Guaranty Bancorp Announces 2016 Second Quarter Financial Results
/EINPresswire.com/ -- DENVER,CO--(Marketwired - July 20, 2016) - Guaranty Bancorp (NASDAQ: GBNK)
- Previously announced merger of Home State Bancorp expected to close in the third quarter 2016
- Successfully raised $40 million of subordinated debt at an initial rate of 5.75%
- Expanded quarterly operating return on average assets (ROAA) to 1.03% from 1.01% in the first quarter 2016; second quarter 2016 GAAP ROAA was 0.97%, compared to 0.94% in the first quarter 2016
- Grew loans by 13.8% during the last twelve months
Guaranty Bancorp (NASDAQ: GBNK) ("we", "our" or "the Company"), a community bank holding company based in Colorado, today announced second quarter 2016 net income of $5.7 million, or $0.27 per basic and diluted common share, an increase of $0.2 million, or 3.8% and an increase of $0.01 per basic and diluted common share as compared to the second quarter 2015. For the six months ended June 30, 2016, net income was $11.2 million or $0.53 per basic common share and $0.52 per diluted common share, an increase of $0.7 million, or 6.2% and an increase of $0.03 per basic common share and $0.02 per diluted common share as compared to the same period in 2015.
Operating earnings
"We are extremely pleased with the progress that has been made with respect to our previously announced merger with Home State Bancorp," said Paul W. Taylor, President and Chief Executive Officer. "Our goal remains to close the merger in the third quarter and complete the integration of all operations by the end of the year. We expect the merger will result in many benefits to our combined company, including increased market share, a lower loan-to-deposit ratio and a reduced commercial real estate concentration ratio. The market has responded very positively to the merger with $40 million in subordinated debt raised for the cash consideration payable in connection with the merger. This subordinated debt bears an initial interest rate of 5.75% which ranks among the lowest of recent reported issuances for bank holding companies of similar size and credit rating."
Mr. Taylor continued, "In addition to the merger activity, we continue to grow our business while successfully managing expenses. Our seasoned bankers are actively consulting with our customers and local Colorado businesses to provide them the resources they need to further their growth. These efforts have resulted in 13.8% loan growth and 6.0% deposit growth over the last twelve months. We also remain focused on the fundamentals with continued improvement in quarterly operating earnings, an operating return on average assets of 1.03% and an efficiency ratio of 59.1%."
On July 18, 2016, the Company completed its offering of $40.0 million of unsecured, fixed-to-floating rate subordinated notes due July 20, 2026 (Notes). The Notes will initially bear a fixed interest rate of 5.75% per annum. On July 20, 2021, and, thereafter, the interest on the Notes will be payable quarterly, at an annual floating rate equal to three-month LIBOR as determined by the applicable quarterly period, plus 4.73%. The Company received a BBB investment grade rating from Kroll Bond Rating Agency on the Notes.
As compared to the first quarter 2016, second quarter 2016 operating earnings increased $0.1 million, or 2.2% to $6.0 million. Operating ROAA increased to 1.03% in the second quarter 2016 compared to 1.01% in the first quarter 2016. Second quarter 2016 net income increased $0.2 million to $5.7 million, as compared to the first quarter 2016 primarily due to declines in merger-related expense and salaries and employee benefits. ROAA (GAAP) during the second quarter 2016 was 0.97% compared to 0.94% in the first quarter 2016.
For the six months ended June 30, 2016, operating earnings increased 11.9%, or $1.3 million, as compared to the same period in 2015 due to a $3.7 million increase in interest income, partially offset by a $1.6 million increase in interest expense and an increase in income taxes due to higher pretax income. The $3.7 million increase in interest income was mostly due to a $257.4 million, or 16.4% increase in average loans for the six months ended June 30, 2016 as compared to the same period in 2015. The $1.6 million increase in interest expense was related to a $149.4 million, or 14.1% increase in average interest-bearing deposits and an increase in the average cost of borrowings of 58 basis points. Net income increased $0.7 million for the first six months of 2016 as compared to the same period in 2015. The increase in net income was the result of a $3.7 million increase in interest income, partially offset by a $1.6 million increase in interest expense, $1.0 million in merger-related expenses incurred during the first six months of 2016 and an increase in income taxes as a result of higher pretax income.
Key Financial Measures
Income Statement
Three Months Ended Six Months Ended
----------------------------- ------------------
June 30, March 31, June 30, June 30, June 30,
2016 2016 2015 2016 2015
----------------------------- ------------------
(Dollars in thousands, except per share amounts)
Operating earnings (1) $ 6,048 $ 5,918 $ 5,586 $ 11,966 $ 10,696
Net income $ 5,685 $ 5,535 $ 5,477 $ 11,220 $ 10,561
Earnings per common share
- diluted - operating (1)$ 0.28 $ 0.28 $ 0.26 $ 0.56 $ 0.50
Earnings per common share
- diluted $ 0.27 $ 0.26 $ 0.26 $ 0.52 $ 0.50
Return on average assets -
operating (1) 1.03% 1.01% 1.02% 1.02% 1.00%
Return on average assets 0.97% 0.94% 1.00% 0.96% 0.99%
Return on average equity -
operating (1) 10.67% 10.62% 10.49% 10.64% 10.18%
Return on average equity 10.03% 9.93% 10.29% 9.98% 10.05%
Net interest margin 3.57% 3.60% 3.67% 3.58% 3.76%
Efficiency ratio - tax
equivalent (2) 59.08% 59.92% 59.77% 59.50% 61.28%
(1) See reconciliation of non-GAAP financial measure to the corresponding
GAAP measurement in "Non-GAAP Financial Measures" later in this document.
(2) The efficiency ratio equals noninterest expense adjusted to exclude
amortization of intangible assets, prepayment penalties on long-term debt,
impairment of long-lived assets and merger-related expenses, divided by
the sum of tax equivalent net interest income and tax equivalent
noninterest income. To calculate tax equivalent net interest income and
noninterest income, the interest earned on tax exempt loans and investment
securities and the income earned on bank-owned life insurance has been
adjusted to reflect the amount that would have been earned had these
investments been subject to normal income taxation.
Balance Sheet
June 30, December 31, Percent June 30, Percent
2016 2015 Change 2015 Change
----------------------------------------------------
(Dollars in thousands, except per share amounts)
Total investments $ 369,008 $ 424,692 (13.1)% $ 442,794 (16.7)%
Total loans, net of
deferred costs and
fees 1,898,543 1,814,536 4.6% 1,668,658 13.8%
Allowance for loan
losses (23,050) (23,000) 0.2% (22,850) 0.9%
Total assets 2,395,015 2,368,525 1.1% 2,269,536 5.5%
Total deposits 1,847,361 1,801,845 2.5% 1,741,999 6.0%
Book value per common
share 10.55 10.21 3.3% 9.84 7.2%
Tangible book value
per common share 10.33 9.97 3.6% 9.56 8.1%
Equity ratio - GAAP 9.60% 9.36% 2.6% 9.42 % 1.9%
Tangible common equity
ratio 9.42% 9.16% 2.8% 9.18 % 2.6%
Total risk-based
capital ratio 13.34% 13.24% 0.8% 13.34 % -%
Assets under
management and
administration $ 718,570 $ 698,247 2.9% $ 708,610 1.4%
Net Interest Income and Margin
Three Months Ended Six Months Ended
---------------------------------- -----------------------
June 30, March 31, June 30, June 30, June 30,
2016 2016 2015 2016 2015
---------------------------------- -----------------------
(Dollars in thousands)
Net interest
income $ 19,821 $ 19,995 $ 18,940 $ 39,816 $ 37,717
Average earning
assets 2,234,612 2,234,247 2,069,468 2,234,429 2,025,337
Interest rate
spread 3.39% 3.44% 3.54% 3.41% 3.62%
Net interest
margin 3.57% 3.60% 3.67% 3.58% 3.76%
Net interest
margin, fully
tax equivalent 3.65% 3.68% 3.75% 3.66% 3.84%
Average cost of
interest-
bearing
liabilities
(including
noninterest-
bearing
deposits) 0.39% 0.35% 0.25% 0.37% 0.24%
Average cost of
deposits
(including
noninterest-
bearing
deposits) 0.23% 0.22% 0.18% 0.23% 0.17%
Net interest income increased $0.9 million in the second quarter 2016, as compared to the same quarter in 2015, due to a $1.7 million increase in interest income, partially offset by a $0.8 million increase in interest expense. The increase in interest income was primarily the result of a $226.9 million, or 14.0% increase in average loan balances in the second quarter 2016 as compared to the same quarter in 2015. The increase in interest expense was primarily attributable to a $0.5 million increase in interest expense on Federal Home Loan Bank (FHLB) borrowings, resulting from hedged borrowings, $25.0 million of which became effective in the third quarter 2015 and $25.0 million of which became effective in the first quarter 2016. Additionally, interest expense on certificates of deposits increased $0.3 million in the second quarter 2016 as compared to the same quarter in 2015, primarily as a result of a $74.4 million increase in average certificates of deposit.
As compared to the first quarter 2016, net interest income decreased by $0.2 million mostly due to an increase in interest expense. The increase in interest expense during the second quarter 2016, as compared to the first quarter 2016, was primarily due to an increase in the cost of Company's FHLB borrowings and certificates of deposit.
For the six months ended June 30, 2016, net interest income increased $2.1 million, as compared to the same period in 2015, due to a $3.7 million increase in interest income, partially offset by a $1.6 million increase in interest expense. The year-to-date increase in interest income was driven by a $257.4 million, or 16.4% increase in average loans, as compared to the same period in 2015. The increase in interest expense during the first six months of 2016, as compared to the same period in 2015, was primarily a result of the increased cost of our FHLB borrowings and increased interest expense on certificates of deposit. The increased cost of FHLB borrowings was the result of the Company's hedged borrowings becoming fully effective as outlined above and the impact of the December 2015 Federal Reserve Board's federal funds interest rate increase on overnight funding. The increase in interest expense on certificates of deposit in the first six months of 2016, as compared to the same period in 2015, was the result of an increase in average cost and an increase in average balances.
Noninterest Income
The following table presents noninterest income as of the dates indicated:
Three Months Ended Six Months Ended
---------------------------- ------------------
June 30, March 31, June 30, June 30, June 30,
2016 2016 2015 2016 2015
---------------------------- ------------------
(In thousands)
Noninterest income:
Deposit service and other
fees $ 2,292 $ 2,169 $ 2,338 $ 4,461 $ 4,373
Investment management and
trust 1,276 1,280 1,338 2,556 2,672
Increase in cash surrender
value of life insurance 460 448 461 908 869
Gain (loss) on sale of
securities (101) 45 - (56) -
Gain on sale of SBA loans 110 154 169 264 449
Other 105 82 98 187 156
---------------------------- ------------------
Total noninterest income $ 4,142 $ 4,178 $ 4,404 $ 8,320 $ 8,519
============================ ==================
Second quarter 2016 noninterest income was $4.1 million as compared to $4.2 million in the first quarter 2016 and $4.4 million in the second quarter 2015.
The decline in noninterest income in the second quarter 2016, as compared to the second quarter 2015, was primarily attributable to the net losses recognized on security sales in the second quarter 2016 and a decline in gains on the sale of SBA loans. Similarly, the decline in noninterest income in the second quarter 2016, as compared to the first quarter 2016, was primarily the result of decreases in net gains generated by the sale of SBA loans and securities.
For the six months ended June 30, 2016, noninterest income decreased $0.2 million to $8.3 million as compared to $8.5 million for the same period in 2015. The primary reason for the decrease in noninterest income was due to a decline in gains on the sale of SBA loans.
Noninterest Expense
The following table presents noninterest expense as of the dates indicated:
Three Months Ended Six Months Ended
--------------------------- -----------------
June 30, March 31, June 30, June 30, June 30,
2016 2016 2015 2016 2015
--------------------------- -----------------
(In thousands)
Noninterest expense:
Salaries and employee
benefits $ 8,520 $ 8,788 $ 7,999 $ 17,308 $ 16,603
Occupancy expense 1,261 1,375 1,630 2,636 3,327
Furniture and equipment 713 818 736 1,531 1,466
Amortization of intangible
assets 239 240 496 479 991
Other real estate owned, net 5 2 54 7 95
Insurance and assessment 597 613 626 1,210 1,191
Professional fees 906 857 853 1,763 1,682
Impairment of long-lived
assets - - 122 - 122
Other general and
administrative 2,893 3,099 2,440 5,992 4,749
--------------------------- -----------------
Total noninterest expense $ 15,134 $ 15,792 $ 14,956 $ 30,926 $ 30,226
=========================== =================
Noninterest expense increased by $0.2 million to $15.1 million in the second quarter 2016 as compared to $15.0 million in the second quarter 2015. The primary cause of the increase in noninterest expense was $0.3 million in merger related expenses associated with the Company's previously announced merger with Home State Bancorp incurred in the second quarter 2016.
During the second quarter 2016, noninterest expense decreased $0.7 million, as compared to the first quarter 2016, primarily as a result of a $0.3 million decrease in salaries and employee benefits due to a decline in payroll taxes related to the timing of the annual payroll cycle and a $0.3 million decline in merger-related expenses. The Company's tax equivalent efficiency ratio was 59.08% for the second quarter 2016, as compared to 59.92% in the first quarter 2016, and 59.77% in the second quarter 2015.
For the six months ended June 30, 2016, noninterest expense was $30.9 million as compared to $30.2 million for the same period in 2015. The increase in noninterest expense during the first six months of 2016, as compared to the same period in 2015, was primarily due to the $1.0 million in merger-related expenses incurred during the first six months of 2016 and a $0.7 million increase in salaries and employee benefits, partially offset by a $0.7 million decline in occupancy expense. The $0.7 million increase in salaries and employee benefits during the first six months of 2016, as compared to the prior year was mostly due to a $0.3 million increase in base salaries, a $0.2 million increase in the Company's self-funded medical plan and a $0.2 million increase in equity compensation expense. The $0.7 million decline occupancy expense was primarily the result of a $0.5 million reduction in rent and depreciation expense related to the restructure of the lease for the Company's corporate office.
Balance Sheet
June 30, December 31, Percent June 30, Percent
2016 2015 Change 2015 Change
--------------------------------------------------------
(Dollars in thousands)
Total assets $2,395,015 $ 2,368,525 1.1% $2,269,536 5.5%
Average assets,
quarter-to-date 2,356,964 2,327,224 1.3% 2,199,723 7.1%
Total loans, net
of deferred costs
and fees 1,898,543 1,814,536 4.6% 1,668,658 13.8%
Total deposits 1,847,361 1,801,845 2.5% 1,741,999 6.0%
Equity ratio -
GAAP 9.60% 9.36% 2.6% 9.42% 1.9%
Tangible common
equity ratio 9.42% 9.16% 2.8% 9.18% 2.6%
At June 30, 2016, the Company had total assets of $2.4 billion, reflecting an increase of $26.5 million as compared to December 31, 2015, and an increase of $125.5 million as compared to June 30, 2015. The $26.5 million increase in total assets during the first six months of 2016 was comprised of an increase in loans of $84.0 million, partially funded by a $55.7 million reduction in investments and a $45.5 million increase in deposits. The $125.5 million increase in total assets at June 30, 2016 as compared to June 30, 2015, was due to a $229.9 million increase in loans, partially offset by a $73.8 million decrease in investments and a $24.7 million decrease in cash.
The following table sets forth the amount of loans outstanding at the dates
indicated:
December September
June 30, March 31, 31, 30, June 30,
--------------------------------------------------------
2016 2016 2015 2015 2015
--------------------------------------------------------
(In thousands)
Loans held for
sale $ - $ - $ - $ 8 $ 423
Commercial and
residential real
estate 1,428,397 1,307,854 1,281,701 1,196,209 1,146,508
Construction 26,497 87,753 107,170 92,473 85,516
Commercial 336,069 329,939 323,552 336,414 333,860
Agricultural 11,035 9,768 9,294 10,991 12,380
Consumer 66,539 66,829 66,288 63,517 61,870
SBA 28,494 26,811 25,645 25,911 26,975
Other 1,111 955 631 510 1,299
--------------------------------------------------------
Total gross
loans 1,898,142 1,829,909 1,814,281 1,726,033 1,668,831
Deferred costs
and (fees) 401 337 255 118 (173)
--------------------------------------------------------
Loans, net of
deferred costs
and fees $1,898,543 $1,830,246 $1,814,536 $ 1,726,151 $1,668,658
========================================================
The following table presents the changes in the Company's loan balances at
the dates indicated:
December September
June 30, March 31, 31, 30, June 30,
2016 2016 2015 2015 2015
------------------------------------------------------------
(In thousands)
Beginning
balance $1,829,909 $1,814,281 $1,726,033 $ 1,668,831 $1,555,288
New credit
extended 121,753 105,843 155,745 149,502 169,687
Net existing
credit
advanced 87,524 50,482 61,165 60,784 83,792
Net pay-downs
and
maturities (142,516) (139,914) (129,189) (152,279) (138,770)
Charge-offs
and other 1,472 (783) 527 (805) (1,166)
------------------------------------------------------------
Gross loans 1,898,142 1,829,909 1,814,281 1,726,033 1,668,831
Deferred costs
and (fees) 401 337 255 118 (173)
------------------------------------------------------------
Loans, net
of deferred
costs and
fees $1,898,543 $1,830,246 $1,814,536 $ 1,726,151 $1,668,658
============================================================
Net change -
loans
outstanding $ 68,297 $ 15,710 $ 88,385 $ 57,493 $ 113,504
During the second quarter 2016, loans net of deferred costs and fees increased $68.3 million which was comprised of a $120.5 million increase in commercial and residential real estate loans, including a $30.7 million increase in 1-4 family residential real estate loans, and a $6.1 million increase in commercial loans, partially offset by a $61.3 million decline in construction loans. The $61.3 million decline in construction loans during the second quarter 2016 was primarily the result of the completion of the underlying construction projects and the conversion of the short-term construction loan to permanent financing. Second quarter 2016 net loan growth consisted of $209.3 million in new loans and net existing credit advanced, partially offset by $142.5 million in net loan pay-downs and maturities. In addition to contractual loan principal payments and maturities, the second quarter 2016 included $48.1 million in early payoffs related to the sale of the borrower's assets, $15.2 million in payoffs due to our strategic decision to not match certain financing terms offered by competitors, and $19.5 million in pay-downs related to revolving line of credit fluctuations.
For the twelve months ended June 30, 2016, loans net of deferred costs and fees increased by $229.9 million, or 13.8%. Net loan growth was comprised of a $281.9 million increase in commercial and residential real estate loans partially offset by a $59.0 million decrease in construction loans. The growth in loans was the result of the development of new customer relationships and growth in existing customer relationships. The utilization rate on commercial lines of credit was 47.0% at June 30, 2016, as compared to 41.2% at December 31, 2015, and 41.0% as of June 30, 2015. At June 30, 2016, 1-4 family residential real estate loans were $374.0 million, as compared to $349.1 million at December 31, 2015, and $273.4 million as of June 30, 2015.
The following table sets forth the amounts of deposits outstanding at the
dates indicated:
December September
June 30, March 31, 31, 30, June 30,
2016 2016 2015 2015 2015
---------------------------------------------------------
(In thousands)
Noninterest-
bearing demand $ 638,110 $ 631,544 $ 612,371 $ 683,797 $ 622,364
Interest-bearing
demand and NOW 383,492 392,808 381,834 405,092 379,495
Money market 392,730 411,582 397,371 369,023 362,798
Savings 149,798 155,673 151,130 144,602 139,305
Time 283,231 281,110 259,139 244,815 238,037
---------------------------------------------------------
Total deposits $ 1,847,361 $ 1,872,717 $1,801,845 $1,847,329 $ 1,741,999
=========================================================
At June 30, 2016, non-maturing deposits were $1.6 billion, an increase of $21.4 million as compared to December 31, 2015, and an increase of $60.2 million as compared to June 30, 2015. At June 30, 2016, noninterest-bearing deposits as a percentage of total deposits were 34.5%, as compared to 34.0% at December 31, 2015, and 35.7% at June 30, 2015.
At June 30, 2016, securities sold under agreements to repurchase were $18.0 million, a decrease of $8.5 million as compared to December 31, 2015, and an increase of $2.2 million as compared to June 30, 2015.
Total FHLB borrowings were $261.6 million at June 30, 2016 consisting of $141.6 million of overnight advances on the Bank's line of credit and $120.0 million in term advances. At December 31, 2015, total FHLB borrowings consisted of $185.8 million in overnight advances and $95.0 million in term advances.
Regulatory Capital Ratios
The following table provides the capital ratios of the Company and the Bank
as of the dates presented, along with the applicable regulatory capital
requirements:
Minimum
Requirement
for
"Adequately
Capitalized"
Institution Minimum
plus fully Requirement
phased in for
Ratio at Ratio at Capital "Well-
June 30, December 31, Conservation Capitalized"
2016 2015 Buffer Institution
-----------------------------------------------------
Common Equity Tier 1
Risk-Based Capital
Ratio
Consolidated 11.07% 10.94% 7.00% N/A
Guaranty Bank and
Trust Company 11.89% 11.96% 7.00% 6.50%
Tier 1 Risk-Based
Capital Ratio
Consolidated 12.23% 12.11% 8.50% N/A
Guaranty Bank and
Trust Company 11.89% 11.96% 8.50% 8.00%
Total Risk-Based
Capital Ratio
Consolidated 13.34% 13.24% 10.50% N/A
Guaranty Bank and
Trust Company 13.00% 13.09% 10.50% 10.00%
Leverage Ratio
Consolidated 10.84% 10.68% 4.00% N/A
Guaranty Bank and
Trust Company 10.54% 10.55% 4.00% 5.00%
At June 30, 2016, all of our regulatory capital ratios remained well above minimum requirements for a "well-capitalized" institution. The Company's consolidated Tier 1 risk-based capital ratio and total risk-based capital ratios increased relative to December 31, 2015 as a result of increased capital due to year-to-date earnings, partially offset by growth in risk-weighted assets.
Asset Quality
The following table presents select asset quality data, including quarterly
charged-off loans, recoveries and provision (credit) for loan losses as of
the dates indicated:
December September
June 30, March 31, 31, 30, June 30,
2016 2016 2015 2015 2015
-----------------------------------------------------
(Dollars in thousands)
Nonaccrual loans and
leases $ 13,326 $ 13,401 $ 14,474 $ 14,512 $ 13,192
Accruing loans past
due 90 days or more
(1) - - - - -
-----------------------------------------------------
Total nonperforming
loans (NPLs) $ 13,326 $ 13,401 $ 14,474 $ 14,512 $ 13,192
Other real estate
owned and foreclosed
assets 674 674 674 1,371 1,503
-----------------------------------------------------
Total nonperforming
assets (NPAs) $ 14,000 $ 14,075 $ 15,148 $ 15,883 $ 14,695
=====================================================
Total classified
assets $ 25,644 $ 27,191 $ 26,428 $ 31,208 $ 31,762
=====================================================
Accruing loans past
due 30-89 days (1) $ 2,386 $ 1,398 $ 2,091 $ 3,461 $ 1,487
=====================================================
Charged-off loans $ (57) $ (302) $ (66) $ (75) $ (48)
Recoveries 72 311 184 101 285
-----------------------------------------------------
Net recoveries $ 15 $ 9 $ 118 $ 26 $ 237
=====================================================
Provision (credit) for
loan losses $ 10 $ 16 $ (8) $ 14 $ 113
=====================================================
Allowance for loan
losses $ 23,050 $ 23,025 $ 23,000 $ 22,890 $ 22,850
=====================================================
Selected ratios:
NPLs to loans, net of
deferred costs and
fees (2) 0.70% 0.73% 0.80% 0.84% 0.79%
NPAs to total assets 0.58% 0.60% 0.64% 0.69% 0.65%
Allowance for loan
losses to NPLs 172.97% 171.82% 158.91% 157.73% 173.21%
Allowance for loan
losses to loans, net
of deferred costs and
fees (2) 1.21% 1.26% 1.27% 1.33% 1.37%
Loans 30-89 days past
due to loans, net of
deferred costs and
fees (2) 0.13% 0.08% 0.12% 0.20% 0.09%
Texas ratio (3) 5.17% 5.14% 5.65% 6.09% 5.80%
Classified asset ratio
(4) 10.55% 11.56% 11.66% 13.51% 13.87%
(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 is
in the process of renewal, but continues to be current with respect to
payments.
(2) Loans, net of deferred costs and fees, exclude loans held for sale.
(3) Texas ratio defined as total NPAs divided by subsidiary bank only Tier
1 Capital plus allowance for loan losses.
(4) Classified asset ratio defined as total classified assets to subsidiary
bank only Tier 1 Capital plus allowance for loan losses.
The following tables summarize past due loans held for investment by class
as of the dates indicated:
90 Days + Total
30-89 Past Due Nonaccrual Total Loans,
Days Past and Still and Held for
June 30, 2016 Due Accruing Nonaccrual Past Due Investment
----------------------------------------------------------------------------
(In thousands)
Commercial and
residential real
estate $ 1,617 $ - $ 10,476 $ 12,093 $ 1,428,698
Construction - - 986 986 26,503
Commercial 90 - 814 904 336,140
Consumer 2 - 257 259 66,553
Other 677 - 793 1,470 40,649
------------------------------------------------------
Total $ 2,386 $ - $ 13,326 $ 15,712 $ 1,898,543
======================================================
90 Days + Total
30-89 Past Due Nonaccrual Total Loans,
Days Past and Still and Held for
December 31, 2015 Due Accruing Nonaccrual Past Due Investment
----------------------------------------------------------------------------
(In thousands)
Commercial and
residential real
estate $ 653 $ - $ 11,905 $ 12,558 $ 1,281,881
Construction - - 986 986 107,185
Commercial 1,147 - 874 2,021 323,598
Consumer 291 - 459 750 66,297
Other - - 250 250 35,575
------------------------------------------------------
Total $ 2,091 $ - $ 14,474 $ 16,565 $ 1,814,536
======================================================
During the second quarter 2016, nonperforming assets decreased by $0.1 million from March 31, 2016 and $0.7 million from June 30, 2015. As of June 30, 2016, nonperforming loans included one out-of-state loan syndication with a balance of $9.4 million.
At June 30, 2016, classified assets represented 10.6% of bank-level Tier 1 risk-based capital plus allowance for loan losses, as compared to 11.7% at December 31, 2015, and 13.9% at June 30, 2015.
Immaterial net recoveries were recognized during the first and second quarters 2016. Net recoveries in the second quarter 2015 were $0.2 million. The Bank considered recoveries, historical charge-offs, level of nonperforming loans, loan growth and other factors when determining the adequacy of the allowance for loan losses and the resulting amount of loan loss provision to be recognized during the quarter.
Shares Outstanding
As of June 30, 2016, the Company had 21,802,054 shares of common stock outstanding, consisting of 20,783,054 shares of voting common stock, of which 554,591 shares were in the form of unvested stock awards, and 1,019,000 shares of non-voting common stock.
Non-GAAP Financial Measures
The Company discloses certain non-GAAP financial measures related to tangible assets, including tangible book value and tangible common equity, and operating earnings adjusted for merger related expenses, OREO expenses, debt termination expense, impairments of long-lived assets, securities gains and losses and gains or losses on the sale or disposal of other assets. The Company also discloses the following GAAP profitability metrics alongside the operating earnings equivalent: return on average assets, return on average equity and earnings per share (diluted).
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 schedule reconciles the non-GAAP operating earnings
to GAAP net income as of the dates indicated:
Three Months Ended Six Months Ended
------------------------------------ ------------------------
June 30, March 31, June 30, June 30, June 30,
2016 2016 2015 2016 2015
------------------------------------ ------------------------
(Dollars in thousands, except per share amounts)
Net income $ 5,685 $ 5,535 $ 5,477 $ 11,220 $ 10,561
Expenses
adjusted for:
Expenses
(gains)
related to
other real
estate
owned, net 5 2 54 7 95
Merger
related
expenses 347 675 - 1,022 -
Impairment of
long-lived
assets - - 122 - 122
Income adjusted
for:
(Gain) loss
on sale of
securities 101 (45) - 56 -
Gain on sale
of other
assets - (14) - (14) -
------------------------------------ ------------------------
Pre-tax
earnings
adjustment 453 618 176 1,071 217
------------------------------------ ------------------------
Tax effect of
adjustments
(1) (90) (235) (67) (325) (82)
------------------------------------ ------------------------
Tax effected
operating
earnings
adjustment 363 383 109 746 135
------------------------------------ ------------------------
Operating
earnings $ 6,048 $ 5,918 $ 5,586 $ 11,966 $ 10,696
==================================== ========================
Average assets $ 2,356,964 $ 2,359,180 $ 2,199,723 $ 2,358,059 $ 2,154,494
Average equity $ 228,060 $ 224,179 $ 213,545 $ 226,120 $ 211,837
Fully diluted
average common
shares
outstanding: 21,361,712 21,375,330 21,200,438 21,411,626 21,191,277
Earnings per
common share-
diluted -
operating: $ 0.28 $ 0.28 $ 0.26 $ 0.56 $ 0.50
Earnings per
common share-
diluted: $ 0.27 $ 0.26 $ 0.26 $ 0.52 $ 0.50
ROAA -
operating 1.03% 1.01% 1.02% 1.02% 1.00%
ROAA (GAAP) 0.97% 0.94% 1.00% 0.96% 0.99%
ROAE -
operating 10.67% 10.62% 10.49% 10.64% 10.18%
ROAE (GAAP) 10.03% 9.93% 10.29% 9.98% 10.05%
_______________
_
(1) Based on a combined federal and state marginal tax rate of 38.01% with
the exception of merger-related expenses which were tax effected using a
combined federal and state marginal tax rate of 30.00% on a year-to-date
basis due to the non-deductibility of certain merger-related expenses.
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:
Tangible Book Value per Common Share
June 30, December 31, June 30,
2016 2015 2015
--------------------------------------
(Dollars in thousands, except per
share amounts)
Total stockholders' equity $ 229,958 $ 221,639 $ 213,839
Less: Intangible assets (4,694) (5,173) (6,163)
--------------------------------------
Tangible common equity $ 225,264 $ 216,466 $ 207,676
======================================
Number of common shares outstanding 21,802,054 21,704,852 21,729,999
Book value per common share $ 10.55 $ 10.21 $ 9.84
Tangible book value per common
share $ 10.33 $ 9.97 $ 9.56
Tangible Common Equity Ratio
June 30, December 31, June 30,
2016 2015 2015
--------------------------------------
(Dollars in thousands)
Total stockholders' equity $ 229,958 $ 221,639 $ 213,839
Less: Intangible assets (4,694) (5,173) (6,163)
--------------------------------------
Tangible common equity $ 225,264 $ 216,466 $ 207,676
======================================
Total assets $ 2,395,015 $ 2,368,525 $ 2,269,536
Less: Intangible assets (4,694) (5,173) (6,163)
--------------------------------------
Tangible assets $ 2,390,321 $ 2,363,352 $ 2,263,373
======================================
Equity ratio - GAAP (total
stockholders' equity / total
assets) 9.60% 9.36% 9.42%
Tangible common equity ratio
(tangible common equity / tangible
assets) 9.42% 9.16% 9.18%
About Guaranty Bancorp
Guaranty Bancorp is a $2.4 billion financial services company that operates as the bank holding company for Guaranty Bank and Trust Company, a premier Colorado community bank. The Bank provides comprehensive financial solutions to consumers and small to medium-sized businesses that value local and personalized service. In addition to loans and depository services, the Bank also offers wealth management solutions, including trust and investment management services. 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 the Company's operations; general economic and business conditions in those areas in which the Company operates, including the impact of global and national economic conditions on our local economy; demographic changes; competition; fluctuations in interest rates; continued ability to attract and employ qualified personnel; ability to receive regulatory approval for the bank subsidiary to declare dividends to the Company; adequacy of the allowance for loan losses, changes in credit quality and the effect of credit quality on the 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; failure or inability to complete mergers or other corporate transactions; failure or inability to realize fully the expected benefits of mergers or other corporate transactions; 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; failure to recognize expected cost savings; 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; changes in oil and natural gas prices; 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 any forward-looking statement 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, except as may otherwise be required by law, 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.
GUARANTY BANCORP AND SUBSIDIARIES
Unaudited Consolidated Balance Sheets
June 30, December 31, June 30,
2016 2015 2015
---------------------------------------
(In thousands)
Assets
Cash and due from banks $ 30,446 $ 26,711 $ 55,169
Securities available for sale, at
fair value 198,156 255,431 283,496
Securities held to maturity 149,196 148,761 138,514
Bank stocks, at cost 21,656 20,500 20,784
---------------------------------------
Total investments 369,008 424,692 442,794
---------------------------------------
Loans held for sale - - 423
Loans, held for investment, net of
deferred costs and fees 1,898,543 1,814,536 1,668,235
Less allowance for loan losses (23,050) (23,000) (22,850)
---------------------------------------
Net loans, held for investment 1,875,493 1,791,536 1,645,385
---------------------------------------
Premises and equipment, net 45,769 48,308 48,375
Other real estate owned and
foreclosed assets 674 674 1,503
Other intangible assets, net 4,694 5,173 6,163
Bank owned life insurance 49,639 48,909 48,159
Other assets 19,292 22,522 21,565
---------------------------------------
Total assets $ 2,395,015 $ 2,368,525 $ 2,269,536
=======================================
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing demand $ 638,110 $ 612,371 $ 622,364
Interest-bearing demand and NOW 383,492 381,834 379,495
Money market 392,730 397,371 362,798
Savings 149,798 151,130 139,305
Time 283,231 259,139 238,037
---------------------------------------
Total deposits 1,847,361 1,801,845 1,741,999
---------------------------------------
Securities sold under agreement to
repurchase and federal funds
purchased 17,990 26,477 15,832
Federal Home Loan Bank term notes 120,000 95,000 70,000
Federal Home Loan Bank line of credit
borrowing 141,600 185,847 190,550
Subordinated debentures 25,774 25,774 25,774
Interest payable and other
liabilities 12,332 11,943 11,542
---------------------------------------
Total liabilities 2,165,057 2,146,886 2,055,697
---------------------------------------
Stockholders' equity:
Common stock and additional paid-in
capital - common stock 714,221 712,334 710,905
Accumulated deficit (375,811) (382,147) (389,824)
Accumulated other comprehensive
loss (3,837) (4,805) (3,797)
Treasury stock (104,615) (103,743) (103,445)
---------------------------------------
Total stockholders' equity 229,958 221,639 213,839
---------------------------------------
Total liabilities and
stockholders' equity $ 2,395,015 $ 2,368,525 $ 2,269,536
=======================================
GUARANTY BANCORP AND SUBSIDIARIES
Unaudited Consolidated Statements of Operations
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- --------------------------
2016 2015 2016 2015
--------------------------- --------------------------
(In thousands, except share and per share data)
Interest income:
Loans, including
costs and fees $ 19,057 $ 17,114 $ 37,911 $ 33,920
Investment
securities:
Taxable 1,753 2,078 3,713 4,201
Tax-exempt 757 712 1,488 1,414
Dividends 281 253 592 475
Federal funds sold
and other 3 2 7 3
--------------------------- --------------------------
Total interest
income 21,851 20,159 43,711 40,013
--------------------------- --------------------------
Interest expense:
Deposits 1,064 750 2,071 1,418
Securities sold
under agreement to
repurchase and
federal funds
purchased 8 9 18 20
Borrowings 733 258 1,356 457
Subordinated
debentures 225 202 450 401
--------------------------- --------------------------
Total interest
expense 2,030 1,219 3,895 2,296
--------------------------- --------------------------
Net interest
income 19,821 18,940 39,816 37,717
Provision for loan
losses 10 113 26 90
--------------------------- --------------------------
Net interest
income, after
provision for
loan losses 19,811 18,827 39,790 37,627
Noninterest income:
Deposit service and
other fees 2,292 2,338 4,461 4,373
Investment
management and
trust 1,276 1,338 2,556 2,672
Increase in cash
surrender value of
life insurance 460 461 908 869
Loss on sale of
securities (101) - (56) -
Gain on sale of SBA
loans 110 169 264 449
Other 105 98 187 156
--------------------------- --------------------------
Total noninterest
income 4,142 4,404 8,320 8,519
Noninterest expense:
Salaries and
employee benefits 8,520 7,999 17,308 16,603
Occupancy expense 1,261 1,630 2,636 3,327
Furniture and
equipment 713 736 1,531 1,466
Amortization of
intangible assets 239 496 479 991
Other real estate
owned, net 5 54 7 95
Insurance and
assessments 597 626 1,210 1,191
Professional fees 906 853 1,763 1,682
Impairment of long-
lived assets - 122 - 122
Other general and
administrative 2,893 2,440 5,992 4,749
--------------------------- --------------------------
Total noninterest
expense 15,134 14,956 30,926 30,226
--------------------------- --------------------------
Income before
income taxes 8,819 8,275 17,184 15,920
Income tax expense 3,134 2,798 5,964 5,359
--------------------------- --------------------------
Net income $ 5,685 $ 5,477 $ 11,220 $ 10,561
=========================== ==========================
Earnings per common
share-basic: $ 0.27 $ 0.26 $ 0.53 $ 0.50
Earnings per common
share-diluted: 0.27 0.26 0.52 0.50
Dividend declared per
common share: $ 0.12 $ 0.10 $ 0.23 $ 0.20
Weighted average
common shares
outstanding-basic: 21,242,520 21,070,199 21,213,706 21,053,853
Weighted average
common shares
outstanding-diluted: 21,361,712 21,200,438 21,411,626 21,191,277
GUARANTY BANCORP AND SUBSIDIARIES
Unaudited Consolidated Average Balance Sheets
QTD Average YTD Average
-------------------------------- ---------------------
June 30, March 31, June 30, June 30, June 30,
2016 2016 2015 2016 2015
-------------------------------- ---------------------
(In thousands)
Assets
Interest earning
assets
Loans, net of
deferred costs and
fees $1,845,337 $1,818,001 $1,618,430 $1,831,669 $1,574,269
Securities 386,453 413,434 449,060 399,943 448,913
Other earning assets 2,822 2,812 1,978 2,817 2,155
-------------------------------- ---------------------
Average earning assets 2,234,612 2,234,247 2,069,468 2,234,429 2,025,337
Other assets 122,352 124,933 130,255 123,630 129,157
-------------------------------- ---------------------
Total average assets $2,356,964 $2,359,180 $2,199,723 $2,358,059 $2,154,494
================================ =====================
Liabilities and
Stockholders' Equity
Average liabilities:
Average deposits:
Noninterest-bearing
deposits $ 616,046 $ 611,736 $ 634,824 $ 613,891 $ 640,970
Interest-bearing
deposits 1,212,332 1,207,001 1,075,022 1,209,667 1,060,258
-------------------------------- ---------------------
Average deposits 1,828,378 1,818,737 1,709,846 1,823,558 1,701,228
Other interest-bearing
liabilities 287,887 303,728 263,702 295,808 228,357
Other liabilities 12,639 12,536 12,630 12,573 13,072
-------------------------------- ---------------------
Total average
liabilities 2,128,904 2,135,001 1,986,178 2,131,939 1,942,657
Average stockholders'
equity 228,060 224,179 213,545 226,120 211,837
-------------------------------- ---------------------
Total average
liabilities and
stockholders' equity $2,356,964 $2,359,180 $2,199,723 $2,358,059 $2,154,494
================================ =====================
Contacts:
Paul W. Taylor
President and Chief Executive Officer
Guaranty Bancorp
1331 Seventeenth Street, Suite 200
Denver, CO 80202
(303) 293-5563
Christopher G. Treece
E.V.P., Chief Financial Officer and Secretary
Guaranty Bancorp
1331 Seventeenth Street, Suite 200
Denver, CO 80202
(303) 675-1194
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