Exhibit 99.1
For Information Contact
At Greater Bay Bancorp: | At Silverman Heller Associates: | |
David L. Kalkbrenner, President and CEO | Philip Bourdillon/Gene Heller | |
(650) 614-5767 | (310) 208-2550 | |
Steven C. Smith, EVP and CFO | ||
(650) 813-8222 |
FOR IMMEDIATE RELEASE
GREATER BAY BANCORP REPORTS
NET INCOMEOF $48 MILLION
FORTHE FIRST SIX MONTHSOF 2003
– CREDIT QUALITY STABLE –
PALO ALTO, Calif., July 23, 2003 – Greater Bay Bancorp (Nasdaq:GBBK), an $8.1 billion in assets financial services holding company, today announced results for the second quarter and six months ended June 30, 2003.
For the second quarter of 2003, Greater Bay Bancorp’sNET INCOME was $23.1 million, or $0.41 per diluted share, compared to $33.5 million, or $0.62 per diluted share, for the second quarter of 2002. Based onNET INCOMEfor the second quarter of 2003, Greater Bay Bancorp’s return on average equity was 12.97% and return on average assets was 1.15%. For the second quarter of 2002,NET INCOME resulted in a return on average equity of 22.48% and a return on average assets of 1.60%.
For the first six months of 2003, Greater Bay Bancorp’sNET INCOME was $48.2 million, or $0.86 per diluted share, compared to $61.1 million, or $1.14 per diluted share, for the first six months of 2002. Based onNET INCOMEfor the first six months of 2003, Greater Bay Bancorp’s return on average equity was 13.80% and return on average assets was 1.22%. For the first six months of 2002,NET INCOME resulted in a return on average equity of 21.47% and a return on average assets of 1.50%.
The $0.21 decline in earnings per diluted share for the second quarter of 2003 and the $0.28 decline in earnings per diluted share for the first six months of 2003, compared to the same periods a year ago, were attributable primarily to the following factors:
• | market interest rate reductions reduced the Company’s net interest margin by 48 basis points in the second quarter of 2003 and 43 basis points in the first six months of 2003, resulting in approximately an $(0.11) and $(0.19) decline in earnings per diluted share, respectively, |
• | planned reduction in the Company’s interest earning asset base (primarily the investment securities portfolio) reduced earnings per diluted share by approximately $(0.07) and $(0.12) for the second quarter of 2003 and first six months of 2003, respectively, |
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Greater Bay Bancorp’s Second Quarter 2003 Earnings Results
July 23, 2003
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• | outside consulting costs related to enterprise-wide risk management and regulatory compliance amounted to approximately $1.3 million in the second quarter of 2003 and $2.2 million in the first six months of 2003, or approximately $(0.02) and $(0.03) per diluted share, respectively. |
Non-Interest Income
The Company continues to focus on increasing non-interest income. Non-interest income for the second quarter of 2003 increased to $42.3 million from $39.5 million in the second quarter of 2002. Non-interest income for the first quarter of 2003 was $44.8 million. While gains on investment securities were $1.1 million higher in the second quarter of 2003 compared to the first quarter of 2003, gains on the sale of loans were $1.2 million lower for the same period due to the Company’s decision not to sell any Matsco loans in the second quarter. Non-interest income for the first six months of 2003 increased to $87.1 million from $62.1 million in the first six months of 2002, of which $20.1 million was related to an additional two and one-half months of ABD’s commissions and fees.
Non-interest income as a percentage of total revenues for the second quarter and first half of 2003 was 36.44% and 36.74%, respectively, compared with 30.83% and 26.06% for the second quarter and first half of 2002 and 37.02% for the first quarter of 2003. The first half of 2002 included only three and one-half months of ABD’s commissions and fees.
In July 2003, ABD completed the acquisition of Sullivan and Curtis Insurance Brokers of Washington LLC (S&C), an insurance brokerage firm located in Seattle, Washington. The acquisition, which we anticipate will be neutral to 2003 earnings and marginally accretive to 2004 earnings, was a strategic move for ABD, as it allows ABD to expand its market reach and enhance its position as the premier regional West Coast firm. The S&C acquisition also adds new business lines to ABD’s product offerings, including marine insurance. Greater Bay Bancorp estimates that the acquisition will add approximately 8% to ABD’s revenue stream.
Balance Sheet
At June 30, 2003, Greater Bay Bancorp’stotal assets were $8.1 billion,total loans were $4.7 billion,total investments, primarily mortgage-backed securities, were $2.7 billion andtotal depositswere $5.5 billion. From June 30, 2002 to June 30, 2003, total loans were flat,total investmentsdecreased 17% to $2.7 billion, andtotal deposits increased 5% to $5.5 billion. The net deposit growth for the 12 month period reflects a reduction of $107.3 million in wholesale deposits. Core deposits, which exclude wholesale deposits, grew by $356.4 million or 8% from the second quarter of 2002 versus the second quarter of 2003.
Credit Quality
Net charge-offs in the second quarter of 2003 were $6.5 million, or 0.55% of average annualized loans, compared to 0.72% in the second quarter of 2002. Non-performing assets of $49 million at June 30, 2003 increased from $40 million at March 31, 2003. The net increase was primarily the result of one Shared National Credit (SNC) loan becoming non-performing. The ratio of non-performing assets to total assets was 0.61% at June 30, 2003, compared to 0.51% at March 31, 2003 and 0.50% at June 30, 2002. The allowance for loan losses was $130 million or 2.75% of total loans at June 30, 2003, compared to $130 million or 2.74% at March 31, 2003 and $126 million or 2.68% at June 30, 2002.
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Greater Bay Bancorp’s Second Quarter 2003 Earnings Results
July 23, 2003
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During the past year, total commitments in our SNC portfolio have been reduced by $107 million, or 60%, and the funded amount has been reduced by $80 million, or 58%. The total SNC non-relationship portfolio as of June 30, 2003 had commitments of only $31 million and a funded amount of $28 million. Subsequent to quarter-end, the Company further reduced its SNC non-relationship loan portfolio by selling a loan with a net book value of $5.07 million for $5.04 million, resulting in a $30,000 loss. After the loan sale, the SNC non-relationship loans outstanding comprise less than 0.5% of loans outstanding.
David Kalkbrenner, President and CEO, stated, “The efforts of our relationship managers continue to show positive results on the levels of net charge-offs and nonperforming assets. With a strong loan loss reserve, we believe we are well-positioned to weather current economic conditions.”
Capital Ratios
The capital ratios of Greater Bay Bancorp and each of its subsidiary banks remain above the well-capitalized guidelines established by the bank regulatory agencies. The Company’s tangible equity to asset ratio increased to 6.91% at June 30, 2003 from 6.69% at March 31, 2003 and 5.43% at June 30, 2002. The Company’s leverage ratio also increased during the second quarter of 2003 to 9.29% from 9.18% in the first quarter of 2003 and 7.77% one year ago, while the total risk-based capital ratio increased to 13.55% at June 30, 2003 from 13.34% at March 31, 2003 and 12.26% at June 30, 2002.
When the Company’s capital ratios are compared to those of the top 75 U.S. Banks (by asset size) at March 31, 2003, the Company (ranked 62nd by asset size) had tangible equity, leverage, tier 1 and total risk-based capital ratios equal to or exceeding the top 75 U.S. Banks’ average ratios.
Mr. Kalkbrenner commented, “During this last quarter, we engaged an outside firm to help us develop an economic capital allocation model that incorporates economic factors, historical factors and our actual operating results to measure our capital levels in relation to our risk profile. The preliminary results of this project indicate that our risk profile and capital position should provide us with the flexibility to continue to manage capital in the best interests of our shareholders.”
Net Interest Margin
Greater Bay Bancorp’saverage net interest marginfor the second quarter of 2003 was 4.11% compared to 4.33% for the first quarter of 2003 and 4.59% for the second quarter of 2002. Theend-of-period net interest marginremained relatively flat at 4.10%.
Mr. Kalkbrenner commented, “Low market interest rates continue to put significant pressure on our net interest margin. Beginning in the second quarter of 2002, we began to defensively position the balance sheet to be more asset sensitive by reducing our fixed rate investment portfolio from $3.2 billion to $2.7 billion with a year-end target of $2.2 billion.”
Mr. Kalkbrenner continued, “We have had many opportunities to add to our net interest income in the short-term by extending investment security maturities or expanding the balance sheet, but we believe the risks of that strategy in this low interest rate environment would not be prudent interest rate risk management. When market interest rates begin to rise, our balance sheet will be positioned for growth and margin expansion and will not be saddled with assets that could hinder our flexibility.”
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July 23, 2003
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Interest Rate Risk Management
The Company continues to proactively manage its interest rate risk exposure to ensure that it is positioned for long-term success compared to short-term earnings goals that would not be sustainable in a rising interest rate environment. The Company’s current strategy, which is continually reviewed in relationship to market conditions, includes a gradual reduction of the investment securities portfolio. This strategy will continue to reduce current net interest income in the near-term, but will position the Company to take advantage of an improving economy and rising market interest rates over the longer term. Because the balance sheet is positioned to be more asset sensitive, the Company’s net interest margin will continue to be pressured by the latest declines in market interest rates. Should rates continue to trend down or remain at their current low levels, the Company’s net interest margin would decline further.
Operating Expenses
Operating expenses decreased by $1.1 million to $72.2 million (which included $1.3 million in regulatory related consulting costs) during the second quarter of 2003 from $73.3 million in the first quarter of 2003, which was primarily the result of the seasonal impact of payroll taxes and benefit costs. Operating expenses increased by $6.7 million to $72.2 million during the second quarter of 2003 compared to $65.5 million in the second quarter of 2002, primarily due to increased salary and benefits of $3.4 million, regulatory related consulting costs of $1.3 million and increases in professional and legal fees of $1.2 million.
The Company’s efficiency ratio for the second quarter of 2003 was 62.21% (56.04% excluding the income and expenses of ABD, compared to 51.10% (43.93% excluding ABD) for the second quarter of 2002. For the first half of 2003, the efficiency ratio was 61.42% (55.66% excluding the income and expenses of ABD), compared to 48.47% (43.42% excluding ABD) for the first half of 2002.
Mr. Kalkbrenner commented, “We have incurred considerable expenses in proactively enhancing our risk management systems to ensure they will support our future growth. While it is difficult to quantify the value of the investment in systems and people that we have made, I am confident that it will position us to enhance the Company’s performance as the economy recovers.”
Outlook for Remainder of 2003
• | Loan growth – continued focus on quality and relationships – business loan growth is expected to increase slightly in the last half of 2003, |
• | Deposit growth – commensurate with our relationship philosophy, the Company is committed to expanding its deposit base and selectively adding new clients – the Company anticipates deposit growth in the range of 5% to 10% for the remainder of the year, |
• | Net interest margin – the Company anticipates slight margin compression throughout 2003 without market interest rate reductions – if market interest rates decline, the Company would expect continued margin pressure. For every 25 basis point decline in market interest rates, the net interest margin is estimated to decline |
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July 23, 2003
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approximately 10 basis points to 20 basis points, depending on the mix of assets and liabilities,
• | Credit Quality – continued aggressive management of credit risk, and based on the current outlook, the Company believes net charge-offs will be in the range of 60 basis points to 70 basis points for 2003. |
Conference Call
Investors have the opportunity to listen to the conference call live over the Internet through CompanyBoardroom at http://www.companyboardroom.com on Wednesday, July 23, 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 and via telephone through July 30, 2003 by dialing (800) 642-1687 or (706) 645-9291 and providing Conference ID 1572019.
About Greater Bay Bancorp
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 BankofCommerce 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.
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 interest margin, net loan charge-offs, asset quality, level of loan loss reserves, growth in loans and deposits, the impact of the S & C acquisition and the strength of the local economy. These forward looking 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 maintain its net interest spread, and the quality of the Company’s earning assets; (2) any difficulties that may be encountered in integrating S&C and in realizing operating efficiencies; (3) government regulation; and (4) 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, 2002.
For additional information and press releases about Greater Bay Bancorp, visit the Company’s web site athttp://www.gbbk.com.
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Greater Bay Bancorp’s Second Quarter 2003 Earnings Results
July 23, 2003
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GREATER BAY BANCORP
JUNE 30, 2003 – FINANCIAL SUMMARY (UNAUDITED)
($ in 000’s)
SELECTED CONSOLIDATED FINANCIAL CONDITION DATA:
Jun 30 2003 | Mar 31 2003 | Dec 31 2002 | Sept 30 2002 | Jun 30 2002 | ||||||||||||||||
Cash and Due From Banks | $ | 278,989 | $ | 243,684 | $ | 300,514 | $ | 271,774 | $ | 265,033 | ||||||||||
Investments | 2,654,714 | 2,556,106 | 2,576,986 | 2,966,302 | 3,181,788 | |||||||||||||||
Loans: | ||||||||||||||||||||
Commercial | 1,992,499 | 1,974,656 | 2,067,142 | 2,007,389 | 1,997,960 | |||||||||||||||
Term Real Estate—Commercial | 1,650,330 | 1,642,560 | 1,610,277 | 1,529,582 | 1,500,972 | |||||||||||||||
Total Commercial | 3,642,829 | 3,617,216 | 3,677,419 | 3,536,971 | 3,498,932 | |||||||||||||||
Construction & Land | 671,666 | 704,041 | 710,990 | 715,351 | 728,795 | |||||||||||||||
Real Estate—Other | 244,955 | 247,335 | 251,665 | 282,894 | 292,474 | |||||||||||||||
Consumer and Other | 162,928 | 165,650 | 166,331 | 174,797 | 178,809 | |||||||||||||||
Deferred Loan Fees, Net | (14,803 | ) | (15,044 | ) | (15,245 | ) | (16,102 | ) | (16,354 | ) | ||||||||||
Total Loans | 4,707,575 | 4,719,198 | 4,791,160 | 4,693,911 | 4,682,656 | |||||||||||||||
Allowance for Loan Losses | (130,030 | ) | (129,818 | ) | (129,613 | ) | (128,429 | ) | (126,092 | ) | ||||||||||
Total Loans, Net | 4,577,545 | 4,589,380 | 4,661,547 | 4,565,482 | 4,556,564 | |||||||||||||||
Goodwill and Other Intangibles | 189,299 | 191,580 | 191,903 | 170,642 | 171,915 | |||||||||||||||
Other Assets | 383,467 | 378,256 | 344,777 | 343,799 | 350,922 | |||||||||||||||
Total Assets | $ | 8,084,014 | $ | 7,959,006 | $ | 8,075,727 | $ | 8,317,999 | $ | 8,526,222 | ||||||||||
Deposits: | ||||||||||||||||||||
Demand, Non-Interest Bearing | $ | 975,122 | $ | 959,823 | $ | 1,028,672 | $ | 984,327 | $ | 933,486 | ||||||||||
NOW, MMDA and Savings | 2,873,737 | 2,813,126 | 2,673,973 | 2,693,242 | 2,555,057 | |||||||||||||||
Time Certificates, $100,000 and over | 808,723 | 803,328 | 829,717 | 809,519 | 807,033 | |||||||||||||||
Other Time Certificates | 890,669 | 945,483 | 739,911 | 956,821 | 1,003,550 | |||||||||||||||
Total Deposits | 5,548,251 | 5,521,760 | 5,272,273 | 5,443,909 | 5,299,126 | |||||||||||||||
Other Borrowings | 1,295,373 | 1,335,406 | 1,737,243 | 1,840,423 | 2,209,356 | |||||||||||||||
Trust Preferred Securities | 204,000 | 204,000 | 204,000 | 203,000 | 223,000 | |||||||||||||||
Other Liabilities | 301,793 | 186,670 | 165,502 | 163,310 | 169,311 | |||||||||||||||
Total Liabilities | 7,349,417 | 7,247,836 | 7,379,018 | 7,650,642 | 7,900,793 | |||||||||||||||
REIT Preferred Securities | 15,302 | 15,650 | 15,650 | 15,650 | 15,650 | |||||||||||||||
Convertible Preferred Stock | 80,441 | 80,441 | 80,900 | 72,500 | 72,500 | |||||||||||||||
Shareholders’ Equity | 638,854 | 615,079 | 600,159 | 579,207 | 537,279 | |||||||||||||||
719,295 | 695,520 | 681,059 | 651,707 | 609,779 | ||||||||||||||||
Total Liabilities and Shareholders’ Equity | $ | 8,084,014 | $ | 7,959,006 | $ | 8,075,727 | $ | 8,317,999 | $ | 8,526,222 | ||||||||||
Average Quarterly Total Loans, excluding Nonaccrual | $ | 4,720,462 | $ | 4,716,930 | $ | 4,702,111 | $ | 4,641,680 | $ | 4,541,191 | ||||||||||
Average Quarterly Investments | $ | 2,483,795 | $ | 2,412,634 | $ | 2,676,653 | $ | 3,183,293 | $ | 3,202,106 | ||||||||||
Average Quarterly Interest Earning Assets | $ | 7,204,257 | $ | 7,129,564 | $ | 7,378,764 | $ | 7,824,973 | $ | 7,743,297 | ||||||||||
Average Quarterly Deposits | $ | 5,661,474 | $ | 5,342,679 | $ | 5,534,618 | $ | 5,443,742 | $ | 5,194,555 | ||||||||||
Average Quarterly Interest Bearing Liabilities | $ | 6,250,061 | $ | 6,080,198 | $ | 6,376,908 | $ | 6,715,291 | $ | 6,721,689 | ||||||||||
Average Quarterly Assets | $ | 8,055,962 | $ | 7,939,810 | $ | 8,219,625 | $ | 8,474,179 | $ | 8,413,187 | ||||||||||
Average Quarterly Equity | $ | 714,908 | $ | 694,109 | $ | 667,716 | $ | 632,589 | $ | 598,254 | ||||||||||
Average YTD Interest Earning Assets | $ | 7,163,416 | $ | 7,129,564 | $ | 7,621,349 | $ | 7,712,939 | $ | 7,639,798 | ||||||||||
Average YTD Assets | $ | 7,998,207 | $ | 7,939,810 | $ | 8,285,240 | $ | 8,307,360 | $ | 8,222,835 | ||||||||||
Average YTD Equity | $ | 704,566 | $ | 694,109 | $ | 612,453 | $ | 593,825 | $ | 574,122 | ||||||||||
Total Regulatory Capital | ||||||||||||||||||||
Tier I capital | $ | 730,432 | $ | 711,170 | $ | 691,048 | $ | 678,606 | $ | 640,207 | ||||||||||
Total risk-based capital | $ | 805,431 | $ | 785,488 | $ | 765,526 | $ | 753,986 | $ | 736,378 | ||||||||||
Nonperforming Assets | ||||||||||||||||||||
Nonaccrual Loans | $ | 46,491 | $ | 37,285 | $ | 37,750 | $ | 47,695 | $ | 42,349 | ||||||||||
OREO | 2,500 | 3,000 | 397 | 930 | 509 | |||||||||||||||
Total Nonperforming Assets | $ | 48,991 | $ | 40,285 | $ | 38,147 | $ | 48,625 | $ | 42,858 | ||||||||||
Greater Bay Trust Company Assets | $ | 616,847 | $ | 598,885 | $ | 607,244 | $ | 598,481 | $ | 641,884 |
Greater Bay Bancorp’s Second Quarter 2003 Earnings Results
July 23, 2003
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GREATER BAY BANCORP
JUNE 30, 2003 – FINANCIAL SUMMARY (UNAUDITED)
($ in 000’s)
SELECTED QUARTERLY CONSOLIDATED OPERATING DATA:
Second Quarter 2003 | First Quarter 2003 | Fourth Quarter 2002 | Third Quarter 2002 | Second Quarter 2002 | ||||||||||||||||
Interest Income | $ | 103,450 | $ | 107,344 | $ | 116,936 | $ | 128,259 | $ | 130,792 | ||||||||||
Interest Expense | 29,646 | 31,177 | 35,917 | 40,622 | 42,145 | |||||||||||||||
Net Interest Income Before Provision for Loan Losses | 73,804 | 76,167 | 81,019 | 87,637 | 88,647 | |||||||||||||||
Provision for Loan Losses | 6,700 | 6,495 | 7,000 | 27,776 | 9,000 | |||||||||||||||
Net Interest Income After Provision for Loan Losses | 67,104 | 69,672 | 74,019 | 59,861 | 79,647 | |||||||||||||||
Non-interest Income: | ||||||||||||||||||||
Insurance Agency Commissions & Fees | 27,945 | 30,642 | 23,664 | 26,359 | 27,601 | |||||||||||||||
Gains on Investments and early retirement of CODES (1) | 3,136 | 2,023 | 2,247 | 14,835 | 3,004 | |||||||||||||||
Depositor Service Fees | 2,995 | 2,831 | 2,786 | 2,771 | 2,762 | |||||||||||||||
Loan and International Banking Fees | 2,421 | 2,038 | 2,309 | 2,124 | 2,273 | |||||||||||||||
Operating Lease Fees | 1,234 | 877 | 523 | 207 | 55 | |||||||||||||||
Trust Fees | 819 | 757 | 922 | 844 | 894 | |||||||||||||||
ATM Fees | 445 | 406 | 574 | 629 | 628 | |||||||||||||||
Gain on Sale of Loans | 364 | 1,543 | 1,999 | 2,049 | 210 | |||||||||||||||
Other Income (2) | 2,962 | 3,647 | 3,441 | 5,737 | 2,083 | |||||||||||||||
Total Non-interest Income | 42,321 | 44,764 | 38,465 | 55,555 | 39,510 | |||||||||||||||
Operating Expenses: | ||||||||||||||||||||
Salaries | 38,084 | 39,543 | 38,222 | 37,296 | 36,054 | |||||||||||||||
Deferred Loan Origination Costs | (3,545 | ) | (3,051 | ) | (3,580 | ) | (3,479 | ) | (3,745 | ) | ||||||||||
Benefits | 7,462 | 8,940 | 7,093 | 5,950 | 6,338 | |||||||||||||||
Total Compensation and Benefits | 42,001 | 45,432 | 41,735 | 39,767 | 38,647 | |||||||||||||||
Occupancy and Equipment | 10,171 | 9,642 | 10,225 | 10,035 | 10,267 | |||||||||||||||
Professional Services & Legal | 4,390 | 4,962 | 2,835 | 2,462 | 1,915 | |||||||||||||||
Telephone, postage and supplies | 1,878 | 1,746 | 2,020 | 1,827 | 1,918 | |||||||||||||||
Marketing and promotion | 1,822 | 1,115 | 681 | 1,605 | 1,617 | |||||||||||||||
Amortization of Intangibles | 1,671 | 1,671 | 1,658 | 1,650 | 1,650 | |||||||||||||||
Data Processing | 1,407 | 1,251 | 1,350 | 1,145 | 1,196 | |||||||||||||||
Insurance | 1,283 | 1,236 | 944 | 901 | 892 | |||||||||||||||
Correspondent Bank Charges | 1,277 | 1,105 | 1,215 | 1,370 | 1,074 | |||||||||||||||
Depreciation—Equipment Leased to Others (2) | 1,072 | 735 | 454 | 158 | — | |||||||||||||||
Other Real Estate, Net | 518 | 1 | 20 | 119 | — | |||||||||||||||
FDIC Insurance and Assessments | 482 | 498 | 491 | 409 | 417 | |||||||||||||||
Client Services | 318 | 344 | 480 | 433 | 557 | |||||||||||||||
Other Expenses | 3,502 | 3,151 | 1,030 | 1,469 | 3,900 | |||||||||||||||
71,792 | 72,889 | 65,138 | 63,350 | 64,050 | ||||||||||||||||
Costs related to the Early Retirement of Trust Preferred Securities (TPS) | — | — | — | — | 975 | |||||||||||||||
REIT Preferred Securities expense | 454 | 453 | 421 | 465 | 464 | |||||||||||||||
Total Operating Expenses | 72,246 | 73,342 | 65,559 | 63,815 | 65,489 | |||||||||||||||
Income Before Income Taxes | 37,179 | 41,094 | 46,925 | 51,601 | 53,668 | |||||||||||||||
Income Tax Expense | 14,054 | 15,997 | 16,259 | 19,131 | 20,132 | |||||||||||||||
Net Income | $ | 23,125 | $ | 25,097 | $ | 30,666 | $ | 32,470 | $ | 33,536 | ||||||||||
(1) | CODES (Zero Coupon Convertible Contingent Debt Securities) |
(2) | Prior amounts have been reclassified to reflect the depreciation expense of equipment leased to others in operating expenses, as required by FAS 13. |
This expense was netted with other income in Q4 and Q3 2002. |
Greater Bay Bancorp’s Second Quarter 2003 Earnings Results
July 23, 2003
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GREATER BAY BANCORP
JUNE 30, 2003 – FINANCIAL SUMMARY (UNAUDITED)
($ in 000’s)
SELECTED CONSOLIDATED OPERATING DATA FOR THE SIX MONTH PERIODS:
YTD 30-Jun 2003 | YTD 30-Jun 2002 | |||||||
Interest Income | $ | 210,794 | $ | 260,217 | ||||
Interest Expense | 60,823 | 84,016 | ||||||
Net Interest Income Before Provision for Loan Losses | 149,971 | 176,201 | ||||||
Provision for Loan Losses | 13,195 | 25,000 | ||||||
Net Interest Income After Provision for Loan Losses | 136,776 | 151,201 | ||||||
Non-interest Income: | ||||||||
Insurance Agency Commissions & Fees (1) | 58,587 | 38,492 | ||||||
Gains on Investments and early retirement of CODES (2) | 5,159 | 3,351 | ||||||
Depositor Service Fees | 5,826 | 5,590 | ||||||
Loan and International Banking Fees | 4,459 | 4,800 | ||||||
Operating Lease Fees | 2,111 | 17 | ||||||
Trust Fees | 1,576 | 1,800 | ||||||
ATM Fees | 851 | 1,211 | ||||||
Gain on Sale of Loans | 1,907 | 706 | ||||||
Other Income | 6,609 | 6,135 | ||||||
Total Non-interest Income | 87,085 | 62,102 | ||||||
Operating Expenses: | ||||||||
Salaries | 77,627 | 62,100 | ||||||
Deferred Loan Origination Costs | (6,596 | ) | (6,731 | ) | ||||
Benefits | 16,402 | 11,853 | ||||||
Total Compensation and Benefits | 87,433 | 67,222 | ||||||
Occupancy and Equipment | 19,813 | 19,105 | ||||||
Professional Services & Legal | 9,352 | 3,604 | ||||||
Telephone, postage and supplies | 3,624 | 3,551 | ||||||
Marketing and promotion | 2,937 | 3,069 | ||||||
Amortization of Intangibles | 3,342 | 2,212 | ||||||
Data Processing | 2,658 | 2,325 | ||||||
Insurance | 2,519 | 1,540 | ||||||
Correspondent Bank Charges | 2,382 | 1,998 | ||||||
Depreciation—Equipment Leased to Others | 1,807 | — | ||||||
Other Real Estate, Net | 519 | — | ||||||
FDIC Insurance and Assessments | 980 | 880 | ||||||
Client Services | 662 | 1,204 | ||||||
Other Expenses | 6,653 | 6,889 | ||||||
144,681 | 113,599 | |||||||
Costs related to the Early Retirement of Trust Preferred Securities (TPS) | — | 975 | ||||||
REIT Preferred Securities expense | 907 | 928 | ||||||
Total Operating Expenses | 145,588 | 115,502 | ||||||
Income Before Income Taxes | 78,273 | 97,801 | ||||||
Income Tax Expense | 30,051 | 36,663 | ||||||
Net Income | $ | 48,222 | $ | 61,138 | ||||
(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) |
Greater Bay Bancorp’s Second Quarter 2003 Earnings Results
July 23, 2003
Page 9 of 11
GREATER BAY BANCORP
JUNE 30, 2003 – FINANCIAL SUMMARY (UNAUDITED)
($ in 000’s, except share and per share data)
SELECTED QUARTERLY CONSOLIDATED FINANCIAL CONDITION RATIOS:
Jun 30 2003 | Mar 31 2003 | Dec 31 2002 | Sept 30 2002 | Jun 30 2002 | ||||||||||||||||
Loan to Deposit Ratio | 84.85 | % | 85.47 | % | 90.87 | % | 86.22 | % | 88.37 | % | ||||||||||
Ratio of Allowance for Loan Losses to: | ||||||||||||||||||||
Average Loans | 2.73 | % | 2.73 | % | 2.73 | % | 2.74 | % | 2.75 | % | ||||||||||
End of Period Loans | 2.75 | % | 2.74 | % | 2.70 | % | 2.73 | % | 2.68 | % | ||||||||||
Total Nonperforming Assets | 265.42 | % | 322.25 | % | 339.77 | % | 264.12 | % | 294.21 | % | ||||||||||
Ratio of Provision for Loan Losses to Average Loans, annualized | 0.56 | % | 0.55 | % | 0.59 | % | 2.35 | % | 0.79 | % | ||||||||||
Total Nonperforming Loans to Total Loans | 0.99 | % | 0.79 | % | 0.79 | % | 1.02 | % | 0.90 | % | ||||||||||
Total Nonperforming Assets to Total Assets | 0.61 | % | 0.51 | % | 0.47 | % | 0.58 | % | 0.50 | % | ||||||||||
Ratio of Quarterly Net Charge-offs to Average Loans, annualized | 0.55 | % | 0.54 | % | 0.49 | % | 2.15 | % | 0.72 | % | ||||||||||
Ratio of YTD Net Charge-offs to YTD Average Loans, annualized | 0.54 | % | 0.54 | % | 1.19 | % | 1.43 | % | 1.05 | % | ||||||||||
Loan Growth, current quarter to prior year quarter | 0.53 | % | 4.91 | % | 6.57 | % | 7.17 | % | 9.01 | % | ||||||||||
Loan Growth, current quarter to prior quarter, annualized | -0.99 | % | -6.09 | % | 8.22 | % | 0.95 | % | 16.43 | % | ||||||||||
Loan Growth, YTD annualized | -3.52 | % | -6.09 | % | 6.57 | % | 5.89 | % | 8.39 | % | ||||||||||
Deposits Growth, current quarter to prior year quarter | 4.70 | % | 9.53 | % | 5.66 | % | 11.71 | % | 8.60 | % | ||||||||||
Deposits Growth, current quarter to prior quarter, annualized | 1.92 | % | 19.19 | % | -12.51 | % | 10.84 | % | 20.52 | % | ||||||||||
Deposits Growth, YTD annualized | 10.56 | % | 19.19 | % | 5.66 | % | 12.16 | % | 12.49 | % | ||||||||||
Revenue Growth, current quarter to prior year quarter | -9.39 | % | 9.79 | % | 28.64 | % | 62.56 | % | 46.25 | % | ||||||||||
Revenue Growth, current quarter to prior quarter, annualized (1) | -15.94 | % | 6.48 | % | -66.58 | % | 46.06 | % | 65.59 | % | ||||||||||
Net Interest Income Growth, current quarter to prior year quarter | -16.74 | % | -13.01 | % | -2.20 | % | 13.38 | % | 18.79 | % | ||||||||||
Net Interest Income Growth, current quarter to prior quarter, annualized (2) | -12.44 | % | -24.29 | % | -29.96 | % | -4.52 | % | 5.01 | % | ||||||||||
Average Earning Assets to Average Total Assets | 89.43 | % | 89.80 | % | 89.77 | % | 92.34 | % | 92.04 | % | ||||||||||
Average Earning Assets to Average Interest-Bearing Liabilities | 115.27 | % | 117.26 | % | 115.71 | % | 116.52 | % | 115.20 | % | ||||||||||
Capital Ratios: | ||||||||||||||||||||
Tangible Equity to Tangible Assets (3) | 6.91 | % | 6.69 | % | 6.40 | % | 6.10 | % | 5.43 | % | ||||||||||
Tangible Common Equity to Tangible Assets (4) | 6.71 | % | 6.49 | % | 6.20 | % | 5.90 | % | 5.24 | % | ||||||||||
Tier 1 leverage ratio | 9.29 | % | 9.18 | % | 8.61 | % | 8.17 | % | 7.77 | % | ||||||||||
Tier 1 risk-based capital ratio | 12.29 | % | 12.08 | % | 11.71 | % | 11.35 | % | 10.66 | % | ||||||||||
Total risk-based capital ratio | 13.55 | % | 13.34 | % | 12.97 | % | 12.61 | % | 12.26 | % | ||||||||||
Risk Weighted Assets | $ | 5,942,616 | $ | 5,887,156 | $ | 5,900,325 | $ | 5,979,732 | $ | 6,005,431 | ||||||||||
Book Value Per Share | $ | 12.29 | $ | 11.88 | $ | 11.64 | $ | 11.26 | $ | 10.50 | ||||||||||
Tangible Book Value Per Share, including Convertible Preferred Stock (5) | $ | 10.20 | $ | 9.73 | $ | 9.48 | $ | 9.35 | $ | 8.55 | ||||||||||
Tangible Book Value Per Share, excluding Convertible Preferred Stock (6) | $ | 8.65 | $ | 8.18 | $ | 7.92 | $ | 7.94 | $ | 7.14 | ||||||||||
Total Shares Outstanding | 51,982,864 | 51,774,074 | 51,577,795 | 51,442,027 | 51,192,359 |
(1) | The revenue contraction in Q4 2002 compared to Q3 2002, annualized was primarily due to a decrease of $12.6 million in gains on investments and early retirement of CODES. |
(2) | The net interest income contraction in the Q1 2003 and Q4 2002 compared to prior quarters, annualized was primarily due to a reduction in investments due to de-leveraging the balance sheet. |
(3) | Tangible Equity includes Shareholders' Equity, Convertible Preferred Stock and REIT Preferred Securities, less Goodwill and Other Intangibles. |
(4) | Tangible Common Equity includes Shareholders' Equity and Convertible Preferred Stock, less Goodwill and Other Intangibles. |
(5) | Tangible Equity includes Shareholders' Equity and Convertible Preferred Stock, less Goodwill and Other Intangibles. |
(6) | Tangible Equity includes Shareholders' Equity less Goodwill and Other Intangibles. |
Great Bay Bancorp’s Second Quarter 2003 Earnings Results
July 23, 2003
Page 10 of 11
GREATER BAY BANCORP
JUNE 30, 2003 – FINANCIAL SUMMARY (UNAUDITED)
($ in 000’s, except share and per share data)
SELECTED QUARTERLY CONSOLIDATED OPERATING RATIOS:
Second Quarter 2003 | First Quarter 2003 | Fourth Quarter 2002 | Third Quarter 2002 | Second Quarter 2002 | ||||||||||||||||
GAAP EPS | ||||||||||||||||||||
Net Income Per Share | ||||||||||||||||||||
Basic (1) | $ | 0.42 | $ | 0.46 | $ | 0.57 | $ | 0.61 | $ | 0.64 | ||||||||||
Diluted (2) | $ | 0.41 | $ | 0.45 | $ | 0.57 | $ | 0.60 | $ | 0.62 | ||||||||||
Weighted Average Common Shares Outstanding | 51,925,000 | 51,735,000 | 51,547,000 | 51,339,000 | 50,685,000 | |||||||||||||||
Weighted Average Common & Common Equivalent Shares Outstanding (2) | 52,745,000 | 52,161,000 | 54,135,000 | 54,504,000 | 54,500,000 | |||||||||||||||
GAAP Ratios | ||||||||||||||||||||
Return on Period Average Assets, annualized | 1.15 | % | 1.28 | % | 1.48 | % | 1.52 | % | 1.60 | % | ||||||||||
Return on Period Average Equity, annualized | 12.97 | % | 14.66 | % | 18.22 | % | 20.36 | % | 22.48 | % | ||||||||||
Net Interest Margin – Average Earning Assets (3) | 4.11 | % | 4.33 | % | 4.36 | % | 4.44 | % | 4.59 | % | ||||||||||
Operating Expense Ratio (4) | 3.60 | % | 3.75 | % | 3.16 | % | 2.99 | % | 3.12 | % | ||||||||||
Efficiency Ratio (5) | 62.21 | % | 60.65 | % | 54.87 | % | 44.57 | % | 51.10 | % | ||||||||||
Total Operating Expenses | $ | 72,246 | $ | 73,342 | $ | 65,559 | $ | 63,815 | $ | 65,489 | ||||||||||
Total Revenue | $ | 116,125 | $ | 120,931 | $ | 119,484 | $ | 143,192 | $ | 128,157 | ||||||||||
NON-GAAP Ratios | ||||||||||||||||||||
Efficiency Ratio (Excluding the operating results of ABD) (6) | 56.04 | % | 55.28 | % | 45.12 | % | 35.61 | % | 43.93 | % | ||||||||||
ABD Operating Expenses | $ | 22,852 | $ | 23,556 | $ | 22,345 | $ | 22,288 | $ | 21,520 | ||||||||||
ABD Revenue | $ | 27,991 | $ | 30,862 | $ | 23,698 | $ | 26,569 | $ | 28,078 |
(1) | Net income available to common shareholders is based on total net income less preferred dividends of $1.5 million for Q2 and Q1 2003, $1.3 million for Q4, Q3 and Q2 2002. |
(2) | The convertible preferred stock was considered anti-dilutive in Q2 and Q1 2003, whereby the preferred dividends of $1.5 million divided by the common stock equivalent of the convertible preferred stock of 2,718,000 shares and 2,785,000 shares in Q2 and Q1 2003 were greater than the diluted earnings per share. Net income available to common shareholders is based on total net income less preferred dividends of $1.5 million for Q2 and Q1 2003. |
(3) | Net interest income for the period, annualized and divided by average quarterly interest earning assets. |
(4) | Total operating expenses for the period, annualized and divided by average quarterly assets. |
(5) | Total operating expenses divided by total revenue (the sum of net interest income and non-interest income). |
(6) | Total operating expenses minus ABD operating expenses divided by total revenue minus ABD revenue. |
Greater Bay Bancorp’s Second Quarter 2003 Earnings Results
July 23, 2003
Page 11 of 11
GREATER BAY BANCORP
JUNE 30, 2003 – FINANCIAL SUMMARY (UNAUDITED)
($ In 000’s, except share and per share data)
SELECTED CONSOLIDATED OPERATING RATIOS FOR THE SIX MONTH PERIODS:
YTD | YTD | |||||||
30-Jun | 30-Jun | |||||||
2003 | 2002 | |||||||
GAAP EPS | ||||||||
Net Income Per Share | ||||||||
Basic (1) | $ | 0.87 | $ | 1.18 | ||||
Diluted (2) | $ | 0.86 | $ | 1.14 | ||||
Weighted Average Common Shares Outstanding | 51,831,000 | 50,446,000 | ||||||
Weighted Average Common & Common Equivalent Shares Outstanding (2) | 52,420,000 | 53,765,000 | ||||||
GAAP Ratios | ||||||||
Return on Period Average Assets, annualized | 1.22 | % | 1.50 | % | ||||
Return on Period Average Equity, annualized | 13.80 | % | 21.47 | % | ||||
Net Interest Margin—Average Earning Assets (3) | 4.22 | % | 4.65 | % | ||||
Operating Expense Ratio (4) | 3.67 | % | 2.83 | % | ||||
Efficiency Ratio (5) | 61.42 | % | 48.47 | % | ||||
Total Operating Expenses | $ | 145,588 | $ | 115,502 | ||||
Total Revenue | $ | 237,056 | $ | 238,303 | ||||
NON-GAAP Ratios | ||||||||
Efficiency Ratio (Excluding the operating results of ABD) (6) | 55.66 | % | 43.42 | % | ||||
ABD Operating Expenses | $ | 46,408 | $ | 29,015 | ||||
ABD Revenue | $ | 58,853 | $ | 39,135 |
(1) | Net income available to common shareholders is based on total net income less preferred dividends of $3.0 million for YTD June 2003 and $1.6 million for YTD June 2002. |
(2) | The convertible preferred stock was considered anti-dilutive in YTD June 2003, whereby the preferred dividends of $3.0 million divided by the common stock equivalent of the convertible preferred stock of 2,751,000 shares was greater than the diluted earnings per share. Net income available to common shareholders is based on total net income less preferred dividends of $3.0 million for YTD June 2003. |
(3) | Net interest income for the period, annualized and divided by average YTD interest earning assets. |
(4) | Total operating expenses for the period, annualized and divided by average YTD assets. |
(5) | Total operating expenses divided by total revenue (the sum of net interest income and non-interest income). |
(6) | Total operating expenses minus ABD operating expenses divided by total revenue minus ABD revenue. |