Press Release

Guaranty Bancshares, Inc. Reports First Quarter 2018 Financial Results

Company Release - 4/24/2018 8:30 AM ET

MOUNT PLEASANT, Texas, April 24, 2018 (GLOBE NEWSWIRE) -- Guaranty Bancshares, Inc. (NASDAQ:GNTY), the holding company for Guaranty Bank & Trust, N.A., today reported financial results for the fiscal quarter ended March 31, 2018.  For the three months ended March 31, 2018, net earnings increased $843,000, or 24.0%, to $4.4 million from $3.5 million for the prior period.   Basic earnings per share was $0.39 for the three months ended March 31, 2018 compared to $0.40 during the prior period.  The company's earnings per share were impacted by the issuance of 2,300,000 shares of common stock in the company's initial public offering, which closed in May 2017.

The company's first quarter net earnings were impacted by approximately $200,000 in nonrecurring expenses related to the pending acquisition of Westbound Bank ("Westbound").  On January 29, 2018, Guaranty announced the execution of a definitive agreement providing for the proposed merger of Westbound with and into Guaranty Bank & Trust, which will facilitate Guaranty’s entry into the Houston metropolitan area.  Guaranty expects to close the merger during the second quarter of 2018, subject to the satisfaction of customary closing conditions and approval by Westbound’s shareholders.  Upon completion of the merger, Guaranty will continue to operate Westbound’s four locations in Katy, Bellaire, Houston and Conroe, Texas.  Excluding the Westbound pending acquisition related expenses, basic earnings per share during the first quarter of 2018 would be $0.41 per basic share.

The first quarter 2018 growth in net earnings was primarily attributable to growth in net interest income of $1.1 million, an increase in noninterest income of $383,000, and a decrease in the income tax provision of $368,000.  These increases were partially offset by an increase in noninterest expense of $1.1 million, which includes the Westbound merger related expenses described above, and expenses of $360,000 associated with our two new de novo branches that opened in the fourth quarter of 2017.

Net interest income for the first quarter of 2018 and 2017 was $15.4 million and $14.2 million, respectively, an increase of $1.1 million, or 7.9%.  Net interest margin for the first quarter of 2018 and 2017 was 3.41% and 3.34%, respectively.  Net interest income and net interest margin, on a taxable equivalent basis, were $15.4 million and 3.43%, respectively, for the first quarter of 2018.

The provision for loan losses was $600,000 in the first quarter of 2018, compared to $600,000 in the fourth quarter of 2017 and $650,000 in the first quarter of 2017.  The provision for loan losses is primarily reflective of organic growth during the respective periods.   Nonperforming assets as a percentage of total loans have remained consistent and were 0.64% at March 31, 2018, compared to 0.64% at December 31, 2017, and 0.66% at March 31, 2017.

Noninterest income increased 11.7% in the first quarter of 2018 to $3.7 million, compared to $3.3 million in the same quarter a year ago.  Merchant and debit card fees increased 13.3% to $829,000, compared to $732,000 in the same quarter last year due to continued growth in net new accounts and debit cards.  Gain on sale of mortgage loans increased $127,000, or 29.6%, from from $429,000 in the first quarter of 2017 to $556,000 in the current quarter.   The increase in gain on sale of mortgage loans results from increases in the volume and amount of the loans sold.  Other categories of noninterest income increased with the continued growth of the bank. 

Noninterest expense for the first quarter of 2018 totaled $13.1 million, compared to $12.0 million for the first quarter of 2017, an increase of 9.0%.   The increase in noninterest expense in the first quarter of 2018 was primarily driven by a $791,000 increase in salary and employee benefit expenses when compared to the same quarter a year ago, a $207,000 increase in legal and professional fees primarily associated with the pending Westbound acquisition and a $105,000 increase in occupancy expenses.  Increases in salary and occupancy expenses were significantly impacted as a result of our two de novo locations in Austin and Fort Worth, Texas that were opened in the fourth quarter of 2017.  The increase was partially offset by decreases in FDIC insurance expense of $35,000 and other non-interest expenses of $172,000.  The company's efficiency ratio in the first quarter of 2018 was 68.99%, compared to 68.74% in the same quarter last year.

As of March 31, 2018, consolidated assets for the company totaled $2.00 billion, compared to $1.96 billion at December 31, 2017 and $1.90 billion at March 31, 2017.  During the first quarter, gross loans increased 3.1%, or $41.8 million, to $1.40 billion at March 31, 2018, compared to loans of $1.36 billion at December 31, 2017.  Gross loans increased 12.7%, or $157.4 million, from $1.25 billion at March 31, 2017.  Deposits increased slightly during the first quarter by 0.9%, or $15.3 million, to $1.69 billion at March 31, 2018 compared to $1.68 billion at December 31, 2017.  Total deposits increased 1.2%, or $20.4 million, from $1.67 billion at March 31, 2017.  Deposit growth was impacted in the first quarter of 2018 by the loss of one large public funds account that maintained an average balance of $20.0 million in deposits with the bank.   Shareholders' equity totaled $207.4 million as of March 31, 2018, compared to $207.3 million at December 31, 2017 and $146.4 million at March 31, 2017.  The increase from March 31, 2017 was primarily the result of operating earnings and the proceeds of the Company's initial public offering.

The company's Chairman and Chief Executive Officer, Ty Abston, said, "Guaranty achieved good net earnings growth in the first quarter, with a 24.0% increase over the first quarter of last year.   Our loan growth was in-line with expectations and should accelerate further into the year.   We are on pace to close the pending Westbound acquisition during the second quarter of 2018 and look forward to the opportunities that expansion brings to our franchise."

Guaranty Bancshares, Inc.
Consolidated Financial Summary (Unaudited)
(In thousands, except share and per share data)
 As of
 2018 2017
 March 31 December 31 September 30 June 30 March 31
Cash and due from banks$33,021  $40,482  $33,736  $36,389  $32,576 
Federal funds sold43,875  26,175  34,250  17,700  83,175 
Interest-bearing deposits9,715  24,771  27,075  29,217  28,006 
Total cash and cash equivalents86,611  91,428  95,061  83,306  143,757 
Securities available for sale235,075  232,372  238,133  246,233  214,463 
Securities held to maturity170,408  174,684  179,081  182,248  185,837 
Loans held for sale1,477  1,896  3,400  2,435  1,446 
Loans, net1,388,913  1,347,779  1,294,847  1,284,318  1,241,215 
Accrued interest receivable6,719  8,174  6,440  7,631  6,304 
Premises and equipment, net45,095  43,818  43,958  44,491  44,823 
Other real estate owned2,076  2,244  1,929  1,733  1,637 
Cash surrender value of life insurance19,468  19,117  18,376  18,035  17,922 
Deferred tax asset3,354  2,543  4,267  4,121  4,426 
Core deposit intangible, net2,578  2,724  2,870  3,016  3,162 
Goodwill18,742  18,742  18,742  18,742  18,742 
Other assets17,369  17,103  16,949  16,160  17,465 
Total assets$1,997,885  $1,962,624  $1,924,053  $1,912,469  $1,901,199 
Noninterest-bearing deposits$421,255  $410,009  $405,678  $387,725  $370,810 
Interest-bearing deposits1,270,327  1,266,311  1,211,624  1,258,648  1,300,361 
Total deposits1,691,582  1,676,320  1,617,302  1,646,373  1,671,171 
Securities sold under agreements to repurchase12,395  12,879  12,920  14,153  12,663 
Accrued interest and other liabilities7,574  7,117  7,601  7,921  7,595 
Other debt        18,929 
Federal Home Loan Bank advances65,149  45,153  65,157  25,161  25,165 
Subordinated debentures13,810  13,810  13,810  14,310  19,310 
Total liabilities1,790,510  1,755,279  1,716,790  1,707,918  1,754,833 
Commitments and contingent liabilities:         
KSOP-owned shares (1)        34,300 
Shareholders' equity207,375  207,345  207,263  204,551  146,366 
Less: KSOP-owned shares (1)        34,300 
Total shareholders' equity207,375  207,345  207,263  204,551  112,066 
Total liabilities and shareholders' equity$1,997,885  $1,962,624  $1,924,053  $1,912,469  $1,901,199 
 Quarter Ended
 2018 2017
 March 31 December 31 September 30 June 30 March 31
Interest income$19,038  $18,689  $18,165  $17,792  $17,136 
Interest expense3,666  3,201  3,063  2,993  2,895 
Net interest income15,372  15,488  15,102  14,799  14,241 
Provision for loan losses600  600  800  800  650 
Net interest income after provision for loan losses14,772  14,888  14,302  13,999  13,591 
Noninterest income3,665  3,779  3,702  3,516  3,282 
Noninterest expense13,134  12,265  12,166  11,906  12,045 
Income before income taxes5,303  6,402  5,838  5,609  4,828 
Income tax provision944  3,594  1,699  1,633  1,312 
Net earnings$4,359  $2,808  $4,139  $3,976  $3,516 
Earnings per common share, basic$0.39  $0.25  $0.37  $0.40  $0.40 
Earnings per common share, diluted0.39  0.25  0.37  0.39  0.40 
Cash dividends per common share0.14  0.14  0.13  0.26   
Book value per common share - end of quarter18.75  18.75  18.74  18.50  16.72 
Tangible book value per common share - end of quarter(2)16.82  16.81  16.79  16.53  14.22 
Common shares outstanding - end of quarter11,058,956  11,058,956  11,058,956  11,058,956  8,753,933 
Weighted-average common shares outstanding, basic11,058,956  11,058,956  11,058,956  10,019,049  8,751,945 
Weighted-average common shares outstanding, diluted11,177,579  11,162,329  11,164,429  10,106,825  8,784,410 
Return on average assets (annualized)0.89% 0.58% 0.87% 0.85% 0.76%
Return on average equity (annualized)8.35  5.36  7.99  8.85  9.72 
Net interest margin (annualized)3.41  3.39  3.38  3.40  3.34 
Efficiency ratio(3)68.99  64.13  64.70  65.10  68.74 

(1) In accordance with provisions of the Internal Revenue Code applicable to private companies, the terms of our KSOP required us, for a specified time, to repurchase shares of our common stock distributed to participants from the KSOP.  Accordingly, the shares of our common stock held by the KSOP while we were a private company are reflected in our consolidated balance sheet as a line item between total liabilities and shareholders’ equity.  Upon listing of our common stock on the NASDAQ Global Select Market in May 2017, this repurchase obligation terminated and, consequently, we were no longer required to deduct KSOP-owned shares from shareholders’ equity.
(2) See Reconciliation of non-GAAP Financial Measures table
(3) 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.

Guaranty Bancshares, Inc.
Selected Financial Data (Unaudited)
(In thousands)
 As of
 2018 2017
 March 31 December 31 September 30 June 30 March 31
Commercial and industrial$206,308  $197,508  $192,368  $217,310  $205,351 
Real estate:         
Construction and development193,909  196,774  201,542  178,041  153,227 
Commercial real estate450,076  418,137  393,710  379,083  373,252 
Farmland63,971  59,023  54,351  63,841  62,133 
1-4 family residential377,278  374,371  364,530  355,121  359,565 
Multi-family residential37,992  36,574  23,259  28,858  23,943 
Consumer48,982  51,267  51,379  51,244  52,755 
Agricultural22,545  25,596  24,449  21,854  21,473 
Overdrafts273  294  698  364  390 
Total loans(1)(2)$1,401,334  $1,359,544  $1,306,286  $1,295,716  $1,252,089 
 Quarter Ended
 2018 2017
 March 31 December 31 September 30 June 30 March 31
Balance at beginning of period$12,859  $12,528  $12,525  $11,928  $11,484 
Loans charged-off(116) (979) (929) (302) (248)
Recoveries32  710  132  99  42 
Provision for loan losses600  600  800  800  650 
Balance at end of period$13,375  $12,859  $12,528  $12,525  $11,928 
Allowance for loan losses / period-end loans0.95% 0.95% 0.96% 0.97% 0.95%
Allowance for loan losses / nonperforming loans282.4  321.2  217.7  316.4  389.0 
Net charge-offs / average loans (annualized)0.02  0.08  0.25  0.06  0.07 
Non-accrual loans (3)$4,737  $4,004  $5,755  $3,958  $3,066 
Other real estate owned2,076  2,244  1,929  1,733  1,637 
Repossessed assets owned2,107  2,466  2,479  3,501  3,526 
Total non-performing assets$8,920  $8,714  $10,163  $9,192  $8,229 
Non-performing assets as a percentage of:         
Total loans(1)(3)0.64% 0.64% 0.78% 0.71% 0.66%
Total assets0.45  0.44  0.53  0.48  0.43 
Restructured loans-nonaccrual$  $  $  $  $42 
Restructured loans-accruing746  657  316  323  330 

 Quarter Ended
 2018 2017
 March 31 December 31 September 30 June 30 March 31
Service charges$888  $945  $986  $938  $877 
Net realized gain on securities transactions  142    25   
Net realized gain on sale of loans556  491  589  472  429 
Fiduciary income398  408  362  343  350 
Bank-owned life insurance income126  114  116  114  117 
Merchant and debit card fees829  818  778  791  732 
Loan processing fee income145  143  146  163  145 
Other noninterest income723  718  725  670  632 
Total noninterest income$3,665  $3,779  $3,702  $3,516  $3,282 
Employee compensation and benefits$7,778  $6,922  $6,729  $6,440  $6,987 
Occupancy expenses1,853  1,848  1,938  1,866  1,748 
Legal and professional fees568  589  692  419  361 
Software and technology556  556  533  517  483 
Amortization257  252  258  259  264 
Director and committee fees279  304  253  248  259 
Advertising and promotions279  314  303  335  241 
ATM and debit card expense309  133  253  264  249 
Telecommunication expense152  114  128  141  143 
FDIC insurance assessment fees156  144  162  174  191 
Other noninterest expense947  1,089  917  1,243  1,119 
Total noninterest expense$13,134  $12,265  $12,166  $11,906  $12,045 

(1) Excludes outstanding balances of loans held for sale of $1.5 million, $1.6 million, $3.4 million, $2.4 million and $1.4 million as of March 31, 2018, December 31, 2017, September 30, 2017, June 30, 2017 and March 31, 2017, respectively.
(2) Excludes deferred loan fees of $1.0 million, $1.1 million, $1.1 million, $1.1 million and $1.1 million as of March 31, 2018, December 31, 2017, September 30, 2017, June 30, 2017 and March 31, 2017, respectively.
(3) Restructured loans-nonaccrual are included in nonaccrual loans which are a component of nonperforming loans.

Guaranty Bancshares, Inc.
Selected Financial Data (Unaudited)
(In thousands)
 For the Three Months Ended March 31,
 2018 2017
Yield/ Rate
Yield/ Rate
Interest-earnings assets:           
Total loans(1)$1,364,724  $16,256  4.83% $1,233,126  $14,415  4.74%
Securities available for sale238,233  1,442  2.45  187,648  1,104  2.39 
Securities held to maturity172,679  1,061  2.49  187,621  1,129  2.44 
Nonmarketable equity securities7,508  89  4.81  8,745  256  11.87 
Interest-bearing deposits in other banks43,547  190  1.77  112,362  232  0.84 
Total interest-earning assets1,826,691  19,038  4.23  1,729,502  17,136  4.02 
Allowance for loan losses(12,989)     (11,564)    
Noninterest-earnings assets142,343      144,338     
Total assets$1,956,045      $1,862,276     
Interest-bearing liabilities:           
Interest-bearing deposits$1,255,975  $3,274  1.06% $1,254,317  $2,404  0.78%
Advances from FHLB and fed funds purchased59,979  214  1.45  49,389  68  0.56 
Other debt      18,693  205  4.45 
Subordinated debentures13,810  167  4.90  19,310  207  4.35 
Securities sold under agreements to repurchase11,621  11  0.38  11,075  11  0.40 
Total interest-bearing liabilities1,341,385  3,666  1.11  1,352,784  2,895  0.87 
Noninterest-bearing liabilities:           
Noninterest-bearing deposits400,347      358,581     
Accrued interest and other liabilities5,589      6,149     
Total noninterest-bearing liabilities405,936      364,730     
Shareholders’ equity208,724      144,762     
Total liabilities and shareholders’ equity$1,956,045      $1,862,276     
Net interest rate spread(2)    3.12%     3.15%
Net interest income  $15,372      $14,241   
Net interest margin(3)    3.41%     3.34%

(1) Includes average outstanding balances of loans held for sale of $1.7 million and $1.6 million for the three months ended March 31, 2018 and 2017 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.

Guaranty Bancshares, Inc.
Reconciliation of Non-GAAP Financial Measures (Unaudited)
(In thousands, except share and per share data)
 As of
 2018 2017
 March 31 December 31 September 30 June 30 March 31
Total shareholders’ equity, including  KSOP-owned shares$207,375  $207,345  $207,263  $204,551  $146,366 
Goodwill(18,742) (18,742) (18,742) (18,742) (18,742)
Core deposit and other intangibles(2,578) (2,724) (2,870) (3,016) (3,162)
Total tangible common equity$186,055  $185,879  $185,651  $182,793  $124,462 
Common shares outstanding - end of period(1)11,058,956  11,058,956  11,058,956  11,058,956  8,753,933 
Book value per common share$18.75  $18.75  $18.74  $18.50  $16.72 
Tangible book value per common share16.82  16.81  16.79  16.53  14.22 

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

About Non-GAAP Financial Measures

Certain of the financial measures and ratios we present, including “tangible book value per share” 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.

About Guaranty Bancshares, Inc.

Guaranty Bancshares, Inc. ("Guaranty") 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 products and services. Guaranty Bank & Trust has 28 banking locations across 20 Texas communities located within the East Texas, Dallas/Fort Worth Metroplex and Central Texas regions of the state.  Visit 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. 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"), including our registration statement on Form S-4 filed with respect to our pending acquisition of Westbound Bank, and the following factors: business and economic conditions generally and in the financial services industry, nationally and within our current and future geographic market areas; economic, market, operational, liquidity, credit and interest rate risks associated with our business; the composition of our loan portfolio, including deteriorating asset quality and higher loan charge-offs; the laws and regulations applicable to our business; our ability to achieve organic loan and deposit growth and the composition of such growth; increased competition in the financial services industry, nationally, regionally or locally; our ability to maintain our historical earnings trends; our ability to raise additional capital to execute our business plan; acquisitions and integrations of acquired businesses; systems failures or interruptions involving our information technology and telecommunications systems or third-party servicers; the composition of our management team and our ability to attract and retain key personnel; the fiscal position of the U.S. federal government and the soundness of other financial institutions; and the amount of nonperforming and classified assets we hold. 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.

No Offer or Solicitation

This communication does not constitute an offer to sell, a solicitation of an offer to sell, the solicitation of an offer to buy any securities or a solicitation of any vote or approval. There will be no sale of securities in any jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

Additional Information about the Merger with Westbound Bank

In connection with the proposed merger of Westbound with and into Guaranty Bank & Trust, N.A., Guaranty filed a Registration Statement on Form S-4 with the SEC with respect to the proposed merger.  The Registration Statement on Form S-4 included a proxy statement of Westbound and a prospectus of Guaranty, which Westbound sent to its shareholders.  WE URGE INVESTORS AND SECURITY HOLDERS TO READ THE REGISTRATION STATEMENT ON FORM S-4 AND THE PROXY STATEMENT/PROSPECTUS INCLUDED WITHIN THE REGISTRATION STATEMENT ON FORM S-4, AS WELL AS ANY AMENDMENT OR SUPPLEMENTS TO THESE DOCUMENTS, AND ANY OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE SEC IN CONNECTION WITH THE MERGER BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT GUARANTY, WESTBOUND AND THE MERGER.  Investors and security holders may obtain free copies of the Registration Statement on Form S-4 and the related proxy statement/prospectus, as well as other documents filed with the SEC by Guaranty through the website maintained by the SEC at  Documents filed with the SEC by Guaranty will also be available free of charge upon written request at the following address: Guaranty Bancshares, Inc., 201 South Jefferson Avenue, Mount Pleasant, Texas 75455, Attn: Investor Relations.

Participants in the Transaction

Guaranty, Westbound and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of Westbound in connection with the proposed merger. Certain information regarding the interests of these participants and a description of their direct and indirect interests, by security holdings or otherwise, is included in the proxy statement/prospectus regarding the proposed merger. Information about Guaranty and its directors and executive officers may be found in Guaranty’s proxy statement relating to its 2018 Annual Meeting of Shareholders that has been filed with the SEC. Additional copies of the proxy statement can be obtained free of change from the sources described above.


Cappy Payne
Senior Executive Vice President and Chief Financial Officer
(888) 572-9881
[email protected]

Source: Guaranty Bancshares, Inc.

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Source: Guaranty Bancshares, Inc.