EX-99 2 p18757-ex99_1.txt EXHIBIT 99.1 Exhibit 99.1 NORTH BAY BANCORP LOGO Contact:: Terry L. Robinson, President & CEO trobinson@northbaybancorp.com 707-252-5024 THE CEREGHINO GROUP LOGO corporate investor relations 5333 15TH AVENUE SOUTH, SUITE 1500 SEATTLE, WA 98108 206.762.0993. NORTH BAY BANCORP'S SECOND QUARTER PROFITS INCREASE 19%, -------------------------------------------------------- LOAN PORTFOLIO GROWS 30% AND CORE DEPOSITS INCREASE 20% ------------------------------------------------------- Napa, CA - July 21, 2004 - North Bay Bancorp (Nasdaq: NBAN), holding company for The Vintage Bank and Solano Bank, today announced profits grew 19% in the second quarter with 30% growth in the loan portfolio and 20% rise in core deposits from the previous year. Net income totaled $1.2 million, or $0.48 per diluted share in the second quarter, compared to $1.0 million, or $0.42 per diluted share in the second quarter of 2003. For the first six months of 2004, net income grew 18% to $2.2 million, or $0.90 per diluted share, compared to $1.9 million, or $0.78 per diluted share in the first half of 2003. "The economy in the North Bay area continues to grow, with strength in construction, tourism, services and wine. Our franchise is located in the heart of California's wine country, with Napa County being home to over 300 wineries. The wine industry, which contributes an estimated $45 billion to the state's economy, is seeing improving conditions with prices firming and demand rising," commented Terry Robinson, President and CEO. "The strength in the economies of both Napa and Solano Counties is translating into solid demand for business loans and excellent deposit growth." Second Quarter 2004 Financial Review and Operating Highlights (quarter ended 6/30/04 compared to 6/30/03) o Net income increased 19% to $1.2 million. o Pre-tax income rose 41% to $1.9 million. o Earnings per diluted share increased 14% to $0.48. o Revenues increased 19% to $6.4 million. o Commercial real estate loans grew 38% to $216 million and account for 64% of the loan portfolio. o Asset quality remained exemplary with no nonperforming assets at quarter end. "Our tenth office, scheduled to open in American Canyon in August, marks the culmination of our branch expansion efforts over the past four years. The seven new offices opened since July 2000 have more than doubled our franchise and provided excellent opportunities for growth. American Canyon is a promising market for us with very strong activity in new housing construction, a growing population, a solid small business community and an inviting competitive banking environment," Robinson noted. 4 Operating Results Revenues: Total revenues, consisting of net interest income before the provision for loan losses and non-interest income, excluding securities gains, increased 19% to $6.4 million in the second quarter of 2004 from $5.4 million in the second quarter of 2003. In the first half of 2004, revenues increased 20% to $12.8 million from $10.6 million in the first half of 2003. Net interest income increased 16% to $5.4 million in the second quarter of 2004 compared to $4.7 million in the second quarter of 2003 with interest income growing 15% and interest expense up 5%. In the first six months of 2004, net interest income rose 17% to $10.8 million from $9.2 million in the first half of 2003. Although there are no nonperforming loans, the second quarter provision for loan losses increased to $174,000 from $45,000 for the second quarter of last year, to compensate for growth in the overall loan portfolio. Year-to-date, the loan loss provision increased to $360,000 from $90,000 in the first half of 2003. Second quarter net interest income after the provision for loan losses increased 14% to $5.3 million compared to $4.6 million in the second quarter the previous year, and grew 15% to $10.5 million in the first half of the year from $9.1 million in the first half of 2003. Net interest margin: "In the second quarter, we initiated a leverage strategy to take advantage of excess capital and improve return on equity with only modest interest rate risk for the overall transaction," said Lee-Ann Cimino, Chief Financial Officer. North Bay Bancorp increased borrowings by $19 million and invested the funds into its securities portfolio. This should boost net interest income by approximately $75,000 per quarter. While this strategy lowered net interest margin overall, it provides significant benefits at very moderate risk." Net interest margin was 4.80% in the second quarter and 5.01% in the first half of 2004, compared to 4.85% and 4.91% in the respective periods of 2003. Non-interest income increased 19% to $1.3 million in the second quarter of 2004 from $1.1 million in the second quarter of 2003. Included in non-interest income are investment gains of $262,000 in the second quarter of 2004 compared with $331,000 in the second quarter of 2003. Year-to-date, non-interest income increased 20% to $2.2 million from $1.9 million for the first half of 2003. Investment gains for the first six months of the year totaled $262,000 and $430,000 for 2004 and 2003, respectively. Non-interest expenses in the second quarter increased 6% to $4.6 million from $4.3 million in the second quarter of 2003. In the first six months of 2004, operating expenses increased 10% to $9.2 million from $8.3 million in the like period of 2003. The tax equivalent efficiency ratio in the second quarter improved to 67.15% compared to 73.81% in the second quarter last year, and dropped to 68.90% in the first half of 2004 from 73.55% in the first half of 2003. The efficiency ratio measures operating expenses as a percent of revenues. Pre-tax Income increased 41% in the second quarter of 2004 to $1.9 million from $1.4 million in the second quarter of 2003. Pre-tax income rose 33% in the first half of the year to $3.5 million from $2.7 million in the first half of 2003. Income taxes increased in the second quarter of 2004 reflecting higher earnings and changes in tax treatment of certain investments from a year ago. The tax provision increased to $740,000, or 38% of second quarter pre-tax income, compared to $366,000, or 27% of second quarter pre-tax income in 2003. For the first half of 2004, the provision for income tax was $1.3 million, or 36% of pre-tax income, compared to $752,000, or 28% of pre-tax income in the first half of 2003. Earnings ratios improved with return on equity and return on assets up for the second quarter and first six months of 2004. "In the second quarter we streamlined our Board structure by consolidating the members of the Boards of The Vintage Bank and Solano Bank so that the identity of the members of the Boards of each Bank as well as of North Bay Bancorp are the same, and we initiated the process to combine the charters of the two banks," Robinson noted. "The benefits in terms of management time and reduced expenses are just beginning to accrue, and we are continuing to seek opportunities to improve operational efficiency." North Bay generated a return on average equity of 12.05% in the second quarter and 11.43% in the first half of 2004 compared to 11.11% and 10.57% in the respective periods of 2003. Return on average assets was 0.95% in the second quarter and 0.92% in the first half of 2004 compared to 0.95% in the second quarter and 0.91% in the first half of 2003. 5 Balance Sheet ------------- Total assets were $522 million as of June 30, 2004, a 20% increase from June 30, 2003. Deposits grew 17% during the year to $449 million, with growth in both average balances and the number of new checking accounts. Loans, net of the allowance for loan losses, grew 30% to $334 million, up from $256 million from the second quarter last year. Book value per share was $16.70 per share compared to $16.52 per share at the end of the second quarter of 2003. Asset quality remains excellent with no nonperforming loans as of June 30, 2004. The allowance for loan and lease losses was $3.8 million, or 1.11% of loans outstanding at quarter end, compared to $3.4 million or 1.29% of loans outstanding at the end of the second quarter of 2003. Net charge-offs year-to-date were $102,000, compared to $7,000 charged off in the first half of 2003. ABOUT NORTH BAY BANCORP North Bay Bancorp is the parent company of two community banks in the North Bay Region of Northern California--The Vintage Bank based in Napa County and Solano Bank based in Solano County. Both subsidiaries are full service commercial banks offering a wide selection of deposit, loan and investment services to local consumers and small business customers. The Vintage Bank, which opened for business in 1985, currently operates five banking offices in Napa County, Northern California's number one tourist destination and the nation's premier wine producing region. The Bank's main office and two branch offices are located in the City of Napa. Vintage also has a branch in the City of St. Helena, a branch on Airport Road in the Southern industrial area of Napa County and an off-site ATM facility in Yountville. A sixth office located in American Canyon is scheduled to open in August 2004. Solano Bank, which opened in July 2000, operates offices in the primary cities along the I-80 corridor of Solano County. The Bank's main office is located in Vacaville, with branch offices in Fairfield, Vallejo and Benicia and an off-site ATM facility in downtown Fairfield. This region, projected to be the fastest growing county in Northern California through year 2020, is attracting businesses and residents with a quality lifestyle, affordable housing and business-friendly attitudes. This news release contains forward-looking statements with respect to the financial condition, results of operation and business of North Bay Bancorp and its subsidiaries. These include, but are not limited to, statements that relate to or are dependent on estimates or assumptions relating to the prospects of loan growth, credit quality and certain operating efficiencies resulting from the operations of The Vintage Bank and Solano Bank. These forward-looking statements involve certain risks and uncertainties. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following possibilities: (1) competitive pressure among financial services companies increases significantly; (2) changes in the interest rate environment on interest margins; (3) general economic conditions, internationally, nationally or in the State of California are less favorable than expected; (4) legislation or regulatory requirements or changes adversely affect the business in which the combined organization will be engaged; and (5) other risks detailed in the North Bay Bancorp reports filed with the Securities and Exchange Commission. 6
NORTH BAY BANCORP ------------------------------------------------------------------------------------------------------------------------------------ CONSOLIDATED INCOME STATEMENT 3-Month Period Ended: 6-Month Period Ended: (in $000's, unaudited) 6/30/2004 6/30/2003 % Change 6/30/2004 6/30/2003 % Change --------- --------- -------- --------- --------- -------- Interest Income $ 6,294 $ 5,494 14.6% $ 12,358 $ 10,855 13.8% Interest Expense 859 819 4.9% 1,547 1,647 -6.1% ----------- ----------- ----------- ----------- Net Interest Income 5,435 4,675 16.3% 10,811 9,208 17.4% Provision for Loan & Lease Losses 174 45 286.7% 360 90 300.0% ----------- ----------- ----------- ----------- Net Interest Income after Loan Loss Provision 5,261 4,630 13.6% 10,451 9,118 14.6% Service Charges 567 345 64.3% 1,120 699 60.2% Loan Sale & Servicing Income 14 56 -75.0% 19 56 -66.1% Bank Owned Life Insurance Income 88 75 17.3% 192 183 4.9% Other Non-Interest Income 326 252 29.4% 650 499 30.3% Gain on Investments 262 331 -20.8% 262 430 -39.1% ----------- ----------- ----------- ----------- Total Non-Interest Income 1,257 1,059 18.7% 2,243 1,867 20.1% Salaries & Benefits 2,563 2,252 13.8% 5,067 4,558 11.2% Occupancy Expense 344 318 8.2% 711 575 23.7% Equipment Expense 515 295 74.6% 1,007 745 35.2% Other Non-Interest Expenses 1,149 1,446 -20.5% 2,383 2,448 -2.7% ----------- ----------- ----------- ----------- Total Non-Interest Expenses 4,571 4,311 6.0% 9,168 8,326 10.1% Income Before Taxes 1,947 1,378 41.3% 3,526 2,659 32.6% Provision for Income Taxes 740 366 102.2% 1,284 752 70.7% ----------- ----------- ----------- ----------- Net Income $ 1,207 $ 1,012 19.3% $ 2,242 $ 1,907 17.6% =========== =========== =========== =========== ------------------------------------------------------------------------------------------------------------------------------------ TAX DATA Tax-Exempt Muni Income $ 136 $ 132 3.0% $ 296 $ 292 1.4% Tax-Exempt BOLI Income $ 88 $ 75 17.3% $ 192 $ 183 4.9% Interest Income - Fully Tax Equivalent $ 6,322 $ 5,515 14.6% $ 12,454 $ 10,958 13.7% ----------- ----------- ----------- ----------- ------------------------------------------------------------------------------------------------------------------------------------ NET CHARGE-OFFS (RECOVERIES) $ 95 $ (1) NM $ 102 $ 7 NM ----------- ----------- ----------- ----------- ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA 3-Month Period Ended: 6-Month Period Ended: (unaudited) 6/30/2004 6/30/2003 % Change 6/30/2004 6/30/2003 % Change --------- --------- -------- --------- --------- -------- Basic Earnings per Share $ 0.50 $ 0.43 16.3% $ 0.93 $ 0.81 14.8% Diluted Earnings per Share $ 0.48 $ 0.42 14.3% $ 0.90 $ 0.78 15.4% Common Dividends $ 0.00 $ 0.00 $ 0.20 $ 0.20 0.0% Wtd. Avg. Shares Outstanding 2,421,695 2,377,116 2,404,823 2,364,384 Wtd. Avg. Diluted Shares 2,499,822 2,430,420 2,484,827 2,428,871 Book Value per Basic Share (EOP) $ 16.70 $ 16.52 1.1% $ 16.70 $ 16.52 1.1% Common Shares Outstanding. (EOP) 2,417,572 2,282,521 2,417,572 2,282,521 ----------- ----------- ----------- ----------- ------------------------------------------------------------------------------------------------------------------------------------ KEY FINANCIAL RATIOS 3-Month Period Ended: 6-Month Period Ended: (unaudited) 6/30/2004 6/30/2003 6/30/2004 6/30/2003 --------- --------- --------- --------- Return on Average Equity 12.05% 11.11% 11.43% 10.57% Return on Average Assets 0.95% 0.95% 0.92% 0.91% Net Interest Margin (Tax-Equivalent) 4.80% 4.85% 5.01% 4.91% Efficiency Ratio (Tax-Equivalent) 67.15% 73.81% 68.90% 73.55% ------------------------------------------------------------------------------------------------------------------------------------ AVERAGE BALANCES 3-Month Period Ended: 6-Month Period Ended: (in $000's, unaudited) 6/30/2004 6/30/2003 % Change 6/30/2004 6/30/2003 % Change --------- --------- -------- --------- --------- -------- Average Assets $ 512,194 $ 432,183 18.5% $ 489,237 $ 422,844 15.7% Average Earning Assets $ 456,352 $ 386,969 17.9% $ 435,713 $ 378,968 15.0% Average Gross Loans & Leases $ 344,421 $ 268,922 28.1% $ 329,081 $ 257,598 27.7% Average Deposits $ 442,839 $ 378,720 16.9% $ 427,678 $ 371,206 15.2% Average Equity $ 40,300 $ 36,938 9.1% $ 39,449 $ 36,393 8.4% NM: not meaningful ------------------------------------------------------------------------------------------------------------------------------------
7 -------------------------------------------------------------------------------- STATEMENT OF CONDITION End of Period: (in $000's, unaudited) 6/30/2004 6/30/2003 Annual Chg --------- --------- ---------- ASSETS Cash and Due from Banks $ 35,840 $ 27,659 29.6% Securities and Fed Funds Sold 108,139 109,157 -0.9% --------- --------- -------------------------------------------------------------------------------- Commercial & Industrial 57,869 51,755 11.8% Commercial Secured by Real Estate 215,819 156,732 37.7% Real Estate 6,233 8,068 -22.7% Construction 27,114 20,473 32.4% Consumer 32,470 24,012 35.2% --------- --------- Gross Loans & Leases 339,505 261,040 30.1% Deferred Loan Fees (1,365) (1,227) 11.2% --------- --------- Loans & Leases Net of Deferred Fees 338,140 259,813 30.1% Allowance for Loan & Lease Losses (3,782) (3,373) 12.1% --------- --------- Net Loans & Leases 334,358 256,440 30.4% Loans Held-for-Sale 18,855 19,538 -3.5% Investment in Subsidiary 310 -- 100.0% Bank Premises & Equipment 10,691 11,166 -4.3% Other Assets 13,636 11,484 18.7% --------- --------- Total Assets $ 521,829 $ 435,444 19.8% ========= ========= LIABILITIES & CAPITAL Demand Deposits $ 114,657 $ 102,107 12.3% NOW / Savings Deposits 136,183 117,805 15.6% Money Market Deposits 119,461 89,861 32.9% Time Certificates of Deposit 78,492 74,666 5.1% --------- --------- Total Deposits 448,793 384,439 16.7% Long Term Borrowings 19,000 -- 100.0% Trust Preferred Securities 10,310 10,000 3.1% --------- --------- Total Deposits & Interest Bearing Liab 478,103 394,439 21.2% Other Liabilities 3,364 3,300 1.9% Total Capital 40,362 37,705 7.0% --------- --------- Total Liabilities & Capital $ 521,829 $ 435,444 19.8% ========= ========= -------------------------------------------------------------------------------- CREDIT QUALITY DATA End of Period: (in $000's, unaudited) 6/30/2004 6/30/2003 --------- --------- Non-Accruing Loans $ -- $ -- Over 90 Days PD and Still Accruing 0 0 Other Real Estate Owned 0 0 --------- --------- Total Non-Performing Assets $ -- $ -- --------- --------- -------------------------------------------------------------------------------- Non-Performing Loans to Total Loans 0.00% 0.00% Non-Performing Assets to Total Assets 0.00% 0.00% Allowance for Loan Losses to Loans 1.11% 1.29% -------------------------------------------------------------------------------- OTHER PERIOD-END STATISTICS End of Period: (unaudited) 6/30/2004 6/30/2003 --------- --------- Shareholders' Equity / Total Assets 7.7% 8.7% Loans / Deposits 75.6% 67.9% Non-Interest Bearing Deposits / Total Deposits 25.5% 26.6% -------------------------------------------------------------------------------- 8