MARKETABLE SECURITIES

6 Months Ended

Jun. 30, 2022

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 June 30, 2022 and December 31, 2021 and the corresponding amounts of gross unrealized gains and losses:


June 30, 2022	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Available for sale:
Corporate bonds	$	35,029	$	—	$	1,455	$	33,574
Municipal securities		9,500		10		62		9,448
Mortgage-backed securities		144,128		18		14,962		129,184
Collateralized mortgage obligations		25,256		17		1,384		23,889
Total available for sale	$	213,913	$	45	$	17,863	$	196,095

Held to maturity:
U.S. government agencies	$	9,066	$	—	$	1,181	$	7,885
Treasury securities		324,510		—		2,832		321,678
Municipal securities		196,262		518		8,446		188,334
Mortgage-backed securities		138,802		2		12,807		125,997
Collateralized mortgage obligations		44,750		—		6,147		38,603
Total held to maturity	$	713,390	$	520	$	31,413	$	682,497


December 31, 2021	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Available for sale:
U.S. government agencies	$	10,013	$	—	$	42	$	9,971
Corporate bonds		35,080		940		85		35,935
Mortgage-backed securities		221,610		1,477		1,779		221,308
Collateralized mortgage obligations		74,925		971		904		74,992
Total available for sale	$	341,628	$	3,388	$	2,810	$	342,206

Held to maturity:
Municipal securities	$	181,310	$	8,364	$	118	$	189,556
Mortgage-backed securities		2,953		—		37		2,916
Total held to maturity	$	184,263	$	8,364	$	155	$	192,472

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 net unrealized holding gains or losses at the date of transfer are retained in other comprehensive income and in the carrying value of the held to maturity securities and are amortized 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. The net unamortized, unrealized loss remaining on transferred securities included in accumulated other comprehensive loss in the accompanying balance sheets totaled $5,263 at June 30, 2022, compared to a net unamortized, unrealized gain of $8,860 at December 31, 2021. This amount will be amortized 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 June 30, 2022 or December 31, 2021.

Information pertaining to securities with gross unrealized losses as of June 30, 2022 and December 31, 2021, 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
June 30, 2022	Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value
Available for sale:
Corporate bonds	$	(1,455	)	$	33,574	$	—		$	—	$	(1,455	)	$	33,574
Municipal securities		(62	)		8,024		—			—		(62	)		8,024
Mortgage-backed securities		(12,272	)		113,242		(2,690	)		14,774		(14,962	)		128,016
Collateralized mortgage obligations		(1,384	)		22,706		—			—		(1,384	)		22,706
Total available for sale	$	(15,173	)	$	177,546	$	(2,690	)	$	14,774	$	(17,863	)	$	192,320

Held to maturity:
U.S. government agencies	$	(1,181	)	$	8,830	$	—		$	—	$	(1,181	)	$	8,830
Treasury securities		(2,832	)		321,678		—			—		(2,832	)		321,678
Municipal securities		(8,446	)		103,252		—			—		(8,446	)		103,252
Mortgage-backed securities		(11,834	)		104,888		(973	)		5,627		(12,807	)		110,515
Collateralized mortgage obligations		(6,147	)		43,104		—			—		(6,147	)		43,104
Total held to maturity	$	(30,440	)	$	581,752	$	(973	)	$	5,627	$	(31,413	)	$	587,379


	Less Than 12 Months					12 Months or Longer					Total
December 31, 2021	Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value
Available for sale:
U.S. government agencies	$	(42	)	$	9,971	$	—		$	—	$	(42	)	$	9,971
Corporate bonds		(85	)		11,418		—			—		(85	)		11,418
Mortgage-backed securities		(1,383	)		144,367		(396	)		11,317		(1,779	)		155,684
Collateralized mortgage obligations		(904	)		40,172		—			—		(904	)		40,172
Total available for sale	$	(2,414	)	$	205,928	$	(396	)	$	11,317	$	(2,810	)	$	217,245

Held to maturity:
Municipal securities	$	(37	)	$	7,772	$	(81	)	$	2,996	$	(118	)	$	10,768
Mortgage-backed securities		(37	)		2,916		—			—		(37	)		2,916
Total held to maturity	$	(74	)	$	10,688	$	(81	)	$	2,996	$	(155	)	$	13,684

There were 265 investments in an unrealized loss position, of which 81 were available for sale debt securities in an unrealized loss position with no recorded allowance for credit losses as of June 30, 2022. The available for sale securities in a loss position were composed of corporate bonds, municipal securities, 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 June 30, 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 CECL. As of June 30, 2022, our held to maturity securities consisted of U.S. government agencies, municipal bonds, treasury securities 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.

Mortgage-backed securities and collateralized mortgage obligations are backed by pools of mortgages that are insured or guaranteed by the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association or the Government National Mortgage Association.

As of June 30, 2022, 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 $397,018 and $310,958 at June 30, 2022 and December 31, 2021, respectively, were pledged to secure public fund deposits and for other purposes as required or permitted by law.

There were no securities sold during the six months ended June 30, 2022 or 2021.

The contractual maturities at June 30, 2022 of available for sale and held to maturity securities at carrying value and estimated fair value are shown below. The Company invests in mortgage-backed securities and collateralized mortgage obligations that have expected maturities that differ from their contractual maturities. These differences arise 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
June 30, 2022	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due within one year	$	—	$	—	$	276,151	$	274,879
Due after one year through five years		17,279		16,826		162,627		160,856
Due after five years through ten years		27,250		26,196		62,262		58,025
Due after ten years		—		—		28,798		24,137
Mortgage-backed securities		144,128		129,184		138,802		125,997
Collateralized mortgage obligations		25,256		23,889		44,750		38,603
Total securities	$	213,913	$	196,095	$	713,390	$	682,497