Investor Relations

Investor Relations

Press Release

Allegiance Bancshares, Inc. Reports First Quarter 2018 Results

Company Release - 4/26/2018 7:00 AM ET
  • Net income increased 27.5% to $7.7 million and diluted earnings per share of $0.57 for the first quarter 2018 compared to $6.0 million and $0.45 for the first quarter 2017

  • Core loan growth of $326.6 million, or 17.0%, year over year and $47.5 million, or 8.6% (annualized), for the first quarter 2018 compared to the linked quarter and deposit growth of $272.2 million, or 13.5%, year over year and $70.8 million, or 12.8% (annualized), for the first quarter 2018 compared to the linked quarter

HOUSTON, April 26, 2018 (GLOBE NEWSWIRE) -- Allegiance Bancshares, Inc. (NASDAQ:ABTX) ("Allegiance"), the holding company of Allegiance Bank (the "Bank"), today reported net income of $7.7 million and diluted earnings per share of $0.57 in the first quarter 2018 compared to $6.0 million and diluted earnings per share of $0.45 for the first quarter 2017.

"Our results for the first quarter reflect the fact that our customers respond favorably to their unique experience of doing business with Allegiance," said George Martinez, Allegiance's Chairman and Chief Executive Officer. "We continue to generate organic growth in both loans and deposits. Earnings were solid, noting the benefit of the reduction in the statutory tax rate as a result of the recent tax reform legislation.  Our team is laser-focused on the execution of our key strategies and the delivery of high quality growth, while managing costs and risk.  Asset quality remains strong with nonperforming assets to total assets at 0.49%," commented Martinez.

"This quarter is a good beginning, and we look forward to another successful year. We are grateful for our dedicated employees, who add value to customer relationships and provide superior service. They embody our culture and ensure a consistent customer experience at Allegiance, and we appreciate their hard work and loyalty," concluded Martinez.

First Quarter 2018 Results

Net interest income before provision for loan losses in the first quarter 2018 increased $2.8 million, or 11.4%, to $26.9 million from $24.1 million for the first quarter 2017 primarily due to organic loan growth partially offset by interest expense on the subordinated debt that was issued in December 2017.  Net interest income before provision for loan losses in the first quarter 2018 decreased slightly from $27.4 million in the fourth quarter 2017 primarily due to interest expense on the subordinated debt that was issued in December 2017 partially offset by organic loan growth.  The net interest margin on a tax equivalent basis decreased 18 basis points to 4.20% for the first quarter 2018 from 4.38% for the first quarter 2017 and decreased 13 basis points from 4.33% for the fourth quarter 2017.  The decreases from the prior year and the linked quarter are primarily due to interest expense on the subordinated debt issuance.

Noninterest income for the first quarter 2018 was $1.6 million, an increase of $305 thousand, or 22.7%, compared to $1.3 million for the first quarter 2017 and increased $63 thousand compared to $1.6 million for the fourth quarter 2017.

Noninterest expense for the first quarter 2018 increased $2.2 million, or 13.1%, to $18.7 million from $16.5 million for the first quarter 2017, and decreased $559 thousand, or 2.9%, from $19.3 million for the fourth quarter 2017. The increase in noninterest expense over the first quarter 2017 was primarily due to salaries and benefits expense to support strategic growth initiatives.  In the first quarter 2018, Allegiance’s efficiency ratio increased to 65.59% from 64.98% for the first quarter 2017 and decreased from 66.50% for the fourth quarter 2017.  First quarter 2018 annualized returns on average assets, average equity and average tangible equity were 1.09%, 10.10% and 11.71%, respectively, compared to 0.96%, 8.61% and 10.15%, respectively, for the first quarter 2017.  Annualized returns on average assets, average equity and average tangible equity for the fourth quarter 2017 were 0.45%, 4.15% and 4.82%, respectively.

Financial Condition

Total assets at March 31, 2018 increased $294.2 million, or 11.3%, to $2.89 billion compared to $2.59 billion at March 31, 2017 and increased $26.3 million, or 0.9%, compared to $2.86 billion at December 31, 2017.

Total loans at March 31, 2018 increased $304.1 million, or 15.3%, to $2.29 billion compared to $1.99 billion at March 31, 2017 and increased $19.6 million, or 0.9%, compared to $2.27 billion at December 31, 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 $326.6 million, or 17.0%, to $2.25 billion at March 31, 2018 from $1.92 billion at March 31, 2017 and increased $47.5 million, or 2.2%, from $2.20 billion at December 31, 2017.

Deposits at March 31, 2018 increased $272.2 million, or 13.5%, to $2.28 billion compared to $2.01 billion at March 31, 2017 and increased $70.8 million, or 3.2%, compared to $2.21 billion at December 31, 2017.

Asset Quality

Nonperforming assets totaled $14.2 million, or 0.49% of total assets, at March 31, 2018, compared to $19.9 million, or 0.77% of total assets, at March 31, 2017, and $13.9 million, or 0.49% of total assets, at December 31, 2017. The allowance for loan losses was 1.08% of total loans at March 31, 2018, 0.94% of total loans at March 31, 2017 and 1.04% of total loans at December 31, 2017.

The provision for loan losses for the first quarter 2018 was $653 thousand, or 0.12% (annualized) of average loans, compared to $1.3 million, or 0.28% (annualized) of average loans, for the first quarter 2017, and $1.9 million, or 0.35% (annualized) of average loans, for the fourth quarter 2017.

First quarter 2018 net recoveries were $327 thousand compared to net charge-offs of $567 thousand for the first quarter 2017 and net charge-offs of $2.0 million for the fourth quarter 2017.

GAAP Reconciliation of Non-GAAP Financial Measures

Allegiance’s management uses certain non-GAAP financial measures to evaluate its performance. Please refer to the GAAP Reconciliation and Management’s Explanation of Non-GAAP Financial Measures on page 9 of this earnings release for a reconciliation of these non-GAAP financial measures.

Conference Call

As previously announced, Allegiance’s management team will host a conference call on Thursday, April 26, 2018 at 8:00 a.m. Central Time (9:00 a.m. Eastern Time) to discuss its first quarter 2018 results. Individuals and investment professionals may participate in the call by dialing (877) 279-2520. The conference ID number is 7295969.  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 $2.89 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, 2017 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)
          
 2018 2017
  March 31  December 31  September 30  June 30  March 31
  (Dollars in thousands)
Cash and cash equivalents$190,088  $182,103  $192,427  $187,491  $184,146 
Available for sale securities307,411  309,615  323,856  321,268  317,219 
          
Total loans2,290,494  2,270,876  2,201,540  2,114,652  1,986,438 
Allowance for loan losses(24,628) (23,649) (23,722) (21,010) (18,687)
Loans, net2,265,866  2,247,227  2,177,818  2,093,642  1,967,751 
          
Goodwill39,389  39,389  39,389  39,389  39,389 
Core deposit intangibles, net3,079  3,274  3,469  3,664  3,860 
Premises and equipment, net18,605  18,477  18,273  18,240  18,138 
Other real estate owned365  365  453  365  365 
Bank owned life insurance22,563  22,422  22,277  22,131  21,985 
Other assets39,118  37,359  35,472  38,526  39,477 
Total assets$2,886,484  $2,860,231  $2,813,434  $2,724,716  $2,592,330 
          
Noninterest-bearing deposits$694,880  $683,110  $712,951  $662,527  $615,225 
Interest-bearing deposits1,589,922  1,530,864  1,573,664  1,436,715  1,397,344 
Total deposits2,284,802  2,213,974  2,286,615  2,099,242  2,012,569 
          
Borrowed funds232,569  282,569  207,569  310,569  275,569 
Subordinated debt48,719  48,659  9,277  9,249  9,222 
Other liabilities8,406  8,164  7,246  7,197  5,840 
Total liabilities2,574,496  2,553,366  2,510,707  2,426,257  2,303,200 
          
Common stock13,302  13,227  13,171  13,153  13,080 
Capital surplus219,760  218,408  216,943  216,158  215,015 
Retained earnings82,533  74,894  71,690  68,704  63,309 
Accumulated other comprehensive (loss) income(3,607) 336  923  444  (2,274)
Shareholders' equity311,988  306,865  302,727  298,459  289,130 
Total liabilities and equity$2,886,484  $2,860,231  $2,813,434  $2,724,716  $2,592,330 
 


 
Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)
          
 Three Months Ended
 2018 2017
  March 31  December 31  September 30  June 30  March 31
 (Dollars in thousands, except per share data)
INTEREST INCOME:         
Loans, including fees$30,117  $29,747  $28,588  $26,736  $25,260 
Securities         
  Taxable599  563  547  503  498 
  Tax-exempt1,459  1,545  1,574  1,591  1,624 
Deposits in other financial institutions216  183  192  157  130 
Total interest income32,391  32,038  30,901  28,987  27,512 
          
INTEREST EXPENSE:         
Demand, money market and savings deposits976  992  811  702  654 
Certificates and other time deposits2,785  2,521  2,299  2,283  1,957 
Borrowed funds1,036  854  654  761  653 
Subordinated debt705  235  140  134  120 
Total interest expense5,502  4,602  3,904  3,880  3,384 
NET INTEREST INCOME26,889  27,436  26,997  25,107  24,128 
Provision for loan losses653  1,930  6,908  3,007  1,343 
Net interest income after provision for loan losses26,236  25,506  20,089  22,100  22,785 
          
NONINTEREST INCOME:         
Nonsufficient funds fees176  158  144  184  199 
Service charges on deposit accounts223  179  204  205  195 
Gain (loss) on sale of securities  30  (12)    
Gain on sale of other real estate  6       
Bank owned life insurance141  145  146  146  148 
Rebate from correspondent bank444  388  370  336  233 
Other662  677  608  606  566 
Total noninterest income1,646  1,583  1,460  1,477  1,341 
          
NONINTEREST EXPENSE:         
Salaries and employee benefits12,794  12,188  11,580  10,415  10,562 
Net occupancy and equipment1,272  1,398  1,325  1,302  1,427 
Depreciation407  412  427  398  400 
Data processing and software amortization1,053  1,850  783  719  695 
Professional fees469  222  822  987  895 
Regulatory assessments and FDIC insurance534  533  582  569  589 
Core deposit intangibles amortization195  195  195  196  195 
Communications248  252  251  233  247 
Advertising330  436  302  288  263 
Other1,415  1,790  1,409  1,354  1,276 
Total noninterest expense18,717  19,276  17,676  16,461  16,549 
INCOME BEFORE INCOME TAXES9,165  7,813  3,873  7,116  7,577 
  Provision for income taxes1,454  4,609  887  1,721  1,530 
NET INCOME$7,711  $3,204  $2,986  $5,395  $6,047 
          
EARNINGS PER SHARE         
  Basic$0.58  $0.24  $0.23  $0.41  $0.46 
   Diluted$0.57  $0.24  $0.22  $0.40  $0.45 
                    


 
Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)
           
  Three Months Ended
  2018 2017
   March 31  December 31  September 30  June 30  March 31
  (Dollars and share amounts in thousands, except per share data)
Net income $7,711  $3,204  $2,986  $5,395  $6,047 
           
Earnings per share, basic $0.58  $0.24  $0.23  $0.41  $0.46 
Earnings per share, diluted $0.57  $0.24  $0.22  $0.40  $0.45 
           
Return on average assets(A) 1.09% 0.45% 0.43% 0.81% 0.96%
Return on average equity(A) 10.10% 4.15% 3.90% 7.32% 8.61%
Return on average tangible equity(A)(B) 11.71% 4.82% 4.55% 8.57% 10.15%
Tax equivalent net interest margin(C) 4.20% 4.33% 4.37% 4.29% 4.38%
Efficiency ratio(D) 65.59% 66.50% 62.14% 61.92% 64.98%
           
Liquidity and Capital Ratios          
Allegiance Bancshares, Inc. (Consolidated)          
  Equity to assets 10.81% 10.73% 10.76% 10.95% 11.15%
  Tangible equity to tangible assets(B) 9.48% 9.38% 9.38% 9.52% 9.65%
  Estimated common equity tier 1 capital 10.81% 10.54% 10.68% 10.84% 11.10%
  Estimated tier 1 risk-based capital 11.18% 10.92% 11.07% 11.24% 11.51%
  Estimated total risk-based capital 13.71% 13.43% 12.04% 12.13% 12.35%
  Estimated tier 1 leverage capital 9.97% 9.84% 9.90% 10.11% 10.28%
Allegiance Bank          
  Estimated common equity tier 1 capital 10.94% 10.72% 10.93% 10.23% 10.49%
  Estimated tier 1 risk-based capital 10.94% 10.72% 10.93% 10.23% 10.49%
  Estimated total risk-based capital 13.48% 13.24% 11.91% 11.12% 11.32%
  Estimated tier 1 leverage capital 9.77% 9.67% 9.77% 9.20% 9.37%
           
Other Data          
Weighted average shares:          
Basic 13,262  13,187  13,165  13,125  13,021 
Diluted 13,542  13,496  13,483  13,471  13,377 
Period end shares outstanding 13,301  13,227  13,171  13,153  13,080 
Book value per share $23.46  $23.20  $22.98  $22.69  $22.10 
Tangible book value per share(B) $20.26  $19.97  $19.73  $19.42  $18.80 
                     
  1. Interim periods annualized.
  2. Refer to the calculation of these non-GAAP financial measures and a reconciliation to their most directly comparable GAAP financial measures on page 9 of this Earnings Release.
  3. Net interest margin represents net interest income divided by average interest-earning assets.
  4. Represents noninterest expense divided by the sum of net interest income plus noninterest income, excluding net gains and losses on the sale of  securities.  Additionally, taxes and provision for loan losses are not part of this calculation.


 
Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)
                  
 Three Months Ended
 March 31, 2018 December 31, 2017 March 31, 2017
 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$2,260,119  $30,117  5.40% $2,209,389  $29,747  5.34% $1,928,333  $25,260  5.31%
Securities312,769  2,058  2.67% 322,539  2,108  2.59% 325,911  2,122  2.64%
Deposits in other financial institutions49,897  216  1.74% 47,257  183  1.54% 53,338  130  0.99%
  Total interest-earning assets2,622,785  $32,391  5.01% 2,579,185  $32,038  4.93% 2,307,582  $27,512  4.84%
Allowance for loan losses(23,949)     (23,740)     (18,200)    
Noninterest-earning assets272,430      267,611      259,315     
  Total assets$2,871,266      $2,823,056      $2,548,697     
                  
Liabilities and Shareholders' Equity                 
Interest-Bearing Liabilities:                 
Interest-bearing demand deposits$232,375  $317  0.55% $214,498  $252  0.47% $130,909  $100  0.31%
Money market and savings deposits552,396  659  0.48% 599,977  740  0.49% 486,779  554  0.46%
Certificates and other time deposits800,343  2,785  1.41% 766,942  2,521  1.30% 685,169  1,957  1.16%
Borrowed funds250,414  1,036  1.68% 232,863  854  1.45% 345,848  653  0.75%
Subordinated debt48,684  705  5.87% 17,070  235  5.46% 9,205  120  5.28%
  Total interest-bearing liabilities1,884,212  $5,502  1.18% 1,831,350  $4,602  1.00% 1,657,910  $3,384  0.83%
                  
Noninterest-Bearing Liabilities:                 
Noninterest-bearing demand deposits669,258      675,643      600,006     
Other liabilities8,251      9,717      5,892     
  Total liabilities2,561,721      2,516,710      2,263,808     
Shareholders' equity309,545      306,346      284,889     
  Total liabilities and shareholders' equity$2,871,266      $2,823,056      $2,548,697     
                  
Net interest rate spread    3.82%     3.93%     4.01%
                  
Net interest income and margin  $26,889  4.16%   $27,436  4.22%   $24,128  4.24%
                  
Net interest income and margin (tax equivalent)  $27,174  4.20%   $28,151  4.33%   $24,907  4.38%
 


 
Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)
          
 Three Months Ended
 2018 2017
  March 31  December 31  September 30  June 30  March 31
 (Dollars in thousands)
Period-end Loan Portfolio:         
Commercial and industrial$447,168  $457,129  $446,029  $444,701  $425,154 
Mortgage warehouse41,572  69,456  83,577  73,499  64,132 
Real estate:         
Commercial real estate (including multi-family residential)1,108,537  1,080,247  1,045,220  1,008,027  961,212 
Commercial real estate construction and land development257,566  243,389  225,574  206,024  175,264 
1-4 family residential (including home equity)317,842  301,219  283,399  267,939  250,881 
Residential construction108,882  109,116  106,299  102,832  99,648 
Consumer and other8,927  10,320  11,442  11,630  10,147 
Total loans$2,290,494  $2,270,876  $2,201,540  $2,114,652  $1,986,438 
          
Asset Quality:         
Nonaccrual loans$13,373  $13,328  $13,913  $19,330  $19,315 
Accruing loans 90 or more days past due         
  Total nonperforming loans13,373  13,328  13,913  19,330  19,315 
Other real estate365  365  453  365  365 
Other repossessed assets443  205  205  205  260 
Total nonperforming assets$14,181  $13,898  $14,571  $19,900  $19,940 
          
Net (recoveries) charge-offs$(327) $2,003  $4,196  $684  $567 
          
Nonaccrual loans:         
Commercial and industrial$6,153  $6,437  $5,031  $9,051  $8,933 
Mortgage warehouse         
Real estate:         
Commercial real estate (including multi-family residential)6,466  6,110  8,097  9,556  9,726 
Commercial real estate construction and land development        70 
1-4 family residential (including home equity)754  781  735  568  574 
Residential construction         
Consumer and other    50  155  12 
  Total nonaccrual loans$13,373  $13,328  $13,913  $19,330  $19,315 
          
Asset Quality Ratios:         
Nonperforming assets to total assets0.49% 0.49% 0.52% 0.73% 0.77%
Nonperforming loans to total loans0.58% 0.59% 0.63% 0.91% 0.97%
Allowance for loan losses to nonperforming loans184.16% 177.44% 170.50% 108.69% 96.75%
Allowance for loan losses to total loans1.08% 1.04% 1.08% 0.99% 0.94%
Net (recoveries) charge-offs to average loans (annualized)(0.06)% 0.36% 0.78% 0.13% 0.12%
               


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. 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
  2018 2017
   March 31  December 31  September 30  June 30  March 31
  (Dollars and share amounts in thousands, except per share data)
Total shareholders' equity $311,988  $306,865  $302,727  $298,459  $289,130 
Less:  Goodwill and core deposit intangibles, net 42,468  42,663  42,858  43,053  43,249 
Tangible shareholders’ equity $269,520  $264,202  $259,869  $255,406  $245,881 
           
Shares outstanding at end of period 13,301  13,227  13,171  13,153  13,080 
           
Tangible book value per share $20.26  $19.97  $19.73  $19.42  $18.80 
           
Net income attributable to shareholders $7,711  $3,204  $2,986  $5,395  $6,047 
           
Average shareholders' equity $309,545  $306,346  $303,449  $295,524  $284,889 
Less:  Average goodwill and core deposit intangibles, net 42,589  42,758  42,954  43,149  43,345 
Average tangible shareholders’ equity $266,954  $263,588  $260,495  $252,375  $241,544 
           
Return on average tangible equity 11.71% 4.82% 4.55% 8.57% 10.15%
           
Total assets $2,886,484  $2,860,231  $2,813,434  $2,724,716  $2,592,330 
Less: Goodwill and core deposit intangibles, net 42,468  42,663  42,858  43,053  43,249 
Tangible assets $2,844,016  $2,817,568  $2,770,576  $2,681,663  $2,549,081 
           
Tangible equity to tangible assets 9.48% 9.38% 9.38% 9.52% 9.65%
                

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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