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FNCB Bancorp, Inc. Reports Earnings Increase for 2020 of 39% and Announces Authorization of Stock Repurchase Program

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FNCB Bancorp, Inc.
·38 min read
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DUNMORE, Pa., Jan. 29, 2021 (GLOBE NEWSWIRE) -- FNCB Bancorp, Inc. (NASDAQ: FNCB), the parent company of Dunmore-based FNCB Bank (the “Bank”), today reported net income for 2020 of $15.3 million, or $0.76 per basic and diluted share, compared to net income of $11.1 million, or $0.56 per basic and diluted share, for 2019. The $4.2 million, or 38.6%, increase in earnings was due to increases of $3.9 million in net interest income and $1.6 million in non-interest income and a $0.8 million reduction in non-interest expense. Partially offsetting these positive factors were increases in the provision for loan and lease losses and income tax expense of $1.1 million and $0.9 million, respectively. Net income for the fourth quarter of 2020 was $5.2 million, or $0.26 per basic and diluted share, an increase of $1.7 million, or 47.8%, compared to $3.5 million, or $0.17 per basic and diluted share, for the same quarter of 2019, which primarily reflected a $2.3 million increase in net interest income, partially offset by a $0.6 million decrease in non-interest income.

Return on average assets and return on average shareholders’ equity were 1.13% and 10.66%, respectively, in 2020, compared to 0.92% and 8.88%, respectively in 2019. For the three months ended December 31, 2020, annualized return on average assets and annualized return on average shareholders’ equity were 1.41% and 13.49%, respectively. Comparatively, annualized return on average assets was 1.15% and annualized return on average shareholders’ equity was 10.43% for the three months ended December 31, 2019.

Dividends declared and paid in 2020 totaled $0.22 per share, an increase of $0.02 per share, or 10.0%, compared to $0.20 per share for 2019. Total dividends declared and paid for 2020 equated to a dividend yield of approximately 3.44% based on the closing stock price of $6.40 per share at December 31, 2020.

Stock Repurchase Program

On January 27, 2021, FNCB's Board of Directors authorized a stock repurchase program under which up to 975,000 shares of FNCB's outstanding common stock may be acquired in the open market commencing no earlier than February 3, 2021 and expiring December 31, 2021 pursuant to a trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended.

The shares will be purchased from time to time at prevailing market prices, through open market transactions depending upon market conditions. Repurchases under the repurchase program will be administered through an independent broker. Repurchases 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 available 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, 2020, FNCB had approximately 20.2 million shares outstanding.

Gerard A. Champi, President and Chief Executive Officer, remarked, “The Board’s approval of this program reflects our confidence in FNCB’s future. Repurchasing shares is one means of underscoring our commitment to enhancing shareholder value.”

2020 Highlights:

  • Fourth quarter earnings per share increased $0.09 per share, or 52.9%, to $0.26 per share in 2020 compared to $0.17 per share for the fourth quarter of 2019. For the full year, earnings per share increased $0.20 per share, or 35.7%, to $0.76 per share in 2020 from $0.56 per share in 2019;

  • Return on average assets improved to 1.41% for the fourth quarter of 2020 from 1.15% for the same quarter of 2019. For the full year, return on average assets was 1.13% in 2020 compared to 0.92% in 2019;

  • For the fourth quarter, return on average shareholders' equity improved to 13.49% in 2020 from 10.43% in 2019. Return on average shareholders' equity for all of 2020 improved to 10.66% compared to 8.88% for 2019;

  • Tangible book value increased $1.08 per share, or 16.3%, to $7.70 per share at December 31, 2020 from $6.62 per share at December 31, 2019;

  • Total risk-based capital and Tier I Leverage ratios (FNCB Bank) were 15.79% and 9.57% at December 31, 2020 compared to 14.77% and 10.36% at December 31, 2019, respectively;

  • Cost of funds for the fourth quarter of 2020 decreased 54 basis points to 0.44% from 0.98% for the fourth quarter of 2019. Year over year, cost of funds decreased 44 basis points to 0.64% in 2020 from 1.08% in 2019;

  • Ratio of non-performing loans to total loans improved to 0.62% at December 31, 2020 compared to 1.10% at December 31, 2019; and

  • The efficiency ratio improved to 54.89% for the fourth quarter of 2020 from 67.35% for the same quarter of 2019.

Mr. Champi commented, "Despite a very challenging operating environment brought on by the COVID-19 pandemic, we were able to achieve much success in 2020. I am extremely proud of the effort put forth by our entire FNCB team. In addition to recording very strong earnings results, most importantly, we were able to provide support to our communities through this very difficult time. Our Bank became a leader with respect to the SBA's Paycheck Protection Program ("PPP"), guiding many businesses in our market area through the application, funding and forgiveness process. Additionally, we were one of a select group of approved lenders participating in the Federal Reserve's Main Street Lending Program. Participation in these programs, along with market opportunities within our investment portfolios and robust demand for residential mortgages, contributed positively to our overall performance and improved our efficiency in 2020. As we head into 2021, our strong balance sheet position will allow us to continue to support the borrowing needs of individuals and businesses, including funding for the second round of PPP loans that recently became available."

Summary Results

For the three months ended December 31, 2020, tax-equivalent net interest income increased $2.4 million, or 25.4%, to $11.8 million from $9.4 million for the same three months of 2019. The increase in tax-equivalent net interest income for the fourth quarter was due to a $1.3 million, or 11.6%, increase in tax-equivalent interest income to $12.9 million in 2020 from $11.6 million in 2019, coupled with a $1.1 million, or 48.1%, reduction in interest expense to $1.1 million in 2020 from $2.2 million in 2019. Included in tax-equivalent interest income in the fourth quarter of 2020 was $1.2 million in net PPP loan origination fees that were recognized upon forgiveness of the respective loan balances. Additionally, the higher amount of tax-equivalent interest income reflected higher balances of earning assets, partially offset by a reduction in the tax-equivalent yield on earning assets. Average earning assets increased $171.8 million, or 15.5%, to $1.277 billion for the three months ended December 31, 2020 from $1.106 billion for the same three months of 2019, which reflected increases in volumes of both loans, primarily PPP loans, and investment securities. Partially offsetting the increase in volumes was a 14 basis point reduction in the tax-equivalent yield on earning assets to 4.05% for the fourth quarter of 2020 from 4.19% for the same quarter of 2019. With respect to the reduction in interest expense, FNCB's cost of funds decreased 54 basis points to 0.44% from 0.98% comparing the three months ended December 31, 2020 and 2019. Specifically, FNCB's cost of interest-bearing deposits decreased 46 basis points to 0.42% from 0.88% comparing the fourth quarters of 2020 and 2019, reflecting a reduction in market interest rates and oversupply. Additionally, the drop in short-term market interest rates contributed to a 50 basis point decrease in average borrowing costs to 1.94% from 2.44% comparing the three months ended December 31, 2020 and 2019. FNCB’s tax-equivalent net interest margin for the fourth quarter of 2020 improved 29 basis points to 3.70% compared to 3.41% for the same quarter of 2019. The margin improvement primarily reflected the impact of PPP loans including interest income and net loan origination fees. Excluding the impact of PPP loans (non-GAAP), FNCB's tax-equivalent net interest margin would have been 3.50% for the fourth quarter of 2020. For the year ended December 31, 2020, tax-equivalent net interest income increased $4.3 million, or 11.7%, to $41.0 million compared to $36.7 million for the year ended December 31, 2019. The improvement in net interest income for the year-to-date period was largely due to a reduction in funding costs, recognition of the $1.2 million in net PPP loan origination fees and an increase in average earnings assets, which were partially offset by a decrease in the tax-equivalent yield on average earning assets. For the year ended December 31, 2020, the cost of funds decreased 44 basis points to 0.64% from 1.08% for the year ended December 31, 2019. Conversely, the tax-equivalent earning-asset yield decreased 31 basis points to 3.85% in 2020 compared to 4.16% in 2019. The tax-equivalent net interest margin improved 6 basis points to 3.35% in 2020 from 3.29% in 2019. 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 2020 and 2019.

For the quarter ended December 31, 2020, non-interest income was $2.1 million, a decrease of $0.6 million, or 22.7%, compared to $2.7 million for the same period of 2019. The decrease in non-interest income for the fourth quarter was largely due to reductions in loan referral fees/interest rate swap revenue and net gains on the sale of available-for-sale securities, partially mitigated by an increase in net gains on equity securities and net gains on the sale of mortgage loans held for sale. Loan referral fees/interest rate swap revenue declined $629 thousand, or 92.4%, to $52 thousand for the fourth quarter of 2020 from $681 thousand for the same quarter of 2019, due to a reduction in the number and volume of such transactions. Net gains on the sale of available-for-sale securities was $24 thousand for the three months ended December 31, 2020, a decrease of $501 thousand, or 95.4%, from $525 thousand for the same three months of 2019. Market value appreciation resulted in a net gain on equity securities of $307 thousand for the fourth quarter of 2020 compared to a net loss of $2 thousand for the same quarter of 2019. Strong demand for home mortgages contributed to a $133 thousand, or 241.8%, increase in net gains on the sale of mortgage loans held for sale comparing the fourth quarters of 2020 and 2019. Non-interest income totaled $9.2 million for the year ended December 31, 2020, an increase of $1.6 million, or 21.4%, compared to $7.6 million for the year ended December 31, 2019. The increase in non-interest income for the year-to-date periods was primarily due to an increase in net gains on equity securities of $1.1 million. FNCB recognized a gain of $1.1 million on the conversion of an equity security of a bank holding company that was part of a merger and acquisition transaction completed in the third quarter of 2020. Also contributing to the increase in year-to-date non-interest income were increases of $400 thousand, or 158.1%, in net gains on the sale of mortgage loans held for sale, $301 thousand, or 24.5%, in net gains on the sale of securities, and $217 thousand, or 7.2%, in deposit service charges. Partially offsetting these positive factors was a decrease in loan referral fees/interest rate swap revenue of $313 thousand, or 44.5%, to $390 thousand in 2020 compared to $703 thousand in 2019.

For the three months ended December 31, 2020, non-interest expense decreased by $363 thousand, or 4.7%, to $7.4 million from $7.8 million for the comparable three months of 2019. The reduction in non-interest expense for the fourth quarter was primarily due to a decrease in other operating expenses of $527 thousand, or 25.1%, which largely reflected a $116 thousand credit for off balance sheet commitments for the three months ended December 31, 2020 compared to a provision of $204 thousand for the same three months of 2019. Also factoring into the reduction in other operating expenses comparing the three months ended December 31, 2020 and 2019 were prepayment penalties of $259 thousand for the early payoff of FHLB advances recorded in the fourth quarter of 2019. Non-interest expense for all of 2020 totaled $28.9 million, a decrease of $767 thousand, or 2.6%, from $29.7 million for 2019. Similar to the reasons for the fourth quarter reduction, the decrease in non-interest expense was predominantly due to a $740 thousand, or 12.0%, reduction in other operating expenses, resulting from a $538 thousand favorable swing in the provision for off balance sheet commitments, due to lower commitment volumes.

Asset Quality

FNCB's asset quality improved throughout 2020, as total non-performing loans decreased $3.5 million to $5.6 million, or 0.62% of total loans, at December 31, 2020 from $9.1 million, or 1.10% of total loans, at December 31, 2019. On a linked quarter basis, non-performing loans decreased $595 thousand, or 9.6%, from $6.2 million, or 0.64% of total loans, at September 30, 2020. FNCB’s loan delinquency rate (total delinquent loans as a percentage of total loans) was 0.99% at December 31, 2020 compared to 1.46% at the end of 2019. The decrease in non-performing loans and loan delinquencies primarily reflected two large commercial relationships that returned to accrual status during 2020. Additionally, FNCB recorded a net recovery of previously charged-off loans of $1.1 million, or 0.12% of average loans, for 2020 compared net charge-offs of 0.16% for 2019. The net recovery position for 2020 was related primarily to large recoveries received on two previously charged-off commercial loans. Due to continued economic uncertainty related to the COVID-19 pandemic, FNCB increased its provision for loan and lease losses $1.1 million, or 143.5%, to $1.9 million in 2020 from $0.8 million in 2019. The allowance for loan and lease losses as a percentage of gross loans was 1.33% and 1.08% at December 31, 2020 and 2019, respectively. Excluding PPP loans (non-GAAP), FNCB's allowance for loan and lease losses as a percentage of gross loans was 1.45% at December 31, 2020.

Cares Act and COVID-19 Related Events

On December 27, 2020, a second stimulus bill was signed into law adding emergency relief to the original Cares Act that was enacted in March 2020. The new relief effort includes a second round of PPP funding through the Small Business Administration ("SBA") for qualifying businesses as well as additional fiscal stimulus packages and emergency relief programs. During 2020, FNCB facilitated and funded 1,002 PPP loans representing approximately $118.6 million in funding. As of December 31, 2020, FNCB has received $40 million in borrower forgiveness from the SBA and anticipates that the remaining PPP loan balances will qualify for borrower forgiveness under the guidelines of the program. On January 19, 2021, FNCB began originating PPP loans as part of the second round of funding and as of January 28, 2021, has underwritten, submitted and received SBA approval for 162 loans representing approximately $29.7 million in funding.

During 2020, FNCB also extended loan payment deferral modifications under Section 1048 of the Cares Act to qualifying commercial and consumer loan customers experiencing financial disruption due to the COVID-19 pandemic. As of December 31, 2020, FNCB had made 843 such modifications on loan balances with an aggregate recorded investment of approximately $151.4 million. Additionally, FNCB extended a second payment deferral modification for 79 loans with an aggregate recorded investment of $22.0 million. As of December 31, 2020, there were 45 loans with an aggregate recorded investment of $9.5 that were still under a payment relief modification.

Financial Condition

Total assets increased $262.1 million, or 21.8%, to $1.466 billion at December 31, 2020, from $1.204 billion at December 31, 2019. The significant year-over-year balance sheet growth reflected substantial increases in cash and cash equivalents, available-for-sale debt securities, and loans, net of net deferred loan costs and unearned income. Cash and cash equivalents increased $121.2 million, or 350.8% to $155.8 million at December 31, 2020 from $34.6 million at December 31, 2019. Available-for-sale debt securities increased $77.2 million, or 28.3%, to $350.0 million at December 31, 2020 from $272.8 million at December 31, 2019. Loans, net of net deferred loan costs and unearned income, grew $72.6 million, or 8.8%, to $901.1 million at December 31, 2020, from $828.5 million at December 31, 2019. The increase was largely due to the origination of PPP loans, of which $76.0 million, net of net deferred origination fees, were outstanding at December 31, 2020. Total deposits increased $285.7 million, or 28.5%, to $1.287 billion at December 31, 2020 from $1.002 billion at December 31, 2019. Interest-bearing deposits increased $193.7 million, or 23.6%, to $1.016 billion at December 31, 2020 from $822.2 million at December 31, 2019. Additionally, non-interest-bearing deposits increased $92.0 million, or 51.3%, to $271.5 million at December 31, 2020 from $179.5 million at December 31, 2019. FNCB used some of the excess liquidity in 2020 to repay FHLB of Pittsburgh advances. Total borrowed funds decreased $46.9 million, or 82.0%, to $10.3 million at December 31, 2020 from $57.2 million at December 31, 2019. FNCB had no term or overnight borrowings through the FHLB of Pittsburgh outstanding as of December 31, 2020.

Total shareholders’ equity increased $22.2 million, or 16.7%, to $155.9 million at December 31, 2020 from $133.6 million at December 31, 2019. Contributing to the increase in capital was 2020 net income of $15.3 million and a $10.8 million increase in accumulated other comprehensive income related primarily to appreciation in the fair value of FNCB’s available-for-sale debt securities, net of deferred taxes. Partially offsetting these increases were dividends declared and paid in 2020 of $4.4 million. FNCB's tangible book value per share improved $1.08, or 16.3%, to $7.70 per share at December 31, 2020 from $6.62 per share at December 31, 2019. FNCB Bank’s total risk-based capital and Tier I leverage ratios were 15.79% and 9.57%, respectively, at December 31, 2020 compared to 14.77% and 10.36%, respectively, at December 31, 2019.

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 FNCB’s beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions, 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 FNCB’s financial performance to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements: the effect of the coronavirus ("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 FNCB’s market area; the deterioration of one or a few of the commercial real estate loans with relatively large balances contained in FNCB’s loan portfolio; greater risk of loan defaults and losses from concentration of loans held by FNCB, including those to insiders and related parties; if FNCB’s portfolio of loans to small and mid-sized community-based businesses increases its credit risk; if FNCB’s 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 FNCB’s investment securities is other-than-temporary could result in FNCB recording an impairment loss; if FNCB’s 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 FNCB’s 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 FNCB’s information systems; any systems failures or interruptions in information technology and telecommunications systems of third parties on which FNCB depends; security breaches; if FNCB’s 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 management’s 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 FNCB’s 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 Bank’s 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 FNCB’s 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 management’s analysis only as of the date of this press release, 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, 2019 and Form 10-Q for the quarters ended March 31, 2020, June 30, 2020 and September 30, 2020.

FNCB Bancorp, Inc.

Selected Financial Data

Dec 31,

Sept 30,

Jun 30,

Mar 31,

Dec 31,

2020

2020

2020

2020

2019

Per share data:

Net income (fully diluted)

$

0.26

$

0.20

$

0.20

$

0.10

$

0.17

Cash dividends declared

$

0.055

$

0.055

$

0.055

$

0.055

$

0.050

Book value

$

7.70

$

7.41

$

7.19

$

6.84

$

6.62

Tangible book value

$

7.70

$

7.41

$

7.19

$

6.84

$

6.62

Market value:

High

$

7.95

$

6.93

$

7.19

$

8.54

$

8.86

Low

$

5.16

$

5.08

$

5.15

$

5.10

$

7.03

Close

$

6.40

$

5.32

$

5.75

$

6.91

$

8.45

Common shares outstanding

20,245,649

20,243,589

20,208,607

20,174,250

20,171,408

Selected ratios:

Annualized return on average assets

1.41

%

1.15

%

1.21

%

0.69

%

1.15

%

Annualized return on average shareholders' equity

13.49

%

11.05

%

11.62

%

6.06

%

10.43

%

Efficiency ratio

54.89

%

66.66

%

56.53

%

66.46

%

67.35

%

Tier I leverage ratio (FNCB Bank)

9.57

%

10.17

%

10.60

%

11.09

%

10.36

%

Total risk-based capital to risk-adjusted assets (FNCB Bank)

15.79

%

16.09

%

15.68

%

15.44

%

14.77

%

Average shareholders' equity to average total assets

10.42

%

10.40

%

10.38

%

11.37

%

11.01

%

Yield on earning assets (FTE)

4.05

%

3.65

%

3.70

%

4.06

%

4.19

%

Cost of funds

0.44

%

0.59

%

0.69

%

0.89

%

0.98

%

Net interest spread (FTE)

3.61

%

3.06

%

3.01

%

3.17

%

3.21

%

Net interest margin (FTE)

3.70

%

3.19

%

3.18

%

3.35

%

3.41

%

Total delinquent loans/total loans

0.99

%

0.81

%

0.89

%

1.41

%

1.46

%

Allowance for loan and lease losses/total loans

1.33

%

1.28

%

1.16

%

1.19

%

1.08

%

Non-performing loans/total loans

0.62

%

0.64

%

0.71

%

1.03

%

1.10

%

Annualized net charge-offs (recoveries)/average loans

0.09

%

(0.49

%)

(0.12

%)

0.09

%

0.16

%


FNCB Bancorp, Inc.

Year-to-Date Consolidated Statements of Income

Year Ended

December 31,

(in thousands, except share data)

2020

2019

Interest income

Interest and fees on loans

$

37,615

$

37,818

Interest and dividends on securities:

U.S. government agencies

2,336

3,545

State and political subdivisions, tax-free

1,373

149

State and political subdivisions, taxable

3,025

3,263

Other securities

1,961

1,093

Total interest and dividends on securities

8,695

8,050

Interest on interest-bearing deposits in other banks

28

188

Total interest income

46,338

46,056

Interest expense

Interest on deposits

5,404

8,101

Interest on borrowed funds:

Federal Reserve Bank Discount Window advances

32

-

Federal Home Loan Bank of Pittsburgh advances

474

1,241

Subordinated debentures

-

24

Junior subordinated debentures

250

430

Total interest on borrowed funds

756

1,695

Total interest expense

6,160

9,796

Net interest income before provision for loan and lease losses

40,178

36,260

Provision for loan and lease losses

1,941

797

Net interest income after provision for loan and lease losses

38,237

35,463

Non-interest income

Deposit service charges

3,252

3,035

Net gain on the sale of available-for-sale securities

1,528

1,227

Net gain on equity securities

1,171

29

Net gain on the sale of mortgage loans held for sale

653

253

Net gain on the sale of other real estate owned

-

20

Loan-related fees

348

378

Income from bank-owned life insurance

482

520

Loan referral fees/Interest rate swap revenue

390

703

Merchant services revenue

565

536

Other

861

919

Total non-interest income

9,250

7,620

Non-interest expense

Salaries and employee benefits

15,246

15,518

Occupancy expense

2,052

1,948

Equipment expense

1,477

1,319

Data processing expense

2,933

3,113

Bank shares tax

786

566

Professional fees

999

1,056

Other operating expenses

5,422

6,162

Total non-interest expense

28,915

29,682

Income before income taxes

18,572

13,401

Income tax expense

3,225

2,326

Net income

$

15,347

$

11,075

Income per share

Basic

$

0.76

$

0.56

Diluted

$

0.76

$

0.56

Cash dividends declared per common share

$

0.22

$

0.20

Weighted average number of shares outstanding:

Basic

20,210,439

19,802,095

Diluted

20,212,187

19,807,592


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)

2020

2020

2020

2020

2019

Interest income

Interest and fees on loans

$

10,338

$

9,078

$

9,060

$

9,139

$

9,505

Interest and dividends on securities:

U.S. government agencies

503

494

589

750

822

State and political subdivisions, tax-free

465

463

388

57

37

State and political subdivisions, taxable

784

741

735

765

718

Other securities

609

525

415

412

364

Total interest and dividends on securities

2,361

2,223

2,127

1,984

1,941

Interest on interest-bearing deposits in other banks

3

1

3

21

33

Total interest income

12,702

11,302

11,190

11,144

11,479

Interest expense

Interest on deposits

1,077

1,291

1,376

1,660

1,818

Interest on borrowed funds:

Federal Reserve Bank Discount Window advances

-

18

14

-

-

Federal Home Loan Bank of Pittsburgh advances

-

95

160

219

253

Junior subordinated debentures

50

52

60

88

99

Total interest on borrowed funds

50

165

234

307

352

Total interest expense

1,127

1,456

1,610

1,967

2,170

Net interest income before (credit) provision for loan and lease losses

11,575

9,846

9,580

9,177

9,309

(Credit) Provision for loan and lease losses

(115

)

74

831

1,151

(33

)

Net interest income after (credit) provision for loan and lease losses

11,690

9,772

8,749

8,026

9,342

Non-interest income

Deposit service charges

875

844

708

825

832

Net gain on the sale of available-for-sale securities

24

433

922

149

525

Net gain (loss) on equity securities

307

846

4

14

(2

)

Net gain on the sale of mortgage loans held for sale

188

186

183

96

55

Loan-related fees

148

119

25

56

147

Income from bank-owned life insurance

116

118

119

129

126

Loan referral fees/Interest rate swap revenue

52

76

214

48

681

Merchant services revenue

164

154

112

135

145

Other

211

194

214

242

187

Total non-interest income

2,085

2,970

2,501

1,694

2,696

Non-interest expense

Salaries and employee benefits

3,984

3,835

3,498

3,929

3,884

Occupancy expense

532

500

466

554

494

Equipment expense

365

381

360

371

351

Data processing expense

745

754

709

725

801

Bank shares tax

(92

)

263

315

300

(194

)

Professional fees

339

279

193

188

332

Other operating expenses

1,570

1,831

883

1,138

2,097

Total non-interest expense

7,443

7,843

6,424

7,205

7,806

Income before income taxes

6,332

4,899

4,826

2,515

4,232

Income tax expense

1,176

792

805

452

744

Net income

$

5,156

$

4,107

$

4,021

$

2,063

$

3,488

Income per share

Basic

$

0.26

$

0.20

$

0.20

$

0.10

$

0.17

Diluted

$

0.26

$

0.20

$

0.20

$

0.10

$

0.17

Cash dividends declared per common share

$

0.055

$

0.055

$

0.055

$

0.055

$

0.050

Weighted average number of shares outstanding:

Basic

20,241,730

20,235,384

20,191,527

20,172,498

20,170,241

Diluted

20,244,652

20,235,384

20,191,527

20,176,565

20,175,758


FNCB Bancorp, Inc.

Consolidated Balance Sheets

Dec 31,

Sept 30,

Jun 30,

Mar 31,

Dec 31,

(in thousands)

2020

2020

2020

2020

2019

Assets

Cash and cash equivalents:

Cash and due from banks

$

24,822

$

26,121

$

20,089

$

15,243

$

22,861

Interest-bearing deposits in other banks

130,989

78,895

81,390

30,304

11,704

Total cash and cash equivalents

155,811

105,016

101,479

45,547

34,565

Available-for-sale debt securities, at fair value

350,035

321,399

305,611

302,638

272,839

Equity securities, at fair value

3,026

2,719

938

934

920

Restricted stock, at cost

1,745

1,791

3,309

4,224

3,804

Loans held for sale

2,107

662

765

470

1,061

Loans, net of net deferred costs and unearned income

901,102

960,229

948,428

834,935

828,479

Allowance for loan and lease losses

(11,950

)

(12,269

)

(11,024

)

(9,907

)

(8,950

)

Net loans

889,152

947,960

937,404

825,028

819,529

Bank premises and equipment, net

17,579

17,413

17,467

17,447

17,518

Accrued interest receivable

4,286

4,693

5,201

3,387

3,234

Bank-owned life insurance

31,712

31,596

31,478

31,359

31,230

Other assets

10,226

9,942

14,519

17,198

18,841

Total assets

$

1,465,679

$

1,443,191

$

1,418,171

$

1,248,232

$

1,203,541

Liabilities

Deposits:

Demand (non-interest-bearing)

$

271,499

$

274,110

$

266,846

$

181,223

$

179,465

Interest-bearing

1,015,949

998,128

902,781

820,339

822,244

Total deposits

1,287,448

1,272,238

1,169,627

1,001,562

1,001,709

Borrowed funds:

Federal Reserve Bank Discount Window advances

-

-

36,242

10,000

-

Federal Home Loan Bank of Pittsburgh advances

-

-

42,809

77,934

46,909

Junior subordinated debentures

10,310

10,310

10,310

10,310

10,310

Total borrowed funds

10,310

10,310

89,361

98,244

57,219

Accrued interest payable

108

139

248

261

258

Other liabilities

11,953

10,458

13,578

10,233

10,748

Total liabilities

1,309,819

1,293,145

1,272,814

1,110,300

1,069,934

Shareholders' equity

Preferred stock

-

-

-

-

-

Common stock

25,307

25,304

25,260

25,217

25,214

Additional paid-in capital

81,587

81,500

81,261

81,209

81,130

Retained earnings

35,080

31,044

28,057

25,155

24,207

Accumulated other comprehensive income

13,886

12,198

10,779

6,351

3,056

Total shareholders' equity

155,860

150,046

145,357

137,932

133,607

Total liabilities and shareholders’ equity

$

1,465,679

$

1,443,191

$

1,418,171

$

1,248,232

$

1,203,541


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)

2020

2020

2020

2020

2019

Interest income

Loans:

Loans - taxable

$

9,938

$

8,688

$

8,661

$

8,693

$

9,138

Loans - tax-free

506

494

505

565

464

Total loans

10,444

9,182

9,166

9,258

9,602

Securities:

Securities, taxable

1,896

1,760

1,739

1,927

1,904

Securities, tax-free

589

586

491

72

47

Total interest and dividends on securities

2,485

2,346

2,230

1,999

1,951

Interest-bearing deposits in other banks

3

1

3

21

33

Total interest income

12,932

11,529

11,399

11,278

11,586

Interest expense

Deposits

1,077

1,291

1,376

1,660

1,818

Borrowed funds

50

165

234

307

352

Total interest expense

1,127

1,456

1,610

1,967

2,170

Net interest income

$

11,805

$

10,073

$

9,789

$

9,311

$

9,416

Average balances

Earning assets:

Loans:

Loans - taxable

$

889,964

$

908,095

$

875,119

$

780,855

$

791,577

Loans - tax-free

46,444

44,826

46,836

52,615

42,954

Total loans

936,408

952,921

921,955

833,470

834,531

Securities:

Securities, taxable

255,111

232,081

247,939

263,697

258,790

Securities, tax-free

71,154

69,973

56,220

7,698

4,598

Total securities

326,265

302,054

304,159

271,395

263,388

Interest-bearing deposits in other banks (a)

14,808

8,286

6,439

7,230

7,713

Total interest-earning assets (a)

1,277,481

1,263,261

1,232,553

1,112,095

1,105,632

Non-earning assets (a)

181,708

159,037

108,608

91,553

99,373

Total assets

$

1,459,189

$

1,422,298

$

1,341,161

$

1,203,648

$

1,205,005

Interest-bearing liabilities:

Deposits

$

1,016,916

$

943,754

$

850,525

$

821,216

$

830,318

Borrowed funds

10,310

51,629

81,813

61,843

57,682

Total interest-bearing liabilities

1,027,226

995,383

932,338

883,059

888,000

Demand deposits

268,531

267,636

258,609

172,132

172,935

Other liabilities

11,377

11,384

11,065

11,636

11,361

Shareholders' equity

152,055

147,895

139,149

136,821

132,709

Total liabilities and shareholders' equity

$

1,459,189

$

1,422,298

$

1,341,161

$

1,203,648

$

1,205,005

Yield/Cost

Earning assets:

Loans:

Interest and fees on loans - taxable

4.47

%

3.83

%

3.96

%

4.45

%

4.62

%

Interest and fees on loans - tax-free

4.36

%

4.41

%

4.31

%

4.30

%

4.32

%

Total loans

4.46

%

3.85

%

3.98

%

4.44

%

4.60

%

Securities:

Securities, taxable

2.97

%

3.03

%

2.81

%

2.92

%

2.94

%

Securities, tax-free

3.31

%

3.35

%

3.49

%

3.74

%

4.09

%

Total securities

3.05

%

3.11

%

2.93

%

2.95

%

2.96

%

Interest-bearing deposits in other banks (a)

0.08

%

0.05

%

0.19

%

1.16

%

1.71

%

Total earning assets (a)

4.05

%

3.65

%

3.70

%

4.06

%

4.19

%

Interest-bearing liabilities:

Interest on deposits

0.42

%

0.55

%

0.65

%

0.81

%

0.88

%

Interest on borrowed funds

1.94

%

1.28

%

1.14

%

1.99

%

2.44

%

Total interest-bearing liabilities

0.44

%

0.59

%

0.69

%

0.89

%

0.98

%

Net interest spread (a)

3.61

%

3.06

%

3.01

%

3.17

%

3.21

%

Net interest margin (a)

3.70

%

3.19

%

3.18

%

3.35

%

3.41

%

(a) Reflects revisions to average balances for the three months ended September 30, 2020, June 30, 2020, March 31, 2020 and December 31, 2019 to reclassify certain average deposits in other banks from interest-bearing deposits in other banks to non-earning assets in the amount of $62,315, $21,419, $1,166 and $9,128, respectively.


FNCB Bancorp, Inc.

Asset Quality Data

Dec 31,

Sept 30,

Jun 30,

Mar 31,

Dec 31,

(in thousands)

2020

2020

2020

2020

2019

At period end

Non-accrual loans, including non-accruing troubled debt restructured loans (TDRs)

$

5,581

$

6,176

$

6,740

$

8,576

$

9,084

Loans past due 90 days or more and still accruing

-

-

-

-

-

Total non-performing loans

5,581

6,176

6,740

8,576

9,084

Other real estate owned (OREO)

58

58

85

85

289

Other non-performing assets

1,900

1,900

1,900

1,900

1,900

Total non-performing assets

$

7,539

$

8,134

$

8,725

$

10,561

$

11,273

Accruing TDRs

$

6,975

$

7,216

$

8,592

$

7,729

$

7,745

For the three months ended

Allowance for loan and lease losses

Beginning balance

$

12,269

$

11,024

$

9,907

$

8,950

$

9,315

Loans charged-off

338

582

316

329

620

Recoveries of charged-off loans

134

1,753

602

135

288

Net charge-offs (recoveries)

204

(1,171

)

(286

)

194

332

(Credit) Provision for loan and lease losses

(115

)

74

831

1,151

(33

)

Ending balance

$

11,950

$

12,269

$

11,024

$

9,907

$

8,950


FNCB Bancorp, Inc.

Non-GAAP Reconciliations

Dec 31,

Sept 30,

Jun 30,

Mar 31,

Dec 31,

(dollars in thousands)

2020

2020

2020

2020

2019

Annualized net interest margin:

Net interest margin (1 divided by 3)

3.70

%

3.19

%

3.18

%

3.35

%

3.41

%

Net interest margin, excluding PPP loans (non-GAAP) (2 divided by 4)

3.49

%

3.40

%

3.34

%

3.35

%

3.41

%

Net interest income (FTE) (1)

$

11,805

$

10,073

$

9,789

$

9,311

$

9,416

PPP loan interest and fee income

1,485

298

223

-

-

Net interest income (FTE), excluding PPP loans (non-GAAP) (2)

$

10,320

$

9,775

$

9,566

$

9,311

$

9,416

Average earning assets (3)(a)

$

1,277,481

$

1,263,261

$

1,232,553

$

1,112,095

$

1,105,632

Average PPP loans

95,837

114,395

86,241

-

-

Average earning assets, excluding PPP loans (non-GAAP) (4)

$

1,181,644

$

1,148,866

$

1,146,312

$

1,112,095

$

1,105,632

Allowance for loan and lease losses/total period end loans

Allowance for loans and lease losses/total period end loans (5 divided by 6)

1.33

%

1.28

%

1.16

%

1.19

%

1.08

%

Allowance for loans and lease losses/total period end loans, excluding PPP loans (5 divided by 7)

1.45

%

1.45

%

1.32

%

1.19

%

1.08

%

Allowance for loans and lease losses (5)

$

11,950

$

12,269

$

11,024

$

9,907

$

8,950

Total period end loans (6)

$

901,102

$

960,229

$

948,428

$

834,935

$

828,479

PPP loans outstanding at period end

76,004

114,784

113,193

-

-

Total period end loans, excluding PPP loans (7)

$

825,098

$

845,445

$

835,235

$

834,935

$

828,479

(a) Reflects revisions to average balances for the three months ended September 30, 2020, June 30, 2020, March 31, 2020 and December 31, 2019 to reclassify certain average deposits in other banks from interest-bearing deposits in other banks to non-earning assets in the amount of $62,315, $21,419, $1,166 and $9,128, respectively.