Core Insights - Guaranty Bancshares Inc. (GNTY) reported quarterly earnings of $0.87 per share, exceeding the Zacks Consensus Estimate of $0.61 per share, and showing an increase from $0.51 per share a year ago, resulting in an earnings surprise of 42.62% [1] - The company achieved revenues of $31.95 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 7.93% and increasing from $28.61 million year-over-year [2] - Guaranty Bancshares has consistently outperformed consensus EPS estimates over the last four quarters [2] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.59 on revenues of $29.3 million, while for the current fiscal year, the estimate is $2.49 on revenues of $121.5 million [7] - The estimate revisions trend for Guaranty Bancshares is favorable, leading to a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The Banks - Southwest industry, to which Guaranty Bancshares belongs, is currently ranked in the top 5% of over 250 Zacks industries, suggesting strong performance potential [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Performance - Guaranty Bancshares, Inc. reported a net income of $10.0 million, or $0.88 per basic share, for Q4 2024, a 35.1% increase from $7.4 million, or $0.65 per share, in Q3 2024, and a 69.5% increase from $5.9 million, or $0.51 per share, in Q4 2023[2] - Net earnings for the quarter ended December 31, 2024, were $10.0 million, up from $7.4 million in the previous quarter[26] - Net earnings attributable to Guaranty Bancshares, Inc. rose to $31,537,000 in 2024, up from $30,037,000 in 2023, reflecting an increase of 4.99%[29] - Earnings per common share, basic, increased to $2.75 in 2024 from $2.57 in 2023, a growth of 7.01%[29] Asset and Deposit Management - Total deposits increased by $23.3 million, or 0.9%, to $2.69 billion at December 31, 2024, compared to $2.67 billion at September 30, 2024, and increased $58.9 million, or 2.2%, from $2.63 billion at December 31, 2023[22] - The bank's total deposits rose to $2,692.2 million at December 31, 2024, from $2,668.9 million at September 30, 2024[25] - The company’s total average deposits for the year ended December 31, 2024, were $2,698,368, an increase from $2,623,703 in 2023[41] Loan and Credit Quality - The total loan portfolio decreased to $2,131,137,000 as of December 31, 2024, down from $2,322,576,000 in 2023, a decline of 8.23%[32] - The company recorded a reversal of the provision for credit losses of $250,000 in Q4 2024, totaling $2.2 million for the year, due to a decline in gross loan balances of $191.4 million, or 8.2%, since January 1, 2024[5][14] - Nonperforming assets decreased significantly to $4,935,000 in 2024 from $20,433,000 in 2023, a reduction of 75.85%[32] - Nonperforming assets as a percentage of total assets were 0.16% at December 31, 2024, down from 0.66% at September 30, 2024, and 0.18% at December 31, 2023[6] - Nonperforming assets as a percentage of total loans decreased to 0.23% at December 31, 2024, from 0.96% at September 30, 2024[23] - Nonaccrual loans as a percentage of total loans improved to 0.17% in 2024 from 0.24% in 2023, indicating better asset quality[32] Interest Income and Margin - Net interest income increased by $2.4 million, or 10.1%, to $26.2 million in Q4 2024, driven by a $2.4 million increase in net interest income and a $930,000 increase in noninterest income[10][15] - The net interest margin improved to 3.54% in Q4 2024, up from 3.33% in Q3 2024 and 3.11% in Q4 2023, primarily due to a 21 basis point increase in interest-earning asset yields[11][13] - The net interest income for the year ended December 31, 2024, was $97,879, compared to $96,980 in 2023, with a net interest margin of 3.35%[37] - Total loans for the quarter ended December 31, 2024, were $2,126,414, with a net interest income of $26,221, representing a net interest margin of 3.56%[35] - The average cost of interest-bearing deposits was 3.07% for Q4 2024, compared to 3.17% in Q4 2023[41] - The company reported a net interest rate spread of 2.51% for Q4 2024, up from 2.03% in Q4 2023[35] Efficiency and Liquidity - The efficiency ratio for Q4 2024 improved to 62.23%, compared to 74.81% for the prior year quarter and 70.47% for Q3 2024[19] - The efficiency ratio slightly increased to 69.01% in 2024 from 68.92% in 2023, indicating a marginal decline in operational efficiency[29] - The liquidity ratio was 16.5% as of December 31, 2024, compared to 12.2% as of December 31, 2023, indicating improved liquidity management[6] Equity and Book Value - Total equity was $319.1 million at December 31, 2024, a slight decrease from $319.3 million at September 30, 2024, but an increase from $303.8 million at December 31, 2023[24] - The tangible book value per common share increased to $24.96 as of December 31, 2024, from $23.37 a year earlier[39] - Total equity attributable to Guaranty Bancshares, Inc. was $318,498 as of December 31, 2024, reflecting a slight increase from $303,300 in the previous year[39] Future Outlook and Events - The company will hold a conference call on January 21, 2025, to discuss fourth quarter and year-end 2024 financial results[45] - The company expects to fully resolve the remaining ORE property with a book balance of $1.2 million in the first quarter of 2025, with minimal expected losses[23] - Forward-looking statements reflect the company's current views on future events and financial performance, but actual results may differ[47] Non-GAAP Measures - The financial measures presented include non-GAAP measures such as "tangible book value per common share" and "cost of total deposits," which are useful for evaluating performance[42] - A reconciliation of non-GAAP financial measures to GAAP measures is provided at the end of the financial statement tables[44] - The company emphasizes that non-GAAP financial measures should not be considered a substitute for GAAP financial information[43] - The company has a commitment to providing meaningful supplemental information regarding performance through non-GAAP measures[42] Company Overview - Guaranty Bancshares, Inc. operates 33 banking locations across 26 Texas communities[46] - As of December 31, 2024, Guaranty Bancshares, Inc. had total assets of $3.1 billion, total loans of $2.1 billion, and total deposits of $2.7 billion[46] - The bank's total assets increased to $3,115.6 million at December 31, 2024, compared to $3,097.1 million at September 30, 2024[25]

Financial Performance - Net earnings attributable to Guaranty Bancshares, Inc. for the nine months ended September 30, 2024, were $21.5 million, down from $24.2 million in the same period of 2023[143]. - Net earnings attributable to Guaranty Bancshares Inc. were $7.4 million for the three months ended September 30, 2024, compared to $6.3 million for the same period in 2023[182]. - Basic earnings per share increased to $0.65 for the three months ended September 30, 2024, from $0.54 in the same period in 2023[183]. - Noninterest income decreased by $2.7 million, or 15.3%, for the nine months ended September 30, 2024, compared to the same period in 2023[159]. - Noninterest income increased by $215,000, or 4.4%, to $5,154,000 for the three months ended September 30, 2024, compared to the same period in 2023[196]. Interest Income and Margin - Net interest margin improved to 3.33% in Q3 2024, up from 3.26% in Q2 2024 and 3.02% in Q3 2023[140]. - Net interest income before provision for credit losses was $71.7 million for the nine months ended September 30, 2024, a decrease of 2.1% from $73.2 million in 2023[145]. - Net interest income increased by $889,000, or 3.8%, to $24.2 million for the third quarter of 2024, driven by a $615,000 increase in interest income[184]. - The net interest margin for the nine months ended September 30, 2024, was 3.28%, compared to 3.17% for the same period in 2023[151]. Deposits and Liquidity - Total deposits increased by $42.8 million during Q3 2024, with noninterest-bearing deposits representing 31.5% of total deposits[141]. - Total deposits as of September 30, 2024, were $2.67 billion, an increase of $35.7 million, or 1.4%, compared to $2.63 billion as of December 31, 2023[251]. - Average total deposits for the nine months ended September 30, 2024, were $2.62 billion, a decrease of $7.4 million, or 6.1%, compared to the year ended December 31, 2023[248]. - Noninterest-bearing deposits as of September 30, 2024, were $839.6 million, a decrease of $13.4 million, or 1.6%, compared to $853.0 million as of December 31, 2023[251]. - The liquidity ratio was 17.1% as of September 30, 2024, up from 14.0% a year earlier[141]. Loans and Credit Quality - Total loans decreased by $186.0 million during the first nine months of 2024, with gross loan balances down by $78.5 million in the third quarter alone[155]. - The allowance for credit losses as a percentage of total loans was 1.34% as of September 30, 2024, compared to 1.33% as of December 31, 2023[155]. - Nonperforming assets as a percentage of total assets decreased to 0.66% as of September 30, 2024, compared to 0.71% at June 30, 2024[141]. - The total nonperforming assets increased to $20.4 million as of September 30, 2024, compared to $5.8 million as of December 31, 2023[219]. - The total allowance for credit losses was $28.5 million as of September 30, 2024, down from $30.9 million as of December 31, 2023[236]. Expenses and Cost Management - Noninterest expense totaled $62.0 million, an increase of $1.0 million, or 1.7%, compared to $61.0 million for the same period in 2023[171]. - Employee compensation and benefits decreased by $401,000, or 1.1%, primarily due to a reduction in bonus expenses during the nine months ended September 30, 2024[172]. - Noninterest expense totaled $20,678,000, an increase of $164,000, or 0.8%, compared to $20,514,000 for the same quarter in 2023[202]. Capital and Equity - As of September 30, 2024, total equity increased to $319.3 million, up $15.4 million or 5.1% from $303.8 million as of December 31, 2023[273]. - Total capital to risk-weighted assets ratio was 16.59% as of September 30, 2024, compared to 15.22% as of December 31, 2023[276]. - Tier 1 capital to risk-weighted assets ratio was 13.81% as of September 30, 2024, up from 12.53% as of December 31, 2023[276]. Market and Economic Conditions - Inflation in the U.S. remains elevated, but the company’s performance is more significantly impacted by interest rate changes than by inflation levels[286]. - The Federal Reserve raised interest rates by 525 basis points over 15 months, followed by a decrease of 50 basis points during the three months ended September 30, 2024[287]. - Future performance is subject to various risks, including interest rate volatility, asset quality deterioration, and competition in the financial services industry[303]. Risk Management - The company utilizes an interest rate risk simulation model to manage market risk and assess the impact of interest rate changes on net interest income and equity[306]. - The asset-liability committee regularly reviews the sensitivity of assets and liabilities to interest rate changes and adjusts strategies accordingly[290]. - The company does not engage in leveraged derivatives or financial options to manage interest rate risk, focusing instead on balance sheet structuring[289].

Financial Data and Key Metrics Changes - Total assets decreased by approximately $88 million year-to-date but increased by $15.5 million during Q3 2024, while total liabilities increased by about $4.8 million [5] - Net income for the quarter was $7.4 million, equating to $0.65 per basic share, consistent with Q2 and up from $0.54 per share in Q3 2023 [7] - Return on average assets was 0.96% for the quarter, compared to 0.95% in Q2, while return on average equity was 9.58%, down from 9.91% in Q2 [7] - Net interest margin (NIM) increased to 3.33% from 3.26% in Q2 and 3.02% in Q3 2023, driven by improvements in interest-earning assets [8] Business Line Data and Key Metrics Changes - Gross loans decreased by $78.5 million during the quarter and have decreased about $186 million year-to-date, primarily in C&I construction and development and CRE loan segments [10] - New loans originated during the quarter totaled $63.8 million with an average rate of 8.07% [10] - Non-performing assets remained low at 0.66% of total assets, down from 0.71% in the prior quarter [11] Market Data and Key Metrics Changes - The company reported a strong core deposit base, with total deposits growing by $42.8 million during the quarter [14] - Non-interest bearing deposits represented 31.5% of total deposits at quarter end [14] - The liquidity ratio was reported at 17.1%, indicating strong liquidity [15] Company Strategy and Development Direction - The company aims to grow by another $1 billion to $2 billion over the next three to four years through organic growth and bolt-on acquisitions [4] - The management is optimistic about growth opportunities in Texas, citing a vibrant economy and strong borrower capacity [4][22] - The company is starting to plan for 2025, focusing on both organic growth and potential acquisitions [4][23] Management's Comments on Operating Environment and Future Outlook - Management noted muted growth due to cautious behavior from key customers, but expects improvements as rates stabilize post-election and geopolitical tensions ease [2] - The overall economic outlook for Texas remains positive, with management confident in the company's positioning to capitalize on future opportunities [5][24] Other Important Information - The company repurchased nearly 60,000 shares during the quarter at an average price of $30.65 per share [16] - Non-interest income decreased by $555,000 primarily due to a prior quarter's ORE valuation allowance [10] Q&A Session Summary Question: Can you elaborate on the deposit repricing schedule and its impact on margin? - Management anticipates NIM will increase by about two basis points per month, with expectations of nearing 3.50% by the end of 2025 [18][19] Question: What are the organic and M&A growth opportunities? - Management emphasized a focus on organic growth while remaining open to bolt-on acquisitions, particularly among smaller banks in Texas [21][23] Question: How is the competitive landscape for deposit pricing? - Management noted reduced pressure on deposit pricing, with less aggressive competition compared to the previous year [31] Question: What is the expected repricing of CDs in the next quarter? - Approximately $254 million of the CD portfolio will reprice in Q4, which is about 34% of the total CD portfolio [29]

Company Performance - Guaranty Bancshares Inc. (GNTY) reported quarterly earnings of $0.65 per share, exceeding the Zacks Consensus Estimate of $0.62 per share and up from $0.54 per share a year ago, representing an earnings surprise of 4.84% [1] - The company posted revenues of $29.35 million for the quarter ended September 2024, slightly missing the Zacks Consensus Estimate by 0.19%, compared to $28.14 million in the same quarter last year [1] - Over the last four quarters, Guaranty Bancshares has surpassed consensus EPS estimates four times and topped consensus revenue estimates two times [1] Market Outlook - Guaranty Bancshares shares have increased approximately 3.3% since the beginning of the year, while the S&P 500 has gained 23% [2] - The current consensus EPS estimate for the upcoming quarter is $0.59 on revenues of $29.6 million, and for the current fiscal year, it is $2.41 on revenues of $116.4 million [4] Industry Context - The Zacks Industry Rank for Banks - Southwest, which includes Guaranty Bancshares, is currently in the top 31% of over 250 Zacks industries, indicating a favorable industry outlook [5] - Another company in the same industry, Cullen/Frost Bankers (CFR), is expected to report quarterly earnings of $2.15 per share, reflecting a year-over-year decline of 9.7%, with revenues projected at $524.09 million, up 2.1% from the previous year [5]

Financial Performance - Net income available to common shareholders for Q3 2024 was $7.4 million, or $0.65 per basic share, unchanged from Q2 2024 and up from $6.3 million, or $0.54 per basic share, in Q3 2023[2] - Net interest income for Q3 2024 was $24.2 million, an increase of $889,000, or 3.8%, compared to Q3 2023[5] - Noninterest income increased by $215,000, or 4.4%, to $5.2 million in Q3 2024 compared to Q3 2023[9] - The efficiency ratio for Q3 2024 improved to 70.47%, compared to 72.64% for the prior year quarter[12] - The company reported a return on average assets of 0.96% and a return on average equity of 9.58% for the quarter[19] - Total noninterest income for the quarter ended September 30, 2023, was $5,154, an increase from $4,599 in the previous quarter[22] - Total noninterest expense for the quarter was $20,678, slightly up from $20,602 in the previous quarter[23] Asset and Deposit Management - Total deposits increased by $42.8 million, or 1.6%, to $2.67 billion at September 30, 2024, compared to $2.63 billion at June 30, 2024[14] - Total assets reached $3,097.1 million, a slight increase from $3,081.6 million in the prior quarter[17] - Total equity increased to $319.3 million as of September 30, 2024, up from $308.6 million in the previous quarter and $296.8 million year-over-year, primarily due to net income of $7.4 million[16] - Total average deposits remained stable at $2,621,968 thousand compared to $2,614,248 thousand in the prior quarter[27] - Noninterest-bearing deposits decreased to $800,573 thousand from $818,290 thousand in the previous quarter[27] Loan Performance - Gross loans decreased by $78.5 million, or 3.5%, during Q3 2024, resulting in a gross loan balance of $2.14 billion[13] - Total loans as of September 30, 2023, amounted to $2,318,249, a slight decrease from $2,322,576 as of June 30, 2024[20] - Total loans for the nine months ended September 30, 2024, were $2,234,538, generating interest income of $105,115, with an average yield of 6.28%[25] Credit Quality - Nonperforming assets as a percentage of total assets were 0.66% at September 30, 2024, down from 0.71% at June 30, 2024[15] - The allowance for credit losses as a percentage of total loans was 1.34% as of September 30, 2024, compared to 1.33% at December 31, 2023[9] - The net charge-offs to average loans (annualized) ratio was 0.04% for the quarter, indicating stable credit quality[21] - Nonaccrual loans were $5,095 as of September 30, 2023, compared to $6,225 as of June 30, 2024, indicating a decrease in nonperforming loans[21] - Total nonperforming assets were $20,433, a decrease from $21,740 in the previous quarter[21] Interest Rates and Margins - Net interest margin increased to 3.33% in Q3 2024, up 7 basis points from Q2 2024 and 31 basis points from Q3 2023[3] - Net interest income for the third quarter was $24.2 million, compared to $23.9 million in the previous quarter, reflecting a net interest margin of 3.33%[19] - The net interest margin improved to 3.28% in 2024 compared to 3.17% in 2023, reflecting a stronger interest rate spread of 2.17%[25] - Interest-bearing deposits increased to $1,802,228 in 2024, with interest expense rising to $44,526, resulting in an average yield of 3.30%[25] Stock and Equity - The company repurchased stock totaling $1.8 million during the third quarter of 2024[16] - Total equity attributable to Guaranty Bancshares, Inc. was $303,418 as of September 30, 2024, compared to $298,656 in 2023[26] - Tangible book value per common share increased to $27.94 in 2024 from $26.98 in 2023[26] Future Outlook - The company will hold a conference call on October 21, 2024, to discuss third quarter 2024 financial results[30] - Guaranty Bancshares, Inc. operates 33 banking locations across 26 Texas communities[31] - The company emphasizes the importance of non-GAAP financial measures for evaluating performance and making operational decisions[28]

Guaranty Bancshares Inc. (GNTY) is expected to deliver a year-over-year increase in earnings on higher revenues when it reports results for the quarter ended September 2024. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price. The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be relea ...

Exhibit 99.1 "Second quarter 2024 results were good and consistent with our expectations. Net interest margin continued to improve from 3.16% in the first quarter to 3.26% in the second quarter. Deposit balances have remained stable as we've strategically shrunk the balance sheet and repaid an additional $30.0 million in FHLB advances during the quarter, as well as purchased some higher-yielding investment securities. Credit quality overall remains manageable with low past-due and charge-off percentages. Th ...

First Guaranty Bancshares, Inc. (NASDAQ:FGBI) is a small regional bank that has taken its share of hits related to the deposit struggles and higher interest rates facing its industry. Last year, I analyzed the bank and discussed why I would not be taking a position in either the common or preferred shares. After three quarters of new data, I revisited the bank's financials, and determined that the situation had improved enough to take a small position in the preferred shares, but I am still avoiding the Fir ...

[PART I — FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for Guaranty Bancshares, Inc. as of March 31, 2024, and for the three months then ended [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2024, total assets decreased to $3.13 billion, primarily due to a reduction in net loans, while total equity slightly increased to $305.9 million Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2024 (Unaudited) | December 31, 2023 (Audited) | | :--- | :--- | :--- | | **Total Assets** | **$3,127,438** | **$3,184,791** | | Cash and cash equivalents | $73,093 | $89,524 | | Loans, net | $2,234,012 | $2,290,881 | | Securities (AFS & HTM) | $592,750 | $600,403 | | **Total Liabilities** | **$2,821,528** | **$2,880,945** | | Total deposits | $2,627,844 | $2,633,246 | | Federal Home Loan Bank advances | $75,000 | $140,000 | | **Total Equity** | **$305,910** | **$303,846** | [Consolidated Statements of Earnings](index=4&type=section&id=Consolidated%20Statements%20of%20Earnings) Net earnings for Q1 2024 decreased to $6.7 million from $8.3 million in Q1 2023, primarily due to a significant increase in interest expense Consolidated Earnings Summary (in thousands, except per share data) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net interest income | $23,587 | $25,162 | | Reversal of provision for credit losses | $(250) | $— | | Noninterest income | $5,258 | $4,905 | | Noninterest expense | $20,692 | $19,967 | | **Net earnings** | **$6,681** | **$8,277** | | **Diluted earnings per share** | **$0.58** | **$0.69** | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities sharply decreased to $1.1 million in Q1 2024, resulting in a net decrease in cash and cash equivalents of $16.4 million Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,120 | $11,712 | | Net cash provided by investing activities | $46,385 | $44,761 | | Net cash used in financing activities | $(63,936) | $(4,815) | | **Net change in cash and cash equivalents** | **$(16,431)** | **$51,658** | [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail the securities and loan portfolios, allowance for credit losses, and regulatory capital, confirming the company exceeds all 'well capitalized' requirements - The company's loan portfolio decreased from **$2.32 billion** at year-end 2023 to **$2.27 billion** as of March 31, 2024. The allowance for credit losses (ACL) was **$30.6 million**, representing **1.35%** of total loans[37](index=37&type=chunk)[39](index=39&type=chunk) - As of March 31, 2024, the company and its bank subsidiary met all capital adequacy requirements to be categorized as 'well capitalized' under regulatory frameworks[98](index=98&type=chunk)[100](index=100&type=chunk) - Nonaccrual loans increased to **$6.2 million** as of March 31, 2024, up from **$5.6 million** at the end of 2023[57](index=57&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=51&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2024 performance, highlighting an improving net interest margin, stable asset quality despite a foreclosure, and strong liquidity and capital positions [Quarterly Highlights](index=51&type=section&id=Quarterly%20Highlights) Management emphasized an improving net interest margin of 3.16%, strong asset quality despite a $14.9 million commercial real estate foreclosure, and healthy liquidity and capital levels - Net interest margin (NIM) on a fully taxable equivalent basis improved sequentially from **3.02%** in Q3 2023 and **3.11%** in Q4 2023 to **3.16%** in Q1 2024[134](index=134&type=chunk) - Asset quality remains strong, though nonperforming assets as a percentage of total assets increased to **0.68%** at March 31, 2024, from **0.18%** at December 31, 2023, due to a single foreclosure. Net charge-offs were low at **0.02%** (annualized)[136](index=136&type=chunk) - The company maintains a healthy liquidity position with total available contingent liquidity of **$1.3 billion** and a strong capital level, with a total equity to average assets ratio of **9.6%**[136](index=136&type=chunk) [Results of Operations](index=52&type=section&id=Results%20of%20Operations) Net earnings for Q1 2024 decreased to $6.7 million due to a $1.6 million decline in net interest income, driven by higher interest expenses Key Earnings Data (in thousands) | Metric | Quarter Ended March 31, 2024 | Quarter Ended March 31, 2023 | | :--- | :--- | :--- | | Net earnings attributable to Guaranty | $6,688 | $8,281 | | Net interest income | $23,587 | $25,162 | | Net interest margin | 3.18% | 3.25% | | Return on average assets | 0.85% | 1.01% | | Return on average equity | 8.93% | 11.18% | - The decrease in net interest income was primarily caused by a **$5.2 million (43.3%)** increase in interest expense, which was only partially offset by a **$3.6 million (9.7%)** increase in interest income compared to Q1 2023[140](index=140&type=chunk) - A **$250,000** reversal to the provision for credit losses was recorded in Q1 2024 due to a **$57.3 million** decrease in loan balances and stable credit quality trends[150](index=150&type=chunk) [Financial Condition](index=59&type=section&id=Financial%20Condition) Total assets decreased by 1.8% to $3.13 billion, mainly due to a 2.5% decrease in gross loans, while nonperforming assets rose to 0.94% of total loans Loan Portfolio Composition (in thousands) | Loan Type | March 31, 2024 | December 31, 2023 | Change (%) | | :--- | :--- | :--- | :--- | | Commercial and industrial | $269,560 | $287,565 | (6.26%) | | Construction and development | $273,300 | $296,639 | (7.87%) | | Commercial real estate | $906,684 | $923,195 | (1.79%) | | 1-4 family residential | $523,573 | $514,603 | 1.74% | | **Total loans held for investment** | **$2,265,257** | **$2,322,576** | **(2.47%)** | Nonperforming Assets (in thousands) | Category | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Nonaccrual loans | $6,161 | $5,592 | | Other real estate owned | $14,900 | $— | | **Total nonperforming assets** | **$21,297** | **$5,826** | | Ratio of nonperforming assets to total assets | 0.68% | 0.18% | - Total deposits remained stable, decreasing by only **$5.4 million (0.2%)** to **$2.63 billion** during the quarter. Noninterest-bearing deposits decreased by **$24.1 million**, while interest-bearing deposits increased by **$18.7 million**[209](index=209&type=chunk)[210](index=210&type=chunk) [Liquidity and Capital Resources](index=77&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position with over $1.5 billion in contingent funding and all regulatory capital ratios significantly exceeding 'well capitalized' thresholds Contingent Liquidity Sources (in thousands) as of March 31, 2024 | Source | Line of Credit | Borrowings | Total Available | | :--- | :--- | :--- | :--- | | FHLB advances | $1,106,209 | $75,000 | $1,031,209 | | Federal Reserve discount window | $231,583 | $— | $231,583 | | Federal funds lines of credit | $55,000 | $— | $55,000 | | Correspondent bank line of credit | $25,000 | $— | $25,000 | | **Total Liquidity Lines (excluding BTFP)** | **$1,417,792** | **$75,000** | **$1,342,792** | Regulatory Capital Ratios as of March 31, 2024 | Ratio (Consolidated) | Amount | Ratio (%) | | :--- | :--- | :--- | | Total capital (to risk-weighted assets) | $371,036 | 15.58% | | Tier 1 capital (to risk-weighted assets) | $306,647 | 12.87% | | Common equity tier 1 capital (to risk-weighted assets) | $299,430 | 12.57% | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=82&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate volatility, with simulations indicating a liability-sensitive position where a 100 basis point rate increase would decrease net interest income by 1.37% Interest Rate Sensitivity Analysis (Simulated Change over 12 Months) | Change in Interest Rates (Basis Points) | % Change in Net Interest Income | % Change in Fair Value of Equity | | :--- | :--- | :--- | | +300 | (3.05%) | (14.34%) | | +200 | (2.12%) | (8.47%) | | +100 | (1.37%) | (3.91%) | | -100 | 0.02% | 2.53% | [Item 4. Controls and Procedures](index=89&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of the reporting period, with no material changes to internal control over financial reporting during Q1 2024 - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[266](index=266&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal controls[267](index=267&type=chunk) [PART II — OTHER INFORMATION](index=90&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=90&type=section&id=Item%201.%20Legal%20Proceedings) Management believes that the outcome of current legal proceedings is unlikely to have a material adverse effect on the company's financial condition or results of operations - In the opinion of management, it is remote that the impact of current legal proceedings would have a material adverse effect on the Company's financial condition, results of operations, or cash flows[269](index=269&type=chunk) [Item 1A. Risk Factors](index=90&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2023 - No material changes have occurred in the Company's risk factors from those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2023[270](index=270&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=90&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q1 2024, the company repurchased 11,651 shares at an average price of $28.76, and a new repurchase program for up to 1,250,000 shares was approved effective April 21, 2024 Share Repurchases in Q1 2024 | Period | Number of Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | January, 2024 | — | $— | | February, 2024 | 9,251 | $28.73 | | March, 2024 | 2,400 | $28.88 | | **Total** | **11,651** | **$28.76** | - A new stock repurchase program was approved on March 13, 2024, authorizing the repurchase of up to **1,250,000 shares**, effective from April 21, 2024, to April 21, 2026[271](index=271&type=chunk) [Other Items (Items 3, 4, 5, 6)](index=90&type=section&id=Other%20Items%20(Items%203%2C%204%2C%205%2C%206)) This section confirms no defaults on senior securities, non-applicability of mine safety disclosures, no Rule 10b5-1 trading arrangement changes by directors or officers, and provides a list of exhibits - Item 3: No defaults upon senior securities were reported[274](index=274&type=chunk) - Item 5: No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the quarter[276](index=276&type=chunk)