Exhibit 99.1
Contact: | Daniel M. Quinn | Paul W. Taylor |
| President & Chief Executive Officer | E.V.P., Chief Financial & Operating Officer & Secretary |
| 1331 Seventeenth Street, Suite 300 | 1331 Seventeenth Street, Suite 300 |
| Denver, CO 80202 | Denver, CO 80202 |
| 303/313-6763 | 303/293-5563 |
FOR IMMEDIATE RELEASE:
Guaranty Bancorp Announces 2010 Second Quarter Financial Results
· Quarterly loss narrows compared to the prior year
· Risk-Based Capital ratios continue to improve representing a new high for the Company
· Year-to-date net interest margin and net interest income expand compared to the prior year
· Non-performing assets decline by over 15% from their peak at September 30, 2009
Denver, Colorado (July 26, 2010) — Guaranty Bancorp (Nasdaq: GBNK) today reported a second quarter 2010 net loss of $4.4 million, or $0.11 loss per basic and diluted common share including the effect of preferred stock dividends, compared to a second quarter 2009 net loss of $10.9 million, or $0.21 loss per basic and diluted common share. The primary reasons for the smaller loss in the second quarter 2010 as compared to the same period last year are a $10.2 million reduction in the provision for loan losses, increases in net interest income and noninterest income and decreases in most categories of noninterest expense. These items were partially offset by a $2.2 million increase in write-downs related primarily to dispositions of other real estate owned.
Dan Quinn, Guaranty Bancorp President and CEO, stated, “We are encouraged by our overall credit outlook. As importantly, we continue to see significant improvements with respect to the overall risk profile of the Company. Our risk-based capital ratios continue to strengthen, our real-estate loan concentrations have decreased and our nonperforming assets have declined by over 6% from the previous quarter. As the level of non-performing assets declines, we also expect that the related loan workout expenses will decrease, including the provision for loan losses.”
Mr. Quinn continued, “On a year-to-date basis, 2010 net interest margin has improved by 16 basis points over the same period in 2009, causing an overall increase in net interest income. We were able to increase our year-to-date net interest margin through higher loan yields and lower cost of funds. “
1
The Company’s net loss for the first six months of 2010 was $6.2 million, or $0.17 loss per basic and diluted share including the effect of preferred stock dividends, as compared to a net loss of $10.4 million, or $0.20 loss per basic and diluted share for the same period in 2009. The primary cause for the decrease in the net loss for the year-to-date period in 2010 as compared to 2009 is an $8.7 million decrease in the provision for loan losses, partially offset by higher write-offs related to other real estate owned.
Key Financial Measures
Income Statement
| | Quarter Ended | | Six Months Ended | |
| | June 30, | | March 31, | | June 30, | | June 30, | | June 30, | |
| | 2010 | | 2009 | | 2009 | | 2010 | | 2009 | |
Loss per share-basic & diluted | | $ | (0.11 | ) | $ | (0.06 | ) | $ | (0.21 | ) | $ | (0.17 | ) | $ | (0.20 | ) |
Return on average assets | | (0.87 | )% | (0.36 | )% | (2.17 | )% | (0.61 | )% | (1.03 | )% |
Net Interest Margin | | 3.47 | % | 3.50 | % | 3.38 | % | 3.48 | % | 3.32 | % |
| | | | | | | | | | | | | | | | |
Balance Sheet
| | June 30,
2010 | | December 31, 2009 | | %
Change | | June 30,
2009 | | %
Change | |
| | (Dollars in thousands, except per share amounts) | |
Cash and cash equivalents | | $ | 184,701 | | $ | 234,483 | | (21.2 | )% | $ | 28,403 | | 550.3 | % |
Total investments | | 312,293 | | 248,236 | | 25.8 | % | 124,952 | | 149.9 | % |
Total loans, net of unearned discount | | 1,374,208 | | 1,519,608 | | (9.6 | )% | 1,651,572 | | (16.8 | )% |
Loans held for sale | | 1,150 | | 9,862 | | (88.3 | )% | 5,250 | | (78.1 | )% |
Allowance for loan losses | | (46,866 | ) | (51,991 | ) | (9.9 | )% | (43,041 | ) | 8.9 | % |
Total assets | | 1,983,798 | | 2,127,580 | | (6.8 | )% | 1,944,867 | | 2.0 | % |
Average assets, quarter-to-date | | 1,999,527 | | 2,117,257 | | (5.6 | )% | 2,011,314 | | (0.6 | )% |
Total deposits | | 1,544,271 | | 1,693,290 | | (8.8 | )% | 1,560,730 | | (1.1 | )% |
Book value per common share | | 2.38 | | 2.50 | | (4.8 | )% | 2.93 | | (18.8 | )% |
Tangible book value per common share | | 2.06 | | 2.13 | | (3.3 | )% | 2.50 | | (17.4 | )% |
Tangible book value per common share (after giving effect to conversion of preferred stock) | | 1.96 | | 2.00 | | (2.1 | )% | 2.50 | | (21.6 | )% |
Book value of preferred stock | | 61,961 | | 59,227 | | 4.6 | % | None | | N/A | |
Liquidation value of preferred stock | | 63,168 | | 60,434 | | 4.5 | % | None | | N/A | |
Equity ratio — GAAP | | 9.53 | % | 9.05 | % | 5.3 | % | 7.90 | % | 20.6 | % |
Tangible equity ratio | | 8.76 | % | 8.23 | % | 6.4 | % | 6.83 | % | 28.3 | % |
Total risk-based capital ratio | | 14.80 | % | 13.80 | % | 7.2 | % | 10.73 | % | 37.9 | % |
| | | | | | | | | | | | | | |
Net Interest Income and Margin
| | Quarter Ended | | Six Months Ended | |
| | June 30,
2010 | | March 31,
2010 | | June 30,
2009 | | June 30,
2010 | | June 30,
2009 | |
| | (Dollars in thousands) | |
Net interest income | | $ | 16,133 | | $ | 16,632 | | $ | 15,860 | | $ | 32,765 | | $ | 31,578 | |
Interest rate spread | | 3.09 | % | 3.10 | % | 2.77 | % | 3.10 | % | 2.69 | % |
Net interest margin | | 3.47 | % | 3.50 | % | 3.38 | % | 3.48 | % | 3.32 | % |
Net interest margin, fully tax equivalent | | 3.55 | % | 3.58 | % | 3.46 | % | 3.56 | % | 3.40 | % |
| | | | | | | | | | | | | | | | |
Second quarter 2010 net interest income of $16.1 million decreased by $0.5 million from the first quarter 2010, and increased by $0.3 million from the second quarter 2009. The Company’s net interest margin of 3.47% for the second quarter 2010 reflected a decrease of three basis points from the first quarter 2010 and an increase of nine basis points from the second quarter 2009. The decrease in net interest margin in the second quarter 2010, as compared to the first quarter 2010, is
2
primarily a result of an overall decline in the yield on earning assets due to a shift from loans to lower yielding investments. The overall yield on earning assets was 4.74% in the second quarter 2010 as compared to 4.90% in the first quarter 2010. This decline in yield was mostly offset by a decline in interest bearing liabilities, which decreased from 1.80% in the first quarter 2010 to 1.65% in the second quarter 2010.
Net interest margin increased by 9 basis points in the second quarter 2010 as compared to the same quarter in 2009 due to a $2.9 million favorable rate variance, less a $2.7 million unfavorable volume variance. The favorable rate variance is primarily attributable to a 13 basis point increase in loan yields in the second quarter 2010 as compared to the same period in 2009, as well as an 86 basis point decline in the overall cost of funds over the same period. Loan yields increased primarily as a result of loans repricing with minimum rates established on loan renewals. The overall cost of funds declined primarily due to a 146 basis point decrease in time deposit rates resulting from lower renewal rates on such deposits. The unfavorable volume variance is primarily the result of a $314.4 million decline in average loan balances in the second quarter 2010 as compared to the same quarter in 2009.
Net interest income for the first six months of 2010 increased by $1.2 million to $32.8 million compared to the same period in 2009. This increase was mostly the result of a 16 basis point increase in net interest margin, leading to a $7.7 million favorable rate variance offset by a $6.5 million unfavorable volume variance. The volume variance is due mostly to the $315.2 million decrease in average loan balances. The favorable rate variance is due mostly to an 81 basis point decline in the cost of interest-bearing liabilities as well as an increase to overall loan yields. The overall yield on earning assets declined by 40 basis points due mostly to the impact of an additional $165.2 million average balance of overnight funding over the first six months of 2010 earning approximately 25 basis points. At June 30, 2010, management believes that the Company remains slightly asset sensitive whereby an increase in rates will have a favorable impact on overall net interest income, especially with greater increases in overall rates.
Noninterest Income
The following table presents noninterest income as of the dates indicated:
| | Quarter Ended | | Six Months Ended | |
| | June 30,
2010 | | March 31,
2010 | | June 30,
2009 | | June 30,
2010 | | June 30,
2009 | |
| | (In thousands) | |
Noninterest income: | | | | | | | | | | | |
Customer service and other fees | | $ | 2,254 | | $ | 2,214 | | $ | 2,354 | | $ | 4,468 | | $ | 5,033 | |
Gain on sale of securities | | 1 | | 14 | | — | | 15 | | — | |
Gain on sale of loans | | 1,196 | | — | | — | | 1,196 | | — | |
Other | | 274 | | 194 | | 277 | | 468 | | 492 | |
Total noninterest income | | $ | 3,725 | | $ | 2,422 | | $ | 2,631 | | $ | 6,147 | | $ | 5,525 | |
Noninterest income for the second quarter 2010 increased by $1.3 million from the first quarter 2010 and increased $1.1 million from the second quarter 2009. These increases were mostly attributable to the gain on the sale of two loans held for sale during the second quarter 2010.
3
For the six months ended June 30, 2010, noninterest income, excluding the $1.2 million gain on sale of loans, decreased by $0.6 million compared to the same period in 2009. This decrease is mostly due to lower account analysis fees, as well as other service charges as some customers migrated to lower fee transaction accounts.
Noninterest Expense
The following table presents noninterest expense as of the dates indicated:
| | Quarter Ended | | Six Months Ended | |
| | June 30,
2010 | | March 31,
2010 | | June 30,
2009 | | June 30,
2010 | | June 30,
2009 | |
| | (In thousands) | |
Noninterest expense: | | | | | | | | | | | |
Salaries and employee benefits | | $ | 6,472 | | $ | 6,563 | | $ | 6,712 | | $ | 13,035 | | $ | 13,451 | |
Occupancy expense | | 1,836 | | 1,890 | | 1,926 | | 3,726 | | 3,847 | |
Furniture and equipment | | 967 | | 976 | | 1,147 | | 1,943 | | 2,278 | |
Amortization of intangible assets | | 1,300 | | 1,300 | | 1,581 | | 2,600 | | 3,163 | |
Other real estate owned | | 3,115 | | 2,749 | | 915 | | 5,864 | | 963 | |
Insurance and assessment | | 1,825 | | 1,812 | | 2,195 | | 3,637 | | 3,236 | |
Professional fees | | 739 | | 877 | | 896 | | 1,616 | | 1,745 | |
Other general and administrative | | 2,165 | | 1,959 | | 2,346 | | 4,124 | | 4,495 | |
Total noninterest expense | | $ | 18,419 | | $ | 18,126 | | $ | 17,718 | | $ | 36,545 | | $ | 33,178 | |
Noninterest expense for the second quarter 2010 increased by $0.3 million as compared to the first quarter 2010 and increased by $0.7 million from the second quarter 2009. These increases are primarily due to increases in other real estate owned and loan workout related expenses, mostly offset by lower costs in other categories of noninterest expense.
The $0.3 million increase in noninterest expense in the second quarter 2010 as compared to the first quarter 2010 is due mostly to a $0.4 million increase in expenses related to other real estate owned and a $0.2 million increase in other general and administrative expenses. The increase in other real estate owned expense is due to an increase in write-downs on other real estate owned properties resulting from valuation adjustments and sales. The increase in other general and administrative expenses is due mostly to higher workout related expenses. All other categories of expense declined or remained relatively flat in the second quarter 2010 as compared to the first quarter 2010.
The $0.7 million increase in noninterest expense in the second quarter 2010 as compared to the same period in 2009 is the result of a $2.2 million increase in other real estate owned expense, mostly offset by declines in all other categories of expense. The increase in other real estate owned expense is due to an increase in write-downs on other real estate owned properties resulting from valuation adjustments and sales. The $0.2 million decline in overall salaries and employee benefit expense in the second quarter 2010 as compared to the same period in 2009 is due mostly to a reduction in full time equivalent staff, as well as reductions in bonuses, incentives and restricted stock expense. Overall occupancy and furniture & equipment expense declined by $0.3 million due to lower depreciation and lease expense resulting from the reduction of leased space in our headquarters building. Amortization of intangible assets declined by $0.3 million in the current quarter as compared to the same period last year due to accelerated amortization of intangible assets associated with previous acquisitions. Overall insurance and assessments decreased by $0.4 million
4
in the second quarter 2010 as compared to the same quarter in 2009. This reduction in cost is the result of a one-time FDIC insurance assessment in the second quarter 2009 for which the Company recorded an additional $0.9 million of expense. Although there was no similar assessment in 2010, our ongoing FDIC assessment rates are higher in 2010 as compared to 2009. The $0.2 million decline in professional fees is due mostly to lower legal costs, while the $0.2 million decline in other general and administrative expenses is due mostly to lower data processing costs.
Noninterest expense for the six months ended June 30, 2010 increased by $3.4 million compared to the same period in 2009 primarily due to a $4.9 million increase in expenses associated with other real estate owned and a $0.4 million increase in insurance and assessments, due mostly to the 2010 FDIC insurance assessment rate exceeding the prior year assessment rate including the prior year special assessment. All other categories of expense declined in the first six-months of 2010 as compared to the same period in 2009. The primary causes for these declines in overall expenses for the year-to-date period in 2010 as compared to 2009 are a reduction in full-time equivalent employees, reduced bonus and incentive expense, reduced amortization due to the use of accelerated amortization methods and other cost reduction initiatives of the Company.
Income Taxes
The effective tax benefit rate for the second quarter 2010 was 37.4% as compared to 39.1% for the same period in 2009. The effective tax benefit rate for the year-to-date period in 2010 was 38.2% as compared to 39.4% in 2009. The primary differences between the expected tax benefit rate and the actual tax benefit rate are state taxes and tax-exempt income.
Preferred Stock Dividend
Effective May 15, 2010, a non-cash preferred stock dividend was paid in the form of additional shares of Series A convertible preferred stock to holders of Series A convertible preferred stock in the amount of $1.4 million.
Balance Sheet
| | June 30,
2010 | | December 31,
2009 | | %
Change | | June 30,
2009 | | %
Change | |
| | (Dollars in thousands, except per share amounts) | |
Total assets | | $ | 1,983,798 | | $ | 2,127,580 | | (6.8 | )% | $ | 1,944,867 | | 2.0 | % |
Average assets, quarter-to-date | | 1,999,527 | | 2,117,257 | | (5.6 | )% | 2,011,314 | | (0.6 | )% |
Loans, net of unearned discount | | 1,374,208 | | 1,519,608 | | (9.6 | )% | 1,651,572 | | (16.8 | )% |
Total deposits | | 1,544,271 | | 1,693,290 | | (8.8 | )% | 1,560,730 | | (1.1 | )% |
| | | | | | | | | | | |
Equity ratio - GAAP | | 9.53 | % | 9.05 | % | 5.3 | % | 7.90 | % | 20.6 | % |
Tangible equity ratio | | 8.76 | % | 8.23 | % | 6.4 | % | 6.83 | % | 28.3 | % |
| | | | | | | | | | | | | | |
At June 30, 2010, the Company had total assets of $2.0 billion which represented a $143.8 million decline as compared to December 31, 2009, and a $38.9 million increase as compared to June 30, 2009. The decline in assets from December 31, 2009 is mostly due to a $145.4 million decline in loans, net of unearned discount. This loan decline was due mostly to a $109.4 million decline in commercial loans and a $32.6 million decline in real estate loans.
5
Although total assets remained relatively flat at June 30, 2010 as compared to June 30, 2009, there was a change in the mix of assets as total loans declined by $277 million, while investment securities increased by $187 million and cash and cash equivalents increased by $138 million. Management continues to evaluate alternatives to utilize this additional low-yielding liquidity in the existing interest-rate environment in order to improve our future net interest margin. The increase in investment securities is nearly all related to purchases of mortgage-backed government agency or government-sponsored agency securities.
The GAAP equity ratio and tangible equity ratio increased at June 30, 2010 as compared to December 31, 2009. Additionally, both the GAAP equity ratio and tangible equity ratio increased significantly from June 30, 2009, primarily as a result of the issuance of $57.8 million, net of expenses, of convertible preferred stock in August 2009.
The following table sets forth the amounts of our loans outstanding (excluding loans held for sale) at the dates indicated:
| | June 30,
2010 | | March 31,
2010 | | December 31,
2009 | | June 30,
2009 | |
| | (In thousands) | |
Loans on real estate: | | | | | | | | | |
Residential and commercial | | $ | 754,019 | | $ | 748,135 | | $ | 760,719 | | $ | 682,923 | |
Construction | | 83,389 | | 111,231 | | 105,612 | | 190,197 | |
Equity lines of credit | | 51,221 | | 53,014 | | 54,852 | | 55,812 | |
Commercial loans | | 411,605 | | 448,908 | | 521,016 | | 639,462 | |
Agricultural loans | | 17,968 | | 17,203 | | 18,429 | | 22,764 | |
Lease financing | | 4,014 | | 4,014 | | 4,011 | | 4,722 | |
Installment loans to individuals | | 31,936 | | 34,986 | | 36,175 | | 37,878 | |
Overdrafts | | 668 | | 612 | | 358 | | 569 | |
SBA and other | | 21,607 | | 19,396 | | 20,997 | | 20,215 | |
| | 1,376,427 | | 1,437,499 | | 1,522,169 | | 1,654,542 | |
Unearned discount | | (2,219 | ) | (2,428 | ) | (2,561 | ) | (2,970 | ) |
Loans, net of unearned discount | | $ | 1,374,208 | | $ | 1,435,071 | | $ | 1,519,608 | | $ | 1,651,572 | |
There were $888.6 million of real estate loans at June 30, 2010 as compared to $921.2 million at December 31, 2009, a decrease of $32.6 million as management continues to decrease risk related to real estate lending.
The following table sets forth the amounts of our deposits outstanding at the dates indicated:
| | June 30,
2010 | | March 31,
2010 | | December 31,
2009 | | June 30,
2009 | |
| | (In thousands) | |
Noninterest-bearing deposits | | $ | 338,169 | | $ | 363,059 | | $ | 366,103 | | $ | 352,185 | |
Interest-bearing demand | | 171,721 | | 165,315 | | 171,844 | | 142,013 | |
Money market | | 323,331 | | 321,603 | | 352,127 | | 306,243 | |
Savings | | 75,338 | | 74,537 | | 71,816 | | 72,143 | |
Time | | 635,712 | | 678,370 | | 731,400 | | 688,146 | |
Total deposits | | $ | 1,544,271 | | $ | 1,602,884 | | $ | 1,693,290 | | $ | 1,560,730 | |
Noninterest-bearing deposits as a percentage of total deposits was 21.9% at June 30, 2010, as compared to 21.6% at December 31, 2009.
The overall decline in deposits is partially attributable to a decrease in wholesale deposits, including both brokered deposits as well as internet deposits. Brokered and internet deposits have declined by
6
$47.9 million from December 31, 2009 to June 30, 2010. Total brokered deposits at June 30, 2010 were $219.5 million, excluding reciprocal deposits through the Certificate of Deposit Account Registry Service (CDARS), as compared to $254.6 million at December 31, 2009. The remaining decline in time deposits is primarily related to the non-renewal of other higher cost certificates of deposits, including those with special rates.
Borrowings were $164.3 million at June 30, 2010 as compared to $164.4 million at December 31, 2009, and $164.5 million at June 30, 2009. The entire balance of borrowings at each balance sheet date consisted of term advances with the Federal Home Loan Bank.
Regulatory Capital Ratios
The Company’s and the subsidiary bank’s capital ratios increased at June 30, 2010 as compared to December 31, 2009 due to a decrease in risk-weighted assets. All of the regulatory capital ratios are above the highest regulatory capital requirement of “well-capitalized” at June 30, 2010. The Company’s and the subsidiary bank’s actual capital ratios for June 30, 2010 and December 31, 2009 are presented in the table below:
| | Ratio at
June 30,
2010 | | Ratio at
December 31,
2009 | | Minimum
Capital
Requirement | | Minimum
Requirement for
“Well
Capitalized”
Institution | |
| | | | | | | | | |
Total Risk-Based Capital Ratio: | | | | | | | | | |
Consolidated | | 14.80 | % | 13.80 | % | 8.00 | % | N/A | |
Guaranty Bank and Trust Company | | 13.82 | % | 12.82 | % | 8.00 | % | 10.00 | % |
Tier 1 Risk-Based Capital Ratio: | | | | | | | | | |
Consolidated | | 9.77 | % | 9.43 | % | 4.00 | % | N/A | |
Guaranty Bank and Trust Company | | 12.55 | % | 11.55 | % | 4.00 | % | 6.00 | % |
Leverage Ratio: | | | | | | | | | |
Consolidated | | 7.87 | % | 7.89 | % | 4.00 | % | N/A | |
Guaranty Bank and Trust Company | | 10.18 | % | 9.66 | % | 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 June 30, 2010, approximately $26.7 million of the subsidiary bank’s allowance for loan losses is disallowed from being included in total risk-based capital under the regulatory capital rules, or approximately 1.67% of the subsidiary bank’s risk-weighted assets.
7
Asset Quality
The following table presents selected asset quality data (excluding loans held for sale) as of the dates indicated:
| | June 30,
2010 | | March 31,
2010 | | December 31,
2009 | | September 30,
2009 | | June 30,
2009 | |
| | (Dollars in thousands) | |
| | | | | | | | | | | |
Nonaccrual loans, not restructured | | $ | 64,339 | | $ | 70,500 | | $ | 59,584 | | $ | 81,035 | | $ | 52,483 | |
Other nonperforming loans | | 1,065 | | 558 | | 123 | | 150 | | 2,671 | |
Total nonperforming loans (NPLs) | | $ | 65,404 | | $ | 71,058 | | $ | 59,707 | | $ | 81,185 | | $ | 55,154 | |
Other real estate owned and foreclosed assets | | 30,298 | | 30,918 | | 37,192 | | 32,246 | | 34,746 | |
Total nonperforming assets (NPAs) | | $ | 95,702 | | $ | 101,976 | | $ | 96,899 | | $ | 113,431 | | $ | 89,900 | |
Accruing loans past due 90 days or more (1) | | $ | 1,065 | | $ | 558 | | $ | 123 | | $ | 9,140 | | $ | 2,671 | |
Accruing loans past due 30-89 days (1) | | $ | 33,050 | | $ | 21,956 | | $ | 21,709 | | $ | 52,443 | | $ | 39,836 | |
Allowance for loan losses | | $ | 46,866 | | $ | 52,015 | | $ | 51,991 | | $ | 49,038 | | $ | 43,041 | |
| | | | | | | | | | | |
Selected ratios: | | | | | | | | | | | |
NPLs to loans, net of unearned discount | | 4.76 | % | 4.95 | % | 3.93 | % | 5.11 | % | 3.34 | % |
NPAs to total assets | | 4.82 | % | 5.02 | % | 4.55 | % | 5.51 | % | 4.62 | % |
Allowance for loan losses to NPAs | | 48.97 | % | 51.01 | % | 53.65 | % | 43.23 | % | 47.88 | % |
Allowance for loan losses to NPLs | | 71.66 | % | 73.20 | % | 87.08 | % | 60.40 | % | 78.04 | % |
Allowance for loan losses to loans, net of unearned discount | | 3.41 | % | 3.62 | % | 3.42 | % | 3.09 | % | 2.61 | % |
Loans 30-89 days past due to loans, net of unearned discount | | 2.40 | % | 1.53 | % | 1.43 | % | 3.30 | % | 2.41 | % |
(1)Past due loans include both loans that are past due with respect to payments, and loans that are past due with respect to the fact that the loan has matured and is in the process of renewal, but continues to be current with respect to payments.
The types of nonperforming loans (excluding loans held for sale) as of June 30, 2010 and March 31, 2010 are as follows:
| | Nonperforming Loans | |
| | June 30, 2010 | | March 31, 2010 | |
| | Loan
Balance | | Percent | | Related
Allowance | | Loan
Balance | | Percent | | Related
Allowance | |
| | (Amounts in thousands) | |
Residential Construction, Land and Land Development | | $ | 23,797 | | 36.4 | % | $ | 517 | | $ | 39,931 | | 56.2 | % | $ | 4,681 | |
Other Residential Loans | | 3,647 | | 5.6 | % | 676 | | 4,054 | | 5.7 | % | 649 | |
Commercial and Industrial Loans | | 10,710 | | 16.4 | % | 1,802 | | 10,661 | | 15.0 | % | 1,620 | |
Commercial Real Estate | | 26,958 | | 41.2 | % | 717 | | 16,069 | | 22.6 | % | 3,852 | |
Other | | 292 | | 0.4 | % | 4 | | 343 | | 0.5 | % | — | |
Total | | $ | 65,404 | | 100.0 | % | $ | 3,716 | | $ | 71,058 | | 100.0 | % | $ | 10,802 | |
8
The types of loans included in the accruing loans past due 30-89 days as of June 30, 2010 and March 31, 2010 are as follows:
| | Accruing loans past due 30-89 days | |
| | June 30, 2010 | | March 31, 2010 | |
| | Loan Balance | | Percent | | Loan Balance | | Percent | |
| | (Amounts in thousands) | |
Residential Construction, Land and Land Development | | $ | 483 | | 1.5 | % | $ | 5,138 | | 23.4 | % |
Other Residential Loans | | 1,219 | | 3.7 | % | 1,382 | | 6.3 | % |
Commercial and Industrial Loans | | 2,758 | | 8.3 | % | 5,027 | | 22.9 | % |
Commercial Real Estate | | 27,290 | | 82.6 | % | 2,268 | | 10.3 | % |
Other | | 1,300 | | 3.9 | % | 8,141 | | 37.1 | % |
Total | | $ | 33,050 | | 100.0 | % | $ | 21,956 | | 100.0 | % |
The overall level of accruing loans past due 30-89 days increased over the previous quarter. At June 30, 2010, approximately $29.3 million of the $33.1 million of accruing loans past due 30-89 days were matured and in the process of renewal. Most of this category relates to a single loan of $23.0 million at June 30, 2010. This compares to approximately $9.8 million of the $22.0 million of accruing loans past due 30-89 days at March 31, 2010, that were matured and in the process of renewal.
Net charge-offs in the second quarter 2010 were $13.5 million as compared to $13.2 million in the same quarter last year and $4.0 million in the first quarter 2010.
Impaired loans as of June 30, 2010 totaled $65.4 million compared to $71.1 million at March 31, 2010 and $59.7 million at December 31, 2009. Other real estate owned was $30.3 million at June 30, 2010 compared to $30.9 million at March 31, 2010 and $37.2 million at December 31, 2009. Overall nonperforming assets declined by $1.2 million at June 30, 2010 as compared to December 31, 2009.
The general component of the allowance for loan losses at June 30, 2010 is $43.2 million, or 92.1% of the entire allowance for loan losses, as compared to $41.2 million, or 79.2% of the allowance for loan losses at the end of the previous quarter.
The Company recorded a provision for loan losses in the second quarter 2010 of $8.4 million, as compared to $18.6 million in the same quarter in 2009. The second quarter 2010 provision for loan consisted of an $6.5 million increase in the specific component of the allowance including charge-offs on impaired loans, as well as a $1.9 million increase in the general component of the allowance due primarily to the impact of charge-offs on the historical, economic concern and concentration components of the allowance for loan losses.
Shares Outstanding
As of June 30, 2010, the Company had 52,757,233 shares of common stock outstanding, including 1,221,835 shares of unvested stock awards, but excluding 156,567 shares of common stock to be issued under its deferred compensation plan. In addition, the Company had 63,168 shares of Series A convertible preferred stock outstanding, with a liquidation value of $1,000 per share.
9
Non-GAAP Financial Measures
This press release includes non-GAAP financial measures related to tangible assets, including tangible book value, tangible book value (after giving effect to conversion of preferred stock), and tangible equity ratio, which exclude intangible assets.
The Company discloses these non-GAAP financial measures to provide meaningful supplemental information regarding the Company’s operational performance and to enhance investors’ overall understanding of the Company’s core financial performance. Management believes that these non-GAAP financial measures allow for additional transparency and are used by some investors, analysts and other users of the Company’s financial information as performance measures. These non-GAAP financial measures are presented for supplemental informational purposes only for understanding the Company’s operating results and should not be considered a substitute for financial information presented in accordance with GAAP. These non-GAAP financial measures presented by the Company may be different from non-GAAP financial measures used by other companies.
The following non-GAAP schedule reconciles the book value per share to the tangible book value per share and the tangible equity ratio as of the dates indicated:
| | June 30,
2010 | | December 31,
2009 | | June 30,
2009 | |
| | (Dollars in thousands, except per share amounts) | |
Tangible Book Value per Common Share | | | | | | | |
Total stockholders’ equity | | $ | 189,005 | | $ | 192,638 | | $ | 153,607 | |
Less: Preferred share liquidation preference | | (63,168 | ) | (60,434 | ) | — | |
Stockholders’ equity attributable to common shares | | 125,837 | | 132,204 | | 153,607 | |
Less: Intangible assets | | (16,622 | ) | (19,222 | ) | (22,337 | ) |
Tangible common equity | | $ | 109,215 | | $ | 112,982 | | $ | 131,270 | |
Number of common shares outstanding and to be issued | | 52,913,800 | | 52,952,703 | | 52,505,524 | |
| | | | | | | |
Number of shares of preferred stock outstanding | | 63,168 | | 60,434 | | N/A | |
Number of shares of common stock to be issued upon conversion of preferred stock | | 35,093,333 | | 33,574,444 | | N/A | |
| | | | | | | |
Book value per common share | | $ | 2.38 | | $ | 2.50 | | $ | 2.93 | |
Tangible book value per common share | | $ | 2.06 | | $ | 2.13 | | $ | 2.50 | |
Tangible book value per common share (after giving effect to conversion of preferred stock) | | $ | 1.96 | | $ | 2.00 | | $ | 2.50 | |
| | | | | | | |
Tangible Equity Ratio | | | | | | | |
Total assets | | $ | 1,983,798 | | $ | 2,127,580 | | $ | 1,944,867 | |
Less: Intangible assets | | (16,622 | ) | (19,222 | ) | (22,337 | ) |
Tangible assets | | $ | 1,967,176 | | $ | 2,108,358 | | $ | 1,922,530 | |
| | | | | | | |
Equity ratio — GAAP
(Total stockholders’ equity / total assets) | | 9.53 | % | 9.05 | % | 7.90 | % |
Tangible equity ratio
(Tangible common equity + Preferred share
liquidation preference) / tangible assets | | 8.76 | % | 8.23 | % | 6.83 | % |
10
About Guaranty Bancorp
Guaranty Bancorp is a bank holding company that operates 34 branches in Colorado through a single bank, Guaranty Bank and Trust Company. The bank provides banking and other financial services including real estate, construction, commercial and industrial, energy, consumer and agricultural loans throughout its targeted Colorado markets to consumers and small to medium-sized businesses, including the owners and employees of those businesses. The bank also provides trust services, including personal trust administration, estate settlement, investment management accounts and self-directed IRAs. More information about Guaranty Bancorp can be found at 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; the effect of the regulatory written agreement the Company and its bank subsidiary have entered into and potential future supervisory action against the Company or its bank subsidiary; 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 our bank subsidiary to declare dividends to the Company; adequacy of our allowance for loan losses, changes in credit quality and the effect of credit quality on our 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 the deferred tax asset valuation allowance; 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 other terms of 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.
11
GUARANTY BANCORP AND SUBSIDIARIES
Unaudited Consolidated Balance Sheets
| | June 30,
2010 | | December 31,
2009 | | June 30,
2009 | |
| | (In thousands) | |
Assets | | | | | | | |
Cash and due from banks | | $ | 184,507 | | $ | 234,483 | | $ | 28,403 | |
Federal funds sold | | 194 | | — | | 18,693 | |
Cash and cash equivalents | | 184,701 | | 234,483 | | 47,096 | |
| | | | | | | |
Securities available for sale, at fair value | | 281,215 | | 221,134 | | 97,461 | |
Securities held to maturity | | 13,897 | | 9,942 | | 10,929 | |
Bank stocks, at cost | | 17,181 | | 17,160 | | 16,562 | |
Total investments | | 312,293 | | 248,236 | | 124,952 | |
| | | | | | | |
Loans, net of unearned discount | | 1,374,208 | | 1,519,608 | | 1,651,572 | |
Less allowance for loan losses | | (46,866 | ) | (51,991 | ) | (43,041 | ) |
Net loans | | 1,327,342 | | 1,467,617 | | 1,608,531 | |
| | | | | | | |
Loans held for sale | | 1,150 | | 9,862 | | 5,250 | |
Premises and equipment, net | | 58,799 | | 60,267 | | 61,903 | |
Other real estate owned and foreclosed assets | | 30,298 | | 37,192 | | 34,746 | |
Other intangible assets, net | | 16,622 | | 19,222 | | 22,337 | |
Other assets | | 52,593 | | 50,701 | | 40,052 | |
Total assets | | $ | 1,983,798 | | $ | 2,127,580 | | $ | 1,944,867 | |
| | | | | | | |
Liabilities and Stockholders’ Equity | | | | | | | |
Liabilities: | | | | | | | |
Deposits: | | | | | | | |
Noninterest-bearing demand | | $ | 338,169 | | $ | 366,103 | | $ | 352,185 | |
Interest-bearing demand | | 495,052 | | 523,971 | | 448,256 | |
Savings | | 75,338 | | 71,816 | | 72,143 | |
Time | | 635,712 | | 731,400 | | 688,146 | |
Total deposits | | 1,544,271 | | 1,693,290 | | 1,560,730 | |
Securities sold under agreements to repurchase and federal funds purchased | | 17,247 | | 22,990 | | 13,071 | |
Borrowings | | 164,276 | | 164,364 | | 164,459 | |
Subordinated debentures | | 41,239 | | 41,239 | | 41,239 | |
Interest payable and other liabilities | | 27,760 | | 13,059 | | 11,761 | |
Total liabilities | | 1,794,793 | | 1,934,942 | | 1,791,260 | |
| | | | | | | |
Stockholders’ equity: | | | | | | | |
Preferred stock and Additional paid-in capital — Preferred stock | | 61,961 | | 59,227 | | — | |
Common stock and Additional paid-in capital — Common stock | | 618,996 | | 618,408 | | 617,664 | |
Shares to be issued for deferred compensation obligations | | 237 | | 199 | | 120 | |
Accumulated deficit | | (391,548 | ) | (382,599 | ) | (362,424 | ) |
Accumulated other comprehensive income (loss) | | 1,844 | | (143 | ) | 691 | |
Treasury Stock | | (102,485 | ) | (102,454 | ) | (102,444 | ) |
Total stockholders’ equity | | 189,005 | | 192,638 | | 153,607 | |
Total liabilities and stockholders’ equity | | $ | 1,983,798 | | $ | 2,127,580 | | $ | 1,944,867 | |
12
GUARANTY BANCORP AND SUBSIDIARIES
Unaudited Consolidated Statements of Operations
| | Three Months Ended June 30, | | Six Months Ended June 30, | |
| | 2010 | | 2009 | | 2010 | | 2009 | |
| | (In thousands, except share and per share data) | |
Interest income: | | | | | | | | | |
Loans, including fees | | $ | 19,449 | | $ | 23,208 | | $ | 40,233 | | $ | 46,284 | |
Investment securities: | | | | | | | | | |
Taxable | | 1,615 | | 590 | | 3,131 | | 1,316 | |
Tax-exempt | | 704 | | 765 | | 1,424 | | 1,532 | |
Dividends | | 182 | | 198 | | 367 | | 486 | |
Federal funds sold and other | | 103 | | 14 | | 219 | | 17 | |
Total interest income | | 22,053 | | 24,775 | | 45,374 | | 49,635 | |
Interest expense: | | | | | | | | | |
Deposits | | 3,994 | | 6,910 | | 8,707 | | 14,035 | |
Securities sold under agreement to repurchase and federal funds purchased | | 33 | | 31 | | 76 | | 69 | |
Borrowings | | 1,314 | | 1,312 | | 2,615 | | 2,633 | |
Subordinated debentures | | 579 | | 662 | | 1,211 | | 1,320 | |
Total interest expense | | 5,920 | | 8,915 | | 12,609 | | 18,057 | |
Net interest income | | 16,133 | | 15,860 | | 32,765 | | 31,578 | |
Provision for loan losses | | 8,400 | | 18,605 | | 12,400 | | 21,110 | |
Net interest income, after provision for loan losses | | 7,733 | | (2,745 | ) | 20,365 | | 10,468 | |
Noninterest income: | | | | | | | | | |
Customer service and other fees | | 2,254 | | 2,354 | | 4,468 | | 5,033 | |
Gain (loss) on sale of securities | | 1 | | — | | 15 | | — | |
Gain on sale of loans | | 1,196 | | — | | 1,196 | | — | |
Other | | 274 | | 277 | | 468 | | 492 | |
Total noninterest income | | 3,725 | | 2,631 | | 6,147 | | 5,525 | |
Noninterest expense: | | | | | | | | | |
Salaries and employee benefits | | 6,472 | | 6,712 | | 13,035 | | 13,451 | |
Occupancy expense | | 1,836 | | 1,926 | | 3,726 | | 3,847 | |
Furniture and equipment | | 967 | | 1,147 | | 1,943 | | 2,278 | |
Amortization of intangible assets | | 1,300 | | 1,581 | | 2,600 | | 3,163 | |
Other real estate owned, net | | 3,115 | | 915 | | 5,864 | | 963 | |
Insurance and assessments | | 1,825 | | 2,195 | | 3,637 | | 3,236 | |
Professional fees | | 739 | | 896 | | 1,616 | | 1,745 | |
Other general and administrative | | 2,165 | | 2,346 | | 4,124 | | 4,495 | |
Total noninterest expense | | 18,419 | | 17,718 | | 36,545 | | 33,178 | |
Loss before income taxes | | (6,961 | ) | (17,832 | ) | (10,033 | ) | (17,185 | ) |
Income tax benefit | | (2,607 | ) | (6,975 | ) | (3,834 | ) | (6,764 | ) |
Net loss | | (4,354 | ) | (10,857 | ) | (6,199 | ) | (10,421 | ) |
Preferred stock dividends | | (1,390 | ) | — | | (2,750 | ) | — | |
Net loss applicable to common stockholders | | $ | (5,744 | ) | $ | (10,857 | ) | $ | (8,949 | ) | $ | (10,421 | ) |
| | | | | | | | | |
Loss per common share—basic: | | $ | (0.11 | ) | $ | (0.21 | ) | $ | (0.17 | ) | $ | (0.20 | ) |
Loss per common share—diluted: | | (0.11 | ) | (0.21 | ) | (0.17 | ) | (0.20 | ) |
| | | | | | | | | |
Weighted average common shares outstanding-basic | | 51,660,603 | | 51,339,542 | | 51,633,972 | | 51,312,847 | |
Weighted average common shares outstanding-diluted | | 51,660,603 | | 51,339,542 | | 51,633,972 | | 51,312,847 | |
13
GUARANTY BANCORP AND SUBSIDIARIES
Unaudited Consolidated Average Balance Sheets
| | QTD Average | | YTD Average | |
| | June 30,
2010 | | December 31,
2009 | | June 30,
2009 | | June 30,
2010 | | June 30,
2009 | |
| | (In thousands) | |
Assets | | | | | | | | | | | |
Interest earning assets | | | | | | | | | | | |
Loans, net of unearned discount | | $ | 1,418,768 | | $ | 1,578,761 | | $ | 1,733,168 | | $ | 1,455,494 | | $ | 1,770,738 | |
Securities | | 286,469 | | 228,608 | | 132,231 | | 266,107 | | 136,607 | |
Other earning assets | | 161,611 | | 176,049 | | 16,175 | | 175,878 | | 10,704 | |
Average earning assets | | 1,866,848 | | 1,983,418 | | 1,881,574 | | 1,897,479 | | 1,918,049 | |
Other assets | | 132,679 | | 133,839 | | 129,740 | | 135,563 | | 120,298 | |
| | | | | | | | | | | |
Total average assets | | $ | 1,999,527 | | $ | 2,117,257 | | $ | 2,011,314 | | $ | 2,033,042 | | $ | 2,038,347 | |
| | | | | | | | | | | |
Liabilities and Stockholders’ Equity | | | | | | | | | | | |
Average liabilities: | | | | | | | | | | | |
Average deposits: | | | | | | | | | | | |
Noninterest-bearing deposits | | $ | 352,171 | | $ | 363,177 | | $ | 410,517 | | $ | 352,551 | | $ | 421,239 | |
Interest-bearing deposits | | 1,218,176 | | 1,320,410 | | 1,203,107 | | 1,249,972 | | 1,215,108 | |
Average deposits | | 1,570,347 | | 1,683,587 | | 1,613,624 | | 1,602,523 | | 1,636,347 | |
Other interest-bearing liabilities | | 223,435 | | 223,835 | | 222,234 | | 224,142 | | 226,283 | |
Other liabilities | | 14,045 | | 11,979 | | 10,472 | | 13,576 | | 11,294 | |
Total average liabilities | | 1,807,827 | | 1,919,401 | | 1,846,330 | | 1,840,241 | | 1,873,924 | |
Average stockholders’ equity | | 191,700 | | 197,856 | | 164,984 | | 192,801 | | 164,423 | |
Total average liabilities and stockholders’ equity | | $ | 1,999,527 | | $ | 2,117,257 | | $ | 2,011,314 | | $ | 2,033,042 | | $ | 2,038,347 | |
14
GUARANTY BANCORP
Unaudited Credit Quality Measures
| | Quarter Ended | |
| | June 30, | | March 31, | | December 31, | | September 30, | | June 30, | |
| | 2010 | | 2010 | | 2009 | | 2009 | | 2009 | |
| | (Dollars in thousands) | |
Nonaccrual loans and leases, not restructured | | $ | 64,339 | | $ | 70,500 | | $ | 59,584 | | $ | 81,035 | | $ | 52,483 | |
Other nonperforming loans | | 1,065 | | 558 | | 123 | | 150 | | 2,671 | |
Total nonperforming loans | | $ | 65,404 | | $ | 71,058 | | $ | 59,707 | | $ | 81,185 | | $ | 55,154 | |
Other real estate owned and foreclosed assets | | 30,298 | | 30,918 | | 37,192 | | 32,246 | | 34,746 | |
Total nonperforming assets | | $ | 95,702 | | $ | 101,976 | | $ | 96,899 | | $ | 113,431 | | $ | 89,900 | |
| | | | | | | | | | | |
Impaired loans | | $ | 65,404 | | $ | 71,058 | | $ | 59,707 | | $ | 81,185 | | $ | 55,154 | |
Allocated allowance for loan losses | | (3,716 | ) | (10,802 | ) | (6,603 | ) | (7,515 | ) | (7,291 | ) |
Net investment in impaired loans | | $ | 61,688 | | $ | 60,256 | | $ | 53,104 | | $ | 73,670 | | $ | 47,863 | |
| | | | | | | | | | | |
Accruing loans past due 90 days or more | | $ | 1,065 | | $ | 558 | | $ | 123 | | $ | 9,140 | | $ | 2,671 | |
| | | | | | | | | | | |
Accruing loans past due 30-89 days | | $ | 33,050 | | $ | 21,956 | | $ | 21,709 | | $ | 52,443 | | $ | 39,836 | |
| | | | | | | | | | | |
Charged-off loans | | $ | 13,918 | | $ | 4,271 | | $ | 7,618 | | $ | 14,618 | | $ | 13,509 | |
Recoveries | | (369 | ) | (295 | ) | (566 | ) | (615 | ) | (347 | ) |
Net charge-offs | | $ | 13,549 | | $ | 3,976 | | $ | 7,052 | | $ | 14,003 | | $ | 13,162 | |
| | | | | | | | | | | |
Provision for loan loss | | $ | 8,400 | | $ | 4,000 | | $ | 10,005 | | $ | 20,000 | | $ | 18,605 | |
| | | | | | | | | | | |
Allowance for loan losses | | $ | 46,866 | | $ | 52,015 | | $ | 51,991 | | $ | 49,038 | | $ | 43,041 | |
| | | | | | | | | | | |
Allowance for loan losses to loans, net of unearned discount | | 3.41 | % | 3.62 | % | 3.42 | % | 3.09 | % | 2.61 | % |
Allowance for loan losses to nonaccrual loans | | 72.84 | % | 73.78 | % | 87.26 | % | 60.51 | % | 82.01 | % |
Allowance for loan losses to nonperforming assets | | 48.97 | % | 51.01 | % | 53.65 | % | 43.23 | % | 47.88 | % |
Allowance for loan losses to nonperforming loans | | 71.66 | % | 73.20 | % | 87.08 | % | 60.40 | % | 78.04 | % |
Nonperforming assets to loans, net of unearned discount, and other real estate owned | | 6.81 | % | 6.96 | % | 6.22 | % | 7.00 | % | 5.33 | % |
Nonperforming assets to total assets | | 4.82 | % | 5.02 | % | 4.55 | % | 5.51 | % | 4.62 | % |
Nonaccrual loans to loans, net of unearned discount | | 4.68 | % | 4.91 | % | 3.92 | % | 5.11 | % | 3.18 | % |
Nonperforming loans to loans, net of unearned discount | | 4.76 | % | 4.95 | % | 3.93 | % | 5.11 | % | 3.34 | % |
Annualized net charge-offs to average loans | | 3.83 | % | 1.08 | % | 1.77 | % | 3.42 | % | 3.05 | % |
15
