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Allegiance Bancshares, Inc. Reports First Quarter 2018 Results

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  • Net income increased 27.5% to $7.7 million and diluted earnings per share of $0.57 for the first quarter 2018 compared to $6.0 million and $0.45 for the first quarter 2017

  • Core loan growth of $326.6 million, or 17.0%, year over year and $47.5 million, or 8.6% (annualized), for the first quarter 2018 compared to the linked quarter and deposit growth of $272.2 million, or 13.5%, year over year and $70.8 million, or 12.8% (annualized), for the first quarter 2018 compared to the linked quarter

HOUSTON, April 26, 2018 (GLOBE NEWSWIRE) -- Allegiance Bancshares, Inc. (NASDAQ:ABTX) ("Allegiance"), the holding company of Allegiance Bank (the "Bank"), today reported net income of $7.7 million and diluted earnings per share of $0.57 in the first quarter 2018 compared to $6.0 million and diluted earnings per share of $0.45 for the first quarter 2017.

"Our results for the first quarter reflect the fact that our customers respond favorably to their unique experience of doing business with Allegiance," said George Martinez, Allegiance's Chairman and Chief Executive Officer. "We continue to generate organic growth in both loans and deposits. Earnings were solid, noting the benefit of the reduction in the statutory tax rate as a result of the recent tax reform legislation.  Our team is laser-focused on the execution of our key strategies and the delivery of high quality growth, while managing costs and risk.  Asset quality remains strong with nonperforming assets to total assets at 0.49%," commented Martinez.

"This quarter is a good beginning, and we look forward to another successful year. We are grateful for our dedicated employees, who add value to customer relationships and provide superior service. They embody our culture and ensure a consistent customer experience at Allegiance, and we appreciate their hard work and loyalty," concluded Martinez.

First Quarter 2018 Results

Net interest income before provision for loan losses in the first quarter 2018 increased $2.8 million, or 11.4%, to $26.9 million from $24.1 million for the first quarter 2017 primarily due to organic loan growth partially offset by interest expense on the subordinated debt that was issued in December 2017.  Net interest income before provision for loan losses in the first quarter 2018 decreased slightly from $27.4 million in the fourth quarter 2017 primarily due to interest expense on the subordinated debt that was issued in December 2017 partially offset by organic loan growth.  The net interest margin on a tax equivalent basis decreased 18 basis points to 4.20% for the first quarter 2018 from 4.38% for the first quarter 2017 and decreased 13 basis points from 4.33% for the fourth quarter 2017.  The decreases from the prior year and the linked quarter are primarily due to interest expense on the subordinated debt issuance.

Noninterest income for the first quarter 2018 was $1.6 million, an increase of $305 thousand, or 22.7%, compared to $1.3 million for the first quarter 2017 and increased $63 thousand compared to $1.6 million for the fourth quarter 2017.

Noninterest expense for the first quarter 2018 increased $2.2 million, or 13.1%, to $18.7 million from $16.5 million for the first quarter 2017, and decreased $559 thousand, or 2.9%, from $19.3 million for the fourth quarter 2017. The increase in noninterest expense over the first quarter 2017 was primarily due to salaries and benefits expense to support strategic growth initiatives.  In the first quarter 2018, Allegiance's efficiency ratio increased to 65.59% from 64.98% for the first quarter 2017 and decreased from 66.50% for the fourth quarter 2017.  First quarter 2018 annualized returns on average assets, average equity and average tangible equity were 1.09%, 10.10% and 11.71%, respectively, compared to 0.96%, 8.61% and 10.15%, respectively, for the first quarter 2017.  Annualized returns on average assets, average equity and average tangible equity for the fourth quarter 2017 were 0.45%, 4.15% and 4.82%, respectively.

Financial Condition

Total assets at March 31, 2018 increased $294.2 million, or 11.3%, to $2.89 billion compared to $2.59 billion at March 31, 2017 and increased $26.3 million, or 0.9%, compared to $2.86 billion at December 31, 2017.

Total loans at March 31, 2018 increased $304.1 million, or 15.3%, to $2.29 billion compared to $1.99 billion at March 31, 2017 and increased $19.6 million, or 0.9%, compared to $2.27 billion at December 31, 2017. These increases were due to strong organic loan growth within the Bank's loan portfolio. Core loans, which exclude the mortgage warehouse portfolio, increased $326.6 million, or 17.0%, to $2.25 billion at March 31, 2018 from $1.92 billion at March 31, 2017 and increased $47.5 million, or 2.2%, from $2.20 billion at December 31, 2017.

Deposits at March 31, 2018 increased $272.2 million, or 13.5%, to $2.28 billion compared to $2.01 billion at March 31, 2017 and increased $70.8 million, or 3.2%, compared to $2.21 billion at December 31, 2017.

Asset Quality

Nonperforming assets totaled $14.2 million, or 0.49% of total assets, at March 31, 2018, compared to $19.9 million, or 0.77% of total assets, at March 31, 2017, and $13.9 million, or 0.49% of total assets, at December 31, 2017. The allowance for loan losses was 1.08% of total loans at March 31, 2018, 0.94% of total loans at March 31, 2017 and 1.04% of total loans at December 31, 2017.

The provision for loan losses for the first quarter 2018 was $653 thousand, or 0.12% (annualized) of average loans, compared to $1.3 million, or 0.28% (annualized) of average loans, for the first quarter 2017, and $1.9 million, or 0.35% (annualized) of average loans, for the fourth quarter 2017.

First quarter 2018 net recoveries were $327 thousand compared to net charge-offs of $567 thousand for the first quarter 2017 and net charge-offs of $2.0 million for the fourth quarter 2017.

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 26, 2018 at 8:00 a.m. Central Time (9:00 a.m. Eastern Time) to discuss its first quarter 2018 results. Individuals and investment professionals may participate in the call by dialing (877) 279-2520. The conference ID number is 7295969.  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.

Allegiance is a $2.89 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 Houston metropolitan area-based small to medium-sized businesses and individual customers. 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.  Allegiance Bank operates 16 full-service banking locations and one loan production office in 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, 2017 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)
                   
  2018   2017
   March 31    December 31    September 30    June 30    March 31
   (Dollars in thousands)
Cash and cash equivalents $ 190,088     $ 182,103     $ 192,427     $ 187,491     $ 184,146  
Available for sale securities 307,411     309,615     323,856     321,268     317,219  
                   
Total loans 2,290,494     2,270,876     2,201,540     2,114,652     1,986,438  
Allowance for loan losses (24,628 )   (23,649 )   (23,722 )   (21,010 )   (18,687 )
Loans, net 2,265,866     2,247,227     2,177,818     2,093,642     1,967,751  
                   
Goodwill 39,389     39,389     39,389     39,389     39,389  
Core deposit intangibles, net 3,079     3,274     3,469     3,664     3,860  
Premises and equipment, net 18,605     18,477     18,273     18,240     18,138  
Other real estate owned 365     365     453     365     365  
Bank owned life insurance 22,563     22,422     22,277     22,131     21,985  
Other assets 39,118     37,359     35,472     38,526     39,477  
Total assets $ 2,886,484     $ 2,860,231     $ 2,813,434     $ 2,724,716     $ 2,592,330  
                   
Noninterest-bearing deposits $ 694,880     $ 683,110     $ 712,951     $ 662,527     $ 615,225  
Interest-bearing deposits 1,589,922     1,530,864     1,573,664     1,436,715     1,397,344  
Total deposits 2,284,802     2,213,974     2,286,615     2,099,242    
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