Guaranty Bancshares, Inc. Reports Fourth Quarter and Year-End 2023 Financial Results

Guaranty Bancshares, Inc. (NYSE: GNTY) (the "Company"), the parent company of Guaranty Bank & Trust, N.A. (the "Bank"), today reported financial results for the fiscal quarter and year ended December 31, 2023. The Company's net income available to common shareholders was $5.9 million, or $0.51 per basic share, for the quarter ended December 31, 2023, compared to $6.3 million, or $0.54 per basic share, for the quarter ended September 30, 2023 and $8.0 million, or $0.67 per basic share, for the quarter ended December 31, 2022. Return on average assets and average equity for the fourth quarter of 2023 were 0.73% and 7.93%, respectively, compared to 0.78% and 8.43%, respectively, for the third quarter of 2023 and 0.95% and 10.88%, respectively, for the fourth quarter of 2022. The decrease in earnings during the fourth quarter of 2023 compared to the third quarter of 2023 was primarily due to fluctuations in general operating expenses. The decrease in earnings in the fourth quarter of 2023 compared to the fourth quarter of 2022 was primarily due to lower net interest income in the current quarter, offset by a $2.8 million provision for credit losses in the prior year quarter.

"Despite the many industry headwinds in 2023, our earnings were relatively good. Our net interest margin hit its lowest point in 2023 during the third quarter but has steadily increased each month in the fourth quarter as our loans reprice and cost of non-maturing deposits remain steady. Our balance sheet is strong and our earnings stream continues to produce consistent results. Non-performing assets remain very low and although we anticipate the need to work with some borrowers as their loan rates adjust, we do not foresee any significant problems as a result of the higher interest rate environment or economic slowdown at this point. We are looking forward to 2024 and have built a balance sheet that will allow us to grow and capitalize on new opportunities when the timing is right and economic conditions become less uncertain. Our liquidity and capital remains very healthy and we continue to focus on driving long term shareholder value," said Ty Abston, the Company's Chairman and Chief Executive Officer.

QUARTERLY AND ANNUAL HIGHLIGHTS

• Strong Asset Quality. Nonperforming assets as a percentage of total assets were 0.18% at December 31, 2023, compared to 0.09% at September 30, 2023 and 0.32% at December 31, 2022. Net charge-offs (annualized) to average loans were 0.04% for the quarter ended December 31, 2023, compared to 0.11% for the quarter ended September 30, 2023, and 0.01% for the quarter ended December 31, 2022. Net charge-offs to average loans for the years ending December 31, 2023 and 2022 were 0.04% and 0.03%, respectively.
  
  Commercial real estate (CRE) loans, particularly office related loans, have received increased scrutiny in recent months. Our CRE loans and real estate C&D loans represent 39.7% and 12.8% of the total loan portfolio, respectively. Office-related loans represent 4.6% of the total loan portfolio and have an average balance of $515,000.
  
  
• Granular and Stable Core Deposit Base. As of December 31, 2023, we have 87,664 total deposit accounts with an average account balance of $30,038. We have a historically reliable core deposit base, with strong and trusted banking relationships. Total deposits decreased by $25.0 million during the fourth quarter, which consisted primarily of a decrease in DDA balances of $48.6 million, a decrease in time deposits of $8.1 million and offset by an increase in savings and MMDA balances of $33.5 million. The decrease in time deposits resulted in part due to $25.0 million in brokered CDs that matured and were not renewed during the fourth quarter. The Bank has not historically used brokered deposits and does not foresee a reliance on them going forward, however, our year-end deposit balance does include $25.0 million of brokered deposits that mature in February 2024 and were issued, along with the $25.0 million that matured in the fourth quarter, to test their availability as a contingent liquidity source. Excluding public funds and bank-owned accounts, our uninsured deposits as of December 31, 2023 were 25.07% of total deposits.
  
  Interest rates paid on deposits during the quarter stabilized with minimal increases. Despite the decrease in DDA during the quarter, noninterest-bearing deposits still represent 32.4% of total deposits. Our cost of interest-bearing deposits increased 17 basis points during the quarter from 3.00% in the prior quarter to 3.17%, representing a beta on interest-bearing deposits of approximately 62.7% for the linked quarter compared to the federal funds target rates. These increases are primarily due to renewals of maturing certificates of deposit into new CD's paying higher rates. Our cost of total deposits for the fourth quarter of 2023 increased 16 basis points from 1.98% in the prior quarter to 2.14%, representing a beta on total deposits of approximately 59.0% for the linked quarter.
  
  
• Healthy Capital and Liquidity. Our capital and liquidity ratios, as well as contingent liquidity sources, remain very healthy. During the fourth quarter of 2023, we repurchased 24,800 shares, or 0.21% of average shares outstanding during the period, at an average price of $27.76 per share. During the year, we repurchased 434,798 shares at an average price of $25.82 per share. Our liquidity ratio, calculated as cash and cash equivalents and unpledged investments divided by total liabilities, was 12.2% as of December 31, 2023, compared to 14.5% as of December 31, 2022. Our total available contingent liquidity, net of current outstanding borrowings, is $1.2 billion, consisting of FHLB, FRB and correspondent bank fed funds and revolving lines of credit. Finally, our total equity to average quarterly assets as of December 31, 2023 was 9.5%. If we had to recognize our entire unrealized losses on both AFS and HTM securities, our total equity to average assets ratio would be 8.8%^†, which is still a strong capital level under regulatory requirements.

† Non-GAAP financial metric. Calculations of this metric and reconciliations to GAAP are included in the schedules accompanying this release.

RESULTS OF OPERATIONS

Net interest income, before the provision for credit losses, in the fourth quarter of 2023 and 2022 was $23.8 million and $28.4 million, respectively, a decrease of $4.5 million, or 16.0%. The decrease in net interest income resulted from an increase in interest expense of $9.6 million, or 130.7%, compared to the prior year quarter, which was partially offset by an increase in interest income of $5.1 million, or 14.2%, from the same quarter in the prior year. The increases in both interest income and expense resulted primarily from higher rates during the period. Interest expense was also impacted by a shift from noninterest-bearing to interest-bearing deposit accounts, which resulted in increased expense in the fourth quarter of 2023 compared to the prior year quarter.

Net interest margin, on a fully taxable equivalent basis, for the fourth quarter of 2023 and 2022 was 3.11% and 3.57%, respectively. Net interest margin decreased 46 basis points primarily due to interest-bearing liabilities repricing faster than our interest-earning assets and a shift from no or lower interest cost DDA and money market accounts to higher cost certificates of deposit. The cost of interest-bearing liabilities increased 184 basis points from the prior year quarter, while interest earning asset yields increased 90 basis points. The increase in the cost of interest-bearing liabilities was due primarily to an increase in the cost of interest-bearing deposits from 1.08% to 3.17%, a change of 209 basis points, in the fourth quarter of 2023 compared to the same period in 2022, as well as increased rates on FHLB advances, which increased from 3.97% to 5.40%, an increase of 143 basis points, from the prior year quarter. The increases in cost were partially offset by increases in yield on the loan portfolio from 5.19% to 6.06%, or 87 basis points, as well as 38 and 34 basis point increases in yield on AFS and HTM securities, respectively. Although the cost of interest-bearing liabilities have repriced more quickly during this period, the weighted average yield on $89.6 million in new loans originated in the fourth quarter was 8.61%.

Net interest income, before the provision for credit losses, increased $511,000, or 2.2%, from $23.3 million in the third quarter of 2023 to $23.8 million in the fourth quarter of 2023. The increase in net interest income resulted primarily from an increase in interest income of $978,000, or 2.5%, partially offset by an increase in interest expense of $467,000, or 2.8%. The increase in interest income was primarily due to higher interest earned on loans of $808,000, or 2.3%, from the prior quarter and higher interest earned on securities of $103,000, or 2.5%. The increase in interest expense resulted primarily from an increase of $1.2 million, or 9.5%, in interest-bearing deposit expense, partially offset by a decrease in FHLB advances expense of $673,000, or 26.0%, and a decrease in interest expense on other borrowed money of $102,000, or 31.4%, from the prior quarter.

Net interest margin, on a taxable equivalent basis, increased from 3.02% for the third quarter of 2023 to 3.11% for the fourth quarter of 2023, an increase of nine basis points. The increase in net interest margin was primarily due to an increase on loan yield from 5.91% for the third quarter of 2023 to 6.06% for the fourth quarter of 2023, a change of 15 basis points. This increase was partially offset by an increase in the cost of interest-bearing deposits from 3.00% in the third quarter to 3.17% in the fourth quarter of 2023, a change of 17 basis points.

We recorded no provision for credit losses during 2023. During the fourth quarter of 2022, we recorded a $2.8 million provision to incorporate forecasts for an economic downturn and possible borrower stressors into our CECL model. The factors that were adjusted in the fourth quarter of 2022 remain relevant, however certain minor adjustments were made in subsequent quarters to reflect current portfolio credit quality trends. As of December 31, 2023 and December 31, 2022, our allowance for credit losses as a percentage of total loans was 1.33% and 1.34%, respectively.

Noninterest income decreased $326,000, or 6.4%, in the fourth quarter of 2023 to $4.8 million, compared to $5.1 million for the fourth quarter of 2022. The decrease from the same quarter in 2022 was partially due to a gain on securities sold of $172,000 in the prior year quarter and no gain on securities sales in the current quarter. There was also a decrease in the gain on sale of loans of $114,000, or 36.8% along with a $51,000, or 63.0%, decrease in mortgage fee income compared to the same quarter in the prior year.

Noninterest expense increased $505,000, or 2.4%, in the fourth quarter of 2023 to $21.4 million, compared to $20.9 million for the fourth quarter of 2022. The increase in noninterest expense in the fourth quarter of 2023 was driven primarily by a $351,000, or 2.8%, increase in employee compensation and benefits, an increase in software and technology expense of $215,000, or 14.1%, and a $175,000, or 22.5%, increase in legal and professional fees primarily related to recruiting fees compared to the fourth quarter of 2022. These were partially offset by a $136,000, or 27.9%, decrease in advertising and promotions expense.

Noninterest income in the fourth quarter of 2023 decreased by $143,000, or 2.9%, from $4.9 million in the third quarter of 2023. The decrease is primarily due to a decrease in other noninterest income of $62,000, or 8.2%, primarily the result of decreased credit card income during the period. Gain on sale of loans decreased $22,000, or 10.1%, while bank-owned life insurance income decreased $17,000, or 6.4%. Additionally, mortgage fee income fell $16,000, or 34.8%, and loan processing fee income decreased $12,000, or 9.4% from the third quarter.

Noninterest expense increased $888,000, or 4.3%, in the fourth quarter of 2023, from $20.5 million for the quarter ended September 30, 2023. The increase resulted from an increase of $771,000, or 6.5%, in employee compensation and benefits primarily due to annual raises, which went into effect during the fourth quarter. There was also a $250,000, or 16.8%, increase in software and technology expense and a $64,000, or 22.2%, increase in advertising and promotions expense during the fourth quarter of 2023 compared to the third quarter of 2023. These increases were partially offset by a $203,000, or 6.9%, decrease in occupancy expenses due to lower than anticipated property taxes payable and a reverse accrual posted in the fourth quarter, compared with the third quarter of 2023.

The Company’s efficiency ratio in the fourth quarter of 2023 was 74.81%, compared to 62.42% in the prior year quarter and 72.64% in the third quarter of 2023.

FINANCIAL CONDITION

Consolidated assets for the Company totaled $3.18 billion at December 31, 2023, compared to $3.23 billion at September 30, 2023 and $3.35 billion at December 31, 2022.

Gross loans increased slightly by $4.3 million, or 0.19%, during the quarter resulting in a gross loan balance of $2.32 billion at both December 31, 2023 and September 30, 2023. Our loan growth is entirely due to organic loan growth during the quarter and not to purchases of assets.

Gross loans decreased $55.6 million, or 2.3%, from $2.38 billion at December 31, 2022. The decrease in gross loans during the fourth quarter of 2023 compared to the fourth quarter of 2022 resulted from tightened credit underwriting standards and loan terms, along with fewer borrower requests in response to higher interest rates. Additionally, there was a $10.7 million decrease in warehouse lending loans, as we discontinued that line of business in the second quarter of 2023.

Total deposits decreased by $25.0 million, or 0.9%, to $2.63 billion at December 31, 2023, compared to $2.66 billion at September 30, 2023, and decreased $47.9 million, or 1.8%, from $2.68 billion at December 31, 2022. The decrease in deposits during the fourth quarter resulted from a decrease in noninterest-bearing deposits of $50.4 million, offset by an increase in interest-bearing deposits of $25.4 million. We also allowed $25.0 million in brokered certificates of deposit to mature and not renew during the fourth quarter of 2023. The decrease in deposits during the current quarter compared to the prior year quarter resulted primarily from a decrease in noninterest-bearing deposits of $199.2 million, partially offset by an increase in interest-bearing deposits of $151.3 million.

Nonperforming assets as a percentage of total loans were 0.25% at December 31, 2023, compared to 0.13% at September 30, 2023 and 0.46% at December 31, 2022. Nonperforming assets as a percentage of total assets were 0.18% at December 31, 2023, compared to 0.09% at September 30, 2023, and 0.32% at December 31, 2022. The Bank's nonperforming assets consist primarily of nonaccrual loans. The decrease in nonperforming assets compared to the prior year end is primarily due to the resolution of several lower balance nonperforming assets during 2023.

Total equity was $303.8 million as of December 31, 2023, compared to $296.8 million at September 30, 2023 and $295.6 million at December 31, 2022. The increase from the previous quarter resulted primarily from net income of $5.9 million and a reduction in accumulated other comprehensive loss of $4.2 million due to increases in the fair value of available for sale securities during the period. This was partially offset by the payment of dividends of $2.7 million during the fourth quarter of 2023.

		As of
		2023																2022
(dollars in thousands)		December 31				September 30				June 30				March 31				December 31
ASSETS
Cash and due from banks		$	47,744			$	47,922			$	47,663			$	59,030			$	52,390
Federal funds sold			36,575				73,275				44,950				95,400				47,275
Interest-bearing deposits			5,205				8,980				4,738				3,695				6,802
Total cash and cash equivalents			89,524				130,177				97,351				158,125				106,467
Securities available for sale			196,195				178,644				166,596				173,744				188,927
Securities held to maturity			404,208				408,308				437,292				476,105				509,008
Loans held for sale			976				2,506				795				1,260				3,156
Loans, net			2,290,881				2,286,163				2,300,882				2,344,240				2,344,245
Accrued interest receivable			13,143				11,307				11,110				10,443				11,555
Premises and equipment, net			57,018				56,712				56,151				55,457				54,291
Other real estate owned			—				—				—				38				38
Cash surrender value of life insurance			42,348				42,096				41,830				38,619				38,404
Core deposit intangible, net			1,418				1,524				1,633				1,746				1,859
Goodwill			32,160				32,160				32,160				32,160				32,160
Other assets			56,920				80,816				60,396				64,350				61,385
Total assets		$	3,184,791			$	3,230,413			$	3,206,196			$	3,356,287			$	3,351,495
LIABILITIES AND EQUITY
Deposits
Noninterest-bearing		$	852,957			$	903,391			$	915,462			$	992,527			$	1,052,144
Interest-bearing			1,780,289				1,754,902				1,687,355				1,630,841				1,629,010
Total deposits			2,633,246				2,658,293				2,602,817				2,623,368				2,681,154
Securities sold under agreements to repurchase			25,172				19,366				20,532				13,338				7,221
Accrued interest and other liabilities			32,242				31,218				30,701				30,125				28,409
Line of credit			4,500				2,000				12,000				—				—
Federal Home Loan Bank advances			140,000				175,000				195,000				340,000				290,000
Subordinated debentures			45,785				47,752				47,719				49,186				49,153
Total liabilities			2,880,945				2,933,629				2,908,769				3,056,017				3,055,937
Equity attributable to Guaranty Bancshares, Inc.			303,300				296,226				296,862				299,700				294,984
Noncontrolling interest			546				558				565				570				574
Total equity			303,846				296,784				297,427				300,270				295,558
Total liabilities and equity		$	3,184,791			$	3,230,413			$	3,206,196			$	3,356,287			$	3,351,495

		Quarter Ended
		2023																2022
(dollars in thousands, except per share data)		December 31				September 30				June 30				March 31				December 31
STATEMENTS OF EARNINGS
Interest income		$	40,796			$	39,818			$	38,734			$	37,144			$	35,720
Interest expense			16,983				16,516				14,031				11,982				7,362
Net interest income			23,813				23,302				24,703				25,162				28,358
Provision for credit losses			—				—				—				—				2,800
Net interest income after provision for credit losses			23,813				23,302				24,703				25,162				25,558
Noninterest income			4,796				4,939				7,873				4,905				5,122
Noninterest expense			21,402				20,514				20,471				19,967				20,897
Income before income taxes			7,207				7,727				12,105				10,100				9,783
Income tax provision			1,341				1,437				2,529				1,823				1,764
Net earnings		$	5,866			$	6,290			$	9,576			$	8,277			$	8,019
Net loss attributable to noncontrolling interest			12				7				5				4				3
Net earnings attributable to Guaranty Bancshares, Inc.		$	5,878			$	6,297			$	9,581			$	8,281			$	8,022
PER COMMON SHARE DATA
Earnings per common share, basic		$	0.51			$	0.54			$	0.82			$	0.69			$	0.67
Earnings per common share, diluted			0.51				0.54				0.81				0.69				0.67
Cash dividends per common share			0.23				0.23				0.23				0.23				0.22
Book value per common share - end of quarter			26.28				25.64				25.58				25.13				24.70
Tangible book value per common share - end of quarter(1)			23.37				22.72				22.67				22.29				21.85
Common shares outstanding - end of quarter(4)			11,540,644				11,554,094				11,603,167				11,925,357				11,941,672
Weighted-average common shares outstanding, basic			11,536,878				11,568,897				11,735,475				11,939,593				11,938,973
Weighted-average common shares outstanding, diluted			11,589,165				11,619,342				11,756,512				12,012,004				12,048,475
PERFORMANCE RATIOS
Return on average assets (annualized)			0.73	%			0.78	%			1.17	%			1.01	%			0.95	%
Return on average equity (annualized)			7.93				8.43				12.87				11.18				10.88
Net interest margin, fully taxable equivalent (annualized)(2)			3.11				3.02				3.19				3.24				3.57
Efficiency ratio(3)			74.81				72.64				62.84				66.41				62.42
(1) See Reconciliation of non-GAAP Financial Measures table.
(2) Net interest margin on a taxable equivalent basis is equal to net interest income adjusted for nontaxable income divided by average interest-earning assets, annualized, using a marginal tax rate of 21%.
(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.
(4) Excludes the dilutive effect, if any, of shares of common stock issuable upon exercise of outstanding stock options.

		For the Years Ended
		December 31,
(dollars in thousands, except per share data)		2023				2022
INCOME STATEMENTS
Interest income		$	156,492			$	123,209
Interest expense			59,512				15,380
Net interest income			96,980				107,829
Provision for loan losses			—				2,150
Net interest income after provision for loan losses			96,980				105,679
Noninterest income			22,513				23,485
Noninterest expense			82,354				79,907
Income before income taxes			37,139				49,257
Income tax provision			7,130				8,834
Net earnings		$	30,009			$	40,423
Net loss attributable to noncontrolling interest			28				24
Net earnings attributable to Guaranty Bancshares, Inc.		$	30,037			$	40,447
PER COMMON SHARE DATA
Earnings per common share, basic		$	2.57			$	3.38
Earnings per common share, diluted			2.56				3.34
Cash dividends per common share			0.92				0.88
Book value per common share - end of period			26.28				24.70
Tangible book value per common share - end of period(1)			23.37				21.85
Common shares outstanding - end of period(4)			11,540,644				11,941,672
Weighted-average common shares outstanding, basic			11,693,761				11,980,209
Weighted-average common shares outstanding, diluted			11,738,605				12,092,847
PERFORMANCE RATIOS
Return on average assets			0.92	%			1.24	%
Return on average equity			10.10				13.76
Net interest margin, fully taxable equivalent(2)			3.15				3.54
Efficiency ratio(3)			68.92				60.85
(1) See Reconciliation of non-GAAP Financial Measures table.
(2) Net interest margin on a taxable equivalent basis is equal to net interest income adjusted for nontaxable income divided by average interest-earning assets, annualized, using a marginal tax rate of 21%.
(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.
(4) Excludes the dilutive effect, if any, of shares of common stock issuable upon exercise of outstanding stock options.

		As of
		2023																2022
(dollars in thousands)		December 31				September 30				June 30				March 31				December 31
LOAN PORTFOLIO COMPOSITION
Commercial and industrial		$	287,565			$	292,410			$	295,864			$	295,936			$	314,067
Real estate:
Construction and development			296,639				317,484				345,127				372,203				377,135
Commercial real estate			923,195				901,321				891,883				900,190				887,587
Farmland			186,295				188,614				187,105				190,802				185,817
1-4 family residential			514,603				504,002				496,340				499,944				493,061
Multi-family residential			44,292				42,720				44,385				44,760				45,147
Consumer			57,059				58,294				59,498				60,163				61,394
Agricultural			12,685				13,076				13,447				13,545				13,686
Overdrafts			243				328				252				270				282
Total loans(1)(2)		$	2,322,576			$	2,318,249			$	2,333,901			$	2,377,813			$	2,378,176
		Quarter Ended
		2023																2022
(dollars in thousands)		December 31				September 30				June 30				March 31				December 31
ALLOWANCE FOR CREDIT LOSSES
Balance at beginning of period		$	31,140			$	31,759			$	31,953			$	31,974			$	29,235
Loans charged-off			(242	)			(644	)			(224	)			(94	)			(103	)
Recoveries			22				25				30				73				42
Provision for credit loss expense			—				—				—				—				2,800
Balance at end of period		$	30,920			$	31,140			$	31,759			$	31,953			$	31,974
Allowance for credit losses / period-end loans			1.33	%			1.34	%			1.36	%			1.34	%			1.34	%
Allowance for credit losses / nonperforming loans			552.9				1,148.2				894.6				238.4				294.7
Net charge-offs / average loans (annualized)			0.04				0.11				0.03				0.00				0.01
NONPERFORMING ASSETS
Nonaccrual loans		$	5,592			$	2,712			$	3,550			$	13,405			$	10,848
Other real estate owned			—				—				—				38				38
Repossessed assets owned			234				250				—				—				—
Total nonperforming assets		$	5,826			$	2,962			$	3,550			$	13,443			$	10,886
Nonperforming assets as a percentage of:
Total loans(1)(2)			0.25	%			0.13	%			0.15	%			0.57	%			0.46	%
Total assets			0.18				0.09				0.11				0.40				0.32
(1) Excludes outstanding balances of loans held for sale of $976,000, $2.5 million, $795,000, $1.3 million, and $3.2 million as of December 31, September 30, June 30 and March 31, 2023, and December 31, 2022, respectively.
(2) Excludes deferred loan fees of $775,000, $946,000, $1.3 million, $1.6 million, and $2.0 million as of December 31, September 30, June 30 and March 31, 2023, and December 31, 2022, respectively.

		Quarter Ended
		2023																2022
(dollars in thousands)		December 31				September 30				June 30				March 31				December 31
NONINTEREST INCOME
Service charges		$	1,123			$	1,131			$	1,056			$	1,077			$	1,096
Net realized gain (loss) on securities transactions			—				—				(322	)			93				172
Net realized gain on sale of loans			196				218				473				314				310
Fiduciary and custodial income			624				637				630				638				642
Bank-owned life insurance income			249				267				211				214				209
Merchant and debit card fees			1,760				1,752				2,121				1,674				1,711
Loan processing fee income			116				128				142				134				150
Mortgage fee income			30				46				50				68				81
Other noninterest income			698				760				3,512				693				751
Total noninterest income		$	4,796			$	4,939			$	7,873			$	4,905			$	5,122
NONINTEREST EXPENSE
Employee compensation and benefits		$	12,715			$	11,944			$	11,939			$	12,264			$	12,364
Occupancy expenses			2,757				2,960				2,754				2,830				2,770
Legal and professional fees			954				902				985				583				779
Software and technology			1,740				1,490				1,531				1,396				1,525
Amortization			145				147				149				161				161
Director and committee fees			186				192				201				199				199
Advertising and promotions			352				288				269				267				488
ATM and debit card expense			763				803				739				599				740
Telecommunication expense			175				178				171				183				193
FDIC insurance assessment fees			321				363				522				301				359
Other noninterest expense			1,294				1,247				1,211				1,184				1,319
Total noninterest expense		$	21,402			$	20,514			$	20,471			$	19,967			$	20,897

		Quarter Ended December 31,
		2023												2022
(dollars in thousands)		Average Outstanding Balance				Interest Earned/ Interest Paid				Average Yield/ Rate				Average Outstanding Balance				Interest Earned/ Interest Paid				Average Yield/ Rate
ASSETS
Interest-earning assets:
Total loans(1)		$	2,329,227			$	35,573				6.06	%		$	2,305,688			$	30,189				5.19	%
Securities available for sale			187,119				1,540				3.27				202,829				1,478				2.89
Securities held to maturity			406,553				2,619				2.56				574,951				3,222				2.22
Nonmarketable equity securities			26,314				264				3.98				24,291				377				6.16
Interest-bearing deposits in other banks			56,207				800				5.65				49,422				454				3.64
Total interest-earning assets			3,005,420				40,796				5.39				3,157,181				35,720				4.49
Allowance for credit losses			(30,996	)											(29,634	)
Noninterest-earning assets			223,204												218,811
Total assets		$	3,197,628											$	3,346,358
LIABILITIES AND EQUITY
Interest-bearing liabilities:
Interest-bearing deposits		$	1,788,863			$	14,311				3.17	%		$	1,627,442			$	4,433				1.08	%
Advances from FHLB and fed funds purchased			140,761				1,915				5.40				240,489				2,408				3.97
Line of credit			4,255				95				8.86				—				—				—
Subordinated debt			46,438				534				4.56				49,806				514				4.09
Securities sold under agreements to repurchase			23,860				128				2.13				7,634				7				0.36
Total interest-bearing liabilities			2,004,177				16,983				3.36				1,925,371				7,362				1.52
Noninterest-bearing liabilities:
Noninterest-bearing deposits			865,817												1,102,016
Accrued interest and other liabilities			33,496												26,500
Total noninterest-bearing liabilities			899,313												1,128,516
Equity			294,138												292,471
Total liabilities and equity		$	3,197,628											$	3,346,358
Net interest rate spread(2)											2.03	%											2.97	%
Net interest income						$	23,813											$	28,358
Net interest margin(3)											3.14	%											3.56	%
Net interest margin, fully taxable equivalent(4)											3.11	%											3.57	%
(1) Includes average outstanding balances of loans held for sale of $799,000 and $1.5 million for the quarter ended December 31, 2023 and 2022, 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.
(4) Net interest margin on a taxable equivalent basis is equal to net interest income adjusted for nontaxable income divided by average interest-earning assets, annualized, using a marginal tax rate of 21%.

		Year Ended December 31,
		2023												2022
(dollars in thousands)		Average Outstanding Balance				Interest Earned/ Interest Paid				Average Yield/ Rate				Average Outstanding Balance				Interest Earned/ Interest Paid				Average Yield/ Rate
ASSETS
Interest-earning assets:
Total loans(1)		$	2,352,154			$	136,086				5.79	%		$	2,126,810			$	104,503				4.91	%
Securities available for sale			182,277				5,159				2.83				287,764				5,808				2.02
Securities held to maturity			449,097				11,210				2.50				518,213				10,789				2.08
Nonmarketable equity securities			27,371				1,288				4.71				18,791				1,246				6.63
Interest-bearing deposits in other banks			51,507				2,749				5.34				121,609				863				0.71
Total interest-earning assets			3,062,406				156,492				5.11				3,073,187				123,209				4.01
Allowance for credit losses			(31,601	)											(29,415	)
Noninterest-earning assets			220,230												216,812
Total assets		$	3,251,035											$	3,260,584
LIABILITIES AND EQUITY
Interest-bearing liabilities:
Interest-bearing deposits		$	1,698,758			$	44,981				2.65	%		$	1,670,287			$	9,753				0.58	%
Advances from FHLB and fed funds purchased			226,214				11,626				5.14				132,764				3,855				2.90
Line of credit			4,168				363				8.71				—				34				—
Subordinated debt			47,873				2,143				4.48				46,977				1,722				3.67
Securities sold under agreements to repurchase			20,635				399				1.93				8,596				16				0.19
Total interest-bearing liabilities			1,997,648				59,512				2.98				1,858,624				15,380				0.83
Noninterest-bearing liabilities:
Noninterest-bearing deposits			924,945												1,082,513
Accrued interest and other liabilities			30,924												25,537
Total noninterest-bearing liabilities			955,869												1,108,050
Equity			297,518												293,910
Total liabilities and equity		$	3,251,035											$	3,260,584
Net interest rate spread(2)											2.13	%											3.18	%
Net interest income						$	96,980											$	107,829
Net interest margin(3)											3.17	%											3.51	%
Net interest margin, fully taxable equivalent(4)											3.15	%											3.54	%
(1) Includes average outstanding balances of loans held for sale of $1.2 million and $2.4 million for the years ended December 31, 2023 and 2022, 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.
(4) Net interest margin on a taxable equivalent basis is equal to net interest income adjusted for nontaxable income divided by average interest-earning assets, using a marginal tax rate of 21%.

NON-GAAP RECONCILING TABLES

Tangible Book Value per Common Share

		As of
		2023																2022
(dollars in thousands, except per share data)		December 31				September 30				June 30				March 31				December 31
Equity attributable to Guaranty Bancshares, Inc.		$	303,300			$	296,226			$	296,862			$	299,700			$	294,984
Adjustments:
Goodwill			(32,160	)			(32,160	)			(32,160	)			(32,160	)			(32,160	)
Core deposit intangible, net			(1,418	)			(1,524	)			(1,633	)			(1,746	)			(1,859	)
Total tangible common equity attributable to Guaranty Bancshares, Inc.		$	269,722			$	262,542			$	263,069			$	265,794			$	260,965
Common shares outstanding(1)			11,540,644				11,554,094				11,603,167				11,925,357				11,941,672
Book value per common share		$	26.28			$	25.64			$	25.58			$	25.13			$	24.70
Tangible book value per common share(1)			23.37				22.72				22.67				22.29				21.85

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

Net Unrealized Loss on Securities, Tax Effected, as % of Total Equity

(dollars in thousands)		December 31, 2023
Total equity(1)		$	303,846
Less: net unrealized loss on HTM securities, tax effected			(23,451	)
Total equity, including net unrealized loss on AFS and HTM securities		$	280,395
Net unrealized loss on AFS securities, tax effected			15,156
Net unrealized loss on HTM securities, tax effected			23,451
Net unrealized loss on AFS and HTM securities, tax effected		$	38,607
Net unrealized loss on securities as % of total equity(1)			12.7	%
Total equity before impact of unrealized losses		$	319,002
Net unrealized loss on securities as % of total equity before impact of unrealized losses			12.1	%
Total average assets		$	3,197,628
Total equity to average assets			9.5	%
Total equity, adjusted for tax effected net unrealized loss, to average assets			8.8	%
(1) Includes the net unrealized loss on AFS securities, tax effected, of $15,156.

Cost of Total Deposits

		Quarter Ended
(dollars in thousands)		December 31, 2023				September 30, 2023				December 31, 2022
Total average interest-bearing deposits		$	1,788,863			$	1,726,218			$	1,627,442
Adjustments:
Noninterest-bearing deposits			865,817				888,772				1,102,016
Total average deposits		$	2,654,680			$	2,614,990			$	2,729,458
Total deposit-related interest expense		$	14,311			$	13,069			$	4,433
Average cost of interest-bearing deposits			3.17	%			3.00	%			1.08	%
Average cost of total deposits			2.14				1.98				0.64

About Non-GAAP Financial Measures

Certain of the financial measures and ratios we present, including “tangible book value per share”, "net unrealized loss on securities, tax effected, as a percentage of total equity" and "cost of total deposits" 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.

Conference Call Information

The Company will hold a conference call to discuss fourth quarter 2023 financial results on Tuesday, January 16, 2024 at 10:00 am Central Time. The conference call will be hosted by Ty Abston, Chairman and CEO and Shalene Jacobson, EVP and CFO. All conference attendees must register before the call at www.gnty.com/earningscall. The conference materials will be available by accessing the Investor Relations page on our website, www.gnty.com. A recording of the conference call will be available by 1:00 pm Central Time the day of the call and remain available through January 31, 2024 on our Investor Relations webpage.

About Guaranty Bancshares, Inc.

Guaranty Bancshares, Inc. is the parent company for Guaranty Bank & Trust, N.A. Guaranty Bank & Trust has 33 banking locations across 26 Texas communities located within the East Texas, Dallas/Fort Worth, Houston and Central Texas regions of the state. As of December 31, 2023, Guaranty Bancshares, Inc. had total assets of $3.2 billion, total loans of $2.3 billion and total deposits of $2.6 billion. Visit www.gnty.com 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"). 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.

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