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Guaranty Bancorp Announces 2010 Annual and Fourth Quarter Financial Results

^{Published on 2011-01-28 17:20:43 - Market Wire}
 

DENVER, CO--(Marketwire - January 28, 2011) - Guaranty Bancorp (NASDAQ: [ GBNK ])

 -- Overall risk profile of the bank continues to improve despite a challenging earnings quarter -- Capital remains strong -- ratios exceed all regulatory "well-capitalized" thresholds -- Our strong liquidity level further improved during 2010 with a $77.4 million increase in cash and investments -- Nonperforming assets decline by 13.4% during the fourth quarter 2010 -- Classified assets decline 22.9% overall throughout 2010 and our internal watch list of potential problem loans declines by 63.0% during 2010 -- Deposits increase by $48.1 million, or 5.1%, during the fourth quarter, excluding time deposits 

Guaranty Bancorp (NASDAQ: [ GBNK ]) today reported a fourth quarter 2010 net loss of $21.1 million, or $0.44 loss per basic and diluted common share including the effect of preferred stock dividends, compared to a fourth quarter 2009 net loss of $1.9 million, or $0.07 loss per basic and diluted common share including the effect of preferred stock dividends.

Dan Quinn, Guaranty Bancorp President and CEO, stated, "We made significant strides in 2010 in reducing the risk profile of the bank, as well as implementing several strategic initiatives, which are expected to improve future performance and revenue generation. Throughout 2010, our classified assets declined by approximately 23% while our watch list loans declined by 63%. At the end of the year, approximately 68% of our classified assets were nonperforming assets, which means that they are in the latter stages of the resolution process. The overall strength of our capital enabled us to aggressively move these nonperforming loans through the collateral disposition process and the pipeline of future problem loans continues to decline as evidenced by a sharp reduction in the dollar amount of loans on our internal watch list. We believe that the charge-offs and reserves taken in 2010 will better enable us to dispose of these nonperforming loans and properties."

Overall financial performance in 2010 was significantly affected by costs associated with reducing the level of our problem assets, including provision for loan losses, legal fees, appraisal costs and write-downs and carrying costs associated with other real estate owned. Some other key items related to our 2010 results include:

 -- Despite the 2010 net loss, the Company continues to exceed the regulatory minimums for a "well capitalized" institution. At December 31, 2010, our total risk-based capital ratio was 14.99% as compared to 13.80% at December 31, 2009. -- Although provision for loan losses increased by $9.5 million in the fourth quarter 2010 as compared to the same quarter in 2009, the overall 2010 provision for loan losses decreased by $16.7 million, or 32.7% from 2009. Further, our overall nonperforming assets and classified assets declined during 2010. -- We took our first-ever other-than-temporary-impairment in the amount of $3.5 million in the fourth quarter 2010. This was related to a local non-rated municipal bond where the underlying affordable housing project was abandoned by the bond's sponsor. 89% of our remaining investment portfolio is comprised of bonds backed by governmental or government-sponsored agencies or securities issued by the Federal Reserve Bank or Federal Home Loan Bank. -- A deferred tax asset valuation allowance was established in the amount of $8.5 million during the fourth quarter 2010. Without this deferred tax asset valuation allowance, our net loss for 2010 would have narrowed by $6.4 million, or 21.4%, from 2009. -- The Company maintains a high level of extremely liquid overnight funds, which increased in both the fourth quarter 2010 and for the year-to-date period in 2010. These liquid overnight funds reduced our fourth quarter 2010 net interest margin by 26 basis points and 2010 net interest margin by 29 basis points. Despite these liquid overnight funds, our net interest margin improved by 21 basis points during 2010. 

Mr. Quinn continued, "Another one of our core strategic initiatives is to increase core deposits. Our thirty-four Colorado branches allow us to focus on growing our retail and business customer base. In addition to increasing the overall number of accounts during 2010, we successfully increased the dollar amount of our demand and savings deposits. We have also reorganized our small and middle-market business loan groups to enable them to more effectively assist businesses within the communities we serve."

The Company's net loss for the year-ended December 31, 2010 was $31.3 million, or $0.72 loss per basic and diluted common share including the effect of preferred stock dividends, as compared to a net loss of $29.2 million, or $0.60 loss per basic and diluted common share for the same period in 2009 including the effect of preferred stock dividends. The loss before income taxes was $37.6 million in 2010 compared to $48.4 million in 2009, an improvement of $10.8 million. The primary causes for the improvement in 2010 are a $16.7 million dollar reduction in the provision for loan losses, a $1.6 million increase in net interest income, a $1.2 million gain recognized on the sale of loans held for sale, as well as declines in most categories of noninterest expense. Partially offsetting these improvements was a $9.0 million increase in OREO expenses related mostly to write-downs and a $3.5 million other-than-temporary-impairment on a local non-rated municipal bond.

Key Financial Measures

Income Statement

 Quarter Ended Year Ended ---------------------------- ------------------ December September December December December 31, 2010 30, 2010 31, 2009 31, 2010 31, 2009 -------- -------- -------- -------- -------- (Dollars in thousands, except per share amounts) Loss before income taxes $(21,133) $ (6,463) $(11,135) $(37,629) $(48,368) Net loss (before preferred stock dividends) (21,133) (4,007) (1,885) (31,339) (29,207) Preferred stock dividends 1,453 1,421 1,389 5,624 1,389 Loss per common share after giving effect to preferred stock dividend-basic & diluted $ (0.44) $ (0.11) $ (0.07) $ (0.72) $ (0.60) Return on average assets (4.32%) (0.81%) (0.35%) (1.57%) (1.42%) Net interest margin 3.39% 3.53% 3.26% 3.47% 3.26% 

Balance Sheet

 December September December 31, 2010 30, 2010 % Change 31, 2009 % Change --------- --------- -------- --------- -------- (Dollars in thousands, except per share amounts) Cash and cash equivalents $ 141,465 $ 109,770 28.9 % $ 234,483 (39.7)% Total investments 418,668 401,131 4.4 % 248,236 68.7 % Total loans, net of unearned discount 1,204,580 1,289,492 (6.6)% 1,519,608 (20.7)% Loans held for sale 14,200 - n/m 9,862 44.0 % Allowance for loan losses (47,069) (41,898) 12.3 % (51,991) (9.5)% Total assets 1,870,052 1,933,146 (3.3)% 2,127,580 (12.1)% Average assets, quarter-to-date 1,940,513 1,962,828 (1.1)% 2,117,257 (8.3)% Total deposits 1,462,351 1,512,479 (3.3)% 1,693,290 (13.6)% Book value per common share 1.76 2.25 (21.8)% 2.50 (29.6)% Tangible book value per common share 1.50 1.97 (23.9)% 2.13 (29.7)% Tangible book value per common share (after giving effect to conversion of preferred stock) 1.62 1.90 (14.7)% 2.00 (19.0)% Book value of preferred stock 64,818 63,372 2.3 % 59,227 9.4 % Liquidation value of preferred stock 66,025 64,579 2.2 % 60,434 9.3 % Equity ratio - GAAP 8.57% 9.60% (10.7)% 9.05% (5.3)% Tangible equity ratio 7.88% 8.88% (11.3)% 8.23% (4.3)% Total risk-based capital ratio 14.99% 15.28% (1.9)% 13.80% 8.6 % 

Net Interest Income and Margin

 Quarter Ended Year Ended ---------------------------- ------------------ December September December December December 31, 2010 30, 2010 31, 2009 31, 2010 31, 2009 -------- -------- -------- -------- -------- (Dollars in thousands) Net interest income $ 15,394 $ 16,196 $ 16,284 $ 64,355 $ 62,773 Interest rate spread 3.02% 3.16% 2.81% 3.09% 2.71% Net interest margin 3.39% 3.53% 3.26% 3.47% 3.26% Net interest margin, fully tax equivalent 3.46% 3.61% 3.34% 3.55% 3.34% 

Fourth quarter 2010 net interest income of $15.4 million decreased by $0.8 million from the third quarter 2010, and decreased by $0.9 million from the fourth quarter 2009. The Company's net interest margin of 3.39% for the fourth quarter 2010 reflected a decrease of 14 basis points from the third quarter 2010 and an increase of 13 basis points from the fourth quarter 2009. On an overall basis, the change in mix of earning assets put downward pressure on our net interest margin. For example, the Company had an average of $153.7 million of liquid overnight funds in 2010 as compared to $75.9 million in 2009. These liquid overnight funds reduced our net interest margin by approximately 29 basis points in 2010 as compared to 12 basis points in 2009.

The decrease in net interest margin in the fourth quarter 2010 as compared to the third quarter 2010 is due mostly to a 24 basis point decline in the yield on earning assets, driven primarily by a change in mix from higher earning loans to lower yielding investment securities and overnight funds. Partially offsetting the decline in yield on earning assets in the fourth quarter was a ten basis point improvement in the cost of our interest bearing liabilities. The decline in net interest income in the fourth quarter 2010 as compared to the third quarter 2010 is due to the $17.5 million decrease in average earning assets coupled with the abovementioned decline in margin over the same period.

Net interest margin increased by 13 basis points in the fourth quarter 2010, as compared to the same quarter in 2009. This increase is primarily the result of a 48 basis point decrease in the cost of our interest bearing liabilities. This decrease is mostly attributable to the 71 basis point decrease in the cost of our certificates of deposit. The decrease in cost of funds was partially offset by a 27 basis point decrease in the yield on earning assets due to a shift from higher yielding loans to lower yielding investment securities and overnight funds. Although net interest margin increased by 13 basis points in the fourth quarter 2010 as compared to the same period in 2009, net interest income declined by $0.9 million over the same period. This decline in net interest income is the result of a $1.1 million favorable rate variance combined with a $2.0 million unfavorable volume variance due to a $180.9 million decrease in average earning assets.

Net interest income for the year ended December 31, 2010 increased by $1.6 million to $64.4 million compared to 2009. This increase was the result of a $11.2 million favorable rate variance offset by a $9.6 million unfavorable volume variance. The favorable rate variance is due to a 21 basis point increase in our net interest margin in 2010 as compared to 2009. The net interest margin improved in 2010 primarily as a result of a 68 basis point decrease in the cost of interest bearing liabilities, strongly influenced by a 118 basis point decline in the cost of time deposits. Also influencing the increase in net interest margin was a 22 basis point increase in loan yields. Despite the 22 basis point increase in loan yields the overall yield on earning assets declined by 30 basis points in 2010 as compared to 2009 due to change in mix from higher yielding loans to lower yielding investment securities and overnight funds. The decrease in average loan balances is also the primary cause of the unfavorable volume variance.

Noninterest Income

The following table presents noninterest income as of the dates indicated:

 Quarter Ended Year Ended ---------------------------- ------------------ December September December December December 31, 2010 30, 2010 31, 2009 31, 2010 31, 2009 -------- --------- -------- -------- -------- (In thousands) Noninterest income: Customer service and other fees $ 2,430 $ 2,343 $ 2,206 $ 9,241 $ 9,520 Gain (loss) on sale of securities 216 82 (1) 313 (2) Gain on sale of loans - - - 1,196 - Other-than-temporary -impairment (OTTI) of securities (3,500) - - (3,500) - Other 256 128 127 852 861 -------- --------- -------- -------- -------- Total noninterest income $ (598) $ 2,553 $ 2,332 $ 8,102 $ 10,379 ======== ========= ======== ======== ======== 

The $3.2 million decrease in noninterest income in the fourth quarter as compared to the third quarter 2010 is mostly due to a $3.5 million credit-related other-than-temporary-impairment (OTTI) recognized on a single, non-rated municipal bond. The sponsor of this local revenue bond made a decision to abandon the underlying project, thereby causing a default to occur in the fourth quarter when they failed to make scheduled interest payments.

The $2.3 million decrease in noninterest income between 2009 and 2010 is primarily attributable to the $3.5 million OTTI discussed above, partially offset by a $1.2 million gain recognized on the sale of loans in the second quarter 2010.

Noninterest Expense

The following table presents noninterest expense as of the dates indicated:

 Quarter Ended Year Ended --------------------------- ----------------- December September December December December 31, 2010 30, 2010 31, 2009 31, 2010 31, 2009 -------- --------- -------- -------- -------- (In thousands) Noninterest expense: Salaries and employee benefits $ 6,456 $ 6,551 $ 6,560 $ 26,042 $ 26,547 Occupancy expense 1,783 1,890 1,854 7,399 7,609 Furniture and equipment 927 850 1,060 3,720 4,441 Amortization of intangible assets 1,283 1,285 1,556 5,168 6,278 Other real estate owned 1,209 7,836 3,281 14,909 5,898 Insurance and assessment 1,336 1,596 1,612 6,569 6,536 Professional fees 824 677 963 3,117 3,224 Other general and administrative 2,611 2,027 2,860 8,762 9,872 -------- --------- -------- -------- -------- Total noninterest expense $ 16,429 $ 22,712 $ 19,746 $ 75,686 $ 70,405 ======== ========= ======== ======== ======== 

The $6.3 million decrease in noninterest expense in the fourth quarter 2010 as compared to the third quarter 2010 is due mostly to a $6.6 million decrease in expenses related to other real estate owned and a decrease of $0.3 million in insurance and assessments, partially offset by a $0.6 million increase in other general and administrative expenses. The decrease in other real estate owned expense is due mostly to a significant reduction in net write-downs on other real estate owned properties resulting from valuation adjustments and sales. The decrease in insurance and assessments is due mostly to a $0.3 million, or 23.8%, decrease in FDIC insurance costs. The $0.6 million increase in other general and administrative expense is primarily related to increased collection and litigation expenses incurred in relation to problem assets. All other categories of expense declined or remained relatively flat in the fourth quarter 2010 as compared to the third quarter 2010.

The $3.3 million decrease in noninterest expense in the fourth quarter 2010 as compared to the same period in 2009 is primarily the result of a $2.1 million decrease in other real estate owned expense as well as smaller decreases in all other categories of noninterest expense.

Noninterest expense for the year ended December 31, 2010 increased by $5.3 million compared to the same period in 2009 primarily due to a $9.0 million increase in expenses associated with other real estate owned, partially offset by decreases in nearly all other categories of noninterest expense. The increase in other real estate owned expenses is due mostly to greater write-downs related to valuation adjustments and sales.

Preferred Stock Dividend

Effective November 15, 2010, 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 $1.5 million.

Balance Sheet

 December September % December % 31, 2010 30, 2010 Change 31, 2009 Change ---------- ---------- ------ ---------- ------ (Dollars in thousands, except per share amounts) Total assets $1,870,052 $1,933,146 (3.3)% $2,127,580 (12.1)% Average assets, quarter-to-date 1,940,513 1,962,828 (1.1)% 2,117,257 (8.3)% Loans, net of unearned discount 1,204,580 1,289,492 (6.6)% 1,519,608 (20.7)% Total deposits 1,462,351 1,512,479 (3.3)% 1,693,290 (13.6)% Equity ratio - GAAP 8.57% 9.60% (10.7)% 9.05% (5.3)% Tangible equity ratio 7.88% 8.88% (11.3)% 8.23% (4.3)% 

At December 31, 2010, the Company had total assets of $1.9 billion, which represented a $63.1 million decline as compared to September 30, 2010 and a $257.5 million decrease as compared to December 31, 2009. The decline in assets from December 31, 2009 is mostly due to a $315.0 million decline in loans, net of unearned discount, partially offset by a $168.4 million increase in available for sale securities over the same time period. This loan decline was due mostly to a $170.3 million decline in commercial loans and a $132.6 million decline in real estate loans. The increase in securities is nearly all related to purchases of mortgage-backed government agency or government-sponsored agency securities.

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, 2010 2010 2009 ----------- ----------- ----------- (In thousands) Loans on real estate: Residential and commercial $ 680,895 $ 740,106 $ 760,719 Construction 57,351 56,624 105,612 Equity lines of credit 50,289 51,903 54,852 Commercial loans 350,725 370,281 521,016 Agricultural loans 14,413 16,088 18,429 Lease financing 3,143 4,014 4,011 Installment loans to individuals 28,582 30,303 36,175 Overdrafts 565 627 358 SBA and other 20,443 21,595 20,997 ----------- ----------- ----------- 1,206,406 1,291,541 1,522,169 Unearned discount (1,826) (2,049) (2,561) ----------- ----------- ----------- Loans, net of unearned discount $ 1,204,580 $ 1,289,492 $ 1,519,608 =========== =========== =========== 

Since December 31, 2009, the ratio of construction, land and land development loans to capital has fallen by 25 percentage points to 85% at December 31, 2010. Similarly, the ratio of commercial real estate loans to capital has fallen by 29 percentage points to 300% at December 31, 2010. These ratios have now fallen to levels below or equal to the regulatory commercial real estate concentration guidelines of 100% for land and construction loans and 300% for all investor real estate loans and are expected to continue to further decline throughout the first two quarters of 2011.

The following table sets forth the amounts of our deposits outstanding at the dates indicated:

 December September December 31, 2010 30, 2010 31, 2009 ----------- ----------- ----------- (In thousands) Noninterest-bearing deposits $ 374,500 $ 358,447 $ 366,103 Interest-bearing demand 178,042 165,000 171,844 Money market 357,036 340,706 352,127 Savings 79,100 76,429 71,816 Time 473,673 571,897 731,400 ----------- ----------- ----------- Total deposits $ 1,462,351 $ 1,512,479 $ 1,693,290 =========== =========== =========== 

Noninterest-bearing deposits as a percentage of total deposits increased to 25.6% at December 31, 2010, as compared to 21.6% at December 31, 2009.

Deposits, other than time deposits, increased by $26.8 million, at December 31, 2010 as compared to December 31, 2009 and increased by $48.1 million as compared to September 30, 2010. The increases in deposits were primarily attributable to a business and retail strategic deposit gathering campaign which began in the third quarter of 2009 and continued throughout all of 2010. We plan to continue this deposit campaign, which includes a variety of different advertising media, in 2011.

Time deposits decreased during 2010 primarily as a result of management's efforts to reduce the overall level of higher cost time deposits, including brokered and internet deposits. Total brokered deposits at December 31, 2010 were $179.9 million as compared to $291.3 million at December 31, 2009. In addition to this $111.4 million decline in brokered deposits, we also experienced a $60.2 million decline in internet time deposits. The remaining decline in time deposits is primarily related to the non-renewal of other higher cost certificates of deposits.

Borrowings were $163.2 million at December 31, 2010 as compared to $164.2 million at September 30, 2010 and $164.4 million at December 31, 2009. The entire balance of borrowings at each balance sheet date consisted of term advances with the Federal Home Loan Bank.

Regulatory Capital Ratios

All of the regulatory capital ratios are above the highest regulatory capital threshold of "well-capitalized" at December 31, 2010. The Company's and the subsidiary bank's actual capital ratios for December 31, 2010 and December 31, 2009 are presented in the table below:

 Minimum Requirement Ratio at Ratio at Minimum for "Well December December Capital Capitalized" 31, 2010 31, 2009 Requirement Institution ----------- ----------- ----------- ----------- Total Risk-Based Capital Ratio: Consolidated 14.99% 13.80% 8.00% N/A Guaranty Bank and Trust Company 14.07% 12.82% 8.00% 10.00% Tier 1 Risk-Based Capital Ratio: Consolidated 8.55% 9.43% 4.00% N/A Guaranty Bank and Trust Company 12.80% 11.55% 4.00% 6.00% Leverage Ratio: Consolidated 6.23% 7.89% 4.00% N/A Guaranty Bank and Trust Company 9.33% 9.66% 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, 2010, approximately $29.3 million of the subsidiary bank's allowance for loan losses was disallowed from being included in total risk-based capital under the regulatory capital rules, or approximately 2.08% of the subsidiary bank'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 December 31, 2010 30, 2010 2010 31, 2010 31, 2009 -------- -------- ------- -------- -------- (Dollars in thousands) Nonaccrual loans, not restructured $ 74,304 $ 65,921 $64,339 $ 70,500 $59,584 Other nonperforming loans 3,317 4,420 1,065 558 123 -------- -------- ------- -------- ------- Total nonperforming loans (NPLs) $ 77,621 $ 70,341 $65,404 $ 71,058 $59,707 Other real estate owned and foreclosed assets 22,898 45,700 30,298 30,918 37,192 -------- -------- ------- -------- ------- Total nonperforming assets (NPAs) $100,519 $116,041 $95,702 $101,976 $96,899 ======== ======== ======= ======== ======= Accruing loans past due 90 days or more (1) $ 3,317 $ 4,420 $ 1,065 $ 558 $ 123 ======== ======== ======= ======== ======= Accruing loans past due 30-89 days (1) $ 21,555 $ 21,876 $33,050 $ 21,956 $21,709 ======== ======== ======= ======== ======= Allowance for loan losses $ 47,069 $ 41,898 $46,866 $ 52,015 $51,991 ======== ======== ======= ======== ======= Selected ratios: NPLs to loans, net of unearned discount 6.44% 5.45% 4.76% 4.95% 3.93% NPAs to total assets 5.38% 6.00% 4.82% 5.02% 4.55% Allowance for loan losses to NPAs 46.83% 36.11% 48.97% 51.01% 53.65% Allowance for loan losses to NPLs 60.64% 59.56% 71.66% 73.20% 87.08% Allowance for loan losses to loans, net of unearned discount 3.91% 3.25% 3.41% 3.62% 3.42% Loans 30-89 days past due to loans, net of unearned discount 1.79% 1.70% 2.40% 1.53% 1.43% (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 are in the process of renewal, but continue to be current with respect to payments. 

The $22.8 million decrease in other real estate owned at December 31, 2010 as compared to September 30, 2010, is primarily attributable to the sale of two properties valued at $17.6 million and $4.2 million in November 2010.

The types of nonperforming loans (excluding loans held for sale) as of December 31, 2010 and September 30, 2010 are as follows:

 Nonperforming Loans ----------------------------------------------------- December 31, 2010 September 30, 2010 -------------------------- -------------------------- Loan Related Loan Related Balance Percent Allowance Balance Percent Allowance -------- ------- -------- -------- ------- -------- (Amounts in thousands) Residential Construction, Land and Land Development $ 7,254 9.3% $ 295 $ 7,949 11.3% $ 718 Other Residential Loans 7,524 9.7% 583 4,814 6.8% 492 Commercial and Industrial Loans 19,955 25.7% 1,940 12,641 18.0% 1,784 Commercial Real Estate 42,833 55.2% 3,840 44,887 63.8% 541 Other 55 0.1% 1 50 0.1% 4 -------- ------- -------- -------- ------- -------- Total $ 77,621 100.0% $ 6,659 $ 70,341 100.0% $ 3,539 ======== ======= ======== ======== ======= ======== 

The $7.3 million increase in nonperforming loans during the fourth quarter 2010 is mostly due to the result of placing two loans relationships with an aggregate value of $21.6 million on nonaccrual status, offset by other reductions and charge-offs. We anticipate on disposing of up to $15.8 million of nonperforming loans and other real estate owned during the first quarter 2011, with further dispositions expected in the second quarter 2011.

The types of loans included in the accruing loans past due 30-89 days as of December 31, 2010 and September 30, 2010 are as follows:

 Accruing loans past due 30-89 days -------------------------------------- December 31, 2010 September 30, 2010 -------------------------------------- Loan Loan Balance Percent Balance Percent -------- ------- ---------- --------- (Amounts in thousands) Residential Construction, Land and Land Development $ 2,770 12.9% $ 3,761 17.2% Other Residential Loans 1,444 6.7% 1,602 7.3% Commercial and Industrial Loans 7,594 35.2% 3,557 16.3% Commercial Real Estate 4,047 18.8% 12,168 55.6% Other 5,700 26.4% 788 3.6% -------- ------- ---------- --------- Total $ 21,555 100.0% $ 21,876 100.0% ======== ======= ========== ========= 

Net charge-offs in the fourth quarter 2010 were $14.3 million, of which $5.1 million relates to the bank's held-for-sale loan. The fourth quarter charge-offs are primarily a result of updated appraisals or valuations, which will better position the Company to more quickly dispose of its problem assets. Net charge-offs were $7.1 million in the same quarter last year and $7.5 million in the third quarter 2010. On a year-to-date basis, net charge-offs were $39.3 million in 2010 as compared to $44.1 million in 2009.

In addition to the $6.7 million of allowance specifically allocated to impaired loans, the Company has partially charged-off $11.9 million of the impaired loans on the balance sheet as of December 31, 2010. Although these partial charge-offs significantly reduced the specific component of our allowance for loan losses, they had the opposite effect on the general component of the allowance for loan losses. As the fourth quarter 2010 charge-offs exceeded the amount of charge-offs that rolled off of our historical loss computation, the general component of the allowance for loan losses increased to $40.4 million at December 31, 2010, or 3.36% of loans, net of unearned discount, as compared to $38.4 million, or 2.98% of loans, net of unearned discount, at the end of the previous quarter.

The Company recorded a provision for loan losses in the fourth quarter 2010 of $19.5 million, as compared to $2.5 million in the third quarter 2010 and $10.0 million in the fourth quarter 2009. The increase in the provision for loan losses was the result of the heightened level of fourth quarter charge-offs on the historical loss component of the allowance, as well as an increase in the specific allowance related to impaired loans.

Shares Outstanding

As of December 31, 2010, the Company had 53,373,383 shares of common stock outstanding, including 1,768,186 shares of unvested stock awards, but excluding 156,567 shares of common stock to be issued under its deferred compensation plan. In addition, the Company had 66,025 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 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 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:

 December September December 31, 2010 30, 2010 31, 2009 ----------- ----------- ----------- (Dollars in thousands, except per share amounts) Tangible Book Value per Common Share Total stockholders' equity $ 160,283 $ 185,594 $ 192,638 Less: Preferred share liquidation preference (66,025) (64,579) (60,434) ----------- ----------- ----------- Stockholders' equity attributable to common shares 94,258 121,015 132,204 Less: Intangible assets (14,054) (15,337) (19,222) ----------- ----------- ----------- Tangible common equity $ 80,204 $ 105,678 $ 112,982 =========== =========== =========== Number of common shares outstanding and to be issued 53,529,950 53,694,478 52,952,703 Book value per common share $ 1.76 $ 2.25 $ 2.50 Tangible book value per common share $ 1.50 $ 1.97 $ 2.13 Total Stockholders' equity $ 160,283 $ 185,594 $ 192,638 Less: Intangible assets (14,054) (15,337) (19,222) ----------- ----------- ----------- Tangible common equity (after giving effect to conversion of preferred stock) $ 146,229 $ 170,257 $ 173,416 =========== =========== =========== Number of shares of preferred stock outstanding 66,025 64,579 60,434 Number of shares of common stock to be issued upon conversion of preferred stock 36,680,556 35,877,222 33,574,444 Total number of shares of common stock outstanding and to be issued (after giving effect to conversion of preferred stock) 90,210,506 89,571,700 86,527,147 Tangible book value per common share (after giving effect to conversion of preferred stock) $ 1.62 $ 1.90 $ 2.00 Tangible Equity Ratio December September December 31, 2010 30, 2010 31, 2009 ----------- ----------- ----------- (Dollars in thousands, except per share amounts) Total stockholders' equity $ 160,283 $ 185,594 $ 192,638 Less: Intangible assets (14,054) (15,337) (19,222) ----------- ----------- ----------- Tangible equity $ 146,229 $ 170,257 $ 173,416 =========== =========== =========== Total assets $ 1,870,052 $ 1,933,146 $ 2,127,580 Less: Intangible assets (14,054) (15,337) (19,222) ----------- ----------- ----------- Tangible assets $ 1,855,998 $ 1,917,809 $ 2,108,358 =========== =========== =========== Equity ratio - GAAP (Total stockholders' equity / total assets) 8.57% 9.60% 9.05% Tangible equity ratio (Tangible equity / tangible assets) 7.88% 8.88% 8.23% 

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, 2010 2010 2009 ------------ ------------ ------------ (In thousands) Assets Cash and due from banks $ 141,465 $ 109,770 $ 234,483 Securities available for sale, at fair value 389,530 370,555 221,134 Securities held to maturity 11,927 13,346 9,942 Bank stocks, at cost 17,211 17,230 17,160 ------------ ------------ ------------ Total investments 418,668 401,131 248,236 ------------ ------------ ------------ Loans, net of unearned discount 1,204,580 1,289,492 1,519,608 Less allowance for loan losses (47,069) (41,898) (51,991) ------------ ------------ ------------ Net loans 1,157,511 1,247,594 1,467,617 ------------ ------------ ------------ Loans held for sale 14,200 - 9,862 Premises and equipment, net 57,399 58,044 60,267 Other real estate owned and foreclosed assets 22,898 45,700 37,192 Other intangible assets, net 14,054 15,337 19,222 Other assets 43,857 55,570 50,701 ------------ ------------ ------------ Total assets $ 1,870,052 $ 1,933,146 $ 2,127,580 ============ ============ ============ Liabilities and Stockholders' Equity Liabilities: Deposits: Noninterest-bearing demand $ 374,500 $ 358,447 $ 366,103 Interest-bearing demand 535,078 505,706 523,971 Savings 79,100 76,429 71,816 Time 473,673 571,897 731,400 ------------ ------------ ------------ Total deposits 1,462,351 1,512,479 1,693,290 ------------ ------------ ------------ Securities sold under agreements to repurchase and federal funds purchased 30,113 17,951 22,990 Borrowings 163,239 164,242 164,364 Subordinated debentures 41,239 41,239 41,239 Interest payable and other liabilities 12,827 11,641 13,059 ------------ ------------ ------------ Total liabilities 1,709,769 1,747,552 1,934,942 ------------ ------------ ------------ Stockholders' equity: Preferred stock and Additional paid-in capital - Preferred stock 64,818 63,372 59,227 Common stock and Additional paid-in capital - Common stock 619,509 619,240 618,408 Shares to be issued for deferred compensation obligations 237 237 199 Accumulated deficit (419,562) (396,976) (382,599) Accumulated other comprehensive income (loss) (2,220) 2,209 (143) Treasury Stock (102,499) (102,488) (102,454) ------------ ------------ ------------ Total stockholders' equity 160,283 185,594 192,638 ------------ ------------ ------------ Total liabilities and stockholders' equity $ 1,870,052 $ 1,933,146 $ 2,127,580 ============ ============ ============ GUARANTY BANCORP AND SUBSIDIARIES Unaudited Consolidated Statements of Operations Three Months Ended Year Ended December 31, December 31, ---------------------- ---------------------- 2010 2009 2010 2009 ---------- ---------- ---------- ---------- (In thousands, except share and per share data) Interest income: Loans, including fees $ 17,217 $ 21,631 $ 76,462 $ 89,625 Investment securities: Taxable 2,604 1,412 7,701 3,479 Tax-exempt 556 738 2,662 3,033 Dividends 171 155 723 825 Federal funds sold and other 93 115 389 193 ---------- ---------- ---------- ---------- Total interest income 20,641 24,051 87,937 97,155 ---------- ---------- ---------- ---------- Interest expense: Deposits 3,207 5,786 15,602 26,402 Securities sold under agreement to repurchase and federal funds purchased 30 42 132 140 Borrowings 1,323 1,328 5,267 5,284 Subordinated debentures 687 611 2,581 2,556 ---------- ---------- ---------- ---------- Total interest expense 5,247 7,767 23,582 34,382 ---------- ---------- ---------- ---------- Net interest income 15,394 16,284 64,355 62,773 Provision for loan losses 19,500 10,005 34,400 51,115 ---------- ---------- ---------- ---------- Net interest income, after provision for loan losses (4,106) 6,279 29,955 11,658 Noninterest income: Customer service and other fees 2,430 2,206 9,241 9,520 Gain (loss) on sale of securities 216 (1) 313 (2) Gain on sale of loans - - 1,196 - Other-than-temporary- impairment (OTTI) of securities (3,500) - (3,500) - Other 256 127 852 861 ---------- ---------- ---------- ---------- Total noninterest income (598) 2,332 8,102 10,379 Noninterest expense: Salaries and employee benefits 6,456 6,560 26,042 26,547 Occupancy expense 1,783 1,854 7,399 7,609 Furniture and equipment 927 1,060 3,720 4,441 Amortization of intangible assets 1,283 1,556 5,168 6,278 Other real estate owned, net 1,209 3,281 14,909 5,898 Insurance and assessments 1,336 1,612 6,569 6,536 Professional fees 824 963 3,117 3,224 Other general and administrative 2,611 2,860 8,762 9,872 ---------- ---------- ---------- ---------- Total noninterest expense 16,429 19,746 75,686 70,405 ---------- ---------- ---------- ---------- Loss before income taxes (21,133) (11,135) (37,629) (48,368) Income tax benefit - (9,250) (6,290) (19,161) ---------- ---------- ---------- ---------- Net loss (21,133) (1,885) (31,339) (29,207) Preferred stock dividends (1,453) (1,389) (5,624) (1,389) ---------- ---------- ---------- ---------- Net loss applicable to common stockholders $ (22,586) $ (3,274) $ (36,963) $ (30,596) ========== ========== ========== ========== Loss per common share-basic: $ (0.44) $ (0.07) $ (0.72) $ (0.60) Loss per common share-diluted: (0.44) (0.07) (0.72) (0.60) Weighted average common shares outstanding-basic 51,717,834 51,468,231 51,671,281 51,378,360 Weighted average common shares outstanding-diluted 51,717,834 51,468,231 51,671,281 51,378,360 GUARANTY BANCORP AND SUBSIDIARIES Unaudited Consolidated Average Balance Sheets ----------------------------------- ----------------------- QTD Average YTD Average ----------------------------------- ----------------------- December September December December December 31, 2010 30, 2010 31, 2009 31, 2010 31, 2009 ---------- ----------- ------------ ----------- ----------- (In thousands) Assets Interest earning assets Loans, net of unearned discount $ 1,259,392 $ 1,351,752 $ 1,578,761 $ 1,379,917 $ 1,686,136 Securities 402,101 345,650 228,608 320,434 164,094 Other earning assets 141,025 122,658 176,049 153,679 75,887 ---------- ----------- ------------ ----------- ----------- Average earning assets 1,802,518 1,820,060 1,983,418 1,854,030 1,926,117 Other assets 137,995 142,768 133,839 137,992 128,168 ---------- ----------- ------------ ----------- ----------- Total average assets $ 1,940,513 $ 1,962,828 $ 2,117,257 $ 1,992,022 $ 2,054,285 =========== =========== =========== =========== =========== Liabilities and Stockholders' Equity Average liabilities: Average deposits: Noninterest- bearing deposits $ 374,004 $ 347,288 $ 363,177 $ 356,632 $ 387,597 Interest- bearing deposits 1,137,216 1,181,290 1,320,410 1,204,239 1,252,903 ---------- ----------- ------------ ----------- ----------- Average deposits 1,511,220 1,528,578 1,683,587 1,560,871 1,640,500 Other interest- bearing liabilities 228,375 223,047 223,835 224,934 223,703 Other liabilities 14,604 20,543 11,979 15,591 11,671 ---------- ----------- ------------ ----------- ----------- Total average liabilities 1,754,199 1,772,168 1,919,401 1,801,396 1,875,874 Average stockholders' equity 186,314 190,660 197,856 190,626 178,411 ---------- ----------- ------------ ----------- ----------- Total average liabilities and stockholders' equity $ 1,940,513 $ 1,962,828 $ 2,117,257 $ 1,992,022 $ 2,054,285 =========== =========== =========== =========== =========== GUARANTY BANCORP Unaudited Credit Quality Measures Quarter Ended ----------------------------------------------------- December September June March December 31, 2010 30, 2010 30, 2010 31, 2010 31, 2009 --------- --------- --------- --------- --------- (Dollars in thousands) Nonaccrual loans and leases, not restructured $ 74,304 $ 65,921 $ 64,339 $ 70,500 $ 59,584 Other nonperforming loans 3,317 4,420 1,065 558 123 --------- --------- --------- --------- --------- Total nonperforming loans $ 77,621 $ 70,341 $ 65,404 $ 71,058 $ 59,707 --------- --------- --------- --------- --------- Other real estate owned and foreclosed assets 22,898 45,700 30,298 30,918 37,192 --------- --------- --------- --------- --------- Total nonperforming assets $ 100,519 $ 116,041 $ 95,702 $ 101,976 $ 96,899 ========= ========= ========= ========= ========= Impaired loans $ 77,621 $ 70,341 $ 65,404 $ 71,058 $ 59,707 Allocated allowance for loan losses (6,659) (3,539) (3,716) (10,802) (6,603) --------- --------- --------- --------- --------- Net investment in impaired loans $ 70,962 $ 66,802 $ 61,688 $ 60,256 $ 53,104 ========= ========= ========= ========= ========= Accruing loans past due 90 days or more $ 3,317 $ 4,420 $ 1,065 $ 558 $ 123 ========= ========= ========= ========= ========= Accruing loans past due 30-89 days $ 21,555 $ 21,876 $ 33,050 $ 21,956 $ 21,709 ========= ========= ========= ========= ========= Charged-off loans $ 14,635 $ 7,953 $ 13,918 $ 4,271 $ 7,618 Recoveries (306) (485) (369) (295) (566) --------- --------- --------- --------- --------- Net charge-offs $ 14,329 $ 7,468 $ 13,549 $ 3,976 $ 7,052 ========= ========= ========= ========= ========= Provision for loan loss $ 19,500 $ 2,500 $ 8,400 $ 4,000 $ 10,005 ========= ========= ========= ========= ========= Allowance for loan losses $ 47,069 $ 41,898 $ 46,866 $ 52,015 $ 51,991 ========= ========= ========= ========= ========= Allowance for loan losses to loans, net of unearned discount 3.91% 3.25% 3.41% 3.62% 3.42% Allowance for loan losses to nonaccrual loans 63.35% 63.56% 72.84% 73.78% 87.26% Allowance for loan losses to nonperforming assets 46.83% 36.11% 48.97% 51.01% 53.65% Allowance for loan losses to nonperforming loans 60.64% 59.56% 71.66% 73.20% 87.08% Nonperforming assets to loans, net of unearned discount, and other real estate owned 8.19% 8.69% 6.81% 6.96% 6.22% Nonperforming assets to total assets 5.38% 6.00% 4.82% 5.02% 4.55% Nonaccrual loans to loans, net of unearned discount 6.17% 5.11% 4.68% 4.91% 3.92% Nonperforming loans to loans, net of unearned discount 6.44% 5.45% 4.76% 4.95% 3.93% Annualized net charge-offs to average loans 4.51% 2.19% 3.83% 1.08% 1.77%