Guaranty Bancshares, Inc. (NYSE: GNTY) (the "Company"), the
parent company of Guaranty Bank & Trust, N.A. (the "Bank"),
today reported financial results for the fiscal quarter ended March
31, 2023. The Company's net income available to common shareholders
was $8.3 million, or $0.69 per basic share, for the quarter ended
March 31, 2023, compared to $8.0 million, or $0.67 per basic share,
for the quarter ended December 31, 2022 and $10.7 million, or $0.89
per basic share, for the quarter ended March 31, 2022. Return on
average assets and average equity for the first quarter of 2023
were 1.01% and 11.18%, respectively, compared to 0.95% and 10.88%,
respectively, for the fourth quarter of 2022 and 1.38% and 14.44%,
respectively, for the first quarter of 2022. The increase in
earnings during the first quarter of 2023, compared to the fourth
quarter of 2022 was primarily due to a provision for credit losses
of $2.8 million in the fourth quarter of 2022 and no provision in
the first quarter of 2023. Noninterest expense was also $930,000
less in the current quarter than in the prior quarter. The decrease
in net earnings compared to the first quarter of 2022 resulted from
a reverse provision of $1.3 million, higher noninterest income of
$1.6 million and lower noninterest expense of $888,000 in the prior
year quarter. Our net core earnings†, excluding provisions
for credit losses, income taxes and PPP1/PPP2 net income are
described further in a table below.
"The first quarter of 2023 was very eventful, as we witnessed
two bank failures, concerns about the health of the overall banking
system, possible industry-wide deposit runoff and continued
discussions of a recession. Despite these events, the strength of
our business model is showing its resilience. We're well prepared
to manage through the current environment, as we have in previous
challenging cycles and downturns. We are also fortunate to be
located in Texas, which continues to have a vibrant economy. Our
balance sheet is strong because we continue to maintain a
disciplined approach to credit and market risks. Our unrealized
losses on all securities at the end of the month was a moderate
12.8% of total capital and our liquidity remains strong. We've
designed very granular loan and deposit portfolios with strong core
customer relationships, all of which creates strength and stability
for our Company," commented Ty Abston, the Company's Chairman and
Chief Executive Officer.
RISK MANAGEMENT HIGHLIGHTS
In light of recent events, we are providing additional
information below to highlight various risk management practices,
as well as additional detail around the lower risk nature,
composition and size of our loans, deposits and investment
securities. These highlights help illustrate the more traditional
and stable nature of our Bank model compared to others who have
recently experienced liquidity and capital challenges.
- Granular and Reliable Deposit Base. As of March 31,
2023, we have 84,233 total deposit accounts with an average balance
of $31,148. Excluding time deposits, 56.8% of our depositors have
been customers of our Bank for more than 5 years and 89.0% have
been customers for more than one year. We have a historically
reliable core deposit base, with strong and trusted banking
relationships, which was illustrated by an increase in total
deposits of $8.3 million during March, despite general consumer
uncertainty caused by the two bank failures in mid-March. Total
deposits decreased $57.3 million in January, decreased by $8.8
million in February and increased by $8.3 million in March of 2023.
As of March 31, 2023, our deposits accounts consisted of the
following:
March 31, 2023
(dollars in thousands)
Balance
Number of Accounts
Average Balance
% of Total Deposits
Consumer
$
1,379,264
71,635
$
19
52.6
%
Commercial
960,904
12,040
80
36.6
%
Public funds
283,200
548
517
10.8
%
Total deposits
$
2,623,368
84,223
$
31
100.0
%
Our level of uninsured deposits, excluding
affiliate deposits (Guaranty-owned funds), public funds (all of
which are collateralized) and director/officer accounts, is 30.3%.
As of March 31, 2023, uninsured deposits consisted of the
following:
March 31, 2023
(dollars in thousands)
Balance
Uninsured Balance
% Uninsured of Total
Deposits
Affiliate deposits
$
13,768
$
12,708
0.5
%
Customers
2,267,628
686,464
26.2
%
Public funds
283,200
267,072
10.2
%
Directors and officers
58,772
27,835
1.1
%
Total
$
2,623,368
$
994,079
37.9
%
Excluding public funds
$
(283,200
)
$
(267,072
)
Excluding affiliate deposits
(13,768
)
(12,708
)
Total, excluding public funds and
affiliate deposits
$
2,326,400
$
714,299
30.7
%
Excluding directors and officers
$
(58,772
)
$
(27,835
)
Total, excluding public funds, affiliate
deposits and directors and officers
$
2,267,628
$
686,464
30.3
%
As an additional resource to our uninsured
depositors, we implemented the IntraFi CDARS program in late March
2023, which we began offering to our customers beginning April 1,
2023. This program allows deposit customers to obtain full FDIC
deposit insurance while maintaining one time deposit relationship
with our Bank.
We continued to increase interest rates paid
on deposits during the quarter in order to pay competitive rates,
however noninterest-bearing deposits continue to represent 37.8% of
total deposits. Our cost of interest-bearing deposits increased 83
basis points during the quarter from 1.08% in the prior quarter to
1.91%, representing a beta on interest-bearing deposits of
approximately 96.4% for the linked quarter. Our cost of total
deposits (cost of funds) for the first quarter of 2023 increased 54
basis points from 0.64% in the prior quarter to 1.18%, representing
a beta on total deposits of approximately 62.7% for the linked
quarter.
On a trailing 12 month basis, our cost of
interest-bearing deposits increased 66 basis points, from 0.32% at
March 31, 2022 to 0.98% at March 31, 2023, representing a beta on
interest-bearing deposits of approximately 24.5%. Our cost of total
deposits increased 39 basis points from 0.20% at March 31, 2022 to
0.59%, representing a beta on total deposits of approximately
14.5%.
- Granular Loan Portfolio and Concentration Risk. Loan
concentrations create risk that should be closely monitored and
limited. We do not have significant concentrations to any one
borrower, industry or geography, other than loans within Texas. Our
credit administration committee meets at least monthly and monitors
the loan portfolio against internal guidelines and limits using
NAICS codes, industry classifications, geography, call report codes
and other metrics. Although our legal loan limit is nearly $54.2
million, we have an internal loan limit of $30.0 million and rarely
approve large loans without a significant borrower relationship and
robust underwriting. As shown in the table below, our large loan
concentration commitments and outstanding balances as of March 31,
2023 are reasonable:
March 31, 2023
(dollars in thousands)
Number of Accounts
Total Commitment
Balance
Weighted Average LTV
> $ 5 million
65
$
459,788
$
363,314
69.99
%
> $ 10 million
10
139,513
93,544
50.98
%
> $ 20 million
2
43,240
31,103
58.22
%
Total
77
$
642,541
$
487,961
65.07
%
Commercial real estate (CRE) loans,
particularly office related loans, have received increased scrutiny
in recent months. Our CRE loans and real estate C&D loans
represent 37.9% and 15.7% of the total loan portfolio,
respectively. Office related loans represent 4.0% of the total loan
portfolio, have an average balance of $504,000, 46.5% are owner
occupied and only 21 of the 189 loans have committed balances over
$1.0 million.
The table below illustrates the diversity of
our portfolio as well as the relatively large number of lower
average balance loans as of March 31, 2023:
March 31, 2023
(dollars in thousands)
Balance
Number of Accounts
Average Balance
% of Total Loans
Commercial and industrial
$
295,936
1,893
$
156
12.4
%
Real estate:
Construction and development
372,203
902
413
15.7
%
Commercial real estate
900,190
1,057
852
37.9
%
Farmland
190,802
527
362
8.0
%
1-4 family residential
499,944
2,999
167
21.0
%
Multi-family residential
44,760
36
1,243
1.9
%
Consumer
60,163
4,331
14
2.5
%
Agricultural
13,545
336
40
0.6
%
Overdrafts
270
—
—
0.0
%
Total loans
$
2,377,813
12,081
$
197
100.0
%
- Good Asset Quality. Nonperforming assets as a percentage
of total assets were 0.40% at March 31, 2023, compared to 0.32% at
December 31, 2022 and 0.08% at March 31, 2022. Net charge-offs
(annualized) to average loans were 0.00% for the quarter ended
March 31, 2023, compared to 0.01% for the quarter ended December
31, 2022, and 0.02% for the quarter ended March 31, 2022.
Consistent with our CECL methodology, we calculated and recorded a
provision for credit losses of $2.8 million during the fourth
quarter of 2022, as we incorporated recession forecasts for 2023
into our CECL model at that time. Due to minimal loan growth,
minimal net charge-offs and minimal downward risk rating migrations
during the first quarter of 2023, no additional ACL provision was
necessary.
- Conservative Investment Portfolio. Our investment
policies and strategies only allow for non-complex investments with
little or no credit risk. Strategically, we strive to maintain an
average life in the portfolio of five years or less, with longer
duration securities usually in high quality municipal bonds in
areas we are familiar with. We also monitor portfolio cash flows to
ensure a good source of near term liquidity, as well as defensive
cash flows as duration extends. During late 2021 and early 2022, we
had significant excess cash but did not believe the low yields on
investments at that time warranted the interest rate risk. To
slightly improve the yields meant investing in securities with much
longer lives. Because of this disciplined approach, our total
unrealized losses, including both AFS and HTM securities are
manageable and low. The table below presents total unrealized
losses as of March 31, 2023, along with estimated unrealized losses
if interest rates increase or decrease by 100 basis points.
March 31, 2023
Net Unrealized Loss
(dollars in thousands)
Amortized Cost
Estimated Fair Value
-100 bps
Actual
+100 bps
Available for sale
$
193,121
$
173,744
$
(11,295
)
$
(19,377
)
$
(27,366
)
Held to maturity
482,305
450,505
(14,770
)
(31,800
)
(49,041
)
- Strong Capital and Liquidity. Our capital and liquidity
ratios, as well as contingent liquidity sources, remain solid. We
are taking advantage of low stock prices to repurchase shares of
Company stock. During the first quarter of 2023, we repurchased
25,709 shares at an average price of $28.95 per share. Our
liquidity ratio, calculated as cash, fed funds sold and non-pledged
investments divided by total liabilities, was 14.7% as of
quarter-end. Contingent liquidity sources and availability as of
March 31 are provided below. Although we do not plan to access the
Federal Reserve's Bank Term Funding Program (BTFP), we have $282.3
million of borrowing capacity based on the value of unpledged,
par-value, securities available as collateral for this line. The
table below shows our total lines of credit, current borrowings as
of March 31, 2023 and total amounts available for future
borrowings, if necessary.
March 31, 2023
Total Available for Future
Liquidity
(dollars in thousands)
Line of Credit
Borrowings
FHLB advances
$
1,097,558
$
340,000
$
757,558
Federal Reserve discount window
243,900
—
243,900
Correspondent bank lines of credit
50,000
—
50,000
Federal Reserve Bank Term Funding
Program
282,342
—
282,342
Total liquidity lines
$
1,333,800
The table below provides total equity
information as if the unrealized loss on HTM securities was
recognized as a reduction in total equity. This information
illustrates the strength of our capital, even with net unrealized
losses on all investment securities considered.
(dollars in thousands)
March 31, 2023
Total equity(1)
$
300,270
Less: net unrealized loss on HTM
securities, tax effected
(25,123
)
Total equity, including net unrealized
loss on AFS and HTM securities†
$
275,147
Net unrealized loss on AFS securities, tax
effected
15,308
Net unrealized loss on HTM securities, tax
effected
25,123
Net unrealized loss on AFS and HTM
securities, tax effected
$
40,431
Net unrealized loss on securities as % of
total equity(1)
13.5
%
Total equity before impact of unrealized
losses†
$
315,578
Net unrealized loss on securities as % of
total equity before impact of unrealized losses†
12.8
%
Total average assets
$
3,325,005
Total equity to average assets
9.0
%
Total equity, adjusted for tax effected
net unrealized loss, to average assets†
8.3
%
(1) Includes the net unrealized loss on
AFS securities, tax effected, of $15,308.
† Non-GAAP financial metric. Calculations
of this metric and reconciliations to GAAP are included in the
schedules accompanying this release.
RESULTS OF OPERATIONS
Participation in the PPP1 and PPP2 program, as well as economic
and COVID-related provisions for credit losses, created temporary
extraordinary results in the calculation of net earnings and
related performance ratios in previous quarters. The following
table illustrates net earnings and net core earnings results, which
are pre-tax, pre-provision and pre-extraordinary PPP1/PPP2 income,
as well as performance ratios for the prior five quarters:
Quarter Ended
2023
2022
(dollars in thousands, except per share
data)
March 31
December 31
September 30
June 30
March 31
Net earnings attributable to Guaranty
Bancshares, Inc.
$
8,281
$
8,022
$
10,903
$
10,784
$
10,738
Adjustments:
Provision for credit losses
—
2,800
600
—
(1,250
)
Income tax provision
1,823
1,764
2,363
2,472
2,235
PPP loan interest and fees
(2
)
(1
)
(57
)
(436
)
(783
)
Net core earnings attributable to Guaranty
Bancshares, Inc.†
$
10,102
$
12,585
$
13,809
$
12,820
$
10,940
Total average assets
$
3,325,005
$
3,346,358
$
3,337,348
$
3,209,440
$
3,146,339
Adjustments:
PPP loans average balance
(519
)
(539
)
(1,159
)
(8,885
)
(36,720
)
Total average assets, adjusted†
$
3,324,486
$
3,345,819
$
3,336,189
$
3,200,555
$
3,109,619
Total average equity
$
300,449
$
292,471
$
290,806
$
291,312
$
301,579
PERFORMANCE RATIOS
Net earnings to average assets
(annualized)
1.01
%
0.95
%
1.30
%
1.35
%
1.38
%
Net earnings to average equity
(annualized)
11.18
10.88
14.87
14.85
14.44
Net core earnings to average assets, as
adjusted (annualized)†
1.23
1.49
1.64
1.61
1.43
Net core earnings to average equity
(annualized)†
13.64
17.07
18.84
17.65
14.71
PER COMMON SHARE DATA
Weighted-average common shares
outstanding, basic
11,939,593
11,938,973
11,907,233
11,968,227
12,109,074
Earnings per common share, basic
$
0.69
$
0.67
$
0.92
$
0.90
$
0.89
Net core earnings per common share,
basic†
0.85
1.05
1.16
1.07
0.90
† Non-GAAP financial metric. Calculations
of this metric and reconciliations to GAAP are included in the
schedules accompanying this release.
Net interest income, before the provision for credit losses, in
the first quarter of 2023 and 2022 was $25.2 million and $24.3
million, respectively, an increase of $839,000, or 3.4%. The
increase in net interest income resulted from an increase in
interest income of $11.3 million, or 43.5%, which was offset by an
increase in interest expense of $10.4 million, or 663.2%, compared
to the prior year quarter. Interest income on loans increased $9.9
million, or 44.4%, during the current quarter compared to the prior
year quarter. In addition, interest income from investment
securities increased $1.0 million, or 32.7%, from the same quarter
in the prior year. The increase in interest expense was due
primarily to a $6.4 million increase in interest expense on
deposits, and a $3.7 million increase in interest expense on FHLB
advances and federal funds purchased. These increases were
primarily due to rising interest rates between the two periods.
Net interest margin, on a fully taxable equivalent basis, for
the first quarter of 2023 and 2022 was 3.24% and 3.37%,
respectively. Net interest margin decreased 13 basis points
primarily due to interest bearing liabilities repricing faster than
our interest-earning assets. The cost of interest-bearing
liabilities increased 208 basis points from the prior year quarter,
while interest earning asset yields increased 126 basis points. The
increase in yield on interest-earning assets resulted in part from
average loan yields increasing from 4.66% for the first quarter of
2022 to 5.46% for the first quarter of 2023, an increase of 80
basis points and an increase in yields of available for sale and
held to maturity securities of 35 and 73 basis points,
respectively, from the prior year quarter. Loans increased $363.8
million, or 18.1%, from March 31, 2022. The weighted average yield
on new loans originated in the first quarter was 7.27%. Our loan
growth is a result of internally generated sources and is not from
loan purchases from other originators. The increase in the cost of
interest-bearing liabilities was due primarily to an increase in
the cost of interest-bearing deposits from 0.29% to 1.91%, a change
of 162 basis points, in the first quarter of 2023 compared to the
same period in 2022, as well as increased rates on FHLB advances,
which increased from 0.49% to 4.94%, an increase of 445 basis
points, from the prior year quarter.
Net interest income, before the provision for credit losses,
decreased $3.2 million, or 11.3%, from $28.4 million in the fourth
quarter of 2022 to $25.2 million in the first quarter of 2023. The
decrease in net interest income resulted primarily from an increase
in interest expense of $4.6 million, or 62.8%, while interest
income increased $1.4 million, or 4.0%. Loan interest income
increased $2.0 million, or 6.5%, from the prior quarter. Average
yield increased from 5.19% in the fourth quarter of 2022 to 5.46%
in the first quarter of 2023. Those increases were partially offset
by an increase in interest expense on interest-bearing deposits of
$3.2 million, or 72.7% and FHLB advances of $1.4 million, or 56.7%,
from the fourth quarter of 2022 to the first quarter of 2023.
Net interest margin, on a taxable equivalent basis, decreased
from 3.57% for the fourth quarter of 2022 to 3.24% for the first
quarter of 2023, a decrease of 33 basis points. The decrease in net
interest margin was primarily due to an increase in the cost of
interest-bearing deposits from 1.08% in the fourth quarter to 1.91%
in the first quarter of 2023, a change of 83 basis points, while
loan yield only increased from 5.19% for the fourth quarter of 2022
to 5.46% for the first quarter of 2023, a change of 27 basis
points.
During the first quarter of 2023, we recorded no provision for
credit losses. During the fourth quarter of 2022, we recorded a
$2.8 million provision to incorporate economic forecasts for a
recession into our CECL model. The factors that were adjusted in
the fourth quarter of 2022 are still relevant and the economic
projections remain consistent. Furthermore, there was minimal
growth in the loan portfolio during the quarter, risk ratings have
remained consistent and no other qualitative factors necessitated
significant changes during the first quarter 2023. As of March 31,
2023 and December 31, 2022, our allowance for credit losses as a
percentage of total loans was 1.34%.
Noninterest income decreased $1.6 million, or 24.3%, in the
first quarter of 2023 to $4.9 million, compared to $6.5 million for
the first quarter of 2022. The decrease from the same quarter in
2022 was due primarily to a decrease in other noninterest income of
$1.0 million, or 61.1%, which resulted from a net gain of $685,000
in the prior year quarter from the termination of three interest
rate swaps, that was not present in the current quarter, as well a
$171,000 negative swing on the fair value of SBA servicing assets
from the prior period to the current period. There was also a
decrease in the gain on sale of loans of $591,000, or 65.3%, an
$84,000, or 72.4%, decrease in warehouse lending fees, and a
$63,000, or 48.1%, decrease in mortgage fee income. These decreases
were partially offset by a $101,000, or 10.3%, increase in service
charge fee income, a $93,000, or 100.0%, increase in the net
realized gain on sale of securities and an increase in merchant and
debit card fees of $63,000, or 3.9%, compared to the same quarter
in the prior year.
Noninterest expense increased $888,000, or 4.7%, in the first
quarter of 2023 to $20.0 million, compared to the first quarter of
2022. The increase in noninterest expense in the first quarter of
2023 was driven primarily by a $732,000, or 6.3%, increase in
employee compensation and benefits due to higher salaries of
$610,000, higher insurance expense of $261,000, and partially
offset by lower bonus expense of $392,000. Software and technology
expense increased $187,000, or 15.5%, compared to the first quarter
of 2022, due to additional technology investments and an increase
in the cost of our core processing software. Other noninterest
expense increased $155,000, or 15.1%, due to a $69,000 increase in
customer related check and wire transfer losses, a $25,000 increase
in contributions, a $19,000 increase in postage and an $18,000
increase in training and education during the first quarter of
2023. The increases were partially offset by a $187,000, or 24.3%,
decrease in legal and professional fees and a $140,000, or 34.4%,
decrease in advertising and promotions fees during the first
quarter of 2023 compared to the same quarter of 2022. Amortization
expense also fell $58,000, or 26.5%, from the prior year
quarter.
Noninterest income in the first quarter of 2023 decreased by
$217,000, or 4.2%, from $5.1 million in the fourth quarter of 2022.
The decrease is due primarily due to a $79,000, or 45.9%, decrease
in the net realized gain on the sale of securities
quarter-over-quarter. Other noninterest income also decreased
$53,000, or 7.4%, primarily due to a $41,000 downward adjustment of
the SBA servicing asset, while merchant and debit card fee income
decreased $37,000, or 2.2%.
Noninterest expense decreased $930,000, or 4.5%, in the first
quarter of 2023, from $20.9 million for the quarter ended December
31, 2022. The decrease is primarily due to a $221,000, or 45.3%,
decrease in advertising and promotion expense, a $196,000, or
25.2%, decrease in legal and professional fees, a $141,000, or
19.1%, decrease in ATM and debit card expense, a $129,000, or 8.5%,
decrease in software and technology expense and a $135,000, or
10.2%, decrease in other noninterest expense during the first
quarter of 2023 compared to the fourth quarter of 2022.
The Company’s efficiency ratio in the first quarter of 2023 was
66.41%, compared to 61.94% in the prior year quarter and 62.42% in
the fourth quarter of 2022.
FINANCIAL CONDITION
Consolidated assets for the Company totaled $3.36 billion at
March 31, 2023, compared to $3.35 billion at December 31, 2022 and
$3.19 billion at March 31, 2022.
Gross loans decreased $363,000, or 0.02%, to $2.38 billion at
March 31, 2023, compared to loans of $2.38 billion at December 31,
2022. Loan growth has remained relatively flat as we have tightened
credit underwriting standards and borrowers have responded to the
increases in interest rates with fewer requests.
Gross loans increased $363.8 million, or 18.1%, from $2.01
billion at March 31, 2022. The increase in gross loans during the
first quarter of 2023 compared to the first quarter of 2022
resulted from organic loan growth and was partially offset by a
$18.8 million reduction in PPP loan balances during the period.
Excluding PPP and warehouse lending loans, gross loans increased
$398.4 million, or 20.2%, from March 31, 2022.
Total deposits decreased by $57.8 million, or 2.2%, to $2.62
billion at March 31, 2023, compared to $2.68 billion at December
31, 2022, and decreased $174.0 million, or 6.2%, from $2.80 billion
at March 31, 2022. The decrease in deposits during the quarter
resulted from a decrease in noninterest-bearing deposits of $59.6
million, offset by an increase in interest-bearing deposits of $1.8
million. Total deposits decreased $57.3 million and $8.8 million in
January and February of 2023, but increased by $8.3 million in
March 2023, despite the concerns regarding the mid-March bank
failures. The decrease in deposits during the current quarter
compared to the prior year quarter resulted primarily from a
decrease in noninterest-bearing deposits of $73.3 million and a
decrease in interest-bearing deposits of $100.8 million.
Nonperforming assets as a percentage of total loans were 0.57%
at March 31, 2023, compared to 0.46% at December 31, 2022 and 0.13%
at March 31, 2022. The Bank's nonperforming assets consist
primarily of nonaccrual loans. Four loans were added to nonaccrual
status in the second quarter of 2022 and are Small Business
Administration (SBA) 7(a), partially guaranteed (75%) loans,
acquired in the June 2018 acquisition of Westbound Bank, with
combined book balances of $6.7 million as of March 31, 2023. These
loans, collateralized by two hotels, were identified as problem
assets prior to COVID-19 but obtained government stimulus and other
relief which allowed the two related borrowers to remain current
through early 2022. Management continues to work toward a
satisfactory resolution for these four loans, however, in the event
of foreclosure, a significant loss is not expected due to estimated
current collateral values and the SBA guarantees. Another
previously classified loan was downgraded to non-accrual status
during the fourth quarter of 2022 with a principal balance of $1.4
million. The loan is considered well-secured and has a low
loan-to-value ratio with guarantor support. Management expects this
loan will be paid in full in the near future. No losses are
anticipated.
Total equity was $300.3 million as of March 31, 2023, compared
to $295.6 million at December 31, 2022 and $291.9 million at March
31, 2022. The increase from the previous quarter resulted primarily
from net income of $8.3 million, offset by a decrease in
accumulated other comprehensive loss of $450,000 due to
fluctuations in the fair value of available for sale securities
during the period, by the payment of dividends of $2.7 million and
repurchase of Company stock of $744,000 during the first quarter of
2023.
Nonperforming assets as a percentage of total assets were 0.40%
at March 31, 2023, compared to 0.32% at December 31, 2022, and
0.08% at March 31, 2022.
As of
2023
2022
(dollars in thousands)
March 31
December 31
September 30
June 30
March 31
ASSETS
Cash and due from banks
$
59,030
$
52,390
$
48,010
$
56,545
$
58,788
Federal funds sold
95,400
47,275
71,875
2,425
139,300
Interest-bearing deposits
3,695
6,802
4,284
12,053
24,003
Total cash and cash equivalents
158,125
106,467
124,169
71,023
222,091
Securities available for sale
173,744
188,927
197,944
196,095
306,704
Securities held to maturity
476,105
509,008
633,386
713,390
494,289
Loans held for sale
1,260
3,156
2,749
2,770
1,166
Loans, net
2,344,240
2,344,245
2,234,782
2,107,658
1,983,449
Accrued interest receivable
10,443
11,555
10,111
10,144
8,961
Premises and equipment, net
55,457
54,291
54,212
54,437
54,316
Other real estate owned
38
38
5
—
—
Cash surrender value of life insurance
38,619
38,404
38,194
37,979
37,352
Core deposit intangible, net
1,746
1,859
1,973
2,086
2,199
Goodwill
32,160
32,160
32,160
32,160
32,160
Other assets
64,350
61,385
60,581
53,171
47,142
Total assets
$
3,356,287
$
3,351,495
$
3,390,266
$
3,280,913
$
3,189,829
LIABILITIES AND EQUITY
Deposits
Noninterest-bearing
$
992,527
$
1,052,144
$
1,141,184
$
1,105,756
$
1,065,789
Interest-bearing
1,630,841
1,629,010
1,649,326
1,673,865
1,731,621
Total deposits
2,623,368
2,681,154
2,790,510
2,779,621
2,797,410
Securities sold under agreements to
repurchase
13,338
7,221
7,592
7,871
11,090
Accrued interest and other liabilities
30,125
28,409
27,384
28,033
27,803
Line of credit
—
—
—
—
—
Federal Home Loan Bank advances
340,000
290,000
225,000
131,500
7,500
Subordinated debentures
49,186
49,153
51,119
51,053
54,146
Total liabilities
3,056,017
3,055,937
3,101,605
2,998,078
2,897,949
Equity attributable to Guaranty
Bancshares, Inc.
299,700
294,984
288,084
282,255
291,282
Noncontrolling interest
570
574
577
580
598
Total equity
300,270
295,558
288,661
282,835
291,880
Total liabilities and equity
$
3,356,287
$
3,351,495
$
3,390,266
$
3,280,913
$
3,189,829
Quarter Ended
2023
2022
(dollars in thousands, except per share
data)
March 31
December 31
September 30
June 30
March 31
STATEMENTS OF EARNINGS
Interest income
$
37,144
$
35,720
$
32,476
$
29,120
$
25,893
Interest expense
11,982
7,362
4,179
2,269
1,570
Net interest income
25,162
28,358
28,297
26,851
24,323
Provision for credit losses
—
2,800
600
—
(1,250
)
Net interest income after provision for
credit losses
25,162
25,558
27,697
26,851
25,573
Noninterest income
4,905
5,122
5,803
6,081
6,479
Noninterest expense
19,967
20,897
20,237
19,694
19,079
Income before income taxes
10,100
9,783
13,263
13,238
12,973
Income tax provision
1,823
1,764
2,363
2,472
2,235
Net earnings
$
8,277
$
8,019
$
10,900
$
10,766
$
10,738
Net loss attributable to noncontrolling
interest
4
3
3
18
—
Net earnings attributable to Guaranty
Bancshares, Inc.
$
8,281
$
8,022
$
10,903
$
10,784
$
10,738
PER COMMON SHARE DATA
Earnings per common share, basic
$
0.69
$
0.67
$
0.92
$
0.90
$
0.89
Earnings per common share, diluted
0.69
0.67
0.91
0.89
0.88
Cash dividends per common share
0.23
0.22
0.22
0.22
0.22
Book value per common share - end of
quarter
25.13
24.70
24.18
23.69
24.14
Tangible book value per common share - end
of quarter(1)
22.29
21.85
21.31
20.82
21.29
Common shares outstanding - end of
quarter(4)
11,925,357
11,941,672
11,915,372
11,912,249
12,066,480
Weighted-average common shares
outstanding, basic
11,939,593
11,938,973
11,907,233
11,968,227
12,109,074
Weighted-average common shares
outstanding, diluted
12,012,004
12,048,475
12,032,391
12,098,983
12,260,945
PERFORMANCE RATIOS
Return on average assets (annualized)
1.01
%
0.95
%
1.30
%
1.35
%
1.38
%
Return on average equity (annualized)
11.18
10.88
14.87
14.85
14.44
Net interest margin, fully taxable
equivalent (annualized)(2)
3.24
3.57
3.59
3.61
3.37
Efficiency ratio(3)
66.41
62.42
59.35
59.80
61.94
(1) See Reconciliation of non-GAAP
Financial Measures table.
(2) Net interest margin on a taxable
equivalent basis is equal to net interest income adjusted for
nontaxable income divided by average interest-earning assets,
annualized, using a marginal tax rate of 21%.
(3) The efficiency ratio was calculated by
dividing total noninterest expense by net interest income plus
noninterest income, excluding securities gains or losses. Taxes are
not part of this calculation.
(4) Excludes the dilutive effect, if any,
of shares of common stock issuable upon exercise of outstanding
stock options.
As of
2023
2022
(dollars in thousands)
March 31
December 31
September 30
June 30
March 31
LOAN PORTFOLIO COMPOSITION
Commercial and industrial
$
287,506
$
303,373
$
278,091
$
268,812
$
270,074
Real estate:
Construction and development
372,203
377,135
391,564
350,024
318,035
Commercial real estate
900,190
887,587
821,941
749,603
674,558
Farmland
190,802
185,817
179,402
166,309
186,982
1-4 family residential
499,944
493,061
467,983
450,929
430,755
Multi-family residential
44,760
45,147
43,025
55,985
42,021
Consumer
60,163
61,394
58,835
56,433
52,670
Agricultural
13,545
13,686
13,917
14,502
14,403
Warehouse lending
8,430
10,694
10,938
25,344
24,260
Overdrafts
270
282
369
435
303
Total loans(1)(2)
$
2,377,813
$
2,378,176
$
2,266,065
$
2,138,376
$
2,014,061
Quarter Ended
2023
2022
(dollars in thousands)
March 31
December 31
September 30
June 30
March 31
ALLOWANCE FOR CREDIT LOSSES
Balance at beginning of period
$
31,974
$
29,235
$
28,997
$
29,096
$
30,433
Loans charged-off
(94
)
(103
)
(418
)
(125
)
(203
)
Recoveries
73
42
56
26
116
Provision for credit loss expense
—
2,800
600
—
(1,250
)
Balance at end of period
$
31,953
$
31,974
$
29,235
$
28,997
$
29,096
Allowance for credit losses / period-end
loans
1.34
%
1.34
%
1.29
%
1.36
%
1.44
%
Allowance for credit losses /
nonperforming loans
238.4
294.7
313.3
294.4
1,084.9
Net charge-offs / average loans
(annualized)
0.00
0.01
0.07
0.02
0.02
NONPERFORMING ASSETS
Nonaccrual loans
$
13,405
$
10,848
$
9,330
$
9,848
$
2,682
Other real estate owned
38
38
5
—
—
Repossessed assets owned
—
—
—
27
7
Total nonperforming assets
$
13,443
$
10,886
$
9,335
$
9,875
$
2,689
Nonperforming assets as a percentage
of:
Total loans(1)(2)
0.57
%
0.46
%
0.41
%
0.46
%
0.13
%
Total assets
0.40
0.32
0.28
0.30
0.08
(1) Excludes outstanding balances of loans
held for sale of $1.3 million, $3.2 million, $2.7 million, $2.8
million, and $1.2 million as of March 31, 2023, and December 31,
September 30, June 30, and March 31, 2022, respectively.
(2) Excludes deferred loan fees of $1.6
million, $2.0 million, $2.0 million, $1.7 million, and $1.5 million
as of March 31, 2023, and December 31, September 30, June 30, and
March 31, 2022, respectively.
Quarter Ended
2023
2022
(dollars in thousands)
March 31
December 31
September 30
June 30
March 31
NONINTEREST INCOME
Service charges
$
1,077
$
1,096
$
1,146
$
1,070
$
976
Net realized gain on securities
transactions
93
172
—
—
—
Net realized gain on sale of loans
314
310
338
882
905
Fiduciary and custodial income
638
642
576
638
642
Bank-owned life insurance income
214
209
215
207
211
Merchant and debit card fees
1,674
1,711
1,738
2,061
1,611
Loan processing fee income
134
150
192
232
187
Warehouse lending fees
32
37
59
79
116
Mortgage fee income
68
81
75
102
131
Other noninterest income
661
714
1,464
810
1,700
Total noninterest income
$
4,905
$
5,122
$
5,803
$
6,081
$
6,479
NONINTEREST EXPENSE
Employee compensation and benefits
$
12,264
$
12,364
$
11,851
$
11,730
$
11,532
Occupancy expenses
2,830
2,770
2,800
2,848
2,711
Legal and professional fees
583
779
503
773
770
Software and technology
1,396
1,525
1,409
1,339
1,209
Amortization
161
161
166
178
219
Director and committee fees
199
199
213
219
205
Advertising and promotions
267
488
378
320
407
ATM and debit card expense
599
740
723
674
578
Telecommunication expense
183
193
184
187
186
FDIC insurance assessment fees
301
359
272
237
233
Other noninterest expense
1,184
1,319
1,738
1,189
1,029
Total noninterest expense
$
19,967
$
20,897
$
20,237
$
19,694
$
19,079
Quarter Ended March
31,
2023
2022
(dollars in thousands)
Average Outstanding
Balance
Interest Earned/ Interest
Paid
Average Yield/ Rate
Average Outstanding
Balance
Interest Earned/ Interest
Paid
Average Yield/ Rate
ASSETS
Interest-earning assets:
Total loans(1)
$
2,388,045
$
32,157
5.46
%
$
1,937,000
$
22,272
4.66
%
Securities available for sale
184,572
1,068
2.35
328,737
1,618
2.00
Securities held to maturity
502,760
3,050
2.46
347,188
1,485
1.73
Nonmarketable equity securities
28,381
419
5.99
15,234
408
10.86
Interest-bearing deposits in other
banks
34,986
450
5.22
334,871
110
0.13
Total interest-earning assets
3,138,744
37,144
4.80
2,963,030
25,893
3.54
Allowance for credit losses
(31,934
)
(30,205
)
Noninterest-earning assets
218,195
213,514
Total assets
$
3,325,005
$
3,146,339
LIABILITIES AND EQUITY
Interest-bearing liabilities:
Interest-bearing deposits
$
1,624,610
$
7,655
1.91
%
$
1,710,157
$
1,242
0.29
%
Advances from FHLB and fed funds
purchased
310,103
3,774
4.94
37,722
46
0.49
Line of credit
—
—
—
3,778
34
3.65
Subordinated debt
49,164
540
4.45
30,492
246
3.27
Securities sold under agreements to
repurchase
10,974
13
0.48
10,916
2
0.07
Total interest-bearing liabilities
1,994,851
11,982
2.44
1,793,065
1,570
0.36
Noninterest-bearing liabilities:
Noninterest-bearing deposits
1,002,793
1,027,429
Accrued interest and other liabilities
26,912
24,266
Total noninterest-bearing liabilities
1,029,705
1,051,695
Equity
300,449
301,579
Total liabilities and equity
$
3,325,005
$
3,146,339
Net interest rate spread(2)
2.36
%
3.18
%
Net interest income
$
25,162
$
24,323
Net interest margin(3)
3.25
%
3.33
%
Net interest margin, fully taxable
equivalent(4)
3.24
%
3.37
%
(1) Includes average outstanding balances
of loans held for sale of $1.7 million and $3.2 million for the
quarter ended March 31, 2023 and 2022, respectively.
(2) Net interest spread is the average
yield on interest-earning assets minus the average rate on
interest-bearing liabilities.
(3) Net interest margin is equal to net
interest income divided by average interest-earning assets,
annualized.
(4) Net interest margin on a taxable
equivalent basis is equal to net interest income adjusted for
nontaxable income divided by average interest-earning assets,
annualized, using a marginal tax rate of 21%.
NON-GAAP RECONCILING TABLES
Tangible Book Value per Common
Share
As of
2023
2022
(dollars in thousands, except per share
data)
March 31
December 31
September 30
June 30
March 31
Equity attributable to Guaranty
Bancshares, Inc.
$
299,700
$
294,984
$
288,084
$
282,255
$
291,282
Adjustments:
Goodwill
(32,160
)
(32,160
)
(32,160
)
(32,160
)
(32,160
)
Core deposit intangible, net
(1,746
)
(1,859
)
(1,973
)
(2,086
)
(2,199
)
Total tangible common equity attributable
to Guaranty Bancshares, Inc.
$
265,794
$
260,965
$
253,951
$
248,009
$
256,923
Common shares outstanding(1)
11,925,357
11,941,672
11,915,372
11,912,249
12,066,480
Book value per common share
$
25.13
$
24.70
$
24.18
$
23.69
$
24.14
Tangible book value per common
share(1)
22.29
21.85
21.31
20.82
21.29
(1)
Excludes the dilutive effect, if any, of
shares of common stock issuable upon exercise of outstanding stock
options.
Net Unrealized Loss on Securities, Tax
Effected, as % of Total Equity
(dollars in thousands)
March 31, 2023
Total equity(1)
$
300,270
Less: net unrealized loss on HTM
securities, tax effected
(25,123
)
Total equity, including net unrealized
loss on AFS and HTM securities†
$
275,147
Net unrealized loss on AFS securities, tax
effected
15,308
Net unrealized loss on HTM securities, tax
effected
25,123
Net unrealized loss on AFS and HTM
securities, tax effected
$
40,431
Net unrealized loss on securities as % of
total equity(1)
13.5
%
Total equity before impact of unrealized
losses†
$
315,578
Net unrealized loss on securities as % of
total equity before impact of unrealized losses†
12.8
%
Total average assets
$
3,325,005
Total equity to average assets
9.0
%
Total equity, adjusted for tax effected
net unrealized loss, to average assets†
8.3
%
(1) Includes the net unrealized loss on
AFS securities, tax effected, of $15,308.
† Non-GAAP financial metric. Calculations
of this metric and reconciliations to GAAP are included in the
schedules accompanying this release.
Net Core Earnings and Net Core Earnings
per Common Share
Quarter Ended
2023
2022
(dollars in thousands, except per share
data)
March 31
December 31
September 30
June 30
March 31
Net earnings attributable to Guaranty
Bancshares, Inc.
$
8,281
$
8,022
$
10,903
$
10,784
$
10,738
Adjustments:
Provision for credit losses
—
2,800
600
—
(1,250
)
Income tax provision
1,823
1,764
2,363
2,472
2,235
PPP loans, including fees
(2
)
(1
)
(57
)
(436
)
(783
)
Net core earnings attributable to Guaranty
Bancshares, Inc.
$
10,102
$
12,585
$
13,809
$
12,820
$
10,940
Weighted-average common shares
outstanding, basic
11,939,593
11,938,973
11,907,233
11,968,227
12,109,074
Earnings per common share, basic
$
0.69
$
0.67
$
0.92
$
0.90
$
0.89
Net core earnings per common share,
basic
0.85
1.05
1.16
1.07
0.90
Three Months Ended March
31,
Three Months Ended December
31,
(dollars in thousands, except per share
data)
2023
2022
2023
Net earnings attributable to Guaranty
Bancshares, Inc.
$
8,281
$
10,738
$
8,022
Adjustments:
Reversal of provision for credit
losses
—
(1,250
)
2,800
Income tax provision
1,823
2,235
1,764
PPP loans, including fees
(2
)
(783
)
(1
)
Net core earnings attributable to Guaranty
Bancshares, Inc.
$
10,102
$
10,940
$
12,585
Weighted-average common shares
outstanding, basic
11,939,593
12,109,074
11,938,973
Earnings per common share, basic
$
0.69
$
0.89
$
0.67
Net core earnings attributable to Guaranty
Bancshares, Inc. per common share, basic
0.85
0.90
1.05
Net Core Earnings to Average Assets, as
Adjusted, and Average Equity
Quarter Ended
2023
2022
(dollars in thousands)
March 31
December 31
September 30
June 30
March 31
Net core earnings attributable to Guaranty
Bancshares, Inc.
$
10,102
$
12,585
$
13,809
$
12,820
$
10,940
Total average assets
$
3,325,005
$
3,346,358
$
3,337,348
$
3,209,440
$
3,146,339
Adjustments:
PPP loan average balance
(519
)
(539
)
(1,159
)
(8,885
)
(36,720
)
Total average assets, adjusted
$
3,324,486
$
3,345,819
$
3,336,189
$
3,200,555
$
3,109,619
Net core earnings attributable to Guaranty
Bancshares, Inc. to average assets, as adjusted (annualized)
1.23
%
1.49
%
1.64
%
1.61
%
1.43
%
Total average equity
$
300,449
$
292,471
$
290,806
$
291,312
$
301,579
Net core earnings attributable to Guaranty
Bancshares, Inc. to average equity (annualized)
13.64
%
17.07
%
18.84
%
17.65
%
14.71
%
Cost of Total Deposits
Quarter Ended
(dollars in thousands)
March 31, 2023
December 31, 2022
March 31, 2022
Total average interest-bearing
deposits
$
1,624,610
$
1,627,442
$
1,710,157
Adjustments:
Noninterest-bearing deposits
1,002,793
1,102,016
1,027,429
Total average deposits
$
2,627,403
$
2,729,458
$
2,737,586
Total deposit-related interest expense
$
7,655
$
4,433
$
1,242
Average cost of interest-bearing
deposits
1.91
%
1.08
%
0.29
%
Average cost of total deposits (cost of
funds)
1.18
0.64
0.18
† Non-GAAP financial metric. Calculations of this metric
and reconciliations to GAAP are included in the schedules
accompanying this release.
About Non-GAAP Financial Measures
Certain of the financial measures and ratios we present,
including “tangible book value per share,” “net core earnings,”
“core net interest margin,” and PPP-adjusted metrics are
supplemental measures that are not required by, or are not
presented in accordance with, U.S. generally accepted accounting
principles (GAAP). We refer to these financial measures and ratios
as “non-GAAP financial measures.” We consider the use of select
non-GAAP financial measures and ratios to be useful for financial
and operational decision making and useful in evaluating
period-to-period comparisons. We believe that these non-GAAP
financial measures provide meaningful supplemental information
regarding our performance by excluding certain expenditures or
assets that we believe are not indicative of our primary business
operating results or by presenting certain metrics on a fully
taxable equivalent basis. We believe 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.
These non-GAAP financial measures should not be considered a
substitute for financial information presented in accordance with
GAAP and you should not rely on non-GAAP financial measures alone
as measures of our performance. The non-GAAP financial measures we
present may differ from non-GAAP financial measures used by our
peers or other companies. We compensate for these limitations by
providing the equivalent GAAP measures whenever we present the
non-GAAP financial measures and by including a reconciliation of
the impact of the components adjusted for in the non-GAAP financial
measure so that both measures and the individual components may be
considered when analyzing our performance.
A reconciliation of non-GAAP financial measures to the
comparable GAAP financial measures is included at the end of the
financial statement tables.
Conference Call Information
The Company will hold a conference call to discuss first quarter
2023 financial results on Monday, April 17, 2023 at 10:00 am
Central Time. The conference call will be hosted by Ty Abston,
Chairman and CEO, Cappy Payne, SEVP and Company CFO, and Shalene
Jacobson, EVP and Bank CFO. All conference attendees must register
before the call at www.gnty.com/earningscall. The conference
materials will be available by accessing the Investor Relations
page on our website, www.gnty.com. A
recording of the conference call will be available by 1:00 pm
Central Time the day of the call and remain available through April
30, 2023 on our Investor Relations webpage.
About Guaranty Bancshares, Inc.
Guaranty Bancshares, Inc. is the parent company for Guaranty
Bank & Trust, N.A. Guaranty Bank & Trust has 32 banking
locations across 26 Texas communities located within the East
Texas, Dallas/Fort Worth, Houston and Central Texas regions of the
state. As of March 31, 2023, Guaranty Bancshares, Inc. had total
assets of $3.4 billion, total loans of $2.4 billion and total
deposits of $2.6 billion. Visit www.gnty.com for more information.
Cautionary Statement Regarding Forward-Looking
Information
This communication contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. These forward-looking statements reflect our current views
with respect to, among other things, future events and our results
of operations, financial condition and financial performance. These
statements are often, but not always, made through the use of words
or phrases such as “may,” “should,” “could,” “predict,”
“potential,” “believe,” “will likely result,” “expect,” “continue,”
“will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,”
“projection,” “would” and “outlook,” or the negative version of
those words or other comparable words of a future or
forward-looking nature. These forward-looking statements are not
historical facts, and are based on current expectations, estimates
and projections about our industry, management’s beliefs and
certain assumptions made by management, many of which, by their
nature, are inherently uncertain and beyond our control. Actual
results may also be significantly impacted by the effects of the
ongoing COVID-19 pandemic, including, among other effects: the
impact of the public health crisis; the operation of financial
markets; global supply chain disruption; employment levels; market
liquidity; the impact of various actions taken in response by the
U.S. federal government, the Federal Reserve, other banking
regulators, state and local governments; and the impact that all of
these factors have on our borrowers, other customers, vendors and
counterparties. Accordingly, we caution you that any such
forward-looking statements are not guarantees of future performance
and are subject to risks, assumptions and uncertainties that are
difficult to predict. Although we believe that the expectations
reflected in these forward-looking statements are reasonable as of
the date made, actual results may prove to be materially different
from the results expressed or implied by the forward-looking
statements. Such factors include, without limitation, the “Risk
Factors” referenced in our most recent Annual Report on Form 10-K
and any subsequent Quarterly Reports on Form 10-Q, other risks and
uncertainties listed from time to time in our reports and documents
filed with the Securities and Exchange Commission ("SEC"). We can
give no assurance that any goal or plan or expectation set forth in
forward-looking statements can be achieved and readers are
cautioned not to place undue reliance on such statements. The
forward-looking statements are made as of the date of this
communication, and we do not intend, and assume no obligation, to
update any forward-looking statement to reflect events or
circumstances after the date on which the statement is made or to
reflect the occurrence of unanticipated events or circumstances,
except as required by applicable law.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230417005272/en/
Cappy Payne Senior Executive Vice President and Chief Financial
Officer Guaranty Bancshares, Inc. (888) 572-9881
investors@gnty.com
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