DENVER, July 31, 2009 (GLOBE NEWSWIRE) -- Guaranty Bancorp (Nasdaq:GBNK) today reported a second quarter 2009 net loss of $10.9 million, or 21 cents loss per basic and diluted share, compared to second quarter 2008 net income of $2.0 million, or 4 cents earnings per basic and diluted share. Excluding after-tax intangible asset amortization of $1.0 million, the second quarter 2009 cash net loss was $9.9 million, or 19 cents loss per basic and diluted share, compared to second quarter 2008 cash net income of $3.2 million, or 6 cents earnings per basic and diluted share. The unfavorable decrease in our second quarter 2009 results as compared to the second quarter 2008 is primarily due to an increased provision for loan losses and Federal Deposit Insurance Corporation (FDIC) insurance assessments, partially offset by a decrease in other noninterest expense.
On May 6, 2009, the Company announced that it had entered into a definitive agreement to sell up to $60 million of mandatorily convertible preferred stock. The transaction was subject to the receipt of stockholder and regulatory approvals or non-objections, as well as other customary closing conditions. At the Company's Special Meeting of Stockholders held on June 29, 2009, each of the proposals presented, the approval of which was a condition of the proposed capital raise, was approved. On July 27, 2009, the necessary regulatory approvals or non-objections were received by each of the principal investors. The closing is expected to occur on or about the week of August 10, 2009, subject to the satisfaction of remaining customary closing conditions.
Dan Quinn, Guaranty Bancorp President and CEO, stated, "Even without giving effect to the pending additional capital which will result from the issuance of the preferred stock, the Company ended the quarter with a GAAP equity ratio of 7.90% and a tangible equity ratio of 6.83%. Further, we had a total risk-based capital ratio of approximately 10.7% for both the consolidated Company, as well as for our subsidiary bank. The Company has always maintained the capital ratio of its subsidiary bank above the 10% minimum for it to be considered "well capitalized" for regulatory purposes. The additional capital resulting upon completion of the pending offering will further strengthen the Company and our subsidiary bank's capital position in this difficult banking environment."
Mr. Quinn continued, "During the second quarter 2009, our results were negatively affected by a higher provision for loan losses as well as the special assessment from the FDIC on all banks. However, these items were partially offset by an improvement in net interest margin by 12 basis points over the previous quarter as a result of management initiatives focused on both loan yields and deposit costs. This increase in margin and related spread enabled us to modestly increase our quarterly net interest income even though total earning assets declined during the quarter. Additionally, our year to date 2009 noninterest expense decreased by $5.2 million, or 13.6%, over the same period in 2008 primarily as a result of a major initiative announced in the second quarter 2008 to better align our expenses with the current size of our business."
The Company's net loss for the first six months of 2009 was $10.4 million, or $0.20 loss per basic and diluted share compared to net income of $5.3 million or $0.10 earnings per basic and diluted share for the same period in 2008. The primary cause for the decrease over 2008 is a $19.3 million increase in the provision for loan losses and $10.5 million reduction in net interest income, partially offset by lower noninterest and tax expense.
Pending Preferred Stock Issuance
On June 29, 2009, the Company held a Special Meeting of Stockholders to obtain stockholder approval of certain matters in connection with its previously announced transaction to raise up to $60 million of capital in the form of preferred stock. At the Special Meeting, the stockholders approved (i) the issuance of up to 60,000 shares of our 9.0% mandatorily convertible preferred stock and (ii) the Company's proposed Second Amended and Restated Certificate of Incorporation, which will increase the total authorized number of shares of common stock from 100,000,000 to 150,000,000 and establish a class of non-voting common stock, each of which proposals was fully described in the Company's proxy statement for the Special Meeting dated June 1, 2009.
On July 27, 2009, the necessary regulatory approvals or non-objections were received by each of the principal investors. The closing on the sale and issuance of up to $60 million of mandatorily convertible preferred stock is expected to occur on or about the week of August 10, 2009, subject to the satisfaction of the remaining customary closing conditions.
The following table presents the actual and pro forma capital ratios of the Company as of June 30, 2009, assuming the consummation of the sale and issuance of the full $60 million of preferred stock had occurred on June 30, 2009:
Actual Capital Pro Forma Ratios at Capital Ratios June 30, at June 30, 2009 2009 (1) ------------------------------ Total Risk-Based Capital Ratio 10.73% 13.84% Tier 1 Risk-Based Capital Ratio 9.46% 10.04% Leverage Ratio 8.96% 9.51% Equity ratio - GAAP 7.90% 10.61% Tangible equity ratio (2) 6.83% 9.60% (1) Assumes the sale and issuance of $60,000,000 of preferred stock, net of $1,000,000 of issuance costs. The preferred stock is treated as a restricted core capital element for Tier 1 Capital purposes. Restricted core elements are restricted to an amount not to exceed 25% of all core capital elements. (2) The tangible equity ratio includes total equity, less intangible assets. The methodology of determining tangible equity may differ among companies. Key Financial Measures Income Statement Quarter Ended Six Months Ended ---------------------------- ------------------ June 30, March 31, June 30, June 30, June 30, 2009 2009 2008 2009 2008 ---------------------------- ------------------ Earnings (loss) per share-basic & diluted $ (0.21) $ 0.01 $ 0.04 $ (0.20) $ 0.10 Cash earnings (loss) per share-basic & diluted $ (0.19) $ 0.03 $ 0.06 $ (0.16) $ 0.15 Return on average assets (2.17)% 0.09% 0.35% (1.03)% 0.45% Return on tangible average assets (cash) (1.99)% 0.28% 0.62% (0.85)% 0.73% Net interest margin 3.38% 3.26% 4.20% 3.32% 4.31% Balance Sheet June 30, December 31, % June 30, % 2009 2008 Change 2008 Change --------------------------------------------------------------------- (Dollars in thousands, except per share amounts) Total loans, net of unearned discount $1,651,572 $1,826,333 (9.6)% $1,789,155 (7.7)% Loans held for sale 5,250 5,760 (8.9)% -- 100% Allowance for loan losses (43,041) (44,988) (4.3)% (26,506) 62.4% Total assets 1,944,867 2,102,741 (7.5)% 2,358,559 (17.5)% Average assets, quarter-to-date 2,011,314 2,099,519 (4.2)% 2,350,421 (14.4)% Total deposits 1,560,730 1,698,651 (8.1)% 1,707,031 (8.6)% Book value per share $ 2.93 $ 3.07 (4.6)% $ 8.04 (63.6)% Tangible book value per share $ 2.50 $ 2.58 (3.1)% $ 2.73 (8.4)% Equity ratio - GAAP 7.90% 7.68% 2.9% 17.97% (56.0)% Tangible equity ratio 6.83% 6.55% 4.3% 6.93% (1.4)% Net Interest Income and Margin Quarter Ended Six Months Ended ----------------------------- ------------------- June 30, March 31, June 30, June 30, June 30, 2009 2009 2008 2009 2008 ----------------------------- ------------------- (Dollars in thousands) Net interest income $ 15,860 $ 15,718 $ 20,391 $ 31,578 $ 42,041 Interest rate spread 2.77% 2.62% 3.50% 2.69% 3.54% Net interest margin 3.38% 3.26% 4.20% 3.32% 4.31% Net interest margin, fully tax equivalent 3.46% 3.34% 4.28% 3.40% 4.41%
Second quarter 2009 net interest income of $15.9 million increased by $0.1 million from the first quarter 2009, and decreased $4.5 million from the second quarter 2008. The Company's net interest margin of 3.38% for the second quarter 2009 reflected an increase of 12 basis points from the first quarter 2009 and a decline of 82 basis points from the second quarter 2008. The increase in net interest margin and net interest spread in the second quarter 2009, as compared to the first quarter 2009, is primarily due to initiatives implemented by management in late 2008 and into 2009 through the utilization of minimum rates and higher pricing on renewed and new loans, as well as the replacement of matured time deposits with lower cost deposits. The decline in the net interest margin from the second quarter 2008 to the second quarter 2009 is mostly attributable to the greater than 200 basis point cut in the target federal funds rate by the Federal Open Market Committee of the Federal Reserve Board since the beginning of the second quarter 2008. The targeted federal funds rate was 2.25% at April 1, 2008 and fell to between 0% and 0.25% on December 16, 2008, where it remains today. These historically low rates have caused a dramatic decrease to our overall net interest margin throughout 2008 and into 2009.
Interest income decreased by $5.4 million from $30.2 million in the second quarter 2008 to $24.8 million in the second quarter 2009. This decrease was primarily due to a decrease in interest rates. Approximately 59% of the Company's outstanding loan balances are variable rate loans and are generally tied to an index, such as prime or LIBOR. As a result of the decline in rates discussed above, the average yield on loans for the Company decreased by 95 basis points from 6.32% for the quarter ended June 30, 2008 to 5.37% for the same period in 2009. The Company remains asset sensitive at the end of second quarter 2009 and expects that as interest rates rise, net interest income will also increase.
Interest expense decreased by $0.9 million, or 9.3%, to $8.9 million for the second quarter 2009 as compared to the second quarter 2008. The decrease in interest expense from the second quarter 2008 was primarily the result of a $1.8 million favorable rate variance and a $0.9 million unfavorable volume variance. The overall cost of funds declined by 21 basis points to 2.51% from the second quarter 2008 to the second quarter 2009, primarily as a result of the overall cost of interest bearing deposits decreasing by 19 basis points.
For the six months ended June 30, 2009, the Company's net interest income declined by $10.5 million from the same period in 2008. This decline is due mostly to an $8.0 million unfavorable rate variance due to a 99 basis point decrease in net interest margin, primarily attributable to the Company being asset sensitive coupled with a greater than 400 basis point cut in the target federal funds rate by the Federal Open Market Committee of the Federal Reserve Board since the beginning of 2008. The remainder of the decrease in net interest income is primarily due to lower earning assets.
Noninterest Income
The following table presents noninterest income as of the dates indicated.
Quarter Ended Six Months Ended ---------------------------- ------------------ June 30, March 31, June 30, June 30, June 30, 2009 2009 2008 2009 2008 ---------------------------- ------------------ (In thousands) Noninterest income: Customer service and other fees $ 2,354 $ 2,679 $ 2,528 $ 5,033 $ 4,804 Gain on sale of securities -- -- -- -- 138 Other 273 236 604 509 705 ---------------------------- ------------------ Total noninterest income $ 2,627 $ 2,915 $ 3,132 $ 5,542 $ 5,647 ============================ ==================
Noninterest income for the second quarter 2009 decreased by $0.3 million from the first quarter 2009 and decreased by $0.5 million from the second quarter 2008.
For the six months ended June 30, 2009, noninterest income remained relatively flat to the same period in 2008.
Noninterest Expense
The following table presents noninterest expense as of the dates indicated.
Quarter Ended Six Months Ended ---------------------------- ------------------ June 30, March 31, June 30, June 30, June 30, 2009 2009 2008 2009 2008 ---------------------------- ------------------ (In thousands) Noninterest expense: Salaries and employee benefits $ 6,712 $ 6,739 $ 9,184 $ 13,451 $ 18,904 Occupancy expense 1,926 1,921 2,131 3,847 4,132 Furniture and equipment 1,147 1,131 1,383 2,278 2,697 Amortization of intangible assets 1,581 1,582 1,877 3,163 3,754 Other general and administrative 6,348 4,108 5,122 10,456 8,920 ---------------------------- ------------------ Total noninterest expense $ 17,714 $ 15,481 $ 19,697 $ 33,195 $ 38,407 ============================ ==================
Noninterest expense for the second quarter 2009 increased by $2.2 million as compared to the first quarter 2009, and decreased by $2.0 million from the second quarter 2008. The increase in noninterest expense for the second quarter 2009 as compared to the first quarter 2009 is primarily due to increases to FDIC insurance assessments, whereas, the decrease in expense from second quarter 2008 is mostly due to a decline in salaries and employee benefits.
Noninterest expense for the second quarter 2009 as compared to the same quarter in 2008 decreased by approximately $2.0 million due mostly to a $2.5 million decrease in salaries and employee benefits, as well as $0.2 million decreases in both occupancy expense and furniture and equipment expense, respectively. These three categories of noninterest expense decreased in the second quarter 2009, as compared to the same quarter in 2008 primarily as a result of the major effort announced in the second quarter 2008 to better align our expenses with the current size of our business. Since the second quarter 2008, overall full-time equivalent employees have decreased from 441 to 380, and the Company has reduced the number of branches by two.
Amortization of intangible assets in the second quarter 2009 remained relatively flat as compared to the first quarter 2009 and decreased by $0.3 million from the second quarter 2008. The decrease from second quarter 2008 is the result of the use of accelerated amortization related to our core deposit intangible assets.
Other general and administrative expense increased in the second quarter 2009 by $2.2 million from the first quarter 2009 and increased by $1.2 million from the second quarter 2008. The increase from the first quarter 2009 is primarily a result of a $1.2 million increase in FDIC insurance assessments due both to higher rates starting on April 1, 2009, as well as the special assessment imposed by the FDIC on all banks during the second quarter of 2009. Additionally, there were $0.9 million in write-downs of other real estate owned during the second quarter 2009. The increase of $1.2 million from the second quarter 2008 is primarily a result of a $1.5 million increase in FDIC insurance assessments on our deposits and a $0.9 million increase in write-downs of other real estate owned. These increases were partially offset by a decrease resulting from a $1.3 million charge in the second quarter 2008 related to the decision to close two branches.
Noninterest expense for the six months ended June 30, 2009 decreased by $5.2 million, or 13.6%, over the same period in 2008. This decline in noninterest expense is mostly attributable to a $5.5 million decrease in salaries and employee benefits expense due primarily to a decline in staffing levels as a result of the major effort announced in the second quarter 2008 to better align our expenses with the current size of our business. Additionally, there was a $0.3 million decrease in occupancy expense and a $0.4 million decrease in furniture and equipment expense, primarily as a result of the closure of two branches in 2008 and a decision to outsource certain processing items for the Company. These expense reductions were partially offset by a $1.5 million increase to other noninterest expense, which increased primarily as a result of a $1.9 million increase to FDIC insurance assessments and a $0.6 million increase in professional services due mostly to higher legal and other professional fees related to the work-out of problem credits. These increases to other noninterest expense were partially offset by a decrease resulting from a $1.3 million charge in the second quarter 2008 related to the decision to close two branches.
Balance Sheet
June 30, Dec. 31, % June 30, % 2009 2008 Change 2008 Change --------------------------------------------------------------------- (Dollars in thousands, except per share amounts) Total assets 1,944,867 2,102,741 (7.5)% 2,358,559 (17.5)% Average assets, quarter-to-date 2,011,314 2,099,519 (4.2)% 2,350,421 (14.4)% Total deposits 1,560,730 1,698,651 (8.1)% 1,707,031 (8.6)% Equity ratio - GAAP 7.90% 7.68% 2.9% 17.97% (56.0)% Tangible equity ratio 6.83% 6.55% 4.3% 6.93% 1.4%
At June 30, 2009, the Company had total assets of approximately $1.9 billion as compared to $2.1 billion at December 31, 2008, and $2.4 billion at June 30, 2008. The Company's shrinking balance sheet during 2009 is primarily a result of management's effort to improve the risk profile of the Company by decreasing its exposure to real estate loans and improve overall capital ratios. The decline in assets from December 31, 2008, is primarily a result of a $175 million decrease in total loans outstanding, consisting mostly of a $70 million decrease in real estate loans and a $107 million decrease in commercial loans. The decline in commercial loans was mostly due to a reduction in lower yielding syndicated and participated loans. The decline in overall assets from June 30, 2008 is mostly due to a reduction in intangible assets as a result of a non-cash goodwill impairment charge recorded in the third quarter 2008.
The GAAP equity ratio and tangible equity ratio each increased from December 31, 2008. The tangible equity ratio was 6.83% at June 30, 2009 as compared to 6.55% at December 31, 2008, an increase of 4.3%.
The following table sets forth the amounts of our loans outstanding (excluding loans held for sale) at the dates indicated:
June 30, March 31, Dec. 31, June 30, 2009 2009 2008 2008 -------------------------------------------------- (In thousands) Loans on real estate: Residential and commercial $ 682,923 $ 658,982 $ 680,030 $ 717,533 Construction 190,197 250,665 268,306 232,522 Equity lines of credit 55,812 52,679 50,270 46,778 Commercial loans 639,462 714,218 746,241 705,309 Agricultural loans 22,764 22,686 22,738 29,442 Lease financing 4,722 3,547 3,549 472 Installment loans to individuals 37,878 38,220 38,352 39,611 Overdrafts 569 987 855 915 SBA and other 20,215 18,294 19,592 20,241 -------------------------------------------------- 1,654,542 1,760,278 1,829,933 1,792,823 Unearned discount (2,970) (3,175) (3,600) (3,668) -------------------------------------------------- Loans, net of unearned discount $ 1,651,572 $ 1,757,103 $ 1,826,333 $ 1,789,155 ==================================================
There were $928.9 million of real estate loans at June 30, 2009 as compared to $998.6 million at December 31, 2008, a decrease of $69.7 million. Management continues its efforts to decrease its exposure to residential real-estate and residential land and land development loans. At June 30, 2009, there were approximately $37 million of loans secured by for-sale residential real estate and approximately $84 million of residential land and land development loans, respectively. This compares to December 31, 2008, with approximately $57 million of loans secured by for-sale residential real estate and approximately $114 million of residential land and land development loans.
The $78.1 million decrease in construction loans, and the $2.9 million increase in residential and commercial real estate loans at June 30, 2009 as compared to December 31, 2008 is partially a result of a $44 million reclassification of construction loans to commercial real estate loans due to the completion of the underlying building projects and the commencement of amortization of these loans. Most of the remainder of the decrease in construction loans was a result of moving the loans to other real estate owned during 2009.
The following table sets forth the amounts of our deposits outstanding at the dates indicated:
-------------------------------------------------- June 30, March 31, Dec. 31, June 30, 2009 2009 2008 2008 -------------------------------------------------- (In thousands) Noninterest bearing deposits $ 352,185 $ 422,509 $ 433,761 $ 515,646 Interest bearing demand 142,013 140,110 145,492 149,019 Money market 306,243 285,164 315,364 524,592 Savings 72,143 72,157 68,064 71,474 Time 688,146 719,857 735,970 446,300 -------------------------------------------------- Total deposits $ 1,560,730 $ 1,639,797 $ 1,698,651 $ 1,707,031 ==================================================
Total deposits at June 30, 2009 declined by $137.9 million, as compared to December 31, 2008, as a result of $47.8 million decrease in time deposits and a $90.1 million decrease in other categories. A portion of the decrease in noninterest bearing deposits is due to a $66.5 million movement of funds from a noninterest bearing account to a money market account by a single account holder who administers an omnibus account on behalf of bank cash sweep account customers.
It is expected that the decline in time deposits will continue throughout 2009. At June 30, 2009, there were approximately $177 million in brokered time deposits, excluding reciprocal balances with other banks through the Certificate of Deposit Account Registry Service (CDARS). Approximately $60 million of brokered deposits with an average rate of 3.84% will mature during the remainder of 2009 and management does not expect to replace all of these maturities with new time deposits.
Noninterest bearing deposits decreased by $70.3 million as compared to March 31, 2009, partially as a result of a $66.5 million movement to money market by a single account holder as discussed above. Noninterest bearing deposits comprised 22.6% of total deposits at June 30, 2009 as compared to 25.8% at March 31, 2009.
Borrowings were $164.5 million at June 30, 2009 as compared to $166.4 million at December 31, 2008, and $147.1 million at June 30, 2008. The entire balance of borrowings at each balance sheet date consisted of term advances with the Federal Home Loan Bank.
Regulatory Capital Ratios
The Company's and the subsidiary bank's capital ratios remain above the highest regulatory capital requirement of "well-capitalized" at June 30, 2009. The Company's and the bank subsidiary's actual capital ratios for June 30, 2009 and December 31, 2008 are presented in the table below:
Minimum Requirement Ratio at Ratio at Minimum for "Well June 30, December 31, Capital Capitalized" 2009 2008 Requirement Institution ------------------------------------------------ Total Risk-Based Capital Ratio: Consolidated 10.73% 10.61% 8.00% N/A Guaranty Bank and Trust Company 10.71% 10.52% 8.00% 10.00% Tier 1 Risk-Based Capital Ratio: Consolidated 9.46% 9.35% 4.00% N/A Guaranty Bank and Trust Company 9.44% 9.26% 4.00% 6.00% Leverage Ratio: Consolidated 8.96% 8.98% 4.00% N/A Guaranty Bank and Trust Company 8.95% 8.90% 4.00% 5.00%
Generally, the allowance for loan losses is included in both total capital for regulatory purposes, but is limited to 1.25% of total risk-weighted assets. Without this limitation, the total risk-based capital ratio would be higher. At June 30, 2009, approximately $19.3 million of the Company's allowance for loan losses is disallowed from being included in total risk-based capital under the regulatory capital rules, or approximately 1.01% of total risk-weighted assets.
Asset Quality
The following table presents selected asset quality data (excluding loans held for sale) as of the dates indicated:
June 30, March 31, Dec. 31, Sept. 30, June 30, 2009 2009 2008 2008 2008 ------------------------------------------------ (Dollars in thousands) Nonaccrual loans, not restructured $ 52,483 $ 57,299 $ 54,594 $ 54,654 $ 29,742 Accruing loans past due 90 days or more 2,671 911 228 324 98 ------------------------------------------------ Total nonperforming loans (NPLs) 55,154 58,210 54,822 54,978 29,840 Other real estate owned and foreclosed assets 34,746 14,524 484 1,199 1,910 ------------------------------------------------ Total nonperforming assets (NPAs) $ 89,900 $ 72,734 $ 55,306 $ 56,177 $ 31,750 ================================================ Accruing loans past due 30-89 days $ 39,836 $ 31,957 $ 35,169 $ 20,660 $ 20,169 ================================================ Allowance for loan losses $ 43,041 $ 37,598 $ 44,988 $ 44,765 $ 26,506 ================================================ Selected ratios: NPLs to loans, net of unearned discount 3.34% 3.31% 3.00% 3.09% 1.67% NPAs to total assets 4.62% 3.57% 2.63% 2.74% 1.35% Allowance for loan losses to NPAs 47.88% 51.69% 81.34% 79.69% 83.48% Allowance for loan losses to NPLs 78.04% 64.59% 82.06% 81.42% 88.83% Allowance for loan losses to loans, net of unearned discount 2.61% 2.14% 2.46% 2.52% 1.48% Loans 30-89 days past due to loans, net of unearned discount 2.41% 1.82% 1.93% 1.16% 1.13%
The types of nonperforming loans (excluding loans held for sale) as of June 30, 2009 and March 31, 2009 are as follows:
-------------------------------------------------------- Nonperforming Loans -------------------------------------------------------- June 30, 2009 March 31, 2009 --------------------------- --------------------------- Loan Related Loan Related Balance Percent Allowance Balance Percent Allowance --------------------------- --------------------------- (Amounts in thousands) Residential Construction, Land and Land Development $28,838 52.3% $ 3,066 $31,194 53.6% $ 2,842 Other Residential Loans 3,245 5.9% 591 3,720 6.4% 424 Commercial and Industrial Loans 10,869 19.7% 659 12,262 21.1% 1,080 Commercial Real Estate 10,979 19.9% 2,725 10,962 18.8% 1,957 Other 1,223 2.2% 250 72 0.1% 39 --------------------------- --------------------------- Total $55,154 100.0% $ 7,291 $58,210 100.0% $ 6,342 =========================== ===========================
The types of loans included in the accruing loans past due 30-89 days as of June 30, 2009 and March 31, 2009 are as follows:
-------------------------------------- Accruing loans past due 30-89 days -------------------------------------- June 30, 2009 March 31, 2009 ------------------ ------------------ Loan Loan Balance Percent Balance Percent ------------------ ------------------ (Amounts in thousands) Residential Construction, Land and Land Development $ 12,096 30.4% $ 20,539 64.3% Other Residential Loan 3,339 8.4% 153 0.5% Commercial and Industrial Loans 21,389 53.6% 8,065 25.2% Commercial Real Estate 2,419 6.1% 2,265 7.1% Other 593 1.5% 935 2.9% ------------------ ------------------ Total $ 39,836 100.0% $ 31,957 100.0% ================== ==================
At June 30, 2009, approximately $25 million of the $39.8 million of accruing loans past due 30-89 days were matured and in the process of renewal. These loans are current with respect to payments, but are on the past due listing as they have matured and need to be renewed. During the last three quarters, the Company has seen an increase of approximately $6.1 million in the matured past due loan category. Due to more conservative underwriting requirements and pricing increases being sought, it is taking longer to negotiate and redocument the matured loans.
Accruing loans over 90 days past due increased to $2.7 million at June 30, 2009, from $0.9 million at March 31, 2009. Included in the $2.7 million at June 30, 2009, was a single loan for $2.5 million which was renewed subsequent to quarter-end and is performing to its terms.
The Company recorded a provision for loan losses in the second quarter 2009 of $18.6 million, as compared to $0.9 million in the second quarter 2008 and $2.5 million in the first quarter 2009. The second quarter 2009 provision for loan losses excess over second quarter net charge-offs was due primarily to the impact of continued stress on commercial real estate values and performance on our general component of the allowance for loan losses.
Net chargeoffs in the second quarter 2009 were $13.2 million, as compared to $0.4 million in the second quarter 2008, and $9.9 million in the first quarter 2009. Impaired loans as of June 30, 2009 totaled $55.2 million, as compared to $58.2 million at the end of the first quarter 2009.
The allowance for loan losses to total loans outstanding was 2.61% at June 30, 2009, as compared to 2.46% at December 31, 2008 and 1.48% at June 30, 2008.
Shares Outstanding
As of June 30, 2009, the Company had 52,438,908 shares outstanding, including 1,110,744 shares of unvested stock awards, but excluding 66,616 shares to be issued under its deferred compensation plan.
Non-GAAP Financial Measures
This press release includes non-GAAP financial measures related to the income statement, including cash net income, cash earnings per share and return on average tangible assets (cash), which exclude the after-tax impact of intangible asset amortization expense.
This press release also includes non-GAAP financial measures related to tangible assets, including return on average tangible assets (cash), tangible book value and tangible equity ratio, which exclude intangible assets.
The Company discloses these non-GAAP financial measures to provide meaningful supplemental information regarding the Company's operational performance and to enhance investors' overall understanding of the Company's core financial performance. Management believes that these non-GAAP financial measures allow for additional transparency and are used by some investors, analysts and other users of the Company's financial information as performance measures. These non-GAAP financial measures are presented for supplemental informational purposes only for understanding the Company's operating results and should not be considered a substitute for financial information presented in accordance with GAAP. These non-GAAP financial measures presented by the Company may be different from non-GAAP financial measures used by other companies.
The following non-GAAP schedule reconciles cash net income and return on tangible net assets (cash) to their respective GAAP measure as of the dates indicated:
Quarter Ended ---------------------------------------- June 30, March 31, June 30, 2009 2009 2008 ---------------------------------------- (In thousands, except per share data) Cash net income (loss) GAAP net income (loss) $ (10,857) $ 436 $ 2,025 Add: Amortization of intangible assets 1,581 1,582 1,877 Less: Income tax effect (600) (602) (713) ---------------------------------------- Cash net income (loss) $ (9,876) $ 1,416 $ 3,189 ======================================== Weighted average shares - diluted 51,339,542 51,277,930 51,091,042 Earnings (loss) per share - diluted $ (0.21) $ 0.01 $ 0.04 Add: Amortization of intangible assets (after tax effect) 0.02 0.02 0.02 ---------------------------------------- Cash earnings (loss) per share $ (0.19) $ 0.03 $ 0.06 ======================================== Return on tangible net assets (cash) Cash net income (loss) $ (9,876) $ 1,416 $ 3,189 ---------------------------------------- Average total assets $ 2,011,314 $ 2,065,680 $ 2,350,421 Less: Average intangible assets (23,016) (24,671) (280,845) ---------------------------------------- Average tangible assets $ 1,988,298 $ 2,041,009 $ 2,069,576 ---------------------------------------- Return on average assets - GAAP net income (loss) divided by total average assets (2.17)% 0.09% 0.35% ======================================== Return on average tangible assets (cash) - cash net income (loss) divided by average tangible assets (1.99)% 0.28% 0.62% ======================================== Six Months Ended --------------------------- June 30, June 30, 2009 2008 --------------------------- (In thousands, except per share data) Cash net income (loss) GAAP net income (loss) $ (10,421) $ 5,270 Add: Amortization of intangible assets 3,163 3,754 Less: Income tax effect (1,202) (1,427) --------------------------- Cash net income (loss) $ (8,460) $ 7,597 =========================== Weighted average shares - diluted 51,312,847 51,086,578 Earnings (loss) per share - diluted $ (0.20) $ 0.10 Add: Amortization of intangible assets (after tax effect) 0.04 0.05 --------------------------- Cash earnings (loss) per share $ (0.16) $ 0.15 =========================== Return on tangible net assets (cash) Cash net income (loss) $ (8,460) $ 7,597 --------------------------- Average total assets $ 2,038,347 $ 2,363,499 Less: Average intangible assets (23,839) (281,837) --------------------------- Average tangible assets $ 2,014,508 $ 2,081,662 --------------------------- Return on average assets - GAAP net income (loss) divided by total average assets (1.03)% 0.45% =========================== Return on average tangible assets (cash) - cash net income (loss) divided by average tangible assets (0.85)% 0.73% ===========================
The following non-GAAP schedule reconciles the book value per share to the tangible book value per share and the tangible equity ratio as of the dates indicated:
June 30, December 31, June 30, 2009 2008 2008 ------------------------------------- (Dollars in thousands, except per share amounts) Tangible Book Value per Share Stockholders' equity $ 153,607 $ 161,580 $ 423,927 Less: Intangible assets (22,337) (25,500) (279,927) ------------------------------------- Tangible equity $ 131,270 $ 136,080 $ 144,000 ===================================== Number of shares outstanding and to be issued 52,505,524 52,654,131 52,736,269 Book value per share $ 2.93 $ 3.07 $ 8.04 Tangible book value per share $ 2.50 $ 2.58 $ 2.73 Tangible Equity Ratio Total assets $ 1,944,867 $ 2,102,741 $ 2,358,559 Less: Intangible assets (22,337) (25,500) (279,927) ------------------------------------- Tangible assets $ 1,922,530 $ 2,077,241 $ 2,078,632 ===================================== Equity ratio - GAAP (stockholders' equity / total assets) 7.90% 7.68% 17.97% Tangible equity ratio (tangible equity / tangible assets) 6.83% 6.55% 6.93%
About Guaranty Bancorp
Guaranty Bancorp is a bank holding company that operates 34 branches in Colorado through a single bank, Guaranty Bank and Trust Company. The bank provides banking and other financial services including real estate, construction, commercial and industrial, energy, consumer and agricultural loans throughout its targeted Colorado markets to consumers and small to medium-sized businesses, including the owners and employees of those businesses. The bank also provides trust services, including personal trust administration, estate settlement, investment management accounts and self-directed IRAs. More information about Guaranty Bancorp can be found at www.gbnk.com.
Forward-Looking Statements
Certain statements contained in this press release, including, without limitation, statements containing the words "believes", "anticipates", "intends", "expects", and words of similar import, constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. 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: 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; costs and uncertainties related to the outcome of pending litigation; changes in business strategy or development plans; changes that occur in the securities markets; changes in governmental legislation or regulation; changes in credit quality; the availability of capital to fund the expansion of the Company's business; the failure to obtain approval to participate in the U.S. Treasury's Capital Purchase Program and, if such approval is obtained, the failure to complete the sale of preferred stock under such program; the failure to consummate the previously announced capital raise of up to $60 million; economic, political and global changes arising from natural disasters; the war on terrorism; conflicts in the Middle East; and additional "Risk Factors" referenced in the Company's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission, as supplemented from time to time. When relying on forward-looking statements to make decisions with respect to the Company, investors and others are cautioned to consider these and other risks and uncertainties. The Company can give no assurance that any goal or plan or expectation set forth in forward-looking statements can be achieved and readers are cautioned not to place undue reliance on such statements, which speak only as of the date made. The forward-looking statements are made as of the date of this press release, and the Company does not intend, and assumes no obligation, to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements.
GUARANTY BANCORP AND SUBSIDIARIES Unaudited Consolidated Balance Sheets June 30, December 31, June 30, 2009 2008 2008 ---------------------------------- (In thousands) Assets Cash and due from banks $ 28,403 $ 32,189 $ 44,175 Federal funds sold 18,693 13,522 11,672 ---------------------------------- Cash and cash equivalents 47,096 45,711 55,847 ---------------------------------- Securities available for sale, at fair value 97,461 102,874 112,118 Securities held to maturity 10,929 13,114 13,772 Bank stocks, at cost 16,562 28,276 32,713 ---------------------------------- Total investments 124,952 144,264 158,603 ---------------------------------- Loans, net of unearned discount 1,651,572 1,826,333 1,789,155 Less allowance for loan losses (43,041) (44,988) (26,506) ---------------------------------- Net loans 1,608,531 1,781,345 1,762,649 ---------------------------------- Loans held for sale 5,250 5,760 -- Premises and equipment, net 61,903 63,018 65,087 Other real estate owned and foreclosed assets 34,746 484 1,910 Goodwill -- -- 250,748 Other intangible assets, net 22,337 25,500 29,179 Other assets 40,052 36,659 34,536 ---------------------------------- Total assets $1,944,867 $2,102,741 $2,358,559 ================================== Liabilities and Stockholders' Equity Liabilities: Deposits: Noninterest-bearing demand $ 352,185 $ 433,761 $ 515,646 Interest-bearing demand 448,256 460,856 673,611 Savings 72,143 68,064 71,474 Time 688,146 735,970 446,300 ---------------------------------- Total deposits 1,560,730 1,698,651 1,707,031 ---------------------------------- Securities sold under agreements to repurchase and federal funds purchased 13,071 21,781 21,442 Borrowings 164,459 166,404 147,117 Subordinated debentures 41,239 41,239 41,239 Interest payable and other liabilities 11,761 13,086 17,803 ---------------------------------- Total liabilities 1,791,260 1,941,161 1,934,632 ---------------------------------- Stockholders' equity: Common stock 65 65 65 Additional paid-in capital 617,599 617,188 619,188 Shares to be issued for deferred compensation obligations 120 710 613 Accumulated deficit (362,424) (352,003) (89,997) Accumulated other comprehensive income (loss) 691 (1,302) (2,894) Treasury Stock (102,444) (103,078) (103,048) ---------------------------------- Total stockholders' equity 153,607 161,580 423,927 ---------------------------------- Total liabilities and stockholders' equity $1,944,867 $2,102,741 $2,358,559 ================================== GUARANTY BANCORP AND SUBSIDIARIES Unaudited Consolidated Statements of Income (Loss) Three Months Ended Six Months Ended June 30, June 30, ---------------------- ---------------------- 2009 2008 2009 2008 ---------------------- ---------------------- (In thousands, except share and per share data) Interest income: Loans, including fees $ 23,208 $ 28,107 $ 46,284 $ 59,147 Investment securities: Taxable 590 779 1,316 1,463 Tax-exempt 765 877 1,532 1,770 Dividends 198 435 486 905 Federal funds sold and other 14 18 17 334 ---------------------- ---------------------- Total interest income 24,775 30,216 49,635 63,619 ---------------------- ---------------------- Interest expense: Deposits 6,910 7,411 14,035 17,206 Federal funds purchased and repurchase agreements 31 145 69 282 Borrowings 1,312 1,417 2,633 2,446 Subordinated debentures 662 852 1,320 1,644 ---------------------- ---------------------- Total interest expense 8,915 9,825 18,057 21,578 ---------------------- ---------------------- Net interest income 15,860 20,391 31,578 42,041 Provision for loan losses 18,605 900 21,110 1,775 ---------------------- ---------------------- Net interest income, after provision for loan losses (2,745) 19,491 10,468 40,266 Noninterest income: Customer service and other fees 2,354 2,528 5,033 4,804 Gain on sale of securities -- -- -- 138 Other 273 604 509 705 ---------------------- ---------------------- Total noninterest income 2,627 3,132 5,542 5,647 Noninterest expense: Salaries and employee benefits 6,712 9,184 13,451 18,904 Occupancy expense 1,926 2,131 3,847 4,132 Furniture and equipment 1,147 1,383 2,278 2,697 Amortization of intangible assets 1,581 1,877 3,163 3,754 Other general and administrative 6,348 5,122 10,456 8,920 ---------------------- ---------------------- Total noninterest expense 17,714 19,697 33,195 38,407 ---------------------- ---------------------- Income (loss) before income taxes (17,832) 2,926 (17,185) 7,506 Income tax expense (benefit) (6,975) 901 (6,764) 2,236 ---------------------- ---------------------- Net income (loss) $ (10,857) $ 2,025 $ (10,421) $ 5,270 ====================== ====================== Earnings (loss) per share-basic: $ (0.21) $ 0.04 $ (0.20) $ 0.10 Earnings (loss) per share-diluted: (0.21) 0.04 (0.20) 0.10 Weighted average shares outstanding-basic 51,339,542 51,004,472 51,312,847 50,996,350 Weighted average shares outstanding-diluted 51,339,542 51,091,042 51,312,847 51,086,578 GUARANTY BANCORP AND SUSIDIARIES Unaudited Consolidated Average Balance Sheets -------------------------------- --------------------- QTD Average YTD Average -------------------------------- --------------------- June 30, March 31, June 30, June 30, June 30, 2009 2009 2008 2009 2008 -------------------------------- --------------------- (In thousands) Assets Interest earning assets Loans, net of unearned discount $1,733,168 $1,808,727 $1,788,603 $1,770,738 $1,778,098 Securities 132,231 141,031 162,293 136,607 161,035 Other earning assets 16,175 5,175 2,738 10,704 22,267 -------------------------------- --------------------- Average earning assets 1,881,574 1,954,933 1,953,634 1,918,049 1,961,400 Other assets 129,740 110,747 396,787 120,298 402,099 -------------------------------- --------------------- Total average assets $2,011,314 $2,065,680 $2,350,421 $2,038,347 $2,363,499 ================================ ===================== Liabilities and Stockholders' Equity Average liabilities: Average deposits: Noninterest- bearing deposits $ 410,517 $ 432,080 $ 452,315 $ 421,239 $ 462,564 Interest- bearing deposits 1,203,107 1,227,242 1,195,998 1,215,108 1,236,802 -------------------------------- --------------------- Average deposits 1,613,624 1,659,322 1,648,313 1,636,347 1,699,366 Other interest- bearing liabilities 222,234 230,379 258,557 226,283 219,595 Other liabilities 10,472 12,122 18,802 11,294 20,893 -------------------------------- --------------------- Total average liabilities 1,846,330 1,901,823 1,925,672 1,873,924 1,939,854 Average stockholders' equity 164,984 163,857 424,749 164,423 423,645 -------------------------------- --------------------- Total average liabilities and stockholders' equity $2,011,314 $2,065,680 $2,350,421 $2,038,347 $2,363,499 ================================ ===================== GUARANTY BANCORP Unaudited Credit Quality Measures Quarter Ended ------------------------------------------------ June 30, March 31, Dec. 31, Sept. 30, June 30, 2009 2009 2008 2008 2008 ------------------------------------------------ (Dollars in thousands) Nonaccrual loans and leases, not restructured $ 52,483 $ 57,299 $ 54,594 $ 54,654 $ 29,742 Accruing loans past due 90 days or more 2,671 911 228 324 98 ------------------------------------------------ Total nonperforming loans $ 55,154 $ 58,210 $ 54,822 $ 54,978 $ 29,840 ------------------------------------------------ Other real estate owned and foreclosed assets 34,746 14,524 484 1,199 1,910 ------------------------------------------------ Total nonperforming assets $ 89,900 $ 72,734 $ 55,306 $ 56,177 $ 31,750 ================================================ Impaired loans $ 55,154 $ 58,210 $ 54,822 $ 54,978 $ 29,840 Allocated allowance for loan losses (7,291) (6,342) (11,064) (12,825) (6,295) ------------------------------------------------ Net investment in impaired loans $ 47,863 $ 51,868 $ 43,758 $ 42,153 $ 23,545 ================================================ Charged-off loans $ 13,509 $ 10,262 $ 2,032 $ 12,779 $ 673 Recoveries (347) (367) (1,005) (288) (231) ------------------------------------------------ Net charge-offs $ 13,162 $ 9,895 $ 1,027 $ 12,491 $ 442 ================================================ Provision for loan loss $ 18,605 $ 2,505 $ 1,250 $ 30,750 $ 900 ================================================ Allowance for loan losses $ 43,041 $ 37,598 $ 44,988 $ 44,765 $ 26,506 ================================================ Allowance for loan losses to loans, net of unearned discount 2.61% 2.14% 2.46% 2.52% 1.48% Allowance for loan losses to nonaccrual loans 82.01% 65.62% 82.41% 81.91% 89.12% Allowance for loan losses to nonperforming assets 47.88% 51.69% 81.34% 79.69% 83.48% Allowance for loan losses to nonperforming loans 78.04% 64.59% 82.06% 81.42% 88.83% Nonperforming assets to loans, net of unearned discount, and other real estate owned 5.33% 4.11% 3.03% 3.15% 1.77% Nonperforming assets to total assets 4.62% 3.57% 2.63% 2.74% 1.35% Nonaccrual loans to loans, net of unearned discount 3.18% 3.26% 2.99% 3.07% 1.66% Nonperforming loans to loans, net of unearned discount 3.34% 3.31% 3.00% 3.09% 1.67% Annualized net charge-offs to average loans 3.05% 2.22% 0.22% 2.75% 0.10%