Guaranty Bancshares (GNTY) 17 Apr 232023 Q1 Earnings call transcript

Good morning, and welcome to Guaranty Bancshares First Quarter 2023 Earnings Call. My name is Nona Branch, and I will be your operator for today's call. This call is being recorded.

After the prepared remarks, there will be a Q&A session.

Our host for today's call will be Ty Abston, Chairman and Chief Executive Officer of the company; Cappy Payne, Senior Executive Vice President and Chief Financial Officer of the company; Shalene Jacobson, Executive Vice President and Chief Financial Officer of the Bank.

I Abston. turn call, our over our Ty CEO, begin will it now to To

Nona. morning, I'm you, going Shalene for a Thank to Good comments, to the earnings to few our to first call turn our go it quarter Cappy then through XXXX. and going over make everyone, to I'm and and welcome presentation.

truly depositors given banks. haven't were in, one us as see This We that consequences years think an that see this. in the of we those and in XXXX that in of some is require had will all There's with that seen that I a address, our leaders over XX second a half I the I didn't environment even solid ultimately Washington our environment, was year. have will quarter going probably to unusual doing to of in uncertainty we

of portfolio in earnings and hearing Also, add granularity portfolio more detail company. so a did last past few given loan portfolio balance the bond that we more level release exposure, everything the our a and messaging sheet weeks, -- that We color little give and our our that. this we're deposit we on to to added detail on haven't

And our vibrant. seeing remains related markets. not strong to in very credit, credit Texas, and deterioration we're just economy the Texas

view. Texas slow be but least second the down to our will in of to half year economy probably our think do credits, we economies, geography that credit like related at the is other sense issues in Our more the going of are

open you to everything, and Shalene, have. and Q&A to and to going then them let Cappy questions I'm walk it answer over through up we'll turn

you, Ty. All right. Thank

sheet hit go and metrics. highlights over some Let's we'll of the earnings balance then the first,

assets billion. of quarter the total we that's comparative billion, pretty year, end with our the the at to did our $X.XXX beginning quarter $X.XXX sheet, which balance On started

early assets, increase decrease increase deposits, then in quarter. and see bit driven change an We an partly January and decrease, no were footings. in on So February discuss in during had which did little too. our a a we'll had that here basically, and March in by a the in

assets lower from were down quarterly the were -- linked they though than were $X.XXX little bit average quarter; a our So, billion.

So, see the one that in you'll of tables.

down treasuries, In among agencies, the it million, bond dispersed portfolio, $XX pretty was and that's munis. evenly about

good of second another there. got and the pretty have another $XX in $XX cash We about the flow half in million in million year. We've QX

as so paying taking So, our just down getting going be advances, forward. basically, the back bond of a those we're general rule, portfolio and -- some we'll more we're probably than into

there for much Average the at change the at the quarter billion. at loans, Looking $X.XXX quarter We ended not $X.XXX was billion. all.

pretty quarter. it's loan the throughout steady volume So, in

-- $XX.X the deposits did million. table liability during average early X.X% the was Looking noninterest-bearing that $XX.X decreased million, about side, Pretty at million, it Again, quarter-to-quarter, million March. Of X.X%. almost comparable look saw increase interest dip $XX.X decrease a increased quarter. when we you XX.X% in big decreased, $X then and on about bearing that's the and at down

So, we remix in did see deposit, shift a a in deposits. little little

low, chasing I been in hadn't the have past customers where it going much. -- think yield, after as rates -- that's just mattered so that's really

XXXX -- some that end. on be as of forward, I higher rates see remix think the to going higher continue continue we'll in So, to too,

of compared to, for did total all deposits. quarter -- balances last XX% at and averaged -- Noninterest-bearing still the about XX%. That they year, quarter-end at year of averaged

minute. income interest-bearing We'll So, of statement the interest-bearing on too on little a deposits shift to that -- still did relatively effect a compared deposits. non-maturing higher time just that bit to deposits. see We a the our discuss total about here from in within

be of Bank advances. Home that Most saw, some Home short-term the They as Again, you'll all release breakdown and as in did those of deposits Loan ended $XXX see press Federal can about increase. mature at Federal down are you million. the advances $XX they the increase Loan paid quarter million. securities advances, and/or Bank

did Equity million. $X.X increase

course, income quarter. for quarter, we million. dividend million. repurchase Of total we'll $X.X shares and X.X% that's stock, XX% We discuss of earnings increase paid that, a that's did share, of obviously had a per for $XXX some a the XX,XXX about $X.XX about of And the for also

of just over decrease detail $XXX,XXX, Our and that's is did about little here will at slightly X.X% million, a minute. about in a $XX.X Shalene now go AOCI that more equity. of

X%, common equity at tangible year-end. Our X.XX% from that's ratio was slightly at up quarter-end

That's kind balance sheet. the of the highlights of

Now turning the statement details. income to

and first our quarter. of they a by we in a share quarter we've lower $X.X a net we were net but X.XX% we've in of than quarter, that's and last $X.XX. $X.X also reverse is And equity did years, did this than provision last said, These or of done average on return included a as were per I little on changes last just lower driven discussed, table It's return going interest quarterly I million, because average of to are income. As now that's QX XX.XX%. quarter those last this do earnings a not and for then, in provision earnings also of of record provision a quarter, million from core a -- be quarter, a couple little assets a higher earnings numbers

can discussion from quarter. our there, that's You X.XX%, we margin basis interest linked points in in that XX was see, net put the down

our average on top-line by of be driven expense liabilities. costing and that's going to was of interest cost deposits. Although mainly our and it interest-bearing growth And yield outpaced higher, by most was our assets on earning revenue

in did As communities of competitive noninterest-bearing the products, very I the to increased shift said, all a necessary from the and deposit in rate lead but on market, we to deposits be to our interest-bearing, serve. we our we not see

our decision funds. obviously made and during of cost we that So, the increased that quarter

deposits interest-bearing basis points quarter, a up on And quarter, the you our probably for X.XX% line. from that's the which is rate of cost our was if quarter. interest X.XX%, average up was deposits basis beta that's total in XX points The year made bearing then, XX the year, factor, pretty a look linked much but Again, it's from pretty factor to quarter. for high linked

think interest-bearing I deposit on XX% for about it's the year. beta

two release. down lower to our the was detail most income Again, than continues the Noninterest be we quarters in of The experienced about that's volume is X%, $XXX,XXX. mortgage last for in press XXXX.

a noninterest that's So driving being income little lower. of some of factor bit the

a down. press release some the -- that's a details Again, expense was Noninterest quarter-over-quarter. in saw category expense lot also lot $XXX,XXX, of It down levels was those and expense of about our lower X.X%. of

look with you page next and quality, think and is you'll talk yield rising X.X% our then as If as new the yield that, for origination at we'll credit new some the -- QX. I said yields, little earlier, quarter, look stable loan loan the pretty over of would to was but I loan and X.XX% a volume about expect, bit in compared

our last loan points from XX basis So, up about yield quarter. total was

Ty strong. talked Credit quality, very about, remains as

relationships, about And non-performing we this the and Our the any, in three we within X.X%. release, not in think this to were that's much group again, total of five category, loss, do talked loans. expect assets loans, I assets if press

provision. our X.XX% as said, for coverage loss which was low. I We did And we last do didn't to very not -- allowance were is credit what quarter-end, quarter. Charge-offs similar it a is

to it so We over going mentioned I have Shalene some some and go Shalene? over that too, management added to I'm of bullets risk turn her Ty let and those.

Cappy. you, Thank

Yes.

recent model which so our of these of of and noticed very topics do disclosures We the sheet, lower hope to navigate quarter management and liquidity, that overall will going granular to all that a that included So, believe XXXX, banking of the model, better historically, to and in our around first forward. events really nature has economic several illustrate included the it of risk light cycles us stability balance is and continue loans, we allowed in traditional investments, we risk capital. deposits, the you've and

have times base. stable mentioned before, core historically we've many a As we deposit

for deposit over Excluding time our XX% of been an balance average our We've depositors nearly than currently deposits, total have bank more of that customers years. got XX,XXX accounts $XX,XXX. of have five

the And deposits speaking uninsured levels. been of which, mid-March. So, since insurance have well levels of topic FDIC a below very hot

the table additional release earnings details with So, in a we there. included

deposits public any PODs collateralized beneficiary track deposits in were at And funds, you uninsured are XX.X% to closer by our and into information, doesn't deposits or Excluding fully which pledged because our take were that we don't XX%. if core. percentage securities, account that quarter-end. officers, to bank directors then, uninsured exclude And

others and did we situation the bit customers calculator. personal FDIC than the it's So, on help bankers, retrained and probably a at lower how insurance actually immediately use mid-March after to that,

there. good So, pretty we feel

Although $X.X for actually mentioned. increased million March, quarter, Cappy the deposits decreased they nearly like in

CDARS IntraFi late to able week June. the our expect as integrate we to with first joined soon product also have network also we their as and Reciprocal that expand core, in We'll accounts first early we're CDARS We to there. our several already which do in May the ICS April, or

quarter, loan reasonable Our at slightly but for ratio remains the increased XX.X%. deposit to

we with in credit very are that We and little talked vanilla securities conservative. no about investment area government to next invest our which agency strategies, was The typically plain risk. policies

portfolio know the so we that to better interest year The manage communities and range have portfolio average we life monitor average keep try our in to that can years generally of municipal bonds the four is we currently in years. And five we also four We closely an with very rate that life risk. duration five of understand. that

we high cash had too, in this that felt XXXX because also deploy good of investments, that late mentioned to into We've the just and XXXX weren't our at time. we yields in we but prior calls duration were and levels

finally short-term Fed. that, risk. that we excess yields and and our have some, decent level we invested high with duration our have little treasury as fast been reasonable did by a the when the providing of in unrealized result gone despite portfolio increases of rate So, were cash, And yields up in deploy very losses interest treasuries the

points net expect got current about to that tax, securities, little of we $XX.X million, sensitivity model, and basis XXX an equity to also basis losses XX.X% to, total those on points, tax, $XX.X And them losses. the don't unrealized illustrate included AFS well, we've as our a XX of increase all bit is before total of would rates both HTM, Net which which million. loss, increase are if unrealized we including additional

concentrations, earnings in With release. policies highlighted to and you many for we around respect manage help to underwriting which also there, especially size of loan the policies, loans, some we've risk got and procedures

has million, Board lending at an legal internal million. $XX but Our lending established limit currently limit our is $XX.X only

in loans two barely And rarely even bank we've entire commitments However, approach of million, the the million. each bank $XX commitments with million. $XX XX We in limit. just loans very currently got and internal $XX are over only those we than with got the total only greater over

So, we low. pretty that keeping believe large in those loan concentration in amounts

Our community construction and loan with like percentage And real development, is portfolio is $XXX,XXX. about portfolio, XX.X% of almost balance commercial of portfolio. a do XX,XXX also we got The total our including of have an the larger granular. loans CRE estate We've fairly estate average loans. most banks, real

there. Now, been quite since more we hot information office related topic included have also loans COVID, the some so

of have Our portfolio. related only we average our of XXX the is a XX of than loan of loan office-related X% XX.X% of $XXX,XXX. with CRE loans and owner office office-related occupied, balance balance is $X that million an total about greater CRE The

we and if liquidity the currently and finally, metrics earnings capital ratios lower although capital, and our look be liquidity are hopefully and Now solid. at temporarily, may

and us need we we contingent is we cash, sold which available Fund total it. quarter-end. to as sources our also liabilities calculate have $X.X Our at liability billion divided ratio, And unpledged over Fed by liquidity securities XX.X% in if

is the were realize Our over capital little release you losses. we a our would had illustrated that in average total capital to We good. total securities if the would for which what of this And decrease case, but deal, the earlier, minimums. to believe to would will remain If million, also well advantage those sell $XXX $XX.XX of per which the XX,XXX assets stock an think, to earnings and actually X%, great shares above and then, in Cappy, price first people of wrap regulatory share, up, take quarter I we we is more guarantee mentioned repurchased average hopefully a at capital about capital be of our is all that. also

So I'll I that's for all over have for back turn remarks. to prepared it Q&A. Nona Nona?

Shalene. you, Thank

ask Gailey questions with first call caller to first KBW. will -- Our be today Brady or

guys. morning, Good thanks. Hey,

Brady. morning, Good

to bit I How So, trend to year? the start first pulling higher this little do you the throughout 'XX wanted net we know the rest previously, but kind seemed flat the I margin with think down in of over deposit just expect quarter. a cost I margin of the dynamic interest a now. 'XX, I likely had probably know less guys -- considered that of year-over-year

kind on thoughts from margin just of So outlook here? the

I'll Well, that. Cappy, This is address Brady.

we'll continue customers yield. go little deposits as see a remix think, more of I to a after

can I the I'm guidance really think NIM. defend not giving our comfortable NIM. we on

and we do our customers. going market even shifting than just we're looking So, above But and in NIM through going We've some not money much of we're But a some outcomes. to take think a our going have obviously to the in range large see deposits not X%. the I continued has the our certainly dip yield end do -- loans, can it a deposits of assets we some increased care the higher past And XXXX. it of forward of time at which dip we modeled to see for think, I and been at repricing. we're keep rates, then with core that year, the

All look outflows X% some about And XX% balances, maybe continue to deposit quarter. on quarter, I down you see deposit this last if then, expect to about they the annualized, right. quarter linked Okay. we here? think Should were at

I significant. think could think some see it'd don't yes. outflows, more deposit be we I

there I leading are market. that obviously, competitive in maintain said very they're the market, at stable not while the core I ago, deposit base. looking they're And and to think out our customers, but we're what's we're as rates, doing our a

out, if outflow, keep I So, it I can don't much. migration there we'll be it'll But very of and lot some think don't with level, -- we're just not be could that. projecting a comfortable we I be think

for guys of assets. X.X% Then I talked know right. finally me, about keeping you All about at have expenses

right quarter, first you X.XX%. look kind X.X% It's the is in If to about But of think base? way that that about the at right it expense still was mark. the level

Yeah, Brady, out, that we're just $XX range under That would think roughly starting million we're us so. $XX as to and million get projecting in that I off.

we can yes. think that, I So, meet

Okay. Thanks, Great. guys.

Thanks, Brady.

Brady. Thanks,

next Our questions is Piper to Milsaps Brad Sandler. of ask

Brad. Hi,

Good Hey, Cappy. Am I morning. coming through?

Yes, Brad.

taking Hey, the thanks for question.

kind Did things if margin provide heated in January us compression when of versus of on of you March? you your quarter it give the see margin through kind days? follow-up it of maybe on the quarter? color kind of discussion, late kind of Just went as you XX to up, kind just a the the sense Maybe the the bulk throughout could where curious did trended trend really some how of or in how was

during down Well, Brad, quarter. trend it did the

ended January more X.XX% the I to then about and started we think closer in we range, X.XX%.

that averaged range. somewhere it in X.XX% -- X.XX% So, out

can still it So, near seeing yeah, we think that, stay I we're trend bit little modeling but level. in a downward out, that

notice know maybe pay five rest portfolio within yield? -- pegged kind I volatile the across level of then on you down back mentioned how of of million that very forward. borrowings. the I the was the quarters. four get to down XX available the or some Is accounting I sale which And of basis cash around of how an account some maybe kind yield I down trying if using And for points the specific securities last It's components. think should that of of a the bond kind linked that trend $XX of to of for that been of year you quarter. about you just the kind flows, sense Okay. going that is look more? Or did pushed there more Just something phenomenon? for there book the movement

Yeah, going using that's adjustments, some and what -- factors Brad, we're accretions, some that's it. that's going and exactly the look accounting some did forward. We be on at made and to amortization

Okay.

our liquidity during for higher -- the quarter, securities also losses, want Brad, for we take because so purposes. available to that some had we sale of yields and sold didn't first

the slightly, so And impacted sold. million that about we $XX yield down

but the Okay. But very I me. about addressed in you I through one if didn't think heavier this, And provisioning we last some move Obviously, no late question guys quarter it's year, that the of know apologize final did how just to this and year? at all. charge-off quarter. I we you this the take as driven, model kind you approach you but your for year think conservative as asset about quality provision, should mean,

can that, I take Brad.

account supposed portfolio out not the model, CECL project the into take then losses you're only into course, to the future. With in but your today, of

quarter. And at the lot had we in of our make didn't projections and the risk the have really more during XX for quarter, in felt of lot materially a first supportable feel for portfolio solid out, The fourth go loan XX end fourth those us and so we ratings quarter, to we're to like provision change change. basically, projections months like the forward ahead our we going a changed. didn't And didn't balances and that

So, year. the a our what calculated of reserve it model did similar at of because the end to that,

Okay, Thank you. great.

Our Matt Stephens. next with be caller Olney will

helpful guys appreciate in the good And I also the next Hey, stuff other the you banks that disclosures I all great weeks. morning. all gave thanks, and hope few us provide very release,

where declined. we so if circle some year? NIB you depositors a land this year. Just how Thanks. discussion. curious on mentioned where later of versus could on appreciate size of few the could ultimately to any additional today can you was looked maybe these see ago, average know this much just this at help years Cappy, didn't it color deposit want I'm the I NIB deposits back the on we outflows

could think month do term as I get yield said while remix, -- shift CD a a ago, good on deposits continued as we certainly you somewhat -- I a pretty we'll a into account market still short now get -- that's XX we or pretty a can I good think Matt, or that's money Well, see of a rate. a

think some started at. budget different So, modeling what into that, take don't we'll going year They're and we for a little big a be throughout now. of number. that than we But I the XXXX bit to we're see that's consideration our

and decrease decrease it should deposits, said a to see them throughout in as some We're slight be enough rates a the could earlier, we we our working think maintain to And our maintain deposits like noninterest-bearing we'll think I the I total in interest-bearing. made markets. attractive probably shifting and our throughout we deposits year. to

see that how we'll So, plays out.

This Matt. is Ty. Yeah,

me things Let of that. to add a couple

really for in QX and quite treasury biggest Our back the rates a market, competitor have come bit. deposits those was

a And the one-year so, for what bank treasury, who's program reciprocal actually, we're paying comparable is we keep now and have the money insurers. to anyone do wanting to in

our So, deposit going different we have and base couple a of to things forward. interest-bearing depend favor our working time

for on in Ty. about change C&I last the or any looks months lower lending rates? utilization specifically few side, C&I Okay. like commercial quarter. any It the -- then, weeks? side seeing on first the that, over And and the X% the on on more were notable side, Thanks balances Anything you're the few

material far rates, the as Not Matt. as utilization

We haven't there. seen anything

single expectation? your loan last year, digit And that low I we is the that about for time growth still talked think

in pretty I environment. a don't -- we're obviously, fluid that's that know -- we're mean, I

we're going contract to see think credit around the I country.

really low system. that don't And stability about of freed buy to contraction growth even I know the so, in use messaging in or going digit the some And on and to mean, would now improves until no that capital I say single the stock, in banking think pretty balance our we that that's how even right up active could to back space. be we're I that sheet some because decline. have to

for is we're of anticipating little a really So environment But of till honestly, that's not bit. in growth intrinsic I -- really. least out sure strategy, my that's this better probably settle significant head and things or kind where kind loan at projecting a

there... that. Yeah, I visibility Yeah, appreciate not out much

exactly. Yeah,

like. growth the office anyway as great credit and by profile portfolio. small, the there think color loan really on geography I it on I in of of Any typical And front, the of ...on just some And just guess finally, size, gave your us middle, looks footprint? front. around terms your disclosures portfolio Average you about down loan? then, butter, your market, office office your bread does loan lean

smaller doesn't. our office going are the several much that There's actually across in It were East would tenant occupied. in it's region. to of office Texas pretty lead It's them our our be Obviously, our be actually owner primarily, But that footprint. bucket.

just third office that's space, up and loan on transaction as exposed party But we of that of lot significant certainly there's metro size. leases out out lease So, far don't have there. that and it's a a in there is as any different things very But going regions. to exposure spread really three our

Okay. guys. Thanks,

you, Thank Matt.

is with Raymond Our Rose James. Michael next caller

you Hey, hear guys. Can me?

Michael. Yeah,

Yeah, Michael.

All right. couple Yeah, follow-up just a questions. of

I first were the around XX% kind pre-COVID, of NIB guys certainly you're mix now. you happening. that's back to on If at remix, Just understand running deposit XX%, go

relates And there it quarters? to are of margin that why back as guidance, where the goes? necessarily you assuming get it kind couple your next wouldn't over of Just

in be still at down low for some a where We're going the -- to reasonable it mid XX%-s, to is, projecting but level. I'm it

more. just a Maybe few Okay.

yields deposit what yields? out of And loan end where cost for the point new Just loan running did quarter kind kind of are what at on you kind production of average? this and interest-bearing just -- same are

that, Michael. X.X% where is production. of we're on have I'll new X%, putting around I kind mean,

level demand at levels those for Okay. And rate? that of there's

putting on, we we're a is but That's kind put credit of mean, it if what on. we're yes, on at. putting I there that's demand, where

just to growth little here bit TBV Obviously, X%. of Maybe capital. a switching Okay. up

of end of one AOCI about book of slide that I would guys have we back you Have for stat the on kind they so? the of their the back or sense And the of in securities come that earn value mature? to about think year. year the XX% a the AOCI put Just neat work? of AOCI, What do a kind will based on larger over through into going cover, or next as done of just next be where kind banks that project are deck you the sort they accretion

together be modeling, We to through ALCO pretty a not rate it'd our that change have it, simple only Michael. that, though We say, could also project from project environment, year now. put in

And Perfect. maybe ahead. -- go oh, just

Sorry.

No. I a AOCI impact we've think mean, just held to going on was I and our structured the portfolio moderate key sale is available to the capital is -- I both our say, has in where it pretty for position, maturity. just on

so that's two over we've quite And piece the the bit attention to last years. paid a

on Okay. just for me, buyback. just Maybe finally the

I this kind think of cautious kind means? Obviously, be has pressure, been expectation under that would kind actually define Can you of think you relatively what active. in stocks be bank generally of that of been to you a expected lot environment. mentioned banks that I just have but our

about So, opportunities there's to there lot this I certainly you can point. active kind understand the growth at that, you loan talk not buyback? of but out understand with plan just be a how Thanks. of I

yeah. Well,

we're We've been. been pretty and daily, much in be the we two last weeks. to that at active So, have looking pretty going

XX% back of X% where the so, of is sheet that And we bank, I up from environment. just kind depending say buy in anywhere on to the our and could would balance

our have earnings loan with the we're and it's deposit quality, -- consistent amount, our forward. earnings earnings stream, core where our projecting asset we sit going but ability perpetuate pretty kind our and our our funding, forward of our with base core comfortable at very loan liquidity, with going decreased even a that to we're portfolio core we But

contraction sheet we middle gives of balance and an that we can stock some is the COVID, buy value do. think opportunity us we did that, and an standpoint, So back we better to we probably things the of during if like intrinsic one from on allow --

valuations -- of of we're kind that where year. it what wouldn't surprise on So, area aggressive me valuations remainder pretty do depending the if the in

That's I right. questions. All Thanks for taking all had. my

Thanks, Michael.

Thanks, Michael.

questions. website remind be everyone of Thank attending, Relations concludes Thank at I PM gnty.com. our and will X:XX this for Investor on recording today you your to for like at call. would available call our this the you