-- Quarterly loss narrowed from the prior quarter to $1.9 million
-- Non-performing loans declined by $21.5 million, or 26.5% from the end
of the prior quarter, while the Allowance for Loan Losses to Loans
increased to 3.42%
-- Delinquent loans declined by $39.8 million, or 64.5%
-- Total capital ratio increased to 13.80%, an all-time high
-- Low-cost deposits grew by $50.7 million in the fourth quarter
Guaranty Bancorp (
Quarter Ended Year Ended
---------------------------------- ----------------------
December September December December December
31, 2009 30, 2009 31, 2008 31, 2009 31, 2008
---------- ---------- ---------- ---------- ----------
Earnings
(loss) per
share-basic
& diluted $ (0.07) $ (0.33) $ 0.08 $ (0.60) $ (5.03)
Return on
average
assets (0.35%) (3.32%) 0.72% (1.42%) (11.19%)
Net Interest
Margin 3.26% 3.14% 3.55% 3.26% 4.05%
Balance Sheet
December 31, September 30, December 31,
2009 2009 % Change 2008 % Change
---------- ---------- --------- ---------- ---------
(Dollars in thousands, except per share amounts)
Cash and cash
equivalents $ 234,483 $ 148,194 58.2% $ 45,711 413.0%
Total
investments 248,236 209,297 18.6% 144,264 72.1%
Total loans,
net of
unearned
discount 1,519,608 1,587,265 (4.3%) 1,826,333 (16.8%)
Loans held for
sale 9,862 5,500 79.3% 5,760 71.2%
Allowance for
loan losses (51,991) (49,038) 6.0% (44,988) 15.6%
Total assets 2,127,580 2,057,378 3.4% 2,102,741 1.2%
Average assets,
quarter-to-
date 2,117,257 2,022,679 4.7% 2,099,519 0.8%
Total deposits 1,693,290 1,632,436 3.7% 1,698,651 (0.3%)
Book value per
common share 2.50 2.60 (3.8%) 3.07 (18.6%)
Tangible book
value per
common share 2.13 2.21 (3.6%) 2.58 (17.4%)
Tangible book
value per
common share
(after giving
effect to
conversion of
preferred
stock) 2.00 2.05 (2.4%) 2.58 (22.5%)
Book value of
preferred
stock 59,227 57,883 2.3% None N/A
Liquidation
value of
preferred
stock 60,434 59,053 2.3% None N/A
Equity ratio -
GAAP 9.05% 9.51% (4.8%) 7.68% 17.8%
Tangible equity
ratio 8.23% 8.59% (4.2%) 6.55% 25.6%
Total
risk-based
capital ratio 13.80% 13.42% 3.1% 10.61% 30.3%
Net Interest Income and Margin
Quarter Ended Year Ended
---------------------------------- ----------------------
December September December December December
31, 2009 30, 2009 31, 2008 31, 2009 31, 2008
---------- ---------- ---------- ---------- ----------
(Dollars in thousands)
Net interest
income $ 16,284 $ 14,911 $ 17,679 $ 62,773 $ 79,562
Interest rate
spread 2.81% 2.65% 2.92% 2.71% 3.35%
Net interest
margin 3.26% 3.14% 3.55% 3.26% 4.05%
Net interest
margin, fully
tax equivalent 3.34% 3.23% 3.64% 3.34% 4.14%
Fourth quarter 2009 net interest income of $16.3 million increased by $1.4
million from the third quarter 2009, and decreased $1.4 million from the
fourth quarter 2008. The Company's net interest margin of 3.26% for the
fourth quarter 2009 reflected an increase of 12 basis points from the third
quarter 2009 and a decline of 29 basis points from the fourth quarter 2008.
The increase in net interest margin and net interest spread in the fourth
quarter 2009, as compared to the third quarter 2009, is primarily a result
of an increase in loan yields and a reduction in the cost of funds during
the fourth quarter 2009. The cost of funds was 2.00% for the fourth quarter
2009 as compared to 2.30% in the previous quarter, a decline of 30 basis
points. The decrease in net interest margin in the fourth quarter 2009 as
compared to the same quarter in 2008 is primarily due to the 11 basis point
decrease in spread. The cost of funds declined by 70 basis points in the
fourth quarter 2009 as compared to the same quarter in 2008 due mostly to
the lower cost of time deposits and the yield on earning assets declined by
81 basis points over the same time period. The yield on earning assets
declined from 5.62% in the fourth quarter 2008 to 4.81% for the same
quarter in 2009, while loan yields declined from 5.67% to 5.44% over the
same time period. The primary reason for the larger overall decline in the
yield on earning assets is due to a change in the mix of earning assets.
The Company maintained a higher level of short-term liquidity as reflected
by a $163.0 million increase in average cash equivalents in the fourth
quarter 2009 as compared to the same quarter in 2008. These cash equivalent
assets earned 0.26% in the fourth quarter 2009 as compared to 2.56% in the
same quarter in 2008. Excluding these low-yielding cash equivalents, the
Company's net interest margin would have been 29 basis points higher in the
fourth quarter 2009.
Interest income in the fourth quarter 2009 decreased by $3.9 million to
$24.1 million, from $28.0 million in the fourth quarter 2008. Lower yields
on earning assets contributed to $1.3 million of the $3.9 million decrease
in interest income with the remainder due to a decline in earning assets,
as well as a change in mix. Other causes for the decline in interest
income include an increase in nonaccrual loan balances in 2009 as compared
to the prior year, as well as a reduction in loan fee income as a result of
a reduction in overall loan balances. The Company remains asset sensitive
at the end of fourth quarter 2009 and expects that as interest rates rise,
net interest income will also increase.
Interest expense decreased by $2.5 million to $7.8 million for the fourth
quarter 2009 as compared to $10.3 million in the fourth quarter 2008. The
$2.5 million decrease in interest expense is attributable to a $3.1 million
favorable rate variance, partially offset by a $0.6 million unfavorable
volume variance due mostly to higher average time deposit balances. The
overall cost of funds declined by 70 basis points to 2.00% from the fourth
quarter 2008 to the fourth quarter 2009, primarily as a result of the
overall cost of interest bearing deposits decreasing by 73 basis points.
For the year ended December 31, 2009, the Company's net interest income
declined by $16.8 million to $62.8 million as compared to $79.6 million for
the same period in 2008. This decline is mostly attributable to a $9.3
million unfavorable rate variance due to a 79 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 throughout 2008. Approximately 56% of the Company's
outstanding loan balances are variable rate loans and are generally tied to
an index, such as prime or LIBOR. Although many of these loans have
interest rate floors, the overall decline in interest rates discussed above
caused the average yield on loans for the Company to decrease by 96 basis
points from 6.28% for the year ended December 31, 2008 to 5.32% in 2009.
The remainder of the decrease in net interest income is primarily due to a
reduced volume of earning assets, as well as a change in the mix of earning
assets.
Noninterest Income
The following table presents noninterest income as of the dates indicated:
Quarter Ended Year Ended
---------------------------------- -----------------------
December September December December December
31, 2009 30, 2009 31, 2008 31, 2009 31, 2008
---------- ---------- ---------- ---------- -----------
(In thousands)
Noninterest
income:
Customer
service and
other fees $ 2,206 $ 2,281 $ 2,357 $ 9,520 $ 9,682
Gain (loss)
on sale of
securities (1) (1) - (2) 138
Other 215 170 (91) 894 800
---------- ---------- ---------- ---------- -----------
Total
noninterest
income $ 2,420 $ 2,450 $ 2,266 $ 10,412 $ 10,620
========== ========== ========== ========== ===========
Noninterest income for the fourth quarter 2009 remained relatively flat as
compared to the third quarter 2009 and fourth quarter 2008.
Noninterest income remained relatively flat in 2009, with a $0.2 million,
or 2% decline in 2009 as compared to 2008. The decline in noninterest
income is mostly due to customer service and other fees, which declined
primarily as a result of a decline in NSF and ATM fees, partially offset by
an increase in analysis account fees due to a lower earnings credit on
compensating balances.
Noninterest Expense
The following table presents noninterest expense as of the dates indicated:
Quarter Ended Year Ended
----------------------------------- -----------------------
December September December December December
31, 2009 30, 2009 31, 2008 31, 2009 31, 2008
----------- ----------- ----------- ----------- -----------
(In thousands)
Noninterest
expense:
Salaries and
employee
benefits $ 6,560 $ 6,536 $ 6,255 $ 26,547 $ 31,086
Occupancy
expense 1,854 1,908 1,725 7,609 7,815
Furniture and
equipment 1,060 1,103 1,203 4,441 5,290
Impairment of
goodwill - - - - 250,748
Amortization
of intangible
assets 1,556 1,559 1,803 6,278 7,433
Other real
estate owned 3,369 1,582 313 5,931 1,612
Insurance and
assessments 1,612 1,688 713 6,536 2,956
Professional
fees 963 516 998 3,224 3,256
Other general
and
administrative 2,860 2,517 2,357 9,872 9,460
----------- ----------- ----------- ----------- -----------
Total
noninterest
expense $ 19,834 $ 17,409 $ 15,367 $ 70,438 $ 319,656
=========== =========== =========== =========== ===========
Noninterest expense for the fourth quarter 2009 increased by $2.4 million as compared to the third quarter 2009 and increased by $4.5 million from the fourth quarter 2008. The increase in the fourth quarter 2009 noninterest expense as compared to the third quarter 2009 is mostly due to a $1.8 million increase in expenses related to the disposition of other real estate owned. Expenses related to other real estate owned increased mostly due to valuation adjustments and sales of other real estate owned. The increase in fourth quarter 2009 noninterest expense as compared to the same quarter in 2008 is mostly due to a $3.1 million increase in expenses associated with other real estate owned, a $0.9 million increase in insurance and assessments, primarily due to higher FDIC insurance, and a $0.5 million increase in other general and administrative expense. The increase in other general and administrative expense is mostly due to higher loan workout related expenses. Noninterest expense for the year ended December 31, 2009 decreased by $249.2 million to $70.4 million compared with the same period in 2008. Excluding the $250.7 million goodwill impairment, noninterest expense increased by $1.5 million in 2009 as compared to 2008. This increase is primarily the result of a $4.3 million increase in expenses related to other real estate owned, a $3.6 million increase in insurance and assessments expense and a $0.4 million increase in other general and administrative expenses. These increases were partially offset by a $4.5 million decrease in salaries and employee benefits, a $1.1 million decrease in occupancy and furniture & equipment expense and a $1.2 million decrease in the amortization of intangible assets. The increase in expenses for other real estate owned in 2009 as compared to 2008 is mostly due to valuation adjustments and sales of other real estate owned, as well as $1.0 million of property holding expenses, including taxes and insurance. The increase in insurance and assessments expense is mostly related to higher FDIC insurance assessment rates on deposits in 2009 as compared to 2008, as well as a $0.9 million special assessment charged by the FDIC. This special assessment was charged on all banks as a percentage of net assets in the second quarter 2009. The increase in other general and administrative expense is mostly due to higher loan workout related expenses. The decreases in salaries and benefits expense in 2009 as compared to 2008 is due to a $4.2 million decrease to base salaries and benefits and a $1.9 million decrease to bonus and incentives. These decreases were partially offset by a $1.6 million increase to equity-based compensation expense, mostly as a result of a cumulative reversal of equity-based compensation expense in 2008 as a result of a determination that performance-based restricted shares were no longer expected to meet their performance target prior to their expiration date. The declines in occupancy, furniture and equipment and intangible asset amortization are primarily a result of the closure of two branches in 2008 and the use of accelerated amortization on our core deposit intangible assets, respectively. Income Taxes In the fourth quarter 2009, management determined that a deferred tax valuation allowance was no longer required. Therefore, the $5.0 million deferred tax valuation allowance booked in the third quarter 2009 was reversed. In making this determination, management considered all evidence currently available, both positive and negative, including existence of taxes paid in available carry-back years, forecasts of future income, a three-year cumulative loss for financial reporting purposes, applicable tax planning strategies, and assessments of the current and future economic and business conditions. The most significant change in positive evidence causing the reversal of the valuation allowance was the legislative increase in carry-back years from two years to five years as a result of the passage of the Worker, Homeownership, and Business Assistance Act of 2009, which was signed into law by President Obama on November 6, 2009. This change caused a significant increase in the amount of taxes available for recovery, allowing businesses to elect to carry-back a net operating loss from 2009 for five years instead of only two years. This new carry-back period does not apply to companies who received payments under the Troubled Asset Relief Program (TARP). As the Company did not receive payments under TARP, we elected to carry-back our 2009 net operating loss five years, which has significantly reduced the deferred tax asset on our books as of December 31, 2009. Because the Company continues to have a deferred tax asset, the Company will, on a quarterly basis, evaluate the need for a valuation allowance and whether the allowance should be adjusted based on then available evidence. The effective tax benefit rate in 2009 was 39.6% as compared to 2.5% in 2008. In 2009, the primary differences between the expected tax benefit rate and the actual tax benefit rate are state taxes and tax-exempt income. In 2008, the primary difference between the expected benefit rate and the actual benefit rate was the significant goodwill impairment charge which was not deductible for income tax purposes. Preferred Stock Dividend On November 15, 2009, a non-cash preferred stock dividend was paid in the form of additional shares of Series A convertible preferred stock to holders of Series A convertible preferred stock in the amount of $1.4 million. The effect of this preferred stock dividend was to reduce the amount available to common shareholders as reflected in the earnings (loss) per share computation. Balance Sheet
December 31, September 30, % December 31, %
2009 2009 Change 2008 Change
----------- ----------- ------- ----------- -------
(Dollars in thousands, except per share amounts)
Total assets $ 2,127,580 $ 2,057,378 3.4% $ 2,102,741 1.2%
Average assets,
quarter-to-date 2,117,257 2,022,679 4.7% 2,099,519 0.8%
Loans, net of
unearned
discount 1,519,608 1,587,265 (4.3%) 1,826,333 (16.8%)
Total deposits 1,693,290 1,632,436 3.7% 1,698,651 (0.3%)
Equity ratio -
GAAP 9.05% 9.51% (4.8%) 7.68% 17.8%
Tangible equity
ratio 8.23% 8.59% (4.2%) 6.55% 25.6%
At December 31, 2009, total assets of $2.1 billion remained relatively flat
as compared to September 30, 2009 and December 31, 2008. Although total
assets remained consistent with prior periods, there has been a shift to
more liquid assets during 2009, including investment securities and
short-term funding due to current economic conditions. Total loans have
declined by $307 million from $1.8 billion as of December 31, 2008 to $1.5
billion as of December 31, 2009. During this same time period, the
Company's investments have increased by $104 million from $144 million as
of December 31, 2008 to $248 million as of December 31, 2009, and total
cash and cash equivalents increased by $189 million to $235 million at
December 31, 2009 as compared to $46 million at December 31, 2008. The
increase in cash and cash equivalents is primarily a result of the decline
in loan balances, coupled with the issuance of $57.8 million, net of
expenses, of preferred stock in the third quarter of 2009. Management
continues to evaluate alternatives for the utilization of this additional
liquidity to improve our future net interest margin, including a
combination of purchasing new investments securities, making new loans and
not renewing certain maturing time deposits.
The decline in loan balances from December 31, 2008 is primarily a result
of a $77 million decrease in real estate loans and a $225 million decrease
in commercial loans. The decline in commercial loans is partly
attributable to planned efforts by the bank to reduce lower yielding
syndicated and participated loans.
The GAAP equity ratio and tangible equity ratio each increased from
December 31, 2008 primarily as a result of the issuance of $57.8 million,
net of expenses, of convertible preferred stock in August 2009. The GAAP
equity ratio and tangible equity ratio declined during the fourth quarter
2009 primarily as a result of the increase in shorter-term cash and cash
equivalents.
The following table sets forth the amounts of our loans outstanding
(excluding loans held for sale) at the dates indicated:
December 31, September 30, December 31,
2009 2009 2008
------------- ------------- -------------
(In thousands)
Loans on real estate:
Residential and commercial $ 760,719 $ 715,005 $ 680,030
Construction 105,612 163,074 268,306
Equity lines of credit 54,852 56,591 50,270
Commercial loans 521,016 573,562 746,241
Agricultural loans 18,429 19,428 22,738
Lease financing 4,011 4,722 3,549
Installment loans to
individuals 36,175 38,704 38,352
Overdrafts 358 768 855
SBA and other 20,997 18,181 19,592
------------- ------------- -------------
1,522,169 1,590,035 1,829,933
Unearned discount (2,561) (2,770) (3,600)
------------- ------------- -------------
Loans, net of unearned
discount $ 1,519,608 $ 1,587,265 $ 1,826,333
============= ============= =============
There were $921.2 million of real estate loans at December 31, 2009 as
compared to $998.6 million at December 31, 2008, a decrease of $77.4
million as management continues efforts to decrease its exposure to
residential and commercial real-estate.
At December 31, 2009, there were approximately $18 million of loans secured
by for-sale residential real estate and approximately $57 million of
residential land and land development loans. 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 $162.7 million decrease in construction loans, and the $80.7 million
increase in residential and commercial real estate loans at December 31,
2009 as compared to December 31, 2008 is partially due to reclassifying
$124.0 million of construction loans to commercial real estate loans
because of the completion of the underlying building projects and the
commencement of amortization of these loans. A portion of the remainder
of the decrease in construction loans was a result of payoffs on existing
loans, as well as moving loans to other real estate owned during 2009.
The following table sets forth the amounts of our deposits outstanding at
the dates indicated:
December 31, September 30, December 31,
2009 2009 2008
------------- ------------- -------------
(In thousands)
Noninterest bearing deposits $ 366,103 $ 366,308 $ 433,761
Interest bearing demand 171,844 152,914 145,492
Money market 352,127 319,504 315,364
Savings 71,816 72,483 68,064
Time 731,400 721,227 735,970
------------- ------------- -------------
Total deposits $ 1,693,290 $ 1,632,436 $ 1,698,651
============= ============= =============
Total deposits increased by $60.9 million to $1.69 billion at December 31,
2009 as compared to $1.63 billion at September 30, 2009, and decreased by
$5.4 million as compared to $1.70 billion at December 31, 2008. The
increase in deposits during the fourth quarter 2009 is primarily a result
of increases to overall transaction and savings accounts, including money
market accounts, which increased by $50.7 million primarily as a result of
a deposit campaign initiated late in the third quarter of 2009. The $5.4
million decrease in deposits from December 31, 2008 to December 31, 2009 is
primarily due to a $4.6 million decrease in time deposits. The $67.7
million decrease in noninterest bearing deposits at December 31, 2009 as
compared to December 31, 2008, is mostly 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.
At December 31, 2009, there were approximately $255 million in brokered
time deposits, excluding reciprocal balances with other banks through the
Certificate of Deposit Account Registry Service (CDARS), as compared to
$193 million in brokered deposits at December 31, 2008. Noninterest
bearing deposits comprised 21.6% of total deposits at December 31, 2009 as
compared to 25.5% at December 31, 2008.
Borrowings remained relatively flat throughout 2009. Total borrowings were
$164.4 million at December 31, 2009 as compared to $166.4 million at
December 31, 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 increased at
December 31, 2009 as compared to December 31, 2008, due primarily to the
issuance of $57.8 million, net of expenses, of convertible preferred stock
during the third quarter 2009. As a result of this issuance, the Company
injected an aggregate of $40.0 million of capital into its bank subsidiary.
All of the regulatory capital ratios are above the highest regulatory
capital requirement of "well-capitalized" at December 31, 2009. The
Company's and the bank subsidiary's actual capital ratios for December 31,
2009 and December 31, 2008 are presented in the table below:
Minimum
Requirement
Ratio at Ratio at Minimum for "Well
December 31, December 31, Capital Capitalized"
2009 2008 Requirement Institution
------------ ------------ ------------ ------------
Total Risk-Based
Capital Ratio:
Consolidated 13.80% 10.61% 8.00% N/A
Guaranty Bank and
Trust Company 12.82% 10.52% 8.00% 10.00%
Tier 1 Risk-Based
Capital Ratio:
Consolidated 9.43% 9.35% 4.00% N/A
Guaranty Bank and
Trust Company 11.55% 9.26% 4.00% 6.00%
Leverage Ratio:
Consolidated 7.89% 8.98% 4.00% N/A
Guaranty Bank and
Trust Company 9.66% 8.90% 4.00% 5.00%
Generally, the allowance for loan losses is included in total capital for regulatory purposes; however, it is limited to 1.25% of total risk-weighted assets. At December 31, 2009, approximately $29.9 million of the bank subsidiary's allowance for loan losses is disallowed from being included in total risk-based capital under the regulatory capital rules, or approximately 1.67% of the bank subsidiary's risk-weighted assets. Asset Quality The following table presents selected asset quality data (excluding loans held for sale) as of the dates indicated:
December September June 30, March 31, December
31, 2009 30, 2009 2009 2009 31, 2008
--------- --------- --------- --------- ---------
(Dollars in thousands)
Nonaccrual loans,
not restructured $ 59,584 $ 81,035 $ 52,483 $ 57,299 $ 54,594
Other nonperforming
loans 123 150 2,671 911 228
--------- --------- --------- --------- ---------
Total nonperforming
loans (NPLs) $ 59,707 $ 81,185 $ 55,154 $ 58,210 $ 54,822
Other real estate
owned and
foreclosed assets 37,192 32,246 34,746 14,524 484
--------- --------- --------- --------- ---------
Total nonperforming
assets (NPAs) $ 96,899 $ 113,431 $ 89,900 $ 72,734 $ 55,306
========= ========= ========= ========= =========
Accruing loans past
due 90 days or more $ 123 $ 9,140 $ 2,671 $ 911 $ 228
========= ========= ========= ========= =========
Accruing loans past
due 30-89 days $ 21,709 $ 52,443 $ 39,836 $ 31,957 $ 35,169
========= ========= ========= ========= =========
Allowance for loan
losses $ 51,991 $ 49,038 $ 43,041 $ 37,598 $ 44,988
========= ========= ========= ========= =========
Selected ratios:
NPLs to loans, net
of unearned
discount 3.93% 5.11% 3.34% 3.31% 3.00%
NPAs to total assets 4.55% 5.51% 4.62% 3.57% 2.63%
Allowance for loan
losses to NPAs 53.65% 43.23% 47.88% 51.69% 81.34%
Allowance for loan
losses to NPLs 87.08% 60.40% 78.04% 64.59% 82.06%
Allowance for loan
losses to loans,
net of unearned
discount 3.42% 3.09% 2.61% 2.14% 2.46%
Loans 30-89 days
past due to loans,
net of unearned
discount 1.43% 3.30% 2.41% 1.82% 1.93%
The types of nonperforming loans (excluding loans held for sale) as of December 31, 2009 and September 30, 2009 are as follows:
Nonperforming Loans
-----------------------------------------------------------
December 31, 2009 September 30, 2009
----------------------------- -----------------------------
Loan Related Loan Related
Balance Percent Allowance Balance Percent Allowance
--------- -------- --------- --------- -------- ---------
(Amounts in thousands)
Residential
Construction,
Land and Land
Development $ 25,812 43.2% $ 2,542 $ 33,073 40.7% $ 1,990
Other
Residential
Loans 3,131 5.2% 623 2,442 3.0% 421
Commercial and
Industrial
Loans 18,206 30.5% 1,960 19,527 24.1% 1,992
Commercial Real
Estate 12,188 20.5% 1,468 25,626 31.6% 3,112
Other 370 0.6% 10 517 0.6% -
--------- -------- --------- --------- -------- ---------
Total $ 59,707 100.0% $ 6,603 $ 81,185 100.0% $ 7,515
========= ======== ========= ========= ======== =========
The decrease in nonperforming loans related to commercial real estate and land development loans is primarily the result of dispositions and loan transfers to other real estate owned during the fourth quarter. The types of loans included in the accruing loans past due 30-89 days as of December 31, 2009 and September 30, 2009 are as follows:
Accruing loans past due 30-89 days
----------------------------------
December 31, September 30,
2009 2009
----------------- ----------------
Loan Loan
Balance Percent Balance Percent
-------- ------- -------- -------
(Amounts in thousands)
Residential Construction, Land and Land
Development $ 10,265 47.3% $ 5,751 11.0%
Other Residential Loans 2,103 9.7% 2,253 4.3%
Commercial and Industrial Loans 4,038 18.6% 3,239 6.2%
Commercial Real Estate 3,516 16.2% 40,452 77.1%
Other 1,787 8.2% 748 1.4%
-------- ------- -------- -------
Total $ 21,709 100.0% $ 52,443 100.0%
======== ======= ======== =======
At December 31, 2009, approximately $18.3 million of the $21.7 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 considered past due as they have matured and must be renewed. 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 decreased to $0.1 million at December 31, 2009, from $9.1 million at September 30, 2009. Approximately $8.9 million of the September 30, 2009 balance was comprised of two loan relationships that were in the process of renewal as of September 30, 2009. Net charge-offs in the fourth quarter 2009 were $7.1 million, as compared to $14.0 million in the third quarter 2009, and $1.0 million in the fourth quarter 2008. Impaired loans as of December 31, 2009 totaled $59.7 million, as compared to $81.2 million at September 30, 2009, and $54.8 million at December 31, 2008. The Company recorded a provision for loan losses in the fourth quarter 2009 of $10.0 million, as compared to $20.0 million in the third quarter 2009 and $1.3 million in the fourth quarter 2008. The fourth quarter 2009 provision for loan losses is 50% lower than the third quarter 2009. A provision for loan losses of $3.9 million was made for the general component of the allowance for loan losses in the fourth quarter 2009, which was primarily for the impact of the quarterly net charge-offs on the historical loss and economic conditions components of our allowance for loan losses. The allowance for loan losses to total loans outstanding was 3.42% at December 31, 2009, as compared to 3.09% at September 30, 2009 and 2.46% at December 31, 2008. The allowance for loan losses to nonperforming loans was 87.08% at December 31, 2009, compared to 60.4% at September 30, 2009 and 82.06% at December 31, 2008. Regulatory Written Agreement On January 22, 2010, the Company and our bank subsidiary, Guaranty Bank and Trust Company, entered into a Written Agreement with the Federal Reserve Bank of Kansas City and the Colorado Division of Banking. The Written Agreement is based in part on the findings of the Federal Reserve and Division of Banking during an examination that commenced in May 2009. Since the completion of the examination, the Company and Guaranty Bank have taken substantial steps to address many of the items included in the Written Agreement. The Written Agreement primarily establishes timeframes for the completion of certain remedial measures identified as important to improve the Company's overall financial performance. In addition, the Written Agreement, among other things, provides that the Company obtain prior written approval from our regulators in order to pay dividends, incur, increase or guarantee any debt or make any payments on its trust preferred securities. Dan Quinn, President and CEO of the Company, said, "We have been working proactively over the last year to address our capital position, liquidity and credit quality and are in a stronger financial position now than we were at the completion of last year's regulatory examination. We have raised $57.8 million, net of expenses, of additional capital. With this capital investment, we have prepared ourselves for a solid, long-term future. Our consolidated total risk-based capital ratio has increased from 10.61% at the end of 2008 to 13.80% at December 31, 2009, a 30.1% increase. The same capital ratio for Guaranty Bank has likewise increased from 10.52% at the end of 2008 to 12.82% at December 31, 2009, which exceeds the threshold to be considered well-capitalized under regulatory guidelines by 2.82 percentage points. In addition to strengthening our capital levels during 2009, we have improved liquidity with a $188.8 million increase to cash and cash equivalents, as well as a $104.0 million increase to investment securities at December 31, 2009 as compared to the end of 2008. We have also taken measures to reduce the Bank's credit risk profile through the identification and reduction of higher-risk loans and aggressively addressing our nonperforming loans and past dues as evidenced by the 26.5% decline in nonperforming loans in the fourth quarter 2009." Mr. Quinn, continued, "The Written Agreement will not affect the operation of our business on a day-to-day basis, nor does it affect our long-term strategic plan. In addition, we will continue our heritage of providing our banking customers the exceptional service they expect and deserve." Shares Outstanding As of December 31, 2009, the Company had 52,822,897 shares of common stock outstanding, including 1,381,105 shares of unvested stock awards, but excluding 129,806 shares of common stock to be issued under its deferred compensation plan. In addition, the company had 60,434 shares of Series A convertible preferred stock outstanding, with a liquidation value of $1,000 per share. Non-GAAP Financial Measures This press release includes non-GAAP financial measures related to tangible assets, including tangible book value, tangible book value (after giving effect to conversion of preferred stock), and tangible equity ratio, 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 the book value per share to the tangible book value per share and the tangible equity ratio as of the dates indicated:
December 31, September 30, December 31,
2009 2009 2008
------------ ------------- ------------
(Dollars in thousands,
except per share amounts)
Tangible Book Value per Common
Share
Total stockholders' equity $ 192,638 $ 195,670 $ 161,580
Less: Preferred share
liquidation preference (60,434) (59,053) -
------------ ------------- ------------
Stockholders' equity
attributable to common shares 132,204 136,617 161,580
Less: Intangible assets (19,222) (20,778) (25,500)
------------ ------------- ------------
Tangible common equity $ 112,982 $ 115,839 $ 136,080
============ ============= ============
Number of common shares
outstanding and to be issued 52,952,703 52,531,840 52,654,131
Number of shares of preferred
stock outstanding 60,434 59,053 N/A
Number of shares of common
stock to be issued upon
conversion of preferred stock 33,574,444 32,807,222 N/A
Book value per common share $ 2.50 $ 2.60 $ 3.07
Tangible book value per common
share $ 2.13 $ 2.21 $ 2.58
Tangible book value per common
share (after giving effect
to conversion of preferred
stock) $ 2.00 $ 2.05 $ 2.58
Tangible Equity Ratio
Total assets $ 2,127,580 $ 2,057,378 $ 2,102,741
Less: Intangible assets (19,222) (20,778) (25,500)
------------ ------------- ------------
Tangible assets $ 2,108,358 $ 2,036,600 $ 2,077,241
============ ============= ============
Equity ratio - GAAP
(Total stockholders' equity /
total assets) 9.05% 9.51% 7.68%
Tangible equity ratio
(Tangible common equity +
Preferred share
liquidation preference) /
tangible assets 8.23% 8.59% 6.55%
About Guaranty Bancorp Guaranty Bancorp is a bank holding company that operates 34 branches in Colorado through a single bank, Guaranty Bank and Trust Company. The bank provides banking and other financial services including real estate, construction, commercial and industrial, energy, consumer and agricultural loans throughout its targeted Colorado markets to consumers and small to medium-sized businesses, including the owners and employees of those businesses. The bank also provides trust services, including personal trust administration, estate settlement, investment management accounts and self-directed IRAs. More information about Guaranty Bancorp can be found at www.gbnk.com. Forward-Looking Statements This press release contains forward-looking statements, which are included in accordance with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "could," "expects," "plans," "intends," "anticipates," "believes," "estimates," "predicts," "potential," or "continue," or the negative of such terms and other comparable terminology. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: failure to maintain adequate levels of capital and liquidity to support Company's operations; the effect of the regulatory written agreement the Company and its bank subsidiary have entered into and potential future supervisory action against the Company or its bank subsidiary; general economic and business conditions in those areas in which the Company operates; demographic changes; competition; fluctuations in interest rates; continued ability to attract and employ qualified personnel; ability to receive regulatory approval for our bank subsidiary to declare dividends to the Company; adequacy of our allowance for loan losses, changes in credit quality and the effect of credit quality on our provision for credit losses and allowance for loan losses; changes in governmental legislation or regulation, including, but not limited to, any increase in FDIC insurance premiums; changes in accounting policies and practices; changes in the deferred tax asset valuation allowance; changes in business strategy or development plans; changes in the securities markets; changes in consumer spending, borrowing and savings habits; the availability of capital from private or government sources; competition for loans and deposits and failure to attract or retain loans and deposits; changes in the financial performance and/or condition of our borrowers and the ability of our borrowers to perform under the terms of their loans and other terms of credit agreements; political instability, acts of war or terrorism and natural disasters; and additional "Risk Factors" referenced in the Company's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission, as supplemented from time to time. When relying on forward-looking statements to make decisions with respect to the Company, investors and others are cautioned to consider these and other risks and uncertainties. The Company can give no assurance that any goal or plan or expectation set forth in forward-looking statements can be achieved and readers are cautioned not to place undue reliance on such statements, which speak only as of the date made. The forward-looking statements are made as of the date of this press release, and the Company does not intend, and assumes no obligation, to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements.
GUARANTY BANCORP AND SUBSIDIARIES
Unaudited Consolidated Balance Sheets
December 31, September 30, December 31,
2009 2009 2008
----------- ----------- -----------
(In thousands)
Assets
Cash and due from banks $ 234,483 $ 148,194 $ 32,189
Federal funds sold - - 13,522
----------- ----------- -----------
Cash and cash equivalents 234,483 148,194 45,711
----------- ----------- -----------
Securities available for sale, at
fair value 221,134 182,573 102,874
Securities held to maturity 9,942 10,377 13,114
Bank stocks, at cost 17,160 16,347 28,276
----------- ----------- -----------
Total investments 248,236 209,297 144,264
----------- ----------- -----------
Loans, net of unearned discount 1,519,608 1,587,265 1,826,333
Less allowance for loan losses (51,991) (49,038) (44,988)
----------- ----------- -----------
Net loans 1,467,617 1,538,227 1,781,345
----------- ----------- -----------
Loans held for sale 9,862 5,500 5,760
Premises and equipment, net 60,267 61,110 63,018
Other real estate owned and
foreclosed assets 37,192 32,246 484
Other intangible assets, net 19,222 20,778 25,500
Other assets 50,701 42,026 36,659
----------- ----------- -----------
Total assets $ 2,127,580 $ 2,057,378 $ 2,102,741
=========== =========== ===========
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing demand $ 366,103 $ 366,308 $ 433,761
Interest-bearing demand 523,971 472,418 460,856
Savings 71,816 72,483 68,064
Time 731,400 721,227 735,970
----------- ----------- -----------
Total deposits 1,693,290 1,632,436 1,698,651
----------- ----------- -----------
Securities sold under agreements to
repurchase and federal funds
purchased 22,990 12,424 21,781
Borrowings 164,364 164,420 166,404
Subordinated debentures 41,239 41,239 41,239
Interest payable and other
liabilities 13,059 11,189 13,086
----------- ----------- -----------
Total liabilities 1,934,942 1,861,708 1,941,161
----------- ----------- -----------
Stockholders' equity:
Preferred stock and Additional
paid-in capital - Preferred stock 59,227 57,883 -
Common stock and Additional
paid-in capital - Common stock 618,408 618,011 617,253
Shares to be issued for deferred
compensation obligations 199 156 710
Accumulated deficit (382,599) (379,325) (352,003)
Accumulated other comprehensive
income (loss) (143) 1,387 (1,302)
Treasury Stock (102,454) (102,442) (103,078)
----------- ----------- -----------
Total stockholders' equity 192,638 195,670 161,580
----------- ----------- -----------
Total liabilities and
stockholders' equity $ 2,127,580 $ 2,057,378 $ 2,102,741
=========== =========== ===========
GUARANTY BANCORP AND SUBSIDIARIES
Unaudited Consolidated Statements of Income (Loss)
Three Months Ended Year Ended
December 31, December 31,
---------------------- ----------------------
2009 2008 2009 2008
---------- ---------- ---------- ----------
(In thousands, except share and per share
data)
Interest income:
Loans, including fees $ 21,631 $ 26,022 $ 89,625 $ 112,844
Investment securities:
Taxable 1,412 779 3,479 2,991
Tax-exempt 738 788 3,033 3,404
Dividends 155 301 825 1,647
Federal funds sold and
other 115 84 193 426
---------- ---------- ---------- ----------
Total interest income 24,051 27,974 97,155 121,312
---------- ---------- ---------- ----------
Interest expense:
Deposits 5,786 7,902 26,402 32,562
Federal funds purchased
and repurchase
agreements 42 85 140 527
Borrowings 1,328 1,402 5,284 5,333
Subordinated debentures 611 906 2,556 3,328
---------- ---------- ---------- ----------
Total interest expense 7,767 10,295 34,382 41,750
---------- ---------- ---------- ----------
Net interest income 16,284 17,679 62,773 79,562
Provision for loan losses 10,005 1,250 51,115 33,775
---------- ---------- ---------- ----------
Net interest income, after
provision for loan losses 6,279 16,429 11,658 45,787
Noninterest income:
Customer service and
other fees 2,206 2,357 9,520 9,682
Gain (loss) on sale of
securities (1) - (2) 138
Other 215 (91) 894 800
---------- ---------- ---------- ----------
Total noninterest
income 2,420 2,266 10,412 10,620
Noninterest expense:
Salaries and employee
benefits 6,560 6,255 26,547 31,086
Occupancy expense 1,854 1,725 7,609 7,815
Furniture and equipment 1,060 1,203 4,441 5,290
Impairment of goodwill - - - 250,748
Amortization of
intangible assets 1,556 1,803 6,278 7,433
Other real estate owned 3,369 313 5,931 1,612
Insurance and assessments 1,612 713 6,536 2,956
Professional fees 963 998 3,224 3,256
Other general and
administrative 2,860 2,357 9,872 9,460
---------- ---------- ---------- ----------
Total noninterest
expense 19,834 15,367 70,438 319,656
---------- ---------- ---------- ----------
Income (loss) before
income taxes (11,135) 3,328 (48,368) (263,249)
Income tax benefit (9,250) (496) (19,161) (6,513)
---------- ---------- ---------- ----------
Net income (loss) (1,885) 3,824 (29,207) (256,736)
Preferred stock dividends (1,389) - (1,389) -
---------- ---------- ---------- ----------
Net income (loss)
applicable to common
shareholders $ (3,274) $ 3,824 $ (30,596) $ (256,736)
========== ========== ========== ==========
Earnings (loss) per common
share-basic: $ (0.07) $ 0.08 $ (0.60) $ (5.03)
Earnings (loss) per common
share-diluted: (0.07) 0.08 (0.60) (5.03)
Weighted average shares
outstanding-basic 51,468,231 51,116,291 51,378,360 51,044,372
Weighted average shares
outstanding- diluted 51,468,231 51,116,291 51,378,360 51,044,372
GUARANTY BANCORP AND SUBSIDIARIES
Unaudited Consolidated Average Balance Sheets
QTD Average YTD Average
----------------------------------- -----------------------
December September December December December
31, 2009 30, 2009 31, 2008 31, 2009 31, 2008
----------- ----------- ----------- ----------- -----------
(In thousands)
Assets
Interest
earning assets
Loans, net of
unearned
discount $ 1,578,761 $ 1,627,066 $ 1,825,489 $ 1,686,136 $ 1,797,357
Securities 228,608 153,657 141,005 164,094 154,548
Other earning
assets 176,049 101,585 13,022 75,887 14,763
----------- ----------- ----------- ----------- -----------
Average earning
assets 1,983,418 1,882,308 1,979,516 1,926,117 1,966,668
Other assets 133,839 140,371 120,003 128,168 328,440
----------- ----------- ----------- ----------- -----------
Total average
assets $ 2,117,257 $ 2,022,679 $ 2,099,519 $ 2,054,285 $ 2,295,108
=========== =========== =========== =========== ===========
Liabilities and
Stockholders'
Equity
Average
liabilities:
Average
deposits:
Noninterest-
bearing
deposits $ 363,177 $ 345,831 $ 410,663 $ 387,597 $ 440,359
Interest-
bearing
deposits 1,320,410 1,259,751 1,275,220 1,252,903 1,242,425
----------- ----------- ----------- ----------- -----------
Average
deposits 1,683,587 1,605,582 1,685,883 1,640,500 1,682,784
Other
interest-
bearing
liabilities 223,835 218,491 241,453 223,703 236,156
Other
liabilities 11,979 12,120 15,001 11,671 19,522
----------- ----------- ----------- ----------- -----------
Total average
liabilities 1,919,401 1,836,193 1,942,337 1,875,874 1,938,462
Average
stockholders'
equity 197,856 186,486 157,182 178,411 356,646
----------- ----------- ----------- ----------- -----------
Total average
liabilities
and
stockholders'
equity $ 2,117,257 $ 2,022,679 $ 2,099,519 $ 2,054,285 $ 2,295,108
=========== =========== =========== =========== ===========
GUARANTY BANCORP
Unaudited Credit Quality Measures
Quarter Ended
------------------------------------------------
December September June March December
31, 2009 30, 2009 30, 2009 31, 2009 31, 2008
-------- -------- -------- -------- --------
(Dollars in thousands)
Nonaccrual loans and
leases, not
restructured $ 59,584 $ 81,035 $ 52,483 $ 57,299 $ 54,594
Other nonperforming loans 123 150 2,671 911 228
-------- -------- -------- -------- --------
Total nonperforming
loans $ 59,707 $ 81,185 $ 55,154 $ 58,210 $ 54,822
-------- -------- -------- -------- --------
Other real estate owned
and foreclosed assets 37,192 32,246 34,746 14,524 484
-------- -------- -------- -------- --------
Total nonperforming
assets $ 96,899 $113,431 $ 89,900 $ 72,734 $ 55,306
======== ======== ======== ======== ========
Impaired loans $ 59,707 $ 81,185 $ 55,154 $ 58,210 $ 54,822
Allocated allowance for
loan losses (6,603) (7,515) (7,291) (6,342) (11,064)
-------- -------- -------- -------- --------
Net investment in
impaired loans $ 53,104 $ 73,670 $ 47,863 $ 51,868 $ 43,758
======== ======== ======== ======== ========
Accruing loans past due
90 days or more $ 123 $ 9,140 $ 2,671 $ 911 $ 228
======== ======== ======== ======== ========
Accruing loans past due
30-89 days $ 21,709 $ 52,443 $ 39,836 $ 31,957 $ 35,169
======== ======== ======== ======== ========
Charged-off loans $ 7,618 $ 14,618 $ 13,509 $ 10,262 $ 2,032
Recoveries (566) (615) (347) (367) (1,005)
-------- -------- -------- -------- --------
Net charge-offs $ 7,052 $ 14,003 $ 13,162 $ 9,895 $ 1,027
======== ======== ======== ======== ========
Provision for loan loss $ 10,005 $ 20,000 $ 18,605 $ 2,505 $ 1,250
======== ======== ======== ======== ========
Allowance for loan
losses $ 51,991 $ 49,038 $ 43,041 $ 37,598 $ 44,988
======== ======== ======== ======== ========
Allowance for loan losses
to loans, net of
unearned discount 3.42% 3.09% 2.61% 2.14% 2.46%
Allowance for loan losses
to nonaccrual loans 87.26% 60.51% 82.01% 65.62% 82.41%
Allowance for loan losses
to nonperforming assets 53.65% 43.23% 47.88% 51.69% 81.34%
Allowance for loan losses
to nonperforming loans 87.08% 60.40% 78.04% 64.59% 82.06%
Nonperforming assets to
loans, net of unearned
discount, and other
real estate owned 6.22% 7.00% 5.33% 4.11% 3.03%
Nonperforming assets to
total assets 4.55% 5.51% 4.62% 3.57% 2.63%
Nonaccrual loans to
loans, net of unearned
discount 3.92% 5.11% 3.18% 3.26% 2.99%
Nonperforming loans to
loans, net of unearned
discount 3.93% 5.11% 3.34% 3.31% 3.00%
Annualized net charge-offs
to average loans 1.77% 3.42% 3.05% 2.22% 0.22%
Contact Information: Contact: Daniel M. Quinn President & Chief Executive Officer 1331 Seventeenth Street, Suite 300 Denver, CO 80202 303/313-6763 Paul W. Taylor E.V.P., Chief Financial & Operating Officer & Secretary 1331 Seventeenth Street, Suite 300 Denver, CO 80202 303/293-5563