SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR the quarter ended March 31, 2000
Commission File No. 333-93365
NORTH BAY BANCORP
-----------------
(Name of Small Business Issuer in its Charter
California 68-0434802
---------- ----------
(State or Jurisdiction of (I.R.S. Employer
incorporation) Identification No.)
1500 Soscol Avenue, Napa, California 94559-1314
------------------------------------------------
(Address of principal office including Zip Code)
Issuer's telephone number, including area code: (707) 257-8585
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, No Par Value
Check whether the issuer (1) 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
------- -------
APPLICABLE ONLY TO CORPORATE ISSURES:
State the number of shares of the North Bay Bancorp's Common Stock outstanding
as of May 10, 2000: 1,615,410
<PAGE>
Item 1.
Financial Information
FORWARD LOOKING STATEMENTS
In addition to the historical information contained herein, this Quarterly
Report contains certain forward-looking statements. The reader of this Quarterly
Report should understand that all such forward-looking statements are subject to
various uncertainties and risks that could affect their outcome. The Company's
actual results could differ materially from those suggested by such
forward-looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, variances in the actual versus
projected growth in assets, return on assets, loan losses, expenses, rates
charged on loans and earned on securities investments, rates paid on deposits,
competition effects, fee and other noninterest income earned as well as other
factors. This entire Quarterly Report should be read to put such forward-looking
statements in context and to gain a more complete understanding of the
uncertainties and risks involved in the Company's business.
Moreover, wherever phrases such as or similar to "In Management's opinion", or
"Management considers" are used, such statements are as of and based upon the
knowledge of Management, at the time made and are subject to change by the
passage of time and/or subsequent events, and accordingly such statements are
subject to the same risks and uncertainties noted above with respect to
forward-looking statements.
FINANCIAL INFORMATION
The information for the three months ended March 31, 2000 and March 31, 1999, is
unaudited, but in the opinion of management reflects all adjustments which are
necessary to present fairly the financial condition of North Bay Bancorp
(Company) at March 31, 2000 and the results of operations and cash flows for the
three months then ended. Results for interim periods should not be considered as
indicative of results for a full year.
2
<PAGE>
<TABLE>
North Bay Bancorp
Consolidated Balance Sheets
Unaudited
<CAPTION>
March 31, March 31, December 31,
Assets 2000 1999 1999
------------- ------------- -------------
<S> <C> <C> <C>
Cash and due from banks $ 10,128,000 $ 8,250,000 $ 8,466,000
Federal funds sold 9,523,000 6,000,000 1,500,000
Time deposits with other financial institutions 100,000 200,000 100,000
Investment Securities:
Held-to-maturity 1,372,000 13,509,000 1,390,000
Available-for-sale 53,970,000 48,992,000 55,264,000
Loans, net of allowance for loan losses of $1,977,000 in March, 2000
$1,814,000 in March, 1999 and $1,987,000 in December, 1999 128,919,000 97,906,000 120,166,000
Bank premises and equipment, net 3,572,000 2,790,000 2,883,000
Accrued interest receivable and other assets 6,501,000 6,151,000 7,337,000
------------- ------------- -------------
Total assets $ 214,085,000 $ 183,798,000 $ 197,106,000
============= ============= =============
Liabilities and Shareholders' Equity
Deposits:
Non-interest bearing $ 43,488,000 $ 41,114,000 $ 38,337,000
Interest bearing 146,256,000 124,597,000 134,043,000
------------- ------------- -------------
Total deposits 189,744,000 165,711,000 172,380,000
Short term borrowings 4,600,000 0 5,000,000
------------- ------------- -------------
Accrued interest payable and other liabilities 1,367,000 1,115,000 1,636,000
------------- ------------- -------------
Total liabilities 195,711,000 166,826,000 179,016,000
------------- ------------- -------------
Shareholders' equity:
Preferred stock - no par value:
Authorized, 500,000 shares;
Issued and outstanding - none
Common stock - no par value:
Authorized, 10,000,000 shares;
Issued and outstanding - 1,615,410 shares in March 2000,
1,510,134 shares in March, 1999, and 1,536,568 in December, 1999 14,824,000 8,963,000 12,893,000
Retained earnings 4,811,000 7,916,000 6,368,000
Accumulated other comprehensive income (loss) (1,261,000) 93,000 (1,171,000)
------------- ------------- -------------
Total shareholders' equity 18,374,000 16,972,000 18,090,000
Total liabilities and shareholders' equity $ 214,085,000 $ 183,798,000 $ 197,106,000
============= ============= =============
<FN>
The accompanying notes are an integral part of these statements
</FN>
</TABLE>
3
<PAGE>
North Bay Bancorp
Consolidated Income Statements
(Unaudited)
Three Months Ended March 31
2000 1999
---------- ----------
Interest Income
Loans (including fees) $2,808,000 $2,237,000
Federal funds sold 71,000 50,000
Investment securities 844,000 948,000
---------- ----------
Total Interest income 3,723,000 3,235,000
Interest Expense 1,289,000 1,032,000
---------- ----------
Net interest income 2,434,000 2,203,000
Provision for loan losses 90,000 60,000
---------- ----------
Net interest income after
provision for loan losses 2,344,000 2,143,000
Non interest income 514,000 384,000
Gains on securities transactions, net 0 5,000
Non interest expenses
Salaries and employee benefits 983,000 849,000
Occupancy 112,000 92,000
Equipment 162,000 124,000
Other 511,000 437,000
---------- ----------
Total non interest expense 1,768,000 1,502,000
---------- ----------
Income before provision for
income taxes 1,090,000 1,030,000
Provision for income taxes 419,000 389,000
---------- ----------
Net income $ 671,000 $ 641,000
========== ==========
Basic earnings per common share: $ 0.42 $ 0.40
========== ==========
Diluted earnings per common share: $ 0.41 $ 0.39
========== ==========
The accompanying notes are an integral part of these statements
4
<PAGE>
<TABLE>
North Bay Bancorp
Consolidated Statement of Change in Shareholders' Equity
March 31, 2000
(Unaudited)
<CAPTION>
Accumulated
Other Total
Common Shares Common Retained Comprehensive Shareholders' Comprehensive
Outstanding Stock Earnings Loss Equity Income
------------ ------------ ------------ ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1999 1,536,568 $ 12,893,000 $ 6,368,000 ($ 1,171,000) $ 18,090,000
Stock dividend 76,509 1,913,000 (1,921,000) (8,000)
Cash dividend (307,000) (307,000)
Comprehensive income:
Net income 671,000 671,000 $ 671,000
Other comprehensive income, net
of tax:
Change in net unrealized loss
on available-for-sale
securities, net of tax (90,000)
--------------
Total other comprehensive loss (90,000) (90,000) (90,000)
--------------
Comprehensive income $ 581,000
==============
Stock options exercised 2,333 18,000 18,000
------------- ------------- ------------- -------------- --------------
BALANCE, MARCH 31, 2000 1,615,410 $ 14,824,000 $ 4,811,000 ($ 1,261,000) $ 18,374,000
============= ============= ============ ============== ============== =============
<FN>
The accompanying notes are an integral part of these statements
</FN>
</TABLE>
5
<PAGE>
<TABLE>
North Bay Bancorp
Consolidated Statement of Cash Flows
Unaudited
(In 000's)
<CAPTION>
Three Months Ended March 31,
2000 1999
-------- --------
Cash Flows From Operating Activities:
<S> <C> <C>
Net income $ 671 $ 641
Adjustment to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 97 84
Provision for loan losses 90 60
Amortization of deferred loan fees (63) (63)
Premium amortization (discount accretion), net 8 (16)
Net loss (gain) on investment securities 0 (5)
Changes in:
Interest receivable and other assets 901 219
Interest payable and other liabilities (269) (93)
-------- --------
Total adjustments 764 186
-------- --------
Net cash provided by operating activities 1,435 827
-------- --------
Cash Flows From Investing Activities:
Investment securities held-to-maturity:
Proceeds from maturities and principal payments 18 0
Investment securities available-for-sale:
Proceeds from maturities and principal payments 1,132 5,110
Proceeds from sales 0 1,004
Purchases 0 (7,077)
Net increase in loans (8,780) (3,128)
Capital expenditures (787) (140)
-------- --------
Net cash used in investing activities (8,417) (4,231)
-------- --------
Cash Flows From Financing Activities:
Net increase in deposits 17,364 3,538
Decrease in short-term borrowings (400) 0
Stock options exercised 18 11
Dividends paid (315) (297)
-------- --------
Net cash provided by financing activities 16,667 3,252
-------- --------
Net increase (decrease) in cash and cash equivalents 9,685 (152)
Cash and cash equivalents at beginning of year 9,966 14,402
-------- --------
Cash and cash equivalents at end of period $ 19,651 $ 14,250
======== ========
Supplemental Disclosures of Cash Flow Information:
Interest paid $ 1,371 $ 1,078
<FN>
The accompanying notes are an integral part of these statements
</FN>
</TABLE>
6
<PAGE>
NORTH BAY BANCORP
Notes to the Consolidated Financial Statements
(Unaudited)
March 31, 2000
NOTE 1 - Basis of Presentation
The accompanying consolidated financial statements, which include the accounts
of North Bay Bancorp and its subsidiary, have been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission (SEC) and in
Management's opinion, include all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of results for such
interim periods. Certain information and note disclosures normally included in
annual financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to SEC rules or regulations;
however, the Company believes that the disclosures made are adequate to make the
information presented not misleading. The interim results for the three months
ended March 31, 2000 and 1999, are not necessarily indicative of results for the
full year. It is suggested that these financial statements be read in
conjunction with the financial statements and the notes included in the
Company's Annual Report for the year ended December 31, 1999.
NOTE 2 - Commitments
The Company has outstanding standby Letters of Credit of approximately
$1,643,000, undisbursed real estate and construction loans of approximately
$20,439,000, and undisbursed commercial and consumer lines of credit of
approximately $16,774,000, as of March 31, 2000.
NOTE 3 - Earnings Per Common Share
The Company declared 5% stock dividends on January 28, 1999 and January 18,
2000. As a result of the stock dividends the number of common shares outstanding
and earnings per share data was adjusted retroactively for all periods
presented.
<TABLE>
The following table reconciles the numerator and denominator of the Basic and
Diluted earnings per share computations:
<CAPTION>
Weighted Average Per-Share
Net Income Shares Amount
For the three months ended March 31, 2000
-----------------------------------------
<S> <C> <C> <C>
Basic earnings per share $671,000 1,613,543 $.42
Stock options 35,855
Diluted earnings per share 1,649,398 $.41
For the three months ended March 31, 1999
-----------------------------------------
Basic earnings per share $641,000 1,584,616 $.40
Stock options 45,776
Diluted earnings per share 1,630,392 $.39
</TABLE>
NOTE 4 - Comprehensive Income
As of January 1, 1998, North Bay Bancorp adopted FASB Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income", (SFAS 130). This
Statement established standards for the reporting and display of comprehensive
income and its components in the financial statements. For the Company,
comprehensive income includes net income reported on the statement of income and
changes in the fair value of its available-for-sale investments reported as a
component of shareholders' equity. The following table presents net income
adjusted by the change in unrealized gains or losses on the available-for-sale
investments as a component of comprehensive income (in thousands).
Three Months
Ended March 31,
2000 1999
---- ----
Net Income $671 $641
Net change in unrealized losses on
available-for-sale investments, net of tax (90) (292)
---- -----
Comprehensive Income $581 $349
==== ====
NOTE 5 - Segment Reporting
Effective January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 131, "Disclosures About Segments of an Enterprise and Related
Information," (SFAS 131). This Statement establishes standards for the reporting
and display of information about operating segments and related disclosures. The
Company's operating segments consist of its traditional community banking
activities provided through its three branches and activities related to the
Bancorp. Community banking activities include the Bank's commercial and retail
lending, deposit gathering and investment and liquidity management activities.
The Company has aggregated the results of the branches into a single reportable
segment, and the Bancorp activities reported as "Other".
The components of the Company's business segments for the three months ended
March 31, 2000 were as follows:
7
<PAGE>
<TABLE>
<CAPTION>
(In 000's)
Community Intersegment
Banking Other Adjustments Consolidated
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Interest Income $ 3,723 $ 0 $ 0 $ 3,723
Interest Expense 1,289 0 0 1,289
-------- -------- -------- --------
Net Interest Income 2,434 0 0 2,434
Provision for loan losses
90 0 0 90
Noninterest Income 555 514 (555) 514
Noninterest Expense 1,549 775 (555) 1,768
-------- -------- -------- --------
Income (Loss) Before Tax 1,351 (261) 0 1,090
Provision for
Income Taxes 528 (109) 0 419
-------- -------- -------- --------
Net Income (Loss) $ 823 ($ 152) $ 0 $ 671
-------- -------- -------- --------
Assets $213,180 $ 18,383 ($17,478) $214,085
Loans, Net 128,919 0 0 128,919
Deposits 190,442 0 (698) 189,744
Equity 16,780 18,374 (16,780) 18,374
</TABLE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FORWARD LOOKING STATEMENTS
In addition to the historical information contained herein, this Quarterly
Report contains certain forward-looking statements. The reader of this Quarterly
Report should understand that all such forward-looking statements are subject to
various uncertainties and risks that could affect their outcome. The Company's
actual results could differ materially from those suggested by such
forward-looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, variances in the actual versus
projected growth in assets, return on assets, loan losses, expenses, rates
charged on loans and earned on securities investments, rates paid on deposits,
competition effects, fee and other noninterest income earned as well as other
factors. This entire Quarterly Report should be read to put such forward-looking
statements in context and to gain a more complete understanding of the
uncertainties and risks involved in the Company's business.
Moreover, wherever phrases such as or similar to "In Management's opinion",
"Management considers" are used, such statements are as of and based upon the
knowledge of Management, at the time made and are subject to change by the
passage of time and/or subsequent events, and accordingly such statements are
subject to the same risks and uncertainties noted above with respect to
forward-looking statements.
OVERVIEW
Net income was $671,000 or $.41 per share for the three months ended March 31,
2000, compared with $641,000 or $.39 per share for the three months ended March
31, 1999, an increase of 5%. Total assets were $214,085,000 as of March 31,
2000; equating to a 16% growth in assets during the twelve months ended March
31, 2000.
SUMMARY OF EARNINGS
NET INTEREST INCOME
Net interest income represents the amount by which interest earned on earning
assets (primarily loans and investments) exceed the amount of interest paid on
deposits. Net interest income is a function of volume, interest rates and level
of non-accrual loans. Non-refundable loan origination fees are deferred and
amortized into income over the life of the loan. Net interest income before the
provision for loan losses on a taxable-equivalent basis for the three months
ended March 31, 2000 and March 31, 1999 was $2,479,000 and $2,253,000,
respectively. These results equate to a 10% increase in net interest income for
the first quarter of 2000 compared to the first quarter of 1999. Loan fee
income, which is included in interest income, was $134,000 for the three months
ended March 31, 2000, compared with $189,000 for the three months ended March
31, 1999. The average balance of earnings assets increased $22,091,000 or 13%
during the twelve months ended March 31, 2000. Taxable-equivalent interest
income increased $483,000 in the first quarter of 2000 compared with the first
quarter of 1999. Increase in the volume of earning assets accounted for $533,000
of this increase, with a decrease of $50,000 attributable to lower rates. The
average balance of interest-bearing liabilities increased $21,716,000 or 17%
during the first three month of 2000 compared with the same period in 1999.
Interest paid on interest-bearing liabilities increased $257,000 in 2000
compared with 1999. Increase in the volume of deposits and other borrowings
accounted for $233,000 of this increase, while a $24,000 increase was attributed
to an increase in rates. Management does not expect a material change in the
Company's net interest margin during the next twelve months as the result of a
modest increase or decrease in general interest rates.
8
<PAGE>
<TABLE>
The following table provides a summary of the components of interest income,
interest expense and net interest margins for the quarters ended March 31, 2000
and March 31, 1999:
<CAPTION>
In 000's
2000 1999
---- ----
Average Income/ Average Average Income/ Average
Balance Expense Yield/Rate Balance Expense Yield/Rate
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Loans (1) (2) $126,918 $2,808 8.85% $98,824 $2,237 9.05%
Investment securities:
Taxable 41,449 674 6.50% 49,016 784 6.40%
Non-taxable (3) 14,090 214 6.08% 13,510 212 6.28%
-------- ------ ------- ------
TOTAL LOANS AND INVESTMENT
SECURITIES 182,457 3,696 8.10% 161,350 3,233 8.01%
Due from banks, time 100 1 4.00% 200 2 4.00%
Federal funds sold 5,787 71 4.91% 4,703 50 4.25%
-------- ------ ------- ------
TOTAL EARNING ASSETS 188,344 $3,768 8.00% 166,253 $3,285 7.90%
-------- ------ ------- ------
Cash and due from banks 8,813 9,301
Allowance for loan losses (1,938) (1,793)
Premises and equipment, net 3,233 2,771
Accrued interest receivable
and other assets 6,779 5,734
-------- --------
TOTAL ASSETS $205,231 $182,266
======== ========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Deposits:
Interest bearing demand $61,160 $344 2.25% $55,681 $314 2.26%
Savings 16,133 74 1.83% 14,868 68 1.83%
Time 63,944 801 5.01% 53,572 650 4.85%
-------- ------ ------- ------
141,237 1,219 3.45% 124,121 1,032 3.33%
Short-term borrowings 4,600 70 6.09% 0 0 0.00%
TOTAL INTEREST BEARING
LIABILITIES 145,837 $1,289 3.54% 124,121 $1,032 3.33%
-------- ------ ------- ------
Noninterest bearing DDA 39,444 39,845
Accrued interest payable
and other liabilities 1,616 1,263
Shareholders' equity 18,334 17,037
--------- ---------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $205,231 $182,266
========= =========
NET INTEREST INCOME $2,479 $2,253
======= ======
NET INTEREST INCOME TO
AVERAGE EARNING ASSETS
(Net Interest Margin (4)) 5.26% 5.42%
<FN>
(1) Average loans include nonaccrual loans
(2) Loan interest income includes loan fee income of $134 in 2000 and $189 in 1999
(3) Average yields shown are taxable-equivalent. On a non- taxable basis, 2000
interest income was $169 with an average yield of 4.80%; in 1999 non-taxable
income was $162 and the average yield was 4.80%.
(4) Net interest margin is calculated by dividing net interest income by the
average balance of total earning assets for the applicable period
</FN>
</TABLE>
9
<PAGE>
The following table sets forth a summary of the changes in interest earned and
interest paid for the first three months in 2000 over 1999 resulting from
changes in assets and liabilities volumes and rates. The change in interest due
to both rate and volume has been allocated in proportion to the relationship of
absolute dollar amounts of change in each.
In 000's
2000 Over 1999
Volume Rate Total
----- ----- -----
Increase (Decrease) In
Interest and Fee Income
Time Deposits With Other
Financial Institutions ($ 1) $ 0 ($ 1)
Investment Securities:
Taxable (121) 11 (110)
Non-Taxable (1) 9 (7) 2
Federal Funds Sold 11 10 21
Loans 635 (64) 571
----- ----- -----
Total Interest and Fee Income 533 (50) 483
----- ----- -----
Increase (Decrease) In
Interest Expense
Deposits:
Interest Bearing
Transaction Accounts 32 (2) 30
Savings 6 0 6
Time Deposits 125 26 151
----- ----- -----
Total Deposits 163 24 187
Short-term Borrowings 70 0 70
----- ----- -----
Total Interest Expense 233 24 257
----- ----- -----
Net Interest Income $ 300 ($ 74) $ 226
===== ===== =====
(1) The interest earned is taxable-equivalent.
PROVISION AND ALLOWANCE FOR LOAN LOSSES
The Company maintains an allowance for loan losses at a level considered
adequate to provide for losses that can be reasonably anticipated. The allowance
is increased by the provision for loan losses and reduced by net charge offs.
The allowance for loan losses is based on estimates, and ultimate losses may
vary from current estimates. These estimates are reviewed periodically and as
adjustments become necessary they are reported in earnings in the periods in
which they become known. The Company makes credit reviews of the loan portfolio
and considers current economic conditions, historical loan loss experience and
other factors in determining the adequacy of the allowance balance. This
evaluation establishes a specific allowance for all classified loans over
$50,000 and establishes percentage allowance requirements for all other loans,
according to the classification as determined by the Company's internal grading
system. As of March 31, 2000 the allowance for loan losses of $1,977,000
represented 1.51% of loans outstanding. As of March 31, 1999, the allowance
represented 1.82% of loans outstanding. During the three months ended March 31,
2000, $90,000 was charged to expense for the loan loss provision, compared with
$60,000 for the same period in 1999. Net charge-offs for all loans was $100,000
for the first quarter on 2000 compared with net recoveries of $2,000 in the year
earlier period.
10
<PAGE>
<TABLE>
The following table summarizes changes in the allowance for loan losses:
<CAPTION>
In 000's
March 31, 2000 March 31, 1999
<S> <C> <C>
Balance, beginning of period $1,987 $1,752
Provision for loan losses 90 60
Loans charged off 120 0
Recoveries of loans previously charged off 20 2
-- --
Balance, end of period $1,977 $1,814
====== ======
Allowance for loan losses to total outstanding loans 1.51% 1.82%
</TABLE>
NON-INTEREST INCOME
Non-interest income was $514,000 for the three months ended March 31, 2000
compared with $384,000 for the same period in 1999, a 34% increase. The increase
in non-interest income resulted primarily from an increase in the number of
deposit accounts, transaction volumes and directly related service charges.
GAIN (LOSSES) ON SECURITIES
Gains of $5,000 for the three months ended March 31, 1999 resulted from the sale
of several available-for-sale securities. There were no gains or losses on sales
of securities for the three months ended March 31, 2000.
NON-INTEREST EXPENSE
Non-interest expense for the three months ended March 31, 2000 and March 31,
1999 was $1,768,000 and $1,502,000, respectively. The 18% increase in 2000 was
primarily in salaries and employee benefit expenses. Salaries and employee
benefits expense for the three months ended March 31, 2000 and 1999 were
$983,000 and $849,000, respectively, a 16% increase. The increase in 2000
resulted from increased salary rates paid to Company officers and employees, and
an increase of approximately eight full-time equivalent employees during the
twelve months ended March 31, 2000. Other expenses for the three months ended
March 31, 2000 and March 31, 1999 were $511,000 and $437,000, respectively, a
17% increase. The increase from last year is primarily due to costs associated
with training staff for a new core banking systems, and costs associated with an
increased advertising campaign.
INCOME TAXES
The Company reported a provision for income tax for the three months ended March
31, 2000 and 1999 of $419,000 and $389,000, respectively. Both the 2000 and 1999
provisions reflect tax accruals at maximum rates for both federal and state
income taxes, adjusted for the effect of the Company's investments in tax-exempt
municipal securities.
BALANCE SHEET
Total assets as of March 31, 2000 were $214,085,000 compared with $183,798,000
as of March 31, 1999, and $197,106,000 at December 31, 1999 equating to a 16%
increase during the twelve months then ended and an 8% increase for the three
month ended March 31, 2000. Total deposits as of March 31, 2000 were
$189,744,000 compared with $165,711,000 as of March 31, 1999, and $172,380,000
at December 31, 1999 representing a 15% increase during the twelve months and a
10% increase for the three months ended March 31, 2000. Loans outstanding as of
March 31, 2000 were $130,896,000 compared with $99,720,000 as of March 31, 1999,
and $122,153,000 at December 31, 1999 equating to a 31% increase during the
twelve months and a 7% increase for the three months ended March 31, 2000,
BORROWINGS
Short-term borrowings were $4,600,000 at March 31, 2000 compared with $5,000,000
at December 31, 1999. Short-term borrowings consist primarily of federal funds
purchased and borrowings from Federal Home Loan Bank. The Company has used
short-term borrowings to assist in funding its increased loan demand. Going
forward, continued reliance on short-term funds may be required if loan demand
continues to outpace deposit growth, and, therefore short-term borrowings are
expected to vary from time to time.
LIQUIDITY AND CAPITAL ADEQUACY
The Company's liquidity is determined by the level of assets (such as cash,
Federal Funds, and investment in marketable securities) that are readily
convertible to cash to meet customer withdrawals and borrowings. Management
reviews the Company's liquidity position on a regular basis to ensure that it is
adequate to meet projected loan funding and potential withdrawal of deposits.
The Company has a comprehensive Asset/Liability Management and Liquidity Policy,
which it uses to determine adequate liquidity. As of March 31, 2000 liquid
assets were 34% of total assets, compared with 35% as of March 31, 1999.
The Federal Deposit Insurance Corporation Improvement Act (FDICA) established
ratios used to determine whether a Company is "Well Capitalized," "Adequately
Capitalized," "Undercapitalized," "Significantly Undercapitalized," or
"Critically Undercapitalized." A Well Capitalized Company has risk-based capital
of at least 10%, tier 1 risked-based capital of at least 6%, and a leverage
ratio of at least 5%. As of March 31, 2000, the Company's risk-based capital
ratio was 13.24%. The Company's tier 1 risk-based capital ratio and leverage
ratio were 12.03% and 9.57%, respectively.
11
<PAGE>
<TABLE>
As the following table indicates, the Bank currently exceeds the regulatory
capital minimum requirements. The Bank is considered "Well Capitalized"
according to regulatory guidelines.
<CAPTION>
To Be Well Capitalized
For Capital Under Prompt Corrective
Actual Adequacy Purposes Action Provisions
------ ------------------- -----------------------
(In 000's)
Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1999:
Total Capital (to Risk
Weighted Assets)
Consolidated $21,612 13.24% $13,060 >8.00% $16,325 >10.00%
- -
The Vintage Bank 20,154 12.70% 12,608 >8.00% 15,760 >10.00%
- -
Tier I Capital (to Risk
Weighted Assets)
Consolidated 19,635 12.03% 6,530 >4.00% 9,795 >6.00%
- -
The Vintage Bank 18,049 11.45% 6,304 >4.00% 9,456 >6.00%
- -
Tier I Capital (to
Average Assets)
Consolidated 19,635 9.58% 8,209 >4.00% 10,261 >5.00%
-
The Vintage Bank 18,049 8.80% 8,209 >4.00% 10,261 >5.00%
- -
</TABLE>
YEAR 2000 DATA PROCESSING ISSUES
The Company previously recognized the material nature of the business issues
surrounding computer processing of dates into and beyond the Year 2000 and began
taking corrective action as required pursuant to the interagency statements
issued by the Federal Financial Institutions Examination Council.
The Company's Year 2000 readiness costs were approximately $75,000. The Company
does not currently expect to apply any further funds to address Year 2000
issues.
As of May 8, 2000, the Company has not experienced any material disruptions of
its internal computer systems or software applications and has not experienced
any problems with the computer systems or software applications of its third
party vendors, suppliers or service providers. The Company will continue to
monitor these third parties to determine the impact, if any, on its business and
the actions it must take, if any, in the event of non-compliance by any of these
third parties. Based upon the Company's assessment of compliance by third
parties, there appears to be no material business risk posed by any such
non-compliance.
Although the Company's Year 2000 rollover did not present any material business
disruption, there may be some remaining Year 2000 related risks. Management
believes that appropriate actions have been taken to address these remaining
Year 2000 issues and contingency plans are in place to minimize the financial
impact to the Company. Management, however, cannot be certain that Year 2000
issues affecting its customers, suppliers or service providers will not have a
material adverse impact on the Company.
12
<PAGE>
PART II - OTHER INFORMATION
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There have been no material developments in any previously reported legal
proceedings.
ITEM 2. USE OF PROCEEDS
Use of Proceeds of Public Offering
On December 22, 1999, North Bay filed Registration Statement No. 333-93365 with
the United States Securities and Exchange Commission with respect to a proposed
public offering of North Bay common stock for an aggregate consideration of
$5,000,000. The registration statement was declared effective on February 9,
2000, and North Bay commenced an offering of up to 200,000 shares of its common
stock, no par value, at a price of $25.00 per share. All securities are being
sold for the account of the issuer and there are no underwriters involved in the
offering. The offering has not been terminated.
The terms of the offering have been amended. Instead of offering up to 200,000
of its common stock at a cash price of $25.00 per share, the Company is now
offering up to 227,273 shares of its common stock at a cash price of $22.00 per
share. The aggregate consideration remains at $5,000,000. The maximum purchase
for any one individual has increased from $100,000 (4,454 shares) to $500,000
(22,727 shares). The Company also has extended the offering expiration date from
April 15, 2000 to May 31, 2000, and has also extended the date to which it
retains discretion to further extend the offering expiration without further
notice from June 30, 2000 to July 31, 2000.
As of May 8, 2000 subscriptions of $1,288,982 have been received but yet not
accepted, therefore there were no net proceeds associated with this offering.
The following expenses have been incurred by the Company in connection with the
issuance and distribution of securities registered:
Underwriting Discounts and Commissions: $ -0-
Finders Fees: $ -0-
Expenses paid to underwriters; $ -0-
Other Expenses; $100,000
Total Expenses; $100,000
All expenses were paid to persons other than directors, officers, or 10%
shareholders of North Bay.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Page
(a) Exhibit 27. Finacial Data Schedule 15
(b) On February 2, 2000, the Company filed a Current Report on Form
8-K, reporting the declaration of a stock dividend of one share for every twenty
outstanding shares and a cash dividend of twenty cents ($.20) per share. On
March 31, 2000 the Company filed a Current Report on Form 8-K, reporting its
year-end results and reporting the commencement of its public stock offering. No
financial statements were filed with the Current Reports on Form 8-K.
13
<PAGE>
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Company has duly caused this quarterly report to be signed on its behalf by the
undersigned, thereunto duly authorized.
NORTH BAY BANCORP
A California Corporation
Date: May 11, 2000 BY: /s/ Terry L. Robinson
------------------------
Terry L. Robinson
President & CEO
Date: May 11,2000 BY: /s/ Lee Ann-Almeida
------------------------
Lee-Ann Almeida
Vice President & CFO
14
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
BALANCE SHEETS OF NORTH BAY BANCORP AS OF MARCH 31, 2000 AND 1999 AND THE
RELATED CONSOLIDATED STATEMENTS OF INCOME,CHANGES IN SHAREHOLDERS' EQUITY AND
CASH FLOWS FOR EACH OF THE PERIODS ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 10,128
<INT-BEARING-DEPOSITS> 100
<FED-FUNDS-SOLD> 9,523
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 53,970
<INVESTMENTS-CARRYING> 1,372
<INVESTMENTS-MARKET> 1,372
<LOANS> 130,896
<ALLOWANCE> 1,977
<TOTAL-ASSETS> 214,085
<DEPOSITS> 189,744
<SHORT-TERM> 4,600
<LIABILITIES-OTHER> 1,367
<LONG-TERM> 0
0
0
<COMMON> 14,824
<OTHER-SE> 3,550
<TOTAL-LIABILITIES-AND-EQUITY> 214,085
<INTEREST-LOAN> 2,808
<INTEREST-INVEST> 844
<INTEREST-OTHER> 71
<INTEREST-TOTAL> 3,723
<INTEREST-DEPOSIT> 1,219
<INTEREST-EXPENSE> 1,289
<INTEREST-INCOME-NET> 2,434
<LOAN-LOSSES> 90
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,768
<INCOME-PRETAX> 1,090
<INCOME-PRE-EXTRAORDINARY> 1,090
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 671
<EPS-BASIC> 1.34
<EPS-DILUTED> .41
<YIELD-ACTUAL> 8.00
<LOANS-NON> 0
<LOANS-PAST> 0
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<ALLOWANCE-OPEN> 1,987
<CHARGE-OFFS> 120
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<ALLOWANCE-CLOSE> 1,977
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<ALLOWANCE-FOREIGN> 0
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</TABLE>
