Exhibit 99.1
Contact: | | Daniel M. Quinn | | Paul W. Taylor |
| | President & Chief Executive Officer | | E.V.P. & Chief Financial Officer |
| | 1331 Seventeenth Street, Suite 300 | | 1331 Seventeenth Street, Suite 300 |
| | Denver, CO 80202 | | Denver, CO 80202 |
| | 303/313-6736 | | 303/293-5563 |
FOR IMMEDIATE RELEASE:
| | Guaranty Bancorp Announces Second Quarter 2008 Earnings |
| | · Net income of $2.0 million or $0.04 per basic and diluted share |
| | · Stockholders’ equity remains stable at 17.97% of total assets while tangible equity increases to 6.93% of tangible assets |
| | · Major initiative undertaken to better align business expenses and revenue |
Denver, Colorado (July 17, 2008) – Guaranty Bancorp (Nasdaq: GBNK) today reported second quarter 2008 net income of $2.0 million, or 4 cents earnings per basic and diluted share, compared to a second quarter 2007 net loss of $6.8 million, or 13 cents loss per basic and diluted share. Excluding after-tax intangible asset amortization of $1.2 million, second quarter 2008 cash net income was $3.2 million, or 6 cents cash earnings per basic and diluted share, compared to second quarter 2007 cash net loss of $5.4 million, or 10 cents cash loss per basic and diluted share.
Second quarter 2008 net income increased by $8.8 million over the second quarter 2007 primarily due to the after-tax impact of a $11.9 million decrease in the provision for loan losses and a $7.9 million decrease in noninterest expense, partially offset by a $5.6 million decline in net interest income.
Dan Quinn, Guaranty Bancorp President and CEO, stated, “The second quarter showed further evidence of our efforts to strategically reposition the Company despite the challenges presented by the current economic environment. The loan portfolio was one important area of progress, where loans increased $29.9 million during the quarter despite the continuing reduction in our exposure to residential real estate.”
“Another area of focus has been the reduction of operating expenses,” Quinn continued. “Although operating expenses have reduced over the past two years, they remain higher than they should be in light of the current operating environment. As a consequence, we initiated a major effort in the second quarter to better align our expenses with the current size of our business. This effort will extend over the next several quarters and is expected to reduce operating expenses by approximately $6 million once fully implemented. As part of this effort, we decided to close two of our bank branches, each to take effect in the second half of 2008. In connection with these branch closures, we took a $1.3 million pre-tax charge in the second quarter. Without this charge, our second quarter net income would have been $2.8 million, or 6 cents per diluted share.”
1
Key Financial Measures
| | Quarter Ended | | Six Months Ended | |
| | June 30,
2008 | | March 31,
2008 | | June 30,
2007 | | June 30,
2008 | | June 30,
2007 | |
Earnings (loss) per share-basic & diluted | | $ | 0.04 | | $ | 0.06 | | $ | (0.13 | ) | $ | 0.10 | | $ | (0.03 | ) |
Cash earnings (loss) per share-basic & diluted | | $ | 0.06 | | $ | 0.09 | | $ | (0.10 | ) | $ | 0.15 | | $ | 0.02 | |
Return on average assets | | 0.35 | % | 0.55 | % | (1.03 | )% | 0.45 | % | (0.10 | )% |
Return on tangible average assets (cash) | | 0.62 | % | 0.85 | % | 0.98 | % | 0.73 | % | 0.12 | % |
Net interest margin | | 4.20 | % | 4.42 | % | 5.00 | % | 4.31 | % | 5.08 | % |
The Company’s net income for the first six months of 2008 improved by $6.7 million over the same period in 2007. For the year-to-date period ending June 30, 2008, net income was $5.3 million, or $0.10 earnings per basic and diluted share compared to a net loss of $1.4 million or $0.03 loss per basic and diluted share for the same period in 2007. The primary cause for the increase in net income over 2007 is an $11.8 million reduction in the provision for loan losses and a $9.9 million reduction in noninterest expense as discussed below, partially offset by a decrease in net interest income.
Cash net income for the first six months of 2008 was $7.6 million, or $0.15 per basic and diluted share excluding after-tax intangible asset amortization of $2.3 million. Cash net income for the first six months of 2007 was $1.3 million, or $0.02 per basic and diluted share excluding after-tax intangible amortization of $2.7 million.
Net Interest Income and Margin
| | Quarter Ended | | Six Months Ended | |
| | June 30,
2008 | | March 31,
2008 | | June 30,
2007 | | June 30,
2008 | | June 30,
2007 | |
| | (Dollars in thousands) | |
| | | | | | | | | | | |
Net interest income | | $ | 20,391 | | $ | 21,650 | | $ | 25,987 | | $ | 42,041 | | $ | 52,830 | |
Interest rate spread | | 3.50 | % | 3.58 | % | 3.98 | % | 3.54 | % | 4.07 | % |
Net interest margin | | 4.20 | % | 4.42 | % | 5.00 | % | 4.31 | % | 5.08 | % |
Net interest margin, fully tax equivalent | | 4.28 | % | 4.53 | % | 5.15 | % | 4.41 | % | 5.24 | % |
| | | | | | | | | | | | | | | | |
Second quarter 2008 net interest income of $20.4 million decreased by $1.3 million from the first quarter 2008, and $5.6 million from the second quarter 2007. The Company’s net interest margin of 4.20% for the second quarter 2008 reflected a decline of 22 basis points from the first quarter 2008 and a decline of 80 basis points from the second quarter 2007. The decline in net interest margin from the second quarter 2007 to second quarter 2008 is mostly attributable to the 325 basis point rate cuts in aggregate by the Federal Open Market Committee of the Federal Reserve Board during the past twelve months.
Interest income decreased by $11.5 million to $30.2 million in the second quarter 2008 from the second quarter 2007. This decrease consisted of a $9.2 million unfavorable rate variance due to lower rates, with the remainder of the decrease due to an overall decline in earnings assets. Approximately 66% of the Company’s outstanding loan balances are variable rate loans and are generally tied to indexes such as prime, LIBOR or federal funds. The prime rate has decreased by 325 basis points from June 2007 to June 2008. As a result of the decline in rates, the average yield on loans for the Company decreased by 201 basis points from 8.33% for the quarter ended June 30, 2007 to 6.32% for the same period in 2008.
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Interest expense decreased by $5.9 million, or 37.5%, to $9.8 million for the second quarter 2008 as compared to the second quarter 2007. The decrease in interest expense from the second quarter 2007 was primarily the result of a $3.9 million favorable rate variance with the remaining $1.9 million a result of a reduction in interest-bearing liabilities. The overall cost of funds declined by 132 basis points to 2.72% from the second quarter 2007 to the second quarter 2008. Average total interest-bearing deposits declined by $247.7 million from the second quarter 2007 to the second quarter 2008, with $151.6 million of the decrease in balances attributable to time deposits. This decline in time deposits is mostly due to the continuation of our strategic decision to reduce the balances of non-core time-deposits to mitigate the impact of margin compression.
For the six months ended June 30, 2008, the Company’s net interest income declined by $10.8 million from the same period in 2007. This decline is due mostly to an $8.6 million unfavorable rate variance due to a 77 basis point decrease in net interest margin. The remainder of the decrease in net interest income is primarily due to lower earning assets.
Noninterest Income
The following table presents noninterest income as of the dates indicated.
| | Quarter Ended | | Six Months Ended | |
| | June 30,
2008 | | March 31,
2008 | | June 30,
2007 | | June 30,
2008 | | June 30,
2007 | |
| | (In thousands) | |
Noninterest income: | | | | | | | | | | | |
Customer service and other fees | | $ | 2,528 | | $ | 2,276 | | $ | 2,409 | | $ | 4,804 | | $ | 4,852 | |
Gain on sale of securities | | — | | 138 | | — | | 138 | | — | |
Other | | 604 | | 101 | | 168 | | 705 | | 292 | |
Total noninterest income | | $ | 3,132 | | $ | 2,515 | | $ | 2,577 | | $ | 5,647 | | $ | 5,144 | |
Noninterest income for second quarter 2008 increased by $0.6 million from the first quarter 2008 and by $0.6 million from the second quarter 2007. The increase from the first quarter 2008 is mostly due to higher fee income, partially offset by the decrease in gain on sale of securities. The $0.6 million increase in the second quarter 2008 as compared to the same period in 2007 is primarily attributable to a $0.3 million increase in analysis fees due to a decrease in earnings credits on compensating balances.
For the six months ended June 30, 2008, noninterest income increased by $0.5 million, or 9.8%, from the same period in 2007. The increase is mostly attributable to higher fee income, gain on sale of securities and a reduction in losses from disposals of other real estate owned.
3
Noninterest Expense
The following table presents noninterest expense as of the dates indicated.
| | Quarter Ended | | Six Months Ended | |
| | June 30,
2008 | | March 31,
2008 | | June 30,
2007 | | June 30,
2008 | | June 30,
2007 | |
| | (In thousands) | |
Noninterest expense: | | | | | | | | | | | |
Salaries and employee benefits | | $ | 9,184 | | $ | 9,720 | | $ | 10,724 | | $ | 18,904 | | $ | 21,698 | |
Occupancy expense | | 2,131 | | 2,001 | | 2,056 | | 4,132 | | 4,177 | |
Furniture and equipment | | 1,383 | | 1,314 | | 1,231 | | 2,697 | | 2,471 | |
Amortization of intangible assets | | 1,877 | | 1,877 | | 2,195 | | 3,754 | | 4,390 | |
Other general and administrative | | 5,122 | | 3,798 | | 11,416 | | 8,920 | | 15,568 | |
Total noninterest expense | | $ | 19,697 | | $ | 18,710 | | $ | 27,622 | | $ | 38,407 | | $ | 48,304 | |
| | | | | | | | | | | |
Efficiency ratio (excluding amortization of intangibles) | | 75.76 | % | 69.66 | % | 89.02 | % | 72.67 | % | 75.75 | % |
Noninterest expense for the second quarter 2008 increased by $1.0 million from the first quarter of 2008, and decreased by $7.9 million from the second quarter 2007. The increase in noninterest expense from the first quarter of 2008 is mostly attributable to $1.3 million of expenses related to the decision in the second quarter 2008 to close two branches and a $0.2 million increase in legal and other fees, partially offset by a $0.5 million reduction in salaries and employee benefits expense. The $7.9 million decrease in noninterest expense from the second quarter 2007 is mostly attributable to additional charges of a $6.5 million settlement of a lawsuit and $1.0 million related to the merger of the subsidiary banks recorded in the second quarter 2007. Further, salaries and employee benefits expense decreased by $1.5 million due mostly to lower base salaries as a result of a continued focus on reducing staff levels, as well as lower bonus and incentive expense. These decreases were partially offset by $1.3 million in expenses related to the decision in the second quarter 2008 to close two branches.
Noninterest expense for the six months ended June 30, 2008 decreased by $9.9 million, or 20.5%, over the same period in 2007. This decline in noninterest expense is mostly attributable to the $6.5 million charge for a settlement of a lawsuit recorded in the second quarter 2007, as well as a $1.0 million charge taken for the merger of the Company’s subsidiary banks in 2007. Additionally, there was a $2.8 million decrease in salaries and employee benefits expense due primarily to a decline in staffing levels and lower lender incentive expense, a $0.8 million decrease in professional fees relating mostly to external and internal audit fees, $0.6 million decline in amortization costs on intangible assets and $0.2 million of other expense decreases. These expense reductions were partially offset by a $1.3 million charge related to the decision to close two branches recorded in the second quarter 2008 as well as $0.7 million in charges related to other real estate owned in 2008, mostly attributable to the write-down of a single property.
4
Balance Sheet
| | June 30,
2008 | | March 31,
2008 | | %
Change | | June 30,
2007 | | %
Change | |
| | (Dollars in thousands, except per share amounts) | |
Total loans, net of unearned discount | | $ | 1,789,155 | | $ | 1,759,297 | | 1.7 | % | $ | 1,893,440 | | (5.5 | )% |
Allowance for loan losses | | (26,506 | ) | (26,048 | ) | 1.8 | % | (35,594 | ) | (25.5 | )% |
Total assets | | 2,358,559 | | 2,345,079 | | 0.6 | % | 2,640,732 | | (10.7 | )% |
Average assets, quarter-to-date | | 2,350,421 | | 2,376,539 | | (1.1 | )% | 2,654,637 | | (11.5 | )% |
Total deposits | | 1,707,031 | | 1,710,082 | | (0.2 | )% | 1,938,412 | | (11.9 | )% |
Book value per share | | $ | 8.04 | | $ | 7.99 | | 0.6 | % | $ | 10.36 | | (22.4 | )% |
Tangible book value per share | | $ | 2.73 | | $ | 2.65 | | 3.1 | % | $ | 2.51 | | 8.8 | % |
Equity ratio – GAAP | | 17.97 | % | 17.97 | % | 0 | % | 21.50 | % | (16.4 | )% |
Tangible equity ratio | | 6.93 | % | 6.77 | % | 2.4 | % | 6.22 | % | 11.4 | % |
At June 30, 2008, the Company had total assets of $2.4 billion as compared to $2.3 billion at March 31, 2008, and $2.6 billion at June 30, 2007. The $282.2 million decline in assets from June 30, 2007 is mostly due to a $142.2 million goodwill impairment charge recorded in the fourth quarter 2007, as well as a $104.3 million decrease in loans, net of unearned discount. Approximately $48 million of this $104.3 million decrease in loans is attributable to the sale of certain impaired and classified loans in October 2007. A significant portion of the remaining decrease in loans is due to the Company’s strategy of reducing its concentration of residential construction and land development loans.
The following table sets forth the amounts of our loans outstanding at the dates indicated:
| | June 30,
2008 | | March 31,
2008 | | December 31,
2007 | | June 30,
2007 | |
| | (In thousands) | |
Loans on real estate: | | | | | | | | | |
Residential and commercial mortgage | | $ | 717,533 | | $ | 723,246 | | $ | 713,478 | | $ | 742,802 | |
Construction | | 232,522 | | 238,926 | | 235,236 | | 321,982 | |
Equity lines of credit | | 46,778 | | 47,659 | | 48,624 | | 53,676 | |
Commercial loans | | 705,309 | | 657,423 | | 679,717 | | 652,911 | |
Agricultural loans | | 29,442 | | 35,003 | | 39,506 | | 47,891 | |
Lease financing | | 472 | | 472 | | 4,732 | | 6,435 | |
Installment loans to individuals | | 39,611 | | 38,151 | | 40,835 | | 45,214 | |
Overdrafts | | 915 | | 2,520 | | 1,329 | | 4,350 | |
SBA and other | | 20,241 | | 19,213 | | 21,592 | | 22,044 | |
| | 1,792,823 | | 1,762,613 | | 1,785,049 | | 1,897,305 | |
Unearned discount | | (3,668 | ) | (3,316 | ) | (3,402 | ) | (3,865 | ) |
Loans, net of unearned discount | | $ | 1,789,155 | | $ | 1,759,297 | | $ | 1,781,647 | | $ | 1,893,440 | |
Of the $997 million of real estate loans at June 30, 2008, approximately $65 million were secured by for-sale residential real estate. Further, approximately $119 million of these real estate loans consisted of residential land and land development loans.
5
The following table sets forth the amounts of our deposits outstanding at the dates indicated:
| | June 30,
2008 | | March 31,
2008 | | December 31,
2007 | | June 30,
2007 | |
| | (In thousands) | |
Noninterest bearing deposits | | $ | 515,646 | | $ | 473,247 | | $ | 515,299 | | $ | 472,777 | |
Interest bearing demand | | 149,019 | | 156,416 | | 160,100 | | 156,440 | |
Money market | | 524,592 | | 582,013 | | 572,056 | | 641,849 | |
Savings | | 71,474 | | 71,617 | | 71,944 | | 77,508 | |
Time | | 446,300 | | 426,789 | | 480,108 | | 589,838 | |
| | | | | | | | | |
Total deposits | | $ | 1,707,031 | | $ | 1,710,082 | | $ | 1,799,507 | | $ | 1,938,412 | |
Total deposits at June 30, 2008 remained relatively flat as compared to March 31, 2008, but declined by $92.5 million from December 31, 2007 and by $231.4 million from June 30, 2007. The primary cause for the actual ending deposit balance at June 30, 2008 being approximately $58.7 million greater than average deposits for the second quarter 2008 is the receipt of a short-term deposit from a single depositor of approximately $62 million on the last day of the quarter. The decreases from both December 31, 2007 and June 30, 2007 are mostly due to decreases in money market and time deposits. The decrease in time deposits is due to a strategic decision to mitigate the impact of margin compression, whereas the decline in money market deposits is due to increased competition for deposits in the falling rate environment. Average noninterest bearing deposits were $452.3 million, or 27.4% of total deposits, for the quarter ended June 30, 2008 as compared to $478.5 million, or 24.9% of total deposits, for the quarter ended June 30, 2007.
Overall borrowings were $147.1 million at June 30, 2008 as compared to $63.7 million at December 31, 2007 and $26.0 million at June 30, 2007. The increase is mostly attributable to a decision to further utilize FHLB term advances as an alternative funding source to higher-cost time deposits.
Regulatory Capital Measures are Above the Well-Capitalized Minimums
The Company remains more than well-capitalized for regulatory capital purposes at June 30, 2008. In addition to exceeding the requirements to be a well capitalized institution, the regulatory capital ratios improved from December 31, 2007 as follows:
| | Ratio at
June 30,
2008 | | Ratio at
December 31,
2007 | | Minimum
Capital
Requirement | | Minimum
Requirement for
“Well
Capitalized”
Institution | |
| | | | | | | | | |
Total Risk-Based Capital Ratio | | 11.0 | % | 10.9 | % | 8.00 | % | 10.00 | % |
Tier 1 Risk-Based Capital Ratio | | 9.8 | % | 9.6 | % | 4.00 | % | 6.00 | % |
Leverage Ratio | | 9.5 | % | 8.6 | % | 4.00 | % | 5.00 | % |
6
Asset Quality
The following table presents selected asset quality data (excluding loans held for sale) as of the dates indicated:
| | June 30,
2008 | | March 31,
2008 | | December 31,
2007 | | September 30,
2007 | | June 30,
2007 | |
| | (Dollars in thousands) | |
| | | | | | | | | | | |
Nonaccrual loans, not restructured | | $ | 29,742 | | $ | 20,798 | | $ | 19,309 | | $ | 16,831 | | $ | 35,515 | |
Accruing loans past due 90 days or more | | 98 | | 1 | | 527 | | 9 | | 122 | |
| | | | | | | | | | | |
Total nonperforming loans (NPLs) | | 29,840 | | 20,799 | | 19,836 | | 16,840 | | 35,637 | |
Other real estate owned | | 1,910 | | 1,715 | | 3,517 | | 3,401 | | 1,385 | |
| | | | | | | | | | | |
Total nonperforming assets (NPAs) | | $ | 31,750 | | $ | 22,514 | | $ | 23,353 | | $ | 20,241 | | $ | 37,022 | |
| | | | | | | | | | | |
Accruing loans past due 30-89 days | | $ | 20,169 | | $ | 42,680 | | $ | 28,242 | | $ | 29,559 | | $ | 25,452 | |
| | | | | | | | | | | |
Allowance for loan losses | | $ | 26,506 | | $ | 26,048 | | $ | 25,711 | | $ | 23,979 | | $ | 35,594 | |
| | | | | | | | | | | |
Selected ratios: | | | | | | | | | | | |
NPLs to loans, net of unearned discount | | 1.67 | % | 1.18 | % | 1.11 | % | 0.93 | % | 1.88 | % |
NPAs to total assets | | 1.35 | % | 0.96 | % | 0.98 | % | 0.77 | % | 1.40 | % |
Allowance for loan losses to NPAs | | 83.48 | % | 115.70 | % | 110.10 | % | 118.47 | % | 96.14 | % |
Allowance for loan losses to NPLs | | 88.83 | % | 125.24 | % | 129.62 | % | 142.39 | % | 99.88 | % |
Allowance for loan losses to loans, net of unearned discount | | 1.48 | % | 1.48 | % | 1.44 | % | 1.32 | % | 1.88 | % |
Loans past due 30-89 days to loans, net of unearned discount | | 1.13 | % | 2.43 | % | 1.59 | % | 1.62 | % | 1.34 | % |
Nonperforming assets increased by $9.2 million at June 30, 2008 as compared to March 31, 2008, and decreased by $5.3 million as compared to June 30, 2007. Approximately 82% of the increase from the prior quarter is due to the addition of one loan relationship to nonperforming asset status during the second quarter 2008. The decrease from June 2007 was mostly due to the sale of certain nonperforming and classified loans on October 31, 2007. At June 30, 2008, six loan relationships comprised approximately 67% of nonperforming loans. Of the $29.8 million of nonperforming loans at June 30, 2008, approximately fifty percent was secured by residential real estate including residential land and land development loans.
The Company took a second quarter 2008 provision for loan losses of $0.9 million, as compared to $0.9 million in the first quarter 2008 and $12.8 million in the second quarter 2007. The lower net charge-offs and level of impaired loans at June 30, 2008 and March 31, 2008, as compared to June 30, 2007 resulted in the lower provision for loan losses in the current quarter.
Net charge-offs in the second quarter 2008 were $0.4 million, as compared to $0.5 million in the first quarter 2008, and $4.7 million in the second quarter 2007. Impaired loans as of June 30, 2008 totaled $29.8 million, as compared to $20.8 million at the end of the first quarter of 2008, and $55.8 million at the end of the second quarter of 2007.
The allowance for loan losses to total loans outstanding was 1.48% at June 30, 2008, as compared to 1.48% at March 31, 2008 and 1.88% at June 30, 2007.
7
Stock Repurchase Programs
During the second quarter 2008, the Company did not repurchase any shares under its stock repurchase programs and only repurchased 13,558 shares related to the net settlement of vested, restricted stock awards at a cost of $70,000, or an average price of $5.13 per share. At June 30, 2008, the Company had 1,200,000 shares remaining under its stock repurchase program adopted in October 2007 (149,858 shares expired in May 2008 when the stock repurchase program adopted in May 2007 lapsed). The remaining shares may be acquired from time to time either in the open market or in privately negotiated transactions in accordance with applicable regulations of the Securities and Exchange Commission. However, the Company does not anticipate purchasing any of the remaining shares in the near future due to its focus and strategy to strengthen its capital position. As of June 30, 2008, the Company had 52,736,269 shares outstanding, including 1,689,608 shares of unvested stock awards, and 69,275 of shares to be issued at June 30, 2008 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. These items exclude average and actual intangible assets, respectively.
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.
8
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 | | Six Months Ended | |
| | June 30,
2008 | | March 31,
2008 | | June 30,
2007 | | June 30,
2008 | | June 30,
2007 | |
| | (In thousands, except per share data) | |
GAAP net income (loss) | | $ | 2,025 | | $ | 3,245 | | $ | (6,794 | ) | $ | 5,270 | | $ | (1,385 | ) |
Add: Amortization of intangible assets | | 1,877 | | 1,877 | | 2,195 | | 3,754 | | 4,390 | |
Less: Income tax effect | | (713 | ) | (713 | ) | (834 | ) | (1,427 | ) | (1,669 | ) |
Cash net income (loss) | | $ | 3,189 | | $ | 4,409 | | $ | (5,433 | ) | $ | 7,597 | | $ | 1,336 | |
| | | | | | | | | | | |
Weighted average shares – diluted | | 51,091,042 | | 51,049,525 | | 53,425,770 | | 51,086,578 | | 54,105,373 | |
| | | | | | | | | | | |
Earnings (loss) per share – diluted | | $ | 0.04 | | $ | 0.06 | | $ | (0.13 | ) | $ | 0.10 | | $ | (0.03 | ) |
Add: Amortization of intangible assets (after tax effect) | | 0.02 | | 0.03 | | 0.03 | | 0.05 | | 0.05 | |
Cash earnings (loss) per share | | $ | 0.06 | | $ | 0.09 | | $ | (0.10 | ) | $ | 0.15 | | $ | 0.02 | |
| | | | | | | | | | | |
Return on tangible net assets (cash) | | | | | | | | | | | |
Cash net income (loss) | | $ | 3,189 | | $ | 4,409 | | $ | (5,433 | ) | $ | 7,597 | | $ | 1,336 | |
| | | | | | | | | | | |
Average total assets | | $ | 2,350,421 | | $ | 2,376,539 | | $ | 2,654,637 | | $ | 2,363,499 | | $ | 2,670,986 | |
Less average intangible assets | | (280,845 | ) | (282,830 | ) | (431,220 | ) | (281,837 | ) | (432,389 | ) |
Average tangible assets | | $ | 2,069,576 | | $ | 2,093,709 | | $ | 2,223,417 | | $ | 2,081,662 | | $ | 2,238,597 | |
| | | | | | | | | | | |
Return on average assets - GAAP net income (loss) divided by total average assets | | 0.35 | % | 0.55 | % | -1.03 | % | 0.45 | % | -0.10 | % |
| | | | | | | | | | | |
Return on average tangible assets(cash) - cash net income divided by average tangible assets | | 0.62 | % | 0.85 | % | -0.98 | % | 0.73 | % | 0.12 | % |
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:
| | June 30,
2008 | | March 31,
2008 | | June 30,
2007 | |
| | (Dollars in thousands, except per share amounts) | |
Tangible Book Value per Share | | | | | | | |
Stockholders’ equity | | $ | 423,927 | | $ | 421,461 | | $ | 567,690 | |
Intangible assets | | (279,927 | ) | (281,804 | ) | (430,167 | ) |
Tangible equity | | $ | 144,000 | | $ | 139,657 | | $ | 137,523 | |
| | | | | | | |
Number of shares outstanding and to be issued | | 52,736,269 | | 52,726,120 | | 54,809,236 | |
Book value per share | | $ | 8.04 | | $ | 7.99 | | $ | 10.36 | |
Tangible book value per share | | $ | 2.73 | | $ | 2.65 | | $ | 2.51 | |
| | | | | | | |
Tangible Equity Ratio | | | | | | | |
| | | | | | | |
Total assets | | $ | 2,358,559 | | $ | 2,345,079 | | $ | 2,640,732 | |
Less: Intangible assets | | (279,927 | ) | (281,804 | ) | (430,167 | ) |
Tangible assets | | $ | 2,078,632 | | $ | 2,063,275 | | $ | 2,210,565 | |
| | | | | | | |
Equity ratio – GAAP (stockholders’ equity / total assets) | | 17.97 | % | 17.97 | % | 21.50 | % |
| | | | | | | |
Tangible equity ratio (tangible equity / tangible assets) | | 6.93 | % | 6.77 | % | 6.22 | % |
9
About Guaranty Bancorp
Guaranty Bancorp is a bank holding company that operates 36 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 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; 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.
10
GUARANTY BANCORP AND SUBSIDIARIES
Unaudited Consolidated Balance Sheets
| | June 30,
2008 | | December 31,
2007 | | June 30,
2007 | |
| | (In thousands) | |
Assets | | | | | | | |
Cash and due from banks | | $ | 44,175 | | $ | 51,611 | | $ | 48,255 | |
Federal funds sold | | 11,672 | | 745 | | 4,200 | |
Cash and cash equivalents | | 55,847 | | 52,356 | | 52,455 | |
Securities available for sale, at fair value | | 112,118 | | 118,964 | | 143,879 | |
Securities held to maturity | | 13,772 | | 14,889 | | 12,160 | |
Bank stocks, at cost | | 32,713 | | 32,464 | | 32,176 | |
Total investments | | 158,603 | | 166,317 | | 188,215 | |
| | | | | | | |
Loans, net of unearned discount | | 1,789,155 | | 1,781,647 | | 1,893,440 | |
Less allowance for loan losses | | (26,506 | ) | (25,711 | ) | (35,594 | ) |
Net loans | | 1,762,649 | | 1,755,936 | | 1,857,846 | |
Loans, held for sale | | — | | 492 | | — | |
Premises and equipment, net | | 65,087 | | 69,981 | | 72,046 | |
Other real estate owned and foreclosed assets | | 1,910 | | 3,517 | | 1,385 | |
Goodwill | | 250,748 | | 250,748 | | 392,958 | |
Other intangible assets, net | | 29,179 | | 32,933 | | 37,209 | |
Other assets | | 34,536 | | 39,384 | | 38,618 | |
Total assets | | $ | 2,358,559 | | $ | 2,371,664 | | $ | 2,640,732 | |
| | | | | | | |
Liabilities and Stockholders’ Equity | | | | | | | |
Liabilities: | | | | | | | |
Deposits: | | | | | | | |
Noninterest-bearing demand | | $ | 515,646 | | $ | 515,299 | | $ | 472,777 | |
Interest-bearing demand | | 673,611 | | 732,156 | | 798,289 | |
Savings | | 71,474 | | 71,944 | | 77,508 | |
Time | | 446,300 | | 480,108 | | 589,838 | |
Total deposits | | 1,707,031 | | 1,799,507 | | 1,938,412 | |
Securities sold under agreements to repurchase and federal fund purchases | | 21,442 | | 23,617 | | 37,391 | |
Borrowings | | 147,117 | | 63,715 | | 26,030 | |
Subordinated debentures | | 41,239 | | 41,239 | | 41,239 | |
Interest payable and other liabilities | | 17,803 | | 24,932 | | 29,970 | |
Total liabilities | | 1,934,632 | | 1,953,010 | | 2,073,042 | |
| | | | | | | |
Stockholders’ equity: | | | | | | | |
Common stock | | 65 | | 64 | | 64 | |
Additional paid-in capital | | 619,188 | | 617,611 | | 616,447 | |
Shares to be issued for deferred compensation obligations | | 613 | | 573 | | 562 | |
Accumulated deficit | | (89,997 | ) | (95,196 | ) | 41,511 | |
Accumulated other comprehensive loss | | (2,894 | ) | (1,472 | ) | (522 | ) |
Treasury Stock | | (103,048 | ) | (102,926 | ) | (90,372 | ) |
Total stockholders’ equity | | 423,927 | | 418,654 | | 567,690 | |
Total liabilities and stockholders’ equity | | $ | 2,358,559 | | $ | 2,371,664 | | $ | 2,640,732 | |
11
GUARANTY BANCORP AND SUBSIDIARIES
Unaudited Consolidated Statements of Income
| | Three Months Ended | | Six Months Ended | |
| | June 30,
2008 | | June 30,
2007 | | June 30,
2008 | | June 30,
2007 | |
| | (In thousands, except per share data) | |
Interest income: | | | | | | | | | |
Loans, including fees | | $ | 28,107 | | $ | 39,087 | | $ | 59,147 | | $ | 78,825 | |
Investment securities: | | | | | | | | | |
Taxable | | 779 | | 608 | | 1,463 | | 1,229 | |
Tax-exempt | | 877 | | 1,336 | | 1,770 | | 2,748 | |
Dividends | | 435 | | 459 | | 905 | | 934 | |
Federal funds sold and other | | 18 | | 213 | | 334 | | 327 | |
Total interest income | | 30,216 | | 41,703 | | 63,619 | | 84,063 | |
Interest expense: | | | | | | | | | |
Deposits | | 7,411 | | 13,738 | | 17,206 | | 27,084 | |
Federal funds purchased and repurchase agreements | | 145 | | 448 | | 282 | | 749 | |
Borrowings | | 1,417 | | 592 | | 2,446 | | 1,530 | |
Subordinated debentures | | 852 | | 938 | | 1,644 | | 1,870 | |
Total interest expense | | 9,825 | | 15,716 | | 21,578 | | 31,233 | |
Net interest income | | 20,391 | | 25,987 | | 42,041 | | 52,830 | |
Provision for loan losses | | 900 | | 12,766 | | 1,775 | | 13,615 | |
Net interest income, after provision for loan losses | | 19,491 | | 13,221 | | 40,266 | | 39,215 | |
Noninterest income: | | | | | | | | | |
Customer service and other fees | | 2,528 | | 2,409 | | 4,804 | | 4,852 | |
Gain on sale of securities | | — | | — | | 138 | | — | |
Other | | 604 | | 168 | | 705 | | 292 | |
Total noninterest income | | 3,132 | | 2,577 | | 5,647 | | 5,144 | |
Noninterest expense: | | | | | | | | | |
Salaries and employee benefits | | 9,184 | | 10,724 | | 18,904 | | 21,698 | |
Occupancy expense | | 2,131 | | 2,056 | | 4,132 | | 4,177 | |
Furniture and equipment | | 1,383 | | 1,231 | | 2,697 | | 2,471 | |
Amortization of intangible assets | | 1,877 | | 2,195 | | 3,754 | | 4,390 | |
Other general and administrative | | 5,122 | | 11,416 | | 8,920 | | 15,568 | |
Total noninterest expense | | 19,697 | | 27,622 | | 38,407 | | 48,304 | |
Income before income taxes | | 2,926 | | (11,824 | ) | 7,506 | | (3,945 | ) |
Income tax expense | | 901 | | (5,030 | ) | 2,236 | | (2,560 | ) |
Net income (loss) | | $ | 2,025 | | $ | (6,794 | ) | $ | 5,270 | | $ | (1,385 | ) |
| | | | | | | | | |
Earnings (loss) per share–basic: | | $ | 0.04 | | $ | (0.13 | ) | $ | 0.10 | | $ | (0.03 | ) |
Earnings (loss) per share–diluted: | | 0.04 | | (0.13 | ) | 0.10 | | (0.03 | ) |
| | | | | | | | | |
Weighted average shares outstanding-basic | | 51,004,472 | | 53,425,770 | | 50,996,350 | | 54,105,373 | |
Weighted average shares outstanding-diluted | | 51,091,042 | | 53,425,770 | | 51,086,578 | | 54,105,373 | |
12
Guaranty Bancorp and Subsidiaries
Unaudited Consolidated Average Balance Sheets
| | QTD Average | | YTD Average | |
| | June 30,
2008 | | March 31,
2008 | | June 30,
2007 | | June 30,
2008 | | June 30,
2007 | |
| | (In thousands) | |
Assets | | | | | | | | | | | |
Interest earning assets | | | | | | | | | | | |
Loans, net of unearned discount | | $ | 1,788,603 | | $ | 1,767,582 | | $ | 1,882,840 | | $ | 1,778,098 | | $ | 1,896,185 | |
Securities | | 162,293 | | 159,777 | | 190,819 | | 161,035 | | 193,910 | |
Other earning assets | | 2,738 | | 41,796 | | 11,282 | | 22,267 | | 7,638 | |
Average earning assets | | 1,953,634 | | 1,969,155 | | 2,084,941 | | 1,961,400 | | 2,097,733 | |
Other assets | | 396,787 | | 407,384 | | 569,696 | | 402,099 | | 573,253 | |
| | | | | | | | | | | |
Total average assets | | $ | 2,350,421 | | $ | 2,376,539 | | $ | 2,654,637 | | $ | 2,363,499 | | $ | 2,670,986 | |
| | | | | | | | | | | |
Liabilities and Stockholders’ Equity | | | | | | | | | | | |
Average liabilities: | | | | | | | | | | | |
Average deposits: | | | | | | | | | | | |
Noninterest-bearing deposits | | $ | 452,315 | | $ | 472,802 | | $ | 478,520 | | $ | 462,564 | | $ | 480,875 | |
Interest-bearing deposits | | 1,195,998 | | 1,277,606 | | 1,443,719 | | 1,236,802 | | 1,446,018 | |
Average deposits | | 1,648,313 | | 1,750,408 | | 1,922,239 | | 1,699,366 | | 1,926,893 | |
Other interest-bearing liabilities | | 258,557 | | 180,633 | | 118,147 | | 219,595 | | 125,431 | |
Other liabilities | | 18,802 | | 22,958 | | 32,603 | | 20,893 | | 33,578 | |
Total average liabilities | | 1,925,672 | | 1,953,999 | | 2,072,989 | | 1,939,854 | | 2,085,902 | |
Average stockholders’ equity | | 424,749 | | 422,540 | | 581,648 | | 423,645 | | 585,084 | |
Total average liabilities and stockholders’equity | | $ | 2,350,421 | | $ | 2,376,539 | | $ | 2,654,637 | | $ | 2,363,499 | | $ | 2,670,986 | |
13
Guaranty Bancorp
Unaudited Credit Quality Measures
| | Quarter Ended | |
| | June 30,
2008 | | March 31,
2008 | | December 31,
2007 | | September 30,
2007 | | June 30,
2007 | |
| | (Dollars in thousands) | |
Nonaccrual loans and leases, not restructured | | $ | 29,742 | | $ | 20,798 | | $ | 19,309 | | $ | 16,831 | | $ | 35,515 | |
Accruing loans past due 90 days or more | | 98 | | 1 | | 527 | | 9 | | 122 | |
Other real estate owned | | 1,910 | | 1,715 | | 3,517 | | 3,401 | | 1,385 | |
Total nonperforming assets | | $ | 31,750 | | $ | 22,514 | | $ | 23,353 | | $ | 20,241 | | $ | 37,022 | |
| | | | | | | | | | | |
Nonperforming loans | | $ | 29,840 | | $ | 20,799 | | $ | 19,836 | | $ | 16,840 | | $ | 35,637 | |
Other impaired loans | | — | | — | | 3,492 | | 510 | | 20,208 | |
Total impaired loans | | 29,840 | | 20,799 | | 23,328 | | 17,350 | | 55,845 | |
Allocated allowance for loan losses | | (6,295 | ) | (5,368 | ) | (4,283 | ) | (4,028 | ) | (14,113 | ) |
Net investment in impaired loans | | $ | 23,545 | | $ | 15,431 | | $ | 19,045 | | $ | 13,322 | | $ | 41,732 | |
| | | | | | | | | | | |
Charged-off loans | | $ | 673 | | $ | 743 | | $ | 1,729 | | $ | 20,079 | | $ | 5,473 | |
Recoveries | | (231 | ) | (205 | ) | (436 | ) | (438 | ) | (809 | ) |
Net charge-offs | | $ | 442 | | $ | 538 | | $ | 1,293 | | $ | 19,641 | | $ | 4,664 | |
| | | | | | | | | | | |
Provision for loan loss | | $ | 900 | | $ | 875 | | $ | 3,025 | | $ | 8,026 | | $ | 12,766 | |
| | | | | | | | | | | |
Allowance for loan losses | | $ | 26,506 | | $ | 26,048 | | $ | 25,711 | | $ | 23,979 | | $ | 35,594 | |
| | | | | | | | | | | |
Allowance for loan losses to loans, net of unearned discount | | 1.48 | % | 1.48 | % | 1.44 | % | 1.32 | % | 1.88 | % |
Allowance for loan losses to nonaccrual loans | | 89.12 | % | 125.24 | % | 133.16 | % | 142.47 | % | 100.22 | % |
Allowance for loan losses to nonperforming assets | | 83.48 | % | 115.70 | % | 110.10 | % | 118.47 | % | 96.14 | % |
Allowance for loan losses to nonperforming loans | | 88.83 | % | 125.24 | % | 129.62 | % | 142.39 | % | 99.88 | % |
| | | | | | | | | | | |
Nonperforming assets to loans, net of unearned discount, and other real estate owned | | 1.77 | % | 1.28 | % | 1.31 | % | 1.11 | % | 1.96 | % |
Annualized net charge-offs to average loans | | 0.10 | % | 0.12 | % | 0.28 | % | 4.16 | % | 0.99 | % |
Nonaccrual loans to loans, net of unearned discount | | 1.66 | % | 1.18 | % | 1.08 | % | 0.93 | % | 1.88 | % |
14
