Allegiance Bancshares, Inc. Reports Record Annual Results for 2021

1/28, 1:00 PM (Source: GlobeNewswire)
  • Net income and diluted earnings per share of $21.6 million and $1.06 for the fourth quarter 2021, respectively, and record annual net income of $81.6 million and diluted earnings per share of $4.01 for the year ended December 31, 2021
  • Deposit growth of 21.2% to $6.05 billion as of December 31, 2021 from $4.99 billion as of December 31, 2020, driven primarily by $538.5 million, or 31.6%, growth in noninterest-bearing deposits and $432.7 million, or 98.9%, growth in interest-bearing demand deposits
  • Core loans of $4.07 billion, which exclude PPP loans, as of December 31, 2021 increased $75.1 million, or 7.5% (annualized), compared to September 30, 2021 and $152.7 million, or 3.9%, compared to December 31, 2020
  • Announced the signing of a definitive agreement on November 8, 2021 with CBTX, Inc., the parent company of CommunityBank of Texas N.A., in an all-stock merger of equals, between two of the largest community banks in the region, which will create an institution with over $11 billion in assets
  • Board declared quarterly dividend of $0.14 per share of common stock, up from $0.12 per share of common stock

HOUSTON, Jan. 28, 2022 (GLOBE NEWSWIRE) -- Allegiance Bancshares, Inc. (NASDAQ: ABTX) (Allegiance), the holding company of Allegiance Bank (the "Bank"), today reported record net income of $21.6 million and diluted earnings per share of $1.06 for the fourth quarter 2021 compared to net income of $15.9 million and diluted earnings per share of $0.77 for the fourth quarter 2020. Net income for the year ended December 31, 2021 was $81.6 million, or $4.01 per diluted share, compared to $45.5 million, or $2.22 per diluted share, for the year ended December 31, 2020. The fourth quarter results were primarily driven by the recapture of provision for credit losses and increased net interest income due to lower funding costs compared to the fourth quarter 2020. The year ended December 31, 2021 results were primarily driven by the recapture of provision for credit losses, increased net interest income due to the impact of PPP fee income and lower funding costs partially offset by elevated expenses as a result of increased performance-based accruals compared to the year ended December 31, 2020.

“2021 was a remarkable year for Allegiance,” said Steve Retzloff, Allegiance’s Chief Executive Officer. “We are very proud of our entire team whose dedication led to record earnings results. Our outstanding success in the Paycheck Protection Program over its extended timeframe was not only a significant revenue contributor but these loans also provided much appreciated assistance in our community and further bolstered valuable customer relationships. Our continued success is directly attributable to the many ways our outstanding employees deliver a differentiated level of extraordinary service,” commented Retzloff.

“Consistent with the last several quarters, we reported meaningful deposit growth along with steady improvement in our credit quality. We are once again encouraged by positive core loan growth generated during the year and more recently the strong growth of 7.5% (annualized) during the fourth quarter as we set new highs for new core loan originations in 2021. Additionally, fourth quarter 2021 average noninterest bearing deposit balances increased 22.4% from last year’s fourth quarter average balances, indicating that our deposit franchise continues to grow and gain momentum in our very attractive markets,” continued Retzloff.

“This is an exciting time at Allegiance. Given our strong operating results, the resilience we have demonstrated over the past two years and the recent announcement of the transformational merger with CBTX, Inc., we look forward to the expanded opportunities for growth and performance that lie ahead. Our integration teams are ready to create a premier Texas franchise with the commitment to continue to deliver unmatched personal service to our customers and our growing communities. It is a clear sense of purpose that has energized our growth to date and will continue to inspire our performance as we strive to exceed the expectations of our customers, employees, and shareholders,” concluded Retzloff.

Fourth Quarter 2021 Results

Net interest income before the provision for credit losses in the fourth quarter 2021 increased $3.2 million, or 5.8%, to $58.1 million from $54.9 million for the fourth quarter 2020 and decreased $62 thousand, or 0.1%, from $58.2 million for the third quarter 2021.The increase and decrease were primarily due to changes in the volume and relative mix of the underlying assets and liabilities, the impact of loans within the Small Business Administration Paycheck Protection Program (PPP) under the Coronavirus Aid, Relief and Economic Security Act (CARES Act) as well as lower costs on interest-bearing liabilities. The net interest margin on a tax equivalent basis decreased 57 basis points to 3.57% for the fourth quarter 2021 from 4.14% for the fourth quarter 2020 and decreased 33 basis points from 3.90% for the third quarter 2021. The decreases in the margin were primarily due to the decrease in the average yield on interest-earning assets, driven by the increase in cash and securities, partially offset by the decrease in funding costs.

Noninterest income for the fourth quarter 2021 was $2.5 million, an increase of $435 thousand, or 21.5%, compared to $2.0 million for the fourth quarter 2020 and increased $355 thousand, or 16.9%, compared to $2.1 million for the third quarter 2021. Fourth quarter 2021 noninterest income reflected higher transactional fee income when compared to the fourth quarter 2020 and the third quarter 2021. Additionally, the fourth quarter 2021 included a recovery on an acquired loan with an associated credit mark.

Noninterest expense for the fourth quarter 2021 increased $4.0 million, or 12.2%, to $36.7 million from $32.7 million for the fourth quarter 2020 and increased $2.4 million, or 7.1%, compared to the third quarter of 2021. The increase over the prior year and prior quarter was primarily due to increases in salaries and benefits, as a result of increased performance-based bonus and profit sharing accruals, along with increased professional fees, other expenses and acquisition and merger-related expenses associated with the pending merger with CBTX, Inc.

In the fourth quarter 2021, Allegiance’s efficiency ratio increased to 60.68% compared to 57.53% for the fourth quarter 2020 and increased from 56.91% for the third quarter 2021. Fourth quarter 2021 annualized returns on average assets, average equity and average tangible equity were 1.23%, 10.60% and 15.05%, respectively, compared to 1.05%, 8.38% and 12.32% for the fourth quarter 2020. Annualized returns on average assets, average equity and average tangible equity for the third quarter 2021 were 1.14%, 9.45% and 13.49%, respectively. Return on average tangible equity is a non-GAAP measure. Please refer to the non-GAAP reconciliation on page 12.  

Year Ended December 31, 2021 Results

Net interest income before provision for credit losses for the year ended December 31, 2021 increased $25.9 million, or 12.8%, to $228.6 million from $202.7 million for the year ended December 31, 2020 primarily due to lower costs related to interest-bearing liabilities, the impact of PPP loan revenue, and a $922.4 million, or 18.4%, increase in average interest-earning assets over the prior year. The net interest margin on a tax equivalent basis decreased 18 basis points to 3.90% for the year ended December 31, 2021 from 4.08% for the year ended December 31, 2020. The decrease in the margin over the prior year was primarily due to the decrease in the average yield on interest-earning assets, driven by the increase in lower-yielding assets, partially offset by decreased funding costs.

Noninterest income for the year ended December 31, 2021 was $8.6 million, an increase of $406 thousand, or 5.0%, compared to $8.2 million for the year ended December 31, 2020 due primarily to increased transactional fee income.

Noninterest expense for the year ended December 31, 2021 increased $12.1 million, or 9.5%, to $139.6 million from $127.5 million for the year ended December 31, 2020. The increase in noninterest expense over the year ended December 31, 2020 was primarily due to increased performance-based bonus and profit sharing accruals along with the reduced amount of deferred PPP loan origination costs, increased other expenses, acquisition and merger-related expenses associated with the pending merger with CBTX, Inc. and the write-down of assets related to the closure of a bank office partially offset by lower other real estate expenses as $4.1 million of other real estate write-downs were recorded during the prior year 2020.

Allegiance’s efficiency ratio decreased to 58.86% for the year ended December 31, 2021 from 60.55% for the year ended December 31, 2020. For the year ended December 31, 2021, returns on average assets, average equity and average tangible equity were 1.24%, 10.38% and 14.93%, respectively, compared to 0.81%, 6.22% and 9.33%, respectively, for the year ended December 31, 2020. Return on average tangible equity is a non-GAAP measure. Please refer to the non-GAAP reconciliation on page 12.

Financial Condition

Total assets at December 31, 2021 increased $1.05 billion, or 17.4%, to $7.10 billion compared to $6.05 billion at December 31, 2020 and increased $345.2 million, or 20.4% (annualized), compared to $6.76 billion at September 30, 2021, primarily due to increased liquidity, growth in the securities portfolio and the origination of core loans partially offset by paydowns of PPP loans.

Total loans at December 31, 2021 decreased $271.3 million, or 6.0%, to $4.22 billion compared to $4.49 billion at December 31, 2020 and decreased $69.0 million, or 6.4% (annualized), compared to $4.29 billion at September 30, 2021, primarily due to paydowns on PPP loans. Core loans, which exclude PPP loans, increased $152.7 million, or 3.9%, to $4.07 billion at December 31, 2021 from $3.92 billion at December 31, 2020 and increased $75.1 million, or 7.5% (annualized), from $4.00 billion at September 30, 2021.

Deposits at December 31, 2021 increased $1.06 billion, or 21.2%, to $6.05 billion compared to $4.99 billion at December 31, 2020 and increased $380.8 million, or 26.9% (annualized), compared to $5.67 billion at September 30, 2021.

Asset Quality

Nonperforming assets totaled $24.1 million, or 0.34%, of total assets, at December 31, 2021 compared to $38.1 million, or 0.63%, of total assets, at December 31, 2020 and $29.8 million, or 0.44%, of total assets at September 30, 2021. The allowance for credit losses on loans as a percentage of total loans was 1.14% at December 31, 2021 and 1.18% at December 31, 2020 and September 30, 2021.

The recapture of provision for credit losses for the fourth quarter 2021 was $2.6 million compared to the provision for credit losses of $4.4 million for the fourth quarter 2020 and $2.3 million for the third quarter 2021. The recapture of the provision for credit losses for the year ended December 31, 2021 was $2.3 million compared to the provision for credit losses of $27.4 million for the same period in 2020. The recapture of provision for credit losses for the quarter and year ended December 31, 2021 is reflective of recent improvements in certain economic factors compared to the same periods in 2020 where there was more uncertainty surrounding unemployment and COVID-19.

Fourth quarter 2021 net charge-offs were $1.4 million, or 0.13% (annualized) of average loans, a decrease from net charge-offs of $4.3 million, or 0.37% (annualized) of average loans, for the fourth quarter 2020 and an increase of $903 thousand from $450 thousand, or 0.04% (annualized) of average loans, for the third quarter 2021. Net charge-offs for the year ended December 31, 2021 were $2.3 million, or 0.05% of average loans, compared to net charge-offs for the year ended December 31, 2020 of $8.0 million, or 0.18% of average loans.

Dividend

The Board of Directors of Allegiance declared a cash dividend on January 27, 2022 of $0.14 per share to be paid on March 15, 2022 to all shareholders of record as of February 28, 2022. The amount and timing of any future dividend payments to shareholders will be subject to the discretion of Allegiance’s Board of Directors.

Pending Merger

On November 8, 2021, Allegiance and CBTX, Inc., jointly announced that they entered into a definitive merger agreement pursuant to which the companies will combine in an all-stock merger of equals to create a combined company with an equity market capitalization of approximately $1.5 billion and the 17th largest deposit market share in the State of Texas. Under the terms of the definitive merger agreement, Allegiance shareholders will receive 1.4184 shares of CBTX, Inc. common stock for each share of Allegiance common stock they own. Based on the number of outstanding shares of Allegiance and CBTX, Inc. as of November 5, 2021, Allegiance shareholders will own approximately 54% and CBTX, Inc. shareholders will own approximately 46% of the combined company. The companies have submitted the required regulatory filings and, subject to satisfaction or in some cases waiver of the closing conditions, including approval of the merger agreement by both companies’ shareholders, the parties anticipate closing in the second quarter of the year.

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 12 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 28, 2022 at 9:00 a.m. Central Time (10:00 a.m. Eastern Time) to discuss its fourth quarter and year-end 2021 results. Individuals and investment professionals may participate in the call by dialing (877) 279-2520. The conference ID number is 1535099. 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, 2021, Allegiance was a $7.10 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, 2021, 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 in the Houston metropolitan area and one bank office in Beaumont, just outside of the Houston metropolitan area. Visit www.allegiancebank.com for more information.

Forward-Looking Statements

Certain statements in this press release which are not historical in nature are intended to be, and are hereby identified as, "forward-looking statements" for purposes of the safe harbor provided by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

These statements include, but are not limited to, statements about the benefits of the proposed merger of Allegiance and CBTX, including future financial and operating results (including the anticipated impact of the transaction on Allegiance's and CBTX's respective earnings and book value), statements related to the expected timing of the completion of the merger, the combined company's plans, objectives, expectations and intentions, and other statements that are not historical facts. Forward-looking statements may be identified by terminology such as "may," "will," "should," "scheduled," "plans," "intends," "anticipates," "expects," "believes," "estimates," "potential," or "continue" or negatives of such terms or other comparable terminology.

All forward-looking statements are subject to risks, uncertainties and other factors that may cause the actual results, performance or achievements of Allegiance or CBTX to differ materially from any results expressed or implied by such forward-looking statements. Such factors include, among others: (1) the risk that the cost savings and any revenue synergies from the merger may not be fully realized or may take longer than anticipated to be realized; (2) disruption to the parties' businesses as a result of the announcement and pendency of the merger; (3) the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement; (4) the risk that the integration of each party's operations will be materially delayed or will be more costly or difficult than expected or that the parties are otherwise unable to successfully integrate each party's businesses into the other's businesses; (5) the failure to obtain the necessary approvals by the shareholders of Allegiance or CBTX; (6) the amount of the costs, fees, expenses and charges related to the merger; (7) the ability by each of Allegiance and CBTX to obtain required governmental approvals of the merger (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the transaction); (8) reputational risk and the reaction of each company's customers, suppliers, employees or other business partners to the merger; (9) the failure of the closing conditions in the merger agreement to be satisfied, or any unexpected delay in closing the merger; (10) the possibility that the merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events; (11) the dilution caused by CBTX's issuance of additional shares of its common stock in the merger; (12) general competitive, economic, political and market conditions; (13) the costs, effects and results of regulatory examinations, investigations, including the ongoing investigation by the Financial Crimes Enforcement Network of the U.S. Department of Treasury, or FinCEN, of CBTX or the ability of CBTX to obtain required regulatory approvals; (14) the possible results and amount of civil money penalties related to such FinCEN investigation and CBTX's BSA/AML program; and (15) other factors that may affect future results of CBTX and Allegiance including changes in asset quality and credit risk; the inability to sustain revenue and earnings growth; changes in interest rates and capital markets; inflation; customer borrowing, repayment, investment and deposit practices; the impact, extent and timing of technological changes; capital management activities; and other actions of the Board of Governors of the Federal Reserve System and Office of the Comptroller of the Currency and legislative and regulatory actions and reforms. Additionally, the impact of the COVID-19 pandemic continues to evolve and its future effects on Allegiance are difficult to predict.

Additional factors which could affect future results of Allegiance and CBTX can be found in Allegiance's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and the Current Reports on Form 8-K, and CBTX's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, in each case filed with the SEC and available on the SEC's website at https://www.sec.gov. Allegiance and CBTX disclaim any obligation and do not intend to update or revise any forward-looking statements contained in this communication, which speak only as of the date hereof, whether as a result of new information, future events or otherwise, except as required by federal securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements.

Information about the Merger and Where to Find It

This release does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval.

In connection with the proposed merger, CBTX has filed a registration statement on Form S-4 with the SEC to register the shares of CBTX common stock that will be issued to Allegiance shareholders in connection with the merger. The registration statement includes a joint proxy statement/prospectus. The Form S-4 has not yet become effective. After the Form S-4 is effective, a definitive joint proxy statement/prospectus will be sent to the shareholders of CBTX and Allegiance seeking their approval of the proposed merger.

WE URGE INVESTORS AND SECURITY HOLDERS TO READ THE REGISTRATION STATEMENT ON FORM S-4, THE JOINT PROXY STATEMENT/PROSPECTUS INCLUDED WITHIN THE REGISTRATION STATEMENT ON FORM S-4 AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IN CONNECTION WITH THE PROPOSED MERGER BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT ALLEGIANCE, CBTX AND THE PROPOSED MERGER.

Investors and security holders may obtain free copies of these documents, once they are filed, and other documents filed with the SEC by Allegiance or CBTX through the website maintained by the SEC at https://www.sec.gov. Documents filed with the SEC by CBTX will be available free of charge by accessing the CBTX's website at www.communitybankoftx.com under the heading “Investor Relations” or, alternatively, by directing a request by mail or telephone to CBTX, Inc., 9 Greenway Plaza, Suite 110, Houston, Texas 77046, Attn: Investor Relations, (713) 210-7600, and documents filed with the SEC by Allegiance will be available free of charge by accessing Allegiance’s website at www.allegiancebank.com under the heading "Investor Relations" or, alternatively, by directing a request by mail or telephone to Allegiance Bancshares, Inc., 8847 West Sam Houston Parkway, N., Suite 200, Houston, Texas 77040, (281) 894-3200.

Participants in the Solicitation

CBTX, Allegiance and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of CBTX and Allegiance in connection with the proposed merger. Certain information regarding the interests of these participants and a description of their direct or indirect interests, by security holdings or otherwise, are included in the joint proxy statement/prospectus regarding the proposed merger. Additional information about the directors and executive officers of CBTX and their ownership of CBTX's common stock is set forth in CBTX's proxy statement for its annual meeting of shareholders, filed with the SEC on April 14, 2021. Additional information about the directors and executive officers of Allegiance and their ownership of Allegiance's common stock is set forth in Allegiance's proxy statement for its annual meeting of shareholders, filed with the SEC on March 10, 2021. These documents can be obtained free of charge from the sources described above.

 2021
 2020
 December 31 September 30 June 30 March 31 December 31
 (Dollars in thousands)
ASSETS         
Cash and due from banks$23,961  $23,903  $146,397  $141,947  $122,897 
Interest-bearing deposits at other financial institutions 733,548   879,858   564,888   482,383   299,869 
Total cash and cash equivalents 757,509   903,761   711,285   624,330   422,766 
Available for sale securities, at fair value 1,773,765   1,211,476   977,282   787,516   772,890 
Loans held for investment 4,220,486   4,289,469   4,460,743   4,659,169   4,491,764 
Less: allowance for credit losses on loans (47,940)  (50,491)  (49,586)  (52,758)  (53,173)
Loans, net 4,172,546   4,238,978   4,411,157   4,606,411   4,438,591 
Accrued interest receivable 33,392   33,523   37,075   38,632   40,053 
Premises and equipment, net 63,708   65,140   65,442   66,115   70,685 
Other real estate owned    1,397   1,397   576   9,196 
Federal Home Loan Bank stock 9,358   8,326   8,234   7,775   7,756 
Bank owned life insurance 28,240   28,101   27,976   27,825   27,686 
Goodwill 223,642   223,642   223,642   223,642   223,642 
Core deposit intangibles, net 14,658   15,482   16,306   17,130   17,954 
Other assets 28,136   29,935   28,871   31,038   18,909 
Total assets$7,104,954  $6,759,761  $6,508,667  $6,430,990  $6,050,128 
LIABILITIES AND SHAREHOLDERS’ EQUITY         
LIABILITIES:         
Deposits:         
Noninterest-bearing$2,243,085  $2,086,683  $1,973,042  $1,914,121  $1,704,567 
Interest-bearing         
Demand 869,984   594,959   553,874   480,710   437,328 
Money market and savings 1,643,745   1,604,222   1,556,920   1,617,823   1,499,938 
Certificates and other time 1,290,825   1,381,014   1,349,522   1,361,535   1,346,649 
Total interest-bearing deposits 3,804,554   3,580,195   3,460,316   3,460,068   3,283,915 
Total deposits 6,047,639   5,666,878   5,433,358   5,374,189   4,988,482 
Accrued interest payable 1,753   3,296   1,940   3,862   2,701 
Borrowed funds 89,956   139,954   139,951   147,517   155,515 
Subordinated debt 108,847   108,715   108,584   108,453   108,322 
Other liabilities 40,291   42,326   35,684   36,432   36,439 
Total liabilities 6,288,486   5,961,169   5,719,517   5,670,453   5,291,459 
SHAREHOLDERS’ EQUITY:         
Common stock 20,337   20,218   20,213   20,183   20,208 
Capital surplus 510,797   507,948   506,810   505,307   508,794 
Retained earnings 267,092   247,966   231,333   210,834   195,236 
Accumulated other comprehensive income 18,242   22,460   30,794   24,213   34,431 
Total shareholders’ equity 816,468   798,592   789,150   760,537   758,669 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$7,104,954  $6,759,761  $6,508,667  $6,430,990  $6,050,128 


 Three Months Ended Years Ended
 2021
 2020 2021
 2020
 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$56,855  $58,176 $57,691  $57,991  $58,496 $230,713  $225,959 
Securities:             
Taxable 3,933   2,998  2,556   2,402   2,203  11,889   8,227 
Tax-exempt 2,526   2,498  2,491   2,394   2,316  9,909   7,311 
Deposits in other financial institutions 317   221  94   41   32  673   265 
Total interest income 63,631   63,893  62,832   62,828   63,047  253,184   241,762 
              
INTEREST EXPENSE:             
Demand, money market and savings deposits 1,277   1,267  1,337   1,484   1,621  5,365   9,371 
Certificates and other time deposits 2,391   2,583  2,989   3,665   4,507  11,628   21,675 
Borrowed funds 434   436  469   539   557  1,878   2,183 
Subordinated debt 1,425   1,441  1,441   1,442   1,460  5,749   5,850 
Total interest expense 5,527   5,727  6,236   7,130   8,145  24,620   39,079 
NET INTEREST INCOME 58,104   58,166  56,596   55,698   54,902  228,564   202,683 
(Recapture of) provision for credit losses (2,577)  2,295  (2,679)  639   4,368  (2,322)  27,374 
Net interest income after provision for credit losses 60,681   55,871  59,275   55,059   50,534  230,886   175,309 
              
NONINTEREST INCOME:             
Nonsufficient funds fees 156   131  94   83   100  464   404 
Service charges on deposit accounts 476   425  382   388   405  1,671   1,530 
Gain on sale of securities         49     49   287 
Loss on sales of other real estate and repossessed assets (89)       (176)    (265)  (258)
Bank owned life insurance 139   125  151   139   144  554   582 
Debit card and ATM card income 834   771  761   630   637  2,996   2,205 
Other 938   647  885   623   733  3,093   3,406 
Total noninterest income 2,454   2,099  2,273   1,736   2,019  8,562   8,156 
              
NONINTEREST EXPENSE:             
Salaries and employee benefits 22,918   22,335  22,472   22,452   21,003  90,177   80,152 
Net occupancy and equipment 2,194   2,335  2,225   2,390   2,079  9,144   7,969 
Depreciation 1,103   1,060  1,057   1,034   1,019  4,254   3,716 
Data processing and software amortization 2,264   2,222  2,176   2,200   2,107  8,862   7,992 
Professional fees 1,008   620  608   789   999  3,025   3,128 
Regulatory assessments and FDIC insurance 949   883  768   807   810  3,407   2,926 
Core deposit intangibles amortization 824   824  824   824   953  3,296   3,922 
Communications 395   358  332   321   225  1,406   1,387 
Advertising 481   481  432   298   347  1,692   1,565 
Other real estate expense 69   137  229   113   382  548   5,162 
Acquisition and merger-related expenses 1,408   603          2,011    
Other 3,131   2,438  2,472   3,691   2,825  11,732   9,575 
Total noninterest expense 36,744   34,296  33,595   34,919   32,749  139,554   127,494 
INCOME BEFORE INCOME
TAXES
 26,391   23,674  27,953   21,876   19,804  99,894   55,971 
Provision for income taxes 4,833   4,614  5,028   3,866   3,863  18,341   10,437 
NET INCOME$21,558  $19,060 $22,925  $18,010  $15,941 $81,553  $45,534 
              
EARNINGS PER SHARE             
Basic$1.06  $0.94 $1.13  $0.89  $0.78 $4.04  $2.23 
Diluted$1.06  $0.93 $1.12  $0.89  $0.77 $4.01  $2.22 


 Three Months Ended Years Ended
 2021
 2020
 2021
 2020
 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$21,558  $19,060  $22,925  $18,010  $15,941  $81,553  $45,534 
              
Earnings per share, basic$1.06  $0.94  $1.13  $0.89  $0.78  $4.04  $2.23 
Earnings per share, diluted$1.06  $0.93  $1.12  $0.89  $0.77  $4.01  $2.22 
Dividends per share$0.12  $0.12  $0.12  $0.12  $0.10  $0.48  $0.40 
              
Return on average assets(A) 1.23%  1.14%  1.42%  1.18%  1.05%  1.24%  0.81%
Return on average equity(A) 10.60%  9.45%  11.87%  9.59%  8.38%  10.38%  6.22%
Return on average tangible equity(A)(B) 15.05%  13.49%  17.20%  14.03%  12.32%  14.93%  9.33%
Net interest margin (tax equivalent)(A)(C) 3.57%  3.90%  4.02%  4.19%  4.14%  3.90%  4.08%
Efficiency ratio(D) 60.68%  56.91%  57.07%  60.85%  57.53%  58.86%  60.55%
              
Capital Ratios             
Allegiance Bancshares, Inc.(Consolidated)             
Equity to assets 11.49%  11.81%  12.12%  11.83%  12.54%  11.49%  12.54%
Tangible equity to tangible assets(B) 8.42%  8.58%  8.76%  8.40%  8.90%  8.42%  8.90%
Estimated common equity tier 1 capital 12.47%  12.37%  12.18%  11.87%  11.80%  12.47%  11.80%
Estimated tier 1 risk-based capital 12.69%  12.60%  12.41%  12.10%  12.04%  12.69%  12.04%
Estimated total risk-based capital 16.08%  16.13%  15.98%  15.72%  15.71%  16.08%  15.71%
Estimated tier 1 leverage capital 8.53%  8.76%  8.56%  8.57%  8.51%  8.53%  8.51%
Allegiance Bank             
Estimated common equity tier 1 capital 12.63%  12.81%  13.03%  13.17%  13.32%  12.63%  13.32%
Estimated tier 1 risk-based capital 12.63%  12.81%  13.03%  13.17%  13.32%  12.63%  13.32%
Estimated total risk-based capital 14.71%  14.98%  15.22%  15.37%  15.55%  14.71%  15.55%
Estimated tier 1 leverage capital 8.49%  8.91%  8.99%  9.33%  9.41%  8.49%  9.41%
              
Other Data             
Weighted average shares:             
Basic 20,260   20,221   20,203   20,140   20,396   20,206   20,415 
Diluted 20,423   20,411   20,386   20,342   20,575   20,355   20,546 
Period end shares outstanding 20,337   20,218   20,213   20,183   20,208   20,337   20,208 
Book value per share$40.15  $39.50  $39.04  $37.68  $37.54  $40.15  $37.54 
Tangible book value per share(B)$28.43  $27.67  $27.17  $25.75  $25.59  $28.43  $25.59 

(A)     Interim periods annualized.
(B)     Refer to the calculation of these non-GAAP financial measures and a reconciliation to their most directly comparable GAAP financial measures on page 12 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 (recapture of) loan losses are not part of this calculation.

 Three Months Ended
 December 31, 2021 September 30, 2021 December 31, 2020
 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$4,243,778  $56,855 5.32% $4,336,443  $58,176 5.32% $4,569,210  $58,496 5.09%
Securities 1,457,793   6,459 1.76%  1,070,851   5,496 2.04%  701,233   4,519 2.56%
Deposits in other financial institutions and other 843,808   317 0.15%  588,859   221 0.15%  58,664   32 0.22%
Total interest-earning assets 6,545,379  $63,631 3.86%  5,996,153  $63,893 4.23%  5,329,107  $63,047 4.71%
Allowance for credit losses on loans (50,654)      (49,381)      (53,260)    
Noninterest-earning assets 447,005       680,682       783,200     
Total assets$6,941,730      $6,627,454      $6,059,047     
                  
Liabilities and Shareholders' Equity                 
Interest-Bearing Liabilities:                 
Interest-bearing demand deposits$724,841  $388 0.21% $576,144  $324 0.22% $430,145  $386 0.36%
Money market and savings deposits 1,618,240   889 0.22%  1,565,965   943 0.24%  1,513,816   1,235 0.32%
Certificates and other time deposits 1,335,020   2,391 0.71%  1,363,121   2,583 0.75%  1,284,181   4,507 1.40%
Borrowed funds 138,747   434 1.24%  139,844   436 1.24%  157,687   557 1.41%
Subordinated debt 108,784   1,425 5.20%  108,652   1,441 5.26%  108,259   1,460 5.37%
Total interest-bearing liabilities 3,925,632  $5,527 0.56%  3,753,726  $5,727 0.61%  3,494,088  $8,145 0.93%
                  
Noninterest-Bearing Liabilities:                 
Noninterest-bearing demand deposits 2,163,016       2,031,399       1,766,826     
Other liabilities 46,141       42,183       41,434     
Total liabilities 6,134,789       5,827,308       5,302,348     
Shareholders' equity 806,941       800,146       756,699     
Total liabilities and shareholders' equity$6,941,730      $6,627,454      $6,059,047     
                  
Net interest rate spread    3.30%     3.62%     3.78%
                  
Net interest income and margin  $58,104 3.52%   $58,166 3.85%   $54,902 4.10%
                  
Net interest income and net interest margin (tax equivalent)  $58,838 3.57%   $58,873 3.90%   $55,477 4.14%


 Years Ended December 31,
 2021
 2020
 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$4,422,467  $230,713 5.22% $4,383,375  $225,959 5.15%
Securities 1,050,376   21,798 2.08%  588,318   15,538 2.64%
Deposits in other financial institutions 458,190   673 0.15%  36,945   265 0.72%
Total interest-earning assets 5,931,033  $253,184 4.27%  5,008,638  $241,762 4.83%
Allowance for credit losses on loans (51,513)      (46,680)    
Noninterest-earning assets 680,191       675,701     
Total assets$6,559,711      $5,637,659     
            
Liabilities and Shareholders' Equity           
Interest-Bearing Liabilities:           
Interest-bearing demand deposits$574,079  $1,409 0.25% $385,482  $2,045 0.53%
Money market and savings deposits 1,571,532   3,956 0.25%  1,316,188   7,326 0.56%
Certificates and other time deposits 1,349,216   11,628 0.86%  1,268,080   21,675 1.71%
Borrowed funds 144,354   1,878 1.30%  197,525   2,183 1.11%
Subordinated debt 108,588   5,749 5.29%  108,064   5,850 5.41%
Total interest-bearing liabilities 3,747,769  $24,620 0.66%  3,275,339   39,079 1.19%
            
Noninterest-Bearing Liabilities:           
Noninterest-bearing demand deposits 1,983,934       1,593,354     
Other liabilities 41,972       37,278     
Total liabilities 5,773,675       4,905,971     
Shareholders' equity 786,036       731,688     
Total liabilities and shareholders' equity$6,559,711      $5,637,659     
            
Net interest rate spread    3.61%     3.64%
            
Net interest income and margin  $228,564 3.85%   $202,683 4.05%
            
Net interest income and net interest margin (tax equivalent)  $231,315 3.90%   $204,416 4.08%


 Three Months Ended
 2021
 2020
 December 31 September 30 June 30 March 31 December 31
 (Dollars in thousands)
Period-end Loan Portfolio:         
Commercial and industrial$693,559  $728,897  $690,867  $664,792  $667,079 
Paycheck Protection Program (PPP) 145,942   290,028   499,207   728,424   569,901 
Real estate:         
Commercial real estate (including multi-family residential) 2,104,621   2,073,521   2,051,516   2,018,853   1,999,877 
Commercial real estate construction and land development 439,125   382,610   371,732   386,637   367,213 
1-4 family residential (including home equity) 685,071   683,919   715,119   726,228   737,605 
Residential construction 117,901   104,638   111,956   119,528   127,522 
Consumer and other 34,267   25,856   20,346   14,707   22,567 
Total loans$4,220,486  $4,289,469  $4,460,743  $4,659,169  $4,491,764 
          
Asset Quality:         
Nonaccrual loans$24,127  $28,369  $36,643  $35,051  $28,893 
Accruing loans 90 or more days past due              
Total nonperforming loans 24,127   28,369   36,643   35,051   28,893 
Other real estate    1,397   1,397   576   9,196 
Total nonperforming assets$24,127  $29,766  $38,040  $35,627  $38,089 
          
Net charge-offs$1,353  $450  $162  $345  $4,287 
          
Nonaccrual loans:         
Commercial and industrial$8,358  $10,247  $12,949  $14,059  $10,747 
Real estate:         
Commercial real estate (including multi-family residential) 12,639   14,629   18,123   13,455   10,081 
Commercial real estate construction and land development 63   53   53   1,000   3,011 
1-4 family residential (including home equity) 2,875   3,224   4,839   5,736   4,525 
Residential construction              
Consumer and other 192   216   679   801   529 
Total nonaccrual loans$24,127  $28,369  $36,643  $35,051  $28,893 
          
Asset Quality Ratios:         
Nonperforming assets to total assets 0.34%  0.44%  0.58%  0.55%  0.63%
Nonperforming loans to total loans 0.57%  0.66%  0.82%  0.75%  0.64%
Allowance for credit losses on loans to nonperforming loans 198.70%  177.98%  135.32%  150.52%  184.03%
Allowance for credit losses on loans to total loans 1.14%  1.18%  1.11%  1.13%  1.18%
Net charge-offs to average loans (annualized) 0.13%  0.04%  0.01%  0.03%  0.37%

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 and the ratio of tangible equity to tangible assets for internal planning and forecasting purposes. Allegiance has included in this Earnings Release information relating to these non-GAAP financial measures for the applicable periods presented.  These non-GAAP measures should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner in which Allegiance calculates the non-GAAP financial measures may differ from that of other companies reporting measures with similar names.

 Three Months Ended Years Ended
  2021   2020   2021   2020 
 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$        816,468  $        798,592  $        789,150  $        760,537  $        758,669  $        816,468  $        758,669 
Less:  Goodwill and core deposit intangibles, net         238,300           239,124           239,948           240,772           241,596           238,300           241,596 
Tangible shareholders’ equity$        578,168  $        559,468  $        549,202  $        519,765  $        517,073  $        578,168  $        517,073 
              
Shares outstanding at end of period         20,337           20,218           20,213           20,183           20,208           20,337           20,208 
              
Tangible book value per share$        28.43  $        27.67  $        27.17  $        25.75  $        25.59  $        28.43  $        25.59 
              
Net income$        21,558  $        19,060  $        22,925  $        18,010  $        15,941  $        81,553  $        45,534 
              
Average shareholders' equity$        806,941  $        800,146  $        774,803  $        761,600  $        756,699  $        786,036  $        731,688 
Less:  Average goodwill and core deposit intangibles, net         238,700           239,497           240,331           241,166           242,043           239,916           243,513 
Average tangible shareholders’ equity$        568,241  $        560,649  $        534,472  $        520,434  $        514,656  $        546,120  $        488,175 
              
Return on average tangible equity(A)         15.05        %          13.49        %          17.20        %          14.03        %          12.32        %          14.93        %          9.33        %
              
Total assets$        7,104,954  $        6,759,761  $        6,508,667  $        6,430,990  $        6,050,128  $        7,104,954  $        6,050,128 
                            
Less: Goodwill and core deposit intangibles, net         238,300           239,124           239,948           240,772           241,596           238,300           241,596 
Tangible assets$        6,866,654  $        6,520,637  $        6,268,719  $        6,190,218  $        5,808,532  $        6,866,654  $        5,808,532 
              
Tangible equity to tangible assets         8.42        %          8.58        %          8.76        %          8.40        %          8.90        %          8.42        %          8.90        %

(A)     Interim periods annualized.

Allegiance Bancshares, Inc.
8847 West Sam Houston Parkway N., Suite 200
Houston, Texas 77040
ir@allegiancebank.com      

 


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