-----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, RE3+p81i7WyhjxPZeZX1j6tL3bnoGfhT0ndFfOkni2bviKUGTzYy+ojhi9oLhpS4 mkUa/9fvvobIE8QsEqY9mg== 0000950005-04-000486.txt : 20040517 0000950005-04-000486.hdr.sgml : 20040517 20040517171240 ACCESSION NUMBER: 0000950005-04-000486 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20040331 FILED AS OF DATE: 20040517 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: 04813500 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 p18513_10q.txt FORM 10Q 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 March 31, 2004 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) 252-5026 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 May 10, 2004: 2,404,171 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 ended March 31, 2004 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 March 31, 2004 and the results of operations and cash flows for the three 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) March 31, March 31, December 31, Assets 2004 2003 2003 -------- -------- -------- Cash and due from banks $ 36,772 $ 28,995 $ 28,756 Federal funds sold 27,000 14,729 9,195 -------- -------- -------- Total cash and cash equivalents 63,772 43,724 37,951 Time deposits with other financial institutions 100 100 100 Investment Securities: Held-to-maturity 0 1,250 0 Available-for-sale 77,984 98,337 90,655 Equity securities 1,358 1,349 1,351 -------- -------- -------- Total investment securities 79,342 100,936 92,006 Loans, net of allowance for loan losses of $3,703 in March, 2004 $3,327 in March, 2003 and $3,524 in December, 2003 317,386 237,646 303,139 Loans held-for-sale 3,398 14,189 3,095 Investment in subsidiary 310 0 0 Bank premises and equipment, net 10,629 11,320 10,909 Accrued interest receivable and other assets 13,165 11,679 12,282 -------- -------- -------- Total assets $488,102 $419,594 $459,482 ======== ======== ======== Liabilities and Shareholders' Equity Deposits: Non-interest bearing $111,632 $ 93,903 $103,401 Interest bearing 322,451 276,746 303,044 -------- -------- -------- Total deposits 434,083 370,649 406,445 Subordinated debentures 10,310 10,000 10,000 Accrued interest payable and other liabilities 3,170 3,083 3,596 -------- -------- -------- Total liabilities 447,563 383,732 420,041 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 - 2,404,171 shares in March, 2004, 2,244,793 shares in March, 2003, and 2,285,646 in December, 2003 33,023 28,460 29,210 Retained earnings 6,477 6,148 9,623 Accumulated other comprehensive income 1,039 1,254 608 -------- -------- -------- Total shareholders' equity 40,539 35,862 39,441 Total liabilities and shareholders' equity $488,102 $419,594 $459,482 ======== ======== ======== 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 --------------------- March 31, March 31, 2004 2003 ------ ------ Interest Income Loans (including fees) $5,256 $4,356 Federal funds sold 41 63 Investment securities - taxable 607 782 Investment securities - tax exempt 160 160 ------ ------ Total interest income 6,064 5,361 Interest Expense Deposits 557 687 Long term debt 131 141 ------ ------ Total interest expense 688 828 Net interest income 5,376 4,533 Provision for loan losses 186 45 ------ ------ Net interest income after provision for loan losses 5,190 4,488 Non interest income 986 709 Gains on securities transactions, net 0 99 ------ ------ Total non interest income 986 808 Non interest expenses Salaries and employee benefits 2,504 2,306 Occupancy 367 257 Equipment 492 450 Other 1,234 1,002 ------ ------ Total non interest expense 4,597 4,015 ------ ------ Income before provision for income taxes 1,579 1,281 Provision for income taxes 544 386 ------ ------ Net income $1,035 $ 895 ====== ====== Basic earnings per common share: $ 0.43 $ 0.38 ====== ====== Diluted earnings per common share: $ 0.42 $ 0.37 ====== ====== Dividends Paid: $ 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 Three Months Ended March 31, 2004 (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, 2003 2,285,646 $29,210 $9,623 $ 608 $39,441 Stock dividend 113,997 3,706 (3,723) (17) Cash dividend (458) (458) Comprehensive income: Net income 1,035 1,035 $1,035 Other comprehensive loss, net of tax: Change in net unrealized losses on available-for-sale securities, net of tax of $306 431 431 431 Comprehensive income $1,466 ====== Stock options exercised, net of tax of $20 4,528 107 107 --------- ------- ------- BALANCE, MARCH 31, 2004 2,404,171 $33,023 $6,477 $1,039 $40,539 ========= ======= ====== ====== ======= The accompanying notes are an integral part of these statements
5 North Bay Bancorp Consolidated Statement of Cash Flows Unaudited (In 000's)
Three Months Ended March 31, ---------------------------- 2004 2003 -------- -------- Cash Flows From Operating Activities: Net income $ 1,035 $ 895 Adjustment to reconcile net income to net cash used by operating activities: Depreciation and amortization 397 376 Provision for loan losses 186 45 Amortization of deferred loan fees (171) (141) Proceeds from sale of loans held-for-sale 10,204 11,991 Purchase of loans held-for-sale (10,507) (26,180) Premium amortization (discount accretion), net 112 294 Gain on securities transactions 0 (99) Changes in: Interest receivable and other assets (1,189) 200 Interest payable and other liabilities (406) (188) -------- -------- Net cash used by operating activities (339) (12,807) -------- -------- Cash Flows From Investing Activities: Investment securities held-to-maturity: Proceeds from maturities and principal payments 0 22 Investment securities available-for-sale: Proceeds from maturities and principal payments 13,296 9,922 Proceeds from sale of securities 0 10,241 Purchases 0 (14,374) Equity securities: Purchases (7) 0 Net increase in loans (14,262) (3,213) Capital expenditures (117) (896) -------- -------- Net cash (used) provided in investing activities (1,090) 1,702 -------- -------- Cash Flows From Financing Activities: Net increase in deposits 27,638 2,846 Stock options exercised 87 114 Dividends paid (475) (441) -------- -------- Net cash provided by financing activities 27,250 2,519 -------- -------- Net increase (decrease) in cash and cash equivalents 25,821 (8,586) Cash and cash equivalents at beginning of year 37,951 52,310 -------- -------- Cash and cash equivalents at end of period $ 63,772 $ 43,724 ======== ======== Supplemental Disclosures of Cash Flow Information: Interest paid $ 777 $ 809 Taxes paid $ 880 $ 135 The accompanying notes are an integral part of these statements
6 NORTH BAY BANCORP Notes to the Consolidated Financial Statements (Unaudited) March 31, 2004 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 and Vintage Capital Trust, a subsidiary of The Vintage Bank, which was established in February 2003. North Bay has announced its intension, subject to regulatory approval, to consolidate its subsidiary banks to simplify the Company's corporate structure. All significant intercompany transactions and balances have been eliminated. The Company de-consolidated its subsidiary, North Bay Statutory Trust 1, effective March 31, 2004. The Trust has no independent assets or operations and exists solely for the purpose of issuing and selling trust preferred securities. 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 three months ended March 31, 2004 and 2003, 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, 2003. NOTE 2 - Commitments - -------------------- The Company has outstanding standby Letters of Credit of approximately $1,359,000, undisbursed real estate and construction loans of approximately $13,340,000, and undisbursed commercial and consumer lines of credit of approximately $75,262,000, as of March 31, 2004. The Company had outstanding standby Letters of Credit of approximately $658,000, undisbursed real estate and construction loans of approximately $25,209,000, and undisbursed commercial and consumer lines of credit of approximately $58,560,000, as of March 31, 2003. NOTE 3 - Earnings Per Common Share - ---------------------------------- The Company declared a 5% stock dividend on January 26, 2004. 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 reconciles the numerator and denominator of the Basic and Diluted earnings per share computations:
Weighted Average Per-Share Net Income Shares Amount ---------- ------ ------ (In 000's except share data) For the three months ended March 31, 2004 Basic earnings per share $1,035 2,401,352 $0.43 Dilutive effect of stock options 81,876 Diluted earnings per share 2,483,228 $0.42 For the three months ended March 31, 2003 Basic earnings per share $895 2,351,509 $0.38 Dilutive effect of stock options 75,670 Diluted earnings per share 2,427,179 $0.37
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 March 31, ------------------------ 2004 2003 --------- -------- Net income as reported $ 1,035 $ 895 Total stock-based employee compensation expense determined under the fair value based method for all awards, net of related tax effects 83 61 --------- -------- Net income pro forma $ 952 $ 834 Earnings per share: As reported: Basic $ .43 $ .38 Diluted $ .42 $ .37 Pro forma: Basic $ .40 $ .35 Diluted $ .38 $ .34 NOTE 5 - Impact of Recently Issued Accounting Standards - ------------------------------------------------------- In January 2003, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 46 "Consolidation of Variable Interest Entities, an interpretation of ARB No. 51" (FIN 46). FIN 46 provides a new framework for identifying variable interest entities (VIEs) and determining when a company should include the assets, liabilities, noncontrolling interests and results of activities of a VIE in its consolidated financial statements. Prior to the implementation of FIN 46, VIEs were generally consolidated by the company when the company had a controlling financial interest through ownership of the majority of the voting inertest in the company. The provisions of FIN 46 were effective immediately. In October 2003, the FASB agreed to defer the effective date of FIN 46 for VIEs to allow time for certain implementation issues to be addressed. On December 24, 2003, the FASB released its latest interpretation (FIN 46R) of the appropriate accounting treatment for VIEs, which in part, specifically addresses limited purpose trusts formed to issue trust preferred securities. In July 2003, the Board of Governors of the Federal Reserve issued a supervisory letter instructing bank holding companies to continue to include the trust preferred securities in their Tier 1 capital for regulatory capital purposes until notice is given to the contrary. The Federal Reserve intends to review the regulatory implications of any accounting treatment changes and, if necessary or warranted, provide further appropriate guidance. There can be no assurance that the Federal Reserve will continue to allow institutions to include trust preferred securities in Tier 1 capital for regulatory purposes. If the trust preferred securities were no longer allowed to be included in Tier 1 capital, the Company would also be permitted to redeem the capital securities without penalty. The Company adopted FIN 46R effective March 31, 2004, and the effect was to de-consolidate the subsidiary trust North Bay Statutory Trust I, and move the mandatory redeemable preferred securities directly to the parent company balance sheet under the caption "subordinated debentures." The Company prospectively applied this ruling in the accompanying financial information. 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 - ---------------------------- The Company's accounting policies are integral to understanding the results reported. The most complex accounting policies require management's judgment to ascertain the valuation of assets, liabilities, commitments and contingencies. The Company has established detailed policies and control procedures that are intended to ensure valuation methods are well controlled and applied consistently from period to period. In addition, the policies and procedures are intended to ensure that the process for changing methodologies occurs in an appropriate manner. The following is a brief description of our current accounting policies involving significant management valuation judgments. Allowance for Loan Losses. The allowance for loan losses represents management's best estimate of losses inherent in the existing loan portfolio. The allowance for loan losses is increased by the provision for loan losses charged to expense and reduced by loans charged-off, net of recoveries. We evaluate our allowance for loan loss on a monthly basis. We believe that the allowance for loan loss is a "critical accounting estimate" because it is based upon management's assessment of various factors affecting the collectibility of the loans, including current and projected economic conditions, past credit experience, delinquency status, the value of the underlying collateral, if any, and a continuing review of the portfolio of loans and commitments. We determine the appropriate level of the allowance for loan losses, primarily on an analysis of the various components of the loan portfolio, including all significant credits on an individual basis. We segment the loan portfolios into as many components as practical. Each component would normally have similar characteristics, such as risk classification, past due status, type of loan, industry or collateral. Management has an established methodology for calculating the level of the allowance for loan losses. We analyze the following components of the portfolio and provide for them in the allowance for loan losses: Specific allowances defined as: o Management assessment of all loans classified as substandard or worse, with an outstanding balance of $100,000 o A specific allowance is provided for any amount by which the loan's collateral fair value is insufficient to cover the loan; or discounting estimated further cash flows, or by observing the loan's market price if it is of a kind for which there is a secondary market General allowance defined as: o An allowance for all loans outstanding within the portfolio and not contained in the specific allowances Judgmental allowance defined as: o National and local economic trends and conditions o Trends in volume of loans o Changes in underwriting standards and/or lending personnel o Concentrations of credit within the portfolio No assurance can be given that the Company will not sustain loan losses that are sizable in relation to the amount provided, or that subsequent evaluations of the loan portfolio will not require an increase in the allowance. Prevailing factors in association with the methodology may include improvement or deterioration of individual commitments or pools of similar loans, or loan concentrations. Available for Sale Securities. SFAS 115 requires that Available for Sale securities be carried at fair value. We believe this is a "critical accounting estimate" in that the fair value of a security is based on quoted market prices or if quoted market prices are not available, fair values are extrapolated from the quoted prices of similar 9 instruments. Adjustments to the Available for Sale securities fair value impact the consolidated financial statements by increasing or decreasing assets and shareholders' equity. Deferred Tax Assets. Deferred income taxes reflect the estimated future tax effects of temporary differences between the reported amount of assets and liabilities for financial purposes and such amounts as measured by tax laws and regulations. We consider the scheduled reversal of deferred tax liabilities, projected future taxable income, amounts available in the carryback periods, and tax planning strategies to support our position that it is more likely than not the benefit of our deferred tax assets will be realized. 10 OVERVIEW - -------- Net income was $1,035,000 or $.42 per diluted share for the three months ended March 31, 2004, compared with $895,000 or $.37 per diluted share for the three months ended March 31, 2003, an increase of 16%. Total assets were $488,102,000 as of March 31, 2004; equating to a 16% growth in assets during the twelve months ended March 31, 2004. 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 March 31, 2004 and March 31, 2003:
(In 000's) 2004 2003 ------------------------------------------ -------------------------------------- Average Income/ Average Average Income/ Average Balance Expense Yield/Rate Balance Expense Yield/Rate ------------------------------------------------------------------------------------- Loans (1)(2) $ 313,742 $ 5,256 6.70% $ 246,273 $ 4,356 7.08% Investment securities: Taxable 68,275 606 3.55% 88,757 781 3.52% Non-taxable (3) 16,464 218 5.30% 13,595 242 7.12% --------- --------- --------- --------- TOTAL LOANS AND INVESTMENT SECURITIES 398,481 6,080 6.10% 348,625 5,379 6.17% Due from banks, time 100 1 4.00% 100 1 4.00% Federal funds sold 16,492 41 .99% 22,243 63 1.13% --------- --------- --------- --------- TOTAL EARNING ASSETS 415,073 $ 6,122 5.90% 370,968 $ 5,443 5.87% --------- --------- --------- --------- Cash and due from banks 30,973 23,121 Allowance for loan losses (3,596) (3,348) Premises and equipment, net 10,824 11,110 Investment in subsidiary 310 0 Accrued interest receivable and other assets 13,007 11,654 --------- --------- TOTAL ASSETS $ 466,591 $ 413,505 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Interest bearing demand $ 200,863 $ 247 0.49% $ 155,564 $ 229 0.59% Savings 37,978 21 0.22% 29,643 34 0.46% Time 72,111 289 1.60% 83,044 424 2.04% --------- --------- ---- --------- --------- ---- 310,952 557 .72% 268,251 687 1.02% Long-term debt 10,310 131 5.08% 10,000 141 5.64% TOTAL INTEREST BEARING LIABILITIES 321,262 $ 688 .86% 278,251 $ 828 1.19% --------- --------- --------- --------- Noninterest bearing DDA 101,567 95,441 Accrued interest payable and other liabilities 5,164 3,966 Shareholders' equity 38,598 35,847 --------- --------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 466,591 $ 413,505 ========= ========= NET INTEREST INCOME $ 5,434 $ 4,615 ========= ========= NET INTEREST INCOME TO AVERAGE EARNING ASSETS (Net Interest Margin (4)) 5.24% 4.98%
11 (1) Average loans would include nonaccrual loans. The Company had no nonaccrual loans during 2004 or 2003. (2) Loan interest income includes loan fee income of $356 and $258 for the three months ended March 31, 2004 and March 31, 2003, respectfully. (3) Average yields shown are on a taxable-equivalent basis. On a non-taxable basis, 2004 interest income on tax exempt securities was $160 with an average yield of 3.89%; in 2003, on a non-taxable basis, interest income on tax exempt securities was $160 with an average yield of 4.71%. (4) Net interest margin is calculated by dividing net interest income by the average balance of total earning assets for the applicable period 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 March 31, 2004 and March 31, 2003 was $5,434,000 and $4,615,000, respectively. These results equate to an 18% increase in net interest income for the first quarter of 2004 compared to the first quarter of 2003. Loan fee income, which is included in interest income from loans, was $356,000 for the three months ended March 31, 2004, compared with $258,000 for the three months ended March 31, 2003. Taxable-equivalent interest income increased $679,000 or 12% in the first quarter of 2004 compared with the same period of 2003. The net increase of $679,000 was attributable to an increase in the volume of earning assets accounting for $1,048,000 of this increase, offset by a decrease of $369,000 attributable to lower rates. Interest paid on interest-bearing liabilities decreased $140,000 in the first quarter of 2004 compared with the first quarter of 2003. Although increases in the volume of deposits and other borrowings accounted for an increase of $21,000 it was offset by $161,000 attributable to lower rates. The average balance of earning assets increased $44,105,000 or 12% when compared with March 31, 2003 and the average balance of interest-bearing liabilities increased $42,701,000 or 15% compared with the same period in 2003. 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. 12 The following table sets forth a summary of the changes in interest earned and interest paid for the three months ended March 31, 2004 over the same period of 2003 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) 2004 Over 2003 --------------------------------- Volume Rate Total --------------------------------- Increase (Decrease) In Interest and Fee Income Time Deposits With Other Financial Institutions $ 0 $ 0 $ 0 Investment Securities: Taxable (180) 5 (175) Non-Taxable (1) 51 (75) (24) Federal Funds Sold (16) (6) (22) Loans 1,193 (293) 900 --------------------------------- Total Interest and Fee Income 1,048 (369) 679 --------------------------------- Increase (Decrease) In Interest Expense Deposits: Interest Bearing Transaction Accounts 67 (49) 18 Savings 10 (23) (13) Time Deposits (56) (79) (135) --------------------------------- Total Deposits 21 (151) (130) Long-term Debt 0 (10) (10) --------------------------------- Total Interest Expense 21 (161) (140) --------------------------------- Net Interest Income $ 1,027 ($ 208) $ 819 ================================= (1) The interest earned is taxable-equivalent. 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 $100,000 and establishes percentage allowance requirements for all other loans, according to the classification as determined by the Company's internal grading system. As of March 31, 2004 the allowance for loan losses of $3,703,000 represented 1.15% of loans outstanding. As of March 31, 2003, the allowance represented 1.38% of loans outstanding. During the three months ended March 31, 2004 $186,000 was charged to expense for the loan loss provision, compared with $45,000 for the same period in 2003. The increase in the expense for the loan loss provision was to provide for growth in the overall loan 13 portfolio. There were net charge-offs of $7,000 during the first three months of 2004 compared with $8,000 net charge-offs during the first three months of 2003. The following table summarizes changes in the allowance for loan losses:
(In 000's) For the three months ended -------------------------------- March 31, 2004 March 31, 2003 -------------- -------------- Balance, beginning of period $ 3,524 $ 3,290 Provision for loan losses 186 45 Loans charged off (8) (11) Recoveries of loans previously charged off 1 3 ------- ------- Balance, end of period $ 3,703 $ 3,327 ======= ======= Allowance for loan losses to total outstanding loans 1.15% 1.38%
There were no loans on non-accrual status as of March 31, 2004, March 31, 2003 or December 31, 2003. There were no loans 90 days or more past due and still accruing interest or restructured loans at March 31, 2004, March 31, 2003 or December 31, 2003. NON-INTEREST INCOME - ------------------- Non-interest income, excluding gains on the sale of securities, was $986,000 for the three months ended March 31, 2004 compared with $709,000 for the same period in 2003, a 39% 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. Service charges on deposit accounts increased proportionately more than deposits because of improved collection efforts and implementation of an overdraft privilege program that commenced in the fourth quarter of 2003. GAINS ON SECURITIES - ------------------- Net gains of $99,000 as of March 31, 2003 resulted from the sale of several available-for-sale securities. There were no gains or losses for the three months ended March 31, 2004. NON-INTEREST EXPENSE - -------------------- Non-interest expense for the three months ended March 31, 2004 and March 31, 2003 was $4,597,000 and $4,015,000, respectively, a 14% increase. Salaries and employee benefits expense for the three months ended March 31, 2004 and 2003 were $2,504,000 and $2,306,000, respectively, a 9% increase. The increase in 2004 resulted from increased salaries paid to Company officers and employees, and an increase of approximately twenty-one full-time equivalent (FTE) employees from 139 at March 31, 2003 to 160 at March 31, 2004. The increases in FTE were related to increasing sales activity and lending staff to support the loan growth. Occupancy expense for the three months ended March 31, 2004 and 2003 were $367,000 and $257,000, respectively, a 43% increase. The increase in 2004 is attributable to opening a branch office and relocated Executive and Administration offices to new leased offices in March 2003. Equipment expenses for the three months ended March 31, 2004 and 2003 was $492,000 and $450,000, respectively, representing an increase of 9%, Other expenses for the three months ended March 31, 2004 and March 31, 200 were $1,234,000 and $1,002,000, respectively, a 23% increase. Components of other non-interest expenses that increased materially were insurance expenses, donations and general supplies. INCOME TAXES - ------------ The Company reported a provision for income tax for the three months ended March 31, 2004 and 2003 of $544,000 and $386,000, respectively. Both the 2004 and 2003 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. BALANCE SHEET - ------------- Total assets as of March 31, 2004 were $488,102,000 compared with $419,594,000 as of March 31, 2003, and $459,482,000 at December 30, 2003 equating to a 16% increase during the twelve months ended March 31, 2004, and a 6% increase for the three months ended March 31, 2004. Total deposits as of March 31, 2004 were $434,083,000 compared with $370,649,000 as of March 31, 2003, and $406,445,000 at December 30, 2003 representing a 17% increase during the twelve months then ended, and a 7% increase for the three months ended March 31, 2004. Gross loans outstanding as of March 31, 2004 were $321,089,000 compared with $240,973,000 as of March 31, 2003, and $306,663,000 at December 30, 2003 equating to a 33% increase during the twelve months then ended and a 5% increase for the three months ended March 31, 2004. LOANS HELD FOR SALE - ------------------- The Company had $3,398,000, $14,189,000 and $3,095,000 in purchased participations in mortgage loans as of March 31, 2004, March 31, 2003 and December 31, 2003, respectively. 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. SUBORDINATED DEBENTURES - ----------------------- During June 2002, the Company formed North Bay Statutory Trust I (Trust), a Connecticut statutory business trust, for the purpose of issuing guaranteed 14 undivided beneficial interest in junior subordinated debentures (trust preferred securities). During June 2002, the Trust issued $10 million in floating rate Cumulative Trust Preferred Securities (Securities). The Securities bear interest at a rate of Libor plus 3.45% and had an initial interest rate of 5.34%; as of March 31, 2004 the interest rate was 4.56%; the Securities will mature on June 26, 2032, but earlier redemption is permitted under certain circumstances, such as changes in tax or regulatory capital rules. As previously discussed the Company de-consolidated the Trust as of March 31, 2004. As a result, the junior subordinated debentures issued by the Company to the issuer trust, totaling $10,310,000 are reflected on the Company's consolidated balance sheet, under the caption Subordinated Debentures. The Company also recognized its $310,000 investment in the trust, which is recorded in Investment in Subsidiary. The Trust has no independent assets or operations and exist for the sole purpose of issuing trust preferred securities and investing the proceeds thereof in an equivalent amount of subordinated debentures issued by 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 June 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 March 31, 2004 liquid assets were 29% of total assets, compared with 35% as of March 31, 2003. 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 March 31, 2004, the Company's risk-based capital ratio was 13.27%. The Company's tier 1 risk-based capital ratio and leverage ratio were 12.34% and 10.61%, respectively. 15 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) Mininum Regulatory Requirements Amount Ratio Amount Ratio Amount Ratio ------ ----- ------ ----- ------ ----- As of March 31, 2004: Total Capital (to Risk Weighted Assets) Consolidated $53,203 13.27% $32,086 8.00% $40,108 less than or equal to 10.00% The Vintage Bank 35,903 11.60% 24,767 8.00% 30,959 less than or equal to 10.00% Solano Bank 9,138 10.40% 7,031 8.00% 8,789 less than or equal to 10.00% Tier I Capital (to Risk Weighted Assets) Consolidated 49,500 12.34% 16,043 4.00% 24,064 less than or equal to 6.00% The Vintage Bank 32,938 10.64% 12,383 4.00% 18,575 less than or equal to 6.00% Solano Bank 8,400 9.56% 3,516 4.00% 5,274 less than or equal to 6.00% Tier I Capital (to Average Assets) Consolidated 49,500 10.61% 18,657 4.00% 23,321 less than or equal to 5.00% The Vintage Bank 32,938 9.11% 14,470 4.00% 18,088 less than or equal to 5.00% Solano Bank 8,400 9.00% 3,734 4.00% 4,667 less than or equal to 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 March 31, 2004 and December 31, 2003 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, 2003. 16 Item 4. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures: Based on their evaluation as of March 31, 2004, 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. Changes in Internal Controls: There have not been any significant changes in our internal controls over financial reporting or in other factors that could significantly affect these controls subsequent to the date of their evaluation. 17 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 20. (b) During the quarter ended March 31, 2004 the Company filed the following Current Reports on Form 8-K: Filed January 29, 2004, under Item 5 of Form 8-K, reported that it will increase its provision for income taxes for 2003 due to a recent announcement by the California Franchise Tax Board regarding its position on the tax treatment of certain real estate investment vehicles. As a result, the registrant's 2003 net income will be reduced by approximately $386,000 or 17 cents per share. Filed February 6, 2004, under Items 5 and 9 of Form 8-K, declaring a 5% stock dividend and a 20-cents-per-share cash dividend, payable March 29, 2004 to shareholders as of March 12, 2004. Filed February 24, 2004, under Item 12 of Form 8-K, reporting net income of $4.4 million for year ended December 31, 2003. Filed March 4, 2004, under Item 5 of Form 8-K, announcing plans to consolidate its bank subsidiary charters as part of a corporate initiative to simplify and streamline its corporate structure, increase efficiency and improve operating performance. No financial statements were filed with the Current Reports on Form 8-K. 18 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: May 13 , 2004 BY: /s/ Terry L. Robinson -------------------------------- Terry L. Robinson President & CEO Principal Executive Officer Date: May 13, 2004 BY: /s/ Lee-Ann Cimino -------------------------------- Lee-Ann Cimino Senior Vice President Principal Financial Officer 19 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 20 EX-31 2 p18513-ex31_1.txt EXHIBIT 31.1 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: May 13, 2004 /s/ Terry L. Robinson -------------------------------------- Terry L. Robinson President and Chief Executive Officer Principal Executive Officer 21 EX-31 3 p18513-ex31_2.txt EXHIBIT 31.2 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: May 13, 2004 /s/ Lee-Ann Cimino ----------------------------------------------------- Lee-Ann Cimino Senior Vice President and Chief Financial Officer Principal Financial Officer 22 EX-32 4 p18513-ex32_1.txt EXHIBIT 32.1 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 March 31, 2004, 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 March 31, 2004, 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 March 31, 2004, fairly presents, in all material respects, the financial condition and results of operations of North Bay Bancorp. Dated: May 13, 2004 /s/ Terry L. Robinson -------------------------------------- TERRY L. ROBINSON President and Chief Executive Officer 23 EX-32 5 p18513-ex32_2.txt EXHIBIT 32.2 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 March 31, 2004, 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 March 31, 2004, 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 March 31, 2004, fairly presents, in all material respects, the financial condition and results of operations of North Bay Bancorp. Dated: May 13, 2004 /s/ Lee-Ann Cimino -------------------------------- LEE-ANN CIMINO Chief Financial Officer 24 -----END PRIVACY-ENHANCED MESSAGE-----