FNB Bancorp Reports Fourth Quarter 2017 Earnings of $0.13 Per Diluted Share

SAN FRANCISCO, CA / ACCESSWIRE / January 31, 2018 / 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 fourth quarter of 2017 of $960,000 or $0.13 per diluted share, compared to net earnings available to common shareholders of $3,042,000 or $0.41 per diluted share for the fourth quarter of 2016. Fourth quarter results include adjustments to asset values that were recorded following the enactment of the Tax Cuts and Jobs Act of 2017 ("H.R.1"), which reduced the federal income tax rate from 35% to 21% beginning in 2018. The fourth quarter adjustments related to H.R.1 included a reduction in our net deferred tax assets of $(3.0) million or $(0.39) per diluted share.

During the fourth quarter of 2017, the Company's Board of Directors signed a definitive agreement whereby FNB Bancorp, the sole shareholder of First National Bank of Northern California, would be sold to TriCo Bancshares. The merger agreement is expected to be presented to and voted on by the shareholders of both companies sometime in late first quarter or early second quarter, 2018.

"During the fourth quarter of 2017, the Company was able to grow our net loan portfolio by $0.6 million. Growth in our deposit liabilities total $5.2 million, which included growth in our non-interest bearing DDA of $3.7 million. Cash generated from our growth in deposits and reductions in our cash and investment portfolio was used to reduce our FHLB borrowings outstanding by $10 million. Net interest income was $12.0 million during the fourth quarter of 2017, an increase of $0.2 million during the quarter. Net interest income was helped by the fact that the adjustable rate portion of our loan portfolio continued to reset to higher yields, in response to increases to short term rates by the Federal Open Market Committee and increases in short term LIBOR rates. The reduction in our Stockholder's Equity during the quarter was related to the additional income tax expense recorded because of H.R.1. Our personnel worked diligently during the fourth quarter to maintain our profitability while continuing to provide for our customers' financial needs, providing them with what they need when they need it," stated CEO Tom McGraw.

"Our credit quality continued to improve during the fourth quarter of 2017. Total non-performing assets decreased by $3.1 million. This decrease was the result of successful efforts to reduce the level of our non-accrual loans. We did foreclose on one commercial property located in Lafayette, CA, bringing our total number of foreclosure properties to two, with a carrying value of $3.3 million as of December 31, 2017. We utilize a conservative underwriting approach in our loan origination process which, historically, has served to keep problem loans at reasonable levels. During the quarter we recorded a $0.2 million loan recovery. This recovery was possible due to the strong credit quality inherent in our loan portfolio coupled with the fact we experienced loan recoveries, net of loan charge offs, totaling $0.1 million during the quarter. Management believes our allowance for loan losses are adequate given the level of risk that has been identified in our loan portfolio," continued Tom McGraw.

FNB Bancorp and Subsidiary
CONSOLIDATED BALANCE SHEETS
(Dollar and share amounts in thousands, except earnings per share)


(Unaudited)
As of
December 31,
20172016
ASSETS
Cash and due from banks$18,353$15,758
Interest-bearing time deposits with financial institutions130205
Securities available for sale, at fair value355,857360,105
Other equity securities7,5677,206
Loans, net of deferred loan fees and allowance for loan losses829,766782,485
Bank premises, equipment and leasehold improvements, net9,3229,837
Bank owned life insurance16,63716,247
Accrued interest receivable5,3174,942
Other real estate owned3,3001,427
Goodwill4,5804,580
Prepaid expenses825856
Other assets13,58415,746
TOTAL ASSETS$1,265,238$1,219,394
LIABILITIES
Deposits:
Demand, noninterest bearing$313,435$296,273
Demand, interest bearing130,988121,086
Savings and money market467,788487,763
Time138,084114,384
Total Deposits1,050,2951,019,506
Federal Home Loan Bank advances75,00071,000
Note payable3,7504,350
Accrued expenses and other liabilities16,91314,224
Total Liabilities1,145,9581,109,080
STOCKHOLDERS' EQUITY
Common stock, no par value85,56584,283
Retained earnings34,65427,577
Accumulated other comprehensive (losses), net of tax(939)
(1,546)
Total Stockholders' Equity119,280110,314
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$1,265,238$1,219,394

FNB Bancorp and Subsidiary
CONSOLIDATED STATEMENTS OF EARNINGS
(Dollar and share amounts in thousands, except earnings per share)


(Unaudited)(Unaudited)
Three Months EndedTwelve Months Ended
December 31,December 31,
2017201620172016
INTEREST INCOME
Interest and fees on loans$10,867$9,578$41,956$38,313
Interest on dividends and securities2,1191,9258,1367,156
Interest on deposits with other financial institutions42712644
Total interest income13,02811,51050,21845,513
INTEREST EXPENSE
Deposits7576312,8072,780
Federal Home Loan Bank advances2494885067
Interest on note payable5255214222
Total interest expense1,0587343,8713,069
NET INTEREST INCOME11,97010,77646,34742,444
(Recovery of) provision for loan losses(220)
-(360)
150
NET INTEREST INCOME AFTER (RECOVERY OF) PROVISION FOR LOAN LOSSES12,19010,77646,70742,294
NONINTEREST INCOME
Service charges5325992,2642,461
Net gain on sale of available-for-sale securities-57210438
Earnings on bank owned life insurance97102390402
Other income2375659961,294
Total noninterest income8661,3233,8604,595
NONINTEREST EXPENSES
Salaries and employee benefits4,9064,83919,36619,474
Occupancy expense6856352,7472,528
Equipment expense4024481,6461,765
Professional fees2613841,4821,363
FDIC assessment90150400600
Telephone, postage, supplies3242981,2671,199
Advertising expense109120451524
Data processing expense143178571657
Low income housing expense12271472284
Surety insurance8785349347
Director fees7272288288
Other real estate owned expense (recovery), net63580(5)
Other expenses3544581,4301,668
Total noninterest expense7,6187,74330,54930,692
EARNINGS BEFORE PROVISION FOR INCOME TAXES5,4384,35620,01816,197
Provision for income taxes4,4781,3149,3075,696
NET EARNINGS AVAILABLE TO COMMON STOCKHOLDERS$960$3,042$10,711$10,501
Per Share and Shareholder Information
Basic earnings per share available to common stockholders$0.13$0.42$1.46$1.45
Diluted earnings per share available to common stockholders$0.13$0.41$1.41$1.42
Cash dividends declared$964$739$3,584$2,847
Average shares outstanding7,4127,2757,3617,233
Average diluted shares outstanding7,6697,4617,6077,417
Shares outstanding as of the end of period7,4427,2797,4427,279

FNB Bancorp and Subsidiary
FINANCIAL HIGHLIGHTS
(Dollar and share amounts in thousands, except earnings per share)


(Unaudited)(Unaudited)
Three Months EndedTwelve Months Ended
December 31,December 31,
2017201620172016
AVERAGE BALANCES
Total Assets$1,276,437$1,191,942$1,257,848$1,163,454
Total Loans834,653763,654823,333746,829
Total Earning Assets1,209,3391,127,3391,192,0831,099,192
Total Deposits1,054,2391,018,0711,033,1171,017,398
Total Stockholder's Equity120,858111,807116,902109,854
SELECTED PERFORMANCE DATA
Annualized return on average assets0.30%1.02%0.85%0.90%
Annualized return on average equity3.18%10.88%9.16%9.56%
Net interest margin (taxable equivalent)4.01%3.89%3.97%3.97%
Average loans as a percent of average deposits79.17%75.01%79.69%73.41%
Average total stockholders' equity as a % of average total assets9.47%9.38%9.29%9.44%
Annualized common dividend payout ratio100.42%24.29%33.46%27.11%

NON-PERFORMING ASSETS
(Dollars in thousands)


(Extracted from
audited annual
(Unaudited)(Unaudited)(Unaudited)(Unaudited)financial statements)
December 31,September 30,June 30,March 31,December 31,
20172017201720172016
Non-accrual loans$1,940$6,933$7,363$8,444$6,647
Other real estate owned3,3001,4711,4591,4431,427
Total non-performing assets$5,240$8,404$8,822$9,887$8,074
Loan loss reserve$10,171$10,250$10,177$10,144$10,167
Non-accrual loans/Gross loans0.23%0.83%0.90%1.03%0.84%
Loan loss reserves/Gross loans1.21%1.22%1.24%1.24%1.28%

FNB Bancorp and Subsidiary
CONSOLIDATED BALANCE SHEETS
(Dollar and share amounts in thousands, except earnings per share)


(Extracted from
audited annual
(Unaudited)(Unaudited)(Unaudited)(Unaudited)financial statements)
December 31,September 30,June 30,March 31,December 31,
20172017201720172016
ASSETS
Cash and due from banks$18,353$23,714$21,859$25,337$15,758
Interest-bearing time deposits with financial institutions130230230205205
Securities available for sale, at fair value355,857360,301362,006353,364360,105
Other equity securities7,5677,5677,5677,2117,206
Loans, net of deferred loan fees and allowance for loan losses829,766829,100808,508807,191782,485
Bank premises, equipment and leasehold improvements, net9,3229,4179,4169,5719,837
Bank owned life insurance16,63716,54016,43816,34916,247
Accrued interest receivable5,3174,8044,9454,7854,942
Other real estate owned3,3001,4711,4591,4431,427
Goodwill4,5804,5804,5804,5804,580
Prepaid expenses825469621768856
Other assets13,58416,42116,03215,91715,746
TOTAL ASSETS$1,265,238$1,274,614$1,253,661$1,246,721$1,219,394
LIABILITIES
Deposits:
Demand, noninterest bearing$313,435$309,753$296,249$287,029$296,273
Demand, interest bearing130,988122,353129,435125,643121,086
Savings and money market467,788482,335472,050496,697487,763
Time138,084130,630124,604115,622114,384
Total Deposits1,050,2951,045,0711,022,3381,024,9911,019,506
Federal Home Loan Bank advances75,00085,00091,00086,00071,000
Note payable3,7503,9004,0504,2004,350
Accrued expenses and other liabilities16,91319,44717,54617,19814,224
Total Liabilities1,145,9581,153,4181,134,9341,132,3891,109,080
STOCKHOLDERS' EQUITY
Common stock, no par value85,56585,30985,15984,60384,283
Retained Earnings34,65434,65532,30629,84227,577
Accumulated other comprehensive (losses) earnings, net of tax(939)
1,2321,262(113)
(1,546)
Total Stockholders' Equity119,280121,196118,727114,332110,314
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$1,265,238$1,274,614$1,253,661$1,246,721$1,219,394

FNB Bancorp and Subsidiary
CONSOLIDATED STATEMENTS OF INCOME
(Dollar and share amounts in thousands, except earnings per share)


(Unaudited)
Three Months Ended
December 31,September 30,June 30,March 31,December 31,
20172017201720172016
INTEREST INCOME
Interest and fees on loans$10,867$10,646$10,370$10,073$9,578
Interest on dividends and securities2,1192,0851,9891,9431,925
Interest on deposits with other financial institutions425419117
Total interest income13,02812,78512,37812,02711,510
INTEREST EXPENSE
Deposits757737677636631
Federal Home Loan Bank advances24924121414648
Interest on note payable5254555355
Total interest expense1,0581,032946835734
NET INTEREST INCOME11,97011,75311,43211,19210,776
Recovery of loan losses(220)
-(140)
--
NET INTEREST INCOME AFTER RECOVERY OF LOAN LOSSES12,19011,75311,57211,19210,776
NONINTEREST INCOME
Service charges532571564597599
Net gain on sale of available-for-sale securities-591232857
Earnings on bank owned life insurance9710289102102
Other income237240236283565
Total noninterest income8669721,0121,0101,323
NONINTEREST EXPENSES
Salaries and employee benefits4,9064,8244,8624,7744,839
Occupancy expense685704707651635
Equipment expense402436406402448
Professional fees261340408473384
FDIC assessment909090130150
Telephone, postage, supplies324321325297298
Advertising expense109127107108120
Data processing expense143145144139178
Low income housing expense12212212310571
Surety insurance8789898485
Director fees7272727272
Other real estate owned expense, net63-7105
Other expenses354378338360458
Total noninterest expense7,6187,6487,6787,6057,743
EARNINGS BEFORE PROVISION FOR INCOME TAXES5,4385,0774,9064,5974,356
Provision for income taxes4,4781,7661,5551,5081,314
NET EARNINGS AVAILABLE TO COMMON STOCKHOLDERS$960$3,311$3,351$3,089$3,042

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


(Unaudited)
Three Months Ended
December 31,September 30,June 30,March 31,December 31,
20172017201720172016
Per Share and Shareholder Information:
Basic earnings per share available to common stockholders$0.13$0.45$0.46$0.42$0.42
Diluted earnings per share available to common stockholders$0.13$0.43$0.44$0.41$0.41
Cash dividends declared$964$959$882$780$739
Average shares outstanding7,4127,3757,3427,3017,275
Average diluted shares outstanding7,6697,6197,5857,5187,461
Shares outstanding as of end of period7,4427,4037,3627,3117,280
SELECTED PERFORMANCE DATA
Annualized return on average assets0.30%1.05%1.07%1.00%1.02%
Annualized return on average equity3.18%11.10%11.58%11.24%10.88%
Net interest margin (taxable equivalent)4.01%3.97%3.93%3.98%3.89%
Average loans as a percent of average deposits79.17%78.73%81.18%79.73%75.01%
Average total stockholders' equity as a % of average total assets9.47%9.43%9.21%8.91%9.38%
Annualized common dividend payout ratio100.42%28.96%26.32%25.25%24.29%
(Extracted from
LOANSaudited annual
(Dollars in thousands)(Unaudited)(Unaudited)(Unaudited)(Unaudited)financial statements)
December 31,September 30,June 30,March 31,December 31,
20172017201720172016
Real estate loans:
Construction$35,206$49,374$46,325$49,490$43,683
Commercial456,992443,556436,286431,295421,222
Multi family105,138109,396104,373112,911105,963
Residential173,476174,000166,610169,373170,523
Commercial & industrial loans55,72751,82757,21749,27748,874
Consumer loans14,05711,1938,8846,0653,533
Gross loans840,596839,346819,695818,411793,798
Net deferred loan (fees) cost(659)
4(1,010)
(1,076)
(1,146)
Allowance for loan losses(10,171)
(10,250)
(10,177)
(10,144)
(10,167)
NET LOANS$829,766$829,100$808,508$807,191$782,485

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
Website: www.fnbnorcal.com

SOURCE: FNB Bancorp

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