FNB Bancorp Reports Second Quarter 2017 Earnings of $0.44 Per Diluted Share

SOUTH SAN FRANCISCO, CA--(Marketwired - Jul 24, 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 second quarter of 2017 of $3,351,000 or $0.44 per diluted share, compared to net earnings available to common shareholders of $2,448,000 or $0.33 per diluted share for the second quarter of 2016.

During the second quarter of 2017, our net interest income was $11.4 million, an increase of $882,000 from the second quarter of 2016. This increase was primarily the result of an increase in the average volume of our interest earning assets outstanding partially offset by a slight reduction in our earning rate when compared to the same period in 2016. 

"During the second quarter of 2017, the Company was able to grow our net loan portfolio by $1.3 million. Loan production was strong during the first half of the quarter, however, commercial real estate loan prepayments during June lowered our overall loan portfolio growth rate. During the quarter, our deposit balances decreased by $3 million, however, we were able to grow our non-interest bearing DDA account balances by $9 million. The growth in loans and the reduction in the overall deposit balances was funded by an increase in short term FHLB borrowings of $5 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 spreads that have allowed us to expand our net interest income at an acceptable rate. Our net interest margin was 3.93% for the second quarter and our increased earnings coupled with a flattening yield curve have allowed our capital base to increase by over $4 million during the quarter. We worked hard during the second quarter to improve our profitability while continuing to provide for our customers' needs and provide 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 $1 million during the second quarter. 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 a $140,000 recovery of provision for loan losses during the second quarter that was related to improving credit characteristics 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
					June 30,
					2017			2016
ASSETS
	Cash and due from banks				$	21,859		$	20,564
	Interest-bearing time deposits with financial institutions					230			205
	Securities available for sale, at fair value					362,006			342,420
	Other equity securities					7,567			7,206
	Loans, net of deferred loan fees and allowance for loan losses					808,508			725,471
	Bank premises, equipment and leasehold improvements, net					9,416			10,114
	Bank owned life insurance					16,438			16,050
	Accrued interest receivable					4,945			4,547
	Other real estate owned					1,459			1,247
	Goodwill					4,580			4,580
	Prepaid expenses					621			783
	Other assets					16,032			15,393
		TOTAL ASSETS			$	1,253,661		$	1,148,580
LIABILITIES
	Deposits:
		Demand, noninterest bearing			$	296,249		$	267,593
		Demand, interest bearing				129,435			112,591
		Savings and money market				472,050			508,605
		Time				124,604			118,700
			Total Deposits			1,022,338			1,007,489
	Federal Home Loan Bank advances					91,000			7,000
	Note payable					4,050			4,650
	Accrued expenses and other liabilities					17,546			17,026
			Total Liabilities			1,134,934			1,036,165
STOCKHOLDERS' EQUITY
	Common stock, no par value:					85,159			75,944
	Retained earnings					32,306			31,424
	Accumulated other comprehensive earnings, net of tax					1,262			5,047
		Total Stockholders' Equity				118,727			112,415
		TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY			$	1,253,661		$	1,148,580

FNB Bancorp and Subsidiary
CONSOLIDATED STATEMENTS OF EARNINGS
(Dollar and share amounts in thousands, except earnings per share)
				(Unaudited)							(Unaudited)
				Three Months Ended							Six Months Ended
				June 30,							June 30,
				2017				2016			2017				2016
INTEREST INCOME
	Interest and fees on loans			$	10,370			$	9,563		$	20,443			$	19,434
	Interest on dividends and securities				1,989				1,731			3,932				3,416
	Interest on deposits with other financial institutions				19				22			30				31
		Total interest income			12,378				11,316			24,405				22,881
INTEREST EXPENSE
	Deposits				677				709			1,313				1,492
	Federal Home Loan Bank advances				214				1			360				9
	Interest on note payable				55				56			108				113
		Total interest expense			946				766			1,781				1,614
NET INTEREST INCOME					11,432				10,550			22,624				21,267
	(Recovery of) provision for loan losses				(140	)			75			(140	)			150
NET INTEREST INCOME AFTER (RECOVERY OF) PROVISION FOR LOAN LOSSES					11,572				10,475			22,764				21,117
NONINTEREST INCOME
	Service charges				564				618			1,161				1,239
	Net gain on sale of available-for-sale securities				123				57			151				241
	Earnings on bank owned life insurance				88				105			190				205
	Other income				237				256			520				485
		Total Noninterest Income			1,012				1,036			2,022				2,170
NONINTEREST EXPENSES
	Salaries and employee benefits				4,862				4,876			9,636				9,814
	Occupancy expense				707				617			1,358				1,248
	Equipment expense				406				438			808				872
	Professional fees				408				294			881				681
	FDIC assessment				90				150			220				300
	Telephone, postage, supplies				325				306			622				601
	Advertising expense				107				183			215				300
	Data processing expense				144				140			283				332
	Low income housing expense				123				71			228				142
	Surety insurance				89				87			173				174
	Director fees				72				72			144				144
	Other real estate owned expense (recovery), net				7				-			17				(10	)
	Other expenses				338				415			698				838
		Total Noninterest Expense			7,678				7,649			15,283				15,436
EARNINGS BEFORE PROVISION FOR INCOME TAXES					4,906				3,862			9,503				7,851
	Provision for income taxes				1,555				1,414			3,063				2,836
NET EARNINGS AVAILABLE TO COMMON STOCKHOLDERS				$	3,351			$	2,448		$	6,440			$	5,015
Per Share Data:
	Basic earnings per share available to common stockholders			$	0.46			$	0.34		$	0.88			$	0.70
	Diluted earnings per share available to common stockholders			$	0.44			$	0.33		$	0.85			$	0.68
	Cash dividends declared			$	882			$	686		$	1,661			$	1,369
	Average shares outstanding				7,342				7,216			7,329				7,194
	Average diluted shares outstanding				7,585				7,393			7,559				7,390
	Shares outstanding as of the end of period				7,362				7,255			7,362				7,255

FNB Bancorp and Subsidiary
FINANCIAL HIGHLIGHTS
(Dollar and share amounts in thousands, except earnings per share)
			(Unaudited)								(Unaudited)
			Three Months Ended								Six Months Ended
			March 31,								June 30,
			2017				2016				2017				2016
AVERAGE BALANCES:
	Total Assets		$	1,256,608			$	1,156,072			$	1,244,943			$	1,151,283
	Total Loans			830,318				740,097				819,030				741,689
	Total Earning Assets			1,191,820				1,091,162				1,180,119				1,086,925
	Total Deposits			1,022,838				1,024,736				1,017,952				1,018,502
	Total Stockholder's Equity			115,720				109,064				113,551				107,642
SELECTED PERFORMANCE DATA
	Annualized return on average assets			1.07	%			0.85	%			0.52	%			0.87	%
	Annualized return on average equity			11.58	%			8.98	%			5.67	%			9.32	%
	Net interest margin (taxable equivalent)			3.93	%			3.98	%			3.95	%			4.03	%
	Average loans as a percent of average deposits			81.18	%			72.22	%			80.46	%			72.82	%
	Average total stockholders' equity as a % of average total assets			9.21	%			9.43	%			9.12	%			9.35	%
	Annualized common dividend payout ratio			26.32	%			28.02	%			25.79	%			27.30	%

NON-PERFORMING ASSETS											(Extracted from
(Dollars In Thousands)											audited annual
			(Unaudited)				(Unaudited)				financial statements)				(Unaudited)				(Unaudited)
			June 30,				March 31,				December 31,				September 30,				June 30,
			2017				2017				2016				2016				2016
Non-accrual loans			$	7,363			$	8,444			$	6,647			$	6,903			$	8,182
Other real estate owned				1,459				1,443				1,427				1,346				1,247
	Total non-performing assets		$	8,822			$	9,887			$	8,074			$	8,249			$	9,429
Loan loss reserve			$	10,177			$	10,144			$	10,167			$	10,092			$	10,038
Non-accrual loans/Gross loans				1.02	%			1.03	%			0.84	%			0.92	%			1.11	%
Loan loss reserves/Gross loans				1.41	%			1.24	%			1.28	%			1.34	%			1.36	%

FNB Bancorp and Subsidiary
CONSOLIDATED BALANCE SHEETS
(Dollar and share amounts in thousands, except earnings per share)												(Extracted from
												audited annual
					(Unaudited)			(Unaudited)				financial statements)				(Unaudited)			(Unaudited)
					June 30,			March 31,				December 31,				September 30,			June 30,
					2017			2017				2016				2016			2016
ASSETS
	Cash and due from banks				$	21,859		$	25,337			$	15,758			$	17,342		$	20,564
	Interest-bearing time deposits with financial institutions					230			205				205				204			205
	Securities available for sale, at fair value					362,006			353,364				360,105				358,877			342,420
	Other equity securities					7,567			7,211				7,206				7,206			7,206
	Loans, net of deferred loan fees and allowance for loan losses					808,508			807,191				782,485				741,407			725,471
	Bank premises, equipment and leasehold improvements, net					9,416			9,571				9,837				9,918			10,114
	Bank owned life insurance					16,438			16,349				16,247				16,145			16,050
	Accrued interest receivable					4,945			4,785				4,942				4,544			4,547
	Other real estate owned					1,459			1,443				1,427				1,346			1,247
	Goodwill					4,580			4,580				4,580				4,580			4,580
	Prepaid expenses					621			768				856				670			783
	Other assets					16,032			15,917				15,746				15,309			15,393
		TOTAL ASSETS			$	1,253,661		$	1,246,721			$	1,219,394			$	1,177,548		$	1,148,580
LIABILITIES
	Deposits:
		Demand, noninterest bearing			$	296,249		$	287,029			$	296,273			$	285,767		$	267,593
		Demand, interest bearing				129,435			125,643				121,086				110,147			112,591
		Savings and money market				472,050			496,697				487,763				491,047			508,605
		Time				124,604			115,622				114,384				116,496			118,700
			Total Deposits			1,022,338			1,024,991				1,019,506				1,003,457			1,007,489
	Federal Home Loan Bank advances					91,000			86,000				71,000				37,000			7,000
	Note payable					4,050			4,200				4,350				4,500			4,650
	Accrued expenses and other liabilities					17,546			17,198				14,224				18,847			17,026
			Total Liabilities			1,134,934			1,132,389				1,109,080				1,063,804			1,036,165
STOCKHOLDERS' EQUITY
	Common stock, no par value:					85,159			84,603				84,283				76,065			75,944
	Retained Earnings					32,306			29,842				27,577				33,123			31,424
	Accumulated other comprehensive earnings (losses), net of tax					1,262			(113	)			(1,546	)			4,556			5,047
			Total Stockholders' Equity			118,727			114,332				110,314				113,744			112,415
			TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	1,253,661		$	1,246,721			$	1,219,394			$	1,177,548		$	1,148,580

FNB Bancorp and Subsidiary
CONSOLIDATED STATEMENTS OF INCOME
(Dollar and share amounts in thousands, except earnings per share)											(Unaudited)
											Three Months Ended
				June 30,				March 31,			December 31,			September 30,			June 30,
				2017				2017			2016			2016			2016
INTEREST INCOME
	Interest and fees on loans			$	10,370			$	10,073		$	9,578		$	9,301		$	9,563
	Interest on dividends and securities				1,989				1,943			1,925			1,815			1,731
	Interest on deposits with other financial institutions				19				11			7			6			22
		Total interest income			12,378				12,027			11,510			11,122			11,316
INTEREST EXPENSE
	Deposits				677				637			631			657			709
	Federal Home Loan Bank advances				214				145			48			10			1
	Interest on note payable				55				53			55			54			56
		Total interest expense			946				835			734			721			766
NET INTEREST INCOME					11,432				11,192			10,776			10,401			10,550
	(Recovery of) provision for loan losses				(140	)			-			-			-			75
NET INTEREST INCOME AFTER (RECOVERY OF) PROVISION FOR LOAN LOSSES					11,572				11,192			10,776			10,401			10,475
NONINTEREST INCOME
	Service charges				564				597			599			623			618
	Net gain on sale of available-for-sale securities				123				28			57			140			57
	Earnings on bank owned life insurance				88				102			102			94			105
	Other income				237				283			565			245			256
		Total Noninterest Income			1,012				1,010			1,323			1,102			1,036
NONINTEREST EXPENSES
	Salaries and employee benefits				4,862				4,774			4,839			4,821			4,876
	Occupancy expense				707				651			635			645			617
	Equipment expense				406				402			448			445			438
	Professional fees				408				473			384			298			294
	FDIC assessment				90				130			150			150			150
	Telephone, postage, supplies				325				297			298			300			306
	Advertising expense				107				108			120			104			183
	Data processing expense				144				139			178			147			140
	Low income housing expense				123				105			71			71			71
	Surety insurance				89				84			85			88			87
	Director fees				72				72			72			72			72
	Other real estate owned expense, net				7				10			5			-			-
	Other expenses				338				360			458			372			415
		Total Noninterest Expense			7,678				7,605			7,743			7,513			7,649
EARNINGS BEFORE PROVISION FOR INCOME TAXES					4,906				4,597			4,356			3,990			3,862
	Provision for income taxes				1,555				1,508			1,314			1,546			1,414
NET EARNINGS AVAILABLE TO COMMON STOCKHOLDERS				$	3,351			$	3,089		$	3,042		$	2,444		$	2,448

FNB Bancorp and Subsidiary
(Dollar and share amounts in thousands, except earnings per share)											(Unaudited)
											Three Months Ended
			June 30,				March 31,				December 31,				September 30,				June 30,
			2017				2017				2016				2016				2016
Per Share Data:
	Basic earnings per share available to common stockholders		$	0.46			$	0.42			$	0.42			$	0.34			$	0.34
	Diluted earnings per share available to common stockholders		$	0.44			$	0.41			$	0.41			$	0.33			$	0.33
	Cash dividends declared		$	882			$	780			$	739			$	738			$	686
	Average shares outstanding			7,342				7,301				7,275				7,263				7,216
	Average diluted shares outstanding			7,585				7,518				7,461				7,428				7,393
	Shares outstanding as of end of period			7,362				7,311				7,280				7,269				7,255
SELECTED PERFORMANCE DATA
	Annualized return on average assets			1.07	%			1.00	%			1.02	%			0.84	%			0.85	%
	Annualized return on average equity			11.58	%			11.24	%			10.88	%			8.69	%			8.98	%
	Net interest margin (taxable equivalent)			3.93	%			3.98	%			3.89	%			3.88	%			3.96	%
	Average loans as a percent of average deposits			81.18	%			79.73	%			75.01	%			72.96	%			72.22	%
	Average total stockholders' equity as a % of average total assets			9.21	%			8.91	%			9.38	%			9.70	%			9.43	%
	Annualized common dividend payout ratio			26.32	%			25.25	%			24.29	%			30.20	%			28.02	%

											(Extracted from
LOANS											audited annual
(Dollars in thousands)			(Unaudited)				(Unaudited)				financial statements)				(Unaudited)				(Unaudited)
			June 30,				March 31,				December 31,				September 30,				June 30,
			2017				2017				2016				2016				2016
Real estate loans:
	Construction		$	46,325			$	49,490			$	43,683			$	38,162			$	29,251
	Commercial			369,657				432,301				421,222				404,841				398,290
	Multi family			90,733				112,911				105,963				83,946				82,637
	Residential			150,546				169,373				170,523				173,476				174,084
Commercial & industrial loans				54,102				49,277				48,874				50,967				51,366
Consumer loans				8,884				6,065				3,533				1,630				1,311
	Gross loans			720,247				819,417				793,798				753,022				736,939
Net deferred loan fees				(1,010	)			(1,076	)			(1,146	)			(1,523	)			(1,430	)
Allowance for loan losses				(10,177	)			(10,144	)			(10,167	)			(10,092	)			(10,038	)
	NET LOANS		$	709,060			$	808,197			$	782,485			$	741,407			$	725,471

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.

Contacts:

Tom McGraw
Chief Executive Officer
[phone]

Dave Curtis
Chief Financial Officer
[phone]