1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM 8-K/A
Amendment No. 1 to Form 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 6, 2001
----------------------------------
CoBiz Inc.
(Exact name of registrant as specified in its charter)
Colorado 000-24445 84-0826324
(State or other jurisdiction of (Commission file number) (I.R.S. employer
incorporation or organization) identification no.)
821 17th Street
Denver, Colorado 80202
(Address of principal executive offices)
(303) 293-2265
(Registrant's telephone number, including area code)
2
TABLE OF CONTENTS
Item 7. Financial Statements and Exhibits
(a) Historical Financial Statements of First Capital Bank of Arizona
Report of Independent Auditors F-1
Balance Sheet as of December 31, 2000 and 1999 F-2
Statement of Income for the Years Ended December 31, 2000 and 1999 F-3
Statement of Changes in Stockholders' Equity for the Years Ended
December 31, 2000 and 1999 F-4
Statement of Cash Flows for the Years Ended December 31, 2000 and 1999 F-5
Notes to Financial Statements F-6
(b) Pro Forma Financial Information
Introduction to Unaudited Pro Forma Consolidated Financial Statements F-21
Unaudited Pro Forma Consolidated Balance Sheet as of December 31, 2000 F-22
Unaudited Pro Forma Consolidated Condensed Statement of Income
for the Year Ended December 31, 2000 F-23
Unaudited Pro Forma Consolidated Condensed Statement of Income
for the Year Ended December 31, 1999 F-24
Notes to Unaudited Pro Forma Financial Statements F-25
(c) Exhibits
23 Consent of S.R. Snodgrass, A.C.
3
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
First Capital Bank of Arizona
We have audited the balance sheet of First Capital Bank of Arizona as of
December 31, 2000 and 1999, and the related statements of income, changes in
stockholders' equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Bank's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of First Capital Bank of Arizona
as of December 31, 2000 and 1999, and the results of its operations and cash
flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.
Wexford, PA
February 16, 2001
4
FIRST CAPITAL BANK OF ARIZONA
BALANCE SHEET
December 31,
2000 1999
------------- -------------
ASSETS
Cash and due from banks $ 3,809,790 $ 2,556,637
Interest-bearing deposits with other banks -- 1,000,000
Federal funds sold 6,935,147 1,298,873
Investment securities available for sale 20,482,058 16,716,215
Loans 73,864,564 63,211,487
Less allowance for loan losses 959,200 586,414
------------- -------------
Net loans 72,905,364 62,625,073
Premises and equipment 900,734 1,024,384
Accrued interest and other assets 1,281,150 1,208,850
------------- -------------
TOTAL ASSETS $ 106,314,243 $ 86,430,032
============= =============
LIABILITIES
Deposits:
Noninterest-bearing demand $ 9,555,425 $ 7,306,655
Interest-bearing demand 5,688,293 4,182,721
Money market 25,704,652 28,130,049
Savings 340,752 265,263
Time 50,500,934 35,099,379
------------- -------------
Total deposits 91,790,056 74,984,067
Short-term borrowings 2,230,000 1,000,000
FHLB Advances 500,000 --
Accrued interest payable and other liabilities 393,210 517,498
------------- -------------
TOTAL LIABILITIES 94,913,266 76,501,565
------------- -------------
STOCKHOLDERS' EQUITY
Common stock, par value $5; 10,000,000 shares authorized,
730,065 and 693,981 issued and outstanding 3,650,325 3,469,905
Additional paid-in capital 6,678,162 5,936,650
Retained earnings 1,145,862 853,755
Accumulated other comprehensive loss (73,372) (331,843)
------------- -------------
TOTAL STOCKHOLDERS' EQUITY 11,400,977 9,928,467
------------- -------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 106,314,243 $ 86,430,032
============= =============
See accompanying notes to the financial statements.
F-2
5
FIRST CAPITAL BANK OF ARIZONA
STATEMENT OF INCOME
Year Ended December 31,
2000 1999
----------- -----------
INTEREST INCOME
Loans, including fees $ 7,003,783 $ 5,246,849
Federal funds sold 134,417 236,113
Investment securities 1,189,317 818,170
----------- -----------
Total interest income 8,327,517 6,301,132
----------- -----------
INTEREST EXPENSE
Deposits 3,924,783 2,793,697
Borrowings 105,079 1,863
----------- -----------
Total interest expense 4,029,862 2,795,560
----------- -----------
NET INTEREST INCOME 4,297,655 3,505,572
Provision for loan losses 372,786 179,381
----------- -----------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 3,924,869 3,326,191
----------- -----------
NONINTEREST INCOME
Service charges on deposit accounts 175,763 122,219
Loan service fees 86,889 50,353
Investment securities losses -- (12,092)
Gains on sales of assets -- 137,978
Other 49,140 54,093
----------- -----------
Total noninterest income 311,792 352,551
----------- -----------
NONINTEREST EXPENSE
Salaries and employee benefits 1,264,288 1,486,192
Occupancy and equipment 350,405 367,249
Data processing 119,437 103,292
Other 590,699 451,502
----------- -----------
Total noninterest expense 2,324,829 2,408,235
----------- -----------
Income before income taxes 1,911,832 1,270,507
Income taxes 720,917 459,045
----------- -----------
NET INCOME $ 1,190,915 $ 811,462
=========== ===========
EARNINGS PER SHARE
Basic $ 1.63 $ 1.11
Diluted $ 1.54 $ 1.07
See accompanying notes to the financial statements.
F-3
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FIRST CAPITAL BANK OF ARIZONA
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Accumulated
Additional Other
Common Paid-in Retained Comprehensive Comprehensive
Stock Capital Earnings Loss Total Income
------------ ------------ ------------ ------------- ------------ -------------
Balance, December 31, 1998 $ 3,462,030 $ 5,918,363 $ 42,293 $ (15,724) $ 9,406,962
Net income 811,462 811,462 $ 811,462
Other comprehensive loss:
Unrealized losses on available for sale
securities, net of reclassification
adjustment, and net of tax benefit
of $204,499 (316,119) (316,119) (316,119)
------------
Comprehensive income $ 495,343
============
Common stock issued - options exercised 7,875 18,287 26,162
------------ ------------ ------------ ------------ ------------
Balance, December 31, 1999 3,469,905 5,936,650 853,755 (331,843) 9,928,467
Net income 1,190,915 1,190,915 $ 1,190,915
Other comprehensive income:
Unrealized gains on available for sale
securities, net of taxes of $167,066 258,471 258,471 258,471
------------
Comprehensive income $ 1,449,386
============
Five percent stock dividend (including cash
paid for fractional shares) 173,525 724,467 (898,808) (816)
Common stock issued - options exercised 6,895 17,045 23,940
------------ ------------ ------------ ------------ ------------
Balance, December 31, 2000 $ 3,650,325 $ 6,678,162 $ 1,145,862 $ (73,372) $ 11,400,977
============ ============ ============ ============ ============
2000 1999
--------- ---------
Components of other comprehensive income (loss):
Change in net unrealized gain (loss) on investment securities available for sale $ 258,471 $(323,461)
Realized losses included in net income, net of tax benefit of $4,750 -- 7,342
--------- ---------
Total $ 258,471 $(316,119)
========= =========
See accompanying notes to the financial statements.
F-4
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FIRST CAPITAL BANK OF ARIZONA
STATEMENT OF CASH FLOWS
Year Ended December 31,
2000 1999
------------ ------------
OPERATING ACTIVITIES
Net income $ 1,190,915 $ 811,462
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for loan losses 372,786 179,381
Depreciation, amortization, and accretion, net 13,741 144,967
Deferred income taxes (153,802) (56,052)
Investment securities losses -- 12,092
Gains on sales of assets -- (137,978)
Increase in accrued interest receivable (97,860) (294,154)
Increase in accrued interest payable 121,780 18,544
Increase (decrease) in income taxes payable (328,074) 376,614
Other, net 88,922 (12,636)
------------ ------------
Net cash provided by operating activities 1,208,408 1,042,240
------------ ------------
INVESTING ACTIVITIES
Investment securities available for sale:
Purchases (6,632,352) (10,070,113)
Proceeds from principal repayments and maturities 3,155,481 1,457,611
Proceeds from sales 184,900 4,609,153
Net increase in loans (10,576,454) (21,120,489)
Proceeds from sale of loans -- 1,442,274
Purchase of premises and equipment (9,669) (52,608)
Proceeds from sale of land -- 330,392
------------ ------------
Net cash used for investing activities (13,878,094) (23,403,780)
------------ ------------
FINANCING ACTIVITIES
Net increase in deposits 16,805,989 17,357,685
Net increase in short-term borrowings 1,230,000 1,000,000
Proceeds from FHLB advances 500,000 --
Proceeds from stock options exercised 23,940 26,162
Cash paid in lieu of fractional shares (816) --
------------ ------------
Net cash provided by financing activities 18,559,113 18,383,847
------------ ------------
Increase (decrease) in cash and cash equivalents 5,889,427 (3,977,693)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 4,855,510 8,833,203
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 10,744,937 $ 4,855,510
============ ============
See accompanying notes to the financial statements.
F-5
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FIRST CAPITAL BANK OF ARIZONA
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of significant accounting and reporting policies applied in the
presentation of the accompanying financial statements follows:
NATURE OF OPERATIONS AND BASIS OF PRESENTATION
First Capital Bank of Arizona (the "Bank") is a state-chartered financial
institution headquartered in Phoenix, Arizona. It derives all of its income
from banking and bank-related services which include interest earnings on
commercial and commercial real estate financing, earnings from investment
securities, federal funds sold, and fees from deposit and loan services
provided to its customers through two offices located in the general
Phoenix area.
The accounting and reporting policies of the Bank conform with generally
accepted accounting principles ("GAAP") and prevailing practices within the
banking industry. The preparation of financial statements in conformity
with GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities as of the balance sheet date
and income and expenses for the period. Actual results could differ
significantly from those estimates.
INVESTMENT SECURITIES
Management has classified investment securities as available for sale to
serve principally as a source of liquidity. Unrealized holding gains and
losses for available for sale securities are reported as a separate
component of stockholders' equity, net of tax, until realized. Realized
securities gains and losses are computed using the specific identification
method. Interest on investment securities is recognized as income when
earned.
Common stock of the Federal Home Loan Bank of San Francisco ("FHLB")
represents ownership in an institution which is wholly-owned by other
financial institutions. This equity security is accounted for at cost.
LOANS
Loans are reported at their principal amount net of the allowance for loan
losses. Interest on all loans is recognized as income when earned on the
accrual method. Accrual of interest is discontinued when, in the opinion of
management, reasonable doubt exists as to the collectibility of additional
interest. Interest payments that would be received on nonaccrual loans are
recorded as income or applied against principal according to management's
judgment as to the collectibility of the related loans.
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses represents the amount which management
estimates is adequate to provide for potential losses in loans, loan
commitments, and letters of credit. The Bank uses the allowance method in
providing for loan losses. Accordingly, all loan losses are charged to the
allowance, and all recoveries are credited to it. The allowance for loan
losses is established through a provision for loan losses which is charged
to operations. The provision is based upon management's periodic evaluation
of individual loans, the overall risk characteristics of the various
portfolio segments, changes in the composition and volume of the portfolio,
the impact of current economic conditions on borrowers, historical loss
experience, and other relevant factors. The estimates used in determining
the adequacy of the allowance for loan losses, including the amounts and
timing of future cash flows expected on any impaired loans, are
particularly susceptible to significant changes in the near term.
F-6
9
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ALLOWANCE FOR LOAN LOSSES (CONTINUED)
A commercial or commercial real estate loan is considered impaired when,
based on current information and events, it is probable the Bank will be
unable to collect all amounts due according to contractual terms of the
loan agreement. The Bank makes an assessment for impairment when such loans
are on nonaccrual or the loans have been restructured. The Bank
individually evaluates such loans for impairment and does not aggregate
loans by major risk classifications. The definition of "impaired loans" is
not the same as "nonaccrual loans," although the two categories overlap.
The Bank may choose to place a loan on nonaccrual status due to payment
delinquency, while not classifying the loan as impaired. Factors considered
by management in determining impairment include payment status and
collateral value. The amount of impairment for these types of impaired
loans is determined by the difference between the present value of the
expected cash flows related to the loan, using the original interest rate,
and its recorded value or as a practical expedient in the case of
collateralized loans, the difference between the fair value of the
collateral and the recorded amount of the loans. When foreclosure is
probable, impairment is measured based on the fair value of the collateral.
Mortgage loans secured by one-to-four family properties and all consumer
loans are large groups of smaller-balance homogeneous loans and are
measured for impairment collectively. Loans that experience insignificant
payment delays, which are defined as 90 days or less, generally are not
classified as impaired.
LOAN FEES
Loan origination and commitment fees and certain direct loan origination
costs are being deferred and the net amount amortized as an adjustment of
the related loan's yield. Management is amortizing these amounts over the
contractual life of the related loans. Commitment fees based on a
percentage of the customer's unused line of credit and fees related to
standby letters of credit are recognized over the commitment period.
Other nonrefundable fees related to lending service activities are
recognized as other operating income in the period in which the related
service is provided. Typically, these fees are earned for loan syndication
transactions regarding the funding of various commercial and commercial
real estate loans and loan servicing for participation loans.
PREMISES AND EQUIPMENT
Premises and equipment are stated at cost less accumulated depreciation.
Depreciation is computed on the straight-line method over the estimated
useful lives of the assets. Expenditures for maintenance and repairs are
charged against income as incurred. Costs of major additions and
improvements are capitalized.
STOCK OPTIONS
The Company maintains a stock option plan for the directors, officers, and
employees. When the exercise price of the Company's stock options is
greater than or equal to the market price of the underlying stock on the
date of the grant, no compensation expense is recognized in the Company's
financial statements. Pro forma net income and earnings per share are
presented to reflect the impact of the stock option plan assuming
compensation expense had been recognized based on the fair value of the
stock options granted under the plan.
INCOME TAXES
Deferred tax assets or liabilities are computed based on the difference
between the financial statement and income tax basis of assets and
liabilities using the enacted marginal federal and state tax rates.
Deferred income tax expenses or benefits are based on the changes in the
deferred tax asset or liability from period to period.
F-7
10
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
EARNINGS PER SHARE
The Bank provides dual presentation of basic and diluted earnings per
share. Basic earnings per share is calculated by dividing net income
available to common stockholders by the weighted-average number of common
shares outstanding during the period. Diluted earnings per share is
calculated by dividing net income available to common stockholders,
adjusted for the effects of any dilutive securities, by the
weighted-average number of common shares outstanding adjusted for the
effects of any dilutive securities such as stock options, stock warrants,
or convertible securities.
COMPREHENSIVE INCOME
The Bank is required to present comprehensive income and its components in
a full set of general-purpose financial statements for all periods
presented. The Bank's other comprehensive loss is comprised exclusively of
the net unrealized losses attributable to the investment securities
available for sale. The Bank has elected to report comprehensive income as
a part of the Statement of Changes in Stockholders' Equity.
CASH FLOW INFORMATION
The Bank has defined cash equivalents as those amounts due from depository
institutions, interest-bearing deposits in other banks, and federal funds
sold on a daily basis. Cash paid during the years ended December 31, 2000
and 1999, for interest on deposits and borrowings, amounted to $3,908,082
and $2,777,016, respectively. The Bank made federal and state income tax
payments of $812,843 and $144,542 in 2000 and 1999, respectively.
RECENT ACCOUNTING PRONOUNCEMENTS
Financial Accounting Standards Board ("FASB") Statement No. 133,
"Accounting for Derivative Instruments and Hedging Activities" (Statement
No. 133), as amended by Financial Accounting Standards Board Statement No.
138, "Accounting for Derivative Instruments and Hedging Activities-Deferral
of the Effective Date of Statement No. 133" (Statement No. 138), is
effective in 2001, and requires measuring and recording the change in fair
value of derivative instruments. Statement No. 133 is not expected to
materially affect the Company's financial position or results of
operations.
In September 2000, the FASB issued Statement No. 140, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities." The Statement replaces FASB Statement No. 125 and provides
consistent standards for distinguishing transfers of financial assets that
are sales from transfers that are secured borrowings based on a
control-oriented "financial-components" approach. Under this approach,
after a transfer of financial assets, an entity recognizes the financial
and servicing assets it controls and liabilities it has incurred,
derecognizes financial assets when control has been surrendered and
derecognizes liabilities when extinguished. The provisions of Statement No.
140 are effective for transactions occurring after March 31, 2001. This
Statement is effective for recognition and reclassification of collateral
and for disclosures relating to securitization transactions and collateral
for fiscal years ending after December 15, 2000. The full adoption of the
provisions of Statement No. 140 is not expected to have a material impact
on financial position or results of operations of the Bank.
2. AGREEMENT AND PLAN OF MERGER
The Bank has entered into an Agreement and Plan of Merger, originally dated
October 24, 2000 and subsequently amended and restated as of November 28,
2000, with Colorado Business Bankshares, Inc. ("CoBiz"). Pending regulatory
and each company's shareholders' approval, the Bank will merge with and
into a wholly-owned subsidiary of CoBiz, resulting in the outstanding
shares of the Bank's common stock being converted into shares of CoBiz
common stock. The stock exchange ratio will be based upon a predetermined
conversion formula based on the average market closing price of CoBiz
common stock. The merger transaction, once completed, will be accounted for
as a pooling of interest.
F-8
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3. STOCK DIVIDEND
On March 24, 2000, the Board of Directors approved a five percent stock
dividend to stockholders of record as of April 28, 2000 payable May 23,
2000. As a result of the dividend, 34,705 additional shares of the Bank's
common stock were issued, with fractional shares paid in cash. All average
shares outstanding and all per share amounts included in the financial
statements are based on the increased number of shares after giving
retroactive effect to the stock dividend.
4. EARNINGS PER SHARE
For 2000 and 1999, there were no convertible securities which would have
affected net income and thus been required to be used in calculating basic
and diluted earnings per share. As such, net income as presented on the
Statement of Income is used for computation purposes. The following table
sets forth a reconciliation of the total weighted shares used for the basic
and diluted earnings per share calculations.
2000 1999
------- -------
Weighted-average common shares
outstanding used to calculate
basic earnings per share 729,434 727,848
Additional common stock equivalents
(stock options) used to calculate
diluted earnings per share 43,650 33,827
------- -------
Weighted-average common shares and
common stock equivalents used
to calculate diluted earnings per share 773,084 761,675
======= =======
5. INVESTMENT SECURITIES AVAILABLE FOR SALE
The amortized cost and estimated market value of investment securities
available for sale are as follows:
2000
------------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
----------- ----------- ----------- -----------
U.S. Treasury and Government
sponsored agency obligations $18,531,090 $ 18,553 $ (152,668) $18,396,975
Mortgage-backed securities 1,289,556 12,570 -- 1,302,126
Obligations of states
and political subdivisions 144,407 2,050 -- 146,457
----------- ----------- ----------- -----------
Total debt securities 19,965,053 33,173 (152,668) 19,845,558
FHLB stock and FNMA
preferred stock 637,800 -- (1,300) 636,500
----------- ----------- ----------- -----------
Total $20,602,853 $ 33,173 $ (153,968) $20,482,058
=========== =========== =========== ===========
F-9
12
5. INVESTMENT SECURITIES AVAILABLE FOR SALE (CONTINUED)
1999
-----------------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
----------- ---------- ----------- -----------
U.S. Government sponsored
agency obligations $15,565,031 $ -- $ (501,321) $15,063,710
Mortgage-backed securities 1,441,797 -- (45,192) 1,396,605
----------- ---- ----------- -----------
Total debt securities 17,006,828 -- (546,513) 16,460,315
FHLB stock 255,900 -- -- 255,900
----------- ---- ----------- -----------
Total $17,262,728 $ -- $ (546,513) $16,716,215
=========== ==== =========== ===========
Investment securities with a carrying value of $3,867,077 and $1,827,431 at
December 31, 2000 and 1999, respectively, were pledged to secure Federal
Home Loan Bank borrowings, public deposits and other purposes as required
by law.
The amortized cost and estimated market value of debt securities at
December 31, 2000, by contractual maturity, are shown below. The Bank's
mortgage-backed securities have contractual maturities ranging from 12 to
14 years. Expected maturities will differ from contractual maturities
because borrowers may have the right to call or prepay obligations with or
without call or prepayment penalties.
Estimated
Amortized Market
Cost Value
----------- -----------
Due within one year $ 6,583,378 $ 6,556,705
Due after one year through five years 11,947,712 11,840,269
Due after five years through ten years 144,407 146,457
Due after ten years 1,289,556 1,302,127
----------- -----------
Total $19,965,053 $19,845,558
=========== ===========
Proceeds from the sales of securities available for sale and the gross
realized losses for the years ended December 31, were as follows:
2000 1999
---------- ----------
Proceeds from sales $ 184,900 $4,609,153
Gross realized losses -- 12,092
F-10
13
6. LOANS
Major classifications of loans are summarized as follows:
2000 1999
----------- -----------
Real estate mortgages:
Construction $10,069,581 $ 8,902,497
Commercial 47,247,598 36,047,279
Residential 3,234,006 3,480,349
Commercial and industrial 11,864,874 13,411,642
Consumer 1,448,505 1,369,720
----------- -----------
73,864,564 63,211,487
Less allowance for loan losses 959,200 586,414
----------- -----------
Net loans $72,905,364 $62,625,073
=========== ===========
The Bank grants commercial, commercial real estate, and consumer loans to
customers throughout its trade area, which is concentrated in the
metropolitan areas of Phoenix, Yuma, and Maricopa Counties of Arizona.
Approximately $41,600,000 or 56.4 percent, and $40,700,000 or 64.4 percent,
of the loan portfolio at December 31, 2000 and 1999, respectively, was
comprised of commercial real estate owner-occupied and office rental
property loan arrangements. In general, a substantial portion of the Bank's
loan customers' abilities to honor their loan agreements is dependent upon
the economic stability of the immediate trade area.
7. ALLOWANCE FOR LOAN LOSSES
Changes in the allowance for loan losses for the years ended December 31,
are as follows:
2000 1999
-------- --------
Balance, January 1 $586,414 $407,009
Add:
Provision charged to operations 372,786 179,381
Recoveries -- 79
Less loans charged off -- 55
-------- --------
Balance, December 31 $959,200 $586,414
======== ========
8. PREMISES AND EQUIPMENT
Major classifications of premises and equipment are summarized as follows:
2000 1999
---------- ----------
Land $ 234,891 $ 234,891
Buildings and improvements 469,557 469,557
Leasehold improvements 66,539 66,539
Furniture, fixtures, and equipment 541,167 532,394
---------- ----------
1,312,154 1,303,381
Less accumulated depreciation 411,420 278,997
---------- ----------
Total $ 900,734 $1,024,384
========== ==========
F-11
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8. PREMISES AND EQUIPMENT (CONTINUED)
Depreciation and amortization expense for the years ended December 31, 2000
and 1999 was $133,319 and $144,162, respectively.
The Bank's headquarters and main office are being operated under a lease
agreement that expires on July 31, 2004, with renewal options available to
the Bank. On an annual basis, the minimum rental payments due are adjusted
for increases in building tax and operating expenses. At December 31, 2000,
the estimated minimum rental commit-ments for this non-cancelable lease
were:
2001 $178,529
2002 199,525
2003 204,342
2004 120,841
--------
Total $703,237
========
Total rental expense recorded in 2000 and 1999 was $163,922 and $151,810,
respectively.
9. DEPOSITS
Time deposits include certificates of deposit in denominations of $100,000
or more. Such deposits aggregated $18,452,841 and $14,367,795 at December
31, 2000 and 1999, representing approximately 20.1 percent and 19.2 percent
of the Bank's total deposits, respectively.
At December 31, 2000, the scheduled maturities of certificates of deposit
of $100,000 or more are as follows:
Three months or less $ 5,215,165
Three to six months 2,059,804
Six to twelve months 4,367,661
Over one year 6,810,211
-----------
Total $18,452,841
===========
10. INCOME TAXES
The provision for income taxes consists of:
2000 1999
--------- ---------
Currently payable:
Federal $ 792,116 $ 473,231
State 82,603 41,866
--------- ---------
874,719 515,097
Deferred (153,802) (56,052)
--------- ---------
Total provision $ 720,917 $ 459,045
========= =========
F-12
15
10. INCOME TAXES (CONTINUED)
The tax effect of deductible and taxable temporary differences that gave
rise to the deferred tax assets and liabilities, respectively, at December
31, is comprised as follows:
2000 1999
-------- --------
Deferred tax assets:
Allowance for loan losses $321,549 $181,269
Organization costs 7,574 17,846
Directors' compensation 27,304 12,661
Net unrealized loss on securities 47,425 214,670
-------- --------
Gross deferred tax assets 403,852 426,446
-------- --------
Deferred tax liabilities:
Premises and equipment 25,454 37,597
FHLB dividends 2,992 --
-------- --------
Gross deferred tax liabilities 28,446 37,597
-------- --------
Net deferred tax assets $375,406 $388,849
======== ========
The following is a reconciliation between the actual provision for income
taxes and the amount of income taxes which would have been provided at
statutory rates:
2000 1999
-------------------- ---------------------
% of % of
Pre-tax Pre-tax
Amount Income Amount Income
--------- ------- --------- -------
Provision at statutory rate $ 650,023 34.0% $ 431,995 34.0%
State income tax, net of
federal tax benefit 54,518 2.9 27,632 2.2
Other, net 16,376 0.8 (582) --
--------- ---- --------- ----
Actual tax expense and
effective rate $ 720,917 37.7% $ 459,045 36.2%
========= ==== ========= ====
11. SHORT-TERM BORROWINGS AND FHLB ADVANCES
During the fourth quarter of 1999, the Bank applied and was accepted for
membership in the FHLB of San Francisco. As a member, the Bank has access
to a predetermined credit arrangement, which at December 31, 2000 and 1999,
had a borrowing limit based on 25 percent of its total assets but not to
exceed its total outstanding residential mortgage loan portfolio balance at
the time of borrowing. This credit arrangement is subject to annual renewal
and typically incurs no service charges. Any outstanding borrowings are
collateralized by a blanket security agreement on qualifying residential
mortgage loans, small business loans, and the Bank's investment in stock of
the FHLB. There were no borrowings from the FHLB in 1999.
F-13
16
11. SHORT-TERM BORROWINGS AND FHLB ADVANCES (CONTINUED)
The following information details information with regards to short-term
borrowings with original maturities of one year or less with the FHLB at
December 31, 2000:
2000
----------
Balance at year-end $2,230,000
Maximum amount outstanding at any month-end 2,230,000
Average balance outstanding during the year 937,083
Weighted-average interest rate:
As of year-end 6.62%
Paid during the year 6.98%
In addition the Bank had a $500,000 long-term borrowing outstanding with
the FHLB at December 31, 2000. This 6.78 percent, fixed rate advance
matures on August 8, 2002.
The Bank maintains a $3.5 million federal funds line of credit and a
$300,000 unsecured line of credit, for letters of credit issuance, with
M & I Thunderbird Bank. The federal funds borrowing line is unsecured in
nature, unless borrowings of at least $1 million remain outstanding for
periods greater than two days, in which case certain U.S. Government
obligations must be pledged as security. The lines incur no service
charges.
The Bank also maintains two unsecured federal fund lines of credit with
Bankers Bank of the West and Zions Bank, with maximum borrowing limits of
$4.95 million and $3.5 million, respectively, at year-end. These lines also
incur no service charges.
12. COMMITMENTS
In the normal course of business, the Bank makes various commitments that
are not reflected in the accompanying financial statements. These
instruments involve, to varying degrees, elements of credit and interest
rate risk in excess of the amount recognized in the balance sheet. The
Bank's exposure to credit loss in the event of nonperformance by the other
parties to the financial instruments is represented by the contractual
amounts as disclosed. Losses, if any, are charged to the allowance for loan
losses. The Bank minimizes its exposure to credit loss under these
commitments by subjecting them to credit approval and review procedures and
collateral requirements as deemed necessary.
The off-balance sheet commitments were comprised of the following:
2000 1999
----------- -----------
Commitments to extend credit $22,645,282 $27,909,881
Commercial and standby letters of credit 794,985 372,773
----------- -----------
$23,440,267 $28,282,654
=========== ===========
Due to regulatory lending limitations as well as bank internal lending
limit guidelines, approximately $3,068,000 at December 31, 2000 and
$6,127,000 at December 31, 1999, of the total commitments to extend credit
will be funded through origination participation arrangements with
independent third-party commercial banking entities.
F-14
17
12. COMMITMENTS (CONTINUED)
Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the loan
agreement. These commitments are comprised primarily of available
commercial lines of credit, commercial construction, and mortgage loan
commitments. The Bank uses the same credit policies in making loan
commitments and conditional obligations as it does for on-balance sheet
instruments. The Bank evaluates each customer's credit worthiness on a
case-by-case basis. The amount of collateral obtained, as deemed necessary,
is based upon management's credit evaluation in compliance with the Bank's
lending policy guidelines. Customers use credit commitments to ensure funds
will be available for working capital purposes, capital expenditures, and
to ensure access to funds at specified terms and conditions.
Standby letters of credit obligate the Bank to disburse funds to a third
party if the Bank's customer fails to perform under the terms of the
agreement with the beneficiary. These instruments are issued primarily to
support bid or performance-related contracts. Commercial letters of credit
are used primarily in the purchase and sale of commercial goods and are
payable upon presentation and supported by funds on deposit or by the
customer's credit qualifications. The coverage period for these instruments
is typically a one-year period or less with an annual renewal option
subject to prior approval by management. The Bank holds collateral for
these instruments, as deemed necessary, which are typically Bank deposit
instruments.
13. EMPLOYEE BENEFITS
The Bank maintains an IRA Savings Incentive Match Plan (Simple IRA)
covering substantially all employees. Employees may contribute up to the
maximum allowed by law. The Bank matches based upon the lesser of one
percent of employee compensation or the actual employee contributions made
for the year. Effective September 1, 1999, the Bank began matching employee
salary reduction contributions up to a limit of three percent of the
employee's compensation for the year. For 2000 and 1999, the Bank
contributed $36,163 and $17,638, respectively.
14. STOCK OPTION PLANS
The Bank maintains a stock option plan for directors, officers, and
employees. The plan provides for granting incentive stock options for
officers, employees, and non-employee directors of the Bank. The maximum
aggregate number of shares which may be optioned and sold through this plan
cannot exceed 15 percent of all issued and outstanding shares of common
stock of the Bank taking into consideration the shares to be issued upon
exercise of an option. Options granted become exercisable in installments
of 25 percent each year for the first two years from the date of grant and
the remainder in the third year provided certain Bank performance
benchmarks have been obtained regarding such items as regulatory capital
adequacy, nonperforming loan levels, earnings performance, and an
acceptable regulatory composite rating.
F-15
18
14. STOCK OPTION PLANS (CONTINUED)
The following is a summary of the status of the plan:
2000 1999
--------------------- --------------------
Weighted- Weighted-
average average
Exercise Exercise
Shares Price Shares Price
------- --------- ------ ---------
Outstanding, beginning of year 100,660 $14.91 92,838 $13.75
Granted 16,840 25.85 18,323 21.53
Exercised (1,416) 16.90 (1,655) 15.82
Forfeited (6,429) 18.83 (8,846) 16.15
------- -------
Outstanding, end of year 109,655 $16.34 100,660 $14.91
======= =======
Exercisable, end of year 68,112 $13.27 55,992 $13.09
======= =======
The following table summarizes the characteristics of stock options
outstanding at December 31, 2000:
Average Average
Grant Exercise Outstanding Contractual Exercisable Exercise
Date Price Shares Life Shares Price
---- ------------ ----------- ----------- ----------- -----------
1996 $ 11.90 50,733 5.82 50,733 $ 11.90
1998 15.71-16.19 27,404 7.24-7.42 13,560 16.07
1999 17.28-23.33 15,278 8.02-8.56 3,819 21.44
2000 24.64-26.00 16,240 9.32-9.58 -- --
------- ------
109,655 68,112
======= ======
The Bank accounts for its stock option plan under APB Opinion No. 25,
"Accounting for Stock Issued to Employees," and related interpretations.
Under this Opinion, no compensation expense has been recognized with
respect to the plan because the exercise price of the Bank's employee stock
options equals the market price of the underlying stock on the grant date.
For purposes of computing pro forma results, the Bank estimated the fair
values of stock options using the Black-Scholes option pricing model. The
model requires the use of subjective assumptions that can materially affect
fair value estimates. Therefore, the pro forma results are estimates of
results of operations as if compensation expense had been recognized for
the stock option plans. The fair value of each stock option vesting in 2000
and 1999 was estimated using the following weighted-average assumptions for
these grants: (1) expected dividend yields were zero percent; (2) risk-free
interest rates ranging from 4.70 percent to 6.70 percent; (3) expected
volatility ranging from 4.64 percent to 10.56 percent; and (4) expected
lives of options ranging from 7.24 years to 8.56 years.
F-16
19
14. STOCK OPTION PLANS (CONTINUED)
Had compensation expense for the stock option plans been recognized in
accordance with the fair value accounting standards, net income applicable
to common stock and basic and diluted net income per common share for the
years ended December 31, would have been as follows:
2000 1999
------------- -----------
Net income:
As reported $ 1,190,915 $ 811,462
Pro forma 1,102,858 706,694
Basic earnings per share:
As reported $ 1.63 $ 1.11
Pro forma 1.51 0.97
Diluted earnings per share:
As reported $ 1.54 $ 1.07
Pro forma 1.43 0.93
15. REGULATORY MATTERS
CASH AND DUE FROM BANKS
The district Federal Reserve Bank requires the Bank to maintain certain
reserve balances. As of December 31, 2000 and 1999, the Bank had required
reserves of $179,000 and $129,000, comprised of vault cash.
DIVIDENDS
The Bank is subject to a dividend restriction that generally limits the
amount of dividends that can be paid by an Arizona state-chartered bank.
Under the Arizona Banking Code, cash dividends may not exceed net profits,
as defined, for that year combined with retained net profits for the two
preceding years less any required transfers to surplus. Using this formula,
the amount available for payment of dividends by the Bank in 2001, without
approval of the Arizona Superintendent of Banks, will be limited to
approximately $2,000,000, plus net profits retained up to the date of the
dividend declaration.
CAPITAL REQUIREMENTS
Federal regulations require the Bank to maintain minimum amounts of
capital. Specifically, the Bank is required to maintain certain minimum
dollar amounts and ratios of Total and Tier I capital to risk-weighted
assets and of Tier I capital to average total assets. Management believes
the Bank meets all capital adequacy requirements to which it is subject.
In addition to the capital requirements, the Federal Deposit Insurance
Corporation Improvement Act ("FDICIA") established five capital categories
ranging from "well capitalized" to "critically undercapitalized." Should
any institution fail to meet the requirements to be considered "adequately
capitalized," it would become subject to a series of increasingly
restrictive regulatory actions.
As of December 31, 2000 and 1999, the FDIC categorized the Bank as well
capitalized under the regulatory framework for prompt corrective action. To
be classified as a well capitalized financial institution, Total
risk-based, Tier 1 risk-based, and Tier 1 Leverage capital ratios must be
at least ten percent, six percent, and five percent, respectively.
F-17
20
15. REGULATORY MATTERS (CONTINUED)
CAPITAL REQUIREMENTS (CONTINUED)
The following table reflects the Bank's capital ratios at December 31:
2000 1999
--------------------- ---------------------
Amount Ratio Amount Ratio
----------- ----- ----------- -----
Total Capital
(to Risk-weighted Assets)
Actual $12,433,549 15.81% $10,846,724 17.91%
Capital Adequacy Purposes 6,293,357 8.00 4,845,702 8.00
To Be Well Capitalized 7,866,696 10.00 6,057,128 10.00
Tier I Capital
(to Risk-weighted Assets)
Actual $11,474,349 14.59% $10,260,310 16.94%
Capital Adequacy Purposes 3,146,678 4.00 2,422,851 4.00
To Be Well Capitalized 4,720,018 6.00 3,634,277 6.00
Tier I Capital
(to Average Assets)
Actual $11,474,349 10.84% $10,260,310 11.87%
Capital Adequacy Purposes 4,235,992 4.00 3,458,700 4.00
To Be Well Capitalized 5,294,990 5.00 4,323,376 5.00
F-18
21
16. FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair values of the Bank's financial instruments at December
31, are as follows:
2000 1999
----------------------------- -----------------------------
Carrying Fair Carrying Fair
Value Value Value Value
------------ ------------ ------------ ------------
Financial assets:
Cash and due from banks,
interest-bearing deposits with
other banks, and federal
funds sold $ 10,744,937 $ 10,744,937 $ 4,855,510 $ 4,855,510
Investment securities
available for sale 20,482,058 20,482,058 16,716,215 16,716,215
Net loans 72,905,364 69,335,773 62,625,073 61,039,502
Accrued interest receivable 842,474 842,474 744,614 744,614
------------ ------------ ------------ ------------
Total $104,974,833 $101,405,242 $ 84,941,412 $ 83,355,841
============ ============ ============ ============
Financial liabilities:
Deposits $ 91,790,056 $ 92,186,864 $ 74,984,067 $ 74,579,123
Borrowings 2,737,802 2,730,000 1,000,000 1,000,000
Accrued interest payable 217,702 217,702 95,922 95,922
------------ ------------ ------------ ------------
Total $ 94,745,560 $ 95,134,566 $ 76,079,989 $ 75,675,045
============ ============ ============ ============
Financial instruments are defined as cash, evidence of ownership interest
in an entity, or a contract which creates an obligation or right to receive
or deliver cash or another financial instrument from/to a second entity on
potentially favorable or unfavorable terms.
Fair value is defined as the amount at which a financial instrument could
be exchanged in a current transaction between willing parties other than in
a forced or liquidation sale. If a quoted market price is available for a
financial instrument, the estimated fair value would be calculated based
upon the market price per trading unit of the instrument.
If no readily available market exists, the fair value estimates for
financial instruments are based upon management's judgment regarding
current economic conditions, interest rate risk, expected cash flows,
future estimated losses, and other factors as determined through various
option pricing formulas or simulation modeling. As many of these
assumptions result from judgments made by management based upon estimates
which are inherently uncertain, the resulting estimated fair values may not
be indicative of the amount realizable in the sale of a particular
financial instrument. In addition, changes in assumptions on which the
estimated fair values are based may have a significant impact on the
resulting estimated fair values.
As certain assets such as deferred tax assets and premises and equipment
are not considered financial instruments, the estimated fair value of
financial instruments would not represent the full value of the Bank.
CASH AND DUE FROM BANKS, INTEREST-BEARING DEPOSITS IN OTHER BANKS, FEDERAL
FUNDS SOLD, ACCRUED INTEREST RECEIVABLE, SHORT-TERM BORROWINGS, AND ACCRUED
INTEREST PAYABLE
The fair value is equal to the current carrying value.
F-19
22
16. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
INVESTMENT SECURITIES
The fair value of investment securities held is equal to the available
quoted market price. If no quoted market price is available, fair value is
estimated using the quoted market price for similar securities.
LOANS, DEPOSITS, AND FHLB ADVANCES
Fair value for commercial, commercial real estate, and consumer loans is
estimated using discounted contractual cash flows generated using
prepayment estimates. Discount rates are based upon current market rates
generally being charged for new loan originations with similar credit and
payment characteristics.
Demand, savings, and money market deposit accounts are valued at the amount
payable on demand as of year-end. Fair values for time deposits and FHLB
advances are estimated using a discounted cash flow calculation that
applies contractual costs currently being offered or paid to current market
rates being offered for deposits or paid on borrowings with similar
remaining maturities.
COMMITMENTS TO EXTEND CREDIT
These financial instruments are generally not subject to sale, and
estimated fair values are not readily available.
The carrying value, represented by the net deferred fee arising from the
unrecognized commitment or letter of credit, and the fair value, determined
by discounting the remaining contractual fee over the term of the
commit-ment using fees currently charged to enter into similar agreements
with similar credit risk, are not considered material for disclosure. The
contractual amounts of unfunded commitments and letters of credit are
presented in Note 12.
F-20
23
INTRODUCTION TO UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS
BASIS OF PRESENTATION
On March 8, 2001, we completed our acquisition of First Capital Bank
of Arizona ("First Capital"). As more fully described in the joint proxy
statement/prospectus contained in the Registration Statement on Form S-4
(Registration No. 333-51866) that we filed in connection with the transaction,
the acquisition was structured as a merger between First Capital and a
wholly-owned subsidiary we formed to participate in the merger. As a result of
the merger, First Capital became our wholly owned subsidiary.
First Capital shareholders received shares of our common stock in
the merger. The exchange ratio was based on the average closing price of our
common stock for the 20 trading days ending three trading days prior to the
merger. The average closing price of our common stock during that period was
$17.41, which resulted in an exchange ratio of 2.266 shares of our common stock
for each share of First Capital common stock. We issued a total of 1,656,591
shares of our common stock as a result of the merger.
First Capital is an Arizona state-chartered commercial bank with two
locations serving Phoenix and the surrounding area of Maricopa County, Arizona.
First Capital provides commercial banking services to a targeted customer base
of small- and medium-sized businesses and high net worth individuals.
The following unaudited pro forma consolidated financial information
(the "Pro Forma Financial Statements") is based on the consolidated historical
financial statements of CoBiz Inc. and Subsidiaries adjusted to give effect to:
(i) the First Capital acquisition, and (ii) the acquisition by CoBiz of all of
the outstanding capital stock of Milek Insurance Services, Inc. ("Milek") as
reported on a Current Report on Form 8-K, dated March 1, 2001, filed on March 8,
2001, collectively referred to as the "Acquisitions".
The Pro Forma Financial Statements were prepared to illustrate the
estimated effects of the Acquisitions. The Pro Forma Consolidated Balance Sheet
gives effect to the Acquisitions as if they had occurred on December 31, 2000.
The Pro Forma Consolidated Condensed Statement of Income for the year ended
December 31, 2000 presents the combined results of operations of CoBiz Inc.,
First Capital, and Milek, as if the companies had been combined for the entire
period.
The pro forma adjustments are based on assumptions that management
believes are reasonable. The Pro Forma Financial Statements do not purport to
represent what the results of operations or financial position of the Company
would have been had the Acquisitions in fact occurred on such dates nor do they
purport to project the results of operations or financial position of the
Company for any future period or as of any date. The Pro Forma Financial
Statements should be read in conjunction with the consolidated financial
statements of CoBiz and the related notes thereto included in the Company's Form
10-K for the year ended December 31, 2000, and the financial statements of First
Capital and related notes thereto included within this Amendment No. 1 to Form
8-K.
The Acquisitions were accounted for as poolings of interests. Under
this method of accounting, the recorded assets, liabilities, shareholders'
equity, income and expenses of CoBiz, First Capital, and Milek have been
combined and reflected at their historical amounts.
F-21
24
COBIZ INC.
Pro Forma Consolidated Balance Sheet
December 31, 2000
(unaudited)
Historical
-----------------------------------------------
First Capital Milek Insurance Pro Forma Pro Forma
CoBiz Inc. Bank of Arizona Services, Inc. Adjustments Combined
------------- --------------- --------------- ----------- -------------
Assets:
Cash and due from banks $ 24,836,000 $ 3,829,000 $ 29,000 $ -- $ 28,694,000
Federal funds sold -- 6,935,000 -- -- 6,935,000
------------- ------------- ------------- ---------- -------------
Total cash and cash equivalents 24,836,000 10,764,000 29,000 -- 35,629,000
------------- ------------- ------------- ---------- -------------
Investment securities available for sale 137,898,000 19,845,000 -- -- 157,743,000
Investment securities held to maturity 4,368,000 -- -- -- 4,368,000
Other investments 3,818,000 638,000 -- -- 4,456,000
------------- ------------- ------------- ---------- -------------
Total investments 146,084,000 20,483,000 -- -- 166,567,000
------------- ------------- ------------- ---------- -------------
Loans and leases, net 444,738,000 72,886,000 -- -- 517,624,000
Excess of cost over fair value of net assets
acquired, net 3,804,000 -- -- -- 3,804,000
Investment in operating leases 2,400,000 -- -- -- 2,400,000
Premises and equipment, net 3,612,000 901,000 -- -- 4,513,000
Accrued interest receivable 3,224,000 842,000 -- -- 4,066,000
Deferred income taxes 1,845,000 376,000 -- -- 2,221,000
Other 2,520,000 63,000 57,000 -- 2,640,000
------------- ------------- ------------- ---------- -------------
Total Assets $ 633,063,000 $ 106,315,000 $ 86,000 $ -- $ 739,464,000
============= ============= ============= ========== =============
Liabilities and shareholders' equity:
Liabilities:
Noninterest-bearing deposits $ 131,198,000 $ 9,677,000 $ -- $ -- $ 140,875,000
Interest-bearing deposits 319,579,000 82,113,000 -- -- 401,692,000
------------- ------------- ------------- ---------- -------------
Total deposits 450,777,000 91,790,000 -- -- 542,567,000
Federal funds purchased 10,400,000 -- -- -- 10,400,000
Securities sold under agreements to
repurchase 65,827,000 -- -- -- 65,827,000
Advances from the Federal Home Loan Bank 35,840,000 2,730,000 -- -- 38,570,000
Accrued interest and other liabilities 3,132,000 393,000 136,000 -- 3,661,000
Company obligated mandatorily redeemable
preferred securities of subsidiary
trust holding solely subordinated
debentures 20,000,000 -- -- -- 20,000,000
------------- ------------- ------------- ---------- -------------
Total liabilities 585,976,000 94,913,000 136,000 -- 681,025,000
Shareholders' equity:
Preferred stock -- -- -- -- --
Common stock 67,000 3,650,000 1,000 (3,634,000)(1) 84,000
Additional paid-in capital 30,144,000 6,679,000 -- 3,634,000 (1) 40,457,000
Retained earnings 16,500,000 1,146,000 (51,000) -- 17,595,000
Accumulated other comprehensive income
(loss), net of tax 376,000 (73,000) -- -- 303,000
------------- ------------- ------------- ---------- -------------
Total shareholders' equity 47,087,000 11,402,000 (50,000) -- 58,439,000
------------- ------------- ------------- ---------- -------------
Total liabilities and shareholders' equity $ 633,063,000 $ 106,315,000 $ 86,000 $ -- $ 739,464,000
============= ============= ============= ========== =============
See accompanying notes to consolidated financial statements.
F-22
25
COBIZ INC.
Pro Forma Consolidated Condensed Statement of Income
Year Ended December 31, 2000
(unaudited)
Historical
---------------------------------------------
First Capital Milek Insurance Pro Forma
CoBiz Inc. Bank of Arizona Services, Inc. Combined
----------- ----------- ----------- -----------
Interest income $46,573,000 $ 8,311,000 $ 1,000 $54,885,000
Interest expense 20,510,000 4,030,000 -- 24,540,000
----------- ----------- ----------- -----------
Net interest income 26,063,000 4,281,000 1,000 30,345,000
Provision for loan and lease losses 1,713,000 373,000 -- 2,086,000
----------- ----------- ----------- -----------
Net interest income after provision
for loan and lease losses 24,350,000 3,908,000 1,000 28,259,000
Noninterest income 4,721,000 329,000 712,000 5,762,000
Noninterest expense 17,816,000 2,325,000 532,000 20,673,000
----------- ----------- ----------- -----------
Income before income taxes 11,255,000 1,912,000 181,000 13,348,000
Provision for income taxes 4,503,000 721,000 -- 5,224,000
----------- ----------- ----------- -----------
Net income $ 6,752,000 $ 1,191,000 $ 181,000 $ 8,124,000
=========== =========== =========== ===========
Earnings per share:
Basic $ 1.01 $ 0.97
=========== ===========
Diluted $ 0.98 $ 0.93
=========== ===========
Number of shares used in computing
pro forma earnings per share:
Basic 6,703,961 8,405,315
=========== ===========
Diluted 6,893,474 8,712,266
=========== ===========
F-23
26
COBIZ INC.
Pro Forma Consolidated Condensed Statement of Income
Year Ended December 31, 1999
(unaudited)
Historical
---------------------------------------------------
First Capital Milek Insurance Pro Forma
CoBiz Inc. Bank of Arizona Services, Inc. Combined
----------- --------------- --------------- -----------
Interest income $32,409,000 $ 6,300,000 $ 3,000 $38,712,000
Interest expense 11,854,000 2,795,000 -- 14,649,000
----------- ----------- ----------- -----------
Net interest income 20,555,000 3,505,000 3,000 24,063,000
Provision for loan and lease losses 1,473,000 179,000 -- 1,652,000
----------- ----------- ----------- -----------
Net interest income after provision
for loan and lease losses 19,082,000 3,326,000 3,000 22,411,000
Noninterest income 4,610,000 352,000 659,000 5,621,000
Noninterest expense 15,771,000 2,408,000 507,000 18,686,000
----------- ----------- ----------- -----------
Income before income taxes 7,921,000 1,270,000 155,000 9,346,000
Provision for income taxes 3,002,000 459,000 -- 3,461,000
----------- ----------- ----------- -----------
Net income $ 4,919,000 $ 811,000 $ 155,000 $ 5,885,000
=========== =========== =========== ===========
Earnings per share:
Basic $ 0.74 $ 0.70
=========== ===========
Diluted $ 0.72 $ 0.68
=========== ===========
Number of shares used in computing
pro forma earnings per share:
Basic 6,673,484 8,374,838
=========== ===========
Diluted 6,864,993 8,658,964
=========== ===========
F-24
27
COBIZ INC. AND SUBSIDIARIES
Notes to Pro Forma Financial Statements
(unaudited)
1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
The accompanying pro forma financial statements are unaudited and
include the accounts of CoBiz Inc., and its wholly owned subsidiaries: CoBiz
Connect, Inc., CoBiz Insurance, Inc., Colorado Business Bankshares Capital Trust
I, First Capital Bank of Arizona, Colorado Business Bank, N.A. ("CBB"), and
CBB's equipment leasing subsidiary, Colorado Business Leasing, Inc.,
collectively referred to as the "Company or CoBiz".
The pro forma balance sheet was adjusted to reflect the issuance
1,656,591 and 44,763 shares of CoBiz Common Stock to the shareholders of First
Capital and Milek, respectively, in conjunction with the Acquisitions. In
addition, CoBiz assumed First Capital options for approximately 244,000 shares
of CoBiz Common Stock.
Certain reclassifications have been made to First Capital's financial
statements to conform to CoBiz's financial statement presentation.
F-25
28
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
CoBiz Inc. has duly caused this amendment to be signed on its behalf by the
undersigned thereunto duly authorized.
CoBiz Inc.
By: /s/ Steve Bangert
-------------------------------------------
Name: Steve Bangert
Title: Chairman and Chief Executive Officer
Date: May 22, 2001
29
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
23 Consent of S.R. Snodgrass, A.C.