Guaranty Bancshares, Inc. (NASDAQ: GNTY), the parent company of
Guaranty Bank & Trust, N.A., today reported financial results
for the fiscal quarter ended March 31, 2021. The Company's net
income available to common shareholders was $11.0 million, or $0.95
per basic share, for the quarter ended March 31, 2021, compared to
$9.9 million, or $0.90 per basic share, for the quarter ended
December 31, 2020 and $6.3 million, or $0.55 per basic share, for
the quarter ended March 31, 2020. Return on average assets and
average equity for the first quarter of 2021 were 1.60% and 16.01%,
respectively, compared to 1.48% and 14.53%, respectively, for the
fourth quarter of 2020 and 1.09% and 9.94%, respectively, for the
first quarter of 2020. The increase in earnings during the first
quarter of 2021, compared to the fourth quarter of 2020, was partly
due to the forgiveness and amortization of Paycheck Protection
Program - round one (“PPP1”) loans and recognition of associated
loan origination fees for both PPP1 and round two (“PPP2”) loans,
decreases in interest expense relative to interest income,
decreases in non-interest expense resulting from PPP origination
costs and lower legal and professional expenses. Net core
earnings†, excluding provisions for credit losses, income
taxes and PPP1/PPP2 net origination 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 are very pleased with our operating and financial results
for the first quarter of 2021. The Texas economy appears to be
rebounding nicely from many of the prior year’s concerns resulting
from COVID-19 and we’re glad to see people in our communities
receiving vaccinations and continuing to work at stopping the
spread of the virus. All of our lobbies are back open at normal
business hours, and many of our employees have returned to normal
working conditions with the remainder expected to during the second
quarter. Our borrowers have generally weathered the downturn well
over the last year and we’re pleased that only a handful of credits
remain in an interest-only deferral period. We anticipate that
these borrowers will return to their normal contractual payment
schedules during the second quarter of 2021. As our first quarter
results indicate, we’ve sustained our net interest margin at good
levels compared to industry trends and continue to have excellent
asset quality and strong net core earnings. Additionally, during
the first quarter of 2021 we issued a 10% stock dividend and
declared a cash dividend of $0.20/share, which is an increase over
last year on a split-adjusted basis of over 12%. We continue to
view our multi-decade history of providing a growing dividend to
our shareholders as a big part of the value proposition to our
shareholder’s total return," commented Ty Abston, the Company's
Chairman and Chief Executive Officer.
QUARTERLY HIGHLIGHTS
- Strong Net Earnings. Net earnings for the quarter were
$11.0 million, up from $9.9 million for the immediately prior
quarter and up from $6.3 million for the same quarter of 2020. Net
core earnings†, which exclude provisions for credit losses
and income tax, net PPP income, and interest on PPP-related
borrowings, were $9.8 million for the first quarter, compared to
$9.6 million for the fourth quarter of 2021, and $9.1 million
during the first quarter of 2020.
- Solid Net Interest Margin. The fully tax-equivalent
(“FTE”) net interest margin was 3.85% for the first quarter of
2021, compared to 3.85% in the preceding quarter and 3.87% in the
first quarter of 2020. Net interest income increased $539,000, or
2.3%, from $24.0 million in the fourth quarter of 2020 to $24.5
million in the first quarter of 2021. Interest expense decreased
$279,000, or 12.1%, from $2.3 million in the fourth quarter of 2020
to $2.0 million in first quarter of 2021. The Bank continues to
decrease cost of funds as higher rate CDs mature and to reduce
interest rates on non-maturing deposits as market conditions allow.
In addition, 63.0% of the loan portfolio, or $1.2 billion, has
interest rate floors and 55% of those loans are currently at their
floors. The weighted average interest rate of loans currently at
their floor is 4.43%.
- Steady Credit Quality and Reduced Deferrals.
Non-performing assets as a percentage of total loans were 0.19% at
March 31, 2021, compared to 0.70% at December 31, 2020 and 1.00% at
March 31, 2020. Net charge-offs to average loans (annualized) were
0.18% at March 31, 2021, compared to 0.03% at December 31, 2020,
and 0.05% at March 31, 2020. The decrease in non-performing assets
and the increase in charge-offs during the quarter resulted
primarily from the resolution of three problem loans, made to two
borrowers, with outstanding combined book balances of $8.7 million
at December 31, 2020, that were acquired during the Westbound
acquisition and which were fully reserved prior to the onset of
COVID-19. The level of COVID-related loan deferrals provided by the
Bank has declined significantly from the levels in the first and
second quarters of 2020. Information about subsequent deferrals
made on those loans described further in the Financial Condition
section below.
- Paycheck Protection Program. The Bank continued
participation in the PPP2 program during the first quarter and as
of March 31, 2021, has issued $84.5 million of PPP2 loans to 932
borrowers, which resulted in $1.8 million in net origination fees
recognized by the Bank. The Bank also recognized $1.4 million in
deferred origination fees during the quarter from PPP1 loans
through both amortization and forgiveness of the related PPP1
loans. As of March 31, 2021, there are 530 PPP1 loans with
outstanding balances of $73.7 million remaining in our loan
portfolio, a reduction of 64.8% from the $209.6 million to 1,944
borrowers that was originated under the PPP1 program. Net deferred
origination income as of March 31, 2021 is $784,000 and $2.1
million from PPP1 and PPP2, respectively.
RESULTS OF OPERATIONS
Large provisions for credit losses in the second quarter of 2020
resulting from effects of COVID-19 and participation in the PPP1
and PPP2 program have created temporary extraordinary results in
the calculation of net earnings and related performance ratios.
With the credit outlook still uncertain as a result of COVID-19 and
other economic factors, 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
2021
2020
$ in thousands ('000s)
March 31
December 31
September 30
June 30
March 31
Net earnings
$
10,962
$
9,915
$
10,134
$
1,075
$
6,278
Adjustments:
Provision for credit losses
—
—
(300
)
12,100
1,400
Income tax provision (benefit)
2,336
2,290
2,350
(190
)
1,445
PPP loans, including fees
(3,513
)
(2,654
)
(1,076
)
(2,540
)
—
Net interest expense on PPP-related
borrowings
—
—
3
31
—
Net core earnings†
$
9,785
$
9,551
$
11,111
$
10,476
$
9,123
Total average assets
$
2,775,567
$
2,659,725
$
2,639,335
$
2,657,609
$
2,325,618
Adjustments:
PPP loans average balance
(137,251
)
(179,240
)
(209,506
)
(163,184
)
—
Excess fed funds sold due to PPP-related
borrowings
—
—
(8,152
)
(84,066
)
—
Total average assets, adjusted†
$
2,638,316
$
2,480,485
$
2,421,677
$
2,410,359
$
2,325,618
Total average equity
$
277,612
$
271,397
$
265,027
$
258,225
$
253,919
PERFORMANCE RATIOS
Net earnings to average assets
(annualized)
1.60
%
1.48
%
1.53
%
0.16
%
1.09
%
Net earnings to average equity
(annualized)
16.01
14.53
15.21
1.67
9.94
Net core earnings to average assets, as
adjusted (annualized)†
1.50
1.53
1.83
1.75
1.58
Net core earnings to average equity
(annualized)†
14.29
14.00
16.68
16.32
14.45
PER COMMON SHARE DATA
Weighted-average common shares
outstanding, basic
11,528,140
10,966,504
11,012,060
11,025,924
11,432,391
Earnings per common share, basic
$
0.95
$
0.90
$
0.92
$
0.10
$
0.55
Net core earnings per common share,
basic†
0.85
0.87
1.01
0.95
0.80
† 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 2021 and 2020 was $24.5 million and $20.6
million, respectively, an increase of $3.9 million, or 19.1%, as a
result of PPP origination income of $3.5 million recorded in the
first quarter of 2021 that did not occur in the first quarter of
2020 partially offset by a $1.8 million decline in loan interest
income, excluding PPP-related income, due to the continued
repricing of variable rate loans to lower interest rates. The
increase in net interest income was also due to a decrease in
deposit-related interest expense of $2.8 million, or 63.7%,
compared to the same quarter of the prior year. Net interest
income, before the provision for credit losses, in the fourth
quarter of 2020 and first quarter of 2021 was $24.0 million and
$24.5 million, respectively, an increase of $539,000, or 2.3%,
resulting primarily from a decrease in deposit-related interest
expense of $275,000, or 14.6%, and an increase in loan income of
$197,000, or 0.8%, during the current quarter driven primarily by
$3.5 million of PPP origination income compared to $2.7 million in
the fourth quarter of 2020.
Net interest margin, on a taxable equivalent basis, for the
first quarter of 2021 and 2020 was 3.85% and 3.87%, respectively.
Loan yield decreased from 5.32% for the first quarter of 2020 to
5.20% for the first quarter of 2021, a change of 12 basis points,
while the cost of interest-bearing deposits decreased from 1.21% to
0.42% during the same period, a change of 79 basis points. The
decrease in loan yield was primarily due to the repricing of
variable rate loans to lower interest rates during the period. The
decrease in average deposit rate was primarily due to continued
reductions in interest rates for non-maturing deposits as market
conditions have allowed.
Net interest margin, on a taxable equivalent basis, stayed at
3.85% from the fourth quarter of 2020 to the first quarter of 2021.
Loan yield increased from 4.93% for the fourth quarter of 2020 to
5.20% for the first quarter of 2021, a change of 27 basis points.
Loan yield, excluding the effect PPP loans, was 4.79% in the first
quarter of 2021, compared to 4.83% in the fourth quarter of 2020, a
decrease of four basis points, due to the continued repricing of
variable rate loans to lower interest rates. The cost of
interest-bearing deposits decreased from 0.51% to 0.42% during the
same period, a change of nine basis points. The decrease was due
primarily to the maturity of higher-rate CDs during the first
quarter of 2021, as well as continued reductions in interest rates
for non-maturing deposits as market conditions have allowed.
The Bank’s continued participation in the PPP program has
created temporary extraordinary results in the calculation of net
interest margin. To illustrate core net interest margin, the table
below excludes PPP1 and PPP2 loans and their associated fees and
costs for the three months ended March 31, 2021:
For the Three Months Ended March
31, 2021
$ in thousands ('000s)
Average Outstanding Balance
Interest Earned/ Interest
Paid
Average Yield/ Rate
Total loans
$
1,886,863
$
24,195
5.20
%
Adjustments:
PPP1 loans average balance and net
fees(1)
(101,689
)
(1,651
)
6.58
PPP2 loans average balance and net
fees(2)
(35,562
)
(1,862
)
21.23
Total PPP loans(3)
$
(137,251
)
$
(3,513
)
10.38
%
Total loans, excluding PPP
$
1,749,612
$
20,682
4.79
%
Total interest-earning assets
2,609,299
26,513
4.12
Total interest-earning assets, net of PPP
effects†
$
2,472,048
$
23,000
3.77
%
Net interest income
$
24,491
Net interest margin(4)
3.81
%
Net interest margin, FTE(5)
3.85
Net interest income, net of PPP
effects†
20,978
Net interest margin, net of PPP
effects†(6)
3.44
Net interest margin, FTE, net of PPP
effects†(7)
3.48
Efficiency ratio(8)
56.56
Efficiency ratio, net of PPP
effects†(9)
65.34
† 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 $247,000 and net origination fees recognized
in earnings of $1.4 million for the three months ended March 31,
2021.
(2) Interest earned on PPP2 loans consists
of interest income of $88,000 and net origination fees recognized
in earnings of $1.8 million for the three months ended March 31,
2021.
(3) Interest earned consists of interest
income of $335,000 and net origination fees recognized in earnings
of $3.2 million for the three months ended March 31, 2021.
(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, 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, 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 year ended December 31, 2020, a total allowance for
credit losses provision of $13.2 million was recorded primarily to
account for the estimated impact of COVID-19 on credit quality and
resulted largely from changes to individual loan risk ratings, as
well as COVID-specific qualitative factors primarily derived from
changes in national GDP, Texas unemployment rates and national
industry related CRE trends, all of which were impacted by the
effects of COVID-19. There was no provision for ACL during the
first quarter of 2021, partially due to the aforementioned
COVID-specific qualitative factors established during 2020 being
reduced during the quarter from 55 basis points across the loan
portfolio to 42 basis points in order to begin to capture the
improvements that have occurred to macro-economic factors evaluated
at the onset of the pandemic. Despite our current quarter loan
growth, ex-PPP, of 1.6%, we did not record a provision because our
reductions in the COVID-specific qualitative factors, as well as
increases in our standard qualitative factors during the quarter,
outweigh the effects of the loan growth. Although management is
cautiously optimistic about improving vaccination and economic
trends, it is possible that the economic effects of the pandemic
could continue beyond 2021, although we expect the credit impact of
the pandemic to be largely understood and accounted for by the end
of 2021.
Noninterest income increased $1.2 million, or 23.3%, in the
first quarter of 2021, to $6.1 million, compared to $5.0 million
for the first quarter of 2020. The increase from the same quarter
in 2020 was due primarily to an increase in the gain on sale of
loans of $209,000, or 17.6%, and an increase in merchant and debit
card fees of $375,000, or 33.2%, from the same quarter of the prior
year. The remaining increase resulted from a $277,000 gain on
bank-owned life insurance proceeds resulting from the death of a
former bank officer, a $156,000 increase in mortgage and warehouse
fee income, a $57,000 increase in SBA income due to a fair value
adjustment and a $48,000 increase on gains on sale of ORE.
Noninterest income in the first quarter of 2021 decreased by
$307,000, or 4.8%, from $6.4 million in fourth quarter of 2020 due
primarily to a decrease in gains on sales of mortgage and SBA loans
of $625,000, or 30.9%. Of the decrease in gains on sales of loans,
$497,000 was attributable to lower mortgage related gains and
$127,000 was attributable to the sale of SBA loans during the
fourth quarter of 2020, and no SBA loan sales in the first quarter
of 2021. The decrease was partially offset by a $277,000 gain from
bank-owned life insurance proceeds.
Noninterest expense increased $905,000, or 5.5%, in the first
quarter of 2021, compared to the first quarter of 2020. The
increase in noninterest expense in the first quarter of 2021 was
primarily driven by an increase in employee compensation and
benefits expense of $477,000, or 5.0%, to $9.9 million, from the
same quarter of the prior year, as well as an increase in occupancy
expenses of $210,000, or 8.5%, from the same quarter of the prior
year and an increase in ATM and debit card expense of $122,000, or
29.2%, resulting from increased usage of ATM and debit cards during
the period. Software and technology expense also increased
$175,000, or 18.6%, as a result of new software and hardware
investments to allow employees to securely work from home and to
improve online deposit account opening.
Noninterest expense decreased $861,000, or 4.7%, in the first
quarter of 2021 to $17.3 million, compared to the quarter ended
December 31, 2020. The decrease was primarily due to a $364,000, or
37.6%, decrease in legal and professional fees, primarily recruiter
and audit fees incurred in fourth quarter of 2020 that were not
incurred during the first quarter of 2021, and a $268,000, or 2.6%,
decrease in employee compensation and benefits, primarily
attributable to PPP2 origination costs deferred of $392,000. The
remaining decrease was due to a $315,000 decrease in other
noninterest expense, which includes a $93,000 decrease in stock
compensation expense from the prior quarter. The company’s
efficiency ratio in the first quarter of 2021 was 56.56%, compared
to 59.82% in the prior quarter and 64.27% in the same quarter last
year. Adjusted to remove the effects of PPP-related transactions,
the company’s efficiency ratio† for the first quarter of
2021 was 65.34% and for the fourth quarter of 2020 was 65.55%.
† 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 $2.89 billion at
March 31, 2021, compared to $2.74 billion at December 31, 2020 and
$2.39 billion at March 31, 2020. Gross loans increased 2.4%, or
$45.5 million, to $1.91 billion at March 31, 2021, compared to
loans of $1.87 billion at December 31, 2020. Gross loans increased
11.3%, or $194.0 million, from $1.72 billion at March 31, 2020. The
increase in gross loans during the first quarter of 2021 compared
to the first quarter of 2020 included outstanding PPP loan balances
of $158.2 million, to 1,462 borrowers, as of March 31, 2021.
Excluding the outstanding PPP balances as of March 31, 2021, gross
loans increased $35.8 million, or 2.08%, from the same quarter of
the prior year. The increase in gross loans from the fourth quarter
of 2020 to the first quarter of 2021 is primarily due to organic
growth, but also due to the $18.4 million, or 13.2%, growth in
outstanding PPP loan balances in the first quarter of 2021.
Excluding the increase in the balance of PPP loans, gross loans
increased by 1.57%, or $27.1 million, from the prior quarter.
Deposits increased by 8.3%, or $188.8 million, to $2.48 billion
at March 31, 2021, compared to $2.29 billion at December 31, 2020.
Total deposits increased 23.7%, or $474.8 million, from $2.00
billion at March 31, 2020. Changes in deposits during these periods
were heavily impacted by the deposit of PPP loan proceeds into
demand accounts at the Bank, as well as apparent changes in
depositor spending habits in these periods resulting from economic
and other uncertainties due to COVID-19. Shareholders' equity
totaled $280.1 million as of March 31, 2021, compared to $272.6
million at December 31, 2020 and $253.6 million at March 31, 2020.
The increase from the previous quarter resulted primarily from net
income of $11.0 million, offset by the payment of dividends of $2.4
million and $1.8 million of other comprehensive expense during the
first quarter of 2021.
Nonperforming assets as a percentage of total loans were 0.19%
at March 31, 2021, compared to 0.70% at December 31, 2020 and 1.00%
at March 31, 2020. The Bank’s nonperforming assets consist
primarily of nonaccrual loans. During 2020, nonperforming assets
included three Small Business Administration (SBA) 7(a), partially
guaranteed (75%) loans that were acquired in the June 2018
acquisition of Westbound Bank, with combined book balances of $8.7
million as of December 31, 2020. During the first quarter of 2021,
one of these loans was resolved when the underlying collateral, a
hotel, was sold to a third party. The bank charged off $475,000 in
connection with the sale, all of which had previously been
specifically reserved within the ACL. The other two loans,
collateralized by a hotel and both to one borrower, were resolved
through a bankruptcy judgement that allows the borrower to
adequately service their debt coverage. The bankruptcy order
resulted in a charge-off of $270,000, which was fully reserved in
the ACL. These loans were internally identified as problem assets
prior to COVID-19 and were properly reserved.
During the first and second quarters of 2020, the Bank provided
financial relief to many of its customers due to the COVID-19
outbreak through either 3-month principal and interest (“P&I”)
payment deferrals or through 6-month interest-only (“I/O”)
deferrals. Under the initial deferral program, the Bank provided
3-month P&I deferrals on 658 loans with principal balances of
$247.8 million and provided up to 6-month I/O deferrals on 336
loans with principal balances of $183.7 million. As of March 31,
2021, there are no loans remaining in the P&I deferral program
and there are 11 loans totaling $49.8 million that remain in a
subsequent I/O deferral program. We anticipate that all of these
borrowers, who are primarily in the hotel, restaurant and
hospitality industries, will return to their contractual payment
schedules at the end of their I/O deferral period with no
additional subsequent deferrals.
Finally, management continues to closely monitor loans and
concentrations in COVID-19 affected industries. Social distancing
and other measures as a result of the virus have particularly
affected the restaurant, hospitality and retail commercial real
estate (“CRE”) sectors. Although all capacity and other
restrictions in Texas have been removed, some local and
business-specific restrictions remain in place. Excluding SBA
partially guaranteed (75%) loans, the Bank has direct exposure,
through total loan commitments with weighted average loan-to-values
(“LTV”), as of March 31, 2021, of $24.9 million with 59.7% weighted
average LTV to restaurants, $51.4 million with 51.5% weighted
average LTV to retail CRE and $68.5 million with 56.3% weighted
average LTV to hotel/hospitality borrowers.
Guaranty Bancshares,
Inc.
Consolidated Financial Summary
(Unaudited)
(In thousands, except share and
per share data)
As of
2021
2020
March 31
December 31
September 30
June 30
March 31
ASSETS
Cash and due from banks
$
38,534
$
47,836
$
35,714
$
35,490
$
40,354
Federal funds sold
356,750
218,825
101,300
104,375
81,250
Interest-bearing deposits
28,188
85,130
56,357
51,129
25,324
Total cash and cash equivalents
423,472
351,791
193,371
190,994
146,928
Securities available for sale
407,736
380,795
368,887
376,381
377,062
Securities held to maturity
—
—
—
—
—
Loans held for sale
4,663
5,542
9,148
7,194
4,024
Loans, net
1,876,985
1,831,737
1,921,234
1,919,201
1,696,861
Accrued interest receivable
8,064
9,834
8,361
11,864
8,148
Premises and equipment, net
54,903
55,212
55,468
55,251
54,496
Other real estate owned
312
404
310
402
605
Cash surrender value of life insurance
35,836
35,510
35,304
34,920
34,713
Core deposit intangible, net
2,786
2,999
3,213
3,426
3,639
Goodwill
32,160
32,160
32,160
32,160
32,160
Other assets
44,383
34,848
35,228
35,402
32,348
Total assets
$
2,891,300
$
2,740,832
$
2,662,684
$
2,667,195
$
2,390,984
LIABILITIES AND SHAREHOLDERS'
EQUITY
Deposits
Noninterest-bearing
$
878,883
$
779,740
$
776,364
$
772,179
$
528,817
Interest-bearing
1,596,327
1,506,650
1,446,718
1,469,847
1,471,609
Total deposits
2,475,210
2,286,390
2,223,082
2,242,026
2,000,426
Securities sold under agreements to
repurchase
24,007
15,631
20,520
17,414
11,843
Accrued interest and other liabilities
28,080
25,257
25,814
25,960
23,645
Line of credit
15,000
12,000
7,000
2,000
20,000
Federal Home Loan Bank advances
49,096
109,101
99,105
100,610
70,614
Subordinated debentures
19,810
19,810
20,310
20,310
10,810
Total liabilities
2,611,203
2,468,189
2,395,831
2,408,320
2,137,338
Total shareholders' equity
280,097
272,643
266,853
258,875
253,646
Total liabilities and shareholders'
equity
$
2,891,300
$
2,740,832
$
2,662,684
$
2,667,195
$
2,390,984
Guaranty Bancshares,
Inc.
Consolidated Financial Summary
(Unaudited)
(In thousands, except share and
per share data)
Quarter Ended
2021
2020
March 31
December 31
September 30
June 30
March 31
STATEMENTS OF EARNINGS
Interest income
$
26,513
$
26,253
$
24,956
$
26,581
$
25,252
Interest expense
2,022
2,301
2,677
3,399
4,683
Net interest income
24,491
23,952
22,279
23,182
20,569
Provision for credit losses
—
—
(300
)
12,100
1,400
Net interest income after provision for
credit losses
24,491
23,952
22,579
11,082
19,169
Noninterest income
6,119
6,426
6,663
4,987
4,961
Noninterest expense
17,312
18,173
16,758
15,184
16,407
Income before income taxes
13,298
12,205
12,484
885
7,723
Income tax provision (benefit)
2,336
2,290
2,350
(190
)
1,445
Net earnings
$
10,962
$
9,915
$
10,134
$
1,075
$
6,278
PER COMMON SHARE DATA
Earnings per common share, basic
$
0.95
$
0.90
$
0.92
$
0.10
$
0.55
Earnings per common share, diluted(1)
0.94
0.90
0.92
0.10
0.55
Cash dividends per common share
0.20
0.20
0.20
0.19
0.19
Book value per common share - end of
quarter
23.24
24.93
24.29
23.50
22.79
Tangible book value per common share - end
of quarter(2)
20.34
21.72
21.07
20.27
19.58
Common shares outstanding - end of
quarter
12,053,597
10,935,415
10,988,239
11,013,804
11,128,556
Weighted-average common shares
outstanding, basic
11,528,140
10,966,504
11,012,060
11,025,924
11,432,391
Weighted-average common shares
outstanding, diluted(1)
11,667,278
11,019,292
11,012,060
11,025,924
11,432,391
PERFORMANCE RATIOS
Return on average assets (annualized)
1.60
%
1.48
%
1.53
%
0.16
%
1.09
%
Return on average equity (annualized)
16.01
14.53
15.21
1.67
9.94
Net interest margin, fully taxable
equivalent (annualized)(3)
3.85
3.85
3.61
3.78
3.87
Efficiency ratio(4)
56.56
59.82
57.90
53.90
64.27
(1) Outstanding options and the closing
price of the company's stock as of September 30, June 30 and March
31, 2020 had an anti-dilutive effect on each respective quarter
end's weighted-average common shares outstanding; therefore, the
effect of their conversion has been excluded from the calculation
of the diluted weighted-average common shares outstanding for those
periods. The diluted EPS for those quarters has been calculated
using the basic weighted-average shares outstanding in order to
comply with GAAP. There was not an anti-dilutive effect for the
quarters ended March 31, 2021 and December 31, 2020.
(2) See Reconciliation of non-GAAP
Financial Measures table.
(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) 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.
Guaranty Bancshares,
Inc.
Selected Financial Data
(Unaudited)
(In thousands)
As of
2021
2020
March 31
December 31
September 30
June 30
March 31
LOAN PORTFOLIO COMPOSITION
Commercial and industrial
$
460,491
$
445,771
$
531,152
$
522,248
$
297,163
Real estate:
Construction and development
257,886
270,407
269,101
265,982
263,973
Commercial real estate
630,479
594,216
602,664
606,061
584,883
Farmland
76,867
78,508
80,197
77,625
78,635
1-4 family residential
389,542
389,096
385,783
383,590
400,605
Multi-family residential
32,090
21,701
19,499
29,692
20,430
Consumer
49,780
51,044
52,855
52,986
52,996
Agricultural
14,905
15,734
17,004
18,981
19,314
Overdrafts
327
342
379
275
354
Total loans(1)(2)
$
1,912,367
$
1,866,819
$
1,958,634
$
1,957,440
$
1,718,353
Quarter Ended
2021
2020
March 31
December 31
September 30
June 30
March 31
ALLOWANCE FOR CREDIT LOSSES
Balance at beginning of period
$
33,619
$
33,757
$
34,119
$
21,948
$
20,750
Loans charged-off
(875
)
(159
)
(101
)
(59
)
(224
)
Recoveries
26
21
39
130
22
Provision for credit loss expense
—
—
(300
)
12,100
1,400
Balance at end of period
$
32,770
$
33,619
$
33,757
$
34,119
$
21,948
Allowance for credit losses / period-end
loans
1.71
%
1.80
%
1.72
%
1.74
%
1.28
%
Allowance for credit losses /
nonperforming loans
968.7
264.6
245.0
235.6
135.2
Net charge-offs (recoveries) / average
loans (annualized)
0.18
0.03
0.01
(0.02
)
0.05
NON-PERFORMING ASSETS
Non-accrual loans(3)
$
3,383
$
12,705
$
13,780
$
14,480
$
16,232
Other real estate owned
312
404
310
402
605
Repossessed assets owned
4
6
3
38
292
Total non-performing assets
$
3,699
$
13,115
$
14,093
$
14,920
$
17,129
Non-performing assets as a percentage
of:
Total loans(1)(2)
0.19
%
0.70
%
0.72
%
0.76
%
1.00
%
Total loans, excluding PPP(1)(2)
0.21
0.76
0.81
0.85
1.00
Total assets
0.13
0.48
0.53
0.56
0.72
TDR loans - nonaccrual
$
87
$
90
$
92
$
95
$
97
TDR loans - accruing
9,598
9,626
7,891
7,216
7,220
(1) Excludes outstanding balances of loans
held for sale of $4.7 million, $5.5 million, $9.1 million, $7.2
million, and $4.0 million as of March 31, 2021, December 31,
September 30, June 30 and March 31, 2020, respectively.
(2) Excludes deferred loan (fees) costs of
$(2.6) million, $(1.5) million, $(3.6) million, $(4.1) million, and
$456,000 as of March 31, 2021, December 31, September 30, June 30
and March 31, 2020, respectively.
(3) TDR loans - nonaccrual are included in
nonaccrual loans, which are a component of nonperforming loans.
Guaranty Bancshares,
Inc.
Selected Financial Data
(Unaudited)
(In thousands)
Quarter Ended
2021
2020
March 31
December 31
September 30
June 30
March 31
NONINTEREST INCOME
Service charges
$
829
$
868
$
717
$
571
$
908
Net realized gain on sale of loans
1,398
2,023
2,114
1,508
1,189
Fiduciary and custodial income
549
513
511
474
514
Bank-owned life insurance income
212
205
208
207
218
Merchant and debit card fees
1,506
1,396
1,654
1,334
1,131
Loan processing fee income
153
167
181
130
150
Warehouse lending fees
241
262
288
243
164
Mortgage fee income
177
197
272
204
98
Other noninterest income
1,054
795
718
316
589
Total noninterest income
$
6,119
$
6,426
$
6,663
$
4,987
$
4,961
NONINTEREST EXPENSE
Employee compensation and benefits
$
9,943
$
10,211
$
9,439
$
8,077
$
9,466
Occupancy expenses
2,687
2,596
2,597
2,550
2,477
Legal and professional fees
604
968
574
589
519
Software and technology
1,114
1,127
1,093
945
939
Amortization
343
340
338
338
333
Director and committee fees
255
251
211
165
219
Advertising and promotions
455
356
301
408
433
ATM and debit card expense
540
545
509
479
418
Telecommunication expense
234
244
231
209
180
FDIC insurance assessment fees
169
252
252
122
195
Other noninterest expense
968
1,283
1,213
1,302
1,228
Total noninterest expense
$
17,312
$
18,173
$
16,758
$
15,184
$
16,407
Guaranty Bancshares,
Inc.
Selected Financial Data
(Unaudited)
(In thousands)
For the Three Months Ended March
31,
2021
2020
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)
$
1,886,863
$
24,195
5.20
%
$
1,701,525
$
22,517
5.32
%
Securities available for sale
378,076
2,091
2.24
220,303
1,313
2.40
Securities held to maturity
—
—
—
144,531
956
2.66
Nonmarketable equity securities
10,031
101
4.08
9,221
114
4.97
Interest-bearing deposits in other
banks
334,329
126
0.15
75,677
352
1.87
Total interest-earning assets
2,609,299
26,513
4.12
2,151,257
25,252
4.72
Allowance for loan losses
(33,242
)
(20,781
)
Noninterest-earning assets
199,510
195,142
Total assets
$
2,775,567
$
2,325,618
LIABILITIES AND SHAREHOLDERS'
EQUITY
Interest-bearing liabilities:
Interest-bearing deposits
$
1,559,865
$
1,603
0.42
%
$
1,475,507
$
4,421
1.21
%
Advances from FHLB and fed funds
purchased
51,098
99
0.79
23,236
82
1.42
Line of credit
14,633
128
3.55
3,407
—
—
Subordinated debentures
19,810
188
3.85
10,810
171
6.36
Securities sold under agreements to
repurchase
21,173
4
0.08
12,827
9
0.28
Total interest-bearing liabilities
1,666,579
2,022
0.49
1,525,787
4,683
1.23
Noninterest-bearing liabilities:
Noninterest-bearing deposits
808,007
524,263
Accrued interest and other liabilities
23,369
21,649
Total noninterest-bearing liabilities
831,376
545,912
Shareholders’ equity
277,612
253,919
Total liabilities and shareholders’
equity
$
2,775,567
$
2,325,618
Net interest rate spread(2)
3.63
%
3.49
%
Net interest income
$
24,491
$
20,569
Net interest margin(3)
3.81
%
3.85
%
Net interest margin, fully taxable
equivalent(4)
3.85
%
3.87
%
(1) Includes average outstanding balances
of loans held for sale of $4.2 million and $2.4 million for the
three months ended March 31, 2021 and 2020, 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%.
Guaranty Bancshares,
Inc.
Reconciliation of Non-GAAP
Financial Measures (Unaudited)
(In thousands, except share and
per share data)
Tangible Book Value per Common Share
As of
2021
2020
March 31
December 31
September 30
June 30
March 31
Total shareholders’ equity
$
280,097
$
272,643
$
266,853
$
258,875
$
253,646
Adjustments:
Goodwill
(32,160
)
(32,160
)
(32,160
)
(32,160
)
(32,160
)
Core deposit intangible, net
(2,786
)
(2,999
)
(3,213
)
(3,426
)
(3,639
)
Total tangible common equity
$
245,151
$
237,484
$
231,480
$
223,289
$
217,847
Common shares outstanding - end of
quarter(1)
12,053,597
10,935,415
10,988,239
11,013,804
11,128,556
Book value per common share
$
23.24
$
24.93
$
24.29
$
23.50
$
22.79
Tangible book value per common share
20.34
21.72
21.07
20.27
19.58
(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
2021
2020
March 31
December 31
September 30
June 30
March 31
Net earnings
$
10,962
$
9,915
$
10,134
$
1,075
$
6,278
Adjustments:
Provision for credit losses
—
—
(300
)
12,100
1,400
Income tax provision (benefit)
2,336
2,290
2,350
(190
)
1,445
PPP loans, including fees
(3,513
)
(2,654
)
(1,076
)
(2,540
)
—
Net interest expense on PPP-related
borrowings
—
—
3
31
—
Net core earnings
$
9,785
$
9,551
$
11,111
$
10,476
$
9,123
Weighted-average common shares
outstanding, basic
11,528,140
10,966,504
11,012,060
11,025,924
11,432,391
Earnings per common share, basic
$
0.95
$
0.90
$
0.92
$
0.10
$
0.55
Net core earnings per common share,
basic
0.85
0.87
1.01
0.95
0.80
Net Core Earnings to Average Assets, as Adjusted, and
Average Equity
Quarter Ended
2021
2020
March 31
December 31
September 30
June 30
March 31
Net core earnings
$
9,785
$
9,551
$
11,111
$
10,476
$
9,123
Total average assets
$
2,775,567
$
2,659,725
$
2,639,335
$
2,657,609
$
2,325,618
Adjustments:
PPP loan average balance
(137,251
)
(179,240
)
(209,506
)
(163,184
)
—
Excess fed funds sold due to PPP-related
borrowings
—
—
(8,152
)
(84,066
)
—
Total average assets, adjusted
$
2,638,316
$
2,480,485
$
2,421,677
$
2,410,359
$
2,325,618
Net core earnings to average assets, as
adjusted (annualized)
1.50
1.53
1.83
1.75
1.58
Total average equity
$
277,612
$
271,397
$
265,027
$
258,225
$
253,919
Net core earnings to average equity
(annualized)
14.29
14.00
16.68
16.32
14.45
Guaranty Bancshares,
Inc.
Reconciliation of Non-GAAP
Financial Measures (Unaudited)
(In thousands, except share and
per share data)
Total Non-Performing Assets to Total Loan, Excluding PPP
Quarter Ended
2021
2020
March 31
December 31
September 30
June 30
March 31
Total loans(1)(2)
$
1,912,367
$
1,866,819
$
1,958,634
$
1,957,440
$
1,718,353
Adjustments:
PPP loans balance
(158,236
)
(139,808
)
(209,609
)
(208,793
)
—
Total loans, excluding PPP(1)(2)
$
1,754,131
$
1,727,011
$
1,749,025
$
1,748,647
$
1,718,353
Total non-performing assets
$
3,699
$
13,115
$
14,093
$
14,920
$
17,129
Non-performing assets as a percentage
of:
Total loans(1)(2)
0.19
%
0.70
%
0.72
%
0.76
%
1.00
%
Total loans, excluding PPP(1)(2)
0.21
0.76
0.81
0.85
1.00
(1) Excludes outstanding balances of loans
held for sale of $4.7 million, $5.5 million, $9.1 million, $7.2
million, and $4.0 million as of March 31, 2021, December 31,
September 30, June 30 and March 31, 2020, respectively.
(2) Excludes deferred loan (fees) costs of
$(2.6) million, $(1.5) million, $(3.6) million, $(4.1) million, and
$456,000 as of March 31, 2021, December 31, September 30, June 30
and March 31, 2020, respectively.
Total Interest-Earning Assets, net of PPP Effects
For the Three Months Ended March
31, 2021
Average Outstanding Balance
Interest Earned/ Interest
Paid
Average Yield/ Rate
Total interest-earning assets
$
2,609,299
$
26,513
4.12
%
Total loans
1,886,863
24,195
5.20
Adjustments:
PPP loan average balance and net
fees(1)
(137,251
)
(3,513
)
10.38
Total loans, net of PPP effects
1,749,612
20,682
4.79
Total interest-earning assets, net of PPP
effects
$
2,472,048
$
23,000
3.77
%
(1) Interest earned consists of interest
income of $335,000 and net origination fees recognized in earnings
of $3.2 million for the three months ended March 31, 2021.
Net Interest Income and Net Interest Margin, Net of PPP
Effects
For the Three Months Ended March
31, 2021
Average Outstanding Balance
Interest Earned/ Interest
Paid
Average Yield/ Rate
Net interest income
$
24,491
Adjustments:
PPP-related interest income
(335
)
PPP-related net origination fees
(3,178
)
Net interest income, net of PPP
effects
$
20,978
Total interest-earning assets
$
2,609,299
Total interest-earning assets, net of PPP
effects
2,472,048
Net interest margin(1)
3.81
%
Net interest margin, net of PPP
effects
3.44
%
(1) Net interest margin is equal to net
interest income divided by average interest-earning assets,
annualized.
Guaranty Bancshares,
Inc.
Reconciliation of Non-GAAP
Financial Measures (Unaudited)
(In thousands, except share and
per share data)
Efficiency Ratio, Net of PPP Effects
Three Months Ended March 31,
2021
Three Months Ended December 31,
2020
Total noninterest expense
$
17,312
$
18,173
Adjustments:
PPP-related deferred costs
392
—
Total noninterest expense, net of PPP
effects
$
17,704
$
18,173
Net interest income
24,491
23,952
Net interest income, net of PPP
effects
20,978
21,298
Noninterest income
$
6,119
$
6,426
Efficiency ratio(1)
56.56
%
59.82
%
Efficiency ratio, net of PPP
effects(2)
65.34
65.55
(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.
Loan Yield, Net of PPP Effects
Three Months Ended March 31,
2021
Three Months Ended December 31,
2020
Average Outstanding Balance
Interest Earned/ Interest
Paid
Average Yield/ Rate
Average Outstanding Balance
Interest Earned/ Interest
Paid
Average Yield/ Rate
Total loans
$
1,886,863
$
24,195
5.20
%
$
1,937,556
$
23,998
4.93
%
Adjustments:
PPP loans average balance and net fees
(137,251
)
(3,513
)
10.38
(179,240
)
(2,654
)
5.89
Total loans, net of PPP effects
$
1,749,612
$
20,682
4.79
%
$
1,758,316
$
21,344
4.83
%
Effect of removing PPP loans on loan
yield
0.41
%
0.10
%
Three Months Ended March 31,
2021
For the Three Months Ended March
31, 2020
Average Outstanding Balance
Interest Earned/ Interest
Paid
Average Yield/ Rate
Average Outstanding Balance
Interest Earned/ Interest
Paid
Average Yield/ Rate
Total loans
$
1,886,863
$
24,195
5.20
%
$
1,701,525
$
22,517
5.32
%
Adjustments:
PPP loans average balance and net fees
(137,251
)
(3,513
)
10.38
—
—
—
Total loans, net of PPP effects
$
1,749,612
$
20,682
4.79
%
$
1,701,525
$
22,517
5.32
%
Effect of removing PPP loans on loan
yield
0.41
%
0.00
%
Guaranty Bancshares,
Inc.
Reconciliation of Non-GAAP
Financial Measures (Unaudited)
(In thousands, except share and
per share data)
ACL to Total Loans, Excluding PPP
Three Months Ended March 31,
2021
Three Months Ended December 31,
2020
Three Months Ended March 31,
2020
Total loans
$
1,912,367
$
1,866,819
$
1,718,353
Adjustments:
PPP loans
(158,236
)
(139,808
)
—
Total loans, excluding PPP
$
1,754,131
$
1,727,011
$
1,718,353
Allowance for credit losses
$
32,770
$
33,619
$
21,948
Allowance for credit losses / period-end
loans
1.71
%
1.80
%
1.28
%
Allowance for credit losses / period-end
loans. excluding PPP
1.87
1.95
1.28
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
2021 financial results on Tuesday, April 19, 2021 at 10:00 am CST.
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
https://www.gnty.com/register. The conference materials will be
available by accessing the Investor Relations page on our website,
gnty.com. A recording of the conference call will be available by
1:00 pm CST the day of the call and remain available through April
31, 2021 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 31 banking locations across 24 Texas communities
located within the East Texas, Dallas/Fort Worth, greater Houston
and Central Texas regions of the state. As of March 31, 2021,
Guaranty Bancshares, Inc. had total assets of $2.9 billion, total
loans of $1.9 billion and total deposits of $2.5 billion. Visit
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 will 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 extent and duration of
closures of businesses, including our branches, vendors and
customers; the operation of financial markets; 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; the adequacy of our
allowance for credit losses in relation to potential losses in our
loan portfolio; 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/20210419005228/en/
Cappy Payne Senior Executive Vice President and Chief Financial
Officer Guaranty Bancshares, Inc. (888) 572-9881
investors@gnty.com
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