Exhibit 99.1 N O R T H B A Y B A N C O R P PRESS RELEASE - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- -------------------------------------------------------------------- NORTH BAY BANCORP -------------------------------------------------------------------- For Immediate Release Contact: Terry L. Robinson President & CEO North Bay Bancorp trobinson@northbaybancorp.com 707-259-2346 NEWS RELEASE NORTH BAY BANCORP ANNOUNCES YEAR 2002 FINANCIAL RESULTS ASSETS GROW 27%, NET INCOME INCREASES 23% Napa, CA - February 18, 2003 - North Bay Bancorp (Nasdaq: NBAN), holding company for The Vintage Bank and Solano Bank, today announced financial results for the quarter and year ended December 31, 2002. Net income for the quarter ended December 31, 2002 was $1,126,000, or $.49 per share (diluted), as compared with net income of $928,000, or $.45 per share (diluted), for the fourth quarter of 2001. Net income was $3,708,000, or $1.64 per share (diluted), for the year ended December 31, 2002 as compared with net income of $3,022,000, or $1.39 per share (diluted), for year 2001. These results represent a 21% increase in net income for the fourth quarter of 2002 compared with the corresponding quarter of 2001 and a 23% increase for the year 2002 compared with 2001. Total assets were $416,458,000 as of December 31, 2002, equating to growth of 27% for the year. "North Bay Bancorp has effectively executed its business plan throughout 2002," stated Terry Robinson, President & CEO. "We opened two new offices in January of 2002, closed a $10 million trust preferred offering in June and completed our Nasdaq National Market listing in September. We achieved our growth goals and finished the year within 3% of meeting our net income targets. In the course of the year, we absorbed some significant non-recurring legal and professional fees related to our Nasdaq listing, the trust preferred offering, revised benefit plans and new regulatory requirements for public companies. We completed the year with only a nominal decline in our net interest margin and our asset quality remains excellent, with no non-accrual or non-performing loans as of December 31, 2002." FINANCIAL HIGHLIGHTS Earnings Net interest income for year 2002 increased $3,068,000, or 21%, compared with 2001. The net interest margin decreased nominally during the year, from 5.36% in 2001 to 5.31% in 2002. A major factor in the declining margin was deposit growth at The Vintage Bank outpacing loan growth, ending 2002 with a loan-to-deposit ratio of 60%. Noninterest income for year 2002 increased $347,000, or 15%, compared with 2001. Most noninterest income derives from service charges on deposit accounts. Service charge income increased proportionately less than growth in deposits because the average balance of deposit accounts increased during the year, resulting in fewer accounts generating service charges. Gains on securities transactions were $399,000 in 2002 compared with $325,000 in 2001. These gains resulted from our established practice of selling selected securities prior to maturity and reinvesting funds longer-term in order to maintain yields; in a falling-rate environment this practice normally results in recognized securities gains. Noninterest expense for year 2002 increased $2,362,000, or 20%, compared with 2001. The largest component of the increase was in Salaries and Benefits, which rose 24%, primarily due to increases in full-time equivalent (FTE) employees. The FTE increases related to increasing sales activity, staffing new offices and positioning for future growth. Other components of noninterest expense that increased materially were insurance costs and legal and professional fees associated with our Nasdaq listing, our trust preferred offering, revised benefits plans, new corporate governance legislation and changes in regulatory requirements. Balance Sheet Total assets grew $89.7 million to $416.5 million as of December 31, 2002, a 27% increase from 2001. Deposits grew $75.4 million, or 26%, while loans grew $50.8 million, or 28%. Liquidity levels significantly exceeded policy requirements throughout the year. As of December 31, 2002 liquid assets represented 38% of total assets. Asset quality remains excellent. As of December 31, 2002, the allowance for loan losses was $3.3 million, or 1.38% of loans outstanding. During 2002, $576,000 was charged to expense for the provision for loan losses compared with $447,000 in 2001. There were no nonperforming or nonaccrual loans as of December 31, 2002. Net charge-offs for the year totaled $3,000. OUTLOOK Regarding the outlook for 2003, Robinson stated, "We have consistently predicted that 2003 would be the year we would witness the initial financial payoff from the aggressive growth strategy commenced in 1999 with the organization of Solano Bank. We are now positioned to grow substantially with our existing infrastructure while requiring only nominal increases in numbers of FTE employees. We project another year of substantial asset growth for 2003 with our increase in net income exceeding asset growth on a percentage basis." ABOUT NORTH BAY BANCORP North Bay Bancorp is the parent company of two community banks in the North Bay Region of Northern California--The Vintage Bank based in Napa County and Solano Bank based in Solano County. Both subsidiaries are full service commercial banks offering a wide selection of deposit, loan and investment services to local consumers and small business customers. Each bank has a separate board of directors composed of local business and community leaders. The Vintage Bank, which opened for business in 1985, currently operates four banking offices in Napa County, Northern California's number one tourist destination and the nation's premier wine producing region. The bank's main office and two branch offices are located in the City of Napa with another branch office in St. Helena. The bank will open its fifth office later this quarter in the Gateway Industrial Park in Southern Napa County. Solano Bank, which opened in July, 2000, operates four offices along the I-80 corridor of Solano County. The bank's main office is located in Vacaville, with branch offices in Fairfield, Vallejo and Benicia. This region, projected to be the fastest growing county in Northern California over the next 20 years, is attracting growth with a quality lifestyle, affordable housing and business-friendly cities. North Bay Bancorp has approximately 1,100 shareholders of record. Effective September 3, 2002, the stock began trading on the Nasdaq National Exchange under the symbol NBAN. - -------------------------------------------------------------------------------- This news release contains forward-looking statements with respect to the financial condition, results of operation and business of North Bay Bancorp and its subsidiaries. These include, but are not limited to, statements that relate to or are dependent on estimates or assumptions relating to the prospects of loan growth, credit quality and certain operating efficiencies resulting from the operations of The Vintage Bank and Solano Bank. These forward-looking statements involve certain risks and uncertainties. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following possibilities: (1) competitive pressure among financial services companies increases significantly; (2) changes in the interest rate environment reduce interest margins; (3) general economic conditions, internationally, nationally or in the State of California are less favorable than expected; (4) legislation or regulatory requirements or changes adversely affect the business in which the combined organization will be engaged; and (5) other risks detailed in the North Bay Bancorp reports filed with the Securities and Exchange Commission. North Bay Bancorp Income Statements - -------------------------------------------------------------------------------- (Unaudited) - -------------------------------------------------------------------------------- Three Months Ended Twelve Months Ended December 31, December 31, 2002 2001 2002 2001 ---- ---- ---- ---- INTEREST INCOME: Loans (including fees) $ 4,415,000 $ 3,945,000 $16,602,000 $15,319,000 Federal funds sold 127,000 109,000 418,000 1,012,000 Investment securities taxable 934,000 1,009,000 3,495,000 3,401,000 Investment securities tax exempt 162,000 79,000 664,000 575,000 ----------- ----------- ----------- ----------- Total Interest income 5,638,000 5,142,000 21,179,000 20,307,000 INTEREST EXPENSE: Deposits 841,000 1,066,000 3,352,000 5,716,000 Short term borrowings 0 1,000 0 3,000 Long term borrowings 147,000 27,000 339,000 168,000 ----------- ----------- ----------- ----------- Total Interest Expense 988,000 1,094,000 3,691,000 5,887,000 Net interest income 4,650,000 4,048,000 17,488,000 14,420,000 PROVISION FOR LOAN LOSSES 144,000 114,000 576,000 447,000 Net interest income after provision for loan losses 4,506,000 3,934,000 16,912,000 13,973,000 NONINTEREST INCOME: 703,000 707,000 2,712,000 2,365,000 Gains on securities transactions, net 333,000 325,000 399,000 325,000 NONINTEREST EXPENSE: Salaries and employee benefits 2,035,000 1,728,000 7,893,000 6,349,000 Occupancy 236,000 205,000 916,000 854,000 Equipment 222,000 470,000 1,614,000 1,451,000 Other 1,304,000 1,060,000 3,893,000 3,300,000 ----------- ----------- ----------- ----------- Total nonInterest expense 3,797,000 3,463,000 14,316,000 11,954,000 Income before provision for income taxes 1,745,000 1,503,000 5,707,000 4,709,000 PROVISION FOR INCOME TAXES 619,000 575,000 1,999,000 1,687,000 NET INCOME $ 1,126,000 $ 928,000 $ 3,708,000 $ 3,022,000 =========== =========== =========== =========== BASIC EARNINGS PER SHARE: $ 0.50 $ 0.45 $ 1.68 $ 1.40 =========== =========== =========== =========== DILUTED EARNINGS PER SHARE: $ 0.49 $ 0.45 $ 1.64 $ 1.39 =========== =========== =========== =========== North Bay Bancorp Consolidated Balance Sheets (Unaudited) December 31, December 31, ASSETS 2002 2001 ---- ---- CASH AND DUE FROM BANKS $ 23,786,000 $ 19,311,000 FEDERAL FUNDS SOLD 28,525,000 18,000,000 TIME DEPOSITS WITH OTHER FINANCIAL INSTITUTIONS 100,000 100,000 ------------ ------------ Total cash and cash equivalents 52,411,000 37,411,000 INVESTMENT SECURITIES: Held-to-maturity 1,272,000 1,314,000 Available-for-sale 104,473,000 83,565,000 Equity securities 1,349,000 1,241,000 ------------ ------------ TOTAL INVESTMENT SECURITIES 107,094,000 86,120,000 LOANS, net of allowance for loan losses of $3,290,000 in December, 2002 and $2,717,000 in December, 2001 234,337,000 183,548,000 BANK PREMISES AND EQUIPMENT, net 10,800,000 9,329,000 ACCRUED INTEREST RECEIVABLE AND OTHER ASSETS 11,816,000 10,398,000 ------------ ------------ Total assets $416,458,000 $326,806,000 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY DEPOSITS: Non-interest bearing $104,142,000 $ 77,117,000 Interest bearing 263,661,000 215,324,000 ------------ ------------ Total deposits 367,803,000 292,441,000 LONG-TERM DEBT 0 1,846,000 SHORT TERM BORROWINGS 0 0 Total borrowings 0 1,846,000 ACCRUED INTEREST PAYABLE AND OTHER LIABILITIES 3,312,000 2,539,000 ------------ ------------ Total liabilities 371,115,000 296,826,000 Floating rate subordinated debenture (trust preferred securities) 10,000,000 0 SHAREHOLDERS' EQUITY: Preferred stock no par value - Authorized, 500,000 shares; Issued and outstanding - None Common stock - no par value - Authorized 10,000,000 shares; Issued and outstanding - 2,130,288 shares in December 2002, and 1,960,902 in December, 2001 25,387,000 21,973,000 Retained earnings 8,612,000 7,454,000 Accumulated other comprehensive income 1,344,000 553,000 ------------ ------------ Total shareholders' equity 35,343,000 29,980,000 Total liabilities and shareholders' equity $416,458,000 $326,806,000 ============ ============