Guaranty Bancorp Announces 2013 Second Quarter Financial Results

Marketwired

DENVER, CO--(Marketwired - Jul 17, 2013) - Guaranty Bancorp ( NASDAQ : GBNK )

  • Net income growth of $1.5 million from prior linked quarter, or 68.0%
  • Year-to-date loan growth of $81.8 million, or 14.2% annualized
  • Significantly improved tax-equivalent efficiency ratio to 65.6% from 73.4% in the prior linked quarter
  • Favorable decline in nonperforming assets of 35.3% during the second quarter
  • Paid first dividend of 2.5 cents per share in May 2013

Guaranty Bancorp ( NASDAQ : GBNK ), a community bank holding company based in Colorado, today announced second quarter 2013 net income of $3.8 million, or $0.18 earnings per basic and diluted common share. Net income for the same quarter in 2012 was $6.2 million, or $0.30 earnings per basic and diluted common share (1) . The second quarter 2012 net income was impacted by two significant items -- a $5.7 million reversal of expense related to the remaining deferred tax valuation allowance, partially offset by a $2.8 million impairment on bank facilities. The Company's pre-tax operating earnings (2) of $5.3 million in the second quarter 2013 improved by $1.7 million compared to the same quarter in 2012. 

The $1.7 million increase in pre-tax operating earnings in the second quarter 2013 as compared to the same quarter in the prior year was due mostly to a $0.4 million increase in net interest income due primarily to lower interest costs; $0.4 million of increased asset management fees resulting from the purchase of Private Capital Management ("PCM") in July 2012; $0.3 million in increased gain on sale of SBA loans and a net reduction in noninterest expense.

"The experienced team we have assembled is successfully executing on our business strategies by attracting new customers and expanding current relationships across our markets," said Paul W. Taylor, President and CEO. "In addition, our continued focus on driving noninterest income and managing our expenses resulted in a $1.5 million increase to our net income for the quarter. As the Colorado economy continues to improve, we are seeing greater business and consumer confidence as evidenced by elevated utilization of our outstanding lines of credit."

Mr. Taylor continued, "We grew loans by 14.2% for the first six months of 2013, annualized, while maintaining our overall net interest margin during the same period. Commercial loan growth continues to be strong with a 27.9% annualized increase for the first six months of 2013. Our nonperforming assets declined 35.3% to $26.0 million resulting in a decline in nonperforming assets as a percentage of total assets to 1.4% from 2.2% at the end of the prior quarter. Our tax-equivalent efficiency ratio improved to 65.6% from 73.4% during the second quarter due to the combination of our reduced credit costs; strong loan growth and significant increases in noninterest income."

For the six months ending June 30, 2013, pre-tax operating earnings increased $2.1 million to $9.4 million as compared to $7.3 million for the six months ending June 30, 2012. The increase in pre-tax operating earnings was mostly due to a $1.6 million improvement in noninterest income, due to a $1.0 million increase in investment advisory fees and increases in other service fee income, as well as a $0.4 million increase in net interest income. For the six months ending June 30, 2013, net income was $6.1 million, or $0.29 earnings per basic and diluted share compared to net income of $9.1 million, or $0.44 earnings per basic and diluted share for the same period in 2012. The net income for the first six months of 2012 included a $5.7 million reversal of the remaining deferred tax valuation allowance, partially offset by a $2.8 million impairment on bank facilities during the second quarter 2012.

(1)  Share and per share numbers used throughout this release, including earnings per share, tangible book value per share and book value per share reflect the Company's 1-for-5 reverse stock split, which was effective May 20, 2013.
(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, acquisition, reorganization and integrations 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     Six Months Ended  
    June 30,     March 31,     June 30,     June 30,     June 30,  
    2013     2013     2012     2013     2012  
       (Dollars in thousands, except per share amounts)  
Net income   $ 3,818     $ 2,272     $ 6,192     $ 6,090     $ 9,109  
Earnings per common share   $ 0.18     $ 0.11     $ 0.30     $ 0.29     $ 0.44  
Return on average assets     0.83 %     0.51 %     1.46 %     0.67 %     1.09 %
Net interest margin     3.61 %     3.61 %     3.86 %     3.61 %     3.90 %
Efficiency ratio (tax equivalent)     65.62 %     73.39 %     74.70 %     69.38 %     73.74 %
                                         
                                         

Balance Sheet

                               
                               
    June 30,     December 31,     Percent     June 30,     Percent  
    2013     2012     Change     2012     Change  
    (Dollars in thousands, except per share amounts)  
Cash and cash equivalents   $ 30,613     $ 163,217     (81.2) %   $ 137,133     (77.7) %
Total investments     484,971       458,927     5.7 %     398,151     21.8 %
Total loans, net of unearned loan fees     1,240,555       1,158,749     7.1 %     1,110,161     11.7 %
Allowance for loan losses     (20,218 )     (25,142 )   (19.6) %     (29,307 )   (31.0) %
Total assets     1,866,128       1,886,938     (1.1) %     1,750,539     6.6 %
Average earning assets, quarter-to-date     1,746,949       1,740,273     0.4 %     1,602,777     9.0 %
Average assets, quarter-to-date     1,848,644       1,843,212     0.3 %     1,706,862     8.3 %
Total deposits     1,449,251       1,454,756     (0.4) %     1,378,937     5.1 %
Book value per common share     8.66       8.89     (2.6) %     8.48     2.1 %
Tangible book value per common share     8.29       8.45     (1.9) %     8.08     2.6 %
Equity ratio - GAAP     9.93 %     9.97 %   (0.4) %     10.29 %   (3.5) %
Tangible common equity ratio     9.55 %     9.53 %   0.2 %     9.85 %   (3.0) %
Total risk-based capital ratio     14.96 %     16.27 %   (8.1) %     16.50 %   (9.3) %
                                     
                                     

Net Interest Income and Margin

                               
                               
    Three Months Ended     Six Months Ended  
    June 30,     March 31,     June 30,     June 30,     June 30,  
    2013     2013     2012     2013     2012  
    (Dollars in thousands)  
Net interest income   $ 15,739     $ 15,378     $ 15,383     $ 31,117     $ 30,683  
Interest rate spread     3.41 %     3.35 %     3.53 %     3.38 %     3.57 %
Net interest margin     3.61 %     3.61 %     3.86 %     3.61 %     3.90 %
Net interest margin, fully tax equivalent     3.72 %     3.72 %     3.95 %     3.72 %     3.99 %
Average cost of deposits (including noninterest bearing deposits)     0.17 %     0.18 %     0.21 %     0.18 %     0.22 %
                                         
                                         

Net interest income increased by $0.4 million to $15.7 million in the second quarter 2013 compared to the first quarter 2013, and increased by $0.4 million compared to the second quarter 2012. Second quarter 2013 net interest margin remained consistent with the first quarter 2013 at 3.61% and decreased 25 basis points from 3.86% in the second quarter 2012.

Second quarter 2013 net interest margin was unchanged as compared to the prior linked quarter. The decline in net interest margin in the second quarter 2013 as compared to the same quarter in 2012 was the result of a 43 basis point decline in the yield on earnings assets, partially offset by a 31 basis point decline in the cost of interest bearing liabilities.

The increase in net interest income of $0.4 million in the second quarter 2013 as compared to the prior linked quarter was the result of an increase in interest income of $0.2 million and a decline in interest expense of $0.2 million. The increase in interest income as compared to prior quarter was mostly due to an increase in average loans of $50.7 million. The decline in interest expense as compared to prior quarter was primarily due to the prepayment of $15.0 million in fixed, high-cost trust preferred securities ("TruPS") and related subordinated debentures in the first quarter 2013.

The increase in net interest income of $0.4 million in the second quarter 2013 as compared to the same quarter in 2012 was the result of a decline in interest expense of $0.6 million, partially offset by a $0.2 million decrease in interest income. The decrease in interest expense as compared to the second quarter 2012 was primarily the result of the prepayment of $15.0 million in fixed, high-cost TruPS and related subordinated debentures in the first quarter 2013 as well as a two basis point decrease in the average cost of deposits.

Net interest income increased $0.4 million for the first six months of 2013 to $31.1 million from $30.7 million for the same period in 2012 due mostly to lower interest costs. Net interest margin declined 29 basis points to 3.61% for the first six months in 2013 from 3.90% for the first six months in 2012. Interest expense decreased $1.1 million, or 22.3%, in the first six months of 2013 as compared to the same period in 2012 mostly due to the prepayment of $15.0 million in fixed, high-cost TruPS and related subordinated debentures in the first quarter 2013 combined with a decline in the average interest bearing liabilities of seven basis points to 0.28% in the first six months of 2013 from 0.35% for the same period in 2012. The decline in interest expense for the first six months of 2013 as compared to the same period in 2012 was partially offset by lower interest income caused by lower yields on earning assets. 

Noninterest Income

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

                     
                 
    Three Months Ended   Six Months Ended
    June 30,
2013
  March 31,
2013
  June 30,
2012
  June 30,
2013
  June 30,
2012
    (In thousands)
Noninterest income:                              
  Customer service and other fees   $ 3,018   $ 2,620   $ 2,382   $ 5,638   $ 4,653
  Gain on sale of securities     54     -     342     54     964
  Gain on sale of SBA loans     287     136     -     423     -
  Other     352     194     187     546     393
  Total noninterest income   $ 3,711   $ 2,950   $ 2,911   $ 6,661   $ 6,010
                                 
                                 

Noninterest income improved $0.8 million, or 25.8% to $3.7 million in the second quarter 2013 as compared to both the prior linked quarter and the same quarter in 2012. The increase in noninterest income as compared to the prior linked quarter was mostly due to an improvement in customer service fees of $0.4 million, net gains on sales of small business administration loans ("SBA") of $0.2 million, gains on sales of securities of $0.1 million and an increase of $0.1 million related to the purchase of an additional $15.0 million in bank owned life insurance ("BOLI") during the second quarter 2013. The increase in customer service fees of $0.4 million during the second quarter 2013 was mostly related to service fee increases, an improvement in card interchange income and increased fee income generated by PCM, mostly due to growth in assets under management.

The improvement in noninterest income of $0.8 million in the second quarter 2013 as compared to the same quarter in 2012 was mostly due to a $0.4 million increase in fee income generated by PCM, which was acquired in July 2012, an increase in gains on sales of SBA loans of $0.3 million and an increase in other noninterest income of $0.2 million, mostly related to the purchase of an additional $15.0 million in BOLI during the second quarter 2013. These favorable increases were partially offset by a decline in net gains on sales of securities of $0.3 million.

Assets under management by PCM increased by $20.6 million, or 9.7%, to $232.8 million as of June 30, 2013 as compared to $212.2 million at March 31, 2013, and increased by $68.1 million, or 41.3%, since acquisition in July 2012. PCM has contributed approximately $1.3 million to noninterest income since acquisition. 

Excluding net gains on sales of securities of $0.9 million, noninterest income increased $1.6 million to $6.6 million as compared to $5.0 million during the same period in the prior year. This increase was primarily due to an increase in customer service fees of $1.0 million, mostly related to PCM fees of $0.7 million and increased analysis and card interchange income; gains on sales of SBA loans of $0.4 million, and an increase in BOLI income of $0.1 million due to the $15.0 million purchase of additional BOLI during the second quarter 2013.

Noninterest Expense

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

                       
                   
    Three Months Ended   Six Months Ended
    June 30,
2013
    March 31,
2013
  June 30,
2012
  June 30,
2013
  June 30,
2012
    (In thousands)
Noninterest expense:                                
  Salaries and employee benefits   $ 7,213     $ 7,441   $ 6,614   $ 14,654   $ 13,471
  Occupancy expense     1,598       1,612     1,972     3,210     3,991
  Furniture and equipment     745       761     783     1,506     1,604
  Amortization of intangible assets     706       707     761     1,413     1,523
  Other real estate owned     (257 )     334     461     77     813
  Insurance and assessment     641       608     881     1,249     1,689
  Professional fees     853       911     856     1,764     1,484
  Prepayment penalty on long term debt     -       629     -     629     -
  Impairment of long-lived assets     -       -     2,750     -     2,750
  Other general and administrative     2,380       2,189     2,438     4,569     4,673
  Total noninterest expense   $ 13,879     $ 15,192   $ 17,516   $ 29,071   $ 31,998
                                   
                                   

Noninterest expense decreased $1.3 million to $13.9 million in the second quarter 2013 as compared to $15.2 million in the first quarter 2013 and decreased $3.6 million as compared to $17.5 million in the second quarter 2012.

The decrease in noninterest expense in the second quarter 2013 as compared to the prior linked quarter was primarily due to declines in OREO expenses of $0.6 million, related to net gains on sales and declines in valuation adjustments of several properties and the prepayment penalty of $0.6 million on the early redemption of $15.0 million of fixed, high-cost TruPS and related subordinated debentures during the first quarter 2013.

Excluding the impairment on long-lived assets of $2.8 million related to the closure of two branches in 2012, the decrease in noninterest expense of $0.9 million in the second quarter 2013 as compared to the same quarter in the prior year was mostly due to declines in OREO expenses of $0.7 million, related to net gains on sales and declines in valuation adjustments on several properties and a decline in occupancy expense of $0.4 million, primarily related to branch closures in 2012. These declines in noninterest expense were partially offset with increases in salary and employee benefit expense of $0.6 million, largely due to timing differences in our self-funded medical plan and base salary increases in 2013.

Excluding the impairment on long-lived assets of $2.8 million recognized in June 2012 and the prepayment penalty of $0.6 million on the early redemption of certain of our TruPS and related subordinated debentures recognized in March 2013, discussed above, noninterest expense decreased $0.8 million, or 2.8% for the first six months of 2013 as compared to the same period in 2012. This decrease was mostly related to declines in occupancy expense of $0.8 million, primarily due to the closure of six branches during 2012; OREO expenses of $0.7 million, related to an increase in net gains on sales; and lower insurance and assessments of $0.4 million, primarily due to decreased FDIC premiums. Partially offsetting these decreases in noninterest expense was an increase in salary and employee benefits of $1.2 million, primarily due to increased base salaries and incentives, increases in equity compensation expense and timing differences in our self-funded medical plan.

Balance Sheet

                               
                               
    June 30,     December 31,     Percent     June 30,     Percent  
    2013     2012     Change     2012     Change  
    (Dollars in thousands, except per share amounts)  
Total assets   $ 1,866,128     $ 1,886,938     (1.1) %   $ 1,750,539     6.6 %
Average assets, quarter-to-date     1,848,644       1,843,212     0.3 %     1,706,862     8.3 %
Total loans, net of unearned loan fees     1,240,555       1,158,749     7.1 %     1,110,161     11.7 %
Total deposits     1,449,251       1,454,756     (0.4) %     1,378,937     5.1 %
                                     
Equity ratio - GAAP     9.93 %     9.97 %   (0.4) %     10.29 %   (3.5) %
Tangible common equity ratio     9.55 %     9.53 %   0.2 %     9.85 %   (3.0) %
                                     
                                     

At June 30, 2013, the Company had total assets of $1.9 billion, which represented a $20.8 million decrease as compared to December 31, 2012 and a $115.6 million increase as compared to June 30, 2012. The decrease in total assets from year end 2012 consisted primarily of decreases in cash and time deposits with banks of $135.6 million and OREO of $13.1 million. These declines were mostly offset by increases in loans, net of unearned fees, of $81.8 million, investments of $26.0 million, BOLI of $15.3 million and a decrease in the allowance for loan losses of $4.9 million. As compared to June 30, 2012, the increase in total assets was mostly due to increases in loans, net of unearned fees, of $130.4 million, investments of $86.8 million, BOLI of $15.6 million and a decrease in the allowance for loan losses of $9.1 million. These increases were partially offset by decreases in cash and time deposits with banks of $106.5 million and OREO of $18.2 million.

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

                   
                   
    June 30,   March 31,   December 31,   June 30,  
    2013   2013   2012   2012  
    (In thousands)  
Commercial and residential real estate   $ 787,210   $ 760,735   $ 737,537   $ 730,324  
Construction     71,833     63,732     72,842     46,413  
Commercial     270,069     246,883     237,199     216,974  
Agricultural     10,922     9,787     9,417     10,712  
Consumer     63,368     62,828     63,095     64,976  
SBA     35,548     35,671     37,207     39,089  
Other     2,625     2,361     3,043     3,458  
Gross loans     1,241,575     1,181,997     1,160,340     1,111,946  
Unearned loan fees     (1,020 )   (1,390 )   (1,591 )   (1,785 )
Loans, net of unearned loan fees   $ 1,240,555   $ 1,180,607   $ 1,158,749   $ 1,110,161  
                           
                           

For the quarter ending June 30, 2013, loans, net of unearned fees grew $59.9 million, or 5.1% as compared to the prior linked quarter and grew $81.8 million as compared to December 31, 2012, or 14.2% on an annualized basis. As compared to the second quarter 2012, loans, net of unearned fees, grew $130.4 million, or 11.7%. The growth in loans was primarily the result of new customer acquisition, reflected in continued growth in new commitments, supplemented by increased utilization of existing lines of credit and declining loan payoffs.

On a linked quarter basis, the increase in loans during the second quarter 2013 was primarily due to increases in commercial and residential real estate loans of $26.5 million, mostly as a result of growth in jumbo mortgages of $25.2 million combined with growth in commercial loans of $23.2 million.

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

                 
                 
    June 30,   March 31,   December 31,   June 30,
    2013   2013   2012   2012
    (In thousands)
Noninterest bearing deposits   $ 505,782   $ 520,008   $ 564,215   $ 546,229
Interest-bearing demand and NOW     332,541     299,010     285,679     270,940
Money market     319,957     326,767     312,724     280,767
Savings     105,853     107,675     100,704     97,497
Time     185,118     188,857     191,434     183,504
Total deposits   $ 1,449,251   $ 1,442,317   $ 1,454,756   $ 1,378,937
                         
                         

Non-maturing deposits increased $10.7 million in the second quarter 2013 as compared to the first quarter 2013 and increased $68.7 million, or 5.7%, as compared to the second quarter 2012. Time deposits decreased $3.7 million as of June 30, 2013 as compared to March 31, 2013 and increased $1.6 million as compared to June 30, 2012. At June 30, 2013, noninterest-bearing deposits as a percentage of total deposits was 34.9% as compared to 36.1% at March 31, 2013 and 39.6% at June 30, 2012.

During the second quarter 2013, securities sold under agreements to repurchase decreased $35.9 million from March 31, 2013 and increased $11.9 million from June 30, 2012 to $24.9 million at June 30, 2013. The decrease from the first quarter 2013 was primarily related to a single depositor whose balance was re-deployed into the depositor's operations during the second quarter 2013, as expected.

Total borrowings were $167.9 million at June 30, 2013 consisting of $110.2 million of term borrowings and $57.7 million of advances on our line of credit both with the Federal Home Loan Bank ("FHLB"). Total borrowings were $110.2 million at March 31, 2013 and June 30, 2012, respectively, and consisted of term notes with the FHLB. 

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,
2013
    Ratio at
December 31,
2012
    Minimum Capital Requirement     Minimum Requirement for "Well-Capitalized" Institution  
Total Risk-Based Capital Ratio                        
  Consolidated   14.96 %   16.27 %   8.00 %   N/A  
  Guaranty Bank and Trust Company   14.37 %   15.52 %   8.00 %   10.00 %
                         
Tier 1 Risk-Based Capital Ratio                        
  Consolidated   13.71 %   15.02 %   4.00 %   N/A  
  Guaranty Bank and Trust Company   13.12 %   14.26 %   4.00 %   6.00 %
                         
Leverage Ratio                        
  Consolidated   11.46 %   11.93 %   4.00 %   N/A  
  Guaranty Bank and Trust Company   10.97 %   11.35 %   4.00 %   5.00 %
                           
                           

As compared to December 31, 2012, the declines in the consolidated total risk-based capital ratio and Tier 1 risk-based capital ratio was primarily due to the early redemption of $15.0 million of the company's TruPS and related subordinated debentures during the first quarter 2013 and loan growth during the first six months of 2013. The redemption of the TruPS and related subordinated debentures was funded by a dividend from the Bank. All three ratios continue to remain well above the minimum capital requirements for holding companies and well capitalized requirements for banks.

Asset Quality

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

                       
                       
    June 30,   March 31,   December 31,   September 30,   June 30,  
    2013   2013   2012   2012   2012  
    (Dollars in thousands)  
Nonaccrual loans and leases   $ 19,430   $ 31,482   $ 13,692   $ 21,185   $ 21,291  
Accruing loans past due 90 days or more (1)     84     40     224     543     -  
                                 
Total nonperforming loans (NPLs)   $ 19,514   $ 31,522   $ 13,916   $ 21,728   $ 21,291  
Other real estate owned and foreclosed assets     6,460     8,606     19,580     23,532     24,640  
                                 
Total nonperforming assets (NPAs)   $ 25,974   $ 40,128   $ 33,496   $ 45,260   $ 45,931  
                                 
Total classified assets   $ 36,590   $ 52,535   $ 58,635   $ 74,514   $ 77,910  
                                 
Accruing loans past due 30-89 days (1)   $ 6,873   $ 3,686   $ 4,270   $ 7,678   $ 18,448  
                                 
Allowance for loan losses   $ 20,218   $ 24,060   $ 25,142   $ 28,597   $ 29,307  
                                 
Selected ratios:                                
NPLs to loans, net of unearned loan fees     1.57 %   2.67 %   1.20 %   1.94 %   1.92 %
NPAs to total assets     1.39 %   2.18 %   1.78 %   2.47 %   2.62 %
Allowance for loan losses to NPLs     103.61 %   76.33 %   180.67 %   131.61 %   137.65 %
Allowance for loan losses to loans, net of unearned loan fees     1.63 %   2.04 %   2.17 %   2.56 %   2.64 %
Loans 30-89 days past due to loans, net of unearned loan fees     0.55 %   0.31 %   0.37 %   0.69 %   1.66 %
Texas ratio (2)     11.70 %   18.17 %   14.37 %   19.49 %   19.92 %
Classified asset ratio (3)     16.48 %   23.78 %   25.16 %   32.10 %   33.79 %
                                 
                                 

(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) Texas ratio defined as total NPAs divided by subsidiary bank only Tier 1 Capital plus allowance for loan losses.
(3) 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 by class as of the dates indicated:

                     
                     
June 30, 2013   30-89
Days Past
Due
  90 days +
Past Due
and Still
Accruing
  Non-Accrual
Loans
  Total
Past Due
  Total
Loans
    (In thousands)
Commercial and residential real estate   $ 3,762   $ -   $ 5,926   $ 9,688   $ 786,563
Construction     -     -     10,812     10,812     71,774
Commercial     2,958     84     865     3,907     269,847
Consumer     153     -     810     963     63,316
Other     -     -     1,017     1,017     49,055
Total   $ 6,873   $ 84   $ 19,430   $ 26,387   $ 1,240,555
                               
                     
                     
December 31, 2012   30-89
Days Past
Due
  90 days +
Past Due
and Still
Accruing
  Non-Accrual
Loans
  Total
Past Due
  Total
Loans
    (In thousands)
Commercial and residential real estate   $ 832   $ 224   $ 8,034   $ 9,090   $ 736,524
Construction     -     -     -     -     72,742
Commercial     2,671     -     3,005     5,676     236,874
Consumer     140     -     1,332     1,472     63,009
Other     627     -     1,321     1,948     49,600
Total   $ 4,270   $ 224   $ 13,692   $ 18,186   $ 1,158,749
                               
                               

At June 30, 2013, classified assets as a percentage of capital and allowance for loan losses were 16.5%, a favorable decline from 25.2% at December 31, 2012 and 33.8% at June 30, 2012. Overall classified assets declined by $16.0 million, or 30.4%, during the second quarter 2013, and decreased by $41.3 million, or 53.0%, for the twelve months ended June 30, 2013. 

During the second quarter 2013, nonperforming assets decreased $14.2 million as compared to the prior quarter primarily due to the decrease in nonaccrual loans. The decrease in nonaccrual loans was related to a negotiated payoff and partial charge-off of an out-of-state loan participation purchased nearly five years ago.

Net charge-offs in the second quarter 2013 were $3.8 million as compared to $1.1 million in the first quarter 2013 and $1.3 million in the second quarter 2012. The net charge-offs in the second quarter 2013 primarily consisted of a single charge-off of $4.6 million on an out-of-state loan participation previously provided for in our allowance for loan losses, partially offset by $1.1 million in recoveries during the quarter. The coverage ratio, defined as allowance for loan losses divided by nonperforming loans, increased from 76.3% at March 31, 2013 to 103.6% at June 30, 2013. The increase in the coverage ratio reflects the reduction in nonperforming loans, as discussed above.

During the first six months of 2013, the Company did not record a provision for loan losses compared to a $1.5 million provision in the first six months of 2012. The decrease in provision for loan losses over last year reflects an overall improvement in asset quality and declines in net historical charge-offs.

Shares Outstanding

As of June 30, 2013, the Company had 21,392,485 shares of common stock outstanding, consisting of 20,373,485 shares of voting common stock and 1,019,000 shares of non-voting common stock. At June 30, 2013, total common shares outstanding include 520,682 shares of unvested stock awards.

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, and pre-tax operating earnings adjusted for (if any) provision (credit) for loan losses, other real estate owned 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   Six Months Ended
    June 30,   March 31,   June 30,   June 30,   June 30,
    2013   2013   2012   2013   2012
    (Dollars in thousands)
Income before income taxes   $ 5,571   $ 3,136   $ 278   8,707   3,195
Plus:                          
  Provision for loan losses     -     -     500   -   1,500
  Expenses related to other real estate owned, net     (257 )   334     461   77   813
  Prepayment penalty on long term debt     -     629     -   629   -
  Impairment of long-lived assets     -     -     2,750   -   2,750
Less:                      
      Gain on sale of securities     54     -     342   54   964 Pre-tax operating earnings   $ 5,260   $ 4,099   $ 3,647   9,359   7,294                             Weighted basic average common shares outstanding:     20,860,228     20,844,384     20,782,861   20,854,858   20,780,713 Fully diluted average common shares outstanding:     20,941,486     20,917,693     20,847,792   20,934,521   20,857,264                             Pre-tax operating earnings per common share-basic:   $ 0.25   $ 0.20   $ 0.18   0.45   0.35 Pre-tax operating earnings per common share-diluted:   $ 0.25   $ 0.20   $ 0.18   0.45   0.35

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,  
    2013     2012     2012  
    (Dollars in thousands, except per share amounts)  
Total stockholders' equity   $ 185,324     $ 188,200     $ 180,121  
Less: Intangible assets     (7,935 )     (9,348 )     (8,440 )
Tangible common equity   $ 177,389     $ 178,852     $ 171,681  
                         
Number of common shares outstanding     21,392,485       21,169,521       21,243,138  
                         
Book value per common share   $ 8.66     $ 8.89     $ 8.48  
Tangible book value per common share   $ 8.29     $ 8.45     $ 8.08  
                         
                         

Tangible Common Equity Ratio                           

                   
    June 30,     December 31,     June 30,  
    2013     2012     2012  
    (Dollars in thousands, except per share amounts)  
Total stockholders' equity   $ 185,324     $ 188,200     $ 180,121  
Less: Intangible assets     (7,935 )     (9,348 )     (8,440 )
Tangible common equity   $ 177,389       178,852       171,681  
                         
Total assets   $ 1,866,128     $ 1,886,938     $ 1,750,539  
Less: Intangible assets     (7,935 )     (9,348 )     (8,440 )
Tangible assets   $ 1,858,193     $ 1,877,590     $ 1,742,099  
                         
Equity ratio - GAAP (Total stockholders' equity / total assets)     9.93 %     9.97 %     10.29 %
Tangible common equity ratio (Tangible common equity / tangible assets)     9.55 %     9.53 %     9.85 %
                         
                         

About Guaranty Bancorp

Guaranty Bancorp is a bank holding company that operates 28 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 subsidiary 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 Company's operations; general economic and business conditions in those areas in which the Company operates; demographic changes; competition; fluctuations in interest rates; continued ability to attract and employ qualified personnel; ability to receive regulatory approval for the bank subsidiary to declare dividends to the Company; adequacy of the allowance for loan losses, changes in credit quality and the effect of credit quality on the provision for credit losses and allowance for loan losses; changes in governmental legislation or regulation, including, but not limited to, any increase in FDIC insurance premiums; changes in accounting policies and practices; changes in business strategy or development plans; changes in the securities markets; changes in consumer spending, borrowing and savings habits; the availability of capital from private or government sources; competition for loans and deposits and failure to attract or retain loans and deposits; changes in the financial performance and/or condition of our borrowers and the ability of our borrowers to perform under the terms of their loans and terms of other credit agreements; political instability, acts of war or terrorism and natural disasters; and additional "Risk Factors" referenced in the Company's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission, as supplemented from time to time. When relying on forward-looking statements to make decisions with respect to the Company, investors and others are cautioned to consider these and other risks and uncertainties. The Company can give no assurance that any goal or plan or expectation set forth in forward-looking statements can be achieved and readers are cautioned not to place undue reliance on such statements, which speak only as of the date made. The forward-looking statements are made as of the date of this press release, and the Company does not intend, and assumes no obligation, to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements.

 
GUARANTY BANCORP AND SUBSIDIARIES
Unaudited Consolidated Balance Sheets
 
                   
                   
    June 30,     December 31,     June 30,  
    2013     2012     2012  
    (In thousands)  
Assets                        
Cash and due from banks   $ 30,613     $ 163,217     $ 137,133  
Time deposits with banks     5,000       8,000       5,000  
Securities available for sale, at fair value     432,218       413,382       362,039  
Securities held to maturity     34,772       31,283       21,687  
Bank stocks, at cost     17,981       14,262       14,425  
      Total investments     484,971       458,927       398,151  
                         
Loans, net of unearned loan fees     1,240,555       1,158,749       1,110,161  
  Less allowance for loan losses     (20,218 )     (25,142 )     (29,307 )
      Net loans     1,220,337       1,133,607       1,080,854  
Premises and equipment, net     46,265       46,918       47,534  
Other real estate owned and foreclosed assets     6,460       19,580       24,640  
Other intangible assets, net     7,935       9,348       8,440  
Securities sold, not yet settled     -       5,878       -  
Bank owned life insurance     30,902       15,564       15,321  
Other assets     33,645       25,899       33,466  
    Total assets   $ 1,866,128     $ 1,886,938     $ 1,750,539  
                         
Liabilities and Stockholders' Equity                        
Liabilities:                        
  Deposits:                        
    Noninterest-bearing demand   $ 505,782     $ 564,215     $ 546,229  
    Interest-bearing demand and NOW     332,541       285,679       270,940  
    Money market     319,957       312,724       280,767  
    Savings     105,853       100,704       97,497  
    Time     185,118       191,434       183,504  
      Total deposits     1,449,251       1,454,756       1,378,937  
Securities sold under agreement to repurchase and federal funds purchased     24,894       67,040       13,028  
Borrowings     167,903       110,163       110,170  
Subordinated debentures     25,774       41,239       41,239  
Securities purchased, not yet settled     5,000       16,943       12,557  
Interest payable and other liabilities     7,982       8,597       14,487  
      Total liabilities     1,680,804       1,698,738       1,570,418  
                         
Stockholders' equity:                        
  Common stock and Additional paid-in capital - Common stock     706,086       705,389       705,058  
  Accumulated deficit     (412,389 )     (417,957 )     (423,907 )
  Accumulated other comprehensive income (loss)     (5,910 )     3,165       1,333  
  Treasury stock     (102,463 )     (102,397 )     (102,363 )
      Total stockholders' equity     185,324       188,200       180,121  
      Total liabilities and stockholders' equity   $ 1,866,128     $ 1,886,938     $ 1,750,539  
                               
                               
 
GUARANTY BANCORP AND SUBSIDIARIES
Unaudited Consolidated Statements of Operations
 
                   
                   
    Three Months Ended
June 30,
  Six Months Ended
June 30,
 
    2013   2012   2013   2012  
    (In thousands, except share and per share data)  
Interest income:                          
  Loans, including fees   $ 14,104   $ 14,511   $ 28,186   $ 28,993  
  Investment securities:                          
    Taxable     2,322     2,366     4,587     4,759  
    Tax-exempt     786     618     1,579     1,235  
  Dividends     170     153     326     311  
  Federal funds sold and other     67     58     101     100  
    Total interest income     17,449     17,706     34,779     35,398  
Interest expense:                          
  Deposits     615     711     1,250     1,488  
Securities sold under agreement to repurchase and federal funds purchased     11     12     29     24  
  Borrowings     849     827     1,667     1,654  
  Subordinated debentures     235     773     716     1,549  
    Total interest expense     1,710     2,323     3,662     4,715  
    Net interest income     15,739     15,383     31,117     30,683  
Provision for loan losses     -     500     -     1,500  
    Net interest income, after provision for loan losses     15,739     14,883     31,117     29,183  
Noninterest income:                          
  Customer service and other fees     3,018     2,382     5,638     4,653  
  Gain on sale of securities     54     342     54     964  
  Gain on sale of SBA loans     287     -     423     -  
  Other     352     187     546     393  
    Total noninterest income     3,711     2,911     6,661     6,010  
Noninterest expense:                          
  Salaries and employee benefits     7,213     6,614     14,654     13,471  
  Occupancy expense     1,598     1,972     3,210     3,991  
  Furniture and equipment     745     783     1,506     1,604  
  Amortization of intangible assets     706     761     1,413     1,523  
  Other real estate owned, net     (257 )   461     77     813  
  Insurance and assessments     641     881     1,249     1,689  
  Professional fees     853     856     1,764     1,484  
  Prepayment penalty on long term debt     -     -     629     -  
  Impairment of long-lived assets     -     2,750     -     2,750  
  Other general and administrative     2,380     2,438     4,569     4,673  
    Total noninterest expense     13,879     17,516     29,071     31,998  
    Income before income taxes     5,571     278     8,707     3,195  
Income tax expense (benefit)     1,753     (5,914 )   2,617     (5,914 )
    Net income   $ 3,818   $ 6,192   $ 6,090   $ 9,109  
                           
Earnings per common share-basic:   $ 0.18   $ 0.30   $ 0.29   $ 0.44  
Earnings per common share-diluted:     0.18     0.30     0.29     0.44  
                           
Dividend declared per common share:   $ 0.03   $ -   $ 0.03   $ -  
                           
Weighted average common shares outstanding-basic:     20,860,228     20,782,861     20,854,858     20,780,713  
Weighted average common shares outstanding-diluted:     20,941,486     20,847,792     20,934,521     20,857,264  
                           
                           
 
GUARANTY BANCORP AND SUBSIDIARIES
Unaudited Consolidated Average Balance Sheets
 
                     
                     
    QTD Average   YTD Average
    June 30,   December 31,   June 30,   June 30,   June 30,
    2013   2012   2012   2013   2012
    (In thousands)
Assets                              
Interest earning assets                              
  Loans, net of unearned loan fees   $ 1,215,104   $ 1,129,893   $ 1,110,035   $ 1,189,883   $ 1,107,358
  Securities     503,019     451,342     388,959     500,784     383,040
  Other earning assets     28,826     159,038     103,783     47,051     93,446
Average earning assets     1,746,949     1,740,273     1,602,777     1,737,718     1,583,844
Other assets     101,695     102,939     104,085     97,223     103,854
Total average assets   $ 1,848,644   $ 1,843,212   $ 1,706,862   $ 1,834,941   $ 1,687,698
                               
Liabilities and Stockholders' Equity                              
Average liabilities:                              
Average deposits:                              
  Noninterest-bearing deposits   $ 510,596   $ 521,000   $ 502,209   $ 514,583   $ 475,571
  Interest-bearing deposits     923,931     895,729     847,074     910,367     855,684
  Average deposits     1,434,527     1,416,729     1,349,283     1,424,950     1,331,255
Other interest-bearing liabilities     214,856     232,004     175,053     211,539     174,502
Other liabilities     8,280     8,736     6,581     8,604     7,431
Total average liabilities     1,657,663     1,657,469     1,530,917     1,645,093     1,513,188
Average stockholders' equity     190,981     185,743     175,945     189,848     174,510
Total average liabilities and stockholders' equity   $ 1,848,644   $ 1,843,212   $ 1,706,862   $ 1,834,941   $ 1,687,698
                               
                               
 
GUARANTY BANCORP
Unaudited Credit Quality Measures
 
                         
                         
    Quarter Ended  
    June 30,   March 31,   December 31,     September 30,   June 30,  
    2013   2013   2012     2012   2012  
    (Dollars in thousands)  
Nonaccrual loans and leases   $ 19,430   $ 31,482   $ 13,692     $ 21,185   $ 21,291  
Accruing loans past due 90 days or more     84     40     224       543     -  
  Total nonperforming loans   $ 19,514   $ 31,522   $ 13,916     $ 21,728   $ 21,291  
                                   
Other real estate owned and foreclosed assets     6,460     8,606     19,580       23,532     24,640  
  Total nonperforming assets   $ 25,974   $ 40,128   $ 33,496     $ 45,260   $ 45,931  
                                   
Total classified assets   $ 36,590   $ 52,535   $ 58,635     $ 74,514   $ 77,910  
                                   
Nonperforming loans   $ 19,514   $ 31,522   $ 13,916     $ 21,728   $ 21,291  
Performing trouble debt restructurings     2,675     1,268     3,838       -     -  
Allocated allowance for loan losses     (1,524 )   (6,474 )   (2,654 )     (3,774 )   (1,859 )
  Net investment in impaired loans   $ 20,665   $ 26,316   $ 15,100     $ 17,954   $ 19,432  
                                   
Accruing loans past due 30-89 days   $ 6,873   $ 3,686   $ 4,270     $ 7,678   $ 18,448  
                                   
Charged-off loans   $ 4,996   $ 1,523   $ 1,199     $ 1,067   $ 2,062  
Recoveries     (1,154 )   (441 )   (1,244 )     (357 )   (794 )
  Net charge-offs   $ 3,842   $ 1,082   $ (45 )   $ 710   $ 1,268  
                                   
Provision for loan loss   $ -   $ -   $ (3,500 )   $ -   $ 500  
                                   
Allowance for loan losses   $ 20,218   $ 24,060   $ 25,142     $ 28,597   $ 29,307  
                                   
Allowance for loan losses to loans, net of unearned loan fees     1.63 %   2.04 %   2.17 %     2.56 %   2.64 %
Allowance for loan losses to nonaccrual loans     104.06 %   76.42 %   183.63 %     134.99 %   137.65 %
Allowance for loan losses to nonperforming loans     103.61 %   76.33 %   180.67 %     131.61 %   137.65 %
Nonperforming assets to loans, net of unearned loan fees and other real estate owned     2.08 %   3.37 %   2.84 %     3.96 %   4.05 %
Nonperforming assets to total assets     1.39 %   2.18 %   1.78 %     2.47 %   2.62 %
Nonaccrual loans to loans, net of unearned loan fees     1.57 %   2.67 %   1.18 %     1.89 %   1.92 %
Nonperforming loans to loans, net of unearned loan fees     1.57 %   2.67 %   1.20 %     1.94 %   1.92 %
Annualized net charge-offs to average loans     1.27 %   0.38 %   (0.02) %     0.26 %   0.46 %
                                   
                                   
Contact:

Paul W. Taylor
President and Chief Executive Officer
Guaranty Bancorp
1331 Seventeenth Street, Suite 345
Denver, CO 80202
303/293-5563


Christopher G. Treece
E.V.P., Chief Financial Officer and Secretary
Guaranty Bancorp
1331 Seventeenth Street, Suite 345
Denver, CO 80202
303/675-1194

Rates

View Comments (0)