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Guaranty Bancorp Announces 2012 Annual and Fourth Quarter Financial Results

DENVER, CO--(Marketwire - Jan 28, 2013) - Guaranty Bancorp ( NASDAQ : GBNK )

  • Loan growth of $60.6 million, or 5.5% during 2012 
  • Increase in pre-tax net income of $5.5 million, or 87.2%, as compared to 2011
  • Reduction in classified assets of $24.7 million, or 29.6%, during 2012, further reduced by an additional $10.9 million due to the sale of our largest classified asset in January 2013
  • Previously announced redemption of $15.0 million of our trust preferred securities scheduled for first quarter 2013 will reduce interest expense by $1.6 million annually

Guaranty Bancorp ( NASDAQ : GBNK ), a Colorado-based community bank holding company, today reported fourth quarter 2012 net income of $3.1 million, or $0.03 earnings per basic and diluted common share, compared to net income of $2.3 million, or $0.02 earnings per basic and diluted common share in the fourth quarter 2011.

"We could not be more pleased with our performance in 2012," said Paul W. Taylor, President and CEO. "We successfully executed on our business plans to grow loans, increase deposits, and improve our credit quality. Our 2012 loan growth was $60.6 million, or 5.5%, despite a $71.5 million reduction in our purchased loan participations. We also grew our core deposits by $153.6 million, or 13.8% during 2012, further enhancing our high liquidity level. Continued focus on improving our credit quality metrics resulted in a substantial reduction in our classified asset ratio to 25.2% at the end of 2012 as compared to 36.6% at the end of the previous year. On a proforma basis, our classified asset ratio at December 31, 2012 improved to 20.5% after consideration of the sale of our largest classified asset on January 28, 2013."

Taylor continued, "Private Capital Management, the Colorado based investment management firm we acquired in July of 2012, also delivered outstanding results in just five short months. Assets under management grew by $14.5 million, or 8.7%, since the close of the acquisition. Additionally, the firm contributed $0.5 million to noninterest income in 2012. These accomplishments, in addition to a continued focus on enhancing profitability, make Guaranty Bancorp well positioned for further growth in 2013."

The $0.8 million improvement in net income in the fourth quarter 2012 compared to the same quarter in 2011 was primarily due to a $2.3 million increase in pre-tax income, offset by a $1.5 million increase in tax expense. The improvement in pre-tax income was primarily due to a $4.5 million decrease in provision for loan loss, due to improvements in credit quality and reduced charge-off levels, and an increase in noninterest income of $1.0 million, primarily due to increases in customer service fees and gains on sale of securities. These improvements were partially offset by a $3.1 million increase in noninterest expense, primarily driven by a $3.0 million write-down on the Company's single largest other real estate owned ("OREO") property, which was subsequently sold in January 2013.

Earnings per basic and diluted common share improved to $0.14 for the year ended December 31, 2012 as compared to a loss per basic and diluted common share of $0.21 from the prior year. The prior year loss per common share calculation included a non-cash adjustment of approximately $19.8 million, or $0.30 per basic and diluted common share, related to three quarters of paid-in-kind preferred stock dividends and the mandatory accelerated conversion of the Company's Series A Convertible Preferred Stock into common stock in September 2011.

For the year ended December 31, 2012, net income improved by $8.7 million, or 137.1%, to $15.1 million compared to $6.4 million for the year ended December 31, 2011, primarily due to the lower level of provision for loan losses of $7.0 million, attributable to continued improvements in credit quality in 2012; the reversal of the remaining deferred tax asset valuation allowance, discussed below; and the reduction in interest expense of $5.3 million, mostly due to reductions in deposit rates and the early payoff of several Federal Home Loan Bank ("FHLB") borrowings in 2011. These improvements were partially offset by a reduction in interest income of $4.7 million, due to declines in average earning assets yields, an increase in noninterest expense of $1.6 million and a decrease in noninterest income of $0.4 million, primarily due to reductions in net gains on sales of securities. The increase in noninterest expense was due to the net increase in OREO expense of $2.8 million, mostly due to the write-down discussed above, and the impairment related to the closure of two branches of $2.8 million, offset by a decrease in intangible amortization of $1.0 million and the FHLB prepayment penalty of $2.7 million recorded in 2011. 

The Company had a deferred tax asset valuation allowance of $6.6 million at December 31, 2011. During the second quarter 2012, the remaining deferred tax asset valuation allowance of $5.7 million was reversed based on the Company's determination that it was more likely than not that the entire deferred tax asset would be realized. Subsequent to the reversal of the deferred tax asset valuation allowance, the Company resumed recording income tax expense.

Key Financial Measures
Income Statement

  Quarter Ended   Year Ended  
  December 31, 2012   September
30, 2012
  December 31, 2011   December 31, 2012   December 31, 2011  
  (Dollars in thousands, except per share amounts)  
Net income $ 3,120   $ 2,830   $ 2,276   $ 15,059   $ 6,352  
Net income (loss) to common stockholders $ 3,120   $ 2,830   $ 2,276   $ 15,059   $ (13,434 )
Earnings (loss) per common share $ 0.03   $ 0.02   $ 0.02   $ 0.14   $ (0.21 )
Return on average assets   0.67 %   0.63 %   0.54 %   0.86 %   0.36 %
Net interest margin   3.48 %   3.46 %   3.86 %   3.67 %   3.61 %
Efficiency ratio (tax equivalent)   88.16 %   71.56 %   74.84 %   77.05 %   77.75 %
                               

Balance Sheet

  December
31, 2012
  September 30, 2012   % Change     December
31, 2011
  % Change  
  (Dollars in thousands, except per share amounts)  
Cash and cash equivalents $ 121,217   $ 127,823   (5.2 )%   $ 109,225   11.0 %
Time deposits with banks   50,000     40,000   25.0 %     -   100.0 %
Total investments   458,927     436,386   5.2 %     386,141   18.8 %
Total loans, net of unearned discount   1,158,749     1,118,968   3.6 %     1,098,140   5.5 %
Allowance for loan losses   (25,142 )   (28,597 ) (12.1 )%     (34,661 ) (27.5 )%
Total assets   1,886,938     1,834,978   2.8 %     1,689,668   11.7 %
Average earning assets, quarter-to-date   1,740,273     1,670,300   4.2 %     1,575,193   10.5 %
Total deposits   1,454,756     1,395,096   4.3 %     1,313,786   10.7 %
Book value per common share   1.78     1.74   2.3 %     1.62   9.9 %
Tangible book value per common share   1.69     1.65   2.4 %     1.53   10.5 %
Equity ratio - GAAP   9.97 %   10.09 % (1.2 )%     10.12 % (1.5 )%
Tangible common equity ratio   9.53 %   9.59 % (0.6 )%     9.59 % (0.6 )%
Total risk-based capital ratio   16.27 %   16.46 % (1.2 )%     16.33 % (0.4 )%
                             

Net Interest Income and Margin

  Quarter Ended     Year Ended  
  December 31, 2012     September 30, 2012     December 31, 2011     December 31, 2012     December 31, 2011  
  (Dollars in thousands)  
Net interest income $ 15,217     $ 14,511     $ 15,325     $ 60,411     $ 59,894  
Interest rate spread   3.21 %     3.15 %     3.54 %     3.37 %     3.25 %
Net interest margin   3.48 %     3.46 %     3.86 %     3.67 %     3.61 %
Net interest margin, fully tax equivalent   3.57 %     3.55 %     3.95 %     3.77 %     3.68 %
Average cost of deposits, including noninterest bearing deposits   0.19 %     0.20 %     0.26 %     0.21 %     0.49 %
                                       
                                       

Net interest income increased $0.7 million from $14.5 million in the third quarter 2012 to $15.2 million in the fourth quarter 2012 and decreased $0.1 million as compared to $15.3 million for the fourth quarter 2011. Net interest margin increased two basis points from 3.46% in the third quarter 2012 to 3.48% in the fourth quarter 2012 and declined 38 basis points from 3.86% in the fourth quarter 2011.

The increase in net interest income of $0.7 million from the third quarter 2012 to the fourth quarter 2012 was due to an increase in interest income of $0.6 million and a decrease in interest expense of $0.1 million. Interest income increased primarily due to increases in average loan and investment balances of $33.5 million and $48.3 million, respectively. The decrease in interest expense was the result of a reduction in subordinated debentures interest due to the payment of compounding, deferred interest during the third quarter 2012.

The decline in net interest income of $0.1 million for the fourth quarter 2012 as compared to the same quarter in 2011 was due to a reduction in interest income of $0.4 million, partially offset by a reduction in interest expense of $0.3 million. The decline in interest income was mostly due to a decline in loan income of $0.2 million and a decline in investment income of $0.2 million. The decline in interest expense was due to a change in the deposit mix from higher-cost time and money market deposits to lower yielding demand accounts, reductions in average time deposit rates and a reduction in subordinated debentures interest due to the payment of compounding, deferred interest during the third quarter 2012.

On a year-to-date basis, the net interest margin improved six basis points from 3.61% in 2011 to 3.67% in 2012, as a result of an increase in net interest income of $0.5 million and a reduction in average earning assets of $13.8 million. The improvement in net interest income was primarily due to a decrease in interest expense of $5.3 million caused by reductions in both average balances and average rates on time certificates of deposit. The improvement in interest expense was partially offset by a decrease in interest income of $4.7 million, primarily due to declines in yields on loans and investments.

Noninterest Income

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

           
    Quarter Ended     Year Ended
    December
31, 2012
  September
30, 2012
  December
31, 2011
    December
31, 2012
  December
31, 2011
    (In thousands)
Noninterest income:                      
  Customer service and other fees   $ 2,640   $ 2,616   $ 2,320     $ 9,909   $ 9,413
  Gain on sale of securities     817     746     283       2,527     3,703
  Gain on sale of SBA loans     -     203     -       203     -
  Other     309     250     197       952     829
  Total noninterest income   $ 3,766   $ 3,815   $ 2,800     $ 13,591   $ 13,945
                                   

Overall noninterest income remained relatively consistent in the fourth quarter 2012, as compared to prior quarter. Increases in gains on sale of securities and a gain on sale of bank facilities of $0.1 million each during the fourth quarter 2012 were offset by the gain on sale of Small Business Administration ("SBA") loans of $0.2 million during the third quarter 2012.

Noninterest income increased $1.0 million to $3.8 million in the fourth quarter 2012, as compared to $2.8 million in the fourth quarter 2011, primarily due to an increase in the gain on sale of securities of $0.5 million, an increase in customer service fees of $0.3 million related to investment management fees generated by Private Capital Management ("PCM"), acquired in July 2012, and net gains on sales of bank facilities of $0.1 million. 

For the year ended December 31, 2012, noninterest income decreased $0.3 million to $13.6 million, as compared to $13.9 million during the prior year, primarily due to the decrease in the net gains on sales of securities of $1.2 million, partially offset by the gains on sales of SBA loans and bank facilities of $0.4 million, as well as the increase in customer service fees of $0.5 million, primarily investment management fees generated by PCM, as discussed in the preceding paragraph.

Noninterest Expense

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

           
    Quarter Ended     Year Ended
    December 31, 2012   September 30, 2012   December 31, 2011     December 31, 2012   December 31, 2011
    (In thousands)
Noninterest expense:                      
  Salaries and employee benefits   $ 6,832   $ 6,466   $ 6,716     $ 26,769   $ 26,059
  Occupancy expense     1,550     1,712     1,967       7,253     7,513
  Furniture and equipment     760     779     846       3,143     3,508
  Amortization of intangible assets     812     803     1,017       3,138     4,091
  Other real estate owned     3,209     348     240       4,370     1,559
  Insurance and assessment     677     771     845       3,137     4,053
  Professional fees     1,543     1,062     690       4,089     3,528
  Prepayment penalty on long term debt     -     -     -       -     2,672
  Impairment of long-lived assets     -     -     -       2,750     -
  Other general and administrative     2,539     2,253     2,528       9,465     9,504
  Total noninterest expense   $ 17,922   $ 14,194   $ 14,849     $ 64,114   $ 62,487
                                   

Noninterest expense increased $3.7 million to $17.9 million in the fourth quarter 2012 as compared to $14.2 million in the third quarter 2012. The increase was primarily due to an increase in OREO expenses driven by a $3.0 million write-down of a single property, which was subsequently sold in January 2013. In addition, professional fees increased $0.5 million, primarily due to legal expenses, and salary and benefits increased $0.4 million. These increases were partially of offset by a decline in occupancy expense of $0.2 million. 

As compared to the fourth quarter 2011, noninterest expense increased $3.1 million primarily due to the OREO write-down discussed above. In addition, professional fees increased $0.9 million primarily related to legal expenses, which were partially offset by declines in occupancy expense of $0.4 million due to savings related to branch closures and declines in insurance and assessment expense of $0.2 million related to decreases in FDIC and other insurance premiums.

Noninterest expense increased $1.6 million to $64.1 million for the year ended December 31, 2012 as compared to $62.5 million for the same period in 2011. Increases in noninterest expense consisted of the increases in OREO expenses of $2.8 million, mostly due to the write-down discussed above, the impairment charge related to the closure of two branches of $2.8 million, an increase in professional fees of $0.6 million related to legal expenses, and an increase in salary and benefit expense of $0.7 million, primarily related to annual salary increases. These increases in noninterest expense were partially offset by the prepayment penalty on FHLB borrowings of $2.7 million incurred in September 2011; reductions in loan collection expenses of $1.0 million, as the result of improved credit quality; decrease in amortization of intangible assets of $1.0 million; reductions in insurance and assessments of $0.9 million, related to lower insurance premiums and FDIC assessments; and reductions in occupancy and furniture and equipment of $0.6 million due to savings related to branch closures in 2012.

Balance Sheet

                     
  December
31, 2012
  September 30, 2012   % Change   December
31, 2011
  % Change  
  (Dollars in thousands)  
Total assets $ 1,886,938   $ 1,834,978   2.8 % $ 1,689,668   11.7 %
Average assets, quarter-to-date   1,843,212     1,776,557   3.8 %   1,682,168   9.6 %
Total loans, net of unearned discount   1,158,749     1,118,968   3.6 %   1,098,140   5.5 %
Total deposits   1,454,756     1,395,096   4.3 %   1,313,786   10.7 %
Equity ratio - GAAP   9.97 %   10.09 % (1.2 )%   10.12 % (1.5 )%
Tangible common equity ratio   9.53 %   9.59 % (0.6 )%   9.59 % (0.6 )%
                           

At December 31, 2012, the Company had total assets of $1.9 billion, which represented a $52.0 million increase as compared to September 30, 2012 and a $197.3 million increase as compared to December 31, 2011. The increase in assets from September 30, 2012 consisted primarily of an increase in loans, net of unearned discount, of $39.8 million and an increase in investments of $22.5 million, partially offset by a decline in other assets of $11.2 million related to securities sold not yet settled. As compared to December 31, 2011, the increase in total assets was primarily due to an increase in investments of $72.8 million, an increase in loans, net of unearned discount, of $60.6 million, an increase in time deposits with banks of $50.0 million, and an increase in cash and cash equivalents of $12.0 million, partially offset by a decrease in OREO of $9.5 million. In addition, the allowance for loan losses decreased by $9.5 million.

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

                 
  December
31, 2012
    September
30, 2012
    December
31, 2011
 
  (In thousands)  
Loans on real estate:                      
  Residential and Commercial $ 737,537     $ 725,498     $ 712,368  
  Construction   72,842       53,172       44,087  
  Equity lines of credit   45,308       44,131       44,601  
Commercial loans   237,199       226,205       223,479  
Agricultural loans   9,417       10,634       11,527  
Installment loans to individuals   17,787       19,481       22,937  
SBA   37,207       39,043       37,876  
Other   3,043       2,521       3,092
Gross loans   1,160,340       1,120,685       1,099,967  
Unearned discount   (1,591 )     (1,717 )     (1,827 )
Loans, net of unearned discount $ 1,158,749     $ 1,118,968     $ 1,098,140  
                       

For the year ending December 31, 2012, loans, net of unearned discount, grew $60.6 million, despite a $71.5 million reduction in our purchased loan participations. The increase in loans is due to a $28.8 million increase in construction loans, a $25.2 million increase in residential and commercial real estate and a $13.7 million increase in commercial loans. These increases were partially offset by declines in consumer loans of $5.2 million and agricultural loans of $2.1 million. The growth in construction loans was primarily due to construction of multi-tenant retail and long-term care facilities with full lease commitments. Residential and commercial real estate growth was primarily due to commercial real estate loans for multi-tenant retail or industrial-flex office buildings that are either owner-occupied or substantially leased. Excluding reductions in our energy portfolio of $30.7 million, our commercial loans grew $45.1 million during 2012, or 27.6%. At December 31, 2012, the overall loan portfolio included 29.9% owner-occupied properties; 18.2% retail and industrial properties; 10.7% office properties; 8.9% other commercial real estate properties; and 5.4% multi-family properties. The Bank has capacity to extend additional credit on residential and commercial real estate loans pursuant to the Bank's concentration ratios discussed below.

Since December 31, 2011, the ratio of construction, land and land development loans to capital increased by five percentage points to 57% at December 31, 2012. During the same period, the ratio of commercial real estate loans to capital increased by 24 percentage points to 278%. These concentration ratios remain below the regulatory commercial real estate concentration guidelines of 100% for land and construction loans and 300% for all investor real estate loans.

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

           
  December
31, 2012
  September
30, 2012
  December
31, 2011
  (In thousands)
Noninterest-bearing deposits $ 564,215   $ 514,912   $ 450,451
Interest-bearing demand and NOW   285,679     286,888     289,987
Money market   312,724     290,520     277,997
Savings   100,704     99,654     91,260
Time   191,434     203,122     204,091
Total deposits $ 1,454,756   $ 1,395,096   $ 1,313,786
                 

Non-maturing deposits increased $71.3 million, or 6.0%, in the fourth quarter 2012 as compared to the third quarter 2012 and $153.6 million, or 13.8%, as compared to fourth quarter 2011. The growth in non-maturing deposits in 2012 included approximately $50.0 million in balances from five customers. We expect these funds will be withdrawn during the first and second quarters of 2013. Time deposits decreased $11.7 million as of December 31, 2012 as compared to September 30, 2012 and $12.7 million as compared to December 31, 2011. At December 31, 2012, noninterest-bearing deposits as a percentage of total deposits increased to 38.8% as compared to 36.9% at September 30, 2012 and 34.3% at December 31, 2011.

Securities sold under agreements to repurchase decreased $16.7 million from September 30, 2012 and increased $50.4 million from December 31, 2011 to $67.0 million at December 31, 2012. The increase from prior year was primarily related to a single depositor whose balance is expected to be re-deployed into the depositor's operations during the first quarter in 2013.

Total borrowings were $110.2 million at December 31, 2012, September 30, 2012 and December 31, 2011. The entire balance of borrowings at each balance sheet date 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
December 31,
2012
 

Ratio at
December 31,
2011
  Minimum
Capital
 Requirement
  Minimum
 Requirement
for "Well
 Capitalized"
 Institution
 
                 
Total Risk-Based Capital Ratio:                
  Consolidated 16.27 % 16.33 % 8.00 % N/A  
  Guaranty Bank and Trust Company 15.52 % 15.59 % 8.00 % 10.00 %
Tier 1 Risk-Based Capital Ratio:                
  Consolidated 15.02 % 15.06 % 4.00 % N/A  
  Guaranty Bank and Trust Company 14.26 % 14.32 % 4.00 % 6.00 %
Leverage Ratio:                
  Consolidated 11.93 % 12.12 % 4.00 % N/A  
  Guaranty Bank and Trust Company 11.35 % 11.53 % 4.00 % 5.00 %
                   

Generally, the allowance for loan losses is included in total capital for regulatory purposes; however, it is limited to 1.25% of total risk-weighted assets. At December 31, 2012, approximately $7.0 million of the Bank's allowance for loan losses was disallowed from being included in total risk-based capital under the regulatory capital rules, or approximately 0.48% of the Company's consolidated risk-weighted assets.

As previously announced, the Company has submitted redemption notices to the trustee with respect to all of its $10.0 million CenBank I 10.6% and $5.0 million CenBank II 10.2% trust preferred securities. The trust preferred securities will be redeemed at a price equal to 104.24% (CenBank I) and 104.08% (CenBank II) of the liquidation amount of $1,000 per trust preferred security, respectively, plus all accrued and unpaid distributions to the respective redemption dates. The redemption of the trust preferred securities will be funded by a dividend from the Bank. The Company expects to redeem these securities during the first quarter 2013. As a result of the redemption, our consolidated total risk-based capital ratio and our Tier 1 risk-based capital ratio will decline by approximately one percentage point and our leverage ratio will decline by approximately 0.8 percentage points. All three ratios will 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:

                                     
    December 31, 2012 Pro Forma (1)     December 31, 2012     September 30, 2012     June 30, 2012     March 31, 2012     December 31, 2011  
    (Dollars in thousands)  
                                                 
Nonaccrual loans and leases   $ 13,692     $ 13,692     $ 21,185     $ 21,291     $ 29,648     $ 26,801  
Other nonperforming loans     224       224       543       -       1,301       6  
Total nonperforming loans (NPLs)   $ 13,916     $ 13,916     $ 21,728     $ 21,291     $ 30,949     $ 26,807  
Other real estate owned and foreclosed assets     8,730       19,580       23,532       24,640       28,072       29,027  
Total nonperforming assets (NPAs)   $ 22,646     $ 33,496     $ 45,260     $ 45,931     $ 59,021     $ 55,834  
                                                 
Accruing loans past due 90 days or more (2)   $ 224     $ 224     $ 543     $ -     $ 1,301     $ 6  
Accruing loans past due 30-89 days (2)   $ 4,270     $ 4,270     $ 7,678     $ 18,448     $ 10,798     $ 10,805  
Allowance for loan losses   $ 25,142     $ 25,142     $ 28,597     $ 29,307     $ 30,075     $ 34,661  
Selected ratios:                                                
NPLs to loans, net of unearned discount     1.20 %     1.20 %     1.94 %     1.92 %     2.79 %     2.44 %
NPAs to total assets     1.20 %     1.78 %     2.47 %     2.62 %     3.44 %     3.30 %
Allowance for loan losses to NPAs     111.02 %     75.06 %     63.18 %     63.81 %     50.96 %     62.08 %
Allowance for loan losses to NPLs     180.67 %     180.67 %     131.61 %     137.65 %     97.17 %     129.30 %
Allowance for loan losses to loans     2.17 %     2.17 %     2.56 %     2.64 %     2.71 %     3.16 %
Loans 30-89 days past due to loans, net of unearned discount     0.37 %     0.37 %     0.69 %     1.66 %     0.97 %     0.98 %
Texas ratio (3)     9.72 %     14.37 %     19.49 %     19.92 %     25.93 %     24.55 %
Classified asset ratio (4)     20.50 %     25.16 %     32.10 %     33.79 %     35.64 %     36.62 %
                                                 
     
 (1)   December 31, 2012 Pro Forma represents data subsequent to the sale of our largest OREO property in January 2013.
 (2)   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.
 (3)   Texas ratio defined as total NPAs divided by subsidiary bank only Tier 1 Capital plus allowance for loan losses.
 (4)   Classified asset ratio defined as total classified assets to subsidiary bank only Tier 1 Capital plus allowance for loan losses.
     
     

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

                     
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 loans     -     -     -     -     72,742
Commercial loans     2,671     -     3,005     5,676     236,874
Consumer loans     140     -     1,332     1,472     64,307
Other     627     -     1,321     1,948     48,302
Total   $ 4,270   $ 224   $ 13,692   $ 18,186   $ 1,158,749
                               
                               
September 30, 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   $ 6,280   $ 543   $ 15,056   $ 21,879   $ 724,388
Construction loans     -     -     -     -     53,091
Commercial loans     753     -     3,217     3,970     225,858
Consumer loans     612     -     1,541     2,153     63,749
Other     33     -     1,371     1,404     51,882
Total   $ 7,678   $ 543   $ 21,185   $ 29,406   $ 1,118,968
                               

During the fourth quarter 2012, nonaccrual loans declined $7.5 million as compared to third quarter 2012, primarily due to the payoff of the largest single nonaccrual loan. In addition, classified loans declined $11.7 million and loans classified as special mention and watch loans declined by $14.5 million. OREO decreased by $4.0 million during the fourth quarter 2012 as compared to the third quarter 2012, primarily driven by the $3.0 million write down on the Company's single largest OREO property, which was subsequently sold in January 2013.

At December 31, 2012, classified assets as a percentage of capital and allowance for loan losses were 25.2%, a favorable decline from 32.1% at September 30, 2012 and 36.6% at December 31, 2011. 

Net charge-offs in the fourth quarter 2012 were negligible as compared to $0.7 million in the third quarter 2012 and $2.2 million in the fourth quarter 2011.

The general component of the allowance for loan losses decreased from $24.8 million at September 30, 2012 to $22.5 million at December 31, 2012. The general component represented 1.9% of loans, net of unearned discount, at December 31, 2012 as compared to 2.2% of loans, net of unearned discount, at the end of the previous quarter. The coverage ratio, defined as allowance for loan losses divided by nonperforming loans, increased from 131.6% at September 30, 2012 to 180.7% at December 31, 2012.

The Company recorded a $3.5 million negative provision for loan losses in the fourth quarter 2012, as compared to no provision in the third quarter 2012 and $1.0 million in the fourth quarter 2011. The decrease in provision for loan losses over the last year reflects an overall improvement in asset quality and the declines in net historical charge-offs.

Shares Outstanding

As of December 31, 2012, the Company had 105,847,607 shares of common stock outstanding, consisting of 100,752,607 shares of voting common stock and 5,095,000 shares of non-voting common stock. At December 31, 2012, total common shares outstanding include 1,696,796 shares of unvested stock awards.

Non-GAAP Financial Measures

This press release includes non-GAAP financial measures related to tangible assets, including tangible book value and the tangible equity ratio, all of 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 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 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:

...
  December 31, 2012   September 30, 2012   December 31, 2011  
  (Dollars in thousands, except per share amounts)  
Tangible Book Value per Common Share                  
  Total stockholders' equity $ 188,200   $ 185,073   $ 171,011  
  Less: Intangible assets   (9,348 )   (10,161 )   (9,963 )
  Tangible common equity $ 178,852   $ 174,912   $ 161,048  
                     
  Number of common shares outstanding   105,847,607     106,256,654     105,436,623  
                   
  Book value per common share $ 1.78   $ 1.74   $ 1.62  
  Tangible book value per common share $ 1.69   $ 1.65   $ 1.53  
                   
                   
Tangible Common Equity Ratio              
  December 31, 2012   September 30, 2012   December 31, 2011  
  (Dollars in thousands, except per share amounts)  
                   
  Total stockholders' equity $ 188,200   $ 185,073   $ 171,011  
  Less: Intangible assets   (9,348 )   (10,161 )   (9,963 )
  Tangible common equity $ 178,852   $ 174,912   $ 161,048  
                   
  Total assets $ 1,886,938   $ 1,834,978   $ 1,689,668  
  Less: Intangible assets   (9,348 )   (10,161 )   (9,963 )
  Tangible assets $ 1,877,590   $ 1,824,817   $ 1,679,705