Investor Relations

Investor Relations

Press Release

Allegiance Bancshares, Inc. Reports Record Year-End 2018 Results

Company Release - 1/25/2019 7:00 AM ET
  • Total assets of $4.66 billion after the completion of the acquisition of Post Oak Bancshares, Inc. on October 1, 2018
  • Record earnings of $37.3 million and diluted earnings per common share of $2.37 for the year 2018
  • Core loan growth of $1.46 billion year over year, or 66.3%, and $1.27 billion for the fourth quarter 2018 compared to the linked quarter, or 53.0%
  • Net charge-offs of 0.02% and 0.06% for the fourth quarter and year 2018, respectively

HOUSTON, Jan. 25, 2019 (GLOBE NEWSWIRE) -- Allegiance Bancshares, Inc. (NASDAQ: ABTX) ("Allegiance"), the holding company of Allegiance Bank (the "Bank"), today reported net income of $13.2 million and diluted earnings per share of $0.59 for the fourth quarter 2018 compared to $3.2 million and diluted earnings per share of $0.24 for the fourth quarter 2017.  Net income for the year ended December 31, 2018 was $37.3 million, or $2.37 per diluted share, compared to $17.6 million, or $1.31 per diluted share, for the year ended December 31, 2017. The year ended December 31, 2018 results include $1.8 million and $1.7 million of core system conversion and merger-related expenses, respectively.

“2018 was a year of significant accomplishments for Allegiance, from our core technology platform conversion in the second quarter to the successful completion of the Post Oak acquisition in the fourth quarter,” said George Martinez, Allegiance’s Chairman and Chief Executive Officer.  “We are extremely proud of the phenomenal results our team has achieved.  We reported record earnings and diluted earnings per share in 2018 and we are well-positioned to deliver strong growth and performance in 2019.   Our combination with Post Oak further distinguishes Allegiance as Houston’s largest community bank exclusively focused on the Houston area, and we look forward to continuing our track record of growth serving the local business community.  Excluding loans acquired from Post Oak, core loans grew $294.3 million over the prior year. This is a tremendous accomplishment and is attributable to our experienced and highly dedicated lenders and back office support team.  Also, we are pleased to have delivered such strong growth with minimal net charge-offs totaling only 6 basis points on average loans during the year,” continued Martinez.

“We are particularly excited about our prospects as we head into 2019. We have begun the operational integration with Post Oak during the first quarter and look forward to further enhancing our already large Houston area footprint.  Early in 2019, we received regulatory approvals for the previously announced acquisition of a branch office in Sugar Land, a suburb of Houston, which we plan to complete in February 2019, and the much anticipated opening of a de novo bank office on the east side of downtown Houston, in early 2020.  Our commitment to being Houston’s premier super-community bank that delivers personalized service to our customers and serves our communities and shareholders could only be accomplished with the tireless work of our outstanding employees for whom we are very grateful,” concluded Martinez.

Fourth Quarter 2018 Results

Net interest income before the provision for loan losses in the fourth quarter 2018 increased $18.4 million, or 67.1%, to $45.8 million from $27.4 million for the fourth quarter 2017 primarily due to a $1.53 billion, or 59.3%, increase in average interest-earning assets for the same period primarily due to the Post Oak Bancshares, Inc. acquisition as well as organic growth for the year over year period.  Net interest income before provision for loan losses in the fourth quarter 2018 increased 63.5% or $17.8 million to $45.8 million from $28.0 million in the third quarter 2018, primarily due to the Post Oak acquisition and $2.7 million in acquisition accounting adjustments recorded during the fourth quarter of 2018.  The net interest margin on a tax equivalent basis increased 12 basis points to 4.45% for the fourth quarter 2018 from 4.33% for the fourth quarter 2017 and increased 35 basis points from 4.10% for the third quarter 2018. Excluding the impact of acquisition accounting adjustments, the net interest margin on a tax equivalent basis for the fourth quarter 2018 would have been 4.16% compared to 4.33% and 4.10% for the fourth quarter 2017 and third quarter 2018, respectively.

Noninterest income for the fourth quarter 2018 was $2.3 million, an increase of $751 thousand, or 47.4%, compared to $1.6 million for the fourth quarter 2017 and increased $406 thousand, or 21.1%, compared to $1.9 million for the third quarter 2018.  Noninterest income for the fourth quarter 2018 included $429 thousand of loss on the sales of other real estate and repossessed assets. 

Noninterest expense for the fourth quarter 2018 increased $9.8 million, or 50.7%, to $29.0 million from $19.3 million for the fourth quarter 2017, and increased $9.9 million, or 51.6%, from $19.2 million for the third quarter 2018. These increases were primarily due to additional noninterest expenses associated with the Post Oak acquisition, of which $840 thousand was attributable to acquisition and merger-related expenses.

In the fourth quarter 2018, Allegiance’s efficiency ratio decreased to 60.30% from 66.50% for the fourth quarter 2017 and 63.95% for the third quarter 2018.  Fourth quarter 2018 annualized returns on average assets, average equity and average tangible equity were 1.12%, 7.49% and 11.66%, respectively, compared to 0.45%, 4.15% and 4.82%, respectively, for the fourth quarter 2017.  Annualized returns on average assets, average equity and average tangible equity for the third quarter 2018 were 1.18%, 10.80% and 12.40%, respectively.

Year-End December 31, 2018 Results

Net interest income before provision for loan losses for the year ended 2018 increased $24.9 million, or 24.0%, to $128.6 million from $103.7 million for the year ended December 31, 2017 primarily due to a $582.6 million, or 23.7%, increase in average interest-earning assets over the prior year associated with the Post Oak acquisition.  The net interest margin on a tax equivalent basis decreased 7 basis points to 4.27% for the year ended December 31, 2018 from 4.34% for the year ended December 31, 2017. Excluding the impact of acquisition accounting adjustments, the net interest margin for the year ended December 31, 2018 would have been 4.17%, compared to 4.32% for the year ended December 31, 2017.

Noninterest income for the year ended December 31, 2018 was $7.7 million, an increase of $1.9 million, or 31.6%, compared to $5.9 million for the year ended December 31, 2017.

Noninterest expense for the year ended December 31, 2018 increased $16.8 million, or 24.0%, to $86.8 million from $70.0 million for the year ended December 31, 2017.  The increase in noninterest expense over the year ended December 31, 2017 was primarily due to core system conversion expenses of $1.8 million, merger-related expenses of $1.7 million and additional expenses related to additional headcount and branches from the Post Oak acquisition during the year ended December 31, 2018.

Allegiance’s efficiency ratio decreased from 63.89% for the year ended December 31, 2017 to 63.68% for the year ended December 31, 2018. For the year ended December 31, 2018, returns on average assets, average equity and average tangible equity were 1.11%, 9.02% and 11.20%, respectively, compared to 0.65%, 5.92% and 6.93%, respectively, for the year ended December 31, 2017.

Financial Condition

Total assets at December 31, 2018 increased $1.79 billion, or 62.8%, to $4.66 billion compared to $2.86 billion at December 31, 2017 and increased $1.62 billion, or 53.4%, compared to $3.04 billion at September 30, 2018, primarily due to the Post Oak acquisition and organic loan growth.

Total loans at December 31, 2018 increased $1.44 billion, or 63.3%, to $3.71 billion compared to $2.27 billion at December 31, 2017 and increased $1.27 billion, or 51.9%, compared to $2.44 billion at September 30, 2018, primarily due to loans acquired in the Post Oak acquisition. Core loans, which exclude the mortgage warehouse portfolio, increased $1.46 billion, or 66.3%, to $3.66 billion at December 31, 2018 from $2.20 billion at December 31, 2017 and increased $1.27 billion, or 53.0%, from $2.39 billion at September 30, 2018.  Excluding loans acquired from Post Oak of $1.16 billion, core loans increased $294.3 million, from December 31, 2017 and $103.7 million, from September 30, 2018.

Deposits at December 31, 2018 increased $1.45 billion, or 65.4%, to $3.66 billion compared to $2.21 billion at December 31, 2017 and increased $1.23 billion, or 50.5%, compared to $2.43 billion at September 30, 2018, primarily related to the Post Oak acquisition.

Asset Quality

Nonperforming assets totaled $33.6 million, or 0.72% of total assets, at December 31, 2018, compared to $13.9 million, or 0.49%, of total assets, at December 31, 2017, and $16.9 million, or 0.56% of total assets, at September 30, 2018. The allowance for loan losses was 0.71% of total loans at December 31, 2018, 1.04% of total loans at December 31, 2017 and 0.97% of total loans at September 30, 2018. The decrease in the allowance for loan losses as a percentage of loans from prior periods reflects the loans acquired in the Post Oak acquisition that were recorded at fair value without an allowance for loan losses at acquisition date.

The provision for loan losses for the fourth quarter 2018 was $3.0 million, or 0.32% (annualized) of average loans, compared to $1.9 million, 0.49%, of average loans, for the fourth quarter 2017.

Fourth quarter 2018 net charge-offs were $219 thousand compared to net charge-offs of $2.0 million for the fourth quarter 2017 and $245 thousand for the third quarter 2018.  Net charge-offs for the year 2018 were $1.6 million down from $7.5 million for the year 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 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 Friday, January 25, 2019 at 9:00 a.m. Central Time (10:00 a.m. Eastern Time) to discuss its fourth quarter and year-end 2018 results. Individuals and investment professionals may participate in the call by dialing (877) 279-2520. The conference ID number is 4644835.  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 December 31, 2018, Allegiance was a $4.66 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 December 31, 2018, Allegiance Bank operated 28 full-service banking locations, with 27 bank offices and one loan production office in the Houston metropolitan area and one bank office location in Beaumont, just outside of the Houston metropolitan area. Visit www.allegiancebank.com for more information.

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

This release 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 
  December 31  September 30  June 30  March 31  December 31 
    
  (Dollars in thousands) 
Cash and cash equivalents $268,947  $191,468  $200,645  $190,088  $182,103 
Available for sale securities  337,293   300,115   300,897   307,411   309,615 
                     
Total loans  3,708,306   2,440,926   2,358,675   2,290,494   2,270,876 
Allowance for loan losses  (26,331)  (23,586)  (23,831)  (24,628)  (23,649)
Loans, net  3,681,975   2,417,340   2,334,844   2,265,866   2,247,227 
                     
Goodwill  223,125   39,389   39,389   39,389   39,389 
Core deposit intangibles, net  26,587   2,688   2,883   3,079   3,274 
Premises and equipment, net  41,717   18,970   19,049   18,605   18,477 
Other real estate owned  630   1,801   1,710   365   365 
Bank owned life insurance  26,480   22,838   22,701   22,563   22,422 
Other assets  48,495   40,930   44,308   39,118   37,359 
Total assets $4,655,249  $3,035,539  $2,966,426  $2,886,484  $2,860,231 
                     
Noninterest-bearing deposits $1,209,300  $789,705  $749,787  $694,880  $683,110 
Interest-bearing deposits  2,453,236   1,644,086   1,563,999   1,589,922   1,530,864 
Total deposits  3,662,536   2,433,791   2,313,786   2,284,802   2,213,974 
                     
Borrowed funds  225,493   211,569   275,569   232,569   282,569 
Subordinated debt  48,899   48,839   48,779   48,719   48,659 
Other liabilities  15,337   13,209   8,404   8,406   8,164 
Total liabilities  3,952,265   2,707,408   2,646,538   2,574,496   2,553,366 
                     
Common stock  21,938   13,397   13,341   13,302   13,227 
Capital surplus  571,803   221,762   220,665   219,760   218,408 
Retained earnings  112,131   98,968   90,089   82,533   74,894 
Accumulated other comprehensive
  (loss) income
  (2,888)  (5,996)  (4,207)  (3,607)  336 
Total shareholders’ equity  702,984   328,131   319,888   311,988   306,865 
Total liabilities and equity $4,655,249  $3,035,539  $2,966,426  $2,886,484  $2,860,231 
  


Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)

  Three Months Ended  Year-to-Date 
  2018  2017  2018  2017 
  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 $53,272  $32,988  $31,846  $30,117  $29,747  $148,223  $110,331 
Securities:                            
Taxable  2,464   636   646   599   563   4,345   2,111 
Tax-exempt  (175)  1,447   1,451   1,459   1,545   4,182   6,334 
Deposits in other financial institutions  742   265   250   216   183   1,473   662 
Total interest income  56,303   35,336   34,193   32,391   32,038   158,223   119,438 
    
    
INTEREST EXPENSE:   
Demand, money market and
  savings deposits
  3,367   1,248   887   976   992   6,478   3,159 
Certificates and other time deposits  5,358   4,051   3,284   2,785   2,521   15,478   9,060 
Borrowed funds  1,008   1,272   1,472   1,036   854   4,788   2,922 
Subordinated debt  732   729   734   705   235   2,900   629 
Total interest expense  10,465   7,300   6,377   5,502   4,602   29,644   15,770 
NET INTEREST INCOME  45,838   28,036   27,816   26,889   27,436   128,579   103,668 
Provision for loan losses  2,964      631   653   1,930   4,248   13,188 
Net interest income after provision
  for loan losses
  42,874   28,036   27,185   26,236   25,506   124,331   90,480 
   
   
NONINTEREST INCOME:  
Nonsufficient funds fees  190   175   214   176   158   755   685 
Service charges on deposit accounts  363   177   106   223   179   869   783 
Gain on sale of securities              30      18 
(Loss) gain on sales of other real
   estate and repossessed assets
  (429)     1      6   (428)  6 
Bank owned life insurance  163   137   138   141   145   579   585 
Rebate from correspondent bank  988   613   564   444   388   2,609   1,327 
Other  1,059   826   782   662   677   3,329   2,457 
Total noninterest income  2,334   1,928   1,805   1,646   1,583   7,713   5,861 
                             
NONINTEREST EXPENSE:   
Salaries and employee benefits  18,167   12,965   12,778   12,794   12,188   56,704   44,745 
Net occupancy and equipment  1,959   1,281   1,333   1,272   1,398   5,845   5,452 
Depreciation  802   490   433   407   412   2,132   1,637 
Data processing and software
  amortization
  1,485   1,226   1,356   1,053   1,850   5,120   4,047 
Professional fees  670   303   567   469   222   2,009   2,926 
Regulatory assessments and
   FDIC insurance
  776   505   494   534   533   2,309   2,273 
Core deposit intangibles amortization  1,229   195   196   195   195   1,815   781 
Communications  416   262   259   248   252   1,185   983 
Advertising  704   351   340   330   436   1,725   1,289 
Acquisition and merger-related
   expenses
  840   196   625         1,661    
Other  1,998   1,390   1,479   1,415   1,790   6,282   5,829 
Total noninterest expense  29,046   19,164   19,860   18,717   19,276   86,787   69,962 
INCOME BEFORE INCOME TAXES  16,162   10,800   9,130   9,165   7,813   45,257   26,379 
Provision for income taxes  2,999   1,921   1,574   1,454   4,609   7,948   8,747 
NET INCOME $13,163  $8,879  $7,556  $7,711  $3,204  $37,309  $17,632 
                             
EARNINGS PER SHARE                            
Basic $0.60  $0.66  $0.57  $0.58  $0.24  $2.41  $1.34 
Diluted $0.59  $0.65  $0.55  $0.57  $0.24  $2.37  $1.31 
                             


Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)

  Three Months Ended  Year-to-Date 
  2018  2017  2018  2017 
  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 $13,163  $8,879  $7,556  $7,711  $3,204  $37,309  $17,632