Guaranty Bancshares(US:GNTY)2023-04-17 18:19Financial Data and Key Metrics Changes - Total assets at the end of Q1 2023 were $3.356 billion, showing minimal change from $3.351 billion at the beginning of the year [5] - Net interest margin decreased to 3.24%, down 33 basis points from the previous quarter, primarily due to increased interest expenses on deposits [8] - Net earnings for Q1 2023 were $8.3 million, with a return on average assets of 1.01% and a return on average equity of 11.18% [18] - Noninterest income decreased by 4%, amounting to $217,000, attributed to lower mortgage volume compared to 2022 [19] - Noninterest expense decreased by approximately $930,000, or 4.5%, quarter-over-quarter [9] Business Line Data and Key Metrics Changes - Loan portfolio remained stable, ending the quarter at $2.380 billion, with an average of $2.388 billion for the quarter [6] - Federal Home Loan Bank advances increased by $50 million, totaling $340 million at quarter-end [7] - The average rate on interest-bearing deposits rose to 1.91%, up 83 basis points from the linked quarter [37] Market Data and Key Metrics Changes - Noninterest-bearing deposits averaged 38% of total deposits, slightly down from 39% in the previous year [17] - Total deposits decreased by $57.8 million, or 2.2%, during the quarter, with a notable shift from noninterest-bearing to interest-bearing deposits [35] Company Strategy and Development Direction - The company aims to maintain a stable core deposit base while being competitive in deposit rates to attract customers [50][62] - The management emphasized a conservative investment strategy, focusing on government agency securities and closely monitoring municipal bonds [41] - The company plans to utilize cash flows from its bond portfolio to pay down borrowings rather than reinvesting in bonds [16] Management's Comments on Operating Environment and Future Outlook - The CEO noted an unusual environment for banks, with heightened uncertainty among depositors, which may require regulatory attention in the second half of the year [13] - The Texas economy remains strong, but a slowdown is anticipated in the latter half of the year, with credit issues expected to be geographically concentrated [14] - Management expressed confidence in maintaining net interest margin above 3% despite potential deposit outflows [49] Other Important Information - The company has a solid liquidity ratio of 14.7% at quarter-end and over $1.3 billion in contingent liability sources available [27] - Uninsured deposits were reported at 30.8% at quarter-end, with measures taken to educate customers on FDIC insurance [40] Q&A Session Summary Question: What is the outlook for net interest margin given the higher deposit costs? - Management expects to defend the net interest margin and maintain it above 3%, despite potential shifts in deposit types [49] Question: Should we expect continued deposit outflows? - Some deposit outflows are anticipated, but management does not expect them to be significant, as they are competitive in rates [50] Question: What is the expense base outlook? - The company aims to keep expenses at about 2.5% of assets, projecting around $83 million to $84 million for the year [51] Question: How did the margin trend throughout the quarter? - The margin trended down from approximately 3.30% in January to about 3.20% by the end of the quarter [78] Question: What is the strategy regarding stock buybacks? - The company plans to be active in stock buybacks, potentially repurchasing 1% to 10% of the bank depending on market conditions [98]