DENVER, July 13 /PRNewswire-FirstCall/ -- CoBiz Financial Inc. , a financial services company with $2.5 billion in assets, announced a net loss of $15.8 million for the second quarter of 2009. Including dividends on the Company's preferred shares held by the U.S. Treasury, the net loss available to common shareholders was $16.7 million or $0.72 loss per fully diluted share (EPS) for the second quarter of 2009, as compared to net income of $4.2 million in the second quarter 2008, or $0.18 EPS. For the six months ended June 30, 2009, the net loss attributable to the Company was $62.8 million, and includes a $33.7 million goodwill impairment charge recognized in the first quarter of 2009.
Financial Performance - Second Quarter 2009 -- Second quarter Operating Income (pre-tax, pre-provision income before losses on securities, other assets, OREO or goodwill impairment) was $11.2 million, as compared to Operating Income of $11.1 million for the first quarter of 2009. For the six months ended June 30, 2009, Operating Income was $22.3 million, versus $19.8 million for the prior year period, an increase of 13%. -- Second quarter results include a $35.1 million (pre-tax) loan and credit loss provision, or 150% of net charge-offs ($23.4 million) for the period. The resulting allowance for loan and credit losses (allowance) increased to 3.87% of total loans. For the year, the loan and credit loss provision was $69.0 million and 189% of net charge-offs. -- Nonperforming assets ended the quarter at $93.9 million, or 3.70% of total assets, up from $52.5 million or 2.00% of total assets at March 31, 2009. -- The net interest margin was stable at 4.38% in the first and second quarters of 2009 as compared to 4.08% in the second quarter of 2008. Adjusting for non-performing assets, the margin was 4.50% in the second quarter versus 4.45% in the first quarter. -- The Company recognized a $1.7 million, pre-tax loss on securities, other assets and OREO as compared to $1.4 million in the first quarter of 2009. -- FDIC insurance costs were $2.1 million for the second quarter, including $1.2 million related to the FDIC's 5-basis-point special assessment. This represents an increase of $1.4 million from the first quarter of 2009. -- The tangible equity ratio was 6.95% and the tangible common equity ratio was 4.51% at the end of the second quarter of 2009. -- Loans outstanding as of June 30, 2009, decreased by $67.7 million to $1.9 billion from March 31, 2009 (linked-quarter). -- Deposits and customer repurchase agreements (Customer Repo's) increased by $71.9 million on a linked-quarter basis, or 16% annualized. Deposits and Customer Repo's excluding wholesale brokered sources (Customer Funding) increased by $119.7 million on a linked-quarter basis, or 28.4% annualized. Year-over-year, Customer Funding increased by $49.4 million.
"We continue to take a conservative posture in our provisioning for loan losses. Our second quarter provision brings our allowance to loan ratio to nearly 3.9%, one of the strongest in the industry," said Chairman and CEO Steve Bangert. "While I remain confident in our senior management's ability to effectively respond to the current credit obstacles, we felt it was prudent to continue building the allowance given the uncertainty in the economy.
"We remain focused on building our franchise during these challenging times and want to ensure we are positioned to take advantage of unique market opportunities that we expect will present themselves. To that end, we recently announced the hiring of Colorado and Arizona market presidents who will oversee all banking operations in their respective markets, provide direction for future growth and free up some of our existing resources to focus on high quality business development opportunities. We will also continue to dedicate appropriate resources through our Special Assets Group to address resolution of problem loans."
Scott Page, the market president for Colorado Business Bank, has more than 25 years of experience in the Denver banking community. Prior to joining the Colorado bank, he served as executive vice president and director of community banking for Vectra Bank Colorado (a subsidiary of Zions Bank) where he was responsible for the bank's commercial, executive, business, SBA and statewide branch banking operations. Bruce (Toby) Day, the Arizona Business Bank market president, has more than three decades of banking experience, most recently serving as senior vice president and manager of business banking for Marshall & Ilsley (M&I) Bank Arizona for 11 years.
Loans
Loans for Colorado Business Bank and Arizona Business Bank, collectively the Bank, ended the period just under $2.0 billion, a decrease of $67.7 million, or 13.4%, annualized, over March 2009. Part of the decrease is attributed to net charge-offs of $23.4 million. The Company extended $65.3 million in to new client relationships and $106.4 million in loan advances during the second quarter which was offset by a higher level of pay-downs and maturities. Although we continue to actively market new relationships and gain market share, we have seen a general decrease in loan demand in our markets.
Overall, Commercial and Industrial (C&I) loans comprised 30.9% of the total portfolio as of June 2009. Commercial Real Estate accounted for 51.8%, with owner/occupied properties representing 23.1% of total loans. Construction loans decreased to 12.2% of the portfolio, from 16.5% as of June 2008.
Investment Securities
The Company recognized a $0.35 million pretax Other Than Temporary Impairment (OTTI) valuation loss during the second quarter of 2009. The valuation loss related to two securities: a trust preferred security and a private label, mortgage-backed security (MBS), both of which were previously deemed to have an OTTI.
The Company had securities with a carrying value totaling $466.1 million at June 30, 2009, a decrease of $17.1 million from the prior quarter. The portfolio consists primarily of mortgage-backed securities, the overwhelming majority backed by U.S. government agencies. These securities had a net book value of $388.3 million and a market value of $399.8 million at quarter end. The remaining MBS are non-agency, private-label securities with a net book value of $6.4 million and a market value of $2.8 million. Investments also include $23.2 million of single-issuer trust preferred securities backed by 15 different financial institutions and $22.4 million of corporate debt securities issued by six S&P 500 companies. The fair value of these securities was $44.1 million at June 30, 2009. The portfolio does not contain any collateralized debt obligations (CDOs) or securities backed by sub-prime mortgage loans.
Deposits and Customer Repo Balances
Deposit and Customer Repo balances ended the period at $1.9 billion, an increase of $93.9 million from the same period in 2008. On a linked-quarter basis, Deposit and Customer Repo balances increased by $71.9 million. Customer Funding (excluding brokered deposits from non-relationship sources) increased $119.7 million on a linked-quarter basis and $49.4 million from the prior year period. The quarterly growth was well diversified, with 60 separate relationships having balance increases of more than $1 million, and is the result of a consistent, focused marketing effort by our business development officers.
Total noninterest-bearing demand accounts represented 27.0% of total deposits as of June 30, 2009, consistent with the linked quarter and prior-year period.
Allowance for Loan and Credit Losses and Credit Quality
Total nonperforming loans (NPLs) increased to $67.4 million as of June 30, 2009, from $43.6 million at March 31, 2009. NPLs to total loans increased to 3.45% at the end of the current quarter, from 2.16% as of the end of the prior linked-quarter. Including Other Real Estate Owned acquired through foreclosure (OREO) of $26.5 million, total nonperforming assets (NPAs) were $93.9 million at quarter end, as compared to $52.5 million as of the prior linked quarter. Part of the increase is attributed to two large relationships totaling $18.3 million, previously disclosed as expected to migrate into NPA status.
NPAs are divided between our two markets consistent with the overall portfolio distribution: 66% of NPAs, or $61.5 million, are within the Colorado portfolio and 34% of the total, or $32.3 million, are in Arizona. Land and Construction loans continue to exhibit the greatest weakness with 14.0% and 4.1%, respectively, of total loans in their category on nonaccrual status. Nonaccruing C&I and Real Estate loans remained relatively benign at 2.0% and 2.2%, respectively. Of the $26.5 million of OREO, $16.3 million, or 62%, was located in Colorado and $10.1 million, or 38%, was located in Arizona.
Although the Colorado economy has outperformed the majority of other metropolitan areas nationally, it began to show increasing signs of weakness during the fourth quarter of 2008. These broader economic trends have impacted our Colorado loan portfolio, which has seen an increase in adversely graded credits. Additionally, the Arizona market continues to be negatively impacted by a severely depressed residential housing market. The receipt of borrower year-end financial statements as well as focused portfolio reviews by our bankers contributed to an increase in adversely graded credits in both markets over the last six months.
During the second quarter of 2009, the Company recorded a $35.1 million loan and credit loss provision, as compared to $33.9 million for the first quarter of 2009, and $5.6 million for the second quarter of 2008. The Company charged-off (net of recoveries) $23.4 million in loans during the second quarter of 2009 and $13.2 million in the prior linked quarter. Overall, the Company provided $32.4 million more in provision for loan and credit losses than it has charged-off during the year. As a result, the Allowance increased to $75.5 million as of June 30, 2009, from $43.1 million as of December 31, 2008. The Company's Allowance to total loans held for investment increased to 3.87% as of June 30, 2009, from 2.12% as of December 31, 2008. The Allowance was nearly 112% of NPLs at June 30, 2009.
Shareholders' Equity and Regulatory Capital
As of the end of the second quarter, total Shareholders' Equity was $193.1 million. The Company's total tangible equity was $175.4 million, and its tangible equity to tangible asset ratio was 6.95%.
As of March 31, 2009, (the most recent period available) the Company was significantly in excess of what is considered "Well-Capitalized" with a Tier 1 Capital ratio of 11.55%, and Total Capital ratio of 13.89%. The Company will remain significantly in excess of Well Capitalized guidelines when final regulatory reporting is completed. Under the risk-based capital guidelines, the Allowance qualifies as Tier 2 equity up to 1.25% of risk-weighted assets. Consequently, due to the level of the Company's provisioning for loan losses, approximately $36.0 million of Allowance was disallowed at March 31, 2009, under the risk-based capital rules, which equated to 1.65% of risk-weighted assets.
Net Interest Income & Margin
Net interest income on a tax equivalent basis for the second quarter of 2009 increased to $26.4 million from $23.7 million for the second quarter of 2008, an 11.6% increase. Net interest income on a tax equivalent basis was $26.8 million for the first quarter of 2009. During the current quarter, our net interest margin (NIM) on a tax equivalent basis expanded to 4.38% vs. 4.08% as of the second quarter of 2008 and was stable on a linked-quarter basis. Second quarter NIM was negatively impacted by the increased level of non-accruing loans, which decreased our reported NIM by approximately 12 basis points.
Average earning asset balances decreased by $56.3 million on a linked-quarter basis, mainly due to a decrease in average investments of $18.4 million, a decrease in average loans of $13.0 million and an increase in average Allowance of $23.1 million (which the Company includes in its interest-earning assets as a contra-asset account). Average Customer Funding (excluding brokered CDs from non-relationship sources) was up by $79.5 million from the prior linked-quarter. As a result of the earning asset decrease and Customer Funding increase, short-term wholesale funding decreased by $117.3 million on a linked-quarter basis.
Yields on average earning assets decreased 9 basis points (0.09%) from the first quarter of 2009 to the second quarter of 2009, while rates paid on average interest-bearing liabilities decreased 5 basis points (0.05%).
Noninterest Income
Noninterest income increased by $1.9 million on a linked-quarter basis to $8.0 million for the second quarter. Noninterest income was $11.6 million in the second quarter of 2008. As a percentage of total operating revenue, noninterest income was 23.5% for the second quarter of 2009 vs. 33.1% for the prior-year quarter.
In general, all of our business segments have been negatively impacted by current market conditions. Our Insurance Segment's revenues have been adversely affected by a continued soft premium market for P&C insurance; the decline in the broader equity market has negatively impacted Investment Advisory earnings; and Investment Banking transactions have been curtailed due to market uncertainty and valuation issues.
The second quarter was positively impacted by an increase of $0.7 million in income from earnings on equity method investments, and an increase of $0.3 million in miscellaneous loan fees.
Operating Expenses
Noninterest expenses for the second quarter of 2009 were $24.3 million, as compared to $57.3 million for the first quarter of 2009. First quarter expenses included a $33.7 million goodwill impairment charge. Excluding this charge, noninterest expenses were $23.6 million for the first quarter. Noninterest expenses for the second quarter of 2008 were $22.5 million.
Salaries and employee benefits decreased by $0.8 million on a linked-quarter basis to $13.1 million. Driving the decrease was a reduction in incentive compensation of $0.2 million from the first quarter of 2009, a decrease in 401(k) expense of $0.2 million as a result of the Company's cost-containment initiative and a reduction in payroll taxes of $0.2 million.
FDIC insurance costs were $2.1 million for the second quarter including $1.2 million related to the FDIC's 5-basis-point special assessment. FDIC insurance expense was $0.6 million for the first quarter of 2009 and $0.3 million for the second quarter of 2008.
The Company recognized a $1.7 million, pre-tax loss on securities, other assets and OREO in the second quarter, as compared to $1.4 million in the first quarter of 2009 and $9,000 in the second quarter of 2008.
Overall, the Company is experiencing an improvement in its efficiency ratio posting 66.8% for the first six months of 2009 versus 68.7% during the prior year period.
Earnings Conference Call
In conjunction with this release, you are invited to listen to the Company's conference call on Tuesday, July 14, 2009, at 8:00 am ET with Steve Bangert, CoBiz chairman and CEO. The call can be accessed via the Internet at http://www.videonewswire.com/event.asp?id=60442 or by telephone at 877.493.9121, (conference ID #18594509).
Explanation of the Company's Use of Non-GAAP Financial Measures
This earnings release contains GAAP financial measures and non-GAAP financial measures where Management believes it to be helpful in understanding our results of operations. We believe these measures provide important supplemental information to investors. However, you should not rely on non-GAAP financial measures alone as measures of our performance.
About CoBiz Financial
CoBiz Financial Inc. (http://www.cobizfinancial.com/) is a $2.5 billion financial holding company headquartered in Denver. The Company operates Colorado Business Bank and Arizona Business Bank, full-service commercial banking institutions that offer a broad range of sophisticated banking services - including credit, treasury management, investment and deposit products - to a targeted customer base of professionals and small to mid-sized businesses. CoBiz also offers trust and fiduciary services through CoBiz Trust; property and casualty insurance brokerage and risk management consulting services through CoBiz Insurance; investment banking services through Green Manning & Bunch; the management of stock and bond portfolios for individuals and institutions through CoBiz Trust, Alexander Capital Management Group and Wagner Investment Management, Inc.; and employee and executive benefits consulting and wealth transfer services through Financial Designs, Ltd.
Forward-looking Information
This release contains forward-looking statements that describe CoBiz's future plans, strategies and expectations. All forward-looking statements are based on assumptions and involve risks and uncertainties, many of which are beyond our control and which may cause our actual results, performance or achievements to differ materially from the results, performance or achievements contemplated by the forward-looking statements. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as "believe," "expect," "anticipate," "intend," "plan," "estimate" or words of similar meaning, or future or conditional verbs such as "would", "could" or "may." Forward-looking statements speak only as of the date they are made. Such risks and uncertainties include, among other things:
-- Risks and uncertainties described in our reports filed with the Securities and Exchange Commission, including our most recent 10-K. -- Competitive pressures among depository and other financial institutions nationally and in our market areas may increase significantly. -- Adverse changes in the economy or business conditions, either nationally or in our market areas, could increase credit-related losses and expenses and/or limit growth. -- Increases in defaults by borrowers and other delinquencies could result in increases in our provision for losses on loans and leases and related expenses. -- Our inability to manage growth effectively, including the successful expansion of our customer support, administrative infrastructure and internal management systems, could adversely affect our results of operations and prospects. -- Fluctuations in interest rates and market prices could reduce our net interest margin and asset valuations and increase our expenses. -- The consequences of continued bank acquisitions and mergers in our market areas, resulting in fewer but much larger and financially stronger competitors, could increase competition for financial services to our detriment. -- Our continued growth will depend in part on our ability to enter new markets successfully and capitalize on other growth opportunities. -- Changes in legislative or regulatory requirements applicable to us and our subsidiaries could increase costs, limit certain operations and adversely affect results of operations. -- Changes in tax requirements, including tax rate changes, new tax laws and revised tax law interpretations may increase our tax expense or adversely affect our customers' businesses.
In light of these risks, uncertainties and assumptions, you should not place undue reliance on any forward-looking statements in this release. We undertake no obligation to publicly update or otherwise revise any forward-looking statements, whether as a result of new information, future events or otherwise.
CoBiz Financial Inc. June 30, 2009 (unaudited) Three months Six months ended ended June 30, June 30, --------------- ------------------ (in thousands, except per share amounts) 2009 2008 2009 2008 --------------------- ---- ---- ---- ---- INCOME STATEMENT DATA Interest income $32,841 $35,639 $66,375 $73,036 Interest expense 6,615 12,143 13,570 27,562 ----- ------ ------ ------ NET INTEREST INCOME BEFORE PROVISION 26,226 23,496 52,805 45,474 Provision for loan losses 35,249 5,986 68,996 11,017 ------ ----- ------ ------ NET INTEREST INCOME AFTER PROVISION (9,023) 17,510 (16,191) 34,457 Noninterest income 8,035 11,610 14,156 19,301 Noninterest expense 24,273 22,477 81,601 44,382 ------ ------ ------ ------ INCOME (LOSS) BEFORE INCOME TAXES (25,261) 6,643 (83,636) 9,376 Provision (benefit) for income taxes (9,740) 2,420 (20,668) 3,290 ------ ----- ------- ----- NET INCOME (LOSS) (15,521) 4,223 (62,968) 6,086 Net (income) loss attributable to noncontrolling interest (290) (40) 208 (308) ---- --- --- ---- NET INCOME (LOSS) ATTRIBUTABLE TO COBIZ FINANCIAL $(15,811) $4,183 $(62,760) $5,778 ======== ====== ======== ====== Preferred stock dividends (932) - (1,862) - ---- --- ------ --- NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS $(16,743) $4,183 $(64,622) $5,778 ======== ====== ======== ====== EARNINGS (LOSS) PER COMMON SHARE BASIC $(0.72) $0.18 $(2.79) $0.25 ------ ----- ------ ----- DILUTED $(0.72) $0.18 $(2.79) $0.25 ------ ----- ------ ----- WEIGHTED AVERAGE SHARES OUTSTANDING (in thousands) BASIC 23,194 23,068 23,184 23,043 ------ ------ ------ ------ DILUTED 23,194 23,207 23,184 23,244 ------ ------ ------ ------ COMMON SHARES OUTSTANDING AT PERIOD END (in thousands) 23,460 23,095 ------ ------ BOOK VALUE PER COMMON SHARE $5.61 $8.33 ----- ----- PERIOD END BALANCES Total Assets $2,540,833 $2,548,171 Loans 1,949,590 1,961,177 Loans Held For Sale 2,185 - Goodwill and Intangible Assets 17,709 51,824 Deposits 1,758,635 1,651,933 Subordinated Debentures 93,150 72,166 Common Shareholders' Equity 131,518 192,492 Total Shareholders' Equity 193,132 192,492 Interest-Earning Assets 2,344,099 2,358,157 Interest-Bearing Liabilities 1,848,425 1,889,499 BALANCE SHEET AVERAGES Average Assets $2,619,124 $2,450,269 Average Loans 2,018,810 1,892,083 Average Deposits 1,675,491 1,763,047 Average Subordinated Debentures 93,150 72,166 Average Equity 230,433 194,772 Average Interest-Earning Assets 2,447,402 2,282,192 Average Interest-Bearing Liabilities 1,920,804 1,807,583 CoBiz Financial Inc. June 30, 2009 (unaudited) Three months ended Six months ended June 30, June 30, ------------ ---------------- (in thousands) 2009 2008 2009 2008 -------------- ---- ---- ---- ---- PROFITABILITY MEASURES Net Interest Margin 4.38% 4.08% 4.38% 4.03% Efficiency Ratio 66.47% 64.07% 66.78% 68.75% Return on Average Assets (2.46)% 0.67% (4.83)% 0.47% Return on Average Shareholders' Equity (30.77)% 8.64% (55.13)% 5.97% Noninterest Income as a Percentage of Operating Revenues 23.45% 33.07% 21.14% 29.80% CREDIT QUALITY Nonperforming Loans Loans 90 days or more past due and accruing interest $35 $1,096 Nonaccrual loans 67,394 19,078 ------ ------ Total nonperforming loans $67,429 $20,174 OREO & Repossessed Assets 26,461 2,580 ------ ----- Total nonperforming assets $93,890 $22,754 ======= ======= Charge-offs (37,094) (5,362) Recoveries 503 29 --- --- Net Charge-offs $(36,591) $(5,333) ======== ======= ASSET QUALITY MEASURES Nonperforming Assets to Total Assets 3.70% 0.89% Nonperforming Loans to Total Loans 3.45% 1.03% Nonperforming Loans and OREO to Total Loans and OREO 4.75% 1.16% Allowance for Loan and Credit Losses to Total Loans (excluding loans held for sale) 3.87% 1.32% Allowance for Loan and Credit Losses to Nonperforming Loans 111.99% 128.66% NONPERFORMING ASSETS BY Total Loans NPAs as a MARKET Colorado Arizona Total in Category % of Loans ------------- -------- ------- ----- ----------- ---------- Commercial $8,204 $3,595 $11,799 $603,278 1.96% Real Estate - mortgage 24,826 15,095 39,921 1,009,960 3.95% Real Estate - construction 8,904 3,499 12,403 237,663 5.22% Consumer 3,276 30 3,306 85,385 3.87% Other Loans - - - 15,489 - Other Real Estate Owned 16,332 10,129 26,461 - - ------ ------ ------ --- NPAs $61,542 $32,348 $93,890 $1,951,775 ======= ======= ======= ========== Total Loans $1,240,255 $711,520 $1,951,775 Total Loans and OREO 1,256,587 721,649 1,978,236 Nonperforming Loans to Total Loans 3.65% 3.12% 3.45% Nonperforming Loans and OREO to Total Loans and OREO 4.90% 4.48% 4.75% CoBiz Financial Inc. June 30, 2009 (unaudited) Investment Investment (in thousands, except per Commercial Banking Advisory share amounts) Banking Services and Trust ------------------------- ------- -------- --------- Net interest income Quarter ended June 30, 2009 $27,330 $1 $(3) Quarter ended March 31, 2009 27,809 3 - Annualized quarterly growth (6.9)% (267.4)% (100.0)% Quarter ended June 30, 2008 $24,606 $12 $(4) Annual growth 11.1% (91.7)% 25.0% Noninterest income Quarter ended June 30, 2009 $2,773 $399 $1,308 Quarter ended March 31, 2009 1,929 104 1,224 Annualized quarterly growth 175.5% 1,137.7% 27.5% Quarter ended June 30, 2008 $2,502 $3,196 $1,739 Annual growth 10.8% (87.5)% (24.8)% Net income Quarter ended June 30, 2009 $(13,808) $(376) $(325) Quarter ended March 31, 2009 (27,791) (1,322) (3,470) Annualized quarterly growth 201.8% 287.0% 363.5% Quarter ended June 30, 2008 $4,659 $901 $(79) Annual growth (396.4)% (141.7)% (311.4)% Earnings per share (diluted) Quarter ended June 30, 2009 $(0.60) $(0.02) $(0.01) Quarter ended March 31, 2009 (1.20) (0.06) (0.15) Annualized quarterly growth 200.4% 260.5% 374.3% Quarter ended June 30, 2008 $0.20 $0.04 (0.00) Annual growth (398.9)% (151.5)% (193.8)% (in thousands) -------------- Total loans (including loans held for sale) At March 31, 2009 At December 31, 2008 Annualized quarterly growth At March 31, 2008 Annual growth Total deposits and customer repurchase agreements At March 31, 2009 At December 31, 2008 Annualized quarterly growth At March 31, 2008 Annual growth Corporate (in thousands, except per Support and share amounts) Insurance Other Consolidated ------------------------- --------- ------------ ------------ Net interest income Quarter ended June 30, 2009 $(4) $(1,098) $26,226 Quarter ended March 31, 2009 (2) (1,231) 26,579 Annualized quarterly growth (401.1)% 43.3% (5.3)% Quarter ended June 30, 2008 $(2) $(1,116) $23,496 Annual growth (100.0)% 1.6% 11.6% Noninterest income Quarter ended June 30, 2009 $2,795 $760 $8,035 Quarter ended March 31, 2009 3,384 (520) 6,121 Annualized quarterly growth (69.8)% 987.3% 125.4% Quarter ended June 30, 2008 $4,153 $20 $11,610 Annual growth (32.7)% 3,700.0% (30.8)% Net income Quarter ended June 30, 2009 $(202) $(1,100) $(15,811) Quarter ended March 31, 2009 (13,220) (1,146) (46,949) Annualized quarterly growth 395.0% 16.1% 266.0% Quarter ended June 30, 2008 $83 $(1,381) $4,183 Annual growth (343.4)% 20.3% (478.0)% Earnings per share (diluted) Quarter ended June 30, 2009 $(0.01) $(0.08) $(0.72) Quarter ended March 31, 2009 (0.57) (0.09) (2.07) Annualized quarterly growth 394.1% 42.9% 261.3% Quarter ended June 30, 2008 0.00 $(0.06) $0.18 Annual growth (379.6)% (34.4)% (499.4)% (in thousands) Consolidated -------------- ------------ Total loans At June 30, 2009 $1,951,775 At March 31, 2009 2,019,450 Annualized quarterly growth (13.4)% At June 30, 2008 $1,961,177 Annual growth (.5)% Total deposits and customer repurchase agreements At June 30, 2009 $1,877,593 At March 31, 2009 1,805,677 Annualized quarterly growth 16.0% At June 30, 2008 $1,783,650 Annual growth 5.3% CoBiz Financial Inc. June 30, 2009 (unaudited) Three months ended ------------------ June 30, March 31, December 31, September 30, June 30, (in thousands) 2009 2009 2008 2008 2008 -------------- ---- ---- ---- ---- ---- COMMERCIAL BANKING ------------------ Income Statement Total interest income $32,820 $33,508 $35,780 $36,012 $35,597 Total interest expense 5,490 5,699 8,603 10,496 10,991 ----- ----- ----- ------ ------ Net interest income 27,330 27,809 27,177 25,516 24,606 Provision for loan losses 35,249 33,747 23,444 5,335 5,986 ------ ------ ------ ----- ----- Net interest income (loss) after provision (7,919) (5,938) 3,733 20,181 18,620 Noninterest income 2,773 1,929 1,475 3,048 2,502 Noninterest expense 10,323 23,490 9,184 8,485 7,546 ------ ------ ----- ----- ----- Income (loss) before income taxes (15,469) (27,499) (3,976) 14,744 13,576 Provision (benefit) for income taxes (4,768) (4,813) (1,994) 5,680 5,031 ------ ------ ------ ----- ----- Net income (loss) before management fees and overhead allocations $(10,701) $(22,686) $(1,982) $9,064 $8,545 -------- -------- ------- ------ ------ Management fees and overhead allocations, net of tax 3,107 5,105 4,740 3,772 3,886 ----- ----- ----- ----- ----- Net income (loss) $(13,808) $(27,791) $(6,722) $5,292 $4,659 ======== ======== ======= ====== ====== INVESTMENT BANKING ------------------ Income Statement Total interest income $1 $3 $8 $11 $12 Total interest expense - - - - - --- --- --- --- --- Net interest income 1 3 8 11 12 Provision for loan losses - - - - - --- --- --- --- --- Net interest income (loss) after provision 1 3 8 11 12 Noninterest income 399 104 504 1,062 3,196 Noninterest expense 955 3,146 1,142 1,369 1,679 --- ----- ----- ----- ----- Income (loss) before income taxes (555) (3,039) (630) (296) 1,529 Provision (benefit) for income taxes (209) (1,755) (247) (102) 588 ---- ------ ---- ---- --- Net income (loss) before management fees and overhead allocations $(346) $(1,284) $(383) $(194) $941 ----- ------- ----- ----- ---- Management fees and overhead allocations, net of tax 30 38 34 41 40 --- --- --- --- --- Net income (loss) $(376) $(1,322) $(417) $(235) $901 ===== ======= ===== ===== ==== INVESTMENT ADVISORY AND TRUST ----------------------------- Income Statement Total interest income $- $- $- $- $- Total interest expense 3 - 3 - 4 --- --- --- --- --- Net interest income (3) - (3) - (4) Provision for loan losses - - - - - --- --- --- --- --- Net interest income (loss) after provision (3) - (3) - (4) Noninterest income 1,308 1,224 1,413 1,517 1,739 Noninterest expense 1,698 4,736 1,255 1,570 1,703 ----- ----- ----- ----- ----- Income (loss) before income taxes (393) (3,512) 155 (53) 32 Provision (benefit) for income taxes (152) (153) 51 7 22 ---- ---- --- --- --- Net income (loss) before management fees and overhead allocations $(241) $(3,359) $104 $(60) $10 ----- ------- ---- ---- --- Management fees and overhead allocations, net of tax 84 111 66 80 89 --- --- --- --- --- Net income (loss) $(325) $(3,470) $38 $(140) $(79) ===== ======= === ===== ==== INSURANCE --------- Income Statement Total interest income $- $- $- $- $- Total interest expense 4 2 4 2 2 --- --- --- --- --- Net interest income (4) (2) (4) (2) (2) Provision for loan losses - - - - - --- --- --- --- --- Net interest income (loss) after provision (4) (2) (4) (2) (2) Noninterest income 2,795 3,384 3,594 3,743 4,153 Noninterest expense 2,966 16,512 3,353 3,488 3,839 ----- ------ ----- ----- ----- Income (loss) before income taxes (175) (13,130) 237 253 312 Provision (benefit) for income taxes (63) (24) 85 127 130 --- --- --- --- --- Net income (loss) before management fees and overhead allocations $(112) $(13,106) $152 $126 $182 ----- -------- ---- ---- ---- Management fees and overhead allocations, net of tax 90 114 83 101 99 --- --- --- --- --- Net income (loss) $(202) $(13,220) $69 $25 $83 ===== ======== === === === CORPORATE SUPPORT AND OTHER --------------------------- Income Statement Total interest income $20 $23 $32 $29 $30 Total interest expense 1,118 1,254 1,571 1,316 1,146 ----- ----- ----- ----- ----- Net interest income (1,098) (1,231) (1,539) (1,287) (1,116) Provision for loan losses - - - - - --- --- --- --- --- Net interest income (loss) after provision (1,098) (1,231) (1,539) (1,287) (1,116) Noninterest income 760 (520) 69 52 20 Noninterest expense 8,331 9,444 8,698 6,791 7,710 ----- ----- ----- ----- ----- Income (loss) before income taxes (8,669) (11,195) (10,168) (8,026) (8,806) Provision (benefit) for income taxes (4,548) (4,183) (3,698) (3,290) (3,351) ------ ------ ------ ------ ------ Net income (loss) before management fees and overhead allocations $(4,121) $(7,012) $(6,470) $(4,736) $(5,455) ------- ------- ------- ------- ------- Management fees and overhead allocations, net of tax (3,311) (5,368) (4,923) (3,994) (4,114) ------ ------ ------ ------ ------ Net income (loss) $(810) $(1,644) $(1,547) $(742) $(1,341) Noncontrolling interest (290) 498 (34) (37) (40) ---- --- --- --- --- Net income (loss) attributable to CoBiz Financial $(1,100) $(1,146) $(1,581) $(779) $(1,381) ======= ======= ======= ===== ======= CONSOLIDATED ------------ Income Statement Total interest income $32,841 $33,534 $35,820 $36,052 $35,639 Total interest expense 6,615 6,955 10,181 11,814 12,143 ----- ----- ------ ------ ------ Net interest income 26,226 26,579 25,639 24,238 23,496 Provision for loan losses 35,249 33,747 23,444 5,335 5,986 ------ ------ ------ ----- ----- Net interest income (loss) after provision (9,023) (7,168) 2,195 18,903 17,510 Noninterest income 8,035 6,121 7,055 9,422 11,610 Noninterest expense 24,273 57,328 23,632 21,703 22,477 ------ ------ ------ ------ ------ Income (loss) before income taxes (25,261) (58,375) (14,382) 6,622 6,643 Provision (benefit) for income taxes (9,740) (10,928) (5,803) 2,422 2,420 ------ ------- ------ ----- ----- Net income (loss) before management fees and overhead allocations $(15,521) $(47,447) $(8,579) $4,200 $4,223 -------- -------- ------- ------ ------ Management fees and overhead allocations, net of tax - - - - - --- --- --- --- --- Net income (loss) $(15,521) $(47,447) $(8,579) $4,200 $4,223 Noncontrolling interest (290) 498 (34) (37) (40) ---- --- --- --- --- Net income (loss) attributable to CoBiz Financial $(15,811) $(46,949) $(8,613) $4,163 $4,183 ======== ======== ======= ====== ====== CoBiz Financial Inc. June 30, 2009 (unaudited) Three months ended ------------------ June 30, March 30, December 31, September 31, June 30, 2009 2009 2008 2008 2008 ---- ---- ---- ---- ---- (in thousands, except per share amounts) ----------------- Interest income $32,841 $33,534 $35,820 $36,052 $35,639 Interest expense 6,615 6,955 10,181 11,814 12,143 ----- ----- ------ ------ ------ Net interest income before provision 26,226 26,579 25,639 24,238 23,496 Provision for loan losses 35,249 33,747 23,444 5,335 5,986 ------ ------ ------ ----- ----- Net interest income (loss) after provision (9,023) (7,168) 2,195 18,903 17,510 ------ ------ ----- ------ ------ Noninterest income: Deposit service charges $1,248 $1,177 $1,111 $1,045 $972 Investment advisory and trust income 1,308 1,224 1,413 1,517 1,739 Insurance income 2,795 3,384 3,594 3,743 4,153 Investment banking income 399 104 504 1,062 3,196 Other income 2,285 232 433 2,055 1,550 ----- --- --- ----- ----- Total noninterest income 8,035 6,121 7,055 9,422 11,610 ----- ----- ----- ----- ------ Noninterest expense: Salaries and employee benefits $13,081 $13,836 $12,052 $13,383 $15,616 Stock based compensation expense 411 409 489 393 462 Occupancy expenses, premises and equipment 3,288 3,274 3,417 3,274 3,247 Amortization of intangibles 169 169 169 166 186 Other operating expenses 5,632 4,584 4,070 3,390 2,957 Impairment of goodwill - 33,697 0 0 0 Net loss on securities, other assets and OREO 1,692 1,359 3,435 1,097 9 ----- ----- ----- ----- --- Total noninterest expense 24,273 57,328 23,632 21,703 22,477 ------ ------ ------ ------ ------ Income (loss) before income taxes (25,261) (58,375) (14,382) 6,622 6,643 Provision (benefit) for income taxes (9,740) (10,928) (5,803) 2,422 2,420 ------ ------- ------ ----- ----- Net income (loss) (15,521) (47,447) (8,579) 4,200 4,223 Net (income) loss attributable to noncontrolling interest (290) 498 (34) (37) (40) ---- --- --- --- --- Net (income) loss attributable to CoBiz Financial $(15,811) $(46,949) $(8,613) $4,163 $4,183 ======== ======== ======= ====== ====== Preferred stock dividends (932) (930) (124) - - ---- ---- ---- --- --- Net income (loss) available to common shareholders $(16,743) $(47,879) $(8,737) $4,163 $4,183 ======== ======== ======= ====== ====== Earnings (loss) per common share Basic $(0.72) $(2.07) $(0.38) $0.18 $0.18 ------ ------ ------ ----- ----- Diluted $(0.72) $(2.07) $(0.38) $0.18 $0.18 ------ ------ ------ ----- ----- Weighted average shares outstanding (in thousands) Basic 23,194 23,174 23,144 23,104 23,068 ------ ------ ------ ------ ------ Diluted 23,194 23,174 23,144 23,232 23,207 ------ ------ ------ ------ ------ Common shares outstanding at period end (in thousands) 23,460 23,421 23,375 23,361 23,095 ------ ------ ------ ------ ------ Book value per common share $5.61 $6.04 $8.16 $8.33 $8.33 ----- ----- ----- ----- ----- PROFITABILITY MEASURES Net Interest Margin 4.38% 4.38% 4.15% 4.10% 4.08% Efficiency Ratio 66.47% 67.09% 61.84% 61.28% 64.07% Return on Average Assets (2.46)% (7.16)% (1.28)% 0.65% 0.67% Return on Average Shareholders' Equity (30.77)% (75.65)% (16.78)% 8.49% 8.64% Noninterest Income as a Percentage of Operating Revenues 23.45% 18.72% 21.58% 27.99% 33.07% CoBiz Financial Inc. June 30, 2009 (unaudited) At ---- June 30, March 31, December 31, September 30, June 30, 2009 2009 2008 2008 2008 ---- ---- ---- ---- ---- (in thousands) -------------- PERIOD END BALANCES Total Assets $2,540,833 $2,623,923 $2,684,275 $2,606,107 $2,548,171 Loans 1,949,590 2,016,350 2,031,253 2,001,685 1,961,177 Loans held for sale 2,185 3,100 - - - Goodwill and Intangible Assets 17,709 17,878 51,864 51,658 51,824 Deposits 1,758,635 1,676,482 1,639,031 1,737,262 1,651,933 Subordinated Debentures 93,150 93,150 93,150 92,550 72,166 Common Shareholders' Equity 131,518 141,555 190,635 194,523 192,492 Total Shareholders' Equity 193,132 203,049 252,099 194,523 192,492 Interest-Earning Assets 2,344,099 2,441,130 2,498,484 2,421,375 2,358,157 Interest-Bearing Liabilities 1,848,425 1,945,511 1,954,991 1,951,678 1,889,499 LOANS Commercial $603,278 $630,567 $648,968 $621,128 $618,677 Real Estate - mortgage 1,009,960 1,039,957 1,017,444 982,084 929,949 Real Estate - construction 237,663 250,767 266,928 305,819 323,554 Consumer 85,385 83,405 86,701 80,336 76,457 Other 13,304 11,654 11,212 12,318 12,540 ------ ------ ------ ------ ------ Gross loans 1,949,590 2,016,350 2,031,253 2,001,685 1,961,177 Less allowance for loan losses (75,256) (63,361) (42,851) (27,703) (25,727) ------- ------- ------- ------- ------- Net loans held for investment 1,874,334 1,952,989 1,988,402 1,973,982 1,935,450 Loans held for sale 2,185 3,100 - - - ----- ----- --- --- --- Total net loans $1,876,519 $1,956,089 $1,988,402 $1,973,982 $1,935,450 ========== ========== ========== ========== ========== DEPOSITS AND CUSTOMER REPURCHASE AGREEMENTS NOW and money market $524,622 $520,605 $565,948 $528,272 $626,500 Savings 9,432 9,560 9,274 10,617 10,726 Eurodollar 103,303 100,249 88,025 101,723 100,771 Certificates of deposits under $100,000 56,657 59,835 76,559 97,017 89,059 Certificates of deposits $100,000 and over 405,888 311,348 287,039 312,053 340,926 Reciprocal CDARS 117,408 108,961 91,844 125,951 16,341 Brokered deposits 65,972 113,800 66,611 122,093 21,465 ------ ------- ------ ------- ------ Total interest- bearing deposits 1,283,282 1,224,358 1,185,300 1,297,726 1,205,788 Noninterest- bearing demand deposits 475,353 452,124 453,731 439,536 446,145 Customer repurchase agreements 118,958 129,195 133,478 140,264 131,717 ------- ------- ------- ------- ------- Total deposits and customer repurchase agreements $1,877,593 $1,805,677 $1,772,509 $1,877,526 $1,783,650 ========== ========== ========== ========== ========== BALANCE SHEET AVERAGES Average Assets $2,580,448 $2,658,588 $2,668,533 $2,548,811 $2,502,900 Average Loans 2,012,342 2,025,349 2,025,859 1,967,742 1,930,674 Average Deposits 1,719,953 1,630,537 1,711,063 1,738,114 1,752,757 Average Subordinated Debentures 93,150 93,150 92,902 79,837 72,166 Average Shareholders' Equity 206,127 251,706 204,222 195,124 194,794 Average Interest- Earning Assets 2,419,408 2,475,708 2,479,183 2,374,202 2,334,972 Average Interest- Bearing Liabilities 1,894,779 1,947,119 1,998,161 1,900,532 1,850,421 CREDIT QUALITY Nonperforming Loans Loans 90 days or more past due and accruing interest $35 $522 $1,292 $1,650 $1,096 Nonaccrual loans 67,394 43,121 39,786 22,254 19,078 ------ ------ ------ ------ ------ Total nonperforming loans $67,429 $43,643 $41,078 $23,904 $20,174 OREO and Repossessed Assets 26,461 8,879 5,941 7,008 2,580 ------ ----- ----- ----- ----- Total nonperforming assets $93,890 $52,522 $47,019 $30,912 $22,754 ======= ======= ======= ======= ======= ASSET QUALITY MEASURES Nonperforming Assets to Total Assets 3.70% 2.00% 1.75% 1.19% 0.89% Nonperforming Loans to Total Loans 3.45% 2.16% 2.02% 1.19% 1.03% Nonperforming Loans and OREO to Total Loans and OREO 4.75% 2.59% 2.31% 1.54% 1.16% Allowance for Loan and Credit Losses to Total Loans (excluding loans held for sale) 3.87% 3.16% 2.12% 1.40% 1.32% Allowance for Loan and Credit Losses to Nonperforming Loans 111.99% 146.12% 104.95% 116.98% 128.66% CoBiz Financial Inc. June 30, 2009 (unaudited) For the three months ended June 30, ---------------------------------- 2009 2008 Interest Average Interest Average Average earned yield Average earned yield balance or paid or cost balance or paid or cost ------- ------- ------- ------- ------- ------- (in thousands) -------------- Assets Federal funds sold and other $3,647 $21 2.28% $7,492 $59 3.12% Investment securities 471,228 6,066 5.15% 420,826 5,431 5.16% Loans 2,012,342 26,937 5.30% 1,930,674 30,311 6.21% Allowance for loan losses (67,809) (24,020) ---------------- ------------------- Total interest- earning assets $2,419,408 $33,024 5.26% $2,334,972 $35,801 6.01% Noninterest- earning assets Cash and due from banks 35,082 42,674 Other 125,958 125,254 ------- ------- Total assets $2,580,448 $2,502,900 ========== ========== Liabilities and Shareholders' Equity Deposits NOW and money market $516,489 $1,457 1.13% $676,456 $3,227 1.92% Savings 9,221 11 0.48% 10,969 34 1.25% Eurodollar 98,314 327 1.32% 108,345 553 2.02% Certificates of deposit Brokered 36,270 117 1.29% 65,759 687 4.20% Reciprocal 116,178 406 1.40% 14,971 119 3.20% Under $100,000 65,672 412 2.52% 94,118 916 3.91% $100,000 and over 417,936 2,273 2.18% 342,153 3,077 3.62% ---------------- ------------------ Total interest- bearing deposits $1,260,080 $5,003 1.59% $1,312,771 $8,613 2.64% Other borrowings Securities sold under agreements to repurchase 119,308 259 0.86% 155,267 715 1.82% Other short- term borrowings 422,241 232 0.22% 310,217 1,849 2.36% Long term-debt 93,150 1,121 4.76% 72,166 966 5.30% --------------- ---------------- Total interest- bearing liabil- ities $1,894,779 $6,615 1.39% $1,850,421 $12,143 2.62% Noninterest- bearing demand accounts 459,873 439,986 ------- ------- Total deposits and interest- bearing liabil- ities 2,354,652 2,290,407 Other noninterest- bearing liabilities 17,990 17,699 ------ ------ Total liabil- ities 2,372,642 2,308,106 Total equity 207,806 194,794 ------- ------- Total liabilities and shareholders' equity $2,580,448 $2,502,900 ========== ========== Net interest income - taxable equivalent $26,409 $23,658 ======= ======= Net interest spread 3.87% 3.39% Net interest margin 4.38% 4.08% Ratio of average interest-earning assets to average interest-bearing liabilities 127.69% 126.19% For the six months ended June 30, --------------------------------- 2009 2008 Interest Average Interest Average Average earned yield Average earned yield balance or paid or cost balance or paid or cost ------- ------- -------- ------- ------- -------- (in thousands) -------------- Assets Federal funds sold and other $4,559 $48 2.09% $9,036 $166 3.63% Investment securities 480,367 12,419 5.17% 403,708 10,473 5.19% Loans 2,018,810 54,279 5.35% 1,892,083 62,708 6.56% Allowance for loan losses (56,334) (22,635) ---------------- ---------------- Total interest earning- assets $2,447,402 $66,746 5.31% $2,282,192 $73,347 6.30% Noninterest- earning assets Cash and due from banks 35,469 42,152 Other 136,253 125,925 ------- ------- Total assets $2,619,124 $2,450,269 ========== ========== Liabilities and Shareholders' Equity Deposits NOW and money market $525,854 $2,997 1.15% $676,255 $7,597 2.26% Savings 9,738 23 0.48% 11,105 83 1.50% Eurodollar 97,692 638 1.30% 100,507 1,165 2.29% Certificates of deposits Brokered 33,573 186 1.12% 101,630 2,345 4.64% Reciprocal 108,982 772 2.84% 14,495 267 3.70% Under $100,000 67,846 944 2.81% 99,470 2,124 4.29% $100,000 and over 381,871 4,381 2.31% 329,088 6,571 4.02% ------- ----- ------- ----- Total interest- bearing deposits $1,225,556 $9,941 1.76% $1,332,550 $20,152 3.04% Other borrowings Securities sold under agreements to repurchase 121,552 531 0.87% 152,510 1,622 2.10% Other short- term borrowings 480,546 738 0.31% 250,357 3,571 2.82% Long-term debt 93,150 2,360 5.04% 72,166 2,217 6.08% ------ ----- ------ ----- Total interest- bearing liabil- ities $1,920,804 $13,570 1.50% $1,807,583 $27,562 3.05% Noninterest- bearing demand accounts 449,935 430,497 ------- ------- Total deposits and interest-bearing liabil- ities 2,370,739 2,238,080 Other noninterest- bearing liabilities 17,952 17,417 ------ ------ Total liabil- ities and preferred securi- ties 2,388,691 2,255,497 Total equity 230,433 194,772 ------- ------- Total liabil- ities and shareholders' equity $2,619,124 $2,450,269 ========== ========== Net interest income - taxable equivalent $53,176 $45,785 ======= ======= Net interest spread 3.81% 3.25% Net interest margin 4.38% 4.03% Ratio of average interest-earning assets to average interest- bearing liabilities 127.42% 126.26% CoBiz Financial Inc. June 30, 2009 (unaudited) Reconciliation of Non-GAAP Measures to GAAP ------------------------------------------- The Company believes these Non-GAAP measurements are useful to an understanding of the operating results of the Company's core business and reflects the basis on which management internally reviews financial performance and capital adequacy. These Non-GAAP measurements are not a substitute for operating results determined in accordance with GAAP nor do they necessarily conform to Non-GAAP performance measures that may be presented by other companies. The following table reflects adjustments to net income, as reported, to exclude the effects of the provision for loan and credit losses, goodwill impairment and losses on securities, other assets and OREO. Three months Six months Three months ended June 30, ended June 30, ended March 31, 2009 2008 2009 2008 2009 ---- ---- ---- ---- ---- Net income (loss) as reported - GAAP $(15,811) $4,183 $(62,760) $5,778 $(46,949) Effect of excluding: Provision (benefit) for income taxes (9,740) 2,420 (20,668) 3,290 (10,928) Provision for loan losses 35,249 5,986 68,996 11,017 33,747 Provision for credit losses (150) (350) - (350) 150 Losses on securities, other assets and OREO 1,692 9 3,051 60 1,359 Goodwill impairment - - 33,697 - 33,697 ------------------------ ------- ------- ------- ------- ------- Operating income - Non-GAAP $11,240 $12,248 $22,316 $19,795 $11,076 ======================== ======= ======= ======= ======= ======= Net income % change as reported - GAAP (478.0)% (1,186.2)% Operating income % change - Non-GAAP (8.2)% 12.7% The following table includes Non-GAAP financial measurements related to tangible equity, tangible common equity and tangible assets. These items have been adjusted to exclude goodwill, intangible assets and preferred stock. June 30, 2009 ------------- Shareholders' equity as reported - GAAP $ 193,132 Goodwill and intangible assets (17,709) --------------------------- -------- Tangible equity - Non-GAAP $ 175,423 Preferred stock (61,614) --------------------------------- -------- Tangible common equity - Non-GAAP $ 113,809 ========= Total assets as reported - GAAP $2,540,833 Goodwill and intangible assets (17,709) -------------------------------- --------- Total tangible assets - Non-GAAP $2,523,124 ========== Shareholders' equity to assets as reported - GAAP 7.60% Tangible equity to tangible assets - Non-GAAP 6.95% Tangible common equity to tangible assets - Non-GAAP 4.51%
CoBiz Financial Inc.
CONTACT: Lyne Andrich, +1-303-312-3458, or Sue Hermann, +1-303-312-3488,
both of CoBiz Financial Inc.
Web Site: http://www.cobizfinancial.com/
