Guaranty Bancshares, Inc. Reports First Quarter 2024 Financial Results

Rhea-AI Summary

Guaranty Bancshares, Inc. reported strong financial results for the first quarter of 2024, with a net income of $6.7 million and earnings per share of $0.58. Return on average assets and equity also showed improvement. The increase in earnings was attributed to higher non-interest income and lower expenses, while the decrease compared to the previous year was due to lower net interest income. The company's balance sheet remains strong, with stable core deposits and manageable credit quality.

Positive

• Strong net income of $6.7 million and earnings per share of $0.58 for the first quarter of 2024
• Improvement in return on average assets and equity
• Higher non-interest income and lower expenses contributed to increased earnings
• Lower net interest income compared to the previous year led to a decrease in earnings
• Stable core deposits and manageable credit quality
• Net interest margin improved to 3.16% in the first quarter of 2024

Negative

• None.

Insights

Financial Analyst

The reported increase of Guaranty Bancshares, Inc.'s net income to $6.7 million in the first quarter of 2024 from $5.9 million in the previous quarter signifies a bullish trend for the company's short-term profitability. Notably, the boost in non-interest income and reduction in non-interest expense are positive indicators. However, the year-over-year decline from $8.3 million is worth investigating deeper. This could suggest either operational challenges or perhaps shifts in market dynamics affecting their net interest income.

Furthermore, the enhanced return on average assets, from 0.73% to 0.85%, as well as on average equity, from 7.93% to 8.93%, indicates a satisfactory allocation and utilization of both assets and equity. The dividend increase to $0.24 further illustrates the company's confidence in their financial stability and commitment to shareholder value.

Banking Industry Analyst

Attention to the net interest margin (NIM) performance is key for stakeholders. Improving from 3.02% to 3.16% over two quarters suggests the bank's strategy in managing the spread between interest income generated and the interest paid to lenders is effective. This is of particular interest as it is an essential gauge of a bank's profitability. The deliberate contraction of the balance sheet through conservative loan underwriting might be a strategic move to mitigate risk in an uncertain economic environment. However, it may signal a cautious stance that could affect growth potential.

The repayment of brokered CDs and FHLB borrowings is a sound liquidity management move, reducing future interest expenses and reliance on potentially volatile external funding. This consolidation of the balance sheet must be balanced with growth strategies to ensure long-term competitive positioning in the market.

Risk Management Analyst

The apparent stable growth in core deposits and the description of credit quality as 'manageable' provides a glimpse into the bank's risk profile. Ensuring a stable deposit base is fundamental for liquidity and speaks to customer confidence. However, the term 'manageable' could imply there are underlying credit risks that require careful monitoring, especially in an economic landscape that is susceptible to rapid changes.

Future credit quality is a critical factor for investors, as it impacts loan loss provisions and ultimately profitability. Guaranty Bancshares' strategy to reduce balance sheet size as a precautionary measure might be prudent, but stakeholders should watch for how this affects the bank's ability to generate income and capitalise on market opportunities.

ADDISON, Texas--(BUSINESS WIRE)-- Guaranty Bancshares, Inc. (NYSE: GNTY) (the “Company”), the parent company of Guaranty Bank & Trust, N.A. (the “Bank”), today reported financial results for the fiscal quarter ended March 31, 2024. The Company’s net income available to common shareholders was $6.7 million, or $0.58 per basic share, for the quarter ended March 31, 2024, compared to $5.9 million, or $0.51 per basic share, for the quarter ended December 31, 2023 and $8.3 million, or $0.69 per basic share, for the quarter ended March 31, 2023. Return on average assets and average equity for the first quarter of 2024 were 0.85% and 8.93%, respectively, compared to 0.73% and 7.93%, respectively, for the fourth quarter of 2023 and 1.01% and 11.18%, respectively, for the first quarter of 2023. The increase in earnings during the first quarter of 2024 compared to the fourth quarter of 2023 was primarily due to higher non-interest income and lower non-interest expense. The decrease in earnings in the first quarter of 2024 compared to the first quarter of 2023 was primarily due to lower net interest income in the current quarter compared to the prior year quarter.

“We are pleased with our first quarter 2024 results. During the quarter, net interest margin continued to improve, we paid down borrowings from the FHLB, we repaid the remaining $25.0 million of brokered CDs that were obtained to test as a source of liquidity, our core deposits are stable and grew slightly and credit quality remains manageable. Although we’ve strategically shrunk the balance sheet primarily through more conservative loan underwriting, our balance sheet remains strong and continues to provide consistent earnings results. Liquidity and capital remain solid and our board of directors increased the dividend paid on GNTY stock from $0.23 last quarter to $0.24 this quarter, further improving shareholder returns and value,” said Ty Abston, the Company’s Chairman and Chief Executive Officer.

QUARTERLY HIGHLIGHTS

• Good Earnings and Improving NIM. Earnings were good in the first quarter as net interest margin improved and non-interest income was boosted from sales of SBA and mortgage loans as well as recoveries from previously marked-down receivables due from the SBA. Net interest margin, on a fully taxable equivalent basis, has continued to improve from 3.02% in the third quarter of 2023 to 3.11% in the fourth quarter of 2023 and 3.16% in the first quarter of 2024. The improvements have resulted primarily from a slow-down in deposit cost increases, while earning assets have continued to reprice upward. The SBA receivable was related to the guaranteed portion of three SBA loans that were acquired from Westbound Bank. The receivable was partially written down in the third quarter of 2022, as there was uncertainty at that time about possible SBA haircuts in the guaranteed portion due to file documentation. However, after extensive review by the SBA, the full amount of guarantees was received during the first quarter of 2024.

• Stable Asset Quality. Although we are seeing some deterioration for certain borrowers, overall credit quality remains strong and the expected losses on deteriorating credits are low primarily due to the Bank's equity position and/or strong guarantor support. During the quarter, we foreclosed on a multi-purpose commercial real estate loan in a vibrant location in the South Austin area and recorded other real estate owned of $14.9 million. A recent appraisal indicates an LTV (prior to foreclosure) of 68.5%. Interest in purchasing the property has been high and we are in discussions with several interested parties. We expect little or no loss on the sale of this other real estate owned. Nonperforming assets as a percentage of total assets were 0.68% at March 31, 2024, compared to 0.18% at December 31, 2023 and 0.40% at March 31, 2023. Net charge-offs (annualized) to average loans were 0.02% for the quarter ended March 31, 2024, compared to 0.04% for the quarter ended December 31, 2023, and 0.00% for the quarter ended March 31, 2023.
  
  Commercial real estate (CRE) loans, particularly office related loans, have received increased scrutiny in recent months. As of March 31, 2024, our CRE loans and real estate C&D loans represent 40.0% and 12.1% of the total loan portfolio, respectively, and office-related loans represent 4.6% of the total loan portfolio and have an average balance of $516,000.

• Granular and Consistent Core Deposit Base. As of March 31, 2024, we have 88,493 total deposit accounts with an average account balance of $29,696. We have a historically reliable core deposit base, with strong and trusted banking relationships. Total deposits decreased by $5.4 million during the first quarter, which resulted primarily from the maturity of $25.0 million in brokered deposits in February 2024 that we did not renew. Excluding these brokered CDs, total core deposits grew $19.6 million during the first quarter. DDA balances decreased $27.1 million, savings and MMDA balances increased $30.8 million and time deposits (excluding matured brokered CDs) increased $15.9 million. Excluding public funds and bank-owned accounts, our uninsured deposits as of March 31, 2024 were 25.43% of total deposits.
  
  Interest rates paid on deposits during the quarter stabilized with minimal increases. Despite the decrease in DDA during the quarter, noninterest-bearing deposits still represent 31.5% of total deposits. Our cost of interest-bearing deposits increased eight basis points during the quarter from 3.17% in the prior quarter to 3.25%. This increase was primarily due to renewals of maturing certificates of deposit into new CDs paying higher rates and the shift from noninterest-bearing balances to interest-bearing. Our cost of total deposits for the first quarter of 2024 increased nine basis points from 2.14% in the prior quarter to 2.23%^†.

• Healthy Capital and Liquidity. Our capital and liquidity ratios, as well as contingent liquidity sources, remain very healthy. During the first quarter of 2024, we repurchased 11,651 shares of our common stock, or 0.10% of average shares outstanding during the period, at an average price of $28.76 per share. Our liquidity ratio, calculated as cash and cash equivalents and unpledged investments divided by total liabilities, was 10.6% as of March 31, 2024, compared to 15.3% as of March 31, 2023. Our total available contingent liquidity, net of current outstanding borrowings, was $1.3 billion, consisting of FHLB, FRB and correspondent bank fed funds and revolving lines of credit. Finally, our total equity to average quarterly assets as of March 31, 2024 was 9.6%. If we had to recognize our entire unrealized losses on both AFS and HTM securities, our total equity to average assets ratio would be 8.8%^†, which we believe represents 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 first quarter of 2024 and 2023 was $23.6 million and $25.2 million, respectively, a decrease of $1.6 million, or 6.3%. The decrease in net interest income resulted from an increase in interest expense of $5.2 million, or 43.3%, compared to the prior year quarter, which was partially offset by an increase in interest income of $3.6 million, or 9.7%, from the same quarter in the prior year. The increases in both interest income and expense resulted primarily from higher rates during the period. Interest expense was also somewhat impacted by a shift from noninterest-bearing to interest-bearing deposit accounts, which resulted in increased expense in the first quarter of 2024 compared to the prior year quarter. Our noninterest-bearing deposits to total deposits were 31.5% and 37.8% as of March 31, 2024 and 2023, respectively.

Net interest margin, on a fully taxable equivalent basis, for the first quarter of 2024 and 2023 was 3.16% and 3.24%, respectively. Net interest margin, on a fully taxable equivalent basis, decreased nine basis points primarily due to interest-bearing liabilities repricing faster than our interest-earning assets during the period. The cost of interest-bearing liabilities increased 98 basis points from the prior year quarter, while interest earning asset yields increased 70 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 1.91% to 3.25%, a change of 134 basis points, in the first quarter of 2024 compared to the same period in 2023, as well as increased rates on FHLB advances, which increased from 4.94% to 5.45%, an increase of 51 basis points, from the prior year quarter. The increases in cost were partially offset by increases in yield on the loan portfolio from 5.46% to 6.21%, or 75 basis points, as well as 109 and 13 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 $62.9 million in new loans originated in the first quarter was 8.39%.

Net interest income, before the provision for credit losses, decreased $226,000, or 0.9%, from $23.8 million in the fourth quarter of 2023 to $23.6 million in the first quarter of 2024. The decrease in net interest income resulted primarily from an increase in interest expense of $182,000, or 1.1%, and a decrease in interest income of $44,000, or 0.1%. The decrease in interest income was primarily due to a decrease in gross loans of $57.3 million, or 2.5%.

Net interest margin, on a fully taxable equivalent basis, increased from 3.11% for the fourth quarter of 2023 to 3.16% for the first quarter of 2024, an increase of four basis points. The increase in net interest margin, on a fully taxable equivalent basis, was primarily due to an increase on loan yield from 6.06% for the fourth quarter of 2023 to 6.21% for the first quarter of 2024, a change of 15 basis points, and a decrease in total interest-earning assets during the first quarter of 2024. This increase was partially offset by an increase in the cost of interest-bearing deposits from 3.17% in the fourth quarter of 2023 to 3.25% in the first quarter of 2024, a change of eight basis points.

We recorded a $250,000 reversal to our provision for credit losses during the first quarter of 2024. Our loan balances decreased $57.3 million during the quarter, while credit quality trends remained relatively stable and the qualitative factors used to account for changes in economic conditions and expected losses were adjusted in 2023. Those assumptions remain relevant in the current quarter, thus no additional q-factor adjustments were made in the current quarter. As of March 31, 2024 and December 31, 2023, our allowance for credit losses as a percentage of total loans was 1.35% and 1.33%, respectively.

Noninterest income increased $353,000, or 7.2%, in the first quarter of 2024 to $5.3 million, compared to $4.9 million for the first quarter of 2023. The increase from the same quarter in 2023 was primarily due to $499,000 in recoveries made on three SBA loans during the first quarter of 2024. This was partially offset by a $130,000 decrease in the gain on mortgage loans sold and a decrease on the gain on sale of loans of $42,000, or 13.4%, along with a $27,000, or 39.7%, decrease in mortgage fee income compared to the same quarter in the prior year.

Noninterest expense increased $725,000, or 3.6%, in the first quarter of 2024 to $20.7 million, compared to $20.0 million for the first quarter of 2023. The increase in noninterest expense in the first quarter of 2024 was driven primarily by a $189,000, or 32.4%, increase in legal and professional fees primarily related to recruiting fees, an increase in software and technology expense of $246,000, or 17.6%, and a $173,000, or 1.4%, increase in employee compensation and benefits compared to the first quarter of 2023. These were partially offset by a $98,000, or 36.7%, decrease in advertising and promotions expense.

Noninterest income in the first quarter of 2024 increased by $462,000, or 9.6%, from $4.8 million in the fourth quarter of 2023. The increase was primarily due to an increase in other noninterest income of $454,000, or 65.0%, primarily the result of $499,000 in recoveries made on three SBA loans and an increase in the gain on sale of loans of $76,000, or 38.8%, during the first quarter of 2024.

Noninterest expense decreased $710,000, or 3.3%, in the first quarter of 2024, from $21.4 million for the quarter ended December 31, 2023. The decrease resulted from a $278,000, or 2.2%, decrease in employee compensation and benefits due to a retirement accrual booked in the fourth quarter of 2023, which was not present in 2024. Additionally, there was a $183,000, or 52.0%, decrease in advertising and promotions expense, a $182,000, or 19.1%, decrease in legal and professional fees and a $98,000, or 5.6%, decrease in software and technology expense during the first quarter of 2024 compared to the fourth quarter of 2023.

The Company’s efficiency ratio in the first quarter of 2024 was 71.74%, compared to 66.41% in the prior year quarter and 74.81% in the fourth quarter of 2024.

FINANCIAL CONDITION

Consolidated assets for the Company totaled $3.13 billion at March 31, 2024, compared to $3.18 billion at December 31, 2023 and $3.36 billion at March 31, 2023.

Gross loans decreased by $57.3 million, or 2.5%, during the quarter resulting in a gross loan balance of $2.27 billion at March 31, 2024, compared to $2.32 billion at December 31, 2023. Our decline in loans resulted primarily from tighter underwriting due to the current economic environment and from lower demand from potential borrowers.

Gross loans decreased $112.6 million, or 4.7%, from $2.38 billion at March 31, 2023. The decrease in gross loans during the first quarter of 2024 compared to the first quarter of 2023 resulted from tightened credit underwriting standards and loan terms, along with fewer borrower requests in response to higher interest rates. Additionally, there was a $10.7 million decrease in warehouse lending loans, as we discontinued that line of business in the second quarter of 2023.

Total deposits decreased by $5.4 million, or 0.2%, to $2.63 billion at March 31, 2024, compared to $2.63 billion at December 31, 2023, and increased $4.5 million, or 0.2%, from $2.62 billion at March 31, 2023. The decrease in deposits during the first quarter of 2024 compared to the fourth quarter of 2023 was the result of a decrease in noninterest-bearing deposits of $24.1 million, offset by an increase in interest-bearing deposits of $18.7 million. The decrease in interest-bearing deposits included the maturity of $25.0 million in brokered CDs in February 2024 that we did not renew. The increase in deposits during the current quarter compared to the prior year quarter resulted primarily from an increase in interest-bearing deposits of $168.1 million, partially offset by a decrease in noninterest-bearing deposits of $163.7 million.

Nonperforming assets as a percentage of total loans were 0.94% at March 31, 2024, compared to 0.25% at December 31, 2023 and 0.57% at March 31, 2023. Nonperforming assets as a percentage of total assets were 0.68% at March 31, 2024, compared to 0.18% at December 31, 2023, and 0.40% at March 31, 2023. The Bank’s nonperforming assets consist primarily of other real estate owned and nonaccrual loans. The increase in nonperforming assets compared to the prior year end and prior year quarter was primarily due to the increase in other real estate owned, which is described in the quarterly highlights above.

Total equity was $305.9 million at March 31, 2024, compared to $303.8 million at December 31, 2023 and $300.3 million at March 31, 2023. The increase in total equity compared to the prior year end and prior year quarter resulted primarily from net income of $6.7 million, the payment of dividends of $2.8 million during the period and a reduction in repurchases during the first quarter of 2024 compared to prior quarters.

		As of
		2024				2023
(dollars in thousands)		March 31				December 31				September 30				June 30				March 31
ASSETS
Cash and due from banks		$	43,872			$	47,744			$	47,922			$	47,663			$	59,030
Federal funds sold			24,300				36,575				73,275				44,950				95,400
Interest-bearing deposits			4,921				5,205				8,980				4,738				3,695
Total cash and cash equivalents			73,093				89,524				130,177				97,351				158,125
Securities available for sale			228,787				196,195				178,644				166,596				173,744
Securities held to maturity			363,963				404,208				408,308				437,292				476,105
Loans held for sale			874				976				2,506				795				1,260
Loans, net			2,234,012				2,290,881				2,286,163				2,300,882				2,344,240
Accrued interest receivable			11,747				13,143				11,307				11,110				10,443
Premises and equipment, net			56,921				57,018				56,712				56,151				55,457
Other real estate owned			14,900				—				—				—				38
Cash surrender value of life insurance			42,119				42,348				42,096				41,830				38,619
Core deposit intangible, net			1,312				1,418				1,524				1,633				1,746
Goodwill			32,160				32,160				32,160				32,160				32,160
Other assets			67,550				56,920				80,816				60,396				64,350
Total assets		$	3,127,438			$	3,184,791			$	3,230,413			$	3,206,196			$	3,356,287
LIABILITIES AND EQUITY
Deposits
Noninterest-bearing		$	828,861			$	852,957			$	903,391			$	915,462			$	992,527
Interest-bearing			1,798,983				1,780,289				1,754,902				1,687,355				1,630,841
Total deposits			2,627,844				2,633,246				2,658,293				2,602,817				2,623,368
Securities sold under agreements to repurchase			39,058				25,172				19,366				20,532				13,338
Accrued interest and other liabilities			33,807				32,242				31,218				30,701				30,125
Line of credit			—				4,500				2,000				12,000				—
Federal Home Loan Bank advances			75,000				140,000				175,000				195,000				340,000
Subordinated debentures			45,819				45,785				47,752				47,719				49,186
Total liabilities			2,821,528				2,880,945				2,933,629				2,908,769				3,056,017
Equity attributable to Guaranty Bancshares, Inc.			305,371				303,300				296,226				296,862				299,700
Noncontrolling interest			539				546				558				565				570
Total equity			305,910				303,846				296,784				297,427				300,270
Total liabilities and equity		$	3,127,438			$	3,184,791			$	3,230,413			$	3,206,196			$	3,356,287

		Quarter Ended
		2024				2023
(dollars in thousands, except per share data)		March 31				December 31				September 30				June 30				March 31
STATEMENTS OF EARNINGS
Interest income		$	40,752			$	40,796			$	39,818			$	38,734			$	37,144
Interest expense			17,165				16,983				16,516				14,031				11,982
Net interest income			23,587				23,813				23,302				24,703				25,162
Reversal of provision for credit losses			(250	)			—				—				—				—
Net interest income after provision for credit losses			23,837				23,813				23,302				24,703				25,162
Noninterest income			5,258				4,796				4,939				7,873				4,905
Noninterest expense			20,692				21,402				20,514				20,471				19,967
Income before income taxes			8,403				7,207				7,727				12,105				10,100
Income tax provision			1,722				1,341				1,437				2,529				1,823
Net earnings		$	6,681			$	5,866			$	6,290			$	9,576			$	8,277
Net loss attributable to noncontrolling interest			7				12				7				5				4
Net earnings attributable to Guaranty Bancshares, Inc.		$	6,688			$	5,878			$	6,297			$	9,581			$	8,281
PER COMMON SHARE DATA
Earnings per common share, basic		$	0.58			$	0.51			$	0.54			$	0.82			$	0.69
Earnings per common share, diluted			0.58				0.51				0.54				0.81				0.69
Cash dividends per common share			0.24				0.23				0.23				0.23				0.23
Book value per common share - end of quarter			26.47				26.28				25.64				25.58				25.13
Tangible book value per common share - end of quarter(1)			23.57				23.37				22.72				22.67				22.29
Common shares outstanding - end of quarter(4)			11,534,960				11,540,644				11,554,094				11,603,167				11,925,357
Weighted-average common shares outstanding, basic			11,539,167				11,536,878				11,568,897				11,735,475				11,939,593
Weighted-average common shares outstanding, diluted			11,598,239				11,589,165				11,619,342				11,756,512				12,012,004
PERFORMANCE RATIOS
Return on average assets (annualized)			0.85	%			0.73	%			0.78	%			1.17	%			1.01	%
Return on average equity (annualized)			8.93				7.93				8.43				12.87				11.18
Net interest margin, fully taxable equivalent (annualized)(2)			3.16				3.11				3.02				3.19				3.24
Efficiency ratio(3)			71.74				74.81				72.64				62.84				66.41
(1) See Non-GAAP Reconciling Tables.
(2) Net interest margin on a fully 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
		2024				2023
(dollars in thousands)		March 31				December 31				September 30				June 30				March 31
LOAN PORTFOLIO COMPOSITION
Commercial and industrial		$	269,560			$	287,565			$	292,410			$	295,864			$	295,936
Real estate:
Construction and development			273,300				296,639				317,484				345,127				372,203
Commercial real estate			906,684				923,195				901,321				891,883				900,190
Farmland			180,502				186,295				188,614				187,105				190,802
1-4 family residential			523,573				514,603				504,002				496,340				499,944
Multi-family residential			44,569				44,292				42,720				44,385				44,760
Consumer			54,375				57,059				58,294				59,498				60,163
Agricultural			12,418				12,685				13,076				13,447				13,545
Overdrafts			276				243				328				252				270
Total loans(1)(2)		$	2,265,257			$	2,322,576			$	2,318,249			$	2,333,901			$	2,377,813
		Quarter Ended
		2024				2023
(dollars in thousands)		March 31				December 31				September 30				June 30				March 31
ALLOWANCE FOR CREDIT LOSSES
Balance at beginning of period		$	30,920			$	31,140			$	31,759			$	31,953			$	31,974
Loans charged-off			(310	)			(242	)			(644	)			(224	)			(94	)
Recoveries			200				22				25				30				73
Reversal of provision for credit loss expense			(250	)			—				—				—				—
Balance at end of period		$	30,560			$	30,920			$	31,140			$	31,759			$	31,953
Allowance for credit losses / period-end loans			1.35	%			1.33	%			1.34	%			1.36	%			1.34	%
Allowance for credit losses / nonperforming loans			496.0				552.9				1,148.2				894.6				238.4
Net charge-offs / average loans (annualized)			0.02				0.04				0.11				0.03				0.00
NONPERFORMING ASSETS
Nonaccrual loans		$	6,161			$	5,592			$	2,712			$	3,550			$	13,405
Other real estate owned			14,900				—				—				—				38
Repossessed assets owned			236				234				250				—				—
Total nonperforming assets		$	21,297			$	5,826			$	2,962			$	3,550			$	13,443
Nonperforming assets as a percentage of:
Total loans(1)(2)			0.94	%			0.25	%			0.13	%			0.15	%			0.57	%
Total assets			0.68				0.18				0.09				0.11				0.40
(1) Excludes outstanding balances of loans held for sale of $874,000, $976,000, $2.5 million, $795,000, and $1.3 million as of March 31, 2024, and December 31, September 30, June 30, and March 31, 2023, respectively.
(2) Excludes deferred loan fees of $685,000, $775,000, $(946,000), $1.3 million, and $1.6 million as of March 31, 2024, and December 31, September 30, June 30, and March 31, 2023, respectively.

		Quarter Ended
		2024				2023
(dollars in thousands)		March 31				December 31				September 30				June 30				March 31
NONINTEREST INCOME
Service charges		$	1,069			$	1,123			$	1,131			$	1,056			$	1,077
Net realized (loss) gain on securities transactions			—				—				—				(322	)			93
Net realized gain on sale of loans			272				196				218				473				314
Fiduciary and custodial income			649				624				637				630				638
Bank-owned life insurance income			251				249				267				211				214
Merchant and debit card fees			1,706				1,760				1,752				2,121				1,674
Loan processing fee income			118				116				128				142				134
Mortgage fee income			41				30				46				50				68
Other noninterest income			1,152				698				760				3,512				693
Total noninterest income		$	5,258			$	4,796			$	4,939			$	7,873			$	4,905
NONINTEREST EXPENSE
Employee compensation and benefits		$	12,437			$	12,715			$	11,944			$	11,939			$	12,264
Occupancy expenses			2,747				2,757				2,960				2,754				2,830
Legal and professional fees			772				954				902				985				583
Software and technology			1,642				1,740				1,490				1,531				1,396
Amortization			143				145				147				149				161
Director and committee fees			200				186				192				201				199
Advertising and promotions			169				352				288				269				267
ATM and debit card expense			609				763				803				739				599
Telecommunication expense			173				175				178				171				183
FDIC insurance assessment fees			360				321				363				522				301
Other noninterest expense			1,440				1,294				1,247				1,211				1,184
Total noninterest expense		$	20,692			$	21,402			$	20,514			$	20,471			$	19,967

		Quarter Ended March 31,
		2024												2023
(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)		$	2,299,177			$	35,491				6.21	%		$	2,388,045			$	32,157				5.46	%
Securities available for sale			216,298				1,851				3.44				184,572				1,068				2.35
Securities held to maturity			393,394				2,533				2.59				502,760				3,050				2.46
Nonmarketable equity securities			24,438				248				4.08				28,381				419				5.99
Interest-bearing deposits in other banks			45,672				629				5.54				34,986				450				5.22
Total interest-earning assets			2,978,979				40,752				5.50				3,138,744				37,144				4.80
Allowance for credit losses			(30,879	)											(31,934	)
Noninterest-earning assets			230,829												218,195
Total assets		$	3,178,929											$	3,325,005
LIABILITIES AND EQUITY
Interest-bearing liabilities:
Interest-bearing deposits		$	1,789,119			$	14,459				3.25	%		$	1,624,610			$	7,655				1.91	%
Advances from FHLB and fed funds purchased			141,593				1,920				5.45				310,103				3,774				4.94
Line of credit			841				18				8.61				—				—				—
Subordinated debt			45,797				517				4.54				49,164				540				4.45
Securities sold under agreements to repurchase			41,271				251				2.45				10,974				13				0.48
Total interest-bearing liabilities			2,018,621				17,165				3.42				1,994,851				11,982				2.44
Noninterest-bearing liabilities:
Noninterest-bearing deposits			823,638												1,002,793
Accrued interest and other liabilities			35,469												26,912
Total noninterest-bearing liabilities			859,107												1,029,705
Equity			301,201												300,449
Total liabilities and equity		$	3,178,929											$	3,325,005
Net interest rate spread(2)											2.08	%											2.36	%
Net interest income						$	23,587											$	25,162
Net interest margin(3)											3.18	%											3.25	%
Net interest margin, fully taxable equivalent(4)											3.16	%											3.24	%
(1) Includes average outstanding balances of loans held for sale of $704,000 and $1.7 million for the quarter ended March 31, 2024 and 2023, 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 fully 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
		2024				2023
(dollars in thousands, except per share data)		March 31				December 31				September 30				June 30				March 31
Equity attributable to Guaranty Bancshares, Inc.		$	305,371			$	303,300			$	296,226			$	296,862			$	299,700
Adjustments:
Goodwill			(32,160	)			(32,160	)			(32,160	)			(32,160	)			(32,160	)
Core deposit intangible, net			(1,312	)			(1,418	)			(1,524	)			(1,633	)			(1,746	)
Total tangible common equity attributable to Guaranty Bancshares, Inc.		$	271,899			$	269,722			$	262,542			$	263,069			$	265,794
Common shares outstanding(1)			11,534,960				11,540,644				11,554,094				11,603,167				11,925,357
Book value per common share		$	26.47			$	26.28			$	25.64			$	25.58			$	25.13
Tangible book value per common share(1)			23.57				23.37				22.72				22.67				22.29
(1) Excludes the dilutive effect, if any, of shares of common stock issuable upon exercise of outstanding stock options.

Net Unrealized Loss on Securities, Tax Effected, as a Percentage of Total Equity

(dollars in thousands)		March 31, 2024
Total equity(1)		$	305,910
Less: net unrealized loss on HTM securities, tax effected			(25,662	)
Total equity, including net unrealized loss on AFS and HTM securities		$	280,248
Net unrealized loss on AFS securities, tax effected			16,709
Net unrealized loss on HTM securities, tax effected			25,662
Net unrealized loss on AFS and HTM securities, tax effected		$	42,371
Net unrealized loss on securities as % of total equity(1)			13.9	%
Total equity before impact of unrealized losses		$	322,619
Net unrealized loss on securities as % of total equity before impact of unrealized losses			13.1	%
Total average assets		$	3,178,929
Total equity to average assets			9.6	%
Total equity, adjusted for tax effected net unrealized loss, to average assets			8.8	%
(1) Includes the net unrealized loss on AFS securities, tax effected, of $16,709.

Cost of Total Deposits

		Quarter Ended
(dollars in thousands)		March 31, 2024				December 31, 2023				March 31, 2023
Total average interest-bearing deposits		$	1,789,119			$	1,788,863			$	1,624,610
Adjustments:
Noninterest-bearing deposits			823,638				865,817				1,002,793
Total average deposits		$	2,612,757			$	2,654,680			$	2,627,403
Total deposit-related interest expense		$	14,459			$	14,311			$	7,655
Average cost of interest-bearing deposits			3.25	%			3.17	%			1.91	%
Average cost of total deposits			2.23				2.14				1.18

About Non-GAAP Financial Measures

Certain of the financial measures and ratios we present, including “tangible book value per common 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 first quarter 2024 financial results on Monday, April 15, 2024 at 10:00 am Central Time. The conference call will be hosted by Ty Abston, Chairman and CEO, and Shalene Jacobson, EVP and CFO. All conference attendees must register before the call at www.gnty.com/earningscall. The conference materials will be available by accessing the Investor Relations page on our website, www.gnty.com. A recording of the conference call will be available by 1:00 pm Central Time the day of the call and remain available through April 31, 2024 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 33 banking locations across 26 Texas communities located within the East Texas, Dallas/Fort Worth, Houston and Central Texas regions of the state. As of March 31, 2024, Guaranty Bancshares, Inc. had total assets of $3.1 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, and other risks and uncertainties listed from time to time in our reports and documents filed with the Securities and Exchange Commission. 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/20240415092208/en/

Shalene Jacobson

Executive Vice President and Chief Financial Officer

Guaranty Bancshares, Inc.

(888) 572-9881

investors@gnty.com

Source: Guaranty Bancshares, Inc.

FAQ

What was Guaranty Bancshares, Inc.'s net income for the first quarter of 2024?

Guaranty Bancshares, Inc. reported a net income of $6.7 million for the first quarter of 2024.

What was the earnings per share for Guaranty Bancshares, Inc. in the first quarter of 2024?

Guaranty Bancshares, Inc. had earnings per share of $0.58 for the first quarter of 2024.

What was the return on average assets for Guaranty Bancshares, Inc. in the first quarter of 2024?

The return on average assets for Guaranty Bancshares, Inc. in the first quarter of 2024 was 0.85%.

What contributed to the increase in earnings for Guaranty Bancshares, Inc. in the first quarter of 2024?

Higher non-interest income and lower non-interest expenses contributed to the increase in earnings for Guaranty Bancshares, Inc. in the first quarter of 2024.

Why did Guaranty Bancshares, Inc.'s earnings decrease in the first quarter of 2024 compared to the first quarter of 2023?

The decrease in earnings for Guaranty Bancshares, Inc. in the first quarter of 2024 compared to the first quarter of 2023 was primarily due to lower net interest income in the current quarter.

What was the net interest margin for Guaranty Bancshares, Inc. in the first quarter of 2024?

The net interest margin for Guaranty Bancshares, Inc. was 3.16% in the first quarter of 2024.