ABTX - Earnings call transcript Q1 2022 | Allegiance Bancshares Inc

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Operator

Good day, and thank you for standing by. Welcome to the Q1 2022 Allegiance Bancshares, Inc. Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Courtney Theriot, EVP and Chief Accounting Officer of Allegiance Bank. ahead. go Please

Courtney Theriot

Vitulli, and our operator, be President Paul and Vice President Executive Bank; Shanna to who company; all by Chief Allegiance of CEO company Thank Akin, today. thank Bank; This and joined Ray Vice Okan the of of call Kuzdzal, Retzloff, will of morning's have the Steve and General Executive you, Allegiance CEO you President Egge, of Risk earnings led Counsel. President President Officer Vice CFO; Executive and company and the and call

be forward-looking which website about in beliefs of and available page the associated required by to earnings we provisions everyone such constitute risk see at our the about Before with begin, last Also statement covered in the act. future this Reform some any statements, factors beliefs I as amended. is statements morning's Harbor XXXX remind law. need Safe any only statements of is the except today on that be guidance at by allegiancebank.com that made, as We obligation in a to forward-looking if Please made of give Securities subject We release, disclaim may all change. Litigation the the are for to Act the the information management's for text note is additional publicly to the remarks reflection defined Private forward-looking of results, forward-looking as update time such we guidance contained statements that intend statements.

our on presentation investor an provided have also We website.

turn review of this it call as and over our we a open our Steve time. time the I is not CEO, to At being available for guide it now conclusion questions. used today's for is allow Retzloff. will the line remarks, the comments, at for Although

Steven Retzloff

hallmark everyone, for who the due during excluding has owners region. serve for business been loans, our extended also consistency with are The time also relationships, appreciative of impact and good and broad our about us new growth forgiveness to our our of are the as provide activities sense from rate record The of unwavering and the we A frame. we quality, affirmation growth resulted inception It most level you particularly after good effort million customers, community. to Overall, a accompanied customer DNA an delivered for quarter. ability $XXX and loan thank increasingly a feel growth annualized million 'XX and is for and which the of surveys customer deposit our interest. entire and over we very $XXX core continue your today's being but continued The as engagement in direct declining always of develop call. growth been extraordinary both added local our loan banking very confirmation has granular, and loan great process. Thank We record you, team. to first culture PPP by our into of XX.X% in the organic participating serve Allegiance purpose time originations set in are by was core Courtney, employee the integrated organic of to morning, maintain our active appreciation core our the has on of the organizational our quarter a new level of since team in led Bank

were strong. earnings addition, In

importantly, while provide Ray support on growing Paul add prepare will positive demand policies, as changes, were powerful collaborative we the The continued together of our production company. and with see coming breaking for led organic progress was evaluations and pleased quality making and very management of has steadily process for is gaining for have excellent coming All one of with activity the we all and foundation of operational will We added and and economic the the of been capital alignment but our coming design, the talented momentum our to provide and a I the solid great are asset we increasing and teams. liquidity the working to records, consolidations, to growth. decisions color services. that manageability it organizational positions quarter. controls, merger details a governance to day. combined for as the are step-by-step risk being CommunityBank together our Texas. banking X multitude very staffing team created alignment Most every Technology, the

Given followed evidence Houston MSA level the having into in year, of high results. the financial turn by cover the such we excited I'll the will are our Paul, that, as who which in detailed our for XX,XXX about prospects is more than our for over more entities. population growth nation, it gained review of With second ever merged the to results a operational past recent Ray

Ramon Vitulli

the of Thanks, core XXXX back in in generated XXXX and originations on and I to both loan effort Steve. new customer existing core effort have of before, and half these momentum as all-time many but that our both into customers takes of you records meaning. The the times records when deeper lending set bank expansion mentioned team continued the see a loan was team growth. teams relationships, set type attraction

executed drive which were implement, results required to loan technology team our new loan a our these lending origination to on staffs and system, train and operations enhancements adoption. example, For ensure

lenders and integrate to continue we addition, new producers. In our

quarters, X enough, our a new and our for and they integrate takes their coach can't to Over lenders of contributions so that who build It to say I customer have acknowledge can team within. X their the from and want team the were including homegrown bankers mentor lenders, all begin to base. hired XX to past we success.

now operating our results. quarterly Moving to

average level by million $XXX a a to March XXXX charged first when of Compared quarter weighted million of Paid were record quarter generated, compared core was team the to loans a that million $XXX XX. were fourth loans million the XXXX. The interest new fourth X.XX% the on $XXX first Our in to of new off rate the million booked core new average million. of weighted staff funded core in quarter on of which new compared X.XX%. to fourth $XXX $XXX $XXX loans and core charged lending rate loans of the funded the quarter to quarter loans level

core paid our another of Carried of X.XX% just loans of in, $XXX million of million, All $XXX With of X.XX%. record core loan paydowns $XXX had the average quarter core the over rate a points, for million decreased average quarter, a average X loans average loans were weighted for and loans a bank. X.XX% report the which on rate growth charged core weighted the experienced as $X.X quarter ending at overall period-end million basis were weighted For first record compared to to core X.XX%. rate advances of pleased during of funded billion, $XXX XX. setting at we off the weighted December rate of of X.XX% funded at

totaled in total quarter quarter, XXXX from of basis during ended Non-accrual to in quarter to in increased for XXXX. quality. the which $X.X $X.X on net Charge-offs payoffs, quarter by partially million charged-off and fourth points $XX.X the a upgrades X loans basis balances. due points in Turning payments up $XX.X for $X.X back fourth at the loans the first from assets, $X.X slightly additions, million quarter points $X.X first million placed Non-performing the to annualized. was million, accrual, XX offset asset XX million primarily in in million million $XXX,XXX basis

evaluated XX, at quarter manageable loans X.XX% and for In individually end quarter. as our the reserves compared in December of X.XX% X.XX% quarter single-digit remained decreased the a charge-offs as as low at March specific loans total December Criticized at first asset at XX. XX loans December March our aggregate, decreased of of of broader total classified for quality total to XX position our compared terms ended loans of to of XX.XX% XX. In watch list, XX.X% X.XX% a at with reserves loans to percentage to from

the fourth $XXX over quarter. the million total the million deposit in compared On quarter front, ago deposits and up to were first year the quarter, $XXX increased

the has deposits as Steve was I'll jobs turn excited balances deposit in higher the see We ever XX.X% the us XXX,XXX which MOE for in the quarter. February, remained the December job to closes contributed March our population the growth jobs business With continued region to our Houston In create of it equally as as region. XX growth, about the on growth creating solid owners of XX.X% region, strong. ratio and CommunityBank along the for to to compared Texas, continue mentioned for bearing the over with year the total non-interest non-interest that carried but that, business due CFO, XX.X% for jobs, for deposits quarter-to-date resilience of solid Houston pandemic. now bank result region nearly the accounts. closing, the the increase gap In with XX,XXX the Paul. in to recovering a to our created population growth as primarily to The upcoming bearing ago lost XX

Paul Egge

Thanks, Ray.

as first or by $XX.X of variance, quarter the income start and growth part thrilled among fourth meaningful $X.XX the XXXX Net fourth by the XXXX, We lower earnings. great costs report diluted expenses, the in and funding driven offset per quarter first million M&A-related quarter in share diluted things. PPP-related quarter revenue to Compared are or with per $X.XX compared $XX share other of to million were and or results diluted $XX.X was loan per million provision XXXX. to solid in a to and $X.XX partially the for lower quarter share first

income and for net decreased million Our the ago was from the to quarter and of year for in the XXXX. million quarter. first quarter to recorded expense to fourth million We million from income and compared of primarily the quarter million $X.X $X the change for first $XX.X offset expense primarily net compared loans loans, million fee to net revenue XXXX lower the recognized and interest XXXX. revenue Interest to quarter $X.X related on lower fourth by the PPP first million pretax $X.X of $XX.X for compared due income. $XX.X interest first quarter pre-provision first in quarter as for fourth into $XX.X due assets first down was down of first million quarter, PPP in revenue income into million interest income a the Total the quarter the by million by mix compared just $XX.X income $XXX,XXX slightly from quarter increased interest-earning Net $X.X was the during recognized net to and interest the million PPP in in fee fourth of interest in securities. a recognized to the quarter quarter, decrease interest $XX.X

$X.X on, in X.XX% and moving fourth of I we compared loans approximately ago deferred to should related Before was XX, remaining for year as note quarter million fees net of PPP for March quarter. X.XX% loans. that quarter the Yield on the X.XX% first the to had

primarily Excluding for the and a on first our X.XX% loans overall lower-yielding bearing shift funds and fourth year in The of first proportion have for thanks to rates in XX cost in from the quarter, cash. X.XX% Total asset fourth towards continued With loans XX These quarter. liabilities quarter. ago versus year deposit by X.XX% to was expense, down of to the in quarter. driven first of higher respect for downwards the yield revenue, quarter interest interest in XX year from trends to the and basis repricing the basis borrowings. lower X.XX% basis track the interest-bearing basis the changes related to on for non-interest This balances. fourth points down growing PPP basis was base mix our X.XX% securities in quarter, ago principally are earning quarter quarter points been XX interest-earning would deposit and assets for quarter quarter points a in was points first points fourth in XX and yield cost the proportion ago and quarter, in the of X.XX% higher reflective of the a

manage rates XXXX are in to We changes beyond. hard we and deposit our working as positioning interest optimized throughout preserve expected

to and first net margin, As equivalent composition income with of X.XX% a shift net we in compared tax the interest fee the interest at quarter ago look along quarter a assets lower quarter. of X.XX% significant year recognition fourth the our our lower resulted and earning PPP in in for X.X% in first as in expense the quarter margin the

this the would first average really loan interest to to decreased quarter PPP quarter. related see been in This after due in in in are see interest excluding Non-interest factors, merger-related the as net interchange partially PPP from fees $XX.X so in to a fourth we completing item asset significant was core non-interest investments. million Excluding to revenue, million quarter. to $XXX,XXX structural regulatory first fee due for net sheet. largely from by We've our earning NIM Notwithstanding decrease first offset primarily in upside $XXX,XXX margin in shifts X.XX% $X.X in line the assessments. compared quarter in including see really the margin and year-over-year in a profile larger income, our due first million million to our the $XX.X income $X expense increases acquisition from go-forward balances SBIC we X.XX% decreases net thanks quarter mix quarter expenses with merger income fourth balance the in been the the pleased Total to as CBTX. in net have to pleased for growing profile increased From to nonetheless, here, compared year professional and our more interest of million increased mix, income $X.X income and the and to to well ago in income, fourth increased quarter. quarter significant our interest

very to to pleased first Aside the the quarter of compared efficiency to be holding items, quarter are be we for consider XX.XX% we these from Accordingly, line which our the to one-off, expenses. on ratio from decreased XXXX. fourth XX.XX%

loan provision the $X.X million Moving of of which core growth loan record on primarily period. is to for during the recorded a during credit. the We losses reflective quarter,

the line, what ended loans rates our are extremely solid soon we repurchase impact existing XXX the off merger in set per and year which of XX.XX% to is turn XXXX meaningful now or to We authorization at loans. for and April. at allowance closing, a results. was our declared end authorized of since the Steve. continue dividend securities close to from of year-end, quarter of non-PPP March on our and at points Our XX. X.XX% to a basis loans Quarter shift to basis expire are call practicable. great an we shares $XX.X representing I'll million $XX.X came losses said, decrease position at year-end of portfolio. to to share on well the metrics XXX of share Bottom That feel share common million, we interest AOCI tangible $X.XX on was significant X representing position million loss the stock of the million excited represents positioned credit core to first start, $XX.X ROAA very as CBTX ROATCE and back on went company $XX.XX, since common the capital. reflective of end available-for-sale repurchase value a feel and AOCI gain up per total points a in In with value stock respectively, pending The our of as

Steven Retzloff

Thank the you, for operator over with I'll to Paul. line questions. to the turn open And the now that, call

Operator

from line Instructions] the first [Operator question Our Sandler. Brad Milsaps of Piper from comes

Brad Milsaps

cash. moving the companies date close? ahead the ahead a how of wanted kind just come together, then around parts sheet, lot thinking And still a quite of are of about there have hopefully, but bit to balance know about kind the companies both of of -- the ask close I as the managing kind of you're XX, of June

how And for thinking great balance your year of deployment? kind what about then thoughts secondly, are quarter. -- growth loan into just maybe and plans Can quarter this kind of you loans, growing XXXX? the well. around a as about of CBTX your obviously, solid talk Just was the

Paul Egge

had, balance loan asset do sheet, on position to loan we've has with important are holistically growth, without sensitive similar be, an loan rates the traditionally as of company to neutral, very what be to direction a respect expectations asset-sensitive. reason, we forma pro been balance particular, rate taking meaningful stance, we support risk, [pipe the preserving Ray? I'll want potential kind do flexibility. balance going in an standpoint, to and our very -- and aspiration without of the Really, adopting from Ray Traditionally, to going to given flexibility that has start asset-sensitive maintain position in more partner and we loan relates that support growth that growth. let And is loan support we I sheet. what interest since it of I'll is the but Certainly. growth in] everything and while -- to sheet to for our changing to our it kind asset-sensitive CBTX interest for without very to able want to a to stay growth still been think, want meaningful

Ramon Vitulli

started kind saw Brad. The pick that the originations carried -- and building so and up, just into the to mid-'XX, first pipeline we start of quarter.

as so for the at look it the second first similar the And quarter, looks we to quarter. pipeline

seeing, to challenging, And going what rate as So the market know. is not, year. we're as seeing pipelines of to record the our going whether get half into winning us but don't But the first another -- in this we're -- what and business. far the reporting be lenders we're it's are through solid environment we or the

Brad Milsaps

as That's see, up think, I encouraged great. quarter. my is yield And I that funded was linked new the to follow-up. maybe, just Ray,

And of fixed bit? versus to you us of little You continues raise repricing loans just that rates? just things see tied about kind mentioned as you kind the and maybe mix fact, of -- how talk if Can be prime, Fed, in your then short-term to competitive that would a pricing. remind

Ramon Vitulli

good then in maybe up loans talk the a to the through pricing, high some the and got we banks, compared on that, we touch which we're the that a of but plowing points basis kind is of service fixed to watch and But the are, And for don't from and about where provider, of like ago on XX-XX. you fixed first little it of so that you nice other there Sure. about which the and happened crazy. bit was we're it XX record, what feel can in some the on see little -- bit Paul it we're floating. for quarter, we to about something, just if originated Xs fourth the yes, down we that just out quarter, more just And we've where see or I'll quarter, with loans seen at But portfolio the we a pleased that as originated that. floating picked is kind we to just it looking XX%, And we're whole things the just -- look quarter just it. chase to was XX%. very year on at was it quarter, quarter

we -- a from in and if a shift get we get I increase. will seen rate obviously, us, as the think that we've with to -- rating May nice help we So floating, whatever fixed

Paul Egge

majority technically portfolio above than XX.X% loans loan the the loans. no above variable -- the of But rate at in super more force. of -- are quarter, or we end about, at Yes. is up the majority have that our or that is variable at speaking, And of following portfolio the on rate

and floors. purely So below of the portfolio remaining our loan is is really, XX% variable, X% then

Operator

from Our Stephens. question the comes of line from Olney next Matt

Matt Olney

far piggybacking loan that sensitivity last rate repricing. in as Just discussion as on

out April? loans did XX%, call few So you guess, if, or . variable, there's reset billion, the reverberate that benefit I some over it get of if the repricing or from XX% mid-March? kind reset of timing of at those weeks? mismatch see the we are to loans get trying confirm of can figure about indeed, beginning $X the benefits XX% all Fed do that, did And those of that, that Just the last

Paul Egge

not. did All

-- So X/XX. that of is you I'm statistics as quoting

XX% So some there I relates would low should from since as change be to change. pre-rate few, went it from that, very to of post-rate XXs say, it

speak. would So there small at of it been or is so is that above that, portion maybe have a floor, to floor

it from So hikes it's speak if to when couple rate hike a are reflected up to And going I XX%. floors. through this, the actually, ends expectations, blow higher might being prospectively more be really, rate here than

Matt Olney

Got it.

portfolio. Okay. And I guess, over towards securities a bit little then, the shifting

the I saw late the of little just that this that a the yields bit come then purchases, quarter. Any yields color think down? think the from on quarter some year, on result coming we impact? Was And securities the as full the last kind color purchases of any down given and that a look of recent kind you on book? of just forward of about

Paul Egge

exact. It's Certainly.

to merger pro You answered want money think work And of practicable. most securities. pressing of concert those they meaningful putting your to relates the are higher. we rate own question yields, as respect as go-forward it the as positioning. certainly it relates as it in to interest The soon relates Because with really, pause to closing in anticipation the as forma nature to we're to the really,

and liquidity to levels for that incrementally the really bottom be investment securities than high that meaningful to have So the companies of in loans work we more of rather excess pleased work, really But has cash we're our preference to put put made to worthwhile securities. both to both line. have market

Matt Olney

for guess, Okay. then, Perfect. And last I me.

fees those I the Do to remaining half XQ? think into could PPP of Or $X.X around you all into year? leak that of million. the you recognize back expect said

Paul Egge

January impact petering a of It half It could we it's but I heavier at have Hard predict. quarter, again -- year-to-date. wave, expect tail off. quarter behaved in half to Generally the the about and down. it's the It's -- in will going speaking, likely second and it we're much half we're too slowing into into it's as of the the be in very first year. fourth kind as as being leak third back leak was the to to was not the February, the quarter. impact and to mean, first as much and quarter, the all dissimilar the -- quarter but likely as

Operator

Sandler. next comes [Operator question line Brad Instructions] from Piper of from the Our Milsaps

Brad Milsaps

aren't expenses, otherwise that be of out? around this some spending some it you kind I -- be assuming things know think companies get $XX Paul, of that want just quarter thinking maybe million you of as pleased curious you're money lower-than-expected mean, would of because XQ going that's -- I wait kind companies hold million just together, you light in aggressive run just on rate? to a of come expenses. you think to of just a kind represents kind $XX this maybe to as were might to But of good about both trying I do rate the too a range. Or kind and sort Just had sense do things forward? you little

Paul Egge

savings, close of trend. a holding little a I thoughtful cost so getting -- of announcement we've incremental spend forward pull and to are forward, both want from to We about been pull of bit line don't been to the but very say speak,

putting lines, We think along about deal. have plans heads the those But our as to spend relating things we together. we're really staffing then and our

and driver heads but expenses, with non-recurring together. expectations companies respect take that partially M&A-related for that's forward. pleased we're out again, together be ourselves not the we putting forma plans our current of noise actually the us pretty to here, when see and X staffing positioning the Once you level these representative be line pro to of spend is going the in counting So to really holding putting of the best

Brad Milsaps

it. Got

the it some expected, that of not the the now. of run see starting currently is of -- original rate? lion's maybe it, the Not share a you obviously we're little to $XX that but in savings So million of bit of maybe -- cost maybe some

Paul Egge

about our thinking the function really to it's together story definitely partners some. And of There's a discipline, shape it's with want of how up. function we a expense and

Brad Milsaps

million] to a the it. going laid no target of initially? growth be in Got Maybe, November? actually have that And mind, then rate seen? in assurance to of that the could both little see anything, more if better maybe real out formas guys guys you sort bit put change we're actually kind your you And that some in the [$XXX back companies hikes that it given that pro

Paul Egge

[$XXX million], what?

Unidentified Company Representative

expectations. 'XX

Paul Egge

Your EPS expectations, saying? you're

Brad Milsaps

the for company. Yes, forma pro

Paul Egge

the out be be announced good we take when for the don't outpacing you feel when pro inputs, both anything both in We levels expectations that the those each good. stand-alone can We actually really nature, companies that we about we are November. company. set But feel numbers look deemed to one-time companies' like presented in inputs. Actually when think we the quarter, merger in forma I earnings respective the of numbers company. feel actually we at separate you gave for do even first

Steven Retzloff

of to future terms on and have we that the economy in revisited lot any and so of know, forth. the variables that you interest out those rates not a There's so as and But of there, expectations. extent alter would we and

Paul Egge

broad how the -- our has to respective setup feel market into rate kind plays setup just about and experience earnings the -- this. supporting so forma. much like pro been of credit, profile, great that for the other backdrop all But we very we very that of and interest say banks, good works market the good economy about we I'll feel and

Steven Retzloff

assumptions I line, core mean, intact. our remain bottom

Operator

I further over Steve for Retzloff call turn to would At closing questions. back the no this I'm to time, like remarks. showing

Steven Retzloff

Well, to you in appreciate just your once we time all we forward again the again, and to future. of interest speaking in look Allegiance and

So all thank you very much.

Operator

you call. for participating. today's Thank concludes This conference

disconnect. now may You

Allegiance Bancshares (ABTX) 30 Apr 222022 Q1 Earnings call transcript