Market Overview

Allegiance Bancshares, Inc. Reports First Quarter 2019 Results

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  • Net income increased 64.4% to $12.7 million for the first quarter 2019 compared to $7.7 million for the first quarter 2018

  • Completed the LoweryBank branch acquisition in Sugar Land, Texas with approximately $45.0 million in loans and $16.0 million in customer deposits

  • Core loan growth of $1.52 billion year over year, or 67.6%, and $109.4 million for the first quarter 2019 compared to the fourth quarter 2018, or 12.0% (annualized)

  • Net charge-offs to average loans of 0.02% (annualized) for each of the first quarter 2019 and fourth quarter 2018

HOUSTON, April 26, 2019 (GLOBE NEWSWIRE) -- Allegiance Bancshares, Inc. (NASDAQ:ABTX) ("Allegiance"), the holding company of Allegiance Bank (the "Bank"), today reported net income of $12.7 million and diluted earnings per share of $0.58 for the first quarter 2019 compared to $7.7 million and diluted earnings per share of $0.57 for the first quarter 2018.  The first quarter 2019 results included $1.2 million of pre-tax acquisition and merger-related expenses.

"2019 has already proven to be a productive year for Allegiance," said George Martinez, Allegiance's Chairman and Chief Executive Officer. "We successfully completed the integration of Post Oak Bank, including the full rebrand and systems conversion along with the continued cultural integration process; completed the branch acquisition of LoweryBank in Sugar Land; and rebalanced our footprint by consolidating two bank offices. We could not be more proud of our employees for their tireless efforts and commitment to Allegiance Bank. We believe we are well-positioned to support new and existing customers, who now have direct access to all of our comprehensive products and services, with 27 bank offices across the Houston region," continued Martinez.

"We are pleased with our first quarter results as they reflect our continued focus on relationship banking and our ability to generate loans in a highly competitive environment. We continue to execute on our growth plans and generate solid returns for our shareholders. Our focus remains on attracting the best bankers in our markets to support organic growth. We hired 6 loan and deposit producers thus far in 2019 and anticipate that our bankers will continue to earn the trust of great customers and our shareholders will continue to reap the rewards. We are off to a strong start and look forward to another successful year," concluded Martinez.

First Quarter 2019 Results

Net interest income before the provision for loan losses in the first quarter 2019 increased $17.7 million, or 65.9%, to $44.6 million from $26.9 million for the first quarter 2018 primarily due to a $1.59 billion, or 60.6%, increase in average interest-earning assets for the same period primarily 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 of $44.6 million for the first quarter 2019 decreased slightly from $45.8 million in the fourth quarter 2018 primarily due to the increase in interest expense as a result of higher funding costs on interest-bearing liabilities.  The net interest margin on a tax equivalent basis increased 11 basis points to 4.31% for the first quarter 2019 from 4.20% for the first quarter 2018 and decreased 14 basis points from 4.45% for the fourth quarter 2018. Excluding the impact of acquisition accounting adjustments, the net interest margin on a tax equivalent basis for the first quarter 2019 would have been 4.03% compared to 4.20% and 4.16% for the first quarter 2018 and fourth quarter 2018, respectively.

Noninterest income for the first quarter 2019 was $3.3 million, an increase of $1.6 million, or 99.8%, compared to $1.6 million for the first quarter 2018 and increased $955 thousand, or 40.9%, compared to $2.3 million for the fourth quarter 2018.  Noninterest income for the fourth quarter 2018 included $429 thousand of loss on the sales of other real estate and repossessed assets. 

Noninterest expense for the first quarter 2019 increased $12.4 million, or 66.2%, to $31.1 million from $18.7 million for the first quarter 2018, and increased $2.1 million, or 7.1%, from $29.0 million for the fourth quarter 2018. These increases were primarily due to additional noninterest expenses associated with the Post Oak acquisition, of which $1.2 million was attributable to acquisition and merger-related expenses.

In the first quarter 2019, Allegiance's efficiency ratio was 64.97% compared to 65.59% for the first quarter 2018 and 60.30% for the fourth quarter 2018.  First quarter 2019 annualized returns on average assets, average equity and average tangible equity were 1.08%, 7.27% and 11.22%, respectively, compared to 1.09%, 10.10% and 11.71%, respectively, for the first quarter 2018.  Annualized returns on average assets, average equity and average tangible equity for the fourth quarter 2018 were 1.12%, 7.49% and 11.66%, respectively.

Financial Condition

Total assets at March 31, 2019 increased $113.6 million, or 2.4%, to $4.77 billion compared to $4.66 billion at December 31, 2018 and increased $1.88 billion, or 65.2%, compared to $2.89 billion at March 31, 2018, primarily due to the Post Oak acquisition and organic loan growth.

Total loans at March 31, 2019 increased $97.9 million, or 10.6% (annualized), to $3.81 billion compared to $3.71 billion at December 31, 2018 and increased $1.52 billion, or 66.2%, compared to $2.29 billion at March 31, 2018, primarily due to loans acquired in the Post Oak acquisition. Core loans, which exclude the mortgage warehouse portfolio, increased $109.4 million, or 3.0%, to $3.77 billion at March 31, 2019 from $3.66 billion at December 31, 2018 and increased $1.52 billion, or 67.6%, from $2.25 billion at March 31, 2018.  Excluding loans acquired from Post Oak of $1.16 billion, core loans at March 31, 2019 increased $360.5 million, from March 31, 2018.

Deposits at March 31, 2019 increased $117.5 million, or 3.2%, to $3.78 billion compared to $3.66 billion at December 31, 2018 and increased $1.50 billion, or 65.4%, compared to $2.28 billion at March 31, 2018, primarily related to the Post Oak acquisition.

Asset Quality

Nonperforming assets totaled $33.8 million, or 0.71% of total assets, at March 31, 2019, compared to $33.6 million, or 0.72%, of total assets, at December 31, 2018, and $14.2 million, or 0.49% of total assets, at March 31, 2018. The allowance for loan losses was 0.71% of total loans at March 31, 2019, 0.71% of total loans at December 31, 2018 and 1.08 % of total loans at March 31, 2018. The decrease in the allowance for loan losses as a percentage of loans from prior periods 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 first quarter 2019 was $1.0 million, or 0.11% (annualized) of average loans, compared to $3.0 million, 0.32% (annualized), of average loans, for the fourth quarter 2018 and $653 thousand, or 0.12% (annualized) of average loans, for the first quarter 2018.

First quarter 2019 net charge-offs were $210 thousand compared to net charge-offs of $219 thousand for the fourth quarter 2018 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 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 Friday, April 26, 2019 at 9:00 a.m. Central Time (10:00 a.m. Eastern Time) to discuss its first quarter 2019 results. Individuals and investment professionals may participate in the call by dialing (877) 279-2520. The conference ID number is 8668328.  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 March 31, 2019, Allegiance was a $4.77 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 March 31, 2019, Allegiance Bank operated 27 full-service banking locations, 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  
    March 31     December 31     September 30     June 30     March 31  
                               
    (Dollars in thousands)  
Cash and cash equivalents   $ 258,843     $ 268,947     $ 191,468     $ 200,645     $ 190,088  
Available for sale securities     345,716       337,293       300,115       300,897       307,411  
                                         
Total loans     3,806,161       3,708,306       2,440,926       2,358,675       2,290,494  
Allowance for loan losses     (27,123 )     (26,331 )     (23,586 )     (23,831 )     (24,628 )
Loans, net     3,779,038       3,681,975       2,417,340       2,334,844       2,265,866  
                                         
Goodwill     223,642       223,125       39,389       39,389       39,389  
Core deposit intangibles, net     25,409       26,587       2,688       2,883       3,079  
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