Guaranty Bancshares(US:GNTY)2024-04-15 17:27Financial Data and Key Metrics Changes - Total deposits decreased by $5.4 million during the first quarter, but excluding $25 million in brokered CDs, deposits were up slightly by $19.6 million [2] - The bank earned $6.7 million in net income in the first quarter, equating to $0.58 per basic share, which is an increase from $0.51 per share in Q4 but down from $0.69 in Q1 2023 [3] - Noninterest income increased by $462,000 during the quarter, primarily due to the recovery of SBA guarantee accounts receivable [4] - Non-performing assets remained low at 0.68% of total assets compared to 0.18% in the prior quarter [5] - The return on average assets was 0.85% for the quarter compared to 0.73% last quarter, and return on average equity was 8.93% compared to 7.93% in the fourth quarter [100] Business Line Data and Key Metrics Changes - Gross loans decreased by $57.3 million in the first quarter, primarily in C&I, C&D, and CRE categories [25] - New loans originated during the first quarter totaled $62.9 million at an average yield of 8.39% [25] - Nonaccrual loans increased slightly during the first quarter, but most are well collateralized with no significant losses expected [7] - The average loan balance in office-related loans is only $516,000, with only 4.6% of the total loan portfolio being office-related [27] Market Data and Key Metrics Changes - Noninterest-bearing deposits decreased by $27.1 million, while savings and money market accounts increased by $30.8 million [105] - Uninsured deposits were 25.43% of total deposits at quarter-end, which is expected to revert to historical averages in the mid- to high-20% range [105][128] Company Strategy and Development Direction - The company continues to focus on building core deposit relationships and retail banking, emphasizing the importance of core deposits for franchise value [69] - The strategic decision to shrink the balance sheet rather than grow is aimed at maintaining profits without taking on added risk from economic uncertainties [96] - The company is interested in share buybacks when the stock price is below their valuation metric, prioritizing this over potential M&A opportunities [80] Management's Comments on Operating Environment and Future Outlook - Management expressed that the current economic environment remains challenging, with expectations of potential further contraction in loan balances [64] - The company anticipates that noninterest income will be impacted by the new property acquisition, which will generate rental income [61] - Management believes that the net interest margin can continue to improve, targeting an increase of 2 to 3 basis points per month, but acknowledges that this may take time [109] Other Important Information - The company repurchased 11,651 shares at an average price of $28.76 per share and increased the dividend to $0.24 per share from $0.23 [10][121] - Total contingent liquidity remains at about $1.3 billion through various sources [106] Q&A Session Summary Question: Can you provide details on the $30 million of treasuries that matured in the first quarter? - The treasuries matured at yields around 1.5% to 1.6% [33] Question: What is the outlook for net interest income growth this year? - Management indicated uncertainty about net interest income growth, suggesting potential for further contraction [50] Question: Can you elaborate on the Austin project mentioned in the press release? - The property is a mixed-use development with retail and condos, and management is optimistic about its yield and market value [60] Question: What is the strategy regarding share buybacks? - The company prioritizes buying back shares when the price is below their valuation metric, especially as the stock price fluctuates [52] Question: How do you view the future of noninterest-bearing deposits? - Management expects noninterest-bearing deposits to revert to historical averages in the mid- to high-20% range [128]