SOURCE: Guaranty Bancorp

Guaranty Bancorp

October 17, 2012 16:15 ET

Guaranty Bancorp Announces 2012 Third Quarter Financial Results

DENVER, CO--(Marketwire - Oct 17, 2012) - Guaranty Bancorp (NASDAQ: GBNK)

  • Pre-tax income of $4.1 million in third quarter 2012 compared to $2.2 million in third quarter 2011
  • Completed previously announced acquisition of Private Capital Management during quarter
  • Improved asset quality for the ninth consecutive quarter

Guaranty Bancorp (NASDAQ: GBNK), a Colorado-based community bank holding company, today reported third quarter 2012 net income of $2.8 million, or $0.02 earnings per basic and diluted common share, compared to net income of $2.2 million in the third quarter 2011. The Company reported a loss of $0.28 per basic and diluted common share for the third quarter 2011 after giving effect to the non-cash adjustment of approximately $16.8 million related to the regular, quarterly paid-in-kind dividend on the Company's Series A Convertible Preferred Stock and the mandatory accelerated conversion of the Series A Convertible Preferred Stock into common stock in September 2011. 

The $0.6 million improvement in net income in the third quarter 2012 compared to the same quarter in 2011 is primarily due to a $2.0 million increase in pre-tax income, partially offset by $1.3 million in tax expense in 2012 as compared to no tax expense in the prior year. The improvement in pre-tax income is primarily due to a $3.3 million decrease in noninterest expense, mostly due to the prepayment penalty incurred on the payoff of $51.0 million in Federal Home Loan Bank borrowings in 2011, and a decrease in provision for loan loss of $1.0 million as compared to third quarter 2011. These improvements were partially offset by a $1.7 million decrease in noninterest income mostly due to lower gains on sales of securities and a $0.6 million decrease in the net interest income. 

Paul W. Taylor, Guaranty Bancorp's President and Chief Executive Officer, stated, "Our 2012 loan growth was fueled by our successful initiative to increase commercial loans. Since the beginning of the year, we have grown our commercial loan portfolio by $33.1 million or 20.5%, excluding energy loans. Further, unfunded commitments for commercial loans, excluding energy loans, increased by $21.6 million, or 23.9%, in 2012. In addition to loan growth, our core deposits have increased by $82.3 million in 2012, or 7.4%. The overall loan and deposit growth momentum has accelerated the improvement in net income in 2012 as compared to the previous year. Our third quarter 2012 pre-tax net income of $4.1 million was slightly higher than the entire first nine-months of pre-tax income of the previous year."

Mr. Taylor continued, "Our third quarter acquisition of Private Capital Management is exciting as it enables us to round out our wealth management practice with a local, experienced investment management team. In addition to doubling our assets under management and related fee income, Private Capital Management's unique and successful investment management approach is an excellent fit with our existing private banking and trust services." 

For the nine months ending September 30, 2012, net income improved by approximately $7.8 million to $11.9 million compared to $4.1 million for the same period last year. Earnings per basic and diluted common share improved to $0.11 for the nine months ended September 30, 2012 from a loss per basic and diluted common share of $0.30. The prior year loss per common share calculation included a non-cash adjustment of approximately $19.8 million, or $0.38 per basic and diluted common share, related to three quarters of paid-in-kind preferred stock dividends and the mandatory accelerated conversion of the Company's Series A Convertible Preferred Stock into common stock in September 2011. The increase in net income for the first nine months of 2012 as compared to the same period in 2011 is primarily due to the reversal of the remaining deferred tax asset valuation allowance, discussed below, an increase in net interest income of $0.6 million, a decrease in provision for loan losses of $2.5 million, and a decrease in noninterest expense of $1.4 million. These improvements were partially offset by a reduction in noninterest income of $1.3 million, primarily related to lower net gains on sale of securities. 

The Company had a deferred tax asset valuation allowance of $6.6 million at December 31, 2011. During the second quarter 2012, the remaining deferred tax asset valuation allowance of $5.7 million was reversed based on the Company's determination that it is more likely than not that the entire deferred tax asset will be realized. Subsequent to the reversal of the deferred tax asset valuation allowance, the Company began recording income tax expense.

Key Financial Measures
Income Statement

             
    Three Months Ended     Nine Months Ended  
    September 30, 2012     June 30,
2012
    September 30, 2011     September 30, 2012     September 30, 2011  
    (Dollars in thousands, except per share amounts)  
Net income   $ 2,830     $ 6,192     $ 2,153     $ 11,939     $ 4,076  
Net income (loss) to common stockholders   $ 2,830     $ 6,192     $ (14,649 )   $ 11,939     $ (15,730 )
Earnings (loss) per common share   $ 0.02     $ 0.06     $ (0.28 )   $ 0.11     $ (0.30 )
Return on average assets     0.63 %     1.46 %     0.49 %     0.93 %     0.30 %
Net interest margin     3.46 %     3.86 %     3.62 %     3.74 %     3.53 %
Efficiency ratio     73.08 %     76.55 %     79.79 %     74.73 %     79.99 %
                                         

Balance Sheet

                               
    September 30, 2012     December 31, 2011     % Change     September 30, 2011     % Change  
    (Dollars in thousands, except per share amounts)  
Cash and cash equivalents   $ 127,823     $ 109,225     17.0 %   $ 93,226     37.1 %
Time deposits with banks     40,000       -     100.0 %     -     100.0 %
Total investments     436,386       386,141     13.0 %     314,420     38.8 %
Total loans, net of unearned discount     1,118,968       1,098,140     1.9 %     1,088,358     2.8 %
Loans held for sale     -       -     0.0 %     14,200     (100.0 )%
Allowance for loan losses     (28,597 )     (34,661 )   (17.5 )%     (35,852 )   (20.2 )%
Total assets     1,834,978       1,689,668     8.6 %     1,692,368     8.4 %
Average earning assets, quarter-to-date     1,670,300       1,575,193     6.0 %     1,655,601     0.9 %
Total deposits     1,395,096       1,313,786     6.2 %     1,330,661     4.8 %
Book value per common share     1.74       1.62     7.4 %     1.61     8.1 %
Tangible book value per common share     1.65       1.53     7.8 %     1.50     10.0 %
Equity ratio - GAAP     10.09 %     10.12 %   (0.3 )%     10.01 %   0.8 %
Tangible common equity ratio     9.59 %     9.59 %   0.0 %     9.42 %   1.8 %
Total risk-based capital ratio     16.46 %     16.33 %   0.8 %     16.64 %   (1.1 )%
                                     

Net Interest Income and Margin

             
    Three Months Ended     Nine Months Ended  
    September 30, 2012     June 30,
2012
    September 30, 2011     September 30, 2012     September 30, 2011  
    (Dollars in thousands)  
                                         
Net interest income   $ 14,511     $ 15,383     $ 15,112     $ 45,194     $ 44,569  
Interest rate spread     3.15 %     3.53 %     3.26 %     3.42 %     3.16 %
Net interest margin     3.46 %     3.86 %     3.62 %     3.74 %     3.53 %
Net interest margin, fully tax equivalent     3.55 %     3.95 %     3.69 %     3.84 %     3.58 %
Average cost of deposits, including noninterest bearing deposits     0.20 %     0.21 %     0.40 %     0.22 %     0.56 %
                                         

Net interest income decreased $0.9 million from $15.4 million in the second quarter 2012 to $14.5 million in the third quarter 2012 and decreased $0.6 million as compared to $15.1 million for the third quarter 2011. Net interest margin declined 40 basis points from 3.86% in the second quarter 2012 to 3.46% in the third quarter 2012 and declined 16 basis points from 3.62% in the third quarter 2011. The 16 basis point decline in net interest margin for the third quarter 2012 as compared to the same quarter in 2011 is mostly due to a 43 basis point decline in the yield on earning assets, partially offset by a 20 basis point decline in the cost of deposits. 

On a linked quarter basis, interest income decreased $0.9 million from $17.7 million in the second quarter 2012 to $16.8 million in the third quarter 2012. The decline is primarily due to a decrease in average loan balances of $13.6 million due to the timing of when loans were paid-off during the quarter, coupled with a decline in loan yields of 17 basis points due to competitive market pressure. Further, investment interest income declined primarily due to higher premium amortization related to accelerated prepayments of agency mortgage backed securities and lower yields on replacement bonds resulting from the early calls of certain corporate bonds. The 44 basis point decline in the yield on earning assets during the quarter is mostly due to a change in mix of earning assets due to higher levels of overnight funding resulting from the growth in deposits and repurchase agreements. For the third quarter 2012, the Bank's average overnight balances were $170.9 million with an average yield of 0.25%, an increase of $67.1 million. Most of this increase in average overnight funding is due to a single depositor whose balance is expected to be re-deployed into the depositor's operations in early 2013.

Interest expense remained relatively flat in the third quarter 2012 as compared to the second quarter 2012 despite a $48.2 million increase in the average balance of interest-bearing deposits and other interest-bearing liabilities. The average cost of deposits declined by one basis point to 20 basis points in the quarter, while the cost of funds declined by four basis points to 57 basis points. Interest expense related to the Company's trust preferred-related subordinated debentures is expected to decline $0.1 million in future quarters due to the payoff of deferred interest related to this debt in the third quarter 2012.

Interest income declined $1.7 million from $18.5 million in the third quarter 2011 to $16.8 million in the third quarter 2012. The decline in interest income was primarily due to declines in average yields on loans and investments due to declines in longer-term, fixed rates in the market over the last twelve months. Interest expense declined $1.1 million from $3.4 million in the third quarter 2011 to $2.3 million in the third quarter 2012. The decline in interest expense was primarily due to the prepayment of $51.0 million of Federal Home Loan Bank borrowings in September 2011 and a decrease of $78.5 million in average higher-cost, time deposits as compared to the third quarter 2011.

Net interest income increased $0.6 million, or 1.4%, for the nine months ending September 30, 2012 to $45.2 million from $44.6 million for the same period in 2011. The Company's net interest margin improved 21 basis points to 3.74% for the first nine months in 2012 from 3.53% for the first nine months in 2011. Interest income decreased $4.3 million primarily due to a decline in average interest-earning assets of $73.9 million, coupled with a decline in average yield of 16 basis points to 4.32% as compared to 4.48% for the same period in 2011. Interest expense decreased $4.9 million, or 41.4%, in the first nine months of 2012 as compared to the same period in 2011 primarily due to a decline in average time deposit balances of $161.0 million, which was mostly due to the maturity of higher-cost, brokered and internet time deposits, and a decline in average borrowings of $52.6 million, which was primarily due to the September 2011 prepayment of several Federal Home Loan Bank notes. 

Noninterest Income

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

         
    Three Months Ended   Nine Months Ended
    September 30, 2012   June 30,
2012
  September 30, 2011   September 30, 2012   September 30, 2011
    (In thousands)
Noninterest income:                              
  Customer service and other fees   $ 2,616   $ 2,382   $ 2,393   $ 7,269   $ 7,093
  Gain on sale of securities     746     342     3,018     1,710     3,420
  Gain on sale of SBA loans     203     -     -     203     -
  Other     250     187     118     643     632
  Total noninterest income   $ 3,815   $ 2,911   $ 5,529   $ 9,825   $ 11,145
                               

On a linked quarter basis, noninterest income increased $0.9 million in the third quarter 2012 primarily due to an increase in net gain from the sale of assets of $0.7 million consisting of gains on sale related to securities of $0.4 million; gains on sale related to Small Business Administration ("SBA") loans of $0.2 million; and the gain on sale of bank facilities of $0.1 million. Additionally, customer service fees increased $0.2 million primarily due to investment management fees generated by the Private Capital Management ("PCM") division acquired at the end of July 2012. 

Noninterest income decreased $1.7 million to $3.8 million in the third quarter 2012, as compared to $5.5 million in the third quarter 2011 primarily due to a net decrease in the gain on sale of securities of $2.3 million, partially offset by the gain on sale related to SBA loans of $0.2 million, the gain on sale of bank facilities of $0.1 million and the increase in customer services fees of $0.2 million.

For the nine months ending September 30, 2012, noninterest income decreased $1.3 million to $9.8 million as compared to $11.1 million during the same period in the prior year. This decrease is primarily due to the decrease in the net gains on sales of securities of $1.7 million, partially offset by the gains on sales of SBA loans and bank facilities as well as the increase in customer service fees, primarily investment management fees generated by PCM, as discussed in the preceding paragraphs.

Noninterest Expense

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

         
    Three Months Ended   Nine Months Ended
    September 30, 2012   June 30,
2012
  September 30, 2011   September 30, 2012   September 30, 2011
    (In thousands)
Noninterest expense:                              
  Salaries and employee benefits   $ 6,466   $ 6,614   $ 6,408   $ 19,937   $ 19,343
  Occupancy expense     1,712     1,972     1,871     5,703     5,546
  Furniture and equipment     779     783     855     2,383     2,662
  Amortization of intangible assets     803     761     1,018     2,326     3,074
  Other real estate owned     348     461     90     1,161     1,319
  Insurance and assessment     771     881     1,017     2,460     3,208
  Professional fees     1,062     856     1,016     2,546     2,838
  Prepayment penalty on long term debt     -     -     2,672     -     2,672
  Impairment of long lived assets     -     2,750     -     2,750     -
  Other general and administrative     2,253     2,438     2,541     6,926     6,976
  Total noninterest expense   $ 14,194   $ 17,516   $ 17,488   $ 46,192   $ 47,638
                                 

Noninterest expense decreased $3.3 million to $14.2 million in the third quarter 2012 as compared to $17.5 million in the second quarter 2012. The decrease is primarily due to the $2.8 million impairment on building premises recognized in the second quarter 2012 related to the Company's previously announced decision to close two underperforming branches. Further decreases in noninterest expense include reductions in salary and benefits of $0.1 million; reductions in occupancy expenses of $0.3 million related to branch closure savings; and reductions in insurance and assessment expenses of $0.1 million related to improvement in the Bank's FDIC risk rating in the third quarter 2012. 

As compared to the third quarter in 2011, noninterest expense decreased $3.3 million primarily as a result of the $2.7 million prepayment penalty on FHLB borrowings incurred in the third quarter 2011. Further decreases in noninterest expense include reductions in amortization of intangible assets of $0.2 million; reductions in insurance and assessments of $0.2 million related to lower premium savings and lower FDIC assessments; and reductions in other general and administrative expenses of $0.3 million, primarily due to lower collection and litigation expenses. These decreases in noninterest expense are partially offset by the increase in OREO expense of $0.3 million, primarily related to net operating income received on a former OREO property in the third quarter 2011. 

Noninterest expense decreased $1.4 million to $46.2 million for the nine month period ending September 30, 2012 as compared to $47.6 million for the same period in 2011. The two largest variances in noninterest expense, the prepayment penalty on FHLB borrowings of $2.7 million incurred in September 2011 and the $2.8 impairment charge incurred in June 2012, are largely offsetting. Other noninterest expense decreases include reductions in amortization of intangible assets of $0.7 million and reductions in insurance and assessments of $0.7 million related to lower insurance premiums and FDIC assessments discussed in the preceding paragraphs. Partially offsetting these decreases is an increase in salary and benefit expenses of $0.6 million, or 3.1%, primarily related to annual salary increases. 

Balance Sheet

                               
    September 30, 2012     December 31, 2011     % Change     September 30, 2011     % Change  
    (Dollars in thousands)  
Total assets   $ 1,834,978     $ 1,689,668     8.6 %   $ 1,692,368     8.4 %
Average assets, quarter-to-date     1,776,557       1,682,168     5.6 %     1,758,422     1.0 %
Total loans, net of unearned discount     1,118,968       1,098,140     1.9 %     1,088,358     2.8 %
Total deposits     1,395,096       1,313,786     6.2 %     1,330,661     4.8 %
                                     
Equity ratio - GAAP     10.09 %     10.12 %   (0.3 )%     10.01 %   0.8 %
Tangible common equity ratio     9.59 %     9.59 %   (0.0 )%     9.42 %   1.8 %
                                     

At September 30, 2012, the Company had total assets of $1.8 billion, which represented a $145.6 million increase as compared to December 31, 2011 and a $142.9 million increase as compared to September 30, 2011. The increase in assets from December 31, 2011 consists primarily of a $90.2 million increase in investments, a $20.8 million increase in loans net of unearned discount, an $18.6 million increase in cash and cash equivalents and a $15.6 million increase in securities sold, not yet settled. As compared to September 30, 2011, the increase in total assets is primarily due to an increase in investments of $162.0 million, an increase in loans net of unearned discount of $30.6 million and an increase in cash and cash equivalents of $34.6 million. These increases are partially offset by a decrease in securities sold, not yet settled of $73.5 million, a decrease in loans held for sale of $14.2 million and a decrease in premises and equipment of $8.3 million. In addition, the allowance for loan losses decreased by $7.3 million from $35.9 million at September 30, 2011 to $28.6 million at September 30, 2012.

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

                         
    September 30, 2012     June 30,
2012
    December 31, 2011     September 30, 2011  
    (In thousands)  
Loans on real estate:                                
  Residential and Commercial   $ 725,498     $ 730,324     $ 712,368     $ 676,276  
  Construction     53,172       46,413       44,087       50,614  
  Equity lines of credit     44,131       44,830       44,601       47,040  
Commercial loans     226,205       216,974       223,479       237,454  
Agricultural loans     10,634       10,712       11,527       11,810  
Lease financing     2,269       2,269       2,269       3,143  
Installment loans to individuals     19,481       20,146       22,937       24,523  
Overdrafts     234       218       254       382  
SBA and other     39,061       40,060       38,445       38,833  
      1,120,685       1,111,946       1,099,967       1,090,075  
Unearned discount     (1,717 )     (1,785 )     (1,827 )     (1,717 )
Loans, net of unearned discount   $ 1,118,968     $ 1,110,161     $ 1,098,140     $ 1,088,358  
                                 

For the nine months ending September 30, 2012, loans, net of unearned discount grew $20.8 million, primarily due to an increase in real estate loans. At September 30, 2012, the overall loan portfolio included 30.7% owner-occupied properties; 17.7% retail and industrial properties; 11.1% office properties; 10.1% other commercial real estate properties; and 4.5% multi-family properties. The Bank has capacity to extend additional credit on residential and commercial real estate loans as evidenced by the Bank's regulatory concentration ratios discussed below.

Since September 30, 2011, the ratio of construction, land and land development loans to capital decreased by 15 percentage points to 52% at September 30, 2012. During the same period, the ratio of commercial real estate loans to capital increased by 19 percentage points to 272%.

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

                 
    September 30, 2012   June 30,
2012
  December 31, 2011   September 30, 2011
    (In thousands)
Noninterest-bearing deposits   $ 514,912   $ 546,229   $ 450,451   $ 443,682
Interest-bearing demand and NOW     286,888     270,940     289,987     185,136
Money market     290,520     280,767     277,997     366,367
Savings     99,654     97,497     91,260     89,636
Time     203,122     183,504     204,091     245,840
Total deposits   $ 1,395,096   $ 1,378,937   $ 1,313,786   $ 1,330,661
                         

At September 30, 2012, noninterest-bearing deposits as a percentage of total deposits increased to 36.9% as compared to 34.3% at December 31, 2011 and 33.3% at September 30, 2011.

Non-maturing deposits increased $82.3 million, or 7.4%, in the third quarter 2012 as compared to the fourth quarter 2011 and $107.2 million, or 9.9%, as compared to third quarter 2011. Time deposits decreased $1.0 million as of September 30, 2012 as compared to December 31, 2011 and $42.7 million as compared to September 30, 2011.

Securities sold under agreement to repurchase increased $67.1 million from $16.6 million as of December 31, 2011 to $83.7 million at September 30, 2012. This increase is primarily related to a single depositor whose balance is expected to be re-deployed into the depositor's operations in early 2013.

Total borrowings were $110.2 million at September 30, 2012, December 31, 2011 and September 30, 2011. The Company elected to payoff $51.0 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

The following table provides the capital ratios of the Company and Bank as of the dates presented, along with the applicable regulatory capital requirements:

                         
    Ratio at
September 30, 2012
   

Ratio at
December 31, 2011
    Minimum Capital Requirement     Minimum Requirement for "Well Capitalized" Institution  
                         
Total Risk-Based Capital Ratio:                        
  Consolidated   16.46 %   16.33 %   8.00 %   N/A  
  Guaranty Bank and Trust Company   15.68 %   15.59 %   8.00 %   10.00 %
Tier 1 Risk-Based Capital Ratio:                        
  Consolidated   15.20 %   15.06 %   4.00 %   N/A  
  Guaranty Bank and Trust Company   14.42 %   14.32 %   4.00 %   6.00 %
Leverage Ratio:                        
  Consolidated   12.16 %   12.12 %   4.00 %   N/A  
  Guaranty Bank and Trust Company   11.54 %   11.53 %   4.00 %   5.00 %
                         

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 September 30, 2012, approximately $10.9 million of the Bank's allowance for loan losses was disallowed from being included in total risk-based capital under the regulatory capital rules, or approximately 0.77% of the Company's consolidated risk-weighted assets. At September 30, 2012, no deferred tax assets were disallowed for purposes of computing consolidated Tier 1 risk-based capital.

Asset Quality

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

                               
    September 30, 2012     June 30,
2012
    March 31,
2012
    December 31, 2011     September 30, 2011  
    (Dollars in thousands)  
                                         
Nonaccrual loans and leases   $ 21,185     $ 21,291     $ 29,648     $ 26,801     $ 45,790  
Other nonperforming loans     543       -       1,301       6       583  
Total nonperforming loans (NPLs)   $ 21,728     $ 21,291     $ 30,949     $ 26,807     $ 46,373  
Other real estate owned and foreclosed assets     23,532       24,640       28,072       29,027       22,008  
Total nonperforming assets (NPAs)   $ 45,260     $ 45,931     $ 59,021     $ 55,834     $ 68,381  
                                         
Accruing loans past due 90 days or more (1)   $ 543     $ -     $ 1,301     $ 6     $ 583  
Accruing loans past due 30-89 days (1)   $ 7,678     $ 18,448     $ 10,798     $ 10,805     $ 9,358  
Allowance for loan losses   $ 28,597     $ 29,307     $ 30,075     $ 34,661     $ 35,852  
Selected ratios:                                        
NPLs to loans, net of unearned discount     1.94 %     1.92 %     2.79 %     2.44 %     4.21 %
NPAs to total assets     2.47 %     2.62 %     3.44 %     3.30 %     4.04 %
Allowance for loan losses to NPAs (2)     63.18 %     63.81 %     50.96 %     62.08 %     66.17 %
Allowance for loan losses to NPLs (2)     131.61 %     137.65 %     97.17 %     129.30 %     111.43 %
Allowance for loan losses to loans (2)     2.56 %     2.64 %     2.71 %     3.16 %     3.29 %
Loans 30-89 days past due to loans, net of unearned discount     0.69 %     1.66 %     0.97 %     0.98 %     0.85 %
   
(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 tables summarize past due loans by class (including loans held for sale) as of the dates indicated:

                     
September 30, 2012   30-89 Days Past Due   90 days +Past Due and Still Accruing   Non-Accrual Loans   Total Past Due   Total Loans
    (In thousands)
     
Commercial and residential real estate   $ 6,280   $ 543   $ 15,056   $ 21,879   $ 724,388
Construction loans     -     -     -     -     53,091
Commercial loans     753     -     3,217     3,970     225,858
Consumer loans     612     -     1,541     2,153     63,749
Other     33     -     1,371     1,404     51,882
Total   $ 7,678   $ 543   $ 21,185   $ 29,406   $ 1,118,968
                               
June 30, 2012   30-89 Days Past Due   90 days +Past Due and Still Accruing   Non-Accrual Loans   Total Past Due   Total Loans
    (In thousands)
     
Commercial and residential real estate   $ 16,779   $ -   $ 15,021   $ 31,800   $ 745,764
Construction loans     -     -     114     114     46,339
Commercial loans     1,596     -     2,759     4,355     216,626
Consumer loans     73     -     1,578     1,651     65,090
Other     -     -     1,819     1,819     36,342
Total   $ 18,448   $ -   $ 21,291   $ 39,739   $ 1,110,161
                               

During the third quarter 2012, nonaccrual loans remained relatively flat as compared to June 30, 2012. However, shortly after the close of the third quarter, the largest single nonaccrual loan of $6.7 million paid off. During the third quarter 2012, classified loans declined $1.8 million and loans classified as special mention and watch loans declined by $4.0 million. Other real estate owned decreased by $1.1 million during the third quarter 2012 as compared to the second quarter 2012.

At September 30, 2012, classified assets as a percentage of capital and allowance for loan losses were 32.1%, a favorable decline from 33.8% at June 30, 2012 and 36.6% at December 31, 2011. 

Net charge-offs in the third quarter 2012 were $0.7 million as compared to $1.3 million in the second quarter 2012 and $4.0 million in the third quarter 2011.

The general component of the allowance for loan losses decreased from $27.4 million at June 30, 2012 to $24.8 million at September 30, 2012. The general component represented 2.2% of loans, net of unearned discount, at September 30, 2012 as compared to 2.5% of loans, net of unearned discount, at the end of the previous quarter. The coverage ratio, defined as allowance for loan losses divided by nonperforming loans, decreased from 137.7% at June 30, 2012 to 131.6% at September 30, 2012.

The Company did not record a provision for loan losses in the third quarter 2012, as compared to $0.5 million provision in the second quarter 2012 and $1.0 million in the third quarter 2011. The decrease in provision for loan loss over last year reflects an overall improvement in asset quality.

Shares Outstanding

As of September 30, 2012, the Company had 106,256,654 shares of common stock outstanding, consisting of 101,161,654 shares of voting common stock and 5,095,000 shares of non-voting common stock. At September 30, 2012, total common shares outstanding include 2,314,589 shares of unvested stock awards.

Non-GAAP Financial Measures

This press release includes non-GAAP financial measures related to tangible assets, including tangible book value and the 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:

                   
    September 30, 2012     December 31, 2011     September 30, 2011  
    (Dollars in thousands, except per share amounts)  
Tangible Book Value per Common Share                        
  Total stockholders' equity   $ 185,073     $ 171,011     $ 169,450  
  Less: Intangible assets     (10,161 )     (9,963 )     (10,980 )
  Tangible common equity   $ 174,912     $ 161,048     $ 158,470  
  Number of common shares outstanding     106,256,654       105,436,623       105,457,136  
                           
  Book value per common share   $ 1.74     $ 1.62     $ 1.61  
  Tangible book value per common share   $ 1.65     $ 1.53     $ 1.50  
                         
                         
Tangible Common Equity Ratio                        
    September 30, 2012     December 31, 2011     September 30, 2011  
    (Dollars in thousands, except per share amounts)  
                         
  Total stockholders' equity   $ 185,073     $ 171,011     $ 169,450  
  Less: Intangible assets     (10,161 )     (9,963 )     (10,980 )
  Tangible common equity   $ 174,912     $ 161,048     $ 158,470  
                           
  Total assets   $ 1,834,978     $ 1,689,668     $ 1,692,368  
  Less: Intangible assets     (10,161 )     (9,963 )     (10,980 )
  Tangible assets   $ 1,824,817     $ 1,679,705     $ 1,681,388  
                           
  Equity ratio - GAAP (total stockholders' equity / total assets)     10.09 %     10.12 %     10.01 %
  Tangible common equity ratio (tangible common equity / tangible assets)     9.59 %     9.59 %     9.42 %
                         

About Guaranty Bancorp

Guaranty Bancorp is a bank holding company that operates 30 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 wealth management services, including private banking, investment management and trust services. 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; 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 the bank subsidiary to declare dividends to the Company; adequacy of the allowance for loan losses, changes in credit quality and the effect of credit quality on the 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 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 terms of other 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  
             
    September 30, 2012     December 31, 2011     September 30, 2011  
    (In thousands)  
Assets                        
Cash and due from banks   $ 127,823     $ 109,225     $ 93,226  
Time deposits with banks     40,000       -       -  
                         
                         
Securities available for sale, at fair value     395,632       353,152       284,523  
Securities held to maturity     26,286       18,424       15,591  
Bank stocks, at cost     14,468       14,565       14,306  
      Total investments     436,386       386,141       314,420  
                         
                         
                         
Loans, net of unearned discount     1,118,968       1,098,140       1,088,358  
  Less allowance for loan losses     (28,597 )     (34,661 )     (35,852 )
      Net loans     1,090,371       1,063,479       1,052,506  
Loans held for sale     -       -       14,200  
Premises and equipment, net     47,083       53,851       55,390  
Other real estate owned and foreclosed assets, net     23,532       29,027       22,008  
Other intangible assets, net     10,161       9,963       10,980  
Securities sold, not yet settled     15,628       -       89,161  
Other assets     43,994       37,982       40,477  
      Total assets   $ 1,834,978     $ 1,689,668     $ 1,692,368  
                         
Liabilities and Stockholders' Equity                        
Liabilities:                        
  Deposits:                        
    Noninterest-bearing demand   $ 514,912     $ 450,451     $ 443,682  
    Interest-bearing demand     577,408       567,984       551,503  
    Savings     99,654       91,260       89,636  
    Time     203,122       204,091       245,840  
      Total deposits     1,395,096       1,313,786       1,330,661  
Securities sold under agreements to repurchase and federal funds purchased     83,734       16,617       16,392  
Borrowings     110,166       110,177       110,181  
Subordinated debentures     41,239       41,239       41,239  
Securities purchased, not yet settled     12,311       20,800       10,095  
Interest payable and other liabilities     7,359       16,038       14,350  
      Total liabilities     1,649,905       1,518,657       1,522,918  
                         
Stockholders' equity:                        
  Common stock and additional paid-in capital -common stock     705,238       704,698       704,562  
  Shares to be issued for deferred compensation obligations     -       -       237  
  Accumulated deficit     (421,077 )     (433,016 )     (435,292 )
  Accumulated other comprehensive income     3,277       1,683       2,505  
  Treasury stock     (102,365 )     (102,354 )     (102,562 )
      Total stockholders' equity     185,073       171,011       169,450  
      Total liabilities and stockholders' equity   $ 1,834,978     $ 1,689,668     $ 1,692,368  
   
   
GUARANTY BANCORP AND SUBSIDIARIES  
Unaudited Consolidated Statements of Operations  
   
    Three Months Ended September 30,     Nine Months Ended September 30,  
    2012   2011     2012     2011  
    (Dollars in thousands, except share and per share data)  
Interest income:                              
  Loans, including fees   $ 14,030   $ 14,900     $ 43,023     $ 45,433  
  Investment securities:                              
    Taxable     1,860     2,853       6,619       8,836  
    Tax-exempt     632     498       1,867       1,484  
  Dividends     164     166       475       495  
  Federal funds sold and other     105     86       205       261  
    Total interest income     16,791     18,503       52,189       56,509  
Interest expense:                              
  Deposits     697     1,353       2,185       5,868  
  Securities sold under agreement to repurchase and federal funds purchased     21     19       45       60  
  Borrowings     837     1,299       2,491       3,891  
  Subordinated debentures     725     720       2,274       2,121  
    Total interest expense     2,280     3,391       6,995       11,940  
    Net interest income     14,511     15,112       45,194       44,569  
Provision for loan losses     -     1,000       1,500       4,000  
    Net interest income, after provision for loan losses     14,511     14,112       43,694       40,569  
Noninterest income:                              
  Customer service and other fees     2,616     2,393       7,269       7,093  
  Gain on sale of securities     746     3,018       1,710       3,420  
  Gain on sale of SBA loans     203     -       203       -  
  Other     250     118       643       632  
    Total noninterest income     3,815     5,529       9,825       11,145  
Noninterest expense:                              
  Salaries and employee benefits     6,466     6,408       19,937       19,343  
  Occupancy expense     1,712     1,871       5,703       5,546  
  Furniture and equipment     779     855       2,383       2,662  
  Amortization of intangible assets     803     1,018       2,326       3,074  
  Other real estate owned, net     348     90       1,161       1,319  
  Insurance and assessments     771     1,017       2,460       3,208  
  Professional fees     1,062     1,016       2,546       2,838  
  Prepayment penalty on long term debt     -     2,672       -       2,672  
  Impairment of long-lived assets     -     -       2,750       -  
  Other general and administrative     2,253     2,541       6,926       6,976  
    Total noninterest expense     14,194     17,488       46,192       47,638  
    Income before income taxes     4,132     2,153       7,327       4,076  
Income tax expense (benefit)     1,302     -       (4,612 )     -  
    Net Income   $ 2,830   $ 2,153     $ 11,939     $ 4,076  
                               
Net income (loss) applicable to common stockholders   $ 2,830   $ (14,649 )   $ 11,939     $ (15,730 )
                               
Earnings (loss) per common share-basic:   $ 0.02   $ (0.28 )   $ 0.11     $ (0.30 )
Earnings (loss) per common share-diluted:     0.02     (0.28 )     0.11       (0.30 )
                               
Weighted average common shares outstanding-basic     103,939,835     51,828,165       103,915,744       51,815,618  
Weighted average common shares outstanding-diluted     104,366,717     51,828,165       104,384,657       51,815,618  
   
 
 
GUARANTY BANCORP AND SUBSIDIARIES
Unaudited Consolidated Average Balance Sheets
                 
    QTD Average   YTD Average
    September 30, 2012   December
31, 2011
  September 30, 2011   September 30, 2012   September 30, 2011
    (In thousands)
Assets                              
Interest earning assets                              
  Loans, net of unearned discount   $ 1,096,395   $ 1,085,975   $ 1,103,832   $ 1,103,677   $ 1,136,304
  Securities     403,053     364,833     401,298     389,760     404,439
  Other earning assets     170,852     124,385     150,471     119,437     146,075
Average earning assets     1,670,300     1,575,193     1,655,601     1,612,874     1,686,818
Other assets     106,257     106,975     102,821     104,656     111,368
                               
Total average assets   $ 1,776,557   $ 1,682,168   $ 1,758,422   $ 1,717,530   $ 1,798,186
                               
Liabilities and Stockholders' Equity                        
Average liabilities:                              
Average deposits:                              
  Noninterest-bearing deposits   $ 515,157   $ 459,031   $ 434,207   $ 488,863   $ 414,551
  Interest-bearing deposits     861,685     869,758     918,904     857,699     982,025
  Average deposits     1,376,842     1,328,789     1,353,111     1,346,562     1,396,576
Other interest-bearing liabilities     208,643     173,848     228,534     185,965     228,992
Other liabilities     8,739     9,691     7,844     7,866     8,178
Total average liabilities     1,594,224     1,512,328     1,589,489     1,540,393     1,633,746
Average stockholders' equity     182,333     169,840     168,933     177,137     164,440
Total average liabilities and stockholders' equity   $ 1,776,557   $ 1,682,168   $ 1,758,422   $ 1,717,530   $ 1,798,186
                               
   
   
 GUARANTY BANCORP  
 Unaudited Credit Quality Measures  
(Includes loans held for sale, except where noted)  
   
    Quarter Ended  
    September 30, 2012     June 30,
2012
    March 31, 2012     December 31, 2011     September 30, 2011  
    (Dollars in thousands)  
Nonaccrual loans and leases   $ 21,185     $ 21,291     $ 29,648     $ 26,801     $ 45,790  
Other nonperforming loans     543       -       1,301       6       583  
  Total nonperforming loans   $ 21,728     $ 21,291     $ 30,949     $ 26,807     $ 46,373  
Other real estate owned and foreclosed assets     23,532       24,640       28,072       29,027       22,008  
  Total nonperforming assets   $ 45,260     $ 45,931     $ 59,021     $ 55,834     $ 68,381  
                                         
Total classified assets   $ 74,514     $ 77,910     $ 81,130     $ 83,317     $ 95,916  
                                         
Nonperforming loans   $ 21,728     $ 21,291     $ 30,949     $ 26,807     $ 46,373  
Allocated allowance for loan losses     (3,774 )     (1,859 )     (2,572 )     (3,490 )     (4,483 )
  Net investment in impaired loans   $ 17,954     $ 19,432     $ 28,377     $ 23,317     $ 41,890  
                                           
Accruing loans past due 90 days or more   $ 543     $ -     $ 1,301     $ 6     $ 583  
                                         
Accruing loans past due 30-89 days   $ 7,678     $ 18,448     $ 10,798     $ 10,805     $ 9,358  
                                         
Charged-off loans   $ 1,067     $ 2,062     $ 6,371     $ 2,603     $ 4,135  
Recoveries     (357 )     (794 )     (785 )     (412 )     (132 )
  Net charge-offs   $ 710     $ 1,268     $ 5,586     $ 2,191     $ 4,003  
                                         
Provision for loan losses   $ -     $ 500     $ 1,000     $ 1,000     $ 1,000  
                                         
Allowance for loan losses   $ 28,597     $ 29,307     $ 30,075     $ 34,661     $ 35,852  
                                         
Allowance for loan losses to loans, net of unearned discount (1)     2.56 %     2.64 %     2.71 %     3.16 %     3.29 %
Allowance for loan losses to nonaccrual loans (1)     134.99 %     137.65 %     101.44 %     129.33 %     113.49 %
Allowance for loan losses to nonperforming assets (1)     63.18 %     63.81 %     50.96 %     62.08 %     66.17 %
Allowance for loan losses to nonperforming loans (1)     131.61 %     137.65 %     97.17 %     129.30 %     111.43 %
Nonperforming assets to loans, net of unearned discount, and other real estate owned     3.96 %     4.05 %     5.19 %     4.95 %     6.08 %
Nonperforming assets to total assets     2.47 %     2.62 %     3.44 %     3.30 %     4.04 %
Nonaccrual loans to loans, net of unearned discount     1.89 %     1.92 %     2.67 %     2.44 %     4.15 %
Nonperforming loans to loans, net of unearned discount     1.94 %     1.92 %     2.79 %     2.44 %     4.21 %
Annualized net charge-offs to average loans     0.26 %     0.46 %     2.03 %     0.80 %     1.44 %
 
(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