2021 ANNUAL REPORT 1 THERE’S NO PLACE LIKE TEXAS We believe there’s no better place to live and thrive than our home state of Texas. And we couldn’t be more proud to celebrate the extraordinary boom Texas continues to experience. Here is a look back at the bountiful economic opportunities Texas, and in turn Guaranty clients, enjoyed in 2021. SHAREHOLDER LETTER 4 GUARANTY BANCSHARES, INC. BOARD OF DIRECTORS 8 2021 YEAR IN REVIEW STATE OF TEXAS ECONOMY STOCK PRICE, EARNINGS, & DIVIDENDS CHART FINANCIAL HIGHLIGHTS 10 YEAR ASSET GROWTH CHART 5 YEAR GROWTH TRENDS BANK LOCATIONS DIGITAL TRANSFORMATION GUARANTY BANK & TRUST BOARD MEMBERS 9 10 13 14 15 15 16 17 19 2 3 TEXAS SHINES BRIGHT A LETTER FRO M OUR CE O TY ABSTON CHA IRMAN OF THE BOARD & C EO DE AR F ELLOW S H ARE H OLDE RS , Many existing companies are prospering, and new companies continue to relocate here. Guaranty Bancshares reported very The 2021 One-Way U-Haul Growth Index listed Texas as the #1 state in the country for positive results for 2021, and prospects net migrations of people, as shown in the chart on page 11. Opportunities for growth are good for a strong 2022. As this report continue, and we are optimistic about the near- and long-term prospects for the state and highlights, Texas is thriving in many ways. for our Company. Guaranty has not only benefited from the presence of our statewide banking The global pandemic has certainly changed the way we all go about our days. While variants footprint but is uniquely positioned to of the COVID-19 virus have caused cases to spike, I am encouraged that we are learning to help our customers and communities live with the virus and hopeful that we will move from a pandemic to an endemic stage in continue to grow and prosper. the coming months. It is likely that 2022 will be the year we all get back to a more normal We are pleased with our Company’s daily environment. performance in 2021. We achieved record For many customers and employees of our Bank, that “more normal” environment will net earnings of $39.8 million in 2021, a actually contain some “new normal” elements. We have implemented a flexible work 45.3% increase over 2020 net earnings of schedule for employees whose positions are conducive to those types of arrangements in $27.4 million, which was lower primarily order to enhance work-life balance with our staff and to maintain our constant focus on ways due to a $13.2 allowance for credit losses to strengthen Guaranty’s culture. Further, an increasing number of customers have used provision that we set aside for possible and embraced digital technology in 2020, with that number continuing to grow in 2021. Our negative effects of COVID-19. Core Bank is committed to finding or developing technology that provides innovative and useful earnings (which are defined on page 15) bank products so that any customer can conduct banking business through either digital or during 2021 were $39.0 million, slightly in-person methods, even outside of normal operating hours when needed. Technology and below our record 2020 core earnings of digital financial tools are evolving quickly, and our technology strategy team, led by our Chief $40.3 million. Loans and deposits grew Digital Officer, continues to evaluate and implement new digital banking tools. to record levels of $1.91 and $2.67 billion, respectively, a 2.1% and 16.8% increase over 2020. We opened 14,548 new checking and savings accounts across “ Opportunities for growth continue, and we are optimistic about the near- and long-term prospects for the State and for our Company.” our statewide banking footprint, further In another new normal, the stock market was again very volatile in 2021. Even with the building our core deposit franchise and prospect of rising rates and the effects of the pandemic on credit quality, bank stocks in developing new customer relationships. general held their value. Overall, Nasdaq bank stocks were up 34.61% in 2021, as measured by More importantly, we are well positioned for the 10% stock dividend declared in the first quarter of 2021. Our stock performed well last to further benefit from the tremendous year, and our five-year average total return of 13.24% compares very favorably to peer indexes. growth our great state is experiencing. Additionally, the record high annual dividend of $0.80 per share represents 35 consecutive the KBW NASDAQ Bank Stock Index, while GNTY stock total return was up 40.96%, adjusted 4 5 years of shareholder dividends that has grown at a compound annual rate of 9.30%. These successes have led to our Company being recognized in the industry and beyond in several ways, one of which was Guaranty being named one of Texas Monthly’s Best While 2022 also promises to be a busy year for our Company, we achieved several key Companies to Work for in Texas for the 13th consecutive year. objectives within our strategic plan in 2021, including the following achievements: Grew total assets from $2.74 billion to $3.09 billion, an increase of $345 million or 12.6% over 2020. Maintained stellar asset quality with net charge-offs of only 0.08% of average loans and a low problem asset ratio of 0.09% of total assets. Continued to assist our small-business customers and our communities through origination of $101 million in additional Paycheck Protection Program (PPP) loans to 1,349 borrowers, bringing our total PPP originations to over $300 million to more than 3,000 borrowers. Gave back to our communities through monetary and volunteer efforts to local charities, with more than $300,000 and over 3,000 employee volunteer hours donated to 131 different organizations. Relocated our primary Denton bank location to a new facility at 1200 University Drive to accommodate our continued growth in that market. Opened new bank locations in Georgetown and Lakeway to further our expansion and growth in the vibrant Austin MSA region. Added more cybersecurity software and controls, including an independent offsite data facility that further protects the bank and our customers from ransomware attacks. Enhanced our online account opening software to provide ability to open a deposit account on any mobile device in just five minutes. Released an updated mobile banking app and online banking platform that enhances our customers’ digital banking experience. PLANS FOR THE COM IN G Y EAR During 2022, we will continue to execute our recently updated strategic plan, which includes continued growth of our new and existing bank locations in all of our regions, further enhancement of our digital product and technology offerings, and seeking acquisition opportunities in markets that fit Guaranty’s banking model, while continuing to build value for our shareholders. Thank you, fellow shareholders, for your continued investment, support, and confidence in Guaranty Bancshares and Guaranty Bank & Trust. TY ABSTON CHAI R MAN OF T HE BOAR D & CE O 6 7 LEADING THE WAY G U A R A N T Y B A N C S H A R E S , I N C . B O A R D O F D I R E C T O R S 2021 STARRING TEXAS YEAR IN REVIEW ROW 1 - LEFT TO RIGHT ROW 2 - LEFT TO RIGHT RICKY BAKER CAPPY PAYNE KRB Investments, LLC Senior Executive Vice KIRK LEE President TY ABSTON Chairman of the Board & CEO Guaranty Bancshares, Inc. MOLLY CURL Retired Partner Grant Thornton, LLC BILL PRIEFERT Chairman & CEO President & CFO Guaranty Bancshares, Inc. Guaranty Bancshares, Inc. JEFF BROWN CARL JOHNSON, JR. Managing Partner Principal RoseRock Baker & Johnson, CPA BRAD DRAKE CEO MIKE NOLAN Investments Lamar Companies, LLC Priefert Manufacturing, Inc. JIM BUNCH CHRIS ELLIOTT President & CEO President BWI, Inc. Elliott Auto Group Achieved record earnings in 2021, despite net interest margin headwinds and continued economic and health effects of COVID-19. Our net earnings were $39.8 million, up from $27.4 million in 2020. Despite the low interest rate environment, maintained a solid net interest margin, fully tax equivalent, of 3.51% in 2021. Continued to pay increasing dividends. Shareholders received $0.80 per share in 2021, up from $0.71 per share in 2020. GNTY stock outperformed the annual KBW NASDAQ Bank Index and the S&P U.S. SmallCap Banks Index on total return performance. We’ve increased tangible book value per share 45% since our IPO five years ago, from $15.28 at Dec. 31, 2017 to $22.09 at Dec. 31, 2021. Adjusted to continually changing guidance for COVID-19 workplace best practices and adopted work strategies that keep our employees and customers safe, while allowing for efficiencies to be gained in certain bank processes. We were named one of Texas Monthly’s Best Companies to Work for in Texas for the 13th straight year. 8 9 9 STATE OF GROWTH T H E T E XA S E CO N O M Y I N 2 0 2 1 49 FORTUNE 500 COMPANIES Headquartered in Texas in 2021 (Fortune Magazine) 95 FORTUNE 1000 COMPANIES Headquartered in Texas in 2021 (Fortune Magazine) TEXAS IS A GATEWAY TO TRADE TITAN GLOBAL TRADE Texas has been the nation’s top exporting Texas has more airports, miles of public state for 19 years in a row with exports roadways, state highways, freight railways and valued at $276.3 billion in 2020. (Texas FTZs than any other state in the nation. (Texas Economic Development Corporation) Economic Development Corporation) 2021 ONE-WAY U-HAUL GROWTH INDEX SHOWS ACCELERATION IN PRE-COVID MIGRATION TRENDS The Lone Star State earned bragging rights as the leading growth state of 2021, narrowly besting Florida for tops honors, according to transactional data compiled for the annual U-Haul Growth Index. Texas reclaims the No. 1 growth state status it held from 2016-18. It ranked second to Florida in 2019 and Tennessee in 2020. (U-Haul Study) *Ranked in growth by U-Haul One Way Growth Index, 1 being the highest net migration gain, 50 being the largest net migration loss. The more green, the higher the net migration gain. 1 50 2nd MOST POPULOUS STATE IN 2021 (U.S. Census Bureau) 1ST IN STATE POPULATION GROWTH TEXAS HAD THE LARGEST ANNUAL AND CUMULATIVE NUMERIC GAIN IN POPULATION IN 2021. (U.S. Census Bureau) 2nd RICHEST STATE IN TERMS OF GDP (World Population Review) TEXAS’ GDP IS $1.8 TRILLION (World Population Review) TEXAS NAMED “STATE OF THE DECADE” IN 2020 BY BUSINESS FACILITIES (Texas Economic Development Corporation) TEXAS RECEIVED AREA DEVELOPMENT MAGAZINE’S “2021 GOLDEN SHOVEL AWARD” (Texas Economic Development Corporation) TEXAS NAMED “BEST STATE FOR BUSINESS” FOR THE 17TH CONSECUTIVE YEAR BY CHIEF EXECUTIVE (Texas Economic Development Corporation) #1 FASTEST-GROWING STATE ECONOMY (U.S. Bureau of Economic Analysis 2020) #1 STATE FOR GROWTH PROSPECTS (Forbes 2019) #1 IN THE NATION IN POPULATION GROWTH in 2021, adding 310,288 people. (U.S. Census Bureau) TEXAS IS WHERE OPPORTUNITY LIVES That’s why the Lone Star State leads the nation in job creation over the last 10 years and in population growth over the last 14. As the 9th largest economy among the nations of the world, Texas offers a business-friendly climate—with no corporate or personal income tax—along with a highly skilled workforce, easy access to global markets, robust infrastructure and predictable regulations. (Texas Economic Development Corporation) Texas led the nation in high Texas is the leading Texas employment forecasts Texas is the largest energy- tech exports for the 8th destination for companies predicted 2021 growth from producing state in the nation. consecutive year, 44.8B in relocating from other about 3.1 to 5.3 percent, Texas (Texas Economic 2020 alone. (Texas Economic states. (Texas Economic has a diverse workforce made Development Corporation) Development Corporation) Development Corporation) up of 14 million workers. (Dallas Federal Reserve) TEXAS IS THE TEXAS RANKED TEXAS IS THE #1 JOB CREATOR IN THE NATION from 2010-2020 with 1.98 million #1 IN POPULATION GROWTH within the last year for the number TOP EXPORTING STATE and accounts for 20% of all U.S. FOR THE 7TH CONSECUTIVE YEAR, Texas attracted more than 500,000 new residents from out of FOR THE 6TH CONSECUTIVE YEAR, the 2020 Texas housing market broke records in terms of the state. The Census also estimated 435,000 - 471,000 Texans moved number of homes sold (393,615) and median price ($259,230), to other states, yielding a net gain of approximately 100,000 while inventory levels hit a critical all-time low, according to the jobs. (Texas Economic Development of residents added from 2020-2021, exports in 2021. (Dallas Federal people. The Lone Star State also welcomed approximately 2020 Texas Real Estate Year in Review report released February Corporation) which worked out to an estimated 850 Reserve) 192,000 - 222,000 new residents from outside the United States in 25 by Texas Realtors. (Texas Realtors) new residents per day. (abc13.com) 2019. (Texas Realtors, Texas Relocation Report 2021 Edition) 10 10 11 11 2021 BY THE NUMBERS GUARANT Y STOCK PR ICE, E A RN INGS PER SHARE , AND DIVIDENDS STOCK PRICE $40.00 PER SHARE $3.50 35.00 30.00 25.00 20.00 15.00 10.00 5.00 3.00 2.50 2.00 1.50 1.00 0.50 0.00 2011 2012 2013 2014** 2015 2016 2017 2018 2019 2020 2021 STO C K PRI CE * ** E ARNI N G S P ER S HA RE* DI VI DENDS PER SH AR E* * Earnings per share and dividends per share prior to 2021 have been adjusted to effect the 10% stock dividend in the first quarter of 2021. **2014 dividends paid excludes a $1.00 special dividend paid to shareholders in connection with the termination of subchapter S election. *** Pre-IPO stock prices are based on third-party valuations as of December 31 of each respective year. 12 13 IN THE SPOTLIGHT (IN THOUSANDS, EXCEPT PER SHARE DATA) O PERATIN G RESULTS Net interest income Provision for loan losses Non-interest income Net realized gain (loss) on securities Non-interest expense Earnings before provision for income taxes Income tax provision Net earnings Core earnings (1) AT YE AR EN D Total assets FI NANC IAL H IGHLIGHTS 2017 2018 2019 2020 2021 $59,630 $68,916 $78,870 $89,982 2,850 14,279 167 48,832 22,677 8,238 14,439 25,530 2,250 1,250 13,200 15,303 16,973 23,037 (50) (22) — 56,774 62,525 66,522 25,195 32,057 33,297 4,599 5,778 5,895 20,596 26,279 27,445 33,307 27,402 40,261 $95,558 (1,700) 24,576 — 73,278 48,556 8,750 39,806 39,034 $1,962,624 $2,266,970 $2,318,444 $2,740,832 $3,086,070 Loans and loans held for sale, net of allowance 1,349,675 1,647,239 1,693,162 1,837,279 Investments in securities Total deposits Stockholders’ equity (2) 407,056 396,139 368,174 380,795 1,676,320 1,871,480 1,956,804 2,286,390 207,345 244,583 261,551 272,643 Weighted average common shares outstanding (3) 11,254 12,719 12,803 12,219 OT HER FIN A NCIAL DATA Return on average total assets Return on average stockholders’ equity Loans to deposits Loan loss reserves to loans Net interest margin Tier 1 capital to average assets Efficiency ratio Charge-offs net of recoveries PE R S HARE DATA Net income (3) Market price (value based on year end numbers) Tangible book value (3) Cash dividends (3) 0.76% 7.78% 81.10% 0.95% 3.38% 10.53% 65.61% $1,475 $1.28 30.65 15.28 0.48 0.97% 9.03% 88.68% 0.88% 3.49% 10.16% 67.37% $458 $1.62 29.82 15.96 0.55 1.13% 10.37% 87.20% 0.95% 3.68% 10.29% 65.23% $(301) $2.05 32.88 17.76 0.64 1.07% 10.39% 81.65% 1.80% 3.74% 9.13% 58.86% $331 $2.25 29.95 19.74 0.71 1,880,205 526,469 2,670,827 302,214 12,065 1.36% 13.72% 70.24% 1.59% 3.47% 9.18% 61.00% $1,486 $3.30 37.58 22.09 0.80 (1) Pre-tax, pre-provision, pre-securities gain (loss) and pre-PPP related extraordinary income (2) Reflects the total shareholders’ equity of the Company after giving effect to the KSOP Repurchase Right Termination (3) Periods prior to the stock dividend issued during the first quarter of 2021 have been adjusted to give effect to the 10% stock dividend EYEING THE FUTURE TOTAL ASSETS DOLLARS IN THOUSANDS 10 YEAR ASSET GR OWTH CH AR T TRENDING UP 5 YEAR GROW TH TRENDS TOTAL ASSETS TOTAL ASSETS TOTAL ASSETS TOTAL ASSETS DOLLARS IN MILLIONS DOLLARS IN MILLIONS DOLLARS IN MILLIONS DOLLARS IN MILLIONS $3,086 $2,741 TOTAL LOANS 1 DOLLARS IN MILLIONS $1,661 $1,709 $1,872 $1,912 $1,963 $2,267 $2,318 $1,361 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 TOTAL DEPOSITS DOLLARS IN MILLIONS CORE EARNINGS 2 DOLLARS IN MILLIONS $2,671 $2,286 $1,871 $1,957 $1,676 $40.3 $39.0 $33.3 $25.5 $27.4 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 1 Total gross loans, including loans held for sale 2 Core earnings defined as pre-tax, pre-provision and pre-PPP related net earnings 14 15 ENTERED BRYAN / COLLEGE STATION MARKET$3,200,000$2,800,000$2,400,000$2,000,000$1,600,000$1,200,000$800,000$400,000$020112012201320142015201620172018201920202021ENTERED DFW METROPLEX MARKETENTERED AUSTIN AND FORT WORTH MARKETSENTERED GREATER HOUSTON MARKET CENTRAL TEXAS REGION • Launched an updated GNTY.com website that provides a greater user experience with improved DALLAS / FORT WORTH REGION EAST TEXAS REGION Dallas Addison Denton (2) Fort Worth Rockwall Royse City Bogata Commerce Hallsville Longview Mount Pleasant (2) Mount Vernon New Boston Paris (2) Pittsburg Sulphur Springs Texarkana (3) DFW EAST TEXAS CENTRAL TEXAS I-35 HOUSTON Austin Georgetown Lakeway Bryan College Station (2) HOUSTON REGION Houston Houston Galleria Conroe Katy THE PLACES WE CALL HOME Approximately 86% of the (U.S. Census Bureau, 2019 located in counties along total Texas population is and to the east of I-35. Population Estimates) EVOLVING WITH THE LANDSCAPE RECENT DIGITAL ENHAN CEM ENTS Emerging technology and changing consumer and business needs and wants are re-shaping traditional banking. Digital banking is the name of the game with consumers that expect to have banking service access any place any time on a variety of electronic devices. Fintech’s are partnering with banks and other financial services companies to provide consumers with new and innovative products and financial tools. Guaranty has made great progress in preparing for the digital banking future and will continue to do so in the years to come. Highlighted below are examples of recent and future investments. content, workflows and ADA compliance. The back-end content management system also allows for quick website updates and agile responses, while the mobile experience is more responsive for both current and prospective customers. • Released a new mobile banking app with a fresh, more modern look and feel. The new app includes more functionality such as bill-payment management within the app, facial recognition for Android users and set-up of recurring money transfers, among others. • Improved the user experience for online banking, also with a more modern look and feel, that includes a convenient transaction summary for all accounts and allows for account groups for our commercial customers. We added “My Spending” budgeting and financial tools to help consumers with planning, cash flow management and goal setting. ROADMA P FOR THE F UTU RE • Migrate internal servers to the cloud to improve speed, security and redundancy • Provide consumers and businesses the ability to quickly and easily apply for a loan and receive a decision online • Closely follow blockchain payment and crypto-currency developments so we’re able to implement and offer related banking services when technology is more fully developed and secure • Improve back-office operations and efficiency by incorporating robotic process automation (RPA) tools for standard and repetitive processes 16 17 TY ABSTON Chairman of the Board & CEO KIRK LEE Vice Chairman & Chief Credit Officer CHUCK COWELL Vice Chairman RICKY BAKER KRB Investments, LLC JOSH BRAY District Manager Sanitation Solutions JEFF BROWN Managing Partner RoseRock JIM BUNCH President & CEO BWI, Inc. BRAD DRAKE CEO Lamar Companies, LLC CHRIS ELLIOTT President Elliott Auto Group CARL JOHNSON, JR. Principal Baker & Johnson, CPA BRIAN MASON Managing Director Boone Creek Investments, LLC MIKE NOLAN Investments GUARANTY BANK & TRUST BOARD OF DIRECTORS BILL PRIEFERT Chairman & CEO Priefert Manufacturing, Inc. CARL SMITH General Contractor Heritage Constructors 19 18 20 21 MEET Born with natural markings identical to our Guaranty “G” logo. Only in Texas! DELIVERY OF ANNUAL REPORT This Annual Report is being delivered to shareholders of Guaranty Bancshares, Inc. (the “Company”) in connection with the 2022 Annual Meeting of Shareholders and should be read with the Company’s proxy statement for the meeting and Annual Report on Form 10-K, copies of which accompany this Annual Report and have been filed with the Securities and Exchange Commission (“SEC”). This Annual Report is also available on our website www.gnty. com under the heading “Investors – Financial Information.” The Company will mail addi- tional copies of this Annual Report to its shareholders upon request. FORWARD-LOOKING STATEMENTS This Annual Report may contain 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 op- erations, 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 SEC, and the following factors: business and economic conditions generally and in the financial services industry, nationally and within our current and future geographic market areas; economic, market, operational, liquidity, credit and interest rate risks associated with our business; natural disasters and adverse weather, acts of terrorism, cyber-attacks, an outbreak of hostilities, a public health outbreak (such as COVID-19) or other international or domestic calamities, and other matters beyond our control; the composition of our loan portfolio, including deteriorating asset quality and higher loan charge-offs; the laws and regulations applicable to our business; our ability to achieve organic loan and deposit growth and the composition of such growth; increased competition in the financial services industry, nationally, regionally or locally; our ability to maintain our historical earnings trends; our ability to raise additional capital to execute our business plan; acquisitions and integrations of acquired businesses; systems failures or interruptions involving our information technology and telecommunications systems or third-party services; the composition of our management team and our ability to attract and retain key personnel; the fiscal position of the U.S. federal govern- ment and the soundness of other financial institutions; and the amount of nonperforming and classified assets we hold. 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 Annual Report, 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. DIVIDENDS CALENDAR Dividends on Guaranty Bancshares, Inc. common stock are payable, if paid, quarterly. INDEPENDENT AUDITORS TRANSFER AGENT Whitley Penn Computer Investor Services 8343 Douglas Avenue P. O. Box 50500 Suite 400 Dallas, Texas 75225 Louisville, KY 40233 Shareholder Services 800-962-4284 22 23 GNTY.COM 24