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Guaranty Bancshares, Inc. Reports Second Quarter 2021 Financial Results

Guaranty Bancshares, Inc. (NASDAQ: GNTY), the parent company of Guaranty Bank & Trust, N.A., today reported financial results for the fiscal quarter ended June 30, 2021. The Company's net income available to common shareholders was $10.4 million, or $0.87 per basic share, for the quarter ended June 30, 2021, compared to $11.0 million, or $0.91 per basic share, for the quarter ended March 31, 2021 and $1.1 million, or $0.09 per basic share, for the quarter ended June 30, 2020. Return on average assets and average equity for the second quarter of 2021 were 1.42% and 14.64%, respectively, compared to 1.60% and 16.01%, respectively, for the first quarter of 2021 and 0.16% and 1.67%, respectively, for the second quarter of 2020. The decrease in earnings during the second quarter of 2021, compared to the first quarter of 2021, was primarily due to lower origination fee income recognized during the quarter for the Paycheck Protection Program - round one (“PPP1”) and round two (“PPP2”) loans, which was partially offset by a reverse provision for credit losses of $1.0 million. Our core earnings, excluding provisions for credit losses, income taxes and PPP1/PPP2 net origination income, as well as our core net interest margin, adjusted to exclude the effects of PPP1/PPP2 loans, are described further in tables below.

"We continue to be extremely pleased with our financial results for the second quarter and first half of 2021. Although not fully recovered, the Texas economy is rebounding very strongly from COVID effects and we've begun to refill our loan pipeline with increased demand across all loan types and regions. Our borrowers have shown strong resilience during this rebound, with many businesses having record years so far during 2021. Our non-performing assets as a percentage of total assets are very low at only 0.13%. Almost all of our borrowers who received a COVID-related deferral are back on regular payment schedules with only a handful of credits remaining in an interest-only deferral period that will end in third quarter of 2021 as they also return to contractual payment schedules. As our second quarter results indicate, like all banks we have experienced some headwinds in our net interest margin and are seeing elevated loan pay downs, but we are confident in our ability to defend our net interest margin in this unprecedented rate environment and are encouraged with the size and strength of our loan pipeline as we enter the second half of 2021," commented Ty Abston, the Company's Chairman and Chief Executive Officer.

QUARTERLY HIGHLIGHTS

  • Solid Net Earnings and Core Earnings. Net earnings have remained consistent for the past four quarters. Net core earnings, which exclude provisions for credit losses and income tax, net PPP income, and interest on PPP-related borrowings, have also remained solid over the last five quarters, illustrating a consistent core earnings stream. Net core earnings were $9.4 million for the second quarter, compared to $9.8 million for the first quarter of 2021, and $10.5 million during the second quarter of 2020.
  • Steady Net Interest Margin and Firm Loan Yields. The fully tax-equivalent (“FTE”) net interest margin, net of PPP effects, was 3.38% for the second quarter of 2021, compared to 3.48% in the preceding quarter and 3.75% in the second quarter of 2020. The decrease in the current quarter is primarily due to higher liquidity levels, which had a lower average yield during the quarter of only 6 basis points. Net interest income decreased $1.0 million, or 4.1%, from $24.5 million in the first quarter of 2021 to $23.5 million in the second quarter of 2021. However, excluding the effects of PPP, net interest income increased $752,000, or 3.6%, from $21.0 million in the first quarter of 2021 to $21.7 million in the second quarter. Average loan yield, excluding PPP effects, increased three basis points, from 4.79% in the first quarter to 4.82% in the second quarter of 2021. Interest expense decreased $215,000, or 10.6%, from $2.0 million in the first quarter of 2021 to $1.8 million in second quarter of 2021. The Bank continues to decrease cost of funds as higher rate CDs mature and to reduce interest rates on non-maturing deposits as market conditions allow. In addition, 63.8% of the loan portfolio, or $1.16 billion, has interest rate floors and 57.5% of those loans are currently at their floors. The weighted average interest rate of loans currently at their floor is 4.37%.
  • Strong Credit Quality. Non-performing assets as a percentage of total assets were 0.13% at June 30, 2021 and March 31, 2021, compared to 0.56% at June 30, 2020. Net charge-offs to average loans (annualized) were 0.05% for the quarter ended June 30, 2021, compared to 0.18% for the quarter ended March 31, 2021, and (0.02%) for the quarter ended June 30, 2020. The decrease in non-performing assets and the increase in charge-offs during the second quarter of 2021 compared to the same period of 2020 resulted primarily from the resolution of three problem loans, made to two borrowers, with outstanding combined book balances of $8.7 million at December 31, 2020, that were acquired during the Westbound acquisition and which were fully reserved prior to the onset of COVID-19.
  • Paycheck Protection Program. The Bank continued participation in the PPP2 program through its end date in the second quarter of 2021. During the first half of 2021, we originated total PPP2 loans of $100.8 million to 1,349 borrowers, which resulted in recognition of $3.3 million of net origination fees and related amortization for PPP2 loans during the first half of 2021. The Bank also recognized $1.8 million in PPP1 deferred origination fees during the first half of 2021 through both amortization and forgiveness of the related PPP1 loans. As of June 30, 2021, there are outstanding PPP1 balances of $26.6 million to 325 borrowers, a reduction of 87.3% from the $209.6 million to 1,944 borrowers that was originated under the PPP1 program. Net deferred origination fees remaining as of June 30, 2021 are $355,000 and $2.2 million from PPP1 and PPP2, respectively.

RESULTS OF OPERATIONS

Participation in the PPP1 and PPP2 program, as well as large provisions for credit losses in the second quarter of 2020 resulting from effects of COVID-19 have created temporary extraordinary results in the calculation of net earnings and related performance ratios. With some continued uncertainty as a result of COVID-19 and other economic factors, the following table illustrates net earnings and net core earnings results, which are pre-tax, pre-provision and pre-extraordinary PPP1/PPP2 income, as well as performance ratios for the prior five quarters:

 

 

Quarter Ended

 

 

 

2021

 

2020

 

(dollars in thousands, except per share data)

 

June 30

 

 

March 31

 

 

December 31

 

 

September 30

 

 

June 30

 

Net earnings

 

$

10,432

 

 

$

10,962

 

 

$

9,915

 

 

$

10,134

 

 

$

1,075

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for credit losses

 

 

(1,000

)

 

 

 

 

 

 

 

 

(300

)

 

 

12,100

 

Income tax provision (benefit)

 

 

2,312

 

 

 

2,336

 

 

 

2,290

 

 

 

2,350

 

 

 

(190

)

PPP loan interest and fees

 

 

(2,346

)

 

 

(3,513

)

 

 

(2,654

)

 

 

(1,076

)

 

 

(2,540

)

Net interest expense on PPP-related borrowings

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

31

 

Net core earnings

 

$

9,398

 

 

$

9,785

 

 

$

9,551

 

 

$

11,111

 

 

$

10,476

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total average assets

 

$

2,938,944

 

 

$

2,775,567

 

 

$

2,659,725

 

 

$

2,639,335

 

 

$

2,657,609

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PPP loans average balance

 

 

(155,417

)

 

 

(137,251

)

 

 

(179,240

)

 

 

(209,506

)

 

 

(163,184

)

Excess fed funds sold due to PPP-related borrowings

 

 

 

 

 

 

 

 

 

 

 

(8,152

)

 

 

(84,066

)

Total average assets, adjusted

 

$

2,783,527

 

 

$

2,638,316

 

 

$

2,480,485

 

 

$

2,421,677

 

 

$

2,410,359

 

Total average equity

 

$

285,803

 

 

$

277,612

 

 

$

271,397

 

 

$

265,027

 

 

$

258,225

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PERFORMANCE RATIOS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings to average assets (annualized)

 

 

1.42

%

 

 

1.60

%

 

 

1.48

%

 

 

1.53

%

 

 

0.16

%

Net earnings to average equity (annualized)

 

 

14.64

 

 

 

16.01

 

 

 

14.53

 

 

 

15.21

 

 

 

1.67

 

Net core earnings to average assets, as adjusted (annualized)

 

 

1.35

 

 

 

1.50

 

 

 

1.53

 

 

 

1.83

 

 

 

1.75

 

Net core earnings to average equity (annualized)

 

 

13.19

 

 

 

14.29

 

 

 

14.00

 

 

 

16.68

 

 

 

16.32

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PER COMMON SHARE DATA*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding, basic

 

 

12,056,550

 

 

 

12,038,638

 

 

 

12,063,154

 

 

 

12,113,266

 

 

 

12,128,516

 

Earnings per common share, basic

 

$

0.87

 

 

$

0.91

 

 

$

0.82

 

 

$

0.84

 

 

$

0.09

 

Net core earnings per common share, basic

 

 

0.78

 

 

 

0.81

 

 

 

0.79

 

 

 

0.92

 

 

 

0.86

 

* Adjusted retroactively for all quarters presented to give effect to the 10% dividend issued during the first quarter of 2021.

 

† Non-GAAP financial metric. Calculations of this metric and reconciliations to GAAP are included in the schedules accompanying this release.

 

Net interest income, before the provision for credit losses, in the second quarter of 2021 and 2020 was $23.5 million and $23.2 million, respectively, an increase of $295,000, or 1.3%. The increase was primarily due to a decrease in interest expense of $1.6 million, or 46.8%, compared to a decrease in interest income of only $1.3 million, or 4.9%. The decrease in interest expense is primarily attributable to lower deposit-related interest expense of $1.5 million, or 50.9%, compared to the same quarter of the prior year.

Net interest margin, on a taxable equivalent basis, for the second quarter of 2021 and 2020 was 3.44% and 3.78%, respectively. Loan yield decreased from 5.15% for the second quarter of 2020 to 4.79% for the second quarter of 2021, a change of 36 basis points, while the cost of interest-bearing deposits decreased from 0.83% to 0.37% during the same period, a change of 46 basis points. The decrease in loan yield was primarily due to the repricing of variable rate loans to lower interest rates during the period and lower recognized PPP origination fee income. Loan yield, excluding the effect of PPP loans, was 4.82% in the second quarter of 2021, compared to 5.04% in the same quarter of the prior year, a decrease of 22 basis points. The average yield on interest-bearing deposits in other banks, which consists of fed funds sold, also declined from 0.12% in the second quarter of 2020 to 0.06% in the current quarter while the average balance more than doubled in the current quarter. The decrease in average deposit rate was primarily due to continued reductions in interest rates for non-maturing deposits as market conditions have allowed.

Net interest income in the first quarter of 2021 was $24.5 million, resulting in a decrease of $1.0 million, or 4.1%, in the current quarter. The decrease resulted primarily from $3.2 million of PPP origination income recognized in the first quarter and only $1.4 million of PPP origination income in the current quarter.

Net interest margin, on a taxable equivalent basis, decreased from 3.85% for the first quarter of 2021 to 3.44% for the second quarter of 2021. Loan yield decreased from 5.20% for the first quarter of 2021 to 4.79% for the second quarter of 2021, a change of 41 basis points. Loan yield, excluding the effect of PPP loans, increased three basis points from 4.79% in the first quarter of 2021. The average yield on interest-bearing deposits in other banks also declined nine basis points from 0.15% in the first quarter of 2021 while the average balance increased by $91.7 million, or 27.4%, in the current quarter. The cost of interest-bearing deposits decreased from 0.42% to 0.37% during the same period, a change of five basis points. The decrease was due primarily to the maturity of higher-rate CDs during the second quarter of 2021, as well as continued reductions in interest rates for non-maturing deposits as market conditions have allowed.

The Bank’s continued participation in the PPP program has created temporary extraordinary results in the calculation of net interest margin. To illustrate core net interest margin, the table below excludes PPP1 and PPP2 loans and their associated fees and costs for the three and six months ended June 30, 2021:

 

 

For the Three Months Ended

June 30, 2021

 

 

For the Six Months Ended

June 30, 2021

 

(dollars in thousands)

 

Average

Outstanding

Balance

 

 

Interest

Earned/

Interest

Paid

 

 

Average

Yield/ Rate

 

 

Average

Outstanding

Balance

 

 

Interest

Earned/

Interest

Paid

 

 

Average

Yield/ Rate

 

Total loans

 

$

1,912,722

 

 

$

22,864

 

 

 

4.79

%

 

$

1,899,864

 

 

$

47,059

 

 

 

4.99

%

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PPP1 loans average balance and net fees(1)

 

 

(57,573

)

 

 

(569

)

 

 

3.96

 

 

 

(79,414

)

 

 

(2,220

)

 

 

5.64

 

PPP2 loans average balance and net fees(2)

 

 

(97,844

)

 

 

(1,178

)

 

 

4.83

 

 

 

(66,689

)

 

 

(3,040

)

 

 

9.19

 

Total PPP loans(3)

 

$

(155,417

)

 

$

(1,747

)

 

 

4.51

%

 

$

(146,103

)

 

$

(5,260

)

 

 

7.26

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loans, excluding PPP

 

$

1,757,305

 

 

$

21,117

 

 

 

4.82

%

 

$

1,753,761

 

 

$

41,799

 

 

 

4.81

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total interest-earning assets

 

 

2,769,054

 

 

 

25,284

 

 

 

3.66

 

 

 

2,689,617

 

 

 

51,797

 

 

 

3.88

 

Total interest-earning assets, net of PPP effects

 

$

2,613,637

 

 

$

23,537

 

 

 

3.61

%

 

$

2,543,514

 

 

$

46,537

 

 

 

3.69

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

 

 

$

23,477

 

 

 

 

 

 

 

 

$

47,968

 

 

 

 

Net interest margin(4)

 

 

 

 

 

 

 

 

3.40

%

 

 

 

 

 

 

 

 

3.60

%

Net interest margin, FTE(5)

 

 

 

 

 

 

 

 

3.44

 

 

 

 

 

 

 

 

 

3.64

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income, net of PPP effects

 

 

 

 

 

21,730

 

 

 

 

 

 

 

 

 

42,708

 

 

 

 

Net interest margin, net of PPP effects†(6)

 

 

 

 

 

 

 

 

3.33

 

 

 

 

 

 

 

 

 

3.39

 

Net interest margin, FTE, net of PPP effects†(7)

 

 

 

 

 

 

 

 

3.38

 

 

 

 

 

 

 

 

 

3.43

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Efficiency ratio(8)

 

 

 

 

 

 

 

 

60.12

 

 

 

 

 

 

 

 

 

58.30

 

Efficiency ratio, net of PPP effects†(9)

 

 

 

 

 

 

 

 

64.66

 

 

 

 

 

 

 

 

 

64.99

 

† Non-GAAP financial metric. Calculations of this metric and reconciliations to GAAP are included in the schedules accompanying this release.

 

(1) Interest earned on PPP1 loans consists of interest income of $141,000 and $388,000, and net origination fees recognized in earnings of $428,000 and $1.8 million for the three and six months ended June 30, 2021, respectively.

 

(2) Interest earned on PPP2 loans consists of interest income of $244,000 and $332,000, and net origination fees recognized in earnings of $934,000 and $2.7 million for the three and six months ended June 30, 2021, respectively.

 

(3) Interest earned consists of interest income of $385,000 and $720,000, and net origination fees recognized in earnings of $1.4 million and $4.5 million for the three and six months ended June 30, 2021, respectively.

 

(4) Net interest margin is equal to net interest income divided by average interest-earning assets, annualized. Taxes are not a part of this calculation.

 

(5) Net interest margin on a taxable equivalent basis is equal to net interest income adjusted for nontaxable income divided by average interest-earning assets, annualized, using a marginal tax rate of 21%.

 

(6) Net interest margin is equal to net interest income, net of PPP effects, divided by average interest-earning assets, excluding average PPP loans, annualized. Taxes are not a part of this calculation.

 

(7) Net interest margin on a taxable equivalent basis is equal to net interest income, net of PPP effects, adjusted for nontaxable income divided by average interest-earning assets, excluding average PPP loans, annualized, using a marginal tax rate of 21%.

 

(8) The efficiency ratio was calculated by dividing total noninterest expense by net interest income plus noninterest income, excluding securities gains or losses. Taxes are not part of this calculation.

 

(9) The efficiency ratio was calculated by dividing total noninterest expense, net of PPP-related deferred costs, by net interest income, net of PPP effects, plus noninterest income, excluding securities gains or losses. Taxes are not part of this calculation.

 

During the year ended December 31, 2020, a total allowance for credit losses provision of $13.2 million was recorded primarily to account for the estimated impact of COVID-19 on credit quality and resulted largely from changes to individual loan risk ratings, as well as COVID-specific qualitative factors primarily derived from changes in national GDP, Texas unemployment rates and national industry related CRE trends, all of which were impacted by the effects of COVID-19. There was no provision for credit losses recorded during the first quarter of 2021. A reverse provision of $1.0 million was recorded in the second quarter of 2021 in order to begin to capture the improvements that have occurred to macro-economic factors evaluated at the onset of the pandemic as part of the aforementioned COVID-specific Q-factors, as well as risk rating upgrades for specific loans, which impact the reserve calculations within our model. Although management is cautiously optimistic about improving vaccination and economic trends, it is possible that the economic effects of the pandemic could continue beyond 2021, although we expect the credit impact of the pandemic to be largely understood and accounted for by the end of 2021.

Noninterest income increased $983,000, or 19.7%, in the second quarter of 2021, to $6.0 million, compared to $5.0 million for the second quarter of 2020. The increase from the same quarter in 2020 was due primarily to an increase in merchant and debit card fees of $588,000, or 44.1%, and an increase in service charges of $284,000, or 49.7%. These increases were partially offset by a decrease in the gain on sale of loans of $264,000, or 17.5%, from the same quarter of the prior year.

Noninterest expense increased $2.5 million, or 16.6%, in the second quarter of 2021 to $17.7 million, compared to the second quarter of 2020. The increase in noninterest expense in the second quarter of 2021 was partially driven by an increase in employee compensation and benefits expense of $2.1 million, or 26.3%, to $10.2 million, from the same quarter of the prior year, resulting primarily from a reduction in bonus accrual during the second quarter of 2020 and from the effects of reduced deferred origination costs associated with fewer PPP loan originations than the prior year quarter. Other increases in non-interest expense resulted from an increase in occupancy expenses of $283,000, or 11.1%, from the same quarter of the prior year and an increase in legal and professional fees of $158,000, or 26.8%. Additionally, ATM and debit card expense increased $137,000, or 28.6%, resulting from increased usage of ATM and debit cards during the period. These increases were partially offset by a decrease in charitable contributions of $156,000 in the second quarter of 2021 compared to the same quarter of the prior year.

Noninterest income in the second quarter of 2021 decreased by $149,000, or 2.4%, from $6.1 million in the first quarter of 2021 due primarily to a decrease in gains on sales of loans of $154,000, or 11.0%. Merchant and debit card fees increased $416,000, or 27.6%, from the prior quarter, but was offset by a decrease in other noninterest income of $413,000, or 39.2%, caused by a first quarter gain of $277,000 on bank-owned life insurance proceeds resulting from the death of a former bank officer, a $95,000 decrease in the gain on sales of real estate and a $65,000 decrease in the Small Business Administration ("SBA") servicing asset fair value that occurred during the second quarter of 2021.

Noninterest expense increased $391,000, or 2.3%, in the second quarter of 2021, from $17.3 million in the quarter ended March 31, 2021. The increase was primarily due to a $261,000, or 2.6%, increase in employee compensation and benefits, along with a $146,000, or 5.4%, increase in occupancy expenses and a $143,000, or 23.7%, increase in legal and professional fees during the second quarter of 2021 compared to the previous quarter. These increases were partially offset by a $117,000, or 25.7%, decrease in advertising and promotion expense during the quarter.

The company’s efficiency ratio in the second quarter of 2021 was 60.12%, compared to 56.56% in the prior quarter and 53.90% in the same quarter last year. Adjusted to remove the effects of PPP-related transactions, the company’s efficiency ratio for the second quarter of 2021 was 64.66%, was 65.34% for the first quarter of 2021 and was 62.44% for the second quarter of 2020.

† Non GAAP financial metric. Calculations of this metric and reconciliations to GAAP are included in the schedules accompanying this release.

FINANCIAL CONDITION

Consolidated assets for the company totaled $2.93 billion at June 30, 2021, compared to $2.89 billion at March 31, 2021 and $2.67 billion at June 30, 2020.

Gross loans decreased 1.2%, or $22.2 million, to $1.89 billion at June 30, 2021, compared to loans of $1.91 billion at March 31, 2021. The decrease in gross loans from the first to the second quarter of 2021 is primarily due to the continued payoff and forgiveness of PPP loan balances, a decrease of $30.8 million from the $158.2 million of PPP loans outstanding at March 31, 2021 . Excluding the decrease in the balance of PPP loans, gross loans increased by 0.5%, or $8.6 million, from the prior quarter.

Gross loans decreased 3.4%, or $67.3 million, from $1.96 billion at June 30, 2020. The decrease in gross loans during the second quarter of 2021 compared to the second quarter of 2020 included a decrease in outstanding PPP loan balances from $208.8 million to 1,908 borrowers at June 30, 2020 to $127.4 million to 1,674 borrowers at June 30, 2021. Excluding the outstanding PPP balances as of June 30, 2021 and 2020, gross loans increased $14.1 million, or 0.8%, from the same quarter of the prior year.

Total deposits increased by 2.3%, or $57.8 million, to $2.53 billion at June 30, 2021, compared to $2.48 billion at March 31, 2021. Deposits increased 13.0%, or $291.0 million, from $2.24 billion at June 30, 2020. Changes in deposits during these periods were heavily impacted by the deposit of PPP loan proceeds into demand accounts at the Bank, as well as apparent changes in depositor spending habits in these periods resulting from economic and other uncertainties due to COVID-19.

Shareholders' equity totaled $287.7 million as of June 30, 2021, compared to $280.1 million at March 31, 2021 and $258.9 million at June 30, 2020. The increase from the previous quarter resulted primarily from net income of $10.4 million, offset by the payment of dividends of $2.4 million and a decrease in other comprehensive income of $663,000 during the second quarter of 2021.

Nonperforming assets as a percentage of total assets were 0.13% at June 30, 2021 and March 31, 2021, compared to 0.56% at June 30, 2020. The Bank’s nonperforming assets consist primarily of nonaccrual loans. During 2020, nonperforming assets included three SBA 7(a), partially guaranteed (75%) loans that were acquired in the June 2018 acquisition of Westbound Bank, with combined book balances of $8.7 million as of June 30, 2020. During the first quarter of 2021, one of these loans was resolved when the underlying collateral, a hotel, was sold to a third party. The bank charged off $475,000 in connection with the sale, all of which had previously been specifically reserved within the allowance for credit losses, or ACL. The other two loans, collateralized by a hotel and both to one borrower, were resolved through a bankruptcy judgement that allows the borrower to adequately service their debt coverage. The bankruptcy order resulted in a charge-off of $270,000, which had previously been fully reserved in the ACL. These loans were internally identified as problem assets prior to COVID-19 and were properly reserved.

During the first and second quarters of 2020, the Bank provided financial relief to many of its customers due to the COVID-19 outbreak through either 3-month principal and interest (“P&I”) payment deferrals or through 6-month interest-only (“I/O”) deferrals. Under the initial deferral program, the Bank provided 3-month P&I deferrals on 658 loans with principal balances of $247.8 million and provided up to 6-month I/O deferrals on 336 loans with principal balances of $183.7 million. As of June 30, 2021, there are no loans remaining in the P&I deferral program and there are seven loans totaling $41.9 million that remain in a subsequent I/O deferral program. We anticipate that all of these borrowers, who are primarily in the hotel and hospitality industry, will return to their contractual payment schedules at the end of their I/O deferral period in the third quarter of 2021 with no additional subsequent deferrals.

 

 

As of

 

 

 

2021

 

 

2020

 

(dollars in thousands)

 

June 30

 

 

March 31

 

 

December 31

 

 

September 30

 

 

June 30

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

37,611

 

 

$

38,534

 

 

$

47,836

 

 

$

35,714

 

 

$

35,490

 

Federal funds sold

 

 

385,075

 

 

 

356,750

 

 

 

218,825

 

 

 

101,300

 

 

 

104,375

 

Interest-bearing deposits

 

 

24,532

 

 

 

28,188

 

 

 

85,130

 

 

 

56,357

 

 

 

51,129

 

Total cash and cash equivalents

 

 

447,218

 

 

 

423,472

 

 

 

351,791

 

 

 

193,371

 

 

 

190,994

 

Securities available for sale

 

 

446,636

 

 

 

407,736

 

 

 

380,795

 

 

 

368,887

 

 

 

376,381

 

Loans held for sale

 

 

5,088

 

 

 

4,663

 

 

 

5,542

 

 

 

9,148

 

 

 

7,194

 

Loans, net

 

 

1,856,277

 

 

 

1,876,985

 

 

 

1,831,737

 

 

 

1,921,234

 

 

 

1,919,201

 

Accrued interest receivable

 

 

8,801

 

 

 

8,064

 

 

 

9,834

 

 

 

8,361

 

 

 

11,864

 

Premises and equipment, net

 

 

54,405

 

 

 

54,903

 

 

 

55,212

 

 

 

55,468

 

 

 

55,251

 

Other real estate owned

 

 

227

 

 

 

312

 

 

 

404

 

 

 

310

 

 

 

402

 

Cash surrender value of life insurance

 

 

36,367

 

 

 

35,836

 

 

 

35,510

 

 

 

35,304

 

 

 

34,920

 

Core deposit intangible, net

 

 

2,573

 

 

 

2,786

 

 

 

2,999

 

 

 

3,213

 

 

 

3,426

 

Goodwill

 

 

32,160

 

 

 

32,160

 

 

 

32,160

 

 

 

32,160

 

 

 

32,160

 

Other assets

 

 

43,207

 

 

 

44,383

 

 

 

34,848

 

 

 

35,228

 

 

 

35,402

 

Total assets

 

$

2,932,959

 

 

$

2,891,300

 

 

$

2,740,832

 

 

$

2,662,684

 

 

$

2,667,195

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing

 

$

928,416

 

 

$

878,883

 

 

$

779,740

 

 

$

776,364

 

 

$

772,179

 

Interest-bearing

 

 

1,604,610

 

 

 

1,596,327

 

 

 

1,506,650

 

 

 

1,446,718

 

 

 

1,469,847

 

Total deposits

 

 

2,533,026

 

 

 

2,475,210

 

 

 

2,286,390

 

 

 

2,223,082

 

 

 

2,242,026

 

Securities sold under agreements to repurchase

 

 

15,336

 

 

 

24,007

 

 

 

15,631

 

 

 

20,520

 

 

 

17,414

 

Accrued interest and other liabilities

 

 

28,058

 

 

 

28,080

 

 

 

25,257

 

 

 

25,814

 

 

 

25,960

 

Line of credit

 

 

 

 

 

15,000

 

 

 

12,000

 

 

 

7,000

 

 

 

2,000

 

Federal Home Loan Bank advances

 

 

49,000

 

 

 

49,096

 

 

 

109,101

 

 

 

99,105

 

 

 

100,610

 

Subordinated debentures

 

 

19,810

 

 

 

19,810

 

 

 

19,810

 

 

 

20,310

 

 

 

20,310

 

Total liabilities

 

 

2,645,230

 

 

 

2,611,203

 

 

 

2,468,189

 

 

 

2,395,831

 

 

 

2,408,320

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total shareholders' equity

 

 

287,729

 

 

 

280,097

 

 

 

272,643

 

 

 

266,853

 

 

 

258,875

 

Total liabilities and shareholders' equity

 

$

2,932,959

 

 

$

2,891,300

 

 

$

2,740,832

 

 

$

2,662,684

 

 

$

2,667,195

 

 

 

Quarter Ended

 

 

 

2021

 

 

2020

 

(dollars in thousands)

 

June 30

 

 

March 31

 

 

December 31

 

 

September 30

 

 

June 30

 

STATEMENTS OF EARNINGS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

$

25,284

 

 

$

26,513

 

 

$

26,253

 

 

$

24,956

 

 

$

26,581

 

Interest expense

 

 

1,807

 

 

 

2,022

 

 

 

2,301

 

 

 

2,677

 

 

 

3,399

 

Net interest income

 

 

23,477

 

 

 

24,491

 

 

 

23,952

 

 

 

22,279

 

 

 

23,182

 

Provision for credit losses

 

 

(1,000

)

 

 

 

 

 

 

 

 

(300

)

 

 

12,100

 

Net interest income after provision for credit losses

 

 

24,477

 

 

 

24,491

 

 

 

23,952

 

 

 

22,579

 

 

 

11,082

 

Noninterest income

 

 

5,970

 

 

 

6,119

 

 

 

6,426

 

 

 

6,663

 

 

 

4,987

 

Noninterest expense

 

 

17,703

 

 

 

17,312

 

 

 

18,173

 

 

 

16,758

 

 

 

15,184

 

Income before income taxes

 

 

12,744

 

 

 

13,298

 

 

 

12,205

 

 

 

12,484

 

 

 

885

 

Income tax provision (benefit)

 

 

2,312

 

 

 

2,336

 

 

 

2,290

 

 

 

2,350

 

 

 

(190

)

Net earnings

 

$

10,432

 

 

$

10,962

 

 

$

9,915

 

 

$

10,134

 

 

$

1,075

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PER COMMON SHARE DATA*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share, basic

 

$

0.87

 

 

$

0.91

 

 

$

0.82

 

 

$

0.84

 

 

$

0.09

 

Earnings per common share, diluted(1)

 

 

0.85

 

 

 

0.90

 

 

 

0.82

 

 

 

0.84

 

 

 

0.09

 

Cash dividends per common share

 

 

0.20

 

 

 

0.20

 

 

 

0.18

 

 

 

0.18

 

 

 

0.17

 

Book value per common share - end of quarter

 

 

23.86

 

 

 

23.24

 

 

 

22.67

 

 

 

22.08

 

 

 

21.37

 

Tangible book value per common share - end of quarter(2)

 

 

20.98

 

 

 

20.34

 

 

 

19.74

 

 

 

19.15

 

 

 

18.43

 

Common shares outstanding - end of quarter

 

 

12,057,937

 

 

 

12,053,597

 

 

 

12,028,957

 

 

 

12,087,063

 

 

 

12,115,184

 

Weighted-average common shares outstanding, basic

 

 

12,056,550

 

 

 

12,038,638

 

 

 

12,063,154

 

 

 

12,113,266

 

 

 

12,128,516

 

Weighted-average common shares outstanding, diluted(1)

 

 

12,251,587

 

 

 

12,177,776

 

 

 

12,121,221

 

 

 

12,113,266

 

 

 

12,128,516

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PERFORMANCE RATIOS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (annualized)

 

 

1.42

%

 

 

1.60

%

 

 

1.48

%

 

 

1.53

%

 

 

0.16

%

Return on average equity (annualized)

 

 

14.64

 

 

 

16.01

 

 

 

14.53

 

 

 

15.21

 

 

 

1.67

 

Net interest margin, fully taxable equivalent (annualized)(3)

 

 

3.44

 

 

 

3.85

 

 

 

3.85

 

 

 

3.61

 

 

 

3.78

 

Efficiency ratio(4)

 

 

60.12

 

 

 

56.56

 

 

 

59.82

 

 

 

57.90

 

 

 

53.90

 

* Adjusted retroactively for all quarters presented to give effect to the 10% dividend issued during the first quarter of 2021.

 

(1) Outstanding options and the closing price of the company's stock as of September 30 and June 30, 2020 had an anti-dilutive effect on each respective quarter end's weighted-average common shares outstanding; therefore, the effect of their conversion has been excluded from the calculation of the diluted weighted-average common shares outstanding for those periods. The diluted EPS for those quarters has been calculated using the basic weighted-average shares outstanding in order to comply with GAAP. There was not an anti-dilutive effect for the quarters ended June 30 and March 31, 2021 and December 31, 2020.

 

(2) See Reconciliation of non-GAAP Financial Measures table.

 

(3) Net interest margin on a taxable equivalent basis is equal to net interest income adjusted for nontaxable income divided by average interest-earning assets, annualized, using a marginal tax rate of 21%.

 

(4) The efficiency ratio was calculated by dividing total noninterest expense by net interest income plus noninterest income, excluding securities gains or losses. Taxes are not part of this calculation.

 

 

 

As of

 

 

 

2021

 

 

2020

 

(dollars in thousands)

 

June 30

 

 

March 31

 

 

December 31

 

 

September 30

 

 

June 30

 

LOAN PORTFOLIO COMPOSITION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

$

424,624

 

 

$

460,491

 

 

$

445,771

 

 

$

531,152

 

 

$

522,248

 

Real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Construction and development

 

 

264,002

 

 

 

257,886

 

 

 

270,407

 

 

 

269,101

 

 

 

265,982

 

Commercial real estate

 

 

608,464

 

 

 

630,479

 

 

 

594,216

 

 

 

602,664

 

 

 

606,061

 

Farmland

 

 

94,525

 

 

 

76,867

 

 

 

78,508

 

 

 

80,197

 

 

 

77,625

 

1-4 family residential

 

 

389,616

 

 

 

389,542

 

 

 

389,096

 

 

 

385,783

 

 

 

383,590

 

Multi-family residential

 

 

42,086

 

 

 

32,090

 

 

 

21,701

 

 

 

19,499

 

 

 

29,692

 

Consumer

 

 

51,795

 

 

 

49,780

 

 

 

51,044

 

 

 

52,855

 

 

 

52,986

 

Agricultural

 

 

14,608

 

 

 

14,905

 

 

 

15,734

 

 

 

17,004

 

 

 

18,981

 

Overdrafts

 

 

444

 

 

 

327

 

 

 

342

 

 

 

379

 

 

 

275

 

Total loans(1)(2)

 

$

1,890,164

 

 

$

1,912,367

 

 

$

1,866,819

 

 

$

1,958,634

 

 

$

1,957,440

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

 

 

2021

 

 

2020

 

(dollars in thousands)

 

June 30

 

 

March 31

 

 

December 31

 

 

September 30

 

 

June 30

 

ALLOWANCE FOR CREDIT LOSSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

32,770

 

 

$

33,619

 

 

$

33,757

 

 

$

34,119

 

 

$

21,948

 

Loans charged-off

 

 

(283

)

 

 

(875

)

 

 

(159

)

 

 

(101

)

 

 

(59

)

Recoveries

 

 

61

 

 

 

26

 

 

 

21

 

 

 

39

 

 

 

130

 

Provision for credit loss expense

 

 

(1,000

)

 

 

 

 

 

 

 

 

(300

)

 

 

12,100

 

Balance at end of period

 

$

31,548

 

 

$

32,770

 

 

$

33,619

 

 

$

33,757

 

 

$

34,119

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses / period-end loans

 

 

1.67

%

 

 

1.71

%

 

 

1.80

%

 

 

1.72

%

 

 

1.74

%

Allowance for credit losses / nonperforming loans

 

 

878.0

 

 

 

968.7

 

 

 

264.6

 

 

 

245.0

 

 

 

235.6

 

Net charge-offs (recoveries) / average loans (annualized)

 

 

0.05

 

 

 

0.18

 

 

 

0.03

 

 

 

0.01

 

 

 

(0.02

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NON-PERFORMING ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-accrual loans(3)

 

$

3,593

 

 

$

3,383

 

 

$

12,705

 

 

$

13,780

 

 

$

14,480

 

Other real estate owned

 

 

227

 

 

 

312

 

 

 

404

 

 

 

310

 

 

 

402

 

Repossessed assets owned

 

 

9

 

 

 

4

 

 

 

6

 

 

 

3

 

 

 

38

 

Total non-performing assets

 

$

3,829

 

 

$

3,699

 

 

$

13,115

 

 

$

14,093

 

 

$

14,920

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-performing assets as a percentage of:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loans(1)(2)

 

 

0.20

%

 

 

0.19

%

 

 

0.70

%

 

 

0.72

%

 

 

0.76

%

Total loans, excluding PPP(1)(2)

 

 

0.22

 

 

 

0.21

 

 

 

0.76

 

 

 

0.81

 

 

 

0.85

 

Total assets

 

 

0.13

 

 

 

0.13

 

 

 

0.48

 

 

 

0.53

 

 

 

0.56

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TDR loans - nonaccrual

 

$

86

 

 

$

87

 

 

$

90

 

 

$

92

 

 

$

95

 

TDR loans - accruing

 

 

9,535

 

 

 

9,598

 

 

 

9,626

 

 

 

7,891

 

 

 

7,216

 

(1) Excludes outstanding balances of loans held for sale of $5.1 million, $4.7 million, $5.5 million, $9.1 million, and $7.2 million as of June 30 and March 31, 2021 and December 31, September 30, June 30, 2020, respectively.

 

(2) Excludes deferred loan fees of $(2.3) million, $(2.6) million, $(1.5) million, $(3.6) million, and $(4.1) million as of June 30 and March 31, 2021 and December 31, September 30, June 30, 2020, respectively.

 

(3) TDR loans - nonaccrual are included in nonaccrual loans, which are a component of nonperforming loans.

 

 

 

Quarter Ended

 

 

 

2021

 

 

2020

 

(dollars in thousands)

 

June 30

 

 

March 31

 

 

December 31

 

 

September 30

 

 

June 30

 

NONINTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges

 

$

855

 

 

$

829

 

 

$

868

 

 

$

717

 

 

$

571

 

Net realized gain on sale of loans

 

 

1,244

 

 

 

1,398

 

 

 

2,023

 

 

 

2,114

 

 

 

1,508

 

Fiduciary and custodial income

 

 

570

 

 

 

549

 

 

 

513

 

 

 

511

 

 

 

474

 

Bank-owned life insurance income

 

 

206

 

 

 

212

 

 

 

205

 

 

 

208

 

 

 

207

 

Merchant and debit card fees

 

 

1,922

 

 

 

1,506

 

 

 

1,396

 

 

 

1,654

 

 

 

1,334

 

Loan processing fee income

 

 

164

 

 

 

153

 

 

 

167

 

 

 

181

 

 

 

130

 

Warehouse lending fees

 

 

211

 

 

 

241

 

 

 

262

 

 

 

288

 

 

 

243

 

Mortgage fee income

 

 

157

 

 

 

177

 

 

 

197

 

 

 

272

 

 

 

204

 

Other noninterest income

 

 

641

 

 

 

1,054

 

 

 

795

 

 

 

718

 

 

 

316

 

Total noninterest income

 

$

5,970

 

 

$

6,119

 

 

$

6,426

 

 

$

6,663

 

 

$

4,987

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employee compensation and benefits

 

$

10,204

 

 

$

9,943

 

 

$

10,211

 

 

$

9,439

 

 

$

8,077

 

Occupancy expenses

 

 

2,833

 

 

 

2,687

 

 

 

2,596

 

 

 

2,597

 

 

 

2,550

 

Legal and professional fees

 

 

747

 

 

 

604

 

 

 

968

 

 

 

574

 

 

 

589

 

Software and technology

 

 

1,055

 

 

 

1,114

 

 

 

1,127

 

 

 

1,093

 

 

 

945

 

Amortization

 

 

336

 

 

 

343

 

 

 

340

 

 

 

338

 

 

 

338

 

Director and committee fees

 

 

167

 

 

 

255

 

 

 

251

 

 

 

211

 

 

 

165

 

Advertising and promotions

 

 

338

 

 

 

455

 

 

 

356

 

 

 

301

 

 

 

408

 

ATM and debit card expense

 

 

616

 

 

 

540

 

 

 

545

 

 

 

509

 

 

 

479

 

Telecommunication expense

 

 

180

 

 

 

234

 

 

 

244

 

 

 

231

 

 

 

209

 

FDIC insurance assessment fees

 

 

168

 

 

 

169

 

 

 

252

 

 

 

252

 

 

 

122

 

Other noninterest expense

 

 

1,059

 

 

 

968

 

 

 

1,283

 

 

 

1,213

 

 

 

1,302

 

Total noninterest expense

 

$

17,703

 

 

$

17,312

 

 

$

18,173

 

 

$

16,758

 

 

$

15,184

 

 

 

For the Three Months Ended June 30,

 

 

 

2021

 

 

2020

 

(dollars in thousands)

 

Average

Outstanding

Balance

 

 

Interest

Earned/

Interest

Paid

 

 

Average

Yield/ Rate

 

 

Average

Outstanding

Balance

 

 

Interest

Earned/

Interest

Paid

 

 

Average

Yield/ Rate

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loans(1)

 

$

1,912,722

 

 

$

22,864

 

 

 

4.79

%

 

$

1,885,959

 

 

$

24,139

 

 

 

5.15

%

Securities available for sale

 

 

420,202

 

 

 

2,191

 

 

 

2.09

 

 

 

379,803

 

 

 

2,273

 

 

 

2.41

 

Nonmarketable equity securities

 

 

10,056

 

 

 

164

 

 

 

6.54

 

 

 

11,869

 

 

 

108

 

 

 

3.66

 

Interest-bearing deposits in other banks

 

 

426,074

 

 

 

65

 

 

 

0.06

 

 

 

209,005

 

 

 

61

 

 

 

0.12

 

Total interest-earning assets

 

 

2,769,054

 

 

 

25,284

 

 

 

3.66

 

 

 

2,486,636

 

 

 

26,581

 

 

 

4.30

 

Allowance for loan losses

 

 

(32,664

)

 

 

 

 

 

 

 

 

(27,720

)

 

 

 

 

 

 

Noninterest-earning assets

 

 

202,554

 

 

 

 

 

 

 

 

 

198,693

 

 

 

 

 

 

 

Total assets

 

$

2,938,944

 

 

 

 

 

 

 

 

$

2,657,609

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

$

1,623,351

 

 

$

1,493

 

 

 

0.37

%

 

$

1,480,106

 

 

$

3,040

 

 

 

0.83

%

Advances from FHLB and fed funds purchased

 

 

49,063

 

 

 

102

 

 

 

0.83

 

 

 

134,677

 

 

 

123

 

 

 

0.37

 

Line of credit

 

 

2,374

 

 

 

21

 

 

 

3.55

 

 

 

7,791

 

 

 

47

 

 

 

2.43

 

Subordinated debentures

 

 

19,810

 

 

 

188

 

 

 

3.81

 

 

 

17,618

 

 

 

176

 

 

 

4.02

 

Securities sold under agreements to repurchase

 

 

14,887

 

 

 

3

 

 

 

0.08

 

 

 

18,106

 

 

 

13

 

 

 

0.29

 

Total interest-bearing liabilities

 

 

1,709,485

 

 

 

1,807

 

 

 

0.42

 

 

 

1,658,298

 

 

 

3,399

 

 

 

0.82

 

Noninterest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

 

916,631

 

 

 

 

 

 

 

 

 

718,378

 

 

 

 

 

 

 

Accrued interest and other liabilities

 

 

27,025

 

 

 

 

 

 

 

 

 

22,708

 

 

 

 

 

 

 

Total noninterest-bearing liabilities

 

 

943,656

 

 

 

 

 

 

 

 

 

741,086

 

 

 

 

 

 

 

Shareholders’ equity

 

 

285,803

 

 

 

 

 

 

 

 

 

258,225

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

2,938,944

 

 

 

 

 

 

 

 

$

2,657,609

 

 

 

 

 

 

 

Net interest rate spread(2)

 

 

 

 

 

 

 

 

3.24

%

 

 

 

 

 

 

 

 

3.48

%

Net interest income

 

 

 

 

$

23,477

 

 

 

 

 

 

 

 

$

23,182

 

 

 

 

Net interest margin(3)

 

 

 

 

 

 

 

 

3.40

%

 

 

 

 

 

 

 

 

3.75

%

Net interest margin, fully taxable equivalent(4)

 

 

 

 

 

 

 

 

3.44

%

 

 

 

 

 

 

 

 

3.78

%

(1) Includes average outstanding balances of loans held for sale of $3.2 million and $6.5 million for the three months ended June 30, 2021 and 2020, respectively.

 

(2) Net interest spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.

 

(3) Net interest margin is equal to net interest income divided by average interest-earning assets, annualized.

 

(4) Net interest margin on a taxable equivalent basis is equal to net interest income adjusted for nontaxable income divided by average interest-earning assets, annualized, using a marginal tax rate of 21%.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

(dollars in thousands)

 

Average

Outstanding

Balance

 

 

Interest

Earned/

Interest

Paid

 

 

Average

Yield/

Rate

 

 

Average

Outstanding

Balance

 

 

Interest

Earned/

Interest

Paid

 

 

Average

Yield/

Rate

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loans(1)

 

$

1,899,864

 

 

$

47,059

 

 

 

4.99

%

 

$

1,793,742

 

 

$

46,656

 

 

 

5.23

%

Securities available for sale

 

 

399,255

 

 

 

4,282

 

 

 

2.16

 

 

 

300,053

 

 

 

3,586

 

 

 

2.40

 

Securities held to maturity

 

 

 

 

 

 

 

 

 

 

 

72,266

 

 

 

956

 

 

 

2.66

 

Nonmarketable equity securities

 

 

10,043

 

 

 

265

 

 

 

5.32

 

 

 

10,545

 

 

 

222

 

 

 

4.23

 

Interest-bearing deposits in other banks

 

 

380,455

 

 

 

191

 

 

 

0.10

 

 

 

142,341

 

 

 

413

 

 

 

0.58

 

Total interest-earning assets

 

 

2,689,617

 

 

 

51,797

 

 

 

3.88

 

 

 

2,318,947

 

 

 

51,833

 

 

 

4.49

 

Allowance for credit losses

 

 

(32,951

)

 

 

 

 

 

 

 

 

(24,250

)

 

 

 

 

 

 

Noninterest-earning assets

 

 

201,041

 

 

 

 

 

 

 

 

 

196,917

 

 

 

 

 

 

 

Total assets

 

$

2,857,707

 

 

 

 

 

 

 

 

$

2,491,614

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

$

1,591,784

 

 

$

3,096

 

 

 

0.39

%

 

$

1,477,806

 

 

$

7,461

 

 

 

1.02

%

Advances from FHLB and fed funds purchased

 

 

50,075

 

 

 

201

 

 

 

0.81

 

 

 

78,957

 

 

 

205

 

 

 

0.52

 

Line of credit

 

 

8,470

 

 

 

149

 

 

 

3.55

 

 

 

5,599

 

 

 

75

 

 

 

2.69

 

Subordinated debentures

 

 

19,810

 

 

 

376

 

 

 

3.83

 

 

 

14,214

 

 

 

319

 

 

 

4.51

 

Securities sold under agreements to repurchase

 

 

18,013

 

 

 

7

 

 

 

0.08

 

 

 

15,466

 

 

 

22

 

 

 

0.29

 

Total interest-bearing liabilities

 

 

1,688,152

 

 

 

3,829

 

 

 

0.46

 

 

 

1,592,042

 

 

 

8,082

 

 

 

1.02

 

Noninterest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

 

862,619

 

 

 

 

 

 

 

 

 

618,176

 

 

 

 

 

 

 

Accrued interest and other liabilities

 

 

25,206

 

 

 

 

 

 

 

 

 

22,121

 

 

 

 

 

 

 

Total noninterest-bearing liabilities

 

 

887,825

 

 

 

 

 

 

 

 

 

640,297

 

 

 

 

 

 

 

Shareholders’ equity

 

 

281,730

 

 

 

 

 

 

 

 

 

259,275

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

2,857,707

 

 

 

 

 

 

 

 

$

2,491,614

 

 

 

 

 

 

 

Net interest rate spread(2)

 

 

 

 

 

 

 

 

3.42

%

 

 

 

 

 

 

 

 

3.47

%

Net interest income

 

 

 

 

$

47,968

 

 

 

 

 

 

 

 

$

43,751

 

 

 

 

Net interest margin(3)

 

 

 

 

 

 

 

 

3.60

%

 

 

 

 

 

 

 

 

3.79

%

Net interest margin, fully taxable equivalent(4)

 

 

 

 

 

 

 

 

3.64

%

 

 

 

 

 

 

 

 

3.78

%

(1) Includes average outstanding balances of loans held for sale of $3.7 million and $4.5 million for the six months ended June 30, 2021 and 2020, respectively.

 

(2) Net interest spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.

 

(3) Net interest margin is equal to net interest income divided by average interest-earning assets, annualized.

 

(4) Net interest margin on a taxable equivalent basis is equal to net interest income adjusted for nontaxable income divided by average interest-earning assets, annualized, using a marginal tax rate of 21%.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NON-GAAP RECONCILING TABLES

Tangible Book Value per Common Share

 

 

 

As of

 

 

 

2021

 

 

2020

 

(dollars in thousands, except per share data)

 

June 30

 

 

March 31

 

 

December 31

 

 

September 30

 

 

June 30

 

Total shareholders’ equity

 

$

287,729

 

 

$

280,097

 

 

$

272,643

 

 

$

266,853

 

 

$

258,875

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

 

(32,160

)

 

 

(32,160

)

 

 

(32,160

)

 

 

(32,160

)

 

 

(32,160

)

Core deposit intangible, net

 

 

(2,573

)

 

 

(2,786

)

 

 

(2,999

)

 

 

(3,213

)

 

 

(3,426

)

Total tangible common equity

 

$

252,996

 

 

$

245,151

 

 

$

237,484

 

 

$

231,480

 

 

$

223,289

 

Common shares outstanding - end of quarter(1)

 

 

12,057,937

 

 

 

12,053,597

 

 

 

12,028,957

 

 

 

12,087,063

 

 

 

12,115,184

 

Book value per common share

 

$

23.86

 

 

$

23.24

 

 

$

22.67

 

 

$

22.08

 

 

$

21.37

 

Tangible book value per common share

 

 

20.98

 

 

 

20.34

 

 

 

19.74

 

 

 

19.15

 

 

 

18.43

 

(1) Excludes the dilutive effect, if any, of shares of common stock issuable upon exercise of outstanding stock options.

Net Core Earnings and Net Core Earnings per Common Share

 

 

Quarter Ended

 

 

 

2021

 

 

2020

 

(dollars in thousands, except per share data)

 

June 30

 

 

March 31

 

 

December 31

 

 

September 30

 

 

June 30

 

Net earnings

 

$

10,432

 

 

$

10,962

 

 

$

9,915

 

 

$

10,134

 

 

$

1,075

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for credit losses

 

 

(1,000

)

 

 

 

 

 

 

 

 

(300

)

 

 

12,100

 

Income tax provision (benefit)

 

 

2,312

 

 

 

2,336

 

 

 

2,290

 

 

 

2,350

 

 

 

(190

)

PPP loans, including fees

 

 

(2,346

)

 

 

(3,513

)

 

 

(2,654

)

 

 

(1,076

)

 

 

(2,540

)

Net interest expense on PPP-related borrowings

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

31

 

Net core earnings

 

$

9,398

 

 

$

9,785

 

 

$

9,551

 

 

$

11,111

 

 

$

10,476

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding, basic*

 

 

12,056,550

 

 

 

12,038,638

 

 

 

12,063,154

 

 

 

12,113,266

 

 

 

12,128,516

 

Earnings per common share, basic*

 

$

0.87

 

 

$

0.91

 

 

$

0.82

 

 

$

0.84

 

 

$

0.09

 

Net core earnings per common share, basic*

 

 

0.78

 

 

 

0.81

 

 

 

0.79

 

 

 

0.92

 

 

 

0.86

 

* Adjusted to give effect to the 10% stock dividend issued during the first quarter of 2021.

 

 

Net Core Earnings to Average Assets, as Adjusted, and Average Equity

 

 

Quarter Ended

 

 

 

2021

 

 

2020

 

(dollars in thousands)

 

June 30

 

 

March 31

 

 

December 31

 

 

September 30

 

 

June 30

 

Net core earnings

 

$

9,398

 

 

$

9,785

 

 

$

9,551

 

 

$

11,111

 

 

$

10,476

 

Total average assets

 

$

2,938,944

 

 

$

2,775,567

 

 

$

2,659,725

 

 

$

2,639,335

 

 

$

2,657,609

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PPP loan average balance

 

 

(155,417

)

 

 

(137,251

)

 

 

(179,240

)

 

 

(209,506

)

 

 

(163,184

)

Excess fed funds sold due to PPP-related borrowings

 

 

 

 

 

 

 

 

 

 

 

(8,152

)

 

 

(84,066

)

Total average assets, adjusted

 

$

2,783,527

 

 

$

2,638,316

 

 

$

2,480,485

 

 

$

2,421,677

 

 

$

2,410,359

 

Net core earnings to average assets, as adjusted (annualized)

 

 

1.35

 

 

 

1.50

 

 

 

1.53

 

 

 

1.83

 

 

 

1.75

 

Total average equity

 

$

285,803

 

 

$

277,612

 

 

$

271,397

 

 

$

265,027

 

 

$

258,225

 

Net core earnings to average equity (annualized)

 

 

13.19

 

 

 

14.29

 

 

 

14.00

 

 

 

16.68

 

 

 

16.32

 

NON-GAAP RECONCILING TABLES

Total Non-Performing Assets to Total Loans, Excluding PPP

 

 

Quarter Ended

 

 

 

2021

 

 

2020

 

(dollars in thousands)

 

June 30

 

 

March 31

 

 

December 31

 

 

September 30

 

 

June 30

 

Total loans(1)(2)

 

$

1,890,164

 

 

$

1,912,367

 

 

$

1,866,819

 

 

$

1,958,634

 

 

$

1,957,440

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PPP loans balance

 

 

(127,390

)

 

 

(158,236

)

 

 

(139,808

)

 

 

(209,609

)

 

 

(208,793

)

Total loans, excluding PPP(1)(2)

 

$

1,762,774

 

 

$

1,754,131

 

 

$

1,727,011

 

 

$

1,749,025

 

 

$

1,748,647

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total non-performing assets

 

$

3,829

 

 

$

3,699

 

 

$

13,115

 

 

$

14,093

 

 

$

14,920

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-performing assets as a percentage of:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loans(1)(2)

 

 

0.20

%

 

 

0.19

%

 

 

0.70

%

 

 

0.72

%

 

 

0.76

%

Total loans, excluding PPP(1)(2)

 

 

0.22

 

 

 

0.21

 

 

 

0.76

 

 

 

0.81

 

 

 

0.85

 

(1) Excludes outstanding balances of loans held for sale of $5.1 million, $4.7 million, $5.5 million, $9.1 million, and $7.2 million as of June 30 and March 31, 2021 and December 31, September 30, June 30, 2020, respectively.

 

(2) Excludes deferred loan fees of $(2.3) million, $(2.6) million, $(1.5) million, $(3.6) million, and $(4.1) million as of June 30 and March 31, 2021 and December 31, September 30, June 30, 2020, respectively.

 

Total Interest-Earning Assets, Net of PPP Effects

 

 

For the Three Months Ended

June 30, 2021

 

 

For the Six Months Ended

June 30, 2021

 

(dollars in thousands)

 

Average

Outstanding

Balance

 

 

Interest

Earned/

Interest

Paid

 

 

Average

Yield/ Rate

 

 

Average

Outstanding

Balance

 

 

Interest

Earned/

Interest

Paid

 

 

Average

Yield/ Rate

 

Total interest-earning assets

 

$

2,769,054

 

 

$

25,284

 

 

 

3.66

%

 

$

2,689,617

 

 

$

51,797

 

 

 

3.88

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loans

 

 

1,912,722

 

 

 

22,864

 

 

 

4.79

 

 

 

1,899,864

 

 

 

47,059

 

 

 

4.99

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PPP loan average balance and net fees(1)

 

 

(155,417

)

 

 

(1,747

)

 

 

4.51

 

 

 

(146,103

)

 

 

(5,260

)

 

 

7.26

 

Total loans, net of PPP effects

 

 

1,757,305

 

 

 

21,117

 

 

 

4.82

 

 

 

1,753,761

 

 

 

41,799

 

 

 

4.81

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total interest-earning assets, net of PPP effects

 

$

2,613,637

 

 

$

23,537

 

 

 

3.61

%

 

$

2,543,514

 

 

$

46,537

 

 

 

3.69

%

(1) Interest earned consists of interest income of $385,000 and $720,000, and net origination fees recognized in earnings of $1.4 million and $4.5 million for the three and six months ended June 30, 2021, respectively.

 

NON-GAAP RECONCILING TABLES

Net Interest Income and Net Interest Margin, Net of PPP Effects

(dollars in thousands)

 

Three Months

Ended

June 30, 2021

 

 

Six Months

Ended

June 30, 2021

 

 

Three Months Ended

March 31, 2021

 

 

Three Months Ended

June 30, 2020

 

Net interest income

 

$

23,477

 

 

$

47,968

 

 

$

24,491

 

 

$

23,182

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

PPP-related interest income

 

 

(385

)

 

 

(720

)

 

 

(335

)

 

 

(407

)

PPP-related net origination fees

 

 

(1,362

)

 

 

(4,540

)

 

 

(3,178

)

 

 

(2,133

)

PPP-related borrowings

 

 

 

 

 

 

 

 

 

 

 

31

 

Net interest income, net of PPP effects

 

$

21,730

 

 

$

42,708

 

 

$

20,978

 

 

$

20,673

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total average interest-earning assets

 

$

2,769,054

 

 

$

2,689,617

 

 

$

2,609,299

 

 

$

2,486,636

 

Total average interest-earning assets, net of PPP effects

 

 

2,613,637

 

 

 

2,543,514

 

 

 

2,472,048

 

 

 

2,239,386

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin(1)

 

 

3.40

%

 

 

3.60

%

 

 

3.81

%

 

 

3.75

%

Net interest margin, net of PPP effects(2)

 

 

3.33

 

 

 

3.39

 

 

 

3.44

 

 

 

3.71

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

23,477

 

 

$

47,968

 

 

$

24,491

 

 

$

23,182

 

Interest income tax adjustments

 

 

269

 

 

 

520

 

 

 

250

 

 

 

212

 

Net interest income, fully taxable equivalent ("FTE")

 

$

23,746

 

 

$

48,488

 

 

$

24,741

 

 

$

23,394

 

Net interest income, FTE, net of PPP effects

 

 

21,999

 

 

 

43,228

 

 

 

21,228

 

 

 

20,885

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin, FTE(3)

 

 

3.44

 

 

 

3.64

 

 

 

3.85

 

 

 

3.78

 

Net interest margin, FTE, net of PPP effects(4)

 

 

3.38

 

 

 

3.43

 

 

 

3.48

 

 

 

3.75

 

(1) Net interest margin is equal to net interest income divided by average interest-earning assets, annualized.

 

(2) Net interest margin is equal to net interest income, net of PPP effects, divided by average interest-earning assets, excluding average PPP loans, annualized. Taxes are not a part of this calculation.

 

(3) Net interest margin on a taxable equivalent basis is equal to net interest income adjusted for nontaxable income divided by average interest-earning assets, annualized, using a marginal tax rate of 21%.

 

(4) Net interest margin on a taxable equivalent basis is equal to net interest income, net of PPP effects, adjusted for nontaxable income divided by average interest-earning assets, excluding average PPP loans, annualized, using a marginal tax rate of 21%.

 

 

Efficiency Ratio, Net of PPP Effects

(dollars in thousands)

 

Three Months Ended

June 30, 2021

 

 

Six Months Ended

June 30, 2021

 

 

Three Months Ended

March 31, 2021

 

 

Three Months Ended

June 30, 2020

 

Total noninterest expense

 

$

17,703

 

 

$

35,015

 

 

$

17,312

 

 

$

15,184

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

PPP-related deferred costs

 

 

207

 

 

 

599

 

 

 

392

 

 

 

838

 

Total noninterest expense, net of PPP effects

 

$

17,910

 

 

$

35,614

 

 

$

17,704

 

 

$

16,022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

23,477

 

 

 

47,968

 

 

 

24,491

 

 

 

23,182

 

Net interest income, net of PPP effects

 

 

21,730

 

 

 

42,708

 

 

 

20,978

 

 

 

20,673

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total noninterest income

 

$

5,970

 

 

$

12,089

 

 

$

6,119

 

 

$

4,987

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Efficiency ratio(1)

 

 

60.12

%

 

 

58.30

%

 

 

56.56

%

 

 

53.90

%

Efficiency ratio, net of PPP effects(2)

 

 

64.66

 

 

 

64.99

 

 

 

65.34

 

 

 

62.44

 

(1) The efficiency ratio was calculated by dividing total noninterest expense by net interest income plus noninterest income, excluding securities gains or losses. Taxes are not part of this calculation.

 

(2) The efficiency ratio, net of PPP effects, was calculated by dividing total noninterest expense, net of PPP-related deferred costs, by net interest income, net of PPP effects, plus noninterest income, excluding securities gains or losses. Taxes are not part of this calculation.

 

NON-GAAP RECONCILING TABLES

Loan Yield, Net of PPP Effects

 

 

Three Months Ended June 30, 2021

 

 

Three Months Ended March 31, 2021

 

(dollars in thousands)

 

Average

Outstanding

Balance

 

 

Interest

Earned/

Interest

Paid

 

 

Average

Yield/ Rate

 

 

Average

Outstanding

Balance

 

 

Interest

Earned/

Interest

Paid

 

 

Average

Yield/ Rate

 

Total loans

 

$

1,912,722

 

 

$

22,864

 

 

 

4.79

%

 

$

1,886,863

 

 

$

24,195

 

 

 

5.20

%

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PPP loans average balance and net fees

 

 

(155,417

)

 

 

(1,747

)

 

 

4.51

 

 

 

(137,251

)

 

 

(3,513

)

 

 

10.38

 

Total loans, net of PPP effects

 

$

1,757,305

 

 

$

21,117

 

 

 

4.82

%

 

$

1,749,612

 

 

$

20,682

 

 

 

4.79

%

Effect of removing PPP loans on loan yield

 

 

 

 

 

 

 

 

0.03

%

 

 

 

 

 

 

 

 

-0.41

%

 

 

Three Months Ended June 30, 2021

 

 

Three Months Ended June 30, 2020

 

(dollars in thousands)

 

Average

Outstanding

Balance

 

 

Interest

Earned/

Interest

Paid

 

 

Average

Yield/ Rate

 

 

Average

Outstanding

Balance

 

 

Interest

Earned/

Interest

Paid

 

 

Average

Yield/ Rate

 

Total loans

 

$

1,912,722

 

 

$

22,864

 

 

 

4.79

%

 

$

1,885,959

 

 

$

24,139

 

 

 

5.15

%

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PPP loans average balance and net fees

 

 

(155,417

)

 

 

(1,747

)

 

 

4.51

 

 

 

(163,184

)

 

 

(2,540

)

 

 

6.26

 

Total loans, net of PPP effects

 

$

1,757,305

 

 

$

21,117

 

 

 

4.82

%

 

$

1,722,775

 

 

$

21,599

 

 

 

5.04

%

Effect of removing PPP loans on loan yield

 

 

 

 

 

 

 

 

0.03

%

 

 

 

 

 

 

 

 

-0.11

%

 

ACL to Total Loans, Excluding PPP

(dollars in thousands)

 

Three Months Ended

June 30, 2021

 

 

Three Months Ended

March 31, 2021

 

 

Three Months Ended

June 30, 2020

 

Total loans

 

$

1,890,164

 

 

$

1,912,367

 

 

$

1,957,440

 

Adjustments:

 

 

 

 

 

 

 

 

 

PPP loans

 

 

(127,390

)

 

 

(158,236

)

 

 

(208,793

)

Total loans, excluding PPP

 

$

1,762,774

 

 

$

1,754,131

 

 

$

1,748,647

 

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses

 

$

31,548

 

 

$

32,770

 

 

$

34,119

 

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses / period-end loans

 

 

1.67

%

 

 

1.71

%

 

 

1.74

%

Allowance for credit losses / period-end loans. excluding PPP

 

 

1.79

 

 

 

1.87

 

 

 

1.95

 

About Non-GAAP Financial Measures

Certain of the financial measures and ratios we present, including “tangible book value per share”, “net core earnings,” “core net interest margin,” and PPP-adjusted metrics are supplemental measures that are not required by, or are not presented in accordance with, U.S. generally accepted accounting principles (GAAP). We refer to these financial measures and ratios as “non-GAAP financial measures.” We consider the use of select non-GAAP financial measures and ratios to be useful for financial and operational decision making and useful in evaluating period-to-period comparisons. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain expenditures or assets that we believe are not indicative of our primary business operating results or by presenting certain metrics on a fully taxable equivalent basis. We believe that management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, analyzing and comparing past, present and future periods.

These non-GAAP financial measures should not be considered a substitute for financial information presented in accordance with GAAP and you should not rely on non-GAAP financial measures alone as measures of our performance. The non-GAAP financial measures we present may differ from non-GAAP financial measures used by our peers or other companies. We compensate for these limitations by providing the equivalent GAAP measures whenever we present the non-GAAP financial measures and by including a reconciliation of the impact of the components adjusted for in the non-GAAP financial measure so that both measures and the individual components may be considered when analyzing our performance.

A reconciliation of non-GAAP financial measures to the comparable GAAP financial measures is included at the end of the financial statement tables.

Conference Call Information

The Company will hold a conference call to discuss second quarter 2021 financial results on Monday, July 19, 2021 at 10:00 am Central time. The conference call will be hosted by Ty Abston, Chairman and CEO, Cappy Payne, SEVP and CFO, and Shalene Jacobson, EVP and CRO. All conference attendees must register before the call at gnty.com/register. The conference materials will be available by accessing the Investor Relations page on our website, gnty.com. A recording of the conference call will be available by 1:00 pm Central time the day of the call and remain available through July 31, 2021 on our Investor Relations webpage.

About Guaranty Bancshares, Inc.

Guaranty Bancshares, Inc. is a bank holding company that conducts commercial banking activities through its wholly-owned subsidiary, Guaranty Bank & Trust, N.A. As one of the oldest regional community banks in Texas, Guaranty Bank & Trust provides its customers with a full array of relationship-driven commercial and consumer banking products and services, as well as mortgage, trust, and wealth management services. Guaranty Bank & Trust has 31 banking locations across 24 Texas communities located within the East Texas, Dallas/Fort Worth, greater Houston and Central Texas regions of the state. As of June 30, 2021, Guaranty Bancshares, Inc. had total assets of $2.93 billion, total loans of $1.89 billion and total deposits of $2.53 billion. Visit gnty.com for more information.

Cautionary Statement Regarding Forward-Looking Information

This communication contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current views with respect to, among other things, future events and our results of operations, financial condition and financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would” and “outlook,” or the negative version of those words or other comparable words of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Actual results will also be significantly impacted by the effects of the ongoing COVID-19 pandemic, including, among other effects: the impact of the public health crisis; the extent and duration of closures of businesses, including our branches, vendors and customers; the operation of financial markets; employment levels; market liquidity; the impact of various actions taken in response by the U.S. federal government, the Federal Reserve, other banking regulators, state and local governments; the adequacy of our allowance for credit losses in relation to potential losses in our loan portfolio; and the impact that all of these factors have on our borrowers, other customers, vendors and counterparties. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. Such factors include, without limitation, the “Risk Factors” referenced in our most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q, other risks and uncertainties listed from time to time in our reports and documents filed with the Securities and Exchange Commission ("SEC"). We can give no assurance that any goal or plan or expectation set forth in forward-looking statements can be achieved and readers are cautioned not to place undue reliance on such statements. The forward-looking statements are made as of the date of this communication, and we do not intend, and assume no obligation, to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events or circumstances, except as required by applicable law.

Contacts

Cappy Payne

Senior Executive Vice President and Chief Financial Officer

Guaranty Bancshares, Inc.

(888) 572-9881

investors@gnty.com

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