·

Income available to common shareholders increased by 45% from the first quarter of 2012.

·

The net interest margin (NIM) expanded five basis points from the fourth quarter of 2012 (linked-quarter), driven by strong loan growth in the prior linked-quarter.

·

Continued credit improvement led to a provision reversal of $1.6 million for the current quarter.

·

Seasonally softer noninterest income was recognized after a strong fourth quarter of 2012.

Quarter ended

1Q13 change vs.

(in thousands, except per share amounts)

1Q13

4Q12

1Q12

4Q12

1Q12

Net interest income before provision

$

$

$

$

(0.1)%

$

(0.5)%

Provision for loan losses

Net interest income after provision

Total noninterest income

(39.3)%

(6.4)%

Total noninterest expense

(2.7)%

(3.5)%

Net income before income taxes

(21.2)%

Provision for income taxes

(28.9)%

Income from continuing operations

(17.0)%

Discontinued operations, net of tax

(61.8)%

Net income

(19.7)%

Preferred stock dividends

(22.6)%

(28.3)%

Net income available to common shareholders

$

$

$

$

(19.4)%

$

Diluted earnings per common share

$

$

$

$

(17.6)%

$

KEY RATIOS

Net interest margin

Efficiency ratio

Return on average assets

Return on average shareholders' equity

Noninterest income as a percentage of operating revenues

·

Loans at March 31, 2013, were $1.9 billion, an increase of $247.4 million, or 14.7%, from the prior-year quarter. On a linked-quarter basis, loan growth was relatively flat.

·

The Commercial & Industrial (C&I) portfolio had the greatest growth during the period, and totaled $742.2 million, or 38.5% of total loans at March 31, 2013.

Quarter ended

1Q13 change vs.

(in thousands)

1Q13

4Q12

1Q12

4Q12

1Q12

LOANS

Commercial & industrial

$

$

$

$

$

Owner-occupied real estate

Investor real estate

Land acquisition & development

(29.0)%

(34.6)%

Real estate - construction

(30.8)%

(19.3)%

Consumer

Other

Total loans

$

$

$

$

(0.0)%

$

·

New loans of $78.6 million were added during the first quarter and advances on existing lines totaled $72.5 million. The Company believes that new credit extended during the first quarter of 2013 was tempered by the elevated level of fourth quarter 2012 activity.

·

New and advanced loans were offset by paydowns and maturities of $150.9 million during the first quarter of 2013. 

Quarter ended

(in thousands)

1Q13

4Q12

3Q12

2Q12

1Q12

Loans - beginning balance

$

$

$

$

$

New credit extended

Credit advanced

Paydowns & maturities

Gross loan charge-offs

Loans - ending balance

$

$

$

$

$

Net change - loans outstanding

$

$

$

$

$

Net change, excluding charge-offs

·

Gross credit commitments were relatively flat on a linked-quarter basis but increased by $89.9 million, or 9.2%, from March 31, 2012.

·

Total line utilization decreased to 37.9% from 38.2% on a linked-quarter basis and 40.1% at March 31, 2012; C&I line utilization rates increased to 37.7% from 36.8% on a linked-quarter basis but decreased from 40.3% at March 31, 2012.

·

The Company had investment securities available for sale with a carrying value of $545.9 million at March 31, 2013, a $12.3 million decrease from December 31, 2012. 

·

The unrealized gain on the investment portfolio increased $0.4 million from December 31, 2012 to $17.2 million at March 31, 2013. 

·

Deposit and Customer Repo balances at March 31, 2013 were $2.2 billion, an increase of $167.5 million from the prior-year quarter.  On a linked-quarter basis, customer funding seasonally declined by $67.2 million.

·

However, noninterest-bearing demand accounts held stable at 40.4% of total deposits on a linked-quarter basis and increased from 38.0% at March 31, 2012. 

Quarter ended

1Q13 change vs.

(in thousands)

1Q13

4Q12

1Q12

4Q12

1Q12

DEPOSITS AND CUSTOMER REPURCHASE AGREEMENTS

NOW and money market

$

$

$

$

(2.3)%

$

Interest-bearing demand

(0.3)%

Savings

(53.9)%

Certificates of deposits under $100,000

(0.6)%

(7.3)%

Certificates of deposits $100,000 and over

(3.1)%

(13.4)%

Reciprocal CDARS

(0.6)%

(7.2)%

Total interest-bearing deposits

(3.1)%

Noninterest-bearing demand deposits

(2.9)%

Customer repurchase agreements

(2.3)%

Total deposits and customer repurchase agreements

$

$

$

$

(3.0)%

$

·

Nonperforming assets (NPAs) were $39.2 million at March 31, 2013, as compared to $30.3 million at December 31, 2012. The increase was driven by two credits transferred to nonaccrual status during the first quarter of 2013. The credits were previously internally classified with specific allocated reserves. 

·

Although NPAs increased from the prior linked-quarter end, classified loans decreased from the linked- and prior-year quarter ends by 16.7% and 43.3%, respectively.

·

Due to the reduction in problem loans, a provision for loan loss reversal of $1.6 million was recorded during the first quarter of 2013.

·

The Company recognized net loan charge-offs of $0.4 million in the first quarter of 2013, compared to net charge-offs of $2.8 million in the first quarter of 2012 and net recoveries of $0.8 million in the fourth quarter of 2012.

·

As a result of the improvement in credit quality measures, the Allowance for Loan and Credit Losses (Allowance) to loan ratio decreased to 2.33% at March 31, 2013. 

·

The coverage of Allowance to nonperforming loans was 145.6% at March 31, 2013.

Quarter ended

(in thousands)

1Q13

4Q12

1Q12

ALLOWANCE FOR LOAN AND CREDIT LOSSES

Beginning allowance for loan losses

$

$

$

Provision for loan losses

Net recovery (charge-off)

Ending allowance for loan losses

$

$

$

Beginning allowance for credit losses

$

 -

$

$

Provision for credit losses

 -

 -

Ending allowance for credit losses

$

 -

$

 -

$

Total provision for loan and credit losses

$

$

$

CREDIT QUALITY

Nonaccrual loans

$

$

$

Loans 90 days or more past due and accruing interest

 -

Total nonperforming loans

OREO and repossessed assets

Total nonperforming assets

$

$

$

Performing renegotiated loans

$

$

$

Classified loans

$

$

$

ASSET QUALITY MEASURES

Nonperforming assets to total assets

Nonperforming loans to total loans

Nonperforming loans and OREO to total loans and OREO

Allowance for loan and credit losses to total loans (excluding loans held for sale)

Allowance for loan and credit losses to nonperforming loans

·

Total shareholders’ equity was $263.5 million at March 31, 2013, increases of $6.5 million and $23.9 million from the linked- and prior-year quarter ends, respectively, as a result of positive retained earnings.

·

Tangible common equity increased to 7.7% of tangible assets at March 31, 2013 from 7.3% at March 31, 2012.

·

The Board of Directors of the Company declared a quarterly cash dividend of $0.03 per common share. The dividend will be paid on May 6, 2013 to shareholders of record on April 29, 2013.

Quarter ended

(in thousands, except per share amounts)

1Q13

4Q12

1Q12

EQUITY MEASURES

Common shareholders' equity

$

$

$

Total shareholders' equity

Common shares outstanding at period end

Book value per common share

$

$

$

Tangible book value per common share *

$

$

$

Tangible common equity to tangible assets *

Tangible equity to tangible assets *

Tier 1 capital ratio

**

Total-risk based capital ratio

**

* See accompanying reconciliation of non-GAAP measures to GAAP

** Ratios unavailable at the time of release.

·

Net interest income on a tax-equivalent basis of $23.8 million for the first quarter of 2013 was relatively flat compared to the prior linked-quarter.

·

NIM for the first quarter of 2013 expanded by five basis points on a linked-quarter basis to 3.94%, primarily due to an improvement in the earning asset mix from strong loan growth in the prior linked-quarter.

·

Average earning assets of $2.45 billion increased $17.7 million on a linked-quarter basis. 

·

The average net loan portfolio increased $83.0 million, while average federal funds sold and interest earning deposits decreased $42.3 million, and average investments decreased $23.0 million, in each case on a linked-quarter basis.

·

The yield on average earning assets increased three basis points to 4.27% from 4.24% on a linked-quarter basis.

·

The rate paid on average interest-bearing liabilities decreased four basis points on a linked-quarter basis from 0.81% to 0.77%.

·

As a percentage of total operating revenue, noninterest income decreased to 21.8% for the first quarter of 2013 from 22.9% for the first quarter of 2012 and 31.5% reported in the linked-quarter.

·

The linked-quarter decrease in noninterest income is primarily attributable to lower investment banking revenue, as well as less income earned on the sale of customer interest rate swaps (reported in other income).

·

The decrease in noninterest income from the prior-year quarter is mainly due to lower revenue recognized on equity method investments (reported in other income).  In the first quarter of 2013, the Company recorded $0.3 million in equity method income versus $1.4 million in the first quarter of 2012.

Quarter ended

1Q13 change vs.

(in thousands)

1Q13

4Q12

1Q12

4Q12

1Q12

Noninterest income:

Deposit service charges

$

$

$

$

$

Investment advisory income

Insurance income

Investment banking income

(98.0)%

(10.8)%

Other income

(44.8)%

(34.3)%

Total noninterest income

$

$

$

$

(39.3)%

$

(6.4)%

·

The Company’s efficiency ratio for the first quarter of 2013 was 75.8% compared to 76.8% for the first quarter of 2012 and 70.3% for the fourth quarter of 2012.

·

The decrease in compensation-related expenses over the linked-quarter is attributed to reduced bonus accruals for the bank and investment banking segment corresponding with the decline in linked-quarter revenue levels. 

·

The reduction in other operating expenses from the linked- and prior-year quarters is primarily due to a reduction in loan workout and OREO expenses.

·

In the first quarter of 2013, the Company recorded a nominal net gain on OREO, investments and other assets.

Quarter ended

1Q13 change vs.

(in thousands)

1Q13

4Q12

1Q12

4Q12

1Q12

Noninterest expense:

Salaries and employee benefits

$

$

$

$

(6.7)%

$

(1.3)%

Stock-based compensation expense

Occupancy expenses, premises and equipment

(2.6)%

(3.8)%

Amortization of intangibles

Other operating expenses

(9.4)%

(7.3)%

(Gain) loss on OREO, repossessed assets and other

(71.1)%

(116.7)%

(Gain) loss on investment securities

(97.5)%

(132.4)%

Total noninterest expense

$

$

$

$

(2.7)%

$

(3.5)%

·

Risks and uncertainties described in our reports filed with the Securities and Exchange Commission, including our most recent Form 10-K.

·

Competitive pressures among depository and other financial institutions nationally and in our market areas may increase significantly.

·

Adverse changes in the economy or business conditions, either nationally or in our market areas, could increase credit-related losses and expenses and/or limit growth.

·

Increases in defaults by borrowers and other delinquencies could result in increases in our provision for losses on loans and related expenses.

·

Our ability to manage growth effectively, including the successful expansion of our customer support, administrative infrastructure and internal management systems, could adversely affect our results of operations and prospects.

·

Fluctuations in interest rates and market prices could reduce our net interest margin and asset valuations and increase our expenses.

·

Our net interest margin may be negatively impacted if we are unable to profitably deploy excess cash into higher yielding loans or investments.

·

The consequences of continued bank acquisitions and mergers in our market areas, resulting in fewer but much larger and financially stronger competitors, could increase competition for financial services to our detriment.

·

Our continued growth will depend in part on our ability to enter new markets successfully and capitalize on other growth opportunities.

·

Changes in legislative or regulatory requirements applicable to us and our subsidiaries and implementation of current legislative or regulatory requirements could increase costs, limit certain operations and adversely affect results of operations.

·

Changes in tax requirements, including tax rate changes, new tax laws and revised tax law interpretations may increase our tax expense or adversely affect our customers' businesses.

CoBiz Financial Inc.

March 31, 2013

(unaudited)

Three months ended March 31,

(in thousands, except per share amounts)

2013

2012

INCOME STATEMENT DATA

Interest income

$

$

Interest expense

NET INTEREST INCOME BEFORE PROVISION

Provision for loan losses

NET INTEREST INCOME AFTER PROVISION

Noninterest income

Noninterest expense

INCOME BEFORE INCOME TAXES

Provision for income taxes

NET INCOME FROM CONTINUING OPERATIONS

Income from discontinued operations, net of tax

NET INCOME

$

$

Preferred stock dividends

NET INCOME AVAILABLE TO COMMON SHAREHOLDERS

$

$

EARNINGS PER COMMON SHARE

BASIC

$

$

DILUTED

$

$

EQUITY MEASURES

Common shares outstanding at period end (in thousands)

Book value per common share

$

$

Tangible book value per common share *

$

$

Tangible common equity to tangible assets *

Tangible equity to tangible assets *

* See accompanying Non-GAAP reconciliation.

PERIOD END BALANCES

Total assets

$

$

Loans

Intangible assets

Deposits

Subordinated debentures

Common shareholders' equity

Total shareholders' equity

Interest-earning assets

Interest-bearing liabilities

BALANCE SHEET AVERAGES

Average assets

$

$

Average loans

Average deposits

Average subordinated debentures

Average shareholders' equity

Average interest-earning assets

Average interest-bearing liabilities

CoBiz Financial Inc.

March 31, 2013

(unaudited)

Three months ended March 31,

(in thousands)

2013

2012

PROFITABILITY MEASURES

Net interest margin

Efficiency ratio

Return on average assets

Return on average shareholders' equity

Noninterest income as a percentage of operating revenues

CREDIT QUALITY

Nonperforming loans

Nonaccrual loans

$

$

Loans 90 days or more past due and accruing interest

 -

Total nonperforming loans

OREO & repossessed assets

Total nonperforming assets

$

$

Performing renegotiated loans

$

$

Classified loans

$

$

Charge-offs

$

$

Recoveries

Net charge-offs

$

$

Nonperforming assets to total assets

Nonperforming loans to total loans

Nonperforming loans and OREO to total loans and OREO

Allowance for loan and credit losses to total loans

Allowance for loan and credit losses to nonperforming loans

Total

NPAs as a

NONPERFORMING ASSETS BY MARKET

Colorado

Arizona

Total

in Category

%

Commercial

$

$

$

$

Real estate - mortgage

Land acquisition & development

Real estate - construction

 -

Consumer

Other loans

 -

OREO & repossessed assets

-

NPAs

$

$

$

$

Total loans

$

$

$

Total loans and OREO

Nonperforming loans to loans

Nonperforming loans and OREO to total loans and OREO

CoBiz Financial Inc.

March 31, 2013

(unaudited)

Three months ended

March 31,

December 31,

September 30,

June 30,

March 31,

(in thousands)

2013

2012

2012

2012

2012

COMMERCIAL BANKING

Income Statement

Total interest income

$

$

$

$

$

Total interest expense

Net interest income

Provision for loan losses

Net interest income (loss) after provision

Noninterest income

Noninterest expense

Operating income

Amortization of intangibles

 -

 -

 -

 -

 -

Provision (benefit) for income taxes

Net income (loss) before management

   fees and overhead allocations

$

$

$

$

$

Management fees and overhead

  allocations, net of tax

Net income

$

$

$

$

$

INVESTMENT BANKING

Income Statement

Total interest income

$

$

$

$

$

Total interest expense

 -

 -

 -

 -

 -

Net interest income

Provision for loan losses

 -

 -

 -

 -

 -

Net interest income (loss) after provision

Noninterest income

Noninterest expense