Allegiance Bank of North America Announces the Extension of its Private Placement Offering to September 30, 2010 and Reports Operating Results for the Quarter Ended, June 30, 2010

BALA CYNWYD, Pa.--(BUSINESS WIRE)--Allegiance Bank of North America (the “Bank”) today announced it has agreed to extend the Private Placement Offering engagement of Cohen & Company Securities, LLC (“Cohen”) (“COHN” – AMEX) from August 30, 2010 to September 30, 2010. On May 14, 2010 the Bank announced the engagement of Cohen to sell a minimum of 2,000,000 shares and up to 5,000,000 shares (the “Shares”) of the Bank’s common stock, par value $1.00 per share (the “Common Stock”), on a best efforts basis to accredited investors at a price of $10.00 per share, resulting in gross proceeds of up to $50,000,000 (the “Offering”). Under the terms of the engagement, the Bank will effect a reverse stock split so that there will be no more than 125,000 common shares outstanding immediately prior to closing the Offering.

Gregg J. Wagner, President and CEO of the Bank, stated, “The market for capital continues to be very competitive. The Bank and Cohen will continue to meet with prospective investors during September with a goal of adding capital to comply with regulatory capital directives and provide us with resources to establish new relationships and expand our offerings within the communities we serve.”

As previously reported, on November 3, 2009, the Federal Deposit Insurance Corporation (“FDIC”) and the Commonwealth of Pennsylvania Department of Banking and Insurance (“Department”) each issued a Consent Order (“Order”) designed to improve the Bank’s overall performance. The Bank has implemented actions to achieve the objectives in the Orders and has been successful in the resolution of certain of these objectives. One of the specific directives within the Order is to achieve an 8% tier 1 leverage capital ratio and a 12% total risk-based capital ratio. The Bank’s tier 1 leverage capital ratio was 2.74% and its total risk based capital ratio was 5.63% at June 30, 2010.

The Bank reported a net loss of $1.5 million, or $0.31 per share, for the second quarter of 2010, compared to a net loss of $7.0 million, or $1.46 per share, for the second quarter of 2009. The second quarter 2009 net loss was the result of the Bank initiating a strategy to significantly reduce its non-performing loans and classifying its Paramount Mortgage and Capital, LLC (Paramount) loan portfolio “loans held for sale”. This classification change resulted in the Bank recording an additional expense of $4.4 million to reduce the Paramount loan portfolio to its fair value as of June 30, 2009. The total operating loss from Paramount during the second quarter of 2009 was approximately $5.3 million, including the $4.4 million charge. The second quarter 2010 net loss of $1.5 million was the result of an $800,000 addition to the provision for loan losses and a reduction in net interest income. The lower net interest income is related to the planned reduction in earning assets to correspond with the Bank’s lower level of capital. The Bank continues to control its expenses as noted by a 36.8% reduction in other expenses during the second quarter of 2010, compared to the same period in 2009. This reduction was the result of both a 30% cutback in employees and lower expenses associated with the Paramount portfolio experienced in the second quarter of 2010, compared to the second quarter of 2009. The year-to-date June 30, 2010 net loss was $2.8 million, compared to the $7.8 million net loss for the same period in 2009. The higher net loss in 2009 was primarily the result of losses associated with Paramount.

Paramount was formed on December 18, 2003 to originate secured commercial loans made primarily to small real estate investors and developers. These loans were held by Paramount and funded by loans to Paramount from the Bank. On March 1, 2008 the Bank took action to close down Paramount operations. Paramount’s loan portfolio was sold on September 3, 2009, which resulted in a loss on sale of $4,038,000. The Bank sold the loans “as is” and surrendered control of the assets.

As a result of the decrease in capital during the last year related to the Bank’s earnings performance, the Bank strategically reduced its assets to be more aligned with its level of capital. Total assets at June 30, 2010 of $116.1 million declined $43.1 million, or 27.1%, compared to total assets at June 30, 2009 of $159.2 million. The Bank decreased net loans, securities available for sale, and loans held for sale by $31.9 million, $8.9 million and $2.8 million, respectively. Total deposits decreased $40.1 million, or 29.1% from $137.8 million at June 30, 2009 to $97.7 million at June 30, 2010. As a result of the lower level of assets, the Bank did not require the same level of deposits to fund its assets. All deposit products experienced decreases during the past year. Contributing to this decrease were reductions in time deposits, money market accounts, interest bearing demand, and non-interest bearing accounts of $18.6 million, $10.7 million, $7.6 million and $3.0 million, respectively.

Total non-performing loans were $6.9 million at June 30, 2010, which decreased $3.3 million from $10.2 million at June 30, 2009. This decrease was due to a $1.8 million reduction in non-performing Bank loans and $1.5 million of non-performing Paramount loans.

The $2.6 million, or 27.6%, reduction in non-performing loans from March 31, 2010 to June 30, 2010 included the payoff of a $540,000 construction loan, the transfer of $992,000 non-performing loans to other real estate owned, and partial charge-offs of two properties in the amount of $903,000. The Bank’s non-performing loan total of $6.9 million at June 30, 2010 included 11 commercial mortgage loans ($4.0 million), two construction loans ($1.5 million), and two residential mortgage loans ($1.4 million). The Bank has continued to aggressively manage its loan portfolio as demonstrated by the fact the Bank has not had a loan 30-89 days past due for 4 consecutive quarters.

	June 30,		March 31,		Dec. 31,		June 30,		Dec 31,
(In Thousands)	2010		2010		2009		2009		2008
Non-Performing Loans*
Bank – Non-Performing Loans	$	6,876	$	9,499	$	8,712	$	8,745	$	6,767
Paramount – Non-Performing Loans		-		-		-		1,503		6,607
Total Non-Performing Loans	$	6,876	$	9,499	$	8,712	$	10,248	$	13,374
30-89 days past due	$	-	$	-	$	-	$	573	$	1,461

*Non-Performing Loans – includes loans that are not earning income due to: (1) full payment of principal and interest under the original terms of the loan agreement is no longer anticipated, (2) principal or interest is 90 days or more delinquent, or (3) the maturity date has passed and payment in full has not been made.

The regulatory Orders are not intended to interfere with the Bank’s current, basic day-to-day operations. Consequently, the Orders do not affect Bank customers. Accounts at Allegiance Bank continue to be insured up to $250,000 per depositor by the FDIC. IRA accounts continue to be separately insured by the FDIC up to $250,000 per depositor. The Bank is participating in the FDIC's Transaction Account Guarantee Program. Under that program, through December 31, 2010, all non-interest bearing transaction accounts are fully guaranteed by the FDIC for the entire amount in the account. Coverage under the Transaction Account Guarantee Program is in addition to and separate from the coverage available under the FDIC's general deposit insurance rules.

About Allegiance Bank: Allegiance Bank is headquartered in Bala Cynwyd, with offices in Berwyn, King of Prussia, Old City and Worcester. Allegiance Bank offers a package of services beyond traditional bank offerings, such as Allegiance University’s free educational classes for customers and community members. Visit Allegiance Bank online at www.allegbank.com, or call [phone]. The common stock of Allegiance Bank is traded on the OTC Bulletin Board under the symbol ABPA.

This announcement does not constitute an offer to sell or the solicitation of an offer to buy securities in any jurisdiction. Any offering will be made in accordance with applicable federal and state securities laws.

Statements contained in this news release which are not historical facts are forward looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995. Amounts herein could vary as a result of market and other factors. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors. Such forward-looking statements may be identified by the use of such words as “believe,” “expect,” “anticipate”, “should,” “planned”, “estimated” and “potential”. Examples of forward-looking statements include, but are not limited to, estimates with respect to the financial condition, expected or anticipated revenue, results of operations and business of the Company that are subject to various factors which could cause actual results to differ materially from these estimates. These factors include, but are not limited to, general economic conditions, changes in interest rates, deposit flows, loan demand, real estate values and competition; changes in accounting principles, policies or guidelines; changes in legislation or regulation; the Bank’s ability to successfully complete its current offering of Common Stock; and other economic, competitive, governmental, regulatory and technological factors affecting the Company’s operations, pricing, products and services.

Consolidated Income Statements
(Unaudited)
	Six Months Ended						Three Months Ended
	June 30,						June 30,
(In thousands)	2010			2009			2010			2009
Interest Income
Loans receivable, including fees	$	2,763		$	3,783		$	1,337		$	1,903
Securities		191			480			81			207
Other		9			6			3			5
Total Interest Income		2,963			4,269			1,421			2,115
Interest Expense
Deposits		1,109			2,031			511			997
Federal Home Loan Bank Borrowings		262			256			135			128
Total Interest Expense		1,371			2,287			646			1,125
Net Interest Income		1,592			1,982			775			990
Provision for Loan Losses		1,530			1,282			800			1,242
Net Interest Income after Prov. for Loan Losses		62			700			(25	)		(252	)
Other Income
Customer service fees		33			49			30			31
Loss on sale of loans		-			(94	)		-			(94	)
Gain (loss) on sale of OREO		44			3			-			3
Valuation allowance on loans held for sale		-			(4,367	)		-			(4,367	)
Other		110			33			33			29
Total Other Income		187			(4,376	)		63			(4,398	)
Other Expenses
Salaries and employee benefits		1,188			1,736			588			878
Occupancy		531			577			262			292
Equipment and data processing		246			275			123			148
Advertising, marketing and business development		13			85			9			44
Professional fees		427			495			213			284
Bank shares tax		85			98			35			56
FDIC insurance expense		277			203			99			104
Other		280			673			175			538
Total Other Expenses		3,047			4,142			1,504			2,344
Net Loss	$	(2,798	)	$	(7,818	)	$	(1,466	)	$	(6,994	)
Loss Per Share
Basic		($0.58	)		($1.63	)		($0.31	)		($1.46	)
Diluted		($0.58	)		($1.63	)		($0.31	)		($1.46	)

Consolidated Balance Sheets
(Unaudited)
(In thousands)
	June 30,
Assets	2010			2009
Cash & due from banks	$	682		$	484
Interest bearing demand deposits		13,661			12,755
Cash & Cash Equivalents		14,343			13,239
Interest bearing time deposits		-			50
Securities available for sale		8,717			17,607
Loans held for sale		-			2,828
Loans receivable		88,730			121,791
Allowance for loan losses		(1,326	)		(2,530	)
Net Loans Receivable		87,404			119,261
Bank premises & equipment		2,088			2,535
Restricted bank stock		1,753			1,753
Accrued interest receivable		379			646
Foreclosed assets		865			506
Other assets		585			746
Total Assets	$	116,134		$	159,171
Liabilities & Shareholders' Equity
Liabilities
Deposits:
Demand, non-interest bearing	$	3,926		$	6,942
Demand, interest bearing		6,029			13,649
Money Market		34,396			45,105
Savings		264			457
Time over $100,000		32,501			36,483
Time, other		20,535			35,157
Total Deposits		97,651			137,793
Federal Home Loan Bank Borrowings		14,471			12,651
Accrued interest payable		56			68
Other liabilities		662			1,341
Total Liabilities		112,840			151,853
Shareholders' Equity
Common Stock		4,798			4,798
Surplus		19,922			19,910
Accumulated deficit		(21,540	)		(17,251	)
Accumulated other comprehensive loss		114			(139	)
Total Shareholders' Equity		3,294			7,318
Total Liabilities & Shareholders' Equity	$	116,134		$	159,171