Guaranty Financial Corp · OTC:GFCJ
Guaranty Financial — Q2 2008 Earnings Presentation
25 slides from Guaranty Financial's earnings presentation, Jul 31, 2008
Slide 1: Second Quarter 2008 Financial Highlights
Second Quarter 2008 Financial Highlights July 31, 2008
Slide 2: Forward Looking Statements
Forward Looking Statements Some statements made in this presentation may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are identified by their use of terms and phrases such as “believe,” “anticipat
Slide 3: Earnings Highlights
Earnings Highlights N/A 9.38% 0.61% (15) (94) - $95 2Q07 ($0.28) ($2.24) Basic and Diluted (Loss) Earnings Per Share (3.65%) (37.12%) Return on Average Equity (0.24%) (2.08%) Return on Average Assets (10) (85) Net (Loss) Income (28) Income Tax Benefit (Expense)* (17) (57) (Loss) Income Before Taxes
Slide 4: Net Interest Margin
Net Interest Margin Despite volatility in interest rates, successfully maintained stable net interest margin long-term
Slide 5: Revenue
Revenue 60.0% Non-deposit Investment Fees 7.9% Total Noninterest Income 6.0% Total Revenue 6.4% 14,903 15,861 Average Earning Assets -8.3% Insurance Commission and Fees* -12.5% Other 15.4% Deposit Fees 5.3% % Change Noninterest Income: $95 $100 Net Interest Income before LLP 2Q07 2Q08 ($ in millions
Slide 6: Balance Sheet Highlights
Balance Sheet Highlights 5.1 5.3 5.1 Securities – amortized cost N/A 19.38 13.85 Tangible Equity Per Common Share 23.91 0.9* 5.7 9.2 15.5 (0.4) 10.1 $16.4 1Q08 1.0 0.8** Stockholders’ Equity N/A 17.61 Book Equity Per Common Share 4.6 5.6 FHLB Borrowings 9.5 9.2 Deposits 14.7 15.2 Total Liabilities -
Slide 7: Deposits
Deposits Diversified deposit base with no brokered deposits Deposit Mix Total: $9.2 billion as of 6/30/2008
Slide 8: Liquidity
Liquidity Significant excess borrowing capacity and deposit gathering capabilities Total: $15 billion as of 6/30/2008 Funding Position Today excess borrowing capacity is in excess of $4.5 billion
Slide 9: Loan Portfolio
Loan Portfolio 14% 14% 13% Diversified loan portfolio (78) (250) Less allowance for loan losses Consumer and other (26) 10,245 Total loans (104) 9,995 Loans, net (100) 1,334 Energy 1,384 Commercial and business (26) 1,774 Commercial real estate 1,877 Multifamily and senior housing (118) 1,223 Single
Slide 10: Nonperforming Assets by Type
Nonperforming Assets by Type 117 182 233 Residential Mortgage REO Homebuilder Other $284 Housing market continues to drive increase in NPAs ($ in millions) $406 $179 $130 $36 $36
Slide 11: Allowance for Loan Losses by Category
Allowance for Loan Losses by Category 2.44% n/a 0.51% 1.42% 1.59% 0.34% 0.48% 11.12% 0.51% 1.62% Allowance as a % of Loan Category $24 Allowance 2Q 2008 0.67% 1.17% 1.67% Total n/a n/a n/a Not allocated - - - - 0.65% Consumer and other 0.36% 0.41% 0.42% Energy 0.79% 1.12% 1.33% Commercial and busine
Slide 12: Provision for credit losses and nonaccrual loans and other loans
Provision for credit losses and nonaccrual loans and other loans 0.74% (19) $181 Three Months Ended June 30, 0.08% Net charge-offs (annualized) as a percentage of average loans outstanding Accruing loans past-due 90 days or more Nonaccrual loans Commitment-related reserves Allowance for loan losses
Slide 13: Charge-off History
Charge-off History Net charge-offs lower than our peers Net charge-offs as a percentage of average loans outstanding *Peers: BOKF, BXS, CRBC, CYN, CNB, CFR, DSL, FBC, FULT, PBCT, STSA, TSFG, SUSQ, VLY, and WBS . **Excludes 4 institutions due to 6/30/08 YTD information not available as of 7/28/08. **
Slide 14: Homebuilder Portfolios
Homebuilder Portfolios Regional builders National builders Outstanding balance
Slide 15: Regional Homebuilder Loans
Regional Homebuilder Loans 7% Colorado $55 Houses 100% 1,077 35% Other 5% Arizona 8% Florida 10% Texas 19% Other California 16% $174 $119 Northern & Central California % of Total Total Land/Lots & Other As of June 30, 2008 ($ in millions) - $52 Amount in NPL Nonperforming homebuilder loans remain pr
Slide 16: Single-Family Mortgages Detail
Single-Family Mortgages Detail Total Portfolio Seconds First Liens Other First Liens Pay Option Arms Intermediate Arms $ in millions 85% 5% 14% 0% 2% TX 3% 57% 49% 61% 60% CA 11.09% 1.86% 11.87% 11.85% 21.04% 5.53% Total 0% 7% 3% 13% 6% FL State Delinquencies% 6.65% 0.50% 7.17% 7.53% 12.72% 3.10% 90
Slide 17: MBS Portfolio Overview
MBS Portfolio Overview June 30, 2008 100% 37% 63% % of Total 100% 5.1 1.9 3.2 Total 71% 3.7 1.4 2.3 Non-agency 29% $1.4 $0.5 $0.9 Agency % of Total Total Available for Sale Held to Maturity Amortized Cost ($ in billions)
Slide 18: Mortgage Backed Securities Product Type
Mortgage Backed Securities Product Type Non-agency MBS Product Type Non-agency MBS by State 100% $3.6 TOTAL 5% 0.2 Hybrid Arm 13% 0.4 Hybrid Option Arm 82% $3.0 Traditional Option Arms % of Total Unpaid Principal Balance ($ in billions) 100% TOTAL 17% Not available 8% Other 3% Arizona 12% Florida 60
Slide 19: MBS Portfolio Detail
MBS Portfolio Detail As of June 30, 2008 ($ Billions) Amortized Cost Fair Value Available for Sale: Agency $0.52 $0.52 Non-agency $1.35 $0.83 Held to Maturity: Agency $0.96 $0.96 Non-agency $2.28 $1.38 Total: $5.11 $3.69 Non-agency MBS Adjustable rate Underlying collateral total delinquency rate (in
Slide 20: MBS Valuation and Subordination
MBS Valuation and Subordination Quarterly Credit Review of each Non-Agency MBS : Project credit losses on underlying loans for each security over its remaining life, using appropriate assumptions for default rates and loss severity. Determine extent to which each security’s subordination level is su
Slide 21: MBS Portfolio Ratings Activity
MBS Portfolio Ratings Activity 1,041 Neg. Watch from AAA 6/19/2008 SAMI 2005-AR8 A5 Neg. Watch from AAA 6/19/2008 SAMI 2005-AR7 5A2 Neg. Watch from AAA 6/25/2008 RALI 2005-Q05 A3 Downgraded to A1 7/25/2008 GPMF 2005-AR5 1A2 Neg. Watch from AAA 6/19/2008 Neg. Watch from AAA 4/29/2008 CWALT-2006-OA2 A
Slide 22: Operating Efficiency
Operating Efficiency 70% $48 2Q08 Other -- -- Charges related to asset impairments and severance 67% 67% 68% 71% Efficiency ratio Information systems and technology Occupancy $182 $184 $181 $51 Compensation and benefits 1Q08 Noninterest Expenses Compensation and benefits expense declined 6% from pri
Slide 23: Capital
Capital $723 million excess $606 million excess $741 million excess Tangible Equity/Tangible Assets * Peers: BOKF, BXS, CRBC, CYN, CNB, CFR, DSL, FBC, FULT, PBCT, STSA, TSFG, SUSQ, VLY, and WBS . Total Risk-Based Capital Tier 1 Risk-Based Capital Tier 1 (Core) Capital (Leverage) 10% 6.0% 5.0% 10.6%
Slide 24: Pro Forma Capitalization
Pro Forma Capitalization 106.5 million Shares outstanding (assuming conversion of preferred into common) 44.6 million Shares outstanding $8.74 Tangible equity per common share $1,098 adjusted stockholders’ equity +312 net proceeds from sale of preferred stk $1,098 Stockholders’ equity As adjusted fo
Slide 25: Second Quarter 2008 Financial Highlights
Second Quarter 2008 Financial Highlights July 31, 2008
Guaranty Financial Group — Q2 2008 Earnings Presentation on 6ix