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Allegiance Bancshares, Inc. Reports Record Results for the Second Quarter 2021

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·28 min read
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  • Record net income and diluted earnings per share of $22.9 million and $1.12 for the second quarter 2021, respectively, and $40.9 million and $2.01 for the six months ended June 30, 2021, respectively

  • Deposit growth of 15.6% to $5.43 billion as of June 30, 2021 from $4.70 billion as of June 30, 2020, driven primarily by $513.7 million, or 17.4%, growth in interest-bearing deposits and $218.9 million, or 12.5%, growth in noninterest-bearing deposits

  • Board declared quarterly dividend of $0.12 per share of common stock

HOUSTON, July 29, 2021 (GLOBE NEWSWIRE) -- Allegiance Bancshares, Inc. (NASDAQ: ABTX) (Allegiance), the holding company of Allegiance Bank (the "Bank"), today reported record net income of $22.9 million and diluted earnings per share of $1.12 for the second quarter 2021 compared to net income of $9.9 million and diluted earnings per share of $0.48 for the second quarter 2020. Net income for the six months ended June 30, 2021 was $40.9 million, or $2.01 per diluted share, compared to $13.4 million, or $0.65 per diluted share, for the six months ended June 30, 2020. The second quarter and six months ended June 30, 2021 results were primarily due to a recapture of provision for credit losses and increased net interest income driven by lower funding costs.

“We are excited to announce yet another record quarter for Allegiance, which came with core loan and deposit gains, and we enter the third quarter positioned for growth,” said Steve Retzloff, Allegiance’s Chief Executive Officer. “We maintained solid asset quality while economic factors improved which led us to a release of reserves for credit losses” commented Retzloff.

“The positive energy across Allegiance coupled with the outstanding determination of our employees continues to reinforce the execution of our business strategies with precision. The company-wide coordination of efforts has provided powerful momentum within our Treasury Management group as we continue to integrate new customers and focus on building both new and deepening existing customer relationships,” continued Retzloff.

“As we appreciate our successes in the first half of 2021, we believe we are in an excellent position of strength as we prepare for the remainder of the year. We have proven our ability to succeed in a highly competitive market and are well-positioned to support the growing needs of the communities we serve,” concluded Retzloff.

Second Quarter 2021 Results

Net interest income before the provision for credit losses in the second quarter 2021 increased $5.7 million, or 11.3%, to $56.6 million from $50.8 million for the second quarter 2020 and increased $898 thousand, or 1.6%, from $55.7 million in the first quarter 2021. These increases were primarily due to changes in the volume and relative mix of the underlying assets and liabilities, the impact of loans within the Small Business Administration Paycheck Protection Program (PPP) under the Coronavirus Aid, Relief and Economic Security Act (CARES Act) as well as lower costs on interest-bearing liabilities. The net interest margin on a tax equivalent basis decreased 8 basis points to 4.02% for the second quarter 2021 from 4.10% for the second quarter 2020 and decreased 17 basis points from 4.19% for the first quarter 2021. The decreases in the margin were primarily due to the decrease in the average yield on interest-earning assets partially offset by the decrease in funding costs.

Noninterest income for the second quarter 2021 was $2.3 million, an increase of $711 thousand, or 45.5%, compared to $1.6 million for the second quarter 2020 and increased $537 thousand, or 30.9%, compared to $1.7 million for the first quarter 2021. Second quarter 2021 noninterest income reflected higher transactional fee income and no losses on sales of other real estate when compared to first quarter 2020.

Noninterest expense for the second quarter 2021 increased $3.8 million, or 12.8%, to $33.6 million from $29.8 million for the second quarter 2020 and decreased $1.3 million, or 3.8%, compared to the second quarter of 2020 and the first quarter 2021. The increase over the prior year was primarily due to increases in salaries and benefits and the reduced amount of deferred PPP loan origination costs compared to the second quarter of 2020.

In the second quarter 2021, Allegiance’s efficiency ratio increased to 57.07% compared to 56.92% for the second quarter 2020 and decreased from 60.85% for the first quarter 2021. Second quarter 2021 annualized returns on average assets, average equity and average tangible equity were 1.42%, 11.87% and 17.20%, respectively, compared to 0.71%, 5.51% and 8.32%, respectively, for the second quarter 2020. Annualized returns on average assets, average equity and average tangible equity for the first quarter 2021 were 1.18%, 9.59% and 14.03%, respectively. Return on average tangible equity is a non-GAAP measure. Please refer to the non-GAAP reconciliation on page 11.

Six Months Ended June 30, 2021 Results

Net interest income before provision for credit losses for the six months ended June 30, 2021 increased $16.4 million, or 17.1%, to $112.3 million from $95.9 million for the six months ended June 30, 2020 primarily due to a $880.6 million, or 18.7%, increase in average interest-earning assets over the prior year including the impact of PPP loans as well as lower costs related to interest-bearing liabilities. The net interest margin on a tax equivalent basis decreased 2 basis points to 4.10% for the six months ended June 30, 2021 from 4.12% for the six months ended June 30, 2020. The decrease in the margin over the prior year was primarily due to the decrease in the average yield on interest-earning assets partially offset by decreased funding costs.

Noninterest income for the six months ended June 30, 2021 was $4.0 million, a decrease of $278 thousand, or 6.5%, compared to $4.3 million for the six months ended June 30, 2020 due primarily to lower correspondent bank rebates and gains on the sale of securities.

Noninterest expense for the six months ended June 30, 2021 increased $6.3 million, or 10.2%, to $68.5 million from $62.2 million for the six months ended June 30, 2020. The increase in noninterest expense over the six months ended June 30, 2020 was primarily due increased accruals for bonus and profit sharing due to increased net income along with the reduced amount of deferred PPP loan origination costs compared to the prior year.

Allegiance’s efficiency ratio decreased from 62.26% for the six months ended June 30, 2020 to 58.93% for the six months ended June 30, 2021. For the six months ended June 30, 2021, returns on average assets, average equity and average tangible equity were 1.30%, 10.75% and 15.65%, respectively, compared to 0.51%, 3.76% and 5.70%, respectively, for the six months ended June 30, 2020. Return on average tangible equity is a non-GAAP measure. Please refer to the non-GAAP reconciliation on page 11.

Financial Condition

Total assets at June 30, 2021 increased $77.7 million, or 4.8% (annualized), to $6.51 billion compared to $6.43 billion at March 31, 2021 and increased $671.8 million, or 11.5%, compared to $5.84 billion at June 30, 2020, primarily due to the origination and paydowns of PPP loans, origination of core loans and growth within the securities portfolio.

Total loans at June 30, 2021 decreased $198.4 million, or 17.0% (annualized), to $4.46 billion compared to $4.66 billion at March 31, 2021, primarily due to $271.9 million of paydowns on PPP loans partially offset by the origination of $42.7 million of PPP loans. Total loans at June 30, 2021 decreased $122.9 million, or 2.7%, compared to $4.58 billion at June 30, 2020. Core loans, which exclude PPP loans, increased $30.8 million, or 3.1% (annualized), to $3.96 billion at June 30, 2021 from $3.93 billion at March 31, 2021 and increased $73.7 million, or 1.9%, from $3.89 billion at June 30, 2020.

Deposits at June 30, 2021 increased $59.2 million, or 4.4% (annualized), to $5.43 billion compared to $5.37 billion at March 31, 2021 and increased $732.6 million, or 15.6%, compared to $4.70 billion at June 30, 2020.

Asset Quality

Nonperforming assets totaled $38.0 million, or 0.58%, of total assets, at June 30, 2021 compared to $35.6 million, or 0.55%, of total assets at March 31, 2021 and $45.1 million, or 0.77%, of total assets, at June 30, 2020. The allowance for credit losses on loans as a percentage of total loans was 1.11% at June 30, 2021 and 1.13% at March 31, 2021.

The recapture of provision for credit losses for the second quarter 2021 was $2.7 million compared to the provision for credit losses of $639 thousand for the first quarter 2021 and $10.7 million for the second quarter 2020 reflecting recent improvements in economic factors compared to prior quarters where there was more uncertainty surrounding unemployment, COVID-19 and effects related to sustained lower crude oil prices.

Second quarter 2021 net charge-offs were $162 thousand, or 0.01% (annualized) of average loans, a decrease from net charge-offs of $345 thousand, or 0.03% (annualized) of average loans, for the first quarter 2021 and $538 thousand, or 0.05% (annualized) of average loans, for the second 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 $128.5 million, or 2.9% of total loans, at June 30, 2021, of which $10.5 million were on nonaccrual. At June 30, 2021, restaurant and bar industry loans, excluding PPP loans, totaled $114.3 million, or 2.6%, of total loans, of which $301 thousand were on nonaccrual. At June 30, 2021, the Company’s allowance for credit losses on loans allocated to its hotel portfolio was 3.7% 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 $73.0 million, or 1.6%, of total loans at June 30, 2021, of which $3.5 million were on nonaccrual. At June 30, 2021, the allowance for credit losses on loans allocated to the oil and gas loan portfolio was 2.3% 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 June 30, 2021, 43 loans with outstanding loan balances of $47.4 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 September 15, 2021 to all shareholders of record as of August 31, 2021. The amount and timing of any future dividend payments to shareholders will be subject to the discretion of Allegiance’s Board of Directors.

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 11 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, July 29, 2021 at 9:00 a.m. Central Time (10:00 a.m. Eastern Time) to discuss its second quarter 2021 results. Individuals and investment professionals may participate in the call by dialing (877) 279-2520. The conference ID number is 5047167. 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 June 30, 2021, Allegiance was a $6.51 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 June 30, 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 continues to evolve 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 Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 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

June 30

March 31

December 31

September 30

June 30

(Dollars in thousands)

ASSETS

Cash and due from banks

$

146,397

$

141,947

$

122,897

$

327,416

$

237,585

Interest-bearing deposits at other financial institutions

564,888

482,383

299,869

19,732

28,815

Total cash and cash equivalents

711,285

624,330

422,766

347,148

266,400

Available for sale securities, at fair value

977,282

787,516

772,890

663,301

618,751

Loans held for investment

4,460,743

4,659,169

4,491,764

4,592,362

4,583,656

Less: allowance for credit losses on loans

(49,586

)

(52,758

)

(53,173

)

(48,698

)

(47,642

)

Loans, net

4,411,157

4,606,411

4,438,591

4,543,664

4,536,014

Accrued interest receivable

37,075

38,632

40,053

36,996

32,795

Premises and equipment, net

65,442

66,115

70,685

69,887

67,229

Other real estate owned

1,397

576

9,196

8,876

11,847

Federal Home Loan Bank stock

8,234

7,775

7,756

9,716

14,844

Bank owned life insurance

27,976

27,825

27,686

27,542

27,398

Goodwill

223,642

223,642

223,642

223,642

223,642

Core deposit intangibles, net

16,306

17,130

17,954

18,907

19,896

Other assets

28,871

31,038

18,909

18,072

18,065

Total assets

$

6,508,667

$

6,430,990

$

6,050,128

$

5,967,751

$

5,836,881

LIABILITIES AND SHAREHOLDERS’ EQUITY

LIABILITIES:

Deposits:

Noninterest-bearing

$

1,973,042

$

1,914,121

$

1,704,567

$

1,772,700

$

1,754,128

Interest-bearing

Demand

553,874

480,710

437,328

409,137

375,353

Money market and savings

1,556,920

1,617,823

1,499,938

1,483,370

1,270,437

Certificates and other time

1,349,522

1,361,535

1,346,649

1,252,159

1,300,793

Total interest-bearing deposits

3,460,316

3,460,068

3,283,915

3,144,666

2,946,583

Total deposits

5,433,358

5,374,189

4,988,482

4,917,366

4,700,711

Accrued interest payable

1,940

3,862

2,701

3,082

3,293

Borrowed funds

139,951

147,517

155,515

155,512

255,509

Subordinated debt

108,584

108,453

108,322

108,191

108,061

Other liabilities

35,684

36,432

36,439

30,547

33,164

Total liabilities

5,719,517

5,670,453

5,291,459

5,214,698

5,100,738

SHAREHOLDERS’ EQUITY:

Common stock

20,213

20,183

20,208

20,445

20,431

Capital surplus

506,810

505,307

508,794

516,151

515,045

Retained earnings

231,333

210,834

195,236

186,866

172,723

Accumulated other comprehensive income

30,794

24,213

34,431

29,591

27,944

Total shareholders’ equity

789,150

760,537

758,669

753,053

736,143

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$

6,508,667

$

6,430,990

$

6,050,128

$

5,967,751

$

5,836,881

Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)

Three Months Ended

Year-to-Date

2021

2020

2021

2020

June 30

March 31

December 31

September 30

June 30

June 30

June 30

(Dollars in thousands, except per share data)

INTEREST INCOME:

Loans, including fees

$

57,691

$

57,991

$

58,496

$

56,418

$

56,421

$

115,682

$

111,045

Securities:

Taxable

2,556

2,402

2,203

2,095

1,842

4,958

3,929

Tax-exempt

2,491

2,394

2,316

2,280

2,169

4,885

2,715

Deposits in other financial institutions

94

41

32

18

20

135

215

Total interest income

62,832

62,828

63,047

60,811

60,452

125,660

117,904

INTEREST EXPENSE:

Demand, money market and savings deposits

1,337

1,484

1,621

1,657

1,729

2,821

6,093

Certificates and other time deposits

2,989

3,665

4,507

5,239

5,845

6,654

11,929

Borrowed funds

469

539

557

558

562

1,008

1,068

Subordinated debt

1,441

1,442

1,460

1,448

1,469

2,883

2,942

Total interest expense

6,236

7,130

8,145

8,902

9,605

13,366

22,032

NET INTEREST INCOME

56,596

55,698

54,902

51,909

50,847

112,294

95,872

(Recapture of) provision for credit losses

(2,679

)

639

4,368

1,347

10,669

(2,040

)

21,659

Net interest income after provision for credit losses

59,275

55,059

50,534

50,562

40,178

114,334

74,213

NONINTEREST INCOME:

Nonsufficient funds fees

94

83

100

75

60

177

229

Service charges on deposit accounts

382

388

405

325

343

770

800

(Loss) gain on sale of securities

49

93

49

287

(Loss) gain on sales of other real estate and repossessed assets

(176

)

117

(306

)

(176

)

(375

)

Bank owned life insurance

151

139

144

144

143

290

294

Debit card and ATM card income

761

630

637

574

510

1,391

994

Rebate from correspondent bank

73

132

196

98

89

205

582

Other

812

491

537

517

630

1,303

1,476

Total noninterest income

2,273

1,736

2,019

1,850

1,562

4,009

4,287

NONINTEREST EXPENSE:

Salaries and employee benefits

22,472

22,452

21,003

20,034

19,334

44,924

39,115

Net occupancy and equipment

2,225

2,390

2,079

2,057

1,926

4,615

3,833

Depreciation

1,057

1,034

1,019

946

885

2,091

1,751

Data processing and software amortization

2,176

2,200

2,107

2,125

1,934

4,376

3,760

Professional fees

608

789

999

756

800

1,397

1,373

Regulatory assessments and FDIC insurance

768

807

810

875

609

1,575

1,241

Core deposit intangibles amortization

824

824

953

989

990

1,648

1,980

Communications

332

321

225

355

390

653

807

Advertising

432

298

347

327

370

730

891

Other real estate expense

229

113

382

2,017

114

342

2,762

Other

2,472

3,691

2,825

2,084

2,427

6,163

4,667

Total noninterest expense

33,595

34,919

32,749

32,565

29,779

68,514

62,180

INCOME BEFORE INCOME TAXES

27,953

21,876

19,804

19,847

11,961

49,829

16,320

Provision for income taxes

5,028

3,866

3,863

3,677

2,054

8,894

2,897

NET INCOME

$

22,925

$

18,010

$

15,941

$

16,170

$

9,907

$

40,935

$

13,423

EARNINGS PER SHARE

Basic

$

1.13

$

0.89

$

0.78

$

0.79

$

0.49

$

2.03

$

0.66

Diluted

$

1.12

$

0.89

$

0.77

$

0.79

$

0.48

$

2.01

$

0.65

Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)

Three Months Ended

Year-to-Date

2021

2020

2021

2020

June 30

March 31

December 31

September 30

June 30

June 30

June 30

(Dollars and share amounts in thousands, except per share data)

Net income

$

22,925

$

18,010

$

15,941

$

16,170

$

9,907

$

40,935

$

13,423

Earnings per share, basic

$

1.13

$

0.89

$

0.78

$

0.79

$

0.49

$

2.03

$

0.66

Earnings per share, diluted

$

1.12

$

0.89

$

0.77

$

0.79

$

0.48

$

2.01

$

0.65

Dividends per share

$

0.12

$

0.12

$

0.10

$

0.10

$

0.10

$

0.24

$

0.20

Return on average assets(A)

1.42

%

1.18

%

1.05

%

1.09

%

0.71

%

1.30

%

0.51

%

Return on average equity(A)

11.87

%

9.59

%

8.38

%

8.59

%

5.51

%

10.75

%

3.76

%

Return on average tangible equity(A)(B)

17.20

%

14.03

%

12.32

%

12.72

%

8.32

%

15.65

%

5.70

%

Net interest margin (tax equivalent)(A)(C)

4.02

%

4.19

%

4.14

%

3.95

%

4.10

%

4.10

%

4.12

%

Efficiency ratio(D)

57.07

%

60.85

%

57.53

%

60.58

%

56.92

%

58.93

%

62.26

%

Capital Ratios

Allegiance Bancshares, Inc. (Consolidated)

Equity to assets

12.12

%

11.83

%

12.54

%

12.62

%

12.61

%

12.12

%

12.61

%

Tangible equity to tangible assets(B)

8.76

%

8.40

%

8.90

%

8.92

%

8.81

%

8.76

%

8.81

%

Estimated common equity tier 1 capital

12.18

%

11.87

%

11.80

%

11.73

%

11.36

%

12.18

%

11.36

%

Estimated tier 1 risk-based capital

12.41

%

12.10

%

12.04

%

11.96

%

11.60

%

12.41

%

11.60

%

Estimated total risk-based capital

15.98

%

15.72

%

15.71

%

15.56

%

15.17

%

15.98

%

15.17

%

Estimated tier 1 leverage capital

8.56

%

8.57

%

8.51

%

8.70

%

8.83

%

8.56

%

8.83

%

Allegiance Bank

Estimated common equity tier 1 capital

13.03

%

13.17

%

13.32

%

13.25

%

12.84

%

13.03

%

12.84

%

Estimated tier 1 risk-based capital

13.03

%

13.17

%

13.32

%

13.25

%

12.84

%

13.03

%

12.84

%

Estimated total risk-based capital

15.22

%

15.37

%

15.55

%

15.41

%

14.97

%

15.22

%

14.97

%

Estimated tier 1 leverage capital

8.99

%

9.33

%

9.41

%

9.64

%

9.77

%

8.99

%

9.77

%

Other Data

Weighted average shares:

Basic

20,203

20,140

20,396

20,439

20,414

20,171

20,413

Diluted

20,386

20,342

20,575

20,532

20,514

20,359

20,572

Period end shares outstanding

20,213

20,183

20,208

20,445

20,431

20,213

20,431

Book value per share

$

39.04

$

37.68

$

37.54

$

36.83

$

36.03

$

39.04

$

36.03

Tangible book value per share(B)

$

27.17

$

25.75

$

25.59

$

24.97

$

24.11

$

27.17

$

24.11

(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 11 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 (recapture of) provision for loan losses are not part of this calculation.


Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)

Three Months Ended

June 30, 2021

March 31, 2021

June 30, 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

$

4,543,142

$

57,691

5.09

%

$

4,571,045

$

57,991

5.15

%

$

4,425,036

$

56,421

5.13

%

Securities

876,099

5,047

2.31

%

789,188

4,796

2.46

%

594,205

4,011

2.71

%

Deposits in other financial institutions and other

294,188

94

0.13

%

96,212

41

0.17

%

18,173

20

0.44

%

Total interest-earning assets

5,713,429

$

62,832

4.41

%

5,456,445

$

62,828

4.67

%

5,037,414

$

60,452

4.83

%

Allowance for credit losses on loans

(52,699

)

(53,370

)

(41,334

)

Noninterest-earning assets

835,801

760,762

637,608

Total assets

$

6,496,531

$

6,163,837

$

5,633,688

Liabilities and Shareholders' Equity

Interest-Bearing Liabilities:

Interest-bearing demand deposits

$

534,314

$

326

0.24

%

$

458,063

$

371

0.33

%

$

353,252

$

421

0.48

%

Money market and savings deposits

1,561,987

1,011

0.26

%

1,539,127

1,113

0.29

%

1,169,225

1,308

0.45

%

Certificates and other time deposits

1,365,881

2,989

0.88

%

1,332,663

3,665

1.12

%

1,302,743

5,845

1.80

%

Borrowed funds

144,126

469

1.31

%

154,927

539

1.41

%

320,332

562

0.71

%

Subordinated debt

108,523

1,441

5.33

%

108,387

1,442

5.40

%

107,998

1,469

5.47

%

Total interest-bearing liabilities

3,714,831

$

6,236

0.67

%

3,593,167

$

7,130

0.80

%

3,253,550

$

9,605

1.19

%

Noninterest-Bearing Liabilities:

Noninterest-bearing demand deposits

1,968,714

1,767,740

1,624,641

Other liabilities

38,183

41,330

32,393

Total liabilities

5,721,728

5,402,237

4,910,584

Shareholders' equity

774,803

761,600

723,104

Total liabilities and shareholders' equity

$

6,496,531

$

6,163,837

$

5,633,688

Net interest rate spread

3.74

%

3.87

%

3.64

%

Net interest income and margin

$

56,596

3.97

%

$

55,698

4.14

%

$

50,847

4.06

%

Net interest income and net interest margin (tax equivalent)

$

57,287

4.02

%

$

56,317

4.19

%

$

51,342

4.10

%

Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)

Six Months Ended June 30,

2021

2020

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

$

4,557,016

$

115,682

5.12

%

$

4,179,164

$

111,045

5.34

%

Securities

832,884

9,843

2.38

%

491,463

6,644

2.72

%

Deposits in other financial institutions

195,768

135

0.14

%

34,442

215

1.26

%

Total interest-earning assets

5,585,668

$

125,660

4.54

%

4,705,069

$

117,904

5.04

%

Allowance for credit losses on loans

(53,033

)

(35,026

)

Noninterest-earning assets

798,468

619,315

Total assets

$

6,331,103

$

5,289,358

Liabilities and Shareholders' Equity

Interest-Bearing Liabilities:

Interest-bearing demand deposits

$

496,399

$

697

0.28

%

$

358,289

$

1,267

0.71

%

Money market and savings deposits

1,550,620

2,124

0.28

%

1,168,883

4,826

0.83

%

Certificates and other time deposits

1,349,364

6,654

0.99

%

1,248,085

11,929

1.92

%

Borrowed funds

149,496

1,008

1.36

%

230,666

1,068

0.93

%

Subordinated debt

108,455

2,883

5.36

%

107,931

2,942

5.48

%

Total interest-bearing liabilities

3,654,334

$

13,366

0.74

%

3,113,854

$

22,032

1.42

%

Noninterest-Bearing Liabilities:

Noninterest-bearing demand deposits

1,868,783

1,425,265

Other liabilities

39,748

31,919

Total liabilities

5,562,865

4,571,038

Shareholders' equity

768,238

718,320

Total liabilities and shareholders' equity

$

6,331,103

$

5,289,358

Net interest rate spread

3.80

%

3.62

%

Net interest income and margin

$

112,294

4.05

%

$

95,872

4.10

%

Net interest income and net interest margin (tax equivalent)

$

113,604

4.10

%

$

96,493

4.12

%

Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)

Three Months Ended

2021

2020

June 30

March 31

December 31

September 30

June 30

(Dollars in thousands)

Period-end Loan Portfolio:

Commercial and industrial

$

690,867

$

664,792

$

667,079

$

650,634

$

651,430

Paycheck Protection Program (PPP)

499,207

728,424

569,901

710,234

695,772

Real estate:

Commercial real estate (including multi-family residential)

2,051,516

2,018,853

1,999,877

1,971,228

1,956,116

Commercial real estate construction and land development

371,732

386,637

367,213

376,877

386,865

1-4 family residential (including home equity)

715,119

726,228

737,605

716,565

703,513

Residential construction

111,956

119,528

127,522

148,056

171,656

Consumer and other

20,346

14,707

22,567

18,768

18,304

Total loans

$

4,460,743

$

4,659,169

$

4,491,764

$

4,592,362

$

4,583,656

Asset Quality:

Nonaccrual loans

$

36,643

$

35,051

$

28,893

$

37,928

$

33,223

Accruing loans 90 or more days past due

Total nonperforming loans

36,643

35,051

28,893

37,928

33,223

Other real estate

1,397

576

9,196

8,876

11,847

Other repossessed assets

Total nonperforming assets

$

38,040

$

35,627

$

38,089

$

46,804

$

45,070

Net charge-offs

$

162

$

345

$

4,287

$

291

$

538

Nonaccrual loans:

Commercial and industrial

$

12,949

$

14,059

$

10,747

$

13,171

$

12,578

Real estate:

Commercial real estate (including multi-family residential)

18,123

13,455

10,081

15,849

16,127

Commercial real estate construction and land development

53

1,000

3,011

3,085

53

1-4 family residential (including home equity)

4,839

5,736

4,525

4,263

3,434

Residential construction

876

898

Consumer and other

679

801

529

684

133

Total nonaccrual loans

$

36,643

$

35,051

$

28,893

$

37,928

$

33,223

Asset Quality Ratios:

Nonperforming assets to total assets

0.58

%

0.55

%

0.63

%

0.78

%

0.77

%

Nonperforming loans to total loans

0.82

%

0.75

%

0.64

%

0.83

%

0.72

%

Allowance for credit losses on loans to nonperforming loans

135.32

%

150.52

%

184.03

%

128.40

%

143.40

%

Allowance for credit losses on loans to total loans

1.11

%

1.13

%

1.18

%

1.06

%

1.04

%

Net charge-offs to average loans (annualized)

0.01

%

0.03

%

0.37

%

0.03

%

0.05

%

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

Year-to-Date

2021

2020

2021

2020

June 30

March 31

December 31

September 30

June 30

June 30

June 30

(Dollars and share amounts in thousands, except per share data)

Total shareholders' equity

$

789,150

$

760,537

$

758,669

$

753,053

$

736,143

$

789,150

$

736,143

Less: Goodwill and core deposit intangibles, net

239,948

240,772

241,596

242,549

243,538

239,948

243,538

Tangible shareholders’ equity

$

549,202

$

519,765

$

517,073

$

510,504

$

492,605

$

549,202

$

492,605

Shares outstanding at end of period

20,213

20,183

20,208

20,445

20,431

20,213

20,431

Tangible book value per share

$

27.17

$

25.75

$

25.59

$

24.97

$

24.11

$

27.17

$

24.11

Net income

$

22,925

$

18,010

$

15,941

$

16,170

$

9,907

$

40,935

$

13,423

Average shareholders' equity

$

774,803

$

761,600

$

756,699

$

748,647

$

723,104

$

768,238

$

718,320

Less: Average goodwill and core deposit intangibles, net

240,331

241,166

242,043

243,015

244,010

240,746

244,508

Average tangible shareholders’ equity

$

534,472

$

520,434

$

514,656

$

505,632

$

479,094

$

527,492

$

473,812

Return on average tangible equity(A)

17.20

%

14.03

%

12.32

%

12.72

%

8.32

%

15.65

%

5.70

%

Total assets

$

6,508,667

$

6,430,990

$

6,050,128

$

5,967,751

$

5,836,881

$

6,508,667

$

5,836,881

Less: Goodwill and core deposit intangibles, net

239,948

240,772

241,596

242,549

243,538

239,948

243,538

Tangible assets

$

6,268,719

$

6,190,218

$

5,808,532

$

5,725,202

$

5,593,343

$

6,268,719

$

5,593,343

Tangible equity to tangible assets

8.76

%

8.40

%

8.90

%

8.92

%

8.81

%

8.76

%

8.81

%

(A) Interim periods annualized.

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