Investor Relations

Investor Relations

Press Release

Allegiance Bancshares, Inc. Reports Record Third Quarter 2018 Results

Company Release - 10/25/2018 7:00 AM ET
  • Record earnings of $8.9 million and diluted earnings per common share of $0.65 for the third quarter 2018

  • Core loan growth of $274.1 million year over year, or 12.9%, and $84.9 million for the third quarter 2018 compared to the linked quarter, or 14.7% (annualized)

  • Net charge-offs of 0.04% and 0.08% (annualized) for the third quarter and year-to-date 2018, respectively

  • Completed the acquisition of Post Oak Bancshares, Inc. on October 1, 2018

HOUSTON, Oct. 25, 2018 (GLOBE NEWSWIRE) -- Allegiance Bancshares, Inc. (NASDAQ: ABTX) ("Allegiance"), the holding company of Allegiance Bank (the "Bank"), today reported net income of $8.9 million and diluted earnings per share of $0.65 for the third quarter 2018 compared to $3.0 million and diluted earnings per share of $0.22 for the third quarter 2017.  Net income for the nine months ended September 30, 2018 was $24.1 million, or $1.77 per diluted share, compared to $14.4 million, or $1.07 per diluted share, for the nine months ended September 30, 2017. The nine months ended September 30, 2018 results include $1.8 million and $821 thousand of core system conversion and merger-related expenses, respectively.

“I am extremely pleased to report record quarterly earnings for Allegiance, both in terms of net income and earnings per share. Our results reflect the execution of our core strategies as evidenced by double-digit organic loan growth and a continued focus on strong credit quality,” said George Martinez, Allegiance’s Chairman and Chief Executive Officer.

“Additionally, we are excited to have completed our merger with Post Oak on October 1st, which further enhanced our market position as Houston’s largest community bank. With this merger, we have surpassed $4 billion in total assets, which we believe will allow us to gain valuable scale and take advantage of organic and strategic growth opportunities that will further enhance shareholder value. We are proud to welcome the employees, clients and shareholders of Post Oak to the Allegiance family.  Together, we are committed to providing the same superior, personalized service to which our customers are accustomed and to the continued investment in the communities where we live and work.  We anticipate completing the operational integration of Post Oak during the first quarter of 2019,” concluded Martinez. 

Third Quarter 2018 Results

Net interest income before provision for loan losses in the third quarter 2018 increased $1.0 million, or 3.8%, to $28.0 million from $27.0 million for the third 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 third quarter 2018 increased slightly from $27.8 million in the second quarter 2018.  The net interest margin on a tax equivalent basis decreased 27 basis points to 4.10% for the third quarter 2018 from 4.37% for the third quarter 2017 and decreased 11 basis points from 4.21% for the second quarter 2018. The decrease from the prior year was primarily due to the increase in interest expense on interest-bearing liabilities driven in part by the subordinated debt issuance in December 2017.

Noninterest income for the third quarter 2018 was $1.9 million, an increase of $468 thousand, or 32.1%, compared to $1.5 million for the third quarter 2017 and increased $123 thousand compared to $1.8 million for the second quarter 2018.

Noninterest expense for the third quarter 2018 increased $1.5 million, or 8.4%, to $19.2 million from $17.7 million for the third quarter 2017, and decreased $696 thousand, or 3.5%, from $19.9 million for the second quarter 2018. The increase in noninterest expense over the third quarter 2017 was primarily due to salaries and benefits and data processing and software amortization expenses incurred to support strategic growth initiatives, partially offset by a decrease in professional fees.  Noninterest expense decreased over the linked quarter primarily due to core system conversion and merger-related expenses incurred during the second quarter 2018.  In the third quarter 2018, Allegiance’s efficiency ratio increased to 63.95% from 62.14% for the third quarter 2017 and decreased from 67.05% for the second quarter 2018.  Third quarter 2018 annualized returns on average assets, average equity and average tangible equity were 1.18%, 10.80% and 12.40%, respectively, compared to 0.43%, 3.90% and 4.55%, respectively, for the third quarter 2017.  Annualized returns on average assets, average equity and average tangible equity for the second quarter 2018 were 1.03%, 9.55% and 11.02%, respectively.

Nine Months Ended September 30, 2018 Results

Net interest income before provision for loan losses for the nine months ended September 30, 2018 increased $6.5 million, or 8.5%, to $82.7 million from $76.2 million for the nine months ended September 30, 2017 primarily due to organic loan growth partially offset by the increased interest expense on interest-bearing liabilities.  The net interest margin on a tax equivalent basis decreased 17 basis points to 4.17% for the nine months ended September 30, 2018 from 4.34% for the nine months ended September 30, 2017 primarily due to the increase in interest expense on interest-bearing liabilities driven in part by the subordinated debt issuance in December 2017.

Noninterest income for the nine months ended September 30, 2018 was $5.4 million, an increase of $1.1 million, or 25.7%, compared to $4.3 million for the nine months ended September 30, 2017.

Noninterest expense for the nine months ended September 30, 2018 increased $7.1 million, or 13.9%, to $57.7 million from $50.7 million for the nine months ended September 30, 2017.  The increase in noninterest expense over the nine months ended September 30, 2017 was primarily due to expenses related to the core system conversion of $1.8 million and merger-related expenses of $821 thousand during the nine months ended September 30, 2018.

During the nine months ended September 30, 2018, Allegiance’s efficiency ratio increased to 65.52% from 62.97% for the nine months ended September 30, 2017. For the nine months ended September 30, 2018, annualized returns on average assets, average equity and average tangible equity were 1.10%, 10.16% and 11.72%, respectively, compared to 0.73%, 6.55% and 7.67%, respectively, for the nine months ended September 30, 2017.

Financial Condition

Total assets at September 30, 2018 increased $222.1 million, or 7.9%, to $3.04 billion compared to $2.81 billion at September 30, 2017 and increased $69.1 million, or 2.3%, compared to $2.97 billion at June 30, 2018.

Total loans at September 30, 2018 increased $239.4 million, or 10.9%, to $2.44 billion compared to $2.20 billion at September 30, 2017 and increased $82.3 million, or 3.5%, compared to $2.36 billion at June 30, 2018. These increases were due to strong organic loan growth within the Bank’s loan portfolio. Core loans, which exclude the mortgage warehouse portfolio, increased $274.1 million, or 12.9%, to $2.39 billion at September 30, 2018 from $2.12 billion at September 30, 2017 and increased $84.9 million, or 3.7%, from $2.31 billion at June 30, 2018.

Deposits at September 30, 2018 increased $147.2 million, or 6.4%, to $2.43 billion compared to $2.29 billion at September 30, 2017 and increased $120.0 million, or 5.2%, compared to $2.31 billion at March 31, 2018.

Asset Quality

Nonperforming assets totaled $16.9 million, or 0.56% of total assets, at September 30, 2018, compared to $14.6 million, or 0.52%, of total assets, at September 30, 2017, and $14.6 million, or 0.49% of total assets, at June 30, 2018. The allowance for loan losses was 0.97% of total loans at September 30, 2018, 1.08% of total loans at September 30, 2017 and 1.01% of total loans at June 30, 2018.

There was no provision for loan losses recorded during the third quarter 2018 due in part to the reversal of the remaining Hurricane Harvey reserve compared to $6.9 million, or 1.28% (annualized) of average loans, for the third quarter 2017, and $631 thousand, or 0.11% (annualized) of average loans, for the second quarter 2018.

Third quarter 2018 net charge-offs were $245 thousand compared to net charge-offs of $4.2 million for the third quarter 2017 and net charge-offs of $1.4 million for the second quarter 2018.

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, October 25, 2018 at 9:00 a.m. Central Time (10:00 a.m. Eastern Time) to discuss its third quarter 2018 results. Individuals and investment professionals may participate in the call by dialing (877) 279-2520. The conference ID number is 3079335.  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 September 30, 2018, Allegiance was a $3.04 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.  As of September 30, 2018, Allegiance Bank operated 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 
  September 30  June 30  March 31  December 31  September 30 
    
  (Dollars in thousands) 
Cash and cash equivalents $191,468  $200,645  $190,088  $182,103  $192,427 
Available for sale securities  300,115   300,897   307,411   309,615   323,856 
                     
Total loans  2,440,926   2,358,675   2,290,494   2,270,876   2,201,540 
Allowance for loan losses  (23,586)  (23,831)  (24,628)  (23,649)  (23,722)
Loans, net  2,417,340   2,334,844   2,265,866   2,247,227   2,177,818 
                     
Goodwill  39,389   39,389   39,389   39,389   39,389 
Core deposit intangibles, net  2,688   2,883   3,079   3,274   3,469 
Premises and equipment, net  18,970   19,049   18,605   18,477   18,273 
Other real estate owned  1,801   1,710   365   365   453 
Bank owned life insurance  22,838   22,701   22,563   22,422   22,277 
Other assets  40,930   44,308   39,118   37,359   35,472 
Total assets $3,035,539  $2,966,426  $2,886,484  $2,860,231  $2,813,434 
                     
Noninterest-bearing deposits $789,705  $749,787  $694,880  $683,110  $712,951 
Interest-bearing deposits  1,644,086   1,563,999   1,589,922   1,530,864   1,573,664 
Total deposits  2,433,791   2,313,786   2,284,802   2,213,974   2,286,615 
                     
Borrowed funds  211,569   275,569   232,569   282,569   207,569 
Subordinated debentures  48,839   48,779   48,719   48,659   9,277 
Other liabilities  13,209   8,404   8,406   8,164   7,246 
Total liabilities  2,707,408   2,646,538   2,574,496   2,553,366   2,510,707 
                     
Common stock  13,397   13,341   13,302   13,227   13,171 
Capital surplus  221,762   220,665   219,760   218,408   216,943 
Retained earnings  98,968   90,089   82,533   74,894   71,690 
Accumulated other comprehensive (loss) income  (5,996)  (4,207)  (3,607)  336   923 
Total shareholders’ equity  328,131   319,888   311,988   306,865   302,727 
Total liabilities and equity $3,035,539  $2,966,426  $2,886,484  $2,860,231  $2,813,434 


Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)


  Three Months Ended  Year-to-Date 
  2018  2017  2018  2017 
  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 $32,988  $31,846  $30,117  $29,747  $28,588  $94,951  $80,584 
Securities:                            
Taxable  636   646   599   563   547   1,881   1,548 
Tax-exempt  1,447   1,451   1,459   1,545   1,574   4,357   4,789 
Deposits in other financial institutions  265   250   216   183   192   731   479 
Total interest income  35,336   34,193   32,391   32,038   30,901   101,920   87,400 
                             
INTEREST EXPENSE:                            
Demand, money market and savings deposits  1,248   887   976   992   811   3,111   2,167 
Certificates and other time deposits  4,051   3,284   2,785   2,521   2,299   10,120   6,539 
Borrowed funds  1,272   1,472   1,036   854   654   3,780   2,068 
Subordinated debt  729   734   705   235   140   2,168   394 
Total interest expense  7,300   6,377   5,502   4,602   3,904   19,179   11,168 
NET INTEREST INCOME  28,036   27,816   26,889   27,436   26,997   82,741   76,232 
Provision for loan losses     631   653   1,930   6,908   1,284   11,258 
Net interest income after provision for loan losses  28,036   27,185   26,236   25,506   20,089   81,457   64,974 
                             
NONINTEREST INCOME:                            
Nonsufficient funds fees  175   214   176   158   144   565   527 
Service charges on deposit accounts  177   106   223   179   204   506   604 
Gain (loss) on sale of securities           30   (12)     (12)
Gain on sales of other real estate     1      6      1    
Bank owned life insurance  137   138   141   145   146   416   440 
Rebate from correspondent bank  613   564   444   388   370   1,621   939 
Other  826   782   662   677   608   2,270   1,780 
Total noninterest income  1,928   1,805   1,646   1,583   1,460   5,379   4,278 
                             
NONINTEREST EXPENSE:                            
Salaries and employee benefits  12,965   12,778   12,794   12,188   11,580   38,537   32,557 
Net occupancy and equipment  1,281   1,333   1,272   1,398   1,325   3,886   4,054 
Depreciation  490   433   407   412   427   1,330   1,225 
Data processing and software amortization  1,226   1,356   1,053   1,850   783   3,635   2,197 
Professional fees  303   567   469   222   822   1,339   2,704 
Regulatory assessments and FDIC insurance  505   494   534   533   582   1,533   1,740 
Core deposit intangibles amortization  195   196   195   195   195   586   586 
Communications  262   259   248   252   251   769   731 
Advertising  351   340   330   436   302   1,021   853 
Acquisition and merger-related expenses  196   625            821    
Other  1,390   1,479   1,415   1,790   1,409   4,284   4,039 
Total noninterest expense  19,164   19,860   18,717   19,276   17,676   57,741   50,686 
INCOME BEFORE INCOME TAXES  10,800   9,130   9,165   7,813   3,873   29,095   18,566 
Provision for income taxes  1,921   1,574   1,454   4,609   887   4,949   4,138 
NET INCOME $8,879  $7,556  $7,711  $3,204  $2,986  $24,146  $14,428 
                             
EARNINGS PER SHARE                            
Basic $0.66  $0.57  $0.58  $0.24  $0.23  $1.81  $1.10 
Diluted $0.65  $0.55  $0.57  $0.24  $0.22  $1.77  $1.07 


Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)



  Three Months Ended  Year-to-Date 
  2018  2017  2018  2017 
  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 $8,879  $7,556  $7,711  $3,204  $2,986  $24,146  $14,428 
                             
Earnings per share, basic $0.66  $0.57  $0.58  $0.24  $0.23  $1.81  $1.10 
Earnings per share, diluted $0.65  $0.55  $0.57  $0.24  $0.22  $1.77  $1.07 
                             
Return on average assets(A)  1.18%  1.03%  1.09%  0.45%  0.43%  1.10%  0.73%
Return on average equity(A)  10.80%  9.55%  10.10%  4.15%  3.90%  10.16%  6.55%
Return on average tangible equity(A)(B)  12.40%  11.02%  11.71%  4.82%  4.55%  11.72%  7.67%
Tax equivalent net interest margin(C)  4.10%  4.21%  4.20%  4.33%  4.37%  4.17%  4.34%
Efficiency ratio(D)  63.95%  67.05%  65.59%  66.50%  62.14%  65.52%  62.97%
                             
Liquidity and Capital Ratios                            
Allegiance Bancshares, Inc. (Consolidated)                            
  Equity to assets  10.81%  10.78%  10.81%  10.73%  10.76%  10.81%  10.76%
  Tangible equity to tangible assets(B)  9.56%  9.49%  9.48%  9.38%  9.38%  9.56%  9.38%
  Estimated common equity tier 1 capital  11.16%  10.60%  10.82%  10.54%  10.68%  11.16%  10.68%
  Estimated tier 1 risk-based capital  11.51%  10.97%  11.19%  10.92%  11.07%  11.51%  11.07%
  Estimated total risk-based capital  13.92%  13.42%  13.72%  13.43%  12.04%  13.92%  12.04%
  Estimated tier 1 leverage capital  10.23%  9.78%  9.98%  9.84%  9.90%  10.23%  9.90%
Allegiance Bank                            
  Estimated common equity tier 1 capital  11.23%  11.04%  10.95%  10.72%  10.93%  11.23%  10.93%
  Estimated tier 1 risk-based capital  11.23%  11.04%  10.95%  10.72%  10.93%  11.23%  10.93%
  Estimated total risk-based capital  13.64%  13.49%  13.49%  13.24%  11.91%  13.64%  11.90%
  Estimated tier 1 leverage capital  9.98%  9.84%  9.77%  9.67%  9.77%  9.98%  9.77%
                             
Other Data                            
Weighted average shares:                            
Basic  13,371   13,327   13,262   13,187   13,165   13,320   13,104 
Diluted  13,637   13,634   13,542   13,496   13,483   13,605   13,445 
Period end shares outstanding  13,397   13,341   13,301   13,227   13,171   13,397   13,171 
Book value per share $24.49  $23.98  $23.46  $23.20  $22.98  $24.49  $22.98 
Tangible book value per share(B) $21.35  $20.81  $20.26  $19.97  $19.73  $21.35  $19.73 

(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 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, 2018  June 30, 2018  September 30, 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 $2,384,966  $32,988   5.49% $2,312,725  $31,846   5.52% $2,141,546  $28,588   5.30%
Securities  304,254   2,083   2.72%  315,198   2,097   2.67%  324,901   2,121   2.59%
Deposits in other financial institutions  47,518   265   2.21%  50,227   250   2.00%  53,409   192   1.43%
Total interest-earning assets  2,736,738  $35,336   5.12%  2,678,150  $34,193   5.12%  2,519,856  $30,901   4.87%
Allowance for loan losses  (24,059)          (24,753)          (20,886)        
Noninterest-earning assets  276,997           280,852           261,524         
Total assets $2,989,676          $2,934,249          $2,760,494         
                                     
Liabilities and Stockholders' Equity                                    
Interest-Bearing Liabilities:                                    
Interest-bearing demand deposits $181,284  $389   0.85% $157,588  $208   0.53% $142,429  $127   0.35%
Money market and savings deposits  530,240   859   0.64%  522,381   679   0.52%  558,087   684   0.49%
Certificates and other time deposits  896,253   4,051   1.79%  827,897   3,284   1.59%  754,076   2,299   1.21%
Borrowed funds  234,776   1,272   2.15%  311,185   1,472   1.90%  197,668   654   1.31%
Subordinated debt  48,805   729   5.93%  48,746   734   6.04%  9,259   140   5.98%
Total interest-bearing liabilities  1,891,358  $7,300   1.53%  1,867,797  $6,377   1.37%  1,661,519  $3,904   0.93%
                                     
Noninterest-Bearing Liabilities:                                    
Noninterest-bearing demand deposits  761,935           741,266           786,566         
Other liabilities  10,179           7,778           8,960         
Total liabilities  2,663,472           2,616,841           2,457,045         
Shareholders' equity  326,204           317,408           303,449         
Total liabilities and shareholders' equity $2,989,676          $2,934,249          $2,760,494         
                                     
Net interest rate spread          3.59%          3.75%          3.94%
                                     
Net interest income and margin(1)     $28,036   4.06%     $27,816   4.17%     $