10-Q

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 March 31, 2024


☐	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	New York Stock Exchange

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 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 ☒

As of May 1, 2024, there were 11,517,060 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 March 31, 2024 and December 31, 2023	1
	Consolidated Statements of Earnings for the Three Months Ended March 31, 2024 and 2023	2
	Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2024 and 2023	3
	Consolidated Statements of Changes in Equity for the Three Months Ended March 31, 2024 and 2023	4
	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023	5
	Notes to Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	58
Item 4.	Controls and Procedures	58

	PART II — OTHER INFORMATION

Item 1.	Legal Proceedings	59
Item 1A.	Risk Factors	59
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	59
Item 3.	Defaults Upon Senior Securities	59
Item 4.	Mine Safety Disclosures	59
Item 5.	Other Information	60
Item 6.	Exhibits	60

SIGNATURES		61

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

GUARANTY BANCSHARES, INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share amounts)


	(Unaudited)			(Audited)
	March 31, 2024			December 31, 2023
ASSETS
Cash and due from banks	$	43,872		$	47,744
Federal funds sold		24,300			36,575
Interest-bearing deposits		4,921			5,205
Total cash and cash equivalents		73,093			89,524
Securities available for sale		228,787			196,195
Securities held to maturity		363,963			404,208
Loans held for sale		874			976
Loans, net of allowance for credit losses of $30,560 and $30,920, respectively		2,234,012			2,290,881
Accrued interest receivable		11,747			13,143
Premises and equipment, net		56,921			57,018
Other real estate owned		14,900			—
Cash surrender value of life insurance		42,119			42,348
Core deposit intangible, net		1,312			1,418
Goodwill		32,160			32,160
Other assets		67,550			56,920
Total assets	$	3,127,438		$	3,184,791
LIABILITIES AND EQUITY
Liabilities
Deposits
Noninterest-bearing	$	828,861		$	852,957
Interest-bearing		1,798,983			1,780,289
Total deposits		2,627,844			2,633,246
Securities sold under agreements to repurchase		39,058			25,172
Accrued interest and other liabilities		33,807			32,242
Line of credit		—			4,500
Federal Home Loan Bank advances		75,000			140,000
Subordinated debt, net		45,819			45,785
Total liabilities		2,821,528			2,880,945
Commitments and contingencies (see Note 10)
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, 14,247,795 and 14,242,328 shares issued, and 11,534,960 and 11,540,644 shares outstanding, respectively		14,248			14,242
Additional paid-in capital		229,187			228,986
Retained earnings		160,797			156,878
Treasury stock, 2,712,835 and 2,701,684 shares, respectively, at cost		(71,819	)		(71,484	)
Accumulated other comprehensive loss		(27,042	)		(25,322	)
Equity attributable to Guaranty Bancshares, Inc.		305,371			303,300
Noncontrolling interest		539			546
Total equity		305,910			303,846
Total liabilities and equity	$	3,127,438		$	3,184,791

See accompanying notes to consolidated financial statements.

GUARANTY BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)

(Dollars in thousands, except per share data)


	Three Months Ended March 31,
	2024			2023
Interest income
Loans, including fees	$	35,491		$	32,157
Securities
Taxable		3,219			2,814
Nontaxable		1,165			1,304
Nonmarketable equity securities		248			419
Federal funds sold and interest-bearing deposits		629			450
Total interest income		40,752			37,144

Interest expense
Deposits		14,459			7,655
FHLB advances and federal funds purchased		1,920			3,774
Subordinated debt		517			540
Other borrowed money		269			13
Total interest expense		17,165			11,982

Net interest income		23,587			25,162
Reversal of provision for credit losses		(250	)		—
Net interest income after reversal of provision for credit losses		23,837			25,162

Noninterest income
Service charges		1,069			1,077
Net realized gain on sales of securities available for sale		—			93
Net realized gain on sale of loans		272			314
Merchant and debit card fees		1,706			1,674
Other income		2,211			1,747
Total noninterest income		5,258			4,905

Noninterest expense
Employee compensation and benefits		12,437			12,264
Occupancy expenses		2,747			2,830
Other expenses		5,508			4,873
Total noninterest expense		20,692			19,967

Income before income taxes		8,403			10,100
Income tax provision		1,722			1,823
Net earnings	$	6,681		$	8,277
Net loss attributable to noncontrolling interest		7			4
Net earnings attributable to Guaranty Bancshares, Inc.	$	6,688		$	8,281
Basic earnings per share	$	0.58		$	0.69
Diluted earnings per share	$	0.58		$	0.69

See accompanying notes to consolidated financial statements.

GUARANTY BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(Dollars in thousands)


	Three Months Ended March 31,
	2024			2023
Net earnings	$	6,681		$	8,277
Other comprehensive loss:
Unrealized losses on securities:
Unrealized holding losses arising during the period, net of tax		(1,553	)		(37	)
Reclassification adjustment for net gains included in net earnings, net of tax		—			(73	)
Change in net unrealized loss on available for sale securities transferred to held to maturity, net of tax		(167	)		(340	)
Unrealized losses on securities, net of tax		(1,720	)		(450	)

Total other comprehensive loss		(1,720	)		(450	)

Comprehensive income		4,961			7,827
Less comprehensive loss attributable to noncontrolling interest		7			4
Comprehensive income attributable to Guaranty Bancshares, Inc.	$	4,968		$	7,831

See accompanying notes to consolidated financial statements.

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 Loss			Noncontrolling Interest			Total Equity
For the Three Months Ended March 31, 2024
Balance at December 31, 2023	$	—	$	14,242	$	228,986		$	156,878		$	(71,484	)	$	(25,322	)	$	546		$	303,846
Net earnings		—		—		—			6,688			—			—			(7	)		6,681
Other comprehensive loss		—		—		—			—			—			(1,720	)		—			(1,720	)
Exercise of stock options		—		3		66			—			—			—			—			69
Purchase of treasury stock		—		—		—			—			(335	)		—			—			(335	)
Restricted stock grants		—		3		(3	)		—			—			—			—			—
Stock based compensation		—		—		138			—			—			—			—			138
Cash dividends:
Common - $0.24 per share		—		—		—			(2,769	)		—			—			—			(2,769	)
Total equity at March 31, 2024	$	—	$	14,248	$	229,187		$	160,797		$	(71,819	)	$	(27,042	)	$	539		$	305,910


	Attributable to Guaranty Bancshares, Inc.
	Preferred Stock		Common Stock		Additional Paid-in Capital			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Loss			Noncontrolling Interest			Total Equity
For the Three Months Ended March 31, 2023
Balance at December 31, 2022	$	—	$	14,209	$	227,727		$	137,565		$	(60,257	)	$	(24,260	)	$	574		$	295,558
Net earnings		—		—		—			8,281			—			—			(4	)		8,277
Other comprehensive loss		—		—		—			—			—			(450	)		—			(450	)
Exercise of stock options		—		8		217			—			—			—			—			225
Purchase of treasury stock		—		—		—			—			(744	)		—			—			(744	)
Restricted stock grants		—		1		(1	)		—			—			—			—			—
Stock based compensation		—		—		148			—			—			—			—			148
Cash dividends:
Common - $0.23 per share		—		—		—			(2,744	)		—			—			—			(2,744	)
Total equity at March 31, 2023	$	—	$	14,218	$	228,091		$	143,102		$	(61,001	)	$	(24,710	)	$	570		$	300,270

See accompanying notes to consolidated financial statements.

GUARANTY BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Dollars in thousands)


	For the Three Months Ended March 31,
	2024			2023
Cash flows from operating activities
Net earnings	$	6,681		$	8,277
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation		1,025			1,018
Amortization		177			194
Deferred taxes		—			(1,157	)
Premium amortization, net of discount accretion		435			760
Net realized gain on sales of securities available for sale		—			(93	)
Gain on sale of loans		(272	)		(314	)
Reversal of provision for credit losses		(250	)		—
Origination of loans held for sale		(7,798	)		(10,488	)
Proceeds from loans held for sale		8,172			12,698
Net gain on sale of premises, equipment, other real estate owned and other assets		(11	)		—
Stock based compensation		138			148
Net change in accrued interest receivable and other assets		(8,627	)		(930	)
Net change in accrued interest payable and other liabilities		1,450			1,599
Net cash provided by operating activities	$	1,120		$	11,712

Cash flows from investing activities
Securities available for sale:
Purchases	$	(439,214	)	$	—
Proceeds from sales		—			7,239
Proceeds from maturities and principal repayments		404,493			7,396
Securities held to maturity:
Proceeds from maturities and principal repayments		39,806			32,305
Net repayments of loans		42,173			5
Purchases of premises and equipment		(997	)		(2,184	)
Proceeds from sale of premises, equipment, other real estate owned and other assets		124			—
Net cash provided by investing activities	$	46,385		$	44,761

See accompanying notes to consolidated financial statements.

GUARANTY BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Dollars in thousands)


	For the Three Months Ended March 31,
	2024			2023
Cash flows from financing activities
Net change in deposits	$	(5,402	)	$	(57,786	)
Net change in securities sold under agreements to repurchase		13,886			6,117
Proceeds from FHLB advances		590,000			1,585,000
Repayment of FHLB advances		(655,000	)		(1,535,000	)
Repayment of line of credit		(4,500	)		—
Purchase of treasury stock		(335	)		(744	)
Exercise of stock options		69			225
Cash dividends paid		(2,654	)		(2,627	)
Net cash used in financing activities	$	(63,936	)	$	(4,815	)
Net change in cash and cash equivalents		(16,431	)		51,658
Cash and cash equivalents at beginning of period		89,524			106,467
Cash and cash equivalents at end of period	$	73,093		$	158,125

Supplemental disclosures of cash flow information
Interest paid	$	16,849		$	10,467

Supplemental schedule of noncash investing and financing activities
Cash dividends accrued	$	2,769		$	2,744
Lease right of use assets obtained in exchange for lease liabilities		—			568
Transfer of loans to other real estate owned and repossessed assets		14,946			—

See accompanying notes to consolidated financial statements.

GUARANTY BANCSHARES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations: Guaranty Bancshares, Inc. (“Guaranty”) is a bank holding company headquartered in Mount Pleasant, Texas that provides, through its wholly-owned subsidiary, Guaranty Bank & Trust, N.A. (the “Bank”), a broad array of financial products and services to individuals and corporate customers, primarily in its markets of East Texas, Dallas/Fort Worth, Greater Houston and Central Texas. The terms “the Company,” “we,” “us” and “our” mean Guaranty and its subsidiaries, when appropriate. The Company’s main sources of income are derived from granting loans throughout its markets and investing in securities issued or guaranteed by the U.S. Treasury, U.S. government agencies and state and political subdivisions. The Company’s primary lending products are real estate, commercial and consumer loans. Although the Company has a diversified loan portfolio, a substantial portion of its debtors’ abilities to honor contracts is dependent on the economy of the State of Texas and primarily the economies of East Texas, Dallas/Fort Worth, Greater Houston and Central Texas. The Company primarily funds its lending activities with deposit operations. The Company’s primary deposit products are checking accounts, money market accounts and certificates of deposit.

Principles of Consolidation: The consolidated financial statements in this Quarterly Report on Form 10-Q (this “Report”) include the accounts of Guaranty, the Bank and indirect subsidiaries that are wholly-owned or controlled. Subsidiaries that are less than wholly owned are fully consolidated if they are controlled by Guaranty or one of its subsidiaries, and the portion of any subsidiary not owned by Guaranty is reported as noncontrolling interest. All significant intercompany balances and transactions have been eliminated in consolidation. The Bank has eight wholly-owned or controlled non-bank subsidiaries, Guaranty Company, Inc., G B COM, INC., 2800 South Texas Avenue LLC, Pin Oak Realty Holdings, Inc., Pin Oak Asset Management, LLC, Guaranty Bank & Trust Political Action Committee, White Oak Aviation, LLC and Caliber Guaranty Private Account, LLC, the entity which has a noncontrolling interest. The accounting and financial reporting policies followed by the Company conform, in all material respects, to accounting principles generally accepted in the United States of America (“GAAP”) and to general practices within the financial services industry.

Basis of Presentation: The consolidated financial statements in this report have not been audited by an independent registered public accounting firm, but in the opinion of management, reflect all adjustments necessary for a fair presentation of the Company’s financial position and results of operations. All such adjustments were of a normal and recurring nature. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q adopted by the Securities and Exchange Commission (“SEC”). Accordingly, the financial statements do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the Company’s consolidated financial statements, and notes thereto, for the year ended December 31, 2023, included in Guaranty’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 14, 2024. Operating results for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for a full year or any future period.

All dollar amounts referenced and discussed in the notes to the consolidated financial statements in this report are presented in thousands, unless noted otherwise.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These estimates and assumptions may also affect disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

(Continued)

GUARANTY BANCSHARES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

NOTE 2 - MARKETABLE SECURITIES

The following tables summarize the amortized cost and fair value of available for sale and held to maturity securities as of March 31, 2024 and December 31, 2023 and the corresponding amounts of gross unrealized gains and losses:


March 31, 2024	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Available for sale:
Corporate bonds	$	29,861	$	—	$	2,801	$	27,060
Municipal securities		2,321		152		—		2,473
Mortgage-backed securities		199,776		601		17,237		183,140
Collateralized mortgage obligations		17,980		5		1,871		16,114
Total available for sale	$	249,938	$	758	$	21,909	$	228,787

Held to maturity:
U.S. government agencies	$	9,331	$	—	$	1,127	$	8,204
Treasury securities		39,557		—		725		38,832
Municipal securities		161,031		625		6,604		155,052
Mortgage-backed securities		117,454		—		16,875		100,579
Collateralized mortgage obligations		36,590		—		7,777		28,813
Total held to maturity	$	363,963	$	625	$	33,108	$	331,480


December 31, 2023	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Available for sale:
Corporate bonds	$	29,882	$	—	$	3,077	$	26,805
Municipal securities		2,322		182		—		2,504
Mortgage-backed securities		164,419		1,014		15,621