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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-K

ý

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended: December 31, 2010oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
from                                  to


Commission file number: 000-51556

GUARANTY BANCORP(Exact name of registrant as specified in its charter)

Delaware(State or other jurisdiction of
incorporation or organization)

41-2150446(I.R.S. Employer
Identification No.)1331 Seventeenth Street, Suite 345Denver, Colorado

80202(Address of principal executive offices)

(Zip code)


(303) 293-5563(Registrant's telephone number, including area code)

Securities
registered pursuant to Section 12(b) of the Act:

Voting Common Stock, $0.001 Par Value

The NASDAQ Stock Market LLC(Title of each class)

(Name of each exchange on which registered)


Securities
registered pursuant to Section 12(g) of the Act:None

Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes o    No ý

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes o    No ý

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes ý    No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment
to this Form 10-K. ý

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit and post such files). Yes o    No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of "large accelerated filer"; "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Act (Check one).

Large accelerated filer o

Accelerated filer o

Non-accelerated filer o (Do not check if a
smaller reporting company)

Smaller reporting company ý


Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.)
Yes o    No ý

The aggregate market value of the voting common stock held by non-affiliates of the registrant, computed by reference to the closing price per share of
the registrant's voting common stock as of the close of business on June 30, 2010, was approximately $39.7 million. For purposes of this computation, all executive officers, directors
and 10% beneficial owners of the registrant are assumed to be affiliates. Such determination should not be deemed an admission that such officers, directors and beneficial owners are, in fact,
affiliates of the registrant. Registrant does not have any outstanding non-voting common equities.

As
of February 16, 2011, there were 54,400,441 shares of the registrant's voting common stock outstanding, including 2,795,244 shares of unvested stock grants and excluding
156,567 shares to be issued under its deferred compensation plan.

DOCUMENTS INCORPORATED BY REFERENCE

The information required by Items 10, 11, 12, 13 and 14 of Part III of this Annual Report on
Form 10-K will be found in the registrant's definitive proxy statement for its 2011 Annual Meeting of Stockholders, to be filed pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended, and such information is incorporated herein by reference.



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GUARANTY BANCORP  ANNUAL REPORT ON FORM 10-K  Table of Contents



PART I

3Forward-Looking Statements and Factors that Could Affect Future Results

3Item 1.

BUSINESS

4Item 1A.

RISK FACTORS

23Item 1B.

UNRESOLVED STAFF COMMENTS

38Item 2.

PROPERTIES

38Item 3.

LEGAL PROCEEDINGS

38Item 4.

[REMOVED AND RESERVED]

38PART II

39Item 5.

MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

39Item 6.

SELECTED FINANCIAL DATA

41Item 7.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

42Item 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

80Item 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

82Item 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

145Item 9A.

CONTROLS AND PROCEDURES

145Item 9B.

OTHER INFORMATION

145PART III

146Item 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE OF THE REGISTRANT

146Item 11.

EXECUTIVE COMPENSATION

146Item 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

146Item 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

146Item 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

146PART IV

147Item 15.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

147SIGNATURES

151


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PART I

Forward-Looking Statements and Factors that Could Affect Future Results

Certain statements contained in this Annual Report on Form 10-K that are not statements of historical fact
constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act"), notwithstanding that such statements are not specifically identified. In
addition, certain statements may be contained in our future filings with the SEC, in press releases, and in oral and written statements made by or with our approval that are not statements of
historical fact and constitute forward-looking statements within the meaning of the Act. Examples of forward-looking statements include, but are not limited to: (i) projections of revenues,
expenses, income or loss, earnings or loss per share, the payment or nonpayment of dividends, capital structure and other financial items; (ii) statements of plans, objectives and expectations
of the Company or its management or board of directors, including those
relating to products or services; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Words such as "believes", "anticipates",
"expects", "intends", "targeted", "projected", "continue", "remain", "will", "should", "may" and other similar expressions are intended to identify forward-looking statements but are not the exclusive
means of identifying such statements.

Forward-looking
statements involve risks and uncertainties that may cause actual results to differ materially from those in such statements. Factors that could cause actual results to
differ from those discussed in the forward-looking statements include, but are not limited to:



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Forward-looking
statements speak only as of the date on which such statements are made. We do not intend to update any forward-looking statement to reflect events or circumstances after the date on
which such statement is made, or to reflect the occurrence of unanticipated events.

ITEM 1.    BUSINESS

Guaranty Bancorp

We are a bank holding company registered under the Bank Holding Company Act of 1956, as amended. Our principal business is to serve as
a holding company for our bank subsidiary, Guaranty Bank and Trust Company ("Guaranty Bank" or "Bank").

When
we say "we", "us", "our" or the "Company", we mean the Company on a consolidated basis with the Bank. When we refer to "Guaranty Bancorp" or the "holding company", we are referring
to the parent company on a standalone basis.

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At
December 31, 2010, we had total assets of $1.9 billion, net loans of $1.2 billion, deposits of $1.5 billion and stockholders' equity of
$160.3 million, and we operated 34 branches in Colorado through our bank subsidiary, Guaranty Bank.

Guaranty
Bancorp was incorporated in 2004 in Delaware under the name Centennial C Corp, and in 2004 and 2005 acquired several banking institutions and other entities, including Guaranty
Bank. By 2008, all of the entities acquired were either ultimately merged into either Guaranty Bancorp or Guaranty Bank or divested as follows:

Date of CompletionAcquisitionsEntityCentennial Bank Holdings, Inc. (Predecessor) (Centennial C Corp changed its name to Centennial Bank Holdings, Inc. in 2004)

July 16, 2004Centennial Bank of the West (merged into Guaranty Bank on January 1, 2008)Guaranty Corporation (merged into Centennial Bank Holdings, Inc.)

December 31, 2004Guaranty Bank and Trust CompanyFirst National Bank of Strasburg (merged into Guaranty Bank on April 14, 2005)Collegiate Peaks Bank (divested on November 1, 2006)First MainStreet Financial, Ltd. (merged into Centennial Bank Holdings, Inc.)

October 1, 2005First MainStreet Bank, N.A. (merged into Centennial Bank of the West)First MainStreet Insurance, Ltd. (divested on March 1, 2006)Foothills Bank (merged into Guaranty Bank)

November 1, 2005DivestituresEntityFirst MainStreet Insurance, Ltd. (asset sale)

March 1, 2006Collegiate Peaks Bank

November 1, 2006


On
May 12, 2008, the Company changed its name from Centennial Bank Holdings, Inc. to Guaranty Bancorp. As of December 31, 2010 and 2009, we had a single bank
subsidiary, Guaranty Bank and Trust Company. Guaranty Bank and Trust Company owns several single-member limited liability companies that own real estate.

Business

The Bank is a full-service community bank offering an array of banking products and services to the communities it serves
along the Front Range of Colorado, including accepting time and demand deposits and originating commercial loans (including energy loans), real estate loans, and small business and consumer loans. The
Bank also provides trust services, including personal trust administration, estate settlement, investment management accounts and self-directed IRAs. Substantially all loans are secured by
specific items of collateral, including business assets, consumer assets and commercial and residential real estate. Commercial loans are expected to be repaid from cash flow from business operations.
There are no significant
concentrations of loans to any one industry or customer. The customers' ability to repay their loans is dependent on the real estate and general economic conditions of the area, among other factors.

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We
concentrate our lending activities in the following principal areas:



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In
addition, we provide traditional deposit accounts such as demand, NOW, Money Market, IRA, time deposits and savings accounts. Our certificate of deposit customers, excluding brokered
deposits, primarily represent local relationships. Our branch network enables us to offer a full range of deposits, loans and personalized services to our targeted commercial and consumer customers.

Our Philosophy and Strategy

We have established a philosophy of relationship banking: providing highly personalized and responsive services based on exceptional
customer service. Our identity statement reads that we are a deeply rooted Colorado bank that provides sound financial solutions to customers through experienced, engaged and empowered employees. Our
mission statement expands on this by stating that we strive to be the most admired and respected bank in Colorado where customers want to bank, employees are proud to work, shareholders value their
investment and growth creates opportunities.

Our
strategy to build a profitable, community-banking franchise along the Colorado Front Range spanning from Castle Rock to Fort Collins has not changed despite the financial challenges
affecting both the national and local economy over the past two years. We emphasize high-quality customer service, commercial and retail banking and low-cost demand deposits,
serving the needs of small to medium-sized businesses, the owners and employees of those businesses and retail customers in the communities we serve. The strategy for serving our target markets is the
delivery of a finely-focused set of value-added products and services that satisfy the primary needs of our customers, emphasizing superior service and relationships as opposed to transaction volume
or low pricing. As a locally managed banking institution, we believe we are able to react more quickly to customers' needs and provide a superior level of customer service compared to larger regional
and super-regional banks.

Our Principal Markets

We operate 34 branches located in the Denver metropolitan area and throughout Colorado's Northern Front Range.

The
Denver metropolitan area is composed of seven counties: Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas and Jefferson. The metropolitan area stretches from the south in Castle
Rock through downtown Denver northward to Boulder and Longmont. Denver is the largest city within a 600-mile radius.

Colorado's
Northern Front Range region begins just 30 miles north of central Denver in southern Boulder County. The I-25 corridor north from Denver to Fort Collins is a
contiguous stream of small communities/housing developments, open space, farm properties, and both small and large businesses. The region includes the cities of Fort Collins, Loveland, Greeley and
Longmont, all located in Boulder, Larimer and Weld counties. Colorado's Northern Front Range has a regional economy that is a diverse mix of agriculture, advanced technology, tourism, manufacturing,
service firms, government, education, retail, small business and construction.

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Business Concentrations

No individual or single group of related accounts is considered material in relation to our total assets, or in relation to the overall
business of the Company. Approximately 65% of our loan portfolio held for investment at December 31, 2010 consisted of real estate-related loans, including construction loans, miniperm loans
and commercial real estate loans. Our business activities are currently focused in the Colorado Front Range. Consequently, our financial condition, results of operations and cash flows depend upon the
general trends in the economy of the Colorado Front Range and, in particular, the residential and commercial real estate markets.

Competition

The banking business in Colorado is highly competitive. The market is characterized by a relatively small number of large financial
institutions with a large number of offices and numerous small to moderate-sized community banks and credit unions. Other entities in both the public and private sectors seeking to raise capital
through the issuance and sale of debt or equity securities also provide competition for us in the acquisition of deposits. We also compete with brokerage firms, money market funds and issuers of other
money market instruments. In recent years, increased competition has also developed from specialized finance and non-finance companies that offer wholesale finance, credit card and other
consumer finance services, including on-line banking services and personal finance software. Additionally, we expect competition to intensify among financial services companies due to the
recent consolidation of certain competing financial institutions and the conversion of certain investment banks to bank holding companies. Competition for deposit and loan products remains strong from
both banking and non-banking firms and this competition directly affects the rates of those products and the terms on which they are offered to consumers. In order to compete with other
competitors in our primary service area, we attempt to use to the fullest extent possible, the flexibility that our community bank status permits, including an emphasis on specialized services, local
promotional activity and personal contacts.

Technological
innovation continues to contribute to greater competition in domestic and international financial services markets. Technological innovation has, for example, made it
possible for non-depository institutions to offer customers automated transfer payment services
previously limited to traditional banking products. In addition, customers now expect a choice of several delivery systems and channels, including telephone, mail, computers via the internet,
automated teller machines (ATMs), debit cards, point-of-sale transactions, automated clearing house transactions (ACH), remote deposit, mobile banking via telephone or wireless
devices and in-store branches.

Mergers
between financial institutions have placed additional pressure on banks to consolidate their operations, reduce expenses and increase revenues to remain competitive. In addition,
competition has intensified due to federal and state interstate banking laws, which permit banking organizations to expand geographically with fewer restrictions than in the past. These laws allow
banks to merge with other banks across state lines, thereby enabling banks to establish or expand banking operations in our market. The competitive environment is also significantly impacted by
federal and state legislation that makes it easier for non-bank financial institutions to compete with us.

Economic
factors, along with legislative and technological changes, will have an ongoing impact on the competitive environment within the financial services industry. As an active
participant in financial markets, we strive to anticipate and adapt to dynamic competitive conditions, but we cannot provide assurance as to their impact on our future business, financial condition,
results of operations or cash flows or as to our continued ability to anticipate and adapt to changing conditions.

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Supervision and Regulation

General

Set forth below is a description of the significant elements of the laws and regulations applicable to the Company. The description is
qualified in its entirety by reference to the full text of the statutes, regulations and policies that are described. Also, such statutes, regulations and policies are continually under review by the
U.S. Congress and state legislatures and federal and state regulatory agencies. A change in statutes, regulations or regulatory policies applicable to the holding company or its subsidiaries could
have a material effect on our business.

Regulatory Agencies

Guaranty Bancorp is a legal entity separate and distinct from its bank subsidiary, Guaranty Bank. As a bank holding company, Guaranty
Bancorp is regulated under the Bank Holding Company Act of 1956, as amended, or the BHC Act, and is subject to inspection, examination and supervision by the Board of Governors of the Federal Reserve
System, or the Federal Reserve Board. Guaranty Bancorp is also under the jurisdiction of the SEC and is subject to the disclosure and regulatory requirements of the Securities Act of 1933, as amended,
and the Securities Exchange Act of 1934, as amended. Guaranty Bancorp is listed on The NASDAQ Stock Market LLC (Nasdaq) under the trading symbol "GBNK," and is subject to the rules of Nasdaq
for listed companies.

As
a Colorado-chartered bank, the Bank is subject to supervision, periodic examination, and regulation by the Colorado Division of Banking, or CDB. As a member of the Federal Reserve
System, the Bank is also subject to supervision, periodic examination and regulation by the Federal Reserve Bank of Kansas City, or the Federal Reserve.

Written Agreement

Based in part on the results of our regularly scheduled examination by the Federal Reserve and CDB in May 2009, the holding company and
the Bank entered into a Written Agreement on January 22, 2010 with the Federal Reserve and CDB (the "Written Agreement").

The
Written Agreement required the Bank to submit written plans within certain timeframes to the Federal Reserve and the CDB that address the following items (i) strengthening
board oversight of the management and operations of the Bank; (ii) strengthening credit risk management practices; (iii) strengthening the Bank's management of commercial real estate
concentrations; (iv) improving the Bank's position with respect to problem assets; (v) maintaining adequate reserves for loan and lease losses; (vi) maintaining sufficient capital
at the Bank; (vii) improving the management of the Bank's liquidity position and funds management practices; (viii) reducing the Bank's reliance on brokered deposits; and
(ix) improving the Bank's earnings and overall condition through a business plan and budget. The Agreement also required the Company to prepare and submit to the Federal Reserve (i) a
written plan that address maintaining sufficient capital at the Company and the Bank and (ii) a written statement of the Company's annual cash flow projections.

In
addition, the Agreement (i) requires the Bank's board of directors or a designated committee thereof to approve any extension, renewal or restructuring of any credit to any
borrower whose loans have been criticized by the Federal Reserve and/or the CDB; (ii) required the Bank to charge off or collect certain problem loans; (iii) requires the Bank to review
and revise its allowance for loan and lease losses consistent with relevant supervisory guidance; (iv) restricts the Bank from accepting any new brokered deposits, but continues to permit
contractual rollovers and renewals of brokered deposits; (v) requires the Company and the Bank to comply with the notice provisions of Section 32 of the Federal Deposit Insurance Act and
Subpart H of Regulation Y of the Board of Governors of the Federal Reserve System in connection with appointing any new director or senior executive officer or

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changing
the responsibilities of any senior executive officer so that the officer would assume a different senior executive officer position; and (vi) requires the Company and the Bank to
comply with the restrictions on indemnification and severance payments of Section 18(k) of the Federal Deposit Insurance Act and Part 359 of the FDIC's regulations.

Further,
the Written Agreement provides that prior written approval must be obtained from the Federal Reserve, and in the case of the Bank, the CDB, prior to paying dividends. Prior
written approval must also be obtained from the Federal Reserve before the Company can incur, increase or guarantee any debt, take any other form of payment representing a reduction in capital from
the Bank, or make any distributions of interest, principal or other sums on subordinated debentures or trust preferred securities.

The
Board of Directors and management of the Company and the Bank are committed to addressing and resolving the matters raised in the Written Agreement on a timely basis. As of the date
of this filing, management believes that it is in compliance with all aspects of the Written Agreement. The primary goal of the Company is to continue to reduce our level of classified assets,
maintain our capital and liquidity levels and improve our earnings in order to no longer be subject to the Written Agreement. With respect to reducing classified assets, we have reduced our level of
classified assets during 2010. At December 31, 2010, the amount of loans that the Company has internally considered to be adversely classified, other than impaired loans, has declined to
$51.2 million as compared to $101.5 million at December 31, 2009. Further, we have reduced both our land and land development as well as our commercial real estate concentrations
to levels within the concentration guidelines from the interagency joint guidance on sound risk management practices for financial institutions with concentrations in commercial real estate lending.
For further information regarding our reduction of both classified assets and concentrations, please see the "Loans" and "Nonperforming Assets and Other Impaired Loans" sections under Item 7,
"Management's Discussion and Analysis of Financial Condition and Results of Operation". With respect to brokered deposits and liquidity, the Company has been able to maintain high levels of liquidity
while significantly reducing our level of brokered deposits during 2010. In particular, our brokered deposits were $179.9 million at December 31, 2010, as compared to
$291.3 million at December 31, 2009. During 2010, we elected to renew one brokered deposit for $10 million, but voluntarily elected not to renew all of other maturing brokered
deposits (excluding reciprocal deposits under the Certificate of Deposit Account Repository System program). In 2011, we will continue to evaluate whether or not to renew each maturing brokered
deposit based on our existing and projected liquidity needs including anticipated loan demand, other time deposit renewals and the cost of eighteen month or longer brokered deposits at the time of
renewal. We may renew more brokered deposits in 2011 than we did in 2010, but we have already reduced the overall
level of brokered deposits significantly from the date of our Written Agreement. For further information regarding our brokered deposits and liquidity, please see the "Deposits" and "Liquidity"
sections under Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operation". During 2010, the Company and the Bank's total risk-based capital
ratios have increased. In particular, the Company's total capital ratio has improved to 14.99% at December 31, 2010 as compared to 13.80% at December 31, 2009. For further information
regarding our capital, please see the "Capital" section under Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operation".

Bank Holding Company Regulation

In general, the BHC Act limits the business of bank holding companies to banking, managing or controlling banks and other activities
that the Federal Reserve Board has determined to be so closely related to banking as to be a proper incident thereto.

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The
BHC Act generally limits acquisitions by bank holding companies to commercial banks and companies engaged in activities that the Federal Reserve Board has determined to be so closely
related to banking as to be a proper incident thereto.

The
BHC Act, the Bank Merger Act, the Colorado Banking Code and other federal and state statutes regulate acquisitions of commercial banks. The BHC Act requires the prior approval of the
Federal Reserve Board for the direct or indirect acquisition of more than 5.0% of the voting shares of a commercial bank or its parent holding company. In reviewing applications seeking approval of
merger and acquisition transactions, the bank regulatory authorities will consider, among other things, the competitive effect and public benefits of the transactions, the capital position of the
combined organization, the applicant's performance record under the Community Reinvestment Act (see the section captioned "Community Reinvestment Act" included elsewhere in this item), fair housing
laws and the effectiveness of the subject organizations in combating money laundering activities.

Dividends

The principal source of the holding company's cash revenues is from dividends from its bank subsidiary, Guaranty Bank. Our earnings and
activities are affected by legislation, by regulations and by local legislative and administrative bodies and decisions of courts in the jurisdictions in which we conduct business. For example, these
include limitations on the ability of our bank subsidiary to pay dividends to the holding company and our ability to pay dividends to our stockholders. It is the policy of the Federal Reserve Board
that bank holding companies should pay cash dividends on common stock only out of income available over the past year and only if prospective earnings retention is consistent with the organization's
expected future needs and financial condition. The policy provides that bank holding companies should not maintain a level of cash dividends that undermines the bank holding company's ability to serve
as a source of strength to its banking subsidiary.

As
a member of the Federal Reserve System, the Bank is subject to Regulation H, which, among other things, provides that a member bank may not declare or pay a dividend if the
total of all dividends declared during the calendar year, including the proposed dividend, exceeds the sum of the bank's net income (as reportable in its Reports of Condition and Income) during the
current calendar year and its retained net income for the prior two calendar years, unless the Federal Reserve has approved the dividend. Regulation H also provides that a member bank may not
declare or pay a dividend if the dividend would exceed the bank's undivided profits as reportable on its Reports of Condition and Income, unless the Federal Reserve and holders of at least
two-thirds of the outstanding shares of each class of the bank's outstanding stock have approved the dividend. Additionally, there are potential additional restrictions and prohibitions if
a bank were to be less than well-capitalized.

As
a Colorado state-chartered bank, the Bank is subject to limitations under Colorado law on the payment of dividends. The Colorado Banking Code provides that a bank may declare
dividends from retained earnings and other components of capital specifically approved by the Banking Board so long as the declaration is made in compliance with rules established by the Banking
Board.

The
Written Agreement discussed above prohibits both the Company and the Bank from paying dividends without the prior written approval of the Federal Reserve, and, in the case of the
Bank, the Colorado Division of Banking.

As
of December 31, 2010, the holding company had approximately $18.5 million of cash on hand. Based on cash flow projections for the holding company, we estimate that this
cash is sufficient to meet the operating needs of the holding company for over three years assuming that the holding company does not contribute any additional amounts of capital to the Bank.

Under
the terms of our trust preferred financings, including our related subordinated debentures, on September 7, 2000, February 22, 2001, June 30, 2003 and
April 8, 2004, respectively, we cannot

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declare
or pay any dividends or distributions (other than stock dividends) on, or redeem, purchase, acquire or make a liquidation payment with respect to, any shares of our capital stock if
(1) an event of default under any of the subordinated debenture agreements has occurred and is continuing, or (2) if we give notice of our election to begin an extension period whereby
we may defer payment of interest on the trust preferred securities for a period of up to sixty consecutive months as long as we are in compliance with all covenants of the agreement. On
July 31, 2009, we elected to defer regularly scheduled interest payments on each of our subordinated debentures until further notice. In addition, we are currently restricted from making
payments of principal or interest on our subordinated debentures or trust preferred securities under the terms of our Written Agreement without the prior approval of the Federal Reserve.

Under
the terms of the Series A Convertible Preferred Stock issuance in 2009, we cannot declare or pay dividends on, make distributions with respect to, or redeem, purchase or
acquire, or make a liquidation payment with respect to, or pay or make available monies for the redemption of, any common stock or other junior securities unless full dividends on all outstanding
shares of the Series A Preferred Stock have been paid or declared and set aside for payment. In addition, we are currently restricted from making cash dividends on our Series A
Convertible Preferred Stock under the terms of our Written Agreement without the prior approval of the Federal Reserve and for as long as we defer payments of interest with respect to our subordinated
debentures and related trust preferred securities. We continue to make paid-in-kind dividends in the form of additional shares of Series A Convertible Preferred Stock on
a quarterly basis and expect to make these paid-in-kind dividends through August 15, 2011.

Any
future determination relating to dividend policy will be made at the discretion of our Board of Directors and will depend on a number of factors, including our future earnings,
capital requirements, financial condition, future prospects and such other factors as our Board of Directors may deem relevant.

Affiliate Transactions

There are various restrictions on the ability of the holding company to borrow from, and engage in certain other transactions with its
bank subsidiary. In general, these restrictions require that any extensions of credit must be secured by designated amounts of specified collateral and are limited, as to transactions with Guaranty
Bank, to 10% of Guaranty Bank's capital stock and surplus, and, as to the holding company, to 20% of Guaranty Bank's capital stock and surplus.

Federal
law also provides that extensions of credit and other transactions between Guaranty Bank and the holding company must be on terms and conditions, including credit standards, that
are substantially the same or at least as favorable to Guaranty Bank as those prevailing at the time for comparable transactions involving other non-affiliated companies or, in the absence
of comparable transactions, on terms and conditions, including credit standards, that in good faith would be offered to, or would apply to, non-affiliated companies.

Capital Adequacy and Prompt Corrective Action

Banks and bank holding companies are subject to various regulatory capital requirements administered by state and federal banking
agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance-sheet
items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weighting and other factors.

The
Federal Reserve Board has risk-based capital ratio and leverage ratio guidelines for banking organizations, which are intended to ensure that banking organizations have
adequate capital given the

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risk
levels of assets and off-balance sheet financial instruments. Under the guidelines, banking organizations are required to maintain minimum ratios for Tier 1 capital and total
capital to total risk-weighted assets (including certain off-balance sheet items, such as letters of credit). For purposes of calculating the ratios, a banking organization's
assets and some of its specified off-balance sheet commitments and obligations are assigned to various risk categories. A depository institution or holding company's capital, in turn, is
classified into one of three tiers, depending on type:



Guaranty
Bancorp, like other bank holding companies, currently is required to maintain Tier 1 capital and "total capital" (the sum of Tier 1, Tier 2 and
Tier 3 capital) equal to at least 4.0% and 8.0%, respectively, of its total risk-weighted assets (including various off-balance-sheet items, such as standby letters of
credit). Guaranty Bank, like other depository institutions, is required to maintain similar capital levels under capital adequacy guidelines.

Bank
holding companies and banks subject to the market risk capital guidelines are required to incorporate market and interest rate risk components into their risk-based
capital standards. Under the market risk capital guidelines, capital is allocated to support the amount of market risk related to a financial institution's ongoing trading activities.

Bank
holding companies and banks are also required to comply with minimum leverage ratio requirements. The leverage ratio is the ratio of a banking organization's Tier 1 capital
to its total adjusted quarterly average assets (as defined for regulatory purposes). The requirements necessitate a minimum leverage ratio of 3.0% for bank holding companies and banks that either have
the highest supervisory rating or have implemented the appropriate federal regulatory authority's risk-adjusted measure for market risk. All other bank holding companies and banks are
required to maintain a minimum leverage ratio of 4.0%, unless a different minimum is specified by an appropriate regulatory authority. For a depository institution to be considered "well capitalized"
under the regulatory framework for prompt corrective action, its leverage ratio must be at least 5.0%.

The
Federal Deposit Insurance Act, as amended ("FDIA"), requires, among other things, that federal banking agencies take "prompt corrective action" with respect to depository
institutions that do not meet minimum capital requirements. The FDIA sets forth the following five capital tiers: "well capitalized," "adequately capitalized," "undercapitalized," "significantly
undercapitalized" and "critically undercapitalized." A depository institution's capital tier will depend upon how its capital levels compare with various relevant capital measures and certain other
factors, as established by regulation. The relevant capital measures are the total capital ratio, the Tier 1 capital ratio and the leverage ratio.

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Under the regulations adopted by the federal regulatory authorities, a bank will be: (i) "well capitalized" if the institution has a total
risk-based capital ratio of 10.0% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater, and a leverage ratio of 5.0% or greater, and is not subject to any
order or written directive by any such regulatory authority to meet and maintain a specific capital level for any capital measure; (ii) "adequately capitalized" if the institution has a total
risk-based capital ratio of 8.0% or greater, a Tier 1 risk-based capital ratio of 4.0% or greater, and a leverage ratio of 4.0% or greater (3.0% in certain
circumstances) and is not "well capitalized"; (iii) "undercapitalized" if the institution has a total risk-based capital ratio that is less than 8.0%, a Tier 1
risk-based capital ratio of less than 4.0% or a leverage ratio of less than 4.0% (3.0% in certain circumstances); (iv) "significantly undercapitalized" if the institution has a
total risk-based capital ratio of less than 6.0%, a Tier 1 risk-based capital ratio of less than 3.0% or a leverage ratio of less than 3.0%; and (v) "critically
undercapitalized" if the institution's tangible equity is equal to or less than 2.0% of average quarterly tangible assets. An institution may be downgraded to, or deemed to be in, a capital category
that is lower than indicated by its capital ratios if it is determined to be in an unsafe or unsound condition or if it receives an unsatisfactory examination rating with respect to certain matters. A
bank's capital category is determined solely for the purpose of applying prompt corrective action regulations, and the capital category may not constitute an accurate representation of the bank's
overall financial condition or prospects for other purposes.

The
FDIA generally prohibits a depository institution from making any capital distributions (including payment of a dividend) or paying any management fee to its parent holding company
if the depository institution would thereafter be undercapitalized. Undercapitalized institutions are subject to growth
limitations and are required to submit a capital restoration plan. The agencies may not accept such a plan without determining, among other things, that the plan is based on realistic assumptions and
is likely to succeed in restoring the depository institution's capital. In addition, for a capital restoration plan to be acceptable, the depository institution's parent holding company must guarantee
that the institution will comply with such capital restoration plan. The aggregate liability of the parent holding company is limited to the lesser of (i) an amount equal to 5.0% of the
depository institution's total assets at the time it became undercapitalized and (ii) the amount which is necessary (or would have been necessary) to bring the institution into compliance with
all capital standards applicable with respect to such institution as of the time it fails to comply with the plan. If a depository institution fails to submit an acceptable plan, it is treated as if
it is "significantly undercapitalized."

"Significantly
undercapitalized" depository institutions may be subject to a number of requirements and restrictions, including orders to sell sufficient voting stock to become
"adequately capitalized," requirements to reduce total assets, and cessation of receipt of deposits from correspondent banks. "Critically undercapitalized" institutions are subject to the appointment
of a receiver or conservator.

Both
Guaranty Bank and Guaranty Bancorp have always maintained the capital ratios and leverage ratio at levels to be considered quantitatively well-capitalized. For
information regarding the capital ratios and leverage ratio of the Company and Guaranty Bank at December 31, 2010 and 2009, see the discussion under the section captioned "Capital" included in
Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations and Note 20Regulatory Capital Matters in the notes to consolidated financial
statements included in Item 8. Financial Statements and Supplementary Data elsewhere in this report.

Pursuant
to the Written Agreement, as discussed above, the Company and the Bank were required to submit written plans to the Federal Reserve and, in the case of the Bank, to the CDB to
continue to maintain sufficient capital at the Company and the Bank, respectively. Although the Written Agreement does not require any specific capital levels, it requires the capital plans to
address, consider and include the Company and the Bank's current and future capital needs; the adequacy of the Bank's capital, taking into account classified credits, concentrations of credit,
allowance for loan losses, current and projected asset growth and projected retained earnings; the source and timing of additional funds

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to
fulfill the Company and the Bank's future capital requirements; and that the holding company serve as a source of strength to the Bank. The Written Agreement does not address any prompt corrective
action with respect to either the Company or the Bank. Both the Company and the Bank continue to be in compliance with their approved written plans with respect to capital.

The
federal bank regulatory authorities' risk-based capital guidelines are based upon the 1988 capital accord of the Basel Committee on Banking Supervision, or the BIS. The
BIS is a committee of central banks and bank supervisors/regulators from the major industrialized countries that develops broad policy guidelines for use by each country's supervisors in determining
the supervisory
policies they apply. In 2004, the BIS published a new capital accord to replace its 1988 capital accord, with an update in November 2005 ("BIS II").

BIS
II provides two approaches for setting capital standards for credit riskan internal ratings-based approach tailored to individual institutions' circumstances (which for
many asset classes is itself broken into a "foundation" approach and an "advanced or A-IRB" approach, the availability of which is subject to additional restrictions) and a standardized
approach that bases risk weightings on external credit assessments to a much greater extent than permitted in existing risk-based capital guidelines. BIS II also sets capital
requirements for operational risk and refines the existing capital requirements for market risk exposures.

In
July 2007, the U.S. banking and thrift agencies reached an agreement on the implementation of the capital adequacy regulations and standards based on BIS II. In November 2007, the
agencies approved final rules to implement the new risk-based capital requirements in the United States for large, internationally active banking organizations, or "core
banks"defined as those with consolidated total assets of $250 billion or more or consolidated on-balance sheet foreign exposures of $10 billion or more. The
final rule was effective as of April 1, 2008. We are not a core bank and do not apply the BIS II approach to computing risk-weighted assets.

In
response to the recent economic and financial industry crisis, the Basel Committee on Banking Supervision and their oversight bodythe Group of Central Bank Governors and
Heads of Supervision (GHOS)set out in late 2009 to work on global initiatives to strengthen the financial regulatory system. In July 2010, the GHOS agreed on key design elements and in
September 2010 agreed to transition and implementation measures. This work is known as Basel III, and it is designed to strengthen the regulation, supervision and risk management of the banking
sector. In particular, BASEL III strengthens existing capital requirements and introduces a global liquidity standard.

It
is expected that implementation of the higher minimum capital requirements under BASEL III will begin on January 1, 2013 as member countries must implement new laws and
regulations to implement the BASEL III rules. These rules include phasing in higher minimum capital standards for common equity to risk-weighted assets and Tier 1 Capital to
Risk-weighted assets through January 1, 2015. There is no phase-in for total capital to risk-weighted assets as the total capital requirement is not
changing.

The
GHOS agreed to a capital conservation buffer above the regulatory minimum requirement be calibrated at 2.5 percent and be met with common equity, after the application of
deductions. The purpose of the conservation buffer is to ensure that banks maintain a buffer of capital that can be used to absorb losses during periods of financial and economic stress. While banks
are allowed to draw on the buffer during such periods of stress, the closer their regulatory capital ratios approach the minimum requirement, the greater the constraints on earnings distributions. The
GHOS agreed that the capital conservation buffer should be phased in between January 1, 2016 and January 1, 2019. It will begin at 0.625 percent of RWAs on January 1, 2016
and increase each subsequent year by an additional 0.625 percentage points, to reach its final level of 2.5 percent of RWAs on January 1, 2019.

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In
addition, there will be certain deductions from capital, including mortgage servicing rights and deferred tax assets, that are phased-in so that they are fully deducted
from common equity by January 1, 2018. The phase-in for these deductions starts at 20% in 2015 and will increase in 20% increments through 2018.

A
countercyclical buffer within a range of 0 percent to 2.5 percent of common equity or other fully loss absorbing capital will be implemented according to national
circumstances. The purpose of the countercyclical buffer is to achieve the broader macroprudential goal of protecting the banking sector from periods of excess aggregate credit growth. For any given
country, this buffer will only be in effect when there is excess credit growth that is resulting in a system-wide build up of risk. The countercyclical buffer, when in effect, would be
introduced as an extension of the conservation buffer range.

These
capital requirements are supplemented by a non-risk-based leverage ratio that will serve as a backstop to the risk-based measures described
above. In July, GHOS agreed to test a minimum Tier 1 leverage ratio of 3 percent during the parallel run period. Based on the results of the parallel run period, any final adjustments
would be carried out in the first half of 2017.

In
June 2008, the U.S. banking and thrift agencies announced a proposed rule that would provide all non-core banking organizations (that is, banking organizations not
required to adopt the advanced approaches of Basel II) with the option to adopt a way to determine required regulatory capital that is more risk sensitive than the current Basel
I-based rules, yet is less complex than the advanced approach final rule. The proposed standardized framework addresses (i) expanding the number of risk-weight
categories to which credit exposures may be assigned, (ii) using loan-to-value ratios to risk weight most residential mortgages to enhance the risk sensitivity of the
capital requirement, (iii) providing a capital charge for operational risk using the Basic Indicator Approach under the international Basel II capital accord, (iv) emphasizing the
importance of a bank's assessment of its overall risk profile and capital adequacy and (v) providing for comprehensive disclosure requirements to complement the minimum capital requirements and
supervisory process through market discipline. This new proposal would replace the agencies' earlier BIS I-A proposal, issued in December 2006. With the anticipated implementation of Basel
III, it is uncertain as to the timing of these new capital rules for non-core banking organizations, such as the Company.

The Dodd-Frank Wall Street Reform and Consumer Protection Act

On July 21, 2010, President Obama signed into law the sweeping financial regulatory reform act entitled the
"Dodd-Frank Wall Street Reform and Consumer Protection Act" (the "Dodd-Frank Act") that implements significant changes to the regulation of the financial services industry,
including provisions that, among other things:



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Many
aspects of the Dodd-Frank Act are subject to rulemaking by various regulatory agencies and will take effect over several years, making it difficult to anticipate the
overall financial impact on the Company, its customers or the financial industry more generally. The elimination of the prohibition on the payment of interest on demand deposits could materially
increase our interest expense, depending on our competitors' responses. Provisions in the legislation that require revisions to the capital requirements of the Company and the Bank could require the
Company and the Bank to seek additional sources of capital in the future.

Small Business Lending Fund

In September 2010, the Small Business Lending Fund Program ("SBLF") was created by the Small Business Jobs Act of 2010. Under the SBLF,
the U.S. Treasury may invest in preferred stock and other debt instruments issued by financial institutions. To be eligible, the bank holding company must have total assets of $10 billion or
less. A holding company between $1 billion and $10 billion may apply for up to 3% of its total risk-weighted assets as long as it is otherwise eligible. The U.S. Treasury
must consult with the bank's regulators to determine if the holding company should receive the investment. Institutions on the FDIC's problem-bank list as of, or within 90 days
prior to, the date of the application, are ineligible to participate in the Program.

Treasury's
investment must be repaid within 10 years. While the investment is outstanding, the rate at which dividends are payable varies between 1% and 7%, with an initial rate
of 5%, and is wholly dependent upon the amount of increase in the bank's quarterly small business lending following Treasury's capital investment. If the amount of small business lending does not
increase within 2 years,
the dividend rates increases to 7%. If Treasury's investment is not redeemed on or before 41/2 years following its investment, the dividend rate increases to 9%.

The
application for participation in the SBLF along with a business plan for increasing small business lending must be submitted to the Treasury and the Bank's primary federal regulator
prior to March 31, 2011. The Company has not yet determined whether it will submit an application for participation in the SBLF. If the Company chooses to submit an application and it is
accepted, there is uncertainty as to whether the Bank will be able to increase the level of small business lending in order to qualify for a reduced level of dividend payments. There is uncertainty as
to the capital treatment of any funds received under the SBLF due to conflicts in capital treatment under the Dodd-Frank Act and the proposed Basel III rules. Further, Treasury could
change the rules regarding participation in the SBLF at any time.

Deposit Insurance

The deposits of the Bank are insured up to applicable limits by the Deposit Insurance Fund, or the DIF, of the FDIC and are subject to
deposit insurance assessments to maintain the DIF. The FDIC

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utilizes
a risk-based assessment system that imposes insurance premiums based upon a risk matrix that takes into account a bank's capital level and supervisory rating. Risk
Category I is the lowest risk category while Risk Category IV is the highest risk category.

On
October 16, 2008, the FDIC published a restoration plan designed to replenish the Deposit Insurance Fund over a period of five years and to increase the deposit insurance
reserve ratio, which decreased to 1.01% of insured deposits on June 30, 2008, to the statutory minimum of 1.15% of insured deposits by December 31, 2013. In order to implement the
restoration plan, the FDIC changed both its risk-based assessment system and its base assessment rates. For the first quarter of 2009 only, the FDIC increased all FDIC deposit assessment
rates by 7 basis points. The updated rates ranged from 12-14 basis points for Risk Category I institutions to 50 basis points for Risk Category IV institutions. Under the
FDIC's restoration plan, the FDIC established new initial base assessment rates that are subject to adjustment. Beginning April 1, 2009, the base assessment rates ranged from 10-14
basis points for Risk Category I institutions to 45 basis points for Risk Category IV institutions. A bank in Risk Category II has a new initial base assessment rate of 22 basis
points and a bank in Risk Category III has an initial base assessment rate of 32 basis points. Adjustments to the base assessment rate include an adjustment for brokered deposits and secured
liabilities while providing a reduction for unsecured debt. The Bank's assessment rate was reduced during 2010 and was approximately 24 basis points at December 31, 2010.

On
May 22, 2009, the FDIC adopted a final rule imposing a 5 basis point special assessment on each insured depository institution's assets minus Tier 1 capital as of
June 30, 2009. This special assessment was collected on September 30, 2009.

On
November 12, 2009, the FDIC adopted a final rule requiring insured institutions to prepay slightly over three years of estimated insurance assessments. The
pre-payment allowed the FDIC to strengthen the cash position of the DIF immediately without impacting earnings of the industry. Payment of the prepaid assessment, along with the payment of
institutions' regular third quarter assessment was due on December 30, 2009. The Bank received an exemption from prepaying its FDIC insurance premiums.

The
Dodd-Frank Act revised the statutory authorities governing the FDIC's management of the DIF. Among other things, the Dodd-Frank Act (1) raises the
minimum fund reserve ratio from 1.15% to 1.35%, (2) requires the fund reserve ratio to reach 1.35% by September 30, 2020, (3) eliminates the requirement that the FDIC provides
dividends from the DIF when the reserve ratio is between 1.35% and 1.5%, (4) removes the 1.5% cap on the reserve ratio, (5) grants the FDIC the sole discretion in determining whether to
suspend or limit the declaration or payment of dividends and (6) changes the assessment base for banks from insured deposits to the average total assets of the bank minus the average tangible
equity of the bank during the assessment period. In December 2010, the FDIC set the minimum reserve ratio at 2.00%. In addition, the FDIC adopted a new Restoration Plan, pursuant to which, among other
things, the FDIC (1) eliminated the uniform 3 basis point increase in initial assessment rates that were scheduled to take effect on January 1, 2011, (2) will pursue further
rulemaking in 2011 regarding the method that will be used to offset the effect on banks with less than $10 billion in assets of the requirement that the reserve ratio reach 1.35% and
(3) at least semiannually, will update its projections for the DIF and increase or decrease assessment rates, if needed. On February 7, 2011, the FDIC adopted final rules to implement
the dividend provisions of the Dodd-Frank Act, change the assessment base and set new assessment rates. In addition, as part of its final rules, the FDIC made certain assessment rate
adjustments by (1) altering the unsecured debt adjustment by adding an adjustment for long-term debt issued by another insured depository institution and (2) eliminating the
secured liability adjustment, changing the brokered deposit adjustment to conform to the change in the assessment base. The new assessment rates will be effective April 1, 2011. The new initial
base assessment rates range from 5 to 9 basis points for Category I banks to 35 basis points for Category IV banks. Category II and III banks will have an initial base assessment
rate of 14

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or
23 basis points, respectively. The Company expects that the new rates and assessment base will further reduce our current FDIC insurance assessments.

The
FDIC may further increase or decrease the assessment rate schedule in order to manage the DIF to prescribed statutory target levels. An increase in the Risk Category for the Bank or
in the assessment rates could have an adverse effect on the Bank's earnings. The FDIC may terminate deposit insurance if it determines the institution involved has engaged in or is engaging in unsafe
or unsound banking practices, is in an unsafe or unsound condition, or has violated applicable laws, regulations or
orders. In the case of a Colorado-chartered bank, the termination of deposit insurance would result in the revocation of its charter.

In
addition, all institutions with deposits insured by the FDIC are required to pay assessments to fund interest payments on bonds issued by the Financing Corporation (FICO), a
mixed-ownership government corporation established to recapitalize a predecessor to the Deposit Insurance Fund. The current annualized assessment rate is 1.02 basis points, or approximately .255 basis
points per quarter. These assessments will continue until the Financing Corporation bonds mature in 2019.

The
enactment of the Emergency Economic Stabilization Act of 2008 temporarily raised the basic limit on federal deposit insurance coverage from $100,000 to $250,000 per depositor. The
temporary increase in deposit insurance coverage became effective on October 3, 2008. On May 20, 2009, the FDIC extended this increased insurance level of $250,000 per depositor through
December 31, 2013. On July 21, 2010, the Dodd-Frank Act permanently increased the FDIC insurance coverage to $250,000 per depositor.

On
October 14, 2008, the FDIC announced its temporary Transaction Account Guarantee Program (TAGP), which provides full coverage for noninterest-bearing transaction deposit
accounts at FDIC-insured institutions that agree to participate in the program. The unlimited coverage applied to all personal and business checking deposit accounts that do not earn
interest (including Demand Deposit (DDA) accounts), low-interest NOW accounts (NOW accounts that cannot earn more than 0.25% interest), Official Items, and IOLTA accounts. A
10-basis point surcharge was added to a participating institution's current insurance assessment in order to fully cover all transaction accounts. Guaranty Bank elected to participate in
the TAGP. This unlimited insurance coverage was temporary and was originally scheduled to expire on December 31, 2009. On August 26, 2009, the FDIC extended its temporary Transaction
Account Guarantee Program through June 30, 2010 and it was again extended through December 31, 2010. The deposit insurance surcharge was increased from 10 to 25 basis points for
institutions electing to continue in the TAGP. Guaranty Bank elected to continue to participate in the TAGP through December 31, 2010. On July 21, 2010, the Dodd-Frank Act
extended unlimited FDIC insurance to noninterest-bearing transaction deposit accounts. It does not apply to accounts earning any level of interest with the exception of IOLTA accounts. This unlimited
FDIC insurance coverage is applicable to all applicable deposits at any FDIC-insured financial institution. Therefore, there is no additional FDIC insurance surcharge related to this
coverage after December 31, 2010. This change is expected to lower the Bank's FDIC insurance.

Depositor Preference

The FDIA provides that, in the event of the "liquidation or other resolution" of an insured depository institution, the claims of
depositors of the institution, including the claims of the FDIC as subrogee of insured depositors, and certain claims for administrative expenses of the FDIC as a receiver, will have priority over
other general unsecured claims against the institution. If
an insured depository institution fails, insured and uninsured depositors, along with the FDIC, will have priority in payment ahead of unsecured, non-deposit creditors, including the
parent bank holding company, with respect to any extensions of credit they have made to such insured depository institution.

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Source of Strength Doctrine

Federal Reserve Board policy requires bank holding companies to act as a source of financial and managerial strength to their
subsidiary banks. Under this policy, the holding company is expected to commit resources to support its bank subsidiary, including at times when the holding company may not be in a financial position
to provide it. Any capital loans by a bank holding company to its subsidiary bank are subordinate in right of payment to deposits and to certain other indebtedness of such subsidiary bank. The BHC Act
provides that, in the event of a bank holding company's bankruptcy, any commitment by the bank holding company to a federal bank regulatory agency to maintain the capital of a bank subsidiary will be
assumed by the bankruptcy trustee and entitled to priority of payment.

The
Dodd-Frank Act has added additional guidance regarding the source of strength doctrine and has directed the regulatory agencies to promulgate new regulations to increase
the capital requirements for bank holding companies to a level that matches those of banking institutions.

On
August 11, 2009, the Company issued 59,053 shares of 9% Series A Convertible Preferred Stock, which resulted in additional capital of $57,846,000, net of expenses.
Immediately after this capital raise, the Company injected $40 million of additional capital into the Bank.

Community Reinvestment Act

The Community Reinvestment Act of 1977, or the CRA, requires depository institutions to assist in meeting the credit needs of their
market areas consistent with safe and sound banking practice. Under the CRA, each depository institution is required to help meet the credit needs of its market areas by, among other things, providing
credit to low- and
moderate-income individuals and communities. These factors are also considered in evaluating mergers, acquisitions and applications to open a branch or facility. The applicable federal regulators
regularly conduct CRA examinations to assess the performance of financial institutions and assign one of four ratings to the institution's records of meeting the credit needs of its community. During
its last examination, a rating of "satisfactory" was received by the Bank.

Financial Privacy

In accordance with the Gramm-Leach-Bliley Financial Modernization Act of 1999, or the GLB Act, federal banking regulators adopted rules
that limit the ability of banks and other financial institutions to disclose non-public information about consumers to nonaffiliated third parties. These limitations require disclosure of
privacy policies to consumers and, in some circumstances, allow consumers to prevent disclosure of certain personal information to a nonaffiliated third party. The privacy provisions of the GLB Act
affect how consumer information is transmitted through diversified financial companies and conveyed to outside vendors.

Anti-Money Laundering Initiatives and the USA Patriot Act

A major focus of governmental policy on financial institutions this decade has been aimed at combating money laundering and terrorist
financing. The USA PATRIOT Act of 2001, or the USA Patriot Act, substantially broadened the scope of United States anti-money laundering laws and regulations by imposing significant new
compliance and due diligence obligations, creating new crimes and penalties and expanding the extra-territorial jurisdiction of the United States. The U.S. Treasury Department has issued a number of
regulations that apply various requirements of the USA Patriot Act to financial institutions such as the Bank. These regulations impose obligations on financial institutions to maintain appropriate
policies, procedures and controls to detect, prevent and report money laundering and terrorist financing and to verify the identity of their customers. Failure of a financial institution to maintain
and implement adequate programs to combat money laundering and terrorist financing, or to comply with all of the relevant laws or regulations, could have serious legal and reputational consequences
for the institution.

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Office of Foreign Assets Control Regulation

The United States has imposed economic sanctions that affect transactions with designated foreign countries, nationals and others.
These are typically known as the "OFAC" rules based on their administration by the U.S. Treasury Department Office of Foreign Assets Control ("OFAC"). The OFAC-administered sanctions
targeting countries take many different forms. Generally, however, they contain one or more of the following elements: (i) restrictions on trade with or investment in a sanctioned country,
including prohibitions against direct or indirect imports from and exports to a sanctioned country and prohibitions on "U.S. persons" engaging in financial transactions relating to making investments
in, or providing investment-related advice or assistance to, a sanctioned country; and (ii) a blocking of assets in which the government or specially designated nationals of the sanctioned
country have an interest, by prohibiting transfers of property subject to U.S. jurisdiction (including property in the possession or control of U.S. persons). Blocked assets (e.g., property and
bank deposits) cannot be paid out, withdrawn, set off or transferred in any manner without a license from OFAC. Failure to comply with these sanctions could have serious legal and reputational
consequences.

Legislative and Regulatory Initiatives

From time to time, various legislative and regulatory initiatives are introduced in the U.S. Congress and state legislatures, as well
as by regulatory agencies. Such initiatives may include proposals to expand or contract the powers of bank holding companies and depository institutions or proposals to substantially change the
financial institution regulatory system. Such legislation could change banking statutes and our operating environment in substantial and unpredictable ways. If enacted, such legislation could increase
or decrease the cost of doing business, limit or expand permissible activities or affect the competitive balance among banks, savings associations, credit unions, and other financial institutions. We
cannot predict whether any such legislation will be enacted, and, if enacted, the effect that it, or any implementing regulations, would have on our financial condition, results of operations or cash
flows. A change in statutes, regulations or regulatory policies applicable to the Company or any of its subsidiaries could have a material effect on our business.

Employees

At December 31, 2010, we employed 375 employees, including 340 full-time employees and 35 part-time
employees. None of our employees are represented by collective bargaining agreements. We believe our employee relations to be good.

Available Information

Guaranty Bancorp maintains an Internet website at www.gbnk.com. At this website, our annual report on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K and proxy statements on Schedule 14A and amendments to such reports filed or furnished pursuant
to Section 13(a) or 15(d) of the Exchange Act are available, free of charge, as soon as reasonably practicable after such forms are electronically filed with, or furnished to, the SEC. The
public may read and copy any materials we file with the SEC at the SEC's Public Reference Room, located at 100 F Street, NE, Washington, D.C. 20549. The public may obtain information on
the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site at www.sec.gov that contains reports, proxy
and information statements, and other information regarding issuers that file electronically with the SEC. You may obtain copies of the Company's filings on the SEC site. These documents may also be
obtained in print upon request by our stockholders to our Investor Relations Department.

We
have adopted a written code of ethics that applies to all directors, officers and employees of the Company, including our principal executive officer and senior financial officers, in
accordance with

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Section 406
of the Sarbanes-Oxley Act of 2002 and the rules of the Securities and Exchange Commission promulgated thereunder. The code of ethics, which we call our Code of Business Conduct and
Ethics, is available on our corporate website, www.gbnk.com, in the section entitled "Corporate Governance." In the event that we make changes in, or provide waivers from, the provisions of this code
of ethics that the SEC requires us to disclose, we intend to disclose these events on our corporate website in such section. In the Corporate Governance section of our corporate website, we have also
posted the charters for our Audit Committee and our Compensation, Nominating and Governance Committee, as well as our Corporate Governance Guidelines. In addition, information concerning purchases and
sales of our equity securities by our executive officers and directors is posted on our website.

Our
Investor Relations Department can be contacted at Guaranty Bancorp, 1331 Seventeenth Street, Suite 345, Denver, CO 80202, Attention: Investor Relations, telephone
303-293-5563, or via e-mail to investor.relations@gbnk.com.

Except
for the documents specifically incorporated by reference into this document, information contained on our website or information that can be accessed through our website is not
incorporated by reference into this document.

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ITEM 1A.    RISK FACTORS

An investment in our common stock is subject to risks inherent to our business. The material risks and uncertainties that management
believes affect us are described below. Before making an investment decision, you should carefully consider the risks and uncertainties described below together with all of the other information
included or incorporated by reference in this report. The risks and uncertainties described below are not the only ones we face. Additional risks and
uncertainties that management is not aware of or focused on or that management currently deems immaterial may also impair our business operations. This report is qualified in its entirety by these
risk factors.

If
any of the following risks actually occurs, our financial condition, results of operations or cash flows could be materially and adversely affected. If this were to happen, the value
of our common stock could decline significantly, and you could lose all or part of your investment.

Our Business Has Been and May Continue to be Adversely Affected by Current Conditions in the Financial Markets And Economic Conditions Generally

Negative developments in 2008 and 2009 in the financial services industry have resulted in uncertainty in the financial markets in
general and a related general economic downturn, which have continued into 2010 and 2011. In addition, as a consequence of the recession that the United States was in, business activity across a wide
range of industries face serious difficulties due to the decrease in consumer spending, reduced consumer confidence brought on by deflated home prices, among other things, and reduced liquidity in the
credit markets. Unemployment also increased significantly.

As
a result of these financial economic crises, many lending institutions, including us, have experienced declines in the performance of their loans, including construction, land
development and land loans, commercial real estate loans and other commercial and consumer loans. Moreover, competition among depository institutions for deposits and quality loans has increased
significantly. In addition, the values of real estate collateral supporting many commercial loans and home mortgages have declined and may continue to decline. Bank and bank holding company stock
prices have been negatively affected, and the ability of banks and bank holding companies to raise capital or borrow in the debt markets has become more difficult compared to recent years. As a
result, there is a potential for new federal or state laws and regulations regarding lending and funding practices and liquidity standards, and bank regulatory agencies have been and are expected to
continue to be very aggressive in responding to concerns and trends identified in examinations, including the issuance of formal or informal enforcement actions or orders. The impact of new
legislation in response to these developments may negatively impact our operations by restricting our business operations, including our ability to originate or sell loans, and adversely impact our
financial performance or our stock price.

In
addition, further negative market developments may affect consumer confidence levels and may cause adverse changes in payment patterns, causing increases in delinquencies and default
rates, which may impact our charge-offs and provision for credit losses. A worsening of these conditions would likely exacerbate the adverse effects of these difficult market conditions on
us and others in the financial services industry.

Overall,
during the past three years, the general business environment has had an adverse effect on our business, and there can be no assurance that the environment will improve in the
near term. Until conditions improve, we expect our business, financial condition and results of operations to be adversely affected.

We are Subject to Credit Risk

There are inherent risks associated with our lending activities. These risks include, among other things, the impact of changes in
interest rates and changes in the economic conditions in the markets

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where
we operate as well as those across the United States and abroad. Increases in interest rates and/or weakening economic conditions could adversely impact the ability of borrowers to repay
outstanding loans or the value of the collateral securing these loans. We are also subject to various laws and regulations that affect our lending activities. Failure to comply with applicable laws
and regulations could subject us to regulatory enforcement action that could result in the assessment of significant civil money penalties against us.

We
seek to mitigate the risks inherent in our loan portfolio by adhering to specific underwriting practices. Although we believe that our underwriting criteria are appropriate for the
various kinds of loans we make, we may incur losses on loans that meet our underwriting criteria, and these losses may exceed the amounts set aside as reserves in our allowance for loan losses. Due to
recent economic conditions affecting the real estate market, many lending institutions, including us, have experienced substantial declines in the performance of their loans, including construction,
land development loans and land loans and commercial loans. The value of real estate collateral supporting many construction and land development loans, land loans, commercial loans and multi-family
loans have declined and may continue to decline. Recent negative developments in the financial industry and credit markets may continue to adversely impact our financial condition and results of
operations.

We Are Subject to Interest Rate Risk

Our earnings and cash flows are largely dependent upon our net interest income. Net interest income is the difference between interest
income earned on interest-earning assets such as loans and securities and interest expense paid on interest-bearing liabilities such as deposits and borrowed funds. Interest rates are highly sensitive
to many factors that are beyond our control, including general economic conditions, demand for loans, securities and deposits, and policies of various governmental and regulatory agencies and, in
particular, the Board of Governors of the Federal Reserve System. Changes in monetary policy, including changes in interest rates, could influence not
only the interest we receive on loans and securities and the amount of interest we pay on deposits and borrowings, but such changes could also affect (i) our ability to originate loans and
obtain deposits, (ii) the fair value of our financial assets and liabilities, and (iii) the average duration of our loans and securities which are collateralized by mortgages. If the
interest rates paid on deposits and other borrowings increase at a faster rate than the interest rates received on loans and other investments, our net interest income, and therefore earnings, could
be adversely affected. Earnings could also be adversely affected if the interest rates received on loans and other investments fall more quickly than the interest rates paid on deposits and other
borrowings.

Any
substantial, unexpected, prolonged change in market interest rates could have a material adverse effect on our financial condition, results of operations and cash flows. See
Item 7A. Quantitative and Qualitative Disclosures about Market Risk located elsewhere in this report for further discussion related to our management of interest rate risk.

We are Subject to a Regulatory Written Agreement that Restricts us from Taking Certain Actions

On January 22, 2010, the Company and the Bank entered into a Written Agreement (the "Written Agreement") with the Federal
Reserve Bank of Kansas City (the "Federal Reserve") and the State of Colorado Division of Banking (the "CDB"). The Written Agreement required the Bank
to submit written plans within certain timeframes to the Federal Reserve Bank and the CDB that address the following items: board oversight, credit risk management practices, commercial real estate
concentrations, problem assets, reserves for loan and lease losses, capital, liquidity, brokered deposits, earnings and overall condition. The Agreement also required the Company to submit to the
Federal Reserve a written plan that addresses capital and a written statement of the Company's annual cash flow projections.

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In
addition, the Written Agreement allows the Bank to continue enter into contractual rollovers and renewals of brokered deposits, but prohibits the Bank from accepting any new brokered
deposits. The Written Agreement also provides that written approval must be obtained from the federal regulators prior to appointing any new director or senior executive officer or changing the
responsibilities of any senior executive officer and making indemnification and severance payments. Further, the Written Agreement provides that prior written approval must be obtained from the
Federal Reserve, and in the case of the Bank, the CDB, prior to paying dividends. Prior written approval must also be obtained from the Federal Reserve before the Company can incur, increase or
guarantee any debt, take any other form of payment representing a reduction in capital from the Bank, or make any distributions of interest, principal or other sums on subordinated debentures or trust
preferred securities.

There
can be no assurance that the terms and conditions of the Written Agreement will be met or that the impact or effect of such terms and conditions will not have a material adverse
effect with respect to our financial condition, results of operations and future prospects.

Also,
if, as a result of a future examination or review of the Bank, the Federal Reserve or the CDB should determine that the financial condition, capital resources, asset quality,
earnings prospects, management, liquidity, or other aspects of its operations have worsened or that it or its management is violating or has violated the written agreement or any law or regulation,
various additional remedies are available to the Federal Reserve and the CDB. Such remedies include the power to enjoin "unsafe or unsound" practices, to require affirmative action to correct any
conditions resulting from any violation or practice, to issue an administrative order that can be judicially enforced, to direct an increase in capital, to restrict our growth, to assess civil
monetary penalties, to remove officers and directors, and ultimately to terminate our deposit insurance, which for a Colorado-chartered bank would result in the revocation of its charter.

The Level of our Commercial Real Estate Loan Portfolio Subjects us to Additional Regulatory Scrutiny

The FDIC, the Federal Reserve and the Office of the Comptroller of the Currency have promulgated joint guidance on sound risk
management practices for financial institutions with concentrations in commercial real estate lending. Under the guidance, a financial institution that, like us, is actively involved in commercial
real estate lending should perform a risk assessment to identify concentrations. A financial institution may have a concentration in commercial real estate lending if, among other factors,
(i) total reported loans for construction, land development, and other land represent 100% or more of total capital or (ii) total reported loans secured by multifamily and
non-farm residential properties, loans for construction, land development and other land and loans otherwise sensitive to the general commercial real estate market, including loans to
commercial real estate related entities, represent 300% or more of total capital. Management should also employ heightened risk management practices including board and management oversight and
strategic planning, development of underwriting standards, risk assessment and monitoring through market analysis and stress testing.

For
our Bank, the amount of total reported loans for construction, land development and other land represented 85% of capital at December 31, 2010 as compared to 110% of capital
at December 31, 2009. Further, our Bank's total reported commercial real estate loans to total capital is 300% at December 31, 2010, as compared to 329% of capital at December 31,
2009. These ratios have now fallen to levels below or equal to the regulatory commercial real estate concentration guidelines of 100% for land and construction loans and 300% for all investor real
estate loans.

Under
the Written Agreement, our Bank is required to submit a written plan to continue to strengthen the Bank's management of commercial real estate concentrations, including steps to
reduce or mitigate the risk of concentrations. Although we have reduced our concentrations as described

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above,
a significant portion of our classified assets are commercial real estate loans and as we work to further mitigate our risks associated with commercial real estate concentrations, we could take
additional charge-offs and loan losses or require the raising of additional capital in order to further reduce our risk.

Recent Legislative and Required Regulatory Initiatives Will Impose Restrictions and Requirements on Financial Institutions That Could Have an Adverse Effect on Our Business

The United States Congress, the Treasury Department and the Federal Deposit Insurance Corporation have taken several steps to support
the financial services industry, which have included certain well-publicized programs, such as the Troubled Asset Relief Program, as well as programs enhancing the liquidity available to
financial institutions and increasing insurance available on bank deposits. These programs have provided an important source of support to many financial institutions. Partly in response to these
programs and the current economic climate, the President signed into law on July 21, 2010 the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the
"Dodd-Frank Act"). Few provisions of the Dodd-Frank Act were effective immediately, with various provisions becoming effective in stages. Many of the provisions require
governmental agencies to implement rules over the first18 months after enactment. These rules will increase regulation of the financial services industry and impose restrictions on the ability
of firms within the industry to conduct business consistent with historical practices. These rules will, as examples, impact the ability of financial institutions to charge certain banking and other
fees, allow interest to be paid on demand deposits, impose new restrictions on lending practices and require depository institution holding companies to maintain capital levels at levels not less than
the levels required for insured depository institutions. We cannot predict the substance or impact of pending or future legislation or regulation. Compliance with such legislation or regulation may,
among other effects, significantly increase our costs, limit our product offerings and operating flexibility, require significant adjustments in our internal business processes, and possibly require
us to maintain our regulatory capital at levels above historical practices.

There can be no Assurance That the Dodd-Frank Act and Other Government Programs Will Stabilize the U.S. Financial System

There can also be no assurance as to the actual impact that the Dodd-Frank Act and other programs will continue to have on
the financial markets, including credit availability. The failure of the Dodd-Frank Act or other programs to stabilize the financial markets and a continuation or worsening of current
financial market conditions
could materially and adversely affect our business, financial condition, results of operations, access to credit or the trading price of our common stock.

We Continue to Hold and Acquire a Large Amount of OREO Properties, Which has Led to Increased Operating Expenses and Vulnerability to Additional Declines in Real Property
Values

We foreclose on and take title to the real estate serving as collateral for a number of our loans as part of our business. During 2009
and 2010, we continued to acquire a large amount of OREO. The balance at December 31, 2010 was comprised of 35 separate properties with an aggregate book value of $22,898,000, of which
$11,118,000 is land; $11,431,000 is commercial real estate including multi-family units; and $349,000 is residential real estate. Large OREO balances have led to significantly increased expenses as we
have incurred costs to manage and dispose of these properties. We expect that our operating results in 2011 will continue to be negatively affected by expenses associated with OREO, including
personnel costs, insurance and taxes, completion and repair costs, and valuation adjustments with assets that are tied up in OREO. Any further decrease in market prices of real estate in our market
areas may lead to additional OREO write downs, with a corresponding expense in our income statement. We evaluate OREO property values periodically and write down the carrying value of the properties
if the results of our evaluations require it.

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We May be Required to Charge Off Additional Loans in the Future and Make Further Increases in Our Provisions for Loan Losses Which Could Adversely Affect Our Results of
Operations

We maintain an allowance for loan losses, which is a reserve established through a provision for loan losses charged to expense, that
represents management's best estimate of probable incurred losses within the existing portfolio of loans. The allowance, in the judgment of management, is necessary to reserve for estimated loan
losses and risks inherent in the loan portfolio. The level of the allowance reflects management's continuing evaluation of specific credit risks; loan loss experience; current loan portfolio quality;
present economic, political and regulatory conditions; industry concentrations; and other unidentified losses inherent in the current loan portfolio. The determination of the appropriate level of the
allowance for loan losses inherently involves a high degree of subjectivity and judgment and requires us to make significant estimates of current credit risks and future trends, all of which may
undergo material changes. Changes in economic conditions affecting borrowers, new information regarding existing loans, identification of additional problem loans and other factors, both within and
outside of our control, may require an increase in the allowance for loan losses. Increases in nonperforming loans have a significant impact on our allowance for loan losses. Generally, our
nonperforming loans and assets reflect operating difficulties of individual borrowers resulting from weakness in the economy of the Front Range of Colorado. If the real estate
valuation trends of the past two years continue, we could experience increased delinquencies and credit losses, particularly with respect to commercial real estate loans.

Under
the Written Agreement, our Bank was required to submit a written plan regarding the allowance for loan losses. Although there was no requirement by the regulators to increase our
allowance for loan losses, the plan addressed policies and procedures to periodically review and update the allowance for loan losses methodology. As a result of these periodic reviews, we might
adjust our allowance for loan losses based on differences in judgment between the regulators and management. This could result in an increase in the provision for loan losses or the recognition of
further loan charge-offs.

If
charge-offs in future periods exceed the allowance for loan losses, we will need additional provisions to increase the allowance for loan losses. Furthermore, growth in
the loan portfolio would generally lead to an increase in the provision for loan losses.

Any
increases in the allowance for loan losses will result in a decrease in net income and capital, and may have a material adverse effect on our financial condition, results of
operations and cash flows. See the section captioned "Allowance for Loan Losses" in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations located
elsewhere in this report for further discussion related to our process for determining the appropriate level of the allowance for loan losses.

Liquidity Risk Could Impair Our Ability to Fund Operations and Jeopardize Our Financial Condition

Liquidity is essential to our business. An inability to raise funds through traditional deposits, brokered deposit renewals or
rollovers, secured or unsecured borrowings, the sale of securities or loans and other sources could have a substantial negative effect on our liquidity. Our access to funding sources in amounts
adequate to finance our activities or under terms of which are acceptable to us could be impaired by factors that affect us specifically or the financial services industry or economy in general.
Factors that could detrimentally impact our access to liquidity sources include a decrease in the level of our business activity as a result of a downturn in the markets in which our loans are
concentrated or adverse regulatory action against us. Our ability to borrow could also be impaired by factors that are not specific to us, such as a disruption in the financial markets or negative
views and expectations about the prospects for the financial services industry in light of the recent turmoil faced by banking organizations and the continued deterioration in credit markets.

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We rely primarily on commercial and retail deposits and to a lesser extent, brokered deposit renewals and rollovers, advances from the Federal Home Loan Bank
("FHLB") of Topeka and other secured and unsecured borrowings to fund our operations. Although we have historically been able to replace maturing deposits and advances as necessary, we might not be
able to replace such funds in the future if, among other things, our results of operations or financial condition or the results of operations or financial condition of the FHLB of Topeka or market
conditions were to change. In addition, if we fall below the FDIC's thresholds to be considered "well capitalized", we will be unable to continue to rollover or renew brokered funds, and the interest
rate paid on deposits would be restricted.

Under
the Written Agreement, our Bank was required to submit a written plan to improve the Bank's liquidity position, including measures to diversify funding sources and reduce reliance
on brokered deposits. The Written Agreement also restricts the Bank from issuing new brokered deposits, but the Bank can continue to renew or rollover existing brokered deposits. We have significantly
reduced our level of brokered deposits during 2010 by choosing not to renew approximately $111.4 million of matured brokered deposits. This limits our ability to utilize brokered deposits as a
significant funding source until we are no longer subject to the Written Agreement. Further, the Written Agreement prevents the Company, but not the Bank, from incurring, increasing or guaranteeing
any debt without approval from the Federal Reserve.

Although
we consider the current sources of funds adequate for our liquidity needs, there can be no assurance in this regard and we may be compelled to seek additional sources of
financing in the future. Likewise, the Company may seek written approval from the Federal Reserve to issue additional debt in
the future. There can be no assurance that such written approval would be obtained for additional borrowings at the holding company level, or that the additional borrowings would be available to us
or, if available, would be on favorable terms.

In
addition, although we believe that the current level of cash at the holding company is sufficient to meet the operating needs of the holding company for over three years, assuming
that the holding company does not contribute any additional amounts of capital to the Bank, there can be no assurance in this regard and we may be compelled in the future to seek either additional
capital or dividends from the Bank to meet such needs. There can be no assurance that we could raise additional capital or that written approval would be obtained from our regulators for any such
dividends.

Bank
and holding company stock prices have been negatively affected by the recent adverse economic trend, as has the ability of banks and holding companies to raise capital or borrow in
the debt markets compared to recent years. If additional financing sources are unavailable or not available on reasonable terms, our financial condition, results of operations and future prospects
could be materially adversely affected.

We
actively monitor the depository institutions that hold our federal funds sold and due from banks cash balances. Our emphasis is primarily on safety of principal, and since September
2009, nearly all of our overnight funding is held at the Federal Reserve in order to mitigate risk associated with holding large amounts of cash with other financial institutions. Nonetheless, we are
currently not able to provide assurances that access to our cash equivalents and federal funds sold will not be impacted by adverse conditions in the financial markets. From
time-to-time, a portion of the balances in our accounts with financial institutions in the U.S. may exceed the FDIC insurance limits. While we monitor and adjust the balances
in our accounts as appropriate, these balances could be impacted if the financial institutions fail and could be subject to other adverse conditions in the financial markets.

Concern of Customers Over Deposit Insurance May Cause a Decrease in Deposits

With recent increased concerns about bank failures, customers increasingly are concerned about the extent to which their deposits are
insured by the FDIC. Customers may withdraw deposits in an

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effort
to ensure that the amount they have on deposit with their bank is fully insured. Decreases in deposits may adversely affect our funding costs and net income.

Our Deposit Insurance Premiums Could Increase in the Future, Which Could Have a Material Adverse Effect on our Future Earnings

The FDIC insures deposits at FDIC insured financial institutions, including the Bank. The FDIC charges insured financial institutions
premiums to maintain the Deposit Insurance Fund at a certain level. Current economic conditions have increased bank failures and expectations for further failures, in which case the FDIC ensures
payments of deposits up to insured limits from the Deposit Insurance Fund.

In
the first quarter of 2009, the FDIC increased all FDIC deposit assessment rates by 7 basis points. Beginning in the second quarter of 2009, the base assessment rates were increased
again and currently range from 12-16 basis points for Risk Category I institutions to 45 basis points for Risk Category IV institutions, subject to adjustments for brokered
deposits, secured liabilities and a reduction for unsecured debt. In the second half of 2009 and through the third quarter of 2010, the Bank's base assessment rate was 32 basis points with an overall
assessment rate of approximately 33 basis points. At December 31, 2010, the Bank's total assessment rate was approximately 22 basis points.

In
addition, on May 22, 2009, the FDIC adopted a final rule imposing a special assessment on all institutions of 5 basis points for the second quarter of 2009. The Bank accrued
$0.9 million for this special assessment as a liability and expense for the second quarter of 2009.

On
February 7, 2011, the FDIC adopted final rules to implement changes required by the Dodd-Frank Act with respect to the FDIC assessment rules. In particular, the
definition of an institution's deposit insurance assessment base is being changed from total deposits to total assets less tangible equity. In addition, the FDIC is revising the deposit insurance
assessment rates down. The changes will become effective April 1, 2011. The new initial base assessment rates range from 5 to 9 basis points for Category I banks to 35 basis points for
Category IV banks. Category II and III banks will have an initial base assessment rate of 14 or 23 basis points, respectively. The Company expects that the new rates and assessment base
will further reduce our current FDIC insurance assessments. However, if the risk category of the Bank changes adversely, our FDIC insurance premiums could increase.

The
FDIC may further increase or decrease the assessment rate schedule in order to manage the DIF to prescribed statutory target levels. An increase in the Risk Category for the Bank or
in the assessment rates could have an adverse effect on the Bank's earnings. The FDIC may terminate deposit insurance if it determines the institution involved has engaged in or is engaging in unsafe
or unsound banking practices, is in an unsafe or unsound condition, or has violated applicable laws, regulations or orders. In the case of a Colorado-chartered bank, the termination of deposit
insurance would result in the revocation of its charter.

To Reduce Our Level of Nonperforming Loans, We May Elect to Sell Loans to Third Parties, Which Could Result in Losses for the Bank

We may elect to sell loans or packages of loans to third parties. Such sales may be at prices below the carrying value of the loans,
which would require the immediate recognition of additional losses and reduce our capital levels.

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We May Elect or be Compelled to Seek Additional Capital in the Future, But Capital May not be Available When it is Needed

We are required by federal and state regulatory authorities to maintain adequate levels of capital to support our operations. In
addition, we may elect to raise additional capital to support our business or to finance acquisitions, if any, or we may otherwise elect to raise additional capital. In that regard, a number of
financial institutions have recently raised considerable amounts of capital as a result of deterioration in their results of operations and financial condition arising from the turmoil in the mortgage
loan market, deteriorating economic conditions, declines in real estate values and other factors, which may diminish our ability to raise additional capital.

Our
ability to raise additional capital, if needed, will depend on conditions in the capital markets, economic conditions and a number of other factors, many of which are outside our
control, and on our financial performance. Accordingly, we cannot be assured of our ability to raise additional capital if needed or on terms acceptable to us. If we cannot raise additional capital
when needed, it may have a material adverse effect on our financial condition, results of operations and prospects.

The Value of Securities in Our Investment Securities Portfolio May be Negatively Affected by Continued Disruptions In Securities Markets

The market for some of the investment securities held in our portfolio has become volatile over the past three years. Volatile market
conditions may detrimentally affect the value of these securities due to the perception of heightened credit and liquidity risks. There can be no assurance that the declines in market value associated
with these disruptions will not result in other than temporary impairments of these assets, which would lead to accounting charges that could have a material adverse effect on our net income and
capital levels.

The Soundness of Other Financial Institutions Could Adversely Affect Us

Since mid-2007, the financial services industry as a whole, as well as the securities markets generally, have been
materially and adversely affected by very significant declines in the values of nearly all asset classes and by a very serious lack of liquidity. Financial institutions in particular have been subject
to increased volatility and an overall loss in investor confidence.

Our
ability to engage in routine funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions. Financial services companies
are interrelated as a result of trading, clearing, counterparty, or other relationships. We have exposure to many different industries and counterparties, and we routinely execute transactions with
counterparties in the financial services industry, including brokers and dealers, commercial banks, investment banks, mutual and hedge funds, and other institutional clients. As a result, defaults by,
or even rumors or questions about, one or more financial services companies, or the financial services industry generally, have led to market-wide liquidity problems and could lead to
losses or defaults by us or by other institutions. Many of these transactions expose us to credit risk in the event of default of our counterparty or client. In addition, our credit risk may be
exacerbated when the collateral held by us cannot be realized or is liquidated at prices not sufficient to recover the full amount of the loan or derivative exposure due us. There is no assurance that
any such losses would not materially and adversely affect our business, financial condition or results of operations.

We Are Subject to Extensive Government Regulation and Supervision

We are subject to extensive regulation, supervision and examination. Any change in the laws or regulations applicable to us, or in
banking regulators' supervisory policies or examination procedures, whether by the Colorado Division of Banking, the FDIC, the Federal Reserve Board, other state or

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federal
regulators, the U.S. Congress or the Colorado legislature could have a material adverse effect on our business, financial condition, results of operations and cash flows.

The
Bank is subject to regulations promulgated by the Colorado Division of Banking, as its chartering authority, and by the FDIC as the insurer of its deposits up to certain limits. The
Bank also belongs to the Federal Home Loan Bank System and, as a member, is subject to certain limited regulations promulgated by the Federal Home Loan Bank of Topeka. In addition, the Federal Reserve
Board
regulates and oversees Guaranty Bancorp as a bank holding company, and the Bank, as a member of the Federal Reserve System.

This
regulation and supervision limits the activities in which we may engage. The purpose of regulation and supervision is primarily to protect the FDIC's insurance fund and our
depositors and borrowers, rather than our stockholders. Regulatory authorities have extensive discretion in the exercise of their supervisory and enforcement powers. They may, among other things,
impose restrictions on the operation of a banking institution, the classification of assets by such institution and such institution's allowance for loan losses. Regulatory and law enforcement
authorities also have wide discretion and extensive enforcement powers under various consumer protection and civil rights laws, including the Truth-in-Lending Act, the Equal
Credit Opportunity Act, the Fair Housing Act, the Real Estate Settlement Procedures Act, the Red Flag Identity Theft rules under the Fair and Accurate Credit Transactions Act and Colorado's deceptive
acts and practices law. These laws also permit private individual and class action lawsuits and provide for the recovery of attorneys fees in certain instances. Given the current disruption in the
financial markets and regulatory initiatives that are likely to be proposed by the new administration and Congress, new regulations and laws that may affect us are increasingly likely. Compliance with
such regulations and laws may increase our costs and limit our ability to pursue business opportunities. The Written Agreement also subjects us to additional restrictions and more frequent oversight.
No assurance can be given that the foregoing regulations and supervision will not change so as to affect us adversely.

Our Profitability Depends Significantly on Economic Conditions in the Colorado Front Range

Our success depends primarily on the general economic conditions in the counties in which we conduct business. Unlike larger banks that
are more geographically diversified, we provide banking and financial services to customers primarily in the Colorado Front Range, which includes the Denver metropolitan area. The local economic
conditions in our market area have a significant impact on our loans, the ability of the borrowers to repay these loans and the value of the collateral securing these loans. A significant decline in
general economic conditions caused by inflation, natural disasters, recession, unemployment or other factors beyond our control would affect these local economic conditions and could adversely affect
our financial condition, results of operations and cash flows. Further deterioration in economic conditions, in particular within our primary market areas, could result in the following consequences,
among others, any of which could hurt our business materially: loan delinquencies on real estate, commercial and consumer loans may increase; problem assets and foreclosures may increase; demand for
our products and services may decline; and collateral for loans made by us, especially real estate, may decline in value, in turn reducing a customer's borrowing power and reducing the value of assets
and collateral securing our loans. In view of the concentration of our operations and the collateral securing our loan portfolio in Colorado's Front Range, we may be particularly susceptible to the
adverse effects of any of these consequences, any of which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Further Downturn in Our Real Estate Markets Could Hurt Our Business

Our business activities and credit exposure are primarily concentrated along the Front Range of Colorado. As of December 31,
2010, approximately 65% of the book value of our loan portfolio consisted of real estate loans. Substantially all of our real estate loans are located in Colorado. While

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we
do not have any sub-prime loans, our construction, land development and land loan portfolio, along with our commercial and multi-family loan portfolios and certain of our other loans,
have been affected by the recent downturn in the residential and commercial real estate market. Real estate values and real estate markets are generally affected by changes in national, regional or
local economic conditions, fluctuations in interest rates and the availability of loans to potential purchasers, changes in tax laws and other governmental statutes, regulations and policies and acts
of nature. We anticipate that further declines in the real estate markets in our primary market areas would affect our business. If real estate values continue to decline, the collateral for our loans
will provide less security. As a result, our ability to recover on defaulted loans by selling the underlying real estate will be diminished, and we would be more likely to suffer losses on defaulted
loans. The events and conditions described in this risk factor could therefore have a material adverse effect on our business, results of operations and financial condition.

Our Small to Medium-sized Business Target Markets may have Fewer Financial Resources to Weather a Downturn in the Economy

We target the banking and financial services needs of small and medium-sized businesses. These businesses generally have fewer
financial resources in terms of capital borrowing capacity than larger entities. If general economic conditions continue to negatively impact these businesses in the markets in which we operate, our
business, financial condition, and results of operation could be adversely affected.

We Operate in a Highly Competitive Industry and Market Area

We face substantial competition in all areas of our operations from a variety of different competitors, many of which are larger and
may have more financial resources. Such competitors primarily include national, regional, and community banks within the various markets we serve. We also face competition from many other types of
financial institutions, including, without limitation, savings and loans, credit unions, finance companies, brokerage firms, insurance companies, factoring companies and other financial
intermediaries. The financial services industry could become
even more competitive as a result of legislative, regulatory and technological changes and continued consolidation. Banks, securities firms and insurance companies can merge under the umbrella of a
financial holding company, which can offer virtually any type of financial service, including banking, securities underwriting, insurance (both agency and underwriting) and merchant banking.
Additionally, we expect competition to intensify among financial services companies due to the recent consolidation of certain competing financial institutions and the conversion of certain investment
banks to bank holding companies. Also, technology has lowered barriers to entry and made it possible for non-banks to offer products and services traditionally provided by banks, such as
automatic funds transfer and automatic payment systems. Many of our competitors have fewer regulatory constraints and may have lower cost structures. Additionally, due to their size, many competitors
may be able to achieve economies of scale and, as a result, may offer a broader range of products and services as well as better pricing for those products and services than we can.

Our
ability to compete successfully depends on a number of factors, including, among other things:



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Failure
to perform in any of these areas could significantly weaken our competitive position, which could adversely affect our growth and profitability, which, in turn, could have a
material adverse effect on our financial condition, results of operations and cash flows.

We Rely on Dividends from Our Subsidiary to Fund Company Expenses and Dividends

Because we are a holding company with no significant assets other than the Bank, we currently depend upon dividends from the Bank for a
substantial portion of our revenues and to fund the holding company's expenses. Our ability to pay dividends to our stockholders will therefore continue to depend in large part upon our receipt of
dividends or other capital distributions from the Bank. Our ability to pay dividends is subject to the restrictions of the Delaware General Corporation Law.

Various
banking laws applicable to the Bank limit the payment of dividends, management fees and other distributions by the Bank to the Company, and may therefore limit our ability to pay
dividends on our common or preferred stock. In addition, the Written Agreement prohibits both the Company and the Bank from paying dividends without the prior written approval of the Federal Reserve,
and, in the case of the Bank, the CDB. Accordingly, our ability to receive dividends from the Bank, as well as our ability to pay dividends to our stockholders will be restricted until the Written
Agreement is terminated.

From
time to time, we may become a party to financing agreements or other contractual arrangements that have the effect of limiting or prohibiting us or our bank subsidiary from
declaring or paying dividends. See "Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesDividends" for more
information on these restrictions.

Although
we believe that the current level of cash at the holding company is sufficient to meet the operating needs of the holding company for over three years, assuming that the holding
company does not contribute any additional amounts of capital to the Bank, there can be no assurance in this regard and we may be compelled in the future to seek either additional capital or dividends
from the Bank to meet such needs. There can be no assurance that we could raise additional capital or that written approval would be obtained from our regulators for any such dividends.

Under
the terms of our trust preferred financings, including our related subordinated debentures, on September 7, 2000, February 22, 2001, June 30, 2003 and
April 8, 2004, respectively, we cannot declare or pay any dividends or distributions (other than stock dividends) on, or redeem, purchase, acquire or make a liquidation payment with respect to,
any shares of our capital stock if (1) an event of default under any of the subordinated debenture agreements has occurred and is continuing, or (2) if we give notice of our election to
begin an extension period whereby we may defer payment of interest on the trust preferred securities for a period of up to sixty consecutive months as long as we are in compliance with all covenants
of the agreement. On July 31, 2009, we elected to defer regularly scheduled interest payments on each of our subordinated debentures until further notice. In addition, we are currently
restricted from making payments of principal or interest on our subordinated debentures or trust preferred securities under the terms of our Written Agreement without the prior approval of the Federal
Reserve.

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Under the terms of the Series A Convertible Preferred Stock issuance in 2009, we cannot declare or pay dividends on, make distributions with respect to, or
redeem, purchase or acquire, or make a liquidation payment with respect to, or pay or make available monies for the redemption of, any Common Stock or other junior securities unless full dividends on
all outstanding shares of the Series A Preferred Stock have been paid or declared and set aside for payment. We continue to make paid-in-kind dividends in the form of
additional shares of Series A Convertible Preferred Stock on a quarterly basis and expect to make these paid-in-kind dividends through August 15, 2011. After
August 2011, any dividend on the Series A Convertible Preferred Stock must be in the form of cash. We are currently restricted from making cash dividends on our Series A Convertible
Preferred Stock under the terms of our Written Agreement without the prior approval of the Federal Reserve and for as long as we defer payments of interest with respect to our subordinated debentures
and related trust preferred securities. If we cannot make such cash dividends prior to the expiration of a one-year cure period, the conversion price of $1.80 per share will adjust
downward in $0.04 increments for each missed quarterly dividend down to a floor of $1.50 per share.

We are Dependent on Key Personnel and the Loss of One or More of Those Key Personnel Could Harm Our Business

Competition for qualified employees and personnel in the banking industry is intense and there are a limited number of qualified
persons with knowledge of and
experience in the Colorado community banking industry. The process of recruiting personnel with the combination of skills and attributes required to carry out our strategies is often lengthy. Our
success depends to a significant degree upon our ability to attract and retain qualified management, loan origination, administrative, marketing and technical personnel and upon the continued
contributions of and customer relationships developed by our management and personnel. In particular, our success is highly dependent upon the abilities of our senior executive management. We believe
this management team, comprised of individuals who have worked in the banking industry for many years, is integral to implementing our business plan. The loss of the services of one or more of them
could harm our business.

On
February 8, 2011, Daniel M. Quinn, the Company's Chairman, Chief Executive Officer and President, notified the Company of his intention to resign from the Company and Guaranty
Bank and Trust Company effective as of the date of the Company's 2011 Annual Meeting of Stockholders, which is expected to occur on May 3, 2011. The Board of Directors of the Company has begun
a search for a CEO to replace Mr. Quinn. If the Board of Directors is unable to timely find a qualified successor to Mr. Quinn, it could adversely affect our business.

Under
the terms of the Written Agreement, prior written approval from the Federal Reserve must be obtained prior to appointing any new director or senior executive officer, or changing
the responsibilities of any senior executive officer so that the officer would assume a different senior executive officer position. There is no assurance that written approval would be granted to
appoint any new director or senior executive officer, or to change the responsibilities of any senior executive officer.

Our Controls and Procedures May Fail or Be Circumvented

Management regularly reviews and updates our internal controls, disclosure controls and procedures, and corporate governance policies
and procedures. Any system of controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the
system are met. Any failure or circumvention of our controls and procedures or failure to comply with regulations related to controls and procedures could have a material adverse effect on our
business, results of operations, cash flows and financial condition.

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We are Subject to Security and Operational Risks Relating to Our Use of Technology That Could Damage Our Reputation and Our Business

We rely heavily on communications and information systems to conduct our business. Any failure, interruption or breach in security of
these systems could result in failures or disruptions in our customer relationship management, general ledger, deposit, loan and other systems. While we have policies and procedures designed to
prevent or limit the effect of the failure, interruption or security breach of our information systems, there can be no assurance that any such failures, interruptions or security breaches will not
occur or, if they do occur, that they will be adequately addressed. Additionally, we outsource our data processing to a third party. If our third party provider encounters difficulties or if we have
difficulty in communicating with such third party, it will significantly affect our ability to adequately process and account for customer transactions, which would significantly affect our business
operations. Furthermore, breaches of such third party's technology may also cause reimbursable loss to our consumer and business customers, through no fault of our own. The occurrence of any failures,
interruptions or security breaches of information systems used to process customer transactions could damage our reputation, result in a loss of customer business, subject us to additional regulatory
scrutiny, or expose us to civil litigation and possible financial liability, any of which could have a material adverse effect on our financial condition, results of operations and cash flows.

We Continually Encounter Technological Change

The financial services industry is continually undergoing rapid technological change with frequent introductions of new
technology-driven products and services. The effective use of technology increases efficiency and enables financial institutions to better serve customers and to reduce costs. Our future success
depends, in part, upon our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer demands, as well as to create additional
efficiencies in our operations. Many of our competitors have substantially greater resources to invest in technological improvements. We may not be able to effectively implement new technology-driven
products and services or be successful in marketing these products and services to our customers. Failure to successfully keep pace with technological change affecting the financial services industry
could have a material adverse impact on our business and, in turn, our financial condition, results of operations and cash flows.

We Are Subject to Claims and Litigation Pertaining to Fiduciary Responsibility

From time to time, customers make claims and take legal action pertaining to our performance of our fiduciary responsibilities. Whether
customer claims and legal action related to our performance of our fiduciary responsibilities are founded or unfounded, if such claims and legal actions are not resolved in a manner favorable to us,
they may result in significant financial liability and/or adversely affect the market perception of us and our products and services as
well as impact customer demand for our products and services. Any financial liability or reputation damage could have a material adverse effect on our business, which, in turn, could have a material
adverse effect on our financial condition, results of operations and cash flows.

Concentrated Ownership of our Stock May Discourage a Change in Control and Have an Adverse Effect on the Share Price of our Common Stock

As of February 1, 2011, executive officers, directors and stockholders of more than 5% of our common stock beneficially owned or
controlled approximately 52.9% of our common stock, after giving effect to the conversion of our existing and outstanding Series A Convertible Preferred Stock at $1.80 per share. Investors who
purchase our common stock may be subject to certain risks due to the concentrated ownership of our common stock. Such a concentration of ownership may have the effect

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of
discouraging, delaying or preventing a change in control and may also have an adverse effect on the market price of our common stock.

We Face Risks Associated With Acquisitions or Mergers

We may pursue or be a party to an acquisition or merger opportunity in the future. Risks commonly encountered in mergers and
acquisitions include, among other things:



We
may not be successful in overcoming these risks or any other problems encountered in connection with mergers or acquisitions. Our integration of operations of banks or branches that
we acquire may not be successfully accomplished and may take a significant amount of time. Our inability to improve the operating performance of acquired banks and branches or to integrate
successfully or in a timely manner their operations could have a material adverse effect on our business, financial condition, results of operations and cash flows. We would expect to hire additional
employees and/or retain consultants to assist with integrating our operations, and we cannot assure that those individuals or firms will perform as expected or be successful in addressing these
issues.

We are Exposed to Risk of Environmental Liabilities with Respect to Properties to Which We Take Title

In the course of our business, we may own or foreclose and take title to real estate, and could be subject to environmental liabilities
with respect to these properties. We may be held liable to a governmental entity or to third parties for property damage, personal injury, investigation and clean-up costs incurred by
these parties in connection with environmental contamination, or may be required to investigate or clean up hazardous or toxic substances, or chemical releases at a property. The costs associated with
investigation or remediation activities could be substantial. In addition, as the owner or former owner of a contaminated site, we may be subject to common law claims by third parties based on damages
and costs resulting from environmental contamination emanating from the property. If we ever become subject to significant environmental liabilities, our business, financial condition, cash flows,
liquidity and results of operations could be materially and adversely affected.

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Severe Weather, Natural Disasters, Acts of War or Terrorism and Other External Events Could Significantly Impact Our Business

Severe weather, natural disasters, acts of war or terrorism and other adverse external events could have a significant impact on our
ability to conduct business. Such events could affect the stability of our deposit base, impair the ability of borrowers to repay outstanding loans, impair the value of collateral securing loans,
cause significant property damage, result in loss of revenue and/or cause us to incur additional expenses. Although management has established disaster recovery policies and procedures, the occurrence
of any such event could have a material adverse effect on our business, which, in turn, could have a material adverse effect on our financial condition, results of operations and cash flows.

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ITEM 1B.    UNRESOLVED STAFF COMMENTS

None.

ITEM 2.    PROPERTIES

As of December 31, 2010, we had a total of 34 branch office properties, 21 of which we owned and 13 of which we leased. All of
our properties are located in the Colorado Front Range. Each of Guaranty Bancorp's and Guaranty Bank's principal office is located at 1331 Seventeenth Street, Suite 345, Denver, Colorado 80202.

We
consider our properties to be suitable and adequate for our needs.

ITEM 3.    LEGAL PROCEEDINGS

In the ordinary course of our business, we are party to various legal actions, which we believe are incidental to the operation of our
business. Although the ultimate outcome and amount of liability, if any, with respect to these legal actions to which we are currently a party cannot presently be ascertained with certainty, in the
opinion of management, based upon information currently available to us, any resulting liability is not likely to have a material adverse effect on the Company's consolidated financial position,
results of operations or cash flows.

ITEM 4.    [REMOVED AND RESERVED]

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PART II

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Common Stock Market Prices

Our voting common stock is traded on the Nasdaq Global Select Market ("Nasdaq") under the symbol "GBNK". We do not have any outstanding
non-voting common stock as of the date of this report. The table below sets forth the high and low sales prices per share of our voting common stock as reported by Nasdaq for each quarter
in the preceding two fiscal years.

Sales PricesHigh

Low

CloseYear/Quarter:2010Fourth quarter

$
1.64

$
1.26

$
1.42Third quarter


1.62


1.00


1.59Second quarter


1.92


1.06


1.06First quarter


1.89


1.22


1.592009Fourth quarter

$
1.75

$
0.96

$
1.32Third quarter


2.03


1.41


1.48Second quarter


2.95


1.52


1.91First quarter


2.43


1.35


1.75


On
February 16, 2011, the closing price of our voting common stock on Nasdaq was $1.27 per share. As of that date, we believe, based on the records of our transfer agent, that
there were approximately 214 record holders of our voting common stock.

Dividends

We have never declared or paid cash dividends on our common stock. Our board of directors reviews the appropriateness of declaring or
paying cash dividends on an ongoing basis. Any determination to declare or pay dividends in the future will be at the discretion of our board of directors. Our board of directors will take into
account such matters as general business conditions, our financial results, future prospects, capital requirements, contractual, legal and regulatory restrictions on the payment of dividends by us to
our stockholders or by our bank subsidiary to the holding company, and such other factors as our board of directors may deem relevant.

Our
ability to pay dividends is subject to the restrictions of the Delaware General Corporation Law. Because we are a holding company with no significant assets other than our bank
subsidiary, we currently depend upon dividends from our bank subsidiary for a substantial portion of our revenues. Our ability to pay dividends will therefore continue to depend in large part upon our
receipt of dividends or other capital distributions from our bank subsidiary.

Various
banking laws applicable to the Bank limit the payment of dividends, management fees and other distributions by the Bank to the Company, and may therefore limit our ability to pay
dividends on our common stock. In addition, the Written Agreement discussed in Note 22 within the Notes to Consolidated Financial Statements contained in "Item 8. Financial Statements
and Supplementary Data" prohibits both the Company and the Bank from paying dividends without the prior written approval of the Federal Reserve, and, in the case of the Bank, the Colorado Division of
Banking. Accordingly, our ability to pay dividends will be restricted until the Written Agreement is terminated.

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Under
the terms of our trust preferred financings, including our related subordinated debentures, issued on September 7, 2000, February 22, 2001, June 30, 2003 and
April 8, 2004, respectively, we cannot declare or pay any dividends or distributions (other than stock dividends) on, or redeem, purchase, acquire or make a liquidation payment with respect to,
any shares of our capital stock if (1) an event of default under any of the subordinated debenture agreements has occurred and is continuing, or (2) if we give notice of our election to
begin an extension period whereby we may defer payment of interest on the trust preferred securities for a period of up to sixty consecutive months as long as we are in compliance with all covenants
of the agreement. On July 31, 2009, we elected to defer regularly scheduled interest payments on each of our subordinated debentures until further notice. In addition, we are currently
restricted from making payments of principal or interest on our subordinated debentures or trust preferred securities under the terms of our Written Agreement without the prior approval of the Federal
Reserve.

Under
the terms of the Series A Convertible Preferred Stock issuance in 2009, we cannot declare or pay dividends on, make distributions with respect to, or redeem, purchase or
acquire, or make a liquidation payment with respect to, or pay or make available monies for the redemption of, any common stock or other junior securities unless full dividends on all outstanding
shares of the Series A Preferred Stock have been paid or declared and set aside for payment. In addition, we are currently restricted from making cash dividends on our Series A
Convertible Preferred Stock under the terms of our Written Agreement without the prior approval of the Federal Reserve and for as long as we defer payments of interest with respect to our subordinated
debentures and related trust preferred securities. We continue to make paid-in-kind dividends in the form of additional shares of Series A Convertible Preferred Stock on
a quarterly basis and expect to make these paid-in-kind dividends through August 15, 2011.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table provides information as of December 31, 2010, regarding securities issued and to be issued under our equity
compensation plans that were in effect during the year ended December 31, 2010:

Plan Category

Number of Securities to
be Issued Upon
Exercise of
Outstanding Options,
Warrants and Rights

Weighted-Average
Exercise Price of
Outstanding
Options, Warrants
and Rights

Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans (Excluding
Securities Reflected in
Column (a))(a)

(b)

(c)Equity compensation plans approved by security holders

Amended & Restated 2005 Stock Incentive Plan(1)



(2)




5,941,028
(3)(4)Equity compensation plans not approved by security holders

None














5,941,028


(1)The
Amended & Restated 2005 Stock Incentive Plan (the "Incentive Plan") was approved by the stockholders of the Company at our 2010 Annual Meeting of
Stockholders.


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(2)Does
not include the 1,768,186 shares of unvested stock grants outstanding as of December 31, 2010 with an exercise price of zero.(3)The
total number of shares of common stock that have been approved for issuance pursuant to awards granted or which may be granted in the future under the
Incentive Plan is 8,500,000 shares. The number of securities remaining available for future issuance has been reduced by 2,558,972 shares, which represents the number of vested shares and the number
of unvested shares of service and performance stock awards outstanding at December 31, 2010.(4)All
of the 5,941,028 shares remaining available for issuance under the Incentive Plan may be issued not only for future grants of options, warrants and
rights, but also for future stock awards. The Company's current practice is to grant only awards of stock. While the Company has not issued any stock options, warrants or rights, it may do so in the
future.


Repurchases of Common Stock

See "Supervision and Regulation" in Item 1 of this report for a discussion of potential regulatory limitations for stock
repurchases and on the holding company's receipt of dividends from its bank subsidiary, which may be used to repurchase our common stock. For 2010, there was no publicly announced plan to repurchase
stock.

The
following table provides information with respect to purchases made by or on behalf of the Company or any "affiliated purchaser" (as defined in Rule 10b-18(a)(3)
under the Securities Exchange Act of 1934) of our common stock during the fourth quarter of 2010.

Total Shares
Purchased(1)

Average
Price Paid
per ShareOctober 1 to October 31, 2010


994

$
1.54November 1 to November 30, 2010


2,072


1.28December 1 to December 31, 2010


4,465


1.427,531

$
1.40


(1)These
shares relate to the net settlement by employees related to vested, restricted stock awards.


ITEM 6.    SELECTED FINANCIAL DATA

Not applicable.

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ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This section should be read in conjunction with the disclosure regarding "Forward-Looking Statements and
Factors that Could Affect Future Results" set forth in the beginning of Part I of this report, as well as the discussion set forth in "Item 1A. Risk Factors" and "Item 8.
Financial Statements and Supplementary Data."



We are a bank holding company providing banking and other financial services throughout our targeted Colorado markets to consumers and
to small and medium-sized businesses, including the owners and employees of those businesses. We offer an array of banking products and services to the communities we serve, including accepting time
and demand deposits and originating commercial loans including energy loans, real estate loans, Small Business Administration guaranteed loans and consumer loans. We derive our income primarily from
interest received on real estate related loans, commercial loans and leases and consumer loans and, to a lesser extent, interest on investment securities, fees received in connection with servicing
loan and deposit accounts and fees from trust services. Our major operating expenses are the interest we pay on deposits and borrowings and general operating expenses. We rely primarily on locally
generated deposits to provide us with funds for making loans.

We
are subject to competition from other financial institutions and our operating results, like those of other financial institutions operating exclusively or primarily in Colorado, are
significantly influenced by economic conditions in Colorado, including the strength of the local real estate market. In addition, both the fiscal and regulatory policies of the federal government and
regulatory authorities that govern financial institutions and market interest rates also impact our financial condition, results of operations and cash flows.

Guaranty
Bancorp has a single bank subsidiary, Guaranty Bank and Trust Company. This structure is a result of a combination of four separate acquisitions in 2004 and 2005 and two
divestitures in 2006. As detailed in Item 1Business, Centennial Bank Holdings, Inc. became Guaranty Bancorp effective May 12, 2008.

Application of Critical Accounting Policies and Accounting Estimates

Our accounting policies are integral to understanding the financial results reported. Our most complex accounting policies require
management's judgment to ascertain the valuation of assets, liabilities, commitments and contingencies. We have established detailed policies and procedures that are intended to ensure valuation
methods are well controlled and consistently applied from period to period. In addition, the policies and procedures are intended to ensure that the process for changing methodologies occurs in an
appropriate manner. The following is a brief description of our current accounting policies that we believe are critical or involve significant management judgment.

Allowance for Loan Losses

The loan portfolio is the largest category of assets on our balance sheet. We determine probable incurred losses inherent in our loan
portfolio and establish an allowance for those losses by considering factors including historical loss rates, expected cash flows and estimated collateral values. In assessing these factors, we use
organizational history and experience with credit decisions and related outcomes. The allowance for loan losses represents our best estimate of losses inherent in the existing loan portfolio. The
allowance for loan losses is increased by the provision for loan losses charged to expense and reduced by loans charged off, net of recoveries. We evaluate our allowance for loan losses quarterly. If
our underlying assumptions later prove to be inaccurate based on subsequent loss evaluations, the allowance for loan losses is adjusted.

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We
estimate the appropriate level of allowance for loan losses by separately evaluating impaired and nonimpaired loans. A specific allowance is assigned to an impaired loan when expected
cash flows or collateral do not justify the carrying amount of the loan. The methodology used to assign an allowance to a nonimpaired loan is more subjective. Generally, the allowance assigned to
nonimpaired loans is determined by applying historical loss rates by portfolio segment to existing loans with similar risk characteristics, adjusted for qualitative factors including the volume and
severity of identified classified loans, changes in economic conditions, changes in credit policies or underwriting standards, and changes in the level of credit risk associated with specific
industries and markets. Because the economic and business climate in any given industry or market, and its impact on any given borrower, can change rapidly, the risk profile of the loan portfolio is
continually assessed and adjusted when appropriate. Notwithstanding these procedures, there still exists the possibility that our assessment could prove to be significantly incorrect and that an
immediate adjustment to the allowance for loan losses would be required.

We
estimate the appropriate level of loan loss allowance by conducting a detailed review of a number of smaller portfolio segments that comprise our loan portfolio. We segment the loan
portfolio into as many components as practical. Each component would normally have similar characteristics, such as risk classification, past due status, type of loan, industry or collateral. The risk
profile of certain segments of the loan portfolio may be improving, while the risk profile of others may be deteriorating. As a result, changes in the appropriate level of the allowance for different
segments may offset one another. Adjustments to the allowance represent the aggregate impact from the analysis of all loan segments.

Other Real Estate Owned and Foreclosed Assets

Other real estate owned or other foreclosed assets acquired through loan foreclosure are initially recorded at fair value less costs to
sell when acquired, establishing a new cost basis. The adjustment at the time of foreclosure is recorded through the allowance for loan losses. Due to the subjective nature of establishing the fair
value when the asset is acquired, the actual fair value of the other real estate owned or foreclosed asset could differ from the original estimate. If it is determined that fair value declines
subsequent to foreclosure, the valuation allowance is adjusted through a charge to noninterest expense. Operating costs associated with the assets after acquisition are also recorded as noninterest
expense. Gains and losses on the disposition of other real estate owned and foreclosed assets are netted and recognized in noninterest expense.

Investment in Debt and Equity Securities

We classify our investments in debt and equity securities as either held to maturity or available for sale. Securities classified as
held to maturity are recorded at cost or amortized cost. Available for sale securities are carried at fair value. Fair value calculations are based on quoted market prices when such prices are
available. If quoted market prices are not available, estimates of fair value are computed using a variety of techniques, including extrapolation from the quoted prices of similar instruments or
recent trades for thinly traded securities, fundamental analysis, or through obtaining purchase quotes. Due to the subjective nature of the valuation process, it is possible that the actual fair
values of these investments could differ from the estimated amounts, thereby affecting our financial position, results of operations and cash flows. If the estimated value of investments is less than
the cost or amortized cost, we evaluate whether an event or change in circumstances has occurred that may have a significant adverse effect on the fair value of the investment. If such an event or
change has occurred and we determine that the impairment is other-than-temporary, we expense the impairment of the investment in the period in which the event or change
occurred.

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Deferred Income Tax Assets/Liabilities

Our net deferred income tax asset arises from differences in the dates that items of income and expense enter into our reported income
and taxable income. From an accounting standpoint, deferred tax assets are reviewed to determine if a valuation allowance is required based on both positive and negative evidence currently available.
Positive evidence includes the historical levels of our taxable income, estimates of our future taxable income including tax planning strategies, the reversals of deferred tax liabilities and taxes
available in carry-back years. Negative evidence primarily includes a cumulative three-year loss for financial reporting purposes. Additionally, current and future economic and
business conditions are considered.

Additionally,
the Company reviews its uncertain tax positions annually. An uncertain tax position is recognized as a benefit only if it is "more likely than not" that the tax position
would be sustained in a tax examination, with a tax examination being presumed to occur. The amount actually recognized is the largest amount of tax benefit that is greater than 50% likely to be
recognized on examination. For tax positions not meeting the "more likely than not" test, no tax benefit is recorded. A significant amount of judgment is applied to determine both whether the tax
position meets the "more likely than
not" test as well as to determine the largest amount of tax benefit that is greater than 50% likely to be recognized. Differences between the position taken by management and that of taxing
authorities could result in a reduction of a tax benefit or increase to tax liability, which could adversely affect future income tax expense.

Intangible Assets

Core deposit and customer relationships, which are intangible assets with a finite life, are recorded on our balance sheets. These
intangible assets were capitalized as a result of past acquisitions and are being amortized over their estimated useful lives of up to 15 years. Core deposit intangible assets with finite lives
are tested for impairment when changes in events or circumstances indicate that their carrying amount may not be recoverable. Core deposits were tested for impairment during 2009 and 2010 and we
determined that no impairment had occured.

This
discussion has highlighted those accounting policies that we consider to be critical to our financial reporting process. However, all the accounting policies are important, and
therefore you are encouraged to review each of the policies included in Note 2 to "Notes to Consolidated Financial Statements" in Item 8, "Financial Statements and Supplementary Data",
to gain a better understanding of how our financial performance is measured and reported.

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RESULTS OF OPERATIONS

The following table presents certain key aspects of our performance.

Table 1

Year Ended December 31,

ChangeFavorable
(Unfavorable)2010

2009

2008

2010 v 2009

2009 v 2008(Dollars in thousands, except per share data)Results of Operations:Interest income

$
87,937

$
97,155

$
121,312

$
(9,218
)
$
(24,157
)Interest expense


23,582


34,382


41,750


10,800


7,368Net interest income


64,355


62,773


79,562


1,582


(16,789
)Provision for loan losses


34,400


51,115


33,775


16,715


(17,340
)Net interest income after provision for loan losses


29,955


11,658


45,787


18,297


(34,129
)Noninterest income


8,102


10,379


10,620


(2,277
)

(241
)Noninterest expense


75,686


70,405


319,656


(5,281
)

249,251Loss before income taxes


(37,629
)

(48,368
)

(263,249
)

10,739


214,881Income tax benefit


(6,290
)

(19,161
)

(6,513
)

(12,871
)

12,648Net loss


(31,339
)

(29,207
)

(256,736
)

(2,132
)

227,529Preferred stock dividends


(5,624
)

(1,389
)




(4,235
)

(1,389
)Net loss applicable to common stockholders

$
(36,963
)
$
(30,596
)
$
(256,736
)
$
(6,367
)
$
226,140Common Share Data:Basic loss per common share

$
(0.72
)
$
(0.60
)
$
(5.03
)
$
(0.12
)
$
4.43Diluted loss per common share

$
(0.72
)
$
(0.60
)
$
(5.03
)
$
(0.12
)
$
4.43Average common shares outstanding


51,671,281


51,378,360


51,044,372


292,921


333,988Diluted average common shares outstanding


51,671,281


51,378,360


51,044,372


292,921


333,988Average equity to average assets


9.57
%

8.68
%

15.54
%

10.25
%

(44.14
)%Return on average equity


(16.44
)%

(16.37
)%

(71.99
)%

(0.43
)%

77.26
%Return on average assets


(1.57
)%

(1.42
)%

(11.19
)%

(10.56
)%

87.31
%




Percent ChangeYear Ended December 31,2010 v 2009

2009 v 20082010

2009

2008Selected Balance Sheet Ratios:Total risk based capital to risk weighted assets


14.99
%

13.80
%

10.61
%

8.62
%

30.07
%Loans, net of unearned discount to deposits


82.37
%

89.74
%

107.52
%

(8.21
)%

(16.53
)%Allowance for loan losses to loans, net of unearned discount


3.91
%

3.42
%

2.46
%

14.21
%

39.08
%


2010 Compared to 2009

The Company's net loss for 2010 was $31.3 million, or $0.72 loss per basic and diluted common share, compared to a net loss of
$29.2 million or $0.60 loss per basic and diluted common share for the same period in 2009. Included in the basic and diluted common share computation for 2010 are $5.6 million in
preferred stock dividends paid in the form of additional shares of Series A convertible

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preferred
stock. The loss before income taxes was $37.6 million in 2010 compared to $48.4 million in 2009, a decrease in the loss before income tax of $10.8 million. The primary
causes for the decrease in the loss before income tax are a $16.7 million reduction in provision for loan losses in 2010 as compared to 2009 resulting from reduced levels of nonperforming and
classified loans during 2010, a $1.6 million increase in net interest income in 2010 primarily attributable to a decrease in the Bank's cost of funds, a $1.2 million gain on the sale of
loans held for sale recorded in 2010, and decreases in most categories of non-interest expense in 2010. These items were partially offset by the $3.5 million OTTI recognized on a
single municipal bond in 2010 and increased OREO expense in 2010 primarily due to write-downs of the Bank's OREO properties resulting from valuation adjustments and sales.

The
Company's total risk capital ratio increased by 119 basis points to 14.99% at December 31, 2010 as compared to 13.80% at December 31, 2009. This increase in our capital
ratio is primarily the result of a reduction in total risk-weighted assets due to a shift in our risk-weighted assets from higher risk-weighted loans to lower
risk-weighted investment securities and overnight funds.

2009 Compared to 2008

The Company's net loss for 2009 was $29.2 million, or $0.60 loss per basic and diluted common share, compared to a net loss of
$256.7 million or $5.03 loss per basic and diluted common share for the same period in 2008. Included in the basic and diluted common share computation for 2009 is a $1.4 million
preferred stock dividend paid in the form of additional shares of Series A convertible preferred stock. The primary cause for the decrease in net loss in 2009 as compared to 2008 is that there
was no goodwill impairment charge in 2009 as compared to the $250.7 million goodwill impairment charge recorded during the third quarter 2008. Other changes in net income were a
$16.8 million decrease in net interest income, primarily as a result of the Company being asset sensitive and interest rates being significantly lower in 2009 as compared to 2008. The increase
in provision for loan losses of $17.3 million was primarily due to the increase in non-performing loans and the deterioration of the economic conditions during 2009 as
compared to 2008. This is highlighted by a 96 basis point increase in our allowance for loan losses to loans, net to 3.42% at December 31, 2009 as compared to 2.46% at December 31, 2008.

Without
the goodwill impairment charge in 2008, the 2008 noninterest expense was $68.9 million, compared to $70.4 million in 2009, an increase of $1.5 million. This
increase is primarily the result of a $4.3 million increase in expenses related to other real estate owned, a $3.6 million increase in insurance and assessments expenses and a
$0.4 million increase in other general and administrative expenses. These increases were primarily offset by a $4.5 million decrease in salaries and employee benefits, a
$1.1 million decrease in occupancy and furniture & equipment expense and a $1.2 million decrease in the amortization of intangible assets. The primary reasons for these changes
are discussed below under noninterest expense.

The
Company's total risk capital ratio increased by 319 basis points to 13.80% at December 31, 2009 as compared to 10.61% at December 31, 2008. This increase is primarily
the result of the issuance of $57.8 million, net of expenses, of Series A convertible preferred stock in August 2009.

Net Interest Income and Net Interest Margin

Net interest income is our primary source of income and represents the difference between income on interest-earning assets and expense
on interest-bearing liabilities.

46

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Table of Contents

The following table summarizes the Company's net interest income and related spread and margin for the periods indicated:

Table 2

Year Ended December 31,2010

2009

2008(Dollars in thousands)Net interest income

$
64,355

$
62,773

$
79,562Interest rate spread


3.09
%

2.71
%

3.35
%Net interest margin


3.47
%

3.26
%

4.05
%Net interest margin, fully tax equivalent


3.55
%

3.34
%

4.14
%


47

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Table of Contents

The
following table presents, for the years indicated, average assets, liabilities and stockholders' equity, as well as the net interest income from average interest-earning assets and
the resultant yields
expressed in percentages. Non-accrual loans are included in the calculation of average loans and leases while non-accrued interest thereon, is excluded from the computation of
yields earned.

Table 3

Year Ended December 31,2010

2009Average
Balance

Interest
Income or
Expense

Average
Yield or
Cost

Average
Balance

Interest
Income or
Expense

Average
Yield or
Cost(Dollars in thousands)ASSETS:Interest-earning assets:Gross loans, net of unearned fees(1)(2)(3)

$
1,379,917

$
76,462


5.54
%
$
1,686,136

$
89,625


5.32
%Investment securities(1)Taxable


246,842


7,701


3.12
%

79,483


3,479


4.38
%Tax-exempt


56,438


2,662


4.72
%

63,972


3,033


4.74
%Bank Stocks(4)


17,154


723


4.22
%

20,639


825


4.00
%Other earning assets


153,679


389


0.25
%

75,887


193


0.25
%Total interest-earning assets


1,854,030


87,937


4.74
%

1,926,117


97,155


5.04
%Non-earning assets:Cash and due from banks


24,662








26,829Other assets


113,330








101,339Total assets

$
1,992,022







$
2,054,285LIABILITIES AND STOCKHOLDERS' EQUITY:Interest-bearing liabilities:Deposits:Interest-bearing demand

$
168,449

$
327


0.19
%
$
148,972

$
368


0.25
%Money market


341,734


2,663


0.78
%

309,493


2,753


0.89
%Savings


75,614


174


0.23
%

71,645


215


0.30
%Time certificates of deposit


618,442


12,438


2.01
%

722,793


23,066


3.19
%Total interest-bearing deposits


1,204,239


15,602


1.30
%

1,252,903


26,402


2.11
%Borrowings:Repurchase agreements


19,450


131


0.67
%

15,557


139


0.89
%Federal funds purchased


92


1


0.87
%

141


1


0.69
%Subordinated debentures


41,239


2,581


6.26
%

41,239


2,556


6.20
%Borrowings


164,153


5,267


3.21
%

166,766


5,284


3.17
%Total interest-bearing liabilities


1,429,173


23,582


1.65
%

1,476,606


34,382


2.33
%Noninterest bearing liabilities:Demand deposits


356,632








387,597Other liabilities


15,591








11,671Total liabilities


1,801,396








1,875,874Stockholders' Equity


190,626








178,411Total liabilities and stockholders' equity

$
1,992,022







$
2,054,285Net interest income




$
64,355







$
62,773Net interest margin








3.47
%







3.26
%


48

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Table of Contents

(1)Yields
on loans and securities have not been adjusted to a tax-equivalent basis. Net interest margin on a fully tax-equivalent basis
would have been 3.55% and 3.34% for the year ended December 31, 2010 and December 31, 2009, respectively. 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%.(2)The
loan average balances include nonaccrual loans.(3)Net
loan fees of $2.2 million and $3.2 million for the year ended December 31, 2010 and 2009, respectively, are included in the yield
computation.(4)Includes
Bankers' Bank of the West stock, Federal Agricultural Mortgage Corporation (Farmer Mac) stock, Federal Reserve Bank stock and Federal Home Loan
Bank stock.


The following table presents the dollar amount of changes in interest income and interest expense for the major categories of our interest-earning
assets and interest-bearing liabilities. Information is provided for each category of interest-earning assets and interest-bearing liabilities with respect to (i) changes attributable to
changes in volume (i.e., changes in average balances multiplied by the prior-period average rate) and (ii) changes attributable to rate (i.e., changes in average rate multiplied
by prior-period average balances). For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately to the change due to volume
and the change due to rate.

Table 4

Year Ended December 31, 2010
Compared to Year Ended
December 31, 2009Net Change

Rate

Volume(In thousands)Interest income:Gross Loans, net of unearned fees

$
(13,163
)
$
4,016

$
(17,179
)Investment SecuritiesTaxable


4,222


(667
)

4,889Tax-exempt


(371
)

(16
)

(355
)Bank Stocks


(102
)

48


(150
)Other earning assets


196


(1
)

197Total interest income


(9,218
)

3,380


(12,598
)Interest expense:Deposits:Interest-bearing demand


(41
)

(105
)

64Money market


(90
)

(564
)

474Savings


(41
)

(54
)

13Time certificates of deposit


(10,628
)

(7,644
)

(2,984
)Repurchase agreements


(8
)

486


(494
)Federal funds purchased








Subordinated debentures


25


25


Borrowings


(17
)

71


(88
)Total interest expense


(10,800
)

(7,785
)

(3,015
)Net interest income

$
1,582

$
11,165

$
(9,583
)


49

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Table of Contents

2010 Compared to 2009

For the year ended December 31, 2010, the Company's net interest income increased by $1.6 million to $64.4 million
as compared to $62.8 million for the same period in 2009. This increase in net interest income during 2010 is attributable to an $11.2 million favorable rate variance offset by a
$9.6 million unfavorable volume variance.

The
$11.2 million favorable rate variance in 2010 as compared to 2009 is a result of the 21 basis point increase in our 2010 net interest margin to 3.47% as compared to 3.26% in
2009. Contributing to the 21 basis point increase in net interest margin was a 68 basis point decline in our cost of funds in 2010 compared to 2009, which was strongly impacted by a 118 basis point
reduction in the cost of our certificates of deposit. The cost of our certificates of deposits declined as higher-cost time deposits matured and were partially replaced with time deposits
with lower rates. Additionally, there was a favorable 22 basis point increase in average loan yields in 2010 as compared to 2009, primarily as a result of the Bank's continued strategy to implement a
minimum or floor rate with respect to renewed variable rate loans.

Partially
offsetting the favorable rate variance of $11.2 million in 2010 was an unfavorable volume variance of $9.6 million. The 2010 unfavorable volume variance is
primarily the result of $72.1 million decrease in overall earning assets during 2010. In addition, there was a shift in the makeup of our earning assets from higher-yielding loans to
lower-yielding investments and cash and cash equivalents during 2010. During 2010, our average loan balances with an average rate of 5.54% declined by approximately $306.2 million while average
investments with an average rate of 3.46% increased by $156.3 million and average overnight cash balances with an average rate of 0.25% increased by $77.8 million. The 2010 decline in
time deposits mitigated the overall impact of the unfavorable volume variance. In 2010, the average balance of our time deposits decreased by $104.4 million, primarily as a result of
management's efforts to allow higher cost brokered deposits to mature without being renewed. In 2011, approximately $340.6 million of time deposits with an average rate of 2.43% are expected to
mature. This amount includes $164.6 million of brokered deposits with an average rate of 3.06% that will mature in 2011. Management expects that these maturities will continue to reduce our
overall cost of deposits because any new time deposits will be replaced at lower rates if overall key rates (i.e. targeted federal funds, prime, LIBOR) remain stable during 2011.

50

---



Table of Contents

The
following table presents, for the years indicated, average assets, liabilities and stockholders' equity, as well as the net interest income from average interest-earning assets and
the resultant yields expressed in percentages. Non-accrual loans are included in the calculation of average loans and leases while non-accrued interest thereon, is excluded
from the computation of yields earned.

Table 5

Year Ended December 31,2009

2008Average
Balance

Interest
Income or
Expense

Average
Yield or
Cost

Average
Balance

Interest
Income or
Expense

Average
Yield or
Cost(Dollars in thousands)ASSETS:Interest-earning assets:Gross loans, net of unearned fees(1)(2)(3)

$
1,686,136

$
89,625


5.32
%
$
1,797,357

$
112,844


6.28
%Investment securities(1)Taxable


79,483


3,479


4.38
%

53,215


2,991


5.62
%Tax-exempt


63,972


3,033


4.74
%

69,830


3,404


4.88
%Bank Stocks(4)


20,639


825


4.00
%

31,503


1,647


5.23
%Other earning assets


75,887


193


0.25
%

14,763


426


2.89
%Total interest-earning assets


1,926,117


97,155


5.04
%

1,966,668


121,312


6.17
%Non-earning assets:Cash and due from banks


26,829








36,846Other assets


101,339








291,594Total assets

$
2,054,285







$
2,295,108LIABILITIES AND STOCKHOLDERS' EQUITY:Interest-bearing liabilities:Deposits:Interest-bearing demand

$
148,972

$
368


0.25
%
$
150,210

$
763


0.51
%Money market


309,493


2,753


0.89
%

507,610


9,968


1.96
%Savings


71,645


215


0.30
%

70,243


397


0.56
%Time certificates of deposit


722,793


23,066


3.19
%

514,362


21,434


4.17
%Total interest-bearing deposits


1,252,903


26,402


2.11
%

1,242,425


32,562


2.62
%Borrowings:Repurchase agreements


15,557


139


0.89
%

18,698


390


2.09
%Federal funds purchased


141


1


0.69
%

6,181


137


2.21
%Subordinated debentures


41,239


2,556


6.20
%

41,239


3,328


8.07
%Borrowings


166,766


5,284


3.17
%

170,038


5,333


3.14
%Total interest-bearing liabilities


1,476,606


34,382


2.33
%

1,478,581


41,750


2.82
%Noninterest bearing liabilities:Demand deposits


387,597








440,359Other liabilities


11,671








19,522Total liabilities


1,875,874








1,938,462Stockholders' Equity


178,411








356,646Total liabilities and stockholders' equity

$
2,054,285







$
2,295,108Net interest income




$
62,773







$
79,562Net interest margin








3.26
%







4.05
%


(1)Yields
on loans and investment securities have not been adjusted to a tax-equivalent basis. Net interest margin on a fully
tax-equivalent basis would have been 3.34% and 4.14% for the year ended December 31, 2009 and December 31, 2008, respectively.(2)The
loan average balances include nonaccrual loans.


51

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Table of Contents

(3)Net
loan fees of $3.2 million and $3.4 million for the year ended December 31, 2009 and 2008, respectively, are included in the yield
computation.(4)Includes
Bankers' Bank of the West stock, Federal Agricultural Mortgage Corporation (Farmer Mac) stock, Federal Reserve Bank stock and Federal Home Loan
Bank stock.


The following table presents the dollar amount of changes in interest income and interest expense for the major categories of our interest-earning
assets and interest-bearing liabilities. Information is provided for each category of interest-earning assets and interest-bearing liabilities with respect to (i) changes attributable to
changes in volume (i.e., changes in average balances multiplied by the prior-period average rate) and (ii) changes attributable to rate (i.e., changes in average rate multiplied
by prior-period average balances). For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately to the change due to volume
and the change due to rate.

Table 6

Year Ended December 31, 2009
Compared to Year Ended
December 31, 2008Net Change

Rate

Volume(In thousands)Interest income:Gross Loans, net of unearned fees

$
(23,219
)
$
(16,544
)
$
(6,675
)Investment SecuritiesTaxable


488


(396
)

884Tax-exempt


(371
)

(91
)

(280
)Bank Stocks


(822
)

(333
)

(489
)Other earning assets


(233
)

65


(298
)Total interest income


(24,157
)

(17,299
)

(6,858
)Interest expense:Deposits:Interest-bearing demand


(395
)

(389
)

(6
)Money market


(7,215
)

(4,211
)

(3,004
)Savings


(182
)

(190
)

8Time certificates of deposit


1,632


(2,235
)

3,867Repurchase agreements


(251
)

(194
)

(57
)Federal funds purchased


(136
)

(56
)

(80
)Subordinated debentures


(772
)

(772
)

0Borrowings


(49
)

56


(105
)Total interest expense


(7,368
)

(7,991
)

623Net interest income

$
(16,789
)
$
(9,308
)
$
(7,481
)


52

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Table of Contents

2009 Compared to 2008

For the year ended December 31, 2009, the Company's net interest income declined by $16.8 million to $62.8 million
as compared to $79.6 million for the same period in 2008. This decline is attributable to a $9.3 million unfavorable rate variance and a $7.5 million unfavorable volume variance.

The
$9.3 million unfavorable rate variance is due mostly to a $17.3 million unfavorable rate variance on interest-earning assets, partially offset by a $8.0 million
favorable rate variance on interest bearing liabilities. The $17.3 million rate variance related to interest-earning assets is due to the 113 basis point decline in the yield on
interest-earning assets during 2009. The yield on interest-earning assets fell from 6.17% to 5.04% year-over-year. This decrease in yield is partially a result of 56% of our
loan portfolio being variable rate loans tied to an index such as prime, federal funds or LIBOR. Although many of these loans have interest rate floors, the overall decline in interest rates discussed
above caused the average yield on loans for the Company to decrease by 96 basis points from 6.28% for the year ended December 31, 2008 to 5.32% in 2009. During 2008, the prime rate fell from
7.25% at December 31, 2007 to 3.25% at December 31, 2008, a decrease of 400 basis points. Although the prime rate stayed at 3.25% through 2009, because it was at higher rates throughout
most of 2008, this caused a decline in overall interest income on variable rate loans in 2009. A significant portion of
the Company's variable rate loans renewed throughout 2009 with higher rates due primarily to floors being added to the loans.

Additionally,
the yield on other earning assets, which mostly represented federal funds sold and interest earning deposits at banks, declined by 264 basis points. In 2008, this category
did not affect the overall yield on interest-earning assets significantly as this category only represented 0.8% of all interest-earning assets. In 2009, this category represented 3.9% of all
interest-earning assets causing it to have a more significant impact on the overall yield on interest-earning assets. Similarly, the yields on investment securities declined during 2009 while the
average balances in these categories increased.

Partially
offsetting the impact of the decline in yield on interest-earning assets was a favorable reduction in the cost of interest-bearing liabilities by 49 basis points during 2009.
The cost of interest-bearing liabilities declined from 2.82% in 2008 to 2.33% in 2009, mostly due to a decline in interest-bearing deposits. In particular, the cost of time deposits declined by 98
basis points during 2009 due to the renewals of time deposits at lower rates.

The
$7.5 million unfavorable volume variance is primarily the result of a $40.6 million decline in total interest-earning assets. Most of this decline is a result of a
$111.2 million decline in average loan balances throughout 2009. The actual balance of loans outstanding at December 31, 2009, was $1.52 billion, compared to average loan balances
during 2009 of $1.69 billion, a difference of $166.5 million.

Provision for Loan Losses

The provision for loan losses in each year represents a charge against earnings. The provision is the amount required to maintain the
allowance for loan losses at a level that, in our judgment, is adequate to absorb probable incurred loan losses in the loan portfolio. The provision for loan losses is based on our allowance
methodology and reflects our judgments about the adequacy of the allowance for loan losses. In determining the amount of the provision, we consider certain quantitative and qualitative factors
including our historical loan loss experience, the volume and type of lending we conduct, the results of our credit review process, the amounts and severity of classified, criticized and nonperforming
assets, regulatory policies, general economic conditions, underlying collateral values and other factors regarding collectability and impairment. The amount of expected loss on our loan portfolio is
influenced by the collateral value associated with our loans. Loans with greater collateral value lessen our exposure to loan loss provision.

53

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Table of Contents

For
further discussion of the methodology and factors impacting management's estimate of the allowance for loan losses, see "Financial ConditionAllowance for Loan Losses"
below. For a discussion of impaired loans and associated collateral values, see "Financial ConditionNonperforming Assets and Other Impaired Loans" below.

2010 Compared to 2009

The provision for loan losses decreased by $16.7 million to $34.4 million for the year ended December 31, 2010 as
compared to $51.1 million in 2009.

Of
the $34.4 million of provision for loan losses in 2010, approximately $39.4 million was related to impaired loans and related charge-offs, offsetting this
was a decrease in the general component of our allowance in the amount of $5.0 million. The decrease in the general component of our Allowance for Loan Losses during 2010 was primarily
attributable to the overall decrease in Classified and Watch list loans throughout 2010, as well as a reduction in overall charge-offs during 2010. The Company determined that the
provision for loan losses made during 2010 was sufficient to maintain our allowance for loan losses at a level necessary for the probable incurred losses inherent in the loan portfolio as of
December 31, 2010. As a percent of loans, our allowance increased to 3.91% at December 31, 2010 compared to 3.42% at December 31, 2009.

The
$16.7 million decrease in the provision for loan losses was partially attributable to the $4.8 million reduction in net charge-offs in 2010 as compared to
2009. Net charge-offs were $39.3 million in 2010 as compared to $44.1 million in 2009. Additionally, the general component of the allowance for loan losses declined in 2010
as a result of an overall improvement in the underlying credit quality factors, including the overall volume and severity of classified and watch-list loans. In 2010, the provision for
loan losses was approximately $4.9 million less than actual charge-offs, whereas, the provision for loan losses exceeded actual 2009 charge-offs by approximately
$7.0 million.

2009 Compared to 2008

The provision for loan losses increased by $17.3 million to $51.1 million for the year ended December 31, 2009 as
compared to $33.8 million in 2008.

Of
the $51.1 million of provision for loan losses in 2009, approximately $37.0 million was related to impaired loans and related charge-offs. Provision for loan
losses of $14.1 million was made for the general component of the allowance for loan losses, which was primarily due to the impact of net charge-offs during the year on the
historical loss and economic condition components of our allowance for loan losses. The Company determined that the provision for loan losses made during 2009 was sufficient to maintain our allowance
for loan losses at a level necessary for the probable incurred losses inherent in the loan portfolio as of December 31, 2009. The provision for loan losses was driven primarily from an increase
in nonperforming loans (nonperforming loans were $59.7 million at December 31, 2009 as compared to $54.8 million at December 31, 2008) and related charge-offs,
primarily due to weakness in the performance of residential construction, land and land development loans. Net charge-offs were $44.1 million in 2009 as compared to
$14.5 million in 2008.

Our
allowance for loan losses compared to loans, net increased to 3.42% at December 31, 2009 compared to 2.46% at December 31, 2008.

54

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Table of Contents

Noninterest Income

The following table presents our major categories of noninterest income:

Table 7

ChangeIncrease /
(Decrease)Year Ended December 31,2010 v 2009

2009 v 20082010

2009

2008(In thousands)Customer service and other fees

$
9,241

$
9,520

$
9,682

$
(279
)
$
(162
)Gain (loss) on sale of securities


313


(2
)

138


315


(140
)Gain on sale of loans


1,196








1,196


Other-than-temporary impairment (OTTI) of securities


(3,500
)







(3,500
)

Other income


852


861


800


(9
)

61Total noninterest income

$
8,102

$
10,379

$
10,620

$
(2,277
)
$
(241
)


2010 Compared to 2009

Noninterest income decreased by $2.3 million in 2010 compared to 2009. The decline in noninterest income is primarily
attributable to a $3.5 million credit-related other-than-temporary-impairment (OTTI) recognized on a single, non-rated municipal bond. The sponsor of this
local revenue bond made a decision to abandon the underlying project, thereby causing a default to occur in the fourth quarter when the bond's sponsor failed to make scheduled interest payments. The
amount of the credit impairment on this bond was estimated using the expected cash flows from the underlying collateral and guarantee supporting this revenue bond. Offsetting the OTTI in 2010 was a
gain recognized on the sale of loans during the second quarter 2010.

In
addition, customer service and other fees decreased by approximately $0.3 million in 2010 as compared to 2009 due mostly to a reduction in business analysis fees primarily from
business customers moving from analysis fee accounts to reduced-fee business checking accounts.

2009 Compared to 2008

Noninterest income remained relatively flat in 2009, with a $0.2 million, or 2%, decline in 2009 as compared to 2008. The
decline in noninterest income is mostly due to customer
service and other fees, which declined primarily as a result of a decline in NSF and ATM fees, partially offset by an increase in analysis account fees due to a lower earnings credit on compensating
balances.

55

---



Table of Contents

Noninterest Expense

The following table presents the major categories of noninterest expense:

Table 8

ChangeIncrease /
(Decrease)Year Ended December 31,2010 v 20092010

2009

2008

2009 v 2008(In thousands)Noninterest expense:Salaries and employee benefits

$
26,042

$
26,547

$
31,086

$
(505
)
$
(4,539
)Occupancy expense


7,399


7,609


7,815


(210
)

(206
)Furniture and equipment


3,720


4,441


5,290


(721
)

(849
)Impairment of goodwill








250,748





(250,748
)Amortization of intangible assets


5,168


6,278


7,433


(1,110
)

(1,155
)Other real estate owned


14,909


5,898


1,612


9,011


4,286Insurance and assessments


6,569


6,536


2,956


33


3,580Professional fees


3,117


3,224


3,256


(107
)

(32
)Other general and administrative


8,762


9,872


9,460


(1,110
)

412Total noninterest expense

$
75,686

$
70,405

$
319,656

$
5,281

$
(249,251
)


2010 Compared to 2009

Noninterest expense for the year ended December 31, 2010 increased by $5.3 million to $75.7 million compared with
the same period in 2009. This increase is mostly attributable to a $9.0 million increase in other real estate owned expense offset by decreases in most other categories of noninterest expense.

The
increase in expenses for other real estate owned in 2010 as compared to 2009 is mostly due to a $7.7 million increase in net write-downs related to valuation adjustments and
sales, as well as a $1.3 million increase in property holding expenses, including taxes, appraisals, insurance and other real estate operating expenses resulting from the heightened level of
other real estate owned properties held by the Company during 2010. The Bank reduced the level of other real estate owned during the fourth quarter through the sale of two properties valued at
$21.8 million. These two sales contributed to the $14.3 million decrease in other real estate owned properties from $37.2 million at December 31, 2009 to
$22.9 million at December 31, 2010. The fair value of other real estate owned is discussed in Note 18, Fair Value, to "Item 8. Financial Statements and Supplementary
DataNotes to Consolidated Financial Statements". Generally, the fair value of the other real estate owned is based on appraised values less estimated costs to sell the other real estate
owned. As updated appraisals are obtained related to other real estate owned or a sales agreement is entered into, any decline from the previous appraised value will affect the amount of other real
estate owned expense through write-down in value.

Salaries
and employee benefits expense declined by $0.5 million in 2010 compared to 2009. This decline is partially a result of a decrease in base salaries as the number of
full-time equivalent employees decreased from 387 at the beginning of 2009 to 366 at the end of 2010. In addition, there was a $0.2 million decrease in incentives and bonuses, as
well as a $0.2 million reduction in stock based compensation expense. Incentives and bonuses decreased as a result of the 2010 loss being partially attributable to items that directly affect
the payment of incentives and bonuses. The decrease in stock-based compensation expense was due mostly to a reduction in the number of unvested restricted stock shares as a result of the vested grants
not being fully replaced with new grants. Overall base salary and employee benefit expense is expected to remain consistent with 2010 levels throughout 2011 as employee levels are not expected to
change significantly. However, incentive and bonus expense could

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reflect
an increase in 2011 if financial performance measures tied to the incentive and bonus program are met, including reductions in nonperforming assets, improvements in net interest margin and
increases in both low-cost deposits and higher-yielding quality earning assets.

On
a combined basis, occupancy and furniture & equipment expense declined by $0.9 million, or 7.7%, to $11.1 million in 2010 as compared to $12.1 million in
2009. This decline is primarily attributable to
lower depreciation expense, lower maintenance and repairs expense and lower rent expense in 2010 as compared to 2009 due mostly to the restructuring of the leases and select assets becoming fully
depreciated.

Amortization
expense decreased in 2010 by $1.1 million, or 17.7%, as a result of accelerated amortization methods. Amortization expense is projected to decrease by
$1.1 million, or 20.8%, in 2011 as compared to 2010 as presented in Note 8, Other Intangible Assets, to "Item 8. Financial Statements and Supplementary DataNotes to
Consolidated Financial Statements".

Insurance
and assessments expense remained relatively level during 2010 at $6.6 million as compared to $6.5 million in 2009. Included within this expense category are FDIC
insurance assessments, which decreased by $0.1 million in 2010 as compared to 2009 despite a $0.9 million one-time special assessment charged to expense in 2009. It is
expected that overall FDIC insurance expense will decrease further in 2011 due to an overall lower assessment rate coupled with a change in how FDIC insurance premiums are calculated effective
April 1, 2011. Starting April 1, 2011, FDIC insurance assessments will be based on total assets less common equity as compared to total deposits in the past. In addition to adjusting the
assessment base, the FDIC is lowering the assessment rates by 5 to 10 basis points. These two changes are expected to lower our FDIC insurance by approximately $1.1 million on an annualized
basis, assuming that our Risk Category does not change. Actual assets and common equity at the end of each quarter and any changes to the FDIC insurance rates could affect this estimate for 2011.

The
$1.1 million decrease in other general and administrative expense to $8.8 million in 2010 as compared to $9.9 million in 2009 is mostly due to a
one-time settlement expense charged to expense in the fourth quarter 2009 related to a dispute with a vendor.

2009 Compared to 2008

Noninterest expense for the year ended December 31, 2009 decreased by $249.2 million to $70.4 million compared
with the same period in 2008. Excluding the $250.7 million goodwill impairment, noninterest expense increased by $1.5 million in 2009 as compared to 2008. This increase is primarily the
result of a $4.3 million increase in expenses related to other real estate owned, a $3.6 million increase in insurance and assessments expense and a $0.4 million increase in other
general and administrative expenses. These increases were partially offset by a $4.5 million decrease in salaries and employee benefits, a $1.1 million decrease in occupancy and
furniture & equipment expense and a $1.2 million decrease in the amortization of intangible assets.

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Salaries and employee benefits expense declined by $4.5 million, or 14.6%, in 2009 as compared to 2008. This decline is primarily a result of a
$4.2 million decrease in base salaries and employee benefit expense, primarily as a result of a decline in full-time equivalent employees by 68 from June 30, 2008 to
December 31, 2009. At the end of the second quarter 2008, the Company announced a major effort to better align our expenses with the current size of our business. This effort was expected to
reduce overall noninterest expense by approximately $6.0 million once fully implemented. A significant portion of these annualized savings were expected to be from salaries and employee
benefits expense and the salary and employee benefit portion of this goal was achieved in 2009. In addition to the overall decline in base salaries and employee benefits, incentive and bonus expense
declined by $1.9 million compared to 2008, but was offset by a $1.6 million increase to equity based compensation expense compared to 2008. Incentive and bonus expense declined due to
the loss in 2009 being attributable to items that directly affected incentives and bonuses, including a decline in average loan balances, higher provision for loan losses and higher overall loan
workout expenses. The increase in equity based compensation expense in 2009 was due mostly to a $2.9 million reversal of equity based compensation in 2008, which caused 2008 expense to be lower
than expected. This reversal in 2008 was made due to a change in expectation regarding the vesting criteria for performance-based shares. It was determined that it is no longer expected that the
performance-based shares will meet their vesting condition, which is based on earnings per common share, prior to their expiration date of December 31, 2012. Should this expectation change,
additional expense could be recorded in future periods.

On
a combined basis, occupancy and furniture & equipment expense declined by $1.1 million, or 8.1%, to $12.1 million in 2009 as compared to $13.1 million in
2008. This decline was primarily attributable to lower depreciation expense and lower maintenance and repairs expense in 2009 as compared to 2008
due mostly to the closure of two branches in 2008, as well as lower depreciation expense due to the outsourcing of certain data processing functions in late 2008.

Amortization
expense decreased in 2009 by $1.2 million, or 15.5%, as a result of accelerated amortization methods.

Other
real estate owned expense increased by $4.3 million to $5.9 million in 2009 as compared to $1.6 million in 2008. The increase in expenses for other real estate
owned in 2009 as compared to 2008 is mostly due to valuation adjustments of other real estate owned, as well as $1.0 million of property holding expenses, including taxes and insurance. The
total balance of other real estate owned at December 31, 2009 is $37.2 million, with most of this balance attributable to foreclosures during 2009.

The
increase in insurance and assessments expense of $3.6 million to $6.5 million in 2009 is mostly related to higher FDIC insurance assessment rates on deposits in 2009 as
compared to 2008, as well as a $0.9 million special assessment charged by the FDIC. This special assessment was charged on all banks as a percentage of net assets in the second quarter 2009.

The
$0.4 million increase in other general and administrative expense to $9.9 million in 2009 as compared to $9.5 million in 2008 is mostly due to higher loan
workout related expenses.

Income Taxes Benefit

2010 Compared to 2009

The effective tax benefit rate in 2010 was 16.7% as compared to 39.6% in 2009. In 2010, the primary differences between the expected
tax benefit rate and the actual tax benefit rate are state taxes, tax-exempt income and the establishment of a valuation allowance against the Company's deferred tax asset. In 2009, the
primary difference between the expected benefit rate and the actual benefit rate was state taxes and tax-exempt income. For further information regarding differences between the expected
tax rate and the actual tax rate, see Note 12, Income Taxes under "Item 8. Financial Statements and Supplementary DataNotes to Consolidated Financial Statements".

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Income
tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and
tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are
reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all, of the deferred tax asset will not be realized. In assessing the realization
of deferred tax assets, management evaluates both positive and negative evidence, including the existence of any cumulative losses in the current year and the prior two years, the amount of taxes paid
in available carry-back years, the forecasts of future income, applicable tax planning strategies, and assessments of current and future economic and business conditions. At the end of
2010, based on various tax planning strategies, the Company has determined that a partial valuation allowance for deferred tax assets is required in the amount of $8.5 million. This analysis
will be updated quarterly and adjusted as necessary.

2009 Compared to 2008

The effective tax benefit rate in 2009 was 39.6% as compared to 2.5% in 2008. In 2009, the primary differences between the expected tax
benefit rate and the actual tax benefit rate are state taxes and tax-exempt income. In 2008, the primary difference between the expected benefit rate and the actual benefit rate was the
significant goodwill impairment charge, which was not deductible for income tax purposes.

Income
tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and
tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are
reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all, of the deferred tax asset will not be realized. In assessing the realization
of deferred tax assets, management evaluates both positive and negative evidence, including the existence of any cumulative losses in the current year and the prior two years, the amount of taxes paid
in available carry-back years, the forecasts of future income, applicable tax planning strategies, and assessments of current and
future economic and business conditions. This analysis is updated quarterly and adjusted as necessary. At the end of 2009, based on the Company's ability to carry-back a portion of its
potential tax losses generated in future years to prior years and various tax planning strategies, the Company determined that a valuation allowance for deferred tax assets was not required.

FINANCIAL CONDITION

At December 31, 2010, the Company had total assets of $1.9 billion, compared to $2.1 billion at
December 31, 2009. The primary causes of the decline of total assets were a decrease in loans of $315 million and a decrease in cash and equivalents of $93 million, partially
offset by $170 million increase in the securities portfolio. There was a continued shift to more liquid assets during 2010 as reflected in the growth of our securities portfolio. During 2010,
the Company continued to maintain a sufficient amount of liquidity by employing strategies to offset projected cash outflows caused by

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maturing
higher rate certificates of deposit with reductions in overnight funds and proceeds from maturing loans.

Despite
the $93 million decrease in cash and cash equivalents during 2010, the Company continues to have an excess of $125 million of overnight funding liquidity in
addition to available secured lines of credit as a result of our increase in investment securities. The cash and cash equivalents continue to reduce our net interest margin as these overnight funds
only earned 0.25% in 2010 as compared to an average investment yield of 3.46% in 2010 and an average loan yield of 5.54% in 2010. The Company continues to evaluate alternatives to reduce the level of
low-yielding overnight funds, including not renewing certain maturing time deposits, the purchase of new investment securities and growing loan balances.

At
December 31, 2009, we had total assets of $2.1 billion, compared to $2.1 billion at December 31, 2008. Although total assets at December 31, 2009
remained consistent with the balance at the end of the prior year, there was a shift to more liquid assets during 2009, including investment securities and short-term funding due to
current economic conditions. Total loans declined by $307 million from $1.8 billion as of December 31, 2008 to $1.5 billion as of December 31, 2009. During this same
time period, the Company's investments increased by $104 million from $144 million as of December 31, 2008 to $248 million as of December 31, 2009, and total cash
and cash equivalents increased by $189 million to $235 million at December 31, 2009 as compared to $46 million at December 31, 2008. The increase in cash and cash
equivalents during 2009 was primarily a result of the decline in loan balances, coupled with the issuance of $57.8 million, net of expenses, of preferred stock in the third quarter of 2009.

The
following table sets forth certain key consolidated balance sheet data:

Table 9

December 31,2010

2009

2008(In thousands)Cash and due from banks

$
141,465

$
234,483

$
45,711Total investments


418,668


248,236


144,264Total loans


1,204,580


1,519,608


1,826,333Total assets


1,870,052


2,127,580


2,102,741Earning assets


1,761,620


1,985,059


1,989,884Deposits


1,462,351


1,693,290


1,698,651


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Loans

The following table sets forth the amount of our loans outstanding at the dates indicated:

Table 10

December 312010

2009

2008

2007

2006Amount

% of
Loans

Amount

% of
Loans

Amount

% of
Loans

Amount

% of
Loans

Amount

% of
Loans(Dollars in thousands)Real Estate:Residential and commercial

$
731,184


61
%
$
815,571


54
%
$
730,300


40
%
$
762,102


43
%
$
734,680


38
%Construction


57,351


5
%

105,612


7
%

268,306


15
%

235,236


13
%

427,465


22
%Commercial


350,725


29
%

521,016


34
%

746,241


41
%

679,717


38
%

647,915


33
%Agricultural


14,413


1
%

18,429


1
%

22,738


1
%

39,506


2
%

51,338


3
%Consumer


28,582


2
%

36,175


2
%

38,352


2
%

40,835


2
%

50,222


3
%Leases receivable and other


24,151


2
%

25,366


2
%

23,996


1
%

27,653


2
%

27,653


1
%1,206,406


100
%

1,522,169


100
%

1,829,933


100
%

1,785,049


100
%

1,939,273


100
%Less: Allowance for loan losses


(47,069
)




(51,991
)




(44,988
)




(25,711
)




(27,899
)Unearned discount


(1,826
)




(2,561
)




(3,600
)




(3,402
)




(4,121
)Net Loans

$
1,157,511




$
1,467,617




$
1,781,345




$
1,755,936




$
1,907,253Loans held for sale at lower of cost or market

$
14,200




$
9,862




$
5,760




$
492




$



There were $788.5 million of real estate loans at December 31, 2010 as compared to $921.2 million at December 31,
2009, a decrease of $132.7 million as management continues its efforts to decrease exposure to land, land development and commercial real-estate loans as discussed below.

Under
joint guidance from the FDIC, the Federal Reserve and the Office of the Comptroller of the Currency on sound risk management practices for financial institutions with
concentrations in commercial real estate lending, a financial institution may have a concentration in commercial real estate lending if, among other factors, (i) total reported loans for
construction, land development, and other land represent 100% or more of total capital or (ii) total reported loans secured by multifamily and non-farm residential properties, loans
for construction, land development and other land and loans otherwise sensitive to the general commercial real estate market, including loans to commercial real estate related entities, represent 300%
or more of total capital. For our Bank, the total reported construction, land development and other land represented 85% of capital at December 31, 2010 as compared to 110% at
December 31, 2009. Further, the Bank's total commercial real estate loans to total capital was 300% at December 31, 2010, as compared to 329% of capital at December 31, 2009.
Loans secured by commercial real estate, as prescribed under the regulatory concentration guidelines, decreased by $148.6 million, or 20%, to $594.1 million at December 31, 2010,
as compared to $742.6 million at December 31, 2009.

Management
employs heightened risk management practices, including board and management oversight and strategic planning, development of underwriting standards, risk assessment and
monitoring through market analysis and stress testing. Loans secured by commercial real estate are recorded on the balance sheet as either a commercial real estate loan or commercial loan depending on
the purpose of the loan, not the underlying collateral. The overall decline in loans in 2010 is partially attributable to management's efforts to mitigate overall risk within the loan portfolio
through

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the
reduction of real estate loans and loans secured by real estate. Further, management worked to reduce the volume of lower yielding syndicated and participated loans.

Total
loans, net of unearned discount (excluding loans held for sale), decreased by $315 million, or 20.7%, from December 31, 2009 to December 31, 2010. Average
loans declined by $306.2 million in 2010 as compared to 2009.

With
respect to group concentrations, most of the Company's business activity is with customers in the state of Colorado. At December 31, 2010, the Company did not have any
significant concentrations in any particular industry.

Loan maturities

The following table shows the amounts of loans outstanding at December 31, 2010, which, based on remaining scheduled repayments
of principal, were due in one year or less, more than one year through five years, and more than five years. Demand or other loans having no stated maturity and no stated schedule of repayments are
reported as due in one year or less. The table also presents, for loans with maturities over one year, an analysis with respect to fixed interest rate loans and floating interest rate loans. The table
excludes unearned discount.

Table 11

Maturity

Rate Structure for
Loans with Maturities
over One YearOne Year
or Less

One through
Five Years

Over Five
Years

Total

Fixed Rate

Floating
Rate(In thousands)Real estateresidential and commercial

$
191,744

$
398,691

$
140,749

$
731,184

$
295,191

$
244,249Real estateconstruction


24,422


32,920


9


57,351


8,924


24,005Commercial


201,205


107,470


42,050


350,725


63,013


86,507Agricultural


7,910


4,754


1,749


14,413


3,937


2,566Consumer


9,306


17,902


1,374


28,582


19,163


113Leases receivable and other


632


6,223


17,296


24,151


2,272


21,247Total

$
435,219

$
567,960

$
203,227

$
1,206,406

$
392,500

$
378,687


Nonperforming Assets and Other Impaired Loans

Credit risk related to nonperforming assets arises as a result of lending activities. To manage this risk, we employ frequent
monitoring procedures in order to appropriately classify assets including moving a loan to nonperforming status. This is accomplished through a risk rating system described below that identifies the
overall potential amount of risk associated with each loan in our loan portfolio. This monitoring and rating system is designed to help management determine current and potential problems so that
corrective actions can be taken promptly.

Loans
are generally placed on nonaccrual status when they become 90 days or more past due or at such time as management determines, after considering economic and business
conditions and an analysis of the borrower's financial condition, that the timely recognition of principal and interest is doubtful.

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A loan is impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due according to the contractual
terms of the loan agreement. Impaired loans consist of our nonaccrual loans, loans that are 90 days or more past due, and other loans for which we determine that noncompliance with contractual
terms of the loan agreement is probable. Losses on individually identified impaired loans that are not collateral dependent are measured based on the present value of expected future cash flows
discounted at the original effective interest rate of each loan. For loans that are collateral dependent, impairment is measured based on the fair value of the collateral less estimated selling costs.

Table 12

December 31,2010

2009(Dollars in thousands)Nonperforming assets:Nonaccrual loans and leases, not restructured

$
74,304

$
59,584Other impaired loans


3,317


123Total nonperforming loans

$
77,621

$
59,707Other real estate owned and foreclosed assets


22,898


37,192Total nonperforming assets

$
100,519

$
96,899Impaired Loans:Nonperforming loans

$
77,621

$
59,707Allocated allowance for loan losses


(6,659
)

(6,603
)Net investment in impaired loans

$
70,962

$
53,104Impaired loans with a valuation allowance

$
23,235

$
21,039Impaired loans without a valuation allowance


54,386


38,668Total impaired loans

$
77,621

$
59,707Valuation allowance related to impaired loans

$
6,659

$
6,603Valuation allowance as a percent of impaired loans


8.6
%

11.1
%Nonaccrual loans to loans, net of unearned discount


6.17
%

3.93
%Nonperforming assets to total assets


5.38
%

4.55
%Allowance for loan losses to nonperforming loans


60.64
%

87.08
%


Nonperforming
assets of $100.5 million at December 31, 2010 reflected an increase of $3.6 million from the December 31, 2009 balance of $96.9 million.
Although nonperforming assets increased slightly during 2010, the overall level of classified assets declined during 2010 as discussed further below.

At
December 31, 2010, approximately $7.3 million, or 9%, of all nonperforming loans outstanding were residential construction, land and land development. At
December 31, 2009, approximately $25.8 million, or 43%, of all nonperforming loans were residential construction, land and land development loans.

At
December 31, 2010, approximately $42.8 million, or 55%, of all nonperforming loans outstanding were commercial real estate loans. At December 31, 2009,
approximately $12.2 million, or 21%, of all nonperforming loans were commercial real estate loans.

The
Company's loss exposure on its nonperforming loans continues to be mitigated by collateral positions on these loans. The allocated allowance for loan losses associated with impaired
loans is generally computed based upon the related collateral value of the loans. The collateral values are

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determined
by recent appraisals, but are generally discounted significantly by management based on historical collateral dispositions, changes in market conditions since the last valuation and
management's expertise and knowledge of the client and the client's business. Annually, or more frequently based on facts and circumstances, management reviews all real estate loan relationships in
excess of $500,000. If, based on an internal evaluation of the property's value, it is determined that the market or property conditions reflect a potential significant decline in value, an updated
appraisal is obtained. Similarly, upon the renewal, extension or refinancing of a real estate loan with new monies, an appraisal is obtained if based on an internal evaluation it is determined that
there has been a significant decline in value. Appraisals are required for all new commercial real estate loans in excess of $1,000,000; all new loans secured by residential real estate loans in
excess of $250,000; renewals, extensions or refinancing with the advance of new monies if there is evidence of market or property deterioration; and any foreclosure of other real estate in excess of
$250,000.

Other
real estate owned was $22.9 million at December 31, 2010, compared to $37.2 million at December 31, 2009. The balance at December 31, 2010 was
comprised of 35 separate properties of which $11.1 million was land; $11.4 million was commercial real estate including multi-family units; and $0.4 million was residential real
estate. The balance at December 31, 2009 was comprised of 27 separate properties of which $15.4 million was land; $20.5 million was commercial real estate including multi-family
units; and $1.3 million was residential real estate.

At
December 31, 2010, no additional funds are committed to be advanced in connection with impaired loans.

At
December 31, 2010, there were seven construction loans with a remaining interest reserve of approximately $1.1 million. At December 31, 2009 there were fourteen
construction loans with a remaining interest reserve of approximately $3.3 million. Additionally, at December 31, 2010, the book value of loans modified in troubled debt restructurings
was $23.6 million compared to an immaterial amount at December 31, 2009; December 31, 2008; December 31, 2007 and December 31, 2006.

The
following table presents our nonperforming assets at the dates indicated:

Table 13

At December 31,2010

2009

2008

2007

2006(Dollars in thousands)Nonaccrual loans, not restructured

$
74,304

$
59,584

$
54,594

$
19,309

$
32,852Accruing loans past due 90 days or more


3,317


123


228


527


3Total nonperforming loans (NPLs)


77,621


59,707


54,822


19,836


32,855Other real estate owned and foreclosed assets


22,898


37,192


484


3,517


1,207Total nonperforming assets (NPAs)

$
100,519

$
96,899

$
55,306

$
23,353

$
34,062Selected ratios:NPLs to loans, net of unearned discount


6.44
%

3.93
%

3.00
%

1.11
%

1.69
%NPAs to total assets


5.38
%

4.55
%

2.63
%

0.98
%

1.25
%


The
Company has an internal risk rating system of classified loans as pass, watch, special mention, substandard, doubtful and loss. These internal guidelines are based on the definitions
in the Uniform Agreement on the Classification of Assets and Appraisal of Securities Held by Banks and Thrifts issued by the Office of the Comptroller of the Currency, the Federal Deposit Insurance
Corporation, the Board of Governors of the Federal Reserve System, and the Office of Thrift Supervision. In particular, loans internally classified as substandard, doubtful or loss are considered
adversely classified loans. Each internal risk classification is judgmental, but based on objective and subjective factors/criteria. The

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internal
risk ratings focus on an evaluation of the borrowers' ability to meet future debt service and performance to plan under stress versus only their current condition. As described below under
"Allowance for Loan Losses", the Company adjusts the general component of its allowance for loan losses for the trends in the volume and severity of adversely classified loans.

At
December 31, 2010, the amount of loans that the Company has internally considered to be adversely classified, other than impaired loans, has declined to $51.2 million as
compared to $101.0 million at December 31, 2009; $119.7 million at December 31, 2008; $54.7 million at December 31, 2007 and $40.3 million at
December 31, 2006.

Allowance for Loan Losses

The allowance for loan losses is maintained at a level that, in our judgment, is adequate to absorb probable incurred loan losses in
the loan portfolio. The amount of the allowance is based on management's evaluation of the collectability of the loan portfolio, historical loss experience, and other significant factors affecting
loan portfolio collectability, including the level and trends in delinquent, nonaccrual and adversely classified loans, trends in volume and terms of loans, levels and trends in credit concentrations,
effects of changes in underwriting standards, policies, procedures and practices, national and local economic trends and conditions, changes in capabilities and experience of lending management and
staff, and other external factors including industry conditions, competition and regulatory requirements.

Our
methodology for evaluating the adequacy of the allowance for loan losses has two basic elements: first, the specific identification of impaired loans and the measurement of an
estimated loss for each individual loan identified; and second, estimating a nonspecific allowance for probable losses on all other loans. Impaired loans are discussed in the previous section. The
specific allowance for impaired loans and the allowance calculated for probable incurred losses on other loans are combined to determine the required allowance for loan losses. The amount calculated
is compared to the actual allowance for loan losses at each quarter end and any shortfall is covered by an additional provision for loan losses.

In
estimating the nonspecific allowance for loan losses, we group the balance of the loan portfolio into portfolio segments that have common characteristics, such as loan type,
collateral type or risk rating. For each nonspecific allowance portfolio segment, we apply loss factors to calculate the required allowance. These loss factors are based upon historical loss rates and
adjusted for qualitative factors affecting loan portfolio collectability as described above. Higher net charge-offs combined with a declining loan portfolio during 2010 and 2009 directly
increased the historical loss factor. This also had a direct impact on the economic concerns factor which looks at historical losses by type of loan and applies a loss factor based on both historical
losses and management's estimate of the economic climate for the remaining loans in the portfolio. Future changes in our historical losses rates compared to recent years will directly affect this
component of the allowance for loan losses. The increase in the historical loss component during 2009 and 2010 was more than offset by a decline in the portion of the general component of the
allowance for loan losses based on the volume and severity of classified assets. Management utilizes the risk weightings of loans and computes a factor for the volume and severity of classified loans
as defined under the regulatory definitions of "substandard"' and "doubtful" that are not otherwise treated as impaired loans. In addition, management utilizes changes in the volume and severity of
loans included on our internal watch list. As both regulatory classified loans and internal watch list loans declined in 2010, this part of the general component of the allowance for loan losses
declined during 2010.

65

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The
table below summarizes loans held for investment, average loans held for investment, nonperforming assets and changes in the allowance for loan losses arising from net
charge-offs and additions to the allowance from provisions charged to operating expense:

Table 14

2010

2009

2008

2007

2006(Dollars in thousands)Balance, beginning of period

$
51,991

$
44,988

$
25,711

$
27,899

$
27,475Loan charge-offs:Real estateresidential and commercial


20,048


6,945


2,639


12,354


2,186Real estateconstruction


16,398


32,153


11,956


12,469


2,044Commercial


1,983


4,213


1,340


2,825


1,154Agricultural


54


3


17


654


40Consumer


194


281


275


497


477Leases receivable and other


2,100


2,412





174


26Total loan charge-offs:


40,777


46,007


16,227


28,973


5,927Recoveries:Real estateresidential and commercial


378


763


596


906


359Real estateconstruction


469


563


744


279


65Commercial


316


455


259


385


1,023Agricultural





9


15


394


84Consumer


84


100


115


134


223Leases receivable and other


208


5





21


Total loan recoveries


1,455


1,895


1,729


2,119


1,754Net loan charge-offs


39,322


44,112


14,498


26,854


4,173Provision for loan losses(1)


34,400


51,115


33,775


24,666


4,597Balance, end of period

$
47,069

$
51,991

$
44,988

$
25,711

$
27,899Loans held for investment

$
1,204,580

$
1,519,608

$
1,826,333

$
1,781,647

$
1,947,487Average loans held for investment


1,376,560


1,682,580


1,797,304


1,868,856


1,975,055Nonperforming assets


100,519


96,899


55,306


23,353


32,855Selected ratios:Net charge-offs to average loans held for investment


2.86
%

2.62
%

0.81
%

1.44
%

0.21
%Provision for the allowance for loans to average loans held for investment


2.50
%

3.04
%

2.50
%

1.38
%

0.23
%Allowance for loans to loans held for investment at end of period


3.91
%

3.42
%

2.46
%

1.44
%

1.43
%Allowance for loans to non-performing assets


46.83
%

53.65
%

81.34
%

110.10
%

84.91
%


(1)The
provision for loan losses noted in the consolidated statements of income (loss) for the year ended December 31, 2006, includes a provision for
loan losses of $4,597,000 and a recovery on the reserve for unfunded commitments of $307,000.


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At December 31, 2010, the allowance for loan losses was $47.1 million, or 3.91% of total loans held for investment. This compares to an allowance
for loan loss of $52.0 million, or 3.42% of total loans held for investment at December 31, 2009.

The
decrease in the allowance for loan losses is due to the reduction in the overall loan portfolio and more specifically, the reduction in classified and watch list loans. Actual net
charge-offs related to loans were $39.3 million in 2010, as compared to $44.1 million in 2009, a decrease of $4.8 million. Charge-offs are taken on loans
when management determines that after review of all possible sources of repayment, including future cash flows, collateral values and the financial strength of guarantors or co-makers,
that there is no longer a reasonable probability that the principal can be collected.

Net
charge-offs have an impact on the historical loss and economic condition components of our allowance for loan losses computation. The Company utilizes a rolling history
of net charge-offs to calculate our historical loss component. As periods with higher than average charge-offs roll out of the historical loss computation, the general
component of the Company's allowance should be reduced, resulting in decreased provision expense in future periods.

Approximately
$6.7 million, or 14.1%, of the $47.1 million allowance for loan losses at December 31, 2010, relates to loans specifically reserved. This compares to a
specific reserve of $6.6 million, or 12.7%,
of the total allowance for loan losses at December 31, 2009. In addition to the $6.7 million specific reserve against impaired loans, the balance of impaired loans at December 31,
2010 and 2009 reflects a reduction of approximately $14. 6 million and $9.4 million, respectively, related to previous partial charge-offs.

The
general component of the allowance as a percent of overall loans, net of unearned discount, was 3.36% at December 31, 2010 as compared to 2.99% at December 31, 2009.
The increase in the general component as a percent of loans, net of unearned discount, is due primarily to the impact of elevated charge-offs on the various parts of our general component
calculation, partially offset by a reduction of the impact of lower classified and watch list loans on the general component calculation.

The
following table allocates the allowance for loan losses based on our judgment of inherent losses to the listed classes of loans which correspond closely to how we classify loans for
internal management reporting purposes. This differs from the portfolio segment breakout of the allowance for loan losses as illustrated in Note 5, Loans, under "Item 8. Financial
Statements and Supplementary DataNotes to the Consolidated Financial Statements. While we have allocated the allowance to

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various
portfolio classes for purposes of this table, the allowance for loan losses is general and is available for the portfolio in its entirety.

Table 15

At December 31,2010

2009

2008

2007

2006Allocation
of the
Allowance

Percent of
Allocation
to Total

Allocation
of the
Allowance

Percent of
Allocation
to Total

Allocation
of the
Allowance

Percent of
Allocation
to Total

Allocation
of the
Allowance

Percent of
Allocation
to Total

Allocation
of the
Allowance

Percent of
Allocation
to Total(Dollars in thousands)Real estateresidential and commercial

$
31,099


66.1
%
$
28,035


54.0
%
$
17,579


39.1
%
$
16,072


62.5
%
$
6,150


22.0
%Real estateconstruction


6,924


14.7


13,253


25.5


18,696


41.6


4,180


16.3


8,520


30.5Commercial


7,090


15.1


10,000


19.2


8,000


17.8


4,087


15.9


8,452


30.3Agricultural


140


0.3


173


0.3


97


0.2


387


1.5


2,071


7.4Consumer


284


0.6


388


0.7


559


1.2


909


3.5


2,027


7.3Leases receivable and other


1,532


3.2


142


0.3


57


0.1


76


0.3


679


2.5Total

$
47,069


100.0
%
$
51,991


100.0
%
$
44,988


100.0
%
$
25,711


100.0
%
$
27,899


100.0
%


During 2010, the majority of the allowance for loan losses remains allocable to real estate loans. This allocation is attributable to the level of
risk in the real estate loan portfolio in consideration of historical losses impacting the classification.

During
2009, the allocation of the allowance for losses attributable to real estate loans increased by $5.0 million to $41.3 million at December 31, 2009 compared to
$36.3 million at December 31, 2008. The increase in this allocation is due to a higher general reserve associated with real estate loans due mostly to actual charge-offs
during 2008 and 2009.

At
December 31, 2010, loans included as impaired as part of the allowance for loan losses included approximately $14.6 million of partial charge-offs for loans
expected to be repaid from the underlying collateral. In addition, there is another $6.7 million of specific allowance related to impaired loans as of December 31, 2010. During 2011, it
is possible that the $6.7 million of specific allowance could be charged-off if the loan is disposed of, foreclosed upon or restructured. Additional charge-offs may
occur in 2011 if loans become impaired during 2011. Management is not able to estimate the amount of anticipated 2011 charge-offs due to the non-homogeneous nature of our loan
portfolio.



We manage our investment portfolio principally to provide collateral for certain deposits, in particular public deposits, as well as to
balance our overall interest rate risk. To a lesser extent, we manage our investment portfolio to provide earnings with a view to minimizing credit risk.

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The
carrying value of our portfolio of investment securities at the dates indicated are as follows:

Table 16

At December 31,2010

2009

2008(In thousands)Securities available for sale:U.S. Treasury securities

$


$


$
3,495U.S. Government agencies and government-sponsored entities


21,770


17,129


2,510State and municipal


42,138


60,827


63,015Mortgage backed securitiesagency/residential


310,810


127,340


31,965Mortgage backed securitiesprivate/residential


3,606


13,959


Marketable equity


1,519


1,519


1,345Other securities


9,687


360


544Total securities available for sale

$
389,530

$
221,134

$
102,874Securities held to maturity:Mortgage-backedagency/residential

$
11,927

$
9,942

$
13,114Bank Stocks, at cost

$
17,211

$
17,160

$
28,276


Securities
available for sale are carried at fair value, while securities held to maturity and bank stocks are carried at historical cost.

Fair
values for municipal securities are generally determined by matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying
exclusively on quoted prices for the specific securities but rather by relying on the securities' relationship to other benchmark quoted securities. Characteristics utilized by matrix pricing include
insurer, credit support, state of issuance, and bond rating. These factors are used to incorporate additional spreads and municipal curves. A separate curve structure is used for
bank-qualified municipal bonds versus general market municipals. For the bank-qualified municipal bonds, active quotes are obtained when available.

Fair
values for U.S. Treasury securities, U.S. government agencies and government-sponsored entities and mortgage backed securities are determined using a combination of daily closing
prices, evaluations, income data, security master (descriptive) data, and terms and conditions data. Additional data used to compute the fair value of U.S. mortgage-backed pass-through
issues (FHLMC, FNMA, GNMA, and SBA pools) includes daily composite seasoned, pool-specific, and generic coupon evaluations, and factors and descriptive data for individual
pass-through pools. Additional data used to compute the fair value of U.S. collateralized mortgage obligations include daily evaluations and descriptive data. Additional data used to
compute the fair value of mortgage backed securitiesprivate/residential include independent bond ratings.

Two
municipal bonds were priced using significant unobservable inputs at December 31, 2010. The first revenue bond has a par value of approximately $37.3 million and
repayment is based on cash flows from a local hospital. Management reviewed the financials of the hospital, had discussions with hospital management and reviewed the underlying collateral for the
municipal bond to determine an appropriate benchmark risk-adjusted interest rate based on transactions with similar risks. At December 31, 2010, this hospital revenue bond had an
unrealized loss of approximately $3.5 million, all of which was determined to be related to temporary changes in interest rates. The second revenue bond had a par value of approximately
$4.6 million, prior to an other-than-temporary-impairment of $3.5 million. The repayment of this bond is primarily based on cash flows from the construction and
sale of low-income housing units, grants and the guarantee of the project's sponsor. During the fourth

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quarter
2010, the bond defaulted for non-payment of monthly interest payments. Based on management's review of the project, an independent appraisal of the underlying collateral and
discussions with the bond's sponsor who abandoned the project, it was determined that a credit related other-than-temporary impairment of $3.5 million should be taken in
2010.

The
carrying value of our investment securities at December 31, 2010 totaled $418.7 million compared to $248.2 million at December 31, 2009, an increase of
$170.5 million. The increase in overall securities balances during 2010 is primarily related to a shift from loan balances to investment securities. Nearly all of the 2010 investment portfolio
purchases were bonds guaranteed by a U.S. government agency or U.S. government-sponsored agency.

The
balance of bank stocks increased slightly by $0.1 million during 2010. Bank stocks are comprised mostly of stock of the Federal Reserve Bank of Kansas City, the Federal Home
Loan Bank of Topeka and Bankers' Bank of the West. These stocks have restrictions placed on their transferability as only members of the entities can own the stock.

The
following table shows the maturities of investment securities at December 31, 2010, December 31, 2009, and the weighted average yields of such securities, including the
benefit of tax-exempt securities:

Table 17

At December 31, 2010Within One Year

After One Year but
within Five Years

After Five Years but
within Ten Years

After Ten YearsAmount

Yield(1)

Amount

Yield(1)

Amount

Yield(1)

Amount

Yield(1)(Dollars in thousands)Securities available for sale:U.S. Government agencies and sponsored entities

$
21,770


0.50
%
$



0.00
%
$



0.00
%
$



0.00
%State and municipal


1,516


7.70
%

2,226


6.58
%

4,337


7.70
%

34,059


7.52
%Mortgage backed securitiesagency/residential





0.00
%




0.00
%

3,310


4.62
%

307,500


3.52
%Mortgage backed securitiesprivate/residential





0.00
%




0.00
%




0.00
%

3,606


3.20
%Marketable equity





0.00
%

1,519


0.88
%




0.00
%




0.00
%Other securities





0.00
%




0.00
%




0.00
%

9,687


5.25
%Total securities available for sale

$
23,286


1.85
%
$
3,745


4.27
%
$
7,647


6.39
%
$
354,852


4.03
%Securities held to maturity:Mortgage-backed

$



0.00
%
$



0.00
%
$



0.00
%
$
11,927


4.86
%


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Table of Contents



At December 31, 2009Within One Year

After One Year but
within Five Years

After Five Years but
within Ten Years

After Ten YearsAmount

Yield(1)

Amount

Yield(1)

Amount

Yield(1)

Amount

Yield(1)(Dollars in thousands)Securities available for sale:U.S. Government agencies and sponsored entities

$



0.00
%
$



0.00
%
$
4,967


2.97
%
$
12,162


5.08
%State and municipal


1,428


7.13
%

11,633


7.00
%

6,048


7.60
%

41,717


7.67
%Mortgage backed securitiesagency/residential





0.00
%




0.00
%

5,482


4.59
%

121,859


3.58
%Mortgage backed securitiesprivate/residential





0.00
%




0.00
%




0.00
%

13,959


5.38
%Marketable equity





0.00
%

1,519


0.88
%




0.00
%




0.00
%Other securities


360


6.25
%




0.00
%




0.00
%




0.00
%Total securities available for sale

$
1,788


6.95
%
$
13,152


6.29
%
$
16,497


5.17
%
$
189,697


4.91
%Securities held to maturity:Mortgage-backed

$



0.00
%
$



0.00
%
$



0.00
%
$
9,942


5.58
%


(1)Yield
is computed on a fully-tax equivalent basis for municipal bonds.


At both December 31, 2010 and 2009, we held $17.2 million of other equity securities consisting of bank stocks with no maturity
date, which are not reflected in the above schedule.

At
December 31, 2010, there was a security of a single issuer with a book value of $37,300,000, or approximately 23.3% of stockholders' equity. This security is a hospital revenue
bond, funded by revenues from a hospital within the Company's footprint. This amortizing tax-exempt bond carries an interest rate of 4.75% and a maturity of December 1, 2031. At
December 31, 2010, the bond had an unrealized loss of approximately $3.5 million, or 9.5% of book value. In addition to its annual review of nonrated municipal bonds completed in the
fourth quarter 2010, the Company reviews the financial statements of the hospital quarterly. To date, the bond has paid principal and interest in accordance with its contractual terms, including a
principal payment of $720,000 in December 2010.

Deposits

Total deposits were $1.5 billion at December 31, 2010, as compared to $1.7 billion at December 31, 2009.

At
December 31, 2010, noninterest bearing deposits constituted 25.6% of total deposits compared to 21.6% of total deposits at December 31, 2009, an increase of
4 percentage points. Throughout 2010, total noninterest bearing deposits increased from $366.1 million at December 31, 2009 to $374.5 million at December 31, 2010.

Our
interest bearing demand deposits, including money market and savings accounts, increased by $18.4 million, to $614.2 million at December 31, 2010 as compared to
$595.8 million at December 31, 2009.

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The following table shows the average amount and average rate paid on the categories of deposits for each of the periods indicated:

Table 18

At December 31,2010

2009

2008Average
Balance

Average
Rate

Average
Balance

Average
Rate

Average
Balance

Average
Rate(Dollars in thousands)Noninterest bearingNoninterest bearing deposits

$
356,632


0.00
%
$
387,597


0.00
%
$
440,359


0.00
%Interest bearingInterest bearing demand


168,449


0.19
%

148,972


0.25
%

150,210


0.51
%Money market


341,734


0.78
%

309,493


0.89
%

507,610


1.96
%Savings


75,614


0.23
%

71,645


0.30
%

70,243


0.56
%Time


618,442


2.01
%

722,793


3.19
%

514,362


4.17
%Total interest bearing deposits


1,204,239


1.30
%

1,252,903


2.11
%

1,242,425


2.62
%Total deposits

$
1,560,871


1.00
%
$
1,640,500


1.61
%
$
1,682,784


1.94
%


Additionally,
the following table shows the maturities of time certificates of deposit and other time deposits of $100,000 or more, including brokered deposits, at the dates indicated:

Table 19

At December 31,2010

2009(In thousands)Due in three months or less

$
56,884

$
85,658Due in over three months through six months


43,559


48,716Due in over six months through twelve months


58,155


136,476Due in over twelve months


9,745


17,738Totals

$
168,343

$
288,588


The
following table presents the mix of our deposits by type based on average balances for each of the periods indicated.

Table 20

At December 31,2010

2009Average
Balance

% of
Total

Average
Balance

% of
Total(Dollars in thousands)Noninterest bearing deposits

$
356,632


22.85
%
$
387,597


23.63
%Interest bearing demand


168,449


10.79
%

148,972


9.08
%Money market


341,734


21.89
%

309,493


18.87
%Savings


75,614


4.84
%

71,645


4.37
%Time


618,442


39.63
%

722,793


44.05
%Total deposits

$
1,560,871


100.00
%
$
1,640,500


100.00
%


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Table of Contents

Overall
average time deposits decreased by $104.4 million, or 14.4%, to $618.4 million for 2010 compared to $722.8 million for 2009. The actual balance of time
deposits decreased by $257.7 million during 2010 to $473.7 million at December 31, 2010 compared to $731.4 million at December 31, 2009.

The
December 31, 2010 time deposit balance includes approximately $5.1 million from the CDARS® program, and $174.7 million of brokered deposits. At
December 31, 2009, time deposits included approximately $36.6 million from the CDARS® program, and $254.6 million in brokered deposits. Brokered deposits, including
CDARS® deposits, comprised 12.2% of total deposits at December 31, 2010 compared to 16.9% at December 31, 2009. Overall time deposits as a percent of total deposits were
32.4% at December 31, 2010 as compared to 43.2% at December 31, 2009. The overall cost of time deposits decreased from 3.19% in 2009 to 2.01% in 2010.

Borrowings

Subordinated Debentures and Trust Preferred Securities

In September 2000, the predecessor to the Company formed CenBank Statutory Trust I and completed an offering of $10.0 million
10.6% Cumulative Trust Preferred Securities, which are guaranteed by us. The Trust also issued common securities to the predecessor and used the net proceeds from the offering to purchase
$10.3 million in principal amount of 10.6% Subordinated Debentures. Interest paid on the 10.6% Debentures is distributed to the holders of the 10.6% Preferred Securities. Distributions payable
on the 10.6% Preferred Securities are recorded as interest expense in the consolidated statements of income. These 10.6% Debentures are unsecured, junior rank and are subordinate in right of payment
to all senior debt of the Company. The 10.6% Preferred Securities are subject to mandatory redemption upon repayment of the 10.6% Debentures. We have the right, subject to events of default, to defer
payments of interest on the 10.6% Debentures at any time by extending the interest payment period for a period not exceeding 10 consecutive semi-annual periods with respect to each
deferral period, provided that no extension period may extend beyond the redemption or maturity date of the 10.6% Debentures. The 10.6% Debentures mature on September 7, 2030, which may be
shortened by us to not earlier than March 7, 2011, if certain conditions are met, or at any time upon the occurrence and continuation of certain changes in either the tax treatment or the
capital treatment of the Trust, the 10.6% Debentures or the 10.6% Preferred Securities. The CenBank Trust I trust preferred issuance became callable semi-annually starting on
September 7, 2010.

In
February 2001, the predecessor to the Company formed CenBank Statutory Trust II and completed an offering of $5.0 million 10.2% Cumulative Trust Preferred Securities, which are
guaranteed by us. The Trust also issued common securities to the predecessor and used the net proceeds from the offering to purchase $5.2 million in principal amount of 10.2% Subordinated
Debentures. Interest paid on the 10.2% Debentures is distributed to the holders of the 10.2% Preferred Securities. Terms and conditions of the 10.2% Debentures are substantially similar to those as
described under the CenBank Statutory Trust I. The 10.2% Debentures mature on February 22, 2031, which may be shortened by us to not earlier than February 22, 2011, if certain conditions
are met, or at any time upon the occurrence and continuation of certain changes in either the tax treatment or the capital treatment of the Trust, the 10.2% Debentures or the 10.2% Preferred
Securities.

In
April 2004, the predecessor to the Company formed CenBank Statutory Trust III and completed an offering of $15.0 million LIBOR plus 2.65% Cumulative Trust Preferred Securities,
which are guaranteed by us. The Trust also issued common securities to the predecessor and used the net proceeds from the offering to purchase $15.5 million in principal amount of floating rate
Subordinated Debentures. Interest paid on the floating rate Debentures is distributed to the holders of the floating rate Preferred Securities. Terms and conditions of the floating rate Debentures are
substantially similar to those as described under the CenBank Statutory Trust I. The floating rate Debentures mature on April 15, 2034, which may be shortened by us to not earlier than
April 15, 2011, if certain conditions

73

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are
met, or at any time upon the occurrence and continuation of certain changes in either the tax treatment or the capital treatment of the Trust, the floating rate Debentures or the floating rate
Preferred Securities.

In
June 2003, Guaranty Corporation formed Guaranty Capital Trust III and completed an offering of $10.0 million LIBOR plus 3.10% Cumulative Trust Preferred Securities, which are
guaranteed by us. The Trust also issued common securities to Guaranty and used the net proceeds from the offering to purchase $10.3 million in principal amount of Junior Subordinated Debt
Securities issued by Guaranty. We assumed Guaranty's obligations relating to such securities upon our acquisition of Guaranty. Interest paid on the debt securities is distributed to the holders of the
Preferred Securities. We have the right, subject to events of default, to defer payments of interest on the subordinated debt securities at any time by extending the interest payment period for a
period not exceeding 20 consecutive quarterly periods with respect to each deferral period, provided that no extension period may extend beyond the redemption or maturity date of the subordinated debt
securities. The subordinated debt securities mature on July 7, 2033. These securities became callable effective July 7, 2008. The Company has not called these securities as these
variable rate securities provide $10.0 million of additional Tier 1 capital. These securities remain callable at the end of each quarter.

Under
the terms of the Written Agreement, regulatory approval is required prior to the call of any trust preferred issuance. Management does not expect to call any of its callable trust
preferred securities in 2011.

Under
the terms of each subordinated debentures agreement, the Company has the ability to defer interest on the debentures for a period of up to sixty months as long as it is in
compliance with all covenants of the agreement. On July 31, 2009, the Company notified the trustees of the four trusts that it would defer interest on all four of its subordinated debentures.
Such a deferral is not an event of default under each subordinated debentures agreement and interest on the debentures continues to accrue during such deferral period. Prior to paying any interest on
the subordinated debentures, the Company must obtain prior written approval from the Federal Reserve Bank of Kansas City under the terms of its Written Agreement (see Note 22, Written Agreement
under "Item 8. Financial Statements and Supplementary DataNotes to Consolidated Financial Statements" for additional information).

The
Company is not considered the primary beneficiary of these Trusts (variable interest entities), therefore the trusts are not consolidated in the Company's financial statements, but
rather the subordinated debentures are shown as a liability. The Company's investment in the common stock of each trust is included in other assets on the consolidated balance sheets.

Although
the securities issued by each of the trusts are not included as a component of stockholders' equity in the consolidated balance sheets, the securities are treated as capital for
regulatory purposes. Specifically, under applicable regulatory guidelines, the $40 million of securities issued by the trusts qualify as Tier 1 capital, along with the
$64.8 million of Series A Convertible Preferred Stock, up to a maximum of 25% of capital on an aggregate basis. Any amount that exceeds 25% qualifies as Tier 2 capital. At
December 31, 2010, approximately $32.3 million of the combined $104.8 million of the trusts' securities and preferred stock outstanding qualified as Tier 1 capital. The
remaining $72.5 million is treated as Tier 2 capital.

The
Board of Governors of the Federal Reserve System, which is the holding company's banking regulator, has promulgated a modification of the capital regulations affecting trust
preferred securities. Under this modification, beginning March 31, 2011, the Company is required to use a more restrictive formula to determine the amount of trust preferred securities that can
be included in regulatory Tier I capital. The Company will be allowed to include in Tier I capital an amount of trust preferred securities equal to no more than 25% of the sum of all
core capital elements, which is generally defined as stockholders' equity less certain intangibles, including core deposit intangibles, net of any related deferred income tax liability. The existing
regulations in effect limit the amount of trust

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preferred
securities that can be included in Tier I capital to 25% of the sum of core capital elements without a deduction for permitted intangibles. After implementation of this modification,
we expect that our Tier 1 capital ratios will remain above the well-capitalized thresholds for regulatory purposes.

Other Borrowings

At December 31, 2010, our outstanding borrowings were $163,239,000 as compared to $164,364,000 at December 31, 2009.

The
borrowings at December 31, 2010 consisted of 15 separate fixed-rate term notes with the FHLB at our bank subsidiary level, with remaining maturities ranging from
11 to 85 months. Each advance with the Federal Home Loan Bank (FHLB) is payable at its maturity date, with a prepayment penalty if paid prior to maturity. Approximately $140 million of
the FHLB term advances at December 31, 2010 have Bermudan conversion options to a variable rate. If the notes are converted by
the FHLB, the Bank has the option to prepay the advance without penalty. If the notes are not converted by the FHLB, the note becomes convertible quarterly thereafter, with the option to convert to
floating rate continuing to be at the discretion of the FHLB. Five notes have potential conversions in 2011a $30 million note with a rate of 2.95%, a $10 million note with a
rate of 3.16%, a $20 million note with a rate of 2.52%; a $40 million note with a rate of 3.17% and a $20 million note with a rate of 3.25% have their next quarterly conversion
dates on 1/10/2011; 1/24/2011; 1/24/2011; 2/28/2011 and 9/19/2011, respectively. The FHLB did not elect to convert any of these advances to a variable rate on conversions dates prior to
February 18, 2011. The remaining $20 million of term note has its first conversion option available in 2013. Our bank subsidiary also had availability of approximately
$205.1 million on its line of credit with the FHLB at December 31, 2010, but there was no balance outstanding on this line of credit as of that date.

The
total commitment, including balances outstanding, for borrowings at the Federal Home Loan Bank for the term notes and the line of credit at December 31, 2010 and
December 31, 2009 was $368.4 million and $195.3 million, respectively. The interest rate on the line of credit varies with the federal funds rate, and was 0.26% and 0.18% at
December 31, 2010 and December 31, 2009, respectively. The term notes have fixed interest rates that range from 2.52% to 6.22%. The weighted-average rate on the FHLB term notes was 3.17%
at December 31, 2010.

The
Company had executed a specific pledging and security agreement with the FHLB in the amount of $368,361,000 at December 31, 2010, which encompassed certain loans and
securities as collateral for these borrowings. The carrying amount of loans and securities used for the specific pledging and security agreement at December 31, 2010, was $324,161,000 and
$200,882,000, respectively. The maximum credit allowance for future borrowings, including term notes and the line of credit, was $205,122,000 and $30,974,000 at December 31, 2010 and 2009,
respectively.

CAPITAL

Current risk-based regulatory capital standards generally require banks and bank holding companies to maintain a ratio of
"core" or "Tier 1" capital (consisting principally of common equity) to total risk-weighted assets of at least 4%, a ratio of Tier 1 capital to total average assets (leverage
ratio) of at least 4% and a ratio of total capital (which includes Tier 1 capital plus certain forms of subordinated debt, a portion of the allowance for loan and lease losses and preferred
stock) to total risk-weighted assets of at least 8%. Risk-weighted assets are calculated by multiplying the balance in each category of assets by a risk factor, which ranges
from zero for cash assets and certain government obligations to 100% for high risk loans, and adding the products together.

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Table 21

Ratio at
December 31,
2010

Ratio at
December 31,
2009

Minimum
Capital
Requirement

Minimum
Requirement for
"Well
Capitalized"
InstitutionTotal Risk-Based Capital RatioConsolidated Guaranty Bancorp


14.99
%

13.80
%

8.00
%

N/AGuaranty Bank and Trust Company


14.07
%

12.82
%

8.00
%

10.00
%Tier 1 Risk Based Capital RatioConsolidated Guaranty Bancorp


8.57
%

9.43
%

4.00
%

N/AGuaranty Bank and Trust Company


12.80
%

11.55
%

4.00
%

6.00
%Leverage RatioConsolidated Guaranty Bancorp


6.25
%

7.89
%

4.00
%

N/AGuaranty Bank and Trust Company


9.33
%

9.66
%

4.00
%

5.00
%


The
overall increase in total risk-based regulatory capital ratios from 2009 to 2010 is attributable to a reduction in our risk-weighted assets caused by
combination of a reduction in total assets and a shift in the mix of earning assets from higher risk-weighted loans to lower risk-weighted assets including U.S. government
agency and U.S. government-sponsored agency securities. The decreases in the Consolidated Tier 1 Risk-Based and Leverage ratios are the result of a decrease in our capital as result
of the 2010 loss combined with a corresponding decrease in the amount of restricted core capital elements included in Tier 1 capital as a result of the 25% of Tier 1 capital limitation.

In
August 2009, the Company issued 59,053 shares of 9% non-cumulative Series A Convertible Preferred Stock, which resulted in additional capital of $57,846,000, net of
expenses. The liquidation preference for the Series A Convertible Preferred Stock is $1,000 per share. The Series A Convertible Preferred Stock is not redeemable. Each share of
Series A Convertible Preferred Stock will automatically convert into shares of the Company's common stock on the fifth anniversary of the issuance date of the Series A Convertible
Preferred Stock, or August 11, 2014, subject to certain limitations. The preferred stock holders may elect to convert their shares of Series A Convertible Preferred Stock into shares of
the Company's common stock prior to the mandatory conversion of the Series A Convertible Preferred Stock following the earlier of the second anniversary of the issuance date the Series A
Convertible Preferred Stock, or August 11, 2011, and the occurrence of certain events resulting in the conversion, exchange or reclassification of the Company's common stock. Each share of
Series A Convertible Preferred Stock will be convertible into shares of the Company's common stock at a conversion price of $1.80 per share, adjustable downward in $0.04 increments to $1.50 per
share in the event of certain nonpayments of dividends (whether paid in cash or in kind) on the Series A Convertible Preferred Stock. The conversion price of the Series A Convertible
Preferred Stock is subject to customary anti-dilution adjustments. Due to the conversion price adjustment resulting from nonpayment of dividends, for purposes of the risk-based
and leverage capital guidelines of the Board of Governors of the Federal Reserve System, and for purposes of regulatory reporting, the Series A Convertible Preferred Stock is treated as
cumulative preferred stock (e.g., a restricted core capital element for Tier 1 capital purposes). However, upon conversion of the Series A
Convertible Preferred Stock into common stock, it is expected that the Company's consolidated Tier 1capital ratios will increase significantly.

Dividend Restrictions

Holders of voting common stock are entitled to dividends out of funds legally available for such dividends when, and if, declared by
the Board of Directors. The Company has not paid dividends since its inception.

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Various
banking laws applicable to the Bank limit the payment of dividends, management fees and other distributions by the Bank to the Company, and may therefore limit our ability to pay
dividends on our common stock. In addition, the Written Agreement discussed in Note 22 prohibits both the Company and the Bank from paying dividends without the prior written approval of the
Federal Reserve, and, in the case of the Bank, the CDB. Accordingly, our ability to pay dividends will be restricted until the Written Agreement is terminated.

Under
the terms of our trust preferred financings, including our related subordinated debentures, on September 7, 2000, February 22, 2001, June 30, 2003 and
April 8, 2004, respectively, we cannot declare or pay any dividends or distributions (other than stock dividends) on, or redeem, purchase, acquire or make a liquidation payment with respect to,
any shares of our capital stock if (1) an event of default under any of the subordinated debenture agreements has occurred and is continuing, or (2) if we give notice of our election to
begin an extension period whereby we may defer payment of interest on the trust preferred securities for a period of up to sixty consecutive months as long as we are in compliance with all covenants
of the agreement. On July 31, 2009, we elected to defer regularly scheduled interest payments on each of our subordinated debentures until further notice. In addition, we are currently
restricted from making payments of principal or interest on our subordinated debentures or trust preferred securities under the terms of our Written Agreement without the prior approval of the Federal
Reserve.

Under
the terms of the Series A Convertible Preferred Stock issuance in 2009 discussed in Note 21, we cannot declare or pay dividends on, make distributions with respect
to, or redeem, purchase or acquire, or make a liquidation payment with respect to, or pay or make available monies for the redemption of, any common stock or other junior securities unless full
dividends on all outstanding shares of the Series A Convertible Preferred Stock have been paid or declared and set aside for payment. In addition, we are currently restricted from making cash
dividends on our Series A Convertible Preferred Stock
under the terms of our Written Agreement without the prior approval of the Federal Reserve and for as long as we defer payments of interest with respect to our subordinated debentures and related
trust preferred securities. We continue to make paid-in-kind dividends in the form of additional shares of Series A Convertible Preferred Stock on a quarterly basis and
expect to make these paid-in-kind dividends through August 15, 2011.

Any
future determination relating to dividend policy will be made at the discretion of our Board of Directors and will depend on a number of factors, including our future earnings,
capital requirements, financial condition, future prospects and such other factors as our Board of Directors may deem relevant.

During
2010 and 2009, shareholders of the Series A Convertible Preferred Stock have received paid-in-kind dividends in the form of additional shares of
Series A Preferred Stock at the prescribed dividend rate. Any fractional shares were paid in cash. This resulted in the issuance of 5,591 and 1,381 additional shares of Series A
Convertible Preferred Stock in 2010 and 2009, respectively. Under the terms of the Series A Convertible Preferred Stock designations, the Company may pay paid-in-kind
dividends through August 2011, and thereafter, any dividend must be in the form of cash. We are currently restricted from making cash dividends on our Series A Convertible Preferred Stock under
the terms of our Written Agreement without the prior approval of the Federal Reserve and for as long as we defer payments of interest with respect to our subordinated debentures and related trust
preferred securities. If we cannot make such cash dividends prior to the expiration of a one-year cure period, the conversion price of $1.80 per share will adjust downward in $0.04
increments for each missed quarterly dividend down to a floor of $1.50 per share.

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LIQUIDITY

The Bank relies on deposits as its principal source of funds and, therefore, must be in a position to service depositors' needs as they
arise. Fluctuations in the balances of a few large depositors may cause temporary increases and decreases in liquidity from time to time. We deal with such fluctuations by using existing liquidity
sources.

The
Bank's primary sources of liquidity are its liquid assets. At December 31, 2010, the Company had $141.5 million of cash and cash equivalents, including
$124.2 million of interest bearing deposits at banks (most of which was held at the Federal Reserve Bank of Kansas City) that could be used for the Bank's
immediate liquidity needs. Further, the Company had $14.8 million of excess pledging related to customer accounts that require collateral at December 31, 2010 and $48.3 million of
securities that are unavailable for pledging.

When
the level of liquid assets (our primary liquidity) does not meet our liquidity needs, other available sources of liquid assets (our secondary liquidity), including the purchase of
federal funds, sales of loans, discount window borrowings from the Federal Reserve, and our lines of credit with the Federal Home Loan Bank of Topeka (FHLB) and other correspondent banks are employed
to meet current and presently anticipated funding needs. At December 31, 2010, the Bank had approximately $205.1 million of availability on its FHLB line, $35.0 million of
availability on its secured federal funds lines with correspondent banks, and $29.1 million of availability with the Federal Reserve discount window.

The
FDIC temporarily increased the individual account deposit insurance from $100,000 per account to $250,000 per account through December 31, 2013, which became permanent with
the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) on July 21, 2010. The FDIC also implemented a Transaction Account
Guarantee (TAG) program, which provided for full FDIC coverage for transaction accounts, regardless of dollar amounts. Although the TAG program expired on December 31, 2010, the
Dodd-Frank Act continued mandated FDIC-insurance coverage for all non-interest bearing accounts in insured depository institutions through December 31, 2012.
As of December 31, 2010, the Bank had approximately 283 accounts with approximately $101.1 million of balances in excess of $250,000 covered under the TAG program of which the majority
of the accounts continued to have unlimited FDIC insurance coverage under the Dodd-Frank Act. Concerns regarding the overall banking industry or the Company could have an adverse effect on
future deposit levels.

Under
the terms of the Written Agreement, the Bank can continue to rollover or renew existing brokered deposits, but cannot obtain any new brokered deposits. Since December 31,
2009, the Company has elected not to renew nearly all of its $121.4 million of maturing brokered deposits due primarily to the excess of $100 million in overnight funding balances
maintained throughout 2010 as well as continued growth of non-time deposit accounts. During 2011, approximately $163.4 million of brokered deposits are expected to mature, although
the Company may renew or rollover a portion of those brokered deposits as needed for liquidity and balance sheet planning. The Bank will continue to monitor and update its rates in order to rollover
and obtain new time deposits from its local markets and/or directly through the internet.

The
holding company relies primarily on cash flow from the Bank as a primary source of liquidity. The Bank pays a management fee for its share of expenses paid by the holding company, as
well as for services provided by the holding company. The Written Agreement prohibits the Bank from paying dividends or making other distributions to the Holding Company without the prior written
approval of the Federal Reserve and CDB. Accordingly, the Bank's ability to pay dividends or make other distributions to the holding company and the holding company's ability to pay cash dividends on
its common or preferred stock will be restricted until the Written Agreement is terminated.

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The
holding company requires liquidity for the payment of interest on the subordinated debentures (if approved by our regulators), for operating expenses, principally salaries and
benefits, for repurchases of our common stock, and, if declared by our board of directors, for the payment of dividends to our stockholders. The Written Agreement prohibits the Company from paying
dividends or making other distributions without the prior written approval of the Federal Reserve. Accordingly, our ability to pay dividends to our stockholders will be restricted until the Written
Agreement is terminated. Under the terms of our trust preferred financings, we may defer payment of interest on the subordinated debentures and related trust preferred securities for a period of up to
sixty consecutive months as long as we are in compliance with all covenants of the agreement. On July 31, 2009, we gave notice that we would defer regularly scheduled interest payments on each
of our subordinated debentures until further notice. During the deferral period, the Company may not pay cash dividends to stockholders of any class of stock, including our Series A Convertible
Preferred Stock, with the exception of cash dividends paid to preferred stockholders representing fractional shares of preferred in kind dividends. In addition, we are currently restricted from making
payments of principal or interest on our subordinated debentures or trust preferred securities under the terms of our Written Agreement without the prior approval of the Federal Reserve.

As
of December 31, 2010, the holding company had approximately $18.5 million of cash on hand. Based on current cash flow projections for the holding company, we estimate
that cash balances maintained by the holding company are sufficient to meet the operating needs of the holding company for over three years assuming that the holding company continues to defer
interest on its trust preferred securities.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

See Note 2 of the Notes to Consolidated Financial Statements contained in "Item 8. Financial Statements and Supplementary
Data" for information on recent accounting pronouncements and their impact, if any, on our consolidated financial statements.

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ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of loss in a financial instrument arising from adverse changes in market prices and rates, foreign currency
exchange rates, commodity prices and equity prices. Our market risk arises primarily from interest rate risk inherent in our lending and deposit taking activities. To that end, management actively
monitors and manages our interest rate risk exposure. We have not entered into any market risk sensitive instruments for trading purposes. We manage our interest rate sensitivity by matching the
re-pricing opportunities on our earning assets to those on our funding liabilities. We use various asset/liability strategies to manage the re-pricing characteristics of our
assets and liabilities designed to ensure that exposure to interest rate fluctuations is limited to our guidelines of acceptable levels of risk-taking. Balance sheet hedging strategies,
including the terms and pricing of loans and deposits and managing the deployment of our securities, are used to reduce mismatches in interest rate re-pricing opportunities of portfolio
assets and their funding sources.

Our
Asset Liability Management Committee, or ALCO, addresses interest rate risk. The committee is composed of members of our senior management. The ALCO monitors interest rate risk by
analyzing the potential impact on the net portfolio of equity value and net interest income from potential changes in interest rates, and considers the impact of alternative strategies or changes in
balance sheet structure. The ALCO manages our balance sheet in part to maintain the potential impact on net portfolio value and net interest income within acceptable ranges despite changes in interest
rates.

Our
exposure to interest rate risk is reviewed on at least a quarterly basis by the ALCO and our board of directors. Interest rate risk exposure is measured using interest rate
sensitivity analysis to determine our change in net portfolio value and net interest income in the event of hypothetical changes in interest rates. If potential changes to net portfolio value and net
interest income resulting from hypothetical interest rate changes are not within board-approved limits, the board may direct management to adjust the asset and liability mix to bring interest rate
risk within board-approved limits.

We
monitor and evaluate our interest rate risk position on a quarterly basis using net interest income simulation analysis under 100 and 200 basis point change scenarios (see below).
Each of these analyses measures different interest rate risk factors inherent in the financial statements

Net Interest Income Modeling

The Company's primary interest rate risk tool, the Net Interest Income Simulation Analysis, measures interest rate risk and the effect
of interest rate changes on net interest income. This analysis incorporates all of the Company's assets and liabilities together with forecasted changes in the balance sheet and assumptions that
reflect the current interest rate environment. Through these simulations, management estimates the impact on net interest income of a 100 and 200 basis point upward or downward change of market
interest rates over a one year period. Assumptions are made to project rates for new loans and deposits based on historical analysis, management outlook and repricing strategies. Asset prepayments and
other market risks are developed from industry estimates of prepayment speeds and other market changes. Since the results of these simulations can be significantly influenced by assumptions utilized,
management evaluates the sensitivity of the simulation results to changes in assumptions.

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The following table shows the net interest income increase or decrease over the next twelve months as of December 31, 2010 and
2009:

Table 22

MARKET RISK:

Annualized Net Interest IncomeDecember 31, 2010
Amount of Change

December 31, 2009
Amount of Change(In thousands)Rates in Basis Points300

$
1,485

$
7,106200


(240
)

3,812100


(686
)

1,266Static





(100)


236


827(200)


(2,479
)

188


Overall,
the Company believes that it is asset sensitive as the company is positioned to be favorably impacted by a 300 basis point rise in rates. However, at
December 31, 2010, the Company is positioned to be slightly unfavorably impacted by a 100 or 200 rise in rates. This is a result of projecting that many of our loans subject to a floor would
not reprice until rates rise more significantly, whereas, our deposits would reprice upward. The most common minimum floor rate is between 5.0% and 5.5%. As rates begin to rise, the loan rate may
continue to be at the minimum rate. However, at a 300 basis point rate shock, most of the variable rate loans should reprice at an amount above the floor and such impact should more than offset any
increase in liability costs based on our modeling. Another reason that the Company is less asset sensitive at December 31, 2010 as compared to December 31, 2009, is the reduction in the
level of overnight funds. Overnight funds are expected to reprice immediately to the full extent of any change in rates. Management also anticipates that deposit rates, other than time
deposit rates, would increase immediately in a rising rate environment, but to a lesser degree than overnight fund rates.

In
a falling rate environment, the Company is projected to have an increase in net interest income under a 100 basis point decline and a decrease in net interest income under the 200
basis point decline. The cause of the favorable projection under the 100 basis point decline is the immediately responsiveness of interest bearing liabilities compared to interest bearing assets.
Again, with a significant portion of our loans subject to a floor, many of our earning assets would not reprice downward in a falling rate environment.

The
target federal funds rate is currently set by the FOMC at a rate between 0 and 25 basis points. The prime rate has historically been set at a rate of 300 basis points over the target
federal funds rate. The Company's interest rate risk modeling has an assumption that prime would continue to be set at a rate of 300 basis points over the target federal funds rate, therefore, a 200
basis point decline in overall rates would only have between a 0 and 25 basis point decline in both federal funds and the prime rate. Further, other rates that are currently below 1% or 2%
(e.g. U.S. Treasuries, LIBOR, etc.) are modeled to not fall below 0% with an overall 100 or 200 basis point decrease in rates. Many of our variable rate loans are set to an index tied to prime,
federal funds or LIBOR, therefore, a further decrease in rates would not have a substantial impact on loan yields. It is projected that loans would continue to yield similar amounts as a result of the
floors discussed above, whereas deposit costs would immediately trend downward. The unfavorable projection under the 200 basis point decline reflects the fact that it is not possible for many of the
Company's deposit rates to fall 100 or 200 basis points due to the current rates already being below 100 basis points at December 31, 2010. Under a 200 basis point decline, the loss of gross
interest income in a falling rate environment is expected to exceed the reduction in interest expense in a falling rate environment.

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ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Financial Statements



Guaranty Bancorp and SubsidiariesManagement's Report On Internal Control Over Financial
Reporting

83Report of Independent Registered Public Accounting Firm

84Consolidated Balance Sheets at December 31, 2010 and
2009

85Consolidated Statements of Operations, Years Ended
December 31, 2010 and 2009.

86Consolidated Statements of Changes in Stockholders' Equity and Comprehensive Income (Loss), Years Ended
December 31, 2010 and 2009.

87Consolidated Statements of Cash Flows, Years Ended
December 31, 2010 and 2009.

88Notes to Consolidated Financial Statements

89


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Management's Report On Internal Control Over Financial Reporting

The management of Guaranty Bancorp, including its consolidated subsidiary, is responsible for establishing and maintaining adequate
internal control over financial reporting. The Company's internal control system was designed to provide reasonable assurance to the Company's management and Board of Directors regarding the
preparation and fair presentation of published financial statements in accordance with U.S. generally accepted accounting principles. All internal control systems, no matter how well designed, have
inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Management
maintains a comprehensive system of controls intended to ensure that transactions are executed in accordance with management's authorization, assets are safeguarded, and
financial records are reliable. Management also takes steps to see that information and communication flows are effective and to monitor performance, including performance of internal control
procedures.

As
of December 31, 2010, Guaranty Bancorp management assessed the effectiveness of the Company's internal control over financial reporting based on the framework established in Internal
Control-Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management has determined that the
Company's internal control over financial reporting as of December 31, 2010, is effective.

Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements should they occur. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the control procedures may
deteriorate.

/s/ DANIEL M. QUINN Daniel M. Quinn President, Chief Executive Officer
and Chairman of the Board

/s/ PAUL W. TAYLOR Paul W. Taylor Executive Vice President,
Chief Financial and Operating Officer and Secretary


February 18,
2011

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



We
have audited the accompanying consolidated balance sheets of Guaranty Bancorp as of December 31, 2010 and 2009, and the related consolidated statements of operations, changes
in stockholders' equity and comprehensive income (loss), and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our audits.

We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis of designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Guaranty Bancorp as of December 31, 2010 and 2009,
and the results of its operations and its cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.

/s/ Crowe Horwath LLPSherman Oaks, California
February 18, 2011


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GUARANTY BANCORP AND SUBSIDIARIES        Consolidated Balance Sheets        December 31, 2010 and 2009

December 31,
2010

December 31,
2009(Dollars in thousands, except
per share data)AssetsCash and due from banks

$
141,465

$
234,483Securities available for sale, at fair value


389,530


221,134Securities held to maturity (fair value of $12,425 and $10,428 at December 31, 2010 and December 31, 2009)


11,927


9,942Bank stocks, at cost


17,211


17,160Total investments


418,668


248,236Loans, net of unearned discount


1,204,580


1,519,608Less allowance for loan losses


(47,069
)

(51,991
)Net loans


1,157,511


1,467,617Loans held for sale


14,200


9,862Premises and equipment, net


57,399


60,267Other real estate owned and foreclosed assets


22,898


37,192Other intangible assets, net


14,054


19,222Other assets


43,857


50,701Total assets

$
1,870,052

$
2,127,580Liabilities and Stockholders' EquityLiabilities:Deposits:Noninterest-bearing demand

$
374,500

$
366,103Interest-bearing demand


535,078


523,971Savings


79,100


71,816Time


473,673


731,400Total deposits


1,462,351


1,693,290Securities sold under agreements to repurchase and federal funds purchased


30,113


22,990Borrowings


163,239


164,364Subordinated debentures


41,239


41,239Interest payable and other liabilities


12,827


13,059Total liabilities


1,709,769


1,934,942Commitments and contingent liabilities





Stockholders' equity:Preferred stock$0.001 par value; 9% non-cumulative; 73,280 shares authorized, 66,025 shares issued and outstanding at December 31, 2010; 73,280
shares authorized, 60,434 shares issued and outstanding at December 31, 2009; liquidation preference of $66,025 at December 31, 2010; liquidation preference of $60,434 at December 31, 2009


64,818


59,227Common stock$0.001 par value; 150,000,000 shares authorized, 65,775,467 voting shares issued, 53,529,950 voting shares outstanding at December 31,
2010 (includes 1,768,186 shares of unvested restricted stock and 156,567 shares to be issued); 64,952,450 voting shares issued, 52,952,703 voting shares outstanding at December 31, 2009 (includes 1,381,105 shares of unvested restricted stock and
129,806 of shares to be issued)


66


65Additional paid-in capitalCommon stock


619,443


618,343Shares to be issued for deferred compensation obligations


237


199Accumulated deficit


(419,562
)

(382,599
)Accumulated other comprehensive loss


(2,220
)

(143
)Treasury Stock, at cost, 10,880,073 and 10,873,533 shares, respectively


(102,499
)

(102,454
)Total stockholders' equity


160,283


192,638Total liabilities and stockholders' equity

$
1,870,052

$
2,127,580


See "Notes to Consolidated Financial Statements."

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GUARANTY BANCORP AND SUBSIDIARIES        Consolidated Statements of Operations        Years ended December 31, 2010 and 2009

Year Ended December 31,2010

2009(In thousands, except
share and per
share data)Interest income:Loans, including fees

$
76,462

$
89,625Investment securities:Taxable


7,701


3,479Tax-exempt


2,662


3,033Dividends


723


825Federal funds sold and other


389


193Total interest income


87,937


97,155Interest expense:Deposits


15,602


26,402Securities sold under agreement to repurchase and federal funds purchased


132


140Borrowings


5,267


5,284Subordinated debentures


2,581


2,556Total interest expense


23,582


34,382Net interest income


64,355


62,773Provision for loan losses


34,400


51,115Net interest income, after provision for loan losses


29,955


11,658Noninterest income:Customer service and other fees


9,241


9,520Net gains (losses) on sale of securities


313


(2
)Gain on sale of loans


1,196


Other-than-temporary impairment lossTotal impairment loss


(3,500
)

Loss recognized in other comprehensive loss





Net impairment loss recognized in earnings


(3,500
)

Other


852


861Total noninterest income


8,102


10,379Noninterest expense:Salaries and employee benefits


26,042


26,547Occupancy expense


7,399


7,609Furniture and equipment


3,720


4,441Amortization of intangible assets


5,168


6,278Other real estate owned, net


14,909


5,898Insurance and assessments


6,569


6,536Professional fees


3,117


3,224Other general and administrative


8,762


9,872Total noninterest expense


75,686


70,405Loss before income taxes


(37,629
)

(48,368
)Income tax benefit


(6,290
)

(19,161
)Net loss


(31,339
)

(29,207
)Preferred stock dividends


(5,624
)

(1,389
)Net loss applicable to common stockholders

$
(36,963
)
$
(30,596
)Loss per common sharebasic

$
(0.72
)
$
(0.60
)Loss per common sharediluted


(0.72
)

(0.60
)Weighted average common shares outstanding-basic


51,671,281


51,378,360Weighted average common shares outstanding-diluted


51,671,281


51,378,360


See "Notes to Consolidated Financial Statements."

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GUARANTY BANCORP AND SUBSIDIARIES

Consolidated Statements of Changes in Stockholders' Equity and Comprehensive Income (Loss)

Years ended December 31, 2010 and 2009

Preferred
Shares
Outstanding

Preferred
Stock

Common
Stock shares
Outstanding
and to be
issued

Common
Stock and
Additional
Paid-in
Capital

Shares
to be
Issued

Treasury
Stock

Accumulated
Deficit

Accumulated
Other
Comprehensive
Income (Loss)

Totals(In thousands, except share data)Balance, December 31, 2008




$



52,654,131

$
617,253

$
710

$
(103,078
)
$
(352,003
)
$
(1,302
)
$
161,580Comprehensive loss:Net loss




















(29,207
)




(29,207
)Other comprehensive income























1,159


1,159Total comprehensive loss


























(28,048
)Stock compensation awards, net of forfeitures








205,597

















Earned stock award compensation, net











1,155














1,155Repurchase of common stock








(32,279
)







(59
)







(59
)Deferred compensation








125,254





172











172Common shares issued














(683
)

683








Preferred stock issued, net of expenses


59,053


57,846




















57,846Preferred stock dividends


1,381


1,381














(1,389
)




(8
)Balance, December 31, 2009


60,434


59,227


52,952,703


618,408


199


(102,454
)

(382,599
)

(143
)

192,638Comprehensive loss:Net loss




















(31,339
)




(31,339
)Other comprehensive loss























(2,077
)

(2,077
)Total comprehensive loss


























(33,416
)Stock compensation awards, net of forfeitures








583,787

















Earned stock award compensation, net











1,101














1,101Repurchase of common stock








(33,301
)







(45
)







(45
)Deferred compensation








26,761





38











38Preferred stock dividends


5,591


5,591














(5,624
)




(33
)Balance, December 31, 2010


66,025

$
64,818


53,529,950

$
619,509

$
237

$
(102,499
)
$
(419,562
)
$
(2,220
)
$
160,283


See
"Notes to Consolidated Financial Statements"

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GUARANTY BANCORP AND SUBSIDIARIES        Consolidated Statements of Cash Flows        Years ended December 31, 2010 and 2009

Year Ended December 31,2010

2009(In thousands)Cash flows from operating activities:Net loss

$
(31,339
)
$
(29,207
)Adjustments to reconcile net loss to net cash provided by operating activities:Depreciation and amortization


8,390


9,853Provision for loan losses


34,400


51,115Stock compensation, net


1,101


1,155Other-than-temporary impairment (OTTI) of securities


3,500


Net loss (gain) on sale of securities


(313
)

2Gain on sale of loans


(1,196
)

Net loss on sale and valuation adjustments on real estate owned, net


12,613


5,135Other


(53
)

(839
)Net change in:Other assets


8,117


(14,682
)Interest payable and other liabilities


(232
)

(27
)Net cash provided by operating activities


34,988


22,505Cash flows from investing activities:Activity in available for sale securities:Sales, maturities, prepayments, and calls


118,843


28,907Purchases


(294,535
)

(145,295
)Activity in held to maturity securities and bank stocks:Maturities, prepayments and calls


4,684


15,382Purchases


(6,480
)

(829
)Loan originations and principal collections, net


214,012


195,931Proceeds from sale of loans transferred to held for sale


18,413


7,960Proceeds from sales of other real estate owned and foreclosed assets


42,457


13,569Proceeds from sales of premises and equipment


11


15Additions to premises and equipment


(392
)

(960
)Net cash provided by investing activities


97,013


114,680Cash flows from financing activities:Net decrease in deposits


(230,939
)

(5,361
)Repayment of long-term debt


(1,125
)

(2,040
)Net change in federal funds purchased and repurchase agreements


7,123


1,209Repurchase of common stock


(45
)

(59
)Issuance of preferred stock





57,846Cash dividends on preferred stock


(33
)

(8
)Net cash provided (used) by financing activities


(225,019
)

51,587Net change in cash and cash equivalents


(93,018
)

188,772Cash and cash equivalents, beginning of year


234,483


45,711Cash and cash equivalents, end of year

$
141,465

$
234,483Supplemental disclosure of cash flow activity:Interest paid on deposits and borrowed funds

$
21,561

$
34,911Income taxes refunded


(14,159
)

(3,916
)Supplemental disclosure of noncash activities:Loans transferred to other real estate owned and foreclosed assets


40,776


55,412Loans transferred to loans held for sale


21,555


12,062Preferred stock dividends


5,591


1,381


See "Notes to Consolidated Financial Statements."

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GUARANTY BANCORP AND SUBSIDIARIES        Notes to Consolidated Financial Statements

(1) Organization

Guaranty Bancorp is a bank holding company registered under the Bank Holding Company Act of 1956, as amended.

Our
principal business is to serve as a holding company for our subsidiaries. As of December 31, 2010 and 2009, Guaranty Bancorp had a single bank subsidiary, Guaranty Bank and
Trust Company, referred to as Guaranty Bank or the Bank.

References
to "we" or "Company" means the Company on a consolidated basis with the Bank. References to "Guaranty" or to the "Holding Company" refer to the parent company on a stand-alone
basis.

(2) Summary of Significant Accounting Policies

(a)    Nature of Operations and Principles of Consolidation

The Bank is a full-service community bank offering an array of banking products and services to the communities it serves
along the Front Range of Colorado, including accepting time and demand deposits and originating commercial loans (including energy loans), real estate loans, Small Business Administration guaranteed
loans and consumer loans. The Bank also provides trust services, including personal trust administration, estate settlement, investment management accounts and self-directed IRAs.
Substantially all loans are secured by specific items of collateral including business assets, consumer assets, and commercial and residential real estate. Commercial loans are expected to be repaid
from cash flow from operations of businesses. There are no significant concentrations of loans to any one industry or customer. However, our customers' ability to repay their loans is dependent on the
real estate and general economic conditions of the area, among other factors.

All
significant intercompany transactions and balances have been eliminated in consolidation.

The
accounting and reporting policies of the Company conform to generally accepted accounting principles in the United States of America.

(b)    Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the dates of the consolidated balance sheet and income and expense for the periods
presented. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant changes include the assessment for impairment of certain
investment securities, the allowance for loan losses, deferred tax assets and liabilities, impairment of other intangible assets, stock compensation expense and other real estate owned. Assumptions
and factors used in the estimates are evaluated on an annual basis or whenever events or changes in circumstance indicate that the previous assumptions and factors have changed. The result of the
analysis could result in adjustments to the estimates.

(c)    Cash Flows

Cash and cash equivalents on the Company's consolidated balance sheets include cash, balances due from banks, interest-bearing deposits
in other financial institutions and federal funds sold that have an original maturity of three months or less. Interest-bearing deposits in other financial institutions

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Notes to Consolidated Financial Statements (Continued)

(2) Summary of Significant Accounting Policies (Continued)

mature
within one year and are carried at cost. Net cash flows are reported for customer loan and deposit transactions, interest bearing deposits in other financial institutions, borrowings, federal
funds purchased and repurchase agreements.

(d)    Securities

Debt securities are classified as held to maturity and carried at amortized cost when management has the positive intent and ability to
hold them to maturity. Debt securities not classified as held to maturity are classified as available for sale. Equity securities with readily determinable fair values are classified as available for
sale. Securities available for sale are carried at fair value, with unrealized holding gains and losses reported in other comprehensive income, net of tax.

Interest
income includes amortization of purchase premium or discount. Premiums and discounts on securities are amortized on the level-yield method without anticipating prepayments,
except for mortgage backed securities where prepayments are anticipated. Gains and losses on sales are recorded on the trade date and determined using the specific identification method.

Management
evaluates securities for other-than-temporary impairment ("OTTI") on a quarterly basis, and more frequently when economic or market conditions warrant
such an evaluation. For securities in an unrealized loss position, management considers the extent and duration of the unrealized loss, and the financial condition and near-term prospects
of the issuer. Management also assesses whether it intends to sell, or it is more likely than not that it will be required to sell, a security in an unrealized loss position before recovery of its
amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through
earnings.

(e)    Loans Held for Sale

Loans held for sale are carried at the lower of aggregate cost, net of discounts or premiums and a valuation allowance, or estimated
fair value. Estimated fair value is determined using forward commitments to sell loans to permanent investors, or current market rates for loans of similar quality and type. Net unrealized losses, if
any, are recognized in a valuation allowance by charges to earnings. Discounts or premiums on loans held for sale are deferred until the related loan is sold. Loans held for sale consist of certain
classified loans and are generally secured by real estate. Loans held for sale are sold with servicing rights released.

Loans
are considered sold when the Company surrenders control over the transferred assets to the purchaser, with standard representations and warranties. At such time, the loan is
removed from the loan portfolio and a gain or loss is recorded on the sale. Gains and losses on loan sales are determined based on the difference between the carrying value of the assets sold, the
estimated fair value of any assets or liabilities that are newly created as a result of the transaction, and the proceeds from the sale. Losses related to asset quality are recorded against the
allowance for valuation losses at the time the loss is probable and quantifiable and charged to earnings.

(f)    Loans

The Company extends real estate, commercial, agricultural and consumer loans to customers. A substantial portion of the loan portfolio
is represented by real estate and commercial loans throughout

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GUARANTY BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(2) Summary of Significant Accounting Policies (Continued)

the
Front Range of Colorado. The ability of the Company's borrowers to honor their contracts is dependent upon the real estate and general economic conditions prevailing in Colorado, among other
factors.

Loans
that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are reported at their outstanding unpaid principal balances,
adjusted for charge-offs, the allowance for loan losses, and any deferred fees or costs on originated loans. Loans acquired in business combinations that have evidence of credit
deterioration are recorded at the present value of expected amounts of principal and interest to be received, i.e., fair value. After acquisition, incurred losses are recognized in the
allowance for loan losses. Accounting for our loans is performed consistently across all portfolio segments and classes.

A
portfolio segment is defined in recently issued accounting guidance as the level at which an entity develops and documents a systematic methodology to determine its allowance for
credit losses. A portfolio class is defined in recent accounting guidance as a group of loans having similar initial measurement attributes, risk characteristics and methods for monitoring and
assessing risk.

Interest
income is accrued on the unpaid principal balance. Loan origination fees, net of direct origination costs, are deferred and recognized as an adjustment of the related loan yield
using the effective interest method without anticipating prepayments.

The
accrual of interest on loans is discontinued (and the loan is put on nonaccrual status) at the time the loan is 90 days delinquent unless the credit is well secured and in
process of collection. Consumer loans are typically charged off no later than 120 days past due. Past due status is based on the contractual terms of the loan. In all cases, loans are placed on
nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful.

The
interest on nonaccrual loans is accounted for on the cash-basis method, until qualifying for a return to the accrual basis of accounting, payments received on nonaccrual
loans are applied first to the principal balance of the loan. Loans are returned to accrual status after the
borrower's financial condition has improved, when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

(g)    Allowance for Loan Losses

The allowance for loan losses is a valuation allowance for probable incurred loan losses. The allowance for loan losses is reported as
a reduction of outstanding loan balances.

The
allowance for loan losses is evaluated on a regular basis by management and is based upon management's periodic review of the collectability of the loans in light of historical
experience, the nature and volume of the loan portfolio, adverse situations that may affect borrowers' ability to repay, estimated value of any underlying collateral and prevailing economic
conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. An allowance for loan losses is
maintained at a level deemed appropriate by management to adequately provide for known and inherent risks in the loan portfolio and other extensions of credit. Our methodology for estimating our
allowance has not changed during the current or prior annual reporting period and is consistent across all portfolio segments and classes of loans.

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GUARANTY BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(2) Summary of Significant Accounting Policies (Continued)

Loans
deemed to be uncollectible are charged off and deducted from the allowance. Our loan portfolio primarily consists of non-homogeneous commercial and real estate loans
where charge-offs are considered on a loan by loan basis based on the facts and circumstances including management's evaluation of collateral values in comparison to book values on real
estate-dependent loans. Charge-offs on smaller balance homogenous type loans such as overdrafts and ready reserves are recognized by the time the loan in question is 90 days past
due. The provision for loan losses and recoveries on loans previously charged off are added to the allowance.

The
allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired. At the present time, we don't aggregate
select loans for collective impairment evaluation, as such, all loans are subject to individual impairment evaluation should the facts and circumstances pertinent to a particular loan suggest that
such evaluation is necessary. Factors considered by management in determining impairment include payment status and the probability of collecting scheduled principal and interest payments when due.
Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. A loan is
considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the
contractual terms of the loan agreement. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all
of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower's prior payment record, and the amount of the shortfall in
relation to the principal and interest owed. If a loan is impaired, a portion of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash flows using
the loan's existing rate or at the fair value of collateral if repayment is expected solely from collateral. Troubled debt restructurings are separately identified for impairment disclosures and are
measured at the present value of estimated future cash flows using the loan's effective rate at inception. If a troubled debt restructuring is considered to be a collateral dependent loan, the loan is
reported, net, at the fair value of the collateral. For troubled debt restructurings that subsequently default, the Company determines the amount of reserve in accordance with the accounting policy
for the allowance for loan losses.

The
general component covers all other loans not identified as impaired and is based on historical losses adjusted for current factors. The historical loss component of the allowance is
determined by losses recognized by portfolio segment over the preceding two years. In calculating the historical component of our allowance, we aggregate our loans into one of three portfolio
segments: Real Estate, Commercial & Industrial and Consumer & Other. Risk factors impacting loans in each of the portfolio segments include broad deterioration of property values,
reduced consumer and business spending as a result of continued high unemployment and reduced credit availability and lack of confidence in a sustainable recovery. Actual loss experience is
supplemented with other economic factors based on the risks present for each portfolio segment. These economic factors include consideration of the following: the concentration of watch and
substandard loans as a percentage of total loans, levels of loan concentration within a portfolio segment or division of a portfolio segment and broad economic conditions.

(h)    Transfers of Financial Assets

Transfers of financial assets are accounted for as sales when control over the assets has been relinquished. Control over transferred
assets is deemed to be surrendered when the assets have been

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Notes to Consolidated Financial Statements (Continued)

(2) Summary of Significant Accounting Policies (Continued)

isolated
from the Company, the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and the Company
does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

(i)    Other Real Estate Owned and Foreclosed Assets

Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired,
establishing a new cost basis. If fair value declines subsequent to foreclosure, a valuation allowance is recorded through expense. Operating revenues and expenses of such assets and reductions in the
fair value of the assets are included in noninterest expense. Gains and losses on their disposition are also included in noninterest expense.

(j)    Premises and Equipment

Land is carried at cost. Buildings, equipment and software are carried at cost, less accumulated depreciation and amortization computed
on the straight-line method over the useful lives of the assets. Leasehold improvements are depreciated over the shorter of their estimated useful life or the lease term. Buildings and
leasehold improvements carry an estimated useful life of five to forty years and equipment and software carry an estimated useful life of one to fifteen years. Repairs and maintenance are charged to
noninterest expense as incurred.

(k)    Bank Stocks

The Bank is a member of the Federal Home Loan Bank (FHLB) system. Members are required to own a certain amount of stock based on the
level of borrowings and other factors, and may invest in additional amounts. The Bank also owns Federal Reserve Bank (FRB) stock and Banker's Bank of the West (BBOW) stock. FHLB, FRB and BBOW stock is
carried at cost, classified as a restricted security, and periodically reviewed for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income.

(l)    Other Intangible Assets

Intangible assets acquired in a business combination are amortized over their estimated useful lives to their estimated residual values
and evaluated for impairment whenever changes in circumstances indicate that such an evaluation is necessary.

Core
deposit intangible assets, referred to as CDI, are recognized at the time of acquisition based on valuations prepared by independent third parties or other estimates of fair value.
In preparing such valuations, variables such as deposit servicing costs, attrition rates, and market discount rates are considered. CDI assets are amortized to expense over their useful lives, which
we have estimated to range from 7 years to 15 years.

(m)    Impairment of Long-Lived Assets

Long-lived assets, such as premises and equipment, and definite-lived intangible assets subject to amortization, are
reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability of assets to be held and used is

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GUARANTY BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(2) Summary of Significant Accounting Policies (Continued)

measured
by a comparison of the carrying value of the asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying value of an asset exceeds its
estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying value of the asset exceeds the fair value of the asset, less costs to sell.

Assets
to be disposed of are separately presented in the balance sheet and reported at the lower of the carrying value or fair value less costs to sell, and are no longer depreciated.

(n)    Loan Commitments and Related Financial Instruments

Financial instruments include off-balance sheet credit instruments, such as commitments to make loans and commercial
letters of credit, issued to meet customer financing needs. The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay. Such financial
instruments are recorded when they are funded.

The
Company recognizes a liability in relation to these commitments intended to represent estimated future losses on these commitments. In calculating this estimate we consider the
volume of off-balance sheet commitments, estimated utilization factors as well as risk factors
determined based on the nature of the loan. Our liability for unfunded commitments is calculated quarterly with the balance presented in Other Liabilities in our Consolidated Balance Sheet.

(o)    Stock Incentive Plan

The Company's Amended and Restated 2005 Stock Incentive Plan ("Plan") provides for up to 8,500,000 grants of stock options, stock
awards, stock units awards, performance stock awards, stock appreciation rights, and other equity-based awards to key employees, nonemployee directors, consultants and prospective employees. As of
December 31, 2010, the Company has only granted stock awards. The Company recognizes stock compensation cost for services received in a share-based payment transaction over the required service
period, generally defined as the vesting period. For awards with graded vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire
award. The compensation cost of employee and director services received in exchange for stock awards is based on the grant-date fair value of the award (as determined by quoted market
prices). Stock compensation expense recognized reflects estimated forfeitures, adjusted as necessary for actual forfeitures. The Company has issued stock awards that vest based on service periods from
three to four years, and stock awards that vest based on performance conditions. The maximum contractual term for the performance-based share awards is December 31, 2013. At the end of 2010,
certain performance-based restricted stock awards were expected to vest prior to the end of the contractual term, while others were not expected to vest prior to the end of the contractual term, based
on current projections in comparison to performance conditions. Should these expectations change, additional expense could be recorded or reversed in future periods.

(p)    Company-Owned Life Insurance

The Company has life insurance policies on certain key executives and former key executives. At December 31, 2010 and 2009, the
carrying value of the company-owned life insurance polices was $14,562,000 and $14,247,000, respectively, which is included in other assets on the Consolidated Balance Sheets. Company-owned life
insurance is recorded at the amount that can be realized under the

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GUARANTY BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(2) Summary of Significant Accounting Policies (Continued)

insurance
contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts likely due at settlement.

(q)    Deferred Compensation Plan

The Company has a Deferred Compensation Plan (the "Plan") that allowed directors and certain key employees to voluntarily defer
compensation prior to December 31, 2009. Compensation expense was recorded for the deferred compensation and a related liability was recognized. Participants elect designated investment options
for the notional investment of their deferred compensation. The recorded obligations are adjusted for deemed income or loss related to the investments selected. Participants in the Plan were given the
opportunity to elect to have all or a portion of their deferred compensation earn a rate of return equal to the total return on the Company's common stock. The Plan does not provide for
diversification of a participant's assets allocated to Company common stock and assets allocated to Company common stock can only be settled with a fixed number of shares of stock. The deferred
compensation obligation associated with Company common stock is classified as a component of stockholders' equity and the related shares are treated as shares to be issued and are included in total
shares outstanding for accounting purposes. At December 31, 2010 and December 31, 2009, there were 156,567 and 129,806 shares, respectively, to be issued. Subsequent changes in the fair
value of the common stock are not reflected in operations or stockholders' equity of the Company. Actual Company common stock held by the Company for the satisfaction of obligations of the Plan is
classified as treasury stock. At the end of 2009, due primarily to a low participation rate and the overall administration costs, the Company determined not to offer eligible or existing participants
the ability to defer any additional compensation in 2010. In December 2010, the Board approved the termination of the Company's Plan and it is expected that all remaining employee balances in the plan
will be distributed in December 2011.

(r)    Income Taxes

Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities.
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years
in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period of the
enactment date.

Deferred
tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all, of the deferred tax asset will not be
realized. In assessing the realization of deferred tax assets, management evaluates both positive and negative evidence, including the existence of any cumulative losses in the current year and the
prior two years, the amount of taxes paid in available carry-back years, the forecasts of future income, taking into account applicable tax planning strategies, and assessments of current
and future economic and business conditions. This analysis is updated quarterly and adjusted as necessary. At December 31, 2010 and December 31, 2009, the Company had a net deferred tax
asset of $14,340,000 and $10,170,000, respectively, which includes the unrealized loss on securities. At the end of the fourth quarter 2010, after consideration the Company's intent to hold the
securities available for sale which are in a loss

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GUARANTY BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(2) Summary of Significant Accounting Policies (Continued)

position
until maturity and various tax planning strategies, the Company has determined that a valuation allowance for deferred tax assets should be established in the amount of $8,500,000.

At
December 31, 2010 and December 31, 2009, the Company did not have any uncertain tax positions for which a tax benefit is disallowed under current accounting guidance. A
tax position is recognized as a benefit only if it is "more likely than not" that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount
recognized is the largest amount of tax benefit that is greater than 50% likely to be realized on examination. For tax positions not meeting the "more likely than not" test, no tax benefit is
recorded.

The
Company and the Bank are subject to U.S. federal income tax and State of Colorado tax. The Company is no longer subject to examination by Federal or State taxing authorities for
years before 2007 except to the extent of the amount of the 2009 carryback claim for refund filed in 2010 with respect to 2004 and 2006. At December 31, 2010 and December 31, 2009, the
Company did not have any unrecognized tax benefits. The Company does not expect the amount of any unrecognized tax benefits to significantly increase in the next twelve months. The Company recognizes
interest related to income tax matters as interest expense and penalties related to income tax matters as other noninterest expense. At December 31, 2010 and December 31, 2009, the
Company does not have any amounts accrued for interest and/or penalties.

(s)    Segments of an Enterprise and Related Information

The Company operates as a single segment. The operating information used by the Company's chief executive officer for purposes of
assessing performance and making operating decisions about the Company is the consolidated financial data presented in this report. For the years ended 2010 and 2009, the Company had one active
operating subsidiary, Guaranty Bank and Trust Company. The Company has determined that banking is its one reportable business segment.

(t)    Loss per Common Share

Basic loss per common share represents the loss allocable to common stockholders divided by the weighted average number of common
shares outstanding during the period. Diluted loss per share reflects additional common shares that would have been outstanding if potential dilutive common shares had been issued. The Company's
obligation to issue shares of stock to participants in its deferred compensation plan has been treated as outstanding shares of stock in the basic earnings per common share calculation. Dilutive
common shares that may be issued by the Company relate to convertible preferred stock and unvested common share grants subject to a service condition for the

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Notes to Consolidated Financial Statements (Continued)

(2) Summary of Significant Accounting Policies (Continued)

years
ended December 31, 2010 and 2009. The loss per common share has been computed based on the following:

Year Ended December 31,2010

2009Average common shares outstanding


51,671,281


51,378,360Effect of dilutive preferred stock(1)





Effect of dilutive unvested stock grants(2)





Average shares outstanding and calculated diluted earnings per common share


51,671,281


51,378,360


(1)The
Company had 66,025 shares outstanding of convertible preferred stock at December 31, 2010 and 60,434 shares outstanding of convertible preferred
stock at December 31, 2009. These shares are convertible into 36,680,556 and 33,574,444 shares of common stock of the Company at December 31, 2010 and 2009, respectively, based on a
conversion price of $1.80. The impact of the future conversion of these shares is antidilutive for the years ending December 31, 2010 and 2009 due to the net loss attributable to common
shareholders for those periods.(2)The
impact of unvested stock grants of 1,768,186 and 1,381,105 at December 31, 2010 and 2009, respectively, are antidilutive due to the net loss
attributable to common shareholders for those periods.


(u)    Other Comprehensive Income (Loss)

Accounting principles require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes
in assets and liabilities, such as unrealized gains and losses on available for sale securities, are reported as a separate component of the equity section of the balance sheet, such items, along with
net income (loss), are components of comprehensive income (loss).

The
entire balance of other comprehensive income (loss) at December 31, 2010 and 2009 was due to unrealized gains (losses) on securities available for sale.

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Notes to Consolidated Financial Statements (Continued)

(2) Summary of Significant Accounting Policies (Continued)

Following are the components of other accumulated comprehensive income (loss) and related tax effects for the periods indicated:

Year Ended
December 31,2010

2009(In thousands)Net loss

$
(31,339
)
$
(29,207
)Other comprehensive loss:Change in net unrealized gains (losses), net


(6,536
)

1,869Less: Reclassification adjustments for net losses included in income, including impairment charges


3,187


2Net unrealized holding gains (losses)


(3,349
)

1,871Income tax benefit (expense)


1,272


(712
)Other comprehensive income (loss)


(2,077
)

1,159Total comprehensive loss

$
(33,416
)
$
(28,048
)


(v)    Restrictions on Cash

A portion of the cash on deposit with the Federal Reserve Bank of Kansas City (the "Federal Reserve") was required to meet regulatory
reserve and clearing requirements. The clearing requirement was $500,000 at December 31, 2010 and 2009. At December 31, 2010 and 2009, there was no reserve requirement. An amount in
excess of the reserve and clearing requirements is maintained in an interest bearing account with the Federal Reserve in lieu of maintaining federal funds sold balances with other financial
institutions.

(w)    Dividend Restrictions

Various banking laws applicable to the Bank limit the payment of dividends by the Bank to the Company or by the Company to both common
and preferred stockholders. In addition, the Company signed a Written Agreement on January 22, 2010, which, among other things prohibits both the Company and the Bank from paying dividends
without the prior written approval of the Federal Reserve and, in the case of the Bank, the Colorado Division of Banking (the "CDB"). Accordingly, our ability to pay dividends will be restricted until
the Written Agreement is terminated.

Under
the terms of our trust preferred financings, including our related subordinated debentures, on September 7, 2000, February 22, 2001, June 30, 2003 and
April 8, 2004, respectively, we cannot declare or pay any dividends or distributions (other than stock dividends) on, or redeem, purchase, acquire or make a liquidation payment with respect to,
any shares of our capital stock if (1) an event of default under any of the subordinated debenture agreements has occurred and is continuing, or (2) if we give notice of our election to
begin an extension period whereby we may defer payment of interest on the trust preferred securities for a period of up to sixty consecutive months as long as we are in compliance with all covenants
of the agreement. On July 31, 2009, we elected to defer regularly scheduled interest payments on each of our subordinated debentures until further notice. In addition, we are currently
restricted from making payments of principal or interest on our subordinated

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Notes to Consolidated Financial Statements (Continued)

(2) Summary of Significant Accounting Policies (Continued)

debentures
or trust preferred securities under the terms of our Written Agreement without the prior approval of the Federal Reserve.

Under
the terms of the Series A Convertible Preferred Stock issuance in 2009, we cannot declare or pay dividends on, make distributions with respect to, or redeem, purchase or
acquire, or make a liquidation payment with respect to, or pay or make available monies for the redemption of, any Common Stock
or other junior securities unless full dividends on all outstanding shares of the Series A Preferred Stock have been paid or declared and set aside for payment. We continue to make
paid-in-kind dividends in the form of additional shares of Series A Convertible Preferred Stock on a quarterly basis and expect to make these
paid-in-kind dividends through August 15, 2011. After August 2011, any dividend on the Series A Convertible Preferred Stock must be in the form of cash. We are
currently restricted from making cash dividends on our Series A Convertible Preferred Stock under the terms of our Written Agreement without the prior approval of the Federal Reserve and for as
long as we defer payments of interest with respect to our subordinated debentures and related trust preferred securities. If we cannot make such cash dividends prior to the expiration of a
one-year cure period, the conversion price of $1.80 per share will adjust downward in $0.04 increments for each missed quarterly dividend down to a floor of $1.50 per share.

(x)    Fair Values of Financial Instruments

Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in
a separate note. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of
broad markets for particular items. Changes in assumptions or in market conditions could significantly affect the estimates.

(y)    Loss Contingencies

Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the
likelihood of a loss is probable and an amount or range of loss can be reasonably estimated. Loss contingencies at December 31, 2010 and 2009 are more fully disclosed in Note 15 to the
consolidated financial statements.

(z)    Recently Issued Accounting Standards



In
April 2009, the FASB amended existing guidance for determining whether impairment is other-than-temporary for debt securities. The
guidance requires an entity to assess whether it intends to sell, or it is more likely than not that it will be required to sell, a security in an unrealized loss position before recovery of its
amortized cost basis. If either of these criteria is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For securities that do not meet the
aforementioned criteria, the amount of impairment is split into two components as follows: 1) other-than-temporary impairment (OTTI) related to other factors, which is
recognized in other comprehensive income and 2) OTTI related to credit loss, which must be recognized in the income statement. The credit loss is defined as the difference between the present
value of the cash flows expected to be collected and the amortized cost basis. Additionally, disclosures about other-than-temporary impairments for debt and equity securities
were expanded. This guidance was

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Notes to Consolidated Financial Statements (Continued)

(2) Summary of Significant Accounting Policies (Continued)

effective
for interim and annual reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. As the Company did not have any
previously recognized impairment charges at adoption, there was no impact to the Company's consolidated financial position or results of operations upon adoption. However, the guidance affected the
accounting for the 2010 OTTI.

In
January 2010, the FASB issued guidance clarifying the accounting for stockholder distributions where the stockholder has the ability to elect to have his/her distribution in the form
of cash (up to a pre-determined maximum), stock or a combination of the two. The update provided that the stock portion of a distribution where the stockholder had the ability to elect the
distribution as stock or cash (up to a pre-determined maximum) should be accounted for as a share issuance and thereby eliminate diversity in practice. The provisions of this update became
effective for financial statements dated on or after December 15, 2009. The adoption of this standard did not have a material impact on the Company's consolidated financial position, results of
operations or cash flows.

In
January 2010, the FASB issued guidance requiring increased fair value disclosures. There are two components to the increased disclosure requirements set forth in the update:
(1) a description of, as well as the disclosure of, the dollar amount of transfers in or out of level one or level two and (2) in the reconciliation for fair value measurements using
significant unobservable inputs (level 3), a reporting entity should present separately information about purchases, sales, issuances and settlements (that is, gross amounts shall be disclosed
as opposed to a single net figure). Increased disclosures regarding the transfers in/out of level one and two were required for interim and annual periods beginning after December 15, 2009. The
adoption of this portion of the standard has not had a material impact on the Company's consolidated financial position, results of operations or cash flows. Increased disclosures regarding the level
three fair value reconciliation are required for fiscal years beginning after December 15, 2010.

In
July 2010, the FASB updated disclosure requirements with respect to the credit quality of financing receivables and the allowance for credit losses. According to the guidance, there
are two levels of detail at which credit information must be presentedthe portfolio segment level and class level. The portfolio segment level is defined as the level where financing
receivables are aggregated in developing a Company's systematic method for calculating its allowance for credit losses. The class level is the second level at which credit information will be
presented and represents the categorization of financing related receivables at a slightly less aggregated level than the portfolio segment level. Companies will now be required to provide the
following disclosures as a result of this update: a rollforward of the allowance for credit losses at the portfolio segment level with the ending balances further categorized according to impairment
method along with the balance reported in the related financing receivables at period end; additional disclosure of nonaccrual and impaired financing receivables by class as of period end; credit
quality and past due/aging information by class as of period end; information surrounding the nature and extent of loan modifications and troubled-debt restructurings and their effect on
the allowance for credit losses during the period; and detail of any significant purchases or sales of financing receivables during the period. The increased period-end disclosure
requirements become effective for periods ending on or after December 15, 2010, with the exception of the additional disclosures surrounding troubled-debt restructurings which were
deferred in December 2010 and will be required for annual and interim reporting periods ending on or after June 15, 2011. The increased disclosures for activity within a reporting period become
effective for periods beginning on or after December 15, 2010. The provisions of this update expanded the

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Notes to Consolidated Financial Statements (Continued)

(2) Summary of Significant Accounting Policies (Continued)

Company's
current disclosures with respect to the credit quality of our financing receivables in addition to our allowance for loan losses.



In December 2010, the FASB issued an accounting standard update focused on the disclosure of supplementary pro-forma
information in business combinations. The purpose of the update was to eliminate diversity in practice surrounding the interpretation of select revenue and expense pro-forma disclosures.
The update provides guidance as to the acquisition date that should be selected when preparing the pro-forma financial disclosures, in the event that comparative financial statements are
presented the acquisition date assumed for the pro-forma disclosure shall be the first day of the preceding, comparative year. The adoption of this standard is not expected to have a
material impact on the Company's consolidated financial position, results of operations or cash flows.

(aa)    Reclassifications

Certain reclassifications of prior year balances have been made to conform to the current year presentation. These reclassifications
had no impact on the Company's consolidated financial position, results of operations or net change in cash and cash equivalents.

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Notes to Consolidated Financial Statements (Continued)

(3) Securities

The fair value of available for sale debt securities and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) were as follows at the
dates presented:

Fair Value

Gross
unrealized
gains

Gross
unrealized
losses

Amortized
Cost(In thousands)December 31, 2010Securities available for sale:U.S. government agencies and government-sponsored entities

$
21,770

$
20

$


$
21,750State and municipal


42,138


271


(3,544
)

45,411Mortgage-backed securitiesagency/residential


310,810


3,053


(3,268
)

311,025Mortgage-backed securitiesprivate/residential


3,606


16


(27
)

3,617Marketable equity


1,519








1,519Other securities


9,687


17


(119
)

9,789Securities available for sale

$
389,530

$
3,377

$
(6,958
)
$
393,111




December 31, 2009Securities available for sale:U.S. government agencies and government-sponsored entities

$
17,129

$


$
(329
)
$
17,458State and municipal


60,827


820


(567
)

60,574Mortgage-backed securitiesagency/residential


127,340


1,300


(889
)

126,929Mortgage-backed securitiesprivate/residential


13,959





(567
)

14,526Marketable equity


1,519








1,519Other securities


360








360Securities available for sale

$
221,134

$
2,120

$
(2,352
)
$
221,366


The
carrying amount, unrealized gains and losses, and fair value of securities held to maturity were as follows at the dates presented:

Amortized
cost

Gross
unrealized
gains

Gross
unrealized
losses

Fair value(In thousands)December 31, 2010:Mortgage-backed securitiesagency/residential

$
11,927

$
498

$


$
12,425December 31, 2009:Mortgage-backed securitiesagency/residential

$
9,942

$
486

$


$
10,428


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Notes to Consolidated Financial Statements (Continued)

(3) Securities (Continued)

The
proceeds from sales and calls of securities and the associated gains are listed below:

Year Ended
December 31,2010

2009(In thousands)Proceeds

$
40,330

$
6,411Gross Gains


370


4Gross Losses


(57
)

(6
)


The
tax expense related to the 2010 net gain is approximately $119,000, and the tax benefit related to the 2009 net loss was not material.

The
amortized cost and estimated fair value of available for sale debt securities by contractual maturity at December 31, 2010 are shown below. Expected maturities will differ
from contractual maturities because borrowers may have the right to prepay obligations with or without prepayment penalties.

Available for sale (AFS)2010

Amortized cost

Fair value(In thousands)Debt securities available for sale:Due in one year or less

$
23,259

$
23,286Due after one year through five years


2,125


2,226Due after five years through ten years


4,182


4,337Due after ten years


47,384


43,746Total AFS excluding MBS and marketable equity securities


76,950


73,595Mortgage-backed securities and marketable equity securities


316,161


315,935Total available for sale

$
393,111

$
389,530




Held to maturityAmortized cost

Fair value(In thousands)Securities held to maturity:Mortgage-backed securitiesagency/residential

$
11,927

$
12,425


Investment
securities with carrying values of $389,734,000 and $187,905,000 were pledged at December 31, 2010 and 2009, respectively, as collateral for various lines of credit,
public deposits and for other purposes as required or permitted by law. At December 31, 2010 and 2009, approximately $272,192,000 and $85,118,000 of securities, respectively, are pledged in
excess of current pledging requirements or outstanding balances on our lines of credit.

The
following table presents the fair value and the unrealized loss on securities that were temporarily impaired and the length of time the individual securities have been in a
continuous

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Notes to Consolidated Financial Statements (Continued)

(3) Securities (Continued)

unrealized
loss position as of December 31, 2010. This table does not include the single municipal security for which an OTTI was recognized during 2010, as OTTI reduced the value of the
security to its estimated fair value.

Less than 12 months

12 months or more

TotalFair
value

Unrealized
losses

Fair
value

Unrealized
losses

Fair
value

Unrealized
losses(In thousands)Description of securities:State and municipal

$


$


$
33,756

$
(3,544
)
$
33,756

$
(3,544
)Mortgage-backed securities agency/residential


205,241


(3,268
)







205,241


(3,268
)Mortgage-backed securities private/residential








952


(27
)

952


(27
)Other


4,544


(119
)







4,544


(119
)Total temporarily impaired

$
209,785

$
(3,387
)
$
34,708

$
(3,571
)
$
244,493

$
(6,958
)


In
determining whether or not there is an OTTI for debt securities, management considers many factors, including: (1) the length of time and the extent to which the fair value has
been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and
(4) whether the Company has the intention to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. The assessment of whether
an other-than-temporary impairment exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time.

During
2010, the Company recognized a pre-tax impairment charge for the other-than-temporary decline in the fair value of a single municipal bond with
an amortized cost of $4.6 million in the amount of $3.5 million. The OTTI was related to a local non-rated municipal bond where the underlying affordable housing project was
abandoned by the bond's sponsor. In determining the amount of the OTTI, the Company considered the value of the underlying property collateralizing the bond in addition to amounts that the Company
felt were recoverable from the project sponsor's guarantee. The entire OTTI of $3.5 million was recognized in the Company's earnings as we believe that it is unlikely that we will recover our
original investment in the bond.

The
following table presents a rollforward of OTTI included in earnings (In thousands):

Accumulated credit losses as of December 31, 2009

$
Initial credit losses recognized on securities identified as other-than-temporarily impaired


3,500Ending accumulated credit losses as of December 31, 2010

$
3,500


At
December 31, 2010, there were 18 individual securities in an unrealized loss position. Of the eighteen securities in an unrealized loss position at December 31, 2010,
two individual securities have been in a continuous unrealized loss position for 12 months or longer. Management has evaluated these two securities in addition to the remaining 16 securities in
an unrealized loss position and has determined that the decline in value since their purchase dates is primarily attributable to changes in

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Notes to Consolidated Financial Statements (Continued)

(3) Securities (Continued)

market
interest rates. The Company does not intend to sell any of the 18 securities in an unrealized loss position and does not consider it likely that it will be required to sell any of the
securities in question prior to recovery in their fair value. The 18 securities in an unrealized loss position do not include the single security for which the $3.5 million OTTI was taken as
that particular security has been marked down to its estimated fair value as of December 31, 2010.

All
of the Bank's agency and mortgage-backed securities are backed by either a U.S. Government agency or government-sponsored agency, except for two private-label mortgage-backed
securities with a total fair value of $3.6 million. These private-label securities are senior tranches that are rated AAA by two separate rating agencies at December 31, 2010.

The
Bank's municipal bond securities have all been rated investment grade or higher by various rating agencies or have been subject to an annual internal review process by management.
This annual review process for non-rated securities considers a review of the issuers' current financial statements, including the related cash flows and interest payments.

At
December 31, 2010, there was a security of a single issuer with a book value of $37,300,000, or approximately 23.3% of stockholders' equity. This security is a hospital revenue
bond, funded by revenues from a hospital within the Company's footprint. This amortizing tax-exempt bond carries an interest rate of 4.75% and a maturity of December 1, 2031. At
December 31, 2010, the bond had an unrealized loss of approximately $3.5 million, or 9.5% of book value. In addition to its annual review of nonrated municipal bonds completed in the
fourth quarter 2010, the Company reviews the financial statements of the hospital quarterly. To date, the bond has paid principal and interest in accordance with its contractual terms, including a
principal payment of $720,000 in December 2010.

We
do not intend to sell any of the debt securities with an unrealized loss and do not believe that it is more likely than not that we will be required to sell a security in an
unrealized loss position prior to a recovery in its value. The fair value of these debt securities is expected to recover as the bonds approach maturity. We concluded that the unrealized loss
positions on these securities is a result of the level of market interest rates and not a result of the underlying issuers' ability to repay. Accordingly, we did not recognize any additional OTTI on
the remaining securities in our investment portfolio, other than the $3.5 million of OTTI recognized on the single municipal bond as discussed above.

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Notes to Consolidated Financial Statements (Continued)

(3) Securities (Continued)

The following table presents the fair value and the unrealized loss on securities that were temporarily impaired and the length of time the individual securities have been in a
continuous unrealized loss position as of December 31, 2009:

Less than 12 months

12 months or more

TotalFair
value

Unrealized
losses

Fair
value

Unrealized
losses

Fair
value

Unrealized
losses(In thousands)Description of securities:U.S. government agencies and government-sponsored entities

$
17,129

$
(329
)
$


$


$
17,129

$
(329
)State and municipal


37,453


(567
)







37,453


(567
)Mortgage-backed securities agency/residential


50,163


(889
)







50,163


(889
)Mortgage-backed securities private/residential


13,959


(567
)







13,959


(567
)Total temporarily impaired

$
118,704

$
(2,352
)
$


$


$
118,704

$
(2,352
)


At
December 31, 2009, there were twelve individual securities in an unrealized loss position. There were no individual securities that had been in a continuous unrealized loss
position for 12 months or longer at December 31, 2009. The securities fluctuate in value since their purchase dates primarily as a result of changes in market interest rates.

At
December 31, 2009, there was a security of a single issuer with a book value of $38,020,000, or approximately 19.7% of stockholders' equity. This security is a hospital revenue
bond, funded by revenues from a hospital within the Company's footprint. At December 31, 2009, the bond had an unrealized loss of approximately $0.6 million, or 1.5% of book value.

(4) Bank Stocks

The Company, through its subsidiary bank, is a member of both the Federal Reserve Bank of Kansas City and the Federal Home Loan Bank of Topeka, and is required to maintain an investment
in the capital stock of each. The Federal Reserve, Federal Home Loan Bank and other bank stock are restricted in that they can only be redeemed by the issuer at par value. The Company's investment at
December 31 was as follows:

2010

2009(In thousands)Federal Reserve Bank of Kansas City

$
6,327

$
6,534Federal Home Loan Bank of Topeka


10,126


9,868Other bank stock


758


758Totals

$
17,211

$
17,160


The
investments in bank stocks are reviewed by management quarterly for potential other-than-temporary-impairment. This quarterly review considers the credit
quality of the institution, the institution's ability to repurchase shares, the Company's carrying value in the shares relative to the

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Notes to Consolidated Financial Statements (Continued)

(4) Bank Stocks (Continued)

share's
book value. Based on each of these reviews, Management concluded that there was no other-than-temporary-impairment during 2010 or 2009.

(5) Loans

A summary of the balances of loans at December 31 follows:

2010

2009(In thousands)Loans on real estate:Residential and commercial

$
680,895

$
760,719Construction


57,351


105,612Equity lines of credit


50,289


54,852Commercial loans


350,725


521,016Agricultural loans


14,413


18,429Lease financing


3,143


4,011Installment loans to individuals


28,582


36,175Overdrafts


565


358SBA and other


20,443


20,997$
1,206,406

$
1,522,169Less:Allowance for loan losses


(47,069
)

(51,991
)Unearned discount


(1,826
)

(2,561
)Net Loans

$
1,157,511

$
1,467,617


Activity
in the allowance for loan losses is as follows:

Year Ended
December 31,2010

2009(In thousands)Balance, beginning of period

$
51,991

$
44,988Provision for loan losses


34,400


51,115Loans charged off


(40,777
)

(46,007
)Recoveries on loans previously charged-off


1,455


1,895Balance, end of period

$
47,069

$
51,991


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Notes to Consolidated Financial Statements (Continued)

(5) Loans (Continued)

A
summary of transactions in the reserve for unfunded commitments for the periods indicated is as follows:

Year Ended
December 31,2010

2009(In thousands)Balance, beginning of period

$
243

$
223Provision (credit) for losses on unfunded commitments


(55
)

20Balance, end of period

$
188

$
243


Under
current US GAAP, the Company must present several additional disclosures relating to our loans and allowance for loan losses. The data is broken out into two subsets,
portfolio segment and class. The portfolio segment level is defined as the level where financing receivables are aggregated in developing the Company's systematic method for calculating its allowance
for credit losses. The class level is the second level at which credit information will be presented and represents the categorization of financing related receivables at a slightly less aggregated
level than the portfolio segment level.

The
following table provides the ending balances in the Company's loans held for investment and allowance for loan losses, broken down by portfolio segment as of December 31,
2010. The table also provides additional detail as to the amount of our loans and allowance that correspond to individual versus collective impairment evaluation. The impairment evaluation corresponds
to the Company's systematic methodology for estimating its Allowance for Loan Losses.

Real Estate

Consumer
and
Installment

Commercial &
Industrial
and Other

Total(In thousands)LoansIndividually evaluated

$
66,942

$
49

$
10,630

$
77,621Collectively evaluated


888,303


6,288


232,368


1,126,959Total

$
955,245

$
6,337

$
242,998

$
1,204,580Allowance for Loan LossesIndividually evaluated

$
5,826

$
1

$
832

$
6,659Collectively evaluated


33,648


251


6,511


40,410Total

$
39,474

$
252

$
7,343

$
47,069


108

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Table of Contents

GUARANTY BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(5) Loans (Continued)

The
following is a summary comparison of impaired loans at December 31, 2010 and 2009:

2010

2009(In thousands)Impaired loans with a valuation allowance

$
23,235

$
21,039Impaired loans without a valuation allowance


54,386


38,668Total impaired loans

$
77,621

$
59,707Valuation allowance related to impaired loans

$
6,659

$
6,603


The
following table provides additional detail of impaired loans broken out according to class as of December 31, 2010. The recorded investment included in the following table
represents customer balances net of any partial charge-offs recognized on the loans, net of any deferred fees and costs. As nearly all of our impaired loans at December 31, 2010 are
on nonaccrual status, recorded investment excludes any insignificant amount of accrued interest receivable on loans 90-days or more past due and still accruing. The unpaid balance
represents the recorded balance prior to any partial charge-offs.

Recorded
Investment

Unpaid
Balance

Related
Allowance

Average
Recorded
Investment
YTD

Interest
Income
Recognized
YTD(In thousands)Impaired loans with no related allowance:Commercial and Residential Real Estate

$
33,498

$
42,132

$


$
26,865

$
Construction Loans





2,084





5,593


Commercial Loans


16,639


18,811





10,823


Consumer Loans


2,082


2,620





1,313


Other


2,167


2,420





1,906


Total

$
54,386

$
68,067

$


$
46,500

$
Impaired loans with a related allowance:Commercial and Residential Real Estate

$
20,482

$
21,316

$
5,723

$
18,596

$
Construction Loans











758


Commercial Loans


2,753


2,803


935


2,734


Consumer Loans





1


1


15


Other











33


Total

$
23,235

$
24,120

$
6,659

$
22,136

$
Total Impaired LoansCommercial and Residential Real Estate

$
53,980

$
63,448

$
5,723

$
45,461

$
Construction Loans





2,084





6,351


Commercial Loans


19,392


21,614


935


13,557


Consumer Loans


2,082


2,621


1


1,328


Other


2,167


2,420





1,939


Total impaired loans

$
77,621

$
92,187

$
6,659

$
68,636

$



109

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Table of Contents

GUARANTY BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(5) Loans (Continued)

The following is a summary of nonaccrual loans and loans past due 90 days still on accrual status:

2010

2009(In thousands)Nonaccrual loans

$
74,304

$
59,584Loans past due over 90 days still on accrual

$
3,317

$
123


The
book balance of troubled debt restructurings at December 31, 2010 is $23.6 million. Approximately $1.3 million in specific reserves have been established with
respect to these loans as of December 31, 2010. As of December 31, 2010, the Company had no additional amounts committed on any loan classified as a troubled debt restructuring. The book
balance of trouble debt restructurings as of December 31, 2009 was immaterial.

The
gross interest income that would have been recorded in the period that ended if the nonaccrual loans had been current in accordance with their original terms and had been outstanding
throughout the period or since origination, if held for part of the period for December 31, 2010 and 2009, was $3,157,000 and $4,198,000, respectively.

The
following is a summary of interest recognized and cash-basis interest earned on impaired loans:

Year Ended
December 31,2010

2009(In thousands)Average of individually impaired loans during year

$
68,636

$
61,816Interest income recognized during impairment

$


$
203Cash-basis interest income recognized

$


$
203


The
following table summarizes by class our loans classified as past due in excess of 30 days or more in addition to those loans classified as non-accrual:

30 - 89
Days Past
Due

90 Days +
Past Due
and Still
Accruing

Non-
Accrual
Loans

Total
Past Due

Total
Loans(In thousands)Commercial and Residential Real Estate

$
13,273

$
2,124

$
51,857

$
67,254

$
679,864Construction Loans














57,265Commercial Loans


6,349


953


18,438


25,740


350,194Consumer Loans


605


240


1,842


2,687


79,316Other


1,328





2,167


3,495


37,941Total

$
21,555

$
3,317

$
74,304

$
99,176

$
1,204,580


The
Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as: current financial information, historical
payment experience, credit documentation, public information, and current economic trends, among other factors. The

110

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Table of Contents

GUARANTY BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(5) Loans (Continued)

Company
uses the following definitions for risk ratings, which are consistent with the definitions used in supervisory guidance:



Loans
not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans.

As
of December 31, 2010, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

Commercial &
Residential
Real Estate

Construction

Commercial
Loans

Consumer

Other

Total(In thousands)Pass

$
589,301

$
57,351

$
290,573

$
75,999

$
33,896

$
1,047,120Special Mention


7,589





22,295


1


594


30,479Substandard


84,006





37,858


3,435


3,508


128,807Doubtful

















Subtotal


680,896


57,351


350,726


79,435


37,998


1,206,406Less: Unearned Discount


(1,032
)

(86
)

(532
)

(119
)

(57
)

(1,826
)Loans, net of unearned discount

$
679,864

$
57,265

$
350,194

$
79,316

$
37,941

$
1,204,580


111

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Table of Contents

GUARANTY BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(6) Premises and Equipment

A summary of the cost and accumulated depreciation and amortization of premises and equipment at December 31 is as follows:

2010

2009(In thousands)Land

$
13,693

$
13,693Buildings


45,038


45,032Leasehold improvements


5,899


5,891Equipment and software


16,253


16,176Leasehold interest in land


684


684Subtotal

$
81,567

$
81,476Accumulated depreciation and amortization


(24,168
)

(21,209
)Total premises and equipment

$
57,399

$
60,267


Depreciation
expense for the years ended December 31, 2010 and 2009 was approximately $3,223,000 and $3,575,000, respectively. Such amounts are classified in occupancy and
furniture and equipment expense.

Operating Leases:Pursuant to the terms of non-cancelable lease agreements in effect at December 31, 2010 pertaining to banking
premises, future minimum rent commitments under various operating leases are as follows (in thousands):

2011

$
2,9232012


2,3542013


1,8812014


1,6832015


1,623Thereafter


1,131$
11,595


Certain
leases contain options to extend the lease terms for five to twenty one years. The cost of such rentals is not included in the above rental commitments. Rent expense for the
years ended December 31, 2010 and 2009 was $3,289,000 and $3,438,000, respectively.

112

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Table of Contents

GUARANTY BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(7) Other Real Estate Owned

Changes in the carrying amount of the Company's other real estate owned for the years ended December 31, 2010 and 2009 were as follows (in thousands):

Balance as of December 31, 2008

$
484Additions to OREO


55,412Sales proceeds


(13,569
)Losses and write-downs, net of gains


(5,135
)Balance as of December 31, 2009

$
37,192Additions to OREO


40,776Sales Proceeds


(42,457
)Losses and write-downs, net of gains


(12,613
)Balance as of December 31, 2010

$
22,898


Expenses
related to foreclosed assets include:

2010

2009(Dollars in
thousands)Write-downs, net of gains on sales

$
12,613

$
5,135Operating expenses, net of rental income


2,296


763Total expenses related to foreclosed assets

$
14,909

$
5,898


(8) Other Intangible Assets

Acquired intangible assets with a finite life are recorded on our balance sheets. These acquired intangible assets were capitalized as a result of past acquisitions and are being
amortized over their estimated useful lives. At December 31, 2010 and 2009, the only such asset on the Company's balance sheet is the core deposit intangible, which is tested annually for
impairment, and no impairment was deemed necessary.

A
summary of the core deposit intangible asset and the accumulated amortization is below:

December 31,Useful life

2010

2009(In thousands)Core deposit intangible assets

7 - 15 years

$
62,975

$
62,975Accumulated amortization




(48,921
)

(43,753
)Other intangible assets, net



$
14,054

$
19,222


113

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Table of Contents

GUARANTY BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(8) Other Intangible Assets (Continued)

Amortization
expense for the years ended December 31, 2010 and 2009 was $5,168,000 and $6,278,000, respectively. Estimated amortization expense for the next five years, and
thereafter, is as follows (amounts in thousands):

TotalFiscal year ending:2011

$
4,0912012


3,0332013


2,5662014


2,0972015


1,416Thereafter


851$
14,054


(9) Deposits

The aggregate amount of time deposits in denominations of $100,000 or more at December 31, 2010 and 2009 was $168,343,000 and $288,588,000, respectively.

At
December 31, 2010 and 2009, the Bank had $174,728,000 and $254,636,000, respectively, in brokered time deposits. Additionally, the Bank had reciprocal time deposits with other
depository institutions that are treated as brokered deposits for regulatory purposes of $5,143,000 and $36,616,000 at December 31, 2010 and 2009, respectively.

At
December 31, 2010, the scheduled maturities of interest-bearing time deposits for the next five years are as follows (amounts in thousands):

2011

$
439,0982012


29,7772013


4,798$
473,673


(10) Securities Sold Under Agreements to Repurchase

The following is a summary of information pertaining to securities sold under agreement to repurchase at December 31:

2010

2009(Dollars in
thousands)Ending Balance

$
29,832

$
22,850Weighted-average interest rate at year-end


0.45
%

0.94
%


114

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Table of Contents

GUARANTY BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(10) Securities Sold Under Agreements to Repurchase (Continued)

Securities sold under agreements to repurchase, which are classified as secured borrowings, generally mature within one to four days from the transaction date. Securities sold under
agreements to repurchase are reflected at the amount of cash received in connection with the transaction. The Company may be required to provide additional collateral based on the fair value of the
underlying security. The securities sold under agreements to repurchase are collateralized by government agency and mortgage-backed securities held by the Company which have carrying values of
$39.1 million and $25.0 million at December 31, 2010 and 2009, respectively.

Information
concerning securities sold under agreements to repurchase is summarized below:

Year Ended
December 31,2010

2009(Dollars in
thousands)Average daily balance during the year

$
19,450

$
15,557Average interest rate during the year


0.67
%

0.89
%Maximum month-end balance during the year

$
29,832

$
22,850


(11) Borrowings

A summary of borrowings is as follows:

Principal

Interest rate

Maturity
date

Total
committed(Dollars in thousands)December 31, 2010Short-term borrowings:FHLB line of credit

$




n/a


368,361Total short-term borrowings

$
Long-term borrowings:FHLB term notes (fixed rate)


163,239

Range:2.52% - 6.22%

2011 - 2018


See belowTotal borrowings

$
163,239December 31, 2009Short-term borrowings:FHLB line of credit

$




n/a


195,338Total short-term borrowings

$
Long-term borrowings:FHLB term notes (fixed rate)


164,364

Range:2.52% - 6.22%

2010 - 2018


See belowTotal borrowings

$
164,364


Each
advance with the Federal Home Loan Bank (FHLB) is payable at its maturity date, with a prepayment penalty if paid prior to maturity. The weighted-average rate on the FHLB term notes
is 3.17% at December 31, 2010. At December 31, 2010, approximately $140 million of the FHLB fixed rate term notes with a weighted-average rate of 3.02% were convertible to
floating rate on

115

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Table of Contents

GUARANTY BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(11) Borrowings (Continued)

predetermined
conversion dates at the discretion of the FHLB. If the notes are converted by the FHLB, the Bank has the option to prepay the advance without penalty. If the notes are not converted by
the FHLB, the note becomes convertible quarterly thereafter, with the option to convert to floating rate continuing to be at the discretion of the FHLB. Five notes totaling $120 million have
potential conversions in 2011a $30 million note with a rate of 2.95%, a $10 million note with a rate of 3.16%, a $20 million note with a rate of 2.52%; a
$40 million note with a rate of 3.17% and a $20 million note with a rate of 3.25% have their next quarterly conversion dates on 1/10/2011; 1/24/2011; 1/24/2011; 2/28/2011 and 9/19/2011,
respectively. The FHLB did not elect to convert any of these advances to variable rate through February 18, 2011. The remaining convertible note of $20 million becomes convertible
1/23/2013 and bears an interest rate of 3.04%.

The
Bank has executed a specific pledging and security agreement with the FHLB in the amount of $368,361,000 at December 31, 2010, which encompassed certain loans and securities
as collateral for these borrowings. The specific pledging and security agreement with the FHLB was $195,338,000 at December 31, 2009. The maximum credit allowance for future borrowings,
including term notes and the line of credit, was $205,122,000 and $30,974,000 at December 31, 2010 and 2009, respectively.

At
December 31, 2010, the scheduled maturities of borrowings are as follows (in thousands):

2011

$
2,9752012


92013


50,1932014


622015


Thereafter


110,000Total borrowings

$
163,239


(12) Income Taxes

The components of the income tax benefit are as follows:

Year ended December 31,2010

2009(In thousands)Current tax benefit:Federal

$
(3,393
)
$
(14,199
)State





Total current tax benefit


(3,393
)

(14,199
)Deferred tax benefit:Federal


(10,220
)

(3,458
)State


(1,177
)

(1,504
)Total deferred tax benefit


(11,397
)

(4,962
)Deferred tax valuation allowance


8,500


Total tax benefit

$
(6,290
)
$
(19,161
)


116

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Table of Contents

GUARANTY BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(12) Income Taxes (Continued)

Income
tax expense attributable to the loss from continuing operations differed from the amounts computed by applying the U.S. federal statutory tax rate to pretax loss from operations
as a result of the following:

Year ended
December 31,2010

2009Tax (benefit) at statutory federal rate


(35.0
)%

(35.0
)%State tax, net of federal benefit


(3.3
)%

(3.3
)%Tax exempt income


(2.7
)%

(2.9
)%Change in valuation allowance


22.6
%

Other


1.7
%

1.6
%(16.7
)%

(39.6
)%


Current
taxes receivable included in other assets totaled approximately $2,859,000 and $13,623,000 at December 31, 2010 and December 31, 2009, respectively. The Company's
net deferred tax asset is included in other assets at December 31, 2010 and December 31, 2009.

117

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Table of Contents

GUARANTY BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(12) Income Taxes (Continued)

Deferred
tax assets and liabilities result from the tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the
amounts used for income tax purposes at December 31 are as follows:

2010

2009(In thousands)Deferred tax assets:Allowance for loan losses

$
17,891

$
19,762Other real estate owned


2,285


19Other assets, accruals and other real estate owned


1,679


2,119Other-than-temporary-impairment


1,330


Unrealized loss on securities


1,361


88Net operating loss, AMT and other tax attribute carryforwards


9,266


1,207Intangible assets


899


1,002Stock compensation and other


537


871Subtotal


35,248


25,068Less: Valuation allowance


(8,500
)

Deferred tax assets


26,748


25,068Deferred tax liabilities:Premises and equipment


4,782


5,320Core deposit intangibles and fixed rate loan purchase accounting adjustments


5,356


7,366FHLB stock, prepaid assets, equity investments and other liabilities


2,270


2,212Total deferred tax liabilities


12,408


14,898Deferred tax asset (liability)

$
14,340

$
10,170


Realization
of deferred tax assets is dependent upon generating future sufficient taxable income prior to their expiration. A valuation allowance to reflect management's estimate of the
temporary deductible differences that may expire prior to their utilization has been recorded at year end 2010. In assessing the realization of deferred tax assets at December 31, 2010, the
Company considered various tax planning strategies which could be implemented to generate taxable income in future taxable periods in which the deferred taxes are deductible, to partially support the
current balance of deferred tax assets. Based on these factors, the Company believed that it was more likely than not that the Company will realize approximately $14.3 million of the benefits
of these deductible differences at December 31, 2010, and therefore, a partial valuation allowance for deferred tax assets in the amount of $8.5 million was recorded at
December 31, 2010.

In
assessing the realization of deferred tax assets at December 31, 2009, the Company considered whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income, including tax planning strategies, during the periods in which
those temporary differences become deductible. The Company determined that at December 31, 2009, it had sufficient prior year taxable income that was still available for carryback, as well as
various tax planning strategies

118

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Table of Contents

GUARANTY BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(12) Income Taxes (Continued)

which
could be implemented to generate taxable income in future taxable periods in which the deferred taxes are deductible, to support the current balance of deferred tax assets. Based on these
factors, the Company believed that it was more likely than not that the Company will realize the benefits of these deductible differences at December 31, 2009, and therefore, no valuation
allowance for deferred tax assets was recorded at December 31, 2009.

At
December 31, 2010, the Company had a federal net operating loss carryforward of approximately $19.2 million expiring in 2030, and a state net operating loss carryforward
of approximately $70.3 million which expires at various dates from 2029 through 2033. Deferred tax assets are recognized for net operating losses, subject to a valuation allowance, to the
extent that the benefit is more likely than not to be realized.

As
of December 31, 2010 and December 31, 2009, the Company did not have any unrecognized tax benefits. The Company does not expect the total amount of unrecognized tax
benefits to significantly increase or decrease in the next twelve months. The Company recognizes interest related to income tax matters as interest expense and penalties related to income tax matters
as other noninterest expense and did not have any accrued interest and/or penalties at December 31, 2010 or 2009. The Company received approximately $3,000 and $27,000 of interest income on tax
refunds in 2010 and 2009, respectively. No other interest or penalties related to tax matters were incurred during 2010 or 2009. The Company and its subsidiaries are subject to U.S. federal income
tax, as well as state of Colorado income tax. The Company is no longer subject to examination by taxing authorities for years before 2007, except to the extent of the amount of the 2009 carryback
claim for refund filed in 2010 with respect to 2004 and 2006, but could be subject to adjustment by taxing authorities up to the amount of the 2009 net operating loss expected to be carried back to
years before 2007.

(13) Subordinated Debentures and Trust Preferred Securities

The Company had a $41,239,000 aggregate balance of subordinated debentures outstanding with a weighted average cost of 5.87% at both December 31, 2010 and 2009. The subordinated
debentures were issued in four separate series. Each issuance has a maturity of thirty years from its date of issue. The subordinated debentures were issued to trusts established by us, which in turn
issued $40,000,000 of trust preferred securities. Generally and with certain limitations, the Company is permitted to call the debentures subsequent to the first five or ten years, as applicable,
after issue if certain conditions are met, or at any time upon the occurrence and continuation of certain changes in either the tax treatment or the capital treatment of the trusts, the debentures or
the preferred securities.

In
September 2000, a predecessor to the Company formed CenBank Statutory Trust I and completed an offering of $10.0 million, 10.6% Cumulative Trust Preferred Securities (Preferred
Securities), which are guaranteed by the Company. The Trust also issued common securities to the predecessor of the Company and used the net proceeds from the offering to purchase $10.3 million
in principal amount of 10.6% Junior Subordinated Debentures (Debentures) issued. The Company assumed the predecessor's obligations relating to such securities upon the acquisition of the predecessor.
Interest paid on the Debentures is distributed to the holders of the Preferred Securities. Distributions payable on the Preferred Securities are recorded as interest expense in the consolidated
statements of income. These Debentures are unsecured, rank junior and are subordinate in right of payment to all senior debt of the Company. The Preferred Securities are subject to mandatory
redemption upon repayment of the Debentures. The Company has the right, subject to events of

119

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GUARANTY BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(13) Subordinated Debentures and Trust Preferred Securities (Continued)

default,
to defer payments of interest on the Debentures at any time by extending the interest payment period for a period not exceeding 10 consecutive semi-annual periods with respect to
each deferral period, provided that no extension period may extend beyond the redemption or maturity date of the Debentures. The Debentures mature on September 7, 2030, which may be shortened
by us to not earlier than March 7, 2011, if certain conditions are met, or at any time upon the occurrence and continuation of certain changes in either the tax treatment or the capital
treatment of the Trust, the Debentures or the Preferred Securities.

In
February 2001, a predecessor to the Company formed CenBank Statutory Trust II and completed an offering of $5.0 million 10.2% Cumulative Trust Preferred Securities (Preferred
Securities), which are guaranteed by the Company. The Trust also issued common securities to the predecessor of the Company and used the net proceeds from the offering to purchase $5.2 million
in principal amount of 10.2% Junior Subordinated Debentures (Debentures) issued. The Company assumed the predecessor's obligations relating to such securities upon the acquisition of the predecessor.
Interest paid on the Debentures is distributed to the holders of the Preferred Securities. Terms and conditions of these Debentures are substantially similar to those as described under the CenBank
Statutory Trust I. The Debentures mature on February 22, 2031, which may be shortened by us to not earlier than February 22, 2011, if certain conditions are met, or at any time upon the
occurrence and continuation of certain changes in either the tax treatment or the capital treatment of the Trust, the Debentures or the Preferred Securities.

In
April 2004, a predecessor to the Company formed CenBank Statutory Trust III and completed an offering of $15.0 million LIBOR plus 2.65% Cumulative Trust Preferred Securities
(Preferred Securities), which are guaranteed by the Company. The Trust also issued common securities to the predecessor of the Company and used the net proceeds from the offering to purchase
$15.5 million in principal amount of floating rate Junior Subordinated Debentures (Debentures) issued. The Company assumed the predecessor's obligations relating to such securities upon the
acquisition of the predecessor. Interest paid on the Debentures is distributed to the holders of the Preferred Securities. Terms and conditions of these Debentures are substantially similar to those
as described under the CenBank Statutory Trust I. The Debentures mature on April 15, 2034, which may be shortened by us to not earlier than April 15, 2011, if certain conditions are met,
or at any time upon the occurrence and continuation of certain changes in either the tax treatment or the capital treatment of the Trust, the Debentures or the Preferred Securities.

In
June 2003, a predecessor to the Company formed Guaranty Capital Trust III and completed an offering of $10.0 million LIBOR plus 3.10% Cumulative Trust Preferred Securities
(Preferred Securities), which are guaranteed by the Company. The Trust also issued common securities to the predecessor of the Company and used the net proceeds from the offering to purchase
$10.3 million in principal amount of Junior Subordinated Debt Securities issued. The Company assumed the predecessor's obligations relating to such securities upon the acquisition of the
predecessor. Interest is paid quarterly and is distributed to the holders of the Preferred Securities. The Company has the right, subject to events of default, to defer payments of interest on the
Debentures at any time by extending the interest payment period for a period not exceeding 20 consecutive quarterly periods with respect to each deferral period, provided that no extension period may
extend beyond the redemption or maturity date of the Debentures. The Debentures mature on July 7, 2033. The Guaranty Capital Trust III trust preferred issuance was initially callable on
July 7, 2008 and remains callable on each quarterly interest payment date.

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Table of Contents

GUARANTY BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(13) Subordinated Debentures and Trust Preferred Securities (Continued)

Under
the terms of each subordinated debentures agreement, the Company has the ability to defer interest on the debentures for a period of up to sixty months as long as it is in
compliance with all covenants of the agreement. On July 31, 2009, the Company notified the trustees of the four trusts that it will defer interest on all four of its subordinated debentures.
Such a deferral is not an event of default under each subordinated debentures agreement and interest on the debentures continues to accrue during the deferral period. Prior to resuming the payment of
interest on the subordinated debentures or calling the subordinated debentures, the Company must obtain prior written approval from the Federal Reserve Bank of Kansas City under the terms of its
Written Agreement (see Note 22, Written Agreement for additional information). At December 31, 2010, the Company was in compliance with all covenants of the agreements.

The
Company is not considered the primary beneficiary of these Trusts (variable interest entities), therefore the trusts are not consolidated in the Company's financial statements, but
rather the subordinated debentures are shown as a liability. The Company's investment in the common stock of each trust is included in other assets in the Consolidated Balance Sheets.

Although
the securities issued by each of the trusts are not included as a component of stockholders' equity in the consolidated balance sheets, the securities are treated as capital for
regulatory purposes. Specifically, under applicable regulatory guidelines, the $40 million of securities issued by the trusts qualify as Tier 1 capital, along with the
$64.8 million of 9% Series A Convertible Preferred Stock, up to a maximum of 25% of capital on an aggregate basis. Any amount that exceeds 25% qualifies as Tier 2 capital. At
December 31, 2010, approximately $32.3 million of the combined $104.8 million of the trusts' securities and preferred stock outstanding qualified as Tier 1 capital. The
remaining $72.5 million is treated as Tier 2 capital.

The
Board of Governors of the Federal Reserve System, which is the holding company's banking regulator, has promulgated a modification of the capital regulations affecting trust
preferred securities. Under this modification, beginning March 31, 2011, the Company is required to use a more restrictive formula to determine the amount of trust preferred securities that can
be included in regulatory Tier I capital. The Company will be allowed to include in Tier I capital an amount of trust preferred securities equal to no more than 25% of the sum of all
core capital elements, which is generally defined as stockholders' equity less certain intangibles, including core deposit intangibles, net of any related deferred income tax liability. The existing
regulations in effect limit the amount of trust preferred securities that can be included in Tier I capital to 25% of the sum of core capital elements without a deduction for permitted
intangibles. After adoption of this modification, the Company expects that its Tier 1 capital ratios will continue to remain well-capitalized for regulatory purposes.

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Notes to Consolidated Financial Statements (Continued)

(13) Subordinated Debentures and Trust Preferred Securities (Continued)

The following table summarizes the terms of each subordinated debenture issuance at December 31, 2010 (dollars in thousands):

Date Issued

Amount

Maturity
Date

Call
Date*

Fixed or
Variable

Rate Adjuster

Rate at
December 31,
2010

Next Rate
Reset
Date**CenBank Trust I

9/7/2000

$
10,310

9/7/2030

3/7/2011

Fixed


N/A


10.60
%
N/ACenBank Trust II

2/22/2001


5,155

2/22/2031

2/22/2011

Fixed


N/A


10.20
%
N/ACenBank Trust III

4/8/2004


15,464

4/15/2034

4/15/2011

Variable


LIBOR + 2.65
%

2.94
%
4/15/2011Guaranty Capital Trust III

6/30/2003


10,310

7/7/2033

4/7/2011

Variable


LIBOR + 3.10
%

3.39
%
4/07/2011


*Call
date represents the earliest date that the Company can next call the debentures.**On
January 7, 2011, the rate on the Guaranty Capital Trust III subordinated debentures reset to 3.40%. On January 15, 2011, the rate on the
CenBank Trust III subordinated debentures reset to 2.95%.


(14) Commitments

The Bank is a party to credit-related financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These
financial instruments include commitments to extend credit, stand-by letters of credit and commercial letters of credit. Such commitments involve, to varying degrees, elements of credit
and interest rate risk in excess of the amount recognized in the consolidated balance sheets.

The
Bank's exposure to credit loss is represented by the contractual amount of these commitments. The Bank follows the same credit policies in making commitments as it does for
on-balance sheet instruments.

At
December 31, the following financial instruments were outstanding whose contract amounts represented credit risk:

2010

2009(In thousands)Commitments to extend credit:Variable

$
214,442

$
173,593Fixed


23,169


131,509Total commitments to extend credit

$
237,611

$
305,102Standby letters of credit

$
13,888

$
14,917Commercial letters of credit





11,000


Commitments
to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed
expiration dates or other termination clauses and may require payment of a fee. Several of the commitments may expire without being drawn upon. Therefore, the total commitment amounts do not
necessarily represent future cash requirements. Off-balance sheet risk to credit loss exists up to the face amount of these instruments, although material losses are not anticipated. The
same credit policies are used to

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Notes to Consolidated Financial Statements (Continued)

(14) Commitments (Continued)

make
such commitments as are used for loans, including obtaining collateral, if necessary, at exercise of the commitment.

Commitments
to extend credit under overdraft protection agreements are commitments for possible future extensions of credit to existing deposit customers. These lines of credit are
uncollateralized and
usually do not contain a specified maturity date and may not be drawn upon to the total extent to which the Company is committed.

Stand-by
letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. Those letters of credit are primarily
issued to support public and private borrowing arrangements. Essentially all letters of credit issued have expiration dates within one year. The credit risk involved in issuing letters of credit is
essentially the same as that involved in extending loan facilities to customers. The Bank generally holds collateral supporting those commitments if deemed necessary.

The
Bank enters into commercial letters of credit on behalf of its customers who authorize a third party to draw drafts on the Bank up to a stipulated amount and with specific terms and
conditions. A commercial letter of credit is a conditional commitment on the part of the Bank to provide payment on drafts drawn in accordance with the terms of the commercial letter of credit.

(15) Contingencies

In the ordinary course of our business, we are party to various legal actions, which we believe are incidental to the operation of our business. Although the ultimate outcome and amount
of liability, if any, with respect to these other legal actions to which we are currently a party, cannot presently be ascertained with certainty, in the opinion of management, based upon information
currently available to us, any resulting liability is not likely to have a material adverse effect on the Company's consolidated financial position, results of operations or cash flows.

(16) Employee Benefit Plans

Substantially all employees are eligible to participate in the Company's 401(k) plan. Employees may contribute up to 100 percent of their compensation subject to certain limits
based on federal tax laws. The Company makes matching contributions equal to a specified percentage of the employee's compensation as defined by the Plan. For years ended December 31, 2010 and
2009, matching contributions to the 401(k) plan were $656,000 and $597,000, respectively.

Stock-Based Compensation

Under the Company's Amended and Restated 2005 Stock Incentive Plan (the "Incentive Plan"), the Company's Board of Directors may grant
stock-based compensation awards to nonemployee directors, key employees, consultants and prospective employees under the terms described in the Incentive Plan. The allowable stock-based compensation
awards include the grant of Options, Restricted Stock Awards, Restricted Stock Unit Awards, Performance Stock Awards, Stock Appreciation Rights and other Equity-Based Awards. The Incentive Plan
provides that eligible participants may be granted shares of Company common stock that are subject to forfeiture until the grantee vests in the stock award based on the established conditions, which
may include service conditions, established performance measures or both.

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Notes to Consolidated Financial Statements (Continued)

(16) Employee Benefit Plans (Continued)

Prior
to vesting of the stock awards with a service vesting condition, each grantee shall have the rights of a stockholder with respect to voting of the granted stock. The recipient is
not entitled to dividend rights with respect to the shares of granted stock until vesting occurs. Prior to vesting of the stock
awards with performance vesting conditions, each grantee shall have the rights of a stockholder with respect to voting of the granted stock. The recipient is generally not entitled to dividend rights
with the exception of performance-based shares granted prior to 2010 (which are not entitled to dividend rights until initial vesting occurs, at which time, the dividend rights will exist on vested
and unvested shares of such performance-based shares, subject to termination of such rights under the terms of the Incentive Plan).

Other
than the stock awards with service and performance based vesting conditions, no grants have been made under the Incentive Plan.

The
Incentive Plan authorized grants of stock-based compensation awards of up to 8,500,000 shares of authorized Company voting common stock, subject to adjustments provided by the
Incentive Plan. The number of authorized shares in the Incentive Plan was increased by 6,000,000 shares during 2010, after approval of the stockholders at the 2010 annual meeting of stockholders. As
of December 31, 2010 and 2009, there were 1,768,186 and 1,381,105 shares of unvested stock granted (net of forfeitures), with 5,941,028 and 524,815 shares available for grant under the
Incentive Plan, respectively.

Of
the 1,768,186 shares unearned at December 31, 2010, approximately 884,000 shares are expected to vest. Approximately 605,000 shares of performance-based shares granted to
executives in 2005 through 2007 have a performance-criterion based on an earnings-per-share goal that must be met by December 31, 2012. Based on an analysis performed in
2008, it was determined that these 605,000 shares would not vest. Should this expectation change, additional compensation expense could be recorded in future periods. In addition, there are 633,687
shares of restricted stock outstanding with a performance condition and we expect that 422,458 of these 633,687 shares will vest and that the remaining shares will expire unvested. These 633,687
shares were granted to executives in August 2010 with the vesting contingent upon various performance criteria. Specifically, 422,458 of these performance-shares granted in August 2010 will vest upon
the meeting of equally-weighted return on asset and net income performance measures over a two and a half year period, dependent upon the termination of the Written Agreement dated January 22,
2010. The specific amount of shares to be vested is determined by where the metric's actual performance would fall within a 90% ("threshold level") to 110% ("maximum level") range of the performance
target ("target level"). The number of vested shares would be determined on a continuous scale by interpolation, with 25% of the targeted shares vesting at the threshold level, 100% of the targeted
shares vesting at the target level and 200% percent of the targeted shares vesting at the maximum level. Management expects that the targeted performance goals will be met, which is the level
currently being expensed over the vesting period based upon management's latest analysis. This results in 211,229 shares that are expected to vest and 211,229 shares that are not expected to vest.
Should this expectation change, additional compensation expense could be recorded in future periods or previously recognized expense could be reversed. In addition, the remaining 211,229 of the
633,687 performance shares granted to the top three executives in August 2010 will vest contingent upon the termination of the Written Agreement and certain time-based vesting criteria.
These shares are expected to vest on or prior to their expiration date of December 31, 2013. Should this expectation change, previously recognized expense could be reversed.

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Notes to Consolidated Financial Statements (Continued)

(16) Employee Benefit Plans (Continued)

A
summary of the status of unearned stock awards and the change during the year is presented in the table below:

Shares

Weighted Average
Fair Value on
Award DateUnearned at December 31, 2009


1,381,105

$
7.15Awarded


823,017


1.19Forfeited


(239,230
)

5.87Vested


(196,706
)

1.36Unearned at December 31, 2010


1,768,186

$
4.68


The
Company recognized $1,101,000 and $1,155,000 in stock-based compensation expense for the years ended December 31, 2010 and December 31, 2009, respectively. As discussed
above, the performance-based shares have performance criterion that must be met on or before the respective expiration dates in order for the performance-based shares to fully or partially vest. Based
on management's analysis, the Company may determine that meeting certain performance criteria is, or is not, likely in order to recognize the appropriate level of expense. Should our current
expectations change, additional expense could be recorded or reversed in future periods. The total income tax effect recognized in the income statement for share-based compensation arrangements was a
$144,000 and $282,000 expense for the years ended December 31, 2010 and 2009, respectively. The 2010 and 2009 income tax effect related to share-based compensation arrangements included
$563,000 and $721,000, respectively, in expense related to the write-off of the deferred tax asset for the difference between the grant date value of the award as compared to fair value of
the award upon vesting.

At
December 31, 2010, compensation cost of $1,036,000 related to unearned awards not yet recognized is expected to be recognized over a weighted-average period of
2.5 years.

A
summary of the Company's awards for the years ended December 31, 2010 and 2009 is presented in the table below:

Year Ended
December 31,2010

2009Number of shares granted


823,017


409,500Weighted-average grant-date fair value

$
1.19

$
1.29Number of shares that vested


196,706


244,837Fair value of shares vested

$
268,021

$
399,784Tax benefit realized

$
101,875

$
151,958


Deferred Compensation Plan

The Company maintains a Deferred Compensation Plan for a select group of management or highly compensated employees and
non-employee members of the Board. The plan, which is meant to be an unfunded deferred compensation plan, is intended to be exempt from certain requirements of the Employee Retirement
Income Security Act of 1974. The plan allowed the participants to defer up to 80% of their salary and up to 100% of their bonus or incentive compensation, and up to 100% of cash

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Notes to Consolidated Financial Statements (Continued)

(16) Employee Benefit Plans (Continued)

fees
in the case of directors, until termination or upon the occurrence of other specified events (e.g., disability, previously specified dates, and unforeseeable emergencies). The plan
permited participants to elect to have deferred amounts deemed to be invested in various investment funds or Company common stock. The plan does not guarantee any minimum rate of return. Participation
in the plan was voluntary and participants may change their elections annually or otherwise as permitted by the plan and applicable regulations governing the deferred tax treatment of the plan. The
Company was permitted, in its sole discretion, to make additional contributions to participants' accounts. The Company did not make any additional contributions to participants' accounts in 2010 or
2009. At the end of 2009, due primarily to a low participation rate and the overall administration costs, the Company determined not to offer eligible or existing participants the ability to defer any
additional compensation in 2010. In December 2010, the Board approved the termination of the plan and it is expected that all remaining participant balances in the plan will be distributed in December
2011.

Deferred
compensation expense of $38,000 was booked in 2010 compared to $176,000 in 2009. The deferred compensation liability was $565,000 and $668,000 at December 31, 2010 and
2009, respectively, and is reported with interest payable and other liabilities on the consolidated balance sheets. Additionally, for participants who elected to defer compensation through Company
stock, the Company has recorded Stock to be Issued as a component of stockholders' equity in the amount of $237,000 and $199,000 at December 31, 2010 and 2009, respectively.

(17) Related-Party Transactions

The Company has granted loans to directors and their affiliates amounting to $0 and $300,000 at December 31, 2010 and 2009, respectively. There were no related-party loans on past
due or non-accrual status.

Activity
during 2010 regarding outstanding loans to certain related-party loan customers (directors of the Company, including companies in which they are principal owners) was as follows
(in thousands):

Balance, December 31, 2009

$
300Advances


Repayments


(300
)Balance, December 31, 2010

$



Deposits
from related parties held by the Company at December 31, 2010 and 2009 amounted to $903,000 and $1,245,000, respectively.

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Notes to Consolidated Financial Statements (Continued)

(18) Fair Value

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability
in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:



A
financial instrument's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

The
fair values of securities available for sale are generally determined by matrix pricing, which is a mathematical technique widely used in the industry to value debt securities
without relying exclusively on quoted prices for the specific securities but rather by relying on the securities' relationship to other benchmark quoted securities (Level 2 inputs).

The
fair value of loans held for sale is based upon binding contracts and quotes from third party investors (Level 2 inputs).

Impaired
loans are evaluated and valued at the time the loan is identified as impaired, at the lower of cost or fair value. Fair value is measured based on the value of the collateral
securing these loans and is classified at a level 3 in the fair value hierarchy. Collateral may be real estate and/or business assets including equipment, inventory and/or accounts receivable
and is determined based on appraisals performed by qualified licensed appraisers hired by the Company. Appraised and reported values may be discounted based on management's historical knowledge,
changes in market conditions from the time of valuation, and/or management's expertise and knowledge of the client and client's business. Such discounts are typically significant and result in a
Level 3 classification of the inputs for determining fair value. Impaired loans are reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly,
based on the same factors identified above.

The
fair values of derivatives are generally derived from market-observable data such as interest rates, volatilities, and information derived from or corroborated by that
market-observable data, which generally fall into Level 2 inputs. However, a significant input into the fair value of the derivatives is a credit valuation adjustment, which uses credit spreads
that are typically derived by management or obtained from a third party data provider that provides an implied credit spread for public entities. As a result, the credit spreads are generally
unobservable to the market, rendering them a Level 3 input.

Level 3
is for positions that are not traded in active markets or are subject to transfer restrictions, and/or where valuations are adjusted to reflect illiquidity and/or
non-transferability. Such adjustments are generally based on available market evidence. In the absence of such evidence, management's best estimate is used. At December 31, 2010,
the Company had two investments classified as Level 3 investments, which are the hospital municipal bond and a local revenue bond on which the $3.5 million OTTI was taken during 2010.
Management's best estimate consists of both internal and external

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Notes to Consolidated Financial Statements (Continued)

(18) Fair Value (Continued)

support
on the Level 3 investments. As it relates to the hospital municipal bond, management estimates the future cash flows, discounted at a higher risk-adjusted discount rate,
based on the nature and size of the bond. As it relates to the local revenue bond, management estimates the fair value based on the current financial position of the underlying project and appraisals
of the underlying collateral, discounted based on management's historical knowledge and expertise. Subsequent to inception, management only changes Level 3 inputs and assumptions when
corroborated by evidence such as transactions in similar instruments, completed or pending third-party transactions in the underlying investment or comparable entities, subsequent rounds of financing,
recapitalizations and other transactions across the capital structure, offerings in the equity or debt markets, and changes in financial ratios or cash flows.

Financial Assets and Liabilities Measured on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are summarized below:

Quoted Prices in
Active Markets
for Identical
Assets (Level 1)

Significant
Other Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Balance(In thousands)Assets/Liabilities at December 31, 2010U.S. government agencies and government-sponsored entities

$


$
21,770

$


$
21,770State and municipal





7,368


34,770


42,138Mortgage-backed securitiesagency/residential





310,810





310,810Mortgage-backed securitiesprivate/residential





3,606





3,606Marketable equity





1,519





1,519Other securities





9,687





9,687Derivative Assets








373


373Derivative Liabilities








(352
)

(352
)Assets at December 31, 2009U.S. government agencies and government-sponsored entities

$


$
17,129

$


$
17,129State and municipal





23,374


37,453


60,827Mortgage-backed securitiesagency/residential





127,340





127,340Mortgage-backed securitiesprivate/residential





13,959





13,959Marketable equity





1,519





1,519Other securities





360





360Derivative Assets








206


206Derivative Liabilities








(151
)

(151
)


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Notes to Consolidated Financial Statements (Continued)

(18) Fair Value (Continued)

There
were no transfers between Level 1 and Level 2 during the year. See Note 19, Derivatives and Hedging Activity, for further discussion of the valuation of the
derivatives as of December 31, 2010.

The
table below presents a reconciliation and income statement classification of gains and losses for all assets measured at fair value on a recurring basis using significant
unobservable inputs (Level 3) for the year ended December 31, 2010:

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)Net Derivative
Assets and
Liabilities

State and
Municipal
Securities(In thousands)Balance, December 31, 2009

$
55

$
37,453Total unrealized gains (losses) included in:Net Loss


(34
)

Other Comprehensive Loss





(2,977
)Purchases, sales, issuances and settlements, net





(720
)Transfers in and (out) of Level 3





4,514Other than temporary impairment recognized





(3,500
)Balance December 31, 2010

$
21

$
34,770


The
transfer in to Level 3 of $4,514,000 represents the carrying cost of a single municipal security that was subject to a $3.5 million OTTI during 2010. As discussed in
Note 3, the OTTI was recognized after the issuer decided to abandon an affordable housing project funded by the issuance of municipal bonds. The remaining value of the issuance was determined
based on the value of the property collateralizing the bond in addition to management's estimates of amounts thought to be recoverable from the issuer.

The
table below presents a reconciliation and income statement classification of gains and losses for all assets measured at fair value on a recurring basis using significant
unobservable inputs (Level 3) for the year ended December 31, 2009:

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)Net Derivative
Assets and
Liabilities

State and
Municipal
Securities(In thousands)Balance, December 31, 2008

$


$
35,897Total unrealized gains (losses) included in:Net Income


55


Other Comprehensive Income





2,246Purchases, sales, issuances and settlements, net





(690
)Transfers in and (out) of level three





Balance December 31, 2009

$
55

$
37,453


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Notes to Consolidated Financial Statements (Continued)

(18) Fair Value (Continued)

Financial Assets and Liabilities Measured on a Non-Recurring Basis

The following represent assets and liabilities measured at fair value on a non-recurring basis as of December 31,
2010 and 2009. The valuation methodology used to measure the fair value of these loans is described earlier in the Note.

Quoted Prices in
Active Markets
for Identical
Assets (Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Total(In thousands)Assets at December 31, 2010Impaired loans

$


$


$
28,749

$
28,749Loans held for sale








14,200


14,200Assets at December 31, 2009Impaired loans

$


$


$
23,357

$
23,357Loans held for sale








9,862


9,862


Impaired
loans, which are usually measured for impairment using the fair value of collateral, had a carrying amount of $77,621,000 at December 31, 2010, after a partial
charge-off of $14,566,000. In addition, these loans have a specific valuation allowance of $6,659,000 at December 31, 2010. Of the $77,621,000 impaired loan portfolio at
December 31, 2010, $35,408,000 were carried at fair value as a result of the aforementioned charge-offs and specific valuation allowances. The remaining $42,213,000 were carried at
cost at December 31, 2010, as the fair value of the collateral on these loans exceeded the book value for each individual credit. Charge-offs and changes in specific valuation
allowances during 2010 on impaired loans carried at fair value at December 31, 2010 resulted in additional provision for loan losses of $42,458,000.

Loans
held for sale, which are carried at the lower of cost or fair value, were carried at the fair value of $14,200,000 as of December 31, 2010. As of December 31, 2010, a
single loan consisting of an outstanding balance of $24,034,000, net of charge-offs, represents the balance in Loans held for sale.

At
December 31, 2009, impaired loans had a carrying amount of $59,707,000, after a partial charge-off of $9,372,188. In addition, these loans have a specific valuation
allowance of $6,603,000 at December 31, 2009. Of the $59,707,000 impaired loan portfolio at December 31, 2009, $30,235,000 were carried at fair value as a result of the aforementioned
charge-offs and specific valuation allowances. The remaining $29,472,000 were carried at cost at December 31, 2009, as the fair value of the collateral on these loans exceeded the
book value for each individual credit. Charge-offs and changes in specific valuation allowances during 2009 on impaired loans carried at fair value at December 31, 2009 resulted in
additional provision for loan losses of $14,289,000.

Loans
held for sale, which are carried at the lower of cost or fair value, were carried at the fair value of $9,862,000, which is made up of the original outstanding balance of
$16,023,000, net of charge-offs taken at the date the loans were transferred to held for sale of $6,161,000. There were no additional charges to earnings in 2009 for changes in the fair
value for loans held for sale.

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Notes to Consolidated Financial Statements (Continued)

(18) Fair Value (Continued)

Nonfinancial Assets and Liabilities Measured on a Non-Recurring Basis

Nonfinancial assets and liabilities measured at fair value on a nonrecurring basis are summarized below:

Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Total(In thousands)Assets at December 31, 2010 Other real estate owned and foreclosed assets

$


$


$
22,898

$
22,898Assets at December 31, 2009 Other real estate owned and foreclosed assets

$


$


$
37,192

$
37,192


Other
real estate owned is valued at the time the loan is foreclosed upon and the asset is transferred to other real estate owned. The value is based primarily on third party appraisals,
less costs to sell. The appraisals are generally discounted based on management's historical knowledge, changes in market conditions from the time of valuation, and/or management's expertise and
knowledge of the client and client's business. Such discounts are typically significant and result in a Level 3 classification of the inputs for determining fair value. Other real estate owned
is reviewed and evaluated on at least an annual basis for additional impairment and adjusted accordingly, based on the same factors identified above. Other real estate owned had a carrying amount of
$22,898,000 at December 31, 2010, which is made up of an outstanding balance of $34,538,000, with a valuation allowance of $11,640,000. OREO, write-downs and sales in 2010 resulted in the
valuation allowance increasing by $8,688,000 during 2010.
Other real estate owned had a carrying amount of $37,192,000 at December 31, 2009, which was made up of an outstanding balance of $40,144,000, with a valuation allowance of $2,952,000. Changes
in the valuation allowance on other real estate owned outstanding at December 31, 2009 resulted in a write-down of $2,922,000 during 2009.

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Notes to Consolidated Financial Statements (Continued)

(18) Fair Value (Continued)

Fair Value of Financial Instruments

The estimated fair values, and related carrying amounts, of the Company's financial instruments are as follows:

December 31, 2010

December 31, 2009Carrying
amount

Fair value

Carrying
amount

Fair value(In thousands)Financial assets:Cash and cash equivalents

$
141,465

$
141,465

$
234,483

$
234,483Securities available for sale


389,530


389,530


221,134


221,134Securities held to maturity


11,927


12,425


9,942


10,428Bank stocks


17,211


n/a


17,160


n/aLoans, net


1,157,511


1,181,003


1,467,617


1,494,649Loans held for sale


14,200


14,200


9,862


9,862Accrued interest receivable


5,910


5,910


6,675


6,675Interest rate swaps, net


21


21


55


55Financial liabilities:Deposits


1,462,351


1,464,117


1,693,290


1,700,549Federal funds purchased and sold under agreements to repurchase


30,113


30,113


22,990


22,990Subordinated debentures


41,239


33,744


41,239


33,768Long-term borrowings


163,239


173,213


164,364


171,345Accrued interest payable


5,419


5,419


3,398


3,398


The
fair value of a financial instrument is the current amount that would be exchanged between willing parties, other than in a forced liquidation. Fair value is best determined based
upon quoted market prices. However, in many instances, there are no quoted market prices for the Company's various financial instruments. In cases where quoted market prices are not available, fair
values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of
future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument.

Certain
financial instruments and all nonfinancial instruments are excluded from the disclosure requirements. Therefore, the aggregate fair value amounts presented may not necessarily
represent the underlying fair value of the Company.

The
following methods and assumptions were used by the Company in estimating fair value disclosures for financial instruments:



The carrying amounts of cash and short-term instruments approximate fair values.

132

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GUARANTY BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(18) Fair Value (Continued)



Fair values for securities available for sale and held to maturity are generally determined by matrix pricing, which is a mathematical
technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities' relationship to other
benchmark quoted securities. For positions that are not traded in active markets or are subject to transfer restrictions (i.e., bonds valued with Level 3 inputs), management uses a
combination of reviews of the underlying financial statements, appraisals and management's judgment regarding credit quality and intent to sell in order to determine the value of the bond.

It
is not practical to determine the fair value of bank stocks due to restrictions placed on the transferability of FHLB stock, Federal Reserve Bank stock and Bankers' Bank of the West
stock. These three stocks comprise the balance of bank stocks.



Loans excludes loans held for sale as these fair values are disclosed on a separate line on the table. For variable rate loans that
reprice frequently and with no significant change in credit risk, fair values are based on carrying values. Fair values for other loans (e.g., commercial real estate and investment property
mortgage loans, commercial and industrial loans) are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar
credit quality. Impaired loans are valued at the lower of cost or fair value as described above in this note.

Loans
held for sale are carried at lower cost or fair value. The fair value of loans held for sale is based upon binding contracts and quotes from third party investors.



The fair value for interest rate swaps are determined by netting the discounted future fixed cash receipts, or payments, and the
discounted expected variable cash payments, or receipts. The variable cash payments, or receipts, are based on an expectation of future interest rates derived from forward interest rate curves.



The fair values disclosed for demand deposits (e.g., interest and non-interest checking, passbook savings, and
certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount). The carrying amounts of variable rate,
fixed-term money market accounts and certificates of deposit approximate their fair values at the reporting date. Fair values for fixed rate certificates of deposit are estimated using a
discounted cash flows calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits.



The carrying amounts of federal funds purchased, borrowings under repurchase agreements, and other short-term borrowings
maturing within ninety days approximate their fair values.

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GUARANTY BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(18) Fair Value (Continued)



The fair values of the Company's long-term borrowings are estimated using discounted cash flow analyses based on the
Company's current incremental borrowing rates for similar types of borrowing arrangements.



The fair values of the Company's Subordinated Debentures are estimated using discounted cash flow analyses based on the Company's
current incremental borrowing rates for similar types of borrowing arrangements.



The carrying amounts of accrued interest approximate fair value.



Fair values for off-balance sheet, credit-related financial instruments are based on fees currently charged to enter into
similar agreements, taking into account the remaining terms of the agreements and the counterparties' credit standing. The fair value of commitments is not material.

(19) Derivatives and Hedging Activities

Risk Management Objective of Using Derivatives

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally
manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity,
and credit risk, primarily by managing the amount, sources, and duration of its assets and liabilities. The Company's existing interest rate derivatives result from a service provided to certain
qualifying customers and, therefore, are not used to manage interest rate risk in the Company's assets or liabilities. The Company manages a matched book with respect to its derivative instruments in
order to minimize its net risk exposure resulting from such transactions.

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GUARANTY BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(19) Derivatives and Hedging Activities (Continued)

Fair Values of Derivative Instruments on the Consolidated Balance Sheet

The table below presents the fair value of the Company's derivative financial instruments as well as their classification on the
Consolidated Balance Sheet as of December 31, 2010 and 2009.

Asset
Derivatives

Liability
Derivatives(In thousands)As of December 31, 2010:Derivativesnotdesignated as hedging instrumentsInterest Rate Products

$
373

$
352Total derivativesnotdesignated as hedging instruments

$
373

$
352As of December 31, 2009:Derivativesnotdesignated as hedging instrumentsInterest Rate Products

$
206

$
151Total derivativesnotdesignated as hedging instruments

$
206

$
151


The
asset derivatives are classified in other assets on the balance sheet and the liability derivatives are classified in interest payable and other liabilities on the consolidated
balance sheet.

Non-designated Hedges

None of the Company's derivatives are designated as qualifying hedging relationships. Derivatives not designated as hedges are not
speculative and result from a service the Company provides to certain customers, which the Company implemented during the first quarter of
2009. The Company executes interest rate swaps with commercial banking customers to facilitate the customer's respective risk management strategies. Those interest rate swaps are simultaneously hedged
by offsetting interest rate swaps that the Company executes with a third party, such that the Company minimizes its net risk exposure resulting from such transactions. As the interest rate swaps
associated with this program do not meet the strict hedge accounting requirements under FASC Topic 815, changes in the fair value of both the customer swaps and the offsetting swaps are recognized
directly in earnings. As of December 31, 2010, the Company had two interest rate swaps with customers with a total notional amount of $23,136,000, and two offsetting interest rate swaps with a
total notional amount of $23,136,000; for an aggregate notional amount of $46,271,000 related to this program. During 2010, the Company recognized a net loss of $34,000 related to changes in fair
value of these swaps. As of December 31, 2009, the Company had two interest rate swaps with customers with a notional amount of $24,419,000 and two offsetting interest rate swaps with a total
notional amount of $24,419,000; for an aggregate notional amount of $48,838,000 related to this program. During 2009, the Company recognized a net gain of $55,000 related to changes in fair value of
these swaps.

135

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Table of Contents

GUARANTY BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(19) Derivatives and Hedging Activities (Continued)

Effect of Derivative Instruments on the Consolidated Income Statement

The tables below present the effect of the Company's derivative financial instruments on the Consolidated Income Statement for 2010 and
2009:

Amount of
Loss
Recognized in
Income on
DerivativeLocation of Gain or
(Loss) Recognized in
Income on DerivativeDerivatives Not Designated as
Hedging Instruments

2010

2009(In thousands)Interest Rate Products

Other non-interest income

$
(34
)
$
55Total



$
(34
)
$
55


(20) Regulatory Capital Matters

The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate
certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct
material effect on the Company's consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital
guidelines that involve quantitative measures of their assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Company's capital
amounts and classification are also subject to qualitative judgments by the regulators about components, risk weighting, and other factors.

Quantitative
measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the following table) of
Total and Tier 1 capital to risk-weighted assets, and of Tier 1 capital to average assets. Management believes, as of December 31, 2010, that the Company and its bank
subsidiary met all capital adequacy requirements to which they are subject.

As
of December 31, 2010, the most recent notifications from the Company's bank regulatory agencies categorized the bank subsidiary as well capitalized under the regulatory
framework for prompt corrective action. To be categorized as well capitalized, an institution must maintain minimum Total risk-based, Tier 1 risk-based, and
Tier 1 leverage ratios, as set forth in the following table. Prompt corrective action provisions are not applicable to bank holding companies. There are no conditions or events since that
notification that management believes have changed the categorization of the Company or its bank subsidiary as well capitalized.

During
2010, the Written Agreement discussed in Note 22 required both the Company and the Bank to submit an acceptable written plan for capital. As of December 31, 2010,
both the Company and the Bank are in compliance with their approved written plans for capital.

136

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Table of Contents

GUARANTY BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(20) Regulatory Capital Matters (Continued)

The
Company's and the Bank's actual capital amounts and ratios for 2010 and 2009 are presented in the table below.

Actual

Minimum Capital
Adequacy
Requirement

Minimum to be
Well Capitalized
Under Prompt
Corrective Action
ProvisionsAmount

Ratio

Amount

Ratio

Amount

Ratio(Dollars in thousands)As of December 31, 2010:Total capital to risk weighted assets:Consolidated

$
210,846


14.99
%
$
112,561


8.00
%

N/A


N/AGuaranty Bank


197,839


14.07


112,457


8.00


140,571


10.00
%Tier 1 capital to risk weighted assets:Consolidated


120,633


8.57


56,280


4.00


N/A


N/AGuaranty Bank


179,901


12.80


56,229


4.00


84,343


6.00Tier 1 capital to average assets:Consolidated


120,633


6.25


77,272


4.00


N/A


N/AGuaranty Bank


179,901


9.33


77,154


4.00


96,443


5.00As of December 31, 2009:Total capital to risk weighted assets:Consolidated

$
243,271


13.80
%
$
141,011


8.00
%

N/A


N/AGuaranty Bank


225,588


12.82


140,793


8.00


175,991


10.00
%Tier 1 capital to risk weighted assets:Consolidated


166,152


9.43


70,506


4.00


N/A


N/AGuaranty Bank


203,216


11.55


70,396


4.00


105,594


6.00Tier 1 capital to average assets:Consolidated


166,152


7.89


84,214


4.00


N/A


N/AGuaranty Bank


203,216


9.66


84,116


4.00


105,145


5.00


Dividend Restrictions

Holders of voting common stock are entitled to dividends out of funds legally available for such dividends when, if and as declared by
the Board of Directors. The Company has not paid dividends on its common stock since its inception.

Various
banking laws applicable to the Bank limit the payment of dividends, management fees and other distributions by the Bank to the Company, and may therefore limit our ability to pay
dividends on our common stock. In addition, the Written Agreement discussed in Note 22 prohibits both the Company and the Bank from paying dividends without the prior written approval of the
Federal Reserve, and, in the case of the Bank, the CDB. Accordingly, our ability to pay dividends will be restricted until the Written Agreement is terminated.

Under
the terms of our trust preferred financings, including our related subordinated debentures, on September 7, 2000, February 22, 2001, June 30, 2003 and
April 8, 2004, respectively, we cannot declare or pay any dividends or distributions (other than stock dividends) on, or redeem, purchase, acquire or make a liquidation payment with respect to,
any shares of our capital stock if (1) an event of

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Table of Contents

GUARANTY BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(20) Regulatory Capital Matters (Continued)

default
under any of the subordinated debenture agreements has occurred and is continuing, or (2) if we give notice of our election to begin an extension period whereby we may defer payment of
interest on the trust preferred securities for a period of up to sixty consecutive months as long as we are in compliance with all covenants of the agreement. On July 31, 2009, we elected to
defer regularly scheduled interest payments on each of our subordinated debentures until further notice. In addition, we are currently restricted from making payments of principal or interest on our
subordinated debentures or trust preferred securities under the terms of our Written Agreement without the prior approval of the Federal Reserve.

Under
the terms of the Series A Convertible Preferred Stock issuance in 2009 discussed in Note 21, we cannot declare or pay dividends on, make distributions with respect
to, or redeem, purchase or acquire, or make a liquidation payment with respect to, or pay or make available monies for the redemption of, any common stock or other junior securities unless full
dividends on all outstanding shares of the Series A Convertible Preferred Stock have been paid or declared and set aside for payment. In addition, we are currently restricted from making cash
dividends on our Series A Convertible Preferred Stock under the terms of our Written Agreement without the prior approval of the Federal Reserve and for as long as we defer payments of interest
with respect to our subordinated debentures and related trust preferred securities. We continue to make paid-in-kind dividends in the form of additional shares of
Series A Convertible Preferred Stock on a quarterly basis and expect to make these paid-in-kind dividends through August 15, 2011.

Any
future determination relating to dividend policy will be made at the discretion of our Board of Directors and will depend on a number of factors, including our future earnings,
capital requirements, financial condition, future prospects and such other factors as our Board of Directors may deem relevant.

(21) Preferred Stock

On August 11, 2009, the Company issued 59,053 shares of 9% non-cumulative Series A Convertible Preferred Stock, which resulted in additional capital of
$57,846,000, net of expenses. The liquidation preference for the Series A Convertible Preferred Stock is $1,000 per share. The Series A Convertible Preferred Stock is not redeemable.
Each share of Series A Convertible Preferred Stock will automatically convert into shares of the Company's common stock on the fifth anniversary of the issuance date of the Series A
Convertible Preferred Stock, or August 11, 2014, subject to certain limitations. The preferred stock holders may elect to convert their shares of Series A Convertible Preferred Stock
into shares of the Company's common stock prior to the mandatory conversion of the Series A Convertible Preferred Stock following the earlier of the second anniversary of the issuance date the
Series A Convertible Preferred Stock, or August 11, 2011, and the occurrence of certain events resulting in the conversion, exchange or reclassification of the Company's common stock.
Each share of Series A Convertible Preferred Stock will be convertible into shares of the Company's common stock at a conversion price of $1.80 per share, adjustable downward in $0.04
increments to $1.50 per share in the event of certain nonpayments of dividends (whether paid in cash or in kind) on the Series A Convertible Preferred Stock. The conversion price of the
Series A Convertible Preferred Stock is subject to customary anti-dilution adjustments. Due to the conversion price adjustment resulting from nonpayment of dividends, for purposes
of the risk-based and leverage capital guidelines of the Board of Governors of the Federal Reserve System, and for purposes of regulatory reporting, the Series A

138

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GUARANTY BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(21) Preferred Stock (Continued)

Convertible
Preferred Stock is treated as cumulative preferred stock (e.g., a restricted core capital element for Tier 1 capital purposes).

During
2009 and 2010, shareholders of the Series A Convertible Preferred Stock have received paid-in-kind dividends in the form of additional shares of
Series A Convertible Preferred Stock at the prescribed dividend rate. Any fractional shares were paid in cash. This resulted in 5,591 and 1,381 additional shares of Series A Convertible
Preferred Stock to be issued in 2010 and 2009, respectively. Under the terms of the Series A Convertible Preferred Stock agreement, the Company may pay paid-in-kind
dividends through August 2011, and thereafter, any dividend must be in the form of cash. We are currently restricted from making cash dividends on our Series A Convertible Preferred Stock under
the terms of our Written Agreement without the prior approval of the Federal Reserve and for as long as we defer payments of interest with respect to our subordinated debentures and related trust
preferred securities.

(22) Written Agreement

On January 22, 2010, the Company and the Bank entered into a Written Agreement with the Federal Reserve and the CDB. The Written Agreement required the Bank to submit written
plans within certain timeframes to the Federal Reserve and the CDB that addressed the following items: board oversight, credit risk management practices, commercial real estate concentrations, problem
assets, reserves for loan and lease losses, capital, liquidity, brokered deposits, earnings and overall condition. The Agreement also required the Company to submit to the Federal Reserve a written
plan that addresses capital and a written statement of the Company's annual cash flow projections. All plans were timely submitted to the appropriate regulatory agencies and all plans requiring
approval by such regulatory agencies were approved.

In
addition, the Written Agreement permits contractual rollovers and renewals of brokered deposits, but places restrictions on the Bank in accepting any new brokered deposits. The
Written Agreement also provides that written approval must be obtained from the federal regulators prior to appointing any new director or senior executive officer or changing the responsibilities of
any senior executive officer and making indemnification and severance payments. Further, the Written Agreement provides that prior written approval must be obtained from the Federal Reserve, and in
the case of the Bank, the CDB, prior to paying dividends. Prior written approval must also be obtained from the Federal Reserve before the Company can incur, increase or guarantee any debt, take any
other form of payment representing a reduction in capital from the Bank, or make any distributions of interest, principal or other sums on subordinated debentures or trust preferred securities.

139

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Table of Contents

GUARANTY BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(23) Parent Company Only Condensed Financial Information

The following is condensed financial information of Guaranty Bancorp (parent company only):

Balance Sheets  (Parent Company Only)  December 31, 2010 and 2009

2010

2009(In thousands)ASSETSCash

$
18,529

$
743Time deposits with banks





18,043Investment in subsidiaries


186,393


214,989Other assets


2,517


3,938Total assets

$
207,439

$
237,713LIABILITIES AND STOCKHOLDERS' EQUITYLiabilities:Subordinated debentures

$
41,239

$
41,239Other liabilities


5,917


3,836Total liabilities


47,156


45,075Stockholders' equity:Preferred stock


64,818


59,227Common stock


66


65Common stockadditional paid-in capital


619,443


618,343Stock to be issued


237


199Accumulated deficit


(419,562
)

(382,599
)Accumulated other comprehensive loss


(2,220
)

(143
)Treasury stock


(102,499
)

(102,454
)Total stockholders' equity


160,283


192,638Total liabilities and stockholders' equity

$
207,439

$
237,713


140

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Table of Contents

GUARANTY BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(23) Parent Company Only Condensed Financial Information (Continued)

Statements of Operations  (Parent Company Only)  Years ended December 31, 2010 and 2009

2010

2009(In thousands)Income:Interest income on other investments

$


$
2Charges for servicessubsidiary bank


3,813


4,221Other


1,378


227Total income


5,191


4,450Expenses:Interest expense


2,581


2,562Salaries and benefits


2,524


3,423Professional services


1,771


1,783Other


1,433


896Total expenses


8,309


8,664Loss before federal income taxes and equity in undistributed net income of subsidiaries


(3,118
)

(4,214
)Income tax benefit


(319
)

(1,821
)Loss before equity in undistributed net income of subsidiaries


(2,799
)

(2,393
)Equity in undistributed loss of subsidiaries


(28,540
)

(26,814
)Net loss


(31,339
)

(29,207
)Preferred stock dividends


(5,624
)

(1,389
)Net loss attributable to common stockholders

$
(36,963
)
$
(30,596
)


141

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Table of Contents

GUARANTY BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(23) Parent Company Only Condensed Financial Information (Continued)

Statements of Cash Flows  (Parent Company Only)  Years ended December 31, 2010 and 2009

Years ended
December 31,2010

2009(In thousands)Cash flows from operating activitiesNet loss

$
(31,339
)
$
(29,207
)Adjustments to reconcile net loss to net cash used by operating activities:Depreciation


7


7Gain on sale of assets


(789
)

Equity based compensation


276


125Deferred compensationshares to be issued


38


172Net change in:Other assets


1,414


(30
)Other liabilities


2,081


(923
)Equity in loss of consolidated subsidiaries


28,540


26,814Net cash provided (used) by operating activities


228


(3,042
)Cash flow from investing activities:Purchase of assets from affiliates


(13,709
)

Proceeds from sale of assets


14,498


Loan principal collections





454Investments in subsidiaries


(1,196
)

(40,000
)Net cash used by investing activities


(407
)

(39,546
)Cash flows from financing activities:Repurchase of common stock


(45
)

(59
)Proceeds from issuance of preferred stock





57,846Dividends paid


(33
)

(8
)Net cash provided (used) by financing activities


(78
)

57,779Net change in cash and cash equivalents


(257
)

15,191Cash and cash equivalents, beginning of year


18,786


3,595Cash and cash equivalents, end of year

$
18,529

$
18,786


142

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Table of Contents

GUARANTY BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(24) Quarterly Results of Operations (Unaudited)

2010 Quarterly Results of Operations

Quarter EndedDecember 31,
2010

September 30,
2010

June 30,
2010

March 31,
2010(Amounts in thousands, except share data)Interest income

$
20,641

$
21,922

$
22,053

$
23,321Interest expense


5,247


5,726


5,920


6,689Net interest income


15,394


16,196


16,133


16,632Provision for loan losses


19,500


2,500


8,400


4,000Net interest income after provision for loan losses


(4,106
)

13,696


7,733


12,632Noninterest income


(598
)

2,553


3,725


2,422Noninterest expense


16,429


22,712


18,419


18,126Loss before income taxes


(21,133
)

(6,463
)

(6,961
)

(3,072
)Income tax benefit





(2,456
)

(2,607
)

(1,227
)Net loss


(21,133
)

(4,007
)

(4,354
)

(1,845
)Preferred stock dividends


(1,453
)

(1,421
)

(1,390
)

(1,360
)Net loss attributable to common stockholders

$
(22,586
)
$
(5,428
)
$
(5,744
)
$
(3,205
)Loss per common sharebasic and diluted

$
(0.44
)
$
(0.11
)
$
(0.11
)
$
(0.06
)


In
the fourth quarter 2010, an additional provision for loan losses was recorded as a result of additional charge-offs due primarily to updated valuations and broker opinions
received in order to more quickly dispose of certain of the nonperforming assets. In addition, noninterest income was negatively affected in the fourth quarter 2010 due to a $3.5 million
other-than-temporary impairment. Additionally, no tax benefit was recorded in the fourth quarter 2010 as the Company determined that a partial valuation allowance with respect
to the deferred tax asset was required.

The
third quarter noninterest expense is higher due mostly to additional write-downs with respect to decisions to dispose of certain other real estate owned at amounts less than the
recorded balance, which was based on a discounted appraised value.

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GUARANTY BANCORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(24) Quarterly Results of Operations (Unaudited) (Continued)

2009 Quarterly Results of Operations

Quarter EndedDecember 31,
2009

September 30,
2009

June 30,
2009

March 31,
2009(Amounts in thousands, except share data)Interest income

$
24,051

$
23,469

$
24,775

$
24,860Interest expense


7,767


8,558


8,915


9,142Net interest income


16,284


14,911


15,860


15,718Provision for loan losses


10,005


20,000


18,605


2,505Net interest income after provision for loan losses


6,279


(5,089
)

(2,745
)

13,213Noninterest income


2,420


2,450


2,627


2,915Noninterest expense


19,834


17,409


17,714


15,481Income (loss) before income taxes


(11,135
)

(20,048
)

(17,832
)

647Income tax expense (benefit)


(9,250
)

(3,147
)

(6,975
)

211Net income (loss)


(1,885
)

(16,901
)

(10,857
)

436Preferred stock dividends


(1,389
)







Net income (loss) attributable to common stockholders

$
(3,274
)
$
(16,901
)
$
(10,857
)
$
436Earnings (loss) per sharebasic and diluted

$
(0.07
)
$
(0.33
)
$
(0.21
)
$
0.01


144

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Table of Contents

ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A.    CONTROLS AND PROCEDURES

(a)   Evaluation of disclosure controls and procedures.The Company's management, with the participation of the
Chief Executive Officer and the Chief Financial Officer, conducted an evaluation of the effectiveness of the Company's disclosure controls and procedures (as defined in
Rule 13a-15(e) under the Securities Exchange Act of 1934) as of December 31, 2010. Based on that evaluation, the Company's Chief Executive Officer and Chief Financial Officer
have concluded that the Company's disclosure controls and procedures were effective as of December 31, 2010.

(b)   Management's Report on Internal Control over Financial Reporting.The Company's management is responsible
for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934). The Company's
management, with the participation of the Chief Executive Officer and the Chief Financial Officer, conducted an evaluation of the effectiveness, as of December 31, 2010, of the Company's
internal control over financial reporting based on the framework in "Internal ControlIntegrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Based on this evaluation, the Company's management concluded that the Company's internal control over financial reporting was effective as of December 31, 2010. Management's Report on Internal
Control over Financial Reporting is set forth in Part II, Item 8 of this Annual Report on Form 10-K.

(c)   Changes in Internal Control Over Financial Reporting.There were no changes in the Company's internal
control over financial reporting that occurred during the fourth quarter of 2010 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over
financial reporting.

ITEM 9B.    OTHER INFORMATION

On February 17, 2011, James K. Simons, the Company's Executive Vice President and Chief Credit Officer, notified the Company of
his intention to resign from his positions at the Company and Guaranty Bank and Trust Company. His last date of employment will be March 9, 2011. Mr. Simons has accepted a position as an
executive credit officer with a financial institution on the West Coast. Mr. Simons' decision to resign was not the result of any disagreement with the Company or its management.

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PART III

ITEM 10.    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE OF THE REGISTRANT

Information required by this Item is incorporated herein by reference to our Proxy Statement (Schedule 14A) for our 2011 Annual
Meeting of Stockholders to be filed with the SEC within 120 days of our fiscal year-end. Information relating to our Code of Business Conduct and Ethics that applies to our
employees, including its senior financial officers, is included in Part I of this Annual Report on Form 10-K under "Item 1. BusinessAvailable
Information."

ITEM 11.    EXECUTIVE COMPENSATION

The information required by this Item is incorporated herein by reference to our Proxy Statement (Schedule 14A) for our 2011
Annual Meeting of Stockholders to be filed with the SEC within 120 days of our fiscal year-end.

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Certain information regarding securities authorized for issuance under our equity compensation plans is included under the section
captioned "Securities Authorized for Issuance Under Equity Compensation Plans" in Item 5 in this Annual Report on Form 10-K. Other information required by this Item is
incorporated herein by reference to our Proxy Statement (Schedule 14A) for our 2011 Annual Meeting of Stockholders to be filed with the SEC within 120 days of our fiscal
year-end.

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this Item is incorporated herein by reference to our Proxy Statement (Schedule 14A) for our 2011
Annual Meeting of Stockholders to be filed with the SEC within 120 days of our fiscal year-end.

ITEM 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this Item is incorporated herein by reference to our Proxy Statement (Schedule 14A) for our 2011
Annual Meeting of Stockholders to be filed with the SEC within 120 days of our fiscal year-end.

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PART IV

ITEM 15.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)   1.
Financial Statements



Exhibit
Number

Description of Exhibit3.1

Second Amended and Restated Certification of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to Registrant's Form 8-K filed on August 12, 2009)3.2

Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 to Registrant's Form 8-K filed on May 7, 2008.)4.1

Specimen stock certificate representing shares of common stock of the Registrant (incorporated by reference to Exhibit 4.1 to Registrant's Form 10-K filed on February 13, 2009)4.2

Certificate of Designations for Series A Convertible Preferred Stock of the Registrant (incorporated by reference to Exhibit 4.1 to Registrant's Form 8-K filed on August 12, 2009)4.3

Indenture, dated September 7, 2000, between State Street Bank and Trust Company of Connecticut, National Association, and the Registrant (incorporated herein by reference from Exhibit 4.2 to Registrant's
Registration Statement on Form S-1 (File No. 333-124855), as amended)4.4

Amended and Restated Declaration of Trust, dated September 7, 2000, by and among State Street Bank and Trust Company of Connecticut, National Association, the Administrators and the Registrant (incorporated herein by
reference from Exhibit 4.3 to Registrant's Registration Statement on Form S-1 (File No. 333-124855), as amended)4.5

Guarantee Agreement, dated September 7, 2000, by and between State Street Bank and Trust Company of Connecticut, National Association, and the Registrant (incorporated herein by reference from Exhibit 4.4 to
Registrant's Registration Statement on Form S-1 (File No. 333-124855), as amended)4.6

Indenture, dated February 22, 2001, State Street Bank and Trust Company of Connecticut, National Association, and the Registrant (incorporated herein by reference from Exhibit 4.5 to Registrant's Registration
Statement on Form S-1 (File No. 333-124855), as amended)4.7

Amended and Restated Declaration of Trust, dated February 22, 2001, by and among State Street Bank and Trust Company of Connecticut, National Association, the Administrators and the Registrant (incorporated herein by
reference from Exhibit 4.6 to Registrant's Registration Statement on Form S-1 (File No. 333-124855), as amended)


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Table of Contents

Exhibit
Number

Description of Exhibit4.8

Guarantee Agreement, dated February 22, 2001, by and between State Street Bank and Trust Company of Connecticut, National Association, and the Registrant (incorporated herein by reference from Exhibit 4.7 to
Registrant's Registration Statement on Form S-1 (File No. 333-124855), as amended)4.9

Junior Subordinated Indenture, dated April 8, 2004, between Deutsche Bank Trust Company Americas and the Registrant (incorporated herein by reference from Exhibit 4.8 to Registrant's Registration Statement on
Form S-1 (File No. 333-124855), as amended)4.10

Amended and Restated Trust Agreement, dated April 8, 2004, among Deutsche Bank Trust Company Americas, Deutsche Bank Trust Company Delaware, the Administrative Trustees and the Registrant (incorporated herein by
reference from Exhibit 4.9 to Registrant's Registration Statement on Form S-1 (File No. 333-124855), as amended)4.11

Guarantee Agreement, dated April 8, 2004, between Deutsche Bank Trust Company Americas and the Registrant (incorporated herein by reference from Exhibit 4.10 to Registrant's Registration Statement on
Form S-1 (File No. 333-124855), as amended)4.12

Assumption Letter, dated December 31, 2004, to Wells Fargo Bank, National Association, and Wells Fargo Delaware Trust Company from the Registrant (incorporated herein by reference from Exhibit 4.11 to
Registrant's Registration Statement on Form S-1 (File No. 333-124855), as amended)4.13

Indenture, dated June 30, 2003, between Wells Fargo Bank, National Association, and Guaranty Corporation (incorporated herein by reference from Exhibit 4.12 to Registrant's Registration Statement on
Form S-1 (File No. 333-124855), as amended)4.14

First Supplemental Indenture, dated December 31, 2004, by and between Wells Fargo Bank, National Association, and the Registrant (incorporated herein by reference from Exhibit 4.13 to Registrant's Registration
Statement on Form S-1 (File No. 333-124855), as amended)4.15

Amended and Restated Declaration of Trust, dated June 30, 2003, by the Trustees, the Administrators and Guaranty Corporation (incorporated herein by reference from Exhibit 4.14 to Registrant's Registration
Statement on Form S-1 (File No. 333-124855), as amended)4.16

Guarantee Agreement, dated June 30, 2003, by Wells Fargo Bank, National Association, and Guaranty Corporation (incorporated herein by reference from Exhibit 4.15 to Registrant's Registration Statement on
Form S-1 (File No. 333-124855), as amended)10.1

Investment Agreement, dated as of May 6, 2009, by and among the Registrant and the Investors named therein (incorporated by reference to Exhibit 10.1 to Registrant's Form 8-K filed on May 12,
2009)10.2

Amendment No. 1 to Investment Agreement, dated as August 11, 2009, by and among the Registrant and the Investors named therein (incorporated by reference to Exhibit 10.1 to Registrant's Form 8-K filed
on August 12, 2009)10.3

Amendment No. 2 to Investment Agreement, dated as of February 11, 2010, by and among the Registrant and the Investors named therein (incorporated by reference to Exhibit 10.3 to Registrant's Form 10-K filed
on February 12, 2010)10.4

Form of Indemnification Agreement for Executive Officers and Directors of the Registrant (incorporated herein by reference from Exhibit 10.2 to Registrant's Registration Statement on Form S-1 (File
No. 333-124855), as amended)


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Exhibit
Number

Description of Exhibit10.5

Guaranty Bancorp Change in Control Severance Plan, amended and restated as of January 1, 2009 (incorporated herein by reference from Exhibit 10.5 to Registrant's Form 10-Q filed on November 7,
2008)10.6

Amended and Restated 2005 Stock Incentive Plan (incorporated herein by reference from Appendix A to the Registrant's Notice of 2010 Annual Meeting of Stockholders and Proxy Statement on Schedule 14A filed on
March 29, 2010)10.7

Form of Option Award Agreement (incorporated herein by reference from Exhibit 10.16 to Registrant's Registration Statement on Form S-1 (File No. 333-124855), as amended)10.8

Amended Form of Restricted Stock Award Agreement (incorporated herein by reference from Exhibit 10.16 to Registrant's Registration Statement on Form S-4 (File No. 333-126643), as amended)10.9

Form of Restricted Stock Award Agreement for Directors (incorporated herein by reference from Exhibit 10.16.1 to Registrant's Registration Statement on Form S-4 (File No. 333-126643), as amended)10.10

Amended and Restated Guaranty Bancorp Deferred Compensation Plan, effective January 1, 2009 (incorporated herein by reference from Exhibit 10.2 to Registrant's Form 10-Q filed on August 7,
2008)10.11

Form of Executive Cash Incentive Plan (incorporated herein by reference from Exhibit 10.9 to Registrant's Form 10-K filed on March 3, 2008)10.12

Amendment to Guaranty Bancorp Executive Cash Incentive Plan, effective as of January 1, 2009 (incorporated herein by reference from Exhibit 10.4 to Registrant's Form 10-Q filed on November 7,
2008)10.13

Severance Agreement and Release, dated as of April 15, 2009, between Registrant and Zsolt K. Bessko (incorporated herein by reference from Exhibit 10.2 of the Registrant's Form 10-Q filed on
July 31, 2009)10.14

Services Agreement, dated as of November 8, 2006, by and between Castle Creek Financial LLC and the Registrant (incorporated herein by reference from Exhibit 10.2 to Registrant's Form 10-Q filed on
November 13, 2006)10.15

Termination letter, dated as of July 29, 2010, concerning the Services Agreement, dated as of November 8, 2006, by and between Castle Creek Financial LLC and the Registrant (incorporated herein by reference
from Exhibit 10.1 to Registrant's Form 10-Q filed on August 4, 2010)10.16

Written Agreement, dated January 22, 2010, by and among Registrant, Guaranty Bank and Trust Company, the Federal Reserve Bank of Kansas City and the State of Colorado Division of Banking (incorporated herein by
reference from Exhibit 10.1 to Registrant's Form 8-K filed on January 28, 2010)11.1

Statement re: Computation of Per Share Earnings (See Note 2(s) of the Notes to Consolidated Financial Statements contained in "Item 8. Financial Statements and Supplementary Data" of this Annual Report on
Form 10-K)21.1

Subsidiaries of the Registrant (filed herewith)23.1

Consent of Crowe Horwath LLP (filed herewith)24.1

Power of Attorney (included on signature page)


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Exhibit
Number

Description of Exhibit31.1

Section 302 Certifications (filed herewith)32.1

Section 906 Certifications (filed herewith)


Indicates
a management contract or compensatory plan or arrangement


(b)   Exhibits

The
exhibits listed in Item 15(a)(3) are incorporated by reference or attached hereto.

(c)   Excluded Financial Statements

Not
Applicable

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date:
February 18, 2011

GUARANTY BANCORPBy:

/s/ PAUL W. TAYLORName:

Paul W. TaylorTitle:

Executive Vice President, Chief Financial
and Operating Officer and Secretary


KNOW
ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Daniel M. Quinn and Paul W. Taylor, and each of them severally, his or her
true and lawful attorney-in-fact with power of substitution and resubstitution to sign in his or her name, place and stead, in any and all capacities, to do any and all things
and execute any and all instruments that such attorney-in-fact may deem necessary or advisable under the Securities Exchange Act of 1934 and any rules, regulations and
requirements of the U.S. Securities and Exchange Commission in connection with this Annual Report on Form 10-K and any and all amendments hereto, as fully for all intents and
purposes as he or she might or could do in person, and hereby ratifies and confirms all said attorneys-in-fact and agents, each acting alone, and his or her substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.

Signature

Title

Date/s/ DANIEL M. QUINN Daniel M. Quinn

President and Chief Executive Officer (Principal Executive Officer) and Chairman of the Board and Director

February 18, 2011/s/ PAUL W. TAYLOR Paul W. Taylor

Executive Vice President, Chief Financial and Operating Officer and Secretary (Principal Financial and Accounting Officer)

February 18, 2011/s/ JOHN M. EGGEMEYER John M. Eggemeyer

Director

February 18, 2011/s/ EDWARD B. CORDES Edward B. Cordes

Director

February 18, 2011


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Signature

Title

Date/s/ STEPHEN D. JOYCE Stephen D. Joyce

Director

February 18, 2011/s/ GAIL H. KLAPPER Gail H. Klapper

Director

February 18, 2011/s/ KATHLEEN SMYTHE Kathleen Smythe

Director

February 18, 2011/s/ W. KIRK WYCOFF W. Kirk Wycoff

Director

February 18, 2011/s/ ALBERT C. YATES Albert C. Yates

Director

February 18, 2011


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