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 June
30, 2023. The Company's net income available to common shareholders
was $9.6 million, or $0.82 per basic share, for the quarter ended
June 30, 2023, compared to $8.3 million, or $0.69 per basic share,
for the quarter ended March 31, 2023 and $10.8 million, or $0.90
per basic share, for the quarter ended June 30, 2022. Return on
average assets and average equity for the second quarter of 2023
were 1.17% and 12.87%, respectively, compared to 1.01% and 11.18%,
respectively, for the first quarter of 2023 and 1.35% and 14.85%,
respectively, for the second quarter of 2022. The increase in
earnings during the second quarter of 2023, compared to the first
quarter of 2023 was primarily due to a one-time gain on the sale of
nonmarketable correspondent bank stock of $2.8 million. Without
this one-time gain, net of tax, earnings for the quarter were $7.3
million1, or $0.63 earnings per basic common share.
"We are pleased with several positive developments during the
second quarter that continue to strengthen our balance sheet and
drive long term shareholder value. The Bank has strong asset
quality with historically low nonperforming assets and we expect
our credit quality metrics will continue to experience benefits
from the robust economic environment in Texas. We put our excess
capital to work and repurchased 322,601 shares of stock during the
quarter at an attractive average price of $25.13 per share. Our
earnings were good with earnings per basic share, net of
extraordinary items, of $0.63 per share1. We've also been able to
defend our NIM relative to peers with a 3.19% tax equivalent
margin, a slight decrease from the prior quarter. During this
period of lower asset growth, we'll continue to focus efforts on
our strategic plan execution, improvements to net interest margin
and operational efficiencies throughout the Company," said Ty
Abston, the Company's Chairman and Chief Executive Officer.
1. Net earnings less extraordinary items
is calculated as net earnings, less the gain on sale of
correspondent bank stock, net of tax, of $2.2 million during the
quarter ended June 30, 2023.
QUARTERLY HIGHLIGHTS
- Excellent Asset Quality. Nonperforming assets as a
percentage of total assets were 0.11% at June 30, 2023, compared to
0.40% at March 31, 2023 and 0.30% at June 30, 2022. Net charge-offs
(annualized) to average loans were 0.03% for the quarter ended June
30, 2023, compared to 0.00% for the quarter ended March 31, 2023,
and 0.02% for the quarter ended June 30, 2022. During the second
quarter, four nonperforming loans that were acquired from Westbound
Bank with combined balances of $6.7 million were resolved and paid
off with minimal charge-offs. An additional nonperforming loan with
an outstanding balance of $1.4 million was resolved and paid off
with a minimal charge-off. 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 38.2% and 14.8% of the total loan portfolio,
respectively. Office-related loans represent 4.4% of the total loan
portfolio and have an average balance of $541,000. Although asset
quality remains strong, we adjusted certain qualitative factors
during the second quarter to incorporate industry-wide concerns
over CRE valuations and the possibility of higher-for-longer
interest rates, which could impact cash flows and repayment ability
of borrowers. These qualitative adjustments, along with minimal
charge-offs and a slight reduction in the loan portfolio, resulted
in no provision for credit loss in the second quarter of 2023.
- Granular and Reliable Deposit Base. As of June 30, 2023,
we have 85,615 total deposit accounts with an average account
balance of $29,693. We have a historically reliable core deposit
base, with strong and trusted banking relationships. Total deposits
decreased by $20.6 million during the second quarter, which
consisted primarily of a decrease in public funds balances of $28.1
million, a decrease in other deposits of $52.3 million, partially
offset by an increase in brokered certificates of deposit of $50.0
million. The bank has not historically used brokered deposits and
does not foresee a reliance on them going forward, but issued these
deposits during the quarter to test their availability as a
contingent liquidity source. We also had an increase of
approximately $7.0 million in collateralized repurchase agreements,
which are shown on our balance sheet as a separate line item than
deposits, but would be classified as deposits if not for the
repurchase agreement. As an additional resource to our uninsured
depositors, we implemented both the IntraFi CDARS and ICS programs
during the second quarter of 2023. These programs allow CD and
money market deposit customers, respectively, to obtain full FDIC
deposit insurance while maintaining one time deposit or savings
relationship with our Bank. Excluding public funds and bank-owned
accounts, our uninsured deposits as of June 30, 2023 were 22.31% of
total deposits. We continued to increase interest rates paid on
deposits during the quarter in order to pay competitive rates,
however noninterest-bearing deposits still represent 35.2% of total
deposits. Our cost of interest-bearing deposits increased 50 basis
points during the quarter from 1.91% in the prior quarter to 2.41%,
representing a beta on interest-bearing deposits of approximately
105.6% for the linked quarter compared to the federal funds target
rates. Our cost of total deposits (cost of funds) for the second
quarter of 2023 increased 35 basis points from 1.18% in the prior
quarter to 1.53%, representing a beta on total deposits of
approximately 73.9% for the linked quarter.
- Strong Capital and Liquidity. Our capital and liquidity
ratios, as well as contingent liquidity sources, are solid. We are
taking advantage of low stock prices to repurchase shares of
Company stock and add intrinsic value for shareholders. During the
second quarter of 2023, we repurchased 322,601 shares, or 2.8% of
average shares outstanding during the period, at an average price
of $25.13 per share. Our liquidity ratio, calculated as cash and
cash equivalents and unpledged investments divided by total
liabilities, was 12.9% as of quarter-end. Our total available
contingent liquidity, net of current outstanding borrowings, is
$1.5 billion, consisting of FHLB, FRB and correspondent bank fed
funds and revolving lines of credit. Finally, our total equity to
average assets as on June 30, 2023 is 9.1%. If we had to recognize
our entire unrealized losses on both AFS and HTM securities, the
ratio would be 8.3%†, which is still well capitalized under
regulatory requirements.
- Investment Portfolio Discipline. 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
remain manageable and low. However, during the second quarter, we
used advantageous market movements to restructure $14.3 million in
AFS securities to improve overall yield with minimal realized
losses and an estimated earnback period of just under one year. The
table below presents total unrealized losses as of June 30, 2023,
along with estimated unrealized losses if interest rates increase
or decrease by 100 basis points.
June 30, 2023
Net Unrealized Loss
(dollars in thousands)
Amortized Cost
Estimated Fair Value
-100 bps
Actual
+100 bps
Available for sale
$
187,959
$
166,596
$
(12,801
)
$
(21,363
)
$
(29,313
)
Held to maturity
437,292
402,735
(18,333
)
(34,557
)
(50,644
)
Total securities
$
625,251
$
569,331
$
(31,134
)
$
(55,920
)
$
(79,957
)
† Non-GAAP financial metric.
Calculations of this metric and reconciliations to GAAP are
included in the schedules accompanying this release.
RESULTS OF OPERATIONS
Net interest income, before the provision for credit losses, in
the second quarter of 2023 and 2022 was $24.7 million and $26.9
million, respectively, a decrease of $2.1 million, or 8.0%. The
decrease in net interest income resulted from an increase in
interest expense of $11.8 million, or 518.4%, compared to the prior
year quarter, which was partially offset by an increase in interest
income of $9.6 million, or 33.0%, from the same quarter in the
prior year. The increase in interest expense was due primarily to
an $8.3 million increase in deposit interest and a $3.2 million
increase in FHLB advance interest, each resulting from rising
interest rates between the two periods. The increase in interest
income was primarily due to an increase in loan interest of $9.0
million, or 36.6%, and an increase in fed funds sold and
interest-bearing deposits of $701,000, or 667.6%, during the
current quarter compared to the prior year quarter.
Net interest margin, on a fully taxable equivalent basis, for
the second quarter of 2023 and 2022 was 3.19% and 3.61%,
respectively. Net interest margin decreased 41 basis points
primarily due to interest bearing liabilities repricing faster than
our interest-earning assets. The cost of interest-bearing
liabilities increased 232 basis points from the prior year quarter,
while interest earning asset yields increased 117 basis points. The
increase in the cost of interest-bearing liabilities was due
primarily to an increase in the cost of interest-bearing deposits
from 0.38% to 2.41%, a change of 203 basis points, in the second
quarter of 2023 compared to the same period in 2022, as well as
increased rates on FHLB advances, which increased from 1.62% to
5.13%, an increase of 351 basis points, from the prior year
quarter. The increases in cost were partially offset by increases
in yield on the loan portfolio from 4.77% to 5.70%, or 93 basis
points, as well as 54 bps and 70 bps increases in yield on AFS and
HTM securities, respectively. Although the cost of interest bearing
liabilities have repriced more quickly during this period, the
weighted average yield on $65.2 million in new loans originated in
the second quarter was 8.14%.
Net interest income, before the provision for credit losses,
decreased $459,000, or 1.8%, from $25.2 million in the first
quarter of 2023 to $24.7 million in the second quarter of 2023. The
decrease in net interest income resulted primarily from an increase
in interest expense of $2.0 million, or 17.1%, partially offset by
an increase in interest income of $1.6 million, or 4.3%. The
increase in interest expense resulted primarily from an increase of
$2.3 million, or 29.9%, in interest-bearing deposit expense, offset
by a slight decrease in FHLB advances expense of $425,000, or
11.3%, from the prior quarter. Interest earned on loans increased
$1.4 million, or 4.5%, from the prior quarter.
Net interest margin, on a taxable equivalent basis, decreased
from 3.24% for the first quarter of 2023 to 3.19% for the second
quarter of 2023, a decrease of five basis points. The decrease in
net interest margin was primarily due to an increase in the cost of
interest-bearing deposits from 1.91% in the first quarter to 2.41%
in the second quarter of 2023, a change of 50 basis points, while
loan yield increased from 5.46% for the first quarter of 2023 to
5.70% for the second quarter of 2023, a change of 24 basis
points.
During the first and second quarters 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, however
additional adjustments to certain qualitative factors were made in
the current quarter to incorporate industry level concerns with
respect to CRE valuations and "higher for longer" interest
projections that could impact borrower cash flows and repayment
ability. These qualitative factor adjustments were offset by a
decline in the total loan portfolio balance during the quarter,
resulting in no adjustment to the ACL during the quarter. As of
June 30, 2023 and December 31, 2022, our allowance for credit
losses as a percentage of total loans was 1.36% and 1.34%,
respectively.
Noninterest income increased $1.8 million, or 29.5%, in the
second quarter of 2023 to $7.9 million, compared to $6.1 million
for the second quarter of 2022. The increase from the same quarter
in 2022 was due to an increase in other noninterest income of $2.6
million, or 295.1%, resulting primarily from a one-time gain on the
sale of nonmarketable correspondent bank stock of $2.8 million.
This increase was partially offset by a decrease in the gain on
sale of loans of $409,000, or 46.4%, and a $322,000, or 100.0%,
increase in the net realized loss on sale of securities, along with
a $52,000, or 51.0%, decrease in mortgage fee income compared to
the same quarter in the prior year.
Noninterest expense increased $777,000, or 3.9%, in the second
quarter of 2023 to $20.5 million, compared to the second quarter of
2022. The increase in noninterest expense in the second quarter of
2023 was driven primarily by a $285,000, or 120.3%, increase in
FDIC insurance assessment fees, a $212,000, or 27.4%, increase in
legal and professional fees primarily related to recruiting and
additional proxy related fees, a $209,000, or 1.8%, increase in
employee compensation and benefits, due to higher salaries and
benefits of $581,000, partially offset by a decrease in bonus
expense of $404,000, and an increase in software and technology
expense of $192,000, or 14.3%, compared to the second quarter of
2022, due to additional technology investments and an increase in
the cost of our core processing software. The increases were
partially offset by a $94,000, or 3.3%, decrease in occupancy
expense, a $51,000, or 15.9%, decrease in advertising and
promotions fees and a decrease in amortization expense of $29,000,
or 16.3%, from the prior year quarter.
Noninterest income in the second quarter of 2023 increased by
$3.0 million, or 60.5%, from $4.9 million in the first quarter of
2023. The increase is due to an increase in other noninterest
income of $2.8 million, or 406.8%, primarily resulting from a
one-time gain on the sale of nonmarketable correspondent bank stock
of $2.8 million. Merchant and debit card fee income also increased
$447,000, or 26.7%, quarter-over-quarter, due to an annual service
provider bonus of $299,000 received during the current quarter.
These increases were partially offset by a $415,000, or 446.2%,
decrease in income resulting from a realized gain on securities of
$93,000 in the first quarter and realized loss on securities of
$322,000 in the second quarter of 2023.
Noninterest expense increased $504,000, or 2.5%, in the second
quarter of 2023, from $20.0 million for the quarter ended March 31,
2023. The increase resulted from a $402,000, or 69.0%, increase in
legal and professional fees which was primarily due to annual
meeting, proxy and related filing fees paid during the second
quarter of 2023. The remainder of the increase was due to an
increase in FDIC insurance assessment fees of $221,000, or 73.4%, a
$140,000, or 23.4%, increase in ATM and debit card expense and a
$135,000, or 9.7%, increase in software and technology expense
during the second quarter of 2023 compared to the first quarter of
2023. These increases were partially offset by a $325,000, or 2.7%,
decrease in employee compensation and benefits, primarily from
lower bonus expense accruals.
The Company’s efficiency ratio in the second quarter of 2023 was
62.84%, compared to 59.80% in the prior year quarter and 66.41% in
the first quarter of 2023.
FINANCIAL CONDITION
Consolidated assets for the Company totaled $3.21 billion at
June 30, 2023, compared to $3.36 billion at March 31, 2023 and
$3.28 billion at June 30, 2022.
Gross loans decreased $43.9 million, or 1.85%, to $2.33 billion
at June 30, 2023, compared to loans of $2.38 billion at March 31,
2023. Loan growth has declined as we have tightened credit
underwriting standards and loan terms and borrowers have responded
to the increases in interest rates with fewer requests.
Gross loans increased $195.5 million, or 9.1%, from $2.14
billion at June 30, 2022. The increase in gross loans during the
second quarter of 2023 compared to the second quarter of 2022
resulted from organic loan growth and was partially offset by a
$25.3 million decrease in warehouse lending loans, as we
discontinued that line of business in the second quarter of 2023,
and a $2.1 million reduction in PPP loan balances during the
period. Excluding PPP and warehouse lending loans, gross loans
increased $223.0 million, or 10.6%, from June 30, 2022.
Total deposits decreased by $20.6 million, or 0.8%, to $2.60
billion at June 30, 2023, compared to $2.62 billion at March 31,
2023, and decreased $176.8 million, or 6.4%, from $2.78 billion at
June 30, 2022. The decrease in deposits during the quarter resulted
from a decrease in noninterest-bearing deposits of $77.1 million,
offset by an increase in interest-bearing deposits of $56.5
million. The decrease in deposits during the current quarter
compared to the prior year quarter resulted primarily from a
decrease in noninterest-bearing deposits of $190.3 million and an
increase in interest-bearing deposits of $13.5 million.
Nonperforming assets as a percentage of total loans were 0.15%
at June 30, 2023, compared to 0.57% at March 31, 2023 and 0.46% at
June 30, 2022. Nonperforming assets as a percentage of total assets
were 0.11% at June 30, 2023, compared to 0.40% at March 31, 2023,
and 0.30% at June 30, 2022. The Bank's nonperforming assets consist
primarily of nonaccrual loans. The decrease in nonperforming assets
is primarily due to the resolution of several nonperforming assets
during the quarter, four of which had outstanding principal
balances of $6.7 million and were Small Business Administration
(SBA) 7(a), partially guaranteed (75%) loans, acquired in the June
2018 acquisition of Westbound Bank. All of these nonperforming
assets were resolved with minimal incurred losses.
Total equity was $297.4 million as of June 30, 2023, compared to
$300.3 million at March 31, 2023 and $282.8 million at June 30,
2022. The decrease from the previous quarter resulted primarily
from an escalation in accumulated other comprehensive loss of $1.8
million 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 $8.1 million during the
second quarter of 2023. This was partially offset by net income of
$9.6 million during the period.
As of
2023
2022
(dollars in thousands)
June 30
March 31
December 31
September 30
June 30
ASSETS
Cash and due from banks
$
47,663
$
59,030
$
52,390
$
48,010
$
56,545
Federal funds sold
44,950
95,400
47,275
71,875
2,425
Interest-bearing deposits
4,738
3,695
6,802
4,284
12,053
Total cash and cash equivalents
97,351
158,125
106,467
124,169
71,023
Securities available for sale
166,596
173,744
188,927
197,944
196,095
Securities held to maturity
437,292
476,105
509,008
633,386
713,390
Loans held for sale
795
1,260
3,156
2,749
2,770
Loans, net
2,300,882
2,344,240
2,344,245
2,234,782
2,107,658
Accrued interest receivable
11,110
10,443
11,555
10,111
10,144
Premises and equipment, net
56,151
55,457
54,291
54,212
54,437
Other real estate owned
—
38
38
5
—
Cash surrender value of life insurance
41,830
38,619
38,404
38,194
37,979
Core deposit intangible, net
1,633
1,746
1,859
1,973
2,086
Goodwill
32,160
32,160
32,160
32,160
32,160
Other assets
60,396
64,350
61,385
60,581
53,171
Total assets
$
3,206,196
$
3,356,287
$
3,351,495
$
3,390,266
$
3,280,913
LIABILITIES AND EQUITY
Deposits
Noninterest-bearing
$
915,462
$
992,527
$
1,052,144
$
1,141,184
$
1,105,756
Interest-bearing
1,687,355
1,630,841
1,629,010
1,649,326
1,673,865
Total deposits
2,602,817
2,623,368
2,681,154
2,790,510
2,779,621
Securities sold under agreements to
repurchase
20,532
13,338
7,221
7,592
7,871
Accrued interest and other liabilities
30,701
30,125
28,409
27,384
28,033
Line of credit
12,000
—
—
—
—
Federal Home Loan Bank advances
195,000
340,000
290,000
225,000
131,500
Subordinated debentures
47,719
49,186
49,153
51,119
51,053
Total liabilities
2,908,769
3,056,017
3,055,937
3,101,605
2,998,078
Equity attributable to Guaranty
Bancshares, Inc.
296,862
299,700
294,984
288,084
282,255
Noncontrolling interest
565
570
574
577
580
Total equity
297,427
300,270
295,558
288,661
282,835
Total liabilities and equity
$
3,206,196
$
3,356,287
$
3,351,495
$
3,390,266
$
3,280,913
Quarter Ended
2023
2022
(dollars in thousands, except per share
data)
June 30
March 31
December 31
September 30
June 30
STATEMENTS OF EARNINGS
Interest income
$
38,734
$
37,144
$
35,720
$
32,476
$
29,120
Interest expense
14,031
11,982
7,362
4,179
2,269
Net interest income
24,703
25,162
28,358
28,297
26,851
Provision for credit losses
—
—
2,800
600
—
Net interest income after provision for
credit losses
24,703
25,162
25,558
27,697
26,851
Noninterest income
7,873
4,905
5,122
5,803
6,081
Noninterest expense
20,471
19,967
20,897
20,237
19,694
Income before income taxes
12,105
10,100
9,783
13,263
13,238
Income tax provision
2,529
1,823
1,764
2,363
2,472
Net earnings
$
9,576
$
8,277
$
8,019
$
10,900
$
10,766
Net loss attributable to noncontrolling
interest
5
4
3
3
18
Net earnings attributable to Guaranty
Bancshares, Inc.
$
9,581
$
8,281
$
8,022
$
10,903
$
10,784
PER COMMON SHARE DATA
Earnings per common share, basic
$
0.82
$
0.69
$
0.67
$
0.92
$
0.90
Earnings per common share, diluted
0.81
0.69
0.67
0.91
0.89
Cash dividends per common share
0.23
0.23
0.22
0.22
0.22
Book value per common share - end of
quarter
25.58
25.13
24.70
24.18
23.69
Tangible book value per common share - end
of quarter(1)
22.67
22.29
21.85
21.31
20.82
Common shares outstanding - end of
quarter(4)
11,603,167
11,925,357
11,941,672
11,915,372
11,912,249
Weighted-average common shares
outstanding, basic
11,735,475
11,939,593
11,938,973
11,907,233
11,968,227
Weighted-average common shares
outstanding, diluted
11,756,512
12,012,004
12,048,475
12,032,391
12,098,983
PERFORMANCE RATIOS
Return on average assets (annualized)
1.17
%
1.01
%
0.95
%
1.30
%
1.35
%
Return on average equity (annualized)
12.87
11.18
10.88
14.87
14.85
Net interest margin, fully taxable
equivalent (annualized)(2)
3.19
3.24
3.57
3.59
3.61
Efficiency ratio(3)
62.84
66.41
62.42
59.35
59.80
(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)
June 30
March 31
December 31
September 30
June 30
LOAN PORTFOLIO COMPOSITION
Commercial and industrial
$
295,864
$
295,936
$
314,067
$
289,029
$
294,156
Real estate:
Construction and development
345,127
372,203
377,135
391,564
350,024
Commercial real estate
891,883
900,190
887,587
821,941
749,603
Farmland
187,105
190,802
185,817
179,402
166,309
1-4 family residential
496,340
499,944
493,061
467,983
450,929
Multi-family residential
44,385
44,760
45,147
43,025
55,985
Consumer
59,498
60,163
61,394
58,835
56,433
Agricultural
13,447
13,545
13,686
13,917
14,502
Overdrafts
252
270
282
369
435
Total loans(1)(2)
$
2,333,901
$
2,377,813
$
2,378,176
$
2,266,065
$
2,138,376
Quarter Ended
2023
2022
(dollars in thousands)
June 30
March 31
December 31
September 30
June 30
ALLOWANCE FOR CREDIT LOSSES
Balance at beginning of period
$
31,953
$
31,974
$
29,235
$
28,997
$
29,096
Loans charged-off
(224
)
(94
)
(103
)
(418
)
(125
)
Recoveries
30
73
42
56
26
Provision for credit loss expense
—
—
2,800
600
—
Balance at end of period
$
31,759
$
31,953
$
31,974
$
29,235
$
28,997
Allowance for credit losses / period-end
loans
1.36
%
1.34
%
1.34
%
1.29
%
1.36
%
Allowance for credit losses /
nonperforming loans
894.6
238.4
294.7
313.3
294.4
Net charge-offs / average loans
(annualized)
0.03
0.00
0.01
0.07
0.02
NONPERFORMING ASSETS
Nonaccrual loans
$
3,550
$
13,405
$
10,848
$
9,330
$
9,848
Other real estate owned
—
38
38
5
—
Repossessed assets owned
—
—
—
—
27
Total nonperforming assets
$
3,550
$
13,443
$
10,886
$
9,335
$
9,875
Nonperforming assets as a percentage
of:
Total loans(1)(2)
0.15
%
0.57
%
0.46
%
0.41
%
0.46
%
Total assets
0.11
0.40
0.32
0.28
0.30
(1) Excludes outstanding balances of loans
held for sale of $795,000, $1.3 million, $3.2 million, $2.7
million, and $2.8 million as of June 30 and March 31, 2023 and
December 31, September 30, June 30, 2022, respectively.
(2) Excludes deferred loan fees of $1.3
million, $1.6 million, $2.0 million, $2.0 million, and $1.7 million
as of June 30 and March 31, 2023 and December 31, September 30,
June 30, 2022, respectively.
Quarter Ended
2023
2022
(dollars in thousands)
June 30
March 31
December 31
September 30
June 30
NONINTEREST INCOME
Service charges
$
1,056
$
1,077
$
1,096
$
1,146
$
1,070
Net realized (loss) gain on securities
transactions
(322
)
93
172
—
—
Net realized gain on sale of loans
473
314
310
338
882
Fiduciary and custodial income
630
638
642
576
638
Bank-owned life insurance income
211
214
209
215
207
Merchant and debit card fees
2,121
1,674
1,711
1,738
2,061
Loan processing fee income
142
134
150
192
232
Mortgage fee income
50
68
81
75
102
Other noninterest income
3,512
693
751
1,523
889
Total noninterest income
$
7,873
$
4,905
$
5,122
$
5,803
$
6,081
NONINTEREST EXPENSE
Employee compensation and benefits
$
11,939
$
12,264
$
12,364
$
11,851
$
11,730
Occupancy expenses
2,754
2,830
2,770
2,800
2,848
Legal and professional fees
985
583
779
503
773
Software and technology
1,531
1,396
1,525
1,409
1,339
Amortization
149
161
161
166
178
Director and committee fees
201
199
199
213
219
Advertising and promotions
269
267
488
378
320
ATM and debit card expense
739
599
740
723
674
Telecommunication expense
171
183
193
184
187
FDIC insurance assessment fees
522
301
359
272
237
Other noninterest expense
1,211
1,184
1,319
1,738
1,189
Total noninterest expense
$
20,471
$
19,967
$
20,897
$
20,237
$
19,694
Quarter Ended June 30,
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)
$
2,363,158
$
33,591
5.70
%
$
2,068,379
$
24,587
4.77
%
Securities available for sale
175,447
1,205
2.75
267,823
1,473
2.21
Securities held to maturity
455,626
2,831
2.49
596,013
2,666
1.79
Nonmarketable equity securities
28,931
301
4.17
14,128
289
8.20
Interest-bearing deposits in other
banks
62,165
806
5.20
74,047
105
0.57
Total interest-earning assets
3,085,327
38,734
5.04
3,020,390
29,120
3.87
Allowance for credit losses
(31,909
)
(29,056
)
Noninterest-earning assets
219,532
218,106
Total assets
$
3,272,950
$
3,209,440
LIABILITIES AND EQUITY
Interest-bearing liabilities:
Interest-bearing deposits
$
1,653,237
$
9,946
2.41
%
$
1,694,363
$
1,623
0.38
%
Advances from FHLB and fed funds
purchased
262,088
3,349
5.13
47,016
190
1.62
Line of credit
7,352
64
3.49
—
—
—
Subordinated debt
48,192
535
4.45
52,326
453
3.47
Securities sold under agreements to
repurchase
24,823
137
2.21
9,045
3
0.13
Total interest-bearing liabilities
1,995,692
14,031
2.82
1,802,750
2,269
0.50
Noninterest-bearing liabilities:
Noninterest-bearing deposits
948,083
1,090,288
Accrued interest and other liabilities
30,480
25,090
Total noninterest-bearing liabilities
978,563
1,115,378
Equity
298,695
291,312
Total liabilities and equity
$
3,272,950
$
3,209,440
Net interest rate spread(2)
2.22
%
3.37
%
Net interest income
$
24,703
$
26,851
Net interest margin(3)
3.21
%
3.57
%
Net interest margin, fully taxable
equivalent(4)
3.19
%
3.61
%
(1) Includes average outstanding balances
of loans held for sale of $1.4 million and $2.6 million for the
quarter ended June 30, 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%.
Six Months Ended June
30,
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)
$
2,375,533
$
65,748
5.58
%
$
2,003,053
$
46,859
4.72
%
Securities available for sale
179,984
2,273
2.55
377,132
3,091
1.65
Securities held to maturity
479,063
5,881
2.48
393,110
4,151
2.13
Nonmarketable equity securities
28,658
720
5.07
14,678
698
9.59
Interest-bearing deposits in other
banks
48,650
1,256
5.21
203,738
214
0.21
Total interest-earning assets
3,111,888
75,878
4.92
2,991,711
55,013
3.71
Allowance for credit losses
(31,922
)
(29,628
)
Noninterest-earning assets
218,868
215,886
Total assets
$
3,298,834
$
3,177,969
LIABILITIES AND EQUITY
Interest-bearing liabilities:
Interest-bearing deposits
$
1,639,003
$
17,601
2.17
%
$
1,702,216
$
2,865
0.34
%
Advances from FHLB and fed funds
purchased
285,963
7,123
5.02
42,395
236
1.12
Line of credit
3,696
64
3.49
1,878
34
3.65
Subordinated debt
48,675
1,075
4.45
41,572
699
3.39
Securities sold under agreements to
repurchase
17,937
150
1.69
9,976
5
0.10
Total interest-bearing liabilities
1,995,274
26,013
2.63
1,798,037
3,839
0.43
Noninterest-bearing liabilities:
Noninterest-bearing deposits
977,738
1,059,032
Accrued interest and other liabilities
28,706
24,680
Total noninterest-bearing liabilities
1,006,444
1,083,712
Equity
297,116
296,220
Total liabilities and equity
$
3,298,834
$
3,177,969
Net interest rate spread(2)
2.29
%
3.28
%
Net interest income
$
49,865
$
51,174
Net interest margin(3)
3.23
%
3.45
%
Net interest margin, fully taxable
equivalent(4)
3.22
%
3.49
%
(1) Includes average outstanding balances
of loans held for sale of $1.5 million and $2.9 million for the six
months ended June 30, 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)
June 30
March 31
December 31
September 30
June 30
Equity attributable to Guaranty
Bancshares, Inc.
$
296,862
$
299,700
$
294,984
$
288,084
$
282,255
Adjustments:
Goodwill
(32,160
)
(32,160
)
(32,160
)
(32,160
)
(32,160
)
Core deposit intangible, net
(1,633
)
(1,746
)
(1,859
)
(1,973
)
(2,086
)
Total tangible common equity attributable
to Guaranty Bancshares, Inc.
$
263,069
$
265,794
$
260,965
$
253,951
$
248,009
Common shares outstanding(1)
11,603,167
11,925,357
11,941,672
11,915,372
11,912,249
Book value per common share
$
25.58
$
25.13
$
24.70
$
24.18
$
23.69
Tangible book value per common
share(1)
22.67
22.29
21.85
21.31
20.82
(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)
June 30, 2023
Total equity(1)
$
297,427
Less: net unrealized loss on HTM
securities, tax effected
(27,300
)
Total equity, including net unrealized
loss on AFS and HTM securities
$
270,127
Net unrealized loss on AFS securities, tax
effected
16,877
Net unrealized loss on HTM securities, tax
effected
27,300
Net unrealized loss on AFS and HTM
securities, tax effected
$
44,177
Net unrealized loss on securities as % of
total equity(1)
14.9
%
Total equity before impact of unrealized
losses
$
314,304
Net unrealized loss on securities as % of
total equity before impact of unrealized losses
14.1
%
Total average assets
$
3,272,950
Total equity to average assets
9.1
%
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 $16,877.
Cost of Total Deposits
Quarter Ended
(dollars in thousands)
June 30, 2023
March 31, 2023
June 30, 2022
Total average interest-bearing
deposits
$
1,653,237
$
1,624,610
$
1,694,363
Adjustments:
Noninterest-bearing deposits
948,083
1,002,793
1,090,288
Total average deposits
$
2,601,320
$
2,627,403
$
2,784,651
Total deposit-related interest expense
$
9,946
$
7,655
$
1,623
Average cost of interest-bearing
deposits
2.41
%
1.91
%
0.38
%
Average cost of total deposits (cost of
funds)
1.53
1.18
0.23
About Non-GAAP Financial Measures
Certain of the financial measures and ratios we present,
including “tangible book value per share” 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 second
quarter 2023 financial results on Monday, July 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 July 31, 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 June 30, 2023, Guaranty Bancshares, Inc. had total
assets of $3.2 billion, total loans of $2.3 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.
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/20230717741549/en/
Cappy Payne Senior Executive Vice President and Chief Financial
Officer Guaranty Bancshares, Inc. (888) 572-9881
investors@gnty.com
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