Guaranty Bancshares(GNTY) - 2025 Q2 - Quarterly Report

Financial Performance - Net earnings attributable to Guaranty Bancshares, Inc. for the six months ended June 30, 2025, were $18.6 million, compared to $14.1 million for the same period in 2024, representing a 32.5% increase [153]. - Net earnings attributable to Guaranty Bancshares Inc. were $10.0 million for the three months ended June 30, 2025, compared to $7.4 million for the same period in 2024, representing a 35.1% increase [192]. - Basic earnings per share increased to $0.88 for the three months ended June 30, 2025, from $0.65 in the same period in 2024, a rise of 35.4% [192]. - Total income tax expense rose to $4.8 million for the six months ended June 30, 2025, compared to $3.4 million in the same period in 2024, reflecting an increase in net earnings before taxes of $5.9 million [190]. Loan and Asset Management - As of June 30, 2025, the company had 10,850 total active loans with an average loan balance of $193,059, and total deposits increased by $4.2 million during the second quarter [150]. - Total loans decreased by $4,529,000 in volume, while interest income from loans increased by $1,127,000 due to rate changes [166]. - The loan portfolio increased by $10.3 million, or 0.5%, from $2.13 billion as of December 31, 2024, to $2.14 billion as of June 30, 2025 [224]. - The company reported $16.1 million in loan balances past due 30 or more days, an increase from $10.1 million at the end of 2024 [169]. - Nonperforming assets as a percentage of total assets were 0.33% at June 30, 2025, compared to 0.71% at June 30, 2024 [152]. - Nonperforming assets as a percentage of total loans rose to 0.48% as of June 30, 2025, compared to 0.23% as of December 31, 2024 [229]. - The total amount of nonperforming assets increased from $4,935,000 to $10,342,000 during the same period [229]. Interest Income and Margin - Net interest margin improved from 3.26% in Q2 2024 to 3.71% in Q2 2025, resulting in a year-over-year net interest income increase of $3.8 million [152]. - Net interest income before the provision for credit losses for the six months ended June 30, 2025, was $54.4 million, an increase of 14.6% from $47.5 million in 2024 [156]. - The net interest margin improved to 3.74%, compared to 3.24% in the previous year, reflecting better asset yield management [1][2]. - The average yield on interest-earning assets was 5.59%, compared to 5.55% in the previous year, indicating improved asset performance [1][2]. Deposits and Liquidity - As of June 30, 2025, total deposits were $2.71 billion, an increase of $16.3 million, or 0.6%, compared to $2.69 billion as of December 31, 2024 [264]. - Average total deposits for the six months ended June 30, 2025, were $2.68 billion, an increase of $42.4 million, or 1.9%, compared to $2.64 billion for the year ended December 31, 2024 [262]. - The liquidity ratio was 18.8% as of June 30, 2025, compared to 13.6% a year earlier, indicating improved liquidity [150]. - The company had cash and cash equivalents of $193.2 million as of June 30, 2025, compared to $146.0 million as of December 31, 2024, primarily due to an increase in federal funds sold of $54.5 million [284]. Noninterest Income and Expenses - Noninterest income rose by $736,000, or 7.5%, totaling $10,593, driven by a $160,000 increase in merchant and debit card fees [172][173]. - Noninterest expense increased by $621,000, or 1.5%, totaling $41.9 million, with employee compensation and benefits decreasing by $132,000 [178][179]. - Total noninterest income increased by $961,000, or 20.9%, for the three months ended June 30, 2025, compared to the same period in 2024 [206]. - Other noninterest income surged by $617,000, or 50.7%, primarily due to a $1.0 million restitution payment from a lawsuit settlement [175]. Credit Losses and Allowance - The provision for credit losses recorded a reversal of $300,000, down from $1.5 million in the same period last year, with the allowance for credit losses as a percentage of total loans at 1.29% [168][169]. - The company recorded no provision for credit losses during Q2 2025, compared to a reversal of $300,000 in Q1 2025 and a total reversal of $2.2 million in 2024 [205]. - As of June 30, 2025, the allowance for credit losses (ACL) for loans totaled $27.6 million, or 1.29% of total loans, down from $28.3 million, or 1.33% as of December 31, 2024, representing a decrease of $704,000, or 2.5% [241]. Regulatory and Market Environment - The company operates in a highly regulated environment, and failure to comply with laws and regulations could adversely affect its operations [314]. - Stringent capital requirements may result in lower returns on equity and limit the ability to repurchase shares or pay dividends [314]. - The company manages market risk primarily through interest rate volatility, using an interest rate risk simulation model [316]. - Business operations are concentrated in primary markets, and adverse economic conditions in these markets could negatively impact operations and customers [314]. Mergers and Acquisitions - The company entered into a merger agreement with GBCI, expected to close in Q4 2025, with each share of common stock converting into 1.0000 shares of GBCI common stock [148]. - Legal and professional fees increased by $104,000, or 6.4%, primarily due to the merger with GBCI [181].