Guaranty Bancorp Announces 2016 Annual And Fourth Quarter Financial Results

DENVER, CO--(Marketwired - January 25, 2017) - Guaranty Bancorp (NASDAQ: GBNK)

  • Increased 2016 net income by $2.3 million, or 10.1% compared to the prior year
  • Successfully completed integration of the former Home State Bank during the fourth quarter 2016
  • Increased loans by $259.1 million, or 14.3%, during 2016, excluding $445.5 million in loans acquired in the merger with Home State Bancorp
  • Grew deposits by $127.5 million, or 7.1%, during 2016, excluding $769.7 million in deposits acquired in the merger with Home State Bancorp

Guaranty Bancorp (NASDAQ: GBNK) ("we", "our" or "the Company"), a community bank holding company based in Colorado, today announced fourth quarter 2016 net income of $7.4 million, or $0.27 per basic common share and $0.26 per diluted common share, compared to $5.9 million, or $0.28 per basic and diluted common share in the fourth quarter 2015. Fourth quarter 2016 net income was impacted by $3.0 million in merger-related expenses. Fourth quarter 2016 operating earnings1 increased 62.0% to $9.4 million, or $0.34 per diluted common share, compared to $5.8 million in the fourth quarter 2015. For the year ended December 31, 2016, net income was $24.7 million or $1.06 per basic common share and $1.05 per diluted common share compared to $22.5 million, or $1.07 per basic common share and $1.06 per diluted common share in 2015. Net income in 2016 included $6.3 million in merger-related expenses. For the year ended December 31, 2016, operating earnings increased $6.5 million, or 28.9% to $29.0 million; an increase of $0.17 per diluted common share compared to $22.5 million in 2015.

"As we look back on our accomplishments in 2016, we have much to be proud of," said Paul W. Taylor, President and Chief Executive Officer of Guaranty Bancorp. "Late in the third quarter 2016, we successfully completed our merger with Home State Bancorp, the holding company for Home State Bank based in Loveland, Colorado. On November 7, 2016, we took the final step and fully integrated our systems and changed the name on the buildings to Guaranty Bank. Our employees have done a fantastic job coming together to serve our expanded customer base and we are focused on providing exceptional service to local Colorado businesses and consumers."

Taylor continued, "Even with all the activities surrounding the merger, loans increased by 14.3% in 2016, excluding $445.5 million in loans acquired in the merger with Home State Bancorp. Not only did we successfully grow loans, we did so while simultaneously improving the nonperforming asset ratio to 0.17% at December 31, 2016, compared to 0.64% at December 31, 2015. We are pleased with our momentum going into 2017 and the opportunity to further support the growth of our customers and the local Colorado economy."

1 This press release contains certain non-GAAP financial measures to provide meaningful supplemental information regarding the Company's operational performance and to enhance investors' overall understanding of the Company's core financial performance. See the "Non-GAAP Financial Measures" section later in this press release for a definition of operating earnings and other non-GAAP measures.

Key Financial Measures
Income Statement
Quarter Ended Year Ended
December 31,2016 September 30,2016 December 31,2015 December 31,2016 December 31,2015
(Dollars in thousands, except per shareamounts)
Net income $ 7,421 $ 5,765 $ 5,891 $ 24,727 $ 22,454
Operatingearnings (1) 9,445 7,281 5,830 29,013 22,509
Earnings percommon share - diluted 0.26 0.25 0.28 1.05 1.06
Earnings percommon share - diluted - operating (1) 0.34 0.32 0.27 1.23 1.06
Return onaverage assets 0.88 % 0.88 % 1.00 % 0.93 % 1.01 %
Return onaverage assets - operating (1) 1.13 % 1.11 % 0.99 % 1.09 % 1.01 %
Return onaverage equity 8.41 % 9.04 % 10.55 % 9.35 % 10.42 %
Return onaverage equity - operating (1) 10.70 % 11.42 % 10.44 % 10.97 % 10.44 %
Net interestmargin 3.58 % 3.66 % 3.58 % 3.60 % 3.67 %
Efficiency ratio - tax equivalent (2) 55.13 % 56.78 % 59.55 % 57.46 % 60.20 %
___________
(1) Seereconciliation of non-GAAP financial measures to the corresponding GAAPmeasurement in "Non-GAAP Financial Measures" later in thisdocument.
(2) Theefficiency ratio equals noninterest expense adjusted to exclude amortizationof intangible assets, prepayment penalties on long-term debt, impairment oflong-lived assets and merger related expenses, divided by the sum of taxequivalent net interest income and tax equivalent noninterest income. Tocalculate tax equivalent net interest income and noninterest income, theinterest earned on tax exempt loans and investment securities and the incomeearned on bank-owned life insurance have been adjusted to reflect the amountthat would have been earned had these investments been subject to normalincome taxation.
Balance Sheet
December 31,2016 September 30,2016 Percent
Change
December 31,2015 Percent
Change
(Dollars in thousands, except per share amounts)
Total investments $ 590,856 $ 562,091 5.1 % $ 424,692 39.1 %
Total loans, net of deferred fees and costs 2,519,138 2,412,999 4.4 % 1,814,536 38.8 %
Allowance for loan losses (23,250 ) (23,300 ) (0.2) % (23,000 ) 1.1 %
Total assets 3,366,427 3,346,265 0.6 % 2,368,525 42.1 %
Total deposits 2,699,084 2,752,112 (1.9) % 1,801,845 49.8 %
Book value per common share 12.44 12.39 0.4 % 10.21 21.8 %
Tangible book value per common share 9.91 9.85 0.6 % 9.97 (0.6) %
Equity ratio - GAAP 10.47 % 10.50 % (0.3) % 9.36 % 11.9 %
Tangible common equity ratio 8.52 % 8.53 % (0.1) % 9.16 % (7.0) %
Total risk-based capital ratio 13.58 % 14.07 % (3.5) % 13.24 % 2.6 %
Assets under management and administration $ 852,420 $ 858,761 (0.7) % $ 698,247 22.1 %
Net Interest Income and Margin
Quarter Ended Year Ended
December 31,2016 September 30,2016 December 31,2015 December 31,2016 December 31,2015
(Dollars in thousands)
Net interestincome $ 27,822 $ 22,750 $ 19,856 $ 90,388 $ 76,979
Average earningassets 3,093,703 2,472,767 2,201,096 2,510,332 2,098,995
Interest ratespread 3.38 % 3.45 % 3.43 % 3.42 % 3.53 %
Net interestmargin 3.58 % 3.66 % 3.58 % 3.60 % 3.67 %
Net interestmargin, fully tax equivalent 3.68 % 3.75 % 3.66 % 3.69 % 3.75 %
Loan yield 4.44 % 4.41 % 4.14 % 4.31 % 4.24 %
Average cost ofinterest-bearing liabilities (including noninterest-bearing deposits) 0.40 % 0.44 % 0.30 % 0.40 % 0.27 %
Average cost ofdeposits (including noninterest-bearing deposits) 0.22 % 0.23 % 0.20 % 0.23 % 0.18 %

Net interest margin was 3.58% for the fourth quarter 2016, compared to 3.66% in the third quarter 2016 and 3.58% in the fourth quarter 2015. For the year ended December 31, 2016 net interest margin was 3.60% compared to 3.67% for 2015. Despite compression in the net interest margin, loan yields increased to 4.44% for the fourth quarter 2016, compared to 4.41% for the third quarter 2016 and 4.14% in the fourth quarter 2015, primarily due to the impact of purchase accounting. Average costs of interest-bearing liabilities, including noninterest-bearing deposits decreased to 0.40% for the fourth quarter 2016, compared to 0.44% for the third quarter 2016 and increased compared to 0.30% for the fourth quarter 2015. The decrease in the average cost of interest-bearing liabilities in the fourth quarter 2016 compared to the third quarter 2016 was due to a $202.2 million increase in average noninterest-bearing deposits. The increase in the average cost of interest-bearing liabilities in the fourth quarter 2016 compared to the same quarter in 2015 was mostly due to the July 2016 issuance of $40.0 million of unsecured fixed-to-floating rate subordinated notes to fund the cash consideration paid in the Home State transaction.

The net interest margin and loan yield are impacted by volatility in accretion of acquired loan discounts. The effects of the accretion on net interest margin and loan yield are outlined in the following table for the periods indicated.

Quarter Ended December 31, 2016 Year Ended December 31, 2016
Net Interest
Margin
Loan
Yield
Net Interest
Margin
Loan
Yield
Reported 3.58 % 4.44 % 3.60 % 4.31 %
Less: Accelerated accretion of acquired loan discount from early payoffs (0.09 )% (0.10 )% (0.03 )% (0.04 )%
Subtotal 3.49 % 4.34 % 3.57 % 4.27 %
Less: Accretionof acquired loan discount not attributable to early payoffs (0.05 )% (0.07 )% (0.02 )% (0.03 )%
Excluding totalaccretion of loan acquisition discounts 3.44 % 4.27 % 3.55 % 4.24 %
Total accretionof loan acquisition discounts (0.14 )% (0.17 )% (0.05 )% (0.07 )%

Net interest income increased $8.0 million in the fourth quarter 2016, compared to the same quarter in 2015, due to a $9.3 million increase in interest income, partially offset by a $1.4 million increase in interest expense. The increase in interest income was the result of an $892.6 million increase in average earning assets in the fourth quarter 2016, compared to the same quarter in 2015, and $1.0 million related to accretion of the discount applied to loans acquired in the Home State transaction. The increase in interest expense in the fourth quarter 2016, compared to the same quarter in 2015, was due to a $0.6 million increase in subordinated debt expense and a $0.6 million increase in interest expense on deposits. Interest expense on deposits increased in the fourth quarter 2016, compared to the same quarter in 2015, due to a $658.4 million increase in average interest-bearing deposit balances, attributable to both organic growth and the Home State transaction.

Compared to the third quarter 2016, net interest income increased by $5.1 million in the fourth quarter 2016 due to a $5.5 million increase in interest income, partially offset by a $0.4 million increase in interest expense. The increase in interest income during the fourth quarter 2016, compared to the third quarter 2016, was primarily due to a $620.9 million increase in average earning assets. The $0.4 million increase in interest expense in the fourth quarter 2016, compared to the third quarter 2016, was mostly due to a $453.9 million increase in average interest bearing deposits.

For the year ended December 31, 2016, net interest income increased $13.4 million, compared to the year ended December 31, 2015, due to a $17.5 million increase in interest income, partially offset by a $4.1 million increase in interest expense. The increase in interest income was primarily due to a $411.3 million increase in average earning assets, compared to 2015 and $1.3 million related to accretion of the discount applied to loans acquired in the Home State transaction. The $4.1 million increase in interest expense during the year ended December 31, 2016, compared to the year ended December 31, 2015, was due to a $1.7 million increase in deposit interest expense, a $1.3 million increase in FHLB borrowing expense and a $1.2 million increase in interest expense on subordinated debt. The increase in interest expense on deposits for the year ended December 31, 2016, compared to the same period in 2015, was the result of a five basis point increase in the weighted average cost of deposits and a $299.9 million increase in average deposit balances. The increased expense related to FHLB borrowings was the result of our hedged borrowings, increased borrowing levels required to fund loan growth and an increase in short-term, variable rates resulting from the December 2015 25 basis point federal funds interest rate increase. The increase in interest expense on subordinated debt during 2016, compared to 2015, was due to the $40.0 million of unsecured fixed-to-floating rate subordinated notes, discussed above.

Noninterest Income
The following table presents noninterest income as of the dates indicated:
Quarter Ended Year Ended
December 31,2016 September 30,2016 December 31,2015 December 31,2016 December 31,2015
(In thousands)
Noninterest income:
Deposit service and other fees $ 3,405 $ 2,581 $ 2,259 $ 10,447 $ 8,941
Investment management and trust 1,563 1,333 1,225 5,452 5,189
Increase in cash surrender value of life insurance 607 490 442 2,005 1,758
Gain (loss) on sale of securities 49 (66 ) 132 (73 ) 132
Gain on sale of SBA loans 401 208 143 873 824
Other 207 159 61 553 336
Total noninterest income $ 6,232 $ 4,705 $ 4,262 $ 19,257 $ 17,180

Fourth quarter 2016 noninterest income was $6.2 million compared to $4.7 million in the third quarter 2016 and $4.3 million in the fourth quarter 2015.

The $1.5 million increase in noninterest income in the fourth quarter 2016, compared to the third quarter 2016, was primarily due to an $0.8 million increase in deposit service and other fees, primarily generated by deposits acquired in the transaction with Home State, a $0.2 million increase in investment management and trust fees and a $0.2 million increase in the gain on sales of SBA loans.

The $2.0 million increase in noninterest income in the fourth quarter 2016, compared to the fourth quarter 2015, was attributable to a $1.1 million increase in deposit service and other fees primarily generated by deposits acquired in the transaction with Home State, a $0.3 million increase in investment management and trust fees and a $0.3 million increase in the gain on sales of SBA loans.

For the year ended December 31, 2016, noninterest income increased $2.1 million to $19.3 million compared to $17.2 million for the year ended December 31, 2015. The $2.1 million increase in noninterest income for 2016 was attributable to a $1.5 million increase in deposit service and other fees and a $0.3 million increase in investment management and trust fees, primarily due to fees generated by deposits and assets under management acquired in the Home State transaction.

Noninterest Expense
The following table presents noninterest expense as of the dates indicated:
Quarter Ended Year Ended
December 31,2016 September 30,2016 December 31,2015 December 31,2016 December 31,2015
(In thousands)
Noninterest expense:
Salaries and employee benefits $ 12,654 $ 10,984 $ 8,643 $ 40,946 $ 33,564
Occupancy expense 1,834 1,417 1,498 5,887 6,312
Furniture and equipment 789 750 801 3,070 3,007
Amortization of intangible assets 689 389 495 1,557 1,981
Other real estate owned, net 4 20 16 31 80
Insurance and assessment 496 608 603 2,314 2,398
Professional fees 914 962 700 3,639 3,220
Impairment of long-lived assets 185 - - 185 122
Other general and administrative 5,672 3,494 2,491 15,158 9,655
Total noninterest expense $ 23,237 $ 18,624 $ 15,247 $ 72,787 $ 60,339

Fourth quarter 2016 noninterest expense was $23.2 million compared to $18.6 million in the third quarter 2016 and $15.2 million in the fourth quarter 2015. The Company's tax equivalent efficiency ratio was 55.13% for the fourth quarter 2016 compared to 56.78% in the third quarter 2016 and 59.55% in the fourth quarter 2015.

Fourth quarter 2016 noninterest expense increased $4.6 million, compared to the third quarter 2016, primarily as a result of a $2.2 million increase in other general and administrative expense, a $1.7 million increase in salaries and employee benefits, a $0.4 million increase in occupancy expense and a $0.3 million increase in amortization of intangible assets. Merger-related expenses incurred in the fourth quarter 2016 were $3.0 million and consisted of $0.5 million in salaries and employee benefit expense related to severance and retention payments and $2.5 million in other general and administrative expense, primarily related to system conversion and integration costs. Salaries and employee benefits include merger-related expenses of $0.5 million in the fourth quarter 2016 and $1.4 million in the third quarter 2016, excluding merger-related expenses, this category of expense increased $2.6 million, mostly due to expenses related to the employees acquired in the Home State transaction. FTEs totaled 510 at December 31, 2016, compared to 547 at September 30, 2016, with the FTE reduction occurring late in the fourth quarter 2016. Similarly, the increases in occupancy expense and amortization of intangible assets were the result of buildings acquired and intangible assets recorded in the Home State transaction.

Noninterest expense increased by $8.0 million in the fourth quarter 2016, compared to the fourth quarter 2015, primarily due to $3.0 million in merger-related expenses incurred in the fourth quarter 2016. These merger-related expenses consisted of $0.5 million in salaries and employee benefit expense related to severance and retention payments and $2.5 million in other general and administrative expense. Excluding the merger-related expenses included in salaries and employee benefits, this category of expense increased $3.5 million, primarily due to an increase of 143 FTEs, due to the employees acquired in the Home State transaction. Other increases in noninterest expense included a $0.3 million increase in occupancy expense, a $0.2 million increase in amortization of intangible assets and a $0.2 million increase in professional fees.

For the year ended December 31, 2016, noninterest expense was $72.8 million, compared to $60.3 million for the year ended December 31, 2015. The $12.4 million increase in noninterest expense during 2016, compared to 2015, was primarily due to $6.3 million in merger-related expenses incurred during 2016. These merger-related expenses consisted of $1.9 million in salaries and employee benefits related to severance and retention payments and $4.4 million in other general and administrative expense, mostly due to system conversion costs and professional fees. Excluding the merger-related expenses, noninterest expense increased $6.2 million for the year ended December 31, 2016, compared to the year ended December 31, 2015, due to a $5.5 million increase in salaries and employee benefits, a $1.0 million increase in general and administrative expense and a $0.4 million increase in professional fees. These increases in noninterest income were partially offset by a $0.4 million decline in occupancy expense and a $0.4 million decline in amortization of intangible assets. The $5.5 million increase in salaries and employee benefits was mostly due to a $3.5 million increase in base salaries and a $1.4 million increase in employee benefits, mostly due to an increase of 143 FTEs since December 31, 2015. The $1.0 million increase in general and administrative expense during the year, compared to the prior year, was due to a $0.5 million increase in advertising and business development expense and smaller increases in several other categories.

Balance Sheet
December 31,2016 September 30,2016 Percent
Change
December 31,2015 Percent
Change
(Dollars in thousands)
Total assets $ 3,366,427 $ 3,346,265 0.6 % $ 2,368,525 42.1 %
Average assets, quarter-to-date 3,336,143 2,613,133 27.7 % 2,327,224 43.4 %
Total loans, net of deferred fees and costs 2,519,138 2,412,999 4.4 % 1,814,536 38.8 %
Total deposits 2,699,084 2,752,112 (1.9) % 1,801,845 49.8 %
Equity ratio - GAAP 10.47 % 10.50 % (0.3) % 9.36 % 11.9 %
Tangible common equity ratio 8.52 % 8.53 % (0.1) % 9.16 % (7.0) %

At December 31, 2016, the Company had total assets of $3.4 billion, reflecting an increase of $997.9 million compared to December 31, 2015, and an increase of $20.2 million compared to September 30, 2016. The increase in total assets year-over-year was comprised of a $704.6 million increase in loans, a $166.2 million increase in investments and a $66.5 million increase in goodwill and intangible assets related to the transaction with Home State. During the fourth quarter 2016, management moved approximately $64.3 million in investments from available-for-sale to the held-to-maturity portfolio to mitigate mark-to-market risk and its impact on tangible common equity. The third quarter 2016 acquisition of Home State included the acquisition of $445.5 million in loans and $769.9 million in deposits.

The following table sets forth the amount of loans outstanding at the dates indicated:
December 31,2016 September
30,
2016
June
30,
2016
March
31,
2016
December 31,2015
(In thousands)
Loans held for sale $ 4,129 $ - $ - $ - $ -
Commercial and residential real estate 1,768,424 1,752,113 1,428,397 1,307,854 1,281,701
Construction 88,451 75,603 26,497 87,753 107,170
Commercial 432,083 400,281 336,069 329,939 323,552
Consumer 125,264 81,766 66,539 66,829 66,288
Other 100,848 102,887 40,640 37,534 35,570
Total gross loans 2,519,199 2,412,650 1,898,142 1,829,909 1,814,281
Deferred (fees) and costs (61 ) 349 401 337 255
Loans, net 2,519,138 2,412,999 1,898,543 1,830,246 1,814,536
Less allowance for loan losses (23,250 ) (23,300 ) (23,050 ) (23,025 ) (23,000 )
Net loans $ 2,495,888 $ 2,389,699 $ 1,875,493 $ 1,807,221 $ 1,791,536
The following table presents the changes in the Company's loan balances at the dates indicated:
December 31,2016 September
30,
2016
June
30,
2016
March
31,
2016
December 31,2015
(In thousands)
Beginningbalance $ 2,412,650 $ 1,898,142 $ 1,829,909 $ 1,814,281 $ 1,726,033
New creditextended 232,499 129,064 121,753 105,843 155,745
Acquisition ofHome State Bank - 445,529 - - -
Net existingcredit advanced 142,448 153,390 87,524 50,482 61,165
Net pay-downsand maturities (272,326 ) (214,089 ) (142,516 ) (139,914 ) (129,189 )
Other 3,928 614 1,472 (783 ) 527
Gross loans 2,519,199 2,412,650 1,898,142 1,829,909 1,814,281
Deferred (fees) and costs (61 ) 349 401 337 255
Loans, net $ 2,519,138 $ 2,412,999 $ 1,898,543 $ 1,830,246 $ 1,814,536
Net change - loans outstanding $ 106,139 $ 514,456 $ 68,297 $ 15,710 $ 88,385

During the fourth quarter 2016, loans net of deferred fees and costs increased $106.1 million despite $272.3 million in net pay-downs and maturities during the quarter. In addition to contractual loan principal payments and maturities, the fourth quarter 2016 included $48.5 million in payoffs due to our strategic decision not to match certain financing terms offered by competitors, $37.9 million in early payoffs related to our borrowers selling their assets, and $25.0 million in loan pay-downs related to fluctuations in loan balances to existing customers.

During the year ended December 31, 2016, loans net of deferred fees and costs increased by $704.6 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 $259.1 million, or 14.3% since December 31, 2015.

The following table sets forth the amounts of deposits outstanding at the dates indicated:
December 31,2016 September
30,
2016
June
30,
2016
March
31,
2016
December 31,2015
(In thousands)
Noninterest-bearing demand $ 916,632 $ 857,064 $ 638,110 $ 631,544 $ 612,371
Interest-bearing demand and NOW 767,523 802,043 383,492 392,808 381,834
Money market 484,664 554,447 392,730 411,582 397,371
Savings 164,478 160,698 149,798 155,673 151,130
Time 365,787 377,860 283,231 281,110 259,139
Total deposits $ 2,699,084 $ 2,752,112 $ 1,847,361 $ 1,872,717 $ 1,801,845

At December 31, 2016, non-maturing deposits were $2.3 billion, an increase of $790.6 million compared to December 31, 2015, and a decrease of $41.0 million compared to September 30, 2016. Deposits acquired in the transaction with Home State were $769.7 million, of which $685.6 million were non-maturing deposits. Excluding the deposits acquired in the Home State transaction, total deposits grew $127.5 million, or 7.1% during the year ended December 31, 2016. At December 31, 2016 and 2015, noninterest-bearing deposits as a percentage of total deposits were 34.0%.

At December 31, 2016, securities sold under agreements to repurchase were $36.9 million, an increase of $10.5 million compared to December 31, 2015, and an increase of $1.0 million compared to September 30, 2016. Securities sold under agreements to repurchase acquired in the transaction with Home State were $20.0 million.

Total FHLB borrowings were $197.2 million at December 31, 2016, consisting of $124.7 million in overnight advances and $72.5 million in term advances. At December 31, 2015, total FHLB borrowings consisted of $185.8 million in overnight advances and $95.0 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
December 31,2016
Ratio at
December 31,2015
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 10.46 % 10.94 % 7.00 % N/A
Guaranty Bank and Trust Company 12.43 % 11.96 % 7.00 % 6.50 %
Tier 1 Risk-Based Capital Ratio
Consolidated 11.34 % 12.11 % 8.50 % N/A
Guaranty Bank and Trust Company 12.43 % 11.96 % 8.50 % 8.00 %
Total Risk-Based Capital Ratio
Consolidated 13.58 % 13.24 % 10.50 % N/A
Guaranty Bank and Trust Company 13.26 % 13.09 % 10.50 % 10.00 %
Leverage Ratio
Consolidated 9.81 % 10.68 % 4.00 % N/A
Guaranty Bank and Trust Company 10.76 % 10.55 % 4.00 % 5.00 %

At December 31, 2016, 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 decreased relative to December 31, 2015 whereas the Company's total risk-based capital ratios increased compared to December 31, 2015. The transaction with Home State was financed through the issuance of $40.0 million in fixed-to-floating rate subordinated notes, which qualified for treatment as Tier 2 capital and by the issuance of common stock valued at $117.5 million, which qualified as Common Equity Tier 1 capital.

Asset Quality
The following table presents select asset quality data, including quarterly charged-off loans, recoveries and provision (credit) for loan losses as of the dates indicated:
December 31,2016 September 30,2016 June
30,
2016
March
31,
2016
December 31,2015
(Dollars in thousands)
Originated nonaccrual loans and leases $ 3,345 $ 3,399 $ 13,326 $ 13,401 $ 14,474
Purchased nonaccrual loans and leases 1,902 2,108 - - -
Accruing loans past due 90 days or more (1) - 335 - - -
Total nonperforming loans (NPLs) $ 5,247 $ 5,842 $ 13,326 $ 13,401 $ 14,474
Other real estate owned and foreclosed assets 569 637 674 674 674
Total nonperforming assets (NPAs) $ 5,816 $ 6,479 $ 14,000 $ 14,075 $ 15,148
Total classified assets $ 33,443 $ 34,675 $ 25,644 $ 27,191 $ 26,428
Accruing loans past due 30-89 days (1) $ 1,337 $ 2,157 $ 2,386 $ 1,398 $ 2,091
Charged-off loans $ (290 ) $ (72 ) $ (57 ) $ (302 ) $ (66 )
Recoveries 150 295 72 311 184
Net (charge-offs) recoveries $ (140 ) $ 223 $ 15 $ 9 $ 118
Provision (credit) for loan losses $ 90 $ 27 $ 10 $ 16 $ (8 )
Allowance for loan losses $ 23,250 $ 23,300 $ 23,050 $ 23,025 $ 23,000
Unaccreted discount $ 14,682 $ 15,721 $ - $ - $ -
Selected ratios:
NPLs to loans, net of deferred fees and costs (2) 0.21 % 0.24 % 0.70 % 0.73 % 0.80 %
NPAs to total assets 0.17 % 0.19 % 0.58 % 0.60 % 0.64 %
Allowance for loan losses plus unaccreted discount to NPLs 722.93 % 667.94 % 172.97 % 171.82 % 158.91 %
Allowance forloan losses to loans, net of deferred fees and costs (2) 0.92 % 0.97 % 1.21 % 1.26 % 1.27 %
Allowance forloan losses plus unaccreted discount to loans, net of deferred fees and costs (2)

1.50

%

1.61

%

1.21

%

1.26

%

1.27

%
Loans 30-89 dayspast due to loans, net of deferred fees and costs (2) 0.05 % 0.09 % 0.13 % 0.08 % 0.12 %
Texas ratio (3) 1.55 % 1.77 % 5.17 % 5.14 % 5.65 %
Classified assetratio (4) 9.79 % 10.69 % 10.55 % 11.56 % 11.66 %
_______________
(1) Pastdue loans include both loans that are past due with respect to payments andloans that are past due because the loan has matured, and is in the processof renewal, but continues to be current with respect to payments.
(2) Loans, net of deferred fees and costs, exclude loans held for sale.
(3) Texasratio defined as total NPAs divided by subsidiary bank only Tier 1 Capitalplus allowance for loan losses.
(4) Classifiedasset ratio defined as total classified assets to subsidiary bank only Tier 1Capital plus allowance for loan losses.
The following tables summarize past due loans held for investment by class as of the dates indicated:
December31, 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 andresidential 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
December31, 2015 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 andresidential real estate $ 653 $ - $ 11,905 $ 12,558 $ 1,281,881
Construction - - 986 986 107,185
Commercial 1,147 - 874 2,021 323,598
Consumer 291 - 459 750 66,297
Other - - 250 250 35,575
Total $ 2,091 $ - $ 14,474 $ 16,565 $ 1,814,536

During the fourth quarter 2016, nonperforming assets decreased by $0.6 million from September 30, 2016 and $9.3 million from December 31, 2015. The $9.3 million decline in nonperforming assets during 2016 included a return of a $9.4 million out-of-state loan syndication to performing status. As a result of the transaction with Home State, $2.1 million of nonperforming loans were acquired. At December 31, 2016, performing troubled debt restructurings were $25.1 million, compared to $24.4 million at September 30, 2016 and $11.7 million at December 31, 2015. The increase in performing troubled debt restructurings in 2016, compared to the prior year, was primarily due to a return of the $9.4 million out-of-state loan syndication to performing status, described above.

At December 31, 2016, classified assets represented 9.8% of bank-level Tier 1 risk-based capital plus allowance for loan losses, compared to 10.7% at September 30, 2016 and 11.7% at December 31, 2015.

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)
December 31, 2016 Reported Balance $ 2,515,009 23,250 0.92 %
Unaccreted net discount 14,682 14,682
Adjusted December 31, 2016Balance $ 2,529,691 $ 37,932 1.50 %
_______________
1 Unaccreted net 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 allowance for loan losses to the extent recorded investment exceeds net realizable value.

Net charge-offs were $0.1 million during the fourth quarter 2016, compared to $0.2 million in net recoveries in the third quarter of 2016 and $0.1 million in net recoveries in the fourth quarter 2015. During the fourth quarter 2016, the Bank recorded a $0.1 million provision for loan losses compared to an immaterial provision in the third quarter 2016 and an immaterial credit provision in the fourth quarter 2015. 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 December 31, 2016, the Company had 28,334,004 shares of voting common stock outstanding, of which 513,187 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:
Quarter Ended Year Ended
December 31,2016 September 30,2016 December 31,2015 December 31,2016 December 31,2015
(Dollars in thousands, except per share amounts)
Net income $ 7,421 $ 5,765 $ 5,891 $ 24,727 $ 22,454
Expenses adjusted for:
Expenses (gains) related to other real estate owned, net 4 20 16 31 80
Merger-related expenses 3,032 2,205 - 6,259 -
Impairment of long-lived assets 185 - - 185 122
Income adjusted for:
(Gain) loss on sale of securities (49 ) 66 (132 ) 73 (132 )
(Gain) loss on sale of other assets - - 18 (14 ) 18
Pre-tax earnings adjustment 3,172 2,291 (98 ) 6,534 88
Tax effect of adjustments (1) (1,148 ) (775 ) 37 (2,248 ) (33 )
Tax effected operating earnings adjustment 2,024 1,516 (61 ) 4,286 55
Operating earnings $ 9,445 $ 7,281 $ 5,830 $ 29,013 $ 22,509
Average assets $ 3,336,143 $ 2,613,133 $ 2,327,224 $ 2,668,035 $ 2,226,794
Average equity $ 351,251 $ 253,570 $ 221,515 $ 264,474 $ 215,513
Fully diluted average common shares outstanding: 28,043,944 22,984,647 21,303,763 23,559,947 21,272,336
Earnings per common share-diluted - operating: $ 0.34 $ 0.32 $ 0.27 $ 1.23 $ 1.06
Earnings per common share-diluted: $ 0.26 $ 0.25 $ 0.28 $ 1.05 $ 1.06
ROAA - operating 1.13 % 1.11 % 0.99 % 1.09 % 1.01 %
ROAA (GAAP) 0.88 % 0.88 % 1.00 % 0.93 % 1.01 %
ROAE - operating 10.70 % 11.42 % 10.44 % 10.97 % 10.44 %
ROAE (GAAP) 8.41 % 9.04 % 10.55 % 9.35 % 10.42 %
___________
(1) Tax effect calculated using a combined federal and statemarginal 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
December 31,2016 September 30,2016 December 31,2015
(Dollars in thousands, except per share amounts)
Total stockholders' equity $ 352,378 $ 351,360 $ 221,639
Less: Goodwill and other intangibleassets (71,721 ) (72,153 ) (5,173 )
Tangible common equity $ 280,657 $ 279,207 $ 216,466
Number of common shares outstanding 28,334,004 28,349,107 21,704,852
Book value per common share $ 12.44 $ 12.39 $ 10.21
Tangible book value per common share $ 9.91 $ 9.85 $ 9.97
Tangible Common Equity Ratio
December 31,2016 September 30,2016 December 31,2015
(Dollars in thousands)
Total stockholders' equity $ 352,378 $ 351,360 $ 221,639
Less: Goodwill and other intangibleassets (71,721 ) (72,153 ) (5,173 )
Tangible common equity $ 280,657 $ 279,207 $ 216,466
Total assets $ 3,366,427 $ 3,346,265 $ 2,368,525
Less: Goodwill and other intangibleassets (71,721 ) (72,153 ) (5,173 )
Tangible assets $ 3,294,706 $ 3,274,112 $ 2,363,352
Equity ratio - GAAP (total stockholders'equity / total assets) 10.47 % 10.50 % 9.36 %
Tangible common equity ratio (tangiblecommon equity / tangible assets) 8.52 % 8.53 % 9.16 %

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
December 31, September 30, December 31,
2016 2016 2015
(In thousands)
Assets
Cash and duefrom banks $ 50,111 $ 163,908 $ 26,711
Time depositswith banks 254 504 -
Securitiesavailable for sale, at fair value 324,228 364,349 255,431
Securities heldto maturity 243,979 183,184 148,761
Bank stocks, atcost 22,649 14,558 20,500
Total investments 590,856 562,091 424,692
Loans held forsale 4,129 - -
Loans, held forinvestment, net of deferred fees and costs 2,515,009 2,412,999 1,814,536
Less allowance for loan losses (23,250 ) (23,300 ) (23,000 )
Net loans, held for investment 2,491,759 2,389,699 1,791,536
Premises andequipment, net 67,390 68,779 48,308
Other realestate owned and foreclosed assets 569 637 674
Goodwill 56,404 56,148 -
Other intangibleassets, net 15,317 16,005 5,173
Bank owned lifeinsurance 65,538 65,030 48,909
Other assets 24,100 23,464 22,522
Total assets $ 3,366,427 $ 3,346,265 $ 2,368,525
Liabilitiesand Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing demand $ 916,632 $ 857,064 $ 612,371
Interest-bearing demand and NOW 767,523 802,043 381,834
Money market 484,664 554,447 397,371
Savings 164,478 160,698 151,130
Time 365,787 377,860 259,139
Total deposits 2,699,084 2,752,112 1,801,845
Securities soldunder agreement to repurchase and federal funds purchased 36,948 35,936 26,477
Federal HomeLoan Bank term notes 72,477 122,521 95,000
Federal Home LoanBank line of credit borrowing 124,691 - 185,847
Subordinateddebentures 64,981 64,973 25,774
Interest payableand other liabilities 15,868 19,363 11,943
Total liabilities 3,014,049 2,994,905 2,146,886
Stockholders' equity:
Common stock and additional paid-in capital - common stock 832,098 831,106 712,334
Accumulated deficit (367,944 ) (372,170 ) (382,147 )
Accumulated other comprehensive loss (6,726 ) (2,936 ) (4,805 )
Treasury stock (105,050 ) (104,640 ) (103,743 )
Total stockholders' equity 352,378 351,360 221,639
Total liabilities and stockholders' equity $ 3,366,427 $ 3,346,265 $ 2,368,525
GUARANTY BANCORP AND SUBSIDIARIES
Unaudited Consolidated Statements of Operations
Quarter Ended December 31, Year Ended December 31,
2016 2015 2016 2015
(In thousands, except share and per sharedata)
Interest income:
Loans, including costs and fees $ 27,043 $ 18,439 $ 87,249 $ 70,188
Investment securities:
Taxable 2,171 2,060 7,625 8,325
Tax-exempt 1,224 719 3,683 2,852
Dividends 234 235 1,063 959
Federal funds sold and other 128 1 233 6
Total interest income 30,800 21,454 99,853 82,330
Interestexpense:
Deposits 1,560 923 4,859 3,207
Securities sold under agreement to repurchase and federal funds purchased 21 14 52 45
Borrowings 557 453 2,549 1,285
Subordinated debentures 840 208 2,005 814
Total interest expense 2,978 1,598 9,465 5,351
Net interest income 27,822 19,856 90,388 76,979
Provision (credit) for loan losses 90 (8 ) 143 96
Net interest income, after provision for loan losses 27,732 19,864 90,245 76,883
Noninterestincome:
Deposit service and other fees 3,405 2,259 10,447 8,941
Investment management and trust 1,563 1,225 5,452 5,189
Increase in cash surrender value of life insurance 607 442 2,005 1,758
Gain (loss) on sale of securities 49 132 (73 ) 132
Gain on sale of SBA loans 401 143 873 824
Other 207 61 553 336
Total noninterest income 6,232 4,262 19,257 17,180
Noninterestexpense:
Salaries and employee benefits 12,654 8,643 40,946 33,564
Occupancy expense 1,834 1,498 5,887 6,312
Furniture and equipment 789 801 3,070 3,007
Amortization of intangible assets 689 495 1,557 1,981
Other real estate owned, net 4 16 31 80
Insurance and assessments 496 603 2,314 2,398
Professional fees 914 700 3,639 3,220
Impairment of long-lived assets 185 - 185 122
Other general and administrative 5,672 2,491 15,158 9,655
Total noninterest expense 23,237 15,247 72,787 60,339
Income before income taxes 10,727 8,879 36,715 33,724
Income taxexpense 3,306 2,988 11,988 11,270
Net income $ 7,421 $ 5,891 $ 24,727 $ 22,454
Earnings percommon share-basic: $ 0.27 $ 0.28 $ 1.06 $ 1.07
Earnings percommon share-diluted: 0.26 0.28 1.05 1.06
Dividenddeclared per common share: $ 0.12 $ 0.10 $ 0.46 $ 0.40
Weighted averagecommon shares outstanding-basic: 27,784,996 21,077,889 23,267,108 21,065,590
Weighted averagecommon shares outstanding-diluted: 28,043,944 21,303,763 23,559,947 21,272,336
GUARANTY BANCORP AND SUBSIDIARIES
Unaudited Consolidated Average Balance Sheets
QTD Average YTD Average
December 31,
2016
September 30,
2016
December 31,
2015
December 31,
2016
December 31,
2015
(In thousands)
Assets
Interest earningassets
Loans, net of deferred fees and costs $ 2,421,057 $ 2,010,622 $ 1,769,010 $ 2,024,804 $ 1,655,857
Securities 573,726 424,133 429,971 449,707 441,046
Other earning assets 98,920 38,012 2,115 35,821 2,092
Average earningassets 3,093,703 2,472,767 2,201,096 2,510,332 2,098,995
Other assets 242,440 140,366 126,128 157,703 127,799
Total averageassets $ 3,336,143 $ 2,613,133 $ 2,327,224 $ 2,668,035 $ 2,226,794
Liabilitiesand Stockholders' Equity
Averageliabilities:
Averagedeposits:
Noninterest-bearing deposits $ 909,523 $ 707,283 $ 648,903 $ 711,678 $ 642,015
Interest-bearing deposits 1,853,362 1,399,442 1,194,964 1,419,174 1,119,309
Average deposits 2,762,885 2,106,725 1,843,867 2,130,852 1,761,324
Otherinterest-bearing liabilities 199,962 238,436 246,959 257,294 236,568
Otherliabilities 22,045 14,402 14,883 15,415 13,389
Total averageliabilities 2,984,892 2,359,563 2,105,709 2,403,561 2,011,281
Averagestockholders' equity 351,251 253,570 221,515 264,474 215,513
Total averageliabilities and stockholders' equity $ 3,336,143 $ 2,613,133 $ 2,327,224 $ 2,668,035 $ 2,226,794

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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