Allegiance Bancshares, Inc. Reports Second Quarter 2020 Results

  • Record net interest income of $50.8 million, representing 12.9% growth from the first quarter of 2020
  • Funded over 5,800 loans totaling in excess of $695 million within the Small Business Administration Paycheck Protection Program under the Coronavirus Aid, Relief and Economic Security Act (CARES Act) through June 30, 2020
     
  • Net interest margin remained strong at 4.10% for the second quarter 2020
     
  • Declared quarterly dividend of $0.10 per share of common stock
     
  • Opened de novo branch in the historic East End of Houston on July 27, 2020

HOUSTON, July 30, 2020 (GLOBE NEWSWIRE) -- Allegiance Bancshares, Inc. (NASDAQ: ABTX) (Allegiance), the holding company of Allegiance Bank (the "Bank"), today reported net income of $9.9 million and diluted earnings per share of $0.48 for the second quarter 2020 compared to net income of $14.2 million and diluted earnings per share of $0.66 for the second quarter 2019.  Net income for the six months ended June 30, 2020 was $13.4 million, or $0.65 per diluted share, compared to $26.9 million, or $1.24 per diluted share, for the six months ended June 30, 2019.  The second quarter and six months ended June 30, 2020 results were primarily driven by the increased provision for loan losses in response to COVID-19-related uncertainties in the current economic environment partially offset by increased net interest income. 

"We are pleased with our second quarter 2020 earnings performance, especially in light of the impact of the coronavirus on our economy," said Steve Retzloff, Allegiance’s Chief Executive Officer. “Allegiance finished the quarter on a solid foundation of record pre-tax, pre-provision earnings, strong capital ratios, and a great liquidity position. We believe that we are well-positioned in light of today’s economic uncertainties and remain a strong resource for those we serve,” commented Retzloff.

“Our team of extraordinary bankers and small business lenders worked tirelessly around the clock to deploy the SBA’s Paycheck Protection Program ('PPP') to support our small business community. I am incredibly proud of the Bank’s ability to deliver on our commitment to help our customers - all while making many changes to how and where we all work. Allegiance reinforces the unique and valuable role a community bank offers to the businesses it serves as our bankers helped our customers and new borrowers secure funding for over 5,800 loans totaling over $695 million and will continue to do more until the PPP program expires. In turn, Allegiance collected a weighted average fee of 3.75% on the PPP loans to be recognized over the life of the loans.  Allegiance was committed to supporting its customers from the start of the process and will continue to be committed throughout the entire forgiveness journey,” continued Retzloff.

“As community bankers, we have a responsibility to support the health and welfare of our customers, communities and employees throughout this unprecedented time. Allegiance donated $150,000 and issued a $100,000 matching grant as well as committed volunteers to support the Houston Food Bank that will help provide one million meals across its Houston footprint. Small businesses are the mainstay of our business in the Houston region and we have been honored to serve their needs during this challenging economic environment. We continue to work diligently to build shareholder value by utilizing our strong capital position to support our customers and the communities we serve with outstanding customer service to keep Houston strong,” concluded Retzloff.

Second Quarter 2020 Results

Net interest income before the provision for loan losses in the second quarter 2020 increased $5.3 million, or 11.6%, to $50.8 million from $45.6 million for the second quarter 2019 and increased $5.8 million, or 12.9%, from $45.0 million in the first quarter 2020.  These increases were primarily due to changes in the volume and relative mix of the underlying assets and liabilities, the impact of PPP loans as well as lower costs on interest-bearing liabilities.  The net interest margin on a tax equivalent basis decreased 23 basis points to 4.10% for the second quarter 2020 from 4.33% for the second quarter 2019 and decreased 5 basis points from 4.15% for the first quarter 2020. Excluding the impact of acquisition accounting adjustments, adjusted net interest margin on a tax equivalent basis was 4.05% for the second quarter 2020 compared to 4.07% for the second quarter 2019 and 4.04% for the first quarter 2020. Adjusted net interest margin is a non-GAAP measure. Please refer to the non-GAAP reconciliation on page 11.

Noninterest income for the second quarter 2020 was $1.6 million, a decrease of $2.3 million, or 59.4%, compared to $3.8 million for the second quarter 2019 and a decrease of $1.2 million, or 42.7%, compared to $2.7 million for the first quarter 2020.  Noninterest income for the second quarter 2020, first quarter 2020 and second quarter 2019 included $93 thousand, $194 thousand and $846 thousand, respectively, of gains on the sale of securities. Second quarter 2020 noninterest income reflected lower transactional fee income, significantly lower correspondent bank rebates and included a loss on the sale of other real estate owned of $306 thousand.

Noninterest expense for the second quarter 2020 decreased $301 thousand, or 1.0%, to $29.8 million from $30.1 million for the second quarter 2019 and decreased $2.6 million, or 8.1%, compared to the first quarter 2020. Noninterest expense for the first quarter 2020 included $2.2 million of other real estate write-downs.

In the second quarter 2020, Allegiance’s efficiency ratio was 56.92% compared to 68.13% for the first quarter 2020 and 61.93% for the second quarter 2019.  Second quarter 2020 annualized returns on average assets, average equity and average tangible equity were 0.71%, 5.51% and 8.32%, respectively, compared to 0.29%, 1.98% and 3.02%, respectively, for the first quarter 2020.  Annualized returns on average assets, average equity and average tangible equity for the second quarter 2019 were 1.19%, 8.10% and 12.52%, respectively. Return on average tangible equity is a non-GAAP measure. Please refer to the non-GAAP reconciliation on page 11. 

Six Months Ended June 30, 2020 Results

Net interest income before provision for loan losses for the six months ended June 30, 2020 increased $5.7 million, or 6.3%, to $95.9 million from $90.2 million for the six months ended June 30, 2019 primarily due to a $481.4 million, or 11.4%, increase in average interest-earning assets over the prior year, the impact of PPP loans as well as lower costs related to interest-bearing liabilities. The net interest margin on a tax equivalent basis decreased 20 basis points to 4.12% for the six months ended June 30, 2020 from 4.32% for the six months ended June 30, 2019. Excluding the impact of acquisition accounting adjustments, the adjusted net interest margin for the six months ended June 30, 2020 was 4.04%, compared to 4.05% for the six months ended June 30, 2019. Adjusted net interest margin is a non-GAAP measure. Please refer to the non-GAAP reconciliation on page 11.

Noninterest income for the six months ended June 30, 2020 was $4.3 million, a decrease of $2.8 million, or 39.9%, compared to $7.1 million for the six months ended June 30, 2019 due primarily to significantly lower correspondent bank rebates and losses on the sales of other real estate owned of $375 thousand. Additionally, noninterest income for the first six months of 2020 and 2019 included $287 thousand and $846 thousand, respectively, of gains on the sale of securities. 

Noninterest expense for the six months ended June 30, 2020 increased $985 thousand, or 1.6%, to $62.2 million from $61.2 million for the six months ended June 30, 2019.  The increase in noninterest expense over the six months ended June 30, 2019 was primarily due to $2.2 million of other real estate write-downs during the first quarter of 2020 partially offset by the decrease in merger-related expenses incurred during the first six months of 2019.

Allegiance’s efficiency ratio decreased from 63.44% for the six months ended June 30, 2019 to 62.26% for the six months ended June 30, 2020. For the six months ended June 30, 2020, returns on average assets, average equity and average tangible equity were 0.51%, 3.76% and 5.70%, respectively, compared to 1.14%, 7.69% and 11.87%, respectively, for the six months ended June 30, 2019. Return on average tangible equity is a non-GAAP measure. Please refer to the non-GAAP reconciliation on page 11. 

Financial Condition

Total assets at June 30, 2020 increased $834.5 million, or 66.7% (annualized), to $5.84 billion compared to $5.00 billion at March 31, 2020 and increased $1.04 billion, or 21.7%, compared to $4.79 billion at June 30, 2019, primarily due to the origination of PPP loans and growth in the securities portfolio.

Total loans at June 30, 2020 increased $628.1 million, or 63.5% (annualized), to $4.58 billion compared to $3.96 billion at March 31, 2020 and increased $725.7 million, or 18.8%, compared to $3.86 billion at June 30, 2019, primarily due to the origination of $695.8 million of PPP loans and organic loan growth. Core loans, which exclude the mortgage warehouse portfolio and PPP loans, decreased $66.6 million, or 6.7% (annualized), to $3.89 billion at June 30, 2020 from $3.95 billion at March 31, 2020 and increased $76.1 million, or 2.0%, from $3.81 billion at June 30, 2019.

Deposits at June 30, 2020 increased $747.1 million, or 75.6% (annualized), to $4.70 billion compared to $3.95 billion at March 31, 2020 and increased $840.1 million, or 21.8%, compared to $3.86 billion at June 30, 2019.

Asset Quality

Nonperforming assets totaled $45.1 million, or 0.77% of total assets, at June 30, 2020, compared to $34.2 million, or 0.68% of total assets, at March 31, 2020, and $37.7 million, or 0.79% of total assets, at June 30, 2019. The allowance for loan losses was 1.04% of total loans at June 30, 2020, 0.95% of total loans at March 31, 2020 and 0.72% of total loans at June 30, 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 second quarter 2020 was $10.7 million, or 0.97% (annualized) of average loans, compared to $11.0 million, or 1.12% (annualized) of average loans, for the first quarter 2020 and $1.4 million, or 0.15% (annualized) of average loans for the second 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 second quarter of 2020 compared to prior quarters reflects the uncertainty surrounding unemployment, the economic impact caused by COVID-19 and the economic effects related to the sustained lower crude oil prices.

Second quarter 2020 net charge-offs were $538 thousand, or 0.05% (annualized) of average loans, a decrease from net charge-offs of $2.9 million, or 0.30% (annualized) of average loans, for the first quarter 2020 and $590 thousand, or 0.06% (annualized) of average loans, for the second quarter 2019.  Net charge-offs for the six months ended June 30, 2020 were $3.5 million, or 0.17% (annualized) of average loans, compared to net charge-offs for the six months ended June 30, 2019 of $799 thousand, or 0.04% (annualized) of average loans.

The Company believes the largest risks within its loan portfolio are in the hotel, restaurant and bar and oil and gas portfolios. Loan balances in the hotel industry, excluding PPP loans, totaled $134.0 million, or 2.9% of total loans, at June 30, 2020, of which $7.1 million were on nonaccrual. At June 30, 2020, restaurant and bar industry loans, excluding PPP loans, totaled $111.3 million, or 2.4%, of total loans, of which $695 thousand were on nonaccrual. At June 30, 2020, the Company’s allowance for loan losses allocated to its hotel portfolio was 1.3% of total hotel loans and its restaurant and bar portfolio was 1.3% of total restaurant and bar loans. The oil and gas portfolio, excluding PPP loans, totaled $74.7 million, or 1.6%, of total loans at June 30, 2020, of which $788 thousand were on nonaccrual. At June 30, 2020, the allowance for loan losses allocated to the oil and gas loan portfolio was 2.1% of total oil and gas loans.

As of June 30, 2020, the Company executed 2,111 principal and interest deferrals on outstanding loan balances of $1.19 billion with associated accrued interest of $16.4 million to borrowers in connection with the COVID-19 relief provided by the CARES Act. Additionally, upon request and after meeting certain conditions, borrowers could be granted a second payment deferral subsequent to the first deferral. The Company processed second payment deferrals for 129 loans with outstanding loan balances of $100.1 million and associated accrued interest of $1.4 million through July 24, 2020. These deferrals were generally no more than 90 days in duration.

Dividend

On July 23, 2020, the Board of Directors of Allegiance declared a cash dividend of $0.10 per share to be paid on September 15, 2020 to all shareholders of record as of August 31, 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 11 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 30, 2020 at 9:00 a.m. Central Time (10:00 a.m. Eastern Time) to discuss its second quarter 2020 results. Individuals and investment professionals may participate in the call by dialing (877) 279-2520. The conference ID number is 1791298.  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 June 30, 2020, Allegiance was a $5.84 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 June 30, 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 Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 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.
Financial Highlights
(Unaudited)

    2020     2019  
    June 30     March 31     December 31     September 30     June 30  
       
    (Dollars in thousands)  
ASSETS                                        
Cash and due from banks   $ 237,585     $ 156,700     $ 213,347     $ 246,312     $ 170,850  
Interest-bearing deposits at other financial
  institutions
    28,815       18,189       132,901       54,307       61,757  
Total cash and cash equivalents     266,400       174,889       346,248       300,619       232,607  
Available for sale securities, at fair value     618,751       508,250       372,545       353,000       348,173  
Loans held for investment     4,583,656       3,955,546       3,915,310       3,886,004       3,857,963  
Less: allowance for loan losses     (47,642 )     (37,511 )     (29,438 )     (29,808 )     (27,940 )
Loans, net     4,536,014       3,918,035       3,885,872       3,856,196       3,830,023  
Accrued interest receivable     32,795       17,203       15,468       15,201       16,508  
Premises and equipment, net     67,229       66,798       66,790       67,175       59,690  
Other real estate owned     11,847       12,617       8,337       8,333       6,294  
Federal Home Loan Bank stock     14,844       12,798       6,242       14,138       8,866  
Bank owned life insurance     27,398       27,255       27,104       26,947       26,794  
Goodwill     223,642       223,642       223,642       223,642       223,642  
Core deposit intangibles, net     19,896       20,886       21,876       23,053       24,231  
Other assets     18,065       20,056       18,530       17,536       17,383  
Total assets   $ 5,836,881     $ 5,002,429     $ 4,992,654     $ 4,905,840     $ 4,794,211  
LIABILITIES AND SHAREHOLDERS’
  EQUITY
                                       
LIABILITIES:                                        
Deposits:                                        
Noninterest-bearing   $ 1,754,128     $ 1,217,532     $ 1,252,232     $ 1,227,839     $ 1,173,423  
Interest-bearing                                        
Demand     375,353       341,524       367,278       340,754       390,067  
Money market and savings     1,270,437       1,110,631       1,258,008       1,114,233       995,467  
Certificates and other time     1,300,793       1,283,887       1,190,583       1,214,659       1,301,683  
Total interest-bearing deposits     2,946,583       2,736,042       2,815,869       2,669,646       2,687,217  
Total deposits     4,700,711       3,953,574       4,068,101       3,897,485       3,860,640  
Accrued interest payable     3,293       3,821       4,326       4,915       3,531  
Borrowed funds     255,509       190,506       75,503       159,501       146,998  
Subordinated debt     108,061       107,930       107,799       107,771       49,019  
Other liabilities     33,164       40,005       27,060       29,860       29,322  
Total liabilities     5,100,738       4,295,836       4,282,789       4,199,532       4,089,510  
SHAREHOLDERS’ EQUITY:                                        
Common stock     20,431       20,355       20,524       20,737       21,147  
Capital surplus     515,045       513,894       521,066       529,688       541,979  
Retained earnings     172,723       164,858       163,375       149,389       137,342  
Accumulated other comprehensive
  income
    27,944       7,486       4,900       6,494       4,233  
Total shareholders’ equity     736,143       706,593       709,865       706,308       704,701  
TOTAL LIABILITIES AND
  SHAREHOLDERS’ EQUITY
  $ 5,836,881     $ 5,002,429     $ 4,992,654     $ 4,905,840     $ 4,794,211  


Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)

    Three Months Ended     Year-to-Date  
    2020     2019     2020     2019  
    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   $ 56,421     $ 54,624     $ 55,368     $ 55,790     $ 56,016     $ 111,045     $ 110,205  
  Securities:                                                        
  Taxable     1,842       2,087       2,066       2,090       1,837       3,929       2,819  
  Tax-exempt     2,169       546       469       483       692       2,715       1,982  
  Deposits in other financial
   institutions
    20       195       244       302       401       215       1,089  
  Total interest income     60,452       57,452       58,147       58,665       58,946       117,904       116,095  
                                                         
INTEREST EXPENSE:                                                        
  Demand, money market and
    savings deposits
    1,729       4,364       5,091       4,975       4,513       6,093       8,241  
  Certificates and other time
    deposits
    5,845       6,084       6,483       6,909       7,008       11,929       13,264  
  Borrowed funds     562       506       547       1,183       1,118       1,068       2,945  
  Subordinated debt     1,469       1,473       1,500       761       736       2,942       1,471  
  Total interest expense     9,605       12,427       13,621       13,828       13,375       22,032       25,921  
NET INTEREST INCOME     50,847       45,025       44,526       44,837       45,571       95,872       90,174  
Provision for loan losses     10,669       10,990       933       2,597       1,407       21,659       2,409  
Net interest income after provision
  for loan losses
    40,178       34,035       43,593       42,240       44,164       74,213       87,765  
                                                         
NONINTEREST INCOME:                                                        
  Nonsufficient funds fees     60       169       189       168       139       229       301  
  Service charges on deposit
    accounts
    343       457       403       379       365       800       690  
  Gain on sale of securities     93       194       613             846       287       846  
  (Loss) gain on sales of other real
    estate and repossessed assets
    (306 )     (69 )     (45 )           70       (375 )     71  
  Bank owned life insurance     143       151       157       153       155       294       314  
  Rebate from correspondent bank     89       493       900       900       884       582       1,780  
  Other     1,140       1,330       1,183       1,289       1,386       2,470       3,132  
  Total noninterest income     1,562       2,725       3,400       2,889       3,845       4,287       7,134  
                                                         
NONINTEREST EXPENSE:                                                        
  Salaries and employee benefits     19,334       19,781       18,273       20,221       19,415       39,115       39,099  
  Net occupancy and equipment     1,926       1,907       1,994       1,973       2,114       3,833       4,166  
  Depreciation     885       866       861       822       756       1,751       1,509  
  Data processing and software
    amortization
    1,934       1,826       2,120       2,058       1,709       3,760       3,332  
  Professional fees     800       573       540       667       527       1,373       1,126  
  Regulatory assessments and
    FDIC insurance
    609       632       216       (41 )     802       1,241       1,530  
  Core deposit intangibles
    amortization
    990       990       1,177       1,178       1,178       1,980       2,356  
  Communications     390       417       486       455       468       807       898  
  Advertising     370       521       597       449       617       891       1,321  
  Acquisition and merger-related
    expenses
                            153             1,326  
  Other     2,541       4,888       3,167       2,227       2,341       7,429       4,532  
  Total noninterest expense     29,779       32,401       29,431       30,009       30,080       62,180       61,195  
INCOME BEFORE INCOME
  TAXES
    11,961       4,359       17,562       15,120       17,929       16,320       33,704  
  Provision for income taxes     2,054       843       3,576       3,073       3,681       2,897       6,778  
NET INCOME   $ 9,907     $ 3,516     $ 13,986     $ 12,047     $ 14,248     $ 13,423     $ 26,926  
                                                         
EARNINGS PER SHARE                                                        
  Basic   $ 0.49     $ 0.17     $ 0.68     $ 0.57     $ 0.67     $ 0.66     $ 1.25  
  Diluted   $ 0.48     $ 0.17     $ 0.67     $ 0.57     $ 0.66     $ 0.65     $ 1.24  


Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)

    Three Months Ended     Year-to-Date  
    2020     2019     2020     2019  
    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   $ 9,907     $ 3,516     $ 13,986     $ 12,047     $ 14,248     $ 13,423     $ 26,926  
                                                         
Earnings per share, basic   $ 0.49     $ 0.17     $ 0.68     $ 0.57     $ 0.67     $ 0.66     $ 1.25  
Earnings per share, diluted   $ 0.48     $ 0.17     $ 0.67     $ 0.57     $ 0.66     $ 0.65     $ 1.24  
                                                         
Return on average assets(A)     0.71 %     0.29 %     1.13 %     0.98 %     1.19 %     0.51 %     1.14 %
Return on average equity(A)     5.51 %     1.98 %     7.81 %     6.73 %     8.10 %     3.76 %     7.69 %
Return on average tangible
  equity(A)(B)
    8.32 %     3.02 %     11.96 %     10.33 %     12.52 %     5.70 %     11.87 %
Net interest margin
  (tax equivalent)(C)
    4.10 %     4.15 %     4.11 %     4.16 %     4.33 %     4.12 %     4.32 %
Adjusted net interest margin
  (tax equivalent)(B)
    4.05 %     4.04 %     3.94 %     3.97 %     4.07 %     4.04 %     4.05 %
Efficiency ratio(D)     56.92 %     68.13 %     62.20 %     62.88 %     61.93 %     62.26 %     63.44 %
                                                         
Capital Ratios                                                        
Allegiance Bancshares, Inc.
   (Consolidated)
                                                       
  Equity to assets     12.61 %     14.12 %     14.22 %     14.40 %     14.70 %     12.61 %     14.70 %
  Tangible equity to tangible
   assets(B)
    8.81 %     9.71 %     9.78 %     9.86 %     10.05 %     8.81 %     10.05 %
  Estimated common equity
   tier 1 capital
    11.36 %     11.15 %     11.42 %     11.28 %     11.34 %     11.36 %     11.34 %
  Estimated tier 1 risk-based
   capital
    11.60 %     11.38 %     11.66 %     11.51 %     11.58 %     11.60 %     11.58 %
  Estimated total risk-based
   capital
    15.17 %     14.72 %     14.83 %     14.70 %     13.27 %     15.17 %     13.27 %
  Estimated tier 1 leverage
   capital
    8.83 %     9.89 %     10.02 %     10.06 %     10.17 %     8.83 %     10.17 %
Allegiance Bank                                                        
  Estimated common equity
   tier 1 capital
    12.84 %     12.58 %     12.67 %     12.28 %     12.02 %     12.84 %     12.02 %
  Estimated tier 1 risk-based
   capital
    12.84 %     12.58 %     12.67 %     12.28 %     12.02 %     12.84 %     12.02 %
  Estimated total risk-based
   capital
    14.97 %     14.48 %     14.39 %     14.01 %     13.71 %     14.97 %     13.71 %
  Estimated tier 1 leverage
   capital
    9.77 %     10.94 %     10.89 %     10.73 %     10.57 %     9.77 %     10.57 %
                                                         
Other Data                                                        
Weighted average shares:                                                        
  Basic     20,414       20,411       20,652       20,981       21,257       20,413       21,494  
  Diluted     20,514       20,690       20,930       21,256       21,546       20,572       21,780  
Period end shares
  outstanding
    20,431       20,355       20,524       20,737       21,147       20,431       21,147  
Book value per share   $ 36.03     $ 34.71     $ 34.59     $ 34.06     $ 33.32     $ 36.03     $ 33.32  
Tangible book value per
  share(B)
  $ 24.11     $ 22.70     $ 22.62     $ 22.16     $ 21.60     $ 24.11     $ 21.60  

(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 11 of this Earnings Release.
(C) Net interest margin represents net interest income divided by average interest-earning assets.
(D) 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  
    June 30, 2020     March 31, 2020     June 30, 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   $ 4,425,036     $ 56,421       5.13 %   $ 3,933,291     $ 54,624       5.59 %   $ 3,819,687     $ 56,016       5.88 %
Securities     594,205       4,011       2.71 %     388,721       2,633       2.72 %     350,004       2,529       2.90 %
Deposits in other financial
  institutions and other
    18,173       20       0.44 %     50,711       195       1.55 %     63,962       401       2.52 %
Total interest-earning assets     5,037,414     $ 60,452       4.83 %     4,372,723     $ 57,452       5.28 %     4,233,653     $ 58,946       5.58 %
Allowance for loan losses     (41,334 )                     (28,718 )                     (27,125 )                
Noninterest-earning assets     637,608                       602,778                       586,435                  
Total assets   $ 5,633,688                     $ 4,946,783                     $ 4,792,963                  
                                                                         
Liabilities and
  Shareholders' Equity
                                                                       
Interest-Bearing Liabilities:                                                                        
Interest-bearing demand
  deposits
  $ 353,252     $ 421       0.48 %   $ 363,326     $ 846       0.94 %   $ 350,147     $ 1,152       1.32 %
Money market and savings
  deposits
    1,169,225       1,308       0.45 %     1,168,541       3,518       1.21 %     994,557       3,361       1.36 %
Certificates and other time
  deposits
    1,302,743       5,845       1.80 %     1,193,427       6,084       2.05 %     1,331,955       7,008       2.11 %
Borrowed funds     320,332       562       0.71 %     140,999       506       1.44 %     155,969       1,118       2.87 %
Subordinated debt     107,998       1,469       5.47 %     107,865       1,473       5.49 %     48,986       736       6.03 %
  Total interest-bearing
  liabilities
    3,253,550     $ 9,605       1.19 %     2,974,158     $ 12,427       1.68 %     2,881,614     $ 13,375       1.86 %
                                                                         
Noninterest-Bearing
  Liabilities:
                                                                       
Noninterest-bearing demand
  deposits
    1,624,641                       1,225,888                       1,173,662                  
Other liabilities     32,393                       33,202                       32,525                  
  Total liabilities     4,910,584                       4,233,248                       4,087,801                  
Shareholders' equity     723,104                       713,535                       705,162                  
  Total liabilities and
   shareholders' equity
  $ 5,633,688                     $ 4,946,783                     $ 4,792,963                  
                                                                         
Net interest rate spread                     3.64 %                     3.60 %                     3.72 %
                                                                         
Net interest income and margin           $ 50,847       4.06 %           $ 45,025       4.14 %           $ 45,571       4.32 %
                                                                         
Net interest income and net
  interest margin (tax equivalent)
          $ 51,342       4.10 %           $ 45,152       4.15 %           $ 45,684       4.33 %



Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)

    Six Months Ended June 30,  
    2020     2019  
    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   $ 4,179,164     $ 111,045       5.34 %   $ 3,783,662     $ 110,205       5.87 %
Securities     491,463       6,644       2.72 %     348,354       4,801       2.78 %
Deposits in other financial institutions     34,442       215       1.26 %     91,628       1,089       2.40 %
Total interest-earning assets     4,705,069     $ 117,904       5.04 %     4,223,644     $ 116,095       5.54 %
Allowance for loan losses     (35,026 )                     (26,944 )                
Noninterest-earning assets     619,315                       572,748                  
Total assets   $ 5,289,358                     $ 4,769,448                  
                                                 
Liabilities and Shareholders' Equity                                                
Interest-Bearing Liabilities:                                                
Interest-bearing demand deposits   $ 358,289     $ 1,267       0.71 %   $ 344,203     $ 2,115       1.24 %
Money market and savings deposits     1,168,883       4,826       0.83 %     937,664       6,126       1.32 %
Certificates and other time deposits     1,248,085       11,929       1.92 %     1,317,536       13,264       2.03 %
Borrowed funds     230,666       1,068       0.93 %     219,415       2,945       2.71 %
Subordinated debt     107,931       2,942       5.48 %     48,956       1,471       6.06 %
Total interest-bearing liabilities     3,113,854     $ 22,032       1.42 %     2,867,774     $ 25,921       1.82 %
                                                 
Noninterest-Bearing Liabilities:                                                
Noninterest-bearing demand deposits     1,425,265                       1,170,435                  
Other liabilities     31,919                       24,832                  
Total liabilities     4,571,038                       4,063,041                  
Shareholders' equity     718,320                       706,407                  
Total liabilities and shareholders' equity   $ 5,289,358                     $ 4,769,448                  
                                                 
Net interest rate spread                     3.62 %                     3.72 %
                                                 
Net interest income and margin           $ 95,872       4.10 %           $ 90,174       4.31 %
                                                 
Net interest income and net interest
  margin (tax equivalent)
          $ 96,493       4.12 %           $ 90,489       4.32 %


Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)

    Three Months Ended  
    2020     2019  
    June 30     March 31     December 31     September 30     June 30  
       
    (Dollars in thousands)  
Period-end Loan Portfolio:                                        
Commercial and industrial   $ 651,430     $ 702,267     $ 689,360     $ 675,055     $ 694,516  
Mortgage warehouse           1,051       8,304       36,594       46,171  
Paycheck Protection Program (PPP)     695,772                          
Real estate:                                        
  Commercial real estate (including
    multi-family residential)
    1,956,116       1,951,080       1,873,782       1,859,721       1,830,764  
  Commercial real estate construction and
    land development
    386,865       378,987       410,471       386,723       368,108  
  1-4 family residential (including home equity)     703,513       704,212       698,957       695,520       690,961  
  Residential construction     171,656       177,025       192,515       189,608       183,991  
Consumer and other     18,304       40,924       41,921       42,783       43,452  
Total loans   $ 4,583,656     $ 3,955,546     $ 3,915,310     $ 3,886,004     $ 3,857,963  
                                         
Asset Quality:                                        
Nonaccrual loans   $ 33,223     $ 21,621     $ 28,371     $ 34,615     $ 31,382  
Accruing loans 90 or more days past due                              
Total nonperforming loans     33,223       21,621       28,371       34,615       31,382  
Other real estate     11,847       12,617       8,337       8,333       6,294  
Other repossessed assets                              
Total nonperforming assets   $ 45,070     $ 34,238     $ 36,708     $ 42,948     $ 37,676  
                                         
Net charge-offs   $ 538     $ 2,917     $ 1,303     $ 729     $ 590  
                                         
Nonaccrual loans:                                        
Commercial and industrial   $ 12,578     $ 8,669     $ 8,388     $ 8,033     $ 9,386  
Mortgage warehouse                              
Real estate:                                        
  Commercial real estate (including
    multi-family residential)
    16,127       7,024       6,741       15,356       18,218  
  Commercial real estate construction and
    land development
    53       1,958       9,050       9,050       1,541  
  1-4 family residential (including home equity)     3,434       2,845       3,294       1,992       2,074  
  Residential construction     898       982       746              
Consumer and other     133       143       152       184       163  
Total nonaccrual loans   $ 33,223     $ 21,621     $ 28,371     $ 34,615     $ 31,382  
                                         
Asset Quality Ratios:                                        
Nonperforming assets to total assets     0.77 %     0.68 %     0.74 %     0.88 %     0.79 %
Nonperforming loans to total loans     0.72 %     0.55 %     0.72 %     0.89 %     0.81 %
Allowance for loan losses to nonperforming loans     143.40 %     173.49 %     103.76 %     86.11 %     89.03 %
Allowance for loan losses to total loans     1.04 %     0.95 %     0.75 %     0.77 %     0.72 %
Net charge-offs to average loans (annualized)     0.05 %     0.30 %     0.13 %     0.07 %     0.06 %


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 adjusted 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     Year-to-Date  
  2020     2019     2020     2019  
  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 $ 736,143     $ 706,593     $ 709,865     $ 706,308     $ 704,701     $ 736,143     $ 704,701  
Less:  Goodwill and core
  deposit intangibles, net
  243,538       244,528       245,518       246,695       247,873       243,538       247,873  
Tangible shareholders
  equity
$ 492,605     $ 462,065     $ 464,347     $ 459,613     $ 456,828     $ 492,605     $ 456,828  
                                                       
Shares outstanding at end of
  period
  20,431       20,355       20,524       20,737       21,147       20,431       21,147  
                                                       
Tangible book value per share $ 24.11     $ 22.70     $ 22.62     $ 22.16     $ 21.60     $ 24.11     $ 21.60  
                                                       
Net income $ 9,907     $ 3,516     $ 13,986     $ 12,047     $ 14,248     $ 13,423     $ 26,926  
                                                       
Average shareholders' equity $ 723,104     $ 713,535     $ 710,155     $ 710,044     $ 705,162     $ 718,320     $ 706,407  
Less: Average goodwill and
  core deposit intangibles, net
  244,010       245,007       246,154       247,404       248,621       244,508       248,947  
Average tangible
  shareholders’ equity
$ 479,094     $ 468,528     $ 464,001     $ 462,640     $ 456,541     $ 473,812     $ 457,460  
                                                       
Return on average
  tangible equity
  8.32 %     3.02 %     11.96 %     10.33 %     12.52 %     5.70 %     11.87 %
                                                       
Total assets $ 5,836,881     $ 5,002,429     $ 4,992,654     $ 4,905,840     $ 4,794,211     $ 5,836,881     $ 4,794,211  
Less: Goodwill and core
  deposit intangibles, net
  243,538       244,528       245,518       246,695       247,873       243,538       247,873  
Tangible assets $ 5,593,343     $ 4,757,901     $ 4,747,136     $ 4,659,145     $ 4,546,338     $ 5,593,343     $ 4,546,338  
                                                       
Tangible equity to tangible
  assets
  8.81 %     9.71 %     9.78 %     9.86 %     10.05 %     8.81 %     10.05 %
                                                       
Net interest income
  (tax equivalent)
$ 51,342     $ 45,152     $ 44,623     $ 44,924     $ 45,684     $ 96,493     $ 90,489  
Less: Acquisition accounting
  adjustments
  (669 )     (1,259 )     (1,860 )     (2,045 )     (2,755 )     (1,928 )     (5,720 )
Adjusted net interest
  income (tax equivalent)
$ 50,673     $ 43,893     $ 42,763     $ 42,879     $ 42,929     $ 94,565     $ 84,768  
                                                       
Average earning assets $ 5,037,414     $ 4,372,723     $ 4,308,028     $ 4,284,667     $ 4,233,653     $ 4,705,069     $ 4,223,644  
                                                       
Net interest margin
  (tax equivalent)
  4.10 %     4.15 %     4.11 %     4.16 %     4.33 %     4.12 %     4.32 %
Adjusted net interest margin
  (tax equivalent)
  4.05 %     4.04 %     3.94 %     3.97 %     4.07 %     4.04 %     4.05 %


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

 

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Source: Allegiance Bancshares, Inc.

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