SOURCE: Guaranty Bancorp

Guaranty Bancorp

January 25, 2012 16:05 ET

Guaranty Bancorp Announces 2011 Annual and Fourth Quarter Financial Results

DENVER, CO--(Marketwire - Jan 25, 2012) - Guaranty Bancorp (NASDAQ: GBNK)

  • Net income rose for the fourth consecutive quarter
  • Net loans grew in the fourth quarter despite continued reductions in nonperforming loans
  • Adversely classified assets declined by 50.5% through 2011
  • Net interest margin improvement of 24 basis points on a linked quarter basis to 3.86%
  • Tangible common equity rose to 9.6% of tangible assets at 12/31/2011 while book equity increased to 10.1% of total assets

Guaranty Bancorp (NASDAQ: GBNK), a Colorado-based, community bank holding company, today reported fourth quarter 2011 net income of $2.3 million, or $0.02 earnings per basic and diluted common share, compared to a fourth quarter 2010 net loss of $22.6 million, or $0.44 loss per basic and diluted common share, including the effect of preferred stock dividends.

Paul W. Taylor, Guaranty Bancorp's President and Chief Executive Officer, stated, "We are pleased with our accomplishments in 2011, as demonstrated by significant improvements in the key operating metrics of our Company. We finished 2011 with net income of $6.4 million, while substantially improving our asset quality. Our asset quality ratio of classified assets to Tier 1 capital and allowance fell to 36.6% at the end of the fourth quarter 2011 as compared to 74.2% at end of the prior year, due to a 50.5% decline in adversely classified assets in 2011."

Mr. Taylor continued, "In addition, we grew our loan portfolio in the fourth quarter by $9.8 million, furthering our investment in local Colorado companies. From the prior year, our core deposit balances grew by 12.2%, while high-cost time deposits declined by 56.9%. In addition, the early conversion of our preferred stock in the third quarter of this year positively impacted several of our key capital ratios. Our leverage ratio improved to 12.1% at December 31, 2011 as compared to 6.2% at the end of the prior year and our tangible common equity ratio increased to 9.6% at December 31, 2011 as compared to 4.3% at the end of the prior year. Our total equity ratio increased to 10.1% from 8.6% during the same period."

For the year ended December 31, 2011, net income was $6.4 million, compared to a net loss of $31.3 million for the year ended December 31, 2010. The earnings per common share calculation for the year 2011 included a non-cash adjustment of approximately $19.8 million, or $0.30 per basic and diluted common share, related to the regular quarterly paid-in-kind dividends on the Company's Series A Convertible Preferred Stock of $4.6 million and the accelerated conversion of the Series A Convertible Preferred Stock into common stock of $15.2 million. After giving effect to the preferred stock dividends and mandatory accelerated conversion of the preferred stock, the loss per basic and diluted common share was $0.21 for the year ended December 31, 2011. For the same period in 2010, the loss per basic and diluted common share was $0.72, including the effect of preferred stock dividends. The improvement in net income is due to a $29.4 million reduction in provision for loan losses, due to lower levels of charge-offs and improved asset quality in 2011, a $13.2 million reduction in noninterest expense, mostly due to lower expenses related to other real estate owned in 2011, and a $5.8 million increase in noninterest income, due to higher net gains on sales of investments in 2011, as well as an other-than-temporary impairment loss recognized in 2010. These improvements were partially offset by a $6.3 million decrease in income tax benefit and a $4.5 million decrease in net interest income, due to a reduced level of earning assets in 2011.

Key Financial Measures
Income Statement
Quarter Ended Year Ended
December 31, 2011 September 30, 2011 December 31, 2010 December 31, 2011 December 31, 2010
(Dollars in thousands, except per share amounts)
Income (loss) before income taxes $ 2,276 $ 2,153 $ (21,133 ) $ 6,352 $ (37,629 )
Net income (loss) 2,276 2,153 (21,133 ) 6,352 (31,339 )
Net income (loss) to common stockholders 2,276 (14,649 ) (22,586 ) (13,434 ) (36,963 )
Earnings (loss) per common share $ 0.02 $ (0.28 ) $ (0.44 ) $ (0.21 ) $ (0.72 )
Return on average assets 0.54 % 0.49 % (4.32 )% 0.36 % (1.57 )%
Net interest margin 3.86 % 3.62 % 3.39 % 3.61 % 3.47 %
Balance Sheet
December 31, 2011 September 30, 2011 % Change December 31, 2010 % Change
(Dollars in thousands, except per share amounts)
Cash and cash equivalents $ 109,225 $ 93,226 17.2 % $ 141,465 (22.8 )%
Total investments 386,141 314,420 22.8 % 418,668 (7.8 )%
Total loans, net of unearned discount 1,098,140 1,088,358 0.9 % 1,204,580 (8.8 )%
Loans held for sale - 14,200 (100.0 )% 14,200 (100.0 )%
Allowance for loan losses (34,661 ) (35,852 ) (3.3 )% (47,069 ) (26.4 )%
Total assets 1,689,668 1,692,368 (0.2 )% 1,870,052 (9.6 )%
Average earning assets, quarter-to-date 1,575,193 1,655,601 (4.9 )% 1,802,518 (12.6 )%
Total deposits 1,313,786 1,330,661 (1.3 )% 1,462,351 (10.2 )%
Book value per common share 1.62 1.61 0.6 % 1.76 (8.0 )%
Tangible book value per common share 1.53 1.50 2.0 % 1.50 2.0 %
Equity ratio - GAAP 10.12 % 10.01 % 1.1 % 8.57 % 18.1 %
Tangible common equity ratio 9.59 % 9.42 % 1.8 % 4.32 % 121.9 %
Total risk-based capital ratio 16.33 % 16.64 % (1.9 )% 14.99 % 8.9 %
Net Interest Income and Margin
Quarter Ended Year Ended
December 31, 2011 September 30, 2011 December 31, 2010 December 31, 2011 December 31, 2010
(Dollars in thousands)
Net interest income $ 15,325 $ 15,112 $ 15,394 $ 59,894 $ 64,355
Interest rate spread 3.54 % 3.26 % 3.02 % 3.25 % 3.09 %
Net interest margin 3.86 % 3.62 % 3.39 % 3.61 % 3.47 %
Net interest margin, fully tax equivalent 3.95 % 3.69 % 3.46 % 3.68 % 3.55 %
Average cost of deposits, including noninterest bearing deposits 0.26 % 0.40 % 0.84 % 0.49 % 1.00 %

Fourth quarter 2011 net interest income of $15.3 million increased by $0.2 million compared to the third quarter 2011, and was relatively flat from the fourth quarter 2010. The Company's net interest margin of 3.86% for the fourth quarter 2011 reflected an increase of 24 basis points from the third quarter 2011 and an increase of 47 basis points from the fourth quarter 2010.

In the fourth quarter 2011, interest income and interest expense decreased by $0.7 million and $0.9 million, respectively, from the prior quarter, resulting in an increase in net interest income of $0.2 million. The decline in interest income was due to a reduced level of average earning assets, while the decrease in interest expense was due to the early payoff of $51.0 million of Federal Home Loan Bank (FHLB) term notes and a $56.9 million decrease in average time deposits, mostly higher-cost, brokered time deposits. At December 31, 2011, our remaining brokered deposit is $10.2 million which will mature in March 2012.

Net interest income was relatively flat in the fourth quarter 2011, as compared to the same quarter in 2010, due to a decline in interest income of $2.8 million, offset by an equal decline in interest expense. The decline in interest income was primarily due to an unfavorable volume variance of $2.7 million and a slight unfavorable rate variance of $0.2 million. The unfavorable volume variance was due mostly to the $173.4 million decrease in average loan balances. The decline in interest expense is due to a favorable volume variance of $1.4 million, in addition to a favorable rate variance of $1.4 million. These favorable volume and rate variances are a result of a $309.7 million reduction in higher-cost average time deposits and the prepayment of $51.0 million in FHLB term notes bearing an average cost of 3.5%. Despite a relatively flat variance in net interest income comparatively, overall net interest margin improved by 47 basis points to 3.86% in the fourth quarter 2011 as compared to 3.39% in the same quarter in 2010.

During 2011, net interest income decreased by $4.5 million, from $64.4 million in 2010 to $59.9 million. Interest income in 2011 was $13.6 million lower than in 2010 due to an unfavorable volume variance of $11.5 million, in addition to a $2.1 million unfavorable rate variance. The unfavorable volume variance was due to a $256.3 million decline in average loan balances, partially offset by a $61.0 million increase in the average balance of all other earning assets, mostly investment securities. The unfavorable rate variance was due to $2.7 million decline in loan income, partially offset by a $0.6 million increase in investment income. The decline in interest income was partially offset by the decrease in interest expense of $9.2 million. This decrease was the result of a favorable volume variance of $5.0 million and a favorable rate variance of $4.2 million. These favorable variances are due to reductions in high-cost, time deposits of $299.9 million and prepayments of FHLB notes, discussed above. Although net interest income declined in 2011 compared to 2010, overall net interest margin increased 14 basis points from 3.47% in 2010 to 3.61% in 2011.

Noninterest Income

The following table presents noninterest income as of the dates indicated:

Quarter Ended Year Ended
December 31, 2011 September 30, 2011 December 31, 2010 December 31, 2011 December 31, 2010
(In thousands)
Noninterest income:
Customer service and other fees $ 2,320 $ 2,393 $ 2,430 $ 9,413 $ 9,241
Gain on sale of securities 283 3,018 216 3,703 313
Gain on sale of loans - - - - 1,196
Other-than-temporary impairment (OTTI) of securities - - (3,500 ) - (3,500 )
Other 197 118 256 829 852
Total noninterest income $ 2,800 $ 5,529 $ (598 ) $ 13,945 $ 8,102

The $2.7 million decrease in noninterest income in the fourth quarter 2011 as compared to the third quarter 2011 reflects a $2.7 million change in gain on sale of securities from the $3.0 million gain recognized in the third quarter to the $0.3 million gain recognized in the fourth quarter. The gain in the third quarter was due to the sale of several mortgage-backed securities, based on the expectation that these securities were expected to have significant increases in prepayment speeds. The gain recognized in the fourth quarter was due to the sale of a single adjustable rate agency security. Non-interest income increased $3.4 million in the fourth quarter 2011 as compared to the fourth quarter 2010. This variance is primarily due to a $3.5 million other-than-temporary impairment on a single, local, non-rated municipal bond that was recognized in the fourth quarter 2010.

Noninterest income increased $5.8 million from $8.1 million in 2010 to $13.9 million in 2011. This variance is attributable to the $3.4 million increase in net gains on sales of securities year over year, as well as the net impact of two 2010 transactions. These transactions consisted of a $3.5 million other-than-temporary impairment on a single, local, non-rated bond, as discussed above, offset by a $1.2 million gain on sale of loans. Additionally, customer service and other fees increased by $0.2 million year over year, primarily as a result of higher overdraft and interchange fee income.

Noninterest Expense

The following table presents noninterest expense as of the dates indicated:

Quarter Ended Year Ended
December 31, 2011 September 30, 2011 December 31, 2010 December 31, 2011 December 31, 2010
(In thousands)
Noninterest expense:
Salaries and employee benefits $ 6,716 $ 6,408 $ 6,456 $ 26,059 $ 26,042
Occupancy expense 1,967 1,871 1,783 7,513 7,399
Furniture and equipment 846 855 927 3,508 3,720
Amortization of intangible assets 1,017 1,018 1,283 4,091 5,168
Other real estate owned 240 90 1,209 1,559 14,909
Insurance and assessment 845 1,017 1,336 4,053 6,569
Professional fees 690 1,016 824 3,528 3,117
Prepayment penalty - 2,672 - 2,672 -
Other general and administrative 2,528 2,541 2,611 9,504 8,762
Total noninterest expense $ 14,849 $ 17,488 $ 16,429 $ 62,487 $ 75,686

The $2.6 million decrease in noninterest expense in the fourth quarter 2011 as compared to the third quarter 2011 is due mostly to a $2.7 million prepayment penalty on the early payoff of $51.0 million FHLB term notes. Other variances include increases in salaries and benefits of $0.3 million and net other real estate owned expenses of $0.2 million, offset by decreases in insurance and assessments of $0.2 million, and other professional expenses of $0.3 million. The increase in salary and benefit expense is due to higher claims related to our self-insured medical plan and the increase in net other real estate expense is due to lower operating income related to a single property. The decrease in insurance and assessments is due to lower insurance premiums related to the annual renewal of our insurance policies. In addition, professional fees decreased due to costs incurred in the third quarter related to our special shareholder meeting and preferred stock conversion.

Noninterest expense decreased $1.6 million to $14.8 million in the fourth quarter 2011 from $16.4 million in the same period in 2010. Net expenses related to other real estate owned contributed to the largest portion of this variance with a decline of $1.0 million. Other declines were realized in insurance and assessments of $0.5 million, mostly due to lower FDIC assessments of $0.4 million.

Noninterest expense declined $13.2 million to $62.5 million in 2011 from $75.7 million in 2010, primarily due to a $13.4 million decrease in expenses related to other real estate owned. This decrease is due to a reduction in net write-downs resulting from valuation adjustments and sales, as well as a reduced level of net operating expenses related to these properties. In addition to these declines, insurance and assessment expense decreased $2.5 million, mostly due to lower FDIC assessments, and amortization of intangible assets decreased $1.1 million based on an accelerated amortization schedule. Partially offsetting these reductions in expenses were prepayment penalties of $2.7 million related to the early payoff of high-cost, FHLB term notes, increases in other general and administrative expenses of $0.7 million related to increases in advertising and business development of $0.5 million, and increases in other professional fees of $0.4 million. The decrease in FDIC assessment expense for 2011 as compared to 2010 is due primarily to a favorable change in our risk classification in the third quarter 2010 as well as the implementation of new rules mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act. These new rules changed the assessment base from total deposits to average total assets less tangible capital, but also significantly lowered the assessment rates, causing a net favorable impact on our FDIC insurance premiums.

At December 31, 2011, our income tax valuation allowance was approximately $6.6 million, compared to $8.5 million at December 31, 2010 and $7.4 million at September 30, 2011. In assessing the realization of deferred tax assets, management evaluates both positive and negative evidence, including the existence of any cumulative losses in the current year and the prior two years, the amount of taxes paid in available carry-back years, the forecasts of future income, taking into account applicable tax planning strategies, and assessments of current and future economic and business conditions. This analysis is updated quarterly and adjusted as necessary. In 2010, based on various tax planning strategies, the Company recorded a partial valuation allowance for deferred tax assets in the amount of $8.5 million. Based upon the updated quarterly analysis at December 31, 2011, this partial valuation allowance was reduced from $7.4 million as of September 30, 2011 to $6.6 million as of December 31, 2011.

Balance Sheet
December 31, 2011 September 30, 2011 % Change December 31, 2010 % Change
(Dollars in thousands)
Total assets $ 1,689,668 $ 1,692,368 (0.2 )% $ 1,870,052 (9.6 )%
Average assets, quarter-to-date 1,682,168 1,758,422 (4.3 )% 1,940,513 (13.3 )%
Loans, net of unearned discount 1,098,140 1,088,358 0.9 % 1,204,580 (8.8 )%
Total deposits 1,313,786 1,330,661 (1.3 )% 1,462,351 (10.2 )%
Equity ratio - GAAP 10.12 % 10.01 % 1.1 % 8.57 % 18.1 %
Tangible common equity ratio 9.59 % 9.42 % 1.8 % 4.32 % 121.9 %

At December 31, 2011, the Company had total assets of $1.7 billion, which represented a $2.7 million decline as compared to September 30, 2011 and a $180.4 million decline as compared to December 31, 2010. The decline in assets from September 30, 2011 consists primarily of a $89.2 million decline in securities sold, not yet settled, partially offset by an increase in cash and due from bank balances of $16.0 million, an increase in investments of $71.7 million, and an increase in loans, net of unearned discount, of $9.8 million. The decline in total assets year over year is primarily due to a decline in loans, net of unearned discount, of $106.4 million. The decrease in loans is primarily due to a $127.2 million decline in commercial loans, partially offset by an increase in residential and commercial real estate loans of $50.2 million. In addition, investments decreased by $32.5 million and cash and due from bank balances decreased by $32.2 million.

In the fourth quarter 2011, our loans held for investment, net of unearned discount, increased by $9.8 million. Residential and commercial real estate loans increased by $36.1 million, partially offset by declines in commercial loans of $14.0 million, construction loans of $6.5 million, equity lines of credit of $2.4 million and consumer installment loans of $1.6 million. At December 31, 2011, our residential and commercial real estate portfolio consisted of 33.6% owner occupied properties and 6.6% multi-family properties. In addition to the net growth in our overall loan portfolio during the fourth quarter, our pipeline for new loan opportunities has continued to grow each month.

The following table sets forth the amounts of our loans outstanding (excluding loans held for sale) at the dates indicated:

December 31, 2011 September 30, 2011 December 31, 2010
(In thousands)
Loans on real estate:
Residential and Commercial $ 731,107 $ 695,027 $ 680,895
Construction 44,087 50,614 57,351
Equity lines of credit 44,601 47,040 50,289
Commercial loans 223,479 237,454 350,725
Agricultural loans 11,527 11,810 14,413
Lease financing 2,269 3,143 3,143
Installment loans to individuals 22,937 24,523 28,582
Overdrafts 254 382 565
SBA and other 19,706 20,082 20,443
1,099,967 1,090,075 1,206,406
Unearned discount (1,827 ) (1,717 ) (1,826 )
Loans, net of unearned discount $ 1,098,140 $ 1,088,358 $ 1,204,580

Since December 31, 2010, the ratio of construction, land and land development loans to capital fell by 33 percentage points to 52% at December 31, 2011. Similarly, the ratio of commercial real estate loans to capital fell by 39 percentage points to 254% at December 31, 2011. These concentration ratios are below the regulatory commercial real estate concentration guidelines of 100% for land and construction loans and 300% for all investor real estate loans, respectively.

The following table sets forth the amounts of our deposits outstanding at the dates indicated:

December 31, 2011 September 30, 2011 December 31, 2010
(In thousands)
Noninterest-bearing deposits $ 450,451 $ 443,682 $ 374,500
Interest-bearing demand and NOW 289,987 185,136 178,042
Money market 277,997 366,367 357,036
Savings 91,260 89,636 79,100
Time 204,091 245,840 473,673
Total deposits $ 1,313,786 $ 1,330,661 $ 1,462,351

Noninterest-bearing deposits as a percentage of total deposits increased to 34.3% at December 31, 2011, as compared to 25.6% at December 31, 2010.

Non-maturing deposits at December 31, 2011 increased by $121.0 million as compared to December 31, 2010 and increased by $24.9 million compared to September 30, 2011. The increase in interest-bearing demand and NOW accounts and offsetting decline in money market accounts in the fourth quarter 2011 is primarily due to a change in the type of account used for our cash sweep product. The decision to utilize an interest-bearing demand account rather than a money market account for our sweep product was based on our ability to deliver a nearly identical sweep product with a less restrictive account type.

Time deposits continue to decrease primarily as a result of management's efforts to reduce the overall level of higher cost time deposits, particularly brokered and internet deposits. Total brokered deposits at December 31, 2011 were $10.2 million as compared to $179.9 million at December 31, 2010. Brokered deposits represented 0.8% of total deposits at December 31, 2011 as compared to 12.2% at December 31, 2010. In addition to this $169.7 million decline in brokered deposits over the past twelve months, we also experienced a $28.6 million decline in internet time deposits over the same time period. The remaining decline in time deposits is primarily related to the non-renewal of other higher cost certificates of deposits. Management monitors time deposit maturities and renewals on a daily basis and our current retention ratio is in excess of 60.0%.

Borrowings were $110.2 million at December 31, 2011 as compared to $110.2 million at September 30, 2011 and $163.2 million at December 31, 2010. The Company elected to payoff $51 million of FHLB term notes in September 2011. The weighted average rate of these advances was 3.5% with maturity dates that ranged from November 2011 to February 2014. The entire balance of borrowings at each balance sheet date consists of term notes with the FHLB.

Regulatory Capital Ratios

All of the Company's and our subsidiary bank's regulatory capital ratios are above the highest regulatory capital threshold of "well-capitalized" at December 31, 2011. The Company's and our subsidiary bank's actual capital ratios for December 31, 2011 and December 31, 2010 are presented in the table below:

Ratio at
December 31, 2011


Ratio at
December 31,
2010
Minimum Capital Requirement Minimum Requirement for "Well Capitalized" Institution
Total Risk-Based Capital Ratio:
Consolidated 16.33 % 14.99 % 8.00 % N/A
Guaranty Bank and Trust Company 15.59 % 14.07 % 8.00 % 10.00 %
Tier 1 Risk-Based Capital Ratio:
Consolidated 15.06 % 8.57 % 4.00 % N/A
Guaranty Bank and Trust Company 14.32 % 12.80 % 4.00 % 6.00 %
Leverage Ratio:
Consolidated 12.12 % 6.25 % 4.00 % N/A
Guaranty Bank and Trust Company 11.53 % 9.33 % 4.00 % 5.00 %

The improvements in the consolidated Tier 1 risk-based capital ratio and leverage ratio are primarily attributable to the mandatory accelerated conversion of preferred stock in the third quarter 2011. In prior periods, the preferred stock was treated for Tier 1 capital purposes as a restricted core capital element limited to 25% of total Tier 1 capital. Post-conversion, the newly converted common stock is treated as an unrestricted core capital element, which significantly improves our Tier 1 and leverage ratios.

Generally, the allowance for loan losses is included in total capital for regulatory purposes; however, it is limited to 1.25% of total risk-weighted assets. At December 31, 2011, approximately $17.8 million of the subsidiary bank's allowance for loan losses was disallowed from being included in total risk-based capital under the regulatory capital rules, or approximately 1.32% of our consolidated risk-weighted assets. No deferred tax assets were disallowed for purposes of computing consolidated Tier 1 capital due to increases in consolidated Tier 1 capital.

Asset Quality

The following table presents select asset quality data (including loans held for sale) as of the dates indicated:

December 31, 2011 September 30, 2011 June 30, 2011 March 31, 2011 December 31, 2010
(Dollars in thousands)
Nonaccrual loans and leases $ 26,801 $ 45,790 $ 56,342 $ 76,850 $ 88,504
Other nonperforming loans 6 583 1,675 1,506 3,317
Total nonperforming loans (NPLs) $ 26,807 $ 46,373 $ 58,017 $ 78,356 $ 91,821
Other real estate owned and foreclosed assets 29,027 22,008 28,362 33,611 22,898
Total nonperforming assets (NPAs) $ 55,834 $ 68,381 $ 86,379 $ 111,967 $ 114,719
Accruing loans past due 90 days or more (1) $ 6 $ 583 $ 1,675 $ 1,506 $ 3,317
Accruing loans past due 30-89 days (1) $ 10,805 $ 9,358 $ 4,750 $ 14,593 $ 21,555
Allowance for loan losses $ 34,661 $ 35,852 $ 38,855 $ 46,879 $ 47,069
Selected ratios:
NPLs to loans, net of unearned discount 2.44 % 4.21 % 5.25 % 6.87 % 7.53 %
NPAs to total assets 3.30 % 4.04 % 4.94 % 6.10 % 6.13 %
Allowance for loan losses to NPAs (2) 62.08 % 66.17 % 53.83 % 47.95 % 46.83 %
Allowance for loan losses to NPLs (2) 129.30 % 111.43 % 88.67 % 73.07 % 60.64 %
Allowance for loan losses to loans (2) 3.16 % 3.29 % 3.56 % 4.16 % 3.91 %
Loans 30-89 days past due to loans, net of unearned discount 0.98 % 0.85 % 0.43 % 1.28 % 1.77 %
(1) Past due loans include both loans that are past due with respect to payments and loans that are past due because the loan has matured, and are in the process of renewal, but continue to be current with respect to payments.
(2) Excludes loans held for sale.

The following table summarizes our past due loans by class (including loans held for sale) as of the dates indicated:

December 31, 2011 30-89 Days Past Due 90 days +Past Due and Still Accruing Non-Accrual Loans Total Past Due Related Allowance Total Loans
(In thousands)
Commercial and Residential Real Estate $ 4,551 $ - $ 17,152 $ 21,703 $ 1,686 $ 740,110
Construction Loans - - 294 294 - 33,042
Commercial Loans 3,233 - 6,990 10,223 1,551 223,107
Consumer Loans 1,611 6 1,793 3,410 153 67,680
Other 1,410 - 572 1,982 100 34,201
Total $ 10,805 $ 6 $ 26,801 $ 37,612 $ 3,490 $ 1,098,140



September 30, 2011
30-89 Days Past Due 90 days +Past Due and Still Accruing Non-Accrual Loans Total Past Due Related Allowance Total Loans
(In thousands)
Commercial and Residential Real Estate $ 5,005 $ 291 $ 37,562 $ 42,858 $ 2,710 $ 708,132
Construction Loans - - 418 418 - 50,534
Commercial Loans 2,534 291 4,684 7,509 1,273 237,080
Consumer Loans 694 1 2,322 3,017 322 71,833
Other 1,125 - 804 1,929 178 34,979
Total $ 9,358 $ 583 $ 45,790 $ 55,731 $ 4,483 $ 1,102,558

During the fourth quarter 2011, nonaccrual loans decreased by $19.0 million and other classified loans decreased by $0.6 million. The decrease in nonaccrual loans is mostly due to the transfer of a loan held for sale in the amount of $14.2 million to other real estate owned, due to the foreclosure of the property. Other real estate owned increased by $7.0 million compared to the prior quarter due to the aforementioned transfer of the loan held for sale into other real estate owned, offset by the sale of a hotel for $7.0 million. The remaining decline in nonaccrual loans of $4.8 million is due to loan payments, net of new additions. Loans classified as special mention or watch increased by $1.6 million mostly due to the downgrade of a single loan in the amount of $4.7 million.

As compared to December 31, 2010, our nonaccrual loans have declined 69.7% from $88.5 million to $26.8 million at December 31, 2011. The decrease in nonaccrual loans is the result of management's successful efforts to work through and dispose of our problem loans. Other real estate owned has increased by $6.1 million, mostly due to the transfer from loans held for sale discussed above. Loans classified as special mention or watch decreased by $28.1 million from $128.9 million at December 31, 2010 to $100.8 million at December 31, 2011.

Net charge-offs in the fourth quarter 2011 were $2.2 million as compared to $4.0 million in the third quarter 2011 and $14.3 million in the fourth quarter 2010. Net charge-offs in 2011 decreased by $21.9 million from $39.3 million in 2010 to $17.4 million in 2011.

The general component of the allowance for loan losses decreased from $31.4 million at September 30, 2011 to $31.2 million at December 31, 2011. The general component represented 2.8% of loans, net of unearned discount, at December 31, 2011 as compared to 2.9% of loans, net of unearned discount, at the end of the previous quarter. The coverage ratio, defined as nonaccrual loans divided by total allowance, has improved from 60.6% at year end 2010, to 129.3% at December 31, 2011.

The Company recorded a provision for loan losses in the fourth quarter 2011 of $1.0 million, as compared to $1.0 million in the third quarter 2011 and $19.5 million in the fourth quarter 2010. In 2011, the provision for loan loss was $5.0 million, which was $29.4 million less than the provision for 2010 of $34.4 million. The lower level of provision for loan loss over the last year reflects the reduction of outstanding balances in our loan portfolio combined with overall improvement in asset quality and lower levels of charge-offs.

Shares Outstanding

As of December 31, 2011, the Company had 105,436,623 shares of common stock outstanding, consisting of 100,341,623 shares of voting common stock and 5,095,000 shares of non-voting common stock. At December 31, 2011, total common shares outstanding include 1,546,292 shares of unvested stock awards. In connection with the termination of the Company's deferred compensation plan, 156,567 shares of voting common stock held by the plan were distributed to participants as of December 15, 2011.

Non-GAAP Financial Measures

This press release includes non-GAAP financial measures related to tangible assets, including tangible book value, tangible book value after giving effect to conversion of preferred stock, and tangible equity ratio, all of which exclude intangible assets.

The Company discloses these non-GAAP financial measures to provide meaningful supplemental information regarding the Company's operational performance and to enhance investors' overall understanding of the Company's core financial performance. Management believes that these non-GAAP financial measures allow for additional transparency and are used by some investors, analysts and other users of the Company's financial information as performance measures. These non-GAAP financial measures are presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with GAAP. These non-GAAP financial measures presented by the Company may be different from non-GAAP financial measures used by other companies.

The following non-GAAP schedules reconcile the book value per share to the tangible book value per share and the GAAP equity ratio to the tangible equity ratio as of the dates indicated:

December 31, 2011 September 30, 2011 December 31, 2010
(Dollars in thousands, except per share amounts)
Tangible Book Value per Common Share
Total stockholders' equity $ 171,011 $ 169,450 $ 160,283
Less: Preferred share liquidation preference - - (66,025 )
Stockholders' equity attributable to common shares 171,011 169,450 94,258
Less: Intangible assets (9,963 ) (10,980 ) (14,054 )
Tangible common equity $ 161,048 $ 158,470 $ 80,204
Number of common shares outstanding and to be issued 105,436,623 105,457,136 53,529,950
Book value per common share $ 1.62 $ 1.61 $ 1.76
Tangible book value per common share $ 1.53 $ 1.50 $ 1.50
Total stockholders' equity $ 171,011 $ 169,450 $ 160,283
Less: Intangible assets (9,963 ) (10,980 ) (14,054 )
Tangible common equity (after giving effect to conversion of preferred stock)
$ 161,048

$ 158,470

$ 146,229
Number of shares of preferred stock outstanding - - 66,025
Number of shares of common stock to be issued upon conversion of preferred stock - - 36,680,556
Total number of shares of common stock outstanding and to be issued (after giving effect to conversion of preferred stock) 105,436,623 105,457,136 90,210,506
Tangible book value per common share (after giving effect to conversion of preferred stock) $ 1.53 $ 1.50 $ 1.62
Tangible Common Equity Ratio
December 31, 2011 September 30, 2011 December 31, 2010
(Dollars in thousands, except per share amounts)
Total stockholders' equity $ 171,011 $ 169,450 $ 160,283
Less: Intangible assets (9,963 ) (10,980 ) (14,054 )
Convertible Preferred Stock - - (66,025 )
Tangible common equity $ 161,048 $ 158,470 $ 80,204
Total assets $ 1,689,668 $ 1,692,368 $ 1,870,052
Less: Intangible assets (9,963 ) (10,980 ) (14,054 )
Tangible assets $ 1,679,705 $ 1,681,388 $ 1,855,998
Equity ratio - GAAP (Total stockholders' equity / total assets) 10.12 % 10.01 % 8.57 %
Tangible common equity ratio (Tangible common equity / tangible assets) 9.59 % 9.42 % 4.32 %

About Guaranty Bancorp

Guaranty Bancorp is a bank holding company that operates 34 branches in Colorado through a single bank, Guaranty Bank and Trust Company. The bank provides banking and other financial services including commercial and industrial, real estate, construction, energy, consumer and agricultural loans throughout its targeted Colorado markets to consumers and small to medium-sized businesses, including the owners and employees of those businesses. The bank also provides private banking and trust services, including personal trust administration, estate settlement, investment management accounts and self-directed IRAs. More information about Guaranty Bancorp can be found at www.gbnk.com.

Forward-Looking Statements

This press release contains forward-looking statements, which are included in accordance with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "could," "expects," "plans," "intends," "anticipates," "believes," "estimates," "predicts," "potential," or "continue," or the negative of such terms and other comparable terminology. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: failure to maintain adequate levels of capital and liquidity to support Company's operations; the effect of the regulatory written agreement the Company and its bank subsidiary have entered into and potential future supervisory action against the Company or its bank subsidiary; general economic and business conditions in those areas in which the Company operates; demographic changes; competition; fluctuations in interest rates; continued ability to attract and employ qualified personnel; ability to receive regulatory approval for our bank subsidiary to declare dividends to the Company; adequacy of our allowance for loan losses, changes in credit quality and the effect of credit quality on our provision for credit losses and allowance for loan losses; changes in governmental legislation or regulation, including, but not limited to, any increase in FDIC insurance premiums; changes in accounting policies and practices; changes in the deferred tax asset valuation allowance; changes in business strategy or development plans; changes in the securities markets; changes in consumer spending, borrowing and savings habits; the availability of capital from private or government sources; competition for loans and deposits and failure to attract or retain loans and deposits; changes in the financial performance and/or condition of our borrowers and the ability of our borrowers to perform under the terms of their loans and other terms of credit agreements; political instability, acts of war or terrorism and natural disasters; and additional "Risk Factors" referenced in the Company's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission, as supplemented from time to time. When relying on forward-looking statements to make decisions with respect to the Company, investors and others are cautioned to consider these and other risks and uncertainties. The Company 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, which speak only as of the date made. The forward-looking statements are made as of the date of this press release, and the Company does not intend, and assumes no obligation, to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements.

GUARANTY BANCORP AND SUBSIDIARIES
Unaudited Consolidated Balance Sheets
December 31, 2011 September 30, 2011 December 31, 2010
(In thousands)
Assets
Cash and due from banks $ 109,225 $ 93,226 $ 141,465
Securities available for sale, at fair value 353,152 284,523 389,530
Securities held to maturity 18,424 15,591 11,927
Bank stocks, at cost 14,565 14,306 17,211
Total investments 386,141 314,420 418,668
Loans, net of unearned discount 1,098,140 1,088,358 1,204,580
Less allowance for loan losses (34,661 ) (35,852 ) (47,069 )
Net loans 1,063,479 1,052,506 1,157,511
Loans held for sale - 14,200 14,200
Premises and equipment, net 53,851 55,390 57,399
Other real estate owned and foreclosed assets 29,027 22,008 22,898
Other intangible assets, net 9,963 10,980 14,054
Securities sold, not yet settled - 89,161 -
Other assets 37,982 40,477 43,857
Total assets $ 1,689,668 $ 1,692,368 $ 1,870,052
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing demand $ 450,451 $ 443,682 $ 374,500
Interest-bearing demand 567,984 551,503 535,078
Savings 91,260 89,636 79,100
Time 204,091 245,840 473,673
Total deposits 1,313,786 1,330,661 1,462,351
Securities sold under agreements to repurchase and federal funds purchased 16,617 16,392 30,113
Borrowings 110,177 110,181 163,239
Subordinated debentures 41,239 41,239 41,239
Securities purchased, not yet settled 20,800 10,095 -
Interest payable and other liabilities 16,038 14,350 12,827
Total liabilities 1,518,657 1,522,918 1,709,769
Stockholders' equity:
Preferred stock and Additional paid-in capital - Preferred stock - - 64,818
Common stock and Additional paid-in capital - Common stock 704,698 704,562 619,509
Shares to be issued for deferred compensation obligations - 237 237
Accumulated deficit (433,016 ) (435,292 ) (419,562 )
Accumulated other comprehensive income (loss) 1,683 2,505 (2,220 )
Treasury Stock (102,354 ) (102,562 ) (102,499 )
Total stockholders' equity 171,011 169,450 160,283
Total liabilities and stockholders' equity $ 1,689,668 $ 1,692,368 $ 1,870,052
GUARANTY BANCORP AND SUBSIDIARIES
Unaudited Consolidated Statements of Operations
Three Months Ended December 31, Year Ended December 31,
2011 2010 2011 2010
(Dollars in thousands, except share and per share data)
Interest income:
Loans, including fees $ 14,552 $ 17,217 $ 59,985 $ 76,462
Investment securities:
Taxable 2,441 2,604 11,277 7,701
Tax-exempt 582 556 2,066 2,662
Dividends 158 171 653 723
Federal funds sold and other 71 93 332 389
Total interest income 17,804 20,641 74,313 87,937
Interest expense:
Deposits 878 3,207 6,746 15,602
Securities sold under agreement to repurchase and federal funds purchased 14 30 74 132
Borrowings 836 1,323 4,727 5,267
Subordinated debentures 751 687 2,872 2,581
Total interest expense 2,479 5,247 14,419 23,582
Net interest income 15,325 15,394 59,894 64,355
Provision for loan losses 1,000 19,500 5,000 34,400
Net interest income, after provision for loan losses 14,325 (4,106 ) 54,894 29,955
Noninterest income:
Customer service and other fees 2,320 2,430 9,413 9,241
Gain on sale of securities 283 216 3,703 313
Gain on sale of loans - - - 1,196
Other-than-temporary-impairment (OTTI) of securities - (3,500 ) - (3,500 )
Other 197 256 829 852
Total noninterest income 2,800 (598 ) 13,945 8,102
Noninterest expense:
Salaries and employee benefits 6,716 6,456 26,059 26,042
Occupancy expense 1,967 1,783 7,513 7,399
Furniture and equipment 846 927 3,508 3,720
Amortization of intangible assets 1,017 1,283 4,091 5,168
Other real estate owned, net 240 1,209 1,559 14,909
Insurance and assessments 845 1,336 4,053 6,569
Professional fees 690 824 3,528 3,117
Prepayment penalty - - 2,672 -
Other general and administrative 2,528 2,611 9,504 8,762
Total noninterest expense 14,849 16,429 62,487 75,686
Income (loss) before income taxes 2,276 (21,133 ) 6,352 (37,629 )
Income tax benefit - - - (6,290 )
Net Income (loss) $ 2,276 $ (21,133 ) $ 6,352 $ (31,339 )
Net income (loss) applicable to common stockholders $ 2,276 $ (22,586 ) $ (13,454 ) $ (36,963 )
Loss per common share-basic: $ 0.02 $ (0.44 ) $ (0.21 ) $ (0.72 )
Loss per common share-diluted: 0.02 (0.44 ) (0.21 ) (0.72 )
Weighted average common shares outstanding-basic 103,840,990 51,717,834 64,941,731 51,671,281
Weighted average common shares outstanding-diluted 104,060,096 51,717,834 64,941,731 51,671,281

GUARANTY BANCORP AND SUBSIDIARIES
Unaudited Consolidated Average Balance Sheets
QTD Average YTD Average
December 31, 2011 September 30, 2011 December 31, 2010 December 31, 2011 December 31, 2010
(In thousands)
Assets
Interest earning assets
Loans, net of unearned discount $ 1,085,975 $ 1,103,832 $ 1,259,392 $ 1,123,619 $ 1,379,917
Securities 364,833 401,298 402,101 394,456 320,434
Other earning assets 124,385 150,471 141,025 140,608 153,679
Average earning assets 1,575,193 1,655,601 1,802,518 1,658,683 1,854,030
Other assets 106,975 102,821 137,995 110,249 137,992
Total average assets $ 1,682,168 $ 1,758,422 $ 1,940,513 $ 1,768,932 $ 1,992,022
Liabilities and Stockholders' Equity
Average liabilities:
Average deposits:
Noninterest-bearing deposits $ 459,031 $ 434,207 $ 374,004 $ 425,763 $ 356,632
Interest-bearing deposits 869,758 918,904 1,137,216 953,727 1,204,239
Average deposits 1,328,789 1,353,111 1,511,220 1,379,490 1,560,871
Other interest-bearing liabilities 173,848 228,534 232,459 215,093 228,032
Other liabilities 9,691 7,844 10,520 8,548 12,493
Total average liabilities 1,512,328 1,589,489 1,754,199 1,603,131 1,801,396
Average stockholders' equity 169,840 168,933 186,314 165,801 190,626
Total average liabilities and stockholders' equity $ 1,682,168 $ 1,758,422 $ 1,940,513 $ 1,768,932 $ 1,992,022

GUARANTY BANCORP
Unaudited Credit Quality Measures
(Includes loans held for sale, except where noted)
Quarter Ended
December 31, 2011 September 30, 2011 June 30, 2011 March 31, 2011 December 31, 2010
(Dollars in thousands)
Nonaccrual loans and leases $ 26,801 $ 45,790 $ 56,342 $ 76,850 $ 88,504
Other nonperforming loans 6 583 1,675 1,506 3,317
Total nonperforming loans $ 26,807 $ 46,373 $ 58,017 $ 78,356 $ 91,821
Other real estate owned and foreclosed assets 29,027 22,008 28,362 33,611 22,898
Total nonperforming assets $ 55,834 $ 68,381 $ 86,379 $ 111,967 $ 114,719
Nonperforming loans $ 26,807 $ 46,373 $ 58,017 $ 78,356 $ 91,821
Allocated allowance for loan losses (3,490 ) (4,483 ) (4,177 ) (12,136 ) (6,659 )
Net investment in impaired loans $ 23,317 $ 41,890 $ 53,840 $ 66,220 $ 85,162
Accruing loans past due 90 days or more $ 6 $ 583 $ 1,675 $ 1,506 $ 3,317
Accruing loans past due 30-89 days $ 10,805 $ 9,358 $ 4,750 $ 14,593 $ 21,555
Charged-off loans $ 2,603 $ 4,135 $ 9,997 $ 2,850 $ 14,635
Recoveries (412 ) (132 ) (973 ) (660 ) (306 )
Net charge-offs $ 2,191 $ 4,003 $ 9,024 $ 2,190 $ 14,329
Provision for loan losses $ 1,000 $ 1,000 $ 1,000 $ 2,000 $ 19,500
Allowance for loan losses $ 34,661 $ 35,852 $ 38,855 $ 46,879 $ 47,069
Allowance for loan losses to loans, net of unearned discount (1) 3.16 % 3.29 % 3.56 % 4.16 % 3.91 %
Allowance for loan losses to nonaccrual loans (1) 129.33 % 113.49 % 92.20 % 74.83 % 63.35 %
Allowance for loan losses to nonperforming assets (1) 62.08 % 66.17 % 53.83 % 47.95 % 46.83 %
Allowance for loan losses to nonperforming loans (1) 129.30 % 111.43 % 88.67 % 73.07 % 60.64 %
Nonperforming assets to loans, net of unearned discount, and other real estate owned 4.95 % 6.08 % 7.62 % 9.54 % 9.24 %
Nonperforming assets to total assets 3.30 % 4.04 % 4.94 % 6.10 % 6.13 %
Nonaccrual loans to loans, net of unearned discount 2.44 % 4.15 % 5.10 % 6.74 % 7.26 %
Nonperforming loans to loans, net of unearned discount 2.44 % 4.21 % 5.25 % 6.87 % 7.53 %
Annualized net charge-offs to average loans 0.80 % 1.44 % 3.24 % 0.75 % 4.51 %
(1) Excludes loans held for sale

Contact Information

  • Contact:
    Paul W. Taylor
    President and Chief Executive Officer
    Guaranty Bancorp
    1331 Seventeenth Street, Suite 345
    Denver, CO 80202
    303/293-5563


    Christopher G. Treece
    E.V.P., Chief Financial Officer and Secretary
    Guaranty Bancorp
    1331 Seventeenth Street, Suite 345
    Denver, CO 80202
    303/675-1194