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Guaranty Bancorp Announces 2008 Fourth Quarter Financial Results
-- Fourth quarter net income of $3.8 million, or 7 cents per basic
and diluted share
-- Loans, deposits and capital increase in the fourth quarter
-- $30.3 million increase in total noninterest bearing deposits in
the fourth quarter
-- Nonperforming assets declined in the fourth quarter
-- Noninterest expense falls to the lowest level in the past sixteen
quarters
DENVER, Jan. 22, 2009 (GLOBE NEWSWIRE) -- Guaranty Bancorp (NasdaqGS:GBNK - News) today reported fourth quarter 2008 net income of $3.8 million, or 7 cents earnings per basic and diluted share and fourth quarter 2008 cash net earnings of $4.9 million, or $0.10 per basic and diluted share, excluding after-tax intangible asset amortization of $1.1 million.
Dan Quinn, Guaranty Bancorp President and CEO, stated, ``We are satisfied with our fourth quarter 2008 results. The Company experienced $52.4 million of loan growth during the fourth quarter 2008 while also strengthening its capital. Additionally, nonperforming assets remained relatively unchanged during the fourth quarter 2008 with net charge-offs of $1.0 million.''
Mr. Quinn continued, ``In a difficult banking environment, we were able to grow noninterest bearing demand deposits by $30.3 million during the fourth quarter 2008. Although we experienced a decline in net interest margin, this was primarily a result of two factors. First, the Federal Open Markets Committee of the Federal Reserve Board decreased the targeted federal funds rate to an historic low between 0 and 25 basis points, a decrease of 175 to 200 basis points in the fourth quarter. Second, management increased the level of its time deposits and FHLB term advances and reduced the amount of its short-term or overnight borrowings. This action effectively lengthened the term of overall liabilities, but at a higher cost than short-term borrowings.''
Regulatory Capital Increases During the Quarter
The Company's capital ratios remain above the highest regulatory capital requirement of ``well-capitalized'' at December 31, 2008 as follows:
Minimum
Requirement
Ratio at Ratio at Minimum for "Well
December 31, September 30, Capital Capitalized"
2008 2008 Requirement Institution
-----------------------------------------------------
Total Risk-
Based Capital
Ratio 10.61% 10.45% 8.00% 10.00%
Tier 1 Risk-
Based Capital
Ratio 9.35% 9.19% 4.00% 6.00%
Leverage Ratio 8.98% 7.79% 4.00% 5.00%
Key Financial Measures
--------------------------- ------------------
Quarter Ended Year Ended
--------------------------- ------------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
2008 2008 2007 2008 2007
--------------------------- ------------------
Earnings (loss)
per share-basic &
diluted $ 0.07 $ (5.21) $ (2.68) $ (5.03) $ (2.60)
Cash earnings (loss)
per share-basic &
diluted $ 0.10 $ (0.27) $ 0.10 $ (0.03) $ 0.18
Return on average
assets 0.72% (44.96%) (22.09%) (11.19%) (5.29%)
Return on tangible
average assets
(cash) 0.95% (2.67%) 0.98% (0.07%) 0.43%
Net Interest Margin 3.55% 4.02% 4.75% 4.05% 4.93%
Fourth quarter 2008 net income was $3.8 million, or 7 cents earnings per basic and diluted share, compared to a fourth quarter 2007 net loss of $138.2 million, or $2.68 loss per basic and diluted share. The fourth quarter 2007 was affected by a $142.2 million non-cash charge for goodwill impairment. Another difference between the fourth quarter 2007 net loss and fourth quarter 2008 net income includes a $6.5 million decrease in net interest income, primarily caused by a 120 basis point decrease in net interest margin -- a direct result of a 400 basis point decrease in both the targeted federal funds rate and prime rate during the past twelve months. Excluding the 2007 goodwill impairment, noninterest expense decreased by $2.5 million, or 14% in the fourth quarter 2008 as compared to the same quarter in 2007.
Fourth quarter 2008 cash net earnings were $4.9 million, or $0.10 per basic and diluted share, which excludes after-tax intangible asset amortization of $1.1 million. Fourth quarter 2007 cash net income was $5.3 million, or $0.10 per basic and diluted share, which excludes after-tax intangible asset amortization of $1.3 million and the 2007 goodwill impairment charge.
For the year ending December 31, 2008, the net loss was $256.7 million, or $5.03 loss per basic and diluted share compared to a net loss of $138.1 million or $2.60 loss per basic and diluted share for 2007. The net loss in both years was primarily the result of goodwill impairment charges of $250.7 million and $142.2 million in 2008 and 2007, respectively. Goodwill impairment charges are non-cash accounting entries that have no impact on the Company's regulatory capital, cash flow or liquidity. At the end of 2008, there is no remaining goodwill intangible asset recorded on the Company's balance sheet.
The cash net loss for the year ended December 31, 2008 was $1.4 million, or a $0.03 loss per basic and diluted share excluding after-tax intangible asset amortization of $4.6 million and goodwill impairment of $250.7 million. Cash net income for the year ended December 31, 2007 was $9.5 million, or $0.18 per basic and diluted share excluding after-tax intangible amortization of $5.4 million and goodwill impairment of $142.2 million.
Net Interest Income and Margin
-------------------------------- ---------------------
Quarter Ended Year Ended
-------------------------------- ---------------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
2008 2008 2007 2008 2007
-------------------------------- ---------------------
(Dollars in thousands)
Net interest
income $ 17,679 $ 19,842 $ 24,184 $ 79,562 $ 102,249
Interest rate
spread 2.92% 3.37% 3.77% 3.35% 3.94%
Net interest
margin 3.55% 4.02% 4.75% 4.05% 4.93%
Net interest
margin,
fully tax
equivalent 3.64% 4.11% 4.88% 4.14% 5.08%
Fourth quarter 2008 net interest income of $17.7 million decreased by $2.2 million from the third quarter 2008, and $6.5 million from the fourth quarter 2007. The Company's net interest margin of 3.55% for the fourth quarter 2008 reflected a decline of 47 basis points from the third quarter 2008 and a decline of 120 basis points from the fourth quarter 2007. The decline in net interest margin from the fourth quarter 2007 to fourth quarter 2008 is mostly attributable to the greater than 400 basis point cuts in the target federal funds rate by the Federal Open Market Committee of the Federal Reserve Board during the past twelve months.
Interest income decreased by $10.6 million from the fourth quarter 2007 to $28.0 million in the fourth quarter 2008. This decrease consisted of a $10.0 million unfavorable rate variance due to lower rates, with the remainder of the decrease due to an overall decline in earnings assets. Approximately 65% of the Company's outstanding loan balances are variable rate loans and are generally tied to indexes such as prime, federal funds or LIBOR. Due to Federal Reserve monetary policy, the prime rate has decreased by over 400 basis points from December 2007 to December 2008. As a result of the decline in rates, the average yield on loans for the Company decreased by 217 basis points from 7.84% for the quarter ended December 31, 2007 to 5.67% for the same period in 2008. The Company remains asset sensitive at the end of 2008 and expects that as interest rates rise, net interest income will also increase.
Interest expense decreased by $4.1 million, or 28.3%, to $10.3 million for the fourth quarter 2008 as compared to the fourth quarter 2007. The decrease in interest expense from the fourth quarter 2007 was primarily the result of a $1.8 million favorable rate variance and a $2.3 million favorable volume variance. The overall cost of funds declined by 109 basis points to 2.70% from the fourth quarter 2007 to the fourth quarter 2008. Average total interest-bearing liabilities increased by $13.2 million from the fourth quarter 2007 to the fourth quarter 2008 due mostly to a $126.5 million increase in long-term borrowings, partially offset by a $115.8 million decrease in total interest-bearing deposits.
For the year ended December 31, 2008, the Company's net interest income declined by $22.7 million from the same period in 2007. This decline is due primarily to an $18.9 million unfavorable rate variance in connection with an 88 basis point decrease in the net interest margin. The remaining $3.8 million decrease in net interest income is primarily due to a $41.8 million decrease in earning assets.
Noninterest Income
The following table presents noninterest income as of the dates indicated.
------------------------------- --------------------
Quarter Ended Year Ended
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
2008 2008 2007 2008 2007
------------------------------- --------------------
(In thousands)
Noninterest
income:
Customer
service and
other fees $ 2,357 $ 2,521 $ 2,267 $ 9,682 $ 9,509
Gain on sale
of securities -- -- -- 138 --
Other (91) 186 665 800 1,187
------------------------------- --------------------
Total
noninterest
income $ 2,266 $ 2,707 $ 2,932 $ 10,620 $ 10,696
=============================== ====================
Noninterest income for the fourth quarter 2008 decreased by $0.4 million from the third quarter 2008 and decreased by $0.7 million from the fourth quarter 2007. The decrease in other noninterest income in the fourth quarter 2008 as compared to the fourth quarter 2007, is mostly due to a recovery of approximately $0.6 million recorded in 2007.
Compared to the third quarter 2008, the decrease is primarily due to a $0.3 million fair value write-down of assets held by the Company for purposes of funding its nonqualified deferred compensation plan. These assets are required to be marked-to-market through the income statement. This write-down is offset by a reduction to compensation cost related to the deferred compensation plan. This compensation cost is recorded as part of salaries and benefit expense as discussed below.
For the year ended December 31, 2008, noninterest income remained relatively flat as compared to 2007. The $0.4 million decrease to other noninterest income was mostly offset by a gain on sale of securities, as well as an increase in customer service and other fees.
Noninterest Expense
The following table presents noninterest expense as of the dates indicated.
----------------------------- -------------------
Quarter Ended Year Ended
----------------------------- -------------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
2008 2008 2007 2008 2007
----------------------------- -------------------
(In thousands)
Noninterest
expense:
Salaries and
employee
benefits $ 6,255 $ 5,927 $ 8,442 $ 31,086 $ 39,179
Occupancy
expense 1,725 1,958 1,781 7,815 7,813
Furniture and
equipment 1,203 1,390 1,205 5,290 4,864
Impairment of
goodwill -- 250,748 142,210 250,748 142,210
Amortization
of intangible
assets 1,803 1,877 2,132 7,434 8,666
Other general
and
administrative 4,381 3,982 4,278 17,283 23,824
----------------------------- -------------------
Total
noninterest
expense $ 15,367 $ 265,882 $ 160,048 $ 319,656 $ 226,556
============================= ===================
Efficiency ratio
(excluding
charges related
to intangible
assets) 68.01% 58.79% 57.91% 68.17% 67.01%
Noninterest expense for the fourth quarter 2008 decreased by $250.5 million from the third quarter 2008 and by $144.7 million from the fourth quarter 2007. The decreases in noninterest expense are primarily a result of goodwill impairment charges recorded in the third quarter 2008 and the fourth quarter 2007. Excluding these non-cash accounting charges for goodwill impairment, noninterest expense decreased by $2.5 million in the fourth quarter 2008 as compared to the fourth quarter 2007, and increased by $0.2 million from the third quarter 2008. At the end of 2008, there is no remaining goodwill recorded on the Company's balance sheet.
Although overall noninterest expense, excluding goodwill, increased by $0.2 million from the third quarter 2008, equity-based compensation in the fourth quarter 2008 was $2.5 million higher as compared to the third quarter 2008. This difference in equity-based compensation resulted from a $2.7 million reduction in restricted stock expense in the third quarter 2008 attributable to a change in expectation regarding meeting the vesting criteria for performance-based shares. Ignoring this $2.5 million difference in equity-based compensation, other salaries and employee benefits decreased by $2.2 million in the fourth quarter 2008 from the third quarter 2008. A part of this $2.2 million quarter-over-quarter decrease is due to the major effort announced in the second quarter 2008 to better align our expenses with the current size of our business. The fourth quarter 2008 saw a favorable impact on salaries and employee benefits as a result of this effort with a $1.1 million decrease in core salaries and benefits. The remaining $1.1 million decrease in salaries and employee benefits is due mostly to a $0.6 million decrease in bonuses and incentive expense as well as a $0.3 million decrease in deferred compensation expense. This decrease in deferred compensation expense corresponds to a write-down of market value on assets held for the deferred compensation plan. The write-down of assets is recorded in other noninterest income as discussed above.
Other general and administrative expenses increased by $0.4 million in the fourth quarter 2008 as compared to the third quarter 2008, and increased by $0.1 million compared to the fourth quarter 2007. The $0.4 million increase over the prior quarter is due in part to an increase in loan collection related costs, including charge-offs of other real estate owned. A portion of this increase is due to costs associated with an extensive third-party loan review, which was finalized in the fourth quarter.
Excluding goodwill impairment charges in both years, noninterest expense for 2008 was $68.9 million as compared to $84.3 million in 2007, a decrease of $15.4 million year-over-year. This decrease is comprised of an $8.1 million decline in salaries and employee benefit expense, a $6.5 million decrease in other noninterest expense and a $1.2 million decrease in intangible amortization expense. Approximately $4.1 million of the $8.1 million decrease to salaries and employee benefits expense is attributable to a decline in full-time equivalent employees by 89 from December 2007 to December 2008. Of the remaining $4.0 million decrease, $3.3 million is related to a decrease in equity-based compensation as discussed above and $0.7 million is related to a decrease in bonus and incentive expense. The $6.5 million decrease in other non-interest expense is primarily attributable to the $6.5 million charge recorded in 2007 resulting from a settlement of a lawsuit.
Balance Sheet
Dec. 31, Sept. 30, % Dec. 31, %
2008 2008 Change 2007 Change
--------------------------------------------------------------------
(Dollars in thousands, except per share amounts)
Total loans,
net of
unearned
discount $1,826,333 $1,779,673 2.6% $1,781,647 2.5%
Loans held
for sale 5,760 -- 100.0% -- 100.0%
Allowance for
loan losses (44,988) (44,765) 0.5% (25,711) 75.0%
Total assets 2,102,741 2,052,944 2.4% 2,371,664 (11.3)%
Average
assets,
quarter-to-
date 2,099,519 2,351,913 (10.7)% 2,482,352 (15.4)%
Total
deposits 1,698,651 1,635,101 3.9% 1,799,507 (5.6)%
Book value
per share $ 3.07 $ 2.93 4.7% $ 7.96 (61.4)%
Tangible book
value per
share $ 2.58 $ 2.41 7.1% $ 2.57 0.6%
Equity ratio
- GAAP 7.68% 7.52% 2.2% 17.65% (56.5)%
Tangible
equity ratio 6.55% 6.27% 4.4% 6.46% 1.3%
At December 31, 2008, the Company had total assets of $2.1 billion as compared to $2.1 billion at September 30, 2008, and $2.4 billion at December 31, 2007. The $268.9 million decline in assets from December 31, 2007 is mostly due to a $250.7 million goodwill impairment charge recorded in the third quarter 2008, as well as a $22.1 million decrease to investments.
The following table sets forth the amounts of our loans outstanding at the dates indicated:
Dec. 31, Sept. 30, Dec. 31,
2008 2008 2007
-------------------------------------
(In thousands)
Loans on real estate:
Residential and commercial $ 680,030 $ 693,800 $ 713,478
Construction 268,306 248,883 235,236
Equity lines of credit 50,270 49,205 48,624
Commercial loans 749,426 706,678 679,717
Agricultural loans 22,738 23,989 39,506
Lease financing 364 472 4,732
Installment loans to
individuals 38,352 38,777 40,835
Overdrafts 855 2,226 1,329
SBA and other 19,592 19,401 21,592
-------------------------------------
1,829,933 1,783,431 1,785,049
Unearned discount (3,600) (3,758) (3,402)
-------------------------------------
Loans, net of unearned
discount $ 1,826,333 $ 1,779,673 $ 1,781,647
=====================================
There were $998.6 million of real estate loans at December 31, 2008. Management continues its efforts to decrease its exposure to residential real-estate and residential land and land development loans. At December 31, 2008, there were approximately $57 million of loans secured by for-sale residential real estate and approximately $114 million of residential land and land development loans, respectively. The increase in construction loans is primarily attributable to the funding of existing commercial construction commitments.
The following table sets forth the amounts of our deposits outstanding at the dates indicated:
December 31, September 30, December 31,
2008 2008 2007
--------------------------------------
(In thousands)
Noninterest bearing deposits $ 433,761 $ 403,495 $ 515,299
Interest bearing demand 145,492 142,164 160,100
Money market 315,364 483,691 572,056
Savings 68,064 68,910 71,944
Time 735,970 536,841 480,108
--------------------------------------
Total deposits $1,698,651 $1,635,101 $1,799,507
======================================
Total deposits at December 31, 2008 increased by $63.6 million as compared to September 30, 2008, and declined by $100.9 million from December 31, 2007. During the fourth quarter 2008, there was a shift in the mix of deposits primarily between money market and time deposits. The Company joined the Certificate of Deposit Account Registry Service (CDARS(r)) program in the third quarter 2008, and part of the fourth quarter 2008 increase in time deposits is due to existing customers moving funds into the CDARS(r) program in order to obtain expanded Federal Deposit Insurance Corporation (FDIC) insurance coverage on their deposits. Additionally, the Company shifted its own funding sources from short-term and overnight funds to brokered deposits in order to provide longer-term funding to mitigate the impact of potential short-term liquidity fluctuations within the overall financial services industry in the second half of 2008. Brokered deposits increased by approximately $70.9 million during the fourth quarter.
Noninterest bearing deposits increased by $30.3 million during the fourth quarter 2008. As of December 31, 2008, noninterest bearing deposits comprised 25.5% of total deposits as compared to 24.7% at September 30, 2008 and 28.6% at December 31, 2007.
The decreases in total deposits from December 31, 2007 is mostly due to declines in money market and noninterest bearing deposits. These decreases were partially offset by increases in time deposits. Time deposits provide a more defined deposit maturity schedule for asset liability management purposes as compared to overnight or short-term borrowings. Average time deposits were $670.8 million, or 39.8% of total average deposits for the fourth quarter 2008, as compared to $514.3 million, or 27.4% of total average deposits for the fourth quarter 2007. The cost of time deposits decreased from 5.03% for the fourth quarter 2007 to 3.76% for the fourth quarter 2008. Most of the time deposits booked in 2008 have durations of twelve months or less, with $564 million of time deposits maturing in 2009.
Overall borrowings were $166.4 million at December 31, 2008 as compared to $63.7 million at December 31, 2007. The increase is mostly attributable to a decision to complement increased time deposits described above with lower-cost FHLB term advances. The average cost of borrowings for the year ended December 31, 2008 was 3.14% as compared to an average cost of time deposits of 4.17%.
Asset Quality
The following table presents selected asset quality data (excluding loans held for sale) as of the dates indicated:
Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
2008 2008 2008 2008 2007
-----------------------------------------------
(Dollars in thousands)
Nonaccrual loans,
not restructured $54,594 $54,654 $29,742 $20,798 $19,309
Accruing loans past
due 90 days or more 228 324 98 1 527
-----------------------------------------------
Total nonperforming
loans (NPLs) 54,822 54,978 29,840 20,799 19,836
Other real estate
owned 484 1,199 1,910 1,715 3,517
-----------------------------------------------
Total nonperforming
assets (NPAs) $55,306 $56,177 $31,750 $22,514 $23,353
===============================================
Accruing loans past
due 30-89 days $35,169 $20,660 $20,169 $42,682 $28,407
===============================================
Allowance for loan
losses $44,988 $44,765 $26,506 $26,048 $25,711
===============================================
Selected ratios:
NPLs to loans, net of
unearned discount 3.00% 3.09% 1.67% 1.18% 1.11%
NPAs to total assets 2.63% 2.74% 1.35% 0.96% 0.98%
Allowance for loan
losses to NPAs 81.34% 79.69% 83.48% 115.70% 110.10%
Allowance for loan
losses to NPLs 82.06% 81.42% 88.83% 125.24% 129.62%
Allowance for loan
losses to loans, net
of unearned discount 2.46% 2.52% 1.48% 1.48% 1.44%
Loans 30-89 days past
due to loans, net
of unearned discount 1.93% 1.16% 1.13% 2.43% 1.59%
Nonperforming assets decreased by $0.9 million at December 31, 2008 as compared to September 30, 2008, and increased by $32.0 million as compared to December 31, 2007.
The types of nonperforming loans (excluding loans held for sale) as of December 31, 2008 and September 30, 2008 are as follows:
-----------------------------------------------------
Nonperforming Loans
-----------------------------------------------------
December 31, 2008 September 30, 2008
-------------------------- -------------------------
Loan Related Loan Related
Balance Percent Allowance Balance Percent Allowance
-------------------------- -------------------------
(Amounts in thousands)
Residential
Construction,
Land and Land
Development 36,808 67.1% 8,677 $39,963 72.7% $ 9,976
Other Residential
Loan 1,504 2.7% 87 1,683 3.1% 116
Commercial and
Industrial
Loans 10,450 19.1% 1,307 7,416 13.5% 1,735
Commercial Real
Estate 5,963 10.9% 962 5,578 10.1% 962
Other 97 0.2% 31 338 0.6% 36
-------------------------- ------------------------
Total $54,822 100.0% $11,064 $54,978 100.0% $12,825
========================== ========================
The types of loans included in the accruing loans past due 30-89 days as of December 31, 2008 and September 30, 2008 are as follows:
-------------------------------------
Accruing loans past due 30-89 days
-------------------------------------
December 31, 2008 September 30, 2008
----------------- ------------------
Loan Loan
Balance Percent Balance Percent
----------------- ------------------
(Amounts in thousands)
Residential Construction,
Land and Land Development $15,029 42.7% $ 9,967 48.2%
Other Residential Loan 704 2.0% 5,248 25.4%
Commercial and Industrial Loans 16,273 46.3% 3,198 15.5%
Commercial Real Estate 2,334 6.6% 390 1.9%
Other 828 2.4% 1,857 9.0%
----------------- ------------------
Total $35,168 100.0% $20,660 100.0%
================= ==================
Approximately 83% of the accruing loans past due 30-89 days relates to three loan relationships that are in the process of being renewed at year-end.
The Company recorded a provision for loan losses in the fourth quarter 2008 of $1.3 million, as compared to $30.8 million in the third quarter 2008 and $3.0 million in the fourth quarter 2007. The higher third quarter 2008 provision was due primarily to an increase in nonperforming loans during the third quarter 2008 and a corresponding higher specific allocation related to such loans, the impact of charge-offs and the current economic climate on our historical loss and economic concerns components of our allowance.
Net charge-offs in the fourth quarter 2008 were $1.0 million, as compared to $12.5 million in the third quarter 2008, and $1.3 million in the fourth quarter 2007. The third quarter 2008 net charge-offs included $10.8 million specifically related to residential construction, land and land development loans. Impaired loans as of December 31, 2008 totaled $54.8 million, as compared to $55.0 million at the end of the third quarter 2008, and $23.3 million at the end of the fourth quarter 2007.
The allowance for loan losses to total loans outstanding was 2.46% at December 31, 2008, as compared to 2.52% at September 30, 2008 and 1.44% at December 31, 2007.
Stock Repurchase Program
During the fourth quarter 2008, the Company did not repurchase any shares under its stock repurchase program and only repurchased 9,622 shares related to the net settlement of vested, restricted stock awards at a cost of $22,000, or an average price of $2.25 per share. At the beginning of the fourth quarter, the Company had 1,200,000 shares remaining under its stock repurchase program adopted in October 2007, which expired on October 24, 2008. The Company did not implement a new stock repurchase program and does not plan to implement a new stock repurchase program in the near future due to its focus and strategy on strengthening its capital position. As of December 31, 2008, the Company had 52,544,917 shares outstanding, including 1,420,345 shares of unvested stock awards, and 109,214 of shares to be issued under its deferred compensation plan.
Non-GAAP Financial Measures
This press release includes non-GAAP financial measures related to the income statement, including cash net income, cash earnings per share and return on average tangible assets (cash), which exclude the after-tax impact of intangible asset amortization expense.
This press release also includes non-GAAP financial measures related to tangible assets, including return on average tangible assets (cash), tangible book value and tangible equity ratio, which exclude intangible assets.
The Company discloses these non-GAAP financial measures to provide meaningful supplemental information regarding the Company's operational performance and to enhance investors' overall understanding of the Company's core financial performance. Management believes that these non-GAAP financial measures allow for additional transparency and are used by some investors, analysts and other users of the Company's financial information as performance measures. These non-GAAP financial measures are presented for supplemental informational purposes only for understanding the Company's operating results 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 cash net income and return on tangible net assets (cash) to their respective GAAP measure as of the dates indicated:
------------------------------------
Quarter Ended
------------------------------------
Dec. 31, Sept. 30, Dec. 31,
2008 2008 2007
------------------------------------
(In thousands, except per share data)
GAAP net income (loss) $ 3,824 $ (265,829) $ (138,210)
Add: Impairment of goodwill -- 250,748 142,210
Add: Amortization of intangible
assets 1,803 1,877 2,132
Less: Income tax effect (686) (713) (810)
------------------------------------
Cash net income (loss) $ 4,941 $ (13,917) $ 5,322
====================================
Weighted average shares - diluted 51,116,291 51,067,439 51,559,554
Earnings (loss) per share -
diluted $ 0.07 $ (5.21) $ (2.68)
Add: Amortization of intangible
assets (after tax effect) 0.03 4.94 2.78
------------------------------------
Cash earnings (loss) per share $ 0.10 $ (0.27) $ 0.10
====================================
Return on tangible net assets
(cash)
Cash net income (loss) $ 4,941 $ (13,917) $ 5,322
------------------------------------
Average total assets $2,099,519 $2,351,913 $2,482,352
Less: Average intangible assets (26,374) (276,257) (331,082)
------------------------------------
Average tangible assets $2,073,145 $2,075,656 $2,151,270
------------------------------------
Return on average assets - GAAP
net income (loss) divided by
total average assets 0.72% (44.96%) (22.09%)
====================================
Return on average tangible
assets (cash) - cash net income
(loss) divided by average
tangible assets 0.95% (2.67%) 0.98%
====================================
---------------------------
Year Ended
---------------------------
December 31, December 31,
2008 2007
---------------------------
(In thousands, except
per share data)
GAAP net income (loss) $ (256,736) $ (138,092)
Add: Impairment of goodwill 250,748 142,210
Add: Amortization of intangible
assets 7,434 8,666
Less: Income tax effect (2,826) (3,295)
---------------------------
Cash net income (loss) $ (1,380) $ 9,489
===========================
Weighted average shares - diluted 51,044,372 53,109,307
Earnings (loss) per share - diluted $ (5.03) $ (2.60)
Add: Amortization of intangible assets
(after tax effect) 5.00 2.78
---------------------------
Cash earnings (loss) per share $ (0.03) $ 0.18
===========================
Return on tangible net assets
(cash)
Cash net income (loss) $ (1,380) $ 9,489
---------------------------
Average total assets $ 2,295,108 $ 2,611,973
Less: Average intangible assets (216,219) (406,012)
---------------------------
Average tangible assets $ 2,078,889 $ 2,205,961
---------------------------
Return on average assets - GAAP net
income (loss) divided by total
average assets (11.19%) (5.29%)
===========================
Return on average tangible assets (cash)
- cash net income (loss) divided by
average tangible assets (0.07%) 0.43%
===========================
The following non-GAAP schedule reconciles the book value per share to the tangible book value per share and the tangible equity ratio as of the dates indicated:
December 31, September 30, December 31,
2008 2008 2007
--------------------------------------
(Dollars in thousands, except
per share amounts)
Tangible Book Value per Share
Stockholders' equity $ 161,580 $ 154,406 $ 418,654
Less: Intangible assets (25,500) (27,302) (283,681)
---------------------------------------
Tangible equity $ 136,080 $ 127,104 $ 134,973
=======================================
Number of shares outstanding
and to be issued 52,654,131 52,661,738 52,616,991
Book value per share $ 3.07 $ 2.93 $ 7.96
Tangible book value per share $ 2.58 $ 2.41 $ 2.57
Tangible Equity Ratio
Total assets $ 2,102,741 $ 2,052,944 $ 2,371,664
Less: Intangible assets (25,500) (27,302) (283,681)
---------------------------------------
Tangible assets $ 2,077,241 $ 2,025,642 $ 2,087,983
=======================================
Equity ratio - GAAP
(stockholders' equity /
total assets) 7.68% 7.52% 17.65%
Tangible equity ratio
(tangible equity / tangible
assets) 6.55% 6.27% 6.46%
About Guaranty Bancorp
Guaranty Bancorp is a bank holding company that operates 34 branches in Colorado through a single bank, Guaranty Bank and Trust Company. The bank provides banking and other financial services including real estate, construction, commercial and industrial, energy, consumer and agricultural loans throughout its targeted Colorado markets to consumers and small to medium-sized businesses, including the owners and employees of those businesses. The bank also provides trust services, including personal trust administration, estate settlement, investment management accounts and self-directed IRAs. More information about Guaranty Bancorp can be found at http://www.gbnk.com.
Forward-Looking Statements
Certain statements contained in this press release, including, without limitation, statements containing the words ``believes'', ``anticipates'', ``intends'', ``expects'', and words of similar import, constitute ``forward-looking statements'' within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. 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: 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; costs and uncertainties related to the outcome of pending litigation; changes in business strategy or development plans; changes that occur in the securities markets; changes in governmental legislation or regulation; changes in credit quality; the availability of capital to fund the expansion of the Company's business; the failure to obtain approval to participate in the U.S. Treasury's Capital Purchase Program and, if such approval is obtained, the failure to complete the sale of preferred stock under such program; economic, political and global changes arising from natural disasters; the war on terrorism; conflicts in the Middle East; and additional ``Risk Factors'' referenced in the Company's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission, as supplemented from time to time. When relying on forward-looking statements to make decisions with respect to the Company, investors and others are cautioned to consider these and other risks and uncertainties. The Company can give no assurance that any goal or plan or expectation set forth in forward-looking statements can be achieved and readers are cautioned not to place undue reliance on such statements, which speak only as of the date made. The forward-looking statements are made as of the date of this press release, and the Company does not intend, and assumes no obligation, to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements.
GUARANTY BANCORP AND SUBSIDIARIES
Unaudited Consolidated Balance Sheets
December 31, September 30, December 31,
2008 2008 2007
---------------------------------------
(In thousands)
Assets
Cash and due from banks $ 32,189 $ 37,548 $ 51,611
Federal funds sold 13,522 3,799 745
---------------------------------------
Cash and cash equivalents 45,711 41,347 52,356
---------------------------------------
Securities available for sale,
at fair value 102,874 97,250 118,964
Securities held to maturity 13,114 13,556 14,889
Bank stocks, at cost 28,276 32,843 32,464
---------------------------------------
Total investments 144,264 143,649 166,317
---------------------------------------
Loans, net of unearned
discount 1,826,333 1,779,673 1,781,647
Less allowance for loan
losses (44,988) (44,765) (25,711)
---------------------------------------
Net loans 1,781,345 1,734,908 1,755,936
---------------------------------------
Loans, held for sale 5,760 -- 492
Premises and equipment, net 63,018 63,973 69,981
Other real estate owned and
foreclosed assets 484 1,199 3,517
Goodwill -- -- 250,748
Other intangible assets, net 25,500 27,302 32,933
Other assets 36,659 40,566 39,384
---------------------------------------
Total assets $ 2,102,741 $ 2,052,944 $ 2,371,664
=======================================
Liabilities and Stockholders'
Equity
Liabilities:
Deposits:
Noninterest-bearing demand $ 433,761 $ 403,495 $ 515,299
Interest-bearing demand 460,856 625,855 732,156
Savings 68,064 68,910 71,944
Time 735,970 536,841 480,108
---------------------------------------
Total deposits 1,698,651 1,635,101 1,799,507
---------------------------------------
Securities sold under
agreements to repurchase and
federal fund purchases 21,781 42,604 23,617
Borrowings 166,404 166,508 63,715
Subordinated debentures 41,239 41,239 41,239
Interest payable and other
liabilities 13,086 13,086 24,932
---------------------------------------
Total liabilities 1,941,161 1,898,538 1,953,010
---------------------------------------
Stockholders' equity:
Common stock 65 65 64
Additional paid-in capital 617,188 616,973 617,611
Shares to be issued for
deferred compensation
obligations 710 664 573
Accumulated deficit (352,003) (355,826) (95,196)
Accumulated other
comprehensive loss (1,302) (4,385) (1,472)
Treasury Stock (103,078) (103,085) (102,926)
---------------------------------------
Total stockholders' equity 161,580 154,406 418,654
---------------------------------------
Total liabilities and
stockholders' equity $ 2,102,741 $ 2,052,944 $ 2,371,664
=======================================
GUARANTY BANCORP AND SUBSIDIARIES
Unaudited Consolidated Statements of Income
------------------------ ------------------------
Three Months Ended Year Ended
December 31, December 31,
------------------------ ------------------------
2008 2007 2008 2007
--------------------------------------------------
(Dollars in thousands, except per share data)
Interest income:
Loans, including
fees $ 26,022 $ 36,020 $ 112,844 $ 153,214
Investment
securities:
Taxable 779 669 2,991 2,515
Tax-exempt 788 1,102 3,404 5,193
Dividends 301 429 1,647 1,853
Federal funds
sold and other 84 322 426 914
------------------------ ------------------------
Total interest
income 27,974 38,542 121,312 163,689
------------------------ ------------------------
Interest expense:
Deposits 7,902 12,576 32,562 53,594
Federal funds
purchased and
repurchase
agreements 85 213 527 1,390
Borrowings 1,402 627 5,333 2,700
Subordinated
debentures 906 942 3,328 3,756
------------------------ ------------------------
Total interest
expense 10,295 14,358 41,750 61,440
------------------------ ------------------------
Net interest
income 17,679 24,184 79,562 102,249
Provision for
loan losses 1,250 3,025 33,775 24,666
------------------------ ------------------------
Net interest
income, after
provision for
loan losses 16,429 21,159 45,787 77,583
Noninterest
income:
Customer service
and other fees 2,357 2,267 9,682 9,509
Gain on sale of
securities -- -- 138 --
Other, net (91) 665 800 1,187
------------------------ ------------------------
Total
noninterest
income 2,266 2,932 10,620 10,696
Noninterest
expense:
Salaries and
employee
benefits 6,255 8,442 31,086 39,179
Occupancy
expense 1,725 1,781 7,815 7,813
Furniture and
equipment 1,203 1,205 5,290 4,864
Impairment of
goodwill -- 142,210 250,748 142,210
Amortization of
intangible
assets 1,803 2,132 7,434 8,666
Other general
and
administrative 4,381 4,278 17,283 23,824
------------------------ ------------------------
Total
noninterest
expense 15,367 160,048 319,656 226,556
------------------------ ------------------------
Income (loss)
before income
taxes 3,328 (135,957) (263,249) (138,277)
Income tax
expense
(benefit) (496) 2,253 (6,513) (185)
------------------------ ------------------------
Net income
(loss) $ 3,824 $ (138,210) $ (256,736) $ (138,092)
======================== ========================
Earnings (loss)
per share-basic: $ 0.07 $ (2.68) $ (5.03) $ (2.60)
Earnings (loss)
per share-
diluted: 0.07 (2.68) (5.03) (2.60)
Weighted average
shares
outstanding-
basic 51,116,291 51,559,554 51,044,372 53,109,307
Weighted average
shares
outstanding-
diluted 51,116,291 51,559,554 51,044,372 53,109,307
Guaranty Bancorp and Subsidiaries
Unaudited Consolidated Average Balance Sheets
-------------------------------- ---------------------
QTD Average YTD Average
-------------------------------- ---------------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
2008 2008 2007 2008 2007
-------------------------------- ---------------------
(In thousands)
Assets
Interest
earning
assets
Loans, net
of
unearned
discount $1,825,489 $1,807,325 $1,823,363 $1,797,357 $1,871,703
Securities 141,005 155,259 178,218 154,548 188,850
Other
earning
assets 13,022 1,662 19,715 14,763 13,016
-------------------------------- ---------------------
Average
earning
assets 1,979,516 1,964,246 2,021,296 1,966,668 2,073,569
Other assets 120,003 387,667 461,056 328,440 538,404
-------------------------------- ---------------------
Total average
assets $2,099,519 $2,351,913 $2,482,352 $2,295,108 $2,611,973
================================ =====================
Liabilities
and
Stockholders'
Equity
Average
liabilities:
Average
deposits:
Noninterest-
bearing
deposits $ 410,663 $ 426,128 $ 487,805 $ 440,359 $ 476,876
Interest-
bearing
deposits 1,275,220 1,220,755 1,391,045 1,242,425 1,435,778
-------------------------------- ---------------------
Average
deposits 1,685,883 1,646,883 1,878,850 1,682,784 1,912,654
Other interest
-bearing
liabilities 241,453 263,625 112,402 236,156 118,979
Other
liabilities 15,001 17,838 23,220 19,522 28,808
-------------------------------- ---------------------
Total average
liabilities 1,942,337 1,928,346 2,014,472 1,938,462 2,060,441
Average
stockholders'
equity 157,182 423,567 467,880 356,646 551,532
-------------------------------- ---------------------
Total average
liabilities
and
stockholders'
equity $2,099,519 $2,351,913 $2,482,352 $2,295,108 $2,611,973
================================ =====================
Guaranty Bancorp
Unaudited Credit Quality Measures
Quarter Ended
------------------------------------------------
Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
2008 2008 2008 2008 2007
------------------------------------------------
(Dollars in thousands)
Nonaccrual loans
and leases, not
restructured $ 54,594 $ 54,654 $ 29,742 $ 20,798 $ 19,309
Accruing loans past
due 90 days or
more 228 324 98 1 527
Foreclosed assets 484 1,199 1,910 1,715 3,517
------------------------------------------------
Total
nonperforming
assets $ 55,306 $ 56,177 $ 31,750 $ 22,514 $ 23,353
------------------------------------------------
Nonperforming
loans $ 54,822 $ 54,978 $ 29,840 $ 20,799 $ 19,836
Other impaired
loans -- -- -- -- 3,492
------------------------------------------------
Total impaired
loans 54,822 54,978 29,840 20,799 23,328
Allocated
allowance for
loan losses (11,064) (12,825) (6,295) (5,368) (4,283)
------------------------------------------------
Net
investment in
impaired loans $ 43,758 $ 42,153 $ 23,545 $ 15,431 $ 19,045
================================================
Charged-off loans $ 2,031 $ 12,779 $ 673 $ 743 $ 1,729
Recoveries (1,005) (288) (231) (205) (436)
------------------------------------------------
Net charge-offs $ 1,026 $ 12,491 $ 442 $ 538 $ 1,293
================================================
Provision for
loan loss $ 1,250 $ 30,750 $ 900 $ 875 $ 3,025
================================================
Allowance for
loan losses $ 44,988 $ 44,765 $ 26,506 $ 26,048 $ 25,711
================================================
Allowance for loan
losses to loans,
net of unearned
discount 2.46% 2.52% 1.48% 1.48% 1.44%
Allowance for loan
losses to
nonaccrual loans 82.41% 81.91% 89.12% 125.24% 133.16%
Allowance for loan
losses to
nonperforming
assets 81.34% 79.69% 83.48% 115.70% 110.10%
Allowance for loan
losses to
nonperforming
loans 82.06% 81.42% 88.83% 125.24% 129.62%
Nonperforming
assets to loans,
net of unearned
discount, and
other real estate
owned 3.03% 3.15% 1.77% 1.28% 1.31%
Nonperforming assets
to total assets 2.63% 2.74% 1.35% 0.96% 0.98%
Nonaccrual
loans to loans,
net of unearned
discount 2.99% 3.07% 1.66% 1.18% 1.08%
Nonperforming loans
to loans, net of
unearned discount 3.00% 3.09% 1.67% 1.18% 1.11%
Annualized net
charge-offs to
average loans 0.22% 2.75% 0.10% 0.12% 0.28%
Contact:
Guaranty Bancorp
Daniel M. Quinn, President & Chief Executive Officer
303/313-6736
Paul W. Taylor, E.V.P. & Chief Financial Officer
303/293-5563
1331 Seventeenth Street, Suite 300
Denver, CO 80202
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