Guaranty Bancshares(US:GNTY)2022-11-04 11:15Financial Performance - Net earnings for Q3 2022 were $10.9 million, or $0.92 per share, up from $10.8 million, or $0.90 per share in Q2 2022, indicating a consistent upward trend [156]. - Net earnings attributable to Guaranty Bancshares, Inc. for the nine months ended September 30, 2022, were $32.4 million, compared to $30.6 million for the same period in 2021, reflecting a year-over-year increase of 5.8% [159]. - Net core earnings attributable to Guaranty Bancshares, Inc. for the three months ended September 30, 2022, were $37.569 million, resulting in a net core earnings per common share of $3.13 [326]. - The company reported net earnings of $32.425 million for the three months ended September 30, 2022, compared to $30.647 million for the same period in 2021 [326]. Loan Growth - Strong organic loan growth of $127.7 million, or 6.0%, in Q3 2022, with a total increase of $144.1 million, or 6.8%, excluding PPP and warehouse lending changes [156]. - Average loans outstanding, excluding PPP loans, increased by $277.3 million, or 15.6%, to $2.05 billion for the nine months ended September 30, 2022 [165]. - Total loans increased to $2,066,529,000 for the nine months ended September 30, 2022, from $1,906,989,000 in 2021, marking an increase of 8.4% [169]. - Total loans held for investment reached $2.27 billion, an increase of $358.0 million or 18.8% from the end of 2021, with significant growth in real estate lending [234]. Interest Income and Margin - Net interest income for Q3 2022 was $28.3 million, an increase of $4.7 million or 20.1% compared to Q3 2021 [204]. - Net interest income for the nine months ended September 30, 2022, was $79.5 million, an increase of $7.9 million, or 11.1%, compared to $71.5 million in 2021 [164]. - The net interest margin for the quarter ended September 30, 2022, was 3.56%, compared to 3.36% in the same quarter of 2021, indicating an improvement of 0.20 percentage points [330]. - The net interest margin for the nine months ended September 30, 2022, was 3.53%, down from 3.56% in the same period of 2021 [166]. Noninterest Income - Total noninterest income decreased by $175,000, or 0.9%, to $18,363,000 for the nine months ended September 30, 2022, compared to $18,538,000 in 2021 [178]. - Service charges on deposit accounts increased by $505,000, or 18.8%, to $3,192,000 for the nine months ended September 30, 2022, compared to $2,687,000 in 2021 [179]. - Gain on sale of loans decreased by $2.3 million, or 51.7%, to $2.1 million for the nine months ended September 30, 2022, compared to $4.4 million for the same period in 2021 [180]. - Total noninterest income decreased by $646,000, or 10.0%, for Q3 2022 compared to Q3 2021 [217]. Nonperforming Assets and Credit Quality - Non-performing assets as a percentage of total assets were 0.28% at September 30, 2022, compared to 0.30% at June 30, 2022, indicating improved asset quality [160]. - Nonperforming assets as a percentage of total loans increased to 0.41% as of September 30, 2022, from 0.15% at December 31, 2021 [240]. - The allowance for credit losses (ACL) decreased to $29.2 million, or 1.29% of total loans, as of September 30, 2022, down from $30.4 million, or 1.59%, at December 31, 2021 [255]. - The company identified four loans totaling $6.7 million as problem assets, primarily related to two hotels, which were classified as nonaccrual loans [240]. Expenses - Noninterest expense totaled $59.0 million for the nine months ended September 30, 2022, an increase of $4.7 million, or 8.7%, compared to $54.3 million for the same period in 2021 [189]. - Employee compensation and benefits increased by $4.0 million, or 12.7%, to $35.1 million for the nine months ended September 30, 2022, due to higher salaries and insurance expenses [191]. - Total noninterest expense for Q3 2022 was $20.2 million, an increase of $950,000 or 4.9% from Q3 2021, with employee compensation being the largest component [224]. Deposits and Liquidity - The loan-to-deposit ratio at quarter-end was 81.2%, indicating strong liquidity and funding position [160]. - Total deposits as of September 30, 2022, were $2.79 billion, an increase of $119.7 million, or 4.5%, compared to $2.67 billion as of December 31, 2021 [272]. - Approximately 40.9% of total deposits were noninterest-bearing, with a total cost of funds on deposits during Q3 2022 at 0.35% [160]. - Noninterest-bearing demand accounts increased by $159.4 million, or 17.39%, to $1.08 billion as of September 30, 2022 [273]. Regulatory and Economic Environment - The Federal Reserve raised interest rates by 300 basis points from March to October 2022, with expectations for an additional 125 basis point increase by the end of 2022 [306]. - The company expects net income to benefit from future interest rate increases, despite potential increases in operating expenses due to inflation [306]. - The Company is subject to liquidity risks that may impact its operations and financial stability [342]. - Changes in regulatory requirements could affect the Company's ability to maintain minimum capital levels, posing additional risks [342]. Risk Management - The Company manages market risk primarily related to interest rate volatility through its Asset-Liability Committee, utilizing an interest rate risk simulation model and shock analysis [341]. - The asset-liability committee regularly reviews interest rate sensitivity and market values to adjust strategies accordingly [309]. - The Company does not engage in leveraged derivatives or financial options to manage interest rate risk, focusing instead on balance sheet structuring [308].