Allegiance Bancshares, Inc. (NASDAQ: ABTX) ("Allegiance"), the holding company of Allegiance Bank (the "Bank"), today reported net income of $14.0 million and diluted earnings per share of $0.67 for the fourth quarter 2019 compared to net income of $13.2 million and diluted earnings per share of $0.59 for the fourth quarter 2018.  Net income for the year ended December 31, 2019 was $53.0 million, or $2.47 per diluted share, compared to net income of $37.3 million, or $2.37 per diluted share, for the year ended December 31, 2018.  The year ended December 31, 2019 results included $1.4 million of pre-tax severance expense and $1.3 million of pre-tax acquisition and merger-related expenses. The year ended December 31, 2018 results included $1.7 million of pre-tax acquisition and merger-related expenses.

“2019 was another successful year for Allegiance,” said Steve Retzloff, Allegiance’s Chief Executive Officer.  “We reported record quarterly and annual diluted earnings per share driven by core loan growth, deposit growth and continued excellent asset quality.  The results are indicative of the dedication, hard work and commitment of our bankers to enhance our business capabilities and technology to best serve our customers and communities in which we operate,” commented Retzloff.

“We are excited to announce Allegiance’s first quarterly cash dividend of $0.10 per share to our shareholders. This dividend represents a significant milestone for Allegiance and along with the continuation of our share repurchase program highlights the profitability and solid capital position that we have achieved since our founding and reflects our commitment to long-term shareholder value,” continued Retzloff.

“As Houston’s largest locally-headquartered community bank, we feel very well positioned for 2020.  We entered the year with strong fundamentals, momentum and a clear focus on our priorities.  We are confident that our experienced team of bankers are the best in the business who will continue to execute our strategy and generate great customer relationships while driving solid returns for Allegiance and our shareholders," concluded Retzloff.

Fourth Quarter 2019 Results

Net interest income before the provision for loan losses in the fourth quarter 2019 decreased $1.3 million, or 2.9%, to $44.5 million from $45.8 million for the fourth quarter 2018. Net interest income before provision for loan losses for the fourth quarter 2019 decreased from $44.8 million in the third quarter 2019.  These decreases were primarily due to changes in market interest rates, acquisition accounting accretion as well as changes in the volume and relative mix of the underlying assets and liabilities.  The net interest margin on a tax equivalent basis decreased 34 basis points to 4.11% for the fourth quarter 2019 from 4.45% for the fourth quarter 2018 and decreased 5 basis points from 4.16% for the third quarter 2019. Core net interest margin on a tax equivalent basis excludes the impact of acquisition accounting adjustments and was 3.94% for the fourth quarter 2019 compared to 4.16% for the fourth quarter 2018 and 3.97% for the third quarter 2019. Please refer to the non-GAAP reconciliation at the end of the release. 

Noninterest income for the fourth quarter 2019 was $3.4 million, an increase of $1.1 million, or 45.7%, compared to $2.3 million for the fourth quarter 2018 and increased $511 thousand, or 17.7%, compared to $2.9 million for the third quarter 2019.  Noninterest income for the fourth quarter 2019 included $613 thousand of gain on the sale of securities. 

Noninterest expense for the fourth quarter 2019 increased $385 thousand, or 1.3%, to $29.4 million from $29.0 million for the fourth quarter 2018 and decreased $578 thousand compared to the third quarter 2019.

In the fourth quarter 2019, Allegiance’s efficiency ratio was 62.20% compared to 62.88% for the third quarter 2019 and 60.30% for the fourth quarter 2018.  Fourth quarter 2019 annualized returns on average assets, average equity and average tangible equity were 1.13%, 7.81% and 11.96%, respectively, compared to 0.98%, 6.73% and 10.33%, respectively, for the third quarter 2019.  Annualized returns on average assets, average equity and average tangible equity for the fourth quarter 2018 were 1.12%, 7.49% and 11.66%, respectively. Return on average tangible equity is a non-GAAP measure. Please refer to the non-GAAP reconciliation at the end of the release. 

Year Ended December 31, 2019 Results

Net interest income before provision for loan losses for the year ended December 31, 2019 increased $51.0 million, or 39.6%, to $179.5 million from $128.6 million for the year ended December 31, 2018 primarily due to a $1.22 billion, or 40.2%, 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 5 basis points to 4.22% for the year ended December 31, 2019 from 4.27% for the year ended December 31, 2018. Core net interest margin on a tax equivalent basis for the year ended December 31, 2019 would have been 4.00%, compared to 4.17% for the year ended December 31, 2018. Please refer to the non-GAAP reconciliation at the end of the release. 

Noninterest income for the year ended December 31, 2019 was $13.4 million, an increase of $5.7 million, or 74.0%, compared to $7.7 million for the year ended December 31, 2018 due primarily to additional noninterest income resulting from the Post Oak acquisition along with the gain of $1.5 million on the sale of securities.

Noninterest expense for the year ended December 31, 2019 increased $33.8 million, or 39.0%, to $120.6 million from $86.8 million for the year ended December 31, 2018. The increase in noninterest expense over the year ended December 31, 2018 was primarily due to additional expenses associated with increased headcount and bank offices from the Post Oak acquisition.

Allegiance’s efficiency ratio decreased from 63.68% for the year ended December 31, 2018 to 62.99% for the year ended December 31, 2019. For the year ended December 31, 2019, returns on average assets, average equity and average tangible equity were 1.10%, 7.48% and 11.50%, respectively, compared to 1.11%, 9.02% and 11.20%, respectively, for the year ended December 31, 2018. Return on average tangible equity is a non-GAAP measure. Please refer to the non-GAAP reconciliation at the end of the release.

Financial Condition

Total assets at December 31, 2019 increased $86.8 million to $4.99 billion compared to $4.91 billion at September 30, 2019 and increased $337.4 million compared to $4.66 billion at December 31, 2018, primarily due to organic loan growth.

Total loans at December 31, 2019 increased $29.3 million, or 3.0% (annualized), to $3.92 billion compared to $3.89 billion at September 30, 2019 and increased $207.0 million, or 5.6%, compared to $3.71 billion at December 31, 2018, primarily due to organic loan growth. Core loans, which exclude the mortgage warehouse portfolio, increased $57.6 million, or 5.9% (annualized), to $3.91 billion at December 31, 2019 from $3.85 billion at September 30, 2019 and increased $247.0 million, or 6.7%, from $3.66 billion at December 31, 2018.

Deposits at December 31, 2019 increased $170.6 million, or 17.4% (annualized), to $4.07 billion compared to $3.90 billion at September 30, 2019 and increased $405.6 million, or 11.1%, compared to $3.66 billion at December 31, 2018.

Asset Quality

Nonperforming assets totaled $36.7 million, or 0.74% of total assets, at December 31, 2019, compared to $42.9 million, or 0.88%, of total assets, at September 30, 2019, and $33.6 million, or 0.72% of total assets, at December 31, 2018. The allowance for loan losses was 0.75% of total loans at December 31, 2019, 0.77% of total loans at September 30, 2019 and 0.71% of total loans at December 31, 2018.

The provision for loan losses for the fourth quarter 2019 was $933 thousand, or 0.10% (annualized) of average loans, compared to $2.6 million, or 0.27% (annualized) of average loans, for the third quarter 2019. The provision for loan losses for the year ended 2019 was $5.9 million, or 0.15% of average loans, compared to $4.2 million, or 0.16% of average loans, for the year ended 2018.

Fourth quarter 2019 net charge-offs were $1.3 million, or 0.13% (annualized) of average loans, compared to net charge-offs of $729 thousand, or 0.07% (annualized) of average loans, for the third quarter 2019 and $219 thousand, or 0.02% (annualized) of average loans, for the fourth quarter 2018. Net charge-offs for the year ended December 31, 2019 were $2.8 million, or 0.07% of average loans, compared to net charge-offs for the year ended December 31, 2018 of $1.6 million, or 0.06% of average loans.

Dividend

The Board of Directors of Allegiance declared its first cash dividend of $0.10 per share to be paid on March 16, 2020 to all shareholders of record as of February 28, 2020. The amount and timing of any future dividend payments to shareholders will be subject to the discretion of Allegiance’s Board of Directors.

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 at the end 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 Wednesday, January 29, 2020 at 9:00 a.m. Central Time (10:00 a.m. Eastern Time) to discuss its fourth quarter 2019 results. Individuals and investment professionals may participate in the call by dialing (877) 279-2520. The conference ID number is 4427269.  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, 2019, Allegiance was a $4.99 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 small to medium-sized businesses and individual customers in the Houston region. 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, 2019, Allegiance Bank operated 27 full-service banking locations in the Houston region, which we define as the Houston-The Woodlands-Sugar Land and Beaumont-Port Arthur metropolitan statistical areas, with 26 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, 2018 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.8847 West Sam Houston Parkway N., Suite 200Houston, Texas 77040ir@allegiancebank.com  

Allegiance Bancshares, Inc.Financial Highlights(Unaudited)

  2019     2018  
  December 31     September 30     June 30     March 31     December 31  
                             
  (Dollars in thousands)  
Cash and cash equivalents $ 346,248     $ 300,619     $ 232,607     $ 258,843     $ 268,947  
Available for sale securities   372,545       353,000       348,173       345,716       337,293  
                                       
Total loans   3,915,310       3,886,004       3,857,963       3,806,161       3,708,306  
Allowance for loan losses   (29,438 )     (29,808 )     (27,940 )     (27,123 )     (26,331 )
Loans, net   3,885,872       3,856,196       3,830,023       3,779,038       3,681,975  
                                       
Goodwill   223,642       223,642       223,642       223,642       223,125  
Core deposit intangibles, net   21,876       23,053       24,231       25,409       26,587  
Premises and equipment, net   66,790       67,175       59,690       60,327       41,717  
Other real estate owned   8,337       8,333       6,294       1,152       630  
Bank owned life insurance   27,104       26,947       26,794       26,639       26,480  
Other assets   40,240       46,875       42,757       48,036       48,495  
Total assets $ 4,992,654     $ 4,905,840     $ 4,794,211     $ 4,768,802     $ 4,655,249  
                                       
Noninterest-bearing deposits $ 1,252,232     $ 1,227,839     $ 1,173,423     $ 1,181,920     $ 1,209,300  
Interest-bearing deposits   2,815,869       2,669,646       2,687,217       2,598,141       2,453,236  
Total deposits   4,068,101       3,897,485       3,860,640       3,780,061       3,662,536  
                                       
Borrowed funds   75,503       159,501       146,998       201,995       225,493  
Subordinated debt   107,799       107,771       49,019       48,959       48,899  
Other liabilities   31,386       34,775       32,853       34,010       15,337  
Total liabilities   4,282,789       4,199,532       4,089,510       4,065,025       3,952,265  
                                       
Common stock   20,524       20,737       21,147       21,484       21,938  
Capital surplus   521,066       529,688       541,979       556,184       571,803  
Retained earnings   163,375       149,389       137,342       123,094       112,131  
Accumulated other comprehensive income (loss)   4,900       6,494       4,233       3,015       (2,888 )
Total shareholders’ equity   709,865       706,308       704,701       703,777       702,984  
Total liabilities and equity $ 4,992,654     $ 4,905,840     $ 4,794,211     $ 4,768,802     $ 4,655,249  

Allegiance Bancshares, Inc.Financial Highlights(Unaudited)

  Three Months Ended     Years Ended  
  2019     2018     2019     2018  
  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 $ 55,368     $ 55,790     $ 56,016     $ 54,189     $ 53,272     $ 221,363     $ 148,223  
Securities:                                                      
Taxable   2,066       2,090       1,837       982       844       6,975       2,725  
Tax-exempt   469       483       692       1,290       1,445       2,934       5,802  
Deposits in other financial institutions   244       302       401       688       742       1,635       1,473  
Total interest income   58,147       58,665       58,946       57,149       56,303       232,907       158,223  
                                                       
INTEREST EXPENSE:                                                      
Demand, money market and savings deposits   5,091       4,975       4,513       3,728       3,367       18,307       6,478  
Certificates and other time deposits   6,483       6,909       7,008       6,256       5,358       26,656       15,478  
Borrowed funds   547       1,183       1,118       1,827       1,008       4,675       4,788  
Subordinated debt   1,500       761       736       735       732       3,732       2,900  
Total interest expense   13,621       13,828       13,375       12,546       10,465       53,370       29,644  
NET INTEREST INCOME   44,526       44,837       45,571       44,603       45,838       179,537       128,579  
Provision for loan losses   933       2,597       1,407       1,002       2,964       5,939       4,248  
Net interest income after provision for loan losses   43,593       42,240       44,164       43,601       42,874       173,598       124,331  
                                                       
NONINTEREST INCOME:                                                      
Nonsufficient funds fees   189       168       139       162       190       658       755  
Service charges on deposit accounts   403       379       365       325       363       1,472       869  
Gain on sale of securities   613             846                   1,459        
(Loss) gain on sales of other real estate and repossessed assets   (45 )           70       1       (429 )     26       (428 )
Bank owned life insurance   157       153       155       159       163       624       579  
Rebate from correspondent bank   900       900       884       896       988       3,580       2,609  
Other   1,183       1,289       1,386       1,746       1,059       5,604       3,329  
Total noninterest income   3,400       2,889       3,845       3,289       2,334       13,423       7,713  
                                                       
NONINTEREST EXPENSE:                                                      
Salaries and employee benefits   18,273       20,221       19,415       19,684       18,167       77,593       56,704  
Net occupancy and equipment   1,994       1,973       2,114       2,098       1,959       8,179       5,845  
Depreciation   861       822       756       753       802       3,192       2,132  
Data processing and software amortization   2,120       2,058       1,709       1,577       1,485       7,464       5,120  
Professional fees   540       667       527       599       670       2,333       2,009  
Regulatory assessments and FDIC insurance   216       (41 )     802       728       776       1,705       2,309  
Core deposit intangibles amortization   1,177       1,178       1,178       1,178       1,229       4,711       1,815  
Communications   486       455       468       430       416       1,839       1,185  
Advertising   597       449       617       704       704       2,367       1,725  
Acquisition and merger-related expenses               153       1,173       840       1,326       1,661  
Other   3,167       2,227       2,341       2,191       1,998       9,926       6,282  
Total noninterest expense   29,431       30,009       30,080       31,115       29,046       120,635       86,787  
INCOME BEFORE INCOME TAXES   17,562       15,120       17,929       15,775       16,162       66,386       45,257  
Provision for income taxes   3,576       3,073       3,681       3,097       2,999       13,427       7,948  
NET INCOME $ 13,986     $ 12,047     $ 14,248     $ 12,678     $ 13,163     $ 52,959     $ 37,309  
                                                       
EARNINGS PER SHARE                                                      
Basic $ 0.68     $ 0.57     $ 0.67     $ 0.58     $ 0.60     $ 2.50     $ 2.41  
Diluted $ 0.67     $ 0.57     $ 0.66     $ 0.58     $ 0.59     $ 2.47     $ 2.37  

Allegiance Bancshares, Inc.Financial Highlights(Unaudited)

  Three Months Ended     Years Ended  
  2019     2018     2019     2018  
  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 $ 13,986     $ 12,047     $ 14,248     $ 12,678     $ 13,163     $ 52,959     $ 37,309  
                                                       
Earnings per share, basic $ 0.68     $ 0.57     $ 0.67     $ 0.58     $ 0.60     $ 2.50     $ 2.41  
Earnings per share, diluted $ 0.67     $ 0.57     $ 0.66     $ 0.58     $ 0.59     $ 2.47     $ 2.37  
                                                       
Return on average assets(A)   1.13 %     0.98 %     1.19 %     1.08 %     1.12 %     1.10 %     1.11 %
Return on average equity(A)   7.81 %     6.73 %     8.10 %     7.27 %     7.49 %     7.48 %     9.02 %
Return on average tangible equity(A)(B)   11.96 %     10.33 %     12.52 %     11.22 %     11.66 %     11.50 %     11.20 %
Net interest margin (tax equivalent)(C)   4.11 %     4.16 %     4.33 %     4.31 %     4.45 %     4.22 %     4.27 %
Core net interest margin (tax equivalent)(B)   3.94 %     3.97 %     4.07 %     4.03 %     4.16 %     4.00 %     4.17 %
Efficiency ratio(D)   62.20 %     62.88 %     61.93 %     64.97 %     60.30 %     62.99 %     63.68 %
                                                       
Capital Ratios                                                      
Allegiance Bancshares, Inc. (Consolidated)                                                      
Equity to assets   14.22 %     14.40 %     14.70 %     14.76 %     15.10 %     14.22 %     15.10 %
Tangible equity to tangible assets(B)   9.78 %     9.86 %     10.05 %     10.06 %     10.29 %     9.78 %     10.29 %
Estimated common equity tier 1 capital   11.43 %     11.28 %     11.34 %     11.37 %     11.76 %     11.43 %     11.76 %
Estimated tier 1 risk-based capital   11.67 %     11.51 %     11.58 %     11.61 %     12.01 %     11.67 %     12.01 %
Estimated total risk-based capital   14.85 %     14.70 %     13.27 %     13.28 %     13.70 %     14.85 %     13.70 %
Estimated tier 1 leverage capital   10.02 %     10.06 %     10.17 %     10.25 %     10.61 %     10.02 %     10.61 %
Allegiance Bank                                                      
Estimated common equity tier 1 capital   12.68 %     12.28 %     12.02 %     11.67 %     11.83 %     12.68 %     11.83 %
Estimated tier 1 risk-based capital   12.68 %     12.28 %     12.02 %     11.67 %     11.83 %     12.68 %     11.83 %
Estimated total risk-based capital   14.40 %     14.01 %     13.71 %     13.34 %     13.53 %     14.40 %     13.53 %
Estimated tier 1 leverage capital   10.90 %     10.73 %     10.57 %     10.31 %     10.45 %     10.90 %     10.45 %
                                                       
Other Data                                                      
Weighted average shares:                                                      
Basic   20,652       20,981       21,257       21,733       21,908       21,152       15,485  
Diluted   20,930       21,256       21,546       22,040       22,210       21,424       15,773  
Period end shares outstanding   20,524       20,737       21,147       21,484       21,938       20,524       21,938  
Book value per share $ 34.59     $ 34.06     $ 33.32     $ 32.76     $ 32.04     $ 34.59     $ 32.04  
Tangible book value per share(B) $ 22.62     $ 22.16     $ 21.60     $ 21.17     $ 20.66     $ 22.62     $ 20.66  
(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 at the end of this Earnings Release.
(C) Net interest margin represents net interest income divided by average interest-earning assets.
(D) 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. Additionally, taxes and provision for loan losses are not part of this calculation.

Allegiance Bancshares, Inc.Financial Highlights(Unaudited)

  Three Months Ended  
  December 31, 2019     September 30, 2019     December 31, 2018  
  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 $ 3,888,476     $ 55,368       5.65 %   $ 3,870,205     $ 55,790       5.72 %   $ 3,639,390     $ 53,272       5.81 %
Securities   364,605       2,535       2.76 %     359,392       2,573       2.84 %     336,974       2,289       2.70 %
Deposits in other financial  institutions and other   54,947       244       1.76 %     55,070       302       2.17 %     132,281       742       2.23 %
Total interest-earning assets   4,308,028     $ 58,147       5.35 %     4,284,667     $ 58,665       5.43 %     4,108,645     $ 56,303       5.44 %
Allowance for loan losses   (29,997 )                     (28,593 )                     (23,554 )                
Noninterest-earning assets   639,601                       600,004                       564,934                  
Total assets $ 4,917,632                     $ 4,856,078                     $ 4,650,025                  
                                                                       
Liabilities and  Shareholders' Equity                                                                      
Interest-Bearing Liabilities:                                                                      
Interest-bearing demand  deposits $ 361,666     $ 952       1.04 %   $ 332,652     $ 943       1.13 %   $ 325,046     $ 920       1.12 %
Money market and savings  deposits   1,169,996       4,139       1.40 %     1,099,937       4,032       1.45 %     942,764       2,447       1.03 %
Certificates and other time  deposits   1,203,110       6,483       2.14 %     1,269,886       6,909       2.16 %     1,232,666       5,358       1.72 %
Borrowed funds   86,372       547       2.51 %     158,358       1,183       2.96 %     168,403       1,008       2.37 %
Subordinated debt   107,782       1,500       5.52 %     51,607       761       5.85 %     48,865       732       5.94 %
Total interest-bearing  liabilities   2,928,926     $ 13,621       1.85 %     2,912,440     $ 13,828       1.88 %     2,717,744     $ 10,465       1.53 %
                                                                       
Noninterest-Bearing  Liabilities:                                                                      
Noninterest-bearing demand  deposits   1,237,770                       1,198,564                       1,215,589                  
Other liabilities   40,781                       35,030                       19,389                  
Total liabilities   4,207,477                       4,146,034                       3,952,722                  
Shareholders' equity   710,155                       710,044                       697,303                  
Total liabilities and  shareholders' equity $ 4,917,632                     $ 4,856,078                     $ 4,650,025                  
                                                                       
Net interest rate spread                   3.50 %                     3.55 %                     3.91 %
                                                                       
Net interest income and margin         $ 44,526       4.10 %           $ 44,837       4.15 %           $ 45,838       4.43 %
                                                                       
Net interest income and net  interest margin (tax equivalent)         $ 44,623       4.11 %           $ 44,924       4.16 %           $ 46,100       4.45 %

Allegiance Bancshares, Inc.Financial Highlights(Unaudited)

  Years Ended December 31,  
  2019     2018  
  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 $ 3,831,894     $ 221,363       5.78 %   $ 2,652,355     $ 148,223       5.59 %
Securities   355,233       9,909       2.79 %     317,329       8,527       2.69 %
Deposits in other financial institutions   74,655       1,635       2.19 %     70,145       1,473       2.10 %
Total interest-earning assets   4,261,782     $ 232,907       5.47 %     3,039,829     $ 158,223       5.21 %
Allowance for loan losses   (28,129 )                     (24,077 )                
Noninterest-earning assets   594,981                       349,408                  
Total assets $ 4,828,634                     $ 3,365,160                  
                                               
Liabilities and Shareholders' Equity                                              
Interest-Bearing Liabilities:                                              
Interest-bearing demand deposits $ 345,693     $ 4,010       1.16 %   $ 224,210     $ 1,834       0.82 %
Money market and savings deposits   1,037,126       14,297       1.38 %     637,722       4,644       0.73 %
Certificates and other time deposits   1,276,684       26,656       2.09 %     940,356       15,478       1.65 %
Borrowed funds   127,138       4,675       3.68 %     240,952       4,788       1.99 %
Subordinated debt   64,451       3,732       5.79 %     48,776       2,900       5.95 %
Total interest-bearing liabilities   2,851,092     $ 53,370       1.87 %     2,092,016     $ 29,644       1.42 %
                                               
Noninterest-Bearing Liabilities:                                              
Noninterest-bearing demand deposits   1,194,496                       848,276                  
Other liabilities   74,777                       11,427                  
Total liabilities   4,120,365                       2,951,719                  
Shareholders' equity   708,269                       413,441                  
Total liabilities and shareholders' equity $ 4,828,634                     $ 3,365,160                  
                                               
Net interest rate spread                   3.60 %                     3.79 %
                                               
Net interest income and margin         $ 179,537       4.21 %           $ 128,579       4.23 %
                                               
Net interest income and net interest  margin (tax equivalent)         $ 180,036       4.22 %           $ 129,652       4.27 %

Allegiance Bancshares, Inc.Financial Highlights(Unaudited)

  Three Months Ended  
  2019     2018  
  December 31     September 30     June 30     March 31     December 31  
                             
  (Dollars in thousands)  
Period-end Loan Portfolio:                                      
Commercial and industrial $ 689,360     $ 675,055     $ 694,516     $ 699,471     $ 702,037  
Mortgage warehouse   8,304       36,594       46,171       36,742       48,274  
Real estate:                                      
Commercial real estate (including multi-family residential)   1,873,782       1,859,721       1,830,764       1,771,890       1,650,912  
Commercial real estate construction and land development   410,471       386,723       368,108       396,162       430,128  
1-4 family residential (including home equity)   698,957       695,520       690,961       658,261       649,311  
Residential construction   192,515       189,608       183,991       201,314       186,411  
Consumer and other   41,921       42,783       43,452       42,321       41,233  
Total loans $ 3,915,310     $ 3,886,004     $ 3,857,963     $ 3,806,161     $ 3,708,306  
                                       
Asset Quality:                                      
Nonaccrual loans $ 28,371     $ 34,615     $ 31,382     $ 32,670     $ 32,953  
Accruing loans 90 or more days past due                            
Total nonperforming loans   28,371       34,615       31,382       32,670       32,953  
Other real estate   8,337       8,333       6,294       1,152       630  
Other repossessed assets                            
Total nonperforming assets $ 36,708     $ 42,948     $ 37,676     $ 33,822     $ 33,583  
                                       
Net charge-offs $ 1,303     $ 729     $ 590     $ 210     $ 219  
                                       
Nonaccrual loans:                                      
Commercial and industrial $ 8,388     $ 8,033     $ 9,386     $ 11,221     $ 10,861  
Mortgage warehouse                            
Real estate:                                      
Commercial real estate (including multi-family residential)   6,741       15,356       18,218       17,531       17,776  
Commercial real estate construction and land development   9,050       9,050       1,541       818       974  
1-4 family residential (including home equity)   3,294       1,992       2,074       2,928       3,201  
Residential construction   746                          
Consumer and other   152       184       163       172       141  
Total nonaccrual loans $ 28,371     $ 34,615     $ 31,382     $ 32,670     $ 32,953  
                                       
Asset Quality Ratios:                                      
Nonperforming assets to total assets   0.74 %     0.88 %     0.79 %     0.71 %     0.72 %
Nonperforming loans to total loans   0.72 %     0.89 %     0.81 %     0.86 %     0.89 %
Allowance for loan losses to nonperforming loans   103.76 %     86.11 %     89.03 %     83.02 %     79.90 %
Allowance for loan losses to total loans   0.75 %     0.77 %     0.72 %     0.71 %     0.71 %
Net charge-offs to average loans (annualized)   0.13 %     0.07 %     0.06 %     0.02 %     0.02 %

Allegiance Bancshares, Inc.GAAP Reconciliation and Management’s Explanation of Non-GAAP Financial Measures(Unaudited)

Allegiance’s management uses certain non-GAAP (generally accepted accounting principles) financial measures to evaluate its performance. Allegiance believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and  that management and investors benefit from referring to these non-GAAP financial measures in assessing Allegiance’s performance and when planning, forecasting, analyzing and comparing past, present and future periods. Specifically, Allegiance reviews tangible book value per share, return on average tangible equity, the ratio of tangible equity to tangible assets and core net interest margin on a tax equivalent basis for internal planning and forecasting purposes. Allegiance has included in this Earnings Release information relating to these non-GAAP financial measures for the applicable periods presented.  These non-GAAP measures should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner in which Allegiance calculates the non-GAAP financial measures may differ from that of other companies reporting measures with similar names.

  Three Months Ended     Years Ended  
  2019     2018     2019     2018  
  December 31     September 30     June 30     March 31     December 31     December 31     December 31  
                                         
  (Dollars and share amounts in thousands, except per share data)  
Total shareholders' equity $ 709,865     $ 706,308     $ 704,701     $ 703,777     $ 702,984     $ 709,865     $ 702,984  
Less:  Goodwill and core deposit intangibles, net   245,518       246,695       247,873       249,051       249,712       245,518       249,712  
Tangible shareholders’ equity $ 464,347     $ 459,613     $ 456,828     $ 454,726     $ 453,272     $ 464,347     $ 453,272  
                                                       
Shares outstanding at end of period   20,524       20,737       21,147       21,484       21,938       20,524       21,938  
                                                       
Tangible book value per share $ 22.62     $ 22.16     $ 21.60     $ 21.17     $ 20.66     $ 22.62     $ 20.66  
                                                       
Net income $ 13,986     $ 12,047     $ 14,248     $ 12,678     $ 13,163     $ 52,959     $ 37,309  
                                                       
Average shareholders' equity $ 710,155     $ 710,044     $ 705,162     $ 707,666     $ 697,303     $ 708,269     $ 413,441  
Less:  Average goodwill and core deposit intangibles, net   246,154       247,404       248,621       249,277       249,252       247,854       80,384  
Average tangible shareholders’ equity $ 464,001     $ 462,640     $ 456,541     $ 458,389     $ 448,051     $ 460,415     $ 333,057  
                                                       
Return on average tangible equity   11.96 %     10.33 %     12.52 %     11.22 %     11.66 %     11.50 %     11.20 %
                                                       
Total assets $ 4,992,654     $ 4,905,840     $ 4,794,211     $ 4,768,802     $ 4,655,249     $ 4,992,654     $ 4,655,249  
Less: Goodwill and core deposit intangibles, net   245,518       246,695       247,873       249,051       249,712       245,518       249,712  
Tangible assets $ 4,747,136     $ 4,659,145     $ 4,546,338     $ 4,519,751     $ 4,405,537     $ 4,747,136     $ 4,405,537  
                                                       
Tangible equity to tangible assets   9.78 %     9.86 %     10.05 %     10.06 %     10.29 %     9.78 %     10.29 %
                                                       
Net interest income (tax equivalent) $ 44,623     $ 44,924     $ 45,684     $ 44,805     $ 46,100     $ 180,036     $ 129,652  
Less: Acquisition accounting adjustments   (1,860 )     (2,045 )     (2,755 )     (2,965 )     (3,069 )     (9,625 )     (3,069 )
Core net interest income (tax equivalent) $ 42,763     $ 42,879     $ 42,929     $ 41,840     $ 43,031     $ 170,411     $ 126,583  
                                                       
Average earning assets $ 4,308,028     $ 4,284,667     $ 4,233,653     $ 4,212,669     $ 4,108,645     $ 4,261,782     $ 3,039,829  
                                                       
Net interest margin (tax equivalent)   4.11 %     4.16 %     4.33 %     4.31 %     4.45 %     4.22 %     4.27 %
Core net interest margin (tax equivalent)   3.94 %     3.97 %     4.07 %     4.03 %     4.16 %     4.00 %     4.17 %
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