EXHIBIT 99.1
Press Release dated January 22, 2003
For Information Contact | ||
At Greater Bay Bancorp: | At FRB|Weber Shandwick: | |
David L. Kalkbrenner | James Hoyne (analyst/investor information) | |
President and CEO | (310) 407-6546 | |
(650) 614-5767 | ||
Steven C. Smith | ||
EVP, CAO and CFO | ||
(650) 813-8222 |
FOR IMMEDIATE RELEASE
GREATER BAY BANCORP REPORTS
RECORD FULL YEAR 2002 NET INCOME
WITH IMPROVED FOURTH QUARTER CREDIT QUALITY
PALO ALTO, CA, January 22, 2003 — Greater Bay Bancorp (Nasdaq:GBBK), an $8.1 billion in assets financial services holding company, today announced results for the fourth quarter and year ended December 31, 2002.
For the year ended December 31, 2002, Greater Bay Bancorp’sNET INCOME increased 56% to $124.3 million, or $2.30 per diluted share, compared to $79.8 million, or $1.57 per diluted share, for the year ended December 31, 2001. The Company’sCORE NET INCOME, excluding merger and related nonrecurring items, was $2.30 per diluted share for the full year 2002 compared to $1.91 per diluted share for the full year 2001. The Company’sCASH NET INCOME, excluding amortization of intangibles, was $2.36 per diluted share for the full year 2002, compared to $1.58 per diluted share for the full year 2001.
Based onNET INCOMEfor the year ended December 31, 2002, Greater Bay Bancorp’s return on average equity was 20.29%, return on average assets was 1.50% and efficiency ratio was 48.93%. For the year ended December 31, 2001,NET INCOME resulted in a return on average equity of 17.83%, return on average assets of 1.18% and an efficiency ratio of 54.27%. The ratios for both periods include merger and related nonrecurring items and reflect returns based on net income.
Greater Bay Bancorp’sNET INCOME for the fourth quarter of 2002 increased to $30.7 million, or $0.57 per diluted share, compared to $7.5 million, or $0.15 per diluted share, in the fourth quarter of 2001. The Company’sCORE NET INCOME,excluding merger and related nonrecurring items, was $0.57 per diluted share in the fourth quarter of 2002, compared to $0.49 per diluted share in the fourth quarter of 2001. The Company’sCASH NET INCOME, excluding amortization of intangibles, was $0.58 per diluted share in the fourth quarter of 2002, compared to $0.15 per diluted share in the fourth quarter of 2001.
Based onNET INCOME for the fourth quarter of 2002, Greater Bay Bancorp’s return on average equity was 18.22%, return on average assets was 1.48% and efficiency ratio was 54.85%. Based on
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Greater Bay Bancorp’s Fourth Quarter and Year End 2002 Earnings Results
January 22, 2003
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NET INCOME for the fourth quarter of 2001, Greater Bay Bancorp’s return on average equity was 6.35%, return on average assets was 0.39% and efficiency ratio was 79.13%. The ratios for both periods include merger and related nonrecurring items and reflect returns based on net income.
At December 31, 2002, Greater Bay Bancorp’stotal assets were $8.1 billion, an increase of 3% or $199 million from December 31, 2001.Total loans grew to $4.8 billion, a 7% annualized growth rate, from $4.5 billion a year ago, whiletotal deposits increased to $5.3 billion or 6% from $5.0 billion at December 31, 2001. The net deposit growth for the year included a reduction of $92.3 million of institutional deposits. Excluding that decrease, core deposits grew by $374.5 million or 9% in 2002 versus 2001. Institutional deposits also declined in the fourth quarter of 2002. Excluding the decline in institutional deposits, the Company had $43.1 million in relationship deposit growth for the fourth quarter. The Company’s ability to reduce its institutional deposits, combined with a $100 million reduction in other borrowings, was accomplished by a $400 million reduction in the securities portfolio. The strategy to de-leverage the balance sheet and position the Company to be more asset sensitive will reduce net interest income in the short-term, but will position the Company to take advantage of a recovery in the economy over the next several years.
Greater Bay Bancorp’snet interest margin(excluding trust preferred securities (“TPS”) expense) for the fourth quarter of 2002 was 4.61% compared to 4.83% for the fourth quarter of 2001 and 4.68% for the third quarter of 2002. The net interest margin declined for the quarter, primarily as the result of the Federal Reserve Board’s (“the Fed”) decision in November to reduce market rates by 50 basis points. Given the current market interest rate environment, this rate reduction could not all be passed through to depositors, thus it had the effect of compressing the Company’s net interest margin. Should the Fed reduce rates further in 2003, it would place significant pressure on the Company’s net interest margin. For the full year, the Company’s net interest margin (excluding TPS expense) was 4.78% in 2002 compared to 5.07% in 2001.
Non-interest income for the fourth quarter of 2002 increased to $38 million from $10 million in the fourth quarter of 2001, primarily due to a $24 million increase in insurance agency commissions which was the result of Greater Bay Bancorp’s acquisition of ABD Insurance and Financial Services (“ABD”) in March 2002 and a net increase of $1.7 million in securities income. For the full year, non-interest income increased by $111 million in 2002 compared to 2001, with $89 million related to recurring insurance agency revenue and $13.5 million in securities income. The majority of the securities income will not be recurring in future periods.
Greater Bay Bancorp’s operating expenses for the fourth quarter of 2002 increased by $2.0 million from the third quarter of 2002, primarily due to higher expenses related to the Company’s increased focus on compliance and risk management. The increases in fourth quarter operating expenses were net of approximately $5.0 million in reductions to fourth quarter accrual estimates to reflect the current economic environment and the actual expenses anticipated to be paid. Operating expenses for the full year increased by $80 million, with $74 million in ongoing expenses resulting from the acquisition of ABD.
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Greater Bay Bancorp’s Fourth Quarter and Year End 2002 Earnings Results
January 22, 2003
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Credit Quality Overview
Net charge-offs in the fourth quarter of 2002 were $5.8 million or 0.49% of average annualized loans, a reduction of over 70% from the prior quarter of $25.4 million or 2.15% of average annualized loans. The fourth quarter 2002 net charge-off ratio of 0.49% was also lower than the year ago ratio of 0.52%. Nonperforming assets for the fourth quarter of 2002 declined to $38 million, a 20% decline from the $49 million of nonperforming assets in the third quarter of 2002. The ratio of nonperforming assets to total assets was 0.47% at December 31, 2002, compared to 0.58% at September 30, 2002 and 0.39% at December 31, 2001. Greater Bay Bancorp’s allowance for loan losses was $130 million or 2.70% of total loans at December 31, 2002, compared to $125 million or 2.77% at December 31, 2001.
President and Chief Executive Officer David Kalkbrenner commented, “Our efforts to aggressively manage our nonperforming assets were successful during the fourth quarter of 2002 and resulted in a significant decline in net charge-offs and nonperforming assets. While we are very pleased with these results, we recognize that the economy in our area continues to be challenging and we will continue to be vigilant in our credit risk management efforts. However, we do believe we have mitigated the significant portion of the risk in our shared national credit portfolio and that our efforts to focus more attention on the collection process at Matsco, our dental and veterinarian leasing unit, have been successful to date.”
Interest Rate Risk and Investment Portfolio Overview
Greater Bay Bancorp continued its plan to reduce its investment securities portfolio and the related wholesale funding. Mr. Kalkbrenner stated, “As we have previously reported, this strategy will reduce current earnings in the near-term, but will position the Company to take advantage of an improving economy over the next two to three years. We do not believe the economy will improve until the latter part of 2003, but we believe the reduction in current income will be offset by the benefits of a more asset sensitive balance sheet, which should benefit the Company when rates begin to rise. The process to de-leverage the balance sheet that began in the second quarter and continued through the fourth quarter of 2002 will continue into 2003, with a final target of $2 billion for our investment securities portfolio (a reduction of $1.2 billion or 37% from its peak in early 2002). However, managing interest rate risk is a dynamic process and, as market conditions change, our timing and target for the investment securities portfolio could change.”
Capital Overview
The capital ratios of Greater Bay Bancorp and each of its subsidiary banks continue to be above the well-capitalized guidelines established by the bank regulatory agencies. Greater Bay Bancorp’s strong earnings for the fourth quarter of 2002, when combined with its balance sheet de-leveraging strategy, substantially improved the tangible equity to asset ratio to 6.40% at December 31, 2002 from 5.76% one year ago and 4.99% at March 31, 2002 when the Company acquired ABD. The Company’s leverage ratio also increased during the fourth quarter of 2002 to 8.61% from 8.17% in the third quarter of 2002 and 8.01% one year ago. The total risk-based capital ratio increased to 12.97% at December 31, 2002 from 12.61% one quarter ago and 12.79% at December 31, 2001.
Mr. Kalkbrenner commented, “We are extremely pleased with our efforts to effectively manage our capital during 2002. Although the strategic acquisition of ABD during 2002 caused an initial decline
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Greater Bay Bancorp’s Fourth Quarter and Year End 2002 Earnings Results
January 22, 2003
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in our capital ratios, our ability to deliver a significant increase in net income during a period of economic stress, coupled with our de-leveraging strategy, had the effect of increasing our capital ratios from their levels at year-end 2001. We realize capital is a key element in managing a bank prudently and safely and our efforts in 2002 resulted in a more diversified income mix and a stronger company from a capital perspective.”
Forward-Looking Information
2003 Earnings Per Share Guidance
The Company’s earnings in 2002 included nonrecurring net income related to gains on the sale of investment securities and the retirement of a significant portion of the zero coupon debt securities issued in 2002, offset by higher than normal loan loss provisions. In addition, the Company’s decision to de-leverage the balance sheet reduced the income that would be generated from the investment securities portfolio in 2003. Excluding these factors, the Company anticipates net income per share for 2003 to increase by approximately 4% to 7%.
2003 Key Business Drivers
· | Average loan growth – high single digit |
· | Average deposit growth – high single digit |
· | Net interest margin – continued pressure due to economic conditions |
· | Business driver assumptions assume market interest rates will stay relatively flat during 2003 |
Greater Bay Bancorp through its eleven subsidiary banks, Bank of Petaluma, Bank of Santa Clara, Bay Area Bank, Bay Bank of Commerce, Coast Commercial Bank, Cupertino National Bank, Golden Gate Bank, Mid-Peninsula Bank, Mt. Diablo National Bank, Peninsula Bank of Commerce and San Jose National Bank, along with its operating divisions, serves clients throughout Silicon Valley, San Francisco, the San Francisco Peninsula, the East Bay Region, the North Bay Region and the Central Coastal Region. ABD Insurance and Financial Services, a wholly owned subsidiary of Greater Bay Bancorp, provides commercial insurance brokerage, employee benefits consulting and risk management solutions to business clients throughout the United States.
Investors have the opportunity to listen to the conference call live over the Internet through CompanyBoardroom at http://www.companyboardroom.com on Wednesday, January 22, 2003 at 8:00 a.m. Pacific time. Investors should go to the CompanyBoardroom web site 15 minutes prior to the start of the call, as it may be necessary to download audio software to hear the conference call. A replay of the conference call will be available on the CompanyBoardroom web site for 30 days and via telephone through January 29, 2003 by dialing (703) 925-2435 or (888) 266-2086, passcode 6371616.
Safe Harbor
Certain matters discussed in this press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward looking statements relate to the Company’s current expectations regarding future operating results, net loan charge-offs, asset quality, level of loan loss reserves, growth in loans, deposits and assets, continued success of its Regional Community Banking strategy and the strength of the local economy. These forward looking
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Greater Bay Bancorp’s Fourth Quarter and Year End 2002 Earnings Results
January 22, 2003
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statements are subject to certain risks and uncertainties that could cause the actual results, performance or achievements to differ materially from those expressed, suggested or implied by the forward looking statements. These risks and uncertainties include, but are not limited to: (1) the impact of changes in interest rates, a decline in economic conditions at the international, national and local levels and increased competition among financial service providers on the Company’s results of operations, the Company’s ability to continue its internal growth at historical rates, the Company’s ability to maintain its net interest spread, and the quality of the Company’s earning assets; (2) any difficulties that may be encountered in integrating newly acquired businesses and in realizing operating efficiencies; (3) government regulation; (4) the risks relating to the Company’s warrant positions; and (5) the other risks set forth in the Company’s reports filed with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2001.
For additional information and press releases about Greater Bay Bancorp, visit the Company’s web site athttp://www.gbbk.com.
-Financial Tables Follow-
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Greater Bay Bancorp’s Fourth Quarter and Year End 2002 Earnings Results
January 22, 2003
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GREATER BAY BANCORP
DECEMBER 31, 2002 – FINANCIAL SUMMARY (UNAUDITED)
($ in 000's, except share and per share data)
SELECTED CONSOLIDATED FINANCIAL CONDITION DATA:
Dec 31 2002 | Sept 30 2002 | Jun 30 2002 | Mar 31 2002 | Dec 31 2001 | ||||||||||||||||
Cash and Due From Banks | $ | 300,514 | $ | 271,774 | $ | 265,033 | $ | 206,487 | $ | 189,404 | ||||||||||
Investments | 2,576,986 | 2,966,302 | 3,181,788 | 3,215,112 | 2,996,630 | |||||||||||||||
Loans: | ||||||||||||||||||||
Commercial | 2,067,142 | 2,007,389 | 1,997,960 | 1,901,577 | 1,909,056 | |||||||||||||||
Term Real Estate – Commercial | 1,610,277 | 1,529,582 | 1,500,972 | 1,466,686 | 1,407,300 | |||||||||||||||
Total Commercial | 3,677,419 | 3,536,971 | 3,498,932 | 3,368,263 | 3,316,356 | |||||||||||||||
Construction & Land | 710,990 | 715,351 | 728,795 | 697,899 | 744,127 | |||||||||||||||
Real Estate – Other | 251,665 | 282,894 | 292,474 | 251,021 | 246,117 | |||||||||||||||
Consumer and Other | 166,331 | 174,797 | 178,809 | 196,111 | 204,483 | |||||||||||||||
Deferred Loan Fees, Net | (15,245 | ) | (16,102 | ) | (16,354 | ) | (14,917 | ) | (15,362 | ) | ||||||||||
Total Loans | 4,791,160 | 4,693,911 | 4,682,656 | 4,498,377 | 4,495,721 | |||||||||||||||
Allowance for Loan Losses | (129,613 | ) | (128,429 | ) | (126,092 | ) | (125,331 | ) | (124,744 | ) | ||||||||||
Total Loans, Net | 4,661,547 | 4,565,482 | 4,556,564 | 4,373,046 | 4,370,977 | |||||||||||||||
Goodwill and Other Intangibles | 191,903 | 170,642 | 171,915 | 173,587 | 26,601 | |||||||||||||||
Other Assets | 344,777 | 343,799 | 350,922 | 361,793 | 293,442 | |||||||||||||||
Total Assets | $ | 8,075,727 | $ | 8,317,999 | $ | 8,526,222 | $ | 8,330,025 | $ | 7,877,054 | ||||||||||
Deposits: | ||||||||||||||||||||
Demand, Non-Interest Bearing | $ | 1,028,672 | $ | 984,327 | $ | 933,486 | $ | 934,150 | $ | 953,989 | ||||||||||
NOW, MMDA and Savings | 2,673,973 | 2,693,242 | 2,555,057 | 2,271,837 | 2,280,119 | |||||||||||||||
Time Certificates, $100,000 and over | 829,717 | 809,519 | 807,033 | 826,178 | 827,756 | |||||||||||||||
Other Time Certificates | 739,911 | 956,821 | 1,003,550 | 1,009,047 | 928,207 | |||||||||||||||
Total Deposits | 5,272,273 | 5,443,909 | 5,299,126 | 5,041,212 | 4,990,071 | |||||||||||||||
Other Borrowings | 1,737,243 | 1,840,423 | 2,209,356 | 2,313,428 | 2,095,896 | |||||||||||||||
Trust Preferred Securities | 204,000 | 203,000 | 223,000 | 218,000 | 218,000 | |||||||||||||||
Other Liabilities | 165,502 | 163,310 | 169,311 | 176,688 | 94,403 | |||||||||||||||
Total Liabilities | 7,379,018 | 7,650,642 | 7,900,793 | 7,749,328 | 7,398,370 | |||||||||||||||
REIT Preferred Securities | 15,650 | 15,650 | 15,650 | 15,650 | 15,000 | |||||||||||||||
Convertible Preferred Stock | 80,900 | 72,500 | 72,500 | 72,500 | — | |||||||||||||||
Shareholders' Equity | 600,159 | 579,207 | 537,279 | 492,547 | 463,684 | |||||||||||||||
681,059 | 651,707 | 609,779 | 565,047 | 463,684 | ||||||||||||||||
Total Liabilities and Shareholders' Equity | $ | 8,075,727 | $ | 8,317,999 | $ | 8,526,222 | $ | 8,330,025 | $ | 7,877,054 | ||||||||||
Average Quarterly Total Loans, excluding Nonaccrual | $ | 4,702,111 | $ | 4,641,680 | $ | 4,541,191 | $ | 4,439,279 | $ | 4,420,039 | ||||||||||
Average Quarterly Investments | $ | 2,676,653 | $ | 3,183,293 | $ | 3,202,106 | $ | 3,098,595 | $ | 2,794,646 | ||||||||||
Average Quarterly Interest Earning Assets | $ | 7,378,764 | $ | 7,824,973 | $ | 7,743,297 | $ | 7,537,874 | $ | 7,214,685 | ||||||||||
Average Quarterly Deposits | $ | 5,534,618 | $ | 5,443,742 | $ | 5,194,555 | $ | 5,055,141 | $ | 4,869,237 | ||||||||||
Average Quarterly Interest Bearing Liabilities | $ | 6,376,908 | $ | 6,715,291 | $ | 6,721,689 | $ | 6,438,579 | $ | 6,055,617 | ||||||||||
Average Quarterly Assets | $ | 8,219,625 | $ | 8,474,179 | $ | 8,413,187 | $ | 8,028,660 | $ | 7,613,853 | ||||||||||
Average Quarterly Equity | $ | 667,716 | $ | 632,589 | $ | 598,254 | $ | 549,300 | $ | 469,459 | ||||||||||
Total Regulatory Capital | ||||||||||||||||||||
Tier I or Leverage Capital | $ | 691,048 | $ | 678,606 | $ | 640,207 | $ | 602,839 | $ | 607,820 | ||||||||||
Total Capital | $ | 765,526 | $ | 753,986 | $ | 736,378 | $ | 701,039 | $ | 740,653 | ||||||||||
Nonperforming Assets | ||||||||||||||||||||
Nonaccrual Loans | $ | 37,750 | $ | 47,695 | $ | 42,349 | $ | 27,837 | $ | 30,970 | ||||||||||
OREO | 397 | 930 | 509 | 972 | — | |||||||||||||||
Total Nonperforming Assets | $ | 38,147 | $ | 48,625 | $ | 42,858 | $ | 28,809 | $ | 30,970 | ||||||||||
Greater Bay Trust Company Assets | $ | 607,244 | $ | 598,481 | $ | 641,884 | $ | 644,216 | $ | 629,696 |
Greater Bay Bancorp’s Fourth Quarter and Year End 2002 Earnings Results
January 22, 2003
Page 7 of 11
GREATER BAY BANCORP
DECEMBER 31, 2002 – FINANCIAL SUMMARY (UNAUDITED)
($ in 000's, except share and per share data)
SELECTED QUARTERLY CONSOLIDATED OPERATING DATA:
Fourth Quarter 2002 | Third Quarter 2002 | Second Quarter 2002 | First Quarter 2002 | Fourth Quarter 2001 | ||||||||||||||||
Interest Income | $ | 116,936 | $ | 128,259 | $ | 130,792 | $ | 129,425 | $ | 129,946 | ||||||||||
Interest Expense | 35,509 | 40,318 | 41,841 | 41,750 | 47,142 | |||||||||||||||
Net Interest Income Before Provision for Loan Losses | 81,427 | 87,941 | 88,951 | 87,675 | 82,804 | |||||||||||||||
Provision for Loan Losses | 7,000 | 27,776 | 9,000 | 16,000 | 28,950 | |||||||||||||||
Net Interest Income After Provision for Loan Losses | 74,427 | 60,165 | 79,951 | 71,675 | 53,854 | |||||||||||||||
Non-interest Income: | ||||||||||||||||||||
Insurance Agency Commissions & Fees (1) | 23,664 | 26,359 | 27,601 | 10,891 | — | |||||||||||||||
Depositor Service Fees | 2,786 | 2,771 | 2,762 | 2,828 | 3,223 | |||||||||||||||
Loan and International Banking Fees | 2,309 | 2,124 | 2,273 | 2,527 | 2,243 | |||||||||||||||
Trust Fees | 922 | 844 | 894 | 906 | 881 | |||||||||||||||
ATM Fees | 574 | 629 | 628 | 583 | 656 | |||||||||||||||
Gain on Sale of Loans | 1,999 | 2,049 | 210 | 496 | 347 | |||||||||||||||
Gains on Investments and early retirement of CODES (2) | 2,247 | 14,835 | 3,004 | 347 | 590 | |||||||||||||||
Other Income | 3,510 | 5,875 | 2,138 | 4,014 | 1,744 | |||||||||||||||
38,011 | 55,486 | 39,510 | 22,592 | 9,684 | ||||||||||||||||
Nonrecurring – Warrant Income (3) | — | (89 | ) | — | — | — | ||||||||||||||
Total Non-interest Income | 38,011 | 55,397 | 39,510 | 22,592 | 9,684 | |||||||||||||||
Operating Expenses: | ||||||||||||||||||||
Salaries | 38,222 | 37,296 | 36,054 | 26,046 | 23,675 | |||||||||||||||
Deferred Loan Origination Costs | (3,580 | ) | (3,479 | ) | (3,745 | ) | (2,986 | ) | (3,117 | ) | ||||||||||
Benefits | 7,093 | 5,950 | 6,338 | 5,515 | 4,138 | |||||||||||||||
Total Compensation and Benefits | 41,735 | 39,767 | 38,647 | 28,575 | 24,696 | |||||||||||||||
Occupancy and Equipment | 10,225 | 10,035 | 10,267 | 8,838 | 7,817 | |||||||||||||||
Professional Services & Legal | 2,835 | 2,462 | 1,915 | 1,689 | 2,342 | |||||||||||||||
Telephone, postage and supplies | 2,020 | 1,827 | 1,918 | 1,633 | 1,615 | |||||||||||||||
Marketing and promotion | 681 | 1,605 | 1,617 | 1,452 | 1,470 | |||||||||||||||
Data Processing | 1,350 | 1,145 | 1,196 | 1,129 | 1,021 | |||||||||||||||
Client Services | 480 | 433 | 557 | 647 | 645 | |||||||||||||||
FDIC Insurance and Assessments | 491 | 409 | 417 | 463 | 627 | |||||||||||||||
Other Real Estate, Net | 20 | 119 | — | — | — | |||||||||||||||
Amortization of Intangibles | 1,658 | 1,650 | 1,650 | 562 | 376 | |||||||||||||||
Other Expenses | 3,597 | 3,565 | 6,170 | 4,682 | 3,331 | |||||||||||||||
65,092 | 63,017 | 64,354 | 49,670 | 43,940 | ||||||||||||||||
Costs related to the Early Retirement of Trust Preferred Securities (TPS) | — | — | 975 | — | — | |||||||||||||||
REIT Preferred Securities expense | 421 | 465 | 464 | 464 | — | |||||||||||||||
Nonrecurring Expenses (3) | — | 479 | — | — | — | |||||||||||||||
Total Operating Expenses (1) (4) | 65,513 | 63,961 | 65,793 | 50,134 | 43,940 | |||||||||||||||
Income Before Income Taxes, Merger and Other Related Nonrecurring Costs | 46,925 | 51,601 | 53,668 | 44,133 | 19,598 | |||||||||||||||
Income Taxes: | ||||||||||||||||||||
Income Tax Expense | 16,259 | 19,572 | 20,132 | 16,531 | 6,369 | |||||||||||||||
Capital Loss Carryback Tax (Benefit) (5) | — | — | — | — | (11,897 | ) | ||||||||||||||
Nonrecurring Income Tax Expense (3) | — | (441 | ) | — | — | — | ||||||||||||||
Total Income Tax Expense | 16,259 | 19,131 | 20,132 | 16,531 | (5,528 | ) | ||||||||||||||
Income Before Merger and Other Related Nonrecurring Costs | 30,666 | 32,470 | 33,536 | 27,602 | 25,126 | |||||||||||||||
Merger and Other Related Nonrecurring Costs, net of tax (3) | — | — | — | — | 17,611 | |||||||||||||||
Net Income | $ | 30,666 | $ | 32,470 | $ | 33,536 | $ | 27,602 | $ | 7,515 | ||||||||||
(1) | The Company acquired ABD Insurance and Financial Services (ABD) on March 12, 2002 which is accounted for under the purchase accounting method. |
(2) | CODES (Zero Coupon Convertible Contingent Debt Securities) |
(3) | Components of Nonrecurring and Merger Items. Net Income excluding these items is $32,597 for Q3 2002 and $25,126 for Q4 2001. |
(4) | Total Operating Expenses were $43.2 million in Q4 2002, $41.7 million in Q3 2002, $44.3 million in Q2 2002 and $42.6 million in Q1 2002, excluding operating expenses of ABD. |
(5) | The Capital Loss Carryback was recognized in conjunction with the establishment of a REIT which also generated $15 million in additional capital in Q4 2001. |
Note: | Prior periods have been restated to reflect the expense for dividends paid on Trust Preferred Securities as interest expense. In prior press releases, this expense was classified as operating expenses. |
Greater Bay Bancorp’s Fourth Quarter and Year End 2002 Earnings Results
January 22, 2003
Page 8 of 11
GREATER BAY BANCORP
DECEMBER 31, 2002 – FINANCIAL SUMMARY (UNAUDITED)
($ in 000's, except share and per share data)
SELECTED YEAR TO DATE CONSOLIDATED OPERATING DATA:
YTD | YTD | |||||||
31-Dec | 31-Dec | |||||||
2002 | 2001 | |||||||
Interest Income | $ | 505,412 | $ | 507,241 | ||||
Interest Expense | 159,418 | 199,956 | ||||||
Net Interest Income Before Provision for Loan Losses | 345,994 | 307,285 | ||||||
Provision for Loan Losses | 59,776 | 54,727 | ||||||
Net Interest Income After Provision for Loan Losses | 286,218 | 252,558 | ||||||
Non-interest Income: | ||||||||
Insurance Agency Commissions & Fees (1) | 88,515 | — | ||||||
Depositor Service Fees | 11,147 | 10,602 | ||||||
Loan and International Banking Fees | 9,233 | 8,856 | ||||||
Trust Fees | 3,566 | 3,610 | ||||||
ATM Fees | 2,414 | 2,887 | ||||||
Gain on Sale of Loans | 4,754 | 3,241 | ||||||
Gains on Investments and early retirement of CODES (2) | 20,433 | 6,940 | ||||||
Other Income | 15,537 | 8,125 | ||||||
155,599 | 44,261 | |||||||
Nonrecurring—Warrant Income (3) | (89 | ) | 581 | |||||
Total Non-interest Income | 155,510 | 44,842 | ||||||
Operating Expenses: | ||||||||
Salaries | 137,618 | 84,558 | ||||||
Deferred Loan Origination Costs | (13,790 | ) | (11,414 | ) | ||||
Benefits | 24,896 | 16,555 | ||||||
Total Compensation and Benefits | 148,724 | 89,699 | ||||||
Occupancy and Equipment | 39,365 | 27,756 | ||||||
Professional Services & Legal | 8,901 | 7,839 | ||||||
Telephone, postage and supplies | 7,398 | 6,027 | ||||||
Marketing and promotion | 5,355 | 5,648 | ||||||
Data Processing | 4,820 | 4,448 | ||||||
Client Services | 2,117 | 2,965 | ||||||
FDIC Insurance and Assessments | 1,780 | 1,762 | ||||||
Other Real Estate, Net | 139 | — | ||||||
Amortization of Intangibles | 5,520 | 1,408 | ||||||
Other Expenses | 18,014 | 14,315 | ||||||
242,133 | 161,867 | |||||||
Costs related to the Early Retirement of Trust Preferred Securities (TPS) | 975 | — | ||||||
REIT Preferred Securities expense | 1,814 | — | ||||||
Nonrecurring Expenses (3) | 479 | — | ||||||
Total Operating Expenses (1) (4) | 245,401 | 161,867 | ||||||
Income Before Income Taxes, Merger and Other Related Nonrecurring Costs | 196,327 | 135,533 | ||||||
Income Taxes: | ||||||||
Income Tax Expense | 72,494 | 49,759 | ||||||
Capital Loss Carryback Tax (Benefit) (5) | — | (11,897 | ) | |||||
Nonrecurring Income Tax Expense (3) | (441 | ) | 244 | |||||
Total Income Tax Expense | 72,053 | 38,106 | ||||||
Income Before Merger and Other Related Nonrecurring Costs | 124,274 | 97,427 | ||||||
Merger and Other Related Nonrecurring Costs, net of tax (3) | — | 17,611 | ||||||
Net Income | $ | 124,274 | $ | 79,816 | ||||
(1) | The Company acquired ABD Insurance and Financial Services (ABD) on March 12, 2002 which is accounted for under the purchase accounting method. |
(2) | CODES (Zero Coupon Convertible Contingent Debt Securities) |
(3) | Components of Nonrecurring and Merger Items. Net Income excluding these items is $124,401 for YTD December 2002 and $97,090 for YTD December 2001. |
(4) | Total Operating Expenses were $171.8 million in YTD December 2002, excluding operating expenses of ABD. |
(5) | The Capital Loss Carryback was recognized in conjunction with the establishment of a REIT which also generated $15 million in additional capital in Q4 2001. |
Note: | Prior periods have been restated to reflect the expense for dividends paid on Trust Preferred Securities as interest expense. In prior press releases, this expense was classified as operating expenses. |
Greater Bay Bancorp’s Fourth Quarter and Year End 2002 Earnings Results
January 22, 2003
Page 9 of 11
GREATER BAY BANCORP
DECEMBER 31, 2002 – FINANCIAL SUMMARY (UNAUDITED)
($ in 000's, except share and per share data)
SELECTED QUARTERLY CONSOLIDATED FINANCIAL CONDITION RATIOS:
Dec 31 2002 | Sept 30 2002 | Jun 30 2002 | Mar 31 2002 | Dec 31 2001 | ||||||||||||||||
Loan to Deposit Ratio | 90.87 | % | 86.22 | % | 88.37 | % | 89.23 | % | 90.09 | % | ||||||||||
Core Bank Loan to Deposit Ratio (1) | 74.24 | % | 70.53 | % | 71.49 | % | 72.26 | % | 75.41 | % | ||||||||||
Ratio of Allowance for Loan Losses to: | ||||||||||||||||||||
Average Loans | 2.73 | % | 2.74 | % | 2.75 | % | 2.81 | % | 2.80 | % | ||||||||||
End of Period Loans | 2.70 | % | 2.73 | % | 2.68 | % | 2.78 | % | 2.77 | % | ||||||||||
Total Nonperforming Assets | 339.77 | % | 264.12 | % | 294.21 | % | 435.04 | % | 402.79 | % | ||||||||||
Ratio of Provision for Loan Losses to Average Loans, annualized | 0.59 | % | 2.35 | % | 0.79 | % | 1.45 | % | 2.58 | % | ||||||||||
Total Nonperforming Loans to Total Loans | 0.79 | % | 1.02 | % | 0.90 | % | 0.62 | % | 0.69 | % | ||||||||||
Total Nonperforming Assets to Total Assets | 0.47 | % | 0.58 | % | 0.50 | % | 0.35 | % | 0.39 | % | ||||||||||
Ratio of Quarterly Net Charge-offs to Average Loans, annualized | 0.49 | % | 2.15 | % | 0.72 | % | 1.40 | % | 0.52 | % | ||||||||||
Ratio of YTD Net Charge-offs to YTD Average Loans, annualized | 1.19 | % | 1.43 | % | 1.05 | % | 1.40 | % | 0.59 | % | ||||||||||
Loan Growth, current quarter to prior year quarter | 6.57 | % | 7.17 | % | 9.01 | % | 7.08 | % | 10.60 | % | ||||||||||
Loan Growth, current quarter to prior quarter, annualized | 8.22 | % | 0.95 | % | 16.43 | % | 0.24 | % | 10.50 | % | ||||||||||
Loan Growth, YTD annualized | 6.57 | % | 5.89 | % | 8.39 | % | 0.24 | % | 10.60 | % | ||||||||||
Deposits Growth, current quarter to prior year quarter | 5.66 | % | 11.71 | % | 8.60 | % | 4.74 | % | 5.05 | % | ||||||||||
Deposits Growth, current quarter to prior quarter, annualized | -12.51 | % | 10.84 | % | 20.52 | % | 4.16 | % | 9.51 | % | ||||||||||
Deposits Growth, YTD annualized | 5.66 | % | 12.16 | % | 12.49 | % | 4.16 | % | 5.05 | % | ||||||||||
Recurring Revenue Growth, current quarter to prior year quarter | 29.14 | % | 63.22 | % | 47.51 | % | 31.12 | % | 11.81 | % | ||||||||||
Recurring Revenue Growth, current quarter to prior quarter, annualized (2) | -66.36 | % | 46.22 | % | 66.18 | % | 77.96 | % | 20.83 | % | ||||||||||
Net Interest Income Growth, current quarter to prior year quarter | -1.66 | % | 13.84 | % | 19.26 | % | 20.70 | % | 11.61 | % | ||||||||||
Net Interest Income Growth, current quarter to prior quarter, annualized (3) | -29.39 | % | -4.50 | % | 5.84 | % | 23.86 | % | 28.51 | % | ||||||||||
Average Earning Assets to Average Total Assets | 89.77 | % | 92.34 | % | 92.04 | % | 93.89 | % | 94.76 | % | ||||||||||
Average Earning Assets to Average Interest-Bearing Liabilities | 115.71 | % | 116.52 | % | 115.20 | % | 117.07 | % | 119.14 | % | ||||||||||
Capital Ratios: | ||||||||||||||||||||
Tangible Equity to Tangible Assets (4) | 6.40 | % | 6.10 | % | 5.43 | % | 4.99 | % | 5.76 | % | ||||||||||
Tangible Equity to Tangible Assets (including ABD value) (4) | 8.30 | % | 7.71 | % | 7.03 | % | 6.66 | % | 5.76 | % | ||||||||||
Leverage | 8.61 | % | 8.17 | % | 7.77 | % | 7.67 | % | 8.01 | % | ||||||||||
Tier 1 Risk Based Capital | 11.71 | % | 11.35 | % | 10.66 | % | 10.31 | % | 10.49 | % | ||||||||||
Total Risk Based Capital | 12.97 | % | 12.61 | % | 12.26 | % | 11.99 | % | 12.79 | % | ||||||||||
Risk Weighted Assets | $ | 5,900,325 | $ | 5,979,732 | $ | 6,005,431 | $ | 5,845,147 | $ | 5,792,917 | ||||||||||
Book Value Per Share | $ | 11.64 | $ | 11.26 | $ | 10.50 | $ | 9.75 | $ | 9.31 | ||||||||||
Tangible Book Value Per Share (4) | $ | 9.79 | $ | 9.66 | $ | 8.86 | $ | 8.06 | $ | 9.07 | ||||||||||
Total Shares Outstanding | 51,577,795 | 51,442,027 | 51,192,359 | 50,501,861 | 49,831,682 |
(1) | Includes the eleven core banking divisions and excludes ABD, Matsco, Capco, Pacific Business Funding and Corporate Finance. |
(2) | The revenue contraction in the current quarter to prior quarter, annualized was primarily due to a decrease of $12.6 million in gains on investments and early retirement of CODES. |
(3) | The net interest income contraction in the current quarter to prior quarter, annualized was primarily due to a reduction in investments due to de-leveraging the balance sheet and a decrease of $12.6 million in gains on investments and early retirement of CODES. |
(4) | Tangible Equity includes Shareholders' Equity, Convertible Preferred Stock and REIT Preferred Securities, less Goodwill and Other Intangibles. |
Note: | Prior periods have been restated to reflect the expense for dividends paid on Trust Preferred Securities as interest expense. In prior press releases, this expense was classified as operating expenses. |
Greater Bay Bancorp’s Fourth Quarter and Year End 2002 Earnings Results
January 22, 2003
Page 10 of 11
GREATER BAY BANCORP
DECEMBER 31, 2002 – FINANCIAL SUMMARY (UNAUDITED)
($ in 000's, except share and per share data)
SELECTED QUARTERLY CONSOLIDATED OPERATING RATIOS:
Fourth Quarter 2002 | Third Quarter 2002 | Second Quarter 2002 | First Quarter 2002 | Fourth Quarter 2001 | ||||||||||||||||
GAAP EPS | ||||||||||||||||||||
Net Income Per Share | ||||||||||||||||||||
Basic (4) | $ | 0.57 | $ | 0.61 | $ | 0.64 | $ | 0.54 | $ | 0.15 | ||||||||||
Diluted | $ | 0.57 | $ | 0.60 | $ | 0.62 | $ | 0.52 | $ | 0.15 | ||||||||||
NON-GAAP EPS | ||||||||||||||||||||
EPS (including Amortization of Intangibles) | ||||||||||||||||||||
Net Income Per Share (Before Nonrecurring and Merger Items) (1) (2) (3) | ||||||||||||||||||||
Basic (4) | $ | 0.57 | $ | 0.61 | $ | 0.64 | $ | 0.54 | $ | 0.51 | ||||||||||
Diluted | $ | 0.57 | $ | 0.60 | $ | 0.62 | $ | 0.52 | $ | 0.49 | ||||||||||
Cash EPS (excluding Amortization of Intangibles) | ||||||||||||||||||||
Net Income Per Share (3) | ||||||||||||||||||||
Basic (4) | $ | 0.59 | $ | 0.63 | $ | 0.66 | $ | 0.55 | $ | 0.16 | ||||||||||
Diluted | $ | 0.58 | $ | 0.61 | $ | 0.63 | $ | 0.53 | $ | 0.15 | ||||||||||
Net Income Per Share (Before Nonrecurring and Merger Items) (1) (2) (3) | ||||||||||||||||||||
Basic (4) | $ | 0.59 | $ | 0.63 | $ | 0.66 | $ | 0.55 | $ | 0.51 | ||||||||||
Diluted | $ | 0.58 | $ | 0.62 | $ | 0.63 | $ | 0.53 | $ | 0.49 | ||||||||||
Weighted Average Common Shares Outstanding | 51,547,000 | 51,339,000 | 50,685,000 | 50,204,000 | 49,689,000 | |||||||||||||||
Weighted Average Common & Common Equivalent Shares Outstanding | 54,135,000 | 54,504,000 | 54,500,000 | 53,026,000 | 51,221,000 | |||||||||||||||
GAAP Ratios | ||||||||||||||||||||
Return on Period Average Assets, annualized | 1.48 | % | 1.52 | % | 1.60 | % | 1.39 | % | 0.39 | % | ||||||||||
Return on Period Average Equity, annualized | 18.22 | % | 20.36 | % | 22.48 | % | 20.38 | % | 6.35 | % | ||||||||||
Net Interest Margin—Average Earning Assets | 4.38 | % | 4.46 | % | 4.61 | % | 4.72 | % | 4.55 | % | ||||||||||
Operating Expense Ratio | 3.16 | % | 2.99 | % | 3.14 | % | 2.53 | % | 3.81 | % | ||||||||||
Efficiency Ratio | 54.85 | % | 44.62 | % | 51.22 | % | 45.47 | % | 79.13 | % | ||||||||||
NON-GAAP Ratios | ||||||||||||||||||||
Ratios (including Amortization of Intangibles) | ||||||||||||||||||||
Return on Period Average Assets, annualized (1) | 1.48 | % | 1.53 | % | 1.60 | % | 1.39 | % | 1.31 | % | ||||||||||
Return on Period Average Equity, annualized (1) | 18.22 | % | 20.44 | % | 22.48 | % | 20.38 | % | 21.23 | % | ||||||||||
Net Interest Margin—Average Earning Assets (excl. TPS interest expense) | 4.61 | % | 4.68 | % | 4.85 | % | 4.98 | % | 4.83 | % | ||||||||||
Operating Expense Ratio (Before Nonrecurring and Merger Items) | 3.16 | % | 2.97 | % | 3.14 | % | 2.53 | % | 2.29 | % | ||||||||||
Operating Expense Ratio (Before Nonrecurring and Merger Items, costs related to early retirement of TPS and REIT preferred securities expense) | 3.14 | % | 2.95 | % | 3.07 | % | 2.51 | % | 2.29 | % | ||||||||||
Efficiency Ratio (Before Nonrecurring and Merger Items) | 54.85 | % | 44.26 | % | 51.22 | % | 45.47 | % | 47.51 | % | ||||||||||
Efficiency Ratio (Before Nonrecurring and Merger Items, costs related to early retirement of TPS and REIT preferred securities expense) | 54.50 | % | 43.94 | % | 50.10 | % | 45.05 | % | 47.51 | % | ||||||||||
Efficiency Ratio (Before Nonrecurring and Merger Items, costs related to early retirement of TPS, REIT preferred securities expense and excluding the operating results of ABD) | 44.65 | % | 34.85 | % | 42.67 | % | 42.51 | % | 47.51 | % | ||||||||||
Ratios (excluding Amortization of Intangibles) | ||||||||||||||||||||
Return on Period Average Assets, annualized (1) | 1.56 | % | 1.60 | % | 1.68 | % | 1.42 | % | 1.33 | % | ||||||||||
Return on Period Average Equity, annualized (1) | 25.25 | % | 28.88 | % | 32.48 | % | 23.97 | % | 22.71 | % | ||||||||||
Net Interest Margin—Average Earning Assets (excl. TPS interest expense) | 4.61 | % | 4.68 | % | 4.85 | % | 4.98 | % | 4.83 | % | ||||||||||
Operating Expense Ratio (Before Nonrecurring and Merger Items) | 3.08 | % | 2.89 | % | 3.06 | % | 2.50 | % | 2.27 | % | ||||||||||
Operating Expense Ratio (Before Nonrecurring and Merger Items, costs related to early retirement of TPS and REIT preferred securities expense) | 3.06 | % | 2.87 | % | 2.99 | % | 2.48 | % | 2.27 | % | ||||||||||
Efficiency Ratio (Before Nonrecurring and Merger Items) | 53.46 | % | 43.11 | % | 49.93 | % | 44.96 | % | 47.10 | % | ||||||||||
Efficiency Ratio (Before Nonrecurring and Merger Items, costs related to early retirement of TPS and REIT preferred securities expense) | 53.11 | % | 42.79 | % | 48.81 | % | 44.54 | % | 47.10 | % | ||||||||||
Efficiency Ratio (Before Nonrecurring and Merger Items, costs related to early retirement of TPS, REIT preferred securities expense and excluding the operating results of ABD) | 44.63 | % | 34.84 | % | 42.65 | % | 42.49 | % | 47.10 | % |
(1) | Excludes nonrecurring and Merger items of $127 thousand, net of tax, in Q3 2002. For Q4 2001 includes a Capital Loss Carryback Tax Benefit of $11.9 million and a Q4 2001 additional provision for loan losses of approximately $21 million over the recurring Q3 2001 provision and excludes Nonrecurring and Merger items of $17.6 million, net of tax. |
(2) | Components of Nonrecurring and Merger Items. Net Income excluding these items is $32,597 for Q3 2002 and $25,126 for Q4 2001. |
(3) | In addition to the principal performance measures in accordance with generally accepted accounting principles, we are providing these supplemental pro forma performance measures to highlight the result of our core operations. We believe these calculations, which are derived from data presented on the face of our consolidated financial statements, are useful for investors to provide comparability from period to period with regard to our core operations. These calculations are not intended to be a substitute for the principal performance measures in accordance with generally accepted accounting principles. |
(4) | Net income available to common shareholders is based on total net income less preferred dividends of $1.3 million for Q4, Q3 and Q2 2002 and $263 thousand for Q1 2002. |
Note: | Prior periods have been restated to reflect the expense for dividends paid on Trust Preferred Securities as interest expense. In prior press releases, this expense was classified as operating expenses. |
Greater Bay Bancorp’s Fourth Quarter and Year End 2002 Earnings Results
January 22, 2003
Page 11 of 11
GREATER BAY BANCORP
DECEMBER 31, 2002 – FINANCIAL SUMMARY (UNAUDITED)
($ in 000's, except share and per share data)
SELECTED YEAR TO DATE CONSOLIDATED OPERATING RATIOS:
YTD | YTD | |||||
31-Dec 2002 | 31-Dec 2001 | |||||
GAAP EPS | ||||||
Net Income Per Share | ||||||
Basic (4) | $2.35 | $1.61 | ||||
Diluted | $2.30 | $1.57 | ||||
NON-GAAP EPS | ||||||
EPS (including Amortization of Intangibles) | ||||||
Net Income Per Share (Before Nonrecurring and Merger Items) (1) (2) (3) | ||||||
Basic (4) | $2.35 | $1.96 | ||||
Diluted | $2.30 | $1.91 | ||||
Cash EPS (excluding Amortization of Intangibles) | ||||||
Net Income Per Share (3) | ||||||
Basic (4) | $2.42 | $1.63 | ||||
Diluted | $2.36 | $1.58 | ||||
Net Income Per Share (Before Nonrecurring and Merger Items) (1) (2) (3) | ||||||
Basic (4) | $2.42 | $1.98 | ||||
Diluted | $2.36 | $1.92 | ||||
Weighted Average Common Shares Outstanding | 51,056,000 | 49,498,000 | ||||
Weighted Average Common & Common Equivalent Shares Outstanding | 54,135,000 | 50,940,000 | ||||
GAAP Ratios | ||||||
Return on Period Average Assets, annualized | 1.50 | % | 1.18 | % | ||
Return on Period Average Equity, annualized | 20.29 | % | 17.83 | % | ||
Net Interest Margin—Average Earning Assets | 4.54 | % | 4.86 | % | ||
Operating Expense Ratio | 2.96 | % | 2.83 | % | ||
Efficiency Ratio | 48.93 | % | 54.27 | % | ||
NON-GAAP Ratios | ||||||
Ratios (including Amortization of Intangibles) | ||||||
Return on Period Average Assets, annualized (1) | 1.50 | % | 1.44 | % | ||
Return on Period Average Equity, annualized (1) | 20.31 | % | 21.68 | % | ||
Net Interest Margin—Average Earning Assets (excl. TPS interest expense) | 4.78 | % | 5.07 | % | ||
Operating Expense Ratio (Before Nonrecurring and Merger Items) | 2.96 | % | 2.40 | % | ||
Operating Expense Ratio (Before Nonrecurring and Merger Items, costs related to early retirement of TPS and REIT preferred securities expense) | 2.92 | % | 2.40 | % | ||
Efficiency Ratio (Before Nonrecurring and Merger Items) | 48.83 | % | 46.04 | % | ||
Efficiency Ratio (Before Nonrecurring and Merger Items, costs related to early retirement of TPS and REIT preferred securities expense) | 48.27 | % | 46.04 | % | ||
Efficiency Ratio (Before Nonrecurring and Merger Items, costs related to early retirementof TPS, REIT preferred securities expense and excluding the operating results of ABD) | 40.88 | % | 46.04 | % | ||
Ratios (excluding Amortization of Intangibles) | ||||||
Return on Period Average Assets, annualized (1) | 1.57 | % | 1.46 | % | ||
Return on Period Average Equity, annualized (1) | 27.49 | % | 23.22 | % | ||
Net Interest Margin—Average Earning Assets (excl. TPS interest expense) | 4.78 | % | 5.07 | % | ||
Operating Expense Ratio (Before Nonrecurring and Merger Items) | 2.89 | % | 2.38 | % | ||
Operating Expense Ratio (Before Nonrecurring and Merger Items, costs related to early retirement of TPS and REIT preferred securities expense) | 2.86 | % | 2.38 | % | ||
Efficiency Ratio (Before Nonrecurring and Merger Items) | 47.73 | % | 45.64 | % | ||
Efficiency Ratio (Before Nonrecurring and Merger Items, costs related to early retirementof TPS and REIT preferred securities expense) | 47.17 | % | 45.64 | % | ||
Efficiency Ratio (Before Nonrecurring and Merger Items, costs related to early retirementof TPS, REIT preferred securities expense and excluding the operating results of ABD) | 40.86 | % | 45.64 | % |
(1) | Excludes Nonrecurring and Merger Items of $127 thousand, net of tax, in YTD December 2002 and $17.3 million, net of tax, in YTD December 2001. |
(2) | Components of Nonrecurring and Merger Items. Net Income excluding these items is $124,401 for YTD December 2002 and $97,090 for YTD December 2001. |
(3) | In addition to the principal performance measures in accordance with generally accepted accounting principles, we are providing these supplemental pro forma performance measures to highlight the result of our core operations. We believe these calculations, which are derived from data presented on the face of our consolidated financial statements, are useful for investors to provide comparability from period to period with regard to our core operations. These calculations are not intended to be a substitute for the principal performance measures in accordance with generally accepted accounting principles. |
(4) | Net income available to common shareholders is based on total net income less preferred dividends of $4.2 million in YTD December 2002. |
Note: Prior periods have been restated to reflect the expense for dividends paid on Trust Preferred Securities as interest expense. In prior press releases, this expense was classified as operating expenses.
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