GlobeNewswire Inc | Oct 29, 2020 07:00AM EDT

October 29, 2020

-- Record net income of $16.2 million and diluted earnings per share of $0.79, representing 34.2% net income growth and 38.6% diluted earnings per share growth from the third quarter of 2019

-- Net charge-offs to average loans of 0.03% (annualized) for the third quarter 2020 -- Deposits increased 4.6%, or 18.4% annualized, over the second quarter 2020 -- Declared quarterly dividend of $0.10 per share of common stock

HOUSTON, Oct. 29, 2020 (GLOBE NEWSWIRE) -- Allegiance Bancshares, Inc. (NASDAQ: ABTX) (Allegiance), the holding company of Allegiance Bank (the "Bank"), today reported net income of $16.2 million and diluted earnings per share of $0.79 for the third quarter 2020 compared to net income of $12.0 million and diluted earnings per share of $0.57 for the third quarter 2019. Net income for the nine months ended September 30, 2020 was $29.6 million, or $1.44 per diluted share, compared to $39.0 million, or $1.81 per diluted share, for the nine months ended September 30, 2019. The three months ended September 30, 2020 results were primarily due to increased net interest income partially offset by write-downs of other real estate of $1.9 million. The nine months ended September 30, 2020 results were primarily impacted by the increased provision for loan losses in response to COVID-19-related uncertainties in the current economic environment partially offset by increased net interest income.

Given the continuing economic slowdown and uncertainties due to the pandemic, we are very pleased with our level of loan and deposit production and core earnings that contributed to a record level of net income for the third quarter. Our team continues to work diligently to support our customers and the communities we serve. The experience we have with our long established customer relationships and disciplined underwriting are key strengths that guide and serve us well during this extended period of recovery, said Steve Retzloff, Allegiances Chief Executive Officer. We further extended our customer outreach during the third quarter as we assessed current conditions and related risks and as we determined appropriate grading of our portfolio and related assessments. These one-on-one discussions and status updates, as well as working with those who requested payment deferrals, give us confidence in the overall quality of our loan portfolio, commented Retzloff.

We believe our strong liquidity, solid capital and focus on expense management, as well as the tradition of community banking, experience and continued commitment of the entire Allegiance team, will help ensure that our core business is solid and resilient. We remain focused on achieving our goals as we strategically position Allegiance to provide long-term value to our shareholders, and continue to be a source of strength for our customers, employees and community as we all navigate toward a more normalized economic environment, concluded Retzloff.

Third Quarter 2020 Results

Net interest income before the provision for loan losses in the third quarter 2020 increased $7.1 million, or 15.8%, to $51.9 million from $44.8 million for the third quarter 2019 and increased $1.1 million, or 2.1%, from $50.8 million in the second quarter 2020. These increases were primarily due to changes in the volume and relative mix of the underlying assets and liabilities, the impact of PPP loans as well as lower costs on interest-bearing liabilities. The net interest margin on a tax equivalent basis decreased 21 basis points to 3.95% for the third quarter 2020 from 4.16% for the third quarter 2019 and decreased 15 basis points from 4.10% for the second quarter 2020. Excluding the impact of acquisition accounting adjustments, adjusted net interest margin on a tax equivalent basis was 3.91% for the third quarter 2020 compared to 3.97% for the third quarter 2019 and 4.05% for the second quarter 2020. Adjusted net interest margin is a non-GAAP measure. Please refer to the non-GAAP reconciliation on page 11.

Noninterest income for the third quarter 2020 was $1.9 million, a decrease of $1.0 million, or 36.0%, compared to $2.9 million for the third quarter 2019 and an increase of $288 thousand, or 18.4%, compared to $1.6 million for the second quarter 2020. Third quarter 2020 noninterest income reflected lower transactional fee income and significantly lower correspondent bank rebates.

Noninterest expense for the third quarter 2020 increased $2.6 million, or 8.5%, to $32.6 million from $30.0 million for the third quarter 2019 and increased $2.8 million, or 9.4%, compared to the second quarter 2020. Noninterest expense for the third quarter 2020 included $1.9 million of other real estate write-downs.

In the third quarter 2020, Allegiances efficiency ratio was 60.58% compared to 56.92% for the second quarter 2020 and 62.88% for the third quarter 2019. Third quarter 2020 annualized returns on average assets, average equity and average tangible equity were 1.09%, 8.59% and 12.72%, respectively, compared to 0.71%, 5.51% and 8.32%, respectively, for the second quarter 2020. Annualized returns on average assets, average equity and average tangible equity for the third quarter 2019 were 0.98%, 6.73% and 10.33%, respectively. Return on average tangible equity is a non-GAAP measure. Please refer to the non-GAAP reconciliation on page 11.

Nine Months Ended September 30, 2020 Results

Net interest income before provision for loan losses for the nine months ended September30, 2020 increased $12.8 million, or 9.5%, to $147.8 million from $135.0 million for the nine months ended September30, 2019 primarily due to a $654.4 million, or 15.4%, increase in average interest-earning assets over the prior year, the impact of PPP loans as well as lower costs related to interest-bearing liabilities. The net interest margin on a tax equivalent basis decreased 21 basis points to 4.06% for the nine months ended September30, 2020 from 4.27% for the nine months ended September30, 2019. Excluding the impact of acquisition accounting adjustments, the adjusted net interest margin for the nine months ended September30, 2020 was 3.99%, compared to 4.02% for the nine months ended September30, 2019. Adjusted net interest margin is a non-GAAP measure. Please refer to the non-GAAP reconciliation on page 11.

Noninterest income for the nine months ended September30, 2020 was $6.1 million, a decrease of $3.9 million, or 38.8%, compared to $10.0 million for the nine months ended September30, 2019 due primarily to significantly lower correspondent bank rebates and losses on the sales of other real estate owned of $258 thousand. Additionally, noninterest income for the first nine months of 2020 included $287 thousand of gains on the sale of securities compared to $846 thousand for the first nine months of 2019.

Noninterest expense for the nine months ended September30, 2020 increased $3.5 million, or 3.9%, to $94.7 million from $91.2 million for the nine months ended September30, 2019. The increase in noninterest expense during the nine months ended September30, 2020 was primarily due to $4.1 million of other real estate write-downs partially offset by having no merger-related expenses incurred compared to $1.3 million during the first nine months of 2019.

Allegiances efficiency ratio decreased from 63.25% for the nine months ended September30, 2019 to 61.67% for the nine months ended September30, 2020. For the nine months ended September30, 2020, returns on average assets, average equity and average tangible equity were 0.72%, 5.43% and 8.16%, respectively, compared to 1.09%, 7.36% and 11.35%, respectively, for the nine months ended September30, 2019. 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 September30, 2020 increased $130.9 million, or 9.0% (annualized), to $5.97 billion compared to $5.84 billion at June30, 2020 and increased $1.06 billion, or 21.6%, compared to $4.91 billion at September30, 2019, primarily due to the origination of PPP loans and growth in the securities portfolio.

Total loans at September30, 2020 increased $8.7 million, or 0.8% (annualized), to $4.59 billion compared to $4.58 billion at June30, 2020 and increased $706.4 million, or 18.2%, compared to $3.89 billion at September30, 2019, primarily due to the origination of $710.2 million of PPP loans. Core loans, which exclude the mortgage warehouse portfolio and PPP loans, decreased $5.8 million, or 0.6% (annualized), to $3.88 billion at September30, 2020 from $3.89 billion at June30, 2020 and increased $32.7 million, or 0.8%, from $3.85 billion at September30, 2019.

Deposits at September30, 2020 increased $216.7 million, or 18.4% (annualized), to $4.92 billion compared to $4.70 billion at June30, 2020 and increased $1.02 billion, or 26.2%, compared to $3.90 billion at September30, 2019.

Asset Quality

Nonperforming assets totaled $46.8 million, or 0.78% of total assets, at September30, 2020, compared to $45.1 million, or 0.77% of total assets, at June30, 2020, and $42.9 million, or 0.88% of total assets, at September30, 2019. The allowance for loan losses was 1.06% of total loans at September30, 2020, 1.04% of total loans at June30, 2020 and 0.77% of total loans at September30, 2019. Accounting Standards Update (ASU) 2016-13, Financial Instruments Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (CECL), became effective for the Company on January1, 2020. On March27, 2020, the CARES Act included an option for entities to delay the implementation of CECL until the earlier of the termination date of the national emergency declaration by the President or December31, 2020. Due to the uncertainty on the economy from COVID-19, the Company chose to delay its implementation of CECL and recorded its provision for loan losses under the incurred loss model that existed prior to CECL.

The provision for loan losses for the third quarter 2020 was $1.3 million, or 0.12% (annualized) of average loans, compared to $10.7 million, or 0.97% (annualized) of average loans, for the second quarter 2020 and $2.6 million, or 0.27% (annualized) of average loans for the third quarter 2019 primarily due to economic risks and uncertainties related to the COVID-19 pandemic. The Companys increased provision for loan losses of $18.0 million during the nine months ended 2020 compared to the same period in 2019 reflects the uncertainty surrounding unemployment, the economic impact caused by COVID-19 and the economic effects related to the sustained lower crude oil prices.

Third quarter 2020 net charge-offs were $291 thousand, or 0.03% (annualized) of average loans, a decrease from net charge-offs of $538 thousand, or 0.05% (annualized) of average loans, for the second quarter 2020 and $729 thousand, or 0.07% (annualized) of average loans, for the third quarter 2019. Net charge-offs for the nine months ended September30, 2020 were $3.7 million, or 0.12% (annualized) of average loans, compared to net charge-offs for the nine months ended September30, 2019 of $1.5 million, or 0.05% (annualized) of average loans.

The Company believes the largest risks within its loan portfolio are in the hotel, restaurant and bar, and oil and gas portfolios. Loan balances in the hotel industry, excluding PPP loans, totaled $133.8million, or 2.9% of total loans, at September 30, 2020, of which $7.1 million were on nonaccrual. At September 30, 2020, restaurant and bar industry loans, excluding PPP loans, totaled $117.1million, or 2.6%, of total loans, of which $683 thousand were on nonaccrual. At September30, 2020, the Companys allowance for loan losses allocated to its hotel portfolio was 4.0% of total hotel loans and its restaurant and bar portfolio was 1.2% of total restaurant and bar loans. The oil and gas portfolio, excluding PPP loans, totaled $74.0 million, or 1.6%, of total loans at September 30, 2020, of which $592 thousand were on nonaccrual. At September30, 2020, the allowance for loan losses allocated to the oil and gas loan portfolio was 2.0% of total oil and gas loans.

During the nine months ended September 30, 2020, the Company granted 2,007 initial principal and interest deferrals on outstanding loan balances of $1.15 billion at September 30, 2020 with associated accrued interest of $16.1 million to borrowers in connection with the COVID-19 relief provided by the CARES Act. Of the initial deferrals, 242 loans with outstanding loan balances of $219.6 million had been granted additional deferrals upon request and after meeting certain conditions with associated accrued interest of $3.4 million as of September 30, 2020. These deferrals were generally no more than 90 days in duration. As of September 30, 2020, 286 loans with outstanding loan balances of $237.0 million remained on deferral.

Dividend

On October 22, 2020, the Board of Directors of Allegiance declared a cash dividend of $0.10 per share to be paid on December 15, 2020 to all shareholders of record as of November 30, 2020. The amount and timing of any future dividend payments to shareholders will be subject to the discretion of Allegiances Board of Directors.

GAAP Reconciliation of Non-GAAP Financial Measures

Allegiances management uses certain non-GAAP financial measures to evaluate its performance. Please refer to the GAAP Reconciliation and Managements 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, Allegiances management team will host a conference call on Thursday, October 29, 2020 at 9:00 a.m. Central Time (10:00 a.m. Eastern Time) to discuss its third quarter 2020 results. Individuals and investment professionals may participate in the call by dialing (877) 279-2520. The conference ID number is 1188487. Alternatively, a simultaneous audio-only webcast may be accessed via the Investor Relations section of Allegiances 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 Allegiances website at www.allegiancebank.com, under News and Events, Event Calendar, Past Events.

Allegiance Bancshares, Inc.

As of September30, 2020, Allegiance was a $5.97 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. Allegiances 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 September30, 2020, Allegiance Bank operated 28 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 27 bank offices in the Houston metropolitan area and one bank office location in Beaumont, just outside of the Houston metropolitan area. Visit www.allegiancebank.com for more information.

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

This release contains forward-looking statements within the meaning of the securities laws that are derived utilizing assumptions, present expectations, estimates and projections about Allegiance and its subsidiaries. Statements preceded by, followed by or that otherwise include the words believes, expects, continues, anticipates, intends, projects, estimates, potential, plans and similar expressions or future or conditional verbs such as will, should, would, may and could are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing words. Forward-looking statements include information concerning Allegiances expected future financial performance, business and growth strategy, projected plans and objectives, as well as projections of macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact economic trends, and any such variations may be material. Such forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties, many of which are outside of Allegiances control, which may cause actual results to differ materially from those expressed or implied by the forward-looking statements. These risks and uncertainties include but are not limited to whether Allegiance can: continue to develop and maintain new and existing customer and community relationships; successfully implement its growth strategy, including identifying suitable acquisition targets and integrating the businesses of acquired companies and banks; sustain its current internal growth rate; provide quality and competitive products and services that appeal to its customers; continue to have access to debt and equity capital markets; and achieve its performance objectives. Additionally, the impact of the COVID-19 pandemic is rapidly evolving and its future effects on Allegiance are difficult to predict. These and various other risk factors are discussed in Allegiances Annual Report on Form 10-K for the fiscal year ended December 31, 2019and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020 and in other reports and statements Allegiance has filed with the Securities and Exchange Commission. Copies of such filings are available for download free of charge from the Investor Relations section of Allegiances 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 Allegiances actual results to differ may emerge from time to time, and it is not possible for Allegiance to predict all of them. Because of these uncertainties, readers should not place undue reliance on any forward-looking statement. Allegiance disclaims any obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

Allegiance Bancshares, Inc.Financial Highlights(Unaudited)

2020 2019 September30 June30 March31 December31 September 30 (Dollars in thousands) ASSETS Cash and due from $ 327,416 $ 237,585 $ 156,700 $ 213,347 $ 246,312 banksInterest-bearingdeposits at other 19,732 28,815 18,189 132,901 54,307 financialinstitutionsTotal cash and cash 347,148 266,400 174,889 346,248 300,619 equivalentsAvailable for salesecurities, at fair 663,301 618,751 508,250 372,545 353,000 valueLoans held for 4,592,362 4,583,656 3,955,546 3,915,310 3,886,004 investmentLess: allowance for (48,698 ) (47,642 ) (37,511 ) (29,438 ) (29,808 )loan lossesLoans, net 4,543,664 4,536,014 3,918,035 3,885,872 3,856,196 Accrued interest 36,996 32,795 17,203 15,468 15,201 receivablePremises and 69,887 67,229 66,798 66,790 67,175 equipment, netOther real estate 8,876 11,847 12,617 8,337 8,333 ownedFederal Home Loan 9,716 14,844 12,798 6,242 14,138 Bank stockBank owned life 27,542 27,398 27,255 27,104 26,947 insuranceGoodwill 223,642 223,642 223,642 223,642 223,642 Core deposit 18,907 19,896 20,886 21,876 23,053 intangibles, netOther assets 18,072 18,065 20,056 18,530 17,536 Total assets $ 5,967,751 $ 5,836,881 $ 5,002,429 $ 4,992,654 $ 4,905,840 LIABILITIES ANDSHAREHOLDERS? EQUITYLIABILITIES: Deposits: Noninterest-bearing $ 1,772,700 $ 1,754,128 $ 1,217,532 $ 1,252,232 $ 1,227,839 Interest-bearing Demand 409,137 375,353 341,524 367,278 340,754 Money market and 1,483,370 1,270,437 1,110,631 1,258,008 1,114,233 savingsCertificates and 1,252,159 1,300,793 1,283,887 1,190,583 1,214,659 other timeTotalinterest-bearing 3,144,666 2,946,583 2,736,042 2,815,869 2,669,646 depositsTotal deposits 4,917,366 4,700,711 3,953,574 4,068,101 3,897,485 Accrued interest 3,082 3,293 3,821 4,326 4,915 payableBorrowed funds 155,512 255,509 190,506 75,503 159,501 Subordinated debt 108,191 108,061 107,930 107,799 107,771 Other liabilities 30,547 33,164 40,005 27,060 29,860 Total liabilities 5,214,698 5,100,738 4,295,836 4,282,789 4,199,532 SHAREHOLDERS? EQUITY:Common stock 20,445 20,431 20,355 20,524 20,737 Capital surplus 516,151 515,045 513,894 521,066 529,688 Retained earnings 186,866 172,723 164,858 163,375 149,389 Accumulated othercomprehensive 29,591 27,944 7,486 4,900 6,494 incomeTotal shareholders? 753,053 736,143 706,593 709,865 706,308 equityTOTAL LIABILITIESAND $ 5,967,751 $ 5,836,881 $ 5,002,429 $ 4,992,654 $ 4,905,840 SHAREHOLDERS?EQUITY

Allegiance Bancshares, Inc.Financial Highlights(Unaudited)

Three Months Ended Year-to-Date 2020 2019 2020 2019 September30 June30 March31 December31 September30 September30 September30 (Dollars in thousands, except per share data) INTEREST INCOME: Loans, including fees $ 56,418 $ 56,421 $ 54,624 $ 55,368 $ 55,790 $ 167,463 $ 165,995 Securities: Taxable 2,095 1,842 2,087 2,066 2,090 6,024 4,909 Tax-exempt 2,280 2,169 546 469 483 4,995 2,465 Deposits in otherfinancial 18 20 195 244 302 233 1,391 institutionsTotal interest income 60,811 60,452 57,452 58,147 58,665 178,715 174,760 INTEREST EXPENSE: Demand, money market and 1,657 1,729 4,364 5,091 4,975 7,750 13,216 savings depositsCertificates and othertime 5,239 5,845 6,084 6,483 6,909 17,168 20,173 depositsBorrowed funds 558 562 506 547 1,183 1,626 4,128 Subordinated debt 1,448 1,469 1,473 1,500 761 4,390 2,232 Total interest expense 8,902 9,605 12,427 13,621 13,828 30,934 39,749 NET INTEREST INCOME 51,909 50,847 45,025 44,526 44,837 147,781 135,011 Provision for loan losses 1,347 10,669 10,990 933 2,597 23,006 5,006 Net interest income afterprovision 50,562 40,178 34,035 43,593 42,240 124,775 130,005 for loan losses NONINTEREST INCOME: Nonsufficient funds fees 75 60 169 189 168 304 469 Service charges ondeposit 325 343 457 403 379 1,125 1,069 accountsGain on sale of ? 93 194 613 ? 287 846 securitiesGain (loss) on sales ofother real 117 (306 ) (69 ) (45 ) ? (258 ) 71 estate and repossessedassetsBank owned life insurance 144 143 151 157 153 438 467 Rebate from correspondent 98 89 493 900 900 680 2,680 bankOther 1,091 1,140 1,330 1,183 1,289 3,561 4,421 Total noninterest income 1,850 1,562 2,725 3,400 2,889 6,137 10,023 NONINTEREST EXPENSE: Salaries and employee 20,034 19,334 19,781 18,273 20,221 59,149 59,320 benefitsNet occupancy and 2,057 1,926 1,907 1,994 1,973 5,890 6,139 equipmentDepreciation 946 885 866 861 822 2,697 2,331 Data processing andsoftware 2,125 1,934 1,826 2,120 2,058 5,885 5,390 amortizationProfessional fees 756 800 573 540 667 2,129 1,793 Regulatory assessmentsand 875 609 632 216 (41 ) 2,116 1,489 FDIC insuranceCore deposit intangibles 989 990 990 1,177 1,178 2,969 3,534 amortizationCommunications 355 390 417 486 455 1,162 1,353 Advertising 327 370 521 597 449 1,218 1,770 Other real estate expense 2,017 114 2,649 164 137 4,780 450 Acquisition andmerger-related ? ? ? ? ? ? 1,326 expensesOther 2,084 2,427 2,239 3,003 2,090 6,750 6,309 Total noninterest expense 32,565 29,779 32,401 29,431 30,009 94,745 91,204 INCOME BEFORE INCOME 19,847 11,961 4,359 17,562 15,120 36,167 48,824 TAXESProvision for income 3,677 2,054 843 3,576 3,073 6,574 9,851 taxesNET INCOME $ 16,170 $ 9,907 $ 3,516 $ 13,986 $ 12,047 $ 29,593 $ 38,973 EARNINGS PER SHARE Basic $ 0.79 $ 0.49 $ 0.17 $ 0.68 $ 0.57 $ 1.45 $ 1.83 Diluted $ 0.79 $ 0.48 $ 0.17 $ 0.67 $ 0.57 $ 1.44 $ 1.81

Allegiance Bancshares, Inc.Financial Highlights(Unaudited)

Three Months Ended Year-to-Date 2020 2019 2020 2019 September30 June30 March31 December31 September30 September30 September30 (Dollars and share amounts in thousands, except per share data) Net income $ 16,170 $ 9,907 $ 3,516 $ 13,986 $ 12,047 $ 29,593 $ 38,973 Earnings per share, $ 0.79 $ 0.49 $ 0.17 $ 0.68 $ 0.57 $ 1.45 $ 1.83 basicEarnings per share, $ 0.79 $ 0.48 $ 0.17 $ 0.67 $ 0.57 $ 1.44 $ 1.81 diluted Return on average 1.09 % 0.71 % 0.29 % 1.13 % 0.98 % 0.72 % 1.09 %assets^(A)Return on average 8.59 % 5.51 % 1.98 % 7.81 % 6.73 % 5.43 % 7.36 %equity^(A)Return on averagetangible 12.72 % 8.32 % 3.02 % 11.96 % 10.33 % 8.16 % 11.35 %equity^(A)(B)Net interest margin 3.95 % 4.10 % 4.15 % 4.11 % 4.16 % 4.06 % 4.27 %(tax equivalent)^(C)Adjusted net interestmargin 3.91 % 4.05 % 4.04 % 3.94 % 3.97 % 3.99 % 4.02 %(tax equivalent)^(B)Efficiency ratio^(D) 60.58 % 56.92 % 68.13 % 62.20 % 62.88 % 61.67 % 63.25 % Capital Ratios Allegiance Bancshares,Inc. (Consolidated)Equity to assets 12.62 % 12.61 % 14.12 % 14.22 % 14.40 % 12.62 % 14.40 %Tangible equity totangible 8.92 % 8.81 % 9.71 % 9.78 % 9.86 % 8.92 % 9.86 %assets^(B)Estimated common equity 11.73 % 11.36 % 11.15 % 11.42 % 11.28 % 11.73 % 11.28 %tier 1 capitalEstimated tier 1risk-based 11.96 % 11.60 % 11.38 % 11.66 % 11.51 % 11.96 % 11.51 %capitalEstimated totalrisk-based 15.56 % 15.17 % 14.72 % 14.83 % 14.70 % 15.56 % 14.70 %capitalEstimated tier 1leverage 8.70 % 8.83 % 9.89 % 10.02 % 10.06 % 8.70 % 10.06 %capitalAllegiance Bank Estimated common equity 13.25 % 12.84 % 12.58 % 12.67 % 12.28 % 13.25 % 12.28 %tier 1 capitalEstimated tier 1risk-based 13.25 % 12.84 % 12.58 % 12.67 % 12.28 % 13.25 % 12.28 %capitalEstimated totalrisk-based 15.41 % 14.97 % 14.48 % 14.39 % 14.01 % 15.41 % 14.01 %capitalEstimated tier 1leverage 9.64 % 9.77 % 10.94 % 10.89 % 10.73 % 9.64 % 10.73 %capital Other Data Weighted average shares:Basic 20,439 20,414 20,411 20,652 20,981 20,421 21,321 Diluted 20,532 20,514 20,690 20,930 21,256 20,551 21,591 Period end shares 20,445 20,431 20,355 20,524 20,737 20,445 20,737 outstandingBook value per share $ 36.83 $ 36.03 $ 34.71 $ 34.59 $ 34.06 $ 36.83 $ 34.06 Tangible book value per $ 24.97 $ 24.11 $ 22.70 $ 22.62 $ 22.16 $ 24.97 $ 22.16 share^(B)

(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 loan losses are not part of this calculation.

Allegiance Bancshares, Inc.Financial Highlights(Unaudited)

Three Months Ended September30, 2020 June30, 2020 September30, 2019 Interest Average Interest Average Interest Average Average Earned/ Yield/ Average Earned/ Yield/ Average Earned/ Yield/ Balance Interest Rate Balance Interest Rate Balance Interest Rate Paid Paid Paid (Dollars in thousands) Assets Interest-Earning Assets:Loans $ 4,594,333 $ 56,418 4.89 % $ 4,425,036 $ 56,421 5.13 % $ 3,870,205 $ 55,790 5.72 %Securities 667,008 4,375 2.61 % 594,205 4,011 2.71 % 359,392 2,573 2.84 %Deposits in otherfinancial 20,176 18 0.35 % 18,173 20 0.44 % 55,070 302 2.17 %institutions andotherTotalinterest-earning 5,281,517 $ 60,811 4.58 % 5,037,414 $ 60,452 4.83 % 4,284,667 $ 58,665 5.43 %assetsAllowance for loan (47,593 ) (41,334 ) (28,593 ) lossesNoninterest-earning 679,750 637,608 600,004 assetsTotal assets $ 5,913,674 $ 5,633,688 $ 4,856,078 Liabilities and Shareholders' EquityInterest-Bearing Liabilities:Interest-bearingdemand $ 394,612 $ 392 0.40 % $ 353,252 $ 421 0.48 % $ 332,652 $ 943 1.13 %depositsMoney market andsavings 1,409,969 1,265 0.36 % 1,169,225 1,308 0.45 % 1,099,937 4,032 1.45 %depositsCertificates andother time 1,291,536 5,239 1.61 % 1,302,743 5,845 1.80 % 1,269,886 6,909 2.16 %depositsBorrowed funds 171,804 558 1.29 % 320,332 562 0.71 % 158,358 1,183 2.96 %Subordinated debt 108,130 1,448 5.33 % 107,998 1,469 5.47 % 51,607 761 5.85 %Totalinterest-bearing 3,376,051 $ 8,902 1.05 % 3,253,550 $ 9,605 1.19 % 2,912,440 $ 13,828 1.88 %liabilities Noninterest-Bearing Liabilities:Noninterest-bearingdemand 1,752,404 1,624,641 1,198,564 depositsOther liabilities 36,572 32,393 35,030 Total liabilities 5,165,027 4,910,584 4,146,034 Shareholders' equity 748,647 723,104 710,044 Total liabilities and $ 5,913,674 $ 5,633,688 $ 4,856,078 shareholders' equity Net interest rate 3.53 % 3.64 % 3.55 %spread Net interest income $ 51,909 3.91 % $ 50,847 4.06 % $ 44,837 4.15 %and margin Net interest incomeand net $ 52,446 3.95 % $ 51,342 4.10 % $ 44,924 4.16 %interest margin (taxequivalent)

Allegiance Bancshares, Inc.Financial Highlights(Unaudited)

Nine Months Ended September30, 2020 2019 Interest Average Interest Average Average Earned/ Yield/ Average Earned/ Yield/ Balance Interest Rate Balance Interest Rate Paid Paid (Dollars in thousands) Assets Interest-Earning Assets: Loans $ 4,318,564 $ 167,463 5.18 % $ 3,812,827 $ 165,995 5.82 %Securities 550,405 11,019 2.67 % 352,074 7,374 2.80 %Deposits in other financial institutions 29,652 233 1.05 % 79,309 1,391 2.34 %Total interest-earning assets 4,898,621 $ 178,715 4.87 % 4,244,210 $ 174,760 5.51 %Allowance for loan losses (39,245 ) (27,500 ) Noninterest-earning assets 639,606 581,932 Total assets $ 5,498,982 $ 4,798,642 Liabilities and Shareholders' Equity Interest-Bearing Liabilities: Interest-bearing demand deposits $ 370,485 $ 1,659 0.60 % $ 340,310 $ 3,058 1.20 %Money market and savings deposits 1,249,832 6,091 0.65 % 992,349 10,158 1.37 %Certificates and other time deposits 1,262,674 17,168 1.82 % 1,301,478 20,173 2.07 %Borrowed funds 210,902 1,626 1.03 % 198,839 4,128 2.78 %Subordinated debt 107,998 4,390 5.43 % 49,849 2,232 5.99 %Total interest-bearing liabilities 3,201,891 $ 30,934 1.29 % 2,882,825 $ 39,749 1.84 % Noninterest-Bearing Liabilities: Noninterest-bearing demand deposits 1,535,107 1,179,914 Other liabilities 33,482 28,270 Total liabilities 4,770,480 4,091,009 Shareholders' equity 728,502 707,633 Totalliabilitiesandshareholders'equity $ 5,498,982 $ 4,798,642 Net interest rate spread 3.58 % 3.67 % Net interest income and margin $ 147,781 4.03 % $ 135,011 4.25 % Net interest income and net interest $ 148,939 4.06 % $ 135,413 4.27 %margin (tax equivalent)

Allegiance Bancshares, Inc.Financial Highlights(Unaudited)

Three Months Ended 2020 2019 September30 June30 March31 December31 September30 (Dollars in thousands) Period-endLoan Portfolio:Commercialand $ 650,634 $ 651,430 $ 702,267 $ 689,360 $ 675,055 industrialMortgage ? ? 1,051 8,304 36,594 warehousePaycheckProtection 710,234 695,772 ? ? ? Program (PPP)Real estate: Commercialreal estate(including 1,971,228 1,956,116 1,951,080 1,873,782 1,859,721 multi-familyresidential)Commercialreal estateconstruction 376,877 386,865 378,987 410,471 386,723 andlanddevelopment1-4 familyresidential 716,565 703,513 704,212 698,957 695,520 (includinghome equity)Residential 148,056 171,656 177,025 192,515 189,608 constructionConsumer and 18,768 18,304 40,924 41,921 42,783 otherTotal loans $ 4,592,362 $ 4,583,656 $ 3,955,546 $ 3,915,310 $ 3,886,004 Asset Quality:Nonaccrual $ 37,928 $ 33,223 $ 21,621 $ 28,371 $ 34,615 loansAccruingloans 90 or ? ? ? ? ? more dayspast dueTotalnonperforming 37,928 33,223 21,621 28,371 34,615 loansOther real 8,876 11,847 12,617 8,337 8,333 estateOtherrepossessed ? ? ? ? ? assetsTotalnonperforming $ 46,804 $ 45,070 $ 34,238 $ 36,708 $ 42,948 assets Net $ 291 $ 538 $ 2,917 $ 1,303 $ 729 charge-offs Nonaccrual loans:Commercialand $ 13,171 $ 12,578 $ 8,669 $ 8,388 $ 8,033 industrialMortgage ? ? ? ? ? warehouseReal estate: Commercialreal estate(including 15,849 16,127 7,024 6,741 15,356 multi-familyresidential)Commercialreal estateconstruction 3,085 53 1,958 9,050 9,050 andlanddevelopment1-4 familyresidential 4,263 3,434 2,845 3,294 1,992 (includinghome equity)Residential 876 898 982 746 ? constructionConsumer and 684 133 143 152 184 otherTotalnonaccrual $ 37,928 $ 33,223 $ 21,621 $ 28,371 $ 34,615 loans Asset Quality Ratios:Nonperformingassets to 0.78 % 0.77 % 0.68 % 0.74 % 0.88 %total assetsNonperformingloans to 0.83 % 0.72 % 0.55 % 0.72 % 0.89 %total loansAllowance forloan lossesto 128.40 % 143.40 % 173.49 % 103.76 % 86.11 %nonperformingloansAllowance forloan losses 1.06 % 1.04 % 0.95 % 0.75 % 0.77 %to totalloansNetcharge-offsto average 0.03 % 0.05 % 0.30 % 0.13 % 0.07 %loans(annualized)

Allegiance Bancshares, Inc.GAAP Reconciliation and Managements Explanation of Non-GAAP Financial Measures(Unaudited)

Allegiances 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 Allegiances 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, the ratio of tangible equity to tangible assets and adjusted net interest margin on a tax equivalent basis 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 Year-to-Date 2020 2019 2020 2019 September30 June30 March31 December31 September30 September30 September30 (Dollars and share amounts in thousands, except per share data) Totalshareholders' $ 753,053 $ 736,143 $ 706,593 $ 709,865 $ 706,308 $ 753,053 $ 706,308 equityLess: Goodwilland coredeposit 242,549 243,538 244,528 245,518 246,695 242,549 246,695 intangibles,netTangibleshareholders? $ 510,504 $ 492,605 $ 462,065 $ 464,347 $ 459,613 $ 510,504 $ 459,613 equity Sharesoutstanding at 20,445 20,431 20,355 20,524 20,737 20,445 20,737 end ofperiod Tangible book $ 24.97 $ 24.11 $ 22.70 $ 22.62 $ 22.16 $ 24.97 $ 22.16 value per share Net income $ 16,170 $ 9,907 $ 3,516 $ 13,986 $ 12,047 $ 29,593 $ 38,973 Averageshareholders' $ 748,647 $ 723,104 $ 713,535 $ 710,155 $ 710,044 $ 728,502 $ 707,633 equityLess: Averagegoodwill andcore deposit 243,015 244,010 245,007 246,154 247,404 244,007 248,427 intangibles,netAveragetangible $ 505,632 $ 479,094 $ 468,528 $ 464,001 $ 462,640 $ 484,495 $ 459,206 shareholders?equity Return onaverage 12.72 % 8.32 % 3.02 % 11.96 % 10.33 % 8.16 % 11.35 %tangible equity Total assets $ 5,967,751 $ 5,836,881 $ 5,002,429 $ 4,992,654 $ 4,905,840 $ 5,967,751 $ 4,905,840 Less: Goodwilland coredeposit 242,549 243,538 244,528 245,518 246,695 242,549 246,695 intangibles,netTangible assets $ 5,725,202 $ 5,593,343 $ 4,757,901 $ 4,747,136 $ 4,659,145 $ 5,725,202 $ 4,659,145 Tangible equityto tangible 8.92 % 8.81 % 9.71 % 9.78 % 9.86 % 8.92 % 9.86 %assets Net interestincome $ 52,446 $ 51,342 $ 45,152 $ 44,623 $ 44,924 $ 148,939 $ 135,413 (taxequivalent)Less:Acquisition (598 ) (665 ) (1,259 ) (1,860 ) (2,045 ) (2,522 ) (7,765 )accountingadjustmentsAdjusted netinterest $ 51,848 $ 50,677 $ 43,893 $ 42,763 $ 42,879 $ 146,417 $ 127,648 income (taxequivalent) Average earning $ 5,281,517 $ 5,037,414 $ 4,372,723 $ 4,308,028 $ 4,284,667 $ 4,898,621 $ 4,244,210 assets Net interestmargin 3.95 % 4.10 % 4.15 % 4.11 % 4.16 % 4.06 % 4.27 %(taxequivalent)Adjusted netinterest margin 3.91 % 4.05 % 4.04 % 3.94 % 3.97 % 3.99 % 4.02 %(taxequivalent)

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