Allegiance Bancshares, Inc. Reports First Quarter 2022 Results

Allegiance Bancshares, Inc. (NASDAQ: ABTX) (Allegiance), the holding company of Allegiance Bank (the "Bank"), today reported net income of $18.7 million and diluted earnings per share of $0.91 for the first quarter 2022 compared to net income of $18.0 million and diluted earnings per share of $0.89 for the first quarter 2021.

“We are delighted to report a productive start to 2022 driven by record core loan originations, with growth at an annualized rate of over 12% in the first quarter,” said Steve Retzloff, Allegiance’s Chief Executive Officer. “Our team’s outstanding efforts also delivered solid earnings results, credit quality metrics and deposit growth,” continued Retzloff.

“We are excited about the future of Allegiance and the pending merger of equals with CBTX, Inc. Our companies are embracing a unified approach as we collaborate to become the premier bank headquartered in the Houston region. We continue to remain true to delivering personalized and remarkable service to all of our customers. The effective combination of scale with our well-established relationship banking further strengthens our competitive position in a large and expanding market,” concluded Retzloff.

First Quarter 2022 Results

Net interest income before the provision for credit losses in the first quarter 2022 decreased $526 thousand, or 0.9%, to $55.2 million from $55.7 million for the first quarter 2021 and decreased $2.9 million, or 5.0%, from $58.1 million for the fourth quarter 2021. These decreases were primarily due to the changes in market interest rates and the decreased impact of loans within the Small Business Administration Paycheck Protection Program (PPP) partially offset by lower costs on interest-bearing liabilities. The net interest margin on a tax equivalent basis decreased 89 basis points to 3.30% for the first quarter 2022 from 4.19% for the first quarter 2021 and decreased 27 basis points from 3.57% for the fourth quarter 2021. The decreases in the margin were primarily due to the decrease in the average yield on interest-earning assets, driven by the increase in cash and securities, partially offset by the decrease in funding costs.

Noninterest income for the first quarter 2022 was $4.0 million, an increase of $2.3 million, or 131.5%, compared to $1.7 million for the first quarter 2021 and increased $1.6 million, or 63.7%, compared to $2.5 million for the fourth quarter 2021. First quarter 2022 other noninterest income included $1.3 million in income from Small Business Investment Company investments.

Noninterest expense for the first quarter 2022 decreased $402 thousand, or 1.2%, to $34.5 million from $34.9 million for the first quarter 2021 and decreased $2.2 million, or 6.1%, compared to the fourth quarter of 2021. The decrease over the fourth quarter 2021 was primarily due to decreased professional fees and acquisition and merger-related expenses associated with the pending merger with CBTX, Inc. partially offset by increased regulatory assessments and FDIC insurance.

In the first quarter 2022, Allegiance’s efficiency ratio decreased to 58.32% compared to 60.85% for the first quarter 2021 and 60.68% for the fourth quarter 2021. First quarter 2022 annualized returns on average assets, average equity and average tangible equity were 1.04%, 9.40% and 13.35%, respectively, compared to 1.18%, 9.59% and 14.03% for the first quarter 2021. Annualized returns on average assets, average equity and average tangible equity for the fourth quarter 2021 were 1.23%, 10.60% and 15.05%, respectively. 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 March 31, 2022 increased $718.4 million, or 11.2%, to $7.15 billion compared to $6.43 billion at March 31, 2021 and increased $44.4 million, or 2.5% (annualized), compared to $7.10 billion at December 31, 2021, primarily due to the increased origination of core loans and growth in the securities portfolio partially offset by paydowns of PPP loans.

Total loans at March 31, 2022 decreased $375.7 million, or 8.1%, to $4.28 billion compared to $4.66 billion at March 31, 2021, primarily due to paydowns on PPP loans, and increased $63.0 million, or 6.0% (annualized) compared to $4.22 billion at December 31, 2021 due to the increase in organic core loans. Core loans, which exclude PPP loans, increased $274.1 million, or 7.0%, to $4.20 billion at March 31, 2022 from $3.93 billion at March 31, 2021 and increased $130.3 million, or 12.8% (annualized), from $4.07 billion at December 31, 2021.

Deposits at March 31, 2022 increased $788.1 million, or 14.7%, to $6.16 billion compared to $5.37 billion at March 31, 2021 and increased $114.7 million, or 7.6% (annualized), compared to $6.05 billion at December 31, 2021.

Asset Quality

Nonperforming assets totaled $26.3 million, or 0.37%, of total assets, at March 31, 2022 compared to $35.6 million, or 0.55%, of total assets, at March 31, 2021 and $24.1 million, or 0.34%, of total assets at December 31, 2021. The allowance for credit losses on loans as a percentage of total loans was 1.15% at March 31, 2022, 1.13% at March 31, 2021 and 1.14% at December 31, 2021.

The provision for credit losses for the first quarter 2022 was $1.8 million compared to $639 thousand for the first quarter 2021 and the recapture of provision for credit losses of $2.6 million for the fourth quarter 2021. The increase in the Company’s provision for credit losses in the first quarter of 2022 compared to the first and fourth quarters of 2021 reflects an increase in core loans.

First quarter 2022 net charge-offs were $317 thousand, or 0.03% (annualized) of average loans, a decrease from net charge-offs of $345 thousand, or 0.03% (annualized) of average loans, for the first quarter 2021 and a decrease of $1.0 million from $1.4 million, or 0.13% (annualized) of average loans, for the fourth quarter 2021.

Dividend

The Board of Directors of Allegiance declared a cash dividend on April 28, 2022 of $0.14 per share to be paid on June 15, 2022 to all shareholders of record as of May 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.

Share Repurchase Authorization

On April 28, 2022, the Board of Directors of Allegiance authorized the repurchase of up to one million shares of outstanding Allegiance common stock through April 30, 2023. Repurchases under this program may be made from time to time through open market purchases, privately negotiated transactions or such other manners as will comply with applicable laws and regulations. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, market conditions and other corporate liquidity requirements and priorities. The repurchase program does not obligate Allegiance to purchase any particular number of shares and there is no guarantee as to the exact number of shares that will be repurchased by Allegiance. Allegiance may suspend, modify or terminate the program at any time and for any reason, without prior notice. On April 30, 2022, the Company’s previously approved one million share repurchase authorization will expire.

Pending Merger

On November 8, 2021, Allegiance and CBTX, Inc., jointly announced that they entered into a definitive merger agreement pursuant to which the companies will combine in an all-stock merger of equals. CBTX reported total assets of $4.49 billion as of December 31, 2021. 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, Inc. shareholders will own approximately 46% of the combined company. The companies have submitted the required regulatory filings and, subject to satisfaction or in some cases waiver of the closing conditions, including approval of the merger agreement by both companies’ shareholders, the parties anticipate closing in the second quarter of the year. Each company has scheduled a special meeting for May 24, 2022 at which its respective shareholders will consider and vote on the merger agreement and other related matters.

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.

Conference Call

As previously announced, Allegiance’s management team will host a conference call on Friday, April 29, 2022 at 9:00 a.m. Central Time (10:00 a.m. Eastern Time) to discuss its first quarter 2022 results. Individuals and investment professionals may participate in the call by dialing (877) 279-2520. The conference ID number is 3473855. Alternatively, a simultaneous audio-only webcast may be accessed via the Investor Relations section of Allegiance’s website at www.allegiancebank.com, under Upcoming Events. If you are unable to participate during the live webcast, the webcast will be archived on the Investor Relations section of Allegiance’s website at www.allegiancebank.com, under News and Events, Event Calendar, Past Events.

Allegiance Bancshares, Inc.

As of March 31, 2022, Allegiance was a $7.15 billion asset Houston, Texas-based bank holding company. Through its wholly owned subsidiary, Allegiance Bank, Allegiance provides a diversified range of commercial banking services primarily to small- to medium-sized businesses and individual customers in the Houston region. Allegiance’s super-community banking strategy was designed to foster strong customer relationships while benefiting from a platform and scale that is competitive with larger local and regional banks. As of March 31, 2022, Allegiance Bank operated 27 full-service banking locations in the Houston region, which we define as the Houston-The Woodlands-Sugar Land and Beaumont-Port Arthur metropolitan statistical areas, with 26 bank offices in the Houston metropolitan area and one bank office in Beaumont, just outside of the Houston metropolitan area. Visit www.allegiancebank.com for more information.

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 (including the anticipated impact of the transaction on Allegiance's and CBTX's respective earnings and book value), statements related to the expected timing of the completion of the merger, the combined company's plans, objectives, expectations and intentions, and other statements that are not historical facts. Forward-looking statements may be identified by terminology such as "may," "will," "should," "scheduled," "plans," "intends," "anticipates," "expects," "believes," "estimates," "potential," 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 announcement and 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 failure to obtain the necessary approvals by the shareholders of Allegiance or CBTX; (6) the amount of the costs, fees, expenses and charges related to the merger; (7) the ability by each of Allegiance and CBTX to obtain required governmental 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); (8) reputational risk and the reaction of each company's customers, suppliers, employees or other business partners to the merger; (9) the failure of the closing conditions in the merger agreement to be satisfied, or any unexpected delay in closing the merger; (10) the possibility that the merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events; (11) the dilution caused by CBTX's issuance of additional shares of its common stock in the merger; (12) general competitive, economic, political and market conditions; (13) the costs, effects and results of regulatory examinations and investigations or the ability of the parties to obtain required regulatory approvals; and (14) other factors that may affect future results of CBTX and Allegiance 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 and Office of the Comptroller of the Currency and legislative and regulatory actions and reforms. Additionally, the impact of the COVID-19 pandemic continues to evolve and its future effects on Allegiance are difficult to predict.

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 the 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. Allegiance and CBTX disclaim any obligation and do 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.

Information about the Merger and Where to Find It

This release does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval.

In connection with the proposed merger, CBTX has filed a registration statement on Form S-4 with the SEC to register the shares of CBTX common stock that will be issued to Allegiance shareholders in connection with the merger. The registration statement includes a joint proxy statement/prospectus. The Form S-4 became effective on April 7, 2022 and a definitive joint proxy statement/prospectus was filed by each of Allegiance and CBTX with the SEC. On or about April 15, 2022, Allegiance and CBTX mailed the definitive proxy statement/prospectus to their respective shareholders to seek their approval of the proposed merger.

WE URGE INVESTORS AND SECURITY HOLDERS TO READ THE REGISTRATION STATEMENT ON FORM S-4, THE JOINT PROXY STATEMENT/PROSPECTUS INCLUDED WITHIN THE REGISTRATION STATEMENT ON FORM S-4 AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IN CONNECTION WITH THE PROPOSED MERGER BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT ALLEGIANCE, CBTX AND THE PROPOSED MERGER.

Investors and security holders may obtain free copies of these documents, once they are filed, and other documents filed with the SEC by Allegiance or CBTX through the website maintained by the SEC at https://www.sec.gov. Documents filed with the SEC by CBTX will be available free of charge by accessing the CBTX's website at www.communitybankoftx.com under the heading “Investor Relations” or, alternatively, by directing a request by mail or telephone to CBTX, Inc., 9 Greenway Plaza, Suite 110, Houston, Texas 77046, Attn: Investor Relations, (713) 210-7600, and documents filed with the SEC by Allegiance will be available free of charge by accessing Allegiance’s website at www.allegiancebank.com under the heading "Investor Relations" or, alternatively, by directing a request by mail or telephone to Allegiance Bancshares, Inc., 8847 West Sam Houston Parkway, N., Suite 200, Houston, Texas 77040, (281) 894-3200.

Participants in the Solicitation

CBTX, Allegiance and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of CBTX and Allegiance in connection with the proposed merger. Certain information regarding the interests of these participants and a description of their direct or indirect interests, by security holdings or otherwise, are included in the joint proxy statement/prospectus regarding the proposed merger. Additional information about the directors and executive officers of CBTX and their ownership of CBTX's common stock is set forth in CBTX's annual report on Form 10-K, filed with the SEC on February 25, 2022. Additional information about the directors and executive officers of Allegiance and their ownership of Allegiance's common stock is set forth in Allegiance's proxy statement for its annual meeting of shareholders, filed with the SEC on March 10, 2022. These documents can be obtained free of charge from the sources described above.

Allegiance Bancshares, Inc.Financial Highlights(Unaudited)

	2022			2021
	March 31			December 31			September 30			June 30			March 31
	(Dollars in thousands)
ASSETS
Cash and due from banks	$	26,629		$	23,961		$	23,903		$	146,397		$	141,947
Interest-bearing deposits at other financial institutions		672,755			733,548			879,858			564,888			482,383
Total cash and cash equivalents		699,384			757,509			903,761			711,285			624,330
Available for sale securities, at fair value		1,790,707			1,773,765			1,211,476			977,282			787,516
Loans held for investment		4,283,514			4,220,486			4,289,469			4,460,743			4,659,169
Less: allowance for credit losses on loans		(49,215	)		(47,940	)		(50,491	)		(49,586	)		(52,758	)
Loans, net		4,234,299			4,172,546			4,238,978			4,411,157			4,606,411
Accrued interest receivable		31,505			33,392			33,523			37,075			38,632
Premises and equipment, net		62,168			63,708			65,140			65,442			66,115
Other real estate owned		—			—			1,397			1,397			576
Federal Home Loan Bank stock		9,376			9,358			8,326			8,234			7,775
Bank owned life insurance		28,374			28,240			28,101			27,976			27,825
Goodwill		223,642			223,642			223,642			223,642			223,642
Core deposit intangibles, net		13,907			14,658			15,482			16,306			17,130
Other assets		56,001			28,136			29,935			28,871			31,038
Total assets	$	7,149,363		$	7,104,954		$	6,759,761		$	6,508,667		$	6,430,990
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES:
Deposits:
Noninterest-bearing	$	2,353,604		$	2,243,085		$	2,086,683		$	1,973,042		$	1,914,121
Interest-bearing
Demand		1,070,855			869,984			594,959			553,874			480,710
Money market and savings		1,552,853			1,643,745			1,604,222			1,556,920			1,617,823
Certificates and other time		1,185,015			1,290,825			1,381,014			1,349,522			1,361,535
Total interest-bearing deposits		3,808,723			3,804,554			3,580,195			3,460,316			3,460,068
Total deposits		6,162,327			6,047,639			5,666,878			5,433,358			5,374,189
Accrued interest payable		3,086			1,753			3,296			1,940			3,862
Borrowed funds		89,959			89,956			139,954			139,951			147,517
Subordinated debt		108,978			108,847			108,715			108,584			108,453
Other liabilities		33,073			40,291			42,326			35,684			36,432
Total liabilities		6,397,423			6,288,486			5,961,169			5,719,517			5,670,453
SHAREHOLDERS’ EQUITY:
Common stock		20,378			20,337			20,218			20,213			20,183
Capital surplus		512,284			510,797			507,948			506,810			505,307
Retained earnings		282,896			267,092			247,966			231,333			210,834
Accumulated other comprehensive (loss) income		(63,618	)		18,242			22,460			30,794			24,213
Total shareholders’ equity		751,940			816,468			798,592			789,150			760,537
TOTAL LIABILITIES ANDSHAREHOLDERS’ EQUITY	$	7,149,363		$	7,104,954		$	6,759,761		$	6,508,667		$	6,430,990

Allegiance Bancshares, Inc.Financial Highlights(Unaudited)

	Three Months Ended
	2022		2021
	March 31		December 31			September 30		June 30			March 31
	(Dollars in thousands, except per share data)
INTEREST INCOME:
Loans, including fees	$	52,370	$	56,855		$	58,176	$	57,691		$	57,991
Securities:
Taxable		5,068		3,933			2,998		2,556			2,402
Tax-exempt		2,525		2,526			2,498		2,491			2,394
Deposits in other financial institutions		340		317			221		94			41
Total interest income		60,303		63,631			63,893		62,832			62,828

INTEREST EXPENSE:
Demand, money market and savings deposits		1,347		1,277			1,267		1,337			1,484
Certificates and other time deposits		2,156		2,391			2,583		2,989			3,665
Borrowed funds		186		434			436		469			539
Subordinated debt		1,442		1,425			1,441		1,441			1,442
Total interest expense		5,131		5,527			5,727		6,236			7,130
NET INTEREST INCOME		55,172		58,104			58,166		56,596			55,698
Provision for credit losses		1,814		(2,577	)		2,295		(2,679	)		639
Net interest income after provision for credit losses		53,358		60,681			55,871		59,275			55,059

NONINTEREST INCOME:
Nonsufficient funds fees		116		156			131		94			83
Service charges on deposit accounts		527		476			425		382			388
Gain on sale of securities		—		—			—		—			49
Loss on sale of other real estate and repossessed assets		—		(89	)		—		—			(176	)
Bank owned life insurance		133		139			125		151			139
Debit card and ATM card income		819		834			771		761			630
Other		2,423		938			647		885			623
Total noninterest income		4,018		2,454			2,099		2,273			1,736

NONINTEREST EXPENSE:
Salaries and employee benefits		22,728		22,918			22,335		22,472			22,452
Net occupancy and equipment		2,205		2,194			2,335		2,225			2,390
Depreciation		1,033		1,103			1,060		1,057			1,034
Data processing and software amortization		2,498		2,264			2,222		2,176			2,200
Professional fees		138		1,008			620		608			789
Regulatory assessments and FDIC insurance		1,261		949			883		768			807
Core deposit intangibles amortization		751		824			824		824			824
Communications		341		395			358		332			321
Advertising		462		481			481		432			298
Other real estate expense		59		69			137		229			113
Acquisition and merger-related expenses		451		1,408			603		—			—
Other		2,590		3,131			2,438		2,472			3,691
Total noninterest expense		34,517		36,744			34,296		33,595			34,919
INCOME BEFORE INCOME TAXES		22,859		26,391			23,674		27,953			21,876
Provision for income taxes		4,202		4,833			4,614		5,028			3,866
NET INCOME	$	18,657	$	21,558		$	19,060	$	22,925		$	18,010

EARNINGS PER SHARE
Basic	$	0.92	$	1.06		$	0.94	$	1.13		$	0.89
Diluted	$	0.91	$	1.06		$	0.93	$	1.12		$	0.89

Allegiance Bancshares, Inc. Financial Highlights (Unaudited)

	Three Months Ended
	2022			2021
	March 31			December 31			September 30			June 30			March 31
	(Dollars and share amounts in thousands, except per share data)
Net income	$	18,657		$	21,558		$	19,060		$	22,925		$	18,010

Earnings per share, basic	$	0.92		$	1.06		$	0.94		$	1.13		$	0.89
Earnings per share, diluted	$	0.91		$	1.06		$	0.93		$	1.12		$	0.89
Dividends per share	$	0.14		$	0.12		$	0.12		$	0.12		$	0.12

Return on average assets(A)		1.04	%		1.23	%		1.14	%		1.42	%		1.18	%
Return on average equity(A)		9.40	%		10.60	%		9.45	%		11.87	%		9.59	%
Return on average tangible equity(A)(B)		13.35	%		15.05	%		13.49	%		17.20	%		14.03	%
Net interest margin (tax equivalent)(A)(C)		3.30	%		3.57	%		3.90	%		4.02	%		4.19	%
Efficiency ratio(D)		58.32	%		60.68	%		56.91	%		57.07	%		60.85	%

Capital Ratios
Allegiance Bancshares, Inc.(Consolidated)
Equity to assets		10.52	%		11.49	%		11.81	%		12.12	%		11.83	%
Tangible equity to tangible assets(B)		7.44	%		8.42	%		8.58	%		8.76	%		8.40	%
Estimated common equity tier 1 capital		12.28	%		12.47	%		12.37	%		12.18	%		11.87	%
Estimated tier 1 risk-based capital		12.49	%		12.69	%		12.60	%		12.41	%		12.10	%
Estimated total risk-based capital		15.76	%		16.08	%		16.13	%		15.98	%		15.72	%
Estimated tier 1 leverage capital		8.37	%		8.53	%		8.76	%		8.56	%		8.57	%
Allegiance Bank
Estimated common equity tier 1 capital		12.48	%		12.63	%		12.81	%		13.03	%		13.17	%
Estimated tier 1 risk-based capital		12.48	%		12.63	%		12.81	%		13.03	%		13.17	%
Estimated total risk-based capital		14.50	%		14.71	%		14.98	%		15.22	%		15.37	%
Estimated tier 1 leverage capital		8.37	%		8.49	%		8.91	%		8.99	%		9.33	%

Other Data
Weighted average shares:
Basic		20,363			20,260			20,221			20,203			20,140
Diluted		20,526			20,423			20,411			20,386			20,342
Period end shares outstanding		20,378			20,337			20,218			20,213			20,183
Book value per share	$	36.90		$	40.15		$	39.50		$	39.04		$	37.68
Tangible book value per share(B)	$	25.24		$	28.43		$	27.67		$	27.17		$	25.75

(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 11 of this Earnings Release.
(C)	Net interest margin represents net interest income divided by average interest-earning assets.
(D)	Represents total noninterest expense divided by the sum of net interest income plus noninterest income, excluding net gains and losses on the sale of loans, securities and assets. Additionally, taxes and provision for credit losses are not part of this calculation.

Allegiance Bancshares, Inc. Financial Highlights (Unaudited)

	Three Months Ended
	March 31, 2022							December 31, 2021							March 31, 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	$	4,231,507		$	52,370	5.02	%	$	4,243,778		$	56,855	5.32	%	$	4,571,045		$	57,991	5.15	%
Securities		1,835,618			7,593	1.68	%		1,457,793			6,459	1.76	%		789,188			4,796	2.46	%
Deposits in other financial institutions and other		806,583			340	0.17	%		843,808			317	0.15	%		96,212			41	0.17	%
Total interest-earning assets		6,873,708		$	60,303	3.56	%		6,545,379		$	63,631	3.86	%		5,456,445		$	62,828	4.67	%
Allowance for credit losses on loans		(48,343	)						(50,654	)						(53,370	)
Noninterest-earning assets		432,133							447,005							760,762
Total assets	$	7,257,498						$	6,941,730						$	6,163,837

Liabilities and Shareholders' Equity
Interest-Bearing Liabilities:
Interest-bearing demand deposits	$	1,071,010		$	549	0.21	%	$	724,841		$	388	0.21	%	$	458,063		$	371	0.33	%
Money market and savings deposits		1,584,373			798	0.20	%		1,618,240			889	0.22	%		1,539,127			1,113	0.29	%
Certificates and other time deposits		1,245,180			2,156	0.70	%		1,335,020			2,391	0.71	%		1,332,663			3,665	1.12	%
Borrowed funds		89,880			186	0.84	%		138,747			434	1.24	%		154,927			539	1.41	%
Subordinated debt		108,913			1,442	5.37	%		108,784			1,425	5.20	%		108,387			1,442	5.40	%
Total interest-bearing liabilities		4,099,356		$	5,131	0.51	%		3,925,632		$	5,527	0.56	%		3,593,167		$	7,130	0.80	%

Noninterest-Bearing Liabilities:
Noninterest-bearing demand deposits		2,312,114							2,163,016							1,767,740
Other liabilities		41,324							46,141							41,330
Total liabilities		6,452,794							6,134,789							5,402,237
Shareholders' equity		804,704							806,941							761,600
Total liabilities and shareholders' equity	$	7,257,498						$	6,941,730						$	6,163,837

Net interest rate spread						3.05	%						3.30	%						3.87	%

Net interest income and margin				$	55,172	3.26	%				$	58,104	3.52	%				$	55,698	4.14	%

Net interest income and net interest margin (tax equivalent)				$	55,922	3.30	%				$	58,838	3.57	%				$	56,317	4.19	%

Allegiance Bancshares, Inc.Financial Highlights(Unaudited)

	Three Months Ended
	2022			2021
	March 31			December 31			September 30			June 30			March 31
	(Dollars in thousands)
Period-end Loan Portfolio:
Commercial and industrial	$	714,450		$	693,559		$	728,897		$	690,867		$	664,792
Paycheck Protection Program (PPP)		78,624			145,942			290,028			499,207			728,424
Real estate:
Commercial real estate (including multi-family residential)		2,197,502			2,104,621			2,073,521			2,051,516			2,018,853
Commercial real estate construction and land development		453,473			439,125			382,610			371,732			386,637
1-4 family residential (including home equity)		669,306			685,071			683,919			715,119			726,228
Residential construction		136,760			117,901			104,638			111,956			119,528
Consumer and other		33,399			34,267			25,856			20,346			14,707
Total loans	$	4,283,514		$	4,220,486		$	4,289,469		$	4,460,743		$	4,659,169

Asset Quality:
Nonaccrual loans	$	26,275		$	24,127		$	28,369		$	36,643		$	35,051
Accruing loans 90 or more days past due		—			—			—			—			—
Total nonperforming loans		26,275			24,127			28,369			36,643			35,051
Other real estate		—			—			1,397			1,397			576
Total nonperforming assets	$	26,275		$	24,127		$	29,766		$	38,040		$	35,627

Net charge-offs	$	317		$	1,353		$	450		$	162		$	345

Nonaccrual loans:
Commercial and industrial	$	7,809		$	8,358		$	10,247		$	12,949		$	14,059
Real estate:
Commercial real estate (including multi-family residential)		15,259			12,639			14,629			18,123			13,455
Commercial real estate construction and land development		—			63			53			53			1,000
1-4 family residential (including home equity)		3,065			2,875			3,224			4,839			5,736
Residential construction		—			—			—			—			—
Consumer and other		142			192			216			679			801
Total nonaccrual loans	$	26,275		$	24,127		$	28,369		$	36,643		$	35,051

Asset Quality Ratios:
Nonperforming assets to total assets		0.37	%		0.34	%		0.44	%		0.58	%		0.55	%
Nonperforming loans to total loans		0.61	%		0.57	%		0.66	%		0.82	%		0.75	%
Allowance for credit losses on loans to nonperforming loans		187.31	%		198.70	%		177.98	%		135.32	%		150.52	%
Allowance for credit losses on loans to total loans		1.15	%		1.14	%		1.18	%		1.11	%		1.13	%
Net charge-offs to average loans (annualized)		0.03	%		0.13	%		0.04	%		0.01	%		0.03	%

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
	2022			2021
	March 31			December 31			September 30			June 30			March 31
	(Dollars and share amounts in thousands, except per share data)
Total shareholders' equity	$	751,940		$	816,468		$	798,592		$	789,150		$	760,537
Less: Goodwill and core deposit intangibles, net		237,549			238,300			239,124			239,948			240,772
Tangible shareholders’ equity	$	514,391		$	578,168		$	559,468		$	549,202		$	519,765

Shares outstanding at end of period		20,378			20,337			20,218			20,213			20,183

Tangible book value per share	$	25.24		$	28.43		$	27.67		$	27.17		$	25.75

Net income	$	18,657		$	21,558		$	19,060		$	22,925		$	18,010

Average shareholders' equity	$	804,704		$	806,941		$	800,146		$	774,803		$	761,600
Less: Average goodwill and core deposit intangibles, net		237,925			238,700			239,497			240,331			241,166
Average tangible shareholders’ equity	$	566,779		$	568,241		$	560,649		$	534,472		$	520,434

Return on average tangible equity(A)		13.35	%		15.05	%		13.49	%		17.20	%		14.03	%

Total assets	$	7,149,363		$	7,104,954		$	6,759,761		$	6,508,667		$	6,430,990
Less: Goodwill and core deposit intangibles, net		237,549			238,300			239,124			239,948			240,772
Tangible assets	$	6,911,814		$	6,866,654		$	6,520,637		$	6,268,719		$	6,190,218

Tangible equity to tangible assets		7.44	%		8.42	%		8.58	%		8.76	%		8.40	%