Market Overview

Allegiance Bancshares, Inc. Reports Record Third Quarter 2018 Results

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  • Record earnings of $8.9 million and diluted earnings per common share of $0.65 for the third quarter 2018

  • Core loan growth of $274.1 million year over year, or 12.9%, and $84.9 million for the third quarter 2018 compared to the linked quarter, or 14.7% (annualized)

  • Net charge-offs of 0.04% and 0.08% (annualized) for the third quarter and year-to-date 2018, respectively

  • Completed the acquisition of Post Oak Bancshares, Inc. on October 1, 2018

HOUSTON, Oct. 25, 2018 (GLOBE NEWSWIRE) -- Allegiance Bancshares, Inc. (NASDAQ:ABTX) ("Allegiance"), the holding company of Allegiance Bank (the "Bank"), today reported net income of $8.9 million and diluted earnings per share of $0.65 for the third quarter 2018 compared to $3.0 million and diluted earnings per share of $0.22 for the third quarter 2017.  Net income for the nine months ended September 30, 2018 was $24.1 million, or $1.77 per diluted share, compared to $14.4 million, or $1.07 per diluted share, for the nine months ended September 30, 2017. The nine months ended September 30, 2018 results include $1.8 million and $821 thousand of core system conversion and merger-related expenses, respectively.

"I am extremely pleased to report record quarterly earnings for Allegiance, both in terms of net income and earnings per share. Our results reflect the execution of our core strategies as evidenced by double-digit organic loan growth and a continued focus on strong credit quality," said George Martinez, Allegiance's Chairman and Chief Executive Officer.

"Additionally, we are excited to have completed our merger with Post Oak on October 1st, which further enhanced our market position as Houston's largest community bank. With this merger, we have surpassed $4 billion in total assets, which we believe will allow us to gain valuable scale and take advantage of organic and strategic growth opportunities that will further enhance shareholder value. We are proud to welcome the employees, clients and shareholders of Post Oak to the Allegiance family.  Together, we are committed to providing the same superior, personalized service to which our customers are accustomed and to the continued investment in the communities where we live and work.  We anticipate completing the operational integration of Post Oak during the first quarter of 2019," concluded Martinez. 

Third Quarter 2018 Results

Net interest income before provision for loan losses in the third quarter 2018 increased $1.0 million, or 3.8%, to $28.0 million from $27.0 million for the third 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 third quarter 2018 increased slightly from $27.8 million in the second quarter 2018.  The net interest margin on a tax equivalent basis decreased 27 basis points to 4.10% for the third quarter 2018 from 4.37% for the third quarter 2017 and decreased 11 basis points from 4.21% for the second quarter 2018. The decrease from the prior year was 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 third quarter 2018 was $1.9 million, an increase of $468 thousand, or 32.1%, compared to $1.5 million for the third quarter 2017 and increased $123 thousand compared to $1.8 million for the second quarter 2018.

Noninterest expense for the third quarter 2018 increased $1.5 million, or 8.4%, to $19.2 million from $17.7 million for the third quarter 2017, and decreased $696 thousand, or 3.5%, from $19.9 million for the second quarter 2018. The increase in noninterest expense over the third quarter 2017 was primarily due to salaries and benefits and data processing and software amortization expenses incurred to support strategic growth initiatives, partially offset by a decrease in professional fees.  Noninterest expense decreased over the linked quarter primarily due to core system conversion and merger-related expenses incurred during the second quarter 2018.  In the third quarter 2018, Allegiance's efficiency ratio increased to 63.95% from 62.14% for the third quarter 2017 and decreased from 67.05% for the second quarter 2018.  Third quarter 2018 annualized returns on average assets, average equity and average tangible equity were 1.18%, 10.80% and 12.40%, respectively, compared to 0.43%, 3.90% and 4.55%, respectively, for the third quarter 2017.  Annualized returns on average assets, average equity and average tangible equity for the second quarter 2018 were 1.03%, 9.55% and 11.02%, respectively.

Nine Months Ended September 30, 2018 Results

Net interest income before provision for loan losses for the nine months ended September 30, 2018 increased $6.5 million, or 8.5%, to $82.7 million from $76.2 million for the nine months ended September 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 17 basis points to 4.17% for the nine months ended September 30, 2018 from 4.34% for the nine months ended September 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 nine months ended September 30, 2018 was $5.4 million, an increase of $1.1 million, or 25.7%, compared to $4.3 million for the nine months ended September 30, 2017.

Noninterest expense for the nine months ended September 30, 2018 increased $7.1 million, or 13.9%, to $57.7 million from $50.7 million for the nine months ended September 30, 2017.  The increase in noninterest expense over the nine months ended September 30, 2017 was primarily due to expenses related to the core system conversion of $1.8 million and merger-related expenses of $821 thousand during the nine months ended September 30, 2018.

During the nine months ended September 30, 2018, Allegiance's efficiency ratio increased to 65.52% from 62.97% for the nine months ended September 30, 2017. For the nine months ended September 30, 2018, annualized returns on average assets, average equity and average tangible equity were 1.10%, 10.16% and 11.72%, respectively, compared to 0.73%, 6.55% and 7.67%, respectively, for the nine months ended September 30, 2017.

Financial Condition

Total assets at September 30, 2018 increased $222.1 million, or 7.9%, to $3.04 billion compared to $2.81 billion at September 30, 2017 and increased $69.1 million, or 2.3%, compared to $2.97 billion at June 30, 2018.

Total loans at September 30, 2018 increased $239.4 million, or 10.9%, to $2.44 billion compared to $2.20 billion at September 30, 2017 and increased $82.3 million, or 3.5%, compared to $2.36 billion at June 30, 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 $274.1 million, or 12.9%, to $2.39 billion at September 30, 2018 from $2.12 billion at September 30, 2017 and increased $84.9 million, or 3.7%, from $2.31 billion at June 30, 2018.

Deposits at September 30, 2018 increased $147.2 million, or 6.4%, to $2.43 billion compared to $2.29 billion at September 30, 2017 and increased $120.0 million, or 5.2%, compared to $2.31 billion at March 31, 2018.

Asset Quality

Nonperforming assets totaled $16.9 million, or 0.56% of total assets, at September 30, 2018, compared to $14.6 million, or 0.52%, of total assets, at September 30, 2017, and $14.6 million, or 0.49% of total assets, at June 30, 2018. The allowance for loan losses was 0.97% of total loans at September 30, 2018, 1.08% of total loans at September 30, 2017 and 1.01% of total loans at June 30, 2018.

There was no provision for loan losses recorded during the third quarter 2018 due in part to the reversal of the remaining Hurricane Harvey reserve compared to $6.9 million, or 1.28% (annualized) of average loans, for the third quarter 2017, and $631 thousand, or 0.11% (annualized) of average loans, for the second quarter 2018.

Third quarter 2018 net charge-offs were $245 thousand compared to net charge-offs of $4.2 million for the third quarter 2017 and net charge-offs of $1.4 million for the second 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, October 25, 2018 at 9:00 a.m. Central Time (10:00 a.m. Eastern Time) to discuss its third quarter 2018 results. Individuals and investment professionals may participate in the call by dialing (877) 279-2520. The conference ID number is 3079335.  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, 2018, Allegiance was a $3.04 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.  As of September 30, 2018, Allegiance Bank operated 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  
    September 30     June 30     March 31     December 31     September 30  
       
    (Dollars in thousands)  
Cash and cash equivalents   $ 191,468     $ 200,645     $ 190,088     $ 182,103     $ 192,427  
Available for sale securities     300,115       300,897       307,411       309,615       323,856  
                                         
Total loans     2,440,926       2,358,675       2,290,494       2,270,876       2,201,540  
Allowance for loan losses     (23,586 )     (23,831 )     (24,628 )     (23,649 )     (23,722 )
Loans, net     2,417,340       2,334,844       2,265,866       2,247,227       2,177,818  
                                         
Goodwill     39,389       39,389       39,389       39,389       39,389  
Core deposit intangibles, net     2,688       2,883       3,079       3,274       3,469  
Premises and equipment, net     18,970       19,049       18,605       18,477       18,273  
Other real estate owned     1,801       1,710       365       365       453  
Bank owned life insurance     22,838       22,701       22,563       22,422       22,277  
Other assets     40,930       44,308       39,118       37,359       35,472  
Total assets   $ 3,035,539     $ 2,966,426     $ 2,886,484     $ 2,860,231     $ 2,813,434  
                                         
Noninterest-bearing deposits   $ 789,705     $ 749,787     $ 694,880     $ 683,110     $ 712,951  
Interest-bearing deposits     1,644,086       1,563,999       1,589,922       1,530,864       1,573,664  
Total deposits     2,433,791       2,313,786       2,284,802       2,213,974       2,286,615  
                                         
Borrowed funds     211,569       275,569       232,569       282,569       207,569  
Subordinated debentures     48,839       48,779       48,719       48,659       9,277  
Other liabilities     13,209       8,404       8,406       8,164       7,246  
Total liabilities     2,707,408       2,646,538       2,574,496       2,553,366       2,510,707  
                                         
Common stock     13,397       13,341       13,302       13,227       13,171  
Capital surplus     221,762       220,665       219,760       218,408       216,943  
Retained earnings     98,968       90,089       82,533       74,894       71,690  
Accumulated other comprehensive (loss) income     (5,996 )     (4,207 )     (3,607 )     336       923  
Total shareholders' equity     328,131       319,888       311,988       306,865       302,727  
Total liabilities and equity   $ 3,035,539     $ 2,966,426     $ 2,886,484     $ 2,860,231     $ 2,813,434  


Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)


    Three Months Ended     Year-to-Date  
    2018     2017     2018     2017  
    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   $ 32,988     $ 31,846     $ 30,117     $ 29,747     $ 28,588     $ 94,951     $ 80,584  
Securities:                                                        
Taxable     636       646       599       563       547       1,881       1,548  
Tax-exempt     1,447       1,451       1,459       1,545       1,574       4,357       4,789  
Deposits in other financial institutions     265       250       216       183       192       731       479  
Total interest income     35,336       34,193       32,391       32,038       30,901       101,920       87,400  
                                                         
INTEREST EXPENSE:                                                        
Demand, money market and savings deposits     1,248       887       976       992       811       3,111       2,167  
Certificates and other time deposits     4,051       3,284       2,785       2,521       2,299       10,120       6,539  
Borrowed funds     1,272       1,472       1,036       854       654       3,780       2,068  
Subordinated debt     729       734       705       235       140       2,168       394  
Total interest expense     7,300       6,377       5,502       4,602       3,904       19,179       11,168  
NET INTEREST INCOME     28,036       27,816       26,889       27,436       26,997       82,741       76,232  
Provision for loan losses           631       653       1,930       6,908       1,284       11,258  
Net interest income after provision for loan losses     28,036       27,185       26,236       25,506       20,089       81,457       64,974  
                                                         
NONINTEREST INCOME:                                                        
Nonsufficient funds fees     175       214       176       158       144       565       527  
Service charges on deposit accounts     177       106       223       179       204       506       604  
Gain (loss) on sale of securities                       30       (12 )           (12 )
Gain on sales of other real estate           1             6             1        
Bank owned life insurance     137       138       141       145       146       416       440  
Rebate from correspondent bank     613       564       444       388       370       1,621       939  
Other     826       782       662       677       608       2,270       1,780  
Total noninterest income     1,928       1,805       1,646       1,583       1,460       5,379       4,278  
                                                         
NONINTEREST EXPENSE:                                                        
Salaries and employee benefits     12,965       12,778       12,794       12,188       11,580       38,537       32,557  
Net occupancy and equipment     1,281       1,333       1,272       1,398       1,325       3,886       4,054  
Depreciation     490       433       407       412       427       1,330       1,225  
Data processing and software amortization     1,226       1,356       1,053       1,850       783       3,635       2,197  
Professional fees     303       567       469       222       822       1,339       2,704  
Regulatory assessments and FDIC insurance     505       494       534       533       582       1,533       1,740  
Core deposit intangibles amortization     195       196       195       195       195       586       586  
Communications     262       259       248       252       251       769       731  
Advertising     351       340       330       436       302       1,021       853  
Acquisition and merger-related expenses     196       625                         821        
Other     1,390       1,479       1,415       1,790       1,409       4,284       4,039  
Total noninterest expense     19,164       19,860       18,717       19,276       17,676       57,741       50,686  
INCOME BEFORE INCOME TAXES     10,800       9,130       9,165       7,813       3,873       29,095       18,566  
Provision for income taxes     1,921       1,574       1,454       4,609       887       4,949       4,138  
NET INCOME   $ 8,879     $ 7,556     $ 7,711     $ 3,204     $ 2,986     $ 24,146     $ 14,428  
                                                         
EARNINGS PER SHARE                                                        
Basic   $ 0.66     $ 0.57     $ 0.58     $ 0.24     $ 0.23     $ 1.81     $ 1.10  
Diluted   $ 0.65     $ 0.55     $ 0.57     $ 0.24     $ 0.22     $ 1.77     $ 1.07  


Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)



    Three Months Ended     Year-to-Date  
    2018     2017     2018     2017  
    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   $ 8,879     $ 7,556     $ 7,711     $ 3,204     $ 2,986     $ 24,146     $ 14,428  
                                                         
Earnings per share, basic   $ 0.66     $ 0.57     $ 0.58     $ 0.24     $ 0.23     $ 1.81     $ 1.10  
Earnings per share, diluted   $ 0.65     $ 0.55     $ 0.57     $ 0.24     $ 0.22     $ 1.77     $ 1.07  
                                                         
Return on average assets(A)     1.18 %     1.03 %     1.09 %     0.45 %     0.43 %     1.10 %     0.73 %
Return on average equity(A)     10.80 %     9.55 %     10.10 %     4.15 %     3.90 %     10.16 %     6.55 %
Return on average tangible equity(A)(B)     12.40 %     11.02 %     11.71 %     4.82 %     4.55 %     11.72 %     7.67 %
Tax equivalent net interest margin(C)     4.10 %     4.21 %     4.20 %     4.33 %     4.37 %     4.17 %     4.34 %
Efficiency ratio(D)     63.95 %     67.05 %     65.59 %     66.50 %     62.14 %     65.52 %     62.97 %
                                                         
Liquidity and Capital Ratios                                                        
Allegiance Bancshares, Inc. (Consolidated)                                                        
  Equity to assets     10.81 %     10.78 %     10.81 %     10.73 %     10.76 %     10.81 %     10.76 %
  Tangible equity to tangible assets(B)     9.56 %     9.49 %     9.48 %     9.38 %     9.38 %     9.56 %     9.38 %
  Estimated common equity tier 1 capital     11.16 %     10.60 %     10.82 %     10.54 %     10.68 %     11.16 %     10.68 %
  Estimated tier 1 risk-based capital     11.51 %     10.97 %     11.19 %     10.92 %     11.07 %     11.51 %     11.07 %
  Estimated total risk-based capital     13.92 %     13.42 %     13.72 %     13.43 %     12.04 %     13.92 %     12.04 %
  Estimated tier 1 leverage capital     10.23 %     9.78 %     9.98 %     9.84 %     9.90 %     10.23 %     9.90 %
Allegiance Bank                                                        
  Estimated common equity tier 1 capital     11.23 %     11.04 %     10.95 %     10.72 %     10.93 %     11.23 %     10.93 %
  Estimated tier 1 risk-based capital     11.23 %     11.04 %     10.95 %     10.72 %     10.93 %     11.23 %     10.93 %
  Estimated total risk-based capital     13.64 %     13.49 %     13.49 %     13.24 %     11.91 %     13.64 %     11.90 %
  Estimated tier 1 leverage capital     9.98 %     9.84 %     9.77 %     9.67 %     9.77 %     9.98 %     9.77 %
                                                         
Other Data                                                        
Weighted average shares:                                                        
Basic     13,371       13,327       13,262       13,187       13,165       13,320       13,104  
Diluted     13,637       13,634       13,542       13,496       13,483       13,605       13,445  
Period end shares outstanding     13,397       13,341       13,301       13,227       13,171       13,397       13,171  
Book value per share   $ 24.49     $ 23.98     $ 23.46     $ 23.20     $ 22.98     $ 24.49     $ 22.98  
Tangible book value per share(B)   $ 21.35     $ 20.81     $ 20.26     $ 19.97     $ 19.73     $ 21.35     $ 19.73  

(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 10 of this Earnings Release.
(C)  Net interest margin represents net interest income divided by average interest-earning assets.
(D)  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  
    September 30, 2018     June 30, 2018     September 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   $ 2,384,966     $ 32,988       5.49 %   $ 2,312,725     $ 31,846       5.52 %   $ 2,141,546     $ 28,588       5.30 %
Securities     304,254       2,083       2.72 %     315,198       2,097       2.67 %     324,901       2,121       2.59 %
Deposits in other financial institutions     47,518       265       2.21 %     50,227       250       2.00 %     53,409       192       1.43 %
Total interest-earning assets     2,736,738     $ 35,336       5.12 %     2,678,150     $ 34,193       5.12 %     2,519,856     $ 30,901       4.87 %
Allowance for loan losses     (24,059 )                     (24,753 )                     (20,886 )                
Noninterest-earning assets     276,997                       280,852                       261,524                  
Total assets   $ 2,989,676                     $ 2,934,249                     $ 2,760,494                  
                                                                         
Liabilities and Stockholders' Equity                                                                        
Interest-Bearing Liabilities:                                                                        
Interest-bearing demand deposits   $ 181,284     $ 389       0.85 %   $ 157,588     $ 208       0.53 %   $ 142,429     $ 127       0.35 %
Money market and savings deposits     530,240       859       0.64 %     522,381       679       0.52 %     558,087       684       0.49 %
Certificates and other time deposits     896,253       4,051       1.79 %     827,897       3,284       1.59 %     754,076       2,299       1.21 %
Borrowed funds     234,776       1,272       2.15 %     311,185       1,472       1.90 %     197,668       654       1.31 %
Subordinated debt     48,805       729       5.93 %     48,746       734       6.04 %     9,259       140       5.98 %
Total interest-bearing liabilities     1,891,358     $ 7,300       1.53 %     1,867,797     $ 6,377       1.37 %     1,661,519     $ 3,904       0.93 %
                                                                         
Noninterest-Bearing Liabilities:                                                                        
Noninterest-bearing demand deposits     761,935                       741,266                       786,566                  
Other liabilities     10,179                       7,778                       8,960                  
Total liabilities     2,663,472                       2,616,841                       2,457,045                  
Shareholders' equity     326,204                       317,408                       303,449                  
Total liabilities and shareholders' equity   $ 2,989,676                     $ 2,934,249                     $ 2,760,494                  
                                                                         
Net interest rate spread                     3.59 %                     3.75 %                     3.94 %
                                                                         
Net interest income and margin(1)           $ 28,036       4.06 %           $ 27,816       4.17 %           $ 26,997       4.25 %
                                                                         
Net interest income and margin (tax
  equivalent)(2)
          $ 28,292       4.10 %           $ 28,086       4.21 %           $ 27,748       4.37 %



Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)


    Nine Months Ended September 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   $ 2,319,727     $ 94,951       5.47 %   $ 2,038,228     $ 80,584       5.29 %
Securities     310,709       6,238       2.68 %     325,730       6,337       2.60 %
Deposits in other financial institutions     49,205       731       1.99 %     52,150       479       1.23 %
Total interest-earning assets     2,679,641     $ 101,920       5.09 %     2,416,108     $ 87,400       4.84 %
Allowance for loan losses     (24,254 )                     (19,456 )                
Noninterest-earning assets     276,777                       260,843                  
Total assets   $ 2,932,164                     $ 2,657,495                  
                                                 
Liabilities and Stockholders' Equity                                                
Interest-Bearing Liabilities:                                                
Interest-bearing demand deposits   $ 190,228     $ 914       0.64 %   $ 136,991     $ 345       0.34 %
Money market and savings deposits     534,925       2,197       0.55 %     514,995       1,822       0.47 %
Certificates and other time deposits     841,849       10,120       1.61 %     741,732       6,539       1.18 %
Borrowed funds     265,401       3,780       1.90 %     282,024       2,068       0.98 %
Subordinated debt     48,746       2,168       5.95 %     9,231       394       5.70 %
Total interest-bearing liabilities     1,881,149     $ 19,179       1.36 %     1,684,973     $ 11,168       0.89 %
                                                 
Noninterest-Bearing Liabilities:                                                
Noninterest-bearing demand deposits     724,493                       670,908                  
Other liabilities     8,742                       6,926                  
Total liabilities     2,614,384                       2,362,807                  
Shareholders' equity     317,780                       294,688                  
Total liabilities and shareholders' equity   $ 2,932,164                     $ 2,657,495                  
                                                 
Net interest rate spread                     3.73 %                     3.95 %
                                                 
Net interest income and margin           $ 82,741       4.13 %           $ 76,232       4.22 %
                                                 
Net interest income and margin (tax equivalent)           $ 83,551       4.17 %           $ 78,517       4.34 %


Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)



    Three Months Ended  
    2018     2017  
    September 30     June 30     March 31     December 31     September 30  
       
    (Dollars in thousands)  
Period-end Loan Portfolio:                                        
Commercial and industrial   $ 458,434     $ 452,307     $ 447,168     $ 457,129     $ 446,029  
Mortgage warehouse     48,876       51,552       41,572       69,456       83,577  
Real estate:                                        
Commercial real estate (including multi-family residential)     1,161,992       1,134,903       1,108,537       1,080,247       1,045,220  
Commercial real estate construction and land development     298,916       270,965       257,566       243,389       225,574  
1-4 family residential (including home equity)     344,342       330,053       317,842       301,219       283,399  
Residential construction     117,740       109,962       108,882       109,116       106,299  
Consumer and other     10,626       8,933       8,927       10,320       11,442  
Total loans   $ 2,440,926     $ 2,358,675     $ 2,290,494     $ 2,270,876     $ 2,201,540  
                                         
Asset Quality:                                        
Nonaccrual loans   $ 14,943     $ 12,137     $ 13,373     $ 13,328     $ 13,913  
Accruing loans 90 or more days past due                              
Total nonperforming loans     14,943       12,137       13,373       13,328       13,913  
Other real estate     1,801       1,710       365       365       453  
Other repossessed assets     205       740       443       205       205  
Total nonperforming assets   $ 16,949     $ 14,587     $ 14,181     $ 13,898     $ 14,571  
                                         
Net charge-offs (recoveries)   $ 245     $ 1,428     $ (326 )   $ 2,003     $ 4,196  
                                         
Nonaccrual loans:                                        
Commercial and industrial   $ 6,258     $ 5,983     $ 6,153     $ 6,437     $ 5,031  
Mortgage warehouse                              
Real estate:                                        
Commercial real estate (including multi-family residential)     5,006       4,917       6,466       6,110       8,097  
Commercial real estate construction and land development     694                          
1-4 family residential (including home equity)     2,985       1,237       754       781       735  
Residential construction                              
Consumer and other                             50  
Total nonaccrual loans   $ 14,943     $ 12,137     $ 13,373     $ 13,328     $ 13,913  
                                         
Asset Quality Ratios:                                        
Nonperforming assets to total assets     0.56 %     0.49 %     0.49 %     0.49 %     0.52 %
Nonperforming loans to total loans     0.61 %     0.51 %     0.58 %     0.59 %     0.63 %
Allowance for loan losses to nonperforming loans     157.84 %     196.35 %     184.16 %     177.44 %     170.50 %
Allowance for loan losses to total loans     0.97 %     1.01 %     1.08 %     1.04 %     1.08 %
Net charge-offs (recoveries) to average loans (annualized)     0.04 %     0.25 %   (0.06) %     0.36 %     0.78 %


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 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  
    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   $ 328,131     $ 319,888     $ 311,988     $ 306,865     $ 302,727     $ 328,131     $ 302,727  
Less:  Goodwill and core
  deposit intangibles, net
    42,077       42,272       42,468       42,663       42,858       42,077       42,858  
Tangible shareholders' equity   $ 286,054     $ 277,616     $ 269,520     $ 264,202     $ 259,869     $ 286,054     $ 259,869  
                                                         
Shares outstanding at end of
  period
    13,397       13,341       13,301       13,227       13,171       13,397       13,171  
                                                         
Tangible book value per share   $ 21.35     $ 20.81     $ 20.26     $ 19.97     $ 19.73     $ 21.35     $ 19.73  
                                                         
Net income   $ 8,879     $ 7,556     $ 7,711     $ 3,204     $ 2,986     $ 24,146     $ 14,428  
                                                         
Average shareholders' equity   $ 326,204     $ 317,408     $ 309,545     $ 306,346     $ 303,449     $ 317,780     $ 294,688  
Less:  Average goodwill and core
  deposit intangibles, net
    42,203       42,393       42,589       42,758       42,954       42,394       43,148  
Average tangible shareholders'
  equity
  $ 284,001     $ 275,015     $ 266,954     $ 263,588     $ 260,495     $ 275,386     $ 251,540  
                                                         
Return on average tangible
  equity
    12.40 %     11.02 %     11.71 %     4.82 %     4.55 %     11.72 %     7.67 %
                                                         
Total assets   $ 3,035,539     $ 2,966,426     $ 2,886,484     $ 2,860,231     $ 2,813,434     $ 3,035,539     $ 2,813,434  
Less: Goodwill and core deposit
  intangibles, net
    42,077       42,272       42,468       42,663       42,858       42,077       42,858  
Tangible assets   $ 2,993,462     $ 2,924,154     $ 2,844,016     $ 2,817,568     $ 2,770,576     $ 2,993,462     $ 2,770,576  
                                                         
Tangible equity to tangible
  assets
    9.56 %     9.49 %     9.48 %     9.38 %     9.38 %     9.56 %     9.38 %


Allegiance Bancshares, Inc.

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

Allegiance Bank - BancsharesOneLineHorizontalWithRegMark.jpg

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