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Allegiance Bancshares, Inc. Reports Third Quarter 2019 Results

HOUSTON, Oct. 25, 2019 (GLOBE NEWSWIRE) -- Allegiance Bancshares, Inc. (ABTX) ("Allegiance"), the holding company of Allegiance Bank (the "Bank"), today reported net income of $12.0 million and diluted earnings per share of $0.57 for the third quarter 2019 compared to net income of $8.9 million and diluted earnings per share of $0.65 for the third quarter 2018. The third quarter 2019 included $1.4 million of pre-tax severance expense. Net income for the nine months ended September 30, 2019 was $39.0 million, or $1.81 per diluted share, compared to net income of $24.1 million, or $1.77 per diluted share, for the nine months ended September 30, 2018. The nine months ended September 30, 2019 results included $1.4 million of pre-tax severance expense and $1.3 million of pre-tax acquisition and merger-related expenses. The nine months ended September 30, 2018 results included $821 thousand of pre-tax acquisition and merger-related expenses.

“The third quarter was very productive for us and culminated with the completion of a $60 million subordinated debt offering,” said George Martinez, Allegiance’s Chairman and Chief Executive Officer. “Securing this attractive capital, positions us well for future growth,” continued Martinez.

“We are dedicated to taking great care of our customers by building on long-lasting relationships as we help them reach their financial goals. We are also keenly focused on developing new customer relationships and adding to our market share. Our personalized service to all of our customers is what will continue to set us apart as the premier bank in the Houston region and what will continue to drive our long-term financial success. We are in a tremendous position of strength and are encouraged about our prospects for the remainder of the year as we work to leverage our talent and capital to produce improved returns for our shareholders,” concluded Martinez.

Third Quarter 2019 Results

Net interest income before the provision for loan losses in the third quarter 2019 increased $16.8 million, or 59.9%, to $44.8 million from $28.0 million for the third quarter 2018 primarily due to a $1.55 billion, or 56.6%, increase in average interest-earning assets for the same period. This increase was mainly due to the Post Oak Bancshares, Inc. acquisition during the fourth quarter of 2018 as well as organic growth for the year-over-year period. Net interest income before provision for loan losses for the third quarter 2019 decreased from $45.6 million in the second quarter 2019. The net interest margin on a tax equivalent basis increased 6 basis points to 4.16% for the third quarter 2019 from 4.10% for the third quarter 2018 and decreased 17 basis points from 4.33% for the second quarter 2019. Core net interest margin on a tax equivalent basis excludes the impact of acquisition accounting adjustments and was 3.97% for the third quarter 2019 compared to 4.07% for the second quarter 2019. Please refer to the non-GAAP reconciliation on page 10.

Noninterest income for the third quarter 2019 was $2.9 million, an increase of $961 thousand, or 49.8%, compared to $1.9 million for the third quarter 2018 and decreased $956 thousand, or 24.9%, compared to $3.8 million for the second quarter 2019. Noninterest income for the second quarter 2019 included $846 thousand of gain on the sale of securities.

Noninterest expense for the third quarter 2019 increased $10.8 million, or 56.6%, to $30.0 million from $19.2 million for the third quarter 2018, and decreased slightly compared to the second quarter 2019. The increase over the prior year quarter was primarily due to additional expenses associated with increased headcount and bank offices from the Post Oak acquisition. Additionally, the third quarter 2019 included $1.4 million of severance expense partially offset by a $676 thousand FDIC Small Bank Assessment Credit.

In the third quarter 2019, Allegiance’s efficiency ratio was 62.88% compared to 61.93% for the second quarter 2019 and 63.95% for the third quarter 2018. Third quarter 2019 annualized returns on average assets, average equity and average tangible equity were 0.98%, 6.73% and 10.33%, respectively, compared to 1.19%, 8.10% and 12.52%, respectively, for the second quarter 2019. Annualized returns on average assets, average equity and average tangible equity for the third quarter 2018 were 1.18%, 10.80% and 12.40%, respectively.

Nine Months Ended September 30, 2019 Results

Net interest income before provision for loan losses for the nine months ended September 30, 2019 increased $52.3 million, or 63.2%, to $135.0 million from $82.7 million for the nine months ended September 30, 2018 primarily due to a $1.56 billion, or 58.4%, increase in average interest-earning assets over the prior year associated with the Post Oak acquisition. The net interest margin on a tax equivalent basis increased 10 basis points to 4.27% for the nine months ended September 30, 2019 from 4.17% for the nine months ended September 30, 2018. Core net interest margin on a tax equivalent basis for the nine months ended September 30, 2019 would have been 4.02%, compared to 4.17% for the nine months ended September 30, 2018. Please refer to the non-GAAP reconciliation on page 10.

Noninterest income for the nine months ended September 30, 2019 was $10.0 million, an increase of $4.6 million, or 86.3%, compared to $5.4 million for the nine months ended September 30, 2018 due primarily to additional noninterest income resulting from the Post Oak acquisition along with the gain on sale of securities.

Noninterest expense for the nine months ended September 30, 2019 increased $33.5 million, or 58.0%, to $91.2 million from $57.7 million for the nine months ended September 30, 2018. The increase in noninterest expense over the nine months ended September 30, 2018 was primarily due to additional expenses associated with increased headcount and bank offices along with merger-related expenses from the Post Oak acquisition. Additionally, the nine months ended 2019 included $1.4 million of severance expense partially offset by a $676 thousand FDIC Small Bank Assessment Credit.

Allegiance’s efficiency ratio decreased from 65.52% for the nine months ended September 30, 2018 to 63.25% for the nine months ended September 30, 2019. For the nine months ended September 30, 2019, returns on average assets, average equity and average tangible equity were 1.09%, 7.36% and 11.35%, respectively, compared to 1.10%, 10.16% and 11.72%, respectively, for the nine months ended September 30, 2018.

Financial Condition

Total assets at September 30, 2019 increased $111.6 million to $4.91 billion compared to $4.79 billion at June 30, 2019 and increased $1.87 billion compared to $3.04 billion at September 30, 2018, primarily due to the Post Oak acquisition and organic loan growth.

Total loans at September 30, 2019 increased $28.0 million, or 2.9% (annualized), to $3.89 billion compared to $3.86 billion at June 30, 2019 and increased $1.45 billion, or 59.2%, compared to $2.44 billion at September 30, 2018, primarily due to loans acquired in the Post Oak acquisition. Core loans, which exclude the mortgage warehouse portfolio, increased $37.6 million, or 4.0% (annualized), to $3.85 billion at September 30, 2019 from $3.81 billion at June 30, 2019 and increased $1.46 billion, or 60.9%, from $2.39 billion at September 30, 2018. Excluding loans acquired from Post Oak at acquisition of $1.16 billion, core loans at September 30, 2019 increased $297.4 million, from September 30, 2018.

Deposits at September 30, 2019 increased $36.8 million, or 3.8% (annualized), to $3.90 billion compared to $3.86 billion at June 30, 2019 and increased $1.46 billion, or 60.1%, compared to $2.43 billion at September 30, 2018, primarily related to the Post Oak acquisition.

Asset Quality

Nonperforming assets totaled $42.9 million, or 0.88% of total assets, at September 30, 2019, compared to $37.7 million, or 0.79%, of total assets, at June 30, 2019, and $16.9 million, or 0.56% of total assets, at September 30, 2018. The allowance for loan losses was 0.77% of total loans at September 30, 2019, 0.72% of total loans at June 30, 2019 and 0.97% of total loans at September 30, 2018. The decrease in the allowance for loan losses as a percentage of loans from September 30, 2018 reflects the loans acquired in the Post Oak acquisition that were recorded at fair value without an allowance for loan losses at acquisition date.

The provision for loan losses for the third quarter 2019 was $2.6 million, or 0.27% (annualized) of average loans, compared to $1.4 million, or 0.15% (annualized) of average loans, for the second quarter 2019.

Third quarter 2019 net charge-offs were $729 thousand, or 0.07% (annualized) of average loans, compared to net charge-offs of $590 thousand, or 0.06% (annualized) of average loans, for the second quarter 2019 and $245 thousand, or 0.04% (annualized) of average loans, for the third quarter 2018. Net charge-offs for the nine months ended September 30, 2019 were $1.5 million, or 0.18% (annualized) of average loans, compared to net charge-offs for the nine months ended September 30, 2018 of $1.3 million, or 0.08% (annualized) of average loans.

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 10 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 Friday, October 25, 2019 at 9:00 a.m. Central Time (10:00 a.m. Eastern Time) to discuss its third quarter 2019 results. Individuals and investment professionals may participate in the call by dialing (877) 279-2520. The conference ID number is 1986475. 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 September 30, 2019, Allegiance was a $4.91 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 September 30, 2019, 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 and one loan production office in the Houston metropolitan area and one bank office location 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 may contain forward-looking statements within the meaning of the securities laws that are based on various facts and derived utilizing important 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 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. These and various other risk factors are discussed in Allegiance’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 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. Allegiance undertakes no 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)

2019

2018

September 30

June 30

March 31

December 31

September 30

(Dollars in thousands)

Cash and cash equivalents

$

300,619

$

232,607

$

258,843

$

268,947

$

191,468

Available for sale securities

353,000

348,173

345,716

337,293

300,115

Total loans

3,886,004

3,857,963

3,806,161

3,708,306

2,440,926

Allowance for loan losses

(29,808

)

(27,940

)

(27,123

)

(26,331

)

(23,586

)

Loans, net

3,856,196

3,830,023

3,779,038

3,681,975

2,417,340

Goodwill

223,642

223,642

223,642

223,125

39,389

Core deposit intangibles, net

23,053

24,231

25,409

26,587

2,688

Premises and equipment, net

67,175

59,690

60,327

41,717

18,970

Other real estate owned

8,333

6,294

1,152

630

1,801

Bank owned life insurance

26,947

26,794

26,639

26,480

22,838

Other assets

46,875

42,757

48,036

48,495

40,930

Total assets

$

4,905,840

$

4,794,211

$

4,768,802

$

4,655,249

$

3,035,539

Noninterest-bearing deposits

$

1,227,839

$

1,173,423

$

1,181,920

$

1,209,300

$

789,705

Interest-bearing deposits

2,669,646

2,687,217

2,598,141

2,453,236

1,644,086

Total deposits

3,897,485

3,860,640

3,780,061

3,662,536

2,433,791

Borrowed funds

159,501

146,998

201,995

225,493

211,569

Subordinated debt

107,771

49,019

48,959

48,899

48,839

Other liabilities

34,775

32,853

34,010

15,337

13,209

Total liabilities

4,199,532

4,089,510

4,065,025

3,952,265

2,707,408

Common stock

20,737

21,147

21,484

21,938

13,397

Capital surplus

529,688

541,979

556,184

571,803

221,762

Retained earnings

149,389

137,342

123,094

112,131

98,968

Accumulated other comprehensive
income (loss)

6,494

4,233

3,015

(2,888

)

(5,996

)

Total shareholders’ equity

706,308

704,701

703,777

702,984

328,131

Total liabilities and equity

$

4,905,840

$

4,794,211

$

4,768,802

$

4,655,249

$

3,035,539

Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)

Three Months Ended

Year-to-Date

2019

2018

2019

2018

September 30

June 30

March 31

December 31

September 30

September 30

September 30

(Dollars in thousands, except per share data)

INTEREST INCOME:

Loans, including fees

$

55,790

$

56,016

$

54,189

$

53,272

$

32,988

$

165,995

$

94,951

Securities:

.

Taxable

2,090

1,837

982

844

636

4,909

1,881

Tax-exempt

483

692

1,290

1,445

1,447

2,465

4,357

Deposits in other financial
institutions

302

401

688

742

265

1,391

731

Total interest income

58,665

58,946

57,149

56,303

35,336

174,760

101,920

INTEREST EXPENSE:

Demand, money market and
savings deposits

4,975

4,513

3,728

3,367

1,248

13,216

3,111

Certificates and other time
deposits

6,909

7,008

6,256

5,358

4,051

20,173

10,120

Borrowed funds

1,183

1,118

1,827

1,008

1,272

4,128

3,780

Subordinated debt

761

736

735

732

729

2,232

2,168

Total interest expense

13,828

13,375

12,546

10,465

7,300

39,749

19,179

NET INTEREST INCOME

44,837

45,571

44,603

45,838

28,036

135,011

82,741

Provision for loan losses

2,597

1,407

1,002

2,964

5,006

1,284

Net interest income after provision
for loan losses

42,240

44,164

43,601

42,874

28,036

130,005

81,457

NONINTEREST INCOME:

Nonsufficient funds fees

168

139

162

190

175

469

565

Service charges on deposit
accounts

379

365

325

363

177

1,069

506

Gain on sale of securities

846

846

Gain (loss) on sales of other real
estate and repossessed assets

70

1

(429

)

71

1

Bank owned life insurance

153

155

159

163

137

467

416

Rebate from correspondent bank

900

884

896

988

613

2,680

1,621

Other

1,289

1,386

1,746

1,059

826

4,421

2,270

Total noninterest income

2,889

3,845

3,289

2,334

1,928

10,023

5,379

NONINTEREST EXPENSE:

Salaries and employee benefits

20,221

19,415

19,684

18,167

12,965

59,320

38,537

Net occupancy and equipment

1,973

2,088

2,078

1,959

1,281

6,139

3,886

Depreciation

822

756

753

802

490

2,331

1,330

Data processing and software
amortization

2,058

1,735

1,597

1,485

1,226

5,390

3,635

Professional fees

667

527

599

670

303

1,793

1,339

Regulatory assessments and
FDIC insurance

(41

)

802

728

776

505

1,489

1,533

Core deposit intangibles
amortization

1,178

1,178

1,178

1,229

195

3,534

586

Communications

455

468

430

416

262

1,353

769

Advertising

449

617

704

704

351

1,770

1,021

Acquisition and merger-related
expenses

153

1,173

840

196

1,326

821

Other

2,227

2,341

2,191

1,998

1,390

6,759

4,284

Total noninterest expense

30,009

30,080

31,115

29,046

19,164

91,204

57,741

INCOME BEFORE INCOME TAXES

15,120

17,929

15,775

16,162

10,800

48,824

29,095

Provision for income taxes

3,073

3,681

3,097

2,999

1,921

9,851

4,949

NET INCOME

$

12,047

$

14,248

$

12,678

$

13,163

$

8,879

$

38,973

$

24,146

EARNINGS PER SHARE

Basic

$

0.57

$

0.67

$

0.58

$

0.60

$

0.66

$

1.83

$

1.81

Diluted

$

0.57

$

0.66

$

0.58

$

0.59

$

0.65

$

1.81

$

1.77


Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)

Three Months Ended

Year-to-Date

2019

2018

2019

2018

September 30

June 30

March 31

December 31

September 30

September 30

September 30

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

Net income

$

12,047

$

14,248

$

12,678

$

13,163

$

8,879

$

38,973

$

24,146

Earnings per share, basic

$

0.57

$

0.67

$

0.58

$

0.60

$

0.66

$

1.83

$

1.81

Earnings per share, diluted

$

0.57

$

0.66

$

0.58

$

0.59

$

0.65

$

1.81

$

1.77

Return on average assets(A)

0.98

%

1.19

%

1.08

%

1.12

%

1.18

%

1.09

%

1.10

%

Return on average equity(A)

6.73

%

8.10

%

7.27

%

7.49

%

10.80

%

7.36

%

10.16

%

Return on average tangible
equity(A)(B)

10.33

%

12.52

%

11.22

%

11.66

%

12.40

%

11.35

%

11.72

%

Net interest margin
(tax equivalent)(C)

4.16

%

4.33

%

4.31

%

4.45

%

4.10

%

4.27

%

4.17

%

Core net interest margin
(tax equivalent)(B)

3.97

%

4.07

%

4.03

%

4.16

%

4.10

%

4.02

%

4.17

%

Efficiency ratio(D)

62.88

%

61.93

%

64.97

%

60.30

%

63.95

%

63.25

%

65.52

%

Capital Ratios

Allegiance Bancshares, Inc.
(Consolidated)

Equity to assets

14.40

%

14.70

%

14.76

%

15.10

%

10.81

%

14.40

%

10.81

%

Tangible equity to tangible
assets(B)

9.86

%

10.05

%

10.06

%

10.29

%

9.56

%

9.86

%

9.56

%

Estimated common equity
tier 1 capital

11.28

%

11.34

%

11.37

%

11.76

%

11.17

%

11.28

%

11.16

%

Estimated tier 1 risk-based
capital

11.51

%

11.58

%

11.61

%

12.01

%

11.53

%

11.51

%

11.51

%

Estimated total risk-based
capital

14.70

%

13.27

%

13.28

%

13.70

%

13.94

%

14.70

%

13.92

%

Estimated tier 1 leverage
capital

10.06

%

10.17

%

10.25

%

10.61

%

10.23

%

10.06

%

10.23

%

Allegiance Bank

Estimated common equity
tier 1 capital

12.28

%

12.02

%

11.67

%

11.83

%

11.24

%

12.28

%

11.23

%

Estimated tier 1 risk-based
capital

12.28

%

12.02

%

11.67

%

11.83

%

11.24

%

12.28

%

11.23

%

Estimated total risk-based
capital

14.01

%

13.71

%

13.34

%

13.53

%

13.65

%

14.01

%

13.64

%

Estimated tier 1 leverage
capital

10.73

%

10.57

%

10.31

%

10.45

%

9.98

%

10.73

%

9.98

%

Other Data

Weighted average shares:

Basic

20,981

21,257

21,733

21,908

13,371

21,321

13,320

Diluted

21,256

21,546

22,040

22,210

13,637

21,591

13,605

Period end shares
outstanding

20,737

21,147

21,484

21,938

13,397

20,737

13,397

Book value per share

$

34.06

$

33.32

$

32.76

$

32.04

$

24.49

$

34.06

$

24.49

Tangible book value per
share(B)

$

22.16

$

21.60

$

21.17

$

20.66

$

21.35

$

22.16

$

21.35

  1. Interim periods annualized.

  2. Refer to the calculation of these non-GAAP financial measures and a reconciliation to their most directly comparable GAAP financial measures on page 10 of this Earnings Release.

  3. Net interest margin represents net interest income divided by average interest-earning assets.

  4. 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

September 30, 2019

June 30, 2019

September 30, 2018

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

$

3,870,205

$

55,790

5.72

%

$

3,819,687

$

56,016

5.88

%

$

2,384,966

$

32,988

5.49

%

Securities

359,392

2,573

2.84

%

350,004

2,529

2.90

%

304,254

2,083

2.72

%

Deposits in other financial
institutions and other

55,070

302

2.17

%

63,962

401

2.52

%

47,518

265

2.21

%

Total interest-earning assets

4,284,667

$

58,665

5.43

%

4,233,653

$

58,946

5.58

%

2,736,738

$

35,336

5.12

%

Allowance for loan losses

(28,593

)

(27,125

)

(24,059

)

Noninterest-earning assets

600,004

586,435

276,997

Total assets

$

4,856,078

$

4,792,963

$

2,989,676

Liabilities and
Shareholders' Equity

Interest-Bearing Liabilities:

Interest-bearing demand
deposits

$

332,652

$

943

1.13

%

$

350,147

$

1,152

1.32

%

$

181,284

$

389

0.85

%

Money market and savings
deposits

1,099,937

4,032

1.45

%

994,557

3,361

1.36

%

530,240

859

0.64

%

Certificates and other time
deposits

1,269,886

6,909

2.16

%

1,331,955

7,008

2.11

%

896,253

4,051

1.79

%

Borrowed funds

158,358

1,183

2.96

%

155,969

1,118

2.87

%

234,776

1,272

2.15

%

Subordinated debt

51,607

761

5.85

%

48,986

736

6.03

%

48,805

729

5.93

%

Total interest-bearing
liabilities

2,912,440

$

13,828

1.88

%

2,881,614

$

13,375

1.86

%

1,891,358

$

7,300

1.53

%

Noninterest-Bearing
Liabilities:

Noninterest-bearing demand
deposits

1,198,564

1,173,662

761,935

Other liabilities

35,030

32,525

10,179

Total liabilities

4,146,034

4,087,801

2,663,472

Shareholders' equity

710,044

705,162

326,204

Total liabilities and
shareholders' equity

$

4,856,078

$

4,792,963

$

2,989,676

Net interest rate spread

3.55

%

3.72

%

3.59

%

Net interest income and margin

$

44,837

4.15

%

$

45,571

4.32

%

$

28,036

4.06

%

Net interest income and net
interest margin
(tax equivalent)

$

44,924

4.16

%

$

45,684

4.33

%

$

28,292

4.10

%


Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)

Nine Months Ended September 30,

2019

2018

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

$

3,812,827

$

165,995

5.82

%

$

2,319,727

$

94,951

5.47

%

Securities

352,074

7,374

2.80

%

310,709

6,238

2.68

%

Deposits in other financial institutions

79,309

1,391

2.34

%

49,205

731

1.99

%

Total interest-earning assets

4,244,210

$

174,760

5.51

%

2,679,641

$

101,920

5.09

%

Allowance for loan losses

(27,500

)

(24,254

)

Noninterest-earning assets

581,932

276,777

Total assets

$

4,798,642

$

2,932,164

Liabilities and Shareholders' Equity

Interest-Bearing Liabilities:

Interest-bearing demand deposits

$

340,310

$

3,058

1.20

%

$

190,228

$

914

0.64

%

Money market and savings deposits

992,349

10,158

1.37

%

534,925

2,197

0.55

%

Certificates and other time deposits

1,301,478

20,173

2.07

%

841,849

10,120

1.61

%

Borrowed funds

198,839

4,128

2.78

%

265,401

3,780

1.90

%

Subordinated debt

49,849

2,232

5.99

%

48,746

2,168

5.95

%

Total interest-bearing liabilities

2,882,825

$

39,749

1.84

%

1,881,149

$

19,179

1.36

%

Noninterest-Bearing Liabilities:

Noninterest-bearing demand deposits

1,179,914

724,493

Other liabilities

28,270

8,742

Total liabilities

4,091,009

2,614,384

Shareholders' equity

707,633

317,780

Total liabilities and shareholders' equity

$

4,798,642

$

2,932,164

Net interest rate spread

3.67

%

3.73

%

Net interest income and margin

$

135,011

4.25

%

$

82,741

4.13

%

Net interest income and net
interest margin
(tax equivalent)

$

135,413

4.27

%

$

83,551

4.17

%


Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)

Three Months Ended

2019

2018

September 30

June 30

March 31

December 31

September 30

(Dollars in thousands)

Period-end Loan Portfolio:

Commercial and industrial

$

675,055

$

694,516

$

699,471

$

702,037

$

458,434

Mortgage warehouse

36,594

46,171

36,742

48,274

48,876

Real estate:

Commercial real estate (including
multi-family residential)

1,859,721

1,830,764

1,771,890

1,650,912

1,161,992

Commercial real estate construction and
land development

386,723

368,108

396,162

430,128

298,916

1-4 family residential (including home equity)

695,520

690,961

658,261

649,311

344,342

Residential construction

189,608

183,991

201,314

186,411

117,740

Consumer and other

42,783

43,452

42,321

41,233

10,626

Total loans

$

3,886,004

$

3,857,963

$

3,806,161

$

3,708,306

$

2,440,926

Asset Quality:

Nonaccrual loans

$

34,615

$

31,382

$

32,670

$

32,953

$

14,943

Accruing loans 90 or more days past due

Total nonperforming loans

34,615

31,382

32,670

32,953

14,943

Other real estate

8,333

6,294

1,152

630

1,801

Other repossessed assets

205

Total nonperforming assets

$

42,948

$

37,676

$

33,822

$

33,583

$

16,949

Net charge-offs

$

729

$

590

$

210

$

219

$

245

Nonaccrual loans:

Commercial and industrial

$

8,033

$

9,386

$

11,221

$

10,861

$

6,258

Mortgage warehouse

Real estate:

Commercial real estate (including
multi-family residential)

15,356

18,218

17,531

17,776

5,006

Commercial real estate construction and
land development

9,050

1,541

818

974

694

1-4 family residential (including home equity)

1,992

2,074

2,928

3,201

2,985

Residential construction

Consumer and other

184

163

172

141

Total nonaccrual loans

$

34,615

$

31,382

$

32,670

$

32,953

$

14,943

Asset Quality Ratios:

Nonperforming assets to total assets

0.88

%

0.79

%

0.71

%

0.72

%

0.56

%

Nonperforming loans to total loans

0.89

%

0.81

%

0.86

%

0.89

%

0.61

%

Allowance for loan losses to nonperforming loans

86.11

%

89.03

%

83.02

%

79.90

%

157.84

%

Allowance for loan losses to total loans

0.77

%

0.72

%

0.71

%

0.71

%

0.97

%

Net charge-offs to average loans (annualized)

0.07

%

0.06

%

0.02

%

0.02

%

0.04

%


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, the ratio of tangible equity to tangible assets and core net interest margin on a tax equivalent basis 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

2019

2018

2019

2018

September 30

June 30

March 31

December 31

September 30

September 30

September 30

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

Total shareholders' equity

$

706,308

$

704,701

$

703,777

$

702,984

$

328,131

$

706,308

$

328,131

Less: Goodwill and core
deposit intangibles, net

246,695

247,873

249,051

249,712

42,077

246,695

42,077

Tangible shareholders
equity

$

459,613

$

456,828

$

454,726

$

453,272

$

286,054

$

459,613

$

286,054

Shares outstanding at end of
period

20,737

21,147

21,484

21,938

13,397

20,737

13,397

Tangible book value per share

$

22.16

$

21.60

$

21.17

$

20.66

$

21.35

$

22.16

$

21.35

Net income

$

12,047

$

14,248

$

12,678

$

13,163

$

8,879

$

38,973

$

24,146

Average shareholders' equity

$

710,044

$

705,162

$

707,666

$

697,303

$

326,204

$

707,633

$

317,780

Less: Average goodwill and
core deposit intangibles, net

247,404

248,621

249,277

249,252

42,203

248,427

42,394

Average tangible
shareholders’ equity

$

462,640

$

456,541

$

458,389

$

448,051

$

284,001

$

459,206

$

275,386

Return on average
tangible equity

10.33

%

12.52

%

11.22

%

11.66

%

12.40

%

11.35

%

11.72

%

Total assets

$

4,905,840

$

4,794,211

$

4,768,802

$

4,655,249

$

3,035,539

$

4,905,840

$

3,035,539

Less: Goodwill and core
deposit intangibles, net

246,695

247,873

249,051

249,712

42,077

246,695

42,077

Tangible assets

$

4,659,145

$

4,546,338

$

4,519,751

$

4,405,537

$

2,993,462

$

4,659,145

$

2,993,462

Tangible equity to tangible
assets

9.86

%

10.05

%

10.06

%

10.29

%

9.56

%

9.86

%

9.56

%

Net interest income
(tax equivalent)

$

44,924

$

45,684

$

44,805

$

46,100

$

28,292

$

135,413

$

83,551

Less: Acquisition accounting
adjustments

(2,045

)

(2,755

)

(2,965

)

(3,069

)

(7,765

)

Core net interest
income (tax equivalent)

$

42,879

$

42,929

$

41,840

$

43,031

$

28,292

$

127,648

$

83,551

Average earning assets

$

4,284,667

$

4,233,653

$

4,212,669

$

4,108,645

$

2,736,738

$

4,244,210

$

2,679,641

Net interest margin
(tax equivalent)

4.16

%

4.33

%

4.31

%

4.45

%

4.10

%

4.27

%

4.17

%

Core net interest margin
(tax equivalent)

3.97

%

4.07

%

4.03

%

4.16

%

4.10

%

4.02

%

4.17

%

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