Exhibit 99.1
CoBiz Inc. Reports 32% Diluted EPS Growth for the Second Quarter 2006
Denver, CO — CoBiz Inc. (Nasdaq: COBZ), a financial services holding company with $2.1 billion in assets, reported second quarter 2006 diluted EPS of $.25, an increase of 32% from second quarter 2005 diluted EPS of $.19. For the first half of 2006, diluted EPS reached $.48, up from $.40 reported in the year-earlier period. Return on average equity was 16.3% for the current quarter versus 14.0% a year earlier, and 15.8% year-to-date versus 14.9% in the prior year’s period. Return on average assets was 1.15% for the current quarter versus 1.00% a year earlier, and 1.12% year-to-date versus 1.06% in the prior year’s period.
Second Quarter 2006 Highlights
(Compared with one year ago)
· Net interest income grew 14.0%
· Non-interest income increased 35.2%
· Average loans and deposits were up 20.9% and 14.6%, respectively
· Credit quality remains strong with .04% nonperforming assets to total assets
“We are very pleased with the performance of our company during the second quarter,” said Chairman and CEO Steve Bangert. “The momentum of both our core banking business and our fee-based companies together with continued excellent credit quality is very encouraging as we enter the second half of 2006.”
Net Interest Income & Margin
Net interest income for the second quarter of 2006 increased to $19.6 million, up $2.4 million or 14.0% over the second quarter of 2005. Year-to-date, net interest income for 2006 was $38.4 million, up $4.5 million or 13.2% over the same period last year. This was primarily attributable to a stable net interest margin and an increase in average earnings assets of 13.5% during the first half of 2006.
The net interest margin remained steady during the second quarter, down two basis points versus the prior year’s quarter (4.20% versus 4.22%) and down one basis point versus the first half of 2005 (4.22% versus 4.23%).
“A flat or slightly inverted yield curve is obviously a tough environment for commercial banks and CoBiz is no exception to that,” commented Bangert. “However, I am pleased that our margin has remained stable during the past year, fluctuating by only a few basis points. Even with a static yield curve, I expect our margin to continue to be fairly stable for the remainder of 2006.”
Non-Interest Income
Non-interest income for the second quarter of 2006 increased to $7.2 million, up $1.9 million or 35.2% over the second quarter of 2005. For the first half of 2006, non-interest
income reached $13.6 million, an increase of $1.5 million or 12.7% versus the same period in 2005. As a percentage of total operating revenue, non-interest income increased to 27.0% in the second quarter of this year versus 23.7% in the second quarter of 2005.
The largest contributor to the second quarter performance was a $1.5 million increase in investment banking income. The investment advisory and insurance businesses also posted strong results with increases of 7.9% and 11.4%, respectively, versus the second quarter of 2005.
“Our investment banking firm, Green, Manning & Bunch (GMB), finished the second quarter on a strong note,” said Bangert. “GMB’s Construction Industry Practice represented a leading high-end masonry products manufacturer and distributor in its sale to the largest brick manufacturer in the world. This transaction sets the tone for what I believe will be a continuation of this success into the third and fourth quarters.”
Operating Expenses
Operating expenses increased $1.9 million or 12.8% over the second quarter of 2005. For the first half of 2006, operating expenses increased $3.1 million or 10.2%. The increase in expenses during the second quarter was due to an increase in compensation, primarily from the continued hiring of seasoned bankers, bonuses paid in conjunction with the quarter’s increase in investment banking income, and the impact of expensing stock-based compensation under SFAS 123(R).
The efficiency ratio decreased to 62.7% during the second quarter of 2006 versus 66.2% in the prior year’s quarter. For the year, the efficiency ratio is 64.2% versus 65.6% in the same period of 2005.
Loans and Deposits
Loan balances finished the second quarter at $1.46 billion, an increase of $258.5 million or 21.6% over balances of $1.20 billion one year ago. The Arizona franchise grew its loan balances by 37.9% and delivered 53.2% of the total loan growth during this period, while the Colorado franchise grew its loan balances by 14.5% or 46.8% of the total loan growth. Loan balances grew at a 19.3% annualized pace during the second quarter, with Arizona and Colorado increasing at a 29.7% and 14.1% pace, respectively.
Deposit and customer repurchase balances ended the second quarter at $1.64 billion, an increase of $246.1 million or 17.6% over balances of $1.40 billion one year ago. The Colorado bank experienced 18.3% deposit growth during the past year, representing 83.6% of the total deposit growth during this period. The Arizona bank posted 14.7% growth or 16.3% of the total. Total deposit and customer repurchase balances decreased $13.9 million or 3.4% annualized during the second quarter, primarily due to decreases in the Arizona market. Similar to the first quarter of 2006, core deposit balance volatility
was higher than normal during the quarter with, for example, one account decreasing by $18.3 million on the final day of June.
“I am very encouraged by the loan growth numbers posted during the second quarter, particularly from our Colorado franchise,” stated Bangert. “Our Arizona bank has long experienced solid growth in concert with the strong economy in that state, and it is gratifying to see the Colorado bank come on strong as well.”
Credit Quality
Credit quality continued to be strong at the end of the second quarter with nonperforming assets to total assets of four basis points (0.04%), unchanged from the prior year’s second quarter. The allowance for loan and credit losses increased to $17.8 million at quarter-end, up $2.2 million from last year’s $15.6 million allowance.
Earnings Conference Call
In conjunction with this earnings release, you are invited to listen to the company’s conference call on Friday, July 21, 2006 at 11:00 am ET with Steve Bangert, CoBiz chairman and CEO. The call can be accessed over the Internet at http://www.videonewswire.com/event.asp?id=34603 or by telephone at 800.473.1292 (1.973.409.9262 for international callers).
Contact Information
CoBiz Inc.
Lyne Andrich 303.312.3458
Sue Hermann 303.312.3488
About CoBiz Inc.
CoBiz Inc. (www.cobizinc.com) is a $2.1 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 Private Asset Management; 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 Alexander Capital Management Group; and employee and executive benefits consulting and wealth transfer services through Financial Designs.
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 “will,” “would,” “should,” “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.
