Market Overview

Guaranty Bancorp Announces 2016 Annual and Fourth Quarter Financial Results

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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 earnings(1) 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 September December December December
31, 2016 30, 2016 31, 2015 31, 2016 31, 2015
-----------------------------------------------------------
(Dollars in thousands, except per share amounts)
Net income $ 7,421 $ 5,765 $ 5,891 $ 24,727 $ 22,454
Operating
earnings (1) 9,445 7,281 5,830 29,013 22,509
Earnings per
common share -
diluted 0.26 0.25 0.28 1.05 1.06
Earnings per
common share -
diluted -
operating (1) 0.34 0.32 0.27 1.23 1.06
Return on
average assets 0.88% 0.88% 1.00% 0.93% 1.01%
Return on
average assets
- operating (1) 1.13% 1.11% 0.99% 1.09% 1.01%
Return on
average equity 8.41% 9.04% 10.55% 9.35% 10.42%
Return on
average equity
- operating (1) 10.70% 11.42% 10.44% 10.97% 10.44%
Net interest
margin 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) 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

December September Percent December Percent
31, 2016 30, 2016 Change 31, 2015 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 September December December December
31, 2016 30, 2016 31, 2015 31, 2016 31, 2015
-----------------------------------------------------------
(Dollars in thousands)
Net interest
income $ 27,822 $ 22,750 $ 19,856 $ 90,388 $ 76,979
Average earning
assets 3,093,703 2,472,767 2,201,096 2,510,332 2,098,995
Interest rate
spread 3.38% 3.45% 3.43% 3.42% 3.53%
Net interest
margin 3.58% 3.66% 3.58% 3.60% 3.67%
Net interest
margin, 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 of
interest-
bearing
liabilities
(including
noninterest-
bearing
deposits) 0.40% 0.44% 0.30% 0.40% 0.27%
Average cost of
deposits
(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 Year Ended
December 31, 2016 December 31, 2016
------------------- -------------------
Net Net
Interest Loan Interest Loan
Margin Yield Margin 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: Accretion of acquired loan
discount not attributable to
early payoffs (0.05)% (0.07)% (0.02)% (0.03)%
--------------------- ---------------------
Excluding total accretion of
loan acquisition discounts 3.44% 4.27% 3.55% 4.24%
===================== =====================

Total accretion of 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 September December December December
31, 2016 30, 2016 31, 2015 31, 2016 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 September December December December
31, 2016 30, 2016 31, 2015 31, 2016 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 September Percent December Percent
31, 2016 30, 2016 Change 31, 2015 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 September June March December
31, 2016 30, 2016 30, 2016 31, 2016 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 September June March December
31, 2016 30, 2016 30, 2016 31, 2016 31, 2015
-----------------------------------------------------------
(In thousands)
Beginning
balance $2,412,650 $1,898,142 $1,829,909 $1,814,281 $1,726,033
New credit
extended 232,499 129,064 121,753 105,843 155,745
Acquisition of
Home State Bank - 445,529 - - -
Net existing
credit advanced 142,448 153,390 87,524 50,482 61,165
Net pay-downs
and 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 September June March December
31, 2016 30, 2016 30, 2016 31, 2016 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:

Minimum
Requirement
for
"Adequately
Capitalized"
Institution Minimum
plus fully Requirement
phased in for
Ratio at Ratio at Capital "Well-
December December Conservation Capitalized"
31, 2016 31, 2015 Buffer 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 September June March December
31, 2016 30, 2016 30, 2016 31, 2016 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 for
loan losses to
loans, net of
deferred fees
and costs (2) 0.92% 0.97% 1.21% 1.26% 1.27%
Allowance for
loan 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 days
past 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 asset
ratio (4) 9.79% 10.69% 10.55% 11.56% 11.66%
_______________
(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 fees and costs, exclude loans held for sale.
(3) Texas ratio defined as total NPAs divided by subsidiary bank only Tier
1 Capital plus allowance for loan losses.
(4) Classified asset ratio defined as total classified assets to subsidiary
bank only Tier 1 Capital plus allowance for loan losses.







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

90 Days + Total Total
30-89 Past Due Nonaccrual Loans,
Days Past and Still and Held for
December 31, 2016 Due Accruing Nonaccrual Past Due Investment
---------------------- -----------------------------------------------------
(In thousands)
Commercial and
residential real
estate $ 1,258 $ - $ 2,835 $ 4,093 $ 1,768,381
Construction - - - - 88,449
Commercial 37 - 1,094 1,131 432,072
Consumer 42 - 201 243 125,261
Other - - 1,117 1,117 100,846
-----------------------------------------------------
Total $ 1,337 $ - $ 5,247 $ 6,584 $ 2,515,009
=====================================================


90 Days + Total Total
30-89 Past Due Nonaccrual Loans,
Days Past and Still and Held for
December 31, 2015 Due Accruing Nonaccrual Past Due Investment
---------------------- -----------------------------------------------------
(In thousands)
Commercial and
residential 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:




Allowance
Allowance / over
Loans Discount 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, 2016 Balance $ 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 September December December December
31, 2016 30, 2016 31, 2015 31, 2016 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 state marginal tax
rate of 38.01%, adjusted for tax effect of nondeductible merger-related
expenses.







The following non-GAAP schedules reconcile the book value per share to the
tangible book value per share and the GAAP equity ratio to the tangible
equity ratio as of the dates indicated:

Tangible Book Value per Common
Share
December 31, September 30, December 31,
2016 2016 2015
--------------------------------------------
(Dollars in thousands, except per share
amounts)
Total stockholders' equity $ 352,378 $ 351,360 $ 221,639
Less: Goodwill and other
intangible assets (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, September 30, December 31,
2016 2016 2015
--------------------------------------------
(Dollars in thousands)
Total stockholders' equity $ 352,378 $ 351,360 $ 221,639
Less: Goodwill and other
intangible assets (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
intangible assets (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
(tangible common 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 due from banks $ 50,111 $ 163,908 $ 26,711
--------------------------------------------

Time deposits with banks 254 504 -

Securities available for sale,
at fair value 324,228 364,349 255,431
Securities held to maturity 243,979 183,184 148,761
Bank stocks, at cost 22,649 14,558 20,500
--------------------------------------------
Total investments 590,856 562,091 424,692
--------------------------------------------

Loans held for sale 4,129 - -

Loans, held for investment, 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 and equipment, net 67,390 68,779 48,308
Other real estate owned and
foreclosed assets 569 637 674
Goodwill 56,404 56,148 -
Other intangible assets, net 15,317 16,005 5,173
Bank owned life insurance 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
============================================

Liabilities and 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 sold under agreement
to repurchase and federal
funds purchased 36,948 35,936 26,477
Federal Home Loan Bank term
notes 72,477 122,521 95,000
Federal Home Loan Bank line of
credit borrowing 124,691 - 185,847
Subordinated debentures 64,981 64,973 25,774
Interest payable and 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 share data)
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
-------------------------- --------------------------
Interest expense:
Deposits 1,560 923 4,859 3,207
Securities sold
under agreement to
repurchase
andfederal 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
Noninterest income:
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
Noninterest expense:
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 tax expense 3,306 2,988 11,988 11,270
-------------------------- --------------------------
Net income $ 7,421 $ 5,891 $ 24,727 $ 22,454
========================== ==========================

Earnings per common
share-basic: $ 0.27 $ 0.28 $ 1.06 $ 1.07
Earnings per common
share-diluted: 0.26 0.28 1.05 1.06
Dividend declared per
common share: $ 0.12 $ 0.10 $ 0.46 $ 0.40

Weighted average
common shares
outstanding-basic: 27,784,996 21,077,889 23,267,108 21,065,590
Weighted average
common 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 September December December December
31, 30, 31, 31, 31,
2016 2016 2015 2016 2015
----------------------------------- -----------------------
(In thousands)
Assets
Interest earning
assets
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 earning
assets 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 average
assets $ 3,336,143 $ 2,613,133 $ 2,327,224 $ 2,668,035 $ 2,226,794
=================================== =======================

Liabilities and
Stockholders'
Equity
Average
liabilities:
Average
deposits:
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
Other interest-
bearing
liabilities 199,962 238,436 246,959 257,294 236,568
Other
liabilities 22,045 14,402 14,883 15,415 13,389
----------------------------------- -----------------------
Total average
liabilities 2,984,892 2,359,563 2,105,709 2,403,561 2,011,281
Average
stockholders'
equity 351,251 253,570 221,515 264,474 215,513
----------------------------------- -----------------------
Total average
liabilities and
stockholders'
equity $ 3,336,143 $ 2,613,133 $ 2,327,224 $ 2,668,035 $ 2,226,794
=================================== =======================





FOR FURTHER INFORMATION PLEASE CONTACT:

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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