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 June 30, 2013

FNB BANCORP

(Exact name of registrant as specified in its charter)

California

(State or other jurisdiction of incorporation)

000-49693	91-2115369
(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 o

Indicate by check mark whether the registrant has submitted electronically and posted on its Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o	Accelerated filer o
Non-accelerated filer x	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o  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 August 3, 2013: 3,760,305 shares.

 FNB BANCORP

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

	Page No
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (unaudited):
Consolidated Balance Sheets	3
Consolidated Statements of Earnings	4
Consolidated Statements of Comprehensive Earnings (Loss)	5
Consolidated Statement of Cash Flows	6
Notes to Consolidated Financial Statements	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3. Quantitative and Qualitative Disclosures About Market Risk	47
Item 4T. Controls and Procedures	47
PART II OTHER INFORMATION	48
Item 1. Legal Proceedings	48
Item 1A. Risk Factors	48
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	48
Item 4. Mine Safety Disclosures	48
Item 6. Exhibits	48
SIGNATURES	49

2

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

FNB BANCORP AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

(Dollar amounts in thousands)	June 30,			December 31,
	2013			2012
ASSETS
Cash and due from banks	$	23,698		$	27,861
Interest-bearing time deposits with financial institutions		8,473			13,216
Securities available-for-sale, at fair value		281,422			234,945
Loans, net of deferred loan fees and allowance for loan losses of $9,745 and $9,124 on June 30, 2013 and December 31, 2012		531,238			541,563
Bank premises, equipment, and leasehold improvements, net		12,699			12,706
Bank owned life insurance		11,975			11,785
Other equity securities		5,300			5,464
Accrued interest receivable		3,886			3,760
Other real estate owned, net		6,675			6,650
Goodwill		1,841			1,841
Prepaid expenses		718			1,372
Other assets		13,563			14,177
Total assets	$	901,488		$	875,340
Liabilities & Stockholders’ Equity
Deposits
Demand, noninterest bearing	$	192,825		$	178,384
Demand, interest bearing		76,544			75,465
Savings and money market		385,017			343,437
Time		148,414			171,066
Total deposits		802,800			768,352
Federal Home Loan Bank advances		501			1,220
Accrued expenses and other liabilities		8,096			10,410
Total liabilities		811,397			779,982
Stockholders’ equity
Preferred stock - series C - no par value, authorized and outstanding 9,450 shares (liquidation preference of $1,000 per share)		9,450			12,600
Common stock, no par value, authorized 10,000,000 shares; issued and outstanding 3,760,305 shares at June 30, 2013 and 3,698,612 shares at December 31, 2012		53,682			52,610
Retained earnings		27,582			26,280
Accumulated other comprehensive earnings, net of tax		(623	)		3,868
Total stockholders’ equity		90,091			95,358
Total liabilities and stockholders’ equity	$	901,488		$	875,340

See accompanying notes to consolidated financial statements.

3

FNB BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENT OF EARNINGS

(UNAUDITED)

(Dollar amounts and average shares are in thousands, except earnings per share amounts)

	Three months ended June 30,					Six months ended June 30,
	2013		2012			2013		2012
Interest income:
Interest and fees on loans	$	8,020	$	6,758		$	16,178	$	13,513
Interest on taxable securities		794		617			1,478		1,230
Interest on tax-exempt securities		503		503			1,009		1,017
Total interest income		9,317		7,878			18,665		15,760
Interest expense:
Deposits		639		653			1,321		1,337
Total interest expense		639		653			1,321		1,337
Net interest income		8,678		7,225			17,344		14,423
Provision for loan losses		510		400			1,110		800
Net interest income after provision for loan losses		8,168		6,825			16,234		13,623
Noninterest income:
Service charges		676		744			1,335		1,496
Credit card fees		3		155			10		308
Net gain on sale of available-for-sale securities		73		325			115		809
Bank owned life insurance earnings		94		111			189		578
Other income		287		80			509		144
Total noninterest income		1,133		1,415			2,158		3,335
Noninterest expense:
Salaries and employee benefits		4,312		3,645			8,728		7,419
Occupancy expense		846		598			1,808		1,198
Equipment expense		386		432			784		878
Professional fees		444		383			807		971
FDIC assessment		180		156			360		336
Acquisition expense		—		—			—		175
Telephone, postage and supplies		277		271			714		549
Operating losses (recoveries)		11		(56	)		25		52
Advertising		121		91			293		176
Bankcard expenses		—		157			1		313
Data processing expense		170		138			326		276
Low income housing expense		109		70			219		139
Surety insurance		67		62			121		124
Directors expense		63		54			126		126
Other real estate owned expense		28		15			78		51
Gain on sale of other real estate owned		—		(9	)		—		(4	)
Other expense		371		491			734		772
Total noninterest expense		7,385		6,498			15,124		13,551
Earnings before provision for income tax expense		1,916		1,742			3,268		3,407
Provision for income tax expense		537		514			959		891
Net earnings		1,379		1,228			2,309		2,516
Dividends and discount accretion on preferred stock		172		157			330		343
Net earnings available to common stockholders	$	1,207	$	1,071		$	1,979	$	2,173
Earnings per share data:
Basic	$	0.32	$	0.29		$	0.53	$	0.59
Diluted	$	0.32	$	0.29		$	0.52	$	0.58
Weighted average shares outstanding:
Basic		3,729		3,690			3,722		3,688
Diluted		3,813		3,752			3,810		3,739

See accompanying notes to consolidated financial statements.

4

FNB BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (LOSS)

(UNAUDITED)

(Dollar amounts in thousands)	Three months ended						Six months ended
	June 30,						June 30,
	2013			2012			2013			2012
Net earnings	$	1,379		$	1,228		$	2309		$	2516
Unrealized holding (loss) gain on available-for-sale securities, net of tax		(4,005	)		631			(4,423	)		648
Reclassification adjustment for gain on available-for-sale securities sold, net of tax of $30 and $47 for three and six months ended June 30, 2013, and $133 and $332 for three and six months ended June 30, 2012, respectively		(43	)		(192	)		(68	)		(477	)
Total comprehensive earnings (loss)	$	(2,669	)	$	1,667		$	(2,182	)	$	2,687

See accompanying notes to consolidated financial statements.

5

FNB BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(Dollar amounts in thousands)	Six months ended
	June 30
	2013			2012
Cash flow from operating activities:
Net earnings	$	2,309		$	2,516
Adjustments to reconcile net earnings to net cash provided by operating activities:
Net gain on sale of securities available-for-sale		(115	)		(809	)
Depreciation, amortization and accretion		1,843			1,680
Gain on sale of other real estate owned		—			4
Stock-based compensation expense		121			121
Earnings on bank owned life insurance		(190	)		(2,073	)
Provision for loan losses		1,110			800
Increase in accrued interest receivable		(126	)		(7	)
Decrease in prepaid expense		654			498
Decrease (increase) in other assets		899			(800	)
Increase in accrued expenses and other liabilities		431			800
Net cash provided by operating activities		6,936			2,730
Cash flows from investing activities
Purchase of securities available-for-sale		(77,996	)		(43,995	)
Proceeds from matured/called/sold securities available-for-sale		22,803			28,269
Investment, net of redemption, in other equity securities		164			5
Redemption of time deposits of other banks		4,743			—
Proceeds from sale of other real estate owned		—			832
Net investment in other real estate owned		(25	)		(13	)
Net decrease (increase) in loans		9,215			(10,379	)
Purchases of bank premises, equipment, leasehold improvements		(618	)		(427	)
Net cash used in investing activities		(41,714	)		(25,708	)

See accompanying notes to consolidated financial statements.

6

FNB BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Six months ended
	June 30
	2013			2012
Cash flows from financing activities
Net  increase in demand and savings deposits		57,100			33,786
Net decrease in time deposits		(22,652	)		(3,721	)
Decrease in FHLB advances		(719	)		—
Dividends paid on common stock		(301	)		(421	)
Exercise of stock options		667			59
Dividends paid on preferred stock series C		(330	)		(343	)
Partial redemption of preferred stock series C		(3,150	)		—
Net cash provided by financing activities		30,615			29,360
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(4,163	)		6,382
Cash and cash equivalents at beginning of period		27,861			38,474
Cash and cash equivalents at end of period	$	23,698		$	44,856
Additional cash flow information:
Interest paid		1,372			1,338
Income taxes paid		—			930
Non-cash investing and financing activities:
Accrued dividends		376			—
(Decrease) increase in unrealized gain (loss) in available for-sale securities, net of tax		(4,491	)		171

See accompanying notes to consolidated financial statements.

7

 FNB BANCORP AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2013

(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.

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 position and results of operations for the periods presented.

The accompanying unaudited consolidated 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 annual financial statements prepared in conformity with accounting principles generally accepted in the United States of America. Accordingly, these consolidated financial statements should be read in conjunction with the consolidated audited financial statements and notes thereto for the year ended December 31, 2012. Results of operations for interim periods are not necessarily indicative of results for the full year.

NOTE B – STOCK OPTION PLANS

Stock option expense is recorded based on the fair value of option contracts issued. The fair value is determined by the expected contract term, the risk free interest rate, the volatility of the Company’s stock price and the level of dividends the Company is expected to pay.

The expected term of options granted is derived from historical plan behavior and represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the contractual life of the option is based on the U. S. Treasury yield curve in effect at the time of the grant.

The amount of compensation expense for options recorded in the quarters ended June 30, 2013 and 2012 was $76,000 and $59,000, respectively. There was an income tax benefit recognized in the statements of earnings for the quarter and year to date ended June 30, 2013 of $121,000, and there was a tax benefit of $22,000 recognized for the quarter and year to date ended June 30, 2012.

8

The intrinsic value for options exercised during the six months ended June 30, 2013 was $108,000. The intrinsic value for options exercisable as of June 30, 2013 was $1,081,000. The intrinsic value for options exercised during the six months ended June 30, 2012 was $58,000. The intrinsic value of options exercisable at June 30, 2012 was $620,000. There were 60,785 options granted for the first six months ended June 30, 2013 and no options granted for the six month period ended June 30, 2012.

The amount of total unrecognized compensation expense related to non-vested options at June 30, 2013 was $776,000, and the weighted average period over which it will be amortized is 3.8 years.

NOTE C – 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 (loss) available to common stockholders (after deducting dividends and related accretion on preferred stock) 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. All common stock equivalents are anti-dilutive when a net loss occurs.

Earnings per share have been computed based on the following: 

(All amounts in thousands)	Three months ended				Six months ended
	June 30,				June 30,
	2013		2012		2013		2012
Net earnings	$	1,379	$	1,228	$	2,309	$	2,516
Dividends and discount accretion on preferred stock		172		157		330		343
Net earnings available to common shareholders	$	1,207	$	1,071	$	1,979	$	2,173
Average number of shares outstanding		3,729		3,690		3,722		3,688
Effect of dilutive options		84		62		88		51
Average number of shares outstanding used to calculate diluted earnings per share		3,813		3,752		3,810		3,739

Anti-dilutive options that were excluded from the calculation for the quarter end and year to date were 204,359 and 230,859 in 2013, and 279,676 and 300,516 in 2012, respectively.

9

NOTE D – SECURITIES AVAILABLE FOR SALE

The amortized cost and carrying values of securities available-for-sale are as follows:

(Dollar amounts in thousands)	Amortized		Unrealized		Unrealized			Carrying
	cost		gains		losses			value
June 30, 2013
U.S. Treasury securities	$	7,139	$	79	$	(45	)	$	7,173
Obligations of U.S. government agencies		86,188		606		(753	)		86,041
Mortgage-backed securities		78,764		469		(2,050	)		77,183
Obligations of states and political subdivisions		83,346		1,595		(1,151	)		83,790
Corporate debt		27,041		351		(157	)		27,235
	$	282,478	$	3,100	$	(4,156	)	$	281,422
December 31, 2012:
U.S. Treasury securities	$	7,145	$	135	$	—		$	7,280
Obligations of U.S. government agencies		71,061		1,206		(7	)		72,260
Mortgage-backed securities		53,934		1,383		(137	)		55,180
Obligations of states and political subdivisions		78,147		3,515		(53	)		81,609
Corporate debt		18,103		535		(22	)		18,616
	$	228,390	$	6,774	$	(219	)	$	234,945

An analysis of gross unrealized losses of the available-for-sale investment securities portfolio as of June 30, 2013 and December 31, 2012, respectively, is as follows:

(Dollar amounts in thousands)			Less than					12 Months
	Total		12 Months			Total		or Longer			Total		Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
June 30, 2013
U.S. Treasury securities	$	2,017	$	(45	)	$	—	$	—		$	2,017	$	(45	)
Obligations of U.S. Government agencies		40,567		(753	)		—		—			40,567	$	(753	)
Mortgage-backed securities		40,791		(2,050	)		—		—			40,791		(2,050	)
Obligations of states and political subdivisions		29,894		(1,100	)		1,115		(51	)		31,009		(1,151	)
Corporate debt		11,038		(155	)		498		(2	)		11,536		(157	)
Total	$	124,307	$	(4,103	)	$	1,613	$	(53	)	$	125,920	$	(4,156	)

			Less than					12 Months
(Dollar amounts in thousands)	Total		12 Months			Total		or Longer			Total		Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
December 31, 2012:
Obligations of U.S. government agencies	$	4,093	$	(7	)	$	—	$	—		$	4,093	$	(7	)
Mortgage-backed securities		8,580		(137	)		—		—			8,580		(137	)
Obligations of states and political subdivisions		8,492		(53	)		—		—			8,492		(53	)
Corporate debt		—		—			478		(22	)		478		(22	)
Total	$	21,165	$	(197	)	$	478	$	(22	)	$	21,643	$	(219	)

10

At June 30, 2013 and December 31, 2012, there were two securities in an unrealized loss position for 12 consecutive months or more. Management periodically evaluates each security in an unrealized loss position to determine if the impairment is temporary or other-than-temporary. The unrealized losses are due solely to interest rate changes and the Company does not intend to sell nor expects it will be required to sell investment securities identified with impairments prior to the earliest of forecasted recovery or the maturity of the underlying investment security. Management has determined that no investment security was other-than-temporarily impaired at June 30, 2013 and 2012.

The amortized cost and carrying value of available-for-sale debt securities as of June 30, 2013 by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

June 30, 2013:

(Dollar amounts in thousands)	Amortized		Carrying
	Cost		Value
Available-for-sale:
Due in one year or less	$	13,932	$	14,062
Due after one through five years		100,978		101,886
Due after five years through ten years		122,548		120,994
Due after ten years		45,020		44,480
	$	282,478	$	281,422

For the six months ended June 30, 2013 and June 30, 2012, respectively, gross realized gains amounted to $115,000 and $817,000, on securities sold or called of $8,593,000 and $22,717,000, respectively. For the six months ended June 30, 2013, there were no gross realized losses. For the six months ended June 30, 2012, gross realized losses amounted to $8,000 on securities sold of $1,968,000.

At June 30, 2013, securities with an amortized cost of $73,935,000 and fair value of $74,661,000 were pledged as collateral for public deposits and for other purposes required by law.

NOTE E – LOANS

Loans are summarized as follows at June 30, 2013 and December 31, 2012:

									Total
(Dollar amounts in thousands)	FNB								Balance
	Bancorp								June 30
June 30, 2013:	Originated			PNCI			PCI		2013
Commercial real estate	$	260,871		$	42,582		$	1,366	$	304,819
Real estate construction		21,775			3,611			588		25,974
Real estate multi-family		41,374			14,580			48		56,002
Real estate 1 to 4 family		92,463			12,608			23		105,094
Commercial & industrial		36,185			11,554			—		47,739
Consumer loans		1,725			—			—		1,725
Gross loans		454,393			84,935			2,025		541,353
Net deferred loan fees		(370	)		—			—		(370	)
Allowance for loan losses		(9,707	)		(38	)		—		(9,745	)
Net loans	$	444,316		$	84,897		$	2,025	$	531,238

11

(Dollar amounts in thousands)								Total
	FNB							Balance
	Bancorp							December 31
December 31, 2012:	Originated			PNCI		PCI		2012
Commercial real estate	$	254,449		$	48,009	$	1,402	$	303,860
Real estate construction		14,866			3,594		486		18,946
Real estate multi-family		39,176			18,828		—		58,004
Real estate 1 to 4 family		97,329			15,390		—		112,719
Commercial & industrial		42,847			12,717		—		55,564
Consumer loans		1,824			—		—		1,824
Gross loans		450,491			98,538		1,888		550,917
Net deferred loan fees		(230	)		—		—		(230	)
Allowance for loan losses		(9,124	)		—		—		(9,124	)
Net loans	$	441,137		$	98,538	$	1,888	$	541,563

Note: PNCI means Purchased, Not Credit Impaired. PCI means Purchased, Credit Impaired.  

Allowance for Credit Losses
For the Three Months Ended June 30, 2013
(Dollar amounts in thousands)								Real		Real
								Estate		Estate
	Commercial			Commercial		Real Estate		Multi		1 to
	& industrial			Real estate		Construction		family		4 family			Consumer		Total
Allowance for credit losses
Beginning balance	$	1,577		$	4,930	$	653	$	281	$	1,862		$	54	$	9,357
Charge-offs		—			—		—		—		(125	)		—		(125	)
Recoveries		—			2		—		—		—			1		3
Provision		(86	)		379		72		48		91			6		510
Ending balance	$	1,491		$	5,311	$	725	$	329	$	1,828		$	61	$	9,745
Ending balance: individually evaluated for impairment	$	254		$	189	$	—	$	—	$	237		$	1	$	681
Ending balance: collectively evaluated for impairment	$	1,237		$	5,122	$	725	$	329	$	1,591		$	60	$	9,064

12

Allowance for Credit Losses
For the Six Months Ended June 30, 2013
(Dollar amounts in thousands)										Real		Real
										Estate		Estate
	Commercial			Commercial			Real Estate			Multi		1 to
	& industrial			Real estate			Construction			family		4 family			Consumer			Total
Allowance for credit losses
Beginning balance	$	1,875		$	4,812		$	857		$	—	$	1,516		$	64		$	9,124
Charge-offs		—			(239	)		(81	)		—		(244	)		(1	)		(565	)
Recoveries		70			4			—			—		1			1			76
Provision		(454	)		754			(34	)		329		518			(3	)		1,110
Ending balance	$	1,491		$	5,331		$	742		$	329	$	1,791		$	61		$	9,745
Ending balance: individually evaluated for impairment	$	254		$	210		$	17		$	—	$	237		$	1		$	719
Ending balance: collectively evaluated for impairment	$	1,237		$	5,121		$	725		$	329	$	1,554		$	60		$	9,026

Recorded Investment in Loans at June 30, 2013
(Dollar amounts in thousands)							Real		Real
							Estate		Estate
	Commercial		Commercial		Real Estate		Multi		1 to
	& industrial		Real Estate		Construction		family		4 family		Consumer		Total
Loans:
Ending balance	$	47,739	$	304,819	$	25,974	$	56,002	$	105,094	$	1,725	$	541,353
Ending balance: individually evaluated for impairment	$	3,795	$	19,244	$	591	$	1,192	$	3,395	$	1	$	28,218
Ending balance: collectively evaluated for impairment	$	43,944	$	285,575	$	25,383	$	54,810	$	101,699	$	1,724	$	513,135

13

Allowance for Credit Losses
For the Three Months Ended June 30, 2012
(Dollar amounts in thousands)	Commercial			Real Estate			Real Estate			Multi			1 to
	& industrial			Commercial			Construction			family			4 family		Consumer			Total
Allowance for credit losses
Beginning balance	$	1,628		$	3,592		$	1,055		$	151		$	1,798	$	63		$	8,287
Charge-offs		(312	)		—			(54	)		—			—		(1	)		(367	)
Recoveries		—			(2	)		—			—			139		1			138
Provision		418			162			(167	)		(102	)		89		0			400
Ending balance	$	1,734		$	3,752		$	834		$	49		$	2,026	$	63		$	8,458
Ending balance: individually evaluated for impairment	$	505		$	477		$	75		$	42		$	157	$	1		$	1,257
Ending balance: collectively evaluated for impairment	$	1,229		$	3,275		$	759		$	7		$	1,869	$	62		$	7,201

Allowance for Credit Losses
For the Six Months Ended June 30, 2012
(Dollar amounts in thousands)	Commercial			Real Estate			Real Estate			Multi			1 to
	& industrial			Commercial			Construction			family			4 family			Consumer			Total
Allowance for credit losses
Beginning balance	$	1,618		$	4,745		$	1,171		$	671		$	1,592		$	100		$	9,897
Charge-offs		(1,487	)		(738	)		(54	)		—			(109	)		(4	)		(2,392	)
Recoveries		1			139			—			—			9			4			153
Provision		1,602			(394	)		(283	)		(622	)		534			(37	)		800
Ending balance	$	1,734		$	3,752		$	834		$	49		$	2,026		$	63		$	8,458
Ending balance: individually evaluated for impairment	$	505		$	477		$	75		$	42		$	157		$	1		$	1,257
Ending balance: collectively evaluated for impairment	$	1,229		$	3,275		$	759		$	7		$	1,869		$	62		$	7,201

14

Recorded Investment in Loans at June 30, 2012
(Dollar amounts in thousands)							Real		Real
							Estate		Estate
	Commercial		Commercial		Real Estate		Multi		1 to
	& industrial		Real Estate		Construction		family		4 family		Consumer		Total
Loans:
Ending balance	$	53,562	$	244,753	$	25,644	$	39,960	$	95,886	$	2,037	$	461,842
Ending balance: individually evaluated for impairment	$	7,082	$	9,471	$	7,238	$	3,242	$	6,443	$	10	$	33,486
Ending balance: collectively evaluated for impairment	$	46,480	$	235,282	$	18,406	$	36,718	$	89,443	$	2,027	$	428,356

	Impaired Loans-Originated
	As of and for the six months ended June 30, 2013
(Dollar amounts in thousands)			Unpaid				Average
	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized
With no related allowance recorded
Commercial and industrial	$	2,058	$	2,222	$	—	$	2,131	$	54
Commercial real estate construction		—		—		—		—		—
Commercial real estate		8,176		8,740		—		7,707		207
Residential - 1 to 4 family		842		950		—		848		14
Total		11,076		11,912		—		10,686		275
With an allowance recorded
Commercial and industrial	$	1,737	$	2,177	$	254	$	1,756	$	6
Commercial real estate construction		—		—		—		—		—
Commercial real estate		6,063		6,302		189		5,748		117
Residential - 1 to 4 family		2,553		2,559		237		2,614		54
Consumer		1		1		1		1		—
Total		10,354		11,039		681		10,119		177
Total
Commercial and industrial	$	3,795	$	4,399	$	254	$	3,887	$	60
Commercial real estate construction		—		—		—		—		—
Commercial real estate		14,239		15,042		189		13,455		324
Residential - 1 to 4 family		3,395		3,509		237		3,462		68
Consumer		1		1		1		1		—
Grand total	$	21,430	$	22,951	$	681	$	20,805	$	452

15

	Impaired Loans-PNCI
	As of and for the six months ended June 30, 2013
(Dollar amounts in thousands)			Unpaid				Average
	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized
With no related allowance recorded
Real estate-multi family	$	1,192	$	1,281	$	—	$	2,693	$	84
Commercial real estate		4,643		5,428		—		5,432		153
Commercial real estate construction		395		588		—		593		—
Total		6,230		7,297		—		8,718		237
With an allowance recorded
Commercial real estate	$	362	$	448	$	21	$	447	$	12
Commercial real estate construction		196		200		17		200		—
Total		558		648		38		647		12
Total
Commercial real estate construction	$	591	$	788	$	17	$	793	$	—
Real estate-multi family		1,192		1,281		—		2,693		84
Commercial real estate		5,005		5,876		21		5,879		165
Grand total	$	6,788	$	7,945	$	38	$	9,365	$	249

16

	Impaired Loans-Originated
	As of and for the year ended December 31, 2012
(Dollar amounts in thousands)			Unpaid				Average
	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized
With no related allowance recorded
Commercial and industrial	$	2,202	$	2,338	$	—	$	2,298	$	120
Commercial real estate construction		—		—		—		6,187		333
Commercial real estate		7,238		7,804		—		1,097		59
Residential - 1 to 4 family		1,052		1,147		—		1,065		55
Total		10,492		11,289		—		10,647		567
With an allowance recorded
Commercial and industrial	$	1,965	$	2,427	$	384	$	2,328	$	30
Commercial real estate construction		—		—		—		—		—
Commercial real estate		5,433		5,433		415		5,685		240
Residential - 1 to 4 family		3,719		3,722		306		3,283		150
Total		11,117		11,582		1,105		11,296		420
Total
Commercial and industrial	$	4,167	$	4,765	$	384	$	4,626	$	150
Commercial real estate construction		—		—		—		6,187		333
Commercial real estate		12,671		13,237		415		6,782		299
Residential - 1 to 4 family		4,771		4,869		306		4,348		205
Grand total	$	21,609	$	22,871	$	1,105	$	21,943	$	987

17

	Impaired Loans-PNCI
	As of and for the year ended December 31, 2012
			Unpaid				Average
	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized
With no related allowance recorded
Commercial and industrial	$	—	$	—	$	—	$	—	$	—
Commercial real estate construction		—		—		—		—		—
Commercial real estate		3,428		3,776		—		3,777		27
Residential - 1 to 4 family		—		—		—		—		—
Total		3,428		3,776		—		3,777		27
With an allowance recorded
Commercial and industrial
Commercial real estate construction	$	681	$	798	$	232	$	798	$	4
Commercial real estate		—		—		—		—		—
Residential - 1 to 4 family		—		—		—		—		—
Total		681		798		232		798		4
Total
Commercial and industrial	$	—	$	—	$	—	$	—	$	—
Commercial real estate construction		681		798		232		798		4
Commercial real estate		3,428		3,776		—		3,777		27
Residential - 1 to 4 family		—		—		—		—		—
Grand total	$	4,109	$	4,574	$	232	$	4,575	$	31

Nonaccrual loans totaled $11,485,000 and $12,474,000 as of June 30, 2013 and December 31, 2012. The difference between impaired loans and nonaccrual loans represents loans that are restructured and performing under modified loan agreements, and where principal and interest is considered to be collectible.

	Loans on Nonaccrual Status as of
(Dollar amounts in thousands)	June 30,		December 31,
	2013		2012
Commercial and industrial	$	2,353	$	2,618
Real estate - construction		591		1,898
Commercial real estate		6,515		6,251
Real estate multi family		650		—
Real estate 1 to 4 family		1,375		1,707
Consumer		1		—
Total	$	11,485	$	12,474

18

Interest income on impaired loans of $701,000 was recognized for cash payments received during the six months ended June 30, 2013, and $987,000 was recognized for cash payments received during the year ended December 31, 2012, respectively. The amount of interest on impaired loans not collected for the six months ended June 30, 2013 was $388,000 and for the year ended December 31, 2012 was $1,358,000. The cumulative amount of unpaid interest on impaired loans was $3,162,000 for the six months ended June 30, 2013, and $2,774,000 for the year ended December 31, 2012. Total outstanding principal of troubled debt restructured loans as of June 30, 2013 was $5,216,000, of which $196,000 was real estate construction loans, $739,000 was residential loans, $544,000 was real estate multi-family loans, and $3,737,000 was commercial real estate loans. Total outstanding principal of troubled debt restructured loans at December 31, 2012 was $5,578,000, of which $2,723,000 was commercial loans, $1,446,000 was real estate one to four family, and $1,409,000 was commercial real estate loans.

Troubled Debt Restructurings

The Company reassessed all restructurings that occurred on or after the beginning of fiscal year 2011 for identification as troubled debt restructurings. The Company identified as troubled debt restructurings certain loans for which the allowance for credit losses had previously been measured under a general allowance for credit losses methodology (ASC 450-20). Upon identifying the reassessed loans as troubled debt restructurings, the Company also identified them as impaired under the guidance in ASC 310-10-35.

Modification Categories

The Company offers a variety of modifications to borrowers. The modification categories offered can generally be described in the following categories.

Rate Modification – A modification in which the interest rate is changed.

Term modification – A modification in which the maturity date, timing of payments, or frequency of payments is changed.

Interest Only Modification – A modification in which the loan is converted to interest only payments for a period of time.

Payment Modification – A modification in which the dollar amount of the payment is changed, other than an interest only modification described above.

As of June 30, 2013, there were no commitments for additional funding of troubled debt restructurings.

	Modifications
	For the six months ended June 30, 2013
			Pre-		Post-
			Modification		Modification
			Outstanding		Outstanding
	Number of		Recorded		Recorded
(Dollar amounts in thousands)	Contracts		Investment		Investment
Real Estate Construction		1	$	196	$	196
Real estate 1 to 4 family		2		739		739
Real estate multi-family		1		544		544
Commercial real estate		4		3,737		3,737
Total		8	$	5,216	$	5,216

19

As of June 30, 2013, no loans defaulted within twelve months following the date of restructure. All restructurings were a modification of interest rate and/or payment. There were no principal reductions granted.

	Modifications
	As of December 31, 2012
			Pre-		Post-
			Modification		Modification
			Outstanding		Outstanding
	Number of		Recorded		Recorded
(Dollar amounts in thousands)	Contracts		Investment		Investment
Commercial and industrial		7	$	2,723	$	2,723
Real estate 1 to 4 family		3		1,446		1,446
Commercial real estate		3		1,409		1,409
Total		13	$	5,578	$	5,578

As of December 31, 2012, no loans defaulted within the previous twelve months following the date of restructure. All restructurings were a modification of interest rate and/or payment. There were no principal reductions granted.

Risk rating system

Loans to borrowers graded as pass or pooled loans represent loans to borrowers of acceptable or better credit quality. They demonstrate sound financial positions, repayment capacity and credit history. They have an identifiable and stable source of repayment.

Special mention loans have potential weaknesses that deserve management’s attention. If left uncorrected these potential weaknesses may result in a deterioration of the repayment prospects for the asset or in the Bank’s credit position at some future date. These assets are “not adversely classified” and do not expose the Bank to sufficient risk to warrant adverse classification.

Substandard loans are inadequately protected by current sound net worth, paying capacity of the borrower, or pledged collateral. Loans are normally classified as Substandard when there are unsatisfactory characteristics causing more than acceptable levels of risk. A substandard loan normally has one or more well-defined weakness that could jeopardize the repayment of the debt. These well-defined weaknesses may include a) cash flow deficiency, which may jeopardize future payments; b) sale of non-collateral assets has become primary source of repayment; c) the borrower is bankrupt; or d) for any other reason, future repayment is dependent on court action.

Doubtful loans represent credits with weakness inherent in the Substandard classification and where collection or liquidation in full is highly questionable. To be classified Doubtful, there must be specific pending factors which prevent the Loan Review Officer from determining the amount of loss contained in the credit. When the amount of loss can be reasonably estimated, that amount is classified as “loss” and the remainder is classified as Substandard.

20

Commercial Real Estate Loans – Multi-Family

Our multi-family commercial real estate loans are secured by multi-family properties located primarily in San Mateo and San Francisco Counties. These loans are made to investors where our primary source of repayment is from cash flows generated by the properties, through rent collections. The borrowers’ promissory notes are secured with recorded liens on the underlying properties. The borrowers would normally also be required to personally guarantee repayment of the loans. The bank uses conservative underwriting standards in reviewing applications for credit. Generally, our borrowers have multiple sources of income, so if cash flow generated from the property declines, at least in the short term, the borrowers can normally cover these short term cash flow deficiencies from their available cash reserves. Risk of loss to the Bank is increased when there are cash flow decreases sufficiently large and for such a prolonged period of time that loan payments can no longer be made by the borrowers.

Commercial Real Estate Loans – Other

Commercial Real Estate loans consist of loans secured by non-farm, non-residential properties, including, but not limited to industrial, hotel, assisted care, retail, office and mixed use buildings. Our commercial real estate loans are made primarily to investors or small businesses where our primary source of repayment is from cash flows generated by the properties, either through rent collection or business profits. The borrower’s promissory notes are secured with recorded liens on the underlying property. The borrowers would normally also be required to personally guarantee repayment of the loan.

The Bank uses conservative underwriting standards in reviewing applications for credit. Generally, our borrowers have multiple sources of income, so if cash flow generated from the property declines, at least in the short term, the borrowers can normally cover these short term cash flow deficiencies from their available cash reserves. Risk of loss to the Bank is increased when there are cash flow decreases sufficiently large and for such a prolonged period of time that loan payments can no longer be made by the borrowers.

Real Estate Construction Loans

Our real estate construction loans are generally made to borrowers who are rehabilitating a building, converting a building use from one type of use to another, or developing land and building residential or commercial structures for sale or lease. The borrower’s promissory notes are secured with recorded liens on the underlying property. The borrowers would normally also be required to personally guarantee repayment of the loan. The Bank uses conservative underwriting standards in reviewing applications for credit. Generally, our borrowers have sufficient resources to make the required construction loan payments during the construction and absorption or lease-up period. After construction is complete, the loans are normally paid off from proceeds from the sale of the building or through a refinance to a commercial real estate loan. Risk of loss to the Bank is increased when there are material construction cost overruns, significant delays in the time to complete the project and/or there has been a material drop in the value of the projects in the marketplace since the inception of the loan.

21

Residential Real Estate Loans

Our residential real estate loans are generally made to borrowers who are buying or refinancing their primary personal residence or a rental property of 1-4 single family residential units. The Bank uses conservative underwriting standards in reviewing applications for credit. Risk of loss to the Bank is increased when borrowers lose their primary source of income and/or property values decline significantly.

Commercial and Industrial Loans

Our commercial and industrial loans are generally made to small businesses to provide them with at least some of the working capital necessary to fund their daily business operations. These loans are generally either unsecured or secured by fixed assets, accounts receivable and/or inventory. The borrowers would normally also be required to personally guarantee repayment of the loan. The Bank uses conservative underwriting standards in reviewing applications for credit. Risk of loss to the Bank is increased when our small business customers experience a significant business downturn, incur significant financial losses, or file for relief from creditors through bankruptcy proceedings.

Consumer and installment Loans

Our consumer and installment loans generally consist of personal loans, credit card loans, automobile loans or other loans secured by personal property. The Bank uses conservative underwriting standards in reviewing applications for credit. Risk of loss to the Bank is increased when borrowers lose their primary source of income, or file for relief from creditors through bankruptcy proceedings.

22

	Age Analysis of Past Due Loans
	As of June 30, 2013
(Dollar amounts in thousands)	30-59		60-89										Recorded
	Days		Days		Over		Total						Investment >
	Past		Past		90		Past				Total		90 Days and
	Due		Due		Days		Due		Current		Loans		Accruing
Commercial real estate	$	544		33		2,430		3,007		257,864		260,871		—
Real estate construction		—		—		—		—		21,775		21,775		—
Real estate multi family		—		—		—		—		41,374		41,374		—
Real estate 1 to 4 family		733		445		299		1,477		90,986		92,463		—
Commercial and industrial		74		356		2,326		2,756		33,429		36,185		—
Consumer		—		—		1		1		1,724		1,725		—
Total	$	1,351	$	834	$	5,056	$	7,241	$	447,152	$	454,393	$	—
														Recorded
														Investment >
Purchased														90 Days and
Not credit impaired														Accruing
Commercial real estate	$	—	$	1,548	$	1,388	$	2,936	$	39,646	$	42,582		—
Real estate construction		—		—		—		—		3,611		3,611		—
Real estate multi-family		—		—		—		—		14,580		14,580		—
Real estate 1 to 4 family		—		—		—		—		12,608		12,608		—
Commercial and industrial		—		—		—		—		11,554		11,554		—
Total	$	—	$	1,548	$	1,388	$	2,936	$	81,999	$	84,935	$	—
														Recorded
														Investment >
														90 Days and
Credit impaired														Accruing
Commercial real estate	$	—	$	—	$	—	$	—	$	1,366	$	1,366		—
Real estate construction		—		—		395		395		193		588		—
Real estate multi-family		—		—		—		—		48		48		—
Real estate 1 to 4 family		—		—		—		—		23		23		—
Commercial and industrial		—		—		—		—		—		—		—
Consumer		—		—		—		—		—		—		—
Total	$	—	$	—	$	395	$	395	$	1,630	$	2,025	$	—

23

	Age Analysis of Past Due Loans As of December 31, 2012
(Dollar amounts in thousands)	30-59		60-89										Recorded
	Days		Days		Over		Total						Investment >
	Past		Past		90		Past				Total		90 Days and
	Due		Due		Days		Due		Current		Loans		Accruing
Commercial real estate	$	3,942		—		2,525		6,467		247,982		254,449		—
Real estate construction		—		—		—		—		14,866		14,866		—
Real estate multi family		—		—		—		—		39,176		39,176		—
Real estate 1 to 4 family		806		168		1,210		2,184		95,145		97,329		—
Commercial and industrial		18		44		2,619		2,681		40,166		42,847		—
Consumer		—		—		—		—		1,824		1,824		—
Total	$	4,766	$	212	$	6,354	$	11,332	$	439,159	$	450,491	$	—
														Recorded
														Investment >
Purchased														90 Days and
Not credit impaired														Accruing
Commercial real estate	$	690	$	—	$	2,212	$	2,902	$	45,107	$	48,009		—
Real estate construction		—		—		1,411		1,411		2,183		3,594		—
Real estate multi-family		75		—		—		75		18,753		18,828		—
Real estate 1 to 4 family		—		119		—		119		15,271		15,390		—
Commercial and industrial		50		—		—		50		12,667		12,717		—
Total	$	815	$	119	$	3,623	$	4,557	$	93,981	$	98,538	$	—
														Recorded
														Investment >
														90 Days and
Credit impaired														Accruing
Commercial real estate	$	—	$	—	$	1,402	$	1,402	$	—	$	1,402		—
Real estate construction		—		—		486		486		—		486		—
Real estate multi-family		—		—		—		—		—		—		—
Real estate 1 to 4 family		—		—		—		—		—		—		—
Commercial and industrial		—		—		—		—		—		—		—
Consumer		—		—		—		—		—		—		—
Total	$	—	$	—	$	1,888	$	1,888	$	—	$	1,888	$	—

24

	Credit Quality Indicators
	As of June 30, 2013
(Dollar amounts in thousands)			Special		Sub-				Total
	Pass		mention		standard		Doubtful		loans
Commercial real estate	$	254,667	$	2,355	$	3,849	$	—	$	260,871
Real estate construction		20,208		523		1,044		—		21,775
Real estate multi-family		41,374		—		—		—		41,374
Real estate 1 to 4 family		91,088		—		1,108		267		92,463
Commercial and industrial		33,799		—		2,284		102		36,185
Consumer loans		1,725		—		—		—		1,725
Totals	$	442,861	$	2,878	$	8,285	$	369	$	454,393
Purchased
Not credit impaired
Commercial real estate	$	30,618	$	5,575	$	6,389	$	—	$	42,582
Real estate construction		1,185		—		2,285		141		3,611
Real estate multi-family		14,580		—		—		—		14,580
Real estate 1 to 4 family		10,805		—		1,803		—		12,608
Commercial and industrial		11,554		—		—		—		11,554
Total	$	68,742	$	5,575	$	10,477	$	141	$	84,935
Credit impaired
Commercial real estate									$	1,366
Real estate construction										588
Real estate multi-family										48
Real estate 1 to 4 family										23
Total									$	2,025

25

	Credit Quality Indicators
	As of December 31, 2012
(Dollar amounts in thousands)			Special		Sub-				Total
	Pass		mention		standard		Doubtful		loans
Commercial real estate	$	249,991	$	2,372	$	2,086	$	—	$	254,449
Real estate construction		13,266		—		1,600		—		14,866
Real estate multi-family		39,176		—		—		—		39,176
Real estate 1 to 4 family		95,579		—		1,470		280		97,329
Commercial and industrial		39,446		—		2,564		837		42,847
Consumer loans		1,824		—		—		—		1,824
Totals	$	439,282	$	2,372	$	7,720	$	1,117	$	450,491
Purchased
Not credit impaired
Commercial real estate	$	30,600	$	7,902	$	9,507	$	—	$	48,009
Real estate construction		—		39		3,555		—		3,594
Real estate multi-family		18,828		—		—		—		18,828
Real estate 1 to 4 family		14,850		—		540		—		15,390
Commercial and industrial		12,717		—		—		—		12,717
Total	$	76,995	$	7,941	$	13,602	$	—	$	98,538
Credit impaired
Commercial real estate									$	1,402
Real estate construction										486
Total									$	1,888

NOTE F – FAIR VALUE MEASUREMENT

The following table presents information about the Company’s assets and liabilities measured at fair value as of June 30, 2013 and December 31, 2012, and indicates the fair value techniques used by the Company to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

26

The following tables present the recorded amounts of assets measured at fair value on a recurring basis:

			Fair Value Measurements
(Dollar amounts in thousands)			at June 30, 2013, Using
			Quoted Prices
			in Active
			Markets		Other		Significant
			for Identical		Observable		Unobservable
	Fair Value		Assets		Inputs		Inputs
Description	6/30/2013		(Level 1)		(Level 2)		(Level 3)
U.S. Treasury securities	$	7,173	$	7,173	$	—	$	—
Obligations of U.S. Government agencies		86,041		—		86,041		—
Mortgage-backed securities		77,183		—		77,183		—
Obligations of states and political subdivisions		83,790		—		83,790		—
Corporate debt		27,235		—		27,235		—
Total assets measured at fair value	$	281,422	$	7,173	$	274,249	$	—

			Fair Value Measurements
(Dollar amounts in thousands)			at December 31, 2012, Using
			Quoted Prices
			in Active
			Markets		Other		Significant
			for Identical		Observable		Unobservable
	Fair Value		Assets		Inputs		Inputs
Description	12/31/2012		(Level 1)		(Level 2)		(Level 3)
U.S. Treasury securities	$	7,280	$	7,280	$	—	$	—
Obligations of U.S. Government agencies		72,260		—		72,260		—
Mortgage-backed securities		55,180		—		55,180		—
Obligations of states and political subdivisions		81,609		—		81,609		—
Corporate debt		18,616		—		18,616		—
Total assets measured at fair value	$	234,945	$	7,280	$	227,665	$	—

The following tables present the recorded amounts of assets measured at fair value on a non-recurring basis:

			Fair Value Measurements
(Dollar amounts in thousands)			at June 30, 2013, Using
			Quoted Prices in
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
	Fair Value		Assets		Inputs		Inputs
Description	6/30/2013		(Level 1)		(Level 2)		(Level 3)
Impaired loans	$	1,203	$	—	$	—	$	1,203
Total impaired assets measured at fair value	$	1,203	$	—	$	—	$	1,203

27

			Fair Value Measurements
(Dollar amounts in thousands)			at December 31, 2012, Using
			Quoted Prices in
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
	Fair Value		Assets		Inputs		Inputs
Description	12/31/2012		(Level 1)		(Level 2)		(Level 3)
Impaired loans	$	2,494	$	—	$	—	$	2,494
Other real estate owned		4,710		—		—		4,710
Total impaired assets measured at fair value	$	7,204	$	—	$	—	$	7,204

The Bank does not record loans at fair value. However, from time to time, if a loan is considered impaired, a specific allocation within the allowance for loan losses may be required. Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. The fair value of impaired loans is estimated using one of several methods, including collateral value, market value of similar debt, enterprise value, liquidation value and cash flows. Those impaired loans not requiring an allowance represent loans for which the value of the expected repayments or collateral exceed the recorded investments in such loans. Impaired loans where an allowance is established based on the fair value of collateral or when the impaired loan has been written down to fair value require classification in the fair value hierarchy. If the fair value of the collateral is based on a non-observable market price or a current appraised value, the Bank records the impaired loans as nonrecurring Level 3. When an appraised value is not available, or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, the Bank also records the impaired loans as nonrecurring Level 3.

Other real estate owned is carried at the lower of historical cost or fair market value less costs to sell. An appraisal (a Level 3 valuation) is obtained at the time the Bank acquires property through the foreclosure process. Any loan balance outstanding that exceeds the appraised value of the property is charged off against the allowance for loan loss at the time the property is acquired. Subsequent to acquisition, the Bank updates the property’s appraised value on at least an annual basis. If the value of the property has declined during the year, a loss due to valuation impairment is recorded along with a corresponding reduction in the book carrying value of the property.

The Company obtains third party appraisals on its impaired loans held-for-investment and foreclosed assets to determine fair value. Generally, the third party appraisals apply the “market approach,” which is a valuation technique that uses prices and other relevant information generated by market transactions involving identical or comparable (that is, similar) assets, liabilities, or a group of assets and liabilities, such as a business. Adjustments are then made based on the type of property, age of appraisal, current status of property and other related factors to estimate the current value of collateral.

Fair Values of Financial Instruments.

The following methods and assumptions were used by the Company in estimating the fair value disclosures for financial instruments.

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Cash and Cash Equivalents.

The carrying amounts reported in the balance sheet for cash and short-term instruments are a reasonable estimate of fair value, which will approximate their historical cost.

Securities Available-for-Sale.

Fair values for investment securities are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments.

Loans Receivable.

For variable-rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values and credit risk factors. For fixed rate loans, fair values are based on discounted cash flows, credit risk factors, and liquidity factors.

Deposit liabilities.

The fair values disclosed for demand deposits (e.g., interest and non-interest checking, savings, and money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). The fair values for fixed-rate certificates of deposit are based on discounted cash flows.

Federal Home Loan Bank Advances.

The fair values of Federal Home Loan Bank Advances are based on discounted cash flows. The discount rate is equal to the market rate currently offered on similar products.

Accrued Interest Receivable and Payable

The interest receivable and payable balances approximate their fair value due to the short-term nature of their settlement dates.

Undisbursed loan commitments, lines of credit, Mastercard line and standby letters of credit.

The fair value of these off-balance sheet items are based on discounted cash flows of expected fundings.

The Bank has excluded non-financial assets and non-financial liabilities defined by the Codification (ASC 820-10-15-A), such as Bank premises and equipment, deferred taxes and other liabilities. In addition, the Bank has not disclosed the fair value of financial instruments specifically excluded from disclosure requirements of the Financial Instruments Topic of the Codification (ASC 825-10-50-8), such as Bank-owned life insurance policies.

29

The following table provides summary information on the estimated fair value of financial instruments at June 30, 2013:

(Dollar amounts in thousands)	Carrying		Fair		Fair value measurements
	amount		value		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	23,698	$	23,698	$	23,698
Interest-bearing time deposits with financial institutions	$	8,473	$	8,638			$	8,638
Securities available for sale		281,422		281,422		7,173		274,249
Loans		541,353		544,609					$	544,609
Bank-owned life insurance		11,975		11,975						11,975
Other equity securities		5,300		5,300						5,300
Accrued interest receivable		3,886		3,886				3,886
Financial liabilities:
Deposits		802,800		803,245				803,245
Federal Home Loan Bank advances		501		501				501
Accrued interest payable		298		298				298
Off-balance-sheet liabilities:
Undisbursed loan commitments, lines of credit, standby letters of credit and Mastercard lines of credit		—		1,215						1,215

The carrying amount of loans include $11,485,000 of nonaccrual loans (loans that are not accruing interest) as of June 30, 2013. The fair value of nonaccrual loans is based on the collateral values that secure the loans or the cash flows expected to be received.

The following table provides summary information on the estimated fair value of financial instruments at December 31, 2012:

(Dollar amounts in thousands)	Carrying		Fair		Fair value measurements
	amount		value		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	27,861	$	27,861	$	27,861
Interest-bearing time deposits with financial institutions	$	13,216		13,216			$	13,216
Securities available for sale		234,945		234,945		7,280		227,665
Loans		550,917		547,740					$	547,740
Bank-owned life insurance		11,785		11,785						11,785
Other equity securities		5,464		5,464						5,464
Accrued interest receivable		3,760		3,760				3,760
Financial liabilities:
Deposits		768,352		769,043				769,043
Federal Home Loan Bank advances		1,220		1,221				1,221
Accrued interest payable		349		349				349
Off-balance-sheet liabilities:
Undisbursed loan commitments, lines of credit, standby letters of credit and Mastercard lines of credit		—		1,026						1,026

The carrying amount of loans include $12,474,000 of nonaccrual loans (loans that are not accruing interest) as of December 31, 2012. The fair value of nonaccrual loans is based on the collateral values that secure the loans or the cash flows expected to be received.

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NOTE G – PREFERRED STOCK

On September 15, 2011, Preferred Stock was issued to the U. S. Treasury as part of the Treasury’s Small Business Lending Fund (“SBLF”), as Preferred Stock – Series C – Non-Cumulative. The initial dividend rate was 5%. Depending on the volume of our small business lending, the dividend rate can be reduced to as low as one percent. If lending does not increase in the first two years, the dividend rate will increase to seven percent. After 4.5 years, the dividend rate will increase to nine percent if the Company has not repaid the SBLF funding. The dividend rate at June 30, 2013 was 5%.

On May 6, 2013, 25% or $3,150,000 of the original $12,600,000 was redeemed.

This program does not contain any of the various restrictions (including restrictions related to the payment of dividends to Common Stockholders) that the Treasury’s Capital Purchase Program TARP program required. The Series A and B Preferred Stock, which contained a blended yield of 6.83% to the expected repayment date, were paid off in full and canceled with the proceeds received from the U. S. Treasury’s SBLF investment.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Information and Uncertainties Regarding Future Financial Performance.

This report, including management’s discussion below, 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 and competitive market pricing, which could require us to reduce interest rates and loan fees to attract new loans or 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. These factors could reduce our ability to attract new deposits and loans and leases.

Liquidity Risk. The stability of funding sources and continued availability of borrowings; our ability to raise capital or incur debt on reasonable terms.

Possible Adverse Changes in Economic Conditions. Adverse changes in national or local economic conditions over an extended period of time 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.

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Possible Adverse Changes in National Economic Conditions and Federal Reserve Board Monetary Policies. Changes in national economic policies and conditions, such as increases in inflation or declines in economic output often prompt changes in Federal Open Market Committee (“FOMC”) monetary policies that could reduce interest income or increase the cost of funds to the Company, either of which could result in reduced earnings. In addition, deterioration in economic conditions that could result in increased loan and lease losses.

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, liquidity requirements, and the risks associated with concentration in real estate related loans 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.

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. All adjustments that, in the opinion of management, are necessary for a fair presentation for the periods presented have been reflected as required by Regulation S-X, Rule 10-01. The Company believes the following critical accounting policy requires significant judgments and estimates used in the preparation of the consolidated financial statements.

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 our borrowers’ ability to repay their loans. Determination of the allowance is based upon objective and subjective judgments by management from the information currently available. Adverse changes in information could result in higher than expected charge-offs and loan loss provisions.

32

Goodwill

Goodwill arises when the Company’s purchase price exceeds the fair value of the net assets of an acquired business. Goodwill represents the value attributable to intangible elements acquired. The value of goodwill is supported ultimately by profit from the acquired business. A decline in earnings could lead to impairment, which would be recorded as a write-down in the Company’s consolidated statements of earnings. Events that may indicate goodwill impairment include significant or adverse changes in results of operations of the acquired business or asset, economic or political climate; an adverse action or assessment by a regulator; unanticipated competition; and a more-likely-than-not expectation that a reporting unit will be sold or disposed of at a loss.

Other Than Temporary Impairment

Other than temporary impairment (“OTTI”) is triggered if the Company has the intent to sell the security, it is likely that it will be required to sell the security before recovery, or if the Company does not expect to recover the entire amortized cost basis of the security. If the Company intends to sell the security or it is likely it will be required to sell the security before recovering its cost basis, the entire impairment loss would be recognized in earnings as an OTTI. If the Company does not intend to sell the security and it is not likely that the Company will be required to sell the security but the Company does not expect to recover the entire amortized cost basis of the security, only the portion of the impairment loss representing credit losses would be recognized in earnings as an OTTI. The credit loss is measured as the difference between the amortized cost basis and the present value of the cash flows expected to be collected of a security. Projected cash flows are discounted by the original or current effective interest rate depending on the nature of the security being measured for potential OTTI. The remaining impairment loss related to all other factors, the difference between the present value of the cash flows expected to be collected and fair value, would be recognized as a charge to other comprehensive income (“OCI”). Impairment losses related to all other factors are to be presented as a separate category within OCI.

For investment securities held to maturity, this amount is accreted over the remaining life of the debt security prospectively based on the amount and timing of future estimated cash flows. The accretion of the OTTI amount recorded in OCI will increase the carrying value of the investment, and would not affect earnings. If there is an indication of additional credit losses the security is re-evaluated accordingly based on the procedures described above.

Provision for and Deferred Income Taxes

The Company is subject to income tax laws of the United States, its states, and the municipalities in which it operates. The Company considers its income tax provision methodology to be critical, as the determination of current and deferred taxes based on complex analyses of many factors including interpretation of federal and state laws, the difference between tax and financial reporting bases of assets and liabilities (temporary differences), estimates of amounts due or owed, the timing of reversals of temporary differences and current financial standards. Actual results could differ significantly from the estimates due to tax law interpretations used in determining the current and deferred income tax liabilities. Additionally, there can be no assurances that estimates and interpretations used in determining income tax liabilities may not be challenged by federal and state tax authorities.

33

Recent Accounting Pronouncements

Accounting Standards Update 2013-01 “Balance Sheet” - (Topic 210). “Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities.” The amendments clarify that the scope of Update 2011-11 applies to derivatives accounted for in accordance with Topic 815, Derivatives and Hedging, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with Section 210-20-45 or Section 815-10-45 or subject to an enforceable master netting arrangement or similar agreement. The amendments apply as of January 1, 2013, or fiscal years beginning after this date. This ASU had no material impact when adopted.

Accounting Standards Update 2013-02 “Comprehensive Income” - (Topic 220). “Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income.” The objective of this Update is to improve the reporting of reclassifications out of accumulated other comprehensive income. The amendments in this Update seek to attain that objective by requiring an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under U.S. generally accepted accounting principles (GAAP) to be reclassified in its entirety to net income. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures required under U.S. GAAP that provide additional detail about those amounts. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is reclassified to a balance sheet account (for example, inventory) instead of directly to income or expense in the same reporting period. The amendments are effective prospectively for reporting periods beginning after December 15, 2012. This ASU had no material impact when adopted.

In April 2013, the FASB issued ASU 2013-11, Income Taxes (Topic 740). This ASU requires an entity to present in the financial statements an unrecognized tax benefit as a liability and the unrecognized tax benefit should not be combined with deferred tax assets to the extent that a net operating loss carry-forward, tax loss or credit carry-forward is also not available at the reporting date. The amendment is to be applied prospectively to all unrecognized tax benefits and are effective for annual and interim reporting periods beginning after December 15, 2013. The Company does not expect this ASU to have a material impact on the Company’s consolidated financial statements.

Management has reviewed the remaining Accounting Standards Updates (ASU; 2013-03 through 2013-10) and concluded that none are applicable to the Company’s current operations.

Oceanic Bank Acquisition

On September 21, 2012, FNB Bancorp completed its acquisition of all of the outstanding stock of Oceanic Bank Holding, Inc. and its wholly owned subsidiary, Oceanic Bank, a California banking corporation. Effective the same date, Oceanic Bank was merged into First National Bank of Northern California and Oceanic Bank Holding, Inc. was merged into FNB Bancorp.

34

 The following table presents the Oceanic Bank acquisition presented at fair value as of the acquisition date, September 21, 2012:

	September 21,
(Dollars in thousands)	2012
Assets acquired:
Cash and due from banks	$	(1,278	)
Investment securities, available for sale		13,387
Loans		103,194
Premises and equipment, net		12
Core deposit intangible		110
Other assets		2,504
Total assets acquired	$	117,929
Liabilities assumed:
Noninterest-bearing deposits		11,755
Borrowings and interest-bearing deposits		95,914
Other liabilities		6,097
Accrued expenses and other liabilities		497
Total liabilities assumed	$	114,263
Net assets acquired:	$	3,666

The Company was able to record a bargain purchase gain related to this acquisition in the amount of $3,666,000. The bargain purchase gain is shown as a separate line item in the Company’s 2012 Consolidated Statement of Earnings. The consolidated operating results of the Company include those of the former Oceanic Bank from the date of acquisition or September 21, 2012.

35

Earnings Analysis

Net earnings for the quarter ended June 30, 2013 were $1,379,000, compared to net earnings of $1,228,000 for the quarter ended June 30, 2012, an increase of 12%. Net earnings for the six months ended June 30, 2013 were $2,309,000, a decrease of $207,000 from the same period in 2012. Net earnings before income tax expense for the quarter ended June 30, 2013 were $1,916,000, compared to $1,742,000 for the quarter ended June 30, 2012, an increase of $174,000, or 10%. Net earnings before income tax expense for the six months ended June 30, 2013 were $3,268,000, compared to net earnings before income tax for the six months ended June 30, 2012 of $3,407,000. Net earnings available to common stockholders for the quarter ended June 30, 2013 were $1,207,000, compared to net earnings available to common stockholders of $1,071,000 for the quarter ended June 30, 2012, an increase of $136,000, or 13%.

During the third quarter of 2012, the Company acquired Oceanic Bank Holding, Inc. and Oceanic Bank. This acquisition was fully incorporated into the Company and the earnings from the assets and liabilities acquired are included in the Consolidated Statement of Earnings for the three and six month periods ended June 30, 2013.

Net interest income for the quarter ended June 30, 2013 was $8,678,000, compared to $7,225,000 for the quarter ended June 30, 2012, an increase of $1,453,000, or 20%. Net interest income for the six months ended June 30, 2013 was $17,344,000, compared to $14,423,000 for the six months ended June 30, 2012.

Basic earnings per share were $0.32 and $0.29for the second quarter of 2013 and 2012,respectively. Diluted earnings per share were $0.52 and $0.58 per share for the first six months ended June 30, 2013 and 2012, respectively.

36

The following tables present an analysis of net interest income and average earning assets and liabilities for the three-and six-month periods ended June 30, 2013 compared to the three-and six-month periods ended June 30, 2012.

TABLE 1	NET INTEREST INCOME AND AVERAGE BALANCES FNB BANCORP AND SUBSIDIARY
	Three months ended June 30,
	2013							2012
(Dollar amounts in thousands)					Annualized							Annualized
	Average				Average			Average				Average
	Balance		Interest		Yield			Balance		Interest		Yield
INTEREST EARNING ASSETS
Loans, gross (1) (2)	$	553,031	$	8,020		5.88	%	$	459,778	$	6,758		5.90	%
Taxable securities		185,715		794		1.73	%		132,987		617		1.86	%
Nontaxable securities (3)		74,548		671		3.65	%		71,416		670		3.76	%
Fed funds sold		59		—		n/a			—		—		n/a
Total interest earning assets		813,353		9,485		4.73	%		664,181		8,045		4.86	%
NONINTEREST EARNING ASSETS:
Cash and due from banks		34,875							43,722
Premises		12,757							12,970
Other assets		43,436							29,478
Total noninterest earning assets		91,068							86,170
TOTAL ASSETS	$	904,421						$	750,351
INTEREST BEARING LIABILITIES:
Demand, int bearing	$	78,809		25		0.13	%	$	62,809		22		0.14	%
Money market		315,519		359		0.46	%		276,251		411		0.60	%
Savings		63,503		25		0.16	%		51,403		26		0.20	%
Time deposits		157,111		230		0.59	%		105,828		194		0.74	%
FHLB advances		523		—		n/a			—		—		n/a
Fed funds purchased		17		—		n/a			—		—		n/a
Total interest bearing liabilities		615,482		639		0.42	%		496,291		653		0.53	%
NONINTEREST BEARING LIABILITIES:
Demand deposits		184,289							155,329
Other liabilities		10,712							10,255
Total noninterest bearing liabilities		195,001							165,584
TOTAL LIABILITIES		810,483							661,875
Stockholders’ equity		93,938							88,476
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	904,421						$	750,351
NET INTEREST INCOME AND MARGIN ON TOTAL EARNING ASSETS (4)			$	8,846		4.41	%			$	7,392		4.46	%

1) Interest on non-accrual loans is recognized into income on a cash received basis if the loan has demonstrated performance and full collection is considered probable.

2) Amounts of interest earned included loan fees of $337,000 and $277,000 for the quarters ended June 30, 2013 and 2012, respectively.

3) Tax equivalent adjustments recorded at the statutory rate of 34% that are included in the nontaxable securities portfolio are $168,000 and $167,000 for the quarters ended June 30, 2013 and 2012, respectively, and were derived from nontaxable municipal interest income.

4) The annualized net interest margin is computed by dividing net interest income by total average interest earning assets and multiplied by an annualization factor.

37

TABLE 2	NET INTEREST INCOME AND AVERAGE BALANCES
	FNB BANCORP AND SUBSIDIARY
	Six months ended June 30,
	2013							2012
(Dollar amounts in thousands)					Annualized							Annualized
	Average				Average			Average				Average
	Balance		Interest		Yield			Balance		Interest		Yield
INTEREST EARNING ASSETS
Loans, gross  (1) (2)	$	552,493	$	16,178		5.90	%	$	456,159	$	13,513		5.97	%
Taxable securities		175,963		1,478		1.69	%		128,225		1,230		1.93	%
Nontaxable securities (3)		74,354		1,348		3.66	%		71,818		1,354		3.80	%
Fed funds sold		36		—		n/a			—		—		n/a
Tot interest earning assets		802,846		19,004		4.77	%		656,202		16,097		4.95	%
NONINTEREST EARNING ASSETS:
Cash and due from banks		38,544							45,479
Premises		12,733							13,038
Other assets		45,108							28,176
Tot noninterest earning assets		96,385							86,693
TOTAL ASSETS	$	899,231						$	742,895
Demand, int bearing	$	77,346		50		0.13	%	$	62,710		50		0.16	%
Money market		304,347		724		0.48	%		273,499		828		0.61	%
Savings		65,023		57		0.18	%		50,383		50		0.20	%
Time deposits		162,110		490		0.61	%		107,323		409		0.77	%
FHLB advances		610		—		n/a			—		—		n/a
Fed funds purchased		14		—		n/a			—		—		n/a
Tot interest bearing liabilities		609,450		1,321		0.44	%		493,915		1,337		0.55	%
NONINTEREST BEARING LIABILITIES:
Demand deposits		184,576							150,436
Other liabilities		10,551							10,367
Tot noninterest bearing liabilities		195,127							160,803
TOTAL LIABILITIES		804,577							654,718
Stockholders’ equity		94,654							88,177
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	899,231						$	742,895
NET INTEREST INCOME AND MARGIN ON TOTAL EARNING ASSETS (4)			$	17,683		4.44	%			$	14,760		4.54	%

(1) Interest on non-accrual loans is recognized into income on a cash received basis if the loan has demonstrated performance and full collection is considered probable.

(2) Amounts of interest earned included loan fees of $591,000 and $567,000 for the six months ended June 30, 2013 and 2012, respectively.

(3) Tax equivalent adjustments recorded at the statutory rate of 34% that are included in the nontaxable securities portfolio are $339,000 and $337,000 for the six months ended June 30, 2013 and 2012, respectively. Tax equivalent adjustments included in the nontaxable securities portfolio were derived from nontaxable municipal interest income.

(4) The annualized net interest margin is computed by dividing net interest income by total average interest earning assets and multiplied by an annualization factor.

Tables 1 and 2, above, show the various components that contributed to changes in net interest income for the three and six months ended June 30, 2013 and 2012. The principal interest earning assets are loans, from a volume as well as from a rate or yield perspective. For the quarter ended June 30, 2013, average loans outstanding represented 68.8% of average earning assets. For the quarter ended June 30, 2012, they represented 69.2% of average earning assets. For the six months ended June 30, 2013 and 2012, average loans outstanding represented 68.8% and 69.5%, respectively, of average earning assets.

38

The taxable equivalent yield on average interest earning assets for the quarter ended June 30, 2013 compared to the quarter ended June 30, 2012 decreased from 4.86% to 4.73%,or 13 basis points. Average loans increased by $93,253,000, year over year, while their yield decreased from 5.90% to 5.88%, or 2 basis points. Interest income on total interest earning assets for the quarter increased $1,440,000 or 17.90% on a fully-taxable equivalent basis.

For the three months ended June 30, 2013 compared to the three months ended June 30, 2012, the cost on total interest bearing liabilities decreased from 0.53% to 0.42%, a decrease of 11 basis points. Time deposit interest cost decreased from 0.74% to 0.59%. Their average balance outstanding increased by $51,283,000, or 48.5%, while their expense increased $35,000. Money market deposits average volume increased $39,268,000, or 14.2%, while their cost decreased 14 basis points, or 23.3%.

For the six months ended June 30, 2013 compared to the six months ended June 30, 2012, interest income on interest earning assets increased $2,907,000 or 18.1% on a fully-taxable equivalent basis, and average earning assets increased $146,644,000, or 22.3%. Average loans increased by $96,344,000, or 21.1%. Interest on loans increased $2,665,000 or 19.7%, while the yield decreased 6 basis points, or 1.0%. The cost on total interest bearing liabilities decreased from 0.54% to 0.44%. Time deposit averages increased $54,787,000 or 51.0%. Their yield decreased 16 basis points, or 20.8%. Money market deposit average balances increased $30,848,000, or 11.3%, and their cost decreased $104,000, or 12.6%.

For the three and six month periods ended June 30, 2013 and June 30, 2012, respectively, the following tables show 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), and b) changes in rate (changes in rate times the prior year’s volume). In this table, the dollar change in rate/volume is prorated to volume and rate proportionately.

Table 3	FNB BANCORP AND SUBSIDIARY
	RATE/VOLUME VARIANCE ANALYSIS
	Three Months Ended June 30,
(Dollar amounts in thousands)	2013 Compared to 2012
				Variance
	Interest			Attributable to
	Income/Expense			Rate			Volume
INTEREST EARNING ASSETS
Loans	$	1,262		$	(90	)	$	1,352
Taxable securities		177			(48	)		225
Nontaxable securities (1)		1			(28	)		29
Total	$	1,440		$	(166	)	$	1,606
INTEREST BEARING LIABILITIES
Demand deposits	$	(3	)	$	3		$	(6	)
Money market		52			97			(45	)
Savings deposits		1			6			(5	)
Time deposits		(36	)		59			(95	)
Total	$	14		$	165		$	(151	)
NET INTEREST INCOME	$	1,454		$	(1	)	$	1,455

(1) Includes tax equivalent adjustment of $168,000 and $167,000 in the three months ended June 30, 2013 and June 30, 2012, respectively.

39

Table 4	FNB BANCORP AND SUBSIDIARY
	RATE/VOLUME VARIANCE ANALYSIS
	Six Months Ended June 30,
(Dollar amounts in thousands)	2013 Compared to 2012
				Variance
	Interest			Attributable to
	Income/Expense			Rate			Volume
INTEREST EARNING ASSETS
Loans	$	2,665		$	(189	)	$	2,854
Taxable securities		248			(210	)		458
Nontaxable securities (1)		(6	)		(52	)		46
Total	$	2,907		$	(451	)	$	3,358
INTEREST BEARING LIABILITIES
Demand deposits	$	—		$	12		$	(12	)
Money market		104			197			(93	)
Savings deposits		(7	)		6			(13	)
Time deposits		(81	)		128			(209	)
Total	$	16		$	343		$	(327	)
NET INTEREST INCOME	$	2,923		$	(108	)	$	3,031

(1) Includes tax equivalent adjustment of $339,000 and $337,000 in the six months ended June 30, 2013 and June 30, 2012, respectively.

Noninterest income

The following table shows the principal components of noninterest income for the periods indicated.

40

Table 5	NONINTEREST INCOME
	Three months
	ended June 30,				Variance
(Dollar amounts in thousands)	2013		2012		Amount			Percent
Service charges	$	676	$	744	$	(68	)		-9.1	%
Credit card fees		3		155		(152	)		-98.1	%
Net gain on available-for-sale of securities		73		325		(252	)		-77.5	%
Bank owned life insurance policy earnings		94		111		(17	)		-15.3	%
Other income		287		80		207			258.8	%
Total noninterest income	$	1,133	$	1,415	$	(282	)		-19.9	%
	Six months
	ended June 30,				Variance
(Dollars in thousands)	2013		2012		Amount			Percent
Service charges	$	1,335	$	1,496	$	(161	)		-10.8	%
Credit card fees		10		308		(298	)		-96.8	%
Gain on sale of available-for-securities		115		809		(694	)		-85.8	%
Bank owned life insurance policy earnings		189		578		(389	)		-67.3	%
Other income		509		144		365			253.5	%
Total noninterest income	$	2,158	$	3,335	$	(1,177	)		-35.3	%

Noninterest income consists mainly of service charges on deposits, credit card fees, and several other miscellaneous types of income. The Bank service charges were down during the second quarter and year to date of June 30, 2013 when compared to the same period during 2012 due to primarily a decrease in our overdraft fees. The decrease in credit card fees for the three and six months ended June 30, 2013 was related to the sale of our merchant credit card portfolio that was completed in the fourth quarter of 2012. During the six months of 2013, the Bank sold $8,593,000 in investment securities for a pre-tax gain of $115,000. During the first six months of 2012, the Company sold approximately $25,486,000 in investment securities at a pre-tax net gain of $809,000 or 3% of principal sold. The sale proceeds were reinvested in a variety of investment securities during the same period. The increase in other income for the three and six months ended June 30, 2013 was primarily related to rents received on fully rented OREO properties. Rent collections on these properties began in January of 2013.

Noninterest expense

The following table shows the principal components of noninterest expense for the periods indicated.

41

Table 6	NONINTEREST EXPENSE
	Three months
	ended June 30,					Variance
(Dollar amounts in thousands)	2013		2012			Amount			Percent
Salaries and employee benefits	$	4,312	$	3,645		$	667			18.3	%
Occupancy expense		846		598			248			41.5	%
Equipment expense		386		432			(46	)		-10.6	%
Professional fees		444		383			61			15.9	%
FDIC assessment		180		156			24			15.4	%
Telephone, postage & supplies		277		271			6			2.2	%
Operating losses		11		(56	)		67			-119.6	%
Advertising expense		121		91			30			33.0	%
Bankcard expenses		—		157			(157	)		-100.0	%
Data processing expense		170		138			32			23.2	%
Low income housing expense		109		70			39			55.7	%
Surety insurance		67		62			5			8.1	%
Directors expense		63		54			—			n/a
Other real estate owned expense		28		15			13			86.7	%
(Gain) loss on sale of other real estate owned		—		(9	)		9			100.0	%
Other expense		371		491			(120	)		-24.4	%
Total noninterest expense	$	7,385	$	6,498		$	887			13.7	%
	NONINTEREST EXPENSE
	Six months
	ended June 30,					Variance
(Dollars in thousands)	2013		2012			Amount			Percent
Salaries and employee benefits	$	8,728	$	7,419		$	1,309			17.6	%
Occupancy expense		1,808		1,198			610			50.9	%
Equipment expense		784		878			(94	)		-10.7	%
Professional fees		807		971			(164	)		-16.9	%
FDIC assessment		360		336			24			7.1	%
Acquisition related expense		—		175			(175	)		100.0	%
Telephone, postage & supplies		714		549			165			30.1	%
Operating losses		25		52			(27	)		-51.9	%
Advertising expense		293		176			117			66.5	%
Bankcard expenses		1		313			(312	)		-99.7	%
Data processing expense		326		276			50			18.1	%
Low income housing expense		219		139			80			57.6	%
Surety insurance		121		124			(3	)		-2.4	%
Directors expense		126		126			0			0.0	%
Other real estate owned expense		78		51			27			52.9	%
Gain on sale of other real estate owned		—		(4	)		4			100.0	%
Other expense		734		772			(38	)		-4.9	%
Total noninterest expense	$	15,124	$	13,551		$	1,573			11.6	%

42

Noninterest expense consists mainly of salaries and employee benefits. During the first quarter of 2012, the Company recorded a $75,000 pre-tax charge related to two employees whose positions were eliminated in conjunction with the sale of our Merchant Card business. For the three months ended June 30, 2013 compared to three months ended June 30, 2012, salaries and benefits represented 58% and 56% of total noninterest expenses. During the six months ended June 30, 2013 compared to the six months ended June 30, 2012, salaries and benefits represented 58% and 55%. During the first six months of 2013, the Bank’s occupancy expense increase was due to the acquired Oceanic Bank branches, and a Company rebranding effort and the related signage changes. During the first quarter of 2013, the Bank recorded a one-time expense accrual related to the closure of our island of Guam office, which was effective June 14, 2013. In connection with this office closure, the Bank accrued $76,000 in anticipated severance payments and $176,000 in estimated future lease payments. The Guam office closed during the second quarter of 2013. In addition, a $100,000 non-recurring insurance related costs were recorded during the first quarter of 2012.

Provision for Loan Losses

During the six months ended June 30, 2013, there was a provision for loan losses of $1,110,000 compared to $800,000 for the same period in 2012. The allowance for loan losses was $9,745,000 or 1.80% of total gross loans at June 30, 2013, compared to $9,124,000 or 1.66% of total gross loans at December 31, 2012. During the six months ended June 30, 2013, $565,000 in loans were charged off, compared to $2,392,000 in the same period in 2012. The overall quality of the remaining portfolio did not warrant a larger provision for loan losses during the six month period ended June 30, 2013. The allowance for loan losses is maintained at a level considered adequate for management to provide for probable loan losses inherent in the loan portfolio as of June 30, 2013. Loans charged-off during the first six months of 2013 were significantly lower than during the same time period during 2012, reflecting the improvement in the level of problem loans within our loan portfolio on a year over year basis. As of June 30, 2013, the Bank maintained an unallocated portion to the allowance for loan losses of $2,786,000. A significant amount of the unallocated reserve exists to reflect the degree of uncertainty related to the credit risk and performance of the Oceanic Bank loan portfolio since its acquisition.

Income Taxes

The effective tax rate for the quarter ended June 30, 2013 was a 28.0% tax expense compared to a 29.5% tax expense for the six months ended June 30, 2012. The effective tax rate for the six months ended June 30, 2013 and June 30, 2012, respectively was an effective tax rate of 29.3% and 26.2%, respectively. Tax preference items which usually affect our effective tax rate are changing amounts invested in tax-advantaged securities, available Low Income Housing Credits, and amounts of interest income on qualifying loans in California Enterprise Zones. During the first quarter of 2012, the Company recognized a tax free gain on proceeds of life insurance of approximately $370,000 due to the passing of the Company’s former Chairman and CEO, Mike Wyman.

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 interest rate sensitivity position including the sale or purchase of assets and product pricing.

43

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 the 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 June 30, 2013, are adequate to meet its operating needs in 2013 and our liquidity positions are sufficient to meet our liquidity needs in the near term.

Financial Condition

Assets. Total assets increased to $901,488,000 at June 30, 2013 from $875,340,000 at December 31, 2012, an increase of $26,148,000. The principal source of this increase was an increase of $46,477,000 in securities available for sale, a $4,163,000 decrease in cash and due from banks, a $4,743,000 decrease in interest-bearing time deposits with financial institutions, a $10,325,000 decrease in net loans, and a decrease of $1,098,000 in remaining types of assets.

Loans. Gross loans (before net loan fees) at June 30, 2013 were $541,353,000, a decrease of $9,564,000 or 1.74% from December 31, 2012. Gross commercial real estate loans increased $959,000, real estate construction loans increased $7,028,000, real estate multi-family loans decreased $2,002,000, real estate loans secured by 1 to 4 family residences increased $7,625,000, commercial and industrial loans decreased $7,825,000, and consumer loans decreased by $99,000. The loan portfolio breakdown was as follows:

TABLE 7	LOAN PORTFOLIO
	June 30						December 31
(Dollar amounts in thousands)	2013			Percent			2012			Percent
Commercial real estate	$	304,819			57	%	$	303,860			56	%
Real estate construction		25,974			5	%		18,946			3	%
Real estate multi family		56,002			10	%		58,004			11	%
Real estate 1 to 4 family		105,094			19	%		112,719			20	%
Commercial and industrial		47,739			9	%		55,564			10	%
Consumer loans		1,725			—	%		1,824			—	%
Gross loans		541,353			100	%		550,917			100	%
Net deferred loan fees		(370	)		—	%		(230	)		—	%
Total	$	540,983			100	%	$	550,687			100	%

Allowance for loan losses. Management of the Company is responsible for assessing the overall risks within the Bank’s loan 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’s management considers changes in national and local economic conditions, as well as the condition of various market segments. It also reviews any changes in the nature and volume of the portfolio. Management watches for the existence and effect of any concentrations of credit, and changes in the level of such concentrations. It also reviews the effect of external factors, such as competition and legal and regulatory requirements. Finally, 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.

44

A summary of transactions in the allowance for loan losses for the six months ended June 30, 2013, and June 30, 2012, respectively is as follows: 

TABLE 8	ALLOWANCE FOR LOAN LOSSES
	Six months ended			Six months ended
(Dollar amounts in thousands)	June 30, 2013			June 30, 2012
Balance, beginning of period	$	9,124		$	9,897
Provision for loan losses		1,110			800
Recoveries		76			153
Amounts charged off		(565	)		(2,392	)
Balance, end of period	$	9,745		$	8,458

During the six months ended June 30, 2013, there was a provision of $1,110,000, compared to $800,000 for the same period in 2012. Loan charge-off levels have declined significantly year over year, and remain close to historic norms.

In management’s judgment, the allowance is adequate to absorb probable losses currently inherent in the loan portfolio at June 30, 2013. 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.

The allowance is affected by a number of factors, and does not necessarily move in tandem with the level of gross loans outstanding. Management continues to monitor the factors that affect the allowance, and is prepared to make adjustments as they become necessary.

Nonperforming assets. Nonperforming assets consist of nonaccrual loans, loans that are 90 days or more past due but are still accruing interest and other real estate owned. At June 30, 2013, there was $18,160,000 in nonperforming assets, compared to $19,124,000 at December 31, 2012. Nonaccrual loans were $11,485,000 at June 30, 2013, compared to $12,474,000 at December 31, 2012. There were no loans past due 90 days and still accruing at either date.

There was $6,675,000 in Other Real Estate Owned at June 30, 2013, and $6,650,000 at December 31, 2012. Management intends to aggressively market these properties. While management believes these properties will sell, there can be no assurance that these properties will sell quickly given the current real estate market, nor can the expected sales price be accurately predicted.

Deposits. Total deposits at June 30, 2013, were $802,800,000 compared to $768,352,000 on December 31, 2012. Of these totals, noninterest-bearing demand deposits were $192,825,000 or 24.0% of the total on June 30, 2013, and $178,384,000 or 23.2% on December 31, 2012. Time deposits were $148,414,000 on June 30, 2013, and $171,066,000 on December 31, 2012.

The following table sets forth the maturity schedule of the time certificates of deposit on June 30, 2013:

45

TABLE 9
(Dollar amounts in thousands)	Under		$100,000
Maturities	$100,000		or more		Total
Three months or less	$	13,842	$	43,139	$	56,981
Over three through six months		8,204		20,505		28,709
Over six through twelve months		11,122		24,257		35,379
Over twelve months		10,262		17,083		27,345
Total	$	43,430	$	104,984	$	148,414

Regulatory Capital. The following table shows the risk-based capital ratios and leverage ratios at June 30, 2013 and December 31, 2012 for the Bank:

TABLE 10								Minimum “Well
	June 30,			December 31,				Capitalized”
Regulatory Capital Ratios	2013			2012				Requirements
Total Regulatory Capital Ratio		13.85	%		14.56	%	≥		10.00	%
Tier 1 Capital Ratio		13.60	%		13.31	%	≥		6.00	%
Leverage Ratios		9.33	%		9.68	%	≥		5.00	%

Liquidity. Liquidity is a measure of the Company’s ability to convert assets into cash with minimal loss. As of June 30, 2013, liquid assets were $313,593,000, or 34.8% of total assets. As of December 31, 2012, liquid assets were $276,022,000, or 31.5% of total assets. Liquidity consists of cash and due from banks, 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 Company also has federal funds borrowing facilities totaling $30,000,000, a Federal Home Loan Bank line up to 30% of total assets, and a Federal Reserve Bank borrowing facility.

The relationship between total net loans and total deposits is a useful additional measure of liquidity. A higher loan to deposit ratio may lead to a loss of liquid assets in the future. This must be balanced against the fact that loans represent the highest interest earning assets. A lower loan to deposit ratio means lower potential income. On June 30, 2013, and December 31, 2012, respectively, net loans were at 66% and 70% of deposits.

Off-Balance Sheet Items

The Company has certain ongoing commitments under operating leases. These commitments do not significantly impact operating results. As of June 30, 2013 and December 31, 2012, 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 $121,456,000 and $102,552,000 at June 30, 2013 and December 31, 2012, respectively. As a percentage of net loans, these off-balance sheet items represent 22.86% and 18.94% respectively. The Company does not expect all commitments are expected to be funded.

46

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.

Item 4T. 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 June 30, 2013. 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 June 30, 2013, 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.

47

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

There are no material legal proceedings adverse to the Company or First National Bank to which any director, officer, affiliate of the Company, or 5% stockholder of the Company, or any associate of any such director, officer, affiliate or 5% stockholder of the Company are a party, and none of the foregoing persons has a material interest adverse to the Company or First National Bank.

From time to time, the Company and/or First National Bank are a party to claims and legal proceedings arising in the ordinary course of business. The Company’s management is not aware of any material pending legal proceedings to which either it or First National Bank may be a party or has recently been a party, which will have a material adverse effect on the financial condition or results of operations of the Company and First National Bank, taken as a whole.

Item 1A. Risk Factors

During the course of normal operations, the Bank and the Company manage a variety of risks including, but not limited to, credit risk, operational risk, interest rate risk and regulatory compliance risk. For a more complete discussion of the risk factors facing the Bank and the Company, please refer to the section entitled “Item 1A – Risk Factors” in the Company’s December 31, 2012 Form 10K.

On July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”) was signed into law. The purpose of this legislation was to bring about regulatory changes and oversight that would help stop past abuses from recurring in the future. This legislation gives new powers to the FDIC and the Federal Reserve Bank that they may use in the execution of their duties as regulators and overseers of the banking industry. It also created a new federal consumer protection agency named the Consumer Financial Protection Bureau (“CFPB”). All existing consumer laws and regulations will be transferred to the CFPB. This Act is expected to enable regulators to issue numerous new banking regulations and requirements that have not yet been fully developed or promulgated. The ultimate effect the Act has on the Company’s operations will ultimately be determined by the significance of the new banking regulations that are issued as a result of the Act.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

c) ISSUER PURCHASES OF EQUITY SECURITIES

On August 24, 2007 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 2,863,635 shares of common stock, or 143,182 shares. There were no repurchases during the quarter ended June 30, 2013. There were 10,457 shares remaining that may be repurchased under this Plan as of June 30, 2013.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 6. Exhibits

Exhibits

31: Rule 13a-14(a)/15d-14(a) Certifications

32: Section 1350 Certifications

48

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:
August 14, 2013.	By:	/s/ Thomas C. McGraw
		Thomas C. McGraw
		Chief Executive Officer
		(Authorized Officer)
	By:	/s/ David A. Curtis
		David A. Curtis
		Senior Vice President
		Chief Financial Officer
		(Principal Financial Officer)

49

EX-31.1

Exhibit 31.1

Rule 13a-14(a)/15d-14(a) Certifications

        I, Thomas C. McGraw, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of FNB Bancorp;

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.     The registrant’s other certifying officer 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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)     Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)     Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)     Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth 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 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:

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: August 14, 2013.	/s/ Thomas C. McGraw
	Thomas C. McGraw
	Chief Executive Officer

EX-31.2

Exhibit 31.2

Rule 13a-14(a)/15d-14(a) Certifications

               I, David A. Curtis, 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 and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and 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)       Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial instruments for external purposes in accordance with generally accepted accounting principles;

    c)       Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

     d)       Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during 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 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:

     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: August 14, 2013.	/s/ David A. Curtis,
	David A. Curtis,
	Senior Vice President and
	Chief Financial Officer

EX-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, 2011 (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 15, 2013.	/s/ Thomas C. McGraw
	Thomas C. McGraw
	Chief Executive Officer
Dated: May 15, 2013.	/s/ David A. Curtis
	David A. Curtis
	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.

XML

NOTE E - LOANS (Tables)

6 Months Ended

Jun. 30, 2013

Debt Disclosure [Abstract]

Schedule of loan outstanding

									Total
(Dollar amounts in thousands)	FNB								Balance
	Bancorp								June 30
June 30, 2013:	Originated			PNCI			PCI		2013
Commercial real estate	$	260,871		$	42,582		$	1,366	$	304,819
Real estate construction		21,775			3,611			588		25,974
Real estate multi-family		41,374			14,580			48		56,002
Real estate 1 to 4 family		92,463			12,608			23		105,094
Commercial & industrial		36,185			11,554			—		47,739
Consumer loans		1,725			—			—		1,725
Gross loans		454,393			84,935			2,025		541,353
Net deferred loan fees		(370	)		—			—		(370	)
Allowance for loan losses		(9,707	)		(38	)		—		(9,745	)
Net loans	$	444,316		$	84,897		$	2,025	$	531,238

(Dollar amounts in thousands)								Total
	FNB							Balance
	Bancorp							December 31
December 31, 2012:	Originated			PNCI		PCI		2012
Commercial real estate	$	254,449		$	48,009	$	1,402	$	303,860
Real estate construction		14,866			3,594		486		18,946
Real estate multi-family		39,176			18,828		—		58,004
Real estate 1 to 4 family		97,329			15,390		—		112,719
Commercial & industrial		42,847			12,717		—		55,564
Consumer loans		1,824			—		—		1,824
Gross loans		450,491			98,538		1,888		550,917
Net deferred loan fees		(230	)		—		—		(230	)
Allowance for loan losses		(9,124	)		—		—		(9,124	)
Net loans	$	441,137		$	98,538	$	1,888	$	541,563

Schedule of allowance for credit loss

Allowance for Credit Losses
For the Three Months Ended June 30, 2013
(Dollar amounts in thousands)								Real		Real
								Estate		Estate
	Commercial			Commercial		Real Estate		Multi		1 to
	& industrial			Real estate		Construction		family		4 family			Consumer		Total
Allowance for credit losses
Beginning balance	$	1,577		$	4,930	$	653	$	281	$	1,862		$	54	$	9,357
Charge-offs		—			—		—		—		(125	)		—		(125	)
Recoveries		—			2		—		—		—			1		3
Provision		(86	)		379		72		48		91			6		510
Ending balance	$	1,491		$	5,311	$	725	$	329	$	1,828		$	61	$	9,745
Ending balance: individually evaluated for impairment	$	254		$	189	$	—	$	—	$	237		$	1	$	681
Ending balance: collectively evaluated for impairment	$	1,237		$	5,122	$	725	$	329	$	1,591		$	60	$	9,064

Allowance for Credit Losses
For the Six Months Ended June 30, 2013
(Dollar amounts in thousands)										Real		Real
										Estate		Estate
	Commercial			Commercial			Real Estate			Multi		1 to
	& industrial			Real estate			Construction			family		4 family			Consumer			Total
Allowance for credit losses
Beginning balance	$	1,875		$	4,812		$	857		$	—	$	1,516		$	64		$	9,124
Charge-offs		—			(239	)		(81	)		—		(244	)		(1	)		(565	)
Recoveries		70			4			—			—		1			1			76
Provision		(454	)		754			(34	)		329		518			(3	)		1,110
Ending balance	$	1,491		$	5,331		$	742		$	329	$	1,791		$	61		$	9,745
Ending balance: individually evaluated for impairment	$	254		$	210		$	17		$	—	$	237		$	1		$	702
Ending balance: collectively evaluated for impairment	$	1,237		$	5,121		$	742		$	329	$	1,554		$	60		$	9,043

Allowance for Credit Losses
For the Three Months Ended June 30, 2012
(Dollar amounts in thousands)	Commercial			Real Estate			Real Estate			Multi			1 to
	& industrial			Commercial			Construction			family			4 family		Consumer			Total
Allowance for credit losses
Beginning balance	$	1,628		$	3,592		$	1,055		$	151		$	1,798	$	63		$	8,287
Charge-offs		(312	)		—			(54	)		—			—		(1	)		(367	)
Recoveries		—			(2	)		—			—			139		1			138
Provision		418			162			(167	)		(102	)		89		0			400
Ending balance	$	1,734		$	3,752		$	834		$	49		$	2,026	$	63		$	8,458
Ending balance: individually evaluated for impairment	$	505		$	477		$	75		$	42		$	157	$	1		$	1,257
Ending balance: collectively evaluated for impairment	$	1,229		$	3,275		$	759		$	7		$	1,869	$	62		$	7,201

Allowance for Credit Losses
For the Six Months Ended June 30, 2012
(Dollar amounts in thousands)	Commercial			Real Estate			Real Estate			Multi			1 to
	& industrial			Commercial			Construction			family			4 family			Consumer			Total
Allowance for credit losses
Beginning balance	$	1,618		$	4,745		$	1,171		$	671		$	1,592		$	100		$	9,897
Charge-offs		(1,487	)		(738	)		(54	)		—			(109	)		(4	)		(2,392	)
Recoveries		1			139			—			—			9			4			153
Provision		1,602			(394	)		(283	)		(622	)		534			(37	)		800
Ending balance	$	1,734		$	3,752		$	834		$	49		$	2,026		$	63		$	8,458
Ending balance: individually evaluated for impairment	$	505		$	477		$	75		$	42		$	157		$	1		$	1,257
Ending balance: collectively evaluated for impairment	$	1,229		$	3,275		$	759		$	7		$	1,869		$	62		$	7,201

Schedule of recorded investment is losses

Recorded Investment in Loans at June 30, 2013
(Dollar amounts in thousands)							Real		Real
							Estate		Estate
	Commercial		Commercial		Real Estate		Multi		1 to
	& industrial		Real Estate		Construction		family		4 family		Consumer		Total
Loans:
Ending balance	$	47,739	$	304,819	$	25,974	$	56,002	$	105,094	$	1,725	$	541,353
Ending balance: individually evaluated for impairment	$	3,795	$	19,244	$	591	$	1,192	$	3,395	$	1	$	28,218
Ending balance: collectively evaluated for impairment	$	43,944	$	285,575	$	25,383	$	54,810	$	101,699	$	1,724	$	513,135

Recorded Investment in Loans at June 30, 2012
(Dollar amounts in thousands)							Real		Real
							Estate		Estate
	Commercial		Commercial		Real Estate		Multi		1 to
	& industrial		Real Estate		Construction		family		4 family		Consumer		Total
Loans:
Ending balance	$	53,562	$	244,753	$	25,644	$	39,960	$	95,886	$	2,037	$	461,842
Ending balance: individually evaluated for impairment	$	7,082	$	9,471	$	7,238	$	3,242	$	6,443	$	10	$	33,486
Ending balance: collectively evaluated for impairment	$	46,480	$	235,282	$	18,406	$	36,718	$	89,443	$	2,027	$	428,356

Schedule of impaired loans allowance

	Impaired Loans-Originated
	As of and for the six months ended June 30, 2013
(Dollar amounts in thousands)			Unpaid				Average
	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized
With no related allowance recorded
Commercial and industrial	$	2,058	$	2,222	$	—	$	2,131	$	54
Commercial real estate construction		—		—		—		—		—
Commercial real estate		8,176		8,740		—		7,707		207
Residential - 1 to 4 family		842		950		—		848		14
Total		11,076		11,912		—		10,686		275
With an allowance recorded
Commercial and industrial	$	1,737	$	2,177	$	254	$	1,756	$	6
Commercial real estate construction		—		—		—		—		—
Commercial real estate		6,063		6,302		189		5,748		117
Residential - 1 to 4 family		2,553		2,559		237		2,614		54
Consumer		1		1		1		1		—
Total		10,354		11,039		681		10,119		177
Total
Commercial and industrial	$	3,795	$	4,399	$	254	$	3,887	$	60
Commercial real estate construction		—		—		—		—		—
Commercial real estate		14,239		15,042		189		13,455		324
Residential - 1 to 4 family		3,395		3,509		237		3,462		68
Consumer		1		1		1		1		—
Grand total	$	21,430	$	22,951	$	681	$	20,805	$	452

	Impaired Loans-PNCI
	As of and for the six months ended June 30, 2013
(Dollar amounts in thousands)			Unpaid				Average
	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized
With no related allowance recorded
Real estate-multi family	$	1,192	$	1,281	$	—	$	2,693	$	84
Commercial real estate		4,643		5,428		—		5,432		153
Commercial real estate construction		395		588		—		593		—
Total		6,230		7,297		—		8,718		237
With an allowance recorded
Commercial real estate	$	362	$	448	$	21	$	447	$	12
Commercial real estate construction		196		200		17		200		—
Total		558		648		38		647		12
Total
Commercial real estate construction	$	591	$	788	$	17	$	793	$	—
Real estate-multi family		1,192		1,281		—		2,693		84
Commercial real estate		5,005		5,876		21		5,879		165
Grand total	$	6,788	$	7,945	$	38	$	9,365	$	249

	Impaired Loans-Originated
	As of and for the year ended December 31, 2012
(Dollar amounts in thousands)			Unpaid				Average
	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized
With no related allowance recorded
Commercial and industrial	$	2,202	$	2,338	$	—	$	2,298	$	120
Commercial real estate construction		—		—		—		6,187		333
Commercial real estate		7,238		7,804		—		1,097		59
Residential - 1 to 4 family		1,052		1,147		—		1,065		55
Total		10,492		11,289		—		10,647		567
With an allowance recorded
Commercial and industrial	$	1,965	$	2,427	$	384	$	2,328	$	30
Commercial real estate construction		—		—		—		—		—
Commercial real estate		5,433		5,433		415		5,685		240
Residential - 1 to 4 family		3,719		3,722		306		3,283		150
Total		11,117		11,582		1,105		11,296		420
Total
Commercial and industrial	$	4,167	$	4,765	$	384	$	4,626	$	150
Commercial real estate construction		—		—		—		6,187		333
Commercial real estate		12,671		13,237		415		6,782		299
Residential - 1 to 4 family		4,771		4,869		306		4,348		205
Grand total	$	21,609	$	22,871	$	1,105	$	21,943	$	987

	Impaired Loans-PNCI
	As of and for the year ended December 31, 2012
			Unpaid				Average
	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized
With no related allowance recorded
Commercial and industrial	$	—	$	—	$	—	$	—	$	—
Commercial real estate construction		—		—		—		—		—
Commercial real estate		3,428		3,776		—		3,777		27
Residential - 1 to 4 family		—		—		—		—		—
Total		3,428		3,776		—		3,777		27
With an allowance recorded
Commercial and industrial
Commercial real estate construction	$	681	$	798	$	232	$	798	$	4
Commercial real estate		—		—		—		—		—
Residential - 1 to 4 family		—		—		—		—		—
Total		681		798		232		798		4
Total
Commercial and industrial	$	—	$	—	$	—	$	—	$	—
Commercial real estate construction		681		798		232		798		4
Commercial real estate		3,428		3,776		—		3,777		27
Residential - 1 to 4 family		—		—		—		—		—
Grand total	$	4,109	$	4,574	$	232	$	4,575	$	31

Schedule of loans on nonaccrual status

	Loans on Nonaccrual Status as of
(Dollar amounts in thousands)	June 30,		December 31,
	2013		2012
Commercial and industrial	$	2,353	$	2,618
Real estate - construction		591		1,898
Commercial real estate		6,515		6,251
Real estate multi family		650		—
Real estate 1 to 4 family		1,375		1,707
Consumer		1		—
Total	$	11,485	$	12,474

Schedule of short term debt

	Modifications
	For the six months ended June 30, 2013
			Pre-		Post-
			Modification		Modification
			Outstanding		Outstanding
	Number of		Recorded		Recorded
(Dollar amounts in thousands)	Contracts		Investment		Investment
Real Estate Construction		1	$	196	$	196
Real estate 1 to 4 family		2		739		739
Real estate multi-family		1		544		544
Commercial real estate		4		3,737		3,737
Total		8	$	5,216	$	5,216

	Modifications
	As of December 31, 2012
			Pre-		Post-
			Modification		Modification
			Outstanding		Outstanding
	Number of		Recorded		Recorded
(Dollar amounts in thousands)	Contracts		Investment		Investment
Commercial and industrial		7	$	2,723	$	2,723
Real estate 1 to 4 family		3		1,446		1,446
Commercial real estate		3		1,409		1,409
Total		13	$	5,578	$	5,578

Schedule of age analysis of past due loans

	Age Analysis of Past Due Loans
	As of June 30, 2013
(Dollar amounts in thousands)	30-59		60-89										Recorded
	Days		Days		Over		Total						Investment >
	Past		Past		90		Past				Total		90 Days and
	Due		Due		Days		Due		Current		Loans		Accruing
Commercial real estate	$	544		33		2,430		3,007		257,864		260,871		—
Real estate construction		—		—		—		—		21,775		21,775		—
Real estate multi family		—		—		—		—		41,374		41,374		—
Real estate 1 to 4 family		733		445		299		1,477		90,986		92,463		—
Commercial and industrial		74		356		2,326		2,756		33,429		36,185		—
Consumer		—		—		1		1		1,724		1,725		—
Total	$	1,351	$	834	$	5,056	$	7,241	$	447,152	$	454,393	$	—
														Recorded
														Investment >
Purchased														90 Days and
Not credit impaired														Accruing
Commercial real estate	$	—	$	1,548	$	1,388	$	2,936	$	39,646	$	42,582		—
Real estate construction		—		—		—		—		3,611		3,611		—
Real estate multi-family		—		—		—		—		14,580		14,580		—
Real estate 1 to 4 family		—		—		—		—		12,608		12,608		—
Commercial and industrial		—		—		—		—		11,554		11,554		—
Total	$	—	$	1,548	$	1,388	$	2,936	$	81,999	$	84,935	$	—
														Recorded
														Investment >
														90 Days and
Credit impaired														Accruing
Commercial real estate	$	—	$	—	$	—	$	—	$	1,366	$	1,366		—
Real estate construction		—		—		395		395		193		588		—
Real estate multi-family		—		—		—		—		48		48		—
Real estate 1 to 4 family		—		—		—		—		23		23		—
Commercial and industrial		—		—		—		—		—		—		—
Consumer		—		—		—		—		—		—		—
Total	$	—	$	—	$	395	$	395	$	1,630	$	2,025	$	—

	Age Analysis of Past Due Loans As of December 31, 2012
(Dollar amounts in thousands)	30-59		60-89										Recorded
	Days		Days		Over		Total						Investment >
	Past		Past		90		Past				Total		90 Days and
	Due		Due		Days		Due		Current		Loans		Accruing
Commercial real estate	$	3,942		—		2,525		6,467		247,982		254,449		—
Real estate construction		—		—		—		—		14,866		14,866		—
Real estate multi family		—		—		—		—		39,176		39,176		—
Real estate 1 to 4 family		806		168		1,210		2,184		95,145		97,329		—
Commercial and industrial		18		44		2,619		2,681		40,166		42,847		—
Consumer		—		—		—		—		1,824		1,824		—
Total	$	4,766	$	212	$	6,354	$	11,332	$	439,159	$	450,491	$	—
														Recorded
														Investment >
Purchased														90 Days and
Not credit impaired														Accruing
Commercial real estate	$	690	$	—	$	2,212	$	2,902	$	45,107	$	48,009		—
Real estate construction		—		—		1,411		1,411		2,183		3,594		—
Real estate multi-family		75		—		—		75		18,753		18,828		—
Real estate 1 to 4 family		—		119		—		119		15,271		15,390		—
Commercial and industrial		50		—		—		50		12,667		12,717		—
Total	$	815	$	119	$	3,623	$	4,557	$	93,981	$	98,538	$	—
														Recorded
														Investment >
														90 Days and
Credit impaired														Accruing
Commercial real estate	$	—	$	—	$	1,402	$	1,402	$	—	$	1,402		—
Real estate construction		—		—		486		486		—		486		—
Real estate multi-family		—		—		—		—		—		—		—
Real estate 1 to 4 family		—		—		—		—		—		—		—
Commercial and industrial		—		—		—		—		—		—		—
Consumer		—		—		—		—		—		—		—
Total	$	—	$	—	$	1,888	$	1,888	$	—	$	1,888	$	—

Schedule of credit quality analysis

	Credit Quality Indicators
	As of June 30, 2013
(Dollar amounts in thousands)			Special		Sub-				Total
	Pass		mention		standard		Doubtful		loans
Commercial real estate	$	254,667	$	2,355	$	3,849	$	—	$	260,871
Real estate construction		20,208		523		1,044		—		21,775
Real estate multi-family		41,374		—		—		—		41,374
Real estate 1 to 4 family		91,088		—		1,108		267		92,463
Commercial and industrial		33,799		—		2,284		102		36,185
Consumer loans		1,725		—		—		—		1,725
Totals	$	442,861	$	2,878	$	8,285	$	369	$	454,393
Purchased
Not credit impaired
Commercial real estate	$	30,618	$	5,575	$	6,389	$	—	$	42,582
Real estate construction		1,185		—		2,285		141		3,611
Real estate multi-family		14,580		—		—		—		14,580
Real estate 1 to 4 family		10,805		—		1,803		—		12,608
Commercial and industrial		11,554		—		—		—		11,554
Total	$	68,742	$	5,575	$	10,477	$	141	$	84,935
Credit impaired
Commercial real estate									$	1,366
Real estate construction										588
Real estate multi-family										48
Real estate 1 to 4 family										23
Total									$	2,025

	Credit Quality Indicators
	As of December 31, 2012
(Dollar amounts in thousands)			Special		Sub-				Total
	Pass		mention		standard		Doubtful		loans
Commercial real estate	$	249,991	$	2,372	$	2,086	$	—	$	254,449
Real estate construction		13,266		—		1,600		—		14,866
Real estate multi-family		39,176		—		—		—		39,176
Real estate 1 to 4 family		95,579		—		1,470		280		97,329
Commercial and industrial		39,446		—		2,564		837		42,847
Consumer loans		1,824		—		—		—		1,824
Totals	$	439,282	$	2,372	$	7,720	$	1,117	$	450,491
Purchased
Not credit impaired
Commercial real estate	$	30,600	$	7,902	$	9,507	$	—	$	48,009
Real estate construction		—		39		3,555		—		3,594
Real estate multi-family		18,828		—		—		—		18,828
Real estate 1 to 4 family		14,850		—		540		—		15,390
Commercial and industrial		12,717		—		—		—		12,717
Total	$	76,995	$	7,941	$	13,602	$	—	$	98,538
Credit impaired
Commercial real estate									$	1,402
Real estate construction										486
Total									$	1,888

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CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Interest income:
Interest and fees on loans	$ 8,020	$ 6,758	$ 16,178	$ 13,513
Interest on taxable securities	794	617	1,478	1,230
Interest on tax-exempt securities	503	503	1,009	1,017
Total interest income	9,317	7,878	18,665	15,760
Interest expense:
Deposits	639	653	1,321	1,337
Total interest expense	639	653	1,321	1,337
Net interest income	8,678	7,225	17,344	14,423
Provision for loan losses	510	400	1,110	800
Net interest income after provision for loan losses	8,168	6,825	16,234	13,623
Noninterest income:
Service charges	676	744	1,335	1,496
Credit card fees	3	155	10	308
Net gain on sale of available-for-sale securities	73	325	115	809
Bank owned life insurance earnings	94	111	189	578
Other income	287	80	509	144
Total noninterest income	1,133	1,415	2,158	3,335
Noninterest expense:
Salaries and employee benefits	4,312	3,645	8,728	7,419
Occupancy expense	846	598	1,808	1,198
Equipment expense	386	432	784	878
Professional fees	444	383	807	971
FDIC assessment	180	156	360	336
Acquisition expense				175
Telephone, postage and supplies	277	271	714	549
Operating losses (recoveries)	11	(56)	25	52
Advertising	121	91	293	176
Bankcard expenses		157	1	313
Data processing expense	170	138	326	276
Low income housing expense	109	70	219	139
Surety insurance	67	62	121	124
Directors expense	63	54	126	126
Other real estate owned expense	28	15	78	51
Gain on sale of other real estate owned		(9)		(4)
Other expense	371	491	734	772
Total noninterest expense	7,385	6,498	15,124	13,551
Earnings before provision for income tax expense	1,916	1,742	3,268	3,407
Provision for income tax expense	537	514	959	891
Net earnings	1,379	1,228	2,309	2,516
Dividends and discount accretion on preferred stock	172	157	330	343
Net earnings available to common stockholders	$ 1,207	$ 1,071	$ 1,979	$ 2,173
Earnings per share data:
Basic (in dollars per share)	$ 0.32	$ 0.29	$ 0.53	$ 0.59
Diluted (in dollars per share)	$ 0.32	$ 0.29	$ 0.52	$ 0.58
Weighted average shares outstanding:
Basic (in shares)	3,729	3,690	3,722	3,688
Diluted (in shares)	3,813	3,752	3,810	3,739

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NOTE C - EARNINGS PER SHARE CALCULATION

6 Months Ended

Jun. 30, 2013

Earnings Per Share [Abstract]

EARNINGS PER SHARE CALCULATION

NOTE C – 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 (loss) available to common stockholders (after deducting dividends and related accretion on preferred stock) 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. All common stock equivalents are anti-dilutive when a net loss occurs.

Earnings per share have been computed based on the following: 

(All amounts in thousands)	Three months ended				Six months ended
	June 30,				June 30,
	2013		2012		2013		2012
Net earnings	$	1,379	$	1,228	$	2,309	$	2,516
Dividends and discount accretion on preferred stock		172		157		330		343
Net earnings available to common shareholders	$	1,207	$	1,071	$	1,979	$	2,173
Average number of shares outstanding		3,729		3,690		3,722		3,688
Effect of dilutive options		84		62		88		51
Average number of shares outstanding used to calculate diluted earnings per share		3,813		3,752		3,810		3,739

Anti-dilutive options that were excluded from the calculation for the quarter end and year to date were 204,359 and 230,859 in 2013, and 279,676 and 300,516 in 2012, respectively.

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NOTE D - SECURITIES AVAILABLE FOR SALE - Summary of Investments Amortized Cost and Carrying Value Classified by Contractual Maturity (Details 2) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Available-for-sale:
Due In One Year Or Less, Amortized Cost	$ 13,932
Due in one year or less, Carrying Value	14,062
Due after one through five years, Amortized Cost	100,978
Due after one through five years, Carrying Value	101,886
Due after five years through ten years, Amortized Cost	122,548
Due after five years through ten years, Carrying Value	120,994
Due after ten years, Amortized Cost	45,020
Due after ten years, Carrying Value	44,480
Available-For-Sale Securities, Debt Maturities, Amortized Cost Basis	282,478
Securities available-for-sale at fair value	$ 281,422	$ 234,945

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NOTE F - FAIR VALUE MEASUREMENT (Tables)

6 Months Ended

Jun. 30, 2013

Fair Value Disclosures [Abstract]

Schedule of fair value assets measured at fair value on a recurring basis

			Fair Value Measurements
(Dollar amounts in thousands)			at June 30, 2013, Using
			Quoted Prices
			in Active
			Markets		Other		Significant
			for Identical		Observable		Unobservable
	Fair Value		Assets		Inputs		Inputs
Description	6/30/2013		(Level 1)		(Level 2)		(Level 3)
U.S. Treasury securities	$	7,173	$	7,173	$	—	$	—
Obligations of U.S. Government agencies		86,041		—		86,041		—
Mortgage-backed securities		77,183		—		77,183		—
Obligations of states and political subdivisions		83,790		—		83,790		—
Corporate debt		27,235		—		27,235		—
Total assets measured at fair value	$	281,422	$	7,173	$	274,249	$	—

			Fair Value Measurements
(Dollar amounts in thousands)			at December 31, 2012, Using
			Quoted Prices
			in Active
			Markets		Other		Significant
			for Identical		Observable		Unobservable
	Fair Value		Assets		Inputs		Inputs
Description	12/31/2012		(Level 1)		(Level 2)		(Level 3)
U.S. Treasury securities	$	7,280	$	7,280	$	—	$	—
Obligations of U.S. Government agencies		72,260		—		72,260		—
Mortgage-backed securities		55,180		—		55,180		—
Obligations of states and political subdivisions		81,609		—		81,609		—
Corporate debt		18,616		—		18,616		—
Total assets measured at fair value	$	234,945	$	7,280	$	227,665	$	—

Schedule of fair value assets measured at fair value on a non-recurring basis

			Fair Value Measurements
(Dollar amounts in thousands)			at June 30, 2013, Using
			Quoted Prices in
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
	Fair Value		Assets		Inputs		Inputs
Description	6/30/2013		(Level 1)		(Level 2)		(Level 3)
Impaired loans	$	1,203	$	—	$	—	$	1,203
Total impaired assets measured at fair value	$	1,203	$	—	$	—	$	1,203

			Fair Value Measurements
(Dollar amounts in thousands)			at December 31, 2012, Using
			Quoted Prices in
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
	Fair Value		Assets		Inputs		Inputs
Description	12/31/2012		(Level 1)		(Level 2)		(Level 3)
Impaired loans	$	2,494	$	—	$	—	$	2,494
Other real estate owned		4,710		—		—		4,710
Total impaired assets measured at fair value	$	7,204	$	—	$	—	$	7,204

Schedule of estimated fair value of financial instruments

(Dollar amounts in thousands)	Carrying		Fair		Fair value measurements
	amount		value		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	23,698	$	23,698	$	23,698
Interest-bearing time deposits with financial institutions	$	8,473	$	8,638			$	8,638
Securities available for sale		281,422		281,422		7,173		274,249
Loans		541,353		544,609					$	544,609
Bank-owned life insurance		11,975		11,975						11,975
Other equity securities		5,300		5,300						5,300
Accrued interest receivable		3,886		3,886				3,886
Financial liabilities:
Deposits		802,800		803,245				803,245
Federal Home Loan Bank advances		501		501				501
Accrued interest payable		298		298				298
Off-balance-sheet liabilities:
Undisbursed loan commitments, lines of credit, standby letters of credit and Mastercard lines of credit		—		1,215						1,215

(Dollar amounts in thousands)	Carrying		Fair		Fair value measurements
	amount		value		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	27,861	$	27,861	$	27,861
Interest-bearing time deposits with financial institutions	$	13,216		13,216			$	13,216
Securities available for sale		234,945		234,945		7,280		227,665
Loans		550,917		547,740					$	547,740
Bank-owned life insurance		11,785		11,785						11,785
Other equity securities		5,464		5,464						5,464
Accrued interest receivable		3,760		3,760				3,760
Financial liabilities:
Deposits		768,352		769,043				769,043
Federal Home Loan Bank advances		1,220		1,221				1,221
Accrued interest payable		349		349				349
Off-balance-sheet liabilities:
Undisbursed loan commitments, lines of credit, standby letters of credit and Mastercard lines of credit		—		1,026						1,026

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NOTE F - FAIR VALUE MEASUREMENT (Detail Textuals) (USD $)	Jun. 30, 2013	Dec. 31, 2012
Fair Value Disclosures [Abstract]
Loans Payable	$ 11,485,000	$ 12,474,000

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NOTE E - LOANS - Summary of Allowance for Credit Losses (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Allowance for credit losses
Beginning balance	$ 9,357	$ 8,287	$ 9,124	$ 9,897
Charge-offs	(125)	(367)	(565)	(2,392)
Recoveries	3	138	76	153
Provision	510	400	1,110	800
Ending balance	9,745	8,458	9,745	8,458
Ending balance: individually evaluated for impairment	719	1,257	719	1,257
Ending balance: collectively evaluated for impairment	9,026	7,201	9,026	7,201
Loans:
Financing Receivable	541,353	461,842	541,353	461,842
Ending balance: individually evaluated for impairment	28,218	33,486	28,218	33,486
Ending balance: collectively evaluated for impairment	13,135	428,356	13,135	428,356
Commercial & Industrial
Allowance for credit losses
Beginning balance	1,577	1,628	1,875	1,618
Charge-offs		(312)		(1,487)
Recoveries			70	1
Provision	(86)	418	(454)	1,602
Ending balance	1,491	1,734	1,491	1,734
Ending balance: individually evaluated for impairment	254	505	254	505
Ending balance: collectively evaluated for impairment	1,237	1,229	1,237	1,229
Loans:
Financing Receivable	47,739	53,562	47,739	53,562
Ending balance: individually evaluated for impairment	3,795	7,082	3,795	7,082
Ending balance: collectively evaluated for impairment	43,944	46,480	43,944	46,480
Commercial Real Estate
Allowance for credit losses
Beginning balance	4,930	3,592	4,812	4,745
Charge-offs			(239)	(738)
Recoveries	2	(2)	4	139
Provision	379	162	754	(394)
Ending balance	5,331	3,752	5,331	3,752
Ending balance: individually evaluated for impairment	210	477	210	477
Ending balance: collectively evaluated for impairment	5,121	3,275	5,121	3,275
Loans:
Financing Receivable	304,819	244,753	304,819	244,753
Ending balance: individually evaluated for impairment	19,244	9,471	19,244	9,471
Ending balance: collectively evaluated for impairment	285,575	235,282	285,575	235,282
Real estate construction loans
Allowance for credit losses
Beginning balance	653	1,055	857	1,171
Charge-offs		(54)	(81)	(54)
Recoveries
Provision	72	(167)	(34)	(283)
Ending balance	742	834	742	834
Ending balance: individually evaluated for impairment	17	75	17	75
Ending balance: collectively evaluated for impairment	725	759	725	759
Loans:
Financing Receivable	25,974	25,644	25,974	25,644
Ending balance: individually evaluated for impairment	591	7,238	591	7,238
Ending balance: collectively evaluated for impairment	25,383	18,406	25,383	18,406
Real estate multi family
Allowance for credit losses
Beginning balance	281	151		671
Charge-offs
Recoveries
Provision	48	(102)	329	(622)
Ending balance	329	49	329	49
Ending balance: individually evaluated for impairment		42		42
Ending balance: collectively evaluated for impairment	329	7	329	7
Loans:
Financing Receivable	56,002	39,960	56,002	39,960
Ending balance: individually evaluated for impairment	1,192	3,242	1,192	3,242
Ending balance: collectively evaluated for impairment	54,810	36,718	54,810	36,718
Real estate 1 to 4 family
Allowance for credit losses
Beginning balance	1,862	1,798	1,516	1,592
Charge-offs	(125)		(244)	(109)
Recoveries		139	1	9
Provision	91	89	518	534
Ending balance	1,791	2,026	1,791	2,026
Ending balance: individually evaluated for impairment	237	157	237	157
Ending balance: collectively evaluated for impairment	1,554	1,869	1,554	1,869
Loans:
Financing Receivable	105,094	95,886	105,094	95,886
Ending balance: individually evaluated for impairment	3,395	6,443	3,395	6,443
Ending balance: collectively evaluated for impairment	101,699	89,443	101,699	89,443
Consumer
Allowance for credit losses
Beginning balance	54	63	64	100
Charge-offs		(1)	(1)	(4)
Recoveries	1	1	1	4
Provision	6	0	(3)	(37)
Ending balance	61	63	61	63
Ending balance: individually evaluated for impairment	1	1	1	1
Ending balance: collectively evaluated for impairment	60	62	60	62
Loans:
Financing Receivable	1,725	2,037	1,725	2,037
Ending balance: individually evaluated for impairment	1	10	1	10
Ending balance: collectively evaluated for impairment	$ 1,724	$ 2,027	$ 1,724	$ 2,027

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NOTE E - LOANS - Summary of Loan Portfolio (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Loans Receivable	$ 541,353	$ 550,917
Net deferred loan fees	(370)	(230)
Allowance for loan losses	(9,745)	(9,124)
Net loans	531,238	541,563
Originated
Loans Receivable	454,393	450,491
Net deferred loan fees	(370)	(230)
Allowance for loan losses	(9,707)	(9,124)
Net loans	444,316	441,137
PNCI
Loans Receivable	84,935	98,538
Net deferred loan fees
Allowance for loan losses	(38)
Net loans	84,897	98,538
PCI
Loans Receivable	2,025	1,888
Net deferred loan fees
Allowance for loan losses
Net loans	2,025	1,888
Commercial real estate
Loans Receivable	304,819	303,860
Net loans	304,819	303,860
Commercial real estate | Originated
Loans Receivable	260,871	254,449
Commercial real estate | PNCI
Loans Receivable	42,582	48,009
Commercial real estate | PCI
Loans Receivable	1,366	1,402
Real estate construction
Loans Receivable	25,974	18,946
Net loans	25,974	18,946
Real estate construction | Originated
Loans Receivable	21,775	14,866
Real estate construction | PNCI
Loans Receivable	3,611	3,594
Real estate construction | PCI
Loans Receivable	588	486
Real estate multi-family
Loans Receivable	56,002	58,004
Net loans	56,002	58,004
Real estate multi-family | Originated
Loans Receivable	41,374	39,176
Real estate multi-family | PNCI
Loans Receivable	14,580	18,828
Real estate multi-family | PCI
Loans Receivable	48
Real estate 1 to 4 family
Loans Receivable	105,094	112,719
Net loans	105,094	112,719
Real estate 1 to 4 family | Originated
Loans Receivable	92,463	97,329
Real estate 1 to 4 family | PNCI
Loans Receivable	12,608	15,390
Real estate 1 to 4 family | PCI
Loans Receivable	23
Commercial & industrial
Loans Receivable	47,739	55,564
Net loans	47,739	55,564
Commercial & industrial | Originated
Loans Receivable	36,185	42,847
Commercial & industrial | PNCI
Loans Receivable	11,554	12,717
Commercial & industrial | PCI
Loans Receivable
Consumer loans
Loans Receivable	1,725	1,824
Net loans	1,725	1,824
Consumer loans | Originated
Loans Receivable	1,725	1,824
Consumer loans | PNCI
Loans Receivable
Consumer loans | PCI
Loans Receivable

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NOTE E - LOANS (Detail Textuals 1) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Loan Categories	$ 5,216	$ 5,578
Loan Categories	5,216	5,578
Commercial loans
Loan Categories		2,723
Loan Categories		2,723
Commercial real estate loans
Loan Categories	3,737	1,409
Loan Categories	3,737	1,409
Real estate construction loans
Loan Categories	196
Loan Categories	196
Real estate one to four family (residential)
Loan Categories	739	1,446
Loan Categories	739	1,446
Real estate multi-family
Loan Categories	544
Loan Categories	$ 544

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NOTE E - LOANS - Age Analysis Of Past Due Loans (Details 5) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2012
Purchased
Financing Receivable, Current	$ 541,353		$ 461,842
Net loans	531,238	541,563
Commercial real estate
Purchased
Net loans	304,819	303,860
Real estate multi family
Purchased
Net loans	56,002	58,004
Real estate 1 to 4 family
Purchased
Net loans	105,094	112,719
Commercial & Industrial
Purchased
Net loans	47,739	55,564
Consumer
Purchased
Net loans	1,725	1,824
Receivables 30 to 59 Days Past Due | Originated
Purchased
Financing Receivable, 30-59 Days Past Due	1,351	4,766
Receivables 30 to 59 Days Past Due | Purchased Not credit impaired
Purchased
Financing Receivable, 30-59 Days Past Due		815
Receivables 30 to 59 Days Past Due | Credit impaired
Purchased
Financing Receivable, 30-59 Days Past Due
Receivables 30 to 59 Days Past Due | Commercial real estate | Originated
Purchased
Financing Receivable, 30-59 Days Past Due	544	3,942
Receivables 30 to 59 Days Past Due | Commercial real estate | Purchased Not credit impaired
Purchased
Financing Receivable, 30-59 Days Past Due		690
Receivables 30 to 59 Days Past Due | Commercial real estate | Credit impaired
Purchased
Financing Receivable, 30-59 Days Past Due
Receivables 30 to 59 Days Past Due | Real estate construction | Originated
Purchased
Financing Receivable, 30-59 Days Past Due
Receivables 30 to 59 Days Past Due | Real estate construction | Purchased Not credit impaired
Purchased
Financing Receivable, 30-59 Days Past Due
Receivables 30 to 59 Days Past Due | Real estate construction | Credit impaired
Purchased
Financing Receivable, 30-59 Days Past Due
Receivables 30 to 59 Days Past Due | Real estate multi family | Originated
Purchased
Financing Receivable, 30-59 Days Past Due
Receivables 30 to 59 Days Past Due | Real estate multi family | Purchased Not credit impaired
Purchased
Financing Receivable, 30-59 Days Past Due		75
Receivables 30 to 59 Days Past Due | Real estate multi family | Credit impaired
Purchased
Financing Receivable, 30-59 Days Past Due
Receivables 30 to 59 Days Past Due | Real estate 1 to 4 family | Originated
Purchased
Financing Receivable, 30-59 Days Past Due	733	806
Receivables 30 to 59 Days Past Due | Real estate 1 to 4 family | Purchased Not credit impaired
Purchased
Financing Receivable, 30-59 Days Past Due
Receivables 30 to 59 Days Past Due | Real estate 1 to 4 family | Credit impaired
Purchased
Financing Receivable, 30-59 Days Past Due
Receivables 30 to 59 Days Past Due | Commercial & Industrial | Originated
Purchased
Financing Receivable, 30-59 Days Past Due	74	18
Receivables 30 to 59 Days Past Due | Commercial & Industrial | Purchased Not credit impaired
Purchased
Financing Receivable, 30-59 Days Past Due		50
Receivables 30 to 59 Days Past Due | Commercial & Industrial | Credit impaired
Purchased
Financing Receivable, 30-59 Days Past Due
Receivables 30 to 59 Days Past Due | Consumer | Originated
Purchased
Financing Receivable, 30-59 Days Past Due
Receivables 30 to 59 Days Past Due | Consumer | Credit impaired
Purchased
Financing Receivable, 30-59 Days Past Due
Loans Past Due 60 To 89 Days | Originated
Purchased
Financing Receivable, 60-89 Days Past Due	834	212
Loans Past Due 60 To 89 Days | Purchased Not credit impaired
Purchased
Financing Receivable, 60-89 Days Past Due	1,548	119
Loans Past Due 60 To 89 Days | Credit impaired
Purchased
Financing Receivable, 60-89 Days Past Due
Financing Receivable, Over 90 Days
Loans Past Due 60 To 89 Days | Commercial real estate | Originated
Purchased
Financing Receivable, 60-89 Days Past Due	33
Loans Past Due 60 To 89 Days | Commercial real estate | Purchased Not credit impaired
Purchased
Financing Receivable, 60-89 Days Past Due	1,548
Loans Past Due 60 To 89 Days | Commercial real estate | Credit impaired
Purchased
Financing Receivable, 60-89 Days Past Due
Loans Past Due 60 To 89 Days | Real estate construction | Originated
Purchased
Financing Receivable, 60-89 Days Past Due
Loans Past Due 60 To 89 Days | Real estate construction | Purchased Not credit impaired
Purchased
Financing Receivable, 60-89 Days Past Due
Loans Past Due 60 To 89 Days | Real estate construction | Credit impaired
Purchased
Financing Receivable, 60-89 Days Past Due
Loans Past Due 60 To 89 Days | Real estate multi family | Originated
Purchased
Financing Receivable, 60-89 Days Past Due
Loans Past Due 60 To 89 Days | Real estate multi family | Purchased Not credit impaired
Purchased
Financing Receivable, 60-89 Days Past Due
Loans Past Due 60 To 89 Days | Real estate multi family | Credit impaired
Purchased
Financing Receivable, 60-89 Days Past Due
Loans Past Due 60 To 89 Days | Real estate 1 to 4 family | Originated
Purchased
Financing Receivable, 60-89 Days Past Due	445	168
Loans Past Due 60 To 89 Days | Real estate 1 to 4 family | Purchased Not credit impaired
Purchased
Financing Receivable, 60-89 Days Past Due		119
Loans Past Due 60 To 89 Days | Real estate 1 to 4 family | Credit impaired
Purchased
Financing Receivable, 60-89 Days Past Due
Loans Past Due 60 To 89 Days | Commercial & Industrial | Originated
Purchased
Financing Receivable, 60-89 Days Past Due	356	44
Loans Past Due 60 To 89 Days | Commercial & Industrial | Purchased Not credit impaired
Purchased
Financing Receivable, 60-89 Days Past Due
Loans Past Due 60 To 89 Days | Commercial & Industrial | Credit impaired
Purchased
Financing Receivable, 60-89 Days Past Due
Loans Past Due 60 To 89 Days | Consumer | Originated
Purchased
Financing Receivable, 60-89 Days Past Due
Loans Past Due 60 To 89 Days | Consumer | Credit impaired
Purchased
Financing Receivable, 60-89 Days Past Due
Greater Than 90 Days Past Due | Originated
Purchased
Financing Receivable, Over 90 Days	5,056	6,354
Greater Than 90 Days Past Due | Purchased Not credit impaired
Purchased
Financing Receivable, Over 90 Days	1,388	3,623
Greater Than 90 Days Past Due | Credit impaired
Purchased
Financing Receivable, Over 90 Days	395	1,888
Greater Than 90 Days Past Due | Commercial real estate | Originated
Purchased
Financing Receivable, Over 90 Days	2,430	2,525
Greater Than 90 Days Past Due | Commercial real estate | Purchased Not credit impaired
Purchased
Financing Receivable, Over 90 Days	1,388	2,212
Greater Than 90 Days Past Due | Commercial real estate | Credit impaired
Purchased
Financing Receivable, Over 90 Days		1,402
Greater Than 90 Days Past Due | Real estate construction | Originated
Purchased
Financing Receivable, Over 90 Days
Greater Than 90 Days Past Due | Real estate construction | Purchased Not credit impaired
Purchased
Financing Receivable, Over 90 Days		1,411
Greater Than 90 Days Past Due | Real estate construction | Credit impaired
Purchased
Financing Receivable, Over 90 Days	395	486
Greater Than 90 Days Past Due | Real estate multi family | Originated
Purchased
Financing Receivable, Over 90 Days
Greater Than 90 Days Past Due | Real estate multi family | Purchased Not credit impaired
Purchased
Financing Receivable, Over 90 Days
Greater Than 90 Days Past Due | Real estate multi family | Credit impaired
Purchased
Financing Receivable, Over 90 Days
Greater Than 90 Days Past Due | Real estate 1 to 4 family | Originated
Purchased
Financing Receivable, Over 90 Days	299	1,210
Greater Than 90 Days Past Due | Real estate 1 to 4 family | Purchased Not credit impaired
Purchased
Financing Receivable, Over 90 Days
Greater Than 90 Days Past Due | Real estate 1 to 4 family | Credit impaired
Purchased
Financing Receivable, Over 90 Days
Greater Than 90 Days Past Due | Commercial & Industrial | Originated
Purchased
Financing Receivable, Over 90 Days	2,326	2,619
Greater Than 90 Days Past Due | Commercial & Industrial | Purchased Not credit impaired
Purchased
Financing Receivable, Over 90 Days
Greater Than 90 Days Past Due | Commercial & Industrial | Credit impaired
Purchased
Financing Receivable, Over 90 Days
Greater Than 90 Days Past Due | Consumer | Originated
Purchased
Financing Receivable, Over 90 Days	1
Greater Than 90 Days Past Due | Consumer | Credit impaired
Purchased
Financing Receivable, Over 90 Days
Total Past Due | Originated
Purchased
Financing Receivable, Total Past Due	7,241	11,332
Total Past Due | Purchased Not credit impaired
Purchased
Financing Receivable, Total Past Due	2,936	4,557
Total Past Due | Credit impaired
Purchased
Financing Receivable, Total Past Due	395	1,888
Total Past Due | Commercial real estate | Originated
Purchased
Financing Receivable, Total Past Due	3,007	6,467
Total Past Due | Commercial real estate | Purchased Not credit impaired
Purchased
Financing Receivable, Total Past Due	2,936	2,902
Total Past Due | Commercial real estate | Credit impaired
Purchased
Financing Receivable, Total Past Due		1,402
Total Past Due | Real estate construction | Originated
Purchased
Financing Receivable, Total Past Due
Total Past Due | Real estate construction | Purchased Not credit impaired
Purchased
Financing Receivable, Total Past Due		1,411
Total Past Due | Real estate construction | Credit impaired
Purchased
Financing Receivable, Total Past Due	395	486
Total Past Due | Real estate multi family | Originated
Purchased
Financing Receivable, Total Past Due
Total Past Due | Real estate multi family | Purchased Not credit impaired
Purchased
Financing Receivable, Total Past Due		75
Total Past Due | Real estate multi family | Credit impaired
Purchased
Financing Receivable, Total Past Due
Total Past Due | Real estate 1 to 4 family | Originated
Purchased
Financing Receivable, Total Past Due	1,477	2,184
Total Past Due | Real estate 1 to 4 family | Purchased Not credit impaired
Purchased
Financing Receivable, Total Past Due		119
Total Past Due | Real estate 1 to 4 family | Credit impaired
Purchased
Financing Receivable, Total Past Due
Total Past Due | Commercial & Industrial | Originated
Purchased
Financing Receivable, Total Past Due	2,756	2,681
Total Past Due | Commercial & Industrial | Purchased Not credit impaired
Purchased
Financing Receivable, Total Past Due		50
Total Past Due | Commercial & Industrial | Credit impaired
Purchased
Financing Receivable, Total Past Due
Total Past Due | Consumer | Originated
Purchased
Financing Receivable, Total Past Due	1
Total Past Due | Consumer | Credit impaired
Purchased
Financing Receivable, Total Past Due
Current | Originated
Purchased
Financing Receivable, Current	447,152	439,159
Current | Purchased Not credit impaired
Purchased
Financing Receivable, Current	81,999	93,981
Current | Credit impaired
Purchased
Net loans	1,630
Current | Commercial real estate | Originated
Purchased
Financing Receivable, Current	257,864	247,982
Current | Commercial real estate | Purchased Not credit impaired
Purchased
Financing Receivable, Current	39,646	45,107
Current | Commercial real estate | Credit impaired
Purchased
Net loans	1,366
Current | Real estate construction | Originated
Purchased
Net loans	21,775	14,866
Current | Real estate construction | Purchased Not credit impaired
Purchased
Financing Receivable, Current	3,611	2,183
Current | Real estate construction | Credit impaired
Purchased
Net loans	193
Current | Real estate multi family | Originated
Purchased
Financing Receivable, Current	41,374	39,176
Current | Real estate multi family | Purchased Not credit impaired
Purchased
Financing Receivable, Current	14,580	18,753
Current | Real estate multi family | Credit impaired
Purchased
Net loans	48
Current | Real estate 1 to 4 family | Originated
Purchased
Financing Receivable, Current	90,986	95,145
Current | Real estate 1 to 4 family | Purchased Not credit impaired
Purchased
Financing Receivable, Current	12,608	15,271
Current | Real estate 1 to 4 family | Credit impaired
Purchased
Net loans	23
Current | Commercial & Industrial | Originated
Purchased
Financing Receivable, Current	33,429	40,166
Current | Commercial & Industrial | Purchased Not credit impaired
Purchased
Financing Receivable, Current	11,554	12,667
Current | Commercial & Industrial | Credit impaired
Purchased
Net loans
Current | Consumer | Originated
Purchased
Financing Receivable, Current	1,724	1,824
Current | Consumer | Credit impaired
Purchased
Net loans
Total Loans | Originated
Purchased
Net loans	454,393	450,491
Total Loans | Purchased Not credit impaired
Purchased
Net loans	84,935	98,538
Total Loans | Credit impaired
Purchased
Financing Receivable, Current	2,025	1,888
Total Loans | Commercial real estate | Originated
Purchased
Net loans	260,871	254,449
Total Loans | Commercial real estate | Purchased Not credit impaired
Purchased
Net loans	42,582	48,009
Total Loans | Commercial real estate | Credit impaired
Purchased
Financing Receivable, Current	1,366	1,402
Total Loans | Real estate construction | Originated
Purchased
Net loans	21,775	14,866
Total Loans | Real estate construction | Purchased Not credit impaired
Purchased
Net loans	3,611	3,594
Total Loans | Real estate construction | Credit impaired
Purchased
Financing Receivable, Current	588	486
Total Loans | Real estate multi family | Originated
Purchased
Net loans	41,374	39,176
Total Loans | Real estate multi family | Purchased Not credit impaired
Purchased
Net loans	14,580	18,828
Total Loans | Real estate multi family | Credit impaired
Purchased
Financing Receivable, Current	48
Total Loans | Real estate 1 to 4 family | Originated
Purchased
Net loans	92,463	97,329
Total Loans | Real estate 1 to 4 family | Purchased Not credit impaired
Purchased
Net loans	12,608	15,390
Total Loans | Real estate 1 to 4 family | Credit impaired
Purchased
Financing Receivable, Current	23
Total Loans | Commercial & Industrial | Originated
Purchased
Net loans	36,185	42,847
Total Loans | Commercial & Industrial | Purchased Not credit impaired
Purchased
Net loans	11,554	12,717
Total Loans | Commercial & Industrial | Credit impaired
Purchased
Financing Receivable, Current
Total Loans | Consumer | Originated
Purchased
Net loans	1,725	1,824
Total Loans | Consumer | Credit impaired
Purchased
Financing Receivable, Current
Recorded Investment > 90 Days and Accruing | Originated
Purchased
Financing Receivable, Recorded Investment > 90 Days and Accruing
Recorded Investment > 90 Days and Accruing | Purchased Not credit impaired
Purchased
Financing Receivable, Recorded Investment > 90 Days and Accruing
Recorded Investment > 90 Days and Accruing | Credit impaired
Purchased
Financing Receivable, Recorded Investment > 90 Days and Accruing
Recorded Investment > 90 Days and Accruing | Commercial real estate | Originated
Purchased
Financing Receivable, Recorded Investment > 90 Days and Accruing
Recorded Investment > 90 Days and Accruing | Commercial real estate | Purchased Not credit impaired
Purchased
Financing Receivable, Recorded Investment > 90 Days and Accruing
Recorded Investment > 90 Days and Accruing | Commercial real estate | Credit impaired
Purchased
Financing Receivable, Recorded Investment > 90 Days and Accruing
Recorded Investment > 90 Days and Accruing | Real estate construction | Originated
Purchased
Financing Receivable, Recorded Investment > 90 Days and Accruing
Recorded Investment > 90 Days and Accruing | Real estate construction | Purchased Not credit impaired
Purchased
Financing Receivable, Recorded Investment > 90 Days and Accruing
Recorded Investment > 90 Days and Accruing | Real estate construction | Credit impaired
Purchased
Financing Receivable, Recorded Investment > 90 Days and Accruing
Recorded Investment > 90 Days and Accruing | Real estate multi family | Originated
Purchased
Financing Receivable, Recorded Investment > 90 Days and Accruing
Recorded Investment > 90 Days and Accruing | Real estate multi family | Purchased Not credit impaired
Purchased
Financing Receivable, Recorded Investment > 90 Days and Accruing
Recorded Investment > 90 Days and Accruing | Real estate multi family | Credit impaired
Purchased
Financing Receivable, Recorded Investment > 90 Days and Accruing
Recorded Investment > 90 Days and Accruing | Real estate 1 to 4 family | Originated
Purchased
Financing Receivable, Recorded Investment > 90 Days and Accruing
Recorded Investment > 90 Days and Accruing | Real estate 1 to 4 family | Purchased Not credit impaired
Purchased
Financing Receivable, Recorded Investment > 90 Days and Accruing
Recorded Investment > 90 Days and Accruing | Real estate 1 to 4 family | Credit impaired
Purchased
Financing Receivable, Recorded Investment > 90 Days and Accruing
Recorded Investment > 90 Days and Accruing | Commercial & Industrial | Originated
Purchased
Financing Receivable, Recorded Investment > 90 Days and Accruing
Recorded Investment > 90 Days and Accruing | Commercial & Industrial | Purchased Not credit impaired
Purchased
Financing Receivable, Recorded Investment > 90 Days and Accruing
Recorded Investment > 90 Days and Accruing | Commercial & Industrial | Credit impaired
Purchased
Financing Receivable, Recorded Investment > 90 Days and Accruing
Recorded Investment > 90 Days and Accruing | Consumer | Originated
Purchased
Financing Receivable, Recorded Investment > 90 Days and Accruing
Recorded Investment > 90 Days and Accruing | Consumer | Credit impaired
Purchased
Financing Receivable, Recorded Investment > 90 Days and Accruing

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NOTE D - SECURITIES AVAILABLE FOR SALE (Detail Textuals) (USD $)	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Investments, Debt and Equity Securities [Abstract]
Gross realized gains on sale of securities	$ 115,000	$ 817,000
Available for sale securities sold or called	8,593,000	22,717,000
Available-for-sale securities, gross realized gain (loss)		8,000
Available-for-sale securities, gross realized gains (losses), sale proceeds		1,968,000
Available for sale securities pledged collateral amortized cost	73,935,000
Fair value securities pledged	$ 74,661,000

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (UNAUDITED) (Parentheticals) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Statement Of Other Comprehensive Income [Abstract]
Reclassification adjustment for gain on available-for-sale (in dollars)	$ 30	$ 133	$ 47	$ 332

XML

NOTE A - BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2013

Basis Of Presentation [Abstract]

BASIS OF PRESENTATION

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.

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 position and results of operations for the periods presented.

The accompanying unaudited consolidated 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 annual financial statements prepared in conformity with accounting principles generally accepted in the United States of America. Accordingly, these consolidated financial statements should be read in conjunction with the consolidated audited financial statements and notes thereto for the year ended December 31, 2012. Results of operations for interim periods are not necessarily indicative of results for the full year.

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NOTE D - SECURITIES AVAILABLE FOR SALE

6 Months Ended

Jun. 30, 2013

Investments, Debt and Equity Securities [Abstract]

SECURITIES AVAILABLE FOR SALE

NOTE D – SECURITIES AVAILABLE FOR SALE

The amortized cost and carrying values of securities available-for-sale are as follows:

(Dollar amounts in thousands)	Amortized		Unrealized		Unrealized			Carrying
	cost		gains		losses			value
June 30, 2013
U.S. Treasury securities	$	7,139	$	79	$	(45	)	$	7,173
Obligations of U.S. government agencies		86,188		606		(753	)		86,041
Mortgage-backed securities		78,764		469		(2,050	)		77,183
Obligations of states and political subdivisions		83,346		1,595		(1,151	)		83,790
Corporate debt		27,041		351		(157	)		27,235
	$	282,478	$	3,100	$	(4,156	)	$	281,422
December 31, 2012:
U.S. Treasury securities	$	7,145	$	135	$	—		$	7,280
Obligations of U.S. government agencies		71,061		1,206		(7	)		72,260
Mortgage-backed securities		53,934		1,383		(137	)		55,180
Obligations of states and political subdivisions		78,147		3,515		(53	)		81,609
Corporate debt		18,103		535		(22	)		18,616
	$	228,390	$	6,774	$	(219	)	$	234,945

An analysis of gross unrealized losses of the available-for-sale investment securities portfolio as of June 30, 2013 and December 31, 2012, respectively, is as follows:

(Dollar amounts in thousands)			Less than					12 Months
	Total		12 Months			Total		or Longer			Total		Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
June 30, 2013
U.S. Treasury securities	$	2,017	$	(45	)	$	—	$	—		$	2,017	$	(45	)
Obligations of U.S. Government agencies		40,567		(753	)		—		—			40,567	$	(753	)
Mortgage-backed securities		40,791		(2,050	)		—		—			40,791		(2,050	)
Obligations of states and political subdivisions		29,894		(1,100	)		1,115		(51	)		31,009		(1,151	)
Corporate debt		11,038		(155	)		498		(2	)		11,536		(157	)
Total	$	124,307	$	(4,103	)	$	1,613	$	(53	)	$	125,920	$	(4,156	)

			Less than					12 Months
(Dollar amounts in thousands)	Total		12 Months			Total		or Longer			Total		Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
December 31, 2012:
Obligations of U.S. government agencies	$	4,093	$	(7	)	$	—	$	—		$	4,093	$	(7	)
Mortgage-backed securities		8,580		(137	)		—		—			8,580		(137	)
Obligations of states and political subdivisions		8,492		(53	)		—		—			8,492		(53	)
Corporate debt		—		—			478		(22	)		478		(22	)
Total	$	21,165	$	(197	)	$	478	$	(22	)	$	21,643	$	(219	)

At June 30, 2013 and December 31, 2012, there were two securities in an unrealized loss position for 12 consecutive months or more. Management periodically evaluates each security in an unrealized loss position to determine if the impairment is temporary or other-than-temporary. The unrealized losses are due solely to interest rate changes and the Company does not intend to sell nor expects it will be required to sell investment securities identified with impairments prior to the earliest of forecasted recovery or the maturity of the underlying investment security. Management has determined that no investment security was other-than-temporarily impaired at June 30, 2013 and 2012.

The amortized cost and carrying value of available-for-sale debt securities as of June 30, 2013 by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

June 30, 2013:

(Dollar amounts in thousands)	Amortized		Carrying
	Cost		Value
Available-for-sale:
Due in one year or less	$	13,932	$	14,062
Due after one through five years		100,978		101,886
Due after five years through ten years		122,548		120,994
Due after ten years		45,020		44,480
	$	282,478	$	281,422

For the six months ended June 30, 2013 and June 30, 2012, respectively, gross realized gains amounted to $115,000 and $817,000, on securities sold or called of $8,593,000 and $22,717,000, respectively. For the six months ended June 30, 2013, there were no gross realized losses. For the six months ended June 30, 2012, gross realized losses amounted to $8,000 on securities sold of $1,968,000.

At June 30, 2013, securities with an amortized cost of $73,935,000 and fair value of $74,661,000 were pledged as collateral for public deposits and for other purposes required by law.

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NOTE B - STOCK OPTION PLANS

6 Months Ended

Jun. 30, 2013

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

STOCK OPTION PLANS

NOTE B – STOCK OPTION PLANS

Stock option expense is recorded based on the fair value of option contracts issued. The fair value is determined by the expected contract term, the risk free interest rate, the volatility of the Company’s stock price and the level of dividends the Company is expected to pay.

The expected term of options granted is derived from historical plan behavior and represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the contractual life of the option is based on the U. S. Treasury yield curve in effect at the time of the grant.

The amount of compensation expense for options recorded in the quarters ended June 30, 2013 and 2012 was $76,000 and $59,000, respectively. There was an income tax benefit recognized in the statements of earnings for the quarter and year to date ended June 30, 2013 of $121,000, and there was a tax benefit of $22,000 recognized for the quarter and year to date ended June 30, 2012.

 The intrinsic value for options exercised during the six months ended June 30, 2013 was $108,000. The intrinsic value for options exercisable as of June 30, 2013 was $1,081,000. The intrinsic value for options exercised during the six months ended June 30, 2012 was $58,000. The intrinsic value of options exercisable at June 30, 2012 was $620,000. There were 60,785 options granted for the first six months ended June 30, 2013 and no options granted for the six month period ended June 30, 2012.

The amount of total unrecognized compensation expense related to non-vested options at June 30, 2013 was $776,000, and the weighted average period over which it will be amortized is 3.8 years.

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NOTE E - LOANS - Summary of Impaired Loans' Recorded Investment, Unpaid Principal Balance, Related Allowance for Loan Losses, Average Investment, and Income Recognized (Details 2) (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Originated
Impaired Financing Receivable, Recorded Investment	$ 21,430	$ 21,609
Impaired Financing Receivable, Unpaid Principal Balance	22,951	22,871
Impaired Financing Receivable, Related Allowance	681	1,105
Impaired Financing Receivable, Average Recorded Investment	20,805	21,943
Impaired Financing Receivable, Income Recognized	452	987
PNCI
Impaired Financing Receivable, Recorded Investment	6,788	4,109
Impaired Financing Receivable, Unpaid Principal Balance	7,945	4,574
Impaired Financing Receivable, Related Allowance	38	232
Impaired Financing Receivable, Average Recorded Investment	9,365	4,575
Impaired Financing Receivable, Income Recognized	249	31
Commercial & Industrial | Originated
Impaired Financing Receivable, Recorded Investment	3,795	4,167
Impaired Financing Receivable, Unpaid Principal Balance	4,399	4,765
Impaired Financing Receivable, Related Allowance	254	384
Impaired Financing Receivable, Average Recorded Investment	3,887	4,626
Impaired Financing Receivable, Income Recognized	60	150
Commercial & Industrial | PNCI
Impaired Financing Receivable, Recorded Investment
Impaired Financing Receivable, Unpaid Principal Balance
Impaired Financing Receivable, Related Allowance
Impaired Financing Receivable, Average Recorded Investment
Impaired Financing Receivable, Income Recognized
Commercial real estate construction | Originated
Impaired Financing Receivable, Recorded Investment
Impaired Financing Receivable, Unpaid Principal Balance
Impaired Financing Receivable, Related Allowance
Impaired Financing Receivable, Average Recorded Investment		6,187
Impaired Financing Receivable, Income Recognized		333
Commercial real estate construction | PNCI
Impaired Financing Receivable, Recorded Investment	591	681
Impaired Financing Receivable, Unpaid Principal Balance	788	798
Impaired Financing Receivable, Related Allowance	17	232
Impaired Financing Receivable, Average Recorded Investment	793	798
Impaired Financing Receivable, Income Recognized		4
Real estate multi-family | PNCI
Impaired Financing Receivable, Recorded Investment	1,192
Impaired Financing Receivable, Unpaid Principal Balance	1,281
Impaired Financing Receivable, Related Allowance
Impaired Financing Receivable, Average Recorded Investment	2,693
Impaired Financing Receivable, Income Recognized	84
Commercial real estate | Originated
Impaired Financing Receivable, Recorded Investment	14,239	12,671
Impaired Financing Receivable, Unpaid Principal Balance	15,042	13,237
Impaired Financing Receivable, Related Allowance	189	415
Impaired Financing Receivable, Average Recorded Investment	13,455	6,782
Impaired Financing Receivable, Income Recognized	324	299
Commercial real estate | PNCI
Impaired Financing Receivable, Recorded Investment	5,005	3,428
Impaired Financing Receivable, Unpaid Principal Balance	5,876	3,776
Impaired Financing Receivable, Related Allowance	21
Impaired Financing Receivable, Average Recorded Investment	5,879	3,777
Impaired Financing Receivable, Income Recognized	165	27
Real estate 1 to 4 family | Originated
Impaired Financing Receivable, Recorded Investment	3,395	4,771
Impaired Financing Receivable, Unpaid Principal Balance	3,509	4,869
Impaired Financing Receivable, Related Allowance	237	306
Impaired Financing Receivable, Average Recorded Investment	3,462	4,348
Impaired Financing Receivable, Income Recognized	68	205
Real estate 1 to 4 family | PNCI
Impaired Financing Receivable, Recorded Investment
Impaired Financing Receivable, Unpaid Principal Balance
Impaired Financing Receivable, Related Allowance
Impaired Financing Receivable, Average Recorded Investment
Impaired Financing Receivable, Income Recognized
Consumer | Originated
Impaired Financing Receivable, Recorded Investment	1
Impaired Financing Receivable, Unpaid Principal Balance	1
Impaired Financing Receivable, Related Allowance	1
Impaired Financing Receivable, Average Recorded Investment	1
Impaired Financing Receivable, Income Recognized
Originated, With an allowance recorded | Originated
Impaired Financing Receivable, Recorded Investment	10,354	11,117
Impaired Financing Receivable, Unpaid Principal Balance	11,039	11,582
Impaired Financing Receivable, Related Allowance	681	1,105
Impaired Financing Receivable, Average Recorded Investment	10,119	11,296
Impaired Financing Receivable, Income Recognized	177	420
Originated, With an allowance recorded | Commercial & Industrial | Originated
Impaired Financing Receivable, Recorded Investment	1,737	1,965
Impaired Financing Receivable, Unpaid Principal Balance	2,177	2,427
Impaired Financing Receivable, Related Allowance	254	384
Impaired Financing Receivable, Average Recorded Investment	1,756	2,328
Impaired Financing Receivable, Income Recognized	6	30
Originated, With an allowance recorded | Commercial real estate construction | Originated
Impaired Financing Receivable, Recorded Investment
Impaired Financing Receivable, Unpaid Principal Balance
Impaired Financing Receivable, Related Allowance
Impaired Financing Receivable, Average Recorded Investment
Impaired Financing Receivable, Income Recognized
Originated, With an allowance recorded | Commercial real estate | Originated
Impaired Financing Receivable, Recorded Investment	6,063	5,433
Impaired Financing Receivable, Unpaid Principal Balance	6,302	5,433
Impaired Financing Receivable, Related Allowance	189	415
Impaired Financing Receivable, Average Recorded Investment	5,748	5,685
Impaired Financing Receivable, Income Recognized	117	240
Originated, With an allowance recorded | Real estate 1 to 4 family | Originated
Impaired Financing Receivable, Recorded Investment	2,553	3,719
Impaired Financing Receivable, Unpaid Principal Balance	2,559	3,722
Impaired Financing Receivable, Related Allowance	237	306
Impaired Financing Receivable, Average Recorded Investment	2,614	3,283
Impaired Financing Receivable, Income Recognized	54	150
Originated, With an allowance recorded | Consumer | Originated
Impaired Financing Receivable, Recorded Investment	1
Impaired Financing Receivable, Unpaid Principal Balance	1
Impaired Financing Receivable, Related Allowance	1
Impaired Financing Receivable, Average Recorded Investment	1
Impaired Financing Receivable, Income Recognized
PNCI, With an allowance recorded | PNCI
Impaired Financing Receivable, Recorded Investment	558	681
Impaired Financing Receivable, Unpaid Principal Balance	648	798
Impaired Financing Receivable, Related Allowance	38	232
Impaired Financing Receivable, Average Recorded Investment	647	798
Impaired Financing Receivable, Income Recognized	12	4
PNCI, With an allowance recorded | Commercial & Industrial | PNCI
Impaired Financing Receivable, Recorded Investment
Impaired Financing Receivable, Unpaid Principal Balance
Impaired Financing Receivable, Related Allowance
Impaired Financing Receivable, Average Recorded Investment
Impaired Financing Receivable, Income Recognized
PNCI, With an allowance recorded | Commercial real estate construction | PNCI
Impaired Financing Receivable, Recorded Investment	196	681
Impaired Financing Receivable, Unpaid Principal Balance	200	798
Impaired Financing Receivable, Related Allowance	17	232
Impaired Financing Receivable, Average Recorded Investment	200	798
Impaired Financing Receivable, Income Recognized		4
PNCI, With an allowance recorded | Commercial real estate | PNCI
Impaired Financing Receivable, Recorded Investment	362
Impaired Financing Receivable, Unpaid Principal Balance	448
Impaired Financing Receivable, Related Allowance	21
Impaired Financing Receivable, Average Recorded Investment	447
Impaired Financing Receivable, Income Recognized	12
PNCI, With an allowance recorded | Real estate 1 to 4 family | PNCI
Impaired Financing Receivable, Recorded Investment
Impaired Financing Receivable, Unpaid Principal Balance
Impaired Financing Receivable, Related Allowance
Impaired Financing Receivable, Average Recorded Investment
Impaired Financing Receivable, Income Recognized
Originated, With no related allowance recorded | Originated
Impaired Financing Receivable, Recorded Investment	11,076	10,492
Impaired Financing Receivable, Unpaid Principal Balance	11,912	11,289
Impaired Financing Receivable, Average Recorded Investment	10,686	10,647
Impaired Financing Receivable, Income Recognized	275	567
Originated, With no related allowance recorded | Commercial & Industrial | Originated
Impaired Financing Receivable, Recorded Investment	2,058	2,202
Impaired Financing Receivable, Unpaid Principal Balance	2,222	2,338
Impaired Financing Receivable, Average Recorded Investment	2,131	2,298
Impaired Financing Receivable, Income Recognized	54	120
Originated, With no related allowance recorded | Commercial real estate construction | Originated
Impaired Financing Receivable, Recorded Investment
Impaired Financing Receivable, Unpaid Principal Balance
Impaired Financing Receivable, Average Recorded Investment		6,187
Impaired Financing Receivable, Income Recognized		333
Originated, With no related allowance recorded | Commercial real estate | Originated
Impaired Financing Receivable, Recorded Investment	8,176	7,238
Impaired Financing Receivable, Unpaid Principal Balance	8,740	7,804
Impaired Financing Receivable, Average Recorded Investment	7,707	1,097
Impaired Financing Receivable, Income Recognized	207	59
Originated, With no related allowance recorded | Real estate 1 to 4 family | Originated
Impaired Financing Receivable, Recorded Investment	842	1,052
Impaired Financing Receivable, Unpaid Principal Balance	950	1,147
Impaired Financing Receivable, Average Recorded Investment	848	1,065
Impaired Financing Receivable, Income Recognized	14	55
PNCI, With no related allowance recorded | PNCI
Impaired Financing Receivable, Recorded Investment	6,230	3,428
Impaired Financing Receivable, Unpaid Principal Balance	7,297	3,776
Impaired Financing Receivable, Average Recorded Investment	8,718	3,777
Impaired Financing Receivable, Income Recognized	237	27
PNCI, With no related allowance recorded | Commercial & Industrial | PNCI
Impaired Financing Receivable, Recorded Investment
Impaired Financing Receivable, Unpaid Principal Balance
Impaired Financing Receivable, Average Recorded Investment
Impaired Financing Receivable, Income Recognized
PNCI, With no related allowance recorded | Commercial real estate construction | PNCI
Impaired Financing Receivable, Recorded Investment	395
Impaired Financing Receivable, Unpaid Principal Balance	588
Impaired Financing Receivable, Average Recorded Investment	593
Impaired Financing Receivable, Income Recognized
PNCI, With no related allowance recorded | Real estate multi-family | PNCI
Impaired Financing Receivable, Recorded Investment	1,192
Impaired Financing Receivable, Unpaid Principal Balance	1,281
Impaired Financing Receivable, Average Recorded Investment	2,693
Impaired Financing Receivable, Income Recognized	84
PNCI, With no related allowance recorded | Commercial real estate | PNCI
Impaired Financing Receivable, Recorded Investment	4,643	3,428
Impaired Financing Receivable, Unpaid Principal Balance	5,428	3,776
Impaired Financing Receivable, Average Recorded Investment	5,432	3,777
Impaired Financing Receivable, Income Recognized	153	27
PNCI, With no related allowance recorded | Real estate 1 to 4 family | PNCI
Impaired Financing Receivable, Recorded Investment
Impaired Financing Receivable, Unpaid Principal Balance
Impaired Financing Receivable, Average Recorded Investment
Impaired Financing Receivable, Income Recognized

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NOTE E - LOANS - Summary of Credit Quality Indicators (Details 6) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Purchased
Net loans	$ 531,238	$ 541,563
Originated
Purchased
Net loans	454,393	450,491
Originated | Pass
Purchased
Net loans	442,861	439,282
Originated | Special mention
Purchased
Net loans	2,878	2,372
Originated | Sub-standard
Purchased
Net loans	8,285	7,720
Originated | Doubtful
Purchased
Net loans	369	1,117
Originated | Commercial real estate
Purchased
Net loans	260,871	254,449
Originated | Commercial real estate | Pass
Purchased
Net loans	254,667	249,991
Originated | Commercial real estate | Special mention
Purchased
Net loans	2,355	2,372
Originated | Commercial real estate | Sub-standard
Purchased
Net loans	3,849	2,086
Originated | Commercial real estate | Doubtful
Purchased
Net loans
Originated | Real Estate Construction
Purchased
Net loans	21,775	14,866
Originated | Real Estate Construction | Pass
Purchased
Net loans	20,208	13,266
Originated | Real Estate Construction | Special mention
Purchased
Net loans	523
Originated | Real Estate Construction | Sub-standard
Purchased
Net loans	1,044	1,600
Originated | Real Estate Construction | Doubtful
Purchased
Net loans
Originated | Real estate multi family
Purchased
Net loans	41,374	39,176
Originated | Real estate multi family | Pass
Purchased
Net loans	41,374	39,176
Originated | Real estate multi family | Special mention
Purchased
Net loans
Originated | Real estate multi family | Sub-standard
Purchased
Net loans
Originated | Real estate multi family | Doubtful
Purchased
Net loans
Originated | Real estate 1 to 4 family
Purchased
Net loans	92,463	97,329
Originated | Real estate 1 to 4 family | Pass
Purchased
Net loans	91,088	95,579
Originated | Real estate 1 to 4 family | Special mention
Purchased
Net loans
Originated | Real estate 1 to 4 family | Sub-standard
Purchased
Net loans	1,108	1,470
Originated | Real estate 1 to 4 family | Doubtful
Purchased
Net loans	267	280
Originated | Commercial & Industrial
Purchased
Net loans	36,185	42,847
Originated | Commercial & Industrial | Pass
Purchased
Net loans	33,799	39,446
Originated | Commercial & Industrial | Special mention
Purchased
Net loans
Originated | Commercial & Industrial | Sub-standard
Purchased
Net loans	2,284	2,564
Originated | Commercial & Industrial | Doubtful
Purchased
Net loans	102	837
Originated | Consumer loans
Purchased
Net loans	1,725	1,824
Originated | Consumer loans | Pass
Purchased
Net loans	1,725	1,824
Originated | Consumer loans | Special mention
Purchased
Net loans
Originated | Consumer loans | Sub-standard
Purchased
Net loans
Originated | Consumer loans | Doubtful
Purchased
Net loans
Purchased Not credit impaired
Purchased
Net loans	84,935	98,538
Purchased Not credit impaired | Pass
Purchased
Net loans	68,742	76,995
Purchased Not credit impaired | Special mention
Purchased
Net loans	5,575	7,941
Purchased Not credit impaired | Sub-standard
Purchased
Net loans	10,477	13,602
Purchased Not credit impaired | Doubtful
Purchased
Net loans	141
Purchased Not credit impaired | Commercial real estate
Purchased
Net loans	42,582	48,009
Purchased Not credit impaired | Commercial real estate | Pass
Purchased
Net loans	30,618	30,600
Purchased Not credit impaired | Commercial real estate | Special mention
Purchased
Net loans	5,575	7,902
Purchased Not credit impaired | Commercial real estate | Sub-standard
Purchased
Net loans	6,389	9,507
Purchased Not credit impaired | Commercial real estate | Doubtful
Purchased
Net loans
Purchased Not credit impaired | Real Estate Construction
Purchased
Net loans	3,611	3,594
Purchased Not credit impaired | Real Estate Construction | Pass
Purchased
Net loans	1,185
Purchased Not credit impaired | Real Estate Construction | Special mention
Purchased
Net loans		39
Purchased Not credit impaired | Real Estate Construction | Sub-standard
Purchased
Net loans	2,285	3,555
Purchased Not credit impaired | Real Estate Construction | Doubtful
Purchased
Net loans	141
Purchased Not credit impaired | Real estate multi family
Purchased
Net loans	14,580	18,828
Purchased Not credit impaired | Real estate multi family | Pass
Purchased
Net loans	14,580	18,828
Purchased Not credit impaired | Real estate multi family | Special mention
Purchased
Net loans
Purchased Not credit impaired | Real estate multi family | Sub-standard
Purchased
Net loans
Purchased Not credit impaired | Real estate multi family | Doubtful
Purchased
Net loans
Purchased Not credit impaired | Real estate 1 to 4 family
Purchased
Net loans	12,608	15,390
Purchased Not credit impaired | Real estate 1 to 4 family | Pass
Purchased
Net loans	10,805	14,850
Purchased Not credit impaired | Real estate 1 to 4 family | Special mention
Purchased
Net loans
Purchased Not credit impaired | Real estate 1 to 4 family | Sub-standard
Purchased
Net loans	1,803	540
Purchased Not credit impaired | Real estate 1 to 4 family | Doubtful
Purchased
Net loans
Purchased Not credit impaired | Commercial & Industrial
Purchased
Net loans	11,554	12,717
Purchased Not credit impaired | Commercial & Industrial | Pass
Purchased
Net loans	11,554	12,717
Purchased Not credit impaired | Commercial & Industrial | Special mention
Purchased
Net loans
Purchased Not credit impaired | Commercial & Industrial | Sub-standard
Purchased
Net loans
Purchased Not credit impaired | Commercial & Industrial | Doubtful
Purchased
Net loans
Credit impaired
Purchased
Net loans	2,025	1,888
Credit impaired | Commercial real estate
Purchased
Net loans	1,366	1,402
Credit impaired | Real Estate Construction
Purchased
Net loans	588	486
Credit impaired | Real estate multi family
Purchased
Net loans	48
Credit impaired | Real estate 1 to 4 family
Purchased
Net loans	$ 23

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NOTE F - FAIR VALUE MEASUREMENT - Fair Value Measurements of Financial Assets on Recurring Basis (Details 2) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2012	Dec. 31, 2011
Financial assets:
Cash and cash equivalents	$ 23,698	$ 27,861	$ 44,856	$ 38,474
Cash and cash equivalents	23,698	27,861
Interest-bearing time deposits with financial institutions	8,473	13,216
Interest-bearing time deposits with financial institutions	8,638	13,216
Securities available for sale	281,422	234,945
Securities available for sale	281,422	234,945
Loans	541,353	550,917
Loans	544,609	547,740
Bank-owned life insurance	11,975	11,785
Bank-owned life insurance	11,975	11,785
Other equity securities	5,300	5,464
Other equity securities	5,300	5,464
Accrued interest receivable	3,886	3,760
Accrued interest receivable	3,886	3,760
Financial liabilities:
Deposits	802,800	768,352
Deposits	803,245	769,043
Federal Home Loan Bank advances	501	1,220
Federal Home Loan Bank advances	501	1,221
Accrued interest payable	298	349
Accrued interest payable	298	349
Off-balance-sheet liabilities:
Undisbursed loan commitments, lines of credit, standby letters of credit and Mastercard lines of credit	1,215	1,026
Fair Value, Inputs, Level 1
Financial assets:
Cash and cash equivalents	23,698	27,861
Securities available for sale	7,173	7,280
Fair Value, Inputs, Level 2
Financial assets:
Interest-bearing time deposits with financial institutions	8,638	13,216
Securities available for sale	274,249	227,665
Accrued interest receivable	3,886	3,760
Financial liabilities:
Deposits	803,245	769,043
Federal Home Loan Bank advances	501	1,221
Accrued interest payable	298	349
Fair Value, Inputs, Level 3
Financial assets:
Loans	544,609	547,740
Bank-owned life insurance	11,975	11,785
Other equity securities	5,300	5,464
Off-balance-sheet liabilities:
Undisbursed loan commitments, lines of credit, standby letters of credit and Mastercard lines of credit	$ 1,215	$ 1,026

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CONSOLIDATED BALANCE SHEETS (UNAUDITED)(Parentheticals) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Statement Of Financial Position [Abstract]
Allowance for loan losses (in dollars)	$ 9,745	$ 9,124
Preferred stock - series C - par value (in dollars per share)
Preferred stock - series C - shares authorized	9,450	9,450
Preferred stock - series C - outstanding	9,450	9,450
Preferred Stock, series C, Liquidation preference per share (in dollars per share)	$ 1,000	$ 1,000
Common stock, no par value (in dollars per share)
Common stock, shares authorized	10,000,000	10,000,000
Common stock, shares issued	3,760,305	3,698,612
Common stock, shares outstanding	3,760,305	3,698,612

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NOTE G - PREFERRED STOCK

6 Months Ended

Jun. 30, 2013

Stockholders' Equity Note [Abstract]

PREFERRED STOCK

NOTE G – PREFERRED STOCK

On September 15, 2011, Preferred Stock was issued to the U. S. Treasury as part of the Treasury’s Small Business Lending Fund (“SBLF”), as Preferred Stock – Series C – Non-Cumulative. The initial dividend rate was 5%. Depending on the volume of our small business lending, the dividend rate can be reduced to as low as one percent. If lending does not increase in the first two years, the dividend rate will increase to seven percent. After 4.5 years, the dividend rate will increase to nine percent if the Company has not repaid the SBLF funding. The dividend rate at June 30, 2013 was 5%.

On May 6, 2013, 25% or $3,150,000 of the original $12,600,000 was redeemed.

This program does not contain any of the various restrictions (including restrictions related to the payment of dividends to Common Stockholders) that the Treasury’s Capital Purchase Program TARP program required. The Series A and B Preferred Stock, which contained a blended yield of 6.83% to the expected repayment date, were paid off in full and canceled with the proceeds received from the U. S. Treasury’s SBLF investment.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (LOSS) (UNAUDITED) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Statement Of Other Comprehensive Income [Abstract]
Net earnings	$ 1,379	$ 1,228	$ 2,309	$ 2,516
Unrealized holding (loss) gain on available-for-sale securities, net of tax	(4,005)	631	(4,423)	648
Reclassification adjustment for gain on available-for-sale securities sold, net of tax of $30 and $47 for three and six months ended June 30, 2013, and $133 and $332 for three and six months ended June 30, 2012, respectively	(43)	(192)	(68)	(477)
Total comprehensive earnings (loss)	$ (2,669)	$ 1,667	$ (2,182)	$ 2,687

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CONSOLIDATED BALANCE SHEETS (UNAUDITED) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
ASSETS
Cash and due from banks	$ 23,698	$ 27,861
Interest-bearing time deposits with financial institutions	8,473	13,216
Securities available-for-sale, at fair value	281,422	234,945
Loans, net of deferred loan fees and allowance for loan losses of $9,745 and $9,124 on June 30, 2013 and December 31, 2012	531,238	541,563
Bank premises, equipment, and leasehold improvements, net	12,699	12,706
Bank owned life insurance	11,975	11,785
Other equity securities	5,300	5,464
Accrued interest receivable	3,886	3,760
Other real estate owned, net	6,675	6,650
Goodwill	1,841	1,841
Prepaid expenses	718	1,372
Other assets	13,563	14,177
Total assets	901,488	875,340
Deposits
Demand, noninterest bearing	192,825	178,384
Demand, interest bearing	76,544	75,465
Savings and money market	385,017	343,437
Time	148,414	171,066
Total deposits	802,800	768,352
Federal Home Loan Bank advances	501	1,220
Accrued expenses and other liabilities	8,096	10,410
Total liabilities	811,397	779,982
Stockholders' equity
Preferred stock - series C - no par value, authorized and outstanding 9,450 shares (liquidation preference of $1,000 per share)	9,450	12,600
Common stock, no par value, authorized 10,000,000 shares; issued and outstanding 3,760,305 shares at June 30, 2013 and 3,698,612 shares at December 31, 2012	53,682	52,610
Retained earnings	27,582	26,280
Accumulated other comprehensive earnings, net of tax	(623)	3,868
Total stockholders' equity	90,091	95,358
Total liabilities and stockholders' equity	$ 901,488	$ 875,340

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NOTE E - LOANS - Loans On NonAccrual Status (Details 3) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012 Loan On Non Accrual Status 31 December 2012	Jun. 30, 2013 Loans On Non Accrual Status 31 March 2013	Dec. 31, 2012 Commercial & Industrial Loan On Non Accrual Status 31 December 2012	Jun. 30, 2013 Commercial & Industrial Loans On Non Accrual Status 31 March 2013	Dec. 31, 2012 Real estate - construction Loan On Non Accrual Status 31 December 2012	Jun. 30, 2013 Real estate - construction Loans On Non Accrual Status 31 March 2013	Dec. 31, 2012 Commercial real estate Loan On Non Accrual Status 31 December 2012	Jun. 30, 2013 Commercial real estate Loans On Non Accrual Status 31 March 2013	Dec. 31, 2012 Real estate multi family Loan On Non Accrual Status 31 December 2012	Jun. 30, 2013 Real estate multi family Loans On Non Accrual Status 31 March 2013	Dec. 31, 2012 Real estate 1 to 4 family Loan On Non Accrual Status 31 December 2012	Jun. 30, 2013 Real estate 1 to 4 family Loans On Non Accrual Status 31 March 2013	Dec. 31, 2012 Consumer loans Loan On Non Accrual Status 31 December 2012	Jun. 30, 2013 Consumer loans Loans On Non Accrual Status 31 March 2013
Financing receivable	$ 12,474	$ 11,485	$ 2,618	$ 2,353	$ 1,898	$ 591	$ 6,251	$ 6,515		$ 650	$ 1,707	$ 1,375		$ 1

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NOTE D - SECURITIES AVAILABLE FOR SALE - Summary of Gross Unrealized Losses on Available-for-Sale Securities (Details 1) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Available-for-Sale Securities, Total Fair Value	$ 124,307	$ 21,165
Available-for-Sale Securities, Less than 12 Months Unrealized Losses	(4,103)	(197)
Available-for-Sale Securities, Total Fair Value	1,613	478
Available-for-Sale Securities, 12 Months or Longer Unrealized Losses	(53)	(22)
Available-for-Sale Securities, Total Fair Value	125,920	21,643
Available-for-Sale Securities, Total Unrealized Losses	(4,156)	(219)
U.S. Treasury securities
Available-for-Sale Securities, Total Fair Value	2,017
Available-for-Sale Securities, Less than 12 Months Unrealized Losses	(45)
Available-for-Sale Securities, Total Fair Value
Available-for-Sale Securities, 12 Months or Longer Unrealized Losses
Available-for-Sale Securities, Total Fair Value	2,017
Available-for-Sale Securities, Total Unrealized Losses	(45)
Obligations of U.S. government agencies
Available-for-Sale Securities, Total Fair Value	40,567	4,093
Available-for-Sale Securities, Less than 12 Months Unrealized Losses	(753)	(7)
Available-for-Sale Securities, Total Fair Value
Available-for-Sale Securities, 12 Months or Longer Unrealized Losses
Available-for-Sale Securities, Total Fair Value	40,567	4,093
Available-for-Sale Securities, Total Unrealized Losses	(753)	(7)
Mortgage-backed securities
Available-for-Sale Securities, Total Fair Value	40,791	8,580
Available-for-Sale Securities, Less than 12 Months Unrealized Losses	(2,050)	(137)
Available-for-Sale Securities, Total Fair Value
Available-for-Sale Securities, 12 Months or Longer Unrealized Losses
Available-for-Sale Securities, Total Fair Value	40,791	8,580
Available-for-Sale Securities, Total Unrealized Losses	(2,050)	(137)
Obligations of states and political subdivisions
Available-for-Sale Securities, Total Fair Value	29,894	8,492
Available-for-Sale Securities, Less than 12 Months Unrealized Losses	(1,100)	(53)
Available-for-Sale Securities, Total Fair Value	1,115
Available-for-Sale Securities, 12 Months or Longer Unrealized Losses	(51)
Available-for-Sale Securities, Total Fair Value	31,009	8,492
Available-for-Sale Securities, Total Unrealized Losses	(1,151)	(53)
Corporate debt
Available-for-Sale Securities, Total Fair Value	11,038
Available-for-Sale Securities, Less than 12 Months Unrealized Losses	(155)
Available-for-Sale Securities, Total Fair Value	498	478
Available-for-Sale Securities, 12 Months or Longer Unrealized Losses	(2)	(22)
Available-for-Sale Securities, Total Fair Value	11,536	478
Available-for-Sale Securities, Total Unrealized Losses	$ (157)	$ (22)

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NOTE G - PREFERRED STOCK (Detail Textuals) (USD $) In Thousands, unless otherwise specified				0 Months Ended
	Jun. 30, 2013	May 06, 2013	Dec. 31, 2012	Sep. 15, 2011 Series A Preferred Stock	Sep. 15, 2011 Series B Preferred Stock	Sep. 15, 2011 Payment Terms First Five Years Series C Preferred Stock	Sep. 15, 2011 Payment Terms First Two Years Series C Preferred Stock	Sep. 15, 2011 Payment Terms Four and Half Years and After Series C Preferred Stock
Preferred stock, dividend rate, percentage				6.83%	6.83%	5.00%		9.00%
Preferred stock, dividend payment terms							Two years	4.5 Years
Preferred stock value	$ 9,450	$ 12,600	$ 12,600
Preferred stock, redemption amount		$ 3,150
Preferred stock, redemption amount percentage		2.50%

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NOTE F - FAIR VALUE MEASUREMENT - Fair Value Measurements Assets Measured On Recurring Basis (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
U. S. Treasury securities	$ 7,173	$ 7,280
Obligations of U.S. Government agencies	86,041	72,260
Mortgage-backed securities	77,183	55,180
Obligations of states and political subdivisions	83,790	81,609
Total assets measured at fair value	281,422	234,945
Fair Value, Inputs, Level 1
U. S. Treasury securities	7,173	7,280
Obligations of U.S. Government agencies
Mortgage-backed securities
Obligations of states and political subdivisions
Total assets measured at fair value	7,173	7,280
Fair Value, Inputs, Level 2
U. S. Treasury securities
Obligations of U.S. Government agencies	86,041	72,260
Mortgage-backed securities	77,183	55,180
Obligations of states and political subdivisions	83,790	81,609
Total assets measured at fair value	274,249	227,665
Fair Value, Inputs, Level 3
U. S. Treasury securities
Obligations of U.S. Government agencies
Mortgage-backed securities
Obligations of states and political subdivisions
Total assets measured at fair value
Corporate Debt
Corporate debt	27,235	18,616
Corporate Debt | Fair Value, Inputs, Level 1
Corporate debt
Corporate Debt | Fair Value, Inputs, Level 2
Corporate debt	27,235	18,616
Corporate Debt | Fair Value, Inputs, Level 3
Corporate debt

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NOTE F - FAIR VALUE MEASUREMENT - Fair Value of Assets on Non-Recurring Basis (Details 1) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Impaired loans	$ 544,609	$ 547,740
Other real estate owned	7,173	7,280
Total impaired assets measured at fair value	281,422	234,945
Quoted Prices in Active Markets for Identical Assets (Level 1)
Other real estate owned	7,173	7,280
Total impaired assets measured at fair value	7,173	7,280
Other Observable Inputs (Level 2)
Other real estate owned
Total impaired assets measured at fair value	274,249	227,665
Significant Unobservable Inputs (Level 3)
Impaired loans	544,609	547,740
Other real estate owned
Total impaired assets measured at fair value
Impaired Asset
Impaired loans	1,203	2,494
Other real estate owned		4,710
Total impaired assets measured at fair value	1,203	7,204
Impaired Asset | Quoted Prices in Active Markets for Identical Assets (Level 1)
Impaired loans
Other real estate owned
Impaired Asset | Other Observable Inputs (Level 2)
Impaired loans
Other real estate owned
Impaired Asset | Significant Unobservable Inputs (Level 3)
Impaired loans	1,203	2,494
Other real estate owned		$ 4,710

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NOTE F - FAIR VALUE MEASUREMENT

6 Months Ended

Jun. 30, 2013

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENT

NOTE F – FAIR VALUE MEASUREMENT

The following table presents information about the Company’s assets and liabilities measured at fair value as of June 30, 2013 and December 31, 2012, and indicates the fair value techniques used by the Company to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

The following tables present the recorded amounts of assets measured at fair value on a recurring basis:

			Fair Value Measurements
(Dollar amounts in thousands)			at June 30, 2013, Using
			Quoted Prices
			in Active
			Markets		Other		Significant
			for Identical		Observable		Unobservable
	Fair Value		Assets		Inputs		Inputs
Description	6/30/2013		(Level 1)		(Level 2)		(Level 3)
U.S. Treasury securities	$	7,173	$	7,173	$	—	$	—
Obligations of U.S. Government agencies		86,041		—		86,041		—
Mortgage-backed securities		77,183		—		77,183		—
Obligations of states and political subdivisions		83,790		—		83,790		—
Corporate debt		27,235		—		27,235		—
Total assets measured at fair value	$	281,422	$	7,173	$	274,249	$	—

			Fair Value Measurements
(Dollar amounts in thousands)			at December 31, 2012, Using
			Quoted Prices
			in Active
			Markets		Other		Significant
			for Identical		Observable		Unobservable
	Fair Value		Assets		Inputs		Inputs
Description	12/31/2012		(Level 1)		(Level 2)		(Level 3)
U.S. Treasury securities	$	7,280	$	7,280	$	—	$	—
Obligations of U.S. Government agencies		72,260		—		72,260		—
Mortgage-backed securities		55,180		—		55,180		—
Obligations of states and political subdivisions		81,609		—		81,609		—
Corporate debt		18,616		—		18,616		—
Total assets measured at fair value	$	234,945	$	7,280	$	227,665	$	—

The following tables present the recorded amounts of assets measured at fair value on a non-recurring basis:

			Fair Value Measurements
(Dollar amounts in thousands)			at June 30, 2013, Using
			Quoted Prices in
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
	Fair Value		Assets		Inputs		Inputs
Description	6/30/2013		(Level 1)		(Level 2)		(Level 3)
Impaired loans	$	1,203	$	—	$	—	$	1,203
Total impaired assets measured at fair value	$	1,203	$	—	$	—	$	1,203

			Fair Value Measurements
(Dollar amounts in thousands)			at December 31, 2012, Using
			Quoted Prices in
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
	Fair Value		Assets		Inputs		Inputs
Description	12/31/2012		(Level 1)		(Level 2)		(Level 3)
Impaired loans	$	2,494	$	—	$	—	$	2,494
Other real estate owned		4,710		—		—		4,710
Total impaired assets measured at fair value	$	7,204	$	—	$	—	$	7,204

The Bank does not record loans at fair value. However, from time to time, if a loan is considered impaired, a specific allocation within the allowance for loan losses may be required. Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. The fair value of impaired loans is estimated using one of several methods, including collateral value, market value of similar debt, enterprise value, liquidation value and cash flows. Those impaired loans not requiring an allowance represent loans for which the value of the expected repayments or collateral exceed the recorded investments in such loans. Impaired loans where an allowance is established based on the fair value of collateral or when the impaired loan has been written down to fair value require classification in the fair value hierarchy. If the fair value of the collateral is based on a non-observable market price or a current appraised value, the Bank records the impaired loans as nonrecurring Level 3. When an appraised value is not available, or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, the Bank also records the impaired loans as nonrecurring Level 3.

Other real estate owned is carried at the lower of historical cost or fair market value less costs to sell. An appraisal (a Level 3 valuation) is obtained at the time the Bank acquires property through the foreclosure process. Any loan balance outstanding that exceeds the appraised value of the property is charged off against the allowance for loan loss at the time the property is acquired. Subsequent to acquisition, the Bank updates the property’s appraised value on at least an annual basis. If the value of the property has declined during the year, a loss due to valuation impairment is recorded along with a corresponding reduction in the book carrying value of the property.

The Company obtains third party appraisals on its impaired loans held-for-investment and foreclosed assets to determine fair value. Generally, the third party appraisals apply the “market approach,” which is a valuation technique that uses prices and other relevant information generated by market transactions involving identical or comparable (that is, similar) assets, liabilities, or a group of assets and liabilities, such as a business. Adjustments are then made based on the type of property, age of appraisal, current status of property and other related factors to estimate the current value of collateral.

Fair Values of Financial Instruments.

The following methods and assumptions were used by the Company in estimating the fair value disclosures for financial instruments.

Cash and Cash Equivalents.

The carrying amounts reported in the balance sheet for cash and short-term instruments are a reasonable estimate of fair value, which will approximate their historical cost.

Securities Available-for-Sale.

Fair values for investment securities are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments.

Loans Receivable.

For variable-rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values and credit risk factors. For fixed rate loans, fair values are based on discounted cash flows, credit risk factors, and liquidity factors.

Deposit liabilities.

The fair values disclosed for demand deposits (e.g., interest and non-interest checking, savings, and money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). The fair values for fixed-rate certificates of deposit are based on discounted cash flows.

Federal Home Loan Bank Advances.

The fair values of Federal Home Loan Bank Advances are based on discounted cash flows. The discount rate is equal to the market rate currently offered on similar products.

Accrued Interest Receivable and Payable

The interest receivable and payable balances approximate their fair value due to the short-term nature of their settlement dates.

Undisbursed loan commitments, lines of credit, Mastercard line and standby letters of credit.

The fair value of these off-balance sheet items are based on discounted cash flows of expected fundings.

The Bank has excluded non-financial assets and non-financial liabilities defined by the Codification (ASC 820-10-15-A), such as Bank premises and equipment, deferred taxes and other liabilities. In addition, the Bank has not disclosed the fair value of financial instruments specifically excluded from disclosure requirements of the Financial Instruments Topic of the Codification (ASC 825-10-50-8), such as Bank-owned life insurance policies.

The following table provides summary information on the estimated fair value of financial instruments at June 30, 2013:

(Dollar amounts in thousands)	Carrying		Fair		Fair value measurements
	amount		value		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	23,698	$	23,698	$	23,698
Interest-bearing time deposits with financial institutions	$	8,473	$	8,638			$	8,638
Securities available for sale		281,422		281,422		7,173		274,249
Loans		541,353		544,609					$	544,609
Bank-owned life insurance		11,975		11,975						11,975
Other equity securities		5,300		5,300						5,300
Accrued interest receivable		3,886		3,886				3,886
Financial liabilities:
Deposits		802,800		803,245				803,245
Federal Home Loan Bank advances		501		501				501
Accrued interest payable		298		298				298
Off-balance-sheet liabilities:
Undisbursed loan commitments, lines of credit, standby letters of credit and Mastercard lines of credit		—		1,215						1,215

The carrying amount of loans include $11,485,000 of nonaccrual loans (loans that are not accruing interest) as of June 30, 2013. The fair value of nonaccrual loans is based on the collateral values that secure the loans or the cash flows expected to be received.

The following table provides summary information on the estimated fair value of financial instruments at December 31, 2012:

(Dollar amounts in thousands)	Carrying		Fair		Fair value measurements
	amount		value		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	27,861	$	27,861	$	27,861
Interest-bearing time deposits with financial institutions	$	13,216		13,216			$	13,216
Securities available for sale		234,945		234,945		7,280		227,665
Loans		550,917		547,740					$	547,740
Bank-owned life insurance		11,785		11,785						11,785
Other equity securities		5,464		5,464						5,464
Accrued interest receivable		3,760		3,760				3,760
Financial liabilities:
Deposits		768,352		769,043				769,043
Federal Home Loan Bank advances		1,220		1,221				1,221
Accrued interest payable		349		349				349
Off-balance-sheet liabilities:
Undisbursed loan commitments, lines of credit, standby letters of credit and Mastercard lines of credit		—		1,026						1,026

The carrying amount of loans include $12,474,000 of nonaccrual loans (loans that are not accruing interest) as of December 31, 2012. The fair value of nonaccrual loans is based on the collateral values that secure the loans or the cash flows expected to be received.

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NOTE E - LOANS - Summary of Loan Modifications (Details 4) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013 Contract	Dec. 31, 2012 Contract
Loan Categories, Number of Contracts	8	13
Loan Categories, Pre-Modification Outstanding Recorded Investment	$ 5,216	$ 5,578
Loan Categories, Post-Modification Outstanding Recorded Investment	5,216	5,578
Commercial & Industrial
Loan Categories, Number of Contracts		7
Loan Categories, Pre-Modification Outstanding Recorded Investment		2,723
Loan Categories, Post-Modification Outstanding Recorded Investment		2,723
Real Estate Construction
Loan Categories, Number of Contracts	1
Loan Categories, Pre-Modification Outstanding Recorded Investment	196
Loan Categories, Post-Modification Outstanding Recorded Investment	196
Real estate 1 to 4 family
Loan Categories, Number of Contracts	2	3
Loan Categories, Pre-Modification Outstanding Recorded Investment	739	1,446
Loan Categories, Post-Modification Outstanding Recorded Investment	739	1,446
Real estate multi family
Loan Categories, Number of Contracts	1
Loan Categories, Pre-Modification Outstanding Recorded Investment	544
Loan Categories, Post-Modification Outstanding Recorded Investment	544
Commercial real estate
Loan Categories, Number of Contracts	4	3
Loan Categories, Pre-Modification Outstanding Recorded Investment	3,737	1,409
Loan Categories, Post-Modification Outstanding Recorded Investment	$ 3,737	$ 1,409

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NOTE C - EARNINGS PER SHARE CALCULATION (Tables)

6 Months Ended

Jun. 30, 2013

Earnings Per Share [Abstract]

Schedule of earnings per share calculation

(All amounts in thousands)	Three months ended				Six months ended
	June 30,				June 30,
	2013		2012		2013		2012
Net earnings	$	1,379	$	1,228	$	2,309	$	2,516
Dividends and discount accretion on preferred stock		172		157		330		343
Net earnings available to common shareholders	$	1,207	$	1,071	$	1,979	$	2,173
Average number of shares outstanding		3,729		3,690		3,722		3,688
Effect of dilutive options		84		62		88		51
Average number of shares outstanding used to calculate diluted earnings per share		3,813		3,752		3,810		3,739

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NOTE E - LOANS

6 Months Ended

Jun. 30, 2013

Debt Disclosure [Abstract]

LOANS

NOTE E – LOANS

Loans are summarized as follows at June 30, 2013 and December 31, 2012:

									Total
(Dollar amounts in thousands)	FNB								Balance
	Bancorp								June 30
June 30, 2013:	Originated			PNCI			PCI		2013
Commercial real estate	$	260,871		$	42,582		$	1,366	$	304,819
Real estate construction		21,775			3,611			588		25,974
Real estate multi-family		41,374			14,580			48		56,002
Real estate 1 to 4 family		92,463			12,608			23		105,094
Commercial & industrial		36,185			11,554			—		47,739
Consumer loans		1,725			—			—		1,725
Gross loans		454,393			84,935			2,025		541,353
Net deferred loan fees		(370	)		—			—		(370	)
Allowance for loan losses		(9,707	)		(38	)		—		(9,745	)
Net loans	$	444,316		$	84,897		$	2,025	$	531,238

(Dollar amounts in thousands)								Total
	FNB							Balance
	Bancorp							December 31
December 31, 2012:	Originated			PNCI		PCI		2012
Commercial real estate	$	254,449		$	48,009	$	1,402	$	303,860
Real estate construction		14,866			3,594		486		18,946
Real estate multi-family		39,176			18,828		—		58,004
Real estate 1 to 4 family		97,329			15,390		—		112,719
Commercial & industrial		42,847			12,717		—		55,564
Consumer loans		1,824			—		—		1,824
Gross loans		450,491			98,538		1,888		550,917
Net deferred loan fees		(230	)		—		—		(230	)
Allowance for loan losses		(9,124	)		—		—		(9,124	)
Net loans	$	441,137		$	98,538	$	1,888	$	541,563

Note: PNCI means Purchased, Not Credit Impaired. PCI means Purchased, Credit Impaired.  

Allowance for Credit Losses
For the Three Months Ended June 30, 2013
(Dollar amounts in thousands)								Real		Real
								Estate		Estate
	Commercial			Commercial		Real Estate		Multi		1 to
	& industrial			Real estate		Construction		family		4 family			Consumer		Total
Allowance for credit losses
Beginning balance	$	1,577		$	4,930	$	653	$	281	$	1,862		$	54	$	9,357
Charge-offs		—			—		—		—		(125	)		—		(125	)
Recoveries		—			2		—		—		—			1		3
Provision		(86	)		379		72		48		91			6		510
Ending balance	$	1,491		$	5,311	$	725	$	329	$	1,828		$	61	$	9,745
Ending balance: individually evaluated for impairment	$	254		$	189	$	—	$	—	$	237		$	1	$	681
Ending balance: collectively evaluated for impairment	$	1,237		$	5,122	$	725	$	329	$	1,591		$	60	$	9,064

Allowance for Credit Losses
For the Six Months Ended June 30, 2013
(Dollar amounts in thousands)										Real		Real
										Estate		Estate
	Commercial			Commercial			Real Estate			Multi		1 to
	& industrial			Real estate			Construction			family		4 family			Consumer			Total
Allowance for credit losses
Beginning balance	$	1,875		$	4,812		$	857		$	—	$	1,516		$	64		$	9,124
Charge-offs		—			(239	)		(81	)		—		(244	)		(1	)		(565	)
Recoveries		70			4			—			—		1			1			76
Provision		(454	)		754			(34	)		329		518			(3	)		1,110
Ending balance	$	1,491		$	5,331		$	742		$	329	$	1,791		$	61		$	9,745
Ending balance: individually evaluated for impairment	$	254		$	210		$	17		$	—	$	237		$	1		$	702
Ending balance: collectively evaluated for impairment	$	1,237		$	5,121		$	742		$	329	$	1,554		$	60		$	9,043

Recorded Investment in Loans at June 30, 2013
(Dollar amounts in thousands)							Real		Real
							Estate		Estate
	Commercial		Commercial		Real Estate		Multi		1 to
	& industrial		Real Estate		Construction		family		4 family		Consumer		Total
Loans:
Ending balance	$	47,739	$	304,819	$	25,974	$	56,002	$	105,094	$	1,725	$	541,353
Ending balance: individually evaluated for impairment	$	3,795	$	19,244	$	591	$	1,192	$	3,395	$	1	$	28,218
Ending balance: collectively evaluated for impairment	$	43,944	$	285,575	$	25,383	$	54,810	$	101,699	$	1,724	$	513,135

Allowance for Credit Losses
For the Three Months Ended June 30, 2012
(Dollar amounts in thousands)	Commercial			Real Estate			Real Estate			Multi			1 to
	& industrial			Commercial			Construction			family			4 family		Consumer			Total
Allowance for credit losses
Beginning balance	$	1,628		$	3,592		$	1,055		$	151		$	1,798	$	63		$	8,287
Charge-offs		(312	)		—			(54	)		—			—		(1	)		(367	)
Recoveries		—			(2	)		—			—			139		1			138
Provision		418			162			(167	)		(102	)		89		0			400
Ending balance	$	1,734		$	3,752		$	834		$	49		$	2,026	$	63		$	8,458
Ending balance: individually evaluated for impairment	$	505		$	477		$	75		$	42		$	157	$	1		$	1,257
Ending balance: collectively evaluated for impairment	$	1,229		$	3,275		$	759		$	7		$	1,869	$	62		$	7,201

Allowance for Credit Losses
For the Six Months Ended June 30, 2012
(Dollar amounts in thousands)	Commercial			Real Estate			Real Estate			Multi			1 to
	& industrial			Commercial			Construction			family			4 family			Consumer			Total
Allowance for credit losses
Beginning balance	$	1,618		$	4,745		$	1,171		$	671		$	1,592		$	100		$	9,897
Charge-offs		(1,487	)		(738	)		(54	)		—			(109	)		(4	)		(2,392	)
Recoveries		1			139			—			—			9			4			153
Provision		1,602			(394	)		(283	)		(622	)		534			(37	)		800
Ending balance	$	1,734		$	3,752		$	834		$	49		$	2,026		$	63		$	8,458
Ending balance: individually evaluated for impairment	$	505		$	477		$	75		$	42		$	157		$	1		$	1,257
Ending balance: collectively evaluated for impairment	$	1,229		$	3,275		$	759		$	7		$	1,869		$	62		$	7,201

Recorded Investment in Loans at June 30, 2012
(Dollar amounts in thousands)							Real		Real
							Estate		Estate
	Commercial		Commercial		Real Estate		Multi		1 to
	& industrial		Real Estate		Construction		family		4 family		Consumer		Total
Loans:
Ending balance	$	53,562	$	244,753	$	25,644	$	39,960	$	95,886	$	2,037	$	461,842
Ending balance: individually evaluated for impairment	$	7,082	$	9,471	$	7,238	$	3,242	$	6,443	$	10	$	33,486
Ending balance: collectively evaluated for impairment	$	46,480	$	235,282	$	18,406	$	36,718	$	89,443	$	2,027	$	428,356

	Impaired Loans-Originated
	As of and for the six months ended June 30, 2013
(Dollar amounts in thousands)			Unpaid				Average
	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized
With no related allowance recorded
Commercial and industrial	$	2,058	$	2,222	$	—	$	2,131	$	54
Commercial real estate construction		—		—		—		—		—
Commercial real estate		8,176		8,740		—		7,707		207
Residential - 1 to 4 family		842		950		—		848		14
Total		11,076		11,912		—		10,686		275
With an allowance recorded
Commercial and industrial	$	1,737	$	2,177	$	254	$	1,756	$	6
Commercial real estate construction		—		—		—		—		—
Commercial real estate		6,063		6,302		189		5,748		117
Residential - 1 to 4 family		2,553		2,559		237		2,614		54
Consumer		1		1		1		1		—
Total		10,354		11,039		681		10,119		177
Total
Commercial and industrial	$	3,795	$	4,399	$	254	$	3,887	$	60
Commercial real estate construction		—		—		—		—		—
Commercial real estate		14,239		15,042		189		13,455		324
Residential - 1 to 4 family		3,395		3,509		237		3,462		68
Consumer		1		1		1		1		—
Grand total	$	21,430	$	22,951	$	681	$	20,805	$	452

	Impaired Loans-PNCI
	As of and for the six months ended June 30, 2013
(Dollar amounts in thousands)			Unpaid				Average
	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized
With no related allowance recorded
Real estate-multi family	$	1,192	$	1,281	$	—	$	2,693	$	84
Commercial real estate		4,643		5,428		—		5,432		153
Commercial real estate construction		395		588		—		593		—
Total		6,230		7,297		—		8,718		237
With an allowance recorded
Commercial real estate	$	362	$	448	$	21	$	447	$	12
Commercial real estate construction		196		200		17		200		—
Total		558		648		38		647		12
Total
Commercial real estate construction	$	591	$	788	$	17	$	793	$	—
Real estate-multi family		1,192		1,281		—		2,693		84
Commercial real estate		5,005		5,876		21		5,879		165
Grand total	$	6,788	$	7,945	$	38	$	9,365	$	249

	Impaired Loans-Originated
	As of and for the year ended December 31, 2012
(Dollar amounts in thousands)			Unpaid				Average
	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized
With no related allowance recorded
Commercial and industrial	$	2,202	$	2,338	$	—	$	2,298	$	120
Commercial real estate construction		—		—		—		6,187		333
Commercial real estate		7,238		7,804		—		1,097		59
Residential - 1 to 4 family		1,052		1,147		—		1,065		55
Total		10,492		11,289		—		10,647		567
With an allowance recorded
Commercial and industrial	$	1,965	$	2,427	$	384	$	2,328	$	30
Commercial real estate construction		—		—		—		—		—
Commercial real estate		5,433		5,433		415		5,685		240
Residential - 1 to 4 family		3,719		3,722		306		3,283		150
Total		11,117		11,582		1,105		11,296		420
Total
Commercial and industrial	$	4,167	$	4,765	$	384	$	4,626	$	150
Commercial real estate construction		—		—		—		6,187		333
Commercial real estate		12,671		13,237		415		6,782		299
Residential - 1 to 4 family		4,771		4,869		306		4,348		205
Grand total	$	21,609	$	22,871	$	1,105	$	21,943	$	987

	Impaired Loans-PNCI
	As of and for the year ended December 31, 2012
			Unpaid				Average
	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized
With no related allowance recorded
Commercial and industrial	$	—	$	—	$	—	$	—	$	—
Commercial real estate construction		—		—		—		—		—
Commercial real estate		3,428		3,776		—		3,777		27
Residential - 1 to 4 family		—		—		—		—		—
Total		3,428		3,776		—		3,777		27
With an allowance recorded
Commercial and industrial
Commercial real estate construction	$	681	$	798	$	232	$	798	$	4
Commercial real estate		—		—		—		—		—
Residential - 1 to 4 family		—		—		—		—		—
Total		681		798		232		798		4
Total
Commercial and industrial	$	—	$	—	$	—	$	—	$	—
Commercial real estate construction		681		798		232		798		4
Commercial real estate		3,428		3,776		—		3,777		27
Residential - 1 to 4 family		—		—		—		—		—
Grand total	$	4,109	$	4,574	$	232	$	4,575	$	31

Nonaccrual loans totaled $11,485,000 and $12,474,000 as of June 30, 2013 and December 31, 2012. The difference between impaired loans and nonaccrual loans represents loans that are restructured and performing under modified loan agreements, and where principal and interest is considered to be collectible.

	Loans on Nonaccrual Status as of
(Dollar amounts in thousands)	June 30,		December 31,
	2013		2012
Commercial and industrial	$	2,353	$	2,618
Real estate - construction		591		1,898
Commercial real estate		6,515		6,251
Real estate multi family		650		—
Real estate 1 to 4 family		1,375		1,707
Consumer		1		—
Total	$	11,485	$	12,474

Interest income on impaired loans of $701,000 was recognized for cash payments received during the six months ended June 30, 2013, and $987,000 was recognized for cash payments received during the year ended December 31, 2012, respectively. The amount of interest on impaired loans not collected for the six months ended June 30, 2013 was $388,000 and for the year ended December 31, 2012 was $1,358,000. The cumulative amount of unpaid interest on impaired loans was $3,162,000 for the six months ended June 30, 2013, and $2,774,000 for the year ended December 31, 2012. Total outstanding principal of troubled debt restructured loans as of June 30, 2013 was $5,216,000, of which $196,000 was real estate construction loans, $739,000 was residential loans, $544,000 was real estate multi-family loans, and $3,737,000 was commercial real estate loans. Total outstanding principal of troubled debt restructured loans at December 31, 2012 was $5,578,000, of which $2,723,000 was commercial loans, $1,446,000 was real estate one to four family, and $1,409,000 was commercial real estate loans.

Troubled Debt Restructurings

The Company reassessed all restructurings that occurred on or after the beginning of fiscal year 2011 for identification as troubled debt restructurings. The Company identified as troubled debt restructurings certain loans for which the allowance for credit losses had previously been measured under a general allowance for credit losses methodology (ASC 450-20). Upon identifying the reassessed loans as troubled debt restructurings, the Company also identified them as impaired under the guidance in ASC 310-10-35.

Modification Categories

The Company offers a variety of modifications to borrowers. The modification categories offered can generally be described in the following categories.

Rate Modification – A modification in which the interest rate is changed.

Term modification – A modification in which the maturity date, timing of payments, or frequency of payments is changed.

Interest Only Modification – A modification in which the loan is converted to interest only payments for a period of time.

Payment Modification – A modification in which the dollar amount of the payment is changed, other than an interest only modification described above.

As of June 30, 2013, there were no commitments for additional funding of troubled debt restructurings.

	Modifications
	For the six months ended June 30, 2013
			Pre-		Post-
			Modification		Modification
			Outstanding		Outstanding
	Number of		Recorded		Recorded
(Dollar amounts in thousands)	Contracts		Investment		Investment
Real Estate Construction		1	$	196	$	196
Real estate 1 to 4 family		2		739		739
Real estate multi-family		1		544		544
Commercial real estate		4		3,737		3,737
Total		8	$	5,216	$	5,216

As of June 30, 2013, no loans defaulted within twelve months following the date of restructure. All restructurings were a modification of interest rate and/or payment. There were no principal reductions granted.

	Modifications
	As of December 31, 2012
			Pre-		Post-
			Modification		Modification
			Outstanding		Outstanding
	Number of		Recorded		Recorded
(Dollar amounts in thousands)	Contracts		Investment		Investment
Commercial and industrial		7	$	2,723	$	2,723
Real estate 1 to 4 family		3		1,446		1,446
Commercial real estate		3		1,409		1,409
Total		13	$	5,578	$	5,578

As of December 31, 2012, no loans defaulted within the previous twelve months following the date of restructure. All restructurings were a modification of interest rate and/or payment. There were no principal reductions granted.

Risk rating system

Loans to borrowers graded as pass or pooled loans represent loans to borrowers of acceptable or better credit quality. They demonstrate sound financial positions, repayment capacity and credit history. They have an identifiable and stable source of repayment.

Special mention loans have potential weaknesses that deserve management’s attention. If left uncorrected these potential weaknesses may result in a deterioration of the repayment prospects for the asset or in the Bank’s credit position at some future date. These assets are “not adversely classified” and do not expose the Bank to sufficient risk to warrant adverse classification.

Substandard loans are inadequately protected by current sound net worth, paying capacity of the borrower, or pledged collateral. Loans are normally classified as Substandard when there are unsatisfactory characteristics causing more than acceptable levels of risk. A substandard loan normally has one or more well-defined weakness that could jeopardize the repayment of the debt. These well-defined weaknesses may include a) cash flow deficiency, which may jeopardize future payments; b) sale of non-collateral assets has become primary source of repayment; c) the borrower is bankrupt; or d) for any other reason, future repayment is dependent on court action.

Doubtful loans represent credits with weakness inherent in the Substandard classification and where collection or liquidation in full is highly questionable. To be classified Doubtful, there must be specific pending factors which prevent the Loan Review Officer from determining the amount of loss contained in the credit. When the amount of loss can be reasonably estimated, that amount is classified as “loss” and the remainder is classified as Substandard.

Commercial Real Estate Loans – Multi-Family

Our multi-family commercial real estate loans are secured by multi-family properties located primarily in San Mateo and San Francisco Counties. These loans are made to investors where our primary source of repayment is from cash flows generated by the properties, through rent collections. The borrowers’ promissory notes are secured with recorded liens on the underlying properties. The borrowers would normally also be required to personally guarantee repayment of the loans. The bank uses conservative underwriting standards in reviewing applications for credit. Generally, our borrowers have multiple sources of income, so if cash flow generated from the property declines, at least in the short term, the borrowers can normally cover these short term cash flow deficiencies from their available cash reserves. Risk of loss to the Bank is increased when there are cash flow decreases sufficiently large and for such a prolonged period of time that loan payments can no longer be made by the borrowers.

Commercial Real Estate Loans – Other

Commercial Real Estate loans consist of loans secured by non-farm, non-residential properties, including, but not limited to industrial, hotel, assisted care, retail, office and mixed use buildings. Our commercial real estate loans are made primarily to investors or small businesses where our primary source of repayment is from cash flows generated by the properties, either through rent collection or business profits. The borrower’s promissory notes are secured with recorded liens on the underlying property. The borrowers would normally also be required to personally guarantee repayment of the loan.

The Bank uses conservative underwriting standards in reviewing applications for credit. Generally, our borrowers have multiple sources of income, so if cash flow generated from the property declines, at least in the short term, the borrowers can normally cover these short term cash flow deficiencies from their available cash reserves. Risk of loss to the Bank is increased when there are cash flow decreases sufficiently large and for such a prolonged period of time that loan payments can no longer be made by the borrowers.

Real Estate Construction Loans

Our real estate construction loans are generally made to borrowers who are rehabilitating a building, converting a building use from one type of use to another, or developing land and building residential or commercial structures for sale or lease. The borrower’s promissory notes are secured with recorded liens on the underlying property. The borrowers would normally also be required to personally guarantee repayment of the loan. The Bank uses conservative underwriting standards in reviewing applications for credit. Generally, our borrowers have sufficient resources to make the required construction loan payments during the construction and absorption or lease-up period. After construction is complete, the loans are normally paid off from proceeds from the sale of the building or through a refinance to a commercial real estate loan. Risk of loss to the Bank is increased when there are material construction cost overruns, significant delays in the time to complete the project and/or there has been a material drop in the value of the projects in the marketplace since the inception of the loan.

Residential Real Estate Loans

Our residential real estate loans are generally made to borrowers who are buying or refinancing their primary personal residence or a rental property of 1-4 single family residential units. The Bank uses conservative underwriting standards in reviewing applications for credit. Risk of loss to the Bank is increased when borrowers lose their primary source of income and/or property values decline significantly.

Commercial and Industrial Loans

Our commercial and industrial loans are generally made to small businesses to provide them with at least some of the working capital necessary to fund their daily business operations. These loans are generally either unsecured or secured by fixed assets, accounts receivable and/or inventory. The borrowers would normally also be required to personally guarantee repayment of the loan. The Bank uses conservative underwriting standards in reviewing applications for credit. Risk of loss to the Bank is increased when our small business customers experience a significant business downturn, incur significant financial losses, or file for relief from creditors through bankruptcy proceedings.

Consumer and installment Loans

Our consumer and installment loans generally consist of personal loans, credit card loans, automobile loans or other loans secured by personal property. The Bank uses conservative underwriting standards in reviewing applications for credit. Risk of loss to the Bank is increased when borrowers lose their primary source of income, or file for relief from creditors through bankruptcy proceedings.

	Age Analysis of Past Due Loans
	As of June 30, 2013
(Dollar amounts in thousands)	30-59		60-89										Recorded
	Days		Days		Over		Total						Investment >
	Past		Past		90		Past				Total		90 Days and
	Due		Due		Days		Due		Current		Loans		Accruing
Commercial real estate	$	544		33		2,430		3,007		257,864		260,871		—
Real estate construction		—		—		—		—		21,775		21,775		—
Real estate multi family		—		—		—		—		41,374		41,374		—
Real estate 1 to 4 family		733		445		299		1,477		90,986		92,463		—
Commercial and industrial		74		356		2,326		2,756		33,429		36,185		—
Consumer		—		—		1		1		1,724		1,725		—
Total	$	1,351	$	834	$	5,056	$	7,241	$	447,152	$	454,393	$	—
														Recorded
														Investment >
Purchased														90 Days and
Not credit impaired														Accruing
Commercial real estate	$	—	$	1,548	$	1,388	$	2,936	$	39,646	$	42,582		—
Real estate construction		—		—		—		—		3,611		3,611		—
Real estate multi-family		—		—		—		—		14,580		14,580		—
Real estate 1 to 4 family		—		—		—		—		12,608		12,608		—
Commercial and industrial		—		—		—		—		11,554		11,554		—
Total	$	—	$	1,548	$	1,388	$	2,936	$	81,999	$	84,935	$	—
														Recorded
														Investment >
														90 Days and
Credit impaired														Accruing
Commercial real estate	$	—	$	—	$	—	$	—	$	1,366	$	1,366		—
Real estate construction		—		—		395		395		193		588		—
Real estate multi-family		—		—		—		—		48		48		—
Real estate 1 to 4 family		—		—		—		—		23		23		—
Commercial and industrial		—		—		—		—		—		—		—
Consumer		—		—		—		—		—		—		—
Total	$	—	$	—	$	395	$	395	$	1,630	$	2,025	$	—

	Age Analysis of Past Due Loans As of December 31, 2012
(Dollar amounts in thousands)	30-59		60-89										Recorded
	Days		Days		Over		Total						Investment >
	Past		Past		90		Past				Total		90 Days and
	Due		Due		Days		Due		Current		Loans		Accruing
Commercial real estate	$	3,942		—		2,525		6,467		247,982		254,449		—
Real estate construction		—		—		—		—		14,866		14,866		—
Real estate multi family		—		—		—		—		39,176		39,176		—
Real estate 1 to 4 family		806		168		1,210		2,184		95,145		97,329		—
Commercial and industrial		18		44		2,619		2,681		40,166		42,847		—
Consumer		—		—		—		—		1,824		1,824		—
Total	$	4,766	$	212	$	6,354	$	11,332	$	439,159	$	450,491	$	—
														Recorded
														Investment >
Purchased														90 Days and
Not credit impaired														Accruing
Commercial real estate	$	690	$	—	$	2,212	$	2,902	$	45,107	$	48,009		—
Real estate construction		—		—		1,411		1,411		2,183		3,594		—
Real estate multi-family		75		—		—		75		18,753		18,828		—
Real estate 1 to 4 family		—		119		—		119		15,271		15,390		—
Commercial and industrial		50		—		—		50		12,667		12,717		—
Total	$	815	$	119	$	3,623	$	4,557	$	93,981	$	98,538	$	—
														Recorded
														Investment >
														90 Days and
Credit impaired														Accruing
Commercial real estate	$	—	$	—	$	1,402	$	1,402	$	—	$	1,402		—
Real estate construction		—		—		486		486		—		486		—
Real estate multi-family		—		—		—		—		—		—		—
Real estate 1 to 4 family		—		—		—		—		—		—		—
Commercial and industrial		—		—		—		—		—		—		—
Consumer		—		—		—		—		—		—		—
Total	$	—	$	—	$	1,888	$	1,888	$	—	$	1,888	$	—

	Credit Quality Indicators
	As of June 30, 2013
(Dollar amounts in thousands)			Special		Sub-				Total
	Pass		mention		standard		Doubtful		loans
Commercial real estate	$	254,667	$	2,355	$	3,849	$	—	$	260,871
Real estate construction		20,208		523		1,044		—		21,775
Real estate multi-family		41,374		—		—		—		41,374
Real estate 1 to 4 family		91,088		—		1,108		267		92,463
Commercial and industrial		33,799		—		2,284		102		36,185
Consumer loans		1,725		—		—		—		1,725
Totals	$	442,861	$	2,878	$	8,285	$	369	$	454,393
Purchased
Not credit impaired
Commercial real estate	$	30,618	$	5,575	$	6,389	$	—	$	42,582
Real estate construction		1,185		—		2,285		141		3,611
Real estate multi-family		14,580		—		—		—		14,580
Real estate 1 to 4 family		10,805		—		1,803		—		12,608
Commercial and industrial		11,554		—		—		—		11,554
Total	$	68,742	$	5,575	$	10,477	$	141	$	84,935
Credit impaired
Commercial real estate									$	1,366
Real estate construction										588
Real estate multi-family										48
Real estate 1 to 4 family										23
Total									$	2,025

	Credit Quality Indicators
	As of December 31, 2012
(Dollar amounts in thousands)			Special		Sub-				Total
	Pass		mention		standard		Doubtful		loans
Commercial real estate	$	249,991	$	2,372	$	2,086	$	—	$	254,449
Real estate construction		13,266		—		1,600		—		14,866
Real estate multi-family		39,176		—		—		—		39,176
Real estate 1 to 4 family		95,579		—		1,470		280		97,329
Commercial and industrial		39,446		—		2,564		837		42,847
Consumer loans		1,824		—		—		—		1,824
Totals	$	439,282	$	2,372	$	7,720	$	1,117	$	450,491
Purchased
Not credit impaired
Commercial real estate	$	30,600	$	7,902	$	9,507	$	—	$	48,009
Real estate construction		—		39		3,555		—		3,594
Real estate multi-family		18,828		—		—		—		18,828
Real estate 1 to 4 family		14,850		—		540		—		15,390
Commercial and industrial		12,717		—		—		—		12,717
Total	$	76,995	$	7,941	$	13,602	$	—	$	98,538
Credit impaired
Commercial real estate									$	1,402
Real estate construction										486
Total									$	1,888

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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Cash flow from operating activities:
Net earnings	$ 2,309	$ 2,516
Adjustments to reconcile net earnings to net cash provided by operating activities:
Net gain on sale of securities available-for-sale	(115)	(809)
Depreciation, amortization and accretion	1,843	1,680
Gain on sale of other real estate owned		4
Stock-based compensation expense	121	121
Earnings on bank owned life insurance	(190)	(2,073)
Provision for loan losses	1,110	800
Increase in accrued interest receivable	(126)	(7)
Decrease in prepaid expense	654	498
Decrease (increase) in other assets	899	(800)
Increase in accrued expenses and other liabilities	431	800
Net cash provided by operating activities	6,936	2,730
Cash flows from investing activities
Purchase of securities available-for-sale	(77,996)	(43,995)
Proceeds from matured/called/sold securities available-for-sale	22,803	28,269
Investment, net of redemption, in other equity securities	164	5
Redemption of time deposits of other banks	4,743
Proceeds from sale of other real estate owned		832
Net investment in other real estate owned	(25)	(13)
Net decrease (increase) in loans	9,215	(10,379)
Purchases of bank premises, equipment, leasehold improvements	(618)	(427)
Net cash used in investing activities	(41,714)	(25,708)
Cash flows from financing activities
Net increase in demand and savings deposits	57,100	33,786
Net decrease in time deposits	(22,652)	(3,721)
Decrease in FHLB advances	(719)
Dividends paid on common stock	(301)	(421)
Exercise of stock options	667	59
Net cash provided by financing activities	30,615	29,360
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(4,163)	6,382
Cash and cash equivalents at beginning of period	27,861	38,474
Cash and cash equivalents at end of period	23,698	44,856
Additional cash flow information:
Interest paid	1,372	1,338
Income taxes paid		930
Non-cash investing and financing activities:
Accrued dividends	376
(Decrease) increase in unrealized gain (loss) in available for-sale securities, net of tax	(4,491)	171
Preferred Stock, Series C
Cash flows from financing activities
Dividends paid on preferred stock series	(330)	(343)
Partial redemption of preferred stock series	$ (3,150)

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NOTE E - LOANS (Detail Textuals) (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Debt Disclosure [Abstract]
Non accrual loans	$ 11,485	$ 12,474
Interest income on impaired loans	701	987
Interest income on impaired loans not collected	388	1,358
Cumulative unpaid interest on impaired loans	$ 3,162	$ 2,774

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NOTE B - STOCK OPTION PLANS (Detail Textuals) (USD $)	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]
Compensation expense for options	$ 76,000	$ 59,000
Recognized income tax benefit	121,000	22,000
Intrinsic value options exercised	108,000	58,000
Intrinsic value options exercisable	1,081,000	620,000
Number of options granted	60,785
Unrecognized compensation expense nonvested options	$ 776,000
Non-vested options weighted average period	3 years 9 months 18 days

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NOTE D - SECURITIES AVAILABLE FOR SALE (Tables)

6 Months Ended

Jun. 30, 2013

Investments, Debt and Equity Securities [Abstract]

Schedule of amortized cost and carrying values of securities available-for-sale

(Dollar amounts in thousands)	Amortized		Unrealized		Unrealized			Carrying
	cost		gains		losses			value
June 30, 2013
U.S. Treasury securities	$	7,139	$	79	$	(45	)	$	7,173
Obligations of U.S. government agencies		86,188		606		(753	)		86,041
Mortgage-backed securities		78,764		469		(2,050	)		77,183
Obligations of states and political subdivisions		83,346		1,595		(1,151	)		83,790
Corporate debt		27,041		351		(157	)		27,235
	$	282,478	$	3,100	$	(4,156	)	$	281,422
December 31, 2012:
U.S. Treasury securities	$	7,145	$	135	$	—		$	7,280
Obligations of U.S. government agencies		71,061		1,206		(7	)		72,260
Mortgage-backed securities		53,934		1,383		(137	)		55,180
Obligations of states and political subdivisions		78,147		3,515		(53	)		81,609
Corporate debt		18,103		535		(22	)		18,616
	$	228,390	$	6,774	$	(219	)	$	234,945

Schedule of analysis of gross unrealized losses of the available-for-sale investment securities

(Dollar amounts in thousands)			Less than					12 Months
	Total		12 Months			Total		or Longer			Total		Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
June 30, 2013
U.S. Treasury securities	$	2,017	$	(45	)	$	—	$	—		$	2,017	$	(45	)
Obligations of U.S. Government agencies		40,567		(753	)		—		—			40,567	$	(753	)
Mortgage-backed securities		40,791		(2,050	)		—		—			40,791		(2,050	)
Obligations of states and political subdivisions		29,894		(1,100	)		1,115		(51	)		31,009		(1,151	)
Corporate debt		11,038		(155	)		498		(2	)		11,536		(157	)
Total	$	124,307	$	(4,103	)	$	1,613	$	(53	)	$	125,920	$	(4,156	)

			Less than					12 Months
(Dollar amounts in thousands)	Total		12 Months			Total		or Longer			Total		Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
December 31, 2012:
Obligations of U.S. government agencies	$	4,093	$	(7	)	$	—	$	—		$	4,093	$	(7	)
Mortgage-backed securities		8,580		(137	)		—		—			8,580		(137	)
Obligations of states and political subdivisions		8,492		(53	)		—		—			8,492		(53	)
Corporate debt		—		—			478		(22	)		478		(22	)
Total	$	21,165	$	(197	)	$	478	$	(22	)	$	21,643	$	(219	)

Schedule of amortized cost and carrying value of available-for-sale debt securities by contractual maturity

June 30, 2013:

(Dollar amounts in thousands)	Amortized		Carrying
	Cost		Value
Available-for-sale:
Due in one year or less	$	13,932	$	14,062
Due after one through five years		100,978		101,886
Due after five years through ten years		122,548		120,994
Due after ten years		45,020		44,480
	$	282,478	$	281,422

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NOTE D - SECURITIES AVAILABLE FOR SALE - Summary of Available-for-Sale Securities Amortized Cost and Carrying Value (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Available for Sale Securities, Amortized cost	$ 282,478	$ 228,390
Available for Sale Securities, Unrealized gains	3,100	6,774
Available for Sale Securities, Unrealized losses	(4,156)	(219)
Available for Sale Securities, Carrying value	281,422	234,945
U.S. Treasury securities
Available for Sale Securities, Amortized cost	7,139	7,145
Available for Sale Securities, Unrealized gains	79	135
Available for Sale Securities, Unrealized losses	(45)
Available for Sale Securities, Carrying value	7,173	7,280
Obligations of U.S. government agencies
Available for Sale Securities, Amortized cost	86,188	71,061
Available for Sale Securities, Unrealized gains	606	1,206
Available for Sale Securities, Unrealized losses	(753)	(7)
Available for Sale Securities, Carrying value	86,041	72,260
Mortgage-backed securities
Available for Sale Securities, Amortized cost	78,764	53,934
Available for Sale Securities, Unrealized gains	469	1,383
Available for Sale Securities, Unrealized losses	(2,050)	(137)
Available for Sale Securities, Carrying value	77,183	55,180
Obligations of states and political subdivisions
Available for Sale Securities, Amortized cost	83,346	78,147
Available for Sale Securities, Unrealized gains	1,595	3,515
Available for Sale Securities, Unrealized losses	(1,151)	(53)
Available for Sale Securities, Carrying value	83,790	81,609
Corporate debt
Available for Sale Securities, Amortized cost	27,041	18,103
Available for Sale Securities, Unrealized gains	351	535
Available for Sale Securities, Unrealized losses	(157)	(22)
Available for Sale Securities, Carrying value	$ 27,235	$ 18,616

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NOTE C - EARNINGS PER SHARE CALCULATION - Summary of Earnnigs Per Share Calculations (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Net earnings	$ 1,379	$ 1,228	$ 2,309	$ 2,516
Dividends and discount accretion on preferred stock	172	157	330	343
Net earnings available to common stockholders	1,207	1,071	1,979	2,173
Average number of shares outstanding (in shares)	3,729	3,690	3,722	3,688
Effect of dilutive options	84	62	88	51
Average number of shares outstanding used to calculate diluted earnings per share (in shares)	3,813	3,752	3,810	3,739
Earnings, Three months ended June 30, 2013
Net earnings	1,379
Dividends and discount accretion on preferred stock	172
Net earnings available to common stockholders	1,207
Average number of shares outstanding (in shares)	3,729
Effect of dilutive options	84
Average number of shares outstanding used to calculate diluted earnings per share (in shares)	3,813
Earnings, Three months ended June 30, 2012
Net earnings		1,228
Dividends and discount accretion on preferred stock		157
Net earnings available to common stockholders		1,071
Average number of shares outstanding (in shares)		3,690
Effect of dilutive options		62
Average number of shares outstanding used to calculate diluted earnings per share (in shares)		3,752
Earnings, Six months ended June 30, 2013
Net earnings			2,309
Dividends and discount accretion on preferred stock			330
Net earnings available to common stockholders			1,979
Average number of shares outstanding (in shares)			3,722
Effect of dilutive options			88
Average number of shares outstanding used to calculate diluted earnings per share (in shares)			3,810
Earnings, Six months ended June 30, 2012
Net earnings				2,516
Dividends and discount accretion on preferred stock				343
Net earnings available to common stockholders				2,173
Average number of shares outstanding (in shares)				3,688
Effect of dilutive options				$ 51
Average number of shares outstanding used to calculate diluted earnings per share (in shares)				3,739

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Document And Entity Information	6 Months Ended
	Jun. 30, 2013	Aug. 03, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	FNB BANCORP/CA/
Entity Central Index Key	0001163199
Trading Symbol	fnbg
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		3,760,305
Document Type	10-Q
Document Period End Date	Jun. 30, 2013
Amendment Flag	false
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2

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NOTE C - EARNINGS PER SHARE CALCULATION (Detail Textuals) (Stock options)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive options not included (in shares)	204,359	279,676	230,859	300,516