FNB Bancorp Reports Third Quarter 2017 Earnings of $0.43 Per Diluted Share

SOUTH SAN FRANCISCO, CA--(Marketwired - Oct 26, 2017) - 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 third quarter of 2017 of $3,311,000 or $0.43 per diluted share, compared to net earnings available to common shareholders of $2,444,000 or $0.33 per diluted share for the third quarter of 2016.

During the third quarter of 2017, our net interest income was $11.8 million, an increase of $1.4 million from the third quarter of 2016. This increase was primarily the result of an increase in the average volume of our interest earning assets outstanding coupled with an increase in our earning rate when compared to the same period in 2016. 

"During the third quarter of 2017, the Company was able to grow our net loan portfolio by $20.6 million. Loan production was strong during the quarter, and the Bank had the opportunity to purchase some very seasoned, high quality, single family residential mortgage loans during the quarter. Also during the quarter, our deposit balances increased by $22.7 million, which included a $13.5 million increase in our non-interest bearing DDA accounts. The growth in both the loan and deposit portfolios was complemented with a decrease in short term FHLB borrowings of $6 million. Net interest income was helped by the fact that the adjustable rate portion of our loan portfolio has begun to reset to higher yields, in response to increases to short term rates by the Federal Open Market Committee and increases in the short term LIBOR rates. The current low rate environment has put pressure on our net interest margin, but we have added enough interest earning assets at favorable spreads that we were able to expand our net interest margin by 4 basis points during the quarter. Our net interest margin was 3.97% for the third quarter and our increased earnings coupled with a flattening yield curve have allowed our capital base to increase by $2.5 million during the quarter and increase our cash dividend payout to $0.13 per quarter. We worked hard during the third quarter to maintain our profitability while continuing to provide for our customers' needs, providing them with the products they want delivered in an efficient and effective manner," stated CEO Tom McGraw. 

"Our total non-accrual loans balance decreased by $0.4 million during the third quarter of 2017. This decrease was the result of management efforts to reduce the levels of our non-accrual loans. We utilize a conservative underwriting approach in our loan origination process which should serve to keep problem loans at acceptable levels as we work to prudently increase the size of our loan portfolio. There was no loan provision for or recovery of loan losses during the third quarter. We continue to see strong credit characteristics within our interest earning assets and our allowance for loan losses continues to be adequate for the level of risk that management has identified in our loan portfolio," continued Tom McGraw.

FNB Bancorp and Subsidiary
CONSOLIDATED BALANCE SHEETS					(Unaudited)
(Dollar and share amounts in thousands, except earnings per share)					As of
					September 30,
					2017			2016
ASSETS
	Cash and due from banks				$	23,714		$	17,342
	Interest-bearing time deposits with financial institutions					230			204
	Securities available for sale, at fair value					360,301			358,877
	Other equity securities					7,567			7,206
	Loans, net of deferred loan fees and allowance for loan losses					829,100			741,407
	Bank premises, equipment and leasehold improvements, net					9,417			9,918
	Bank owned life insurance					16,540			16,145
	Accrued interest receivable					4,804			4,544
	Other real estate owned					1,471			1,346
	Goodwill					4,580			4,580
	Prepaid expenses					469			670
	Other assets					16,421			15,309
		TOTAL ASSETS			$	1,274,614		$	1,177,548
LIABILITIES
	Deposits:
		Demand, noninterest bearing			$	309,753		$	285,767
		Demand, interest bearing				122,353			110,147
		Savings and money market				482,335			491,047
		Time				130,630			116,496
			Total Deposits			1,045,071			1,003,457
	Federal Home Loan Bank advances					85,000			37,000
	Note payable					3,900			4,500
	Accrued expenses and other liabilities					19,447			18,847
			Total Liabilities			1,153,418			1,063,804
STOCKHOLDERS' EQUITY
	Common stock, no par value:					85,309			76,065
	Retained earnings					34,655			33,123
	Accumulated other comprehensive earnings, net of tax					1,232			4,556
		Total Stockholders' Equity				121,196			113,744
		TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY			$	1,274,614		$	1,177,548

FNB Bancorp and Subsidiary
CONSOLIDATED STATEMENTS OF EARNINGS
(Dollar and share amounts in thousands, except earnings per share)
				(Unaudited)						(Unaudited)
				Three Months Ended						Nine Months Ended
				September 30,						September 30,
				2017			2016			2017			2016
INTEREST INCOME
	Interest and fees on loans			$	10,646		$	9,301		$	31,089		$	28,735
	Interest on dividends and securities				2,085			1,815			6,017			5,231
	Interest on deposits with other financial institutions				54			6			84			37
		Total interest income			12,785			11,122			37,190			34,003
INTEREST EXPENSE
	Deposits				737			657			2,050			2,149
	Federal Home Loan Bank advances				241			10			601			19
	Interest on note payable				54			54			162			167
		Total interest expense			1,032			721			2,813			2,335
NET INTEREST INCOME					11,753			10,401			34,377			31,668
	(Recovery of) provision for loan losses				-			-			(140)			150
NET INTEREST INCOME AFTER (RECOVERY OF) PROVISION FOR LOAN LOSSES					11,753			10,401			34,517			31,518
NONINTEREST INCOME
	Service charges				571			623			1,732			1,862
	Net gain on sale of available-for-sale securities				59			140			210			381
	Earnings on bank owned life insurance				103			95			293			300
	Other income				239			244			759			729
		Total Noninterest Income			972			1,102			2,994			3,272
NONINTEREST EXPENSES
	Salaries and employee benefits				4,824			4,821			14,460			14,635
	Occupancy expense				704			645			2,062			1,893
	Equipment expense				436			445			1,244			1,317
	Professional fees				340			298			1,221			979
	FDIC assessment				90			150			310			450
	Telephone, postage, supplies				321			300			943			901
	Advertising expense				127			104			342			404
	Data processing expense				145			147			428			479
	Low income housing expense				122			71			350			213
	Surety insurance				89			88			262			262
	Director fees				72			72			216			216
	Other real estate owned expense (recovery), net				-			-			17			(10)
	Other expenses				378			372			1,076			1,210
		Total Noninterest Expense			7,648			7,513			22,931			22,949
EARNINGS BEFORE PROVISION FOR INCOME TAXES					5,077			3,990			14,580			11,841
	Provision for income taxes				1,766			1,546			4,829			4,382
NET EARNINGS AVAILABLE TO COMMON STOCKHOLDERS				$	3,311		$	2,444		$	9,751		$	7,459
Per Share Data:
	Basic earnings per share available to common stockholders			$	0.45		$	0.34		$	1.33		$	1.03
	Diluted earnings per share available to common stockholders			$	0.43		$	0.33		$	1.29		$	1.01
	Cash dividends declared			$	959		$	738		$	2,620		$	2,107
	Average shares outstanding				7,375			7,264			7,344			7,216
	Average diluted shares outstanding				7,619			7,428			7,579			7,402
	Shares outstanding as of the end of period				7,403			7,269			7,403			7,269

FNB Bancorp and Subsidiary
FINANCIAL HIGHLIGHTS
(Dollar and share amounts in thousands, except earnings per share)
			(Unaudited)								(Unaudited)
			Three Months Ended								Nine Months Ended
			September 30,								September 30,
			2017				2016				2017				2016
AVERAGE BALANCES:
	Total Assets		$	1,264,864			$	1,159,129			$	1,251,583			$	1,153,889
	Total Loans			820,497				740,218				819,519				741,180
	Total Earning Assets			1,198,556				1,092,060				1,186,265				1,081,448
	Total Deposits			1,042,106				1,014,541				1,026,003				1,017,172
	Total Stockholder's Equity			119,334				112,448				115,479				109,211
SELECTED PERFORMANCE DATA
	Annualized return on average assets			1.05	%			0.84	%			1.04	%			0.86	%
	Annualized return on average equity			11.10	%			8.69	%			11.26	%			9.11	%
	Net interest margin (taxable equivalent)			3.97	%			3.88	%			3.96	%			4.00	%
	Average loans as a percent of average deposits			78.73	%			72.96	%			79.87	%			72.87	%
	Average total stockholders' equity as a % of average total assets			9.43	%			9.70	%			9.23	%			9.46	%
	Annualized common dividend payout ratio			28.96	%			30.20	%			26.87	%			28.25	%

NON-PERFORMING ASSETS															(Extracted from
(Dollars In Thousands)															audited annual
			(Unaudited)				(Unaudited)				(Unaudited)				financial statements)				(Unaudited)
			September 30,				June 30,				March 31,				December 31,				September 30,
			2017				2017				2017				2016				2016
Non-accrual loans			$	6,933			$	7,363			$	8,444			$	6,647			$	6,903
Other real estate owned				1,471				1,459				1,443				1,427				1,346
	Total non-performing assets		$	8,404			$	8,822			$	9,887			$	8,074			$	8,249
Loan loss reserve			$	10,250			$	10,177			$	10,144			$	10,167			$	10,092
Non-accrual loans/Gross loans				0.83	%			0.90	%			1.03	%			0.84	%			0.92	%
Loan loss reserves/Gross loans				1.22	%			1.24	%			1.24	%			1.28	%			1.34	%

FNB Bancorp and Subsidiary
CONSOLIDATED BALANCE SHEETS
(Dollar and share amounts in thousands, except earnings per share)														(Extracted from
														audited annual
					(Unaudited)			(Unaudited)			(Unaudited)			financial statements)			(Unaudited)
					September 30,			June 30,			March 31,			December 31,			September 30,
					2017			2017			2017			2016			2016
ASSETS
	Cash and due from banks				$	23,714		$	21,859		$	25,337		$	15,758		$	17,342
	Interest-bearing time deposits with financial institutions					230			230			205			205			204
	Securities available for sale, at fair value					360,301			362,006			353,364			360,105			358,877
	Other equity securities					7,567			7,567			7,211			7,206			7,206
	Loans, net of deferred loan fees and allowance for loan losses					829,100			808,508			807,191			782,485			741,407
	Bank premises, equipment and leasehold improvements, net					9,417			9,416			9,571			9,837			9,918
	Bank owned life insurance					16,540			16,438			16,349			16,247			16,145
	Accrued interest receivable					4,804			4,945			4,785			4,942			4,544
	Other real estate owned					1,471			1,459			1,443			1,427			1,346
	Goodwill					4,580			4,580			4,580			4,580			4,580
	Prepaid expenses					469			621			768			856			670
	Other assets					16,421			16,032			15,917			15,746			15,309
		TOTAL ASSETS			$	1,274,614		$	1,253,661		$	1,246,721		$	1,219,394		$	1,177,548
LIABILITIES
	Deposits:
		Demand, noninterest bearing			$	309,753		$	296,249		$	287,029		$	296,273		$	285,767
		Demand, interest bearing				122,353			129,435			125,643			121,086			110,147
		Savings and money market				482,335			472,050			496,697			487,763			491,047
		Time				130,630			124,604			115,622			114,384			116,496
			Total Deposits			1,045,071			1,022,338			1,024,991			1,019,506			1,003,457
	Federal Home Loan Bank advances					85,000			91,000			86,000			71,000			37,000
	Note payable					3,900			4,050			4,200			4,350			4,500
	Accrued expenses and other liabilities					19,447			17,546			17,198			14,224			18,847
			Total Liabilities			1,153,418			1,134,934			1,132,389			1,109,080			1,063,804
STOCKHOLDERS' EQUITY
	Common stock, no par value:					85,309			85,159			84,603			84,283			76,065
	Retained Earnings					34,655			32,306			29,842			27,577			33,123
	Accumulated other comprehensive earnings (losses), net of tax					1,232			1,262			(113)			(1,546)			4,556
			Total Stockholders' Equity			121,196			118,727			114,332			110,314			113,744
			TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	1,274,614		$	1,253,661		$	1,246,721		$	1,219,394		$	1,177,548

FNB Bancorp and Subsidiary
CONSOLIDATED STATEMENTS OF INCOME
(Dollar and share amounts in thousands, except earnings per share)										(Unaudited)
										Three Months Ended
				September 30,			June 30,			March 31,			December 31,			September 30,
				2017			2017			2017			2016			2016
INTEREST INCOME
	Interest and fees on loans			$	10,646		$	10,370		$	10,073		$	9,578		$	9,301
	Interest on dividends and securities				2,085			1,989			1,943			1,925			1,815
	Interest on deposits with other financial institutions				54			19			11			7			6
		Total interest income			12,785			12,378			12,027			11,510			11,122
INTEREST EXPENSE
	Deposits				737			677			636			631			657
	Federal Home Loan Bank advances				241			214			146			48			10
	Interest on note payable				54			55			53			55			54
		Total interest expense			1,032			946			835			734			721
NET INTEREST INCOME					11,753			11,432			11,192			10,776			10,401
	Recovery of loan losses				-			(140)			-			-			-
NET INTEREST INCOME AFTER RECOVERY OF LOAN LOSSES					11,753			11,572			11,192			10,776			10,401
NONINTEREST INCOME
	Service charges				571			564			597			599			623
	Net gain on sale of available-for-sale securities				59			123			28			57			140
	Earnings on bank owned life insurance				102			89			102			102			95
	Other income				240			236			283			565			244
		Total Noninterest Income			972			1,012			1,010			1,323			1,102
NONINTEREST EXPENSES
	Salaries and employee benefits				4,824			4,862			4,774			4,839			4,821
	Occupancy expense				704			707			651			635			645
	Equipment expense				436			406			402			448			445
	Professional fees				340			408			473			384			298
	FDIC assessment				90			90			130			150			150
	Telephone, postage, supplies				321			325			297			298			300
	Advertising expense				127			107			108			120			104
	Data processing expense				145			144			139			178			147
	Low income housing expense				122			123			105			71			71
	Surety insurance				89			89			84			85			88
	Director fees				72			72			72			72			72
	Other real estate owned expense, net				-			7			10			5			-
	Other expenses				378			338			360			458			372
		Total Noninterest Expense			7,648			7,678			7,605			7,743			7,513
EARNINGS BEFORE PROVISION FOR INCOME TAXES					5,077			4,906			4,597			4,356			3,990
	Provision for income taxes				1,766			1,555			1,508			1,314			1,546
NET EARNINGS AVAILABLE TO COMMON STOCKHOLDERS				$	3,311		$	3,351		$	3,089		$	3,042		$	2,444

FNB Bancorp and Subsidiary
(Dollar and share amounts in thousands, except earnings per share)								(Unaudited)
								Three Months Ended
			September 30,		June 30,			March 31,			December 31,			September 30,
			2017		2017			2017			2016			2016
Per Share Data:
	Basic earnings per share available to common stockholders		$ 0.45		$	0.46		$	0.42		$	0.42		$	0.34
	Diluted earnings per share available to common stockholders		$ 0.43		$	0.44		$	0.41		$	0.41		$	0.33
	Cash dividends declared		$ 959		$	882		$	780		$	739		$	738
	Average shares outstanding		7,375			7,342			7,301			7,275			7,264
	Average diluted shares outstanding		7,619			7,585			7,518			7,461			7,429
	Shares outstanding as of end of period		7,403			7,362			7,311			7,280			7,269
SELECTED PERFORMANCE DATA
	Annualized return on average assets		1.05%			1.07%			1.00%			1.02%			0.84%
	Annualized return on average equity		11.10%			11.58%			11.24%			10.88%			8.69%
	Net interest margin (taxable equivalent)		3.97%			3.93%			3.98%			3.89%			3.87%
	Average loans as a percent of average deposits		78.73%			81.18%			79.73%			75.01%			72.96%
	Average total stockholders' equity as a % of average total assets		9.43%			9.21%			8.91%			9.38%			9.70%
	Annualized common dividend payout ratio		28.96%			26.32%			25.25%			24.29%			30.20%
											(Extracted from
LOANS											audited annual
(Dollars in thousands)			(Unaudited)		(Unaudited)			(Unaudited)			financial statements)			(Unaudited)
			September 30,		June 30,			March 31,			December 31,			September 30,
			2017		2017			2017			2016			2016
Real estate loans:
	Construction		$ 49,374		$	46,325		$	49,490		$	43,683		$	38,163
	Commercial		443,556			436,286			431,295			421,222			404,964
	Multi family		109,396			104,373			112,911			105,963			83,944
	Residential		174,000			166,610			169,373			170,523			173,441
Commercial & industrial loans			51,827			57,217			49,277			48,874			50,870
Consumer loans			11,193			8,884			6,065			3,533			1,630
	Gross loans		839,346			819,695			818,411			793,798			753,012
Net deferred loan cost (fees)			4			(1,010)			(1,076)			(1,146)			(1,513)
Allowance for loan losses			(10,250)			(10,177)			(10,144)			(10,167)			(10,092)
	NET LOANS		$ 829,100		$	808,508		$	807,191		$	782,485		$	741,407

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.