Greater Bay Bancorp Reports Net Income of $21.5 Million for the First

Greater Bay Bancorp Reports Net Income of $21.5 Million for the First Quarter of 2005

    Business Editors

    PALO ALTO, Calif.--(BUSINESS WIRE)--April 27, 2005--Greater Bay Bancorp (Nasdaq:GBBK), a $7.0 billion in assets financial services holding company, today announced results for the first quarter of 2005.
    For the first quarter of 2005, Greater Bay Bancorp's net income was $21.5 million, or $0.34 per diluted share, compared to $24.9 million, or $0.42 per diluted share for the first quarter of 2004, and $21.1 million, or $0.33 per diluted share for the fourth quarter of 2004. For the first quarter of 2005, the Company's return on average common equity was 13.03% and its return on average assets was 1.26% as compared to a return on average common equity of 14.82% and a return on average assets of 1.32% for the first quarter of 2004 and a return on average common equity of 12.69% and a return on average assets of 1.18% for the fourth quarter of 2004.
    Operating results for the first quarter of 2005 included a negative provision for credit losses of $1.7 million offset by severance-related costs associated with accelerated retirements and other severance benefits of $2.0 million, a charge for other than temporary impairment of Fannie Mae and Freddie Mac securities totaling $1.0 million, and a contribution of $0.9 million to fund the charitable giving of the Greater Bay Bancorp Foundation.
    The reported fully diluted earnings per common share for the first quarter of 2005 reflects the Company's implementation during the fourth quarter of 2004 of the accounting pronouncement related to contingently convertible debt, which requires that the common shares issuable upon conversion of the Company's outstanding Zero Coupon Senior Convertible Contingent Debt Securities ("CODES") be considered on an if-converted basis in calculating fully diluted earnings per common share. The accounting pronouncement also required the Company to restate its fully diluted earnings per common share for prior periods. The accounting pronouncement resulted in a decrease in the Company's reported fully diluted earnings per common share by $0.04 for the first quarter of 2005, by $0.04 for the fourth quarter of 2004 and by $0.01 for the first quarter of 2004.
    "We are pleased to confirm solid fundamental performance for the quarter," commented Byron A. Scordelis, President and Chief Executive Officer of Greater Bay Bancorp. "While our net loan portfolio remained relatively flat, new loan originations in our community bank increased by 14% compared to the fourth quarter of 2004. Revenue growth in our commercial insurance brokerage business was strong, and key credit metrics in our lending businesses remained sound. We are also pleased to report our compliance with Sarbanes-Oxley provisions, as it validated our ongoing efforts to assure a solid internal control platform upon which our future growth can be built."

    Non-interest Income

    Non-interest income for the first quarter of 2005 increased to $50.0 million from $47.5 million in the first quarter of 2004. The increase was primarily due to increases in insurance agency commissions and fees of $3.5 million including seasonal override and contingent income and an increase in rental revenue on operating leases of $1.7 million, partially offset by a decrease of $2.1 million in gains on sale of securities.
    Non-interest income for the first quarter of 2005 increased $5.3 million from the fourth quarter of 2004. The increase was primarily due to increases in insurance agency commissions and fees of $8.4 million including seasonal override and contingent income, offset by decreases in gains on sale of securities of $1.3 million and gains on sale of loans of $1.2 million.
    Non-interest income as a percentage of total revenues was 43.1% for the first quarter of 2005 compared to 38.6% and 39.6% for the first quarter and fourth quarter of 2004, respectively.
    "Reflective of its continued progress, our ABD commercial insurance brokerage subsidiary recorded net commission growth of 10% in the first quarter of 2005 over the same period in 2004 excluding contingency fee income," stated Mr. Scordelis. "With its recently announced acquisition of the highly regarded Lucini Parish firm in Nevada, ABD has taken another meaningful step in achieving its strategic intent of pre-eminent positioning in all key West Coast commercial insurance markets. We are also pleased that the loan and lease portfolio generated by our Greater Bay Capital small ticket leasing division passed the $200 million mark during the quarter, providing solid growth in a geographically diversified and sound credit portfolio."

    Operating Expenses

    Operating expenses increased by $3.7 million during the first quarter of 2005 from the first quarter of 2004. The increase was largely attributable to an increase in legal and professional fees of $1.5 million and increased charge for depreciation on equipment leased to others of $1.5 million. Excluding severance-related expenses taken during the first quarter of 2005, total compensation expenses declined by $1.1 million compared to the first quarter of 2004.
    Operating expenses increased $5.3 million in the first quarter of 2005 from the fourth quarter of 2004. This increase was primarily due to $2.0 million in severance-related costs, an increase in incentive-related accruals of $3.2 million, a funding contribution of $0.9 million to the Greater Bay Bancorp Foundation, and a reduction in deferred loan origination expenses of $0.8 million. These items were partially offset by $1.6 million in reduced occupancy expenses and a decline in legal and professional fees of $1.6 million, largely due to a decline in Sarbanes-Oxley compliance preparation expenses.

    Balance Sheet

    At March 31, 2005, Greater Bay Bancorp's total assets were $7.0 billion, total loans were $4.5 billion, total investments were $1.6 billion, and total deposits were $5.0 billion.
    Total loans increased by $49.3 million from March 31, 2004 to March 31, 2005. The year-over-year increase was attributable to increases in commercial loans of $77.3 million, construction loans of $20.1 million, and other real estate loans of $60.9 million. These increases were partially offset by a decline in commercial real estate loans of $92.4 million and in consumer loans of $16.2 million.
    Total loans increased by $16.4 million from December 31, 2004 to March 31, 2005. This first quarter growth reflects increases in commercial loans of $37.2 million, in real estate construction and land loans of $20.7 million and in other real estate loans of $30.2 million. These increases were partially offset by a decline in term real estate loans of $57.3 million.
    From March 31, 2004 to March 31, 2005, total investments declined by $579.2 million, which was reflective of the Company's stated intent of moving toward a more asset sensitive balance sheet structure. Total investments at March 31, 2005 declined by $10.1 million compared to December 31, 2004.
    Total core deposits (excluding institutional time deposits) declined by $2.1 million to $4.8 billion compared to March 31, 2004 and by $61.4 million compared to December 31, 2004. Total deposits at March 31, 2005 declined by $185.7 million versus March 31, 2004 to $5.0 billion and by $107.1 million versus December 31, 2004.
    Mr. Scordelis commented, "While balance sheet changes remain modest, the underlying shift in loan mix is both consistent with our stated focus and with the quality-oriented opportunities being afforded by our regional markets. Our core deposit results reflect the continued cyclical volatility of large title company, venture fund, and other specialty deposits. We continue to focus on pricing disciplines on both sides of our balance sheet to optimize the mix of yield and growth."

    Credit Quality Overview

    Net charge-offs in the first quarter of 2005 were $3.5 million, or 0.32% of average annualized loans, compared to $5.6 million or 0.50% of average annualized loans for the first quarter of 2004 and $4.6 million or 0.41% for the quarter ended December 31, 2004. Nonperforming assets increased to $53.4 million for the first quarter of 2005 compared to $49.2 million at March 31, 2004 and $44.3 million at December 31, 2004. The ratio of nonperforming assets to total assets was 0.77% at March 31, 2005, compared to 0.64% at March 31, 2004 and 0.64% at December 31, 2004. The ratio of non-performing loans to total loans was 1.17% at March 31, 2005, compared to 1.08% at March 31, 2004 and 0.98% at December 31, 2004.
    The following is a summary by type of non-performing assets as of March 31, 2005 and December 31, 2004:

Dollars in millions NON-PERFORMING ASSETS 31-Mar-05 31-Dec-04 Change ---------------------------------- ------------ ------------ --------- Commercial $8.2 $11.6 $(3.4) Real Estate Term and Construction 26.6 19.6 7.0 SBA 6.7 1.9 4.8 Venture Banking Group - 0.8 (0.8) Specialty Finance 11.7 10.4 1.3 Other 0.2 - 0.2 ------------ ------------ --------- Total Non-performing Loans 53.4 44.3 9.1 OREO - - - ------------ ------------ --------- Total Non-performing Assets $53.4 $44.3 $9.1 ============ ============ ========= Non-performing Loans to Total Loans 1.17% 0.98% Non-performing Assets to Total Assets 0.77% 0.64% ---------------------------------- ------------ ------------ ---------

    The Company recorded a negative provision of $1.7 million for credit losses for the quarter ended March 31, 2005, which reflects a reduction from the $2.0 million provision taken in the first quarter of 2004 and from the $0.2 million provision taken in the quarter ended December 31, 2004. The reduced provision level is consistent with both the Company's methodology for establishing the adequacy of its loan loss reserves as well as its actual loss experience.
    The allowance for loan losses was $99.4 million, or 2.21% of total loans at March 31, 2005, compared to $118.4 million, or 2.66% of total loans at March 31, 2004 and $107.5 million, or 2.40% of total loans, at December 31, 2004. The allowance methodology includes an assessment of relevant economic conditions, employment trends, commercial real estate trends and other data considered to be significant at that time. The results are then evaluated to determine the appropriate level of loan loss reserves for the Company. At December 31, 2004, the Company reclassified $6.5 million of its allowance for loan and lease losses related to unfunded credit commitments from the allowance for loan and lease losses to other liabilities. Prior periods have been similarly reclassified along with the relevant financial ratios. The process used in the determination of the adequacy of the reserve for unfunded credit commitments is consistent with the process for the allowance for loan and lease losses.
    "The slight upward movement in non-performing loans was concentrated in commercial real estate which is consistent with our past observations regarding the inherent lumpiness in this portfolio. While we continue to see both internal and published reports indicating modest upturns in sectors of our regional economy, we continue to devote substantial effort to and focus upon disciplined portfolio administration and controls," stated Mr. Scordelis.

    Capital Overview

    The Company's total equity to assets ratio was 10.88% at March 31, 2005 compared to 9.63% at March 31, 2004, and 11.01% at December 31, 2004. The Company's total tangible equity to tangible assets ratio was 7.58% at March 31, 2005 compared to 6.90% at March 31, 2004 and 7.66% as of December 31, 2004.
    The Company repurchased $10.7 million of its common stock under the Company's $70.0 million common share repurchase program during the first quarter of 2005 totaling approximately 416,800 shares at an average price of $25.63 per share. A new share repurchase authority totaling $80.0 million was announced during the first quarter of 2005. No shares were purchased under this authority during this period.
    During the first quarter of 2005, the Company completed open market purchases of approximately $48.5 million (or 18.3%) of its total of $265.2 million in originally issued face value of CODES issued in 2004. As of March 31, 2005, $216.7 million in face value of CODES remained outstanding.
    Mr. Scordelis commented, "We appropriately adapted our capital strategy to reflect evolving market and interest rate conditions, and remain sensitive to every option that leads to effective capital deployment and enhanced shareholder value."

    Net Interest Margin and Interest Rate Risk Management

    Greater Bay Bancorp's net interest margin for the first quarter of 2005 was 4.45%, compared to 4.51% for the first quarter of 2004 and 4.36% for the fourth quarter of 2004.
    "First quarter net interest margin expansion over the fourth quarter of 2004 reflected the portfolio's underlying net asset sensitivity position in the context of short-term market rate increases, bolstered by the maturation of above market rate wholesale borrowings and a shift to a higher yielding earning asset mix," stated James S. Westfall, Executive Vice President and Chief Financial Officer.

    Outlook For 2005

    Our guidance for 2005 is as follows:

--	Loan growth - based on the current forecast of moderate economic growth in our primary market area, and our clients' current business outlook, we anticipate future loan portfolio growth in the low to mid-single digits.
--	Deposit growth - we anticipate future core deposit growth in the mid-single digits. We intend to adjust our use of institutional time deposits and other non-relationship funding sources to meet funding needs not satisfied by core deposit and capital funding sources.
--	Credit quality - based on our continued aggressive credit risk management and the current economic outlook, we anticipate future net charge-offs from 40 basis points to 50 basis points of average loans outstanding.
--	Net interest margin - based on balance sheet trends and the rate sensitivity of the Company's assets and liabilities, we expect the margin to fluctuate between 4.35% and 4.50%.

    Conference Call

    The Company will broadcast its earnings conference call live via the Internet at 8:00 a.m. (PDT) on April 27, 2005. 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.FullDisclosure.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. PDT on April 27 through midnight on May 4, 2005 by dialing 800-642-1687 or 706-645-9291 and providing Conference ID 5671654.

    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, Bank of Santa Clara, Bay Area Bank, Bay Bank of Commerce, Coast Commercial Bank, Cupertino National Bank, Golden Gate Bank, Mid-Peninsula Bank, Mt. Diablo National Bank, Peninsula Bank of Commerce and San Jose 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 and the strength of the local economy. 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 international, national and local 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) any difficulties that may be encountered in consolidating the bank subsidiaries and in realizing operating efficiencies; (3) government regulation, including developments related to the ongoing insurance industry-wide investigations into contingent commissions and override payments; and (4) 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, 2004. 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 MARCH 31, 2005 - FINANCIAL SUMMARY (UNAUDITED) ($ in 000's)

---------------------------------------------------------------------- SELECTED CONSOLIDATED FINANCIAL CONDITION DATA:

Mar 31 Dec 31 Sept 30 2005 2004 2004 ----------- ----------- ----------- Cash and Due From Banks $213,806 $171,657 $184,639 Fed Funds Sold - - 8,000 Securities 1,592,120 1,602,268 1,825,289 Loans: Commercial 2,006,585 1,969,351 1,951,813 Term Real Estate - Commercial 1,540,496 1,597,756 1,647,568 ----------- ----------- ----------- Total Commercial 3,547,081 3,567,107 3,599,381 Real Estate Construction and Land 499,817 479,113 459,533 Real Estate Other 321,981 291,737 272,684 Consumer and Other 129,859 145,065 152,553 Deferred Fees and Discounts, Net (13,239) (13,902) (14,457) ----------- ----------- ----------- Total Loans, Net of Deferred Fees and Discounts 4,485,499 4,469,120 4,469,694 Allowance for Loan and Lease Losses(1) (99,355) (107,517) (113,460) ----------- ----------- ----------- Total Loans, Net(1) 4,386,144 4,361,603 4,356,234 Goodwill 212,077 212,432 178,317 Other Intangible Assets 36,986 39,228 41,310 Other Assets 539,423 544,869 517,704 ----------- ----------- ----------- Total Assets(1) $6,980,556 $6,932,057 $7,111,493 =========== =========== =========== Deposits: Demand, Non-Interest Bearing $1,065,004 $1,052,272 $1,053,348 NOW, MMDA and Savings 3,193,558 3,263,716 3,272,922 Time Deposits, $100,000 and over 602,432 647,531 716,911 Other Time Deposits 134,749 139,320 152,376 ----------- ----------- ----------- Total Deposits 4,995,743 5,102,839 5,195,557 ----------- ----------- ----------- Other Borrowings 775,361 578,664 714,883 Subordinated Debt 210,311 210,311 210,311 Other Liabilities(1) 227,263 264,556 238,221 ----------- ----------- ----------- Total Liabilities(1) 6,208,678 6,156,370 6,358,972 ----------- ----------- -----------

Preferred Stock of Real Estate Investment Trust Subsidiaries 12,577 12,621 12,582

Convertible Preferred Stock 103,569 103,816 91,917 Common Shareholders' Equity 655,732 659,250 648,022 ----------- ----------- ----------- Total Equity 759,301 763,066 739,939

----------- ----------- ----------- Total Liabilities and Total Equity(1) $6,980,556 $6,932,057 $7,111,493 =========== =========== ===========

Average Quarterly Total Loans, excluding Nonaccrual $4,394,582 $4,415,129 $4,412,082 Average Quarterly Securities $1,620,513 $1,781,461 $2,127,015 Average Quarterly Interest Earning Assets $6,015,095 $6,196,590 $6,539,097

Average Quarterly Deposits $5,058,544 $5,295,406 $5,311,140 Average Quarterly Interest Bearing Liabilities $4,856,794 $5,004,480 $5,383,185

Average Quarterly Assets(1) $6,948,017 $7,085,307 $7,442,983 Average Quarterly Common Shareholders' Equity $669,655 $660,867 $642,523 Average Quarterly Total Equity $773,410 $752,913 $734,443

Average YTD Interest Earning Assets $6,015,095 $6,545,422 $6,662,571 Average YTD Assets(1) $6,948,017 $7,431,444 $7,544,040 Average YTD Common Shareholders' Equity $669,655 $654,095 $651,820 Average YTD Total Equity $773,410 $746,111 $743,826

Total Regulatory Capital Tier I Capital $733,387 $727,319 $733,579 Total Risk-based Capital $803,966 $797,788 $804,839

Nonperforming Assets Nonaccrual Loans $52,585 $43,711 $58,741 OREO - - - Other Nonperforming Assets 840 569 534 ----------- ----------- ----------- Total Nonperforming Assets $53,425 $44,280 $59,275 =========== =========== ===========

Greater Bay Trust Company Assets $648,920 $634,343 $653,910

Jun 30 Mar 31 2004 2004 ----------------- --------------- Cash and Due From Banks $242,517 $251,895 Fed Funds Sold 22,000 216,000 Securities 2,250,302 2,171,330 Loans: Commercial 1,941,573 1,929,257 Term Real Estate - Commercial 1,658,921 1,632,921 ----------------- --------------- Total Commercial 3,600,494 3,562,178 Real Estate Construction and Land 415,155 479,692 Real Estate Other 268,947 261,127 Consumer and Other 171,003 146,022 Deferred Fees and Discounts, Net (12,575) (12,812) ----------------- --------------- Total Loans, Net of Deferred Fees and Discounts 4,443,024 4,436,207 Allowance for Loan and Lease Losses(1) (116,045) (118,411) ----------------- --------------- Total Loans, Net(1) 4,326,979 4,317,796 Goodwill 178,317 178,317 Other Intangible Assets 43,544 45,778 Other Assets 551,076 461,289 ----------------- --------------- Total Assets(1) $7,614,735 $7,642,405 ================= =============== Deposits: Demand, Non-Interest Bearing $1,045,651 $1,030,169 NOW, MMDA and Savings 3,361,211 3,133,005 Time Deposits, $100,000 and over 725,753 696,885 Other Time Deposits 174,297 321,384 ----------------- --------------- Total Deposits 5,306,912 5,181,443 ----------------- --------------- Other Borrowings 1,112,334 1,270,255 Subordinated Debt 210,311 210,311 Other Liabilities(1) 257,976 232,075 ----------------- --------------- Total Liabilities(1) 6,887,533 6,894,084 ----------------- ---------------

Preferred Stock of Real Estate Investment Trust Subsidiaries 12,162 12,162

Convertible Preferred Stock 91,924 92,050 Common Shareholders' Equity 623,116 644,109 ----------------- --------------- Total Equity 715,040 736,159

----------------- --------------- Total Liabilities and Total Equity(1) $7,614,735 $7,642,405 ================= ===============

Average Quarterly Total Loans, excluding Nonaccrual $4,414,731 $4,450,875 Average Quarterly Securities $2,318,903 $2,265,734 Average Quarterly Interest Earning Assets $6,733,634 $6,716,609

Average Quarterly Deposits $5,280,262 $5,210,518 Average Quarterly Interest Bearing Liabilities $5,613,803 $5,533,915

Average Quarterly Assets(1) $7,637,696 $7,554,333 Average Quarterly Common Shareholders' Equity $638,371 $674,670 Average Quarterly Total Equity $730,420 $766,721

Average YTD Interest Earning Assets $6,725,231 $6,716,609 Average YTD Assets(1) $7,595,354 $7,554,333 Average YTD Common Shareholders' Equity $656,520 $674,670 Average YTD Total Equity $748,570 $766,721

Total Regulatory Capital Tier I Capital $727,214 $704,790 Total Risk-based Capital $799,306 $775,571

Nonperforming Assets Nonaccrual Loans $42,230 $48,042 OREO - 1,200 Other Nonperforming Assets - - ----------------- --------------- Total Nonperforming Assets $42,230 $49,242 ================= ===============

Greater Bay Trust Company Assets $647,022 $640,063

(1) As of December 31, 2004, we reclassified the reserve for unfunded credit commitments from the allowance for loan losses to other liabilities. Amounts presented prior to the fourth quarter of 2004 have been reclassified to conform with the current presentation.

GREATER BAY BANCORP MARCH 31, 2005 - FINANCIAL SUMMARY (UNAUDITED) ($ in 000's)

---------------------------------------------------------------------- SELECTED QUARTERLY CONSOLIDATED OPERATING DATA:

First Fourth Third Second First Quarter Quarter Quarter Quarter Quarter 2005 2004 2004 2004 2004 -------- -------- -------- -------- -------- Interest Income $91,798 $92,576 $93,574 $93,604 $96,745 Interest Expense 25,756 24,473 23,307 21,722 21,374 -------- -------- -------- -------- -------- Net Interest Income Before Provision for Credit Losses 66,042 68,103 70,267 71,882 75,371 Provision for Credit Losses (1,678) 213 1,308 2,000 2,000 -------- -------- -------- -------- -------- Net Interest Income After Provision for Credit Losses 67,720 67,890 68,959 69,882 73,371

Non-interest Income: Insurance Commissions and Fees 38,122 29,727 33,276 32,916 34,581 Rental Revenue on Operating Leases 4,032 3,500 3,067 2,665 2,317 Service Charges and Other Fees 2,550 2,611 2,599 2,624 2,623 Loan and International Banking Fees 1,875 1,094 1,953 1,962 2,036 Trust Fees 1,024 1,041 972 974 851 Gains on Sale of Securities, net 290 1,636 2,820 1,572 2,342 ATM Network Revenue 280 302 314 333 360 Gains on Sale of Loans 95 1,315 129 699 338 Other Income 1,745 3,494 2,637 2,880 2,025 -------- -------- -------- -------- -------- Total Non-interest Income 50,013 44,720 47,767 46,625 47,473

Operating Expenses: Salaries & Benefits 53,756 46,826 48,282 49,423 52,603 Deferred Loan Origination Costs (3,596) (4,384) (3,772) (3,797) (3,019) -------- -------- -------- -------- -------- Total Compensation 50,160 42,442 44,510 45,626 49,584 Occupancy and Equipment 10,412 11,984 11,570 10,251 10,205 Legal and Other Professional Fees 4,809 6,441 6,525 4,646 3,298 Depreciation - Equipment Leased to Others 3,370 2,941 2,549 2,252 1,905 Amortization of Intangibles 2,083 2,072 2,071 2,072 2,071 Marketing and Promotion 1,787 1,963 1,741 1,729 1,669 Telephone, Postage and Supplies 1,607 1,943 1,670 1,853 1,749 Insurance 1,119 1,346 1,267 1,257 1,271 Data Processing 1,110 1,222 1,303 1,272 1,227 Contribution to Greater Bay Bancorp Foundation 900 - - - 900 Correspondent Bank Charges 522 580 623 692 862 FDIC Insurance and Regulatory Assessments 357 449 458 496 500 Client Services Expenses 224 242 318 272 327 Expenses on Other Real Estate Owned - - - 214 134 Other Expenses 4,852 4,400 3,654 3,987 3,886 -------- -------- -------- -------- -------- 83,312 78,025 78,259 76,619 79,588 Dividends Paid on Preferred Stock of Real Estate Investment Trust Subsidiaries 456 456 456 456 456 -------- -------- -------- -------- -------- Total Operating Expenses 83,768 78,481 78,715 77,075 80,044

Income Before Provision for Income Taxes 33,965 34,129 38,011 39,432 40,800 Provision for Income Taxes 12,455 13,050 15,556 14,899 15,948 -------- -------- -------- -------- -------- Net Income $21,510 $21,079 $22,455 $24,533 $24,852 ======== ======== ======== ======== ========

GREATER BAY BANCORP MARCH 31, 2005 - FINANCIAL SUMMARY (UNAUDITED) ($ in 000's, except share and per share data)

---------------------------------------------------------------------- SELECTED QUARTERLY CONSOLIDATED FINANCIAL CONDITION RATIOS:

Mar 31 Dec 31 Sept 30 2005 2004 2004 ----------- ----------- ----------- FINANCIAL RATIOS: Loan to Deposit Ratio 89.79% 87.58% 86.03% Ratio of Allowance for Loan and Lease Losses to(1): Average Loans 2.23% 2.41% 2.54% End of Period Loans 2.21% 2.40% 2.53% Total Nonaccrual Loans 188.94% 245.97% 193.15%

Ratio of Provision for Loan and Lease Losses to Average Loans, annualized -0.15% 0.02% 0.12%

Total Nonaccrual Loans to Total Loans 1.17% 0.98% 1.31% Total Nonperforming Assets to Total Assets 0.77% 0.64% 0.83%

Ratio of Quarterly Net Charge- offs to Average Loans, annualized 0.32% 0.41% 0.32% Ratio of YTD Net Charge-offs to YTD Average Loans 0.32% 0.40% 0.39%

Loan Growth, current quarter to prior year quarter 1.11% -1.51% -2.86% Loan Growth, current quarter to prior quarter, annualized 1.49% -0.05% 2.39% Loan Growth, YTD 1.49% -1.51% -2.01%

Core Deposit Growth, current quarter to prior year quarter(2) -0.04% 5.33% 7.10% Core Deposit Growth, current quarter to prior quarter, annualized(2) -5.18% -6.94% -9.79% Core Deposit Growth, YTD(2) -5.18% 5.33% 9.61%

Deposit Growth, current quarter to prior year quarter -3.58% -3.95% -4.47% Deposit Growth, current quarter to prior quarter, annualized -8.51% -7.10% -8.35% Deposit Growth, YTD -8.51% -3.95% -2.94%

Revenue Growth, current quarter to prior year quarter -5.53% -2.53% 1.22% Revenue Growth, current quarter to prior quarter, annualized 11.62% -17.56% -1.59%

Net Interest Income Growth, current quarter to prior year quarter -12.38% -9.46% -3.33% Net Interest Income Growth, current quarter to prior quarter, annualized -12.27% -12.25% -8.94%

Average Earning Assets to Average Total Assets 86.57% 87.46% 87.86% Average Earning Assets to Average Interest-Bearing Liabilities 123.85% 123.82% 121.47%

Capital Ratios: Tier 1 Leverage ratio 10.98% 10.67% 10.18% Tier 1 Risk-Based Capital ratio 13.08% 13.01% 12.98% Total Risk-Based Capital ratio 14.34% 14.27% 14.24% Total Equity to Assets ratio 10.88% 11.01% 10.40%

Risk Weighted Assets $5,605,961 $5,591,535 $5,651,203

Common Book Value Per Common Share $12.85 $12.88 $12.73 Total Common Shares Outstanding 51,045,917 51,179,450 50,907,052

NON-GAAP RATIOS(3):

Tangible Total Equity(4) to Tangible Assets(5) 7.58% 7.66% 7.55% Tangible Common Book Value Per Common Share(6) $7.97 $7.96 $8.42

Jun 30 Mar 31 2004 2004 ----------- ----------- FINANCIAL RATIOS: Loan to Deposit Ratio 83.72% 85.62% Ratio of Allowance for Loan and Lease Losses to(1): Average Loans 2.60% 2.63% End of Period Loans 2.60% 2.66% Total Nonaccrual Loans 274.79% 246.47%

Ratio of Provision for Loan and Lease Losses to Average Loans, annualized 0.18% 0.18%

Total Nonaccrual Loans to Total Loans 0.95% 1.08% Total Nonperforming Assets to Total Assets 0.55% 0.64%

Ratio of Quarterly Net Charge-offs to Average Loans, annualized 0.36% 0.50% Ratio of YTD Net Charge-offs to YTD Average Loans 0.43% 0.50%

Loan Growth, current quarter to prior year quarter -5.62% -6.00% Loan Growth, current quarter to prior quarter, annualized 0.62% -9.01% Loan Growth, YTD -4.20% -9.01%

Core Deposit Growth, current quarter to prior year quarter(2) 10.32% 6.20% Core Deposit Growth, current quarter to prior quarter, annualized(2) 22.70% 16.20% Core Deposit Growth, YTD(2) 19.91% 16.20%

Deposit Growth, current quarter to prior year quarter -4.35% -6.16% Deposit Growth, current quarter to prior quarter, annualized 9.74% -9.93% Deposit Growth, YTD -0.22% -9.93%

Revenue Growth, current quarter to prior year quarter 2.05% 1.58% Revenue Growth, current quarter to prior quarter, annualized -14.20% 24.63%

Net Interest Income Growth, current quarter to prior year quarter -2.60% -1.05% Net Interest Income Growth, current quarter to prior quarter, annualized -18.62% 0.80%

Average Earning Assets to Average Total Assets 88.16% 88.91% Average Earning Assets to Average Interest- Bearing Liabilities 119.95% 121.37%

Capital Ratios: Tier 1 Leverage ratio 9.83% 9.64% Tier 1 Risk-Based Capital ratio 12.72% 12.58% Total Risk-Based Capital ratio 13.98% 13.84% Total Equity to Assets ratio 9.39% 9.63%

Risk Weighted Assets $5,715,605 $5,604,682

Common Book Value Per Common Share $12.18 $12.57 Total Common Shares Outstanding 51,177,202 51,238,680

NON-GAAP RATIOS(3):

Tangible Total Equity(4) to Tangible Assets(5) 6.67% 6.90% Tangible Common Book Value Per Common Share(6) $7.84 $8.20

(1) As of December 31, 2004, we reclassified the reserve for unfunded credit commitments from the allowance for loan losses to other liabilities. Amounts presented prior to the fourth quarter of 2004 have been reclassified to conform with the current presentation.

(2) Core Deposits includes total deposits, less institutional time deposits.

(3) Management believes that these ratios are meaningful measures because they reflect the equity deployed in the Company's businesses. The following table sets forth the reconciliation of Common Shareholders' Equity to Tangible Total Equity and Total Assets to Tangible Assets:

Mar 31 Dec 31 Sept 30 Jun 30 Mar 31 2005 2004 2004 2004 2004

Common Share- holders' Equity $655,732 $659,250 $648,022 $623,116 $644,109 Conver- tible Pre- ferred Stock 103,569 103,816 91,917 91,924 92,050 ----------- ----------- ----------- ----------- ----------- Total Equity 759,301 763,066 739,939 715,040 736,159 Less: Goodwill and Other Intan- gible Assets (249,063) (251,660) (219,627) (221,861) (224,095) ----------- ----------- ----------- ----------- ----------- Tangible Total Equity (4) $510,238 $511,406 $520,312 $493,179 $512,064 =========== =========== =========== =========== ===========

Total Assets $6,980,556 $6,932,057 $7,111,493 $7,614,735 $7,642,405 Less: Goodwill and Other Intan- gible Assets (249,063) (251,660) (219,627) (221,861) (224,095) ----------- ----------- ----------- ----------- ----------- Tangible Assets (5) $6,731,493 $6,680,397 $6,891,866 $7,392,874 $7,418,310 =========== =========== =========== =========== ===========

(4) Tangible Total Equity includes Common Shareholders' Equity and Convertible Preferred Stock, less Goodwill and Other Intangible Assets.

(5) Tangible Assets includes Total Assets, less Goodwill and Other Intangible Assets.

(6) Computed by dividing Common Shareholders' Equity, less Goodwill and Other Intangible Assets by Total Common Shares outstanding.

GREATER BAY BANCORP MARCH 31, 2005 - FINANCIAL SUMMARY (UNAUDITED) ($ in 000's, except share and per share data)

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SELECTED QUARTERLY CONSOLIDATED OPERATING RATIOS: First Fourth Third Quarter Quarter Quarter 2005 2004 2004 ----------- ----------- ----------- GAAP EPS Earnings Per Common Share Basic(1) $0.38 $0.38 $0.41 Fully Diluted(1) $0.34 $0.33 $0.36

Weighted Average Common Shares Outstanding(1) 51,135,000 51,060,000 51,046,000

Weighted Average Common & Common Equivalent Shares Outstanding(1) 58,184,000 58,924,000 58,776,000

GAAP Ratios Return on Quarterly Average Assets, annualized 1.26% 1.18% 1.20% Return on Quarterly Average Common Shareholders' Equity, annualized 13.03% 12.69% 13.90% Return on Quarterly Average Total Equity, annualized 11.28% 11.14% 12.16% Net Interest Margin - Average Earning Assets(2) 4.45% 4.37% 4.27% Operating Expense Ratio(3) 4.89% 4.41% 4.21% Efficiency Ratio(4) 72.18% 69.56% 66.69% Total Operating Expenses $83,768 $78,481 $78,715 Total Revenue $116,055 $112,823 $118,034

NON-GAAP Ratios Efficiency Ratio (Excluding the operating results of ABD)(5) 68.79% 60.80% 60.26% ABD Operating Expenses $30,413 $28,300 $27,857 ABD Revenue $38,491 $30,286 $33,643

SELECTED QUARTERLY CONSOLIDATED OPERATING RATIOS: Second First Quarter Quarter 2004 2004 ----------- ----------- GAAP EPS Earnings Per Common Share Basic(1) $0.45 $0.44 Fully Diluted(1) $0.39 $0.42

Weighted Average Common Shares Outstanding(1) 51,108,000 52,654,000

Weighted Average Common & Common Equivalent Shares Outstanding(1) 58,929,000 54,835,000

GAAP Ratios Return on Quarterly Average Assets, annualized 1.29% 1.32% Return on Quarterly Average Common Shareholders' Equity, annualized 15.46% 14.82% Return on Quarterly Average Total Equity, annualized 13.51% 13.04% Net Interest Margin - Average Earning Assets(2) 4.29% 4.51% Operating Expense Ratio(3) 4.06% 4.26% Efficiency Ratio(4) 65.04% 65.16% Total Operating Expenses $77,075 $80,044 Total Revenue $118,507 $122,844

NON-GAAP Ratios Efficiency Ratio (Excluding the operating results of ABD)(5) 57.24% 59.00% ABD Operating Expenses $28,268 $28,139 ABD Revenue $33,245 $34,870

(1) The following table provides detailed components included in the calculation of the Company's basic and fully diluted earnings per common share and is presented to provide investors with information to enable them to better understand the reported EPS calculations. The table also shows the effect of the adoption of Emerging Issues Task Force (EITF) Issue 04-8, "The Effect of Contingently Convertible Debt on Diluted Earnings per Share", on the current and prior periods. The Company's outstanding convertible preferred stock was antidilutive for all periods presented.

GAAP EPS as reported Q1 2005 Q4 2004 Q3 2004 ----------------------------- ----------- ----------- -----------

Net Income as reported $21,510 $21,079 $22,455 Less: Dividends on convertible preferred stock (1,840) (1,653) (1,653) ----------- ----------- ----------- (A)Net Income available to common shareholders $19,670 $19,426 $20,802 Add: CODES interest, net of taxes 174 190 202 ----------- ----------- ----------- (B)Net Income available to common shareholders including CODES $19,844 $19,616 $21,004 =========== =========== ===========

(C)Weighted Average Common Shares Outstanding 51,135,000 51,060,000 51,046,000 Common Stock Equivalents- Stock Options 1,094,000 1,548,000 1,414,000 CODES due 2024 on if- converted basis 5,940,000 6,301,000 6,301,000 CODES due 2022 on if- converted basis 15,000 15,000 15,000 ----------- ----------- ----------- (D)Total Weighted Average Common & Common Equivalent Shares Outstanding 58,184,000 58,924,000 58,776,000 =========== =========== ===========

(A)/ Earnings Per Common Share - (C) Basic $0.38 $0.38 $0.41 (B)/ Earnings Per Common Share - (D) Fully Diluted $0.34 $0.33 $0.36

Fully Diluted EPS Excluding Impact of New Accounting Pronouncement (EITF 04-8) -----------------------------------------

Net Income as reported $21,510 $21,079 $22,455 Less: Dividends on convertible preferred stock (1,840) (1,653) (1,653) ----------- ----------- ----------- (E)Net Income available to common shareholders $19,670 $19,426 $20,802 =========== =========== ===========

Weighted Average Common Shares Outstanding 51,135,000 51,060,000 51,046,000 Common Stock Equivalents- Stock Options 1,094,000 1,548,000 1,414,000 ----------- ----------- ----------- (F)Weighted Average Common & Common Equivalent Shares Outstanding 52,229,000 52,608,000 52,460,000 =========== =========== ===========

(E)/ Earnings Per Common Share - (F) Fully Diluted excluding the impact of EITF 04-8 $0.38 $0.37 $0.40

Reconciliation: ----------------------------- Earnings Per Common Share - Fully Diluted as reported $0.34 $0.33 $0.36 Earnings Per Common Share - Fully Diluted excluding the impact of EITF 04-8 $0.38 $0.37 $0.40

----------- ----------- ----------- Difference $(0.04) $(0.04) $(0.04) =========== =========== ===========

GAAP EPS as reported Q2 2004 Q1 2004 ----------------------------------------- ----------- -----------

Net Income as reported $24,533 $24,852 Less: Dividends on convertible preferred stock (1,653) (1,653) ----------- ----------- (A)Net Income available to common shareholders $22,880 $23,199 Add: CODES interest, net of taxes 176 17 ----------- ----------- (B)Net Income available to common shareholders including CODES $23,056 $23,216 =========== ===========

(C)Weighted Average Common Shares Outstanding 51,108,000 52,654,000 Common Stock Equivalents-Stock Options 1,505,000 1,612,000 CODES due 2024 on if-converted basis 6,301,000 554,000 CODES due 2022 on if-converted basis 15,000 15,000 ----------- ----------- (D)Total Weighted Average Common & Common Equivalent Shares Outstanding 58,929,000 54,835,000 =========== ===========

(A)/ Earnings Per Common Share - Basic (C) $0.45 $0.44 (B)/ Earnings Per Common Share - Fully Diluted (D) $0.39 $0.42

Fully Diluted EPS Excluding Impact of New Accounting Pronouncement (EITF 04-8) ----------------------------------------------------

Net Income as reported $24,533 $24,852 Less: Dividends on convertible preferred stock (1,653) (1,653) ----------- ----------- (E)Net Income available to common shareholders $22,880 $23,199 =========== ===========

Weighted Average Common Shares Outstanding 51,108,000 52,654,000 Common Stock Equivalents-Stock Options 1,505,000 1,612,000 ----------- ----------- (F)Weighted Average Common & Common Equivalent Shares Outstanding 52,613,000 54,266,000 =========== ===========

(E)/ Earnings Per Common Share - Fully Diluted (F) excluding the impact of EITF 04-8 $0.43 $0.43

Reconciliation: ----------------------------------------- Earnings Per Common Share - Fully Diluted as reported $0.39 $0.42 Earnings Per Common Share - Fully Diluted excluding the impact of EITF 04-8 $0.43 $0.43

----------- ----------- Difference $(0.04) $(0.01) =========== ===========

(2) Net interest income for the period, annualized and divided by average quarterly interest earning assets.

(3) Total operating expenses for the period, annualized and divided by average quarterly assets.

(4) Total operating expenses divided by total revenue (the sum of net interest income and non-interest income).

(5) Total operating expenses less ABD operating expenses divided by total revenue less ABD revenue.

--30--TM/la*

CONTACT: Greater Bay Bancorp Byron A. Scordelis, 650-838-6101 James S. Westfall, 650-838-6108 or Silverman Heller Associates Philip Bourdillon/Gene Heller, 310-208-2550

KEYWORD: CALIFORNIA INDUSTRY KEYWORD: BANKING EARNINGS CONFERENCE CALLS SOURCE: Greater Bay Bancorp

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