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Allegiance Bancshares, Inc. Reports Third Quarter 2017 Results

  • Core loan growth of $363.3 million, or 20.7%, year over year and $76.8 million, or 15.1% (annualized), for the third quarter 2017 compared to the linked quarter
  • Net interest income increased 15.3% year over year and 7.5% for the third quarter 2017 compared to the linked quarter
  • Net interest margin on a tax equivalent basis increased 8 basis points for the third quarter compared to the linked quarter

HOUSTON, Oct. 24, 2017 (GLOBE NEWSWIRE) -- Allegiance Bancshares, Inc. (NASDAQ:ABTX) ("Allegiance"), the holding company of Allegiance Bank (the "Bank"), today reported net income of $3.0 million in the third quarter 2017 compared to $5.5 million in the third quarter 2016 and diluted earnings per share of $0.22 in the third quarter 2017 compared to $0.42 in the third quarter 2016.

"Houston experienced an unprecedented natural disaster when Hurricane Harvey struck during the quarter. As Houstonians, we were proud to see an overwhelming outpouring of support within the community to help each other in our clean up and recovery efforts," commented George Martinez, Allegiance's Chairman and Chief Executive Officer. "Thanks to previously established processes and the extraordinary efforts of our employees to ensure that we took care of our customers and fellow employees, our banking operations were uninterrupted during the storm and most of our banking locations were fully functional within days of the Hurricane," continued Martinez.

"We are extremely proud of our consistently strong loan growth, even in the wake of the Hurricane. Our provision expense was elevated this quarter in part due to immediate uncertainty in the Houston economy and estimated losses related to Hurricane Harvey. Additionally, during the quarter, we charged off one energy-related loan relationship we had been monitoring for some time. We performed a thorough assessment of the impact of the Hurricane on our customers as well as the adequacy of the allowance for loan losses for our current portfolio," added George Martinez.

"Notwithstanding the Hurricane, we delivered solid growth in pre-provision profitability during the quarter as we continue to execute our growth plans. As Houston’s largest community bank, we are dedicated to serving the dynamic Houston market through the Hurricane recovery and beyond," concluded George Martinez.

Third Quarter 2017 Results

Net interest income before provision for loan losses in the third quarter 2017 increased $3.6 million, or 15.3%, to $27.0 million from $23.4 million for the third quarter 2016 primarily due to organic loan growth. Net interest income before provision for loan losses in the third quarter 2017 increased $1.9 million, or 7.5%, from $25.1 million in the second quarter 2017. The net interest margin on a tax equivalent basis decreased 2 basis points to 4.37% for the third quarter 2017 from 4.39% for the third quarter 2016 and increased 8 basis points from 4.29% for the second quarter 2017.

Noninterest income for the third quarter 2017 was $1.5 million, an increase of $186 thousand, or 14.6%, compared to $1.3 million for the third quarter 2016 and slightly decreased $17 thousand compared to $1.5 million for the second quarter 2017.

Noninterest expense for the third quarter 2017 increased $2.8 million, or 18.7%, to $17.7 million from $14.9 million for the third quarter 2016, and increased $1.2 million, or 7.4%, from $16.5 million for the second quarter 2017. The increase in noninterest expense over the third quarter 2016 was primarily due to increased salaries and benefits as a result of increased headcount and professional service fees related to supporting growth initiatives.

In the third quarter 2017, Allegiance’s efficiency ratio increased to 62.14% from 60.34% for the third quarter 2016 and increased from 61.92% for the second quarter 2017.

Third quarter 2017 annualized returns on average assets, average equity and average tangible equity were 0.43%, 3.90% and 4.55%, respectively, compared to 0.90%, 7.77% and 9.21%, respectively, for the third quarter 2016. Annualized returns on average assets, average equity and average tangible equity for the second quarter 2017 were 0.81%, 7.32% and 8.57%, respectively.

Nine Months Ended September 30, 2017 Results

Net interest income before provision for loan losses for the nine months ended September 30, 2017 increased $9.8 million, or 14.7%, to $76.2 million from $66.4 million for the nine months ended September 30, 2016 primarily due to organic loan growth and an increase in the securities portfolio. The net interest margin on a tax equivalent basis decreased 5 basis points to 4.34% for the nine months ended September 30, 2017 from 4.39% for the nine months ended September 30, 2016.

Noninterest income for the nine months ended September 30, 2017 was $4.3 million, a decrease of $1.5 million, or 26.1%, compared to $5.8 million for the nine months ended September 30, 2016. The nine months ended September 30, 2016 included a pre-tax gain of $2.1 million on the sale of two Central Texas branch locations that were sold in order to focus on the Houston MSA. Excluding the gain on the sale of these branches, noninterest income would have increased $538 thousand, or 14.4%, for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016.

Noninterest expense for the nine months ended September 30, 2017 increased $7.6 million, or 17.7%, to $50.7 million from $43.1 million for the nine months ended September 30, 2016. The increase in noninterest expense over the nine months ended September 30, 2016 was primarily due to increases in salaries and benefits as a result of the increased headcount and professional service fees related to supporting growth initiatives.

During the nine months ended September 30, 2017, Allegiance’s efficiency ratio increased to 62.97% from 61.37% for the nine months ended September 30, 2016.

For the nine months ended September 30, 2017, annualized returns on average assets, average equity and average tangible equity were 0.73%, 6.55% and 7.67%, respectively, compared to 0.99%, 8.40% and 10.03%, respectively, for the nine months ended September 30, 2016. Excluding the gain on the sale of the two Central Texas branch locations during the first quarter 2016, the annualized returns on average assets, average equity and average tangible equity for the nine months ended September 30, 2016 would have been 0.92%, 7.75% and 9.24%, respectively.

Financial Condition

Total loans at September 30, 2017 increased $370.8 million, or 20.3%, to $2.20 billion compared to $1.83 billion at September 30, 2016 and increased $86.9 million, or 4.1%, compared to $2.11 billion at June 30, 2017. These increases were due to strong organic loan growth within the Bank’s loan portfolio. Core loans, which exclude the mortgage warehouse portfolio, increased $363.3 million, or 20.7%, to $2.12 billion at September 30, 2017 from $1.75 billion at September 30, 2016 and increased $76.8 million, or 3.8%, from $2.04 billion at June 30, 2017.

Deposits at September 30, 2017 increased $385.7 million, or 20.3%, to $2.29 billion compared to $1.90 billion at September 30, 2016 and increased $187.4 million, or 8.9%, compared to $2.10 billion at June 30, 2017.

Asset Quality

Nonperforming assets totaled $14.6 million, or 0.52% of total assets, at September 30, 2017, compared to $17.1 million, or 0.69% of total assets, at September 30, 2016, and $19.9 million, or 0.73% of total assets, at June 30, 2017. The allowance for loan losses was 1.08% of total loans at September 30, 2017, 0.94% of total loans at September 30, 2016 and 0.99% of total loans at June 30, 2017.

The provision for loan losses for the third quarter 2017 was $6.9 million, or 1.28% (annualized) of average loans, compared to $2.2 million, or 0.49% (annualized) of average loans, for the third quarter 2016, and $3.0 million, or 0.59% (annualized) of average loans, for the second quarter 2017. The provision for loan losses for the nine months ended September 30, 2017 was $11.3 million, or 0.74% (annualized) of average loans, compared to $4.6 million, or 0.35% (annualized) of average loans for the nine months ended September 30, 2016.

Third quarter 2017 net charge-offs were $4.2 million, or 0.78% (annualized) of average loans, compared to net recoveries of $54 thousand, for the third quarter 2016, and $684 thousand, or 0.13% (annualized) of average loans, for the second quarter 2017. Net charge-offs for the nine months ended September 30, 2017 were $5.4 million, or 0.36% (annualized) of average loans, compared to $482 thousand, or 0.04% (annualized) of average loans for the nine months ended September 30, 2016.

GAAP Reconciliation of Non-GAAP Financial Measures

Allegiance’s management uses certain non-GAAP financial measures to evaluate its performance. Please refer to the GAAP Reconciliation and Management’s Explanation of Non-GAAP Financial Measures on page 10 of this earnings release for a reconciliation of these non-GAAP financial measures.

Conference Call

As previously announced, Allegiance’s management team will host a conference call on Tuesday, October 24, 2017 at 9:00 a.m. Central Time (10:00 a.m. Eastern Time) to discuss its third quarter 2017 results. Individuals and investment professionals may participate in the call by dialing (877) 279-2520. The conference ID number is 95345409. Alternatively, a simultaneous audio-only webcast may be accessed via the Investor Relations section of Allegiance’s website at www.allegiancebank.com, under Upcoming Events. If you are unable to participate during the live webcast, the webcast will be archived on the Investor Relations section of Allegiance’s website at www.allegiancebank.com, under News and Events, Event Calendar, Past Events.

Allegiance Bancshares, Inc.

Allegiance is a $2.81 billion asset Houston, Texas-based bank holding company. Through its wholly owned subsidiary, Allegiance Bank, Allegiance provides a diversified range of commercial banking services primarily to Houston metropolitan area-based small to medium-sized businesses and individual customers. Allegiance’s super-community banking strategy was designed to foster strong customer relationships while benefiting from a platform and scale that is competitive with larger local and regional banks. Allegiance Bank operates 16 full-service banking locations and one loan production office in the Houston metropolitan area. Visit www.allegiancebank.com for more information.

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

This release may contain forward-looking statements within the meaning of the securities laws that are based on various facts and derived utilizing important assumptions, present expectations, estimates and projections about Allegiance and its subsidiaries. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “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, 2016 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)
2017 2016
September 30 June 30 March 31 December 31 September 30
(Dollars in thousands)
Cash and cash equivalents$192,427 $187,491 $184,146 $142,098 $225,082
Available for sale securities323,856 321,268 317,219 316,455 310,033
Total loans2,201,540 2,114,652 1,986,438 1,891,635 1,830,722
Allowance for loan losses(23,722) (21,010) (18,687) (17,911) (17,185)
Loans, net2,177,818 2,093,642 1,967,751 1,873,724 1,813,537
Goodwill39,389 39,389 39,389 39,389 39,389
Core deposit intangibles, net3,469 3,664 3,860 4,055 4,250
Premises and equipment, net18,273 18,240 18,138 18,340 17,811
Other real estate owned453 365 365 1,503 1,138
Bank owned life insurance22,277 22,131 21,985 21,837 21,684
Other assets35,472 38,526 39,477 33,547 28,978
Total assets$2,813,434 $2,724,716 $2,592,330 $2,450,948 $2,461,902
Noninterest-bearing deposits$712,951 $662,527 $615,225 $593,751 $604,278
Interest-bearing deposits1,573,664 1,436,715 1,397,344 1,276,432 1,296,601
Total deposits2,286,615 2,099,242 2,012,569 1,870,183 1,900,879
Borrowed funds207,569 310,569 275,569 285,569 261,569
Subordinated debentures9,277 9,249 9,222 9,196 9,169
Other liabilities7,246 7,197 5,840 6,183 9,190
Total liabilities2,510,707 2,426,257 2,303,200 2,171,131 2,180,807
Common stock13,171 13,153 13,080 12,958 12,905
Capital surplus216,943 216,158 215,015 212,649 211,349
Retained earnings71,690 68,704 63,309 57,262 51,491
Accumulated other comprehensive income (loss)923 444 (2,274) (3,052) 5,350
Shareholders' equity302,727 298,459 289,130 279,817 281,095
Total liabilities and equity$2,813,434 $2,724,716 $2,592,330 $2,450,948 $2,461,902


Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)
Three Months Ended Year-to-Date
2017 2016 2017 2016
September 30 June 30 March 31 December 31 September 30 September 30 September 30
(Dollars in thousands, except per share data)
INTEREST INCOME:
Loans, including fees$28,588 $26,736 $25,260 $24,232 $24,057 $80,584 $69,124
Securities
Taxable547 503 498 478 607 1,548 1,329
Tax-exempt1,574 1,591 1,624 1,642 1,505 4,789 3,402
Deposits in other financial institutions192 157 130 129 150 479 442
Total interest income30,901 28,987 27,512 26,481 26,319 87,400 74,297
INTEREST EXPENSE:
Demand, money market and savings deposits811 702 654 673 651 2,167 1,764
Certificates and other time deposits2,299 2,283 1,957 1,947 1,872 6,539 5,097
Borrowed funds654 761 653 311 264 2,068 634
Subordinated debt140 134 120 128 123 394 360
Total interest expense3,904 3,880 3,384 3,059 2,910 11,168 7,855
NET INTEREST INCOME26,997 25,107 24,128 23,422 23,409 76,232 66,442
Provision for loan losses6,908 3,007 1,343 900 2,214 11,258 4,569
Net interest income after provision for loan losses20,089 22,100 22,785 22,522 21,195 64,974 61,873
NONINTEREST INCOME:
Nonsufficient funds fees144 184 199 178 175 527 483
Service charges on deposit accounts204 205 195 177 182 604 500
Gain on sale of branch assets 2,050
(Loss) gain on sale of securities(12) 30 (12)
Gain on sale of other real estate 206 60 60
Bank owned life insurance146 146 148 153 154 440 473
Other978 942 799 734 703 2,719 2,224
Total noninterest income1,460 1,477 1,341 1,478 1,274 4,278 5,790
NONINTEREST EXPENSE:
Salaries and employee benefits11,580 10,415 10,562 10,627 9,781 32,557 28,231
Net occupancy and equipment1,325 1,302 1,427 1,238 1,260 4,054 3,706
Depreciation427 398 400 391 404 1,225 1,236
Data processing and software amortization783 719 695 703 655 2,197 1,930
Professional fees822 987 895 857 442 2,704 1,377
Regulatory assessments and FDIC insurance582 569 589 485 396 1,740 1,096
Core deposit intangibles amortization195 196 195 195 196 586 590
Communications251 233 247 237 264 731 818
Advertising302 288 263 319 228 853 626
Other1,409 1,354 1,276 1,135 1,269 4,039 3,461
Total noninterest expense17,676 16,461 16,549 16,187 14,895 50,686 43,071
INCOME BEFORE INCOME TAXES3,873 7,116 7,577 7,813 7,574 18,566 24,592
Provision for income taxes887 1,721 1,530 2,042 2,103 4,138 7,512
NET INCOME$2,986 $5,395 $6,047 $5,771 $5,471 $14,428 $17,080
EARNINGS PER SHARE
Basic$0.23 $0.41 $0.46 $0.45 $0.42 $1.10 $1.33
Diluted$0.22 $0.40 $0.45 $0.44 $0.42 $1.07 $1.31


Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)
Three Months Ended Year-to-Date
2017 2016 2017 2016
September 30 June 30 March 31 December 31 September 30 September 30 September 30
(Dollars and share amounts in thousands, except per share data)
Net income $2,986 $5,395 $6,047 $5,771 $5,471 $14,428 $17,080
Earnings per share, basic $0.23 $0.41 $0.46 $0.45 $0.42 $1.10 $1.33
Earnings per share, diluted $0.22 $0.40 $0.45 $0.44 $0.42 $1.07 $1.31
Return on average assets(A) 0.43% 0.81% 0.96% 0.93% 0.90% 0.73% 0.99%
Return on average equity(A) 3.90% 7.32% 8.61% 8.25% 7.77% 6.55% 8.40%
Return on average tangible equity(A)(B) 4.55% 8.57% 10.15% 9.79% 9.21% 7.67% 10.03%
Tax equivalent net interest margin(C) 4.37% 4.29% 4.38% 4.32% 4.39% 4.34% 4.39%
Efficiency ratio(D) 62.14% 61.92% 64.98% 65.09% 60.34% 62.97% 61.37%
Liquidity and Capital Ratios
Equity to assets 10.76% 10.95% 11.15% 11.42% 11.42% 10.76% 11.42%
Common equity Tier 1 capital 10.68% 10.84% 11.10% 11.44% 11.40% 10.68% 11.40%
Tier 1 risk-based capital 11.07% 11.24% 11.51% 11.87% 11.84% 11.07% 11.84%
Total risk-based capital 12.04% 12.13% 12.35% 12.72% 12.68% 12.04% 12.68%
Tier 1 leverage capital 9.90% 10.11% 10.28% 10.35% 10.25% 9.90% 10.25%
Tangible equity to tangible assets(B) 9.38% 9.52% 9.65% 9.82% 9.82% 9.38% 9.82%
Other Data
Weighted average shares:
Basic 13,165 13,125 13,021 12,913 12,882 13,104 12,860
Diluted 13,483 13,471 13,377 13,180 13,108 13,445 13,038
Period end shares outstanding 13,171 13,153 13,080 12,958 12,905 13,171 12,905
Book value per share $22.98 $22.69 $22.10 $21.59 $21.78 $22.98 $21.78
Tangible book value per share(B) $19.73 $19.42 $18.80 $18.24 $18.40 $19.73 $18.40

(A) Interim periods annualized.
(B) Refer to the calculation of these non-GAAP financial measures and a reconciliation to their most directly comparable GAAP financial measures on page 10 of this Earnings Release.
(C) Net interest margin represents net interest income divided by average interest-earning assets.
(D) Represents noninterest expense divided by the sum of net interest income plus noninterest income, excluding net gains and losses on the sale of branch assets, loans and securities. Additionally, taxes and provision for loan losses are not part of this calculation.


Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)
Three Months Ended
September 30, 2017 June 30, 2017 September 30, 2016
Average
Balance
Interest
Earned/
Interest Paid
Average
Yield/Rate
Average
Balance
Interest
Earned/
Interest Paid
Average
Yield/Rate
Average
Balance
Interest
Earned/
Interest Paid
Average
Yield/Rate
(Dollars in thousands)
Assets
Interest-Earning Assets:
Loans$2,141,546 $28,588 5.30% $2,042,460 $26,736 5.25% $1,784,763 $24,057 5.36%
Securities324,901 2,121 2.59% 326,388 2,094 2.57% 310,769 2,112 2.70%
Deposits in other financial institutions53,409 192 1.43% 49,703 157 1.26% 92,928 150 0.64%
Total interest-earning assets2,519,856 $30,901 4.87% 2,418,551 $28,987 4.81% 2,188,460 $26,319 4.78%
Allowance for loan losses(20,886) (19,253) (15,575)
Noninterest-earning assets261,524 261,668 249,363
Total assets$2,760,494 $2,660,966 $2,422,248
Liabilities and Shareholders' Equity
Interest-Bearing Liabilities:
Interest-bearing demand deposits$142,429 $127 0.35% $137,507 $118 0.34% $111,497 $95 0.34%
Money market and savings deposits558,087 684 0.49% 499,335 584 0.47% 484,587 556 0.46%
Certificates and other time deposits754,076 2,299 1.21% 785,194 2,283 1.17% 668,092 1,872 1.11%
Borrowed funds197,668 654 1.31% 304,184 761 1.00% 244,732 264 0.43%
Subordinated debt9,259 140 5.98% 9,232 134 5.83% 9,151 123 5.35%
Total interest-bearing liabilities1,661,519 $3,904 0.93% 1,735,452 $3,880 0.90% 1,518,059 $2,910 0.76%
Noninterest-Bearing Liabilities:
Noninterest-bearing demand deposits786,566 624,100 614,303
Other liabilities8,960 5,890 9,821
Total liabilities2,457,045 2,365,442 2,142,183
Shareholders' equity303,449 295,524 280,065
Total liabilities and shareholders' equity$2,760,494 $2,660,966 $2,422,248
Net interest rate spread 3.94% 3.91% 4.02%
Net interest income and margin $26,997 4.25% $25,107 4.16% $23,409 4.26%
Net interest income and margin (tax equivalent) $27,748 4.37% $25,862 4.29% $24,149 4.39%


Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)
Year-to-Date
September 30, 2017 September 30, 2016
Average
Balance
Interest
Earned/
Interest Paid
Average
Yield/ Rate
Average
Balance
Interest
Earned/
Interest Paid
Average
Yield/ Rate
(Dollars in thousands)
Assets
Interest-Earning Assets:
Loans$2,038,228 $80,584 5.29% $1,724,494 $69,124 5.35%
Securities325,730 6,337 2.60% 256,149 4,731 2.47%
Deposits in other financial institutions52,150 479 1.23% 93,700 442 0.63%
Total interest-earning assets2,416,108 $87,400 4.84% 2,074,343 $74,297 4.78%
Allowance for loan losses(19,456) (14,401)
Noninterest-earning assets260,843 237,765
Total assets$2,657,495 $2,297,707
Liabilities and Shareholders' Equity
Interest-Bearing Liabilities:
Interest-bearing demand deposits$136,991 $345 0.34% $103,215 $250 0.32%
Money market and savings deposits514,995 1,822 0.47% 451,314 1,514 0.45%
Certificates and other time deposits741,732 6,539 1.18% 636,877 5,097 1.07%
Borrowed funds282,024 2,068 0.98% 192,880 634 0.44%
Subordinated debt9,231 394 5.70% 9,125 360 5.27%
Total interest-bearing liabilities1,684,973 $11,168 0.89% 1,393,411 $7,855 0.75%
Noninterest-Bearing Liabilities:
Noninterest-bearing demand deposits670,908 624,190
Other liabilities6,926 8,545
Total liabilities2,362,807 2,026,146
Shareholders' equity294,688 271,561
Total liabilities and shareholders' equity$2,657,495 $2,297,707
Net interest rate spread 3.95% 4.03%
Net interest income and margin $76,232 4.22% $66,442 4.28%
Net interest income and margin (tax equivalent) $78,517 4.34% $68,113 4.39%


Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)
As of and For the Three Months Ended
2017 2016
September 30 June 30 March 31 December 31 September 30
(Dollars in thousands)
Period-end Loan Portfolio:
Commercial and industrial$446,029 $444,701 $425,154 $416,752 $402,273
Mortgage warehouse83,577 73,499 64,132 67,038 76,043
Real estate:
Commercial real estate (including multi-family residential)1,045,220 1,008,027 961,212 891,989 848,939
Commercial real estate construction and land development225,574 206,024 175,264 159,247 167,936
1-4 family residential (including home equity)283,399 267,939 250,881 246,987 228,651
Residential construction106,299 102,832 99,648 98,657 93,923
Consumer and other11,442 11,630 10,147 10,965 12,957
Total loans$2,201,540 $2,114,652 $1,986,438 $1,891,635 $1,830,722
Asset Quality:
Nonaccrual loans$13,913 $19,330 $19,315 $15,788 $15,882
Accruing loans 90 or more days past due 911
Total nonperforming loans13,913 19,330 19,315 16,699 15,882
Other real estate453 365 365 1,503 1,138
Other repossessed assets205 205 260 286 30
Total nonperforming assets$14,571 $19,900 $19,940 $18,488 $17,050
Net charge-offs (recoveries)4,196 684 567 174 (54)
Nonaccrual loans:
Commercial and industrial$5,031 $9,051 $8,933 $3,896 $4,983
Mortgage warehouse
Real estate:
Commercial real estate (including multi-family residential)8,097 9,556 9,726 11,663 10,495
Commercial real estate construction and land development 70
1-4 family residential (including home equity)735 568 574 217 11
Residential construction
Consumer and other50 155 12 12 393
Total nonaccrual loans$13,913 $19,330 $19,315 $15,788 $15,882
Asset Quality Ratios:
Nonperforming assets to total assets0.52% 0.73% 0.77% 0.75% 0.69%
Nonperforming loans to total loans0.63% 0.91% 0.97% 0.88% 0.87%
Allowance for loan losses to nonperforming loans170.50% 108.69% 96.75% 107.26% 108.20%
Allowance for loan losses to total loans1.08% 0.99% 0.94% 0.95% 0.94%
Net charge-offs (recoveries) to average loans (annualized)0.78% 0.13% 0.12% 0.04% (0.01)%


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

Allegiance’s management uses certain non−GAAP (generally accepted accounting principles) financial measures to evaluate its performance. Allegiance believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance. Allegiance believes that management and investors benefit from referring to these non-GAAP financial measures in assessing Allegiance’s performance and when planning, forecasting, analyzing and comparing past, present and future periods. Specifically, Allegiance reviews tangible book value per common share, return on average tangible common equity and the ratio of tangible common equity to tangible assets for internal planning and forecasting purposes. Additionally, Allegiance excluded the one time sale of two Central Texas branch locations during the first quarter 2016 as noted within the narrative, as Allegiance believes this transaction was not indicative of its recurring operating results. 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
2017 2016 2017 2016
September 30 June 30 March 31 December 31 September 30 September 30 September 30
(Dollars and share amounts in thousands, except per share data)
Total shareholders' equity $302,727 $298,459 $289,130 $279,817 $281,095 $302,727 $281,095
Less: Goodwill and core deposit intangibles, net 42,858 43,054 43,249 43,444 43,639 42,858 43,639
Tangible shareholders’ equity $259,869 $255,405 $245,881 $236,373 $237,456 $259,869 $237,456
Shares outstanding at end of period 13,171 13,153 13,080 12,958 12,905 13,171 12,905
Tangible book value per share $19.73 $19.42 $18.80 $18.24 $18.40 $19.73 $18.40
Net income attributable to shareholders $2,986 $5,395 $6,047 $5,771 $5,471 $14,428 $17,080
Average shareholders' equity $303,449 $295,524 $284,889 $278,123 $280,065 $294,688 $271,561
Less: Average goodwill and core deposit intangibles, net 42,954 43,149 43,345 43,539 43,735 43,148 43,994
Average tangible shareholders’ equity $260,495 $252,375 $241,544 $234,584 $236,330 $251,540 $227,567
Return on average tangible equity 4.55% 8.57% 10.15% 9.79% 9.21% 7.67% 10.03%
Total assets $2,813,434 $2,724,716 $2,592,330 $2,450,948 $2,461,902 $2,813,434 $2,461,902
Less: Goodwill and core deposit intangibles, net 42,858 43,054 43,249 43,444 43,639 42,858 43,639
Tangible assets $2,770,576 $2,681,662 $2,549,081 $2,407,504 $2,418,263 $2,770,576 $2,418,263
Tangible equity to tangible assets 9.38% 9.52% 9.65% 9.82% 9.82% 9.38% 9.82%

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

Source:Allegiance Bancshares, Inc.