CALL PARTICIPANTS Image source: The Motley Fool. Monday, April 21, 2025 Need a quote from one of our analysts? Email [email protected] SUMMARY Guaranty Bancshares reported mixed Q1 2025 results amid economic uncertainty, with strong net interest margin (NIM) improvement, offset by lower loan balances. Management cited a robust loan pipeline despite the quarter's contraction, indicating potential for future growth, pending economic clarity in 2025. The bank's balance sheet, featuring over 91,100 deposit acco ...

Financial Data and Key Metrics Changes - Total assets increased by approximately $37 million during Q1 2025 [8] - Net income for Q1 2025 was $8.6 million, equating to $0.76 per basic share, down from $0.88 per share in the previous quarter but up from $0.58 per share in Q1 2024 [12] - The net interest margin (NIM) improved to 0.7% in Q1 2025, up from 0.54% in Q4 2024 and 0.16% in Q1 2024 [13] - Return on average assets was 0.13% for the quarter, compared to 0.27% last quarter, while return on average equity was 0.83%, up from 0.68% in Q4 [12] Business Line Data and Key Metrics Changes - The loan book decreased by $23 million in Q1 2025, with a strong loan pipeline anticipated for Q2 [5][22] - Non-interest income decreased by $693,000 compared to the previous quarter, primarily due to elevated non-interest income in Q4 2024 [17] - Non-interest expense increased by $1.3 million in Q1 2025, mainly due to employee compensation and related benefits [19] Market Data and Key Metrics Changes - The Texas economy remains strong and growing, with no significant negative impacts observed from national economic uncertainties [3][4] - Non-performing assets to total assets ratio was 0.15% at March 31, compared to 0.16% at year-end [24] Company Strategy and Development Direction - The company is focused on maintaining a granular and historically stable core deposit base, with an anticipated net growth of 2% to 5% in the deposit book for the year [61] - Plans to utilize cash flows from maturing securities for loan growth or reinvestment in securities [66] - The company aims to continue share repurchases as a good utilization of excess capital [80] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of the loan portfolio and the quality of the customer base, despite uncertainties related to tariffs and the national economy [70][72] - The company is prepared for potential economic slowdowns while also being positioned for future growth [7] Other Important Information - The company increased its dividend to $0.25 per share in Q1 2025, up from $0.24 per share in 2024 [12] - Total equity increased by $6.7 million, primarily due to net income and employee stock option exercises [11] Q&A Session Summary Question: Can you provide insights on the loan pipeline and its composition? - The loan pipeline is similar to the current composition of the loan portfolio, with a strong uptick in opportunities observed post-November election [39] Question: What are clients looking for to feel comfortable in the current environment? - Clients are cautious due to national uncertainties but see strength in local markets [44] Question: What is the outlook for reserves based on current economic conditions? - No expectation to build reserves unless there is a significant systemic concern; qualitative factors remain elevated [46][50] Question: Can you elaborate on the CNI loan portfolio and its recent contraction? - The contraction was primarily due to lower utilization and paydowns in CNI lines [58] Question: What is the strategy for deposit growth moving forward? - The company aims for a 2% to 5% net growth in deposits, focusing on core deposit relationships [61] Question: How does the company plan to utilize cash flows from securities? - Plans to systematically add to the bond portfolio as opportunities arise [66] Question: What is the company's approach to share repurchases? - The company views share repurchases as a good use of excess capital and plans to continue this strategy [80]

Financial Data and Key Metrics Changes - Total assets increased by approximately $37 million during Q1 2025 [8] - Net income for Q1 2025 was $8.6 million, equating to $0.76 per basic share, down from $0.88 per share in the previous quarter but up from $0.58 per share in Q1 2024 [12] - The net interest margin (NIM) improved to 0.7% in Q1 2025, up from 0.54% in Q4 2024 and 0.16% in Q1 2024 [13] - Total equity increased by $6.7 million, primarily due to net income and employee stock option exercises [11] Business Line Data and Key Metrics Changes - The loan book decreased by $23 million in Q1 2025, with a strong loan pipeline anticipated for Q2 [5][22] - Non-interest income decreased by $693,000 compared to the previous quarter, primarily due to elevated non-interest income in Q4 2024 [17] - Non-interest expense increased by $1.3 million, mainly due to employee compensation and related benefits [19] Market Data and Key Metrics Changes - The Texas economy remains strong and growing, with no negative impacts observed from national economic uncertainties [3][4] - Non-performing assets (NPAs) remained low at 0.15% of total assets, slightly improved from 0.16% at year-end [24] Company Strategy and Development Direction - The company is focused on maintaining a granular and stable core deposit base, with plans to open 10,000 checking accounts this year [60] - The strategy includes systematic investment in the bond portfolio as opportunities arise, utilizing cash flows from maturing securities [66] - The company anticipates a 2% to 5% net growth in the deposit book for the year [61] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of the loan portfolio and the quality of the customer base, despite national uncertainties [71] - The company is prepared for potential economic slowdowns while also being positioned for future growth [7][30] - Management does not expect to build reserves unless significant systemic concerns arise [46][50] Other Important Information - The company increased its dividend to $0.25 per share in Q1 2025, up from $0.24 per share in 2024 [12] - The liquidity ratio improved to 0.8% compared to 0.5% at year-end [30] Q&A Session Summary Question: Can you provide insights on the loan pipeline and its composition? - The loan pipeline is strong and similar to the current loan portfolio composition, with opportunities across all regions [39] Question: What are clients looking for to feel comfortable in the current environment? - Clients are cautious due to national uncertainties but see strength in local markets [44] Question: Can you elaborate on the CNI loan portfolio and the recent contraction? - The contraction was primarily due to lower utilization and paydowns in CNI lines [58] Question: What is the outlook for deposit growth for the full year? - The company anticipates a 2% to 5% net growth in deposits, focusing on core deposit relationships [61] Question: What is the plan for cash flows from the securities portfolio? - The plan is to systematically add to the bond portfolio as opportunities arise [66] Question: What areas of the portfolio are being closely monitored for credit risks? - The company is monitoring customers with potential direct impacts from tariffs, but currently sees no significant concerns [71] Question: What is the company's approach to share repurchases? - The company views share repurchases as a good utilization of excess capital and plans to continue this strategy [81] Question: What is the target for the expense to average asset ratio? - The target remains around 2.5%, with flexibility to adjust based on revenue and growth opportunities [84]

Guaranty Bancshares, which belongs to the Zacks Banks - Southwest industry, posted revenues of $31.76 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 1.79%. This compares to year-ago revenues of $28.85 million. The company has topped consensus revenue estimates two times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commenta ...

Financial Performance - The Company's net income available to common shareholders for Q1 2025 was $8.6 million, or $0.76 per basic share, a decrease from $10.0 million, or $0.88 per share in Q4 2024, but an increase from $6.7 million, or $0.58 per share in Q1 2024[2]. - Net earnings for the first quarter of 2025 were $8.623 million, compared to $10.008 million in the previous quarter[27]. - Earnings per common share, basic, was $0.76 for the first quarter of 2025, down from $0.88 in the previous quarter[27]. - The Company's efficiency ratio improved to 66.78% in Q1 2025 from 71.74% in the prior year quarter[19]. Asset and Liability Management - Total assets increased to $3.153 billion at March 31, 2025, from $3.116 billion at December 31, 2024[26]. - Total liabilities increased to $2.827 billion at March 31, 2025, from $2.796 billion at December 31, 2024[26]. - Total equity was $325.8 million at March 31, 2025, up from $319.1 million at December 31, 2024, primarily due to net income of $8.6 million[25]. - The total equity attributable to Guaranty Bancshares, Inc. was $325.247 million as of March 31, 2025, up from $318.498 million at the end of the previous quarter[35]. Income and Expense Analysis - Net interest income for Q1 2025 was $26.7 million, an increase of $3.1 million, or 13.3%, from $23.6 million in Q1 2024, primarily due to a decrease in interest expense[10]. - Noninterest income decreased by $225,000, or 4.3%, in Q1 2025 to $5.0 million, primarily due to lower recoveries on SBA loans and a decrease in gains on loan sales[15]. - Noninterest expense increased by $517,000, or 2.5%, in Q1 2025 to $21.2 million, driven by higher occupancy expenses and other noninterest expenses[17]. - Total noninterest income for the quarter ended March 31, 2025, was $5,033, a decrease of 12.14% from $5,726 in the previous quarter[32]. - Total noninterest expense rose to $21,209, an increase of 6.69% from $19,880 in the previous quarter[32]. Loan and Deposit Trends - Total deposits increased by $12.2 million during Q1 2025, with noninterest-bearing deposits representing 31.3% of total deposits[6]. - Total deposits increased by $12.2 million, or 0.5%, to $2.70 billion at March 31, 2025, compared to $2.69 billion at December 31, 2024[23]. - Gross loans decreased by $23.0 million, or 1.1%, during Q1 2025, resulting in a gross loan balance of $2.11 billion[21]. - Total loans as of March 31, 2025, amounted to $2,108,161, a decrease of 1.08% from $2,131,137 on December 31, 2024[30]. Performance Ratios - Return on average assets and average equity for Q1 2025 were 1.13% and 10.83%, respectively, compared to 1.27% and 12.68% in Q4 2024 and 0.85% and 8.93% in Q1 2024[2]. - Return on average assets (annualized) was 1.13% for the first quarter of 2025, compared to 1.27% in the previous quarter[27]. - Return on average equity (annualized) was 10.83% for the first quarter of 2025, down from 12.68% in the previous quarter[27]. Credit Quality - Nonperforming assets as a percentage of total loans were 0.23% at March 31, 2025, unchanged from December 31, 2024, and down from 0.94% at March 31, 2024[24]. - The allowance for credit losses at the end of the period was $27,865, representing 1.32% of period-end loans[30]. - Nonaccrual loans increased to $4,756, accounting for 0.23% of total loans as of March 31, 2025[30]. - The company reported a net charge-off of $145 for the quarter, with recoveries amounting to $20[30]. Market and Operational Insights - The average yield on interest-earning assets was 5.60%, compared to 5.50% in the previous quarter[33]. - The average cost of interest-bearing deposits decreased to 2.83% from 3.07% in the previous quarter, a reduction of 24 basis points[37]. - The average cost of total deposits decreased to 1.96% from 2.11% in the previous quarter, a decline of 15 basis points[37]. - Guaranty Bancshares, Inc. operates 33 banking locations across 26 Texas communities[42]. Upcoming Events - The company will hold a conference call on April 21, 2025, to discuss the first quarter 2025 financial results[41].

Company Overview - Guaranty Bancshares Inc. (GNTY) is headquartered in Addison and operates in the Finance sector [3] - The stock has experienced a price change of 12.98% since the beginning of the year [3] Dividend Information - Guaranty Bancshares Inc. currently pays a dividend of $0.25 per share, resulting in a dividend yield of 2.56% [3] - This yield is significantly higher than the Banks - Southwest industry's yield of 1.16% and the S&P 500's yield of 1.68% [3] - The company's annualized dividend of $1 has increased by 4.2% from the previous year [4] - Over the last 5 years, Guaranty Bancshares has raised its dividend 5 times, averaging an annual increase of 7.12% [4] - The current payout ratio is 35%, indicating that the company pays out 35% of its trailing 12-month EPS as dividends [4] Earnings Expectations - Guaranty Bancshares is expected to see earnings growth this fiscal year, with the Zacks Consensus Estimate for 2025 at $3.10 per share, reflecting a 13.14% increase from the previous year [5] Investment Considerations - The company is viewed as a compelling investment opportunity due to its strong dividend profile and current Zacks Rank of 3 (Hold) [7] - Income investors should note that high-yielding stocks may face challenges during periods of rising interest rates [7]

Interest Rate Risk - The company is subject to interest rate risk, which may adversely affect earnings due to fluctuations in interest rates [119]. - Interest rate fluctuations may adversely affect the company's earnings, particularly due to the sensitivity of its assets and liabilities to changes in market interest rates [168]. - The Federal Reserve raised interest rates by 525 basis points over 15 months, with the target federal funds interest rate at 4.25% to 4.50% as of December 31, 2024 [450]. - Under the company's internal policy, estimated net income at risk for the subsequent one-year period should not decline by more than 15.0% for a 100 basis point shift in interest rates [455]. - The simulated change in net interest income shows a decrease of 0.73% for a 300 basis point increase in interest rates as of December 31, 2024 [456]. - The company’s exposure to interest rate risk is managed by the asset-liability committee, which regularly reviews the sensitivity of assets and liabilities to interest rate changes [453]. Loan Portfolio and Credit Risk - A significant portion of the loan portfolio is comprised of real estate loans, making it vulnerable to negative changes in the economy affecting real estate values and liquidity [119]. - Real estate loans comprised approximately $1.83 billion, or 85.8%, of total loans, exposing the company to significant credit risk due to potential fluctuations in real estate values [144]. - The allowance for credit losses may prove insufficient to absorb potential losses in the loan portfolio [119]. - The allowance for credit losses totaled $28.3 million, representing approximately 1.33% of total loans, reflecting management's assessment of potential losses [149]. - The company may face increased delinquencies and loan losses in its mortgage warehouse lending business due to credit risks and market value fluctuations [177]. Operational and Compliance Risks - The ongoing implementation of the Dodd-Frank Act could adversely affect the company's business, financial condition, and results of operations [124]. - The company is exposed to operational risks, including customer fraud and data processing system failures, which could negatively impact its business [124]. - The complexity of quantitative models used in risk management may lead to suboptimal decision-making if misunderstood or misapplied [139]. - The company maintains a system of internal controls to mitigate operational risks, including fraud and data processing errors, but failures could adversely affect financial condition [194]. - Regulatory challenges related to consumer protection laws could result in sanctions that negatively impact the company's operations and financial condition [220]. Strategic Growth and Acquisitions - The company plans to pursue acquisition opportunities that complement its activities, but these acquisitions carry risks such as intense competition and potential integration challenges [127]. - The company may not be able to implement aspects of its expansion strategy, which could adversely affect its ability to maintain historical earnings trends [125]. - The company intends to continue de novo branching as part of its expansion strategy, which carries risks related to obtaining necessary regulatory approvals [216]. - The company plans to pursue strategic acquisitions of financial institutions, but these require federal regulatory approvals that may not be granted [214]. Market and Economic Conditions - Changes in U.S. trade policies, including tariffs, may adversely impact the company's financial condition and results of operations [134]. - Economic conditions in primary markets, including the energy sector and oil prices, significantly impact the company's operations and customer repayment ability [171]. - The company faces strong competition from various financial institutions, which may lead to higher interest rates for deposits and lower yields on loans [172]. - Disruptions in the secondary market for residential mortgage loans could limit the company's ability to maintain or grow income from these activities [157]. Financial Position and Capital Management - As of December 31, 2024, the company had approximately $1.56 billion in loans to small- to medium-sized businesses, representing about 73.0% of its total loan portfolio [140]. - As of December 31, 2024, approximately $1.94 billion, or 72.1%, of total deposits were demand, savings, and money market accounts [160]. - The remaining balance of deposits included $742.7 million in certificates of deposit, with $696.3 million, or 25.8%, due to mature within one year [161]. - The company may need to raise additional capital in the future, which may not be available on acceptable terms or at all [166]. - The company is subject to stringent capital requirements under Basel III, which may lead to lower returns on equity and limit share repurchases or dividend payments [213]. Reputational and Environmental Risks - Negative public opinion and reputational damage could hinder the company's ability to attract new customers and retain existing ones [180]. - A significant portion of the company's business is generated from markets susceptible to natural disasters, which could lead to decreased revenue and increased loan losses [197]. - The company may incur substantial environmental liabilities related to real estate properties it owns or forecloses on, potentially impacting financial results [198]. Management and Governance - The company relies heavily on its executive management team, and the unexpected loss of key employees could adversely affect its operations [119]. - As of December 31, 2024, the company's management and board of directors owned approximately 17.7% of the outstanding shares, giving them significant control over corporate decisions [235]. - The company is dependent on Guaranty Bank & Trust for cash distributions to meet its obligations and pay dividends [240].

Core Viewpoint - Guaranty Bancshares Inc. (GNTY) shows potential as a strong investment opportunity due to significant upward revisions in earnings estimates, indicating a positive earnings outlook [1][2]. Estimate Revisions - The current-quarter earnings estimate is $0.77 per share, reflecting a year-over-year increase of +32.76%. The Zacks Consensus Estimate has risen by 30.51% in the last 30 days, with one estimate increasing and no negative revisions [4]. - For the full year, the earnings estimate stands at $2.89 per share, representing a +5.47% change from the previous year. The consensus estimate has increased by 16.53%, with two estimates moving higher and no negative revisions [5]. Zacks Rank - Guaranty Bancshares holds a Zacks Rank 1 (Strong Buy), indicating strong agreement among analysts regarding the upward revisions in earnings estimates. This rank is associated with a historical average annual return of +25% for Zacks 1 Ranked stocks since 2008 [3][6]. Stock Performance - Over the past four weeks, Guaranty Bancshares shares have appreciated by 19.7%, suggesting that investor sentiment is positive regarding the company's earnings growth prospects [7].

Group 1 - HBT Financial, Inc. (HBT) has seen a Zacks Consensus Estimate for its current year earnings increase by 8.8% over the last 60 days and offers a dividend yield of 3.3%, above the industry average of 2.6% [1] - Guaranty Bancshares, Inc. (GNTY) has experienced a 16.5% increase in the Zacks Consensus Estimate for its current year earnings in the last 60 days, with a dividend yield of 2.3%, compared to the industry average of 0.7% [2] - Tyson Foods, Inc. (TSN) has had a modest increase of 0.6% in the Zacks Consensus Estimate for its current year earnings over the past 60 days [2]

Financial Data and Key Metrics - The company ended the year with strong performance metrics, including credit metrics, liquidity, capital, and earnings [3] - The company has the capacity to grow its loan portfolio in the current year, supported by a strong funding base of core deposits and good capacity in all lending buckets [3] Business Line Data and Key Metrics - Positive trends are observed across all markets and business lines, indicating strong performance throughout the company [2] Market Data and Key Metrics - The company sees significant opportunities for organic growth and further maturation of its expansion markets across Texas [3] Company Strategy and Industry Competition - The company aims to build shareholder value through continued organic growth and further development of its expansion markets in Texas [3] Management Commentary on Operating Environment and Future Outlook - The company had a good year in 2024 and anticipates an even stronger year in 2025 [2] - Management is optimistic about the opportunities for growth and the positive trends observed across the company [2][3] Other Important Information - The company's strong liquidity position and core deposit base provide a solid foundation for future growth [3] Q&A Session - No Q&A session details were provided in the content