FNCB Bancorp, Inc. Reports Earnings Increase for 2021 of 39% and Announces Authorization of Stock Repurchase Program

Dunmore, Pennsylvania, UNITED STATES


DUNMORE, Pa., Jan. 28, 2022 (GLOBE NEWSWIRE) -- FNCB Bancorp, Inc. (NASDAQ: FNCB), the parent company of Dunmore-based FNCB Bank (the “Bank”), today reported net income for 2021 of $21.4 million, or $1.06 per basic and diluted share, compared to net income of $15.3 million, or $0.76 per basic and diluted share, for 2020. The $6.0 million, or 39.3%, earnings improvement was due primarily to a $8.8 million, or 21.9%, increase in net interest income, coupled with a $1.8 million, or 91.5%, reduction in the provision for loan and lease losses.  Partially offsetting these positive factors was a $1.0 million, or 10.6%, decrease in non-interest income and a $2.2 million, or 7.5%, increase in non-interest expense. Net income for the fourth quarter of 2021 was $4.0 million, or $0.20 per basic and diluted share, a decrease of $1.2 million, or 23.2%, compared to $5.2 million, or $0.26 per basic and diluted share, for the same quarter of 2020. The reduction in fourth quarter earnings was largely due to increases in non-interest expense and credit provisioning, partially offset by an increase in net interest income. 

Return on average assets and return on average shareholders’ equity were 1.36% and 13.46%, respectively, in 2021, compared to 1.13% and 10.66%, respectively in 2020. For the three months ended December 31, 2021, annualized return on average assets and annualized return on average shareholders’ equity were 0.94% and 9.82%, respectively. Comparatively, annualized return on average assets was 1.41% and annualized return on average shareholders’ equity was 13.49% for the three months ended December 31, 2020.

Dividends declared and paid in 2021 totaled $0.27 per share, an increase of $0.05 per share, or 22.7%, compared to $0.22 per share for 2020. Total dividends declared and paid for 2021 equated to a dividend yield of approximately 2.92% based on the closing stock price of $9.24 per share at December 31, 2021. 

Stock Repurchase Program

On January 26, 2022, FNCB's Board of Directors authorized a stock repurchase program under which up to 750,000 shares of FNCB's outstanding common stock may be acquired in the open market commencing no earlier than March 4, 2022 and expiring December 31, 2022 pursuant to a trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. In 2021, the Board of Directors had authorized a similar program under which 330,759 common shares were repurchased. The 2021 plan expired on December 31, 2021.

The repurchase of shares under the program is administered through an independent broker. Repurchases may occur from time to time at prevailing market prices, through open market transactions depending upon market conditions, and are subject to SEC regulations as well as certain price, market volume and timing constraints specified in the trading plan. Under the program, the purchases will be funded from working capital presently available to FNCB, and the repurchased shares will be returned to the status of authorized but unissued shares of Common Stock.  There is not a guarantee as to the exact number of shares that will be repurchased by FNCB, and FNCB may discontinue purchases at any time that management determines additional repurchases are no longer warranted. As of December 31, 2021, FNCB had approximately 20.0 million shares outstanding.

2021 Highlights:

 Fourth quarter earnings per share decreased $0.06 per share, or 23.1%, to $0.20 per share in 2021 compared to $0.26 per share for the fourth quarter of 2020. For the full year, earnings per share increased $0.30 per share, or 39.5%, to $1.06 per share in 2021 from $0.76 per share in 2020;
 Return on average assets was 0.94% for the fourth quarter of 2021 and 1.41% for the same quarter of 2020. For the full year, return on average assets was 1.36% in 2021 compared to 1.13% in 2020;
 For the fourth quarter, return on average shareholders' equity was 9.82% in 2021 from 13.49% in 2020. Return on average shareholders' equity for all of 2021 improved to 13.46% compared to 10.66% for 2020;
 Tangible book value increased $0.43 per share, or 5.6%, to $8.13 per share at December 31, 2021 from $7.70 per share at December 31, 2020;
 Total risk-based capital and Tier I Leverage ratios (FNCB Bank) were 14.61% and 9.82% at December 31, 2021 compared to 15.79% and 9.57% at December 31, 2020, respectively;
 The earning asset yield (FTE) for the fourth quarter decreased 64 basis points to 3.41% in 2021 from 4.05% in 2020. Year over year, the earning asset yield (FTE) decreased 22 basis points to 3.63% in 2021 from 3.85% in 2020;
 Cost of funds for the fourth quarter of 2021 decreased 28 basis points to 0.16% from 0.44% for the fourth quarter of 2020. Year over year, cost of funds decreased 39 basis points to 0.25% in 2021 from 0.64% in 2020.
 The net interest margin (FTE) for the fourth quarter of 2021 decreased 41 basis points to 3.29% from 3.70% for the fourth quarter of 2020. Year over year, net interest margin (FTE) increased 10 basis points to 3.45% in 2021 from 3.35% in 2020;
 Ratio of non-performing loans to total loans improved to 0.39% at December 31, 2021 compared to 0.62% at December 31, 2020; and
 The efficiency ratio increased to 61.75% for the fourth quarter of 2021 from 54.89% for the same quarter of 2020.

"The strong performance generated by FNCB in 2021 speaks to the quality of the FNCB brand, our ability to provide superior customer service and adapt to changing market demands," stated Gerard A. Champi, President and Chief Executive Officer. "Earnings in 2021 benefitted from our leadership in originating PPP loans and assisting customers through the forgiveness process, as well as our ability to effectively manage funding costs and strengthen asset quality. During the fourth quarter we expanded our product offerings to include commercial equipment financing, including leasing, through the hiring of a team of seasoned professionals in this line of business. We are pleased to say that the buildout of this product offering is complete and is generating new loan originations in line with expectations. Additionally in the fourth quarter of 2021, we received approval to consolidate our Dunmore-Wheeler community office into our state-of-the-art Main Office. The consolidation, which will be finalized in the first quarter of 2022, will have minimal impact to customers, reduce operating expense run rates going forward and create efficiency within our branch network," concluded Mr. Champi. 

COVID-19 Pandemic Update

FNCB originated 679 PPP loans totaling $76.2 million under a second round of funding, which expired during the first half of 2021 and received $3.6 million in related loan origination fees associated with these originations, which was deferred and is being recognized upon forgiveness or repayment. As of December 31, 2021, PPP loans outstanding were $20.9 million, net of $1.0 million in net unrecognized deferred origination fees. FNCB has been actively assisting customers through the forgiveness process. During the year ended December 31, 2021, FNCB received forgiveness for PPP loans totaling $130.3 million and recognized $4.8 million in net PPP loan origination fees upon forgiveness. 

Due to the recent rise in the number of positive cases in our market area, FNCB branches are open for drive thru and by appointment only, with the exception of the Main Office and Plains Rt 315 community office, which are fully operational with lobbies open for consumer traffic. FNCB continues to follow CDC and Commonwealth of Pennsylvania guidance and take additional precautions to ensure the safety of its customers and its employees. Widespread availability and distribution of vaccines, including boosters, has led to improved economic growth across the United States and more specifically within our market area. However, lingering effects from the COVID-19 pandemic, including the effects of the Delta and Omicron variants continue to adversely impact employment markets and supply-chains affecting national, regional and local economies, which has resulted in pronounced price inflation. 

Regarding our banking operations, commercial activity within our market area, while improving, remains volatile and has not returned to pre-pandemic levels. Economic restrictions adopted in 2020 caused many borrowers to request payment deferrals and other payment accommodations. As of December 31, 2021, all borrowers that previously received payment accommodations have resumed making contractual principal and interest payments. While positive developments have occurred, management is keenly aware that uncertainty regarding the pandemic may still exist. Additionally, FNCB's commercial customer base includes businesses in industries such as automobile, hotel/lodging, restaurants, hospitality, and retail and commercial real estate, all of which had been significantly and adversely impacted in 2020 and 2021 by economic restrictions and employment and supply-chain constraints related to the COVID-19 pandemic. Management continues to closely monitor customers within these industries as the economic recovery continues to unfold.

Management expects the COVID-19 pandemic, as well as certain provisions of legislative and regulatory relief efforts, to continue to impact FNCB's operations. At this time, management cannot determine or estimate the full magnitude of the impact and cannot provide any assurances as to the effect on FNCB's results of operations or financial position. The FNCB team will continue to work diligently to address any issues related to the COVID-19 pandemic in a safe and sound manner as they arise. Management believes that FNCB's balance sheet and capital position are strong and will allow FNCB to withstand any further challenges that may be presented. 

Summary Results 

We make reference to certain non-GAAP measures in this release.  See the reconciliations of the Non-GAAP adjusted measures to the GAAP measures in the tables that accompany this release.

For the three months ended December 31, 2021, FNCB's net interest income on a fully tax-equivalent basis increased $1.3 million, or 10.7%, to $13.1 million from $11.8 million for the same three months of 2020, which resulted from higher levels of tax-equivalent interest income, coupled with a reduction in interest expense. For the fourth quarter of 2021, tax-equivalent interest income increased $0.6 million, or 4.6%, to $13.5 million from $12.9 million in 2020. The increase in tax-equivalent interest income was caused primarily by higher balances of earning assets, partially offset by a reduction in the tax-equivalent yield on earning assets. Average earning assets increased $311.6 million, or 24.4%, to $1.589 billion for the three months ended December 31, 2021 from $1.277 billion for the same three months of 2020, which largely reflected an increase in the average balances of investment securities of $175.6 million, or 53.8%, as management redirected excess liquidity into the investment portfolio. Partially offsetting the increase in earning asset volumes was a 64-basis point reduction in the tax-equivalent yield on earning assets to 3.41% for the fourth quarter of 2021 from 4.05% for the same quarter of 2020. Specifically, the tax-equivalent yield on the loan portfolio decreased 13 basis points to 4.33% for the fourth quarter of 2021 from 4.46% for the same quarter of 2020, while the tax-equivalent yield on the investment portfolio decreased 61 basis points to 2.44% from 3.05% comparing the fourth quarters of 2021 and 2020, respectively. In addition, the improvement in tax-equivalent net interest income reflected a $0.7 million, or 58.8% reduction in interest expense driven by a further reduction in funding costs. FNCB's cost of funds decreased 28 basis points to 0.16% for the fourth quarter of 2021 compared to 0.44% for the same quarter of 2020. FNCB’s tax-equivalent net interest margin for the fourth quarter of 2021 contracted 41 basis points to 3.29% compared to 3.70% for the same quarter of 2020. The margin contraction reflected the significant growth in average earning assets at lower yields which overshadowed the reduction in funding costs. On a linked quarter basis, tax-equivalent net interest margin contracted 17 basis points from 3.46% for the third quarter of 2021. Excluding the impact of PPP loans (non-GAAP), FNCB's tax-equivalent net interest margin would have been 3.09% for the fourth quarter of 2021, compared to 3.49% for the fourth quarter of 2020 and 3.15% for the third quarter of 2021. For the year ended December 31, 2021, tax-equivalent net interest income increased $8.9 million, or 21.8%, to $49.9 million compared to $41.0 million for the year ended December 31, 2020. Similarly, the improvement in net interest income for the full-year period was due to an increase in tax-equivalent interest income due primarily to higher earning asset volumes coupled with a reduction in funding costs. Average earning assets increased $226.2 million, or 18.5%, to $1.449 billion in 2021 from $1.223 billion in 2020. Specifically, investment security volumes averaged $127.4 million, or 42.1% higher, while average interest-bearing deposits in other banks increased $59.7 million, or 649.0% and average loan volumes increased $3.4 million, or 4.3%, comparing the years ended December 31, 2021 and 2020.  Additionally, net loan origination fees recognized on forgiven PPP loans totaled $4.8 million in 2021 compared to $1.2 million in 2020, an increase of $3.6 million. The low interest rate environment and continued oversupply of deposits in the market resulted in further reductions in funding costs. For the year ended December 31, 2021, the cost of funds decreased 39 basis points to 0.25% from 0.64% for the year ended December 31, 2020. The tax-equivalent net interest margin widened 10 basis points to 3.45% in 2021 from 3.35% in 2020. For purposes of presenting net interest income, earning-asset yields and net interest margin information on a tax-equivalent basis, tax-free interest income is adjusted using the statutory federal corporate income tax rate of 21.0% for 2021 and 2020. 

Non-interest income for the fourth quarter of 2021 was $1.9 million, a decrease of $0.2 million, or 6.8% from $2.1 million for the fourth quarter of 2020. The decrease was largely due to reductions in net gains on equity securities, net gains on the sale of mortgage loans held for sale, partially offset by an increase in deposit service charges. For the quarter ended December 31, 2021, net gains on equity securities were $145 thousand, a decrease of $162 thousand, or 52.8%, compared to $307 thousand for the same three months of 2020. Net gains on the sale of mortgage loans held for sale were $40 thousand for the fourth quarter of 2021, a decrease of $148 thousand, or 78.7%, compared to $188 thousand for the same quarter of 2020. These reductions were partially offset by a $163 thousand, or 18.6%, increase in deposit service charges to $1.0 million for the three months ended December 31, 2021 compared to $875 thousand for the three months ended December 31, 2020, which primarily reflected increases in debit card fees. For the year ended December 31, 2021, non-interest income decreased $1.0 million, or 10.6%, to $8.3 million from $9.3 million for the year ended December 31, 2020. The year-to-date reduction in non-interest income resulted primarily from decreases in net gains on the sale of available-for-sale debt securities, net gains on equity securities and net gains on the sale of mortgage loans held for sale. Net gains on the sale of available-for-sale securities decreased $1.3 million, or 86.1%, to $213 thousand in 2021 compared to $1.5 million in 2020, while net gains on equity securities decreased $470 thousand, or 40.1%, to $701 thousand in 2021 from $1.2 million in 2020. As part of an asset/liability management initiative to enhance future interest income run rates, management elected to hold higher-quality saleable mortgage loans in the loan portfolio. This initiative was the major factor causing a $301 thousand, or 46.1%, decrease in net gains on the sale of mortgage loans to $352 thousand in 2021 as compared to $653 thousand in 2020. These decreases were partially offset by a $625 thousand, or 19.2%, increase in deposit service charges, resulting primarily from an increase in debit card usage, and a settlement in the amount of $426 thousand from a bank-owned life insurance death benefit claim that was recognized in 2021. 

Non-interest expense totaled $9.2 million for the fourth quarter of 2021, an increase of $1.7 million, or 23.2%, from $7.4 million for the fourth quarter of 2020, which reflected increases in salaries and employee benefits, data processing costs and other operating expenses. Salaries and employee benefits expense increased $917 thousand, or 23.0%, to $4.9 million from $4.0 million comparing the three months ended December 31, 2021 and 2020, which was caused primarily by additional salary and benefit costs associated with the onboarding of the 1st Equipment Financing team of professionals, along with increases in employee retirement plan contributions and incentive pay. Data processing costs for the fourth quarter increased $279 thousand, or 37.5%, to $1.0 million in 2021 from $745 thousand in 2020, reflecting additional costs associated with cybersecurity enhancements.  Other operating expenses totaled $1.9 million for the fourth quarter of 2021, an increase of $630 thousand, or 50.4%, from $1.2 million for the same quarter of 2020. Included in other operating expense in the fourth quarter of 2021 were losses of $300 thousand associated with the transfer of two bank-owned properties to other real estate owned. As part of management's ongoing initiative to optimize its branch network, in December 2021, FNCB received regulatory approval to consolidate a community office located in the Borough of Dunmore, Lackawanna County, Pennsylvania with its main office located in the same Borough. The consolidation is expected to be completed in the first quarter of 2022, and is expected to generate annual operating cost savings of approximately $230 thousand. Additionally, with the continuing evolution of digital banking and declining utilization of brick-and-mortar branches, management decided to sell land located in Lackawanna County that FNCB was holding for future branch expansion. For the year ended December 31, 2021, non-interest expense totaled $31.1 million, an increase of $2.1 million, or 7.5%, compared to $28.9 million for the year ended December 31, 2020. Similar to the fourth quarter increase, the yearly increase was primarily due to increased salaries and employee benefits, data processing expenses and other operating expenses. Salaries and employee benefits increased $1.4 million, or 9.5%, to $16.7 million in 2021, compared to $15.2 million in 2020. Data processing expenses increased $756 thousand, or 25.8%, to $3.7 million in 2021, compared to $2.9 million in 2020. Other operating expenses amounted to $5.6 million in 2021, an increase of $235 thousand, or 4.3%, compared to $5.4 million in 2020. 

Asset Quality

FNCB experienced steady improvement in asset quality throughout 2021, as exhibited by a decrease in total non-performing loans of $1.7 million, or 30.8%, to $3.9 million, or 0.39% of total loans, at December 31, 2021 from $5.6 million, or 0.62% of total loans, at December 31, 2020. The improvement primarily reflected the payoff of one commercial relationship, strong repayment activity and the return of several loans to accrual status. On a linked-quarter basis, non-performing loans improved $612 thousand, or 13.7%, from $4.5 million at September 30, 2021. FNCB’s loan delinquency rate (total delinquent loans as a percentage of total loans) improved to 0.55% at December 31, 2021, compared to 0.99% at December 31, 2020 and 0.61% at September 30, 2021. FNCB recorded a provision for loan and lease losses of $166 thousand in 2021, a decrease of $1.8 million or 91.5%, compared to $1.9 million in 2020. The elevated amount of credit provisioning in 2020 was directly related to the economic disruption and uncertainty caused by the COVID-19 pandemic. The allowance for loan and lease losses was $12.4 million, or 1.27% of total loans, at December 31, 2021, compared to $11.9 million, or 1.33% of total loans, at December 31, 2020. Excluding PPP loans, which are 100.0% guaranteed by the federal government, this ratio (non-GAAP) was 1.30% at December 31, 2021 and 1.45% at December 31, 2020.

Financial Condition

Total assets increased $198.6 million, or 13.6%, to $1.664 billion at December 31, 2021, from $1.465 billion at December 31, 2020.  The strong balance sheet growth reflected substantial increases in available-for-sale debt securities, and loans, net of net deferred loan costs and unearned income. Available-for-sale debt securities increased $172.5 million, or 49.3%, to $522.6 million at December 31, 2021 from $350.0 million at December 31, 2020. Loans, net of net deferred loan costs and unearned income, grew $78.3 million, or 8.7%, to $979.4 million at December 31, 2021, from $901.1 million at December 31, 2020. Excluding activity related to the origination and forgiveness of PPP loans, loans, net of net deferred loan origination fees, increased $134.4 million, or 16.3%. Total deposits increased $167.6 million, or 13.0%, to $1.455 billion at December 31, 2021 from $1.287 billion at December 31, 2020. Interest-bearing deposits increased $119.0 million, or 11.7%, to $1.135 billion at December 31, 2021 from $1.016 billion at December 31, 2020. Additionally, non-interest-bearing deposits increased $48.6 million, or 17.9%, to $320.1 million at December 31, 2021 from $271.5 million at December 31, 2020. 

Total shareholders’ equity increased $6.6 million, or 4.2%, to $162.5 million at December 31, 2021 from $155.9 million at December 31, 2020. Contributing to the increase in capital was 2021 net income of $21.4 million partially offset by a $7.5 million decrease in accumulated other comprehensive income related primarily to depreciation in the fair value of FNCB’s available-for-sale debt securities, net of deferred taxes and dividends declared and paid in 2021 of $5.4 million. The repurchase of 330,759 common shares under the board-authorized 2021 stock repurchase program also reduced shareholders' equity by $2.4 million. FNCB's tangible book value per share improved $0.43, or 5.6%, to $8.13 per share at December 31, 2021 from $7.70 per share at December 31, 2020. FNCB Bank’s total risk-based capital and Tier I leverage ratios were 14.61% and 8.92%, respectively, at December 31, 2021 compared to 15.79% and 9.57%, respectively, at December 31, 2020. 

Availability of Filings

Copies of FNCB’s most recent Annual Report on Form 10-K and Quarterly Reports on form 10-Q will be provided upon request from: Shareholder Relations, FNCB Bancorp, Inc., 102 East Drinker Street, Dunmore, PA 18512 or by calling (570) 348-6419. FNCB’s SEC filings including its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q are also available free of charge on the Investor Relations page of FNCB’s website, www.fncb.com, and on the SEC website at: http://www.sec.gov/edgar/searchedgar/companysearch.html

About FNCB Bancorp, Inc.:
FNCB Bancorp, Inc. is the bank holding company of FNCB Bank. Locally-based for over 110 years, FNCB Bank continues as a premier community bank in Northeastern Pennsylvania – offering a full suite of personal, small business and commercial banking solutions with industry-leading mobile, online and in-branch products and services. FNCB currently operates through 17 community offices located in Lackawanna, Luzerne and Wayne Counties, and remains dedicated to making its customers’ banking experience simply better. For more information about FNCB, visit www.fncb.com.

INVESTOR CONTACT:
James M. Bone, Jr., CPA
Executive Vice President and Chief Financial Officer 
FNCB Bank
(570) 348-6419
james.bone@fncb.com

Forward-looking Statements

FNCB may from time to time make written or oral forward-looking statements, including statements contained in our filings with the Securities and Exchange Commission (SEC), in our reports to shareholders, and in our other communications, which are made in good faith by us pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements include statements with respect to FNCBs beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions, including statements with respect to new product offerings, that are subject to significant risks and uncertainties, and are subject to change based on various factors (some of which are beyond our control). The words may,” “could,” “should,” “will,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” “project,” “future” and similar expressions are intended to identify forward-looking statements. The following factors, among others, could cause FNCBs financial performance to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements: the effect of the novel Coronavirus Disease 2019 ("COVID-19") pandemic on FNCB and its customers, the Commonwealth of Pennsylvania and the United States, related to the economy and overall financial stability; government and regulatory responses to the COVID-19 pandemic; government intervention in the U.S. financial system including the effects of recent legislative, tax, accounting and regulatory actions and reforms, including, but not limited to, the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act), the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) and the Tax Cuts and Jobs Act; political instability; the ability of FNCB to manage credit risk; weakness in the economic environment, in general, and within FNCBs market area; the deterioration of one or a few of the commercial real estate loans with relatively large balances contained in FNCBs loan portfolio; greater risk of loan defaults and losses from concentration of loans held by FNCB, including those to insiders and related parties; if FNCBs portfolio of loans to small and mid-sized community-based businesses increases its credit risk; if FNCBs ALLL is not sufficient to absorb actual losses or if increases to the ALLL were required; FNCB is subject to interest-rate risk and any changes in interest rates could negatively impact net interest income or the fair value of FNCB's financial assets; if management concludes that the decline in value of any of FNCBs investment securities is other-than-temporary could result in FNCB recording an impairment loss; if FNCBs risk management framework is ineffective in mitigating risks or losses to FNCB; if FNCB is unable to successfully compete with others for business; a loss of depositor confidence resulting from changes in either FNCBs financial condition or in the general banking industry; if FNCB is unable to retain or grow its core deposit base; inability or insufficient dividends from its subsidiary, FNCB Bank; if FNCB loses access to wholesale funding sources; interruptions or security breaches of FNCBs information systems; any systems failures or interruptions in information technology and telecommunications systems of third parties on which FNCB depends; security breaches; if FNCBs information technology is unable to keep pace with growth or industry developments or if technological developments result in higher costs or less advantageous pricing; the loss of management and other key personnel; dependence on the use of data and modeling in both its managements decision-making generally and in meeting regulatory expectations in particular; additional risk arising from new lines of business, products, product enhancements or services offered by FNCB; inaccuracy of appraisals and other valuation techniques FNCB uses in evaluating and monitoring loans secured by real property and other real estate owned; unsoundness of other financial institutions; damage to FNCBs reputation; defending litigation and other actions; dependence on the accuracy and completeness of information about customers and counterparties; risks arising from future expansion or acquisition activity; environmental risks and associated costs on its foreclosed real estate assets; any remediation ordered, or adverse actions taken, by federal and state regulators, including requiring FNCB to act as a source of financial and managerial strength for the FNCB Bank in times of stress; costs arising from extensive government regulation, supervision and possible regulatory enforcement actions; new or changed legislation or regulation and regulatory initiatives; noncompliance and enforcement action with the Bank Secrecy Act and other anti-money laundering statutes and regulations; failure to comply with numerous "fair and responsible banking" laws; any violation of laws regarding privacy, information security and protection of personal information or another incident involving personal, confidential or proprietary information of individuals; any rulemaking changes implemented by the Consumer Financial Protection Bureau; inability to attract and retain its highest performing employees due to potential limitations on incentive compensation contained in proposed federal agency rulemaking; any future increases in FNCB Banks FDIC deposit insurance premiums and assessments; and the success of FNCB at managing the risks involved in the foregoing and other risks and uncertainties, including those detailed in FNCBs filings with the SEC.

FNCB cautions that the foregoing list of important factors is not all inclusive. Readers are also cautioned not to place undue reliance on any forward-looking statements, which reflect managements analysis only as of the date of this report, even if subsequently made available by FNCB on its website or otherwise. FNCB does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of FNCB to reflect events or circumstances occurring after the date of this press release. Readers should carefully review the risk factors described in the Annual Report and other documents that FNCB periodically files with the SEC, including its Form 10-K for the year ended December 31, 2020 and Form 10-Q for the quarters ended March 31, 2021, June 30, 2021 and September 30, 2021. 

 
 
FNCB Bancorp, Inc.
Selected Financial Data


  Dec 31,  Sept 30,  Jun 30,  Mar 31,  Dec 31, 
  2021  2021  2021  2021  2020 
Per share data:                    
Net income (fully diluted) $0.20  $0.31  $0.26  $0.29  $0.26 
Cash dividends declared $0.075  $0.075  $0.060  $0.060  $0.055 
Book value $8.13  $8.10  $7.99  $7.65  $7.70 
Tangible book value $8.13  $8.10  $7.99  $7.65  $7.70 
Market value:                    
High $9.40  $8.35  $7.98  $8.94  $7.95 
Low $8.21  $7.17  $6.90  $5.80  $5.16 
Close $9.24  $8.23  $7.27  $7.54  $6.40 
Common shares outstanding  19,989,875   19,985,837   20,102,602   20,240,668   20,245,649 
                     
Selected ratios:                    
Annualized return on average assets  0.94%  1.58%  1.38%  1.61%  1.41%
Annualized return on average shareholders' equity  9.82%  15.61%  13.37%  15.27%  13.49%
Efficiency ratio  61.75%  51.32%  51.86%  51.87%  54.89%
Tier I leverage ratio (FNCB Bank)  8.92%  9.80%  9.90%  9.88%  9.57%
Total risk-based capital to risk-adjusted assets (FNCB Bank)  14.64%  15.91%  15.79%  16.26%  15.79%
Average shareholders' equity to average total assets  9.61%  10.14%  10.35%  10.53%  10.42%
Yield on earning assets (FTE)  3.41%  3.63%  3.80%  3.85%  4.05%
Cost of funds  0.16%  0.23%  0.30%  0.34%  0.44%
Net interest spread (FTE)  3.25%  3.40%  3.50%  3.51%  3.61%
Net interest margin (FTE)  3.29%  3.46%  3.58%  3.59%  3.70%
Total delinquent loans/total loans  0.55%  0.61%  0.56%  0.70%  0.99%
Allowance for loan and lease losses/total loans  1.27%  1.25%  1.26%  1.30%  1.33%
Non-performing loans/total loans  0.39%  0.47%  0.46%  0.52%  0.62%
Annualized net (recoveries) charge-offs/average loans  (0.03%)  (0.03%)  (0.02%)  0.03%  0.09%
                     


FNCB Bancorp, Inc.
Year-to-Date Consolidated Statements of Income


  Year Ended 
  December 31, 
(in thousands, except share data) 2021  2020 
Interest income        
Interest and fees on loans $41,049  $37,615 
Interest and dividends on securities:        
Taxable  8,237   7,073 
Tax-exempt  2,086   1,373 
Dividends  239   249 
Total interest and dividends on securities  10,562   8,695 
Interest on interest-bearing deposits in other banks  88   28 
Total interest income  51,699   46,338 
Interest expense        
Interest on deposits  2,508   5,404 
Interest on borrowed funds:        
Federal Reserve Bank Discount Window advances  -   32 
Federal Home Loan Bank of Pittsburgh advances  6   474 
Junior subordinated debentures  191   250 
Total interest on borrowed funds  197   756 
Total interest expense  2,705   6,160 
Net interest income before provision for loan and lease losses  48,994   40,178 
Provision for loan and lease losses  166   1,941 
Net interest income after provision for loan and lease losses  48,828   38,237 
Non-interest income        
Deposit service charges  3,877   3,252 
Net gain on the sale of available-for-sale securities  213   1,528 
Net gain on equity securities  701   1,171 
Net gain on the sale of mortgage loans held for sale  352   653 
Loan-related fees  390   348 
Income from bank-owned life insurance  541   482 
Bank-owned life insurance settlement  426   - 
Merchant services revenue  593   565 
Other  1,175   1,251 
   Total non-interest income  8,268   9,250 
Non-interest expense        
Salaries and employee benefits  16,697   15,246 
Occupancy expense  2,039   2,052 
Equipment expense  1,338   1,477 
Advertising expense  712   685 
Data processing expense  3,689   2,933 
Regulatory assessments  609   387 
Bank shares tax  975   786 
Professional fees  674   999 
Other operating expenses  4,336   4,350 
Total non-interest expense  31,069   28,915 
Income before income taxes  26,027   18,572 
Income tax expense  4,656   3,225 
Net income $21,371  $15,347 
         
Income per share        
Basic $1.06  $0.76 
Diluted $1.06  $0.76 
         
Cash dividends declared per common share $0.27  $0.22 
Weighted average number of shares outstanding:        
Basic  20,111,430   20,210,439 
Diluted  20,126,853   20,212,187 
         


FNCB Bancorp, Inc.
Quarter-to-Date Consolidated Statements of Income


  Three Months Ended 
  Dec 31,  Sept 30,  Jun 30,  Mar 31,  Dec 31, 
(in thousands, except share data) 2021  2021  2021  2021  2020 
Interest income                    
Interest and fees on loans and leases $10,325  $10,696  $10,242  $9,786  $10,338 
Interest and dividends on securities:                    
Taxable  2,281   2,070   1,980   1,906   1,832 
Tax-exempt  567   517   516   486   465 
Dividends  63   55   59   62   64 
Total interest and dividends on securities  2,911   2,642   2,555   2,454   2,361 
Interest on interest-bearing deposits in other banks  53   31   1   3   3 
Total interest income  13,289   13,369   12,798   12,243   12,702 
Interest expense                    
Interest on deposits  410   582   718   798   1,077 
Interest on borrowed funds:                    
Federal Home Loan Bank of Pittsburgh advances  6   -   -   -   - 
Junior subordinated debentures  48   47   48   48   50 
Total interest on borrowed funds  54   47   48   48   50 
Total interest expense  464   629   766   846   1,127 
Net interest income before provision (credit) for loan and lease losses  12,825   12,740   12,032   11,397   11,575 
Provision (credit) for loan and lease losses  338   (513)  155   186   (115)
Net interest income after provision (credit) for loan and lease losses  12,487   13,253   11,877   11,211   11,690 
Non-interest income                    
Deposit service charges  1,038   1,009   956   874   875 
Net gain on the sale of available-for-sale securities  -   -   -   213   24 
Net gain on equity securities  145   156   36   364   307 
Net gain on the sale of mortgage loans held for sale  40   41   47   224   188 
Loan-related fees  76   77   104   133   148 
Income from bank-owned life insurance  139   139   142   121   116 
Bank-owned life insurance settlement  -   -   4   422   - 
Merchant services revenue  140   159   156   138   164 
Other  365   261   264   285   263 
Total non-interest income  1,943   1,842   1,709   2,774   2,085 
Non-interest expense                    
Salaries and employee benefits  4,901   4,022   4,038   3,736   3,984 
Occupancy expense  549   450   431   609   532 
Equipment expense  333   319   333   353   365 
Advertising expense  221   160   214   117   190 
Data processing expense  1,024   961   885   819   745 
Regulatory assessments  149   160   112   188   131 
Bank shares tax  (34)  352   342   315   (92)
Professional fees  150   153   112   259   339 
Other operating expenses  1,879   923   759   775   1,249 
Total non-interest expense  9,172   7,500   7,226   7,171   7,443 
Income before income taxes  5,258   7,595   6,360   6,814   6,332 
Income tax expense  1,300   1,244   1,131   981   1,176 
Net income $3,958  $6,351  $5,229  $5,833  $5,156 
                     
Income per share                    
Basic $0.20  $0.31  $0.26  $0.29  $0.26 
Diluted $0.20  $0.31  $0.26  $0.29  $0.26 
                     
Cash dividends declared per common share $0.075  $0.075  $0.060  $0.060  $0.055 
Weighted average number of shares outstanding:                    
Basic  19,988,272   19,997,021   20,222,216   20,242,262   20,241,730 
Diluted  20,015,776   20,009,387   20,232,694   20,253,606   20,244,652 
                     


FNCB Bancorp, Inc.
Consolidated Balance Sheets


  Dec 31,  Sept 30,  Jun 30,  Mar 31,  Dec 31, 
(in thousands) 2021  2021  2021  2021  2020 
Assets                    
Cash and cash equivalents:                    
Cash and due from banks $16,651  $24,612  $24,782  $22,382  $24,822 
Interest-bearing deposits in other banks  82,369   149,581   31,160   76,172   130,989 
Total cash and cash equivalents  99,020   174,193   55,942   98,554   155,811 
Available-for-sale debt securities, at fair value  522,566   470,323   432,807   407,396   350,035 
Equity securities, at fair value  4,922   4,777   4,303   4,267   3,026 
Restricted stock, at cost  1,911   1,826   1,099   1,149   1,745 
Loans held for sale  -   491   642   267   2,107 
Loans, net of net deferred costs and unearned income  979,439   958,408   976,538   931,943   901,102 
Allowance for loan and lease losses  (12,416)  (12,018)  (12,285)  (12,076)  (11,950)
Net loans  967,023   946,390   964,253   919,867   889,152 
Bank premises and equipment, net  16,082   17,269   17,360   17,407   17,579 
Accrued interest receivable  4,643   4,593   4,485   4,567   4,286 
Bank-owned life insurance  33,494   33,355   33,216   33,074   31,712 
Other assets  14,662   12,674   10,656   13,488   10,226 
Total assets $1,664,323  $1,665,891  $1,524,763  $1,500,036  $1,465,679 
                     
Liabilities                    
Deposits:                    
Demand (non-interest-bearing) $320,089  $321,952  $312,408  $319,532  $271,499 
Interest-bearing  1,134,939   1,160,114   1,025,770   1,003,296   1,015,949 
Total deposits  1,455,028   1,482,066   1,338,178   1,322,828   1,287,448 
Borrowed funds  30,310   10,310   10,310   10,310   10,310 
Accrued interest payable  49   56   87   99   108 
Other liabilities  16,479   11,509   15,574   11,869   11,953 
Total liabilities  1,501,866   1,503,941   1,364,149   1,345,106   1,309,819 
                     
Shareholders' equity                    
Preferred stock  -   -   -   -   - 
Common stock  24,987   24,982   25,128   25,300   25,307 
Additional paid-in capital  80,128   80,000   80,591   81,640   81,587 
Retained earnings  50,990   48,541   43,698   39,691   35,080 
Accumulated other comprehensive income  6,352   8,427   11,197   8,299   13,886 
Total shareholders' equity  162,457   161,950   160,614   154,930   155,860 
   Total liabilities and shareholders’ equity $1,664,323  $1,665,891  $1,524,763  $1,500,036  $1,465,679 
                     


FNCB Bancorp, Inc.
Summary Tax-equivalent Net Interest Income


  Three Months Ended 
  Dec 31,  Sept 30,  Jun 30,  Mar 31,  Dec 31, 
(dollars in thousands) 2021  2021  2021  2021  2020 
Interest income                    
Loans:                    
Loans and leases - taxable $9,983  $10,364  $9,897  $9,401  $9,938 
Loans and leases - tax-free  433   420   437   487   506 
Total loans  10,416   10,784   10,334   9,888   10,444 
Securities:                    
Securities, taxable  2,344   2,125   2,039   1,968   1,896 
Securities, tax-free  719   654   653   615   589 
Total interest and dividends on securities  3,063   2,779   2,692   2,583   2,485 
Interest-bearing deposits in other banks  53   31   1   3   3 
Total interest income  13,532   13,594   13,027   12,474   12,932 
Interest expense                    
Deposits  410   582   718   798   1,077 
Borrowed funds  54   47   48   48   50 
Total interest expense  464   629   766   846   1,127 
Net interest income $13,068  $12,965  $12,261  $11,628  $11,805 
                     
Average balances                    
Earning assets:                    
Loans:                    
Loans and leases - taxable $915,693  $921,648  $909,833  $873,544  $889,964 
Loans and leases - tax-free  45,920   43,091   44,583   46,897   46,444 
Total loans and leases  961,613   964,739   954,416   920,441   936,408 
Securities:                    
Securities, taxable  409,210   357,684   326,848   286,128   255,111 
Securities, tax-free  92,685   82,706   82,304   75,876   71,154 
Total securities  501,895   440,390   409,152   362,004   326,265 
Interest-bearing deposits in other banks  125,609   94,434   7,042   13,490   14,808 
Total interest-earning assets  1,589,117   1,499,563   1,370,610   1,295,935   1,277,481 
Non-earning assets  91,968   105,912   145,861   175,301   181,708 
Total assets $1,681,085  $1,593,014  $1,516,471  $1,471,236  $1,459,189 
Interest-bearing liabilities:                    
Deposits $1,163,290  $1,080,312  $1,019,612  $999,085  $1,016,916 
Borrowed funds  17,810   10,419   10,310   10,310   10,310 
Total interest-bearing liabilities  1,181,100   1,090,731   1,029,922   1,009,395   1,027,226 
Demand deposits  322,536   325,571   317,670   294,525   268,531 
Other liabilities  15,846   15,258   11,998   12,413   11,377 
Shareholders' equity  161,603   161,454   156,881   154,903   152,055 
Total liabilities and shareholders' equity $1,681,085  $1,593,014  $1,561,471  $1,471,236  $1,459,189 
                     
Yield/Cost                    
Earning assets:                    
Loans:                    
Interest and fees on loans and leases - taxable  4.36%  4.50%  4.35%  4.30%  4.47%
Interest and fees on loans and leases - tax-free  3.77%  3.90%  3.92%  4.15%  4.36%
Total loans  4.33%  4.47%  4.33%  4.30%  4.46%
Securities:                    
Securities, taxable  2.29%  2.38%  2.50%  2.75%  2.97%
Securities, tax-free  3.10%  3.16%  3.17%  3.24%  3.31%
Total securities  2.44%  2.52%  2.63%  2.85%  3.05%
Interest-bearing deposits in other banks  0.17%  0.13%  0.06%  0.09%  0.08%
Total earning assets  3.41%  3.63%  3.80%  3.85%  4.05%
Interest-bearing liabilities:                    
Interest on deposits  0.14%  0.22%  0.28%  0.32%  0.42%
Interest on borrowed funds  1.21%  1.80%  1.86%  1.86%  1.94%
Total interest-bearing liabilities  0.16%  0.23%  0.30%  0.34%  0.44%
Net interest spread  3.25%  3.40%  3.50%  3.51%  3.61%
Net interest margin  3.29%  3.46%  3.58%  3.59%  3.70%
                     


FNCB Bancorp, Inc.
Asset Quality Data


  Dec 31,  Sept 30,  Jun 30,  Mar 31,  Dec 31, 
(in thousands) 2021  2021  2021  2021  2020 
At period end                    
Non-accrual loans, including non-accruing troubled debt restructured loans (TDRs) $3,863  $4,475  $4,555  $4,842  $5,581 
Loans past due 90 days or more and still accruing  -   -   -   -   - 
Total non-performing loans and leases  3,863   4,475   4,555   4,842   5,581 
Other real estate owned (OREO)  920   54   236   58   58 
Other non-performing assets  1,773   1,773   1,773   1,900   1,900 
Total non-performing assets $6,556  $6,302  $6,564  $6,800  $7,539 
                     
Accruing TDRs $6,666  $6,666  $6,823  $6,962  $6,975 
                     
                     
For the three months ended                    
Allowance for loan and lease losses                    
Beginning balance $12,018  $12,285  $12,076  $11,950  $12,269 
Loans and leases charged-off  34   255   136   361   338 
Recoveries of charged-off loans and leases  94   501   190   301   134 
Net (recoveries)/charge-offs  (60)  (246)  (54)  60   204 
Provision (credit) for loan and lease losses  338   (513)  155   186   (115)
Ending balance $12,416  $12,018  $12,285  $12,076  $11,950 
                     


FNCB Bancorp, Inc.
Non-GAAP Reconciliations


  Dec 31,  Sept 30,  Jun 30,  Mar 31,  Dec 31, 
(dollars in thousands) 2021  2021  2021  2021  2020 
Annualized net interest margin:                    
Net interest margin (1 divided by 3)  3.29%  3.46%  3.58%  3.59%  3.70%
Net interest margin, excluding PPP loans (non-GAAP) (2 divided by 4)  3.09%  3.15%  3.45%  3.37%  3.49%
                     
Net interest income (FTE) (1) $13,068  $12,965  $12,261  $11,628  $11,805 
PPP loan interest and fee income  1,033   1,709   1,319   1,499   1,485 
Net interest income (FTE), excluding PPP loans (non-GAAP) (2) $12,035  $11,256  $10,942  $10,129  $10,320 
                     
Average earning assets (3)(a) $1,589,117  $1,499,563  $1,370,610  $1,295,935  $1,277,481 
Average PPP loans  33,205   69,132   101,779   94,801   95,837 
Average earning assets, excluding PPP loans (non-GAAP) (4) $1,555,912  $1,430,431  $1,268,831  $1,201,134  $1,181,644 
                     
                     
Allowance for loan and lease losses/total period end loans                    
Allowance for loans and lease losses/total period end loans (5 divided by 6)  1.27%  1.25%  1.26%  1.30%  1.33%
Allowance for loans and lease losses/total period end loans, excluding PPP loans (non-GAAP) (5 divided by 7)  1.30%  1.32%  1.37%  1.46%  1.45%
                     
Allowance for loans and lease losses (5) $12,416  $12,018  $12,285  $12,076  $11,950 
                     
Total period end loans (6) $979,439  $958,408  $976,538  $931,943  $901,102 
PPP loans outstanding at period end  21,940   49,434   82,354   103,466   76,004 
Total period end loans, excluding PPP loans (non-GAAP) (7) $957,499  $908,974  $894,184  $828,477  $825,098