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

SOUTH SAN FRANCISCO, CA--(Marketwired - Jul 27, 2016) - FNB Bancorp (OTCBB: 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					(Unaudited)
(Dollars in thousands)					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, 2016			March 31, 2016			December 31, 2015			September 30, 2015			June 30, 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, 2016			March 31, 2016			December 31, 2015			September 30, 2015			June 30, 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, 2016			March 31, 2016			December 31, 2015			September 30, 2015			June 30, 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, 2016			March 31, 2016			December 31, 2015			September 30, 2015			June 30, 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, 2016			March 31, 2016			December 31, 2015			September 30, 2015			June 30, 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.