SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
FNB BANCORP
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies: NA
(2) Aggregate number of securities to which transaction applies: NA
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined): NA
(4) Proposed maximum aggregate value of transaction: NA
(5) Total fee paid: NA
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: NA
(2) Form, Schedule or Registration Statement No.: NA
(3) Filing Party: NA
(4) Date Filed: NA
FNB BANCORP
975 El Camino Real
South San Francisco, California 94080
-------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be Held Wednesday, May 18, 2005
7:30 P.M.
-------------------
TO THE SHAREHOLDERS OF FNB BANCORP:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Annual Meeting") of FNB BANCORP, a California corporation (the "Company") will
be held at the Basque Cultural Center, 599 Railroad Avenue, South San Francisco,
California, on Wednesday, May 18, 2005, at 7:30 p.m., for the following
purposes:
1. To elect the nine (9) incumbent directors identified in the
accompanying proxy statement;
2. To ratify the appointment of Moss-Adams LLP as independent
auditors of the Company to serve for the 2005 fiscal year; and
3. To transact such other business as may properly come before
the Annual Meeting and any adjournment or adjournments
thereof.
Section 7 of the Bylaws of the Company provides for the nomination
of directors as follows:
"Nominations for election to the Board of Directors may be made by
the Board of Directors or by any shareholder entitled to vote for the election
of directors. Nominations, other than those made by the Board of Directors,
shall be made in writing and shall be delivered or mailed, with first-class
United States mail postage prepaid, to the Secretary not less than 20 days nor
more than 50 days prior to any meeting of shareholders called for the election
of directors; provided however, that if less than 25 days notice of the meeting
is given to the shareholders, such nomination shall be mailed or delivered to
the Secretary not later than the close of business on the seventh day on which
the notice of the meeting was mailed. Shareholder nominations shall contain the
following information: (a) the name, age, business address and, if known,
residence address of each proposed nominee; (b) the principal occupation or
employment of each proposed nominee; (c) the total number of shares of capital
stock of the corporation that are beneficially owned by each proposed nominee
and by the nominating shareholder; (d) the name and residence address of the
notifying shareholder; and (e) any other information the corporation must
disclose regarding director nominees in the corporation's proxy solicitation.
Nominations not made in accordance with this Section may be disregarded by the
Chairman of the meeting, and if the Chairman so instructs, the inspectors of
election may disregard all votes cast for each nominee."
Only those shareholders of record at the close of business on April
8, 2005, will be entitled to notice of and to vote at the Annual Meeting.
As an added convenience, a shareholder can choose to vote by
telephone or by using the Internet as indicated on the proxy card. If you vote
by telephone or electronically through the Internet, there is no need to return
the proxy card. Please refer to the attached proxy statement for a more complete
description of the procedures for telephone and Internet voting.
You are cordially invited to attend the Annual Meeting.
By Order of the Board of Directors
Thomas C. McGraw
Secretary
South San Francisco, California
April 20, 2005
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE VOTE BY TELEPHONE,
OR BY THE INTERNET, OR SIGN AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS
POSSIBLE IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
Mailed to shareholders
on or about April 20, 2004
FNB BANCORP
975 El Camino Real
South San Francisco, California 94080
Telephone (650) 588-6800
PROXY STATEMENT
INFORMATION CONCERNING THE SOLICITATION
This Proxy Statement is being furnished to the shareholders of FNB
Bancorp, a California corporation (the "Company"), in connection with the
solicitation of proxies by the Board of Directors for use at the Annual Meeting
of Shareholders (the "Annual Meeting") to be held at Basque Cultural Center, 599
Railroad Avenue, South San Francisco, California, at 7:30 p.m. on Wednesday, May
18, 2005. Only shareholders of record on April 8, 2005 (the "Record Date"), will
be entitled to notice of and to vote at the Annual Meeting. At the close of
business on the Record Date, the Company had outstanding and entitled to be
voted 2,590,508 shares of its no par value Common Stock (the "Common Stock").
Shareholders may vote their shares by mail without attending the Annual
Meeting, whether their shares of Common Stock are held in their names or through
a broker, bank or other nominee. Instructions for voting by mail are set forth
on the enclosed proxy card. For shares held through a broker, bank or other
nominee, shareholders may vote by submitting their voting instructions to the
broker, bank or other nominee. Voting instructions may be given by mail, by
telephone or by using the Internet, if the broker, bank or other nominee makes
those methods available to the shareholder, in which case the procedures will be
enclosed with the Proxy Statement forwarded by the broker, bank or other
nominee.
The presence in person or by proxy of a majority of the shares entitled
to vote is necessary to constitute a quorum at the Annual Meeting. Abstentions
and broker non-votes will be counted for purposes of determining the presence or
absence of a quorum. "Broker non-votes" are shares held by brokers or nominees
who are present in person or represented by proxy, but which are not voted on a
particular matter because under applicable rules the broker cannot vote on the
matter in the absence of instructions from the beneficial owner. The effect of
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abstentions and broker non-votes on the calculation of the required vote on
specific proposals to be brought before the Annual Meeting is discussed under
each proposal, where applicable.
Shareholders of Common Stock are entitled to one vote for each share
held, except that for the election of directors each shareholder has cumulative
voting rights and is entitled to as many votes as shall equal the number of
shares held by such shareholder multiplied by the number of directors to be
elected. Each shareholder may cast all of his or her votes for a single
candidate or distribute such votes among any or all of the candidates as he or
she chooses. However, no shareholder shall be entitled to cumulate votes (in
other words, cast for any candidate a number of votes greater than the number of
shares of stock held by such shareholder) unless such candidate's name has been
placed in nomination prior to the voting and the shareholder has given notice at
the Annual Meeting prior to the voting of the shareholder's intention to
cumulate votes. If any shareholder has given such notice, all shareholders may
cumulate their votes for candidates in nomination. Prior to voting, an
opportunity will be given for shareholders or their proxies at the Annual
Meeting to announce their intention to cumulate their votes. The proxy holders
are given, under the terms of the proxy, discretionary authority to cumulate
votes on shares for which they hold a proxy.
Any person giving a proxy in the form accompanying this Proxy Statement
has the power to revoke that proxy prior to its exercise. The proxy may be
revoked prior to the Annual Meeting by delivering to the Secretary of the
Company either a written instrument revoking the proxy or a duly executed proxy
bearing a later date. The proxy may also be revoked by the shareholder by
attending and voting in person at the Annual Meeting. The proxy will be voted as
directed by the shareholder giving the proxy and if no directions are given on
the proxy, the proxy will be voted "FOR" the nominees of the Board of Directors
and "FOR" ratification of the appointment of Moss-Adams LLP as independent
auditors of the Company to serve for the 2005 fiscal year, and at the proxy
holders' discretion, on such other matters, if any, which may come before the
Annual Meeting (including any proposal to adjourn the meeting).
The Company will bear the entire cost of preparing, assembling,
printing and mailing proxy materials furnished by the Board of Directors to
shareholders. Copies of proxy materials will be furnished to brokerage houses,
fiduciaries and custodians to be forwarded to the beneficial owners of the
Common Stock. The Company will reimburse brokerage houses, fiduciaries,
custodians and others holding Common Stock in their names or names of nominees
or otherwise for reasonable out-of-pocket expenses incurred in sending proxy
materials to the beneficial owners of such Common Stock. In addition to the
solicitation of proxies by use of the mail, some of the officers, directors and
regular employees of the Company may (without additional compensation) solicit
proxies by telephone, Internet or personal interview, the costs of which will be
borne by the Company.
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ANNUAL REPORT
A copy of the Annual Report of the Company for the fiscal year ended
December 31, 2004, including audited consolidated financial statements of the
Company (the "Annual Report") is enclosed with this Proxy Statement. Additional
copies of the Annual Report are available upon request to the Secretary of the
Company, Thomas C. McGraw, at FNB Bancorp, 975 El Camino Real, South San
Francisco, California 94080.
THE ANNUAL REPORT INCLUDES A COPY OF THE COMPANY'S ANNUAL REPORT ON
FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004, AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION.
WEBSITE
The Company and First National Bank of Northern California maintain an
Internet website at http://www.fnbnorcal.com. The Company's Annual Report on
Form 10-K, as well as quarterly reports (on Form 10-Q), current reports (on Form
8-K) and other reports filed with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, as amended, may be accessed
free of charge through such website.
CODE OF ETHICS
The Board of Directors has adopted a "code of ethics" as defined under
applicable rules promulgated by the Securities and Exchange Commission pursuant
to the Sarbanes-Oxley Act of 2002. The code of ethics requires that the
Company's directors, officers (including the principal executive, financial and
accounting officers, or controller and persons performing similar functions) and
employees conduct business in accordance with the highest ethical standards and
in compliance with all laws, rules and regulations applicable to the Company.
The code of ethics is intended to supplement the provisions of any other
personnel policies of the Company or codes of conduct which may establish
additional standards of ethical behavior applicable to the Company's directors,
officers and employees. The code of ethics was filed as Exhibit 14.1 to the
Company's Annual Report on Form 10-K for the year ended December 31, 2004, and a
copy of the code of ethics may be obtained through the Company's website by
following the instructions for accessing reports filed with the Securities and
Exchange Commission (see above, under the heading "Website").
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PRINCIPAL SHAREHOLDERS
As of April 18, 2005, no person known to the Company owned beneficially
or of record more than five percent (5%) of the outstanding shares of its Common
Stock, except as indicated in the chart below:
================================================================================
Amount and Nature of Percentage of
Name and Address Beneficial Ownership Ownership(1)
- --------------------------------------------------------------------------------
The Ricco Lagomarsino Trust 255,389 9.86
26 Hillcrest Drive
Daly City, CA 94014
- --------------------------------------------------------------------------------
Thomas G. Atwood (2) 10.05
c/o Cypress Abbey Company 260,401
P.O. Box 516
Colma, CA 94014
- --------------------------------------------------------------------------------
The Bank Funds, LLC 171,874 6.63
208 South LaSalle Street,
Suite 1680
Chicago, IL 60604
- --------------------------------------------------------------------------------
Cede & Co.(3) 1,095,480 42.29
Box 20, Bowling Green Station
New York, NY 10004
================================================================================
(1) Based upon 2,590,508 shares outstanding.
(2) Includes 211,066 shares owned by Cypress Abbey Company, a corporation
in which Mr. Atwood is the principal shareholder.
(3) Cede & Co. is the nominee of The Depository Trust Company of New York,
New York, and acts as the record owner of securities held in "street
name" for a number of brokerage firms and other financial institutions.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS OF THE COMPANY
The Bylaws of the Company provide a procedure for nomination for
election of members of the Board of Directors, which procedure is printed in
full in the Notice of Annual Meeting of Shareholders accompanying this Proxy
Statement. Nominations not made in accordance therewith may be disregarded by
the Chairman of the Meeting, and upon his instructions the tellers of votes may
disregard all votes cast for such nominee(s).
The Bylaws of the Company provide that the Board of Directors shall
consist of not less than five nor more than nine shareholders, the exact number
to be fixed and determined from time to time by resolution of a majority of the
full Board of Directors or by resolution of a majority of the shareholders at
any annual or special meeting thereof. The current number of directors has been
fixed by resolution of the Board of Directors at nine (9). The directors to be
elected at the Annual Meeting shall hold office for one year and until their
successors are elected and have qualified. The nine (9) nominees receiving the
highest number of affirmative votes of the shares present in person or
represented by proxy and entitled to vote for them shall be elected as
directors. Only votes cast "FOR" a nominee will be counted in determining
whether that nominee has been elected as a director.
All proxies will be voted for the election of the following nine (9)
nominees recommended by the Board of Directors, unless authority to vote for the
election of any director or directors is withheld by the shareholder on the
proxy card. All of the nominees are incumbent Directors. If any nominee should
unexpectedly decline or be unable to act as a director, the proxies may be voted
for a substitute nominee to be designated by the Board of Directors. The Board
of Directors has no reason to believe that any nominee will become unavailable
and has no present intention to nominate persons in addition to or in lieu of
those named below.
The following table sets forth information with respect to beneficial
ownership of the Common Stock of the Company by those persons nominated by the
Board of Directors for election as directors, as well as all directors and
executive officers of FNB Bancorp and its subsidiary, First National Bank of
Northern California, a national banking association (herein called the "Bank" or
"First National Bank"), as a group. There is no family relationship between any
of the directors and/or executive officers, except that Edward J. Watson is
related by marriage to Anthony J. Clifford. The Company has only one class of
shares outstanding, Common Stock.
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=================================================================================================================
Shares Beneficially Owned
as of April 11, 2004 (1)
Nominee Age Positions Held Director
With the Bank Since % of
and Company Sole (2) Shared (3) Total
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
Michael R. Wyman 68 Chairman of the Board, 1978 for (4)
Director Bank; 3,607 25,571 1.13
2001for
Company
- -----------------------------------------------------------------------------------------------------------------
Thomas C. McGraw 53 Chief Executive 1989 for (5)
Officer, Secretary, Bank; 2,236 128,215 5.03
Director 2001 for
Company
- -----------------------------------------------------------------------------------------------------------------
Neil J. Vannucci 68 Director 1989 for (6)
Bank; 2,175 52,840 2.12
2001 for
Company
- -----------------------------------------------------------------------------------------------------------------
Edward J. Watson 57 Director 1996 for (7)
Bank; 3,168 2.026 .20
2001 for
Company
- -----------------------------------------------------------------------------------------------------------------
Daniel J. Modena 71 Director 1996 for (8)
Bank; 3,168 -- .12
2001 for
Company
- -----------------------------------------------------------------------------------------------------------------
Lisa Angelot 47 Director 1999 for (9)
Bank; 12,771 -- .49
2001 for
Company
- -----------------------------------------------------------------------------------------------------------------
Jim D. Black 48 President, Director 2002 for (10)
Bank and 9,376 434 .38
Company
- -----------------------------------------------------------------------------------------------------------------
Anthony J. Clifford 42 Executive Vice 2002 for (11)
President and Chief Bank and 9,097 -- .35
Operating Officer, Company
Director
- -----------------------------------------------------------------------------------------------------------------
R. Albert Roensch 66 Director 2003 for
Bank and 551 -- .02
Company
- -----------------------------------------------------------------------------------------------------------------
All directors and executive officers (11 persons) as a group (12)
54,004 209,706 10.06
=================================================================================================================
(1) This table is based upon information supplied by directors, executive
officers and principal shareholders. Percentages are based upon
2,590,508 shares outstanding.
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(2) The named persons exercise sole voting and investment power with
respect to shares listed in this column.
(3) The named persons share voting and investment power with respect to
shares listed in this column.
(4) Includes 25,571 shares held by the Wyman Family Trust for which Mr.
Wyman serves as co-trustee. Includes 961 shares of presently
exercisable stock options under the Company's 2002 Stock Option Plan.
Excludes 6,564 shares held in the Bank's Deferred Compensation Trust.
(5) Includes 116,296 shares held by the Thomas C. and Virginia K. McGraw
Family Trust for which Mr. McGraw serves as co-trustee. Includes 983
shares of presently exercisable stock options under the Company's Stock
Option Plan and 961 shares of presently exercisable stock options under
the Company's 2002 Stock Option Plan.
(6) Includes 52,830 shares held by the Vannucci Family Trust for which Mr.
Vanucci serves as co-trustee and 983 shares of presently exercisable
stock options under the Company's Stock Option Plan and 961 shares of
presently exercisable stock options under the Company's 2002 Stock
Option Plan.
(7) Includes 983 shares of presently exercisable stock options under the
Company's Stock Option Plan and 961 shares of presently exercisable
stock options under the Company's 2002 Stock Option Plan.
(8) Includes 983 shares of presently exercisable stock options under the
Company's Stock Option Plan and 961 shares of presently exercisable
stock options under the Company's 2002 Stock Option Plan.
(9) Includes 1,338 shares held by Ms. Angelot as Custodian for Eric Angelot
and 319 shares held by Ms. Angelot as Custodian for Katherine
Brandenberger. A total of 255,389 shares are held by The Ricco
Lagomarsino Trust for which Ms. Angelot serves as one of the
co-trustees. Ms. Angelot disclaims beneficial ownership of such shares.
Includes 772 shares of presently exercisable stock options under the
Company's Stock Option Plan and 590 shares of presently exercisable
stock options under the Company's 2002 Stock Option Plan.
(10) Includes 3,007 presently exercisable stock options under the Company's
Stock Option Plan, and 2,381 shares of presently exercisable stock
options under the Company's 2002 Stock Option Plan.. Includes 217
shares held in trust for Greg Black and includes 217 shares held in
trust for Janelle Black. Excludes 2,958 shares held in the Bank's
Deferred Compensation Trust.
(11) Includes 6,420 presently exercisable stock options under the Company's
Stock Option Plan, and 2,381 shares of presently exercisable stock
options under the Company's 2002 Stock Option Plan. Excludes 2,463
shares held in the Bank's Deferred Compensation Trust.
(12) Includes 341 shares of presently exercisable stock options under the
Company's 2002 Stock Option Plan.
(13) Includes a total of 19,433 shares of presently exercisable stock
options under the Company's Stock Option Plan and 12,687 shares of
presently exercisable stock options under the Company's 2002 Stock
Option Plan. Excludes 15,985 shares held by the Bank's Deferred
Compensation Trust for the accounts of Messrs. Wyman, Black, Clifford
and Ramsey. See "Deferred Compensation Plan" herein.
- ---------------------
7
The following table sets forth certain information as of the Record
Date with respect to each Director of the Company and the Bank, each person
nominated for election as a Director, and each executive officer named in the
Executive Compensation table elsewhere herein, as well as for all other
executive officers of the Company and the Bank.
Michael R. Wyman Chairman of the Board of Directors of the Company
since 2001. Chairman of the Board of Directors of
First National Bank since 1999 and Director of First
National Bank since 1983. Retired as Chief Executive
Officer of the Company and First National Bank
effective March 31, 2002. Previously, Chief Executive
Officer of First National Bank since 1983 and
President of First National Bank from 1983 to 1996.
Thomas C. McGraw Director and Secretary of the Company since 2001.
Chief Executive Officer of the Company and First
National Bank since April 1, 2002. Director and
Secretary of First National Bank since 1989, and
President and Chief Operating Officer of First
National Bank from October 2001 until April 1, 2003.
Formerly, self-employed communications consultant in
San Mateo and Marin Counties, since 1987.
Neil J. Vannucci Director of the Company since 2001. Director of First
National Bank since 1989. Director of U.S. Concrete
since 1999. President of Bay Cities Building Materials
from 1995 to 1999.
Edward J. Watson Director of the Company since 2001. Director of First
National Bank since 1996. Certified Public Accountant.
Attorney and partner in the law firm of Watson &
Lanctot LLP, formerly known as Dreher, Garfinkle &
Watson.
Daniel J. Modena Director of the Company since 2001. Director of First
National Bank since 1996. Attorney and partner in the
law firm of Modena & Royce in South San Francisco
since 1961.
Lisa Angelot Director of the Company since 2001. Director of First
National Bank since 1999. Property manager for the
Lagomarsino Properties in Daly City since 1992. Her
grandfather was Ricco Lagomarsino, Founding Director
and Chairman of First National Bank.
Jim D. Black Director of the Company and First National Bank since
March 2002. President of the Company and First
National Bank since April 1, 2002. Formerly, Senior
Vice President and Senior Lending Officer of First
National Bank and an employee since 1981.
8
Anthony J. Clifford Director of the Company and First National Bank since
March 2002. Executive Vice President and Chief
Operating Officer of the Company and First National
Bank since April 1, 2002. Formerly, Vice President and
Branch Administrator of First National Bank since
1995; Vice President and Branch Manager of First
National Bank since 1990; and Assistant Vice President
and Branch Manager of First National Bank since 1983.
R. Albert Roensch Director of the Company and First National Bank since
December 19, 2003. Formerly, President and Chief
Executive Officer of America California Bank (1999 to
2003). Founding President and Chief Executive Officer
and Chairman of Pacific Coast Bankers' Bank (1995 to
1999). Mr. Roensch has more than forty years of
commercial banking experience.
James B. Ramsey Senior Vice President and Chief Financial Officer of
the Company since 2001. Senior Vice President, Chief
Financial Officer and Cashier of First National Bank
since 1997. Formerly, Vice President/Controller of
Mid-Peninsula Bank in Palo Alto since 1994, Senior
Vice President and Chief Financial Officer of Codding
Bank in Rohnert Park, California since 1989, and
Executive Vice-President and Chief Financial Officer
of Pajaro Valley Bank since 1982.
Charles R. Key Senior Vice President and Director of Information
Systems of First National Bank and an employee since
1970.
None of the directors of the Company is a director of any other company
with a class of securities registered pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended, or subject to the requirements of Section
15(d) of such Act or any company registered as an investment company under the
Investment Company Act of 1940, whose common stock is registered pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended.
Committees of the Board of Directors
The Company has an Audit Committee and a Compensation Committee. In
addition, the entire Board of Directors of the Company functions as the
Nominating Committee. The current members of the Company's Audit Committee are
Edward J. Watson, Neil J. Vannucci and R. Albert Roensch. The current members of
the Company's Compensation Committee are Lisa Angelot, Neil J. Vannucci and
Edward J. Watson.
The members of the Audit Committee select and oversee the Company's
independent public accountants, analyze the results of internal and regulatory
examinations and monitor the financial and accounting organization, reporting
and controls. Each member of the Audit Committee is "independent" as defined
under applicable rules promulgated by the Securities and Exchange Commission
9
pursuant to the Sarbanes-Oxley Act of 2002. Edward J. Watson and R. Albert
Roensch have each been designated by the Board of Directors as an "audit
committee financial expert" as defined under applicable rules promulgated by the
Securities and Exchange Commission pursuant to the Sarbanes-Oxley Act of 2002.
Reference should be made to the Audit Committee Report set forth below in this
Proxy Statement for additional information regarding the functions of the Audit
Committee.
The members of the Company's Audit Committee met five (5) times during
2004 and the members of the Company's Compensation Committee met once during
2004. During 2004, the Company's Board of Directors held twelve (14) regularly
scheduled meetings and two (7) "executive sessions" which only the non-employee
directors attended, each of whom is "independent" as defined under applicable
rules promulgated by the Securities and Exchange Commission pursuant to the
Sarbanes-Oxley Act of 2002. All incumbent directors of the Company attended at
least seventy-five percent (75%) of the meetings of the board of directors and
the committees of which they were members during 2004.
A majority of the members of the Company's Board of Directors, each of
whom is "independent" as defined under applicable rules promulgated by the
Securities and Exchange Commission pursuant to the Sarbanes-Oxley Act of 2002,
has established procedures for receipt and delivery of shareholder
communications addressed to the Board of Directors. Any such shareholder
communications, including communications by employees of the Company solely in
their capacity as shareholders, should be mailed or delivered to the Company
addressed as follows: Board of Directors, FNB Bancorp, 975 El Camino Real, South
San Francisco, CA 94080.
The Company encourages the members of its Board of Directors to attend
the Company's annual meeting of shareholders each year. A majority of the
directors attended the Company's Annual Meeting of shareholders held in 2004.
In performing the functions of a nominating committee, the Board of
Directors has responsibility for considering appropriate candidates as
directors. The Board of Directors believes that the participation of the full
Board of Directors in considering candidates is efficient in view of the size of
the Board of Directors. Candidates are selected by a majority of directors who
are "independent" as defined under applicable rules promulgated by the
Securities and Exchange Commission pursuant to the Sarbanes-Oxley Act of 2002,
in accordance with a Nominating Charter adopted by a majority of such
independent directors. The Nominating Charter includes a policy for
consideration of candidates proposed by shareholders. Any recommendations by
shareholders will be evaluated by the Board of Directors in the same manner as
any other recommendation and in each case in accordance with the Nominating
Charter. Shareholders that desire to recommend candidates for consideration by
the Company's Board of Directors should mail or deliver written recommendations
to the Company addressed as follows: Board of Directors, FNB Bancorp, 975 El
Camino Real, South San Francisco, CA 94080. Each recommendation should include
biographical information indicating the background and experience of the
candidate that qualifies the candidate for consideration as a director for
evaluation by the Board of Directors. In addition to minimum standards of
independence for non-employee directors and financial literacy, the Board of
Directors considers various other criteria including the candidate's experience
10
and expertise, financial resources, ability to devote the time and effort
necessary to fulfill the responsibilities of a director and involvement in
community activities in the market areas served by the Company and First
National Bank that may enhance the reputation of the Company and the Bank. The
Company and the Bank operate in a highly regulated industry and are subject to
the supervision, regulation and periodic examination by state and federal
banking regulatory authorities including the Board of Governors of the Federal
Reserve System, the Office of the Comptroller of the Currency and the Federal
Deposit Insurance Corporation. Directors of the Company and the Bank are subject
to certain rules and regulations and potential liabilities not otherwise
applicable to directors of non-banking organizations. Consequently, evaluation
of candidates by the Company's Board of Directors may include more extensive
inquiries into personal background information including confirmation of the
accuracy and completeness of background information by (a) requiring candidates
to complete questionnaires to elicit information of the type required to be
disclosed by the Company in reports filed with the Securities and Exchange
Commission or such federal banking regulatory authorities, (b) conducting
background investigations by qualified independent organizations experienced in
conducting criminal and civil investigatory reviews, and (c) such other personal
and financial reviews and analyses as the Board of Directors may deem
appropriate in connection with the consideration of candidates. Shareholders who
wish to nominate a candidate for election to the Company's Board of Directors,
as opposed to recommending a potential nominee for consideration by the Board of
Directors, are required to comply with the advance notice and any other
requirements of the Company's bylaws, applicable laws and regulations. The Board
of Directors may elect to use third parties in the future to identify or
evaluate candidates for consideration by the Board of Directors. The Nominating
Charter adopted by the Board of Directors is attached to this Proxy Statement as
Appendix A.
First National Bank has an Audit Committee, a Loan and Discount
Committee (which functions as an executive committee of the Board of Directors)
and a Compensation Committee.
First National Bank does not have a nominating committee, but the Loan
and Discount Committee functions as the Bank's nominating committee, as
necessary. Since March 15, 2002, the Company has been the sole shareholder of
the Bank.
The current members of the Bank's Audit Committee are Edward J. Watson,
Neil J. Vannucci and R. Albert Roensch. The principal functions of the Audit
Committee are (1) to examine and review both internal audit controls and
regulatory audit reports and to meet with the First National Bank auditors
concerning audit procedures and controls and (2) to monitor the First National
Bank investments.
The current members of the Bank's Loan and Discount committee are
Michael R. Wyman, Thomas C. McGraw, Daniel J. Modena and Lisa Angelot. The
principal functions of the Loan and Discount Committee are to oversee loans and
investments and the routine operations of First National Bank by delegation from
the board of directors and to advise and report to the full board regarding such
matters.
The members of the Bank's Compensation Committee are Lisa Angelot, Neil
J. Vannucci and Edward J. Watson. The Compensation Committee investigates and
advises the board of directors as to employee benefit arrangements and conducts
11
executive searches whenever First National Bank proposes to hire executive
personnel. The Compensation Committee also reports to the board of directors
with regard to executive compensation, including bonus compensation.
The board of directors of First National Bank met a total of twelve
(12) times during 2004. During this same period, the Loan and Discount Committee
met nineteen (19) times, the Audit Committee met five (5) times and the
Compensation Committee met once. All incumbent directors of the Bank attended at
least seventy-five percent (75%) of the meetings of the board of directors and
the committees of which they were members during 2004.
Compensation of Directors
No fees or other compensation has been paid to the non-officer
directors of the Company since incorporation of the Company on February 28,
2001. The Company became the holding company for First National Bank, effective
March 15, 2002. No separate fees were paid to the directors of the Company
during 2004 for their attendance at meetings of the board of directors or for
their attendance at meetings of the committees of the board of directors.
Each non-officer director of First National Bank was paid $30,000 in
fees for attending meetings of the board of directors during 2004. The aggregate
amount of such fees paid by First National Bank in 2004 was $180,000. No fees
were paid to the directors during 2004 for their attendance at meetings of the
committees of the board of directors of the Bank. During 2004, each non-officer
director of First National Bank was granted a non-statutory option for 325
shares of common stock pursuant to the FNB Bancorp 2002 Stock Option Plan.
Board Compensation Committee Report
Set forth below is the Report of the members of the Compensation
Committee of the Board of Directors of the Company and the Bank:
The Company was formed in 2001 to become the holding company of First
National Bank. After approval by the shareholders of the Bank, the holding
company reorganization became effective on March 15, 2002. No separate
compensation was paid to the executive officers of the Company since 2002. The
compensation paid by First National Bank to its executive officers during 2004
included payment for all services rendered by such officers to the Company
during 2004, including their attendance at meetings of the board of directors
and their attendance at meetings of committees of the board of directors of the
Company.
The compensation of the executive officers of First National Bank is
reviewed and approved annually by the board of directors based on the
recommendations by the Compensation Committee. During 2004, Lisa Angelot, Neil
J. Vanucci and Edward J. Watson served as members of the Bank's Compensation
Committee. Each such member of the Compensation Committee is "independent" as
defined under applicable rules promulgated by the Securities and Exchange
Commission pursuant to the Sarbanes-Oxley Act of 2002. The executive officers of
First National Bank during 2004 were: Thomas C. McGraw, Chief Executive Officer
12
and Secretary; Jim D. Black, President; Anthony J. Clifford, Executive Vice
President and Chief Operating Officer; James B. Ramsey, Senior Vice President
and Chief Financial Officer; and Charles R. Key, Senior Vice President and
Director of Information Systems.
The Compensation Committee's philosophy is that compensation should be
designed to reflect the value created for shareholders while supporting First
National Bank's strategic goals. The Compensation Committee reviews the
compensation of the executive officers annually to insure that First National
Bank's compensation programs are related to financial performance and consistent
generally with employers of comparable size in the industry. Other than as
described herein, there are no other employment contracts between First National
Bank and any officer of First National Bank. Annual compensation for First
National Bank's executive officers includes the components described below.
Base salary is related to the individual executive officer's level of
responsibility and comparison with comparable employers in the industry. The
board of directors reviews and sets base salaries annually, taking into
consideration the recommendations of the Chief Executive Officer (for executive
officers other than the Chief Executive Officer). In conducting its review of
salaries, the board of directors takes into consideration the overall
performance of First National Bank.
The board of directors determines the base salary for the Chief
Executive Officer by (a) examining the financial performance of First National
Bank against its present goals; (b) examining the financial performance of First
National Bank as compared to the banking industry generally; (c) evaluating the
overall performance of the Chief Executive Officer; and (d) comparing the base
salary of the Chief Executive Officer to that of other chief executive officers
in the banking industry in the market area of First National Bank.
The compensation paid to Messrs. McGraw, Black, Clifford, Ramsey and
Key during 2003 is set forth in the table of "Executive Compensation" below. On
December 17, 2004, effective as of January 1, 2004, the board of directors
approved the following base salaries: Mr. McGraw's salary was increased to
$212,000; Mr. Black's salary was increased to $200,000; Mr. Clifford's salary
was increased to $176,400; Mr. Ramsey's salary was increased to $164,000; and
Mr. Key's salary was increased to $147,000.
First National Bank does not have a formal bonus plan. The board of
directors, at its discretion, awarded bonuses to its executive officers during
2004, including bonuses to Messrs. Black, Clifford, Ramsey and Key (which are
set forth in the table of "Executive Compensation" below). Bonus compensation is
based on the return on beginning shareholder equity for each year and individual
performance criteria are established by the Compensation Committee for each
executive officer.
The entire board of directors can, at its discretion, grant stock
options to key officers of the Company and First National Bank who are primarily
responsible for the growth and management of its business. As of December 31,
2004, a total of 253,411 shares were reserved for options previously granted and
currently outstanding under the FNB Bancorp Stock Option Plan (successor as of
March 15, 2002, to the First National Bank of Northern California 1997 Stock
Option Plan) and the FNB Bancorp 2002 Stock Option Plan, including options for
13
an aggregate of 79,330 shares of common stock (as adjusted for stock dividends
paid in 1999, 2000, 2001, 2002, 2003 and 2004) which have been granted to
Messrs. McGraw, Black, Clifford, Ramsey and Key. A summary of the stock options
granted to such officers during 2004, including the exercise prices, is set
forth below in the table of "Option/SAR Grants In Last Fiscal Year." The
exercise price of an incentive stock option is set at the fair market value of
the shares on the date of grant. All options granted and currently outstanding
are incentive stock options, vesting at the rate of 20 percent per year over the
period of 5 years from date of grant and are exercisable for a period of 10
years from the grant date.
Submitted by the Compensation Committee:
Lisa Angelot
Neil J. Vannucci
Edward J. Watson
14
Equity Compensation Plan Information
The chart below lists information regarding common stock issuable upon
the exercise of stock options, the weighted average exercise price of those
options and the number of shares available for issuance under the FNB Bancorp
Stock Option Plan and the FNB Bancorp 2002 Stock Option Plan. The Company has no
other equity compensation plan and there are no warrants or other rights
outstanding that would result in the issuance of shares of the Company's common
stock.
- ---------------------------------------------------------------------------------------------------------------
Plan Category Number of securities Weighted-average Number of securities
to be issued upon exercise price of remaining available
exercise of outstanding options, for future issuance
outstanding options, warrants and rights under equity
warrants and rights compensation plans
(excluding securities
reflected in column (a))
(a) (b) (c)
- ---------------------------------------------------------------------------------------------------------------
Equity compensation
plans approved by 181,996 $23.97 150,382
security holders
- ---------------------------------------------------------------------------------------------------------------
Equity compensation
plans not approved by -0- -0- -0-
security holders
- ---------------------------------------------------------------------------------------------------------------
Total 181,996 $23.97 150,382
- ---------------------------------------------------------------------------------------------------------------
15
Executive Compensation
Set forth below is the compensation of the Chief Executive Officer of
the Company and the Bank and the other most highly compensated officers (whose
total annual salary and bonus exceeds $100,000) for services in all capacities
to the Company and the Bank during the three years ended December 31, 2004.
=========================================================================================================
Annual Compensation
- ---------------------------------------------------------------------------------------------------------
Name and Position Year Salary Bonus (1) All Other
Compensation(2)(3)
- ---------------------------------------------------------------------------------------------------------
Thomas C. McGraw, 2002 177,681 $ -- $ --
Chief Executive Officer, 2003 205,538 20,000 13,001
Secretary 2004 205,538 33,000 16,837
- ---------------------------------------------------------------------------------------------------------
Jim D. Black, 2002 $168,592 $35,200 $14,203
President 2003 183,750 24,640 12,847
2004 193,537 30,000 16,666
- ---------------------------------------------------------------------------------------------------------
Anthony J. Clifford, 2002 $152,916 $34,000 $12,882
Executive Vice President, 2003 168,000 23,800 11,746
Chief Operating Officer 2004 170,400 29,000 15,191
- ---------------------------------------------------------------------------------------------------------
James B. Ramsey, 2002 $144,240 $32,000 $12,151
Senior Vice President, 2003 151,641 22,500 10,602
Chief Financial Officer 2004 159,223 26,000 13,711
- ---------------------------------------------------------------------------------------------------------
Charles R. Key, 2002 $128,760 $24,000 $11,098
Senior Vice President, 2003 135,360 18,000 9,463
Director, Information Systems 2004 142,128 22,500 12,239
=========================================================================================================
(1) Bonuses are indicated for the years upon which they are based, and are
payable in the same year.
(2) Each of Messrs. McGraw, Black and Clifford is provided with the use of
a Company-owned automobile. No executive officer received perquisites
or other personal benefits in excess of the lesser of $50,000 or 10
percent of each such officer's total annual salary and bonus during
2002, 2003 or 2004.
(3) Amounts shown represent contributions to The First National Bank Profit
Sharing and 401(k) Plan for the accounts of the named officers.
16
The following table sets forth certain information concerning the
granting of options under the FNB Bancorp 2002 Stock Option Plan during the year
ended December 31, 2004 (adjusted for the 2004 stock dividend).
Option/SAR Grants In Last Fiscal Year
- -------------------------------------------------------------------------------------------------------------------
Potential Realizable
Value at Assumed
Individual Grants Annual Rates of Stock
Price Appreciation
for Option Term (3)
- -------------------------------------------------------------------------------------------------------------------
Number of Percentage of
Securities Total
Underlying Options/SARs
Option/SARs Granted to Exercise or
Granted Employees in Base Price Expiration
Name (#) (1) Fiscal Year ($Sh) (2) Date 5% 10%
- -------------------------------------------------------------------------------------------------------------------
Thomas C. McGraw 341 0.8% 30.95 5/27/2014 6,639 15,578
- -------------------------------------------------------------------------------------------------------------------
Jim D. Black 4,988 12.1% 30.95 5/27/2014 97,107 227,868
- -------------------------------------------------------------------------------------------------------------------
Anthony J. Clifford 4,988 12.1% 30.95 5/27/2014 97,107 227,868
- -------------------------------------------------------------------------------------------------------------------
James B. Ramsey 3,413 8.2% 30.95 5/27/2014 66,445 155,917
- -------------------------------------------------------------------------------------------------------------------
Charles R. Key 2,625 6.3% 30.95 5/27/2014 51,104 119,919
- -------------------------------------------------------------------------------------------------------------------
(1) Options granted under the FNB Bancorp 2002 Stock Option Plan were either
incentive options or nonstatutory options and become exercisable in
accordance with a vesting schedule established at the time of grant.
Vesting cannot extend beyond ten (10) years from the date of grant. All
options granted to the named executive officers are incentive stock options
and have an exercise price equal to the fair market value of the Company's
common stock on the date of grant. Options granted under the FNB Bancorp
2002 Stock Option Plan are adjusted to protect against dilution in the
event of certain changes in the Company's capitalization, including stock
splits and stock dividends, and upon a change in control of the Company,
all outstanding options will become fully vested and exercisable.
(2) The exercise price was determined based upon the average of the bid and
asked price of the Company's common stock on the grant date.
(3) In accordance with Securities and Exchange Commission rules, these columns
show gains that might exist for the respective options, assuming that the
market price of the stock appreciates from the date of grant over the 10
year option term at the annualized rates of 5% and 10%, respectively.
17
The following table sets forth the number of shares of the Company's
Common Stock acquired by each of the named executive officers upon the exercise
of stock options during the fiscal year 2004, if any, the net value realized
upon exercise, the number of shares of the Company's common stock represented by
outstanding stock options held by each of the named executive officers as of
December 31, 2004, the value of such options based on the average of the bid and
asked price of the Company's common stock, and certain information concerning
unexercised options under the Company's stock option plans.
Aggregated Option/SAR Exercises In Last Fiscal Year And
FY-End Option/SAR Values
- ----------------------------------------------------------------------------------------------------------------
Number of Securities Value of
Underlying Unexercised
Shares Unexercised in-the-Money
Acquired Options/SARs at Options/SARs
on Value Fiscal Year-End (#) at Fiscal Year- End ($)
Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable (1)
- ----------------------------------------------------------------------------------------------------------------
Thomas C. McGraw -- -- 1,944 -- 22,474 --
- ----------------------------------------------------------------------------------------------------------------
Jim D. Black 3,514 47,631 5,388 12,508 67,413 113,191
- ----------------------------------------------------------------------------------------------------------------
Anthony J. Clifford -- -- 8,801 12,508 117,561 113,191
- ----------------------------------------------------------------------------------------------------------------
James B. Ramsey 1,300 18,533 7,120 9,264 93,373 86,852
- ----------------------------------------------------------------------------------------------------------------
Charles R. Key -- -- 8,267 8,476 111,269 83,715
- ----------------------------------------------------------------------------------------------------------------
(1) The aggregate value has been determined based upon the average of the
bid and asked price for the Company's common stock at year-end, minus
the exercise price.
Employment Contracts and Termination of Employment and Change in Control
Arrangements
Employment Contracts. There are no employment contracts between the
Company or First National Bank and the executive officers named in the tables
above, other than the Salary Continuation Agreements, the Management Continuity
Agreements, the Deferred Compensation Plan and the Company's stock option plans,
as described below. Effective March 15, 2002, the Company assumed all of the
Bank's rights and obligations under the Bank's 1997 Stock Option Plan (re-named
the FNB Bancorp Stock Option Plan). All other employee benefit plans of the
Bank, existing on that date, are to be continued, modified or assumed by the
Company as determined by mutual agreement of the Bank and the Company, in
accordance with applicable laws, regulations and tax rules.
Salary Continuation Agreements. First National Bank has entered into
Salary Continuation Agreements (the "Agreements") with Michael R. Wyman (current
Chairman of the Board of Directors and former Chief Executive Officer--in 1996),
18
James B. Ramsey (Senior Vice President and Chief Financial Officer--in 1998,
amended in 2004), Jim D. Black (President--in 2004) and Anthony J. Clifford
(Executive Vice President and Chief Operating Officer--in 2004). The Agreements
provide for annual benefits to be paid to Mr. Wyman or his designated
beneficiary of up to $60,000 per year over a period of 15 years; annual benefits
to be paid to Mr. Ramsey or his designated beneficiary of up to $70,000 per year
over a period of 20 years; annual benefits to be paid to Mr. Black or his
designated beneficiary of up to $122,600 per year over a period of 20 years; and
annual benefits to be paid to Mr. Clifford or his designated beneficiary of up
to $140,700 per year over a period of 20 years. Such benefits were effective for
Mr. Wyman upon his attaining 66 years of age, and will be effective for each of
Messrs. Ramsey, Black and Clifford upon (i) attainment of age 65, or upon his
death or disability prior to such time if he is actively employed by First
National Bank at the time; (ii) termination of his employment by First National
Bank without "cause" (as defined in the Agreements); and (iii) termination or
constructive termination of his employment by First National Bank after the
occurrence of a "change of control" of First National Bank (as defined in the
Agreements). First National Bank has purchased life insurance policies on the
life of Messrs. Wyman (in 1996), Ramsey (in 2004, in addition to the 1998
policy), Black (in 2004) and Clifford (in 2004). First National Bank is the sole
owner and beneficiary or co-beneficiary under such life insurance policies,
which policies indirectly offset the anticipated costs for certain death,
disability and post-employment/retirement benefits for Messrs. Wyman, Ramsey,
Black and Clifford. First National Bank has entered into Split- Dollar
Agreements with Messrs. Ramsey, Black and Clifford, each of which designates the
Bank as beneficiary of the insurance policies after the interest of Messrs.
Ramsey, Black and Clifford have been paid to their respective designated
beneficiaries. The cash surrender value of each insurance policy, which is
expected to increase over the term of the policy, is included among the "other
assets" on the consolidated balance sheet of FNB Bancorp.
Management Continuity Agreements. On July 20, 2000, First National Bank
entered into Management Continuity Agreements with Jim D. Black, Charles R. Key
and Anthony J. Clifford. Each Agreement provides for the payment of a severance
benefit to the officer upon termination of employment after a "change in
control" of First National Bank (as defined in the Agreements). The purpose of
the Agreements is to maintain sound and vital management of First National Bank,
thereby protecting its best interests, in the event of a proposed change in
control of First National Bank. The amount of the benefit payable under each
Agreement is two times the "base annual salary" of the relevant officer for the
twelve month period immediately preceding a "change in control." In addition, if
any payment of the benefit constitutes an "excess parachute payment" that is
subject to an excise tax imposed by the Internal Revenue Code of 1986, as
amended, First National Bank will increase the amounts payable to the extent
necessary to place the officer in the same after-tax position that would have
existed had no excise tax been imposed. First National Bank can elect to pay
benefits in a lump sum payment or in monthly installments over a period not
exceeding two years following the date of termination of employment. Each
Management Continuity Agreement continues for two years from July 20, 2000, and
is subject to automatic one year renewals thereafter, unless First National Bank
gives written notice of non-renewal.
19
Deferred Compensation Plan. First National Bank has established a
Deferred Compensation Plan. Participation in the Plan is open to all officers of
First National Bank with the title Vice President or higher. The Deferred
Compensation Plan consists of a Deferred Compensation Trust, dated November 1,
1997, with The Mechanics Bank serving as Trustee, and individual Deferred
Compensation Agreements between First National Bank and each of the
participating officers. The funds contributed to the Plan are those of the
individual participant, and represent income earned and/or bonuses granted as an
employee of First National Bank. No funds of First National Bank may be
contributed to the Plan. Under the Plan, a participant may elect to defer the
receipt of a portion of his or her cash salary and/or bonus. First National Bank
maintains a record of the deferred compensation for each participant, and at the
time of distribution, is obligated to effect the distribution as well as
collection of any and all taxes due at such time. Each participant may elect
whether he or she will receive distribution of his or her entire account,
subject to applicable tax withholding requirements, upon reaching a specified
age, or upon passage of at least five years or upon termination of employment.
In order to discharge its obligations in respect of such deferred compensation,
First National Bank makes contributions of the deferred compensation specified
by the participants to the Deferred Compensation Trust, which are then invested
in accordance with the instructions of the participants. The principal and any
earnings in the Trust are held separate and apart from other funds of First
National Bank and are used for the discharge of First National Bank's
obligations to the participants. As of April 7, 2005, the Deferred Compensation
Trust held an aggregate of 15,985 shares of Common Stock for the accounts of
Messrs. McGraw, Black, Clifford, Ramsey and Key, representing approximately
0.35% of the total shares outstanding on such date (consisting of 2,598 shares
for Jim D. Black; 2,463 shares for Anthony J. Clifford; 4,000 shares for James
B. Ramsey; and no shares for Thomas C. McGraw and Charles R. Key.
FNB Bancorp Stock Option Plan. The board of directors of the Bank
adopted the First National Bank of Northern California 1997 Stock Option Plan
(the "Bank Stock Option Plan"), which was approved by the shareholders of First
National Bank at the 1997 Annual Meeting, held on October 15, 1997. Pursuant to
the holding company reorganization which became effective March 15, 2002, the
Bank Stock Option Plan became the FNB Bancorp Stock Option Plan. As of December
31, 2004, a total of 181,996 shares were reserved for options previously granted
and outstanding under the FNB Bancorp Stock Option Plan, including options for
an aggregate of 33,083 shares of Common Stock (as adjusted for stock dividends
paid in 1999, 2000, 2001, 2002, 2003 and 2004) which have been granted to the
five officers of the Company identified in the table of "Executive Compensation"
above. Also, see "Board Compensation Committee Report" above. All such options
granted and currently outstanding are incentive stock options, vesting at the
rate of 20 percent per year over the period of 5 years from date of grant and
are exercisable for a period of 10 years from the grant date. Directors Angelot,
Modena, Vannucci, Watson and Wyman have been granted non-statutory stock options
for an aggregate of 3,721 shares of Common Stock (as adjusted for stock
dividends paid in 1999, 2000, 2001, 2002, 2003 and 2004) which were fully vested
on the dates of grant and are exercisable (at a price of $20.89 per share for
options granted in 1999; at a price of $19.69 per share for options granted in
2000; and at a price of $20.61 per share for options granted in 2001) over a
period of 10 years from the grant dates. No options have been granted under the
FNB Bancorp Stock Option Plan since March 15, 2002, and no further options are
20
expected to be granted under the FNB Bancorp Stock Option Plan, except that if
any outstanding option should expire, terminate or become unexercisable for any
reason without having been exercised in full, the unpurchased shares which were
subject to the option shall, unless the FNB Bancorp Stock Option Plan shall have
been terminated, become available for future grants under the FNB Bancorp Stock
Option Plan. Upon consummation of any plan of reorganization, merger or
consolidation of the Company with one or more other banks or corporations as a
result of which the Company is not the surviving entity, or upon the sale of all
or substantially all the assets of the Company to another bank or corporation,
then all outstanding unexercised options shall become immediately exercisable in
accordance with the terms of the FNB Bancorp Stock Option Plan and the Plan
shall terminate.
FNB Bancorp 2002 Stock Option Plan. The Board of Directors of the
Company adopted the FNB Bancorp 2002 Stock Option Plan (the "2002 Plan") on June
28, 2002, which was approved by the shareholders at the 2003 Annual Meeting,
held on May 14, 2003. A total of 200,000 shares of Common Stock were reserved
for issuance pursuant to the 2002 Plan (after giving effect to the Company's
2002 stock dividend). The 2002 Plan provides for the grant of incentive stock
options ("Incentive Options") and nonstatutory stock options ("Nonstatutory
Options"). The terms and provisions of the Plan are substantially the same as
the FNB Bancorp Stock Option Plan.
As of December 31, 2004, a total of 220,500 shares of Common Stock were
reserved for issuance pursuant to the 2002 Plan, including 110,500 shares for
options granted and outstanding under the 2002 Plan as of that date (all as
adjusted for the Company's 2004 stock dividend). Options for an aggregate of
46,247 shares of Common Stock (adjusted for the stock dividend paid in 2002,
2003 and 2004) have been granted to the five officers of the Company identified
in the table of "Executive Compensation" above pursuant to the 2002 Plan. Also,
see "Board Compensation Committee Report" above. All such options granted and
currently outstanding under the 2002 Plan are incentive stock options, vesting
at the rate of 20 percent per year over the period of 5 years from the date of
grant and are exercisable for a period of 10 years from the grant date.
Non-employee directors Angelot, Modena, Vannucci, Watson and Wyman have been
granted non-statutory stock options for an aggregate of 5,146 shares of Common
Stock (adjusted for the stock dividend paid in 2002, 2003 and 2004) which were
fully vested on the dates of grant and are exercisable (at a price of $23.76 per
share for options granted in 2002, at a price of $22.68for options granted in
2003 and at a price of $30..95 per share for options granted in 2004) over a
period of 10 years from the grant dates.
Upon the dissolution, liquidation or sale of the Company, or a merger
or consolidation in which the Company is not the surviving entity, outstanding
options which would otherwise terminate in accordance with the 2002 Plan will
become exercisable in full for such period as is determined by the Board of
Directors of the Company or a Stock Option Committee appointed by the Board (but
in any event not more than 15 days) prior to the consummation of such event.
After the consummation of such an event, such outstanding options will
terminate.
21
Profit Sharing Plan
On August 26, 1969, the Bank established The First National Bank Profit
Sharing and 401(k) Plan (the "Plan") under provisions which allow the Bank to
make a contribution on behalf of each eligible employee. Each year, the Board of
Directors of the Bank decides whether to make a profit sharing contribution to
the Plan, and the amount of that contribution. The profit sharing contribution
to the Plan for 2004 was $480,000. Each participant in the Plan who is employed
on the last day of the Plan year receives a share of that contribution based on
the amount of his or her compensation relative to the compensation of all other
participants. The accounts of the participants vest according to a schedule of
years of service with the Bank. The Mechanics Bank acts as Trustee for the
Profit Sharing Plan Trust, and the Trustee invests all the assets of the Plan in
four common trust funds maintained by the Trustee. On January 1, 1998, the Plan
was amended to allow any eligible employee to make voluntary contributions to
the Plan, and to direct the investment of such voluntary contributions from a
menu of available options. Both the profit sharing provisions and the employee
contribution provisions are elements of the 401(k) Plan. The profit sharing
element of the Plan is funded by the Bank. The employee contribution element of
the Plan is funded by the employee.
Comparison of First National Bank/FNB Bancorp Shareholder Return
Set forth below is a line graph comparing the annual percentage change
in the cumulative total return on First National Bank common stock and FNB
Bancorp common stock with the cumulative total return of the SNL Securities
Index of Pink Banks (asset size of $100 million to $500 million) and the Russell
2000 Index as of the end of each of the last five fiscal years. Effective March
15, 2002, First National Bank became the wholly owned subsidiary of FNB Bancorp.
Thereafter, the common stock of FNB Bancorp has been quoted on the OTC Bulletin
Board under the symbol "FNBG.OB."
The graph assumes that $100.00 was invested on December 31, 1998 in
First National Bank common stock and each index, and that all dividends were
reinvested. Returns have been adjusted for any stock dividends and stock splits
declared by First National Bank and FNB Bancorp. Shareholder returns over the
indicated period should not be considered indicative of future shareholder
returns.
22
- --------------------------------------------------------------------------------
FNB BANCORP
- --------------------------------------------------------------------------------
Total Return Performance
[GRAPHIC OMITTED]
Period Ending
-----------------------------------------------------------------
Index 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04
- ------------------------------------------------------------------------------------------------------------
FNB Bancorp 100.00 108.01 113.27 117.01 155.07 189.60
Russell 2000 100.00 96.98 99.39 79.03 116.38 137.71
SNL $100M-$500M OTC-BB & Pink Banks* 100.00 84.53 97.38 116.81 158.66 191.77
* SNL $100-$500M Pink Banks Index consists of Pink Sheet and OTC Bulletin
Board-traded banks with between $100M and $500M in total assets.
SNL Financial LC
(C) 2004
Note: the foregoing graph was prepared by SNL Financial LC ("SNL") at the
request of the Company for purposes of this Proxy Statement. All information
provided by SNL in the graph has been gathered by SNL from sources believed by
SNL to be reliable and true and accurate both in form and substance.
23
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers and any
persons who own more than 10% of a registered class of the Company's equity
securities to file with the Securities and Exchange Commission (the "SEC")
initial reports of ownership and reports of changes in ownership of Common Stock
and other equity securities of the Company. Officers, directors and any greater
than 10% shareholders are required by the SEC to furnish the Company with copies
of all Section 16(a) forms they file.
On March 15, 2002, the Company registered its common stock under
Section 12(g) of the Exchange Act, at which time the Company's directors,
officers and any person who owned more than 10% of such common stock became
subject to Section 16(a) of the Exchange Act.
To the Company's knowledge, based solely on a review of such reports
furnished to the Company and written representations that no other reports were
required, during the fiscal year ended December 31, 2004, all Section 16(a)
filing requirements applicable to its officers, directors and any greater than
10% shareholders were complied with on a timely basis, with the exception of one
shareholder, Mr. Thomas G. Atwood.
Certain Relationships and Related Transactions
Through its banking subsidiary, First National Bank, the Company has
had, and expects in the future to have banking transactions, including loans and
other extensions of credit, in the ordinary course of its business with many of
the Company's directors and officers and their associates, including
transactions with corporations of which such persons are directors, officers or
controlling shareholders, on substantially the same terms (including interest
rates and collateral) as those prevailing for comparable transactions with
others. Management believes that in 2004 such transactions comprising loans did
not involve more than the normal risk of collectibility or present other
unfavorable features. Loans to executive officers of First National Bank are
subject to limitations as to amount and purposes prescribed in part by the
Federal Reserve Act, as amended, and the regulations of the Office of the
Comptroller of the Currency.
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The firm of Moss-Adams LLP has been recommended by the Audit Committee
of the Board of Directors of the Company to serve as independent auditors for
the 2005 fiscal year, and the Board of Directors has approved the Audit
Committee recommendation. In this Proposal No. 2, the shareholders of the
Company are being asked to ratify the appointment of Moss-Adams LLP as
independent auditors of the Company, to serve for the 2005 fiscal year.
24
A representative of Moss-Adams LLP is expected to attend the Annual
Meeting and will have an opportunity to make a statement if the representative
desires to do so, and the representative is expected to be available to respond
to appropriate questions.
Audit Fees
The aggregate fees billed by Grant Thornton LLP to the Company for
their consent to the inclusion of the financial statements for 2001 in the 2003
Annual report were $7,500.
The aggregate fees billed by KPMG to the Company for professional
services rendered for the audit of the Company's consolidated financial
statements for the fiscal years ended December 31, 2003 and 2004, included in
the Company's Annual Report on Form 10-K and for the review of the financial
statements included in the Company's Quarterly Reports on Form 10-Q for the
quarterly periods ended March 31, June 30, and September for the years 2003 and
2004 were $116,450 and $344,966, respectively.
All Other Fees
Other than the fees for services described above under "Audit Fees," no
fees were billed to the Company by KPMG LLP for services rendered to the Company
or First National Bank of Northern California for the fiscal years ended
December 31, 2003 and 2004.
The Audit Committee of the Board of Directors of the Company has
approved each professional service rendered by Grant Thornton LLP and KPMG LLP
during the fiscal years 2003 and 2004, and the Audit Committee has considered
whether the provision of non-audit services would be compatible with maintaining
the independence of Grant Thornton LLP and KPMG LLP.
Vote Required
Ratification of the appointment of Moss-Adams LLP as the Company's
independent auditors for the 2005 fiscal year requires the affirmative vote of
the holders of a majority of the shares of Common Stock present or represented
by proxy and voting at the Annual Meeting.
Recommendation of Management
The Board of Directors of the Company has approved the recommendation
of the Audit Committee of the Board of Directors to appoint Moss-Adams LLP as
independent auditors of the Company for the 2005 fiscal year, and recommends a
vote "FOR" ratification of the appointment of Moss-Adams LLP.
25
AUDIT COMMITTEE REPORT
The Audit Committee consists of the following members of the Company's
Board of Directors: Edward J. Watson (Chairman), Neil J. Vannucci and R. Albert
Roensch. Each of the members of the Audit Committee is "independent" as defined
under applicable rules promulgated by the Securities and Exchange Commission
pursuant to the Sarbanes-Oxley Act of 2002. The Committee operates under a
written charter adopted by the Board of Directors which is included in this
Proxy Statement as Appendix B.
Management is responsible for the Company's internal controls and the
financial reporting process. The independent accountants are responsible for
performing an independent audit of the Company's consolidated financial
statements in accordance with generally accepted accounting principles and to
issue a report thereon. The Audit Committee's responsibility is to monitor and
oversee these processes.
The Audit Committee's responsibilities include assisting the Board of
Directors in fulfilling its responsibility for oversight of the quality and
integrity of the accounting, auditing, internal control and financial reporting
practices of the Company. The Committee's primary responsibilities are to: (1)
serve as an independent and objective party to monitor the Company's financial
reporting process and internal control system; (2) review and evaluate the audit
efforts of the Company's independent accountants and the outsource internal
audit firm; (3) evaluate the Company's quarterly financial performance as well
as its compliance with laws and regulations; (4) oversee management's
establishment and enforcement of financial policies and business practices; and
(5) facilitate communication among the independent accountants, financial and
senior management, counsel, the outsource internal audit firm and the Board of
Directors.
The Audit Committee has reviewed and discussed the audited financial
statements of the Company for the fiscal year ended December 31, 2004, with the
Company's management. The Committee has discussed with KPMG LLP, the Company's
independent auditors, the matters required to be discussed by Statement on
Auditing Standards No. 61 (Communication with Audit Committees). The Committee
has also received the written disclosures and the letter from KPMG LLP required
by Independence Standards Board Standard No. 1 (Independence Discussion with
Audit Committees) and the Committee has discussed the independence of KPMG LLP
with that firm.
Based on the Audit Committee's review and discussions noted above, the
Committee recommended to the Board of Directors that the Bank's audited
financial statements be included in the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2004, for the filing with the Securities and
Exchange Commission.
Submitted by the Audit Committee:
Edward J. Watson, Chairman
Neil J. Vannucci
R. Albert Roensch
26
SHAREHOLDERS' PROPOSALS
Next year's Annual Meeting of Shareholders will be held on May 18,
2005. The deadline for shareholders to submit proposals for inclusion in the
proxy statement and form of proxy for the 2005 Annual Meeting of Shareholders is
January 31, 2006. All proposals should be submitted by Certified Mail, Return
Receipt Requested, to the Secretary, FNB Bancorp, 975 El Camino Real, South San
Francisco, California 94080.
South San Francisco, California
April 20, 2005
27
APPENDIX A
----------
FNB BANCORP
NOMINATING CHARTER
------------------
I. Purpose
The purpose of the Nominating Charter is to establish a written charter
concerning the process of identifying, evaluating and nominating
candidates, including candidates proposed by shareholders, for election
to the Board of Directors.
II. Board Functioning as Nominating Committee
The Board of Directors of FNB Bancorp (the "Company") performs the
functions of a nominating committee. Candidates proposed as nominees
for election to the Company's Board of Directors shall be evaluated and
selected by the independent members of the Board of Directors. Director
independence shall be determined in accordance with applicable rules of
the Securities and Exchange Commission.
III. Nomination Process
1. Candidates shall be evaluated based on the criteria established
by the Board of Directors which may include (a) satisfactory
results of any background investigation, (b) experience and
expertise, (c) financial resources, (d) time availability, (e)
community involvement, and (f) such other criteria as the Board
of Directors may determine to be relevant. Candidates evaluated
for consideration as nominees must meet with the Board of
Directors.
2. Any candidate nominated for election to the Board of Directors
must receive a majority of votes in favor of nomination from
independent members of the Board of Directors. Directors who are
not independent shall not vote, but may be present during the
voting.
3. Each candidate may be required to complete one or more
questionnaires and provide such additional information as the
Board of Directors shall deem necessary or appropriate. Such
information shall include a personal financial statement and a
background investigation using an outside firm which shall, among
other matters, include (a) verification of the accuracy of
information provided by the candidate, and (b) a review of
criminal history records.
4. Each existing member of the Board of Directors whose term is
ending must be evaluated for nomination to be re-elected. This
review will include review of attendance, participation,
continuing education, investment in shares, business development
and community involvement. In lieu of the information required to
be provided by new candidates for election to the Board of
Directors described above in paragraph 3, the Board of Directors
may rely upon the information contained in the most recent annual
Directors and Officers Questionnaire completed by the existing
member of the Board of Directors, subject to such updated
information as the Board of Directors may deem appropriate. An
existing member of the Board of Directors must be nominated for
re-election by a majority vote of the independent members of the
Board of Directors, not counting such existing member.
IV. Annual Nominations
The Board of Directors shall evaluate and select nominees for election
(a) annually prior to distribution of the Company's proxy solicitation
materials and (b) at such other times as may be appropriate to fill
vacancies in accordance with the Company's bylaws.
V. Conflicts
Any conflicts between the provisions of this Charter and the provisions
of the Company's bylaws shall be resolved in favor of the bylaw
provisions and nothing contained herein shall be construed as an
amendment of the Company's bylaws.
2
APPENDIX B
----------
FNB BANCORP
AUDIT COMMITTEE CHARTER
-----------------------
This Audit Committee Charter has been adopted by the Board of Directors
of FNB Bancorp (the "Company"). The Audit Committee of the Board shall review
and reassess this charter annually and recommend any proposed changes to the
Board for approval.
Membership
The audit committee will be composed of not less than three (3) members
of the board of directors. They will be selected by the board of directors,
taking into account prior experience in matters to be considered by the
committee, probable availability at times required for consideration of such
matters, and their individual independence and objectivity.
The committee's membership will meet the requirements of the audit
committee policy of Nasdaq. Accordingly, all of the members will be directors
independent of management and free from relationships that, in the opinion of
the board of directors, would interfere with the exercise of independent
judgment as a committee member.
No officers or employees of the Company or its subsidiaries will serve
on the committee. A former officer of the Company or any of its subsidiaries may
serve on the committee (even though the former officer may by receiving pension
or deferred compensation payments from the Company) if, in the opinion of the
board of directors, the former officer will exercise independent judgment and
will significantly assist the committee to function. However, a majority of the
committee will be directors who were not formerly officers of the Company or any
of its subsidiaries.
When considering relationships that might affect independence,
including possible affiliate status, the board of directors will give
appropriate consideration, in addition to its audit committee policy, to
guidelines issued by Nasdaq, which are provided to assist boards of directors in
observing the spirit of Nasdaq policy.
The board of directors shall appoint one member of the audit committee
to serve as the chairman. The chairman shall be responsible for leadership of
the committee, including scheduling and presiding over meetings, preparing
agendas and making regular reports to the board of directors. The chairman will
also maintain regular liaison with the Chief Executive Officer, the Chief
Financial Officer, the lead independent audit partner and the outsource internal
audit firm.
Actions of the Committee
The committee's activities will include the following actions:
o Oversight of the financial statements and relations with the
independent auditors.
o Instruct the independent auditors that the board of directors is the
client in its capacity as the shareholders' representative.
o Expect the independent auditors to meet with the board of directors at
least annually so the board has a basis on which to recommend the
independent auditors' appointment to the shareholders or to ratify its
selection of the independent auditors.
o Expect financial management and the independent auditors to analyze
significant financial report issues and practices on a timely basis.
o Expect financial management and the independent auditors to discuss
with the audit committee:
o Qualitative judgments about whether current or proposed
accounting principles and disclosures are appropriate, not
just acceptable; and
o Aggressiveness or conservatism of accounting principles and
financial estimates.
o Expect the independent auditors to provide the audit committee with:
o Independent judgments about the appropriateness of the
Company's current or proposed accounting principles and
whether current or proposed financial disclosures are clear;
o Views on whether the accounting principles chosen by
management are conservative, moderate, or aggressive as they
relate to income, asset, and liability recognition, and
whether these accounting principles are commonly used;
o Reasons why accounting principles and disclosure practices
used for new transactions or events are appropriate;
o Reasons for accepting or questioning significant estimates
made by management; and
o Views on how selected accounting principles and disclosure
practices affect shareholder and public attitudes about the
Company.
Actions taken on the board's behalf that require board notification but not
board approval:
o Review and approve the scope of the Company's audit and that of its
subsidiaries as recommended by the independent auditors and the
President;
o Review and approve the scope of the Company's annual profit and
pension trust audits;
o Answer questions raised by shareholders during an annual shareholders'
meeting on matters relating to the committee's activities if asked to
do so by the board of directors' chairperson; and
o Ask the President to have the outsourced internal audit firm study a
particular area of interest or concern to the audit committee.
2
Matters requiring the committee's review and study before making a
recommendation for the board of directors' action:
o Appointment of the independent auditors;
o Implementation of major accounting policy changes;
o SEC registration statements to be signed by the board of directors;
and
o The auditors' reports and financial statements prior to publication in
the annual report.
Matters requiring the committee's review and study before providing summary
information to the board of directors:
o Accounting policy changes proposed or adopted by organizations such as
the Financial Accounting Standards Board (FASB), the Securities and
Exchange Commission (SEC), and the American Institute of Certified
Public Accountants (AICPA), or by comparable bodies outside the United
States;
o The independent auditors' assessment of the strengths and weaknesses
of the Company's financial staff, systems, controls, and other factors
that might be relevant to the integrity of the financial statements;
o Quarterly financial statement review before publication;
o Administration of the Company's "conflict of interest" policies as may
be set by the board of directors from time to time;
o The performance of management and operating personnel under the
Company's code of ethics as may be adopted by the board of directors
from time to time;
o Gaps and exposures in insurance programs;
o Reports about the Company or its subsidiaries submitted by agencies of
governments in countries in which the Company or it subsidiaries may
operate; and
o Periodic SEC filings and the adequacy of programs and procedures to
assure compliance with SEC rules and regulations and the rules and
regulations of Nasdaq.
3
- --------------------------------------------------------------------------------
|
| FNB BANCORP
|
| Solicited by the Board of Directors
| for the Annual Meeting of Shareholders
| on May 18, 2005
|
| The undersigned holder of Common Stock acknowledges receipt of a copy of
| the Notice of Annual Meeting of Shareholders of FNB BANCORP and the
| accompanying Proxy Statement dated April 20, 2005, and revoking any
| Proxy heretofore given, hereby constitutes and appoints Thomas C.
| McGraw, Neil J.Vannucci and Edward J. Watson, and each of them, with
| full power of substitution, as attorneys and proxies to appear and vote
| all shares of Common Stock of FNB BANCORP, a California corporation,
| outstanding in the name of the undersigned which the undersigned could
| vote if personally present and acting at the Annual Meeting of
| Shareholders of FNB BANCORP, to be held at the Basque Cultural Center,
| 599 Railroad Avenue, South San Francisco, California, on Wednesday,
| May 18, 2005, at 7:30 p.m. or at any adjournments thereof, upon the
| following items as set forth in the Notice of Meeting and Proxy
| Statement and to vote according to their discretion on all matters which
| may be properly presented for action at the meeting or any adjournments
| thereof. The above-named proxy holders are hereby granted discretionary
| authority to cumulate votes represented by the shares covered by this
| Proxy in the election of directors.
|
| THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS
| NOMINATED BY THE BOARD OF DIRECTORS AND "FOR" RATIFICATION OF THE
| APPOINTMENT OF MOSS-ADAMS LLP AS INDEPENDENT AUDITORS OF THE COMPANY TO
| SERVE FOR THE 2005 FISCAL YEAR. THE PROXY, WHEN PROPERLY EXECUTED, WILL
| BE VOTED AS DIRECTED. IF NO DIRECTION IS MADE, IT WILL BE VOTED "FOR"
| THE ELECTION OF DIRECTORS NOMINATED BY THE BOARD OF DIRECTORS AND "FOR"
| RATIFICATION OF THE APPOINTMENT OF MOSS-ADAMS LLP AS INDEPENDENT
| AUDITORS OF THE COMPANY TO SERVE FOR THE 2005 FISCAL YEAR.
|
| (Continued and to be signed on other side)
FNB BANCORP
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 18, 2005
The Board of Directors recommends a Vote "AUTHORITY GIVEN FOR" on Proposal 1;
and, FOR on Proposal 2.
INSTRUCTIONS
------------
[X] Mark, sign and date your proxy card
[X] Detach your proxy card at the perforations
[X] Return your proxy card in the postage paid envelope provided
THIS PROXY IS SOLICITED BY, AND ON BEHALF OF, THE BOARD OF DIRECTORS AND MAY BE
REVOKED PRIOR TO ITS EXERCISE.
FOLD AND DETACH HERE
- --------------------------------------------------------------------------------------------------------------------------------
|
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED "FOR" THE FOLLOWING ITEMS: |
|
1. [ ] AUTHORITY GIVEN FOR all nine (9) [ ] WITHHOLD AUTHORITY to vote |
(except as indicated to the contrary below) for all nominees listed below. |
|
INSTRUCTION: To withhold authority to vote for any individual nominee, strike |
a line through the nominee's name in the list below: |
|
01. Michael R. Wyman 06. Lisa Angelot |
02. Thomas C. McGraw 07. Jim D. Black |
03. Neil J. Vannucci 08. Anthony J. Clifford |
04. Edward J. Watson 09. R. Albert Roensch |
05. Daniel J. Modena |
| Please Detach Here
| You Must Detach This Portion of the
EXCEPTION ______________________________________________________________________ | Proxy Card Before Returning in the
| Enclosed Envelope
|
2. To ratify the appointment of MOSS-ADAMS [ ] FOR [ ] AGAINST [ ] ABSTAIN |
LLP as independent auditors of the Company |
to serve for the 2005 fiscal year. |
3. In their discretion, to transact such |
other business as may properly come |
before the meeting. |
|
|
Authorized Signature(s) |
|
____________________________________ |
|
____________________________________ |
|
Date: ________________, 2005 |
|
Please please give date and sign |
exactly as your name(s) appears. |
When signing as attorney, executor, |
administrator, trustee, or guardian, |
please give full title. If more than |
one trustee, all should sign. All |
joint owners should sign. WHETHER OR |
NOT YOU PLAN TO ATTEND THIS MEETING, |
PLEASE SIGN AND RETURN THIS PROXY AS |
PROMPTLY AS POSSIBLE IN THE ENCLOSED |
POSTAGE-PAID ENVELOPE. |
|
I/we do __ or do not __ expect to |
attend this meeting. |
|