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 September 30, 2005
-------------------------------------------------
FNB BANCORP
(Exact name of registrant as specified in its charter)
California
(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 by check mark whether the registrant is a shell company (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 November 9,
2005: 2,571,692 shares.
PART I--FINANCIAL INFORMATION
Item 1. Financial Statements.
FNB BANCORP AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Dollars in thousands)
ASSETS
September 30 December 31
2005 2004
------------ ------------
Cash and due from banks $ 22,959 $ 17,084
Federal funds sold -- --
------------ ------------
Cash and cash equivalents 22,959 17,084
Securities available-for-sale 119,682 102,823
Loans, net 371,408 340,906
Bank premises, equipment, and leasehold improvements 12,041 11,614
Other real estate owned 2,600 --
Goodwill 359 --
Accrued interest receivable and other assets 24,981 17,627
------------ ------------
Total assets $ 554,030 $ 490,054
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Demand, noninterest bearing $ 122,344 $ 109,758
Demand, interest bearing 56,139 51,818
Savings and money market 172,860 160,062
Time 141,569 91,615
------------ ------------
Total deposits 492,912 413,253
Federal funds purchased 505 19,172
Accrued expenses and other liabilities 7,012 5,000
------------ ------------
Total liabilities 500,429 437,425
------------ ------------
Stockholders' equity
Common stock, no par value, authorized 10,000,000 shares;
issued and outstanding 2,567,000 shares at September 30, 2005
and 2,586,000 shares at December 31, 2004 30,645 31,365
Additional paid-in capital 16 9
Retained earnings 23,005 20,689
Accumulated other comprehensive (loss) income (65) 566
------------ ------------
Total stockholders' equity 53,601 52,629
------------ ------------
Total liabilities and stockholders' equity $ 554,030 $ 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 Nine months ended
September 30, September 30,
----------------------- -----------------------
2005 2004 2005 2004
---------- ---------- ---------- ----------
Interest income:
Interest and fees on loans $ 6,972 $ 5,320 $ 19,255 $ 15,602
Interest on securities 550 511 1,436 977
Interest on tax-exempt securities 397 326 1,056 909
Federal funds sold 114 49 256 140
---------- ---------- ---------- ----------
Total interest income 8,033 6,206 22,003 17,628
---------- ---------- ---------- ----------
Interest expense:
Interest on deposits 1,566 639 3,679 1,778
Other 1 -- 61 --
---------- ---------- ---------- ----------
Total interest expense 1,567 639 3,740 1,778
---------- ---------- ---------- ----------
Net interest income 6,466 5,567 18,263 15,850
Provision for loan losses 165 120 435 360
---------- ---------- ---------- ----------
Net interest income after provision for loan losses 6,301 5,447 17,828 15,490
---------- ---------- ---------- ----------
Noninterest income:
Service charges 590 591 1,742 1,901
Credit card fees 218 241 651 681
Other income 185 124 512 255
---------- ---------- ---------- ----------
Total noninterest income 993 956 2,905 2,837
---------- ---------- ---------- ----------
Noninterest expense:
Salaries and employee benefits 2,823 2,623 8,435 7,977
Occupancy expense 400 301 1,058 992
Equipment expense 406 425 1,189 1,265
Professional fees 195 267 729 847
Telephone, postage and supplies 271 271 695 849
Bankcard expenses 205 219 608 606
Securities write-down -- -- 66 --
Other expense 767 518 2,418 1,576
---------- ---------- ---------- ----------
Total noninterest expense 5,067 4,624 15,198 14,112
---------- ---------- ---------- ----------
Earnings before income tax expense 2,227 1,779 5,535 4,215
Income tax expense 674 437 1,684 1,007
---------- ---------- ---------- ----------
NET EARNINGS $ 1,553 $ 1,342 $ 3,851 $ 3,208
========== ========== ========== ==========
Earnings per share data:
Basic $ 0.60 $ 0.51 $ 1.50 $ 1.22
Diluted $ 0.60 $ 0.51 $ 1.47 $ 1.20
Weighted average shares outstanding:
Basic 2,567,000 2,613,000 2,570,000 2,627,000
Diluted 2,608,000 2,654,000 2,620,000 2,670,000
See accompanying notes to consolidated financial statements.
3
FNB BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands)
Three months ended Nine months ended
September 30, September 30,
------------------------ ------------------------
2005 2004 2005 2004
---------- ---------- ---------- ----------
Net earnings $ 1,553 $ 1,342 $ 3,851 $ 3,208
Unrealized gain/(loss) on AFS securities (270) 460 (631) (126)
Total comprehensive income $ 1,283 $ 1,802 $ 3,220 $ 3,082
See accompanying notes to consolidated financial statements.
FNB BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED) (Dollars
in thousands)
Nine months ended
September 30
------------------------
2005 2004
---------- ----------
Cash flow from operating activities
Net earnings $ 3,851 $ 3,208
Adjustments to reconcile net earnings to net cash provided by operating activities
Depreciation and amortization 1,012 1,365
Stock-based compensation expense 7 4
Provision for loan losses 435 360
Securities write-down 66 --
Changes in assets and liabilities:
Accrued interest receivable and other assets (5,202) (5,360)
Accrued expenses and other liabilities 2,105 2,408
---------- ----------
Net cash provided by operating activities 2,274 1,985
---------- ----------
Cash flows from investing activities
Purchase of securities available-for-sale (40,636) (73,098)
Proceeds from matured/called/securities available-for-sale 23,022 26,101
Net decrease (increase) in loans 9,705 (5,532)
Proceeds from sale of bank premises, equipment and leasehold improvements 241 121
Purchase of bank premises, equipment and leasehold improvements (1,430) (1,902)
Cash and equivalents received in bank acquisition, net of cash paid 9,602 --
---------- ----------
Net cash provided/(used) by investing activities 504 (54,310)
---------- ----------
Cash flows from financing activities
Net increase (decrease) in demand and savings deposits 847 60,148
Net increase (decrease) in time deposits 22,787 (7,197)
Net increase in federal funds purchased (18,667) --
Dividends paid (1,150) (1,202)
Repurchase of common stock (765) (1,489)
Issuance of common stock 45 273
---------- ----------
Net cash provided by financing activities 3,097 50,533
---------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 5,875 (1,792)
Cash and cash equivalents at beginning of period 17,084 30,644
---------- ----------
Cash and cash equivalents at end of period $ 22,959 $ 28,852
========== ==========
Additional cash flow information
Interest paid $ 3,335 $ 1,778
Income taxes paid $ 1,576 $ 1,226
Non-cash financing activity
Accrued dividends 385 298
See accompanying notes to consolidated financial statements.
4
FNB BANCORP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 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
on an historical cost basis. A table showing the fair values of the assets
acquired follows this note. 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, in order to pay for certain contingencies
specified in the Acquisition Agreement. On November 1 , 2005, after submission
and payment of all such claims and expenses, the escrow was terminated and the
approximately $1,100,000, being the balance of funds remaining in escrow, was
transferred to the Paying Agent designated in the Acquisition Agreement, for
distribution to the former shareholders of Sequoia National Bank in accordance
with their interests. This second and final distribution of cash to the former
shareholders of Sequoia National Bank has been paid to the shareholders at the
rate of $0.212815 per share. Effective May 2, 2005, the former banking offices
of Sequoia National Bank began operating as branch offices of First National
Bank of Northern California.
5
The following table summarizes the estimated fair values of the assets acquired
and liabilities assumed by First National Bank of Northern California at the
date of acquisition:
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 September 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.
6
(Dollars in thousands, except per share) Three months ended Nine months ended
September 30 September 30
------------------------ ------------------------
2005 2004 2005 2004
---------- ---------- ---------- ----------
Net income as reported $ 1,553 $ 1,342 $ 3,851 $ 3,208
Add: stock-based employee compensation
expense included in reported net income,
net of related tax effects 3 2 7 4
Deduct: total stock-based employee
compensation expense determined under
fair value method for all awards, net of
related tax effect (3) (3) (4) (4)
---------- ---------- ---------- ----------
Pro forma net income $ 1,553 $ 1,341 $ 3,854 $ 3,208
Earnings per share:
Basic - as reported $ 0.60 $ 0.51 $ 1.50 $ 1.22
Basic - pro forma $ 0.60 $ 0.51 $ 1.50 $ 1.22
Diluted - as reported $ 0.60 $ 0.51 $ 1.47 $ 1.20
Diluted - pro forma $ 0.60 $ 0.51 $ 1.47 $ 1.20
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 Nine months ended
September 30, September 30,
----------------------- -----------------------
2005 2004 2005 2004
---------- ---------- ---------- ----------
Net earnings $ 1,553 $ 1,342 $ 3,851 $ 3,208
Average number of shares outstanding 2,567,000 2,613,000 2,570,000 2,627,000
Effect of dilutive options 41,000 41,000 50,000 43,000
Average number of shares outstanding used
to calculate diluted earnings per share 2,608,000 2,654,000 2,620,000 2,670,000
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 September 30, 2005 was $1,283,000 compared to $1,802,000
for the three months ended September 30, 2004. Comprehensive income for the nine
months ended September 30, 2005 was $3,220,000 compared to $3,082,000 for the
nine months ended September 30, 2004.
7
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 less estimated costs
to sell, as of February, 2005, consisting of a 19,000 square foot research and
development 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
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.
8
Earnings Analysis
-----------------
Net earnings for the quarter ended September 30, 2005 were $1,553,000,
compared to net earnings of $1,342,000 for the quarter ended September 30, 2004,
an increase of $211,000, or 15.72%. Net earnings for the nine months ended
September 30, 2005 were $3,851,000 compared to $3,208,000 for the nine months
ended September 30, 2004, an increase of $643,000, or 20.04%. Earnings before
income tax expense for the quarter ended September 30, 2005 were $2,227,000,
compared to $1,779,000 for the quarter ended September 30, 2004, an increase of
$448,000, or 25.18%. Earnings before income tax were $5,535,000 for the nine
months ended September 30, 2005 compared to $4,215,000 for the nine months ended
September 30, 2004, an increase of $1,320,000, or 31.32%.
Net interest income for the quarter ended September 30, 2005 was
$6,466,000, compared to $5,567,000 for the quarter ended September 30, 2004, an
increase of $899,000, or 16.15%. Net interest income for the nine months ended
September 30, 2005 was $18,263,000 compared to $15,850,000 for the nine months
ended September 30, 2004, an increase of $2,413,000, or 15.22%. The prime
lending rate was 6.25% at the beginning of the third quarter of 2005, and
increased to 6.50% on August 9, 2005 and 6.75% on September 20, 2005, compared
to 4.25% on July 1, 2004, 4.50% on August 11, 2004, and 4.75% on September 21,
2004. The Federal Home Loan Bank of San Francisco's Weighted Monthly Cost of
Funds Index for the three months ended September 2005 (based on the three Index
Months ended August 31), averaged 2.77%, compared to 1.82% for the three months
ended September 2004.
Basic earnings per share were $0.60 for the third quarter of 2005
compared to $0.51 for the third quarter of 2004. Diluted earnings per share were
$0.60 for the third quarter of 2005 compared to $0.51 for the third quarter of
2004. Basic earnings per share were $1.50 for the nine months ended September
30, 2005 compared to $1.22 for the nine months ended September 30, 2004. Diluted
earnings per share were $1.47 for the nine months ended September 30, 2005
compared to $1.20 for the nine months ended September 30, 2004.
The following table presents an analysis of net interest income and
average earning assets and liabilities for the three-and nine-month periods
ended September 30, 2005 compared to the three- and nine-month periods ended
September 30, 2004.
9
Table 1 NET INTEREST INCOME AND AVERAGE BALANCES
------- FNB BANCORP AND SUBSIDIARY
(Dollars in thousands)
Three months ended September 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 $ 370,481 $ 6,972 7.47% $ 315,430 $ 5,320 6.69%
Taxable securities 63,597 550 3.43 67,938 511 2.98
Nontaxable securities 46,140 397 3.41 38,872 326 3.33
Federal funds sold 13,280 114 3.41 14,671 49 1.33
------------ ------------ ------------ ------------
Total interest earning assets $ 493,498 $ 8,033 6.46 $ 436,911 $ 6,206 5.64
NONINTEREST EARNING ASSETS
Cash and due from banks $ 19,690 $ 19,432
Premises and equipment 12,096 11,634
Other assets 22,931 11,365
------------ ------------
Total noninterest earning assets $ 54,717 $ 42,431
------------ ------------
TOTAL ASSETS $ 548,215 $ 479,342
============ ============
INTEREST BEARING LIABILITIES
Deposits:
Demand, interest bearing $ 56,004 ($ 31) (0.22) $ 57,712 ($ 28) (0.19)
Money market 114,481 (520) (1.80) 104,579 (237) (0.90)
Savings 58,169 (45) (0.31) 61,092 (41) (0.27)
Time deposits 140,072 (970) (2.75) 84,619 (333) (1.56)
Federal funds purchased and other
borrowings 89 (1) (4.46) -- -- --
------------ ------------ ------------ ------------
Total interest bearing
liabilities $ 368,815 ($ 1,567) (1.69) $ 308,002 ($ 639) (0.82)
------------ ------------ ------------ ------------
NONINTEREST BEARING LIABILITIES
Demand deposits 119,219 113,259
Other liabilities 6,601 5,765
------------ ------------
Total noninterest bearing
liabilities $ 125,820 $ 119,024
------------ ------------
TOTAL LIABILITIES $ 494,635 $ 427,026
Stockholders' equity $ 53,580 $ 52,316
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 548,215 $ 479,342
============ ============
NET INTEREST INCOME AND MARGIN
ON TOTAL EARNING ASSETS $ 6,466 5.20% $ 5,567 5.06%
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)
Nine months ended September 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 $ 357,443 $ 19,255 7.20% $ 315,293 $ 15,602 6.62%
Taxable securities 59,203 1,436 3.24 41,488 977 3.15
Nontaxable securities 41,925 1,056 3.37 34,750 909 3.50
Federal funds sold 11,331 256 3.03 17,856 140 1.05
------------ ------------ ------------ ------------
Total interest earning assets $ 469,902 $ 22,003 6.26 $ 409,387 $ 17,628 5.76
NONINTEREST EARNING ASSETS
Cash and due from banks $ 19,476 $ 18,969
Premises and equipment 11,846 13,863
Other assets 19,408 10,093
------------ ------------
Total noninterest earning assets $ 50,730 $ 42,925
------------ ------------
TOTAL ASSETS $ 520,632 $ 452,312
============ ============
INTEREST BEARING LIABILITIES
Deposits:
Demand, interest bearing $ 56,620 ($ 109) (0.26) $ 57,347 ($ 88) (0.21)
Money market 108,686 (1,286) (1.58) 84,103 (533) (0.85)
Savings 59,217 (128) (0.29) 59,822 (119) (0.27)
Time deposits 118,964 (2,156) (2.42) 88,515 (1,038) (1.57)
Federal funds purchased and other
Borrowings 3,149 (61) (2.59) -- -- --
------------ ------------ ------------ ------------
Total interest bearing
liabilities $ 346,636 ($ 3,740) (1.44) $ 289,787 ($ 1,778) (0.82)
------------ ------------ ------------ ------------
NONINTEREST BEARING LIABILITIES
Demand deposits 115,065 104,618
Other liabilities 6,072 5,666
------------ ------------
Total noninterest bearing
liabilities $ 121,137 $ 110,284
------------ ------------
TOTAL LIABILITIES $ 467,773 $ 400,071
Stockholders' equity $ 52,859 $ 52,241
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 520,632 $ 452,312
============ ============
NET INTEREST INCOME AND MARGIN
ON TOTAL EARNING ASSETS $ 18,263 5.20% $ 15,850 5.18%
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 nine months ended September 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 September 30, 2005,
average loans outstanding represented 75.1% of average earning assets. For the
11
quarter ended September 30, 2004, they represented 72.2% of average earning
assets. For the nine months ended September 30, 2005 and 2004, average loans
outstanding represented 76.1% and 77.0%, respectively, of average earning
assets.
The yield on total interest earning assets for the quarter ended
September 30, 2005 compared to the quarter ended September 30, 2004 increased
from 5.64% to 6.46%, or 82 basis points. Contributing to this was a larger
volume invested in loans, which increased by $55,051,000 or 17.45% quarter to
quarter, with a yield increase of 78 basis points, or 11.66%. Interest income on
total interest earning assets increased $1,827,000 or 29.44%.
For the three months ended September 30, 2005 compared to the three
months ended September 30, 2004, the cost on total interest bearing liabilities
increased from 0.82% to 1.69%, an increase of 87 basis points. The most
expensive as well as principal source of interest bearing liabilities comes from
time deposits. Their average cost increased from 1.56% to 2.75%, and the expense
on these deposits increased $637,000 for the three months ended September 30,
2005 compared to 2004. Their average volume increased by $55,453,000, or 65.53%.
The other significant increase was in money market deposits. Comparing the two
quarters ended September 30, money market deposit average balances increased
$9,902,000 or 9.47%, and their cost increased 90 basis points, or 100.00%, while
the expense increased $283,000 or 119.41%.
For the nine months ended September 30, 2005 compared to the nine
months ended September 30, 2004, interest income on interest earning assets
increased $4,375,000 or 24.82%, and average earning assets increased
$60,515,000, or 14.78%. Average loans increased by $42,150,000, or 13.37%.
Interest on loans increased $3,653,000 or 23.41%. Their yield increased 58 basis
points, or 8.76%. The cost on total interest bearing liabilities increased from
0.82% to 1.44%. Time deposit averages increased $30,449,000 or 34.40%. Their
cost increased 85 basis points, or 54.14%. Money market deposit balances
increased $24,583,000, or 29.23%, and their cost increased 73 basis points, or
85.88%.
For the three and nine month periods ended September 30, 2005 and
September 30, 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), and b)
changes in rate (changes in rate times the prior year's 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.
12
Table 3 FNB BANCORP AND SUBSIDIARY
------- RATE/VOLUME VARIANCE ANALYSIS
Three Months Ended September 30,
(Dollars in thousands) 2005 Compared to 2004
Interest Variance
Income/Expense Attributable To
Variance Rate Volume
------------ ------------ ------------
INTEREST EARNING ASSETS
Loans $ 1,652 $ 616 $ 1,036
Taxable securities 39 77 (38)
Nontaxable securities 71 8 63
Federal funds sold 65 70 (5)
------------ ------------ ------------
Total $ 1,827 $ 771 $ 1,056
------------ ------------ ------------
INTEREST BEARING LIABILITIES
Demand deposits $ 3 $ 4 ($ 1)
Money market 283 238 45
Savings deposits 4 6 (2)
Time deposits 637 419 218
Federal funds and other borrowings 1 0 1
------------ ------------ ------------
Total $ 928 $ 667 $ 261
------------ ------------ ------------
NET INTEREST INCOME $ 899 $ 104 $ 795
============ ============ ============
Table 4 FNB BANCORP AND SUBSIDIARY
------- RATE/VOLUME VARIANCE ANALYSIS
Nine Months Ended September 30,
(Dollars in thousands) 2005 Compared To 2004
Interest Variance
Income/Expense Attributable To
Variance Rate Volume
------------ ------------ ------------
INTEREST EARNING ASSETS
Loans $ 3,653 $ 1,567 $ 2,086
Taxable securities 459 29 430
Nontaxable securities 147 (34) 181
Federal funds sold 116 167 (51)
------------ ------------ ------------
Total $ 4,375 $ 1,729 $ 2,646
------------ ------------ ------------
INTEREST BEARING LIABILITIES
Demand deposits $ 21 $ 22 ($ 1)
Money market 753 462 291
Savings deposits 9 10 (1)
Time deposits 1,118 761 357
Federal funds and other borrowings 61 0 61
------------ ------------ ------------
Total $ 1,962 $ 1,255 $ 707
------------ ------------ ------------
NET INTEREST INCOME $ 2,413 $ 474 $ 1,939
============ ============ ============
13
Noninterest income
------------------
The following table shows the principal components of noninterest
income for the periods indicated.
Table 5 NONINTEREST INCOME
Three months ended Nine months ended
September 30, September 30,
----------------------- -----------------------
(Dollars in thousands) 2005 2004 2005 2004
---------- ---------- ---------- ----------
Service charges $ 590 $ 591 $ 1,742 $ 1,901
Credit card fees 218 241 651 681
Other income 185 124 512 255
---------- ---------- ---------- ----------
Total noninterest income $ 993 $ 956 $ 2,905 $ 2,837
========== ========== ========== ==========
Noninterest income consists mainly of service charges on deposits,
credit card fees, and several other miscellaneous types of income. For the
quarter ended September 30, 2005 compared to September 30, 2004, total
noninterest income increased by $37,000 or 3.87%. Service charges decreased by
$1,000, credit card fees decreased $23,000, offset by an increase in other
income, which increased $61,000. For the nine months ended September 30, 2005
and September 30, 2004, total noninterest income increased by $68,000, or 2.40%.
Service charges decreased $159,000, or 8.36%, credit card fees decreased $30,000
but other income increased $257,000. The increase included $54,000 in letter of
credit fees, $33,000 in tax free earnings on officers' life insurance, $37,000
in earnings from travel express checks.
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 Nine months ended
September 30, September 30,
----------------------- -----------------------
2005 2004 2005 2004
---------- ---------- ---------- ----------
Salaries and employee benefits $ 2,823 $ 2,623 $ 8,435 $ 7,977
Occupancy expense 400 301 1,058 992
Equipment expense 406 425 1,189 1,265
Professional fees 195 267 729 847
Telephone, postage and supplies 271 271 695 849
Bankcard expense 205 219 608 606
Other expense 767 518 2,484 1,576
---------- ---------- ---------- ----------
Total noninterest expense $ 5,067 $ 4,624 $ 15,198 $ 14,112
========== ========== ========== ==========
Noninterest expense consists mainly of salaries and employee benefits.
For the three months ended September 30, 2005 compared to three months ended
September 30, 2004, it represented 55.7% and 56.7% of total noninterest
expenses. For the nine months ended September 30, 2005 and 2004, it was 55.5%
and 56.5% respectively of total noninterest expense. The remaining categories
are less significant. Other expense increased $249,000 in the quarter ended
14
September 30, 2005 over the quarter ended September 30, 2004. The principal
increase was $70,000 in marketing and promotion, and $41,000 in acquisition
related expense, in connection with Sequoia National Bank. For the nine months
ended September 30, 2005 and 2004, the increase in other expense was $908,000.
The principal increase was $349,000 in acquisition related expense, followed by
$173,000 in marketing and promotion, and a $75,000 securities write-down in
equity securities , and eighteen other smaller expense categories, each less
than $70,000.
Income Taxes
------------
The effective tax rate for the quarter ended September 30, 2005 was
30.3% compared to 24.6% for the quarter ended September 30, 2004. The effective
tax rate for the nine months ended September 30, 2005 and September 30, 2004,
respectively was 30.4% and 23.9%. 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.
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 September 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 September 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.
15
Table 7 RATE SENSITIVE ASSETS/LIABILITIES
------- As of September 30, 2005
(Dollars in thousands)
Over
Three Three To Over One Over Not
Months Twelve Through Five Rate-
Or Less Months Five Years Years Sensitive Total
---------- ---------- ---------- ---------- ---------- ----------
Interest earning assets:
Securities available for sale $ 5,994 $ 22,895 $ 61,236 $ 29,557 $ -- $ 119,682
Loans 290,252 28,043 20,771 36,261 487 375,814
---------- ---------- ---------- ---------- ---------- ----------
Total interest earning assets 296,246 50,938 82,007 65,818 487 495,496
Cash and due from banks -- -- -- -- 22,959 22,959
Allowance for loan losses -- -- -- -- (4,406) (4,406)
Other assets -- -- -- -- 39,981 39,981
---------- ---------- ---------- ---------- ---------- ----------
Total assets $ 296,246 $ 50,938 $ 82,007 $ 65,818 $ 59,021 $ 554,030
========== ========== ========== ========== ========== ==========
Interest bearing liabilities:
Demand, interest bearing $ 56,139 $ -- $ -- $ -- $ -- $ 56,139
Savings and money market 172,860 -- -- -- -- 172,860
Time deposits 52,310 65,786 23,372 101 -- 141,569
Federal funds purchased 505 -- -- -- -- 505
---------- ---------- ---------- ---------- ---------- ----------
Total interest bearing liabilities 281,814 65,786 23,372 101 -- 371,073
---------- ---------- ---------- ---------- ---------- ----------
Noninterest demand deposits -- -- -- -- 122,344 122,344
Other liabilities -- -- -- -- 7,012 7,012
Stockholders' equity -- -- -- -- 53,601 53,601
---------- ---------- ---------- ---------- ---------- ----------
Total liabilities and stockholders' $ 281,814 $ 65,786 $ 23,372 $ 101 $ 182,957 $ 554,030
========== ========== ========== ========== ========== ==========
Interest rate sensitivity gap $ 14,432 ($ 14,848) $ 58,635 $ 65,717 ($ 123,936) $ --
========== ========== ========== ========== ========== ==========
Cumulative interest rate sensitivity gap $ 14,432 ($ 416) $ 58,219 $ 123,936 $ -- $ --
Cumulative interest rate sensitivity gap
ratio 4.87% (0.12%) 13.56% 25.04% -- --
Financial Condition
-------------------
Assets. Total assets increased to $554,030,000 at September 30, 2005
from $490,054,000 at December 31, 2004, an increase of $63,976,000. Most of this
increase was in net loans, which increased $30,502,000, and securities available
for sale, which increased $16,859,000, the remaining categories increased by
$16,489,000. Most of the increase in total assets was funded by an increase in
deposits of $79,659,000, minus a decline of $18,667,000 in federal funds
purchased.
Loans. Gross loans at September 30, 2005 were $376,756,000, an increase
of $30,888,000 or 8.93% over December 31, 2004. Gross real estate loans
increased $37,187,000, representing most of the increase, while the remaining
categories decreased $6,299,000 net. The portfolio breakdown was as follows.
Table 8 LOAN PORTFOLIO
-------
September 30, December 31,
(In thousands) 2005 Percent 2004 Percent
------------ --------- ------------ ---------
Real Estate $ 292,620 77.7% $ 255,433 73.9%
Construction 27,474 7.3 28,997 8.4
Commercial 53,596 14.2 58,849 17.0
Consumer 3,066 0.8 2,589 0.7
------------ --------- ------------ ---------
Gross loans 376,756 100.0% 345,868 100.0%
========= =========
Net deferred loan fees (942) (1,628)
Allowance for loan losses (4,406) (3,334)
------------ ------------
Net loans $ 371,408 $ 340,906
============ ============
16
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 nine
months ended September 30, 2005 and the nine months ended September 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
-------
Nine months ended Nine months ended
(In thousands) September 30, 2005 September 30, 2004
------------------ ------------------
Balance, beginning of period $ 3,334 $ 3,284
Provision for loan losses 435 360
Recoveries 23 1
Amounts charged off (86) (417)
Allowance acquired in business combination 700 --
------------------ ------------------
Balance, end of period $ 4,406 $ 3,228
================== ==================
In management's judgment, the allowance was adequate to absorb losses
currently inherent in the loan portfolio at September 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.
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 September 30, 2005, there were $487,000 in non-accrual
loans, compared to $2,798,000 at December 31, 2004. There was $2,600,000 in
Other Real Estate Owned at September 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 September 30, 2005 were $492,912,000
compared to $413,253,000 on December 31, 2004. Of these totals,
noninterest-bearing demand deposits were $122,344,000 or 24.8% of the total on
September 30, 2005 and $109,758,000 or 26.6% on December 31, 2004. Time deposits
were $141,569,000 on September 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 September 30, 2005:
17
Table 10
--------
(Dollars in thousands) Under $100,000
Maturities: $100,000 or more Total
---------- ---------- ----------
Three months or less $ 18,382 $ 33,928 $ 52,310
Over three to six months 14,120 18,759 32,879
Over six through twelve months 15,796 17,111 32,907
Over twelve months 15,228 8,245 23,473
---------- ---------- ----------
Total $ 63,526 $ 78,043 $ 141,569
---------- ---------- ----------
The following table shows the risk-based capital ratios and leverage
ratios at September 30, 2005 and December 31, 2004 for the Bank:
Table 11
-------- Minimum "Well
September 30, December 31, Capitalized"
Risk-Based Capital Ratios 2005 2004 Requirements
Tier 1 Capital 10.59% 12.69% > 6.00%
-
Total Capital 11.52% 13.50% > 10.00%
-
Leverage Ratios 9.32% 10.71% > 5.00%
-
Liquidity. Liquidity is a measure of the Company's ability to convert
assets into cash with minimal loss. As of September 30, 2005, Liquid Assets were
$142,641,000, or 25.8% 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 September 30, 2005, there were $505,000 in federal funds
purchased.
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 September 30, 2005 net loans were at 75.3% 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
future financial condition that are based on current information and that are
18
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 September
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 $94,556,000 and $83,078,000 at September 30, 2005 and
December 31, 2004, respectively. As a percentage of net loans, these off-balance
sheet items represent 25.5% and 24.4% respectively.
19
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
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 September 30, 2005, the prime lending rate started at
6.25%, and increased to 6.50% on August 9, 2005 and 6.75% on September 20, 2005.
For the quarter ended September 30, 2004, the prime lending rate was 4.25% on
July 1, 2004, 4.50% on August 11, 2004 and 4.75% on September 21, 2004.
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 September 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.
20
(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 September 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.
PART II--OTHER INFORMATION
Item 1. Legal Procedures
There are currently no material legal procedures in effect, other than
those in the normal course of business.
Item 6. Exhibits
Exhibits
31: Rule 13a-14(a)/15d-14(a) Certifications
32: Section 1350 Certifications
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:
November 14, 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