North Bay Bancorp (Nasdaq:NBAN), parent of The Vintage Bank and its
Solano Bank Division, today reported net income of $6.6 million or
$1.64 per diluted share for 2005, compared with $5.1 million or
$1.29 per diluted share in 2004, a 31% increase in net income and a
27% increase in diluted earnings per share for the year ended
December 31, 2005. Fourth quarter profits increased 13% to $1.8
million, or $0.44 per diluted share, compared to $1.6 million, or
$0.39 per diluted share in the fourth quarter of 2004. The net
interest margin increased 38 basis points to 5.38% for the year
2005. Return on average equity for 2005 was 13.94% compared to
12.34% for 2004 and the return on average assets was 1.11% for 2005
compared with .97% for 2004. The efficiency ratio improved to
63.85% from 66.93% a year ago. Total assets increased 7.2% to $603
million; deposits grew 6.6% to $516 million and net loans grew 9.6%
to $410 million. Additionally, North Bay declared a $.15 per share
cash dividend and a 5% stock dividend. Both dividends have a record
date of March 22, 2006 and are payable on April 12, 2006. "2005 was
a challenging, yet rewarding year for North Bay Bancorp. We were
able to improve financial returns while absorbing significant
first-year expenses associated with the Sarbanes-Oxley (SOX)
Section 404 compliance process. We executed successfully on our
plan to place more emphasis on profitability versus growth," stated
President and CEO Terry Robinson. "We are pleased to announce cash
and stock dividends for another year following reporting of our
record profits." 2005 Financial Review and Operating Highlights
(year ended 12/31/05 compared to 12/31/04) - Net income increased
31% to $6.6 million. - Pre-tax income rose 33% to $10.7 million. -
Earnings per diluted share increased 27% to $1.64. - Revenues
increased 21% to $32.7 million. - Productivity improved with the
efficiency ratio dropping 308 basis points to 63.85%. - Deposits
grew 7% to $516 million. - Net loans grew 10% to $410 million. -
Asset quality remained exemplary with six consecutive years of no
non-performing assets at year- end. Operating Results Total
revenues, (net interest income before the provision for loan losses
and non-interest income, excluding securities gains) increased 21%
to $32.7 million in 2005 from $27.0 million in 2004. In the fourth
quarter of 2005, revenues increased 18% to $8.7 million from $7.3
million in 2004. The net interest margin increased to 5.38% for the
year from 5.00% in 2004. The net interest margin for the fourth
quarter of 2005 was 5.52% compared to 5.03% in 2004. Net interest
income increased 25% to $28.8 million in 2005, with interest income
rising 27% and interest expense increasing 43%. In the fourth
quarter of 2005, net interest income rose 22%, with interest income
up 24% and interest expense rising 40%. "Increasing the net
interest margin was essential to improving our financial
performance in 2005 given the significant expenses associated with
SOX 404 compliance. The increases in the Fed Funds rate and prime
rate throughout the year had a positive impact on the net interest
margin as the increase in yield on earning assets exceeded the
increase in rates paid on interest bearing liabilities," stated
Executive Vice President and Chief Financial Officer Pat Phelan.
The provision for loan losses increased 31% to $815,000 in 2005
from $620,000 in 2004, reflecting growth in the loan portfolio. Net
interest income after the provision for loan losses increased 25%
to $28.0 million compared to $22.4 million in the previous year,
and grew 22% to $7.7 million in the fourth quarter of 2005 from
$6.3 million in 2004. Non-interest income decreased 6% in 2005 to
$3.9 million from $4.2 million in 2004. In the fourth quarter,
non-interest income declined 3% to $937,000 from $969,000 in the
fourth quarter a year ago. The decline reflects a decrease in
service charge income resulting from reduced non-sufficient funds
(NSF) check activity; also, there were no securities gains recorded
in 2005 compared with securities gains totaling $262,000 in 2004.
Operating (non-interest) expense in 2005 increased 14% to $21.2
million from $18.5 million in 2004, reflecting significantly
increased consulting and audit fees associated with SOX 404
compliance. Operating expenses in the fourth quarter increased 22%
to $5.8 million from $4.7 million in the fourth quarter a year ago.
The tax equivalent efficiency ratio improved to 63.85% in 2005 from
66.93% in 2004. The efficiency ratio measures operating expenses as
a percent of revenues. "Consulting and Audit fees for the fourth
quarter of 2005 were higher primarily due to SOX compliance costs,"
CFO Phelan noted. Phelan added, "these costs negatively impacted
the fourth quarter 2005 efficiency ratio, which was 65.28% compared
with 63.21% for the fourth quarter of 2004." Pre-tax income rose
33% in 2005 to $10.7 million from $8.1 million in 2004. Pre-tax
Income increased 11% in the fourth quarter of 2005 to $2.8 million
from $2.6 million in the fourth quarter of 2004. Income taxes
increased in 2005 in correlation with the higher earnings. The tax
provision increased 36% to $4.1 million, or 38% of pre-tax income
in 2005, compared to $3.0 million, or 37% of pre-tax income in
2004. Return on average equity increased 160 basis points to 13.94%
for the year. Return on average equity for the 2005 fourth quarter
was 14.04%, down 38 basis points from the 2004 fourth quarter due
to the previously noted SOX related expenses. Return on average
assets was 1.11% for the year 2005 compared to 0.97% in 2004. For
the fourth quarter, return on average assets equated to 1.12% and
1.09% for 2005 and 2004, respectively. "Given that many of the
costs associated with SOX 404 compliance are non-recurring, the
prospects for continued productivity improvement are promising,"
commented Robinson. Balance Sheet (at December 31, 2005 compared to
December 31, 2004) Total assets increased 7% to $603 million from
$562 million a year ago. Deposits grew 7% from $484 million in 2004
to $516 million, with growth in both average balances and the
number of new checking accounts. Loans, net of the allowance for
loan losses and deferred fees, grew 10% to $410 million, up from
$374 million. Commercial and industrial loans increased 28% from a
year previous while commercial real estate loans grew 4% and
construction loans grew 17% to $33 million. Consumer loans grew 7%
to $39 million. Book value per share as of December 31, 2005 was
$12.82 compared to $12.12 a year ago. Asset quality remains
excellent with no non-performing loans at year-end. The allowance
for loan and lease losses was $4.9 million, or 1.18% of loans
outstanding, compared to $4.1 million or 1.09% of loans outstanding
a year ago. Net charge-offs for 2005 were $27,000, which includes
$8,000 charged-off in the fourth quarter, compared to $8,000 of net
charge-offs in year 2004, including $16,000 in net recoveries
during the fourth quarter of 2004. About North Bay Bancorp North
Bay Bancorp is the holding company for The Vintage Bank in Napa
County and Solano Bank, a Division of The Vintage Bank, in Solano
County. This full-service commercial bank offers a wide selection
of deposit, loan and investment services to local consumers and
small business customers. The Vintage Bank opened in 1985 and now
operates six banking offices in Napa County, Northern California's
number one tourist destination and the nation's premier wine
producing region. The main office and two branch offices are
located in the City of Napa. Vintage also has branches in the
Cities of St. Helena and American Canyon and the Southern
industrial area of Napa County. Solano Bank, a Division of The
Vintage Bank, opened in July 2000 and has offices in the primary
cities along the I-80 corridor of Solano County, including
Vacaville, Fairfield, Vallejo and Benicia and an off-site ATM
facility in downtown Fairfield. Solano County is projected to be
the fastest growing county in Northern California through year 2030
and 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 subsidiary. All financial results are unaudited
and therefore subject to change. 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 its Solano Bank Division. 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;
(5) finalization of the year-end audit results; (6) the ability to
satisfy the requirements of the Sarbanes-Oxley Act and other
regulations governing internal control and (7) other risks detailed
in the North Bay Bancorp reports filed with the Securities and
Exchange Commission. -0- *T NORTH BAY BANCORP
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CONSOLIDATED INCOME STATEMENT (in $000's, 3-Month Period Ended:
12-Month Period Ended: unaudited) 12/31/05 12/31/04 % Change
12/31/05 12/31/04 % Change --------------------------
-------------------------- Interest Income $9,197 $7,405 24.2%
$33,865 $26,585 27.4% Interest Expense 1,444 1,035 39.5% 5,082
3,543 43.4% ------ ------ ------- ------- Net Interest Income 7,753
6,370 21.7% 28,783 23,042 24.9% Provision for Loan & Lease
Losses 100 80 25.0% 815 620 31.5% ------ ------ ------- ------- Net
Interest Income after Loan Loss Provision 7,653 6,290 21.7% 27,968
22,422 24.7% Service Charges 495 565 -12.4% 2,073 2,249 -7.8% Loan
Sale & Servicing Income 7 10 -30.0% 31 45 -31.1% Bank Owned
Life Insurance Income 35 77 -54.5% 298 357 -16.5% Other Non-
Interest Income 400 317 26.2% 1,539 1,285 19.8% Gain on Investments
- - NM - 262 -100.0% ------ ------ ------- ------- Total Non-
Interest Income 937 969 -3.3% 3,941 4,198 -6.1% Salaries &
Benefits 2,950 2,360 25.0% 11,171 9,993 11.8% Occupancy Expense 470
407 15.5% 1,787 1,487 20.2% Equipment Expense 471 509 -7.5% 2,037
2,018 0.9% Other Non- Interest Expenses 1,861 1,425 30.6% 6,176
5,038 22.6% ------ ------ ------- ------- Total Non- Interest
Expenses 5,752 4,701 22.4% 21,171 18,536 14.2% Income Before Taxes
2,838 2,558 10.9% 10,738 8,084 32.8% Provision for Income Taxes
1,069 986 8.4% 4,105 3,020 35.9% ------ ------ ------- -------
----------------------------------------------------------------------
Net Income $1,769 $1,572 12.5% $6,633 $5,064 31.0% ====== ======
======= =======
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TAX DATA Tax-Exempt Muni Income $201 $113 77.9% $541 $522 3.6%
Tax-Exempt BOLI Income $35 $77 -54.5% $298 $357 -16.5% Interest
Income - Fully Tax Equivalent $9,301 $7,441 25.0% $34,144 $26,754
27.6%
----------------------------------------------------------------------
NET CHARGE- OFFS (RECOVERIES) $8 $(16) NM $27 $8 NM
----------------------------------------------------------------------
PER SHARE DATA 3-Month Period Ended: 12-Month Period Ended:
(unaudited) 12/31/05 12/31/04 % Change 12/31/05 12/31/04 % Change
------------------------------------------------------- Basic
Earnings per Share $0.45 $0.41 9.8% $1.71 $1.33 28.6% Diluted
Earnings per Share $0.44 $0.39 12.8% $1.64 $1.29 27.1% Common
Dividends $0.00 $0.00 NM $0.15 $0.12 25.0% Wtd. Avg. Shares
Outstanding 3,899,756 3,821,986 3,880,155 3,820,386 Wtd. Avg.
Diluted Shares 4,062,226 3,984,105 4,051,524 3,920,160 Book Value
per Share (EOP) $12.82 $12.12 5.8% $12.82 $12.12 5.8% Common Shares
Outstanding (EOP) 3,904,651 3,641,289 3,904,651 3,641,289
----------------------------------------------------------------------
KEY FINANCIAL RATIOS 3-Month Period Ended: 12-Month Period Ended:
(unaudited) 12/31/05 12/31/04 12/31/05 12/31/04
-------------------------------------------------------- Return on
Average Equity 14.04% 14.42% 13.94% 12.34% Return on Average Assets
1.12% 1.09% 1.11% 0.97% Net Interest Margin (Tax- Equivalent) 5.52%
5.03% 5.38% 5.00% Efficiency Ratio (Tax- Equivalent) 65.28% 63.21%
63.85% 66.93%
----------------------------------------------------------------------
AVERAGE BALANCES (in $000's, 3-Month Period Ended: 12-Month Period
Ended: unaudited) 12/31/05 12/31/04 % Change 12/31/05 12/31/04 %
Change --------------------------------------------------------
Average Assets $624,224 $575,261 8.5% $595,905 $523,328 13.9%
Average Earning Assets $564,787 $509,118 10.9% $540,644 $464,399
16.4% Average Gross Loans & Leases $409,219 $383,907 6.6%
$402,770 $352,863 14.1% Average Deposits $538,380 $498,426 8.0%
$514,454 $454,603 13.2% Average Equity $49,998 $43,378 15.3%
$47,594 $41,053 15.9%
----------------------------------------------------------------------
----------------------------------------------------------------------
STATEMENT OF CONDITION End of Period: (in $000's, unaudited)
12/31/2005 12/31/2004 Annual Chg
---------------------------------------- ASSETS Cash and Due from
Banks $28,174 $27,342 3.0% Securities and Fed Funds Sold 136,548
132,348 3.2% Commercial & Industrial 86,094 67,172 28.2%
Commercial Secured by Real Estate 249,773 241,361 3.5% Residential
Real Estate 8,557 6,613 29.4% Construction 32,593 27,762 17.4%
Consumer 38,859 36,343 6.9% ----------- ----------- Gross Loans
& Leases 415,876 379,251 9.7% Deferred Loan Fees (1,448)
(1,485) -2.5% ----------- ----------- Loans & Leases Net of
Deferred Fees 414,428 377,766 9.7% Allowance for Loan & Lease
Losses (4,924) (4,136) 19.1% ----------- ----------- Net Loans
& Leases 409,504 373,630 9.6% Loans Held-for-Sale - 4,604
-100.0% Bank Premises & Equipment 9,475 10,336 -8.3% Other
Assets 18,996 13,803 37.6% ----------- ----------- Total Assets
$602,697 $562,063 7.2% =========== =========== LIABILITIES &
CAPITAL Demand Deposits $155,320 $127,250 22.1% NOW / Savings
Deposits 148,336 151,053 -1.8% Money Market Deposits 128,684
128,884 -0.2% Time Certificates of Deposit 84,053 77,306 8.7%
----------- ----------- Total Deposits 516,393 484,493 6.6% Long
Term Borrowings 19,000 19,000 NM Trust Preferred Securities 10,310
10,310 0.0% ----------- ----------- Total Deposits & Interest
Bearing Liab. 545,703 513,803 6.2% Other Liabilities 6,941 4,126
68.2% Total Capital 50,053 44,134 13.4% ----------- -----------
Total Liabilities & Capital $602,697 $562,063 7.2% ===========
===========
----------------------------------------------------------------------
CREDIT QUALITY DATA End of Period: (in $000's, unaudited)
12/31/2005 12/31/2004 -------------------------- 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 1.18% 1.09%
----------------------------------------------------------------------
OTHER PERIOD-END STATISTICS End of Period: (unaudited) 12/31/2005
12/31/2004 Shareholders' Equity / Total Assets 8.3% 7.9% Loans /
Deposits 80.5% 78.3% Non-Interest Bearing Deposits / Total Deposits
30.1% 26.3%
----------------------------------------------------------------------
*T
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