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
September 30, 2023. The Company's net income available to common
shareholders was $6.3 million, or $0.54 per basic share, for the
quarter ended September 30, 2023, compared to $9.6 million, or
$0.82 per basic share, for the quarter ended June 30, 2023 and
$10.9 million, or $0.92 per basic share, for the quarter ended
September 30, 2022. Return on average assets and average equity for
the third quarter of 2023 were 0.78% and 8.43%, respectively,
compared to 1.17% and 12.87%, respectively, for the second quarter
of 2023 and 1.30% and 14.87%, respectively, for the third quarter
of 2022. The decrease in earnings during the third quarter of 2023,
compared to the second quarter of 2023 was primarily due to a
one-time gain on the sale of nonmarketable correspondent bank stock
of $2.8 million during the second quarter. Without this one-time
gain, net of tax, earnings for the second quarter were $7.4
million1, or $0.63 earnings per basic common share.
"Our company is performing well despite various economic and
industry headwinds. Earnings were adequate in the third quarter and
although we're seeing signs of a slowing economy, the Company is
well-positioned for it with a strong balance sheet and stable core
deposit base. We continue to have strong asset quality with
historically low nonperforming assets. We expect to see some
borrower stress as loan interest rates reprice but our loans are
conservatively underwritten and many of our borrowers will continue
to experience benefits from the robust economic environment in
Texas. Our capital remains very healthy and we repurchased 61,688
shares of stock during the quarter at an attractive average price
of $27.38 per share. As the year progresses, we'll continue to
focus on strategic goals and operational efficiencies that will
drive long term shareholder value," 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
- Granular and Stable Core Deposit Base. As of September
30, 2023, we have 87,208 total deposit accounts with an average
account balance of $30,482. We have a historically reliable core
deposit base, with strong and trusted banking relationships. Total
deposits increased by $55.5 million during the third quarter, which
consisted primarily of an increase in core deposits of $75.7
million, offset by a decrease in public funds deposits of $20.2
million. The bank has not historically used brokered deposits and
does not foresee a reliance on them going forward, however, we
issued $50.0 million of these deposits during the second quarter to
test their availability as a contingent liquidity source. Half of
the brokered CD's mature in November 2023 and the remainder in
February 2024. Excluding public funds and bank-owned accounts, our
uninsured deposits as of September 30, 2023 were 25.02% 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 34.0% of total
deposits. Our cost of interest-bearing deposits increased 59 basis
points during the quarter from 2.41% in the prior quarter to 3.00%,
representing a beta on interest-bearing deposits of approximately
217.6% for the linked quarter compared to the federal funds target
rates. Our cost of total deposits for the third quarter of 2023
increased 45 basis points from 1.53% in the prior quarter to 1.98%,
representing a beta on total deposits of approximately 166.0% for
the linked quarter.
- Strong Asset Quality. Nonperforming assets as a
percentage of total assets were 0.09% at September 30, 2023,
compared to 0.11% at June 30, 2023 and 0.28% at September 30, 2022.
Net charge-offs (annualized) to average loans were 0.11% for the
quarter ended September 30, 2023, compared to 0.03% for the quarter
ended June 30, 2023, and 0.07% for the quarter ended September 30,
2022. During the third quarter, nonperforming assets consisted
primarily of nonaccrual loans and the decrease from the prior
quarter resulted from the resolution or payoff of smaller balance
loans. Loans risk rated as substandard increased during the quarter
from $8.1 million as of June 30, 2023 to $29.5 million as of
September 30, 2023, an increase of $21.4 million. Despite the
increase, substandard loans continued to represent a modest 1.3% of
total loans at quarter-end. The increase results primarily from two
commercial real estate loans, with outstanding balances of $14.5
million and $6.9 million, respectively. The larger credit is
currently performing, is not past due, and is well-collateralized
in the desirable Austin, Texas market with an LTV of 69%.
Management believes this credit will be favorably resolved with
minimal to no loss by year-end. The second, smaller loan is an
amortizing commercial real estate loan in which we hold a priority
first lien position. The project is being developed under an SBA
504 program, with a different lender managing the project's
construction phase and financing the second lien debenture note.
This loan is also performing, is not past due and is
well-collateralized with an LTV of 46%. These two downgrades
resulted from general economic stress factors, and appropriate
credit reserves were captured in our CECL model. 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 38.9% and 13.7% of the total
loan portfolio, respectively. Office-related loans represent 4.7%
of the total loan portfolio and have an average balance of
$523,000. Although asset quality remains strong, we made minor
adjustments to certain qualitative factors during the third quarter
to incorporate improvements in C&D concentrations and past-due
and non-accrual trends. These qualitative adjustments, along with
minimal charge-offs and a reduction in the total loan portfolio,
resulted in no provision for credit loss in the third quarter of
2023.
- Healthy Capital and Liquidity. Our capital and liquidity
ratios, as well as contingent liquidity sources, remain very
healthy. We continue to take advantage of low stock prices to
repurchase shares of Company stock and add intrinsic value for
shareholders. During the third quarter of 2023, we repurchased
61,688 shares, or 0.53% of average shares outstanding during the
period, at an average price of $27.38 per share. Our liquidity
ratio, calculated as cash and cash equivalents and unpledged
investments divided by total liabilities, was 14.0% as of
quarter-end. Our total available contingent liquidity, net of
current outstanding borrowings, is $1.2 billion, consisting of
FHLB, FRB and correspondent bank fed funds and revolving lines of
credit. Finally, our total equity to average assets as on September
30, 2023 is 9.2%. If we had to recognize our entire unrealized
losses on both AFS and HTM securities, our total equity to average
assets ratio would be 8.2%†, which is still a strong capital
level under regulatory requirements.
† 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 third quarter of 2023 and 2022 was $23.3 million and $28.3
million, respectively, a decrease of $5.0 million, or 17.7%. The
decrease in net interest income resulted from an increase in
interest expense of $12.3 million, or 295.2%, compared to the prior
year quarter, which was partially offset by an increase in interest
income of $7.3 million, or 22.6%, from the same quarter in the
prior year. The increase in interest expense was due primarily to a
$10.6 million increase in deposit interest and a $1.4 million
increase in FHLB advance interest, each resulting from higher
interest rates between the two periods. The increase in interest
income was primarily due to an increase in loan interest of $7.3
million, or 26.6%, and an increase in fed funds sold and
interest-bearing deposits of $499,000, or 257.2%, during the
current quarter compared to the prior year quarter.
Net interest margin, on a fully taxable equivalent basis, for
the third quarter of 2023 and 2022 was 3.02% and 3.59%,
respectively. Net interest margin decreased 57 basis points
primarily due to interest-bearing liabilities repricing faster than
our interest-earning assets and a shift from lower interest cost
DDA and money market accounts to higher cost certificates of
deposit. The cost of interest-bearing liabilities increased 241
basis points from the prior year quarter, while interest earning
asset yields increased 113 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 0.59% to 3.00%, a change
of 241 basis points, in the third quarter of 2023 compared to the
same period in 2022, as well as increased rates on FHLB advances,
which increased from 2.37% to 5.29%, an increase of 292 basis
points, from the prior year quarter. The increases in cost were
partially offset by increases in yield on the loan portfolio from
4.97% to 5.91%, or 94 basis points, as well as 43 and 56 basis
point 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
$76.2 million in new loans originated in the third quarter was
8.49%.
Net interest income, before the provision for credit losses,
decreased $1.4 million, or 5.7%, from $24.7 million in the second
quarter of 2023 to $23.3 million in the third quarter of 2023. The
decrease in net interest income resulted primarily from an increase
in interest expense of $2.5 million, or 17.7%, partially offset by
an increase in interest income of $1.1 million, or 2.8%. The
increase in interest expense resulted primarily from an increase of
$3.1 million, or 31.4%, in interest-bearing deposit expense, offset
somewhat by a decrease in FHLB advances expense of $761,000, or
22.7%, from the prior quarter. Interest earned on loans increased
$1.2 million, or 3.5%, from the prior quarter.
Net interest margin, on a taxable equivalent basis, decreased
from 3.19% for the second quarter of 2023 to 3.02% for the third
quarter of 2023, a decrease of 17 basis points. The decrease in net
interest margin was primarily due to an increase in the cost of
interest-bearing deposits from 2.41% in the second quarter to 3.00%
in the third quarter of 2023, a change of 59 basis points, while
loan yield increased from 5.70% for the second quarter of 2023 to
5.91% for the third quarter of 2023, a change of 21 basis
points.
We recorded no provision for credit losses during the first
three quarters of 2023. During the fourth quarter of 2022, we
recorded a $2.8 million provision to incorporate forecasts for an
economic downturn and possible borrower stressors into our CECL
model. The factors that were adjusted in the fourth quarter of 2022
are still relevant, however certain minor adjustments were made in
subsequent quarters to reflect current portfolio credit quality
trends. As of September 30, 2023 and December 31, 2022, our
allowance for credit losses as a percentage of total loans was
1.34%.
Noninterest income decreased $970,000, or 16.7%, in the third
quarter of 2023 to $4.8 million, compared to $5.8 million for the
third quarter of 2022. The decrease from the same quarter in 2022
was due to a decrease in other noninterest income of $869,000, or
57.1%, resulting primarily from a gain on sale of an airplane asset
of $894,000 during the third quarter of 2022. There was also a
decrease in the gain on sale of loans of $120,000, or 35.5% along
with a $29,000, or 38.7%, decrease in mortgage fee income compared
to the same quarter in the prior year.
Noninterest expense increased $171,000, or 0.8%, in the third
quarter of 2023 to $20.4 million, compared to the third quarter of
2022. The increase in noninterest expense in the third quarter of
2023 was driven primarily by a $399,000, or 79.3%, increase in
legal and professional fees primarily related to recruiting fees, a
$93,000, or 0.8%, increase in employee compensation and benefits, a
$91,000, or 33.5%, increase in FDIC insurance assessment fees and
an increase in software and technology expense of $81,000, or 5.7%,
compared to the third quarter of 2022. These were partially offset
by a $491,000, or 28.3%, decrease in other noninterest expense,
primarily due to a write-down in the second quarter of 2022 of
$487,000 related to an SBA loan related receivable that was
subsequently resolved.
Noninterest income in the third quarter of 2023 decreased by
$3.0 million, or 38.6%, from $7.9 million in the second quarter of
2023. The decrease is due to a decrease in other noninterest income
of $2.9 million, or 81.4%, primarily resulting from a one-time gain
on the sale of nonmarketable correspondent bank stock of $2.8
million during the second quarter. Merchant and debit card fee
income also decreased $369,000, or 17.4%, quarter-over-quarter,
mainly due to an annual service provider bonus of $299,000 received
during the previous quarter. Additionally, gain on sale of loans
decreased $255,000, or 53.9%. The decreases were partially offset
from a realized loss of $322,000 that was recognized on securities
during the second quarter of 2022 that was not present in the
current quarter.
Noninterest expense decreased $63,000, or 0.3%, in the third
quarter of 2023, from $20.5 million for the quarter ended June 30,
2023. The decrease resulted from a decrease in FDIC insurance
assessment fees of $159,000, or 30.5%, a $83,000, or 8.4%, decrease
in legal and professional fees which was primarily due to annual
meeting, proxy and related filing fees paid during the second
quarter of 2023, and a $41,000, or 2.7%, decrease in software and
technology expense during the third quarter of 2023 compared to the
second quarter of 2023. These decreases were partially offset by a
$100,000, or 3.6%, increase in occupancy expense and a $64,000, or
8.7%, increase in ATM and debit card expense.
The Company’s efficiency ratio in the third quarter of 2023 was
72.54%, compared to 59.35% in the prior year quarter and 62.84% in
the second quarter of 2023.
FINANCIAL CONDITION
Consolidated assets for the Company totaled $3.23 billion at
September 30, 2023, compared to $3.21 billion at June 30, 2023 and
$3.39 billion at September 30, 2022.
Gross loans decreased $15.7 million, or 0.67%, to $2.32 billion
at September 30, 2023, compared to loans of $2.33 billion at June
30, 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 $52.2 million, or 2.3%, from $2.27 billion
at September 30, 2022. The increase in gross loans during the third
quarter of 2023 compared to the third quarter of 2022 resulted from
organic loan growth and was partially offset by a $10.9 million
decrease in warehouse lending loans, as we discontinued that line
of business in the second quarter of 2023.
Total deposits increased by $55.5 million, or 2.1%, to $2.66
billion at September 30, 2023, compared to $2.60 billion at June
30, 2023, and decreased $132.2 million, or 4.7%, from $2.79 billion
at September 30, 2022. The increase in deposits during the past
quarter resulted from an increase in interest-bearing deposits of
$67.5 million offset somewhat by a decrease in noninterest-bearing
deposits of $12.1 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 $237.8
million partially offset by an increase in interest-bearing
deposits of $105.6 million.
Nonperforming assets as a percentage of total loans were 0.13%
at September 30, 2023, compared to 0.15% at June 30, 2023 and 0.41%
at September 30, 2022. Nonperforming assets as a percentage of
total assets were 0.09% at September 30, 2023, compared to 0.11% at
June 30, 2023, and 0.28% at September 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 lower balance nonperforming assets during the
quarter.
Total equity was $296.8 million as of September 30, 2023,
compared to $297.4 million at June 30, 2023 and $288.7 million at
September 30, 2022. The decrease from the previous quarter resulted
primarily from an increase in accumulated other comprehensive loss
of $3.0 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 $1.7 million
during the third quarter of 2023. This was partially offset by net
income of $6.3 million during the period.
As of
2023
2022
(dollars in thousands)
September 30
June 30
March 31
December 31
September 30
ASSETS
Cash and due from banks
$
47,922
$
47,663
$
59,030
$
52,390
$
48,010
Federal funds sold
73,275
44,950
95,400
47,275
71,875
Interest-bearing deposits
8,980
4,738
3,695
6,802
4,284
Total cash and cash equivalents
130,177
97,351
158,125
106,467
124,169
Securities available for sale
178,644
166,596
173,744
188,927
197,944
Securities held to maturity
408,308
437,292
476,105
509,008
633,386
Loans held for sale
2,506
795
1,260
3,156
2,749
Loans, net
2,286,163
2,300,882
2,344,240
2,344,245
2,234,782
Accrued interest receivable
11,307
11,110
10,443
11,555
10,111
Premises and equipment, net
56,712
56,151
55,457
54,291
54,212
Other real estate owned
—
—
38
38
5
Cash surrender value of life insurance
42,096
41,830
38,619
38,404
38,194
Core deposit intangible, net
1,524
1,633
1,746
1,859
1,973
Goodwill
32,160
32,160
32,160
32,160
32,160
Other assets
80,816
60,396
64,350
61,385
60,581
Total assets
$
3,230,413
$
3,206,196
$
3,356,287
$
3,351,495
$
3,390,266
LIABILITIES AND EQUITY
Deposits
Noninterest-bearing
$
903,391
$
915,462
$
992,527
$
1,052,144
$
1,141,184
Interest-bearing
1,754,902
1,687,355
1,630,841
1,629,010
1,649,326
Total deposits
2,658,293
2,602,817
2,623,368
2,681,154
2,790,510
Securities sold under agreements to
repurchase
19,366
20,532
13,338
7,221
7,592
Accrued interest and other liabilities
31,218
30,701
30,125
28,409
27,384
Line of credit
2,000
12,000
—
—
—
Federal Home Loan Bank advances
175,000
195,000
340,000
290,000
225,000
Subordinated debentures
47,752
47,719
49,186
49,153
51,119
Total liabilities
2,933,629
2,908,769
3,056,017
3,055,937
3,101,605
Equity attributable to Guaranty
Bancshares, Inc.
296,226
296,862
299,700
294,984
288,084
Noncontrolling interest
558
565
570
574
577
Total equity
296,784
297,427
300,270
295,558
288,661
Total liabilities and equity
$
3,230,413
$
3,206,196
$
3,356,287
$
3,351,495
$
3,390,266
Quarter Ended
2023
2022
(dollars in thousands, except per share
data)
September 30
June 30
March 31
December 31
September 30
STATEMENTS OF EARNINGS
Interest income
$
39,818
$
38,734
$
37,144
$
35,720
$
32,476
Interest expense
16,516
14,031
11,982
7,362
4,179
Net interest income
23,302
24,703
25,162
28,358
28,297
Provision for credit losses
—
—
—
2,800
600
Net interest income after provision for
credit losses
23,302
24,703
25,162
25,558
27,697
Noninterest income
4,833
7,873
4,905
5,122
5,803
Noninterest expense
20,408
20,471
19,967
20,897
20,237
Income before income taxes
7,727
12,105
10,100
9,783
13,263
Income tax provision
1,437
2,529
1,823
1,764
2,363
Net earnings
$
6,290
$
9,576
$
8,277
$
8,019
$
10,900
Net loss attributable to noncontrolling
interest
7
5
4
3
3
Net earnings attributable to Guaranty
Bancshares, Inc.
$
6,297
$
9,581
$
8,281
$
8,022
$
10,903
PER COMMON SHARE DATA
Earnings per common share, basic
$
0.54
$
0.82
$
0.69
$
0.67
$
0.92
Earnings per common share, diluted
0.54
0.81
0.69
0.67
0.91
Cash dividends per common share
0.23
0.23
0.23
0.22
0.22
Book value per common share - end of
quarter
25.64
25.58
25.13
24.70
24.18
Tangible book value per common share - end
of quarter(1)
22.72
22.67
22.29
21.85
21.31
Common shares outstanding - end of
quarter(4)
11,554,094
11,603,167
11,925,357
11,941,672
11,915,372
Weighted-average common shares
outstanding, basic
11,568,897
11,735,475
11,939,593
11,938,973
11,907,233
Weighted-average common shares
outstanding, diluted
11,619,342
11,756,512
12,012,004
12,048,475
12,032,391
PERFORMANCE RATIOS
Return on average assets (annualized)
0.78
%
1.17
%
1.01
%
0.95
%
1.30
%
Return on average equity (annualized)
8.43
12.87
11.18
10.88
14.87
Net interest margin, fully taxable
equivalent (annualized)(2)
3.02
3.19
3.24
3.57
3.59
Efficiency ratio(3)
72.54
62.84
66.41
62.42
59.35
(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)
September 30
June 30
March 31
December 31
September 30
LOAN PORTFOLIO COMPOSITION
Commercial and industrial
$
292,410
$
295,864
$
295,936
$
314,067
$
289,029
Real estate:
Construction and development
317,484
345,127
372,203
377,135
391,564
Commercial real estate
901,321
891,883
900,190
887,587
821,941
Farmland
188,614
187,105
190,802
185,817
179,402
1-4 family residential
504,002
496,340
499,944
493,061
467,983
Multi-family residential
42,720
44,385
44,760
45,147
43,025
Consumer
58,294
59,498
60,163
61,394
58,835
Agricultural
13,076
13,447
13,545
13,686
13,917
Overdrafts
328
252
270
282
369
Total loans(1)(2)
$
2,318,249
$
2,333,901
$
2,377,813
$
2,378,176
$
2,266,065
Quarter Ended
2023
2022
(dollars in thousands)
September 30
June 30
March 31
December 31
September 30
ALLOWANCE FOR CREDIT LOSSES
Balance at beginning of period
$
31,759
$
31,953
$
31,974
$
29,235
$
28,997
Loans charged-off
(644
)
(224
)
(94
)
(103
)
(418
)
Recoveries
25
30
73
42
56
Provision for credit loss expense
—
—
—
2,800
600
Balance at end of period
$
31,140
$
31,759
$
31,953
$
31,974
$
29,235
Allowance for credit losses / period-end
loans
1.34
%
1.36
%
1.34
%
1.34
%
1.29
%
Allowance for credit losses /
nonperforming loans
1,148.2
894.6
238.4
294.7
313.3
Net charge-offs / average loans
(annualized)
0.11
0.03
0.00
0.01
0.07
NONPERFORMING ASSETS
Nonaccrual loans
$
2,712
$
3,550
$
13,405
$
10,848
$
9,330
Other real estate owned
—
—
38
38
5
Repossessed assets owned
250
—
—
—
—
Total nonperforming assets
$
2,962
$
3,550
$
13,443
$
10,886
$
9,335
Nonperforming assets as a percentage
of:
Total loans(1)(2)
0.13
%
0.15
%
0.57
%
0.46
%
0.41
%
Total assets
0.09
0.11
0.40
0.32
0.28
(1) Excludes outstanding balances of loans
held for sale of $2.5 million, $795,000, $1.3 million, $3.2
million, and $2.7 million as of September 30, June 30 and March 31,
2023 and December 31, September 30, 2022, respectively.
(2) Excludes deferred loan fees of
$946,000, $1.3 million, $1.6 million, $2.0 million, and $2.0
million as of September 30, June 30 and March 31, 2023 and December
31, September 30, 2022, respectively.
Quarter Ended
2023
2022
(dollars in thousands)
September 30
June 30
March 31
December 31
September 30
NONINTEREST INCOME
Service charges
$
1,131
$
1,056
$
1,077
$
1,096
$
1,146
Net realized gain on securities
transactions
—
(322
)
93
172
—
Net realized gain on sale of loans
218
473
314
310
338
Fiduciary and custodial income
637
630
638
642
576
Bank-owned life insurance income
267
211
214
209
215
Merchant and debit card fees
1,752
2,121
1,674
1,711
1,738
Loan processing fee income
128
142
134
150
192
Mortgage fee income
46
50
68
81
75
Other noninterest income
654
3,512
693
751
1,523
Total noninterest income
$
4,833
$
7,873
$
4,905
$
5,122
$
5,803
NONINTEREST EXPENSE
Employee compensation and benefits
$
11,944
$
11,939
$
12,264
$
12,364
$
11,851
Occupancy expenses
2,854
2,754
2,830
2,770
2,800
Legal and professional fees
902
985
583
779
503
Software and technology
1,490
1,531
1,396
1,525
1,409
Amortization
147
149
161
161
166
Director and committee fees
192
201
199
199
213
Advertising and promotions
288
269
267
488
378
ATM and debit card expense
803
739
599
740
723
Telecommunication expense
178
171
183
193
184
FDIC insurance assessment fees
363
522
301
359
272
Other noninterest expense
1,247
1,211
1,184
1,319
1,738
Total noninterest expense
$
20,408
$
20,471
$
19,967
$
20,897
$
20,237
Quarter Ended September
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)
$
2,332,171
$
34,765
5.91
%
$
2,191,411
$
27,455
4.97
%
Securities available for sale
181,946
1,346
2.93
196,875
1,239
2.50
Securities held to maturity
432,687
2,710
2.48
707,601
3,416
1.92
Nonmarketable equity securities
25,429
304
4.74
21,382
172
3.19
Interest-bearing deposits in other
banks
52,424
693
5.24
32,233
194
2.39
Total interest-earning assets
3,024,657
39,818
5.22
3,149,502
32,476
4.09
Allowance for credit losses
(31,574
)
(28,777
)
Noninterest-earning assets
220,406
216,623
Total assets
$
3,213,489
$
3,337,348
LIABILITIES AND EQUITY
Interest-bearing liabilities:
Interest-bearing deposits
$
1,726,218
$
13,069
3.00
%
$
1,650,314
$
2,455
0.59
%
Advances from FHLB and fed funds
purchased
194,115
2,588
5.29
202,832
1,211
2.37
Line of credit
5,011
204
16.15
—
—
—
Subordinated debt
47,730
534
4.44
51,087
509
3.95
Securities sold under agreements to
repurchase
22,718
121
2.11
6,844
4
0.23
Total interest-bearing liabilities
1,995,792
16,516
3.28
1,911,077
4,179
0.87
Noninterest-bearing liabilities:
Noninterest-bearing deposits
888,772
1,109,205
Accrued interest and other liabilities
32,716
26,260
Total noninterest-bearing liabilities
921,488
1,135,465
Equity
296,209
290,806
Total liabilities and equity
$
3,213,489
$
3,337,348
Net interest rate spread(2)
1.94
%
3.22
%
Net interest income
$
23,302
$
28,297
Net interest margin(3)
3.06
%
3.56
%
Net interest margin, fully taxable
equivalent(4)
3.02
%
3.59
%
(1) Includes average outstanding balances
of loans held for sale of $1.1 million and $2.1 million for the
quarter ended September 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%.
Nine Months Ended September
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)
$
2,359,880
$
100,513
5.69
%
$
2,066,529
$
74,314
4.81
%
Securities available for sale
180,645
3,619
2.68
316,386
4,330
1.83
Securities held to maturity
463,434
8,591
2.48
499,092
7,567
2.03
Nonmarketable equity securities
27,727
1,024
4.94
16,937
869
6.86
Interest-bearing deposits in other
banks
49,923
1,949
5.22
145,936
409
0.37
Total interest-earning assets
3,081,609
115,696
5.02
3,044,880
87,489
3.84
Allowance for credit losses
(31,804
)
(29,341
)
Noninterest-earning assets
219,227
216,140
Total assets
$
3,269,032
$
3,231,679
LIABILITIES AND EQUITY
Interest-bearing liabilities:
Interest-bearing deposits
$
1,668,394
$
30,670
2.46
%
$
1,684,725
$
5,320
0.42
%
Advances from FHLB and fed funds
purchased
255,011
9,711
5.09
96,462
1,447
2.01
Line of credit
4,139
268
8.66
—
34
—
Subordinated debt
48,357
1,609
4.45
46,024
1,208
3.51
Securities sold under agreements to
repurchase
19,548
271
1.85
8,920
9
0.13
Total interest-bearing liabilities
1,995,449
42,529
2.85
1,836,131
8,018
0.58
Noninterest-bearing liabilities:
Noninterest-bearing deposits
944,870
1,075,941
Accrued interest and other liabilities
30,057
25,212
Total noninterest-bearing liabilities
974,927
1,101,153
Equity
298,656
294,395
Total liabilities and equity
$
3,269,032
$
3,231,679
Net interest rate spread(2)
2.17
%
3.26
%
Net interest income
$
73,167
$
79,471
Net interest margin(3)
3.17
%
3.49
%
Net interest margin, fully taxable
equivalent(4)
3.16
%
3.53
%
(1) Includes average outstanding balances
of loans held for sale of $1.4 million and $2.6 million for the
nine months ended September 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)
September 30
June 30
March 31
December 31
September 30
Equity attributable to Guaranty
Bancshares, Inc.
$
296,226
$
296,862
$
299,700
$
294,984
$
288,084
Adjustments:
Goodwill
(32,160
)
(32,160
)
(32,160
)
(32,160
)
(32,160
)
Core deposit intangible, net
(1,524
)
(1,633
)
(1,746
)
(1,859
)
(1,973
)
Total tangible common equity attributable
to Guaranty Bancshares, Inc.
$
262,542
$
263,069
$
265,794
$
260,965
$
253,951
Common shares outstanding(1)
11,554,094
11,603,167
11,925,357
11,941,672
11,915,372
Book value per common share
$
25.64
$
25.58
$
25.13
$
24.70
$
24.18
Tangible book value per common
share(1)
22.72
22.67
22.29
21.85
21.31
(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)
September 30, 2023
Total equity(1)
$
296,784
Less: net unrealized loss on HTM
securities, tax effected
(32,087
)
Total equity, including net unrealized
loss on AFS and HTM securities
$
264,697
Net unrealized loss on AFS securities, tax
effected
19,536
Net unrealized loss on HTM securities, tax
effected
32,087
Net unrealized loss on AFS and HTM
securities, tax effected
$
51,623
Net unrealized loss on securities as % of
total equity(1)
17.4
%
Total equity before impact of unrealized
losses
$
316,320
Net unrealized loss on securities as % of
total equity before impact of unrealized losses
16.3
%
Total average assets
$
3,213,489
Total equity to average assets
9.2
%
Total equity, adjusted for tax effected
net unrealized loss, to average assets
8.2
%
(1) Includes the net unrealized loss on
AFS securities, tax effected, of $19,536.
Cost of Total Deposits
Quarter Ended
(dollars in thousands)
September 30, 2023
June 30, 2023
September 30, 2022
Total average interest-bearing
deposits
$
1,726,218
$
1,653,237
$
1,650,314
Adjustments:
Noninterest-bearing deposits
888,772
948,083
1,109,205
Total average deposits
$
2,614,990
$
2,601,320
$
2,759,519
Total deposit-related interest expense
$
13,069
$
9,946
$
2,455
Average cost of interest-bearing
deposits
3.00
%
2.41
%
0.59
%
Average cost of total deposits
1.98
1.53
0.35
About Non-GAAP Financial Measures
Certain of the financial measures and ratios we present,
including “tangible book value per share”, "net unrealized loss on
securities, tax effected, as a percentage of total equity" and
"cost of total deposits" 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 third quarter
2023 financial results on Monday, October 16, 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
October 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 September 30, 2023, Guaranty Bancshares, Inc. had
total assets of $3.2 billion, total loans of $2.3 billion and total
deposits of $2.7 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/20231016876887/en/
Cappy Payne Senior Executive Vice President and Chief Financial
Officer Guaranty Bancshares, Inc. (888) 572-9881
investors@gnty.com
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