-- 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 quarterGuaranty 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