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First National Bank of Northern California Reports Third Quarter 2014 Earnings of $0.44 per Diluted Share


October 29, 2014 - South San Francisco, CA

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 third quarter of 2014 of $1,823,000 or $0.44 per diluted share, compared to net earnings available to common shareholders of $2,880,000 or $0.71 per diluted share for the third quarter of 2013. During the second quarter of 2014, FNB Bancorp signed a definitive agreement and submitted an application to the Office of the Comptroller of the Currency to purchase Valley Community Bank in an all stock transaction.

"During the third quarter of 2014, we were able to grow our loan portfolio, our securities portfolio and our total assets. Our borrowers began to utilize their lines of credit more than they have during the second quarter and real estate prices in the San Francisco Bay Area continued to rise. According to the Zillow Home Value Index, San Francisco home values are up 12.4% for the twelve months ended September 30, 2014. We are carefully watching the valuations currently being provided on our residential and commercial real estate appraisals as valuations surpass the highs before the last recession. Deposit trends during the third quarter were not as favorable. Overall, our deposits were down approximately $8 million or 1% from June 30, 2014 levels. The largest percentage declines were in the certificate of deposit segment of our deposit portfolio as brokered CDs obtained in our Oceanic Bank acquisition continue to mature and not be renewed. Declines were also noted in our savings and money market depository accounts, although at a lower decline rate. Total FHLB advances outstanding at the end of the third quarter were $16 million. Management has and will continue to utilize this low cost funding source when it is prudent to do so," stated Tom McGraw, CEO.




Financial Highlights: Third Quarter, 2014

(Unaudited)
----------------------------------------------------------
Consolidated
Statements of
Earnings
(in 000s except Three months Three months Nine months Nine months
share and ended ended ended ended
earnings per September 30, September 30, September 30, September 30,
share amounts) 2014 2013 2014 2013
------------- ------------- ------------- -------------

Interest income $ 9,300 $ 9,259 $ 27,544 $ 28,014
Interest expense 538 560 1,562 1,881
------------- ------------- ------------- -------------
Net interest
income 8,762 8,699 25,982 26,133
Provision for
loan losses - (225) (75) (1,335)
Noninterest
income 1,041 978 3,067 3,046
Noninterest
expense 7,055 6,950 21,107 22,074
------------- ------------- ------------- -------------
Income before
income taxes 2,748 2,502 7,867 5,770
(Provision for)
benefit from
income taxes (925) 629 (2,581) (330)
------------- ------------- ------------- -------------
Net earnings 1,823 3,131 5,286 5,440
Dividends and
discount
accretion on
preferred
stock - 251 170 581
Net earnings
available to
common
shareholders $ 1,823 $ 2,880 $ 5,116 $ 4,859
============= ============= ============= =============

Basic earnings
per share $ 0.45 $ 0.73 $ 1.27 $ 1.24
Diluted earnings
per share $ 0.44 $ 0.71 $ 1.23 $ 1.21

Average assets $ 903,222 $ 903,868 $ 897,247 $ 900,794
Average equity $ 91,455 $ 89,728 $ 89,738 $ 92,994
Return on
average assets 0.81% 1.27% 1.14% 0.72%
Return on
average equity 7.97% 12.84% 11.40% 6.97%
Efficiency ratio 72% 72% 73% 76%
Net interest
margin (taxable
equivalent) 4.20% 4.23% 4.23% 4.34%
Average shares
outstanding 4,048 3,949 4,021 3,922
Average diluted
shares
outstanding 4,175 4,045 4,156 4,015


Financial Highlights: Third Quarter, 2014 (Unaudited) * (Unaudited) *Consolidated Balance As of As of As of As of Sheets September 30, December 31, September 30, December 31,(in '000s) 2014 2013 2013 2012 ------------- ------------- ------------- ------------- Assets:Cash and cash equivalents $ 15,220 $ 14,007 $ 18,368 $ 27,861Interest-bearing time deposits with other financial institutions 4,068 5,543 6,979 13,216Securities available for sale, at fair value 267,924 263,988 285,610 234,945Loans, net 568,533 552,343 558,164 541,563Premises, equipment and leasehold improvements, net 12,239 12,512 12,631 12,706Other real estate owned, net 755 5,318 6,675 6,650Goodwill 1,841 1,841 1,841 1,841Other equity securities 5,769 5,300 5,300 5,464Accrued interest receivable 3,670 3,808 3,855 3,760Prepaid expenses 444 701 741 1,372Bank owned life insurance 12,424 12,151 12,065 11,785Other assets 14,535 14,418 14,822 14,177 ------------- ------------- ------------- ------------- Total assets $ 907,422 $ 891,930 $ 927,051 $ 875,340 ============= ============= ============= ============= Liabilities and stockholders' equity:Deposits:Demand and NOW $ 284,196 $ 279,269 $ 263,480 $ 253,849Savings and money market 393,929 370,194 387,275 343,437Time 104,031 124,152 130,369 171,066 ------------- ------------- ------------- ------------- Total deposits 782,156 773,615 781,124 768,352Federal Home Loan Bank advances 16,000 15,000 44,000 1,220Note payable 5,700 - - -Accrued expenses and other liabilities 10,974 9,066 9,109 10,410 ------------- ------------- ------------- ------------- Total liabilities 814,830 797,681 834,233 779,982Stockholders' equity 92,592 94,249 92,818 95,358 ------------- ------------- ------------- ------------- Total liab. and stockholders' equity $ 907,422 $ 891,930 $ 927,051 $ 875,340 ============= ============= ============= ============= * Excerpt from the audited annual financial statements Other Financial Information--------------------Allowance for loan losses $ 10,774 $ 9,879 $ 9,748 $ 9,124Nonperforming assets $ 5,875 $ 12,669 $ 15,728 $ 19,124Total gross loans $ 579,307 $ 562,222 $ 567,912 $ 550,687 

"During the third quarter, our net interest income and net interest margins increased when compared to the second quarter. The loan to deposit ratio increased to 74% at September 30, 2014 compared to 73% at year end. We are lending when it is prudent to do so, staying true to our conservative underwriting standards rather the increasing lending volume by accepting unwarranted risk into our loan pipeline. We continue to be 'well capitalized' by regulatory capital standards. The Bank's Tier 1 leverage capital ratio was 10.16% at September 30, 2014. The Bank's Tier 1 risk-based capital ratio was 13.05% and our total risk-based capital was 14.30%. We also continue to look for bank acquisitions. A Form 8-K was filed with the SEC on October 23, 2014 which provided additional information concerning our pending acquisition of Valley Community Bank," 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.

Contacts:
Tom McGraw
Chief Executive Officer
(650) 875-4864

Dave Curtis
Chief Financial Officer
(650) 875-4862

www.fnbnorcal.com

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