• Core loan growth of $363.3 million, or 20.7%, year over year and $76.8 million, or 15.1% (annualized), for the third quarter 2017 compared to the linked quarter
   
• Net interest income increased 15.3% year over year and 7.5% for the third quarter 2017 compared to the linked quarter
   
• Net interest margin on a tax equivalent basis increased 8 basis points for the third quarter compared to the linked quarter

HOUSTON, Oct. 24, 2017 (GLOBE NEWSWIRE) -- Allegiance Bancshares, Inc. (NASDAQ:ABTX) ("Allegiance"), the holding company of Allegiance Bank (the "Bank"), today reported net income of $3.0 million in the third quarter 2017 compared to $5.5 million in the third quarter 2016 and diluted earnings per share of $0.22 in the third quarter 2017 compared to $0.42 in the third quarter 2016.

"Houston experienced an unprecedented natural disaster when Hurricane Harvey struck during the quarter.  As Houstonians, we were proud to see an overwhelming outpouring of support within the community to help each other in our clean up and recovery efforts," commented George Martinez, Allegiance's Chairman and Chief Executive Officer. "Thanks to previously established processes and the extraordinary efforts of our employees to ensure that we took care of our customers and fellow employees, our banking operations were uninterrupted during the storm and most of our banking locations were fully functional within days of the Hurricane," continued Martinez.

"We are extremely proud of our consistently strong loan growth, even in the wake of the Hurricane.  Our provision expense was elevated this quarter in part due to immediate uncertainty in the Houston economy and estimated losses related to Hurricane Harvey.  Additionally, during the quarter, we charged off one energy-related loan relationship we had been monitoring for some time.  We performed a thorough assessment of the impact of the Hurricane on our customers as well as the adequacy of the allowance for loan losses for our current portfolio," added George Martinez.

"Notwithstanding the Hurricane, we delivered solid growth in pre-provision profitability during the quarter as we continue to execute our growth plans.  As Houston’s largest community bank, we are dedicated to serving the dynamic Houston market through the Hurricane recovery and beyond," concluded George Martinez.

Third Quarter 2017 Results

Net interest income before provision for loan losses in the third quarter 2017 increased $3.6 million, or 15.3%, to $27.0 million from $23.4 million for the third quarter 2016 primarily due to organic loan growth.  Net interest income before provision for loan losses in the third quarter 2017 increased $1.9 million, or 7.5%, from $25.1 million in the second quarter 2017.  The net interest margin on a tax equivalent basis decreased 2 basis points to 4.37% for the third quarter 2017 from 4.39% for the third quarter 2016 and increased 8 basis points from 4.29% for the second quarter 2017.

Noninterest income for the third quarter 2017 was $1.5 million, an increase of $186 thousand, or 14.6%, compared to $1.3 million for the third quarter 2016 and slightly decreased $17 thousand compared to $1.5 million for the second quarter 2017.

Noninterest expense for the third quarter 2017 increased $2.8 million, or 18.7%, to $17.7 million from $14.9 million for the third quarter 2016, and increased $1.2 million, or 7.4%, from $16.5 million for the second quarter 2017. The increase in noninterest expense over the third quarter 2016 was primarily due to increased salaries and benefits as a result of increased headcount and professional service fees related to supporting growth initiatives.

In the third quarter 2017, Allegiance’s efficiency ratio increased to 62.14% from 60.34% for the third quarter 2016 and increased from 61.92% for the second quarter 2017.

Third quarter 2017 annualized returns on average assets, average equity and average tangible equity were 0.43%, 3.90% and 4.55%, respectively, compared to 0.90%, 7.77% and 9.21%, respectively, for the third quarter 2016.  Annualized returns on average assets, average equity and average tangible equity for the second quarter 2017 were 0.81%, 7.32% and 8.57%, respectively.

Nine Months Ended September 30, 2017 Results

Net interest income before provision for loan losses for the nine months ended September 30, 2017 increased $9.8 million, or 14.7%, to $76.2 million from $66.4 million for the nine months ended September 30, 2016 primarily due to organic loan growth and an increase in the securities portfolio.  The net interest margin on a tax equivalent basis decreased 5 basis points to 4.34% for the nine months ended September 30, 2017 from 4.39% for the nine months ended September 30, 2016.

Noninterest income for the nine months ended September 30, 2017 was $4.3 million, a decrease of $1.5 million, or 26.1%, compared to $5.8 million for the nine months ended September 30, 2016. The nine months ended September 30, 2016 included a pre-tax gain of $2.1 million on the sale of two Central Texas branch locations that were sold in order to focus on the Houston MSA. Excluding the gain on the sale of these branches, noninterest income would have increased $538 thousand, or 14.4%, for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016.

Noninterest expense for the nine months ended September 30, 2017 increased $7.6 million, or 17.7%, to $50.7 million from $43.1 million for the nine months ended September 30, 2016.  The increase in noninterest expense over the nine months ended September 30, 2016 was primarily due to increases in salaries and benefits as a result of the increased headcount and professional service fees related to supporting growth initiatives.

During the nine months ended September 30, 2017, Allegiance’s efficiency ratio increased to 62.97% from 61.37% for the nine months ended September 30, 2016.

For the nine months ended September 30, 2017, annualized returns on average assets, average equity and average tangible equity were 0.73%, 6.55% and 7.67%, respectively, compared to 0.99%, 8.40% and 10.03%, respectively, for the nine months ended September 30, 2016. Excluding the gain on the sale of the two Central Texas branch locations during the first quarter 2016, the annualized returns on average assets, average equity and average tangible equity for the nine months ended September 30, 2016 would have been 0.92%, 7.75% and 9.24%, respectively.

Financial Condition

Total loans at September 30, 2017 increased $370.8 million, or 20.3%, to $2.20 billion compared to $1.83 billion at September 30, 2016 and increased $86.9 million, or 4.1%, compared to $2.11 billion at June 30, 2017. These increases were due to strong organic loan growth within the Bank’s loan portfolio. Core loans, which exclude the mortgage warehouse portfolio, increased $363.3 million, or 20.7%, to $2.12 billion at September 30, 2017 from $1.75 billion at September 30, 2016 and increased $76.8 million, or 3.8%, from $2.04 billion at June 30, 2017.

Deposits at September 30, 2017 increased $385.7 million, or 20.3%, to $2.29 billion compared to $1.90 billion at September 30, 2016 and increased $187.4 million, or 8.9%, compared to $2.10 billion at June 30, 2017.

Asset Quality

Nonperforming assets totaled $14.6 million, or 0.52% of total assets, at September 30, 2017, compared to $17.1 million, or 0.69% of total assets, at September 30, 2016, and $19.9 million, or 0.73% of total assets, at June 30, 2017. The allowance for loan losses was 1.08% of total loans at September 30, 2017, 0.94% of total loans at September 30, 2016 and 0.99% of total loans at June 30, 2017.

The provision for loan losses for the third quarter 2017 was $6.9 million, or 1.28% (annualized) of average loans, compared to $2.2 million, or 0.49% (annualized) of average loans, for the third quarter 2016, and $3.0 million, or 0.59% (annualized) of average loans, for the second quarter 2017. The provision for loan losses for the nine months ended September 30, 2017 was $11.3 million, or 0.74% (annualized) of average loans, compared to $4.6 million, or 0.35% (annualized) of average loans for the nine months ended September 30, 2016.

Third quarter 2017 net charge-offs were $4.2 million, or 0.78% (annualized) of average loans, compared to net recoveries of $54 thousand, for the third quarter 2016, and $684 thousand, or 0.13% (annualized) of average loans, for the second quarter 2017. Net charge-offs for the nine months ended September 30, 2017 were $5.4 million, or 0.36% (annualized) of average loans, compared to $482 thousand, or 0.04% (annualized) of average loans for the nine months ended September 30, 2016.

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 10 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, October 24, 2017 at 9:00 a.m. Central Time (10:00 a.m. Eastern Time) to discuss its third quarter 2017 results. Individuals and investment professionals may participate in the call by dialing (877) 279-2520. The conference ID number is 95345409.  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.

Allegiance is a $2.81 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 Houston metropolitan area-based small to medium-sized businesses and individual customers. 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.  Allegiance Bank operates 16 full-service banking locations and one loan production office in the Houston metropolitan area. Visit www.allegiancebank.com for more information.

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

This release may contain forward-looking statements within the meaning of the securities laws that are based on various facts and derived utilizing important assumptions, present expectations, estimates and projections about Allegiance and its subsidiaries. Statements preceded by, followed by or  that otherwise include the words “believes,” “expects,” “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; sustain its current internal growth rate; provide quality and competitive products and services that appeal to its customers; continue to have access to debt and equity capital markets; and achieve its performance objectives. These and various other risk factors are discussed in Allegiance’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 and in other reports and statements Allegiance has filed with the Securities and Exchange Commission. Copies of such filings are available for download free of charge from the Investor Relations section of Allegiance’s website at www.allegiancebank.com, under Financial Information, SEC Filings.  Any forward-looking statement made by Allegiance in this release speaks only as of the date on which it is made. Factors or events that could cause Allegiance’s actual results to differ may emerge from time to time, and it is not possible for Allegiance to predict all of them. Allegiance undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)
	2017												2016
	September 30				June 30				March 31				December 31				September 30
	(Dollars in thousands)
Cash and cash equivalents	$	192,427			$	187,491			$	184,146			$	142,098			$	225,082
Available for sale securities	323,856				321,268				317,219				316,455				310,033
Total loans	2,201,540				2,114,652				1,986,438				1,891,635				1,830,722
Allowance for loan losses	(23,722		)		(21,010		)		(18,687		)		(17,911		)		(17,185		)
Loans, net	2,177,818				2,093,642				1,967,751				1,873,724				1,813,537
Goodwill	39,389				39,389				39,389				39,389				39,389
Core deposit intangibles, net	3,469				3,664				3,860				4,055				4,250
Premises and equipment, net	18,273				18,240				18,138				18,340				17,811
Other real estate owned	453				365				365				1,503				1,138
Bank owned life insurance	22,277				22,131				21,985				21,837				21,684
Other assets	35,472				38,526				39,477				33,547				28,978
Total assets	$	2,813,434			$	2,724,716			$	2,592,330			$	2,450,948			$	2,461,902
Noninterest-bearing deposits	$	712,951			$	662,527			$	615,225			$	593,751			$	604,278
Interest-bearing deposits	1,573,664				1,436,715				1,397,344				1,276,432				1,296,601
Total deposits	2,286,615				2,099,242				2,012,569				1,870,183				1,900,879
Borrowed funds	207,569				310,569				275,569				285,569				261,569
Subordinated debentures	9,277				9,249				9,222				9,196				9,169
Other liabilities	7,246				7,197				5,840				6,183				9,190
Total liabilities	2,510,707				2,426,257				2,303,200				2,171,131				2,180,807
Common stock	13,171				13,153				13,080				12,958				12,905
Capital surplus	216,943				216,158				215,015				212,649				211,349
Retained earnings	71,690				68,704				63,309				57,262				51,491
Accumulated other comprehensive income (loss)	923				444				(2,274		)		(3,052		)		5,350
Shareholders' equity	302,727				298,459				289,130				279,817				281,095
Total liabilities and equity	$	2,813,434			$	2,724,716			$	2,592,330			$	2,450,948			$	2,461,902

Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)
	Three Months Ended																				Year-to-Date
	2017												2016								2017				2016
	September 30				June 30				March 31				December 31				September 30				September 30				September 30
	(Dollars in thousands, except per share data)
INTEREST INCOME:
Loans, including fees	$	28,588			$	26,736			$	25,260			$	24,232			$	24,057			$	80,584			$	69,124
Securities
Taxable	547				503				498				478				607				1,548				1,329
Tax-exempt	1,574				1,591				1,624				1,642				1,505				4,789				3,402
Deposits in other financial institutions	192				157				130				129				150				479				442
Total interest income	30,901				28,987				27,512				26,481				26,319				87,400				74,297
INTEREST EXPENSE:
Demand, money market and savings deposits	811				702				654				673				651				2,167				1,764
Certificates and other time deposits	2,299				2,283				1,957				1,947				1,872				6,539				5,097
Borrowed funds	654				761				653				311				264				2,068				634
Subordinated debt	140				134				120				128				123				394				360
Total interest expense	3,904				3,880				3,384				3,059				2,910				11,168				7,855
NET INTEREST INCOME	26,997				25,107				24,128				23,422				23,409				76,232				66,442
Provision for loan losses	6,908				3,007				1,343				900				2,214				11,258				4,569
Net interest income after provision for loan losses	20,089				22,100				22,785				22,522				21,195				64,974				61,873
NONINTEREST INCOME:
Nonsufficient funds fees	144				184				199				178				175				527				483
Service charges on deposit accounts	204				205				195				177				182				604				500
Gain on sale of branch assets	—				—				—				—				—				—				2,050
(Loss) gain on sale of securities	(12		)		—				—				30				—				(12		)		—
Gain on sale of other real estate	—				—				—				206				60				—				60
Bank owned life insurance	146				146				148				153				154				440				473
Other	978				942				799				734				703				2,719				2,224
Total noninterest income	1,460				1,477				1,341				1,478				1,274				4,278				5,790
NONINTEREST EXPENSE:
Salaries and employee benefits	11,580				10,415				10,562				10,627				9,781				32,557				28,231
Net occupancy and equipment	1,325				1,302				1,427				1,238				1,260				4,054				3,706
Depreciation	427				398				400				391				404				1,225				1,236
Data processing and software amortization	783				719				695				703				655				2,197				1,930
Professional fees	822				987				895				857				442				2,704				1,377
Regulatory assessments and FDIC insurance	582				569				589				485				396				1,740				1,096
Core deposit intangibles amortization	195				196				195				195				196				586				590
Communications	251				233				247				237				264				731				818
Advertising	302				288				263				319				228				853				626
Other	1,409				1,354				1,276				1,135				1,269				4,039				3,461
Total noninterest expense	17,676				16,461				16,549				16,187				14,895				50,686				43,071
INCOME BEFORE INCOME TAXES	3,873				7,116				7,577				7,813				7,574				18,566				24,592
Provision for income taxes	887				1,721				1,530				2,042				2,103				4,138				7,512
NET INCOME	$	2,986			$	5,395			$	6,047			$	5,771			$	5,471			$	14,428			$	17,080
EARNINGS PER SHARE
Basic	$	0.23			$	0.41			$	0.46			$	0.45			$	0.42			$	1.10			$	1.33
Diluted	$	0.22			$	0.40			$	0.45			$	0.44			$	0.42			$	1.07			$	1.31

Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)
		Three Months Ended																				Year-to-Date
		2017												2016								2017				2016
		September 30				June 30				March 31				December 31				September 30				September 30				September 30
		(Dollars and share amounts in thousands, except per share data)
Net income		$	2,986			$	5,395			$	6,047			$	5,771			$	5,471			$	14,428			$	17,080
Earnings per share, basic		$	0.23			$	0.41			$	0.46			$	0.45			$	0.42			$	1.10			$	1.33
Earnings per share, diluted		$	0.22			$	0.40			$	0.45			$	0.44			$	0.42			$	1.07			$	1.31
Return on average assets(A)		0.43		%		0.81		%		0.96		%		0.93		%		0.90		%		0.73		%		0.99		%
Return on average equity(A)		3.90		%		7.32		%		8.61		%		8.25		%		7.77		%		6.55		%		8.40		%
Return on average tangible equity(A)(B)		4.55		%		8.57		%		10.15		%		9.79		%		9.21		%		7.67		%		10.03		%
Tax equivalent net interest margin(C)		4.37		%		4.29		%		4.38		%		4.32		%		4.39		%		4.34		%		4.39		%
Efficiency ratio(D)		62.14		%		61.92		%		64.98		%		65.09		%		60.34		%		62.97		%		61.37		%
Liquidity and Capital Ratios
Equity to assets		10.76		%		10.95		%		11.15		%		11.42		%		11.42		%		10.76		%		11.42		%
Common equity Tier 1 capital		10.68		%		10.84		%		11.10		%		11.44		%		11.40		%		10.68		%		11.40		%
Tier 1 risk-based capital		11.07		%		11.24		%		11.51		%		11.87		%		11.84		%		11.07		%		11.84		%
Total risk-based capital		12.04		%		12.13		%		12.35		%		12.72		%		12.68		%		12.04		%		12.68		%
Tier 1 leverage capital		9.90		%		10.11		%		10.28		%		10.35		%		10.25		%		9.90		%		10.25		%
Tangible equity to tangible assets(B)		9.38		%		9.52		%		9.65		%		9.82		%		9.82		%		9.38		%		9.82		%
Other Data
Weighted average shares:
Basic		13,165				13,125				13,021				12,913				12,882				13,104				12,860
Diluted		13,483				13,471				13,377				13,180				13,108				13,445				13,038
Period end shares outstanding		13,171				13,153				13,080				12,958				12,905				13,171				12,905
Book value per share		$	22.98			$	22.69			$	22.10			$	21.59			$	21.78			$	22.98			$	21.78
Tangible book value per share(B)		$	19.73			$	19.42			$	18.80			$	18.24			$	18.40			$	19.73			$	18.40

(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 10 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 branch assets, loans and securities.  Additionally, taxes and provision for loan losses are not part of this calculation.

Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)
	Three Months Ended
	September 30, 2017											June 30, 2017											September 30, 2016
	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	$	2,141,546			$	28,588			5.30	%		$	2,042,460			$	26,736			5.25	%		$	1,784,763			$	24,057			5.36	%
Securities	324,901				2,121				2.59	%		326,388				2,094				2.57	%		310,769				2,112				2.70	%
Deposits in other financial institutions	53,409				192				1.43	%		49,703				157				1.26	%		92,928				150				0.64	%
Total interest-earning assets	2,519,856				$	30,901			4.87	%		2,418,551				$	28,987			4.81	%		2,188,460				$	26,319			4.78	%
Allowance for loan losses	(20,886		)									(19,253		)									(15,575		)
Noninterest-earning assets	261,524											261,668											249,363
Total assets	$	2,760,494										$	2,660,966										$	2,422,248
Liabilities and Shareholders' Equity
Interest-Bearing Liabilities:
Interest-bearing demand deposits	$	142,429			$	127			0.35	%		$	137,507			$	118			0.34	%		$	111,497			$	95			0.34	%
Money market and savings deposits	558,087				684				0.49	%		499,335				584				0.47	%		484,587				556				0.46	%
Certificates and other time deposits	754,076				2,299				1.21	%		785,194				2,283				1.17	%		668,092				1,872				1.11	%
Borrowed funds	197,668				654				1.31	%		304,184				761				1.00	%		244,732				264				0.43	%
Subordinated debt	9,259				140				5.98	%		9,232				134				5.83	%		9,151				123				5.35	%
Total interest-bearing liabilities	1,661,519				$	3,904			0.93	%		1,735,452				$	3,880			0.90	%		1,518,059				$	2,910			0.76	%
Noninterest-Bearing Liabilities:
Noninterest-bearing demand deposits	786,566											624,100											614,303
Other liabilities	8,960											5,890											9,821
Total liabilities	2,457,045											2,365,442											2,142,183
Shareholders' equity	303,449											295,524											280,065
Total liabilities and shareholders' equity	$	2,760,494										$	2,660,966										$	2,422,248
Net interest rate spread									3.94	%										3.91	%										4.02	%
Net interest income and margin					$	26,997			4.25	%						$	25,107			4.16	%						$	23,409			4.26	%
Net interest income and margin (tax equivalent)					$	27,748			4.37	%						$	25,862			4.29	%						$	24,149			4.39	%

Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)
	Year-to-Date
	September 30, 2017											September 30, 2016
	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	$	2,038,228			$	80,584			5.29	%		$	1,724,494			$	69,124			5.35	%
Securities	325,730				6,337				2.60	%		256,149				4,731				2.47	%
Deposits in other financial institutions	52,150				479				1.23	%		93,700				442				0.63	%
Total interest-earning assets	2,416,108				$	87,400			4.84	%		2,074,343				$	74,297			4.78	%
Allowance for loan losses	(19,456		)									(14,401		)
Noninterest-earning assets	260,843											237,765
Total assets	$	2,657,495										$	2,297,707
Liabilities and Shareholders' Equity
Interest-Bearing Liabilities:
Interest-bearing demand deposits	$	136,991			$	345			0.34	%		$	103,215			$	250			0.32	%
Money market and savings deposits	514,995				1,822				0.47	%		451,314				1,514				0.45	%
Certificates and other time deposits	741,732				6,539				1.18	%		636,877				5,097				1.07	%
Borrowed funds	282,024				2,068				0.98	%		192,880				634				0.44	%
Subordinated debt	9,231				394				5.70	%		9,125				360				5.27	%
Total interest-bearing liabilities	1,684,973				$	11,168			0.89	%		1,393,411				$	7,855			0.75	%
Noninterest-Bearing Liabilities:
Noninterest-bearing demand deposits	670,908											624,190
Other liabilities	6,926											8,545
Total liabilities	2,362,807											2,026,146
Shareholders' equity	294,688											271,561
Total liabilities and shareholders' equity	$	2,657,495										$	2,297,707
Net interest rate spread									3.95	%										4.03	%
Net interest income and margin					$	76,232			4.22	%						$	66,442			4.28	%
Net interest income and margin (tax equivalent)					$	78,517			4.34	%						$	68,113			4.39	%

Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)
	As of and For the Three Months Ended
	2017												2016
	September 30				June 30				March 31				December 31				September 30
	(Dollars in thousands)
Period-end Loan Portfolio:
Commercial and industrial	$	446,029			$	444,701			$	425,154			$	416,752			$	402,273
Mortgage warehouse	83,577				73,499				64,132				67,038				76,043
Real estate:
Commercial real estate (including multi-family residential)	1,045,220				1,008,027				961,212				891,989				848,939
Commercial real estate construction and land development	225,574				206,024				175,264				159,247				167,936
1-4 family residential (including home equity)	283,399				267,939				250,881				246,987				228,651
Residential construction	106,299				102,832				99,648				98,657				93,923
Consumer and other	11,442				11,630				10,147				10,965				12,957
Total loans	$	2,201,540			$	2,114,652			$	1,986,438			$	1,891,635			$	1,830,722
Asset Quality:
Nonaccrual loans	$	13,913			$	19,330			$	19,315			$	15,788			$	15,882
Accruing loans 90 or more days past due	—				—				—				911				—
Total nonperforming loans	13,913				19,330				19,315				16,699				15,882
Other real estate	453				365				365				1,503				1,138
Other repossessed assets	205				205				260				286				30
Total nonperforming assets	$	14,571			$	19,900			$	19,940			$	18,488			$	17,050
Net charge-offs (recoveries)	4,196				684				567				174				(54		)
Nonaccrual loans:
Commercial and industrial	$	5,031			$	9,051			$	8,933			$	3,896			$	4,983
Mortgage warehouse	—				—				—				—				—
Real estate:
Commercial real estate (including multi-family residential)	8,097				9,556				9,726				11,663				10,495
Commercial real estate construction and land development	—				—				70				—				—
1-4 family residential (including home equity)	735				568				574				217				11
Residential construction	—				—				—				—				—
Consumer and other	50				155				12				12				393
Total nonaccrual loans	$	13,913			$	19,330			$	19,315			$	15,788			$	15,882
Asset Quality Ratios:
Nonperforming assets to total assets	0.52		%		0.73		%		0.77		%		0.75		%		0.69		%
Nonperforming loans to total loans	0.63		%		0.91		%		0.97		%		0.88		%		0.87		%
Allowance for loan losses to nonperforming loans	170.50		%		108.69		%		96.75		%		107.26		%		108.20		%
Allowance for loan losses to total loans	1.08		%		0.99		%		0.94		%		0.95		%		0.94		%
Net charge-offs (recoveries) to average loans (annualized)	0.78		%		0.13		%		0.12		%		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.  Allegiance believes 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 common share, return on average tangible common equity and the ratio of tangible common equity to tangible assets for internal planning and forecasting purposes. Additionally, Allegiance excluded the one time sale of two Central Texas branch locations during the first quarter 2016 as noted within the narrative, as Allegiance believes this transaction was not indicative of its recurring operating results. 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																				Year-to-Date
		2017												2016								2017				2016
		September 30				June 30				March 31				December 31				September 30				September 30				September 30
		(Dollars and share amounts in thousands, except per share data)
Total shareholders' equity		$	302,727			$	298,459			$	289,130			$	279,817			$	281,095			$	302,727			$	281,095
Less:  Goodwill and core deposit intangibles, net		42,858				43,054				43,249				43,444				43,639				42,858				43,639
Tangible shareholders’ equity		$	259,869			$	255,405			$	245,881			$	236,373			$	237,456			$	259,869			$	237,456
Shares outstanding at end of period		13,171				13,153				13,080				12,958				12,905				13,171				12,905
Tangible book value per share		$	19.73			$	19.42			$	18.80			$	18.24			$	18.40			$	19.73			$	18.40
Net income attributable to shareholders		$	2,986			$	5,395			$	6,047			$	5,771			$	5,471			$	14,428			$	17,080
Average shareholders' equity		$	303,449			$	295,524			$	284,889			$	278,123			$	280,065			$	294,688			$	271,561
Less:  Average goodwill and core deposit intangibles, net		42,954				43,149				43,345				43,539				43,735				43,148				43,994
Average tangible shareholders’ equity		$	260,495			$	252,375			$	241,544			$	234,584			$	236,330			$	251,540			$	227,567
Return on average tangible equity		4.55		%		8.57		%		10.15		%		9.79		%		9.21		%		7.67		%		10.03		%
Total assets		$	2,813,434			$	2,724,716			$	2,592,330			$	2,450,948			$	2,461,902			$	2,813,434			$	2,461,902
Less: Goodwill and core deposit intangibles, net		42,858				43,054				43,249				43,444				43,639				42,858				43,639
Tangible assets		$	2,770,576			$	2,681,662			$	2,549,081			$	2,407,504			$	2,418,263			$	2,770,576			$	2,418,263
Tangible equity to tangible assets		9.38		%		9.52		%		9.65		%		9.82		%		9.82		%		9.38		%		9.82		%

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

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