North Bay Bancorp (NASDAQ:NBAN)
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North Bay Bancorp (Nasdaq:NBAN), parent of The Vintage
Bank and its Solano Bank Division, today reported profits increased
17.3% in the quarter ended March 31, 2006, compared to the first
quarter a year ago. The results equate to a 13.43% return on average
equity and a 1.17% return on average assets. Solid loan demand and
general increases in short-term interest rates contributed to a higher
net interest margin. In the first quarter, loans grew 7.4%, deposits
increased 4.1%, and the net interest margin improved 18 basis points
to 5.56% from a year ago. Net income increased to $1.7 million, or
$0.40 per diluted share, compared to $1.5 million, or $0.34 per
diluted share, in the first quarter of 2005. All per share results
reflect the 5% stock dividend paid on April 12, 2006.
"These results reflect our current focus on building an
infrastructure and management team to take us beyond $1 billion in
assets," stated President and CEO Terry Robinson. "Also, we are
emphasizing growth in profitability over growth in assets; the slower
growth than the previous five years is consistent with that strategy,"
Robinson noted.
First Quarter 2006 Financial Review and Operating Highlights (for
the quarter ended 3/31/06 compared to 3/31/05)
-- Net income increased 17.3% to $1.7 million
-- Earnings per diluted share increased 17.6% to $0.40
-- Revenues increased 11.1% to $8.4 million
-- Deposits grew 4.1% to $510 million, of which 84% are low-cost
core deposits
-- Net loans grew 7.4% to $427 million
-- Asset quality remained exemplary
Operating Results
Total revenues (net interest income before the provision for loan
losses plus non-interest income, excluding securities gains) increased
11.1% to $8.4 million in the first quarter of 2006 from $7.6 million
in the same quarter a year ago. The net interest margin expanded to
5.56%, up 18 basis points from the first quarter a year ago and up 4
basis points from the fourth quarter of 2005.
First quarter net interest income increased 11.3% to $7.4 million,
with interest income rising 16.6% and interest expense increasing
50.1% from the first quarter of 2005. "The run-up in short-term
interest rates this past 18 months has positively impacted our net
interest margin," stated Pat Phelan, Executive Vice President and
Chief Financial Officer. Phelan continued, "Our outlook is for a
modest narrowing of the margin during the remainder of 2006 as the
impact of any future increases in rates paid on deposits will likely
exceed the anticipated benefit of any future increases in asset
yields."
The provision for loan losses of $100,000 in the first quarter
2006 was 45.9% below the $185,000 provision in the first quarter a
year ago. Net interest income after the provision for loan losses
increased 13.0% to $7.3 million compared to $6.4 million in the first
quarter of 2005.
Non-interest income increased 9.5% to $1,047,000 during the first
quarter of 2006 compared to $956,000 in the first quarter of 2005.
Increases in ATM fees, commissions received on investment products
sold, earnings on the cash value of life insurance and earnings on
non-marketable equity securities all contributed to the increase.
The tax equivalent efficiency ratio rose to 65.85% in the first
quarter of 2006 compared to 65.54% in the first quarter a year ago, as
some components of operating costs increased more rapidly than
revenues. The efficiency ratio, calculated by dividing non-interest
expense (not including $120,000 in amortization of an investment in an
affordable housing bond that generates tax credits) by net interest
income adjusted for tax-free interest and non-interest income,
measures overhead costs as a percentage of total revenues. Operating
(non-interest) expense in the first quarter of 2006 increased 14.8% to
$5.8 million from $5.0 million in the first quarter of 2005, primarily
due to increases in salaries and wages. Also, as of January 1, 2006,
the Company adopted Statement of Financial Accounting Standards No.
123 (revised 2004), Share-Based Payment (SFAS 123R), using the
modified-prospective transition method, and commenced expensing the
fair value (at the grant date) of all unvested stock options
outstanding as of December 31, 2005 over the remaining vesting
periods. Consequently, first quarter 2006 salaries and benefits
expense includes $85,000 related to vesting of stock options while no
such expense was recorded in the first quarter of 2005. "We expect the
efficiency ratio to decline modestly for the remainder of 2006,"
Robinson noted. "New additions and changes to the Senior Management
team as well as staffing increases in risk management, compliance and
internal audit functions along with the requirement to expense stock
options and stock grants have permanently increased our core salaries
and benefits expense. However, we now have the staffing infrastructure
in place to grow significantly with very modest increases in full-time
equivalent employees."
Pre-tax income rose 7.7% in the first quarter to $2.54 million
from $2.36 million in the first quarter of 2005. The tax provision
decreased to 32.5% of first quarter pre-tax income from 38.1% of
pre-tax income in 2005. The lower tax rate in the first quarter of
2006 compared to the first quarter of 2005 was primarily due to a $2
million investment in affordable housing bonds near year-end 2005 that
generate income tax credits.
Return on average equity in the first quarter of 2006 improved to
13.43%, up 41 basis points from the first quarter a year ago. Return
on average assets was 1.17% in the first quarter, up 11 basis points
compared to 1.06% in the first quarter of 2005.
Balance Sheet (at March 31, 2006 compared to March 31, 2005)
Total assets increased 7.6% to $611 million compared to $568
million a year ago. Loans, net of the allowance for loan losses, grew
7.4% to $427 million, up from $398 million a year ago. Commercial and
industrial loans increased 27.9% while commercial real estate loans
grew a modest 1.8% to $259 million. Construction loans at $31 million
and consumer loans at $38 million were virtually unchanged from the
prior year.
Deposits grew 4.1% during the year to $510 million at quarter-end.
Core deposits, which exclude time certificates, increased 2.9% to $429
million, or 84% of total deposits, compared to $417 million or 85% of
total deposits a year ago. Non-interest bearing checking accounts
increased 16.7% to $162 million, representing 31.7% of total deposits.
Book value per share increased 12.6% to $12.49 from $11.09 a year ago.
Asset quality remains excellent at quarter-end with one $300,000
nonperforming loan that is fully secured by a certificate of deposit.
This represents the first nonperforming loan reported at quarter-end
in over six years. The allowance for loan and lease losses was $5.0
million, or 1.16% of loans outstanding, compared to $4.3 million or
1.07% of loans outstanding a year ago. Net charge-offs were $4,000 in
the first quarter, equaling the amount of net charge-offs in the first
quarter of 2005.
About North Bay Bancorp
North Bay Bancorp is the holding company for The Vintage Bank in
Napa County and Solano Bank, a Division of The Vintage Bank, in Solano
County. This full-service commercial bank offers a wide selection of
deposit, loan and investment services to local consumers and small
business customers. The Vintage Bank opened in 1985 and now operates
six banking offices in Napa County, Northern California's number one
tourist destination and the nation's premier wine producing region.
The main office and two branch offices are located in the City of
Napa. Vintage also has branches in the City of St. Helena, American
Canyon and the Southern industrial area of Napa County. Solano Bank, a
Division of The Vintage Bank, launched in July 2000, has offices in
the primary cities along the I-80 corridor of Solano County, including
Vacaville, Fairfield, Vallejo and Benicia and an off-site ATM facility
in downtown Fairfield. Solano County is projected to be the fastest
growing county in Northern California through year 2030, and is
attracting businesses and residents with a quality lifestyle,
affordable housing and business-friendly attitudes.
This news release contains forward-looking statements with respect
to the financial condition, results of operation and business of North
Bay Bancorp and its subsidiaries. All financial results are unaudited
and therefore subject to change. These include, but are not limited
to, statements that relate to or are dependent on estimates or
assumptions relating to the prospects of loan growth, credit quality
and certain operating efficiencies resulting from the operations of
The Vintage Bank and its Solano Bank Division. These forward-looking
statements involve certain risks and uncertainties. Factors that may
cause actual results to differ materially from those contemplated by
such forward-looking statements include, among others, the following
possibilities: (1) competitive pressure among financial services
companies increases significantly; (2) changes in the interest rate
environment on interest margins; (3) general economic conditions,
internationally, nationally or in the State of California are less
favorable than expected; (4) legislation or regulatory requirements or
changes adversely affect the business in which the combined
organization will be engaged; (5) finalization of the year-end audit
results and (6) other risks detailed in the North Bay Bancorp reports
filed with the Securities and Exchange Commission.
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NORTH BAY BANCORP
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CONSOLIDATED INCOME 3-Month Period Ended:
STATEMENT
(in $000's, unaudited) 3/31/2006 12/31/2005 3/31/2005 % Change
-------------------------------------------
Interest Income $ 8,953 $ 9,197 $ 7,676 16.6%
Interest Expense 1,579 1,444 1,052 50.1%
---------- ----------- ----------
Net Interest Income 7,374 7,753 6,624 11.3%
Provision for Loan & Lease
Losses 100 100 185 -45.9%
---------- ----------- ----------
Net Interest Income
after Loan Loss
Provision 7,274 7,653 6,439 13.0%
Service Charges 500 495 523 -4.4%
Loan Sale & Servicing
Income 7 7 7 0.0%
Bank Owned Life Insurance
Income 105 35 88 19.3%
Other Non-Interest Income 435 400 338 28.7%
Gain on Investments - - - NM
---------- ----------- ----------
Total Non-Interest
Income 1,047 937 956 9.5%
Salaries & Benefits 3,206 2,950 2,724 17.7%
Occupancy Expense 475 470 394 20.6%
Equipment Expense 479 471 547 -12.4%
Other Non-Interest
Expenses 1,619 1,861 1,370 18.2%
---------- ----------- ----------
Total Non-Interest
Expenses 5,779 5,752 5,035 14.8%
Income Before Taxes 2,542 2,838 2,360 7.7%
Provision for Income Taxes 827 1,069 898 -7.9%
---------- ----------- ----------
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Net Income $ 1,715 $ 1,769 $ 1,462 17.3%
========== =========== ==========
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TAX DATA
Tax-Exempt Muni Income $ 231 $ 201 $ 110 110.0%
Tax-Exempt BOLI Income $ 105 $ 35 $ 88 19.3%
Interest Income -- Fully
Tax Equivalent $ 9,072 $ 9,301 $ 7,733 17.3%
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NET CHARGE-OFFS
(RECOVERIES) $ 4 $ 8 $ 4 0.0%
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PER SHARE DATA 3-Month Period Ended:
(unaudited) 3/31/2006 12/31/2005 3/31/2005 % Change
-------------------------------------------
Basic Earnings per Share $0.42 $0.43 $0.36 16.7%
Diluted Earnings per Share $0.40 $0.42 $0.34 17.6%
Common Dividends Declared $0.14 $0.00 $0.14
Wtd. Avg. Shares
Outstanding 4,111,968 4,094,744 4,041,189
Wtd. Avg. Diluted Shares 4,275,593 4,262,650 4,244,287
Book Value per Share (EOP) $ 12.49 $ 12.21 $ 11.09 12.6%
Tangible Book Value per
Share $ 12.31 $ 12.03 $ 11.09 11.0%
Common Shares Outstanding
(EOP) 4,120,919 4,100,376 4,077,442
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KEY FINANCIAL RATIOS 3-Month Period Ended:
(unaudited) 3/31/2006 12/31/2005 3/31/2005
-------------------------------------------
Return on Average Equity 13.43% 14.04% 13.02%
Return on Average Assets 1.17% 1.12% 1.06%
Net Interest Margin (Tax-
Equivalent) 5.56% 5.52% 5.38%
Efficiency Ratio (Tax-
Equivalent) 65.85% 65.28% 65.54%
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AVERAGE BALANCES 3-Month Period Ended:
(in $000's, unaudited) 3/31/2006 12/31/2005 3/31/2005 % Change
-------------------------------------------
Average Assets $ 596,364 $ 624,224 $ 559,631 6.6%
Average Earning Assets $ 546,143 $ 564,787 $ 503,767 8.4%
Average Gross Loans &
Leases $ 420,328 $ 409,219 $ 387,994 8.3%
Average Deposits $ 505,601 $ 538,380 $ 480,151 5.3%
Average Equity $ 51,804 $ 49,998 $ 45,523 13.8%
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----------------------------------------------------------------------
STATEMENT OF CONDITION End of Period: Annual
(in $000's, unaudited) 3/31/2006 12/31/2005 3/31/2005 Chg
-------------------------------------------
ASSETS
Cash and Due from Banks $ 28,422 $ 28,174 $ 27,838 2.1%
Securities and Fed Funds
Sold 122,347 131,780 114,986 6.4%
Commercial & Industrial 92,876 86,094 72,592 27.9%
Commercial Secured by Real
Estate 259,430 249,773 254,740 1.8%
Real Estate 12,056 8,557 6,324 90.6%
Construction 30,977 32,593 31,206 -0.7%
Consumer 38,299 38,859 38,785 -1.3%
---------- ----------- ----------
Gross Loans & Leases 433,638 415,876 403,647 7.4%
Deferred Loan Fees (1,449) (1,448) (1,484) -2.4%
---------- ----------- ----------
Loans & Leases Net of
Deferred Fees 432,189 414,428 402,163 7.5%
Allowance for Loan & Lease
Losses (5,020) (4,924) (4,317) 16.3%
---------- ----------- ----------
Net Loans & Leases 427,169 409,504 397,846 7.4%
Loans Held-for-Sale - - 481 -100.0%
Bank Premises & Equipment 9,293 9,475 10,038 -7.4%
Other Assets 24,079 23,764 17,131 40.6%
---------- ----------- ----------
Total Assets $ 611,310 $ 602,697 $ 568,320 7.6%
========== =========== ==========
LIABILITIES & CAPITAL
Demand Deposits $ 161,582 $ 155,320 $ 138,437 16.7%
NOW / Savings Deposits 151,689 148,336 148,811 1.9%
Money Market Deposits 116,201 128,684 130,057 -10.7%
Time Certificates of
Deposit 80,419 84,053 72,277 11.3%
---------- ----------- ----------
Total Deposits 509,891 516,393 489,582 4.1%
Other Borrowings 31,800 19,000 19,000 67.4%
Subordinated Debentures 10,310 10,310 10,310 0.0%
---------- ----------- ----------
Total Deposits &
Interest Bearing
Liabilities 552,001 545,703 518,892 6.4%
Other Liabilities 7,859 6,941 4,213 86.5%
---------- ----------- ----------
Total Capital 51,450 50,053 45,215 13.8%
---------- ----------- ----------
Total Liabilities &
Capital $ 611,310 $ 602,697 $ 568,320 7.6%
========== =========== ==========
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CREDIT QUALITY DATA End of Period:
(in $000's, unaudited) 3/31/2006 12/31/2005 3/31/2005
---------------------------------
Non-Accruing Loans $ 300 $ - $ -
Over 90 Days PD and Still
Accruing 0 0 0
Other Real Estate Owned 0 0 0
---------- ----------- ----------
Total Non-Performing
Assets $ 300 $ - $ -
---------------------------------
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Non-Performing Loans to
Total Loans 0.07% 0.00% 0.00%
Non-Performing Assets to
Total Assets 0.05% 0.00% 0.00%
Allowance for Loan Losses
to Loans 1.16% 1.18% 1.07%
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OTHER PERIOD-END STATISTICS End of Period:
(unaudited) 3/31/2006 12/31/2005 3/31/2005
Shareholders' Equity/
Total Assets 8.4% 8.3% 8.0%
Loans/Deposits 85.0% 80.5% 82.4%
Non-Interest Bearing
Deposits/Total Deposits 31.7% 30.1% 28.3%
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*T