Guaranty Bancorp (GBNK) Announces 2009 Fourth Quarter Financial Results

DENVER, CO–(Marketwire – 01/28/10) – Guaranty Bancorp (NASDAQ:GBNK – News)

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--  Quarterly loss narrowed from the prior quarter to $1.9 million
--  Non-performing loans declined by $21.5 million, or 26.5% from the end
    of the prior quarter, while the Allowance for Loan Losses to Loans
    increased to 3.42%
--  Delinquent loans declined by $39.8 million, or 64.5%
--  Total capital ratio increased to 13.80%, an all-time high
--  Low-cost deposits grew by $50.7 million in the fourth quarter

Guaranty Bancorp (NASDAQ:GBNK – News) today reported a fourth quarter 2009 net loss of $1.9 million, or $0.07 loss per basic and diluted common share, compared to a fourth quarter 2008 net income of $3.8 million, or $0.08 earnings per basic and diluted common share. Included in the basic and diluted common share computation for the fourth quarter 2009 is a $1.4 million preferred stock dividend paid in the form of additional shares of Series A convertible preferred stock. The primary reason for the decrease from the prior year period is an $8.8 million increase in the provision for loan losses. In addition, noninterest expense increased by $4.5 million from the prior year mostly due to greater other real estate owned expenses related to our aggressive disposition strategy and higher FDIC insurance assessments. These increases were partially offset by an increase in tax benefit primarily caused by a reversal of the valuation allowance established in the third quarter 2009 associated with deferred taxes.

Dan Quinn, Guaranty Bancorp President and CEO, stated, “While the results of a particular quarter do not constitute a trend, the results of the fourth quarter were significant as they gave further evidence of the overall improvement in loan quality that began in August of last year. During the fourth quarter, nonperforming loans were reduced by $21.5 million, or 26.5%. Of greater significance was the reduction in delinquent loans from $61.6 million at the end of the third quarter 2009 to $21.8 million at year end, as this suggests that the future inflow of nonperforming loans is slowing. Delinquent loans have declined from 3.9% of loans at September 30, 2009 to 1.4% of loans at December 31, 2009.”

Mr. Quinn continued, “We are also pleased with a $60.9 million increase in deposits during the fourth quarter 2009. Most of this deposit growth was related to overall transaction and savings deposits, which grew by $50.7 million during the fourth quarter 2009. Our net interest margin also increased during the fourth quarter 2009 to 3.26%, compared to 3.14% in the prior quarter. This increase in net interest margin is primarily attributable to an increase in loan yields and a decline in our cost of funds.”

The Company’s net loss for 2009 was $29.2 million, or $0.60 loss per basic and diluted common share, compared to a net loss of $256.7 million or $5.03 loss per basic and diluted common share for the same period in 2008. Included in the basic and diluted common share computation for 2009 is a $1.4 million preferred stock dividend paid in the form of additional shares of Series A convertible preferred stock. The primary cause for the decrease in net loss in 2009 as compared to 2008 is that there was no goodwill impairment charge in 2009 as compared to the $250.7 million goodwill impairment charge recorded during the third quarter 2008. Other differences for 2009 as compared to 2008 include a $16.8 million reduction in net interest income due to lower interest rates and a decrease in earning assets, as well as a $17.3 million increase to the provision for loan losses.

Key Financial Measures

Income Statement

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                         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

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               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

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                          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 re