CoBiz Financial Inc. (COBZ)

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CoBiz Financial Inc (COBZ)

Q1 2013 Earnings Call

April 19, 2013 11:00 am ET


Lyne B. Andrich - Chief Financial Officer, Executive Vice President and Director of Cobiz Insurance Inc

Steven Bangert - Chairman, Chief Executive Officer, Chairman of Executive Committee, Chairman of Cobiz Bank NA, Director of Cobiz Gmb Inc, Director of Financial Designs Ltd, Director of Colorado Business Leasing Inc, Director of Cobiz Insurance Inc and Director of Alexander Capital Management Group LLC

Jonathan C. Lorenz - Chief Executive Officer of Colorado Business Bank and Chief Executive Officer of Arizona Business Bank


Joe Morford - RBC Capital Markets, LLC, Research Division

Brian James Zabora - Keefe, Bruyette, & Woods, Inc., Research Division

Timothy O'Brien - Sandler O'Neill + Partners, L.P., Research Division

Gary P. Tenner - D.A. Davidson & Co., Research Division



Good morning, afternoon, evening. My name is Kayla, and I will be your conference operator today. At this time, I would like to welcome everyone to the CoBiz Financial's First Quarter 2013 Earnings Conference Call. [Operator Instructions] Thank you.

I would now like to hand the call over to Ms. Lyne Andrich, Chief Financial Officer. Please go ahead, ma'am.

Lyne B. Andrich

All right, thank you. And good morning, everyone. Before we commence with management comments today, I do need to remind everyone of our Safe Harbor disclosures.

Certain of the matters discussed in this presentation may constitute forward-looking statements for the purposes of the federal securities laws and, as such, may involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of CoBiz to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Additional information concerning factors that could cause our results to be materially different than those in the forward-looking statements can be found in the company's filings with the SEC, including forms 10-K, 10-Q and other reports and statements we have filed with the SEC. All forward-looking statements are expressly qualified in their entirety by these cautionary statements.

Also on today's call, our speakers may reference certain non-GAAP financial measures, which we believe provide useful information for our investors. Reconciliation of these non-GAAP numbers to GAAP results are included in our earnings release, which is available on our -- in Investor Relations website.

I would now like to introduce Steve Bangert, Chairman and CEO of CoBiz.

Steven Bangert

Thanks, Lyne. And welcome, everybody, to our First Quarter Conference Call. I'll have a few comments, and then I'll turn it back to Lyne to do a deeper dive into the financials, and also ask Jon Lorenz, our CEO, who's sitting with us, to give you an overview of kind of activities that we're seeing in the marketplace as well as at the bank itself.

Last night, we reported $0.14 per share. That's comparable to $0.10 per share same quarter last year. We reported $0.14 -- or $0.17 in the fourth quarter of last year, but our fourth quarter typically has seasonally high fee income, as it did last year also. In many ways, this quarter is typical first quarter for CoBiz. We'd typically start kind of slow out of the gates and gain momentum as the year progresses, and that is, our fee income picks up. And also, lending activity is expected to pick up considerably as the year progresses.

For comparison purposes, fee income in 2012 was unusually high because of investments in the mezzanine income. But other than that, I think, when you compare our first quarter this year to first quarter last year, I think you can see that we're making some progress. And I'm feeling pretty good about where we're at today.

Loans, although they were flat for the quarter, we really emptied the pipeline in the fourth quarter. Those of you that remember the fourth quarter, we had an exceptional fourth quarter, and that really -- at the time, I think we said in the last conference call that we had emptied the pipeline and we're starting to build it again. I feel pretty good about where both pipelines are in both states today, and I'm looking forward to growth over the next 3 quarters on that.

Still very competitive. I'm sure Jon will talk about that but in -- in that it seems to be consistent with what I've heard from other bank reports, as they've reported during the week, and that nothing's changed as far as the competitive market is concerned. It's still very, very competitive out there.

Our fee income, I think you'll see that continue to grow as the year progresses. Wealth Management had an excellent first quarter, as far as gathering assets. Our employee benefit group has really had an exceptional year. You'll see their revenues improve as the year proceeds. Investment Banking, unfortunately no closed transactions during the quarter, but we are anticipating their revenues to continue to grow significantly as the year progresses. But once again, it could be heavily weighted towards the third and fourth quarter this year.

I thought that -- probably the thing that pleased us the most was the margin. You saw, instead of margin compression that we've been experiencing over the last few quarters, and that seems to be typical for our industry, we actually had some NIM expansion. I think it was about 5 basis points. But I -- looking forward, I still think margins can be our biggest challenge as we head into the rest of the year and that, will we be able to grow the loan portfolio sufficiently enough to offset the continued competitive pressure that we're feeling on our yields on new loan activity as well as payoffs from our existing portfolio.

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