Allegiance Bancshares, Inc. Reports Second Quarter 2022 Results
07/29/2022 - 07:00 AM
Core loan growth of $112.1 million , or 10.7% (annualized), to $4.32 billion as of June 30, 2022 compared to $4.20 billion as of March 31, 2022 and $355.4 million , or 9.0% , compared to June 30, 2021; core loans exclude Paycheck Protection Program (PPP) loans Net income and diluted earnings per share of $16.4 million and $0.80 for the second quarter 2022, respectively Board declared quarterly dividend of $0.14 per share of common stock HOUSTON, July 29, 2022 (GLOBE NEWSWIRE) -- Allegiance Bancshares, Inc. (NASDAQ: ABTX) (Allegiance), the holding company of Allegiance Bank (the "Bank"), today reported net income of $16.4 million and diluted earnings per share of $0.80 for the second quarter 2022 compared to net income of $22.9 million and diluted earnings per share of $1.12 for the second quarter 2021. Net income for the six months ended June 30, 2022 was $35.1 million , or $1.71 per diluted share, compared to $40.9 million , or $2.01 per diluted share, for the six months ended June 30, 2021. The second quarter and six months ended June 30, 2022 results reflect the decreased impact of PPP loan revenue and included a normalized provision for credit losses compared to the recapture of provision for credit losses during the comparable periods in 2021. Additionally, noninterest expenses were elevated due to acquisition and merger-related expenses related to the pending merger of equals with CBTX, Inc. (“CBTX”) and increased operational losses recorded during the three and six months ended June 30, 2022.
“We are pleased with the overall results for the second quarter as we reported another record quarter of loan originations as core loans grew 10.7% (annualized),” said Steve Retzloff, Allegiance’s Chief Executive Officer. “Our team remains focused on delivering excellent customer service and our commitment to the communities we serve,” continued Retzloff.
“We continue to make significant progress developing the foundation for our pending merger of equals with CBTX. We are excited to have received approval from the Federal Deposit Insurance Corporation and the Texas Department of Banking along with the shareholders of both companies who supported the merger at their respective meetings during the quarter and look forward to continuing to drive and deliver strong performance results for them as a combined institution,” concluded Retzloff.
Second Quarter 2022 Results
Net interest income before the provision for credit losses in the second quarter 2022 increased $886 thousand , or 1.6% , to $57.5 million from $56.6 million for the second quarter 2021 and increased $2.3 million , or 4.2% , from $55.2 million for the first quarter 2022. These increases were primarily due to increased interest income on securities partially offset by decreased interest income on loans due to decreased impact of loans within the Small Business Administration Paycheck Protection Program (PPP) and changes in market interest rates. The net interest margin on a tax equivalent basis decreased 49 basis points to 3.53% for the second quarter 2022 from 4.02% for the second quarter 2021 and increased 23 basis points from 3.30% for the first quarter 2022. 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 decreased PPP revenue recognition and changes in the composition of earnings assets, partially offset by the decrease in funding costs. PPP revenue of $1.4 million was recognized during the three months ended June 30, 2022 compared to the $6.4 million recognized for the three months ended June 30, 2021. The increase in the margin over the prior quarter was primarily due to changes in market interest rates and the composition of earnings assets.
Noninterest income for the second quarter 2022 was $2.7 million , an increase of $431 thousand , or 19.0% , compared to $2.3 million for the second quarter 2021 and a decrease of $1.3 million , or 32.7% , compared to $4.0 million for the first quarter 2022. First quarter 2022 other noninterest income included $1.3 million in income from Small Business Investment Company investments.
Noninterest expense for the second quarter 2022 increased $4.3 million , or 12.8% , to $37.9 million from $33.6 million for the second quarter 2021 and increased $3.4 million , or 9.8% , compared to the first quarter of 2022. These increases in noninterest expense over the prior periods were primarily due to acquisition and merger-related expenses associated with the pending merger with CBTX along with increased operational losses recorded during the second quarter 2022.
In the second quarter 2022, Allegiance’s efficiency ratio increased to 62.96% compared to 57.07% for the second quarter 2021 and 58.32% for the first quarter 2022. Second quarter 2022 annualized returns on average assets, average equity and average tangible equity were 0.94% , 8.86% and 13.00% , respectively, compared to 1.42% , 11.87% and 17.20% for the second quarter 2021. Annualized returns on average assets, average equity and average tangible equity for the first quarter 2022 were 1.04% , 9.40% and 13.35% , respectively. Return on average tangible equity is a non-GAAP measure. Please refer to the non-GAAP reconciliation on page 11.
Six Months Ended June 30, 2022 Results
Net interest income before provision for credit losses for the six months ended June 30, 2022 increased $360 thousand , or 0.3% , to $112.7 million from $112.3 million for the six months ended June 30, 2021 primarily due to lower costs related to interest-bearing liabilities and higher interest income from securities and deposits in other financial institutions, partially offset by the decreased impact of PPP loan revenue. The net interest margin on a tax equivalent basis decreased 69 basis points to 3.41% for the six months ended June 30, 2022 from 4.10% for the six months ended June 30, 2021. 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 decreased PPP revenue recognition and changes in the composition of earnings assets, partially offset by decreased funding costs. PPP revenue of $4.0 million was recognized during the six months ended June 30, 2022 compared to the $13.3 million recognized for the same period in 2021.
Noninterest income for the six months ended June 30, 2022 was $6.7 million , an increase of $2.7 million , or 67.7% , compared to $4.0 million for the six months ended June 30, 2021 due primarily to $1.3 million in income from Small Business Investment Company investments along with increased transactional fee income.
Noninterest expense for the six months ended June 30, 2022 increased $3.9 million , or 5.7% , to $72.4 million from $68.5 million for the six months ended June 30, 2021. The increase in noninterest expense over the six months ended June 30, 2021 was primarily due to acquisition and merger-related expenses associated with the pending merger with CBTX and increased operational losses recorded during 2022.
Allegiance’s efficiency ratio increased to 60.66% for the six months ended June 30, 2022 from 58.93% for the six months ended June 30, 2021. For the six months ended June 30, 2022, returns on average assets, average equity and average tangible equity were 0.99% , 9.14% and 13.19% , respectively, compared to 1.30% , 10.75% and 15.65% , respectively, for the six months ended June 30, 2021. Return on average tangible equity is a non-GAAP measure. Please refer to the non-GAAP reconciliation on page 11.
Financial Condition
Total assets at June 30, 2022 increased $223.1 million , or 3.4% , to $6.73 billion compared to $6.51 billion at June 30, 2021 and decreased $417.6 million , or 23.4% (annualized), compared to $7.15 billion at March 31, 2022.
Total loans at June 30, 2022 decreased $111.9 million , or 2.5% , to $4.35 billion compared to $4.46 billion at June 30, 2021, primarily due to paydowns on PPP loans partially offset by organic loan growth, and increased $65.3 million , or 6.1% (annualized) compared to $4.28 billion at March 31, 2022 due to the increase in organic core loans. Core loans, which exclude PPP loans, increased $355.4 million , or 9.0% , to $4.32 billion at June 30, 2022 from $3.96 billion at June 30, 2021 and increased $112.1 million , or 10.7% (annualized), from $4.20 billion at March 31, 2022.
Deposits at June 30, 2022 increased $447.3 million , or 8.2% , to $5.88 billion compared to $5.43 billion at June 30, 2021 and decreased $281.7 million , or 18.3% (annualized), compared to $6.16 billion at March 31, 2022.
Asset Quality
Nonperforming assets totaled $28.2 million , or 0.42% of total assets, at June 30, 2022 compared to $38.0 million , or 0.58% of total assets, at June 30, 2021 and $26.3 million , or 0.37% of total assets at March 31, 2022. The allowance for credit losses on loans as a percentage of total loans was 1.16% at June 30, 2022, 1.11% at June 30, 2021 and 1.15% at March 31, 2022.
The provision for credit losses for the second quarter 2022 was $2.1 million compared to the recapture of provision for credit losses of $2.7 million for the second quarter 2021 and the provision for credit losses of $1.8 million for the first quarter 2022.
Second quarter 2022 net charge-offs were $571 thousand , or 0.05% (annualized) of average loans, an increase of $409 thousand from net charge-offs of $162 thousand , or 0.01% (annualized) of average loans, for the second quarter 2021 and an increase of $254 thousand from $317 thousand , or 0.03% (annualized) of average loans, for the first quarter 2022.
Dividend
The Board of Directors of Allegiance declared a cash dividend on July 28, 2022 of $0.14 per share to be paid on September 15, 2022 to all shareholders of record as of August 31, 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 jointly announced that they entered into a definitive merger agreement pursuant to which the companies will combine in an all-stock merger of equals. 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. Following the completion of the merger, we estimate that former Allegiance shareholders will own approximately 54% and former CBTX shareholders will own approximately 46% of the combined company. The companies have received the requisite approvals from the Federal Deposit Insurance Corporation, Texas Department of Banking and both companies’ shareholders and, subject to receipt of the approval of the Board of Governors of the Federal Reserve System and the satisfaction or in some cases waiver of the closing conditions, the parties anticipate closing in the third 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 11 of this earnings release for a reconciliation of these non-GAAP financial measures.
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Allegiance Bancshares, Inc.
As of June 30, 2022, Allegiance was a $6.73 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 June 30, 2022, Allegiance Bank operated 26 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 25 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, statements related to the expected timing of the completion of the merger, the combined company's plans, business and growth strategies, objectives, expectations and intentions, and other statements that are not historical facts, including 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. Forward-looking statements may be identified by terminology such as “may,” “will,” “should,” “could,” “scheduled,” “plans,” “intends,” “projects,” “anticipates,” “expects,” “believes,” “estimates,” “potential,” “would,” 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 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 amount of the costs, fees, expenses and charges related to the merger; (6) the ability by each party to obtain required regulatory 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); (7) reputational risk and the reaction of each company's customers, suppliers, employees or other business partners to the merger; (8) the failure of the closing conditions in the merger agreement to be satisfied, or any unexpected delay in closing the merger; (9) the possibility that the merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events; (10) the dilution caused by CBTX's issuance of additional shares of its common stock in the merger; (11) general competitive, economic, political and market conditions; and (12) other factors that may affect future results of Allegiance and CBTX 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, Federal Deposit Insurance Corporation, the Texas Department of Banking and Office of the Comptroller of the Currency and legislative and regulatory actions and reforms.
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 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. Each of Allegiance and CBTX disclaims any obligation and does 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.
Allegiance Bancshares, Inc. Financial Highlights (Unaudited)
2022 2021 June 30 March 31 December 31 September 30 June 30 (Dollars in thousands) ASSETS Cash and due from banks $ 17,547 $ 26,629 $ 23,961 $ 23,903 $ 146,397 Interest-bearing deposits at other financial institutions 275,290 672,755 733,548 879,858 564,888 Total cash and cash equivalents 292,837 699,384 757,509 903,761 711,285 Available for sale securities, at fair value 1,709,321 1,790,707 1,773,765 1,211,476 977,282 Loans held for investment 4,348,833 4,283,514 4,220,486 4,289,469 4,460,743 Less: allowance for credit losses on loans (50,242 ) (49,215 ) (47,940 ) (50,491 ) (49,586 ) Loans, net 4,298,591 4,234,299 4,172,546 4,238,978 4,411,157 Accrued interest receivable 29,882 31,505 33,392 33,523 37,075 Premises and equipment, net 58,482 62,168 63,708 65,140 65,442 Other real estate owned — — — 1,397 1,397 Federal Home Loan Bank stock 4,078 9,376 9,358 8,326 8,234 Bank owned life insurance 28,170 28,374 28,240 28,101 27,976 Goodwill 223,642 223,642 223,642 223,642 223,642 Core deposit intangibles, net 13,156 13,907 14,658 15,482 16,306 Other assets 73,605 56,001 28,136 29,935 28,871 Total assets $ 6,731,764 $ 7,149,363 $ 7,104,954 $ 6,759,761 $ 6,508,667 LIABILITIES AND SHAREHOLDERS’ EQUITY LIABILITIES: Deposits: Noninterest-bearing $ 2,394,719 $ 2,353,604 $ 2,243,085 $ 2,086,683 $ 1,973,042 Interest-bearing Demand 1,016,381 1,070,855 869,984 594,959 553,874 Money market and savings 1,510,008 1,552,853 1,643,745 1,604,222 1,556,920 Certificates and other time 959,524 1,185,015 1,290,825 1,381,014 1,349,522 Total interest-bearing deposits 3,485,913 3,808,723 3,804,554 3,580,195 3,460,316 Total deposits 5,880,632 6,162,327 6,047,639 5,666,878 5,433,358 Accrued interest payable 1,500 3,086 1,753 3,296 1,940 Borrowed funds — 89,959 89,956 139,954 139,951 Subordinated debt 109,109 108,978 108,847 108,715 108,584 Other liabilities 35,194 33,073 40,291 42,326 35,684 Total liabilities 6,026,435 6,397,423 6,288,486 5,961,169 5,719,517 SHAREHOLDERS’ EQUITY: Common stock 20,154 20,378 20,337 20,218 20,213 Capital surplus 504,165 512,284 510,797 507,948 506,810 Retained earnings 296,477 282,896 267,092 247,966 231,333 Accumulated other comprehensive (loss) income (115,467 ) (63,618 ) 18,242 22,460 30,794 Total shareholders’ equity 705,329 751,940 816,468 798,592 789,150 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 6,731,764 $ 7,149,363 $ 7,104,954 $ 6,759,761 $ 6,508,667
Three Months Ended Six Months Ended 2022 2021 2022 2021 June 30 March 31 December 31 September 30 June 30 June 30 June 30 (Dollars in thousands, except per share data) INTEREST INCOME: Loans, including fees $ 53,835 $ 52,370 $ 56,855 $ 58,176 $ 57,691 $ 106,205 $ 115,682 Securities: Taxable 5,571 5,068 3,933 2,998 2,556 10,639 4,958 Tax-exempt 2,557 2,525 2,526 2,498 2,491 5,082 4,885 Deposits in other financial institutions 877 340 317 221 94 1,217 135 Total interest income 62,840 60,303 63,631 63,893 62,832 123,143 125,660 INTEREST EXPENSE: Demand, money market and savings deposits 1,859 1,347 1,277 1,267 1,337 3,206 2,821 Certificates and other time deposits 1,922 2,156 2,391 2,583 2,989 4,078 6,654 Borrowed funds 114 186 434 436 469 300 1,008 Subordinated debt 1,463 1,442 1,425 1,441 1,441 2,905 2,883 Total interest expense 5,358 5,131 5,527 5,727 6,236 10,489 13,366 NET INTEREST INCOME 57,482 55,172 58,104 58,166 56,596 112,654 112,294 Provision for credit losses 2,143 1,814 (2,577 ) 2,295 (2,679 ) 3,957 (2,040 ) Net interest income after provision for credit losses 55,339 53,358 60,681 55,871 59,275 108,697 114,334 NONINTEREST INCOME: Nonsufficient funds fees 126 116 156 131 94 242 177 Service charges on deposit accounts 560 527 476 425 382 1,087 770 (Loss) gain on sale of securities (17 ) — — — — (17 ) 49 Loss on sale of other real estate and repossessed assets — — (89 ) — — — (176 ) Bank owned life insurance 342 133 139 125 151 475 290 Debit card and ATM card income 880 819 834 771 761 1,699 1,391 Other 813 2,423 938 647 885 3,236 1,508 Total noninterest income 2,704 4,018 2,454 2,099 2,273 6,722 4,009 NONINTEREST EXPENSE: Salaries and employee benefits 21,864 22,728 22,918 22,335 22,472 44,592 44,924 Net occupancy and equipment 2,220 2,205 2,194 2,335 2,225 4,425 4,615 Depreciation 1,012 1,033 1,103 1,060 1,057 2,045 2,091 Data processing and software amortization 2,522 2,498 2,264 2,222 2,176 5,020 4,376 Professional fees 662 138 1,008 620 608 800 1,397 Regulatory assessments and FDIC insurance 1,256 1,261 949 883 768 2,517 1,575 Core deposit intangibles amortization 751 751 824 824 824 1,502 1,648 Communications 363 341 395 358 332 704 653 Advertising 483 462 481 481 432 945 730 Other real estate expense 65 59 69 137 229 124 342 Acquisition and merger-related expenses 1,667 451 1,408 603 — 2,118 — Other 5,039 2,590 3,131 2,438 2,472 7,629 6,163 Total noninterest expense 37,904 34,517 36,744 34,296 33,595 72,421 68,514 INCOME BEFORE INCOME TAXES 20,139 22,859 26,391 23,674 27,953 42,998 49,829 Provision for income taxes 3,702 4,202 4,833 4,614 5,028 7,904 8,894 NET INCOME $ 16,437 $ 18,657 $ 21,558 $ 19,060 $ 22,925 $ 35,094 $ 40,935 EARNINGS PER SHARE Basic $ 0.81 $ 0.92 $ 1.06 $ 0.94 $ 1.13 $ 1.72 $ 2.03 Diluted $ 0.80 $ 0.91 $ 1.06 $ 0.93 $ 1.12 $ 1.71 $ 2.01
Three Months Ended Six Months Ended 2022 2021 2022 2021 June 30 March 31 December 31 September 30 June 30 June 30 June 30 (Dollars and share amounts in thousands, except per share data) Net income $ 16,437 $ 18,657 $ 21,558 $ 19,060 $ 22,925 $ 35,094 $ 40,935 Earnings per share, basic $ 0.81 $ 0.92 $ 1.06 $ 0.94 $ 1.13 $ 1.72 $ 2.03 Earnings per share, diluted $ 0.80 $ 0.91 $ 1.06 $ 0.93 $ 1.12 $ 1.71 $ 2.01 Dividends per share $ 0.14 $ 0.14 $ 0.12 $ 0.12 $ 0.12 $ 0.28 $ 0.24 Return on average assets(A) 0.94 % 1.04 % 1.23 % 1.14 % 1.42 % 0.99 % 1.30 % Return on average equity(A) 8.86 % 9.40 % 10.60 % 9.45 % 11.87 % 9.14 % 10.75 % Return on average tangible equity(A)(B) 13.00 % 13.35 % 15.05 % 13.49 % 17.20 % 13.19 % 15.65 % Net interest margin (tax equivalent)(A)(C) 3.53 % 3.30 % 3.57 % 3.90 % 4.02 % 3.41 % 4.10 % Efficiency ratio(D) 62.96 % 58.32 % 60.68 % 56.91 % 57.07 % 60.66 % 58.93 % Capital Ratios Allegiance Bancshares, Inc.(Consolidated) Equity to assets 10.48 % 10.52 % 11.49 % 11.81 % 12.12 % 10.48 % 12.12 % Tangible equity to tangible assets(B) 7.21 % 7.44 % 8.42 % 8.58 % 8.76 % 7.21 % 8.76 % Estimated common equity tier 1 capital 12.06 % 12.28 % 12.47 % 12.37 % 12.18 % 12.06 % 12.18 % Estimated tier 1 risk-based capital 12.26 % 12.49 % 12.69 % 12.60 % 12.41 % 12.26 % 12.41 % Estimated total risk-based capital 15.47 % 15.76 % 16.08 % 16.13 % 15.98 % 15.47 % 15.98 % Estimated tier 1 leverage capital 8.65 % 8.37 % 8.53 % 8.76 % 8.56 % 8.65 % 8.56 % Allegiance Bank Estimated common equity tier 1 capital 12.51 % 12.48 % 12.63 % 12.81 % 13.03 % 12.51 % 13.03 % Estimated tier 1 risk-based capital 12.51 % 12.48 % 12.63 % 12.81 % 13.03 % 12.51 % 13.03 % Estimated total risk-based capital 14.50 % 14.50 % 14.71 % 14.98 % 15.22 % 14.50 % 15.22 % Estimated tier 1 leverage capital 8.83 % 8.37 % 8.49 % 8.91 % 8.99 % 8.83 % 8.99 % Other Data Weighted average shares: Basic 20,357 20,363 20,260 20,221 20,203 20,360 20,171 Diluted 20,530 20,526 20,423 20,411 20,386 20,522 20,359 Period end shares outstanding 20,154 20,378 20,337 20,218 20,213 20,154 20,213 Book value per share $ 35.00 $ 36.90 $ 40.15 $ 39.50 $ 39.04 $ 35.00 $ 39.04 Tangible book value per share(B) $ 23.25 $ 25.24 $ 28.43 $ 27.67 $ 27.17 $ 23.25 $ 27.17
(A) Interim periods annualized.
Three Months Ended June 30, 2022 March 31, 2022 June 30, 2021 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 $ 4,303,714 $ 53,835 5.02 % $ 4,231,507 $ 52,370 5.02 % $ 4,543,142 $ 57,691 5.09 % Securities 1,778,745 8,128 1.83 % 1,835,618 7,593 1.68 % 876,099 5,047 2.31 % Deposits in other financial institutions and other 535,546 877 0.66 % 806,583 340 0.17 % 294,188 94 0.13 % Total interest-earning assets 6,618,005 $ 62,840 3.81 % 6,873,708 $ 60,303 3.56 % 5,713,429 $ 62,832 4.41 % Allowance for credit losses on loans (49,290 ) (48,343 ) (52,699 ) Noninterest-earning assets 450,584 432,133 835,801 Total assets $ 7,019,299 $ 7,257,498 $ 6,496,531 Liabilities and Shareholders' Equity Interest-Bearing Liabilities: Interest-bearing demand deposits $ 1,044,493 $ 927 0.36 % $ 1,071,010 $ 549 0.21 % $ 534,314 $ 326 0.24 % Money market and savings deposits 1,566,376 932 0.24 % 1,584,373 798 0.20 % 1,561,987 1,011 0.26 % Certificates and other time deposits 1,088,664 1,922 0.71 % 1,245,180 2,156 0.70 % 1,365,881 2,989 0.88 % Borrowed funds 50,116 114 0.91 % 89,880 186 0.84 % 144,126 469 1.31 % Subordinated debt 109,045 1,463 5.38 % 108,913 1,442 5.37 % 108,523 1,441 5.33 % Total interest-bearing liabilities 3,858,694 $ 5,358 0.56 % 4,099,356 $ 5,131 0.51 % 3,714,831 $ 6,236 0.67 % Noninterest-Bearing Liabilities: Noninterest-bearing demand deposits 2,382,230 2,312,114 1,968,714 Other liabilities 34,249 41,324 38,183 Total liabilities 6,275,173 6,452,794 5,721,728 Shareholders' equity 744,126 804,704 774,803 Total liabilities and shareholders' equity $ 7,019,299 $ 7,257,498 $ 6,496,531 Net interest rate spread 3.25 % 3.05 % 3.74 % Net interest income and margin $ 57,482 3.48 % $ 55,172 3.26 % $ 56,596 3.97 % Net interest income and net interest margin (tax equivalent) $ 58,238 3.53 % $ 55,922 3.30 % $ 57,287 4.02 %
Six Months Ended June 30, 2022 2021 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 $ 4,267,810 $ 106,205 5.02 % $ 4,557,016 $ 115,682 5.12 % Securities 1,807,024 15,721 1.75 % 832,884 9,843 2.38 % Deposits in other financial institutions 670,316 1,217 0.37 % 195,768 135 0.14 % Total interest-earning assets 6,745,150 $ 123,143 3.68 % 5,585,668 $ 125,660 4.54 % Allowance for credit losses on loans (48,819 ) (53,033 ) Noninterest-earning assets 441,390 798,468 Total assets $ 7,137,721 $ 6,331,103 Liabilities and Shareholders' Equity Interest-Bearing Liabilities: Interest-bearing demand deposits $ 1,057,678 $ 1,476 0.28 % $ 496,399 $ 697 0.28 % Money market and savings deposits 1,575,325 1,730 0.22 % 1,550,620 2,124 0.28 % Certificates and other time deposits 1,166,490 4,078 0.70 % 1,349,364 6,654 0.99 % Borrowed funds 69,868 300 0.87 % 149,496 1,008 1.36 % Subordinated debt 108,979 2,905 5.38 % 108,455 2,883 5.36 % Total interest-bearing liabilities 3,978,340 $ 10,489 0.53 % 3,654,334 13,366 0.74 % Noninterest-Bearing Liabilities: Noninterest-bearing demand deposits 2,347,366 1,868,783 Other liabilities 37,767 39,748 Total liabilities 6,363,473 5,562,865 Shareholders' equity 774,248 768,238 Total liabilities and shareholders' equity $ 7,137,721 $ 6,331,103 Net interest rate spread 3.15 % 3.80 % Net interest income and margin $ 112,654 3.37 % $ 112,294 4.05 % Net interest income and net interest margin (tax equivalent) $ 114,160 3.41 % $ 113,604 4.10 %
Three Months Ended 2022 2021 June 30 March 31 December 31 September 30 June 30 (Dollars in thousands) Period-end Loan Portfolio: Commercial and industrial $ 727,068 $ 714,450 $ 693,559 $ 728,897 $ 690,867 Paycheck Protection Program (PPP) 31,855 78,624 145,942 290,028 499,207 Real estate: Commercial real estate (including multi-family residential) 2,265,155 2,197,502 2,104,621 2,073,521 2,051,516 Commercial real estate construction and land development 450,694 453,473 439,125 382,610 371,732 1-4 family residential (including home equity) 682,066 669,306 685,071 683,919 715,119 Residential construction 155,017 136,760 117,901 104,638 111,956 Consumer and other 36,978 33,399 34,267 25,856 20,346 Total loans $ 4,348,833 $ 4,283,514 $ 4,220,486 $ 4,289,469 $ 4,460,743 Asset Quality: Nonaccrual loans $ 28,225 $ 26,275 $ 24,127 $ 28,369 $ 36,643 Accruing loans 90 or more days past due — — — — — Total nonperforming loans 28,225 26,275 24,127 28,369 36,643 Other real estate — — — 1,397 1,397 Total nonperforming assets $ 28,225 $ 26,275 $ 24,127 $ 29,766 $ 38,040 Net charge-offs $ 571 $ 317 $ 1,353 $ 450 $ 162 Nonaccrual loans: Commercial and industrial $ 9,145 $ 7,809 $ 8,358 $ 10,247 $ 12,949 Real estate: Commercial real estate (including multi-family residential) 14,409 15,259 12,639 14,629 18,123 Commercial real estate construction and land development 1,511 — 63 53 53 1-4 family residential (including home equity) 3,040 3,065 2,875 3,224 4,839 Residential construction — — — — — Consumer and other 120 142 192 216 679 Total nonaccrual loans $ 28,225 $ 26,275 $ 24,127 $ 28,369 $ 36,643 Asset Quality Ratios: Nonperforming assets to total assets 0.42 % 0.37 % 0.34 % 0.44 % 0.58 % Nonperforming loans to total loans 0.65 % 0.61 % 0.57 % 0.66 % 0.82 % Allowance for credit losses on loans to nonperforming loans 178.01 % 187.31 % 198.70 % 177.98 % 135.32 % Allowance for credit losses on loans to total loans 1.16 % 1.15 % 1.14 % 1.18 % 1.11 % Net charge-offs to average loans (annualized) 0.05 % 0.03 % 0.13 % 0.04 % 0.01 %
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 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 Six Months Ended 2022 2021 2022 2021 June 30 March 31 December 31 September 30 June 30 June 30 June 30 (Dollars and share amounts in thousands, except per share data) Total shareholders' equity $ 705,329 $ 751,940 $ 816,468 $ 798,592 $ 789,150 $ 705,329 $ 789,150 Less: Goodwill and core deposit intangibles, net 236,798 237,549 238,300 239,124 239,948 236,798 239,948 Tangible shareholders’ equity $ 468,531 $ 514,391 $ 578,168 $ 559,468 $ 549,202 $ 468,531 $ 549,202 Shares outstanding at end of period 20,154 20,378 20,337 20,218 20,213 20,154 20,213 Tangible book value per share $ 23.25 $ 25.24 $ 28.43 $ 27.67 $ 27.17 $ 23.25 $ 27.17 Net income $ 16,437 $ 18,657 $ 21,558 $ 19,060 $ 22,925 $ 35,094 $ 40,935 Average shareholders' equity $ 744,126 $ 804,704 $ 806,941 $ 800,146 $ 774,803 $ 774,248 $ 768,238 Less: Average goodwill and core deposit intangibles, net 237,153 237,925 238,700 239,497 240,331 237,537 240,746 Average tangible shareholders’ equity $ 506,973 $ 566,779 $ 568,241 $ 560,649 $ 534,472 $ 536,711 $ 527,492 Return on average tangible equity (A) 13.00 % 13.35 % 15.05 % 13.49 % 17.20 % 13.19 % 15.65 % Total assets $ 6,731,764 $ 7,149,363 $ 7,104,954 $ 6,759,761 $ 6,508,667 $ 6,731,764 $ 6,508,667 Less: Goodwill and core deposit intangibles, net 236,798 237,549 238,300 239,124 239,948 236,798 239,948 Tangible assets $ 6,494,966 $ 6,911,814 $ 6,866,654 $ 6,520,637 $ 6,268,719 $ 6,494,966 $ 6,268,719 Tangible equity to tangible assets 7.21 % 7.44 % 8.42 % 8.58 % 8.76 % 7.21 % 8.76 %
(A) Interim periods annualized.
Allegiance Bancshares, Inc. ir@allegiancebank.com
