COBZ

CoBiz Financial Inc. (COBZ)

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Exchange: NASDAQ
Industry: Finance
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CoBiz Financial Inc (COBZ)

Q2 2013 Earnings Call

July 19, 2013 11:00 am ET

Executives

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

Analysts

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

John Lawrence Rodis - FIG Partners, LLC, Research Division

Presentation

Operator

Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome, everyone to the CoBiz Financial Second Quarter 2013 Earnings Call. [Operator Instructions] I would now like to time the call over to Ms. Lyne Andrich, Chief Financial Officer for CoBiz Financial. Please go ahead.

Lyne B. Andrich

All right. Good morning, everyone, and thank you for joining us. Before we commence with management comments today, though, I do need to remind everyone of certain Safe Harbor disclosures.

Certain of the matters we discuss in this presentation may contain future -- forward-looking statements for the purposes of federal securities laws and, as such, may involve known and unknown risks, uncertainties and other factors, which may cause our 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 actual results to be materially different than those in the forward-looking statements can be found on our -- or with the filings with the SEC, including forms 10-Q, 10-K 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 investors. Reconciliation of these non-GAAP numbers to GAAP results are included in our earnings release, which is available on the Investor Relations website.

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

Steven Bangert

Okay. Thanks, Lyne. Welcome, everybody. Appreciate you listen to our second conference -- second quarter conference call. I have Lyne Andrich, who just spoke, and the CFO will be in the room and will also be talking later; as well as Jon Lorenz, the CEO of the bank.

Last night, we reported earnings of $0.18 versus $0.14, same quarter last year. I guess, I would phrase the quarter as just a really solid quarter for us, and that I think, it sets us up really well to have a good second half of the year and that just the momentum coming from all directions right now -- just about all directions. We'll talk about that. But, really, I think, strong loan growth continues to be very important to us. We had about 19% annualized loan growth during the quarter. You remember we had a fantastic fourth quarter of last year, kind of cleaned out the pipeline.

So we're flat during the first quarter, but it's nice to see the momentum picking up again. I think we expected that, but it's always nice to see. Puts our loans over $2 billion today. Our focus really is to continue to focus on growing our net interest income. We had some success doing that this quarter. It's going to continue to be a challenge. We saw the net interest margin came down -- came in a little bit on us during the quarter. We continue to find it a very competitive market out there, but have certainly found plenty of opportunities to book quality assets in that, and so I'm feeling really good about where we're at.

Most of the growth if not all the growth has come out of the Colorado market. I still believe that Arizona, at some point -- and I know Jon will probably speak to that -- will start to be a bigger contributor for us when it comes to loan growth. There is a certainly economic activity picking up down in the Arizona market, long term. I love that market. And I just -- I think that, that's just kind of -- will be just an additional win to our back when that market starts to contribute like the rest of the franchise in that.

I will tell you when it comes to the Arizona market though, we had -- you'll see when -- as we talk about fee-based businesses, our wealth management group has had a great quarter. And most of that has come out of the Arizona market, so even though we haven't had the loan growth, we have had some great growth in the wealth management side coming out of Arizona. So we'll continue to pedal as fast as we can on the loan side in that and see if we can offset any further net interest margin compression. And I do think looking at the pipeline of activity that we have that things look pretty good for the second half of the year, but once again, Jon, will go into that.

So besides loan growth, which I'd really think was the highlight -- one of our other primary focuses is to grow our assets under management and our fee income operating margins and -- but we're starting to see that now. Our net interest income was 26.5% of our operating income for the quarter. Really, all categories, when you look at noninterest income, were up over the previous quarter. They were up over the same quarter last year. I'm expecting even stronger fee income coming out of our fee-based businesses in the second half of the year. So I think we're really in a really good situation right now.

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