Exhibit 99.1
For Information Contact At Greater Bay Bancorp: Byron A. Scordelis, President and CEO (650) 614-5751 Steven C. Smith, EVP and CFO (650) 813-8222 |
At Silverman Heller Associates: Philip Bourdillon/Gene Heller (310) 208-2550 |
FOR IMMEDIATE RELEASE
GREATER BAY BANCORP REPORTS
FULL YEAR NET INCOMEOF $1.62PERSHAREAND
FOURTH QUARTER NET INCOMEOF $0.37PERSHARE
PALO ALTO, Calif., January 21, 2004—Greater Bay Bancorp (Nasdaq:GBBK), a $7.6 billion in assets financial services holding company, today announced results for the fourth quarter and year ended December 31, 2003. The Company also reported that the federal regulators have approved the consolidation of the Company’s eleven bank subsidiaries.
For the fourth quarter of 2003, Greater Bay Bancorp’sNET INCOME was $21.4 million, or $0.37 per diluted share, compared to $30.7 million, or $0.57 per diluted share, for the fourth quarter of 2002. Based onNET INCOMEfor the fourth quarter of 2003, Greater Bay Bancorp’s return on average equity was 11.56% and return on average assets was 1.10%. For the fourth quarter of 2002,NET INCOME resulted in a return on average equity of 18.22% and a return on average assets of 1.48%.
For the year ended December 31, 2003, Greater Bay Bancorp’sNET INCOME was $92.0 million, or $1.62 per diluted share, compared to $124.3 million, or $2.30 per diluted share, for the year ended December 31, 2002. Based onNET INCOMEfor the year ended December 31, 2003, Greater Bay Bancorp’s return on average equity was 12.88% and return on average assets was 1.16%. For the year ended December 31, 2002,NET INCOME resulted in a return on average equity of 20.29% and a return on average assets of 1.50%.
The $0.20 decline in earnings per diluted share for the fourth quarter of 2003 and the $0.68 decline in earnings per diluted share for the year ended December 31, 2003, compared to the same periods a year ago, were attributable primarily to the following factors:
• | lower market interest rates reduced the Company’s net interest margin by 3 basis points in the fourth quarter of 2003 and by 32 basis points for the year 2003, resulting in approximately a $(0.01) and $(0.29) decline in earnings per diluted share, respectively. |
• | a decrease in overall interest earning assets due to: i) a planned reduction in the Company’s investment securities portfolio of approximately $312 million in 2003 and ii) a decline in average loans outstanding of approximately $208 million in 2003—this reduced earnings per diluted share by approximately $(0.06) for the fourth quarter of 2003 and $(0.26) for the year 2003. |
Greater Bay Bancorp’s Fourth Quarter 2003 Earnings Results
January 21, 2004
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• | outside consulting costs related to enterprise-wide risk management and regulatory compliance amounted to approximately $489 thousand ($303 thousand, net of tax) in the fourth quarter of 2003 and $3.1 million ($1.9 million, net of tax) for the year 2003, or approximately $(0.01) and $(0.04) per diluted share, respectively. |
• | expenses related to the retirement, consulting and non-compete agreements of retiring executives amounted to $1.5 million ($938 thousand, net of tax) or approximately $(0.02) per diluted share in the fourth quarter and $1.7 million ($1.1 million, net of tax) or approximately $(0.02) per diluted share for the year 2003. |
“We are pleased to report solid operating results for the fourth quarter and for the year 2003, with a nominal increase in our net interest margin, relatively stable credit quality and our continued focus on expense control during a difficult economic period,” commented Byron Scordelis, President and Chief Executive Officer.
Non-Interest Income
Non-interest income was $40.5 million for the fourth quarter of 2003 compared to $43.9 million for the third quarter of 2003. Non-interest income for the fourth quarter of 2002 was $38.5 million. The increase in non-interest income for the fourth quarter of 2003 compared to the fourth quarter of 2002 was primarily due to higher insurance agency commissions and fees ($4.1 million), partially offset by lower gains on sales of investment securities and early retirement of the Zero Coupon Senior Convertible Debt Securities (“CODES”) ($1.5 million). Non-interest income for the year ended December 31, 2003 increased to $171.5 million from $156.1 million for the year ended December 31, 2002. This was primarily due to $5.5 million related to the acquisition of Sullivan & Curtis Insurance Brokers of Washington and $20.1 million related to an additional two months of commissions and fees of ABD Insurance and Financial Services (“ABD”) recognized in 2003 versus 2002, which were partially offset by the reduction in the CODES-related gains of $14.5 million.
Non-interest income as a percentage of total revenues was 35.02% for the fourth quarter of 2003, and 36.54% for the year ended December 31, 2003, compared to 32.19% for the fourth quarter of 2002 and 31.16% for the year ended December 31, 2002, and 37.67% for the third quarter of 2003.
Operating Expenses
Operating expenses in the fourth quarter of 2003 included $1.5 million in expenses related to retiring executives. Excluding these expenses, the Company’s operating expenses remained unchanged at $72.6 million compared to the third quarter of 2003, reflecting the Company’s continued focus on expense control.
The Company’s efficiency ratio for the fourth quarter of 2003 was 64.00% (54.11% excluding ABD), compared to 54.87% (45.12% excluding ABD) for the fourth quarter of 2002. For the year ended December 31, 2003, the efficiency ratio was 62.25% (55.08% excluding ABD), compared to 48.88% (41.60% excluding ABD) for the year ended December 31, 2002. The increase in our 2003 ratios is primarily attributable to the reduction in net interest income on investment securities and investment securities gains combined with the additional operating expenses related to improving the Company’s risk management controls.
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Greater Bay Bancorp’s Fourth Quarter 2003 Earnings Results
January 21, 2004
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Balance Sheet
At December 31, 2003, Greater Bay Bancorp’stotal assets were $7.6 billion,total loans were $4.5 billion,total investments, primarily mortgage-backed securities, were $2.3 billion andtotal depositswere $5.3 billion.
From December 31, 2002 to December 31, 2003,total loans decreased by $253.4 million. The decrease included $43.2 million from the Shared National Credit (“SNC”) portfolio and $173.9 million from the construction loan portfolio. From December 31, 2002 to December 31, 2003,total investmentsdecreased to $2.3 billion, a 12.13% decline, consistent with the Company’s stated goal to move to a more asset sensitive balance sheet structure. Core deposits, which excludes institutional time certificates of deposit, increased by $137.0 million or 3.09%, whiletotal deposits increased by $40.4 million, or 0.77%, during 2003.
Mr. Scordelis commented, “The decline in total loans outstanding was primarily in two sectors of the loan portfolio. First, the construction loan portfolio declined by $173.9 million as projects we previously financed began to payoff and new construction loan fundings were lower, reflecting our prudent underwriting guidelines and the uncertain Bay Area business environment. Second, we continued to reduce the SNC portfolio by $43.2 million,which totaled only $19.7 million at year end 2003.”
Credit Quality
Net charge-offs to average loans for the year ended December 31, 2003 were 0.67% of average annualized loans, compared to 1.19% for the same period in 2002. Non-performing assets were $61.7 million at December 31, 2003 compared to $58.1 million at September 30, 2003. The ratio of non-performing loans to total loans was 1.36% at December 31, 2003, compared to 1.26% at September 30, 2003 and 0.79% at December 31, 2002. The following is a detailed summary by type of the Company’s non-performing assets as of December 31, 2003:
NON-PERFORMING ASSETS ($ in millions) | Q4 2003 | Q3 2003 | Variance | |||||||||
Commercial | $ | 14.4 | $ | 8.1 | $ | 6.3 | ||||||
Real Estate Term and Construction | 17.1 | 17.4 | (0.3 | ) | ||||||||
SBA | 4.8 | 6.4 | (1.6 | ) | ||||||||
Corporate Finance | 12.7 | 15.2 | (2.5 | ) | ||||||||
Venture Banking Group | 3.5 | 3.6 | (0.1 | ) | ||||||||
Specialty Finance | 8.6 | 6.7 | 1.9 | |||||||||
Other | 0.6 | 0.7 | (0.1 | ) | ||||||||
Total Non-performing Loans | 61.7 | 58.1 | 3.6 | |||||||||
OREO | — | — | — | |||||||||
Total Non-performing Assets | $ | 61.7 | $ | 58.1 | $ | 3.6 | ||||||
Non-performing Loans to Total Loans | 1.37 | % | 1.26 | % | 0.11 | % | ||||||
Non-performing Assets to Total Assets | 0.81 | % | 0.75 | % | 0.06 | % |
During the quarter, the Company had $9.3 million of total net charge-offs, of which approximately $1.5 million were SNC-related. The SNC portfolio has been reduced to $19.7 million at year-end and is considered to be adequately reserved without the need for a provision to replenish the reserve for this small segment of the portfolio. A provision for loan losses of $7.0 million was taken in the fourth quarter.
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Greater Bay Bancorp’s Fourth Quarter 2003 Earnings Results
January 21, 2004
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The allowance for loan losses was $126.2 million or 2.77% of total loans at December 31, 2003, compared to $128.5 million, or 2.78% of total loans, at September 30, 2003 and $129.6 million, or 2.70% of total loans, at December 31, 2002. This compares to an average of 1.61% for the top 75 U.S. Banks (by asset size) at September 30, 2003.
Mr. Scordelis stated, “We continue to focus much of our attention on aggressive credit management, as we still have an economy that, while not declining as it did in 2000 through early 2003, is not providing job growth and economic expansion. While we are pleased with our credit management and the Company’s credit metrics when compared to peers, we will continue to revisit our reserve levels as greater clarity emerges regarding the economic recovery in our primary market area.”
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 to 9.98% during the fourth quarter of 2003 from 9.49% in the third quarter of 2003 and 8.61% one year ago, while the total risk-based capital ratio of 14.13% at December 31, 2003 compares to 13.90% at September 30, 2003 and 12.97% at December 31, 2002.
The Company had leverage, tier 1 and total risk-based capital ratios exceeding the average ratios for the top 75 U.S. Banks (by asset size) at September 30, 2003.
Net Interest Margin
Greater Bay Bancorp’saverage net interest marginfor the fourth quarter of 2003 was 4.33%, compared to 4.06% for the third quarter of 2003 and 4.36% for the fourth quarter of 2002, while theend-of-period net interest marginincreased slightly to 4.39%.
Interest Rate Risk Management
The Company proactively manages its interest rate risk exposure and attempts to position the Company to be relatively interest rate neutral, but with a bias toward the anticipated direction of interest rates. Over the last 18 months, that bias has resulted in the Company reducing the size of its investment portfolio and positioning the Company to be more asset sensitive in the future. The investment portfolio is now at its target level and we would not anticipate any significant change in its size in 2004, unless there were changes in the economic environment. This strategy reduced net interest income and net income in 2003, but positioned the Company to be more asset sensitive to take advantage of a rising rate environment in the future. Over the last quarter, the stabilization in market rates combined with the mix change in our balance sheet, primarily due to the reduction in the investment securities portfolio, has resulted in a margin increase. We would not anticipate the margin expanding significantly in the future, unless short-term market interest rates rise or the mix of our balance sheet begins to trend toward a larger loan portfolio weighting.
Consolidation of Bank Subsidiaries
Mr. Scordelis commented, “We are pleased to report that we have received approval to consolidate our eleven bank subsidiaries into a single national bank that will be regulated by the Office of the Comptroller of the Currency. As previously reported, our individual business units will retain their current names, and we are delighted that an overwhelming majority of our subsidiary directors have
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Greater Bay Bancorp’s Fourth Quarter 2003 Earnings Results
January 21, 2004
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agreed to continue their service as members of eleven Strategic Development Boards that will provide advice and local market knowledge in the communities we serve. We anticipate the legal consolidation will occur early this quarter with the systems conversion occurring over an eighteen-month period. The true long term benefit to this structural change will be our future capacity to leverage the efficiencies and scale of our banking platform.”
Outlook for 2004
• | Loan growth—based on the current forecast of moderate economic growth in our market area, combined with our clients’ belief that they will grow in 2004, we are anticipating growth ranging from the low single to mid-single digits. |
• | Deposit growth—we anticipate core deposit growth in the mid-single digits, offset by continued reductions in our non-core funding sources, primarily institutional deposits – the net result will be a low single digit growth rate in total deposits. |
• | 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. Current consensus recognized economic forecasts predict that there will be at least two 25 basis point increases in short-term market interest rates in mid to late 2004, which would result in our average net interest margin increasing by 10 basis points to 30 basis points depending on the timing of the rate increases. |
• | Credit Quality—continued aggressive management of credit risk, and based on the current outlook, the Company believes net charge-offs for 2004 will be in the range of 60 basis points to 70 basis points of average loans outstanding. |
Conference Call
Investors have the opportunity to listen to the conference call live over the Internet athttp://www.FullDisclosure.com on Wednesday, January 21, 2004 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 website. A telephone replay will also be available beginning at 11 a.m. PST on January 21 through midnight on January 28, 2004, by dialing 800-642-1687 or 706-645-9291 and providing Conference ID 4810585.
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.
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Greater Bay Bancorp’s Fourth Quarter 2003 Earnings Results
January 21, 2004
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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, the bank subsidiary consolidation, net interest margin, net loan charge-offs, asset quality, level of loan loss reserves, growth in loans and deposits 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 newly acquired businesses, consolidating the bank subsidiaries 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-
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Greater Bay Bancorps Fourth Quarter 2003 Earnings Release
January 21, 2004
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GREATER BAY BANCORP
DECEMBER 31, 2003—FINANCIAL SUMMARY (UNAUDITED)
($ in 000’s)
SELECTED CONSOLIDATED FINANCIAL CONDITION DATA:
Dec 31 2003 | Sept 30 2003 | Jun 30 2003 | Mar 31 2003 | Dec 31 2002 | ||||||||||||||||
Cash and Due From Banks | $ | 238,534 | $ | 258,054 | $ | 278,989 | $ | 243,684 | $ | 300,514 | ||||||||||
Investments | 2,264,509 | 2,455,434 | 2,654,714 | 2,556,106 | 2,576,986 | |||||||||||||||
Loans: | ||||||||||||||||||||
Commercial | 1,937,766 | 1,945,030 | 1,992,499 | 1,974,656 | 2,067,142 | |||||||||||||||
Term Real Estate—Commercial | 1,636,356 | 1,656,059 | 1,650,330 | 1,642,560 | 1,610,277 | |||||||||||||||
Total Commercial | 3,574,122 | 3,601,089 | 3,642,829 | 3,617,216 | 3,677,419 | |||||||||||||||
Construction & Land | 537,079 | 604,172 | 671,666 | 704,041 | 710,990 | |||||||||||||||
Real Estate—Other | 273,504 | 253,502 | 244,955 | 247,335 | 251,665 | |||||||||||||||
Consumer and Other | 167,593 | 158,119 | 162,928 | 165,650 | 166,331 | |||||||||||||||
Deferred Loan Fees, Net | (14,491 | ) | (15,413 | ) | (14,803 | ) | (15,044 | ) | (15,245 | ) | ||||||||||
Total Loans | 4,537,807 | 4,601,469 | 4,707,575 | 4,719,198 | 4,791,160 | |||||||||||||||
Allowance for Loan Losses | (126,168 | ) | (128,499 | ) | (130,030 | ) | (129,818 | ) | (129,613 | ) | ||||||||||
Total Loans, Net | 4,411,639 | 4,472,970 | 4,577,545 | 4,589,380 | 4,661,547 | |||||||||||||||
Goodwill | 177,991 | 148,714 | 145,005 | 145,605 | 144,181 | |||||||||||||||
Other Intangibles | 47,238 | 51,102 | 44,294 | 45,975 | 47,722 | |||||||||||||||
Other Assets | 461,512 | 408,027 | 389,778 | 384,567 | 351,088 | |||||||||||||||
Total Assets | $ | 7,601,423 | $ | 7,794,301 | $ | 8,090,325 | $ | 7,965,317 | $ | 8,082,038 | ||||||||||
Deposits: | ||||||||||||||||||||
Demand, Non-Interest Bearing | $ | 1,077,648 | $ | 1,043,433 | $ | 975,122 | $ | 959,823 | $ | 1,028,672 | ||||||||||
NOW, MMDA and Savings | 2,858,647 | 2,865,841 | 2,873,737 | 2,813,126 | 2,673,973 | |||||||||||||||
Time Certificates, $100,000 and over | 735,657 | 768,712 | 808,723 | 803,328 | 829,717 | |||||||||||||||
Other Time Certificates | 640,715 | 760,925 | 890,669 | 945,483 | 739,911 | |||||||||||||||
Total Deposits | 5,312,667 | 5,438,911 | 5,548,251 | 5,521,760 | 5,272,273 | |||||||||||||||
Other Borrowings | 1,071,880 | 1,215,677 | 1,295,373 | 1,335,406 | 1,737,243 | |||||||||||||||
Subordinated Debt (1) | 210,311 | 210,311 | 210,311 | 210,311 | 210,311 | |||||||||||||||
Other Liabilities | 240,746 | 193,303 | 301,793 | 186,670 | 165,502 | |||||||||||||||
Total Liabilities | 6,835,604 | 7,058,202 | 7,355,728 | 7,254,147 | 7,385,329 | |||||||||||||||
REIT Preferred Securities | 15,302 | 15,302 | 15,302 | 15,650 | 15,650 | |||||||||||||||
Convertible Preferred Stock | 91,752 | 80,441 | 80,441 | 80,441 | 80,900 | |||||||||||||||
Shareholders’ Equity | 658,765 | 640,356 | 638,854 | 615,079 | 600,159 | |||||||||||||||
750,517 | 720,797 | 719,295 | 695,520 | 681,059 | ||||||||||||||||
Total Liabilities and Shareholders’ Equity | $ | 7,601,423 | $ | 7,794,301 | $ | 8,090,325 | $ | 7,965,317 | $ | 8,082,038 | ||||||||||
Average Quarterly Total Loans, excluding Nonaccrual | $ | 4,494,411 | $ | 4,623,844 | $ | 4,720,462 | $ | 4,716,930 | $ | 4,702,111 | ||||||||||
Average Quarterly Investments | $ | 2,397,036 | $ | 2,487,171 | $ | 2,483,795 | $ | 2,412,634 | $ | 2,676,653 | ||||||||||
Average Quarterly Interest Earning Assets | $ | 6,891,447 | $ | 7,111,015 | $ | 7,204,257 | $ | 7,129,564 | $ | 7,378,764 | ||||||||||
Average Quarterly Deposits | $ | 5,382,868 | $ | 5,509,736 | $ | 5,661,474 | $ | 5,342,679 | $ | 5,534,618 | ||||||||||
Average Quarterly Interest Bearing Liabilities | $ | 5,720,832 | $ | 6,039,904 | $ | 6,256,372 | $ | 6,086,509 | $ | 6,383,219 | ||||||||||
Average Quarterly Assets | $ | 7,700,455 | $ | 7,965,048 | $ | 8,062,273 | $ | 7,946,121 | $ | 8,225,936 | ||||||||||
Average Quarterly Common Equity | $ | 651,027 | $ | 636,796 | $ | 634,315 | $ | 613,110 | $ | 595,125 | ||||||||||
Average Quarterly Equity | $ | 735,280 | $ | 717,237 | $ | 714,908 | $ | 694,109 | $ | 667,716 | ||||||||||
Average YTD Interest Earning Assets | $ | 7,084,821 | $ | 7,152,886 | $ | 7,163,416 | $ | 7,129,564 | $ | 7,621,349 | ||||||||||
Average YTD Assets | $ | 7,918,177 | $ | 7,991,519 | $ | 8,004,518 | $ | 7,946,121 | $ | 8,291,853 | ||||||||||
Average YTD Common Equity | $ | 633,503 | $ | 628,211 | $ | 623,847 | $ | 613,110 | $ | 554,033 | ||||||||||
Average YTD Equity | $ | 714,113 | $ | 708,836 | $ | 704,566 | $ | 694,109 | $ | 612,453 | ||||||||||
Total Regulatory Capital | ||||||||||||||||||||
Tier I Capital | $ | 745,586 | $ | 735,514 | $ | 730,432 | $ | 711,170 | $ | 691,048 | ||||||||||
Total Risk-based Capital | $ | 818,743 | $ | 808,986 | $ | 805,431 | $ | 785,488 | $ | 765,526 | ||||||||||
Nonperforming Assets | ||||||||||||||||||||
Nonaccrual Loans | $ | 61,700 | $ | 58,072 | $ | 46,491 | $ | 37,285 | $ | 37,750 | ||||||||||
OREO | — | — | 2,500 | 3,000 | 397 | |||||||||||||||
Total Nonperforming Assets | $ | 61,700 | $ | 58,072 | $ | 48,991 | $ | 40,285 | $ | 38,147 | ||||||||||
Greater Bay Trust Company Assets | $ | 629,333 | $ | 619,528 | $ | 616,847 | $ | 598,885 | $ | 607,244 |
(1) | Effective December 31, 2003, the Company adopted certain provisions of FASB Interpretation No. 46, as a result of which the liability previously reported as Trust Preferred Securities has been replaced with Subordinated Debt. Prior periods have been restated accordingly. |
Greater Bay Bancorp’s Fourth Quarter 2003 Earnings Release
January 21, 2004
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GREATER BAY BANCORP
DECEMBER 31, 2003—FINANCIAL SUMMARY (UNAUDITED)
($ in 000’s)
SELECTED QUARTERLY CONSOLIDATED OPERATING DATA: | ||||||||||||||||||||
Fourth 2003 | Third 2003 | Second 2003 | First 2003 | Fourth 2002 | ||||||||||||||||
Interest Income | $ | 98,197 | $ | 98,728 | $ | 103,450 | $ | 107,344 | $ | 116,936 | ||||||||||
Interest Expense | 22,975 | 26,040 | 29,646 | 31,177 | 35,917 | |||||||||||||||
Net Interest Income Before Provision for Loan Losses | 75,222 | 72,688 | 73,804 | 76,167 | 81,019 | |||||||||||||||
Provision for Loan Losses | 7,000 | 8,000 | 6,700 | 6,495 | 7,000 | |||||||||||||||
Net Interest Income After Provision for Loan Losses | 68,222 | 64,688 | 67,104 | 69,672 | 74,019 | |||||||||||||||
Non-interest Income: | ||||||||||||||||||||
Insurance Agency Commissions & Fees | 27,747 | 31,174 | 27,945 | 30,642 | 23,664 | |||||||||||||||
Depositor Service Fees | 2,754 | 2,792 | 2,995 | 2,831 | 2,786 | |||||||||||||||
Loan and International Banking Fees | 2,188 | 2,668 | 2,421 | 2,038 | 2,309 | |||||||||||||||
Operating Lease Fees | 1,934 | 1,537 | 1,234 | 877 | 523 | |||||||||||||||
Gain on Sale of Loans | 1,113 | 1,515 | 364 | 1,543 | 1,999 | |||||||||||||||
Trust Fees | 925 | 813 | 819 | 757 | 922 | |||||||||||||||
Gains on Investments and early retirement of CODES (1) | 764 | 38 | 3,136 | 2,023 | 2,247 | |||||||||||||||
ATM Fees | 430 | 492 | 445 | 406 | 574 | |||||||||||||||
Other Income (2) | 2,678 | 2,895 | 2,962 | 3,647 | 3,441 | |||||||||||||||
Total Non-interest Income | 40,533 | 43,924 | 42,321 | 44,764 | 38,465 | |||||||||||||||
Operating Expenses: | ||||||||||||||||||||
Salaries | 40,878 | 40,295 | 38,084 | 39,543 | 38,222 | |||||||||||||||
Deferred Loan Origination Costs | (3,709 | ) | (3,898 | ) | (3,545 | ) | (3,051 | ) | (3,580 | ) | ||||||||||
Benefits | 7,512 | 6,912 | 7,462 | 8,940 | 7,093 | |||||||||||||||
Total Compensation and Benefits | 44,681 | 43,309 | 42,001 | 45,432 | 41,735 | |||||||||||||||
Occupancy and Equipment | 10,390 | 10,695 | 10,171 | 9,642 | 10,225 | |||||||||||||||
Professional Services & Legal | 3,641 | 3,601 | 4,390 | 4,962 | 2,835 | |||||||||||||||
Amortization of Intangibles | 1,889 | 1,949 | 1,671 | 1,671 | 1,658 | |||||||||||||||
Telephone, postage and supplies | 1,854 | 1,767 | 1,878 | 1,746 | 2,020 | |||||||||||||||
Marketing and promotion | 1,755 | 1,428 | 1,822 | 1,115 | 681 | |||||||||||||||
Depreciation—Equipment Leased to Others (2) | 1,712 | 1,096 | 1,072 | 735 | 454 | |||||||||||||||
Data Processing | 1,267 | 1,431 | 1,407 | 1,251 | 1,350 | |||||||||||||||
Correspondent Bank Charges | 1,036 | 1,101 | 1,277 | 1,105 | 1,215 | |||||||||||||||
Insurance | 837 | 1,131 | 1,283 | 1,236 | 944 | |||||||||||||||
FDIC Insurance and Assessments | 505 | 588 | 482 | 498 | 491 | |||||||||||||||
Client Services | 337 | 294 | 318 | 344 | 480 | |||||||||||||||
Other Real Estate, Net | — | 546 | 518 | 1 | 20 | |||||||||||||||
Other Expenses | 3,711 | 3,152 | 3,502 | 3,151 | 1,030 | |||||||||||||||
73,615 | 72,088 | 71,792 | 72,889 | 65,138 | ||||||||||||||||
REIT Preferred Securities expense | 464 | 453 | 454 | 453 | 421 | |||||||||||||||
Total Operating Expenses | 74,079 | 72,541 | 72,246 | 73,342 | 65,559 | |||||||||||||||
Income Before Income Taxes | 34,676 | 36,071 | 37,179 | 41,094 | 46,925 | |||||||||||||||
Income Tax Expense | 13,256 | 13,710 | 14,054 | 15,997 | 16,259 | |||||||||||||||
Net Income | $ | 21,420 | $ | 22,361 | $ | 23,125 | $ | 25,097 | $ | 30,666 | ||||||||||
(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 2002. |
Greater Bay Bancorp’s Fourth Quarter 2003 Earnings Release
January 21, 2004
Page 9 of 12
GREATER BAY BANCORP
DECEMBER 31, 2003—FINANCIAL SUMMARY (UNAUDITED)
($ in 000’s)
SELECTED YEAR TO DATE CONSOLIDATED OPERATING DATA: | ||||||||
YTD 31-Dec 2003 | YTD 31-Dec 2002 | |||||||
Interest Income | $ | 407,719 | $ | 505,412 | ||||
Interest Expense | 109,838 | 160,555 | ||||||
Net Interest Income Before Provision for Loan Losses | 297,881 | 344,857 | ||||||
Provision for Loan Losses | 28,195 | 59,776 | ||||||
Net Interest Income After Provision for Loan Losses | 269,686 | 285,081 | ||||||
Non-interest Income: | ||||||||
Insurance Agency Commissions & Fees (1) | 117,508 | 88,515 | ||||||
Depositor Service Fees | 11,372 | 11,147 | ||||||
Loan and International Banking Fees | 9,315 | 9,233 | ||||||
Operating Lease Fees | 5,582 | 747 | ||||||
Gain on Sale of Loans | 4,535 | 4,754 | ||||||
Trust Fees | 3,314 | 3,566 | ||||||
Gains on Investments and early retirement of CODES (2) | 5,961 | 20,433 | ||||||
ATM Fees | 1,773 | 2,414 | ||||||
Other Income | 12,182 | 15,313 | ||||||
Total Non-interest Income | 171,542 | 156,122 | ||||||
Operating Expenses: | ||||||||
Salaries | 158,800 | 137,618 | ||||||
Deferred Loan Origination Costs | (14,203 | ) | (13,790 | ) | ||||
Benefits | 30,826 | 24,896 | ||||||
Total Compensation and Benefits | 175,423 | 148,724 | ||||||
Occupancy and Equipment | 40,898 | 39,365 | ||||||
Professional Services & Legal | 16,594 | 8,901 | ||||||
Amortization of Intangibles | 7,180 | 5,520 | ||||||
Telephone, postage and supplies | 7,245 | 7,398 | ||||||
Marketing and promotion | 6,120 | 5,355 | ||||||
Depreciation—Equipment Leased to Others (2) | 4,615 | 612 | ||||||
Data Processing | 5,356 | 4,820 | ||||||
Correspondent Bank Charges | 4,519 | 4,583 | ||||||
Insurance | 4,487 | 3,385 | ||||||
FDIC Insurance and Assessments | 2,073 | 1,780 | ||||||
Client Services | 1,293 | 2,117 | ||||||
Other Real Estate, Net | 1,065 | 139 | ||||||
Other Expenses | 13,516 | 9,388 | ||||||
290,384 | 242,087 | |||||||
Costs related to the Early Retirement of Trust Preferred Securities (TPS) | — | 975 | ||||||
REIT Preferred Securities expense | 1,824 | 1,814 | ||||||
Total Operating Expenses | 292,208 | 244,876 | ||||||
Income Before Income Taxes | 149,020 | 196,327 | ||||||
Income Tax Expense | 57,017 | 72,053 | ||||||
Net Income | $ | 92,003 | $ | 124,274 | ||||
(1) | The Company acquired ABD Insurance and Financial Services (ABD) on March 12, 2002 which is accounted for under the purchase accounting method and only ten months of operations were included for 2002. |
(2) | CODES (Zero Coupon Convertible Contingent Debt Securities) |
Greater Bay Bancorp’s Fourth Quarter 2003 Earnings Realease
January 21, 2004
Page 10 of 12
GREATER BAY BANCORP
DECEMBER 31, 2003—FINANCIAL (UNAUDITED)
($ in 000’s, except share and per share data)
SELECTED QUARTERLY CONSOLIDATED FINANCIAL CONDITION RATIOS: | ||||||||||||||||||||
Dec 31 2003 | Sept 30 2003 | Jun 30 2003 | Mar 31 2003 | Dec 31 2002 | ||||||||||||||||
GAAP RATIOS: | ||||||||||||||||||||
Loan to Deposit Ratio | 85.41 | % | 84.60 | % | 84.85 | % | 85.47 | % | 90.87 | % | ||||||||||
Ratio of Allowance for Loan Losses to: | ||||||||||||||||||||
Average Loans | 2.77 | % | 2.74 | % | 2.73 | % | 2.73 | % | 2.73 | % | ||||||||||
End of Period Loans | 2.77 | % | 2.78 | % | 2.75 | % | 2.74 | % | 2.70 | % | ||||||||||
Total Nonperforming Assets | 204.49 | % | 221.28 | % | 265.42 | % | 322.25 | % | 339.77 | % | ||||||||||
Ratio of Provision for Loan Losses to Average Loans, annualized | 0.61 | % | 0.68 | % | 0.56 | % | 0.55 | % | 0.59 | % | ||||||||||
Total Nonperforming Loans to Total Loans | 1.36 | % | 1.26 | % | 0.99 | % | 0.79 | % | 0.79 | % | ||||||||||
Total Nonperforming Assets to Total Assets | 0.81 | % | 0.75 | % | 0.61 | % | 0.51 | % | 0.47 | % | ||||||||||
Ratio of Quarterly Net Charge-offs to Average Loans, annualized | 0.81 | % | 0.81 | % | 0.55 | % | 0.54 | % | 0.49 | % | ||||||||||
Ratio of YTD Net Charge-offs to YTD Average Loans | 0.67 | % | 0.63 | % | 0.54 | % | 0.54 | % | 1.19 | % | ||||||||||
Loan Growth, current quarter to prior year quarter | -5.29 | % | -1.97 | % | 0.53 | % | 4.91 | % | 6.57 | % | ||||||||||
Loan Growth, current quarter to prior quarter, annualized | -5.49 | % | -8.94 | % | -0.99 | % | -6.09 | % | 8.22 | % | ||||||||||
Loan Growth, YTD | -5.29 | % | -5.29 | % | -3.52 | % | -6.09 | % | 6.57 | % | ||||||||||
Deposits Growth, current quarter to prior year quarter | 0.77 | % | -0.09 | % | 4.70 | % | 9.53 | % | 5.66 | % | ||||||||||
Deposits Growth, current quarter to prior quarter, annualized | -9.21 | % | -7.82 | % | 1.92 | % | 19.19 | % | -12.51 | % | ||||||||||
Deposits Growth, YTD | 0.77 | % | 4.23 | % | 10.56 | % | 19.19 | % | 5.66 | % | ||||||||||
Revenue Growth, current quarter to prior year quarter | -3.12 | % | -18.56 | % | -9.39 | % | 9.79 | % | 28.64 | % | ||||||||||
Revenue Growth, current quarter to prior quarter, annualized | -2.92 | % | 1.66 | % | -15.94 | % | 6.48 | % | -66.58 | % | ||||||||||
Net Interest Income Growth, current quarter to prior year quarter | -7.16 | % | -17.06 | % | -16.74 | % | -13.01 | % | -2.20 | % | ||||||||||
Net Interest Income Growth, current quarter to priorquarter, annualized | 13.83 | % | -6.00 | % | -12.44 | % | -24.29 | % | -29.96 | % | ||||||||||
Average Earning Assets to Average Total Assets | 89.49 | % | 89.28 | % | 89.36 | % | 89.72 | % | 89.70 | % | ||||||||||
Average Earning Assets to Average Interest Bearing Liabilities | 120.46 | % | 117.73 | % | 115.15 | % | 117.14 | % | 115.60 | % | ||||||||||
Capital Ratios: | ||||||||||||||||||||
Tier 1 leverage ratio | 9.98 | % | 9.49 | % | 9.29 | % | 9.18 | % | 8.61 | % | ||||||||||
Tier 1 risk-based capital ratio | 12.87 | % | 12.64 | % | 12.29 | % | 12.08 | % | 11.71 | % | ||||||||||
Total risk-based capital ratio | 14.13 | % | 13.90 | % | 13.55 | % | 13.34 | % | 12.97 | % | ||||||||||
Risk Weighted Assets | $ | 5,793,334 | $ | 5,818,104 | $ | 5,942,616 | $ | 5,887,156 | $ | 5,900,325 | ||||||||||
Book Value Per Share | $ | 12.54 | $ | 12.28 | $ | 12.29 | $ | 11.88 | $ | 11.64 | ||||||||||
Total Shares Outstanding | 52,529,850 | 52,160,193 | 51,982,864 | 51,774,074 | 51,577,795 | |||||||||||||||
NON-GAAP RATIOS (1): | ||||||||||||||||||||
Tangible Equity (2) to Tangible Assets (3) | 7.33 | % | 7.06 | % | 6.90 | % | 6.68 | % | 6.40 | % | ||||||||||
Tangible Common Equity (4) to Tangible Assets (3) | 7.12 | % | 6.86 | % | 6.71 | % | 6.48 | % | 6.20 | % | ||||||||||
Tangible Common Book Value Per Share, includingConvertible Preferred Stock (5) | $ | 10.00 | $ | 9.99 | $ | 10.20 | $ | 9.73 | $ | 9.48 | ||||||||||
Tangible Book Value Per Share, excluding ConvertiblePreferred Stock (6) | $ | 8.25 | $ | 8.45 | $ | 8.65 | $ | 8.18 | $ | 7.92 | ||||||||||
(1) 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 | $ | 658,765 | $ | 640,356 | $ | 638,854 | $ | 615,079 | $ | 600,159 | ||||||||||
Convertible Preferred Stock | 91,752 | 80,441 | 80,441 | 80,441 | 80,900 | |||||||||||||||
REIT Preferred Securities | 15,302 | 15,302 | 15,302 | 15,650 | 15,650 | |||||||||||||||
765,819 | 736,099 | 734,597 | 711,170 | 696,709 | ||||||||||||||||
Less: Goodwill and Other Intangibles | (225,229 | ) | (199,816 | ) | (189,299 | ) | (191,580 | ) | (191,903 | ) | ||||||||||
Tangible Equity | $ | 540,590 | $ | 536,283 | $ | 545,298 | $ | 519,590 | $ | 504,806 | ||||||||||
Shareholders’ Equity | $ | 658,765 | $ | 640,356 | $ | 638,854 | $ | 615,079 | $ | 600,159 | ||||||||||
Convertible Preferred Stock | 91,752 | 80,441 | 80,441 | 80,441 | 80,900 | |||||||||||||||
750,517 | 720,797 | 719,295 | 695,520 | 681,059 | ||||||||||||||||
Less: Goodwill and Other Intangibles | (225,229 | ) | (199,816 | ) | (189,299 | ) | (191,580 | ) | (191,903 | ) | ||||||||||
Tangible Common Equity | $ | 525,288 | $ | 520,981 | $ | 529,996 | $ | 503,940 | $ | 489,156 | ||||||||||
Total Assets | $ | 7,601,423 | $ | 7,794,301 | $ | 8,090,325 | $ | 7,965,317 | $ | 8,082,038 | ||||||||||
Less: Goodwill and Other Intangibles | (225,229 | ) | (199,816 | ) | (189,299 | ) | (191,580 | ) | (191,903 | ) | ||||||||||
Tangible Assets | $ | 7,376,194 | $ | 7,594,485 | $ | 7,901,026 | $ | 7,773,737 | $ | 7,890,135 | ||||||||||
(2) | Tangible Equity includes Shareholders’ Equity, Convertible Preferred Stock and REIT Preferred Securities, less Goodwill and Other Intangibles. |
(3) | Tangible Assets includes Total Assets, less Goodwill and Other Intangibles. |
(4) | Tangible Common Equity includes Shareholders’ Equity and Convertible Preferred Stock, less Goodwill and Other Intangibles. |
(5) | 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. |
(6) | 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 Fourth Quarter 2003 Earnings Release
January 21, 2004
Page 11 of 12
GREATER BANCORP
DECEMBER 31, 2003—FINANCIAL SUMMARY (UNAUDITED)
($ in 000’s, except share and per share data)
SELECTED QUARTERLY CONSOLIDATED OPERATING RATIOS: | ||||||||||||||||||||
Fourth 2003 | Third Quarter 2003 | Second 2003 | First Quarter 2003 | Fourth 2002 | ||||||||||||||||
GAAP EPS | ||||||||||||||||||||
Net Income Per Share | ||||||||||||||||||||
Basic (1) | $ | 0.38 | $ | 0.40 | $ | 0.42 | $ | 0.46 | $ | 0.57 | ||||||||||
Diluted (2) | $ | 0.37 | $ | 0.39 | $ | 0.41 | $ | 0.45 | $ | 0.57 | ||||||||||
Weighted Average Common Shares Outstanding | 52,363,000 | 52,093,000 | 51,925,000 | 51,735,000 | 51,547,000 | |||||||||||||||
Weighted Average Common & Common Equivalent Shares Outstanding (2) | 53,961,000 | 53,134,000 | 52,745,000 | 52,161,000 | 54,135,000 | |||||||||||||||
GAAP Ratios | ||||||||||||||||||||
Return on Period Average Assets, annualized | 1.10 | % | 1.11 | % | 1.15 | % | 1.28 | % | 1.48 | % | ||||||||||
Return on Period Average Common Equity, annualized | 13.05 | % | 13.93 | % | 14.62 | % | 16.60 | % | 20.44 | % | ||||||||||
Return on Period Average Equity, annualized | 11.56 | % | 12.37 | % | 12.97 | % | 14.66 | % | 18.22 | % | ||||||||||
Net Interest Margin—Average Earning Assets (3) | 4.33 | % | 4.06 | % | 4.11 | % | 4.33 | % | 4.36 | % | ||||||||||
Operating Expense Ratio (4) | 3.82 | % | 3.61 | % | 3.59 | % | 3.74 | % | 3.16 | % | ||||||||||
Efficiency Ratio (5) | 64.00 | % | 62.21 | % | 62.21 | % | 60.65 | % | 54.87 | % | ||||||||||
Total Operating Expenses | $ | 74,079 | $ | 72,541 | $ | 72,246 | $ | 73,342 | $ | 65,559 | ||||||||||
Total Revenue | $ | 115,755 | $ | 116,612 | $ | 116,125 | $ | 120,931 | $ | 119,484 | ||||||||||
NON-GAAP Ratios | ||||||||||||||||||||
Efficiency Ratio (Excluding the operating results of ABD) (6) | 54.11 | % | 54.88 | % | 56.04 | % | 55.28 | % | 45.12 | % | ||||||||||
ABD Operating Expenses | $ | 26,761 | $ | 25,880 | $ | 22,852 | $ | 23,556 | $ | 22,345 | ||||||||||
ABD Revenue | $ | 28,301 | $ | 31,591 | $ | 27,991 | $ | 30,862 | $ | 23,698 |
(1) | Net income available to common shareholders is based on total net income less preferred dividends of $1.5 million for Q4, Q3, Q2 and Q1 2003, $1.3 million for Q4 2002. |
(2) | The convertible preferred stock was considered anti-dilutive in Q4, 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 Q4, 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 $1.5 million for Q4, Q3, Q2 and Q1 2003. |
(3) | Net interest income for the period, annualized and divided by average quarterly interest earning assets. |
(4) | Total operating expenses for the period, annualized and divided by average quarterly assets. |
(5) | Total operating expenses divided by total revenue (the sum of net interest income and non-interest income). |
(6) | Total operating expenses minus ABD operating expenses divided by total revenue minus ABD revenue. |
Greater Bay Bancorp’s Fourth Quarter 2003 Earnings Release
January 21, 2004
Page 12 of 12
GREATER BAY BANCORP
DECEMBER 31, 2003—FINANCIAL SUMMARY (UNAUDITED)
($ in 000’s, except share and per share data)
SELECTED YEAR TO DATE CONSOLIDATED OPERATING RATIOS: | ||||||||
YTD 31-Dec 2003 | YTD 31-Dec 2002 | |||||||
GAAP EPS | ||||||||
Net Income Per Share | ||||||||
Basic (1) | $ | 1.65 | $ | 2.35 | ||||
Diluted (2) | $ | 1.62 | $ | 2.30 | ||||
Weighted Average Common Shares Outstanding | 52,040,000 | 51,056,000 | ||||||
Weighted Average Common & Common Equivalent Shares Outstanding (2) | 52,993,000 | 54,135,000 | ||||||
GAAP Ratios | ||||||||
Return on Period Average Assets | 1.16 | % | 1.50 | % | ||||
Return on Period Average Common Equity | 14.52 | % | 22.43 | % | ||||
Return on Period Average Equity | 12.88 | % | 20.29 | % | ||||
Net Interest Margin—Average Earning Assets (3) | 4.20 | % | 4.52 | % | ||||
Operating Expense Ratio (4) | 3.69 | % | 2.95 | % | ||||
Efficiency Ratio (5) | 62.25 | % | 48.88 | % | ||||
Total Operating Expenses | $ | 292,208 | $ | 244,876 | ||||
Total Revenue | $ | 469,423 | $ | 500,979 | ||||
NON-GAAP Ratios | ||||||||
Efficiency Ratio (Excluding the operating results of ABD) (6) | 55.08 | % | 41.60 | % | ||||
ABD Operating Expenses | $ | 99,049 | $ | 73,648 | ||||
ABD Revenue | $ | 118,745 | $ | 89,402 |
(1) | Net income available to common shareholders is based on total net income less preferred dividends of $5.9 million for YTD December 2003 and $4.2 million for YTD December 2002. |
(2) | The convertible preferred stock was considered anti-dilutive in YTD December 2003, whereby the preferred dividends of $5.9 million divided by the common stock equivalent of the convertible preferred stock of 2,734,000 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 $5.9 million for YTD December 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. |