Financial Highlights: Third quarter, 2007 Consolidated Statement of Earnings (In '000s except earnings per share amounts) Three months ended Nine months ended September 30, September 30, 2007 2006 2007 2006 --------- --------- --------- --------- Interest income $ 10,881 $ 9,502 $ 31,439 $ 27,267 Interest expense 3,531 2,786 10,046 6,905 --------- --------- --------- --------- Net interest income 7,350 6,716 21,393 20,362 Provision for loan losses (180) (163) (510) (519) Non-interest income 1,093 1,046 3,239 5,189 Non-interest expense 5,761 5,346 17,327 16,135 --------- --------- --------- --------- Income before income taxes 2,502 2,253 6,795 8,897 Provision for income taxes (707) (787) (1,814) (2,874) --------- --------- --------- --------- Net earnings $ 1,795 $ 1,466 $ 4,981 $ 6,023 ========= ========= ========= ========= Basic earnings per share $ 0.63 $ 0.52 $ 1.74 $ 2.12 Diluted earnings per share $ 0.62 $ 0.51 $ 1.72 $ 2.07 Average assets $ 627,520 $ 585,307 $ 615,185 $ 569,719 Average equity $ 64,940 $ 59,723 $ 63,745 $ 58,076 Return on average assets 1.14% 1.00% 1.08% 1.41% Return on average equity 11.06% 9.82% 10.42% 13.83% Efficiency ratio 68% 69% 70% 63% Net interest margin 5.10% 5.01% 5.12% 5.28% Weighted average shares outstanding: Basic 2,861 2,842 2,859 2,840 Diluted 2,881 2,901 2,888 2,905 Consolidated Balance Sheets (In '000s) As of As of September 30, September 30, 2007 2006 -------------- -------------- Assets Cash and cash equivalents $ 17,264 $ 16,675 Securities available for sale 91,127 136,133 Loans, net 486,127 393,883 Premises, equipment and leasehold improvements 13,604 13,300 Goodwill 1,841 1,841 Other assets 28,565 24,191 -------------- -------------- Total assets $ 638,528 $ 586,023 ============== ============== Liabilities and stockholders equity: Deposits: Demand and NOW $ 179,627 $ 180,069 Savings and money market 189,232 170,378 Time 138,154 126,431 -------------- -------------- Total deposits 507,013 476,878 Federal funds purchased 12,620 10,622 Federal Home Loan Bank advances 45,000 30,000 Accrued expenses and other liabilities 8,859 8,051 -------------- -------------- Total liabilities 573,492 525,551 Stockholders equity 65,036 60,472 -------------- -------------- Total liabilities and stockholders equity $ 638,528 $ 586,023 ============== =============="Our operating results for the third quarter of 2007 reflect our ability to add quality interest earning assets, primarily construction and permanent commercial real estate financing instruments, which have positively affected our profitability for the quarter. We have been able to grow our assets by $52,505,000 or 9%, total deposits by $30,135,000 or 6% year over year. We have increased our use of FHLB borrowings to help fund this loan growth in order to keep the interest rates paid on our deposits at levels that management believes to be prudent. During the quarter, the growth in loans has allowed our net interest margin to increase 9 basis points over levels achieved during the same quarter of 2006. Our quarterly net interest income increased by $634,000 year over year, resulting in a net interest margin of 5.10% during the third quarter of 2007, compared to 5.01% during the third quarter of 2006. The third quarter net interest margin decreased by 3 basis points when compared to the 5.13% recorded for the second quarter of 2007. The primary reason for the decline in the third quarter net interest margin from the level achieved during the second quarter of this year was an increase in nonaccrual loans. At September 30, 2007 there were four loans totaling $11,253,000 in nonaccrual status, compared to $2,344,000 and $3,000 in nonaccrual loans as of June 30, 2007 and September 30, 2006, respectively. At September 30, 2007, the nonaccrual loans were all real estate loans that were considered well secured by management based on current valuations. Our increased non-interest expenses year over year were primarily the result of increased salaries and benefits and occupancy expenses, " stated Tom McGraw, Chief Executive Officer. "Our focus in the near term is to increase our deposit base, in particular our DDA deposits, while continuing to meet our customers' loan needs. Anticipated deposit acquisition efforts are planned throughout our existing branches, highlighting products such as our business on-line banking and remote capture products. We also plan to offer positive pay and lockbox products in the near future. Our challenge, as we plan for the future, is to deliver the products and services that will help our customers meet their personal and business financial goals while we manage the growth of our non-interest expenses," noted Mr. 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.
Contact Information: Contacts: Tom McGraw Chief Executive Officer (650) 875-4864 Dave Curtis Chief Financial Officer (650) 875-4862 Website: www.fnbnorcal.com