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A service for global professionals · Thursday, October 18, 2018 · 465,504,566 Articles · 3+ Million Readers

Guaranty Bancorp Announces First Quarter 2018 Financial Results

  • Record earnings of $13.6 million in the first quarter 2018, an increase of $3.7 million, or 37.7% compared to the first quarter 2017
  • Expanded return on average assets to 1.48% compared to 1.18% in the first quarter 2017
  • Increased quarterly stockholder dividend 30% to $0.1625 per share

DENVER, April 18, 2018 (GLOBE NEWSWIRE) -- Guaranty Bancorp (Nasdaq:GBNK) (“we”, “our” or “the Company”), a community bank holding company based in Colorado, today announced first quarter 2018 net income of $13.6 million, or $0.47 per basic and diluted common share, compared to net income of $9.8 million, or $0.35 per basic and diluted common share, in the first quarter 2017. The $3.7 million increase in first quarter 2018 net income as compared to the same quarter in 2017 was primarily attributable to higher net interest income resulting from higher average loan balances and increased loan yields and a lower tax rate due to the Tax Cuts and Jobs Act of 2017, partially offset by higher noninterest expense resulting from the acquisitions of Castle Rock Bank Holding Company (“Castle Rock”) in late 2017 and Wagner Wealth Management, LLC (“Wagner”) early in the first quarter 2018. In addition, the first quarter 2018 increase in noninterest income was favorably impacted by a $0.3 million gain on sale of a building. The first quarter 2018 net income was $5.0 million greater than fourth quarter 2017 net income due mostly to higher net interest income, lower noninterest expense due to merger-related expenses incurred in the fourth quarter 2017, and reduced tax expense.

“We achieved another strong quarter highlighted by record earnings of $13.6 million in the first quarter 2018, an increase of $3.7 million, or 38% compared to the first quarter 2017,” said Paul W. Taylor, President and Chief Executive Officer of Guaranty Bancorp. “We grew loans in the first quarter by $40.1 million, or 6% on an annualized basis and deposits increased by $90.1 million, which represented annualized growth of 12%.”

Taylor continued, “Our earnings growth came as a result of balance sheet growth and increased fee income, primarily investment management and trust fees, which increased 0.8 million or 50.9% compared to the fourth quarter 2017. Our robust performance has enabled us to continue to provide solid returns to our stockholders as demonstrated by the increase in our quarterly dividend to $0.1625 per share from $0.125 in 2017, an increase of 30%. Our strong first quarter results, together with a continued healthy Colorado economy, have us well positioned as we enter the second quarter.”

Key Financial Measures

/EIN News/ -- Income Statement

    Three Months Ended  
    March 31,     December 31,     March 31,  
    2018     2017     2017  
                   
    (Dollars in thousands, except per share amounts)
Net income $ 13,557   $ 8,605   $ 9,840  
Operating earnings (1)   13,440     11,885     9,832  
Earnings per common share - diluted   0.47     0.30     0.35  
Earnings per common share - diluted - operating (1)   0.46     0.41     0.35  
Return on average assets   1.48 %   0.95 %   1.18 %
Return on average assets - operating (1)   1.47 %   1.31 %   1.18 %
Return on average equity   13.45 %   8.59 %   11.17 %
Return on average equity - operating (1)   13.33 %   11.86 %   11.16 %
Net interest margin   3.77 %   3.77 %   3.65 %
Net interest margin, fully tax equivalent   3.84 %   3.89 %   3.76 %
Efficiency ratio - tax equivalent (2)   52.91 %   49.79 %   55.33 %
Average cost of interest-bearing liabilities                  
(including noninterest-bearing deposits)   0.52 %   0.44 %   0.43 %
Average cost of deposits                  
(including noninterest-bearing deposits)   0.31 %   0.28 %   0.23 %
Assets under management $ 1,465   $ 866   $ 821  
________________________                  
                   
(1) See reconciliation of non-GAAP financial measures 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, litigation-related settlements 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 have been adjusted to reflect the amount that would have been earned had these investments been subject to normal income taxation.

Balance Sheet

    March 31,       December 31,       September 30,       June 30,       March 31,  
    2018       2017       2017       2017       2017  
    (Dollars in thousands, except per share amounts)
Total investments $ 598,391     $ 614,312     $ 576,459     $ 569,812     $ 584,746  
Total loans, net of deferred fees and costs   2,847,465       2,807,388       2,661,866       2,578,472       2,570,750  
Allowance for loan losses   (23,350 )     (23,250 )     (22,900 )     (23,125 )     (23,175 )
Total assets   3,721,651       3,698,890       3,510,046       3,403,852       3,399,651  
Total deposits   3,031,714       2,941,627       2,898,060       2,763,623       2,765,630  
Book value per common share   14.01       13.86       13.21       12.94       12.64  
Tangible book value per common share (1)   11.09       11.13       10.75       10.46       10.13  
Equity ratio - GAAP   11.03 %     10.95 %     10.69 %     10.80 %     10.56 %
Tangible common equity ratio (1)   8.93 %     8.99 %     8.88 %     8.91 %     8.65 %
Total risk-based capital ratio   13.31 %     13.36 %     13.50 %     13.65 %     13.44 %
________________________                                      
(1) See reconciliation of non-GAAP financial measures to the corresponding GAAP measurement in "Non-GAAP Financial Measures" later in this document.

Net Interest Income and Margin

The following tables present, for the periods indicated, average assets, liabilities and stockholders’ equity, as well as interest income from average interest-earning assets, interest expense from average interest-bearing liabilities and the resultant yields and costs expressed in percentages. Nonaccrual loans are included in the calculation of average loans and leases, while interest thereon is excluded from the computation of yield earned.

  Three Months Ended     Three Months Ended     Three Months Ended  
    March 31, 2018       December 31, 2017       March 31, 2017  
    Average
Balance
  Interest
Income or
Expense
Average
Yield or
Cost
      Average
Balance
  Interest
Income or
Expense
Average
Yield or
Cost
      Average
Balance
  Interest
Income or
Expense
Average
Yield or
Cost
 
    (Dollars in thousands)  
ASSETS:                                        
Interest-earning assets:                                        
Gross loans, net of deferred fees                                        
and costs (1)(3) $ 2,835,485 $ 32,115 4.59 %   $ 2,728,736 $ 31,404 4.57 %   $ 2,540,421 $ 27,392 4.37 %
Investment securities (1)                                        
Taxable   364,652   2,556 2.84 %     356,457   2,372 2.64 %     361,799   2,315 2.59 %
Tax-exempt   217,367   1,223 2.28 %     222,312   1,220 2.18 %     202,094   1,237 2.48 %
Bank Stocks (4)   26,845   423 6.39 %     19,951   279 5.55 %     24,237   389 6.51 %
Other earning assets   4,788   19 1.61 %     16,206   65 1.59 %     4,097   8 0.79 %
Total interest-earning assets   3,449,137   36,336 4.27 %     3,343,662   35,340 4.19 %     3,132,648   31,341 4.06 %
Non-earning assets:                                        
Cash and due from banks   35,518             23,879             35,533        
Other assets   230,000             236,011             205,972        
Total assets $ 3,714,655           $ 3,603,552           $ 3,374,153        
                                         
LIABILITIES AND STOCKHOLDERS' EQUITY:                                    
Interest-bearing liabilities:                                        
Deposits:                                        
Interest-bearing demand and NOW $ 811,790 $ 368 0.18 %   $ 831,610 $ 351 0.17 %   $ 772,880 $ 357 0.19 %
Money market   538,740   623 0.47 %     544,882   516 0.38 %     490,430   333 0.28 %
Savings   204,544   56 0.11 %     198,513   56 0.11 %     171,738   47 0.11 %
Time certificates of deposit   461,901   1,224 1.07 %     449,767   1,159 1.02 %     374,065   800 0.87 %
Total interest-bearing deposits   2,016,975   2,271 0.46 %     2,024,772   2,082 0.41 %     1,809,113   1,537 0.34 %
Borrowings:                                        
Repurchase agreements   43,711   21 0.19 %     47,029   23 0.19 %     36,466   17 0.19 %
Federal funds purchased   1   - 1.95 %     1   - 1.95 %     1   - 1.46 %
Subordinated debentures   65,077   889 5.54 %     65,056   872 5.32 %     64,993   844 5.27 %
Borrowings   232,188   1,062 1.85 %     95,052   569 2.37 %     210,680   771 1.48 %
Total interest-bearing liabilities   2,357,952   4,243 0.73 %     2,231,910   3,546 0.63 %     2,121,253   3,169 0.61 %
Noninterest bearing liabilities:                                        
Demand deposits   931,562             958,934             880,231        
Other liabilities   16,389             15,208             15,381        
Total liabilities   3,305,903             3,206,052             3,016,865        
Stockholders' Equity   408,752             397,500             357,288        
Total liabilities and stockholders' equity $ 3,714,655           $ 3,603,552           $ 3,374,153        
                                         
Net interest income     $ 32,093           $ 31,794           $ 28,172    
Net interest margin         3.77 %           3.77 %           3.65 %
Net interest margin, fully tax                                        
equivalent (2)         3.84 %           3.89 %           3.76 %
                                         

(1) Yields on loans and securities have not been adjusted to a tax-equivalent basis.
(2) The tax-equivalent basis was computed by calculating the deemed interest on municipal bonds and tax-exempt loans that would have been earned on a fully taxable basis to yield the same after-tax income, net of the interest expense disallowance under Internal Revenue Code Sections 265 and 291, using a combined federal and state marginal tax rate of 24.66% for 2018 and 38.01% for 2017.
(3) The loan average balances and rates include nonaccrual loans.
(4) Includes Bankers’ Bank of the West stock, Federal Reserve Bank stock, Federal Home Loan Bank stock and Pacific Coast Bankers’ Bank stock.

Net Interest Income and Margin (continued)

Net interest income increased $3.9 million in the first quarter 2018 to $32.1 million, compared to $28.2 million in the same quarter in 2017, due to a $5.0 million increase in interest income, partially offset by a $1.1 million increase in interest expense. The increase in interest income was mostly the result of a $316.5 million increase in average earning assets in the first quarter 2018 compared to the same quarter in 2017. The increase in interest expense in the first quarter 2018, compared to the same quarter in 2017, was primarily due to a $0.7 million increase in interest expense on deposits and a $0.3 million increase in interest expense on FHLB borrowings. Interest expense on deposits increased in the first quarter 2018, compared to the same quarter in 2017, due to a $207.9 million increase in average interest bearing deposit balances and a twelve basis point increase in the cost of deposits. The Company acquired $71.1 million in loans and $128.4 million in deposits in the October 2017 acquisition of Castle Rock.

The $0.3 million increase in net interest income in the first quarter 2018 compared to the fourth quarter 2017 was comprised of a $1.0 million increase in interest income partially offset by a $0.7 million increase in interest expense. The $1.0 million increase in interest income in the first quarter 2018 compared to the fourth quarter 2017 was mostly due to a $105.5 million increase in average earning assets. Accretion of discount on acquired loans was $1.0 million in the first quarter 2018, compared to $1.4 million in the fourth quarter 2017 and $0.8 million in the first quarter 2017. The $0.7 million increase in interest expense in the first quarter 2018 compared to the fourth quarter 2017 was mostly due to a $126.0 million increase in average interest-bearing liabilities and a ten basis point increase in the cost of interest-bearing liabilities.

Noninterest Income

The following table presents noninterest income as of the dates indicated:

    Three Months Ended
    March 31,
2018
  December 31,
2017
  March 31,
2017
             
    (In thousands)
Noninterest income:            
Deposit service and other fees $ 3,321 $ 3,546 $ 3,280
Investment management and trust   2,298   1,523   1,521
Increase in cash surrender value of            
life insurance   670   675   595
Gain on sale of securities   -   80   -
Gain on sale of SBA loans   231   285   381
Other   450   461   625
Total noninterest income $ 6,970 $ 6,570 $ 6,402
             

First quarter 2018 noninterest income increased $0.4 million compared to the fourth quarter 2017, primarily due to a $0.8 million increase in investment management and trust income. The increase in investment management and trust income was primarily a result of the January 2018 purchase of the assets under management of Wagner. At March 31, 2018 assets under management were $1.5 billion compared to $866 million at December 31, 2017 and $821 million at March 31, 2017.

Compared to the first quarter 2017, noninterest income increased $0.6 million in the first quarter 2018, primarily resulting from an increase in investment management and trust income due to the increase in assets under management, described above. Partially offsetting the increase in investment management and trust income was a $0.3 million gain on sale of the Company’s $2.0 million credit card loan portfolio, included in other noninterest income in the table above, in the first quarter 2017.

Noninterest Expense

The following table presents noninterest expense as of the dates indicated:

    Three Months Ended
    March 31,
2018
  December 31,
2017
  March 31,
2017
    (In thousands)
Noninterest expense:            
Salaries and employee benefits $ 12,903 $ 11,853 $ 11,926
Occupancy expense   1,738   1,724   1,552
Furniture and equipment   1,060   1,004   945
Amortization of intangible assets   912   776   649
Other real estate owned, net   39   -   68
Insurance and assessments   697   671   706
Professional fees   1,091   974   974
Impairment of long-lived assets   -   170   190
Other general and administrative   3,506   6,784   3,519
Total noninterest expense $ 21,946 $ 23,956 $ 20,529
             

First quarter 2018 noninterest expense decreased $2.0 million compared to the fourth quarter 2017, mostly due to a $3.2 million decrease in merger-related expenses (included in other general and administrative expense in the table above), partially offset by a $1.1 million increase in salaries and employee benefit expense. The decline in the merger-related expenses in the first quarter 2018 compared with the fourth quarter 2017 was a result of expenses incurred in relation to the October 2017 Castle Rock acquisition during the fourth quarter 2017. The increase in salaries and employee benefits expense in the first quarter 2018 compared to the fourth quarter 2017 was related to an increase in employees from the Castle Rock and Wagner acquisitions and also the timing of the annual payroll tax cycle.

Compared to the first quarter 2017, noninterest expense increased $1.4 million in the first quarter 2018, primarily resulting from a $1.0 million increase in salaries and employee benefits expense and a $0.3 million increase in amortization of intangible assets. The increase in salaries and employee benefits was related to growth in employees from the Castle Rock and Wagner acquisitions, in addition to a $0.6 million increase in incentive compensation. The increase in intangible asset amortization in the first quarter 2018 compared to the first quarter 2017 was a direct result of the intangible assets added in the Castle Rock and Wagner acquisitions.

Tax Expense

The Company’s first quarter 2018 income tax expense was favorably impacted by the Tax Cuts and Jobs Act of 2017, which was signed into law in December 2017. This new tax law reduced the statutory federal corporate tax rate from 35.0% to 21.0%, beginning on January 1, 2018. The Company’s first quarter 2018 income tax expense and effective tax rate were $3.4 million and 19.9%, respectively, compared to income tax expense and an effective tax rate of $4.2 million and 29.9% in the first quarter 2017. In addition, the Company’s first quarter 2018 tax expense benefited from the vesting of 107,786 shares of restricted stock with a weighted average grant price of $15.41 and a weighted average fair value at vesting of $27.71. The increase in the value of these shares between the grant date and the vesting date resulted in the direct benefit to tax expense of approximately $327,000 in the first quarter 2018. In the absence of the direct benefit to tax expense from first quarter 2018 restricted stock vestings the Company’s effective tax rate would have been 21.9%. Comparatively, a direct tax benefit of $511,000 from the vesting of 123,407 shares of restricted stock reduced first quarter 2017 income tax expense, in the absence of this benefit the first quarter 2017 effective tax rate would have been 33.6%.

Balance Sheet

    March 31,       December 31,       September 30,       June 30,       March 31,  
    2018       2017       2017       2017       2017  
    (Dollars in thousands)
Total assets $ 3,721,651     $ 3,698,890     $ 3,510,046     $ 3,403,852     $ 3,399,651  
Average assets, quarter-to-date   3,714,655       3,603,552       3,423,224       3,404,109       3,374,153  
Total loans, net of deferred fees and costs   2,847,465       2,807,388       2,661,866       2,578,472       2,570,750  
Total deposits   3,031,714       2,941,627       2,898,060       2,763,623       2,765,630  
                                       
Equity ratio - GAAP   11.03 %     10.95 %     10.69 %     10.80 %     10.56 %
Tangible common equity ratio (1)   8.93 %     8.99 %     8.88 %     8.91 %     8.65 %
________________________                                      
(1) See reconciliation of non-GAAP financial measures to the corresponding GAAP measurement in "Non-GAAP Financial Measures" later in this document.

The following table sets forth the amount of loans outstanding at the dates indicated:

    March 31,   December 31,   September 30,   June 30,   March 31,
    2018     2017     2017     2017     2017  
    (In thousands)
Loans held for sale $ 1,940   $ 1,725   $ 314   $ 887   $ 951  
Commercial and residential real estate   2,003,326     1,977,431     1,892,828     1,799,114     1,800,194  
Construction   107,707     99,965     81,826     99,632     103,682  
Commercial   543,818     523,355     499,936     490,771     482,318  
Consumer   133,670     143,066     124,625     122,994     120,231  
Other   57,123     61,982     62,277     64,920     63,369  
Total gross loans   2,847,584     2,807,524     2,661,806     2,578,318     2,570,745  
Deferred (fees) and costs   (119 )   (136 )   60     154     5  
Loans, net   2,847,465     2,807,388     2,661,866     2,578,472     2,570,750  
Less allowance for loan losses   (23,350 )   (23,250 )   (22,900 )   (23,125 )   (23,175 )
Net loans $ 2,824,115   $ 2,784,138   $ 2,638,966   $ 2,555,347   $ 2,547,575  
                               

The following table presents the quarterly changes in the Company’s loan balances at the dates indicated:

    March 31,   December 31,   September 30,   June 30,   March 31,
    2018     2017     2017     2017     2017  
    (In thousands)
Beginning balance $ 2,807,524   $ 2,661,806   $ 2,578,318   $ 2,570,745   $ 2,519,199  
New credit extended   156,311     186,969     192,774     132,420     139,185  
Acquisition of Castle Rock Bank   -     71,052     -     -     -  
Net existing credit advanced   76,770     77,307     59,275     73,298     111,821  
Net pay-downs and maturities   (192,986 )   (191,624 )   (165,520 )   (196,511 )   (195,678 )
Other   (35 )   2,014     (3,041 )   (1,634 )   (3,782 )
Gross loans   2,847,584     2,807,524     2,661,806     2,578,318     2,570,745  
Deferred (fees) and costs   (119 )   (136 )   60     154     5  
Loans, net $ 2,847,465   $ 2,807,388   $ 2,661,866   $ 2,578,472   $ 2,570,750  
                     
Net change - loans outstanding $ 40,077   $ 145,522   $ 83,394   $ 7,722   $ 51,612  

During the first quarter 2018, loans net of deferred costs and fees increased $40.1 million, comprised of $233.1 million in new loans and advances on existing loans, partially offset by $193.0 million in net pay-downs and maturities during the quarter. In addition to contractual loan principal payments and maturities, the first quarter 2018 included $62.3 million in early payoffs related to our borrowers selling their assets, $7.0 million in loan pay-downs related to fluctuations in loan balances of existing customers, and $3.5 million in loan payoffs related to our strategic decision not to match certain financing terms offered by competitors.

Balance Sheet (continued)

The following table sets forth the amounts of deposits outstanding at the dates indicated:

    March 31,   December 31,   September 30,   June 30,   March 31,
    2018   2017   2017   2017   2017
    (In thousands)
Noninterest-bearing demand $  973,172  $  939,550  $  924,361  $  876,043  $  868,189 
Interest-bearing demand and NOW    849,741     813,882     866,309     811,639     821,518 
Money market    531,818     527,621     502,400     475,656     489,921 
Savings    210,376     201,687     183,366     183,200     178,157 
Time    466,607     458,887     421,624     417,085     407,845 
Total deposits $  3,031,714  $  2,941,627  $  2,898,060  $  2,763,623  $  2,765,630 
                     

At March 31, 2018, total deposits were $3.0 billion, an increase of $90.1 million compared to December 31, 2017 and an increase of $266.1 million compared to March 31, 2017. The Company acquired $128.4 million in deposits in the October 2017 Castle Rock transaction. At March 31, 2018, noninterest-bearing deposits as a percentage of total deposits were 32.1%, compared to 31.9% at December 31, 2017 and 31.4% at March 31, 2017.

Regulatory Capital Ratios

The following table provides the capital ratios of the Company and the Guaranty Bank and Trust Company (the “Bank”) as of the dates presented, along with the applicable regulatory capital requirements:

  Ratio at
March 31,
2018
  Ratio at
December 31,
2017
  Minimum Requirement
for “Adequately Capitalized”
Institution plus fully
phased in Capital
Conservation Buffer
  Minimum
Requirement for
"Well-Capitalized"
Institution
 
Common Equity Tier 1 Risk-Based Capital Ratio                
Consolidated 10.54 % 10.57 % 7.00 % N/A  
Guaranty Bank and Trust Company 12.46 % 12.29 % 7.00 % 6.50 %
                 
Tier 1 Risk-Based Capital Ratio                
Consolidated 11.32 % 11.36 % 8.50 % N/A  
Guaranty Bank and Trust Company 12.46 % 12.29 % 8.50 % 8.00 %
                 
Total Risk-Based Capital Ratio                
Consolidated 13.31 % 13.36 % 10.50 % N/A  
Guaranty Bank and Trust Company 13.19 % 13.03 % 10.50 % 10.00 %
                 
Leverage Ratio                
Consolidated 9.95 % 10.21 % 4.00 % N/A  
Guaranty Bank and Trust Company 10.95 % 11.05 % 4.00 % 5.00 %

At March 31, 2018, all of our regulatory capital ratios remained well above minimum requirements for a “well-capitalized” institution. At March 31, 2018, most of the Company’s bank-level capital ratios had increased compared to December 31, 2017, whereas the consolidated ratios had decreased. Bank regulatory capital ratios increased in the first quarter 2018 while the consolidated ratios decreased because dividends were paid at the consolidated level in the first quarter 2018 while no bank level dividends were paid.

Asset Quality

The following table presents select asset quality data, including quarterly charged-off loans, recoveries and provision for loan losses as of the dates indicated:

    March 31,     December 31,     September 30,     June 30,     March 31,  
    2018       2017       2017       2017       2017    
    (Dollars in thousands)  
Originated nonaccrual loans $ 3,696     $ 3,932     $ 3,935     $ 3,332     $ 3,387    
Purchased credit impaired loans   1,495       1,622       809       1,290       1,715    
Accruing loans past due 90 days or more (1)   -       -       -       -       -    
                               
Total nonperforming loans (NPLs) $ 5,191     $ 5,554     $ 4,744     $ 4,622     $ 5,102    
Other real estate owned and foreclosed assets   629       761       -       113       257    
                               
Total nonperforming assets (NPAs) $ 5,820     $ 6,315     $ 4,744     $ 4,735     $ 5,359    
                               
Total classified assets $ 26,125     $ 28,330     $ 28,186     $ 29,188     $ 30,201    
                               
Accruing loans past due 30-89 days (1) $ 2,671     $ 2,869     $ 9,129     $ 957     $ 3,858    
                               
Charged-off loans $ (261 )   $ (117 )   $ (970 )   $ (338 )   $ (125 )  
Recoveries   173       183       248       82       45    
Net (charge-offs) recoveries $ (88 )   $ 66     $ (722 )   $ (256 )   $ (80 )  
                               
Provision for loan losses $ 188     $ 284     $ 497     $ 206     $ 5    
                               
Allowance for loan losses $ 23,350     $ 23,250     $ 22,900     $ 23,125     $ 23,175    
                               
Unaccreted loan discount (2) $ 12,046     $ 13,049     $ 11,654     $ 12,665     $ 13,896    
                               
Selected ratios:                              
NPLs to loans, net of deferred fees and costs (3)   0.18   %   0.20   %   0.18   %   0.18   %   0.20   %
NPAs to total assets   0.16   %   0.17   %   0.14   %   0.14   %   0.16   %
Allowance for loan losses to NPLs   449.82   %   418.62   %   482.72   %   500.32   %   454.23   %
Allowance for loan losses to loans, net of                              
deferred fees and costs (3)   0.82   %   0.83   %   0.86   %   0.90   %   0.90   %
Loans 30-89 days past due to loans, net of                              
deferred fees and costs (3)   0.09   %   0.10   %   0.34   %   0.04   %   0.15   %
Texas ratio (4)   1.38   %   1.53   %   1.22   %   1.26   %   1.39   %
Classified asset ratio (5)   6.73   %   7.43   %   7.57   %   8.08   %   8.24   %
________________________                              
(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) Related to loans acquired in the Home State and Castle Rock transactions.  
(3) Loans, net of deferred fees and costs, exclude loans held for sale.  
(4) Texas ratio defined as total NPAs divided by subsidiary bank only Tier 1 Capital plus allowance for loan losses.  
(5) Classified asset ratio defined as total classified assets to subsidiary bank only Tier 1 Capital plus allowance for loan losses.  

Asset Quality (continued)

The following tables summarize past due loans held for investment by class as of the dates indicated:

March 31, 2018   30-89
Days Past
Due
  90 Days +
Past Due
and Still
Accruing
  Nonaccrual   Total Nonaccrual
and
Past Due
  Total Loans,
Held for
Investment
    (In thousands)
Commercial and residential                    
real estate $ 28 $ - $ 1,279 $ 1,307 $ 2,003,243
Construction   -   -   -   -   107,702
Commercial   1,760   -   2,540   4,300   543,795
Consumer   453   -   178   631   133,664
Other   430   -   1,194   1,624   57,121
Total $ 2,671 $ - $ 5,191 $ 7,862 $ 2,845,525
                     


December 31, 2017   30-89
Days Past
Due
  90 Days +
Past Due
and Still
Accruing
  Nonaccrual   Total Nonaccrual
and
Past Due
  Total Loans,
Held for
Investment
    (In thousands)
Commercial and residential                    
real estate $ 410 $ - $ 1,750 $ 2,160 $ 1,977,335
Construction   -   -   -   -   99,960
Commercial   1,663   -   2,079   3,742   523,330
Consumer   469   -   444   913   143,059
Other   327   -   1,281   1,608   61,979
Total $ 2,869 $ - $ 5,554 $ 8,423 $ 2,805,663
                     

At March 31, 2018, nonperforming assets were $5.8 million, a decrease of $0.5 million compared to December 31, 2017 and an increase of $0.5 million compared to March 31, 2017. As a result of the Castle Rock transaction, the Company acquired $1.6 million of nonperforming loans and $0.8 million of other real estate owned. At March 31, 2018, performing troubled debt restructurings were $18.4 million, compared to $18.1 million at December 31, 2017 and $23.2 million at March 31, 2017. The year-over-year decrease in performing troubled debt restructurings was primarily due to the payoff of a $9.4 million out-of-state loan syndication during the third quarter 2017, partially offset by the modification of a single commercial loan during the fourth quarter 2017.

Net charge offs were $0.1 million during the first quarter 2018, compared to net recoveries of $0.1 million during the fourth quarter 2017 and net charge-offs of $0.1 million in the first quarter 2017. During the first quarter 2018, the Bank recorded a $0.2 million provision for loan losses, compared to a $0.3 million provision in the fourth quarter 2017 and an immaterial provision in the first quarter 2017. The Bank considered recoveries, historical charge-offs, the 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 March 31, 2018, the Company had 29,297,002 shares of voting common stock outstanding, of which 440,787 shares were in the form of unvested stock awards.

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, litigation-related settlements, securities gains and losses, net deferred tax asset write-downs 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  
    March 31,     December 31,     March 31,  
    2018       2017       2017    
    (Dollars in thousands, except per share amounts)
Net income $ 13,557     $ 8,605     $ 9,840    
Expenses adjusted for:                  
Expenses (gains) related to other real                  
estate owned, net   33       -       68    
Merger-related expenses   75       3,319       -    
Impairment of long-lived assets   -       170       190    
Litigation-related settlements   -       75       -    
Income adjusted for:                  
Gain on sale of securities   -       (80 )     -    
Gain on sale of other assets   (281 )     -       (271 )  
Pre-tax earnings adjustment   (173 )     3,484       (13 )  
Tax effect of adjustments (1)   56       (1,180 )     5    
Net deferred tax assets write-down (2)   -       976       -    
Tax effected operating earnings adjustment   (117 )     3,280       (8 )  
Operating earnings $ 13,440     $ 11,885     $ 9,832    
                   
Average assets $ 3,714,655     $ 3,603,552     $ 3,374,153    
                   
Average equity $ 408,752     $ 397,500     $ 357,288    
                   
Fully diluted average common                  
shares outstanding:   29,036,820       28,791,748       28,090,179    
                   
Earnings per common                  
share–diluted: $ 0.47     $ 0.30     $ 0.35    
Earnings per common                  
share–diluted - operating: $ 0.46     $ 0.41     $ 0.35    
                   
ROAA (GAAP)   1.48   %   0.95   %   1.18   %
ROAA - operating   1.47   %   1.31   %   1.18   %
                   
ROAE (GAAP)   13.45   %   8.59   %   11.17   %
ROAE - operating   13.33   %   11.86   %   11.16   %
________________                  
(1) Tax effect calculated using a combined federal and state marginal tax rate of 24.66% for 2018 and 38.01% for 2017, adjusted for tax effect of nondeductible merger-related expenses.
(2) The net deferred tax assets write-down relates to the Tax Cuts and Jobs Act of 2017.

Non-GAAP Financial Measures (continued)

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                            
    March 31,     December 31,     September 30,     June 30,     March 31,
    2018       2017       2017       2017       2017  
    (Dollars in thousands, except per share amounts)
Total stockholders' equity $ 410,432     $ 404,899     $ 375,152     $ 367,529     $ 358,838  
Less: Goodwill and other intangible assets   (85,608 )     (79,547 )     (69,752 )     (70,424 )     (71,072 )
Tangible common equity $ 324,824     $ 325,352     $ 305,400     $ 297,105     $ 287,766  
                             
Number of common shares outstanding   29,297,002       29,222,264       28,401,870       28,406,758       28,393,278  
                             
Book value per common share $ 14.01     $ 13.86     $ 13.21     $ 12.94     $ 12.64  
Tangible book value per common share $ 11.09     $ 11.13     $ 10.75     $ 10.46     $ 10.13  


Tangible Common Equity Ratio                              
    March 31,     December 31,     September 30,     June 30,     March 31,  
    2018       2017       2017       2017       2017    
    (Dollars in thousands)  
Total stockholders' equity $ 410,432     $ 404,899     $ 375,152     $ 367,529     $ 358,838    
Less: Goodwill and other intangible assets   (85,608 )     (79,547 )     (69,752 )     (70,424 )     (71,072 )  
Tangible common equity $ 324,824     $ 325,352     $ 305,400     $ 297,105     $ 287,766    
                               
Total assets $ 3,721,651     $ 3,698,890     $ 3,510,046     $ 3,403,852     $ 3,399,651    
Less: Goodwill and other intangible assets   (85,608 )     (79,547 )     (69,752 )     (70,424 )     (71,072 )  
Tangible assets $ 3,636,043     $ 3,619,343     $ 3,440,294     $ 3,333,428     $ 3,328,579    
                               
Equity ratio - GAAP (total stockholders'                              
equity / total assets)   11.03   %   10.95   %   10.69   %   10.80   %   10.56   %
Tangible common equity ratio (tangible                              
common equity / tangible assets)   8.93   %   8.99   %   8.88   %   8.91   %   8.65   %

About Guaranty Bancorp

Guaranty Bancorp is a $3.7 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 and the effects of the Tax Cuts and Jobs Act of 2017; 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; difficulty retaining key employees; the parties being unable to successfully implement integration strategies or to achieve expected synergies and operating efficiencies within the expected time-frames or at all; 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
 
    March 31,   December 31,   March 31,
    2018     2017     2017  
    (In thousands)
Assets            
Cash and due from banks $ 44,340   $ 51,553   $ 40,513  
             
Time deposits with banks   254     254     254  
             
Securities available for sale, at fair value   316,878     329,977     318,280  
Securities held to maturity   257,792     259,916     243,452  
Bank stocks, at cost   23,721     24,419     23,014  
Total investments   598,391     614,312     584,746  
             
Loans held for sale   1,940     1,725     951  
             
Loans, held for investment, net of deferred fees and costs   2,845,525     2,805,663     2,569,799  
Less allowance for loan losses   (23,350 )   (23,250 )   (23,175 )
Net loans, held for investment   2,822,175     2,782,413     2,546,624  
             
Premises and equipment, net   65,425     65,874     66,001  
Other real estate owned and foreclosed assets   629     761     257  
Goodwill   67,917     65,106     56,404  
Other intangible assets, net   17,691     14,441     14,668  
Bank owned life insurance   79,143     78,573     66,034  
Other assets   23,746     23,878     23,199  
Total assets $ 3,721,651   $ 3,698,890   $ 3,399,651  
             
Liabilities and Stockholders’ Equity            
Liabilities:            
Deposits:            
Noninterest-bearing demand $ 973,172   $ 939,550   $ 868,189  
Interest-bearing demand and NOW   849,741     813,882     821,518  
Money market   531,818     527,621     489,921  
Savings   210,376     201,687     178,157  
Time   466,607     458,887     407,845  
Total deposits   3,031,714     2,941,627     2,765,630  
             
Securities sold under agreement to repurchase   39,876     44,746     34,457  
Federal Home Loan Bank line of credit borrowing   108,100     157,444     90,400  
Federal Home Loan Bank term notes   50,000     70,000     72,432  
Subordinated debentures, net   65,086     65,065     65,002  
Interest payable and other liabilities   16,443     15,109     12,892  
Total liabilities   3,311,219     3,293,991     3,040,813  
             
Stockholders’ equity:            
Common stock and additional paid-in capital - common stock   860,455     859,541     832,846  
Accumulated deficit   (333,503 )   (343,383 )   (361,592 )
Accumulated other comprehensive loss   (8,855 )   (4,694 )   (6,416 )
Treasury stock   (107,665 )   (106,565 )   (106,000 )
Total stockholders’ equity   410,432     404,899     358,838  
Total liabilities and stockholders’ equity $ 3,721,651   $ 3,698,890   $ 3,399,651  


GUARANTY BANCORP AND SUBSIDIARIES
Unaudited Consolidated Statements of Operations
         
    Three Months Ended March 31,
    2018   2017
         
    (In thousands, except share and per share data)
Interest income:        
Loans, including costs and fees $ 32,115 $ 27,392
Investment securities:        
Taxable   2,556   2,315
Tax-exempt   1,223   1,237
Dividends   423   389
Federal funds sold and other   19   8
Total interest income   36,336   31,341
Interest expense:        
Deposits   2,271   1,537
Securities sold under agreement to repurchase   21   17
Borrowings   1,062   771
Subordinated debentures   889   844
Total interest expense   4,243   3,169
Net interest income   32,093   28,172
Provision for loan losses   188   5
Net interest income, after provision for loan losses   31,905   28,167
Noninterest income:        
Deposit service and other fees   3,321   3,280
Investment management and trust   2,298   1,521
Increase in cash surrender value of life insurance   670   595
Gain on sale of SBA loans   231   381
Other   450   625
Total noninterest income   6,970   6,402
Noninterest expense:        
Salaries and employee benefits   12,903   11,926
Occupancy expense   1,738   1,552
Furniture and equipment   1,060   945
Amortization of intangible assets   912   649
Other real estate owned, net   39   68
Insurance and assessments   697   706
Professional fees   1,091   974
Impairment of long-lived assets   -   190
Other general and administrative   3,506   3,519
Total noninterest expense   21,946   20,529
Income before income taxes   16,929   14,040
Income tax expense   3,372   4,200
Net income $ 13,557 $ 9,840
         
Earnings per common share–basic: $ 0.47 $ 0.35
Earnings per common share–diluted:   0.47   0.35
Dividend declared per common share: $ 0.16 $ 0.13
         
Weighted average common shares outstanding-basic:   28,822,829   27,867,558
Weighted average common shares outstanding-diluted:   29,036,820   28,090,179

 

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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