FNB BANCORP/CA/ - FORM 8-K - EX-99.01 - EXHIBIT 99.01

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8-K - FORM 8-K - FNB BANCORP/CA/	fnb_8k.htm

Exhibit 99.01

Press Release

Available for Immediate Publication: July 27, 2016

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

Source: FNB Bancorp (CA) (QTCQB:FNBG)

South San Francisco, California

Website: www.fnbnorcal.com

Contacts:

Tom McGraw, Chief Executive Officer (650) 875-4864

Dave Curtis, Chief Financial Officer (650) 875-4862

FNB Bancorp (QTCQB: FNBG), parent company of First National Bank of Northern California (the “Bank”), today announced net earnings available to common shareholders for the second quarter of 2016 of $2,448,000 or $0.52 per diluted share, compared to net earnings available to common shareholders of $2,071,000 or $0.45 per diluted share for the second quarter of 2015.

The second 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 second quarter of 2016, our net interest income was $10.5 million, a decrease of $180,000 from the first quarter of 2016. This decrease was caused by a decline in average earning assets outstanding of $6.7 million during the quarter, and a drop in yield of 18 basis points.

“During the second quarter of 2016, the Company was able to control operational expenses that helped to offset the negative affect of declines in total assets at June 30, 2016 as compared to March 31, 2016. The Company experienced declines in both our loan and deposit totals during the quarter, and these portfolio reductions serve as evidence of the difficulty of holding our relatively high net interest margin while at the same time striving to grow our balance sheet in a low interest rate environment. Net interest margins declined during the second quarter of 2016, due primarily to higher yielding loan payoffs that were partially reinvested into new loans at lower yields, lower yielding investment securities and partially used to maintain liquidity. During the second quarter of 2016, we were able to increase our noninterest bearing DDA deposit balances by $1.6 million. Management understands the values of our core deposit base and we make every effort to develop and grow our core deposit banking relationships,” stated CEO Tom McGraw.

“During the second quarter of 2016, our non-accrual loans increased above levels experienced at year-end. The increase in non-accrual loans was not related to any systemic problems identified within any segments or loan types within our loan portfolio but was isolated to a few individual customer relationships. The Bank has worked hard to adhere to prudent underwriting standards as we continue to search for quality deposit and loan relationships. The second quarter provision for loan losses was $75,000. Management believes the level of reserves are sufficient to absorb expected losses inherent in our loan portfolio at June 30, 2016,” continued Tom McGraw.

CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
	(Unaudited) As of June 30,
	2016		2015
ASSETS
Cash and due from banks	$	20,564	$	91,662
Interest-bearing time deposits with financial institutions		205		2,138
Securities available for sale, at fair value		342,420		295,171
Other equity securities		7,206		6,069
Loans, net of deferred loan fees and allowance for loan losses		725,471		571,665
Bank premises, equipment and leasehold improvements, net		10,114		10,527
Bank owned life insurance		16,050		12,681
Accrued interest receivable		4,547		3,909
Other real estate owned		1,247		806
Goodwill		4,580		1,841
Prepaid expenses		783		922
Other assets		15,393		12,437
TOTAL ASSETS	$	1,148,580	$	1,009,828

LIABILITIES
Deposits:
Demand, noninterest bearing	$	267,593	$	249,420
Demand, interest bearing		112,591		101,693
Savings and money market		508,605		437,092
Time		118,700		104,935
Total Deposits		1,007,489		893,140
Federal Home Loan Bank advances		7,000		—
Note payable		4,650		5,250
Accrued expenses and other liabilities		17,026		11,001
Total Liabilities		1,036,165		909,391
STOCKHOLDERS’ EQUITY
Common stock, no par value:		75,944		67,597
Retained Earnings		31,424		31,452
Accumulated other comprehensive earnings, net of tax		5,047		1,388
Total Stockholders’ Equity		112,415		100,437
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,148,580	$	1,009,828

CONSOLIDATED STATEMENTS OF EARNINGS	(Unaudited)					(Unaudited)
(Amounts in thousands, except per share amounts)	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2016		2015			2016			2015
INTEREST INCOME
Interest and fees on loans	$	9,563	$	7,855		$	19,434		$	15,565
Interest on dividends and securities		1,731		1,432			3,416			2,776
Interest on deposits with other financial institutions		1		13			2			27
Total interest income		11,295		9,300			22,852			18,368

INTEREST EXPENSE
Deposits		709		538			1,492			992
Federal Home Loan Bank advances		1		—			9			1
Interest on note payable		56		57			113			116
Total interest expense		766		595			1,614			1,109
NET INTEREST INCOME		10,529		8,705			21,238			17,259
Provision for loan losses		75		75			150			150
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		10,454		8,630			21,088			17,109
NONINTEREST INCOME
Service charges		618		627			1,239			1,238
Net gain on sale of available-for-sale securities		57		152			241			221
Earnings on bank owned life insurance		105		87			205			171
Other income		277		401			514			715
Total Noninterest Income		1,057		1,267			2,199			2,345
NONINTEREST EXPENSES
Salaries and employee benefits		4,876		4,111			9,814			8,413
Occupancy expense		617		646			1,248			1,314
Equipment expense		438		410			872			815
Professional fees		294		354			681			741
FDIC assessment		150		150			300			300
Telephone, postage, supplies		306		256			601			545
Advertising expense		183		170			300			269
Data processing expense		140		147			332			281
Low income housing expense		71		71			142			142
Surety insurance		87		88			174			176
Director fees		72		72			144			144
Other real estate owned expense recovery, net		—		(6	)		(10	)		(6	)
Other expenses		415		320			838			598
Total Noninterest Expense		7,649		6,789			15,436			13,732
EARNINGS BEFORE PROVISION FOR INCOME TAXES		3,862		3,108			7,851			5,722
Provision for income taxes		1,414		1,037			2,836			1,852
NET EARNINGS AVAILABLE TO COMMON STOCKHOLDERS	$	2,448	$	2,071		$	5,015		$	3,870

Per Share Data:
Basic earnings per share available to common stockholders	$	0.53	$	0.46		$	1.10		$	0.86
Diluted earnings per share available to common stockholders	$	0.52	$	0.45		$	1.07		$	0.84
Cash dividends declared	$	686	$	559		$	1,369		$	1,114
Average shares outstanding		4,582		4,511			4,568			4,499
Average diluted shares outstanding		4,695		4,636			4,693			4,629

FINANCIAL HIGHLIGHTS
(Dollars in thousands)
	(Unaudited)						(Unaudited)
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2016			2015			2016			2015

AVERAGE BALANCES:
Total Assets	$	1,156,072		$	953,193		$	1,151,283		$	936,347
Total Loans		740,097			590,872			741,689			589,396
Total Earning Assets		1,079,470			871,816			1,076,130			860,434
Total Deposits		1,024,736			836,610			1,018,502			819,260
Total Stockholder’s Equity		109,064			99,701			107,642			98,924

SELECTED PERFORMANCE DATA
Annualized return on average assets		0.85	%		0.87	%		0.87	%		0.83	%
Annualized return on average equity		8.98	%		8.31	%		9.32	%		7.82	%
Net interest margin (taxable equivalent)		3.96	%		4.14	%		4.05	%		4.13	%
Average loans as a percent of average deposits		72.22	%		70.63	%		72.82	%		71.94	%
Average total stockholders’ equity as a % of average total assets		9.43	%		10.46	%		9.35	%		10.56	%
Annualized common dividend payout ratio		28.02	%		26.99	%		27.30	%		28.79	%

NON-PERFORMING ASSETS							(Extracted from
(Dollars In Thousands)							audited annual
	(Unaudited)			(Unaudited)			financial statements)			(Unaudited)			(Unaudited)
										As of
	June 30,			March 31,			December 31,			September 30,			June 30,
	2016			2016			2015			2015			2015
Non-accrual loans	$	8,182		$	6,882		$	7,915		$	5,192		$	6,020
Other real estate owned		1,247			1,055			1,026			838			806
Total non-performing assets		9,429			7,937			8,941			6,030			6,826

Loan loss reserve	$	10,038		$	9,943		$	9,970		$	9,940		$	9,836
Non-accrual loans/Gross loans		1.11	%		0.92	%		1.08	%		0.73	%		1.03	%
Loan loss reserves/Gross loans		1.36	%		1.33	%		1.36	%		1.40	%		1.69	%

CONSOLIDATED BALANCE SHEETS					(Extracted from
(Dollars in thousands)					audited annual
	(Unaudited)		(Unaudited)		financial statements)		(Unaudited)		(Unaudited)
							As of
	June 30,		March 31,		December 31,		September 30,		June 30,
	2016		2016		2015		2015		2015
ASSETS
Cash and due from banks	$	20,564	$	37,737	$	12,314	$	40,282	$	91,662
Interest-bearing time deposits with financial institutions		205		205		205		1,246		2,138
Securities available for sale, at fair value		342,420		329,396		329,207		315,560		295,171
Other equity securities		7,206		6,756		6,748		6,748		6,069
Loans, net of deferred loan fees and allowance for loan losses		725,471		733,991		722,747		696,888		571,665
Bank premises, equipment and leasehold improvements, net		10,114		10,320		10,202		10,326		10,527
Bank owned life insurance		16,050		15,946		15,845		15,742		12,681
Accrued interest receivable		4,547		4,603		4,511		4,326		3,909
Other real estate owned		1,247		1,055		1,026		838		806
Goodwill		4,580		4,580		4,580		4,580		1,841
Prepaid expenses		783		945		997		877		922
Other assets		15,393		15,444		15,967		14,044		12,437
TOTAL ASSETS	$	1,148,580	$	1,160,978	$	1,124,349	$	1,111,457	$	1,009,828

LIABILITIES
Deposits:
Demand, noninterest bearing	$	267,593	$	265,947	$	263,822	$	262,206	$	249,420
Demand, interest bearing		112,591		113,337		102,304		84,682		101,693
Savings and money market		508,605		526,557		491,633		512,534		437,092
Time		118,700		124,410		125,430		129,943		104,935
Total Deposits		1,007,489		1,030,251		983,189		989,365		893,140
Federal Home Loan Bank advances		7,000		—		17,000		—		—
Note payable		4,650		4,800		4,950		5,100		5,250
Accrued expenses and other liabilities		17,026		17,230		15,048		13,302		11,001
Total Liabilities		1,036,165		1,052,281		1,020,187		1,007,767		909,391
STOCKHOLDERS’ EQUITY
Common stock, no par value:		75,944		75,240		74,805		67,852		67,597
Retained Earnings		31,424		29,666		27,816		33,046		31,452
Accumulated other comprehensive earnings, net of tax		5,047		3,791		1,541		2,792		1,388
Total Stockholders’ Equity		112,415		108,697		104,162		103,690		100,437
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,148,580	$	1,160,978	$	1,124,349	$	1,111,457	$	1,009,828

CONSOLIDATED STATEMENTS OF INCOME						(Unaudited)
(Amounts in thousands, except per share amounts)						Three Months Ended
	June 30,		March 31,			December 31,			September 30,		June 30,
	2016		2016			2015			2015		2015
INTEREST INCOME
Interest and fees on loans	$	9,563	$	9,871		$	9,361		$	8,309	$	7,855
Interest on dividends and securities		1,731		1,685			1,657			1,575		1,432
Interest on deposits with other financial institutions		1		1			3			9		13
Total interest income		11,295		11,557			11,021			9,893		9,300

INTEREST EXPENSE
Deposits		709		783			734			635		538
Federal Home Loan Bank advances		1		8			7			1		—
Interest on note payable		56		57			56			57		57
Total interest expense		766		848			797			693		595
NET INTEREST INCOME		10,529		10,709			10,224			9,200		8,705
Provision for loan losses		75		75			(530	)		75		75
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		10,454		10,634			10,754			9,125		8,630
NONINTEREST INCOME
Service charges		618		621			647			618		627
Net gain on sale of available-for-sale securities		57		184			89			29		152
Earnings on bank owned life insurance		105		100			103			90		87
Other income		277		237			290			287		401
Total Noninterest Income		1,057		1,142			1,129			1,024		1,267
NONINTEREST EXPENSES
Salaries and employee benefits		4,876		4,938			6,010			4,100		4,111
Occupancy expense		617		631			611			592		646
Equipment expense		438		434			393			718		410
Professional fees		294		387			396			334		354
FDIC assessment		150		150			150			150		150
Telephone, postage, supplies		306		295			292			237		256
Advertising expense		183		117			119			112		170
Data processing expense		140		192			136			659		147
Low income housing expense		71		71			71			70		71
Surety insurance		87		87			83			122		88
Director fees		72		72			72			72		72
Other real estate owned expense recovery, net		—		(10	)		10			—		(6	)
Other expenses		415		423			371			313		320
Total Noninterest Expense		7,649		7,787			8,714			7,479		6,789
EARNINGS BEFORE PROVISION FOR INCOME TAXES		3,862		3,989			3,169			2,670		3,108
Provision for income taxes		1,414		1,422			1,081			431		1,037
NET EARNINGS AVAILABLE TO COMMON STOCKHOLDERS	$	2,448	$	2,567		$	2,088		$	2,239	$	2,071

							(Unaudited)
							Three Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,
	2016			2016			2015			2015			2015
Per Share Data:
Basic earnings per share available to common stockholders	$	0.53		$	0.56		$	0.47		$	0.49		$	0.46
Diluted earnings per share available to common stockholders	$	0.52		$	0.55		$	0.45		$	0.48		$	0.45
Cash dividends declared	$	686		$	683		$	680		$	646		$	559
Average shares outstanding		4,582			4,550			4,487			4,524			4,511
Average diluted shares outstanding		4,695			4,687			4,623			4,643			4,636

SELECTED PERFORMANCE DATA
Annualized return on average assets		0.85	%		0.90	%		0.91	%		0.86	%		0.87	%
Annualized return on average equity		8.98	%		9.67	%		8.51	%		8.88	%		8.31	%
Net interest margin (taxable equivalent)		3.96	%		4.14	%		4.17	%		4.00	%		4.14	%
Average loans as a percent of average deposits		72.22	%		73.43	%		71.11	%		67.72	%		70.63	%
Average total stockholders’ equity as a % of average total assets		9.43	%		9.26	%		10.68	%		9.69	%		10.46	%
Annualized common dividend payout ratio		28.02	%		26.61	%		32.57	%		28.85	%		26.99	%

LOANS							(Extracted from
(Dollars in thousands)							audited annual
	(Unaudited)			(Unaudited)			financial statements)			(Unaudited)			(Unaudited)
										As of
	June 30,			March 31,			December 31,			September 30,			June 30,
	2016			2016			2015			2015			2015
Real Estate Loans:
Construction	$	29,251		$	42,465		$	44,816		$	35,868		$	32,648
Commercial		398,290			411,999			399,993			394,090			330,303
Multi family		82,637			59,993			63,597			63,928			51,613
Residential		174,084			173,437			171,964			172,280			127,900
Commercial & industrial loans		51,366			55,694			52,033			39,843			37,745
Consumer loans		1,311			1,675			1,574			1,497			1,696
Gross Loans		736,939			745,263			733,977			707,506			581,905
Net deferred loan fees		(1,430	)		(1,329	)		(1,260	)		(678	)		(404	)
Allowance for loan losses		(10,038	)		(9,943	)		(9,970	)		(9,940	)		(9,836	)
NET LOANS	$	725,471		$	733,991		$	722,747		$	696,888		$	571,665

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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