Allegiance Bancshares : Third Quarter 2020 Earnings Presentation

cshares, Inc.

Fixed Income Investor Presentation

Third Quarter 2020

[Month] [Day], 2019

Earnings Presentation

Safe Harbor Statement and Non-GAAP Financial Measures

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: This presentation contains forward-looking statements within the meaning of the securities laws that are derived utilizing assumptions, present expectations, estimates and projections about Allegiance. These 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. Forward-looking statements include information concerning Allegiance's 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 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. 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 factors are discussed in Allegiance's Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and 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 Allegiance's website at www.allegiancebank.com, under Financial Information, SEC Filings. Any forward-looking statement made by Allegiance in this presentation 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. 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.

GAAP Reconciliation of Non-GAAP Financial Measures

We use certain non-GAAP financial measures to evaluate our performance. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and that management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, analyzing and comparing past, present and future periods. Specifically, we review return on average tangible common equity, the ratio of tangible equity to tangible assets and core net interest margin on a tax equivalent basis for internal planning and forecasting purposes. We have included in this presentation 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 we calculate these non-GAAP financial measures may differ from that of other companies reporting measures with similar names. A reconciliation of the non-GAAP financial measures is in the appendix.

2

Allegiance Bancshares, Inc. Overview

Franchise Footprint

Holding Company for Allegiance Bank; Headquartered in Houston, Texas

45	Beaumont
	10

10

Houston

45

Galveston

ABTX Branch Locations (28)

Houston-TheWoodlands-Sugar Land MSA

Beaumont-Port Arthur MSA

Company Overview

Providing full-service banking services for owner-operated businesses

Operational History

• 28 full-service banking locations (at 9/30/20)
• • 27 in the Houston-TheWoodlands-Sugar Land MSA
  • 1 in the Beaumont-Port Arthur MSA, just outside of Houston
• Since opening in 2007, we have completed three whole bank acquisitions and one branch transaction:
• • 2019: LoweryBank branch acquisition with $45.0 million in loans and $16.0 million in deposits
  • 2018: Post Oak Bank, N.A. (Post Oak Bancshares, Inc.) with $1.5 billion in total assets
  • 2015: Enterprise Bank (F&M Bancshares, Inc.) with $569.7 million in total assets
  • 2013: Independence Bank, N.A. with $222.1 million in total assets

Financial Highlights

($ in millions)

9/30/2020

12/31/2019

12/31/2018

12/31/2017

12/31/2016

Sheet	Total Assets	$	5,967.8	$	4,992.7	$	4,655.2	$	2,860.2	$	2,450.9
Total Loans		4,592.4		3,915.3		3,708.3		2,270.9		1,891.6
Balance
Total Deposits		4,917.4		4,068.1		3,662.5		2,214.0		1,870.2
	Total Equity		753.1		709.9		703.0		306.9		279.8
Profitability
Loans/Deposits		93.39%		96.24%		101.25%		102.57%		101.10%
NPAs/Assets		0.78%		0.74%		0.72%		0.49%		0.75%
&	TCE/TA		8.92%		9.78%		10.29%		9.38%		9.82%
Credit	NIM (tax equivalent)		3.95%		4.22%		4.27%		4.34%		4.37%
Capital,	ROAA*		1.09%		1.10%		1.11%		0.65%		0.98%
ROATCE*		12.72%		11.50%		11.20%		6.93%		9.96%

3

Financial Highlights - Third Quarter 2020

Balance Sheet Growth

• Assets of $5.97 billion, loans of $4.59 billion, deposits of $4.92 billion and shareholder's equity of $753.1 million at September 30, 2020
• • Funded over 6,300 PPP loans totaling in excess of $710 million through the third quarter 2020
  • Deposit growth of $1.02 billion, or 26.2%, from the third quarter 2019
  • Tangible book value per share increased of 12.7% from the third quarter 2019.

Profitability

• Record net income of $16.2 million for the third quarter 2020 compared to $9.9 million for the second quarter 2020 and $12.0 million for the third quarter 2019
• $0.79 diluted EPS translated into an annualized return on average assets and average tangible equity of 1.09% and 12.72%, respectively
• Third quarter 2020 earnings were impacted by:
• • Other real estate write-downs of $1.9 million

Net Interest Margin

• Net interest income increased to $51.9 million for third quarter 2020 compared to $50.8 million for the second quarter 2020 and increased from $44.8 million for the third quarter 2019
• • Net interest margin on a tax equivalent basis decreased to 3.95% for the third quarter 2020 from 4.10% for the second quarter 2020 and decreased from 4.16% for the third quarter 2019 primarily due to the effect of the PPP loans on the yield
  • Adjusted net interest margin(1) on a tax equivalent basis excludes the impact of acquisition accounting adjustments of $598 thousand and was 3.91% for the third quarter 2020 compared to 4.05% for the second quarter 2020 and 3.97% for the third quarter 2019

Recognitions and Awards

• Top ten finalist for an NACD NXT award, which recognizes board commitment to diversity, equity and inclusion
• Recognized at the 2020 BBB Awards for Excellence

_____________________

1. Please refer to the non-GAAP reconciliation in the appendix.

4