2.1Initiation — Written Request. To initiate the review, the claimant, within sixty (60) days after receiving the Administrator’s notice of denial, must file with the Administrator a written request for review.

9.2.2Additional Submissions — Information Access. The claimant shall then have the opportunity to submit written comments, documents, records and other information relating to the claim. The Administrator shall also provide the claimant, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable

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ERISA regulations) to the claimant’s claim for benefits.

9.2.3Considerations on Review. In considering the review, the Administrator shall take into account all materials and information the claimant submits relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.

9.2.4Timing of Administrator Response. The Administrator shall respond in writing to such claimant within sixty (60) days after receiving the request for review. If the Administrator determines that special circumstances require additional time for processing the claim, the Administrator can extend the response period by an additional sixty (60) days by notifying the claimant in writing, prior to the end of the initial sixty (60) day period, that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Administrator expects to render its decision.

9.2.5Notice of Decision. The Administrator shall notify the claimant in writing of its decision on review. The Administrator shall write the notification in a manner calculated to be understood by the claimant. A notification of denial shall set forth:

(a)The specific reasons for the denial;

(b)A reference to the specific provisions of this Agreement on which the denial is based;

(c)A statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the claimant’s claim for benefits; and

(d)A statement of the claimant’s right to bring a civil action under ERISA Section 502(a).

Article 10

Amendments and Termination

10.1Amendments. In general, this Agreement may be amended only by a written agreement signed by the Bank and the Executive. However, the Bank may unilaterally amend this Agreement to conform with written directives to the Bank from its auditors or banking regulators or to comply with legislative changes or tax law.

10.2Plan Termination Generally. This Agreement may be terminated only by a written agreement signed by the Bank and the Executive. Except as provided in Section 10.3, the termination of this Agreement shall not cause a distribution of benefits under this Agreement. Rather, upon such termination benefit distributions will be made at the earliest distribution event permitted under Article 4 or Article 5.

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10.3Plan Terminations Under Section 409A. Notwithstanding anything to the contrary in Section 10.2, if the Bank terminates this Agreement in the following circumstances:

(a)Within thirty (30) days before or twelve (12) months after a Change in Control, provided that all distributions are made no later than twelve (12) months following such termination of this Agreement and further provided that all the Bank’s arrangements which are substantially similar to this Agreement are terminated so the Executive and all participants in the similar arrangements are required to receive all amounts of compensation deferred under the terminated arrangements within twelve (12) months of such termination;

(b)Upon the Bank’s dissolution or with the approval of a bankruptcy court provided that the amounts deferred under this Agreement are included in the Executive’s gross income in the latest of (i) the calendar year in which this Agreement terminates; (ii) the calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or (iii) the first calendar year in which the distribution is administratively practical; or

(c)Upon the Bank’s termination of this and all other arrangements that would be aggregated with this Agreement pursuant to Treasury Regulations Section 1.409A-l(c) if the Executive participated in such arrangements (“Similar Arrangements”), provided that (i) the termination and liquidation does not occur proximate to a downturn in the financial health of the Bank, (ii) all termination distributions are made no earlier than twelve (12) months and no later than twenty-four (24) months following such termination, and (iii) the Bank does not adopt any new arrangement that would be a Similar Arrangement for a minimum of three (3) years following the date the Bank takes all necessary action to irrevocably terminate and liquidate the Agreement; the Bank may distribute the Holdback Account balance determined as of the date of the termination of this Agreement, to the Executive in a lump sum subject to the above terms.

Article 11

Miscellaneous

11.1Binding Effect. This Agreement shall bind the Executive and the Bank and their beneficiaries, survivors, executors, administrators, and transferees.

11.2No Guarantee of Employment. This Agreement is not a contract for employment. It does not give the Executive the right to remain as an employee of the Bank nor interfere with the Bank’s right to discharge the Executive. It does not require the Executive to remain an employee nor interfere with the Executive’s right to terminate employment at any time.

11.3Non-Transferability. Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached, or encumbered in any manner.

11.4Tax Withholding and Reporting. The Bank shall withhold any taxes that are required to be withheld from the benefits provided under this Agreement. The Executive

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acknowledges that the Bank’s sole liability regarding taxes is to forward any amounts withheld to the appropriate taxing authorities. The Bank shall satisfy all applicable reporting requirements.

11.5Applicable Law. This Agreement and all rights hereunder shall be governed by the laws of the State of Texas, except to the extent preempted by the laws of the United States of America.

11.6Unfunded Arrangement. The Executive and the Beneficiary are general unsecured creditors of the Bank for the distribution of benefits under this Agreement. The benefits represent the mere promise by the Bank to distribute such benefits. The rights to benefits are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors. Any insurance on the Executive’s life or other informal funding asset is a general asset of the Bank to which the Executive and Beneficiary have no preferred or secured claim.

11.7Reorganization. The Bank shall not merge or consolidate into or with another bank, or reorganize, or sell substantially all of its assets to another bank, firm or person unless such succeeding or continuing bank, firm or person agrees to assume and discharge the obligations of the Bank under this Agreement. Upon the occurrence of such an event, the term “Bank” as used in this Agreement shall be deemed to refer to the successor or survivor entity.

11.8Entire Agreement. This Agreement constitutes the entire agreement between the Bank and the Executive as to the subject matter hereof. No rights are granted to the Executive by virtue of this Agreement other than those specifically set forth herein.

11.9Interpretation. Wherever the fulfillment of the intent and purpose of this Agreement requires and the context will permit, the use of the masculine gender includes the feminine and use of the singular includes the plural.

11.10Alternative Action. In the event it shall become impossible for the Bank or the Administrator to perform any act required by this Agreement due to regulatory or other constraints, the Bank or Administrator may perform such alternative act as most nearly carries out the intent and purpose of this Agreement and is in the best interests of the Bank, provided that such alternative act does not violate Code Section 409A.

11.11Headings. Article and section headings are for convenient reference only and shall not control or affect the meaning or construction of any provision herein.

11.12Validity. If any provision of this Agreement shall be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Agreement shall be construed and enforced as if such illegal or invalid provision had never been included herein.

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11.13Notice. Any notice or filing required or permitted to be given to the Bank or Administrator under this Agreement shall be sufficient if in writing and hand-delivered or sent by registered or certified mail to the address below:

5999 Delaware St.

Beaumont, TX 77706

Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification.

Any notice or filing required or permitted to be given to the Executive under this Agreement shall be sufficient if in writing and hand-delivered or sent by mail to the last known address of the Executive.

11.14Deduction Limitation on Benefit Payments. If the Bank reasonably anticipates that the Bank’s deduction with respect to any distribution under this Agreement would be limited or eliminated by application of Code Section 162(m), then to the extent deemed necessary by the Bank to ensure that the entire amount of any distribution from this Agreement is deductible, the Bank may delay payment of any amount that would otherwise be distributed under this Agreement but only as permissible under Code Section 409A. The delayed amounts shall be distributed to the Executive (or the Beneficiary in the event of the Executive’s death) at the earliest date the Bank reasonably anticipates that the deduction of the payment of the amount will not be limited or eliminated by application of Code Section 162(m).

11.15409A Compliance. The Plan is intended to comply with the applicable requirements of Section 409A of the Code and regulations thereunder, and shall be administered in accordance with Section 409A and the regulations thereunder to the extent applicable. In the event that any provision of the Plan conflicts with the requirements of Section 409A and the regulations thereunder, or would cause the administration of the Plan to fail to satisfy such requirements, such provision shall be deemed null and void to the extent permitted under applicable law. In no event shall a Participant, directly or indirectly, designate the calendar year of payment, except as permitted by section 409A of the Code. All payments to be made upon a Separation from Service may only be made upon a “separation from service” within the meaning of Code Section 409A. Each Holdback Account payment right shall be treated as a right to a separate payment.

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IN WITNESS WHEREOF, the Executive and a duly authorized representative of the Bank have signed this Agreement.

EXECUTIVE	BANK
/s/ J Pat Parsons	By:	/s/ Donna Dillon
J Pat Parsons	Title:	EVP & CFO

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Exhibit A

Bonus Criteria

Beneficiary Designation Form

xNew Designation

oChange in Designation

I, J Pat Parsons, designate the following as Beneficiary under the Plan:

Primary:
Melody S. Parsons	100	%
		%
Contingent:
John Pat Parsons JR.	100	%
		%

Notes:

·Please PRINT CLEARLY or TYPE the names of the beneficiaries.

·To name a trust as Beneficiary, please provide the name of the trustee(s) and the exact name and date of the trust agreement.

·To name your estate as Beneficiary, please write “Estate of [your name]”.

·Be aware that none of the contingent beneficiaries will receive anything unless ALL of the primary beneficiaries predecease you.

I understand that I may change these beneficiary designations by delivering a new written designation to the Administrator, which shall be effective only upon receipt and acknowledgment by the Administrator prior to my death. I further understand that the designations will be automatically revoked if the Beneficiary predeceases me, or, if I have named my spouse as Beneficiary and our marriage is subsequently dissolved.

Name:		J. Pat Parsons
Signature:		/s/ J. Pat Parsons	Date:	12/30/11
Received by the Administrator this 31st day of January , 2012
By:	/s/ Donna Dillon
Title:	EVP & CFO

EX-10.18

Exhibit 10.18

COMMUNITYBANK OF TEXAS, NA

Acknowledgment Agreement

This AGREEMENT (this “Agreement”) is entered into effective as of January 1, 2015, by and between CommunityBank of Texas, NA (the “Bank”) and the below indicated key employee (the “Participant”), to acknowledge the following:

WHEREAS, the Participant participates in the CommunityBank of Texas, NA Executive Deferred Compensation Agreement, as amended from time to time (the “Deferred Compensation Agreement”);

WHEREAS, the Bank also sponsors an Incentive Pay Plan (the “Incentive Pay Plan”) for eligible key employees of the Bank;

WHEREAS, effective as of the close of December 31, 2014, the Bank desires to freeze the Participant’s active participation in the Deferred Compensation Agreement, although the Participant’s current balance in his or her Deferral Account and Holdback Account (as applicable) shall continue to be governed by the terms of such Deferred Compensation Agreement; and

WHEREAS, effective for performance periods beginning January 1, 2015, it is desired that the Participant be eligible to participate in the Incentive Pay Plan in accordance with its terms.

NOW, THEREFORE, the Bank and the Participant hereby agree and acknowledge the following:

1.Freeze Participation on a Going Forward Basis. Effective as of the close of December 31, 2014, the Deferred Compensation Agreement shall be frozen so that the Participant shall no longer actively participate therein. Notwithstanding the foregoing, and for purposes of clarity and avoidance of doubt, the Participant’s balance within his or her Deferral Account and/or Holdback Account (as applicable) under the Deferred Compensation Agreement shall continue in accordance with the terms of such Deferred Compensation Agreement, including, for example, any crediting of interest to such account or accounts and any payouts from such account or accounts.

2.Participation in the Incentive Pay Plan. Effective for performance periods beginning January 1, 2015, the Participant shall be eligible to participate in the Incentive Pay Plan in accordance with its terms.

3Entire Agreement, Counterparts, Governing Law. This Agreement constitutes the entire agreement between the Participant and the Bank with respect to the subject matter hereof and supersedes in its entirety all prior undertakings and agreements between the Participant and the Bank with respect to the subject matter hereof. This Agreement may be executed in one or

more counterparts. This Agreement and all disputes or controversies arising therefrom, shall be governed by, and construed with, the internal laws of the State of Texas.

[SIGNATURES ON NEXT PAGE]

IN WITNESS WHEREOF, the Participant and the Bank have executed this Agreement effective as provided herein.

PARTICIPANT:		COMMUNITYBANK OF TEXAS, NA:
Print Name:	J. Pat Parsons	By:	/s/ Donna Dillon
Sign Name:	/s/ J. Pat Parsons	Its:	EVP & CFO

EX-10.19

Exhibit 10.19

INDEMNIFICATION AGREEMENT

THIS INDEMNIFICATION AGREEMENT (“Agreement”) is made as of              , 20   by and between CBTX, Inc., a Texas corporation (the “Company”), and                                (“Indemnitee”).  This Agreement supersedes and replaces any and all previous agreements between the Company and Indemnitee covering the subject matter of this Agreement.

RECITALS

WHEREAS, highly competent persons have become more reluctant to serve publicly-held corporations as directors and officers or in other capacities unless they are provided with adequate protection through insurance or adequate indemnification against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of the corporation;

WHEREAS, the Board of Directors of the Company (the “Board”) has determined that, in order to attract and retain qualified individuals, the Company will attempt to maintain on an ongoing basis, at its sole expense, liability insurance to protect persons serving the Company and its subsidiaries from certain liabilities.  Although the furnishing of such insurance has been a customary and widespread practice among United States-based corporations and other business enterprises, the Company believes that, given current market conditions and trends, such insurance may be available to it in the future only at higher premiums and with more exclusions.  At the same time, directors, officers, and other persons in service to corporations or business enterprises are being increasingly subjected to expensive and time-consuming litigation relating to, among other things, matters that traditionally would have been brought only against the Company or business enterprise itself.  The Organizational Documents (as defined below) require indemnification of the officers and directors of the Company.  Indemnitee may also be entitled to indemnification pursuant the TBOC (as defined below).  The Organizational Documents of the Company and the TBOC expressly provide that the indemnification provisions set forth therein are not exclusive, and thereby contemplate that contracts may be entered into between the Company and members of the board of directors, officers and other persons with respect to indemnification;

WHEREAS, the uncertainties relating to such insurance and to indemnification have increased the difficulty of attracting and retaining such persons;

WHEREAS, the Board has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests of the Company and its stockholders and that the Company should act to assure such persons that there will be increased certainty of such protection in the future;

WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, and to advance expenses on behalf of, such persons to the fullest extent permitted by applicable law so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified;

WHEREAS, this Agreement is a supplement to and in furtherance of the Organizational Documents and any resolutions adopted pursuant thereto, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder;

WHEREAS, Indemnitee does not regard the protection available under the Organizational Documents and insurance as adequate in the present circumstances, and may not be willing to serve as an officer or director without adequate protection, and the Company desires Indemnitee to serve in such capacity.  Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Company on the condition that he be so indemnified; and

NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:

Section 1.Services to the Company.  Indemnitee agrees to serve as a director and/or officer of the Company.  Indemnitee may at any time and for any reason resign from such position (subject to any other contractual obligation or any obligation imposed by operation of law), in which event the Company shall have no obligation under this Agreement to continue Indemnitee in such position.  This Agreement shall not be deemed an employment contract between the Company (or any of its subsidiaries or any Enterprise) and Indemnitee.  Indemnitee specifically acknowledges that Indemnitee’s employment with the Company (or any of its subsidiaries or any Enterprise), if any, is at will, and the Indemnitee may be discharged at any time for any reason, with or without cause, except as may be otherwise provided in any written employment contract between Indemnitee and the Company (or any of its subsidiaries or any Enterprise), other applicable formal severance policies duly adopted by the Board, or, with respect to service as a director or officer of the Company, by the Company’s Organizational Documents and the TBOC.  The foregoing notwithstanding, this Agreement shall continue in force after Indemnitee has ceased to serve as an officer and director of the Company, as provided in Section 18 hereof.

Section 2.Definitions.   As used in this Agreement:

(a)References to “agent” shall mean any person who is or was a director, officer, or employee of the Company or a subsidiary of the Company or other person authorized by the Company to act for the Company, to include such person serving in such capacity as a director, officer, employee, fiduciary or other member of another corporation, partnership, limited liability company, joint venture, trust, organization or other enterprise at the request of, for the convenience of, or to represent the interests of the Company or a subsidiary of the Company.

(b)A “Change in Control” shall be deemed to occur upon the earliest to occur after the date of this Agreement of any of the following events:

i.Acquisition of Stock by Third Party.  Any Person (as defined below) is or becomes the Beneficial Owner (as defined below), directly or indirectly, of securities of the Company representing fifteen percent (15%) or more of the combined voting power of the Company’s then outstanding securities unless the change in relative Beneficial

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Ownership of the Company’s securities by any Person results solely from a reduction in the aggregate number of outstanding shares of securities entitled to vote generally in the election of directors;

ii.Change in Board of Directors.  During any period of two (2) consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in Sections 2(b)(i), 2(b)(iii) or 2(b)(iv)) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the members of the Board;

iii.Corporate Transactions.  The effective date of a merger or consolidation of the Company with any other entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the surviving entity outstanding immediately following such merger or consolidation and with the power to elect at least a majority of the board of directors or other governing body of such surviving entity;

iv.Liquidation.  The approval by the stockholders of the Company of a complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets; and

v.Other Events.  There occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or a response to any similar item on any similar schedule or form) promulgated under the Exchange Act (as defined below), whether or not the Company is then subject to such reporting requirement.

For purposes of this Section 2(b), the following terms shall have the following meanings:

(A)“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

(B)“Person” shall have the meaning as set forth in Sections 13(d) and 14(d) of the Exchange Act; provided, however, that Person shall exclude (i) the Company, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company, and (iii) any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

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(C)“Beneficial Owner” shall have the meaning given to such term in Rule 13d-3 under the Exchange Act; provided, however, that Beneficial Owner shall exclude any Person otherwise becoming a Beneficial Owner by reason of the stockholders of the Company approving a merger of the Company with another entity.

(c)“Corporate Status” describes the status of a person who is or was a director, officer, employee or agent of the Company or of any other corporation, limited liability company, partnership or joint venture, trust, organization or other enterprise which such person is or was serving at the request of the Company.

(d)“Disinterested Director” shall mean a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.

(e)“Enterprise” shall mean the Company and any other corporation, limited liability company, partnership, joint venture, trust, organization or other enterprise of which Indemnitee is or was serving at the request of the Company as a director, officer, trustee, partner, managing member, employee, agent or fiduciary.

(f)“Expenses” shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts and other professionals, witness fees, travel expenses, electronic discovery costs, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, any federal, state, local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement, ERISA excise taxes and penalties, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise participating in, a Proceeding.  Expenses also shall include (i) Expenses incurred in connection with any appeal resulting from any Proceeding, including without limitation the premium, security for, and other costs relating to any cost bond, supersedeas bond, or other appeal bond or its equivalent, and (ii) for purposes of Section 15(d) only, Expenses incurred by Indemnitee in connection with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement, by litigation or otherwise.  The parties agree that for the purposes of any advancement of Expenses for which Indemnitee has made written demand to the Company in accordance with this Agreement, all Expenses included in such demand that are certified by affidavit of Indemnitee’s counsel as being reasonable shall be presumed conclusively to be reasonable.  Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.

(g)“Independent Counsel” shall mean a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent:  (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder.  Notwithstanding

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the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.  The Company agrees to pay the reasonable fees and expenses of the Independent Counsel referred to above and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

(h)The term “Organizational Documents” shall mean the First Amended and Restated Certificate of Formation of the Company and the First Amended and Restated Bylaws of the Company, in each case as amended from time to time.

(i)The term “Proceeding” shall include any threatened, pending or completed action, suit, claim, counterclaim, cross claim, arbitration, mediation, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought in the right of the Company or otherwise and whether of a civil, criminal, administrative, legislative, or investigative (formal or informal) nature, including any appeal therefrom, in which Indemnitee was, is or will be involved as a party, potential party, non-party witness or otherwise by reason of the fact that Indemnitee is or was a director or officer of the Company, by reason of any action taken by him (or a failure to take action by him) or of any action (or failure to act) on his part while acting pursuant to his Corporate Status, in each case whether or not serving in such capacity at the time any liability or Expense is incurred for which indemnification, reimbursement, or advancement of Expenses can be provided under this Agreement.  If the Indemnitee believes in good faith that a given situation may lead to or culminate in the institution of a Proceeding, this shall be considered a Proceeding under this paragraph.

(j)The term “Sarbanes-Oxley Act” shall mean the Sarbanes-Oxley Act of 2002, as amended from time to time.

(k)The term “TBOC” shall mean the Texas Business Organizations Code, as amended from time to time.

(l)The term “Texas Court” shall mean the courts of the State of Texas located in Dallas, Texas.

(m)Reference to “other enterprise” shall include employee benefit plans; references to “fines” shall include any excise tax assessed with respect to any employee benefit plan; references to “serving at the request of the Company” shall include any service as a director, officer, employee or agent of the Company which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in manner “not opposed to the best interests of the Company” as referred to in this Agreement.

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Section 3.Indemnity in Third-Party Proceedings.  The Company shall indemnify Indemnitee in accordance with the provisions of this Section 3 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding, other than a Proceeding by or in the right of the Company to procure a judgment in its favor.  Pursuant to this Section 3, Indemnitee shall be indemnified to the fullest extent permitted by applicable law against all Expenses, judgments, fines and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses, judgments, fines and amounts paid in settlement) actually and reasonably incurred by Indemnitee or on his behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company and, in the case of a criminal Proceeding had no reasonable cause to believe that his conduct was unlawful.  The parties hereto intend that this Agreement shall provide to the fullest extent permitted by law for indemnification in excess of that expressly permitted by statute, including, without limitation, any indemnification provided by the Organizational Documents, vote of its stockholders or disinterested directors or applicable law.

Section 4.Indemnity in Proceedings by or in the Right of the Company.   The Company shall indemnify Indemnitee in accordance with the provisions of this Section 4 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding by or in the right of the Company to procure a judgment in its favor.  Pursuant to this Section 4, Indemnitee shall be indemnified to the fullest extent permitted by applicable law against all Expenses actually and reasonably incurred by him or on his behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company.  No indemnification for Expenses shall be made under this Section 4 in respect of any claim, issue or matter as to which Indemnitee shall have been finally adjudged by a court to be liable to the Company, unless and only to the extent that a Texas Court or any other court in which the Proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnification.

Section 5.Indemnification for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provisions of this Agreement, to the fullest extent permitted by applicable law and to the extent that Indemnitee is a party to (or a participant in) and is successful, on the merits or otherwise, in any Proceeding or in defense of any claim, issue or matter therein, in whole or in part, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him in connection therewith.  If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him or on his behalf in connection with or related to each successfully resolved claim, issue or matter to the fullest extent permitted by law.  For purposes of this Section and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

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Section 6.Indemnification For Expenses of a Witness.  Notwithstanding any other provision of this Agreement, to the fullest extent permitted by applicable law and to the extent that Indemnitee is, by reason of his Corporate Status, a witness or otherwise asked to participate in any Proceeding to which Indemnitee is not a party, he shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith.

Section 7.Partial Indemnification.  If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of Expenses, but not, however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee is entitled.

Section 8.Additional Indemnification.

(a)Notwithstanding any limitation in Sections 3, 4, or 5, the Company shall indemnify Indemnitee to the fullest extent permitted by applicable law if Indemnitee is a party to or threatened to be made a party to any Proceeding (including a Proceeding by or in the right of the Company to procure a judgment in its favor) against all Expenses, judgments, fines and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses, judgments, fines and amounts paid in settlement) actually and reasonably incurred by Indemnitee in connection with the Proceeding.

(b)For purposes of Section 8(a), the meaning of the phrase “to the fullest extent permitted by applicable law” shall include, but not be limited to:

i.to the fullest extent permitted by the provision of the TBOC that authorizes or contemplates additional indemnification by agreement, or the corresponding provision of any amendment to or replacement of the TBOC, and

ii.to the fullest extent authorized or permitted by any amendments to or replacements of the TBOC adopted after the date of this Agreement that increase the extent to which a corporation may indemnify its officers and directors.

Section 9.NOTICE OF ASSUMPTION OF LIABILITY.  THE COMPANY EXPRESSLY ACKNOWLEDGES THAT THE INDEMNITIES CONTAINED IN THIS AGREEMENT REQUIRE ASSUMPTION OF LIABILITY PREDICATED ON THE NEGLIGENCE, GROSS NEGLIGENCE, OR CONDUCT RESULTING IN STRICT LIABILITY OF INDEMNITEE, AND THE COMPANY ACKNOWLEDGES THAT THIS SECTION 9  COMPLIES WITH ANY REQUIREMENT TO EXPRESSLY STATE LIABILITY FOR NEGLIGENCE, GROSS NEGLIGENCE, OR CONDUCT RESULTING IN STRICT LIABILITY IS CONSPICUOUS AND AFFORDS FAIR AND ADEQUATE NOTICE.

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Section 10.Exclusions.   Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnification payment in connection with any claim made against Indemnitee:

(a)for which payment has actually been made to or on behalf of Indemnitee under any insurance policy or other indemnity provision, except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision; or

(b)for (i) an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Exchange Act (as defined in Section 2(b) hereof) or similar provisions of state statutory law or common law, or (ii) any reimbursement of the Company by the Indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits realized by the Indemnitee from the sale of securities of the Company, as required in each case under the Exchange Act (including any such reimbursements that arise from an accounting restatement of the Company pursuant to Section 304 of the Sarbanes-Oxley Act or the payment to the Company of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act); or

(c)except as provided in Section 15(d) of this Agreement, in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees or other indemnitees, unless (i) the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation or (ii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law.

Section 11.Advances of Expenses.   Notwithstanding any provision of this Agreement to the contrary (other than Section 15(d)), the Company shall advance, to the extent not prohibited by law, the Expenses incurred by Indemnitee in connection with any Proceeding (or any part of any Proceeding) not initiated by Indemnitee, and such advancement shall be made within thirty (30) days after the receipt by the Company of a statement or statements requesting such advances from time to time, whether prior to or after final disposition of any Proceeding.  Advances shall be unsecured and interest free.  Advances shall be made without regard to Indemnitee’s ability to repay the Expenses and without regard to Indemnitee’s ultimate entitlement to indemnification under the other provisions of this Agreement.  In accordance with Section 15(d), advances shall include any and all reasonable Expenses incurred pursuing an action to enforce this right of advancement, including Expenses incurred preparing and forwarding statements to the Company to support the advances claimed.  The Indemnitee shall qualify for advances upon the execution and delivery to the Company of this Agreement, which shall constitute an undertaking providing that the Indemnitee undertakes to repay the amounts advanced (without interest) to the extent that it is ultimately determined that Indemnitee is not entitled to be indemnified by the Company.  No other form of undertaking shall be required other than the execution of this Agreement.  This Section 11 shall not apply to any claim made by Indemnitee for which indemnity is excluded pursuant to Section 10.

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Section 12.Procedure for Notification and Defense of Claim.

(a)Indemnitee shall notify the Company in writing of any matter with respect to which Indemnitee intends to seek indemnification or advancement of Expenses hereunder as soon as reasonably practicable following the receipt by Indemnitee of written notice thereof.  The written notification to the Company shall include a description of the nature of the Proceeding and the facts underlying the Proceeding.  To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification following the final disposition of such Proceeding.  The omission by Indemnitee to notify the Company hereunder will not relieve the Company from any liability which it may have to Indemnitee hereunder or otherwise than under this Agreement, and any delay in so notifying the Company shall not constitute a waiver by Indemnitee of any rights under this Agreement.  The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board in writing that Indemnitee has requested indemnification.

(b)The Company will be entitled to participate in the Proceeding at its own expense.

Section 13.Procedure Upon Application for Indemnification.

(a)Upon written request by Indemnitee for indemnification pursuant to Section 12(a), a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall be made in the specific case:  (i) if a Change in Control shall have occurred, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee; or (ii) if a Change in Control shall not have occurred, (A) by a majority vote of the Disinterested Directors, even though less than a quorum of the Board, (B) by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors, even though less than a quorum of the Board, (C) if there are no such Disinterested Directors or, if such Disinterested Directors so direct, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee or (D) if so directed by the Board, by the stockholders of the Company; and, if it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten (10) days after such determination.  Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination.  Any costs or Expenses (including attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.  The Company promptly will advise Indemnitee in writing with respect to any determination that Indemnitee is or is not entitled to indemnification, including a description of any reason or basis for which indemnification has been denied.

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(b)In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 13(a) hereof, the Independent Counsel shall be selected as provided in this Section 13(b).  If a Change in Control shall not have occurred, the Independent Counsel shall be selected by the Board, and the Company shall give written notice to Indemnitee advising him of the identity of the Independent Counsel so selected.  If a Change in Control shall have occurred, the Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request that such selection be made by the Board, in which event the preceding sentence shall apply), and Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected.  In either event, Indemnitee or the Company, as the case may be, may, within ten (10) days after such written notice of selection shall have been given, deliver to the Company or to Indemnitee, as the case may be, a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 2 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion.  Absent a proper and timely objection, the person so selected shall act as Independent Counsel.  If such written objection is so made and substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or the Texas Court has determined that such objection is without merit.  If, within twenty (20) days after the later of submission by Indemnitee of a written request for indemnification pursuant to Section 12(a) hereof and the final disposition of the Proceeding, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition the Texas Court for resolution of any objection which shall have been made by the Company or Indemnitee to the other’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by such court or by such other person as such court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 13(a) hereof.  Upon the due commencement of any judicial proceeding or arbitration pursuant to Section 15(a) of this Agreement, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).

Section 14.Presumptions and Effect of Certain Proceedings.

(a)In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall, to the fullest extent not prohibited by law, presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 12(a) of this Agreement, and the Company shall, to the fullest extent not prohibited by law, have the burden of proof to overcome that presumption in connection with the making by any person, persons or entity of any determination contrary to that presumption.  Neither the failure of the Company (including by its directors or Independent Counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including by its directors or Independent Counsel) that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.

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(b)Subject to Section 15(e), if the person, persons or entity empowered or selected under Section 13 of this Agreement to determine whether Indemnitee is entitled to indemnification shall not have made a determination within sixty (60) days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall, to the fullest extent not prohibited by law, be deemed to have been made and Indemnitee shall be entitled to such indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided, however, that such 60-day period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if the person, persons or entity making the determination with respect to entitlement to indemnification in good faith requires such additional time for the obtaining or evaluating of documentation and/or information relating thereto; and provided, further, that the foregoing provisions of this Section 13(b) shall not apply (i) if the determination of entitlement to indemnification is to be made by the stockholders pursuant to Section 13(a) of this Agreement and if (A) within fifteen (15) days after receipt by the Company of the request for such determination the Board has resolved to submit such determination to the stockholders for their consideration at an annual meeting thereof to be held within seventy-five (75) days after such receipt and such determination is made thereat, or (B) a special meeting of stockholders is called within fifteen (15) days after such receipt for the purpose of making such determination, such meeting is held for such purpose within sixty (60) days after having been so called and such determination is made thereat, or (ii) if the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 13(a) of this Agreement.

(c)The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that his conduct was unlawful.

(d)For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied to Indemnitee by the directors or officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with the reasonable care by  the Enterprise.  The provisions of this Section 14(d) shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement.

(e)The knowledge and/or actions, or failure to act, of any director, officer, trustee, partner, managing member, fiduciary, agent or employee of the Enterprise shall not be

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imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.

Section 15.Remedies of Indemnitee.

(a)Subject to Section 15(e), in the event that (i) a determination is made pursuant to Section 13 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 11 of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 13(a) of this Agreement within ninety (90) days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to Section 5, 6 or 7 or the last sentence of Section 13(a) of this Agreement within ten (10) days after receipt by the Company of a written request therefor, (v) payment of indemnification pursuant to Section 3, 4 or 8 of this Agreement is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification, or (vi) in the event that the Company or any other person takes or threatens to take any action to declare this Agreement void or unenforceable, or institutes any litigation or other action or Proceeding designed to deny, or to recover from, the Indemnitee the benefits provided or intended to be provided to the Indemnitee hereunder, Indemnitee shall be entitled to an adjudication by a court of his entitlement to such indemnification or advancement of Expenses.  Alternatively, Indemnitee, at his option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association.  Indemnitee shall commence such proceeding seeking an adjudication or an award in arbitration within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 15(a); provided, however, that the foregoing clause shall not apply in respect of a proceeding brought by Indemnitee to enforce his rights under Section 5 of this Agreement.  The Company shall not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.

(b)In the event that a determination shall have been made pursuant to Section 13(a) of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 15 shall be conducted in all respects as a de novo trial, or arbitration, on the merits and Indemnitee shall not be prejudiced by reason of that adverse determination.  In any judicial proceeding or arbitration commenced pursuant to this Section 15 the Company shall have the burden of proving Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be.

(c)If a determination shall have been made pursuant to Section 13(a) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 15, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law.

(d)The Company shall, to the fullest extent not prohibited by law, be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this

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Section 15 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all the provisions of this Agreement.  It is the intent of the Company that, to the fullest extent permitted by law, the Indemnitee not be required to incur legal fees or other Expenses associated with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement by litigation or otherwise because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Indemnitee hereunder.  The Company shall, to the fullest extent permitted by law, indemnify Indemnitee against any and all Expenses and, if requested by Indemnitee, shall (within ten (10) days after receipt by the Company of a written request therefor) advance, to the extent not prohibited by law, such Expenses to Indemnitee, which are incurred by Indemnitee in connection with any action brought by Indemnitee for indemnification or advance of Expenses from the Company under this Agreement or under any directors’ and officers’ liability insurance policies maintained by the Company if, in the case of indemnification, Indemnitee is wholly successful on the underlying claims; if Indemnitee is not wholly successful on the underlying claims, then such indemnification shall be only to the extent Indemnitee is successful on such underlying claims or otherwise as permitted by law, whichever is greater.

(e)Notwithstanding anything in this Agreement to the contrary, no determination as to entitlement of Indemnitee to indemnification under this Agreement shall be required to be made prior to the final disposition of the Proceeding.

Section 16.Non-exclusivity; Survival of Rights; Insurance; Subrogation.

(a)The rights of indemnification and to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Organizational Documents, any agreement, a vote of stockholders or a resolution of directors, or otherwise.  No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his Corporate Status prior to such amendment, alteration or repeal.  To the extent that a change in Texas law, whether by statute or judicial decision, permits greater indemnification or advancement of Expenses than would be afforded currently under the Organizational Documents and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change.  No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

(b)To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees, or agents of the Enterprise, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director, officer, employee or agent under such policy or policies.  If, at the time of the receipt of a notice of a claim pursuant to the

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terms hereof, the Company has director and officer liability insurance in effect, the Company shall give prompt notice of such claim or of the commencement of a Proceeding, as the case may be, to the insurers in accordance with the procedures set forth in the respective policies.  The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such policies.

(c)In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

(d)The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable (or for which advancement is provided hereunder) hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

(e)The Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company as a director, officer, trustee, partner, managing member, fiduciary, employee or agent of any other corporation, limited liability company, partnership, joint venture, trust, employee benefit plan, organization or other enterprise shall be reduced by any amount Indemnitee has actually received as indemnification or advancement of Expenses from such other corporation, limited liability company, partnership, joint venture, trust, organization or other enterprise.

Section 17.Duration of Agreement.  This Agreement shall continue until and terminate upon the later of: (a) ten (10) years after the date that Indemnitee shall have ceased to serve as a director and officer of the Company or (b) one (1) year after the final termination of any Proceeding then pending in respect of which Indemnitee is granted rights of indemnification or advancement of Expenses hereunder and of any proceeding commenced by Indemnitee pursuant to Section 15 of this Agreement relating thereto.  The indemnification and advancement of expenses rights provided by or granted pursuant to this Agreement shall be binding upon and be enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), shall continue as to an Indemnitee who has ceased to be a director, officer, employee or agent of the Company or of any other Enterprise, and shall inure to the benefit of Indemnitee and his or her spouse, assigns, heirs, devisees, executors and administrators and other legal representatives.

Section 18.Severability.  If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by

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law; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.

Section 19.Enforcement.

(a)The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve as a director or officer of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as a director or officer of the Company.

(b)This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof; provided, however, that this Agreement is a supplement to and in furtherance of the Organizational Documents and applicable law, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder.

Section 20.Modification and Waiver.  No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by the parties hereto.  No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions of this Agreement nor shall any waiver constitute a continuing waiver.

Section 21.Notice by Indemnitee.  Indemnitee agrees promptly to notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification or advancement of Expenses covered hereunder.  The failure of Indemnitee to so notify the Company shall not relieve the Company of any obligation which it may have to the Indemnitee under this Agreement or otherwise.

Section 22.Notices.   All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given if (a) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, (b) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed, (c) mailed by reputable overnight courier and receipted for by the party to whom said notice or other communication shall have been directed or (d) sent by facsimile transmission, with receipt of oral confirmation that such transmission has been received:

(a)If to Indemnitee, at the address indicated on the signature page of this Agreement, or such other address as Indemnitee shall provide to the Company.

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(b)If to the Company to

[CBTX, Inc.]
9 Greenway Plaza, Suite 110
Houston, Texas 77046
Attention:  Chief Executive Officer

or to any other address as may have been furnished to Indemnitee by the Company.

Section 23.Contribution.  To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).

Section 24.Applicable Law and Consent to Jurisdiction.  This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Texas, without regard to its conflict of laws rules.  Except with respect to any arbitration commenced by Indemnitee pursuant to Section 15(a) of this Agreement, the Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Texas Court and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Texas Court for purposes of any action or proceeding arising out of or in connection with this Agreement, (iii) waive any objection to the laying of venue of any such action or proceeding in the Texas Court, and (iv) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Texas Court has been brought in an improper or inconvenient forum.

Section 25.Identical Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement.  Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.

Section 26.Miscellaneous.    Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate.  The headings of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

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IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of the day and year first above written.

[CBTX, Inc.]	Indemnitee
Name:	Name:
Title:	Address:

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EX-21.1

Exhibit 21.1

CBTX, Inc. Subsidiary

Entity Name	State of Incorporation
CommunityBank of Texas, N.A.	Texas, U.S.A.

1

EX-23.2

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Exhibit 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

        We have issued our report dated August 14, 2017 (except for the effects of the par value change described in Note 1, as to which the date is September 26, 2017 and except for the effects of the stock split dividend described in Note 1, as to which the date is October 13, 2017), with respect to the consolidated financial statements of CBTX, Inc. (formerly known as CBFH, Inc.) contained in the Registration Statement and Prospectus. We consent to the use of the aforementioned report in the Registration Statement and Prospectus, and to the use of our name as it appears under the caption "Experts."

/s/ GRANT THORNTON LLP

Dallas, Texas
October 13, 2017

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Exhibit 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM