ABTX - Allegiance Bancshares Inc. Reports First Quarter 2021 Record Results

• Record net income and diluted earnings per share of $18.0 million and $0.89, respectively
  
  
• Funded in excess of $1.04 billion in loans over the last year within the Small Business Administration Paycheck Protection Program (PPP) under the Coronavirus Aid, Relief and Economic Security Act (CARES Act)
  
  
• Deposit growth of 35.9% to $5.37 billion as of March 31, 2021 from $3.95 billion as of March 31, 2020, driven by $696.6 million, or 57.2%, growth in noninterest-bearing deposits
  
  
• Board declared quarterly dividend of $0.12 per share of common stock and authorized repurchases of up to 1 million shares
  

HOUSTON, April 29, 2021 (GLOBE NEWSWIRE) -- Allegiance Bancshares, Inc. (NASDAQ: ABTX) (Allegiance), the holding company of Allegiance Bank (the "Bank"), today reported record net income of $18.0 million and diluted earnings per share of $0.89 for the first quarter 2021 compared to net income of $3.5 million and diluted earnings per share of $0.17 for the first quarter 2020.   The first quarter 2021 results were primarily driven by increased net interest income primarily due to lower funding costs and lower provision expense.

“Allegiance is off to a very productive start in 2021. We are proud to report record quarterly earnings results while continuing to maintain stable asset quality,” said Steve Retzloff, Allegiance’s Chief Executive Officer. “We reached record highs in terms of net income, diluted earnings per share, return on average assets and preserved a solid net interest margin all due to the successful execution of our core strategies,” continued Retzloff.

“These exceptional results highlight our team’s unparalleled and coordinated effort to assist our customers during the PPP process by funding over $1.04 billion of loans since the beginning of the pandemic. A high percentage of these loans were to businesses who were not previously customers and who experienced, first hand, the value of our high service culture. We look forward to solidifying these relationships over the coming months. Our team is excited about the future of Allegiance and continues to believe that providing remarkable service to our customers and our community sets us apart as the Houston region’s premier community bank and will continue to drive future value,” concluded Retzloff.

First Quarter 2021 Results

Net interest income before the provision for credit losses in the first quarter 2021 increased $10.7 million, or 23.7%, to $55.7 million from $45.0 million for the first quarter 2020 and increased $796 thousand, or 1.4%, from $54.9 million in the fourth quarter 2020. These increases were primarily due to changes in the volume and relative mix of the underlying assets and liabilities, the impact of PPP loans as well as lower costs on interest-bearing liabilities. The net interest margin on a tax equivalent basis increased 4 basis points to 4.19% for the first quarter 2021 from 4.15% for the first quarter 2020 and increased 5 basis points from 4.14% for the fourth quarter 2020.

Noninterest income for the first quarter 2021 was $1.7 million, a decrease of $989 thousand, or 36.3%, compared to $2.7 million for the first quarter 2020 and decreased $283 thousand, or 14.0%, compared to $2.0 million for the fourth quarter 2020. First quarter 2021 noninterest income reflected lower transactional fee income, significantly lower correspondent bank rebates, lower gains on sales of securities and higher losses on sales of other real estate when compared to first quarter 2020.

Noninterest expense for the first quarter 2021 increased $2.5 million, or 7.8%, to $34.9 million from $32.4 million for the first quarter 2020 and increased $2.2 million, or 6.6%, compared to the fourth quarter 2020 primarily due to increases in salaries and benefits.

In the first quarter 2021, Allegiance’s efficiency ratio decreased to 60.85% compared to 68.13% for the first quarter 2020 and increased from 57.53% for the fourth quarter 2020. First quarter 2021 annualized returns on average assets, average equity and average tangible equity were 1.18%, 9.59% and 14.03%, respectively, compared to 0.29%, 1.98% and 3.02%, respectively, for the first quarter 2020. Annualized returns on average assets, average equity and average tangible equity for the fourth quarter 2020 were 1.05%, 8.38% and 12.32%, respectively. Return on average tangible equity is a non-GAAP measure. Please refer to the non-GAAP reconciliation on page 9.

Financial Condition

Total assets at March 31, 2021 increased $380.9 million, or 25.2% (annualized), to $6.43 billion compared to $6.05 billion at December 31, 2020 and increased $1.43 billion, or 28.6%, compared to $5.00 billion at March 31, 2020, primarily due to the origination of PPP loans and growth in the securities portfolio.

Total loans at March 31, 2021 increased $167.4 million, or 14.9% (annualized), to $4.66 billion compared to $4.49 billion at December 31, 2020, primarily due to the origination of $331.9 million of PPP loans, and increased $703.6 million, or 17.8%, compared to $3.96 billion at March 31, 2020. Core loans, which exclude the mortgage warehouse portfolio and PPP loans, increased $8.9 million, or 0.9% (annualized), to $3.93 billion at March 31, 2021 from $3.92 billion at December 31, 2020 and decreased $23.8 million, or 0.6%, from $3.95 billion at March 31, 2020.

Deposits at March 31, 2021 increased $385.7 million, or 30.9% (annualized), to $5.37 billion compared to $4.99 billion at December 31, 2020 and increased $1.42 billion, or 35.9%, compared to $3.95 billion at March 31, 2020.

Asset Quality

Nonperforming assets totaled $35.6 million, or 0.55% of total assets, at March 31, 2021, compared to $38.1 million, or 0.63% of total assets, at December 31, 2020 and $34.2 million, or 0.68% of total assets, at March 31, 2020. The allowance for credit losses on loans as a percentage of total loans was 1.13% at March 31, 2021 and 1.18% at December 31, 2020.

The provision for credit losses for the first quarter 2021 was $639 thousand compared to $4.4 million for the fourth quarter 2020 and $11.0 million for the first quarter 2020. The increased provision during 2020 reflected the uncertainty surrounding unemployment, the economic impact caused by COVID-19 and the economic effects related to the sustained lower crude oil prices.

First quarter 2021 net charge-offs were $345 thousand, or 0.03% (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 $2.9 million, or 0.30% (annualized) of average loans, for the first quarter 2020.

The Company is carefully monitoring the hotel, restaurant and bar, and oil and gas portfolios, which it believes are at heightened risk due to the current economic environment. Loan balances in the hotel industry, excluding PPP loans, totaled $125.2 million, or 2.7% of total loans, at March 31, 2021, of which $6.2 million were on nonaccrual. At March 31, 2021, restaurant and bar industry loans, excluding PPP loans, totaled $116.2 million, or 2.5%, of total loans, of which $486 thousand were on nonaccrual. At March 31, 2021, the Company’s allowance for credit losses on loans allocated to its hotel portfolio was 3.5% of total hotel loans and its restaurant and bar portfolio was 1.3% of total restaurant and bar loans. The oil and gas portfolio, excluding PPP loans, totaled $72.5 million, or 1.6%, of total loans at March 31, 2021, of which $3.6 million were on nonaccrual. At March 31, 2021, the allowance for credit losses on loans allocated to the oil and gas loan portfolio was 3.4% of total oil and gas loans.

The Company granted initial principal and interest deferrals on outstanding loan balances to borrowers in connection with the COVID-19 relief provided by the CARES Act and subsequent deferrals upon request and after meeting certain conditions. These deferrals were generally no more than 90 days in duration. As of March 31, 2021, 65 loans with outstanding loan balances of $62.1 million remained on deferral.

Dividend

The Board of Directors of Allegiance has declared a cash dividend of $0.12 per share to be paid on June 15, 2021 to all shareholders of record as of May 28, 2021. The amount and timing of any future dividend payments to shareholders will be subject to the discretion of Allegiance’s Board of Directors.

Share Repurchase Authorization

The Board of Directors of Allegiance approved a stock repurchase authorization, under which Allegiance may repurchase up to one million shares of its outstanding common stock at the discretion of management through April 30, 2022. Repurchases under this program may be made from time to time through open market purchases, privately negotiated transactions or such other manners as will comply with applicable laws and regulations. Allegiance’s previously announced share repurchase program recently expired on March 31, 2021.

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 9 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 Thursday, April 29, 2021 at 9:00 a.m. Central Time (10:00 a.m. Eastern Time) to discuss its first quarter 2021 results. Individuals and investment professionals may participate in the call by dialing (877) 279-2520. The conference ID number is 3792638. 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 March 31, 2021, Allegiance was a $6.43 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 March 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.

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

This release contains forward-looking statements within the meaning of the securities laws that are derived utilizing 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 expected 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. Additionally, the impact of the COVID-19 pandemic is rapidly evolving and its future effects on Allegiance are difficult to predict. These and various other risk factors are discussed in Allegiance’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 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. Because of these uncertainties, readers should not place undue reliance on any forward-looking statement. Allegiance disclaims any 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.

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(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 9 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.

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