Guaranty Bancshares, Inc.

Good morning. Welcome to Guaranteed Bank Share's second quarter of 2023 earnings call. My name is Nona Branch, and I will be your operator for today's call. This call is being recorded. After our prepared remarks, there will be a Q&A session. For our host today, for today's call will be Ty Abston, Chairman and Chief Executive Officer of the company. Cappy Payne, Senior Executive Vice President and Chief Financial Officer of the company. Shalene Jacobson, Executive Vice President and Chief Financial Officer of the Bank. To begin our call, I will now turn it over to our CEO, Ty Adston.

Thank you, Nona. Good morning, everyone. Again, welcome to our earnings call for the second quarter. We have a presentation. I'm going to have Cappy and Shalene go through, and then when we're done, we'll answer any questions anyone has. Cappy?

Thank you, Ty. Good morning, everyone. Let's take a quick look at the balance sheet first. If you're joining us on your computer, you see a PowerPoint presentation where we have some bullet points. Our total assets for the quarter were down about $150 million. That's about 4.5% to the total balance at June 30 of $3.21 billion. The biggest drivers of that on the liability side, we show... The Federal Home Loan Bank advances were down $145 million, and deposits were down about $20 million. Then on the asset side, according to you'll see in the press release, the decreases were mainly driven by Fed funds were down about $50 million. Our securities portfolio was down about $46 million, and then the loans were down about $44 million for the quarter. To give a little of securities detail, the securities portfolio detail, we did have $25 million in short-term treasuries mature during the quarter, and then the rest of that decrease was pretty much from normal paydowns and a few maturities of municipal bonds in the portfolio. Municipal bonds were down for the quarter about $8 million and about $24 million year-to-date. And then our total securities portfolio is down about 90 million since December 31, 2022, since last year. As I said, loans decreased for the quarter about 44 million. That's 1.8%. That's period to period. Total loans are now 2.3 billion. Our new loan originations have slowed and pay downs and payoffs have picked up a little bit. Chalene is going to give us a little more detail on that in the next couple of slides. Looking at the deposit side, as I said, total deposits decreased slightly by 20 million. We did see, we saw customer deposit migration slowing compared to Q1 where deposits were down about 58 million. We did see a decrease of our non-interest bearing deposits of 77 million during the quarter. I think this is pretty much a trend we've been talking about where our non-interest bearing deposits still represent 35% of total deposits at period end. We also had a $28 million decrease in public fund money, which represents about 10% of our public fund money. And it's It has shown to be very typical in recent past years for second quarter trends to show a pretty good decrease. Then looking at our total equity, it did decrease $3 million. The income earned for the quarter was offset by some stock purchases. We bought back about $8.1 million in stock. That's 322,600 shares bought back. That's about 2.7% of shares outstanding. We also continued to pay a dividend, paid a dividend of 23 cents per share. That was 2.7 million of the decrease. And that's 33 years now of paying an increasing dividend. And that dividend equates to about a 3.4% dividend yield currently. Then looking over at the income statement, the earnings section, our reported earnings were $9.6 million. And as indicated in the earnings release, we did record a one-time gain net of tax of $2.2 million on a sale of some correspondent bank stock. And that coupled with the realized loss of $322,000 that we incurred on restructuring some of, I think it's about $14 million of our securities portfolio, that would get us to core or operating earnings for the quarter of $7.7 million, which represents an earnings per share of $0.65 compared to the reported earnings per share of $0.82 per person. Then the reported ROA is 1.17% and ROE is 12.87%. So looking at our margin a little closer, our net interest income was 24.7 million for the quarter. That equates to a fully tax equivalent net interest margin of 3.19%. That's down five basis points linked quarter. And then looking at some of the major components of that, our loan yield did increase 24 basis points. And that's on that 2.4 billion average balance of loans outstanding. And our securities yield increased approximately 16 basis points. And that's on the average balance of 631 million. Remember, we did have those... Short-term lower yielding treasuries roll off, actually for the first six months, totaled about $45 million so far this year. So our total earning assets yield increased 24 basis points, and that's on the 3.1 billion in average earning assets for the quarter. Then looking on the liability or the costing side, we saw increases in our interest-bearing liabilities in order to remain competitive and to defend our customer deposit base, our total cost of deposits, which includes non-interest-bearing, increased 35 basis points to 1.53%, which represents a beta on our total costing deposits of about 74% for the quarter. Been looking at the non-interest income section. I've already discussed the one-time gain of $2.8 million gross before tax effect. And then that coupled with the realized loss of $322,000 makes our core non-interest income total for a quarter to be $5.4 million. Pretty much in line with that. with what our guidance is, which guidance is now about 20, between 20 million and 21 million. In the non-interest expense category, we did increase expenses 504,000 linked quarter. We detailed in the press release some increases, FDIC insurance increase in software cost increasing, which will be ongoing probably, and then Then some professional fees that were really related to one-time charges, mainly related to our annual meeting. So our expenses are pretty much in line with our expense budget for the first six months. And our efficiency ratio, as reported in the press release, was 62.84%. So I'll turn it over to Shalene, and she'll continue on.