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FNCB Bancorp, Inc. Announces First Quarter 2021 Net Income

04/30/2021

DUNMORE, Pa., April 30, 2021 (GLOBE NEWSWIRE) -- FNCB Bancorp, Inc. (NASDAQ: FNCB; www.fncb.com), the parent company of Dunmore-based FNCB Bank (the “Bank”), (collectively, ("FNCB") today reported net income of $5.8 million, or $0.29 per basic and diluted share, for the three months ended March 31, 2021, an increase of $3.7 million, or 182.7% from $2.1 million, or $0.10 per basic and diluted share, for the same three months of 2020.  The increase in earnings comparing the first quarters of 2021 and 2020 was primarily due to a $2.2 million, or 24.2%, increase in net interest income, a $1.1 million, or 63.8%, increase in non-interest income, and a $1.0 million,  or 83.8%, reduction in the provision for loan and lease losses. These positive factors were partially offset by an $0.5 million, or 117.0%, increase in income tax expense, which was due to the higher level of pre-tax net income.   

Annualized return on average assets and annualized return on average equity for the three months ended March 31, 2021 was 1.61% and 15.27%, respectively, compared to 0.69% and 6.06%, respectively, for the three months ended March 31, 2020. Dividends declared and paid were $0.060 per share for the first quarter of 2021, a 9.1% increase compared to $0.055 per share for the same period of 2020. Year-to-date 2021 dividends equated to an annualized dividend yield of approximately 3.2% based on the closing stock price of $7.54 per share at March 31, 2021.

First quarter 2021 performance

  • First quarter net income increased $3.7 million, or 182.7%, to $5.8 million, or $0.29 per share in 2021 compared to $2.1 million, or $0.10 per share in 2020;
  • Yield on earnings assets (FTE) decreased 21 basis points to 3.85% in 2021 from 4.06% in 2020;
  • Cost of funds decreased 55 basis points to 0.34% in 2021 from 0.89% in 2020;
  • Net interest margin (FTE) increased 24 basis points to 3.59% in 2021, compared to 3.35% in 2020;
  • Provision for loan and lease losses decreased $1.0 million, or 83.8%;
  • Non-interest income increased $1.1 million, or 63.8%;
  • Non-interest expense decreased $34 thousand, or 0.47%; and
  • Efficiency ratio improved to 51.87% in 2021 compared to 66.46% in 2020.

Summary financial position at March 31, 2021 as compared to December 31, 2020:

  • Total assets grew $34.4 million, or 2.3%, to $1.500 billion at March 31, 2021 from $1.466 billion at December 31, 2020;
  • Loans, net of deferred loan fees and cost and unearned income, increased $30.8 million, or 3.4%, to $931.9 million at March 31, 2021 from $901.1 million at December 31, 2020;
  • Included in net loans were PPP loans outstanding, net of loan origination fees and costs, of $103.5 million at March 31, 2021;
  • Total deposits increased $35.4 million, or 2.7% to $1.323 billion at March 31, 2021 from $1.287 billion at December 31, 2020;
  • Non-performing loans as a percentage of total loans improved to 0.52% at March 31, 2021 from 0.62% at December 31, 2020; and
  • The Bank's total risk-based capital and leverage ratios improved to 16.26% and 9.88%, respectively, at March 31, 2021, compared to 15.79% and 9.57%, respectively, at December 31, 2020.

"We are pleased with our strong first quarter 2021 results," stated Gerard A. Champi, President and CEO. "PPP was once again a major focus for us this quarter with the government's extension of this program on January 11, 2021. During the first quarter of 2021, the FNCB team assisted 540 business customers secure $59.0 million in additional funding under round two of the program. Additionally, loan origination fees recognized on the forgiveness of first round PPP loans contributed to our year-over-year earnings performance and margin improvement. We anticipate that the majority of outstanding PPP loans will be forgiven by the end of 2021 and earnings will continue to be favorably impacted by the additional fee recognition. We continued to see strong deposit growth, which was driven by the second round of PPP funding and additional fiscal stimulus payments, and were able to further reduce our funding costs. Most importantly, during the first quarter, we worked with health care providers to be able to secure and provide vaccines for our employees, as the health and safety of our FNCB family remains foremost," concluded Champi. 

Impact of the COVID-19 pandemic

While the effects from the COVID-19 pandemic continue to impact national, regional and local economies, the Unites States economy has begun to show signs of recovering and with the availability and distribution of vaccines, governments have started to lift restrictions on businesses. All FNCB community offices are open, and while fully operational, are still operating under the pandemic preparedness plan. We continue to follow CDC and Commonwealth of Pennsylvania guidelines and take additional precautions to ensure the safety of our customers and our employees. Additionally, FNCB has worked with local health care providers to secure and offer vaccinations to all eligible employees.

While positive developments have occurred, we are keenly aware that FNCB’s business and consumer customers may continue to experience varying degrees of financial distress, as uncertainty related to the pandemic still exists. Should the number of cases rise, or new COVID-19 variant infections increase, additional economic restrictions could be mandated again. Commercial activity has improved, but has not returned to pre-pandemic levels, which may result in asset quality deterioration. Our commercial customer base includes businesses in industries such as hotel/lodging, restaurants, hospitality, and retail and commercial real estate, all of which have been significantly impacted by the COVID-19 pandemic. We continue to closely monitor customers within these industries as the economic recovery unfolds.

On December 27, 2020, another COVID-19 relief bill was signed into law that extended and modified several provisions of the PPP.  This included an additional allocation of $284 billion in funding. The SBA reactivated the PPP on January 11, 2021, and on January 19, 2021, FNCB began originating additional loans through the PPP. The SBA will continue to accept new applications for this new round of funding through May 31, 2021.  During the three months ended March 31, 2021, FNCB originated and received SBA approval and funding for 540 PPP loans totaling $59.0 million and received $2.8 million in related deferred loan origination fees associated with this funding.  During the three months ended March 31, 2021, FNCB received forgiveness for PPP loans totaling $30.2 million originated in 2020 under the first round of funding, with $1.3 million in PPP loan origination fees, net of loan origination costs, recognized into interest income upon forgiveness. PPP loans, net of deferred loan origination fees and costs, outstanding at March 31, 2021 were $103.5 million. FNCB expects to apply and receive forgiveness for the majority of these loans by the end of 2021.

Management expects the COVID-19 pandemic, as well as certain provisions of legislative and regulatory relief efforts, to continue to impact FNCB's operations. The full impact is unknown, continues to evolve and will be contingent upon the speed and extent of recovery. At this time, management cannot determine or estimate the full magnitude of the impact and cannot provide any assurances as to how the crisis may ultimately affect FNCB's results of operations or financial position. Management believes that FNCB's balance sheet and capital position are strong, and we will continue to address any issues related to the pandemic in a safe and sound manner as they arise.

Summary Results 

Net interest income on a tax-equivalent basis increased $2.3 million, or 24.9%, to $11.6 million for the three months ended March 31, 2021 from $9.3 million for the comparable period of 2020. The improvement in tax-equivalent net interest income comparing the first quarters of 2021 and 2020 reflected a $1.2 million, or 10.6%, increase in tax-equivalent interest income, coupled with a $1.1 million, or 57.0%, reduction in interest expense. The increase in tax-equivalent interest income was largely due to higher volumes of earning assets and the recognition of PPP origination fees, partially offset by a decrease in the tax-equivalent yield on earning assets. Average earning assets increased $183.8 million, or  16.5%, to $1.296 billion for the first quarter of 2021 from $1.112 billion for the same quarter of 2020 due to higher loan and investment volumes. Comparing the first quarters of 2021 and 2020, average loans increased $86.9 million, or 10.4%, to $920.4 million from $833.5 million, respectively, and average investment securities increased $90.6 million, or 33.4%, to $362.0 million from $271.4 million, respectively. The increase in loan volumes primarily reflected the origination of PPP loans, net of forgiveness received, while the higher level of investment securities was due to the deployment of a portion of excess liquidity into the investment portfolio. The tax-equivalent yield on earning assets decreased 21 basis points to 3.85% for the first quarter of 2021 from 4.06% for the same quarter of 2020, which partially offset the positive impact on interest income from higher volumes of earning assets. The 57.0% decrease in interest expense was primarily due to a 55-basis point reduction in the cost of funds to 0.34% for the three months ended March 31, 2021 from 0.89% for the same three months of 2020. Specifically, the average rate paid for interest-bearing deposits decreased 49 basis points to 0.32% for the first quarter of 2021 from 0.81% for the same period of 2020. The average rates paid for interest-bearing demand and time deposits, which reflected the reduction in market interest rates, decreased 48 basis points and 58 basis points, respectively, comparing the three months ended March 31, 2021 and 2020. FNCB experienced strong deposit growth due to additional fiscal stimulus in the first quarter of 2021. Additionally, changing customer deposit preferences due to the reduction in economic activity and uncertainty related to the COVID-19 pandemic also contributed to the deposit growth, as well as factoring into deposit migration from time deposits into non-maturity deposits. Specifically, average interest-bearing deposits increased $177.9 million, or 21.7%, to $999.1 million from $821.2 million comparing the first quarters of 2021 and 2020, respectively. Average interest-bearing demand deposits increased $167.0 million, or 31.6%, to $695.8 million for the first quarter of 2021 compared to $528.8 million for the same quarter of 2020, while average savings deposits increased $20.4 million, or 21.7%, to $114.3 million from $94.0 million comparing the first quarters of 2021 and 2020, respectively. Conversely, average time deposits decreased $9.5 million to $188.9 million for the three months ended March 31, 2021 from $198.4 million for the same three months of 2020. FNCB used the excess liquidity from deposit growth to reduce its reliance on and repay higher-costing borrowed funds. As a result, average borrowed funds decreased $51.5 million, or 83.3%, to $10.3 million from $61.8 million comparing the first quarters of 2021 and 2020. FNCB’s tax-equivalent net interest margin improved 24 basis points to 3.59% for the first quarter of 2021 from 3.35% for the same quarter of 2020. The margin improvement was primarily impacted by activity related to PPP loans, coupled with reduction in funding costs. On a linked quarter basis, FNCB's tax-equivalent net interest margin decreased 11 basis points from 3.70% for the fourth quarter of 2020.

Non-interest income increased $1.1 million, or 63.8%, to $2.8 million for the three months ended March 31, 2021 from $1.7 million for the same three months of 2020. The increase resulted primarily from a gain of $422 thousand from a bank-owned life insurance death benefit claim that was recognized in the first quarter of 2021, coupled with increases in net gains on equity securities and net gains on the sale of mortgage loans held for sale. Net gains on equity securities totaled $364 thousand for the first quarter of 2021, an increase of $350 thousand compared to $14 thousand for the same quarter of 2020. FNCB recorded net gains on the sale of mortgage loans of $224 thousand for the three months ended March 31, 2021, an increase of $128 thousand, or 133.3%, compared to $96 thousand for the same three-month period of 2020. Additionally, FNCB experienced increases in net gains on available-for-sale debt securities, loan related fees and deposit service charges. Net gains on the sales of available-for-sale securities totaled $213 thousand for the first quarter of 2021, an increase of $64 thousand, or 43.0%, compared to $149 thousand for the same quarter of 2020. Additionally, loan-related fees increased $77 thousand, or 137.5% to $133 thousand for the three months ended March 31, 2021, compared to $56 thousand for the same period of 2020, while an increase in debit card usage contributed to the $49 thousand, or 5.9%, increase in deposit service charges to $874 thousand from $825 thousand comparing the three months ended March 31, 2021 and 2020.

Non-interest expense was relatively constant at $7.2 million, decreasing by $34 thousand, or 0.5%, comparing the three months ended March 31, 2021 and 2020. The decrease primarily reflected reductions in salaries and benefits, advertising expenses and other operating expenses. Salaries and benefits decreased $193 thousand, or 4.9% to $3.7 million for the three months ended March 31, 2021, from $3.9 million for the same period in 2020, due primarily to the deferral of payroll-related loan origination costs associated with PPP loans. Advertising expenses decreased $90 thousand, or 43.5%, to $117 thousand for the first quarter of 2021 from $207 thousand for the same quarter of 2020, as FNCB reduced its advertising during the pandemic. Other operating expenses decreased $97 thousand, or 11.1%, to $775 thousand from $872 thousand comparing the three months ended March 31, 2021 and 2020. This decrease reflected reductions in OREO-related expenses, coupled with reductions in office expense, auto expense and travel and entertainment expense due to travel restrictions and a large percentage of staff working remotely. These expense reductions were offset by increases in regulatory assessments of $129 thousand, or 218.6%, data processing of $94 thousand, or 13.0%, professional fees of $71 thousand, or 37.8%, and occupancy expense of $55 thousand, or 9.9%, comparing the three months ended March 31, 2021 and 2020.  Regulatory assessments for the first quarter of 2020 were reduced by the remainder of the FDIC's small bank assessment credit. There were no such assessment credits in 2021. The increase in data processing expense reflected added costs associated with employees working remotely, coupled with additions to FNCB's digital banking services, while the increase in professional fees was primarily due to additional costs associated with FNCB's annual audit. The increase in FNCB's occupancy expense was largely due to higher snow removal costs. 

Asset Quality

Despite the economic uncertainty related to the pandemic, FNCB's asset quality improved during the first quarter of 2021 as total non-performing loans decreased $739 thousand, or 13.2%, to $4.8 million, or 0.52% of total loans, at March 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 and the return of two other commercial loan relationships to accrual status. Year-over-year, non-performing loans decreased $3.8 million, or 43.5%, from $8.6 million, or 1.03% of total loans, at March 31, 2020. FNCB’s loan delinquency rate (total delinquent loans as a percentage of total loans) was 0.70% at March 31, 2021 compared to 0.99% at December 31, 2020 and 1.41% at March 31, 2020. Annualized net loans charged off, as a percentage of average loans, was 0.03% for the three months ended March 31, 2021 compared to 0.09% for the same three months of 2020. FNCB recorded a provision for loan and lease losses of $186 thousand for the first quarter of 2021 compared to $1.2 million for the first quarter of 2020. The larger provision recorded for the first quarter of 2020 was directly related to the economic disruption and uncertainty caused by the onset of COVID-19 pandemic. The allowance for loan and lease losses was $12.1 million, or 1.30% of total loans at March 31, 2021, compared to $11.9 million, or 1.33% of total loans at December 31, 2020 and $9.9 million, or 1.19%, at March 31, 2020. Excluding PPP loans, which are 100.0% guaranteed by the federal government, this ratio was 1.46% at March 31, 2021.

Financial Condition

Total assets increased $34.4 million, or 2.3%, to $1.500 billion at March 31, 2021 from $1.466 billion at December 31, 2020. The change in total assets primarily reflected increases in net loans and available-for-sale debt securities, which were partially offset by a decrease in cash and cash equivalents. Net loans increased $30.7 million, or 3.5%, to $919.9 million at March 31, 2021 from $889.2 million at December 31, 2020, primarily due to the origination and funding of a second round of PPP loans, partially offset by first-round PPP loan forgiveness. Available-for-sale debt securities increased $57.4 million, or 16.4%, to $407.4 million at March 31, 2021 from $350.0 million at December 31, 2020, which primarily reflected the deployment of a portion of FNCB's excess liquidity into the investment portfolio. Conversely, the deployment caused cash and cash equivalents to decrease $57.3 million, or 36.7%, to $98.5 million at March 31, 2021 from $155.8 million at December 31, 2020. Total deposits increased $35.4 million, or 2.7%, to $1.323 billion at March 31, 2021 from $1.287 billion at December 31, 2020.  Specifically, non-interest bearing deposits increased $48.0 million, or 17.7%, due primarily to the second round of PPP loan funding and additional fiscal stimulus payments. Partially offsetting the increase in non-interest bearing deposits was a $12.7 million, or 1.2%, reduction in interest-bearing deposits reflecting the continued runoff and migration of certificates of deposit. Borrowed funds remained constant at $10.3 million at March 31, 2021 and December 31, 2020, comprised entirely of $10.3 million in FNCB's junior subordinated debentures.

Total shareholders’ equity decreased $930 thousand, or 0.6%, to $154.9 million at March 31, 2021 from $155.9 million at December 31, 2020.  Contributing to the decrease in capital was a $5.6 million decrease in accumulated other comprehensive income related primarily to the depreciation in the fair value of FNCB's available-for-sale debt securities, net of deferred taxes, and dividends declared and paid of $1.2 million for the three months ended March 31, 2021.  These reductions to capital were partially offset by net income for the three months ended March 31, 2021 of $5.8 million. FNCB Bank's regulatory capital improved as the total risk-based capital ratio and Tier 1 leverage ratios increased to 16.26% and 9.88% at March 31, 2021 from 15.79% and 9.57% at December 31, 2020, respectively.

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 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

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 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 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 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. 

 
 
FNCB Bancorp, Inc.
Selected Financial Data
                               
    Mar 31,     Dec 31,     Sept 30,     Jun 30,     Mar 31,  
    2021     2020     2020     2020     2020  
Per share data:                                        
Net income (fully diluted)   $ 0.29     $ 0.26     $ 0.20     $ 0.20     $ 0.10  
Cash dividends declared   $ 0.060     $ 0.055     $ 0.055     $ 0.055     $ 0.055  
Book value   $ 7.65     $ 7.70     $ 7.41     $ 7.19     $ 6.84  
Tangible book value   $ 7.65     $ 7.70     $ 7.41     $ 7.19     $ 6.84  
Market value:                                        
High   $ 8.94     $ 7.95     $ 6.93     $ 7.19     $ 8.54  
Low   $ 5.80     $ 5.16     $ 5.08     $ 5.15     $ 5.10  
Close   $ 7.54     $ 6.40     $ 5.32     $ 5.75     $ 6.91  
Common shares outstanding     20,240,668       20,245,649       20,243,589       20,208,607       20,174,250  
                                         
Selected ratios:                                        
Annualized return on average assets     1.61 %     1.41 %     1.15 %     1.21 %     0.69 %
Annualized return on average shareholders' equity     15.27 %     13.49 %     11.05 %     11.62 %     6.06 %
Efficiency ratio     51.87 %     54.89 %     66.66 %     56.53 %     66.46 %
Tier I leverage ratio (FNCB Bank)     9.88 %     9.57 %     10.17 %     10.60 %     11.09 %
Total risk-based capital to risk-adjusted assets (FNCB Bank)     16.26 %     15.79 %     16.09 %     15.68 %     15.44 %
Average shareholders' equity to average total assets     10.53 %     10.42 %     10.40 %     10.38 %     11.37 %
Yield on earning assets (FTE)     3.85 %     4.05 %     3.65 %     3.70 %     4.06 %
Cost of funds     0.34 %     0.44 %     0.59 %     0.69 %     0.89 %
Net interest spread (FTE)     3.51 %     3.61 %     3.06 %     3.01 %     3.17 %
Net interest margin (FTE)     3.59 %     3.70 %     3.19 %     3.18 %     3.35 %
Total delinquent loans/total loans     0.70 %     0.99 %     0.81 %     0.89 %     1.41 %
Allowance for loan and lease losses/total loans     1.30 %     1.33 %     1.28 %     1.16 %     1.19 %
Non-performing loans/total loans     0.52 %     0.62 %     0.64 %     0.71 %     1.03 %
Annualized net charge-offs (recoveries)/average loans     0.03 %     0.09 %     (0.49 %)     (0.12 %)     0.09 %
                                         


FNCB Bancorp, Inc.
Year-to-Date Consolidated Statements of Income
 
    Three Months Ended  
    March 31,  
(in thousands, except share data)   2021     2020  
Interest income                
Interest and fees on loans   $ 9,786     $ 9,139  
Interest and dividends on securities:                
Taxable     1,906       1,852  
Tax-exempt     486       57  
Dividends     62       75  
Total interest and dividends on securities     2,454       1,984  
Interest on interest-bearing deposits in other banks     3       21  
    Total interest income     12,243       11,144  
Interest expense                
Interest on deposits     798       1,660  
Interest on borrowed funds                
Federal Home Loan Bank of Pittsburgh advances     -       219  
Junior subordinated debentures     48       88  
Total interest on borrowed funds     48       307  
    Total interest expense     846       1,967  
Net interest income before provision for loan and lease losses     11,397       9,177  
Provision for loan and lease losses     186       1,151  
Net interest income after provision for loan and lease losses     11,211       8,026  
Non-interest income                
Deposit service charges     874       825  
Net gain on the sale of available-for-sale securities     213       149  
Net gain on equity securities     364       14  
Net gain on the sale of mortgage loans held for sale     224       96  
Loan-related fees     133       56  
Income from bank-owned life insurance     121       129  
Bank-owned life insurance settlement     422       -  
Merchant services revenue     138       135  
Other     285       290  
    Total non-interest income     2,774       1,694  
Non-interest expense                
Salaries and employee benefits     3,736       3,929  
Occupancy expense     609       554  
Equipment expense     353       371  
Advertising expense     117       207  
Data processing expense     819       725  
Regulatory assessments     188       59  
Bank shares tax     315       300  
Professional fees     259       188  
Other operating expenses     775       872  
    Total non-interest expense     7,171       7,205  
Income before income taxes     6,814       2,515  
Income tax expense     981       452  
Net income   $ 5,833     $ 2,063  
                 
Income per share                
Basic   $ 0.29     $ 0.10  
Diluted   $ 0.29     $ 0.10  
                 
Cash dividends declared per common share   $ 0.060     $ 0.055  
Weighted average number of shares outstanding:                
Basic     20,242,262       20,172,498  
Diluted     20,253,606       20,176,565  


FNCB Bancorp, Inc.
Quarter-to-Date Consolidated Statements of Income
       
    Three Months Ended  
    Mar 31,     Dec 31,     Sept 30,     Jun 30,     Mar 31,  
(in thousands, except share data)   2021     2020     2020     2020     2020  
Interest income                                        
Interest and fees on loans   $ 9,786     $ 10,338     $ 9,078     $ 9,060     $ 9,139  
Interest and dividends on securities                                        
Taxable     1,906       1,832       1,698       1,692       1,852  
Tax-exempt     486       465       463       388       57  
Dividends     62       64       62       47       75  
Total interest and dividends on securities     2,454       2,361       2,223       2,127       1,984  
Interest on interest-bearing deposits in other banks     3       3       1       3       21  
    Total interest income     12,243       12,702       11,302       11,190       11,144  
Interest expense                                        
Interest on deposits     798       1,077       1,291       1,376       1,660  
Interest on borrowed funds                                        
Federal Reserve Bank Discount Window advances     -       -       18       14       -  
Federal Home Loan Bank of Pittsburgh advances     -       -       95       160       219  
Junior subordinated debentures     48       50       52       60       88  
Total interest on borrowed funds     48       50       165       234       307  
    Total interest expense     846       1,127       1,456       1,610       1,967  
Net interest income before provision (credit) for loan and lease losses     11,397       11,575       9,846       9,580       9,177  
Provision (credit) for loan and lease losses     186       (115 )     74       831       1,151  
Net interest income after provision (credit) for loan and lease losses     11,211       11,690       9,772       8,749       8,026  
Non-interest income                                        
Deposit service charges     874       875       844       708       825  
Net gain on the sale of available-for-sale securities     213       24       433       922       149  
Net gain on equity securities     364       307       846       4       14  
Net gain on the sale of mortgage loans held for sale     224       188       186       183       96  
Loan-related fees     133       148       119       25       56  
Income from bank-owned life insurance     121       116       118       119       129  
Bank-owned life insurance settlement     422       -       -       -       -  
Loan referral fees/Interest rate swap revenue     -       52       76       214       48  
Merchant services revenue     138       164       154       112       135  
Other     285       211       194       214       242  
    Total non-interest income     2,774       2,085       2,970       2,501       1,694  
Non-interest expense                                        
Salaries and employee benefits     3,736       3,984       3,835       3,498       3,929  
Occupancy expense     609       532       500       466       554  
Equipment expense     353       365       381       360       371  
Advertising expense     117       190       175       113       207  
Data processing expense     819       745       754       709       725  
Regulatory assessments     188       131       122       75       59  
Bank shares tax     315       (92 )     263       315       300  
Professional fees     259       339       279       193       188  
Other operating expenses     775       1,249       1,534       695       872  
    Total non-interest expense     7,171       7,443       7,843       6,424       7,205  
Income before income taxes     6,814       6,332       4,899       4,826       2,515  
Income tax expense     981       1,176       792       805       452  
Net income   $ 5,833     $ 5,156     $ 4,107     $ 4,021     $ 2,063  
                                         
Income per share                                        
Basic   $ 0.29     $ 0.26     $ 0.20     $ 0.20     $ 0.10  
Diluted   $ 0.29     $ 0.26     $ 0.20     $ 0.20     $ 0.10  
                                         
Cash dividends declared per common share   $ 0.060     $ 0.055     $ 0.055     $ 0.055     $ 0.055  
Weighted average number of shares outstanding:                                        
Basic     20,242,262       20,241,730       20,235,384       20,191,527       20,172,498  
Diluted     20,253,606       20,244,652       20,235,384       20,191,527       20,176,565  
                                         


FNCB Bancorp, Inc.
Consolidated Balance Sheets
                               
    Mar 31,     Dec 31,     Sept 30,     Jun 30,     Mar 31,  
(in thousands)   2021     2020     2020     2020     2020  
Assets                                        
Cash and cash equivalents:                                        
Cash and due from banks   $ 22,382     $ 24,822     $ 26,121     $ 20,089     $ 15,243  
Interest-bearing deposits in other banks     76,172       130,989       78,895       81,390       30,304  
Total cash and cash equivalents     98,554       155,811       105,016       101,479       45,547  
Available-for-sale debt securities, at fair value     407,396       350,035       321,399       305,611       302,638  
Equity securities, at fair value     4,267       3,026       2,719       938       934  
Restricted stock, at cost     1,149       1,745       1,791       3,309       4,224  
Loans held for sale     267       2,107       662       765       470  
Loans, net of deferred loan fees and costs and unearned income     931,943       901,102       960,229       948,428       834,935  
Allowance for loan and lease losses     (12,076 )     (11,950 )     (12,269 )     (11,024 )     (9,907 )
Net loans     919,867       889,152       947,960       937,404       825,028  
Bank premises and equipment, net     17,407       17,579       17,413       17,467       17,447  
Accrued interest receivable     4,567       4,286       4,693       5,201       3,387  
Bank-owned life insurance     33,074       31,712       31,596       31,478       31,359  
Other assets     13,488       10,226       9,942       14,519       17,198  
Total assets   $ 1,500,036     $ 1,465,679     $ 1,443,191     $ 1,418,171     $ 1,248,232  
                                         
Liabilities                                        
Deposits:                                        
Demand (non-interest-bearing)   $ 319,532     $ 271,499     $ 274,110     $ 266,846     $ 181,223  
Interest-bearing     1,003,296       1,015,949       998,128       902,781       820,339  
Total deposits     1,322,828       1,287,448       1,272,238       1,169,627       1,001,562  
Borrowed funds:                                        
Federal Reserve Bank Discount Window advances     -       -       -       36,242       10,000  
Federal Home Loan Bank of Pittsburgh advances     -       -       -       42,809       77,934  
Junior subordinated debentures     10,310       10,310       10,310       10,310       10,310  
Total borrowed funds     10,310       10,310       10,310       89,361       98,244  
Accrued interest payable     99       108       139       248       261  
Other liabilities     11,869       11,953       10,458       13,578       10,233  
Total liabilities     1,345,106       1,309,819       1,293,145       1,272,814       1,110,300  
                                         
Shareholders' equity                                        
Preferred stock     -       -       -       -       -  
Common stock     25,300       25,307       25,304       25,260       25,217  
Additional paid-in capital     81,640       81,587       81,500       81,261       81,209  
Retained earnings     39,691       35,080       31,044       28,057       25,155  
Accumulated other comprehensive income     8,299       13,886       12,198       10,779       6,351  
Total shareholders' equity     154,930       155,860       150,046       145,357       137,932  
    Total liabilities and shareholders’ equity   $ 1,500,036     $ 1,465,679     $ 1,443,191     $ 1,418,171     $ 1,248,232  
                                         


FNCB Bancorp, Inc.
Summary Tax-equivalent Net Interest Income
 
    Three Months Ended  
    Mar 31,     Dec 31,     Sept 30,     Jun 30,     Mar 31,  
(dollars in thousands)   2021     2020     2020     2020     2020  
Interest income                                        
Loans:                                        
Loans - taxable   $ 9,401     $ 9,938     $ 8,688     $ 8,661     $ 8,693  
Loans - tax-free     487       506       494       505       565  
Total loans     9,888       10,444       9,182       9,166       9,258  
Securities:                                        
Securities, taxable     1,968       1,896       1,760       1,739       1,927  
Securities, tax-free     615       589       586       491       72  
Total interest and dividends on securities     2,583       2,485       2,346       2,230       1,999  
Interest-bearing deposits in other banks     3       3       1       3       21  
Total interest income     12,474       12,932       11,529       11,399       11,278  
Interest expense                                        
Deposits     798       1,077       1,291       1,376       1,660  
Borrowed funds     48       50       165       234       307  
Total interest expense     846       1,127       1,456       1,610       1,967  
Net interest income   $ 11,628     $ 11,805     $ 10,073     $ 9,789     $ 9,311  
                                         
Average balances                                        
Earning assets:                                        
Loans:                                        
Loans - taxable   $ 873,544     $ 889,964     $ 908,095     $ 875,119     $ 780,855  
Loans - tax-free     46,897       46,444       44,826       46,836       52,615  
Total loans     920,441       936,408       952,921       921,955       833,470  
Securities:                                        
Securities, taxable     286,128       255,111       232,081       247,939       263,697  
Securities, tax-free     75,876       71,154       69,973       56,220       7,698  
Total securities     362,004       326,265       302,054       304,159       271,395  
Interest-bearing deposits in other banks (a)     13,490       14,808       8,286       6,439       7,230  
Total interest-earning assets (a)     1,295,935       1,277,481       1,263,261       1,232,553       1,112,095  
Non-earning assets (a)     175,301       181,708       159,037       108,608       91,553  
Total assets   $ 1,471,236     $ 1,459,189     $ 1,422,298     $ 1,341,161     $ 1,203,648  
Interest-bearing liabilities:                                        
Deposits   $ 999,085     $ 1,016,916     $ 943,754     $ 850,525     $ 821,216  
Borrowed funds     10,310       10,310       51,629       81,813       61,843  
Total interest-bearing liabilities     1,009,395       1,027,226       995,383       932,338       883,059  
Demand deposits     294,525       268,531       267,636       258,609       172,132  
Other liabilities     12,413       11,377       11,384       11,065       11,636  
Shareholders' equity     154,903       152,055       147,895       139,149       136,821  
Total liabilities and shareholders' equity   $ 1,471,236     $ 1,459,189     $ 1,422,298     $ 1,341,161     $ 1,203,648  
                                         
Yield/Cost                                        
Earning assets:                                        
Loans:                                        
Interest and fees on loans - taxable     4.30 %     4.47 %     3.83 %     3.96 %     4.45 %
Interest and fees on loans - tax-free     4.15 %     4.36 %     4.41 %     4.31 %     4.30 %
Total loans     4.30 %     4.46 %     3.85 %     3.98 %     4.44 %
Securities:                                        
Securities, taxable     2.75 %     2.97 %     3.03 %     2.81 %     2.92 %
Securities, tax-free     3.24 %     3.31 %     3.35 %     3.49 %     3.74 %
Total securities     2.85 %     3.05 %     3.11 %     2.93 %     2.95 %
Interest-bearing deposits in other banks (a)     0.09 %     0.08 %     0.05 %     0.19 %     1.16 %
Total earning assets (a)     3.85 %     4.05 %     3.65 %     3.70 %     4.06 %
Interest-bearing liabilities:                                        
Interest on deposits     0.32 %     0.42 %     0.55 %     0.65 %     0.81 %
Interest on borrowed funds     1.86 %     1.94 %     1.28 %     1.14 %     1.99 %
Total interest-bearing liabilities     0.34 %     0.44 %     0.59 %     0.69 %     0.89 %
Net interest spread (a)     3.51 %     3.61 %     3.06 %     3.01 %     3.17 %
Net interest margin (a)     3.59 %     3.70 %     3.19 %     3.18 %     3.35 %
                                         
(a) Reflects revisions to average balances for the three months ended September 30, 2020, June 30, 2020 and March 31, 2020 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 and $1,166, respectively.
 


FNCB Bancorp, Inc.
Asset Quality Data
                               
    Mar 31,     Dec 31,     Sept 30,     Jun 30,     Mar 31,  
(in thousands)   2021     2020     2020     2020     2020  
At period end                                        
Non-accrual loans, including non-accruing troubled debt restructured loans (TDRs)   $ 4,842     $ 5,581     $ 6,176     $ 6,740     $ 8,576  
Loans past due 90 days or more and still accruing     -       -       -       -       -  
Total non-performing loans     4,842       5,581       6,176       6,740       8,576  
Other real estate owned (OREO)     58       58       58       85       85  
Other non-performing assets     1,900       1,900       1,900       1,900       1,900  
Total non-performing assets   $ 6,800     $ 7,539     $ 8,134     $ 8,725     $ 10,561  
                                         
Accruing TDRs   $ 6,962     $ 6,975     $ 7,216     $ 8,592     $ 7,729  
                                         
                                         
For the three months ended                                        
Allowance for loan and lease losses                                        
Beginning balance   $ 11,950     $ 12,269     $ 11,024     $ 9,907     $ 8,950  
Loans charged-off     361       338       582       316       329  
Recoveries of charged-off loans     301       134       1,753       602       135  
Net charge-offs (recoveries)     60       204       (1,171 )     (286 )     194  
Provision (credit) for loan and lease losses     186       (115 )     74       831       1,151  
Ending balance   $ 12,076     $ 11,950     $ 12,269     $ 11,024     $ 9,907  
                                         


FNCB Bancorp, Inc.
Non-GAAP Reconciliations
                                         
    Mar 31,     Dec 31,     Sept 30,     Jun 30,     Mar 31,  
(dollars in thousands)   2021     2020     2020     2020     2020  
Annualized net interest margin:                                        
Net interest margin (1 divided by 3)     3.59 %     3.70 %     3.19 %     3.18 %     3.35 %
Net interest margin, excluding PPP loans (non-
GAAP) (2 divided by 4)
    3.37 %     3.49 %     3.40 %     3.34 %     3.35 %
                                         
Net interest income (FTE) (1)   $ 11,628     $ 11,805     $ 10,073     $ 9,789     $ 9,311  
PPP loan interest and fee income     1,499       1,485       298       223       -  
Net interest income (FTE), excluding PPP loans
(non-GAAP) (2)
  $ 10,129     $ 10,320     $ 9,775     $ 9,566     $ 9,311  
                                         
Average earning assets (3)(a)   $ 1,295,935     $ 1,277,481     $ 1,263,261     $ 1,232,553     $ 1,112,095  
Average PPP loans     94,801       95,837       114,395       86,241       -  
Average earning assets, excluding PPP loans (non-
GAAP) (4)
  $ 1,201,134     $ 1,181,644     $ 1,148,866     $ 1,146,312     $ 1,112,095  
                                         
                                         
Allowance for loan and lease losses/total period
end loans
                                       
Allowance for loans and lease losses/total period end
loans (5 divided by 6)
    1.30 %     1.33 %     1.28 %     1.16 %     1.19 %
Allowance for loans and lease losses/total period end
loans, excluding PPP loans (5 divided by 7)
    1.46 %     1.45 %     1.45 %     1.32 %     1.19 %
                                         
Allowance for loans and lease losses (5)   $ 12,076     $ 11,950     $ 12,269     $ 11,024     $ 9,907  
                                         
Total period end loans (6)   $ 931,943     $ 901,102     $ 960,229     $ 948,428     $ 834,935  
PPP loans outstanding at period end     103,466       76,004       114,784       113,193       -  
Total period end loans, excluding PPP loans (7)   $ 828,477     $ 825,098     $ 845,445     $ 835,235     $ 834,935  
                                         
(a) Reflects revisions to average balances for the three months ended September 30, 2020, June 30, 2020 and March 31, 2020 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, and $1,166, respectively.  


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Source: FNCB Bancorp, Inc.

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