First National Bank of Northern California Reports Second Quarter 2013 Earnings of $0.32 per Diluted Share

Marketwired

SOUTH SAN FRANCISCO, CA--(Marketwired - Jul 29, 2013) - FNB Bancorp (OTCQB: FNBG), parent company of First National Bank of Northern California (the "Bank"), today announced net earnings available to common shareholders for the second quarter of 2013 of $1,207,000 or $0.32 per diluted share, compared to net earnings available to common shareholders of $1,071,000 or $0.29 per diluted share for the second quarter of 2012. Dividend payments on the preferred shares outstanding were made as required by the Treasury Department's Small Business Lending (SBLF) Program and a $3,150,000 partial redemption of SBLF preferred stock was completed during the second quarter of 2013. Total assets as of June 30, 2013 were $901,488,000 compared to $748,750,000 as of June 30, 2012. Our net loans increased by $77,938,000 since June 30, 2012. During this same time frame, our deposits increased by $150,957,000 or 23%. At June 30, 2013, the Company had considerable liquid assets on hand of $281,422,000 in available for sale securities as well as $23,698,000 in cash and cash equivalents.

"During the second quarter of 2013, our island of Guam office was closed. This office was acquired by the Company in our acquisition of Oceanic Bank that was completed in September, 2012. Alternatives to closure of this branch office, such as a sale to another financial institution, either in whole or in part, were explored. After a considerable due diligence period, the Company was not able to find a suitable buyer and the office was closed on June 14, 2013. The Company intends to retain the loan relationships as well as the Certificate of Deposit customers through their maturity date, and will service these customers from our Battery Street, San Francisco location. Checking and savings deposit account holders will not be retained. Overall, the closure of the Guam branch office will allow the Company to concentrate our efforts on our operations in San Francisco and on the San Francisco peninsula. The consolidation of our Post Street office into our Battery Street office recently occurred during July, 2013. This action was taken in order to more properly align our cost structure with the low interest environment we find ourselves. The service levels in our branch offices are critically important to us and must be maintained. Any cost reductions that are implemented are done so only after due consideration of our customers and the customer experience," stated Tom McGraw, Chief Executive Officer.

   
Financial Highlights: Second Quarter, 2013  
   
Consolidated Statements of Earnings  
(in '000s except earnings per share amounts)  
                   
    Three months   Three months   Six months   Six months  
    ended   ended   ended   ended  
    June 30,   June 30,   June 30,   June 30,  
    2013   2012   2013   2012  
                           
Interest income   $ 9,317   $ 7,878   $ 18,665   $ 15,760  
Interest expense     639     653     1,321     1,337  
  Net interest income     8,678     7,225     17,344     14,423  
Provision for loan losses     (510 )   (400 )   (1,110 )   (800 )
Noninterest income     1,133     1,415     2,158     3,335  
Noninterest expense     7,385     6,498     15,124     13,551  
  Income before income taxes     1,916     1,742     3,268     3,407  
Provision for income taxes     (537 )   (514 )   (959 )   (891 )
  Net earnings     1,379     1,228     2,309     2,516  
  Dividends and discount accretion on preferred stock     172     157     330     343  
  Net earnings available to common shareholders   $ 1,207   $ 1,071   $ 1,979   $ 2,173  
                           
Basic earnings per share   $ 0.32   $ 0.29   $ 0.53   $ 0.59  
Diluted earnings per share   $ 0.32   $ 0.29   $ 0.52   $ 0.58  
                           
Average assets   $ 904,421   $ 750,351   $ 899,231   $ 742,895  
Average equity   $ 93,938   $ 88,476   $ 94,654   $ 88,177  
Return on average assets     0.53 %   0.57 %   0.44 %   0.59 %
Return on average equity     5.14 %   4.84 %   4.18 %   4.93 %
Efficiency ratio     75 %   75 %   78 %   76 %
Net interest margin (taxable equivalent)     4.41 %   4.48 %   4.44 %   4.52 %
Average shares outstanding     3,729     3,690     3,722     3,688  
Average diluted shares outstanding     3,813     3,752     3,810     3,739  
                           
                           
                           
Financial Highlights: Second Quarter, 2013  
   
Consolidated Balance Sheets  
(in '000s)  
                   
    As of   As of   As of   As of  
    June 30,   December 31,   June 30,   December 31,  
    2013   2012   2012   2011  
                           
Assets:                          
Cash and cash equivalents   $ 23,698   $ 27,861   $ 44,856   $ 38,474  
Interest-bearing time deposits with other financial institutions    
8,473
   
13,216
   
-
   
-
 
Securities available for sale, at fair value     281,422     234,945     203,548     187,664  
Loans, net     531,238     541,563     453,300     443,721  
Premises, equipment and leasehold improvements, net     12,699     12,706     12,916     13,227  
Other real estate owned, net     6,675     6,650     1,923     2,747  
Goodwill     1,841     1,841     1,841     1,841  
Other equity securities     5,300     5,464     4,603     4,608  
Accrued interest receivable     3,886     3,760     3,621     3,614  
Prepaid expenses     718     1,372     1,609     2,107  
Bank owned life insurance     11,975     11,785     11,594     9,521  
Other assets     13,563     14,177     8,939     8,117  
Total assets   $ 901,488   $ 875,340   $ 748,750   $ 715,641  
                           
Liabilities and stockholders' equity:                          
Deposits:                          
Demand and NOW   $ 269,369   $ 253,849   $ 223,341   $ 202,690  
Savings and money market     385,017     343,437     323,372     310,237  
Time     148,414     171,066     105,130     108,851  
  Total deposits     802,800     768,352     651,843     621,778  
Accrued expenses and other liabilities     8,597     11,630     7,586     6,667  
  Total liabilities     811,397     779,982     659,429     628,445  
Stockholders' equity     90,091     95,358     89,321     87,196  
  Total liab. and stockholders' equity   $ 901,488   $ 875,340   $ 748,750   $ 715,641  
                           
Other Financial Information                          
                           
Allowance for loan losses   $ 9,745   $ 9,124   $ 8,458   $ 9,897  
Nonperforming assets   $ 18,527   $ 19,124   $ 20,953   $ 21,845  
Total gross loans   $ 540,983   $ 550,687   $ 461,758   $ 453,618  
                           

"Our investment portfolio and deposit portfolio experienced growth during the three and six months ended June 30, 2013. Our core deposit balances are at historical highs. Our loan portfolio declined during the second quarter of 2013, due primarily to the repayment of several large commercial real estate loans, yet our loan application pipeline has increased. With the recent uptick in the three, five and ten year U.S. Treasury yields, our loan prepayments are expected to slow during the third quarter of 2013 when compared to the second quarter of 2013. Overall, our assets and our deposits grew by 0.4% during the quarter, despite the closure of our office on the island of Guam. Our stockholders' equity decreased during the second quarter of 2013, due primarily to the redemption of $3,150,000 or 25% of the outstanding Preferred stock - series C issued to the U.S. Treasury as part of their SBLF program. This was the first redemption we have consummated with the U.S. Treasury. As our capital base will allow, the Board has determined that additional redemptions of this type may be in the Bank's best interest. The Oceanic Bank purchase has now been fully integrated into the operations of the Company. Management has taken steps designed to prudently reduce our future noninterest expenses through the consolidation of branch offices while at the same time keeping our focus on maintaining the highest level of customer service. We understand that we must meet or exceed our customers' expectations relative to their banking experience with us. For 50 years, we have built our organization around the idea that we must earn our customers' business," continued CEO Tom McGraw.

Cautionary Statement: This release contains certain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those stated herein. Management's assumptions and projections are based on their anticipation of future events and actual performance may differ materially from those projected. Risks and uncertainties which could impact future financial performance include, among others, (a) competitive pressures in the banking industry; (b) changes in the interest rate environment; (c) general economic conditions, either nationally or regionally or locally, including fluctuations in real estate values; (d) changes in the regulatory environment; (e) changes in business conditions or the securities markets and inflation; (f) possible shortages of gas and electricity at utility companies operating in the State of California, and (g) the effects of terrorism, including the events of September 11, 2001, and thereafter, and the conduct of war on terrorism by the United States and its allies. Therefore, the information set forth herein, together with other information contained in the periodic reports filed by FNB Bancorp with the Securities and Exchange Commission, should be carefully considered when evaluating its business prospects. FNB Bancorp undertakes no obligation to update any forward-looking statements contained in this release.

Contact:

Tom McGraw
Chief Executive Officer
(650) 875-4864

Dave Curtis
Chief Financial Officer
(650) 875-4862

Website: www.fnbnorcal.com
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