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GUARANTY BANCSHARES INC /TX/ (GNTY)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered a clean beat on internal drivers: net earnings rose to $10.0M ($0.88 basic EPS) with FTE NIM expanding 21 bps QoQ to 3.54%, ROAA 1.27% and efficiency ratio improving to 62.23% as deposit costs fell and noninterest expense declined .
  • Credit tightened further: nonperforming assets fell to 0.16% of assets (from 0.66% in Q3) after selling a large ORE property; ACL/loans held steady at 1.33% and net charge-offs were effectively zero in Q4 .
  • Management outlook: modeling continued NIM expansion through 2025 (baseline ~2 bps per month), more aggressive share repurchases, modest 1–2% expense growth with a 2.5% of assets OpEx target, and a more constructive loan growth stance supported by ~$165M of bond portfolio cash flows in 2025 .
  • Catalysts into 1H25: further NIM lift as liabilities reprice lower, cleanup of last ORE in Q1 2025, and accelerated buybacks; risks include continued loan shrinkage and AOCI sensitivity (Q4 OCI impacted equity by ~$8.1M) if rates retrace .

What Went Well and What Went Wrong

What Went Well

  • Margin/pricing power: FTE NIM rose to 3.54% (up 21 bps QoQ; 43 bps YoY) as deposit costs declined and earning assets repriced higher; net interest income increased $2.0M QoQ to $26.2M .
  • Credit quality normalization: NPA/Assets fell to 0.16% (from 0.66% in Q3) following sale of Austin ORE; net charge-offs were ~0.00% annualized; ACL coverage remained 1.33% of loans .
  • Expense discipline: Noninterest expense fell $0.8M QoQ (driven by lower healthcare/salaries and absence of prior ORE holding costs), driving efficiency ratio improvement to 62.23% .
    • Management: “We are very satisfied with our fourth quarter and year-end 2024 financial results... net interest margin... 3.54% for the fourth quarter... We believe we are well positioned for loan growth... during 2025.” — Ty Abston .

What Went Wrong

  • Loan contraction: Gross loans declined $5.4M QoQ and $191.4M YoY as tighter underwriting and softer demand persisted, pressuring asset balances despite stronger NIM .
  • AOCI headwind: Equity dipped slightly QoQ as ~$8.1M higher unrealized securities losses offset $10.0M net income and $2.7M dividends .
  • Mix/Deposit dynamics: Noninterest-bearing deposits fell to 31.1% (from 31.5% in Q3), and total loan interest income was down YoY; deposit costs, though improving, remain elevated versus 2023 .

Financial Results

Core P&L metrics

MetricQ2 2024Q3 2024Q4 2024
Net Interest Income ($USD Millions)$23.880 $24.191 $26.221
Noninterest Income ($USD Millions)$4.599 $5.154 $5.726
Net Earnings ($USD Millions)$7.423 $7.379 $10.008
EPS (Basic, $)$0.65 $0.65 $0.88
FTE NIM (%)3.26% 3.33% 3.54%
Efficiency Ratio (%)72.34% 70.47% 62.23%
ROAA (%)0.95% 0.96% 1.27%
ROAE (%)9.91% 9.58% 12.68%

Balance sheet and credit KPIs (period-end)

MetricQ2 2024Q3 2024Q4 2024
Total Assets ($USD Millions)$3,081.617 $3,097.105 $3,115.554
Gross Loans ($USD Millions)$2,214.997 $2,136.537 $2,131.137
Total Deposits ($USD Millions)$2,626.162 $2,668.914 $2,692.167
NPA / Assets (%)0.71% 0.66% 0.16%
ACL / Loans (%)1.32% 1.34% 1.33%
Cost of Total Deposits (%)2.28% 2.31% 2.11%
Noninterest-bearing Deposits (% of Total)31.2% 31.5% 31.1%

Loan portfolio mix ($USD Millions)

CategoryQ2 2024Q3 2024Q4 2024
Commercial & Industrial$264.058 $245.738 $254.702
Construction & Development$231.053 $213.014 $218.617
Commercial Real Estate$899.120 $866.112 $866.684
1–4 Family Residential$526.650 $524.245 $529.006
Total Loans$2,214.997 $2,136.537 $2,131.137

Note: Management highlights office-related loans at 5.9% of total loans (avg. balance ~$530K) within CRE/C&D concentration (CRE 40.7%, C&D 10.3%) as of Q4 2024 .

Guidance Changes

Metric/TopicPeriodPrevious GuidanceCurrent GuidanceChange
NIM trajectory (FTE)2025Not previously quantifiedModeling continued NIM expansion through 2025; baseline ~2 bps/month Raised specificity/positive bias
Loan growth outlook2025Strategically shrinking balance sheet to position for future growth “Much more optimistic” on loan growth; capacity and liquidity in place More constructive
Operating expenses2025N/AExpect up ~1–2%; targeting ~2.5% of total assets New quantified target reiterated
Share repurchases2025Active but moderate buybacks in 2024 Plan to be “much more aggressive” given valuation/capital Accelerated
ORE resolutionQ1 2025Expected year-end 2024 resolution of ORE One remaining SF ORE expected to be resolved/sold in Q1 2025 Slight timing shift
Deposit costsNear-termStabilized in Q3 Flat to down if rates hold; liability costs decreased 27 bps in Q4 Improving
Funding for growth2025N/A~$165M bond portfolio cash flows available in 2025 New disclosure
DividendOngoing$0.24/quarter (Q3/Q2) $0.24 declared Dec-2024, paid Jan 8, 2025 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2, Q-1)Current Period (Q4 2024)Trend
NIM/MarginNIM improved to 3.26% (Q2) and 3.33% (Q3) as deposit cost increases slowed and assets repriced higher .NIM 3.54%; management modeling further expansion through 2025; baseline ~2 bps/month .Improving
Loan growthBalance sheet shrink to build liquidity/capital; cautious underwriting (Q2/Q3) .More optimistic on 2025 loan growth; utilization up in C&I from existing customers .Turning positive
Deposit costs/mixCosts stabilized with minimal increases in Q2/Q3; NIBD ~31–32% .Costs down; cost of total deposits 2.11%; NIBD 31.1%; seasonality in public funds noted .Improving
Credit/OREORE elevated in Q2/Q3 with expected resolution by year-end .NPA/Assets 0.16% after Austin ORE sale; last SF ORE targeted for Q1 2025 .Normalizing
Capital/AOCI & BuybacksBuybacks ongoing (Q2/Q3); liquidity/capital strong .Aggressive repurchase stance planned; equity impacted by $8.1M OCI in Q4; contingent liquidity ~$1.3B .More proactive
ExpensesMixed in Q2/Q3; ORE holding costs pressured Q3 .Down QoQ; 2025 expense growth 1–2% with 2.5% of assets target .Better control

Management Commentary

  • Strategy and capital allocation: “We also see a disconnect between our current stock price and what we feel is the fair market value... plan to utilize our strong capital position to much more aggressively buy back stock in the coming months.” — Ty Abston .
  • Margin drivers: “Fed lowered rates by 50 bps... we benefited on the cost of deposits while loans/securities continue to reprice upward... average rate on costing liabilities decreased 27 bps to 3.09%.” — Shalene Jacobson .
  • Credit and originations: “We originated $103.1M of new loans at an average rate of 7.36%... nonperforming assets to total assets were 0.16% at year-end... essentially no net charge-offs in Q4.” — Shalene Jacobson .
  • NIM outlook: “We’re modeling continued growth in our NIM throughout ’25... 2 bps per month as a baseline.” — Ty Abston .

Q&A Highlights

  • NIM sustainability: Small nonaccrual interest recovery (<$500K) had minimal impact; management still expects NIM expansion across rate scenarios, using ~2 bps/month baseline going forward .
  • Loan growth trajectory: Expectation for positive growth in 2025, with improved opportunity set; Q4 C&I growth mainly from line utilization by existing customers .
  • Deposits/funding: Not focused on raising marginal funds; core checking remains a franchise priority; ~$165M bond cash flows expected to fund growth in 2025; some Q4 public fund seasonality .
  • Expenses: 2025 noninterest expense up ~1–2%; employee compensation likely up in Q1 after unusually low Q4 healthcare claims; targeting ~2.5% of assets .
  • Provision/ACL: With stable credit and potential improvement in qualitative factors, provision likely low; reversals possible if growth under-shoots; ACL at 1.33% of loans .
  • Buybacks: Management prepared to be “much more aggressive,” with capacity to execute remaining authorization as valuation disconnect persists .

Estimates Context

  • Wall Street consensus (S&P Global) for EPS and revenue was unavailable at time of analysis due to data access limits; we attempted multiple retrievals but hit SPGI daily request limits. As a result, we cannot provide vs-consensus beats/misses for Q4 2024 at this time [Values retrieved from S&P Global unavailable due to request limits].
  • Implication: Given the strong QoQ improvement in NIM, net income, and efficiency, and the clear positive outlook on NIM and buybacks, Street estimates for 2025 NIM/earnings may need upward revision if deposit costs continue to moderate and loan growth materializes .

Key Takeaways for Investors

  • NIM inflection is intact; management is explicitly modeling continued expansion through 2025, providing a tangible path to further EPS improvement if liability costs keep easing and asset yields hold .
  • Credit normalization (NPA/Assets 0.16%) and minimal charge-offs de-risk the story; with the last ORE sale targeted for Q1 2025, reported metrics should remain clean .
  • Expense control plus mix tailwinds drove a step-change in efficiency (62.23%); 2025 OpEx growth is expected to be just 1–2% with a 2.5% of assets target, supporting positive operating leverage .
  • Capital deployment is turning more assertive: expect accelerated buybacks given perceived valuation disconnect and strong capital generation—an incremental EPS lever even with modest loan growth .
  • Loan balances are still drifting lower; a turn to net growth in 2025 would add a second earnings driver alongside NIM; watch early-2025 origination trends and utilization rates .
  • AOCI remains a swing factor for book value; Q4 OCI losses trimmed equity QoQ—rate volatility is the key sensitivity for tangible book momentum .
  • Near-term trading setup favors names with visible NIM expansion/clean credit and capital return; catalysts include Q1 ORE resolution, buyback pace, and sustained deposit cost declines .

Supporting Detail: Additional Press Releases

  • Dividend maintained at $0.24/share (declared Dec 19, 2024; paid Jan 8, 2025) .
  • Full Q4 press release and detailed financial tables (duplicative of 8-K Exhibit 99.1) provide quarter and annual statistics including NIM, efficiency, and credit metrics .