GNTY - Earnings call transcript Q2 2021 | Guaranty Bancshares, Inc.

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Operator

Good morning. Welcome to the Guaranty Bancshares’ Second Quarter 2021 Earnings Call. My name is Nona Branch, and I will be your operator for today’s call. This call is being recorded. After our prepared remarks, there will be a Q&A session.

Officer; call of Ty Senior Officer. the President Chief today's Chief Chairman Executive for Vice and Officer Executive Executive company; Financial host will Chief Abston, be and Vice President Our and Jacobson, Risk Shalene Cappy Payne, begin now it our I over will Ty Abston. call, our to To turn CEO,

Ty Abston

investor this our second quarter you, too to want It’s Thank our welcome everyone call morning. and presentation Nona. I to for company. our call earnings

for what pleased our and economy very We in and and after overall second today the results opening the economy for proud quarter COVID. company are for and of the also we’re Texas year the the up encouraged and with seeing

being said, also be continue cycle. we look always in I’ll turn the to to underwriting, of we’re how over pretty every cautious Cappy we as economic we in credit are we what see be in first. opportunities That part to and we’re company other at about continuing So there. optimistic seeing it out the

through start Cappy? of kind through go him and we’ll the presentation. Let this numbers going

Cappy Payne

Good Ty. everyone. you, Thank morning,

XX% Let comparable and assets basically in we the up me talk We then sheet, ago, are of comparing X.XX highlights. year-over-year. with finish or had to pretty about X.XX just linked did assets QX quarter total year hit total income the assets, recap billion balance XXX And one about the statement we’ll when million billion.

that decrease basis and talk just I'll our to the accounts close historic to funds, the talked minute, level. our on in And remain Xx balance a just cash about NIM, liquidity cash Fed additional We've that. excess continues highlight increased in quarters. to in wanted notice You'll quarter. but mainly our for XX elevated, It past that this and equivalents, approximately sheet, again points been this that about

our pretty PPP they an loans They understandable But our sizable quarter this million. a were right the at and million. million. warehouse is of shows at gross decrease million. We totaled XX were forgiveness. loans, which our XX.X quarter PPP warehouse another linked increase then our looking of lines in at lending loans, X.XX billion. And loans, lending, had down net Looking They were down XX down in by XX of because

loan year-to-date PPP that's factors of And is warehouse annualized million. year net Our for via full the growth these of two XX.X X.X%. and lending

they So We we wild the that's card two of QX. QX QX. pretty think end elevated products. right more bit payoffs, I in the of than million. did again, had payoff were a that the We XX loans some right here also in is funded little our detail or in loan core in totaled big significant QX at fund at loan But loans

good warehouse had that, we So ex PPP lending. pretty still and even with growth, loan

QX remained Our strong. pipeline

So we're a terms the at think we'll I able for the book from wild or refinance that come be not going that to us. Again, would attractive yields just that optimistic either be forward. a payoffs are or new card from sale loans

just in here little this of a more speak to going Ty's bit. think I

Looking deposit and million having another the XXX at that's XX increase, year-to-date. deposit showed increased side, linked million quarter

know nice for some of So PPP the stimulus the But our increase government doubt. far. is funding adding a programs, to high so no to annualized consumer increases. that's pattern. customers liquidity have back XXXX the due deposit XX% Again, even deposits about impact, new and shown this savings increase we We're

XXXX. see how second the half we'll of that in plays So out

XX% total million are deposits bearing deposits. million XX They non-interest Our of currently year-to-date. linked XXX quarter increased our and

and not shareholders’ Then XX.X equity, at quarter in X.X two we million actually Again, did for quarter, being $X.XX the non-interest our in paid of looking of back quarters deposits. So a and this our XXXX. year-to-date. stock any each million we that's growth XX% grew year-to-date dividend it loan bearing linked buy

pleased back, earnings per historic we're reflecting 'XX. Looking earnings Ty to, of see alluded continuing trailing our share with are quarters, if as We've net so look even four half our you earnings statement, performance highs, at XX-month and in we of an for income had at really back and the very $X.XX. year-to-date. the And that strong quarter the

issued at adjusted mind in do periods as our period. been As if keep full dividend we of look the year have for stock each was this all in net we prior trends, in that QX XX% effect earnings

So been those have adjusted accordingly.

last or we in have quarters, have earnings taxes effects. and tables guess quarter we $X.XX for earnings, now this Our provided quarter, before the and income $X.XX and credit linked provisions releases of per compared share. net net for respectively. as or I of were ROE that highlight releases an share to which for these That's again, our XX.XX%, million PPP QX five before ROA X.XX% million. additional per That's earnings And XX.X and XX.X QX annualized before core is

ex out we So PPP.

in have the table this So release, do net earnings. core we in our

here. error information a Let only. in parenthetical give its tables. and This guess me I There an is non-GAAP these supplemental note you is

been loans we cost when million core it's think correct. is numbers. QX, and the that reverse Again, give again, to in net is and supplemental a immaterial. is is affect Those this analysis, affect our trend does full show to correct. out Again, to going statement, really in not is on we're I of only to million. to year-to-date of it the because everyone, disclosure. restate have reverse need information our QX in quarters to error going year-to-date But This But think issue spread but our -- it balance earnings an and be just we revision all in you X.X sheet. to disclosure QX But in X.X put should two X-K I on income non-GAAP, full does disclosure PPP full book we're years. these going two really not

of that. about already our to coming be will that we've So out analysts and talked most

on, guess But some guess our these not continuing loans headwinds there outpaced QX. have yield a and have is positive mainly that, loans in excess I booked X.XX% notes yield as new loans dollar we of said I QX. new even or And consistent the driven news we still in in to is in better, X.XX% It’s where in on I as loan But booked margin And just I our did was that liquidity the notice QX QX certainly mentioned by our very compares drop. Okay. ex amount PPP good accounts. quarter-to-quarter. you'll and table

quarter, million. did have the about XX increase might also You noticed investment our securities during

back at deposit some forward include bearing in but foresee compares And not treasuries QX. really, looking they XX really And significant adding the risk. on the And buying in with of our mortgage basis don't then side liquidity. QX We’re points non-interest that basis even which deposits, excess duration cost that X during points deposits, basis XX decreased to the points. to of going quarter

then about XX points. So year there's And were we point basis basis ago, a X drop.

give of just we've but think for quite we deposits have those I you'll some a So have in as our little we forward. margin, more totaling on reverse minute. Most dropped been notice more to of them consistent. then just a look going a points here now, repriced a bit. decrease, bit few detail did basis very be be there pretty After Shalene it's And room will $X allowance our that be will million.

mortgage linked our and on in did in gain a at was by decline our have an loans we Looking decrease driven of sale income, non-interest slight fee quarter. mainly mortgage income. That XX%

up to Our in this fee for also income interchange was our volume contract our due X.X increase. quarter XXX,XXX. MasterCard And That's debit card you'll annual million. totaling bonus see came

payable quarter. two-thirds employee expense that's of compensation to our and expenses, that did about earnings. payables, X.X% XXX,XXX more That’s earnings, to And QX. accrued in during than we We linked continued related did our improvement in increased About costs. QX our is Looking XXX,XXX. more QX at accrue in in bonus we due our non-interest in bonus

increase. well So of all that accounts for pretty almost that

the on and ex million PPP So I at looking it's rate up XX.XX%, Then And about XX.X%. efficiency slightly then XX linked are was forward range, Both stated the think QX. to as achievable. ratio should you XX to from our to that quarter. million our it, be pretty looking expenses be going out in is if run comparable

it As a I'll to Shalene. recap turn of over statement, the balance and sheet income

Shalene Jacobson

their Thank I'm COVID-XX, PPP to cover deferrals Cappy. and all of branches. response in open, and all you, to are offices With going quarter. employees COVID-XX back for are respect locations of our our the

COVID and we'll virus. nation. mandates, to take are certainly continuing virus variants that and to be what measures delta increases of reduce out However, as well of try Texas monitor increase to and developments everyone hospitalizations we variants as really the need keep variant unfortunately in the If or new to the are other distancing the there and needs in the across social and mask additional safe spread to done do we the

hospitality June But XX those of are about to quarter, principal million loans hotel XXXX. are that are to third expected remaining XXth on are there the return As remain contractual payments interest deferrals deferrals. to seven totaling of and this no interest-only that , COVID. There of primarily all related quarter and seven

and quarter payments. we those levels a improving really All We with for those loans additional expect occupancy we well, loans to seem issues any also originated of forgiveness have contractual quite under few be under to loan and don't good PPPX. PPPX doing are returning a did

million which we first can were year forgiving had June our XXXX that XXX about And forgiven, million we of finally in loans as SBI about is of see originated some XXth, you XX%. SBA second originated the XXX for As during quarter. largest here, XXX We to during that million of round really see that loans. excited last the PPPX, we've of

first in we the of quarter also second during So participated this PPPX. year, and

them forgiveness We Some X,XXX but but applications forgiveness We're of developments from under kind on little to we those that, XXX We're the not taking PPPX. on taking a be people further able PPPX about those. originated to start SBA’s and to million soon. on technically it's hope guidance loans call of about still I it borrowers. applications monitoring yet X, over think

So over to about to our talk now and I will turn Ty it portfolio growth plans. loan

Ty Abston

Shalene. Thanks,

defend bank that have right at us portfolio kind XX% So and strong net We interest helped quality still strong. has of which our asset of the floors, rate margin. in loan remains portfolio loan remains

brought we Cappy X.X% the in quarter. loans growth As had mentioned, for up

going we're that's stay with guess a higher of pretty single kind of our to seeing portfolio say digit digit, I mid-single double maybe digit, mid-single of continue because kind goal not as through annualized. a duration. growth short So has I'm and that to digit

we But is of anticipating pipeline So of across the some saw they in also we a our are But our paydowns strong to really our sign always portfolio. really -- lot it happen footprint and pipeline paydowns, when healthy has happened. weren't QX we which a strong. is that is

we're We to bring the are credits and be really look and to very that, where bank, But credit that footprint. to credit and continue so in able selective been. we're to good with the opportunities into credits hold quality to they've and continue going our across standards to we even strong at willing find our

So Austin we're in up locations Georgetown have We additional QX. open in are that. two do by that Lakeway MSA encouraged and going to

We have there. teams strong lending

as we're So in the MSA continued about well. optimistic growth pretty our Austin

low. As far as Non-accruals again, really are our assets are quality, low. asset non-performing

a charge-offs, we had and loans half in actually which we excess we I related actually XX%, three what ago As them experienced well we acquired that think almost QX, XX% reserved you some losses. two, years with Bank of in Westbound to saw, two had were

but be for some profile we're always what in is that have really looking of we but it again, been to much as to And, and million year, XX opportunities as for remains can, to we did to credit go is it comfortable maintain We It's we're of a COVID book, grow right and release to with with just hold nil. to to a as -- at the negative where quality, asset step strong. the growth, models. our revision we're the net put far going have as for a asset overall, and our at. are going the continue not in way company we on you'll remember, continue little have still that's we're and to do sense. our loan have talk, we of risk look the Shalene’s been intention CECL acquired quarter. our with which did charge-offs with going if also as we're loans, But We integrity But with to the So a along to cycle releases. focus primary pretty had And those quality company. makes we our last

in We to goal CECL? 'XX. have did we to conservative going and a but pretty with as some small second Shalene, more much would so hold have to little And can that we provision as the more speak half, may be the a is and intention release. try on into detail you

Shalene Jacobson

yes. Thank Ty. Sure, you,

So everything we make Q But factors, is several our provision factor, factors that adjustments quarter about, it. and standard when created all to reverse XX we specific COVID. has of reduction going that benchmarks our basically, it Q what basis in our primarily was about during built to COVID to $X our points But on prior of talked was of and resulting back got macroeconomic March in our rather really in nine in baselines million April model and than some some standard the COVID, from Texas into started factors bad calls. added we've April key the that which economy I've did XXXX and try our to really based reserves CECL were March related in specifically XXXX, due in

March positive still unwinding economy it's the standard is had that making and showing factor our been we starting baseline in that specific improvement, regular to XXXX some some trends as COVID factors. show that we've cautiously from to while April and some really of So adjustments then key back Texas and

specific during we these of second points. XX and to economy really by going any and we're half the Q unwind COVID that, the reduced during the about on. basis of anticipating So effects not the continues variants we're continuing COVID And that assuming to other year to quarter, that issues improve factor major see negative able

or have a expectation end our of factors throughout we're sure, around approximately the million. improve X% modeled factors If X% decline X So continues growth specific but of we'll make the year. through unwind economy COVID But the big out not the those to that and not assuming worse. we other COVID a that's still again, that's CECL we've unknown, year, slowly to reverse of and not provision that meets and do

the back Q&A. credit will for of loans of So excluding quarter, end for of to second loans, a Nona X.XX%. I as now as the total turn at allowance losses X.XX%. was And percentage it over PPP our some it's

Operator

time It's Shalene. you, Thank session. for our Q&A

will should to be today Rose from you question your unmute and panel. to first Michael, from Our Raymond Michael able line be the James. speak

Michael Rose

Can you hear me?

Ty Abston

Yes, we can. Hi, Michael.

Michael Rose

guys? Hi. taking my Thanks How are for you question.

couple little with I hired Dallas going can the the to just and maybe Just a lender a general from of wanted growth? coming coming there it bit. market. the market little around to and hires guys it and and handle pipeline the pipeline us other on into more the know update generally How of I continues like like how grow? the some around what's just just guys dig much an lenders. last business to today, because and you on some of of like is seems is if of a Thanks. was did some and pipeline there down have visit in just from give those much But there's month other banks lot you markets a to it seem looks better it get activity what you

Ty Abston

after seeing pipeline the Yes, as The pipeline history we're in and like It's has dollars, would East growing. has then I of probably XX% market. a I've But coming being It's it's as we've strength -- Michael, And COVID. Austin far our East strong really and And before, XX% primarily Texas the been really. overall probably activity been region. Houston. that's some say Dallas, Houston, Texas so the DFW in stronger had mentioned also, as region, XX% encouraging. real then Austin some had from in balance

new of business the of producers As a just ongoing of The normal that is far third kind development and on last efforts. is XX rest our that, breakdown as I would probably say months. we brought the

Michael Rose

for talk you give commentary stabilize maybe update Should great. just you imply fees take can and that give around with Thanks. guys the it expand enough securities here of there's the kind guys I even the the know to And up. if the help purchasing the to place the more NII? the flattening grow maybe an PPP this curve hold one press us hopefully just ability we in you here. to assets that Okay, plan and margin a if on wanted actually of the potentially that ex that to margin? maintain is about quarter. to follow you and core as in And remaining and percentage release think I that part growing us margin of securities grew yield

Ty Abston

Yes. Go ahead, Cappy.

Cappy Payne

that. think headwinds. the the X.XX%. new were that at do I loan have steady. which book we we than did said right little don’t say encouraged I a total loans what bit Well, pretty continue to less is, still They're booked We was were

I think in drop future. But nothing and but the just our I here don't don't we -- I from can headwinds. net interest see few near could we'll basis think margin I points, us still it have growing a nothing significant. think I defend we --

Ty Abston

think but not, are million tomorrow say it's the they probably not where With we're that's inflation. of margin our bit, of me funds. kind we're We yields improve that's see have we our not and seeing us our with lot to portfolio, at makes pretty at with think with short-term just That's just we we think people, to and can see sense it long going floors conservative we make -- on We add would growing. securities don't $XXX term what We move long rates I like We'll in we it income. real bond remain looking going either, how securities. can whether that Michael. for or the a margin, we let that the could willing term stay a until bet the the But start defend the but too same growing move in time, just to don't that. of it we little dollars not with we're of into think to Yes, side kind cost other cash. is was defend significant

doing been buy we're the we bond to grow tranches along we've see strength not what but starting yields the So quarter. portfolio in if with go is it market the be in bond and likely, there's each each will significant. quarter We’ll

So that our if think is we can rates a start in think overall moving our just for costing again, don't it But NIM. us NIM. rates going term, sense expand longer We to are we makes we think favorable banks. until today. But defend direction it's

Michael Rose

seems So a it's and with grow dollars place loan like little the of couple think which to in that than next bit growth, mid-single quarters? digits, you NII the going expected higher with actually can be over you

Ty Abston

to the buying I'm how being sitting on no do. on would Michael. interest overall just be I'm and are, the versus securities. conservative just I with pleased where with being we much fact cautious we're liquidity that going say we're if we that, rate environment

next that point. when XX up rates level forward positioned to well last defend to our expand And our and to NIM. so to is the start be And some normalized moving the obviously year remains be then or so at goal going months able

Michael Rose

taking questions. for Okay. my Thanks

Ty Abston

Michael. Sure,

Cappy Payne

Thanks, Michael.

Operator

will next Our Olney with Matt be from Stephens. call

Matt Olney

Good guys. morning. Hi,

Ty Abston

Hi, Matt.

Matt Olney

to when discussions M&A M&A we remind your Texas. I is get Guaranty, data engaged the strategic about you M&A the for And the is that with other And the overall. for hearing us bank? M&A. And on want points with banks. then chatter how about priorities of Texas take Love chatter think just improving M&A bank to in then ask keep the

Ty Abston

Ty. is this Matt,

makes been. we're smaller look are But to say that it on but has company. we strategic XXX and looking years. And really within in our long with where the pretty of want be would We've without So us. modeling of a heard our active it's like if kind of that four markets we again, than going And we a in like has we're the sense a next regions. some deal of post that to probably probably be to We a a it's conversation, sense, how kind that. would of lot is much company for going be makes then the It We our value to for approach an careful time. we're economics state in XXX as intrinsic it's four regions below deal that we one just a years. cultural any said, our diluted lot our think are regions. conversations a at fits additional M&A hits that finished those see But deal. that can stay, makes I our transaction. talk, of we the forward There company pretty interested. selective larger in transaction I strategy, not fit not to base hearing of us, we kind in strategic a going approach that of plan planning, with point it without that would that say I million conversations. as our in If we swinging very we disciplined for overly throughout without our at how a going talk do million. fences, did the three We're I've we're a profile we sense be any X some very, had bank billion to we're and updating good next a bank actual would develops including M&A, We'll have create we for this that, into are to the be doubt, markets COVID four company, three of be the to lot just for

risk, other is on test accretive or strategic And with be that making, it that. any of we're have be has be And the that it M&A decisions plan. everything, execution so to to to we our kind comfortable litmus

to seeing we're then then confidently, if it. are we going get we can we're that to accretive that execute disciplined on accretive think that can't with. approach pretty be it's comfortable anything we how plan, to But the we So plan on that's we moving forward

interested worked region are work, just real East Like some lot mentioned, that in more the a on strength we seeing pre-COVID. Texas there. rural we the So within There's and I've state of some the relocations we're around strength more of some of that's markets. going to the and to country even real remote markets those with added

So in region Texas we're the looking well. metro as region at East opportunities the well as as

Matt Olney

one, That's And two. then perfect, you're over switching gears fees it fees. over applications round you. more I sounds PPP $X round of two not you to round million think for the And unrecognized I taking heard there's not and be to many yet but yet forgiveness Okay. Thank like recognized for Ty. say

those fees? you the I thinking are is question remaining of how recognizing guess about So guys pace the

Cappy Payne

Well, that Matt. up, I'll pick

have We not opened up. that

I open think pretty to going up quick. it we're

I the really But cranked on got Round None going, it's pretty SBA. up mind projected. of all it once have we think obviously just one to two-thirds it the We round probably year, half all go than have one. projected pace the but don't in we faster budget. the hit pace second of the of quickly. will the it it in our of in -- depends

X to still two to round we close X.X one million. and million round got in So

the that of second this half some in get we'll So of year.

Matt Olney

Thank great. Okay, guys. you,

Operator

Okay.

from be next KBW. be Our Brady, unmute. to able with you call Brady should Gailey will

Brady Gailey

Hi. Thanks. Good guys. morning,

Ty Abston

Brady. morning, Good

Brady Gailey

-- guys XXXX. in with in on in pullback, the even too. active and so have bank years now. is buyback? the cheaper guys stock just of you you updated are stocks at how there been thoughts So XXXX Maybe but think you are little fairly share buyback And about in last having more the stock a the couple The all

Ty Abston

just our below continue We're numbers be on far again, And run on we next as stock as what attractive three we and Brady. current far we're of out company. going to of of it. that, intrinsic just, XX the that as we're value starting kind what as kind see starts to certainly, the getting of years, valuation modeling Where actually is to create optimistic value pretty

unfunded. maintain in company a of a we credit that's So holding line

that the XX so I think capital really see so repurchased sense. XX valuations take the valuation And were can the much at rather it's to we currently opportunities, another and XXXX buy as we we in Very buy advantage and or will, Guaranty similar million Guaranty, million buyback opportunities excess we low. when we'd makes bank. if to have see of than we

aggressively So we'll doing certainly be in it. there

Brady Gailey

your has good more on it -- hires It's but great. bit Okay, you color to what plans little from the pace know gave the here? just going additional on hear forward. I of hiring, are hiring Maybe on positive tone loan of growth a slowed, is consistent, like

Ty Abston

lot We opening. the prepared that the downtime, in Brady. kind for did kind XXXX of of a slowed, of probably getting It's during

And footprint, we lenders months. so our on-boarded few the to a last quite XX

maybe, would point. be growth my pace on -- of a this it's slower credit far other So as lenders to here, to net a side as be at personnel we're going not but from going we replacing lot don't have the estimate just

Brady Gailey

Thanks, guys. great. right, All Okay.

Ty Abston

Thank you, Brady.

Operator

with Our next will Brad Sandler. question be from Piper Milsaps

Brad Milsaps

Hi. Good coming morning, guys. Am I through?

Ty Abston

Brad. Yes, Hi, Brad.

Brad Milsaps

Hi.

You've of the you near the curious of Was the of that $XX that came most mentioned everything. end on just payoffs million addressed kind quarter.

those. you You weren't anticipating kind said of

might construction they curious were of got or termed those secondary and what just be some maybe undercutting those just terms, or other something market in behind out loans, rate curious, paydowns? a or coming these kind payoffs result your are the Just banks of in of as else? Just

Ty Abston

actually was out hear majority the okay? one larger So, that of Brad, think into me I you -- would moved the can a transaction

Brad Milsaps

Yes.

Ty Abston

Okay.

on kind non-recourse $XXX was I of then bank pieces. of million customer that block the with that And center moved financing those as upfront. much some a was to the non-recourse and moves into around we're money financing to the money of for think into that him a consolidating REIT ones interim loan last That he's And week out a in center doing QX smaller the banks. go design one our larger basis. he all into rolling is

And already part that backfield thought so was in request of to come QX. another as program. He's that we going actually

on So that to structure, was one doing that aggressive pretty some some clients lenders But actually from seeing things things. If them. recommending we're we're then there pricing either we'll them. of we're or non-recourse, business they're are still situation direct going And and been they're to are competitors. do take them. recommending credits customer It are those recourse that out and that, hasn't frankly those longer some or understand clients with where opportunities and take losing like non-bank term we're our full there rate opportunities loans, still a lower

Brad Milsaps

Great. appreciate today. all I color Got it. the helpful. That's

Ty Abston

Sure.

Cappy Payne

Thanks, Brad.

Operator

That call concludes remind on I recording the there session be of everyone to gnty.com. you want the attending for today a available page X at Investor appreciate will today. Q&A Relations today. our by We PM

Guaranty Bancshares (GNTY) 19 Jul 212021 Q2 Earnings call transcript