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Sep 30, 2022
Guaranty Bancshares Q3 2022 Earnings Report
Reported strong financial results for the third quarter of 2022, driven by loan growth and improved net interest margin.
Key Takeaways
Guaranty Bancshares, Inc. reported a net income available to common shareholders of $10.9 million, or $0.92 per basic share, for the quarter ended September 30, 2022. The increase in earnings was primarily due to higher interest income, partially offset by a provision for credit losses, lower non-interest income, and higher non-interest expense. Loan growth remained strong, and the net interest margin continued to improve.
Strong loan growth of $127.7 million, or 6.0%, during the quarter.
Net earnings per share of $0.92 in the current quarter, compared to $0.90 in the prior quarter.
Nonperforming assets as a percentage of total assets were 0.28% at September 30, 2022.
Net interest margin increased 19 basis points primarily due to a 49 basis point yield increase on total interest earning assets.
Guaranty Bancshares
Guaranty Bancshares
Forward Guidance
The bank anticipates loan growth to slow in the fourth quarter of 2022 and more significantly in 2023 as tighter underwriting standards and anticipated declines in new loan demand unfold. The Bank is slightly asset-sensitive and should see benefits from expected rate increases by the Federal Reserve in November and December of 2022.
Positive Outlook
- The Bank is slightly asset-sensitive and should see benefits from expected rate increases by the Federal Reserve in November and December of 2022.
- We continue to be well-positioned for loan funding and liquidity with a loan-to-deposit ratio at quarter-end of 81.2%.
- Approximately $124.4 million in securities will mature or pay down by December 31, 2022 and $217.0 million within 12 months.
- Additional Fed rate increases will result in the repricing of approximately $354.5 million, or 15.7%, of our total loans by December 31, 2022.
- A total of 40.9% of our deposits are noninterest-bearing and total cost of funds on total deposits during the third quarter was 0.35%.
Challenges Ahead
- As interest rates continue to increase and projections for a recession become more widespread, we anticipate loan growth to slow in the fourth quarter of 2022 and more significantly in 2023 as tighter underwriting standards and anticipated declines in new loan demand unfold.
- We anticipate increases to certain qualitative factor adjustments in the fourth quarter of 2022 to continue incorporating recession forecasts in 2023.
- Although we have raised interest rates paid on deposit accounts, we've maintained a conservative approach to increases thus far in 2022, but anticipate continued upward trends in deposit betas during 2023.
- The decrease from the same quarter in 2021 was due primarily to a decrease in the gain on sale of loans of $1.4 million, or 80.8%, along with a $70,000, or 48.3%, decrease in mortgage fee income and a $137,000, or 69.9%, decrease in warehouse lending fees.
- Other non-interest expense during the third quarter of 2022 included a write-down of $487,000 for an SBA receivable that was recorded during the work-out of two previous loan relationships that were acquired as part of the Westbound Bank acquisition in 2018.