SOURCE: Guaranty Bancorp

October 15, 2014 16:10 ET

Guaranty Bancorp Announces 2014 Third Quarter Financial Results

DENVER, CO--(Marketwired - Oct 15, 2014) - Guaranty Bancorp (NASDAQ: GBNK)

  • Net income increased 21.3% during the third quarter 2014 compared to the prior-year third quarter
  • Net loans grew 16.4% annualized, during the nine months ended September 30, 2014
  • Core deposits grew 30.1% annualized, during the third quarter 2014
  • The efficiency ratio(1) improved to 63.7% for the third quarter 2014 compared to 66.1% for the second quarter 2014

Guaranty Bancorp (NASDAQ: GBNK) ("we", "our" or "the Company"), a community bank holding company based in Colorado, today announced third quarter 2014 net income of $4.7 million or $0.22 per basic and diluted common share as compared to $3.9 million or $0.18 per basic and diluted common share in the prior-year third quarter, an increase of $0.8 million or $0.04 per basic and diluted common share. The Company's pre-tax operating earnings(2) in the third quarter 2014 were $7.1 million or $0.34 per basic and diluted common share, an increase of $1.6 million or $0.07 per basic and diluted common share as compared to the same quarter in 2013. Return on average assets for the third quarter 2014 was 0.91% as compared to 0.81% for the prior-year third quarter.

"Our strong third quarter results demonstrate our continued progress in the improvement of our key operating metrics," said Paul W. Taylor, President and CEO. "In addition to solid earnings and loan growth, core deposits grew by 30.1% annualized as we focus on relationship based banking and continue to benefit from growth in the local Colorado economy. I am especially pleased with our return on average assets of 91 basis points, an increase of 8 basis points during the quarter. This accomplishment was a result of the overall success we are having across our organization in growing our balance sheet and net interest income along with increasing our noninterest income. The significant improvement in our efficiency ratio of 2.4 percentage points to 63.7% during the third quarter 2014 reflects our continued focus on responsibly managing our growth while controlling expenses."

The $1.6 million increase in pre-tax operating earnings in the third quarter 2014 as compared to the same quarter in the prior year was primarily due to a $1.7 million improvement in interest income, attributable to growth in average loan balances of $195.4 million, while maintaining a consistent level of interest expense.

For the nine months ended September 30, 2014, net income was $12.3 million or $0.59 per basic common share and $0.58 per diluted common share, an increase of $2.4 million, or $0.11 per basic and diluted common share as compared to the same period in 2013. Pre-tax operating earnings were $18.6 million or $0.89 per basic and $0.88 per diluted common share for the nine months ended September 30, 2014, an increase of $3.6 million or $0.17 per basic and diluted common share for the same period in 2013. Return on average assets for the nine months ended September 30, 2014 was 0.83% as compared to 0.72% for the same period in 2013.

The $3.6 million increase in pre-tax operating earnings for the nine months ended September 30, 2014 as compared to the same period in the prior year was mostly the result of a $3.6 million increase in interest income, due to growth in average loan balances of $182.4 million.

   
(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.
(2) "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, 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.
   

Key Financial Measures
Income Statement

    Three Months Ended           Nine Months Ended  
September 30, 2014     June 30,
2014
    September 30, 2013         September 30, 2014     September 30, 2013  
    (Dollars in thousands, except per share amounts)  
Net income $ 4,671     $ 4,084     $ 3,851         $ 12,297     $ 9,941  
Earnings per common share - basic $ 0.22     $ 0.19     $ 0.18         $ 0.59     $ 0.48  
Return on average assets   0.91 %     0.83 %     0.81 %         0.83 %     0.72 %
Net interest margin   3.67 %     3.66 %     3.63 %         3.67 %     3.62 %
Efficiency ratio   63.68 %     66.11 %     65.12 %         66.06 %     67.92 %

Balance Sheet

    September 30, 2014   December 31, 2013   Percent
Change
  September 30, 2013   Percent
Change
    (Dollars in thousands, except per share amounts)
Total investments   $ 456,118     $ 442,300     3.1 %   $ 471,257     (3.2 )%
Total loans, net of unearned loan fees     1,482,268       1,320,424     12.3 %     1,293,252     14.6 %
Allowance for loan losses     (22,350 )     (21,005 )   6.4 %     (20,450 )   9.3 %
Total assets     2,077,939       1,911,032     8.7 %     1,896,191     9.6 %
Total deposits     1,662,598       1,528,457     8.8 %     1,482,515     12.1 %
Book value per common share     9.46       8.89     6.4 %     8.80     7.5 %
Tangible book value per common share     9.10       8.58     6.1 %     8.46     7.6 %
Equity ratio - GAAP     9.88 %     9.91 %   (0.3 )%     9.93 %   (0.5 )%
Tangible common equity ratio     9.54 %     9.60 %   (0.6 )%     9.58 %   (0.4 )%
Total risk-based capital ratio     14.25 %     14.96 %   (4.7 )%     14.94 %   (4.6 )%
Assets under management   $ 675,431     $ 462,958     45.9 %   $ 431,149     56.7 %
                                     

New credit extended and advanced during the third quarter 2014 was $172.0 million, an increase of $10.3 million compared to $161.7 million in the second quarter 2014. However, net loan paydowns and other reductions totaled $128.9 million in the third quarter 2014 compared to $86.1 million in the second quarter 2014. The $42.8 million increase in net paydowns and maturities in the third quarter 2014 was mostly due to early commercial loan payoffs related to four clients successfully selling their businesses. Despite the highest quarter of gross loan production in over six years, the larger loan paydowns in the third quarter 2014 resulted in net loan growth of $44.2 million, or 12.2% annualized compared to $75.8 million of net loan growth in the second quarter 2014, or 22.3% annualized. In addition to the continued strong net loan growth, the Company's commercial loan group assisted a local non-profit organization with their analysis of an $8.0 million financing for expansion purposes. The non-profit organization chose to do the financing as a tax-exempt bond through one of Colorado's public authorities and the Company purchased their entire $8.0 million tax-exempt private placement bond and booked it as an investment security during the third quarter 2014. Excluding this transaction, on a year-to-date basis, net loans increased $161.8 million, or 16.4% annualized compared to $134.5 million, or 15.5% for the same period in 2013. 

Net Interest Income and Margin

      Three Months Ended       Nine Months Ended  
    September 30, 2014     June 30,
2014
    September 30, 2013     September 30, 2014     September 30, 2013  
      (Dollars in thousands)  
Net interest income   $ 17,809     $ 17,065     $ 16,062     $ 51,133     $ 47,179  
Average earning assets     1,927,474       1,870,508       1,753,746       1,862,369       1,743,298  
Interest rate spread     3.47 %     3.47 %     3.43 %     3.47 %     3.40 %
Net interest margin     3.67 %     3.66 %     3.63 %     3.67 %     3.62 %
Net interest margin, fully tax equivalent     3.75 %     3.75 %     3.73 %     3.76 %     3.72 %
Average cost of deposits (including noninterest-bearing deposits)     0.16 %     0.15 %     0.17 %     0.15 %     0.17 %
                                         

Net interest income improved $1.7 million to $17.8 million in the third quarter 2014 as compared to the same quarter in 2013 due to an increase in interest income primarily driven by a $195.4 million, or 15.4% increase in average loan balances. Interest expense remained relatively flat in the third quarter 2014 as compared to the same quarter in the prior year despite a $71.0 million increase in average interest bearing deposits. 

During the third quarter 2014, net interest margin increased by four basis points to 3.67% as compared to the same quarter in the prior year and increased one basis point as compared to the second quarter 2014. The increase in net interest margin in the third quarter 2014 as compared to the second quarter 2014 and the third quarter 2013 was primarily the result of a change in the mix of average earning assets primarily due to loan growth.

Net interest income improved by $4.0 million for the nine months ended September 30, 2014 to $51.1 million compared to $47.2 million during the same period in 2013. The increase in net interest income was the result of a $3.6 million increase in interest income combined with a $0.4 million decline in interest expense. The increase in interest income was driven by a $182.4 million increase in average loan balances for the nine months ended September 30, 2014 as compared to the same period in 2013. The decrease in year-to-date interest expense in 2014 as compared to the same period in 2013 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 deposits.

Net interest margin increased five basis points to 3.67% for the nine months ended September 30, 2014 as compared to 3.62% for the same period in 2013, 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:

      Three Months Ended     Nine Months Ended
    September 30, 2014   June 30,
2014
  September 30, 2013   September 30, 2014   September 30, 2013
  (In thousands)
Noninterest income:                              
  Deposit service and other fees   $ 2,290   $ 2,352   $ 2,302   $ 6,708   $ 6,603
  Investment management and trust     1,279     962     736     3,149     2,073
  Increase in cash surrender value of life insurance     291     293     305     877     714
  Gain on sale of securities     3     -     20     28     74
  Gain on sale of SBA loans     186     28     207     351     630
  Other     253     160     94     634     231
  Total noninterest income   $ 4,302   $ 3,795   $ 3,664   $ 11,747   $ 10,325
                                 

Third quarter 2014 noninterest income was $4.3 million as compared to $3.8 million in the second quarter 2014 and $3.7 million in the third quarter 2013.

The $0.5 million increase in noninterest income in the third quarter 2014 as compared to the second quarter 2014 was mostly due to a $0.3 million increase in investment management and trust income and a $0.2 million increase in gains on sale of SBA loans. As compared to the third quarter 2013, noninterest income increased $0.6 million primarily due to a $0.5 million increase in investment management and trust income and a $0.2 million increase in customer interest rate swap fee income.

Total assets under management at September 30, 2014 were $675.4 million, an increase of $244.3 million, or 56.7% as compared to September 30, 2013. During the third quarter 2014, the Company acquired Cherry Hills Investment Advisors with assets under management of $178.5 million at July 16, 2014.

For the nine months ended September 30, 2014, noninterest income increased $1.4 million as compared to the same period in 2013. This increase was the result of a $1.1 million increase in investment management and trust income and a $0.3 million increase in customer interest rate swap income.

Noninterest Expense

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

             
      Three Months Ended     Nine Months Ended
    September 30, 2014   June 30,
2014
  September 30, 2013   September 30, 2014   September 30, 2013
      (In thousands)
Noninterest expense:                              
  Salaries and employee benefits   $ 8,112   $ 8,096   $ 7,242   $ 24,286   $ 21,896
  Occupancy expense     1,583     1,633     1,572     4,764     4,782
  Furniture and equipment     693     673     709     2,061     2,215
  Amortization of intangible assets     670     591     703     1,852     2,116
  Other real estate owned     147     22     (200)     225     (123)
  Insurance and assessment     594     605     629     1,779     1,878
  Professional fees     890     811     886     2,593     2,650
  Prepayment penalty on long term debt     -     -     -     -     629
  Impairment of long-lived assets     -     110     -     110     -
  Other general and administrative     2,434     2,332     2,395     6,956     6,964
  Total noninterest expense   $ 15,123   $ 14,873   $ 13,936   $ 44,626   $ 43,007
                                 

Noninterest expense was $15.1 million in the third quarter 2014 as compared to $14.9 million in the second quarter 2014 and $13.9 million in the third quarter 2013. 

Third quarter 2014 noninterest expense increased $0.2 million as compared to the second quarter 2014, primarily due to a $0.1 million loss on sale of other real estate owned ("OREO") recognized in the third quarter and a $0.1 million increase in other general and administrative expense. Noninterest expense increased $1.2 million for the third quarter 2014 as compared to the same quarter in 2013, which was driven by a $0.6 million increase in salaries, a $0.3 million increase in equity compensation and a $0.3 million increase in OREO-related expenses.

Year-to-date 2014 noninterest expense was $44.6 million as compared to $43.0 million for the same period in 2013. Noninterest expense includes a $2.4 million increase in salary and employee benefit expense comprised of a $1.1 million increase in salaries, a $0.7 million increase in equity compensation and a $0.3 million increase in costs related to our self-funded medical insurance plan. The increase in salaries and equity compensation for the nine months ended September 30, 2014 as compared to the same period in the prior year was primarily due to the achievement of key performance targets. Most other categories of noninterest expense decreased during the nine months ended September 30, 2014 as compared to the same period in the prior year, including a decrease of $0.6 million related to prepayment penalties on long-term debt incurred in 2013 and several smaller declines in occupancy, furniture and equipment, amortization of intangible assets and professional fees.

Balance Sheet

    September 30, 2014     December 31, 2013     Percent
Change
    September 30, 2013     Percent
Change
 
  (Dollars in thousands)  
Total assets   $ 2,077,939     $ 1,911,032     8.7 %   $ 1,896,191     9.6 %
Average assets, quarter-to-date     2,043,756       1,905,524     7.3 %     1,878,081     8.8 %
Total loans, net of unearned loan fees     1,482,268       1,320,424     12.3 %     1,293,252     14.6 %
Total deposits     1,662,598       1,528,457     8.8 %     1,482,515     12.1 %
                                     
Equity ratio - GAAP     9.88 %     9.91 %   (0.3 )%     9.93 %   (0.5 )%
Tangible common equity ratio     9.54 %     9.60 %   (0.6 )%     9.58 %   (0.4 )%
                                     

At September 30, 2014, the Company had total assets of $2.1 billion, reflecting a $166.9 million increase compared to December 31, 2013 and a $181.7 million increase compared to September 30, 2013. The increase in total assets during the nine months ended September 30, 2014 includes a $161.8 million increase in loans, an $18.5 million increase in cash, and a $13.8 million increase in investments, partially offset by a $21.9 million decrease in securities sold or called, not yet settled.

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

                                 
    September 30,
2014
    June 30,
2014
    December 31,
2013
    September 30,
2013
 
  (In thousands)  
Loans held for sale   $ -     $ 255     $ 507     $ -  
Commercial and residential real estate     1,001,174       949,148       866,507       834,128  
Construction     89,787       78,394       77,657       72,025  
Commercial     286,545       307,629       271,843       280,577  
Agricultural     11,986       11,246       10,772       10,453  
Consumer     60,492       59,610       60,932       60,876  
SBA     32,107       31,748       31,010       32,454  
Other     773       871       2,039       3,471  
  Total gross loans     1,482,864       1,438,901       1,321,267       1,293,984  
    Unearned loan fees     (596 )     (812 )     (843 )     (732 )
  Loans, net of unearned loan fees   $ 1,482,268     $ 1,438,089     $ 1,320,424     $ 1,293,252  
                                   

During the nine months ended September 30, 2014, loans net of unearned fees increased by $161.8 million, or 16.4% annualized. During the third quarter 2014, loans increased $44.2 million primarily due to a $52.0 million increase in commercial and residential real estate and an $11.4 million increase in construction loans, partially offset by a $21.1 million decline in commercial loans, mostly due to $28.3 million in early payoffs resulting from the sale of four client's businesses. Commercial and residential real estate growth was comprised mostly of loans to finance the acquisition and development of multi-family and mixed-use retail/office commercial properties in Colorado as well as $10.3 million in jumbo mortgage loans.

As compared to September 30, 2013, loans net of unearned fees increased by $189.0 million, or 14.6%. The net loan growth was primarily comprised of a $167.0 million increase in commercial and residential real estate loans, including a $42.8 million increase in jumbo mortgage loans and a $17.8 million increase in construction loans. The growth in loans was primarily the result of new customer relationships. The utilization rate on commercial lines of credit was 41.0% at September 30, 2014 as compared to 41.5% at June 30, 2014 and 42.8% at September 30, 2013.

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

                         
    September 30,
 2014
  June 30,
2014
  December 31,
2013
  September 30,
 2013
      (In thousands)
Noninterest-bearing demand   $ 617,704   $ 577,062   $ 564,326   $ 525,330
Interest-bearing demand and NOW     365,538     326,900     346,449     351,380
Money market     357,368     341,962     326,008     313,585
Savings     128,931     119,996     111,568     108,242
Time     193,057     186,756     180,106     183,978
Total deposits   $ 1,662,598   $ 1,552,676   $ 1,528,457   $ 1,482,515
                         

Non-maturing deposits increased $103.6 million in the third quarter 2014 as compared to the second quarter 2014, and increased $171.0 million, or 13.2%, as compared to the third quarter 2013. At September 30, 2014, noninterest bearing deposits as a percentage of total deposits was 37.2% as compared to 37.2% at June 30, 2014 and 35.4% at September 30, 2013.

During the third quarter 2014, securities sold under agreements to repurchase increased by $1.9 million compared to June 30, 2014 and decreased by $5.5 million compared to September 30, 2013.

Total Federal Home Loan Bank ("FHLB") borrowings were $150.4 million at September 30, 2014 consisting of $110.0 million of term notes and $40.4 million of overnight advances on our line of credit. 

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
September 30,
 2014
  Ratio at
December 31,
2013
  Minimum
Capital
Requirement
  Minimum
 Requirement
for
"Well-
Capitalized"
 Institution
Total Risk-Based Capital Ratio                        
  Consolidated   14.25 %   14.96 %   8.00 %   N/A  
  Guaranty Bank and Trust Company   13.87 %   14.37 %   8.00 %   10.00 %
                         
Tier 1 Risk-Based Capital Ratio                        
  Consolidated   12.99 %   13.71 %   4.00 %   N/A  
  Guaranty Bank and Trust Company   12.62 %   13.12 %   4.00 %   6.00 %
                         
Leverage Ratio                        
  Consolidated   11.18 %   11.49 %   4.00 %   N/A  
  Guaranty Bank and Trust Company   10.86 %   11.00 %   4.00 %   5.00 %
                           

The declines in the consolidated total risk-based capital ratio and Tier 1 risk-based capital ratio from December 31, 2013 to September 30, 2014 were primarily attributable to the loan growth during the first nine months of 2014. The Company has 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:

                               
    September 30, 2014     June 30,
2014
    March 31,
2014
    December 31, 2013     September 30, 2013  
    (Dollars in thousands)  
Nonaccrual loans and leases   $ 13,237     $ 13,884     $ 14,605     $ 15,476     $ 18,095  
Accruing loans past due 90 days or more (1)     -       -       -       -       -  
                                         
Total nonperforming loans (NPLs)   $ 13,237     $ 13,884     $ 14,605     $ 15,476     $ 18,095  
Other real estate owned and foreclosed assets     3,526       4,373       4,419       4,493       6,211  
                                         
Total nonperforming assets (NPAs)   $ 16,763     $ 18,257     $ 19,024     $ 19,969     $ 24,306  
                                         
Total classified assets   $ 32,578     $ 35,010     $ 27,176     $ 29,215     $ 33,993  
                                         
Accruing loans past due 30-89 days (1)   $ 458     $ 1,236     $ 432     $ 2,123     $ 1,026  
                                         
Charged-off loans   $ 80     $ 63     $ 407       644     $ 110  
Recoveries     (278 )     (644 )     (958 )     (1,045 )     (200 )
  Net charge-offs   $ (198 )   $ (581 )   $ (551 )     (401 )   $ (90 )
                                         
Provision (credit) for loan losses   $ (3 )   $ 24     $ (6 )     154     $ 142  
                                         
Allowance for loan losses   $ 22,350     $ 22,155     $ 21,550     $ 21,005     $ 20,450  
                                         
Selected ratios:                                        
NPLs to loans, net of unearned loan fees (2)     0.89 %     0.97 %     1.07 %     1.17 %     1.40 %
NPAs to total assets     0.81 %     0.90 %     0.97 %     1.04 %     1.28 %
Allowance for loan losses to NPLs     168.84 %     159.57 %     147.55 %     135.73 %     113.01 %
Allowance for loan losses to loans, net of unearned loan fees (2)    
1.51
%    
1.54
%    
1.58
%    
1.59
%    
1.58
%
Loans 30-89 days past due to loans, net of unearned loan fees (2)    
0.03
%    
0.09
%    
0.03
%    
0.16
%    
0.08
%
Texas ratio (3)     6.89 %     7.60 %     8.11 %     8.71 %     10.72 %
Classified asset ratio (4)     13.39 %     14.58 %     11.59 %     12.74 %     14.99 %
     
(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:

                     
September 30, 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   $
50
  $
-
  $
12,319
  $
12,369
  $
1,000,771
Construction     -     -     -     -     89,751
Commercial     51     -     31     82     286,430
Consumer     123     -     587     710     60,468
Other     234     -     300     534     44,848
Total   $ 458   $ -   $ 13,237   $ 13,695   $ 1,482,268
 
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 third quarter 2014, nonperforming assets decreased $1.5 million from June 30, 2014 and decreased $7.5 million from September 30, 2013. Nonperforming loans at September 30, 2014 includes one out-of-state loan participation with a balance of $10.0 million. 

At September 30, 2014, classified assets represented 13.4% of bank-level Tier 1 Capital plus allowance for loan losses compared to 12.7% at December 31, 2013 and 15.0% at September 30, 2013. The increase in this ratio during 2014 was primarily the result of an $8.7 million loan transferred to classified assets during the second quarter.

Net recoveries in the third quarter 2014 were $0.2 million as compared to net recoveries of $0.6 million in the second quarter 2014 and net recoveries of $0.1 million in the third quarter 2013. The coverage ratio, defined as allowance for loan losses divided by nonperforming loans, increased favorably from 159.6% at June 30, 2014 to 168.8% at September 30, 2014. The increase in the coverage ratio reflects a $0.6 million reduction in nonperforming loans during the quarter in addition to the $0.2 million increase in the allowance for loan losses during the third quarter 2014.

During the quarter ended September 30, 2014, the Company recorded an immaterial credit provision for loan losses compared to an immaterial provision in the second quarter 2014 and a $0.1 million provision in the third quarter 2013. The Company considered the $0.2 million in net recoveries received during the third quarter 2014 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 September 30, 2014, the Company had 21,714,115 shares of common stock outstanding, consisting of 20,695,115 shares of voting common stock, of which 746,782 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, 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:

    Three Months Ended     Nine Months Ended  
    September 30, 2014     June 30,
2014
  September 30, 2013     September 30, 2014     September 30, 2013  
    (Dollars in thousands, except per share amounts)  
Income before income taxes   $ 6,991     $ 5,963   $ 5,648     $ 18,239     $ 14,355  
Adjusted for:                                      
  Provision (credit) for loan losses     (3 )     24     142       15       142  
  Expenses (gains) related to other real estate owned, net    
147
     
22
   
(200
)    
225
     
(123
)
  Prepayment penalty on long term debt     -       -     -       -       629  
  Impairment of long-lived assets     -       110     -       110       -  
  (Gain) loss on sale of securities     (3 )     -     (20 )     (28 )     (74 )
Pre-tax operating earnings   $ 7,132     $ 6,119   $ 5,570     $ 18,561     $ 14,929  
                                       
Weighted basic average common shares outstanding:  
20,966,179
   
20,959,337
 
20,873,601
   
20,954,046
   
20,861,175
 
Fully diluted average common shares outstanding:  
21,089,221
   
21,059,884
 
20,981,555
   
21,070,895
   
20,954,687
 
                                       
Pre-tax operating earnings per common share - basic:   $
0.34
    $
0.29
  $
0.27
    $
0.89
    $
0.72
 
Pre-tax operating earnings per common share - diluted:   $
0.34
    $
0.29
  $
0.27
    $
0.88
    $
0.71
 
                                       

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                  
    September 30, 2014     December 31, 2013     September 30, 2013  
    (Dollars in thousands, except per share amounts)  
Total stockholders' equity   $ 205,361     $ 189,394     188,268  
Less: Intangible assets     (7,808 )     (6,530 )   (7,232 )
Tangible common equity   $ 197,553     $ 182,864     181,036  
                       
Number of common shares outstanding     21,714,115       21,303,707     21,390,412  
                       
Book value per common share   $ 9.46     $ 8.89   $ 8.80  
Tangible book value per common share   $ 9.10     $ 8.58   $ 8.46  
                   
                   
Tangible Common Equity Ratio                  
    September 30, 2014     December 31, 2013     September 30, 2013  
    (Dollars in thousands)  
Total stockholders' equity   $ 205,361     $ 189,394   $ 188,268  
Less: Intangible assets     (7,808 )     (6,530 )   (7,232 )
Tangible common equity   $ 197,553     $ 182,864   $ 181,036  
                       
Total assets   $ 2,077,939     $ 1,911,032   $ 1,896,191  
Less: Intangible assets     (7,808 )     (6,530 )   (7,232 )
Tangible assets   $ 2,070,131     $ 1,904,502   $ 1,888,959  
                       
Equity ratio - GAAP (total stockholders' equity / total assets)     9.88 %     9.91 %   9.93 %
Tangible common equity ratio (tangible common equity / tangible assets)    
9.54
%    
9.60
%  
9.58
%
                       

About Guaranty Bancorp

Guaranty Bancorp is a bank holding company that operates 26 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 and its subsidiaries also provide wealth management services, including private banking, investment management, jumbo mortgage loans 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 the 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 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  
   
    September 30, 2014     December 31, 2013     September 30, 2013  
    (In thousands)  
Assets                  
Cash and due from banks   $ 46,617     $ 28,077     $ 33,465  
                         
Securities available for sale, at fair value     349,993       384,957       422,421  
Securities held to maturity     91,042       41,738       33,385  
Bank stocks, at cost     15,083       15,605       15,451  
      Total investments     456,118       442,300       471,257  
                         
Loans held for sale     -       507       -  
                         
Loans, held for investment, net of unearned loan fees     1,482,268       1,319,917       1,293,252  
  Less allowance for loan losses     (22,350 )     (21,005 )     (20,450 )
      Net loans, held for investment     1,459,918       1,298,912       1,272,802  
                         
Premises and equipment, net     46,492       48,080       45,846  
Other real estate owned and foreclosed assets     3,526       4,493       6,211  
Other intangible assets, net     7,808       6,530       7,232  
Securities sold or called, not yet settled     -       21,917       -  
Bank owned life insurance     32,135       31,410       31,156  
Other assets     25,325       28,806       28,222  
      Total assets   $ 2,077,939     $ 1,911,032     $ 1,896,191  
                         
Liabilities and Stockholders' Equity                        
Liabilities:                        
  Deposits:                        
    Noninterest-bearing demand   $ 617,704     $ 564,326     $ 525,330  
    Interest-bearing demand and NOW     365,538       346,449       351,380  
    Money market     357,368       326,008       313,585  
    Savings     128,931       111,568       108,242  
    Time     193,057       180,106       183,978  
      Total deposits     1,662,598       1,528,457       1,482,515  
Securities sold under agreement to repurchase and federal funds purchased     23,674       24,284       29,139  
Federal Home Loan Bank term notes     110,000       110,000       110,151  
Federal Home Loan Bank line of credit borrowing     40,400       20,000       52,550  
Subordinated debentures     25,774       25,774       25,774  
Securities purchased, not yet settled     -       3,839       -  
Interest payable and other liabilities     10,132       9,284       7,794  
      Total liabilities     1,872,578       1,721,638       1,707,923  
                         
Stockholders' equity:                        
  Common stock and additional paid-in capital - common stock     708,597       706,514       706,459  
  Accumulated deficit     (396,339 )     (405,494 )     (409,060 )
  Accumulated other comprehensive loss     (4,052 )     (8,954 )     (6,665 )
  Treasury stock     (102,845 )     (102,672 )     (102,466 )
      Total stockholders' equity     205,361       189,394       188,268  
      Total liabilities and stockholders' equity   $ 2,077,939     $ 1,911,032     $ 1,896,191  
                               
                               
   
GUARANTY BANCORP AND SUBSIDIARIES  
Unaudited Consolidated Statements of Operations  
   
    Three Months Ended September 30,     Nine Months Ended September 30,  
    2014     2013     2014   2013  
    (In thousands, except share and per share data)  
Interest income:                              
  Loans, including fees   $ 16,336     $ 14,487     $ 46,508   $ 42,673  
  Investment securities:                              
    Taxable     2,287       2,408       6,995     6,995  
    Tax-exempt     691       719       2,007     2,298  
  Dividends     214       169       622     495  
  Federal funds sold and other     1       6       4     107  
    Total interest income     19,529       17,789       56,136     52,568  
Interest expense:                              
  Deposits     647       630       1,797     1,880  
  Securities sold under agreement to repurchase and federal funds purchased     9       10       27     39  
  Borrowings     862       883       2,580     2,550  
  Subordinated debentures     202       204       599     920  
    Total interest expense     1,720       1,727       5,003     5,389  
    Net interest income     17,809       16,062       51,133     47,179  
Provision (credit) for loan losses     (3 )     142       15     142  
    Net interest income, after provision for loan losses     17,812       15,920       51,118     47,037  
Noninterest income:                              
  Deposit service and other fees     2,290       2,302       6,708     6,603  
  Investment management and trust     1,279       736       3,149     2,073  
  Increase in cash surrender value of life insurance     291       305       877     714  
  Gain on sale of securities     3       20       28     74  
  Gain on sale of SBA loans     186       207       351     630  
  Other     253       94       634     231  
    Total noninterest income     4,302       3,664       11,747     10,325  
Noninterest expense:                              
  Salaries and employee benefits     8,112       7,242       24,286     21,896  
  Occupancy expense     1,583       1,572       4,764     4,782  
  Furniture and equipment     693       709       2,061     2,215  
  Amortization of intangible assets     670       703       1,852     2,116  
  Other real estate owned, net     147       (200 )     225     (123 )
  Insurance and assessments     594       629       1,779     1,878  
  Professional fees     890       886       2,593     2,650  
  Prepayment penalty on long term debt     -       -       -     629  
  Impairment of long-lived assets     -       -       110     -  
  Other general and administrative     2,434       2,395       6,956     6,964  
    Total noninterest expense     15,123       13,936       44,626     43,007  
    Income before income taxes     6,991       5,648       18,239     14,355  
Income tax expense     2,320       1,797       5,942     4,414  
    Net income   $ 4,671     $ 3,851     $ 12,297   $ 9,941  
                               
Earnings per common share-basic:   $ 0.22     $ 0.18     $ 0.59   $ 0.48  
Earnings per common share-diluted:     0.22       0.18       0.58     0.47  
                               
Dividend declared per common share:   $ 0.05     $ 0.03     $ 0.15   $ 0.05  
                               
Weighted average common shares outstanding - basic:     20,966,179       20,873,601       20,954,046     20,861,175  
Weighted average common shares outstanding - diluted:     21,089,221       20,981,555       21,070,895     20,954,687  
                               
                               
 
GUARANTY BANCORP AND SUBSIDIARIES
Unaudited Consolidated Average Balance Sheets
 
    QTD Average   YTD Average
    September 30, 2014   December 31, 2013   September 30, 2013   September 30, 2014   September 30, 2013
    (In thousands)
Assets                              
Interest earning assets                              
  Loans, net of unearned loan fees   $ 1,463,042   $ 1,301,815   $ 1,267,647   $ 1,398,501   $ 1,216,089
  Securities     462,603     464,987     476,269     461,895     492,523
  Other earning assets     1,829     14,708     9,830     1,973     34,686
Average earning assets     1,927,474     1,781,510     1,753,746     1,862,369     1,743,298
Other assets     116,282     124,014     124,335     117,013     106,184
Total average assets   $ 2,043,756   $ 1,905,524   $ 1,878,081   $ 1,979,382   $ 1,849,482
                               
Liabilities and Stockholders' Equity                              
Average liabilities:                              
Average deposits:                              
  Noninterest-bearing deposits   $ 595,041   $ 547,739   $ 510,367   $ 568,188   $ 513,163
  Interest-bearing deposits     1,033,094     953,336     962,134     984,640     927,812
  Average deposits     1,628,135     1,501,075     1,472,501     1,552,828     1,440,975
Other interest-bearing liabilities     201,579     205,242     209,471     218,736     210,842
Other liabilities     10,131     8,140     8,723     9,075     8,647
Total average liabilities     1,839,845     1,714,457     1,690,695     1,780,639     1,660,464
Average stockholders' equity     203,911     191,067     187,386     198,743     189,018
Total average liabilities and stockholders' equity   $ 2,043,756   $ 1,905,524   $ 1,878,081   $ 1,979,382   $ 1,849,482
                               

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