Exhibit 99.1
FOR IMMEDIATE RELEASE:
| Investor Relations: |
| Paul W. Taylor 303/293-5563 |
Guaranty Bancorp Announces 2011 First Quarter Financial Results
· Net income of $0.5 million (before non-cash preferred stock dividends)
· Asset quality shows continued improvement highlighted by a 7.2% decrease in classified assets in the first quarter 2011 and a 2.7% decline in nonperforming assets
· Continued growth in lower cost core deposits with $57.4 million of additional growth in the first quarter 2011
· Capital and liquidity remain strong
DENVER, April 21, 2011 — Guaranty Bancorp (Nasdaq: GBNK) today reported first quarter 2011 net income of $0.5 million before preferred stock dividends compared to a net loss of $1.8 million before preferred stock dividends in the first quarter 2010. After giving effect to the preferred stock dividends, the loss per basic and diluted common share in the first quarter 2011 was $0.02 compared to a loss per basic and diluted common share of $0.06 for the same period in 2010.
The Company’s net income before preferred stock dividends for the first quarter 2011 of $0.5 million is an increase of $2.4 million as compared to the first quarter 2010. On a pre-tax basis, the improvement in net income was $3.6 million for the first quarter 2011 as compared to 2010. This increase is primarily due to approximately $4.0 million in lower costs associated with problem assets, a $0.7 million reduction in other expenses and a $0.7 million gain on sale of securities, partially offset by a $1.9 million reduction in net interest income due mostly to lower loan balances.
Paul W. Taylor, Guaranty Bancorp’s CFO and COO, stated, “We are very pleased with progress made in 2011 to improve the core operating metrics of the bank. The net income before our non-cash preferred stock dividends is attributable to the risk-reduction strategies employed during the past two years. As important, we continued to improve the asset quality of the bank while growing core deposits. After a 23% decrease in classified assets in 2010, classified assets declined by another 7.2% and nonperforming assets declined modestly in the first quarter 2011. Our low cost core deposits increased by $57.4 million, or 5.8%, during the first quarter 2011 due to our continued focus on growing our retail and business customer base. Even with the growth in core deposits, the interest expense associated with core deposits actually declined by $0.1 million due to lower rates on our core deposits. Additionally, we continue to strategically reduce higher cost time deposits. The $81.4 million decrease in time deposits in the first quarter 2011 resulted in a $0.5 million decrease in our interest expense.”
As previously announced, the resignation of Dan Quinn, Guaranty Bancorp’s President and CEO, will be effective as of the Company’s Annual Meeting of Stockholders, which is scheduled for May 3, 2011. The Board of Directors is in the process of the search for a new CEO and President with the assistance of an executive search firm focused on the financial institutions industry. Several qualified candidates have been identified and are in the process of being interviewed.
1
Key Financial Measures
Income Statement
| | Quarter Ended | |
| | March 31,
2011 | | December 31,
2010 | | March 31,
2010 | |
| | (Dollars in thousands, except per share amounts) | |
Income (loss) before taxes | | $ | 514 | | $ | (21,133 | ) | $ | (3,072 | ) |
Net income (loss) before preferred stock dividends | | 514 | | (21,133 | ) | (1,845 | ) |
Preferred stock dividends | | 1,486 | | 1,453 | | 1,360 | |
Loss per common share after giving effect to preferred stock dividend-basic & diluted | | $ | (0.02 | ) | $ | (0.44 | ) | $ | (0.06 | ) |
Return on average assets | | 0.11 | % | (4.32 | )% | (0.36 | )% |
Net interest margin | | 3.42 | % | 3.39 | % | 3.50 | % |
Balance Sheet
| | March 31,
2011 | | December 31,
2010 | | %
Change | | March 31,
2010 | | %
Change | |
| | (Dollars in thousands, except per share amounts) | |
Cash and cash equivalents | | $ | 184,777 | | $ | 141,465 | | 30.6 | % | $ | 222,723 | | (17.0 | )% |
Total investments | | 409,126 | | 418,668 | | (2.3 | )% | 252,393 | | 62.1 | % |
Total loans, net of unearned discount | | 1,126,083 | | 1,204,580 | | (6.5 | )% | 1,435,071 | | (21.5 | )% |
Loans held for sale | | 14,200 | | 14,200 | | 0.0 | % | 11,506 | | 23.4 | % |
Allowance for loan losses | | (46,879 | ) | (47,069 | ) | (0.4 | )% | (52,015 | ) | (9.9 | )% |
Total assets | | 1,834,457 | | 1,870,052 | | (1.9 | )% | 2,030,331 | | (9.6 | )% |
Average assets, quarter-to-date | | 1,869,896 | | 1,940,513 | | (3.6 | )% | 2,066,930 | | (9.5 | )% |
Total deposits | | 1,438,320 | | 1,462,351 | | (1.6 | )% | 1,602,884 | | (10.3 | )% |
Book value per common share | | 1.71 | | 1.76 | | (2.8 | )% | 2.44 | | (29.9 | )% |
Tangible book value per common share | | 1.47 | | 1.50 | | (2.0 | )% | 2.10 | | (30.0 | )% |
Tangible book value per common share (after giving effect to conversion of preferred stock) | | 1.60 | | 1.62 | | (1.2 | )% | 1.98 | | (19.2 | )% |
Book value of preferred stock | | 66,297 | | 64,818 | | 2.3 | % | 60,580 | | 9.4 | % |
Liquidation value of preferred stock | | 67,504 | | 66,025 | | 2.2 | % | 61,787 | | 9.3 | % |
Equity ratio — GAAP | | 8.72 | % | 8.57 | % | 1.8 | % | 9.41 | % | (7.3 | )% |
Tangible equity ratio | | 8.06 | % | 7.88 | % | 2.3 | % | 8.60 | % | (6.3 | )% |
Total risk-based capital ratio | | 15.82 | % | 14.99 | % | 5.5 | % | 14.28 | % | 10.8 | % |
| | | | | | | | | | | | | | |
Net Interest Income and Margin
| | Quarter Ended | |
| | March 31,
2011 | | December 31,
2010 | | March 31,
2010 | |
| | (Dollars in thousands) | |
| | | | | | | |
Net interest income | | $ | 14,710 | | $ | 15,394 | | $ | 16,632 | |
Interest rate spread | | 3.05 | % | 3.02 | % | 3.10 | % |
Net interest margin | | 3.42 | % | 3.39 | % | 3.50 | % |
Net interest margin, fully tax equivalent | | 3.49 | % | 3.46 | % | 3.58 | % |
| | | | | | | | | | |
First quarter 2011 net interest income of $14.7 million decreased by $0.7 million from the fourth quarter 2010, and decreased by $1.9 million from the first quarter 2010. The Company’s net interest margin of 3.42% for the first quarter 2011 reflected an increase of 3 basis points from the fourth quarter 2010 and a decrease of 8 basis points from the first quarter 2010.
The $0.7 million decrease in net interest income in the first quarter 2011 as compared to the fourth quarter 2010 is due mostly to a 12 basis point decline in the yield on loans coupled with a $70.2
2
million decrease in average loan balances. These two items contributed to a $1.7 million decline in interest income on loans. Partially offsetting this decrease in loan interest income was a $0.5 million increase in taxable investment security interest income and a $0.6 million decrease in deposit interest expense. The increase in interest income on taxable investments is due mostly to a $25.0 million increase in the average balances of such investments along with a 37 basis point increase in the yield on taxable investments. The decrease in deposit interest expense was due mostly to a $0.5 million decrease in time deposit interest expense due to management’s continued strategy to reduce non-core time deposits. The average balance of time deposit accounts decreased by $76.5 million in the first quarter 2011 as compared to the fourth quarter 2010. In particular, during the last week of the first quarter 2011, a $33.6 million brokered time deposit with a rate of 4.25% matured and was not renewed. Although this did not have a significant impact on first quarter 2011 results, it is anticipated to reduce ongoing deposit interest expense. Throughout the remainder of 2011, the Company has approximately $98.2 million of brokered time deposits with a weighted average cost of 2.87% maturing that the Company does not expect to renew.
Net interest income decreased by $1.9 million in the first quarter 2011 as compared to the same quarter in 2010 due mostly to a $5.3 million decrease in loan interest income, partially offset by a $2.1 million decrease in deposit interest expense and a $1.5 million increase in interest on taxable investments. The decline in loan interest income was primarily attributable to a $303.4 million decrease in average loan volume as the Company worked to reduce its overall risk profile. Partially offsetting the impact of the decline in loan volume was an increase in the average balance of taxable investment securities by $190.6 million in the first quarter 2011 as compared to the same quarter in 2010. The cost of deposits decreased from 1.49% in the first quarter 2010 to 1.00% in the first quarter 2011 due primarily to a reduction in time deposit interest expense.
Noninterest Income
The following table presents noninterest income as of the dates indicated:
| | Quarter Ended | |
| | March 31,
2011 | | December 31,
2010 | | March 31,
2010 | |
| | (Dollars in thousands) | |
Noninterest income: | | | | | | | |
Customer service and other fees | | $ | 2,314 | | $ | 2,430 | | $ | 2,214 | |
Gain on sale of securities | | 714 | | 216 | | 14 | |
Other-than-temporary-impairment (OTTI) of securities | | — | | (3,500 | ) | — | |
Other | | 252 | | 256 | | 194 | |
Total noninterest income | | $ | 3,280 | | $ | (598 | ) | $ | 2,422 | |
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The $3.9 million increase in noninterest income in the first quarter 2011 as compared to the fourth quarter 2010 is mostly due to a $3.5 million credit-related other-than-temporary-impairment (OTTI) recognized on a single, non-rated municipal bond in the fourth quarter 2010. This security was evaluated for impairment at the end of the first quarter 2011 and no changes to the initial OTTI was considered necessary on this bond. Additionally, the gain on sale of securities increased by $0.5 million in the first quarter 2011 as compared to the fourth quarter 2010.
The $0.9 million increase in noninterest income between the first quarter 2011 as compared to the same quarter in 2010 is primarily due to a $0.7 million gain on sale of securities.
Noninterest Expense
The following table presents noninterest expense as of the dates indicated:
| | Quarter Ended | |
| | March 31,
2011 | | December 31,
2010 | | March 31,
2010 | |
| | (Dollars in thousands) | |
Noninterest expense: | | | | | | | |
Salaries and employee benefits | | $ | 6,615 | | $ | 6,456 | | $ | 6,563 | |
Occupancy expense | | 1,883 | | 1,783 | | 1,890 | |
Furniture and equipment | | 894 | | 927 | | 976 | |
Amortization of intangible assets | | 1,028 | | 1,283 | | 1,300 | |
Other real estate owned | | 763 | | 1,209 | | 2,749 | |
Insurance and assessment | | 1,225 | | 1,336 | | 1,812 | |
Professional fees | | 908 | | 824 | | 877 | |
Other general and administrative | | 2,160 | | 2,611 | | 1,959 | |
Total noninterest expense | | $ | 15,476 | | $ | 16,429 | | $ | 18,126 | |
The $1.0 million decrease in noninterest expense in the first quarter 2011 as compared to the fourth quarter 2010 is due mostly to a $0.4 million decrease in expenses related to other real estate owned and a decrease of $0.5 million in other general and administrative expenses. The decrease in other real estate owned expense is primarily due to a reduction in net write-downs on other real estate owned properties resulting from valuation adjustments and sales. The decrease in other general and administrative expenses is due mostly to various reductions across all items of miscellaneous expense including advertising, data processing, communication and loan collection expenses.
The $2.7 million decrease in noninterest expense in the first quarter 2011 as compared to the same quarter in 2010 is due mostly to a $2.0 million decrease in expenses related to other real estate owned as well as a $0.6 million decrease in insurance and assessment expenses. The decrease in other real estate owned expense is due mostly to a reduction in net write-downs on other real estate owned properties. The decrease in insurance and assessment expenses is due mostly to a decrease in our risk category for FDIC insurance assessment purposes, as well as a decrease in overall deposits. Effective April 1, 2011, the FDIC insurance assessment rules have changed as a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act. These new rules change the assessment base from total deposits to average total assets less tangible capital. The assessment rates have been lowered to account for the higher assessment base. The Company expects that these new rules will have a favorable impact on FDIC insurance assessments for the remainder of 2011. Had these new rules been in effect for the first quarter 2011, our FDIC insurance premium would have been reduced by approximately $0.2 million.
4
Preferred Stock Dividend
Effective February 15, 2011, 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 $1.5 million.
Balance Sheet
| | March 31,
2011 | | December 31,
2010 | | %
Change | | March 31,
2010 | | %
Change | |
| | (Dollars in thousands) | |
Total assets | | $ | 1,834,457 | | $ | 1,870,052 | | (1.9 | )% | $ | 2,030,331 | | (9.6 | )% |
Average assets, quarter-to-date | | 1,869,896 | | 1,940,513 | | (3.6 | )% | 2,066,930 | | (9.5 | )% |
Loans, net of unearned discount | | 1,126,083 | | 1,204,580 | | (6.5 | )% | 1,435,071 | | (21.5 | )% |
Total deposits | | 1,438,320 | | 1,462,351 | | (1.6 | )% | 1,602,884 | | (10.3 | )% |
| | | | | | | | | | | |
Equity ratio - GAAP | | 8.72 | % | 8.57 | % | 1.8 | % | 9.41 | % | (7.3 | )% |
Tangible equity ratio | | 8.06 | % | 7.88 | % | 2.3 | % | 8.60 | % | (6.3 | )% |
| | | | | | | | | | | | | | |
At March 31, 2011, the Company had total assets of $1.8 billion, which represented a $35.6 million decline as compared to December 31, 2010 and a $195.9 million decrease as compared to March 31, 2010. The decline in assets from December 31, 2010 is mostly due to a $78.5 million decline in loans, net of unearned discount, partially offset by a $43.3 million increase in cash and due from banks over the same time period. This loan decline was due mostly to a $45.1 million decline in commercial loans and a $29.6 million decline in real estate loans. The increase in cash and due from banks is due to proceeds from the reduction of loans being held to fund anticipated reductions in brokered time deposits, purchase additional investment securities and fund future loan growth.
The following table sets forth the amounts of our loans outstanding (excluding loans held for sale) at the dates indicated:
| | March 31,
2011 | | December 31,
2010 | | March 31,
2010 | |
| | (In thousands) | |
Loans on real estate: | | | | | | | |
Residential and commercial | | $ | 659,018 | | $ | 680,895 | | $ | 748,135 | |
Construction | | 50,539 | | 57,351 | | 111,231 | |
Equity lines of credit | | 49,399 | | 50,289 | | 53,014 | |
Commercial loans | | 305,627 | | 350,725 | | 448,908 | |
Agricultural loans | | 12,582 | | 14,413 | | 17,203 | |
Lease financing | | 3,143 | | 3,143 | | 4,014 | |
Installment loans to individuals | | 26,942 | | 28,582 | | 34,986 | |
Overdrafts | | 835 | | 565 | | 612 | |
SBA and other | | 19,543 | | 20,443 | | 19,396 | |
| | 1,127,628 | | 1,206,406 | | 1,437,499 | |
Unearned discount | | (1,545 | ) | (1,826 | ) | (2,428 | ) |
Loans, net of unearned discount | | $ | 1,126,083 | | $ | 1,204,580 | | $ | 1,435,071 | |
Since March 31, 2010, the ratio of construction, land and land development loans to capital has fallen by 28 percentage points to 77% at March 31, 2011. Similarly, the ratio of commercial real estate loans to capital has fallen by 59 percentage points to 268% at March 31, 2011. These ratios are below the regulatory commercial real estate concentration guidelines of 100% for land and construction loans and 300% for all investor real estate loans, respectively.
5
The following table sets forth the amounts of our deposits outstanding at the dates indicated:
| | March 31,
2011 | | December 31,
2010 | | March 31,
2010 | |
| | (In thousands) | |
Noninterest-bearing deposits | | $ | 419,335 | | $ | 374,500 | | $ | 363,059 | |
Interest-bearing demand | | 184,305 | | 178,042 | | 165,315 | |
Money market | | 357,922 | | 357,036 | | 321,603 | |
Savings | | 84,501 | | 79,100 | | 74,537 | |
Time | | 392,257 | | 473,673 | | 678,370 | |
Total deposits | | $ | 1,438,320 | | $ | 1,462,351 | | $ | 1,602,884 | |
Noninterest-bearing deposits as a percentage of total deposits increased to 29.2% at March 31, 2011, as compared to 25.6% at December 31, 2010 and 22.7% at March 31, 2010.
Deposits, other than time deposits, increased by $57.4 million, at March 31, 2011 as compared to December 31, 2010 and increased by $121.5 million as compared to March 31, 2010. The increases in non-maturity deposits were primarily attributable to the continued success of our business and retail strategic deposit gathering campaign. We plan to continue this deposit campaign, which includes a variety of different advertising media, throughout 2011.
Time deposits continue to decrease primarily as a result of management’s efforts to reduce the overall level of higher cost time deposits, including brokered and internet deposits. Total brokered deposits at March 31, 2011 were $133.3 million as compared to $179.9 million at December 31, 2010 and $267.5 million at March 31, 2010. In addition to this $134.2 million decline in brokered deposits over the past twelve months, we also experienced a $60.3 million decline in internet time deposits over the same time period. The remaining decline in time deposits is primarily related to the non-renewal of other higher cost certificates of deposits. Management monitors time deposit maturities and renewals on a daily basis and will raise rates on local time deposits if necessary to grow such deposits.
Borrowings were $163.2 million at March 31, 2011 as compared to $163.2 million at December 31, 2010 and $164.3 million at March 31, 2010. The entire balance of borrowings at each balance sheet date consisted of term advances with the Federal Home Loan Bank.
6
Regulatory Capital Ratios
All of the regulatory capital ratios are above the highest regulatory capital threshold of “well-capitalized” at March 31, 2011. The Company’s and the subsidiary bank’s actual capital ratios for March 31, 2011 and December 31, 2010 are presented in the table below:
| | Ratio at
March 31,
2011 | | Ratio at
December 31,
2010 | | Minimum
Capital
Requirement | | Minimum
Requirement for
“Well
Capitalized”
Institution | |
| | | | | | | | | |
Total Risk-Based Capital Ratio: | | | | | | | | | |
Consolidated | | 15.82 | % | 14.99 | % | 8.00 | % | N/A | |
Guaranty Bank and Trust Company | | 14.96 | % | 14.07 | % | 8.00 | % | 10.00 | % |
Tier 1 Risk-Based Capital Ratio: | | | | | | | | | |
Consolidated | | 8.79 | % | 8.57 | % | 4.00 | % | N/A | |
Guaranty Bank and Trust Company | | 13.68 | % | 12.80 | % | 4.00 | % | 6.00 | % |
Leverage Ratio: | | | | | | | | | |
Consolidated | | 6.29 | % | 6.25 | % | 4.00 | % | N/A | |
Guaranty Bank and Trust Company | | 9.80 | % | 9.33 | % | 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 March 31, 2011, approximately $30.0 million of the subsidiary bank’s allowance for loan losses was disallowed from being included in total risk-based capital under the regulatory capital rules, or approximately 2.25% of the subsidiary bank’s risk-weighted assets. In addition, approximately $1.3 million of deferred tax assets were disallowed for purposes of computing Tier 1 capital.
7
Asset Quality
The following table presents selected asset quality data (excluding loans held for sale) as of the dates indicated:
| | March 31,
2011 | | December 31,
2010 | | September 30,
2010 | | June 30,
2010 | | March 31,
2010 | |
| | (Dollars in thousands) | |
| | | | | | | | | | | |
Nonaccrual loans, not restructured | | $ | 62,650 | | $ | 74,304 | | $ | 65,921 | | $ | 64,339 | | $ | 70,500 | |
Other nonperforming loans | | 1,506 | | 3,317 | | 4,420 | | 1,065 | | 558 | |
Total nonperforming loans (NPLs) | | $ | 64,156 | | $ | 77,621 | | $ | 70,341 | | $ | 65,404 | | $ | 71,058 | |
Other real estate owned and foreclosed assets | | 33,611 | | 22,898 | | 45,700 | | 30,298 | | 30,918 | |
Total nonperforming assets (NPAs) | | $ | 97,767 | | $ | 100,519 | | $ | 116,041 | | $ | 95,702 | | $ | 101,976 | |
| | | | | | | | | | | |
Accruing loans past due 90 days or more (1) | | $ | 1,506 | | $ | 3,317 | | $ | 4,420 | | $ | 1,065 | | $ | 558 | |
Accruing loans past due 30-89 days (1) | | $ | 14,593 | | $ | 21,555 | | $ | 21,876 | | $ | 33,050 | | $ | 21,956 | |
Allowance for loan losses | | $ | 46,879 | | $ | 47,069 | | $ | 41,898 | | $ | 46,866 | | $ | 52,015 | |
| | | | | | | | | | | |
Selected ratios: | | | | | | | | | | | |
NPLs to loans, net of unearned discount | | 5.70 | % | 6.44 | % | 5.45 | % | 4.76 | % | 4.95 | % |
NPAs to total assets | | 5.33 | % | 5.38 | % | 6.00 | % | 4.82 | % | 5.02 | % |
Allowance for loan losses to NPAs | | 47.95 | % | 46.83 | % | 36.11 | % | 48.97 | % | 51.01 | % |
Allowance for loan losses to NPLs | | 73.07 | % | 60.64 | % | 59.56 | % | 71.66 | % | 73.20 | % |
Allowance for loan losses to loans, net of unearned discount | | 4.16 | % | 3.91 | % | 3.25 | % | 3.41 | % | 3.62 | % |
Loans 30-89 days past due to loans, net of unearned discount | | 1.30 | % | 1.79 | % | 1.70 | % | 2.40 | % | 1.53 | % |
(1)Past due loans include both loans that are past due with respect to payments and loans that are past due because the loan has matured, and are in the process of renewal, but continue to be current with respect to payments.
The $10.7 million increase in other real estate owned at March 31, 2011 as compared to December 31, 2010 is primarily attributable to the addition of $11.9 million related to two similar properties from the same borrower that are expected to be sold during the next two quarters for a full recovery of our cost basis.
The types of nonperforming loans (excluding loans held for sale) as of March 31, 2011 and December 31, 2010 are as follows:
| | Nonperforming Loans | |
| | March 31, 2011 | | December 31, 2010 | |
| | Loan
Balance | | Percent | | Related
Allowance | | Loan
Balance | | Percent | | Related
Allowance | |
| | (Dollars in thousands) | |
Residential Construction, Land and Land Development | | $ | 6,722 | | 10.5 | % | $ | 742 | | $ | 7,254 | | 9.3 | % | $ | 295 | |
Other Residential Loans | | 6,058 | | 9.4 | % | 1,695 | | 7,524 | | 9.7 | % | 583 | |
Commercial and Industrial Loans | | 19,057 | | 29.7 | % | 3,608 | | 19,955 | | 25.7 | % | 1,940 | |
Commercial Real Estate | | 32,287 | | 50.3 | % | 6,091 | | 42,833 | | 55.2 | % | 3,840 | |
Other | | 32 | | 0.1 | % | — | | 55 | | 0.1 | % | 1 | |
Total | | $ | 64,156 | | 100.0 | % | $ | 12,136 | | $ | 77,621 | | 100.0 | % | $ | 6,659 | |
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The $13.5 million decrease in nonperforming loans during the first quarter 2011 is mostly due to the foreclosure on two properties related to one loan relationship with an aggregate value of $11.9 million. The specific allowance associated with nonperforming loans increased during the first quarter 2011 primarily due to updated valuations and broker opinions on properties that the Company plans to dispose of in an expeditious manner.
The types of loans included in the accruing loans past due 30-89 days as of March 31, 2011 and December 31, 2010 are as follows:
| | Accruing loans past due 30-89 days | |
| | March 31, 2011 | | December 31, 2010 | |
| | Loan Balance | | Percent | | Loan Balance | | Percent | |
| | (Dollars in thousands) | |
Residential Construction, Land and Land Development | | $ | 3,302 | | 22.6 | % | $ | 2,770 | | 12.9 | % |
Other Residential Loans | | 1,220 | | 8.4 | % | 1,444 | | 6.7 | % |
Commercial and Industrial Loans | | 5,810 | | 39.8 | % | 7,594 | | 35.2 | % |
Commercial Real Estate | | 1,305 | | 8.9 | % | 4,047 | | 18.8 | % |
Other | | 2,956 | | 20.3 | % | 5,700 | | 26.4 | % |
Total | | $ | 14,593 | | 100.0 | % | $ | 21,555 | | 100.0 | % |
Net charge-offs in the first quarter 2011 were $2.2 million as compared to $14.3 million in the fourth quarter 2010 and $4.0 million in the first quarter 2010. The majority of the charge-offs in the first quarter 2011 related to a single loan relationship.
In addition to the $12.1 million of allowance specifically allocated to impaired loans, the Company had partially charged-off $10.0 million of the impaired loans on the balance sheet as of March 31, 2011 in prior periods. These prior period partial charge-offs have reduced the specific component of our allowance for loan losses. The general component of the allowance for loan losses decreased to $34.7 million at March 31, 2011, or 3.09% of loans, net of unearned discount, as compared to $40.4 million, or 3.36% of loans, net of unearned discount, at the end of the previous quarter. The decrease in the general component of the allowance for loan losses during the first quarter is primarily attributable to a decrease in the balance of the loan portfolio subject to a general allowance for loan losses and a declining trend in net charge-offs within the Company’s historical look-back period. This caused a decrease in our historical loss component of the allowance for loan losses.
The Company recorded a provision for loan losses in the first quarter 2011 of $2.0 million, as compared to $19.5 million in the fourth quarter 2010 and $4.0 million in the first quarter 2010. The decrease in the provision for loan losses was the result of the reduction in the general component of the allowance for loan losses due mostly to a significant reduction in the level of historical chargeoffs in our look-back period, a decrease in classified assets and a decline in the overall loan portfolio subject to a general allowance for loan losses.
9
Shares Outstanding
As of March 31, 2011, the Company had 54,034,095 shares of common stock outstanding, including 2,295,836 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 67,504 shares of Series A convertible preferred stock outstanding, with a liquidation value of $1,000 per share.
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, 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:
| | March 31,
2011 | | December 31,
2010 | | March 31,
2010 | |
| | (Dollars in thousands, except per share amounts) | |
Tangible Book Value per Common Share | | | | | | | |
Total stockholders’ equity | | $ | 159,920 | | $ | 160,283 | | $ | 190,980 | |
Less: Preferred share liquidation preference | | (67,504 | ) | (66,025 | ) | (61,787 | ) |
Stockholders’ equity attributable to common shares | | 92,416 | | 94,258 | | 129,193 | |
Less: Intangible assets | | (13,026 | ) | (14,054 | ) | (17,922 | ) |
Tangible common equity | | $ | 79,390 | | $ | 80,204 | | $ | 111,271 | |
Number of common shares outstanding and to be issued | | 54,190,662 | | 53,529,950 | | 52,982,035 | |
| | | | | | | |
Book value per common share | | $ | 1.71 | | $ | 1.76 | | $ | 2.44 | |
Tangible book value per common share | | $ | 1.47 | | $ | 1.50 | | $ | 2.10 | |
| | | | | | | |
Total Stockholders’ equity | | $ | 159,920 | | $ | 160,283 | | $ | 190,980 | |
Less: Intangible assets | | (13,026 | ) | (14,054 | ) | (17,922 | ) |
Tangible common equity (after giving effect to conversion of preferred stock) | | $ | 146,894 | | $ | 146,229 | | $ | 173,058 | |
Number of shares of preferred stock outstanding | | 67,504 | | 66,025 | | 61,787 | |
Number of shares of common stock to be issued upon conversion of preferred stock | | 37,502,222 | | 36,680,556 | | 34,326,111 | |
Total number of shares of common stock outstanding and to be issued (after giving effect to conversion of preferred stock) | | 91,692,884 | | 90,210,506 | | 87,308,146 | |
| | | | | | | |
Tangible book value per common share (after giving effect to conversion of preferred stock) | | $ | 1.60 | | $ | 1.62 | | $ | 1.98 | |
10
Tangible Equity Ratio
| | March 31,
2011 | | December 31,
2010 | | March 31,
2010 | |
| | (Dollars in thousands, except per share amounts) | |
| | | | | | | |
Total stockholders’ equity | | $ | 159,920 | | $ | 160,283 | | $ | 190,980 | |
Less: Intangible assets | | (13,026 | ) | (14,054 | ) | (17,922 | ) |
Tangible equity | | $ | 146,894 | | $ | 146,229 | | $ | 173,058 | |
| | | | | | | |
Total assets | | $ | 1,834,457 | | $ | 1,870,052 | | $ | 2,030,331 | |
Less: Intangible assets | | (13,026 | ) | (14,054 | ) | (17,922 | ) |
Tangible assets | | $ | 1,821,431 | | $ | 1,855,998 | | $ | 2,012,409 | |
| | | | | | | |
Equity ratio — GAAP (Total stockholders’ equity / total assets) | | 8.72 | % | 8.57 | % | 9.41 | % |
Tangible equity ratio (Tangible equity / tangible assets) | | 8.06 | % | 7.88 | % | 8.60 | % |
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
11
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.
Contact Information | | |
| | |
For more information, please contact: | | |
| | |
Daniel M. Quinn | | Paul W. Taylor |
President & Chief Executive Officer | | E.V.P., Chief Financial & Operating Officer& Secretary |
Guaranty Bancorp | | Guaranty Bancorp |
1331 Seventeenth Street, Suite 345 | | 1331 Seventeenth Street, Suite 345 |
Denver, CO 80202 | | Denver, CO 80202 |
303/313-6763 | | 303/293-5563 |
12
GUARANTY BANCORP AND SUBSIDIARIES
Unaudited Consolidated Balance Sheets
| | March 31,
2011 | | December 31,
2010 | | March 31,
2010 | |
| | (In thousands) | |
Assets | | | | | | | |
Cash and due from banks | | $ | 184,777 | | $ | 141,465 | | $ | 222,723 | |
| | | | | | | | | | |
Securities available for sale, at fair value | | 381,310 | | 389,530 | | 219,490 | |
Securities held to maturity | | 11,284 | | 11,927 | | 15,760 | |
Bank stocks, at cost | | 16,532 | | 17,211 | | 17,143 | |
Total investments | | 409,126 | | 418,668 | | 252,393 | |
| | | | | | | |
Loans, net of unearned discount | | 1,126,083 | | 1,204,580 | | 1,435,071 | |
Less allowance for loan losses | | (46,879 | ) | (47,069 | ) | (52,015 | ) |
Net loans | | 1,079,204 | | 1,157,511 | | 1,383,056 | |
Loans held for sale | | 14,200 | | 14,200 | | 11,506 | |
Premises and equipment, net | | 56,688 | | 57,399 | | 59,587 | |
Other real estate owned and foreclosed assets | | 33,611 | | 22,898 | | 30,918 | |
Other intangible assets, net | | 13,026 | | 14,054 | | 17,922 | |
Other assets | | 43,825 | | 43,857 | | 52,226 | |
Total assets | | $ | 1,834,457 | | $ | 1,870,052 | | $ | 2,030,331 | |
| | | | | | | |
Liabilities and Stockholders’ Equity | | | | | | | |
Liabilities: | | | | | | | |
Deposits: | | | | | | | |
Noninterest-bearing demand | | $ | 419,335 | | $ | 374,500 | | $ | 363,059 | |
Interest-bearing demand | | 542,227 | | 535,078 | | 486,918 | |
Savings | | 84,501 | | 79,100 | | 74,537 | |
Time | | 392,257 | | 473,673 | | 678,370 | |
Total deposits | | 1,438,320 | | 1,462,351 | | 1,602,884 | |
Securities sold under agreements to repurchase and federal funds purchased | | 18,303 | | 30,113 | | 18,387 | |
Borrowings | | 163,215 | | 163,239 | | 164,310 | |
Subordinated debentures | | 41,239 | | 41,239 | | 41,239 | |
Interest payable and other liabilities | | 13,460 | | 12,827 | | 12,531 | |
Total liabilities | | 1,674,537 | | 1,709,769 | | 1,839,351 | |
| | | | | | | |
Stockholders’ equity: | | | | | | | |
Preferred stock and Additional paid-in capital — Preferred stock | | 66,297 | | 64,818 | | 60,580 | |
Common stock and Additional paid-in capital — Common stock | | 619,706 | | 619,509 | | 618,779 | |
Shares to be issued for deferred compensation obligations | | 237 | | 237 | | 237 | |
Accumulated deficit | | (420,534 | ) | (419,562 | ) | (385,804 | ) |
Accumulated other comprehensive income (loss) | | (3,275 | ) | (2,220 | ) | (341 | ) |
Treasury Stock | | (102,511 | ) | (102,499 | ) | (102,471 | ) |
Total stockholders’ equity | | 159,920 | | 160,283 | | 190,980 | |
Total liabilities and stockholders’ equity | | $ | 1,834,457 | | $ | 1,870,052 | | $ | 2,030,331 | |
13
GUARANTY BANCORP AND SUBSIDIARIES
Unaudited Consolidated Statements of Operations
| | Three Months Ended March 31, | |
| | 2011 | | 2010 | |
| | (In thousands, except share and per share data) | |
Interest income: | | | | | |
Loans, including fees | | $ | 15,534 | | $ | 20,784 | |
Investment securities: | | | | | |
Taxable | | 3,065 | | 1,516 | |
Tax-exempt | | 489 | | 720 | |
Dividends | | 166 | | 185 | |
Federal funds sold and other | | 89 | | 116 | |
Total interest income | | 19,343 | | 23,321 | |
Interest expense: | | | | | |
Deposits | | 2,629 | | 4,713 | |
Securities sold under agreement to repurchase and federal funds purchased | | 24 | | 43 | |
Borrowings | | 1,289 | | 1,301 | |
Subordinated debentures | | 691 | | 632 | |
Total interest expense | | 4,633 | | 6,689 | |
Net interest income | | 14,710 | | 16,632 | |
Provision for loan losses | | 2,000 | | 4,000 | |
Net interest income, after provision for loan losses | | 12,710 | | 12,632 | |
Noninterest income: | | | | | |
Customer service and other fees | | 2,314 | | 2,214 | |
Gain on sale of securities | | 714 | | 14 | |
Other | | 252 | | 194 | |
Total noninterest income | | 3,280 | | 2,422 | |
Noninterest expense: | | | | | |
Salaries and employee benefits | | 6,615 | | 6,563 | |
Occupancy expense | | 1,883 | | 1,890 | |
Furniture and equipment | | 894 | | 976 | |
Amortization of intangible assets | | 1,028 | | 1,300 | |
Other real estate owned, net | | 763 | | 2,749 | |
Insurance and assessments | | 1,225 | | 1,812 | |
Professional fees | | 908 | | 877 | |
Other general and administrative | | 2,160 | | 1,959 | |
Total noninterest expense | | 15,476 | | 18,126 | |
Income (loss) before income taxes | | 514 | | (3,072 | ) |
Income tax benefit | | — | | (1,227 | ) |
Net Income (loss) | | 514 | | (1,845 | ) |
Preferred stock dividends | | (1,486 | ) | (1,360 | ) |
Net loss applicable to common stockholders | | $ | (972 | ) | $ | (3,205 | ) |
| | | | | |
Loss per common share—basic: | | $ | (0.02 | ) | $ | (0.06 | ) |
Loss per common share—diluted: | | (0.02 | ) | (0.06 | ) |
| | | | | |
Weighted average common shares outstanding-basic | | 51,775,475 | | 51,607,044 | |
Weighted average common shares outstanding-diluted | | 51,775,475 | | 51,607,044 | |
14
GUARANTY BANCORP AND SUBSIDIARIES
Unaudited Consolidated Average Balance Sheets
| | QTD Average | |
| | March 31,
2011 | | December 31,
2010 | | March 31,
2010 | |
| | (In thousands) | |
Assets | | | | | | | |
Interest earning assets | | | | | | | |
Loans, net of unearned discount | | $ | 1,189,220 | | $ | 1,259,392 | | $ | 1,492,630 | |
Securities | | 416,991 | | 402,101 | | 245,518 | |
Other earning assets | | 136,063 | | 141,025 | | 190,302 | |
Average earning assets | | 1,742,274 | | 1,802,518 | | 1,928,450 | |
Other assets | | 127,622 | | 137,995 | | 138,480 | |
| | | | | | | |
Total average assets | | $ | 1,869,896 | | $ | 1,940,513 | | $ | 2,066,930 | |
| | | | | | | |
Liabilities and Stockholders’ Equity | | | | | | | |
Average liabilities: | | | | | | | |
Average deposits: | | | | | | | |
Noninterest-bearing deposits | | $ | 400,979 | | $ | 374,004 | | $ | 352,937 | |
Interest-bearing deposits | | 1,067,156 | | 1,137,216 | | 1,282,119 | |
Average deposits | | 1,468,135 | | 1,511,220 | | 1,635,056 | |
Other interest-bearing liabilities | | 226,602 | | 228,375 | | 224,856 | |
Other liabilities | | 14,123 | | 14,604 | | 13,105 | |
Total average liabilities | | 1,708,860 | | 1,754,199 | | 1,873,017 | |
Average stockholders’ equity | | 161,036 | | 186,314 | | 193,913 | |
| | | | | | | |
Total average liabilities and stockholders’ equity | | $ | 1,869,896 | | $ | 1,940,513 | | $ | 2,066,930 | |
15
GUARANTY BANCORP
Unaudited Credit Quality Measures
| | Quarter Ended | |
| | March 31,
2011 | | December 31,
2010 | | September 30,
2010 | | June 30,
2010 | | March 31,
2010 | |
| | (Dollars in thousands) | |
Nonaccrual loans and leases, not restructured | | $ | 62,650 | | $ | 74,304 | | $ | 65,921 | | $ | 64,339 | | $ | 70,500 | |
Other nonperforming loans | | 1,506 | | 3,317 | | 4,420 | | 1,065 | | 558 | |
Total nonperforming loans | | $ | 64,156 | | $ | 77,621 | | $ | 70,341 | | $ | 65,404 | | $ | 71,058 | |
Other real estate owned and foreclosed assets | | 33,611 | | 22,898 | | 45,700 | | 30,298 | | 30,918 | |
Total nonperforming assets | | $ | 97,767 | | $ | 100,519 | | $ | 116,041 | | $ | 95,702 | | $ | 101,976 | |
| | | | | | | | | | | |
Impaired loans | | $ | 64,156 | | $ | 77,621 | | $ | 70,341 | | $ | 65,404 | | $ | 71,058 | |
Allocated allowance for loan losses | | (12,136 | ) | (6,659 | ) | (3,539 | ) | (3,716 | ) | (10,802 | ) |
Net investment in impaired loans | | $ | 52,020 | | $ | 70,962 | | $ | 66,802 | | $ | 61,688 | | $ | 60,256 | |
| | | | | | | | | | | |
Accruing loans past due 90 days or more | | $ | 1,506 | | $ | 3,317 | | $ | 4,420 | | $ | 1,065 | | $ | 558 | |
| | | | | | | | | | | |
Accruing loans past due 30-89 days | | $ | 14,593 | | $ | 21,555 | | $ | 21,876 | | $ | 33,050 | | $ | 21,956 | |
| | | | | | | | | | | |
Charged-off loans | | $ | 2,851 | | $ | 14,635 | | $ | 7,953 | | $ | 13,918 | | $ | 4,271 | |
Recoveries | | (661 | ) | (306 | ) | (485 | ) | (369 | ) | (295 | ) |
Net charge-offs | | $ | 2,190 | | $ | 14,329 | | $ | 7,468 | | $ | 13,549 | | $ | 3,976 | |
| | | | | | | | | | | |
Provision for loan losses | | $ | 2,000 | | $ | 19,500 | | $ | 2,500 | | $ | 8,400 | | $ | 4,000 | |
| | | | | | | | | | | |
Allowance for loan losses | | $ | 46,879 | | $ | 47,069 | | $ | 41,898 | | $ | 46,866 | | $ | 52,015 | |
| | | | | | | | | | | |
Allowance for loan losses to loans, net of unearned discount | | 4.16 | % | 3.91 | % | 3.25 | % | 3.41 | % | 3.62 | % |
Allowance for loan losses to nonaccrual loans | | 74.83 | % | 63.35 | % | 63.56 | % | 72.84 | % | 73.78 | % |
Allowance for loan losses to nonperforming assets | | 47.95 | % | 46.83 | % | 36.11 | % | 48.97 | % | 51.01 | % |
Allowance for loan losses to nonperforming loans | | 73.07 | % | 60.64 | % | 59.56 | % | 71.66 | % | 73.20 | % |
Nonperforming assets to loans, net of unearned discount, and other real estate owned | | 8.43 | % | 8.19 | % | 8.69 | % | 6.81 | % | 6.96 | % |
Nonperforming assets to total assets | | 5.33 | % | 5.38 | % | 6.00 | % | 4.82 | % | 5.02 | % |
Nonaccrual loans to loans, net of unearned discount | | 5.56 | % | 6.17 | % | 5.11 | % | 4.68 | % | 4.91 | % |
Nonperforming loans to loans, net of unearned discount | | 5.70 | % | 6.44 | % | 5.45 | % | 4.76 | % | 4.95 | % |
Annualized net charge-offs to average loans | | 0.75 | % | 4.51 | % | 2.19 | % | 3.83 | % | 1.08 | % |
16
