Exhibit 99.1
Contact: | Paul W. Taylor | Christopher G. Treece |
| President and Chief Executive Officer | E.V.P., Chief Financial Officer and Secretary |
| Guaranty Bancorp | Guaranty Bancorp |
| 1331 Seventeenth Street, Suite 345 | 1331 Seventeenth Street, Suite 345 |
| Denver, CO 80202 | Denver, CO 80202 |
| 303/293-5563 | 303/675-1194 |
FOR IMMEDIATE RELEASE:
Guaranty Bancorp Announces 2012 Second Quarter Financial Results
· Net income improves to $6.2 million in second quarter 2012
· Full reversal of deferred tax asset valuation allowance
· Nonaccrual loans declined by 28.2% during the second quarter 2012
· Previously announced acquisition of Private Capital Management expected to close in third quarter
· Core deposits increased by $46.0 million, or 4.0%, in the second quarter 2012
DENVER, July 18, 2012 — Guaranty Bancorp (Nasdaq: GBNK), a Colorado-based, community bank holding company, today reported second quarter 2012 net income of $6.2 million, or $0.06 earnings per basic and diluted common share, compared to net income of $1.4 million in the second quarter 2011. After giving effect to a non-cash adjustment of approximately $1.5 million for paid-in-kind preferred stock dividends, the loss per basic and diluted common share was approximately zero for the second quarter 2011.
The $4.8 million improvement in net income in the second quarter 2012 compared to the same quarter in 2011 is primarily due to the reversal of the remaining deferred tax asset valuation allowance of $5.7 million, a $0.6 million increase in net interest income, a $0.5 million reduction in provision for loan losses, and a $0.6 million increase in noninterest income, partially offset by a $2.8 million impairment loss on bank facilities scheduled to be closed.
Paul W. Taylor, Guaranty Bancorp’s President and Chief Executive Officer, stated “We are pleased with the accomplishments we have made in the second quarter. Excluding the tax benefit and impairment loss, our core operating income would have been $3.0 million. We continued to reduce our nonperforming and classified assets and ended the quarter with a classified asset to capital and allowance ratio of 33.8%, as compared to 35.6% in the prior quarter and 56.3% a year ago. New credit extended and new credit advanced on existing lines was $138.0 million in the second quarter as compared to $116.6 million in the previous quarter. Overall net loan growth in the quarter occurred despite several expected large loan payoffs, and the new loans we have booked continue to add granularity to our portfolio. Our valuable deposit mix also continues to improve with 39.6% of our deposits consisting of noninterest bearing deposits at June 30, 2012, as compared to 35.0% at the end of the prior quarter. In addition, our overall cost of deposits decreased to 0.21% in the second quarter as compared to 0.24% in the previous quarter.”
Mr. Taylor continued, “We continue our focus on building a stronger balance sheet and improving income. In addition to our focus on loan and core deposit growth, we moved forward with
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improving our efficiency. We closed four underperforming branches in the second quarter, and with today’s announcement, will close two additional underperforming branch locations later this year. Finally, we are excited to consummate the previously announced acquisition of Private Capital Management, a local investment advisory firm, expected to occur in the third quarter.”
For the first six months of 2012, net income improved by $7.2 million to $9.1 million compared to $1.9 million for the same period last year. Earnings per basic and diluted common share improved to $0.09 for the six months ended June 30, 2012 from a loss per basic and diluted common share of $0.02, after giving effect to preferred stock dividends, for the same period last year. The increase in net income for the first six months of 2012 as compared to the same period in 2011 is primarily due to the reversal of the remaining deferred tax asset valuation allowance, discussed below, an increase in net interest income of $1.2 million, a decrease in provision for loan losses of $1.5 million, an increase in noninterest income of $0.4 million, and a decrease in noninterest expense, excluding the impairment of long-lived assets, of $0.9 million. These improvements were partially offset by the impairment of long-lived assets of $2.8 million recognized in June 2012 in connection with the two branch facilities scheduled to be closed later this year.
The Company had a deferred tax asset valuation allowance of $6.6 million at December 31, 2011. During the second quarter 2012, the remaining deferred tax asset valuation allowance of $5.7 million was reversed based on the Company’s determination that it is more likely than not that the entire deferred tax asset will be realized.
Key Financial Measures
Income Statement
| | Three Months Ended | | Six Months Ended | |
| | June 30,
2012 | | March 31,
2012 | | June 30,
2011 | | June 30,
2012 | | June 30,
2011 | |
| | (Dollars in thousands, except per share amounts) | |
Net income | | $ | 6,192 | | 2,917 | | $ | 1,409 | | $ | 9,109 | | $ | 1,923 | |
Net income (loss) to common stockholders | | 6,192 | | 2,917 | | (109 | ) | 9,109 | | (1,081 | ) |
Earnings (loss) per common share | | $ | 0.06 | | $ | 0.03 | | $ | (0.00 | ) | $ | 0.09 | | $ | (0.02 | ) |
Return on average assets | | 1.46 | % | 0.70 | % | 0.32 | % | 1.09 | % | 0.22 | % |
Net interest margin | | 3.86 | % | 3.93 | % | 3.56 | % | 3.90 | % | 3.49 | % |
Efficiency ratio | | 76.55 | % | 74.57 | % | 79.88 | % | 75.56 | % | 80.10 | % |
| | | | | | | | | | | | | | | | |
Balance Sheet
| | June 30,
2012 | | December 31,
2011 | | %
Change | | June 30,
2011 | | %
Change | |
| | (Dollars in thousands, except per share amounts) | |
Cash and cash equivalents | | $ | 107,133 | | $ | 109,225 | | (1.9 | )% | $ | 134,896 | | (20.6 | )% |
Time deposits with banks | | 35,000 | | — | | 100.0 | % | — | | 100.0 | % |
Total investments | | 398,151 | | 386,141 | | 3.1 | % | 408,806 | | (2.6 | )% |
Total loans, net of unearned discount | | 1,110,161 | | 1,098,140 | | 1.1 | % | 1,091,132 | | 1.7 | % |
Loans held for sale | | — | | — | | 0.0 | % | 14,200 | | (100.0 | )% |
Allowance for loan losses | | (29,307 | ) | (34,661 | ) | (15.4 | )% | (38,855 | ) | (24.6 | )% |
Total assets | | 1,750,539 | | 1,689,668 | | 3.6 | % | 1,747,060 | | 0.2 | % |
Average earning assets, quarter-to-date | | 1,602,777 | | 1,575,193 | | 1.8 | % | 1,663,451 | | (3.6 | )% |
Total deposits | | 1,378,937 | | 1,313,786 | | 5.0 | % | 1,346,183 | | 2.4 | % |
Book value per common share | | 1.70 | | 1.62 | | 4.9 | % | 1.81 | | (6.1 | )% |
Tangible book value per common share | | 1.62 | | 1.53 | | 5.9 | % | 1.59 | | 1.9 | % |
Equity ratio — GAAP | | 10.29 | % | 10.12 | % | 1.7 | % | 9.49 | % | 8.4 | % |
Tangible common equity ratio | | 9.85 | % | 9.59 | % | 2.8 | % | 4.88 | % | 101.9 | % |
Total risk-based capital ratio | | 16.50 | % | 16.33 | % | 1.0 | % | 16.22 | % | 1.7 | % |
| | | | | | | | | | | | | | |
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Net Interest Income and Margin
| | Three Months Ended | | Six Months Ended | |
| | June 30,
2012 | | March 31,
2012 | | June 30,
2011 | | June 30,
2012 | | June 30,
2011 | |
| | (Dollars in thousands) | |
Net interest income | | $ | 15,383 | | $ | 15,300 | | $ | 14,747 | | $ | 30,683 | | $ | 29,457 | |
Interest rate spread | | 3.53 | % | 3.62 | % | 3.18 | % | 3.57 | % | 3.11 | % |
Net interest margin | | 3.86 | % | 3.93 | % | 3.56 | % | 3.90 | % | 3.49 | % |
Net interest margin, fully tax equivalent | | 3.95 | % | 4.03 | % | 3.62 | % | 3.99 | % | 3.55 | % |
Average cost of deposits, including noninterest bearing deposits | | 0.21 | % | 0.24 | % | 0.55 | % | 0.22 | % | 0.64 | % |
| | | | | | | | | | | | | | | | |
Second quarter 2012 net interest income increased by $0.1 million to $15.4 million from $15.3 million for first quarter 2012, and increased $0.6 million as compared to $14.7 million for second quarter 2011. Although the net interest income increased in the second quarter 2012, the Company’s net interest margin of 3.86% reflected a decrease of seven basis points as compared to the first quarter 2012, mostly due to an increase in low-yielding overnight funding due to our growth in noninterest bearing deposits. The Company’s net interest margin improved 30 basis points in the second quarter 2012 when compared to the same quarter in the prior year due to favorable improvement in our asset mix.
On a linked quarter basis, second quarter 2012 interest income remained relatively flat while interest expense decreased by $0.1 million. The decline in interest expense was primarily due to a decline in average time deposits of $10.1 million, as well as a reduction in the overall cost of deposits. This resulted in an average cost of deposits for the second quarter 2012 of 21 basis points as compared to 24 basis points for the first quarter 2012.
Second quarter 2012 interest income and interest expense decreased $1.0 million and $1.6 million, respectively, as compared to the second quarter 2011. The decline in interest income was primarily due to declines in average yields on loans and investments due to declines in longer-term, fixed rates in the market over the last twelve months and a decline in average loan balances of $6.8 million. The decline in interest expense was primarily due to a $156.1 million decline in average time deposits, mostly higher-cost, brokered time deposits. At June 30, 2012 the Company has one remaining brokered deposit of $0.1 million.
Net interest income increased $1.2 million, or 4.2%, for the first six months of 2012 to $30.7 million from $29.5 million for the same period in 2011. The Company’s net interest margin improved 41 basis points to 3.90% for the first six months in 2012 from 3.49% for the first six months in 2011. During the first six months in 2012, interest income decreased $2.6 million primarily due to declines in average interest-earning assets of $118.8 million while the average yield remained relatively flat at 4.49% as compared to the same period in 2011. Interest expense decreased $3.8 million, or 44.8%, in the first six months of 2012 as compared to the same period in 2011 primarily due to a decline in average time deposit balances of $202.9 million, mostly due to the maturity of higher-cost, brokered and internet time deposits and a decline in average borrowings of $53.1 million, primarily due to the September 2011 prepayment of several Federal Home Loan Bank notes.
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Noninterest Income
The following table presents noninterest income as of the dates indicated:
| | Three Months Ended | | Six Months Ended | |
| | June 30,
2012 | | March 31,
2012 | | June 30,
2011 | | June 30,
2012 | | June 30,
2011 | |
| | (In thousands) | |
Noninterest income: | | | | | | | | | | | |
Customer service and other fees | | $ | 2,382 | | $ | 2,271 | | $ | 2,386 | | $ | 4,653 | | $ | 4,700 | |
Gain (loss) on sale of securities | | 342 | | 622 | | (312 | ) | 964 | | 402 | |
Other | | 187 | | 206 | | 262 | | 393 | | 514 | |
Total noninterest income | | $ | 2,911 | | $ | 3,099 | | $ | 2,336 | | $ | 6,010 | | $ | 5,616 | |
On a linked quarter basis, noninterest income decreased $0.2 million in the second quarter 2012 primarily due to decrease in net gains on sales of securities of $0.3 million, partially offset by an increase in customer services charges of $0.1 million.
Noninterest income increased $0.6 million to $2.9 million in the second quarter 2012, as compared to $2.3 million in the second quarter 2011 primarily due to a net increase in the gain on sales of securities.
For the first six months in 2012, noninterest income increased $0.4 million to $6.0 million as compared to $5.6 million during the same period in the prior year. This increase is primarily due to the increase in the net gains on sales of securities of $0.6 million, partially offset by the slight declines in customer service charges and other fee income.
The impact of our previously announced acquisition of Private Capital Management will be reflected in noninterest income through the generation of investment advisory fees, which is anticipated to begin in the third quarter 2012.
Noninterest Expense
The following table presents noninterest expense as of the dates indicated:
| | Three Months Ended | | Six Months Ended | |
| | June 30,
2012 | | March 31,
2012 | | June 30,
2011 | | June 30,
2012 | | June 30,
2011 | |
| | (In thousands) | |
Noninterest expense: | | | | | | | | | | | |
Salaries and employee benefits | | $ | 6,614 | | $ | 6,857 | | $ | 6,320 | | $ | 13,471 | | $ | 12,935 | |
Occupancy expense | | 1,972 | | 2,019 | | 1,792 | | 3,991 | | 3,675 | |
Furniture and equipment | | 783 | | 821 | | 913 | | 1,604 | | 1,807 | |
Amortization of intangible assets | | 761 | | 762 | | 1,028 | | 1,523 | | 2,056 | |
Other real estate owned | | 461 | | 352 | | 466 | | 813 | | 1,229 | |
Insurance and assessment | | 881 | | 808 | | 966 | | 1,689 | | 2,191 | |
Professional fees | | 856 | | 628 | | 914 | | 1,484 | | 1,822 | |
Impairment of long lived assets | | 2,750 | | — | | — | | 2,750 | | — | |
Other general and administrative | | 2,438 | | 2,235 | | 2,275 | | 4,673 | | 4,435 | |
Total noninterest expense | | $ | 17,516 | | $ | 14,482 | | $ | 14,674 | | $ | 31,998 | | $ | 30,150 | |
Noninterest expense increased $3.0 million to $17.5 million in the second quarter 2012 as compared to $14.5 million in the first quarter 2012. The increase is primarily due to a $2.8 million impairment on building premises related to the Company’s decision to close two underperforming branches.
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This decision reflects the Company’s ongoing efforts to accelerate performance by deploying assets in areas of greater opportunity. Other increases in noninterest expense include professional fees, which increased $0.2 million, related to problem assets and our previously announced acquisition of Private Capital Management, and other general and administrative expense of $0.2 million, related to marketing and business development expenses. The increase in noninterest expense is partially offset by reductions in salaries and benefit expense of $0.2 million.
As compared to the second quarter in 2011, noninterest expense increased $2.8 million as a result of the impairment of assets discussed in the previous paragraph. In addition to this impairment, several other noninterest expense categories had offsetting variances.
Noninterest expense increased $1.8 million to $32.0 million for the first six months in 2012 as compared to $30.2 million for the same period in 2011. This increase is primarily related to the $2.8 million impairment described above. Other increases in noninterest expenses are related to salary and benefits of $0.5 million primarily due to annual salary increases; occupancy expense of $0.3 million mostly due to charges associated with branch closures in June 2012; and general and administrative expense of $0.2 million mostly related to advertising and business development expense. Partially offsetting these increases in noninterest expense were decreases in furniture and equipment expense of $0.2 million mostly related to lower depreciation; intangible amortization of $0.5 million; write-downs and net operating costs related to other real estate owned of $0.4 million; insurance and assessments of $0.5 million related to lower FDIC and other insurance premiums; and professional fees of $0.3 million.
Balance Sheet
| | June 30,
2012 | | December 31,
2011 | | %
Change | | June 30,
2011 | | % Change | |
| | (Dollars in thousands) | |
| | | | | | | | | | | |
Total assets | | $ | 1,750,539 | | $ | 1,689,668 | | 3.6 | % | $ | 1,747,060 | | 0.2 | % |
Average assets, quarter-to-date | | 1,706,862 | | 1,682,168 | | 1.5 | % | 1,767,540 | | (3.4 | )% |
Total loans, net of unearned discount | | 1,110,161 | | 1,098,140 | | 1.1 | % | 1,091,132 | | 1.7 | % |
Total deposits | | 1,378,937 | | 1,313,786 | | 5.0 | % | 1,346,183 | | 2.4 | % |
| | | | | | | | | | | |
Equity ratio — GAAP | | 10.29 | % | 10.12 | % | 1.7 | % | 9.49 | % | 8.4 | % |
Tangible common equity ratio | | 9.85 | % | 9.59 | % | 2.8 | % | 4.88 | % | 101.9 | % |
| | | | | | | | | | | | | | |
At June 30, 2012, the Company had total assets of $1.8 billion, which represented a $60.9 million increase as compared to December 31, 2011 and a $3.5 million increase as compared to June 30, 2011. The increase in assets from December 31, 2011 consists primarily of a $12.0 million increase in loans, net of unearned discount and a $47.0 million increase in investments. As compared to June 30, 2011, the increase in total assets is primarily due to an increase in loans, net of unearned discount of $19.0 million and an increase in investments of $24.0 million. These increases are partially offset by a decrease in cash and overnight funds of $27.8 million and a decrease in loans held for sale of $14.2 million.
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The following table sets forth the amounts of our loans outstanding (excluding loans held for sale) at the dates indicated:
| | June 30,
2012 | | March 31,
2012 | | December 31,
2011 | | June 30,
2011 | |
| | (In thousands) | |
Loans on real estate: | | | | | | | | | |
Residential and Commercial | | $ | 746,965 | | $ | 756,409 | | $ | 731,107 | | $ | 675,283 | |
Construction | | 46,413 | | 47,468 | | 44,087 | | 45,421 | |
Equity lines of credit | | 44,830 | | 44,745 | | 44,601 | | 48,129 | |
Commercial loans | | 216,974 | | 208,995 | | 223,479 | | 258,990 | |
Agricultural loans | | 10,712 | | 10,417 | | 11,527 | | 14,193 | |
Lease financing | | 2,269 | | 2,269 | | 2,269 | | 3,143 | |
Installment loans to individuals | | 20,146 | | 20,461 | | 22,937 | | 25,912 | |
Overdrafts | | 218 | | 179 | | 254 | | 869 | |
SBA and other | | 23,419 | | 20,751 | | 19,706 | | 20,736 | |
| | 1,111,946 | | 1,111,694 | | 1,099,967 | | 1,092,676 | |
Unearned discount | | (1,785 | ) | (1,797 | ) | (1,827 | ) | (1,544 | ) |
Loans, net of unearned discount | | $ | 1,110,161 | | $ | 1,109,897 | | $ | 1,098,140 | | $ | 1,091,132 | |
The $12.0 million growth in total loans, net of unearned discount in the first six months in 2012 as compared to December 31, 2011 was primarily related to increases in real estate loans of $18.4 million, partially offset by a decline in commercial loans of $6.5 million. At June 30, 2012, our residential and commercial real estate portfolio included 29.1% owner-occupied properties and 7.0% multi-family properties. We have capacity to extend additional credit on residential and commercial real estate loans as evidenced by our regulatory concentration ratios discussed below.
Since June 30, 2011, the ratio of construction, land and land development loans to capital fell by 26 percentage points to 47% at June 30, 2012. During the same period, the ratio of commercial real estate loans to capital rose slightly by eight percentage points to 267%.
The following table sets forth the amounts of our deposits outstanding at the dates indicated:
| | June 30,
2012 | | March 31,
2012 | | December 31,
2011 | | June 30,
2011 | |
| | (In thousands) | |
Noninterest-bearing deposits | | $ | 546,229 | | $ | 468,133 | | $ | 450,451 | | $ | 419,731 | |
Interest-bearing demand and NOW | | 270,940 | | 285,749 | | 289,987 | | 183,287 | |
Money market | | 280,767 | | 298,504 | | 277,997 | | 343,920 | |
Savings | | 97,497 | | 97,033 | | 91,260 | | 86,139 | |
Time | | 183,504 | | 189,509 | | 204,091 | | 313,106 | |
Total deposits | | $ | 1,378,937 | | $ | 1,338,928 | | $ | 1,313,786 | | $ | 1,346,183 | |
At June 30, 2012, noninterest-bearing deposits as a percentage of total deposits increased to 39.6% as compared to 34.3% at December 31, 2011 and 31.2% at June 30, 2011.
Non-maturing deposits increased $85.7 million, or 7.7%, in the second quarter 2012 as compared to the fourth quarter 2011 and $162.4 million, or 15.7%, as compared to second quarter 2011. Time deposits decreased $20.6 million as of June 30, 2012 as compared to December 31, 2011 and $129.6 million, as compared to June 30, 2011. Time deposits decreased over the past twelve months primarily as a result of management’s efforts to reduce the overall level of higher cost time deposits. Total brokered deposits at June 30, 2012 were $0.1 million as compared to $10.2 million at December 31, 2011 and $80.2 million at June 30, 2011. Brokered deposits represented less than 0.1% of total time deposits at June 30, 2012 as compared to 5.0% at December 31, 2011 and 25.6% at June 30, 2011.
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Borrowings were $110.2 million at June 30, 2012 and December 31, 2011 as compared to $163.2 million at June 30, 2011. The Company elected to payoff $51.0 million of FHLB term notes in September 2011. The weighted average rate of these advances was 3.5% with maturity dates that ranged from November 2011 to February 2014. The entire balance of borrowings at each balance sheet date consists of term notes with the FHLB.
Regulatory Capital Ratios
All of the Company’s and its subsidiary bank’s regulatory capital ratios are above the highest regulatory capital threshold of “well-capitalized” at June 30, 2012. The Company’s and its subsidiary bank’s actual capital ratios for June 30, 2012 and December 31, 2011 are presented in the table below:
| | Ratio at
June 30,
2012 | | Ratio at
December 31,
2011 | | Minimum
Capital
Requirement | | Minimum
Requirement for
“Well
Capitalized”
Institution | |
| | | | | | | | | |
Total Risk-Based Capital Ratio: | | | | | | | | | |
Consolidated | | 16.50 | % | 16.33 | % | 8.00 | % | N/A | |
Guaranty Bank and Trust Company | | 15.67 | % | 15.59 | % | 8.00 | % | 10.00 | % |
Tier 1 Risk-Based Capital Ratio: | | | | | | | | | |
Consolidated | | 15.24 | % | 15.06 | % | 4.00 | % | N/A | |
Guaranty Bank and Trust Company | | 14.41 | % | 14.32 | % | 4.00 | % | 6.00 | % |
Leverage Ratio: | | | | | | | | | |
Consolidated | | 12.55 | % | 12.12 | % | 4.00 | % | N/A | |
Guaranty Bank and Trust Company | | 11.84 | % | 11.53 | % | 4.00 | % | 5.00 | % |
Generally, the allowance for loan losses is included in total capital for regulatory purposes; however, it is limited to 1.25% of total risk-weighted assets. At June 30, 2012, approximately $11.8 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 0.85% of our consolidated risk-weighted assets. At June 30, 2012, no deferred tax assets were disallowed for purposes of computing consolidated tier 1 risk-based capital.
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Asset Quality
The following table presents select asset quality data (including loans held for sale) as of the dates indicated:
| | June 30,
2012 | | March 31,
2012 | | December 31,
2011 | | September 30,
2011 | | June 30,
2011 | |
| | (Dollars in thousands) | |
| | | | | | | | | | | |
Nonaccrual loans and leases | | $ | 21,291 | | $ | 29,648 | | $ | 26,801 | | $ | 45,790 | | $ | 56,342 | |
Other nonperforming loans | | — | | 1,301 | | 6 | | 583 | | 1,675 | |
| | | | | | | | | | | |
Total nonperforming loans (NPLs) | | $ | 21,291 | | $ | 30,949 | | $ | 26,807 | | $ | 46,373 | | $ | 58,017 | |
Other real estate owned and foreclosed assets | | 24,640 | | 28,072 | | 29,027 | | 22,008 | | 28,362 | |
| | | | | | | | | | | |
Total nonperforming assets (NPAs) | | $ | 45,931 | | $ | 59,021 | | $ | 55,834 | | $ | 68,381 | | $ | 86,379 | |
| | | | | | | | | | | |
Accruing loans past due 90 days or more (1) | | $ | — | | $ | 1,301 | | $ | 6 | | $ | 583 | | $ | 1,675 | |
| | | | | | | | | | | |
Accruing loans past due 30-89 days (1) | | $ | 18,448 | | $ | 10,798 | | $ | 10,805 | | $ | 9,358 | | $ | 4,750 | |
| | | | | | | | | | | |
Allowance for loan losses | | $ | 29,307 | | $ | 30,075 | | $ | 34,661 | | $ | 35,852 | | $ | 38,855 | |
| | | | | | | | | | | |
Selected ratios: | | | | | | | | | | | |
NPLs to loans, net of unearned discount | | 1.92 | % | 2.79 | % | 2.44 | % | 4.21 | % | 5.25 | % |
NPAs to total assets | | 2.62 | % | 3.44 | % | 3.30 | % | 4.04 | % | 4.94 | % |
Allowance for loan losses to NPAs (2) | | 63.81 | % | 50.96 | % | 62.08 | % | 66.17 | % | 53.83 | % |
Allowance for loan losses to NPLs (2) | | 137.65 | % | 97.17 | % | 129.30 | % | 111.43 | % | 88.67 | % |
Allowance for loan losses to loans (2) | | 2.64 | % | 2.71 | % | 3.16 | % | 3.29 | % | 3.56 | % |
Loans 30-89 days past due to loans, net of unearned discount | | 1.66 | % | 0.97 | % | 0.98 | % | 0.85 | % | 0.43 | % |
(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.
(2) Excludes loans held for sale.
The following tables summarize our past due loans by class (including loans held for sale) as of the dates indicated:
June 30, 2012 | | 30-89 Days
Past Due | | 90 days +Past
Due and Still
Accruing | | Non-Accrual
Loans | | Total Past
Due | | Total
Loans | |
| | (In thousands) | |
| | | | | | | | | | | |
Commercial and residential real estate | | $ | 16,779 | | $ | — | | $ | 15,021 | | $ | 31,800 | | $ | 745,764 | |
Construction loans | | — | | — | | 114 | | 114 | | 46,339 | |
Commercial loans | | 1,596 | | — | | 2,759 | | 4,355 | | 216,626 | |
Consumer loans | | 73 | | — | | 1,578 | | 1,651 | | 65,090 | |
Other | | — | | — | | 1,819 | | 1,819 | | 36,342 | |
Total | | $ | 18,448 | | $ | — | | $ | 21,291 | | $ | 39,739 | | $ | 1,110,161 | |
March 31, 2012 | | 30-89 Days
Past Due | | 90 days +Past
Due and Still
Accruing | | Non-Accrual
Loans | | Total Past
Due | | Total
Loans | |
| | (In thousands) | |
| | | | | | | | | | | |
Commercial and residential real estate | | $ | 8,699 | | $ | 862 | | $ | 14,790 | | $ | 24,351 | | $ | 755,187 | |
Construction loans | | — | | — | | 114 | | 114 | | 47,391 | |
Commercial loans | | 1,831 | | — | | 11,353 | | 13,184 | | 208,657 | |
Consumer loans | | 268 | | 439 | | 1,713 | | 2,420 | | 65,279 | |
Other | | — | | — | | 1,678 | | 1,678 | | 33,383 | |
Total | | $ | 10,798 | | $ | 1,301 | | $ | 29,648 | | $ | 41,747 | | $ | 1,109,897 | |
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During the second quarter 2012, nonaccrual loans decreased $8.4 million primarily due to the payoff of a single natural gas energy loan. At June 30, 2012, total classified loans declined $0.2 million and loans classified as special mention and watch loans declined $25.1 million on a linked quarter basis. At June 30, 2012, our classified assets as a percentage of capital and allowance for loan losses decreased to 33.8% as compared to 35.6% at March 31, 2012 and 36.6% at December 31, 2011. Other real estate owned decreased by $3.4 million during the second quarter 2012 as compared to the first quarter 2012.
Net charge-offs in the second quarter 2012 were $1.3 million as compared to $5.6 million in the first quarter 2012 and $9.0 million in the second quarter 2011.
The general component of the allowance for loan losses decreased from $27.5 million at March 31, 2012 to $27.0 million at June 30, 2012. The general component represented 2.4% of loans, net of unearned discount, at June 30, 2012 as compared to 2.5% of loans, net of unearned discount, at the end of the previous quarter. The coverage ratio, defined as allowance for loan losses divided by nonperforming loans, increased from 97.2% at March 31, 2012 to 137.7% at June 30, 2012.
The Company recorded a provision for loan losses in the second quarter 2012 of $0.5 million, as compared to $1.0 million in the first quarter 2012 and $1.0 million in the second quarter 2011. The lower level of provision for loan loss over last year reflects the overall improvement in asset quality.
Shares Outstanding
As of June 30, 2012, the Company had 106,215,690 shares of common stock outstanding, consisting of 101,120,690 shares of voting common stock and 5,095,000 shares of non-voting common stock. At June 30, 2012, total common shares outstanding include 2,280,922 shares of unvested stock awards.
9
Non-GAAP Financial Measures
This press release includes non-GAAP financial measures related to tangible assets, including tangible book value and tangible equity ratio, all of which exclude intangible assets, and net income.
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:
| | June 30,
2012 | | December 31,
2011 | | June 30,
2011 | |
| | (Dollars in thousands, except per share amounts) | |
Tangible Book Value per Common Share | | | | | | | |
Total stockholders’ equity | | $ | 180,121 | | $ | 171,011 | | $ | 165,734 | |
Less: Preferred share liquidation preference | | — | | — | | (69,013 | ) |
Stockholders’ equity attributable to common shares | | 180,121 | | 171,011 | | 96,721 | |
Less: Intangible assets | | (8,440 | ) | (9,963 | ) | (11,998 | ) |
Tangible common equity | | $ | 171,681 | | $ | 161,048 | | $ | 84,723 | |
| | | | | | | |
Number of common shares outstanding and to be issued | | 106,215,690 | | 105,436,623 | | 53,389,052 | |
| | | | | | | |
Book value per common share | | $ | 1.70 | | $ | 1.62 | | $ | 1.81 | |
Tangible book value per common share | | $ | 1.62 | | $ | 1.53 | | $ | 1.59 | |
| | June 30,
2012 | | December 31,
2011 | | June 30,
2011 | |
| | (Dollars in thousands, except per share amounts) | |
Tangible Common Equity Ratio | | | | | | | | | | |
Total stockholders’ equity | | $ | 180,121 | | $ | 171,011 | | $ | 165,734 | |
Less: Intangible assets | | (8,440 | ) | (9,963 | ) | (11,998 | ) |
Convertible Preferred Stock | | — | | — | | (69,013 | ) |
Tangible common equity | | $ | 171,681 | | $ | 161,048 | | $ | 84,723 | |
| | | | | | | |
Total assets | | $ | 1,750,539 | | $ | 1,689,668 | | $ | 1,747,060 | |
Less: Intangible assets | | (8,440 | ) | (9,963 | ) | (11,998 | ) |
Tangible assets | | $ | 1,742,099 | | $ | 1,679,705 | | $ | 1,735,062 | |
| | | | | | | |
Equity ratio — GAAP (total stockholders’ equity / total assets) | | 10.29 | % | 10.12 | % | 9.49 | % |
Tangible common equity ratio (tangible common equity / tangible assets) | | 9.85 | % | 9.59 | % | 4.88 | % |
10
The following non-GAAP table reconciles net income to core net income as of the dates indicated:
| | June 30,
2012 | | December 31,
2011 | | June 30,
2011 | |
| | (Dollars in thousands) | |
Core Operating Income | | | | | | | |
Net income | | $ | 6,192 | | $ | 2,917 | | $ | 1,409 | |
Less: Tax benefit | | (5,914 | ) | — | | — | |
Net income before tax benefit | | 278 | | 2,917 | | 1,409 | |
Less: Impairment of long-lived assets | | (2,750 | ) | — | | — | |
Core operating income | | $ | 3,028 | | $ | 2,917 | | $ | 1,409 | |
About Guaranty Bancorp
Guaranty Bancorp is a bank holding company that operates 30 branches in Colorado through a single bank, Guaranty Bank and Trust Company. The Bank provides banking and other financial services including commercial and industrial, real estate, construction, energy, consumer and agricultural loans throughout its targeted Colorado markets to consumers and small to medium-sized businesses, including the owners and employees of those businesses. The Bank also provides private banking and 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; 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 business strategy or development plans; changes in the securities markets; changes in consumer spending, borrowing and savings habits; the availability of capital from private or government sources; competition for loans and deposits and failure to attract or retain loans and deposits; changes in the financial performance and/or condition of our borrowers and the ability of our borrowers to perform under the terms of their loans and terms of other credit agreements; political instability, acts of war or terrorism and natural disasters; and additional “Risk Factors” referenced in the Company’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission, as supplemented from time to time. When relying on forward-looking statements to make decisions with respect to the Company, investors and others are cautioned to consider these and other risks and uncertainties. The Company can give
11
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.
12
GUARANTY BANCORP AND SUBSIDIARIES
Unaudited Consolidated Balance Sheets
| | June 30,
2012 | | December 31,
2011 | | June 30,
2011 | |
| | (In thousands) | |
Assets | | | | | | | |
Cash and due from banks | | $ | 107,133 | | $ | 109,225 | | $ | 134,896 | |
| | | | | | | |
Time deposits with banks | | 35,000 | | — | | — | |
| | | | | | | |
Securities available for sale, at fair value | | 362,039 | | 353,152 | | 375,921 | |
Securities held to maturity | | 21,687 | | 18,424 | | 16,277 | |
Bank stocks, at cost | | 14,425 | | 14,565 | | 16,608 | |
Total investments | | 398,151 | | 386,141 | | 408,806 | |
| | | | | | | |
Loans, net of unearned discount | | 1,110,161 | | 1,098,140 | | 1,091,132 | |
Less allowance for loan losses | | (29,307 | ) | (34,661 | ) | (38,855 | ) |
Net loans | | 1,080,854 | | 1,063,479 | | 1,052,277 | |
| | | | | | | |
Loans held for sale | | — | | — | | 14,200 | |
Premises and equipment, net | | 47,534 | | 53,851 | | 56,118 | |
Other real estate owned and foreclosed assets, net | | 24,640 | | 29,027 | | 28,362 | |
Other intangible assets, net | | 8,440 | | 9,963 | | 11,998 | |
Other assets | | 48,787 | | 37,982 | | 40,403 | |
Total assets | | $ | 1,750,539 | | $ | 1,689,668 | | $ | 1,747,060 | |
| | | | | | | |
Liabilities and Stockholders’ Equity | | | | | | | |
Liabilities: | | | | | | | |
Deposits: | | | | | | | |
Noninterest-bearing demand | | $ | 546,229 | | $ | 450,451 | | $ | 419,731 | |
Interest-bearing demand | | 551,707 | | 567,984 | | 527,207 | |
Savings | | 97,497 | | 91,260 | | 86,139 | |
Time | | 183,504 | | 204,091 | | 313,106 | |
Total deposits | | 1,378,937 | | 1,313,786 | | 1,346,183 | |
Securities sold under agreements to repurchase and federal funds purchased | | 13,028 | | 16,617 | | 17,608 | |
Borrowings | | 110,170 | | 110,177 | | 163,211 | |
Subordinated debentures | | 41,239 | | 41,239 | | 41,239 | |
Securities purchased, not yet settled | | 12,557 | | 20,800 | | — | |
Interest payable and other liabilities | | 14,487 | | 16,038 | | 13,085 | |
Total liabilities | | 1,570,418 | | 1,518,657 | | 1,581,326 | |
| | | | | | | |
Stockholders’ equity: | | | | | | | |
Preferred stock and additional paid-in capital — preferred stock | | — | | — | | 67,806 | |
Common stock and additional paid-in capital —common stock | | 705,058 | | 704,698 | | 619,855 | |
Shares to be issued for deferred compensation obligations | | — | | — | | 237 | |
Accumulated deficit | | (423,907 | ) | (433,016 | ) | (420,643 | ) |
Accumulated other comprehensive income | | 1,333 | | 1,683 | | 1,038 | |
Treasury stock | | (102,363 | ) | (102,354 | ) | (102,559 | ) |
Total stockholders’ equity | | 180,121 | | 171,011 | | 165,734 | |
Total liabilities and stockholders’ equity | | $ | 1,750,539 | | $ | 1,689,668 | | $ | 1,747,060 | |
13
GUARANTY BANCORP AND SUBSIDIARIES
Unaudited Consolidated Statements of Operations
| | Three Months Ended June 30, | | Six Months Ended June 30, | |
| | 2012 | | 2011 | | 2012 | | 2011 | |
| | (Dollars in thousands, except share and per share data) | |
Interest income: | | | | | | | | | |
Loans, including fees | | $ | 14,511 | | $ | 14,999 | | $ | 28,993 | | $ | 30,533 | |
Investment securities: | | | | | | | | | |
Taxable | | 2,366 | | 2,918 | | 4,759 | | 5,983 | |
Tax-exempt | | 618 | | 497 | | 1,235 | | 986 | |
Dividends | | 153 | | 163 | | 311 | | 329 | |
Federal funds sold and other | | 58 | | 86 | | 100 | | 175 | |
Total interest income | | 17,706 | | 18,663 | | 35,398 | | 38,006 | |
Interest expense: | | | | | | | | | |
Deposits | | 711 | | 1,886 | | 1,488 | | 4,515 | |
Securities sold under agreement to repurchase and federal funds purchased | | 12 | | 17 | | 24 | | 41 | |
Borrowings | | 827 | | 1,303 | | 1,654 | | 2,592 | |
Subordinated debentures | | 773 | | 710 | | 1,549 | | 1,401 | |
Total interest expense | | 2,323 | | 3,916 | | 4,715 | | 8,549 | |
Net interest income | | 15,383 | | 14,747 | | 30,683 | | 29,457 | |
Provision for loan losses | | 500 | | 1,000 | | 1,500 | | 3,000 | |
Net interest income, after provision for loan losses | | 14,883 | | 13,747 | | 29,183 | | 26,457 | |
Noninterest income: | | | | | | | | | |
Customer service and other fees | | 2,382 | | 2,386 | | 4,653 | | 4,700 | |
Gain (loss) on sale of securities | | 342 | | (312 | ) | 964 | | 402 | |
Other | | 187 | | 262 | | 393 | | 514 | |
Total noninterest income | | 2,911 | | 2,336 | | 6,010 | | 5,616 | |
Noninterest expense: | | | | | | | | | |
Salaries and employee benefits | | 6,614 | | 6,320 | | 13,471 | | 12,935 | |
Occupancy expense | | 1,972 | | 1,792 | | 3,991 | | 3,675 | |
Furniture and equipment | | 783 | | 913 | | 1,604 | | 1,807 | |
Amortization of intangible assets | | 761 | | 1,028 | | 1,523 | | 2,056 | |
Other real estate owned, net | | 461 | | 466 | | 813 | | 1,229 | |
Insurance and assessments | | 881 | | 966 | | 1,689 | | 2,191 | |
Professional fees | | 856 | | 914 | | 1,484 | | 1,822 | |
Impairment of long-lived assets | | 2,750 | | — | | 2,750 | | — | |
Other general and administrative | | 2,438 | | 2,275 | | 4,673 | | 4,435 | |
Total noninterest expense | | 17,516 | | 14,674 | | 31,998 | | 30,150 | |
Income before income taxes | | 278 | | 1,409 | | 3,195 | | 1,923 | |
Income tax expense (benefit) | | (5,914 | ) | — | | (5,914 | ) | — | |
Net Income | | $ | 6,192 | | $ | 1,409 | | $ | 9,109 | | $ | 1,923 | |
| | | | | | | | | |
Net income (loss) applicable to common stockholders | | $ | 6,192 | | $ | (109 | ) | $ | 9,109 | | $ | (1,081 | ) |
| | | | | | | | | |
Earnings (loss) per common share—basic: | | $ | 0.06 | | $ | 0.00 | | $ | 0.09 | | $ | (0.02 | ) |
Earnings (loss) per common share—diluted: | | 0.06 | | 0.00 | | 0.09 | | (0.02 | ) |
| | | | | | | | | |
Weighted average common shares outstanding-basic | | 103,914,305 | | 51,919,637 | | 103,903,566 | | 51,809,240 | |
Weighted average common shares outstanding-diluted | | 104,238,960 | | 51,919,637 | | 104,286,318 | | 51,809,240 | |
14
GUARANTY BANCORP AND SUBSIDIARIES
Unaudited Consolidated Average Balance Sheets
| | QTD Average | | YTD Average | |
| | June 30,
2012 | | December 31,
2011 | | June 30,
2011 | | June 30,
2012 | | June 30,
2011 | |
| | (In thousands) | |
Assets | | | | | | | | | | | |
Interest earning assets | | | | | | | | | | | |
Loans, net of unearned discount | | $ | 1,110,035 | | $ | 1,085,975 | | $ | 1,116,801 | | $ | 1,107,358 | | $ | 1,152,810 | |
Securities | | 388,959 | | 364,833 | | 395,199 | | 383,040 | | 406,035 | |
Other earning assets | | 103,783 | | 124,385 | | 151,451 | | 93,446 | | 143,841 | |
Average earning assets | | 1,602,777 | | 1,575,193 | | 1,663,451 | | 1,583,844 | | 1,702,686 | |
Other assets | | 104,085 | | 106,975 | | 104,089 | | 103,854 | | 115,734 | |
| | | | | | | | | | | |
Total average assets | | $ | 1,706,862 | | $ | 1,682,168 | | $ | 1,767,540 | | $ | 1,687,698 | | $ | 1,818,420 | |
| | | | | | | | | | | |
Liabilities and Stockholders’ Equity | | | | | | | | | | | |
Average liabilities: | | | | | | | | | | | |
Average deposits: | | | | | | | | | | | |
Noninterest-bearing deposits | | $ | 502,209 | | $ | 459,031 | | $ | 408,106 | | $ | 475,571 | | $ | 404,562 | |
Interest-bearing deposits | | 847,074 | | 869,758 | | 961,640 | | 855,684 | | 1,014,107 | |
Average deposits | | 1,349,283 | | 1,328,789 | | 1,369,746 | | 1,331,255 | | 1,418,669 | |
Other interest-bearing liabilities | | 175,053 | | 173,848 | | 227,133 | | 174,502 | | 229,225 | |
Other liabilities | | 6,581 | | 9,691 | | 7,396 | | 7,431 | | 8,369 | |
Total average liabilities | | 1,530,917 | | 1,512,328 | | 1,604,275 | | 1,513,188 | | 1,656,263 | |
Average stockholders’ equity | | 175,945 | | 169,840 | | 163,265 | | 174,510 | | 162,157 | |
Total average liabilities and stockholders’ equity | | $ | 1,706,862 | | $ | 1,682,168 | | $ | 1,767,540 | | $ | 1,687,698 | | $ | 1,818,420 | |
15
GUARANTY BANCORP
Unaudited Credit Quality Measures
(Includes loans held for sale, except where noted)
| | Quarter Ended | |
| | June 30,
2012 | | March 31,
2012 | | December 31,
2011 | | September 30,
2011 | | June 30,
2011 | |
| | (Dollars in thousands) | |
Nonaccrual loans and leases | | $ | 21,291 | | $ | 29,648 | | $ | 26,801 | | $ | 45,790 | | $ | 56,342 | |
Other nonperforming loans | | — | | 1,301 | | 6 | | 583 | | 1,675 | |
Total nonperforming loans | | $ | 21,291 | | $ | 30,949 | | $ | 26,807 | | $ | 46,373 | | $ | 58,017 | |
Other real estate owned and foreclosed assets | | 24,640 | | 28,072 | | 29,027 | | 22,008 | | 28,362 | |
Total nonperforming assets | | $ | 45,931 | | $ | 59,021 | | $ | 55,834 | | $ | 68,381 | | $ | 86,379 | |
| | | | | | | | | | | |
Total classified assets | | $ | 77,910 | | $ | 81,130 | | $ | 83,317 | | $ | 95,916 | | $ | 126,098 | |
| | | | | | | | | | | | | | | | |
Nonperforming loans | | $ | 21,291 | | $ | 30,949 | | $ | 26,807 | | $ | 46,373 | | $ | 58,017 | |
Allocated allowance for loan losses | | (2,272 | ) | (2,572 | ) | (3,490 | ) | (4,483 | ) | (4,177 | ) |
Net investment in impaired loans | | $ | 19,019 | | $ | 28,377 | | $ | 23,317 | | $ | 41,890 | | $ | 53,840 | |
| | | | | | | | | | | | | | | | |
Accruing loans past due 90 days or more | | $ | — | | $ | 1,301 | | $ | 6 | | $ | 583 | | $ | 1,675 | |
| | | | | | | | | | | | | | | | |
Accruing loans past due 30-89 days | | $ | 18,448 | | $ | 10,798 | | $ | 10,805 | | $ | 9,358 | | $ | 4,750 | |
| | | | | | | | | | | | | | | | |
Charged-off loans | | $ | 2,062 | | $ | 6,371 | | $ | 2,603 | | $ | 4,135 | | $ | 9,997 | |
Recoveries | | (794 | ) | (785 | ) | (412 | ) | (132 | ) | (973 | ) |
Net charge-offs | | $ | 1,268 | | $ | 5,586 | | $ | 2,191 | | $ | 4,003 | | $ | 9,024 | |
| | | | | | | | | | | |
Provision for loan losses | | $ | 500 | | $ | 1,000 | | $ | 1,000 | | $ | 1,000 | | $ | 1,000 | |
| | | | | | | | | | | |
Allowance for loan losses | | $ | 29,307 | | $ | 30,075 | | $ | 34,661 | | $ | 35,852 | | $ | 38,855 | |
| | | | | | | | | | | |
Allowance for loan losses to loans, net of unearned discount (1) | | 2.64 | % | 2.71 | % | 3.16 | % | 3.29 | % | 3.56 | % |
Allowance for loan losses to nonaccrual loans (1) | | 137.65 | % | 101.44 | % | 129.33 | % | 113.49 | % | 92.20 | % |
Allowance for loan losses to nonperforming assets (1) | | 63.81 | % | 50.96 | % | 62.08 | % | 66.17 | % | 53.83 | % |
Allowance for loan losses to nonperforming loans (1) | | 137.65 | % | 97.17 | % | 129.30 | % | 111.43 | % | 88.67 | % |
Nonperforming assets to loans, net of unearned discount, and other real estate owned | | 4.05 | % | 5.19 | % | 4.95 | % | 6.08 | % | 7.62 | % |
Nonperforming assets to total assets | | 2.62 | % | 3.44 | % | 3.30 | % | 4.04 | % | 4.94 | % |
Nonaccrual loans to loans, net of unearned discount | | 1.92 | % | 2.67 | % | 2.44 | % | 4.15 | % | 5.10 | % |
Nonperforming loans to loans, net of unearned discount | | 1.92 | % | 2.79 | % | 2.44 | % | 4.21 | % | 5.25 | % |
Annualized net charge-offs to average loans | | 0.46 | % | 2.03 | % | 0.80 | % | 1.44 | % | 3.24 | % |
(1) Excludes loans held for sale
16
