Greater Bay Bancorp (Nasdaq:GBBK), a $7.3 billion in assets
financial services holding company, today announced results for the
third quarter and nine months ended September 30, 2006. For the
third quarter of 2006, the Company�s net income was $18.5 million,
or $0.32 per diluted common share, compared to $25.6 million, or
$0.44 per diluted common share, for the third quarter of 2005, and
$25.1 million, or $0.46 per diluted common share, for the second
quarter of 2006. For the first nine months of 2006, net income was
$69.5 million, or $1.24 per diluted common share, compared to $69.8
million, or $1.16 per diluted common share for the first nine
months of 2005. Operating results for the quarter reflected the
recognition of approximately $7.0 million of notable expenses which
included the following: $3.2 million of unamortized debt issuance
costs that were written off in connection with the redemption of
trust preferred securities in August 2006; $2.5 million in combined
expenses related to the rebranding of regional banking identities,
consulting costs related to the previously disclosed self-initiated
review of historical stock option practices, and transitional costs
related to the outsourcing of the Company�s mainframe data
processing operations; and $1.3 million in costs at ABD related to
severance and expenses associated with the opening of ABD�s new
office in Oregon. For the third quarter of 2006, the Company�s
return on average common equity, annualized, was 10.15% compared to
15.13% for the third quarter of 2005, and 14.29% for the second
quarter of 2006. Return on average common equity, annualized, for
the first nine months of 2006 was 13.22% compared to 13.96% for the
same period in 2005. Return on average assets, annualized, for the
third quarter of 2006 was 1.00% compared to 1.41% for the third
quarter of 2005, and 1.41% for the second quarter of 2006. Return
on average assets, annualized, was 1.29% for the first nine months
of 2006 compared to 1.32% for the same period in 2005. �Our
performance for the quarter was marked by the confluence of several
non-core or otherwise notable expenses which impacted our bottom
line results,� stated Byron A. Scordelis, President and Chief
Executive Officer of Greater Bay Bancorp. �On a more sustained
basis, we are pleased to note the continuation of both solid loan
growth and exemplary credit quality during the most recent period.
In the insurance brokerage area, organic revenue growth was once
again favorable at ABD, and the Bank successfully completed the
outsourcing of its mainframe operations which will contribute to
our broader and ongoing cost reduction efforts in the future.�
�While period-end core deposit totals once again declined,
effectively all of that reduction occurred in the volatile title
company, venture capital, and 1031 exchange specialty deposit areas
which extended a cyclical trend that has been evident for several
quarters,� Mr. Scordelis continued. �With both the growth and
quality of our loan portfolio well in hand, we are intently focused
on operating expense containment as well as long term growth and
value in our core deposit base as being key elements to drive our
future earnings performance.� Net Interest Income and Margin Net
interest income for the third quarter of 2006 decreased to $63.8
million from $68.0 million in the third quarter of 2005, and
decreased from $65.8 million in the second quarter of 2006. Net
interest income for the first nine months of 2006 decreased to
$196.2 million from $199.5 million for the same period of 2005. The
net interest margin (on a fully tax-equivalent basis) for the third
quarter of 2006 was 3.97%, compared to 4.32% for the third quarter
of 2005 and 4.26% for the second quarter of 2006. The net interest
margin (on a fully tax equivalent basis) for the first nine months
of 2006 was 4.20% compared to 4.34% for the same period in 2005.
�About half of the third quarter reduction in net interest margin
resulted from the combined effect of continued loan growth, core
deposit attrition, and upward pressure on core deposit costs,�
stated James Westfall, Executive Vice President and Chief Financial
Officer. �The remaining change largely resulted from growth in our
investment portfolio, a period-to-period decline in deferred
interest recognition and prepayment fees, and a temporary increase
in cash and cash equivalents. We currently anticipate that our
margin for the fourth quarter will remain stabilized at or near
third quarter levels which has been reflected in our revised margin
outlook for the full year,� he concluded. Non-Interest Income
Non-interest income for the third quarter of 2006 increased to
$55.5 million compared to $54.5 million in the third quarter of
2005. This change was primarily attributable to a $1.8 million
increase in insurance brokerage commissions and fees. Non-interest
income for the third quarter of 2006 decreased by $1.3 million
compared to the second quarter of 2006. This reduction was
primarily attributable to a $3.6 million reduction in warrant
portfolio income, partially offset by a $1.5 million increase in
insurance commissions and fees. Non-interest income for the first
nine months of 2006 increased to $172.3 million from $158.9 million
for the same period of 2005. This change was primarily attributable
to an increase in insurance brokerage commissions and fees of $9.6
million and an increase in other income of $3.6 million including
$3.9 million of warrant portfolio appreciation. Non-interest income
as a percentage of total revenues for the third quarter of 2006 was
46.5%, compared to 44.5% for the third quarter of 2005 and 46.3%
for the second quarter of 2006. Non-interest income as a percentage
of total revenues for the first nine months of 2006 was 46.7%,
compared to 44.3% for the same period one year ago. �We are
encouraged by the continued revenue growth being achieved by ABD in
the face of ongoing pressures on premium levels in the property and
casualty and workers� compensation areas,� commented Mr. Scordelis.
�Of equal significance, ABD entered the Oregon market by opening a
new office in Eugene during the quarter, continuing ABD�s progress
in implementing its strategic objective of achieving a preeminent
presence and share position on the West Coast.� Operating Expenses
Operating expenses for the third quarter of 2006 increased to $91.1
million from $84.6 million in the third quarter of 2005. Operating
expenses for the third quarter of 2006 increased to $91.1 million
from $84.5 million in the second quarter of 2006. This expense
growth was primarily attributable to the following: Write-off of
$3.2 million in unamortized debt issuance costs associated with the
redemption of trust preferred securities, Combined costs of $2.5
million associated with the rebranding of banking identities,
consulting costs related to the previously disclosed self-initiated
review of historical stock option practices, and outsourcing of the
Company�s mainframe computer operations, and Costs of $1.3 million
at ABD related to severance and expenses associated with the
opening of its new office in Oregon. Operating expenses for the
first nine months of 2006 increased to $267.7 million from $249.7
million for the first nine months of 2005. In addition to the items
noted above, expense growth during this period was also
attributable to: Expenses of $10.2 million representing the full
year impact in 2006 of expenses resulting from the Lucini/Parish
acquisition in May 2005 and ABD�s opening of new office locations
in San Diego and Denver, and Expenses of $2.3 million due to
accelerated vesting of restricted stock and adoption of FAS 123R.
�In the current cyclical period of margin and revenue pressure,
cost rationalization is clearly of increased importance. As a
result of focused expense reduction initiatives currently underway,
we fully expect total normalized core operating expenses to
decrease in 2007 from actual 2006 levels,� stated Mr. Scordelis.
Credit Quality Overview Net loan charge-offs in the third quarter
of 2006 were $0.2 million, or 0.02% of average loans, annualized,
compared to $3.1 million, or 0.26% of average loans, for the third
quarter of 2005 and $2.7 million, or 0.23% of average loans, for
the second quarter of 2006. Net loan charge-offs for the first nine
months of 2006 were $2.9 million, or 0.08% of average loans,
annualized, compared to $10.1 million or 0.29% for the same period
in 2005. Provision for credit losses was a negative provision of
$0.4 million for the third quarter of 2006, compared to a negative
provision of $3.4 million for the third quarter of 2005, and a
negative provision of $1.9 million for the second quarter of 2006.
The provision for the first nine months of 2006 was a negative $8.3
million, compared to a negative $2.8 million for the first nine
months of 2005. Non-performing assets were $29.7 million at
September 30, 2006, compared to $73.1 million at September 30, 2005
and $32.6 million at June 30, 2006. The ratio of non-performing
assets to total assets was 0.40% at September 30, 2006, compared to
1.03% at September 30, 2005 and 0.44% at June 30, 2006. The ratio
of non-accrual loans to total loans was 0.60% at September 30,
2006, compared to 1.53% at September 30, 2005 and 0.68% at June 30,
2006. Allowance for loan and lease losses was $71.3 million, or
1.48% of total loans at September 30, 2006, compared to $92.9
million, or 1.98% of total loans, at September 30, 2005 and $71.7
million, or 1.50% of total loans, at June 30, 2006. �We continue to
be pleased with the quality of our credit portfolio,� commented Mr.
Scordelis. �Non-performing loan levels continued their downward
trend, and now stand fully sixty percent below the dollar level of
one year ago. Net charge-offs were also extremely well contained.
An assessment of these and other key credit metrics gave rise to
our decision to favorably adjust our guidance in this area for the
full year of 2006,� he concluded. Balance Sheet At September 30,
2006, total assets were $7.3 billion, total net loans were $4.8
billion, total securities were $1.6 billion, and total deposits
were $5.1 billion. Total loans net of deferred costs and fees
increased by $149.6 million from September 30, 2005 to September
30, 2006. This growth reflects increases of $143.4 million in real
estate construction and land loans, and $131.0 million in
commercial loans. These increases were partially offset by
decreases of $70.1 million in the commercial term real estate loan
portfolio, $38.6 million in real estate other and $36.9 million in
consumer and other loans. Total loans net of deferred costs and
fees increased by $61.7 million from June 30, 2006 to September 30,
2006, representing an annualized growth rate of 5.12% for the
quarter. This growth reflects an increase of $63.9 in commercial
loans and $22.0 million in commercial term real estate loans,
partially offset by decreases of $22.7 million in consumer and
other loans and $9.0 million in construction and land loans. �We
are pleased with our fourth consecutive quarter of core loan
expansion, particularly since this growth was once again
concentrated in the targeted area of commercial lending. With our
specialty finance business activity remaining strong and our
community banking business posting tangible growth during the
period, we continue to track to the expectations reflected in our
existing guidance,� indicated Mr. Scordelis. Securities totaled
$1.6 billion as of September 30, 2006, compared to $1.5 billion at
September 30, 2005 and $1.6 billion at June 30, 2006. Core deposits
(excluding institutional and brokered deposits) at September 30,
2006 decreased by $479.8 million compared to September 30, 2005 and
decreased by $154.6 million compared to June 30, 2006. According to
Mr. Scordelis, �While core deposit levels continue to be affected
by the volatility of large specialty accounts and upward pressure
on core deposit costs, we are encouraged that money market account
totals in our community banking area remained virtually flat during
the quarter. Given this overall challenging environment, we have
redoubled our focus on steps aimed at ensuring the restoration of
well-priced growth in our deposit portfolio,� he added. Capital
Overview The capital ratios of Greater Bay Bancorp and its
subsidiary bank continue to exceed minimum well-capitalized
guidelines established by bank regulatory agencies. The Company�s
common equity to assets ratio was 10.01% at September 30, 2006,
compared to 9.43% at September 30, 2005 and 9.66% at June 30, 2006.
The Company�s tangible common equity to tangible assets ratio was
6.34% at September 30, 2006, compared to 5.58% at September 30,
2005 and 5.96% at June 30, 2006. Other Matters In September 2006,
the SEC staff issued Staff Accounting Bulletin No. 108,
�Considering the Effects of Prior Year Misstatements when
Quantifying Misstatements in Current Year Financial Statements�
(SAB 108). The Company will adopt SAB 108 as of December 31, 2006
and initially apply its provisions using the cumulative effect
transition method in connection with the preparation of its annual
financial statements for the year ending December 31, 2006. Upon
adoption of SAB 108, the Company expects to increase net income for
the year ending December 31, 2006 by approximately $1.3 million
and, as of January 1, 2006, record an increase to common stock of
approximately $3.4 million and a reduction in retained earnings of
approximately $4.7 million. The increase in net income results from
the reversal of entries recorded during the first and second
quarters of 2006 to correct immaterial errors related to periods
prior to 2006. The increase in common stock relates to previously
uncorrected errors in recording tax benefits arising from stock
option tax deductions during the years 1996 through 2005. Outlook
for 2006 Our full year guidance for 2006 has been updated as
follows: Core Loan Growth � based on the current forecast of
moderate economic growth in our primary market area, we anticipate
core loan portfolio growth in the mid to high single digit range.
Core Deposit Growth � we do not currently contemplate a near-term
recovery of the core deposit outflow experienced in the first nine
months of 2006, and now expect core deposit totals to remain flat
for the balance of the year relative to the quarter end balance at
September 30, 2006. Credit Quality � based on our continued credit
risk management and the current economic outlook, we anticipate
full year net charge-offs to range from 12 basis points to 15 basis
points of average loans outstanding. Net Interest Margin � based on
the Company�s anticipated core loan growth and core deposit
stability and its neutral interest rate sensitivity position, we
expect the full year margin level to fluctuate in the 4.10% to
4.15% range. Conference Call The Company will broadcast its
earnings conference call live via the Internet at 8:00 a.m. (PST)
on Monday, October 30, 2006. Participants may access this
conference call through the Company�s website at
http://www.gbbk.com, under the �Investor Info� link, or through
http://www.earnings.com. You should go to either of these websites
15 minutes prior to the start of the call, as it may be necessary
to download audio software to hear the conference call. A replay of
the conference call will be available on the websites. A telephone
replay will also be available beginning at 11:00 a.m. PST on
October 30, 2006 through 9:00 p.m. PST on November 6, 2006, by
dialing 800-642-1687 or 706-645-9291 and providing Conference ID
9745265. About Greater Bay Bancorp Greater Bay Bancorp, a
diversified financial services holding company, provides community
banking services in the Greater San Francisco Bay Area through
Greater Bay Bank, N.A.�s community banking organization, including
Bank of Petaluma, Coast Commercial Bank, Golden Gate Bank,
Mid-Peninsula Bank, Mt. Diablo National Bank, Peninsula Bank of
Commerce and Santa Clara Valley National Bank. Nationally, Greater
Bay Bancorp provides specialized leasing and loan services through
its specialty finance group, which includes Matsco, CAPCO and
Greater Bay Capital. ABD Insurance and Financial Services, the
Company�s insurance brokerage subsidiary, provides commercial
insurance brokerage, employee benefits consulting and risk
management solutions to business clients throughout the United
States. Safe Harbor Certain matters discussed in this press release
constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These
forward-looking statements relate to the Company�s current
expectations regarding future operating results, net interest
margin, net loan charge-offs, asset quality, level of loan loss
reserves, growth in loans and deposits, the strength of the local
economy and the Company�s intent to adopt SAB 108 as of December
31, 2006. These forward-looking statements are subject to certain
risks and uncertainties that could cause the actual results,
performance or achievements to differ materially from those
expressed, suggested or implied by the forward-looking statements.
These risks and uncertainties include, but are not limited to: (1)
the impact of changes in interest rates, a decline in economic
conditions at the local, national and international levels and
increased competition among financial service providers on the
Company�s results of operations and the quality of the Company�s
earning assets; (2) government regulation, including ABD�s receipt
of requests for information from state insurance commissioners and
subpoenas from state attorneys general related to the ongoing
insurance industry-wide investigations into contingent commissions
and override payments; and (3) the other risks set forth in the
Company�s reports filed with the Securities and Exchange
Commission, including its Annual Report on Form 10-K for the year
ended December 31, 2005. Greater Bay does not undertake, and
specifically disclaims, any obligation to update any
forward-looking statements to reflect occurrences or unanticipated
events or circumstances after the date of such statements. For
additional information and press releases about Greater Bay
Bancorp, visit the Company�s website at http://www.gbbk.com.
GREATER BAY BANCORP September 30, 2006 - FINANCIAL SUMMARY
(UNAUDITED) (Dollars and shares in 000's, except per share data) �
� � � � � � � SELECTED QUARTERLY CONSOLIDATED OPERATING DATA: �
Third Second First Fourth Third Quarter Quarter Quarter Quarter
Quarter 2006� 2006� 2006� 2005� 2005� Interest income $ 113,916� $
108,321� $ 103,754� $ 102,225� $ 100,710� Interest expense 50,142�
42,487� 37,134� 34,478� 32,714� Net interest income before
(recovery of) / provision for credit losses 63,774� 65,834� 66,620�
67,747� 67,996� (Recovery of) / provision for credit losses (443)
(1,886) (6,004) (10,491) (3,352) Net interest income after
(recovery of) / provision for credit losses 64,217� 67,720� 72,624�
78,238� 71,348� � Non-interest income: Insurance commissions and
fees 41,757� 40,235� 44,969� 37,071� 39,974� Rental revenue on
operating leases 4,632� 4,790� 5,264� 4,906� 4,901� Service charges
and other fees 2,363� 2,368� 2,540� 2,533� 2,496� Loan and
international banking fees 1,960� 1,718� 1,795� 1,919� 1,663�
Income on bank owned life insurance 2,038� 1,922� 1,911� 1,869�
1,877� Trust fees 1,059� 1,127� 1,055� 1,101� 1,074� Gains on sale
of loans (14) -� -� 172� 100� Security gains, net 40� 5� 168� -�
43� Other income 1,617� 4,605� 2,331� 3,438� 2,361� Total
non-interest income 55,452� 56,770� 60,033� 53,009� 54,489� �
Operating expenses: Compensation and benefits 52,548� 51,500�
57,929� 51,455� 50,745� Occupancy and equipment 11,896� 12,241�
11,322� 11,285� 11,278� Legal costs and other professional fees
5,074� 3,884� 3,753� 5,295� 4,671� Depreciation - operating leases
3,665� 3,917� 4,091� 4,013� 4,108� Amortization of intangibles
1,678� 1,689� 1,640� 1,835� 1,886� Other expenses 16,220� 11,255�
13,379� 12,476� 11,936� Total operating expenses 91,081� 84,486�
92,114� 86,359� 84,624� � Income before provision for income taxes
and cumulative effect of accounting change 28,588� 40,004� 40,543�
44,888� 41,213� Provision for income taxes 10,076� 14,886� 14,772�
17,433� 15,626� Income before cumulative effect of accounting
change 18,512� 25,118� 25,771� 27,455� 25,587� Cumulative effect of
accounting change, net of tax (1) -� -� 130� -� -� Net income $
18,512� $ 25,118� $ 25,901� $ 27,455� $ 25,587� � � � � � � � � � �
EARNINGS PER SHARE DATA: Net Income per common share before
cumulative effect of accounting change (2) Basic $ 0.33� $ 0.46� $
0.48� $ 0.51� $ 0.47� Diluted $ 0.32� $ 0.46� $ 0.46� $ 0.48� $
0.44� � Net Income per common share after cumulative effect of
accounting change (2) Basic $ 0.33� $ 0.46� $ 0.48� $ 0.51� $ 0.47�
Diluted $ 0.32� $ 0.46� $ 0.46� $ 0.48� $ 0.44� � Weighted average
common shares outstanding 50,423� 50,188� 49,802� 50,251� 50,698�
Weighted average common & potential common shares outstanding
51,366� 51,173� 52,727� 53,370� 54,010� � GAAP ratios Return on
quarterly average assets, annualized 1.00% 1.41% 1.47% 1.53% 1.41%
Return on quarterly average common shareholders' equity, annualized
10.15% 14.29% 15.42% 16.25% 15.13% Return on quarterly average
total equity, annualized 8.89% 12.47% 13.39% 14.09% 13.12% Net
interest margin, annualized (3) 3.97% 4.26% 4.35% 4.36% 4.32%
Operating expense ratio, annualized (4) 4.92% 4.75% 5.24% 4.81%
4.67% Efficiency ratio (5) 76.39% 68.91% 72.73% 71.52% 69.09% �
NON-GAAP ratios Efficiency ratio (excluding ABD & other ABD
expenses paid by holding company) (6) 69.63% 59.53% 67.76% 62.31%
59.50% � � � � (1) Effective January 1, 2006, the Company adopted
SFAS No.123 (revised 2004), Share-Based Payment ("SFAS 123R"), as a
result of which the Company recognized a one-time cumulative
adjustment, to record an estimate of future forfeitures on
outstanding equity based awards for which compensation expense had
been recognized prior to adoption. � (2) The following table
provides a reconciliation of income available to common
shareholders before and after cumulative effect of accounting
change. Additionally, the Company's outstanding convertible
preferred stock was antidilutive for all periods presented. �
Income before cumulative effect of accounting change as reported $
18,512� $ 25,118� $ 25,771� $ 27,455� $ 25,587� Less: dividends on
convertible preferred stock (1,832) (1,822) (1,832) (1,825) (1,834)
Income available to common shareholders before cumulative effect of
accounting change 16,680� 23,296� 23,939� 25,630� 23,753� Add:
CODES interest and other related income/(loss), net of taxes -� -�
59� (99) 76� Income available to common shareholders before
cumulative effect of accounting change 16,680� 23,296� 23,998�
25,531� 23,829� Cumulative effect of accounting change, net of tax
-� -� 130� -� -� Income available to common shareholders after
cumulative effect of accounting change $ 16,680� $ 23,296� $
24,128� $ 25,531� $ 23,829� � Weighted average common shares
outstanding 50,423� 50,188� 49,802� 50,251� 50,698� Weighted
average potential common shares: Stock options 943� 985� 946� 939�
878� CODES due 2024 -� -� 1,979� 2,180� 2,426� CODES due 2022 -� -�
-� -� 8� Total weighted average common & potential common
shares outstanding 51,366� 51,173� 52,727� 53,370� 54,010� � (3)
Net interest income (on a tax equivalent basis) for the period,
annualized and divided by average quarterly interest earning assets
for the period. � (4) Total operating expenses for the period,
annualized and divided by average quarterly assets. � (5) Total
operating expenses divided by total revenue (the sum of net
interest income and non-interest income, excluding provision for
credit losses). � (6) Total operating expenses less ABD operating
expenses divided by total revenue less ABD revenue. The following
table provides the information for calculating the efficiency ratio
excluding ABD: � Revenue (excluding ABD) $ 77,083� $ 82,180� $
81,183� $ 83,614� $ 81,796� Operating expenses (excluding ABD &
other ABD expenses paid by holding company) $ 53,670� $ 48,922� $
55,010� $ 52,102� $ 48,667� GREATER BAY BANCORP September 30, 2006
- FINANCIAL SUMMARY (UNAUDITED) (Dollars and shares in 000's,
except per share data) � � � � � � SELECTED QUARTERLY CONSOLIDATED
OPERATING DATA: � Nine Months Ended September 30, 2006� 2005�
Interest income $ 325,991� $ 288,558� Interest expense 129,763�
89,095� Net interest income before (recovery of) / provision for
credit losses 196,228� 199,463� (Recovery of) / provision for
credit losses (8,333) (2,778) Net interest income after (recovery
of) / provision for credit losses 204,561� 202,241� � Non-interest
income: Insurance commissions and fees 126,961� 117,319� Rental
revenue on operating leases 14,686� 13,396� Service charges and
other fees 7,271� 7,915� Loan and international banking fees 5,473�
5,789� Income on bank owned life insurance 5,871� 5,679� Trust fees
3,241� 3,200� Gains on sale of loans (14) 306� Security gains, net
213� 342� Other income 8,553� 4,977� Total non-interest income
172,255� 158,923� � Operating expenses: Compensation and benefits
161,977� 149,202� Occupancy and equipment 35,459� 32,838� Legal
costs and other professional fees 12,711� 12,720� Depreciation -
operating leases 11,673� 11,213� Amortization of intangibles 5,007�
6,041� Other expenses 40,854� 37,688� Total operating expenses
267,681� 249,702� � Income before provision for income taxes and
cumulative effect of accounting change 109,135� 111,462� Provision
for income taxes 39,734� 41,690� Income before cumulative effect of
accounting change 69,401� 69,772� Cumulative effect of accounting
change, net of tax (1) 130� -� Net income $ 69,531� $ 69,772� � � �
� � � � � EARNINGS PER SHARE DATA: Net Income per common share
before cumulative effect of accounting change (2) Basic $ 1.27� $
1.26� Diluted $ 1.24� $ 1.16� � Net Income per common share after
cumulative effect of accounting change (2) Basic $ 1.28� $ 1.26�
Diluted $ 1.24� $ 1.16� � Weighted average common shares
outstanding 50,159� 50,891� Weighted average common & potential
common shares outstanding 51,536� 55,824� � GAAP ratios Return on
YTD average assets, annualized 1.29% 1.32% Return on YTD common
shareholders' equity, annualized 13.22% 13.96% Return on YTD
average total equity, annualized 11.53% 12.09% Net interest margin,
annualized (3) 4.20% 4.34% Operating expense ratio, annualized (4)
4.97% 4.72% Efficiency ratio (5) 72.64% 69.67% � NON-GAAP ratios
Efficiency Ratio (excluding ABD & other ABD expenses paid by
holding company) (6) 65.55% 62.53% � � � � � (1) Effective January
1, 2006, the Company adopted SFAS No.123 (revised 2004),
Share-Based Payment ("SFAS 123R"), as a result of which the Company
recognized a one-time which the Company recognized a one-time
cumulative adjustment, to record an estimate of future forfeitures
on outstanding equity based awards for which compensation expense
had been recognized prior to adoption. � (2) The following table
provides a reconciliation of income available to common
shareholders before and after cumulative effect of accounting
change. Additionally, the Company's outstanding convertible
preferred stock was antidilutive for all periods presented. �
Income before cumulative effect of accounting change as reported $
69,401� $ 69,772� Less: dividends on convertible preferred stock
(5,486) (5,515) Net Income available to common shareholders before
cumulative effect of accounting change 63,915� 64,257� Add: CODES
interest and other related income/(loss), net of taxes 59� 366�
Income available to common shareholders before cumulative effect of
accounting change 63,974� 64,623� Cumulative effect of accounting
change, net of tax 130� -� Income available to common shareholders
after cumulative effect of accounting change $ 64,104� $ 64,623� �
� Weighted average common shares outstanding 50,159� 50,891�
Weighted average potential common shares: Stock options 725� 927�
CODES due 2024 652� 3,993� CODES due 2022 -� 13� Total weighted
average common & potential common shares outstanding 51,536�
55,824� � (3) Net interest income (on a tax equivalent basis) for
the period, annualized and divided by average quarterly interest
earning assets for the period. � (4) Total operating expenses for
the period, annualized and divided by average quarterly assets. �
(5) Total operating expenses divided by total revenue (the sum of
net interest income and non-interest income, excluding provision
for credit losses). � (6) Total operating expenses less ABD
operating expenses divided by total revenue less ABD revenue. The
following information is for calculating the efficiency ratio
excluding ABD: � Revenue (Excluding ABD) $ 240,446� $ 239,730�
Operating Expenses (Excluding ABD & other ABD expenses paid by
holding company) $ 157,602� $ 149,904� GREATER BAY BANCORP
September 30, 2006 - FINANCIAL SUMMARY (UNAUDITED) (Dollars in
000's) � � � � � � � � � SELECTED CONSOLIDATED FINANCIAL CONDITION
DATA AND RATIOS: � Sep 30 Jun 30 Mar 31 Dec 31 Sep 30 2006� 2006�
2006� 2005� 2005� Cash and cash equivalents $ 160,572� $ 198,716� $
167,203� $ 152,153� $ 153,284� Fed funds sold -� 36,000� -� -�
20,000� Securities 1,572,109� 1,565,732� 1,468,123� 1,493,584�
1,487,935� Loans: Commercial (1) 2,136,235� 2,072,334� 2,046,402�
2,052,049� 2,005,198� Term real estate - commercial 1,362,794�
1,340,762� 1,389,635� 1,389,329� 1,432,939� Total commercial (1)
3,499,029� 3,413,096� 3,436,037� 3,441,378� 3,438,137� Real estate
construction and land 753,416� 762,409� 688,086� 644,883� 609,969�
Residential mortgage 277,038� 275,332� 271,658� 266,263� 258,268�
Real estate other 223,373� 217,889� 230,190� 263,164� 261,969�
Consumer and other (1) 79,131� 101,821� 100,468� 109,168� 116,026�
Deferred costs and fees, net (1) 4,278� 4,066� 3,285� 3,113� 2,344�
Total loans, net of deferred costs and fees (1) 4,836,265�
4,774,613� 4,729,724� 4,727,969� 4,686,713� Allowance for loan and
lease losses (71,323) (71,689) (74,568) (82,159) (92,857) Total
loans, net 4,764,942� 4,702,924� 4,655,156� 4,645,810� 4,593,856�
Goodwill 242,687� 243,343� 242,728� 243,289� 236,511� Other
intangible assets 44,515� 46,227� 48,005� 49,741� 51,739� Other
assets 548,530� 576,712� 527,291� 536,392� 529,983� Total assets $
7,333,355� $ 7,369,654� $ 7,108,506� $ 7,120,969� $ 7,073,308� �
Deposits: Demand, noninterest-bearing $ 980,050� $ 1,015,734� $
1,004,575� $ 1,093,157� $ 1,066,536� MMDA, NOW and savings
2,613,387� 2,734,656� 2,957,354� 3,000,647� 3,003,159� Time
deposits, $100,000 and over 784,557� 776,712� 782,891� 741,682�
750,406� Other time deposits 681,104� 495,131� 363,941� 223,053�
195,315� Total deposits 5,059,098� 5,022,233� 5,108,761� 5,058,539�
5,015,416� Other borrowings 994,044� 970,390� 750,248� 797,802�
813,006� Subordinated debt 180,929� 287,631� 210,311� 210,311�
210,311� Other liabilities 249,553� 261,907� 232,866� 265,607�
252,510� Total liabilities 6,483,624� 6,542,161� 6,302,186�
6,332,259� 6,291,243� � Minority interest: Preferred stock of real
estate investment trust subsidiaries 12,821� 12,780� 12,739�
12,699� 12,658� � Convertible preferred stock 103,094� 103,096�
103,097� 103,387� 102,706� Common shareholders' equity 733,816�
711,617� 690,484� 672,624� 666,701� Total equity 836,910� 814,713�
793,581� 776,011� 769,407� � � � � � Total liabilities and total
equity $ 7,333,355� $ 7,369,654� $ 7,108,506� $ 7,120,969� $
7,073,308� � � � � � � � � � RATIOS: � Loan growth, current quarter
to prior year quarter 3.19% 0.72% 4.93% 5.34% 4.31% Loan growth,
current quarter to prior quarter, annualized 5.12% 3.81% 0.15%
3.49% -4.50% Loan growth, YTD 3.06% 1.99% 0.15% 5.34% 5.91% � Core
loan growth, current quarter to prior year quarter (2) 3.90% 1.32%
1.39% 0.57% -1.13% Core loan growth, current quarter to prior
quarter, annualized (2) 5.91% 4.47% 0.66% 4.30% -4.09% Core loan
growth, YTD (2) 3.73% 2.58% 0.66% 0.57% -0.68% � Deposit growth,
current quarter to prior year quarter 0.87% 2.93% 2.26% -0.87%
-3.47% Deposit growth, current quarter to prior quarter, annualized
2.91% -6.79% 4.03% 3.41% 11.07% Deposit growth, YTD 0.01% -1.45%
4.03% -0.87% -2.29% � Core deposit growth, current quarter to prior
year quarter (3) -10.48% -6.63% -5.78% -5.03% -6.45% Core deposit
growth, current quarter to prior quarter, annualized (3) -14.43%
-19.72% -8.31% -1.02% 2.02% Core deposit growth, YTD (3) -13.71%
-13.84% -8.31% -5.03% -6.40% � Revenue growth, current quarter to
prior year quarter (4) -2.66% 2.46% 8.96% 7.03% 3.77% Revenue
growth, current quarter to prior quarter, annualized (4) -10.93%
-12.82% 19.80% -5.60% 9.35% � Net interest income growth, current
quarter to prior year quarter -6.21% 0.63% 0.88% -0.52% -3.23% Net
interest income growth, current quarter to prior quarter,
annualized -12.41% -4.73% -6.75% -1.45% 15.59% � � � � � (1) In Q3
2006, $15.4 million of deferred costs and fees on leases were
reclassified from commercial loans and consumer and other loans
into net deferred costs and fees. Prior periods have been changed
to conform to this presentation. � (2) Core loans calculated as
total loans less purchased residential mortgage loans. � (3) Core
deposits calculated as total deposits less institutional and
brokered time deposits. � (4) Revenue is the sum of net interest
income before (recovery of) / provision for credit losses and total
non-interest income. GREATER BAY BANCORP September 30, 2006 -
FINANCIAL SUMMARY (UNAUDITED) (Dollars in 000's) � � � � � � � � �
SELECTED AVERAGE BALANCE SHEET AND YIELD DATA: � Three months ended
September 30, 2006 June 30, 2006 Average Average Average yield /
Average yield / Tax-Equivalent Basis (1) balance (2) Interest rate
balance (2) Interest rate � INTEREST-EARNING ASSETS: Fed funds sold
$ 33,141� $ 432� 5.18% $ 10,791� $ 128� 4.77% Securities: Taxable
1,509,123� 17,537� 4.61% 1,433,756� 16,030� 4.48% Tax-exempt (1)
91,142� 1,590� 6.92% 86,323� 1,543� 7.16% Other short-term (3)
9,993� 83� 3.29% 9,348� 46� 1.99% Loans (4) 4,785,791� 94,781�
7.86% 4,705,859� 91,074� 7.76% Total interest-earning assets
6,429,190� 114,423� 7.06% 6,246,077� 108,821� 6.99%
Noninterest-earning assets 911,348� -� 888,886� -� Total assets $
7,340,538� 114,423� $ 7,134,963� 108,821� INTEREST-BEARING
LIABILITIES: Deposits: MMDA, NOW and Savings $ 2,719,915� 17,036�
2.48% $ 2,807,337� 15,094� 2.16% Time deposits over $100,000
787,289� 9,506� 4.79% 780,415� 8,466� 4.35% Other time deposits
595,200� 6,973� 4.65% 414,765� 4,381� 4.24% Total interest-bearing
deposits 4,102,404� 33,515� 3.24% 4,002,517� 27,941� 2.80%
Short-term borrowings 299,675� 3,674� 4.86% 262,439� 2,947� 4.50%
CODES -� -� 0.00% -� -� 0.00% Subordinated debt 251,677� 5,355�
8.44% 224,755� 4,867� 8.68% Other long-term borrowings 579,694�
7,598� 5.20% 547,494� 6,732� 4.93% Total interest-bearing
liabilities 5,233,450� 50,142� 3.80% 5,037,205� 42,487� 3.38%
Noninterest-bearing deposits 993,457� 1,013,577� Other
noninterest-bearing liabilities 274,367� 263,424� Minority
Interest: Preferred stock of real estate investment trust
subsidiaries 12,796� 12,756� Shareholders' equity 826,468� �
808,001� � Total shareholders' equity and liabilities $ 7,340,538�
50,142� $ 7,134,963� 42,487� � Net interest income, on a
tax-equivalent basis (1) 64,281� 66,334� � Net interest margin (5)
3.97% 4.26% � Reconciliation to reported net interest income: �
Adjustment for tax equivalent basis (507) (500) � Net interest
income, as reported $ 63,774� $ 65,834� � (1) Income from
tax-exempt securities issued by state and local governments or
authorities, is adjusted by an increment that equates tax-exempt
income to tax equivalent basis (assuming a 35% federal income tax
rate). � (2) Nonaccrual loans are included in the average balance.
� (3) Includes average interest-earning deposits in other financial
institutions. � (4) Amortization of deferred loan fees, net of the
amortization of deferred costs, resulted in an increase of interest
income on loans by $364,000 and $602,000, for the three months
ended September 30, 2006 and June 30, 2006, respectively. � (5) Net
interest margin during the period equals (a) the difference between
tax-equivalent interest income on interest-earning assets and the
interest expense on interest-bearing liabilities, divided by (b)
average interest-earning assets for the period, annualized. GREATER
BAY BANCORP September 30, 2006 - FINANCIAL SUMMARY (UNAUDITED)
(Dollars in 000's) � � � � � � � � � SELECTED AVERAGE BALANCE SHEET
AND YIELD DATA: � Three months ended September 30, 2006 September
30, 2005 Average Average Average yield / Average yield /
Tax-Equivalent Basis (1) balance (2) Interest rate balance (2)
Interest rate � INTEREST-EARNING ASSETS: Fed funds sold $ 33,141� $
432� 5.18% $ 45,033� $ 384� 3.38% Securities: Taxable 1,509,123�
17,537� 4.61% 1,446,353� 15,117� 4.15% Tax-exempt (1) 91,142�
1,590� 6.92% 82,724� 1,514� 7.27% Other short-term (3) 9,993� 83�
3.29% 11,923� 59� 1.96% Loans (4) 4,785,791� 94,781� 7.86%
4,699,570� 84,135� 7.10% Total interest-earning assets 6,429,190�
114,423� 7.06% 6,285,603� 101,209� 6.39% Noninterest-earning assets
911,348� -� 902,363� -� Total assets $ 7,340,538� 114,423� $
7,187,966� 101,209� INTEREST-BEARING LIABILITIES: Deposits: MMDA,
NOW and Savings $ 2,719,915� 17,036� 2.48% $ 3,004,193� 13,042�
1.72% Time deposits over $100,000 787,289� 9,506� 4.79% 729,040�
5,562� 3.03% Other time deposits 595,200� 6,973� 4.65% 180,933�
1,172� 2.57% Total interest-bearing deposits 4,102,404� 33,515�
3.24% 3,914,166� 19,776� 2.00% Short-term borrowings 299,675�
3,674� 4.86% 350,989� 3,290� 3.72% CODES -� -� 0.00% 93,304� 131�
0.56% Subordinated debt 251,677� 5,355� 8.44% 210,311� 4,446� 8.39%
Other long-term borrowings 579,694� 7,598� 5.20% 417,583� 5,071�
4.82% Total interest-bearing liabilities 5,233,450� 50,142� 3.80%
4,986,353� 32,714� 2.60% Noninterest-bearing deposits 993,457�
1,132,668� Other noninterest-bearing liabilities 274,367� 282,409�
Minority Interest: Preferred stock of real estate investment trust
subsidiaries 12,796� 12,634� Shareholders' equity 826,468� �
773,902� � Total shareholders' equity and liabilities $ 7,340,538�
50,142� $ 7,187,966� 32,714� � Net interest income, on a
tax-equivalent basis (1) 64,281� 68,495� � Net interest margin (5)
3.97% 4.32% � Reconciliation to reported net interest income: �
Adjustment for tax equivalent basis (507) (499) � Net interest
income, as reported $ 63,774� $ 67,996� � � (1) Income from
tax-exempt securities issued by state and local governments or
authorities, is adjusted by an increment that equates tax-exempt
income to tax equivalent basis (assuming a 35% federal income tax
rate). � (2) Nonaccrual loans are included in the average balance.
� (3) Includes average interest-earning deposits in other financial
institutions. � (4) Amortization of deferred loan fees, net of the
amortization of deferred costs, resulted in an increase of interest
income on loans by $364,000 and $841,000 for the three months ended
September 30, 2006 and September 30, 2005, respectively. � (5) Net
interest margin during the period equals (a) the difference between
tax-equivalent interest income on interest-earning assets and the
interest expense on interest-bearing liabilities, divided by (b)
average interest-earning assets for the period, annualized. GREATER
BAY BANCORP September 30, 2006 - FINANCIAL SUMMARY (UNAUDITED)
(Dollars in 000's) � � � SELECTED AVERAGE BALANCE SHEET AND YIELD
DATA: � Year to date September 30, 2006 September 30, 2005 Average
Average Average yield / Average yield / Tax-Equivalent Basis (1)
balance (2) Interest rate balance (2) Interest rate �
INTEREST-EARNING ASSETS: Fed funds sold $ 18,813� $ 692� 4.92% $
38,412� $ 789� 2.75% Securities: Taxable 1,456,380� 49,191� 4.52%
1,480,290� 47,196� 4.26% Tax-exempt (1) 86,718� 4,625� 7.13%
84,012� 4,472� 7.12% Other short-term (3) 9,701� 164� 2.26% 8,117�
95� 1.56% Loans (4) 4,727,539� 272,813� 7.72% 4,581,382� 237,486�
6.93% Total interest-earning assets 6,299,151� 327,485� 6.95%
6,192,213� 290,038� 6.26% Noninterest-earning assets 903,335� -�
886,871� -� Total assets $ 7,202,486� 327,485� $ 7,079,084�
290,038� INTEREST-BEARING LIABILITIES: Deposits: MMDA, NOW and
Savings $ 2,824,987� 46,202� 2.19% $ 3,130,250� 39,596� 1.69% Time
deposits over $100,000 774,767� 25,294� 4.36% 662,113� 13,175�
2.66% Other time deposits 424,817� 13,722� 4.32% 151,668� 2,625�
2.31% Total interest-bearing deposits 4,024,571� 85,218� 2.83%
3,944,031� 55,396� 1.88% Short-term borrowings 283,572� 9,604�
4.53% 339,960� 8,870� 3.49% CODES 24,758� 101� 0.55% 154,463� 631�
0.55% Subordinated debt 229,066� 14,779� 8.63% 210,311� 13,135�
8.24% Other long-term borrowings 534,221� 20,061� 5.02% 291,833�
11,063� 5.00% Total interest-bearing liabilities 5,096,188�
129,763� 3.40% 4,940,598� 89,095� 2.41% Noninterest-bearing
deposits 1,016,102� 1,089,518� Other noninterest-bearing
liabilities 271,014� 264,535� Minority Interest: Preferred stock of
real estate investment trust subsidiaries 12,756� 12,599�
Shareholders' equity 806,426� � 771,834� � Total shareholders'
equity and liabilities $ 7,202,486� 129,763� $ 7,079,084� 89,095� �
Net interest income, on a tax-equivalent basis (1) 197,722�
200,943� � Net interest margin (5) 4.20% 4.34% � Reconciliation to
reported net interest income: � Adjustment for tax equivalent basis
(1,494) (1,480) � Net interest income, as reported $ 196,228� $
199,463� � � (1) Income from tax-exempt securities issued by state
and local governments or authorities, is adjusted by an increment
that equates tax-exempt income to tax equivalent basis (assuming a
35% federal income tax rate). � (2) Nonaccrual loans are included
in the average balance. � (3) Includes average interest-earning
deposits in other financial institutions. � (4) Amortization of
deferred loan fees, net of the amortization of deferred costs,
resulted in an increase of interest income on loans by $1,211,000
and $838,000 for the nine months ended September 30, 2006 and
September 30, 2005, respectively. � (5) Net interest margin during
the period equals (a) the difference between tax-equivalent
interest income on interest-earning assets and the interest expense
on interest-bearing liabilities, divided by (b) average
interest-earning assets for the period, annualized. GREATER BAY
BANCORP September 30, 2006 - FINANCIAL SUMMARY (UNAUDITED) (Dollars
and shares in 000's, except per share data) � � � � � � � � �
SELECTED CONSOLIDATED CREDIT QUALITY DATA: � Sep 30 Jun 30 Mar 31
Dec 31 Sep 30 � � � 2006� 2006� 2006� 2005� 2005� � Nonperforming
assets (1) Commercial: Matsco/GBC $ 8,323� $ 7,257� $ 8,011� $
8,883� $ 9,299� SBA 2,881� 4,536� 3,627� 6,497� 7,612� Other 6,458�
4,775� 9,184� 9,142� 7,578� Total commercial 17,662� 16,568�
20,822� 24,522� 24,489� Real estate: Commercial 10,939� 14,763�
8,203� 8,434� 9,844� Construction and land 323� 323� 3,242� 323� -�
Other -� 3� 7� 33,312� 33,777� Total real estate 11,262� 15,089�
11,452� 42,069� 43,621� Consumer and other 139� 611� 718� 4,503�
3,821� Total nonaccrual loans 29,063� 32,268� 32,992� 71,094�
71,931� OREO -� -� -� -� -� Other nonperforming assets 603� 361�
438� 631� 1,153� Total non-performing assets (1) $ 29,666� $
32,629� $ 33,430� $ 71,725� $ 73,084� � Net loan charge-offs
(recoveries) (2) $ 223� $ 2,662� $ 43� $ 1,207� $ 3,098� � Ratio of
allowance for loan and lease losses to: End of period loans 1.48%
1.50% 1.58% 1.74% 1.98% Total nonaccrual loans 245.41% 222.17%
226.02% 115.56% 129.09% � Ratio of (recovery of ) / provision for
credit losses to average loans, annualized -0.04% -0.16% -0.52%
-0.89% -0.28% � Total nonaccrual loans to total loans 0.60% 0.68%
0.70% 1.50% 1.53% Total nonperforming assets to total assets 0.40%
0.44% 0.47% 1.01% 1.03% � Ratio of quarterly net loan charge-offs
to average loans, annualized 0.02% 0.23% 0.00% 0.10% 0.26% Ratio of
YTD net loan charge-offs to YTD average loans 0.08% 0.12% 0.00%
0.24% 0.29% � � � � (1) Nonperforming assets include nonaccrual
loans, other real estate owned and other nonperforming assets. �
(2) Net loan charge-offs are loan charge-offs net of recoveries. �
� � � � � � � � � � � � � � � � � SELECTED QUARTERLY CAPITAL RATIOS
AND DATA: � Sep 30 Jun 30 Mar 31 Dec 31 Sep 30 � � � 2006� 2006�
2006� 2005� 2005� � Tier 1 leverage ratio 10.63% 12.07% 10.77%
10.41% 10.23% Tier 1 risk-based capital ratio 12.15% 13.49% 12.48%
12.01% 12.25% Total risk-based capital ratio 13.40% 14.93% 13.73%
13.26% 13.51% Total equity to assets ratio 11.41% 11.05% 11.16%
10.90% 10.88% Common equity to assets ratio 10.01% 9.66% 9.71%
9.45% 9.43% � Tier I capital $ 748,071� $ 824,154� $ 734,692� $
708,563� $ 702,030� Total risk-based capital $ 825,036� $ 911,802�
$ 808,436� $ 782,525� $ 774,044� Risk weighted assets $ 6,155,489�
$ 6,108,101� $ 5,889,032� $ 5,900,425� $ 5,730,710� � NON-GAAP
RATIOS (1): � Tangible common equity to tangible assets - end of
period (2) 6.34% 5.96% 5.86% 5.56% 5.58% Tangible common book value
per common share - end of period (3) $ 8.75� $ 8.29� $ 7.95� $
7.61� $ 7.51� � Common book value per common share - end of period
(4) $ 14.38� $ 13.98� $ 13.73� $ 13.48� $ 13.22� Total common
shares outstanding - end of period 51,047� 50,917� 50,288� 49,906�
50,425� � � � � (1) The following table provides a reconciliation
of common equity to tangible common equity and total assets to
tangible assets: � Common shareholders' equity $ 733,816� $
711,617� $ 690,484� $ 672,624� $ 666,701� Less: goodwill and other
Intangible assets (287,202) (289,570) (290,733) (293,030) (288,250)
Tangible common equity $ 446,614� $ 422,047� $ 399,751� $ 379,594�
$ 378,451� � Total assets $ 7,333,355� $ 7,369,654� $ 7,108,506� $
7,120,969� $ 7,073,308� Less: goodwill and other intangible assets
(287,202) (289,570) (290,733) (293,030) (288,250) Tangible assets $
7,046,153� $ 7,080,084� $ 6,817,773� $ 6,827,939� $ 6,785,058� �
(2) Computed as common shareholders' equity, less goodwill and
other intangible assets divided by tangible assets � (3) Computed
as common shareholders' equity, less goodwill and other intangible
assets divided by total common shares outstanding - end of period �
(4) Computed as common shareholders' equity divided by common
shares outstanding - end of period. Greater Bay Bancorp
(Nasdaq:GBBK), a $7.3 billion in assets financial services holding
company, today announced results for the third quarter and nine
months ended September 30, 2006. For the third quarter of 2006, the
Company's net income was $18.5 million, or $0.32 per diluted common
share, compared to $25.6 million, or $0.44 per diluted common
share, for the third quarter of 2005, and $25.1 million, or $0.46
per diluted common share, for the second quarter of 2006. For the
first nine months of 2006, net income was $69.5 million, or $1.24
per diluted common share, compared to $69.8 million, or $1.16 per
diluted common share for the first nine months of 2005. Operating
results for the quarter reflected the recognition of approximately
$7.0 million of notable expenses which included the following: $3.2
million of unamortized debt issuance costs that were written off in
connection with the redemption of trust preferred securities in
August 2006; $2.5 million in combined expenses related to the
rebranding of regional banking identities, consulting costs related
to the previously disclosed self-initiated review of historical
stock option practices, and transitional costs related to the
outsourcing of the Company's mainframe data processing operations;
and $1.3 million in costs at ABD related to severance and expenses
associated with the opening of ABD's new office in Oregon. For the
third quarter of 2006, the Company's return on average common
equity, annualized, was 10.15% compared to 15.13% for the third
quarter of 2005, and 14.29% for the second quarter of 2006. Return
on average common equity, annualized, for the first nine months of
2006 was 13.22% compared to 13.96% for the same period in 2005.
Return on average assets, annualized, for the third quarter of 2006
was 1.00% compared to 1.41% for the third quarter of 2005, and
1.41% for the second quarter of 2006. Return on average assets,
annualized, was 1.29% for the first nine months of 2006 compared to
1.32% for the same period in 2005. "Our performance for the quarter
was marked by the confluence of several non-core or otherwise
notable expenses which impacted our bottom line results," stated
Byron A. Scordelis, President and Chief Executive Officer of
Greater Bay Bancorp. "On a more sustained basis, we are pleased to
note the continuation of both solid loan growth and exemplary
credit quality during the most recent period. In the insurance
brokerage area, organic revenue growth was once again favorable at
ABD, and the Bank successfully completed the outsourcing of its
mainframe operations which will contribute to our broader and
ongoing cost reduction efforts in the future." "While period-end
core deposit totals once again declined, effectively all of that
reduction occurred in the volatile title company, venture capital,
and 1031 exchange specialty deposit areas which extended a cyclical
trend that has been evident for several quarters," Mr. Scordelis
continued. "With both the growth and quality of our loan portfolio
well in hand, we are intently focused on operating expense
containment as well as long term growth and value in our core
deposit base as being key elements to drive our future earnings
performance." Net Interest Income and Margin Net interest income
for the third quarter of 2006 decreased to $63.8 million from $68.0
million in the third quarter of 2005, and decreased from $65.8
million in the second quarter of 2006. Net interest income for the
first nine months of 2006 decreased to $196.2 million from $199.5
million for the same period of 2005. The net interest margin (on a
fully tax-equivalent basis) for the third quarter of 2006 was
3.97%, compared to 4.32% for the third quarter of 2005 and 4.26%
for the second quarter of 2006. The net interest margin (on a fully
tax equivalent basis) for the first nine months of 2006 was 4.20%
compared to 4.34% for the same period in 2005. "About half of the
third quarter reduction in net interest margin resulted from the
combined effect of continued loan growth, core deposit attrition,
and upward pressure on core deposit costs," stated James Westfall,
Executive Vice President and Chief Financial Officer. "The
remaining change largely resulted from growth in our investment
portfolio, a period-to-period decline in deferred interest
recognition and prepayment fees, and a temporary increase in cash
and cash equivalents. We currently anticipate that our margin for
the fourth quarter will remain stabilized at or near third quarter
levels which has been reflected in our revised margin outlook for
the full year," he concluded. Non-Interest Income Non-interest
income for the third quarter of 2006 increased to $55.5 million
compared to $54.5 million in the third quarter of 2005. This change
was primarily attributable to a $1.8 million increase in insurance
brokerage commissions and fees. Non-interest income for the third
quarter of 2006 decreased by $1.3 million compared to the second
quarter of 2006. This reduction was primarily attributable to a
$3.6 million reduction in warrant portfolio income, partially
offset by a $1.5 million increase in insurance commissions and
fees. Non-interest income for the first nine months of 2006
increased to $172.3 million from $158.9 million for the same period
of 2005. This change was primarily attributable to an increase in
insurance brokerage commissions and fees of $9.6 million and an
increase in other income of $3.6 million including $3.9 million of
warrant portfolio appreciation. Non-interest income as a percentage
of total revenues for the third quarter of 2006 was 46.5%, compared
to 44.5% for the third quarter of 2005 and 46.3% for the second
quarter of 2006. Non-interest income as a percentage of total
revenues for the first nine months of 2006 was 46.7%, compared to
44.3% for the same period one year ago. "We are encouraged by the
continued revenue growth being achieved by ABD in the face of
ongoing pressures on premium levels in the property and casualty
and workers' compensation areas," commented Mr. Scordelis. "Of
equal significance, ABD entered the Oregon market by opening a new
office in Eugene during the quarter, continuing ABD's progress in
implementing its strategic objective of achieving a preeminent
presence and share position on the West Coast." Operating Expenses
Operating expenses for the third quarter of 2006 increased to $91.1
million from $84.6 million in the third quarter of 2005. Operating
expenses for the third quarter of 2006 increased to $91.1 million
from $84.5 million in the second quarter of 2006. This expense
growth was primarily attributable to the following: -- Write-off of
$3.2 million in unamortized debt issuance costs associated with the
redemption of trust preferred securities, -- Combined costs of $2.5
million associated with the rebranding of banking identities,
consulting costs related to the previously disclosed self-initiated
review of historical stock option practices, and outsourcing of the
Company's mainframe computer operations, and -- Costs of $1.3
million at ABD related to severance and expenses associated with
the opening of its new office in Oregon. Operating expenses for the
first nine months of 2006 increased to $267.7 million from $249.7
million for the first nine months of 2005. In addition to the items
noted above, expense growth during this period was also
attributable to: -- Expenses of $10.2 million representing the full
year impact in 2006 of expenses resulting from the Lucini/Parish
acquisition in May 2005 and ABD's opening of new office locations
in San Diego and Denver, and -- Expenses of $2.3 million due to
accelerated vesting of restricted stock and adoption of FAS 123R.
"In the current cyclical period of margin and revenue pressure,
cost rationalization is clearly of increased importance. As a
result of focused expense reduction initiatives currently underway,
we fully expect total normalized core operating expenses to
decrease in 2007 from actual 2006 levels," stated Mr. Scordelis.
Credit Quality Overview Net loan charge-offs in the third quarter
of 2006 were $0.2 million, or 0.02% of average loans, annualized,
compared to $3.1 million, or 0.26% of average loans, for the third
quarter of 2005 and $2.7 million, or 0.23% of average loans, for
the second quarter of 2006. Net loan charge-offs for the first nine
months of 2006 were $2.9 million, or 0.08% of average loans,
annualized, compared to $10.1 million or 0.29% for the same period
in 2005. Provision for credit losses was a negative provision of
$0.4 million for the third quarter of 2006, compared to a negative
provision of $3.4 million for the third quarter of 2005, and a
negative provision of $1.9 million for the second quarter of 2006.
The provision for the first nine months of 2006 was a negative $8.3
million, compared to a negative $2.8 million for the first nine
months of 2005. Non-performing assets were $29.7 million at
September 30, 2006, compared to $73.1 million at September 30, 2005
and $32.6 million at June 30, 2006. The ratio of non-performing
assets to total assets was 0.40% at September 30, 2006, compared to
1.03% at September 30, 2005 and 0.44% at June 30, 2006. The ratio
of non-accrual loans to total loans was 0.60% at September 30,
2006, compared to 1.53% at September 30, 2005 and 0.68% at June 30,
2006. Allowance for loan and lease losses was $71.3 million, or
1.48% of total loans at September 30, 2006, compared to $92.9
million, or 1.98% of total loans, at September 30, 2005 and $71.7
million, or 1.50% of total loans, at June 30, 2006. "We continue to
be pleased with the quality of our credit portfolio," commented Mr.
Scordelis. "Non-performing loan levels continued their downward
trend, and now stand fully sixty percent below the dollar level of
one year ago. Net charge-offs were also extremely well contained.
An assessment of these and other key credit metrics gave rise to
our decision to favorably adjust our guidance in this area for the
full year of 2006," he concluded. Balance Sheet At September 30,
2006, total assets were $7.3 billion, total net loans were $4.8
billion, total securities were $1.6 billion, and total deposits
were $5.1 billion. Total loans net of deferred costs and fees
increased by $149.6 million from September 30, 2005 to September
30, 2006. This growth reflects increases of $143.4 million in real
estate construction and land loans, and $131.0 million in
commercial loans. These increases were partially offset by
decreases of $70.1 million in the commercial term real estate loan
portfolio, $38.6 million in real estate other and $36.9 million in
consumer and other loans. Total loans net of deferred costs and
fees increased by $61.7 million from June 30, 2006 to September 30,
2006, representing an annualized growth rate of 5.12% for the
quarter. This growth reflects an increase of $63.9 in commercial
loans and $22.0 million in commercial term real estate loans,
partially offset by decreases of $22.7 million in consumer and
other loans and $9.0 million in construction and land loans. "We
are pleased with our fourth consecutive quarter of core loan
expansion, particularly since this growth was once again
concentrated in the targeted area of commercial lending. With our
specialty finance business activity remaining strong and our
community banking business posting tangible growth during the
period, we continue to track to the expectations reflected in our
existing guidance," indicated Mr. Scordelis. Securities totaled
$1.6 billion as of September 30, 2006, compared to $1.5 billion at
September 30, 2005 and $1.6 billion at June 30, 2006. Core deposits
(excluding institutional and brokered deposits) at September 30,
2006 decreased by $479.8 million compared to September 30, 2005 and
decreased by $154.6 million compared to June 30, 2006. According to
Mr. Scordelis, "While core deposit levels continue to be affected
by the volatility of large specialty accounts and upward pressure
on core deposit costs, we are encouraged that money market account
totals in our community banking area remained virtually flat during
the quarter. Given this overall challenging environment, we have
redoubled our focus on steps aimed at ensuring the restoration of
well-priced growth in our deposit portfolio," he added. Capital
Overview The capital ratios of Greater Bay Bancorp and its
subsidiary bank continue to exceed minimum well-capitalized
guidelines established by bank regulatory agencies. The Company's
common equity to assets ratio was 10.01% at September 30, 2006,
compared to 9.43% at September 30, 2005 and 9.66% at June 30, 2006.
The Company's tangible common equity to tangible assets ratio was
6.34% at September 30, 2006, compared to 5.58% at September 30,
2005 and 5.96% at June 30, 2006. Other Matters In September 2006,
the SEC staff issued Staff Accounting Bulletin No. 108,
"Considering the Effects of Prior Year Misstatements when
Quantifying Misstatements in Current Year Financial Statements"
(SAB 108). The Company will adopt SAB 108 as of December 31, 2006
and initially apply its provisions using the cumulative effect
transition method in connection with the preparation of its annual
financial statements for the year ending December 31, 2006. Upon
adoption of SAB 108, the Company expects to increase net income for
the year ending December 31, 2006 by approximately $1.3 million
and, as of January 1, 2006, record an increase to common stock of
approximately $3.4 million and a reduction in retained earnings of
approximately $4.7 million. The increase in net income results from
the reversal of entries recorded during the first and second
quarters of 2006 to correct immaterial errors related to periods
prior to 2006. The increase in common stock relates to previously
uncorrected errors in recording tax benefits arising from stock
option tax deductions during the years 1996 through 2005. Outlook
for 2006 Our full year guidance for 2006 has been updated as
follows: -- Core Loan Growth - based on the current forecast of
moderate economic growth in our primary market area, we anticipate
core loan portfolio growth in the mid to high single digit range.
-- Core Deposit Growth - we do not currently contemplate a
near-term recovery of the core deposit outflow experienced in the
first nine months of 2006, and now expect core deposit totals to
remain flat for the balance of the year relative to the quarter end
balance at September 30, 2006. -- Credit Quality - based on our
continued credit risk management and the current economic outlook,
we anticipate full year net charge-offs to range from 12 basis
points to 15 basis points of average loans outstanding. -- Net
Interest Margin - based on the Company's anticipated core loan
growth and core deposit stability and its neutral interest rate
sensitivity position, we expect the full year margin level to
fluctuate in the 4.10% to 4.15% range. Conference Call The Company
will broadcast its earnings conference call live via the Internet
at 8:00 a.m. (PST) on Monday, October 30, 2006. Participants may
access this conference call through the Company's website at
http://www.gbbk.com, under the "Investor Info" link, or through
http://www.earnings.com. You should go to either of these websites
15 minutes prior to the start of the call, as it may be necessary
to download audio software to hear the conference call. A replay of
the conference call will be available on the websites. A telephone
replay will also be available beginning at 11:00 a.m. PST on
October 30, 2006 through 9:00 p.m. PST on November 6, 2006, by
dialing 800-642-1687 or 706-645-9291 and providing Conference ID
9745265. About Greater Bay Bancorp Greater Bay Bancorp, a
diversified financial services holding company, provides community
banking services in the Greater San Francisco Bay Area through
Greater Bay Bank, N.A.'s community banking organization, including
Bank of Petaluma, Coast Commercial Bank, Golden Gate Bank,
Mid-Peninsula Bank, Mt. Diablo National Bank, Peninsula Bank of
Commerce and Santa Clara Valley National Bank. Nationally, Greater
Bay Bancorp provides specialized leasing and loan services through
its specialty finance group, which includes Matsco, CAPCO and
Greater Bay Capital. ABD Insurance and Financial Services, the
Company's insurance brokerage subsidiary, provides commercial
insurance brokerage, employee benefits consulting and risk
management solutions to business clients throughout the United
States. Safe Harbor Certain matters discussed in this press release
constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These
forward-looking statements relate to the Company's current
expectations regarding future operating results, net interest
margin, net loan charge-offs, asset quality, level of loan loss
reserves, growth in loans and deposits, the strength of the local
economy and the Company's intent to adopt SAB 108 as of December
31, 2006. These forward-looking statements are subject to certain
risks and uncertainties that could cause the actual results,
performance or achievements to differ materially from those
expressed, suggested or implied by the forward-looking statements.
These risks and uncertainties include, but are not limited to: (1)
the impact of changes in interest rates, a decline in economic
conditions at the local, national and international levels and
increased competition among financial service providers on the
Company's results of operations and the quality of the Company's
earning assets; (2) government regulation, including ABD's receipt
of requests for information from state insurance commissioners and
subpoenas from state attorneys general related to the ongoing
insurance industry-wide investigations into contingent commissions
and override payments; and (3) the other risks set forth in the
Company's reports filed with the Securities and Exchange
Commission, including its Annual Report on Form 10-K for the year
ended December 31, 2005. Greater Bay does not undertake, and
specifically disclaims, any obligation to update any
forward-looking statements to reflect occurrences or unanticipated
events or circumstances after the date of such statements. For
additional information and press releases about Greater Bay
Bancorp, visit the Company's website at http://www.gbbk.com. -0- *T
GREATER BAY BANCORP September 30, 2006 - FINANCIAL SUMMARY
(UNAUDITED) (Dollars and shares in 000's, except per share data)
----------------------------------------------------------------------
SELECTED QUARTERLY CONSOLIDATED OPERATING DATA: Third Second First
Fourth Third Quarter Quarter Quarter Quarter Quarter 2006 2006 2006
2005 2005 --------------------------------------------- Interest
income $113,916 $108,321 $103,754 $102,225 $100,710 Interest
expense 50,142 42,487 37,134 34,478 32,714
--------------------------------------------- Net interest income
before (recovery of) / provision for credit losses 63,774 65,834
66,620 67,747 67,996 (Recovery of) / provision for credit losses
(443) (1,886) (6,004) (10,491) (3,352)
--------------------------------------------- Net interest income
after (recovery of) / provision for credit losses 64,217 67,720
72,624 78,238 71,348 Non-interest income: Insurance commissions and
fees 41,757 40,235 44,969 37,071 39,974 Rental revenue on operating
leases 4,632 4,790 5,264 4,906 4,901 Service charges and other fees
2,363 2,368 2,540 2,533 2,496 Loan and international banking fees
1,960 1,718 1,795 1,919 1,663 Income on bank owned life insurance
2,038 1,922 1,911 1,869 1,877 Trust fees 1,059 1,127 1,055 1,101
1,074 Gains on sale of loans (14) - - 172 100 Security gains, net
40 5 168 - 43 Other income 1,617 4,605 2,331 3,438 2,361
--------------------------------------------- Total non-interest
income 55,452 56,770 60,033 53,009 54,489 Operating expenses:
Compensation and benefits 52,548 51,500 57,929 51,455 50,745
Occupancy and equipment 11,896 12,241 11,322 11,285 11,278 Legal
costs and other professional fees 5,074 3,884 3,753 5,295 4,671
Depreciation - operating leases 3,665 3,917 4,091 4,013 4,108
Amortization of intangibles 1,678 1,689 1,640 1,835 1,886 Other
expenses 16,220 11,255 13,379 12,476 11,936
--------------------------------------------- Total operating
expenses 91,081 84,486 92,114 86,359 84,624 Income before provision
for income taxes and cumulative effect of accounting change 28,588
40,004 40,543 44,888 41,213 Provision for income taxes 10,076
14,886 14,772 17,433 15,626
--------------------------------------------- Income before
cumulative effect of accounting change 18,512 25,118 25,771 27,455
25,587 Cumulative effect of accounting change, net of tax (1) - -
130 - - --------------------------------------------- Net income
$18,512 $25,118 $25,901 $27,455 $25,587
=============================================
----------------------------------------------------------------------
EARNINGS PER SHARE DATA: Net Income per common share before
cumulative effect of accounting change (2) Basic $0.33 $0.46 $0.48
$0.51 $0.47 Diluted $0.32 $0.46 $0.46 $0.48 $0.44 Net Income per
common share after cumulative effect of accounting change (2) Basic
$0.33 $0.46 $0.48 $0.51 $0.47 Diluted $0.32 $0.46 $0.46 $0.48 $0.44
Weighted average common shares outstanding 50,423 50,188 49,802
50,251 50,698 Weighted average common & potential common shares
outstanding 51,366 51,173 52,727 53,370 54,010 GAAP ratios Return
on quarterly average assets, annualized 1.00% 1.41% 1.47% 1.53%
1.41% Return on quarterly average common shareholders' equity,
annualized 10.15% 14.29% 15.42% 16.25% 15.13% Return on quarterly
average total equity, annualized 8.89% 12.47% 13.39% 14.09% 13.12%
Net interest margin, annualized (3) 3.97% 4.26% 4.35% 4.36% 4.32%
Operating expense ratio, annualized (4) 4.92% 4.75% 5.24% 4.81%
4.67% Efficiency ratio (5) 76.39% 68.91% 72.73% 71.52% 69.09%
NON-GAAP ratios Efficiency ratio (excluding ABD & other ABD
expenses paid by holding company) (6) 69.63% 59.53% 67.76% 62.31%
59.50% ------------------------- (1) Effective January 1, 2006, the
Company adopted SFAS No.123 (revised 2004), Share-Based Payment
("SFAS 123R"), as a result of which the Company recognized a
one-time cumulative adjustment, to record an estimate of future
forfeitures on outstanding equity based awards for which
compensation expense had been recognized prior to adoption. (2) The
following table provides a reconciliation of income available to
common shareholders before and after cumulative effect of
accounting change. Additionally, the Company's outstanding
convertible preferred stock was antidilutive for all periods
presented. Income before cumulative effect of accounting change as
reported $18,512 $25,118 $25,771 $27,455 $25,587 Less: dividends on
convertible preferred stock (1,832) (1,822) (1,832) (1,825) (1,834)
--------------------------------------------- Income available to
common shareholders before cumulative effect of accounting change
16,680 23,296 23,939 25,630 23,753 Add: CODES interest and other
related income/(loss), net of taxes - - 59 (99) 76
--------------------------------------------- Income available to
common shareholders before cumulative effect of accounting change
16,680 23,296 23,998 25,531 23,829 Cumulative effect of accounting
change, net of tax - - 130 - -
--------------------------------------------- Income available to
common shareholders after cumulative effect of accounting change
$16,680 $23,296 $24,128 $25,531 $23,829
============================================= Weighted average
common shares outstanding 50,423 50,188 49,802 50,251 50,698
Weighted average potential common shares: Stock options 943 985 946
939 878 CODES due 2024 - - 1,979 2,180 2,426 CODES due 2022 - - - -
8 --------------------------------------------- Total weighted
average common & potential common shares outstanding 51,366
51,173 52,727 53,370 54,010
============================================= (3) Net interest
income (on a tax equivalent basis) for the period, annualized and
divided by average quarterly interest earning assets for the
period. (4) Total operating expenses for the period, annualized and
divided by average quarterly assets. (5) Total operating expenses
divided by total revenue (the sum of net interest income and
non-interest income, excluding provision for credit losses). (6)
Total operating expenses less ABD operating expenses divided by
total revenue less ABD revenue. The following table provides the
information for calculating the efficiency ratio excluding ABD:
Revenue (excluding ABD) $77,083 $82,180 $81,183 $83,614 $81,796
Operating expenses (excluding ABD & other ABD expenses paid by
holding company) $53,670 $48,922 $55,010 $52,102 $48,667 *T -0- *T
GREATER BAY BANCORP September 30, 2006 - FINANCIAL SUMMARY
(UNAUDITED) (Dollars and shares in 000's, except per share data)
----------------------------------------------------------------------
SELECTED QUARTERLY CONSOLIDATED OPERATING DATA: Nine Months Ended
September 30, 2006 2005 ----------------------- Interest income
$325,991 $288,558 Interest expense 129,763 89,095
----------------------- Net interest income before (recovery of) /
provision for credit losses 196,228 199,463 (Recovery of) /
provision for credit losses (8,333) (2,778) -----------------------
Net interest income after (recovery of) / provision for credit
losses 204,561 202,241 Non-interest income: Insurance commissions
and fees 126,961 117,319 Rental revenue on operating leases 14,686
13,396 Service charges and other fees 7,271 7,915 Loan and
international banking fees 5,473 5,789 Income on bank owned life
insurance 5,871 5,679 Trust fees 3,241 3,200 Gains on sale of loans
(14) 306 Security gains, net 213 342 Other income 8,553 4,977
----------------------- Total non-interest income 172,255 158,923
Operating expenses: Compensation and benefits 161,977 149,202
Occupancy and equipment 35,459 32,838 Legal costs and other
professional fees 12,711 12,720 Depreciation - operating leases
11,673 11,213 Amortization of intangibles 5,007 6,041 Other
expenses 40,854 37,688 ----------------------- Total operating
expenses 267,681 249,702 Income before provision for income taxes
and cumulative effect of accounting change 109,135 111,462
Provision for income taxes 39,734 41,690 -----------------------
Income before cumulative effect of accounting change 69,401 69,772
Cumulative effect of accounting change, net of tax (1) 130 -
----------------------- Net income $69,531 $69,772
=======================
----------------------------------------------------------------------
EARNINGS PER SHARE DATA: Net Income per common share before
cumulative effect of accounting change (2) Basic $1.27 $1.26
Diluted $1.24 $1.16 Net Income per common share after cumulative
effect of accounting change (2) Basic $1.28 $1.26 Diluted $1.24
$1.16 Weighted average common shares outstanding 50,159 50,891
Weighted average common & potential common shares outstanding
51,536 55,824 GAAP ratios Return on YTD average assets, annualized
1.29% 1.32% Return on YTD common shareholders' equity, annualized
13.22% 13.96% Return on YTD average total equity, annualized 11.53%
12.09% Net interest margin, annualized (3) 4.20% 4.34% Operating
expense ratio, annualized (4) 4.97% 4.72% Efficiency ratio (5)
72.64% 69.67% NON-GAAP ratios Efficiency Ratio (excluding ABD &
other ABD expenses paid by holding company) (6) 65.55% 62.53%
----------------------------------------------- (1) Effective
January 1, 2006, the Company adopted SFAS No.123 (revised 2004),
Share-Based Payment ("SFAS 123R"), as a result of which the Company
recognized a one-time which the Company recognized a one-time
cumulative adjustment, to record an estimate of future forfeitures
on outstanding equity based awards for which compensation expense
had been recognized prior to adoption. (2) The following table
provides a reconciliation of income available to common
shareholders before and after cumulative effect of accounting
change. Additionally, the Company's outstanding convertible
preferred stock was antidilutive for all periods presented. Income
before cumulative effect of accounting change as reported $69,401
$69,772 Less: dividends on convertible preferred stock (5,486)
(5,515) ----------------------- Net Income available to common
shareholders before cumulative effect of accounting change 63,915
64,257 Add: CODES interest and other related income/(loss), net of
taxes 59 366 ----------------------- Income available to common
shareholders before cumulative effect of accounting change 63,974
64,623 Cumulative effect of accounting change, net of tax 130 -
----------------------- Income available to common shareholders
after cumulative effect of accounting change $64,104 $64,623
======================= Weighted average common shares outstanding
50,159 50,891 Weighted average potential common shares: Stock
options 725 927 CODES due 2024 652 3,993 CODES due 2022 - 13
----------------------- Total weighted average common &
potential common shares outstanding 51,536 55,824
======================= (3) Net interest income (on a tax
equivalent basis) for the period, annualized and divided by average
quarterly interest earning assets for the period. (4) Total
operating expenses for the period, annualized and divided by
average quarterly assets. (5) Total operating expenses divided by
total revenue (the sum of net interest income and non-interest
income, excluding provision for credit losses). (6) Total operating
expenses less ABD operating expenses divided by total revenue less
ABD revenue. The following information is for calculating the
efficiency ratio excluding ABD: Revenue (Excluding ABD) $240,446
$239,730 Operating Expenses (Excluding ABD & other ABD expenses
paid by holding company) $157,602 $149,904 *T -0- *T GREATER BAY
BANCORP September 30, 2006 - FINANCIAL SUMMARY (UNAUDITED) (Dollars
in 000's)
----------------------------------------------------------------------
SELECTED CONSOLIDATED FINANCIAL CONDITION DATA AND RATIOS: Sep 30
Jun 30 Mar 31 Dec 31 Sep 30 2006 2006 2006 2005 2005
------------------------------------------------------- Cash and
cash equivalents $160,572 $198,716 $167,203 $152,153 $153,284 Fed
funds sold - 36,000 - - 20,000 Securities 1,572,109 1,565,732
1,468,123 1,493,584 1,487,935 Loans: Commercial (1) 2,136,235
2,072,334 2,046,402 2,052,049 2,005,198 Term real estate -
commercial 1,362,794 1,340,762 1,389,635 1,389,329 1,432,939
------------------------------------------------------- Total
commercial (1) 3,499,029 3,413,096 3,436,037 3,441,378 3,438,137
Real estate construction and land 753,416 762,409 688,086 644,883
609,969 Residential mortgage 277,038 275,332 271,658 266,263
258,268 Real estate other 223,373 217,889 230,190 263,164 261,969
Consumer and other (1) 79,131 101,821 100,468 109,168 116,026
Deferred costs and fees, net (1) 4,278 4,066 3,285 3,113 2,344
------------------------------------------------------- Total
loans, net of deferred costs and fees (1) 4,836,265 4,774,613
4,729,724 4,727,969 4,686,713 Allowance for loan and lease losses
(71,323) (71,689) (74,568) (82,159) (92,857)
------------------------------------------------------- Total
loans, net 4,764,942 4,702,924 4,655,156 4,645,810 4,593,856
Goodwill 242,687 243,343 242,728 243,289 236,511 Other intangible
assets 44,515 46,227 48,005 49,741 51,739 Other assets 548,530
576,712 527,291 536,392 529,983
------------------------------------------------------- Total
assets $7,333,355 $7,369,654 $7,108,506 $7,120,969 $7,073,308
======================================================= Deposits:
Demand, noninterest- bearing $980,050 $1,015,734 $1,004,575
$1,093,157 $1,066,536 MMDA, NOW and savings 2,613,387 2,734,656
2,957,354 3,000,647 3,003,159 Time deposits, $100,000 and over
784,557 776,712 782,891 741,682 750,406 Other time deposits 681,104
495,131 363,941 223,053 195,315
------------------------------------------------------- Total
deposits 5,059,098 5,022,233 5,108,761 5,058,539 5,015,416
------------------------------------------------------- Other
borrowings 994,044 970,390 750,248 797,802 813,006 Subordinated
debt 180,929 287,631 210,311 210,311 210,311 Other liabilities
249,553 261,907 232,866 265,607 252,510
------------------------------------------------------- Total
liabilities 6,483,624 6,542,161 6,302,186 6,332,259 6,291,243
------------------------------------------------------- Minority
interest: Preferred stock of real estate investment trust
subsidiaries 12,821 12,780 12,739 12,699 12,658 Convertible
preferred stock 103,094 103,096 103,097 103,387 102,706 Common
shareholders' equity 733,816 711,617 690,484 672,624 666,701
------------------------------------------------------- Total
equity 836,910 814,713 793,581 776,011 769,407
------------------------------------------------------- Total
liabilities and total equity $7,333,355 $7,369,654 $7,108,506
$7,120,969 $7,073,308
=======================================================
----------------------------------------------------------------------
RATIOS: Loan growth, current quarter to prior year quarter 3.19%
0.72% 4.93% 5.34% 4.31% Loan growth, current quarter to prior
quarter, annualized 5.12% 3.81% 0.15% 3.49% -4.50% Loan growth, YTD
3.06% 1.99% 0.15% 5.34% 5.91% Core loan growth, current quarter to
prior year quarter (2) 3.90% 1.32% 1.39% 0.57% -1.13% Core loan
growth, current quarter to prior quarter, annualized (2) 5.91%
4.47% 0.66% 4.30% -4.09% Core loan growth, YTD (2) 3.73% 2.58%
0.66% 0.57% -0.68% Deposit growth, current quarter to prior year
quarter 0.87% 2.93% 2.26% -0.87% -3.47% Deposit growth, current
quarter to prior quarter, annualized 2.91% -6.79% 4.03% 3.41%
11.07% Deposit growth, YTD 0.01% -1.45% 4.03% -0.87% -2.29% Core
deposit growth, current quarter to prior year quarter (3) -10.48%
-6.63% -5.78% -5.03% -6.45% Core deposit growth, current quarter to
prior quarter, annualized (3) -14.43% -19.72% -8.31% -1.02% 2.02%
Core deposit growth, YTD (3) -13.71% -13.84% -8.31% -5.03% -6.40%
Revenue growth, current quarter to prior year quarter (4) -2.66%
2.46% 8.96% 7.03% 3.77% Revenue growth, current quarter to prior
quarter, annualized (4) -10.93% -12.82% 19.80% -5.60% 9.35% Net
interest income growth, current quarter to prior year quarter
-6.21% 0.63% 0.88% -0.52% -3.23% Net interest income growth,
current quarter to prior quarter, annualized -12.41% -4.73% -6.75%
-1.45% 15.59% --------------- (1) In Q3 2006, $15.4 million of
deferred costs and fees on leases were reclassified from commercial
loans and consumer and other loans into net deferred costs and
fees. Prior periods have been changed to conform to this
presentation. (2) Core loans calculated as total loans less
purchased residential mortgage loans. (3) Core deposits calculated
as total deposits less institutional and brokered time deposits.
(4) Revenue is the sum of net interest income before (recovery of)
/ provision for credit losses and total non-interest income. *T -0-
*T GREATER BAY BANCORP September 30, 2006 - FINANCIAL SUMMARY
(UNAUDITED) (Dollars in 000's)
----------------------------------------------------------------------
SELECTED AVERAGE BALANCE SHEET AND YIELD DATA: Three months ended
---------------------------------- September 30, 2006
---------------------------------- Average Average yield /
Tax-Equivalent Basis (1) balance (2) Interest rate
----------------------------------------------------------------------
INTEREST-EARNING ASSETS: Fed funds sold $33,141 $432 5.18%
Securities: Taxable 1,509,123 17,537 4.61% Tax-exempt (1) 91,142
1,590 6.92% Other short-term (3) 9,993 83 3.29% Loans (4) 4,785,791
94,781 7.86% ----------------------- Total interest-earning assets
6,429,190 114,423 7.06% Noninterest-earning assets 911,348 -
----------------------- Total assets $7,340,538 114,423
============----------- INTEREST-BEARING LIABILITIES: Deposits:
MMDA, NOW and Savings $2,719,915 17,036 2.48% Time deposits over
$100,000 787,289 9,506 4.79% Other time deposits 595,200 6,973
4.65% ----------------------- Total interest-bearing deposits
4,102,404 33,515 3.24% Short-term borrowings 299,675 3,674 4.86%
CODES - - 0.00% Subordinated debt 251,677 5,355 8.44% Other
long-term borrowings 579,694 7,598 5.20% -----------------------
Total interest-bearing liabilities 5,233,450 50,142 3.80%
Noninterest-bearing deposits 993,457 Other noninterest-bearing
liabilities 274,367 Minority Interest: Preferred stock of real
estate investment trust subsidiaries 12,796 Shareholders' equity
826,468 ----------------------- Total shareholders' equity and
liabilities $7,340,538 50,142 ============----------- Net interest
income, on a tax- equivalent basis (1) 64,281 Net interest margin
(5) 3.97% =========== Reconciliation to reported net interest
income: ------------------------------------ Adjustment for tax
equivalent basis (507) ----------- Net interest income, as reported
$63,774 =========== Three months ended
--------------------------------- June 30, 2006
--------------------------------- Average Average yield /
Tax-Equivalent Basis (1) balance (2) Interest rate
------------------------------------
-------------------------------- INTEREST-EARNING ASSETS: Fed funds
sold $10,791 $128 4.77% Securities: Taxable 1,433,756 16,030 4.48%
Tax-exempt (1) 86,323 1,543 7.16% Other short-term (3) 9,348 46
1.99% Loans (4) 4,705,859 91,074 7.76% ---------------------- Total
interest-earning assets 6,246,077 108,821 6.99% Noninterest-earning
assets 888,886 - ---------------------- Total assets $7,134,963
108,821 ===========----------- INTEREST-BEARING LIABILITIES:
Deposits: MMDA, NOW and Savings $2,807,337 15,094 2.16% Time
deposits over $100,000 780,415 8,466 4.35% Other time deposits
414,765 4,381 4.24% ---------------------- Total interest-bearing
deposits 4,002,517 27,941 2.80% Short-term borrowings 262,439 2,947
4.50% CODES - - 0.00% Subordinated debt 224,755 4,867 8.68% Other
long-term borrowings 547,494 6,732 4.93% ----------------------
Total interest-bearing liabilities 5,037,205 42,487 3.38%
Noninterest-bearing deposits 1,013,577 Other noninterest-bearing
liabilities 263,424 Minority Interest: Preferred stock of real
estate investment trust subsidiaries 12,756 Shareholders' equity
808,001 ---------------------- Total shareholders' equity and
liabilities $7,134,963 42,487 ===========----------- Net interest
income, on a tax- equivalent basis (1) 66,334 Net interest margin
(5) 4.26% ========== Reconciliation to reported net interest
income: ------------------------------------ Adjustment for tax
equivalent basis (500) ----------- Net interest income, as reported
$65,834 =========== (1) Income from tax-exempt securities issued by
state and local governments or authorities, is adjusted by an
increment that equates tax-exempt income to tax equivalent basis
(assuming a 35% federal income tax rate). (2) Nonaccrual loans are
included in the average balance. (3) Includes average
interest-earning deposits in other financial institutions. (4)
Amortization of deferred loan fees, net of the amortization of
deferred costs, resulted in an increase of interest income on loans
by $364,000 and $602,000, for the three months ended September 30,
2006 and June 30, 2006, respectively. (5) Net interest margin
during the period equals (a) the difference between tax-equivalent
interest income on interest-earning assets and the interest expense
on interest-bearing liabilities, divided by (b) average
interest-earning assets for the period, annualized. *T -0- *T
GREATER BAY BANCORP September 30, 2006 - FINANCIAL SUMMARY
(UNAUDITED) (Dollars in 000's)
----------------------------------------------------------------------
SELECTED AVERAGE BALANCE SHEET AND YIELD DATA: Three months ended
---------------------------------- September 30, 2006
---------------------------------- Average Average yield /
Tax-Equivalent Basis (1) balance (2) Interest rate
----------------------------------------------------------------------
INTEREST-EARNING ASSETS: Fed funds sold $33,141 $432 5.18%
Securities: Taxable 1,509,123 17,537 4.61% Tax-exempt (1) 91,142
1,590 6.92% Other short-term (3) 9,993 83 3.29% Loans (4) 4,785,791
94,781 7.86% ----------------------- Total interest-earning assets
6,429,190 114,423 7.06% Noninterest-earning assets 911,348 -
----------------------- Total assets $7,340,538 114,423
============----------- INTEREST-BEARING LIABILITIES: Deposits:
MMDA, NOW and Savings $2,719,915 17,036 2.48% Time deposits over
$100,000 787,289 9,506 4.79% Other time deposits 595,200 6,973
4.65% ----------------------- Total interest-bearing deposits
4,102,404 33,515 3.24% Short-term borrowings 299,675 3,674 4.86%
CODES - - 0.00% Subordinated debt 251,677 5,355 8.44% Other
long-term borrowings 579,694 7,598 5.20% -----------------------
Total interest-bearing liabilities 5,233,450 50,142 3.80%
Noninterest-bearing deposits 993,457 Other noninterest-bearing
liabilities 274,367 Minority Interest: Preferred stock of real
estate investment trust subsidiaries 12,796 Shareholders' equity
826,468 ----------------------- Total shareholders' equity and
liabilities $7,340,538 50,142 ============----------- Net interest
income, on a tax- equivalent basis (1) 64,281 Net interest margin
(5) 3.97% =========== Reconciliation to reported net interest
income: ------------------------------------ Adjustment for tax
equivalent basis (507) ----------- Net interest income, as reported
$63,774 =========== Three months ended
--------------------------------- September 30, 2005
--------------------------------- Average Average yield /
Tax-Equivalent Basis (1) balance (2) Interest rate
------------------------------------
-------------------------------- INTEREST-EARNING ASSETS: Fed funds
sold $45,033 $384 3.38% Securities: Taxable 1,446,353 15,117 4.15%
Tax-exempt (1) 82,724 1,514 7.27% Other short-term (3) 11,923 59
1.96% Loans (4) 4,699,570 84,135 7.10% ---------------------- Total
interest-earning assets 6,285,603 101,209 6.39% Noninterest-earning
assets 902,363 - ---------------------- Total assets $7,187,966
101,209 ===========----------- INTEREST-BEARING LIABILITIES:
Deposits: MMDA, NOW and Savings $3,004,193 13,042 1.72% Time
deposits over $100,000 729,040 5,562 3.03% Other time deposits
180,933 1,172 2.57% ---------------------- Total interest-bearing
deposits 3,914,166 19,776 2.00% Short-term borrowings 350,989 3,290
3.72% CODES 93,304 131 0.56% Subordinated debt 210,311 4,446 8.39%
Other long-term borrowings 417,583 5,071 4.82%
---------------------- Total interest-bearing liabilities 4,986,353
32,714 2.60% Noninterest-bearing deposits 1,132,668 Other
noninterest-bearing liabilities 282,409 Minority Interest:
Preferred stock of real estate investment trust subsidiaries 12,634
Shareholders' equity 773,902 ---------------------- Total
shareholders' equity and liabilities $7,187,966 32,714
===========----------- Net interest income, on a tax- equivalent
basis (1) 68,495 Net interest margin (5) 4.32% ==========
Reconciliation to reported net interest income:
------------------------------------ Adjustment for tax equivalent
basis (499) ----------- Net interest income, as reported $67,996
=========== (1) Income from tax-exempt securities issued by state
and local governments or authorities, is adjusted by an increment
that equates tax-exempt income to tax equivalent basis (assuming a
35% federal income tax rate). (2) Nonaccrual loans are included in
the average balance. (3) Includes average interest-earning deposits
in other financial institutions. (4) Amortization of deferred loan
fees, net of the amortization of deferred costs, resulted in an
increase of interest income on loans by $364,000 and $841,000 for
the three months ended September 30, 2006 and September 30, 2005,
respectively. (5) Net interest margin during the period equals (a)
the difference between tax-equivalent interest income on
interest-earning assets and the interest expense on
interest-bearing liabilities, divided by (b) average
interest-earning assets for the period, annualized. *T -0- *T
GREATER BAY BANCORP September 30, 2006 - FINANCIAL SUMMARY
(UNAUDITED) (Dollars in 000's)
----------------------------------------------------------------------
SELECTED AVERAGE BALANCE SHEET AND YIELD DATA: Year to date
---------------------------------- September 30, 2006
---------------------------------- Average Average yield /
Tax-Equivalent Basis (1) balance (2) Interest rate
----------------------------------------------------------------------
INTEREST-EARNING ASSETS: Fed funds sold $18,813 $692 4.92%
Securities: Taxable 1,456,380 49,191 4.52% Tax-exempt (1) 86,718
4,625 7.13% Other short-term (3) 9,701 164 2.26% Loans (4)
4,727,539 272,813 7.72% ----------------------- Total
interest-earning assets 6,299,151 327,485 6.95% Noninterest-earning
assets 903,335 - ----------------------- Total assets $7,202,486
327,485 ============----------- INTEREST-BEARING LIABILITIES:
Deposits: MMDA, NOW and Savings $2,824,987 46,202 2.19% Time
deposits over $100,000 774,767 25,294 4.36% Other time deposits
424,817 13,722 4.32% ----------------------- Total interest-bearing
deposits 4,024,571 85,218 2.83% Short-term borrowings 283,572 9,604
4.53% CODES 24,758 101 0.55% Subordinated debt 229,066 14,779 8.63%
Other long-term borrowings 534,221 20,061 5.02%
----------------------- Total interest-bearing liabilities
5,096,188 129,763 3.40% Noninterest-bearing deposits 1,016,102
Other noninterest-bearing liabilities 271,014 Minority Interest:
Preferred stock of real estate investment trust subsidiaries 12,756
Shareholders' equity 806,426 ----------------------- Total
shareholders' equity and liabilities $7,202,486 129,763
============----------- Net interest income, on a tax- equivalent
basis (1) 197,722 Net interest margin (5) 4.20% ===========
Reconciliation to reported net interest income:
------------------------------------ Adjustment for tax equivalent
basis (1,494) ----------- Net interest income, as reported $196,228
=========== Year to date ---------------------------------
September 30, 2005 --------------------------------- Average
Average yield / Tax-Equivalent Basis (1) balance (2) Interest rate
---------------------------------------------------------------------
INTEREST-EARNING ASSETS: Fed funds sold $38,412 $789 2.75%
Securities: Taxable 1,480,290 47,196 4.26% Tax-exempt (1) 84,012
4,472 7.12% Other short-term (3) 8,117 95 1.56% Loans (4) 4,581,382
237,486 6.93% ---------------------- Total interest-earning assets
6,192,213 290,038 6.26% Noninterest-earning assets 886,871 -
---------------------- Total assets $7,079,084 290,038
===========----------- INTEREST-BEARING LIABILITIES: Deposits:
MMDA, NOW and Savings $3,130,250 39,596 1.69% Time deposits over
$100,000 662,113 13,175 2.66% Other time deposits 151,668 2,625
2.31% ---------------------- Total interest-bearing deposits
3,944,031 55,396 1.88% Short-term borrowings 339,960 8,870 3.49%
CODES 154,463 631 0.55% Subordinated debt 210,311 13,135 8.24%
Other long-term borrowings 291,833 11,063 5.00%
---------------------- Total interest-bearing liabilities 4,940,598
89,095 2.41% Noninterest-bearing deposits 1,089,518 Other
noninterest-bearing liabilities 264,535 Minority Interest:
Preferred stock of real estate investment trust subsidiaries 12,599
Shareholders' equity 771,834 ---------------------- Total
shareholders' equity and liabilities $7,079,084 89,095
===========----------- Net interest income, on a tax- equivalent
basis (1) 200,943 Net interest margin (5) 4.34% ==========
Reconciliation to reported net interest income:
------------------------------------ Adjustment for tax equivalent
basis (1,480) ----------- Net interest income, as reported $199,463
=========== (1) Income from tax-exempt securities issued by state
and local governments or authorities, is adjusted by an increment
that equates tax-exempt income to tax equivalent basis (assuming a
35% federal income tax rate). (2) Nonaccrual loans are included in
the average balance. (3) Includes average interest-earning deposits
in other financial institutions. (4) Amortization of deferred loan
fees, net of the amortization of deferred costs, resulted in an
increase of interest income on loans by $1,211,000 and $838,000 for
the nine months ended September 30, 2006 and September 30, 2005,
respectively. (5) Net interest margin during the period equals (a)
the difference between tax-equivalent interest income on
interest-earning assets and the interest expense on
interest-bearing liabilities, divided by (b) average
interest-earning assets for the period, annualized. *T -0- *T
GREATER BAY BANCORP September 30, 2006 - FINANCIAL SUMMARY
(UNAUDITED) (Dollars and shares in 000's, except per share data)
----------------------------------------------------------------------
SELECTED CONSOLIDATED CREDIT QUALITY DATA: Sep 30 Jun 30 Mar 31 Dec
31 Sep 30 2006 2006 2006 2005 2005
----------------------------------------------------------------------
Nonperforming assets (1) Commercial: Matsco/GBC $8,323 $7,257
$8,011 $8,883 $9,299 SBA 2,881 4,536 3,627 6,497 7,612 Other 6,458
4,775 9,184 9,142 7,578
------------------------------------------------------- Total
commercial 17,662 16,568 20,822 24,522 24,489 Real estate:
Commercial 10,939 14,763 8,203 8,434 9,844 Construction and land
323 323 3,242 323 - Other - 3 7 33,312 33,777
------------------------------------------------------- Total real
estate 11,262 15,089 11,452 42,069 43,621 Consumer and other 139
611 718 4,503 3,821
------------------------------------------------------- Total
nonaccrual loans 29,063 32,268 32,992 71,094 71,931 OREO - - - - -
Other nonperforming assets 603 361 438 631 1,153
------------------------------------------------------- Total non-
performing assets (1) $29,666 $32,629 $33,430 $71,725 $73,084
======================================================= Net loan
charge-offs (recoveries) (2) $223 $2,662 $43 $1,207 $3,098 Ratio of
allowance for loan and lease losses to: End of period loans 1.48%
1.50% 1.58% 1.74% 1.98% Total nonaccrual loans 245.41% 222.17%
226.02% 115.56% 129.09% Ratio of (recovery of ) / provision for
credit losses to average loans, annualized -0.04% -0.16% -0.52%
-0.89% -0.28% Total nonaccrual loans to total loans 0.60% 0.68%
0.70% 1.50% 1.53% Total nonperforming assets to total assets 0.40%
0.44% 0.47% 1.01% 1.03% Ratio of quarterly net loan charge- offs to
average loans, annualized 0.02% 0.23% 0.00% 0.10% 0.26% Ratio of
YTD net loan charge-offs to YTD average loans 0.08% 0.12% 0.00%
0.24% 0.29% --------------- (1) Nonperforming assets include
nonaccrual loans, other real estate owned and other nonperforming
assets. (2) Net loan charge-offs are loan charge-offs net of
recoveries.
----------------------------------------------------------------------
----------------------------------------------------------------------
SELECTED QUARTERLY CAPITAL RATIOS AND DATA: Sep 30 Jun 30 Mar 31
Dec 31 Sep 30 2006 2006 2006 2005 2005
----------------------------------------------------------------------
Tier 1 leverage ratio 10.63% 12.07% 10.77% 10.41% 10.23% Tier 1
risk- based capital ratio 12.15% 13.49% 12.48% 12.01% 12.25% Total
risk- based capital ratio 13.40% 14.93% 13.73% 13.26% 13.51% Total
equity to assets ratio 11.41% 11.05% 11.16% 10.90% 10.88% Common
equity to assets ratio 10.01% 9.66% 9.71% 9.45% 9.43% Tier I
capital $748,071 $824,154 $734,692 $708,563 $702,030 Total risk-
based capital $825,036 $911,802 $808,436 $782,525 $774,044 Risk
weighted assets $6,155,489 $6,108,101 $5,889,032 $5,900,425
$5,730,710 NON-GAAP RATIOS (1): Tangible common equity to tangible
assets - end of period (2) 6.34% 5.96% 5.86% 5.56% 5.58% Tangible
common book value per common share - end of period (3) $8.75 $8.29
$7.95 $7.61 $7.51 Common book value per common share - end of
period (4) $14.38 $13.98 $13.73 $13.48 $13.22 Total common shares
outstanding - end of period 51,047 50,917 50,288 49,906 50,425
--------------- (1) The following table provides a reconciliation
of common equity to tangible common equity and total assets to
tangible assets: Common shareholders' equity $733,816 $711,617
$690,484 $672,624 $666,701 Less: goodwill and other Intangible
assets (287,202) (289,570) (290,733) (293,030) (288,250)
------------------------------------------------------- Tangible
common equity $446,614 $422,047 $399,751 $379,594 $378,451
======================================================= Total
assets $7,333,355 $7,369,654 $7,108,506 $7,120,969 $7,073,308 Less:
goodwill and other intangible assets (287,202) (289,570) (290,733)
(293,030) (288,250)
------------------------------------------------------- Tangible
assets $7,046,153 $7,080,084 $6,817,773 $6,827,939 $6,785,058
======================================================= (2)
Computed as common shareholders' equity, less goodwill and other
intangible assets divided by tangible assets (3) Computed as common
shareholders' equity, less goodwill and other intangible assets
divided by total common shares outstanding - end of period (4)
Computed as common shareholders' equity divided by common shares
outstanding - end of period. *T
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