Allegiance Bancshares, Inc. Reports First Quarter 2021 Record Results

• Record net income and diluted earnings per share of $18.0 million and $0.89, respectively
  
  

• Funded in excess of $1.04 billion in loans over the last year within the Small Business Administration Paycheck Protection Program (PPP) under the Coronavirus Aid, Relief and Economic Security Act (CARES Act)
  
  

• Deposit growth of 35.9% to $5.37 billion as of March 31, 2021 from $3.95 billion as of March 31, 2020, driven by $696.6 million, or 57.2%, growth in noninterest-bearing deposits
  
  

• Board declared quarterly dividend of $0.12 per share of common stock and authorized repurchases of up to 1 million shares
  

HOUSTON, April 29, 2021 (GLOBE NEWSWIRE) -- Allegiance Bancshares, Inc. (NASDAQ: ABTX) (Allegiance), the holding company of Allegiance Bank (the "Bank"), today reported record net income of $18.0 million and diluted earnings per share of $0.89 for the first quarter 2021 compared to net income of $3.5 million and diluted earnings per share of $0.17 for the first quarter 2020. The first quarter 2021 results were primarily driven by increased net interest income primarily due to lower funding costs and lower provision expense.

“Allegiance is off to a very productive start in 2021. We are proud to report record quarterly earnings results while continuing to maintain stable asset quality,” said Steve Retzloff, Allegiance’s Chief Executive Officer. “We reached record highs in terms of net income, diluted earnings per share, return on average assets and preserved a solid net interest margin all due to the successful execution of our core strategies,” continued Retzloff.

“These exceptional results highlight our team’s unparalleled and coordinated effort to assist our customers during the PPP process by funding over $1.04 billion of loans since the beginning of the pandemic. A high percentage of these loans were to businesses who were not previously customers and who experienced, first hand, the value of our high service culture. We look forward to solidifying these relationships over the coming months. Our team is excited about the future of Allegiance and continues to believe that providing remarkable service to our customers and our community sets us apart as the Houston region’s premier community bank and will continue to drive future value,” concluded Retzloff.

First Quarter 2021 Results

Net interest income before the provision for credit losses in the first quarter 2021 increased $10.7 million, or 23.7%, to $55.7 million from $45.0 million for the first quarter 2020 and increased $796 thousand, or 1.4%, from $54.9 million in the fourth quarter 2020. These increases were primarily due to changes in the volume and relative mix of the underlying assets and liabilities, the impact of PPP loans as well as lower costs on interest-bearing liabilities. The net interest margin on a tax equivalent basis increased 4 basis points to 4.19% for the first quarter 2021 from 4.15% for the first quarter 2020 and increased 5 basis points from 4.14% for the fourth quarter 2020.

Noninterest income for the first quarter 2021 was $1.7 million, a decrease of $989 thousand, or 36.3%, compared to $2.7 million for the first quarter 2020 and decreased $283 thousand, or 14.0%, compared to $2.0 million for the fourth quarter 2020. First quarter 2021 noninterest income reflected lower transactional fee income, significantly lower correspondent bank rebates, lower gains on sales of securities and higher losses on sales of other real estate when compared to first quarter 2020.

Noninterest expense for the first quarter 2021 increased $2.5 million, or 7.8%, to $34.9 million from $32.4 million for the first quarter 2020 and increased $2.2 million, or 6.6%, compared to the fourth quarter 2020 primarily due to increases in salaries and benefits.

In the first quarter 2021, Allegiance’s efficiency ratio decreased to 60.85% compared to 68.13% for the first quarter 2020 and increased from 57.53% for the fourth quarter 2020. First quarter 2021 annualized returns on average assets, average equity and average tangible equity were 1.18%, 9.59% and 14.03%, respectively, compared to 0.29%, 1.98% and 3.02%, respectively, for the first quarter 2020. Annualized returns on average assets, average equity and average tangible equity for the fourth quarter 2020 were 1.05%, 8.38% and 12.32%, respectively. Return on average tangible equity is a non-GAAP measure. Please refer to the non-GAAP reconciliation on page 9.

Financial Condition

Total assets at March 31, 2021 increased $380.9 million, or 25.2% (annualized), to $6.43 billion compared to $6.05 billion at December 31, 2020 and increased $1.43 billion, or 28.6%, compared to $5.00 billion at March 31, 2020, primarily due to the origination of PPP loans and growth in the securities portfolio.

Total loans at March 31, 2021 increased $167.4 million, or 14.9% (annualized), to $4.66 billion compared to $4.49 billion at December 31, 2020, primarily due to the origination of $331.9 million of PPP loans, and increased $703.6 million, or 17.8%, compared to $3.96 billion at March 31, 2020. Core loans, which exclude the mortgage warehouse portfolio and PPP loans, increased $8.9 million, or 0.9% (annualized), to $3.93 billion at March 31, 2021 from $3.92 billion at December 31, 2020 and decreased $23.8 million, or 0.6%, from $3.95 billion at March 31, 2020.

Deposits at March 31, 2021 increased $385.7 million, or 30.9% (annualized), to $5.37 billion compared to $4.99 billion at December 31, 2020 and increased $1.42 billion, or 35.9%, compared to $3.95 billion at March 31, 2020.

Asset Quality

Nonperforming assets totaled $35.6 million, or 0.55% of total assets, at March 31, 2021, compared to $38.1 million, or 0.63% of total assets, at December 31, 2020 and $34.2 million, or 0.68% of total assets, at March 31, 2020. The allowance for credit losses on loans as a percentage of total loans was 1.13% at March 31, 2021 and 1.18% at December 31, 2020.

The provision for credit losses for the first quarter 2021 was $639 thousand compared to $4.4 million for the fourth quarter 2020 and $11.0 million for the first quarter 2020. The increased provision during 2020 reflected the uncertainty surrounding unemployment, the economic impact caused by COVID-19 and the economic effects related to the sustained lower crude oil prices.

First quarter 2021 net charge-offs were $345 thousand, or 0.03% (annualized) of average loans, a decrease from net charge-offs of $4.3 million, or 0.37% (annualized) of average loans, for the fourth quarter 2020 and $2.9 million, or 0.30% (annualized) of average loans, for the first quarter 2020.

The Company is carefully monitoring the hotel, restaurant and bar, and oil and gas portfolios, which it believes are at heightened risk due to the current economic environment. Loan balances in the hotel industry, excluding PPP loans, totaled $125.2 million, or 2.7% of total loans, at March 31, 2021, of which $6.2 million were on nonaccrual. At March 31, 2021, restaurant and bar industry loans, excluding PPP loans, totaled $116.2 million, or 2.5%, of total loans, of which $486 thousand were on nonaccrual. At March 31, 2021, the Company’s allowance for credit losses on loans allocated to its hotel portfolio was 3.5% of total hotel loans and its restaurant and bar portfolio was 1.3% of total restaurant and bar loans. The oil and gas portfolio, excluding PPP loans, totaled $72.5 million, or 1.6%, of total loans at March 31, 2021, of which $3.6 million were on nonaccrual. At March 31, 2021, the allowance for credit losses on loans allocated to the oil and gas loan portfolio was 3.4% of total oil and gas loans.

The Company granted initial principal and interest deferrals on outstanding loan balances to borrowers in connection with the COVID-19 relief provided by the CARES Act and subsequent deferrals upon request and after meeting certain conditions. These deferrals were generally no more than 90 days in duration. As of March 31, 2021, 65 loans with outstanding loan balances of $62.1 million remained on deferral.

Dividend

The Board of Directors of Allegiance has declared a cash dividend of $0.12 per share to be paid on June 15, 2021 to all shareholders of record as of May 28, 2021. The amount and timing of any future dividend payments to shareholders will be subject to the discretion of Allegiance’s Board of Directors.

Share Repurchase Authorization

The Board of Directors of Allegiance approved a stock repurchase authorization, under which Allegiance may repurchase up to one million shares of its outstanding common stock at the discretion of management through April 30, 2022. Repurchases under this program may be made from time to time through open market purchases, privately negotiated transactions or such other manners as will comply with applicable laws and regulations. Allegiance’s previously announced share repurchase program recently expired on March 31, 2021.

GAAP Reconciliation of Non-GAAP Financial Measures

Allegiance’s management uses certain non-GAAP financial measures to evaluate its performance. Please refer to the GAAP Reconciliation and Management’s Explanation of Non-GAAP Financial Measures on page 9 of this earnings release for a reconciliation of these non-GAAP financial measures.

Conference Call

As previously announced, Allegiance’s management team will host a conference call on Thursday, April 29, 2021 at 9:00 a.m. Central Time (10:00 a.m. Eastern Time) to discuss its first quarter 2021 results. Individuals and investment professionals may participate in the call by dialing (877) 279-2520. The conference ID number is 3792638. Alternatively, a simultaneous audio-only webcast may be accessed via the Investor Relations section of Allegiance’s website at www.allegiancebank.com, under Upcoming Events. If you are unable to participate during the live webcast, the webcast will be archived on the Investor Relations section of Allegiance’s website at www.allegiancebank.com, under News and Events, Event Calendar, Past Events.

Allegiance Bancshares, Inc.

As of March 31, 2021, Allegiance was a $6.43 billion asset Houston, Texas-based bank holding company. Through its wholly owned subsidiary, Allegiance Bank, Allegiance provides a diversified range of commercial banking services primarily to small- to medium-sized businesses and individual customers in the Houston region. Allegiance’s super-community banking strategy was designed to foster strong customer relationships while benefiting from a platform and scale that is competitive with larger local and regional banks. As of March 31, 2021, Allegiance Bank operated 27 full-service banking locations in the Houston region, which we define as the Houston-The Woodlands-Sugar Land and Beaumont-Port Arthur metropolitan statistical areas, with 26 bank offices in the Houston metropolitan area and one bank office in Beaumont, just outside of the Houston metropolitan area. Visit www.allegiancebank.com for more information.

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995

This release contains forward-looking statements within the meaning of the securities laws that are derived utilizing assumptions, present expectations, estimates and projections about Allegiance and its subsidiaries. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “continues,” “anticipates,” “intends,” “projects,” “estimates,” “potential,” “plans” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing words. Forward-looking statements include information concerning Allegiance’s expected future financial performance, business and growth strategy, projected plans and objectives, as well as projections of macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact economic trends, and any such variations may be material. Such forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties, many of which are outside of Allegiance’s control, which may cause actual results to differ materially from those expressed or implied by the forward-looking statements. These risks and uncertainties include but are not limited to whether Allegiance can: continue to develop and maintain new and existing customer and community relationships; successfully implement its growth strategy, including identifying suitable acquisition targets and integrating the businesses of acquired companies and banks; sustain its current internal growth rate; provide quality and competitive products and services that appeal to its customers; continue to have access to debt and equity capital markets; and achieve its performance objectives. Additionally, the impact of the COVID-19 pandemic is rapidly evolving and its future effects on Allegiance are difficult to predict. These and various other risk factors are discussed in Allegiance’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 and in other reports and statements Allegiance has filed with the Securities and Exchange Commission. Copies of such filings are available for download free of charge from the Investor Relations section of Allegiance’s website at www.allegiancebank.com, under Financial Information, SEC Filings. Any forward-looking statement made by Allegiance in this release speaks only as of the date on which it is made. Factors or events that could cause Allegiance’s actual results to differ may emerge from time to time, and it is not possible for Allegiance to predict all of them. Because of these uncertainties, readers should not place undue reliance on any forward-looking statement. Allegiance disclaims any obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)

	2021				2020
	March 31				December 31				September 30				June 30				March 31
	(Dollars in thousands)
ASSETS
Cash and due from banks	$	141,947			$	122,897			$	327,416			$	237,585			$	156,700
Interest-bearing deposits at other financial institutions		482,383				299,869				19,732				28,815				18,189
Total cash and cash equivalents		624,330				422,766				347,148				266,400				174,889
Available for sale securities, at fair value		787,516				772,890				663,301				618,751				508,250
Loans held for investment		4,659,169				4,491,764				4,592,362				4,583,656				3,955,546
Less: allowance for credit losses on loans		(52,758	)			(53,173	)			(48,698	)			(47,642	)			(37,511	)
Loans, net		4,606,411				4,438,591				4,543,664				4,536,014				3,918,035
Accrued interest receivable		38,632				40,053				36,996				32,795				17,203
Premises and equipment, net		66,115				70,685				69,887				67,229				66,798
Other real estate owned		576				9,196				8,876				11,847				12,617
Federal Home Loan Bank stock		7,775				7,756				9,716				14,844				12,798
Bank owned life insurance		27,825				27,686				27,542				27,398				27,255
Goodwill		223,642				223,642				223,642				223,642				223,642
Core deposit intangibles, net		17,130				17,954				18,907				19,896				20,886
Other assets		31,038				18,909				18,072				18,065				20,056
Total assets	$	6,430,990			$	6,050,128			$	5,967,751			$	5,836,881			$	5,002,429
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES:
Deposits:
Noninterest-bearing	$	1,914,121			$	1,704,567			$	1,772,700			$	1,754,128			$	1,217,532
Interest-bearing
Demand		480,710				437,328				409,137				375,353				341,524
Money market and savings		1,617,823				1,499,938				1,483,370				1,270,437				1,110,631
Certificates and other time		1,361,535				1,346,649				1,252,159				1,300,793				1,283,887
Total interest-bearing deposits		3,460,068				3,283,915				3,144,666				2,946,583				2,736,042
Total deposits		5,374,189				4,988,482				4,917,366				4,700,711				3,953,574
Accrued interest payable		3,862				2,701				3,082				3,293				3,821
Borrowed funds		147,517				155,515				155,512				255,509				190,506
Subordinated debt		108,453				108,322				108,191				108,061				107,930
Other liabilities		36,432				36,439				30,547				33,164				40,005
Total liabilities		5,670,453				5,291,459				5,214,698				5,100,738				4,295,836
SHAREHOLDERS’ EQUITY:
Common stock		20,183				20,208				20,445				20,431				20,355
Capital surplus		505,307				508,794				516,151				515,045				513,894
Retained earnings		210,834				195,236				186,866				172,723				164,858
Accumulated other comprehensive income		24,213				34,431				29,591				27,944				7,486
Total shareholders’ equity		760,537				758,669				753,053				736,143				706,593
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	6,430,990			$	6,050,128			$	5,967,751			$	5,836,881			$	5,002,429

Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)

	Three Months Ended
	2021				2020
	March 31				December 31				September 30				June 30				March 31
	(Dollars in thousands, except per share data)
INTEREST INCOME:
Loans, including fees	$	57,991			$	58,496			$	56,418			$	56,421			$	54,624
Securities:
Taxable		2,402				2,203				2,095				1,842				2,087
Tax-exempt		2,394				2,316				2,280				2,169				546
Deposits in other financial institutions		41				32				18				20				195
Total interest income		62,828				63,047				60,811				60,452				57,452
INTEREST EXPENSE:
Demand, money market and savings deposits		1,484				1,621				1,657				1,729				4,364
Certificates and other time deposits		3,665				4,507				5,239				5,845				6,084
Borrowed funds		539				557				558				562				506
Subordinated debt		1,442				1,460				1,448				1,469				1,473
Total interest expense		7,130				8,145				8,902				9,605				12,427
NET INTEREST INCOME		55,698				54,902				51,909				50,847				45,025
Provision for credit losses		639				4,368				1,347				10,669				10,990
Net interest income after provision for credit losses		55,059				50,534				50,562				40,178				34,035
NONINTEREST INCOME:
Nonsufficient funds fees		83				100				75				60				169
Service charges on deposit accounts		388				405				325				343				457
Gain on sale of securities		49				—				—				93				194
(Loss) gain on sales of other real estate and repossessed assets		(176	)			—				117				(306	)			(69	)
Bank owned life insurance		139				144				144				143				151
Rebate from correspondent bank		132				196				98				89				493
Other		1,121				1,174				1,091				1,140				1,330
Total noninterest income		1,736				2,019				1,850				1,562				2,725
NONINTEREST EXPENSE:
Salaries and employee benefits		22,452				21,003				20,034				19,334				19,781
Net occupancy and equipment		2,390				2,079				2,057				1,926				1,907
Depreciation		1,034				1,019				946				885				866
Data processing and software amortization		2,200				2,107				2,125				1,934				1,826
Professional fees		789				999				756				800				573
Regulatory assessments and FDIC insurance		807				810				875				609				632
Core deposit intangibles amortization		824				953				989				990				990
Communications		321				225				355				390				417
Advertising		298				347				327				370				521
Other real estate expense		113				382				2,017				114				2,649
Other		3,691				2,825				2,084				2,427				2,239
Total noninterest expense		34,919				32,749				32,565				29,779				32,401
INCOME BEFORE INCOME TAXES		21,876				19,804				19,847				11,961				4,359
Provision for income taxes		3,866				3,863				3,677				2,054				843
NET INCOME	$	18,010			$	15,941			$	16,170			$	9,907			$	3,516
EARNINGS PER SHARE
Basic	$	0.89			$	0.78			$	0.79			$	0.49			$	0.17
Diluted	$	0.89			$	0.77			$	0.79			$	0.48			$	0.17

Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)

	Three Months Ended
	2021				2020
	March 31				December 31				September 30				June 30				March 31
	(Dollars and share amounts in thousands, except per share data)
Net income	$	18,010			$	15,941			$	16,170			$	9,907			$	3,516
Earnings per share, basic	$	0.89			$	0.78			$	0.79			$	0.49			$	0.17
Earnings per share, diluted	$	0.89			$	0.77			$	0.79			$	0.48			$	0.17
Dividends per share	$	0.12			$	0.10			$	0.10			$	0.10			$	0.10
Return on average assets(A)		1.18	%			1.05	%			1.09	%			0.71	%			0.29	%
Return on average equity(A)		9.59	%			8.38	%			8.59	%			5.51	%			1.98	%
Return on average tangible equity(A)(B)		14.03	%			12.32	%			12.72	%			8.32	%			3.02	%
Net interest margin (tax equivalent)(A)(C)		4.19	%			4.14	%			3.95	%			4.10	%			4.15	%
Efficiency ratio(D)		60.85	%			57.53	%			60.58	%			56.92	%			68.13	%
Capital Ratios
Allegiance Bancshares, Inc. (Consolidated)
Equity to assets		11.83	%			12.54	%			12.62	%			12.61	%			14.12	%
Tangible equity to tangible assets(B)		8.40	%			8.90	%			8.92	%			8.81	%			9.71	%
Estimated common equity tier 1 capital		11.87	%			11.80	%			11.73	%			11.36	%			11.15	%
Estimated tier 1 risk-based capital		12.10	%			12.04	%			11.96	%			11.60	%			11.38	%
Estimated total risk-based capital		15.72	%			15.71	%			15.56	%			15.17	%			14.72	%
Estimated tier 1 leverage capital		8.57	%			8.51	%			8.70	%			8.83	%			9.89	%
Allegiance Bank
Estimated common equity tier 1 capital		13.17	%			13.32	%			13.25	%			12.84	%			12.58	%
Estimated tier 1 risk-based capital		13.17	%			13.32	%			13.25	%			12.84	%			12.58	%
Estimated total risk-based capital		15.37	%			15.55	%			15.41	%			14.97	%			14.48	%
Estimated tier 1 leverage capital		9.33	%			9.41	%			9.64	%			9.77	%			10.94	%
Other Data
Weighted average shares:
Basic		20,140				20,396				20,439				20,414				20,411
Diluted		20,342				20,575				20,532				20,514				20,690
Period end shares outstanding		20,183				20,208				20,445				20,431				20,355
Book value per share	$	37.68			$	37.54			$	36.83			$	36.03			$	34.71
Tangible book value per share(B)	$	25.75			$	25.59			$	24.97			$	24.11			$	22.70

(A) Interim periods annualized.
(B) Refer to the calculation of these non-GAAP financial measures and a reconciliation to their most directly comparable GAAP financial measures on page 9 of this Earnings Release.
(C) Net interest margin represents net interest income divided by average interest-earning assets.
(D) Represents total noninterest expense divided by the sum of net interest income plus noninterest income, excluding net gains and losses on the sale of loans, securities and assets. Additionally, taxes and provision for loan losses are not part of this calculation.

Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)

	Three Months Ended
	March 31, 2021												December 31, 2020												March 31, 2020
	Average Balance				Interest Earned/ Interest Paid				Average Yield/ Rate				Average Balance				Interest Earned/ Interest Paid				Average Yield/ Rate				Average Balance				Interest Earned/ Interest Paid				Average Yield/ Rate
	(Dollars in thousands)
Assets
Interest-Earning Assets:
Loans	$	4,571,045			$	57,991				5.15	%		$	4,569,210			$	58,496				5.09	%		$	3,933,291			$	54,624				5.59	%
Securities		789,188				4,796				2.46	%			701,233				4,519				2.56	%			388,721				2,633				2.72	%
Deposits in other financial institutions and other		96,212				41				0.17	%			58,664				32				0.22	%			50,711				195				1.55	%
Total interest-earning assets		5,456,445			$	62,828				4.67	%			5,329,107			$	63,047				4.71	%			4,372,723			$	57,452				5.28	%
Allowance for credit losses on loans		(53,370	)											(53,260	)											(28,718	)
Noninterest-earning assets		760,762												783,200												602,778
Total assets	$	6,163,837											$	6,059,047											$	4,946,783
Liabilities and Shareholders' Equity
Interest-Bearing Liabilities:
Interest-bearing demand deposits	$	458,063			$	371				0.33	%		$	430,145			$	386				0.36	%		$	363,326			$	846				0.94	%
Money market and savings deposits		1,539,127				1,113				0.29	%			1,513,816				1,235				0.32	%			1,168,541				3,518				1.21	%
Certificates and other time deposits		1,332,663				3,665				1.12	%			1,284,181				4,507				1.40	%			1,193,427				6,084				2.05	%
Borrowed funds		154,927				539				1.41	%			157,687				557				1.41	%			140,999				506				1.44	%
Subordinated debt		108,387				1,442				5.40	%			108,259				1,460				5.37	%			107,865				1,473				5.49	%
Total interest-bearing liabilities		3,593,167			$	7,130				0.80	%			3,494,088			$	8,145				0.93	%			2,974,158			$	12,427				1.68	%
Noninterest-Bearing Liabilities:
Noninterest-bearing demand deposits		1,767,740												1,766,826												1,225,888
Other liabilities		41,330												41,434												33,202
Total liabilities		5,402,237												5,302,348												4,233,248
Shareholders' equity		761,600												756,699												713,535
Total liabilities and shareholders' equity	$	6,163,837											$	6,059,047											$	4,946,783
Net interest rate spread										3.87	%											3.78	%											3.60	%
Net interest income and margin					$	55,698				4.14	%						$	54,902				4.10	%						$	45,025				4.14	%
Net interest income and net interest margin (tax equivalent)					$	56,317				4.19	%						$	55,477				4.14	%						$	45,152				4.15	%

Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)

	Three Months Ended
	2021				2020
	March 31				December 31				September 30				June 30				March 31
	(Dollars in thousands)
Period-end Loan Portfolio:
Commercial and industrial	$	664,792			$	667,079			$	650,634			$	651,430			$	702,267
Mortgage warehouse		—				—				—				—				1,051
Paycheck Protection Program (PPP)		728,424				569,901				710,234				695,772				—
Real estate:
Commercial real estate (including multi-family residential)		2,018,853				1,999,877				1,971,228				1,956,116				1,951,080
Commercial real estate construction and land development		386,637				367,213				376,877				386,865				378,987
1-4 family residential (including home equity)		726,228				737,605				716,565				703,513				704,212
Residential construction		119,528				127,522				148,056				171,656				177,025
Consumer and other		14,707				22,567				18,768				18,304				40,924
Total loans	$	4,659,169			$	4,491,764			$	4,592,362			$	4,583,656			$	3,955,546
Asset Quality:
Nonaccrual loans	$	35,051			$	28,893			$	37,928			$	33,223			$	21,621
Accruing loans 90 or more days past due		—				—				—				—				—
Total nonperforming loans		35,051				28,893				37,928				33,223				21,621
Other real estate		576				9,196				8,876				11,847				12,617
Other repossessed assets		—				—				—				—				—
Total nonperforming assets	$	35,627			$	38,089			$	46,804			$	45,070			$	34,238
Net charge-offs	$	345			$	4,287			$	291			$	538			$	2,917
Nonaccrual loans:
Commercial and industrial	$	14,059			$	10,747			$	13,171			$	12,578			$	8,669
Mortgage warehouse		—				—				—				—				—
Real estate:
Commercial real estate (including multi-family residential)		13,455				10,081				15,849				16,127				7,024
Commercial real estate construction and land development		1,000				3,011				3,085				53				1,958
1-4 family residential (including home equity)		5,736				4,525				4,263				3,434				2,845
Residential construction		—				—				876				898				982
Consumer and other		801				529				684				133				143
Total nonaccrual loans	$	35,051			$	28,893			$	37,928			$	33,223			$	21,621
Asset Quality Ratios:
Nonperforming assets to total assets		0.55	%			0.63	%			0.78	%			0.77	%			0.68	%
Nonperforming loans to total loans		0.75	%			0.64	%			0.83	%			0.72	%			0.55	%
Allowance for credit losses on loans to nonperforming loans		150.52	%			184.03	%			128.40	%			143.40	%			173.49	%
Allowance for credit losses on loans to total loans		1.13	%			1.18	%			1.06	%			1.04	%			0.95	%
Net charge-offs to average loans (annualized)		0.03	%			0.37	%			0.03	%			0.05	%			0.30	%

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

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

	Three Months Ended
	2021				2020
	March 31				December 31				September 30				June 30				March 31
	(Dollars and share amounts in thousands, except per share data)
Total shareholders' equity	$	760,537			$	758,669			$	753,053			$	736,143			$	706,593
Less: Goodwill and core deposit intangibles, net		240,772				241,596				242,549				243,538				244,528
Tangible shareholders’ equity	$	519,765			$	517,073			$	510,504			$	492,605			$	462,065
Shares outstanding at end of period		20,183				20,208				20,445				20,431				20,355
Tangible book value per share	$	25.75			$	25.59			$	24.97			$	24.11			$	22.70
Net income	$	18,010			$	15,941			$	16,170			$	9,907			$	3,516
Average shareholders' equity	$	761,600			$	756,699			$	748,647			$	723,104			$	713,535
Less: Average goodwill and core deposit intangibles, net		241,166				242,043				243,015				244,010				245,007
Average tangible shareholders’ equity	$	520,434			$	514,656			$	505,632			$	479,094			$	468,528
Return on average tangible equity(A)		14.03	%			12.32	%			12.72	%			8.32	%			3.02	%
Total assets	$	6,430,990			$	6,050,128			$	5,967,751			$	5,836,881			$	5,002,429
Less: Goodwill and core deposit intangibles, net		240,772				241,596				242,549				243,538				244,528
Tangible assets	$	6,190,218			$	5,808,532			$	5,725,202			$	5,593,343			$	4,757,901
Tangible equity to tangible assets		8.40	%			8.90	%			8.92	%			8.81	%			9.71	%

(A) Interim periods annualized.

Allegiance Bancshares, Inc.
8847 West Sam Houston Parkway N., Suite 200
Houston, Texas 77040
ir@allegiancebank.com