CoBiz (COBZ)

uses.  The Company also entered into an interest rate swap agreement during January 2003 that significantly reduced our cash outlays on our fixed-rate junior subordinated debentures.

Net cash used in investing activities totaled $265.1 million and $182.1 million for the years ended December 31, 2003 and 2002, respectively.  The increase in cash used in investing activities was primarily related to a significant net addition to the investment portfolio, primarily mortgage-backed securities ($47.7 million) that the Company uses to manage liquidity and interest rate risk; the purchase of bank-owned life insurance ($10.0 million) to offset future benefit costs; the acquisitions of ACMG and FDL ($1.3 million and $2.1 million, respectively); and an increase in net loan and lease originations and repayments ($21.2 million) due to the growth of the Company.

Net cash provided by financing activities totaled $248.6 million and $180.0 million for the years ended December 31, 2003 and 2002, respectively.  The increase in net cash provided by financing activities was primarily attributed to an increase in net advances from the Federal Home Loan Bank ($119.6 million), an increase in cash flows from securities sold under agreement to repurchase ($39.0 million) and the issuance of junior subordinated debentures ($20.6 million), offset by reduced cash inflows from total deposits and federal funds purchased ($109.7 million) during the year ended 2003 as compared to 2002.  Although the Company grew its deposit base during 2003, it did not increase at the same level as in 2002, primarily due to the soft economy in Colorado.  As a result, the Company increased its level of wholesale borrowing (FHLB advances and street repurchase agreements) during 2003.  The issuance of the junior subordinated debentures in September 2003, was part of a strategy to obtain funds with a low cost of capital to finance our acquisitions and to provide capital to the Bank.