North Bay Bancorp Logo
Contact: Terry L. Robinson, President & CEO
trobinson@northbaybancorp.com
707-252-5024
NORTH BAY BANCORP'S THIRD QUARTER PROFITS INCREASE 45%,
LOAN PORTFOLIO GROWS 11% AND CORE DEPOSITS INCREASE 16%
Napa, CA - October 26, 2005 - North Bay Bancorp (Nasdaq: NBAN), holding company
for The Vintage Bank and its Solano Bank division, today announced profits grew
45% in the third quarter of 2005. Total assets grew 14% compared with the third
quarter of 2004, with 11% growth in the loan portfolio and a 16% increase in
core deposits from previous year levels. Net income totaled $1.8 million, or
$0.45 per diluted share in the third quarter, compared to $1.3 million, or $0.32
per diluted share in the third quarter of 2004. For the first nine months of
2005, net income grew 39% to $4.9 million, or $1.23 per diluted share, compared
to $3.5 million, or $0.89 per diluted share in the first nine months of 2004.
"Our third quarter results evidence the success of our plan to improve
efficiency and profitability. We are exceeding our goal for profit growth
despite significant costs being incurred in association with SOX Section 404
compliance. Our strong net interest margin, reflecting our outstanding core
deposit base, is key to this growth in profitability," commented Terry Robinson,
President and CEO. Robinson added, "Non-recurring costs of services associated
with implementing Sarbanes-Oxley Section 404 compliance will continue to
adversely impact earnings through the remainder of 2005."
Third Quarter 2005 Financial Review and Operating Highlights (quarter ended
9/30/05 compared to 9/30/04)
o Net income increased 45% to $1.8 million.
o Pre-tax income rose 47% to $2.9 million.
o Earnings per diluted share increased 41% to $0.45.
o Revenues, excluding securities gains, increased 24% to $8.5 million.
o Total loans grew 11% to $400 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 $8.5
million in the third quarter of 2005 from $6.8 million in the third quarter of
2004. In the first nine months of 2005, revenues increased 22% to $24.0 million
from $19.6 million in the like period of 2004.
Net interest income increased 27% to $7.4 million in the third quarter of 2005
compared to $5.8 million in the third quarter of 2004, with interest income
growing 30% and interest expense up 47%. In the first nine months of 2005, net
interest income rose 26% to $21.0 million from $16.7 million in the first nine
months of 2004. Although there are no nonperforming loans, the third quarter
provision for loan losses increased to $300,000 from $180,000 in the third
quarter of last year to support growth in the overall loan portfolio.
Year-to-date, the loan loss provision increased to $715,000 from $540,000 in the
first nine months of 2004. Third quarter net interest income after the provision
for loan losses increased 26% to $7.1 million compared to $5.7 million in the
third quarter of 2004 and grew 26% to $20.3 million in the first nine months of
the year from $16.1 million in the like period of 2004.
The net interest margin increased to 5.30% in the third quarter from 4.95% in
the third quarter of 2004. In the first nine months of 2005, the net interest
margin was 5.43% compared with 4.9% in 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 rates paid on deposits.
Non-interest income, excluding securities gains, increased 4% to $1.0 million in
the third quarter of 2005 from the previous year's third quarter. Year-to-date,
non-interest income decreased 6.9% to $3.0 million from $3.2 million in 2004.
NBAN 3Q05 Profits Up 45%
October 26, 2005
Page 2 of 3
Non-interest expenses in the third quarter of 2005 increased 12% to $5.2 million
from $4.7 million in the third quarter of 2004. In the first nine months of
2005, operating expenses increased 11% to $15.4 million from $13.8 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 relating to the Company's requirement for Sarbanes-Oxley Section 404
compliance in 2005. The tax equivalent efficiency ratio in the third quarter
improved to 60.83% compared to 67.15% in the third quarter last year, while the
year-to-date ratio improved to 63.33% from 68.30% in the first nine months of
2004. The efficiency ratio measures non-interest expenses as a percent of
revenues.
Pre-tax Income increased 47% in the third quarter of 2005 to $2.9 million from
$2.0 million the third quarter of 2004. Pre-tax income rose 43% in the first
nine months of the year to $7.9 million from $5.5 million in the like period of
2004.
Income taxes increased in the third quarter of 2005 reflecting higher earnings.
The tax provision increased to $1.1 million, or 38% of third quarter pre-tax
income, compared to $750,000, or 37.5% of third quarter pre-tax income a year
ago. For the first nine months of 2005, the provision for income tax was $3.0
million, or 38% of pre-tax income, compared to $2.0 million, or 37% of pre-tax
income in the first nine months of 2004. The increase in the effective tax rate
in 2005 compared with 2004 was due to a declining level of municipal bonds
earning interest exempt from federal income tax.
Earnings ratios improved with return on equity and return on assets up for the
third quarter and first nine months of 2005. North Bay generated a return on
average equity of 14.96% and 13.88% in the third quarter and first nine months
2005, respectively, compared with 11.86% and 11.58%, respectively, in the
comparable periods of 2004. Return on average assets was 1.17% in the third
quarter and 1.11% in the first nine months of 2005 compared with 0.92% in both
corresponding periods of 2004.
Balance Sheet
- -------------
Total assets were $630 million as of September 30, 2005, a 14% increase from
September 30, 2004 and a 12% increase from December 31, 2004. Deposits grew 15%
during the previous twelve months to $547 million and 13% from year-end 2004,
with demand deposits growing 30% from September 30, 2004 and 31% from year-end
2004. Loans, net of the allowance for loan losses, were $393 million as of
September 30, 2005, an 11% increase from September 30, 2004 and a 5% increase
from year-end 2004. Book value per share at the end of the third quarter was
$12.60 compared to $11.18 per share as of September 30, 2004, an increase of
12.7%.
Asset quality remains excellent with no nonperforming loans as of September 30,
2005. The allowance for loan and lease losses was $4.8 million, or 1.22% of
loans outstanding at quarter end, compared to $4.0 million or 1.13% of loans
outstanding at the end of the third quarter of 2004. Net charge-offs
year-to-date were $19,000 compared to $24,000 charged off in the like period 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.
NBAN 3Q05 Profits Up 45%
October 26, 2005
Page 3 of 3
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.
NORTH BAY BANCORP
CONSOLIDATED INCOME STATEMENT 3-Month Period Ended: 9-Month Period Ended:
(in $000's, unaudited) 9/30/2005 9/30/2004 % Change 9/30/2005 9/30/2004 % Change
- ---------------------- --------- --------- -------- --------- --------- --------
Interest Income $ 8,847 $ 6,822 29.7% $ 24,668 $ 19,180 28.6%
Interest Expense 1,415 961 47.2% 3,638 2,508 45.1%
---------- ---------- ---------- ----------
Net Interest Income 7,432 5,861 26.8% 21,030 16,672 26.1%
Provision for Loan & Lease Losses 300 180 66.7% 715 540 32.4%
---------- ---------- ---------- ----------
Net Interest Income after Loan
Loss Provision 7,132 5,681 25.5% 20,315 16,132 25.9%
Service Charges 540 564 -4.3% 1,579 1,684 -6.2%
Loan Sale & Servicing Income 11 16 -31.3% 23 35 -34.3%
Bank Owned Life Insurance Income 88 88 0.0% 263 280 -6.1%
Other Non-Interest Income 388 318 22.0% 1,140 968 17.8%
Gain on Investments -- -- -- 262 -100.0%
---------- ---------- ---------- ----------
Total Non-Interest Income 1,027 986 4.2% 3,005 3,229 -6.9%
Salaries & Benefits 2,763 2,566 7.7% 8,221 7,633 7.7%
Occupancy Expense 477 369 29.3% 1,317 1,080 21.9%
Equipment Expense 487 502 -3.0% 1,566 1,509 3.8%
Other Non-Interest Expenses 1,484 1,230 20.7% 4,315 3,613 19.4%
---------- ---------- ---------- ----------
Total Non-Interest Expenses 5,211 4,667 11.7% 15,419 13,835 11.4%
Income Before Taxes 2,948 2,000 47.4% 7,901 5,526 43.0%
Provision for Income Taxes 1,131 750 50.8% 3,036 2,034 49.3%
---------- ---------- ---------- ----------
Net Income $ 1,817 $ 1,250 45.4% $ 4,865 $ 3,492 39.3%
========== ========== ========== ==========
TAX DATA
Tax-Exempt Muni Income $ 121 $ 113 7.1% $ 340 $ 409 -16.9%
Tax-Exempt BOLI Income $ 88 $ 88 0.0% $ 263 $ 280 -6.1%
Interest Income - Fully Tax Equivalent $ 8,885 $ 6,859 29.5% $ 24,783 $ 19,313 28.3%
NET CHARGE-OFFS (RECOVERIES) $ 9 $ (78) NM $ 19 $ 24 NM
PER SHARE DATA 3-Month Period Ended: 9-Month Period Ended:
(unaudited) 9/30/2005 9/30/2004 % Change 9/30/2005 9/30/2004 % Change
- ----------- --------- --------- -------- --------- --------- --------
Basic Earnings per Share $ 0.47 $ 0.33 42.4% $ 1.26 $ 0.92 37.0%
Diluted Earnings per Share $ 0.45 $ 0.32 40.6% $ 1.21 $ 0.89 36.0%
Common Dividends $ 0.00 $ 0.00 $ 0.15 $ 0.13 15.4%
Wtd. Avg. Shares Outstanding 3,888,998 3,820,591 3,854,216 3,796,906
Wtd. Avg. Diluted Shares 4,060,596 3,924,053 4,025,905 3,915,404
Book Value per Share (EOP) $ 12.60 $ 11.18 12.7% $ 12.60 $ 11.18 12.7%
Common Shares Outstanding. (EOP) 3,897,504 3,822,150 3,897,504 3,822,150
KEY FINANCIAL RATIOS 3-Month Period Ended: 9-Month Period Ended:
(unaudited) 9/30/2005 9/30/2004 9/30/2005 9/30/2004
- ----------- --------- --------- --------- ---------
Return on Average Equity 14.96% 11.86% 13.88% 11.58%
Return on Average Assets 1.17% 0.92% 1.11% 0.92%
Net Interest Margin (Tax-Equivalent) 5.30% 4.95% 5.43% 4.98%
Efficiency Ratio (Tax-Equivalent) 60.83% 67.15% 63.33% 68.30%
AVERAGE BALANCES 3-Month Period Ended: 9-Month Period Ended:
(in $000's, unaudited) 9/30/2005 9/30/2004 % Change 9/30/2005 9/30/2004 % Change
- ---------------------- --------- --------- -------- --------- --------- --------
Average Assets $ 619,442 $ 539,578 14.8% $ 586,794 $ 506,018 16.0%
Average Earning Assets $ 565,561 $ 477,054 18.6% $ 532,593 $ 449,495 18.5%
Average Gross Loans & Leases $ 407,741 $ 369,384 10.4% $ 400,634 $ 342,515 17.0%
Average Deposits $ 537,539 $ 464,629 15.7% $ 506,409 $ 439,995 15.1%
Average Equity $ 48,319 $ 41,936 15.2% $ 46,809 $ 40,278 16.2%
STATEMENT OF CONDITION End of Period:
(in $000's, unaudited) 9/30/2005 12/31/2004 9/30/2004 9-Month chg Annual Chg
- ---------------------- --------- ---------- --------- ----------- ----------
ASSETS
Cash and Due from Banks $ 31,048 $ 27,342 $ 42,626 13.6% -27.2%
Securities and Fed Funds Sold 180,248 132,348 110,856 36.2% 62.6%
Commercial & Industrial 78,829 67,172 60,828 17.4% 29.6%
Commercial Secured by Real Estate 251,872 241,361 230,610 4.4% 9.2%
Real Estate 4,422 6,613 6,743 -33.1% -34.4%
Construction 25,416 27,762 25,841 -8.5% -1.6%
Consumer 38,643 36,343 35,889 6.3% 7.7%
Gross Loans & Leases 399,182 379,251 359,911 5.3% 10.9%
Deferred Loan Fees (1,473) (1,485) (1,468) -0.8% 0.3%
Loans & Leases Net of Deferred Fees 397,709 377,766 358,443 5.3% 11.0%
Allowance for Loan & Lease Losses (4,832) (4,136) (4,040) 16.8% 19.6%
Net Loans & Leases 392,877 373,630 354,403 5.2% 10.9%
Loans Held-for-Sale -- 4,604 20,232 -100.0% -100.0%
Investment in Subsidiary 310 310 310 0.0% 0.0%
Bank Premises & Equipment 9,542 10,336 10,657 -7.7% -10.5%
Other Assets 16,018 13,493 13,415 18.7% 19.4%
Total Assets $ 630,043 $ 562,063 $ 552,499 12.1% 14.0%
LIABILITIES & CAPITAL
Demand Deposits $ 166,239 $ 127,250 $ 127,768 30.6% 30.1%
NOW / Savings Deposits 146,963 151,053 144,267 -2.7% 1.9%
Money Market Deposits 148,938 128,884 125,994 15.6% 18.2%
Time Certificates of Deposit 84,710 77,306 78,763 9.6% 7.6%
Total Deposits 546,850 484,493 476,792 12.9% 14.7%
Long Term Borrowings 19,000 19,000 19,000 0.0% 0.0%
Trust Preferred Securities 10,310 10,310 10,310 0.0% 0.0%
Total Deposits & Interest Bearing Liab. 576,160 513,803 506,102 12.1% 13.8%
Other Liabilities 4,763 4,126 3,667 15.4% 29.9%
Total Capital 49,120 44,134 42,730 11.3% 15.0%
Total Liabilities & Capital $ 630,043 $ 562,063 $ 552,499 12.1% 14.0%
CREDIT QUALITY DATA End of Period:
(in $000's, unaudited) 9/30/2005 12/31/2004 9/30/2004
- ---------------------- --------- ---------- ---------
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 1.21% 1.09% 1.12%
OTHER PERIOD-END STATISTICS End of Period:
(unaudited) 9/30/2005 12/31/2004 9/30/2004
- ----------- --------- ---------- ---------
Shareholders' Equity / Total Assets 7.8% 7.9% 7.7%
Loans / Deposits 73.0% 78.3% 75.5%
Non-Interest Bearing Deposits
/ Total Deposits 30.4% 26.3% 26.8%