Exhibit 99.1
CoBiz Financial Reports Second Quarter 2007 Results
Announces Share Repurchase Program
Denver — CoBiz Financial Inc. (Nasdaq: COBZ), a financial services holding company with $2.3 billion in assets, reported second quarter 2007 diluted EPS of $0.23, compared to $0.25 diluted EPS a year ago. Diluted EPS for the first half of 2007 was $0.47, compared to $0.48 in the year-earlier period. Net income was $5.66 million in the second quarter 2007 versus $5.81 million one year ago and $11.5 million year-to-date 2007 versus $11.1 million for the prior-year period. Return on average equity was 11.74% for the current quarter versus 16.25% a year earlier, and 12.43% year-to-date 2007 versus 15.84% in the prior year’s period. Return on average assets was 1.04% for the current quarter versus 1.15% a year earlier, and 1.08% year-to-date versus 1.12% in the prior year’s period. Diluted EPS and return on average equity were both affected by the 975,000 shares issued in the secondary stock offering CoBiz completed during the current year.
Second Quarter 2007 Highlights
(Compared with one year ago)
· Loans and deposits (including customer repos) increased 15.4% and 10.5%, respectively
· Net interest income grew 11.0%
· Net interest margin expanded by 12 basis points (0.12 %)
· Credit quality remains strong with 0.09% nonperforming assets to total assets
“Loan growth during the second quarter was phenomenal, increasing $111.0 million over the first quarter. This represents the best quarter for loan growth in the Company’s history” said Chairman and CEO Steve Bangert. “Although I was disappointed in the decrease in net income and EPS during the quarter, the decrease was primarily the result of the seasonality of our fee-based business lines. Our outlook for the remainder of the year remains positive with a healthy loan pipeline, stable asset quality and a significant backlog of business expected to close within our fee-based lines.”
Net Interest Income & Margin
Net interest income for the second quarter of 2007 increased to $21.7 million, up $2.1 million or 11.0% over the second quarter of 2006. Year-to-date, net interest income for 2007 was $42.7 million, up $4.3 million or 11.2% over the same period last year. Both the Colorado and Arizona markets contributed to the loan growth that drove the increase in net interest income.
The net interest margin increased to 4.32% for the second quarter of 2007, from 4.20% in the second quarter of 2006 but down slightly from 4.38% in the first quarter of 2007. For the first half of 2007, the net interest margin increased to 4.35% from 4.22% in the first half of 2006.
Noninterest Income
Noninterest income for the second quarter of 2007 was $6.3 million, down $0.9 million or 12.4% below the second quarter of 2006. For the first half of 2007, noninterest income was $13.0 million, a decrease of $0.6 million or 4.4% versus the same period in 2006. As a percentage of total operating revenue, noninterest income was 22.6% in the second quarter of 2007 versus 27.0% in the second quarter of 2006. Decreases in investment banking and wealth transfer income were the primary causes for the declines. Noninterest income from investment banking and high-end wealth transfer deals are transactional by nature and can fluctuate from period-to-period, creating volatility in our quarterly results.
“While transactions can slip from one quarter to the next, GMB has a sizeable pipeline of quality deals that we expect to close in the latter half of 2007,” said Bangert.
Operating Expenses
Operating expenses increased $1.2 million or 7.1% over the second quarter of 2006. For the first half of 2007, operating expenses increased $3.0 million or 8.9% over the same period in 2006. The increase in expenses during the second quarter and first half of 2007 was due to an increase in compensation, primarily from the continued hiring of seasoned bankers, the cumulative impact of expensing stock-based compensation under SFAS 123(R) and the recently launched company-wide branding project. The Company continues to see good recruitment momentum, adding 13 new bankers during the first half of 2007 versus four new bankers in the prior-year period.
“We officially changed our name to CoBiz Financial Inc. at our annual meeting in May and have begun rolling out our new brand throughout each of our subsidiaries,” said Bangert. “While the cost of the branding effort has increased our operating expense in 2007, the unified presentation of our business will create synergies and cross-sell opportunities that will far outweigh any short-term costs.”
The efficiency ratio increased slightly to 63.5% during the second quarter of 2007 versus 62.7% in the prior year’s quarter. For the year, the efficiency ratio is 64.9% versus 64.2% in the same period of 2006. The Company should realize an improvement in the efficiency ratio in the latter-half of the year as we see stronger quarterly earnings.
Loans and Deposits
Loans ended the quarter at $1.68 billion, an increase of $224.5 million or 15.4% over the second quarter of 2006. Loans grew at an annualized rate of 28.4% in the second quarter of 2007. Arizona Business Bank grew loans by more than $61 million, or at an annualized rate of 42.5%. Colorado Business Bank also had success, increasing loans by $49.0 million, or 20.1% annualized.
Deposit and customer repurchase balances ended the second quarter at $1.82 billion, an increase of $173.0 million or 10.5% from the second quarter of 2006. Noninterest-
bearing demand deposits increased $34.7 million, or 8.2% over the second quarter of 2006, and represented 29.2% of total deposits as of June 30, 2007.
“Deposit growth, which has been a challenge for the industry, is an area we continue to focus on,” said Bangert. “We modified our incentive program this year — putting a greater emphasis on deposit generation, particularly noninterest-bearing deposits — and we recently introduced a Eurodollar sweep product that we began offering at the beginning of July, further enhancing our suite of Treasury Management products. We should see these initiatives begin to pay off as we progress through the remainder of 2007.”
Credit Quality
Credit quality continues to be very strong, with nonperforming assets to total assets improving to nine basis points (0.09%) at June 30, 2007, from 20 basis points (0.20%) at the end of the first quarter. Nonperforming assets to total assets were four basis points (0.04%) as of June 30, 2006. Nonperforming loans to total loans ended the quarter at 12 basis points (0.12%), compared to six basis points (0.06%) at the end of second quarter 2006. The allowance for loan and credit losses increased to $19.4 million at quarter-end, up $1.6 million from $17.8 million at the end of the second quarter of 2006.
Real Estate Capital Markets Group
“We are thrilled to announce our recent success in recruiting the core real estate team from LaSalle Bank’s regional Colorado office. The team is led by two seasoned veterans, recognized as leading real estate bankers in our market” said Bangert. “This greatly extends not only our commercial real estate lending capabilities, but will uniquely position us to introduce new capital market products, including mezzanine debt financing, to our customers.”
Share Repurchase Program
The Company’s Board of Directors authorized a new share repurchase program on July 19, 2007, for the repurchase of up to 5% of its outstanding stock. This program reflects the Company’s confidence in its strong financial position and belief that the repurchase will enhance shareholder value and further position the Company for long-term success.
Share repurchases under this program will be made through open market purchases, block trades or in privately negotiated transactions from time to time and in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, market conditions, and other corporate liquidity requirements and priorities. The share repurchase program may be suspended or terminated at any time without prior notice, and will expire on July 18, 2008.
Earnings Conference Call
In conjunction with this earnings release, you are invited to listen to the company’s conference call on Friday, July 20, 2007 at 11:00 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=40592 or by telephone at (800) 821-1449 (conference ID #8962087).
Contact Information
CoBiz Financial Inc.
Lyne Andrich 303.312.3458
Sue Hermann 303.312.3488
About CoBiz Financial
CoBiz Financial Inc. (www.cobizfinancialinc.com) is a $2.3 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 Alexander Capital Management Group; 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 “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.
