Allegiance Bancshares (ABTX) Q4 2019 Earnings Call Transcript

Allegiance Bancshares (ABTX)
Q4 2019 Earnings Call
Jan 29, 2020, 10:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by and welcome to the Allegiance Bancshares, Inc. fourth-quarter 2019 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 to your speaker today, Courtney Theriot executive vice president and chief accounting officer of Allegiance Bank.

Please go ahead, ma'am.

Courtney Theriot -- Executive Vice President and Chief Accounting Officer

Thank you, operator, and thank you to all who have joined our call today. This morning's earnings call will be led by Steve Retzloff CEO of the company; Ray Vitulli president of the company and CEO of Allegiance Bank; Paul Egge executive vice president and CFO; Okan Akin executive vice president and risk -- chief risk officer of the company and president of Allegiance Bank; and Shanna Kuzdzal executive vice president and general counsel. Before we begin, I need to remind everyone that some of the remarks made today may constitute forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995 as amended. We intend all such statements to be covered by the safe harbor provisions for forward-looking statements contained in the act.

Also note that if we give guidance about future results, that guidance is only a reflection of management's beliefs at the time the statement is made. Management's beliefs relating to predictions are subject to change, and we do not publicly update guidance. Please see the last page of the text in this morning's earnings release for additional information about the risk factors associated with forward-looking statements. If needed, a copy of the earnings release is available on our website at allegiancebank.com, or by calling Heather Robert at (281) 517-6422, and she will email you a copy.

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

Steve Retzloff -- Chief Executive Officer

Thank you, Courtney, and we welcome all of you to our fourth-quarter earnings call. As was previously announced, I accepted the election by the board to serve as CEO of the company, as George Martinez retired from the CEO position as of January 1st. We are extremely grateful for George's tremendous contribution and visionary leadership, as he has been instrumental in shaping the company's success. George is also highly regarded in the industry and a respected friend to many.

We look forward to continuing the work -- to work with them daily in the Chairman's role as he is an incredible asset and will continue to provide ongoing strategic guidance. A review of our accomplishments during 2019 reflects another successful year for Allegiance. We finished the year with strong operating results, including record diluted earnings per share for the quarter and year that resulted from both our strategy and the continued hard work and dedication of our team. In early 2019, we acquired the LoweryBank branch in Sugar Land, consisting of approximately $45 million in loans and approximately $16 million in deposits.

We also successfully completed the technology conversion and integration of Post Oak and its employees. The leadership of each of these bank offices has become a cohesive unit, which would not have been possible without the commitment demonstrated by the employees of our combined bank. This became particularly apparent as we were recognized as one of Houston's top workplaces for the 10th consecutive year, an award in which over 2,300 companies were nominated. But only 150 made the final cut.

We are honored to be one of only 10 companies that have been on the list of Houston's top workplaces, 10 consecutive years. In addition, Allegiance was recognized as one of 2020 best companies to work for in Texas and awards program created as a project of Texas monthly, and several other organizations. These awards are impactful to us as we continue to focus our recruiting efforts on strategic hires who we believe are the best in our market. We added 14 new bankers and internally promoted two others, along with several professionals, including a chief information officer, a chief human resource officer, a training and development officer, and bolstered our team of treasury management professionals.

At the same time, although some bankers exited the bank through productivity gains, many did not need to be replaced. We believe in our people who continue to provide outstanding service to our customers every day. This high-energy team sets us apart from our competition as the premier community bank in the Houston region. The value-added approach allows us to anticipate continued growth and returns for our shareholders by winning business without sacrificing our standards.

We were pleased to end the year with positive trends in asset quality as we experienced solid improvement in our non-performing classified net charge-off and coverage ratios. We view our strong credit culture as an important ingredient for our long-term success. We once again had strong loan originations for both the year and quarter, a higher-than-expected level of paid off loans did, however, impact net loan growth. That said, we reiterate our small commercial market sector and maintain our underwriting standards.

As previously announced, we made the strategic decision to exit the mortgage warehouse business line, which allowed us to redirect operational resources to other areas. Due to increasing -- increased trading volumes of our stock in 2019, we were included in the S&P SmallCap 600. Finally, we successfully completed a $60 million subordinated debt offering, which serves to better optimize our capital position without sacrificing our future growth potential. These results allowed us to return capital to our shareholders, as we repurchased 1.7 million shares for approximately $59 million during the year, and have now crossed a milestone, as we have announced plans for our first quarterly cash dividend to be paid in 2020.

In the year ahead, we remain focused on growing relationships, continuing investments in technology initiatives such as our new loan origination platform and our infrastructure as we look forward to opening of our new branch office on the east side of downtown Houston. Next, Ray will describe our loan and deposit production results followed by Paul, who will cover our financial results, who will then open the call for questions.

Ray Vitulli -- President and Chief Executive Officer, Allegiance Bank

Thanks, Steve. First, I will review our loan production metrics for the fourth quarter. Total core loans, which excludes mortgage warehouse lines, ended the fourth quarter at $3.91 billion, an increase of $57.6 million during the quarter or an annualized growth rate of 5.9%. This compares to the total core loan growth rate of 4% for the third quarter.

Year-to-date, core loan growth was $247 million or 6.7%. During the fourth quarter, our staff and lending team once again booked a very strong $299 million of new loans that funded to a level of $189 million by December 31. This compares to the third quarter where $315 million of new loans were generated, which funded to a level of $210 million by the end of the third quarter. Paid off loans continue to be elevated at $182 million in the fourth quarter, compared to $188 million in the third quarter, and $175 million in the second.

To give you a picture of the increased level of paydowns over the prior year, paid off loans for the year-ago quarter were $109 million. Of the paydowns in the fourth quarter, $16 million were attributable to the planned reduction in the mortgage warehouse portfolio. For the year, we were very pleased with our level of new loans booked, which totaled $1.2 billion. The average size of the new organic core loans generated during the fourth quarter was $393,000 with an average funded balance of $246,000, which once again reflects our continued focus on building a diverse and granular loan portfolio.

The average size of all funded loans ended the quarter at $337,000. Regarding interest rates on loans based on total loan amount, the weighted average interest rate charge on our new fourth-quarter core loans was 5.39%, which is below the third-quarter weighted average rate of 5.50%. The $166 million of paid off core loans during the quarter had a weighted average rate of 5.50%. Carried core loans experienced advances of $124 million at a weighted average rate of 5.56% and paydowns of $94 million, which were at a weighted average rate of 5.43%.

All in, the overall period-end weighted average rate charged on our funded core loans decreased 3 basis points, ending the quarter at 5.42%, which is close to where the year began at 5.47% as of January 1, 2019. The mix of new loan production based on fourth-quarter funded levels was represented by the following four commercial categories: owner-occupied commercial real estate, 22.5%; non-owner-occupied commercial real estate, 13.8%; commercial term loans, 17.1,% and commercial working capital, 4.2%. These four commercial categories represented 57.5% of the new funded production, compared to 59.2% for the third quarter and 48% for the second quarter of 2019, indicating our ongoing commercial concentration. The overall loan mix was little changed on a linked-quarter basis.

The slide deck posted on our website provides added color regarding our overall mix of loans. Asset quality at quarter end remained in a manageable position. The level of net charge-offs experienced during the quarter was $1.3 million or an annualized rate of 13 basis points. Full-year 2019 net charge-offs amounted to 7 basis points as compared to 6 basis points for 2018.

We were pleased to report that non-performing assets, including both nonaccrual loans and ORE ended the quarter down from the third quarter, decreasing from 88 to 74 basis points of total assets. Nonaccrual loans decreased a net of $6.2 million during the quarter from $34.6 million to $28.4 million, primarily due to the upgrade of a $7.2 million loan payoff of approximately $2.6 million; payments applied to principal of $607,000; foreclosures of $214,000, which are now ORE, and charge-offs of $1.1 million. This decrease was partially offset by increases to nonaccrual loans totaling $5.4 million, as a result of downgrades from 13 relationships, three of which totaled more than half or $3.3 million. The additional $2.1 million of downgrades was from 10 smaller relationships.

Our ORE consists of seven properties totaling $8.3 million. The largest is a $5.7 million industrial/commercial real estate property, which has a recent appraised value of $6.5 million and is being marketed. The second-largest at $1.2 million is a lot located in the well-established upscale River Oaks neighborhood. The third-largest is a $576,000 home in a popular gated community.

The remainders are three smaller properties located west of Houston and one in Beaumont. Generally, we believe our non-performing assets are well collateralized. In terms of our broader watch list, our classified loans as a percentage of total loans increased slightly to 2.21% of total loans as of December 31 from 2.18% at September 30. Criticized loans decreased slightly to 2.85% at December 31 compared to 2.87% at September 30.

The specific reserves for the impaired loans ended the quarter at 14.5% from 18.2% at September 30. On the deposit front, we were pleased by the changes in our deposit mix in the quarter. Total deposits increased in the fourth quarter by $170.6 million, representing 17.5% annualized growth rate in the quarter as a result of a very strong back half of the quarter, although we do expect a portion of this late quarter growth to be temporary in nature. For the year, total deposits increased $405.6 million or 11.1%.

Non-interest-bearing deposits increased $24.4 million or an annualized growth rate of 7.9% during the fourth quarter and increased $42.9 million for the year or 3.6%. With that, our non-interest-bearing deposits to total deposits ratio was 30.8% at December 31 compared to 31.5% at September 30. We seek to continue our track record keeping this ratio at or above 30%. The most notable change in our deposit mix was our ability to decrease our wholesale funding position by $62.8 million, which included the prepayment of certain FHLB borrowings and letting broker deposits roll off the balance sheet.

Obviously, we are pleased with the recent mix change and continue to focus the entire Allegiance team on our core deposit growth initiatives from both borrowing and nonborrowing customers. With that, I will now turn it over to our CFO, Paul.

Paul Egge -- Executive Vice President and Chief Financial Officer

Thanks, Ray. Fourth-quarter net income was $14 million or $0.67 per diluted share, as compared to third-quarter earnings of $12 million or $0.57 per diluted share. Fourth-quarter performance benefited from certain one-time items, including a $443,000 small bank assessment credit from the FDIC, a $146,000 gain in FDIC income, and $613,000 related to the gain on sale of securities. This was partially offset by $572,000 in FHLB pre-payment penalties, all netting to additional pre-tax income of approximately $630,000 in the quarter.

You will recall that third-quarter performance was impacted by certain one-time items as well, most notably, $1.4 million of severance costs partially offset by $676,000 small bank assessment credit from the FDIC, netting to additional expense of about $755,000 in the quarter. Adjusting for these one-time items, net income would have been $13.4 million or $0.64 per diluted share for the fourth quarter of 2019 versus an adjusted $12.6 million or $0.59 per diluted share in the third quarter. Fourth-quarter net interest income was $44.5 million, down from $44.8 million in the third quarter, primarily due to changes in market interest rates, acquisition accounting accretion, as well as, changes in the volume and relative mix of the underlying assets and liabilities versus the third quarter. Most notably, fourth-quarter net interest income reflects the first full-quarter impact of the $60 million sub-debt issuance closed in late September.

Within the fourth quarter, acquisition accounting accretion increased loan income by $1.7 million and reduced CD expense by $118,000 for a total positive effect on net interest income of $1.9 million, a decrease of $185,000 compared to the third quarter. This quarter's accretion leaves $5.5 million in the loan mark and $576,000 in the CD mark. During full-year 2019, acquisition accounting accretion increased net interest income by a total of over $9.6 million. In 2020, though, we expect acquisition accretion to increase net interest income by less than $2.5 million.

Yield on loans in the fourth quarter was 5.65% versus 5.72% for the third quarter, and 5.81% for the year-ago quarter. Adjusting for the acquisition accretion recorded during the fourth quarter, yield on loans would have been 5.47% versus 5.53% in the third quarter, and 5.51% in the year-ago quarter. Total yield on interest-earning assets was 5.35% for the fourth quarter, 5.43% for the third quarter, and 5.44% for the year-ago quarter. Adjusting for the acquisition accretion, total yield on earning assets would have been 5.19%, compared to an adjusted total yield on earning assets of 5.26% in the third quarter, and 5.18% for the year-ago quarter.

The total cost of interest-bearing liabilities was 185 basis points for the fourth quarter, compared to 188 basis points in the third quarter, and 153 basis points for the year-ago quarter. Overall cost of funds for the fourth quarter was 130 basis points versus 133 basis points in the third quarter and 106 basis points in the year-ago quarter. Excluding acquisition accounting adjustments in the fourth quarter, the total cost of interest-bearing liabilities would have been 186 basis points and the overall cost of funds would have been 131 basis points. We're particularly pleased with the improvement in our cost of funds notwithstanding the first full quarter impact of the sub-debt offering we closed late in the third quarter.

Going forward, we feel well-positioned to show incremental improvement in our cost of funds as we work to reprice our deposits in today's relatively lower interest rate environment. Tax equivalent net interest margin for the fourth quarter was 4.11% compared to 4.16% in the third quarter. Adjusting for the acquisition accounting accretion, net interest margin would have been 3.94% for the fourth quarter compared to 3.97% for the third quarter. Non-interest income increased to $3.4 million for the fourth quarter from $2.9 million for the third quarter, primarily due to the fourth quarter being bolstered by certain nonrecurring revenue items, including $613,000 of gain on sale of securities and $146,000 of lumpy FDIC income.

Total non-interest expense for the fourth quarter was $29.4 million compared to $30 million in the third quarter. One-time items to consider during the fourth quarter that affected noninterest expense included the $443,000 small bank assessment credit from the FDIC, offset by $572,000 expense related to the early redemption of $50 million of FHLB borrowings. Third-quarter non-interest expenses were also impacted by one-time items, including $1.4 million of severance expenses, partially offset by the $676,000 small bank assessment credit recognized from the FDIC. Separately, I should note that bonus accrual for the fourth quarter of 2019 was down nearly $900,000 relative to the average accrual during the prior quarters in 2019.

The efficiency ratio for the fourth quarter was 62.2%, compared to 62.88% posted in the third quarter, and 60.3% for the prior-year quarter. The provision for loan losses was $933,000 for the fourth quarter and the ending allowance at $29.4 million is 75 basis points of total loans. If you were to include the $5.5 million in loan mark remaining on acquired loans, the ending allowance plus loan mark to total loans is 89 basis points. Bottom line, our fourth-quarter 2019 produced a return on average assets of 1.13% and return on average tangible equity of 11.96%.

For the full year, we produced an ROAA of 1.1% and a return on average tangible equity of 11.5%. We remain pleased with our strong capital position, which has allowed us to introduce a quarterly dividend and to continue to be active in repurchasing shares under our share repurchase authorization. In the fourth quarter, we bought approximately 325,000 shares at a weighted average price of $35.44 per share. And as Steve noted earlier, for the full-year 2019, we repurchased almost 1.7 million shares at a weighted average price of $34.79 per share.

Last, we'd like to highlight the year-end tangible book value per share of 22.62% increased 9.5% over the prior year-end. I'll now turn the call back over to Steve.

Steve Retzloff -- Chief Executive Officer

Thank you, Paul. As we conclude, I would note that we entered 2020 with good momentum and a clear focus on the priorities of our customers. We are well-positioned for a strong 2020, as we believe our competitive advantage will allow us to reach new heights and capitalize on opportunities. We will continue to execute on our strategic plan and achieve the goals that are set for ourselves throughout 2020 and beyond.

With that, I will now turn the call over to the operator to open the line for questions.

Questions & Answers:

Operator

[Operator instructions] Our first question comes from Brady Gailey with KBW. Your line is now open.

Brady Gailey -- KBW -- Analyst

Yeah. Thank you. Good morning, guys.

Steve Retzloff -- Chief Executive Officer

Good morning, Brady.

Ray Vitulli -- President and Chief Executive Officer, Allegiance Bank

Good morning, Brady.

Brady Gailey -- KBW -- Analyst

I wanted to start with loan growth. As we look to 2020, how are we thinking about loan growth? It looks like in 2019, outside of a little noise, you grew loans and kind of that mid- to high single-digit level, does that feel like the right outlook for 2020 as well?

Ray Vitulli -- President and Chief Executive Officer, Allegiance Bank

That's probably safe. The -- for '19, we probably -- the elevated paydowns were probably maybe about $150 million more over the entire year than what we expected. And we did see a little bit of relief in the fourth quarter on paydowns, but it was still elevated compared to what we expected, but I think that's fair.

Steve Retzloff -- Chief Executive Officer

Yeah. Last year was also an integration year as well, and we've kind of got a really good start going into 2020. So, I think we have a decent year.

Brady Gailey -- KBW -- Analyst

All right. And then, how should we think about growth in the expense base in 2020 relative to 2019?

Paul Egge -- Executive Vice President and Chief Financial Officer

I'll take that. So seasonally in the first quarter, we tend to have a little bit higher growth -- higher expense levels, if you look back from the past four, five quarters, you'll see our March quarter tend to have a little seasonal adjustment. That's when we do salary adjustments on an annual basis, as well as, there's higher payroll taxes that hit predominantly in the first quarter. But the overall run rate of our expenses, we do expect it to have some growth, although, we don't think it's going to be too -- as meaningful because we're very focused on getting operating leverage, but we will acknowledge that that first quarter will increase.

If you're trying to build a bridge from the fourth quarter to that first quarter, I'd acknowledge really that $900,000 differential. Other than the other one-time items, the differential in our bonus accrual going into the back -- into the fourth quarter of the year was relatively significant in the fourth quarter and gave an expense relief that if we're hitting on all cylinders in a normalized quarter, you're not going to see that.

Brady Gailey -- KBW -- Analyst

Right. That's helpful. And then any color on CECL and the impact that will have next quarter, Paul?

Paul Egge -- Executive Vice President and Chief Financial Officer

Definitely. So, when you think about our loan loss reserve as the existing loss reserve on the prior standard plus the double-counting of the discount on acquired loans, you'll get to about where CECL is going to be. Granted, there's some volatility there as it relates to the -- we expect some quarterly provision volatility in the future as a byproduct of the pace of quarterly loan growth changes in unfunded balances and changes in economic forecasts and other assumptions, which is one of the reasons we're not doing back puts about CECL. But the overall effect is not that significant on us when you adjust -- really add back that -- what's the existing credit mark on loans to our existing reserve level.

Brady Gailey -- KBW -- Analyst

All right. Great. Thanks, guys.

Steve Retzloff -- Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from Matt Olney with Stephens. Your line is now open.

Matt Olney -- Stephens Inc. -- Analyst

Hey, Thanks. Good morning, guys.

Steve Retzloff -- Chief Executive Officer

Good morning, Matt.

Matt Olney -- Stephens Inc. -- Analyst

I want to start with a core or call it, the adjusted margin. We saw some good stability in the fourth quarter. What's the outlook for the margin from -- in 2020 from the fourth-quarter levels? And specifically, how much more opportunity do you see to move down deposit costs from here? Thanks.

Paul Egge -- Executive Vice President and Chief Financial Officer

Certainly. We're expecting stability, but working hard to create expansion. It's just in this market, where we're really fighting -- the good fight competitively on both the asset and liability side. It's hard to pencil in anything other than stability.

But as we execute, we do think that there is potential, just as much as there's risk for contraction if the execution falls off, but there is potential. When you look at the cost of interest-bearing liabilities, and I think the -- I'll note that the potential is greater on the funding side and getting back to levels that we were at, call it, five quarters ago. The rate at which cost of funds really increased in that first half of the year was quite phenomenal, and we're working really hard to ratchet that down without upsetting the proverbial apple cart with existing clients and position ourselves to do better. We are finding that the competitive dynamics are supporting our ability to walk down rates and exercise more discipline.

But at the same time, we are focused on continuing to be able to fund loan growth, which we hope to get back on track in 2020.

Matt Olney -- Stephens Inc. -- Analyst

OK, great. Thank you, Paul. And then on the credit front, I believe in the prepared remarks, you mentioned there was an upgrade of a credit to help drive lower nonaccruals. I think the upgrade you said was over a $7 million credit.

Any more color on that upgrade? And then on the other side, charge-offs were a little bit elevated in the fourth quarter. Any more color on what drove the higher charge offs? Thanks.

Ray Vitulli -- President and Chief Executive Officer, Allegiance Bank

Well, Matt, on the upgrade, I mean, that was just the case of a pre-identified credit that we've been watching closely and performance of the credit over a significant period of time warranted the upgrade, as well as, the collateral position. On the charge-offs, the -- it was elevated compared to prior quarters, but it's nothing that we're really in the significant concern factor. It was -- majority was three customers, and we continue to work with recovery as far as collateral and liquidation of collateral for those credits.

Matt Olney -- Stephens Inc. -- Analyst

OK, got it. Thanks, guys.

Ray Vitulli -- President and Chief Executive Officer, Allegiance Bank

Thank you.

Operator

Thank you. Our next question comes from David Feaster with Raymond James. Your line is now open.

David Feaster -- Raymond James -- Analyst

Hey. Good morning, guys.

Ray Vitulli -- President and Chief Executive Officer, Allegiance Bank

Hey, David.

David Feaster -- Raymond James -- Analyst

So, we've historically talked about that kind of $1.5 billion origination level, and we're trending a little bit below that just given the competitive landscape. But looking forward, I guess, given the hiring initiatives, and just again, taking the competition into play, too, do you think that's still a reasonable target for 2020?

Ray Vitulli -- President and Chief Executive Officer, Allegiance Bank

Oh, hey, David, the -- I would say, we were really targeting about $1.2 billion to $1.3 billion on the origination. And yes, we do feel that's still a good number going forward. We did have 14 producer hires in '19 that will be gaining traction in '20, with also two internal promotions through our officer development program. So, there's capacity there that will help toward those origination numbers, but that kind of $300 million a quarter is still a number that we feel is an achievable number.

David Feaster -- Raymond James -- Analyst

OK. And then, it was great to see the core deposit growth. Could you just talk about what our strategy is to continue driving this? Is it the treasury management that's just started to hit stride? Is it the commercial growth that's helping there? Just some more color into your strategy there.

Ray Vitulli -- President and Chief Executive Officer, Allegiance Bank

Yeah, you hit it there, David, it's more of the same. We definitely are feeling really good about our, what we call, a leading indicator of new accounts opened and both non-interest-bearing, and then, across all account types. And then also our -- we do track our onboarding of new treasury, whether it's brand new treasury customer that's never been here before or an existing customer that's never had treasury services. And so, those numbers are heading in the right direction, and that was definitely a function -- or that resulted in the growth that we enjoyed in '19.

David Feaster -- Raymond James -- Analyst

OK. That's helpful. Last one from me. Just any updates on the warehouse and the runoff there? And are there any expected expense savings from that?

Ray Vitulli -- President and Chief Executive Officer, Allegiance Bank

So the exit is going on track. We're down to really just a handful of customers. It's been very orderly, and it worked as we had hoped. There will be some reallocations.

It was a very small department. There will be some reallocation of some of that staff as we -- but we're not going to probably have that executed until we actually fully exit. We do still have customers right now.

David Feaster -- Raymond James -- Analyst

Perfect. Thanks, guys.

Operator

[Operator instructions] Our next question comes from Brad Milsaps with Piper Sandler. Your line is now open.

Brad Milsaps -- Piper Sandler -- Analyst

Hey. Good morning, guys.

Ray Vitulli -- President and Chief Executive Officer, Allegiance Bank

Good morning, Brad.

Brad Milsaps -- Piper Sandler -- Analyst

Ray, Steve, I joined a few minutes late, so, I apologize if you addressed this. But Ray, you just mentioned 14 new producers in '19 plus two promotions. I was going to see if you guys had handy the stats as you sort of grade each class of new lenders, 2017, '18, '19, and kind of what their capacity is at this point in terms of what they're able to take on to get them to that sort of $30-ish million loan book goal that you typically have?

Ray Vitulli -- President and Chief Executive Officer, Allegiance Bank

Yeah. That's -- Brad, the -- that population of '16 -- I'm sorry, '17, '18, and '19 is around 30 producers and there's probably capacity there of another -- we actually -- if you look at the population that's not '17, '18, and '19, but all of our legacy lenders. That's around $41 million, is that average. So, there's definitely embedded capacity with '17, '18, and '19, probably something like $250 million is probably just from those 30.

It will not necessarily happen in 2020, but that's the -- that would be where we're headed with that -- where they stand today and once they get to, let's say, the average of the others at 41.

Brad Milsaps -- Piper Sandler -- Analyst

And, Ray, it's still kind of -- you're targeting kind of one new producer a month?

Ray Vitulli -- President and Chief Executive Officer, Allegiance Bank

Yeah, that's how '19 shaked out. I think that we'll -- there will be some in '20, but I also feel we'll have some homegrown in '20 as well, supplement that growth through our officer development program, where we had two this year or in '19, we may have four or so in 2020. So, I think you'll see something close. I'm not sure if it will be the '14 or '16 that was in '19.

But --

Steve Retzloff -- Chief Executive Officer

We're also excited about opening that branch on the east side of Houston pretty soon. So that will help us at least get some geography there for '20.

Brad Milsaps -- Piper Sandler -- Analyst

Got it. And Paul, just on the Federal Home Loan Bank advance that you prepaid, did that happen toward the end of the quarter? We see some pick up in 1Q? Or did that kind of happen toward the beginning of the quarter where most of the benefit from that's in the -- already in the run rate?

Paul Egge -- Executive Vice President and Chief Financial Officer

Happened about one-third of the way through the quarter. And yes, we got two months of benefit from it.

Brad Milsaps -- Piper Sandler -- Analyst

OK. What was the rate on that advance?

Paul Egge -- Executive Vice President and Chief Financial Officer

It was $50 million that was costing around 280 basis points.

Brad Milsaps -- Piper Sandler -- Analyst

OK, great. Thank you, guys.

Steve Retzloff -- Chief Executive Officer

Thanks, Brad.

Operator

Thank you. Our next question comes from Matt Olney with Stephens. Your line is now open.

Matt Olney -- Stephens Inc. -- Analyst

Yeah. Thanks for taking the follow-up. Just wanted to circle back on the dividend announcement, first-ever dividend, $0.10 per share. Loved here, just more about the decision to institute the dividend and just a general view on current capital levels? Thanks.

Steve Retzloff -- Chief Executive Officer

Yeah, Matt, thanks a lot. Yeah, we're just managing capital, and obviously, we've got capital accretion through our earnings. And with the growth expectations balanced out throughout the year. We'll take a -- this is a just kind of a modest entry-level of dividend that we would like to enter into and hold to.

But we also will look at other capital strategies, such as buybacks as appropriate to manage our capital levels. So with the accretiveness that we've got on capital today, it just seems like the right thing to do, and it's a good balance for us.

Paul Egge -- Executive Vice President and Chief Financial Officer

Yeah. I might add that it just really represents the diversification of our capital management effort, a steady dividend, it isn't that much in the grand scheme of things, but it does allow us to kind of diversify how we pursue returning capital to shareholders. So, we'll continue to pursue share repurchases when it makes sense to buy back stock, but this is a good step for us.

Matt Olney -- Stephens Inc. -- Analyst

OK. And Paul, do you have it in front of you on the share repurchase plan, what the current authorization stands at right now?

Paul Egge -- Executive Vice President and Chief Financial Officer

The -- so we -- our second authorization for 1 million shares, we have about 230,000 shares remaining on that authorization to that.

Matt Olney -- Stephens Inc. -- Analyst

And when does that expire?

Paul Egge -- Executive Vice President and Chief Financial Officer

I don't think it expires for another nine months or something along those lines.

Ray Vitulli -- President and Chief Executive Officer, Allegiance Bank

eight or nine months, yeah.

Paul Egge -- Executive Vice President and Chief Financial Officer

But if we run to the end of it, we'll seek board approval for additional authorization.

Matt Olney -- Stephens Inc. -- Analyst

OK, perfect. Thank you, guys.

Steve Retzloff -- Chief Executive Officer

Thanks, Matt.

Operator

Thank you. I'm not showing any further questions at this time. I would now like to turn the call back over to Steve Retzloff for any closing remarks.

Steve Retzloff -- Chief Executive Officer

No real remarks. Just thanks, again, for your time and interest in Allegiance Bank. We look forward to speaking with you again in the future. Thanks a lot for participating.

Duration: 38 minutes

Call participants:

Courtney Theriot -- Executive Vice President and Chief Accounting Officer

Steve Retzloff -- Chief Executive Officer

Ray Vitulli -- President and Chief Executive Officer, Allegiance Bank

Paul Egge -- Executive Vice President and Chief Financial Officer

Brady Gailey -- KBW -- Analyst

Matt Olney -- Stephens Inc. -- Analyst

David Feaster -- Raymond James -- Analyst

Brad Milsaps -- Piper Sandler -- Analyst

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