Exhibit 99.1
NORTH BAY BANCORP LOGO
Contact: Terry L. Robinson, President & CEO
trobinson@northbaybancorp.com
707-252-5024
THE CEREGHINO GROUP LOGO
corporate investor relations
5333 15TH AVENUE SOUTH, SUITE 1500
SEATTLE, WA 98108
206.762.0993
North Bay Bancorp's Third Quarter Pre-Tax Profits Increase 24%,
Loan Portfolio Grows 29% and Core Deposits Increase 22%
Napa, CA - October 22, 2004 - North Bay Bancorp (Nasdaq: NBAN), holding company
for The Vintage Bank and Solano Bank, today reported pre-tax profits grew 24% in
the third quarter with 29% growth in the loan portfolio and 22% growth in core
deposits from the third quarter a year ago. Third quarter pre-tax profits were
$2.0 million and net income was $1.3 million, compared to pre-tax profits of
$1.6 million and net income of $1.2 million, in the third quarter of 2003. The
rise in effective tax rates between 2004 and 2003 is due to a change in tax
treatment for certain investment income, effected in the fourth quarter of 2003.
Earnings per diluted share in the third quarter totaled $0.50 compared to $0.48
in the third quarter a year ago. Year-to-date, net income grew 14% to $3.5
million, or $1.40 per diluted share, compared to $3.1 million, or $1.26 per
diluted share in the first nine months of 2003.
"Modest but stable growth in construction, wine country tourism and the service
sector continued to fuel the regional economy and provide support for our
business banking franchise," commented Terry Robinson, President and CEO.
"Demand for business loans in both Napa and Solano Counties remains solid and we
implemented a new automated process for consumer loans that enables us to
process applications quickly and efficiently, stimulating growth in the consumer
loan portfolio."
Year-to-Date 2004 Financial Review and Operating Highlights (nine months ended
9/30/04 compared to 9/30/03)
o Net income increased 14% to $3.5 million.
o Pre-tax income rose 29% to $5.5 million.
o Earnings per diluted share increased 11% to $1.40.
o Revenues increased 20% to $19.6 million.
o Productivity improved with the efficiency ratio dropping 412 basis
points to 68.30%.
o Deposits grew 19% to $478 million.
o Net loans outstanding grew 28% to $354 million.
o Asset quality remained exemplary with no nonperforming assets at
quarter end.
"Our new Vintage Bank office in American Canyon, a high-growth area,
opened in August and is off to a fast start and we are confident it will begin
contributing to profitability next year. Even with the expense of a new office,
our efficiency ratio improved significantly, down 316 basis points in the third
quarter and 412 basis points year-to-date when compared to the same periods in
2003. This improvement reflects our initiating actions to improve cost
management," Robinson explained.
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Operating Results
Revenues: Total revenues, (net interest income before the provision for loan
losses and non-interest income, excluding securities gains) increased 20% to
$6.8 million in the third quarter of 2004 from $5.7 million in the third quarter
of 2003. In the first nine months of 2004, revenues increased 20% to $19.6
million from $16.4 million in the first nine months of 2003.
Net interest income increased 20% to $5.9 million in the third quarter compared
to $4.9 million in the third quarter of 2003, with interest income growing 23%
and interest expense up 41%. The substantial increase in interest expense was
primarily due to the impact of $19 million in borrowings booked in the second
quarter of 2004. Year-to-date, net interest income rose 18% to $16.7 million
from $14.1 million in the first nine months of 2003, with interest income rising
17% and interest expense up 8%. North Bay increased its third quarter provision
for loan losses to $180,000 from $45,000 for the third quarter a year ago to
keep pace with growth in the overall loan portfolio. Year-to-date, the loan loss
provision increased to $540,000 from $135,000 in the first nine months of 2003.
Third quarter net interest income after the provision for loan losses increased
18% to $5.7 million compared to $4.8 million in the third quarter the previous
year, and grew 16% to $16.1 million year-to-date from $13.9 million in the first
nine months of 2003. "Growth in the loan portfolio plus income from the modest
leverage strategy implemented last quarter were the drivers behind the strong
increase in net interest income," said Lee-Ann Cimino, Chief Financial Officer.
Net interest margin: "As expected, the leverage strategy we employed earlier
this year had a positive effect on net interest income with little impact on net
interest margin in the quarter. This strategy provides significant benefits at
very moderate risk," Cimino noted. Net interest margin was 4.95% in the third
quarter and 4.98% in the first nine months of 2004, compared to 4.98% and 4.94%
in the respective periods of 2003.
Non-interest income: There were no investment gains in the third quarter
compared with $207,000 in gains in the third quarter of 2003. As a result, third
quarter non-interest income decreased 7% to $1.0 million from $1.1 million in
the third quarter a year ago. Year-to-date, non-interest income increased 11% to
$3.2 million from $2.9 million for same period of 2003. Investment gains
year-to-date totaled $262,000 compared with $637,000 for the first nine months
of 2003.
Non-interest expenses in the third quarter increased 9% to $4.7 million from
$4.3 million in the third quarter of 2003. In the first nine months of 2004,
operating expenses increased 10% to $13.8 million from $12.6 million in the like
period of 2003. The tax equivalent efficiency ratio in the third quarter
improved to 67.15% compared to 70.31% in the third quarter last year and dropped
to 68.30% in the first nine months of 2004 from 72.42% in the first nine months
of 2003. The efficiency ratio measures operating expenses as a percent of
revenues.
Pre-tax Income increased 24% in the third quarter of 2004 to $2.0 million from
$1.6 million in the third quarter of 2003. Pre-tax income rose 29% in the first
nine months of the year to $5.5 million from $4.3 million in the same period of
2003.
Income taxes increased in the third quarter of 2004 reflecting higher earnings
and changes in tax treatment for income from a REIT. The tax provision increased
to $750,000, or 38% of third quarter pre-tax income, compared to $452,000, or
28% of third quarter pre-tax income in 2003. For the first nine months of 2004,
the provision for income tax was $2.0 million, or 37% of pre-tax income,
compared to $1.2 million, or 28% of pre-tax income in the first nine months of
2003.
Earnings ratios. Strong growth in loans and deposits accelerated balance sheet
growth ahead of earnings growth. In addition, after-tax profitability ratios
were somewhat skewed by the lower tax rate in 2003. "We continue to work to
streamline our corporate structure and operating processes. We anticipate the
benefits of these efforts will build as we execute on our plan to improve
profitability," Robinson said. North Bay generated a return on average equity of
11.86% in the third quarter and 11.58% in the first nine months of 2004 compared
to 12.25% and 11.15% in the respective periods of 2003. Return on average assets
was 0.92% in the third quarter and first nine months of 2004 compared to 1.03%
in the third quarter and 0.95% in the first nine months of 2003.
Balance Sheet
Total assets increased 22% to $552 million as of September 30, 2004, compared to
$451 million at September 30, 2003. Deposits grew 19% during the year to $478
million, with growth in both average balances and the number of new checking
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accounts. Loans, net of the allowance for loan losses, grew 29% to $354 million,
up from $274 million from the third quarter last year. In addition to a 36%
increase in commercial loans secured by real estate, commercial and industrial
loans grew 15% fueled by strength in the wine sector and consumer loans grew
48%, assisted by the new automated program implemented to better serve
individuals. Book value per share was $17.61 compared to $16.65 at the end of
the third quarter of 2003.
Asset quality remains excellent with no nonperforming loans as of September 30,
2004. The allowance for loan and lease losses was $4.0 million, or 1.12% of
loans outstanding at quarter end, compared to $3.4 million or 1.23% of loans
outstanding at the end of the third quarter of 2003. Strong loan growth and
excellent credit quality contributed to the drop in the ratio of allowance for
loan losses to total loans. Net charge-offs year-to-date were $24,000, which
included $78,000 in recoveries in the third quarter, compared to $4,000 of net
charge-offs in the first nine months of 2003, including $3,000 in net recoveries
during the third quarter of 2003.
ABOUT NORTH BAY BANCORP
North Bay Bancorp is the parent company of The Vintage Bank based in Napa County
and Solano Bank based in Solano County, both full service commercial banks
offering a wide selection of deposit, loan and investment services to local
consumers and small business customers. The Vintage Bank, opened in 1985,
operates six 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. Vintage also
has a branch in the City of St. Helena, one in American Canyon, a branch in the
Southern industrial area of Napa County and an off-site ATM facility in
Yountville. Solano Bank, opened in July 2000, operates offices in the primary
cities along the I-80 corridor of Solano County. The Bank's main office is
located in Vacaville, with branches in Fairfield, Vallejo and Benicia and an
off-site ATM facility in downtown Fairfield. This region, projected to be the
fastest growing county in Northern California through year 2020, is attracting
businesses and residents with a quality lifestyle, affordable housing and
business-friendly attitudes.
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 on 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.
(more)
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NORTH BAY BANCORP
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CONSOLIDATED INCOME STATEMENT 3-Month Period Ended: 9-Month Period Ended:
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(in $000's, unaudited) 9/30/2004 9/30/2003 % Change 9/30/2004 9/30/2003 % Change
----------- ----------- ----------- ----------- ----------- ---------
Interest Income $ 6,822 $ 5,554 22.8% $ 19,180 $ 16,409 16.9%
Interest Expense 961 681 41.1% 2,508 2,328 7.7%
Net Interest Income 5,861 4,873 20.3% 16,672 14,081 18.4%
Provision for Loan & Lease Losses 180 45 300.0% 540 135 300.0%
Net Interest Income after Loan Loss Provision 5,681 4,828 17.7% 16,132 13,946 15.7%
Service Charges 564 369 52.8% 1,684 1,068 57.7%
Loan Sale & Servicing Income 16 129 -87.6% 35 185 -81.1%
Bank Owned Life Insurance Income 88 91 -3.3% 280 274 2.2%
Other Non-Interest Income 318 259 22.8% 968 758 27.7%
Gain on Investments -- 207 NM 262 637 -58.9%
Total Non-Interest Income 986 1,055 -6.5% 3,229 2,922 10.5%
Salaries & Benefits 2,566 2,338 9.8% 7,633 6,896 10.7%
Occupancy Expense 369 356 3.7% 1,080 931 16.0%
Equipment Expense 502 485 3.5% 1,509 1,230 22.7%
Other Non-Interest Expenses 1,230 1,088 13.1% 3,613 3,536 2.2%
Total Non-Interest Expenses 4,667 4,267 9.4% 13,835 12,593 9.9%
Income Before Taxes 2,000 1,616 23.8% 5,526 4,275 29.3%
Provision for Income Taxes 750 452 65.9% 2,034 1,204 68.9%
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Net Income $ 1,250 $ 1,164 7.4% $ 3,492 $ 3,071 13.7%
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TAX DATA
Tax-Exempt Muni Income $ 113 $ 182 -37.9% $ 409 $ 474 -13.7%
Tax-Exempt BOLI Income $ 88 $ 91 -3.3% $ 280 $ 274 2.2%
Interest Income - Fully Tax Equivalent $ 6,859 $ 5,627 21.9% $ 19,313 $ 16,585 16.4%
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NET CHARGE-OFFS (RECOVERIES) $ (78) $ (3) NM $ 24 $ 4 NM
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PER SHARE DATA 3-Month Period Ended: 9-Month Period Ended:
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(unaudited) 9/30/2004 9/30/2003 % Change 9/30/2004 9/30/2003 % Change
----------- ----------- ----------- ----------- ----------- ---------
Basic Earnings per Share $ 0.52 $ 0.49 6.1% $ 1.45 $ 1.29 12.4%
Diluted Earnings per Share $ 0.50 $ 0.48 4.2% $ 1.40 $ 1.26 11.1%
Common Dividends $ 0.00 $ 0.00 NM $ 0.20 $ 0.20 0.0%
Wtd. Avg. Shares Outstanding 2,425,772 2,399,102 2,410,739 2,376,083
Wtd. Avg. Diluted Shares 2,491,462 2,442,374 2,485,970 2,433,490
Book Value per Share (EOP) $ 17.61 $ 16.65 5.8% $ 17.61 $ 16.65 5.8%
Common Shares Outstanding. (EOP) 2,426,762 2,285,646 2,426,762 2,285,646
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KEY FINANCIAL RATIOS 3-Month Period Ended: 9-Month Period Ended:
-------------------------- -------------------------
(unaudited) 9/30/2004 9/30/2003 9/30/2004 9/30/2003
----------- ----------- ----------- -----------
Return on Average Equity 11.86% 12.25% 11.58% 11.15%
Return on Average Assets 0.92% 1.03% 0.92% 0.95%
Net Interest Margin (Tax-Equivalent) 4.95% 4.98% 4.98% 4.94%
Efficiency Ratio (Tax-Equivalent) 67.15% 70.31% 68.30% 72.42%
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AVERAGE BALANCES 3-Month Period Ended: 9-Month Period Ended:
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(in $000's, unaudited) 9/30/2004 9/30/2003 % Change 9/30/2004 9/30/2003 % Change
----------- ----------- ----------- ----------- ----------- ---------
Average Assets $ 539,578 $ 449,859 19.9% $ 506,018 $ 431,849 17.2%
Average Earning Assets $ 477,054 $ 397,560 20.0% $ 449,495 $ 385,165 16.7%
Average Gross Loans & Leases $ 369,384 $ 294,276 25.5% $ 342,515 $ 269,824 26.9%
Average Deposits $ 464,629 $ 398,411 16.6% $ 439,995 $ 380,274 15.7%
Average Equity $ 41,936 $ 37,693 11.3% $ 40,278 $ 36,826 9.4%
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STATEMENT OF CONDITION End of Period:
(in $000's, unaudited) 9/30/2004 9/30/2003 Annual Chg
--------- --------- ----------
ASSETS
Cash and Due from Banks $ 42,626 $ 34,777 22.6%
Securities and Fed Funds Sold 110,806 107,626 3.0%
Commercial & Industrial 60,828 52,754 15.3%
Commercial Secured by Real Estate 230,610 169,175 36.3%
Real Estate 6,743 6,696 0.7%
Construction 25,841 26,198 -1.4%
Consumer 35,889 24,327 47.5%
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Gross Loans & Leases 359,911 279,150 28.9%
Deferred Loan Fees (1,468) (1,238) 18.6%
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Loans & Leases Net of Deferred Fees 358,443 277,912 29.0%
Allowance for Loan & Lease Losses (4,040) (3,421) 18.1%
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Net Loans & Leases 354,403 274,491 29.1%
Loans Held-for-Sale 20,232 10,786 87.6%
Investment in Subsidiary 310 -- NM
Bank Premises & Equipment 10,657 11,137 -4.3%
Other Assets 13,415 12,499 7.3%
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Total Assets $ 552,449 $ 451,316 22.4%
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LIABILITIES & CAPITAL
Demand Deposits $ 127,768 $ 104,594 22.2%
NOW / Savings Deposits 144,267 123,989 16.4%
Money Market Deposits 125,994 97,241 29.6%
Time Certificates of Deposit 78,763 73,597 7.0%
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Total Deposits 476,792 399,421 19.4%
Long Term Borrowings 19,000 -- NM
Trust Preferred Securities 10,310 10,000 3.1%
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Total Deposits & Interest Bearing Liab 506,102 409,421 23.6%
Other Liabilities 3,667 3,836 -4.4%
Total Capital 42,730 38,059 12.3%
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Total Liabilities & Capital $ 552,499 $ 451,316 22.4%
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CREDIT QUALITY DATA End of Period:
(in $000's, unaudited) 9/30/2004 9/30/2003
--------- ---------
Non-Accruing Loans $ -- $ --
Over 90 Days PD and Still Accruing 0 0
Other Real Estate Owned 0 0
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Total Non-Performing Assets $ -- $ --
========= =========
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Non-Performing Loans to Total Loans 0.00% 0.00%
Non-Performing Assets to Total Assets 0.00% 0.00%
Allowance for Loan Losses to Loans 1.12% 1.23%
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OTHER PERIOD-END STATISTICS End of Period:
(unaudited) 9/30/2004 9/30/2003
--------- ---------
Shareholders' Equity / Total Assets 7.7% 8.4%
Loans / Deposits 75.5% 69.9%
Non-Interest Bearing Deposits / Total Deposits 26.8% 26.2%
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