CoBiz Financial : Announces Fourth Quarter 2016 Results

CoBiz Financial Announces Fourth Quarter 2016 Results

Exhibit 99.1

Denver -- CoBiz Financial Inc. (Company) (NASDAQ: COBZ), a financial services company with $3.6 billion in assets, reported financial results for the fourth quarter of 2016.

Financial Highlights - Fourth quarter 2016

• Net income available to common shareholders of $34.9 million in 2016, compared to $25.7 million in 2015.

• Net income available to common shareholders of $8.7 million for the fourth quarter of 2016, compared to $4.4 million in the fourth quarter of 2015.

• Diluted earnings per share of $0.21 for the fourth quarter of 2016, compared to $0.11 in the fourth quarter of 2015.

• Loans increased $234.9 million, or 8.7%, from December 31, 2015 and $107.0 million from September 30, 2016.

• Deposits increased $288.1 million, or 10.5%, from December 31, 2015 and $92.6 million from September 30, 2016.

• Nonperforming assets (NPAs) to total assets of 0.23% at December 31, 2016, compared to 0.64% at December 31, 2015 and 0.29% at September 30, 2016.

Financial Summary	Quarter ended (unaudited)			4Q16 change vs.
(in thousands, except per share amounts)	4Q16 3Q16 4Q15			3Q16 4Q15
Net interest income before provision	$ 29,888 $ 29,401 $ 28,236			$ 487 1.7 % $ 1,652 5.9 %
Provision for loan losses	349 (1,168) 5,390			1,517 129.9 % (5,041) (93.5)%
Net interest income after provision	29,539 30,569 22,846			(1,030) (3.4)% 6,693 29.3 %
Total noninterest income	9,374 9,286 7,985			88 0.9 % 1,389 17.4 %
Total noninterest expense	27,088 26,043 25,717			1,045 4.0 % 1,371 5.3 %
Net income before income taxes	11,825 13,812 5,114			(1,987) (14.4)% 6,711 131.2 %
Provision for income taxes	3,092 3,543 714			(451) (12.7)% 2,378 333.1 %
Net income	$ 8,733 $ 10,269 $ 4,400			$ (1,536) (15.0)% $ 4,333 98.5 %
Diluted earnings per common share	$ 0.21	$ 0.25	$ 0.11	$ (0.04)	(16.0)% $	0.10	90.9 %
KEY RATIOS
Net interest margin	3.75 %	3.74 %	3.73 %
Efficiency ratio - taxable equivalent *	65.57 %	64.50 %	68.51 %
Return on average assets	0.98 %	1.18 %	0.53 %
Return on average shareholders' equity	11.56 %	14.04 %	6.37 %
Noninterest income as a percentage of taxable equivalent operating revenue *	22.66 %	22.91 %	21.07 %

• See accompanying Reconciliation of Non-GAAP Measures to GAAP

  Loans

  (in thousands)	Quarter ended (unaudited) 4Q16 3Q16 4Q15	4Q16 change vs. 3Q16 4Q15
  LOANS
  Commercial	$ 1,217,732 $ 1,196,088 $ 1,175,379	$ 21,644 1.8 % $ 42,353 3.6 %
  Owner-occupied real estate	475,287 473,809 436,643	1,478 0.3 % 38,644 8.9 %
  Investor real estate	695,836 625,174 579,625	70,662 11.3 % 116,211 20.0 %
  Construction & land	174,451 170,594 201,281	3,857 2.3 % (26,830) (13.3)%
  Consumer	267,013 263,871 253,317	3,142 1.2 % 13,696 5.4 %
  Other	103,786 97,569 52,960	6,217 6.4 % 50,826 96.0 %
  Total loans	$ 2,934,105 $ 2,827,105 $ 2,699,205	$ 107,000 3.8 % $ 234,900 8.7 %

  • Loans at December 31, 2016 increased $234.9 million, or 8.7%, from December 31, 2015 and $107.0 million from September 30, 2016.

  • Loans in the Arizona and Colorado markets increased $211.1 million and $23.8 million, respectively, from December 31, 2015. Compared to the quarter ended September 30, 2016 (linked-quarter), loans in the Arizona and Colorado markets increased $106.5 million and $0.5 million, respectively.

    Quarter ended (unaudited)
    (in thousands)	4Q16	3Q16 2Q16 1Q16			4Q15
    Loans - beginning balance	$ 2,827,105	$ 2,813,703 $ 2,716,888 $ 2,699,205			$ 2,621,053
    New credit extended	273,195	154,319	201,018	136,126	187,750
    Credit advanced	105,122	108,074	135,294	111,032	129,789
    Paydowns & maturities	(270,167)	(248,760)	(239,447)	(223,102)	(239,212)
    Gross loan charge-offs	(1,150)	(231)	(50)	(6,373)	(175)
    Loans - ending balance	$ 2,934,105	$ 2,827,105	$ 2,813,703	$ 2,716,888	$ 2,699,205

    Net change - loans outstanding $ 107,000 $ 13,402 $ 96,815 $ 17,683 $ 78,152

  • New credit extensions and advances were $378.3 million in the fourth quarter of 2016, compared to

    $317.5 million in the fourth quarter of 2015 and $262.4 million in the linked-quarter. Paydowns and maturities were slightly higher in the fourth quarter of 2016 compared to the same periods.

  • Commercial line utilization was 31.0% at December 31, 2016, compared to 34.5% and 34.0%, respectively, at December 31, 2015 and September 30, 2016.

    DEPOSITS AND CUSTOMER REPURCHASE AGREEMENTS

    Deposits and Customer Repurchase Agreements

    Quarter ended (unaudited)	4Q16 change vs.
    (in thousands)	4Q16 3Q16 4Q15	3Q16 4Q15

    Money market	$ 861,856	$ 854,928	$ 804,777	$ 6,928	0.8 %	$ 57,079	7.1 %
    Interest-bearing demand	714,062	681,256	585,524	32,806	4.8 %	128,538	22.0 %
    Savings	19,561	20,403	18,078	(842)	(4.1)%	1,483	8.2 %
    Certificates of deposits under $100	19,899	20,151	21,515	(252)	(1.3)%	(1,616)	(7.5)%
    Certificates of deposits $100 and
    over	87,692	87,593	94,260	99	0.1 %	(6,568)	(7.0)%
    Reciprocal CDARS	44,250	46,316	37,223	(2,066)	(4.5)%	7,027	18.9 %
    Total interest-bearing deposits	1,747,320	1,710,647	1,561,377	36,673	2.1 %	185,943	11.9 %
    Noninterest-bearing demand deposits	1,282,463	1,226,546	1,180,335	55,917	4.6 %	102,128	8.7 %
    Total deposits	3,029,783	2,937,193	2,741,712	92,590	3.2 %	288,071	10.5 %
    Customer repurchase agreements	27,639	52,114	47,459	(24,475)	(47.0)%	(19,820)	(41.8)%
    Total deposits and customer repurchase agreements	$ 3,057,422	$ 2,989,307	$ 2,789,171	$ 68,115	2.3 %	$ 268,251	9.6 %

  • Total deposits at December 31, 2016 increased $288.1 million, or 10.5%, from December 31, 2015 and $92.6 million from September 30, 2016.

  • Noninterest-bearing demand accounts increased $102.1 million from December 31, 2015 and $55.9 million from September 30, 2016 and were 42.3% of total deposits at December 31, 2016.

    Credit Quality	Quarter ended (unaudited)
    (in thousands)	4Q16 3Q16 4Q15
    ALLOWANCE FOR LOAN AND CREDIT LOSSES
    Beginning allowance for loan losses	$ 33,529 $ 34,344 $ 34,899
    Provision for loan losses	349 (1,168) 5,390
    Net (charge-off) recovery	(585) 353 397
    Ending allowance for loan losses	$ 33,293 $ 33,529 $ 40,686
    CREDIT QUALITY
    Nonaccrual loans	$ 2,638 $ 5,046 $ 15,717
    Loans 90 days or more past due and accruing interest	657 - 505
    Total nonperforming loans	3,295 5,046 16,222
    OREO and repossessed assets	5,079 5,079 5,079
    Total nonperforming assets	$ 8,374 $ 10,125 $ 21,301
    Performing renegotiated loans	$ 23,612 $ 25,291 $ 28,196
    Classified loans	$ 57,905 $ 58,376 $ 51,078
    ASSET QUALITY MEASURES
    Nonperforming assets to total assets	0.23 % 0.29 % 0.64 %
    Nonperforming loans to total loans	0.11 % 0.18 % 0.60 %
    Nonperforming loans and OREO to total loans and OREO	0.28 % 0.36 % 0.79 %
    Allowance for loan and credit losses to total loans	1.13 % 1.19 % 1.51 %
    Allowance for loan and credit losses to nonperforming loans	1,010.41 % 664.47 % 250.81 %

  • NPAs decreased $1.8 million from September 30, 2016 and $12.9 million from December 31, 2015, to $8.4 million at December 31, 2016.

  • The Company had net charge-offs of $0.6 million in the fourth quarter of 2016.

  • A provision for loan losses of $0.3 million was recorded in the fourth quarter of 2016 as a result of net charge-offs and growth in the loan portfolio.

  • The resulting allowance for loan and credit losses (Allowance) was 1.13% of total loans at December 31, 2016.

Shareholders' Equity

Quarter ended (unaudited)

EQUITY MEASURES

(in thousands, except per share amounts) 4Q16 3Q16 4Q15 Common shareholders' equity $ 302,310 $ 295,837 $ 273,536

Common shares outstanding at period end 41,555 41,465 41,122

Book value per common share $ 7.27 $ 7.13 $ 6.65

Tangible book value per common share * $ 7.24 $ 7.10 $ 6.60

Tangible common equity to tangible assets * 8.29 % 8.53 % 8.11 %

Tier 1 capital ratio ** 11.52 % 10.47 %

Total risk-based capital ratio ** 14.47 % 13.73 %

• See accompanying Reconciliation of Non-GAAP Measures to GAAP

  ** Ratios unavailable at the time of release.

  • On January 19, 2017, the Board of Directors of the Company declared a quarterly cash dividend of

    $0.05 per common share. The dividend will be paid on February 6, 2017 to shareholders of record on January 30, 2017.

    Net Interest Income and Margin

  • Net interest income on a tax-equivalent basis (NII) was $32.0 million for the fourth quarter of 2016, an increase of $2.1 million, or 6.9%, from the quarter ended December 31, 2015. From the quarter ended September 30, 2016, NII increased $0.7 million, or 2.4%.

  • The Net Interest Margin (NIM) was 3.75% for the fourth quarter of 2016, compared to 3.73% in the prior-year quarter and 3.74% in the third quarter of 2016.

  • Supporting the growth in NII was an increase in the earning asset base and deposit growth.

    • Quarterly average loans increased $219.6 million, or 8.3%, from the prior-year quarter, and

      $49.0 million from the linked-quarter.

    • Quarterly average deposits increased $282.6 million, or 10.3%, from the prior-year quarter, and $112.1 million from the linked-quarter.

    • Average noninterest-bearing demand accounts increased $147.7 million, or 12.6%, from the prior-year quarter and $53.8 million from the linked-quarter.

      Noninterest Income	Quarter ended (unaudited)	4Q16 change vs.
      (in thousands)	4Q16 3Q16 4Q15	3Q16 4Q15
      Noninterest income:
      Deposit service charges	$ 1,551 $ 1,553 $ 1,424	$ (2) (0.1)% $ 127 8.9 %
      Investment advisory income	1,418 1,416 1,388	2 0.1 % 30 2.2 %
      Insurance income	3,286 3,120 2,937	166 5.3 % 349 11.9 %
      Other investments	215 1,348 453	(1,133) (84.1)% (238) (52.5)%
      Derivative valuation	737 - 154	737 100.0 % 583 378.6 %
      Other income	2,167 1,849 1,629	318 17.2 % 538 33.0 %
      Total noninterest income	$ 9,374 $ 9,286 $ 7,985	$ 88 0.9 % $ 1,389 17.4 %

  • Noninterest income increased $1.4 million, or 17.4%, from the prior-year quarter and $0.1 million, or 0.9%, from the linked-quarter. On a linked-quarter basis, a decrease of $1.1 million in other investments was offset by higher income in other areas, most notably the mark-to-market adjustment on the Company's derivative portfolio. The increase in other income is primarily from fees recognized on the sale of interest rate swaps.

  • Noninterest income as a percentage of taxable equivalent operating revenue was 22.7% for the fourth quarter of 2016, compared to 21.1% in the prior-year quarter and 22.9% in the linked-quarter.

    Operating Expenses	Quarter ended (unaudited)	4Q16 change vs.
    (in thousands)	4Q16 3Q16 4Q15	3Q16 4Q15
    Noninterest expense:
    Salaries and employee benefits	$ 18,378 $ 17,480 $ 17,808	$ 898 5.1 % $ 570 3.2 %
    Occupancy expenses, premises and equipment	3,934 4,025 3,301	(91) (2.3)% 633 19.2 %
    Amortization of intangibles	150 150 150	- - % - - %
    Other operating expenses	4,659 4,486 4,704	173 3.9 % (45) (1.0)%
    Net gain on OREO, repossessed assets and other	(33) (98) (246)	65 66.3 % 213 86.6 %
    Total noninterest expense	$ 27,088 $ 26,043 $ 25,717	$ 1,045 4.0 % $ 1,371 5.3 %

  • Noninterest expense increased $1.4 million, or 5.3%, from the prior-year quarter and $1.0 million from the linked-quarter. The increase in noninterest expense compared to the prior-year quarter was due to increases in salaries, employee benefits and occupancy expenses. The increase in salaries and employee benefits was due to higher incentive compensation based on improved operating results. The increase in occupancy expense was due to the lease of the Company's new headquarters location.

  • The efficiency ratio was 65.6% for the fourth quarter of 2016, compared to 68.5% and 64.5%, respectively, for the prior-year and linked-quarters.