Guaranty Bancorp: First Quarter 2017 Financial Results

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News Desk 2018

Apr 19, 2017 at 6:00 PM 126

DENVER, CO --(Marketwired - April 19, 2017) -

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


		March 31,			December 31,			September 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 March 31, 2017						Three Months Ended December 31, 2016						Three Months Ended March 31, 2016
				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)(2)(3)		$	2,540,421	$	27,392	4.37	%	$	2,421,057	$	27,043	4.44	%	$	1,818,001	$	18,854	4.17	%
	Investment securities ⁽¹⁾
		Taxable		361,799		2,315	2.59	%		352,248		2,171	2.45	%		301,604		1,960	2.61	%
		Tax-exempt		202,094		1,237	2.48	%		204,555		1,224	2.38	%		90,929		731	3.23	%
	Bank Stocks ⁽⁴⁾			24,237		389	6.51	%		16,923		234	5.50	%		20,901		311	5.98	%
	Other earning assets			4,097		8	0.79	%		98,920		128	0.51	%		2,812		4	0.57	%
	Total interest-earning assets			3,132,648		31,341	4.06	%		3,093,703		30,800	3.96	%		2,234,247		21,860	3.94	%
Non-earning assets:
	Cash and due from banks			35,533						36,494						24,982
	Other assets			205,972						205,946						99,951
Total assets			$	3,374,153					$	3,336,143					$	2,359,180

LIABILITIES AND STOCKHOLDERS' EQUITY:
Interest-bearing liabilities:
	Deposits:
		Interest-bearing demand and NOW	$	772,880	$	357	0.19	%	$	794,139	$	345	0.17	%	$	377,777	$	92	0.10	%
		Money market		490,430		333	0.28	%		519,361		359	0.27	%		402,008		258	0.26	%
		Savings		171,738		47	0.11	%		162,363		46	0.11	%		152,853		42	0.11	%
		Time certificates of deposit		374,065		800	0.87	%		377,499		810	0.85	%		274,363		615	0.90	%
		Total interest-bearing deposits		1,809,113		1,537	0.34	%		1,853,362		1,560	0.33	%		1,207,001		1,007	0.34	%
	Borrowings:
		Repurchase agreements		36,466		17	0.19	%		36,828		21	0.23	%		20,937		10	0.19	%
		Federal funds purchased ⁽⁵⁾		1		-	1.46	%		2		-	0.84	%		1		-	0.98	%
		Subordinated debentures		64,993		844	5.27	%		64,984		840	5.14	%		25,774		225	3.51	%
		Borrowings		210,680		771	1.48	%		98,148		557	2.26	%		257,016		623	0.97	%
		Total interest-bearing liabilities		2,121,253		3,169	0.61	%		2,053,324		2,978	0.58	%		1,510,729		1,865	0.50	%
Noninterest bearing liabilities:
	Demand deposits			880,231						909,523						611,736
	Other liabilities			15,381						22,045						12,536
	Total liabilities			3,016,865						2,984,892						2,135,001
Stockholders' Equity				357,288						351,251						224,179
Total liabilities and stockholders' equity			$	3,374,153					$	3,336,143					$	2,359,180

Net interest income					$	28,172					$	27,822					$	19,995
Net interest margin							3.65	%					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 Interest Margin			Loan Yield			Net Interest Margin			Loan Yield			Net Interest Margin		Loan 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, 2017		December 31, 2016		March 31, 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, 2017		December 31, 2016		March 31, 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, 2017			December 31, 2016			September 30, 2016			June 30, 2016			March 31, 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, 2017			December 31, 2016			September 30, 2016			June 30, 2016			March 31, 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, 2017			December 31, 2016			September 30, 2016			June 30, 2016			March 31, 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, 2017		December 31, 2016		September 30, 2016		June 30, 2016		March 31, 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:



		Ratio at March 31, 2017		Ratio at December 31, 2016		Minimum Requirement for "Adequately Capitalized" Institution plus fully phased in Capital Conservation Buffer		Minimum Requirement for "Well-Capitalized" 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, 2017			December 31, 2016			September 30, 2016			June 30, 2016			March 31, 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:


March 31, 2017		30-89 Days Past Due		90 Days + Past Due and Still Accruing		Nonaccrual		Total Nonaccrual and Past Due		Total Loans, Held for 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


December 31, 2016		30-89 Days Past Due		90 Days + Past Due and Still Accruing		Nonaccrual		Total Nonaccrual and Past Due		Total Loans, Held for 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:


		Loans		Allowance / Discount		Allowance over 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, 2017			December 31, 2016			March 31, 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, 2017			December 31, 2016			March 31, 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, 2017			December 31, 2016			March 31, 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, 2017			December 31, 2016			March 31, 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. Taylor President and Chief Executive Officer Guaranty Bancorp 1331 Seventeenth Street, Suite 200 Denver, CO 80202 (303) 293-5563 Christopher G. Treece E.V.P., Chief Financial Officer and Secretary Guaranty Bancorp 1331 Seventeenth Street, Suite 200 Denver, CO 80202 (303) 675-1194

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