• Core loan growth of $376.8 million in 2017, or 20.7%, year over year and $83.5 million, or 15.8% (annualized), for the fourth quarter 2017 compared to the linked quarter
• Net interest income for the fourth quarter 2017 increased $4.0 million, or 17.1%, compared to the fourth quarter 2016
• Completed an offering of $40 million of Allegiance Bank subordinated notes to supplement total risk-based capital

HOUSTON, Jan. 25, 2018 (GLOBE NEWSWIRE) -- Allegiance Bancshares, Inc. (NASDAQ:ABTX) ("Allegiance"), the holding company of Allegiance Bank (the "Bank"), today reported net income of $3.2 million in the fourth quarter 2017 compared to $5.8 million in the fourth quarter 2016 and diluted earnings per share of $0.24 in the fourth quarter 2017 compared to $0.44 in the fourth quarter 2016. The fourth quarter 2017 results included a $2.6 million increase in the tax provision as a result of the revaluation of the deferred tax asset due to the enactment of the Tax Cuts and Jobs Act and $1.1 million in core technology conversion costs.  Net income for the year ended December 31, 2017 was $17.6 million, or $1.31 per diluted common share, compared to net income of $22.9 million, or $1.75 per diluted common share, for the year ended December 31, 2016.  The year ended December 31, 2016 included an after-tax gain of $1.3 million on the sale of two Central Texas branch locations.

"This was a sound year for Allegiance as we continued to consistently generate loan growth into the fourth quarter, while maintaining solid credit quality and a strong net interest margin," said George Martinez, Allegiance's Chairman and Chief Executive Officer.  "Our fourth quarter earnings were impacted by the recent tax reform bill enacted at the end of December which led to a revaluation of our deferred tax asset resulting in a $2.6 million tax adjustment.  We remain focused on the execution of our growth strategies as we further strengthened our capital position through the successful completion of a subordinated debt offering in December.  Additionally, we made a strategic decision to implement a new core technology platform in the first half of 2018 to a more integrated technology solution reflective of our vision to better leverage technology to achieve our goals and realize operational efficiencies in our super community banking model.  This new platform will not only better position us to meet the current and future needs and demands of our customers, but also enhance the user experience for customers and employees alike," continued Martinez.

"I am very pleased with our momentum and achievements over this past year. Among those achievements are robust capital, continued customer growth, and strength in asset quality. We anticipate a sustained focus and continued progress in the coming year toward attaining our strategic goals of high quality growth with improving levels of profitability.  As such, I am grateful for our dedicated employees, who add value to our customer relationships and provide superior service and innovation. They ensure a consistent customer experience at Allegiance, just as they have done throughout our 10-year history, and I appreciate their hard work and loyalty," concluded Martinez.

Fourth Quarter 2017 Results

Net interest income before provision for loan losses in the fourth quarter 2017 increased $4.0 million, or 17.1%, to $27.4 million from $23.4 million for the fourth quarter 2016 primarily due to organic loan growth.  Net interest income before provision for loan losses in the fourth quarter 2017 increased slightly from $27.0 million in the third quarter 2017.  The net interest margin on a tax equivalent basis increased one basis point to 4.33% for the fourth quarter 2017 from 4.32% for the fourth quarter 2016 and decreased four basis points from 4.37% for the third quarter 2017.

Noninterest income for the fourth quarter 2017 was $1.6 million, an increase of $105 thousand, or 7.1%, compared to $1.5 million for the fourth quarter 2016 and increased $123 thousand, or 8.4%, compared to $1.5 million for the third quarter 2017.

Noninterest expense for the fourth quarter 2017 increased $3.1 million, or 19.1%, to $19.3 million from $16.2 million for the fourth quarter 2016, and increased $1.6 million, or 9.1%, from $17.7 million for the third quarter 2017. The increase in noninterest expense over the fourth quarter 2016 was primarily due to $1.1 million of expenses related to the core technology conversion and continued investment to support strategic growth initiatives.

In the fourth quarter 2017, Allegiance’s efficiency ratio increased to 66.50% from 65.09% for the fourth quarter 2016 and increased from 62.14% for the third quarter 2017.  Fourth quarter 2017 annualized returns on average assets, average equity and average tangible equity were 0.45%, 4.15% and 4.82%, respectively, compared to 0.93%, 8.25% and 9.79%, respectively, for the fourth quarter 2016.  Annualized returns on average assets, average equity and average tangible equity for the third quarter 2017 were 0.43%, 3.90% and 4.55%, respectively.

Year Ended December 31, 2017 Results

Net interest income before provision for loan losses for the year ended December 31, 2017 increased $13.8 million, or 15.4%, to $103.7 million from $89.9 million for the year ended December 31, 2016 primarily due to organic loan growth and an increase in the securities portfolio.  The net interest margin on a tax equivalent basis decreased three basis points to 4.34% for the year ended December 31, 2017 from 4.37% for the year ended December 31, 2016.

Noninterest income for the year ended December 31, 2017 was $5.9 million, a decrease of $1.4 million, or 19.4%, compared to $7.3 million for the year ended December 31, 2016. The year ended December 31, 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 $643 thousand, or 12.3%, for the year ended December 31, 2017 compared to the year ended December 31, 2016.

Noninterest expense for the year ended December 31, 2017 increased $10.7 million, or 18.1%, to $70.0 million from $59.3 million for the year ended December 31, 2016.  The increase in noninterest expense over the year ended December 31, 2016 was primarily due to increased expenses related to the core technology conversion, professional fees and salaries and benefits related to supporting growth initiatives.

During the year ended December 31, 2017, Allegiance’s efficiency ratio increased to 63.89% from 62.34% for the year ended December 31, 2016.

For the year ended December 31, 2017, returns on average assets, average equity and average tangible equity were 0.65%, 5.92% and 6.93%, respectively, compared to 0.98%, 8.36% and 9.96%, respectively, for the year ended December 31, 2016. Excluding the gain on the sale of the two Central Texas branch locations during the first quarter 2016, the returns on average assets, average equity and average tangible equity for the year ended December 31, 2016 would have been 0.92%, 7.88% and 9.38%, respectively.

Financial Condition

Total assets at December 31, 2017 increased $409.3 million, or 16.7%, to $2.86 billion compared to $2.45 billion at December 31, 2016 and increased $46.8 million, or 1.7%, compared to $2.81 billion at September 31, 2017.

Total loans at December 31, 2017 increased $379.2 million, or 20.0%, to $2.27 billion compared to $1.89 billion at December 31, 2016 and increased $69.3 million, or 3.1%, compared to $2.20 billion at September 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 $376.8 million, or 20.7%, to $2.20 billion at December 31, 2017 from $1.82 billion at December 31, 2016 and increased $83.5 million, or 3.9%, from $2.12 billion at September 30, 2017.

Deposits at December 31, 2017 increased $343.8 million, or 18.4%, to $2.21 billion compared to $1.87 billion at December 31, 2016 and decreased $72.6 million, or 3.2%, compared to $2.29 billion at September 30, 2017.

Asset Quality

Nonperforming assets totaled $13.9 million, or 0.49% of total assets, at December 31, 2017, compared to $18.5 million, or 0.75% of total assets, at December 31, 2016, and $14.6 million, or 0.52% of total assets, at September 30, 2017. The allowance for loan losses was 1.04% of total loans at December 31, 2017, 0.95% of total loans at December 31, 2016 and 1.08% of total loans at September 30, 2017.

The provision for loan losses for the fourth quarter 2017 was $1.9 million, or 0.35% of average loans, compared to $900 thousand, or 0.19% of average loans, for the fourth quarter 2016, and $6.9 million, or 1.28% of average loans, for the third quarter 2017. The provision for loan losses for the year ended December 31, 2017 was $13.2 million, or 0.63% of average loans, compared to $5.5 million, or 0.31% of average loans for the year ended December 31, 2016.

Fourth quarter 2017 net charge-offs were $2.0 million, or 0.36% (annualized) of average loans, compared to $174 thousand, or 0.04% (annualized) of average loans, for the fourth quarter 2016, and $4.2 million, or 0.78% (annualized) of average loans, for the third quarter 2017. Net charge-offs for the year ended December 31, 2017 were $7.5 million, or 0.36% of average loans, compared to $656 thousand, or 0.04% of average loans for the year ended December 31, 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 Thursday, January 25, 2018 at 9:00 a.m. Central Time (10:00 a.m. Eastern Time) to discuss its fourth quarter and full year 2017 results. Individuals and investment professionals may participate in the call by dialing (877) 279-2520. The conference ID number is 8468395.  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 $2.86 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,” “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 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
	December 31				September 30				June 30				March 31				December 31
	(Dollars in thousands)
Cash and cash equivalents	$	182,103			$	192,427			$	187,491			$	184,146			$	142,098
Available for sale securities	309,615				323,856				321,268				317,219				316,455
Total loans	2,270,876				2,201,540				2,114,652				1,986,438				1,891,635
Allowance for loan losses	(23,649		)		(23,722		)		(21,010		)		(18,687		)		(17,911		)
Loans, net	2,247,227				2,177,818				2,093,642				1,967,751				1,873,724
Goodwill	39,389				39,389				39,389				39,389				39,389
Core deposit intangibles, net	3,274				3,469				3,664				3,860				4,055
Premises and equipment, net	18,477				18,273				18,240				18,138				18,340
Other real estate owned	365				453				365				365				1,503
Bank owned life insurance	22,422				22,277				22,131				21,985				21,837
Other assets	37,359				35,472				38,526				39,477				33,547
Total assets	$	2,860,231			$	2,813,434			$	2,724,716			$	2,592,330			$	2,450,948
Noninterest-bearing deposits	$	683,110			$	712,951			$	662,527			$	615,225			$	593,751
Interest-bearing deposits	1,530,864				1,573,664				1,436,715				1,397,344				1,276,432
Total deposits	2,213,974				2,286,615				2,099,242				2,012,569				1,870,183
Borrowed funds	282,569				207,569				310,569				275,569				285,569
Subordinated debentures	48,659				9,277				9,249				9,222				9,196
Other liabilities	8,164				7,246				7,197				5,840				6,183
Total liabilities	2,553,366				2,510,707				2,426,257				2,303,200				2,171,131
Common stock	13,227				13,171				13,153				13,080				12,958
Capital surplus	218,408				216,943				216,158				215,015				212,649
Retained earnings	74,894				71,690				68,704				63,309				57,262
Accumulated other comprehensive income (loss)	336				923				444				(2,274		)		(3,052		)
Shareholders' equity	306,865				302,727				298,459				289,130				279,817
Total liabilities and equity	$	2,860,231			$	2,813,434			$	2,724,716			$	2,592,330			$	2,450,948

Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)
	Three Months Ended																				Year Ended
	2017																2016				2017				2016
	December 31				September 30				June 30				March 31				December 31				December 31				December 31
	(Dollars in thousands, except per share data)
INTEREST INCOME:
Loans, including fees	$	29,747			$	28,588			$	26,736			$	25,260			$	24,232			$	110,331			$	93,356
Securities
Taxable	563				547				503				498				478				2,111				1,807
Tax-exempt	1,545				1,574				1,591				1,624				1,642				6,334				5,044
Deposits in other financial institutions	183				192				157				130				129				662				571
Total interest income	32,038				30,901				28,987				27,512				26,481				119,438				100,778
INTEREST EXPENSE:
Demand, money market and savings deposits	992				811				702				654				673				3,159				2,437
Certificates and other time deposits	2,521				2,299				2,283				1,957				1,947				9,060				7,044
Borrowed funds	854				654				761				653				311				2,922				945
Subordinated debt	235				140				134				120				128				629				488
Total interest expense	4,602				3,904				3,880				3,384				3,059				15,770				10,914
NET INTEREST INCOME	27,436				26,997				25,107				24,128				23,422				103,668				89,864
Provision for loan losses	1,930				6,908				3,007				1,343				900				13,188				5,469
Net interest income after provision for loan losses	25,506				20,089				22,100				22,785				22,522				90,480				84,395
NONINTEREST INCOME:
Nonsufficient funds fees	158				144				184				199				178				685				661
Service charges on deposit accounts	179				204				205				195				177				783				677
Gain on sale of branch assets	—				—				—				—				—				—				2,050
Gain (loss) on sale of securities	30				(12		)		—				—				30				18				30
Gain on sale of other real estate	6				—				—				—				206				6				266
Bank owned life insurance	146				146				146				148				153				586				626
Rebate from correspondent bank	388				370				336				233				170				1,327				650
Other	676				608				606				566				564				2,456				2,308
Total noninterest income	1,583				1,460				1,477				1,341				1,478				5,861				7,268
NONINTEREST EXPENSE:
Salaries and employee benefits	12,188				11,580				10,415				10,562				10,627				44,745				38,858
Net occupancy and equipment	1,398				1,325				1,302				1,427				1,238				5,452				4,944
Depreciation	412				427				398				400				391				1,637				1,627
Data processing and software amortization	1,850				783				719				695				703				4,047				2,633
Professional fees	222				822				987				895				857				2,926				2,234
Regulatory assessments and FDIC insurance	533				582				569				589				485				2,273				1,581
Core deposit intangibles amortization	195				195				196				195				195				781				785
Communications	252				251				233				247				237				983				1,055
Advertising	436				302				288				263				319				1,289				945
Other	1,790				1,409				1,354				1,276				1,135				5,829				4,596
Total noninterest expense	19,276				17,676				16,461				16,549				16,187				69,962				59,258
INCOME BEFORE INCOME TAXES	7,813				3,873				7,116				7,577				7,813				26,379				32,405
Provision for income taxes	4,609				887				1,721				1,530				2,042				8,747				9,554
NET INCOME	$	3,204			$	2,986			$	5,395			$	6,047			$	5,771			$	17,632			$	22,851
EARNINGS PER SHARE
Basic	$	0.24			$	0.23			$	0.41			$	0.46			$	0.45			$	1.34			$	1.78
Diluted	$	0.24			$	0.22			$	0.40			$	0.45			$	0.44			$	1.31			$	1.75

Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)
		Three Months Ended																				Year Ended
		2017																2016				2017				2016
		December 31				September 30				June 30				March 31				December 31				December 31				December 31
		(Dollars and share amounts in thousands, except per share data)
Net income		$	3,204			$	2,986			$	5,395			$	6,047			$	5,771			$	17,632			$	22,851
Earnings per share, basic		$	0.24			$	0.23			$	0.41			$	0.46			$	0.45			$	1.34			$	1.78
Earnings per share, diluted		$	0.24			$	0.22			$	0.40			$	0.45			$	0.44			$	1.31			$	1.75
Return on average assets(A)		0.45		%		0.43		%		0.81		%		0.96		%		0.93		%		0.65		%		0.98		%
Return on average equity(A)		4.15		%		3.90		%		7.32		%		8.61		%		8.25		%		5.92		%		8.36		%
Return on average tangible equity(A)(B)		4.82		%		4.55		%		8.57		%		10.15		%		9.79		%		6.93		%		9.96		%
Tax equivalent net interest margin(C)		4.33		%		4.37		%		4.29		%		4.38		%		4.32		%		4.34		%		4.37		%
Efficiency ratio(D)		66.50		%		62.14		%		61.92		%		64.98		%		65.09		%		63.89		%		62.34		%
Liquidity and Capital Ratios
Allegiance Bancshares, Inc. (Consolidated)
Equity to assets		10.73		%		10.76		%		10.95		%		11.15		%		11.42		%		10.73		%		11.42		%
Tangible equity to tangible assets(B)		9.38		%		9.38		%		9.52		%		9.65		%		9.82		%		9.38		%		9.82		%
Estimated common equity tier 1 capital		10.29		%		10.68		%		10.84		%		11.10		%		11.44		%		10.29		%		11.44		%
Estimated tier 1 risk-based capital		10.65		%		11.07		%		11.24		%		11.51		%		11.87		%		10.65		%		11.87		%
Estimated total risk-based capital		13.10		%		12.04		%		12.13		%		12.35		%		12.72		%		13.10		%		12.72		%
Estimated tier 1 leverage capital		9.84		%		9.90		%		10.11		%		10.28		%		10.35		%		9.84		%		10.35		%
Allegiance Bank
Estimated common equity tier 1 capital		10.77		%		10.93		%		10.23		%		10.49		%		10.77		%		10.77		%		10.77		%
Estimated tier 1 risk-based capital		10.77		%		10.93		%		10.23		%		10.49		%		10.77		%		10.77		%		10.77		%
Estimated total risk-based capital		13.29		%		11.91		%		11.12		%		11.32		%		11.61		%		13.29		%		11.61		%
Estimated tier 1 leverage capital		9.67		%		9.77		%		9.20		%		9.37		%		9.50		%		9.67		%		9.50		%
Other Data
Weighted average shares:
Basic		13,187				13,165				13,125				13,021				12,913				13,125				12,873
Diluted		13,496				13,483				13,471				13,377				13,180				13,458				13,074
Period end shares outstanding		13,227				13,171				13,153				13,080				12,958				13,227				12,958
Book value per share		$	23.20			$	22.98			$	22.69			$	22.10			$	21.59			$	23.20			$	21.59
Tangible book value per share(B)		$	19.97			$	19.73			$	19.42			$	18.80			$	18.24			$	19.97			$	18.24

1. Interim periods annualized.
2. 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.
3. Net interest margin represents net interest income divided by average interest-earning assets.
4. 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
	December 31, 2017											September 30, 2017											December 31, 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	$	2,209,389			$	29,747			5.34	%		$	2,141,546			$	28,588			5.30	%		$	1,847,122			$	24,232			5.22	%
Securities	322,539				2,108				2.59	%		324,901				2,121				2.59	%		314,387				2,120				2.68	%
Deposits in other financial institutions	47,257				183				1.54	%		53,409				192				1.43	%		68,974				129				0.74	%
Total interest-earning assets	2,579,185				$	32,038			4.93	%		2,519,856				$	30,901			4.87	%		2,230,483				$	26,481			4.72	%
Allowance for loan losses	(23,740		)									(20,886		)									(17,579		)
Noninterest-earning assets	267,611											261,524											247,465
Total assets	$	2,823,056										$	2,760,494										$	2,460,369
Liabilities and Shareholders' Equity
Interest-Bearing Liabilities:
Interest-bearing demand deposits	$	214,498			$	252			0.47	%		$	142,429			$	127			0.35	%		$	107,180			$	84			0.31	%
Money market and savings deposits	599,977				740				0.49	%		558,087				684				0.49	%		507,362				589				0.46	%
Certificates and other time deposits	766,942				2,521				1.30	%		754,076				2,299				1.21	%		681,425				1,947				1.14	%
Borrowed funds	232,863				854				1.45	%		197,668				654				1.31	%		258,048				311				0.48	%
Subordinated debt	17,070				235				5.46	%		9,259				140				5.98	%		9,178				128				5.55	%
Total interest-bearing liabilities	1,831,350				$	4,602			1.00	%		1,661,519				$	3,904			0.93	%		1,563,193				$	3,059			0.78	%
Noninterest-Bearing Liabilities:
Noninterest-bearing demand deposits	675,643											786,566											610,310
Other liabilities	9,717											8,960											8,743
Total liabilities	2,516,710											2,457,045											2,182,246
Shareholders' equity	306,346											303,449											278,123
Total liabilities and shareholders' equity	$	2,823,056										$	2,760,494										$	2,460,369
Net interest rate spread									3.93	%										3.94	%										3.94	%
Net interest income and margin					$	27,436			4.22	%						$	26,997			4.25	%						$	23,422			4.18	%
Net interest income and margin (tax equivalent)					$	28,151			4.33	%						$	27,748			4.37	%						$	24,219			4.32	%

Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)
	Year Ended
	December 31, 2017											December 31, 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	$	2,081,370			$	110,331			5.30	%		$	1,755,319			$	93,356			5.32	%
Securities	324,926				8,445				2.60	%		270,789				6,851				2.53	%
Deposits in other financial institutions	50,917				662				1.30	%		87,485				571				0.65	%
Total interest-earning assets	2,457,213				$	119,438			4.86	%		2,113,593				$	100,778			4.77	%
Allowance for loan losses	(20,536		)									(15,200		)
Noninterest-earning assets	262,549											240,202
Total assets	$	2,699,226										$	2,338,595
Liabilities and Shareholders' Equity
Interest-Bearing Liabilities:
Interest-bearing demand deposits	$	156,527			$	597			0.38	%		$	104,212			$	334			0.32	%
Money market and savings deposits	536,415				2,562				0.48	%		465,403				2,103				0.45	%
Certificates and other time deposits	748,086				9,060				1.21	%		648,075				7,044				1.09	%
Borrowed funds	269,633				2,922				1.08	%		209,379				945				0.45	%
Subordinated debt	11,208				629				5.61	%		9,138				488				5.34	%
Total interest-bearing liabilities	1,721,869				$	15,770			0.92	%		1,436,207				$	10,914			0.76	%
Noninterest-Bearing Liabilities:
Noninterest-bearing demand deposits	672,101											620,701
Other liabilities	7,629											8,476
Total liabilities	2,401,599											2,065,384
Shareholders' equity	297,627											273,211
Total liabilities and shareholders' equity	$	2,699,226										$	2,338,595
Net interest rate spread									3.94	%										4.01	%
Net interest income and margin					$	103,668			4.22	%						$	89,864			4.25	%
Net interest income and margin (tax equivalent)					$	106,669			4.34	%						$	92,330			4.37	%

Allegiance Bancshares, Inc.
Financial Highlights
(Unaudited)
	Three Months Ended
	2017																2016
	December 31				September 30				June 30				March 31				December 31
	(Dollars in thousands)
Period-end Loan Portfolio:
Commercial and industrial	$	457,129			$	446,029			$	444,701			$	425,154			$	416,752
Mortgage warehouse	69,456				83,577				73,499				64,132				67,038
Real estate:
Commercial real estate (including multi-family residential)	1,080,247				1,045,220				1,008,027				961,212				891,989
Commercial real estate construction and land development	243,389				225,574				206,024				175,264				159,247
1-4 family residential (including home equity)	301,219				283,399				267,939				250,881				246,987
Residential construction	109,116				106,299				102,832				99,648				98,657
Consumer and other	10,320				11,442				11,630				10,147				10,965
Total loans	$	2,270,876			$	2,201,540			$	2,114,652			$	1,986,438			$	1,891,635
Asset Quality:
Nonaccrual loans	$	13,328			$	13,913			$	19,330			$	19,315			$	15,788
Accruing loans 90 or more days past due	—				—				—				—				911
Total nonperforming loans	13,328				13,913				19,330				19,315				16,699
Other real estate	365				453				365				365				1,503
Other repossessed assets	205				205				205				260				286
Total nonperforming assets	$	13,898			$	14,571			$	19,900			$	19,940			$	18,488
Net charge-offs	2,003				4,196				684				567				174
Nonaccrual loans:
Commercial and industrial	$	6,437			$	5,031			$	9,051			$	8,933			$	3,896
Mortgage warehouse	—				—				—				—				—
Real estate:
Commercial real estate (including multi-family residential)	6,110				8,097				9,556				9,726				11,663
Commercial real estate construction and land development	—				—				—				70				—
1-4 family residential (including home equity)	781				735				568				574				217
Residential construction	—				—				—				—				—
Consumer and other	—				50				155				12				12
Total nonaccrual loans	$	13,328			$	13,913			$	19,330			$	19,315			$	15,788
Asset Quality Ratios:
Nonperforming assets to total assets	0.49		%		0.52		%		0.73		%		0.77		%		0.75		%
Nonperforming loans to total loans	0.59		%		0.63		%		0.91		%		0.97		%		0.88		%
Allowance for loan losses to nonperforming loans	177.44		%		170.50		%		108.69		%		96.75		%		107.26		%
Allowance for loan losses to total loans	1.04		%		1.08		%		0.99		%		0.94		%		0.95		%
Net charge-offs to average loans (annualized)	0.36		%		0.78		%		0.13		%		0.12		%		0.04		%

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 equity and the ratio of tangible 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 Ended
		2017																2016				2017				2016
		December 31				September 30				June 30				March 31				December 31				December 31				December 31
		(Dollars and share amounts in thousands, except per share data)
Total shareholders' equity		$	306,865			$	302,727			$	298,459			$	289,130			$	279,817			$	306,865			$	279,817
Less:  Goodwill and core deposit intangibles, net		42,663				42,858				43,053				43,249				43,444				42,663				43,444
Tangible shareholders’ equity		$	264,202			$	259,869			$	255,406			$	245,881			$	236,373			$	264,202			$	236,373
Shares outstanding at end of period		13,227				13,171				13,153				13,080				12,958				13,227				12,958
Tangible book value per share		$	19.97			$	19.73			$	19.42			$	18.80			$	18.24			$	19.97			$	18.24
Net income attributable to shareholders		$	3,204			$	2,986			$	5,395			$	6,047			$	5,771			$	17,632			$	22,851
Average shareholders' equity		$	306,346			$	303,449			$	295,524			$	284,889			$	278,123			$	297,627			$	273,211
Less:  Average goodwill and core deposit intangibles, net		42,758				42,954				43,149				43,345				43,539				43,050				43,880
Average tangible shareholders’ equity		$	263,588			$	260,495			$	252,375			$	241,544			$	234,584			$	254,577			$	229,331
Return on average tangible equity		4.82		%		4.55		%		8.57		%		10.15		%		9.79		%		6.93		%		9.96		%
Total assets		$	2,860,231			$	2,813,434			$	2,724,716			$	2,592,330			$	2,450,948			$	2,860,231			$	2,450,948
Less: Goodwill and core deposit intangibles, net		42,663				42,858				43,053				43,249				43,444				42,663				43,444
Tangible assets		$	2,817,568			$	2,770,576			$	2,681,663			$	2,549,081			$	2,407,504			$	2,817,568			$	2,407,504
Tangible equity to tangible assets		9.38		%		9.38		%		9.52		%		9.65		%		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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