Filed Pursuant to Rule 424(b)(5)

Registration No. 333-215610

 

Prospectus Supplement

(To Prospectus dated January 18, 2017)

$60,000,000

4.70% Fixed-to-Floating Rate Subordinated Notes due October 1, 2029

We are offering $60.0 million aggregate principal amount of our 4.70% Fixed-to-Floating Rate Subordinated Notes due October 1, 2029, referred to herein as the “Notes.” The Notes will mature on October 1, 2029. From and including September 27, 2019 to, but excluding, October 1, 2024, the Notes will bear interest at a fixed annual interest rate equal to 4.70%, payable semi-annually in arrears on each April 1 and October 1, commencing April 1, 2020. From and including October 1, 2024 to, but excluding, the maturity date or the date of earlier redemption, the interest rate will reset quarterly to an annual interest rate equal to Three-month LIBOR (as defined herein) plus a spread of 313 basis points (3.13%), payable quarterly in arrears on each January 1, April 1, July 1 and October 1, beginning on October 1, 2024. Notwithstanding the foregoing, in the event that Three-month LIBOR is less than zero, then Three-month LIBOR shall be deemed to be zero.

We may, at our option, beginning with the interest payment date of October 1, 2024 and on any interest payment date thereafter, redeem the Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed plus accrued and unpaid interest to, but excluding, the date of redemption. The Notes will not otherwise be redeemable by us prior to maturity, unless certain events occur, as described under “Description of the Notes—Optional Redemption and Redemption Upon Special Events” on page S-36 of this prospectus supplement. Any redemption of the Notes prior to maturity will be subject to the receipt of the approval of the Board of Governors of the Federal Reserve System, or the Federal Reserve, to the extent then required under applicable laws or regulations, including capital regulations. The Notes will not be convertible or exchangeable.

There is no sinking fund for the Notes. The Notes will be unsecured and subordinated in right of payment to the payment of our existing and future senior indebtedness, including all of our general creditors, and will be structurally subordinated to all of our subsidiaries’ existing and future indebtedness and other obligations. The Notes are obligations of ours, Allegiance Bancshares, Inc., only and are not obligations of, and are not guaranteed by, any of our subsidiaries, including our bank subsidiary, Allegiance Bank. The holders of the Notes may be fully subordinated to interests held by the U.S. government in the event that we enter into a bankruptcy, receivership, insolvency, liquidation, or similar proceeding.

Currently, there is no public trading market for the Notes. We do not intend to list the Notes on any securities exchange or to have the Notes quoted on a quotation system.

 

Per Note

 

 

Total

 

Public offering price(1)

 

 

100.00

%

 

$

60,000,000

 

Underwriting discount(2)

 

 

1.50

%

 

$

900,000

 

Proceeds to us, before expenses

 

 

98.50

%

 

$

59,100,000

 

 

(1)Plus accrued interest, if any, from the original issue date.

(2)

We will also reimburse the underwriters for certain expenses incurred in this offering. See “Underwriting” in this prospectus supplement for details.

 

Investing in the Notes involves risk, including that the interest rate on the Notes during the floating period may be determined based on a rate other than Three-month LIBOR. You should refer to “Risk Factors” beginning on page S-12 of this prospectus supplement, on page 5 of the accompanying prospectus and the risk factors beginning on page 14 of our Annual Report on Form 10-K for the year ended December 31, 2018, which is incorporated by reference herein, and carefully consider that information before investing in the Notes.

The Notes are not savings accounts, deposits or other obligations of Allegiance Bank or any of our nonbank subsidiaries. The Notes are not insured or guaranteed by the Federal Deposit Insurance Corporation, or the FDIC, or any other governmental agency or public or private insurer.

Neither the Securities and Exchange Commission, or the SEC, nor any state securities commission has approved or disapproved of the Notes or passed upon the adequacy or accuracy of this prospectus supplement or the accompanying prospectus. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver the Notes to purchasers in book-entry form only through the facilities of The Depository Trust Company, or the DTC, and its direct participants, against payment therefor in immediately available funds, on or about September 27, 2019, which is the fifth business day following the date of pricing the Notes (such settlement being referred to as “T+5”). See “Underwriting” beginning on page S-55 of this prospectus supplement for details.

 

 


Sole Book-Running Manager

Keefe, Bruyette & Woods

A Stifel Company

Co-Managers

 

Raymond James

  Sandler O’Neill + Partners, L.P.

Stephens Inc.

 

Prospectus Supplement dated September 20, 2019

 


TABLE OF CONTENTS

Prospectus Supplement

 

ABOUT THIS PROSPECTUS SUPPLEMENT

 

S-ii

WHERE YOU CAN FIND MORE INFORMATION

 

S-iii

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

 

S-iii

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

S-v

PROSPECTUS SUPPLEMENT SUMMARY

 

S-1

THE OFFERING

 

S-3

SUMMARY SELECTED CONSOLIDATED FINANCIAL INFORMATION

 

S-9

NON-GAAP FINANCIAL INFORMATION

 

S-11

RISK FACTORS

 

S-12

USE OF PROCEEDS

 

S-23

CAPITALIZATION

 

S-24

DESCRIPTION OF THE NOTES

 

S-25

MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

 

S-43

BENEFIT PLAN INVESTOR CONSIDERATION

 

S-52

UNDERWRITING

 

S-55

LEGAL MATTERS

 

S-59

EXPERTS

 

S-59

 

 

 

Prospectus

ABOUT THIS PROSPECTUS

 

1

ABOUT ALLEGIANCE BANCSHARES, INC.

 

1

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

2

RISK FACTORS

 

5

RATIO OF FIXED CHARGES TO EARNINGS

 

6

USE OF PROCEEDS

 

7

THE SECURITIES WE MAY OFFER

 

8

DESCRIPTION OF DEBT SECURITIES

 

9

DESCRIPTION OF COMMON STOCK

 

36

DESCRIPTION OF PREFERRED STOCK

 

40

DESCRIPTION OF WARRANTS

 

42

DESCRIPTION OF UNIT PURCHASE AGREEMENTS

 

46

BOOK ENTRY ISSUANCE

 

47

PLAN OF DISTRIBUTION

 

50

WHERE YOU CAN FIND MORE INFORMATION

 

53

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

 

54

VALIDITY OF THE SECURITIES

 

55

EXPERTS

 

55

 

 

 

S-i


ABOUT THIS PROSPECTUS SUPPLEMENT

Unless otherwise indicated or unless the context requires otherwise, all references in this prospectus supplement and the accompanying prospectus to “Allegiance,” “the Company,” “we,” “our,” “ours,” and “us” or similar references refer to Allegiance Bancshares, Inc. and its subsidiaries, including our wholly-owned bank subsidiary, Allegiance Bank, which is sometimes referred to as the “Bank.”

This document consists of two parts. The first part is this prospectus supplement, which describes the specific terms of this offering and certain other matters relating to us and our financial condition, and it adds to and updates information contained in the accompanying prospectus and the documents incorporated by reference into this prospectus supplement and the accompanying prospectus. The second part is the accompanying prospectus, dated January 18, 2017, which provides more general information about the securities that we may offer from time to time, some of which may not apply to this offering. You should read carefully both this prospectus supplement and the accompanying prospectus in their entirety, together with additional information described under the headings “Where You Can Find More Information” and “Incorporation of Certain Documents by Reference” before investing in the Notes.

If the information set forth in this prospectus supplement differs in any way from the information set forth in the accompanying prospectus, you should rely on the information set forth in this prospectus supplement. If the information conflicts with any statement in a document that we have incorporated by reference, then you should consider only the statement in the more recent document. You should not assume that the information appearing in this prospectus supplement, the accompanying prospectus or the documents incorporated by reference into those documents is accurate as of any date other than the date of the applicable document. Our business, financial condition, results of operations and prospects may have changed since that date.

We have not authorized anyone to provide any information other than that contained or incorporated by reference into this prospectus supplement or in any free writing prospectus prepared by or on behalf of us or to which we have referred you. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus supplement may be used only for the purpose for which it has been prepared.

Neither this prospectus supplement nor the accompanying prospectus constitutes an offer, or an invitation on our behalf or on behalf of the underwriters, to subscribe for and purchase any of the securities and may not be used for or in connection with an offer or solicitation by anyone in any jurisdiction in which such an offer or solicitation is not authorized or to any person to whom it is unlawful to make such an offer or solicitation.

The information contained or incorporated by reference in this prospectus supplement and the accompanying prospectus is not investment, legal or tax advice. You should consult your own legal counsel, accountants and other advisers for legal, tax, business, financial and related advice before investing in the Notes.

 

S-ii


WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and current reports, proxy statements and other information with the SEC. Our filings with the SEC are available to the public through the SEC’s website at www.sec.gov. Our annual, quarterly and current reports and amendments to those reports are also available at our website at www.allegiancebank.com. All Internet addresses provided in this prospectus supplement or in the accompanying prospectus are for informational purposes only and are not intended to be hyperlinks. In addition, the information on, or accessible through, our website, or any other website described herein, is not a part of, and is not incorporated or deemed to be incorporated by reference in, this prospectus supplement or the accompanying prospectus or other offering materials.

We also have filed the registration statement with the SEC relating to the securities offered by this prospectus supplement and the accompanying prospectus. This prospectus supplement and the accompanying prospectus are part of that registration statement. You may obtain from the SEC copies of the registration statement and the related exhibits that we filed with the SEC when we registered such securities. The registration statement may contain additional information that may be important to you.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The SEC allows us to “incorporate by reference” information into this prospectus supplement. This means that we can disclose important information to you by referring you to other documents. The information incorporated by reference is an important part of this prospectus supplement; and information that we file subsequently with the SEC will automatically update this prospectus supplement. We incorporate by reference the documents listed below and any filings we make with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, after the date of this prospectus supplement; provided, however, that we are not incorporating any information that is deemed “furnished” in accordance with the SEC’s rules, including, but not limited to, information furnished under either Item 2.02 or Item 7.01 of any Current Report on Form 8-K and corresponding information furnished under Item 9.01 as an exhibit thereto:

our Annual Report on Form 10-K for the year ended December 31, 2018, filed on March 11, 2019 (including those portions of our definitive proxy statement on Schedule 14A relating to our 2019 Annual Meeting of Shareholders, which was filed on March 15, 2019, to the extent incorporated by reference in Part III of such Annual Report on Form 10-K);

our Quarterly Reports on Form 10-Q for the quarter ended March 31, 2019, filed on May 6, 2019, and for the quarter ended June 30, 2019, filed on August 1, 2019;

our Current Reports on Form 8-K filed on January 29, 2019, February 4, 2019, April 30, 2019, July 26, 2019 (earlier filing only), September 11, 2019 and September 20, 2019; and

the description of our common stock contained on our Form 8-A Registration Statement  filed pursuant to Section 12(g) of the Exchange Act, on October 6, 2015 (File No. 001-37585), as amended from time to time, including any amendment or report filed with the SEC for purposes of updating such description.  

S-iii


Any statement contained in this prospectus supplement or in a document incorporated or deemed to be incorporated by reference into this prospectus supplement will be deemed to be modified or superseded for purposes of this prospectus supplement to the extent that a statement contained in this prospectus supplement or any other subsequently filed document that is deemed to be incorporated by reference into this prospectus supplement modifies or supersedes the statement. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this prospectus supplement.

We will provide to each person to whom a prospectus supplement is delivered, a copy of any or all of the information that has been incorporated by reference in the prospectus supplement but not delivered with the prospectus. You can obtain copies of the documents incorporated by reference in this prospectus supplement, at no cost, by writing or calling us at the following address and telephone number:

Allegiance Bancshares, Inc.
8847 West Sam Houston Parkway N, Suite 200
Houston, Texas 77040
Attention: Investor Relations
Telephone: (281) 894-3200

You should rely only on the information contained or incorporated by reference in this prospectus supplement and the accompanying prospectus or in any free writing prospectus prepared by or on behalf of us or to which we have referred you. Neither we nor any underwriters, dealers or agents have authorized anyone else to provide you with additional or different information.

You should assume that the information appearing in this prospectus supplement, the accompanying prospectus, any free writing prospectus with respect to the offering filed by us with the SEC and the documents incorporated by reference herein and therein is accurate only as of their respective dates. Our business, financial condition, results of operations and prospects may have changed since those dates.

 

S-iv


SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus supplement, including the documents that we incorporate by reference, contains forward-looking statements within the meaning of such term in the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Exchange Act), with respect to our financial condition, results of operations, plans, objectives, future performance and business. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of our management and on information currently available to our management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “bode,” “predict,” “suggest,” “project,” “appear,” “plan,” “intend,” “estimate,” “may,” “will,” “would,” “could,” “should,” “likely,” or other similar expressions. Additionally, all statements in this prospectus supplement, including forward-looking statements, speak only as of the date they are made, and we undertake no obligation to update any statement in light of new information or future events. All forward-looking statements are qualified in their entirety by reference to the risk factors discussed in this prospectus supplement, the prospectus or discussed in the documents incorporated by reference in this prospectus supplement.

Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. The factors that could have a material adverse effect on our operations and future prospects are detailed in the “Risk Factors” section included under Item 1A. of Part I of our Annual Report on Form 10-K for the year ended December 31, 2018, in the “Risk Factors” section of this prospectus supplement beginning on page S-12 and in the “Risk Factors section of the accompanying prospectus beginning on page 5. In addition, there are other factors that may impact any public company, including ours, which could have a material adverse effect on our operations and future prospects.

These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

 

S-v


PROSPECTUS SUPPLEMENT SUMMARY

This summary highlights selected information contained elsewhere in, or incorporated by reference into, this prospectus supplement. Because this is a summary, it may not contain all of the information that is important to you in making your investment decision. You should carefully read this entire prospectus supplement and the accompanying prospectus, as well as the information to which we refer you and the information incorporated by reference herein, before deciding whether to invest in the Notes. You should pay special attention to the information contained under the caption entitled “Risk Factors” in this prospectus supplement and in the accompanying prospectus and under the “Risk Factors” section included as Item 1A. of Part I of our Annual Report on Form 10-K for the year ended December 31, 2018 to determine whether an investment in the Notes is appropriate for you.

Company Overview

We are a Texas corporation and a registered bank holding company headquartered in Houston, Texas. Our wholly-owned subsidiary, Allegiance Bank (the “Bank”), is a Texas-chartered banking association, the deposits of which are insured by the FDIC’s Deposit Insurance Fund up to applicable legal limits. The Bank is not a member of the Federal Reserve System; therefore, it is subject to ongoing and comprehensive supervision, regulation, examination and enforcement by the Texas Department of Banking and the FDIC.

We provide a diversified range of commercial banking services primarily to small to medium-sized businesses within the Houston region, which we define as the Houston-The Woodlands-Sugar Land and Beaumont-Port Arthur metropolitan statistical areas, professionals and individual customers.  Our objective is to grow and strengthen our community banking franchise by deploying our super-community banking strategy and pursuing select strategic acquisitions in the Houston region. Our super-community banking strategy is designed to foster strong customer relationships while benefitting from a platform and scale that is competitive with larger regional and national banks.  We believe this strategy presents a significant market advantage when serving small to medium sized-business customers and further enables us to attract talented bankers. We are positioning the Bank to be a leading provider of personalized commercial banking services by emphasizing the strength and capabilities of local bank office management and providing superior customer service. We have made the strategic decision to focus on the Houston region because of our deep roots and experience operating through a variety of economic cycles in this large and vibrant market.

 

Super-community banking strategy. We focus on establishing personal relationships with customers through superior service, which we provide through responsive decision-making and empowering personnel to respond quickly to customers’ needs. We focus on lending to and banking with small to medium-sized businesses, for which we believe loans can be priced on terms that are more attractive to us than we would achieve by lending to larger businesses. We operate full-service decentralized branches and employ lenders with strong underwriting credentials who we authorize to make loan and underwriting decisions at the branch level up to prescribed limits. We support our branch operations with a centralized credit approval process for larger credit relationships, loan operations, information technology, core data processing, accounting, finance, treasury and treasury management support, deposit operations and executive/board oversight. Our

S-1


strategy emphasizes community involvement by our directors, officers and employees, which further allows us to be responsive in developing products and services. This approach produces clear competitive advantages by delivering an extraordinary customer experience and fostering a culture dedicated to achieving both superior external and internal service levels.

 

Through our full-service banking locations and our website at www.allegiancebank.com, we offer a broad array of deposit products and services, including checking accounts, commercial savings, savings accounts, other time deposits of various types, ranging from daily money market accounts to longer-term certificates of deposit, cash management services, electronic banking services and online bill payment. We also offer a wide array of loan products, such as commercial loans, loans to small businesses guaranteed by the Small Business Administration, mortgage loans, home equity loans, personal and automobile loans, among others, specifically designed for small to medium-sized businesses and companies, professionals and individuals generally located within Texas and primarily the Houston region. At June 30, 2019, we had consolidated total assets of $4.79 billion, net loans of $3.83 billion, total deposits of $3.86 billion and consolidated total shareholders’ equity of $704.7 million. At June 30, 2019, the Bank was considered a “well-capitalized” financial institution for regulatory capital purposes.

Our common stock is listed for trading on the NASDAQ Global Market under the symbol “ABTX.” Our executive offices are located at 8847 West Sam Houston Parkway N, Suite 200, Houston, Texas 77040, and our telephone number is (281) 894-3200. Our website address is www.allegiancebank.com. Additional information about us and our subsidiaries is included in the documents incorporated by reference in this prospectus supplement under the heading “Incorporation of Certain Documents by Reference”.


S-2


THE OFFERING

The following summary contains basic information about the Notes and is not complete. It does not contain all the information that may be important to you. For a more complete understanding of the Notes, you should read the section of this prospectus supplement entitled “Description of the Notes” and the section of the accompanying prospectus entitled “Description of Debt Securities.”

Issuer:

Allegiance Bancshares, Inc.

 

Securities Offered:

 4.70% Fixed-to-Floating Rate Subordinated Notes due 2029

 

Aggregate Principal Amount:

$60,000,000

 

Issue Price:

100%

 

Maturity Date:

The Notes will mature on October 1, 2029.

 

Interest Rate:

From and including the issue date to, but excluding, October 1, 2024, a fixed per annum rate of 4.70%. From and including October 1, 2024 to, but excluding, the maturity date or the date of earlier redemption, a floating per annum rate equal to Three-month LIBOR, determined on the determination date of the applicable interest period, plus a spread of 313 basis points (3.13%); provided, however, in the event that Three-month LIBOR is less than zero, then Three-month LIBOR shall be deemed to be zero. For any determination date, “Three-month LIBOR” means the offered rate for deposits in U.S. dollars having a maturity rate of three months that appears on the Designated LIBOR page (as defined below) as of  11:00 a.m., London time, on the LIBOR Determination Date (as defined below) related to such interest period; provided, however, that if no such rate appears on the Designated LIBOR Page as of 11:00 a.m., London time, on the LIBOR Determination Date, then the rate for that interest period will be determined by such alternate method as provided in the indenture (as defined in “Description of the Notes” in this prospectus supplement).

 

If the calculation agent determines that a Benchmark Transition Event and its related Benchmark Replacement Date (each as defined below) have occurred with respect to Three-month

S-3


LIBOR or the then-applicable benchmark rate, then the provisions under the heading Description of the Notes—Effect of Benchmark Transition Event”, which are referred to herein as the benchmark transition provisions, will thereafter apply to all determinations of the floating rate of the Notes for each interest period during the floating rate period. In accordance with the benchmark transition provisions, after a Benchmark Transition Event and its related Benchmark Replacement Date have occurred, the interest rate payable on the Notes will transition to an alternative benchmark rate, which is currently expected to be Term SOFR, a forward-looking term rate for a tenor of three months that will be based on the secured overnight financing rate (“SOFR”).

We will appoint, in our sole discretion, an initial calculation agent prior to October 1, 2024. In addition, we or an affiliate of ours may assume the duties of the calculation agent.

 

Interest Payment Dates:

Until, but excluding October 1, 2024, interest on the Notes will be payable on April 1 and October 1 of each year, commencing April 1, 2020.

 

From and including October 1, 2024 to October 1, 2029, interest will be payable on the Notes on January 1, April 1, July 1 and October 1 of each year, beginning on October 1, 2024.

On the maturity date or a date of earlier redemption, interest will be paid to, but excluding, such date.

Record Dates:

The record date for the Notes is the fifteenth day immediately preceding the applicable interest payment date.

 

Day Count Convention:

Interest will be computed on the basis of a 360-day year consisting of twelve 30-day months to, but excluding, October 1, 2024 and, thereafter, on the basis of the actual number of days in the relevant interest period divided by 360.

 

S-4


No Guarantees:

The Notes are not guaranteed by any of our subsidiaries, including the Bank. As a result, the Notes will be structurally subordinated to the liabilities of our subsidiaries as discussed below under “Ranking.”

 

Ranking:

The Notes offered by this prospectus supplement will be issued by the Company under an indenture, dated as of September 20, 2019, between the Company and U.S. Bank National Association, as trustee, which we refer to as the trustee, as amended and supplemented by a first supplemental indenture, to be dated as of September 27, 2019, between the Company and the trustee. We refer to the subordinated indenture, as amended and supplemented by the first supplemental indenture, as the indenture.

 

The Notes will be our unsecured, subordinated obligations and:

 

 

will rank junior in right of payment and upon our liquidation to any of our existing and all future Senior Indebtedness (as defined in the indenture and as discussed under “Description of the Notes—Subordination of the Notes” in this prospectus supplement);

 

 

will rank junior in right of payment and upon our liquidation to any of our existing and all of our future general creditors;

 

 

will rank equal in right of payment and upon our liquidation with any of our existing and all of our future indebtedness the terms of which provide that such indebtedness ranks equally with the Notes;

 

 

will rank senior in right of payment and upon our liquidation to any of our indebtedness the terms of which provide that such indebtedness ranks junior in right of payment to note indebtedness such as the Notes; and

 

S-5


 

will be effectively subordinated to our future secured indebtedness to the extent of the value of the collateral securing such indebtedness, and structurally subordinated to the existing and future indebtedness of our subsidiaries, including without limitation the Bank’s depositors, liabilities to general creditors and liabilities arising in the ordinary course of business or otherwise.

 

As of June 30, 2019, the Bank and our other subsidiaries had outstanding indebtedness, total deposits and other liabilities of approximately $4.1 billion, excluding intercompany liabilities, all of which ranks structurally senior to the Notes. As of June 30, 2019, the Company, at the holding company level, had outstanding indebtedness and other liabilities of approximately $22.1 million ranking senior to the Notes and approximately $11.3 million of subordinated notes ranking junior to the Notes. For more information, see “Description of the Notes—Subordination of the Notes” in this prospectus supplement.

The indenture does not limit the amount of additional indebtedness we or our subsidiaries may incur.

Optional Redemption:

We may, beginning with the interest payment date of October 1, 2024, and on any interest payment date thereafter, redeem the Notes, in whole or in part, from time to time, subject to obtaining the prior approval of the Federal Reserve to the extent such approval is then required under the rules of the Federal Reserve, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed plus accrued and unpaid interest to, but excluding, the date of redemption.

 

Special Redemption:

We may also redeem the Notes at any time, including prior to October 1, 2024, at our option, in whole but not in part, subject to obtaining the prior approval of the Federal Reserve to the extent such approval is then required under the rules of the Federal Reserve, if: (a) a change or prospective change in law occurs that could prevent us from deducting interest payable on the Notes for U.S.

 

S-6


federal income tax purposes; (b) a subsequent event occurs that would preclude the Notes from being recognized as Tier 2 capital for regulatory capital purposes; or (c) we are required to register as an investment company under the Investment Company Act of 1940, as amended; in each case, at a redemption price equal to 100% of the principal amount of the Notes plus any accrued and unpaid interest to, but excluding, the redemption date. For more information, see “Description of the Notes—Optional Redemption and Redemption Upon Special Events” in this prospectus supplement.

 

Sinking Fund:

There is no sinking fund for the Notes.

 

Further Issuances:

The Notes will initially be limited to an aggregate principal amount of $60.0 million. We may from time to time, without notice to or consent of the holders, increase the aggregate principal amount of the Notes outstanding by issuing additional notes in the future with the same terms as the Notes, except for the issue date, the offering price and the first interest payment date, and such additional notes may be consolidated with the Notes issued in this offering and form a single series.

 

Use of Proceeds:

We estimate that the net proceeds from this offering, after deducting the underwriting discount and estimated expenses, will be approximately $58.4 million. We intend to use the net proceeds from this offering for general corporate purposes, which may include working capital, repurchasing shares of our common stock, repaying indebtedness and redemption of our outstanding securities, providing capital to support the organic growth of the Bank or funding the opportunistic acquisition of similar or complementary financial service organizations, financing investments and capital expenditures and for investments in the Bank as regulatory capital. See “Use of Proceeds” in this prospectus supplement.

 

Form and Denomination:

The Notes will be offered in book-entry form through the facilities of DTC in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof.

 

S-7


Listing:

The Notes will not be listed on any securities exchange or quoted on any quotation system. Currently there is no market for the Notes, and there can be no assurances that any public market for the Notes will develop.

 

Governing Law:

The Notes and the indenture will be governed by the laws of the State of New York.

 

Trustee:

U.S. Bank National Association.

 

Risk Factors:

An investment in the Notes involves risks. You should carefully consider the information contained under “Risk Factors” in this prospectus supplement beginning on page S-12 and in the accompanying prospectus and under the “Risk Factors” section included as Item 1A. of Part I of our Annual Report on Form 10-K for the year ended December 31, 2018, as well as other information included or incorporated by reference into this prospectus supplement and the accompanying prospectus, including our financial statements and the notes thereto, before making an investment decision.

 


S-8


SUMMARY SELECTED CONSOLIDATED FINANCIAL INFORMATION

The following tables present selected historical financial data as of and for the six months ended June 30, 2019 and 2018, derived from our unaudited consolidated financial statements as of and for such periods, which are incorporated herein by reference, and the following audited consolidated financial statements as of and for the years ended December 31, 2018, 2017, 2016, 2015 and 2014. You should read the information set forth below, together with our consolidated financial statements and related notes, included in our Annual Report on Form 10-K for the year ended December 31, 2018 and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2019. See “Incorporation of Certain Documents by Reference.”

 

As of and for the

Six Months Ended June 30,

 

 

As of and for the Years Ended December 31,

 

 

 

2019

 

 

2018

 

 

2018

 

 

2017

 

 

2016

 

 

2015

 

 

2014

 

 

 

(Dollars in thousands, except share and per share data)

 

Selected Period End Balance Sheet Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

232,607

 

 

$

200,645

 

 

$

268,947

 

 

$

182,103

 

 

$

142,098

 

 

$

148,431

 

 

$

167,540

 

Available for sale securities

 

 

348,173

 

 

 

300,897

 

 

 

337,293

 

 

 

309,615

 

 

 

316,455

 

 

 

165,097

 

 

 

84,962

 

Loans held for sale

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

27,887

 

 

 

-

 

Loans held for investment

 

 

3,857,963

 

 

 

2,358,675

 

 

 

3,708,306

 

 

 

2,270,876

 

 

 

1,891,635

 

 

 

1,653,165

 

 

 

1,002,054

 

Allowance for loan losses

 

 

27,940

 

 

 

23,831

 

 

 

26,331

 

 

 

23,649

 

 

 

17,911

 

 

 

13,098

 

 

 

8,246

 

Goodwill and intangible assets, net

 

 

247,873

 

 

 

42,272

 

 

 

249,712

 

 

 

42,663

 

 

 

43,444

 

 

 

44,619

 

 

 

12,891

 

Total assets

 

 

4,794,211

 

 

 

2,966,426

 

 

 

4,655,249

 

 

 

2,860,231

 

 

 

2,450,948

 

 

 

2,084,579

 

 

 

1,280,008

 

Noninterest-bearing deposits

 

 

1,173,423

 

 

 

749,787

 

 

 

1,209,300

 

 

 

683,110

 

 

 

593,751

 

 

 

620,320

 

 

 

373,795

 

Interest-bearing deposits

 

 

2,687,217

 

 

 

1,563,999

 

 

 

2,453,236

 

 

 

1,530,864

 

 

 

1,276,432

 

 

 

1,138,813

 

 

 

759,889

 

Total deposits

 

 

3,860,640

 

 

 

2,313,786

 

 

 

3,662,536

 

 

 

2,213,974

 

 

 

1,870,183

 

 

 

1,759,133

 

 

 

1,133,684

 

Total shareholders’ equity

 

 

704,701

 

 

 

319,888

 

 

 

702,984

 

 

 

306,865

 

 

 

279,817

 

 

 

258,490

 

 

 

131,778

 

Total tangible shareholders' equity

 

 

456,828

 

 

 

277,616

 

 

 

453,272

 

 

 

264,202

 

 

 

236,373

 

 

 

213,871

 

 

 

118,887

 

Selected Income Statement Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

90,174

 

 

$

54,705

 

 

$

128,579

 

 

$

103,668

 

 

$

89,864

 

 

$

80,166

 

 

$

46,834

 

Provision for loan losses

 

 

2,409

 

 

 

1,284

 

 

 

4,248

 

 

 

13,188

 

 

 

5,469

 

 

 

5,792

 

 

 

2,150

 

Net interest income after provision for

   loan losses

 

 

87,765

 

 

 

53,421

 

 

 

124,331

 

 

 

90,480

 

 

 

84,395

 

 

 

74,374

 

 

 

44,684

 

Noninterest income

 

 

7,134

 

 

 

3,451

 

 

 

7,713

 

 

 

5,861

 

 

 

7,268

 

 

 

3,992

 

 

 

2,607

 

Noninterest expense

 

 

61,195

 

 

 

38,577

 

 

 

86,787

 

 

 

69,962

 

 

 

59,258

 

 

 

54,805

 

 

 

33,458

 

Net income before income taxes

 

 

33,704

 

 

 

18,295

 

 

 

45,257

 

 

 

26,379

 

 

 

32,405

 

 

 

23,561

 

 

 

13,833

 

Net income

 

 

26,926

 

 

 

15,267

 

 

 

37,309

 

 

 

17,632

 

 

 

22,851

 

 

 

15,786

 

 

 

9,005

 

Net income attributable to common

   shareholders

 

 

26,926

 

 

 

15,267

 

 

 

37,309

 

 

 

17,632

 

 

 

22,851

 

 

 

15,227

 

 

 

9,005

 

Selected Per Share Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share, basic

 

 

1.25

 

 

 

1.15

 

 

 

2.41

 

 

 

1.34

 

 

 

1.78

 

 

 

1.45

 

 

 

1.29

 

Earnings per common share, diluted

 

 

1.24

 

 

 

1.12

 

 

 

2.37

 

 

 

1.31

 

 

 

1.75

 

 

 

1.43

 

 

 

1.26

 

Book value per common share

 

 

33.32

 

 

 

23.98

 

 

 

32.04

 

 

 

23.20

 

 

 

21.59

 

 

 

20.17

 

 

 

17.62

 

Tangible book value per common share

 

 

21.60

 

 

 

20.81

 

 

 

20.66

 

 

 

19.97

 

 

 

18.24

 

 

 

16.69

 

 

 

15.90

 

Weighted average common shares

   outstanding, basic

 

 

21,493,887

 

 

 

13,294,409

 

 

 

15,484,757

 

 

 

13,124,900

 

 

 

12,873,326

 

 

 

10,470,465

 

 

 

6,978,025

 

Weighted average common shares

   outstanding, diluted

 

 

21,780,158

 

 

 

13,587,976

 

 

 

15,773,039

 

 

 

13,457,718

 

 

 

13,073,932

 

 

 

10,654,003

 

 

 

7,142,377

 

Shares outstanding at end of period

 

 

21,147,179

 

 

 

13,340,919

 

 

 

21,937,740

 

 

 

13,226,826

 

 

 

12,958,341

 

 

 

12,812,985

 

 

 

7,477,309

 

Selected Performance Metrics:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

1.14

%

 

 

1.06

%

 

 

1.11

%

 

 

0.65

%

 

 

0.98

%

 

 

0.81

%

 

 

0.75

%

Return on average common equity

 

 

7.69

%

 

 

9.82

%

 

 

9.02

%

 

 

5.92

%

 

 

8.36

%

 

 

7.43

%

 

 

7.73

%

Return on average tangible common equity

 

 

11.87

%

 

 

11.36

%

 

 

11.20

%

 

 

6.93

%

 

 

9.96

%

 

 

9.52

%

 

 

8.70

%

Tax equivalent net interest margin

 

 

4.32

%

 

 

4.20

%

 

 

4.27

%

 

 

4.34

%

 

 

4.37

%

 

 

4.68

%

 

 

4.31

%

Efficiency ratio(1)

 

 

63.44

%

 

 

66.33

%

 

 

63.68

%

 

 

63.89

%

 

 

62.34

%

 

 

65.27

%

 

 

67.79

%

Loans to deposits ratio

 

 

99.93

%

 

 

101.94

%

 

 

101.25

%

 

 

102.57

%

 

 

101.15

%

 

 

95.56

%

 

 

88.39

%

Noninterest expense to average assets

 

 

2.59

%

 

 

2.68

%

 

 

2.58

%

 

 

2.59

%

 

 

2.53

%

 

 

2.83

%

 

 

2.80

%

Selected Credit Quality Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming assets to total assets

 

 

0.79

%

 

 

0.49

%

 

 

0.72

%

 

 

0.49

%

 

 

0.75

%

 

 

0.25

%

 

 

0.25

%

Nonperforming loans to total loans

 

 

0.81

%

 

 

0.51

%

 

 

0.89

%

 

 

0.59

%

 

 

0.88

%

 

 

0.31

%

 

 

0.32

%

Allowance for loan losses to nonperforming

   loans

 

 

89.03

%

 

 

196.35

%

 

 

79.90

%

 

 

177.44

%

 

 

107.26

%

 

 

252.66

%

 

 

258.98

%

Allowance for loan losses to total loans

 

 

0.72

%

 

 

1.01

%

 

 

0.71

%

 

 

1.04

%

 

 

0.95

%

 

 

0.78

%

 

 

0.82

%

Provision for loan losses to average loans

 

 

0.06

%

 

 

0.06

%

 

 

0.16

%

 

 

0.63

%

 

 

0.31

%

 

 

0.38

%

 

 

0.23

%

Net charge-offs to average loans

 

 

0.04

%

 

 

0.06

%

 

 

0.06

%

 

 

0.36

%

 

 

0.04

%

 

 

0.06

%

 

 

0.06

%

Capital Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allegiance Bancshares, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common equity Tier 1 capital ratio

 

 

11.34

%

 

 

10.59

%

 

 

11.76

%

 

 

10.54

%

 

 

11.30

%

 

 

11.72

%

 

N/A

 

S-9


 

As of and for the

Six Months Ended June 30,

 

 

As of and for the Years Ended December 31,

 

 

 

2019

 

 

2018

 

 

2018

 

 

2017

 

 

2016

 

 

2015

 

 

2014

 

 

 

(Dollars in thousands, except share and per share data)

 

Tier 1 risk-based capital

 

 

11.58

%

 

 

10.96

%

 

 

12.01

%

 

 

10.92

%

 

 

11.73

%

 

 

12.21

%

 

 

11.96

%

Total risk-based capital

 

 

13.27

%

 

 

13.41

%

 

 

13.70

%

 

 

13.43

%

 

 

12.57

%

 

 

12.92

%

 

 

12.80

%

Leverage capital ratio

 

 

10.17

%

 

 

9.78

%

 

 

10.61

%

 

 

9.84

%

 

 

10.35

%

 

 

11.02

%

 

 

9.55

%

Total equity to total assets

 

 

14.70

%

 

 

10.78

%

 

 

15.10

%

 

 

10.73

%

 

 

11.42

%

 

 

12.40

%

 

 

10.30

%

Tangible common equity to tangible assets

 

 

10.05

%

 

 

9.49

%

 

 

10.29

%

 

 

9.38

%

 

 

9.82

%

 

 

10.48

%

 

 

9.38

%

Allegiance Bank

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common equity Tier 1 capital ratio

 

 

12.02

%

 

 

11.03

%

 

 

11.83

%

 

 

10.72

%

 

 

10.77

%

 

 

11.25

%

 

N/A

 

Tier 1 risk-based capital

 

 

12.02

%

 

 

11.03

%

 

 

11.83

%

 

 

10.72

%

 

 

10.77

%

 

 

11.25

%

 

 

11.76

%

Total risk-based capital

 

 

13.71

%

 

 

13.48

%

 

 

13.53

%

 

 

13.24

%

 

 

11.61

%

 

 

11.96

%

 

 

12.59

%

Leverage capital ratio

 

 

10.57

%

 

 

9.84

%

 

 

10.45

%

 

 

9.67

%

 

 

9.50

%

 

 

10.16

%

 

 

9.38

%

(1)

This is a non-GAAP measure that represents total noninterest expense divided by the sum of net interest income plus noninterest income, excluding net gains and losses on the sale of loans, securities and assets (including the sale of the two acquired Central Texas branches). Additionally, taxes and provision for loan losses are not part of this calculation.

S-10


NON-GAAP FINANCIAL INFORMATION

The Company uses certain financial measures that are not calculated in accordance with generally accepted accounting principles, or GAAP, to provide meaningful supplemental information regarding the Company’s operational performance and to enhance investors’ overall understanding of such financial performance. These non-GAAP financial measures are supplemental and are not a substitute for an analysis based on GAAP measures and may not be comparable to non-GAAP financial measures that may be presented by other companies. These non-GAAP measures include the following:

Tangible Shareholders’ Equity:  Total shareholders’ equity is reduced by the amount of goodwill and core deposit intangibles, net of accumulated amortization.

Tangible common equity amounts and ratios, tangible assets, tangible book value per share and return on average tangible common equity:  Given that the use of these measures is prevalent among banking regulators, investors and analysts, we disclose them in addition to equity-to-assets ratio, total assets, book value per share and return on average common equity, respectively.

The following tables provide reconciliations of the non-GAAP measures with financial measures defined by GAAP.

 

 

As and for the Six Months Ended June 30,

 

 

As of and for the Years Ended December 31,

 

 

 

2019

 

 

2018

 

 

2018

 

 

2017

 

 

2016

 

 

2015

 

 

2014

 

 

 

(Dollars in thousands, except share and per share data)

 

Total shareholders' equity

 

$

704,701

 

 

$

319,888

 

 

$

702,984

 

 

$

306,865

 

 

$

279,817

 

 

$

258,490

 

 

$

131,778

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill and core deposit intangibles, net

 

 

247,873

 

 

 

42,272

 

 

 

249,712

 

 

 

42,663

 

 

 

43,444

 

 

 

44,619

 

 

 

12,891

 

Tangible shareholders' equity

 

$

456,828

 

 

$

277,616

 

 

$

453,272

 

 

$

264,202

 

 

$

236,373

 

 

$

213,871

 

 

$

118,887

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares outstanding at end of period(1)

 

 

21,147,179

 

 

 

13,340,919

 

 

 

21,937,740

 

 

 

13,226,826

 

 

 

12,958,341

 

 

 

12,812,985

 

 

 

7,477,309

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tangible book value per share

 

 

21.60

 

 

 

20.81

 

 

 

20.66

 

 

 

19.97

 

 

 

18.24

 

 

 

16.69

 

 

 

15.90

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to shareholders

 

$

26,926

 

 

$

15,267

 

 

$

37,309

 

 

$

17,632

 

 

$

22,851

 

 

$

15,227

 

 

$

9,005

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average shareholders' equity

 

$

706,407

 

 

$

313,498

 

 

$

413,441

 

 

$

297,627

 

 

$

273,211

 

 

$

204,935

 

 

$

116,460

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average goodwill and other intangible

   assets, net