Market Overview

Allegiance Bancshares, Inc. Reports First Quarter 2020 Results

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  • Promptly supported customers, employees and community with proactive response to the COVID-19 pandemic
  • Approved more than 3,500 loans in excess of $640 million within the Small Business Administration Paycheck Protection Program under the Coronavirus Aid, Relief and Economic Security Act (CARES Act) through April 26, 2020
     
  • Surpassed $5 billion in assets, further bolstering market position as the largest community bank exclusively focused on the Houston region
     
  • Net interest margin increased to 4.15% for the first quarter 2020 from 4.11% for the fourth quarter 2019
     
  • Declared quarterly dividend of $0.10 per share of common stock

HOUSTON, April 30, 2020 (GLOBE NEWSWIRE) -- Allegiance Bancshares, Inc. (NASDAQ:ABTX) (Allegiance), the holding company of Allegiance Bank (the "Bank"), today reported net income of $3.5 million and diluted earnings per share of $0.17 for the first quarter 2020 compared to net income of $12.7 million and diluted earnings per share of $0.58 for the first quarter 2019.  The first quarter 2020 results were primarily driven by the increased provision expense in response to COVID-19-related uncertainties in the current economic environment and write-downs in other real estate owned.

"While first quarter earnings were negatively impacted by the broader economic risks and uncertainties relating to the COVID-19 pandemic, the true story for the quarter was the phenomenal effort and execution of our entire team at Allegiance Bank under unprecedented conditions" said Steve Retzloff, Allegiance's Chief Executive Officer.  "We enter the second quarter very well-positioned to navigate potential challenges related to the evolving COVID-19 and economic situation.  Our capital is very strong, our loan portfolio is granular and well-collateralized, and our people remain dedicated to providing extraordinary service to our customers, albeit remotely when appropriate," commented Retzloff.

"Our pre-existing pandemic response plan enabled us to quickly respond to the situation and fulfill our commitment to providing a safe environment for our customers and employees.  Implementation strategies have included social distancing, acquisition of a pre-arranged supply of laptops that allow for an extensive work-from-home program, drive-thru only service, evaluating and responding to customer needs and a more recent show of strength as we processed thousands of Paycheck Protection Program applications for both existing and new customers.  The extraordinary dedication of our employees has been remarkable," continued Retzloff.

First Quarter 2020 Results

Net interest income before the provision for loan losses in the first quarter 2020 increased $422 thousand, or 0.9%, to $45.0 million from $44.6 million for the first quarter 2019 and from $44.5 million in the fourth quarter 2019.  These increases were primarily due to changes in the volume and relative mix of the underlying assets and liabilities as well as lower costs related to interest-bearing liabilities.  The net interest margin on a tax equivalent basis decreased 16 basis points to 4.15% for the first quarter 2020 from 4.31% for the first quarter 2019 and increased 4 basis points from 4.11% for the fourth quarter 2019.  Core net interest margin on a tax equivalent basis excludes the impact of acquisition accounting adjustments and was 4.04% for the first quarter 2020 compared to 4.03% for the first quarter 2019 and 3.94% for the fourth quarter 2019.  Please refer to the non-GAAP reconciliation on page 9.

Noninterest income for the first quarter 2020 was $2.7 million, a decrease of $564 thousand, or 17.1%, compared to $3.3 million for the first quarter 2019 and a decrease of $675 thousand, or 19.9%, compared to $3.4 million for the fourth quarter 2019.  Noninterest income for the first quarter 2020 and the fourth quarter 2019 included $194 thousand and $613 thousand, respectively, of gains on the sale of securities.

Noninterest expense for the first quarter 2020 increased $1.3 million, or 4.1%, to $32.4 million from $31.1 million for the first quarter 2019 and increased $3.0 million, or 10.1%, compared to the fourth quarter 2019.  Noninterest expense for the first quarter 2020 included $2.2 million of other real estate write-downs.

In the first quarter 2020, Allegiance's efficiency ratio was 68.13% compared to 62.20% for the fourth quarter 2019 and 64.97% for the first quarter 2019.  First quarter 2020 annualized returns on average assets, average equity and average tangible equity were 0.29%, 1.98% and 3.02%, respectively, compared to 1.13%, 7.81% and 11.96%, respectively, for the fourth quarter 2019.  Annualized returns on average assets, average equity and average tangible equity for the first quarter 2019 were 1.08%, 7.27% and 11.22%, respectively. Return on average tangible equity is a non-GAAP measure.  Please refer to the non-GAAP reconciliation on page 9. 

Financial Condition

Total assets at March 31, 2020 increased $9.8 million to $5.00 billion compared to $4.99 billion at December 31, 2019 and increased $233.6 million compared to $4.77 billion at March 31, 2019, primarily due to organic loan growth.

Total loans at March 31, 2020 increased $40.2 million, or 4.1% (annualized), to $3.96 billion compared to $3.92 billion at December 31, 2019 and increased $149.4 million, or 3.9%, compared to $3.81 billion at March 31, 2019, primarily due to organic loan growth.  Core loans, which exclude the mortgage warehouse portfolio, increased $47.4 million, or 4.9% (annualized), to $3.95 billion at March 31, 2020 from $3.91 billion at December 31, 2019 and increased $185.1 million, or 4.9%, from $3.77 billion at March 31, 2019.

Loans with oil and gas industry exposure totaled $80.7 million, or 2.0%, of total loans at March 31, 2020, of which $826 thousand were on nonaccrual.  At March 31, 2020, the Company's allowance for loan losses allocated to its total oil and gas loan portfolio was 1.5% of total oil and gas loans.

In addition, at March 31, 2020, loan balances in the hotel and restaurant and bar industries was $133.0 million, or 3.4%, of total loans, and $101.3 million, or 2.6%, of total loans, respectively.  At March 31, 2020, there were no hotel loans on nonaccrual and there were $794 thousand restaurant and bar loans on nonaccrual.  At March 31, 2020, the Company's allowance for loan losses allocated to its hotel portfolio was 1.0% of total hotel loans and its restaurant and bar portfolio was 1.2% of total restaurant and bar loans.

The Company had executed 1,563 principal and interest deferrals on outstanding loan balances of $838.1 million, as of April 26, 2020, in connection with the COVID-19 relief provided by the CARES Act. These deferrals were generally no more than 90 days in duration.

Deposits at March 31, 2020 decreased $114.5 million, or 11.3% (annualized), to $3.95 billion compared to $4.07 billion at December 31, 2019 and increased $173.5 million, or 4.6%, compared to $3.78 billion at March 31, 2019.

Asset Quality

Nonperforming assets totaled $34.2 million, or 0.68% of total assets, at March 31, 2020, compared to $36.7 million, or 0.74% of total assets, at December 31, 2019, and $33.8 million, or 0.71% of total assets, at March 31, 2019.  The allowance for loan losses was 0.95% of total loans at March 31, 2020, 0.75% of total loans at December 31, 2019 and 0.71% of total loans at March 31, 2019.  Accounting Standards Update (ASU) 2016-13, "Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" (CECL), became effective for the Company on January 1, 2020.  On March 27, 2020, the CARES Act included an option for entities to delay the implementation of CECL until the earlier of the termination date of the national emergency declaration by the President or December 31, 2020.  Due to the uncertainty on the economy from COVID-19, the Company chose to delay its implementation of CECL and recorded its provision for loan losses under the incurred loss model that existed prior to CECL.

The provision for loan losses for the first quarter 2020 was $11.0 million, or 1.12% (annualized) of average loans, compared to $933 thousand, or 0.10% (annualized) of average loans, for the fourth quarter 2019 and $1.0 million, or 0.11% (annualized) of average loans for the first quarter 2019 primarily due to economic risks and uncertainties related to the COVID-19 pandemic.  The increase in the Company's provision for loan losses in the first quarter of 2020 compared to prior quarters reflects overall growth in the loan portfolio; increased level of charge-offs; and increasing uncertainty surrounding unemployment, the economic impact caused by COVID-19 and the economic effects related to the recent sharp decline in crude oil prices.

First quarter 2020 net charge-offs were $2.9 million, or 0.30% (annualized) of average loans, compared to net charge-offs of $1.3 million, or 0.13% (annualized) of average loans, for the fourth quarter 2019 and $210 thousand, or 0.02% (annualized) of average loans, for the first quarter 2019.

Dividend

On April 23, 2020, the Board of Directors of Allegiance declared a cash dividend of $0.10 per share to be paid on June 15, 2020 to all shareholders of record as of May 29, 2020.  The amount and timing of any future dividend payments to shareholders will be subject to the discretion of Allegiance's Board of Directors.

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 30, 2020 at 9:00 a.m. Central Time (10:00 a.m. Eastern Time) to discuss its first quarter 2020 results.  Individuals and investment professionals may participate in the call by dialing (877) 279-2520.  The conference ID number is 9575797.  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, 2020, Allegiance was a $5.00 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, 2020, Allegiance Bank operated 27 full-service banking locations in the Houston region, which we define as the Houston-The Woodlands-Sugar Land and Beaumont-Port Arthur metropolitan statistical areas, with 26 bank offices and one loan production office in the Houston metropolitan area and one bank office location in Beaumont, just outside of the Houston metropolitan area.  Visit www.allegiancebank.com for more information.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995

This release contains forward-looking statements within the meaning of the securities laws that are derived utilizing 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 expected 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.  Additionally, the impact of the COVID-19 pandemic is rapidly evolving and its future effects on Allegiance are difficult to predict.  These and various other risk factors are discussed in Allegiance's Annual Report on Form 10-K for the fiscal year ended December 31, 2019 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.  Because of these uncertainties, readers should not place undue reliance on any forward-looking statement.  Allegiance disclaims any 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.
8847 West Sam Houston Parkway N., Suite 200
Houston, Texas 77040
ir@allegiancebank.com


Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)

    2020     2019  
    March 31     December 31     September 30     June 30     March 31  
                               
    (Dollars in thousands)  
ASSETS                                        
Cash and due from banks   $ 156,700     $ 213,347     $ 246,312     $ 170,850     $ 169,975  
Interest-bearing deposits at other financial
  institutions
    18,189       132,901       54,307       61,757       88,868  
Total cash and cash equivalents     174,889       346,248       300,619       232,607       258,843  
Available for sale securities, at fair value     508,250       372,545       353,000       348,173       345,716  
Loans held for investment     3,955,546       3,915,310       3,886,004       3,857,963       3,806,161  
Less: allowance for loan losses     (37,511 )     (29,438 )     (29,808 )     (27,940 )     (27,123 )
Loans, net     3,918,035       3,885,872       3,856,196       3,830,023       3,779,038  
Accrued interest receivable     17,203       15,468       15,201       16,508       16,194  
Premises and equipment, net     66,798       66,790       67,175       59,690       60,327  
Other real estate owned     12,617       8,337       8,333       6,294       1,152  
Federal Home Loan Bank stock     12,798       6,242       14,138       8,866       14,365  
Bank owned life insurance     27,255       27,104       26,947       26,794       26,639  
Goodwill     223,642       223,642       223,642       223,642       223,642  
Core deposit intangibles, net     20,886       21,876       23,053       24,231       25,409  
Other assets     20,056       18,530       17,536       17,383       17,477  
Total assets   $ 5,002,429     $ 4,992,654     $ 4,905,840     $ 4,794,211     $ 4,768,802  
LIABILITIES AND SHAREHOLDERS'
  EQUITY
                                       
LIABILITIES:                                        
Deposits:                                        
Noninterest-bearing   $ 1,217,532     $ 1,252,232     $ 1,227,839     $ 1,173,423     $ 1,181,920  
Interest-bearing                                        
Demand     341,524       367,278       340,754       390,067       328,961  
Money market and savings     1,110,631       1,258,008       1,114,233       995,467       901,773  
Certificates and other time     1,283,887       1,190,583       1,214,659       1,301,683       1,367,407  
Total interest-bearing deposits     2,736,042       2,815,869       2,669,646       2,687,217       2,598,141  
Total deposits     3,953,574       4,068,101       3,897,485       3,860,640       3,780,061  
Accrued interest payable     3,821       4,326       4,915       3,531       4,511  
Borrowed funds     190,506       75,503       159,501       146,998       201,995  
Subordinated debt     107,930       107,799       107,771       49,019       48,959  
Other liabilities     40,005       27,060       29,860       29,322       29,499  
Total liabilities     4,295,836       4,282,789       4,199,532       4,089,510       4,065,025  
SHAREHOLDERS' EQUITY:                                        
Common stock     20,355       20,524       20,737       21,147       21,484  
Capital surplus     513,894       521,066       529,688       541,979       556,184  
Retained earnings     164,858       163,375       149,389       137,342       123,094  
Accumulated other comprehensive
  income
    7,486       4,900       6,494       4,233       3,015  
Total shareholders' equity     706,593       709,865       706,308       704,701       703,777  
TOTAL LIABILITIES AND
  SHAREHOLDERS' EQUITY
  $ 5,002,429     $ 4,992,654     $ 4,905,840     $ 4,794,211     $ 4,768,802  


Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)

    Three Months Ended  
    2020     2019  
    March 31     December 31     September 30     June 30     March 31  
                               
    (Dollars in thousands, except per share data)  
INTEREST INCOME:                                        
Loans, including fees   $ 54,624     $ 55,368     $ 55,790     $ 56,016     $ 54,189  
Securities:                                        
Taxable     2,087       2,066       2,090       1,837       982  
Tax-exempt     546       469       483       692       1,290  
Deposits in other financial
  institutions
    195       244       302       401       688  
Total interest income     57,452       58,147       58,665       58,946       57,149  
                                         
INTEREST EXPENSE:                                        
Demand, money market and
  savings deposits
    4,364       5,091       4,975       4,513       3,728  
Certificates and other time
  deposits
    6,084       6,483       6,909       7,008       6,256  
Borrowed funds     506       547       1,183       1,118       1,827  
Subordinated debt     1,473       1,500       761       736       735  
Total interest expense     12,427       13,621       13,828       13,375       12,546  
NET INTEREST INCOME     45,025       44,526       44,837       45,571       44,603  
Provision for loan losses     10,990       933       2,597       1,407       1,002  
Net interest income after provision
  for loan losses
    34,035       43,593       42,240       44,164       43,601  
                                         
NONINTEREST INCOME:                                        
Nonsufficient funds fees     169       189       168       139       162  
Service charges on deposit
  accounts
    457       403       379       365       325  
Gain on sale of securities     194       613             846        
(Loss) gain on sales of other real
  estate and repossessed assets
    (69 )     (45 )           70       1  
Bank owned life insurance     151       157       153       155       159  
Rebate from correspondent bank     493       900       900       884       896  
Other     1,330       1,183       1,289       1,386       1,746  
Total noninterest income     2,725       3,400       2,889       3,845       3,289  
                                         
NONINTEREST EXPENSE:                                        
Salaries and employee benefits     19,781       18,273       20,221       19,415       19,684  
Net occupancy and equipment     1,907       1,994       1,973       2,114       2,098  
Depreciation     866       861       822       756       753  
Data processing and software
  amortization
    1,826       2,120       2,058       1,709       1,577  
Professional fees     573       540       667       527       599  
Regulatory assessments and
  FDIC insurance
    632       216       (41 )     802       728  
Core deposit intangibles
  amortization
    990       1,177       1,178       1,178       1,178  
Communications     417       486       455       468       430  
Advertising     521       597       449       617       704  
Acquisition and merger-related
  expenses
                      153       1,173  
Other     4,888       3,167       2,227       2,341       2,191  
Total noninterest expense     32,401       29,431       30,009       30,080       31,115  
INCOME BEFORE INCOME
  TAXES
    4,359       17,562       15,120       17,929       15,775  
Provision for income taxes     843       3,576       3,073       3,681       3,097  
NET INCOME   $ 3,516     $ 13,986     $ 12,047     $ 14,248     $ 12,678  
                                         
EARNINGS PER SHARE                                        
Basic   $ 0.17     $ 0.68     $ 0.57     $ 0.67     $ 0.58  
Diluted   $ 0.17     $ 0.67     $ 0.57     $ 0.66     $ 0.58  


Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)

    Three Months Ended  
    2020     2019  
    March 31     December 31     September 30     June 30     March 31  
                               
    (Dollars and share amounts in thousands, except per share data)  
Net income   $ 3,516     $ 13,986     $ 12,047     $ 14,248     $ 12,678  
                                         
Earnings per share, basic   $ 0.17     $ 0.68     $ 0.57     $ 0.67     $ 0.58  
Earnings per share, diluted   $ 0.17     $ 0.67     $ 0.57     $ 0.66     $ 0.58  
                                         
Return on average assets(A)     0.29 %     1.13 %     0.98 %     1.19 %     1.08 %
Return on average equity(A)     1.98 %     7.81 %     6.73 %     8.10 %     7.27 %
Return on average tangible
  equity(A)(B)
    3.02 %     11.96 %     10.33 %     12.52 %     11.22 %
Net interest margin
   (tax equivalent)(C)
    4.15 %     4.11 %     4.16 %     4.33 %     4.31 %
Core net interest margin
  (tax equivalent)(B)
    4.04 %     3.94 %     3.97 %     4.07 %     4.03 %
Efficiency ratio(D)     68.13 %     62.20 %     62.88 %     61.93 %     64.97 %
                                         
Capital Ratios                                        
Allegiance Bancshares, Inc.
  (Consolidated)
                                       
Equity to assets     14.12 %     14.22 %     14.40 %     14.70 %     14.76 %
Tangible equity to tangible
  assets(B)
    9.71 %     9.78 %     9.86 %     10.05 %     10.06 %
Estimated common equity
  tier 1 capital
    11.16 %     11.42 %     11.28 %     11.34 %     11.37 %
Estimated tier 1 risk-based
   capital
    11.40 %     11.66 %     11.51 %     11.58 %     11.61 %
Estimated total risk-based
  capital
    14.73 %     14.83 %     14.70 %     13.27 %     13.28 %
Estimated tier 1 leverage
  capital
    9.89 %     10.02 %     10.06 %     10.17 %     10.25 %
Allegiance Bank                                        
Estimated common equity
  tier 1 capital
    12.60 %     12.67 %     12.28 %     12.02 %     11.67 %
Estimated tier 1 risk-based
  capital
    12.60 %     12.67 %     12.28 %     12.02 %     11.67 %
Estimated total risk-based
  capital
    14.50 %     14.39 %     14.01 %     13.71 %     13.34 %
Estimated tier 1 leverage
  capital
    10.94 %     10.89 %     10.73 %     10.57 %     10.31 %
                                         
Other Data                                        
Weighted average shares:                                        
Basic     20,411       20,652       20,981       21,257       21,733  
Diluted     20,690       20,930       21,256       21,546       22,040  
Period end shares
  outstanding
    20,355       20,524       20,737       21,147       21,484  
Book value per share   $ 34.71     $ 34.59     $ 34.06     $ 33.32     $ 32.76  
Tangible book value per
  share(B)
  $ 22.70     $ 22.62     $ 22.16     $ 21.60     $ 21.17  
  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 9 of this Earnings Release.
  3. Net interest margin represents net interest income divided by average interest-earning assets.
  4. Represents total noninterest expense divided by the sum of net interest income plus noninterest income, excluding net gains and losses on the sale of loans, securities and assets. Additionally, taxes and provision for loan losses are not part of this calculation.


Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)

    Three Months Ended  
    March 31, 2020     December 31, 2019     March 31, 2019  
    Average Balance     Interest Earned/ Interest Paid     Average
Yield/ Rate
    Average Balance     Interest Earned/ Interest Paid     Average
Yield/ Rate
    Average Balance     Interest Earned/ Interest Paid     Average
Yield/ Rate
 
                                                       
    (Dollars in thousands)  
Assets                                                                        
Interest-Earning Assets:                                                                        
Loans   $ 3,933,291     $ 54,624       5.59 %   $ 3,888,476     $ 55,368       5.65 %   $ 3,747,234     $ 54,189       5.86 %
Securities     388,721       2,633       2.72 %     364,605       2,535       2.76 %     346,686       2,272       2.66 %
Deposits in other financial
  institutions and other
    50,711       195       1.55 %     54,947       244       1.76 %     118,749       688       2.35 %
Total interest-earning assets     4,372,723     $ 57,452       5.28 %     4,308,028     $ 58,147       5.35 %     4,212,669     $ 57,149       5.50 %
Allowance for loan losses     (28,718 )                     (29,997 )                     (26,760 )                
Noninterest-earning assets     602,778                       639,601                       559,763                  
Total assets   $ 4,946,783                     $ 4,917,632                     $ 4,745,672                  
                                                                         
Liabilities and
  Shareholders' Equity
                                                                       
Interest-Bearing Liabilities:                                                                        
Interest-bearing demand
  deposits
  $ 363,326     $ 846       0.94 %   $ 361,666     $ 952       1.04 %   $ 338,193     $ 963       1.16 %
Money market and savings
  deposits
    1,168,541       3,518       1.21 %     1,169,996       4,139       1.40 %     880,138       2,765       1.27 %
Certificates and other time
  deposits
    1,193,427       6,084       2.05 %     1,203,110       6,483       2.14 %     1,302,958       6,256       1.95 %
Borrowed funds     140,999       506       1.44 %     86,372       547       2.51 %     283,566       1,827       2.61 %
Subordinated debt     107,865       1,473       5.49 %     107,782       1,500       5.52 %     48,925       735       6.09 %
Total interest-bearing
  liabilities
    2,974,158     $ 12,427       1.68 %     2,928,926     $ 13,621       1.85 %     2,853,780     $ 12,546       1.78 %
                                                                         
Noninterest-Bearing
  Liabilities:
                                                                       
Noninterest-bearing demand
  deposits
    1,225,888                       1,237,770                       1,167,172                  
Other liabilities     33,202                       40,781                       17,054                  
Total liabilities     4,233,248                       4,207,477                       4,038,006                  
Shareholders' equity     713,535                       710,155                       707,666                  
Total liabilities and
  shareholders' equity
  $ 4,946,783                     $ 4,917,632                     $ 4,745,672                  
                                                                         
Net interest rate spread                     3.60 %                     3.50 %                     3.72 %
                                                                         
Net interest income and margin           $ 45,025        4.14 %           $ 44,526       4.10 %           $ 44,603       4.29 %
                                                                         
Net interest income and net
  interest margin (tax equivalent)
          $ 45,152       4.15 %           $ 44,623       4.11 %           $ 44,805       4.31 %


Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)

    Three Months Ended  
    2020     2019  
    March 31     December 31     September 30     June 30     March 31  
                               
    (Dollars in thousands)  
Period-end Loan Portfolio:                                        
Commercial and industrial   $ 702,267     $ 689,360     $ 675,055     $ 694,516     $ 699,471  
Mortgage warehouse     1,051       8,304       36,594       46,171       36,742  
Real estate:                                        
Commercial real estate (including
  multi-family residential)
    1,951,080       1,873,782       1,859,721       1,830,764       1,771,890  
Commercial real estate construction and
  land development
    378,987       410,471       386,723       368,108       396,162  
1-4 family residential (including home equity)     704,212       698,957       695,520       690,961       658,261  
Residential construction     177,025       192,515       189,608       183,991       201,314  
Consumer and other     40,924       41,921       42,783       43,452       42,321  
Total loans   $ 3,955,546     $ 3,915,310     $ 3,886,004     $ 3,857,963     $ 3,806,161  
                                         
Asset Quality:                                        
Nonaccrual loans   $ 21,621     $ 28,371     $ 34,615     $ 31,382     $ 32,670  
Accruing loans 90 or more days past due                              
Total nonperforming loans     21,621       28,371       34,615       31,382       32,670  
Other real estate     12,617       8,337       8,333       6,294       1,152  
Other repossessed assets                              
Total nonperforming assets   $ 34,238     $ 36,708     $ 42,948     $ 37,676     $ 33,822  
                                         
Net charge-offs   $ 2,917     $ 1,303     $ 729     $ 590     $ 210  
                                         
Nonaccrual loans:                                        
Commercial and industrial   $ 8,669     $ 8,388     $ 8,033     $ 9,386     $ 11,221  
Mortgage warehouse                              
Real estate:                                        
Commercial real estate (including
  multi-family residential)
    7,024       6,741       15,356       18,218       17,531  
Commercial real estate construction and
  land development
    1,958       9,050       9,050       1,541       818  
1-4 family residential (including home equity)     2,845       3,294       1,992       2,074       2,928  
Residential construction     982       746                    
Consumer and other     143       152       184       163       172  
Total nonaccrual loans   $ 21,621     $ 28,371     $ 34,615     $ 31,382     $ 32,670  
                                         
Asset Quality Ratios:                                        
Nonperforming assets to total assets     0.68 %     0.74 %     0.88 %     0.79 %     0.71 %
Nonperforming loans to total loans     0.55 %     0.72 %     0.89 %     0.81 %     0.86 %
Allowance for loan losses to nonperforming loans     173.49 %     103.76 %     86.11 %     89.03 %     83.02 %
Allowance for loan losses to total loans     0.95 %     0.75 %     0.77 %     0.72 %     0.71 %
Net charge-offs to average loans (annualized)     0.30 %     0.13 %     0.07 %     0.06 %     0.02 %


Allegiance Bancshares, Inc.
GAAP Reconciliation and Management's Explanation of Non-GAAP Financial Measures
(Unaudited)

Allegiance's management uses certain non-GAAP (generally accepted accounting principles) financial measures to evaluate its performance. Allegiance believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and  that management and investors benefit from referring to these non-GAAP financial measures in assessing Allegiance's performance and when planning, forecasting, analyzing and comparing past, present and future periods. Specifically, Allegiance reviews tangible book value per share, return on average tangible equity, the ratio of tangible equity to tangible assets and core net interest margin on a tax equivalent basis for internal planning and forecasting purposes. Allegiance has included in this Earnings Release information relating to these non-GAAP financial measures for the applicable periods presented.  These non-GAAP measures should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner in which Allegiance calculates the non-GAAP financial measures may differ from that of other companies reporting measures with similar names.

    Three Months Ended  
    2020     2019  
    March 31     December 31     September 30     June 30     March 31  
                               
    (Dollars and share amounts in thousands, except per share data)  
Total shareholders' equity   $ 706,593     $ 709,865     $ 706,308     $ 704,701     $ 703,777  
Less:  Goodwill and core
  deposit intangibles, net
    244,528       245,518       246,695       247,873       249,051  
Tangible shareholders'
  equity
  $ 462,065     $ 464,347     $ 459,613     $ 456,828     $ 454,726  
                                         
Shares outstanding at end of
  period
    20,355       20,524       20,737       21,147       21,484  
                                         
Tangible book value per share   $ 22.70     $ 22.62     $ 22.16     $ 21.60     $ 21.17  
                                         
Net income   $ 3,516     $ 13,986     $ 12,047     $ 14,248     $ 12,678  
                                         
Average shareholders' equity   $ 713,535     $ 710,155     $ 710,044     $ 705,162     $ 707,666  
Less:  Average goodwill and
  core deposit intangibles, net
    245,007       246,154       247,404       248,621       249,277  
Average tangible
  shareholders' equity
  $ 468,528     $ 464,001     $ 462,640     $ 456,541     $ 458,389  
                                         
Return on average
  tangible equity
    3.02 %     11.96 %     10.33 %     12.52 %     11.22 %
                                         
Total assets   $ 5,002,429     $ 4,992,654     $ 4,905,840     $ 4,794,211     $ 4,768,802  
Less: Goodwill and core
  deposit intangibles, net
    244,528       245,518       246,695       247,873       249,051  
Tangible assets   $ 4,757,901     $ 4,747,136     $ 4,659,145     $ 4,546,338     $ 4,519,751  
                                         
Tangible equity to tangible
  assets
    9.71 %     9.78 %     9.86 %     10.05 %     10.06 %
                                         
Net interest income
  (tax equivalent)
  $ 45,152     $ 44,623     $ 44,924     $ 45,684     $ 44,805  
Less: Acquisition accounting
  adjustments
    (1,259 )     (1,860 )     (2,045 )     (2,755 )     (2,965 )
Core net interest
  income (tax equivalent)
  $ 43,893     $ 42,763     $ 42,879     $ 42,929     $ 41,840  
                                         
Average earning assets   $ 4,372,723     $ 4,308,028     $ 4,284,667     $ 4,233,653     $ 4,212,669  
                                         
Net interest margin
  (tax equivalent)
    4.15 %     4.11 %     4.16 %     4.33 %     4.31 %
Core net interest margin
  (tax equivalent)
    4.04 %     3.94 %     3.97 %     4.07 %     4.03 %

 

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