Exhibit 99.1
For Information Contact
At Greater Bay Bancorp: | At Silverman Heller Associates: | |
David L. Kalkbrenner, CEO | Philip Bourdillon/Gene Heller | |
(650) 614-5767 | (310) 208-2550 | |
Byron A. Scordelis, President and COO | ||
(650) 614-5751 | ||
Steven C. Smith, EVP and CFO | ||
(650) 813-8222 |
FOR IMMEDIATE RELEASE
GREATER BAY BANCORP REPORTS
NET INCOMEOF $71 MILLION
FORTHE FIRST NINE MONTHSOF 2003
PALO ALTO, Calif., October 22, 2003 — Greater Bay Bancorp (Nasdaq:GBBK), a $7.8 billion in assets financial services holding company, today announced results for the third quarter and nine months ended September 30, 2003.
For the third quarter of 2003, Greater Bay Bancorp’sNET INCOME was $22.4 million, or $0.39 per diluted share, compared to $32.5 million, or $0.60 per diluted share, for the third quarter of 2002. Based onNET INCOMEfor the third quarter of 2003, Greater Bay Bancorp’s return on average equity was 12.37% and return on average assets was 1.11%. For the third quarter of 2002,NET INCOME resulted in a return on average equity of 20.36% and a return on average assets of 1.52%.
For the first nine months of 2003, Greater Bay Bancorp’sNET INCOME was $70.6 million, or $1.26 per diluted share, compared to $93.6 million, or $1.73 per diluted share, for the first nine months of 2002. Based onNET INCOMEfor the first nine months of 2003, Greater Bay Bancorp’s return on average equity was 13.31% and return on average assets was 1.18%. For the first nine months of 2002,NET INCOME resulted in a return on average equity of 21.08% and a return on average assets of 1.51%.
The $0.21 decline in earnings per diluted share for the third quarter of 2003 and the $0.47 decline in earnings per diluted share for the first nine 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 38 basis points in the third quarter of 2003 and by 41 basis points in the first nine months of 2003, resulting in approximately a $(0.09) and $(0.28) decline in earnings per diluted share, respectively, |
• | a planned reduction in the Company’s interest earning asset base (primarily the investment securities portfolio) reduced earnings per diluted share by approximately $(0.09) and $(0.21) for the third quarter of 2003 and first nine months of 2003, respectively, |
Greater Bay Bancorp’s Third Quarter 2003 Earnings Results
October 22, 2003
Page 2 of 12
• | outside consulting costs related to enterprise-wide risk management and regulatory compliance amounted to approximately $434 thousand ($269 thousand net of tax) in the third quarter of 2003 and $2.6 million ($1.6 million net of tax) in the first nine months of 2003, or approximately $(0.01) and $(0.03) per diluted share, respectively. |
Non-Interest Income
Non-interest income was $43.9 million for the third quarter of 2003 compared to $42.3 million for the second quarter of 2003. Non-interest income for the third quarter of 2002 was $55.6 million. The decline in non-interest income for the third quarter of 2003 compared to the third quarter of 2002 was primarily attributable to the lower gains on sales of investment securities and early retirement of the Zero Coupon Senior Convertible Debt Securities (“CODES”). Non-interest income for the first nine months of 2003 increased to $131.0 million from $117.7 million for the first nine months of 2002, of which $3.1 million was related to the acquisition of Sullivan & Curtis Insurance Brokers of Washington (“S&C”) and $20.1 million was related to an additional two and one-half months of commissions and fees of ABD Insurance and Financial Services (“ABD”) recognized in 2003 versus 2002.
Non-interest income as a percentage of total revenues for the third quarter and first nine months of 2003 was 37.67% and 37.04%, respectively, compared to 38.80% and 30.84% for the third quarter and first nine months of 2002, respectively, and 36.44% for the second quarter of 2003.
According to David Kalkbrenner, Chief Executive Officer, “We remain focused on increasing our non-interest income as a percentage of total revenue. ABD continues to outperform our expectations and we anticipate that its fee-based revenue will continue to increase, both through organic growth and strategic acquisitions of other high performing insurance brokerage firms. We continue to look for other opportunities to increase fee revenue, particularly in the wealth management area.”
Operating Expenses
Operating expenses, which included $2.3 million in S&C operating expenses, increased by approximately $0.3 million in the third quarter compared to the second quarter of 2003. Excluding the S&C expenses, the Company’s operating expenses would have declined by $2.0 million, or approximately 3%. The decline reflects the Company’s focused effort to manage expenses.
The Company’s efficiency ratio for the third quarter of 2003 was 62.21% (54.88% excluding ABD), compared to 44.57% (35.61% excluding ABD) for the third quarter of 2002. For the first nine months of 2003, the efficiency ratio was 61.68% (55.41% excluding ABD), compared to 47.00% (40.54% excluding ABD) for the first nine months of 2002.
Balance Sheet
At September 30, 2003, Greater Bay Bancorp’stotal assets were $7.8 billion,total loans were $4.6 billion,total investments, primarily mortgage-backed securities, were $2.5 billion andtotal depositswere $5.4 billion.
-more-
Greater Bay Bancorp’s Third Quarter 2003 Earnings Results
October 22, 2003
Page 3 of 12
From September 30, 2002 to September 30, 2003,total loans decreased by $92.4 million. The decrease included $29.2 million in net payoffs from the Shared National Credit (“SNC”) portfolio and $111.2 million in net payoffs in the construction loan portfolio. These decreases were offset by net growth of $48.0 million in other sectors of the Company’s business banking loan portfolio. From September 30, 2002 to September 30, 2003,total investmentsdecreased 17%, consistent with the Company’s stated goals, to $2.5 billion, andtotal depositsdecreased by approximately $5.0 million or 0.09%, while total deposits, excluding institutional time certificates of deposits, increased by $184.1 million, or 4%.
Mr. Kalkbrenner continued, “The lack of loan growth reflects the continued challenging economy and its impact on our business borrowers’ willingness to expand their businesses during uncertain times, combined with our efforts to continue to follow a course of prudent underwriting. The decline in the investment portfolio was planned as part of our asset/liability strategy to position the Company to be more asset sensitive as we move closer to an economic recovery. Our deposit base, excluding institutional time certificates, continues to grow, which allows us to reduce wholesale funding. We believe these factors position the Company to have the liquidity resources available to fund anticipated increased loan demand when the economy begins to improve.”
Credit Quality
Net charge-offs to average loans for the year to date 2003 were 0.63% of average annualized loans, compared to 1.43% for the same period in 2002. This compares to an average of 0.54% for the top 75 U.S. Banks (by asset size) at June 30, 2003 (the Company ranked 59th by asset size).
Non-performing assets were $58.1 million at September 30, 2003 compared to $49.0 million at June 30, 2003. The ratio of non-performing loans to total loans was 1.26% at September 30, 2003, compared to 0.99% at June 30, 2003 and 1.02% at September 30, 2002. This compares to an average of 0.84% for the top 75 U.S. Banks (by asset size) at June 30, 2003. The following is a detailed summary by type of the Company’s non-performing assets as of September 30, 2003:
NON-PERFORMING ASSETS ($ in millions) | Q3 2003 | Q2 2003 | Variance | |||||||||
Commercial | $ | 6.5 | $ | 5.3 | $ | 1.2 | ||||||
Real Estate Term and Construction | 17.4 | 14.1 | 3.3 | |||||||||
SBA | 6.4 | 2.9 | 3.5 | |||||||||
Shared National Credits | 15.2 | 13.5 | 1.7 | |||||||||
Venture Banking Group | 3.6 | 3.8 | (0.2 | ) | ||||||||
Specialty Finance | 6.4 | 6.5 | (0.1 | ) | ||||||||
Other | 2.6 | 0.4 | 2.2 | |||||||||
Total Non-performing Loans | 58.1 | 46.5 | 11.6 | |||||||||
OREO | — | 2.5 | (2.5 | ) | ||||||||
Total Non-performing Assets | $ | 58.1 | $ | 49.0 | $ | 9.1 | ||||||
Non-performing Loans to Total Loans | 1.26 | % | 0.99 | % | 0.27 | % | ||||||
Non-performing Assets to Total Assets | 0.75 | % | 0.61 | % | 0.14 | % |
-more-
Greater Bay Bancorp’s Third Quarter 2003 Earnings Results
October 22, 2003
Page 4 of 12
The $9.1 million increase in non-performing assets is primarily in three areas — real estate of $3.3 million, SNC of $1.7 million and SBA of $3.5 million. Mr. Kalkbrenner commented, “Based on our analysis of the increases in the non-performing asset classes, as well as the existing balances, the Company expects minimal loss exposure on the SBA credits, which are substantially government guaranteed, and limited loss exposure on the real estate non-performing assets based on the current real estate valuations. The SNC non-performing asset portfolio loss exposure is adequately reserved. In addition, recent internal and external credit examinations were completed without any significant adjustments to the Company’s classifications or reserve levels.”
During the quarter, the Company had $9.5 million of total net charge-offs, of which $3.9 million were SNC related. According to Mr. Kalkbrenner, “Because our non-relationship SNC portfolio has been reduced to $21 million and we consider the portfolio to be adequately reserved, we determined that it was not necessary to replenish the reserve related to this portfolio. Therefore, after a careful analysis utilizing our loan loss reserve methodology, we made a provision for loan losses of $8.0 million in the third quarter.”
The allowance for loan losses was $128.5 million or 2.78% of total loans at September 30, 2003, compared to $130.0 million or 2.75% at June 30, 2003 and $128.4 million or 2.73% at September 30, 2002. This compares to an average of 1.71% for the top 75 U.S. Banks (by asset size) at June 30, 2003.
Mr. Kalkbrenner stated, “We continue to aggressively manage our loan portfolio and encourage every relationship officer to remain focused on maintaining good credit quality. Our loan loss reserve continues to exceed that of our peers, and given the economic environment, we believe that this position is appropriate. Once the economy begins to improve, we will evaluate the appropriate level of our loan loss reserve, which might result in a lower level of reserves on new loan growth in the future.”
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 leverage ratio increased during the third quarter of 2003 to 9.49% from 9.29% in the second quarter of 2003 and 8.17% one year ago, while the total risk-based capital ratio increased to 13.90% at September 30, 2003 from 13.55% at June 30, 2003 and 12.61% at September 30, 2002.
The Company had leverage, tier 1 and total risk-based capital ratios equal to or exceeding the top 75 U.S. Banks (by asset size) average ratios at June 30, 2003.
Mr. Kalkbrenner commented, “With our capital levels continuing to grow, we are well positioned to take advantage of opportunities to utilize capital to enhance shareholder value.”
Net Interest Margin
Greater Bay Bancorp’saverage net interest marginfor the third quarter of 2003 was 4.06% compared to 4.11% for the second quarter of 2003 and 4.44% for the third quarter of 2002, while theend-of-period net interest marginincreased to 4.16%.
-more-
Greater Bay Bancorp’s Third Quarter 2003 Earnings Results
October 22, 2003
Page 5 of 12
Mr. Kalkbrenner observed, “Low market interest rates continue to put significant pressure on our net interest margin. When the margin pressure is combined with our decision over one year ago to de-leverage the investment securities portfolio and position the Company to be more asset sensitive, the impact on our net interest income has been significant. With some positive economic news coming sporadically into the marketplace, we are hopeful that the end of period margin expansion is a positive sign regarding the future outlook for our net interest margin as we move through the last quarter of 2003 and into 2004.”
Interest Rate Risk Management
Mr. Kalkbrenner added, “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 any declines in market interest rates. Should market interest rates trend down further, the Company’s net interest margin would continue to decline.”
Outlook for Fourth Quarter of 2003
• | Loan growth — continued focus on quality and relationships — commercial loan growth is anticipated to continue during the fourth quarter; however, we do not anticipate any significant increase in our overall loan portfolio; |
• | 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% annualized for the remainder of the year; |
• | Net interest margin — based on our current net interest margin position and the mix of our balance sheet, we believe we have seen the majority of the margin compression that will impact the Company. However, if market interest rates decline further, 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 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. |
-more-
Greater Bay Bancorp’s Third Quarter 2003 Earnings Results
October 22, 2003
Page 6 of 12
Conference Call
Investors have the opportunity to listen to the conference call live over the Internet athttp://www.FullDisclosure.com on Wednesday, October 22, 2003 at 8:00 a.m. Pacific time. Investors should go to the FullDisclosure 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. To do so, investors should click on the Windows Media Player icon at the bottom of the page and follow directions from there.
A replay of the conference call will be available on the FullDisclosure web site. A telephone replay will also be available beginning at 11 a.m. on October 22 through midnight on October 29, 2003 by dialing 800-642-1687 or 706-645-9291 and providing Conference ID 3226903.
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 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.
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. Greater Bay does not undertake, and specifically disclaims, any obligation to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements.
For additional information and press releases about Greater Bay Bancorp, visit the Company’s web site athttp://www.gbbk.com.
-Financial Tables Follow-
-more-
Greater Bay Bancorp’s Third Quarter 2003 Earnings Results
October 22, 2003
Page 7 of 12
GREATER BAY BANCORP
SEPTEMBER 30, 2003 – FINANCIAL SUMMARY (UNAUDITED)
($ in 000’s)
SELECTED CONSOLIDATED FINANCIAL CONDITION DATA: | ||||||||||||||||||||
Sept 30 2003 | Jun 30 2003 | Mar 31 2003 | Dec 31 2002 | Sept 30 2002 | ||||||||||||||||
Cash and Due From Banks | $ | 258,054 | $ | 278,989 | $ | 243,684 | $ | 300,514 | $ | 271,774 | ||||||||||
Investments | 2,455,434 | 2,654,714 | 2,556,106 | 2,576,986 | 2,966,302 | |||||||||||||||
Loans: | ||||||||||||||||||||
Commercial | 1,945,030 | 1,992,499 | 1,974,656 | 2,067,142 | 2,007,389 | |||||||||||||||
Term Real Estate—Commercial | 1,656,059 | 1,650,330 | 1,642,560 | 1,610,277 | 1,529,582 | |||||||||||||||
Total Commercial | 3,601,089 | 3,642,829 | 3,617,216 | 3,677,419 | 3,536,971 | |||||||||||||||
Construction & Land | 604,172 | 671,666 | 704,041 | 710,990 | 715,351 | |||||||||||||||
Real Estate—Other | 253,502 | 244,955 | 247,335 | 251,665 | 282,894 | |||||||||||||||
Consumer and Other | 158,119 | 162,928 | 165,650 | 166,331 | 174,797 | |||||||||||||||
Deferred Loan Fees, Net | (15,413 | ) | (14,803 | ) | (15,044 | ) | (15,245 | ) | (16,102 | ) | ||||||||||
Total Loans | 4,601,469 | 4,707,575 | 4,719,198 | 4,791,160 | 4,693,911 | |||||||||||||||
Allowance for Loan Losses | (128,499 | ) | (130,030 | ) | (129,818 | ) | (129,613 | ) | (128,429 | ) | ||||||||||
Total Loans, Net | 4,472,970 | 4,577,545 | 4,589,380 | 4,661,547 | 4,565,482 | |||||||||||||||
Goodwill | 148,714 | 145,005 | 145,605 | 144,181 | 122,233 | |||||||||||||||
Other Intangibles | 51,102 | 44,294 | 45,975 | 47,722 | 48,409 | |||||||||||||||
Other Assets | 401,716 | 383,467 | 378,256 | 344,777 | 343,799 | |||||||||||||||
Total Assets | $ | 7,787,990 | $ | 8,084,014 | $ | 7,959,006 | $ | 8,075,727 | $ | 8,317,999 | ||||||||||
Deposits: | ||||||||||||||||||||
Demand, Non-Interest Bearing | $ | 1,043,433 | $ | 975,122 | $ | 959,823 | $ | 1,028,672 | $ | 984,327 | ||||||||||
NOW, MMDA and Savings | 2,865,841 | 2,873,737 | 2,813,126 | 2,673,973 | 2,693,242 | |||||||||||||||
Time Certificates, $100,000 and over | 768,712 | 808,723 | 803,328 | 829,717 | 809,519 | |||||||||||||||
Other Time Certificates | 760,925 | 890,669 | 945,483 | 739,911 | 956,821 | |||||||||||||||
Total Deposits | 5,438,911 | 5,548,251 | 5,521,760 | 5,272,273 | 5,443,909 | |||||||||||||||
Other Borrowings | 1,215,677 | 1,295,373 | 1,335,406 | 1,737,243 | 1,840,423 | |||||||||||||||
Trust Preferred Securities | 204,000 | 204,000 | 204,000 | 204,000 | 203,000 | |||||||||||||||
Other Liabilities | 193,303 | 301,793 | 186,670 | 165,502 | 163,310 | |||||||||||||||
Total Liabilities | 7,051,891 | 7,349,417 | 7,247,836 | 7,379,018 | 7,650,642 | |||||||||||||||
REIT Preferred Securities | 15,302 | 15,302 | 15,650 | 15,650 | 15,650 | |||||||||||||||
Convertible Preferred Stock | 80,441 | 80,441 | 80,441 | 80,900 | 72,500 | |||||||||||||||
Shareholders’ Equity | 640,356 | 638,854 | 615,079 | 600,159 | 579,207 | |||||||||||||||
720,797 | 719,295 | 695,520 | 681,059 | 651,707 | ||||||||||||||||
Total Liabilities and Shareholders’ Equity | $ | 7,787,990 | $ | 8,084,014 | $ | 7,959,006 | $ | 8,075,727 | $ | 8,317,999 | ||||||||||
Average Quarterly Total Loans, excluding Nonaccrual | $ | 4,623,844 | $ | 4,720,462 | $ | 4,716,930 | $ | 4,702,111 | $ | 4,641,680 | ||||||||||
Average Quarterly Investments | $ | 2,487,171 | $ | 2,483,795 | $ | 2,412,634 | $ | 2,676,653 | $ | 3,183,293 | ||||||||||
Average Quarterly Interest Earning Assets | $ | 7,111,015 | $ | 7,204,257 | $ | 7,129,564 | $ | 7,378,764 | $ | 7,824,973 | ||||||||||
Average Quarterly Deposits | $ | 5,509,736 | $ | 5,661,474 | $ | 5,342,679 | $ | 5,534,618 | $ | 5,443,742 | ||||||||||
Average Quarterly Interest Bearing Liabilities | $ | 6,033,593 | $ | 6,250,061 | $ | 6,080,198 | $ | 6,376,908 | $ | 6,715,291 | ||||||||||
Average Quarterly Assets | $ | 7,958,737 | $ | 8,055,962 | $ | 7,939,810 | $ | 8,219,625 | $ | 8,474,179 | ||||||||||
Average Quarterly Common Equity | $ | 636,796 | $ | 634,315 | $ | 613,110 | $ | 595,125 | $ | 560,089 | ||||||||||
Average Quarterly Equity | $ | 717,237 | $ | 714,908 | $ | 694,109 | $ | 667,716 | $ | 632,589 | ||||||||||
Average YTD Interest Earning Assets | $ | 7,152,886 | $ | 7,163,416 | $ | 7,129,564 | $ | 7,621,349 | $ | 7,712,939 | ||||||||||
Average YTD Assets | $ | 7,985,208 | $ | 7,998,207 | $ | 7,939,810 | $ | 8,285,240 | $ | 8,307,360 | ||||||||||
Average YTD Common Equity | $ | 628,211 | $ | 623,847 | $ | 613,110 | $ | 554,033 | $ | 540,180 | ||||||||||
Average YTD Equity | $ | 708,836 | $ | 704,566 | $ | 694,109 | $ | 612,453 | $ | 593,825 | ||||||||||
Total Regulatory Capital | ||||||||||||||||||||
Tier I capital | $ | 735,514 | $ | 730,432 | $ | 711,170 | $ | 691,048 | $ | 678,606 | ||||||||||
Total risk-based capital | $ | 808,986 | $ | 805,431 | $ | 785,488 | $ | 765,526 | $ | 753,986 | ||||||||||
Nonperforming Assets | ||||||||||||||||||||
Nonaccrual Loans | $ | 58,072 | $ | 46,491 | $ | 37,285 | $ | 37,750 | $ | 47,695 | ||||||||||
OREO | — | 2,500 | 3,000 | 397 | 930 | |||||||||||||||
Total Nonperforming Assets | $ | 58,072 | $ | 48,991 | $ | 40,285 | $ | 38,147 | $ | 48,625 | ||||||||||
Greater Bay Trust Company Assets | $ | 619,528 | $ | 616,847 | $ | 598,885 | $ | 607,244 | $ | 598,481 |
Greater Bay Bancorp’s Third Quarter 2003 Earnings Results
October 22, 2003
Page 8 of 12
GREATER BAY BANCORP
SEPTEMBER 30, 2003 – FINANCIAL SUMMARY (UNAUDITED)
($ in 000’s)
SELECTED QUARTERLY CONSOLIDATED OPERATING DATA:
Third Quarter 2003 | Second Quarter 2003 | First Quarter 2003 | Fourth Quarter 2002 | Third Quarter 2002 | ||||||||||||||||
Interest Income | $ | 98,728 | $ | 103,450 | $ | 107,344 | $ | 116,936 | $ | 128,259 | ||||||||||
Interest Expense | 26,040 | 29,646 | 31,177 | 35,917 | 40,622 | |||||||||||||||
Net Interest Income Before Provision for Loan Losses | 72,688 | 73,804 | 76,167 | 81,019 | 87,637 | |||||||||||||||
Provision for Loan Losses | 8,000 | 6,700 | 6,495 | 7,000 | 27,776 | |||||||||||||||
Net Interest Income After Provision for Loan Losses | 64,688 | 67,104 | 69,672 | 74,019 | 59,861 | |||||||||||||||
Non-interest Income: | ||||||||||||||||||||
Insurance Agency Commissions & Fees | 31,174 | 27,945 | 30,642 | 23,664 | 26,359 | |||||||||||||||
Depositor Service Fees | 2,792 | 2,995 | 2,831 | 2,786 | 2,771 | |||||||||||||||
Loan and International Banking Fees | 2,668 | 2,421 | 2,038 | 2,309 | 2,124 | |||||||||||||||
Operating Lease Fees | 1,537 | 1,234 | 877 | 523 | 207 | |||||||||||||||
Gain on Sale of Loans | 1,515 | 364 | 1,543 | 1,999 | 2,049 | |||||||||||||||
Trust Fees | 813 | 819 | 757 | 922 | 844 | |||||||||||||||
ATM Fees | 492 | 445 | 406 | 574 | 629 | |||||||||||||||
Gains on Investments and early retirement of CODES (1) | 38 | 3,136 | 2,023 | 2,247 | 14,835 | |||||||||||||||
Other Income (2) | 2,895 | 2,962 | 3,647 | 3,441 | 5,737 | |||||||||||||||
Total Non-interest Income | 43,924 | 42,321 | 44,764 | 38,465 | 55,555 | |||||||||||||||
Operating Expenses: | ||||||||||||||||||||
Salaries | 40,295 | 38,084 | 39,543 | 38,222 | 37,296 | |||||||||||||||
Deferred Loan Origination Costs | (3,898 | ) | (3,545 | ) | (3,051 | ) | (3,580 | ) | (3,479 | ) | ||||||||||
Benefits | 6,912 | 7,462 | 8,940 | 7,093 | 5,950 | |||||||||||||||
Total Compensation and Benefits | 43,309 | 42,001 | 45,432 | 41,735 | 39,767 | |||||||||||||||
Occupancy and Equipment | 10,695 | 10,171 | 9,642 | 10,225 | 10,035 | |||||||||||||||
Professional Services & Legal | 3,601 | 4,390 | 4,962 | 2,835 | 2,462 | |||||||||||||||
Amortization of Intangibles | 1,949 | 1,671 | 1,671 | 1,658 | 1,650 | |||||||||||||||
Telephone, postage and supplies | 1,767 | 1,878 | 1,746 | 2,020 | 1,827 | |||||||||||||||
Data Processing | 1,431 | 1,407 | 1,251 | 1,350 | 1,145 | |||||||||||||||
Marketing and promotion | 1,428 | 1,822 | 1,115 | 681 | 1,605 | |||||||||||||||
Insurance | 1,131 | 1,283 | 1,236 | 944 | 901 | |||||||||||||||
Correspondent Bank Charges | 1,101 | 1,277 | 1,105 | 1,215 | 1,370 | |||||||||||||||
Depreciation — Equipment Leased to Others (2) | 1,096 | 1,072 | 735 | 454 | 158 | |||||||||||||||
FDIC Insurance and Assessments | 588 | 482 | 498 | 491 | 409 | |||||||||||||||
Other Real Estate, Net | 546 | 518 | 1 | 20 | 119 | |||||||||||||||
Client Services | 294 | 318 | 344 | 480 | 433 | |||||||||||||||
Other Expenses | 3,152 | 3,502 | 3,151 | 1,030 | 1,469 | |||||||||||||||
72,088 | 71,792 | 72,889 | 65,138 | 63,350 | ||||||||||||||||
REIT Preferred Securities expense | 453 | 454 | 453 | 421 | 465 | |||||||||||||||
Total Operating Expenses | 72,541 | 72,246 | 73,342 | 65,559 | 63,815 | |||||||||||||||
Income Before Income Taxes | 36,071 | 37,179 | 41,094 | 46,925 | 51,601 | |||||||||||||||
Income Tax Expense | 13,710 | 14,054 | 15,997 | 16,259 | 19,131 | |||||||||||||||
Net Income | $ | 22,361 | $ | 23,125 | $ | 25,097 | $ | 30,666 | $ | 32,470 | ||||||||||
(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 Third Quarter 2003 Earnings Results
October 22, 2003
Page 9 of 12
GREATER BAY BANCORP
SEPTEMBER 30, 2003 – FINANCIAL SUMMARY (UNAUDITED)
($ in 000’s)
SELECTED CONSOLIDATED OPERATING DATA FOR THE NINE MONTH PERIODS:
YTD 30-Sep 2003 | YTD 30-Sep 2002 | |||||||
Interest Income | $ | 309,522 | $ | 388,476 | ||||
Interest Expense | 86,863 | 124,638 | ||||||
Net Interest Income Before Provision for Loan Losses | 222,659 | 263,838 | ||||||
Provision for Loan Losses | 21,195 | 52,776 | ||||||
Net Interest Income After Provision for Loan Losses | 201,464 | 211,062 | ||||||
Non-interest Income: | ||||||||
Insurance Agency Commissions & Fees (1) | 89,761 | 64,851 | ||||||
Depositor Service Fees | 8,618 | 8,361 | ||||||
Loan and International Banking Fees | 7,127 | 6,924 | ||||||
Operating Lease Fees | 3,648 | 224 | ||||||
Gain on Sale of Loans | 3,422 | 2,755 | ||||||
Trust Fees | 2,389 | 2,644 | ||||||
ATM Fees | 1,343 | 1,840 | ||||||
Gains on Investments and early retirement of CODES (2) | 5,197 | 18,186 | ||||||
Other Income | 9,504 | 11,872 | ||||||
Total Non-interest Income | 131,009 | 117,657 | ||||||
Operating Expenses: | ||||||||
Salaries | 117,922 | 99,396 | ||||||
Deferred Loan Origination Costs | (10,494 | ) | (10,210 | ) | ||||
Benefits | 23,314 | 17,803 | ||||||
Total Compensation and Benefits | 130,742 | 106,989 | ||||||
Occupancy and Equipment | 30,508 | 29,140 | ||||||
Professional Services & Legal | 12,953 | 6,066 | ||||||
Amortization of Intangibles | 5,291 | 3,862 | ||||||
Telephone, postage and supplies | 5,391 | 5,378 | ||||||
Data Processing | 4,089 | 3,470 | ||||||
Marketing and promotion | 4,365 | 4,674 | ||||||
Insurance | 3,650 | 2,441 | ||||||
Correspondent Bank Charges | 3,483 | 3,368 | ||||||
Depreciation — Equipment Leased to Others | 2,903 | 158 | ||||||
FDIC Insurance and Assessments | 1,568 | 1,289 | ||||||
Other Real Estate, Net | 1,065 | 119 | ||||||
Client Services | 956 | 1,637 | ||||||
Other Expenses | 9,805 | 8,358 | ||||||
216,769 | 176,949 | |||||||
Costs related to the Early Retirement of Trust Preferred Securities (TPS) | — | 975 | ||||||
REIT Preferred Securities expense | 1,360 | 1,393 | ||||||
Total Operating Expenses | 218,129 | 179,317 | ||||||
Income Before Income Taxes | 114,344 | 149,402 | ||||||
Income Tax Expense | 43,761 | 55,794 | ||||||
Net Income | $ | 70,583 | $ | 93,608 | ||||
(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 Third Quarter 2003 Earnings Results
October 22, 2003
Page 10 of 12
GREATER BAY BANCORP
SEPTEMBER 30, 2003 – FINANCIAL SUMMARY (UNAUDITED)
($ in 000’s, except share and per share data)
SELECTED QUARTERLY CONSOLIDATED FINANCIAL CONDITION RATIOS:
Sept 30 2003 | Jun 30 2003 | Mar 31 2003 | Dec 31 2002 | Sept 30 2002 | ||||||||||||||||
GAAP RATIOS: | ||||||||||||||||||||
Loan to Deposit Ratio | 84.60 | % | 84.85 | % | 85.47 | % | 90.87 | % | 86.22 | % | ||||||||||
Ratio of Allowance for Loan Losses to: | ||||||||||||||||||||
Average Loans | 2.74 | % | 2.73 | % | 2.73 | % | 2.73 | % | 2.74 | % | ||||||||||
End of Period Loans | 2.78 | % | 2.75 | % | 2.74 | % | 2.70 | % | 2.73 | % | ||||||||||
Total Nonperforming Assets | 221.28 | % | 265.42 | % | 322.25 | % | 339.77 | % | 264.12 | % | ||||||||||
Ratio of Provision for Loan Losses to Average Loans, annualized | 0.68 | % | 0.56 | % | 0.55 | % | 0.59 | % | 2.35 | % | ||||||||||
Total Nonperforming Loans to Total Loans | 1.26 | % | 0.99 | % | 0.79 | % | 0.79 | % | 1.02 | % | ||||||||||
Total Nonperforming Assets to Total Assets | 0.75 | % | 0.61 | % | 0.51 | % | 0.47 | % | 0.58 | % | ||||||||||
Ratio of Quarterly Net Charge-offs to Average Loans, annualized | 0.81 | % | 0.55 | % | 0.54 | % | 0.49 | % | 2.15 | % | ||||||||||
Ratio of YTD Net Charge-offs to YTD Average Loans, annualized | 0.63 | % | 0.54 | % | 0.54 | % | 1.19 | % | 1.43 | % | ||||||||||
Loan Growth, current quarter to prior year quarter | -1.97 | % | 0.53 | % | 4.91 | % | 6.57 | % | 7.17 | % | ||||||||||
Loan Growth, current quarter to prior quarter, annualized | -8.94 | % | -0.99 | % | -6.09 | % | 8.22 | % | 0.95 | % | ||||||||||
Loan Growth, YTD annualized | -5.29 | % | -3.52 | % | -6.09 | % | 6.57 | % | 5.89 | % | ||||||||||
Deposits Growth, current quarter to prior year quarter | -0.09 | % | 4.70 | % | 9.53 | % | 5.66 | % | 11.71 | % | ||||||||||
Deposits Growth, current quarter to prior quarter, annualized | -7.82 | % | 1.92 | % | 19.19 | % | -12.51 | % | 10.84 | % | ||||||||||
Deposits Growth, YTD annualized | 4.23 | % | 10.56 | % | 19.19 | % | 5.66 | % | 12.16 | % | ||||||||||
Revenue Growth, current quarter to prior year quarter | -18.56 | % | -9.39 | % | 9.79 | % | 28.64 | % | 62.56 | % | ||||||||||
Revenue Growth, current quarter to prior quarter, annualized (1) | 1.66 | % | -15.94 | % | 6.48 | % | -66.58 | % | 46.06 | % | ||||||||||
Net Interest Income Growth, current quarter to prior year quarter | -17.06 | % | -16.74 | % | -13.01 | % | -2.20 | % | 13.38 | % | ||||||||||
Net Interest Income Growth, current quarter to prior quarter, annualized (2) | -6.00 | % | -12.44 | % | -24.29 | % | -29.96 | % | -4.52 | % | ||||||||||
Average Earning Assets to Average Total Assets | 89.35 | % | 89.43 | % | 89.80 | % | 89.77 | % | 92.34 | % | ||||||||||
Average Earning Assets to Average Interest-Bearing Liabilities | 117.86 | % | 115.27 | % | 117.26 | % | 115.71 | % | 116.52 | % | ||||||||||
Capital Ratios: | ||||||||||||||||||||
Tier 1 leverage ratio | 9.49 | % | 9.29 | % | 9.18 | % | 8.61 | % | 8.17 | % | ||||||||||
Tier 1 risk-based capital ratio | 12.64 | % | 12.29 | % | 12.08 | % | 11.71 | % | 11.35 | % | ||||||||||
Total risk-based capital ratio | 13.90 | % | 13.55 | % | 13.34 | % | 12.97 | % | 12.61 | % | ||||||||||
Risk Weighted Assets | $ | 5,818,104 | $ | 5,942,616 | $ | 5,887,156 | $ | 5,900,325 | $ | 5,979,732 | ||||||||||
Book Value Per Share | $ | 12.28 | $ | 12.29 | $ | 11.88 | $ | 11.64 | $ | 11.26 | ||||||||||
Total Shares Outstanding | 52,160,193 | 51,982,864 | 51,774,074 | 51,577,795 | 51,442,027 | |||||||||||||||
NON-GAAP RATIOS (3): | ||||||||||||||||||||
Tangible Equity (4) to Tangible Assets (5) | 7.07 | % | 6.91 | % | 6.69 | % | 6.40 | % | 6.10 | % | ||||||||||
Tangible Common Equity (6) to Tangible Assets (5) | 6.87 | % | 6.71 | % | 6.49 | % | 6.20 | % | 5.90 | % | ||||||||||
Tangible Common Book Value Per Share, including Convertible Preferred Stock (7) | $ | 9.99 | $ | 10.20 | $ | 9.73 | $ | 9.48 | $ | 9.35 | ||||||||||
Tangible Book Value Per Share, excluding Convertible Preferred Stock (8) | $ | 8.45 | $ | 8.65 | $ | 8.18 | $ | 7.92 | $ | 7.94 |
(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) | Management believes that these ratios are meaningful measures because they reflect the equity deployed in the Company’s businesses. The following table sets forth the reconciliation of Shareholders’ Equity to Tangible Equity, Tangible Common Equity and Total Assets to Tangible Assets: |
Shareholders’ Equity | $ | 640,356 | $ | 638,854 | $ | 615,079 | $ | 600,159 | $ | 579,207 | ||||||||||
Convertible Preferred Stock | 80,441 | 80,441 | 80,441 | 80,900 | 72,500 | |||||||||||||||
REIT Preferred Securities | 15,302 | 15,302 | 15,650 | 15,650 | 15,650 | |||||||||||||||
736,099 | 734,597 | 711,170 | 696,709 | 667,357 | ||||||||||||||||
Less: Goodwill and Other Intangibles | (199,816 | ) | (189,299 | ) | (191,580 | ) | (191,903 | ) | (170,642 | ) | ||||||||||
Tangible Equity | $ | 536,283 | $ | 545,298 | $ | 519,590 | $ | 504,806 | $ | 496,715 | ||||||||||
Shareholders’ Equity | $ | 640,356 | $ | 638,854 | $ | 615,079 | $ | 600,159 | $ | 579,207 | ||||||||||
Convertible Preferred Stock | 80,441 | 80,441 | 80,441 | 80,900 | 72,500 | |||||||||||||||
720,797 | 719,295 | 695,520 | 681,059 | 651,707 | ||||||||||||||||
Less: Goodwill and Other Intangibles | (199,816 | ) | (189,299 | ) | (191,580 | ) | (191,903 | ) | (170,642 | ) | ||||||||||
Tangible Common Equity | $ | 520,981 | $ | 529,996 | $ | 503,940 | $ | 489,156 | $ | 481,065 | ||||||||||
Total Assets | $ | 7,787,990 | $ | 8,084,014 | $ | 7,959,006 | $ | 8,075,727 | $ | 8,317,999 | ||||||||||
Less: Goodwill and Other Intangibles | (199,816 | ) | (189,299 | ) | (191,580 | ) | (191,903 | ) | (170,642 | ) | ||||||||||
Tangible Assets | $ | 7,588,174 | $ | 7,894,715 | $ | 7,767,426 | $ | 7,883,824 | $ | 8,147,357 | ||||||||||
(4) | Tangible Equity includes Shareholders’ Equity, Convertible Preferred Stock and REIT Preferred Securities, less Goodwill and Other Intangibles. |
(5) | Tangible Assets includes Total Assets, less Goodwill and Other Intangibles. |
(6) | Tangible Common Equity includes Shareholders’ Equity and Convertible Preferred Stock, less Goodwill and Other Intangibles. |
(7) | Tangible Common Book Value is computed by dividing the sum of Shareholders’ Equity and Convertible Preferred Stock, less Goodwill and Other Intangibles by Total Shares Outstanding. |
(8) | Tangible Book Value is computed by dividing the sum of Shareholders’ Equity, less Goodwill and Other Intangibles by Total Shares Outstanding. |
Greater Bay Bancorp’s Third Quarter 2003 Earnings Results
October 22, 2003
Page 11 of 12
GREATER BAY BANCORP
SEPTEMBER 30, 2003 – FINANCIAL SUMMARY (UNAUDITED)
($ in 000’s, except share and per share data)
SELECTED QUARTERLY CONSOLIDATED OPERATING RATIOS: | Third Quarter 2003 | Second Quarter 2003 | First Quarter 2003 | Fourth Quarter 2002 | Third Quarter 2002 | |||||||||||||||
GAAP EPS | ||||||||||||||||||||
Net Income Per Share | ||||||||||||||||||||
Basic (1) | $ | 0.40 | $ | 0.42 | $ | 0.46 | $ | 0.57 | $ | 0.61 | ||||||||||
Diluted (2) | $ | 0.39 | $ | 0.41 | $ | 0.45 | $ | 0.57 | $ | 0.60 | ||||||||||
Weighted Average Common Shares Outstanding | 52,093,000 | 51,925,000 | 51,735,000 | 51,547,000 | 51,339,000 | |||||||||||||||
Weighted Average Common & Common Equivalent Shares Outstanding (2) | 53,134,000 | 52,745,000 | 52,161,000 | 54,135,000 | 54,504,000 | |||||||||||||||
GAAP Ratios | ||||||||||||||||||||
Return on Period Average Assets, annualized | 1.11 | % | 1.15 | % | 1.28 | % | 1.48 | % | 1.52 | % | ||||||||||
Return on Period Average Common Equity, annualized | 13.93 | % | 14.62 | % | 16.60 | % | 20.44 | % | 23.00 | % | ||||||||||
Return on Period Average Equity, annualized | 12.37 | % | 12.97 | % | 14.66 | % | 18.22 | % | 20.36 | % | ||||||||||
Net Interest Margin – Average Earning Assets (3) | 4.06 | % | 4.11 | % | 4.33 | % | 4.36 | % | 4.44 | % | ||||||||||
Operating Expense Ratio (4) | 3.62 | % | 3.60 | % | 3.75 | % | 3.16 | % | 2.99 | % | ||||||||||
Efficiency Ratio (5) | 62.21 | % | 62.21 | % | 60.65 | % | 54.87 | % | 44.57 | % | ||||||||||
Total Operating Expenses | $ | 72,541 | $ | 72,246 | $ | 73,342 | $ | 65,559 | $ | 63,815 | ||||||||||
Total Revenue | $ | 116,612 | $ | 116,125 | $ | 120,931 | $ | 119,484 | $ | 143,192 | ||||||||||
NON-GAAP Ratios | ||||||||||||||||||||
Efficiency Ratio (Excluding the operating results of ABD) (6) | 54.88 | % | 56.04 | % | 55.28 | % | 45.12 | % | 35.61 | % | ||||||||||
ABD Operating Expenses | $ | 25,880 | $ | 22,852 | $ | 23,556 | $ | 22,345 | $ | 22,288 | ||||||||||
ABD Revenue | $ | 31,591 | $ | 27,991 | $ | 30,862 | $ | 23,698 | $ | 26,569 |
(1) | Net income available to common shareholders is based on total net income less preferred dividends of $1.5 million for Q3, Q2 and Q1 2003, $1.3 million for Q4 and Q3 2002. |
(2) | The convertible preferred stock was considered anti-dilutive in Q3, 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 in Q3 and Q2 and 2,785,000 shares in 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 $1.5 million for Q3, Q2 and Q1 2003. |
(3) | Net interest income for the period, annualized and divided by average quarterly interest earning assets. |
(4) | Total operating expenses for the period, annualized and divided by average quarterly assets. |
(5) | Total operating expenses divided by total revenue (the sum of net interest income and non-interest income). |
Greater Bay Bancorp’s Third Quarter 2003 Earnings Results
October 22, 2003
Page 12 of 12
GREATER BAY BANCORP
SEPTEMBER 30, 2003 – FINANCIAL SUMMARY (UNAUDITED)
($ in 000’s)
SELECTED CONSOLIDATED OPERATING RATIOS FOR THE NINE MONTH PERIODS: | YTD 30-Sep 2003 | YTD 30-Sep 2002 | ||||||
GAAP EPS | ||||||||
Net Income Per Share | ||||||||
Basic (1) | $ | 1.27 | $ | 1.78 | ||||
Diluted (2) | $ | 1.26 | $ | 1.73 | ||||
Weighted Average Common Shares Outstanding | 51,919,000 | 50,891,000 | ||||||
Weighted Average Common & Common Equivalent Shares Outstanding (2) | 52,646,000 | 54,039,000 | ||||||
GAAP Ratios | ||||||||
Return on Period Average Assets, annualized | 1.18 | % | 1.51 | % | ||||
Return on Period Average Common Equity, annualized | 15.02 | % | 23.17 | % | ||||
Return on Period Average Equity, annualized | 13.31 | % | 21.08 | % | ||||
Net Interest Margin — Average Earning Assets (3) | 4.16 | % | 4.57 | % | ||||
Operating Expense Ratio (4) | 3.65 | % | 2.89 | % | ||||
Efficiency Ratio (5) | 61.68 | % | 47.00 | % | ||||
Total Operating Expenses | $ | 218,129 | $ | 179,317 | ||||
Total Revenue | $ | 353,668 | $ | 381,495 | ||||
NON-GAAP Ratios | ||||||||
Efficiency Ratio (Excluding the operating results of ABD) (6) | 55.41 | % | 40.54 | % | ||||
ABD Operating Expenses | $ | 72,288 | $ | 51,303 | ||||
ABD Revenue | $ | 90,444 | $ | 65,704 |
(1) | Net income available to common shareholders is based on total net income less preferred dividends of $4.4 million for YTD September 2003 and $2.9 million for YTD September 2002. |
(2) | The convertible preferred stock was considered anti-dilutive in YTD September 2003, whereby the preferred dividends of $4.4 million divided by the common stock equivalent of the convertible preferred stock of 2,740,000 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 $4.4 million for YTD September 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. |