-----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, FiW3YSSb0k53+GVtsRkDSriUS9dOGICymgXrFae7RyJdFRoNK3nRzUJ8PuAtphH1 GZeKGrMVGSfsRj8hkIRKkw== 0001019056-04-000687.txt : 20040512 0001019056-04-000687.hdr.sgml : 20040512 20040512093339 ACCESSION NUMBER: 0001019056-04-000687 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20040331 FILED AS OF DATE: 20040512 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FNB BANCORP/CA/ CENTRAL INDEX KEY: 0001163199 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 922115369 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-49693 FILM NUMBER: 04797704 BUSINESS ADDRESS: STREET 1: 975 EL CAMINO REAL 3RD FL STREET 2: C/O FIRST NATIONAL BANK CITY: S. SAN FRANCISCO STATE: CA ZIP: 94080 BUSINESS PHONE: 6505886800 MAIL ADDRESS: STREET 1: 975 EL CAMINO REAL 3RD FL STREET 2: C/O FIRST NATIONAL BANK CITY: S. SAN FRANCISCO STATE: CA ZIP: 94080 10-Q 1 fnb_q.txt FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended March 31, 2004 --------------------------------------------- FNB BANCORP (Exact name of registrant as specified in its charter) California (State or other jurisdiction of incorporation) 000-49693 92-2115369 (Commission File Number) (IRS Employer Identification No.) 975 El Camino Real, South San Francisco, California 94080 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (650) 588-6800 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Common Stock as of May 5, 2004: 2,503,000 shares. PART I--FINANCIAL INFORMATION Item 1. Financial Statements. FNB BANCORP AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Dollars in thousands) ASSETS
March 31 December 31 2004 2003 ------------ ------------ Cash and due from banks $ 15,997 $ 22,764 Federal funds sold 21,170 7,880 ------------ ------------ Cash and cash equivalents 37,167 30,644 Securities available-for-sale 52,482 63,692 Loans, net 315,839 312,929 Bank premises, equipment, and leasehold improvements 11,276 10,904 Other real estate owned 5,827 -- Accrued interest receivable and other assets 12,667 11,279 ------------ ------------ $ 435,258 $ 429,448 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Deposits Demand, noninterest bearing $ 101,752 $ 96,567 Demand, interest bearing 56,893 62,974 Savings and money market 129,158 122,705 Time 90,521 91,968 ------------ ------------ Total deposits 378,324 374,214 Accrued expenses and other liabilities 4,901 3,247 ------------ ------------ Total liabilities 383,225 377,461 ------------ ------------ Stockholders' equity Common stock, no par value, authorized 10,000,000 shares; issued and outstanding 2,514,000 shares at March 31, 2004 and 2,519,000 shares at December 31, 2003 28,587 28,903 Additional paid-in capital 3 3 Retained earnings 22,339 22,041 Accumulated other comprehensive income 1,104 1,040 ------------ ------------ Total stockholders' equity 52,033 51,987 ------------ ------------ Total liabilities and stockholders' equity $ 435,258 $ 429,448 ============ ============
See accompanying notes to consolidated financial statements. 2 FNB BANCORP AND SUBSIDIARY CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) (Dollars in thousands, except per share amounts) Three months ended March 31, ----------------------- 2004 2003 ---------- ---------- Interest income: Interest and fees on loans $ 5,191 $ 5,045 Interest on securities 223 425 Interest on tax-exempt securities 291 320 Federal funds sold 32 22 ---------- ---------- Total interest income 5,737 5,812 ---------- ---------- Interest expense: Interest on deposits 563 750 ---------- ---------- Total interest expense 563 750 ---------- ---------- Net interest income 5,174 5,062 Provision for loan losses 120 620 ---------- ---------- Net interest income after provision for loan losses 5,054 4,442 ---------- ---------- Noninterest income: Service charges 661 680 Credit card fees 207 203 Other income 55 96 ---------- ---------- Total noninterest income 923 979 ---------- ---------- Noninterest expense: Salaries and employee benefits 2,690 2,831 Occupancy expense 358 323 Equipment expense 422 379 Professional fees 250 197 Telephone, postage and supplies 313 234 Bankcard expenses 178 186 Other expense 534 446 ---------- ---------- Total noninterest expense 4,745 4,596 ---------- ---------- Earnings before income tax expense 1,232 825 Income tax expense 329 207 ---------- ---------- NET EARNINGS $ 903 $ 618 ========== ========== Earnings per share data: Basic $ 0.36 $ 0.24 Diluted $ 0.35 $ 0.24 Weighted average shares outstanding: Basic 2,520,000 2,557,000 Diluted 2,566,000 2,560,000 See accompanying notes to consolidated financial statements 3 FNB BANCORP AND SUBSIDIARY CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (Dollars in thousands) Three months ended March 31, ----------------------- 2004 2003 ---------- ---------- Net earnings $ 903 $ 618 Unrealized gain/(loss) on AFS securities 64 (411) ---------- ---------- Total comprehensive income $ 967 $ 207 ========== ========== See accompanying notes to consolidated financial statements. FNB BANCORP AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Dollars in thousands)
Three months ended March 31 ------------------------ 2004 2003 ---------- ---------- Cash flow from operating activities Net earnings $ 903 $ 618 Adjustments to reconcile net earnings to net cash provided by operating activities Depreciation and amortization 442 407 Provision for loan losses 120 620 Changes in assets and liabilities: Accrued interest receivable and other assets (1,388) 622 Accrued expenses and other liabilities 1,610 (552) ---------- ---------- Net cash provided by operating activities 1,687 1,715 ---------- ---------- Cash flows from investing activities Purchase of securities available-for-sale -- (3,975) Proceeds from matured/called/securities available-for-sale 11,183 12,710 Net increase in loans (3,030) (2,696) Net increase in other real estate owned (5,827) -- Proceeds from sale of bank premises, equipment and leasehold improvements 21 -- Purchases of bank premises, equipment, leasehold improvements (700) (157) ---------- ---------- Net cash provided by investing activities 1,647 5,882 ---------- ---------- Cash flows from financing activities Net increase in demand and savings deposits 5,557 3,251 Net increase (decrease) in time deposits (1,447) 523 Dividends paid (605) (293) Repurchase of common stock (420) -- Issuance of common stock 104 -- Payments on capital note payable -- (78) ---------- ---------- Net cash provided by financing activities 3,189 3,403 ---------- ---------- NET INCREASE IN CASH AND CASH EQUIVALENTS 6,523 11,000 Cash and cash equivalents at beginning of period 30,644 20,199 ---------- ---------- Cash and cash equivalents at end of period $ 37,167 $ 31,199 ========== ========== Additional cash flow information Interest paid $ 553 $ 813 Income taxes paid $ 250 $ --
See accompanying notes to consolidated financial statements. 4 FNB BANCORP AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2004 (UNAUDITED) NOTE A - BASIS OF PRESENTATION FNB Bancorp (the "Company") is a bank holding company registered under the Bank Holding Company Act of 1956, as amended. The Company was incorporated under the laws of the State of California on February 28, 2001. The consolidated financial statements include the accounts of FNB Bancorp and its wholly owned subsidiary, First National Bank of Northern California (the "Bank"). The Bank provides traditional banking services in San Mateo and San Francisco counties. The Bank and the Company entered into an Agreement and Plan of Reorganization dated November 1, 2001 (the "Plan of Reorganization"), and the shareholders of the Bank approved the Plan of Reorganization at a Special Meeting of the Shareholders of the Bank held on February 27, 2002. The Plan of Reorganization was consummated on March 15, 2002. Each outstanding share of the common stock, par value $1.25 per share, of the Bank (other than any shares as to which dissenters' rights of appraisal have been properly exercised) was converted into one share of the common stock of the Company, and the former holders of Bank common stock became the holders of all of the Company's common stock. The change in capital structure has been included for all periods presented. All intercompany transactions and balances have been eliminated in consolidation. The financial statements include all adjustments of a normal and recurring nature, which are, in the opinion of management, necessary for a fair presentation of the financial results for the interim periods. The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all information and footnotes normally included in financial statements prepared in conformity with accounting principles generally accepted in the United States of America. Accordingly, these financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2003. Results of operations for interim periods are not necessarily indicative of results for the full year. NOTE B - STOCK OPTION PLAN At March 31, 2004, the Company has two stock-based employee compensation plans. Prior to 2003, the Company accounted for the plan under the recognition and measurement provisions of APB Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations. Effective January 1, 2003, the Company adopted the fair value recognition provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation, prospectively to all employee awards granted, modified, or settled after January 1, 2003. Therefore, the cost related to stock-based employee compensation included in the determination of net income for 2003 and 2004 is less than that which would have been recognized if the fair value based method had been applied to all awards since the original effective date of Statement No. 123. Awards under the Company's plan vest over periods ranging from three to five years. The following table illustrates the effect on net income and earnings per share if the fair value based method had been applied to all outstanding and unvested awards in each period. 5 (In thousands, except per share) Three months ended March 31 ------------------------ 2004 2003 ---------- ---------- Net income as reported $ 903 $ 618 Add: stock-based employee compensation expense included in reported net income, net of related tax effects 1 -- Deduct: total stock-based employee compensation expense determined under fair value method for all awards, net of related tax effect (1) (2) Pro forma net income $ 903 $ 616 Earnings per share: Basic - as reported $ 0.36 $ 0.24 Basic - pro forma $ 0.36 $ 0.24 Diluted - as reported $ 0.35 $ 0.24 Diluted - pro forma $ 0.35 $ 0.24 NOTE C - LOANS The loan portfolio consisted of the following at the dates indicated: March 31, December 31, (In thousands) 2004 2003 ---------- ---------- Real Estate $ 226,906 $ 214,588 Construction 37,758 48,610 Commercial 53,936 52,248 Consumer 2,000 2,551 ---------- ---------- Gross loans 320,600 317,997 Net deferred loan fees (1,742) (1,784) Allowance for loan losses (3,019) (3,284) ---------- ---------- Net loans $ 315,839 $ 312,929 ========== ========== NOTE D - EARNINGS PER SHARE CALCULATION Earnings per common share (EPS) are computed based on the weighted average number of common shares outstanding during the period. Basic EPS excludes dilution and is computed by dividing net earnings by the weighted average of common shares outstanding. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. Earnings per share have been computed based on the following (dollars in thousands): 6 Three months ended (In thousands, except number of shares) March 31 ------------------------ 2004 2003 ---------- ---------- Net earnings $ 903 $ 618 Average number of shares outstanding 2,520,000 2,557,000 Effect of dilutive options 46,000 3,000 Average number of shares outstanding used To calculate diluted earnings per share 2,566,000 2,560,000 All outstanding options were included in the 2004 and 2003 computations. NOTE E - COMPREHENSIVE INCOME Comprehensive income is the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. Other comprehensive income consists of net unrealized gains on investment securities available for sale. Comprehensive income for the three months ended March 31, 2004 was $967,000 compared to $207,000 for the three months ended March 31, 2003. NOTE F - OTHER REAL ESTATE OWNED Loans that have become delinquent through non payment of scheduled principal and/or interest for 90 days are placed in nonaccrual and interest is no longer accrued. If a favorable restructuring can not be made for the loan (provided the market value of the collateral is sufficient), or, if insufficient, or the borrower is unable to make further payments, foreclosure procedures are initiated. If there are no bidders, or if bids are made and are insufficient to cover the debt, the Bank will acquire the property at sale under judgments, decrees, or mortgages where the property was originally security for debts previously contracted. During the quarter ended March 31, 2004 the Company foreclosed on a loan secured by a residential care facility, and placed it in Other Real Estate Owned. It was booked at its cost of $5,828,000, and an appraisal was ordered. The appraisal was received in April, showing a market value of $7,000,000. NOTE G - STOCK REPURCHASE PROGRAM On July 25, 2003, the Board of Directors authorized a stock repurchase program, which calls for the repurchase of up to 5% of the Company's shares, which at that time represented 121,852 shares, based on approximately 2,437,043 shares outstanding at that date. On January 23, 2004 the Board of Directors of the registrant authorized an extension of the FNB Bancorp stock repurchase program previously adopted on July 25, 2003. Through March 31, 2004, a total of 52,160 shares, or approximately 2.04% of the shares outstanding on that date (adjusted for the stock dividend paid by the registrant on December 15, 2003, to shareholders of record on November 28, 2003) had been repurchased pursuant to the program. 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Critical Accounting Policies And Estimates ------------------------------------------ Management's discussion and analysis of its financial condition and results of operations are based upon the Company's financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including those related to its loans and allowance for loan losses. The Company bases its estimates on current market conditions, historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The Company believes the following policies require significant judgments and estimates. Allowance for Loan Losses ------------------------- The allowance for loan losses is periodically evaluated for adequacy by management. Factors considered include the Company's loan loss experience, known and inherent risks in the portfolio, current economic conditions, known adverse situations that may affect the borrower's ability to repay, regulatory policies, and the estimated value of underlying collateral. The evaluation of the adequacy of the allowance is based on the above factors along with prevailing and anticipated economic conditions that may impact borrowers' ability to repay loans. Determination of the allowance is in part objective and in part a subjective judgment by management based on the information it currently has in its possession. Adverse changes in any of these factors or the discovery of new adverse information could result in higher than expected charge-offs and loan loss provisions. Earnings Analysis ----------------- Net earnings for the quarter ended March 31, 2004 were $903,000, compared to net earnings of $618,000 for the quarter ended March 31, 2003. Earnings before income tax expense for the quarter ended March 31, 2004 were $1,232,000, compared to $825,000 for the quarter ended March 31, 2003. This improvement of $407,000 was largely attributable to a decline in the provision for loan losses, which was $500,000 lower in the 2004 quarter than in the 2003 quarter. Net interest income for the quarter ended March 31, 2004 was $5,174,000, compared to $5,062,000 for the quarter ended March 31, 2003. The prime lending rate was 4.00% in the first quarter of 2004 compared to 4.25% in the first quarter of 2003. The Federal Home Loan Bank of San Francisco's Weighted Monthly Cost of Funds Index announced for the three months ended March 2004, averaged 1.85%, compared to 2.31% for the three months ended March 2003. Net interest income is the difference between interest yield generated by earning assets and the interest expense associated with the funding of those assets. Basic earnings per share were $0.36 for the first quarter of 2004 compared to $0.24 for the first quarter of 2003. Diluted earnings per share were $0.35 for the first quarter of 2004 compared to $0.24 for the first quarter of 2003. 8 The following table presents an analysis of net interest income and average earning assets and liabilities for the three-month period ended March 31, 2004 compared to the three-month period ended March 31, 2003.
Table 1 NET INTEREST INCOME AND AVERAGE BALANCES - ------- FNB BANCORP AND SUBSIDIARY (Dollars in thousands) Three months ended March 31, ------------------------------------------------------------------------------- 2004 2003 ------------------------------------- ------------------------------------- Annualized Annualized Interest Average Interest Average Average Income Yield Average Income Yield INTEREST EARNING ASSETS Balance (Expense) (Cost) Balance (Expense) (Cost) ---------- ---------- ---------- ---------- ---------- ---------- Loans, gross $ 314,565 $ 5,191 6.64% $ 288,024 $ 5,045 7.10% Taxable securities 26,933 223 3.58 42,229 425 4.08 Nontaxable securities 32,531 291 3.31 30,882 320 4.20 Federal funds sold 13,376 32 0.96 7,609 22 1.17 ---------- ---------- ---------- ---------- Total interest earning assets $ 387,405 $ 5,737 5.96 $ 368,744 $ 5,812 6.39 NONINTEREST EARNING ASSETS Cash and due from banks $ 18,158 $ 18,250 Premises and equipment 11,048 11,141 Other assets 12,762 6,100 ---------- ---------- Total noninterest earning assets $ 41,968 $ 35,491 ---------- ---------- TOTAL ASSETS $ 429,373 $ 404,235 ========== ========== INTEREST BEARING LIABILITIES Deposits: Demand, interest bearing $ 57,486 ($ 31) (0.22) $ 49,949 ($ 28) (0.23) Money market 67,080 (127) (0.76) 64,271 (165) (1.04) Savings 58,313 (38) (0.26) 53,861 (53) (0.40) Time deposits 92,229 (367) (1.60) 89,670 (504) (2.28) Federal funds purchased and other Borrowings -- -- -- 43 -- -- ---------- ---------- ---------- ---------- Total interest bearing liabilities $ 275,108 ($ 563) (0.82) $ 257,794 ($ 750) (1.18) ---------- ---------- ---------- ---------- NONINTEREST BEARING LIABILITIES Demand deposits 96,252 89,643 Other liabilities 5,663 4,940 ---------- ---------- Total noninterest bearing liabilities $ 101,915 $ 94,583 ---------- ---------- TOTAL LIABILITIES $ 377,023 $ 352,377 Stockholders' equity $ 52,350 $ 51,858 ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 429,373 $ 404,235 ========== ========== NET INTEREST INCOME AND MARGIN ON TOTAL EARNING ASSETS $ 5,174 5.37% $ 5,062 5.57%
Interest income is reflected on an actual basis, not on a fully taxable basis due to immaterial effect. Yield on gross loans was not adjusted for nonaccrual loans, which were not considered material for this calculation. 9 Table 1, above, shows the various components that contributed to changes in net interest income for the two quarterly periods of 2004 and 2003. The principal interest earning assets are loans, from a volume perspective as well as from an earnings rate. For the quarter ended March 31, 2004, average loans outstanding represented 81.2% of average earning assets. For the quarter ended March 31, 2003, they represented 78.1% of average earning assets. While the yield on total interest earning assets decreased from 6.39% to 5.96%, or 43 basis points, this was offset by the larger volume invested in loans, which resulted in a small decrease of total interest income from $5,812,000 to $5,737,000, or $75,000, or 1.3% The cost on total interest bearing liabilities decreased from 1.18% to 0.82%, a decrease of 36 basis points. The most expensive as well as principal source of interest bearing liabilities comes from time deposits. Their average cost decreased from 2.28% to 1.60%, and the expense on these deposits decreased $137,000 for the three months ended March 31, 2004 compared to 2003. This accounted for most of the expense of interest bearing liabilities, which decreased $187,000. For the three months ended March 31, 2004 the following table shows the dollar amount of change in interest income and expense and the dollar amounts attributable to: (a) changes in volume (changes in volume at the current year rate), b) changes in rate (changes in rate times the prior year's volume) and (c) changes in rate/volume (changes in rate times change in volume). In this table, the dollar change in rate/volume is prorated to volume and rate proportionately. Table 2 FNB BANCORP AND SUBSIDIARY ------- RATE/VOLUME VARIANCE ANALYSIS Three Months Ended March 31, (In thousands) 2004 Compared To 2003 Variance Interest Attributable To Income/Expense ------------------------ Variance Rate Volume ---------- ---------- ---------- INTEREST EARNING ASSETS Loans $ 146 ($ 319) $ 465 Taxable securities (202) (75) (127) Nontaxable securities (29) (44) 15 Federal funds sold 10 (7) 17 ---------- ---------- ---------- Total ($ 75) ($ 445) $ 370 ---------- ---------- ---------- INTEREST BEARING LIABILITIES Demand deposits $ 3 ($ 1) $ 4 Money market (38) (43) 5 Savings deposits (15) (18) 3 Time deposits (137) (151) 14 ---------- ---------- ---------- Total ($ 187) ($ 213) $ 26 ---------- ---------- ---------- NET INTEREST INCOME $ 112 ($ 238) $ 350 ========== ========== ========== 10 Noninterest income - ------------------ The following table shows the principal components of noninterest income for the periods indicated. Table 3 NONINTEREST INCOME (In thousands) Three months ended March 31, --------------------------- 2004 2003 ------------ ------------ Service charges $ 661 $ 680 Credit card fees 207 203 Other income 55 96 ------------ ------------ Total noninterest income $ 923 $ 979 ============ ============ Noninterest income consists mainly of service charges on deposits, credit card fees, and other miscellaneous types of income. Service charges decreased $19,000 in the quarter ended March 31, 2004 from the same quarter in 2003. Most of this was from a $30,000 decrease in service charges on deposits, while charges for miscellaneous fees, such as deluxe check fees, wire transfer fees, etc. increased by a net $11,000 in the same periods. Other income decreased by $41,000 for the quarter ended March 31, 2004 compared to the same quarter of 2003. This was because, in the quarter ended March 31, 2003, the Marketing Department was discontinued, and $45,000 that had been provided for future projects was unused and taken to other income at the time. Noninterest expense - ------------------- The following table shows the principal components of noninterest expense for the periods indicated. NONINTEREST EXPENSE (In thousands) Three months ended March 31, --------------------------- 2004 2003 ------------ ------------ Salaries and employee benefits $ 2,690 $ 2,831 Occupancy expense 358 323 Equipment expense 422 379 Professional fees 250 197 Telephone, postage and supplies 313 234 Bankcard expenses 178 186 Other expense 534 446 ------------ ------------ Total noninterest expense $ 4,745 $ 4,596 ============ ============ Noninterest expense consists of salaries and employee benefits representing more than half of the total, and various smaller categories. Salaries and employee benefits decreased by $141,000 or 5.0% in the quarter ended March 31, 2004 compared to the same quarter of 2003. During August of 2003, the in-bank courier service was outsourced. Their salaries and benefits for the quarter ended March 31, 2003 were $41,000. There was a general reduction in staff by attrition, with full-time equivalent employees at 194 on March 31, 2003 compared to 164 on March 31, 2004, accounting for the total reduction of 11 $141,000. For the quarter ended March 31, 2004, occupancy expense increased by $35,000 over the same quarter in 2003. Most of this was from the relocation of the San Mateo Branch, with an increased expense of $29,000 for the quarter. The increase of equipment expense in the quarter ended March 31, 2004 compared to the same quarter in 2003 was $43,000. Most of the increase was from software maintenance contracts, which increased by $46,000. Professional fees increased by $53,000 in the quarter ended March 31, 2004 compared to the quarter ended March 31, 2003. This reflects the increasing costs associated with compliance issues such as the Patriot Act, Sarbanes-Oxley, and the Gramm-Leach-Bliley Act. Other expense represents a number of small items, and increased $88,000 in the quarter ended March 31, 2004 compared to the quarter ended March 31, 2003. Within this group, contributions and donations increased by $31,000, and marketing and promotion (excluding contributions and donations), increased $59,000. Remaining expenses in the group decreased $2,000. Income Taxes - ------------ The effective tax rate for the quarter ended March 31, 2004 was 26.7% compared to 26.1% for the quarter ended March 31, 2003. Income on tax-free investments declined in the quarter ended March 31, 2004 compared to March 31, 2003, and contributed 0.8% to the increase in this rate. Asset and Liability Management - ------------------------------ Ongoing management of the Company's interest rate sensitivity, limits interest rate risk through monitoring the mix and maturity of loans, investments and deposits. Management regularly reviews the Company's position and evaluates alternative sources and uses of funds as well as changes in external factors. Various methods are used to achieve and maintain the desired rate sensitivity position including the sale or purchase of assets and product pricing. In order to ensure that sufficient funds are available for loan growth and deposit withdrawals, as well as to provide for general needs, the Company must maintain an adequate level of liquidity. Asset liquidity comes from the Company's ability to convert short-term investments into cash and from the maturity and repayment of loans and investment securities. Liability liquidity comes from Company's customer base, which provides core deposit growth. The overall liquidity position of the Company is closely monitored and evaluated regularly. Management believes the Company's liquidity sources at March 31, 2004 are adequate to meet its operating needs in 2004 and going forward into the foreseeable future. The following table sets forth information concerning interest rate sensitive assets and liabilities as of March 31, 2004. The assets and liabilities are classified by the earlier of maturity or repricing date in accordance with their contractual terms. Since all interest rates and yields do not adjust at the same speed or magnitude, and since volatility is subject to change, the gap is only a general indicator of interest rate sensitivity. The Company's asset/liability gap is the difference between the cash flow amounts of interest-sensitive assets and liabilities that will be refinanced (or repriced) during a given period. For example, if the asset amount to be repriced exceeds the corresponding liability amount for a certain day, month, year or longer period, the institution is in an asset-sensitive gap position. In this situation, net interest income would increase if market interest rates rose or decrease if market interest rates fell. Alternatively, if more liabilities than assets will reprice, the institution is in a liability-sensitive position. Accordingly, net interest income would decline when rates rose and increase when rates fell. 12
Table 5 RATE SENSITIVE ASSETS/LIABILITIES ------- As of March 31, 2004 (In thousands) Over Three Three To Over One Over Not Months Twelve Through Five Rate- Or Less Months Five Years Years Sensitive Total ---------- ---------- ---------- ---------- ---------- ---------- Interest earning assets: Federal funds sold $ 21,170 $ -- $ -- $ -- $ -- $ 21,170 Securities available for sale 1,724 3,223 29,256 18,279 -- 52,482 Loans 276,682 8,394 7,332 23,700 2,750 318,858 ---------- ---------- ---------- ---------- ---------- ---------- Total interest earning assets 299,576 11,617 36,588 41,979 2,750 392,510 Cash and due from banks -- -- -- -- 15,997 15,997 Allowance for loan losses -- -- -- -- (3,019) (3,019) Other assets -- -- -- -- 29,770 29,770 ---------- ---------- ---------- ---------- ---------- ---------- Total assets $ 299,576 $ 11,617 $ 36,588 $ 41,979 $ 45,498 $ 435,258 ========== ========== ========== ========== ========== ========== Interest bearing liabilities: Demand, interest bearing $ 56,893 $ -- $ -- $ -- $ -- $ 56,893 Savings and money market 129,158 -- -- -- -- 129,158 Time deposits 42,169 35,207 13,145 -- -- 90,521 ---------- ---------- ---------- ---------- ---------- ---------- Total interest bearing liabilities 228,220 35,207 13,145 -- -- 276,572 ---------- ---------- ---------- ---------- ---------- ---------- Noninterest demand deposits -- -- -- -- 101,752 101,752 Other liabilities -- -- -- -- 4,901 4,901 Stockholders' equity -- -- -- -- 52,033 52,033 ---------- ---------- ---------- ---------- ---------- ---------- Total liabilities and stockholders' equity $ 228,220 $ 35,207 $ 13,145 $ -- $ 158,686 $ 435,258 ========== ========== ========== ========== ========== ========== Interest rate sensitivity gap $ 71,356 ($ 23,590) $ 23,443 $ 41,979 ($ 113,188) $ -- ========== ========== ========== ========== ========== ========== Cumulative interest rate sensitivity gap $ 71,356 $ 47,766 $ 71,209 $ 113,188 $ -- $ -- Cumulative interest rate sensitivity gap ratio 23.82% 15.35% 20.48% 29.04% -- --
Financial Condition - ------------------- Assets. Total assets increased to $435,258,000 at March 31, 2004 from $429,448,000 at December 31, 2003, an increase of $5,810,000. Most of this increase was in cash and cash equivalents, which increased $6,523,000, other real estate owned, which increased by $5,827,000, net loans, which increased $2,910,000, accrued interest receivable and other assets, which increased $1,388,000, offset by a decrease in securities available-for-sale of $11,210,000. The increase in total assets was funded mainly by an increase in deposits of $4,110,000. Loans. Net loans at March 31, 2004 were $315,839,000, an increase of $2,910,000 or 0.93% over December 31, 2003. Commercial loans increased $1,688,000, representing most of the increase, while real estate and construction loans increased by $1,466,000, and consumer loans decreased $551,000. The portfolio breakdown was as follows.
Table 6 LOAN PORTFOLIO ------- March 31, December 31, (In thousands) 2004 Percent 2003 Percent ------------ ------------ ------------ ------------ Real Estate $ 226,906 70.8% $ 214,588 67.5% Construction 37,758 11.8 48,610 15.3 Commercial 53,936 16.8 52,248 16.4 Consumer 2,000 0.6 2,551 0.8 ------------ ------------ ------------ ------------ Gross loans 320,600 100.0% 317,997 100.0% ============ ============ Net deferred loan fees (1,742) (1,784) Allowance for loan losses (3,019) (3,284) ------------ ------------ Net loans $ 315,839 $ 312,929 ============ ============
13 Allowance for loan losses. The Company has the responsibility of assessing the overall risks in its portfolio, assessing the specific loss expectancy, and determining the adequacy of the allowance for loan losses. The level of the allowance is determined by internally generating credit quality ratings, reviewing economic conditions in the Company's market area, and considering the Company's historical loan loss experience. The Company is committed to maintaining an adequate allowance, identifying credit weaknesses by consistent review of loans, and maintaining the ratings and changing those ratings in a timely manner as circumstances change. A summary of transactions in the allowance for loan losses for the three months ended March 31, 2004 and the year ended December 31, 2003 is as follows: Table 7 ALLOWANCE FOR LOAN LOSSES ------- Three months ended Three months ended (In thousands) March 31, 2004 December 31, 2003 ----------------- ----------------- Balance, beginning of period $ 3,284 $ 3,300 Provision for loan losses 120 -- Recoveries -- -- Amounts charged off (385) (16) ----------------- ----------------- Balance, end of period $ 3,019 $ 3,284 ================= ================= In management's judgment, the allowance was adequate to absorb losses currently inherent in the loan portfolio at March 31, 2004. However, changes in prevailing economic conditions in the Company's markets or in the financial condition of its customers could result in changes in the level of nonperforming assets and charge-offs in the future and, accordingly, changes in the allowance. Nonperforming assets. Nonperforming assets consist of nonaccrual loans, foreclosed assets, and loans that are 90 days or more past due but are still accruing interest. At March 31, 2004, there was $2,750,000 in non-accrual loans, compared to $9,085,000 at December 31, 2003. One loan secured by office building, and another to a residential care facility were the main portion of the December 31, 2003 nonaccrual loans. The first loan was secured by an office building in the Silicon Valley community of Mountain View, which was placed in nonaccrual status due to a significant decline in the underlying value of the collateral. At December 31, 2003, its balance was $3,128,000.The loan had been written down to its current market value. The guarantors continue to perform according to the contractual obligations of the documents. The other loan was to a residential care facility with a balance of $5,828,000, taken into Other Real Estate Owned in the first quarter ended March 31, 2004. There were no foreclosed assets or loans past due 90 days and still accruing on either date. In the first quarter of 2004, the Company foreclosed and took into Other Real Estate Owned, the loan secured by a residential care facility with a net loan balance of $5,828,000. This loan was previously in nonaccrual status due to a payment default, and ultimately a bankruptcy filed by the borrower. An independent appraiser determined that the "as is" market value of the property as of May 20, 2003 was $7,300,000. The loan secured by an office building in Mountain View in December 31, 2003 was written down to $2,700,000 in the quarter ended March 31, 2004, its current market value. 14 Deposits. Total deposits at March 31, 2004 were $378,324,000 compared to $374,214,000 on December 31, 2003. Of these totals, noninterest-bearing demand deposits were $101,742,000 or 26.9% of the total on March 31, 2004 and $96,567,000 or 25.8% on December 31, 2003. Time deposits were $90,521,000 on March 31, 2004 and $91,968,000 on December 31, 2003. The following table sets forth the maturity schedule of the time certificates of deposit on March 31, 2004: Table 8 ------- (In thousands) Under $100,000 Maturities: $100,000 or more Total ---------- ---------- ---------- Three months or less $ 19,507 $ 22,662 $ 42,169 Over three to six months 11,126 8,365 19,491 Over six through twelve months 9,945 5,771 15,716 Over twelve months 9,660 3,485 13,145 ---------- ---------- ---------- Total $ 50,238 $ 40,283 $ 90,521 ========== ========== ========== The following table shows the risk-based capital ratios and leverage ratios at March 31, 2004 and December 31, 2003: Table 9 ------- Minimum "Well March 31, December 31, Capitalized" Risk-Based Capital Ratios 2004 2003 Requirements Tier 1 Capital 13.60% 13.29% > 6.00% - Total Capital 14.40% 14.15% > 10.00% - Leverage Ratios 11.92% 12.06% > 5.00% - Liquidity. Liquidity is a measure of the Company's ability to convert assets into cash with minimum loss. As of March 31, 2004, Liquid Assets were $89,649,000, or 20.6% of total assets. As of December 31, 2003, Liquid Assets were $94,336,000, or 22.0% of total assets. Liquidity consists of cash and due from other banks accounts, federal funds sold, and securities available-for-sale. The Company's primary uses of funds are loans, and the primary sources of funds are deposits. The relationship between total net loans and total deposits is a useful additional measure of liquidity. A higher loan to deposit ratio means that assets will be less liquid. This has to be balanced against the fact that loans represent the highest interest earning assets A lower loan to deposit ratio means lower potential income. On March 31, 2004 net loans were at 83.5% of deposits. On December 31, 2003 net loans were at 83.6%. Forward-Looking Information and Uncertainties Regarding Future Financial Performance. -------------------------------------------------------------- This report, including management's discussion above, concerning earnings and financial condition, contains "forward-looking statements". Forward-looking statements are estimates of or statements about expectations or beliefs regarding the Company's future financial performance or anticipated future financial condition that are based on current information and that are subject to a number of risks and uncertainties that could cause actual operating results in the future to differ significantly from those expected at the current time. Those risks and uncertainties include, although they are not limited to, the following: Increased competition. Increased competition from other banks and financial service businesses, mutual funds and securities brokerage and investment banking firms that offer competitive loan and investment products could require us to reduce interest rates and loan fees to attract new loans or 15 to increase interest rates that we offer on time deposits, either or both of which could, in turn, reduce interest income and net interest margins. Possible Adverse Changes in Economic Conditions. Adverse changes in national or local economic conditions could (i) reduce loan demand which could, in turn, reduce interest income and net interest margins; (ii) adversely affect the financial capability of borrowers to meet their loan obligations, which, in turn, could result in increases in loan losses and require increases in provisions for possible loan losses, thereby adversely affecting operating results; and (iii) lead to reductions in real property values that, due to the Company's reliance on real property to secure many of its loans, could make it more difficult to prevent losses from being incurred on non-performing loans through the sale of such real properties. Possible Adverse Changes in National Economic Conditions and Federal Reserve Board Monetary Policies. Changes in national economic policies, such as increases in inflation or declines in economic output often prompt changes in Federal Reserve Board monetary policies that could reduce interest income or increase the cost of funds to the Company, either of which could result in reduced earnings. Changes in Regulatory Policies. Changes in federal and national bank regulatory policies, such as increases in capital requirements or in loan loss reserve or asset/liability ratio requirements, could adversely affect earnings by reducing yields on earning assets or increasing operating costs. Due to these and other possible uncertainties and risks, readers are cautioned not to place undue reliance on the forward-looking statements contained in this report, which speak only as of the date of this report, or to make predictions based solely on historical financial performance. The Company also disclaims any obligation to update forward-looking statements contained in this report. Other Matters Off-Balance Sheet Items The Company has certain ongoing commitments under operating leases. These commitments do not significantly impact operating results. As of March 31, 2004 and December 31, 2003, commitments to extend credit and letters of credit were the only financial instruments with off-balance sheet risk. The Company has not entered into any contracts for financial derivative instruments such as futures, swaps, options or similar instruments. Loan commitments and letters of credit were $65,168,000 and $56,888,000 at March 31, 2004 and December 31, 2003, respectively. As a percentage of net loans, these off-balance sheet items represent 20.6% and 18.2% respectively. Corporate Reform Legislation President George W. Bush signed the "Sarbanes-Oxley Act of 2002" (the "Act") on July 30, 2002, which responds to the recent corporate accounting scandals. Among other matters, the Act increases the penalties for securities fraud, establishes new rules for financial analysts to prevent conflicts of interest, creates a new independent oversight board for the accounting profession, imposes restrictions on the consulting activities of accounting firms that audit company records and requires certification of financial reports by corporate executives. The SEC has adopted a number of rule changes to implement the provisions of the Act.. The SEC has also approved new rules proposed and adopted by the New York Stock Exchange and the Nasdaq Stock Market to strengthen corporate governance standards for listed companies. The Company does not currently anticipate that compliance with the Act (including the rules adopted pursuant to the Act) will have a material effect upon its financial position or results of its operations or its cash flows. 16 Item 3. Quantitative and Qualitative Disclosures About Market Risk. Market risk is the risk of loss to future earnings, to fair values of assets or to future cash flows that may result from changes in the price or value of a financial instrument. The value of a financial instrument may change as a result of changes in interest rates and other market conditions. Market risk is attributed to all market risk sensitive financial instruments, including loans, investment securities, deposits and borrowings. The Company does not engage in trading activities or participate in foreign currency transactions for its own account. Accordingly, exposure to market risk is primarily a function of asset and liability management activities and of changes in market rates of interest. Changes in rates can cause or require increases in the rates paid on deposits that may take effect more rapidly or may be greater than the increases in the interest rates that the Company is able to charge on loans and the yields that it can realize on its investments. The extent of that market risk depends on a number of variables including the sensitivity to changes in market interest rates and the maturities of the Company's interest earning assets and deposits. For the quarter ended March 31, 2004, the prime lending rate held steady at 4.00% From January 1, 2003 through June 26, 2003, the prime lending rate was 4.25%, and dropped to 4.00% from June 27 to the end of December 2003. The changes were not as significant as in prior years. The effect of these rate changes was mitigated, because a significant amount of the Real Estate loan portfolio is subject to interest rate caps and floors. Consequently, this did not have a material effect on earnings. Item 4. Controls and Procedures. (a) Disclosure Controls and Procedures: An evaluation of the Company's disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) was carried out under the supervision and with the participation of the Company's Chief Executive Officer, Chief Financial Officer and other members of the Company's senior management as of the end of the Company's fiscal quarter ended March 31, 2004. The Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures as currently in effect are effective in ensuring that the information required to be disclosed by the Company in the reports it files or submits under the Act is (i) accumulated and communicated to the Company's management (including the Chief Executive Officer and Chief Financial Officer) to allow timely decisions regarding required disclosure, and (ii) recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms. (b) Internal Control Over Financial Reporting: An evaluation of any changes in the Company's internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), that occurred during the Company's fiscal quarter ended March 31, 2004, was carried out under the supervision and with the participation of the Company's Chief Executive Officer, Chief Financial Officer and other members of the Company's senior management. The Company's Chief Executive Officer and Chief Financial Officer concluded that no change identified in connection with such evaluation has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. 17 PART II--OTHER INFORMATION Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities
ISSUER PURCHASES OF EQUITY SECURITIES - ------------------------------------------------------------------------------------------------------------ Period (a) (b) (c) (d) Total Number Average Number of Shares Maximum Number (or Of Shares (or Price Paid (or Units) Purchased Approximate Dollar Value) Units) Per Share As Part of Publicly of Shares (or Units) that Purchased (or Unit) Announced Plans or May Yet Be Purchased Programs Under the Plans or Programs - ------------------------------------------------------------------------------------------------------------ Month #1 January 1 None N/a None 85,285 through January 31, 2004 - ------------------------------------------------------------------------------------------------------------ Month #2 February 1 4,900 $33.75 4,900 80,385 through February 29, 2004 - ------------------------------------------------------------------------------------------------------------ Month #3 March 1 4,600 $33.36 4,600 75,785 through March 31, 2004 - ------------------------------------------------------------------------------------------------------------ Total 9,500 9,500 - ------------------------------------------------------------------------------------------------------------
Footnote: On July 25, 2003, the Board of Directors of the Company authorized a stock repurchase program which calls for the repurchase of up to five percent (5%) of the Company's then outstanding shares of common stock, or approximately 121,852 shares. The repurchases are to be made from time to time in the open market as conditions allow and will be structured to comply with Commission Rule 10b-18. All repurchased shares reflected in the table above were made in open market transactions and then retired. The Board of Directors has reserved the right to suspend, terminate, modify or cancel this repurchase program at any time for any reason. On January 23, 2004, the Board of Directors of the registrant authorized an extension of the FNB Bancorp stock repurchase program previously adopted on July 25, 2003. On March 31, 2004, a total of 52,160 shares, or approximately 2.04% of the shares outstanding on that date (adjusted for the stock dividend paid by the registrant on December 15, 2003, to shareholders of record on November 28, 2003) had been repurchased pursuant to the program. The program (as extended) calls for the further purchase of an additional 75,785 shares, subject to an aggregate limit of five percent of the registrant's common stock. All such transactions, including any block purchases, will be structured to comply with Commission Rule 10b-18 and all shares that are purchased under this program will be retired. The Board of Directors has reserved the right to suspend, terminate, modify or cancel the program at any time for any reason. 18 Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 31: Rule 13a-14(a)/15d-14(a) Certifications 32: Section 1350 Certifications (b) Reports on Form 8-K The following reports on Form 8-K have been filed during the quarter ended March 31, 2004: Filed January 6, 2004, announcing the appointment of R. Albert Roensch as Director of FNB Bancorp and First National Bank of Northern California. Filed January 22, 2004, announcing earnings for 2003 fiscal year-end. Filed January 27, 2004, announcing cash dividend payable February 17, 2004. Filed January 29, 2004, announcing extension of stock repurchase program. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. FNB BANCORP (Registrant) Dated: May 11, 2004. By: /s/ THOMAS C. MCGRAW ----------------------------- Thomas C. McGraw Chief Executive Officer (Authorized Officer) By: /s/ JAMES B. RAMSEY ----------------------------- James B. Ramsey Senior Vice President Chief Financial Officer (Principal Financial Officer) 19 EX-31 2 ex_31.txt EXHIBIT 31 Exhibit 31 Rule 13a-14(a)/15d-14(a) Certifications I, Thomas C. McGraw, Chief Executive Officer, (Principal Executive Officer) of the registrant, FNB Bancorp, certify that: 1. I have reviewed this quarterly report on Form 10-Q of FNB Bancorp; 2. Based on my knowledge, this quarterly 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 quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly 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 we have: a) designed such disclosure controls and procedures 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) 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 c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) 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 the 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 control over financial reporting. Date: May 11, 2004. /s/ THOMAS C. MCGRAW - ------------------------------ Thomas C. McGraw Chief Executive Officer (Principal Executive Officer) 20 I, James B. Ramsey, Senior Vice President and Chief Financial Officer (Principal Financial Officer) of the registrant, FNB Bancorp, certify that: 1. I have reviewed this quarterly report on Form 10-Q of FNB Bancorp; 2. Based on my knowledge, this quarterly 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-15e)) for the registrant and we have: a) designed such disclosure controls and procedures, 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) 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 c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) 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 control over financial reporting. Date: May 11, 2004. /s/ JAMES B. RAMSEY - ------------------------------------------------- James B. Ramsey Senior Vice President and Chief Financial Officer (Principal Financial Officer) 21 EX-32 3 ex_32.txt EXHIBIT 32 Exhibit 32 Section 1350 Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of FNB Bancorp, a California corporation (the "Company"), does hereby certify that: 1. The Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2004 (the "Form 10-Q") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and 2. Information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: May 11, 2004. /s/ THOMAS C. MCGRAW ---------------------------- Thomas C. McGraw Chief Executive Officer Dated: May 11, 2004. /s/ JAMES B. RAMSEY ---------------------------- James B. Ramsey Senior Vice President and Chief Financial Officer A signed original of this statement required by Section 906 has been provided to FNB Bancorp and will be retained by FNB Bancorp and furnished to the Securities and Exchange Commission or its staff upon request. 22 -----END PRIVACY-ENHANCED MESSAGE-----