-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ri9sb7NGlPTAYra/DNgVNZ+QCdi7jI4Cj3BbkylFxVbre2b66I8d2JfrDOCoTi1S VK6xoAb9Y4wbuwmEiexjGw== 0000950005-03-001115.txt : 20031112 0000950005-03-001115.hdr.sgml : 20031111 20031112150047 ACCESSION NUMBER: 0000950005-03-001115 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20030930 FILED AS OF DATE: 20031112 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORTH BAY BANCORP/CA CENTRAL INDEX KEY: 0001102595 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 680434802 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-31080 FILM NUMBER: 03993248 BUSINESS ADDRESS: STREET 1: 1500 SOSCOL AVE CITY: NAPA STATE: CA ZIP: 94559 BUSINESS PHONE: 7072578500 MAIL ADDRESS: STREET 1: 1500 SOSCOL AVE CITY: NAPA STATE: CA ZIP: 94559 10-Q 1 p17878_10q.txt QUARTERLY REPORT SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR the quarter period ended September 30, 2003 Commission File No. 0-31080 NORTH BAY BANCORP ----------------- (Exact name of registrant as specified in its charter) California 68-0434802 ---------- ---------- (State or Jurisdiction of incorporation) (I.R.S. Employer Identification No.) 1190 Airport Road, Suite 101, Napa, California 94558 ---------------------------------------------------- (Address of principal executive office including Zip Code) Registrant's telephone number, including area code: (707) 257-8585 Securities registered pursuant to Section 12(b) of the Act: NONE Securities registered pursuant to Section 12(g) of the Act: Common Stock, No Par Value -------------------------- Preferred Share Purchase Rights ------------------------------- 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 Act). Yes No X --- --- APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of the North Bay Bancorp's Common Stock outstanding as of November 10, 2003: 2,285,646 Part 1. FINANCIAL INFORMATION FORWARD LOOKING STATEMENTS In addition to the historical information, this Quarterly Report contains certain forward-looking information within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 321E of the Securities Exchange Act of 1934, as amended, and are subject to the "Safe Harbor" created by those Sections. The reader of this Quarterly Report should understand that all such forward-looking statements are subject to various uncertainties and risks that could affect their outcome. The Company's actual results could differ materially from those suggested by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, (i) variances in the actual versus projected growth in assets, return on assets, loan losses, expenses, rates charged on loans and earned on securities investments, rates paid on deposits, and fee and other noninterest income earned; (ii) competitive pressures among depository and other financial institutions may increase significantly and have an effect on pricing, spending, third-party relationships and revenues; (iii) enactment of adverse government regulations; (iv) adverse conditions and volatility, as a result of recent economic uncertainty created by the United States' war on terrorism, the war in Iraq, in the stock market, the public debt market and other capital markets and the impact of such conditions of the Company; (v) continued changes in the interest rate environment may reduce interest margins and adversely impact net interest income; (vi) as well as other factors. This entire Quarterly Report should be read to put such forward-looking statements in context and to gain a more complete understanding of the uncertainties and risks involved in the Company's business. Moreover, wherever phrases such as or similar to "In Management's opinion", or "Management considers" are used, such statements are as of and based upon the knowledge of Management at the time made and are subject to change by the passage of time and/or subsequent events, and accordingly such statements are subject to the same risks and uncertainties noted above with respect to forward-looking statements. FINANCIAL INFORMATION The information for the three months and nine months ended September 30, 2003 and September 30, 2002 is unaudited, but in the opinion of management reflects all adjustments which are necessary to present fairly the financial condition of North Bay Bancorp (Company) at September 30, 2003 and the results of operations and cash flows for the three and nine months then ended. Results for interim periods should not be considered as indicative of results for a full year. 2 Item 1. FINANCIAL STATEMENTS
North Bay Bancorp Consolidated Balance Sheets Unaudited (In 000's except share data) September 30, September 30, December 31, Assets 2003 2002 2002 -------- -------- -------- Cash and due from banks $ 34,777 $ 20,091 $ 23,785 Federal funds sold 21,750 25,154 28,525 Time deposits with other financial institutions 100 100 100 -------- -------- -------- Total cash and cash equivalents 56,627 45,345 52,410 Investment Securities: Held-to-maturity 1,250 1,272 1,272 Available-for-sale 83,177 106,280 104,473 Equity securities 1,349 1,352 1,349 -------- -------- -------- Total investment securities 85,776 108,904 107,094 Loans, net of allowance for loan losses of $3,421 in September, 2003 $3,143 in September, 2002 and $3,290 in December, 2002 274,491 219,245 234,337 Loans held-for-sale 10,786 0 0 Bank premises and equipment, net 11,137 10,691 10,800 Accrued interest receivable and other assets 12,499 11,743 11,817 -------- -------- -------- Total assets $451,316 $395,928 $416,458 ======== ======== ======== Liabilities and Shareholders' Equity Deposits: Non-interest bearing $104,594 $ 94,833 $104,142 Interest bearing 294,827 253,266 263,661 -------- -------- -------- Total deposits 399,421 348,099 367,803 Floating rate subordinated debenture (trust preferred securities) 10,000 10,000 10,000 Accrued interest payable and other liabilities 3,836 3,377 3,312 -------- -------- -------- Total liabilities 413,257 361,476 371,115 Shareholders' equity: Preferred stock - no par value: Authorized, 500,000 shares; Issued and outstanding - none Common stock - no par value: Authorized, 10,000,000 shares; Issued and outstanding - 2,285,646 shares in September 2003, 2,123,687 shares in September, 2002, and 2,130,288 in December, 2002 29,209 25,269 25,387 Retained earnings 8,324 7,487 8,612 Accumulated other comprehensive income 526 1,696 1,344 -------- -------- -------- Total shareholders' equity 38,059 34,452 35,343 Total liabilities and shareholders' equity $451,316 $395,928 $416,458 ======== ======== ========
The accompanying notes are an integral part of these statements 3 North Bay Bancorp Consolidated Income Statements (Unaudited) (In 000's except share data)
Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2003 2002 2003 2002 ------- ------- ------- ------- Interest Income Loans (including fees) $ 4,853 $ 4,290 $13,780 $12,187 Federal funds sold 38 135 157 291 Investment securities - taxable 482 906 1,999 2,561 Investment securities - tax exempt 181 164 473 502 ------- ------- ------- ------- Total interest income 5,554 5,495 16,409 15,541 Interest Expense Deposits 550 859 1,907 2,511 Short term borrowings 2 0 10 0 Long term debt 129 153 411 192 ------- ------- ------- ------- Total interest expense 681 1,012 2,328 2,703 Net interest income 4,873 4,483 14,081 12,838 Provision for loan losses 45 144 135 432 ------- ------- ------- ------- Net interest income after provision for loan losses 4,828 4,339 13,946 12,406 Non interest income 848 731 2,285 2,009 Gains on securities transactions, net 207 0 637 66 ------- ------- ------- ------- Total non interest income 1,055 731 2,922 2,075 Non interest expenses Salaries and employee benefits 2,338 1,978 6,896 5,858 Occupancy 356 228 931 680 Equipment 485 450 1,230 1,392 Other 1,088 1,041 3,536 2,589 ------- ------- ------- ------- Total non interest expense 4,267 3,697 12,593 10,519 ------- ------- ------- ------- Income before provision for income taxes 1,616 1,373 4,275 3,962 Provision for income taxes 452 446 1,204 1,380 ------- ------- ------- ------- Net income $ 1,164 $ 927 $ 3,071 $ 2,582 ======= ======= ======= ======= Basic earnings per common share: $ 0.51 $ 0.42 $ 1.36 $ 1.18 ======= ======= ======= ======= Diluted earnings per common share: $ 0.50 $ 0.41 $ 1.32 $ 1.15 ======= ======= ======= ======= Dividends Paid: $ 0.00 $ 0.00 $ 0.20 $ 0.20 ======= ======= ======= =======
The accompanying notes are an integral part of these statements 4 North Bay Bancorp Consolidated Statement of Change in Shareholders' Equity For the Nine Months Ended September 30, 2003 (Unaudited) (In 000's except share data)
Accumulated Other Total Common Shares Common Retained Comprehensive Shareholders' Comprehensive Outstanding Stock Earnings Income Equity Income ----------- ----------- ----------- ----------- ----------- ----------- BALANCE, DECEMBER 31, 2002 2,130,288 $ 25,387 $ 8,612 $ 1,344 $ 35,343 Stock dividend 106,295 2,918 (2,932) (14) Cash dividend (427) (427) Comprehensive income: Net income 3,071 3,071 $ 3,071 Other comprehensive loss, net oftax: Change in net unrealized losses on available-for-sale securities, net of tax of $375 (818) (818) (818) ----------- Comprehensive income $ 2,253 =========== Stock options exercised, net of tax of $260 49,063 904 904 --------- ----------- ----------- BALANCE, SEPTEMBER 30, 2003 2,285,646 $ 29,209 $ 8,324 $ 526 $ 38,059 ========= =========== =========== =========== ===========
The accompanying notes are an integral part of these statements 5 North Bay Bancorp Consolidated Statement of Cash Flows Unaudited (In 000's)
Nine Months Ended September 30, 2003 2002 --------- --------- Cash Flows From Operating Activities: Net income $ 3,071 $ 2,582 Adjustment to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,171 1,076 Provision for loan losses 135 432 Amortization of deferred loan fees (498) (374) Proceeds from sale of loans held-for-sale 269,120 0 Purchase of loans held-for-sale (279,906) 0 Premium amortization (discount accretion), net 919 672 Gain on securities transactions (637) (66) Loss on sale of capital assets 0 1 Changes in: Interest receivable and other assets (101) (2,157) Interest payable and other liabilities 784 838 --------- --------- Net cash (used) provided by operating activities (5,942) 3,004 --------- --------- Cash Flows From Investing Activities: Investment securities held-to-maturity: Proceeds from maturities and principal payments 22 42 Investment securities available-for-sale: Proceeds from maturities and principal payments 28,558 33,577 Proceeds from sale of securities 34,626 5,112 Purchases (43,569) (60,056) Equity securities: Proceeds from sale of securities 50 10 Purchases (50) (120) Net increase in loans (39,791) (35,755) Sale of capital assets 0 1 Capital expenditures (1,508) (2,440) --------- --------- Net cash used in investing activities (21,662) (59,629) --------- --------- Cash Flows From Financing Activities: Net increase in deposits 31,618 55,658 Repayment of long-term debt 0 (1,846) Stock options exercised 644 1,153 Proceeds from issuance of Trust Preferred Securities 0 10,000 Dividends paid (441) (406) --------- --------- Net cash provided by financing activities 31,821 64,559 --------- --------- Net increase in cash and cash equivalents 4,217 7,934 Cash and cash equivalents at beginning of year 52,410 37,411 --------- --------- Cash and cash equivalents at end of period $ 56,627 $ 45,345 ========= ========= Supplemental Disclosures of Cash Flow Information: Interest paid $ 2,394 $ 2,849 Taxes paid $ 845 $ 1,740
The accompanying notes are an integral part of these statements 6 NORTH BAY BANCORP Notes to the Consolidated Financial Statements (Unaudited) September 30, 2003 NOTE 1 - Basis of Presentation The accompanying consolidated financial statements, which include the accounts of North Bay Bancorp and its subsidiaries together the "Company", have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission and in Management's opinion, include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of results for such interim periods. The subsidiaries consist of two community banks, The Vintage Bank, established in 1985, and Solano Bank, which opened in 2000, North Bay Statutory Trust 1 which was established in September 2002 and Vintage Capital Trust, a subsidiary of The Vintage Bank, which was established in February 2003. All significant intercompany transactions and balances have been eliminated. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to SEC rules or regulations; however, the Company believes that the disclosures made are adequate to make the information presented not misleading. The interim results for the nine months ended September 30, 2003 and 2002, are not necessarily indicative of results for the full year. It is suggested that these financial statements be read in conjunction with the financial statements and the notes included in the Company's Annual Report for the year ended December 31, 2002. NOTE 2 - Commitments The Company has outstanding standby Letters of Credit of approximately $927,000, undisbursed real estate and construction loans of approximately $21,310,000, and undisbursed commercial and consumer lines of credit of approximately $70,610,000, as of September 30, 2003. The Company had outstanding standby Letters of Credit of approximately $474,000, undisbursed real estate and construction loans of approximately $16,388,000, and undisbursed commercial and consumer lines of credit of approximately $59,628,000, as of September 30, 2002. NOTE 3 - Earnings Per Common Share The Company declared a 5% stock dividend on January 27, 2003. As a result of the stock dividend the number of common shares outstanding and earnings per share data was adjusted retroactively for all periods presented. The following table (in thousands except share data) reconciles the numerator and denominator of the Basic and Diluted earnings per share computations: Weighted Average Per-Share Net Income Shares Amount ---------- ------ ------ (Dollars in 000's except share data) For the three months ended September 30, 2003 --------------------------------------------- Basic earnings per share $1,164 2,284,859 $0.51 Dilutive effect of stock options 41,211 Diluted earnings per share 2,326,070 $0.50 For the three months ended September 30, 2002 --------------------------------------------- Basic earnings per share $927 2,222,547 $0.42 Dilutive effect of stock options 49,051 Diluted earnings per share 2,271,598 $0.41 For the nine months ended September 30, 2003 --------------------------------------------- Basic earnings per share $3,071 2,262,936 $1.36 Dilutive effect of stock options 54,682 Diluted earnings per share 2,317,618 $1.32 For the nine months ended September 30, 2002 --------------------------------------------- Basic earnings per share $2,582 2,190,818 $1.18 Dilutive effect of stock options 57,401 Diluted earnings per share 2,248,219 $1.15 7 NOTE 4- Stock-Based Compensation The Company uses the intrinsic value method to account for its stock option plans (in accordance with the provisions of Accounting Principles Board Opinion No. 25 and related interpretations). Under this method, compensation expense is recognized for awards of options to purchase shares of common stock to employees under compensatory plans only if the fair market value of the stock at the option grant date (or other measurement date, if later) is greater than the amount the employee must pay to acquire the stock. Statement of Financial Accounting Standards No. 123 (SFAS 123), "Accounting for Stock-Based Compensation", permits companies to continue using the intrinsic-value method to account for stock option plans or adopt a fair value based method. The fair value based method results in recognizing as expense over the vesting period the fair value of all stock-based awards on the date of grant. The Company has elected to continue to use the intrinsic value method and the pro forma disclosures required by SFAS 123. Using the fair value method the Company's net income and earnings per share amounts would have been reduced to the pro forma amounts as indicated below: (In 000's except share data) For the three months ended September 30, 2003 2002 --------- ------- Net income as reported $ 1,164 $ 927 Total stock-based employee compensation expense determined under the fair value based method for all awards, net of related tax effects 75 59 --------- ------- Net income pro forma $ 1,089 $ 868 Earnings per share: As reported: Basic $ .51 $ .42 Diluted $ .50 $ .41 Pro forma: Basic $ .48 $ .39 Diluted $ .47 $ .38 (In 000's except share data) For the nine months ended September 30, 2003 2002 --------- ------- Net income as reported $ 3,071 $ 2,582 Total stock-based employee compensation expense determined under the fair value based method for all awards, net of related tax effects 197 177 --------- ------- Net income pro forma $ 2,874 $ 2,405 Earnings per share: As reported: Basic $ 1.36 $ 1.18 Diluted $ 1.32 $ 1.15 Pro forma: Basic $ 1.27 $ 1.10 Diluted $ 1.24 $ 1.07 NOTE 5 - Impact of Recently Issued Accounting Standards FASB Interpretation No. 46, Consolidation of Variable Interest Entities. This Interpretation addresses consolidation by business enterprises of variable interest entities, which have one or both of the following characteristics: 1) the equity investment at risk is not sufficient to permit the entity to finance its activities without additional financial support from other parties, or 2) the equity investors lack one or more of the following essential characteristics of a controlling financial interest: a) the direct or indirect ability to make decisions about the entity's activities through voting or similar rights, b) the obligation to absorb the expected losses of the entity if they occur, or c) the right to receive the expected residual returns of the entity if they occur. The Interpretation requires existing variable interest entities to be consolidated if those entities do not effectively disburse risks among parties involved. The Company does not expect adoption to have a material impact on the financial position or operations of the Company. 8 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FORWARD LOOKING STATEMENTS In addition to the historical information this Quarterly Report contains certain forward-looking statements. The reader of this Quarterly Report should understand that all such forward-looking statements are subject to various uncertainties and risks that could affect their outcome. The Company's actual results could differ materially from those suggested by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, variances in the actual versus projected growth in assets, return on assets, loan losses, expenses, rates charged on loans and earned on securities investments, rates paid on deposits, competition effects, fee and other noninterest income earned, the economic uncertainty created by the United States' war on terrorism and the war in Iraq, as well as other factors. This entire Quarterly Report should be read to put such forward-looking statements in context and to gain a more complete understanding of the uncertainties and risks involved in the Company's business. Moreover, wherever phrases such as or similar to "In Management's opinion" "Management considers" are used, such statements are as of and based upon the knowledge of Management at the time made and are subject to change by the passage of time and/or subsequent events, and accordingly such statements are subject to the same risks and uncertainties noted above with respect to forward-looking statements. CRITICAL ACCOUNTING POLICIES In preparing its consolidated financial statements, the Company is required to make judgments and estimates that may have a significant impact upon its financial results. Certain accounting policies require the Company to make significant estimates and assumptions, which have a material impact on the carrying value of certain assets and liabilities, and are considered critical accounting policies. The estimates and assumptions used are based on the historical experiences and other factors, which are believed to be reasonable under the circumstances. Actual results could differ significantly from these estimates and assumptions , which could have a material impact on the carrying value of assets and liabilities at the balance sheet dates and results of operations for the reporting periods. The Company's determination of the adequacy of its allowance for loan losses is particularly susceptible to management's judgment and estimates. For further information, see Provision and Allowance for Loan Losses on page 16. 9 OVERVIEW Net income was $1,164,000 or $.50 per diluted share for the three months ended September 30, 2003, compared with $927,000 or $.41 per diluted share for the three months ended September 30, 2002, an increase of 26%. Net income was $3,071000 or $1.32 per diluted share for the nine months ended September 30, 2003, compared with $2,582,000 or $1.15 per diluted share for the nine months ended September 30, 2002, an increase of 19%. Total assets were $451,316,000 as of September 30, 2003; equating to a 14% growth in assets during the twelve months ended September 30, 2003. SUMMARY OF EARNINGS NET INTEREST INCOME The following table provides a summary of the components of interest income, interest expense and net interest margins for the three months ended September 30, 2003 and September 30, 2002:
(In 000's) 2003 2002 ------------------------------------- ------------------------------------- Average Income/ Average Average Income/ Average Balance Expense Yield/Rate Balance Expense Yield/Rate ------- ------- ---------- ------- ------- ---------- Loans(1)(2) $ 294,276 $ 4,853 6.06% $ 217,261 $ 4,290 7.90% Investment securities: Taxable 70,601 481 2.73% 80,747 905 4.48% Non-taxable(3) 20,596 254 4.93% 13,852 196 5.66% --------- --------- --------- --------- TOTAL LOANS AND INVESTMENT SECURITIES 385,473 5,588 5.80% 311,860 5,391 6.91% Due from banks, time 100 1 4.00% 100 1 4.00% Federal funds sold 11,987 38 1.27% 34,834 135 1.55% --------- --------- --------- --------- TOTAL EARNING ASSETS 397,560 $ 5,627 5.66% 346,794 $ 5,527 6.37% --------- --------- --------- --------- Cash and due from banks 32,208 22,242 Allowance for loan losses (3,405) (3,100) Premises and equipment, net 11,156 10,706 Accrued interest receivable and other assets 12,340 12,820 --------- --------- TOTAL ASSETS $ 449,859 $ 389,462 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Interest bearing demand $ 187,448 $ 217 0.46% $ 143,524 $ 303 0.84% Savings 34,015 17 0.20% 26,520 64 0.97% Time 72,882 316 1.73% 77,683 492 2.53% --------- --------- --------- --------- 294,345 550 247,727 859 Long-term debt 10,000 129 5.16% 10,000 153 6.12% Short-term borrowings 0 2 0.00% 0 0 0.00% --------- --------- --------- --------- 10,000 131 10,000 153 TOTAL INTEREST BEARING LIABILITIES 304,345 $ 681 .90% 257,727 $ 1,012 1.57% --------- --------- --------- --------- Noninterest bearing DDA 104,066 94,669 Accrued interest payable and other liabilities 3,755 3,345 Shareholders' equity 37,693 33,721 --------- --------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 449,859 $ 389,462 ========= ========= NET INTEREST INCOME $ 4,946 $ 4,515 ========= ========= NET INTEREST INCOME TO AVERAGE EARNING ASSETS (Net Interest Margin(4)) 4.98% 5.21%
10 (1) Average loans would include nonaccrual loans. The Company had no nonaccrual loans during 2003 or 2002. (2) Loan interest income includes loan fee income of $273 and $318 for the three months ended September 30, 2003 and September 30, 2002, respectfully. (3) Average yields shown are on a taxable-equivalent basis. On a non-taxable basis, 2003 interest income was $181 with an average yield of 3.52%; in 2002, on a non-taxable basis, interest income was $164 with an average yield of 4.74%. (4) Net interest margin is calculated by dividing net interest income by the average balance of total earning assets for the applicable period The following table provides a summary of the components of interest income, interest expense and net interest margins for the nine months ended September 30, 2003 and September 30, 2002: 11
(In 000's) 2003 2002 ------------------------------------- ------------------------------------- Average Income/ Average Average Income/ Average Balance Expense Yield/Rate Balance Expense Yield/Rate ------- ------- ---------- ------- ------- ---------- Loans(1)(2) $ 269,824 $ 13,780 6.81% $ 205,925 $ 12,187 7.89% Investment securities: Taxable 80,777 1,997 3.30% 72,805 2,556 4.68% Non-taxable(3) 15,922 649 5.43% 14,109 602 5.69% --------- --------- --------- --------- TOTAL LOANS AND INVESTMENT SECURITIES 366,523 16,426 5.98% 292,839 15,345 6.99% Due from banks, time 100 2 2.67% 100 5 6.67% Federal funds sold 18,542 157 1.13% 24,840 291 1.56% --------- --------- --------- --------- TOTAL EARNING ASSETS 385,165 $ 16,585 5.74% 317,779 $ 15,641 6.56% --------- --------- --------- --------- Cash and due from banks 26,931 19,818 Allowance for loan losses (3,370) (2,957) Premises and equipment, net 11,166 10,410 Accrued interest receivable and other assets 11,957 11,729 --------- --------- TOTAL ASSETS $ 431,849 $ 356,779 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Interest bearing demand $ 170,537 $ 688 0.54% $ 129,244 $ 803 0.83% Savings 31,695 88 0.37% 24,776 177 0.95% Time 78,969 1,131 1.91% 76,360 1,531 2.67% --------- --------- --------- --------- 281,201 1,907 230,380 2,511 Long-term debt 10,000 411 5.48% 5,291 192 4.84% Short-term borrowings 1,000 10 1.33% 0 0 0.00% --------- --------- --------- --------- 11,000 421 5,291 192 TOTAL INTEREST BEARING LIABILITIES 292,201 $ 2,328 1.06% 235,671 $ 2,703 1.53% --------- --------- --------- --------- Noninterest bearing DDA 99,073 86,291 Accrued interest payable and other liabilities 3,749 2,922 Shareholders' equity 36,826 31,895 --------- --------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 431,849 $ 356,779 ========= ========= NET INTEREST INCOME $ 14,257 $ 12,938 ========= ========= NET INTEREST INCOME TO AVERAGE EARNING ASSETS (Net Interest Margin(4)) 4.94% 5.43%
(1) Average loans would include nonaccrual loans. The Company had no nonaccrual loans during 2003 or 2002. (2) Loan interest income includes loan fee income of $811 and $881 for the nine months ended September 30, 2003 and September 30, 2002, respectfully. (3) Average yields shown are on a taxable-equivalent basis. On a non-taxable basis, 2003 interest income was $473 with an average yield of 3.96%; in 2002, on a non-taxable basis, interest income was $502 with an average yield of 4.74%. (4) Net interest margin is calculated by dividing net interest income by the average balance of total earning assets for the applicable period 12 Net interest income represents the amount by which interest earned on earning assets (primarily loans and investments) exceeds the amount of interest paid on deposits. Net interest income is a function of volume, interest rates and level of non-accrual loans. Non-refundable loan origination fees are deferred and amortized into income over the life of the loan. Net interest income before the provision for loan losses on a taxable-equivalent basis for the three months ended September 30, 2003 and September 30, 2002 was $4,946,000 and $4,515,000, respectively. These results equate to a 10% increase in net interest income for the third quarter of 2003 compared to the third quarter of 2002. Loan fee income, which is included in interest income from loans, was $273,000 for the three months ended September 30, 2003, compared with $318,000 for the three months ended September 30, 2002. Net interest income before the provision for loan losses on a taxable-equivalent basis for the nine months ended September 30, 2003 and September 30, 2002 was $14,257,000 and $12,938,000, respectively. These results equate to a 10% increase in net interest income for the first nine months of 2003 compared to the same period in 2002. Loan fee income, which is included in interest income from loans, was $811,000 for the nine months ended September 30, 2003, compared with $881,000 for the nine months ended September 30, 2002. Taxable-equivalent interest income increased $100,000 or 2% in the third quarter of 2003 compared with the same period of 2002. The net increase of $100,000 was attributed to an increase in the volume of earning assets accounting for $1,414,000 of this increase, offset by a decrease of $1,314,000 attributable to lower rates. Interest paid on interest-bearing liabilities decreased $331,000 in the third quarter of 2003 compared with the third quarter of 2002. Although increases in the volume of deposits and other borrowings accounted for an increase of $78,000 it was offset by $409,000 attributed to lower rates. Taxable-equivalent interest income increased $944,000 or 6% in the first nine months of 2003 compared with the same period of 2002. The net increase of $944,000 was attributed to an increase in the volume of earning assets accounting for $4,062,000 of this increase, offset by a decrease of $3,118,000 attributable to lower rates. The average balance of interest-bearing liabilities increased $56,530,000 or 24% during the first nine month of 2003 compared with the same period in 2002. Interest paid on interest-bearing liabilities decreased $375,000 in 2003 compared with 2002. Although increases in the volume of deposits and other borrowings accounted for an increase of $529,000 it was offset by $904,000 attributed to lower rates. The average balance of earning assets increased $67,386,000 or 21% when compared with September 30, 2002 and the average balance of interest-bearing liabilities increased $56,530,000 or 24% compared with the same period in 2002. Management does not expect a material change in the Company's net interest margin during the next twelve months as the result of a modest increase or decrease in general interest rates. 13 The following table sets forth a summary of the changes in interest earned and interest paid for the three months ended September 30, 2003 over the same period of 2002 resulting from changes in assets and liabilities volumes and rates. The change in interest due to both rate and volume has been allocated in proportion to the relationship of absolute dollar amounts of change in each.
(In 000's) 2003 Over 2002 Volume Rate Total ------------------------------------------------ Increase (Decrease) In Interest and Fee Income Time Deposits With Other Financial Institutions $ 0 ($0) ($0) Investment Securities: Taxable (114) (310) (424) Non-Taxable (1) 95 (37) 58 Federal Funds Sold (89) (8) (97) Loans 1,522 (959) 563 ------------------------------------------------ Total Interest and Fee Income 1,414 (1,314) 100 ------------------------------------------------ Increase (Decrease) In Interest Expense Deposits: Interest Bearing Transaction Accounts 91 (177) (86) Savings 18 (65) (47) Time Deposits (31) (145) (176) ------------------------------------------------ Total Deposits 78 (387) (309) Long-term Debt 0 2 2 Short-term Borrowings 0 (24) (24) ------------------------------------------------ Total Interest Expense 78 (409) (331) ------------------------------------------------ Net Interest Income $1,336 ($905) $431 ================================================
(1) The interest earned is taxable-equivalent. 14 The following table sets forth a summary of the changes in interest earned and interest paid for the first nine months in 2003 over 2002 resulting from changes in assets and liabilities volumes and rates. The change in interest due to both rate and volume has been allocated in proportion to the relationship of absolute dollar amounts of change in each.
(In 000's) 2003 Over 2002 Volume Rate Total ------------------------------------------------ Increase (Decrease) In Interest and Fee Income Time Deposits With Other Financial Institutions $0 ($3) ($3) Investment Securities: Taxable 279 (838) (559) Non-Taxable (1) (77) (30) 47 Federal Funds Sold (74) (60) (134) Loans 3,780 (2,187) 1,593 ------------------------------------------------ Total Interest and Fee Income 4,062 (3,118) 944 ------------------------------------------------ Increase (Decrease) In Interest Expense Deposits: Interest Bearing Transaction Accounts 259 (374) (115) Savings 49 (138) (89) Time Deposits 50 (450) (400) ------------------------------------------------ Total Deposits 358 (962) (604) Long-term Debt 171 48 219 Short-term Borrowings 0 10 10 ------------------------------------------------ Total Interest Expense 529 (904) (375) ------------------------------------------------ Net Interest Income $3,533 ($2,214) $1,319 ================================================
(1) The interest earned is taxable-equivalent. 15 PROVISION AND ALLOWANCE FOR LOAN LOSSES The Company maintains an allowance for loan losses at a level considered adequate to provide for losses that can be reasonably anticipated. The allowance is increased by the provision for loan losses and reduced by net charge offs. The allowance for loan losses is based on estimates, and ultimate losses may vary from current estimates. These estimates are reviewed periodically and as adjustments become necessary they are reported in earnings in the periods in which they become known. The Company conducts credit reviews of the loan portfolio and considers current economic conditions, historical loan loss experience and other factors in determining the adequacy of the allowance balance. This evaluation establishes a specific allowance for all classified loans over $50,000 and establishes percentage allowance requirements for all other loans, according to the classification as determined by the Company's internal grading system. As of September 30, 2003 the allowance for loan losses of $3,421,000 represented 1.23% of loans outstanding. As of September 30, 2002, the allowance represented 1.41% of loans outstanding. During the three months ended September 30, 2003 $45,000 was charged to expense for the loan loss provision, compared with $144,000 for the same period in 2002. During the nine months ended September 30, 2003, $135,000 was charged to expense for the loan loss provision, compared with $432,000 for the same period in 2002.There were net charge-offs of $4,000 during the first nine months of 2003 compared with $6,000 net charge-offs during the first nine months of 2002. The following table summarizes changes in the allowance for loan losses: (In 000's) For the nine months ended September 30, 2003 September 30, 2002 ------- ------- Balance, beginning of period $ 3,290 $ 2,717 Provision for loan losses 135 432 Loans charged off (11) (10) Recoveries of loans previously charged off 7 4 ------- ------- Balance, end of period $ 3,421 $ 3,143 ======= ======= Allowance for loan losses to total outstanding loans 1.23% 1.41% There were no loans on non-accrual status as of September 30, 2003, September 30, 2002 or December 31, 2002. There were no loans 90 days or more past due and still accruing interest or restructured loans at September 30, 2003, September 30, 2002 or December 31, 2002. NON-INTEREST INCOME Non-interest income, excluding gains on the sale of securities, was $848,000 for the three months ended September 30, 2003 compared with $731,000 for the same period in 2002, a 16% increase. Non-interest income, excluding gains on the sale of securities was $2,285,000 for the nine months ended September 30, 2003 compared with $2,009,000 for the same period in 2002, a 14% increase. Non-interest income primarily consists of service charges and other fees related to deposit accounts. The increase in non-interest income resulted primarily from an increase in the number of deposit accounts, transaction volumes and directly related service charges. GAINS ON SECURITIES Net gains of $207,000 and $637,000 for the three and nine months ended September 30, 2003, respectively, resulted from the sale of several available-for-sale securities. Net gains of $66,000 for the nine months ended September 30, 2002 also resulted from the sale of several available-for-sale securities. There were no gains or losses for the three months ended September 30, 2002. NON-INTEREST EXPENSE Non-interest expense for the three months ended September 30, 2003 and September 30, 2002 was $4,267,000 and $3,697,000, respectively, a 15% increase. Non-interest expense for the nine months ended September 30, 2003 and September 30, 2002 was $12,593,000 and $10,519,000, respectively, a 20% increase. Salaries and employee benefits expense for the three months ended September 30, 2003 and 2002 were $2,338,000 and $1,978,000, respectively, an 18% increase. Salaries and employee benefits expense for the nine months ended September 30, 2003 and 2002 were $6,896,000 and $5,858,000, respectively, an 18% increase. The increase in 2003 resulted from increased salaries paid to Company officers and employees, and an increase of approximately eighteen full-time equivalent (FTE) employees from 136 at September 30, 2002 to 154 at September 30, 2003. The increases in FTE were related to increasing sales activity and staffing new offices. Occupancy expense for the three months ended September 30, 2003 and 2002 were $356,000 and $228,000, respectively, a 56% increase. Occupancy expense for the nine months ended September 30, 2003 and 2002 were $931,000 and $680,000, respectively, representing a 37% increase. The increase in 2003 is attributed to opening a branch office in March 2003 and obtaining rented locations for Executive and Administration offices. Equipment expenses for the three months ended September 30, 2003 and 2002 was $485,000 and $450,000, respectively, representing an increase of 8%. Equipment expenses for the nine months ended September 30, 2003 and 2002 was $1,230,000 and $1,392,000, respectively, a decrease of 12%. During 2002 the Company had additional depreciation expense resulting from accelerated depreciation on the host banking system, which was replaced in July 2002. Other expenses for the three months ended September 30, 2003 and September 30, 2002 were $1,088,000 and $1,041,000, respectively, a 5% increase. Other expenses for the nine months ended September 30, 2003 and September 30, 2002 were $3,536,000 and $2,589,000, respectively, a 37% increase. Components of other non-interest expenses that increased materially were legal and professional fees. Legal fees were $120,000 and $521,000 for the three and nine months ended September 30, 2003, respectively. This compares with $116,000 and $216,000 for the same periods in 2002. The increase in legal fees is primarily due to litigation with our former host systems provider. Now that the suit has been settled, legal fees are 16 expected to be proportionately less the remainder of 2003. Professional fees were $127,000 and $435,000 for the three and nine months ended September 30, 2003, respectively. This compares with $42,000 and $118,000 for the same periods in 2002. The increase in professional fees were primarily the result of outsourced information technology and consulting services. INCOME TAXES The Company reported a provision for income tax for the three months ended September 30, 2003 and 2002 of $452,000 and $446,000, respectively. The Company reported a provision for income tax for the nine months ended September 30, 2003 and 2002 of $1,204,000 and $1,380,000, respectively. Both the 2003 and 2002 provisions reflect tax accruals at statutory rates for federal income taxes, adjusted primarily for the effect of the Company's investments in tax-exempt municipal securities, bank owned life insurance policies and state taxes. The Vintage Bank established a Real Estate Investment Trust (REIT) subsidiary in February 2003, which provided approximately $292,000 and $114,000 in tax benefits during the nine months and three months ended September 2003, respectively. BALANCE SHEET Total assets as of September 30, 2003 were $451,316,000 compared with $395,928,000 as of September 30, 2002, and $416,458,000 at December 30, 2002 equating to a 14% increase during the twelve months ended September 30, 2003, and an 8% increase for the nine months ended September 30, 2003. Total deposits as of September 30, 2003 were $399,421,000 compared with $348,099,000 as of September 30, 2002, and $367,803,000 at December 30, 2002 representing a 15% increase during the twelve months then ended, and a 9% increase for the nine months ended September 30, 2003. Gross loans outstanding as of September 30, 2003 were $277,912,000 compared with $222,388,000 as of September 30, 2002, and $237,627,000 at December 30, 2002 equating to a 25% increase during the twelve months then ended and a 17% increase for the nine months ended September 30, 2003. LOANS HELD FOR SALE The Company had $10.8 million in purchased participations in mortgage loans as of September 30, 2003. Loans originated or purchased and considered held for sale are carried at the lower of cost or estimated market value in the aggregate. Net unrealized losses are recognized through a valuation allowance by charges to income. TRUST PREFERRED SECURITIES On September 26, 2002, North Bay Statutory Trust I (Trust), a Connecticut statutory business trust and wholly-owned subsidiary of North Bay Bancorp, issued $10 million in floating rate Cumulative Trust Preferred Securities (Securities). The Securities bear interest a rate of Libor plus 3.45% and had an initial interest rate of 5.34%; currently the interest rate is 4.74%; the Securities will mature on September 26, 2032, but earlier redemption is permitted under certain circumstances, such as changes in tax or regulatory capital rules. The principal asset of the trust is a $10,310,000 floating rate subordinated debenture of the Company. The Securities, the subordinated debentures, and the common securities issued by the Trust are redeemable in whole or in part on or after September 26, 2007, or at any time in whole, but not in part, upon the occurrence of certain events. The Securities are included in Tier 1 capital for regulatory capital adequacy determination purposes, subject to certain limitations. The Company fully and unconditionally guarantees the obligations of the Trust with respect to the issuance of the Securities. Subject to certain exceptions and limitations, the Company may, from time to time, defer subordinated debenture interest payments, which would result in a deferral of distribution payments on the Securities and, with certain exceptions, prevent the Company from declaring or paying cash distributions on the Company's common stock or debt securities that rank junior to the subordinated debentures. LIQUIDITY AND CAPITAL ADEQUACY The Company's liquidity is determined by the level of assets (such as cash, Federal Funds, and investment in unpledged marketable securities) that are readily convertible to cash to meet customer withdrawals and borrowings. Management reviews the Company's liquidity position on a regular basis to ensure that it is adequate to meet projected loan funding and potential withdrawal of deposits. The Company has a comprehensive Asset/Liability Management and Liquidity Policy, which it uses to determine adequate liquidity. As of September 30, 2003 liquid assets were 31% of total assets, compared with 38% as of September 30, 2002. The Federal Deposit Insurance Corporation Improvement Act (FDICIA) established ratios used to determine whether a Company is "Well Capitalized," "Adequately Capitalized," "Undercapitalized," "Significantly Undercapitalized," or "Critically Undercapitalized." A Well Capitalized Company has risk-based capital of at least 10%, tier 1 risked-based capital of at least 6%, and a leverage ratio of at least 5%. As of September 30, 2003, the Company's risk-based capital ratio was 14.12%. The Company's tier 1 risk-based capital ratio and leverage ratio were 13.17% and 10.64%, respectively. 17 As the following table indicates, the Company and the Banks currently exceeds the regulatory capital minimum requirements. The Company and the Banks are considered "Well Capitalized" according to regulatory guidelines.
To Be Well Capitalized For Capital Under Prompt Corrective Actual Adequacy Purposes Action Provisions ------------------- ------------------- ---------------------- (In 000's) Amount Ratio Amount Ratio Amount Ratio ------ ----- ------ ----- ------ ----- As of September 30, 2003: Total Capital (to Risk Weighted Assets) Consolidated $50,954 14.12% $28,867 >8.00% $36,084 >10.00% - - The Vintage Bank 32,729 11.28% 23,219 >8.00% 29,024 >10.00% - - Solano Bank 7,923 11.86% 5,345 >8.00% 6,682 >10.00% - - Tier I Capital (to Risk Weighted Assets) Consolidated 47,533 13.17% 14,433 >4.00% 21,650 >6.00% - - The Vintage Bank 29,861 10.29% 11,609 >4.00% 17,414 >6.00% - - Solano Bank 7,370 11.03% 2,673 >4.00% 4,009 >6.00% - - Tier I Capital (to Average Assets) Consolidated 47,533 10.64% 17,878 >4.00% 22,347 >5.00% - The Vintage Bank 29,861 8.39% 14,238 >4.00% 17,797 >5.00% - - Solano Bank 7,370 9.32% 3,163 >4.00% 3,953 >5.00% - -
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Market risk is the exposure to loss resulting from changes in interest rates, foreign currency exchange rates, commodity prices and equity prices. Although the Company manages other risks, as in credit quality and liquidity risk, in the normal course of business, management considers interest rate risk to be a principal market risk. Other types of market risks, such as foreign currency exchange rate risk, do not arise in the normal course of the Company's business activities. The majority of the Company's interest rate risk arises from instruments, positions and transactions entered into for purposes other than trading. They include loans, securities available-for-sale, deposit liabilities, short-term borrowings and long-term debt. Interest rate risk occurs when assets and liabilities reprice at different times as interest rates change. The Company manages interest rate risk through its Audit Committee, which serves as the Asset Liability Committee (ALCO). The ALCO monitors exposure to interest rate risk on a quarterly basis using both a traditional gap analysis and simulation analysis. Traditional gap analysis identifies short and long-term interest rate positions or exposure. Simulation analysis uses an income simulation approach to measure the change in interest income and expense under rate shock conditions. The model considers the three major factors of (a) volume differences, (b) repricing differences and (c) timing in its income simulation. The model begins by disseminating data into appropriate repricing buckets based on internally supplied algorithms (or overridden by calibration). Next, each major asset and liability type is assigned a "multiplier" or beta to simulate how much that particular balance sheet category type will reprice when interest rates change. The model uses eight asset and liability multipliers consisting of bank-specific or default multipliers. The remaining step is to simulate the timing effect of assets and liabilities by modeling a month-by-month simulation to estimate the change in interest income and expense over the next 12-month period. The results are then expressed as the change in pre-tax net interest income over a 12-month period for +1%, and +2% shocks. Utilizing the simulation model to measure interest rate risk at September 30, 2003 and December 31, 2002 the Company is within the established exposure of a 4% change in "return on equity" tolerance limit. There were no significant changes in interest rate risk from the annual report on form 10-K for December 31, 2002. 18 Item 4. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures: Based on their evaluation as of September 30, 2003, the Company's Chief Executive Officer and Chief Financial Officer have concluded that the Company's disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. There have been no significant changes in the Company's internal controls or in other factors that could significantly affect those controls subsequent to the date of their evaluation. Changes in Internal Controls: There have not been any significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation. We are not aware of any significant deficiencies or material weaknesses; therefore no corrective actions were taken. 19 PART 2 OTHER INFORMATION OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Other than ordinary routine litigation incidental to the business of the Company, there are no material pending legal proceedings. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS None ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) An index of exhibits begins on page 22. (b) On July 28, 2003 the Company furnished a Current Report on Form 8-K, reporting the issuance of a press release announcing the Company's earning for the quarter ended June 30, 2003. 20 Pursuant to the requirements of the Securities and Exchange Act of 1934, the Company has duly caused this quarterly report to be signed on its behalf by the undersigned, thereunto duly authorized. NORTH BAY BANCORP A California Corporation Date: November 10, 2003 BY: /s/ Terry L. Robinson -------------------------------- Terry L. Robinson President & CEO Principal Executive Officer Date: November 10, 2003 BY: /s/ Lee-Ann Cimino -------------------------------- Lee-Ann Cimino Senior Vice President Principal Financial Officer 21 EXHIBIT INDEX Exhibit No. Description - ----------- ----------- 11 Statement re: computation of per share earnings is included in Note 3 to the unaudited condensed consolidated financial statements of Registrant. 31.1 Certificate of Principal Executive Officer Pursuant to SEC Release 33-8238 31.2 Certificate of Principal Financial Officer Pursuant to SEC Release 33-8238 32.1 Certificate of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350 32.2 Certificate of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350 22 EX-31.1 3 p17878_ex31-1.txt CERTIFICATE OF PRINCIPAL EXECUTIVE OFFICER Exhibit 31.1 CERTIFICATION I, Terry L. Robinson, certify that: 1. I have reviewed this quarterly report on Form 10-Q of North Bay Bancorp; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedure, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) [Paragraph reserved pursuant to SEC Release 33-8238] (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: November 10, 2003 /s/ Terry L. Robinson ----------------------------------- Terry L. Robinson President and Chief Executive Officer Principal Executive Officer 23 EX-31.2 4 p17878_ex31-2.txt CERTIFICATE OF PRINCIPAL FINANCIAL OFFICER Exhibit 31.2 CERTIFICATION I, Lee-Ann Cimino, certify that: 1. I have reviewed this quarterly report on Form 10-Q of North Bay Bancorp; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedure, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) [Paragraph reserved pursuant to SEC Release 33-8238] (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: November 10, 2003 /s/ Lee-Ann Cimino ------------------------------------ Lee-Ann Cimino Senior Vice President and Chief Financial Officer Principal Financial Officer 24 EX-32.1 5 p17878_ex32-1.txt CERTIFICATE OF PRINCIPAL EXECUTIVE OFFICER EXHIBIT 32.1 The following certification accompanies North Bay Bancorp's Quarterly Report on Form 10-Q and is not filed as provided in SEC Release Nos. 33-8212, 34-47551 and IC 25967, dated March 21, 2003. CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350 In connection with the accompanying Quarterly Report on Form 10-Q of North Bay Bancorp for the quarter ended September 30, 2003, I, Terry L. Robinson, President and Chief Executive Officer of North Bay Bancorp, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that: (1) such Quarterly Report on Form 10-Q of North Bay Bancorp for the quarter ended September 30, 2003, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in such Quarterly Report on Form 10-Q of North Bay Bancorp for the quarter ended September 30, 2003, fairly presents, in all material respects, the financial condition and results of operations of North Bay Bancorp. Dated: November 10, 2003 /s/ Terry L. Robinson ---------------------------------- TERRY L. ROBINSON President and Chief Executive Officer 25 EX-32.2 6 p17878_ex32-2.txt CERTIFICATE OF PRINCIPAL FINANCIAL OFFICER EXHIBIT 32.2 The following certification accompanies North Bay Bancorp's Quarterly Report on Form 10-Q and is not filed as provided in SEC Release Nos. 33-8212, 34-47551 and IC 25967, dated March 21, 2003. CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350 In connection with the accompanying Quarterly Report on Form 10-Q of North Bay Bancorp for the quarter ended September 30, 2003, I, Lee-Ann Cimino, Chief Financial Officer of North Bay Bancorp, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) such Quarterly Report on Form 10-Q of North Bay Bancorp for the quarter ended September 30, 2003, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in such Quarterly Report on Form 10-Q of North Bay Bancorp for the quarter ended September 30, 2003, fairly presents, in all material respects, the financial condition and results of operations of North Bay Bancorp. Dated: November 10, 2003 /s/ Lee-Ann Cimino ------------------------------ LEE-ANN CIMINO Chief Financial Officer 26 -----END PRIVACY-ENHANCED MESSAGE-----