Guaranty Bancshares, Inc. Reports First Quarter 2022 Financial Results

Rhea-AI Summary

Guaranty Bancshares reported a net income of $10.7 million, or $0.89 per share, for Q1 2022, a rise from $9.2 million in Q4 2021 but below $11.0 million in Q1 2021. The return on average assets was 1.38% and average equity 14.45%. The bank experienced significant loan growth of 8.6% (excluding PPP loans), while maintaining low non-performing assets at 0.08% of total assets. Despite positive trends, concerns remain over inflation and rising interest rates, prompting cautious optimism about future economic conditions.

Positive

• Net income up to $10.7 million for Q1 2022 from $9.2 million in Q4 2021.
• Core earnings increased to $10.9 million for Q1 2022 from $10.1 million in Q4 2021.
• Loan portfolio grew by $156.8 million, or 8.6%, excluding PPP and warehouse loans.

Negative

• Net interest income slightly decreased by $168,000, or 0.7%, from Q1 2021.
• Net interest margin decreased to 3.37% from 3.85% in Q1 2021.
• Concerns over inflation and rising interest rates may negatively impact future growth.

ADDISON, Texas--(BUSINESS WIRE)-- Guaranty Bancshares, Inc. (NASDAQ: 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, 2022. The Company's net income available to common shareholders was $10.7 million, or $0.89 per basic share, for the quarter ended March 31, 2022, compared to $9.2 million, or $0.76 per basic share, for the quarter ended December 31, 2021 and $11.0 million, or $0.91 per basic share, for the quarter ended March 31, 2021. Return on average assets and average equity for the first quarter of 2022 were 1.38% and 14.45%, respectively, compared to 1.20% and 12.06%, respectively, for the fourth quarter of 2021 and 1.60% and 16.01%, respectively, for the first quarter of 2021. The increase in earnings during the first quarter of 2022, compared to the fourth quarter of 2021, was primarily due to a reverse provision for credit losses of $1.25 million during the first quarter of 2022, in response to the Bank's continued analysis into the effects of COVID-19 on the loan portfolio. Our net core earnings^†, excluding provisions for credit losses, income taxes and PPP1/PPP2 net income, as well as our core net interest margin, adjusted to exclude the effects of PPP1/PPP2 loans, are described further in tables below.

"We achieved excellent financial results and strong loan growth during the first quarter of 2022. Excluding PPP and warehouse loans, our loan portfolio grew 8.6% during the first quarter and our pipeline currently remains robust across our footprint. Our non-performing assets continue to be very low, and we have seen significant improvements in COVID-related statistics and economic impacts. Due to these factors, we fully reversed the COVID-specific reserves from our allowance for credit losses during this quarter. However, we also adjusted the allowance for our increased concerns related to the current environment of very high inflation, the likely negative impacts of rising rates on the economy, and the geopolitical uncertainty that exists today. These negative adjustments offset a significant portion of the reserves that were released due to our improved outlook as it relates to COVID. While we remain very optimistic about the Texas economy, given these external events and backdrop, we are cautiously optimistic about the overall economy in the short to medium term. Guaranty has a long history of maintaining a very strong balance sheet, including strong liquidity and capital, for times of economic uncertainty," commented Ty Abston, the Company's Chairman and Chief Executive Officer.

QUARTERLY HIGHLIGHTS

• Strong Loan Growth. The first quarter of 2022 saw strong organic loan growth, increasing $106.0 million, or 5.6%, during the quarter. Excluding PPP and warehouse lending changes, our loans grew $156.8 million, or 8.6%, during the quarter. Our loan growth is a result of internally generated sources and is not from loan purchases from other originators.
• Solid Net Earnings and Core Earnings. Net earnings have remained consistent quarter-over-quarter. Net core earnings^†, which exclude provisions for credit losses and income tax, and net PPP income, have trended upwards, demonstrating a consistent core earnings stream. Net core earnings^† were $10.9 million for the first quarter, compared to $10.1 million for the fourth quarter of 2021, and $9.4 million during the first quarter of 2021.
• Strong Credit Quality. Non-performing assets as a percentage of total assets were 0.08% at March 31, 2022, compared to 0.09% at December 31, 2021 and 0.13% at March 31, 2021. Net charge-offs to average loans (annualized) were 0.02% for the quarter ended March 31, 2022, compared to 0.04% for the quarter ended December 31, 2021, and 0.18% for the quarter ended March 31, 2021.
• Favorable Asset and Liability Management. Our Bank is slightly asset-sensitive and should see benefits from expected rate increases by the Federal Reserve. During the quarter, we terminated interest rate swaps that hedged $40.0 million of 3-month FHLB advances, resulting in an extraordinary gain of $685,000, and we paid off the FHLB advances. Also during the first quarter of 2022, we deployed excess cash of $270.0 million to purchase short term U.S. treasuries, maturing from August 2022 through March 2024, to take advantage of higher short term yields. As of March 31, 2022, we have $1.29 billion, or 65.0%, or our loan portfolio in variable rate loans. If rates increase as predicted by 50bps in the May and June FOMC meetings, as well as 25bps in the remaining meetings during 2022, approximately $346.2 million, or 26.7%, of the variable rates loans will reprice by December 31, 2022. We are maintaining a conservative stance on our cost of total deposits, given our excess liquidity position, and as of March 31, 2022, 38.1% of our total deposits are non-interest bearing. Anticipating increases in interest rates, on March 4, 2022, we issued $35.0 million in 10-year subordinated notes (refer to our Form 8-K filed with the Securities and Exchange Commission on March 4, 2022 for more details). Finally, we repurchased 56,237 shares of Company stock during the quarter at an average purchase price per share of $35.44.

† 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 large provisions for credit losses in the second quarter of 2020 resulting from the expected effects of COVID-19, has created temporary extraordinary results in the calculation of net earnings and related performance ratios. 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
		2022				2021
(dollars in thousands, except per share data)		March 31				December 31				September 30				June 30				March 31
Net earnings		$	10,738			$	9,159			$	9,253			$	10,432			$	10,962
Adjustments:
Provision for credit losses			(1,250	)			—				(700	)			(1,000	)			—
Income tax provision			2,235				1,923				2,179				2,312				2,336
PPP loan interest and fees			(783	)			(958	)			(1,005	)			(1,954	)			(3,905	)
Net core earnings†		$	10,940			$	10,124			$	9,727			$	9,790			$	9,393
Total average assets		$	3,146,399			$	3,021,079			$	2,953,181			$	2,938,944			$	2,775,567
Adjustments:
PPP loans average balance			(36,720	)			(61,062	)			(107,931	)			(155,417	)			(137,251	)
Total average assets, adjusted†		$	3,109,679			$	2,960,017			$	2,845,250			$	2,783,527			$	2,638,316
Total average equity		$	301,432			$	301,398			$	295,076			$	285,803			$	277,612
PERFORMANCE RATIOS
Net earnings to average assets (annualized)			1.38	%			1.20	%			1.24	%			1.42	%			1.60	%
Net earnings to average equity (annualized)			14.45				12.06				12.44				14.64				16.01
Net core earnings to average assets, as adjusted (annualized)†			1.43				1.36				1.36				1.41				1.44
Net core earnings to average equity (annualized)†			14.72				13.33				13.08				13.74				13.72
PER COMMON SHARE DATA
Weighted-average common shares outstanding, basic			12,109,074				12,097,100				12,067,769				12,056,550				12,038,638
Earnings per common share, basic		$	0.89			$	0.76			$	0.77			$	0.87			$	0.91
Net core earnings per common share, basic†			0.90				0.84				0.81				0.81				0.78
† 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 2022 and 2021 was $24.3 million and $24.5 million, respectively, a decrease of $168,000, or 0.7%. The slight decline in net interest income resulted from a decrease in interest income of $620,000, or 2.3%, which was partially offset by a decrease in interest expense of $452,000, or 22.4%, quarter over quarter. Interest and fee income from PPP loans decreased $2.7 million, or 77.7%, while all other loan interest income increased $1.2 million, or 5.9%, during the current quarter compared to the prior year quarter. In addition, interest income from investment securities increased $1.0 million, or 48.0%, from the same quarter in the prior year.

Net interest margin, on a taxable equivalent basis, for the first quarter of 2022 and 2021 was 3.37% and 3.85%, respectively. Net interest margin decreased 48 basis points primarily due to a decrease in loan yield from 5.20% for the first quarter of 2021 to 4.66% for the first quarter of 2022, a change of 54 basis points, offset somewhat by a decrease in the cost of interest-bearing deposits from 0.42% to 0.29% during the same period, a change of 13 basis points. The decrease in loan yield was primarily due to recognized PPP origination fee income during the prior year quarter. Loan yield, excluding the effect of PPP loans, was 4.59% in the first quarter of 2022, compared to 4.79% in the same quarter of the prior year, a decrease of 20 basis points.

Net interest income, before the provision for credit losses, increased $303,000, or 1.3%, from $24.0 million in the fourth quarter of 2021 to $24.3 million in the first quarter of 2022.

Net interest margin, on a taxable equivalent basis, decreased from 3.39% for the fourth quarter of 2021 to 3.37% for the first quarter of 2022. Loan yield decreased from 4.71% for the fourth quarter of 2021 to 4.66% for the first quarter of 2022, a change of five basis points. Loan yield, excluding the effect of PPP loans, decreased seven basis points from 4.66% in the fourth quarter of 2021 to 4.59% in the current quarter. The average yield on interest-bearing deposits in other banks increased three basis points from 0.10% in the fourth quarter of 2021, while the average balance decreased by $88.7 million, or 20.9%, in the current quarter.

The Bank’s participation in the PPP program created temporary extraordinary results in the calculation of net interest margin. To illustrate the impact of the PPP program on net interest margin, the table below excludes PPP1 and PPP2 loans and their associated fees and costs for the quarter ended March 31, 2022:

		Quarter Ended March 31, 2022
(dollars in thousands)		Average Outstanding Balance				Interest Earned/ Interest Paid				Average Yield/ Rate
Total loans		$	1,937,000			$	22,272				4.66	%
Adjustments:
PPP1 loans average balance and net fees(1)			(769	)			(5	)			2.64
PPP2 loans average balance and net fees(2)			(35,951	)			(778	)			8.78
Total PPP loans(3)		$	(36,720	)		$	(783	)			8.65	%
Total loans, excluding PPP†		$	1,900,280			$	21,489				4.59	%
Total interest-earning assets			2,963,030				25,893				3.54
Total interest-earning assets, net of PPP effects†		$	2,926,310			$	25,110				3.48	%
Net interest income						$	24,323
Net interest margin(4)											3.33	%
Net interest margin, FTE(5)											3.37
Net interest income, net of PPP effects†							23,540
Net interest margin, net of PPP effects†(6)											3.26
Net interest margin, FTE, net of PPP effects†(7)											3.30
Efficiency ratio(8)											61.94
Efficiency ratio, net of PPP effects†(9)											63.56
† Non-GAAP financial metric. Calculations of this metric and reconciliations to GAAP are included in the schedules accompanying this release.
(1) Interest earned on PPP1 loans consists of interest income of $2,000 and net origination fees recognized in earnings of $3,000 for the quarter ended March 31, 2022.
(2) Interest earned on PPP2 loans consists of interest income of $87,000 and net origination fees recognized in earnings of $691,000 million for the quarter ended March 31, 2022.
(3) Interest earned consists of interest income of $89,000 and net origination fees recognized in earnings of $694,000 million for the quarter ended March 31, 2022.
(4) Net interest margin is equal to net interest income divided by average interest-earning assets, annualized. Taxes are not a part of this calculation.
(5) 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%.
(6) Net interest margin is equal to net interest income, net of PPP effects, divided by average interest-earning assets, excluding average PPP loans, annualized. Taxes are not a part of this calculation.
(7) Net interest margin on a taxable equivalent basis is equal to net interest income, net of PPP effects, adjusted for nontaxable income divided by average interest-earning assets, excluding average PPP loans, annualized, using a marginal tax rate of 21%.
(8) 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.
(9) The efficiency ratio was calculated by dividing total noninterest expense, net of PPP-related deferred costs, by net interest income, net of PPP effects, plus noninterest income, excluding securities gains or losses. Taxes are not part of this calculation.

During the first quarter of 2022, we recorded a reverse provision for credit losses of $1.25 million. At the onset of the COVID pandemic in 2020, we established COVID-specific qualitative factors to estimate the potential impact of the pandemic to our loan portfolio as a whole, which led to a provision during 2020 of $13.2 million. As the economic, health and other impacts of the virus became more clear and cases began to decline, we reduced the COVID-specific qualitative factors during 2021 and fully unwound these factors during the first quarter of 2022. The impact of unwinding the remaining COVID-specific qualitative factors was offset by growth in our loan portfolio and increases in certain of our standard qualitative factors to capture current macro-economic concerns related to inflation, rising interest rates and the war in Ukraine. As of March 31, 2022, our allowance for credit losses as a percentage of total loans was 1.44%.

Noninterest income increased $360,000, or 5.9%, in the first quarter of 2022 to $6.5 million, compared to $6.1 million for the first quarter of 2021. The increase from the same quarter in 2021 was due primarily to an increase in other noninterest income of $601,000, or 25.2%, and an increase in service charges of $147,000, or 17.7%, compared to the same quarter of the prior year. The increase in other noninterest income resulted from a net gain of $685,000 from the termination of three interest rate swaps during the first quarter of 2022. The increase in noninterest income was partially offset by a decrease in the gain on sale of loans of $493,000, or 35.3%, a $46,000, or 26.0%, decrease in mortgage fee income and a $125,000, or 51.9%, decrease in warehouse lending fees compared to the same quarter of the prior year.

Noninterest expense increased $1.8 million, or 10.2%, in the first quarter of 2022 to $19.1 million, compared to the first quarter of 2021. The increase in noninterest expense in the first quarter of 2022 was driven primarily by a $1.6 million, or 16.0%, increase in employee compensation and benefits due to increased salaries and higher insurance expense accruals due to increased claims experience. Legal and professional fees also increased $166,000, or 27.5%, from the same quarter of the prior year, primarily due to higher employee recruitment fees in the current quarter.

Noninterest income in the first quarter of 2022 increased by $441,000, or 7.3%, from $6.0 million in the fourth quarter of 2021 due primarily to an increase in other noninterest income of $617,000, or 28.6%, resulting primarily from the $685,000 net gain on the termination of interest rate swaps described above.

Noninterest expense increased $103,000, or 0.5%, in the first quarter of 2022, from $19.0 million in the quarter ended December 31, 2021. The increase was primarily due to a $166,000, or 27.5%, increase in legal and professional fees and a $332,000, or 3.0%, increase in employee compensation and benefits during the first quarter of 2022. These were partially offset by a decrease in FDIC insurance assessment fees of $67,000, or 22.3%, and a decrease in other noninterest expense of $255,000, or 19.9%.

The Company’s efficiency ratio in the first quarter of 2022 was 61.94%, compared to 63.13% in the prior year quarter and 56.56% in the fourth quarter of 2021. Adjusted to remove the effects of PPP-related transactions, the Company’s efficiency ratio^† for the first quarter of 2022 was 63.56%, was 65.21% for the fourth quarter of 2021 and was 65.34% for the first quarter of 2021.

† Non-GAAP financial metric. Calculations of this metric and reconciliations to GAAP are included in the schedules accompanying this release.

FINANCIAL CONDITION

Consolidated assets for the Company totaled $3.19 billion at March 31, 2022, compared to $3.09 billion at December 31, 2021 and $2.89 billion at March 31, 2021.

Gross loans increased 5.6%, or $106.0 million, to $2.01 billion at March 31, 2022, compared to loans of $1.91 billion at December 31, 2021. The increase in gross loans from the fourth quarter of 2021 to the first quarter of 2022 is primarily due to increased loan originations and advances, which were partially offset by continued forgiveness of PPP loans, which decreased $31.3 million during the quarter. Excluding PPP and warehouse lending loans, gross loans increased $156.8 million, or 8.6%, from December 31, 2021.

Gross loans increased 5.3%, or $101.7 million, from $1.91 billion at March 31, 2021. The increase in gross loans during the first quarter of 2022 compared to the first quarter of 2021 resulted primarily from organic loan growth and was partially offset by a $138.9 million reduction in PPP loan balances during the period. Excluding PPP and warehouse lending loans, gross loans increased $303.2 million, or 18.2%, from March 31, 2021.

Total deposits increased by 4.7%, or $126.6 million, to $2.80 billion at March 31, 2022, compared to $2.67 billion at December 31, 2021, and increased 13.0%, or $322.2 million, from $2.48 billion at March 31, 2021. Changes in deposits during these periods appear to be the result of changes in depositor spending habits resulting from economic and other uncertainties.

Shareholders' equity totaled $291.9 million as of March 31, 2022, compared to $302.2 million at December 31, 2021 and $280.1 million at March 31, 2021. The decrease from the previous quarter resulted from the payment of dividends of $2.7 million, repurchase of 56,237 shares of treasury stock for $2.0 million and a decrease in other comprehensive income of $17.2 million during the first quarter of 2022 resulting from fluctuations in the fair market value of securities, and offset by net income of $10.7 million. Although the unrealized losses in other comprehensive income during the quarter do not impact regulatory capital ratios, they did result in a decrease in the tangible common equity ratio from 8.77% as of December 31, 2021 to 8.16% as of March 31, 2022.

In September 2021, we announced the formation of a partnership with CaliberCos, Inc., a vertically integrated alternative asset manager and fund sponsor, in an effort to drive investments that will revitalize communities across Texas through real estate developments. We began to consolidate the financial statements for this investment by our Bank subsidiary that contains a minority interest position during the first quarter of 2022. The newly formed entity had no assets, liabilities or equity until the first quarter of 2022 and had no income or expense during the first quarter of 2022. Further details of this partnership can be found in a Form 8-K filed with the Securities and Exchange Commission on September 7, 2021.

Nonperforming assets as a percentage of total assets were 0.08% at March 31, 2022 compared to 0.09% at December 31, 2021, and 0.13% at March 31, 2021.

		As of
		2022				2021
(dollars in thousands)		March 31				December 31				September 30				June 30				March 31
ASSETS
Cash and due from banks		$	58,788			$	42,979			$	34,741			$	37,611			$	38,534
Federal funds sold			139,300				431,975				346,500				385,075				356,750
Interest-bearing deposits			24,003				24,651				27,634				24,532				28,188
Total cash and cash equivalents			222,091				499,605				408,875				447,218				423,472
Securities available for sale			306,704				342,206				269,070				446,636				407,736
Securities held to maturity			494,289				184,263				173,676				—				—
Loans held for sale			1,166				4,129				1,903				5,088				4,663
Loans, net			1,983,449				1,876,076				1,938,268				1,856,277				1,876,985
Accrued interest receivable			8,961				8,901				7,673				8,801				8,064
Premises and equipment, net			54,316				53,470				53,834				54,405				54,903
Other real estate owned			—				—				40				227				312
Cash surrender value of life insurance			37,352				37,141				36,582				36,367				35,836
Core deposit intangible, net			2,199				2,313				2,426				2,573				2,786
Goodwill			32,160				32,160				32,160				32,160				32,160
Other assets			47,806				45,806				43,761				43,207				44,383
Total assets		$	3,190,493			$	3,086,070			$	2,968,268			$	2,932,959			$	2,891,300
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Noninterest-bearing		$	1,065,789			$	1,014,518			$	972,854			$	928,416			$	878,883
Interest-bearing			1,731,621				1,656,309				1,590,217				1,604,610				1,596,327
Total deposits			2,797,410				2,670,827				2,563,071				2,533,026				2,475,210
Securities sold under agreements to repurchase			11,090				14,151				11,195				15,336				24,007
Accrued interest and other liabilities			27,803				26,568				26,284				28,058				28,080
Line of credit			—				5,000				3,000				—				15,000
Federal Home Loan Bank advances			7,500				47,500				47,500				49,000				49,096
Subordinated debentures			54,810				19,810				19,810				19,810				19,810
Total liabilities			2,898,613				2,783,856				2,670,860				2,645,230				2,611,203
Equity attributable to Guaranty Bancshares, Inc.			291,282				302,214				297,408				287,729				280,097
Minority interest			598				—				—				—				—
Total shareholders' equity			291,880				302,214				297,408				287,729				280,097
Total liabilities and shareholders' equity		$	3,190,493			$	3,086,070			$	2,968,268			$	2,932,959			$	2,891,300

		Quarter Ended
		2022				2021
(dollars in thousands, except per share data)		March 31				December 31				September 30				June 30				March 31
STATEMENTS OF EARNINGS
Interest income		$	25,893			$	25,518			$	25,235			$	25,284			$	26,513
Interest expense			1,570				1,498				1,665				1,807				2,022
Net interest income			24,323				24,020				23,570				23,477				24,491
Provision for credit losses			(1,250	)			—				(700	)			(1,000	)			—
Net interest income after provision for credit losses			25,573				24,020				24,270				24,477				24,491
Noninterest income			6,479				6,038				6,449				5,970				6,119
Noninterest expense			19,079				18,976				19,287				17,703				17,312
Income before income taxes			12,973				11,082				11,432				12,744				13,298
Income tax provision			2,235				1,923				2,179				2,312				2,336
Net earnings		$	10,738			$	9,159			$	9,253			$	10,432			$	10,962
PER COMMON SHARE DATA*
Earnings per common share, basic		$	0.89			$	0.76			$	0.77			$	0.87			$	0.91
Earnings per common share, diluted			0.88				0.75				0.76				0.85				0.90
Cash dividends per common share			0.22				0.20				0.20				0.20				0.20
Book value per common share - end of quarter			24.14				24.93				24.62				23.86				23.24
Tangible book value per common share - end of quarter(1)			21.29				22.09				21.75				20.98				20.34
Common shares outstanding - end of quarter			12,066,480				12,122,717				12,081,477				12,057,937				12,053,597
Weighted-average common shares outstanding, basic			12,109,074				12,097,100				12,067,769				12,056,550				12,038,638
Weighted-average common shares outstanding, diluted			12,260,945				12,263,252				12,211,389				12,251,587				12,177,776
PERFORMANCE RATIOS
Return on average assets (annualized)			1.38	%			1.20	%			1.24	%			1.42	%			1.60	%
Return on average equity (annualized)			14.45				12.06				12.44				14.64				16.01
Net interest margin, fully taxable equivalent (annualized)(2)			3.37				3.39				3.40				3.44				3.85
Efficiency ratio(3)			61.94				63.13				64.25				60.12				56.56
(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.

		As of
		2022				2021
(dollars in thousands)		March 31				December 31				September 30				June 30				March 31
LOAN PORTFOLIO COMPOSITION
Commercial and industrial		$	270,074			$	280,569			$	308,647			$	352,042			$	373,678
Real estate:
Construction and development			318,035				307,797				309,746				264,002				257,886
Commercial real estate			674,558				622,842				633,353				608,464				630,479
Farmland			186,982				145,501				135,413				94,525				76,867
1-4 family residential			430,755				410,673				403,403				389,616				389,542
Multi-family residential			42,021				30,971				40,810				42,086				32,090
Consumer			52,670				50,965				52,992				51,795				49,780
Agricultural			14,403				14,639				14,199				14,608				14,905
Warehouse lending			24,260				43,720				71,823				72,582				86,813
Overdrafts			303				363				495				444				327
Total loans(1)(2)		$	2,014,061			$	1,908,040			$	1,970,881			$	1,890,164			$	1,912,367
		Quarter Ended
		2022				2021
(dollars in thousands)		March 31				December 31				September 30				June 30				March 31
ALLOWANCE FOR CREDIT LOSSES
Balance at beginning of period		$	30,433			$	30,621			$	31,548			$	32,770			$	33,619
Loans charged-off			(203	)			(239	)			(244	)			(283	)			(875	)
Recoveries			116				51				17				61				26
Provision for credit loss expense			(1,250	)			—				(700	)			(1,000	)			—
Balance at end of period		$	29,096			$	30,433			$	30,621			$	31,548			$	32,770
Allowance for credit losses / period-end loans			1.44	%			1.59	%			1.55	%			1.67	%			1.71	%
Allowance for credit losses / nonperforming loans			1,084.9				1,075.0				976.7				878.0				968.7
Net charge-offs / average loans (annualized)			0.02				0.04				0.05				0.05				0.18
NON-PERFORMING ASSETS
Non-accrual loans(3)		$	2,682			$	2,831			$	3,135			$	3,593			$	3,383
Other real estate owned			—				—				40				227				312
Repossessed assets owned			7				14				63				9				4
Total non-performing assets		$	2,689			$	2,845			$	3,238			$	3,829			$	3,699
Non-performing assets as a percentage of:
Total loans(1)(2)			0.13	%			0.15	%			0.16	%			0.20	%			0.19	%
Total loans, excluding PPP(1)(2)			0.13				0.15				0.17				0.22				0.21
Total assets			0.08				0.09				0.11				0.13				0.13
TDR loans - nonaccrual		$	98			$	103			$	84			$	86			$	87
TDR loans - accruing			9,418				9,466				9,522				9,535				9,598
(1) Excludes outstanding balances of loans held for sale of $1.2 million, $4.1 million, $1.9 million, $5.1 million, and $4.7 million as of March 31, 2022, and December 31, September 30, June 30, and March 31, 2021, respectively.
(2) Excludes deferred loan fees of $1.5 million, $1.5 million, $2.0 million, $2.3 million, and $2.6 million as of March 31, 2022, and December 31, September 30, June 30, and March 31, 2021, respectively.
(3) TDR loans - nonaccrual are included in nonaccrual loans, which are a component of nonperforming loans.

		Quarter Ended
		2022				2021
(dollars in thousands)		March 31				December 31				September 30				June 30				March 31
NONINTEREST INCOME
Service charges		$	976			$	1,085			$	1,003			$	855			$	829
Net realized gain on sale of loans			905				1,127				1,759				1,244				1,398
Fiduciary and custodial income			642				615				599				570				549
Bank-owned life insurance income			211				207				215				206				212
Merchant and debit card fees			1,611				1,669				1,620				1,922				1,506
Loan processing fee income			187				188				164				164				153
Warehouse lending fees			116				164				196				211				241
Mortgage fee income			131				133				145				157				177
Other noninterest income			1,700				850				748				641				1,054
Total noninterest income		$	6,479			$	6,038			$	6,449			$	5,970			$	6,119
NONINTEREST EXPENSE
Employee compensation and benefits		$	11,532			$	11,200			$	10,998			$	10,204			$	9,943
Occupancy expenses			2,711				2,686				2,738				2,833				2,687
Legal and professional fees			770				604				644				747				604
Software and technology			1,209				1,167				1,258				1,055				1,114
Amortization			219				222				253				336				343
Director and committee fees			205				204				197				167				255
Advertising and promotions			407				470				495				338				455
ATM and debit card expense			578				643				646				616				540
Telecommunication expense			186				196				197				180				234
FDIC insurance assessment fees			233				300				214				168				169
Other noninterest expense			1,029				1,284				1,647				1,059				968
Total noninterest expense		$	19,079			$	18,976			$	19,287			$	17,703			$	17,312

		Quarter Ended March 31,
		2022												2021
(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)		$	1,937,000			$	22,272				4.66	%		$	1,886,863			$	24,195				5.20	%
Securities available for sale			328,737				1,618				2.00				378,076				2,091				2.24
Securities held to maturity			347,188				1,485				1.73				—				—				—
Nonmarketable equity securities			15,234				408				10.86				10,031				101				4.08
Interest-bearing deposits in other banks			334,871				110				0.13				334,329				126				0.15
Total interest-earning assets			2,963,030				25,893				3.54				2,609,299				26,513				4.12
Allowance for credit losses			(30,205	)											(33,242	)
Noninterest-earning assets			213,574												199,510
Total assets		$	3,146,399											$	2,775,567
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing deposits		$	1,710,157			$	1,242				0.29	%		$	1,559,865			$	1,603				0.42	%
Advances from FHLB and fed funds purchased			37,722				46				0.49				51,098				99				0.79
Line of credit			3,778				34				3.65				14,633				128				3.55
Subordinated debentures			30,699				246				3.25				19,810				188				3.85
Securities sold under agreements to repurchase			10,916				2				0.07				21,173				4				0.08
Total interest-bearing liabilities			1,793,272				1,570				0.36				1,666,579				2,022				0.49
Noninterest-bearing liabilities:
Noninterest-bearing deposits			1,027,429												808,007
Accrued interest and other liabilities			24,266												23,369
Total noninterest-bearing liabilities			1,051,695												831,376
Shareholders’ equity			301,432												277,612
Total liabilities and shareholders’ equity		$	3,146,399											$	2,775,567
Net interest rate spread(2)											3.18	%											3.63	%
Net interest income						$	24,323											$	24,491
Net interest margin(3)											3.33	%											3.81	%
Net interest margin, fully taxable equivalent(4)											3.37	%											3.85	%
(1) Includes average outstanding balances of loans held for sale of $3.2 million and $4.2 million for the quarter ended March 31, 2022 and 2021, 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
		2022				2021
(dollars in thousands, except per share data)		March 31				December 31				September 30				June 30				March 31
Equity attributable to Guaranty Bancshares, Inc.		$	291,282			$	302,214			$	297,408			$	287,729			$	280,097
Adjustments:
Goodwill			(32,160	)			(32,160	)			(32,160	)			(32,160	)			(32,160	)
Core deposit intangible, net			(2,199	)			(2,313	)			(2,426	)			(2,573	)			(2,786	)
Total tangible common equity attributable to Guaranty Bancshares, Inc.		$	256,923			$	267,741			$	262,822			$	252,996			$	245,151
Common shares outstanding - end of quarter(1)			12,066,480				12,122,717				12,081,477				12,057,937				12,053,597
Book value per common share		$	24.14			$	24.93			$	24.62			$	23.86			$	23.24
Tangible book value per common share			21.29				22.09				21.75				20.98				20.34

(1) Excludes the dilutive effect, if any, of shares of common stock issuable upon exercise of outstanding stock options.

Net Core Earnings and Net Core Earnings per Common Share

		Quarter Ended
		2022				2021
(dollars in thousands, except per share data)		March 31				December 31				September 30				June 30				March 31
Net earnings		$	10,738			$	9,159			$	9,253			$	10,432			$	10,962
Adjustments:
Provision for credit losses			(1,250	)			—				(700	)			(1,000	)			—
Income tax provision			2,235				1,923				2,179				2,312				2,336
PPP loans, including fees			(783	)			(958	)			(1,005	)			(1,954	)			(3,905	)
Net core earnings		$	10,940			$	10,124			$	9,727			$	9,790			$	9,393
Weighted-average common shares outstanding, basic			12,109,074				12,097,100				12,067,769				12,056,550				12,038,638
Earnings per common share, basic		$	0.89			$	0.76			$	0.77			$	0.87			$	0.91
Net core earnings per common share, basic			0.90				0.84				0.81				0.81				0.78

Net Core Earnings to Average Assets, as Adjusted, and Average Equity

		Quarter Ended
		2022				2021
(dollars in thousands)		March 31				December 31				September 30				June 30				March 31
Net core earnings		$	10,940			$	10,124			$	9,727			$	9,790			$	9,393
Total average assets		$	3,146,399			$	3,021,079			$	2,953,181			$	2,938,944			$	2,775,567
Adjustments:
PPP loan average balance			(36,720	)			(61,062	)			(107,931	)			(155,417	)			(137,251	)
Total average assets, adjusted		$	3,109,679			$	2,960,017			$	2,845,250			$	2,783,527			$	2,638,316
Net core earnings to average assets, as adjusted (annualized)			1.43	%			1.36	%			1.36	%			1.41	%			1.44	%
Total average equity		$	301,432			$	301,398			$	295,076			$	285,803			$	277,612
Net core earnings to average equity (annualized)			14.72	%			13.33	%			13.08	%			13.74	%			13.72	%

NON-GAAP RECONCILING TABLES

Total Non-Performing Assets to Total Loans, Excluding PPP

		Quarter Ended
		2022				2021
(dollars in thousands)		March 31				December 31				September 30				June 30				March 31
Total loans(1)(2)		$	2,014,061			$	1,908,040			$	1,970,881			$	1,890,164			$	1,912,367
Adjustments:
PPP loans balance			(19,302	)			(50,611	)			(75,304	)			(127,390	)			(158,236	)
Total loans, excluding PPP(1)(2)		$	1,994,759			$	1,857,429			$	1,895,577			$	1,762,774			$	1,754,131
Total non-performing assets		$	2,689			$	2,845			$	3,238			$	3,829			$	3,699
Non-performing assets as a percentage of:
Total loans(1)(2)			0.13	%			0.15	%			0.16	%			0.20	%			0.19	%
Total loans, excluding PPP(1)(2)			0.13				0.15				0.17				0.22				0.21
(1) Excludes outstanding balances of loans held for sale of $1.2 million, $4.1 million, $1.9 million, $5.1 million, and $4.7 million as of March 31, 2022, and December 31, September 30, June 30, and March 31, 2021, respectively.
(2) Excludes deferred loan fees of $1.5 million, $1.5 million, $2.0 million, $2.3 million, and $2.6 million as of March 31, 2022, and December 31, September 30, June 30, and March 31, 2021, respectively.

Total Interest-Earning Assets, Net of PPP Effects

		Quarter Ended March 31, 2022												Quarter Ended March 31, 2021
(dollars in thousands)		Average Outstanding Balance				Interest Earned/ Interest Paid				Average Yield/ Rate				Average Outstanding Balance				Interest Earned/ Interest Paid				Average Yield/ Rate
Total interest-earning assets		$	2,963,030			$	25,893				3.54	%		$	2,609,299			$	26,513				4.12	%
Total loans			1,937,000				22,272				4.66				1,886,863				24,195				5.20
Adjustments:
PPP loan average balance and net fees(1)			(36,720	)			(783	)			8.65				(137,251	)			(3,513	)			10.38
Total loans, net of PPP effects			1,900,280				21,489				4.59				1,749,612				20,682				4.79
Total interest-earning assets, net of PPP effects		$	2,926,310			$	25,110				3.48	%		$	2,472,048			$	23,000				3.77	%
(1) Interest earned consists of interest income of $89,000 and $335,000, and net origination fees recognized in earnings of $694,000 and $3.2 million for the quarter ended March 31, 2022 and 2021, respectively.

		Quarter Ended December 31, 2021
(dollars in thousands)		Average Outstanding Balance				Interest Earned/ Interest Paid				Average Yield/ Rate
Total interest-earning assets		$	2,844,147			$	25,518				3.56	%
Total loans			1,925,046				22,833				4.71
Adjustments:
PPP loan average balance and net fees(1)			(61,062	)			(958	)			6.22
Total loans, net of PPP effects			1,863,984				21,875				4.66
Total interest-earning assets, net of PPP effects		$	2,783,085			$	24,560				3.50	%
(1) Interest earned consists of interest income of $154,000 and net origination fees recognized in earnings of $804,000 million for the quarter ended December 31, 2021.

NON-GAAP RECONCILING TABLES

Net Interest Income and Net Interest Margin, Net of PPP Effects

(dollars in thousands)		Quarter Ended March 31, 2022				Quarter Ended December 31, 2021				Quarter Ended March 31, 2021
Net interest income		$	24,323			$	24,020			$	24,491
Adjustments:
PPP-related interest income			(89	)			(154	)			(335	)
PPP-related net origination fees			(694	)			(804	)			(3,178	)
Net interest income, net of PPP effects		$	23,540			$	23,062			$	20,978
Total average interest-earning assets		$	2,963,030			$	2,844,147			$	2,609,299
Total average interest-earning assets, net of PPP effects			2,926,310				2,783,085				2,472,048
Net interest margin(1)			3.33	%			3.35	%			3.81	%
Net interest margin, net of PPP effects(2)			3.26				3.29				3.44
Net interest income		$	24,323			$	24,020			$	24,491
Interest income tax adjustments			298				277				250
Net interest income, fully taxable equivalent ("FTE")		$	24,621			$	24,297			$	24,741
Net interest income, FTE, net of PPP effects			23,838				23,339				21,228
Net interest margin, FTE(3)			3.37	%			3.39	%			3.85	%
Net interest margin, FTE, net of PPP effects(4)			3.30				3.33				3.48
(1) Net interest margin is equal to net interest income divided by average interest-earning assets, annualized.
(2) Net interest margin is equal to net interest income, net of PPP effects, divided by average interest-earning assets, excluding average PPP loans, annualized. Taxes are not a part of this calculation.
(3) 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%.
(4) Net interest margin on a taxable equivalent basis is equal to net interest income, net of PPP effects, adjusted for nontaxable income divided by average interest-earning assets, excluding average PPP loans, annualized, using a marginal tax rate of 21%.

Efficiency Ratio, Net of PPP Effects

(dollars in thousands)		Quarter Ended March 31, 2022				Quarter Ended December 31, 2021				Quarter Ended March 31, 2021
Total noninterest expense		$	19,079			$	18,976			$	17,312
Adjustments:
PPP-related deferred costs			—				—				392
Total noninterest expense, net of PPP effects		$	19,079			$	18,976			$	17,704
Net interest income			24,323				24,020				24,491
Net interest income, net of PPP effects			23,540				23,062				20,978
Total noninterest income		$	6,479			$	6,038			$	6,119
Securities gains (losses)			—				—				—
Noninterest income, as adjusted		$	6,479			$	6,038			$	6,119
Efficiency ratio(1)			61.94	%			63.13	%			56.56	%
Efficiency ratio, net of PPP effects(2)			63.56				65.21				65.34
(1) 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.
(2) The efficiency ratio, net of PPP effects, was calculated by dividing total noninterest expense, net of PPP-related deferred costs, by net interest income, net of PPP effects, plus noninterest income, excluding securities gains or losses. Taxes are not part of this calculation.

NON-GAAP RECONCILING TABLES

Loan Yield, Net of PPP Effects

		Quarter Ended March 31, 2022												Quarter Ended December 31, 2021
(dollars in thousands)		Average Outstanding Balance				Interest Earned/ Interest Paid				Average Yield/ Rate				Average Outstanding Balance				Interest Earned/ Interest Paid				Average Yield/ Rate
Total loans		$	1,937,000			$	22,272				4.66	%		$	1,925,046			$	22,833				4.71	%
Adjustments:
PPP loans average balance and net fees			(36,720	)			(783	)			8.65				(61,062	)			(958	)			6.22
Total loans, net of PPP effects		$	1,900,280			$	21,489				4.59	%		$	1,863,984			$	21,875				4.66	%
Effect of removing PPP loans on loan yield											-0.07	%											-0.05	%

		Quarter Ended March 31, 2022												Quarter Ended March 31, 2021
(dollars in thousands)		Average Outstanding Balance				Interest Earned/ Interest Paid				Average Yield/ Rate				Average Outstanding Balance				Interest Earned/ Interest Paid				Average Yield/ Rate
Total loans		$	1,937,000			$	22,272				4.66	%		$	1,886,863			$	24,195				5.20	%
Adjustments:
PPP loans average balance and net fees			(36,720	)			(783	)			8.65				(137,251	)			(3,513	)			10.38
Total loans, net of PPP effects		$	1,900,280			$	21,489				4.59	%		$	1,749,612			$	20,682				4.79	%
Effect of removing PPP loans on loan yield											-0.07	%											-0.41	%

ACL to Total Loans, Excluding PPP

(dollars in thousands)		As of March 31, 2022				As of December 31, 2021				As of March 31, 2021
Total loans		$	2,014,061			$	1,908,040			$	1,912,367
Adjustments:
PPP loans			(19,302	)			(50,611	)			(158,236	)
Total loans, excluding PPP		$	1,994,759			$	1,857,429			$	1,754,131
Allowance for credit losses		$	29,096			$	30,433			$	32,770
Allowance for credit losses / period-end loans			1.44	%			1.59	%			1.71	%
Allowance for credit losses / period-end loans. excluding PPP			1.46				1.64				1.87

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 2022 financial results on Monday, April 18, 2022 at 10:00 am Central Daylight Time. The conference call will be hosted by Ty Abston, Chairman and CEO, Cappy Payne, SEVP and CFO, and Shalene Jacobson, EVP and CRO. 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 Daylight Time the day of the call and remain available through April 30, 2022 on our Investor Relations webpage.

About Guaranty Bancshares, Inc.

Guaranty Bancshares, Inc. is a bank holding company that conducts commercial banking activities through its wholly-owned subsidiary, Guaranty Bank & Trust, N.A. As one of the oldest regional community banks in Texas, Guaranty Bank & Trust provides its customers with a full array of relationship-driven commercial and consumer banking products and services, as well as mortgage, trust, and wealth management services. Guaranty Bank & Trust has 32 banking locations across 26 Texas communities located within the East Texas, Dallas/Fort Worth, greater Houston and Central Texas regions of the state. As of March 31, 2022, Guaranty Bancshares, Inc. had total assets of $3.19 billion, total loans of $2.01 billion and total deposits of $2.80 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/20220418005176/en/

Cappy Payne

Senior Executive Vice President and Chief Financial Officer

Guaranty Bancshares, Inc.

(888) 572-9881

investors@gnty.com

Source: Guaranty Bancshares, Inc.

FAQ

What were Guaranty Bancshares' earnings for Q1 2022?

Guaranty Bancshares reported earnings of $10.7 million, or $0.89 per share for Q1 2022.

How did loan growth perform for GNTY in Q1 2022?

The loan portfolio grew by $156.8 million, or 8.6%, excluding PPP and warehouse loans.

What is the outlook for Guaranty Bancshares considering inflation?

While there are positive trends, rising inflation and interest rates raise concerns about future economic conditions.

What was the return on assets for GNTY in Q1 2022?

Return on average assets for Guaranty Bancshares was 1.38% for Q1 2022.