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FNCB Bancorp, Inc. Announces 58% Increase in Second Quarter 2020 Net Income

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DUNMORE, Pa., July 20, 2020 (GLOBE NEWSWIRE) -- FNCB Bancorp, Inc. (NASDAQ:FNCB, www.fncb.com)), the parent company of Dunmore-based FNCB Bank (the "Bank"), today reported net income of $4.0 million, or $0.20 per basic and diluted share, for the three months ended June 30, 2020, an increase of $1.5 million, or 57.7% from $2.5 million, or $0.13 per basic and diluted share, for the comparable period of 2019.  Net income for the six months ended June 30, 2020 totaled $6.1 million, or $0.30 per basic and diluted share, an increase of $0.9 million, or 17.4%, compared to $5.2 million, or $0.27 per basic and diluted share, for the same six months of 2019. The increase in second quarter and year-to-date 2020 earnings reflected increases in net interest income and non-interest income, coupled with a decrease in non-interest expense. Partially offsetting these positive factors was an increase in the provision for loan and lease losses. Additionally, the results for the second quarter and year-to-date periods of 2020 include the effect of $117.0 million in loans originated through the Paycheck Protection Program ("PPP") of United States Small Business Administration ("SBA"), as well as COVID-19 related expenses of $183 thousand.

For the three and six months ended June 30, 2020, the annualized return on average assets was 1.21% and 0.96%, respectively, compared to 0.85% and 0.86%, respectively, for the same periods of 2019. The annualized return on average equity was 11.62% and 8.87%, respectively, for the three- and six-month periods ended June 30, 2020, and 8.19% and 8.89%, respectively, for the comparable periods of 2019. Dividend declared and paid were $0.055 per share for the second quarter and $0.11 per share for the year-to-date period of 2020, a 10.0% increase compared to $0.05 per share and $0.10 per share, respectively, for the three and six months ended June 30, 2019. The dividend pay-out ratio was 36.5% for the six months ended June 30, 2020 and 38.8% for the comparable period of 2019. Year-to-date 2020 dividends equated to an annualized dividend yield of approximately 3.8% based on the closing stock price of $5.75 per share at June 30, 2020.

Second quarter 2020 results as compared to the second quarter of 2019:

  Net interest income (FTE) increased $0.7 million, or 8.1%;
  Yield on earnings assets (FTE) decreased 51 basis points to 3.64% in 2020 from 4.15% in 2019;
  Cost of funds decreased 42 basis points to 0.69% in 2020 from 1.11% in 2019; 
  Net interest margin (FTE) contracted 13 basis points to 3.12% in 2020, compared to 3.25% in 2019;
  Provision for loan and lease losses increased $0.5 million, or 139.5%;
  Non-interest income increased $0.9 million, or 58.5%;
  Non-interest expense decreased $0.7 million, or 9.8%; and
  Efficiency ratio improved to 56.53% in 2020 compared to 68.12% in 2019.

Summary financial position at June 30, 2020 as compared to December 31, 2019:

  Total assets grew $214.6 million, or 17.8%, to $1.418 billion at June 30, 2020 from $1.204 billion at December 31, 2019;
  Net loans increased $117.9 million, or 14.4%, to $937.4 million at June 30, 2020 from $819.5 million at December 31, 2019;
  Included in net loans were PPP loans outstanding of $117.0 million at June 30, 2020;
  Total deposits increased $167.9 million, or 16.8% to $1.170 billion at June 30, 2020 from $1.002 billion at December 31, 2019;
  Total capital increased $11.8 million, or 8.8% to $145.4 million at June 30, 2020 from $133.6 million at December 31, 2019; and
  Tangible book value improved $0.57, or 8.6%, to $7.19 per share at June 30, 2020 from $6.62 per share at December 31, 2019. 

"We are extremely pleased with the results achieved by our Company for the second quarter of 2020," stated Gerard A. Champi, President and Chief Executive Officer. "The solid performance reflects the underlying strength of our franchise and the hard work and dedication of the entire FNCB team. As essential employees, I am extremely proud of the effort put forth by our employees in assisting our customers and communities in navigating through the many challenges presented by the COVID-19 pandemic in a safe and sound manner. Our team worked around the clock to ensure our small business customers gained access to the resources available to be able to continue their livelihoods. On an additional note, I am pleased to announce that FNCB Bank is one of eleven lenders within the Commonwealth of Pennsylvania participating in the Federal Reserve Board's Main Street Lending Program. Participating in this important program is just another example of our commitment to assisting local businesses within our communities maintain their operations during this uncertain time. With the economy slowly beginning to re-open, all of our community offices are now open and we remain committed to delivering exceptional service while taking into consideration the safety of our customers and employees by requiring the wearing of masks and adhering to social distancing guidelines. However, we are keenly aware that circumstances surrounding the pandemic are evolving. We are closely monitoring the situation and are ready to adjust our operations as necessary to protect our customers and employees," concluded Champi.

Summary Results 

For the three months ended June 30, 2020, tax-equivalent net interest income increased $0.7 million, or 8.1% to $9.8 million from $9.1 million for the same three months of 2019. The second quarter increase was largely due to a $0.9 million, or 35.8%, decrease in interest expense, which primarily reflected a 42 basis point decrease in the cost of funds to 0.69% for the second quarter of 2020 from 1.11% for the same quarter of 2019. The cost of interest-bearing deposits fell 36 basis points to 0.65% for the second quarter of 2020 from 1.01% for the comparable quarter of 2019, while average borrowing costs decreased 164 basis points to 1.14% from 2.78% comparing the second quarters of 2020 and 2019, respectively. Partially offsetting the reduction in interest expense was a $0.2 million, or 1.4%, decrease in tax-equivalent interest income, which was caused primarily by a 51 basis point decrease in the tax-equivalent yield on earning assets, partially mitigated by a $140.4 million, or 12.6%, increase in average earning assets. On a linked quarter basis, tax-equivalent net interest income increased $0.5 million, or 5.1% from $9.3 million for the first quarter of 2020, which was reflective of a $0.4 million decline in interest expense, coupled with a $0.1 million increase in tax-equivalent interest income. The tax-equivalent net interest margin fell 13 basis points to 3.12% from 3.25% comparing the second quarters of 2020 and 2019, and 23 basis points from 3.35% for the first quarter of 2020. The margin decline was impacted by the origination of PPP loans, which averaged $88.0 million at an average yield of 0.99% for the second quarter of 2020.

For the six months ended June 30, 2020, tax-equivalent net interest income increased $1.0 million, or 5.3% to $19.1 million, from $18.1 million for the same six months of 2019. The increase in year-to-date tax-equivalent net interest income primarily reflected a $1.6 million, or 30.8%, reduction in interest expense caused by a decrease in funding costs, coupled with lower average balances of interest-bearing liabilities. Due to lower market interest rates, FNCB's cost of funds for the six months ended June 30, decreased 32 basis points to 0.79% in 2020 from 1.11% in 2019. Additionally, average interest-bearing liabilities decreased $25.1 million, or 2.7%, comparing the year-to-date periods of 2020 and 2019. Partially offsetting the reduction in interest expense was a $0.6 million, or 2.7%, decrease in tax-equivalent interest income to $22.7 million for the six months ended June 30, 2020 from $23.3 million for the comparable six-month period of 2019. The tax-equivalent yield on loans decreased 38 basis points to 4.20% for the six months ended June 30, 2020 from 4.58% for the same six months of 2019. Partially mitigating the reduction in loan yields was a $46.0 million, or 5.5%, increase in average loan balances to $877.7 million from $831.7 million comparing the year-to-date periods of 2020 and 2019, respectively. On a year-to-date basis, the tax-equivalent net interest margin improved 4 basis points to 3.23% in 2020 compared to 3.19% in 2019. PPP loans averaged $44.9 million for the six months ended June 30, 2020, with an average yield of 0.99%.  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 the three and six months ended June 30, 2020 and 2019.

For the second quarter, non-interest income increased  $923 thousand to $2.5 million in 2020 compared to $1.6 million in 2019. The 58.5% increase was primarily due to higher net gains on the sale of available-for-sale securities, coupled with increases in loan referral fees and net gains on the sale of mortgage loans held for sale. FNCB realized net gains on the sale of available-for-sale debt securities of $922 thousand  for the second quarter of 2020, an increase of $759 thousand, or 466.6%, compared to $163 thousand for the same quarter of 2019. Loan referral fees, which include commissions received from a correspondent bank related to an off-balance sheet commercial interest-rate hedge program and the referral of FHA residential mortgage loans to a third-party broker, increased $208 thousand, or 3466.7% to $214 thousand for the second quarter of 2020 from $6 thousand for the same quarter of 2019. Comparing the second quarters of 2020 and 2019, net gains on the sale of residential mortgage loans held for sale increased $110 thousand, or 150.7%, to $183 thousand in 2020 compared to $73 thousand in 2019. For the six months ended June 30, 2020, non-interest income increased $1.1 million, or 35.6%, to $4.2 million from $3.1 million for the same period of 2019. Similarly, the increase in non-interest income for the year-to-date period was due to increases in net gains on the sale of available-for-sale securities, loan referral fees and net gains on the sale of residential mortgage loans held for sale. Additionally, deposit service charges increased $127 thousand, or 9.0%, which reflected enhancements made to FNCB's fee structure implemented in the fourth quarter of 2019. 

For the three months ended June 30, 2020, non-interest expense decreased by $698 thousand, or 9.8%, to $6.4 million from $7.1 million for the comparable three months of 2019. Non-interest expense for the six months ended June 30, 2020, decreased $918 thousand, or 6.3%, to $13.6 million from $14.5 million for the same six months of 2019. The decrease in the three- and six-month periods primarily reflected decreases in salaries and employee benefits, data processing costs and other operating expenses, which were partially offset by increases in occupancy and equipment expenses and bank shares tax. For the six months ended June 30, 2020, FNCB incurred COVID-19 related costs, including stay-at-home pay, computer-related equipment to enable employees to work remotely, cleaning and sanitizing facilities and safety supplies, totaling $183 thousand, which is included in non-interest expense. 

The increases in net interest income and non-interest income, coupled with the reduction in non-interest expense, resulted in an improvement in FNCB's efficiency ratio year over year to 56.53% for the second quarter of 2020 from 68.12% for the same quarter of 2019.

Asset Quality

Total non-performing loans were $6.7 million, or 0.71% of total loans, at June 30, 2020, an increase of $1.4 million, or 27.1%, compared to $5.3 million, or 0.65% of total loans, at June 30, 2019. The year-over-year increase was due to several smaller-balance commercial credits that were placed on nonaccrual status. On a linked quarter basis, non-performing loans decreased $1.8 million, or 21.4%, from $8.6 million, or 1.03% of total loans, at March 31, 2020. The decrease in non-performing loans from the end of the previous quarter end primarily reflected the return of two large commercial loan relationships to accrual status. FNCB's loan delinquency rate (total delinquent loans as a percentage of total loans)  was 0.89% at June 30, 2020 compared to 1.46% at December 31, 2019 and 0.99% at June 30, 2019. FNCB recorded net recoveries of $286 thousand during the second quarter of 2020 due to a substantial recovery received on a previously charged-off loan. Annualized net loans charged off (recovered), as a percentage of average loans, was (0.12%) for the three months ended June 30, 2020 compared to 0.32% for the second quarter of 2019. Despite receipt of the large recovery and the improvement in non-performing assets and delinquency rate, FNCB recorded a provision for loan and lease losses of $0.8 million for the second quarter of 2020, an increase of $0.5 million, or 139.5%, from $0.3 million for the second quarter of 2019. For the six months ended June 30, 2020, the provision for loan and lease losses was $2.0 million, an increase of $1.8 million, from $0.2 million for the same six months of 2019. The increase in credit provisioning in 2020 was primarily related to economic disruption and uncertainty caused by the COVID-19 pandemic. The allowance for loan and lease losses was $11.0 million, or 1.16% of total loans at June 30, 2020, compared to $8.9 million, or 1.08% of total loans at December 31, 2019 and $8.9 million, or 1.10%, at June 30, 2019. At June 30, 2020, FNCB provided short-term, COVID-19 related payment deferment for 905 loans with aggregate balance totaling $176.6 million, or 18.6%, of gross loans outstanding. Additionally, of the 905 loans, there were 12 loans with an aggregate balance of $7.0 million, or 0.7% of gross loans outstanding, that were provided a second short-term payment deferment as of June 30, 2020. All of the loans that were granted a payment deferment were current and in good standing at December 31, 2019. 

Financial Condition

Total assets increased $214.6 million, or 17.8%, to $1.418 billion at June 30, 2020 from $1.204 billion at December 31, 2019. The change in the balance sheet primarily reflected increases in net loans, available-for-sale debt securities and cash and cash equivalents. Net loans were $937.4 million at June 30, 2020, an increase of $117.9 million, or 14.4%, from $819.5 million at December 31, 2019. The increase in loans primarily reflected the origination and funding of PPP loans, of which $117.0 million were outstanding at June 30, 2020. Available-for-sale debt securities increased $32.8 million, or 12.0%, to $305.6 million at June 30, 2020 from $272.8 million at December 31, 2019. Cash and cash equivalents were $101.5 million at June 30, 2020, an increase of $66.9 million, or 193.6%, compared to $34.6 million at December 31, 2019. Total deposits increased $167.9 million, or 16.8%, to $1.170 billion at June 30, 2020 from $1.002 billion at December 31, 2019. Non-interest-bearing deposits increased $87.4 million, or 48.7%, while interest-bearing deposits rose $80.5 million, or 9.8%, comparing balances outstanding at June 30, 2020 and December 31, 2019. Total borrowed funds increased $32.2 million, or 56.2%, to $89.4 million at June 30, 2020 from $57.2 million at December 31, 2019. The increase was primarily the result of receipt of $36.2 million in funding through the Federal Reserve Bank Discount Window Paycheck Protection Program Liquidity Facility (PPPLF).  

Total shareholders' equity increased $11.8 million, or 8.8%, to $145.4 million at June 30, 2020 from $133.6 million at December 31, 2019.  Factoring into the capital improvement was net income for the six months ended June 30, 2020 of $6.1 million and a $7.7 million positive change in accumulated other comprehensive income related primarily to appreciation in the fair value of available-for-sale debt securities, net of deferred taxes, partially offset by dividends declared of $2.2 million. FNCB's tangible book value improved $0.57, or 8.6%, to $7.19 per share at June 30, 2020 from $6.62 per share at December 31, 2019, and $0.75 per share, or 11.6%, year over year from $6.44 per share at June 30, 2019. FNCB Bank's total risk-based capital and Tier I leverage ratios improved to 15.68% and 10.60%, respectively, at June 30, 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 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 a limited purpose office in Lehigh County, 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 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 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 report.

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 quarter ended March 31, 2020.



FNCB Bancorp, Inc.
Selected Financial Data


    Jun 30,     Mar 31,     Dec 31,     Sept 30,     Jun 30,  
    2020     2020     2019     2019     2019  
Per share data:                                        
Net income (fully diluted)   $ 0.20     $ 0.10     $ 0.17     $ 0.12     $ 0.13  
Cash dividends declared   $ 0.055     $ 0.055     $ 0.050     $ 0.050     $ 0.050  
Book value   $ 7.19     $ 6.84     $ 6.62     $ 6.57     $ 6.44  
Tangible book value   $ 7.19     $ 6.84     $ 6.62     $ 6.57     $ 6.44  
Market value:                                        
High   $ 7.19     $ 8.54     $ 8.86     $ 9.41     $ 8.12  
Low   $ 5.15     $ 5.10     $ 7.03     $ 7.03     $ 7.16  
Close   $ 5.75     $ 6.91     $ 8.45     $ 7.81     $ 7.74  
Common shares outstanding     20,208,607       20,174,250       20,171,408       20,169,492       20,148,017  
                                         
Selected ratios:                                        
Annualized return on average assets     1.21 %     0.69 %     1.15 %     0.80 %     0.85 %
Annualized return on average shareholders' equity     11.62 %     6.06 %     10.43 %     7.30 %     8.19 %
Efficiency ratio     56.53 %     66.46 %     67.35 %     69.20 %     68.12 %
Tier I leverage ratio (FNCB Bank)     10.60 %     11.09 %     10.36 %     11.01 %     10.69 %
Total risk-based capital to risk-adjusted assets (FNCB Bank)     15.68 %     15.44 %     14.77 %     15.37 %     15.25 %
Average shareholders' equity to average total assets     10.38 %     11.37 %     11.01 %     10.96 %     10.41 %
Yield on earning assets (FTE)     3.64 %     4.05 %     4.16 %     4.22 %     4.15 %
Cost of funds     0.69 %     0.89 %     0.98 %     1.11 %     1.11 %
Net interest spread (FTE)     2.95 %     3.16 %     3.18 %     3.11 %     3.04 %
Net interest margin (FTE)     3.12 %     3.35 %     3.38 %     3.32 %     3.25 %
Total delinquent loans/total loans     0.89 %     1.41 %     1.46 %     1.16 %     0.99 %
Allowance for loan and lease losses/total loans     1.16 %     1.19 %     1.08 %     1.11 %     1.10 %
Non-performing loans/total loans     0.71 %     1.03 %     1.10 %     0.73 %     0.65 %
Annualized net charge-offs(recoveries)/average loans     (0.12 %)     0.09 %     0.16 %     0.13 %     0.32 %



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


    Six Months Ended  
    June 30,  
(in thousands, except share data)   2020     2019  
Interest income                
Interest and fees on loans   $ 18,199     $ 18,825  
Interest and dividends on securities                
U.S. government agencies     1,339       1,799  
State and political subdivisions, tax-free     445       75  
State and political subdivisions, taxable     1,500       1,832  
Other securities     827       415  
Total interest and dividends on securities     4,111       4,121  
Interest on interest-bearing deposits in other banks     24       125  
Total interest income     22,334       23,071  
Interest expense                
Interest on deposits     3,036       4,382  
Interest on borrowed funds                
Interest on Federal Reserve Bank discount window advances     14       -  
Interest on Federal Home Loan Bank of Pittsburgh advances     379       540  
Interest on subordinated debentures     -       24  
Interest on junior subordinated debentures     148       225  
Total interest on borrowed funds     541       789  
Total interest expense     3,577       5,171  
Net interest income before provision for loan and lease losses     18,757       17,900  
Provision for loan and lease losses     1,982       193  
Net interest income after provision for loan and lease losses     16,775       17,707  
Non-interest income                
Deposit service charges     1,533       1,406  
Net gain on the sale of securities     1,071       323  
Net gain on equity securities     18       26  
Net gain on the sale of mortgage loans held for sale     279       129  
Loan-related fees     81       151  
Income from bank-owned life insurance     248       260  
Merchant services revenue     247       249  
Loan referral fees     262       20  
Other     456       529  
Total non-interest income     4,195       3,093  
Non-interest expense                
Salaries and employee benefits     7,427       7,723  
Occupancy expense     1,020       994  
Equipment expense     731       636  
Data processing expense     1,434       1,570  
Regulatory assessments     133       244  
Bank shares tax     615       555  
Professional fees     381       535  
Other operating expenses     1,888       2,290  
Total non-interest expense     13,629       14,547  
Income before income taxes     7,341       6,253  
Income tax expense     1,257       1,069  
Net income   $ 6,084     $ 5,184  
                 
Income per share                
Basic   $ 0.30     $ 0.27  
Diluted   $ 0.30     $ 0.27  
                 
Cash dividends declared per common share   $ 0.110     $ 0.100  
Weighted average number of shares outstanding:                
Basic     20,182,012       19,428,717  
Diluted     20,184,046       19,435,076  



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


    Three Months Ended  
    Jun 30,     Mar 31,     Dec 31,     Sept 30,     Jun 30,  
(in thousands, except share data)   2020     2020     2019     2019     2019  
Interest income                                        
Interest and fees on loans   $ 9,060     $ 9,139     $ 9,505     $ 9,488     $ 9,418  
Interest and dividends on securities                                        
U.S. government agencies     589       750       822       924       906  
State and political subdivisions, tax-free     388       57       37       37       38  
State and political subdivisions, taxable     735       765       718       713       811  
Other securities     415       412       364       314       210  
Total interest and dividends on securities     2,127       1,984       1,941       1,988       1,965  
Interest on interest-bearing deposits in other banks     3       21       33       30       79  
Total interest income     11,190       11,144       11,479       11,506       11,462  
Interest expense                                        
Interest on deposits     1,376       1,660       1,818       1,901       2,144  
Interest on borrowed funds                                        
Interest on Federal Reserve Bank discount window advances     14       -       -       -       -  
Interest on Federal Home Loan Bank of Pittsburgh advances     160       219       253       448       253  
Interest on junior subordinated debentures     60       88       99       106       111  
Total interest on borrowed funds     234       307       352       554       364  
Total interest expense     1,610       1,967       2,170       2,455       2,508  
Net interest income before provision (credit) for loan and lease losses     9,580       9,177       9,309       9,051       8,954  
Provision (credit) for loan and lease losses     831       1,151       (33 )     637       347  
Net interest income after provision (credit) for loan and lease losses     8,749       8,026       9,342       8,414       8,607  
Non-interest income                                        
Deposit service charges     708       825       832       797       721  
Net gain on the sale of securities     922       149       525       379       163  
Net gain (loss) on equity securities     4       14       (2 )     5       14  
Net gain on the sale of mortgage loans held for sale     183       96       55       69       73  
Net gain on the sale of other real estate owned     -       -       -       11       9  
Loan-related fees     25       56       147       80       72  
Income from bank-owned life insurance     119       129       126       134       129  
Merchant services revenue     112       135       145       142       131  
Loan referral fees     214       48       681       54       6  
Other     214       242       187       160       260  
Total non-interest income     2,501       1,694       2,696       1,831       1,578  
Non-interest expense                                        
Salaries and employee benefits     3,498       3,929       3,884       3,911       3,824  
Occupancy expense     466       554       494       460       444  
Equipment expense     360       371       351       332       329  
Data processing expense     709       725       801       742       789  
Regulatory assessments     74       59       41       21       76  
Bank shares tax     315       300       (194 )     205       277  
Professional fees     193       188       332       189       203  
Other operating expenses     809       1,079       2,097       1,469       1,180  
Total non-interest expense     6,424       7,205       7,806       7,329       7,122  
Income before income taxes     4,826       2,515       4,232       2,916       3,063  
Income tax expense     805       452       744       513       514  
Net income   $ 4,021     $ 2,063     $ 3,488     $ 2,403     $ 2,549  
                                         
Income per share                                        
Basic   $ 0.20     $ 0.10     $ 0.17     $ 0.12     $ 0.13  
Diluted   $ 0.20     $ 0.10     $ 0.17     $ 0.12     $ 0.13  
                                         
Cash dividends declared per common share   $ 0.055     $ 0.055     $ 0.050     $ 0.050     $ 0.050  
Weighted average number of shares outstanding:                                        
Basic     20,191,527       20,172,498       20,170,241       20,168,529       20,129,150  
Diluted     20,191,527       20,176,565       20,175,758       20,172,282       20,133,850  



FNCB Bancorp, Inc.
Consolidated Balance Sheets


    Jun 30,     Mar 31,     Dec 31,     Sept 30,     Jun 30,  
(in thousands)   2020     2020     2019     2019     2019  
Assets                                        
Cash and cash equivalents:                                        
Cash and due from banks   $ 20,089     $ 15,243     $ 22,861     $ 30,900     $ 24,277  
Interest-bearing deposits in other banks     81,390       30,304       11,704       6,611       5,627  
Total cash and cash equivalents     101,479       45,547       34,565       37,511       29,904  
Available-for-sale debt securities, at fair value     305,611       302,638       272,839       254,666       285,855  
Equity securities, at fair value     938       934       920       922       917  
Restricted stock, at cost     3,309       4,224       3,804       4,194       4,618  
Loans held for sale     765       470       1,061       1,140       419  
Loans, net of net deferred costs and unearned income     948,428       834,935       828,479       836,877       814,420  
Allowance for loan and lease losses     (11,024 )     (9,907 )     (8,950 )     (9,315 )     (8,945 )
Net loans     937,404       825,028       819,529       827,562       805,475  
Bank premises and equipment, net     17,467       17,447       17,518       17,274       15,923  
Accrued interest receivable     5,201       3,387       3,234       3,038       3,640  
Bank-owned life insurance     31,478       31,359       31,230       31,104       31,275  
Other real estate owned     85       85       289       412       560  
Other assets     14,434       17,113       18,552       19,367       20,208  
Total assets   $ 1,418,171     $ 1,248,232     $ 1,203,541     $ 1,197,190     $ 1,198,794  
                                         
Liabilities                                        
Deposits:                                        
Demand (non-interest-bearing)   $ 266,846     $ 181,223     $ 179,465     $ 179,025     $ 157,856  
Interest-bearing     902,781       820,339       822,244       785,035       803,208  
Total deposits     1,169,627       1,001,562       1,001,709       964,060       961,064  
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       79,458       87,223  
Junior subordinated debentures     10,310       10,310       10,310       10,310       10,310  
Total borrowed funds     89,361       98,244       57,219       89,768       97,533  
Accrued interest payable     248       261       258       401       389  
Other liabilities     13,578       10,233       10,748       10,394       10,102  
Total liabilities     1,272,814       1,110,300       1,069,934       1,064,623       1,069,088  
                                         
Shareholders' equity                                        
Preferred stock     -       -       -       -       -  
Common stock     25,260       25,217       25,214       25,211       25,184  
Additional paid-in capital     81,261       81,209       81,130       81,058       80,864  
Retained earnings     28,057       25,155       24,207       21,733       20,345  
Accumulated other comprehensive income     10,779       6,351       3,056       4,565       3,313  
Total shareholders' equity     145,357       137,932       133,607       132,567       129,706  
Total liabilities and shareholders' equity   $ 1,418,171     $ 1,248,232     $ 1,203,541     $ 1,197,190     $ 1,198,794  



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


    Three Months Ended  
    Jun 30,     Mar 31,     Dec 31,     Sept 30,     Jun 30,  
(dollars in thousands)   2020     2020     2019     2019     2019  
Interest income                                        
Loans:                                        
Loans - taxable   $ 8,661     $ 8,693     $ 9,138     $ 9,170     $ 9,084  
Loans - tax-free     505       565       464       403       423  
Total loans     9,166       9,258       9,602       9,573       9,507  
Securities:                                        
Securities, taxable     1,739       1,927       1,904       1,951       1,927  
Securities, tax-free     491       72       47       47       48  
Total interest and dividends on securities     2,230       1,999       1,951       1,998       1,975  
Interest-bearing deposits in other banks     3       21       33       30       79  
Total interest income     11,399       11,278       11,586       11,601       11,561  
Interest expense                                        
Deposits     1,376       1,660       1,818       1,901       2,144  
Borrowed funds     234       307       352       554       364  
Total interest expense     1,610       1,967       2,170       2,455       2,508  
Net interest income   $ 9,789     $ 9,311     $ 9,416     $ 9,146     $ 9,053  
                                         
Average balances                                        
Earning assets:                                        
Loans:                                        
Loans - taxable   $ 875,119     $ 780,855     $ 791,577     $ 781,963     $ 778,540  
Loans - tax-free     46,836       52,615       42,954       37,638       41,436  
Total loans     921,955       833,470       834,531       819,601       819,976  
Securities:                                        
Securities, taxable     247,939       263,697       258,790       266,653       274,552  
Securities, tax-free     56,220       7,698       4,598       4,611       4,624  
Total securities     304,159       271,395       263,388       271,264       279,176  
Interest-bearing deposits in other banks     27,858       8,396       16,841       10,007       14,420  
Total interest-earning assets     1,253,972       1,113,261       1,114,760       1,100,872       1,113,572  
Non-earning assets     87,189       90,387       90,245       90,807       85,429  
Total assets   $ 1,341,161     $ 1,203,648     $ 1,205,005     $ 1,191,679     $ 1,199,001  
Interest-bearing liabilities:                                        
Deposits   $ 850,525     $ 821,216     $ 830,318     $ 794,971     $ 851,726  
Borrowed funds     81,813       61,843       57,682       85,927       52,313  
Total interest-bearing liabilities     932,338       883,059       888,000       880,898       904,039  
Demand deposits     258,609       172,132       172,935       169,416       158,413  
Other liabilities     11,065       11,636       11,361       10,730       11,698  
Shareholders' equity     139,149       136,821       132,709       130,635       124,851  
Total liabilities and shareholders' equity   $ 1,341,161     $ 1,203,648     $ 1,205,005     $ 1,191,679     $ 1,199,001  
                                         
Yield/Cost                                        
Earning assets:                                        
Loans:                                        
Interest and fees on loans - taxable     3.96 %     4.45 %     4.62 %     4.69 %     4.67 %
Interest and fees on loans - tax-free     4.31 %     4.29 %     4.32 %     4.28 %     4.08 %
Total loans     3.98 %     4.44 %     4.60 %     4.67 %     4.64 %
Securities:                                        
Securities, taxable     2.81 %     2.92 %     2.94 %     2.93 %     2.81 %
Securities, tax-free     3.49 %     3.74 %     4.09 %     4.08 %     4.15 %
Total securities     2.93 %     2.95 %     2.96 %     2.95 %     2.83 %
Interest-bearing deposits in other banks     0.04 %     1.00 %     0.78 %     1.20 %     2.19 %
Total earning assets     3.64 %     4.05 %     4.16 %     4.22 %     4.15 %
Interest-bearing liabilities:                                        
Interest on deposits     0.65 %     0.81 %     0.88 %     0.96 %     1.01 %
Interest on borrowed funds     1.14 %     1.99 %     2.44 %     2.58 %     2.78 %
Total interest-bearing liabilities     0.69 %     0.89 %     0.98 %     1.11 %     1.11 %
Net interest spread     2.95 %     3.16 %     3.18 %     3.11 %     3.04 %
Net interest margin     3.12 %     3.35 %     3.38 %     3.32 %     3.25 %



FNCB Bancorp, Inc.
Asset Quality Data


    Jun 30,     Mar 31,     Dec 31,     Sept 30,     Jun 30,  
(in thousands)   2020     2020     2019     2019     2019  
At period end                                        
Non-accrual loans, including non-accruing troubled debt restructured loans (TDRs)   $ 6,740     $ 8,576     $ 9,084     $ 6,119     $ 5,302  
Loans past due 90 days or more and still accruing     -       -       -       -       -  
Total non-performing loans     6,740       8,576       9,084       6,119       5,302  
Other real estate owned (OREO)     85       85       289       412       560  
Other non-performing assets     1,900       1,900       1,900       1,900       1,900  
Total non-performing assets   $ 8,725     $ 10,561     $ 11,273     $ 8,431     $ 7,762  
                                         
Accruing TDRs   $ 8,592     $ 7,729     $ 7,745     $ 7,828     $ 7,897  
                                         
                                         
For the three months ended                                        
Allowance for loan and lease losses                                        
Beginning balance   $ 9,907     $ 8,950     $ 9,315     $ 8,945     $ 9,253  
Loans charged-off     316       329       620       417       1,123  
Recoveries of charged-off loans     602       135       288       150       468  
Net charge-offs (recoveries)     (286 )     194       332       267       655  
Provision (credit) for loan and lease losses     831       1,151       (33 )     637       347  
Ending balance   $ 11,024     $ 9,907     $ 8,950     $ 9,315     $ 8,945  

 

 

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