Guaranty Bancshares(GNTY) - 2025 Q2 - Quarterly Results

Guaranty Bancshares, Inc. Reports Second Quarter 2025 Financial Results Guaranty Bancshares reported strong Q2 2025 financial results with significant increases in net income and key profitability ratios Second Quarter 2025 Performance Summary Q2 2025 saw net income of $10.0 million ($0.88 EPS), driven by higher net interest and noninterest income, improving profitability metrics Q2 2025 Key Financial Metrics | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net Income (Common) (Millions USD) | $10.0 | $8.6 | $7.4 | | EPS (Basic) (USD) | $0.88 | $0.76 | $0.65 | | Return on Average Assets (%) | 1.28% | 1.13% | 0.95% | | Return on Average Equity (%) | 12.19% | 10.83% | 9.91% | - The increase in earnings was primarily attributed to higher net interest income and noninterest income, along with lower noninterest expense compared to Q1 2025[2] - The CEO highlighted that the earnings increase of $2.6 million from Q2 2024 was driven primarily by the improvement in net interest margin (FTE) from 3.26% in Q2 2024 to 3.71% in Q2 2025[3] Quarterly Highlights This section highlights the company's stable loan and deposit base, strong liquidity, and improved earnings and asset quality Portfolio, Deposits, and Liquidity Granular loan and deposit base, decreasing cost of deposits, and robust liquidity with an 18.8% ratio and $1.3 billion contingent liquidity - The company maintains a granular loan portfolio with 10,850 active loans averaging $193,059 and a core deposit base with 91,436 accounts averaging $29,622[5] - The average cost of total deposits decreased by six basis points from the prior quarter to 1.90%, with noninterest-bearing deposits representing 31.6% of total deposits[5] - The liquidity ratio (cash, cash equivalents, and unpledged investments to total liabilities) was 18.8% as of June 30, 2025, and total available contingent liquidity was $1.3 billion[5] - Total equity to average assets was 10.6%, which would remain a still-strong 9.9% if all unrealized securities losses were recognized[5] Earnings and Asset Quality Strong Q2 earnings, driven by NIM expansion to 3.71% and a $3.8 million increase in net interest income, alongside improved asset quality at 0.33% NPAs - Net interest margin (FTE) improved from 3.26% in Q2 2024 to 3.71% in Q2 2025, resulting in a $3.8 million year-over-year increase in net interest income before provision[6] Asset Quality Ratios | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Nonperforming Assets / Total Assets (%) | 0.33% | 0.15% | 0.71% | | Net Charge-offs / Average Loans (Ann.) (%) | 0.05% | 0.02% | 0.01% | Results of Operations This section details the company's operational performance, including net interest income, credit loss provisions, noninterest income, and expenses Net Interest Income and Margin Net interest income rose 15.8% YoY to $27.7 million, driven by reduced interest expense, with NIM expanding 45 bps to 3.71% YoY and a 3.5% QoQ increase - Net interest income before provision rose $3.8 million (15.8%) to $27.7 million in Q2 2025 from $23.9 million in Q2 2024, mainly due to a $3.3 million reduction in interest expense from the absence of FHLB advances[7][8] - Net interest margin (FTE) increased by 45 basis points to 3.71% in Q2 2025 from 3.26% in Q2 2024, primarily due to a 65 basis point decrease in the cost of interest-bearing liabilities[8] - Compared to Q1 2025, net interest income increased by $938,000 (3.5%), and the net interest margin (FTE) increased by one basis point from 3.70% to 3.71%[9][10] Provision for Credit Losses No provision for credit losses was recorded in Q2 2025, reflecting a stabilized economic outlook and reduced portfolio risk, with allowance at 1.29% of total loans - No provision for credit losses was recorded during Q2 2025, compared to a $300,000 reversal in Q1 2025 and a total reversal of $2.2 million in 2024[11] - The allowance for credit losses as a percentage of total loans was 1.29% as of June 30, 2025, compared to 1.33% as of December 31, 2024[11] Noninterest Income Noninterest income rose significantly to $5.6 million (up 20.9% YoY), primarily due to a $1.0 million lawsuit restitution, partially offset by a $547,000 swaption loss - Noninterest income increased by $961,000 (20.9%) YoY to $5.6 million, primarily driven by a $1.0 million restitution payment from a lawsuit settlement[12] - The restitution income was partially offset by a $547,000 loss from changes in the fair value of interest rate swaptions related to the proposed merger with Glacier Bancorp, Inc. (GBCI)[12] - Compared to Q1 2025, noninterest income increased by $527,000 (10.5%), also primarily due to the restitution income and swaption expense[13] Noninterest Expense Noninterest expense was $20.7 million, down 2.4% QoQ due to lower compensation, while the efficiency ratio significantly improved to 62.32% - Noninterest expense decreased by $503,000 (2.4%) from Q1 2025, mainly due to a $452,000 decrease in employee compensation and benefits related to prior-quarter bonus taxes and accruals[16] - Year-over-year, noninterest expense increased slightly by $104,000 (0.5%), with increases in technology, occupancy, and merger-related professional fees largely offset by decreases in other expenses, including prior-year ORE costs and fraud losses[14][15] Efficiency Ratio | Period | Efficiency Ratio (%) | | :--- | :--- | | Q2 2025 | 62.32% | | Q1 2025 | 66.78% | | Q2 2024 | 72.34% | Financial Condition This section provides an overview of the company's financial position, including balance sheet items and asset quality metrics Balance Sheet Overview Total assets were $3.14 billion, with gross loans at $2.14 billion (up 1.6% QoQ) and total deposits at $2.71 billion (up 0.2% QoQ), driving equity growth Key Balance Sheet Items | Item | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Total Assets (Billions USD) | $3.14 | $3.15 | $3.08 | | Gross Loans (Billions USD) | $2.14 | $2.11 | $2.21 | | Total Deposits (Billions USD) | $2.71 | $2.70 | $2.63 | | Total Equity (Billions USD) | $0.332 | $0.326 | $0.309 | - The quarterly loan growth was driven by increases in construction and development, 1-4 family, and multifamily segments[19] - The year-over-year decrease in loans resulted from tightened credit underwriting standards, strategic non-renewal decisions, and reduced borrower demand[20] Asset Quality Nonperforming assets rose to 0.33% of total assets QoQ, primarily due to a single $5.4 million relationship, but improved significantly YoY Nonperforming Assets / Total Assets | Date | Ratio (%) | | :--- | :--- | | June 30, 2025 | 0.33% | | March 31, 2025 | 0.15% | | June 30, 2024 | 0.71% | - The increase in nonperforming assets from the prior quarter was primarily due to one borrowing relationship with a balance of $5.4 million moving to nonaccrual status[22] Consolidated Financial Statements This section presents the company's consolidated financial statements, including balance sheets, earnings, loan portfolio details, and net interest margin analysis Consolidated Balance Sheets As of June 30, 2025, total assets were $3.14 billion, with $2.11 billion in net loans, $2.71 billion in deposits, and $331.8 million in total equity Selected Balance Sheet Data (June 30, 2025) | Category | Amount (Thousands USD) | | :--- | :--- | | Assets | | | Total cash and cash equivalents | $193,166 | | Total securities | $648,764 | | Loans, net | $2,112,851 | | Total Assets | $3,144,155 | | Liabilities & Equity | | | Total deposits | $2,708,502 | | Total Liabilities | $2,812,348 | | Total Equity | $331,807 | Consolidated Statements of Earnings Q2 2025 net interest income was $27.7 million, with net earnings of $10.0 million ($0.88 EPS), and an efficiency ratio of 62.32% Statement of Earnings Summary (Quarter Ended) | Item (Thousands USD) | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Net Interest Income | $27,664 | $23,880 | | Noninterest Income | $5,560 | $4,599 | | Noninterest Expense | $20,706 | $20,602 | | Income Before Taxes | $12,518 | $9,077 | | Net Earnings | $9,983 | $7,423 | | EPS, basic (USD) | $0.88 | $0.65 | Loan Portfolio and Asset Quality Details The loan portfolio totaled $2.14 billion, with commercial real estate as the largest segment, and asset quality metrics showing 1.29% allowance for credit losses and 0.33% NPAs Loan Portfolio Composition (June 30, 2025) | Loan Type | Amount (Thousands USD) | | :--- | :--- | | Commercial real estate | $876,112 | | 1-4 family residential | $544,705 | | Construction and development | $249,172 | | Commercial and industrial | $210,504 | | Other | $261,548 | | Total Loans | $2,141,441 | Key Asset Quality Metrics (June 30, 2025) | Metric | Value | | :--- | :--- | | Allowance for credit losses / period-end loans | 1.29% | | Nonaccrual loans (Thousands USD) | $10,309 | | Nonperforming assets / Total assets | 0.33% | Average Balances and Net Interest Margin Analysis Q2 2025 net interest margin (FTE) was 3.71%, a 45 bps improvement YoY, driven by a lower average rate on interest-bearing liabilities Net Interest Margin Analysis (Quarter Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Average Yield on Interest-Earning Assets (%) | 5.59% | 5.61% | | Average Rate on Interest-Bearing Liabilities (%) | 2.78% | 3.43% | | Net Interest Rate Spread (%) | 2.81% | 2.18% | | Net Interest Margin (FTE) (%) | 3.71% | 3.26% | Non-GAAP Reconciliations This section provides reconciliations for key non-GAAP financial measures, including tangible book value and adjusted equity ratios Non-GAAP Reconciliations Summary Key non-GAAP metrics include tangible book value per share of $26.29, an adjusted total equity to average assets ratio of 9.9%, and an average cost of deposits of 1.90% Key Non-GAAP Metrics (June 30, 2025) | Metric | Value | | :--- | :--- | | Tangible book value per common share (USD) | $26.29 | | Total equity to average assets (adjusted for unrealized losses) (%) | 9.9% | | Average cost of total deposits (Q2 2025) (%) | 1.90% | Company Information and Disclosures This section provides company background, operational footprint, and important financial and forward-looking statement disclosures About Guaranty Bancshares, Inc. Guaranty Bancshares, Inc. operates 33 banking locations in Texas, with total assets of $3.1 billion, loans of $2.1 billion, and deposits of $2.7 billion as of June 30, 2025 - The company operates 33 banking locations across the East Texas, Dallas/Fort Worth, Houston, and Central Texas regions[42] Company Size (as of June 30, 2025) | Metric | Amount (Billions USD) | | :--- | :--- | | Total Assets | $3.1 | | Total Loans | $2.1 | | Total Deposits | $2.7 | Disclosures This section outlines the use of non-GAAP financial measures and provides a forward-looking statement disclaimer, emphasizing merger-related risks - The company uses select non-GAAP financial measures, believing they provide meaningful supplemental information, with reconciliations to comparable GAAP measures provided[39][41] - The report contains forward-looking statements that are not guarantees of future performance and are subject to risks and uncertainties, including those related to the proposed merger with GBCI[43]