Guaranty Bancorp (Nasdaq: GBNK) has agreed to sell $50 million in convertible noncumulative preferred stock to three firms: Castle Creek Capital Partners, Patriot Financial Partners and Relational Investors.
Guaranty Bancorp (Nasdaq:GBNK) today reported that it has entered into a definitive purchase agreement with three investment firms to sell them $50 million in newly issued mandatory convertible noncumulative preferred stock of Guaranty Bancorp (Company). Upon receipt of regulatory and stockholder approval of the proposed investment, as well as the completion of customary closing conditions, the preferred stock will be acquired by Patriot Financial Partners, L.P. and Patriot Financial Partners Parallel, L.P. (Patriot); Relational Investors Mid-Cap Fund I, L.P. and Relational Investors Mid-Cap Fund II, L.P (Relational); and Castle Creek Capital Partners III, L.P. (Castle Creek). The preferred stock is being issued under a transaction exempt from the registration requirements of the Securities Act of 1933, as amended, and the transaction is expected to close in the third quarter.
Dan Quinn, Guaranty Bancorp President and CEO, stated, “We are pleased to have added significantly to our equity base in the current environment. This new capital provides a strong foundation from which to serve our customers during these challenging times. Upon completion of this private placement, we believe that Guaranty Bancorp will become one of the most highly capitalized public bank holding companies in the Western United States with a GAAP equity ratio of 10.2% and a tangible common equity ratio of approximately 9.2%.”
The Company has agreed that, following consummation, it will file a shelf registration statement with the Securities and Exchange Commission (SEC) with respect to the preferred shares being issued and the shares of common stock issuable upon conversion. The preferred shares are convertible after two years at the option of the holder, and subject to certain limitations are mandatorily convertible at the end of five years at a price of $1.80, subject to adjustment upon certain conditions. The shares pay a noncumulative 9% dividend until conversion, which can be paid in convertible preferred stock during the first two years. The holders of preferred stock will vote together with the holders of common stock on all matters submitted to a vote of the stockholders on an as converted basis and will vote separately as a class on certain matters. Stockholders of the Company representing approximately 32% of the outstanding shares of common stock have entered into voting agreements pursuant to which they have agreed to vote their shares in favor of the transactions contemplated by the purchase agreement. Further information regarding the terms and conditions of the capital raise will be available in a Form 8-K to be filed with the SEC by the Company.
On a pro forma basis, the regulatory capital ratios for the Company would have further exceeded regulatory minimums at March 31, 2009 as follows:
Actual and Pro Forma
Rations at March 31,
Regulatory Bank to be
Minimum a “Well
Capital Capitalized” As Pro
Requirement Institution Reported Forma
Capital Ratio 8.00% 10.00% 10.82% 13.35%
Tier 1 Risk-Based
Capital Ratio 4.00% 6.00% 9.56% 10.29%
Leverage Ratio 4.00% 5.00% 9.20% 9.90%
Equity Ratio – GAAP N/A N/A 8.03% 10.24%
Equity Ratio* N/A N/A 6.94% 9.20%
* Tangible common equity includes common stock capital elements, as
well as mandatory convertible classes of stock. The tangible common
equity ratio excludes $23,918,000 of intangible assets from both the
numerator and denominator.
About Guaranty Bancorp
Guaranty Bancorp is a bank holding company that operates 34 branches in Colorado through a single bank, Guaranty Bank and Trust Company. The bank provides banking and other financial services including real estate, construction, commercial and industrial, energy, consumer and agricultural loans throughout its targeted Colorado markets to consumers and small to medium-sized businesses, including the owners and employees of those businesses. The bank also provides trust services, including personal trust administration, estate settlement, investment management accounts and self-directed IRAs. More information about Guaranty Bancorp can be found at www.gbnk.com.