U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

FORM 10-Q

ý Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2003.

o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number 000-24445

CoBiz Inc.
(Exact name of registrant as specified in its charter)

COLORADO		84-0826324
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

821 l7th Street
Denver, CO		80202
(Address of principal executive offices)		(Zip Code)

(303) 293-2265
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ý No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).

Yes ý No o

There were 13,778,737 shares of the registrant’s Common Stock, $0.01 par value per share, outstanding as of November 1, 2003.

CoBiz Inc.

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.	Quantitative and Qualitative Disclosures about Market Risk

Item 4.	Controls and Procedures

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings

Item 2.	Changes in Securities and Use of Proceeds

Item 3.	Defaults Upon Senior Securities

Item 4.	Submission of Matters to a Vote of Security Holders

Item 5.	Other Information

Item 6.	Exhibits and Reports on Form 8-K

SIGNATURES

Item 1. Financial Statements

CoBiz Inc.

Consolidated Statements of Condition

September 30, 2003 and December 31, 2002

(unaudited)

	September 30, 2003			December 31, 2002
	(in thousands)
ASSETS
Cash and due from banks	$	35,282		$	33,252
Investments:
Investment securities available for sale (cost of $339,972 and $257,888, respectively)	339,056			262,237
Investment securities held to maturity (fair value of $1,741 and $2,282, respectively)	1,707			2,245
Other investments	8,301			7,806
Total investments	349,064			272,288
Loans and leases, net	876,654			788,481
Goodwill	14,059			8,341
Intangible assets	3,740			489
Investment in operating leases	4			443
Premises and equipment, net	6,620			5,337
Accrued interest receivable	4,023			3,893
Deferred income taxes	4,451			2,537
Other	15,618			3,588
TOTAL ASSETS	$	1,309,515		$	1,118,649

LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Deposits:
Demand	$	293,802		$	212,987
NOW and money market	330,753			305,954
Savings	8,876			6,950
Certificates of deposit	319,977			331,074
Total deposits	953,408			856,965
Federal funds purchased	6,900			8,700
Securities sold under agreements to repurchase	129,796			115,517
Advances from Federal Home Loan Bank	81,990			30,560
Accrued interest and other liabilities	5,662			4,900
Company obligated mandatorily redeemable preferred securities of subsidiary trusts holding solely subordinated debentures	39,630			20,000
Total liabilities	1,217,386			1,036,642

Minority Interests	—			3

Shareholders’ equity:
Cumulative preferred, $.01 par value; 2,000,000 shares authorized; None outstanding	—			—
Common, $.01 par value; 25,000,000 shares authorized; 13,777,987 and 13,271,999 issued and outstanding, respectively	138			133
Additional paid-in capital	52,662			46,284
Retained earnings	39,896			32,895
Accumulated other comprehensive (loss) income net of income tax of $349 and $1,657, respectively	(567		)	2,692
Total shareholders’ equity	92,129			82,004
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,309,515		$	1,118,649

See notes to consolidated financial statements.

CoBiz Inc.

Consolidated Statements of Income and Comprehensive Income

(unaudited)

	Three months ended September 30,						Nine months ended September 30,
	2003			2002			2003			2002
	(in thousands)
INTEREST INCOME:
Interest and fees on loans and leases	$	13,308		$	13,057		$	39,241		$	37,575
Interest and dividends on investment securities:
Taxable securities	2,904			2,840			8,365			8,344
Nontaxable securities	63			59			203			185
Dividends on securities	70			80			205			233
Federal funds sold and other	3			22			11			37
Total interest income	16,348			16,058			48,025			46,374
INTEREST EXPENSE:
Interest on deposits	2,427			3,410			7,926			10,103
Interest on short-term borrowings and FHLB advances	651			699			1,889			2,244
Interest on mandatorily redeemable preferred securities of subsidiary trusts	304			500			892			1,500
Total interest expense	3,382			4,609			10,707			13,847
NET INTEREST INCOME BEFORE PROVISION FOR LOAN AND LEASE LOSSES	12,966			11,449			37,318			32,527
Provision for loan and lease losses	570			850			1,640			1,990
NET INTEREST INCOME AFTER PROVISION FOR LOAN AND LEASE LOSSES	12,396			10,599			35,678			30,537
NONINTEREST INCOME:
Service charges	657			503			1,888			1,552
Operating lease income	14			134			72			649
Trust and advisory fees	720			176			1,586			502
Insurance revenue	1,941			508			4,447			1,180
Investment banking revenues	108			211			1,139			2,253
Other income	437			410			1,240			1,349
Total noninterest income	3,877			1,942			10,372			7,485
NONINTEREST EXPENSE:
Salaries and employee benefits	6,990			5,152			19,803			14,854
Occupancy expenses, premises and equipment	2,090			1,568			5,846			4,420
Depreciation on leases	16			116			76			525
Amortization of intangibles	143			47			303			126
Other	1,825			1,652			5,543			4,741
Total noninterest expense	11,064			8,535			31,571			24,666
MINORITY INTERESTS	—			(5		)	(3		)	(3		)
INCOME BEFORE INCOME TAXES	5,209			4,011			14,482			13,359
Provision for income taxes	1,909			1,528			5,302			5,115
NET INCOME	$	3,300		$	2,483		$	9,180		$	8,244
UNREALIZED (DEPRECIATION) APPRECIATION ON INVESTMENT SECURITIES AVAILABLE FOR SALE, net of tax	(4,672		)	(310		)	(3,259		)	252
COMPREHENSIVE INCOME	$	(1,372	)	$	2,173		$	5,921		$	8,496
EARNINGS PER SHARE:
Basic	$	0.24		$	0.19		$	0.68		$	0.63
Diluted	$	0.23		$	0.18		$	0.65		$	0.60

See notes to consolidated financial statements.

CoBiz Inc.

Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2003 and 2002

(unaudited)

	2003			2002
	(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	9,180		$	8,244
Adjustments to reconcile net income to net cash provided by operating activities:
Net amortization of securities	699			304
Depreciation and amortization	2,365			2,117
Provision for loan and lease losses	1,640			1,990
Deferred income taxes	190			(114		)
Minority interests	(3		)	(3		)
Gain on sale of premises and equipment	(83		)	(36		)
Changes in operating assets and liabilities, net of acquisitions:
Accrued interest receivable	(130		)	(182		)
Other assets	(1,735		)	(115		)
Accrued interest and other liabilities	(214		)	35
Net cash provided by operating activities	11,909			12,240
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of other investments	(495		)	(1,071		)
Purchase of investment securities available for sale	(165,744		)	(102,448		)
Maturities of investment securities held to maturity	533			665
Maturities of investment securities available for sale	82,965			59,315
Net cash paid in acquisition of ACMG	(1,271		)	—
Net cash paid in acquisition of FDL	(2,011		)	—
Purchase of bank owned life insurance	(10,000		)	—
Loan and lease originations and repayments, net	(89,807		)	(96,876		)
Purchase of intangible asset	(162		)	(176		)
Purchase of premises and equipment	(3,836		)	(2,370		)
Proceeds from sale of premises and equipment	1,401			325
Net cash used in investing activities	(188,427		)	(142,636		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand, NOW, money market, and savings accounts	107,540			78,615
Net (decrease) increase in certificates of deposit	(11,097		)	59,209
Net (decrease) increase in federal funds purchased	(1,800		)	12,450
Net increase in securities sold under agreements to repurchase	14,279			26,768
Advances from the Federal Home Loan Bank	611,000			320,500
Repayments of advances from the Federal Home Loan Bank	(559,570		)	(346,070		)
Proceeds from issuance of mandatorily redeemable preferred securities of a subsidiary trust	20,000			—
Debt issuance costs	(200		)	—
Proceeds from exercise of stock options	575			440
Dividends paid on common stock	(2,179		)	(1,853		)
Net cash provided by financing activities	178,548			150,059
NET INCREASE IN CASH AND CASH EQUIVALENTS	2,030			19,663
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	33,252			18,879
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	35,282		$	38,542

See notes to consolidated financial statements.

CoBiz Inc. and Subsidiaries

Notes to Consolidated Condensed Financial Statements

(unaudited)

1. Consolidated Condensed Financial Statements

The accompanying consolidated condensed financial statements are unaudited and include the accounts of CoBiz Inc. (“Parent”), and its wholly owned subsidiaries: Alexander Capital Management Group (“ACMG”), Financial Designs, Ltd. (“FDL”, formerly CoBiz Connect, Inc.), CoBiz Insurance Inc., Colorado Business Bankshares Capital Trust I, CoBiz Statutory Trust I, CoBiz Bank, N.A. (the “Bank,” previously named American Business Bank, N.A.), the Bank’s equipment leasing subsidiary, Colorado Business Leasing, Inc. (“Leasing”), and CoBiz GMB, Inc. The Bank operates in its Colorado market areas under the name Colorado Business Bank (“CBB”) and in its Arizona market area under the name Arizona Business Bank (“ABB”).

The Bank is a commercial banking institution with eight locations in the Denver metropolitan area, one in Edwards, Colorado, and four in the Phoenix Metropolitan area. Leasing provides equipment leasing primarily to mid-market companies. ACMG provides investment management services to institutions and individuals. FDL provides employee benefits consulting, insurance brokerage and related administrative support to employers. CoBiz Insurance, Inc. provides commercial and personal property and casualty insurance brokerage, as well as risk management consulting services to small and medium-sized businesses and individuals. CoBiz GMB, Inc. provides investment banking services to middle-market companies through its wholly owned subsidiary, Green Manning and Bunch, Ltd. (“GMB”).

All significant intercompany accounts and transactions have been eliminated. These financial statements and notes thereto should be read in conjunction with, and are qualified in their entirety by, our Annual Report on Form 10-K for the year ended December 31, 2002, as filed with the Securities and Exchange Commission.

The consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting only of normally recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2003 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2003.

2. ACQUISITIONS

On April 1, 2003, the Company acquired ACMG, an SEC registered investment adviser firm based in Denver, Colorado. The acquisition was accounted for using the purchase method of accounting, and accordingly, the results of ACMG’s operations have been included in the consolidated financial statements since the date of purchase. The acquisition of ACMG was completed through a merger of ACMG into a wholly owned subsidiary that was formed in order to consummate the transaction and then a subsequent contribution of the assets and liabilities of the merged entity into a newly formed limited liability company called Alexander Capital Management Group, LLC.

The aggregate purchase price was $3,131,000, consisting of 107,220 shares of CoBiz Inc. common stock valued at $1,500,000, $1,277,000 in cash, $264,000 in net liabilities assumed and $90,000 in direct acquisition costs (consisting primarily of external legal fees). Goodwill of $2,785,000, which is not expected to be deductible for tax purposes, was recorded as part of the purchase price allocation. Intangible assets consisting of customer account relationships, employment agreements and non-solicitation agreements totaling $346,000 were also recorded with an average useful life of 14 years.

The terms of the merger agreement provide for additional earn-out payments to the former shareholders of ACMG for each of the calendar years 2003 through 2005. The earn-out payments are based on a multiple of earnings before interest, taxes, depreciation and amortization, as defined in the merger agreement, and are payable 40% in cash and 60% in CoBiz common stock. In addition to the earn-out, the former shareholders of ACMG were issued 200,000 Profits Interests Units, representing a 20% interest in the future profits and losses of ACMG.

On April 14, 2003, the Company acquired FDL, a provider of wealth transfer and employee benefit services based in Denver, Colorado. The acquisition was accounted for using the purchase method of accounting, and accordingly, the results of FDL’s operations have been included in the consolidated financial statements since the date of purchase. The acquisition of FDL was completed through a merger of FDL into CoBiz Connect, Inc., a wholly owned subsidiary of CoBiz that has provided employee benefits consulting services since 2000. The surviving corporation continues to use the FDL name.

The aggregate purchase price was $5,406,000, consisting of 222,315 shares of CoBiz, Inc. common stock valued at $3,210,000, $2,140,000 in cash, and $56,000 in direct acquisition costs (consisting primarily of external legal fees). Goodwill of $1,933,000, which is not expected to be deductible for tax purposes, was recorded as part of the purchase price allocation. Intangible assets consisting of customer account relationships, employment agreements and non-solicitation agreements totaling $3,045,000 were also recorded with an average useful life of 10 years.

The terms of the merger agreement provide for additional earn-out payments to the former shareholders of FDL for each of the calendar years 2003 through 2006. The earn-out payments are based on a multiple of earnings before interest, taxes, depreciation and amortization, as defined in the merger agreement, and are payable 50% in cash and 50% in CoBiz common stock.

The earn-out payments for both the ACMG and FDL transactions, if made, will be treated as additional costs of the acquisitions and recorded as goodwill.

In the acquisition of GMB on July 10, 2001, GMB was merged into a wholly-owned subsidiary, CoBiz GMB, Inc., that we formed in order to consummate the transaction. The corporate general partner of GMB was merged into CoBiz GMB, Inc., with the shareholders of the general partner receiving, among other things, shares of CoBiz GMB, Inc. Class B Common Stock (the “CoBiz GMB, Inc. Shares”). The CoBiz GMB, Inc. Shares represented a 2% interest in CoBiz GMB, Inc. After two years from the date of acquisition, or sooner under certain circumstances, the holders of the CoBiz GMB, Inc. Shares had the right to require us to exchange the CoBiz GMB, Inc. Shares for shares of our common stock. On August 6, 2003 the holders of the CoBiz GMB, Inc. Shares exercised this right and, accordingly, 73,818 shares of our common stock were issued on August 12, 2003 resulting in the recognition of an additional $1,000,000 in goodwill. CoBiz GMB, Inc. is now a wholly-owned subsidiary of the Company.

3. Mandatorily Redeemable Preferred Securities of Subsidiary Trust

On September 17, 2003, we established CoBiz Statutory Trust I (“Trust”), a wholly-owned statutory business trust. The Trust was created for the exclusive purpose of issuing 30-year capital trust preferred securities (“Trust Preferred Securities”) in the aggregate amount of $20,000,000 and using the proceeds to purchase junior subordinated debentures (“Subordinated Debentures”) issued by the Parent. The sole assets of the Trust are the Subordinated Debentures.

The Trust Preferred Securities bear a floating interest rate based on a spread over 3-month LIBOR which is set each quarter on March 17, June 17, September 17 and December 17 and mature on September 17, 2033. Interest distributions are payable quarterly. The Trust Preferred Securities are subject to mandatory redemption upon repayment of the Subordinated Debentures at their stated maturity date or their earlier redemption in an amount equal to their liquidation amount plus accumulated and unpaid distributions to the date of redemption. We guarantee the payment of distributions and payments for redemption or liquidation of the Trust Preferred Securities to the extent of funds held by the Trust. Our obligations under the Subordinated Debentures together with the guarantee and other back-up obligations, in the aggregate, constitute a full and unconditional guarantee by us of the obligations of the Trust under the Trust Preferred Securities.

The Subordinated Debentures are unsecured, bear an interest rate based on a spread over 3-month LIBOR which is set each quarter on March 17, June 17, September 17 and December 17 and mature on September 17, 2033. Interest is payable quarterly. We may defer the payment of interest at any time for a period not exceeding 20 consecutive quarters provided that deferral period does not extend past the stated maturity. During any such deferral period, distributions on the Trust Preferred Securities will also be deferred and our ability to pay dividends on our common shares will be restricted.

Subject to approval by the Federal Reserve Bank, the Trust Preferred Securities may be redeemed prior to maturity at our option on or after September 17, 2008. The Trust Preferred Securities may also be redeemed at any time in whole (but not in part) in the event of unfavorable changes in laws or regulations that result in (1) the Trust becoming subject to federal income tax on income received on the Subordinated Debentures, (2) interest payable by the parent company on the Subordinated Debentures becoming non-deductible for federal tax purposes, (3) the requirement for the Trust to register under the Investment Company Act of 1940, as amended, or (4) loss of the ability to treat the Trust Preferred Securities as “Tier I capital” under the Federal Reserve capital adequacy guidelines.

Portions of the Trust Preferred Securities qualify as Tier I capital under regulatory definitions. Issuance costs consisting primarily of underwriting discounts and professional fees of approximately $200,000 were capitalized and are being amortized over five years using the straight-line method.

4. Earnings per Common Share

Income available to common shareholders and the weighted average shares outstanding used in the calculation of Basic and Diluted Earnings Per Share are as follows:

	Three months ended September 30,					Nine months ended September 30,
	2003		2002			2003			2002
	(in thousands, except share amounts)
Income available to common shareholders	$	3,300	$	2,483		$	9,180		$	8,244
Income impact of assumed conversions:
Convertible CoBiz GMB, Inc. Class B shares	—		(5		)	(3		)	(3		)
Income available to common shareholders plus assumed conversions	$	3,300	$	2,478		$	9,177		$	8,241
Weighted average shares outstanding - basic earnings per share	13,730,711		13,223,043			13,547,859			13,179,380

Effect of dilutive securities - stock options	462,968		567,279			463,533			602,688

Weighted average shares outstanding - diluted earnings per share	14,193,679		13,790,322			14,011,392			13,782,068

As of September 30, 2003 and 2002, 281,331 and 190,937 options, respectively, were excluded from the earnings per share computation solely because their effect was anti-dilutive.

5. Recent Accounting Pronouncements

Effective December 15, 2002, the Company adopted SFAS No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure,” an amendment of FASB Statement No. 123. SFAS No. 148 amends SFAS No. 123, “Accounting for Stock-Based Compensation,” to provide alternative methods of transition for an entity that voluntarily changes to the fair value based method of accounting for stock-based employee compensation. It also amends the disclosure provisions of SFAS No. 123 to require prominent disclosure about the effects on reported net income of an entity’s accounting policy decisions with respect to stock-based employee compensation. Finally, it amends APB Opinion No. 28, “Interim Financial Reporting,” to require disclosure about those effects in interim financial information.

If the fair value based method of accounting under SFAS No. 123 had been applied, the Company’s net income available for common shareholders and earnings per common share would have been reduced to the pro forma amounts indicated below (assuming that the fair value of options granted during the year is amortized over the vesting period):

	Three months ended September 30,						Nine months ended September 30,
	2003			2002			2003			2002
	(in thousands, except per share amounts)
Net income, as reported	$	3,300		$	2,483		$	9,180		$	8,244
Less: stock-based compensation determined under the fair value method	(79		)	(157		)	(318		)	(470		)
Pro forma net income	$	3,221		$	2,326		$	8,862		$	7,774
Earnings per share:
As reported - basic	$	0.24		$	0.19		$	0.68		$	0.63
As reported - diluted	$	0.23		$	0.18		$	0.65		$	0.60
Pro forma - basic	$	0.23		$	0.18		$	0.65		$	0.59
Pro forma - diluted	$	0.23		$	0.17		$	0.63		$	0.56

In April 2003, FASB issued Statement No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities” (“SFAS 149”). SFAS 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities. The amendments (i) reflect decisions of the Derivatives Implementation Group process that effectively required amendments to SFAS 133, (ii) reflect decisions made by the Financial Accounting Standards Board in connection with other board projects dealing with financial instruments, and (iii) address implementation issues related to the application of the definition of a derivative. SFAS 149 is effective for contracts entered into or modified after June 30, 2003, and for hedging relationships designated after June 30, 2003, with all provisions applied prospectively. The Company does not believe the adoptions of SFAS 149 will have a significant impact on its financial statements.

In May, 2003, the FASB issued SFAS No. 150 “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity.” This Statement establishes standards for how to measure and classify certain financial instruments with characteristics of both liabilities and equity. It requires three categories of financial instruments be classified as liabilities rather than equity and be measured and reported at fair value. It was immediately effective for financial instruments entered into or modified after May 31, 2003, and applies to existing financial instruments at the beginning of the first interim period after June 15, 2003. The adoption of this Statement did not have a material effect on the Company’s consolidated financial statements.

Effective January 1, 2003, the Company adopted FASB Interpretation No. 45 (“FIN No. 45”), “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” FIN No. 45 considers standby letters of credit, excluding commercial letters of credit and other lines of credit, a guarantee of the Company. The Company enters into a standby letter of credit to guarantee performance of a customer to a third party. These guarantees are primarily issued to support public and private borrowing arrangements. The credit risk involved is represented by the contractual amounts of those instruments. Under the standby letters of credit, the Company is required to make payments to the beneficiary of the letters of credit upon request by the beneficiary so long as all performance criteria have been met. The adoption of FIN No. 45 did not have a material impact on the Company’s consolidated financial statements.

In January 2003, the FASB issued Interpretation No. 46 (“FIN No. 46”), “Consolidation of Variable Interest Entities,” which addresses consolidation by business enterprises of variable interest entities. FIN No. 46 clarifies the application of Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN No. 46 applies immediately to variable interest entities created after January 31, 2003, and to variable interest entities in which an enterprise obtains an interest after that date. It applies in the first fiscal year or interim period ending after December 15, 2003, to variable interest entities in which an enterprise holds a variable interest that it acquired before February 1, 2003. Currently, the Company’s two subsidiary trusts, Colorado Business Bankshares Capital Trust I and CoBiz Statutory Trust I, would qualify as variable interest entities. The Company does not expect the requirements of FIN No. 46 to have a material impact on its consolidated financial statements.

6. Comprehensive Income

Comprehensive income is the total of (1) net income plus (2) all other changes in net assets arising from non-owner sources, which are referred to as other comprehensive income. Presented below are the changes in other comprehensive income for the periods indicated.

	Three months ended September 30,						Nine months ended September 30,
	2003			2002			2003			2002
	(in thousands)
Other comprehensive (loss) income, before tax:
Unrealized (loss) gain on available for sale securities arising during the period	$	(7,548	)	$	(501	)	$	(5,265	)	$	407

Tax benefit (expense) related to items of other comprehensive income	2,876			191			2,006			(155		)

Other comprehensive (loss) income, net of tax	$	(4,672	)	$	(310	)	$	(3,259	)	$	252

7. Goodwill and Intangible Assets

The Company adopted SFAS No. 142 in January 2002, which requires companies to stop amortizing goodwill and certain intangible assets. Instead, SFAS No. 142 requires that goodwill and intangible assets with an indefinite life be reviewed for impairment upon adoption (January 1, 2002) and annually thereafter.

Under SFAS No. 142, goodwill impairment is deemed to exist when the carrying value of a reporting unit exceeds its estimated fair value. The Company’s reporting units are generally consistent with the operating segments identified in Note 9. The Company estimates the fair value of the reporting units using multiples of comparable entities, including recent transactions, or a combination of multiples and a discounted cash flow analysis. As of the most recent annual evaluation, the estimated fair value of all reporting units exceeded their carrying values and goodwill impairment was not deemed to exist.

A summary of goodwill, adjustments to goodwill and total assets by operating segment as of September 30, 2003 is as follows:

							Total Assets September 30, 2003
	Goodwill
	December 31, 2002		Acquisitions and Adjustments		September 30, 2003
	(in thousands)

Colorado Business Bank	$	4,360	$	1,415	$	5,775	$	1,037,476
Arizona Business Bank	255		236		491		253,858
Investment banking services	3,486		1,000		4,486		5,758
Trust and advisory services	—		1,810		1,810		3,204
Insurance	240		1,257		1,497		7,649
Corporate support and other	—		—		—		1,570

Total	$	8,341	$	5,718	$	14,059	$	1,309,515

As of September 30, 2003 and December 31, 2002, the Company’s intangible assets and related accumulated amortization consisted of the following:

	Customer List			Lease Premium			Customer Contracts and Relationships			Employment and Non-Solicitation Agreements		Total
	(in thousands)

December 31, 2002	$	207		$	83		$	199		$	—	$	489

Acquisition of ACMG	—			—			316			30		346
Acquisition of FDL	—			—			2,995			50		3,045
Acquisition of insurance book of business	163			—			—			—		163
Amortization	(98		)	(50		)	(155		)	—		(303		)

September 30, 2003	$	272		$	33		$	3,355		$	80	$	3,740

The Company recorded amortization expense of $143,000 related to intangible assets during the three months ended September 30, 2003, compared to $47,000 in the same period of 2002. Amortization expense for the nine months ended September 30, 2003 totaled $303,000 and $126,000 for the same period in 2002. Amortization expense on intangible assets for each of the five succeeding years is estimated as follows (in thousands):

2004	$	510
2005	450
2006	398
2007	396
2008	355
Total	$	2,109

8. Derivatives

In January 2003, the Company entered into an interest rate swap agreement with a notional amount of $20,000,000. The swap effectively converted the Company’s fixed interest rate obligation under the trust preferred securities to a variable interest rate obligation, decreasing the asset sensitivity of the Company’s statement of condition by more closely matching our variable rate assets with variable rate liabilities. The swap has a notional amount equal to the outstanding principal amount of the related trust preferred securities, together with the same payment dates, maturity date and call provisions as the related trust preferred securities. Under the swap, the Company pays interest at a variable rate equal to a spread over 90-day LIBOR, adjusted quarterly, and the Company receives a fixed rate equal to the interest that the Company is obligated to pay on the related trust preferred securities. The interest rate swap is a derivative financial instrument and has been designated as a fair value hedge of the trust preferred securities. Because the critical terms of the interest rate swap match the term of the trust preferred securities, the swap qualifies for “short-cut method” accounting treatment under SFAS No. 133. The fair market value of the swap totaling $370,000 at September 30, 2003 is included in Other Liabilities in the Consolidated Statement of Condition. The Company Obligated Mandatorily Redeemable Preferred Securities of Subsidiary Trust Holding Solely Subordinated Debentures has been adjusted by a similar amount.

9. Segments

Our principal areas of activity consist of commercial banking, investment banking, trust and advisory services, insurance and corporate support and other. As of December 31, 2002, our trust and advisory services and insurance segments were combined and reported as one segment, titled Other Fee Based Services. With the acquisitions of ACMG and FDL, these business lines are now reported separately.

The Company distinguishes its commercial banking segments based on geographic markets served. Currently, our reportable commercial banking segments are CBB and ABB. CBB is a full-service business bank with nine Colorado locations, including eight in the Denver metropolitan area and one in Edwards, just west of Vail. ABB is based in Phoenix, Arizona and has branch offices in Surprise, Tempe and Scottsdale, Arizona.

The investment banking segment consists of the operations of GMB, which provides middle-market companies with merger and acquisition advisory services, institutional private placements of debt and equity and other strategic financial advisory services.

The trust and advisory services segment consists of the operations of ACMG and CoBiz Private Asset Management. ACMG is an SEC registered investment management firm that manages stock and bond portfolios for individuals and institutions. CoBiz Private Asset Management is a separate business division within the Bank that offers wealth management and investment advisory services, fiduciary (trust) services and estate administration services.

The insurance segment includes the activities of FDL and CoBiz Insurance, Inc. FDL provides employee benefits consulting, wealth transfer planning and preservation for high net worth individuals and executive benefits and compensation planning. CoBiz Insurance, Inc. provides commercial and personal property and casualty insurance brokerage, as well as risk management consulting services to small- and medium-sized businesses and individuals.

Corporate support and other consists of activities that are not directly attributable to the other reportable segments. Included in this category are the activities of Leasing, centralized bank operations, the Company’s treasury function (i.e., investment management and wholesale funding), and activities of Parent and Colorado Business Bankshares Capital Trust I and CoBiz Statutory Trust I.

The financial information for each business segment reflects that information which is specifically identifiable or which is allocated based on an internal allocation method. The results of operations and selected financial information by operating segment are as follows:

	Colorado Business Bank		Arizona Business Bank		Investment Banking Services			Trust and Advisory Services			Insurance		Corporate Support and Other			Consolidated
	(in thousands)
For the three months ended September 30, 2003
Income statement
Total interest income	$	12,824	$	3,223	$	1		$	5		$	1	$	294		$	16,348
Total interest expense	1,943		586		—			5			—		848			3,382
Net interest income	10,881		2,637		1			—			1		(554		)	12,966
Provision for loan and lease losses	335		235		—			—			—		—			570
Net interest income after provision for loan and lease losses	10,546		2,402		1			—			1		(554		)	12,396
Noninterest income	782		193		109			729			1,994		70			3,877
Noninterest expense and minority interest	2,445		1,226		734			693			1,742		4,224			11,064
Income before income taxes	8,883		1,369		(624		)	36			253		(4,708		)	5,209
Provision for income taxes	3,313		510		(237		)	14			99		(1,790		)	1,909
Net income before management fees and overhead allocations	$	5,570	$	859	$	(387	)	$	22		$	154	$	(2,918	)	$	3,300
Management fees and overhead allocations, net of tax	1,982		395		23			31			45		(2,476		)	—
Net income	$	3,588	$	464	$	(410	)	$	(9	)	$	109	$	(442	)	$	3,300

For the nine months ended September 30, 2003
Income statement
Total interest income	$	37,488	$	9,398	$	5		$	12		$	5	$	1,117		$	48,025
Total interest expense	6,157		1,888		—			8			—		2,654			10,707
Net interest income	31,331		7,510		5			4			5		(1,537		)	37,318
Provision for loan and lease losses	1,153		612		—			—			—		(125		)	1,640
Net interest income after provision for loan and lease losses	30,178		6,898		5			4			5		(1,412		)	35,678
Noninterest income	2,224		543		1,145			1,597			4,604		259			10,372
Noninterest expense and minority interest	7,608		3,716		2,508			1,551			3,694		12,491			31,568
Income before income taxes	24,794		3,725		(1,358		)	50			915		(13,644		)	14,482
Provision for income taxes	9,185		1,405		(515		)	20			353		(5,146		)	5,302
Net income before management fees and overhead allocations	$	15,609	$	2,320	$	(843	)	$	30		$	562	$	(8,498	)	$	9,180
Management fees and overhead allocations, net of tax	5,969		1,124		63			85			124		(7,365		)	—
Net income	$	9,640	$	1,196	$	(906	)	$	(55	)	$	438	$	(1,133	)	$	9,180

At September 30, 2003
Balance sheet
Total assets	$	1,037,476	$	253,858	$	5,758		$	3,204		$	7,649	$	1,570		$	1,309,515
Total gross loans and leases	698,767		187,259		—			—			—		2,229			888,255
Total deposits and customer repurchase agreements	898,859		183,488		—			857			—		—			1,083,204

	Colorado Business Bank		Arizona Business Bank		Investment Banking Services			Trust and Advisory Services			Insurance			Corporate Support and Other			Consolidated
	(in thousands)
For the three months ended September 30, 2002
Income statement
Total interest income	$	12,335	$	2,346	$	10		$	6		$	2		$	1,359		$	16,058
Total interest expense	2,445		840		2			1			—			1,321			4,609
Net interest income	9,890		1,506		8			5			2			38			11,449
Provision for loan and lease losses	115		40		—			—			—			695			850
Net interest income after provision for loan and lease losses	9,775		1,466		8			5			2			(657		)	10,599
Noninterest income	712		89		220			177			520			224			1,942
Noninterest expense	2,397		1,045		643			190			489			3,766			8,530
Income before income taxes	8,090		510		(415		)	(8		)	33			(4,199		)	4,011
Provision for income taxes	3,355		199		(157		)	(3		)	12			(1,878		)	1,528
Net income before management fees and overhead allocations	$	4,735	$	311	$	(258	)	$	(5	)	$	21		$	(2,321	)	$	2,483
Management fees and overhead allocations, net of tax	982		259		11			17			24			(1,293		)	—
Net income	$	3,753	$	52	$	(269	)	$	(22	)	$	(3	)	$	(1,028	)	$	2,483

For the nine months ended September 30, 2002
Income statement
Total interest income	$	35,357	$	6,434	$	13		$	15		$	3		$	4,552		$	46,374
Total interest expense	7,361		2,521		6			1			—			3,958			13,847
Net interest income	27,996		3,913		7			14			3			594			32,527
Provision for loan and lease losses	704		260		—			—			—			1,026			1,990
Net interest income after provision for loan and lease losses	27,292		3,653		7			14			3			(432		)	30,537
Noninterest income	2,335		276		2,262			503			1,203			906			7,485
Noninterest expense	6,758		2,695		2,452			580			1,191			10,987			24,663
Income before income taxes	22,869		1,234		(183		)	(63		)	15			(10,513		)	13,359
Provision for income taxes	8,697		471		(69		)	(24		)	6			(3,966		)	5,115
Net income before management fees and overhead allocations	$	14,172	$	763	$	(114	)	$	(39	)	$	9		$	(6,547	)	$	8,244
Management fees and overhead allocations, net of tax	3,167		732		35			47			64			(4,045		)	—
Net income	$	11,005	$	31	$	(149	)	$	(86	)	$	(55	)	$	(2,502	)	$	8,244

At September 30, 2002
Balance sheet
Total assets	$	926,108	$	174,470	$	5,423		$	868		$	1,421		$	7,110		$	1,115,400
Total gross loans and leases	639,244		123,271		—			—			—			7,539			770,054
Total deposits and customer repurchase agreements	742,341		150,389		—			876			—			—			893,606

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This discussion should be read in conjunction with our consolidated financial statements and notes thereto included in this Form 10-Q. For a description of our accounting policies, see Note 1 of Notes to Consolidated Financial Statements included in our Form 10-K for the year ended December 31, 2002. For a discussion of the segments included in our principal activities, see Note 9 of Notes to Consolidated Financial Statements.

Critical Accounting Policies

The Company’s discussion and analysis of its financial condition and results of operations are based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. In making those critical accounting estimates we are required to make assumptions about matters that are highly uncertain at the time of the estimate. Different estimates we could reasonably have used, or changes in the assumptions that are reasonably likely to occur, would have a material effect on our financial condition or results of operations.

The allowance for loan and lease losses is a critical accounting policy that requires subjective estimates in the preparation of the consolidated financial statements. The allowance for loan and lease losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectibilty of loans and leases in light of historical experience, the nature and volume of the loan

and lease portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

We maintain a loan review program independent of the lending function that is designed to reduce and control risk in the lending function. It includes the monitoring of lending activities with respect to underwriting and processing new loans, preventing insider abuse and timely follow-up and corrective action for loans showing signs of deterioration in quality. We also have a systematic process to evaluate individual loans and pools of loans within our loan and lease portfolio. We maintain a loan grading system whereby each loan is assigned a grade between 1 and 8, with 1 representing the highest quality credit, 7 representing a non-accrual loan, and 8 representing a loss that will be charged-off. Grades are assigned based upon the degree of risk associated with repayment of a loan in the normal course of business pursuant to the original terms. Loans above a certain dollar amount that are adversely graded are reported to the Loan Committee and the Senior Credit Officer along with current financial information, a collateral analysis and an action plan. Individual loans that are deemed to be impaired are evaluated in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 114 “Accounting by Creditors for Impairment of a Loan.”

In determining the appropriate level of the allowance for loan and lease losses, we model an analysis of the various components of the loan and lease portfolio, including all significant credits on an individual basis. When analyzing the adequacy we segment the loan and lease portfolio into components with similar characteristics, such as risk classification, past due status, type of loan, industry or collateral. Possible components may include, but are not limited to:

• Changes in lending policies and procedures, including underwriting standards and collection, charge-off, and recovery practices.

• Changes in national and local economic and business conditions and developments, including the condition of various market segments.

• Changes in the nature and volume of the portfolio.

• Changes in the experience, ability, and depth of lending management and staff.

• Changes in the trend of the volume and severity of past due and classified loans; and trends in the volume of non-accrual loans, troubled debt restructurings, and other loan modifications.

• Changes in the quality of the loan review system and the degree of oversight by the board of directors.

• The existence and effect of any concentrations of credit, and changes in the level of such concentrations.

• The effect of external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the current portfolio.

Refer to the Provision and Allowance for Loan and Lease Losses section for further discussion on management’s methodology.

SFAS No. 142 “Goodwill and Other Intangible Assets,” requires that we evaluate on an annual basis (or whenever events occur which may indicate possible impairment) whether any portion of our recorded goodwill is impaired. Goodwill impairment is determined by comparing the fair value of a reporting unit to its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered impaired. If the fair value of the reporting unit is less than the carrying amount, goodwill is considered impaired. We estimate the fair

value of our reporting units using market multiples of comparable entities, including recent transactions, or a combination of market multiples and a discounted cash flow methodology.

We conducted our annual evaluation of our reporting units, including our investment banking subsidiary, GMB, as of December 31, 2002. As discussed in our Annual Report on Form 10-K for the period ending December 31, 2002, the estimated fair value of all reporting units exceeded their carrying values and goodwill impairment was not deemed to exist. Since the acquisition of GMB, mergers and acquisitions activity has decreased as a result of poor economic conditions. As such, the revenues of GMB have been less than their projected targets. Although we fully expect mergers and acquisitions activity to increase as the economy improves, if GMB continues to recognize operational losses our evaluation of the fair value of GMB could result in the determination that the carrying value of the business exceeds its fair value and that goodwill relating to GMB has been impaired. If we were to conclude that goodwill has been impaired, that conclusion could result in a non-cash goodwill impairment charge, which would adversely affect our results of operations.

We also have other policies that we consider to be key accounting policies; however, these policies, which are disclosed in Note 1 of Notes to Consolidated Financial Statements in our Form 10-K for the year ended December 31, 2002, do not meet the definition of critical accounting policies because they do not generally require us to make estimates or judgments that are difficult or subjective.

Financial Condition

The following table sets forth the balance of loans and leases and deposits as of September 30, 2003, December 31, 2002 and September 30, 2002 (in thousands):

	September 30, 2003					December 31, 2002					September 30, 2002
	Amount			% of Portfolio		Amount			% of Portfolio		Amount			% of Portfolio
Loans and Leases:
Commercial	$	299,796		34.2	%	$	254,389		32.3	%	$	237,481		31.2	%
Real estate – mortgage	408,579			46.6	%	366,841			46.5	%	368,466			48.5	%
Real estate – construction	111,055			12.7	%	114,753			14.6	%	102,974			13.5	%
Consumer	57,057			6.5	%	50,853			6.4	%	48,006			6.3	%
Municipal leases	9,539			1.1	%	6,219			0.8	%	5,595			0.7	%
Small business leases	2,229			0.2	%	5,814			0.7	%	7,532			1.1	%
Loans and leases	$	888,255		101.3	%	$	798,869		101.3	%	$	770,054		101.3	%
Less allowance for loan and lease losses	(11,601		)	(1.3	)%	(10,388		)	(1.3	)%	(9,862		)	(1.3	)%
Net loans and leases	$	876,654		100.0	%	$	788,481		100.0	%	$	760,192		100.0	%

Deposits and Customer Repurchase Agreements:
NOW and money market accounts	$	330,753		30.5	%	$	305,954		31.5	%	$	283,127		31.7	%
Savings	8,876			0.8	%	6,950			0.7	%	6,518			0.7	%
Certificates of deposit under $100,000	116,667			10.8	%	117,155			12.0	%	133,925			15.0	%
Certificates of deposit $100,000 and over	203,310			18.8	%	213,919			22.0	%	173,166			19.4	%
Total interest-bearing deposits	$	659,606		60.9	%	$	643,978		66.2	%	$	596,736		66.8	%
Noninterest-bearing demand deposits	293,802			27.1	%	212,987			21.9	%	196,280			22.0	%
Customer repurchase agreements	129,796			12.0	%	115,517			11.9	%	100,590			11.2	%
Total deposits and customer repurchase agreements	$	1,083,204		100.0	%	$	972,482		100.0	%	$	893,606		100.0	%

Our total assets increased by $190.9 million to $1.31 billion as of September 30, 2003, from $1.12 billion as of December 31, 2002. A consistent focus on internal growth allowed our loan and lease portfolio (net) to increase by $88.2 million, to $876.7 million as of September 30, 2003, from $788.5 million at December 31, 2002. Total investments were $349.1 million as of September 30, 2003, compared to $272.3 million as of December 31, 2002. Investments represented 27% of total assets at September 30, 2003 and 24% at December 31, 2002. The increase in investments was driven by strong

growth in deposits and customer repurchase agreements, advances from the Federal Home Loan Bank and the issuance of $20.0 million in Trust Preferred Securities.

Deposits increased by $96.4 million to $953.4 million as of September 30, 2003, from $857.0 million as of December 31, 2002. Securities sold under agreements to repurchase were $129.8 million at September 30, 2003 and $115.5 million at December 31, 2002. The majority of the repurchase agreements outstanding at September 30, 2003 were transacted on behalf of our customers and are not considered a wholesale borrowing source. The increase in deposits and customer repurchase agreements is attributable, in part, to the bear market as investors have pulled out of equities and into safer harbors such as certificates of deposit, money market accounts and real estate. The implementation of a new wire system has allowed us to serve high volume wire customers, such as title companies and investment exchange accommodators, which has resulted in a significant increase in our deposit base. An increased emphasis on deposit generation included in banker production goals has also impacted our deposit growth.

Advances from the Federal Home Loan Bank of Topeka (“FHLB”) were $81.2 million at September 30, 2003, compared to $30.6 million at December 31, 2002. Advances from the FHLB are used as part of our liquidity management strategy and can fluctuate based on the Company’s cash position.

Results of Operations

Overview

The following table presents the condensed statements of income for the three and nine months ended September 30, 2003 and 2002.

	Three months ended September 30,									Nine months ended September 30,
					Increase (decrease)									Increase (decrease)
	2003		2002		Amount			%		2003		2002		Amount			%
	(in thousands)
Interest income	$	16,348	$	16,058	$	290		2	%	$	48,025	$	46,374	$	1,651		4	%
Interest expense	3,382		4,609		(1,227		)	(27	)%	10,707		13,847		(3,140		)	(23	)%
Net interest income before provision for loan and lease losses	12,966		11,449		1,517			13	%	37,318		32,527		4,791			15	%
Provision for loan and lease losses	570		850		(280		)	(33	)%	1,640		1,990		(350		)	(18	)%
Net interest income after provision for loan and lease losses	12,396		10,599		1,797			17	%	35,678		30,537		5,141			17	%
Noninterest income	3,877		1,942		1,935			100	%	10,372		7,485		2,887			39	%
Noninterest expense and minority interests	11,064		8,530		2,534			30	%	31,568		24,663		6,905			28	%
Income before income taxes	5,209		4,011		1,198			30	%	14,482		13,359		1,123			8	%
Provision for income taxes	1,909		1,528		381			25	%	5,302		5,115		187			4	%
Net income	$	3,300	$	2,483	$	817		33	%	$	9,180	$	8,244	$	936		11	%

Net income was $3.3 million for the three months ending September 30, 2003 and $2.5 million for the three months ending September 30, 2002. Earnings per share on a fully diluted basis for the third quarter were $0.23 for 2003 and $0.18 for 2002. Annualized return on average assets for both the three and nine months ended September 30, 2003 was 1.03%, versus 0.95% and 1.11% for the three and nine months ended September 30, 2002. Annualized return on average common shareholders’ equity for the three and nine months ended September 30, 2003 was 14.01% and 13.87%, versus 12.70% and 14.83% for the three and nine months ended September 30, 2002.

Net Interest Income

Net interest income before provision for loan and lease losses was $13.0 million, a $1.5 million, or 13% increase from the same period a year ago. For the nine months ended September 30, 2003, net interest income before provision for loan and lease losses was $37.3 million, a $4.8 million, or 15% increase from the same period a year ago. Yields earned on our interest-earning assets decreased by 102 basis points to 5.38% for the three months ended September 30, 2003 and 86 basis points to 5.62% for the nine months ended September 30, 2003, as compared to the same periods a year ago. Interest paid on interest-bearing liabilities decreased by 90 basis points for the three months ended September 30, 2003 and 81 basis points for the nine months ended September 30, 2003 as compared to the same periods a year ago. The net interest margin was 4.32% for the quarter ended September 30, 2003, down from 4.62% for the quarter ended September 30, 2002. For the nine months ended September 30, 2003 the net interest margin was 4.43% compared to 4.61% for the same period a year ago.

The Bank has historically maintained an asset-sensitive interest rate profile, and was negatively impacted by the 50 basis point decrease in the prime rate during the fourth quarter of 2002 and the 25 basis point decrease that occurred towards the end of the second quarter of 2003. Mitigating the impact from the decreases in the prime rate was an interest rate swap the Company entered into in January of 2003. The swap effectively converted our 10% fixed rate trust preferred securities into a variable rate liability based on a spread over three month LIBOR, for a combined rate of 5.18% for the quarter ending September 30, 2003 and 5.61% for the nine months ended September 30, 2003.

The following tables set forth the average amounts outstanding for each category of interest-earning assets and interest-bearing liabilities, the interest earned or paid on such amounts and the average rate earned or paid for the three and nine months ended September 30, 2003 and 2002.

	For the three months ended September 30,
	2003							2002
	Average balance			Interest earned or paid		Average yield or cost (1)		Average balance			Interest earned or paid		Average yield or cost (1)
	(in thousands)
ASSETS:
Federal funds sold and other	$	660		$	3	1.78	%	$	2,794		$	22	3.08	%
Investment securities (2)	337,431			3,037		3.52	%	243,089			2,979		4.80	%
Loans and leases (3)	863,284			13,308		6.03	%	746,785			13,057		6.84	%
Allowance for loan and lease losses	(11,429		)	—		0.00	%	(10,167		)	—		0.00	%
Total interest-earning assets	1,189,946			16,348		5.38	%	982,501			16,058		6.40	%
Noninterest-earning assets:
Cash and due from banks	34,668							28,451
Other	43,424							23,323
Total assets	$	1,268,038						$	1,034,275
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Deposits:
NOW and money market accounts	$	327,308		$	566	0.69	%	$	271,332		$	902	1.32	%
Savings	8,699			8		0.36	%	6,645			13		0.78	%
Certificates of deposit:
Under $100,000	122,781			779		2.52	%	127,161			1,122		3.50	%
$100,000 and over	199,327			1,074		2.14	%	175,788			1,373		3.10	%
Total interest-bearing deposits	658,115			2,427		1.46	%	580,926			3,410		2.33	%
Other borrowings:
Securities and loans sold under agreements to repurchase and federal funds purchased	139,120			428		1.20	%	105,253			373		1.39	%
FHLB advances	68,425			223		1.28	%	55,239			326		2.31	%
Company obligated mandatorily redeemable preferred securities	22,966			304		5.18	%	20,000			500		10.00	%
Total interest-bearing liabilities	888,626			3,382		1.50	%	761,418			4,609		2.40	%
Noninterest-bearing demand accounts	280,928							190,670
Total deposits and interest-bearing liabilities	1,169,554							952,088
Other noninterest-bearing liabilities	5,044							4,595
Total liabilities and preferred securities	1,174,598							956,683
Shareholders’ equity	93,440							77,592
Total liabilities and shareholders’ equity	$	1,268,038						$	1,034,275
Net interest income				$	12,966						$	11,449
Net interest spread						3.87	%						4.00	%
Net interest margin						4.32	%						4.62	%
Ratio of average interest-earning assets to average interest-bearing liabilities	133.91		%					129.04		%

	For the nine months ended September 30,
	2003							2002
	Average balance			Interest earned or paid		Average yield or cost (1)		Average balance			Interest earned or paid		Average yield or cost (1)
	(in thousands)
ASSETS:
Federal funds sold and other	$	1,100		$	11	1.32	%	$	1,948		$	37	2.50	%
Investment securities (1)	299,952			8,773		3.86	%	228,389			8,762		5.06	%
Loans and leases (2)	836,345			39,241		6.19	%	722,684			37,575		6.86	%
Allowance for loan and lease losses	(10,996		)	—		—		(9,682		)	—		—
Total interest-earning assets	1,126,401			48,025		5.62	%	943,339			46,374		6.48	%
Noninterest-earning assets:
Cash and due from banks	31,358							27,338
Other	33,363							23,403
Total assets	$	1,191,122						$	994,080
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Deposits:
NOW and money market accounts	$	310,490		$	1,855	0.80	%	$	257,727		$	2,610	1.35	%
Savings	8,341			30		0.48	%	6,734			39		0.77	%
Certificates of deposit:
Under $100,000	129,876			2,685		2.76	%	112,670			3,230		3.83	%
$100,000 and over	187,064			3,356		2.40	%	172,127			4,224		3.28	%
Total interest-bearing deposits	635,771			7,926		1.67	%	549,258			10,103		2.46	%
Other borrowings:
Securities and loans sold under agreements to repurchase and federal funds purchased	135,876			1,238		1.20	%	109,480			1,225		1.48	%
FHLB advances	53,744			651		1.60	%	60,274			1,019		2.23	%
Company obligated mandatorily redeemable preferred securities	20,961			892		5.61	%	20,000			1,500		10.00	%
Total interest-bearing liabilities	846,352			10,707		1.69	%	739,012			13,847		2.50	%
Noninterest-bearing demand accounts	251,995							176,649
Total deposits and interest-bearing liabilities	1,098,347							915,661
Other noninterest-bearing liabilities	4,312							4,105
Total liabilities and preferred securities	1,102,659							919,766
Shareholders’ equity	88,463							74,314
Total liabilities and shareholders’ equity	$	1,191,122						$	994,080
Net interest income				$	37,318						$	32,527
Net interest spread						3.94	%						3.98	%
Net interest margin						4.43	%						4.61	%
Ratio of average interest-earning assets to average interest-bearing liabilities	133.09		%					127.65		%

(1) Average yield or cost for the three and nine months ended September 30, 2003 and 2002 has been annualized and is not necessarily indicative of results for the entire year.

(2) Yields do not include adjustments for tax-exempt interest because the amount of such interest is not material.

(3) Loan fees included in interest income are not material. Nonaccrual loans and leases are included in average loans and leases outstanding.

Noninterest Income

The following table presents noninterest income for the three and nine months ended September 30, 2003 and 2002 (in thousands).

	Three months ended September 30,									Nine months ended September 30,
					Increase (decrease)									Increase (decrease)
	2003		2002		Amount			%		2003		2002		Amount			%
Noninterest income:
Deposit service charges	$	657	$	503	$	154		31	%	$	1,888	$	1,552	$	336		22	%
Operating lease income	14		134		(120		)	(90	)%	72		649		(577		)	(89	)%
Other loan fees	170		202		(32		)	(16	)%	530		494		36			7	%
Trust and advisory income	720		176		544			309	%	1,586		502		1,084			216	%
Insurance revenue	1,941		508		1,433			282	%	4,447		1,180		3,267			277	%
Investment banking revenue	108		211		(103		)	(49	)%	1,139		2,253		(1,114		)	(49	)%
Other income	240		144		96			66	%	627		701		(74		)	(11	)%
Gain (loss) on sale of other assets	27		64		(37		)	(58	)%	83		154		(71		)	(46	)%
Total noninterest income	$	3,877	$	1,942	$	1,935		100	%	$	10,372	$	7,485	$	2,887		39	%

Noninterest income for the third quarter of 2003 was $3.9 million, compared to noninterest income of $1.9 million for the third quarter of 2002. For the nine months ended September 30, 2003, noninterest income was $10.4 million, a $2.9 million or 39% increase from the same period a year ago. Focusing our strategy on expanding our non-interest income, we are continually looking for opportunities to expand into fee-based business lines that are complementary to our existing market niche. In March 2000, we opened CoBiz Connect, Inc. (which was merged into Financial Designs, Ltd. on April 14, 2003), an employee benefits brokerage and consulting firm specializing in the needs of small- to mid-sized employers. In March 2001, we acquired CoBiz Insurance, Inc., a property and casualty insurance agency. In July 2001, we acquired GMB, expanding our product line to include investment banking services. In April 2003, we acquired ACMG, an SEC-registered investment management firm that manages stock and bond portfolios for individuals and institutions. Also in April 2003, we acquired Financial Designs Ltd., a leading provider of wealth transfer and employee benefit services for individuals and companies in the Rocky Mountain region.

We believe offering such complementary products allows us to both broaden our relationships with existing customers and attract new customers to our core business. We believe the fees generated by these services will increase our noninterest income and eventually reduce our dependency on net interest income. Noninterest income as a percentage of operating revenues was 23% and 22% for the three and nine months ended September 30, 2003, compared to 14% and 19% for the same periods in 2002.

Deposit service charges for the three and nine months ended September 30, 2003 were $0.7 million and $1.9 million, compared to $0.5 million and $1.5 million for the same periods in 2002. The increase was driven primarily by an increase in cash management analysis fees.

There was a net decrease in operating lease rentals for the three and nine months ended September 30, 2003, compared to the same periods in 2002, which is the result of concentrating our marketing efforts on originating loans, rather than leases. The interest spreads on loans have been more favorable than on our leases.

Other loan fees, consisting primarily of letter of credit, mortgage origination and loan documentation fees have increased year-over-year due to the growth in the loan and lease portfolio.

Trust and advisory fees are up $0.5 million and $1.1 million for the three and nine months ended September 30, 2003 compared to the same periods in 2002. The increase is directly related to the acquisition of ACMG, which earned $0.5 million in advisory fees for the third quarter of 2003. As of

September 30, 2003, assets under management for both ACMG and CoBiz Private Asset Management were $376.0 million.

Insurance revenue for the three and nine months ended September 30, 2003 was $1.9 million and $4.4 million, compared to $0.5 million and $1.2 million for the same periods in 2002. The increase is primarily attributed to insurance revenue earned since the April 14, 2003 acquisition of FDL. Insurance revenue from FDL (including the operations of CoBiz Connect, Inc., which was merged with FDL at the acquisition date) for the three and nine months ended September 30, 2003 was $1.6 million and $3.3 million, respectively. Insurance revenue for the third quarter of 2003 includes $0.2 million in commissions earned for selling bank owned life insurance to CoBiz Bank, N.A, a related company. CoBiz Insurance has also shown steady growth as it continues to expand its client base, growing insurance revenue 23% to $1.1 million for the nine months ended September 30, 2003 as compared to the same period in 2002.

Investment banking revenue for the three months ended September 30, 2003 and 2002 was $0.1 million and $0.2 million, respectively. Investment banking revenue for the nine months ended September 30, 2003 and 2002 was $1.1 million and $2.3 million, respectively. Investment banking revenue for the nine months ended September 30, 2002 included a success fee from the closing of a significant deal that represented 49% of the total investment banking revenue earned in 2002.

Other miscellaneous income for the three and nine months ended September 30, 2003 was $0.2 million and $0.6 million, respectively. Other income for the three and nine months ended September 30, 2002 was $0.1 million and $0.7 million, respectively. Included in other income for the first nine months of 2002 were non-recurring gains of $0.2 million on an excess recovery over the amount of a loan charged off in 1997 and a $0.1 million gain on the exercise of warrants taken in connection with a loan transaction.

Noninterest Expense

The following table presents noninterest expense for the three and nine months ended September 30, 2003 and 2002 (in thousands).

	Three months ended September 30,									Nine months ended September 30,
					Increase (decrease)									Increase (decrease)
	2003		2002		Amount			%		2003		2002		Amount			%
Noninterest expenses:
Salaries and employee benefits	$	6,990	$	5,152	$	1,838		36	%	$	19,803	$	14,854	$	4,949		33	%
Occupancy expenses, premises and equipment	2,090		1,568		522			33	%	5,846		4,420		1,426			32	%
Depreciation on leases	16		116		(100		)	(86	)%	76		525		(449		)	(86	)%
Amortization of intangibles	143		47		96			204	%	303		126		177			140	%
Other operating expenses	1,825		1,652		173			10	%	5,543		4,741		802			17	%
Total other expense	$	11,064	$	8,535	$	2,529		30	%	$	31,571	$	24,666	$	6,905		28	%

The increase in salaries and employee benefits in 2003 from 2002 was due primarily to the additional staff from the acquisitions of FDL and ACMG. The hiring of additional personnel required to accommodate the Company’s growth, as well as cost of living and performance raises awarded to employees effective January 1, 2003, has also contributed to the increase. The Company’s full time equivalent employees were 352 and 284 at September 30, 2003 and 2002, respectively.

The increase in amortization of intangibles is primarily a result of the acquisitions of FDL and ACMG. As part of these acquisitions, intangible assets subject to amortization for customer contracts and relationship and employment and non-solicitation agreements were recognized.

The decrease in depreciation on operating leases was a result of dedicating fewer resources to originating leases and it is expected that depreciation will continue to decrease. The decrease in depreciation expense mitigates part of the decline in operating lease rental income.

Overall, the increases in noninterest expenses reflect our ongoing investment in personnel, technology and office space needed to accommodate internal growth and the expansion of our business through acquisitions and the opening of new branches.

Provision and Allowance for Loan and Lease Losses

The provision for loan and lease losses was $0.6 million and $1.6 million for the three and nine months ended September 30, 2003, compared to $0.9 million and $2.0 million for the three and nine months ended September 30, 2002. Key indicators of asset quality have remained favorable, while average outstanding loan amounts have increased to $836.3 million for the first nine months of 2003, up from $722.7 million for the first nine months of 2002. As of September 30, 2003, the allowance for loan and lease losses amounted to $11.6 million, or 1.31% of total loans and leases, compared to 1.28% at September 30, 2002.

The allowance for loan and lease losses represents management’s recognition of the risks of extending credit and its evaluation of the quality of the loan and lease portfolio. We maintain an allowance for loan and lease losses based upon a number of factors, including, among others, the amount of problem loans and leases, general economic conditions, historical loss experience, and the evaluation of the underlying collateral and holding and disposal costs. In addition to unallocated allowances, specific allowances are provided for individual loans when ultimate collection is considered questionable by management after reviewing the current status of those loans that are contractually past due and considering the net realizable value of the collateral for the loans. Management actively monitors our asset quality and will charge off loans against the allowance for loan and lease losses when appropriate and will provide specific loss allowances when necessary. Although management believes it uses the best information available to make determinations with respect to the allowance for loan and lease losses, future adjustments may be necessary if economic conditions differ from the assumptions used in making the initial determinations. In addition, the determination of the allowance for loan and lease losses is subject to review by our regulators, as part of the routine examination process, which may result in the establishment of additional reserves based upon their judgment of information available to them at the time of their examination. The following table presents, for the periods indicated, an analysis of the allowance for loan and lease losses and other related data.

	Nine months ended September 30, 2003			Year ended December 31, 2002			Nine months ended September 30, 2002
	(in thousands)
Balance of allowance for loan and lease losses at beginning of period	$	10,388		$	8,872		$	8,872
Charge-offs:
Commercial	(286		)	(552		)	(493		)
Real estate — mortgage	(113		)	(65		)	(65		)
Consumer	(7		)	(75		)	(69		)
Direct financing leases	(163		)	(903		)	(847		)
Total charge-offs	(569		)	(1,595		)	(1,474		)
Recoveries:
Commercial	10			371			354
Real estate — mortgage	—			17			7
Consumer	33			3			3
Direct financing leases	99			130			110
Total recoveries	142			521			474
Net charge-offs	(427		)	(1,074		)	(1,000		)
Provisions for loan and lease losses charged to operations	1,640			2,590			1,990
Balance of allowance for loan and lease losses at end of period	$	11,601		$	10,388		$	9,862
Ratio of net charge-offs to average loans and leases (1)	(0.07		)%	(0.15		)%	(0.19		)%
Average loans and leases outstanding during the period	$	836,345		$	737,151		$	722,684

(1) The ratios for the nine months ended September 30, 2003 and 2002 have been annualized. The September 30, 2003 ratio is not necessarily indicative of the results for the entire year.

Nonperforming Assets

Nonperforming assets consist of nonaccrual loans and leases, restructured loans and leases, past due loans and leases, repossessed assets and other real estate owned. Nonperforming assets were $1.9 million as of September 30, 2003, compared with $2.4 million as of December 31, 2002 and $3.5 million as of September 30, 2002. The following table presents information regarding nonperforming assets as of the dates indicated:

	At September 30, 2003			At December 31, 2002			At September 30, 2002
	(in thousands)
Nonperforming loans and leases:
Loans and leases 90 days or more delinquent and still accruing interest	$	47		$	8		$	740
Nonaccrual loans and leases	1,883			2,434			2,735
Total nonperforming loans and leases	1,930			2,442			3,475
Repossessed assets	8			6			35
Total nonperforming assets	$	1,938		$	2,448		$	3,510
Allowance for loan and lease losses	$	11,601		$	10,388		$	9,862

Ratio of nonperforming assets to total assets	0.15		%	0.22		%	0.31		%
Ratio of nonperforming loans and leases to total loans and leases	0.22		%	0.31		%	0.46		%
Ratio of allowance for loan and lease losses to total loans and leases	1.31		%	1.30		%	1.28		%
Ratio of allowance for loan and lease losses to to nonperforming loans and leases	601.09		%	425.39		%	283.80		%

Liquidity and Capital Resources

Our liquidity management objective is to ensure our ability to satisfy the cash flow requirements of depositors and borrowers and to allow us to sustain our operations. Historically, our primary source of funds has been customer deposits. Scheduled loan and lease repayments are a relatively stable source of funds, while deposit inflows and unscheduled loan and lease prepayments, which are influenced by fluctuations in general levels of interest rates, returns available on other investments, competition, economic conditions and other factors, are relatively unpredictable. Borrowings may be used on a short-term basis to compensate for reductions in other sources of funds (such as deposit inflows at less than projected levels). Borrowings may also be used on a longer term basis to support expanded lending activities and to match the maturity or repricing intervals of assets.

We use various forms of short-term borrowings for cash management and liquidity purposes on a limited basis. These forms of borrowings include federal funds purchases, securities sold under agreements to repurchase, the State of Colorado Treasury’s Time Deposit program, and borrowings from the FHLB. The Bank has approved federal funds purchase lines with six other banks with an aggregate credit line of $106.2 million. In addition, the Bank may apply for up to $63.2 million of State of Colorado time deposits. The Bank also has lines of credit from the FHLB that are limited by the amount of eligible collateral available to secure the lines. Borrowings under the FHLB lines are required to be secured by unpledged securities and qualifying loans. At September 30, 2003, we had $134.3 million in unpledged securities and qualifying loans available to collateralize FHLB borrowings and s ecurities sold under agreements to repurchase.

We also use dividends paid by the Bank to provide cash flow. However, the approval of the Office of the Comptroller of the Currency is required prior to the declaration of any dividend by the Bank if the total of all dividends declared by the Bank in any calendar year exceeds the total of its net profits of that year combined with the retained net profits for the preceding two years. In addition, the Federal Deposit Insurance Corporation Improvement Act of 1991 provides that the Bank cannot pay a dividend if it will cause the Bank to be “undercapitalized”. CoBiz’s ability to pay dividends on its common stock depends upon the availability of dividends from the Bank, and upon CoBiz’s compliance with the cap ital adequacy guidelines of the Board of Governors of the Federal Reserve System.

Net cash provided by operating activities totaled $11.9 million and $12.2 million for the nine months ended September 30, 2003 and 2002, respectively. The principal component of net cash provided by operating activities is net income adjusted by depreciation and amortization, provision for loan losses and changes in other assets and liabilities.

Net cash used in investing activities totaled $188.4 million and $142.6 million for the nine months ended September 30, 2003 and 2002, respectively. ; The increase in cash used in investing activities is primarily related to a significant net addition to the mortgage back security portfolio ($39.2 million), the purchase of bank owned life insurance ($10.0 million) and the acquisitions of ACMG and FDL ($1.3 million and $2.1 million, respectively), offset by a $7.1 million decrease in net loan and lease originations and repayments.

Net cash provided by financing activities totaled $178.5 million and $150.1 million for the nine months ended September 30, 2003 and 2002, respectively. The increase in net cash provided by financing activities is primarily attributed to an increase in net advances from the Federal Home Loan Bank, the $20.0 million issuance of Trust Preferred Securities, offset by redu ced cash inflows from total deposits, federal funds purchased and securities sold under agreement to repurchase during the first nine months of 2003 as compared to 2002.

Effects of Inflation and Changing Prices

The primary impact of inflation on our operations is increased operating costs. Unlike most retail or manufacturing companies, virtually all of the assets and liabilities of a financial institution such as the Bank are monetary in nature. As a result, the impact of interest rates on a financial institution’s performance is generally greater than the impact of inflation. Although interest rates do not necessarily move in the same direction, or to the same extent, as the prices of goods and services, increases in inflation generally have resulted in increased interest rates. Over short periods of time, interest rates may not move in the same direction, or at the same magnitude, as inflation.

Recent Accounting Pronouncements

	Three months ended September 30,						Nine months ended September 30,
	2003			2002			2003			2002
	(in thousands, except per share amounts)
Net income, as reported	$	3,300		$	2,483		$	9,180		$	8,244
Less: stock-based compensation determined under the fair value method	(79		)	(157		)	(318		)	(470		)
Pro forma net income	$	3,221		$	2,326		$	8,862		$	7,774
Earnings per share:
As reported - basic	$	0.24		$	0.19		$	0.68		$	0.63
As reported - diluted	$	0.23		$	0.18		$	0.65		$	0.60
Pro forma - basic	$	0.23		$	0.18		$	0.65		$	0.59
Pro forma - diluted	$	0.23		$	0.17		$	0.63		$	0.56

entities. FIN No. 46 clarifies the application of Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN No. 46 applies immediately to variable interest entities created after January 31, 2003, and to variable interest entities in which an enterprise obtains an interest after that date. It applies in the first fiscal year or interim period ending after December 15, 2003, to variable interest entities in which an enterprise holds a variable interest that it acquired before February 1, 2003. Currently, the Company’s two subsidiary trusts, Colorado Business Bankshares Capital Trust I and CoBiz Statutory Trust I, would qualify as variable interest entities. The Company does not expect the requirements of FIN No. 46 to have a material impact on its consolidated financial statements.

Forward Looking Statements

The discussion in this report contains forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. The forward-looking statements involve risks and uncertainties that affect our operations, financial performance and other factors as discussed in our filings with the Securities and Exchange Commission. These risks include the impact of economic conditions and interest rates, loan and lease losses, risks related to the execution of our growth strategy, the possible loss of key personnel, factors that could affect our ability to compete in its trade areas, changes in regulations and government policies and other factors discussed in our filings with the Securities and Exchange Commission.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

As of September 30, 2003, there have been no material changes in the quantitative and qualitative information about market risk provided pursuant to Item 305 of Regulation S-K as presented in our Form 10-K for the year ended December 31, 2002.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. The Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and the Company’s Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(e) as of September 30, 2003. Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company’s periodic Securities and Exchange Commission filings. There have been no significant changes in the Company’s internal controls or in other factors, which could significantly affect internal controls subsequent to the date the Company carried out its evaluation.

Disclosure controls and procedures are our controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our

management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control. There was no change in the Company’s internal control over financial reporting that occurred during the quarter ended September 30, 2003 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 2. Changes in Securities and Use of Proceeds

On August 12, 2003, CoBiz issued 73,818 shares of its Common Stock to three employees in exchange for shares they owned in a subsidiary company of CoBiz, CoBiz GMB, Inc. The shares were issued without registration under the Securities Act of 1933, as amended, in reliance on the exemption afforded by Section 4(2) of the Act and Regulation D promulgated thereunder.

Item 6. Exhibits and Reports on Form 8-K.

(a) Exhibits

Exhibits and Index of Exhibits.

(1)	2	Amended and Restated Agreement and Plan of Merger dated November 28, 2000.

(2)	3.1	Amended and Restated Articles of Incorporation of the Registrant.

(3)	3.2	Amendment to Articles of Incorporation.

(10)	3.3	Amendment to Articles of Incorporation

(2)	3.4	Amended and Restated Bylaws of the Registrant.

(9)	3.5	Amendment to Bylaws

(4)	4.1	Form of Indenture

(4)	4.2	Form of Subordinated Debenture (included as an exhibit to Exhibit 4.1)

(4)	4.3	Certificate of Trust

(4)	4.4	Form of Trust Agreement

(4)	4.5	Form of Amended and Restated Trust Agreement

(4)	4.6	Form of Capital Securities Certificate (included as an exhibit to Exhibit 4.5)

(4)	4.7	Form of Capital Securities Guarantee Agreement

(4)	4.8	Form of Agreement of Expenses and Liabilities (included as an exhibit to Exhibit 4.5)

(2)	10.1	CoBiz Inc. 1998 Stock Incentive Plan.

(2)	10.2	Amended and Restated CoBiz Inc. 1997 Incentive Stock Option Plan.

(2)	10.3	Amended and Restated CoBiz Inc. 1995 Incentive Stock Option Plan.

+(2)	10.4	License Agreement, dated at November 19, 1997, by and between Jack Henry & Associates, Inc. and Colorado Business Bank, N.A.

+(2)	10.5	Contract Modification, dated at November 19, 1997, by and between Jack Henry & Associates, Inc. and Colorado Business Bank, N.A.

+(2)	10.6	Computer Software Maintenance Agreement, dated at November 19, 1997, by and between Jack Henry & Associates, Inc. and Colorado Business Bank, N.A.

(2)	10.7	Employment Agreement, dated at March 1, 1995, by and between Equitable Bankshares of Colorado, Inc. and Jonathan C. Lorenz.

(2)	10.8	Employment Agreement, dated at May 8, 1995, by and between Equitable Bankshares of Colorado, Inc. and Virginia K. Berkeley.

(2)	10.9	Employment Agreement, dated at January 3, 1998, by and between CoBiz Inc. and Richard J. Dalton.

(5)	10.10	Lease Agreement between Kesef, LLC and CoBiz Inc.

(7)	10.11	First Amendment to Lease Agreement between Kesef, LLC and Colorado Business Bankshares, Inc. dated May 1, 1998.

(8)	10.12	2000 Employee Stock Purchase Plan.

(9)	10.13	2002 Equity Incentive Plan

	10.14	Employment Agreement, dated August 12, 2003, by and between CoBiz Inc. and Lyne B. Andrich.

	10.15	Employment Agreement, dated August 12, 2003, by and between CoBiz Inc. and Kevin W. Ahern.

(10)	21	List of subsidiaries

	31.1	Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer

	31.2	Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer

	32.1	Section 1350 Certification of the Chief Executive Officer

	32.2	Section 1350 Certification of the Chief Financial Officer

(1) Incorporated herein by reference from the Registrant’s Registration Statement on Form S-4 (File No. 333-51866).

(2) Incorporated herein by reference from the Registrant’s Registration Statement on Form SB-2 (File No. 333-50037).

(3) Incorporated herein by reference from the Registrant’s Current Report on Form 8-K, as filed on March 23, 2001.

(4) Incorporated herein by reference from the Registrant’s Registration Statement on Form S-1 (File No. 333-37674).

(5) Incorporated herein by reference from the Registrant’s Quarterly Report on Form 10-QSB for the quarter ended September 30, 1998, as filed on November 13, 1998.

(6) Incorporated herein by reference from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2000, as filed on May 12, 2000.

(7) Incorporated herein by reference from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2000, as filed on November 14, 2000.

(8) Incorporated herein by reference from the Registrant’s Proxy Statement filed in connection with its 2000 annual meeting of shareholders, as filed on April 19, 2000.

(9) Incorporated herein by reference from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2002, as filed on August 14, 2002.

(10) Incorporated herein by reference from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2003, as filed on May 14, 2003.

+ Confidential treatment has been granted by the Securities and Exchange Commission as to certain portions of exhibit. Such portions have been redacted.

(b) Reports on Form 8-K

On July 21, 2003 we filed a current report on Form 8-K under Item 9. Regulation FD Disclosure, reporting that we issued a press release on July 17, 2003 with the financial results for the quarter ended June 30, 2003.

On July 31, 2003 we filed a current report on Form 8-K under Item 9. Regulation FD Disclosure, reporting that we had presented information at an investor conference on July 31, 2003.

On September 18, 2003 we filed a current report on Form 8-K under Item 9. Regulation FD Disclosure, reporting that we had presented information at an investor conference on September 18, 2003

On September 19, 2003 we filed a current report on Form 8-K under Item 5. Other Events, announcing the raising of $20 million in a trust-preferred securities offering.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		COBIZ INC.



Date:	November 13, 2003	By /s/ Steven Bangert
		Steven Bangert, Chief Executive Officer and Chairman

Date:	November 13, 2003	By /s/ Lyne B. Andrich
		Lyne B. Andrich, Executive Vice President and Chief Financial Officer