Guaranty Bancorp: First Quarter 2017 Financial Results
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DENVER, CO -- (Marketwired) -- 04/19/17 --
- Improved net income by $4.0 million, or 68.1%, compared to the first quarter 2016
- Expanded return on average assets to 1.18%, compared to 1.00% in the first quarter 2016
- Increased loans $51.6 million, or 8.3% annualized, during the first quarter 2017
- Grew deposits $66.5 million, or 10.0% annualized, during the first quarter 2017
- Further improved nonperforming assets to total assets to 0.16%, compared to 0.60% in the first quarter 2016
- Increased quarterly cash dividend to 12.5 cents, compared to 11.5 cents in 2016
Guaranty Bancorp (NASDAQ: GBNK) ("we", "our" or "the Company"), a community bank holding company based in Colorado, today announced first quarter 2017 net income of $9.8 million, or $0.35 per basic and diluted common share, compared to $5.9 million, or $0.28 per basic common share and $0.27 per diluted common share in the first quarter 2016.
The $4.0 million increase in net income in the first quarter 2017, compared to the first quarter 2016, was comprised of an $8.2 million increase in net interest income and a $2.2 million increase in noninterest income, partially offset by a $4.7 million increase in noninterest expense and a $1.7 million increase in income taxes. The increase in net income in the first quarter 2017, compared to the first quarter 2016 was favorably impacted by the Company's organic growth and the September 2016 acquisition of Home State Bancorp (Home State). Compared to the fourth quarter 2016, net income increased $2.4 million in the first quarter 2017, or $0.08 per basic common share and $0.09 per diluted common share, primarily due to the $3.0 million of merger-related expenses net of tax incurred in the fourth quarter 2016.
"As expected, the strong momentum we had coming out of 2016 carried into the first quarter of 2017" said Paul W. Taylor, President and Chief Executive Officer of the Company. "The first quarter 2017 had the highest quarterly net income we've ever reported for Guaranty Bancorp. The successful integration of Home State Bank in late 2016 and solid first quarter 2017 annualized loan and deposit growth of 8.3% and 10%, respectively, fueled our $4.0 million, or 68.1%, increase in net income as compared to the first quarter of 2016."
Taylor continued, "We continued to expand our quarterly profitability metrics with a return on average assets of 1.18% as compared to 1.00% for the same quarter in 2016, and increased our earnings per diluted common share by $0.08, compared to the first quarter 2016. We remain highly focused on furthering our growth and achieving our goal of being the premier community bank in the state of Colorado."
Key Financial Measures
Income Statement
Three Months Ended
------------------------------------------------
March 31, December 31, March 31,
2017 2016 2016
------------------------------------------------
(Dollars in thousands, except per share
amounts)
Net income $ 9,840 $ 7,421 $ 5,855
Operating earnings (1) 9,832 9,445 6,238
Earnings per common share -
diluted 0.35 0.26 0.27
Earnings per common share -
diluted - operating (1) 0.35 0.34 0.29
Return on average assets 1.18% 0.88% 1.00%
Return on average assets -
operating (1) 1.18% 1.13% 1.06%
Return on average equity 11.17% 8.41% 10.50%
Return on average equity -
operating (1) 11.16% 10.70% 11.19%
Net interest margin 3.65% 3.58% 3.60%
Efficiency ratio - tax
equivalent (2) 55.33% 55.13% 59.92%
Average cost of interest-
bearing liabilities
(including noninterest-
bearing deposits) 0.43% 0.40% 0.35%
Average cost of deposits
(including noninterest-
bearing deposits) 0.23% 0.22% 0.22%
________________________
(1) See reconciliation of non-GAAP financial measures to the corresponding
GAAP measurement in "Non-GAAP Financial Measures" later in this document.
(2) The efficiency ratio equals noninterest expense adjusted to exclude
amortization of intangible assets, prepayment penalties on long-term debt,
impairment of long-lived assets and merger related expenses, divided by the
sum of tax equivalent net interest income and tax equivalent noninterest
income. To calculate tax equivalent net interest income and noninterest
income, the interest earned on tax-exempt loans and investment securities
and the income earned on bank-owned life insurance have been adjusted to
reflect the amount that would have been earned had these investments been
subject to normal income taxation.
Balance Sheet
December September
March 31, 31, 30, June 30, March 31,
2017 2016 2016 2016 2016
----------------------------------------------------------------
(Dollars in thousands, except per share amounts)
Total
investments $ 584,746 $ 590,856 $ 562,091 $ 369,008 $ 400,890
Total loans,
net of
deferred
costs and
fees 2,570,750 2,519,138 2,412,999 1,898,543 1,830,246
Allowance
for loan
losses (23,175) (23,250) (23,300) (23,050) (23,025)
Total assets 3,399,651 3,366,427 3,346,265 2,395,015 2,362,216
Total
deposits 2,765,630 2,699,084 2,752,112 1,847,361 1,872,717
Book value
per common
share 12.64 12.44 12.39 10.55 10.35
Tangible
book value
per common
share 10.13 9.91 9.85 10.33 10.12
Equity ratio
- GAAP 10.56% 10.47% 10.50% 9.60% 9.55%
Tangible
common
equity
ratio 8.65% 8.52% 8.53% 9.42% 9.36%
Total risk-
based
capital
ratio 13.44% 13.58% 14.07% 13.34% 13.31%
The following table presents, for the periods indicated, average assets, liabilities and stockholders' equity, as well as interest income from average interest-earning assets, interest expense from average interest-bearing liabilities and the resultant yields and costs expressed in percentages. Nonaccrual loans are included in the calculation of average loans and leases, while interest thereon is excluded from the computation of yield earned.
Net Interest Income and Margin
Three Months
Ended
December 31,
Three Months Ended March 31, 2017 2016
----------------------------------------------------------
Interest Average
Average Income or Yield or Average
Balance Expense Cost Balance
----------------------------------------------------------
(Dollars in thousands)
ASSETS:
Interest-earning
assets:
Gross loans, net
of deferred
costs and fees
(1)(2)(3) $ 2,540,421 $ 27,392 4.37% $ 2,421,057
Investment
securities (1)
Taxable 361,799 2,315 2.59% 352,248
Tax-exempt 202,094 1,237 2.48% 204,555
Bank Stocks (4) 24,237 389 6.51% 16,923
Other earning
assets 4,097 8 0.79% 98,920
----------------------------------------------------------
Total interest-
earning assets 3,132,648 31,341 4.06% 3,093,703
Non-earning
assets:
Cash and due from
banks 35,533 36,494
Other assets 205,972 205,946
-------------- ---------------
Total assets $ 3,374,153 $ 3,336,143
============== ===============
LIABILITIES AND
STOCKHOLDERS'
EQUITY:
Interest-bearing
liabilities:
Deposits:
Interest-bearing
demand and NOW $ 772,880 $ 357 0.19% $ 794,139
Money market 490,430 333 0.28% 519,361
Savings 171,738 47 0.11% 162,363
Time
certificates of
deposit 374,065 800 0.87% 377,499
----------------------------------------------------------
Total interest-
bearing
deposits 1,809,113 1,537 0.34% 1,853,362
Borrowings:
Repurchase
agreements 36,466 17 0.19% 36,828
Federal funds
purchased (5) 1 - 1.46% 2
Subordinated
debentures 64,993 844 5.27% 64,984
Borrowings 210,680 771 1.48% 98,148
----------------------------------------------------------
Total interest-
bearing
liabilities 2,121,253 3,169 0.61% 2,053,324
Noninterest
bearing
liabilities:
Demand deposits 880,231 909,523
Other liabilities 15,381 22,045
-------------- ---------------
Total liabilities 3,016,865 2,984,892
Stockholders'
Equity 357,288 351,251
-------------- ---------------
Total liabilities
and stockholders'
equity $ 3,374,153 $ 3,336,143
============== ===============
Net interest
income $ 28,172
================
Net interest
margin 3.65%
============
------------------
Three Months Ended Three Months Ended March 31,
December 31, 2016 2016
----------------------------------------------------------
Interest Average Interest Average
Income or Yield or Average Income or Yield or
Expense Cost Balance Expense Cost
----------------------------------------------------------
(Dollars in thousands)
ASSETS:
Interest-earning
assets:
Gross loans, net
of deferred
costs and fees
(1)(2)(3) $ 27,043 4.44% $ 1,818,001 $ 18,854 4.17%
Investment
securities (1)
Taxable 2,171 2.45% 301,604 1,960 2.61%
Tax-exempt 1,224 2.38% 90,929 731 3.23%
Bank Stocks (4) 234 5.50% 20,901 311 5.98%
Other earning
assets 128 0.51% 2,812 4 0.57%
----------------------------------------------------------
Total interest-
earning assets 30,800 3.96% 2,234,247 21,860 3.94%
Non-earning
assets:
Cash and due from
banks 24,982
Other assets 99,951
-------------
Total assets $ 2,359,180
=============
LIABILITIES AND
STOCKHOLDERS'
EQUITY:
Interest-bearing
liabilities:
Deposits:
Interest-bearing
demand and NOW $ 345 0.17% $ 377,777 $ 92 0.10%
Money market 359 0.27% 402,008 258 0.26%
Savings 46 0.11% 152,853 42 0.11%
Time
certificates of
deposit 810 0.85% 274,363 615 0.90%
----------------------------------------------------------
Total interest-
bearing
deposits 1,560 0.33% 1,207,001 1,007 0.34%
Borrowings:
Repurchase
agreements 21 0.23% 20,937 10 0.19%
Federal funds
purchased (5) - 0.84% 1 - 0.98%
Subordinated
debentures 840 5.14% 25,774 225 3.51%
Borrowings 557 2.26% 257,016 623 0.97%
----------------------------------------------------------
Total interest-
bearing
liabilities 2,978 0.58% 1,510,729 1,865 0.50%
Noninterest
bearing
liabilities:
Demand deposits 611,736
Other liabilities 12,536
-------------
Total liabilities 2,135,001
Stockholders'
Equity 224,179
-------------
Total liabilities
and stockholders'
equity $ 2,359,180
=============
Net interest
income $ 27,822 $ 19,995
=========== ===========
Net interest
margin 3.58% 3.60%
=========== =========
------------------
(1) Yields on loans and securities have not been adjusted to a tax-equivalent basis. Net interest margin on a fully tax-equivalent basis would have been 3.76%, 3.68% and 3.68% for the three months ended March 31, 2017, December 31, 2016 and March 31, 2016, respectively. The tax-equivalent basis was computed by calculating the deemed interest on municipal bonds and tax-exempt loans that would have been earned on a fully taxable basis to yield the same after-tax income, net of the interest expense disallowance under Internal Revenue Code Sections 265 and 291, using a combined federal and state marginal tax rate of 38.01%.
(2) The loan average balances and rates include nonaccrual loans.
(3) Net loan fees (costs) of $(0.1) million, $0.2 million and $0.1 million for the three months ended March 31, 2017, December 31, 2016 and March 31, 2016, respectively, are included in the yield computation.
(4) Includes Bankers' Bank of the West stock, Federal Agricultural Mortgage Corporation (Farmer Mac) stock, Federal Reserve Bank stock, Federal Home Loan Bank stock and Pacific Coast Bankers' Bank stock.
(5) The interest expense related to federal funds purchased for the three months ended March 31, 2017, December 31, 2016 and March 31, 2016 rounded to zero.
The net interest margin and loan yield are impacted by volatility in accretion of the acquired loan discount. The effects of the accretion on net interest margin and loan yield are outlined in the following table for the periods indicated.
Three Months Ended Three Months Ended Three Months Ended
March 31, 2017 December 31, 2016 March 31, 2016
----------------------------------------------------------
Net Net Net
Interest Loan Interest Loan Interest Loan
Margin Yield Margin Yield Margin Yield
----------------------------------------------------------
Reported 3.65 % 4.37 % 3.58 % 4.44 % 3.60% 4.17%
Less: Accelerated
accretion of
acquired loan
discount from
early payoffs (0.04)% (0.05)% (0.09)% (0.10)% -% -%
----------------------------------------------------------
Subtotal 3.61 % 4.32 % 3.49 % 4.34 % 3.60% 4.17%
Less: Accretion of
acquired loan
discount not
attributable to
early payoffs (0.06)% (0.07)% (0.05)% (0.07)% -% -%
----------------------------------------------------------
Excluding total
accretion of loan
acquisition
discounts 3.55 % 4.25 % 3.44 % 4.27 % 3.60% 4.17%
==========================================================
Total accretion of
loan acquisition
discounts (0.10)% (0.12)% (0.14)% (0.17)% -% -%
Net interest margin increased to 3.65% for the first quarter 2017, compared to 3.58% for the fourth quarter 2016 and 3.60% for the first quarter 2016, primarily due to an increase in the yield on average earning assets. The yield on average earnings assets increased to 4.06% for the first quarter 2017, compared to 3.96% for the fourth quarter 2016 and 3.94% for the first quarter 2016. The accretion of the discount on acquired loans had a ten basis point favorable impact on the net interest margin for the first quarter 2017, compared to a 14 basis point favorable impact on the net interest margin for the fourth quarter 2016 and no impact on the net interest margin for the first quarter 2016. The cost of interest-bearing liabilities increased to 0.61% for the first quarter 2017, compared to 0.58% for the fourth quarter 2016 and 0.50% for the first quarter 2016. The average cost of interest-bearing liabilities for both the first quarter 2017 and fourth quarter 2016 were impacted by the July 2016 issuance of $40.0 million of unsecured fixed-to-floating rate subordinated notes, bearing an initial interest rate of 5.75% through July 2021. The average cost of deposits, including demand deposits, was 0.23% for the first quarter 2017, compared to 0.22% for both the fourth and first quarters of 2016.
Net interest income increased $8.2 million in the first quarter 2017, compared to the same quarter in 2016, due to a $9.5 million increase in interest income, partially offset by a $1.3 million increase in interest expense. The increase in interest income was mostly the result of an $898.4 million increase in average earning assets in the first quarter 2017 compared to the same quarter in 2016, and $0.8 million related to accretion of the discount on acquired loans. The increase in interest expense in the first quarter 2017, compared to the same quarter in 2016, was primarily due to a $0.6 million increase in subordinated debt expense and a $0.5 million increase in interest expense on deposits. Interest expense on deposits increased in the first quarter 2017, compared to the same quarter in 2016, due to a $602.1 million increase in average interest-bearing deposit balances. The Company acquired $445.5 million in loans and $769.7 million in deposits as a result of the September 2016 Home State transaction.
Compared to the fourth quarter 2016, net interest income increased by $0.4 million in the first quarter 2017 reflecting a $0.5 million increase in interest income, partially offset by a $0.2 million increase in interest expense. The increase in interest income during the first quarter 2017, compared to the fourth quarter 2016, was primarily due to a $119.4 million increase in average loans, partially offset by a $14.4 million decrease in average investments. The increase in interest expense in the first quarter 2017, compared to the fourth quarter 2016, was mostly due to a $67.9 million increase in average interest-bearing liabilities, primarily consisting of overnight borrowings utilized to fund the increase in loans.
Noninterest Income
The following table presents noninterest income as of the dates indicated:
Three Months Ended
------------------------------------------
March 31, December 31, March 31,
2017 2016 2016
------------------------------------------
(In thousands)
Noninterest income:
Deposit service and other fees $ 3,280 $ 3,405 $ 2,169
Investment management and trust 1,521 1,563 1,280
Increase in cash surrender value
of life insurance 595 607 448
Gain on sale of securities - 49 45
Gain on sale of SBA loans 381 401 154
Other 625 207 82
------------------------------------------
Total noninterest income $ 6,402 $ 6,232 $ 4,178
==========================================
First quarter 2017 noninterest income increased $0.2 million compared to the fourth quarter 2016, primarily due to a $0.3 million gain on sale of the Company's $2.0 million credit card loan portfolio during the first quarter 2017.
Compared to the first quarter 2016, noninterest income increased $2.2 million in the first quarter 2017. This increase was attributable to a $1.1 million increase in deposit service and other fees, a $0.2 million increase in investment management and trust fees, a $0.2 million increase in the gain on sales of SBA loans, and a $0.5 million increase in other noninterest income. The increases in deposit service and other fees and investment management and trust fees were mostly due to the impact of deposit accounts and trust accounts acquired in the 2016 Home State transaction. The $0.5 million increase in other noninterest income in the first quarter 2017, compared to the first quarter 2016, was primarily due to the $0.3 million gain on sale of the Company's credit card loan portfolio, discussed above.
Noninterest Expense
The following table presents noninterest expense as of the dates indicated:
------------------------------------------
Three Months Ended
------------------------------------------
March 31, December 31, March 31,
2017 2016 2016
------------------------------------------
(In thousands)
Noninterest expense:
Salaries and employee benefits $ 11,926 $ 12,654 $ 8,788
Occupancy expense 1,552 1,834 1,375
Furniture and equipment 945 789 818
Amortization of intangible
assets 649 689 240
Other real estate owned, net 68 4 2
Insurance and assessments 706 496 613
Professional fees 974 914 857
Impairment of long-lived assets 190 185 -
Other general and administrative 3,519 5,672 3,099
------------------------------------------
Total noninterest expense $ 20,529 $ 23,237 $ 15,792
==========================================
First quarter 2017 noninterest expense decreased $2.7 million to $20.5 million, compared to $23.2 million in the fourth quarter 2016, primarily due to $3.0 million in merger-rated expenses incurred in the fourth quarter 2016. The $3.0 million in merger-related expenses incurred in the fourth 2016 consisted of $0.5 million in salaries and employee benefits and $2.5 million in other general and administrative expense.
Noninterest expense increased by $4.7 million in the first quarter 2017, compared to the first quarter 2016, primarily due to a $3.1 million increase in salaries and employee benefits, a $0.2 million increase in occupancy expense, a $0.4 million increase in amortization of intangible assets, a $0.2 million increase in impairment of long-lived assets, and a $0.4 million increase in other general and administrative expense. The $3.1 million increase in salaries and employee benefits in the first quarter 2017, compared to the same quarter in 2016, consisted of a $2.0 million increase in base salaries, a $0.7 million increase in the Company's self-funded medical plan, and a $0.3 million increase in payroll taxes. Since March 31, 2016, the Company's full-time equivalent employees (FTE) increased by 134 FTE to 498 FTE at March 31, 2017, primarily due to the Home State transaction. The $0.4 million increase in amortization of intangible assets in the first quarter 2017, compared to the same quarter in 2016, was primarily due to the intangible assets recorded in the Home State transaction. The $0.2 million impairment of long-lived assets in the first quarter 2017 was related to a real estate property that was transferred to held for sale at net realizable value. The $0.4 million increase in other general and administrative expense in the first quarter 2017, compared to the first quarter 2016 was related to increases in data processing and card interchange expense.
The Company's first quarter 2017 income tax expense of $4.2 million and effective tax rate of 29.9% were favorably impacted by the direct reduction of tax expense resulting from the vesting of restricted stock at a market value higher than the grant date fair value. During the first quarter 2017, 123,407 shares of restricted stock vested with a weighted average grant price of $13.60 and a weighted average fair value at vesting of $24.50. The increase in the value of these shares between the date of grant and the date of vesting resulted in the direct benefit to tax expense of approximately $511,000 in the first quarter 2017.The Company's income tax expense is not expected to be materially impacted by restricted stock vestings again until the fourth quarter 2017 when 40,845 shares of time-based restricted stock granted to named executive officers are expected to vest with a weighted average grant price of $16.13 per share.
Balance Sheet
March 31, December September June 30, March 31,
2017 31, 2016 30, 2016 2016 2016
-----------------------------------------------------------------
(Dollars in thousands)
Total
assets $ 3,399,651 $ 3,366,427 $ 3,346,265 $ 2,395,015 $ 2,362,216
Average
assets,
quarter-
to-date 3,374,153 3,336,143 2,613,133 2,356,964 2,359,180
Total
loans, net
of
deferred
costs and
fees 2,570,750 2,519,138 2,412,999 1,898,543 1,830,246
Total
deposits 2,765,630 2,699,084 2,752,112 1,847,361 1,872,717
Equity
ratio -
GAAP 10.56% 10.47% 10.50% 9.60% 9.55%
Tangible
common
equity
ratio 8.65% 8.52% 8.53% 9.42% 9.36%
At March 31, 2017, the Company had total assets of $3.4 billion, reflecting an increase of $1.0 billion compared to March 31, 2016, and an increase of $33.2 million compared to December 31, 2016. The increase in total assets year-over-year was comprised of a $740.5 million increase in loans, a $183.9 million increase in investments and a $66.1 million increase in goodwill and intangible assets. The increase in total assets was funded by an $892.9 million increase in deposits and a $15.7 million increase in securities sold under agreements to repurchase. During the third quarter 2016, the Company acquired $445.5 million in loans, net of deferred fees and costs and $769.7 million in deposits in the Home State transaction. The $33.2 million increase in total assets during the first quarter 2017, compared to the fourth quarter 2016 was primarily due to a $51.6 million increase in loans, partially offset by a $9.6 million decrease in cash and a $6.1 million decrease in investments.
The following table sets forth the amount of loans outstanding at the dates indicated:
March 31, December September June 30, March 31,
2017 31, 2016 30, 2016 2016 2016
-------------------------------------------------------------
(In thousands)
Loans held for
sale $ 951 $ 4,129 $ - $ - $ -
Commercial and
residential
real estate 1,800,194 1,768,424 1,752,113 1,428,397 1,307,854
Construction 103,682 88,451 75,603 26,497 87,753
Commercial 451,708 432,083 400,281 336,069 329,939
Consumer 120,231 125,264 81,766 66,539 66,829
Other 93,979 100,848 102,887 40,640 37,534
-------------------------------------------------------------
Total gross
loans 2,570,745 2,519,199 2,412,650 1,898,142 1,829,909
Deferred
costs and
(fees) 5 (61) 349 401 337
-------------------------------------------------------------
Loans, net 2,570,750 2,519,138 2,412,999 1,898,543 1,830,246
Less allowance
for loan
losses (23,175) (23,250) (23,300) (23,050) (23,025)
-------------------------------------------------------------
Net loans $ 2,547,575 $ 2,495,888 $ 2,389,699 $ 1,875,493 $ 1,807,221
=============================================================
The following table presents the changes in the Company's loan balances at the dates indicated:
March 31, December September June 30, March 31,
2017 31, 2016 30, 2016 2016 2016
-------------------------------------------------------------
(In thousands)
Beginning
balance $ 2,519,199 $ 2,412,650 $ 1,898,142 $ 1,829,909 $ 1,814,281
New credit
extended 139,185 232,499 129,064 121,753 105,843
Acquisition of
Home State
Bank - - 445,529 - -
Net existing
credit
advanced 111,821 142,448 153,390 87,524 50,482
Net pay-downs
and maturities (195,678) (272,326) (214,089) (142,516) (139,914)
Other (3,782) 3,928 614 1,472 (783)
-------------------------------------------------------------
Gross loans 2,570,745 2,519,199 2,412,650 1,898,142 1,829,909
Deferred costs
and (fees) 5 (61) 349 401 337
-------------------------------------------------------------
Loans, net $ 2,570,750 $ 2,519,138 $ 2,412,999 $ 1,898,543 $ 1,830,246
=============================================================
Net change -
loans
outstanding $ 51,612 $ 106,139 $ 514,456 $ 68,297 $ 15,710
During the first quarter 2017, loans net of deferred costs and fees increased $51.6 million, despite $195.7 million in net pay-downs and maturities during the quarter. In addition to contractual loan principal payments and maturities, the first quarter 2017 included $33.3 million in payoffs due to our strategic decision not to match certain financing terms offered by competitors, $36.1 million in early payoffs related to our borrowers selling their assets or deploying excess cash, and $10.8 million in loan pay-downs related to fluctuations in loan balances to existing customers.
During the twelve months ended March 31, 2017, loans net of deferred fees and costs increased by $740.5 million. Loans acquired in the transaction with Home State during the third quarter 2016 were $445.5 million. Excluding the loans acquired in the transaction with Home State, loans grew $295.0 million, or 16.1% since March 31, 2016.
The following table sets forth the amounts of deposits outstanding at the dates indicated:
March 31, December September June 30, March 31,
2017 31, 2016 30, 2016 2016 2016
----------------------------------------------------------------
(In thousands)
Noninterest-
bearing
demand $ 868,189 $ 916,632 $ 857,064 $ 638,110 $ 631,544
Interest-
bearing
demand and
NOW 821,518 767,523 802,043 383,492 392,808
Money market 489,921 484,664 554,447 392,730 411,582
Savings 178,157 164,478 160,698 149,798 155,673
Time 407,845 365,787 377,860 283,231 281,110
----------------------------------------------------------------
Total
deposits $ 2,765,630 $ 2,699,084 $ 2,752,112 $ 1,847,361 $ 1,872,717
================================================================
At March 31, 2017, non-maturing deposits were $2.4 billion, an increase of $24.5 million compared to December 31, 2016, and an increase of $766.2 million compared to March 31, 2016. Deposits acquired in the transaction with Home State were $769.7 million, of which $685.6 million were non-maturing deposits. Time deposits increased $42.1 million during the first quarter 2017, consisting of a $15.0 million increase in brokered time deposits and a $27.1 million increase in in-market time deposits. Excluding the deposits acquired in the Home State transaction, total deposits grew $123.2 million during the twelve months ended March 31, 2017. At March 31, 2017, noninterest-bearing deposits as a percentage of total deposits were 31.4%, compared to 33.7% at March 31, 2016.
At March 31, 2017, securities sold under agreements to repurchase were $34.5 million, compared to $36.9 million at December 31, 2016 and $18.7 million at March 31, 2016. Securities sold under agreements to repurchase acquired in the transaction with Home State were $20.0 million.
Total FHLB borrowings were $162.8 million at March 31, 2017, consisting of $90.4 million in overnight advances and $72.4 million in term advances. At March 31, 2016, total FHLB borrowings consisted of $85.9 million in overnight advances and $120.0 million in term advances.
Regulatory Capital Ratios
The following table provides the capital ratios of the Company and the Bank as of the dates presented, along with the applicable regulatory capital requirements:
Minimum
Requirement
for "Adequately
Capitalized"
Institution plus Minimum
Ratio at fully Requirement for
Ratio at December phased in Capital "Well-
March 31, 31, Conservation Capitalized"
2017 2016 Buffer Institution
---------------------------------------------------------
Common Equity Tier
1 Risk-Based
Capital Ratio
Consolidated 10.39% 10.46% 7.00% N/A
Guaranty Bank
and Trust
Company 12.48% 12.43% 7.00% 6.50%
Tier 1 Risk-Based
Capital Ratio
Consolidated 11.25% 11.34% 8.50% N/A
Guaranty Bank
and Trust
Company 12.48% 12.43% 8.50% 8.00%
Total Risk-Based
Capital Ratio
Consolidated 13.44% 13.58% 10.50% N/A
Guaranty Bank
and Trust
Company 13.29% 13.26% 10.50% 10.00%
Leverage Ratio
Consolidated 9.83% 9.81% 4.00% N/A
Guaranty Bank
and Trust
Company 10.92% 10.76% 4.00% 5.00%
At March 31, 2017, all of our regulatory capital ratios remained well above minimum requirements for a "well-capitalized" institution. The Company's consolidated Tier 1 risk-based capital ratio and total risk-based capital ratio decreased relative to December 31, 2016 primarily due to an increase in risk-weighted assets.
Asset Quality
The following table presents select asset quality data, including quarterly charged-off loans, recoveries and provision for loan losses as of the dates indicated:
March 31, December 31, September 30, June 30, March 31,
2017 2016 2016 2016 2016
-----------------------------------------------------------
(Dollars in thousands)
Originated
nonaccrual loans
and leases $ 3,387 $ 3,345 $ 3,399 $ 13,326 $ 13,401
Purchased
nonaccrual loans
and leases 1,715 1,902 2,108 - -
Accruing loans
past due 90 days
or more (1) - - 335 - -
----------------------------------------------------------
Total
nonperforming
loans (NPLs) $ 5,102 $ 5,247 $ 5,842 $ 13,326 $ 13,401
Other real estate
owned and
foreclosed
assets 257 569 637 674 674
----------------------------------------------------------
Total
nonperforming
assets (NPAs) $ 5,359 $ 5,816 $ 6,479 $ 14,000 $ 14,075
==========================================================
Total classified
assets $ 30,201 $ 33,443 $ 34,675 $ 25,644 $ 27,191
==========================================================
Accruing loans
past due 30-89
days (1) $ 3,858 $ 1,337 $ 2,157 $ 2,386 $ 1,398
==========================================================
Charged-off loans $ (125) $ (290) $ (72) $ (57) $ (302)
Recoveries 45 150 295 72 311
----------------------------------------------------------
Net (charge-
offs)
recoveries $ (80) $ (140) $ 223 $ 15 $ 9
==========================================================
Provision for
loan losses $ 5 $ 90 $ 27 $ 10 $ 16
==========================================================
Allowance for
loan losses $ 23,175 $ 23,250 $ 23,300 $ 23,050 $ 23,025
==========================================================
Unaccreted loan
discount $ 13,896 $ 14,682 $ 15,721 $ - $ -
==========================================================
Selected ratios:
NPLs to loans,
net of deferred
costs and fees
(2) 0.20% 0.21% 0.24% 0.70% 0.73%
NPAs to total
assets 0.16% 0.17% 0.19% 0.58% 0.60%
Allowance for
loan losses plus
unaccreted
discount to NPLs 726.60% 722.93% 667.94% 172.97% 171.82%
Allowance for
loan losses to
loans, net of
deferred costs
and fees (2) 0.90% 0.92% 0.97% 1.21% 1.26%
Allowance for
loan losses plus
unaccreted
discount to
loans, net of
deferred costs
and fees (2) 1.43% 1.50% 1.61% 1.21% 1.26%
Loans 30-89 days
past due to
loans, net of
deferred costs
and fees (2) 0.15% 0.05% 0.09% 0.13% 0.08%
Texas ratio (3) 1.39% 1.55% 1.77% 5.17% 5.14%
Classified asset
ratio (4) 8.24% 9.79% 10.69% 10.55% 11.56%
_________________
_______
(1)Past due loans include both loans that are past due with respect to payments and loans that are past due because the loan has matured, and is in the process of renewal, but continues to be current with respect to payments. (2)Loans, net of deferred costs and fees, exclude loans held for sale. (3)Texas ratio defined as total NPAs divided by subsidiary bank only Tier 1 Capital plus allowance for loan losses. (4)Classified asset ratio defined as total classified assets to subsidiary bank only Tier 1 Capital plus allowance for loan losses.
The following tables summarize past due loans held for investment by class as of the dates indicated:
90 Days + Total Total
30-89 Past Due Nonaccrual Loans,
Days Past and Still and Held for
March 31, 2017 Due Accruing Nonaccrual Past Due Investment
----------------------------------------------------------------------------
(In thousands)
Commercial and
residential
real estate $ 1,951 $ - $ 2,539 $ 4,490 $ 1,800,198
Construction - - - - 103,682
Commercial 858 - 1,022 1,880 451,709
Consumer 280 - 191 471 120,231
Other 769 - 1,350 2,119 93,979
------------------------------------------------------------
Total $ 3,858 $ - $ 5,102 $ 8,960 $ 2,569,799
============================================================
90 Days +
30-89 Past Due Total Loans,
Days Past and Still Total Nonaccrual and Held for
December 31, 2016 Due Accruing Nonaccrual Past Due Investment
--------------------------------------------------------------------------------------------
(In thousands)
Commercial and residential
real estate $ 1,258$ -$ 2,835$ 4,093$ 1,768,381
Construction - - - - 88,449
Commercial 37 - 1,094 1,131 432,072
Consumer 42 - 201 243 125,261
Other - - 1,117 1,117 100,846
------------------------------------------------------------------
Total $ 1,337$ -$ 5,247$ 6,584$ 2,515,009
==================================================================
During the first quarter 2017, nonperforming assets decreased by $0.5 million from December 31, 2016 and $8.7 million from March 31, 2016. The $8.7 million decline in nonperforming assets, compared to March 31, 2016 included the return of a $9.4 million out-of-state loan syndication to performing status. Also as a result of the transaction with Home State, $2.1 million of nonperforming loans were acquired. At March 31, 2017, performing troubled debt restructurings were $23.2 million, compared to $25.1 million at December 31, 2016 and $11.4 million at March 31, 2016. The increase in performing troubled debt restructurings in the first quarter 2017, compared to the first quarter 2016, was primarily due to a return of the $9.4 million out-of-state loan syndication to performing status, described above.
At March 31, 2017, classified assets represented 8.2% of bank-level Tier 1 risk-based capital plus allowance for loan losses, compared to 9.8% at December 31, 2016 and 11.6% at March 31, 2016.
All acquired loans are initially recorded at their estimated fair value which encompasses an estimate of credit losses. The table below presents two alternative views of credit risk coverage ratios for loans, reflecting adjustments for acquired loans and the associated purchase accounting discount:
Allowance over
Loans Allowance / Discount Loans Ratio
------------ ----------------------- ----------------
(Dollars in thousands)
March 31, 2017
Reported Balance $ 2,569,799 23,175 0.90%
Unaccreted net loan
discount 13,896 13,896 1
------------- ----------------------- ---------------
Adjusted March 31,
2017 Balance $ 2,583,695 $ 37,071 1.43%
============= ======================= ===============
____________________
____
(1) Unaccreted net loan discount relates to $445.5 million of acquired loans and is assigned specifically to those loans only. The discount represents the remaining acquisition date fair value adjustment based on market, liquidity, interest rate risk and credit risk and is being accreted into interest income over the remaining life of the respective loans. Credit deterioration on acquired loans subsequent to purchase will result in recognition of additional provision for loan losses to the extent recorded investment exceeds net realizable value.
Net charge-offs were $0.1 million during both the first quarter of 2017 and the fourth quarter of 2016, compared to immaterial net recoveries in the first quarter of 2016. During the first quarters of 2017 and 2016, the Bank recorded an immaterial provision for loan losses, compared to a $0.1 million provision in the fourth quarter 2016. The Bank considered recoveries, historical charge-offs, level of nonperforming loans, loan growth and other factors when determining the adequacy of the allowance for loan losses and the resulting amount of loan loss provision to be recognized during the quarter.
Shares Outstanding
As of March 31, 2017, the Company had 28,393,278 shares of voting common stock outstanding, of which 487,856 shares were in the form of unvested stock awards.
Non-GAAP Financial Measures
The Company discloses certain non-GAAP financial measures related to tangible assets, including tangible book value and tangible common equity, and operating earnings adjusted for merger-related expenses, OREO expenses, debt termination expense, impairments of long-lived assets, securities gains and losses and gains or losses on the sale or disposal of other assets. The Company also discloses the following GAAP profitability metrics alongside the operating earnings equivalent: return on average assets, return on average equity and earnings per share (diluted).
The Company discloses these non-GAAP financial measures to provide meaningful supplemental information regarding the Company's operational performance and to enhance investors' overall understanding of the Company's core financial performance. Management believes that these non-GAAP financial measures allow for additional transparency and are used by some investors, analysts and other users of the Company's financial information as performance measures. These non-GAAP financial measures are presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with GAAP. These non-GAAP financial measures presented by the Company may be different from non-GAAP financial measures used by other companies.
The following non-GAAP schedule reconciles the non-GAAP operating earnings to GAAP net income as of the dates indicated:
Three Months Ended
------------------------------------------------
March 31, December 31, March 31,
2017 2016 2016
------------------------------------------------
(Dollars in thousands, except per share
amounts)
Net income $ 9,840 $ 7,421 $ 5,855
Expenses adjusted for:
Expenses (gains) related
to other real estate
owned, net 68 4 2
Merger-related expenses - 3,032 675
Impairment of long-lived
assets 190 185 -
Income adjusted for:
Gain on sale of securities - (49) (45)
Gain on sale of other
assets (271) - (14)
------------------------------------------------
Pre-tax earnings adjustment (13) 3,172 618
------------------------------------------------
Tax effect of adjustments
(1) 5 (1,148) (235)
------------------------------------------------
Tax effected operating
earnings adjustment (8) 2,024 383
------------------------------------------------
Operating earnings $ 9,832 $ 9,445 $ 6,238
================================================
Average assets $ 3,374,153 $ 3,336,143 $ 2,359,180
Average equity $ 357,288 $ 351,251 $ 224,179
Fully diluted average common
shares outstanding: 28,090,179 28,043,944 21,398,559
Earnings per common share-
diluted: $ 0.35 $ 0.26 $ 0.27
Earnings per common share-
diluted - operating: $ 0.35 $ 0.34 $ 0.29
%
ROAA (GAAP) 1.18 0.88% 1.00%
ROAA - operating 1.18% 1.13% 1.06%
ROAE (GAAP) 11.17% 8.41% 10.50%
ROAE - operating 11.16% 10.70% 11.19%
________________
(1) Tax effect calculated using a combined federal and state marginal tax
rate of 38.01%, adjusted for tax effect of nondeductible merger-related
expenses.
The following non-GAAP schedules reconcile the book value per share to the tangible book value per share and the GAAP equity ratio to the tangible equity ratio as of the dates indicated:
Tangible Book Value per Common
Share
March 31, December March 31,
2017 31, 2016 2016
------------------------------------------
(Dollars in thousands, except per share
amounts)
Total stockholders' equity $ 358,838 $ 352,378 $ 225,519
Less: Goodwill and other
intangible assets (71,072) (71,721) (4,933)
------------------------------------------
Tangible common equity $ 287,766 $ 280,657 $ 220,586
==========================================
Number of common shares
outstanding 28,393,278 28,334,004 21,790,800
Book value per common share $ 12.64 $ 12.44 $ 10.35
Tangible book value per common
share $ 10.13 $ 9.91 $ 10.12
Tangible Common Equity Ratio
March 31, December March 31,
2017 31, 2016 2016
------------------------------------------
(Dollars in thousands)
Total stockholders' equity $ 358,838 $ 352,378 $ 225,519
Less: Goodwill and other
intangible assets (71,072) (71,721) (4,933)
------------------------------------------
Tangible common equity $ 287,766 $ 280,657 $ 220,586
==========================================
Total assets $ 3,399,651 $ 3,366,427 $ 2,362,216
Less: Goodwill and other
intangible assets (71,072) (71,721) (4,933)
------------------------------------------
Tangible assets $ 3,328,579 $ 3,294,706 $ 2,357,283
==========================================
Equity ratio - GAAP (total
stockholders' equity / total
assets) 10.56% 10.47% 9.55%
Tangible common equity ratio
(tangible common equity /
tangible assets) 8.65% 8.52% 9.36%
About Guaranty Bancorp
Guaranty Bancorp is a $3.4 billion financial services company that operates as the bank holding company for Guaranty Bank and Trust Company, a premier Colorado community bank. The Bank provides comprehensive financial solutions to consumers and small to medium-sized businesses that value local and personalized service. In addition to loans and depository services, the Bank also offers wealth management solutions, including trust and investment management services. More information about Guaranty Bancorp can be found at www.gbnk.com.
Forward-Looking Statements
This press release contains forward-looking statements, which are included in accordance with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "could," "expects," "plans," "intends," "anticipates," "believes," "estimates," "predicts," "potential," or "continue," or the negative of such terms and other comparable terminology. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: failure to maintain adequate levels of capital and liquidity to support the Company's operations; general economic and business conditions in those areas in which the Company operates, including the impact of global and national economic conditions on our local economy; demographic changes; competition; fluctuations in interest rates; continued ability to attract and employ qualified personnel; ability to receive regulatory approval for the bank subsidiary to declare dividends to the Company; adequacy of the allowance for loan losses, changes in credit quality and the effect of credit quality on the provision for credit losses and allowance for loan losses; changes in governmental legislation or regulation, including, but not limited to, any increase in FDIC insurance premiums; changes in accounting policies and practices; changes in business strategy or development plans; failure or inability to complete mergers or other corporate transactions; failure or inability to realize fully the expected benefits of mergers or other corporate transactions; changes in the securities markets; changes in consumer spending, borrowing and savings habits; the availability of capital from private or government sources; competition for loans and deposits and failure to attract or retain loans and deposits; failure to recognize expected cost savings; changes in the financial performance and/or condition of our borrowers and the ability of our borrowers to perform under the terms of their loans and terms of other credit agreements; changes in oil and natural gas prices; political instability, acts of war or terrorism and natural disasters; and additional "Risk Factors" referenced in the Company's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission, as supplemented from time to time. When relying on forward-looking statements to make decisions with respect to the Company, investors and others are cautioned to consider these and other risks and uncertainties. The Company can give no assurance that any goal or plan or expectation set forth in any forward-looking statement can be achieved and readers are cautioned not to place undue reliance on such statements, which speak only as of the date made. The forward-looking statements are made as of the date of this press release, and, except as may otherwise be required by law, the Company does not intend, and assumes no obligation, to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements.
GUARANTY BANCORP AND SUBSIDIARIES
Unaudited Consolidated Balance Sheets
March 31, December March 31,
2017 31, 2016 2016
------------------------------------------
(In thousands)
Assets
Cash and due from banks $ 40,513 $ 50,111 $ 31,142
------------------------------------------
Time deposits with banks 254 254 -
Securities available for sale, at
fair value 318,280 324,228 229,478
Securities held to maturity 243,452 243,979 152,213
Bank stocks, at cost 23,014 22,649 19,199
------------------------------------------
Total investments 584,746 590,856 400,890
------------------------------------------
Loans held for sale 951 4,129 -
Loans, held for investment, net of
deferred costs and fees 2,569,799 2,515,009 1,830,246
Less allowance for loan losses (23,175) (23,250) (23,025)
------------------------------------------
Net loans, held for
investment 2,546,624 2,491,759 1,807,221
------------------------------------------
Premises and equipment, net 66,001 67,390 46,036
Other real estate owned and
foreclosed assets 257 569 674
Goodwill 56,404 56,404 -
Other intangible assets, net 14,668 15,317 4,933
Bank owned life insurance 66,034 65,538 49,279
Other assets 23,199 24,100 22,041
------------------------------------------
Total assets $ 3,399,651 $ 3,366,427 $ 2,362,216
==========================================
Liabilities and Stockholders'
Equity
Liabilities:
Deposits:
Noninterest-bearing demand $ 868,189 $ 916,632 $ 631,544
Interest-bearing demand and
NOW 821,518 767,523 392,808
Money market 489,921 484,664 411,582
Savings 178,157 164,478 155,673
Time 407,845 365,787 281,110
------------------------------------------
Total deposits 2,765,630 2,699,084 1,872,717
------------------------------------------
Securities sold under agreement to
repurchase 34,457 36,948 18,730
Federal Home Loan Bank line of
credit borrowing 90,400 124,691 85,900
Federal Home Loan Bank term notes 72,432 72,477 120,000
Subordinated debentures, net 65,002 64,981 25,774
Interest payable and other
liabilities 12,892 15,868 13,576
------------------------------------------
Total liabilities 3,040,813 3,014,049 2,136,697
------------------------------------------
Stockholders' equity:
Common stock and additional
paid-in capital - common
stock 832,846 832,098 713,171
Accumulated deficit (361,592) (367,944) (378,733)
Accumulated other
comprehensive loss (6,416) (6,726) (4,307)
Treasury stock (106,000) (105,050) (104,612)
------------------------------------------
Total stockholders' equity 358,838 352,378 225,519
------------------------------------------
Total liabilities and
stockholders' equity $ 3,399,651 $ 3,366,427 $ 2,362,216
==========================================
GUARANTY BANCORP AND SUBSIDIARIES
Unaudited Consolidated Statements of Operations
Three Months Ended March 31,
----------------------------------
2017 2016
----------------------------------
(In thousands, except share and
per share data)
Interest income:
Loans, including costs and fees $ 27,392 $ 18,854
Investment securities:
Taxable 2,315 1,960
Tax-exempt 1,237 731
Dividends 389 311
Federal funds sold and other 8 4
----------------------------------
Total interest income 31,341 21,860
----------------------------------
Interest expense:
Deposits 1,537 1,007
Securities sold under agreement to
repurchase 17 10
Borrowings 771 623
Subordinated debentures 844 225
----------------------------------
Total interest expense 3,169 1,865
----------------------------------
Net interest income 28,172 19,995
Provision for loan losses 5 16
----------------------------------
Net interest income, after provision
for loan losses 28,167 19,979
Noninterest income:
Deposit service and other fees 3,280 2,169
Investment management and trust 1,521 1,280
Increase in cash surrender value of life
insurance 595 448
Gain on sale of securities - 45
Gain on sale of SBA loans 381 154
Other 625 82
----------------------------------
Total noninterest income 6,402 4,178
Noninterest expense:
Salaries and employee benefits 11,926 8,788
Occupancy expense 1,552 1,375
Furniture and equipment 945 818
Amortization of intangible assets 649 240
Other real estate owned, net 68 2
Insurance and assessments 706 613
Professional fees 974 857
Impairment of long-lived assets 190 -
Other general and administrative 3,519 3,099
----------------------------------
Total noninterest expense 20,529 15,792
----------------------------------
Income before income taxes 14,040 8,365
Income tax expense 4,200 2,510
----------------------------------
Net income $ 9,840 $ 5,855
==================================
Earnings per common share-basic: $ 0.35 $ 0.28
Earnings per common share-diluted: 0.35 0.27
Dividend declared per common share: $ 0.13 $ 0.12
Weighted average common shares
outstanding-basic: 27,867,558 21,184,892
Weighted average common shares
outstanding-diluted: 28,090,179 21,398,559
Contacts:Paul W. TaylorPresident and Chief Executive OfficerGuaranty Bancorp1331 Seventeenth Street, Suite 200Denver, CO 80202(303) 293-5563Christopher G. TreeceE.V.P., Chief Financial Officer and SecretaryGuaranty Bancorp1331 Seventeenth Street, Suite 200Denver, CO 80202(303) 675-1194
Source: Guaranty Bancorp
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