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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number: 001-38087

 

GUARANTY BANCSHARES, INC.

(Exact name of registrant as specified in its charter)

 

 

Texas

001-38087

75-1656431

(State or Other Jurisdiction of Incorporation)

(Commission File Number)

(IRS Employer Identification No.)

16475 Dallas Parkway, Suite 600

Addison, Texas

 

75001

(Address of Principal Executive Offices)

 

(Zip Code)

 

(888) 572 - 9881

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading symbol

 

Name of each exchange on which registered

Common Stock, par value $1.00 per share

 

GNTY

 

NASDAQ Global Select Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

 

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the

Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No

 

 

 

As of November 2, 2022, there were 11,939,572 outstanding shares of the registrant’s common stock, par value $1.00 per share.


 

GUARANTY BANCSHARES, INC.

 

 

 

PART I — FINANCIAL INFORMATION

 

Page

 

 

 

 

 

Item 1.

 

Financial Statements – (Unaudited)

 

1

 

 

Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021

 

1

 

 

Consolidated Statements of Earnings for the Three and Nine Months Ended September 30, 2022 and 2021

 

2

 

 

Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2022 and 2021

 

3

 

 

Consolidated Statements of Changes in Equity for the Three and Nine Months Ended September 30, 2022 and 2021

 

4

 

 

Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021

 

6

 

 

Notes to Consolidated Financial Statements

 

8

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

36

Item 3.

 

Quantitative and Qualitative Disclosures about Market Risk

 

69

Item 4.

 

Controls and Procedures

 

70

 

 

 

 

 

 

 

PART II — OTHER INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

70

Item 1A.

 

Risk Factors

 

70

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

70

Item 3.

 

Defaults Upon Senior Securities

 

71

Item 4.

 

Mine Safety Disclosures

 

71

Item 5.

 

Other Information

 

71

Item 6.

 

Exhibits

 

71

 

 

 

 

 

SIGNATURES

 

72

 

 

 

 


 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

GUARANTY BANCSHARES, INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share amounts)

 

 

 

(Unaudited)

 

 

(Audited)

 

 

 

September 30,
2022

 

 

December 31,
2021

 

ASSETS

 

 

 

 

 

 

Cash and due from banks

 

$

48,010

 

 

$

42,979

 

Federal funds sold

 

 

71,875

 

 

 

431,975

 

Interest-bearing deposits

 

 

4,284

 

 

 

24,651

 

Total cash and cash equivalents

 

 

124,169

 

 

 

499,605

 

Securities available for sale

 

 

197,944

 

 

 

342,206

 

Securities held to maturity

 

 

633,386

 

 

 

184,263

 

Loans held for sale

 

 

2,749

 

 

 

4,129

 

Loans, net of allowance for credit losses of $29,235 and $30,433, respectively

 

 

2,234,782

 

 

 

1,876,076

 

Accrued interest receivable

 

 

10,111

 

 

 

8,901

 

Premises and equipment, net

 

 

54,212

 

 

 

53,470

 

Other real estate owned

 

 

5

 

 

 

 

Cash surrender value of life insurance

 

 

38,194

 

 

 

37,141

 

Core deposit intangible, net

 

 

1,973

 

 

 

2,313

 

Goodwill

 

 

32,160

 

 

 

32,160

 

Other assets

 

 

60,581

 

 

 

45,806

 

Total assets

 

$

3,390,266

 

 

$

3,086,070

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

Noninterest-bearing

 

$

1,141,184

 

 

$

1,014,518

 

Interest-bearing

 

 

1,649,326

 

 

 

1,656,309

 

Total deposits

 

 

2,790,510

 

 

 

2,670,827

 

Securities sold under agreements to repurchase

 

 

7,592

 

 

 

14,151

 

Accrued interest and other liabilities

 

 

27,384

 

 

 

26,568

 

Line of credit

 

 

 

 

 

5,000

 

Federal Home Loan Bank advances

 

 

225,000

 

 

 

47,500

 

Subordinated debt

 

 

51,119

 

 

 

19,810

 

Total liabilities

 

 

3,101,605

 

 

 

2,783,856

 

Commitments and contingencies (see Note 11)

 

 

 

 

 

 

Equity

 

 

 

 

 

 

Preferred stock, $5.00 par value, 15,000,000 shares authorized, no shares issued

 

 

 

 

 

 

Common stock, $1.00 par value, 50,000,000 shares authorized, 14,182,258 and 14,138,978 shares issued, and 11,915,372 and 12,122,717 shares outstanding, respectively

 

 

14,182

 

 

 

14,139

 

Additional paid-in capital

 

 

226,962

 

 

 

225,544

 

Retained earnings

 

 

132,170

 

 

 

107,645

 

Treasury stock, 2,266,886 and 2,016,261 shares, respectively, at cost

 

 

(60,257

)

 

 

(51,419

)

Accumulated other comprehensive (loss) income

 

 

(24,973

)

 

 

6,305

 

Equity attributable to Guaranty Bancshares, Inc.

 

 

288,084

 

 

 

302,214

 

Noncontrolling interest

 

 

577

 

 

 

 

Total equity

 

 

288,661

 

 

 

302,214

 

Total liabilities and equity

 

$

3,390,266

 

 

$

3,086,070

 

 

See accompanying notes to consolidated financial statements.

1.


 

GUARANTY BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)

(Dollars in thousands, except per share data)

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Interest income

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

27,455

 

 

$

22,605

 

 

$

74,314

 

 

$

69,664

 

Securities

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

3,331

 

 

 

1,203

 

 

 

8,133

 

 

 

3,393

 

Nontaxable

 

 

1,324

 

 

 

1,050

 

 

 

3,764

 

 

 

3,142

 

Federal funds sold and interest-bearing deposits

 

 

366

 

 

 

377

 

 

 

1,278

 

 

 

833

 

Total interest income

 

 

32,476

 

 

 

25,235

 

 

 

87,489

 

 

 

77,032

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

2,455

 

 

 

1,348

 

 

 

5,320

 

 

 

4,444

 

FHLB advances and federal funds purchased

 

 

1,211

 

 

 

107

 

 

 

1,447

 

 

 

308

 

Subordinated debt

 

 

509

 

 

 

182

 

 

 

1,208

 

 

 

558

 

Other borrowed money

 

 

4

 

 

 

28

 

 

 

43

 

 

 

184

 

Total interest expense

 

 

4,179

 

 

 

1,665

 

 

 

8,018

 

 

 

5,494

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

28,297

 

 

 

23,570

 

 

 

79,471

 

 

 

71,538

 

Provision for (reversal of) credit losses

 

 

600

 

 

 

(700

)

 

 

(650

)

 

 

(1,700

)

Net interest income after provision for credit losses

 

 

27,697

 

 

 

24,270

 

 

 

80,121

 

 

 

73,238

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income

 

 

 

 

 

 

 

 

 

 

 

 

Service charges

 

 

1,146

 

 

 

1,003

 

 

 

3,192

 

 

 

2,687

 

Net realized gain on sale of loans

 

 

338

 

 

 

1,759

 

 

 

2,125

 

 

 

4,401

 

Merchant and debit card fees

 

 

1,738

 

 

 

1,620

 

 

 

5,410

 

 

 

5,048

 

Other income

 

 

2,581

 

 

 

2,067

 

 

 

7,636

 

 

 

6,402

 

Total noninterest income

 

 

5,803

 

 

 

6,449

 

 

 

18,363

 

 

 

18,538

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense

 

 

 

 

 

 

 

 

 

 

 

 

Employee compensation and benefits

 

 

11,851

 

 

 

10,998

 

 

 

35,113

 

 

 

31,145

 

Occupancy expenses

 

 

2,800

 

 

 

2,738

 

 

 

8,359

 

 

 

8,258

 

Other expenses

 

 

5,586

 

 

 

5,551

 

 

 

15,538

 

 

 

14,899

 

Total noninterest expense

 

 

20,237

 

 

 

19,287

 

 

 

59,010

 

 

 

54,302

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

13,263

 

 

 

11,432

 

 

 

39,474

 

 

 

37,474

 

Income tax provision

 

 

2,363

 

 

 

2,179

 

 

 

7,070

 

 

 

6,827

 

Net earnings

 

$

10,900

 

 

$

9,253

 

 

$

32,404

 

 

$

30,647

 

Net loss attributable to noncontrolling interest

 

 

3

 

 

 

 

 

 

21

 

 

 

 

Net earnings attributable to Guaranty Bancshares, Inc.

 

$

10,903

 

 

$

9,253

 

 

$

32,425

 

 

$

30,647

 

Basic earnings per share

 

$

0.92

 

 

$

0.77

 

 

$

2.70

 

 

$

2.54

 

Diluted earnings per share

 

$

0.91

 

 

$

0.76

 

 

$

2.68

 

 

$

2.51

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

2.


 

GUARANTY BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(Dollars in thousands)

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net earnings

 

$

10,900

 

 

$

9,253

 

 

$

32,404

 

 

$

30,647

 

Other comprehensive (loss) income:

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized (losses) gains on securities, net of tax

 

 

(2,432

)

 

 

1,654

 

 

 

(31,090

)

 

 

(1,268

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains (losses) on interest rate swaps:

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized holding gains arising during the period

 

 

 

 

 

62

 

 

 

497

 

 

 

534

 

Reclassification of realized gains on interest rate swap termination from accumulated other comprehensive income

 

 

 

 

 

466

 

 

 

(685

)

 

 

466

 

Unrealized gains (losses) on interest rate swaps

 

 

 

 

 

528

 

 

 

(188

)

 

 

1,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total other comprehensive (loss) income

 

 

(2,432

)

 

 

2,182

 

 

 

(31,278

)

 

 

(268

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income

 

 

8,468

 

 

 

11,435

 

 

 

1,126

 

 

 

30,379

 

Less comprehensive loss attributable to noncontrolling interest

 

 

3

 

 

 

 

 

 

21

 

 

 

 

Comprehensive income attributable to Guaranty Bancshares, Inc.

 

$

8,471

 

 

$

11,435

 

 

$

1,147

 

 

$

30,379

 

 

 

See accompanying notes to consolidated financial statements.

3.


 

GUARANTY BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited)

(Dollars in thousands, except per share data)

 

 

 

Attributable to Guaranty Bancshares, Inc.

 

 

 

 

 

 

 

 

 

Preferred
Stock

 

 

Common
Stock

 

 

Additional
Paid-in
Capital

 

 

Retained
Earnings

 

 

Treasury
Stock

 

 

Accumulated
Other
Comprehensive
Income (Loss)

 

 

Noncontrolling Interest

 

 

Total
Equity

 

For the Nine Months Ended September 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2021

 

$

 

 

$

14,139

 

 

$

225,544

 

 

$

107,645

 

 

$

(51,419

)

 

$

6,305

 

 

$

 

 

$

302,214

 

Net earnings