Allegiance Bancshares, Inc. Reports Fourth Quarter 2015

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News Desk 2018

Jan 26, 2016 at 7:15 AM

Allegiance Bancshares, Inc. Reports Fourth Quarter 2015 Earnings

Core loans, excluding mortgage warehouse loans and loans held for sale, increased 4.6% for the fourth quarter 2015 over the third quarter 2015
Strong asset quality as evidenced by annualized net charge-offs of 0.06% for the fourth quarter 2015 and a nonperforming assets to total assets ratio of 0.30%
Completed Initial Public Offering of 2,990,000 shares generating net proceeds of approximately $57.2 million during the fourth quarter of 2015

HOUSTON, Jan. 26, 2016 (GLOBE NEWSWIRE) -- Allegiance Bancshares, Inc. (NASDAQ: ABTX ), the holding company of Allegiance Bank (collectively, “Allegiance”), reported net income attributable to common stockholders for the three months ended December 31, 2015 of $4.2 million, a 4.1% increase compared to the three months ended September 30, 2015 and an 83.1% increase compared with the three months ended December 31, 2014. Diluted earnings per common share for the three months ended December 31, 2015 decreased 17.5% to $0.33, compared to $0.40 for the three months ended September 30, 2015, reflecting a 25.9% increase in weighted average diluted common shares outstanding due to Allegiance’s Initial Public Offering (IPO) completed during the fourth quarter of 2015, and increased 3.1% from $0.32 for the three months ended December 31, 2014. The shares issued in Allegiance’s IPO had a $0.09 impact on diluted earnings per common share for the three months ended December 31, 2015. Additionally, during the first quarter of 2015, Allegiance completed the acquisition of F&M Bancshares, Inc. (“F&M”) on January 1, 2015.

“We are pleased with our robust organic growth in the fourth quarter, which demonstrates the underlying strength of our business model,” said George Martinez, Allegiance’s Chairman and Chief Executive Officer. “We also delivered solid quarterly earnings driven by continuing growth in core loans, strong asset quality and a continuing focus on controlling costs.”

“2015 was a year of significant accomplishments for us, culminating with the completion of our initial public offering,” continued Martinez. “Proceeds received from the IPO were used to reduce the debt related to our F&M acquisition, and we ended 2015 with sufficient capital to continue our growth trajectory into 2016. We have, and will, continue to leverage the strength of our talented bankers as we continue to expand our presence in the Houston economy. While the Houston region has been impacted by the sharp decline in the price of crude oil, we view the current environment as an excellent opportunity for Allegiance to take advantage of the segment of the market that benefits from low energy prices.”

“Our super-community banking strategy offers a competitive advantage through our commitment to serving small to medium-sized business customers. Our unique strategy was designed to foster strong customer relationships while benefitting from a platform and scale that is competitive with larger local and regional banks. As part of our growth plan, we intend to continue to expand our market position primarily through organic growth, including the establishment of de novo branch locations.”

Results of operations for the three months ended December 31, 2015

Annualized returns on average assets, average common equity and average tangible common equity for the three months ended December 31, 2015 were 0.81%, 6.71% and 8.19%, respectively. Allegiance’s efficiency ratio for the three months ended December 31, 2015 decreased to 62.40% compared to 65.04% for the three months ended September 30, 2015 and from 71.56% for the three months ended December 31, 2014.

Net interest income before provision for loan losses for the three months ended December 31, 2015 increased 4.2% to $21.3 million, compared with $20.4 million during the three months ended September 30, 2015, primarily due to a $76.1 million or 4.3% increase in average interest-earning assets. Net interest income before provision for loan losses for the three months ended December 31, 2015 increased $8.7 million, or 68.8%, from $12.6 million for the three months ended December 31, 2014. This increase was primarily due to a 62.3% increase in average interest-earning assets as a result of the acquisition of F&M as well as organic growth within Allegiance’s loan portfolio. The net interest margin on a tax equivalent basis remained virtually flat from 4.61% for the three months ended September 30, 2015 to 4.60% for the three months ended December 31, 2015. Excluding the impact of acquisition accounting adjustments, the net interest margin for the three months ended December 31, 2015 would have been 4.47%, compared to 4.44% for the three months ended September 30, 2015. The net interest margin on a tax equivalent basis increased for the three months ended December 31, 2015 from 4.37% for the three months ended December 31, 2014.

On a linked quarter basis, noninterest income for the three months ended December 31, 2015 decreased $223 thousand, or 18.6%, primarily due to gains on the sale of loans recorded during the third quarter of 2015. Noninterest income for the three months ended December 31, 2015 increased $297 thousand, or 43.6%, to $978 thousand, compared with $681 thousand for the three months ended December 31, 2014. This increase was primarily due to increased fees and service charges resulting from the additional accounts acquired in the F&M acquisition.

Noninterest expense for the three months ended December 31, 2015 remained constant compared to the three months ended September 30, 2015, and increased $4.5 million, or 47.2%, to $13.9 million, compared with $9.4 million for the three months ended December 31, 2014. This increase was primarily due to additional noninterest expenses associated with operating a larger platform following the F&M acquisition.

Financial Condition

Total loans increased $64.6 million or 4.0% to $1.68 billion at December 31, 2015 from $1.62 billion at September 30, 2015 due to strong organic loan growth within Allegiance’s loan portfolio. During the three months ended December 31, 2015, core loans, which exclude the mortgage warehouse portfolio and loans held for sale, increased $70.6 million, but were partially offset by a decrease of $6.9 million in the mortgage warehouse portfolio, compared to the three months ended September 30, 2015. Total loans at December 31, 2015 increased $679.0 million, or 67.8%, compared with $1.0 billion at December 31, 2014, primarily due to loans acquired in the F&M acquisition as well as organic growth within Allegiance’s portfolio.

Average loans for the three months ended December 31, 2015 increased $58.6 million, or 3.7%, to $1.63 billion from $1.57 billion for the quarter ended September 30, 2015. Average loans for the three months ended December 31, 2015 increased $650.2 million, or 66.3%, from $980.9 million for the three months ended December 31, 2014.

Deposits increased $102.6 million, or 6.2%, to $1.76 billion at December 31, 2015 from $1.66 billion at September 30, 2015. Deposits at December 31, 2015 increased $625.5 million, or 55.2%, compared with $1.13 billion at December 31, 2014, primarily due to the deposits acquired in the F&M acquisition.

Average deposits for the three months ended December 31, 2015 increased $107.7 million, or 6.6%, to $1.74 billion, from $1.63 billion for the three months ended September 30, 2015. Average deposits for the three months ended December 31, 2015 increased $624.5 million, or 55.9%, compared with $1.12 billion for the three months ended December 31, 2014.

Asset Quality

Nonperforming assets totaled $6.2 million or 0.30% of total assets at December 31, 2015, compared with $6.3 million or 0.31% of total assets at September 30, 2015, and $3.2 million or 0.25% of total assets at December 31, 2014. The allowance for loan losses was 0.78% of total loans at December 31, 2015, 0.69% of total loans at September 30, 2015 and 0.82% of total loans at December 31, 2014.

The provision for loan losses for the three months ended December 31, 2015 was $2.2 million, or 0.53% (annualized) of average loans, compared with $1.5 million, or 0.39% (annualized) of average loans, for the three months ended September 30, 2015 and $500 thousand, or 0.20% (annualized) of average loans, for the three months ended December 31, 2014.

Net charge offs for the three months ended December 31, 2015 were $265 thousand, or 0.06% (annualized) of average loans, compared with $638 thousand, or 0.16% (annualized) of average loans, for the three months ended September 30, 2015.

GAAP Reconciliation of Non-GAAP Financial Measures

Allegiance’s management uses certain non-GAAP financial measures to evaluate its performance. Specifically, Allegiance reviews tangible book value per common share, return on average tangible common equity and the tangible common equity to tangible assets ratio. 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 Tuesday, January 26, 2016 at 9:00 a.m. Central Time (10:00 a.m. Eastern Time) to discuss its fourth quarter 2015 earnings. Individuals and investment professionals may participate in the call by dialing (855) 717-7672. The conference ID number is 22569148.

Alternatively, a simultaneous webcast may be accessed via the Investor Relations section of Allegiance’s website at www.allegiancebank.com , under Upcoming Events.

Allegiance Bancshares, Inc.

As of December 31, 2015, Allegiance Bancshares Inc. is a $2.08 billion Houston, Texas based bank holding company. Through its wholly owned subsidiary, Allegiance Bank, Allegiance provides a diversified range of commercial banking services primarily to Houston metropolitan area-based small to medium-sized businesses and individual customers. Allegiance Bank operates 16 full-service banking locations in the Houston metropolitan area and two full-service banking locations in Central Texas. Visit www.allegiancebank.com for more information.

Forward Looking Statements

“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. These statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “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; continue to 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 factors are discussed in Allegiance’s prospectus, filed with the SEC on October 8, 2015 pursuant to Rule 424(b)(4) under the Securities Act of 1933 relating to Allegiance’s Registration Statement on Form S-1, as amended (Registration No. 33-206536), that was declared effective by the SEC on October 7, 2015, and other reports and statements Allegiance has filed with the SEC. Copies of such filings are available for download free of charge from the Investor Relations section of the website at www.allegiancebank.com , under Financial Information, SEC Filings. Any forward-looking statement made by Allegiance in this release speaks only as of the date on which it is made. Factors or events that could cause Allegiance’s actual results to differ may emerge from time to time, and it is not possible for Allegiance to predict all of them. Allegiance undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)

		2015												2014
	December 31			September 30			June 30			March 31			December 31
	(Dollars in thousands)

Cash and cash equivalents	$	148,431		$	144,590		$	138,685		$	252,558		$	167,540
Available for sale securities		165,097			154,546			151,662			96,910			84,962
Total Loans (including loans held for sale)		1,681,052			1,616,416			1,561,657			1,444,732			1,002,054
Allowance for loan losses		(13,098	)		(11,204	)		(10,312	)		(8,940	)		(8,246	)
Loans, net		1,667,954			1,605,212			1,551,345			1,435,792			993,808
Goodwill		39,389			39,389			39,389			39,389			11,144
Core deposit intangibles, net		5,230			5,437			5,645			5,852			1,747
Premises and equipment, net		18,471			18,838			18,887			18,510			10,969
Bank owned life insurance		21,211			21,040			20,872			20,699			-
Other assets		18,796			23,298			18,671			15,176			9,838
Total assets	$	2,084,579		$	2,012,350		$	1,945,156		$	1,884,886		$	1,280,008

Noninterest-bearing deposits	$	620,320		$	560,773		$	556,502		$	554,624		$	373,795
Interest-bearing deposits		1,138,813			1,095,775			1,068,822			1,089,095			759,889
Total deposits		1,759,133			1,656,548			1,625,324			1,643,719			1,133,684
Short-term borrowings		50,000			115,000			75,000			-			-
Subordinated debentures		9,089			9,062			9,032			8,953			-
Other borrowed funds		569			28,069			28,069			28,069			10,069
Other liabilities		7,298			7,628			5,901			5,121			4,477
Total liabilities		1,826,089			1,816,307			1,743,326			1,685,862			1,148,230
Preferred equity		-			-			11,550			11,550			-
Common equity		258,490			196,043			190,280			187,474			131,778
Stockholders' equity		258,490			196,043			201,830			199,024			131,778
Total liabilities and equity	$	2,084,579		$	2,012,350		$	1,945,156		$	1,884,886		$	1,280,008

Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)

	Three Months Ended												Year Ended
		2015										2014		2015			2014
	December 31			September 30		June 30		March 31			December 31		December 31			December 31
	(Dollars in thousands)

INTEREST INCOME:
Loans, including fees	$	22,431		$	21,627	$	21,079	$	20,306		$	13,534	$	85,443		$	50,243
Securities		989			975		721		439			450		3,124			1,851
Deposits in other financial institutions		72			43		50		74			68		239			311
Total interest income		23,492			22,645		21,850		20,819			14,052		88,806			52,405

INTEREST EXPENSE:
Demand, money market and savings deposits		555			508		482		456			338		2,001			1,261
Certificates and other time deposits		1,494			1,324		1,254		1,200			1,046		5,272			4,081
Short-term borrowings		33			47		2		-			-		82			-
Subordinated debt		139			114		162		163			-		578			-
Other borrowed funds		16			245		216		230			78		707			229
Total interest expense		2,237			2,238		2,116		2,049			1,462		8,640			5,571
NET INTEREST INCOME		21,255			20,407		19,734		18,770			12,590		80,166			46,834
Provision for loan losses		2,159			1,530		1,420		683			500		5,792			2,150
Net interest income after provision for loan losses		19,096			18,877		18,314		18,087			12,090		74,374			44,684

NONINTEREST INCOME:
Nonsufficient funds fees		191			179		168		165			120		703			455
Service charges on deposit accounts		166			163		176		175			112		680			490
Gains (losses) on sales of securities		(37	)		-		-		-			82		(37	)		82
Gains (losses) on sales of other real estate		-			1		-		(6	)		-		(5	)		188
Gains on sales of loans		-			235		-		-			-		235			-
Other		658			623		603		532			367		2,416			1,392
Total noninterest income		978			1,201		947		866			681		3,992			2,607

NONINTEREST EXPENSE:
Salaries and employee benefits		8,905			8,996		8,481		8,942			5,682		35,324			20,179
Net occupancy and equipment		1,179			1,289		1,274		1,084			847		4,826			3,316
Data processing and software amortization		750			841		827		626			428		3,044			1,658
Professional fees		451			343		397		480			794		1,671			2,294
Regulatory assessments and FDIC insurance		356			296		320		374			211		1,346			848
Core deposit intangibles amortization		208			207		207		208			74		830			298
Depreciation		424			414		409		367			295		1,614			1,084
Communications		298			300		358		334			224		1,290			684
Advertising		271			188		184		138			207		781			601
Other		1,054			1,027		965		1,033			676		4,079			2,496
Total noninterest expense		13,896			13,901		13,422		13,586			9,438		54,805			33,458
INCOME BEFORE INCOME TAXES		6,178			6,177		5,839		5,367			3,333		23,561			13,833
Provision for income taxes		1,966			1,957		1,956		1,896			1,033		7,775			4,828
NET INCOME		4,212			4,220		3,883		3,471			2,300		15,786			9,005
Preferred stock dividends		-			173		260		126			-		559			-
NET INCOME ATTRIBUTABLE TO COMMON
STOCKHOLDERS	$	4,212		$	4,047	$	3,623	$	3,345		$	2,300	$	15,227		$	9,005

Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)

	Three Months Ended															Year Ended
		2015												2014			2015			2014
	December 31			September 30			June 30			March 31			December 31			December 31			December 31
	(Dollars and share amounts in thousands)

Net income	$	4,212		$	4,220		$	3,883		$	3,471		$	2,300		$	15,786		$	9,005
Net income attributable to common stockholders	$	4,212		$	4,047		$	3,623		$	3,345		$	2,300		$	15,227		$	9,005

Earnings per common share, basic	$	0.34		$	0.41		$	0.37		$	0.34		$	0.33		$	1.45		$	1.29
Earnings per common share, diluted	$	0.33		$	0.40		$	0.36		$	0.33		$	0.32		$	1.43		$	1.26

Return on average assets^(A)		0.81	%		0.85	%		0.84	%		0.77	%		0.73	%		0.81	%		0.75	%
Return on average common equity^(A)		6.71	%		8.27	%		8.20	%		7.56	%		7.56	%		7.43	%		7.73	%
Return on average tangible common equity^{(A) (B)}		8.19	%		10.77	%		10.04	%		9.62	%		8.46	%		9.52	%		8.70	%
Tax equivalent net interest margin^(C)		4.60	%		4.61	%		4.79	%		4.72	%		4.37	%		4.68	%		4.31	%
Efficiency ratio^(D)		62.40	%		65.04	%		64.90	%		69.19	%		71.56	%		65.27	%		67.79	%

Liquidity and Capital Ratios
Equity to assets		12.40	%		9.74	%		10.38	%		10.56	%		10.30	%		12.40	%		10.30	%
Common equity Tier 1 capital		11.71	%		8.61	%		8.68	%		8.98	%		N/A			11.71	%		N/A
Tier 1 risk-based capital		12.20	%		9.12	%		9.88	%		10.25	%		11.96	%		12.20	%		11.96	%
Total risk-based capital		12.92	%		9.75	%		10.48	%		10.80	%		12.80	%		12.92	%		12.80	%
Tier 1 leverage capital		11.02	%		8.37	%		9.34	%		9.22	%		9.55	%		11.02	%		9.55	%
Tangible common equity to tangible assets^(B)		10.48	%		7.69	%		7.64	%		7.73	%		9.38	%		10.48	%		9.38	%

Other Data
Weighted average shares:
Basic		12,390			9,823			9,825			9,823			6,995			10,470			6,978
Diluted		12,589			10,003			10,004			9,999			7,169			10,654			7,142
Period end shares outstanding		12,813			9,823			9,823			9,824			7,477			12,813			7,477
Book value per common share	$	20.17		$	19.96		$	19.37		$	19.08		$	17.62		$	20.17		$	17.62
Tangible book value per common share^(B)	$	16.69		$	15.39		$	14.79		$	14.48		$	15.90		$	16.69		$	15.90

(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 noninterest expense divided by the sum of net interest income plus noninterest income, excluding net gains and losses on the sale of assets and securities. Additionally, taxes and provision for loan losses are not part of this calculation.

Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)

	Three Months Ended
	December 31, 2015								September 30, 2015								December 31, 2014
	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	$	1,631,068		$	22,431		5.46	%	$	1,572,441		$	21,627		5.46	%	$	980,853		$	13,534		5.47	%
Securities		161,245			989		2.43	%		162,308			975		2.38	%		89,196			450		2.00	%
Deposits in other financial institutions		72,262			72		0.40	%		53,759			43		0.31	%		79,087			68		0.34	%
Total interest-earning assets		1,864,575		$	23,492		5.00	%		1,788,508		$	22,645		5.02	%		1,149,136		$	14,052		4.85	%
Allowance for loan losses		(11,598	)							(10,618	)							(7,983	)
Noninterest-earning assets		222,624								201,952								110,766
Total assets	$	2,075,601							$	1,979,842							$	1,251,919

Liabilities and Stockholders' Equity
Interest-Bearing Liabilities:
Interest-bearing demand deposits	$	95,696		$	43		0.18	%	$	97,488		$	40		0.16	%	$	79,674		$	30		0.15	%
Money market and savings deposits		456,867			512		0.44	%		432,654			468		0.43	%		291,621			308		0.42	%
Certificates and other time deposits		591,403			1,494		1.00	%		547,884			1,324		0.96	%		392,992			1,046		1.06	%
Short-term borrowings		63,587			33		0.20	%		106,533			47		0.17	%		-			-		0.00	%
Subordinated debt		9,072			139		6.06	%		9,060			114		5.01	%		-			-		0.00	%
Other borrowed funds		5,053			16		1.24	%		28,069			245		3.46	%		10,008			78		3.10	%
Total interest-bearing liabilities		1,221,678		$	2,237		0.73	%		1,221,688		$	2,238		0.73	%		774,295		$	1,462		0.75	%

Noninterest-Bearing liabilities:
Noninterest-bearing demand deposits		596,854								555,060								352,024
Other liabilities		8,144								7,292								4,894
Total liabilities		1,826,676								1,784,040								1,131,213
Stockholders' equity		248,925								195,802								120,706
Total liabilities and stockholders' equity	$	2,075,601							$	1,979,842							$	1,251,919

Net interest rate spread							4.27	%							4.29	%							4.10	%

Net interest income and margin				$	21,255		4.52	%				$	20,407		4.53	%				$	12,590		4.35	%

Net interest income and margin (tax equivalent)				$	21,623		4.60	%				$	20,770		4.61	%				$	12,651		4.37	%

Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)

	Year Ended
	December 31, 2015								December 31, 2014
	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	$	1,525,325		$	85,443		5.60	%	$	917,218		$	50,243		5.48	%
Securities		136,277			3,124		2.29	%		91,318			1,851		2.03	%
Deposits in other financial institutions		73,995			239		0.32	%		81,839			311		0.38	%
Total interest-earning assets		1,735,597		$	88,806		5.12	%		1,090,375		$	52,405		4.81	%
Allowance for loan losses		(10,004	)							(7,276	)
Noninterest-earning assets		211,419								109,852
Total assets	$	1,937,012							$	1,192,951

Liabilities and Stockholders' Equity
Interest-Bearing Liabilities:
Interest-bearing demand deposits	$	100,139		$	163		0.16	%	$	69,139		$	134		0.19	%
Money market and savings deposits		429,153			1,838		0.43	%		263,277			1,127		0.43	%
Certificates and other time deposits		559,247			5,272		0.94	%		404,006			4,081		1.01	%
Short-term borrowings		43,989			82		0.19	%		-			-		0.00	%
Subordinated debt		9,004			578		6.42	%		-			-		0.00	%
Other borrowed funds		22,354			707		3.16	%		7,537			229		3.04	%
Total interest-bearing liabilities		1,163,886		$	8,640		0.74	%		743,959		$	5,571		0.75	%

Noninterest-Bearing liabilities:
Noninterest-bearing demand deposits		554,704								328,743
Other liabilities		7,316								3,789
Total liabilities		1,725,906								1,076,491
Stockholders' equity		211,106								116,460
Total liabilities and stockholders' equity	$	1,937,012							$	1,192,951

Net interest rate spread							4.38	%							4.06	%

Net interest income and margin				$	80,166		4.62	%				$	46,834		4.30	%

Net interest income and margin (tax equivalent)				$	81,156		4.68	%				$	47,049		4.31	%

Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)

	Three Months Ended
		2015												2014
	December 31			September 30			June 30			March 31			December 31
	(Dollars in thousands)
Period-end Loan Portfolio:
Loans held for sale	$	27,887		$	27,004		$	25,629		$	33,409		$	-

Commercial and industrial		383,044			367,341			346,703			325,598			242,034
Mortgage warehouse		59,071			65,928			81,255			36,912			28,329
Real Estate:
Commercial real estate (including multi-family residential)		745,595			710,857			678,979			640,391			429,986
Commercial real estate construction and land development		154,646			151,369			140,437			135,760			85,484
1-4 family residential (including home equity)		205,200			185,473			178,635			174,070			135,127
Residential construction		93,848			95,212			94,167			86,412			72,402
Consumer and other		11,761			13,232			15,852			12,180			8,692
Total loans	$	1,681,052		$	1,616,416		$	1,561,657		$	1,444,732		$	1,002,054

Asset Quality:
Nonaccrual loans	$	6,035		$	6,185		$	5,722		$	6,852		$	3,184
Accruing loans 90 or more
days past due		-			-			-			-			-
Total nonperforming loans		6,035			6,185			5,722			6,852			3,184
Other real estate		-			-			21			-			-
Other repossessed assets		131			131			491			-			-
Total nonperforming assets	$	6,166		$	6,316		$	6,234		$	6,852		$	3,184

Net charge-offs (recoveries)	$	265		$	638		$	48		$	(11	)	$	(6	)

Nonaccrual loans:
Loans held for sale	$	209		$	498		$	1,130		$	782		$	-
Commercial and industrial		2,664			3,477			3,186			4,204			1,527
Warehouse lending		-			-			-			-			-
Real Estate:
Commercial real estate (including multi-family residential)		2,857			1,783			974			1,293			1,653
Commercial real estate construction and land development		-			-			-			246			-
1-4 family residential (including home equity)		239			341			343			296			-
Residential construction		-			-			-			-			-
Consumer and other		66			86			89			31			4
Total nonaccrual loans	$	6,035		$	6,185		$	5,722		$	6,852		$	3,184

Asset Quality Ratios:
Nonperforming assets to total assets		0.30	%		0.31	%		0.32	%		0.36	%		0.25	%
Nonperforming loans to total loans		0.36	%		0.38	%		0.37	%		0.47	%		0.32	%
Allowance for loan losses to nonperforming loans		217.03	%		181.15	%		180.22	%		130.47	%		258.98	%
Allowance for loan losses to total loans		0.78	%		0.69	%		0.66	%		0.62	%		0.82	%
Provision for loan losses to average loans (annualized)		0.53	%		0.39	%		0.39	%		0.20	%		0.20	%
Net charge-offs to average loans (annualized)		0.06	%		0.16	%		0.01	%		0.00	%		0.00	%

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. Specifically, Allegiance reviews tangible book value per common share, return on average tangible common equity and the tangible common equity to tangible assets ratio 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. Allegiance believes these non-GAAP financial measures provide information useful to management and investors that is supplementary to our financial condition and results of operations computed in accordance with GAAP. 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															Year Ended
		2015												2014			2015			2014
	December 31			September 30			June 30			March 31			December 31			December 31			December 31
	(Dollars and share amounts in thousands)

Total Stockholders' equity	$	258,490		$	196,043		$	201,830		$	199,024		$	131,778		$	258,490		$	131,778
Less: Goodwill and core deposit intangibles, net		44,619			44,826			45,034			45,241			12,891			44,619			12,891
Tangible stockholders’ equity	$	213,871		$	151,217		$	156,796		$	153,783		$	118,887		$	213,871		$	118,887

Less: Preferred Stock		-			-			11,550			11,550			-			-			-
Tangible common stockholders’ equity	$	213,871		$	151,217		$	145,246		$	142,233		$	118,887		$	213,871		$	118,887

Shares outstanding at end of period		12,813			9,823			9,823			9,824			7,477			12,813			7,477

Tangible book value per common share	$	16.69		$	15.39		$	14.79		$	14.48		$	15.90		$	16.69		$	15.90

Net income attributable to common stockholders	$	4,212		$	4,047		$	3,623		$	3,345		$	2,300		$	15,227		$	9,005

Average common stockholders equity		248,925			194,045			189,907			186,294			120,706			204,935			116,460
Less: Average goodwill and core deposit intangibles, net		44,886			44,929			45,150			45,260			12,927			45,055			13,007
Average tangible common stockholders’ equity	$	204,039		$	149,116		$	144,757		$	141,034		$	107,779		$	159,880		$	103,453

Return on average tangible common equity		8.19	%		10.77	%		10.04	%		9.62	%		8.46	%		9.52	%		8.70	%

Total assets	$	2,084,579		$	2,012,350		$	1,945,156		$	1,884,886		$	1,280,008		$	2,084,579		$	1,280,008
Less: Goodwill and core deposit intangibles, net		44,619			44,826			45,034			45,241			12,891			44,619			12,891
Tangible assets	$	2,039,960		$	1,967,524		$	1,900,122		$	1,839,645		$	1,267,117		$	2,039,960		$	1,267,117

Tangible common equity to tangible assets		10.48	%		7.69	%		7.64	%		7.73	%		9.38	%		10.48	%		9.38	%