Exhibit 99.1
North Bay Bancorp logo
Contact: Terry L. Robinson, President & CEO
trobinson@northbaybancorp.com
707-252-5024
NORTH BAY BANCORP'S SECOND QUARTER PROFITS INCREASE 31%,
LOAN PORTFOLIO GROWS 19% AND CORE DEPOSITS INCREASE 16%
Napa, CA - July 26, 2005 - North Bay Bancorp (Nasdaq: NBAN), holding company for
The Vintage Bank and its Solano Bank division, today announced profits grew 31%
in the second quarter of 2005 with 19% growth in the loan portfolio and a 16%
increase in core deposits from the year previous levels. Net income totaled $1.6
million, or $0.39 per diluted share in the second quarter, compared to $1.2
million, or $0.31 per diluted share in the second quarter of 2004. For the first
six months of 2005, net income grew 36% to $3.0 million, or $0.75 per diluted
share, compared to $2.2 million, or $0.57 per diluted share in the first half of
2004.
"Our second quarter results are consistent with our plan, formulated in 2004, to
focus on improving efficiency and profitability. Our asset quality remains
excellent, our net interest margin is strong and we continue to advance our
expense management skills," commented Terry Robinson, President and CEO.
Robinson added, "A major factor that will continue to adversely impact earnings
through the remainder of 2005 is the cost of services associated with
Sarbanes-Oxley Section 404 compliance."
Second Quarter 2005 Financial Review and Operating Highlights (quarter ended
6/30/05 compared to 6/30/04)
o Net income increased 31% to $1.6 million.
o Pre-tax income rose 33% to $2.6 million.
o Earnings per diluted share increased 26% to $0.39.
o Revenues, excluding securities gains, increased 24% to $8.0 million.
o Total loans grew 19% to $403 million.
o Asset quality remained exemplary with no nonperforming assets at quarter
end.
Operating Results
Revenues, consisting of net interest income before the provision for loan losses
and non-interest income excluding securities gains, increased 24% to $8.0
million in the second quarter of 2005 from $6.4 million in the second quarter of
2004. In the first half of 2005, revenues increased 22% to $15.6 million from
$12.8 million in the first half of 2004.
4
Net interest income increased 28% to $7.0 million in the second quarter of 2005
compared to $5.4 million in the second quarter year of 2004, with interest
income growing 29% and interest expense up 36%. In the first six months of 2005,
net interest income rose 26% to $13.6 million from $10.8 million in the first
half of 2004. Although there are no nonperforming loans, the second quarter
provision for loan losses increased to $230,000 from $174,000 in the second
quarter of last year to provide for growth in the overall loan portfolio.
Year-to-date, the loan loss provision increased to $415,000 from $360,000 in the
first half of 2004. Second quarter net interest income after the provision for
loan losses increased 28% to $6.7 million compared to $5.3 million in the second
quarter the previous year and grew 26% to $13.2 million in the first half of the
year from $10.5 million in the first half of 2004.
The net interest margin increased to 5.31% in the second quarter from 4.80% in
the second quarter of 2004. In the first six months of 2005, the net interest
margin was 5.30% compared with 5.01% for the first half of 2004. The improved
margin is attributed to a higher loan-to-deposit ratio, increased yields from
variable rate loans, an improved deposit mix and prudent management of
increasing rates paid on deposits.
Non-interest income, excluding securities gains, increased 3% to $1.0 million in
the second quarter of 2005. Year-to-date, non-interest income was slightly less
than the first six months of 2004 primarily due to a decline in revenues
generated from consumer overdraft activity.
NBAN 2Q05 Profits Up 31%
------------------------
Non-interest expenses in the second quarter of 2005 increased 13% to $5.2
million from $4.6 million in the second quarter of 2004. In the first six months
of 2005, operating expenses increased 11% to $10.2 million from $9.2 million in
the like period of 2004. The percentage increase in expenses is significantly
less than the comparable increase in revenues primarily due to a modest
percentage increase in salaries and benefits resulting from maintaining
full-time equivalent employee levels very close to previous year levels. This
benefit was partially offset by significant increases in consulting and audit
fees due to the Company's requirement for Sarbanes-Oxley Section 404 compliance
in 2005. The tax equivalent efficiency ratio in the second quarter improved to
63.89% compared to 67.15% in the second quarter last year and dropped to 64.70%
in the first half of 2005 from 68.90% in the first half of 2004. The efficiency
ratio measures non-interest expenses as a percent of revenues.
Pre-tax Income increased 33% in the second quarter of 2005 to $2.6 million from
$1.9 million the second quarter of 2004. Pre-tax income rose 40% in the first
half of the year to $5.0 million from $3.5 million in the first half of 2004.
Income taxes increased in the second quarter of 2005 reflecting higher earnings.
The tax provision increased to $1.0 million, or 39% of second quarter pre-tax
income, compared to $740,000, or 38% of second quarter pre-tax income a year
ago. For the first half of 2005, the provision for income tax was $1.9 million,
or 38% of pre-tax income, compared to $1.3 million, or 36% of pre-tax income in
the first half of 2004. The increase in the effective tax rate in 2005 compared
with 2004 was due to a declining level of tax free income from municipal bonds
in the investment portfolio.
Earnings ratios improved with return on equity and return on assets up for the
second quarter and first six months of 2005. "As predicted, we are now realizing
efficiencies from changes identified approximately a year ago," Robinson noted.
North Bay generated a return on average equity of 13.65% in the second quarter
and 13.34% in the first half of 2005 compared to 12.05% and 11.43% in the
respective periods of 2004. Return on average assets was 1.09% in the second
quarter and 1.08% in the first half of 2005 compared to 0.95% in the second
quarter and 0.92% in the first half of 2004.
5
Balance Sheet
-------------
Total assets were $590 million as of June 30, 2005, a 13% increase from June 30,
2004 and a 5% increase from December 31, 2004. Deposits grew 14% during the
previous twelve months to $510 million and 5% from year-end 2004, with demand
deposits growing 33% from June 30, 2004 and 20% from year-end 2004. Loans, net
of the allowance for loan losses, were $397 million as of June 30, 2005 a 19%
increase from June 30, 2004 and a 6% increase from year-end 2004. Book value per
share was $12.16 per share compared to $10.60 per share at the end of the second
quarter of 2004, an increase of 15%.
Asset quality remains excellent with no nonperforming loans as of June 30, 2005.
The allowance for loan and lease losses was $4.5 million, or 1.13% of loans
outstanding at quarter end, compared to $3.8 million or 1.11% of loans
outstanding at the end of the second quarter of 2004. Net charge-offs
year-to-date were $10,000 compared to $102,000 charged off in the first half of
2004.
ABOUT NORTH BAY BANCORP
North Bay Bancorp is the holding company for The Vintage Bank in Napa County and
its Solano Bank division in Solano County. This full service commercial bank
offers a wide selection of deposit, loan and investment services to local
consumers and small business customers. The Vintage Bank opened for business in
1985 and operates six banking offices in Napa County, Northern California's
number one tourist destination and the nation's premier wine producing region.
The main office and two branch offices are located in the City of Napa. The
Vintage Bank also has branches in the cities of St. Helena and American Canyon
and on Airport Road in the Southern industrial area of Napa County as well as an
off-site ATM facility in Yountville. Solano Bank, a division of The Vintage Bank
launched in July 2000, has offices in the primary cities along the I-80 corridor
of Solano County, including Vacaville, Fairfield, Vallejo and Benicia and an
off-site ATM facility in downtown Fairfield. Solano County is projected to be
the fastest growing county in Northern California through year 2020 and is
attracting people 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 its Solano Bank division. 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.
6
NORTH BAY BANCORP
CONSOLIDATED INCOME STATEMENT 3-Month Period Ended: 6-Month Period Ended:
(in $000's, unaudited) 6/30/2005 6/30/2004 % Change 6/30/2005 6/30/2004 % Change
--------------------------------------- --------------------------------
Interest Income $ 8,145 $ 6,294 29.4% $ 15,821 $ 12,358 28.0%
Interest Expense 1,171 859 36.3% 2,223 1,547 43.7%
---------- ---------- ---------- ----------
Net Interest Income 6,974 5,435 28.3% 13,598 10,811 25.8%
Provision for Loan & Lease Losses 230 174 32.2% 415 360 15.3%
---------- ---------- ---------- ----------
Net Interest Income after
Loan Loss Provision 6,744 5,261 28.2% 13,183 10,451 26.1%
Service Charges 516 567 -9.0% 1,039 1,120 -7.2%
Loan Sale & Servicing Income 5 14 -64.3% 12 19 -36.8%
Bank Owned Life Insurance Income 88 88 0.0% 176 192 -8.3%
Other Non-Interest Income 412 326 26.4% 750 650 15.4%
Gain on Investments -- 262 -100.0% -- 262 -100.0%
---------- ---------- ---------- ----------
Total Non-Interest Income 1,021 1,257 -18.8% 1,977 2,243 -11.9%
Salaries & Benefits 2,735 2,563 6.7% 5,459 5,067 7.7%
Occupancy Expense 446 344 29.7% 840 711 18.1%
Equipment Expense 532 515 3.3% 1,079 1,007 7.1%
Other Non-Interest Expenses 1,460 1,149 27.1% 2,830 2,383 18.8%
---------- ---------- ---------- ----------
Total Non-Interest Expenses 5,173 4,571 13.2% 10,208 9,168 11.3%
Income Before Taxes 2,592 1,947 33.1% 4,952 3,526 40.4%
Provision for Income Taxes 1,007 740 36.1% 1,905 1,284 48.4%
---------- ---------- ---------- ----------
Net Income $ 1,585 $ 1,207 31.3% $ 3,047 $ 2,242 35.9%
========== ========== ========== ==========
TAX DATA
Tax-Exempt Muni Income $ 109 $ 136 -19.9% $ 219 $ 296 -26.0%
Tax-Exempt BOLI Income $ 88 $ 88 0.0% $ 176 $ 192 -8.3%
Interest Income - Fully Tax Equivalent $ 8,181 $ 6,322 29.4% $ 15,891 $ 12,454 27.6%
NET CHARGE-OFFS (RECOVERIES) $ 6 $ 95 NM $ 10 $ 102 NM
PER SHARE DATA 3-Month Period Ended: 6-Month Period Ended:
(unaudited) 6/30/2005 6/30/2004 % Change 6/30/2005 6/30/2004 % Change
--------------------------------------- --------------------------------
Basic Earnings per Share $ 0.41 $0.32 28.1% $ 0.79 $ 0.59 33.9%
Diluted Earnings per Share $ 0.39 $ 0.31 25.8% $ 0.75 $ 0.57 31.6%
Common Dividends $ 0.00 $ 0.00 $ 0.15 $ 0.13 15.4%
Wtd. Avg. Shares Outstanding 3,884,162 3,814,170 3,866,555 3,787,596
Wtd. Avg. Diluted Shares 4,034,205 3,937,220 4,038,289 3,913,603
Book Value per Basic Share (EOP) $ 12.16 $ 10.60 14.7% $ 12.16 $ 10.60 14.7%
Common Shares Outstanding. (EOP) 3,884,700 3,807,676 3,884,700 3,807,676
KEY FINANCIAL RATIOS 3-Month Period Ended: 6-Month Period Ended:
(unaudited) 6/30/2005 6/30/2004 6/30/2005 6/30/2004
------------------------------- -------------------------------
Return on Average Equity 13.65% 12.05% 13.34% 11.43%
Return on Average Assets 1.09% 0.95% 1.08% 0.92%
Net Interest Margin (Tax-Equivalent) 5.31% 4.80% 5.30% 5.01%
Efficiency Ratio (Tax-Equivalent) 63.89% 67.15% 64.70% 68.90%
AVERAGE BALANCES 3-Month Period Ended: 6-Month Period Ended:
(in $000's, unaudited) 6/30/2005 6/30/2004 % Change 6/30/2005 6/30/2004 % Change
--------------------------------------- --------------------------------
Average Assets $ 581,311 $ 512,194 13.5% $ 570,470 $ 489,237 16.6%
Average Earning Assets $ 528,140 $ 456,352 15.7% $ 516,108 $ 435,713 18.5%
Average Gross Loans & Leases $ 406,169 $ 344,421 17.9% $ 397,081 $ 329,081 20.7%
Average Deposits $ 501,537 $ 442,839 13.3% $ 490,843 $ 427,678 14.8%
Average Equity $ 46,584 $ 40,300 15.6% $ 46,054 $ 39,449 16.7%
7
NORTH BAY BANCORP
STATEMENT OF CONDITION End of Period:
(in $000's, unaudited) 6/30/2005 12/31/2004 6/30/2004 6-Month Chg Annual Chg
----------- ------------ ----------- ------------- ------------
ASSETS
Cash and Due from Banks $ 24,369 $ 27,342 $ 35,740 -10.9% -31.8%
Securities and Fed Funds Sold 133,994 132,348 108,239 1.2% 23.8%
Commercial & Industrial 72,482 67,172 57,869 7.9% 25.3%
Commercial Secured by Real Estate 253,577 241,361 215,819 5.1% 17.5%
Real Estate 5,851 6,613 6,233 -11.5% -6.1%
Construction 31,990 27,762 27,114 15.2% 18.0%
Consumer 38,678 36,343 32,470 6.4% 19.1%
--------- --------- ---------
Gross Loans & Leases 402,578 379,251 339,505 6.2% 18.6%
Deferred Loan Fees (1,415) (1,485) (1,365) -4.7% 3.7%
--------- --------- ---------
Loans & Leases Net of Deferred Fees 401,163 377,766 338,140 6.2% 18.6%
Allowance for Loan & Lease Losses (4,541) (4,136) (3,782) 9.8% 20.1%
--------- --------- ---------
Net Loans & Leases 396,622 373,630 334,358 6.2% 18.6%
Loans Held-for-Sale 9,707 4,604 18,855 110.8% -48.5%
Investment in Subsidiary 310 310 310 0.0% 0.0%
Bank Premises & Equipment 9,731 10,336 10,691 -5.9% -9.0%
Other Assets 15,424 13,493 13,636 14.3% 13.1%
--------- --------- ---------
Total Assets $ 590,157 $ 562,063 $ 521,829 5.0% 13.1%
========= ========= =========
LIABILITIES & CAPITAL
Demand Deposits $ 152,065 $ 127,250 $ 114,657 19.5% 32.6%
NOW / Savings Deposits 144,722 151,053 136,183 -4.2% 6.3%
Money Market Deposits 132,353 128,884 119,461 2.7% 10.8%
Time Certificates of Deposit 80,521 77,306 78,492 4.2% 2.6%
--------- --------- ---------
Total Deposits 509,661 484,493 448,793 5.2% 13.6%
Long Term Borrowings 19,000 19,000 19,000 0.0% 0.0%
Subordinated Debentures 10,310 10,310 10,310 0.0% 0.0%
--------- --------- ---------
Total Deposits & Interest Bearing Liab. 538,971 513,803 478,103 4.9% 12.7%
Other Liabilities 3,958 4,126 3,364 -4.1% 17.7%
Total Capital 47,228 44,134 40,362 7.0% 17.0%
--------- --------- ---------
Total Liabilities & Capital $ 590,157 $ 562,063 $ 521,829 5.0% 13.1%
========= ========= =========
CREDIT QUALITY DATA End of Period:
(in $000's, unaudited) 6/30/2005 12/31/2004 6/30/2004
----------- ------------ -----------
Non-Accruing Loans $ -- $ -- $ --
Over 90 Days PD and Still Accruing 0 0 0
Other Real Estate Owned 0 0 0
--------- --------- ---------
Total Non-Performing Assets $ -- $ -- $ --
========= ========= =========
Non-Performing Loans to Total Loans 0.00% 0.00% 0.00%
Non-Performing Assets to Total Assets 0.00% 0.00% 0.00%
Allowance for Loan Losses to Loans 1.13% 1.09% 1.11%
OTHER PERIOD-END STATISTICS End of Period:
(unaudited) 6/30/2005 12/31/2004 6/30/2004
----------- ------------ -----------
Shareholders' Equity / Total Assets 8.0% 7.9% 7.7%
Loans / Deposits 79.0% 78.3% 75.6%
Non-Interest Bearing Deposits / Total Deposits 29.8% 26.3% 25.5%
8