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Guaranty Bancorp Announces Second Quarter 2018 Financial Results

  • Continued improvement in profitability evidenced by a return on average assets of 1.43% in the second quarter 2018 compared to 1.19% in the second quarter 2017
  • Significant net income growth of $3.1 million, or 31.0% to $13.3 million compared to $10.1 million of net income in the second quarter 2017
  • Sustained improvement in efficiency ratio, decreasing to 50.73% in the second quarter 2018
  • On May 22, 2018 the planned acquisition by Independent Bank Group, Inc., expected to close in the fourth quarter 2018, was announced

DENVER, July 18, 2018 (GLOBE NEWSWIRE) — Guaranty Bancorp (Nasdaq:GBNK) (“we”, “our” or “the Company”), a community bank holding company based in Colorado, today announced second quarter 2018 net income of $13.3 million, or $0.46 per basic and diluted common share, compared to net income of $10.1 million, or $0.36 per basic and diluted common share, in the second quarter 2017. The $3.1 million increase in second quarter 2018 net income, compared to the same quarter in 2017, was primarily attributable to higher net interest income resulting from higher average loan balances, increased loan yields, and a reduced tax rate.

On an operating basis1, the Company’s second quarter 2018 return on average assets was 1.52% compared to 1.21% for the same quarter in 2017. On a GAAP basis, the Company’s return on average assets was 1.43% in the second quarter 2018 compared to 1.19% for the same quarter in 2017. The difference between the Company’s second quarter 2018 operating and GAAP return on average assets is primarily attributable to $1.0 million in merger-related expenses incurred in the second quarter 2018.

“Once again, we are very pleased with our second quarter results,” said Paul W. Taylor, President and Chief Executive Officer of Guaranty Bancorp. “We achieved significant improvement in profitability with an exceptional operating return on average assets1 of 1.52% for the second quarter 2018 compared to 1.21% for the same quarter in 2017. In addition, our improved efficiency ratio of 50.73% in the second quarter 2018, compared to 53.77% during the same quarter in 2017, further demonstrates our focus on expense management. Our net income growth of $3.1 million, or 31% to $13.3 million compared to second quarter 2017 was a direct result of our success in expanding our customer relationships and gaining market share.”

Taylor continued, “Gross loan production during the quarter was strong, up 18% or $42.4 million quarter-over-quarter to $275.5 million. Due to the continued dynamic economy in Colorado, paydowns and maturities jumped during the quarter to $246.1 million.  On a net basis, loans increased by $29.3 million, or 4.1% on an annualized basis during the quarter. We are excited to build upon this success by joining together with Independent Bank Group, Inc., one of the premier community banks in the nation.”  
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1 This press release contains certain 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. See the “Non-GAAP Financial Measures” section later in this press release for a definition of operating earnings and other non-GAAP measures.

Key Financial Measures

Income Statement

    Three Months Ended       Six Months Ended  
    June 30,     March 31,     June 30,       June 30,     June 30,  
    2018     2018     2017       2018     2017  
                                 
    (Dollars in thousands, except per share amounts)  
Net income $ 13,263   $ 13,557   $ 10,125     $ 26,820   $ 19,965  
Operating earnings (1)   14,116     13,440     10,232       27,556     20,064  
Earnings per common share – diluted   0.46     0.47     0.36       0.92     0.71  
Earnings per common share – diluted – operating (1)   0.49     0.46     0.36       0.95     0.71  
Return on average assets   1.43 %   1.48 %   1.19 %     1.45 %   1.19 %
Return on average assets – operating (1)   1.52 %   1.47 %   1.21 %     1.49 %   1.19 %
Return on average equity   12.79 %   13.45 %   11.13 %     13.12 %   11.15 %
Return on average equity – operating (1)   13.61 %   13.33 %   11.25 %     13.48 %   11.20 %
Net interest margin   3.80 %   3.77 %   3.74 %     3.79 %   3.69 %
Net interest margin, fully tax equivalent (2)   3.87 %   3.84 %   3.85 %     3.86 %   3.80 %
Efficiency ratio – tax equivalent (3)   50.73 %   52.91 %   53.77 %     51.81 %   54.53 %
Average cost of interest-bearing liabilities                                
(including noninterest-bearing deposits)   0.59 %   0.52 %   0.46 %     0.56 %   0.44 %
Average cost of deposits                                
(including noninterest-bearing deposits)   0.38 %   0.31 %   0.26 %     0.34 %   0.25 %
Assets under management $ 1,502   $ 1,465   $ 792     $ 1,502   $ 792  
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(1) See reconciliation of non-GAAP financial measures to the corresponding GAAP measurement in “Non-GAAP Financial Measures” later in this document.  
(2) 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 24.66% for 2018 and 38% for 2017.  
(3) The efficiency ratio equals noninterest expense adjusted to exclude amortization of intangible assets, prepayment penalties on long-term debt, impairment of long-lived assets, litigation-related settlements 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

    June 30,       March 31,       December 31,       September 30,       June 30,  
    2018      2018      2017      2017      2017  
    (Dollars in thousands, except per share amounts)
Total investments $ 598,316       $ 598,391       $ 614,312       $ 576,459       $ 569,812    
Total loans, net of deferred costs and fees   2,876,721         2,847,465         2,807,388         2,661,866         2,578,472    
Allowance for loan losses   (23,750 )       (23,350 )       (23,250 )       (22,900 )       (23,125 )  
Total assets   3,775,967         3,721,651         3,698,890         3,510,046         3,403,852    
Total deposits   2,947,795         3,031,714         2,941,627         2,898,060         2,763,623    
Book value per common share   14.29         14.01         13.86         13.21         12.94    
Tangible book value per common share (1)   11.41         11.09         11.13         10.75         10.46    
Equity ratio – GAAP   11.10   %     11.03   %     10.95   %     10.69   %     10.80   %
Tangible common equity ratio (1)   9.06   %     8.93   %     8.99   %     8.88   %     8.91   %
Total risk-based capital ratio   13.51   %     13.31   %     13.36   %     13.50   %     13.65   %
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(1) See reconciliation of non-GAAP financial measures to the corresponding GAAP measurement in “Non-GAAP Financial Measures” later in this document.
 

Net Interest Income and Margin

The following tables present, 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.

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  Three Months Ended     Three Months Ended     Three Months Ended  
    June 30, 2018       March 31, 2018       June 30, 2017  
    Average
Balance
  Interest
Income or
Expense
Average
Yield or
Cost
      Average
Balance
  Interest
Income or
Expense
Average
Yield or
Cost
      Average
Balance
  Interest
Income or
Expense
Average
Yield or
Cost
 
                                         
    (Dollars in thousands)  
Assets:                                        
Interest-earning assets:                                        
Gross loans, net of deferred costs                                        
and fees (1)(3) $ 2,858,683 $ 33,549 4.71 %   $ 2,835,485 $ 32,115 4.59 %   $ 2,581,043 $ 28,976 4.50 %
Investment securities (1)