Allegiance Bancshares, Inc. Reports Fourth Quarter and Year-End 2017 Results

  • Core loan growth of $376.8 million in 2017, or 20.7%, year over year and $83.5 million, or 15.8% (annualized), for the fourth quarter 2017 compared to the linked quarter
  • Net interest income for the fourth quarter 2017 increased $4.0 million, or 17.1%, compared to the fourth quarter 2016
  • Completed an offering of $40 million of Allegiance Bank subordinated notes to supplement total risk-based capital

HOUSTON, Jan. 25, 2018 (GLOBE NEWSWIRE) -- Allegiance Bancshares, Inc. (NASDAQ:ABTX) ("Allegiance"), the holding company of Allegiance Bank (the "Bank"), today reported net income of $3.2 million in the fourth quarter 2017 compared to $5.8 million in the fourth quarter 2016 and diluted earnings per share of $0.24 in the fourth quarter 2017 compared to $0.44 in the fourth quarter 2016. The fourth quarter 2017 results included a $2.6 million increase in the tax provision as a result of the revaluation of the deferred tax asset due to the enactment of the Tax Cuts and Jobs Act and $1.1 million in core technology conversion costs. Net income for the year ended December 31, 2017 was $17.6 million, or $1.31 per diluted common share, compared to net income of $22.9 million, or $1.75 per diluted common share, for the year ended December 31, 2016. The year ended December 31, 2016 included an after-tax gain of $1.3 million on the sale of two Central Texas branch locations.

"This was a sound year for Allegiance as we continued to consistently generate loan growth into the fourth quarter, while maintaining solid credit quality and a strong net interest margin," said George Martinez, Allegiance's Chairman and Chief Executive Officer. "Our fourth quarter earnings were impacted by the recent tax reform bill enacted at the end of December which led to a revaluation of our deferred tax asset resulting in a $2.6 million tax adjustment. We remain focused on the execution of our growth strategies as we further strengthened our capital position through the successful completion of a subordinated debt offering in December. Additionally, we made a strategic decision to implement a new core technology platform in the first half of 2018 to a more integrated technology solution reflective of our vision to better leverage technology to achieve our goals and realize operational efficiencies in our super community banking model. This new platform will not only better position us to meet the current and future needs and demands of our customers, but also enhance the user experience for customers and employees alike," continued Martinez.

"I am very pleased with our momentum and achievements over this past year. Among those achievements are robust capital, continued customer growth, and strength in asset quality. We anticipate a sustained focus and continued progress in the coming year toward attaining our strategic goals of high quality growth with improving levels of profitability. As such, I am grateful for our dedicated employees, who add value to our customer relationships and provide superior service and innovation. They ensure a consistent customer experience at Allegiance, just as they have done throughout our 10-year history, and I appreciate their hard work and loyalty," concluded Martinez.

Fourth Quarter 2017 Results

Net interest income before provision for loan losses in the fourth quarter 2017 increased $4.0 million, or 17.1%, to $27.4 million from $23.4 million for the fourth quarter 2016 primarily due to organic loan growth. Net interest income before provision for loan losses in the fourth quarter 2017 increased slightly from $27.0 million in the third quarter 2017. The net interest margin on a tax equivalent basis increased one basis point to 4.33% for the fourth quarter 2017 from 4.32% for the fourth quarter 2016 and decreased four basis points from 4.37% for the third quarter 2017.

Noninterest income for the fourth quarter 2017 was $1.6 million, an increase of $105 thousand, or 7.1%, compared to $1.5 million for the fourth quarter 2016 and increased $123 thousand, or 8.4%, compared to $1.5 million for the third quarter 2017.

Noninterest expense for the fourth quarter 2017 increased $3.1 million, or 19.1%, to $19.3 million from $16.2 million for the fourth quarter 2016, and increased $1.6 million, or 9.1%, from $17.7 million for the third quarter 2017. The increase in noninterest expense over the fourth quarter 2016 was primarily due to $1.1 million of expenses related to the core technology conversion and continued investment to support strategic growth initiatives.

In the fourth quarter 2017, Allegiance’s efficiency ratio increased to 66.50% from 65.09% for the fourth quarter 2016 and increased from 62.14% for the third quarter 2017. Fourth quarter 2017 annualized returns on average assets, average equity and average tangible equity were 0.45%, 4.15% and 4.82%, respectively, compared to 0.93%, 8.25% and 9.79%, respectively, for the fourth quarter 2016. Annualized returns on average assets, average equity and average tangible equity for the third quarter 2017 were 0.43%, 3.90% and 4.55%, respectively.

Year Ended December 31, 2017 Results

Net interest income before provision for loan losses for the year ended December 31, 2017 increased $13.8 million, or 15.4%, to $103.7 million from $89.9 million for the year ended December 31, 2016 primarily due to organic loan growth and an increase in the securities portfolio. The net interest margin on a tax equivalent basis decreased three basis points to 4.34% for the year ended December 31, 2017 from 4.37% for the year ended December 31, 2016.

Noninterest income for the year ended December 31, 2017 was $5.9 million, a decrease of $1.4 million, or 19.4%, compared to $7.3 million for the year ended December 31, 2016. The year ended December 31, 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 $643 thousand, or 12.3%, for the year ended December 31, 2017 compared to the year ended December 31, 2016.

Noninterest expense for the year ended December 31, 2017 increased $10.7 million, or 18.1%, to $70.0 million from $59.3 million for the year ended December 31, 2016. The increase in noninterest expense over the year ended December 31, 2016 was primarily due to increased expenses related to the core technology conversion, professional fees and salaries and benefits related to supporting growth initiatives.

During the year ended December 31, 2017, Allegiance’s efficiency ratio increased to 63.89% from 62.34% for the year ended December 31, 2016.

For the year ended December 31, 2017, returns on average assets, average equity and average tangible equity were 0.65%, 5.92% and 6.93%, respectively, compared to 0.98%, 8.36% and 9.96%, respectively, for the year ended December 31, 2016. Excluding the gain on the sale of the two Central Texas branch locations during the first quarter 2016, the returns on average assets, average equity and average tangible equity for the year ended December 31, 2016 would have been 0.92%, 7.88% and 9.38%, respectively.

Financial Condition

Total assets at December 31, 2017 increased $409.3 million, or 16.7%, to $2.86 billion compared to $2.45 billion at December 31, 2016 and increased $46.8 million, or 1.7%, compared to $2.81 billion at September 31, 2017.

Total loans at December 31, 2017 increased $379.2 million, or 20.0%, to $2.27 billion compared to $1.89 billion at December 31, 2016 and increased $69.3 million, or 3.1%, compared to $2.20 billion at September 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 $376.8 million, or 20.7%, to $2.20 billion at December 31, 2017 from $1.82 billion at December 31, 2016 and increased $83.5 million, or 3.9%, from $2.12 billion at September 30, 2017.

Deposits at December 31, 2017 increased $343.8 million, or 18.4%, to $2.21 billion compared to $1.87 billion at December 31, 2016 and decreased $72.6 million, or 3.2%, compared to $2.29 billion at September 30, 2017.

Asset Quality

Nonperforming assets totaled $13.9 million, or 0.49% of total assets, at December 31, 2017, compared to $18.5 million, or 0.75% of total assets, at December 31, 2016, and $14.6 million, or 0.52% of total assets, at September 30, 2017. The allowance for loan losses was 1.04% of total loans at December 31, 2017, 0.95% of total loans at December 31, 2016 and 1.08% of total loans at September 30, 2017.

The provision for loan losses for the fourth quarter 2017 was $1.9 million, or 0.35% of average loans, compared to $900 thousand, or 0.19% of average loans, for the fourth quarter 2016, and $6.9 million, or 1.28% of average loans, for the third quarter 2017. The provision for loan losses for the year ended December 31, 2017 was $13.2 million, or 0.63% of average loans, compared to $5.5 million, or 0.31% of average loans for the year ended December 31, 2016.

Fourth quarter 2017 net charge-offs were $2.0 million, or 0.36% (annualized) of average loans, compared to $174 thousand, or 0.04% (annualized) of average loans, for the fourth quarter 2016, and $4.2 million, or 0.78% (annualized) of average loans, for the third quarter 2017. Net charge-offs for the year ended December 31, 2017 were $7.5 million, or 0.36% of average loans, compared to $656 thousand, or 0.04% of average loans for the year ended December 31, 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 Thursday, January 25, 2018 at 9:00 a.m. Central Time (10:00 a.m. Eastern Time) to discuss its fourth quarter and full year 2017 results. Individuals and investment professionals may participate in the call by dialing (877) 279-2520. The conference ID number is 8468395. 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 $2.86 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,” “continues,” “anticipates,” “intends,” “projects,” “estimates,” “potential,” “plans” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing words. Forward-looking statements include information concerning Allegiance’s future financial performance, business and growth strategy, projected plans and objectives, as well as projections of macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact economic trends, and any such variations may be material. Such forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties, many of which are outside of Allegiance’s control, which may cause actual results to differ materially from those expressed or implied by the forward-looking statements. These risks and uncertainties include but are not limited to whether Allegiance can: continue to develop and maintain new and existing customer and community relationships; successfully implement its growth strategy, including identifying suitable acquisition targets and integrating the businesses of acquired companies and banks; sustain its current internal growth rate; provide quality and competitive products and services that appeal to its customers; continue to have access to debt and equity capital markets; and achieve its performance objectives. These and various other risk factors are discussed in Allegiance’s Annual Report on Form 10-K for the fiscal year ended December 31, 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
December 31 September 30 June 30 March 31 December 31
(Dollars in thousands)
Cash and cash equivalents$182,103 $192,427 $187,491 $184,146 $142,098
Available for sale securities309,615 323,856 321,268 317,219 316,455
Total loans2,270,876 2,201,540 2,114,652 1,986,438 1,891,635
Allowance for loan losses(23,649) (23,722) (21,010) (18,687) (17,911)
Loans, net2,247,227 2,177,818 2,093,642 1,967,751 1,873,724
Goodwill39,389 39,389 39,389 39,389 39,389
Core deposit intangibles, net3,274 3,469 3,664 3,860 4,055
Premises and equipment, net18,477 18,273 18,240 18,138 18,340
Other real estate owned365 453 365 365 1,503
Bank owned life insurance22,422 22,277 22,131 21,985 21,837
Other assets37,359 35,472 38,526 39,477 33,547
Total assets$2,860,231 $2,813,434 $2,724,716 $2,592,330 $2,450,948
Noninterest-bearing deposits$683,110 $712,951 $662,527 $615,225 $593,751
Interest-bearing deposits1,530,864 1,573,664 1,436,715 1,397,344 1,276,432
Total deposits2,213,974 2,286,615 2,099,242 2,012,569 1,870,183
Borrowed funds282,569 207,569 310,569 275,569 285,569
Subordinated debentures48,659 9,277 9,249 9,222 9,196
Other liabilities8,164 7,246 7,197 5,840 6,183
Total liabilities2,553,366 2,510,707 2,426,257 2,303,200 2,171,131
Common stock13,227 13,171 13,153 13,080 12,958
Capital surplus218,408 216,943 216,158 215,015 212,649
Retained earnings74,894 71,690 68,704 63,309 57,262
Accumulated other comprehensive income (loss)336 923 444 (2,274) (3,052)
Shareholders' equity306,865 302,727 298,459 289,130 279,817
Total liabilities and equity$2,860,231 $2,813,434 $2,724,716 $2,592,330 $2,450,948


Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)
Three Months Ended Year Ended
2017 2016 2017 2016
December 31 September 30 June 30 March 31 December 31 December 31 December 31
(Dollars in thousands, except per share data)
INTEREST INCOME:
Loans, including fees$29,747 $28,588 $26,736 $25,260 $24,232 $110,331 $93,356
Securities
Taxable563 547 503 498 478 2,111 1,807
Tax-exempt1,545 1,574 1,591 1,624 1,642 6,334 5,044
Deposits in other financial institutions183 192 157 130 129 662 571
Total interest income32,038 30,901 28,987 27,512 26,481 119,438 100,778
INTEREST EXPENSE:
Demand, money market and savings deposits992 811 702 654 673 3,159 2,437
Certificates and other time deposits2,521 2,299 2,283 1,957 1,947 9,060 7,044
Borrowed funds854 654 761 653 311 2,922 945
Subordinated debt235 140 134 120 128 629 488
Total interest expense4,602 3,904 3,880 3,384 3,059 15,770 10,914
NET INTEREST INCOME27,436 26,997 25,107 24,128 23,422 103,668 89,864
Provision for loan losses1,930 6,908 3,007 1,343 900 13,188 5,469
Net interest income after provision for loan losses25,506 20,089 22,100 22,785 22,522 90,480 84,395
NONINTEREST INCOME:
Nonsufficient funds fees158 144 184 199 178 685 661
Service charges on deposit accounts179 204 205 195 177 783 677
Gain on sale of branch assets 2,050
Gain (loss) on sale of securities30 (12) 30 18 30
Gain on sale of other real estate6 206 6 266
Bank owned life insurance146 146 146 148 153 586 626
Rebate from correspondent bank388 370 336 233 170 1,327 650
Other676 608 606 566 564 2,456 2,308
Total noninterest income1,583 1,460 1,477 1,341 1,478 5,861 7,268
NONINTEREST EXPENSE:
Salaries and employee benefits12,188 11,580 10,415 10,562 10,627 44,745 38,858
Net occupancy and equipment1,398 1,325 1,302 1,427 1,238 5,452 4,944
Depreciation412 427 398 400 391 1,637 1,627
Data processing and software amortization1,850 783 719 695 703 4,047 2,633
Professional fees222 822 987 895 857 2,926 2,234
Regulatory assessments and FDIC insurance533 582 569 589 485 2,273 1,581
Core deposit intangibles amortization195 195 196 195 195 781 785
Communications252 251 233 247 237 983 1,055
Advertising436 302 288 263 319 1,289 945
Other1,790 1,409 1,354 1,276 1,135 5,829 4,596
Total noninterest expense19,276 17,676 16,461 16,549 16,187 69,962 59,258
INCOME BEFORE INCOME TAXES7,813 3,873 7,116 7,577 7,813 26,379 32,405
Provision for income taxes4,609 887 1,721 1,530 2,042 8,747 9,554
NET INCOME$3,204 $2,986 $5,395 $6,047 $5,771 $17,632 $22,851
EARNINGS PER SHARE
Basic$0.24 $0.23 $0.41 $0.46 $0.45 $1.34 $1.78
Diluted$0.24 $0.22 $0.40 $0.45 $0.44 $1.31 $1.75


Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)
Three Months Ended Year Ended
2017 2016 2017 2016
December 31 September 30 June 30 March 31 December 31 December 31 December 31
(Dollars and share amounts in thousands, except per share data)
Net income $3,204 $2,986 $5,395 $6,047 $5,771 $17,632 $22,851
Earnings per share, basic $0.24 $0.23 $0.41 $0.46 $0.45 $1.34 $1.78
Earnings per share, diluted $0.24 $0.22 $0.40 $0.45 $0.44 $1.31 $1.75
Return on average assets(A) 0.45% 0.43% 0.81% 0.96% 0.93% 0.65% 0.98%
Return on average equity(A) 4.15% 3.90% 7.32% 8.61% 8.25% 5.92% 8.36%
Return on average tangible equity(A)(B) 4.82% 4.55% 8.57% 10.15% 9.79% 6.93% 9.96%
Tax equivalent net interest margin(C) 4.33% 4.37% 4.29% 4.38% 4.32% 4.34% 4.37%
Efficiency ratio(D) 66.50% 62.14% 61.92% 64.98% 65.09% 63.89% 62.34%
Liquidity and Capital Ratios
Allegiance Bancshares, Inc. (Consolidated)
Equity to assets 10.73% 10.76% 10.95% 11.15% 11.42% 10.73% 11.42%
Tangible equity to tangible assets(B) 9.38% 9.38% 9.52% 9.65% 9.82% 9.38% 9.82%
Estimated common equity tier 1 capital 10.29% 10.68% 10.84% 11.10% 11.44% 10.29% 11.44%
Estimated tier 1 risk-based capital 10.65% 11.07% 11.24% 11.51% 11.87% 10.65% 11.87%
Estimated total risk-based capital 13.10% 12.04% 12.13% 12.35% 12.72% 13.10% 12.72%
Estimated tier 1 leverage capital 9.84% 9.90% 10.11% 10.28% 10.35% 9.84% 10.35%
Allegiance Bank
Estimated common equity tier 1 capital 10.77% 10.93% 10.23% 10.49% 10.77% 10.77% 10.77%
Estimated tier 1 risk-based capital 10.77% 10.93% 10.23% 10.49% 10.77% 10.77% 10.77%
Estimated total risk-based capital 13.29% 11.91% 11.12% 11.32% 11.61% 13.29% 11.61%
Estimated tier 1 leverage capital 9.67% 9.77% 9.20% 9.37% 9.50% 9.67% 9.50%
Other Data
Weighted average shares:
Basic 13,187 13,165 13,125 13,021 12,913 13,125 12,873
Diluted 13,496 13,483 13,471 13,377 13,180 13,458 13,074
Period end shares outstanding 13,227 13,171 13,153 13,080 12,958 13,227 12,958
Book value per share $23.20 $22.98 $22.69 $22.10 $21.59 $23.20 $21.59
Tangible book value per share(B) $19.97 $19.73 $19.42 $18.80 $18.24 $19.97 $18.24

  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 10 of this Earnings Release.
  3. Net interest margin represents net interest income divided by average interest-earning assets.
  4. 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
December 31, 2017 September 30, 2017 December 31, 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$2,209,389 $29,747 5.34% $2,141,546 $28,588 5.30% $1,847,122 $24,232 5.22%
Securities322,539 2,108 2.59% 324,901 2,121 2.59% 314,387 2,120 2.68%
Deposits in other financial institutions47,257 183 1.54% 53,409 192 1.43% 68,974 129 0.74%
Total interest-earning assets2,579,185 $32,038 4.93% 2,519,856 $30,901 4.87% 2,230,483 $26,481 4.72%
Allowance for loan losses(23,740) (20,886) (17,579)
Noninterest-earning assets267,611 261,524 247,465
Total assets$2,823,056 $2,760,494 $2,460,369
Liabilities and Shareholders' Equity
Interest-Bearing Liabilities:
Interest-bearing demand deposits$214,498 $252 0.47% $142,429 $127 0.35% $107,180 $84 0.31%
Money market and savings deposits599,977 740 0.49% 558,087 684 0.49% 507,362 589 0.46%
Certificates and other time deposits766,942 2,521 1.30% 754,076 2,299 1.21% 681,425 1,947 1.14%
Borrowed funds232,863 854 1.45% 197,668 654 1.31% 258,048 311 0.48%
Subordinated debt17,070 235 5.46% 9,259 140 5.98% 9,178 128 5.55%
Total interest-bearing liabilities1,831,350 $4,602 1.00% 1,661,519 $3,904 0.93% 1,563,193 $3,059 0.78%
Noninterest-Bearing Liabilities:
Noninterest-bearing demand deposits675,643 786,566 610,310
Other liabilities9,717 8,960 8,743
Total liabilities2,516,710 2,457,045 2,182,246
Shareholders' equity306,346 303,449 278,123
Total liabilities and shareholders' equity$2,823,056 $2,760,494 $2,460,369
Net interest rate spread 3.93% 3.94% 3.94%
Net interest income and margin $27,436 4.22% $26,997 4.25% $23,422 4.18%
Net interest income and margin (tax equivalent) $28,151 4.33% $27,748 4.37% $24,219 4.32%


Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)
Year Ended
December 31, 2017 December 31, 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$2,081,370 $110,331 5.30% $1,755,319 $93,356 5.32%
Securities324,926 8,445 2.60% 270,789 6,851 2.53%
Deposits in other financial institutions50,917 662 1.30% 87,485 571 0.65%
Total interest-earning assets2,457,213 $119,438 4.86% 2,113,593 $100,778 4.77%
Allowance for loan losses(20,536) (15,200)
Noninterest-earning assets262,549 240,202
Total assets$2,699,226 $2,338,595
Liabilities and Shareholders' Equity
Interest-Bearing Liabilities:
Interest-bearing demand deposits$156,527 $597 0.38% $104,212 $334 0.32%
Money market and savings deposits536,415 2,562 0.48% 465,403 2,103 0.45%
Certificates and other time deposits748,086 9,060 1.21% 648,075 7,044 1.09%
Borrowed funds269,633 2,922 1.08% 209,379 945 0.45%
Subordinated debt11,208 629 5.61% 9,138 488 5.34%
Total interest-bearing liabilities1,721,869 $15,770 0.92% 1,436,207 $10,914 0.76%
Noninterest-Bearing Liabilities:
Noninterest-bearing demand deposits672,101 620,701
Other liabilities7,629 8,476
Total liabilities2,401,599 2,065,384
Shareholders' equity297,627 273,211
Total liabilities and shareholders' equity$2,699,226 $2,338,595
Net interest rate spread 3.94% 4.01%
Net interest income and margin $103,668 4.22% $89,864 4.25%
Net interest income and margin (tax equivalent) $106,669 4.34% $92,330 4.37%


Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)
Three Months Ended
2017 2016
December 31 September 30 June 30 March 31 December 31
(Dollars in thousands)
Period-end Loan Portfolio:
Commercial and industrial$457,129 $446,029 $444,701 $425,154 $416,752
Mortgage warehouse69,456 83,577 73,499 64,132 67,038
Real estate:
Commercial real estate (including multi-family residential)1,080,247 1,045,220 1,008,027 961,212 891,989
Commercial real estate construction and land development243,389 225,574 206,024 175,264 159,247
1-4 family residential (including home equity)301,219 283,399 267,939 250,881 246,987
Residential construction109,116 106,299 102,832 99,648 98,657
Consumer and other10,320 11,442 11,630 10,147 10,965
Total loans$2,270,876 $2,201,540 $2,114,652 $1,986,438 $1,891,635
Asset Quality:
Nonaccrual loans$13,328 $13,913 $19,330 $19,315 $15,788
Accruing loans 90 or more days past due 911
Total nonperforming loans13,328 13,913 19,330 19,315 16,699
Other real estate365 453 365 365 1,503
Other repossessed assets205 205 205 260 286
Total nonperforming assets$13,898 $14,571 $19,900 $19,940 $18,488
Net charge-offs2,003 4,196 684 567 174
Nonaccrual loans:
Commercial and industrial$6,437 $5,031 $9,051 $8,933 $3,896
Mortgage warehouse
Real estate:
Commercial real estate (including multi-family residential)6,110 8,097 9,556 9,726 11,663
Commercial real estate construction and land development 70
1-4 family residential (including home equity)781 735 568 574 217
Residential construction
Consumer and other 50 155 12 12
Total nonaccrual loans$13,328 $13,913 $19,330 $19,315 $15,788
Asset Quality Ratios:
Nonperforming assets to total assets0.49% 0.52% 0.73% 0.77% 0.75%
Nonperforming loans to total loans0.59% 0.63% 0.91% 0.97% 0.88%
Allowance for loan losses to nonperforming loans177.44% 170.50% 108.69% 96.75% 107.26%
Allowance for loan losses to total loans1.04% 1.08% 0.99% 0.94% 0.95%
Net charge-offs to average loans (annualized)0.36% 0.78% 0.13% 0.12% 0.04%


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 equity and the ratio of tangible 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 Ended
2017 2016 2017 2016
December 31 September 30 June 30 March 31 December 31 December 31 December 31
(Dollars and share amounts in thousands, except per share data)
Total shareholders' equity $306,865 $302,727 $298,459 $289,130 $279,817 $306,865 $279,817
Less: Goodwill and core deposit intangibles, net 42,663 42,858 43,053 43,249 43,444 42,663 43,444
Tangible shareholders’ equity $264,202 $259,869 $255,406 $245,881 $236,373 $264,202 $236,373
Shares outstanding at end of period 13,227 13,171 13,153 13,080 12,958 13,227 12,958
Tangible book value per share $19.97 $19.73 $19.42 $18.80 $18.24 $19.97 $18.24
Net income attributable to shareholders $3,204 $2,986 $5,395 $6,047 $5,771 $17,632 $22,851
Average shareholders' equity $306,346 $303,449 $295,524 $284,889 $278,123 $297,627 $273,211
Less: Average goodwill and core deposit intangibles, net 42,758 42,954 43,149 43,345 43,539 43,050 43,880
Average tangible shareholders’ equity $263,588 $260,495 $252,375 $241,544 $234,584 $254,577 $229,331
Return on average tangible equity 4.82% 4.55% 8.57% 10.15% 9.79% 6.93% 9.96%
Total assets $2,860,231 $2,813,434 $2,724,716 $2,592,330 $2,450,948 $2,860,231 $2,450,948
Less: Goodwill and core deposit intangibles, net 42,663 42,858 43,053 43,249 43,444 42,663 43,444
Tangible assets $2,817,568 $2,770,576 $2,681,663 $2,549,081 $2,407,504 $2,817,568 $2,407,504
Tangible equity to tangible assets 9.38% 9.38% 9.52% 9.65% 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.