Market Overview

Allegiance Bancshares, Inc. Reports Second Quarter 2018 Results

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  • Core loan growth of $266.0 million, or 13.0%, year over year and $58.2 million, or 10.4% (annualized), for the second quarter 2018 compared to the linked quarter
     
  • Deposit growth of $214.5 million, or 10.2%, year over year and $29.0 million, or 5.1% (annualized), for the second quarter 2018 compared to the linked quarter
     
  • Announced the pending acquisition of Post Oak Bancshares, Inc. headquartered in Houston, Texas

HOUSTON, July 26, 2018 (GLOBE NEWSWIRE) -- Allegiance Bancshares, Inc. (NASDAQ:ABTX) ("Allegiance"), the holding company of Allegiance Bank (the "Bank"), today reported net income of $7.6 million and diluted earnings per share of $0.55 for the second quarter 2018 compared to $5.4 million and diluted earnings per share of $0.40 for the second quarter 2017.  The second quarter 2018 results include $1.1 million and $625 thousand of core system conversion and merger related expenses, respectively.  Net income for the six months ended June 30, 2018 was $15.3 million, or $1.12 per diluted share, compared to $11.4 million, or $0.85 per diluted share, for the six months ended June 30, 2017.

"This quarter was an exciting one for us as we further executed our growth strategies. We generated continued organic loan and deposit growth, successfully completed our core technology conversion and advanced our acquisition strategy by announcing a transaction with Post Oak Bancshares, Inc. headquartered in Houston, Texas," said George Martinez, Allegiance's Chairman and Chief Executive Officer.  "Allegiance and Post Oak share the same tradition of customer, employee and community bank focus and we continue to anticipate that the acquisition will close in the fourth quarter of 2018. We are excited about this partnership and the opportunities that will further enhance our value as Houston's largest community bank," commented Martinez.

"I would like to thank our outstanding team of dedicated employees for a remarkable job well done as we effectively enhanced our core  system during the quarter.  Our employees continue to ensure an outstanding customer experience every day to help our bank grow and innovate while working diligently to deliver great results.  We believe that this quarter's results reflect our commitment to our customers and the enhancement of shareholder value," concluded Martinez.

Second Quarter 2018 Results

Net interest income before provision for loan losses in the second quarter 2018 increased $2.7 million, or 10.8%, to $27.8 million from $25.1 million for the second 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 second quarter 2018 increased slightly from $26.9 million in the first quarter 2018.  The net interest margin on a tax equivalent basis decreased eight basis points to 4.21% for the second quarter 2018 from 4.29% for the second quarter 2017 and increased one basis point from 4.20% for the first quarter 2018. The decrease from the prior year is primarily due to the increase in interest expense on interest-bearing liabilities driven in part by the subordinated debt issuance in December 2017.

Noninterest income for the second quarter 2018 was $1.8 million, an increase of $328 thousand, or 22.2%, compared to $1.5 million for the second quarter 2017 and increased $159 thousand compared to $1.6 million for the first quarter 2018.

Noninterest expense for the second quarter 2018 increased $3.4 million, or 20.4%, to $19.9 million from $16.5 million for the second quarter 2017, and increased $1.1 million, or 6.1%, from $18.7 million for the first quarter 2018. The increases in noninterest expense over the second quarter 2017 and the linked quarter were primarily due to expenses of $1.1 million related to the core system conversion and $625 thousand of merger related expenses. In the second quarter 2018, Allegiance's efficiency ratio increased to 67.05% from 61.92% for the second quarter 2017 and increased from 65.59% for the first quarter 2018.  Second quarter 2018 annualized returns on average assets, average equity and average tangible equity were 1.03%, 9.55% and 11.02%, respectively, compared to 0.81%, 7.32% and 8.57%, respectively, for the second quarter 2017.  Annualized returns on average assets, average equity and average tangible equity for the first quarter 2018 were 1.09%, 10.10% and 11.71%, respectively.

Six Months Ended June 30, 2018 Results

Net interest income before provision for loan losses for the six months ended June 30, 2018 increased $5.5 million, or 11.1%, to $54.7 million from $49.2 million for the six months ended June 30, 2017 primarily due to organic loan growth partially offset by the increased interest expense on interest-bearing liabilities.  The net interest margin on a tax equivalent basis decreased 13 basis points to 4.20% for the six months ended June 30, 2018 from 4.33% for the six months ended June 30, 2017 primarily due to the increase in interest expense on interest-bearing liabilities driven in part by the subordinated debt issuance in December 2017

Noninterest income for the six months ended June 30, 2018 was $3.5 million, an increase of $633 thousand, or 22.5%, compared to $2.8 million for the six months ended June 30, 2017.

Noninterest expense for the six months ended June 30, 2018 increased $5.6 million, or 16.9%, to $38.6 million from $33.0 million for the six months ended June 30, 2017.  The increase in noninterest expense over the six months ended June 30, 2017 was primarily due to expenses related to the core system conversion of $1.5 million and the merger related expenses of $625 thousand during the six months ended June 30, 2018.

During the six months ended June 30, 2018, Allegiance's efficiency ratio increased to 66.33% from 63.41% for the six months ended June 30, 2017.

For the six months ended June 30, 2018, annualized returns on average assets, average equity and average tangible equity were 1.06%, 9.82% and 11.36%, respectively, compared to 0.89%, 7.95% and 9.34%, respectively, for the six months ended June 30, 2017.

Financial Condition

Total assets at June 30, 2018 increased $241.7 million, or 8.9%, to $2.97 billion compared to $2.72 billion at June 30, 2017 and increased $79.9 million, or 2.8%, compared to $2.89 billion at March 31, 2018.

Total loans at June 30, 2018 increased $244.0 million, or 11.5%, to $2.36 billion compared to $2.11 billion at June 30, 2017 and increased $68.2 million, or 3.0%, compared to $2.29 billion at March 31, 2018. These increases were due to strong organic loan growth within the Bank's loan portfolio. Core loans, which exclude the mortgage warehouse portfolio, increased $266.0 million, or 13.0%, to $2.31 billion at June 30, 2018 from $2.04 billion at June 30, 2017 and increased $58.2 million, or 2.6%, from $2.25 billion at March 31, 2018.

Deposits at June 30, 2018 increased $214.5 million, or 10.2%, to $2.31 billion compared to $2.10 billion at June 30, 2017 and increased $29.0 million, or 1.3%, compared to $2.28 billion at March 31, 2018.

Asset Quality

Nonperforming assets totaled $14.6 million, or 0.49% of total assets, at June 30, 2018, compared to $19.9 million, or 0.73% of total assets, at June 30, 2017, and $14.2 million, or 0.49% of total assets, at March 31, 2018. The allowance for loan losses was 1.01% of total loans at June 30, 2018, 0.99% of total loans at June 30, 2017 and 1.08% of total loans at March 31, 2018.

The provision for loan losses for the second quarter 2018 was $631 thousand, or 0.11% (annualized) of average loans, compared to $3.0 million, or 0.59% (annualized) of average loans, for the second quarter 2017, and $653 thousand, or 0.12% (annualized) of average loans, for the first quarter 2018.

Second quarter 2018 net charge-offs were $1.4 million compared to net charge-offs of $684 thousand for the second quarter 2017 and net recoveries of $326 thousand for the first quarter 2018.

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 Thursday, July 26, 2018 at 9:00 a.m. Central Time (10:00 a.m. Eastern Time) to discuss its second quarter 2018 results. Individuals and investment professionals may participate in the call by dialing (877) 279-2520. The conference ID number is 8558406.  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 $2.97 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
   June 30    March 31    December 31    September 30    June 30
  (Dollars in thousands)
Cash and cash equivalents $ 200,645     $ 190,088     $ 182,103     $ 192,427     $ 187,491  
Available for sale securities 300,897     307,411     309,615     323,856     321,268  
                   
Total loans 2,358,675     2,290,494     2,270,876     2,201,540     2,114,652  
Allowance for loan losses (23,831 )   (24,628 )   (23,649 )   (23,722 )   (21,010 )
Loans, net 2,334,844     2,265,866     2,247,227     2,177,818     2,093,642  
                   
Goodwill 39,389     39,389     39,389     39,389     39,389  
Core deposit intangibles, net 2,883     3,079     3,274     3,469     3,664  
Premises and equipment, net 19,049     18,605     18,477     18,273     18,240  
Other real estate owned 1,710     365     365     453     365  
Bank owned life insurance 22,701     22,563     22,422     22,277     22,131  
Other assets 44,308     39,118     37,359     35,472     38,526  
Total assets $ 2,966,426     $ 2,886,484     $ 2,860,231     $ 2,813,434     $ 2,724,716  
                   
Noninterest-bearing deposits $ 749,787     $ 694,880     $ 683,110     $ 712,951     $ 662,527  
Interest-bearing deposits 1,563,999     1,589,922     1,530,864     1,573,664     1,436,715  
Total deposits 2,313,786     2,284,802     2,213,974     2,286,615     2,099,242  
                   
Borrowed funds 275,569     232,569     282,569     207,569     310,569  
Subordinated debt 48,779     48,719     48,659     9,277     9,249  
Other liabilities 8,404     8,406     8,164     7,246     7,197  
Total liabilities 2,646,538     2,574,496     2,553,366     2,510,707     2,426,257  
                   
Common stock 13,341     13,302     13,227     13,171     13,153  
Capital surplus 220,665     219,760     218,408     216,943     216,158  
Retained earnings 90,089     82,533     74,894     71,690     68,704  
Accumulated other comprehensive (loss) income (4,207 )   (3,607 )   336     923     444  
Shareholders' equity 319,888     311,988     306,865     302,727     298,459  
Total liabilities and equity $ 2,966,426     $ 2,886,484     $ 2,860,231     $ 2,813,434     $ 2,724,716  
                                       


Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)
                           
  Three Months Ended   Year-to-Date
  2018   2017   2018   2017
   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 $ 31,846     $ 30,117     $ 29,747     $ 28,588     $ 26,736     $ 61,963     $ 51,996  
Securities                          
  Taxable 646     599     563     547     503     1,245     1,001  
  Tax-exempt 1,451     1,459     1,545     1,574     1,591     2,910     3,215  
Deposits in other financial institutions 250     216     183     192     157     466     287  
Total interest income 34,193     32,391     32,038     30,901     28,987     66,584     56,499  
                           
INTEREST EXPENSE:                          
Demand, money market and savings deposits 887     976     992     811     702     1,863     1,356  
Certificates and other time deposits 3,284     2,785     2,521     2,299     2,283     6,069     4,240  
Borrowed funds 1,472     1,036     854     654     761     2,508     1,414  
Subordinated debt 734     705     235     140     134     1,439     254  
Total interest expense 6,377     5,502     4,602     3,904     3,880     11,879     7,264  
NET INTEREST INCOME 27,816     26,889     27,436     26,997     25,107     54,705     49,235  
Provision for loan losses 631     653     1,930     6,908     3,007     1,284     4,350  
Net interest income after provision for loan losses 27,185     26,236     25,506     20,089     22,100     53,421     44,885  
                           
NONINTEREST INCOME:                          
Nonsufficient funds fees 214     176     158     144     184     390     383  
Service charges on deposit accounts 106     223     179     204     205     329     400  
Gain (loss) on sale of securities         30     (12 )            
Gain on sale of other real estate 1         6             1      
Bank owned life insurance 138     141     145     146     146     279     294  
Rebate from correspondent bank 564     444     388     370     336     1,008     569  
Other 782     662     677     608     606     1,444     1,172  
Total noninterest income 1,805     1,646     1,583     1,460     1,477     3,451     2,818  
                           
NONINTEREST EXPENSE:                          
Salaries and employee benefits 12,778     12,794     12,188     11,580     10,415     25,572     20,977  
Net occupancy and equipment 1,367     1,272     1,398     1,325     1,302     2,639     2,729  
Depreciation 433     407     412     427     398     840     798  
Data processing and software amortization 1,356     1,053     1,850     783     719     2,409     1,414  
Professional fees 1,126     469     222     822     987     1,595     1,882  
Regulatory assessments and FDIC insurance 509     534     533     582     569     1,043     1,158  
Core deposit intangibles amortization 196     195     195     195     196     391     391  
Communications 259     248     252     251     233     507     480  
Advertising 342     330     436     302     288     672     551  
Other 1,494     1,415     1,790     1,409     1,354     2,909     2,630  
Total noninterest expense 19,860     18,717     19,276     17,676     16,461     38,577     33,010  
INCOME BEFORE INCOME TAXES 9,130     9,165     7,813     3,873     7,116     18,295     14,693  
  Provision for income taxes 1,574     1,454     4,609     887     1,721     3,028     3,251  
NET INCOME $ 7,556     $ 7,711     $ 3,204     $ 2,986     $ 5,395     $ 15,267     $ 11,442  
                           
EARNINGS PER SHARE                          
  Basic $ 0.57     $ 0.58     $ 0.24     $ 0.23     $ 0.41     $ 1.15     $ 0.88  
  Diluted $ 0.55     $ 0.57     $ 0.24     $ 0.22     $ 0.40     $ 1.12     $ 0.85  
                                                       


Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)
                             
    Three Months Ended   Year-to-Date
    2018   2017   2018   2017
     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   $ 7,556     $ 7,711     $ 3,204     $ 2,986     $ 5,395     $ 15,267     $ 11,442  
                             
Earnings per share, basic   $ 0.57     $ 0.58     $ 0.24     $ 0.23     $ 0.41     $ 1.15     $ 0.88  
Earnings per share, diluted   $ 0.55     $ 0.57     $ 0.24     $ 0.22     $ 0.40     $ 1.12     $ 0.85  
                             
Return on average assets(A)   1.03 %   1.09 %   0.45 %   0.43 %   0.81 %   1.06 %   0.89 %
Return on average equity(A)   9.55 %   10.10 %   4.15 %   3.90 %   7.32 %   9.82 %   7.95 %
Return on average tangible equity(A)(B)   11.02 %   11.71 %   4.82 %   4.55 %   8.57 %   11.36 %   9.34 %
Tax equivalent net interest margin(C)   4.21 %   4.20 %   4.33 %   4.37 %   4.29 %   4.20 %   4.33 %
Efficiency ratio(D)   67.05 %   65.59 %   66.50 %   62.14 %   61.92 %   66.33 %   63.41 %
                             
Liquidity and Capital Ratios                            
Allegiance Bancshares, Inc. (Consolidated)                            
  Equity to assets   10.78 %   10.81 %   10.73 %   10.76 %   10.95 %   10.78 %   10.95 %
  Tangible equity to tangible assets(B)   9.49 %   9.48 %   9.38 %   9.38 %   9.52 %   9.49 %   9.52 %
  Estimated common equity tier 1 capital   10.60 %   10.82 %   10.54 %   10.68 %   10.85 %   10.32 %   10.85 %
  Estimated tier 1 risk-based capital   10.97 %   11.19 %   10.92 %   11.07 %   11.24 %   10.67 %   11.24 %
  Estimated total risk-based capital   13.42 %   13.72 %   13.43 %   12.04 %   12.13 %   13.06 %   12.13 %
  Estimated tier 1 leverage capital   9.78 %   9.98 %   9.84 %   9.90 %   10.11 %   9.78 %   10.11 %
Allegiance Bank                            
  Estimated common equity tier 1 capital   11.04 %   10.95 %   10.72 %   10.93 %   10.23 %   10.74 %   10.23 %
  Estimated tier 1 risk-based capital   11.04 %   10.95 %   10.72 %   10.93 %   10.23 %   10.74 %   10.23 %
  Estimated total risk-based capital   13.49 %   13.49 %   13.24 %   11.91 %   11.12 %   13.13 %   11.12 %
  Estimated tier 1 leverage capital   9.84 %   9.77 %   9.67 %   9.77 %   9.20 %   9.84 %   9.20 %
                             
Other Data                            
Weighted average shares:                            
Basic   13,327     13,262     13,187     13,165     13,125     13,294     13,073  
Diluted   13,634     13,542     13,496     13,483     13,471     13,588     13,425  
Period end shares outstanding   13,341     13,301     13,227     13,171     13,153     13,341     13,153  
Book value per share   $ 23.98     $ 23.46     $ 23.20     $ 22.98     $ 22.69     $ 23.98     $ 22.69  
Tangible book value per share(B)   $ 20.81     $ 20.26     $ 19.97     $ 19.73     $ 19.42     $ 20.81     $ 19.42  
                                                         
  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 noninterest expense divided by the sum of net interest income plus noninterest income, excluding net gains and losses on the sale of  securities.  Additionally, taxes and provision for loan losses are not part of this calculation.
Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)
                                   
  Three Months Ended
  June 30, 2018   March 31, 2018   June 30, 2017
  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 $ 2,312,725     $ 31,846     5.52 %   $ 2,260,119     $ 30,117     5.40 %   $ 2,042,460     $ 26,736     5.25 %
Securities 315,198     2,097     2.67 %   312,769     2,058     2.67 %   326,388     2,094     2.57 %
Deposits in other financial institutions 50,227     250     2.00 %   49,897     216     1.75 %   49,703     157     1.26 %
  Total interest-earning assets 2,678,150     $ 34,193     5.12 %   2,622,785     $ 32,391     5.01 %   2,418,551     $ 28,987     4.81 %
Allowance for loan losses (24,753 )           (23,949 )           (19,253 )        
Noninterest-earning assets 280,852             272,430             261,668          
  Total assets $ 2,934,249             $ 2,871,266             $ 2,660,966          
                                   
Liabilities and Shareholders' Equity                                  
Interest-Bearing Liabilities:                                  
Interest-bearing demand deposits $ 157,588     $ 208     0.53 %   $ 232,375     $ 317     0.55 %   $ 137,507     $ 118     0.34 %
Money market and savings deposits 522,381     679     0.52 %   552,396     659     0.48 %   499,335     584     0.47 %
Certificates and other time deposits 827,897     3,284     1.59 %   800,343     2,785     1.41 %   785,194     2,283     1.17 %
Borrowed funds 311,185     1,472     1.90 %   250,414     1,036     1.68 %   304,184     761     1.00 %
Subordinated debt 48,746     734     6.04 %   48,684     705     5.87 %   9,232     134     5.83 %
  Total interest-bearing liabilities 1,867,797     $ 6,377     1.37 %   1,884,212     $ 5,502     1.18 %   1,735,452     $ 3,880     0.90 %
                                   
Noninterest-Bearing Liabilities:                                  
Noninterest-bearing demand deposits 741,266             669,258             624,100          
Other liabilities 7,778             8,251             5,890          
  Total liabilities 2,616,841             2,561,721             2,365,442          
Shareholders' equity 317,408             309,545             295,524          
  Total liabilities and shareholders' equity $ 2,934,249             $ 2,871,266             $ 2,660,966          
                                   
Net interest rate spread         3.75 %           3.83 %           3.91 %
                                   
Net interest income and margin     $ 27,816     4.17 %       $ 26,889     4.16 %       $ 25,107     4.16 %
                                   
Net interest income and margin (tax equivalent)     $ 28,086     4.21 %       $ 27,174     4.20 %       $ 25,862     4.29 %
                                                     


Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)
                       
  Six Months Ended June 30,
  2018   2017
  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 $ 2,286,567     $ 61,963     5.46 %   $ 1,985,715     $ 51,996     5.28 %
Securities 313,990     4,155     2.67 %   326,151     4,216     2.61 %
Deposits in other financial institutions 50,063     466     1.88 %   51,511     287     1.12 %
  Total interest-earning assets 2,650,620     $ 66,584     5.07 %   2,363,374     $ 56,499     4.82 %
Allowance for loan losses (24,353 )           (18,729 )        
Noninterest-earning assets 276,664             260,497          
  Total assets $ 2,902,931             $ 2,605,142          
                       
Liabilities and Shareholders' Equity                      
Interest-Bearing Liabilities:                      
Interest-bearing demand deposits $ 194,774     $ 525     0.54 %   $ 134,226     $ 218     0.33 %
Money market and savings deposits 537,305     1,338     0.50 %   493,092     1,138     0.47 %
Certificates and other time deposits 814,196     6,069     1.50 %   735,458     4,240     1.16 %
Borrowed funds 280,967     2,508     1.80 %   324,901     1,414     0.88 %
Subordinated debt 48,716     1,439     5.96 %   9,218     254     5.56 %
  Total interest-bearing liabilities 1,875,958     $ 11,879     1.28 %   1,696,895     $ 7,264     0.86 %
                       
Noninterest-Bearing Liabilities:                      
Noninterest-bearing demand deposits 705,461             612,120          
Other liabilities 8,014             5,891          
  Total liabilities 2,589,433             2,314,906          
Shareholders' equity 313,498             290,236          
  Total liabilities and shareholders' equity $ 2,902,931             $ 2,605,142          
                       
Net interest rate spread         3.79 %           3.96 %
                       
Net interest income and margin     $ 54,705     4.16 %       $ 49,235     4.20 %
                       
Net interest income and margin (tax equivalent)     $ 55,260     4.20 %       $ 50,770     4.33 %
                                   


Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)
                   
  Three Months Ended
  2018   2017
   June 30    March 31    December 31    September 30    June 30
  (Dollars in thousands)
Period-end Loan Portfolio:                  
Commercial and industrial $ 452,307     $ 447,168     $ 457,129     $ 446,029     $ 444,701  
Mortgage warehouse 51,552     41,572     69,456     83,577     73,499  
Real estate:                  
Commercial real estate (including multi-family residential) 1,134,903     1,108,537     1,080,247     1,045,220     1,008,027  
Commercial real estate construction and land development 270,965     257,566     243,389     225,574     206,024  
1-4 family residential (including home equity) 330,053     317,842     301,219     283,399     267,939  
Residential construction 109,962     108,882     109,116     106,299     102,832  
Consumer and other 8,933     8,927     10,320     11,442     11,630  
Total loans $ 2,358,675     $ 2,290,494     $ 2,270,876     $ 2,201,540     $ 2,114,652  
                   
Asset Quality:                  
Nonaccrual loans $ 12,137     $ 13,373     $ 13,328     $ 13,913     $ 19,330  
Accruing loans 90 or more days past due                  
  Total nonperforming loans 12,137     13,373     13,328     13,913     19,330  
Other real estate 1,710     365     365     453     365  
Other repossessed assets 740     443     205     205     205  
Total nonperforming assets $ 14,587     $ 14,181     $ 13,898     $ 14,571     $ 19,900  
                   
Net charge-offs (recoveries) $ 1,428     $ (326 )   $ 2,003     $ 4,196     $ 684  
                   
Nonaccrual loans:                  
Commercial and industrial $ 5,983     $ 6,153     $ 6,437     $ 5,031     $ 9,051  
Mortgage warehouse                  
Real estate:                  
Commercial real estate (including multi-family residential) 4,917     6,466     6,110     8,097     9,556  
Commercial real estate construction and land development                  
1-4 family residential (including home equity) 1,237     754     781     735     568  
Residential construction                  
Consumer and other             50     155  
  Total nonaccrual loans $ 12,137     $ 13,373     $ 13,328     $ 13,913     $ 19,330  
                   
Asset Quality Ratios:                  
Nonperforming assets to total assets 0.49 %   0.49 %   0.49 %   0.52 %   0.73 %
Nonperforming loans to total loans 0.51 %   0.58 %   0.59 %   0.63 %   0.91 %
Allowance for loan losses to nonperforming loans 196.35 %   184.16 %   177.44 %   170.50 %   108.69 %
Allowance for loan losses to total loans 1.01 %   1.08 %   1.04 %   1.08 %   0.99 %
Net charge-offs (recoveries) to average loans (annualized) 0.25 %   (0.06 )%   0.36 %   0.78 %   0.13 %
                             

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.  Allegiance believes 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 common 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
  2018   2017   2018   2017
   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 $ 319,888     $ 311,988     $ 306,865     $ 302,727     $ 298,459     $ 319,888     $ 298,459  
Less:  Goodwill and core deposit intangibles, net 42,272     42,468     42,663     42,858     43,053     42,272     43,054  
Tangible shareholders' equity $ 277,616     $ 269,520     $ 264,202     $ 259,869     $ 255,406     $ 277,616     $ 255,405  
                           
Shares outstanding at end of period 13,341     13,301     13,227     13,171     13,153     13,341     13,153  
                           
Tangible book value per share $ 20.81     $ 20.26     $ 19.97     $ 19.73     $ 19.42     $ 20.81     $ 19.42  
                           
Net income $ 7,556     $ 7,711     $ 3,204     $ 2,986     $ 5,395     $ 15,267     $ 11,442  
                           
Average shareholders' equity $ 317,408     $ 309,545     $ 306,346     $ 303,449     $ 295,524     $ 313,498     $ 290,236  
Less:  Average goodwill and core deposit intangibles, net 42,393     42,589     42,758     42,954     43,149     42,491     43,246  
Average tangible shareholders' equity $ 275,015     $ 266,954     $ 263,588     $ 260,495     $ 252,375     $ 271,007     $ 246,990  
                           
Return on average tangible equity 11.02 %   11.71 %   4.82 %   4.55 %   8.57 %   11.36 %   9.34 %
                           
Total assets $ 2,966,426     $ 2,886,484     $ 2,860,231     $ 2,813,434     $ 2,724,716     $ 2,966,426     $ 2,724,716  
Less: Goodwill and core deposit intangibles, net 42,272     42,468     42,663     42,858     43,053     42,272     43,054  
Tangible assets $ 2,924,154     $ 2,844,016     $ 2,817,568     $ 2,770,576     $ 2,681,663     $ 2,924,154     $ 2,681,662  
                           
Tangible equity to tangible assets 9.49 %   9.48 %   9.38 %   9.38 %   9.52 %   9.49 %   9.52 %
                                         

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

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