Guaranty Bancshares Delivers Solid Q3 Performance Amid Economic Headwinds

Guaranty Bancshares, Inc. (NYSE: GNTY), the parent company of Guaranty Bank & Trust, N.A., has reported its financial results for the fiscal quarter ended September 30, 2024. The company's net income available to common shareholders stood at $7.4 million, or $0.65 per basic share, showcasing resilience in the face of economic challenges.

Navigating Uncertain Times with Prudence and Foresight

Margin Expansion and Consistent Earnings

Guaranty Bancshares' net interest margin, on a fully taxable equivalent basis, continued to improve in the third quarter, reaching 3.33%, up from 3.26% in the previous quarter and 3.02% in the prior year quarter. This expansion was driven by a decrease in interest-bearing liability costs, while earning assets continued to reprice upward. The company's earnings remained fairly consistent with the prior quarter, with improvements in net interest income, non-interest income, and employee and compensation expenses, partially offset by a lower reverse provision for credit losses and higher provision for income taxes.

Solid Balance Sheet and Liquidity Position

Guaranty Bancshares has strategically managed its balance sheet, primarily by paying off debt and allowing non-relationship loans to mature. This approach positions the company to capitalize on growth or merger and acquisition opportunities when the economic conditions improve. The company's capital and liquidity ratios, as well as its contingent liquidity sources, remain robust. During the third quarter, the company repurchased 59,996 shares of its common stock, representing 0.53% of its average shares outstanding, at an average price of $30.65 per share. The company's liquidity ratio, calculated as cash and cash equivalents and unpledged investments divided by total liabilities, stood at 17.1% as of September 30, 2024, up from 14.0% a year earlier. Additionally, Guaranty Bancshares' total available contingent liquidity, net of current outstanding borrowings, was $1.4 billion, consisting of FHLB, FRB, and correspondent bank fed funds and revolving lines of credit.

Maintaining Asset Quality Amid Challenges

Guaranty Bancshares' overall credit quality remains strong, with low expected losses on deteriorating credits due to the bank's equity position and strong guarantor support. Nonperforming assets as a percentage of total assets were 0.66% at the end of the third quarter, down from 0.71% in the previous quarter and 0.09% a year earlier. Net charge-offs (annualized) to average loans were 0.04% for the quarter, compared to 0.01% in the prior quarter and 0.11% in the year-ago quarter. The company recorded a reverse provision for credit losses of $500,000 during the third quarter, in addition to the $1.45 million reverse provision during the first half of the year, reflecting the decline in gross loan balances and stable credit quality trends.

Deposit Base Remains Granular and Consistent

Guaranty Bancshares maintains a historically reliable core deposit base, with strong and trusted banking relationships. As of September 30, 2024, the company had 89,878 total deposit accounts with an average account balance of $29,695. Total deposits increased by $42.8 million during the third quarter, with DDA and time deposit balances increasing by $19.2 million and $24.5 million, respectively, while savings and MMDA balances decreased by $965,000. Excluding public funds and bank-owned accounts, the company's uninsured deposits as of September 30, 2024, were 26.3% of total deposits. Interest rates paid on deposits during the quarter stabilized with minimal increases, and noninterest-bearing deposits represented 31.5% of total deposits as of the end of the quarter.

Operational Efficiency and Profitability

Guaranty Bancshares' efficiency ratio for the third quarter of 2024 was 70.47%, an improvement from 72.64% in the prior year quarter and 72.34% in the previous quarter. The company's return on average assets and average equity for the third quarter were 0.96% and 9.58%, respectively, compared to 0.95% and 9.91% in the prior quarter and 0.78% and 8.43% in the year-ago quarter.In summary, Guaranty Bancshares has demonstrated its ability to navigate the challenging economic environment, delivering solid financial performance, maintaining a strong balance sheet and liquidity position, and preserving asset quality. The company's focus on prudent management and strategic positioning positions it well to capitalize on future growth opportunities and deliver favorable results for its shareholders.