Guaranty Bancshares (NYSE:GNTY) has reported its third-quarter earnings for 2023, revealing a stable asset base of $3.2 billion, a slight decrease in net earnings, and a robust liquidity position. The company also announced a consistent dividend of $0.92 per share, marking a 5% increase from the previous year.
Key takeaways from the call include:
- Total assets remained stable at $3.2 billion, with a small increase of $24 million for the quarter.
- Loans decreased by $16 million for the quarter and $60 million year-to-date due to tightened credit underwriting and lower loan demand.
- Deposits increased by $55 million, a 2% increase to $2.7 billion.
- Net earnings for the quarter were $6.3 million, down $1.2 million from the previous quarter.
- The loan-to-deposit ratio improved to 87.2% in the third quarter.
- The company repurchased 61,688 shares of stock and paid a consistent dividend of $0.92 per share.
Despite a decrease in loans due to tightened credit underwriting and lower loan demand, Guaranty Bancshares saw a $55 million increase in deposits, bringing the total to $2.7 billion. This increase, along with the company's strong liquidity ratio of 14% and a tangible common equity ratio of 8.21%, has contributed to the improvement of the loan-to-deposit ratio to 87.2%.
Net earnings for the quarter were reported at $6.3 million, a decrease of $1.2 million from the previous quarter. This decrease was attributed to lower net interest income and non-interest income. However, the quality of the loan portfolio remained strong, with non-performing assets at historically low levels.
The company also repurchased 61,688 shares at an average price of $27.38, using excess capital. The dividend was maintained at $0.92 per share, representing a 5% increase from the previous year.
In the earnings call, Cappy Payne projected that expenses for the fourth quarter would likely be in the range of $81 million to $82 million, aligning with their target of 2.5% of asset level. CEO Ty Abston also provided insights into the company's future plans, including a focus on retail banking and core deposits, and projected low-single-digit growth in deposits. He also anticipated the possibility of expanding the margin in 2024 due to the repricing of the asset side of their balance sheet.
Abston addressed questions regarding the contraction of loan balances in the construction sector, stating that some loans are being refinanced within the bank, while others are being transferred to other banks or investors, depending on the project. He also expressed confidence in swiftly resolving a downgraded commercial real estate loan in Austin, emphasizing the bank's proactive approach in managing its loan portfolio.
The company expects the net interest margin to stay around 3% and anticipates lower deposit betas in the fourth quarter. The earnings call concluded with a reminder that the recording of the call will be available on the bank's investor relations page.
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