First National Bank of Northern California Reports Third Quarter 2016 Earnings of $0.52 Per Diluted Share

SOUTH SAN FRANCISCO, CA--(Marketwired - Oct 24, 2016) - FNB Bancorp (OTCQB: 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 2016 of $2,444,000 or $0.52 per diluted share, compared to net earnings available to common stockholders of $2,239,000 or $0.48 per diluted share for the third quarter of 2015. 

The third quarter of 2016 operating results, when compared to the same period a year ago, were positively affected by the completion of the America California Bank ("ACB") acquisition that occurred in September, 2015. The ACB acquisition provided an opportunity for the Company to increase our interest earning assets and interest bearing liabilities in a cost effective manner. During the third quarter of 2016, our net interest income was $10.3 million, a decrease of $133,000 from the second quarter of 2016. This decrease was caused by a drop in yield that was partially offset by an increase in average interest earning assets.

"During the third quarter of 2016, the Company was able to grow our total assets by $29 million. This growth included an increase in gross loans of $16 million and an increase in available for sale investment securities of $16 million. The Company also experienced a $16 million increase in our demand deposit balances. Overall, the deposit portfolio declined by $4 million, due primarily to declines in interest rate sensitive money market balances. The bank was able to continue to grow our interest earning assets by obtaining $30 million in additional Federal Home Loan Bank advances from existing credit facilities during the quarter. The current low rate environment has put stress on our net interest margin, but we have found solid opportunities to expand our interest earning assets. Our net interest margin declined during the third quarter of 2016 by 10 basis points, due primarily to higher yielding loan payoffs that were partially reinvested into new loans at lower yields. We remain "well capitalized" by regulatory definition and our earnings are sufficient to support our growth and pay out quarterly cash dividends. We take pride in our accomplishments, and we make every effort possible to listen to our customers and provide them with the products they want delivered with customer service levels that exceed their expectations", stated CEO Tom McGraw. 

"Our total non-accrual loan balances decreased by $1.3 million during the third quarter. The decrease in non-accrual loans was not related to any changes in systemic problems identified within any segments or loan types within our loan portfolio but was isolated to improved individual customer relationships that were adequately collateralized. We continue to utilize a conservative underwriting approach to loan origination and we endeavor to cultivate new and existing deposit and loan relationships. There was no third quarter provision for loan losses and our allowance for loan loss was considered sufficient to absorb potential losses within our loan portfolio as of September 30, 2016", continued Tom McGraw.

CONSOLIDATED BALANCE SHEETS					(Unaudited)
(Dollars in thousands)					As of
					September 30,
					2016			2015
ASSETS
	Cash and due from banks				$	17,342		$	40,282
	Interest-bearing time deposits with financial institutions					204			1,246
	Securities available for sale, at fair value					358,877			315,560
	Other equity securities					7,206			6,748
	Loans, net of deferred loan fees and allowance for loan losses					741,407			696,888
	Bank premises, equipment and leasehold improvements, net					9,918			10,326
	Bank owned life insurance					16,145			15,742
	Accrued interest receivable					4,544			4,326
	Other real estate owned					1,346			838
	Goodwill					4,580			4,580
	Prepaid expenses					670			877
	Other assets					15,309			14,044
		TOTAL ASSETS			$	1,177,548		$	1,111,457
LIABILITIES
	Deposits:
		Demand, noninterest bearing			$	285,767		$	262,206
		Demand, interest bearing				110,147			84,682
		Savings and money market				491,047			512,534
		Time				116,496			129,943
			Total Deposits			1,003,457			989,365
	Federal Home Loan Bank advances					37,000			-
	Note payable					4,500			5,100
	Accrued expenses and other liabilities					18,847			13,302
			Total Liabilities			1,063,804			1,007,767
STOCKHOLDERS' EQUITY
	Common stock, no par value:					76,065			67,852
	Retained Earnings					33,123			33,046
	Accumulated other comprehensive earnings, net of tax					4,556			2,792
		Total Stockholders' Equity				113,744			103,690
		TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY			$	1,177,548		$	1,111,457

CONSOLIDATED STATEMENTS OF EARNINGS				(Unaudited)						(Unaudited)
(Amounts in thousands, except per share amounts)				Three Months Ended						Nine Months Ended
				September 30,						September 30,
				2016			2015			2016				2015
INTEREST INCOME
	Interest and fees on loans			$	9,301		$	8,309		$	28,735			$	23,874
	Interest on dividends and securities				1,815			1,575			5,231				4,351
	Interest on deposits with other financial institutions				1			9			3				36
		Total interest income			11,117			9,893			33,969				28,261
INTEREST EXPENSE
	Deposits				657			635			2,149				1,625
	Federal Home Loan Bank advances				10			1			19				2
	Interest on note payable				54			57			167				173
		Total interest expense			721			693			2,335				1,800
NET INTEREST INCOME					10,396			9,200			31,634				26,461
	Provision for loan losses				-			75			150				225
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES					10,396			9,125			31,484				26,236
NONINTEREST INCOME
	Service charges				623			618			1,862				1,854
	Net gain on sale of available-for-sale securities				140			29			381				250
	Earnings on bank owned life insurance				94			90			299				261
	Other income				250			287			764				1,002
		Total Noninterest Income			1,107			1,024			3,306				3,367
NONINTEREST EXPENSES
	Salaries and employee benefits				4,821			4,100			14,635				12,513
	Occupancy expense				645			592			1,893				1,906
	Equipment expense				445			718			1,317				1,533
	Professional fees				298			334			979				1,075
	FDIC assessment				150			150			450				450
	Telephone, postage, supplies				300			237			901				782
	Advertising expense				104			112			404				381
	Data processing expense				147			659			479				940
	Low income housing expense				71			70			213				212
	Surety insurance				88			122			262				298
	Director fees				72			72			216				216
	Other real estate owned expense (recovery), net				-			-			(10	)			(6	)
	Other expenses				372			313			1,210				911
		Total Noninterest Expense			7,513			7,479			22,949				21,211
EARNINGS BEFORE PROVISION FOR INCOME TAXES					3,990			2,670			11,841				8,392
	Provision for income taxes				1,546			431			4,382				2,283
NET EARNINGS AVAILABLE TO COMMON STOCKHOLDERS				$	2,444		$	2,239		$	7,459			$	6,109
Per Share Data:
	Basic earnings per share available to common stockholders			$	0.53		$	0.49		$	1.63			$	1.36
	Diluted earnings per share available to common stockholders			$	0.52		$	0.48		$	1.59			$	1.32
	Cash dividends declared			$	738		$	646		$	2,152			$	1,760
	Average shares outstanding				4,582			4,524			4,568				4,508
	Average diluted shares outstanding				4,687			4,643			4,686				4,635
	Shares oustanding as of the end of period				4,616			4,532			4,616				4,532

FINANCIAL HIGHLIGHTS
(Dollars in thousands)
			(Unaudited)								(Unaudited)
			Three Months Ended								Nine Months Ended
			September 30,								September 30,
			2016				2015				2016				2015
AVERAGE BALANCES:
	Total Assets		$	1,159,129			$	1,040,049			$	1,153,889			$	971,294
	Total Loans			740,218				624,123				741,180				601,098
	Total Earning Assets			1,092,060				933,292				1,081,448				884,986
	Total Deposits			1,014,541				921,615				1,017,172				853,753
	Total Stockholder's Equity			112,448				100,801				109,211				99,556
SELECTED PERFORMANCE DATA
	Annualized return on average assets			0.84	%			0.86	%			1.29	%			1.26	%
	Annualized return on average equity			8.69	%			8.88	%			13.66	%			12.27	%
	Net interest margin (taxable equivalent)			3.88	%			4.00	%			4.00	%			4.09	%
	Average loans as a percent of average deposits			72.96	%			67.72	%			72.87	%			70.41	%
	Average total stockholders' equity as a % of average total assets			9.70	%			9.69	%			9.46	%			10.25	%
	Annualized common dividend payout ratio			30.20	%			28.85	%			28.85	%			28.81	%

NON-PERFORMING ASSETS															(Extracted from
(Dollars In Thousands)															audited annual
			(Unaudited)				(Unaudited)				(Unaudited)				financial statements)				(Unaudited)
																			As of
			September 30,				June 30,				March 31,				December 31,				September 30,
			2016				2016				2016				2015				2015
Non-accrual loans			$	6,903			$	8,182			$	6,882			$	7,915			$	5,192
Other real estate owned				1,346				1,247				1,055				1,026				838
	Total non-performing assets			8,249				9,429				7,937				8,941				6,030
Loan loss reserve			$	10,092			$	10,038			$	9,943			$	9,970			$	9,940
Non-accrual loans/Gross loans				0.92	%			1.11	%			0.92	%			1.08	%			0.73	%
Loan loss reserves/Gross loans				1.34	%			1.36	%			1.33	%			1.36	%			1.40	%

CONSOLIDATED BALANCE SHEETS														(Extracted from
(Dollars in thousands)														audited annual
					(Unaudited)			(Unaudited)			(Unaudited)			financial statements)			(Unaudited)
																	As of
					September 30,			June 30,			March 31,			December 31,			September 30,
					2016			2016			2016			2015			2015
ASSETS
	Cash and due from banks				$	17,342		$	20,564		$	37,737		$	12,314		$	40,282
	Interest-bearing time deposits with financial institutions					204			205			205			205			1,246
	Securities available for sale, at fair value					358,877			342,420			329,396			329,207			315,560
	Other equity securities					7,206			7,206			6,756			6,748			6,748
	Loans, net of deferred loan fees and allowance for loan losses					741,407			725,471			733,991			722,747			696,888
	Bank premises, equipment and leasehold improvements, net					9,918			10,114			10,320			10,202			10,326
	Bank owned life insurance					16,145			16,050			15,946			15,845			15,742
	Accrued interest receivable					4,544			4,547			4,603			4,511			4,326
	Other real estate owned					1,346			1,247			1,055			1,026			838
	Goodwill					4,580			4,580			4,580			4,580			4,580
	Prepaid expenses					670			783			945			997			877
	Other assets					15,309			15,393			15,444			15,967			14,044
		TOTAL ASSETS			$	1,177,548		$	1,148,580		$	1,160,978		$	1,124,349		$	1,111,457
LIABILITIES
	Deposits:
		Demand, noninterest bearing			$	285,767		$	267,593		$	265,947		$	263,822		$	262,206
		Demand, interest bearing				110,147			112,591			113,337			102,304			84,682
		Savings and money market				491,047			508,605			526,557			491,633			512,534
		Time				116,496			118,700			124,410			125,430			129,943
			Total Deposits			1,003,457			1,007,489			1,030,251			983,189			989,365
	Federal Home Loan Bank advances					37,000			7,000			-			17,000			-
	Note payable					4,500			4,650			4,800			4,950			5,100
	Accrued expenses and other liabilities					18,847			17,026			17,230			15,048			13,302
			Total Liabilities			1,063,804			1,036,165			1,052,281			1,020,187			1,007,767
STOCKHOLDERS' EQUITY
	Common stock, no par value:					76,065			75,944			75,240			74,805			67,852
	Retained Earnings					33,123			31,424			29,666			27,816			33,046
	Accumulated other comprehensive earnings, net of tax					4,556			5,047			3,791			1,541			2,792
			Total Stockholders' Equity			113,744			112,415			108,697			104,162			103,690
			TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	1,177,548		$	1,148,580		$	1,160,978		$	1,124,349		$	1,111,457

CONSOLIDATED STATEMENTS OF INCOME				(Unaudited)
(Amounts in thousands, except per share amounts)				Three Months Ended
				September 30,				June 30,				March 31,				December 31,				September 30,
				2016				2016				2016				2015				2015
INTEREST INCOME
	Interest and fees on loans			$	9,301			$	9,563			$	9,871			$	9,361			$	8,309
	Interest on dividends and securities				1,815				1,731				1,685				1,657				1,575
	Interest on deposits with other financial institutions				1				1				1				3				9
		Total interest income			11,117				11,295				11,557				11,021				9,893
INTEREST EXPENSE
	Deposits				657				709				783				734				635
	Federal Home Loan Bank advances				10				1				8				7				1
	Interest on note payable				54				56				57				56				57
		Total interest expense			721				766				848				797				693
NET INTEREST INCOME					10,396				10,529				10,709				10,224				9,200
	Provision (recovery) for loan losses				-				75				75				(530	)			75
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES					10,396				10,454				10,634				10,754				9,125
NONINTEREST INCOME
	Service charges				623				618				621				647				618
	Net gain on sale of available-for-sale securities				140				57				184				89				29
	Earnings on bank owned life insurance				94				105				100				103				90
	Other income				250				277				237				290				287
		Total Noninterest Income			1,107				1,057				1,142				1,129				1,024
NONINTEREST EXPENSES
	Salaries and employee benefits				4,821				4,876				4,938				6,010				4,100
	Occupancy expense				645				617				631				611				592
	Equipment expense				445				438				434				393				718
	Professional fees				298				294				387				396				334
	FDIC assessment				150				150				150				150				150
	Telephone, postage, supplies				300				306				295				292				237
	Advertising expense				104				183				117				119				112
	Data processing expense				147				140				192				136				659
	Low income housing expense				71				71				71				71				70
	Surety insurance				88				87				87				83				122
	Director fees				72				72				72				72				72
	Other real estate owned expense (recovery), net				-				-				(10	)			10				-
	Other expenses				372				415				423				371				313
		Total Noninterest Expense			7,513				7,649				7,787				8,714				7,479
EARNINGS BEFORE PROVISION FOR INCOME TAXES					3,990				3,862				3,989				3,169				2,670
	Provision for income taxes				1,546				1,414				1,422				1,081				431
NET EARNINGS AVAILABLE TO COMMON STOCKHOLDERS				$	2,444			$	2,448			$	2,567			$	2,088			$	2,239
				(Unaudited)
				Three Months Ended
(Amounts in thousands, except per share				September 30,				June 30,				March 31,				December 31,				September 30,
amounts and percentages)				2016				2016				2016				2015				2015
Per Share Data:
Basic earnings per share available to common stockholders				$	0.53			$	0.53			$	0.56			$	0.47			$	0.49
Diluted earnings per share available to common stockholders				$	0.52			$	0.52			$	0.55			$	0.45			$	0.48
Cash dividends declared				$	738			$	686			$	683			$	680			$	646
Average shares outstanding					4,612				4,582				4,550				4,487				4,524
Average diluted shares outstanding					4,717				4,695				4,687				4,623				4,643
Shares outstanding as of end of period					4,616				4,607				4,566				4,542				4,316
SELECTED PERFORMANCE DATA
Annualized return on average assets					0.84	%			0.85	%			0.90	%			0.91	%			0.86	%
Annualized return on average equity					8.69	%			8.98	%			9.67	%			8.51	%			8.88	%
Net interest margin (taxable equivalent)					3.88	%			3.96	%			4.14	%			4.17	%			4.00	%
Average loans as a percent of average deposits					72.96	%			72.22	%			73.43	%			71.11	%			67.72	%
Average total stockholders' equity as a % of average total assets					9.70	%			9.43	%			9.26	%			10.68	%			9.69	%
Annualized common dividend payout ratio					30.20	%			28.02	%			26.61	%			32.57	%			28.85	%
																(Extracted from
LOANS																audited annual				(Unaudited)
(Dollars in thousands)				(Unaudited)				(Unaudited)				(Unaudited)				financial statements)				As of
				September 30,				June 30,				March 31,				December 31,				September 30,
				2016				2016				2016				2015				2015
Real Estate Loans:
Construction				$	38,162			$	29,251			$	42,465			$	44,816			$	35,868
Commercial					404,841				398,290				411,999				399,993				394,090
Multi family					83,946				82,637				59,993				63,597				63,928
Residential					173,476				174,084				173,437				171,964				172,280
Commercial & industrial loans					50,967				51,366				55,694				52,033				39,843
Consumer loans					1,630				1,311				1,675				1,574				1,497
Gross Loans					753,022				736,939				745,263				733,977				707,506
Net deferred loan fees					(1,523	)			(1,430	)			(1,329	)			(1,260	)			(678	)
Allowance for loan losses					(10,092	)			(10,038	)			(9,943	)			(9,970	)			(9,940	)
NET LOANS				$	741,407			$	725,471			$	733,991			$	722,747			$	696,888

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.

Website: www.fnbnorcal.com

Contacts:
Tom McGraw
Chief Executive Officer
[phone]

Dave Curtis
Chief Financial Officer
[phone]