Guaranty Bancshares: Navigating Rising Interest Rates and Driving Growth in Texas

2023-07-25

Guaranty Bancshares, Inc. (GNTY) recently held a call meeting to discuss their second quarter 2023 earnings. Led by their Chairman and CEO, Ty Abston, the meeting included presentations by the CFO and EVP of the bank, covering key financial aspects such as the company's balance sheet, assets, liabilities, loans, and deposits.

During the meeting, management expressed their confidence in their ability to offset the increased costs resulting from rising interest rates. They plan to quickly reprice their assets in order to maintain a net interest margin above 3%. Additionally, they aim to keep the non-interest expense to asset ratio around 2.5% and anticipate expenses for the year to be in the range of $82 million to $83 million. The company also plans to repurchase the remaining 450,000 shares of stock before the program expires in February.

In terms of credit demand, management noted a decrease and attributed it to borrowers being more cautious in the current interest rate environment. However, they highlighted the overall strength of the Texas economy, with only a slowdown in the commercial sector.

The key drivers of the business discussed during the meeting were the Net Interest Margin (NIM), Non-interest Expense to Asset Ratio, Capital Building and Share Repurchase Program, and Credit Quality and Borrower Activity.

Several important numbers were cited during the meeting. Bank advances increased by approximately $145 million during the quarter. The company also has contingent liquidity of about $1.5 billion available through various sources. Total net unrealized losses on investment securities amount to about $56 million. Currently, the total equity to average assets ratio stands at 9.1%. Even if all losses in the portfolio were realized, the capital ratio would still be good at 8.3%. FHLB balances were brought down to around $200 million and are expected to remain steady. Additionally, broker CDs with six-month and nine-month maturities were brought on with a rate.

Overall, Guaranty Bancshares, Inc. remains confident in their ability to navigate the current interest rate environment and maintain a strong financial position. With a focus on managing expenses and capital, the company is well-positioned to continue serving its customers and driving growth in the Texas market.