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FNB Bancorp Reports Third Quarter 2017 Earnings of $0.43 Per Diluted Share

SOUTH SAN FRANCISCO, CA--(Marketwired - Oct 26, 2017) - FNB Bancorp (NASDAQ: FNBG), parent company of First National Bank of Northern California (the "Bank"), today announced net earnings available to common stockholders for the third quarter of 2017 of $3,311,000 or $0.43 per diluted share, compared to net earnings available to common shareholders of $2,444,000 or $0.33 per diluted share for the third quarter of 2016.

During the third quarter of 2017, our net interest income was $11.8 million, an increase of $1.4 million from the third quarter of 2016. This increase was primarily the result of an increase in the average volume of our interest earning assets outstanding coupled with an increase in our earning rate when compared to the same period in 2016.

"During the third quarter of 2017, the Company was able to grow our net loan portfolio by $20.6 million. Loan production was strong during the quarter, and the Bank had the opportunity to purchase some very seasoned, high quality, single family residential mortgage loans during the quarter. Also during the quarter, our deposit balances increased by $22.7 million, which included a $13.5 million increase in our non-interest bearing DDA accounts. The growth in both the loan and deposit portfolios was complemented with a decrease in short term FHLB borrowings of $6 million. Net interest income was helped by the fact that the adjustable rate portion of our loan portfolio has begun to reset to higher yields, in response to increases to short term rates by the Federal Open Market Committee and increases in the short term LIBOR rates. The current low rate environment has put pressure on our net interest margin, but we have added enough interest earning assets at favorable spreads that we were able to expand our net interest margin by 4 basis points during the quarter. Our net interest margin was 3.97% for the third quarter and our increased earnings coupled with a flattening yield curve have allowed our capital base to increase by $2.5 million during the quarter and increase our cash dividend payout to $0.13 per quarter. We worked hard during the third quarter to maintain our profitability while continuing to provide for our customers' needs, providing them with the products they want delivered in an efficient and effective manner," stated CEO Tom McGraw.

"Our total non-accrual loans balance decreased by $0.4 million during the third quarter of 2017. This decrease was the result of management efforts to reduce the levels of our non-accrual loans. We utilize a conservative underwriting approach in our loan origination process which should serve to keep problem loans at acceptable levels as we work to prudently increase the size of our loan portfolio. There was no loan provision for or recovery of loan losses during the third quarter. We continue to see strong credit characteristics within our interest earning assets and our allowance for loan losses continues to be adequate for the level of risk that management has identified in our loan portfolio," continued Tom McGraw.

FNB Bancorp and Subsidiary

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Dollar and share amounts in thousands, except earnings per share)

As of

September 30,

2017

2016

ASSETS

Cash and due from banks

$

23,714

$

17,342

Interest-bearing time deposits with financial institutions

230

204

Securities available for sale, at fair value

360,301

358,877

Other equity securities

7,567

7,206

Loans, net of deferred loan fees and allowance for loan losses

829,100

741,407

Bank premises, equipment and leasehold improvements, net

9,417

9,918

Bank owned life insurance

16,540

16,145

Accrued interest receivable

4,804

4,544

Other real estate owned

1,471

1,346

Goodwill

4,580

4,580

Prepaid expenses

469

670

Other assets

16,421

15,309

TOTAL ASSETS

$

1,274,614

$

1,177,548

LIABILITIES

Deposits:

Demand, noninterest bearing

$

309,753

$

285,767

Demand, interest bearing

122,353

110,147

Savings and money market

482,335

491,047

Time

130,630

116,496

Total Deposits

1,045,071

1,003,457

Federal Home Loan Bank advances

85,000

37,000

Note payable

3,900

4,500

Accrued expenses and other liabilities

19,447

18,847

Total Liabilities

1,153,418

1,063,804

STOCKHOLDERS' EQUITY

Common stock, no par value:

85,309

76,065

Retained earnings

34,655

33,123

Accumulated other comprehensive earnings, net of tax

1,232

4,556

Total Stockholders' Equity

121,196

113,744

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

1,274,614

$

1,177,548

FNB Bancorp and Subsidiary

CONSOLIDATED STATEMENTS OF EARNINGS

(Dollar and share amounts in thousands, except earnings per share)

(Unaudited)

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

INTEREST INCOME

Interest and fees on loans

$

10,646

$

9,301

$

31,089

$

28,735

Interest on dividends and securities

2,085

1,815

6,017

5,231

Interest on deposits with other financial institutions

54

6

84

37

Total interest income

12,785

11,122

37,190

34,003

INTEREST EXPENSE

Deposits

737

657

2,050

2,149

Federal Home Loan Bank advances

241

10

601

19

Interest on note payable

54

54

162

167

Total interest expense

1,032

721

2,813

2,335

NET INTEREST INCOME

11,753

10,401

34,377

31,668

(Recovery of) provision for loan losses

-

-

(140)

150

NET INTEREST INCOME AFTER (RECOVERY OF) PROVISION FOR LOAN LOSSES

11,753

10,401

34,517

31,518

NONINTEREST INCOME

Service charges

571

623

1,732

1,862

Net gain on sale of available-for-sale securities

59

140

210

381

Earnings on bank owned life insurance

103

95

293

300

Other income

239

244

759

729

Total Noninterest Income

972

1,102

2,994

3,272

NONINTEREST EXPENSES

Salaries and employee benefits

4,824

4,821

14,460

14,635

Occupancy expense

704

645

2,062

1,893

Equipment expense

436

445

1,244

1,317

Professional fees

340

298

1,221

979

FDIC assessment

90

150

310

450

Telephone, postage, supplies

321

300

943

901

Advertising expense

127

104

342

404

Data processing expense

145

147

428

479

Low income housing expense

122

71

350

213

Surety insurance

89

88

262

262

Director fees

72

72

216

216

Other real estate owned expense (recovery), net

-

-

17

(10)

Other expenses

378

372

1,076

1,210

Total Noninterest Expense

7,648

7,513

22,931

22,949

EARNINGS BEFORE PROVISION FOR INCOME TAXES

5,077

3,990

14,580

11,841

Provision for income taxes

1,766

1,546

4,829

4,382

NET EARNINGS AVAILABLE TO COMMON STOCKHOLDERS

$

3,311

$

2,444

$

9,751

$

7,459

Per Share Data:

Basic earnings per share available to common stockholders

$

0.45

$

0.34

$

1.33

$

1.03

Diluted earnings per share available to common stockholders

$

0.43

$

0.33

$

1.29

$

1.01

Cash dividends declared

$

959

$

738

$

2,620

$

2,107

Average shares outstanding

7,375

7,264

7,344

7,216

Average diluted shares outstanding

7,619

7,428

7,579

7,402

Shares outstanding as of the end of period

7,403

7,269

7,403

7,269

FNB Bancorp and Subsidiary

FINANCIAL HIGHLIGHTS

(Dollar and share amounts in thousands, except earnings per share)

(Unaudited)

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

AVERAGE BALANCES:

Total Assets

$

1,264,864

$

1,159,129

$

1,251,583

$

1,153,889

Total Loans

820,497

740,218

819,519

741,180

Total Earning Assets

1,198,556

1,092,060

1,186,265

1,081,448

Total Deposits

1,042,106

1,014,541

1,026,003

1,017,172

Total Stockholder's Equity

119,334

112,448

115,479

109,211

SELECTED PERFORMANCE DATA

Annualized return on average assets

1.05

%

0.84

%

1.04

%

0.86

%

Annualized return on average equity

11.10

%

8.69

%

11.26

%

9.11

%

Net interest margin (taxable equivalent)

3.97

%

3.88

%

3.96

%

4.00

%

Average loans as a percent of average deposits

78.73

%

72.96

%

79.87

%

72.87

%

Average total stockholders' equity as a % of average total assets

9.43

%

9.70

%

9.23

%

9.46

%

Annualized common dividend payout ratio

28.96

%

30.20

%

26.87

%

28.25

%

NON-PERFORMING ASSETS

(Extracted from

(Dollars In Thousands)

audited annual

(Unaudited)

(Unaudited)

(Unaudited)

financial statements)

(Unaudited)

September 30,

June 30,

March 31,

December 31,

September 30,

2017

2017

2017

2016

2016

Non-accrual loans

$

6,933

$

7,363

$

8,444

$

6,647

$

6,903

Other real estate owned

1,471

1,459

1,443

1,427

1,346

Total non-performing assets

$

8,404

$

8,822

$

9,887

$

8,074

$

8,249

Loan loss reserve

$

10,250

$

10,177

$

10,144

$

10,167

$

10,092

Non-accrual loans/Gross loans

0.83

%

0.90

%

1.03

%

0.84

%

0.92

%

Loan loss reserves/Gross loans

1.22

%

1.24

%

1.24

%

1.28

%

1.34

%

FNB Bancorp and Subsidiary

CONSOLIDATED BALANCE SHEETS

(Dollar and share amounts in thousands, except earnings per share)

(Extracted from

audited annual

(Unaudited)

(Unaudited)

(Unaudited)

financial statements)

(Unaudited)

September 30,

June 30,

March 31,

December 31,

September 30,

2017

2017

2017

2016

2016

ASSETS

Cash and due from banks

$

23,714

$

21,859

$

25,337

$

15,758

$

17,342

Interest-bearing time deposits with financial institutions

230

230

205

205

204

Securities available for sale, at fair value

360,301

362,006

353,364

360,105

358,877

Other equity securities

7,567

7,567

7,211

7,206

7,206

Loans, net of deferred loan fees and allowance for loan losses

829,100

808,508

807,191

782,485

741,407

Bank premises, equipment and leasehold improvements, net

9,417

9,416

9,571

9,837

9,918

Bank owned life insurance

16,540

16,438

16,349

16,247

16,145

Accrued interest receivable

4,804

4,945

4,785

4,942

4,544

Other real estate owned

1,471

1,459

1,443

1,427

1,346

Goodwill

4,580

4,580

4,580

4,580

4,580

Prepaid expenses

469

621

768

856

670

Other assets

16,421

16,032

15,917

15,746

15,309

TOTAL ASSETS

$

1,274,614

$

1,253,661

$

1,246,721

$

1,219,394

$

1,177,548

LIABILITIES

Deposits:

Demand, noninterest bearing

$

309,753

$

296,249

$

287,029

$

296,273

$

285,767

Demand, interest bearing

122,353

129,435

125,643

121,086

110,147

Savings and money market

482,335

472,050

496,697

487,763

491,047

Time

130,630

124,604

115,622

114,384

116,496

Total Deposits

1,045,071

1,022,338

1,024,991

1,019,506

1,003,457

Federal Home Loan Bank advances

85,000

91,000

86,000

71,000

37,000

Note payable

3,900

4,050

4,200

4,350

4,500

Accrued expenses and other liabilities

19,447

17,546

17,198

14,224

18,847

Total Liabilities

1,153,418

1,134,934

1,132,389

1,109,080

1,063,804

STOCKHOLDERS' EQUITY

Common stock, no par value:

85,309

85,159

84,603

84,283

76,065

Retained Earnings

34,655

32,306

29,842

27,577

33,123

Accumulated other comprehensive earnings (losses), net of tax

1,232

1,262

(113)

(1,546)

4,556

Total Stockholders' Equity

121,196

118,727

114,332

110,314

113,744

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

1,274,614

$

1,253,661

$

1,246,721

$

1,219,394

$

1,177,548

FNB Bancorp and Subsidiary

CONSOLIDATED STATEMENTS OF INCOME

(Dollar and share amounts in thousands, except earnings per share)

(Unaudited)

Three Months Ended

September 30,

June 30,

March 31,

December 31,

September 30,

2017

2017

2017

2016

2016

INTEREST INCOME

Interest and fees on loans

$

10,646

$

10,370

$

10,073

$

9,578

$

9,301

Interest on dividends and securities

2,085

1,989

1,943

1,925

1,815

Interest on deposits with other financial institutions

54

19

11

7

6

Total interest income

12,785

12,378

12,027

11,510

11,122

INTEREST EXPENSE

Deposits

737

677

636

631

657

Federal Home Loan Bank advances

241

214

146

48

10

Interest on note payable

54

55

53

55

54

Total interest expense

1,032

946

835

734

721

NET INTEREST INCOME

11,753

11,432

11,192

10,776

10,401

Recovery of loan losses

-

(140)

-

-

-

NET INTEREST INCOME AFTER RECOVERY OF LOAN LOSSES

11,753

11,572

11,192

10,776

10,401

NONINTEREST INCOME

Service charges

571

564

597

599

623

Net gain on sale of available-for-sale securities

59

123

28

57

140

Earnings on bank owned life insurance

102

89

102

102

95

Other income

240

236

283

565

244

Total Noninterest Income

972

1,012

1,010

1,323

1,102

NONINTEREST EXPENSES

Salaries and employee benefits

4,824

4,862

4,774

4,839

4,821

Occupancy expense

704

707

651

635

645

Equipment expense

436

406

402

448

445

Professional fees

340

408

473

384

298

FDIC assessment

90

90

130

150

150

Telephone, postage, supplies

321

325

297

298

300

Advertising expense

127

107

108

120

104

Data processing expense

145

144

139

178

147

Low income housing expense

122

123

105

71

71

Surety insurance

89

89

84

85

88

Director fees

72

72

72

72

72

Other real estate owned expense, net

-

7

10

5

-

Other expenses

378

338

360

458

372

Total Noninterest Expense

7,648

7,678

7,605

7,743

7,513

EARNINGS BEFORE PROVISION FOR INCOME TAXES

5,077

4,906

4,597

4,356

3,990

Provision for income taxes

1,766

1,555

1,508

1,314

1,546

NET EARNINGS AVAILABLE TO COMMON STOCKHOLDERS

$

3,311

$

3,351

$

3,089

$

3,042

$

2,444

FNB Bancorp and Subsidiary

(Dollar and share amounts in thousands, except earnings per share)

(Unaudited)

Three Months Ended

September 30,

June 30,

March 31,

December 31,

September 30,

2017

2017

2017

2016

2016

Per Share Data:

Basic earnings per share available to common stockholders

$ 0.45

$

0.46

$

0.42

$

0.42

$

0.34

Diluted earnings per share available to common stockholders

$ 0.43

$

0.44

$

0.41

$

0.41

$

0.33

Cash dividends declared

$ 959

$

882

$

780

$

739

$

738

Average shares outstanding

7,375

7,342

7,301

7,275

7,264

Average diluted shares outstanding

7,619

7,585

7,518

7,461

7,429

Shares outstanding as of end of period

7,403

7,362

7,311

7,280

7,269

SELECTED PERFORMANCE DATA

Annualized return on average assets

1.05%

1.07%

1.00%

1.02%

0.84%

Annualized return on average equity

11.10%

11.58%

11.24%

10.88%

8.69%

Net interest margin (taxable equivalent)

3.97%

3.93%

3.98%

3.89%

3.87%

Average loans as a percent of average deposits

78.73%

81.18%

79.73%

75.01%

72.96%

Average total stockholders' equity as a % of average total assets

9.43%

9.21%

8.91%

9.38%

9.70%

Annualized common dividend payout ratio

28.96%

26.32%

25.25%

24.29%

30.20%

(Extracted from

LOANS

audited annual

(Dollars in thousands)

(Unaudited)

(Unaudited)

(Unaudited)

financial statements)

(Unaudited)

September 30,

June 30,

March 31,

December 31,

September 30,

2017

2017

2017

2016

2016

Real estate loans:

Construction

$ 49,374

$

46,325

$

49,490

$

43,683

$

38,163

Commercial

443,556

436,286

431,295

421,222

404,964

Multi family

109,396

104,373

112,911

105,963

83,944

Residential

174,000

166,610

169,373

170,523

173,441

Commercial & industrial loans

51,827

57,217

49,277

48,874

50,870

Consumer loans

11,193

8,884

6,065

3,533

1,630

Gross loans

839,346

819,695

818,411

793,798

753,012

Net deferred loan cost (fees)

4

(1,010)

(1,076)

(1,146)

(1,513)

Allowance for loan losses

(10,250)

(10,177)

(10,144)

(10,167)

(10,092)

NET LOANS

$ 829,100

$

808,508

$

807,191

$

782,485

$

741,407

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.

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