Guaranty Bancorp announces second consecutive quar

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Posted On: 07/19/2017 6:00:03 PM

Posted By: News Desk 2018

Guaranty Bancorp announces second consecutive quarter of record net income and the signing of a definitive agreement to acquire Castle Rock Bank Holding Company

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

Increased quarterly net income by $4.4 million, or 78.1%, compared to the second quarter 2016
Expanded quarterly return on average assets to 1.19%, compared to 0.97% in the second quarter 2016
Continued improvement in quarterly efficiency ratio to 53.77%, compared to 59.08% in the second quarter 2016
Reduced the nonperforming asset to total asset ratio to 0.14%, compared to 0.58% in the second quarter 2016

Guaranty Bancorp ( NASDAQ : GBNK ) ("we", "our" or "the Company"), a community bank holding company based in Colorado, today announced second quarter 2017 net income of $10.1 million, or $0.36 per basic and diluted common share, compared to $5.7 million, or $0.27 per basic and diluted common share in the second quarter 2016. For the six months ended June 30, 2017, net income was $20.0 million or $0.72 per basic common share and $0.71 per diluted common share, compared to $11.5 million, or $0.54 per basic and diluted common share for the same period in 2016.

Today, the Company announces the signing of a definitive purchase agreement with Castle Rock Bank Holding Company, the holding company for Castle Rock Bank, in an all-stock transaction. Castle Rock Bank, a 43 year old community bank based in Castle Rock, Colorado, has $147.8 million in total assets as of June 30, 2017 and two bank branches strategically located between Denver and Colorado Springs, Colorado. The deal is subject to normal regulatory approvals and customary closing conditions and is expected to close in the first quarter of 2018. Following the close of the transaction, Castle Rock Bank will be merged into Guaranty Bank and Trust and all Castle Rock Bank branches will operate under the Guaranty Bank and Trust name. The Company expects the transaction to be $0.04 accretive to earnings per share in 2018 and have an internal rate of return in excess of 19%. Further information regarding the transaction can be found in the investor presentation filed as an exhibit to Guaranty Bancorp's Form 8-K filed on July 19, 2017.

"Our quarterly net income growth, together with our expanded quarterly return on average assets, demonstrates the successful business strategies we have in place to enhance shareholder value," said Paul W. Taylor, President and Chief Executive Officer of Guaranty Bancorp.

Taylor continued, "In addition, our continued commitment to grow our bank through strategic acquisitions is demonstrated by the announcement of our intent to acquire Castle Rock Bank Holding Company. We are pleased to welcome a high quality franchise like Castle Rock Bank with their solid core deposit base and excess liquidity to the Guaranty Bank organization. This acquisition provides a fill-in opportunity within our Front Range footprint and strengthens our position as one of the premier community banks headquartered in Colorado with approximately $3.6 billion in pro forma assets. Castle Rock Bank customers will continue to enjoy the exceptional service and local decision-making that a community bank provides. Customers of Castle Rock Bank will also have more locations along the Front Range to transact their business and enhanced service offerings including an expanded suite of Wealth Management and Treasury Management solutions. The acquisition of Castle Rock Bank furthers our reach into Douglas County, Colorado, a rapidly growing community that ranks 4th in the nation for highest median household income among counties with populations of 65,000 or more, according to the 2015 American Community Survey."

Key Financial Measures

Income Statement


		Three Months Ended									Six Months Ended
		June 30,			March 31,			June 30,			June 30,			June 30,
		2017			2017			2016			2017			2016
		(Dollars in thousands, except per share amounts)
Net income	$	10,125		$	9,840		$	5,686		$	19,965		$	11,541
Operating earnings⁽¹⁾		10,232			9,832			6,049			20,064			12,287
Earnings per common share - diluted		0.36			0.35			0.27			0.71			0.54
Earnings per common share - diluted - operating⁽¹⁾		0.36			0.35			0.28			0.71			0.57
Return on average assets		1.19	%		1.18	%		0.97	%		1.19	%		0.98	%
Return on average assets - operating⁽¹⁾		1.21	%		1.18	%		1.03	%		1.19	%		1.05	%
Return on average equity		11.13	%		11.17	%		10.03	%		11.15	%		10.26	%
Return on average equity - operating⁽¹⁾		11.25	%		11.16	%		10.67	%		11.20	%		10.93	%
Net interest margin		3.74	%		3.65	%		3.57	%		3.69	%		3.58	%
Efficiency ratio - tax equivalent⁽²⁾		53.77	%		55.33	%		59.08	%		54.53	%		59.50	%
Average cost of interest-bearing liabilities (including noninterest-bearing deposits)		0.46	%		0.43	%		0.39	%		0.44	%		0.37	%
Average cost of deposits (including noninterest-bearing deposits)		0.26	%		0.23	%		0.23	%		0.25	%		0.23	%
________________________

⁽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


		June 30,			March 31,			December 31,			September 30,			June 30,
		2017			2017			2016			2016			2016
		(Dollars in thousands, except per share amounts)
Total investments	$	569,812		$	584,746		$	590,856		$	562,091		$	369,008
Total loans, net of deferred costs and fees		2,578,472			2,570,750			2,519,138			2,412,999			1,898,543
Allowance for loan losses		(23,125)			(23,175)			(23,250)			(23,300)			(23,050)
Total assets		3,403,852			3,399,651			3,366,427			3,346,265			2,395,015
Total deposits		2,763,623			2,765,630			2,699,084			2,752,112			1,847,361
Book value per common share		12.94			12.64			12.44			12.39			10.55
Tangible book value per common share⁽¹⁾		10.46			10.13			9.91			9.85			10.33
Equity ratio - GAAP		10.80	%		10.56	%		10.47	%		10.50	%		9.60	%
Tangible common equity ratio⁽¹⁾		8.91	%		8.65	%		8.52	%		8.53	%		9.42	%
Total risk-based capital ratio		13.65	%		13.44	%		13.58	%		14.07	%		13.34	%
________________________

⁽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.


			Three Months Ended						Three Months Ended						Three Months Ended
				June 30, 2017						March 31, 2017						June 30, 2016
				Average Balance		Interest Income or Expens	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⁾		$	2,581,043	$	28,976	4.50	%	$	2,540,421	$	27,392	4.37	%	$	1,845,337	$	19,057	4.15	%
	Investment securities⁽¹⁾
		Taxable		354,230		2,356	2.67	%		361,799		2,315	2.59	%		271,891		1,753	2.59	%
		Tax-exempt		201,893		1,243	2.47	%		202,094		1,237	2.48	%		94,397		757	3.23	%
	Bank Stocks⁽⁴⁾			23,531		347	5.91	%		24,237		389	6.51	%		20,165		281	5.60	%
	Other earning assets			4,549		11	0.97	%		4,097		8	0.79	%		2,822		3	0.43	%
	Total interest-earning assets			3,165,246		32,933	4.17	%		3,132,648		31,341	4.06	%		2,234,612		21,851	3.93	%
Non-earning assets:
	Cash and due from banks			34,714						35,533						24,754
	Other assets			204,149						205,972						97,598
Total assets			$	3,404,109					$	3,374,153					$	2,356,964

LIABILITIES AND STOCKHOLDERS' EQUITY:
Interest-bearing liabilities:
	Deposits:
		Interest-bearing demand and NOW	$	807,883	$	354	0.18	%	$	772,880	$	357	0.19	%	$	378,438	$	95	0.10	%
		Money market		479,009		402	0.34	%		490,430		333	0.28	%		398,209		266	0.27	%
		Savings		179,862		49	0.11	%		171,738		47	0.11	%		151,507		41	0.11	%
		Time certificates of deposit		414,533		981	0.95	%		374,065		800	0.87	%		284,178		662	0.94	%
		Total interest-bearing deposits		1,881,287		1,786	0.38	%		1,809,113		1,537	0.34	%		1,212,332		1,064	0.35	%
	Borrowings:
		Repurchase agreements		31,794		15	0.19	%		36,466		17	0.19	%		19,477		8	0.17	%
		Federal funds purchased		1		-	1.46	%		1		-	1.46	%		3		-	0.98	%
		Subordinated debentures		65,014		856	5.28	%		64,993		844	5.27	%		25,774		225	3.51	%
		Borrowings		182,617		777	1.71	%		210,680		771	1.48	%		242,633		733	1.22	%
		Total interest-bearing liabilities		2,160,713		3,434	0.64	%		2,121,253		3,169	0.61	%		1,500,219		2,030	0.54	%
Noninterest bearing liabilities:
	Demand deposits			864,359						880,231						616,046
	Other liabilities			14,078						15,381						12,639
	Total liabilities			3,039,150						3,016,865						2,128,904
Stockholders' Equity				364,959						357,288						228,060
Total liabilities and stockholders' equity			$	3,404,109					$	3,374,153					$	2,356,964

Net interest income					$	29,499					$	28,172					$	19,821
Net interest margin							3.74	%					3.65	%					3.57	%
Net interest margin, fully tax equivalent⁽²⁾							3.85	%					3.76	%					3.65	%

⁽¹⁾ Yields on loans and securities have not been adjusted to a tax-equivalent basis. ⁽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 38.01%. ⁽³⁾ The loan average balances and rates include nonaccrual loans. ⁽⁴⁾ Includes Bankers' Bank of the West stock, Federal Reserve Bank stock, Federal Home Loan Bank stock and Pacific Coast Bankers' Bank stock.

Net Interest Income and Margin (continued)


			Six Months Ended						Six Months Ended
				June 30, 2017						June 30, 2016
				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⁾		$	2,560,845	$	56,368	4.44	%	$	1,831,669	$	37,911	4.16	%
	Investment securities⁽¹⁾
		Taxable		357,993		4,671	2.63	%		286,747		3,713	2.60	%
		Tax-exempt		201,993		2,480	2.48	%		92,663		1,488	3.23	%
	Bank Stocks⁽⁴⁾			23,883		736	6.21	%		20,533		592	5.80	%
	Other earning assets			4,324		19	0.89	%		2,817		7	0.50	%
	Total interest-earning assets			3,149,038		64,274	4.12	%		2,234,429		43,711	3.93	%
Non-earning assets:
	Cash and due from banks			35,121						24,868
	Other assets			205,053						98,762
Total assets			$	3,389,212					$	2,358,059

LIABILITIES AND STOCKHOLDERS' EQUITY:
Interest-bearing liabilities:
	Deposits:
		Interest-bearing demand and NOW	$	790,478	$	712	0.18	%	$	378,107	$	186	0.10	%
		Money market		484,688		735	0.31	%		400,109		525	0.26	%
		Savings		175,823		96	0.11	%		152,180		83	0.11	%
		Time certificates of deposit		394,410		1,780	0.91	%		279,271		1,277	0.92	%
		Total interest-bearing deposits		1,845,399		3,323	0.36	%		1,209,667		2,071	0.34	%
	Borrowings:
		Repurchase agreements		34,117		32	0.19	%		20,207		18	0.18	%
		Federal funds purchased		1		-	1.46	%		2		-	0.98	%
		Subordinated debentures		65,004		1,700	5.27	%		25,774		450	3.51	%
		Borrowings		196,570		1,548	1.59	%		249,825		1,356	1.09	%
		Total interest-bearing liabilities		2,141,091		6,603	0.62	%		1,505,475		3,895	0.52	%
Noninterest bearing liabilities:
	Demand deposits			872,251						613,891
	Other liabilities			14,725						12,573
	Total liabilities			3,028,067						2,131,939
Stockholders' Equity				361,145						226,120
Total liabilities and stockholders' equity			$	3,389,212					$	2,358,059

Net interest income					$	57,671					$	39,816
Net interest margin							3.69	%					3.58	%
Net interest margin, fully tax equivalent ⁽²⁾							3.80	%					3.66	%

Net Interest Income and Margin (continued)

During the second quarter 2017, our net interest margin increased to 3.74%, compared to 3.57% for the second quarter 2016 and 3.65% for the first quarter 2017. The yield on average earnings assets increased to 4.17% for the second quarter 2017, compared to 3.93% for the second quarter 2016 and 4.06% for the first quarter 2017. Beginning in the third quarter 2016, net interest margin and loan yield were favorably impacted by the accretion of the discount on loans acquired in the Home State transaction. Accretion on acquired loans increased to $1.2 million in the second quarter 2017, compared to $0.8 million in the first quarter 2017. Second quarter 2017 interest income included $0.9 million of accreted discount on loans paid off during the quarter. The cost of interest-bearing liabilities increased to 0.64% for the second quarter 2017, compared to 0.54% for the second quarter 2016 and 0.61% for the first quarter 2017. 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, was a primary driver of the increase in the average cost of interest-bearing liabilities.

Net interest income increased $9.7 million, or 48.8% in the second quarter 2017, compared to the same quarter in 2016, and increased $1.3 million, or 4.7%, compared to the first quarter 2017. The increase in net interest income was driven by an increase in average earning assets and the accretion of the discount on loans acquired in the acquisition of Home State Bancorp, partially offset by an increase in average interest-bearing liabilities.

For the six months ended June 30, 2017, net interest income increased $17.9 million, compared to the same period in 2016, primarily due to a $914.6 million, or 40.9% increase in average earning assets, partially offset by a $635.6 million, or 42.2% increase in average interest bearing liabilities. Accretion of discount on acquired loans was $2.0 million during the six months ended June 30, 2017. There was no accretion of discount on acquired loans in the six months ended June 30, 2016. The Company acquired $445.5 million in loans and $769.7 million in deposits as a result of the September 2016 Home State transaction.

Noninterest Income

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


			Three Months Ended						Six Months Ended
			June 30, 2017		March 31, 2017		June 30, 2016		June 30, 2017		June 30, 2016
			(In thousands)
Noninterest income:
	Deposit service and other fees	$	3,545	$	3,280	$	2,292	$	6,825	$	4,461
	Investment management and trust		1,483		1,521		1,276		3,004		2,556
	Increase in cash surrender value of life insurance		615		595		460		1,210		908
	Loss on sale of securities		-		-		(101)		-		(56)
	Gain on sale of SBA loans		447		381		110		828		264
	Other		252		625		105		877		187
	Total noninterest income	$	6,342	$	6,402	$	4,142	$	12,744	$	8,320

Beginning in the third quarter 2016, noninterest income was favorably impacted by the Home State transaction, affecting deposit service and other fees, investment management and trust and merchant income; included in "other" in the table above.

Noninterest income increased $2.2 million, or 53.1% in the second quarter 2017, compared to the same quarter in 2016 and decreased $0.1 million, compared to the first quarter 2017. Second quarter 2017 deposit service and other fees increased $0.3 million, compared to the first quarter 2017, primarily due to an increase in debit card interchange income and an increase in annual fees on overdraft protection accounts. First quarter 2017 noninterest income included a $0.3 million gain on sale of our $2.0 million credit card loan portfolio.

For the six months ended June 30, 2017, noninterest income increased $4.4 million, or 53.2%, compared to the same period in 2016. In addition to the impact of the Home State transaction, gain on sale of SBA loans increased $0.6 million and bank-owned life insurance increased $0.3 million for the six months ended June 30, 2017, compared to the same period in 2016.

Noninterest Expense

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


			Three Months Ended						Six Months Ended
			June 30, 2017		March 31, 2017		June 30, 2016		June 30, 2017		June 30, 2016
			(In thousands)
Noninterest expense:
	Salaries and employee benefits	$	11,247	$	11,926	$	8,520	$	23,173	$	17,308
	Occupancy expense		1,674		1,552		1,261		3,226		2,636
	Furniture and equipment		975		945		713		1,920		1,531
	Amortization of intangible assets		648		649		239		1,297		479
	Other real estate owned, net		126		68		5		194		7
	Insurance and assessments		647		706		597		1,353		1,210
	Professional fees		1,252		974		906		2,226		1,763
	Impairment of long-lived assets		34		190		-		224		-
	Other general and administrative		3,900		3,519		2,893		7,419		5,992
	Total noninterest expense	$	20,503	$	20,529	$	15,134	$	41,032	$	30,926

Beginning in the third quarter 2016, noninterest expense was significantly impacted by the Home State transaction, primarily affecting salaries and employee benefits, other general and administrative, amortization of intangible assets and occupancy.

Salaries and employee benefits increased $2.7 million in the second quarter 2017, compared to the same quarter in 2016, primarily due to a $1.8 million increase in base salaries and a $0.5 million increase in our self-funded medical plan. Since June 30, 2016, our full-time equivalent employees (FTE) increased by 128 FTE to 491 FTE at June 30, 2017. Other general and administrative expenses increased $1.0 million in the second quarter 2017, compared to the same quarter in 2016, primarily due to increases in data processing and debit card interchange expense.

Salaries and employee benefits decreased $0.7 million in the second quarter 2017, compared to the first quarter 2017, mostly due to a decline in payroll taxes related to the timing of the annual payroll cycle. Offsetting the decline in salaries and employee benefits, other general and administrative expense increased $0.4 million and professional fees increased $0.3 million in the second quarter 2017, compared to the first quarter 2017. The increase in general and administrative expense in the second quarter 2017, compared to the first quarter 2017, was related to increases in data processing expense and security expense. The increase in professional fees in the second quarter 2017, compared to the first quarter 2017, was mostly related to increases to legal and miscellaneous professional fees.

For the six months ended June 30, 2017, noninterest expense increased $10.1 million, compared to the same period in 2016, primarily due to the impact of the Home State transaction. Salaries and employee benefits increased $5.9 million for the six months ended June 30, 2017, compared to the same period in 2016, primarily due to a $3.8 million increase in base salary expense and a $1.2 million increase in our self-funded medical plan. Other general and administrative expense increased $1.4 million for the six months ended June 30, 2017, compared to the same period in 2016, due to increases in data processing, debit card interchange expense and communication expense. Amortization of intangible assets increased $0.8 million for the six months ended June 30, 2017, compared to the same period in 2016, due to the intangible assets recorded in the Home State transaction. Occupancy expense increased $0.6 million for the six months ended June 30, 2017, compared to the same period in 2016, due to increases in real estate taxes and depreciation. As a result of the Home State transaction, we acquired eleven branches and closed five branches by the end of 2016.

Balance Sheet


		June 30,			March 31,			December 31,			September 30,			June 30,
		2017			2017			2016			2016			2016
		(Dollars in thousands)
Total assets	$	3,403,852		$	3,399,651		$	3,366,427		$	3,346,265		$	2,395,015
Average assets, quarter-to-date		3,404,109			3,374,153			3,336,143			2,613,133			2,356,964
Total loans, net of deferred costs and fees		2,578,472			2,570,750			2,519,138			2,412,999			1,898,543
Total deposits		2,763,623			2,765,630			2,699,084			2,752,112			1,847,361

Equity ratio - GAAP		10.80	%		10.56	%		10.47	%		10.50	%		9.60	%
Tangible common equity ratio		8.91	%		8.65	%		8.52	%		8.53	%		9.42	%

Second quarter 2017 average assets were $3.4 billion, reflecting an increase of $1.0 billion compared to June 30, 2016, and an increase of $30.0 million compared to March 31, 2017. During the third quarter 2016, the Company acquired $445.5 million in loans and $769.7 million in deposits in the Home State transaction.

The following table sets forth the amount of loans outstanding at the dates indicated:


				June 30,		March 31,		December 31,		September 30,		June 30,
				2017		2017		2016		2016		2016
				(In thousands)
Loans held for sale			$	887	$	951	$	4,129	$	-	$	-
Commercial and residential real estate				1,799,114		1,800,194		1,768,424		1,752,113		1,428,397
Construction				99,632		103,682		88,451		75,603		26,497
Commercial				451,701		451,708		432,083		400,281		336,069
Consumer				122,994		120,231		125,264		81,766		66,539
Other				103,990		93,979		100,848		102,887		40,640
	Total gross loans			2,578,318		2,570,745		2,519,199		2,412,650		1,898,142
		Deferred costs and (fees)		154		5		(61)		349		401
	Loans, net			2,578,472		2,570,750		2,519,138		2,412,999		1,898,543
Less allowance for loan losses				(23,125)		(23,175)		(23,250)		(23,300)		(23,050)
	Net loans		$	2,555,347	$	2,547,575	$	2,495,888	$	2,389,699	$	1,875,493

The following table presents the changes in the Company's loan balances at the dates indicated:


			June 30,		March 31,		December 31,		September 30,		June 30,	March 31,
			2017		2017		2016		2016		2016	2016
			(In thousands)
Beginning balance		$	2,570,745	$	2,519,199	$	2,412,650	$	1,898,142	$	1,829,909	1,814,281
New credit extended			132,420		139,185		232,499		129,064		121,753	105,843
Acquisition of Home State Bank			-		-		-		445,529		-	-
Net existing credit advanced			73,298		111,821		142,448		153,390		87,524	50,482
Net pay-downs and maturities			(196,511)		(195,678)		(272,326)		(214,089)		(142,516)	(139,914)
Other			(1,634)		(3,782)		3,928		614		1,472	(783)
	Gross loans		2,578,318		2,570,745		2,519,199		2,412,650		1,898,142	1,829,909
Deferred costs and (fees)			154		5		(61)		349		401	337
	Loans, net	$	2,578,472	$	2,570,750	$	2,519,138	$	2,412,999	$	1,898,543	1,830,246

Net change - loans outstanding		$	7,722	$	51,612	$	106,139	$	514,456	$	68,297	15,710

For the six months ended June 30, 2017, new credit extended and credit advanced on existing lines increased $91.1 million, or 24.9% to $456.7 million, compared to $365.6 million in the same period in 2016. Net pay-downs and maturities on loans increased $109.8 million, or 38.9% to $392.2 million for the six months ended June 30, 2017, compared to $282.4 million for the same period in 2016. In addition to contractual loan principal payments and maturities, the second quarter 2017 included $40.1 million in early payoffs related to our borrowers selling their assets, $18.0 million in payoffs due to our strategic decision not to match certain financing terms offered by competitors, $17.2 million in loan pay-downs related to fluctuations in loan balances to existing customers and $8.1 million in loan payoffs related to watch or classified loans.

Balance Sheet (continued)

Second quarter 2017 average loans increased $40.6 million, or 6.4% annualized. Net loan growth was $7.7 million during the second quarter 2017, compared to the first quarter 2017. During the twelve months ended June 30, 2017, loans increased by $679.9 million, or 35.8%. Excluding the loans acquired in the transaction with Home State, loans grew $234.4 million, or 12.3% since June 30, 2016.

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


		June 30,		March 31,		December 31,		September 30,		June 30,
		2017		2017		2016		2016		2016
		(In thousands)
Noninterest-bearing demand	$	876,043	$	868,189	$	916,632	$	857,064	$	638,110
Interest-bearing demand and NOW		811,639		821,518		767,523		802,043		383,492
Money market		475,656		489,921		484,664		554,447		392,730
Savings		183,200		178,157		164,478		160,698		149,798
Time		417,085		407,845		365,787		377,860		283,231
Total deposits	$	2,763,623	$	2,765,630	$	2,699,084	$	2,752,112	$	1,847,361

At June 30, 2017, deposits were $2.8 billion, an increase of $0.9 billion, or 49.6%, compared to June 30, 2016. The $769.7 million in deposits acquired in the Home State transaction, consisted of $685.6 million in non-maturing deposits and $84.1 million in time deposits. Excluding the deposits acquired in the Home State transaction total deposits grew $146.6 million during the twelve months ended June 30, 2017. At June 30, 2017, noninterest-bearing deposits as a percentage of total deposits were 31.7%, compared to 34.5% at June 30, 2016 and 31.4% at March 31, 2017. At June 30, 2017, securities sold under agreements to repurchase were $29.6 million, compared to $36.9 million at December 31, 2016 and $18.0 million at June 30, 2016. Securities sold under agreements to repurchase acquired in the Home State transaction were $20.0 million.

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 June 30, 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	10.61	%	10.46	%	7.00	%	N/A
	Guaranty Bank and Trust Company	12.19	%	12.43	%	7.00	%	6.50	%

Tier 1 Risk-Based Capital Ratio
	Consolidated	11.47	%	11.34	%	8.50	%	N/A
	Guaranty Bank and Trust Company	12.19	%	12.43	%	8.50	%	8.00	%

Total Risk-Based Capital Ratio
	Consolidated	13.65	%	13.58	%	10.50	%	N/A
	Guaranty Bank and Trust Company	12.99	%	13.26	%	10.50	%	10.00	%

Leverage Ratio
	Consolidated	9.98	%	9.81	%	4.00	%	N/A
	Guaranty Bank and Trust Company	10.60	%	10.76	%	4.00	%	5.00	%

At June 30, 2017, all of our regulatory capital ratios remained well above minimum requirements for a "well-capitalized" institution. Our consolidated total risk-based capital ratio increased compared to December 31, 2016, primarily due to an increase in retained 2017 earnings. At June 30, 2017, our bank-level capital ratios declined compared to December 31, 2016, primarily due to the $18.7 million dividend paid to the Company in the second quarter 2017 to fund stockholder dividends and debt servicing during 2017.

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:


			June 30,			March 31,			December 31,			September 30,			June 30,
			2017			2017			2016			2016			2016
			(Dollars in thousands)
Originated nonaccrual loans		$	3,332		$	3,387		$	3,345		$	3,399		$	13,326
Purchased credit impaired loans			1,290			1,715			1,902			2,108			-
Accruing loans past due 90 days or more⁽¹⁾			-			-			-			335			-

Total nonperforming loans (NPLs)		$	4,622		$	5,102		$	5,247		$	5,842		$	13,326
Other real estate owned and foreclosed assets			113			257			569			637			674

Total nonperforming assets (NPAs)		$	4,735		$	5,359		$	5,816		$	6,479		$	14,000

Total classified assets		$	29,188		$	30,201		$	33,443		$	34,675		$	25,644

Accruing loans past due 30-89 days⁽¹⁾		$	957		$	3,858		$	1,337		$	2,157		$	2,386

Charged-off loans		$	(338)		$	(125)		$	(290)		$	(72)		$	(57)
Recoveries			82			45			150			295			72
	Net (charge-offs) recoveries	$	(256)		$	(80)		$	(140)		$	223		$	15

Provision for loan losses		$	206		$	5		$	90		$	27		$	10

Allowance for loan losses		$	23,125		$	23,175		$	23,250		$	23,300		$	23,050

Unaccreted loan discount⁽⁵⁾		$	12,665		$	13,896		$	14,682		$	15,721		$	-

Selected ratios:
NPLs to loans, net of deferred costs and fees⁽²⁾			0.18	%		0.20	%		0.21	%		0.24	%		0.70	%
NPAs to total assets			0.14	%		0.16	%		0.17	%		0.19	%		0.58	%
Allowance for loan losses to NPLs			500.32	%		454.23	%		443.11	%		398.84	%		172.97	%
Allowance for loan losses to loans, net of deferred costs and fees⁽ ²⁾			0.90	%		0.90	%		0.92	%		0.97	%		1.21	%
Loans 30-89 days past due to loans, net of deferred costs and fees⁽²⁾			0.04	%		0.15	%		0.05	%		0.09	%		0.13	%
Texas ratio⁽³⁾			1.26	%		1.39	%		1.55	%		1.77	%		5.17	%
Classified asset ratio⁽⁴⁾			8.08	%		8.24	%		9.79	%		10.69	%		10.55	%
________________________

⁽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. ⁽⁵⁾ Related to loans acquired in the Home State transaction.

Asset Quality (continued)

The following tables summarize past due loans held for investment by class as of the dates indicated:


June 30, 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	$	-	$	-	$	2,154	$	2,154	$	1,799,222
Construction		-		-		-		-		99,638
Commercial		587		-		1,368		1,955		451,728
Consumer		370		-		193		563		123,001
Other		-		-		907		907		103,996
Total	$	957	$	-	$	4,622	$	5,579	$	2,577,585



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 second quarter 2017, nonperforming assets decreased by $0.6 million from March 31, 2017 and $9.3 million from June 30, 2016. The $9.3 million decline in nonperforming assets, compared to June 30, 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 June 30, 2017, performing troubled debt restructurings were $23.4 million, compared to $23.2 million at March 31, 2017 and $13.1 million at June 30, 2016. The increase in performing troubled debt restructurings in the second quarter 2017, compared to the same quarter in 2016, was primarily due to a return of the $9.4 million out-of-state loan syndication to performing status, described above.

At June 30, 2017, classified assets represented 8.1% of bank-level Tier 1 risk-based capital plus allowance for loan losses, compared to 8.2% at March 31, 2017 and 10.6% at June 30, 2016.

Net charge-offs were $0.3 million during the second quarter of 2017, compared to $0.1 million during the first quarter 2017 and immaterial net recoveries in the second quarter of 2016. During the second quarter 2017, the Bank recorded a $0.2 million provision for loan losses, compared to immaterial provisions in the first quarter 2017 and the second quarter 2016. The Bank considered recoveries, historical charge-offs, the 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 June 30, 2017, the Company had 28,406,758 shares of voting common stock outstanding, of which 487,994 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										Six Months Ended
			June 30,			March 31,			June 30,			June 30,			June 30,
			2017			2017			2016			2017			2016
			(Dollars in thousands, except per share amounts)
Net income		$	10,125		$	9,840		$	5,686		$	19,965		$	11,541
Expenses adjusted for:
	Expenses (gains) related to other real estate owned, net		126			68			5			194			7
	Merger-related expenses		-			-			347			-			1,022
	Impairment of long-lived assets		34			190			-			224			-
Income adjusted for:
	Loss on sale of securities		-			-			101			-			56
	(Gain) loss on sale of other assets		14			(271)			-			(257)			(14)
Pre-tax earnings adjustment			174			(13)			453			161			1,071
Tax effect of adjustments⁽¹⁾			(67)			5			(90)			(62)			(325)
Tax effected operating earnings adjustment			107			(8)			363			99	-		746
Operating earnings		$	10,232		$	9,832		$	6,049		$	20,064		$	12,287

Average assets		$	3,404,109		$	3,374,153		$	2,356,964		$	3,389,212		$	2,358,059

Average equity		$	364,959		$	357,288		$	228,060		$	361,145		$	226,120

	Fully diluted average common shares outstanding:		28,095,871			28,090,179			21,378,349			28,120,746			21,437,781

	Earnings per common share-diluted:	$	0.36		$	0.35		$	0.27		$	0.71		$	0.54
Earnings per common share-diluted - operating:		$	0.36		$	0.35		$	0.28		$	0.71		$	0.57

ROAA (GAAP)			1.19	%		1.18	%		0.97	%		1.19	%		0.98	%
ROAA - operating			1.21	%		1.18	%		1.03	%		1.19	%		1.05	%

ROAE (GAAP)			11.13	%		11.17	%		10.03	%		11.15	%		10.26	%
ROAE - operating			11.25	%		11.16	%		10.67	%		11.20	%		10.93	%
________________

⁽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.

Non-GAAP Financial Measures (continued)

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
			June 30,		December 31,		June 30,
			2017		2016		2016
			(Dollars in thousands, except per share amounts)
	Total stockholders' equity	$	367,529	$	352,378	$	229,958
	Less: Goodwill and other intangible assets		(70,424)		(71,721)		(4,694)
	Tangible common equity	$	297,105	$	280,657	$	225,264

	Number of common shares outstanding		28,406,758		28,334,004		21,802,054

	Book value per common share	$	12.94	$	12.44	$	10.55
	Tangible book value per common share	$	10.46	$	9.91	$	10.33



Tangible Common Equity Ratio
			June 30,			December 31,			June 30,
			2017			2016			2016
			(Dollars in thousands)
	Total stockholders' equity	$	367,529		$	352,378		$	229,958
	Less: Goodwill and other intangible assets		(70,424)			(71,721)			(4,694)
	Tangible common equity	$	297,105		$	280,657		$	225,264

	Total assets	$	3,403,852		$	3,366,427		$	2,395,015
	Less: Goodwill and other intangible assets		(70,424)			(71,721)			(4,694)
	Tangible assets	$	3,333,428		$	3,294,706		$	2,390,321

	Equity ratio - GAAP (total stockholders' equity / total assets)		10.80	%		10.47	%		9.60	%
	Tangible common equity ratio (tangible common equity / tangible assets)		8.91	%		8.52	%		9.42	%

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; Castle Rock Bank's business experiencing disruptions due to transaction-related uncertainty or other factors making it more difficult to maintain relationships with employees, customers, other business partners or governmental entities; difficulty retaining key employees; the parties being unable to successfully implement integration strategies or to achieve expected synergies and operating efficiencies within the expected time-frames or at all; 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.

Notice to Shareholders

This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. In connection with the proposed merger transaction, a registration statement on Form S-4 will be filed with the SEC by Guaranty Bancorp. The registration statement will contain a proxy statement/prospectus to be distributed to the shareholders of Castle Rock Bank Holding Company in connection with their vote on the merger. Shareholders of Castle Rock Bank Holding Company are encouraged to read the registration statement and any other relevant documents filed with the SEC, including the proxy statement / prospectus that will be part of the registration statement, because they will contain important information about the proposed merger. The final proxy statement/prospectus will be mailed to shareholders of Castle Rock Bank Holding Company. Investors and security holders will be able to obtain the documents free of charge at the SEC's website, www.sec.gov . In addition, documents filed with the SEC by Guaranty Bancorp will be available free of charge by (1) accessing the Guaranty Bancorp website at www.gbnk.com under the "SEC Filings" link (2) writing Guaranty Bancorp at 1331 17th Street, Suite 200, Denver, CO 80202, Attention: Investor Relations or (3) writing Castle Rock Bank Holding Company at 509 N. Wilcox St., Castle Rock, CO 80104, Attention: Corporate Secretary.


GUARANTY BANCORP AND SUBSIDIARIES
Unaudited Consolidated Balance Sheets

					June 30,		December 31,		June 30,
					2017		2016		2016
					(In thousands)
Assets
Cash and due from banks				$	46,582	$	50,111	$	30,446

Time deposits with banks					254		254		-

Securities available for sale, at fair value					305,910		324,228		198,156
Securities held to maturity					240,899		243,979		149,196
Bank stocks, at cost					23,003		22,649		21,656
			Total investments		569,812		590,856		369,008

Loans held for sale					887		4,129		-

Loans, held for investment, net of deferred costs and fees					2,577,585		2,515,009		1,898,543
	Less allowance for loan losses				(23,125)		(23,250)		(23,050)
			Net loans, held for investment		2,554,460		2,491,759		1,875,493

Premises and equipment, net					64,774		67,390		45,769
Other real estate owned and foreclosed assets					113		569		674
Goodwill					56,404		56,404		-
Other intangible assets, net					14,020		15,317		4,694
Bank owned life insurance					74,050		65,538		49,639
Other assets					22,496		24,100		19,292
			Total assets	$	3,403,852	$	3,366,427	$	2,395,015

Liabilities and Stockholders' Equity
Liabilities:
	Deposits:
		Noninterest-bearing demand		$	876,043	$	916,632	$	638,110
		Interest-bearing demand and NOW			811,639		767,523		383,492
		Money market			475,656		484,664		392,730
		Savings			183,200		164,478		149,798
		Time			417,085		365,787		283,231
			Total deposits		2,763,623		2,699,084		1,847,361

Securities sold under agreement to repurchase					29,553		36,948		17,990
Federal Home Loan Bank line of credit borrowing					90,900		124,691		141,600
Federal Home Loan Bank term notes					71,772		72,477		120,000
Subordinated debentures, net					65,023		64,981		25,774
Interest payable and other liabilities					15,452		15,868		12,332
			Total liabilities		3,036,323		3,014,049		2,165,057

Stockholders' equity:
	Common stock and additional paid-in capital - common stock				833,600		832,098		713,900
	Accumulated deficit				(354,956)		(367,944)		(375,490)
	Accumulated other comprehensive loss				(5,112)		(6,726)		(3,837)
	Treasury stock				(106,003)		(105,050)		(104,615)
			Total stockholders' equity		367,529		352,378		229,958
			Total liabilities and stockholders' equity	$	3,403,852	$	3,366,427	$	2,395,015



GUARANTY BANCORP AND SUBSIDIARIES
Unaudited Consolidated Statements of Operations

				Three Months Ended June 30,				Six Months Ended June 30,
				2017		2016		2017		2016
				(In thousands, except share and per share data)
Interest income:
	Loans, including costs and fees		$	28,976	$	19,057	$	56,368	$	37,911
	Investment securities:
		Taxable		2,356		1,753		4,671		3,713
		Tax-exempt		1,243		757		2,480		1,488
	Dividends			347		281		736		592
	Federal funds sold and other			11		3		19		7
		Total interest income		32,933		21,851		64,274		43,711
Interest expense:
	Deposits			1,786		1,064		3,323		2,071
	Securities sold under agreement to repurchase			15		8		32		18
	Borrowings			777		733		1,548		1,356
	Subordinated debentures			856		225		1,700		450
		Total interest expense		3,434		2,030		6,603		3,895
		Net interest income		29,499		19,821		57,671		39,816
Provision for loan losses				206		10		211		26
		Net interest income, after provision for loan losses		29,293		19,811		57,460		39,790
Noninterest income:
	Deposit service and other fees			3,545		2,292		6,825		4,461
	Investment management and trust			1,483		1,276		3,004		2,556
	Increase in cash surrender value of life insurance			615		460		1,210		908
	Loss on sale of securities			-		(101)		-		(56)
	Gain on sale of SBA loans			447		110		828		264
	Other			252		105		877		187
		Total noninterest income		6,342		4,142		12,744		8,320
Noninterest expense:
	Salaries and employee benefits			11,247		8,520		23,173		17,308
	Occupancy expense			1,674		1,261		3,226		2,636
	Furniture and equipment			975		713		1,920		1,531
	Amortization of intangible assets			648		239		1,297		479
	Other real estate owned, net			126		5		194		7
	Insurance and assessments			647		597		1,353		1,210
	Professional fees			1,252		906		2,226		1,763
	Impairment of long-lived assets			34		-		224		-
	Other general and administrative			3,900		2,893		7,419		5,992
		Total noninterest expense		20,503		15,134		41,032		30,926
		Income before income taxes		15,132		8,819		29,172		17,184
Income tax expense				5,007		3,133		9,207		5,643
		Net income	$	10,125	$	5,686	$	19,965	$	11,541

Earnings per common share-basic:			$	0.36	$	0.27	$	0.72	$	0.54
Earnings per common share-diluted:				0.36		0.27		0.71		0.54
Dividend declared per common share:			$	0.13	$	0.12	$	0.25	$	0.23

Weighted average common shares outstanding-basic:				27,913,082		21,242,520		27,890,446		21,213,706
Weighted average common shares outstanding-diluted:				28,095,871		21,378,349		28,120,746		21,437,781

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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