·

Loans at March 31, 2015 increased $44.0 million from December 31, 2014 and $297.2 million, or 13.8%, from March 31, 2014.

·

Deposits at March 31, 2015 increased $54.9 million from December 31, 2014, and $224.5 million, or 9.7%, from March 31, 2014.  

·

Net interest income on a tax-equivalent basis (NII) increased $0.6 million from the fourth quarter of 2014 (linked-quarter), and $3.4 million, or 13.3%, from the prior-year quarter.  

·

The net interest margin (NIM) increased to 4.06% in the first quarter of 2015, from 3.94% in the linked-quarter and 3.90% in the prior-year quarter. The NIM benefited from recaptured past due interest from problem loan resolutions during the current quarter. Excluding these adjustments, the core NIM was 3.89% for the first quarter of 2015 (See accompanying Reconciliation of Non-GAAP measures to GAAP).

Quarter ended (unaudited)

1Q15 change vs.

(in thousands, except per share amounts)

1Q15

4Q14

1Q14

4Q14

1Q14

Net interest income before provision

$

$

$

$

% 

$

%

Provision for loan losses

% 

%

Net interest income after provision

% 

%

Total noninterest income

% 

%

Total noninterest expense

% 

%

Net income before income taxes

% 

%

Provision for income taxes

% 

%

Income from continuing operations

% 

%

Discontinued operations, net of tax(1)

% 

%

Net income

% 

%

Preferred stock dividends

% 

 -

%

Net income available to common shareholders

$

$

$

$

% 

$

%

Diluted earnings per common share

$

$

$

$

% 

$

%

KEY RATIOS

Net interest margin

%

%

%

Efficiency ratio(2)

%

%

%

Return on average assets

%

%

%

Return on average shareholders' equity

%

%

%

Noninterest income as a percentage of operating revenues

%

%

%

(1)

The Company discontinued the operations of its investment banking subsidiary, Green Manning & Bunch (GMB) as of March 31, 2015. GMB’s operations have been reported as such for all periods presented throughout this earnings announcement

(2)

The efficiency ratio equals noninterest expense adjusted to exclude gains and losses on other real estate owned (“OREO”), other assets and investments, divided by the sum of tax equivalent net interest income and noninterest income. To calculate tax equivalent net interest income, the interest earned on tax exempt loans and investment securities has been adjusted to reflect the amount that would have been earned had these investments been subject to normal income taxation.

·

Loans at March 31, 2015 were $2.4 billion, increasing $44.0 million from December 31, 2014. From March 31, 2014, loans increased $297.2 million, or 13.8%.

·

Loans increased $47.1 million for Arizona but declined $3.1 million in Colorado from the linked-quarter end, as the Colorado market experienced a high level of paydowns and maturities, particularly within its commercial real estate portfolio.

Quarter ended (unaudited)

1Q15 change vs.

(in thousands)

1Q15

4Q14

1Q14

4Q14

1Q14

LOANS

Commercial

$

$

$

$

% 

$

% 

Owner-occupied real estate

% 

% 

Investor real estate

% 

% 

Construction & land

% 

% 

Consumer

% 

% 

Other

% 

% 

Total loans

$

$

$

$

% 

$

% 

·

The first quarter of the fiscal year is normally the lowest period for new credit extension, and the Company observed a typical decline from the linked-quarter. However, new credit extensions during the first quarter of 2015 improved from the prior-year quarter. 

·

Paydowns and maturities, while less than the fourth quarter of 2014, were elevated in the first quarter of 2015 as compared to the prior-year quarter.  

Quarter ended (unaudited)

(in thousands)

1Q15

4Q14

3Q14

2Q14

1Q14

Loans - beginning balance

$

$

$

$

$

New credit extended

Credit advanced

Paydowns & maturities

Gross loan charge-offs

Loans - ending balance

$

$

$

$

$

Net change - loans outstanding

$

$

$

$

$

·

Commercial line utilization was 36.9% at March 31, 2015, compared to 36.2% and 38.7%, respectively, at the linked- and prior-year quarter ends.  

·

Customer Funding at March 31, 2015 increased $63.8 million from the linked-quarter end and $193.8 million from the prior-year quarter end.  

·

Noninterest-bearing demand (NIB) accounts had a seasonal decline of $13.1 million from the linked-quarter. The percentage of NIB to total deposits was 41.6% at March 31, 2015.  

Quarter ended (unaudited)

1Q15 change vs.

(in thousands)

1Q15

4Q14

1Q14

4Q14

1Q14

DEPOSITS AND CUSTOMER REPURCHASE AGREEMENTS

Money market

$

$

$

$

% 

$

%

Interest-bearing demand

% 

%

Savings

% 

%

Certificates of deposits under $100

% 

%

Certificates of deposits $100 and over

% 

%

Reciprocal CDARS

% 

%

Total interest-bearing deposits

% 

%

Noninterest-bearing demand deposits

% 

%

Customer repurchase agreements

% 

%

Total deposits and customer repurchase agreements

$

$

$

$

% 

$

%

·

Nonperforming assets were $11.9 million at March 31, 2015, compared to $15.0 million at December 31, 2014, and $15.5 million at March 31, 2014. 

·

The Company had net recoveries of $0.5 million in the first quarter of 2015. A negative provision for loan losses of $0.8 million was recorded in the first quarter of 2015.

·

The resulting Allowance equated to 1.33% of total loans, and the coverage of Allowance to nonperforming loans was 533.9% at March 31, 2015.

Quarter ended (unaudited)

(in thousands)

1Q15

4Q14

1Q14

ALLOWANCE FOR LOAN AND CREDIT LOSSES

Beginning allowance for loan losses

$

$

$

Provision for loan losses

Net recovery (charge-off)

Ending allowance for loan losses

$

$

$

CREDIT QUALITY

Nonaccrual loans

$

$

$

Loans 90 days or more past due and accruing interest

 -

 -

Total nonperforming loans

OREO and repossessed assets

Total nonperforming assets

$

$

$

Performing renegotiated loans

$

$

$

Classified loans

$

$

$

ASSET QUALITY MEASURES

Nonperforming assets to total assets

% 

% 

% 

Nonperforming loans to total loans

% 

% 

% 

Nonperforming loans and OREO to total loans and OREO

% 

% 

% 

Allowance for loan and credit losses to total loans

% 

% 

% 

Allowance for loan and credit losses to nonperforming loans

% 

% 

% 

·

On April 16, 2015, the Board of Directors of the Company declared a quarterly cash dividend of $0.04 per common share. The dividend will be paid on May 4, 2015 to shareholders of record on April 27, 2015.

Quarter ended (unaudited)

(in thousands, except per share amounts)

1Q15

4Q14

1Q14

EQUITY MEASURES

Common shareholders' equity

$

$

$

Total shareholders' equity

Common shares outstanding at period end

Book value per common share

$

$

$

Tangible book value per common share *

$

$

$

Tangible common equity to tangible assets *

% 

% 

% 

Tangible equity to tangible assets *

% 

% 

% 

Tier 1 capital ratio

**

% 

% 

Total-risk based capital ratio

**

% 

% 

·

Net interest income on a tax-equivalent basis was $29.2 million for the first quarter of 2015, an increase of $0.6 million from the linked-quarter.  

·

The reported net interest margin expanded 12 basis points on a linked-quarter basis to 4.06%. However, the core NIM was relatively stable (See accompanying Reconciliation of Non-GAAP measures to GAAP).

o

Positively affecting net interest income and the NIM during the current quarter was past-due interest collected on problem loan resolutions of $1.2 million. Excluding these items, the core NIM for the first quarter of 2015 was 3.89%.

o

Excluding prepayment penalties and other adjustments, the core NIM for the fourth quarter of 2014 was 3.90%.

·

From December 31, 2014, average loans increased $48.7 million while average federal funds sold, interest-earning deposits and investments decreased $9.7 million.  

o

As a a percentage of average interest-earning assets, the Company’s investment portfolio declined to 16.7% at March 31, 2015 from 17.1% at the linked-quarter end.

·

Average deposits increased $44.9 million from the linked-quarter end, with average noninterest-bearing deposits decreasing $10.3 million from the linked-quarter end.

·

The Company has decided to focus on fee-based business lines with recurring revenue, and as of March 31, 2015 ceased offering investment banking services. The operations of GMB have been reported as discontinued operations retrospectively for all periods presented.

·

Total noninterest income decreased $0.2 million to $7.3 million from the linked- quarter, primarily due to a decline in both miscellaneous loan fees and income from equity method investments.

·

From the prior year quarter, noninterest income increased $1.8 million, or 33.2%.

o

Noninterest income for the first quarter of 2014 was adversely impacted by a $1.3 million valuation adjustment on a limited partnership investment.

·

Noninterest income as a percentage of operating income was 20.0% for the first quarter of 2015, as compared to 20.8% and 17.6%, respectively, for the linked- and prior-year quarters. 

Quarter ended (unaudited)

1Q15 change vs.

(in thousands)

1Q15

4Q14

1Q14

4Q14

1Q14

Noninterest income:

Deposit service charges

$

$

$

$

% 

$

% 

Investment advisory income

% 

% 

Insurance income

% 

% 

Other income

% 

NM

% 

Total noninterest income

$

$

$

$

% 

$

% 

·

Total noninterest expense increased $0.5 million from the linked- quarter and $2.0 million from the prior-year quarter.

·

The increase in noninterest expense over the prior-year quarter is primarily related to investments in new personnel and annual merit increases effective in April 2014.

o

Total full-time equivalent employees at March 31, 2015 were 529, compared to 524 at December 31, 2014 and 512 at March 31, 2014.

·

The efficiency ratio was 69.4% for the first quarter of 2015, as compared to 69.6% and 75.5%, respectively, for the linked- and prior-year quarters.

Quarter ended (unaudited)

1Q15 change vs.

(in thousands)

1Q15

4Q14

1Q14

4Q14

1Q14

Noninterest expense:

Salaries and employee benefits

$

$

$

$

% 

$

% 

Stock-based compensation expense

% 

% 

Occupancy expenses, premises and equipment

% 

% 

Amortization of intangibles

 -

 -

% 

% 

Other operating expenses

% 

% 

Net (gain) loss on OREO, repossessed assets and other

% 

% 

Total noninterest expense

$

$

$

$

% 

$

% 

·

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

·

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

·

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

·

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

·

Our ability to manage growth effectively could adversely affect our results of operations and prospects.

·

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

·

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

·

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

·

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

·

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

Three months ended March 31, 

(in thousands, except per share amounts)

2015

2014

INCOME STATEMENT DATA

Interest income

$

$

Interest expense

NET INTEREST INCOME BEFORE PROVISION

Provision for loan losses

NET INTEREST INCOME AFTER PROVISION

Noninterest income

Noninterest expense

INCOME BEFORE INCOME TAXES

Provision for income taxes

NET INCOME FROM CONTINUING OPERATIONS

Income from discontinued operations, net of tax

NET INCOME

$

$

Preferred stock dividends

NET INCOME AVAILABLE TO COMMON SHAREHOLDERS

$

$

EARNINGS PER COMMON SHARE

BASIC

$

$

DILUTED

$

$

EQUITY MEASURES

Common shares outstanding at period end (in thousands)

Book value per common share

$

$

Tangible book value per common share *

$

$

Tangible common equity to tangible assets *

% 

% 

Tangible equity to tangible assets *

% 

% 

* See accompanying Reconciliation of Non-GAAP Measures to GAAP

PERIOD END BALANCES

Total assets

$

$

Investments

Loans

Intangible assets

Deposits

Subordinated debentures

Common shareholders' equity

Total shareholders' equity

Interest-earning assets

Interest-bearing liabilities

BALANCE SHEET AVERAGES

Average assets

$

$

Average investments

Average loans

Average deposits

Average subordinated debentures

Average shareholders' equity

Average interest-earning assets

Average interest-bearing liabilities

Three months ended March 31, 

(in thousands)

2015

2014

PROFITABILITY MEASURES

Net interest margin

% 

% 

Efficiency ratio - tax equivalent

% 

% 

Return on average assets

% 

% 

Return on average shareholders' equity

% 

% 

Noninterest income as a percentage of operating revenues

% 

% 

CREDIT QUALITY

Nonperforming loans

Nonaccrual loans

$

$

Loans 90 days or more past due and accruing interest

 -

 -

Total nonperforming loans

OREO & repossessed assets

Total nonperforming assets

$

$

Performing renegotiated loans

$

$

Classified loans

$

$

Charge-offs

$

$

Recoveries

Net charge-offs

$

$

Nonperforming assets to total assets

% 

% 

Nonperforming loans to total loans

% 

% 

Nonperforming loans and OREO to total loans and OREO

%