GNTY - Earnings call 3 2023 | Guaranty Bancshares, Inc.

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Operator

Good morning, and welcome to Guaranty Bancshares' Third Quarter 2023 Earnings Call. My name is Nona Branch, and I will be your operator for today's call. I would like to remind everyone this call is being recorded. [Operator Instructions] Our host for today's call will be Ty Abston, Chairman and Chief Executive Officer of the company; Cappy Payne, Senior Executive Vice President and Chief Financial Officer of the company; Shalene Jacobson, Executive Vice President and Chief Financial Officer of the bank. To begin our call, I will now turn it over to our CEO, Ty Abston.

Tyson Abston

Thank you, Nona. again, our and call. quarter everyone, morning, welcome third to earnings Good detail. did this quarter over of release a in that lot We press went morning issue kind of a our and We it Q&A Shalene to do up a color of to and more afterwards. the little presentation then our have that operations give are to and go a going through quarter kind on Cappy we'll open Cappy?

Clifton Payne

here and and a take I All right. the look the details. income balance Ty. statement the Thank through quick sheet as at talk We'll you,

Looking at at assets total We for pretty the the the balance increase sheet, total in quarter. $X.X consistent of assets ended $XX linked did quarter small quarter remained show million. a billion. That the from

That's portfolio. decrease our the we million the treasuries For and reflected in bought, down is It's year. during X.X%. short-term $XX That called or the the assets We $XXX year XXXX, beginning bond mainly that maturities about year. million are about in $XXX since down some of $XX million matured had million. that about

with construction they're I about million. And loans, I million. course, looking the don't in did year-to-date tightened our The million is bigger assets. development our decrease we've of QX. billion of that credit mentioned some. of obviously the rates, release. is thought terms has end that were most just that $XX it's in We $X.X for in banks as addressed broad our quarter, the bucket. bulk loan So decrease softened that bulk They at have. in regard, underwriting, and year-to-date, demand They $XX the higher And the so down earnings at about of $XX in know what

FYI. Just

and that's are million $XX liability of the -- million billion. $X.X increased Deposits And the $XX decrease it's year. a beginning about X% since there side, to on

are sitting here the last will little deposits our deposits. total still, at in a deposits Shalene for into detail just XX minute. a XX% actually, give had deposits -- on we've our in interest-bearing deposits, the of DDA As months, a continual shift more

ended X million. average remains Our about equity TCE, X.XX%, We of points. down a assets, equity ratio tangible strong. quarter X.X% capital basis That's common at and of the it's $XXX.X

did looking increase did If a capital which a during and we is year-to-date, our that's -- as million. concerned, of AOCI we quarter. pay quarter. the little our repurchased then bonds, repurchased at X.X% XXX,XXX change outstanding. dividend million. was capital, somewhat back the far of our as bought in $X.X quarter shares you're million company that our of stock That's means and loss unrealized We during decrease the $X of -- on our earnings That shares by offset it an And bit million. $X.X had offset by XX,XXX during And of shares, $X.X about is

is at out a again, the year, is, year. looking and price we pretty over a up last pay dividend a X% dividend that which the for X%, yield at to Again, $X.XX That's $X.XX X.XX%. is And share increase. today's from consistent annualizes

turning income then So to statement. the

That's earnings quarter. There really extraordinary were $X.XX in million. the no QX net Our were $X.X per items share.

our be would this earnings. So core

of net they're and that down of $X.X lower lower the this of earnings QX interest noninterest QX. you -- income be That's core of -- by you noninterest it when going to compare quarter, mainly million the driven income income about So $XXX,XXX if $X.X to QX, to core about lower compare million. by

earnings CDs, the of has the a it accounts projections $XX increase release, balance a take all million. due because And major QX of that deposit and interest-bearing for looking out would it quarter, had consensus to money money, DDA time pretty our down deposit in increased accounts the an $XX same into and thought On interest-bearing averages noninterest-bearing decrease our and Almost from compared then a yield a at is obviously there. our it's table, little decreased -- million, higher what noninterest-bearing I -- checking to average bit average QX, prior or table cost. which from variance -- and that's increase in remain the that components margin of is our market balance cost in our nonmaturing steady. look obviously So the

QX market both for in were fund decrease our money which million affected the is in of balance quarter, DDA So accounts public the for and part money activity. the typical by $XX

little of at quarter. looking deposit the And was came more activity, we deposit yield in course, and time deposits X.XX% to to of time increase on that that increase the of mentioned, compared than than -- the rates. projected, I affected deposit category. had that's that again, those A accounts But related obviously what all interest-bearing for almost that's what in shift that X.X% Now but for by fee the cost quarter. linked back higher -- that interest-bearing

the of point the you linked quarter, the total XX was deposits, look from our at quarter, DDA which it X.XX%. basis for If is was balances, including cost $X.XX when million it

being the is costing Another book other in rates on When you'll one, offset detail, the too. note liabilities and rising the one earnings these you see increase somewhat at assets loan by release. our look in

basis but looking points other basis assets, at linked XX at and from looking the But it loan points yield, XX year-over-year. quarter earning increased

life in loan a our short relatively have We portfolio. average

the and higher loans those quarterly category in increase we rates for coming So coming that interest have we the up to the quarters. speed reprice in to quarters to as expect in see longer, opportunity that continue stay

to I margin X.XX%. points income. it basis And it net last equates QX, interest is about So from XX being quarter, was quarter, our mentioned all noninterest decreased our that this briefly in X.XX%.

on the and to Our activity. of about quarter's, about almost market volume noninterest gain sale is income. income both lower from linked That's the core that in -- all noninterest decreased to SBA X%. That's core $XXX,XXX loans, of due related secondary

earnings components ratio efficiency the you. flat ratio for increased for or on efficiency to very They're XX.X% are and our the release Expenses the made made quarter. for that quarter, all our increase -- detailed those

it over to a liquidity. about turn and few portfolio comments has capital and I'll Shalene, she and So loan

Shalene Jacobson

you, Cappy. Thank Yes.

As in quarter, a development standards, borrower down moving or loans permanent slowed a where our construction of about are mentioned, tightened off. financing is as have lower interest demand this we paying Cappy result while for in projects primarily underwriting on and rates. and million books down it that portfolio, Overall, as $XX.X has been our to they're higher

of about loans originate new million However, the an X.XX%. quarter in we during with did average $XX rate

are yields So strong. loan new

$XXX,XXX, continue low in and at compared had remained levels total the net of historically charge-off assets remain loans ratio And for the we nonperforming to average quarter. X.XX% at low also quarter prior assets charge-offs Our to to a of X.XX% X.XX%. at

but areas Commercial real office those XX.X% $XXX,XXX. now. portfolio, areas X.X% concentration a loan hot estate but CRE represents that total a in We've in we our manage CRE and diverse on well. and of very loan XX.X%, portfolio. about is office-related of is topic, balance those that significant And concerns really we any loans right our CRE, have the average to office-related continue be got don't

office office tech mom-and-pop development. instead larger buildings So it's of primarily the commercial

an the loans have of in million. increase $XX.X during quarter substandard We did

Texas this has of at that portfolio. However, to quality increase The million total the continue areas. expect both balance had that Both X overall borrowers X losses of no low total loans have through -- LTVs. currently represent and $X.X continue portfolio to challenges and one metrics or balance results some compared still to have X.X% They loans, of with coming primarily And some here benefit other a We geographic loans as but the those a our the substandard our remain only months, credit we of work time, strong. in we are loan does we expect that really a $XX.X other good minimal credits. Overall, from from tailwinds the the million. the balance the will to potential of believe do we in performing.

a Our during for of ACL not quarter the coverage X.XX% quarter. losses credit third have provision We total loans. is end did

Our us need portfolio made our decrease quarters relevant And adjustments that not model in quarter. are additional qualitative still provisions this allowed loan CECL we've previous in within factor has to today. our the

On to deposits.

deposits than mentioned, are deposit risk, core overall during quarter the more the also month historically an ended and and respect of uninsured every low. we very has stable $XX,XXX. With grew with with Cappy we deposit base. balance quarter a XX,XXX only deposit to relatively At average quarter, million. Guaranty granular our And account deposits increase an As of end, had accounts $XX.X

and were total public accounts, deposits Excluding quarter end. at guarantee of funds deposits uninsured XX% owned

increase and continues ratio decrease. loan-to-deposit improve to Our loan deposit balances balances as

XXXX. the and in was compared the XX.X% the -- in second quarter quarter same in XX.X% XX.X% I'm ratio to third in XX Our sorry, quarter

down still the mentioned noninterest-bearing represent of quarter, deposits. prior from Although Cappy deposits total XX%

to towards rates third the that of to more large again quarter, more increases we expect continue high they ratio is down far average, this deposit were pre-pandemic mid- but as anticipate deposit as high-XXs. in remainder in to We the And year. don't the which any in our for move betas, historical the

higher accounts. of the reprice to to move will as renew and customers noninterest-bearing to mature will and deposits yielding higher Some interest-bearing rate into CDs from continue some CDs, continue and

the fourth to lower really deposit in expect we However, betas do be much quarter.

of yields cash liquidity XX%, flows quarter And purchased the and by Liquidity mature $XX securities small ratio to used at we down also and during is as some quarter the good. from well. about pay amounts and the a higher several ended we our during loans with million We securities advances bank home quarter. mortgage-backed of

Bank Reserve and credit. have billion about lines funds We Home Federal and bank $X.X Federal of lines through Fed Loan correspondent contingent other programs of either available liquidity advances,

AOCI balance Our million, $XX.X total of and included our the at which reasonable $XX.X is losses investment AFS on within to unrealized on related securities our million net securities sheet. remains

also is strong. Capital

and an shares $XX.XX. the quarter As our in XX,XXX shareholders. of excess stock We average add of value shares intrinsic to price Cappy some used repurchase mentioned, repurchased Guaranty's capital our at in third to we

now, ratio will at our the budgets X.X%. doing, Even if portfolio, prepared fair our anticipate for it's X.X%. total do remain Q&A. the equity to we concludes over investment That so with or liquidate entire to then had pretty average to Nona finally, And back assets will of Right turn expect respect it remarks, good we in to the decline certainly which mentioned securities. to I don't value

Operator

question from It's Tim Q&A James. you, session, be of Thank will Raymond Shalene. with our our time first Mitchell today

Tim Mitchell

-- close this the on appreciate level. X% it's there getting pretty I quarter. color Obviously, that to

I been above kind think about getting quarter, You've how the Bancshares things where through about here? could you developed of talking this you guess talk cycle. from staying to goes

Clifton Payne

I'll Tim. take that,

we'll out X%. right stay projected that has at modeling Our

will mix I of affect think deposits. what anything than the is that the more

time the well X%. modeling last in As came that keep we near quarter. it We've says deposits can got I all pretty said, basically the increase that the

We we were increase QX that confident for that in what going QX and really down rates did in the in slow QX pace is matter. of to from

So control but deposit we can somewhat, so we don't much control the the mix. is rate

near But at how below we see maybe, our we'll has little the that certainly So just right X%, us a bit, whether modeling but not lays out. it much. go

Tim Mitchell

little if Awesome. loan on which the Loan guess for bit. of growth for you've of kind you of XXXX quarter, And bit this moving kind I I -- comfortable was let true forward next think And year? with about little that the guess about previously, a a with what shrink do been going elevated sheet talking being front. the growth remain consistent we down does loan how rest into longer? growth then stay the balance

Tyson Abston

it's Tim, Ty.

think rates. single it low higher be at I is say best, digit with 'XX going be would muted. loan in growth would I to just

to economic would slower, going activity expect. be as think I is all we

starting and year. kind look of kind of to to put how for how 'XX, that's modeling of we're but together So budget for we're going kind that's 'XX next

Tim Mitchell

lastly just me. activity, could moving back think repurchase second just for step you discuss the curious muted then activity then was took I and if Buybacks this quarter a the quarter And Awesome. behind forward? about how you more from levels. rationale

Tyson Abston

it certainly during we just capital buy a opportunities priority stronger And last did the we as valuation. hits price mean, lower valuations, us had we we the see year. will. the quarter back -- on the this not when than much quarters stock said But at like because for was in stock in buy it's the previous I as back metrics to it been past,

Operator

Sandler. from question next with is Our today Graham Piper Dick

Graham Dick

I quickly -- to circle things. just I and just back So on a wanted get to kind NIM just more some couple of color the of

like the -- So rate the they're get it I points confirmation -- loan you a quarters. XX that. sustainable going over of sounds wanted to basis And XX just XX, guys forward. think yields, last is up XX X over that

I lot million so is of basis of like of next you certainly point to ton think going just XX-plus guess, originations, that you I repricing kind the renewals quarters? ] the mean of mean, here? churn. had does that sustainable a And mean, got you so, demand couple quarter, you and Do bottom, close in $XX if the improvement [ on is, I said, a over pretty if that of

Tyson Abston

Ty. it's Graham,

So yes, I we reality were first think half the that the year, raising mean, is is of sustainable. the rates we weekly.

the raised haven't And on catch-up been playing weeks. velocity so just rates in sheet. of And few increase, last the we repricing the we've balance

side to asset a raise level. of stay duration But balance If loan we then rates short from portfolio. we to sheet have and do repricing fast. having we're pretty the we're here, to as -- rates pretty rates the continue have not rates, And -- level we're stay anticipating

rate, at pretty we forward, NIM quickly. will up which and will consistent that consistent So is on pretty think going we catch be our

being who margin do we think for knows related have lays sure headwinds less and projecting we to front because net that of But We're going our us. in forward. do interest what conservative of not

Graham Dick

on Okay. time funding those the maybe kind also just helpful. the to the appetite your this quarter? deposit were into guess. ratio of strategy be don't you'd over That's a going of you need muted, new if what and about specifically guys Obviously, you cost I manage just more And a -- are that growth might And what how forward maybe can to for how loan-to-deposit is and the loan piece, you bunch bunch play deposits, that of like several deposits talk then is next wondering your going about I'm here. thinking how time time months. funding from it

Tyson Abston

now rates the has I as of XX% X%, deposit far do maybe. accounts mix, that about, sense deposits, Yes. of X%, talked I believe, are We're with middle which a as is in cost Shalene moving time time mean, road as and right our of the yield marginal deposits because our on our out lot that And now. money that transaction fact Cappy your into makes and customers time to the around

that continuing of see migration So some slowed, to that but we're seeing some our and that, of we're definitely has deposits. of

bogey comfortable ratio will XXs our below always as far As has during loan-to-deposit the as is where far goal the of guess that. we're max, XX% be been My and around as mid we in year. the

our banking, we model, and We X ago, ago years of as deposits. today. we're what retail continue, to doing focus That's years core what X part on did

turn which ratio us as the we're economy with then we year, going start core the as So probably and deposits aggressively to throughout lending the side as around. our to build of turns loan more things continue more funding muted, deposit loan lower gives it to we're is because comfortable plenty

portfolio a I -- time loan is the to duration. good increments, smaller mean, now sets duration add each adding but in some we and to are think month We to the bond

$X So little cash to of we're taking bond million million $X or loan. a all duration flow that portfolio your the to and really have so adding

Graham Dick

that lastly the helpful. on guys are be the Okay. in look It's a I said Or understand by over like guess, pretty talking That's owns I for How pull would of on And guess cadence drawdown what's deposit were at from just Texas you the that? mean, mid- are the strong long until I noninterest-bearing end? the the XX% to -- growth your high what how levels. know of the economy term. I -- what's XXs. really beginning XX% XXXX? about, your be here? you modeling could it next you NIM Like today. forward we thinking Shalene here of

Tyson Abston

we're modeling. I think XX%, Graham, is what really

I XXs possibly, we're think modeling. is it do could but what high to XX%

Graham Dick

it. -- Got Great. Okay. me all from all That's today. that's

Operator

you with Our unmute? Brady, next KBW. Brady will Gailey from can be question

Brady Gailey

quarters, I quarter like in about that. mark. this But seen X know $XX around think that looks to as million about we've still longer you Is looks being there's first term, we've $XX expenses in do X about talked to like past, so for only already the way It X.X%. all Maybe million left. year it better talk right being that then in we than you head could around little it XQ. expenses I about talked just the think a expenses into XXXX? And the

Tyson Abston

little asset attention still million to pay million million yield right and bit we're still to million $X.X $X.X [ million and is think we range, over, within. ] that ], That's a something I sign marker but going to [ that that's that we number, $XX range, want be of maybe our we the pay that's to $XX our to stay in level. $XX at attention but that

Brady Gailey

still quarter do how And a head we still a had line you -- credit? provision into provision, next low of I level. Okay. then as a another year is But about CRE pretty couple X that of I here. know go in you know credit relatively it's to but loans that think substandard, clean

how credit So you into do the next think about year? and provision

Tyson Abston

put point, mean any to We're at concerns don't 'XX. Brady, project some of not lot projecting going will but Ty. clarity some credit. the moderate -- out provision this to that on for things going which is this have is just growth. a of conservative not I lack we're level see to starting work net for us We for 'XX, we of we're

it's going to reserves at up can exact we than project the downturn be if where But to going but addition we'll have -- an be of that made anticipated one. see any -- we we kind any we're enough portfolio. don't more we comfortable cover So number, point, to additional be this shore would to just it's

Brady Gailey

for finally the the year, XQ, is bit. of if then grew little which were great X%, down quarter But growth annualized linked came deposits look you core from looks It me, deposits. like came And right. that lot first in at of you a a see. All half deposits to

about talk just growth maybe forward? So going deposit you're about thinking how

Tyson Abston

likely again, officer big it's retail that corporately are core coming model. Well, is And -- because to name year a big efforts a and I deposits. our competency and of a retail that to mean, core deposit part very the just banking we and that's in in our chief model our part of refocus area going

going just because a would low-single-digit are I pressure bank, look the to. that to deposits mean, of we're deposit But at buying big growth franchise -- there. We're -- continue say plan a in out I how project that's we we probably part of -- and pressures to we

Operator

Our is next Matt from question Stephens. Olney with

Matt Olney

Thanks.

to that you see you flatten move that if year any recapture a said color forward term. guess margin back near But pause of you I the how just a you here, you dynamics the into I outlook, this next given couple and think on can in X% from assuming we think some pressure quarters Going margin there's of into from going do Fed out? those performing that Is to shorter repricing a experienced year? XXXX? portfolio, Or loan around

Tyson Abston

margin of because we speak repricing But mean, to have a the asset of I end loans. with the me than net conservative tailwind that going side forward just because we're let projecting like of of sheet. Matt, said, our NIM say balance headwind interest of a would I more that. the I

with base margin that expand 'XX. deposits we've we the that in can I sheets. all in and everything the rates movements say very out the last So We're and balance because likely come just hesitant migration seen anticipate in to year, within directly just of our would

here. just trying a can it don't lot actually So likely significant it. of known given we're in at be this we're losing -- certainly margin conservative very from trying to we're we But how it to point. see We expand projecting it

Matt Olney

the reach you loan within refinanced -- at bank? of kind loans side? that construction balances other with side, Okay. those move more being that Shalene those construction Any As those construction mentioned are or banks contraction loan on on general of phase, And construction the into into commentary color loans have then the any within think phase? the investors? when on they Or other I

Tyson Abston

would of It be a both. mix

we some are of the perm are them on many exiting went -- [ construction of them piece Some it. banks, bank project when plans ] of depending into on going the

of So I will think mix both. it be a

Matt Olney

I were And type is? then that were color Okay. appreciate the there gave credits out near color guess, loans it the Any what release guys expect sounds us the in on there. the you far I CRE of in And as as downgrades. the term. specifically that's loan few a resolution press guess Austin, I like you this some all called in

the Just appraisal resolution of end you or think, process expect any kind the why before I on color the there, of year.

Tyson Abston

going bank. group, they bigger the and multiple credit the itself borrower, it's a with that we think is only we pretty of be of it is given of it company. on loans resolution debt cash very is working part property located. property project flows big have. flow, has This But with quickly part it's felt group We cash have. comfortable overall just everything cash it. just to it we downgrade our one the self cash resolved with are have The in properties. is that we're this of like Yes, while a actually we're where made so the This not through this And top flow. as flows group will ours But sense

Matt Olney

just broadly, portfolio. And loan the more then, I Okay. guess,

one this that how in point? color bank just think Austin the on in exposure Austin market market. at the overall Any much I was just has this

Tyson Abston

up moving they've have all in at not some one-off any to don't point, this surface see loss to up you're the see I where think, mean, real bubble credits I going before, exposure. with we I -- mean, like portfolios. said weakness moved, I rates and

was on aggressive far We've which as been assets is to you capacity to handle key sure work we credits. that to make those, keep proactively pretty our the problem clear think and those I as have decks or credits felt we we could of turn weak -- If bank. it in environment credit become a it felt economic environment. out would like weak it rate or moving different like a in either the

identify goal others get position of that is credits, where are reduce shored work other with credits could in ourselves able the -- we our going environment bank to as to kind them we're to of moved going see get rates and -- we forward up the activity. slower And handle those, surface higher or and the potentially economic them to out to

Matt Olney

Okay.

all Okay. Thanks guys. color, for the

Operator

I everyone, for you available would your Thank our call. recording Relations for concludes the like to p.m. questions. be This page remind at you X:XX of gnty.com. this our call on Investor by attending. will Goodbye. today Thank

Guaranty Bancshares (GNTY) 16 Oct 232023 Q3 Earnings call transcript