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 shareamounts)
Net income $ 10,125 $ 9,840 $ 5,686 $ 19,965 $ 11,541
Operatingearnings(1) 10,232 9,832 6,049 20,064 12,287
Earnings percommon share - diluted 0.36 0.35 0.27 0.71 0.54
Earnings per commonshare - diluted - operating(1) 0.36 0.35 0.28 0.71 0.57
Return onaverage assets 1.19 % 1.18 % 0.97 % 1.19 % 0.98 %
Return onaverage assets - operating(1) 1.21 % 1.18 % 1.03 % 1.19 % 1.05 %
Return onaverage equity 11.13 % 11.17 % 10.03 % 11.15 % 10.26 %
Return onaverage equity - operating(1) 11.25 % 11.16 % 10.67 % 11.20 % 10.93 %
Net interestmargin 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-earningassets:
Gross loans, net of deferred costsand 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-earningassets:
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
LIABILITIESAND STOCKHOLDERS' EQUITY:
Interest-bearingliabilities:
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 %
Noninterestbearing 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
Totalliabilities and stockholders' equity $ 3,404,109 $ 3,374,153 $ 2,356,964
Net interestincome $ 29,499 $ 28,172 $ 19,821
Net interestmargin 3.74 % 3.65 % 3.57 %
Net interest margin, fully taxequivalent(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-earningassets:
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-earningassets:
Cash and due from banks 35,121 24,868
Other assets 205,053 98,762
Total assets $ 3,389,212 $ 2,358,059
LIABILITIESAND STOCKHOLDERS' EQUITY:
Interest-bearingliabilities:
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 %
Noninterestbearing 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
Totalliabilities and stockholders' equity $ 3,389,212 $ 2,358,059
Net interestincome $ 57,671 $ 39,816
Net interestmargin 3.69 % 3.58 %
Net interest margin, fully taxequivalent (2) 3.80 % 3.66 %

(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)

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 oflife 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)
Beginningbalance $ 2,570,745 $ 2,519,199 $ 2,412,650 $ 1,898,142 $ 1,829,909 1,814,281
New creditextended 132,420 139,185 232,499 129,064 121,753 105,843
Acquisition ofHome State Bank - - - 445,529 - -
Net existingcredit advanced 73,298 111,821 142,448 153,390 87,524 50,482
Net pay-downsand 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 costsand (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)
Originatednonaccrual loans $ 3,332 $ 3,387 $ 3,345 $ 3,399 $ 13,326
Purchased creditimpaired loans 1,290 1,715 1,902 2,108 -
Accruing loanspast due 90 days or more(1) - - - 335 -
Totalnonperforming loans (NPLs) $ 4,622 $ 5,102 $ 5,247 $ 5,842 $ 13,326
Other realestate owned and foreclosed assets 113 257 569 637 674
Totalnonperforming assets (NPAs) $ 4,735 $ 5,359 $ 5,816 $ 6,479 $ 14,000
Total classifiedassets $ 29,188 $ 30,201 $ 33,443 $ 34,675 $ 25,644
Accruing loanspast due 30-89 days(1) $ 957 $ 3,858 $ 1,337 $ 2,157 $ 2,386
Charged-offloans $ (338) $ (125) $ (290) $ (72) $ (57)
Recoveries 82 45 150 295 72
Net (charge-offs) recoveries $ (256) $ (80) $ (140) $ 223 $ 15
Provision forloan losses $ 206 $ 5 $ 90 $ 27 $ 10
Allowance forloan losses $ 23,125 $ 23,175 $ 23,250 $ 23,300 $ 23,050
Unaccreted loandiscount(5) $ 12,665 $ 13,896 $ 14,682 $ 15,721 $ -
Selectedratios:
NPLs to loans, net of deferred costs and fees(2) 0.18 % 0.20 % 0.21 % 0.24 % 0.70 %
NPAs to totalassets 0.14 % 0.16 % 0.17 % 0.19 % 0.58 %
Allowance forloan losses to NPLs 500.32 % 454.23 % 443.11 % 398.84 % 172.97 %
Allowance for loan losses to loans, net ofdeferred costs and fees(2) 0.90 % 0.90 % 0.92 % 0.97 % 1.21 %
Loans 30-89 days past due to loans, net ofdeferred 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 assetratio(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 residentialreal 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
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 and residentialreal 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 realestate 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 commonshares outstanding: 28,095,871 28,090,179 21,378,349 28,120,746 21,437,781
Earnings per commonshare-diluted: $ 0.36 $ 0.35 $ 0.27 $ 0.71 $ 0.54
Earnings per commonshare-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 intangibleassets (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 intangibleassets (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 intangibleassets (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 (tangiblecommon 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 duefrom banks $ 46,582 $ 50,111 $ 30,446
Time depositswith banks 254 254 -
Securitiesavailable for sale, at fair value 305,910 324,228 198,156
Securities heldto maturity 240,899 243,979 149,196
Bank stocks, atcost 23,003 22,649 21,656
Total investments 569,812 590,856 369,008
Loans held forsale 887 4,129 -
Loans, held forinvestment, 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 andequipment, net 64,774 67,390 45,769
Other realestate owned and foreclosed assets 113 569 674
Goodwill 56,404 56,404 -
Other intangibleassets, net 14,020 15,317 4,694
Bank owned lifeinsurance 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
Liabilitiesand 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 soldunder agreement to repurchase 29,553 36,948 17,990
Federal HomeLoan Bank line of credit borrowing 90,900 124,691 141,600
Federal HomeLoan Bank term notes 71,772 72,477 120,000
Subordinateddebentures, net 65,023 64,981 25,774
Interest payableand 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 sharedata)
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
Interestexpense:
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 forloan losses 206 10 211 26
Net interest income, after provision for loan losses 29,293 19,811 57,460 39,790
Noninterestincome:
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
Noninterestexpense:
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 taxexpense 5,007 3,133 9,207 5,643
Net income $ 10,125 $ 5,686 $ 19,965 $ 11,541
Earnings percommon share-basic: $ 0.36 $ 0.27 $ 0.72 $ 0.54
Earnings percommon share-diluted: 0.36 0.27 0.71 0.54
Dividenddeclared per common share: $ 0.13 $ 0.12 $ 0.25 $ 0.23
Weighted averagecommon shares outstanding-basic: 27,913,082 21,242,520 27,890,446 21,213,706
Weighted averagecommon 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

Comments on GBNK stock