MARKETABLE SECURITIES

9 Months Ended

Sep. 30, 2023

Investments, Debt and Equity Securities [Abstract]

NOTE 2 - MARKETABLE SECURITIES

The following tables summarize the amortized cost and fair value of available for sale and held to maturity securities as of September 30, 2023 and December 31, 2022 and the corresponding amounts of gross unrealized gains and losses:


September 30, 2023	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Available for sale:
Corporate bonds	$	29,902	$	—	$	3,353	$	26,549
Municipal securities		2,322		42		—		2,364
Mortgage-backed securities		151,424		19		19,302		132,141
Collateralized mortgage obligations		19,725		—		2,135		17,590
Total available for sale	$	203,373	$	61	$	24,790	$	178,644

Held to maturity:
U.S. government agencies	$	9,254	$	—	$	1,357	$	7,897
Treasury securities		69,307		—		1,725		67,582
Municipal securities		168,992		104		9,568		159,528
Mortgage-backed securities		122,231		—		19,631		102,600
Collateralized mortgage obligations		38,524		—		8,440		30,084
Total held to maturity	$	408,308	$	104	$	40,721	$	367,691


December 31, 2022	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Available for sale:
Corporate bonds	$	29,964	$	—	$	2,177	$	27,787
Municipal securities		10,324		326		8		10,642
Mortgage-backed securities		145,896		1		15,556		130,341
Collateralized mortgage obligations		21,981		3		1,827		20,157
Total available for sale	$	208,165	$	330	$	19,568	$	188,927

Held to maturity:
U.S. government agencies	$	9,141	$	—	$	1,259	$	7,882
Treasury securities		133,735		—		2,921		130,814
Municipal securities		191,680		658		8,285		184,053
Mortgage-backed securities		132,693		—		14,708		117,985
Collateralized mortgage obligations		41,759		—		7,425		34,334
Total held to maturity	$	509,008	$	658	$	34,598	$	475,068

From time to time, we have reclassified certain securities from available for sale to held to maturity. Such transfers are made at fair value at the date of transfer. The unrealized holding gains and losses at the date of transfer are retained in accumulated other comprehensive loss and in the carrying value of the held to maturity securities and are amortized or accreted over the remaining life of the security. During the second quarter of 2022, we transferred $106,157 of securities from available for sale to held to maturity, which included a net unrealized loss on the date of transfer of $13,186. During the third quarter of 2021, we transferred $172,292 of securities from available for sale to held to maturity, which included a net unrealized gain on the date of transfer of $10,235. These unamortized unrealized losses and unaccreted unrealized gains on our transferred securities are included in accumulated other comprehensive loss on our balance sheet and they netted to an unrealized loss of $6,791 at September 30, 2023 compared to an unrealized loss of $5,861 at December 31, 2022. This amount will continue to be amortized and accreted out of accumulated other comprehensive loss over the remaining life of the underlying securities as an adjustment of the yield on those securities.

There is no allowance for credit losses recorded for our available for sale or held to maturity debt securities as of September 30, 2023 or December 31, 2022.

Information pertaining to securities with gross unrealized losses as of September 30, 2023 and December 31, 2022, for which no allowance for credit losses has been recorded, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position is detailed in the following tables:


	Less Than 12 Months					12 Months or Longer					Total
September 30, 2023	Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value
Available for sale:
Corporate bonds	$	—		$	—	$	(3,353	)	$	26,549	$	(3,353	)	$	26,549
Mortgage-backed securities		(454	)		21,642		(18,848	)		98,588		(19,302	)		120,230
Collateralized mortgage obligations		(3	)		3,117		(2,132	)		14,473		(2,135	)		17,590
Total available for sale	$	(457	)	$	24,759	$	(24,333	)	$	139,610	$	(24,790	)	$	164,369

Held to maturity:
U.S. government agencies	$	—		$	—	$	(1,357	)	$	7,897	$	(1,357	)	$	7,897
Treasury securities		(1,725	)		67,582		—			—		(1,725	)		67,582
Municipal securities		(798	)		61,215		(8,770	)		77,783		(9,568	)		138,998
Mortgage-backed securities		—			—		(19,631	)		102,600		(19,631	)		102,600
Collateralized mortgage obligations		—			—		(8,440	)		30,084		(8,440	)		30,084
Total held to maturity	$	(2,523	)	$	128,797	$	(38,198	)	$	218,364	$	(40,721	)	$	347,161


	Less Than 12 Months					12 Months or Longer					Total
December 31, 2022	Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value
Available for sale:
Corporate bonds	$	(1,518	)	$	20,323	$	(659	)	$	7,464		(2,177	)		27,787
Municipal securities		(8	)		1,659		—			—		(8	)		1,659
Mortgage-backed securities		(6,150	)		74,146		(9,406	)		55,826		(15,556	)		129,972
Collateralized mortgage obligations		(908	)		16,575		(919	)		3,411		(1,827	)		19,986
Total available for sale	$	(8,584	)	$	112,703	$	(10,984	)	$	66,701	$	(19,568	)	$	179,404

Held to maturity:
U.S. government agencies	$	(1,259	)	$	7,882	$	—		$	—	$	(1,259	)	$	7,882
Treasury securities		(2,921	)		130,814		—			—		(2,921	)		130,814
Municipal securities		(7,071	)		118,117		(1,214	)		3,701		(8,285	)		121,818
Mortgage-backed securities		(8,355	)		80,556		(6,353	)		37,429		(14,708	)		117,985
Collateralized mortgage obligations		(1,031	)		10,750		(6,394	)		23,584		(7,425	)		34,334
Total held to maturity	$	(20,637	)	$	348,119	$	(13,961	)	$	64,714	$	(34,598	)	$	412,833

There were 292 investments in an unrealized loss position at September 30, 2023, of which 77 were available for sale debt securities in an unrealized loss position with no recorded allowance for credit losses. The available for sale securities in a loss position were composed of corporate bonds, collateralized mortgage obligations and mortgage-backed securities. Management evaluates available for sale debt securities in an unrealized loss position to determine whether the impairment is due to credit-related factors or noncredit-related factors. With respect to the collateralized mortgage obligations and mortgage-backed securities issued by the U.S. government and its agencies, the Company has determined that a decline in fair value is not due to credit-related factors. The Company monitors the credit quality of other debt securities through the use of credit ratings and other factors specific to an individual security in assessing whether or not the decline in fair value of municipal or corporate securities, relative to their amortized cost, is due to credit-related factors. Triggers to prompt further investigation of securities when the fair value is less than the amortized cost are when a security has been downgraded and falls below an A credit rating, and the security’s unrealized loss exceeds 20% of its book value. Consideration is given to (1) the extent to which fair value is less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the security for a period of time sufficient to allow for any anticipated recovery in fair value. Based on evaluation of available evidence, management believes the unrealized losses on the securities as of September 30, 2023 and December 31, 2022 are not credit-related. Management does not have the intent to sell any of these securities and believes that it is more likely than not the Company will not have to sell any such securities before recovery of cost. The fair values are expected to recover as the securities approach their maturity date or

repricing date or if market yields for the investments decline. Accordingly, no allowance for credit losses has been recorded for these securities.

Management assesses held to maturity securities sharing similar risk characteristics on a collective basis for expected credit losses under the current expected credit losses ("CECL") methodology. As of September 30, 2023 and December 31, 2022, our held to maturity securities consisted of U.S. government agencies, municipal bonds, treasury securities, collateralized mortgage obligations and mortgage-backed securities issued by the U.S. government and its agencies. With regard to the treasuries, collateralized mortgage obligations and mortgage-backed securities issued by the U.S. government, or agencies thereof, it is expected that the securities will not be settled at prices less than the amortized cost bases of the securities as such securities are backed by the full faith and credit of and/or guaranteed by the U.S. government. For municipal securities, management reviewed key risk indicators, including ratings by credit agencies when available, and determined that there is no current expectation of credit loss. Accordingly, no allowance for credit losses has been recorded for these securities.

As of September 30, 2023, there were no holdings of securities of any one issuer, other than the collateralized mortgage obligations, treasuries and mortgage-backed securities issued by the U.S. government and its agencies, in an amount greater than 10% of total equity attributable to Guaranty Bancshares, Inc.

Securities with fair values of approximately $292,192 and $396,584 at September 30, 2023 and December 31, 2022, respectively, were pledged to secure public fund deposits and for other purposes as required or permitted by law.

The proceeds from sales of available for sale securities and the associated gains and losses are listed below for the:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023			2022
Proceeds from sales	$	—	$	—	$	21,268		$	—
Gross gains		—		—		184			—
Gross losses		—		—		(413	)		—

The contractual maturities at September 30, 2023 of available for sale and held to maturity securities at carrying value and estimated fair value are shown below. Expected maturities may differ from contractual maturities because borrowers and/or issuers may have the right to call or prepay their obligation with or without call or prepayment penalties.


	Available for Sale				Held to Maturity
September 30, 2023	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due within one year	$	2,005	$	1,967	$	46,996	$	46,316
Due after one year through five years		7,544		7,145		68,569		65,029
Due after five years through ten years		22,675		19,801		80,411		76,728
Due after ten years		—		—		51,577		46,934
Mortgage-backed securities		151,424		132,141		122,231		102,600
Collateralized mortgage obligations		19,725		17,590		38,524		30,084
Total securities	$	203,373	$	178,644	$	408,308	$	367,691