SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
Quarterly Report
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Quarterly Period Ended June 30, 2005
--------------------------------------------
FNB BANCORP
------------------------------------------------------
(Exact name of registrant as specified in its charter)
California
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(State or other jurisdiction of incorporation)
000-49693 92-2115369
------------------------ ---------------------------------
(Commission File Number) (IRS Employer Identification No.)
975 El Camino Real, South San Francisco, California 94080
--------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (650) 588-6800
--------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: Common Stock as of August 12,
2005: 2,567,232 shares.
PART I--FINANCIAL INFORMATION
Item 1. Financial Statements.
FNB BANCORP AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Dollars in thousands)
ASSETS
June 30 December 31
2005 2004
------------ ------------
Cash and due from banks $ 18,681 $ 17,084
Federal funds sold 12,205 --
------------ ------------
Cash and cash equivalents 30,886 17,084
Securities available-for-sale 97,962 102,823
Loans, net 377,957 340,906
Bank premises, equipment, and leasehold improvements 12,031 11,614
Other real estate owned 2,600 --
Goodwill 666 --
Accrued interest receivable and other assets 24,320 17,627
------------ ------------
Total assets $ 546,422 $ 490,054
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Demand, noninterest bearing $ 121,226 $ 109,758
Demand, interest bearing 54,237 51,818
Savings and money market 174,671 160,062
Time 137,284 91,615
------------ ------------
Total deposits 487,418 413,253
Federal funds purchased -- 19,172
Accrued expenses and other liabilities 6,322 5,000
------------ ------------
Total liabilities 493,740 437,425
------------ ------------
Stockholders' equity
Common stock, no par value, authorized 10,000,000 shares;
issued and outstanding 2,566,000 shares at June 30, 2005
and 2,586,000 shares at December 31, 2004 30,628 31,365
Additional paid-in capital 13 9
Retained earnings 21,836 20,689
Accumulated other comprehensive income 205 566
------------ ------------
Total stockholders' equity 52,682 52,629
------------ ------------
Total liabilities and stockholders' equity $ 546,422 $ 490,054
============ ============
See accompanying notes to consolidated financial statements.
2
FNB BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENT OF EARNINGS
(UNAUDITED)
(Dollars in thousands, except per share amounts)
Three months ended Six months ended
June 30, June 30,
--------------------------- ---------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
Interest income:
Interest and fees on loans $ 6,589 $ 5,091 $ 12,283 $ 10,282
Interest on securities 445 253 886 466
Interest on tax-exempt securities 330 282 659 583
Federal funds sold 91 59 142 91
------------ ------------ ------------ ------------
Total interest income 7,455 5,685 13,970 11,422
------------ ------------ ------------ ------------
Interest expense:
Interest on deposits 1,204 576 2,113 1,139
Other 4 -- 60 --
------------ ------------ ------------ ------------
Total interest expense 1,208 576 2,173 1,139
------------ ------------ ------------ ------------
Net interest income 6,247 5,109 11,797 10,283
Provision for loan losses 150 120 270 240
------------ ------------ ------------ ------------
Net interest income after provision for loan losses 6,097 4,989 11,527 10,043
------------ ------------ ------------ ------------
Noninterest income:
Service charges 585 649 1,152 1,310
Credit card fees 217 233 433 440
Other income 207 76 327 131
------------ ------------ ------------ ------------
Total noninterest income 1,009 958 1,912 1,881
------------ ------------ ------------ ------------
Noninterest expense:
Salaries and employee benefits 2,807 2,664 5,612 5,354
Occupancy expense 343 333 658 691
Equipment expense 413 418 783 840
Professional fees 284 330 534 580
Telephone, postage and supplies 230 265 424 578
Bankcard expenses 204 209 403 387
Securities write-down -- -- 66 --
Other expense 948 524 1,651 1,058
------------ ------------ ------------ ------------
Total noninterest expense 5,229 4,743 10,131 9,488
------------ ------------ ------------ ------------
Earnings before income tax expense 1,877 1,204 3,308 2,436
Income tax expense 595 241 1,010 570
------------ ------------ ------------ ------------
NET EARNINGS $ 1,282 $ 963 $ 2,298 $ 1,866
============ ============ ============ ============
Earnings per share data:
Basic $ 0.50 $ 0.37 $ 0.89 $ 0.71
Diluted $ 0.49 $ 0.36 $ 0.88 $ 0.70
Weighted average shares outstanding:
Basic 2,566,000 2,626,000 2,572,000 2,634,000
Diluted 2,609,000 2,669,000 2,623,000 2,684,000
See accompanying notes to consolidated financial statements.
3
FNB BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands)
Three months ended Six months ended
June 30, June 30,
--------------------------- ---------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
Net earnings $ 1,282 $ 963 $ 2,298 $ 1,866
Unrealized gain/(loss) on AFS securities 202 (650) (361) (586)
------------ ------------ ------------ ------------
Total comprehensive income $ 1,484 $ 313 $ 1,937 $ 1,280
============ ============ ============ ============
See accompanying notes to consolidated financial statements.
4
FNB BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Dollars in thousands)
Six months ended
June 30
---------------------------
2005 2004
------------ ------------
Cash flow from operating activities
Net earnings $ 2,298 $ 1,866
Adjustments to reconcile net earnings to net cash provided by
operating activities
Depreciation and amortization 875 897
Stock-based compensation expense 4 2
Provision for loan losses 270 240
Securities write-down 66 --
Changes in assets and liabilities:
Accrued interest receivable and other assets (4,270) (2,709)
Accrued expenses and other liabilities 915 2,333
------------ ------------
Net cash (used)/provided by operating activities 158 2,629
------------ ------------
Cash flows from investing activities
Purchase of securities available-for-sale (13,187) (35,352)
Proceeds from matured/called/securities available-for-sale 17,818 19,790
Net decrease in loans 3,060 8,729
Proceeds from sale of bank premises, equipment and leasehold improvements -- 121
Purchase of bank premises, equipment and leasehold improvements (1,114) (1,303)
Cash and equivalents received in bank aquisition 9,602 --
------------ ------------
Net cash (used)/provided by investing activities 16,179 (8,015)
------------ ------------
Cash flows from financing activities
Net increase (decrease) in demand and savings deposits (362) 46,068
Net increase (decrease) in time deposits 18,502 (7,073)
Net increase in federal funds purchased (19,172) --
Dividends paid (766) (905)
Repurchase of common stock (765) (865)
Issuance of common stock 28 125
------------ ------------
Net cash provided by financing activities (2,535) 37,350
------------ ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 13,802 31,964
Cash and cash equivalents at beginning of period 17,084 30,644
------------ ------------
Cash and cash equivalents at end of period $ 30,886 $ 62,608
============ ============
Additional cash flow information
Interest paid $ 1,900 $ 1,138
Income taxes paid $ 1,077 $ 761
Non-cash financing activity
Accrued dividends 385 300
See accompanying notes to consolidated financial statements.
5
FNB BANCORP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2005
(UNAUDITED)
NOTE A - BASIS OF PRESENTATION
FNB Bancorp (the "Company") is a bank holding company registered under
the Bank Holding Company Act of 1956, as amended. The Company was incorporated
under the laws of the State of California on February 28, 2001. The consolidated
financial statements include the accounts of FNB Bancorp and its wholly owned
subsidiary, First National Bank of Northern California (the "Bank"). The Bank
provides traditional banking services in San Mateo and San Francisco counties.
All intercompany transactions and balances have been eliminated in
consolidation. The financial statements include all adjustments of a normal and
recurring nature, which are, in the opinion of management, necessary for a fair
presentation of the financial results for the interim periods.
The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-Q and, therefore, do not include all
information and footnotes normally included in financial statements prepared in
conformity with accounting principles generally accepted in the United States of
America. Accordingly, these financial statements should be read in conjunction
with the audited financial statements and notes thereto for the year ended
December 31, 2004.
Results of operations for interim periods are not necessarily
indicative of results for the full year.
NOTE B - ACQUISITION
On May 2, 2005 the Company announced that its wholly owned subsidiary,
First National Bank of Northern California, had completed its acquisition of
Sequoia National Bank, with two offices in San Francisco. Sequoia was
consolidated with and merged into First National Bank of Northern California
effective April 30, 2005. Sequoia had approximately $62,000,000 in total assets.
Under the terms of the Acquisition Agreement, holders of the 4,749,646 Sequoia
shares of common stock and options for 88,125 shares outstanding will receive
approximately $10,981,000 in cash, subject to an escrow holdback of $1,500,000
for a maximum of 120 days, in order to pay for certain contingencies specified
in the Acquisition Agreement. Effective May 2, 2005, the former banking offices
of Sequoia National Bank began operating as branch offices of First National
Bank of Northern California. The escrow holdback period has not yet expired.
The following table summarizes the estimated fair values of the assets acquired
and liabilities assumed by the Bank at the date of acquisition:
6
Assets:
Cash and due from banks $ 3,218,000
Federal funds sold 17,365,000
Securities available for sale 627,000
Loans, net 40,652,000
Other assets 2,334,000
Core deposit intangibles 2,418,000
Goodwill 666,000
------------
Total Assets 67,280,000
Liabilities:
Deposits:
Noninterest-bearing 6,945,000
Interest-bearing 49,080,000
------------
Total deposits 56,025,000
Accrued interest payable and other liabilities 274,000
Total Liabilities 56,299,000
------------
Net Assets 10,981,000
============
NOTE C - STOCK OPTION PLAN
At June 30, 2005, the Company has two stock-based employee compensation
plans. Prior to 2003, the Company accounted for the plan under the recognition
and measurement provisions of APB Opinion No. 25, Accounting for Stock Issued to
Employees, and related interpretations. Effective January 1, 2003, the Company
adopted the fair value recognition provisions of FASB Statement No. 123,
Accounting for Stock-Based Compensation, prospectively to all employee awards
granted, modified, or settled after January 1, 2003. Therefore, the cost related
to stock-based employee compensation included in the determination of net income
for 2004 and 2005 is less than that which would have been recognized if the fair
value based method had been applied to all awards since the original effective
date of Statement No. 123. Awards under the Company's plan vest over periods
ranging from three to five years. The following table illustrates the effect on
net income and earnings per share if the fair value-based method had been
applied to all outstanding and unvested awards in each period.
(Dollars in thousands, except per share)
Three months ended Six months ended
June 30 June 30
--------------------------- ---------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
Net income as reported $ 1,282 $ 963 $ 2,298 $ 1,866
Add: stock-based employee compensation
expense included in reported net income,
net of related tax effects 2 2 4 2
Deduct: total stock-based employee
compensation expense determined under
fair value method for all awards, net of
related tax effect (3) (3) (4) (3)
------------ ------------ ------------ ------------
Pro forma net income $ 1,281 $ 962 $ 2,298 $ 1,865
Earnings per share:
Basic - as reported $ 0.50 $ 0.37 $ 0.89 $ 0.71
Basic - pro forma $ 0.50 $ 0.37 $ 0.89 $ 0.71
Diluted - as reported $ 0.49 $ 0.36 $ 0.88 $ 0.70
Diluted - pro forma $ 0.49 $ 0.36 $ 0.88 $ 0.69
7
NOTE D - EARNINGS PER SHARE CALCULATION
Earnings per common share (EPS) are computed based on the weighted
average number of common shares outstanding during the period. Basic EPS
excludes dilution and is computed by dividing net earnings by the weighted
average of common shares outstanding. Diluted EPS reflects the potential
dilution that could occur if securities or other contracts to issue common stock
were exercised or converted into common stock.
Earnings per share have been computed based on the following (dollars
in thousands):
Three months ended Six months ended
June 30, June 30,
--------------------------- ---------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
Net earnings $ 1,282 $ 963 $ 2,298 $ 1,866
Average number of shares outstanding 2,566,000 2,626,000 2,572,000 2,634,000
Effect of dilutive options 43,000 43,000 51,000 50,000
Average number of shares outstanding used
to calculate diluted earnings per 2,609,000 2,669,000 2,623,000 2,684,000
share
All outstanding options were included in the 2005 and 2004
computations. Average shares outstanding have been adjusted for the 5% stock
dividend declared November 13, 2004.
NOTE E - COMPREHENSIVE INCOME
Comprehensive income is the change in equity of a business enterprise
during a period from transactions and other events and circumstances from
non-owner sources. Other comprehensive income consists of net unrealized gains
and losses on investment securities available-for-sale. Comprehensive income for
the three months ended June 30, 2005 was $1,484,000 compared to $313,000 for the
three months ended June 30, 2004. Comprehensive income for the six months ended
June 30, 2005 was $1,937,000 compared to $1,280,000 for the six months ended
June 30, 2004.
NOTE F - OTHER REAL ESTATE OWNED
Loans that have become delinquent through non payment of scheduled
principal and/or interest for 90 days are placed in nonaccrual and interest is
no longer accrued. If a favorable restructuring cannot be made for the loan
(provided the market value of the collateral is sufficient), or, if
insufficient, the borrower is unable to make further payments, foreclosure
procedures are initiated. If there are no bidders, or if bids are made and are
insufficient to cover the debt, the Bank will acquire the property at sale under
judgments, decrees, or mortgages where the property was originally security for
debts previously contracted. The Bank currently has one property carried as
Other Real Estate Owned at $2,600,000, its appraised value as of February, 2005,
consisting of a research and development 19,000 square foot office building
located in Mountain View, California.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Critical Accounting Policies And Estimates
------------------------------------------
Management's discussion and analysis of its financial condition and
results of operations are based upon the Company's financial statements, which
have been prepared in accordance with accounting principles generally accepted
in the United States of America. The preparation of these financial statements
requires the Company to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues and expenses, and related disclosure of
contingent assets and liabilities. On an on-going basis, the Company evaluates
its estimates, including those related to its loans and allowance for loan
losses. The Company bases its estimates on current market conditions, historical
experience and on various other assumptions that are believed to be reasonable
under the circumstances, the results of which form the basis for making
8
judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions. The Company believes the
following policies require significant judgments and estimates.
Allowance for Loan Losses
-------------------------
The allowance for loan losses is periodically evaluated for adequacy by
management. Factors considered include the Company's loan loss experience, known
and inherent risks in the portfolio, current economic conditions, known adverse
situations that may affect the borrower's ability to repay, regulatory policies,
and the estimated value of underlying collateral. The evaluation of the adequacy
of the allowance is based on the above factors along with prevailing and
anticipated economic conditions that may impact borrowers' ability to repay
loans. Determination of the allowance is in part objective and in part a
subjective judgment by management based on the information it currently has in
its possession. Adverse changes in any of these factors or the discovery of new
adverse information could result in higher than expected charge-offs and loan
loss provisions.
Earnings Analysis
-----------------
Net earnings for the quarter ended June 30, 2005 were $1,282,000,
compared to net earnings of $963,000 for the quarter ended June 30, 2004, an
increase of $319,000, or 33.13%. Net earnings for the six months ended June 30,
2005 were $2,298,000 compared to $1,866,000 for the six months ended June 30,
2004, an increase of $432,000, or 23.15%. Earnings before income tax expense for
the quarter ended June 30, 2005 were $1,877,000, compared to $1,204,000 for the
quarter ended June 30, 2004, an increase of $673,000, or 55.90%. Earnings before
income tax were $3,308,000 for the six months ended June 30, 2005 compared to
$2,436,000 for the six months ended June 30, 2004, an increase of $872,000, or
35.80%.
Net interest income for the quarter ended June 30, 2005 was $6,247,000,
compared to $5,109,000 for the quarter ended June 30, 2004, an increase of
$1,138,000, or 22.27%. Net interest income for the six months ended June 30,
2005 was $11,797,000 compared to $10,283,000 for the six months ended June 30,
2004, an increase of $1,514,000, or 14.72%. The prime lending rate was 5.75% at
the beginning of the second quarter of 2005, and increased to 6.00% on May 3,
2005 and 6.25% on June 30, 2005, compared to 4.00% in the second quarter of
2004. The Federal Home Loan Bank of San Francisco's Weighted Monthly Cost of
Funds Index for the three months ended June 2005 (based on the three Index
Months ended May 31), averaged 2.51%, compared to 1.78% for the three months
ended June 2004.
Basic earnings per share were $0.50 for the second quarter of 2005
compared to $0.37 for the second quarter of 2004. Diluted earnings per share
were $0.49 for the second quarter of 2005 compared to $0.36 for the second
quarter of 2004. Basic earnings per share were $0.89 for the six months ended
June 30, 2005 compared to $0.71 for the six months ended June 30, 2004. Diluted
earnings per share were $0.88 for the six months ended June 30, 2005 compared to
$0.70 for the six months ended June 30, 2004.
The following table presents an analysis of net interest income and
average earning assets and liabilities for the three-and six-month periods ended
June 30, 2005 compared to the three- and six-month periods ended June 30, 2004.
9
Table 1
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NET INTEREST INCOME AND AVERAGE BALANCES
FNB BANCORP AND SUBSIDIARY
(Dollars in thousands)
Three months ended June 30,
------------------------------------------------------------------------
2005 2004
--------------------------------- ----------------------------------
Annualized Annualized
Interest Average Interest Average
Average Income Yield Average Income Yield
INTEREST EARNING ASSETS Balance (Expense) (Cost) Balance (Expense) (Cost)
-------- -------- -------- -------- -------- --------
Loans, gross $363,799 $ 6,589 7.26% $315,883 $ 5,091 6.48%
Taxable securities 55,156 445 3.24 29,303 253 3.47
Nontaxable securities 39,475 330 3.35 32,803 282 3.46
Federal funds sold 12,278 91 2.97 25,555 59 0.93
-------- -------- -------- --------
Total interest earning assets $470,708 $ 7,455 6.35 $403,544 $ 5,685 5.67
NONINTEREST EARNING ASSETS
Cash and due from banks $ 19,705 $ 19,312
Premises and equipment 11,848 11,296
Other assets 20,591 13,771
-------- --------
Total noninterest earning assets $ 52,144 $ 44,379
-------- --------
TOTAL ASSETS $522,852 $447,923
======== ========
INTEREST BEARING LIABILITIES
Deposits:
Demand, interest bearing $ 59,940 $ (42) (0.28) $ 56,839 $ (30) (0.21)
Money market 108,488 (410) (1.52) 80,426 (168) (0.84)
Savings 60,138 (44) (0.29) 60,047 (40) (0.27)
Time deposits 119,039 (708) (2.39) 88,738 (338) (1.53)
Federal funds purchased and other
borrowings 505 (4) (3.18) -- -- --
-------- -------- -------- --------
Total interest bearing liabilities $348,110 $ (1,207) (1.39) $286,050 $ (576) (0.81)
-------- -------- -------- --------
NONINTEREST BEARING LIABILITIES
Demand deposits 116,411 104,248
Other liabilities 5,991 5,569
-------- --------
Total noninterest bearing liabilities $122,402 $109,817
-------- --------
TOTAL LIABILITIES $470,512 $395,867
Stockholders' equity $ 52,340 $ 52,056
-------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $522,852 $447,923
======== ========
NET INTEREST INCOME AND MARGIN
ON TOTAL EARNING ASSETS $ 6,247 5.32% $ 5,109 5.09%
Interest income is reflected on an actual basis, not on a fully taxable basis
due to immaterial effect. Yield on gross loans was not adjusted for nonaccrual
loans, which were not considered material for this calculation
10
Table 2
- -------
NET INTEREST INCOME AND AVERAGE BALANCES
FNB BANCORP AND SUBSIDIARY
(Dollars in thousands)
Six months ended June 30,
------------------------------------------------------------------------
2005 2004
--------------------------------- ----------------------------------
Annualized Annualized
Interest Average Interest Average
Average Income Yield Average Income Yield
INTEREST EARNING ASSETS Balance (Expense) (Cost) Balance (Expense) (Cost)
-------- -------- -------- -------- -------- --------
Loans, gross $350,815 $ 12,283 7.06% $315,224 $ 10,282 6.56%
Taxable securities 56,970 886 3.14 28,118 466 3.33
Nontaxable securities 39,782 659 3.34 32,667 583 3.59
Federal funds sold 10,341 142 2.76 19,465 91 0.94
-------- -------- -------- --------
Total interest earning assets $457,908 $ 13,970 6.15 $395,474 $ 11,422 5.81
NONINTEREST EARNING ASSETS
Cash and due from banks $ 19,367 $ 18,735
Premises and equipment 11,719 11,172
Other assets 17,618 13,267
-------- --------
Total noninterest earning assets $ 48,704 $ 43,174
-------- --------
TOTAL ASSETS $506,612 $438,648
======== ========
INTEREST BEARING LIABILITIES
Deposits:
Demand, interest bearing $ 56,934 ($ 78) (0.28) $ 57,162 ($ 60) (0.21)
Money market 105,741 (766) (1.46) 73,753 (295) (0.80)
Savings 59,750 (82) (0.28) 59,180 (78) (0.27)
Time deposits 108,234 (1,187) (2.21) 90,484 (706) (1.57)
Federal funds purchased and other
Borrowings 4,704 (60) (2.57) -- -- --
-------- -------- -------- --------
Total interest bearing liabilities $335,363 ($ 2,173) (1.31) $280,579 ($ 1,139) (0.82)
-------- -------- -------- --------
NONINTEREST BEARING LIABILITIES
Demand deposits 112,953 100,250
Other liabilities 5,803 5,616
-------- --------
Total noninterest bearing liabilities $118,756 $105,866
-------- --------
TOTAL LIABILITIES $454,119 $386,445
Stockholders' equity $ 52,493 $ 52,203
-------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $506,612 $438,648
======== ========
NET INTEREST INCOME AND MARGIN
ON TOTAL EARNING ASSETS $ 11,797 5.20% $ 10,283 5.23%
Net interest income is the difference between interest yield generated
by earning assets and the interest expense associated with the funding of those
assets.
Tables 1 and 2, above, show the various components that contributed to
changes in net interest income for the three and six months ended June 30, 2005
and 2004. The principal interest earning assets are loans, from a volume as well
as from an earnings perspective. For the quarter ended June 30, 2005, average
loans outstanding represented 77.3% of average earning assets. For the quarter
ended June 30, 2004, they represented 78.3% of average earning assets. For the
six months ended June 30, 2005 and 2004, average loans outstanding represented
76.6% and 79.7%, respectively, of average earning assets.
11
The yield on total interest earning assets for the quarter ended June
30, 2005 compared to the quarter ended June 30, 2004 increased from 5.67% to
6.35%, or 68 basis points. Contributing to this was a larger volume invested in
loans, which increased by $47,916,000 or 15.17% quarter to quarter, with a yield
increase of 78 basis points, or 12.04%. Interest income increased $1,770,000 or
31.13%.
For the three months ended June 30, 2005 compared to the three months
ended June 30, 2004, the cost on total interest bearing liabilities increased
from 0.81% to 1.39%, an increase of 58 basis points. The most expensive as well
as principal source of interest bearing liabilities comes from time deposits.
Their average cost increased from 1.53% to 2.39%, and the expense on these
deposits increased $369,000 for the three months ended June 30, 2005 compared to
2004. Their average volume increased by $30,301,000, or 34.15%. The other
significant increase was in money market deposits. Comparing the two quarters
ended June 30, average balances increased $28,062,000 or 34.89%, and their cost
increased 68 basis points, or 80.95%, and the expense increased $242,000 or
144.05%.
For the six months ended June 30, 2005 compared to the six months ended
June 30, 2004, interest income on interest earning assets increased $2,548,000
or 22.30%, and average earning assets increased $62,434,000, or 15.79%. Average
loans increased by $35,591,000, or 11.29%. Interest on loans increased
$2,001,000 or 19.46%. Their yield increased 50 basis points, or 7.62%. The cost
on total interest bearing liabilities increased from 0.82% to 1.31%. Time
deposit averages increased $17,750,000 or 19.62%. Their cost increased 64 basis
points, or 40.76%. Money market deposit balances increased $31,988,000, or
43.37%, and their cost increased 66 basis points, or 82.50%.
For the three and six month period ended June 30, 2005 and June 2004,
respectively, the following tables show the dollar amount of change in interest
income and expense and the dollar amounts attributable to: (a) changes in volume
(changes in volume at the current year rate), b) changes in rate (changes in
rate times the prior year's volume) and (c) changes in rate/volume (change in
rate times change in volume). In this table, the dollar change in rate/volume is
prorated to volume and rate proportionately.
At the end of April, 2005, total interest-bearing deposits outstanding
acquired from Sequoia National Bank were $49,080,000. They consisted of
$7,477,000 in interest-bearing demand deposits; $12,518,000 in money market
deposits; $1,917,000 in savings deposits; and $27,168,000 in time deposits.
Table 3
- -------
FNB BANCORP AND SUBSIDIARY
RATE/VOLUME VARIANCE ANALYSIS
Three Months Ended June 30,
(Dollars in thousands) 2005 Compared to 2004
------------------------------------------
Interest Variance
Income/Expense Attributable To
Variance Rate Volume
------------ ------------ ------------
INTEREST EARNING ASSETS
Loans $ 1,498 $ 630 $ 868
Taxable securities 192 (17) 209
Nontaxable securities 48 (8) 56
Federal funds sold 32 63 (31)
------------ ------------ ------------
Total $ 1,770 $ 668 $ 1,102
------------ ------------ ------------
INTEREST BEARING LIABILITIES
Demand deposits $ 12 $ 10 $ 2
Money market 242 136 106
Savings deposits 4 4 0
Time deposits 369 254 115
Federal funds and other borrowings 4 0 4
------------ ------------ ------------
Total $ 631 $ 404 $ 227
------------ ------------ ------------
NET INTEREST INCOME $ 1,139 $ 264 $ 875
============ ============ ============
12
Table 4
- -------
FNB BANCORP AND SUBSIDIARY
RATE/VOLUME VARIANCE ANALYSIS
Six Months Ended June 30,
(Dollars in thousands) 2005 Compared To 2004
------------------------------------------
Interest Variance
Income/Expense Attributable To
Variance Rate Volume
------------ ------------ ------------
INTEREST EARNING ASSETS
Loans $ 2,001 $ 840 $ 1,161
Taxable securities 420 (29) 449
Nontaxable securities 76 (42) 118
Federal funds sold 51 94 (43)
------------ ------------ ------------
Total $ 2,548 $ 863 $ 1,685
------------ ------------ ------------
INTEREST BEARING LIABILITIES
Demand deposits $ 18 $ 18 $ 0
Money market 471 239 232
Savings deposits 4 3 1
Time deposits 481 343 138
Federal funds and other borrowings 60 0 60
------------ ------------ ------------
Total $ 1,034 $ 603 $ 431
------------ ------------ ------------
NET INTEREST INCOME $ 1,514 $ 260 $ 1,254
============ ============ ============
Noninterest income
- ------------------
The following table shows the principal components of noninterest
income for the periods indicated
Table 5
- -------
NONINTEREST INCOME
Three months ended Six months ended
June 30, June 30,
--------------------------- ---------------------------
(Dollars in thousands) 2005 2004 2005 2004
------------ ------------ ------------ ------------
Service charges $ 585 $ 649 $ 1,152 $ 1,310
Credit card fees 217 233 433 440
Other income 207 76 327 131
------------ ------------ ------------ ------------
Total noninterest income $ 1,009 $ 958 $ 1,912 $ 1,881
============ ============ ============ ============
Noninterest income consists mainly of service charges on deposits,
credit card fees, and several other miscellaneous types of income. For the
quarter ended June 30, 2005 compared to June 30, 2004, total noninterest income
increased by $51,000 or 5.32%. The major component, service charges, decreased
$64,000, but was offset by an increase in other income, which increased
$131,000. This increase included a $54,000 increase in letter of credit fees,
and a $19,000 increase in tax free earnings on officers' life insurance. For the
six months ended June 30, 2005 and June 30, 2004, total noninterest income
increased by $31,000, or 1.65%. The major component, service charges, declined
$158,000, or 12.06%, but other income increased $196,000. The increase included
$54,000 in letter of credit fees, $59,000 in tax free earnings on officers' life
insurance, $23,000 in earnings from travel express checks.
13
Noninterest expense
- -------------------
The following table shows the principal components of noninterest
expense for the periods indicated.
Table 6
- -------
NONINTEREST EXPENSE
(Dollars in thousands) Three months ended Six months ended
June 30, June 30,
---------------------------------------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
Salaries and employee benefits $ 2,807 $ 2,664 $ 5,612 $ 5,354
Occupancy expense 343 333 658 691
Equipment expense 413 418 783 840
Professional fees 284 330 534 580
Telephone, postage and
supplies 230 265 424 578
Bankcard expense 204 209 403 387
Other expense 948 524 1,717 1,058
------------ ------------ ------------ ------------
Total noninterest expense $ 5,229 $ 4,743 $ 10,131 $ 9,488
============ ============ ============ ============
Noninterest expense consists mainly of salaries and employee benefits.
For the three months ended June 30, 2005 compared to three months ended June 30,
2004, it represented 53.7% and 56.2% of total noninterest expenses. For the six
months ended June 30, 2005 and 2004, it was 55.4% and 56.4% respectively of
total noninterest expense. The remaining categories are less significant. Other
expense increased $424,000 in the quarter ended June 30, 2005 over the quarter
ended June 30, 2004. The principal increase was $308,000 in acquisition related
expense, in connection with Sequoia National Bank. For the six months ended June
30, 2005 and 2004, the increase in other expense was $659,000. Again, the
principal increase was the $308,000 in acquisition related expense, followed by
$103,000 in additional marketing and promotion expense, a $66,000 securities
write-down in the first quarter, and other smaller expense categories.
Income Taxes
- ------------
The effective tax rate for the quarter ended June 30, 2005 was 31.7%
compared to 20.0% for the quarter ended June 30, 2004. The effective tax rate
for the six months ended June 30, 2005 and June 30, 2004, respectively was 30.5%
and 23.4%. This is affected by changing amounts invested in tax-free securities,
by available Low Income Housing Credits, by amounts of interest income on
qualifying loans in Enterprise Zones, and by the effective state tax rate.
Asset and Liability Management
- ------------------------------
Ongoing management of the Company's interest rate sensitivity limits
interest rate risk through monitoring the mix and maturity of loans, investments
and deposits. Management regularly reviews the Company's position and evaluates
alternative sources and uses of funds as well as changes in external factors.
Various methods are used to achieve and maintain the desired rate sensitivity
position including the sale or purchase of assets and product pricing.
14
In order to ensure that sufficient funds are available for loan growth
and deposit withdrawals, as well as to provide for general needs, the Company
must maintain an adequate level of liquidity. Asset liquidity comes from the
Company's ability to convert short-term investments into cash and from the
maturity and repayment of loans and investment securities. Liability liquidity
comes from Company's customer base, which provides core deposit growth. The
overall liquidity position of the Company is closely monitored and evaluated
regularly. Management believes the Company's liquidity sources at June 30, 2005
are adequate to meet its operating needs in 2005 and going forward into the
foreseeable future.
The Company's asset/liability gap is the difference between the cash
flow amounts of interest-sensitive assets and liabilities that will be
refinanced (or repriced) during a given period. For example, if the asset amount
to be repriced exceeds the corresponding liability amount for a certain day,
month, year or longer period, the institution is in an asset-sensitive gap
position. In this situation, net interest income would increase if market
interest rates rose or decrease if market interest rates fell. Alternatively, if
more liabilities than assets will reprice, the institution is in a
liability-sensitive position. Accordingly, net interest income would decline
when rates rose and increase when rates fell.
The following table sets forth information concerning interest rate
sensitive assets and liabilities as of June 30, 2005. The assets and liabilities
are classified by the earlier of maturity or repricing date in accordance with
their contractual terms. Since all interest rates and yields do not adjust at
the same speed or magnitude, and since volatility is subject to change, the gap
is only a general indicator of interest rate sensitivity.
Table 7
- -------
RATE SENSITIVE ASSETS/LIABILITIES
As of June 30, 2005
(Dollars in thousands)
Over Over One
Three Three To Through Over Not
Months Twelve Five Five Rate-
Or Less Months Years Years Sensitive Total
--------- --------- --------- --------- --------- ---------
Interest earning assets:
Federal funds sold $ 12,205 $ -- $ -- $ -- $ -- $ 12,205
Securities available for sale 4,449 17,876 63,310 12,327 -- 97,962
Loans 306,254 25,399 15,033 35,503 -- 382,189
--------- --------- --------- --------- --------- ---------
Total interest earning assets 322,908 43,275 78,343 47,830 -- 492,356
Cash and due from banks -- -- -- -- 18,681 18,681
Allowance for loan losses -- -- -- -- (4,232) (4,232)
Other assets -- -- -- -- 39,617 39,617
--------- --------- --------- --------- --------- ---------
Total assets $ 322,908 $ 43,275 $ 78,343 $ 47,830 $ 54,066 $ 546,422
========= ========= ========= ========= ========= =========
Interest bearing liabilities:
Demand, interest bearing $ 54,237 $ -- $ -- $ -- $ -- $ 54,237
Savings and money market 174,671 -- -- -- -- 174,671
Time deposits 47,955 62,650 26,679 -- -- 137,284
--------- --------- --------- --------- --------- ---------
Total interest bearing liabilities 276,863 62,650 26,679 -- -- 366,192
--------- --------- --------- --------- --------- ---------
Noninterest demand deposits -- -- -- -- 121,226 121,226
Other liabilities -- -- -- -- 6,322 6,322
Stockholders' equity -- -- -- -- 52,682 52,682
--------- --------- --------- --------- --------- ---------
Total liabilities and stockholders' equity $ 276,863 $ 62,650 $ 26,679 $ -- $ 180,230 $ 546,422
========= ========= ========= ========= ========= =========
Interest rate sensitivity gap $ 46,045 ($ 19,375) $ 51,664 $ 47,830 ($126,164) $ --
========= ========= ========= ========= ========= =========
Cumulative interest rate sensitivity gap $ 46,045 $ 26,670 $ 78,334 $ 126,164 $ -- $ --
Cumulative interest rate sensitivity gap ratio 14.26% 7.28% 17.62% 25.62% -- --
Financial Condition
- -------------------
Assets. Total assets increased to $546,422,000 at June 30, 2005 from
$490,054,000 at December 31, 2004, an increase of $56,368,000. Most of this
increase was in cash and cash equivalents, which increased $13,802,000, and net
loans, which increased $37,051,000. The increase in total assets was funded
mainly by an increase in deposits of $74,165,000, minus a decline of $19,172,00
in federal funds purchased.
15
Loans. Net loans at June 30, 2005 were $377,957,000, an increase of
$37,051,000 or 10.87% over December 31, 2004. Gross real estate loans increased
$36,846,000, representing most of the increase, while the remaining categories
increased $887,000. The portfolio breakdown was as follows.
Table 8
- -------
LOAN PORTFOLIO
June 30, December 31,
(In thousands) 2005 Percent 2004 Percent
------------ ------------ ------------ ------------
Real Estate $ 292,279 76.2% $ 255,433 73.9%
Construction 30,839 8.0 28,997 8.4
Commercial 57,526 15.0 58,849 17.0
Consumer 2,957 0.8 2,589 0.7
------------ ------------ ------------ ------------
Gross loans 383,601 100.0% 345,868 100.0%
============ ============
Net deferred loan fees (1,412) (1,628)
Allowance for loan losses (4,232) (3,334)
------------ ------------
Net loans $ 377,957 $ 340,906
============ ============
Allowance for loan losses. The Company has the responsibility of
assessing the overall risks in its portfolio, assessing the specific loss
expectancy, and determining the adequacy of the allowance for loan losses. The
level of the allowance is determined by internally generating credit quality
ratings, reviewing economic conditions in the Company's market area, and
considering the Company's historical loan loss experience. The Company considers
changes in national and local economic conditions, as well as the condition of
various market segments. It also reviews any changes in the nature and volume of
the portfolio. It watches for the existence and effect of any concentrations of
credit, and changes in the level of such concentrations. The Company also
reviews the effect of external factors, such as competition and legal and
regulatory requirements. Finally, the Company is committed to maintaining an
adequate allowance, identifying credit weaknesses by consistent review of loans,
and maintaining the ratings and changing those ratings in a timely manner as
circumstances change.
A summary of transactions in the allowance for loan losses for the six
months ended June 30, 2005 and the six months ended June 30, 2004 is as follows.
During the quarter ended June 30, 2005, the $700,000 balance in Sequoia National
Bank's allowance for loan losses was added to the Bank's allowance as part of
the acquisition entries.
Table 9
- -------
ALLOWANCE FOR LOAN LOSSES
Six months Six months
ended ended
(In thousands) June 30, 2005 June 30, 2004
------------ ------------
Balance, beginning of period $ 3,334 $ 3,284
Provision for loan losses 270 240
Recoveries 13 1
Amounts charged off (85) (385)
Allowance acquired in business combination 700 --
------------ ------------
Balance, end of period $ 4,232 $ 3,140
============ ============
In management's judgment, the allowance was adequate to absorb losses
currently inherent in the loan portfolio at June 30, 2005. However, changes in
prevailing economic conditions in the Company's markets or in the financial
condition of its customers could result in changes in the level of nonperforming
assets and charge-offs in the future and, accordingly, changes in the allowance.
16
Nonperforming assets. Nonperforming assets consist of nonaccrual loans,
foreclosed assets, and loans that are 90 days or more past due but are still
accruing interest. At June 30, 2005, there were no non-accrual loans, compared
to $2,798,000 at December 31, 2004. There was $2,600,000 in Other Real Estate
Owned at June 30, 2005, but no loans past due 90 days and still accruing. At
December 31, 2004, there were no foreclosed assets or loans past due 90 days and
still accruing.
Deposits. Total deposits at June 30, 2005 were $487,418,000 compared to
$413,253,000 on December 31, 2004. Of these totals, noninterest-bearing demand
deposits were $121,226,000 or 24.9% of the total on June 30, 2005 and
$109,758,000 or 26.6% on December 31, 2004. Time deposits were $137,284,000 on
June 30, 2005 and $91,615,000 on December 31, 2004.
The following table sets forth the maturity schedule of the time certificates of
deposit on June 30, 2005:
Table 10
- --------
(Dollars in thousands) Under $100,000
Maturities: $100,000 or more Total
------------ ------------ ------------
Three months or less $ 20,717 $ 27,238 $ 47,955
Over three to six months 12,725 22,968 35,693
Over six through twelve months 14,192 12,766 26,958
Over twelve months 16,797 9,881 26,678
------------ ------------ ------------
Total $ 64,431 $ 72,853 $ 137,284
------------ ------------ ------------
The following table shows the risk-based capital ratios and leverage
ratios at June 30, 2005 and December 31, 2004 for the Bank:
Table 11
- --------
Minimum "Well
June 30, December 31, Capitalized"
Risk-Based Capital Ratios 2005 2004 Requirements
Tier 1 Capital 10.21% 12.69% > 6.00%
-
Total Capital 11.09% 13.50% > 10.00%
-
Leverage Ratios 9.45% 10.71% > 5.00%
-
Liquidity. Liquidity is a measure of the Company's ability to convert
assets into cash with minimum loss. As of June 30, 2005, Liquid Assets were
$128,848,000, or 23.6% of total assets. As of December 31, 2004, Liquid Assets
were $119,907,000, or 24.5% of total assets. Liquidity consists of cash and due
from other banks accounts, federal funds sold, and securities
available-for-sale. The Company's primary uses of funds are loans, and the
primary sources of funds are deposits. The relationship between total net loans
and total deposits is a useful additional measure of liquidity. The Company also
has federal fund borrowing facilities for a total of $50,000,000, a Federal Home
Loan Bank line of up to 25% of total assets, and a Federal Reserve bank
facility. As of June 30, 2005, there were no amounts outstanding.
A higher loan to deposit ratio means that assets will be less liquid.
This has to be balanced against the fact that loans represent the highest
interest earning assets. A lower loan to deposit ratio means lower potential
income. On June 30, 2005 net loans were at 77.5% of deposits. On December 31,
2004 net loans were at 82.5%.
Forward-Looking Information and Uncertainties Regarding Future
Financial Performance.
- -----------------------------------------------------------------------
This report, including management's discussion above, concerning
earnings and financial condition, contains "forward-looking statements".
Forward-looking statements are estimates of or statements about expectations or
beliefs regarding the Company's future financial performance or anticipated
17
future financial condition that are based on current information and that are
subject to a number of risks and uncertainties that could cause actual operating
results in the future to differ significantly from those expected at the current
time. Those risks and uncertainties include, although they are not limited to,
the following:
Increased competition. Increased competition from other banks and
financial service businesses, mutual funds and securities brokerage and
investment banking firms that offer competitive loan and investment products
could require us to reduce interest rates and loan fees to attract new loans or
to increase interest rates that we offer on time deposits, either or both of
which could, in turn, reduce interest income and net interest margins.
Possible Adverse Changes in Economic Conditions. Adverse changes in
national or local economic conditions could (i) reduce loan demand which could,
in turn, reduce interest income and net interest margins; (ii) adversely affect
the financial capability of borrowers to meet their loan obligations, which, in
turn, could result in increases in loan losses and require increases in
provisions for possible loan losses, thereby adversely affecting operating
results; and (iii) lead to reductions in real property values that, due to the
Company's reliance on real property to secure many of its loans, could make it
more difficult to prevent losses from being incurred on non-performing loans
through the sale of such real properties.
Possible Adverse Changes in National Economic Conditions and Federal
Reserve Board Monetary Policies. Changes in national economic policies, such as
increases in inflation or declines in economic output often prompt changes in
Federal Reserve Board monetary policies that could reduce interest income or
increase the cost of funds to the Company, either of which could result in
reduced earnings.
Changes in Regulatory Policies. Changes in federal and national bank
regulatory policies, such as increases in capital requirements or in loan loss
reserve or asset/liability ratio requirements, could adversely affect earnings
by reducing yields on earning assets or increasing operating costs.
Due to these and other possible uncertainties and risks, readers are
cautioned not to place undue reliance on the forward-looking statements
contained in this report, which speak only as of the date of this report, or to
make predictions based solely on historical financial performance. The Company
also disclaims any obligation to update forward-looking statements contained in
this report.
Other Matters
Off-Balance Sheet Items
The Company has certain ongoing commitments under operating leases.
These commitments do not significantly impact operating results. As of June 30,
2005 and December 31, 2004, commitments to extend credit and letters of credit
were the only financial instruments with off-balance sheet risk. The Company has
not entered into any contracts for financial derivative instruments such as
futures, swaps, options or similar instruments. Loan commitments and letters of
credit were $87,966,000 and $83,078,000 at June 30, 2005 and December 31, 2004,
respectively. As a percentage of net loans, these off-balance sheet items
represent 23.3% and 24.4% respectively.
Corporate Reform Legislation
President George W. Bush signed the "Sarbanes-Oxley Act of 2002" (the
"Act") on July 30, 2002, which responds to the recent corporate accounting
scandals. Among other matters, the Act increases the penalties for securities
fraud, establishes new rules for financial analysts to prevent conflicts of
interest, creates a new independent oversight board for the accounting
profession, imposes restrictions on the consulting activities of accounting
firms that audit company records and requires certification of financial reports
18
by corporate executives. The SEC has adopted a number of rule changes to
implement the provisions of the Act. The SEC has also approved new rules
proposed and adopted by the New York Stock Exchange and the Nasdaq Stock Market
to strengthen corporate governance standards for listed companies. The Company
does not currently anticipate that compliance with the Act (including the rules
adopted pursuant to the Act) will have a material effect upon its financial
position or results of its operations or its cash flows.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Market risk is the risk of loss to future earnings, to fair values of
assets or to future cash flows that may result from changes in the price or
value of a financial instrument. The value of a financial instrument may change
as a result of changes in interest rates and other market conditions. Market
risk is attributed to all market risk sensitive financial instruments, including
loans, investment securities, deposits and borrowings. The Company does not
engage in trading activities or participate in foreign currency transactions for
its own account. Accordingly, exposure to market risk is primarily a function of
asset and liability management activities and of changes in market rates of
interest. Changes in rates can cause or require increases in the rates paid on
deposits that may take effect more rapidly or may be greater than the increases
in the interest rates that the Company is able to charge on loans and the yields
that it can realize on its investments. The extent of that market risk depends
on a number of variables including the sensitivity to changes in market interest
rates and the maturities of the Company's interest earning assets and deposits.
For the quarter ended June 30, 2005, the prime lending rate started at 5.75%,
and increased to 6.00% on May 3, 2005 and 6.25% on June 30, 2005. For the
quarter ended June 30, 2004, the prime lending rate held steady at 4.00%. The
changes were not as significant as in prior years. The effect of these rate
changes was mitigated, because a significant amount of the Real Estate loan
portfolio is subject to interest rate caps and floors. Consequently, this did
not have a material effect on earnings.
Item 4. Controls and Procedures.
(a) Disclosure Controls and Procedures: An evaluation of the
Company's disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) was carried out under the supervision and with the
participation of the Company's Chief Executive Officer, Chief Financial Officer
and other members of the Company's senior management as of the end of the
Company's fiscal quarter ended June 30, 2005. The Company's Chief Executive
Officer and Chief Financial Officer concluded that the Company's disclosure
controls and procedures as currently in effect are effective in ensuring that
the information required to be disclosed by the Company in the reports it files
or submits under the Act is (i) accumulated and communicated to the Company's
management (including the Chief Executive Officer and Chief Financial Officer)
to allow timely decisions regarding required disclosure, and (ii) recorded,
processed, summarized and reported within the time periods specified in the
Commission's rules and forms.
(b) Internal Control Over Financial Reporting: An evaluation of
any changes in the Company's internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), that occurred during the
Company's fiscal quarter ended June 30, 2005, was carried out under the
supervision and with the participation of the Company's Chief Executive Officer,
Chief Financial Officer and other members of the Company's senior management.
The Company's Chief Executive Officer and Chief Financial Officer concluded that
no change identified in connection with such evaluation has materially affected,
or is reasonably likely to materially affect, the Company's internal control
over financial reporting.
19
PART II--OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders of FNB Bancorp was held on May 18,
2005. Two matters were voted on at the Annual Meeting: the election of
Directors, and a proposal to ratify and approve the appointment of Moss-Adams
LLP as independent auditors of FNB Bancorp for the 2005 fiscal year. The nine
nominees identified in the proxy statement for the Annual Meeting were elected
as Directors, and the appointment of Moss-Adams LLP was approved. Set forth
below is a summary of the voting:
Election of Votes
Directors Votes For Withheld
--------- --------- ------------
Michael R. Wyman 1,937,801 4,467
Thomas C. McGraw 1,937,801 4,467
Neil J. Vannucci 1,937,518 4,750
Edward J. Watson 1,937,421 4,847
Daniel J. Modena 1,937,801 4,467
Lisa Angelot 1,937,226 5,042
Jim D. Black 1,937,509 4,759
Anthony J. Clifford 1,937,129 5,139
R. Albert Roensch 1,937,129 5,139
Appointment of Moss-Adams LLP For Against Abstain
- ----------------------------- --------- ------- ------------
1,932,205 - 10,063
Item 6. Exhibits
Exhibits
31: Rule 13a-14(a)/15d-14(a) Certifications
32: Section 1350 Certifications
20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FNB BANCORP
(Registrant)
Dated:
August 12, 2005. By: /s/ THOMAS C. MCGRAW
-------------------------------------
Thomas C. McGraw
Chief Executive Officer
(Authorized Officer)
By: /s/ JAMES B. RAMSEY
-------------------------------------
James B. Ramsey
Senior Vice President
Chief Financial Officer
(Principal Financial Officer)
21