SOURCE: Guaranty Bancorp

Guaranty Bancorp

July 20, 2016 16:10 ET

Guaranty Bancorp Announces 2016 Second Quarter Financial Results

DENVER,CO--(Marketwired - July 20, 2016) - Guaranty Bancorp (NASDAQ: GBNK)

  • Previously announced merger of Home State Bancorp expected to close in the third quarter 2016
  • Successfully raised $40 million of subordinated debt at an initial rate of 5.75%
  • Expanded quarterly operating return on average assets (ROAA) to 1.03% from 1.01% in the first quarter 2016; second quarter 2016 GAAP ROAA was 0.97%, compared to 0.94% in the first quarter 2016
  • Grew loans by 13.8% during the last twelve months

Guaranty Bancorp (NASDAQ: GBNK) ("we", "our" or "the Company"), a community bank holding company based in Colorado, today announced second quarter 2016 net income of $5.7 million, or $0.27 per basic and diluted common share, an increase of $0.2 million, or 3.8% and an increase of $0.01 per basic and diluted common share as compared to the second quarter 2015. For the six months ended June 30, 2016, net income was $11.2 million or $0.53 per basic common share and $0.52 per diluted common share, an increase of $0.7 million, or 6.2% and an increase of $0.03 per basic common share and $0.02 per diluted common share as compared to the same period in 2015.

Operating earnings1 increased $0.5 million, or 8.3% for the second quarter 2016, as compared to the same quarter in the prior year. The $0.5 million increase in operating earnings was primarily due to a $0.9 million increase in net interest income resulting from a $226.9 million, or 14.0% increase in average loans, partially offset by an increase in income taxes due to higher pretax income. The $0.2 million increase in net income for the quarter ended June 30, 2016, as compared to the same period in the prior year was due to a $0.9 million increase in net interest income, partially offset by $0.3 million of merger-related expenses incurred in the second quarter 2016 and a $0.3 million decline in noninterest income, mostly due to lower gains on sales of loans and a loss on sale of securities incurred during the second quarter 2016.

"We are extremely pleased with the progress that has been made with respect to our previously announced merger with Home State Bancorp," said Paul W. Taylor, President and Chief Executive Officer. "Our goal remains to close the merger in the third quarter and complete the integration of all operations by the end of the year. We expect the merger will result in many benefits to our combined company, including increased market share, a lower loan-to-deposit ratio and a reduced commercial real estate concentration ratio. The market has responded very positively to the merger with $40 million in subordinated debt raised for the cash consideration payable in connection with the merger. This subordinated debt bears an initial interest rate of 5.75% which ranks among the lowest of recent reported issuances for bank holding companies of similar size and credit rating."

Mr. Taylor continued, "In addition to the merger activity, we continue to grow our business while successfully managing expenses. Our seasoned bankers are actively consulting with our customers and local Colorado businesses to provide them the resources they need to further their growth. These efforts have resulted in 13.8% loan growth and 6.0% deposit growth over the last twelve months. We also remain focused on the fundamentals with continued improvement in quarterly operating earnings, an operating return on average assets of 1.03% and an efficiency ratio of 59.1%."

On July 18, 2016, the Company completed its offering of $40.0 million of unsecured, fixed-to-floating rate subordinated notes due July 20, 2026 (Notes). The Notes will initially bear a fixed interest rate of 5.75% per annum. On July 20, 2021, and, thereafter, the interest on the Notes will be payable quarterly, at an annual floating rate equal to three-month LIBOR as determined by the applicable quarterly period, plus 4.73%. The Company received a BBB investment grade rating from Kroll Bond Rating Agency on the Notes.

As compared to the first quarter 2016, second quarter 2016 operating earnings increased $0.1 million, or 2.2% to $6.0 million. Operating ROAA increased to 1.03% in the second quarter 2016 compared to 1.01% in the first quarter 2016. Second quarter 2016 net income increased $0.2 million to $5.7 million, as compared to the first quarter 2016 primarily due to declines in merger-related expense and salaries and employee benefits. ROAA (GAAP) during the second quarter 2016 was 0.97% compared to 0.94% in the first quarter 2016.

For the six months ended June 30, 2016, operating earnings increased 11.9%, or $1.3 million, as compared to the same period in 2015 due to a $3.7 million increase in interest income, partially offset by a $1.6 million increase in interest expense and an increase in income taxes due to higher pretax income. The $3.7 million increase in interest income was mostly due to a $257.4 million, or 16.4% increase in average loans for the six months ended June 30, 2016 as compared to the same period in 2015. The $1.6 million increase in interest expense was related to a $149.4 million, or 14.1% increase in average interest-bearing deposits and an increase in the average cost of borrowings of 58 basis points. Net income increased $0.7 million for the first six months of 2016 as compared to the same period in 2015. The increase in net income was the result of a $3.7 million increase in interest income, partially offset by a $1.6 million increase in interest expense, $1.0 million in merger-related expenses incurred during the first six months of 2016 and an increase in income taxes as a result of higher pretax income.

This press release contains certain 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. See the "Non-GAAP Financial Measures" section later in this press release for a definition of operating earnings and other non-GAAP measures.

  
Key Financial Measures 
Income Statement 
                     
  Three Months Ended   Six Months Ended  
  June 30,   March 31,   June 30,   June 30,   June 30,  
  2016   2016   2015   2016   2015  
                     
  (Dollars in thousands, except per share amounts)  
Operating earnings (1) $6,048   $5,918   $5,586   $11,966   $10,696  
Net income $5,685   $5,535   $5,477   $11,220   $10,561  
Earnings per common share - diluted - operating (1) $0.28   $0.28   $0.26   $0.56   $0.50  
Earnings per common share - diluted $0.27   $0.26   $0.26   $0.52   $0.50  
Return on average assets - operating (1)  1.03 %  1.01 %  1.02 %  1.02 %  1.00 %
Return on average assets  0.97 %  0.94 %  1.00 %  0.96 %  0.99 %
Return on average equity - operating (1)  10.67 %  10.62 %  10.49 %  10.64 %  10.18 %
Return on average equity  10.03 %  9.93 %  10.29 %  9.98 %  10.05 %
Net interest margin  3.57 %  3.60 %  3.67 %  3.58 %  3.76 %
Efficiency ratio - tax equivalent (2)  59.08 %  59.92 %  59.77 %  59.50 %  61.28 %
                          
(1) See reconciliation of non-GAAP financial measure to the corresponding GAAP measurement in "Non-GAAP Financial Measures" later in this document.  
(2) The efficiency ratio equals noninterest expense adjusted to exclude amortization of intangible assets, prepayment penalties on long-term debt, impairment of long-lived assets and merger-related expenses, 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 
                    
   June 30,   December 31,  Percent   June 30,  Percent  
   2016   2015  Change   2015  Change  
   (Dollars in thousands, except per share amounts)  
Total investments  $369,008   $424,692  (13.1) % $442,794  (16.7) %
Total loans, net of deferred costs and fees   1,898,543    1,814,536  4.6 %  1,668,658  13.8 %
Allowance for loan losses   (23,050 )  (23,000 )0.2 %  (22,850 )0.9 %
Total assets   2,395,015    2,368,525  1.1 %  2,269,536  5.5 %
Total deposits   1,847,361    1,801,845  2.5 %  1,741,999  6.0 %
Book value per common share   10.55    10.21  3.3 %  9.84  7.2 %
Tangible book value per common share   10.33    9.97  3.6 %  9.56  8.1 %
Equity ratio - GAAP   9.60 %  9.36 %2.6 %  9.42  % 1.9 %
Tangible common equity ratio   9.42 %  9.16 %2.8 %  9.18  % 2.6 %
Total risk-based capital ratio   13.34 %  13.24 %0.8 %  13.34  % - %
Assets under management and administration  $718,570   $698,247  2.9 % $708,610  1.4 %
                 
                 
Net Interest Income and Margin  
                      
   Three Months Ended   Six Months Ended  
   June 30,   March 31,   June 30,   June 30,   June 30,  
   2016   2016   2015   2016   2015  
                      
   (Dollars in thousands)  
Net interest income  $19,821   $19,995   $18,940   $39,816   $37,717  
Average earning assets   2,234,612    2,234,247    2,069,468    2,234,429    2,025,337  
Interest rate spread   3.39 %  3.44 %  3.54 %  3.41 %  3.62 %
Net interest margin   3.57 %  3.60 %  3.67 %  3.58 %  3.76 %
Net interest margin, fully tax equivalent   3.65 %  3.68 %  3.75 %  3.66 %  3.84 %
Average cost of interest-bearing liabilities (including noninterest-bearing deposits)   0.39 %  0.35 %  0.25 %  0.37 %  0.24 %
Average cost of deposits (including noninterest-bearing deposits)   0.23 %  0.22 %  0.18 %  0.23 %  0.17 %
                     

Net interest income increased $0.9 million in the second quarter 2016, as compared to the same quarter in 2015, due to a $1.7 million increase in interest income, partially offset by a $0.8 million increase in interest expense. The increase in interest income was primarily the result of a $226.9 million, or 14.0% increase in average loan balances in the second quarter 2016 as compared to the same quarter in 2015. The increase in interest expense was primarily attributable to a $0.5 million increase in interest expense on Federal Home Loan Bank (FHLB) borrowings, resulting from hedged borrowings, $25.0 million of which became effective in the third quarter 2015 and $25.0 million of which became effective in the first quarter 2016. Additionally, interest expense on certificates of deposits increased $0.3 million in the second quarter 2016 as compared to the same quarter in 2015, primarily as a result of a $74.4 million increase in average certificates of deposit.

As compared to the first quarter 2016, net interest income decreased by $0.2 million mostly due to an increase in interest expense. The increase in interest expense during the second quarter 2016, as compared to the first quarter 2016, was primarily due to an increase in the cost of Company's FHLB borrowings and certificates of deposit.

For the six months ended June 30, 2016, net interest income increased $2.1 million, as compared to the same period in 2015, due to a $3.7 million increase in interest income, partially offset by a $1.6 million increase in interest expense. The year-to-date increase in interest income was driven by a $257.4 million, or 16.4% increase in average loans, as compared to the same period in 2015. The increase in interest expense during the first six months of 2016, as compared to the same period in 2015, was primarily a result of the increased cost of our FHLB borrowings and increased interest expense on certificates of deposit. The increased cost of FHLB borrowings was the result of the Company's hedged borrowings becoming fully effective as outlined above and the impact of the December 2015 Federal Reserve Board's federal funds interest rate increase on overnight funding. The increase in interest expense on certificates of deposit in the first six months of 2016, as compared to the same period in 2015, was the result of an increase in average cost and an increase in average balances.

 
Noninterest Income
 
The following table presents noninterest income as of the dates indicated:
              
   Three Months Ended  Six Months Ended
   June 30,
2016
  March 31,
2016
 June 30,
2015
 June 30,
2016
  June 30,
2015
                  
   (In thousands)
Noninterest income:                      
 Deposit service and other fees  $2,292   $2,169  $2,338  $4,461   $4,373
 Investment management and trust   1,276    1,280   1,338   2,556    2,672
 Increase in cash surrender value of life insurance   460    448   461   908    869
 Gain (loss) on sale of securities   (101 )  45   -   (56 )  -
 Gain on sale of SBA loans   110    154   169   264    449
 Other   105    82   98   187    156
 Total noninterest income  $4,142   $4,178  $4,404  $8,320   $8,519
                   

Second quarter 2016 noninterest income was $4.1 million as compared to $4.2 million in the first quarter 2016 and $4.4 million in the second quarter 2015.

The decline in noninterest income in the second quarter 2016, as compared to the second quarter 2015, was primarily attributable to the net losses recognized on security sales in the second quarter 2016 and a decline in gains on the sale of SBA loans. Similarly, the decline in noninterest income in the second quarter 2016, as compared to the first quarter 2016, was primarily the result of decreases in net gains generated by the sale of SBA loans and securities.

For the six months ended June 30, 2016, noninterest income decreased $0.2 million to $8.3 million as compared to $8.5 million for the same period in 2015. The primary reason for the decrease in noninterest income was due to a decline in gains on the sale of SBA loans.

 
Noninterest Expense
 
The following table presents noninterest expense as of the dates indicated:
             
   Three Months Ended  Six Months Ended
   June 30,
2016
 March 31,
2016
 June 30,
2015
 June 30,
2016
 June 30,
2015
                
   (In thousands)
Noninterest expense:                    
 Salaries and employee benefits  $8,520  $8,788  $7,999  $17,308  $16,603
 Occupancy expense   1,261   1,375   1,630   2,636   3,327
 Furniture and equipment   713   818   736   1,531   1,466
 Amortization of intangible assets   239   240   496   479   991
 Other real estate owned, net   5   2   54   7   95
 Insurance and assessment   597   613   626   1,210   1,191
 Professional fees   906   857   853   1,763   1,682
 Impairment of long-lived assets   -   -   122   -   122
 Other general and administrative   2,893   3,099   2,440   5,992   4,749
 Total noninterest expense  $15,134  $15,792  $14,956  $30,926  $30,226
                

Noninterest expense increased by $0.2 million to $15.1 million in the second quarter 2016 as compared to $15.0 million in the second quarter 2015. The primary cause of the increase in noninterest expense was $0.3 million in merger related expenses associated with the Company's previously announced merger with Home State Bancorp incurred in the second quarter 2016.

During the second quarter 2016, noninterest expense decreased $0.7 million, as compared to the first quarter 2016, primarily as a result of a $0.3 million decrease in salaries and employee benefits due to a decline in payroll taxes related to the timing of the annual payroll cycle and a $0.3 million decline in merger-related expenses. The Company's tax equivalent efficiency ratio was 59.08% for the second quarter 2016, as compared to 59.92% in the first quarter 2016, and 59.77% in the second quarter 2015.

For the six months ended June 30, 2016, noninterest expense was $30.9 million as compared to $30.2 million for the same period in 2015. The increase in noninterest expense during the first six months of 2016, as compared to the same period in 2015, was primarily due to the $1.0 million in merger-related expenses incurred during the first six months of 2016 and a $0.7 million increase in salaries and employee benefits, partially offset by a $0.7 million decline in occupancy expense. The $0.7 million increase in salaries and employee benefits during the first six months of 2016, as compared to the prior year was mostly due to a $0.3 million increase in base salaries, a $0.2 million increase in the Company's self-funded medical plan and a $0.2 million increase in equity compensation expense. The $0.7 million decline occupancy expense was primarily the result of a $0.5 million reduction in rent and depreciation expense related to the restructure of the lease for the Company's corporate office.

Balance Sheet 
                      
   June 30,   December 31,   Percent   June 30,   Percent  
   2016   2015   Change   2015   Change  
   (Dollars in thousands)  
Total assets  $2,395,015   $2,368,525   1.1 % $2,269,536   5.5 %
Average assets, quarter-to-date   2,356,964    2,327,224   1.3 %  2,199,723   7.1 %
Total loans, net of deferred costs and fees   1,898,543    1,814,536   4.6 %  1,668,658   13.8 %
Total deposits   1,847,361    1,801,845   2.5 %  1,741,999   6.0 %
                         
Equity ratio - GAAP   9.60 %  9.36 % 2.6 %  9.42 % 1.9 %
Tangible common equity ratio   9.42 %  9.16 % 2.8 %  9.18 % 2.6 %
                   

At June 30, 2016, the Company had total assets of $2.4 billion, reflecting an increase of $26.5 million as compared to December 31, 2015, and an increase of $125.5 million as compared to June 30, 2015. The $26.5 million increase in total assets during the first six months of 2016 was comprised of an increase in loans of $84.0 million, partially funded by a $55.7 million reduction in investments and a $45.5 million increase in deposits. The $125.5 million increase in total assets at June 30, 2016 as compared to June 30, 2015, was due to a $229.9 million increase in loans, partially offset by a $73.8 million decrease in investments and a $24.7 million decrease in cash.

  
The following table sets forth the amount of loans outstanding at the dates indicated: 
                  
   June 30,  March 31,  December 31,  September 30,  June 30,  
   2016  2016  2015  2015  2015  
   (In thousands)  
Loans held for sale  $-  $-  $-  $8  $423  
Commercial and residential real estate   1,428,397   1,307,854   1,281,701   1,196,209   1,146,508  
Construction   26,497   87,753   107,170   92,473   85,516  
Commercial   336,069   329,939   323,552   336,414   333,860  
Agricultural   11,035   9,768   9,294   10,991   12,380  
Consumer   66,539   66,829   66,288   63,517   61,870  
SBA   28,494   26,811   25,645   25,911   26,975  
Other   1,111   955   631   510   1,299  
 Total gross loans   1,898,142   1,829,909   1,814,281   1,726,033   1,668,831  
  Deferred costs and (fees)   401   337   255   118   (173 )
 Loans, net of deferred costs and fees  $1,898,543  $1,830,246  $1,814,536  $1,726,151  $1,668,658  
                  
                  
The following table presents the changes in the Company's loan balances at the dates indicated: 
                      
   June 30,   March 31,   December 31,   September 30,   June 30,  
   2016   2016   2015   2015   2015  
   (In thousands)  
Beginning balance  $1,829,909   $1,814,281   $1,726,033   $1,668,831   $1,555,288  
New credit extended   121,753    105,843    155,745    149,502    169,687  
Net existing credit advanced   87,524    50,482    61,165    60,784    83,792  
Net pay-downs and maturities   (142,516 )  (139,914 )  (129,189 )  (152,279 )  (138,770 )
Charge-offs and other   1,472    (783 )  527    (805 )  (1,166 )
 Gross loans   1,898,142    1,829,909    1,814,281    1,726,033    1,668,831  
Deferred costs and (fees)   401    337    255    118    (173 )
 Loans, net of deferred costs and fees  $1,898,543   $1,830,246   $1,814,536   $1,726,151   $1,668,658  
                           
Net change - loans outstanding  $68,297   $15,710   $88,385   $57,493   $113,504  
                     

During the second quarter 2016, loans net of deferred costs and fees increased $68.3 million which was comprised of a $120.5 million increase in commercial and residential real estate loans, including a $30.7 million increase in 1-4 family residential real estate loans, and a $6.1 million increase in commercial loans, partially offset by a $61.3 million decline in construction loans. The $61.3 million decline in construction loans during the second quarter 2016 was primarily the result of the completion of the underlying construction projects and the conversion of the short-term construction loan to permanent financing. Second quarter 2016 net loan growth consisted of $209.3 million in new loans and net existing credit advanced, partially offset by $142.5 million in net loan pay-downs and maturities. In addition to contractual loan principal payments and maturities, the second quarter 2016 included $48.1 million in early payoffs related to the sale of the borrower's assets, $15.2 million in payoffs due to our strategic decision to not match certain financing terms offered by competitors, and $19.5 million in pay-downs related to revolving line of credit fluctuations.

For the twelve months ended June 30, 2016, loans net of deferred costs and fees increased by $229.9 million, or 13.8%. Net loan growth was comprised of a $281.9 million increase in commercial and residential real estate loans partially offset by a $59.0 million decrease in construction loans. The growth in loans was the result of the development of new customer relationships and growth in existing customer relationships. The utilization rate on commercial lines of credit was 47.0% at June 30, 2016, as compared to 41.2% at December 31, 2015, and 41.0% as of June 30, 2015. At June 30, 2016, 1-4 family residential real estate loans were $374.0 million, as compared to $349.1 million at December 31, 2015, and $273.4 million as of June 30, 2015.

The following table sets forth the amounts of deposits outstanding at the dates indicated:
                
   June 30,  March 31,  December 31,  September 30,  June 30,
   2016  2016  2015  2015  2015
   (In thousands)
Noninterest-bearing demand  $638,110  $631,544  $612,371  $683,797  $622,364
Interest-bearing demand and NOW   383,492   392,808   381,834   405,092   379,495
Money market   392,730   411,582   397,371   369,023   362,798
Savings   149,798   155,673   151,130   144,602   139,305
Time   283,231   281,110   259,139   244,815   238,037
Total deposits  $1,847,361  $1,872,717  $1,801,845  $1,847,329  $1,741,999
                

At June 30, 2016, non-maturing deposits were $1.6 billion, an increase of $21.4 million as compared to December 31, 2015, and an increase of $60.2 million as compared to June 30, 2015. At June 30, 2016, noninterest-bearing deposits as a percentage of total deposits were 34.5%, as compared to 34.0% at December 31, 2015, and 35.7% at June 30, 2015.

At June 30, 2016, securities sold under agreements to repurchase were $18.0 million, a decrease of $8.5 million as compared to December 31, 2015, and an increase of $2.2 million as compared to June 30, 2015.

Total FHLB borrowings were $261.6 million at June 30, 2016 consisting of $141.6 million of overnight advances on the Bank's line of credit and $120.0 million in term advances. At December 31, 2015, total FHLB borrowings consisted of $185.8 million in overnight advances and $95.0 million in term advances.

 
Regulatory Capital Ratios
 
The following table provides the capital ratios of the Company and the Bank as of the dates presented, along with the applicable regulatory capital requirements:
                 
  Ratio at
June 30,
2016
  Ratio at
December 31,
2015
  Minimum Requirement
for "Adequately Capitalized"
Institution plus fully
phased in Capital
Conservation Buffer
  Minimum
Requirement for
"Well-Capitalized"
Institution
 
Common Equity Tier 1 Risk-Based Capital Ratio           
 Consolidated 11.07 % 10.94 % 7.00 % N/A  
 Guaranty Bank and Trust Company 11.89 % 11.96 % 7.00 % 6.50 %
                 
Tier 1 Risk-Based Capital Ratio                
 Consolidated 12.23 % 12.11 % 8.50 % N/A  
 Guaranty Bank and Trust Company 11.89 % 11.96 % 8.50 % 8.00 %
                 
Total Risk-Based Capital Ratio                
 Consolidated 13.34 % 13.24 % 10.50 % N/A  
 Guaranty Bank and Trust Company 13.00 % 13.09 % 10.50 % 10.00 %
                 
Leverage Ratio                
 Consolidated 10.84 % 10.68 % 4.00 % N/A  
 Guaranty Bank and Trust Company 10.54 % 10.55 % 4.00 % 5.00 %
            

At June 30, 2016, all of our regulatory capital ratios remained well above minimum requirements for a "well-capitalized" institution. The Company's consolidated Tier 1 risk-based capital ratio and total risk-based capital ratios increased relative to December 31, 2015 as a result of increased capital due to year-to-date earnings, partially offset by growth in risk-weighted assets.

  
Asset Quality 
  
The following table presents select asset quality data, including quarterly charged-off loans, recoveries and provision (credit) for loan losses as of the dates indicated: 
                     
  June 30,   March 31,   December 31,   September 30,   June 30,  
  2016   2016   2015   2015   2015  
  (Dollars in thousands)  
Nonaccrual loans and leases $13,326   $13,401   $14,474   $14,512   $13,192  
Accruing loans past due 90 days or more (1)  -    -    -    -    -  
                          
Total nonperforming loans (NPLs) $13,326   $13,401   $14,474   $14,512   $13,192  
Other real estate owned and foreclosed assets  674    674    674    1,371    1,503  
                          
Total nonperforming assets (NPAs) $14,000   $14,075   $15,148   $15,883   $14,695  
                          
Total classified assets $25,644   $27,191   $26,428   $31,208   $31,762  
                          
Accruing loans past due 30-89 days (1) $2,386   $1,398   $2,091   $3,461   $1,487  
                          
Charged-off loans $(57 ) $(302 ) $(66 ) $(75 ) $(48 )
Recoveries  72    311    184    101    285  
 Net recoveries $15   $9   $118   $26   $237  
                          
Provision (credit) for loan losses $10   $16   $(8 ) $14   $113  
                          
Allowance for loan losses $23,050   $23,025   $23,000   $22,890   $22,850  
                          
Selected ratios:                         
NPLs to loans, net of deferred costs and fees (2)  0.70 %  0.73 %  0.80 %  0.84 %  0.79 %
NPAs to total assets  0.58 %  0.60 %  0.64 %  0.69 %  0.65 %
Allowance for loan losses to NPLs  172.97 %  171.82 %  158.91 %  157.73 %  173.21 %
Allowance for loan losses to loans, net of deferred costs and fees (2)  1.21 %  1.26 %  1.27 %  1.33 %  1.37 %
Loans 30-89 days past due to loans, net of deferred costs and fees (2)  0.13 %  0.08 %  0.12 %  0.20 %  0.09 %
Texas ratio (3)  5.17 %  5.14 %  5.65 %  6.09 %  5.80 %
Classified asset ratio (4)  10.55 %  11.56 %  11.66 %  13.51 %  13.87 %
                    
(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 deferred costs and 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:
               
June 30, 2016 30-89
Days Past
Due
 90 Days +
Past Due
and Still
Accruing
 Nonaccrual  Total Nonaccrual and
Past Due
 Total Loans,
Held for
Investment
  (In thousands)
Commercial and residential real estate $1,617  $-  $10,476  $12,093  $1,428,698
Construction  -   -   986   986   26,503
Commercial  90   -   814   904   336,140
Consumer  2   -   257   259   66,553
Other  677   -   793   1,470   40,649
Total $2,386  $-  $13,326  $15,712  $1,898,543
               
               
December 31, 2015 30-89
Days Past
Due
 90 Days +
Past Due
and Still
Accruing
 Nonaccrual  Total Nonaccrual and
Past Due
 Total Loans,
Held for
Investment
  (In thousands)
Commercial and residential real estate $653  $-  $11,905  $12,558  $1,281,881
Construction  -   -   986   986   107,185
Commercial  1,147   -   874   2,021   323,598
Consumer  291   -   459   750   66,297
Other  -   -   250   250   35,575
Total $2,091  $-  $14,474  $16,565  $1,814,536
               

During the second quarter 2016, nonperforming assets decreased by $0.1 million from March 31, 2016 and $0.7 million from June 30, 2015. As of June 30, 2016, nonperforming loans included one out-of-state loan syndication with a balance of $9.4 million.

At June 30, 2016, classified assets represented 10.6% of bank-level Tier 1 risk-based capital plus allowance for loan losses, as compared to 11.7% at December 31, 2015, and 13.9% at June 30, 2015.

Immaterial net recoveries were recognized during the first and second quarters 2016. Net recoveries in the second quarter 2015 were $0.2 million. The Bank considered recoveries, historical charge-offs, level of nonperforming loans, loan growth and other factors when determining the adequacy of the allowance for loan losses and the resulting amount of loan loss provision to be recognized during the quarter.

Shares Outstanding

As of June 30, 2016, the Company had 21,802,054 shares of common stock outstanding, consisting of 20,783,054 shares of voting common stock, of which 554,591 shares were in the form of unvested stock awards, and 1,019,000 shares of non-voting common stock.

Non-GAAP Financial Measures

The Company discloses certain non-GAAP financial measures related to tangible assets, including tangible book value and tangible common equity, and operating earnings adjusted for merger related expenses, OREO expenses, debt termination expense, impairments of long-lived assets, securities gains and losses and gains or losses on the sale or disposal of other assets. The Company also discloses the following GAAP profitability metrics alongside the operating earnings equivalent: return on average assets, return on average equity and earnings per share (diluted).

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 operating earnings to GAAP net income as of the dates indicated:
 
 Three Months Ended Six Months Ended
 June 30,March 31,June 30, June 30,June 30,
 201620162015 20162015
 (Dollars in thousands, except per share amounts)
Net income$5,685 $5,535 $5,477  $11,220 $10,561 
Expenses adjusted for:                
 Expenses (gains) related to other real estate owned, net 5  2  54   7  95 
 Merger related expenses 347  675  -   1,022  - 
 Impairment of long-lived assets -  -  122   -  122 
Income adjusted for:                
 (Gain) loss on sale of securities 101  (45) -   56  - 
 Gain on sale of other assets -  (14) -   (14) - 
Pre-tax earnings adjustment 453  618  176   1,071  217 
Tax effect of adjustments (1) (90) (235) (67)  (325) (82)
Tax effected operating earnings adjustment 363  383  109   746  135 
Operating earnings$6,048 $5,918 $5,586  $11,966 $10,696 
                 
Average assets$2,356,964 $2,359,180 $2,199,723  $2,358,059 $2,154,494 
                 
Average equity$228,060 $224,179 $213,545  $226,120 $211,837 
                 
Fully diluted average common shares outstanding: 21,361,712  21,375,330  21,200,438   21,411,626  21,191,277 
                 
Earnings per common share-diluted - operating:$0.28 $0.28 $0.26  $0.56 $0.50 
Earnings per common share-diluted:$0.27 $0.26 $0.26  $0.52 $0.50 
                 
ROAA - operating 1.03% 1.01% 1.02%  1.02% 1.00%
ROAA (GAAP) 0.97% 0.94% 1.00%  0.96% 0.99%
                 
ROAE - operating 10.67% 10.62% 10.49%  10.64% 10.18%
ROAE (GAAP) 10.03% 9.93% 10.29%  9.98% 10.05%
________________                
(1) Based on a combined federal and state marginal tax rate of 38.01% with the exception of merger-related expenses which were tax effected using a combined federal and state marginal tax rate of 30.00% on a year-to-date basis due to the non-deductibility of certain merger-related expenses. 
  
  
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         
   June 30,  December 31,  June 30,
   2016  2015  2015
   (Dollars in thousands, except per share amounts)
 Total stockholders' equity  $229,958   $221,639   $213,839  
 Less: Intangible assets   (4,694 )  (5,173 )  (6,163 )
 Tangible common equity  $225,264   $216,466   $207,676  
                  
 Number of common shares outstanding   21,802,054    21,704,852    21,729,999  
                  
 Book value per common share  $10.55   $10.21   $9.84  
 Tangible book value per common share  $10.33   $9.97   $9.56  
              
              
Tangible Common Equity Ratio
   June 30,  December 31,  June 30,
   2016  2015  2015
   (Dollars in thousands)
 Total stockholders' equity  $229,958   $221,639   $213,839  
 Less: Intangible assets   (4,694 )  (5,173 )  (6,163 )
 Tangible common equity  $225,264   $216,466   $207,676  
                  
 Total assets  $2,395,015   $2,368,525   $2,269,536  
 Less: Intangible assets   (4,694 )  (5,173 )  (6,163 )
 Tangible assets  $2,390,321   $2,363,352   $2,263,373  
                  
 Equity ratio - GAAP (total stockholders' equity / total assets)   9.60 %  9.36 %  9.42 %
 Tangible common equity ratio (tangible common equity / tangible assets)   9.42 %  9.16 %  9.18 %
              

About Guaranty Bancorp

Guaranty Bancorp is a $2.4 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; failure or inability to complete mergers or other corporate transactions; failure or inability to realize fully the expected benefits of mergers or other corporate transactions; 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; changes in oil and natural gas prices; 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
         
  June 30,  December 31,  June 30,
  2016  2015  2015
  (In thousands)
Assets               
Cash and due from banks $30,446   $26,711   $55,169  
                
Securities available for sale, at fair value  198,156    255,431    283,496  
Securities held to maturity  149,196    148,761    138,514  
Bank stocks, at cost  21,656    20,500    20,784  
   Total investments  369,008    424,692    442,794  
                
Loans held for sale  -    -    423  
                
Loans, held for investment, net of deferred costs and fees  1,898,543    1,814,536    1,668,235  
  Less allowance for loan losses  (23,050 )  (23,000 )  (22,850 )
   Net loans, held for investment  1,875,493    1,791,536    1,645,385  
                
Premises and equipment, net  45,769    48,308    48,375  
Other real estate owned and foreclosed assets  674    674    1,503  
Other intangible assets, net  4,694    5,173    6,163  
Bank owned life insurance  49,639    48,909    48,159  
Other assets  19,292    22,522    21,565  
   Total assets $2,395,015   $2,368,525   $2,269,536  
                
Liabilities and Stockholders' Equity               
Liabilities:               
 Deposits:               
  Noninterest-bearing demand $638,110   $612,371   $622,364  
  Interest-bearing demand and NOW  383,492    381,834    379,495  
  Money market  392,730    397,371    362,798  
  Savings  149,798    151,130    139,305  
  Time  283,231    259,139    238,037  
   Total deposits  1,847,361    1,801,845    1,741,999  
                
Securities sold under agreement to repurchase and federal funds purchased  17,990    26,477    15,832  
Federal Home Loan Bank term notes  120,000    95,000    70,000  
Federal Home Loan Bank line of credit borrowing  141,600    185,847    190,550  
Subordinated debentures  25,774    25,774    25,774  
Interest payable and other liabilities  12,332    11,943    11,542  
   Total liabilities  2,165,057    2,146,886    2,055,697  
                
Stockholders' equity:               
 Common stock and additional paid-in capital - common stock  714,221    712,334    710,905  
 Accumulated deficit  (375,811 )  (382,147 )  (389,824 )
 Accumulated other comprehensive loss  (3,837 )  (4,805 )  (3,797 )
 Treasury stock  (104,615 )  (103,743 )  (103,445 )
   Total stockholders' equity  229,958    221,639    213,839  
   Total liabilities and stockholders' equity $2,395,015   $2,368,525   $2,269,536  
               
               
GUARANTY BANCORP AND SUBSIDIARIES
Unaudited Consolidated Statements of Operations
             
   Three Months Ended June 30,  Six Months Ended June 30,
   2016  2015  2016  2015
   (In thousands, except share and per share data)
Interest income:                  
 Loans, including costs and fees  $19,057   $17,114  $37,911   $33,920
 Investment securities:                  
  Taxable   1,753    2,078   3,713    4,201
  Tax-exempt   757    712   1,488    1,414
 Dividends   281    253   592    475
 Federal funds sold and other   3    2   7    3
  Total interest income   21,851    20,159   43,711    40,013
Interest expense:                  
 Deposits   1,064    750   2,071    1,418
 Securities sold under agreement to repurchase and federal funds purchased   8    9   18    20
 Borrowings   733    258   1,356    457
 Subordinated debentures   225    202   450    401
  Total interest expense   2,030    1,219   3,895    2,296
  Net interest income   19,821    18,940   39,816    37,717
Provision for loan losses   10    113   26    90
  Net interest income, after provision for loan losses   19,811    18,827   39,790    37,627
Noninterest income:                  
 Deposit service and other fees   2,292    2,338   4,461    4,373
 Investment management and trust   1,276    1,338   2,556    2,672
 Increase in cash surrender value of life insurance   460    461   908    869
 Loss on sale of securities   (101 )  -   (56 )  -
 Gain on sale of SBA loans   110    169   264    449
 Other   105    98   187    156
  Total noninterest income   4,142    4,404   8,320    8,519
Noninterest expense:                  
 Salaries and employee benefits   8,520    7,999   17,308    16,603
 Occupancy expense   1,261    1,630   2,636    3,327
 Furniture and equipment   713    736   1,531    1,466
 Amortization of intangible assets   239    496   479    991
 Other real estate owned, net   5    54   7    95
 Insurance and assessments   597    626   1,210    1,191
 Professional fees   906    853   1,763    1,682
 Impairment of long-lived assets   -    122   -    122
 Other general and administrative   2,893    2,440   5,992    4,749
  Total noninterest expense   15,134    14,956   30,926    30,226
  Income before income taxes   8,819    8,275   17,184    15,920
Income tax expense   3,134    2,798   5,964    5,359
  Net income  $5,685   $5,477  $11,220   $10,561
                   
Earnings per common share-basic:  $0.27   $0.26  $0.53   $0.50
Earnings per common share-diluted:   0.27    0.26   0.52    0.50
Dividend declared per common share:  $0.12   $0.10  $0.23   $0.20
                   
Weighted average common shares outstanding-basic:   21,242,520    21,070,199   21,213,706    21,053,853
Weighted average common shares outstanding-diluted:   21,361,712    21,200,438   21,411,626    21,191,277
               
               
GUARANTY BANCORP AND SUBSIDIARIES
Unaudited Consolidated Average Balance Sheets
               
  QTD Average  YTD Average
  June 30,  March 31,  June 30,  June 30,  June 30,
  2016  2016  2015  2016  2015
               
  (In thousands)
Assets              
Interest earning assets                   
 Loans, net of deferred costs and fees $1,845,337  $1,818,001  $1,618,430  $1,831,669  $1,574,269
 Securities  386,453   413,434   449,060   399,943   448,913
 Other earning assets  2,822   2,812   1,978   2,817   2,155
Average earning assets  2,234,612   2,234,247   2,069,468   2,234,429   2,025,337
Other assets  122,352   124,933   130,255   123,630   129,157
Total average assets $2,356,964  $2,359,180  $2,199,723  $2,358,059  $2,154,494
                    
Liabilities and Stockholders' Equity                   
Average liabilities:                   
Average deposits:                   
 Noninterest-bearing deposits $616,046  $611,736  $634,824  $613,891  $640,970
 Interest-bearing deposits  1,212,332   1,207,001   1,075,022   1,209,667   1,060,258
 Average deposits  1,828,378   1,818,737   1,709,846   1,823,558   1,701,228
Other interest-bearing liabilities  287,887   303,728   263,702   295,808   228,357
Other liabilities  12,639   12,536   12,630   12,573   13,072
Total average liabilities  2,128,904   2,135,001   1,986,178   2,131,939   1,942,657
Average stockholders' equity  228,060   224,179   213,545   226,120   211,837
Total average liabilities and stockholders' equity $2,356,964  $2,359,180  $2,199,723  $2,358,059  $2,154,494

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