Exhibit 99.1
CoBiz Financial Announces Second Quarter 2018 Results
Denver — CoBiz Financial Inc. (Company) (NASDAQ: COBZ), a financial services company with $3.9 billion in assets, reported financial results for the second quarter of 2018.
Pending Merger
As previously announced on June 18, 2018, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") to merge with a wholly-owned subsidiary of BOK Financial Corporation ("BOK"). The Merger Agreement was approved by the Board of Directors of each of CoBiz and BOK.
Subject to the terms and conditions of the Merger Agreement, CoBiz shareholders will have the right to receive upon effectiveness of the Merger 0.17 shares of BOK common stock and $5.70 in cash, for each share of CoBiz common stock. The completion of the Merger is subject to customary conditions, including, among others, (1) the approval of the Merger Agreement by CoBiz's shareholders, (2) authorization for listing on the Nasdaq of the shares of BOK common stock to be issued in the Merger, (3) the effectiveness of the registration statement on Form S-4 for the BOK common stock to be issued in the Merger, (4) the absence of any order, injunction or other legal restraint preventing the completion of the Merger or making the consummation of the Merger illegal and (5) the receipt of required regulatory approvals, including the approval of the Federal Reserve Board and the Office of the Comptroller of the Currency. Each party's obligation to complete the Merger is also subject to certain additional customary conditions, including (i) subject to certain exceptions, the accuracy of the representations and warranties of the other party, (ii) performance in all material respects by the other party of its obligations under the Merger Agreement and (iii) receipt by such party of an opinion from its counsel to the effect that the Merger will qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended.
Financial Highlights
| · | | Net income of $11.4 million for the second quarter of 2018 compared to $9.5 million in the second quarter of 2017. The return on average assets increased to 1.19% in the second quarter of 2018 compared 1.01% in the prior-year quarter. |
| · | | Diluted earnings per share of $0.27 for the second quarter of 2018, compared to $0.23 in the second quarter of 2017. The second quarter results were impacted by $1.7 million of Merger-related costs. Excluding these costs on a tax-effected basis, diluted earnings per share for the second quarter of 2018 were $0.30 (see accompanying Reconciliation of Non-GAAP Measures to GAAP). |
| · | | Net interest margin (NIM) was 3.94% for the second quarter of 2018, compared to 3.76% for the second quarter of 2017 and 3.93% for the first quarter of 2018. |
Financial Summary
| | | | | | | | | | | | | | | | | | | | |
| | Quarter ended (unaudited) | | | 2Q18 change vs. | |
(in thousands, except per share amounts) | | 2Q18 | | 1Q18 | | 2Q17 | | 1Q18 | | 2Q17 | |
Net interest income before provision | | $ | 35,149 | | $ | 34,609 | | $ | 32,005 | | $ | 540 | | 1.6 | % | $ | 3,144 | | 9.8 | % |
Provision for loan losses | | | (901) | | | (325) | | | 673 | | | (576) | | (177.2) | % | | (1,574) | | (233.9) | % |
Net interest income after provision | | | 36,050 | | | 34,934 | | | 31,332 | | | 1,116 | | 3.2 | % | | 4,718 | | 15.1 | % |
Total noninterest income | | | 8,209 | | | 8,961 | | | 8,311 | | | (752) | | (8.4) | % | | (102) | | (1.2) | % |
Total noninterest expense | | | 30,354 | | | 28,570 | | | 26,655 | | | 1,784 | | 6.2 | % | | 3,699 | | 13.9 | % |
Net income before income taxes | | | 13,905 | | | 15,325 | | | 12,988 | | | (1,420) | | (9.3) | % | | 917 | | 7.1 | % |
Provision for income taxes | | | 2,511 | | | 2,344 | | | 3,499 | | | 167 | | 7.1 | % | | (988) | | (28.2) | % |
Net income | | $ | 11,394 | | $ | 12,981 | | $ | 9,489 | | $ | (1,587) | | (12.2) | % | $ | 1,905 | | 20.1 | % |
| | | | | | | | | | | | | | | | | | | | |
Diluted earnings per common share | | $ | 0.27 | | $ | 0.31 | | $ | 0.23 | | $ | (0.04) | | (11.5) | % | $ | 0.04 | | 17.4 | % |
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KEY RATIOS | | | | | | | | | | | | | | | | | | | | |
Net interest margin | | | 3.94 | % | | 3.93 | % | | 3.76 | % | | | | | | | | | | |
Efficiency ratio - taxable equivalent * | | | 68.13 | % | | 64.07 | % | | 62.83 | % | | | | | | | | | | |
Return on average assets | | | 1.19 | % | | 1.38 | % | | 1.01 | % | | | | | | | | | | |
Return on average shareholders' equity | | | 13.34 | % | | 15.93 | % | | 12.10 | % | | | | | | | | | | |
Noninterest income as a percentage of taxable equivalent operating revenue * | | | 18.42 | % | | 20.01 | % | | 19.61 | % | | | | | | | | | | |
* See accompanying Reconciliation of Non-GAAP Measures to GAAP
The Tax Cuts and Jobs Act (TCJA) was adopted by the Company in the first quarter of 2018 resulting in impacts to comparability with prior periods in the following areas: net interest income, NIM, the taxable equivalent efficiency ratio, the provision for income taxes, and net income.
Loans
| | | | | | | | | | | | | | | | | | | | |
| | Quarter ended (unaudited) | | | 2Q18 change vs. | |
(in thousands) | | 2Q18 | | 1Q18 | | 2Q17 | | 1Q18 | | 2Q17 | |
LOANS | | | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 1,222,780 | | $ | 1,237,176 | | $ | 1,272,304 | | $ | (14,396) | | (1.2) | % | $ | (49,524) | | (3.9) | % |
Owner-occupied real estate | | | 525,020 | | | 488,344 | | | 481,180 | | | 36,676 | | 7.5 | % | | 43,840 | | 9.1 | % |
Investor real estate | | | 708,530 | | | 759,587 | | | 747,765 | | | (51,057) | | (6.7) | % | | (39,235) | | (5.2) | % |
Construction & land | | | 242,653 | | | 228,898 | | | 162,318 | | | 13,755 | | 6.0 | % | | 80,335 | | 49.5 | % |
Consumer | | | 273,986 | | | 272,783 | | | 287,790 | | | 1,203 | | 0.4 | % | | (13,804) | | (4.8) | % |
Other | | | 93,285 | | | 97,654 | | | 109,597 | | | (4,369) | | (4.5) | % | | (16,312) | | (14.9) | % |
Total loans | | $ | 3,066,254 | | $ | 3,084,442 | | $ | 3,060,954 | | $ | (18,188) | | (0.6) | % | $ | 5,300 | | 0.2 | % |
•Loans at June 30, 2018 increased $5.3 million, or 0.2%, from June 30, 2017 and decreased $18.2 million from March 31, 2018. The decrease in the second quarter was impacted by elevated paydowns and maturities.
•Loans in the Colorado markets increased $5.3 million from June 30, 2017, while loans in Arizona were flat in the same period. Compared to March 31, 2018, loans in the Arizona and Colorado markets decreased $9.7 million and $8.5 million, respectively.
| | | | | | | | | | | | | | | | |
| | Quarter ended (unaudited) | |
(in thousands) | | 2Q18 | | 1Q18 | | 4Q17 | | 3Q17 | | 2Q17 | |
Loans - beginning balance | | $ | 3,084,442 | | $ | 3,145,563 | | $ | 3,121,698 | | $ | 3,060,954 | | $ | 2,987,068 | |
New credit extended | | | 145,582 | | | 131,528 | | | 171,043 | | | 148,467 | | | 190,431 | |
Credit advanced | | | 133,345 | | | 118,626 | | | 126,103 | | | 131,460 | | | 129,633 | |
Paydowns & maturities | | | (296,782) | | | (310,160) | | | (272,678) | | | (219,172) | | | (245,976) | |
Gross loan charge-offs | | | (333) | | | (1,115) | | | (603) | | | (11) | | | (202) | |
Loans - ending balance | | $ | 3,066,254 | | $ | 3,084,442 | | $ | 3,145,563 | | $ | 3,121,698 | | $ | 3,060,954 | |
| | | | | | | | | | | | | | | | |
Net change - loans outstanding | | $ | (18,188) | | $ | (61,121) | | $ | 23,865 | | $ | 60,744 | | $ | 73,886 | |
•New credit extensions and advances were $278.9 million in the second quarter of 2018, compared to $320.1 million in the second quarter of 2017 and $250.2 million in the quarter ended March 31, 2018 (linked-quarter).
•Commercial line utilization was 34.1% at June 30, 2018, compared to 32.6% and 29.9%, respectively, at June 30, 2017 and March 31, 2018.
Deposits
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| | Quarter ended (unaudited) | | | 2Q18 change vs. | |
(in thousands) | | 2Q18 | | 1Q18 | | 2Q17 | | 1Q18 | | 2Q17 | |
DEPOSITS | | | | | | | | | | | | | | | | | |
Money market | | $ | 864,190 | | $ | 866,108 | | $ | 898,615 | | $ | (1,918) | | (0.2) | % | $ | (34,425) | | (3.8) | % |
Interest-bearing demand | | | 712,061 | | | 736,929 | | | 696,971 | | | (24,868) | | (3.4) | % | | 15,090 | | 2.2 | % |
Savings | | | 21,218 | | | 22,976 | | | 22,748 | | | (1,758) | | (7.7) | % | | (1,530) | | (6.7) | % |
Certificates of deposits under $100 | | | 16,897 | | | 17,466 | | | 18,748 | | | (569) | | (3.3) | % | | (1,851) | | (9.9) | % |
Certificates of deposits $100 and over | | | 64,030 | | | 61,968 | | | 79,103 | | | 2,062 | | 3.3 | % | | (15,073) | | (19.1) | % |
Reciprocal CDARS | | | 15,251 | | | 23,530 | | | 42,046 | | | (8,279) | | (35.2) | % | | (26,795) | | (63.7) | % |
Total interest-bearing deposits | | | 1,693,647 | | | 1,728,977 | | | 1,758,231 | | | (35,330) | | (2.0) | % | | (64,584) | | (3.7) | % |
Noninterest-bearing demand deposits | | | 1,450,894 | | | 1,450,789 | | | 1,314,408 | | | 105 | | 0.0 | % | | 136,486 | | 10.4 | % |
Total deposits | | $ | 3,144,541 | | $ | 3,179,766 | | $ | 3,072,639 | | $ | (35,225) | | (1.1) | % | $ | 71,902 | | 2.3 | % |
•Total deposits at June 30, 2018 increased $71.9 million, or 2.3%, from June 30, 2017 and decreased $35.2 million from March 31, 2018. The Company typically realizes a seasonal decrease in deposits in the first part of the year.
•Noninterest-bearing demand deposits at June 30, 2018 increased $136.5 million from June 30, 2017, increased $0.1 million from March 31, 2018 and were 46.1% of total deposits at June 30, 2018.
Credit Quality
| | | | | | | | | | |
| | Quarter ended (unaudited) | |
(in thousands) | | 2Q18 | | 1Q18 | | 2Q17 | |
ALLOWANCE FOR LOAN LOSSES | | | | | | | | | | |
Beginning allowance for loan losses | | $ | 36,796 | | $ | 37,941 | | $ | 34,211 | |
Provision for loan losses | | | (901) | | | (325) | | | 673 | |
Net recoveries (charge-offs) | | | (61) | | | (820) | | | 741 | |
Ending allowance for loan losses | | $ | 35,834 | | $ | 36,796 | | $ | 35,625 | |
| | | | | | | | | | |
CREDIT QUALITY | | | | | | | | | | |
Nonaccrual loans | | $ | 16,741 | | $ | 18,200 | | $ | 3,830 | |
Loans 90 days or more past due and accruing interest | | | - | | | - | | | 664 | |
Total nonperforming loans | | | 16,741 | | | 18,200 | | | 4,494 | |
OREO and repossessed assets | | | 4,979 | | | 4,979 | | | 5,079 | |
Total nonperforming assets | | $ | 21,720 | | $ | 23,179 | | $ | 9,573 | |
| | | | | | | | | | |
Performing renegotiated loans | | $ | 34,674 | | $ | 41,400 | | $ | 31,482 | |
Classified loans | | $ | 81,728 | | $ | 83,936 | | $ | 50,587 | |
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ASSET QUALITY MEASURES | | | | | | | | | | |
Nonperforming assets to total assets | | | 0.56 | % | | 0.61 | % | | 0.25 | % |
Nonperforming loans to total loans | | | 0.55 | % | | 0.59 | % | | 0.15 | % |
Nonperforming loans and OREO to total loans and OREO | | | 0.71 | % | | 0.75 | % | | 0.31 | % |
Allowance for loan losses to total loans | | | 1.17 | % | | 1.19 | % | | 1.16 | % |
Allowance for loan losses to nonperforming loans | | | 214.05 | % | | 202.18 | % | | 792.72 | % |
•Nonperforming assets (NPAs) of $21.7 million at June 30, 2018 increased $12.1 million from June 30, 2017 and decreased $1.5 million from March 31, 2018. The increase from June 30, 2017 was primarily due to $10.3 million of loans with one customer with previously recorded allowances of $1.5 million, which became nonaccrual loans in the first quarter of 2018.
•The Company had net charge-offs of $0.1 million in the second quarter of 2018.
•A negative provision for loan losses of $0.9 million was recorded in the second quarter of 2018, primarily due to the decrease in the loan portfolio and a decrease in classified loans.
•The resulting allowance for loan losses was 1.17% of total loans at June 30, 2018.
Shareholders’ Equity
| | | | | | | | | | |
| | Quarter ended (unaudited) | |
(in thousands, except per share amounts) | | 2Q18 | | 1Q18 | | 2Q17 | |
EQUITY MEASURES | | | | | | | | | | |
Common shareholders' equity | | $ | 346,104 | | $ | 338,557 | | $ | 319,470 | |
| | | | | | | | | | |
Common shares outstanding at period end | | | 42,390 | | | 42,366 | | | 41,771 | |
| | | | | | | | | | |
Book value per common share | | $ | 8.16 | | $ | 7.99 | | $ | 7.65 | |
Tangible book value per common share * | | $ | 8.15 | | $ | 7.98 | | $ | 7.62 | |
| | | | | | | | | | |
Tangible common equity to tangible assets * | | | 8.90 | % | | 8.86 | % | | 8.37 | % |
Tier 1 capital ratio | | | ** | | | 12.35 | % | | 11.52 | % |
Total risk-based capital ratio | | | ** | | | 15.15 | % | | 14.36 | % |
* See accompanying Reconciliation of Non-GAAP Measures to GAAP
** Ratios unavailable at the time of release
•On July 19, 2018, the Board of Directors of the Company declared a quarterly cash dividend of $0.10 per common share. The dividend will be paid on August 6, 2018 to shareholders of record on July 30, 2018.
Net Interest Income and Margin
•Net interest income (NII) on a taxable equivalent basis was $36.4 million for the second quarter of 2018, an increase of $2.3 million, or 6.7%, from the quarter ended June 30, 2017. Compared to the quarter ended March 31, 2018, NII on a taxable equivalent basis increased $0.5 million, or 1.5%.
•The NIM was 3.94% for the second quarter of 2018, compared to 3.76% in the prior-year quarter and 3.93% in the linked-quarter.
•The average yield on interest-earning assets was 4.33% for the second quarter of 2018, compared to 4.08% in the prior-year quarter and 4.22% in the linked-quarter.
•Items impacting NII and the NIM in the second quarter of 2018 were:
| o | | Quarterly average loans increased $19.1 million from the prior-year quarter and decreased $52.0 million from the linked-quarter. |
| o | | Quarterly average investments increased $49.0 million, or 8.5%, from the prior-year quarter and increased $56.0 million from the linked-quarter. The shift in the mix of investments and loans negatively impacted the NIM in the second quarter of 2018. |
| o | | Quarterly average deposits increased $128.2 million, or 4.3%, from the prior-year quarter and decreased $58.8 million from the linked-quarter. |
| o | | Including noninterest-bearing deposits, the Company’s deposit interest cost increased to 0.18% for the second quarter of 2018, compared to 0.13% in the prior-year and linked quarters. |
| o | | Quarterly average noninterest-bearing demand accounts increased $190.7 million, or 14.5%, from the prior-year quarter and decreased $4.9 million from the linked-quarter. |
| o | | Quarterly average other short-term borrowings decreased $75.3 million from the prior-year quarter and increased $61.8 million from the linked-quarter. |
Noninterest Income
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| | Quarter ended (unaudited) | | | 2Q18 change vs. | |
(in thousands) | | 2Q18 | | 1Q18 | | 2Q17 | | 1Q18 | | 2Q17 | |
Noninterest income: | | | | | | | | | | | | | | | | | | | | |
Deposit service charges | | $ | 1,577 | | $ | 1,655 | | $ | 1,714 | | $ | (78) | | (4.7) | % | $ | (137) | | (8.0) | % |
Investment advisory income | | | 1,678 | | | 1,655 | | | 1,500 | | | 23 | | 1.4 | % | | 178 | | 11.9 | % |
Insurance income | | | 3,138 | | | 3,459 | | | 3,427 | | | (321) | | (9.3) | % | | (289) | | (8.4) | % |
Other investments | | | 124 | | | 175 | | | 372 | | | (51) | | (29.1) | % | | (248) | | (66.7) | % |
Derivative valuation | | | 45 | | | 156 | | | (80) | | | (111) | | (71.2) | % | | 125 | | 156.3 | % |
Other income | | | 1,647 | | | 1,861 | | | 1,378 | | | (214) | | (11.5) | % | | 269 | | 19.5 | % |
Total noninterest income | | $ | 8,209 | | $ | 8,961 | | $ | 8,311 | | $ | (752) | | (8.4) | % | $ | (102) | | (1.2) | % |
•Noninterest income decreased $0.1 million, or 1.2%, from the prior-year comparative quarter and $0.8 million, or 8.4%, from the linked-quarter.
•Noninterest income as a percentage of taxable equivalent operating revenue* was 18.4% for the second quarter of 2018, compared to 19.6% in the prior-year comparative quarter and 20.0% in the linked-quarter.
* See accompanying Reconciliation of Non-GAAP Measures to GAAP
Operating Expenses
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| | Quarter ended (unaudited) | | | 2Q18 change vs. | |
(in thousands) | | 2Q18 | | 1Q18 | | 2Q17 | | 1Q18 | | 2Q17 | |
Noninterest expense: | | | | | | | | | | | | | | | | | | | | |
Salaries and employee benefits | | $ | 20,761 | | $ | 19,747 | | $ | 18,335 | | $ | 1,014 | | 5.1 | % | $ | 2,426 | | 13.2 | % |
Occupancy expenses, premises and equipment | | | 3,651 | | | 3,711 | | | 3,685 | | | (60) | | (1.6) | % | | (34) | | (0.9) | % |
Amortization of intangibles | | | 49 | | | 56 | | | 150 | | | (7) | | (12.5) | % | | (101) | | (67.3) | % |
Other operating expenses | | | 5,897 | | | 5,176 | | | 4,453 | | | 721 | | 13.9 | % | | 1,444 | | 32.4 | % |
Net (gain) loss on OREO, repossessed assets and other | | | (4) | | | (120) | | | 32 | | | 116 | | 96.7 | % | | (36) | | (112.5) | % |
Total noninterest expense | | $ | 30,354 | | $ | 28,570 | | $ | 26,655 | | $ | 1,784 | | 6.2 | % | $ | 3,699 | | 13.9 | % |
•Noninterest expense increased $3.7 million, or 13.9%, from the prior-year quarter and $1.8 million from the linked-quarter. The increase compared to the prior-year quarter was due to higher base salaries from an annual merit increase and the Merger-related costs. The increase compared to the linked-quarter was due to the Merger-related costs, offset by a decrease in consulting costs related to technology initiatives for business intelligence and a data center relocation. These projects have been suspended due to the pending Merger.
•The taxable equivalent efficiency ratio* was 68.1% for the second quarter of 2018, compared to 62.8% and 64.1%, respectively, for the prior-year and linked-quarters. The taxable equivalent efficiency ratio is directly impacted by the tax rate paid by the Company. The efficiency ratio increases with a decrease in tax rates, and decreases with an increase in tax rates. Although the TCJA benefits net income due to the reduction in the federal income tax rate from 35% to 21%, it increases the taxable equivalent efficiency ratio.
Provision for Income Taxes
| · | | The effective tax rate was 18.1% in the second quarter of 2018, compared to 25.0% in fiscal 2017 (excluding a $7.2 million charge related to the TCJA). The majority of the decrease in the tax rate relates to the TCJA that became effective in the first quarter of 2018. |
| · | | Prospectively, until closing of the Merger, the Company estimates that its effective tax rate will be approximately 18-19%. |
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 and reflects the basis on which management internally reviews financial performance and capital adequacy. The Company believes these non-GAAP measures are useful supplementary financial measures that enable investors to assess the performance of the Company’s operations and for comparison to the Company’s peers. However, you should not rely on non-GAAP financial measures alone as measures of our performance. Please see the accompanying Reconciliation of Non-GAAP Measures to GAAP for additional information.
Contact Information
CoBiz Financial Inc.
Lyne Andrich 303.312.3458
* See accompanying Reconciliation of Non-GAAP Measures to GAAP
About CoBiz Financial
CoBiz Financial (NASDAQ:COBZ) is a $3.9 billion financial services company that serves the complete financial needs of businesses, business owners and professionals in Colorado and Arizona. The Company provides banking services through Colorado Business Bank, Arizona Business Bank and CoBiz Private Bank; wealth planning and investment management through CoBiz Wealth; and property and casualty insurance brokerage and employee benefits through CoBiz Insurance.
Forward-Looking Information
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, but not limited to, CoBiz's expectations or predictions of future financial or business performance or conditions. Forward-looking statements are typically identified by words such as “believe,” “expect,” “anticipate,” “intend,” “target,” “estimate,” “continue,” “positions,” “plan,” “predict,” “project,” “forecast,” “guidance,” “goal,” “objective,” “prospects,” “possible” or “potential,” by future conditional verbs such as “assume,” “will,” “would,” “should,” “could” or “may”, or by variations of such words or by similar expressions. These forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made and we assume no duty to update forward-looking statements. Actual results may differ materially from current projections. 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. 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 Form 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.
•Our ability to grow deposits while the number of physical branches have decreased in recent years.
•Increases in defaults by borrowers and other delinquencies could result in increases in our provision for losses on loans and related expenses.
•Our ability to manage growth effectively 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.
•Increased cybersecurity risk, including potential network breaches, business disruptions, or financial losses.
•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.
•Changes in legislative or regulatory requirements applicable to us and our subsidiaries and implementation of current legislative or regulatory requirements 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 change 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.
In addition to factors previously disclosed in CoBiz’s reports filed with the SEC and those identified elsewhere in this communication, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: the ability to obtain regulatory approvals and meet other closing conditions to the merger, including approval by CoBiz Financial Inc.’s shareholders on the expected terms and schedule, including the risk that regulatory approvals required for the merger are not obtained or
are obtained subject to conditions that are not anticipated; delay in closing the merger; difficulties and delays in integrating CoBiz Financial Inc.’s business or fully realizing cost savings and other benefits; business disruption following the merger; changes in asset quality and credit risk; the inability to sustain revenue and earnings growth; changes in interest rates and capital markets; inflation; customer acceptance of BOK products and services; customer borrowing, repayment, investment and deposit practices; customer disintermediation; the introduction, withdrawal, success and timing of business initiatives; competitive conditions; the inability to realize cost savings or revenues or to implement integration plans and other consequences associated with mergers, acquisitions and divestitures; economic conditions; and the impact, extent and timing of technological changes, capital management activities, and other actions of the Federal Reserve Board and legislative and regulatory actions and reforms.
Annualized, pro forma, projected and estimated numbers are used for illustrative purpose only, are not forecasts and may not reflect actual results.
CoBiz Financial Inc.
June 30, 2018
(unaudited)
| | | | | | | | | | | | | |
| | Three months ended June 30, | | Six months ended June 30, | |
(in thousands, except per share amounts) | | 2018 | | 2017 | | 2018 | | 2017 | |
INCOME STATEMENT DATA | | | | | | | | | | | | | |
Interest income | | $ | 39,177 | | $ | 35,406 | | $ | 76,954 | | $ | 68,487 | |
Interest expense | | | 4,028 | | | 3,401 | | | 7,196 | | | 6,404 | |
NET INTEREST INCOME BEFORE PROVISION | | | 35,149 | | | 32,005 | | | 69,758 | | | 62,083 | |
Provision for loan losses | | | (901) | | | 673 | | | (1,226) | | | 1,280 | |
NET INTEREST INCOME AFTER PROVISION | | | 36,050 | | | 31,332 | | | 70,984 | | | 60,803 | |
Noninterest income | | | 8,209 | | | 8,311 | | | 17,170 | | | 16,639 | |
Noninterest expense | | | 30,354 | | | 26,655 | | | 58,924 | | | 53,769 | |
INCOME BEFORE INCOME TAXES | | | 13,905 | | | 12,988 | | | 29,230 | | | 23,673 | |
Provision for income taxes | | | 2,511 | | | 3,499 | | | 4,855 | | | 5,570 | |
NET INCOME | | $ | 11,394 | | $ | 9,489 | | $ | 24,375 | | $ | 18,103 | |
| | | | | | | | | | | | | |
EARNINGS PER COMMON SHARE | | | | | | | | | | | | | |
BASIC | | $ | 0.27 | | $ | 0.23 | | $ | 0.58 | | $ | 0.43 | |
DILUTED | | $ | 0.27 | | $ | 0.23 | | $ | 0.58 | | $ | 0.43 | |
| | | | | | | | | | | | | |
EQUITY MEASURES | | | | | | | | | | | | | |
Common shares outstanding at period end (in thousands) | | | | | | | | | 42,390 | | | 41,771 | |
Book value per common share | | | | | | | | $ | 8.16 | | $ | 7.65 | |
Tangible book value per common share * | | | | | | | | $ | 8.15 | | $ | 7.62 | |
Tangible common equity to tangible assets * | | | | | | | | $ | 8.90% | | $ | 8.37% | |
| | | | | | | | | | | | | |
* See accompanying Reconciliation of Non-GAAP Measures to GAAP | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
PERIOD END BALANCES | | | | | | | | | | | | | |
Total assets | | | | | | | | $ | 3,881,875 | | $ | 3,803,490 | |
Investments | | | | | | | | | 646,648 | | | 568,181 | |
Loans | | | | | | | | | 3,066,254 | | | 3,060,954 | |
Intangible assets | | | | | | | | | 621 | | | 1,026 | |
Deposits | | | | | | | | | 3,144,541 | | | 3,072,639 | |
Subordinated debentures | | | | | | | | | 131,405 | | | 131,318 | |
Common shareholders' equity | | | | | | | | | 346,104 | | | 319,470 | |
Interest-earning assets | | | | | | | | | 3,731,161 | | | 3,656,377 | |
Interest-bearing liabilities | | | | | | | | | 2,054,046 | | | 2,140,752 | |
| | | | | | | | | | | | | |
BALANCE SHEET AVERAGES | | | | | | | | | | | | | |
Average assets | | | | | | | | $ | 3,826,650 | | $ | 3,703,281 | |
Average investments | | | | | | | | | 596,511 | | | 557,378 | |
Average loans | | | | | | | | | 3,081,880 | | | 2,983,284 | |
Average deposits | | | | | | | | | 3,170,134 | | | 3,019,399 | |
Average subordinated debentures | | | | | | | | | 131,382 | | | 131,297 | |
Average shareholders' equity | | | | | | | | | 336,575 | | | 310,831 | |
Average interest-earning assets | | | | | | | | | 3,695,003 | | | 3,563,477 | |
Average interest-bearing liabilities | | | | | | | | | 1,954,787 | | | 2,053,971 | |
CoBiz Financial Inc.
June 30, 2018
(unaudited)
| | | | | | | | | | | | | |
| | Three months ended June 30, | | Six months ended June 30, | |
(in thousands) | | 2018 | | 2017 | | 2018 | | 2017 | |
PROFITABILITY MEASURES | | | | | | | | | | | | | |
Net interest margin | | | 3.94 | % | | 3.76 | % | | 3.94 | % | | 3.76 | % |
Efficiency ratio - taxable equivalent * | | | 68.13 | % | | 62.83 | % | | 66.10 | % | | 65.04 | % |
Return on average assets | | | 1.19 | % | | 1.01 | % | | 1.28 | % | | 0.99 | % |
Return on average shareholders' equity | | | 13.34 | % | | 12.10 | % | | 14.60 | % | | 11.74 | % |
Noninterest income as a percentage of taxable equivalent operating revenue * | | | 18.42 | % | | 19.61 | % | | 19.22 | % | | 20.01 | % |
| | | | | | | | | | | | | |
CREDIT QUALITY | | | | | | | | | | | | | |
Nonperforming loans | | | | | | | | | | | | | |
Nonaccrual loans | | | | | | | | $ | 16,741 | | $ | 3,830 | |
Loans 90 days or more past due and accruing interest | | | | | | | | | - | | | 664 | |
Total nonperforming loans | | | | | | | | | 16,741 | | | 4,494 | |
OREO & repossessed assets | | | | | | | | | 4,979 | | | 5,079 | |
Total nonperforming assets | | | | | | | | $ | 21,720 | | $ | 9,573 | |
| | | | | | | | | | | | | |
Performing renegotiated loans | | | | | | | | $ | 34,674 | | $ | 31,482 | |
Classified loans | | | | | | | | $ | 81,728 | | $ | 50,587 | |
| | | | | | | | | | | | | |
Charge-offs | | | | | | | | $ | (1,448) | | $ | (308) | |
Recoveries | | | | | | | | | 567 | | | 1,360 | |
Net recoveries (charge-offs) | | | | | | | | $ | (881) | | $ | 1,052 | |
| | | | | | | | | | | | | |
Nonperforming assets to total assets | | | | | | | | | 0.56 | % | | 0.25 | % |
Nonperforming loans to total loans | | | | | | | | | 0.55 | % | | 0.15 | % |
Nonperforming loans and OREO to total loans and OREO | | | | | | | | | 0.71 | % | | 0.31 | % |
Allowance for loan losses to total loans | | | | | | | | | 1.17 | % | | 1.16 | % |
Allowance for loan losses to nonperforming loans | | | | | | | | | 214.05 | % | | 792.72 | % |
| | | | | | | | | | | | | | | |
| | | | | Total | | NPAs as a | |
NONPERFORMING ASSETS BY MARKET | | Colorado | | Arizona | | Total | | in Category | | % | |
Commercial | | $ | 15,768 | | $ | 470 | | $ | 16,238 | | $ | 1,222,780 | | 1.33 | % |
Real estate - mortgage | | | 295 | | | 38 | | | 333 | | | 1,233,550 | | 0.03 | % |
Construction & land | | | - | | | - | | | - | | | 242,653 | | - | % |
Consumer | | | 148 | | | - | | | 148 | | | 273,986 | | 0.05 | % |
Other loans | | | 22 | | | - | | | 22 | | | 93,285 | | 0.02 | % |
OREO & repossessed assets | | | 4,803 | | | 176 | | | 4,979 | | | 4,979 | | - | |
NPAs | | $ | 21,036 | | $ | 684 | | $ | 21,720 | | $ | 3,071,233 | | 0.71 | % |
| | | | | | | | | | | | | | | |
Total loans | | $ | 1,968,440 | | $ | 1,097,814 | | $ | 3,066,254 | | | | | | |
Total loans and OREO | | | 1,973,243 | | | 1,097,990 | | | 3,071,233 | | | | | | |
Nonperforming loans to loans | | | 0.82 | % | | 0.05 | % | | 0.55 | % | | | | | |
Nonperforming loans and OREO to total loans and OREO | | | 1.07 | % | | 0.06 | % | | 0.71 | % | | | | | |
| | | | | | | | | | | | | | | |
* See accompanying Reconciliation of Non-GAAP Measures to GAAP | | | | | | | | |
CoBiz Financial Inc.
June 30, 2018
(unaudited)
| | | | | | | | | | | | | | | | |
| | Three months ended | |
| | June 30, | | March 31, | | December 31, | | September 30, | | June 30, | |
(in thousands, except per share amounts) | | 2018 | | 2018 | | 2017 | | 2017 | | 2017 | |
Interest income | | $ | 39,177 | | $ | 37,777 | | $ | 37,753 | | $ | 36,947 | | $ | 35,406 | |
Interest expense | | | 4,028 | | | 3,168 | | | 3,031 | | | 3,178 | | | 3,401 | |
Net interest income before provision | | | 35,149 | | | 34,609 | | | 34,722 | | | 33,769 | | | 32,005 | |
Provision for loan losses | | | (901) | | | (325) | | | 945 | | | 1,060 | | | 673 | |
Net interest income after provision | | | 36,050 | | | 34,934 | | | 33,777 | | | 32,709 | | | 31,332 | |
Noninterest income: | | | | | | | | | | | | | | | | |
Deposit service charges | | $ | 1,577 | | $ | 1,655 | | $ | 1,505 | | $ | 1,660 | | $ | 1,714 | |
Investment advisory income | | | 1,678 | | | 1,655 | | | 1,639 | | | 1,550 | | | 1,500 | |
Insurance income | | | 3,138 | | | 3,459 | | | 3,294 | | | 3,338 | | | 3,427 | |
Other investments | | | 124 | | | 175 | | | 132 | | | 355 | | | 372 | |
Derivative valuation | | | 45 | | | 156 | | | (3) | | | (35) | | | (80) | |
Other income | | | 1,647 | | | 1,861 | | | 1,800 | | | 2,127 | | | 1,378 | |
Total noninterest income | | | 8,209 | | | 8,961 | | | 8,367 | | | 8,995 | | | 8,311 | |
Noninterest expense: | | | | | | | | | | | | | | | | |
Salaries and employee benefits | | $ | 20,761 | | $ | 19,747 | | $ | 19,212 | | $ | 18,421 | | $ | 18,335 | |
Occupancy expenses, premises and equipment | | | 3,651 | | | 3,711 | | | 3,709 | | | 3,666 | | | 3,685 | |
Amortization of intangibles | | | 49 | | | 56 | | | 150 | | | 150 | | | 150 | |
Other operating expenses | | | 5,897 | | | 5,176 | | | 4,862 | | | 4,149 | | | 4,453 | |
Net (gain) loss on securities, other assets and OREO | | | (4) | | | (120) | | | (200) | | | 6 | | | 32 | |
Total noninterest expense | | | 30,354 | | | 28,570 | | | 27,733 | | | 26,392 | | | 26,655 | |
Net income before income taxes | | | 13,905 | | | 15,325 | | | 14,411 | | | 15,312 | | | 12,988 | |
Provision for income taxes | | | 2,511 | | | 2,344 | | | 10,789 | | | 4,119 | | | 3,499 | |
Net income | | $ | 11,394 | | $ | 12,981 | | $ | 3,622 | | $ | 11,193 | | $ | 9,489 | |
| | | | | | | | | | | | | | | | |
Earnings per common share | | | | | | | | | | | | | | | | |
Basic | | $ | 0.27 | | $ | 0.31 | | $ | 0.09 | | $ | 0.27 | | $ | 0.23 | |
Diluted | | $ | 0.27 | | $ | 0.31 | | $ | 0.09 | | $ | 0.27 | | $ | 0.23 | |
| | | | | | | | | | | | | | | | |
PROFITABILITY MEASURES | | | | | | | | | | | | | | | | |
Net interest margin | | | 3.94 | % | | 3.93 | % | | 3.95 | % | | 3.91 | % | | 3.76 | % |
Efficiency ratio - taxable equivalent * | | | 68.13 | % | | 64.07 | % | | 61.56 | % | | 58.61 | % | | 62.83 | % |
Return on average assets | | | 1.19 | % | | 1.38 | % | | 0.37 | % | | 1.17 | % | | 1.01 | % |
Return on average shareholders' equity | | | 13.34 | % | | 15.93 | % | | 4.30 | % | | 13.66 | % | | 12.10 | % |
Noninterest income as a percentage of taxable equivalent operating revenue * | | | 18.42 | % | | 20.01 | % | | 18.44 | % | | 19.98 | % | | 19.61 | % |
| | | | | | | | | | | | | | | | |
EQUITY MEASURES | | | | | | | | | | | | | | | | |
Common shares outstanding at period end (in thousands) | | | 42,390 | | | 42,366 | | | 42,217 | | | 41,800 | | | 41,771 | |
Diluted weighted average common shares outstanding (in thousands) | | | 42,082 | | | 41,963 | | | 41,908 | | | 41,781 | | | 41,713 | |
Book value per common share | | $ | 8.16 | | $ | 7.99 | | $ | 7.80 | | $ | 7.87 | | $ | 7.65 | |
Tangible book value per common share * | | $ | 8.15 | | $ | 7.98 | | $ | 7.78 | | $ | 7.85 | | $ | 7.62 | |
| | | | | | | | | | | | | | | | |
Tangible common equity to tangible assets * | | | 8.90 | % | | 8.86 | % | | 8.54 | % | | 8.56 | % | | 8.37 | % |
Tier 1 capital ratio | | | ** | % | | 12.35 | % | | 11.79 | % | | 11.65 | % | | 11.52 | % |
Total risk-based capital ratio | | | ** | % | | 15.15 | % | | 14.55 | % | | 14.49 | % | | 14.36 | % |
| | | | | | | | | | | | | | | | |
* See accompanying Reconciliation of Non-GAAP Measures to GAAP
** Ratios unavailable at the time of release
CoBiz Financial Inc.
June 30, 2018
(unaudited)
| | | | | | | | | | | | | | | | |
| | At | |
| | June 30, | | March 31, | | December 31, | | September 30, | | June 30, | |
(in thousands) | | 2018 | | 2018 | | 2017 | | 2017 | | 2017 | |
PERIOD END BALANCES | | | | | | | | | | | | | | | | |
Total assets | | $ | 3,881,875 | | $ | 3,815,507 | | $ | 3,846,272 | | $ | 3,836,843 | | $ | 3,803,490 | |
Investments | | | 646,648 | | | 582,251 | | | 539,416 | | | 549,748 | | | 568,181 | |
Loans | | | 3,066,254 | | | 3,084,442 | | | 3,145,563 | | | 3,121,698 | | | 3,060,954 | |
Deposits | | | 3,144,541 | | | 3,179,766 | | | 3,225,220 | | | 3,177,532 | | | 3,072,639 | |
Common shareholders' equity | | | 346,104 | | | 338,557 | | | 329,284 | | | 329,090 | | | 319,470 | |
| | | | | | | | | | | | | | | | |
BALANCE SHEET AVERAGES | | | | | | | | | | | | | | | | |
Average assets | | $ | 3,831,978 | | $ | 3,821,262 | | $ | 3,862,902 | | $ | 3,795,822 | | $ | 3,772,484 | |
Average investments | | | 624,333 | | | 568,379 | | | 550,853 | | | 564,690 | | | 575,363 | |
Average loans | | | 3,056,031 | | | 3,108,017 | | | 3,143,543 | | | 3,072,370 | | | 3,036,949 | |
Average deposits | | | 3,140,911 | | | 3,199,684 | | | 3,272,895 | | | 3,154,343 | | | 3,012,706 | |
Average shareholders' equity | | | 342,627 | | | 330,458 | | | 334,404 | | | 325,136 | | | 314,669 | |
Average interest-earning assets | | | 3,697,106 | | | 3,692,875 | | | 3,716,903 | | | 3,656,949 | | | 3,633,412 | |
Average interest-bearing liabilities | | | 1,954,742 | | | 1,954,837 | | | 1,971,962 | | | 2,027,857 | | | 2,115,642 | |
| | | | | | | | | | | | | | | | |
LOANS | | | | | | | | | | | | | | | | |
Commercial | | $ | 1,222,780 | | $ | 1,237,176 | | $ | 1,250,571 | | $ | 1,251,815 | | $ | 1,272,304 | |
Real estate - mortgage | | | 1,233,550 | | | 1,247,931 | | | 1,249,497 | | | 1,258,906 | | | 1,228,945 | |
Construction & land | | | 242,653 | | | 228,898 | | | 264,401 | | | 215,172 | | | 162,318 | |
Consumer | | | 273,986 | | | 272,783 | | | 282,149 | | | 287,300 | | | 287,790 | |
Other | | | 93,285 | | | 97,654 | | | 98,945 | | | 108,505 | | | 109,597 | |
Total gross loans | | | 3,066,254 | | | 3,084,442 | | | 3,145,563 | | | 3,121,698 | | | 3,060,954 | |
Less allowance for loan losses | | | (35,834) | | | (36,796) | | | (37,941) | | | (36,850) | | | (35,625) | |
Total net loans | | $ | 3,030,420 | | $ | 3,047,646 | | $ | 3,107,622 | | $ | 3,084,848 | | $ | 3,025,329 | |
| | | | | | | | | | | | | | | | |
Gross loans - Colorado | | $ | 1,968,440 | | $ | 1,976,976 | | $ | 2,018,415 | | $ | 2,014,676 | | $ | 1,963,177 | |
Gross loans - Arizona | | $ | 1,097,814 | | $ | 1,107,466 | | $ | 1,127,148 | | $ | 1,107,022 | | $ | 1,097,777 | |
| | | | | | | | | | | | | | | | |
DEPOSITS | | | | | | | | | | | | | | | | |
Money market | | $ | 864,190 | | $ | 866,108 | | $ | 875,936 | | $ | 925,589 | | $ | 898,615 | |
Interest-bearing demand | | | 712,061 | | | 736,929 | | | 737,934 | | | 721,600 | | | 696,971 | |
Savings | | | 21,218 | | | 22,976 | | | 21,453 | | | 21,210 | | | 22,748 | |
Certificates of deposits under $100 | | | 16,897 | | | 17,466 | | | 17,715 | | | 18,445 | | | 18,748 | |
Certificates of deposits $100 and over | | | 64,030 | | | 61,968 | | | 69,736 | | | 76,266 | | | 79,103 | |
Reciprocal CDARS | | | 15,251 | | | 23,530 | | | 28,796 | | | 40,630 | | | 42,046 | |
Total interest-bearing deposits | | | 1,693,647 | | | 1,728,977 | | | 1,751,570 | | | 1,803,740 | | | 1,758,231 | |
Noninterest-bearing demand deposits | | | 1,450,894 | | | 1,450,789 | | | 1,473,650 | | | 1,373,792 | | | 1,314,408 | |
Total deposits | | $ | 3,144,541 | | $ | 3,179,766 | | $ | 3,225,220 | | $ | 3,177,532 | | $ | 3,072,639 | |
| | | | | | | | | | | | | | | | |
ALLOWANCE FOR LOAN LOSSES | | | | | | | | | | | | | | | | |
Beginning allowance for loan losses | | $ | 36,796 | | $ | 37,941 | | $ | 36,850 | | $ | 35,625 | | $ | 34,211 | |
Provision for loan losses | | | (901) | | | (325) | | | 945 | | | 1,060 | | | 673 | |
Net recovery (charge-off) | | | (61) | | | (820) | | | 146 | | | 165 | | | 741 | |
Ending allowance for loan losses | | $ | 35,834 | | $ | 36,796 | | $ | 37,941 | | $ | 36,850 | | $ | 35,625 | |
| | | | | | | | | | | | | | | | |
CREDIT QUALITY | | | | | | | | | | | | | | | | |
Nonperforming loans | | | | | | | | | | | | | | | | |
Nonaccrual loans | | $ | 16,741 | | $ | 18,200 | | $ | 7,517 | | $ | 4,863 | | $ | 3,830 | |
Loans 90 days or more past due and accruing interest | | | - | | | - | | | 348 | | | 20 | | | 664 | |
Total nonperforming loans | | | 16,741 | | | 18,200 | | | 7,865 | | | 4,883 | | | 4,494 | |
OREO and repossessed assets | | | 4,979 | | | 4,979 | | | 5,079 | | | 5,079 | | | 5,079 | |
Total nonperforming assets | | $ | 21,720 | | $ | 23,179 | | $ | 12,944 | | $ | 9,962 | | $ | 9,573 | |
Performing renegotiated loans | | $ | 34,674 | | $ | 41,400 | | $ | 52,817 | | $ | 33,205 | | $ | 31,482 | |
Classified loans | | $ | 81,728 | | $ | 83,936 | | $ | 74,674 | | $ | 54,355 | | $ | 50,587 | |
| | | | | | | | | | | | | | | | |
ASSET QUALITY MEASURES | | | | | | | | | | | | | | | | |
Nonperforming assets to total assets | | | 0.56 | % | | 0.61 | % | | 0.34 | % | | 0.26 | % | | 0.25 | % |
Nonperforming loans to total loans | | | 0.55 | % | | 0.59 | % | | 0.25 | % | | 0.16 | % | | 0.15 | % |
Nonperforming loans and OREO to total loans and OREO | | | 0.71 | % | | 0.75 | % | | 0.41 | % | | 0.32 | % | | 0.31 | % |
Allowance for loan losses to total loans | | | 1.17 | % | | 1.19 | % | | 1.21 | % | | 1.18 | % | | 1.16 | % |
Allowance for loan losses to nonperforming loans | | | 214.05 | % | | 202.18 | % | | 482.40 | % | | 754.66 | % | | 792.72 | % |
CoBiz Financial Inc.
June 30, 2018
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the three months ended, | |
| | June 30, 2018 | | March 31, 2018 | | June 30, 2017 | |
| | | | | Interest | | Average | | | | | Interest | | Average | | | | | Interest | | Average | |
| | Average | | earned | | yield | | Average | | earned | | yield | | Average | | earned | | yield | |
(in thousands) | | balance | | or paid | | or cost | | balance | | or paid | | or cost | | balance | | or paid | | or cost | |
ASSETS | | | | | | | | | | | | | | | | | | | | | | | | | |
Federal funds sold and other | | $ | 16,742 | | $ | 70 | | 1.65 | % | $ | 16,479 | | $ | 79 | | 1.92 | % | $ | 21,100 | | $ | 54 | | 1.01 | % |
Investment securities | | | 624,333 | | | 4,565 | | 2.92 | % | | 568,379 | | | 3,993 | | 2.81 | % | | 575,363 | | | 3,999 | | 2.78 | % |
Loans | | | 3,056,031 | | | 35,745 | | 4.63 | % | | 3,108,017 | | | 34,910 | | 4.49 | % | | 3,036,949 | | | 33,409 | | 4.35 | % |
Total interest-earning assets | | $ | 3,697,106 | | $ | 40,380 | | 4.33 | % | $ | 3,692,875 | | $ | 38,982 | | 4.22 | % | $ | 3,633,412 | | $ | 37,462 | | 4.08 | % |
Noninterest-earning assets | | | 134,872 | | | | | | | | 128,387 | | | | | | | | 139,072 | | | | | | |
Total assets | | $ | 3,831,978 | | | | | | | $ | 3,821,262 | | | | | | | $ | 3,772,484 | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | | | | | | | | | | | | | | | | | | |
Deposits | | | | | | | | | | | | | | | | | | | | | | | | | |
Money market | | $ | 856,702 | | $ | 956 | | 0.45 | % | $ | 875,376 | | $ | 615 | | 0.28 | % | $ | 888,217 | | $ | 586 | | 0.26 | % |
Interest-bearing demand | | | 657,720 | | | 351 | | 0.21 | % | | 678,492 | | | 260 | | 0.16 | % | | 645,243 | | | 234 | | 0.15 | % |
Savings | | | 20,777 | | | 5 | | 0.10 | % | | 22,419 | | | 3 | | 0.05 | % | | 20,429 | | | 3 | | 0.06 | % |
Certificates of deposit | | | | | | | | | | | | | | | | | | | | | | | | | |
Reciprocal | | | 17,264 | | | 12 | | 0.28 | % | | 28,181 | | | 15 | | 0.22 | % | | 42,562 | | | 18 | | 0.17 | % |
Under $100 | | | 17,048 | | | 17 | | 0.40 | % | | 17,579 | | | 16 | | 0.37 | % | | 18,939 | | | 17 | | 0.36 | % |
$100 and over | | | 63,489 | | | 82 | | 0.52 | % | | 64,857 | | | 78 | | 0.49 | % | | 80,085 | | | 97 | | 0.49 | % |
Total interest-bearing deposits | | $ | 1,633,000 | | $ | 1,423 | | 0.35 | % | $ | 1,686,904 | | $ | 987 | | 0.24 | % | $ | 1,695,475 | | $ | 955 | | 0.23 | % |
Other borrowings | | | | | | | | | | | | | | | | | | | | | | | | | |
Securities sold under agreements to repurchase | | | 40,932 | | | 11 | | 0.11 | % | | 48,910 | | | 8 | | 0.07 | % | | 64,181 | | | 9 | | 0.06 | % |
Other short-term borrowings | | | 149,417 | | | 740 | | 1.96 | % | | 87,652 | | | 339 | | 1.55 | % | | 224,679 | | | 593 | | 1.04 | % |
Long-term debt | | | 131,393 | | | 1,854 | | 5.58 | % | | 131,371 | | | 1,834 | | 5.58 | % | | 131,307 | | | 1,844 | | 5.56 | % |
Total interest-bearing liabilities | | $ | 1,954,742 | | $ | 4,028 | | 0.82 | % | $ | 1,954,837 | | $ | 3,168 | | 0.65 | % | $ | 2,115,642 | | $ | 3,401 | | 0.64 | % |
Noninterest-bearing demand accounts | | | 1,507,911 | | | | | | | | 1,512,780 | | | | | | | | 1,317,231 | | | | | | |
Total deposits and interest-bearing liabilities | | | 3,462,653 | | | | | | | | 3,467,617 | | | | | | | | 3,432,873 | | | | | | |
Other noninterest-bearing liabilities | | | 26,698 | | | | | | | | 23,187 | | | | | | | | 24,942 | | | | | | |
Total liabilities | | | 3,489,351 | | | | | | | | 3,490,804 | | | | | | | | 3,457,815 | | | | | | |
Total shareholders' equity | | | 342,627 | | | | | | | | 330,458 | | | | | | | | 314,669 | | | | | | |
Total liabilities and shareholders' equity | | $ | 3,831,978 | | | | | | | $ | 3,821,262 | | | | | | | $ | 3,772,484 | | | | | | |
Net interest income - taxable equivalent | | | | | $ | 36,352 | | | | | | | $ | 35,814 | | | | | | | $ | 34,061 | | | |
Net interest spread | | | | | | | | 3.51 | % | | | | | | | 3.57 | % | | | | | | | 3.44 | % |
Net interest margin | | | | | | | | 3.94 | % | | | | | | | 3.93 | % | | | | | | | 3.76 | % |
Ratio of average interest-earning assets to average interest-bearing liabilities | | | 189.14 | % | | | | | | | 188.91 | % | | | | | | | 171.74 | % | | | | | |
| | | | | | | | | | | | | | | | | |
| | For the six months ended June 30, | |
| | 2018 | | 2017 | |
| | | | | Interest | | Average | | | | | Interest | | Average | |
| | Average | | earned | | yield | | Average | | earned | | yield | |
(in thousands) | | balance | | or paid | | or cost | | balance | | or paid | | or cost | |
ASSETS | | | | | | | | | | | | | | | | | |
Federal funds sold and other | | $ | 16,612 | | $ | 149 | | 1.78 | % | $ | 22,815 | | $ | 110 | | 0.96 | % |
Investment securities | | | 596,511 | | | 8,558 | | 2.87 | % | | 557,378 | | | 7,795 | | 2.80 | % |
Loans | | | 3,081,880 | | | 70,655 | | 4.56 | % | | 2,983,284 | | | 65,017 | | 4.33 | % |
Total interest-earning assets | | $ | 3,695,003 | | $ | 79,362 | | 4.27 | % | $ | 3,563,477 | | $ | 72,922 | | 4.07 | % |
Noninterest-earning assets | | | 131,647 | | | | | | | | 139,804 | | | | | | |
Total assets | | $ | 3,826,650 | | | | | | | $ | 3,703,281 | | | | | | |
| | | | | | | | | | | | | | | | | |
LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | | | | | | | | | | |
Deposits | | | | | | | | | | | | | | | | | |
Money market | | $ | 865,987 | | $ | 1,571 | | 0.37 | % | $ | 894,378 | | $ | 1,178 | | 0.27 | % |
Interest-bearing demand | | | 668,048 | | | 611 | | 0.18 | % | | 648,431 | | | 479 | | 0.15 | % |
Savings | | | 21,593 | | | 8 | | 0.07 | % | | 19,693 | | | 5 | | 0.05 | % |
Certificates of deposit | | | | | | | | | | | | | | | | | |
Reciprocal | | | 22,692 | | | 27 | | 0.24 | % | | 43,140 | | | 39 | | 0.18 | % |
Under $100 | | | 17,312 | | | 33 | | 0.38 | % | | 19,203 | | | 34 | | 0.36 | % |
$100 and over | | | 64,169 | | | 160 | | 0.50 | % | | 82,972 | | | 207 | | 0.50 | % |
Total interest-bearing deposits | | $ | 1,659,801 | | $ | 2,410 | | 0.29 | % | $ | 1,707,817 | | $ | 1,942 | | 0.23 | % |
Other borrowings | | | | | | | | | | | | | | | | | |
Securities sold under agreements to repurchase | | | 44,899 | | | 19 | | 0.08 | % | | 57,176 | | | 17 | | 0.06 | % |
Other short-term borrowings | | | 118,705 | | | 1,079 | | 1.81 | % | | 157,681 | | | 769 | | 0.97 | % |
Long term-debt | | | 131,382 | | | 3,688 | | 5.58 | % | | 131,297 | | | 3,676 | | 5.57 | % |
Total interest-bearing liabilities | | $ | 1,954,787 | | $ | 7,196 | | 0.74 | % | $ | 2,053,971 | | $ | 6,404 | | 0.62 | % |
Noninterest-bearing demand accounts | | | 1,510,333 | | | | | | | | 1,311,582 | | | | | | |
Total deposits and interest-bearing liabilities | | | 3,465,120 | | | | | | | | 3,365,553 | | | | | | |
Other noninterest-bearing liabilities | | | 24,955 | | | | | | | | 26,897 | | | | | | |
Total liabilities | | | 3,490,075 | | | | | | | | 3,392,450 | | | | | | |
Total shareholders' equity | | | 336,575 | | | | | | | | 310,831 | | | | | | |
Total liabilities and shareholders' equity | | $ | 3,826,650 | | | | | | | $ | 3,703,281 | | | | | | |
Net interest income - taxable equivalent | | | | | $ | 72,166 | | | | | | | $ | 66,518 | | | |
Net interest spread | | | | | | | | 3.53 | % | | | | | | | 3.45 | % |
Net interest margin | | | | | | | | 3.94 | % | | | | | | | 3.76 | % |
Ratio of average interest-earning assets to average interest-bearing liabilities | | | 189.02 | % | | | | | | | 173.49 | % | | | | | |
CoBiz Financial Inc.
June 30, 2018
(unaudited)
Reconciliation of Non-GAAP Measures to GAAP
(in thousands, except per share amounts)
The Company believes these non-GAAP financial measures enable investors to obtain an understanding of the operating results of the Company’s core business and reflect the basis on which management internally reviews financial performance and capital adequacy. These non-GAAP financial measures are not a substitute for operating results determined in accordance with GAAP nor do they necessarily conform to non-GAAP financial measures that may be presented by other companies.
The following tables include non-GAAP financial measures related to tangible common equity, tangible assets and tangible book value per common share. Shareholders' equity and total assets have been adjusted to exclude intangible assets.
| | | | | | | | | | | | | | | | | |
| | | At | |
| | | June 30, | | March 31, | | December 31, | | September 30, | | June 30, | |
| (in thousands, except per share amounts) | | 2018 | | 2018 | | 2017 | | 2017 | | 2017 | |
| Shareholders' equity as reported - GAAP | | $ | 346,104 | | $ | 338,557 | | $ | 329,284 | | $ | 329,090 | | $ | 319,470 | |
| Intangible assets | | | (621) | | | (671) | | | (726) | | | (876) | | | (1,026) | |
A | Tangible common equity - non-GAAP | | $ | 345,483 | | $ | 337,886 | | $ | 328,558 | | $ | 328,214 | | $ | 318,444 | |
| | | | | | | | | | | | | | | | | |
| Total assets as reported - GAAP | | $ | 3,881,875 | | $ | 3,815,507 | | $ | 3,846,272 | | $ | 3,836,843 | | $ | 3,803,490 | |
| Intangible assets | | | (621) | | | (671) | | | (726) | | | (876) | | | (1,026) | |
B | Total tangible assets - non-GAAP | | $ | 3,881,254 | | $ | 3,814,836 | | $ | 3,845,546 | | $ | 3,835,967 | | $ | 3,802,464 | |
| | | | | | | | | | | | | | | | | |
C | Common shares outstanding | | | 42,390 | | | 42,366 | | | 42,217 | | | 41,800 | | | 41,771 | |
| | | | | | | | | | | | | | | | | |
A / B | Tangible common equity to tangible assets - non-GAAP | | | 8.90 | % | | 8.86 | % | | 8.54 | % | | 8.56 | % | | 8.37 | % |
A / C | Tangible book value per common share - non-GAAP | | $ | 8.15 | | $ | 7.98 | | $ | 7.78 | | $ | 7.85 | | $ | 7.62 | |
The following table includes non-GAAP financial measures used in the computation of the efficiency ratio and the ratio of noninterest income to taxable equivalent operating revenue. The efficiency ratio equals noninterest expense adjusted to exclude gains and losses on securities, other assets and other real estate owned (OREO), divided by taxable equivalent operating revenue, which equals the sum of tax equivalent net interest income and noninterest income. To calculate tax equivalent net interest income, the interest earned on tax exempt loans and investment securities has been adjusted to reflect the amount that would have been earned had these investments been subject to normal income taxation.
| | | | | | | | | | | | | | | | | |
| | | Three months ended | |
| | | June 30, | | March 31, | | December 31, | | September 30, | | June 30, | |
| (in thousands) | | 2018 | | 2018 | | 2017 | | 2017 | | 2017 | |
| Noninterest expense - GAAP, adjusted for: | | $ | 30,354 | | $ | 28,570 | | $ | 27,733 | | $ | 26,392 | | $ | 26,655 | |
| Net (gain) loss on securities, other assets and OREO | | | (4) | | | (120) | | | (200) | | | 6 | | | 32 | |
D | Adjusted noninterest expense - non-GAAP | | $ | 30,358 | | $ | 28,690 | | $ | 27,933 | | $ | 26,386 | | $ | 26,623 | |
| | | | | | | | | | | | | | | | | |
| Net interest income - GAAP | | $ | 35,149 | | $ | 34,609 | | $ | 34,722 | | $ | 33,769 | | $ | 32,005 | |
E | Noninterest income - GAAP | | | 8,209 | | | 8,961 | | | 8,367 | | | 8,995 | | | 8,311 | |
| Operating revenue | | | 43,358 | | | 43,570 | | | 43,089 | | | 42,764 | | | 40,316 | |
| Taxable equivalent adjustment | | | 1,203 | | | 1,205 | | | 2,286 | | | 2,258 | | | 2,056 | |
F | Operating revenue - taxable equivalent - non-GAAP | | $ | 44,561 | | $ | 44,775 | | $ | 45,375 | | $ | 45,022 | | $ | 42,372 | |
| | | | | | | | | | | | | | | | | |
D / F | Efficiency ratio - taxable equivalent - non-GAAP | | | 68.13 | % | | 64.07 | % | | 61.56 | % | | 58.61 | % | | 62.83 | % |
E / F | Noninterest income as a percentage of taxable equivalent operating revenue - non-GAAP | | | 18.42 | % | | 20.01 | % | | 18.44 | % | | 19.98 | % | | 19.61 | % |
Pre-tax, Adjusted Earnings (PTAE) is a non-GAAP measure and is calculated as net income adjusted on a taxable equivalent basis less provisions for income taxes and loan losses and further adjusted to exclude gains and losses on securities, other assets and OREO. To calculate taxable equivalent net income, the interest earned on tax exempt loans and investment securities has been adjusted to reflect the amount that would have been earned had these investments been subject to normal income taxation. The Company believes that PTAE is a useful financial measure that enables investors and others to assess the Company's ability to generate capital to cover credit losses and is a reflection of earnings generated by the core business. The following table is a reconciliation of PTAE to its most comparable GAAP measure.
| | | | | | | | | | | | | | |
| | | Three months ended June 30, | | Change | |
| (in thousands) | | 2018 | | 2017 | | Amount | | % | |
| Net income - GAAP, adjusted for: | | $ | 11,394 | | $ | 9,489 | | $ | 1,905 | | | 20.1 | % |
| Taxable equivalent adjustment | | | 1,203 | | | 2,056 | | | (853) | | | 41.5 | % |
| Provision for income taxes | | | 2,511 | | | 3,499 | | | (988) | | | 28.2 | % |
| Provision for loan losses | | | (901) | | | 673 | | | (1,574) | | | 233.9 | % |
| Net (gain) loss on securities, other assets and other real estate owned | | | (4) | | | 32 | | | (36) | | | 112.5 | % |
| Pre-tax, Adjusted Earnings (PTAE) - non-GAAP | | $ | 14,203 | | $ | 15,749 | | $ | (1,546) | | | 9.8 | % |
Diluted earnings per common share (EPS), adjusted to exclude Merger-related costs and the TCJA charge, is a non-GAAP measure. The Company believes presenting net income and EPS excluding the effect of Merger-related costs and the TCJA charge is meaningful to increase comparability of period-to-period results. The following table is a reconciliation of diluted earnings per share to adjusted diluted earnings per share.
| | | | | | | | | | | | | | | | |
| | | Three months ended |
| | | June 30, | | March 31, | | December 31, | | September 30, | | June 30, |
| (in thousands, except per share amounts) | | 2018 | | 2018 | | 2017 | | 2017 | | 2017 |
| Net income - GAAP, adjusted for: | | $ | 11,394 | | $ | 12,981 | | $ | 3,622 | | $ | 11,193 | | $ | 9,489 |
| Merger-related costs, net of tax | | | 1,537 | | | - | | | - | | | - | | | - |
| TCJA charge | | | - | | | - | | | 7,150 | | | - | | | - |
| Adjusted net income - non-GAAP | | $ | 12,931 | | $ | 12,981 | | $ | 10,772 | | $ | 11,193 | | $ | 9,489 |
| | | | | | | | | | | | | | | | |
| Weighted average common shares outstanding - diluted | | | 42,082 | | | 41,963 | | | 41,908 | | | 41,781 | | | 41,713 |
| Diluted EPS - GAAP 1 | �� | $ | 0.27 | | $ | 0.31 | | $ | 0.09 | | $ | 0.27 | | $ | 0.23 |
| Adjusted diluted EPS - non-GAAP 1 | | $ | 0.30 | | $ | 0.31 | | $ | 0.25 | | $ | 0.27 | | $ | 0.23 |
| | | | | | | | | | | | | | | | |
| 1 The calculation of EPS excludes earnings allocated to participating securities. | | | | | | | | |
