SOURCE: Guaranty Bancorp

Guaranty Bancorp

January 21, 2015 16:10 ET

Guaranty Bancorp Announces 2014 Annual and Fourth Quarter Financial Results

DENVER, CO--(Marketwired - Jan 21, 2015) - Guaranty Bancorp (NASDAQ: GBNK)

  • Grew net loans 16.7% during 2014
  • Strong net commercial loan growth of 19.2% during 2014
  • Increased core deposits by 10.8% during 2014
  • Prepaid $90 million of high-cost Federal Home Loan Bank term advances during the fourth quarter 2014

Guaranty Bancorp (NASDAQ: GBNK) ("we", "our" or "the Company"), a community bank holding company based in Colorado, today announced fourth quarter 2014 net income of $1.2 million or $0.06 per basic and diluted common share as compared to $4.1 million or $0.20 per basic common share and $0.19 per diluted common share in fourth quarter 2013. The Company's net income for the fourth quarter 2014 included a $5.5 million prepayment penalty, net of a $2.1 million tax benefit related to the prepayment of $90.0 million in Federal Home Loan Bank (FHLB) term advances. Net income for the fourth quarter 2014 would have been $4.6 million or $0.22 per basic and diluted common share excluding the net FHLB prepayment penalty. Fourth quarter 2014 return on average assets (ROAA) was 0.23% as compared to 0.88% excluding the net FHLB prepayment penalty.

"Our experienced team of local bankers once again delivered exceptional results with net loan growth of 16.7% and core deposit growth of 10.8% during 2014," said Paul W. Taylor, President and CEO. "In addition to these significant accomplishments, we continue to improve our key core operating metrics across all lines of business. Our noninterest income grew 21%, from $13.8 million in 2013 to $16.7 million in 2014. We also improved our net interest margin by four basis points to 3.66% during 2014, despite competitive and economic pressures."

Mr. Taylor added, "At the end of the fourth quarter 2014, we made the strategic decision to prepay $90 million in FHLB term advances with a weighted average rate of 3.07%. We expect that the prepayment will reduce our net interest expense by as much as $2.5 million annually for 2015 through 2017. The prepayment is also expected to improve our profitability ratios including net interest margin, earnings per share, return on average equity and ROAA, among others."

The Company's pre-tax operating earnings(1) for the fourth quarter 2014 were $7.2 million or $0.34 per basic and diluted common share, an increase of $2.0 million or $0.09 per basic and diluted common share as compared to the same quarter in 2013. The $2.0 million increase in pre-tax operating earnings in the fourth quarter 2014 as compared to the same quarter in the prior year was primarily driven by a $1.3 million improvement in interest income, attributable to growth in average loan balances of $179.9 million and a $1.4 million, or 40.0% increase in noninterest income, primarily due to increases in investment management and trust income and gains on the sale of SBA loans.

(1) "Pre-tax operating earnings" is considered a "non-GAAP" financial measure, which we define as income before income taxes adjusted for (if any) provision (credit) for loan losses, other real estate owned expenses, debt termination expenses such as prepayment penalties, impairment of long-lived assets, acquisition, reorganization and integration costs, and securities gains and losses. More information regarding this measure and a reconciliation to the comparable GAAP measurement is provided under the heading Non-GAAP Financial Measures in this release.

For the year ended December 31, 2014, the Company's net income was $13.5 million or $0.64 per basic and diluted common share as compared to $14.0 million, or $0.67 per basic and diluted common share in the prior year. Net income for 2014 would have been $16.9 million or $0.81 per basic common share and $0.80 per diluted common share excluding the net FHLB prepayment penalty. The Company's ROAA was 0.68% for the year ended December 31, 2014 as compared to 0.84% excluding the net FHLB prepayment penalty.

The Company's pre-tax operating earnings for 2014 were $25.7 million or $1.23 per basic common share and $1.22 per diluted common share, an increase of $5.6 million or $0.26 per basic and diluted common share as compared to the prior year. The $5.6 million increase in pre-tax operating earnings for the year ended December 31, 2014 as compared to the prior year was mostly due to a $4.9 million increase in interest income, driven by growth in average loan balances of 14.7%, combined with a $2.9 million increase in noninterest income.

Key Financial Measures
Income Statement

                               
    Quarter Ended     Year Ended  
    December 31, 2014     September 30, 2014     December 31, 2013     December 31, 2014     December 31, 2013  
    (Dollars in thousands, except per share amounts)  
Net income   $ 1,215     $ 4,671     $ 4,088     $ 13,512     $ 14,029  
Earnings per common share - basic   $ 0.06     $ 0.22     $ 0.20     $ 0.64     $ 0.67  
Return on average assets     0.23 %     0.91 %     0.85 %     0.68 %     0.75 %
Net interest margin     3.61 %     3.67 %     3.65 %     3.66 %     3.62 %
Efficiency ratio (1)     64.03 %     63.68 %     63.49 %     65.56 %     66.79 %
                                         
                                         

(1) The "efficiency ratio" equals noninterest expenses adjusted to exclude amortization of intangible assets, prepayment penalties on long-term debt and impairment of long-lived assets divided by the sum of tax equivalent net interest income and tax equivalent noninterest income. To calculate tax equivalent net interest income and noninterest income, the interest earned on tax exempt loans and investment securities and the income earned on bank-owned life insurance has been adjusted to reflect the amount that would have been earned had these investments been subject to normal income taxation.

Balance Sheet   

                               
 
 
 
 
December 31, 2014  
 
 
 
September 30, 2014  
 
 
 
Percent
Change
 
 
 
 
December 31, 2013  
 
 
 
Percent
Change
 
 
    (Dollars in thousands, except per share amounts)  
Total investments   $ 449,482     $ 456,118     (1.5 )%   $ 442,300     1.6 %
Total loans, net of unearned loan fees     1,541,434       1,482,268     4.0 %     1,320,424     16.7 %
Allowance for loan losses     (22,490 )     (22,350 )   0.6 %     (21,005 )   7.1 %
Total assets     2,124,778       2,077,939     2.3 %     1,911,032     11.2 %
Total deposits     1,685,324       1,662,598     1.4 %     1,528,457     10.3 %
Book value per common share     9.57       9.46     1.2 %     8.89     7.6 %
Tangible book value per common share     9.24       9.10     1.5 %     8.58     7.7 %
Equity ratio - GAAP     9.74 %     9.88 %   (1.4 )%     9.91 %   (1.7 )%
Tangible common equity ratio     9.43 %     9.54 %   (1.2 )%     9.60 %   (1.8 )%
Total risk-based capital ratio     13.85 %     14.25 %   (2.8 )%     14.96 %   (7.4 )%
Assets under management   $ 683,138     $ 675,431     1.1 %   $ 462,958     47.6 %
                                     
                                     

Net Interest Income and Margin 

                               
    Quarter Ended     Year Ended  
 
 
 
 
December 31, 2014  
 
 
 
September 30, 2014  
 
 
 
December 31, 2013  
 
 
 
December 31, 2014  
 
 
 
December 31, 2013  
 
    (Dollars in thousands)  
Net interest income   $ 17,680     $ 17,809     $ 16,391     $ 68,813     $ 63,570  
Average earning assets     1,941,028       1,927,474       1,781,510       1,882,194       1,755,693  
Interest rate spread     3.40 %     3.47 %     3.45 %     3.45 %     3.40 %
Net interest margin     3.61 %     3.67 %     3.65 %     3.66 %     3.62 %
Net interest margin, fully tax equivalent     3.69 %     3.75 %     3.75 %     3.74 %     3.72 %
Average cost of deposits (including noninterest-bearing deposits)     0.16 %     0.16 %     0.16 %     0.16 %     0.17 %
                                         
                                         

Net interest income improved $1.3 million to $17.7 million in the fourth quarter 2014 as compared to the same quarter in 2013 due to a $1.3 million increase in interest income primarily driven by a 13.8% increase in average loan balances. Interest expense remained relatively flat in the fourth quarter 2014 as compared to the same quarter in the prior year despite an $81.1 million increase in average interest bearing deposits.

During the fourth quarter 2014, net interest margin decreased by six basis points to 3.61% as compared to the third quarter 2014 and decreased four basis points as compared to the fourth quarter 2013. These decreases in net interest margin were primarily the result of a decrease in loan yield, due to competitive and economic pressures, partially offset by a change in the mix of average earning assets, primarily due to an increase in average loan balances. Fourth quarter 2014 loan yield declined six basis points to 4.37%, as compared to third quarter 2014 and declined 13 basis points as compared to fourth quarter 2013.

Net interest income improved by $5.2 million for the year ended December 31, 2014 to $68.8 million compared to $63.6 million during 2013. The increase in net interest income was the result of a $4.9 million increase in interest income combined with a $0.4 million decline in interest expense. The increase in interest income was driven by a $181.8 million increase in average loan balances for the year ended December 31, 2014 as compared to the prior year. The decrease in interest expense during 2014 as compared to the prior year was mostly due to the early redemption of high-cost TruPS and related subordinated debentures during the first quarter 2013 combined with a two basis point decline in the cost of interest bearing deposits. The prepayment of $90.0 million in FHLB term advances with a weighted average rate of 3.07% during the fourth quarter 2014 is expected to have a favorable impact on both net interest income and net interest margin in 2015.

On a year-over-year basis, the 2014 net interest margin increased four basis points to 3.66% as compared to 3.62% for the prior year, primarily due to a change in the mix of average earnings assets as a result of loan growth combined with a decline in the average cost of deposits and early redemption of TruPS and related subordinated debentures during the first quarter 2013.

Noninterest Income   

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

                     
    Quarter Ended     Year Ended  
    December 31, 2014   September 30, 2014   December 31, 2013     December 31, 2014   December 31, 2013  
    (In thousands)  
Noninterest income:                        
  Deposit service and other fees   $ 2,358   $ 2,290   $ 2,222     $ 9,066   $ 8,825  
  Investment management and trust     1,231     1,279     831       4,380     2,904  
  Increase in cash surrender value of life insurance     418     291     304       1,295     1,018  
  Gain (loss) on sale of securities     -     3     (85 )     28     (11 )
  Gain on sale of SBA loans     447     186     95       798     725  
  Other     408     289     107       1,128     338  
  Total noninterest income   $ 4,862   $ 4,338   $ 3,474     $ 16,695   $ 13,799  
                                     
                                     

Fourth quarter 2014 noninterest income increased $0.5 million to $4.9 million as compared to $4.3 million in the third quarter 2014 and increased $1.4 million from $3.5 million in the fourth quarter 2013.

The $0.5 million increase in noninterest income in the fourth quarter 2014 as compared to the third quarter 2014 was mostly due to a $0.3 million increase in gains on sale of SBA loans. As compared to the fourth quarter 2013, noninterest income increased $1.4 million primarily due to a $0.4 million increase in investment management and trust income, a $0.4 million increase in gains on sale of SBA loans and a $0.1 million increase in cash surrender value of bank-owned life insurance (BOLI).

Total assets under management at December 31, 2014 were $683.1 million, an increase of $220.2 million, or 47.6% as compared to December 31, 2013. During the third quarter 2014, the Company acquired Cherry Hills Investment Advisors which had assets under management of $178.5 million at July 16, 2014.

For the year ended December 31, 2014, noninterest income increased $2.9 million as compared to the prior year. This increase in noninterest income included a $1.5 million increase in investment management and trust income, as a result of an increase in fee income generated by the Company's subsidiary, Private Capital Management as well as fee income generated from the Company's recent acquisition of Cherry Hills Investment Advisors. Other categories of noninterest income contributing to the increase included a $0.3 million increase in customer interest rate swap income, a $0.3 million increase in BOLI, and a $0.2 million increase in deposit service fees.

Noninterest Expense   

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

                         
      Quarter Ended       Year Ended  
    December 31, 2014   September 30, 2014   December 31, 2013     December 31, 2014   December 31, 2013  
      (In thousands)  
Noninterest expense:                        
  Salaries and employee benefits   $ 8,434   $ 8,135   $ 7,685     $ 32,766   $ 29,581  
  Occupancy expense     1,544     1,583     1,507       6,308     6,289  
  Furniture and equipment     698     693     728       2,759     2,943  
  Amortization of intangible assets     654     670     702       2,506     2,818  
  Other real estate owned     142     147     (1,037 )     367     (1,160 )
  Insurance and assessment     576     594     641       2,355     2,519  
  Professional fees     927     890     968       3,520     3,618  
  Prepayment penalty on long term debt     5,459     -     -       5,459     629  
  Impairment of long-lived assets     76     -     -       186     -  
  Other general and administrative     2,524     2,447     2,487       9,520     9,451  
  Total noninterest expense   $ 21,034   $ 15,159   $ 13,681     $ 65,746   $ 56,688  
                                     
                                   

The FHLB prepayment penalty was the primary cause for the increase of $5.9 million in noninterest expense during the fourth quarter 2014 as compared to the third quarter 2014. Salaries and employee benefits increased $0.3 million during the fourth quarter 2014 as compared to the third quarter 2014 mostly due to a $0.2 million increase in our self-funded medical insurance plan and $0.1 million in incentive compensation. As compared to the fourth quarter 2013, noninterest expense increased $7.4 million, consisting of the $5.5 million prepayment penalty on FHLB term advances, a $1.2 million increase in other real estate owned (OREO) expenses mostly related to a gain on sale of OREO recognized in the fourth quarter 2013 and a $0.7 million increase in salaries and employee benefits. The increase in salaries and employee benefits was mostly due to a $0.4 million increase in salaries and a $0.2 million reduction in equity compensation expense in the fourth quarter 2013 related to an adjustment to the expected vesting of certain performance shares.

Noninterest expense in 2014 was $65.7 million as compared to $56.7 million for 2013. Exclusive of the FHLB prepayment penalty and the $0.6 million prepayment penalty incurred in 2013 related to the early redemption of $15.0 million in the Company's trust preferred securities, other categories of noninterest expense increased by $4.2 million. These increases include a $3.2 million increase in salaries and employee benefits and a $1.5 million increase in OREO expense. The increase in salaries and employee benefits was comprised of a $1.5 million increase in salaries, a $1.3 million increase in equity compensation and a $0.4 million increase in costs related to our self-funded medical insurance plan. The increase in salaries was impacted by an increase of eleven full-time equivalent employees during 2014. The increase in equity compensation during 2014 was primarily related to additional shares granted early in 2014. The increase in OREO expense was mostly related to higher net gains on sale of OREO during 2013.

Balance Sheet

                               
    December 31, 2014     September 30, 2014     Percent Change     December 31, 2013     Percent Change  
    (Dollars in thousands)  
Total assets   $ 2,124,778     $ 2,077,939     2.3 %   $ 1,911,032     11.2 %
Average assets, quarter-to-date     2,067,371       2,043,756     1.2 %     1,905,524     8.5 %
Total loans, net of unearned loan fees     1,541,434       1,482,268     4.0 %     1,320,424     16.7 %
Total deposits     1,685,324       1,662,598     1.4 %     1,528,457     10.3 %
                                     
Equity ratio - GAAP     9.74 %     9.88 %   (1.4 )%     9.91 %   (1.7 )%
Tangible common equity ratio     9.43 %     9.54 %   (1.2 )%     9.60 %   (1.8 )%
                                     
                                     

At December 31, 2014, the Company had total assets of $2.1 billion, reflecting a $46.8 million increase compared to September 30, 2014 and a $213.7 million increase compared to December 31, 2013. The increase in total assets during the year ended December 31, 2014 includes a $221.0 million, or 16.7% increase in loans. The loan growth was funded by a $156.9 million increase in deposits and a $39.5 million increase in repurchase agreements and borrowings.

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

                   
    December 31,     September 30,     December 31,  
    2014     2014     2013  
    (In thousands)  
Loans held for sale   $ -     $ -     $ 507  
Commercial and residential real estate     1,049,315       1,001,174       866,507  
Construction     66,634       89,787       77,657  
Commercial     324,057       286,545       271,843  
Agricultural     10,625       11,986       10,772  
Consumer     60,155       60,492       60,932  
SBA     30,025       32,107       31,010  
Other     1,002       773       2,039  
  Total gross loans     1,541,813       1,482,864       1,321,267  
    Unearned loan fees     (379 )     (596 )     (843 )
  Loans, net of unearned loan fees   $ 1,541,434     $ 1,482,268     $ 1,320,424  
                           
                           

During the fourth quarter 2014, loans increased $59.2 million, comprised of a $48.1 million increase in commercial and residential real estate and a $37.5 million increase in commercial loans, partially offset by a $23.2 million decline in construction loans. Fourth quarter 2014 net loan growth consisted of $178.5 million in new loans and new advances on existing loans, partially offset by $119.9 million in loan maturities, early payoffs and pay-downs. Commercial and residential real estate growth was comprised mostly of loans to finance the acquisition and development of mixed-use retail and office, industrial and multi-family commercial properties in Colorado.

For the year ended December 31, 2014, loans net of unearned fees increased by $221.0 million, or 16.7%. Net loan growth was comprised of a $182.8 million increase in commercial and residential real estate loans and a $52.2 million increase in commercial loans. The growth in loans was both the result of development of new customer relationships and growth in existing customer relationships. The utilization rate on commercial lines of credit was 41.0% at December 31, 2014 as compared to 41.0% at September 30, 2014 and 39.5% at December 31, 2013. At December 31, 2014, 1-4 family residential real estate loans were $262.7 million as compared to $222.4 million at December 31, 2013.

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

             
    December 31,   September 30,   December 31,
    2014   2014   2013
      (In thousands)
Noninterest-bearing demand   $ 654,051   $ 617,704   $ 564,326
Interest-bearing demand and NOW     326,748     365,538     346,449
Money market     374,063     357,368     326,008
Savings     138,588     128,931     111,568
Time     191,874     193,057     180,106
Total deposits   $ 1,685,324   $ 1,662,598   $ 1,528,457
                   
                   

Non-maturing deposits increased $23.9 million in the fourth quarter 2014 as compared to the third quarter 2014, and increased $145.1 million, or 10.8%, as compared to the fourth quarter 2013. At December 31, 2014, noninterest bearing deposits as a percentage of total deposits was 38.8% as compared to 37.2% at September 30, 2014 and 36.9% at December 31, 2013.

During the fourth quarter 2014, securities sold under agreements to repurchase increased by $9.8 million compared to September 30, 2014 and increased by $9.2 million compared to December 31, 2013.

Total FHLB borrowings were $160.3 million at December 31, 2014 consisting of $140.3 million of overnight advances on our line of credit and a $20.0 million term note. At December 31, 2013, total FHLB borrowings consisted of $20.0 million in overnight advances and $110.0 million in term advances. As previously discussed, the Company prepaid $90.0 million in FHLB term advances during the fourth quarter 2014.

Regulatory Capital Ratios

The following table provides the capital ratios of the Company and our subsidiary bank, Guaranty Bank and Trust Company ("Bank") as of the dates presented, along with the applicable regulatory capital requirements:

                         
    Ratio at
December 31, 2014
    Ratio at
December 31, 2013
    Minimum Capital Requirement     Minimum Requirement for "Well-Capitalized" Institution  
Total Risk-Based Capital Ratio                        
  Consolidated   13.85 %   14.96 %   8.00 %   N/A  
  Guaranty Bank and Trust Company   13.58 %   14.37 %   8.00 %   10.00 %
                         
Tier 1 Risk-Based Capital Ratio                        
  Consolidated   12.60 %   13.71 %   4.00 %   N/A  
  Guaranty Bank and Trust Company   12.33 %   13.12 %   4.00 %   6.00 %
                         
Leverage Ratio                        
  Consolidated   11.10 %   11.49 %   4.00 %   N/A  
  Guaranty Bank and Trust Company   10.86 %   11.00 %   4.00 %   5.00 %
                           
                         

The declines in the total risk-based capital ratios, Tier 1 risk-based capital ratios and leverage ratios from December 31, 2013 to December 31, 2014 were primarily attributable to loan growth during 2014. The Company computed its projected regulatory capital ratios on a pro-forma basis under the final rule on Enhanced Regulatory Capital Standards, commonly referred to as Basel III. The Company and the Bank currently exceed the capital requirements set forth in the new rules that become effective in the first quarter 2015.

Asset Quality

The following table presents select asset quality data as of the dates indicated:

                               
    December 31, 2014     September 30, 2014     June 30,
2014
    March 31,
2014
    December 31, 2013  
    (Dollars in thousands)  
Nonaccrual loans and leases   $ 12,617     $ 13,237     $ 13,884     $ 14,605     $ 15,476  
Accruing loans past due 90 days or more (1)     -       -       -       -       -  
                                         
Total nonperforming loans (NPLs)   $ 12,617     $ 13,237     $ 13,884     $ 14,605     $ 15,476  
Other real estate owned and foreclosed assets     2,175       3,526       4,373       4,419       4,493  
                                         
Total nonperforming assets (NPAs)   $ 14,792     $ 16,763     $ 18,257     $ 19,024     $ 19,969  
                                         
Total classified assets   $ 27,271     $ 32,578     $ 35,010     $ 27,176     $ 29,215  
                                         
Accruing loans past due 30-89 days (1)   $ 1,381     $ 458     $ 1,236     $ 432     $ 2,123  
                                         
Charged-off loans   $ 73     $ 80     $ 63     $ 407     $ 644  
Recoveries     (214 )     (278 )     (644 )     (958 )     (1,045 )
  Net charge-offs   $ (141 )   $ (198 )   $ (581 )   $ (551 )   $ (401 )
                                         
Provision (credit) for loan losses   $ (1 )   $ (3 )   $ 24     $ (6 )   $ 154  
                                         
Allowance for loan losses   $ 22,490     $ 22,350     $ 22,155     $ 21,550     $ 21,005  
                                         
Selected ratios:                                        
NPLs to loans, net of unearned loan fees (2)     0.82 %     0.89 %     0.97 %     1.07 %     1.17 %
NPAs to total assets     0.70 %     0.81 %     0.90 %     0.97 %     1.04 %
Allowance for loan losses to NPLs     178.25 %     168.84 %     159.57 %     147.55 %     135.73 %
Allowance for loan losses to loans, net of unearned loan fees (2)     1.46 %     1.51 %     1.54 %     1.58 %     1.59 %
Loans 30-89 days past due to loans, net of unearned loan fees (2)     0.09 %     0.03 %     0.09 %     0.03 %     0.16 %
Texas ratio (3)     6.01 %     6.89 %     7.60 %     8.11 %     8.71 %
Classified asset ratio (4)     11.08 %     13.39 %     14.58 %     11.59 %     12.74 %
                                         
(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 is in the process of renewal, but continues to be current with respect to payments.
(2) Loans, net of unearned loan fees, exclude loans held for sale.
(3) Texas ratio defined as total NPAs divided by subsidiary bank only Tier 1 Capital plus allowance for loan losses.
(4) Classified asset ratio defined as total classified assets to subsidiary bank only Tier 1 Capital plus allowance for loan losses.
   
   

The following tables summarize past due loans held for investment by class as of the dates indicated:

                     
December 31, 2014   30-89
Days Past
Due
  90 Days +
Past Due
and Still
Accruing
  Nonaccrual
Loans
  Total
Past Due
  Total Loans,
Held for
Investment
    (In thousands)
Commercial and residential real estate   $ 92   $ -   $ 11,872   $ 11,964   $ 1,049,057
Construction     -     -     -     -     66,618
Commercial     1,080     -     18     1,098     323,977
Consumer     66     -     559     625     60,140
Other     143     -     168     311     41,642
Total   $ 1,381   $ -   $ 12,617   $ 13,998   $ 1,541,434
                               
                               
                               
December 31, 2013   30-89
Days Past
Due
  90 Days +
Past Due
and Still
Accruing
  Nonaccrual
Loans
  Total
Past Due
  Total Loans,
Held for
Investment
    (In thousands)
Commercial and residential real estate   $ 590   $ -   $ 13,560   $ 14,150   $ 865,960
Construction     277     -     -     277     77,601
Commercial     616     -     624     1,240     271,670
Consumer     146     -     924     1,070     60,893
Other     494     -     368     862     43,793
Total   $ 2,123   $ -   $ 15,476   $ 17,599   $ 1,319,917
                               
                               

During the fourth quarter 2014, nonperforming assets decreased $2.0 million from September 30, 2014 and decreased $5.2 million from December 31, 2013. Nonperforming loans at December 31, 2014 and December 31, 2013 include one out-of-state loan participation with a balance of $9.9 million.

At December 31, 2014, classified assets represent 11.1% of bank-level Tier 1 Risk-based Capital plus allowance for loan losses compared to 13.4% at September 30, 2014 and 12.7% at December 31, 2013. The decrease in this ratio during the fourth quarter 2014 was primarily the result of a $4.0 million decrease in classified loans and a $1.4 million decrease in OREO combined with an increase in bank-level Tier-1 Capital plus allowance for loan losses.

Net recoveries in the fourth quarter 2014 were $0.1 million as compared to net recoveries of $0.2 million in the third quarter 2014 and net recoveries of $0.4 million in the fourth quarter 2013. The coverage ratio, defined as allowance for loan losses divided by nonperforming loans, increased favorably from 168.8% at September 30, 2014 to 178.2% at December 31, 2014. The increase in the coverage ratio reflects a $0.6 million reduction in nonperforming loans during the fourth quarter 2014 in addition to the $0.1 million increase in the allowance for loan losses during the quarter.

During the quarters ended December 31, 2014 and September 30, 2014 the Company recorded immaterial credit provisions for loan losses compared to a $0.2 million provision in the fourth quarter 2013. The Company considered recoveries, improvement in nonperforming loans, as well as loan growth when determining the adequacy of the allowance for loan losses and the resulting loan loss credit provision recognized during the same quarter.

Shares Outstanding

As of December 31, 2014, the Company had 21,628,873 shares of common stock outstanding, consisting of 20,609,873 shares of voting common stock, of which 620,075 shares were in the form of unvested stock awards, and 1,019,000 shares of non-voting common stock.

Non-GAAP Financial Measures

This press release contains certain non-GAAP financial measures related to tangible assets, including tangible book value and tangible common equity, pre-tax operating earnings adjusted for (if any) provision (credit) for loan losses, OREO expenses, debt termination expense, impairments of long-lived assets, acquisition, reorganization and integration costs and securities gains and losses.

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 schedule reconciles the non-GAAP pre-tax operating earnings to GAAP net income before income taxes as of the dates indicated:

                       
    Quarter Ended   Year Ended  
    December 31, 2014   September 30, 2014   December 31, 2013   December 31, 2014   December 31, 2013  
    (Dollars in thousands, except per share amounts)  
Income before income taxes   $ 1,509   $ 6,991   $ 6,030   $ 19,748   $ 20,385  
Adjusted for:                                
  Provision (credit) for loan losses     (1 )   (3 )   154     14     296  
  Expenses (gains) related to other real estate owned, net    
142
   
147
   
(1,037
)  
367
   
(1,160
)
  Prepayment penalty on long term debt     5,459     -     -     5,459     629  
  Impairment of long-lived assets     76     -     -     186     -  
  (Gain) loss on sale of securities     -     (3 )   85     (28 )   11  
Pre-tax operating earnings   $ 7,185   $ 7,132   $ 5,232   $ 25,746   $ 20,161  
                                 
Weighted basic average common shares outstanding:    
20,968,551
   
20,966,179
   
20,884,542
   
20,957,702
   
20,867,064
 
Fully diluted average common shares outstanding:    
21,114,680
   
21,089,221
   
20,995,284
   
21,086,543
   
20,951,237
 
                                 
Pre-tax operating earnings per common share-basic:   $
0.34
  $
0.34
  $
0.25
  $
1.23
  $
0.97
 
Pre-tax operating earnings per common share-diluted:   $
0.34
  $
0.34
  $
0.25
  $
1.22
  $
0.96
 
                                 
                                 

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:

                   
Tangible Book Value per Common Share                  
    December 31,     September 30,     December 31,  
    2014     2014     2013  
    (Dollars in thousands, except per share amounts)  
Total stockholders' equity   $ 206,939     $ 205,361     $ 189,394  
Less: Intangible assets     (7,154 )     (7,808 )     (6,530 )
Tangible common equity   $ 199,785     $ 197,553     $ 182,864  
                         
Number of common shares outstanding     21,628,873       21,714,115       21,303,707  
                         
Book value per common share   $ 9.57     $ 9.46     $ 8.89  
Tangible book value per common share   $ 9.24     $ 9.10     $ 8.58  
                         
                         
                         
Tangible Common Equity Ratio                        
    December 31,     September 30,     December 31,  
    2014     2014     2013  
    (Dollars in thousands)  
Total stockholders' equity   $ 206,939     $ 205,361     $ 189,394  
Less: Intangible assets     (7,154 )     (7,808 )     (6,530 )
Tangible common equity   $ 199,785     $ 197,553     $ 182,864  
                         
Total assets   $ 2,124,778     $ 2,077,939     $ 1,911,032  
Less: Intangible assets     (7,154 )     (7,808 )     (6,530 )
Tangible assets   $ 2,117,624     $ 2,070,131     $ 1,904,502  
                         
Equity ratio - GAAP (total stockholders' equity / total assets)     9.74 %     9.88 %     9.91 %
Tangible common equity ratio (tangible common equity / tangible assets)     9.43 %     9.54 %     9.60 %
                         
                         

The following non-GAAP schedules reconciles the following GAAP measures to net income, earnings per share and ROAA excluding the net FHLB prepayment penalty for the fourth quarter 2014 and year-to-date 2014 periods.

             
    Quarter Ended     Year Ended  
    December 31,     December 31,  
    2014     2014  
    (Dollars in thousands, except per share amounts)  
Net income   $ 1,215     $ 13,512  
Adjusted for:                
  Prepayment penalty on long term debt     5,459       5,459  
  Tax effect on prepayment penalty     (2,075 )     (2,075 )
Net income excluding prepayment penalty   $ 4,599     $ 16,896  
                 
Average assets   $ 2,067,371     $ 2,001,552  
                 
Weighted basic average common shares outstanding:     20,968,551       20,957,702  
Fully diluted average common shares outstanding:     21,114,680       21,086,543  
                 
ROAA (GAAP)     0.23 %     0.68 %
ROAA (excluding prepayment penalty)     0.88 %     0.84 %
                 
Earnings per common share - basic:   $ 0.06     $ 0.64  
Earnings per common share - basic (excluding prepayment penalty):     0.22       0.81  
                 
Earnings per common share - diluted:   $ 0.06     $ 0.64  
Earnings per common share - diluted (excluding prepayment penalty):     0.22       0.80  
                 
                 

About Guaranty Bancorp

Guaranty Bancorp is a $2.1 billion financial services company that operates as the bank holding company for Guaranty Bank and Trust Company, a premier Colorado community bank. The Bank provides comprehensive financial solutions to consumers and small to medium-sized businesses that value local and personalized service. In addition to loans and depository services, the Bank also offers wealth management solutions, including trust and investment management 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 the Company's operations; general economic and business conditions in those areas in which the Company operates, including the impact of global and national economic conditions on our local economy; 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; failure to recognize expected cost savings; 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 any forward-looking statement 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, except as may otherwise be required by law, 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,     September 30,     December 31,  
    2014     2014     2013  
    (In thousands)  
Assets                        
Cash and due from banks   $ 32,441     $ 46,617     $ 28,077  
                         
Securities available for sale, at fair value     346,146       349,993       384,957  
Securities held to maturity     88,514       91,042       41,738  
Bank stocks, at cost     14,822       15,083       15,605  
      Total investments     449,482       456,118       442,300  
                         
Loans held for sale     -       -       507  
                         
Loans, held for investment, net of unearned loan fees     1,541,434       1,482,268       1,319,917  
  Less allowance for loan losses     (22,490 )     (22,350 )     (21,005 )
      Net loans, held for investment     1,518,944       1,459,918       1,298,912  
                         
Premises and equipment, net     45,937       46,492       48,080  
Other real estate owned and foreclosed assets     2,175       3,526       4,493  
Other intangible assets, net     7,154       7,808       6,530  
Securities sold or called, not yet settled     -       -       21,917  
Bank owned life insurance     42,456       32,135       31,410  
Other assets     26,189       25,325       28,806  
      Total assets   $ 2,124,778     $ 2,077,939     $ 1,911,032  
                         
Liabilities and Stockholders' Equity                        
Liabilities:                        
  Deposits:                        
    Noninterest-bearing demand   $ 654,051     $ 617,704     $ 564,326  
    Interest-bearing demand and NOW     326,748       365,538       346,449  
    Money market     374,063       357,368       326,008  
    Savings     138,588       128,931       111,568  
    Time     191,874       193,057       180,106  
      Total deposits     1,685,324       1,662,598       1,528,457  
Securities sold under agreement to repurchase and federal funds purchased     33,508       23,674       24,284  
Federal Home Loan Bank term notes     20,000       110,000       110,000  
Federal Home Loan Bank line of credit borrowing     140,300       40,400       20,000  
Subordinated debentures     25,774       25,774       25,774  
Securities purchased, not yet settled     -       -       3,839  
Interest payable and other liabilities     12,933       10,132       9,284  
      Total liabilities     1,917,839       1,872,578       1,721,638  
                         
Stockholders' equity:                        
  Common stock and additional paid-in capital - common stock     709,365       708,597       706,514  
  Accumulated deficit     (396,172 )     (396,339 )     (405,494 )
  Accumulated other comprehensive loss     (3,127 )     (4,052 )     (8,954 )
  Treasury stock     (103,127 )     (102,845 )     (102,672 )
      Total stockholders' equity     206,939       205,361       189,394  
      Total liabilities and stockholders' equity   $ 2,124,778     $ 2,077,939     $ 1,911,032  
                         
                         
   
GUARANTY BANCORP AND SUBSIDIARIES  
Unaudited Consolidated Statements of Operations  
   
    Quarter Ended December 31,     Year Ended December 31,  
    2014     2013     2014   2013  
                       
    (In thousands, except share and per share data)  
Interest income:                              
  Loans, including fees   $ 16,311     $ 14,762     $ 62,819   $ 57,435  
  Investment securities:                              
    Taxable     2,183       2,437       9,178     9,432  
    Tax-exempt     701       692       2,708     2,990  
  Dividends     185       169       807     664  
  Federal funds sold and other     4       10       8     117  
    Total interest income     19,384       18,070       75,520     70,638  
Interest expense:                              
  Deposits     667       610       2,464     2,490  
  Securities sold under agreement to repurchase and federal funds purchased     13       10       40     49  
  Borrowings     823       857       3,403     3,407  
  Subordinated debentures     201       202       800     1,122  
    Total interest expense     1,704       1,679       6,707     7,068  
    Net interest income     17,680       16,391       68,813     63,570  
Provision (credit) for loan losses     (1 )     154       14     296  
    Net interest income, after provision for loan losses     17,681       16,237       68,799     63,274  
Noninterest income:                              
  Deposit service and other fees     2,358       2,222       9,066     8,825  
  Investment management and trust     1,231       831       4,380     2,904  
  Increase in cash surrender value of life insurance     418       304       1,295     1,018  
  Gain (loss) on sale of securities     -       (85 )     28     (11 )
  Gain on sale of SBA loans     447       95       798     725  
  Other     408       107       1,128     338  
    Total noninterest income     4,862       3,474       16,695     13,799  
Noninterest expense:                              
  Salaries and employee benefits     8,434       7,685       32,766     29,581  
  Occupancy expense     1,544       1,507       6,308     6,289  
  Furniture and equipment     698       728       2,759     2,943  
  Amortization of intangible assets     654       702       2,506     2,818  
  Other real estate owned, net     142       (1,037 )     367     (1,160 )
  Insurance and assessments     576       641       2,355     2,519  
  Professional fees     927       968       3,520     3,618  
  Prepayment penalty on long term debt     5,459       -       5,459     629  
  Impairment of long-lived assets     76       -       186     -  
  Other general and administrative     2,524       2,487       9,520     9,451  
    Total noninterest expense     21,034       13,681       65,746     56,688  
    Income before income taxes     1,509       6,030       19,748     20,385  
Income tax expense     294       1,942       6,236     6,356  
  Net income   $ 1,215     $ 4,088     $ 13,512   $ 14,029  
                               
Earnings per common share-basic:   $ 0.06     $ 0.20     $ 0.64   $ 0.67  
Earnings per common share-diluted:     0.06       0.19       0.64     0.67  
                               
Dividend declared per common share:   $ 0.05     $ 0.03     $ 0.20   $ 0.08  
                               
Weighted average common shares outstanding-basic:     20,968,551       20,884,542       20,957,702     20,867,064  
Weighted average common shares outstanding-diluted:     21,114,680       20,995,284       21,086,543     20,951,237  
                               
                               
 
GUARANTY BANCORP AND SUBSIDIARIES
Unaudited Consolidated Average Balance Sheets
 
    QTD Average   YTD Average
    December 31, 2014   September 30, 2014   December 31, 2013   December 31, 2014   December 31, 2013
                     
    (In thousands)
Assets                              
Interest earning assets                              
  Loans, net of unearned loan fees   $ 1,481,748   $ 1,463,042   $ 1,301,815   $ 1,419,483   $ 1,237,697
  Securities     452,200     462,603     464,987     459,451     485,582
  Other earning assets     7,080     1,829     14,708     3,260     32,414
Average earning assets     1,941,028     1,927,474     1,781,510     1,882,194     1,755,693
Other assets     126,343     116,282     124,014     119,358     107,885
Total average assets   $ 2,067,371   $ 2,043,756   $ 1,905,524   $ 2,001,552   $ 1,863,578
                               
Liabilities and Stockholders' Equity                              
Average liabilities:                              
Average deposits:                              
  Noninterest-bearing deposits   $ 637,551   $ 595,041   $ 547,739   $ 585,671   $ 521,876
  Interest-bearing deposits     1,034,401     1,033,094     953,336     997,183     934,247
  Average deposits     1,671,952     1,628,135     1,501,075     1,582,854     1,456,123
Other interest-bearing liabilities     175,203     201,579     205,242     207,762     209,430
Other liabilities     12,192     10,131     8,140     9,854     8,491
Total average liabilities     1,859,347     1,839,845     1,714,457     1,800,470     1,674,044
Average stockholders' equity     208,024     203,911     191,067     201,082     189,534
Total average liabilities and stockholders' equity   $ 2,067,371   $ 2,043,756   $ 1,905,524   $ 2,001,552   $ 1,863,578
                               
                               

Contact Information

  • Contacts

    Paul W. Taylor
    President and Chief Executive Officer
    Guaranty Bancorp
    1331 Seventeenth Street, Suite 200
    Denver, CO 80202
    (303) 293-5563

    Christopher G. Treece
    E.V.P., Chief Financial Officer and Secretary
    Guaranty Bancorp
    1331 Seventeenth Street, Suite 200
    Denver, CO 80202
    (303) 675-1194