FNCB Bancorp, Inc. Announces Second Quarter 2022 Net Income and Results of Operations

Jul 29th, 2022 16:05 EST

DUNMORE, Pa., July 29, 2022 (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 $5.7 million, or $0.29 per basic and diluted share, for the three months ended June 30, 2022, an increase of $0.5 million, or 9.7%, compared to $5.2 million, or $0.26 per share for the same period of 2021. Higher net interest income, coupled with a reduction in the provision for loan and lease losses, were the primary factors leading to the improvement in second quarter 2022 earnings. These increases to earnings were partially offset by a decrease in non-interest income and an increase in non-interest expense. For the six months ended June 30, 2022, net income totaled $10.1 million, or $0.51 per basic and diluted share, a decrease of $1.0 million, or 8.8%, from $11.1 million, or $0.55 per basic or diluted share, for the same six months of 2021.  The reduction in earnings comparing the year-to-date periods of 2022 and 2021 was due primarily to increases in non-interest expense and the provision for loan and lease losses and a decrease in non-interest income, partially mitigated by an increase in net interest income.

For the three and six months ended June 30, 2022, the annualized return on average assets was 1.37% and 1.23%, respectively, compared to 1.38% and 1.49%, respectively, for the same period of 2021.  The annualized return on average equity was 17.57% and 14.18%, respectively for the three and six months ended June 30 ,2022, compared to 13.37% and 14.31%, respectively, for the comparable periods of 2021. FNCB declared and paid dividends to shareholders of common stock of $0.075 per share for the second quarter of 2022 and $0.150 per share for the six months ended June 30, 2022, a 25.0% increase, compared to $0.060 per share and $0.120 per share for the same periods of 2021. 

Second quarter 2022 results as compared to the second quarter of 2021: 

  Second quarter net income was $5.7 million, or $0.29 per share, compared to $5.2 million, or $0.26 per share for the second quarter of 2021, an increase of $0.5 million, or 9.7%;
  Yield on earning assets (FTE) decreased 22 basis points to 3.58% for the second quarter of 2022 from 3.80% for the same quarter of 2021, but improved 13 basis points on a linked-quarter basis from 3.45% for the first quarter of 2022;
  Cost of funds decreased 8 basis points to 0.22% from 0.30% comparing the second quarters of 2022 and 2021, but increased 8 basis points on a linked-quarter basis from 0.14% for the first quarter of 2022;
  Net interest margin (FTE) contracted 16 basis points to 3.42% for the second quarter of 2022, compared to 3.58% for the same period of 2021, but widened 7 basis points on a linked-quarter basis from 3.35% for the first quarter of 2022;
  Efficiency ratio was 53.38% for the second quarter of 2022 compared to 51.86% for the second quarter of 2021.

Summary financial position at June 30, 2022 as compared to December 31, 2021:

  Total assets increased $28.8 million, or 1.7%, to $1.693 billion at June 30, 2022 from $1.664 billion at December 31, 2021;
  Loans and leases, net of deferred loan fees and unearned income, increased $109.3 million, or 11.2%, to $1.088 billion at June 30, 2022 from $979.4 million at December 31, 2021;
  Total deposits decreased $28.1 million, or 1.9% to $1.427 billion at June 30, 2022 from $1.455 billion at December 31, 2021;
  Non-performing loans as a percentage of total loans improved to 0.26% at June 30, 2022 from 0.39% at December 31, 2021;
  The Bank was well capitalized with total risk-based capital and leverage ratios of 13.90% and 9.32%, respectively, at June 30, 2022, and 14.64% and 8.92%, respectively, at December 31, 2021.

“We are very pleased with our second quarter 2022 results,” stated Gerard A. Champi, President and CEO. “FNCB’s solid performance continues to reflect our efforts to enhance interest income while being disciplined in managing funding costs and credit quality. We experienced strong loan growth during the first half of 2022 attributable to robust organic generation as well as full integration of our new commercial equipment financing product offering, which has exceeded expectations. Additionally, we remain focused on advancing our digital footprint and I am excited to announce that in the second quarter of 2022, through an alliance with a leading provider, we began offering a fully-digital, collaborative point of sale solution for residential mortgage and home equity loans. This new platform allows us to streamline the entire mortgage origination process and provide our customers with exceptional service from time of application right through closing,” concluded Champi. 

Summary Results 

Net interest income on a tax-equivalent basis increased $1.6 million, or 13.3%, to $13.9 million for the three months ended June 30, 2022 from $12.3 million for the comparable period of 2021. The improvement in tax-equivalent net interest income primarily reflected an increase in tax-equivalent interest income of $1.5 million or 11.7%, to $14.5 million for the second quarter of 2022 from $13.0 million for the same quarter of 2021, coupled with a decrease in interest expense of $0.1 million, or 14.1%, to $0.7 million from $0.8 million comparing the second quarter of 2022 and 2021, respectively. The increase in tax-equivalent interest income largely reflected higher volumes of earning assets, as total average earning assets increased $254.2 million, or 18.6%, to $1.625 billion for the three months ended June 30, 2022 from $1.371 billion for the same three months of 2021. Specifically, total securities averaged $552.9 million for the second quarter of 2022, an increase of $143.8 million, or 35.1%, from $409.1 million for the second quarter of 2021, reflecting the redeployment of excess liquidity in the latter half of 2021 into the investment portfolio. In addition, average total loans and leases increased $113.0 million, or 11.8%, to $1.067 billion for the second quarter of 2022 from $954.4 million for the same quarter of 2021, which was largely due to strong organic loan demand, FNCB’s new commercial equipment financing and leasing product offering and purchases of third-party originated loan pools. Partially offsetting the positive impact of earning asset growth, was a decrease in the tax-equivalent yield on average earning assets of 22 basis points to 3.58% for the three months ended June 30, 2022, compared to 3.80% for the same three months of 2021. A reduction in net loan origination fees from PPP loans contributed to a 13-basis point decrease in the tax-equivalent yield on the loan portfolio to 4.20% from 4.33% comparing the second quarters of 2022 and 2021, respectively. Loan origination fees from PPP loans were $0.3 million for the three months ended June 30, 2022, a decrease of $0.8 million, or 72.3%, from $1.1 million for the same three months of 2021. The tax-equivalent yield on the investment portfolio decreased 21 basis points to 2.42% for the second quarter of 2022 from 2.63% for the same quarter of 2021. The $0.1 million, or 14.1%, reduction in interest expense was largely due to a decrease in funding costs, specifically average deposit rates, partially offset by an increase in average borrowed funds. FNCB’s cost of funds declined by 8 basis points to 0.22% for the three months ended June 30, 2022 from 0.30% for the same three months of 2021. Specifically, the average rate paid for interest-bearing deposits decreased 15 basis points to 0.13% for the second quarter of 2022 from 0.28% for the same period of 2021, which reflected a lag in increasing deposits rates, coupled with continued migration from higher-costing time deposits into lower-costing non-maturity deposits. Interest-bearing liabilities averaged $1.216 billion for the second quarter of 2022, an increase of $186.0 million, or 18.1%, from $1.030 billion for the same quarter of 2021. Specifically, average borrowed funds increased $103.6 million, or 1005.1%, to $113.9 million for the three months ended June 30, 2022 from $10.3 million for the three months ended June 30, 2021. The increase in borrowed funds was entirely due to an increase in utilization of advances through the FHLB of Pittsburgh. In addition, average interest-bearing deposits increased $82.3 million, or 8.1%, to $1.102 billion from $1.020 billion, comparing the second quarters of 2022 and 2021, respectively. However, the overall increase in average deposits had little impact on interest expense as the composition of total deposits shifted, reflecting continued migration from time deposits to non-maturity deposits. Average interest-bearing demand deposits increased $84.0 million, or 11.8%, to $796.8 million for the second quarter of 2022 compared to $712.8 million for the same quarter of 2021, while average savings deposits increased $20.6 million, or 16.7%, to $143.9 million from $123.3 million comparing the second quarters of 2022 and 2021, respectively. Conversely, average time deposits decreased $22.4 million, or 12.2%, to $161.2 million for the three months ended June 30, 2022 from $183.6 million for the same three months of 2021. FNCB’s tax-equivalent net interest margin compressed 16 basis points to 3.42% for the second quarter of 2022 from 3.58% for the same quarter of 2021. Additionally, the net interest spread declined 14 basis points to 3.36% for the three months ended June 30, 2022 from 3.50% for the same three months of 2021. The reduction in margin and spread largely reflected decreases in yields earned on loans and investments, coupled with the decline in PPP loan origination fees recognized, comparing the second quarters of 2022 and 2021. On a linked-quarter basis, the tax-equivalent net interest margin widened 7 basis points from 3.35%, while the net interest rate spread widened 5 basis points from 3.31%, for the first quarter of 2022, due to the increase in interest rates.

On a year-to-date basis, tax-equivalent net interest income increased $3.0 million, or 12.7%, to $26.4 million for the six months ended June 30, 2022 from $23.4 million for the comparable period of 2021. The improvement in tax-equivalent net interest income was due to a $2.5 million, or 9.7%, increase in tax-equivalent interest income, coupled with a $0.5 million, or 34.0%, decrease in interest expense. The increase in tax-equivalent interest income for the year-to-date period resulted primarily from the $239.9 million, or 17.7%, increase in average earning asset balances. Average total security balances increased $161.3 million, or 41.8%, to $547.0 million for the six months ended June 30, 2022 from $385.7 million for the same period of 2021. In addition, average loan balances increased $96.5 million, or 10.3%, to $1.034 billion for the six months ended June 30, 2022, compared to $937.5 million for the same six months of 2021. Tax equivalent yield on average earning assets, on a year-to-date basis, decreased 25 basis points to 3.52% from 3.77%. Comparing the first half of 2022 and 2021, the tax-equivalent yield on the loan portfolio decreased 17 basis points to 4.14% from 4.31%, respectively, while the tax-equivalent yield on the investment portfolio declined 33 basis points to 2.41% from 2.74%, respectively. Similar to the quarterly period, loan yields were impacted by a $1.4 million, or 60.1%, reduction in net loan origination fees recognized on the forgiveness of PPP loans to $0.9 million for the six months ended June 30, 2022 from $2.3 million for the same six months of 2021. The $0.5 million, or 34.0%, decrease in interest expense resulted primarily from a decrease in funding costs, partially offset by an increase in average interest-bearing deposits and an increase in average borrowed funds. FNCB’s total cost of funds decreased 14 basis points to 0.18% for the six months ended June 30, 2022 from 0.32% for the same six months of 2021.  The cost of interest-bearing deposits decreased 18 basis points to 0.12% from 0.30%, respectively, comparing the six months ended June 30, 2022 and 2021. Specifically, comparing the year-to-date periods of 2022 and 2021, the rates paid on time deposits, interest-bearing demand deposits and savings deposits decreased 54 basis points, 10 basis points and 1 basis point, respectively. Regarding volumes of interest-bearing liabilities, total interest-bearing deposits increased $97.4 million, or 9.65%, to $1.107 billion for the first half of 2022 from $1.009 billion for the same period of 2021, while borrowed funds averaged $80.8 million for the six months ended June 30, 2022, an increase of $70.5 million, or 683.9%, from $10.3 million for the six months of 2021. On a year-to-date basis, the tax-equivalent net interest margin compressed 15 basis points to 3.38% in 2022 from 3.53% in 2021.

For the three months ended June 30, 2022, non-interest income decreased $52 thousand, or 3.0%, to $1.6 million from $1.7 million for the three months ended June 30, 2021. The decrease was largely due to shifting market conditions which resulted in net losses on equity securities, net losses on the sale of available-for-sale debt securities and a reduction in loan-related fees. These reductions were partially offset by an increase in deposit service charges. For the three months ended June 30, 2022, FNCB recorded a net loss on equity securities of $82 thousand, a decrease of $118 thousand, or 327.8%, compared to a net gain on equity securities of $36 thousand for the same three months of 2021. Additionally, FNCB recorded a net loss of $35 thousand realized on the sale of available-for-sale debt securities during the three months ended June 30, 2022. Comparatively, no net gains or losses were recognized on the sale of available-for-sale debt securities during the three months ended June 30, 2021. In addition, loan related fees decreased $54 thousand, or 51.9%, to $50 thousand from $104 thousand comparing the three months ended June 30, 2022 and 2021. These reductions were partially offset by a $109 thousand, or 11.4%, increase in deposit service charges to $1.1 million for the three months ended June 30, 2022, compared to $1.0 million for the three months ended June 30, 2021. For the six months ended June 30, 2022, non-interest income decreased $1.0 million, or 23.1%, to $3.5 million from $4.5 million for the same period of 2021.  FNCB recorded a net loss on equity securities of $200 thousand, compared to a net gain of $400 thousand recorded for June 30, 2021. Additionally, a net gain of $213 thousand was realized on the sale of available-for-sale debt securities during the six months ended June 30, 2021, compared to the net loss of $35 thousand for the same six months of 2022.  Comparing the six months ended June 30, 2022 and 2021, net gains recognized on the sale of mortgages held for sale decreased $239 thousand, reflecting changing market conditions, while loan-related fees decreased $130 thousand due to a reduction in servicing fees associated with loans originated under the Federal Reserve Bank’s Main Street Lending Program. In addition, non-interest income for the six months ended June 30, 2021 included a $426 thousand settlement from a bank-owned life insurance death benefit claim. These decreases were partially offset by $285 thousand, or 15.6%, increase in deposit service charges, to $2.1 million for the six months ended June 30, 2022, compared to $1.8 million for the same period of 2021.

Non-interest expense totaled $8.2 million for the three months ended June 30, 2022, a $1.0 million, or 13.9%, increase from $7.2 million for the three months ended June 30, 2021. The increase primarily reflected increases in salaries and employee benefits, data processing expense, professional fees and regulatory assessments. Salaries and employee benefits increased $481 thousand, or 11.9%, to $4.5 million for the second quarter of 2022 from $4.0 million for the same quarter of 2021, which included personnel-related costs associated with the onboarding of staff for the new commercial equipment financing and leasing product offering, increases in payroll taxes and higher retirement costs. Data processing expenses increased $124 thousand, or 14.0%, to $1.0 million for the three months ended June 30, 2022, compared to $0.9 million for the same three months of 2021, while professional fees increased $101 thousand to $0.2 million from $0.1 million comparing the second quarters of 2022 and 2021. The increases in data processing expense and professional fees reflected additional costs associated with FNCB’s initiative to enhance its digital banking platforms. FNCB also experienced an increase of $84 thousand, or 75.0%, in regulatory assessments to $0.2 million for the three months ended June 30, 2022 from $0.1 million for the same three months of 2021 due primarily to balance sheet growth. For the six months ended June 30, 2022, non-interest expense increased $2.4 million or 16.5%, to $16.8 million compared to $14.4 million for the same period of 2021, primarily due to similar increases experienced for the quarterly period. 

Asset Quality

FNCB’s asset quality improved during the first half of 2022, as total non-performing loans decreased $1.1 million, or 28.1%, to $2.8 million at June 30, 2022, representing 0.26% of total loans and leases, gross at June 30, 2022 from $3.9 million, or 0.39% of total loans and leases, gross at December 31, 2021. Year-over-year, non-performing loans decreased $1.8 million, or 39.0%, from $4.6 million, or 0.46% of total loans, gross, at June 30, 2021. FNCB’s loan delinquency rate (total delinquent loans as a percentage of total loans, gross) decreased to 0.39% at June 30, 2022 compared to 0.55% at December 31, 2021, and 0.56% at June 30, 2021. FNCB recorded a provision for loan and lease losses of $62 thousand for the second quarter of 2022 compared to a $155 thousand provision for the same quarter of 2021. For the six months ended June 30, 2022, the provision for loan and lease losses totaled $821 thousand compared to $341 thousand for the same period of 2021. The increase was primarily attributable to increases in loan and lease volumes.  The allowance for loan and lease losses was $13.4 million, or 1.23% of total loans and leases, gross, at June 30, 2022, compared to $12.4 million, or 1.27% of total loans and leases, gross, at December 31, 2021 and $12.3 million, or 1.26% of total loans and leases, gross, at June 30, 2021.

Financial Condition

Total assets increased $28.8 million, or 1.7%, to $1.693 billion at June 30, 2022 from $1.664 billion at December 31, 2021. The change in total assets primarily reflected increases in loans and leases, net of ALLL, partially offset by decreases in cash and cash equivalents and available-for-sale debt securities. Loans and leases increased $108.3 million, or 11.2%, to $1.075 billion at June 30, 2022 from $967.0 million at December 31, 2021. Increases were experienced across all loan categories, which reflected originations from the new commercial equipment financing product offerings, strong organic loan demand and the purchase of several pools of third-party originated loans. Cash and cash equivalents decreased $71.6 million, or 72.3%, to $27.4 million at June 30, 2022 from $99.0 million at December 31, 2021. Available-for-sale debt securities decreased $27.0 million, or 5.2%, to $495.6 million at June 30, 2022 from $522.6 million at December 31, 2021. Total deposits decreased $28.1 million, or 1.9%, to $1.427 billion at June 30, 2022 from $1.455 billion at December 31, 2021. Meanwhile, total borrowed funds increased $98.1 million to $128.4 million at June 30, 2022 from $30.3 million at December 31, 2021. The increase was entirely due to increased utilization of advances through the FHLB of Pittsburgh. 

Total shareholders’ equity decreased $37.0 million, or 22.7%, to $125.5 million at June 30, 2022 from $162.5 million at December 31, 2021. The decrease in capital was primarily due to an accumulated other comprehensive loss of $34.4 million at June 30, 2022, compared to accumulated other comprehensive income of $6.3 million at December 31, 2021. This $40.7 million reduction was related primarily to the depreciation in the fair value of FNCB’s available-for-sale debt securities, net of deferred taxes. Also impacting capital was net income for the six months ended June 30, 2022 of $10.1 million, partially offset by $3.5 million utilized for the repurchase of common shares under a board authorized stock repurchase program and $3.0 million in dividends declared and paid for the six months ended June 30, 2022. Tangible book value was $6.38 per share at June 30, 2022, compared to $8.13 per share at December 31, 2021, reflecting the reduction in fair value of available-for-sale securities. FNCB Bank was considered well capitalized with total risk-based capital and Tier 1 leverage ratios of 13.90% and 9.32%, respectively, at June 30, 2022, and 14.64% and 8.92%, respectively, at December 31, 2021.

Availability of Filings

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

About FNCB Bancorp, Inc.:

FNCB Bancorp, Inc. is the bank holding company of FNCB Bank. Locally-based for over 112 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 16 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., CPAExecutive Vice President and Chief Financial Officer               FNCB Bank(570) 348-6419[email protected]

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, overall financial stability and the global supply chain; the COVID-19 pandemic and actions taken to control its spread; government intervention in the U.S. financial system including the effects of recent rate actions taken by the Federal Open Market Committee, and 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, 2021 and Form 10-Q for the quarter ended March 31, 2022.

FNCB Bancorp, Inc.
Selected Financial Data

  June 30,     Mar 31,     Dec 31,     Sept 30,     June 30,  
  2022     2022     2021     2021     2021  
Per share data:                                      
Net income (fully diluted) $ 0.29     $ 0.22     $ 0.20     $ 0.31     $ 0.26  
Cash dividends declared $ 0.075     $ 0.075     $ 0.075     $ 0.075     $ 0.060  
Book value $ 6.38     $ 7.03     $ 8.13     $ 8.10     $ 7.99  
Tangible book value $ 6.38     $ 7.03     $ 8.13     $ 8.10     $ 7.99  
Market value:                                      
High $ 10.02     $ 10.15     $ 9.40     $ 8.35     $ 7.98  
Low $ 7.36     $ 8.67     $ 8.21     $ 7.17     $ 6.90  
Close $ 8.00     $ 9.49     $ 9.24     $ 8.23     $ 7.27  
Common shares outstanding   19,675,557       19,683,671       19,989,875       19,985,837       20,102,602  
                                       
Selected ratios:                                      
Annualized return on average assets   1.37 %     1.08 %     0.94 %     1.58 %     1.38 %
Annualized return on average shareholders’ equity   17.57 %     11.31 %     9.82 %     15.61 %     13.37 %
Efficiency ratio   53.35 %     58.12 %     61.75 %     51.32 %     51.86 %
Tier I leverage ratio (FNCB Bank)   9.32 %     9.30 %     8.92 %     9.80 %     9.90 %
Total risk-based capital to risk-adjusted assets (FNCB Bank)   13.90 %     14.10 %     14.64 %     15.91 %     15.79 %
Average shareholders’ equity to average total assets   7.80 %     9.54 %     9.61 %     10.14 %     10.35 %
Yield on earning assets (FTE)   3.58 %     3.45 %     3.41 %     3.63 %     3.80 %
Cost of funds   0.22 %     0.14 %     0.16 %     0.23 %     0.30 %
Net interest spread (FTE)   3.36 %     3.31 %     3.25 %     3.40 %     3.50 %
Net interest margin (FTE)   3.42 %     3.35 %     3.29 %     3.46 %     3.58 %
Total delinquent loans/total loans   0.39 %     0.55 %     0.55 %     0.61 %     0.56 %
Allowance for loan and lease losses/total loans   1.23 %     1.27 %     1.27 %     1.25 %     1.26 %
Non-performing loans/total loans   0.26 %     0.37 %     0.39 %     0.47 %     0.46 %
Annualized net (recoveries) charge-offs /average loans   (0.07 %)     0.00 %     (0.03 %)     (0.03 %)     (0.02 %)

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

    Six Months Ended  
    June 30,  
(in thousands, except share data)   2022     2021  
Interest income                
Interest and fees on loans and leases   $ 21,202     $ 20,028  
Interest and dividends on securities:                
Taxable     4,792       3,886  
Tax-exempt     1,270       1,002  
Dividends     190       121  
Total interest and dividends on securities     6,252       5,009  
Interest on interest-bearing deposits in other banks     15       4  
Total interest income     27,469       25,041  
Interest expense                
Interest on deposits     670       1,516  
Interest on borrowed funds                
Federal Home Loan Bank of Pittsburgh advances     273        
Junior subordinated debentures     121       96  
Total interest on borrowed funds     394       96  
Total interest expense     1,064       1,612  
Net interest income before provision for loan and lease losses     26,405       23,429  
Provision for loan and lease losses     821       341  
Net interest income after provision for loan and lease losses     25,584       23,088  
Non-interest income                
Deposit service charges     2,115       1,830  
Net (loss) gain on the sale of available-for-sale debt securities     (35 )     213  
Net (loss) gain on equity securities     (207 )     400  
Net gain on the sale of mortgage loans held for sale     32       271  
Loan-related fees     107       237  
Income from bank-owned life insurance     342       263  
Bank-owned life insurance settlement           426  
Merchant services revenue     371       294  
Other     722       549  
Total non-interest income     3,447       4,483  
Non-interest expense                
Salaries and employee benefits     9,177       7,774  
Occupancy expense     995       1,040  
Equipment expense     640       686  
Advertising expense     359       331  
Data processing expense     2,072       1,704  
Regulatory assessments     421       300  
Bank shares tax     716       657  
Professional fees     540       371  
Other operating expenses     1,856       1,534  
Total non-interest expense     16,776       14,397  
Income before income taxes     12,255       13,174  
Income tax expense     2,164       2,112  
Net income   $ 10,091     $ 11,062  
                 
Income per share                
Basic   $ 0.51     $ 0.55  
Diluted   $ 0.51     $ 0.55  
                 
Cash dividends declared per common share   $ 0.150     $ 0.120  
Weighted average number of shares outstanding:                
Basic     19,805,485       20,232,183  
Diluted     19,832,405       20,243,094  

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

    Three Months Ended  
    June 30,     Mar 31,     Dec 31,     Sept 30,     June 30,  
(in thousands, except share data)   2022     2022     2021     2021     2021  
Interest income                                        
Interest and fees on loans and leases   $ 11,100     $ 10,102     $ 10,325     $ 10,696     $ 10,242  
Interest and dividends on securities                                        
Taxable     2,402       2,390       2,281       2,070       1,980  
Tax-exempt     658       612       567       517       516  
Dividends     112       78       63       55       59  
Total interest and dividends on securities     3,172       3,080       2,911       2,642       2,555  
Interest on interest-bearing deposits in other banks     8       7       53       31       1  
Total interest income     14,280       13,189       13,289       13,369       12,798  
Interest expense                                        
Interest on deposits     346       324       410       582       718  
Interest on borrowed funds                                        
Federal Home Loan Bank of Pittsburgh advances     242       31       6              
Junior subordinated debentures     70       51       48       47       48  
Total interest on borrowed funds     312       82       54       47       48  
Total interest expense     658       406       464       629       766  
Net interest income before provision (credit) for loan and lease losses     13,622       12,783       12,825       12,740       12,032  
Provision (credit) for loan and lease losses     62       759       338       (513 )     155  
Net interest income after provision (credit) for loan and lease losses     13,560       12,024       12,487       13,253       11,877  
Non-interest income                                        
Deposit service charges     1,065       1,050       1,038       1,009       956  
Net (loss) gain on the sale of available-for-sale debt securities     (35 )                        
Net (loss) gain on equity securities     (82 )     (125 )     145       156       36  
Net gain on the sale of mortgage loans held for sale     32             40       41       47  
Loan-related fees     50       57       76       77       104  
Income from bank-owned life insurance     197       145       139       139       142  
Merchant services revenue     172       199       140       159       156  
Other     258       464       365       261       268  
Total non-interest income     1,657       1,790       1,943       1,842       1,709  
Non-interest expense                                        
Salaries and employee benefits     4,519       4,658       4,901       4,022       4,038  
Occupancy expense     447       548       549       450       431  
Equipment expense     316       324       333       319       333  
Advertising expense     227       132       221       160       214  
Data processing expense     1,009       1,063       1,024       961       885  
Regulatory assessments     196       225       149       160       112  
Bank shares tax     375       341       (34 )     352       342  
Professional fees     213       327       150       153       112  
Other operating expenses     930       926       1,879       923       759  
Total non-interest expense     8,232       8,544       9,172       7,500       7,226  
Income before income taxes     6,985       5,270       5,258       7,595       6,360  
Income tax expense     1,247       917       1,300       1,244       1,131  
Net income   $ 5,738     $ 4,353     $ 3,958     $ 6,351     $ 5,229  
                                         
Income per share                                        
Basic   $ 0.29     $ 0.22     $ 0.20     $ 0.31     $ 0.26  
Diluted   $ 0.29     $ 0.22     $ 0.20     $ 0.31     $ 0.26  
                                         
Cash dividends declared per common share   $ 0.075     $ 0.075     $ 0.075     $ 0.075     $ 0.060  
Weighted average number of shares outstanding:                                        
Basic     19,677,109       19,935,288       19,988,272       19,997,021       20,222,216  
Diluted     19,694,125       19,972,113       20,015,776       20,009,387       20,232,694  

FNCB Bancorp, Inc.
Consolidated Balance Sheets

    June 30,     Mar 31,     Dec 31,     Sept 30,     June 30,  
(in thousands)   2022     2022     2021     2021     2021  
Assets                                        
Cash and cash equivalents:                                        
Cash and due from banks   $ 23,355     $ 19,383     $ 16,651     $ 24,612     $ 24,782  
Interest-bearing deposits in other banks     4,037       4,719       82,369       149,581       31,160  
Total cash and cash equivalents     27,392       24,102       99,020       174,193       55,942  
Available-for-sale debt securities     495,604       514,133       522,566       470,323       432,807  
Equity securities, at fair value     5,307       5,018       4,922       4,777       4,303  
Restricted stock, at cost     5,787       4,020       1,911       1,826       1,099  
Loans held for sale     667                   491       642  
Loans and leases, net of deferred loan fees and costs and unearned income     1,088,748       1,036,400       979,439       958,408       976,538  
Allowance for loan and lease losses     (13,381 )     (13,129 )     (12,416 )     (12,018 )     (12,285 )
Net loans and leases     1,075,367       1,023,271       967,023       946,390       964,253  
Bank premises and equipment, net     15,619       15,895       16,082       17,269       17,360  
Accrued interest receivable     5,103       4,870       4,643       4,593       4,485  
Bank-owned life insurance     36,836       36,639       33,494       33,355       33,216  
Other assets     25,403       21,602       14,662       12,674       10,656  
Total assets   $ 1,693,085     $ 1,649,550     $ 1,664,323     $ 1,665,891     $ 1,524,763  
                                         
Liabilities                                        
Deposits:                                        
Demand (non-interest-bearing)   $ 317,725     $ 317,541     $ 320,089     $ 321,952     $ 312,408  
Interest-bearing     1,109,219       1,094,052       1,134,939       1,160,114       1,025,770  
Total deposits     1,426,944       1,411,593       1,455,028       1,482,066       1,338,178  
Borrowed funds     128,360       87,260       30,310       10,310       10,310  
Accrued interest payable     85       57       49       56       87  
Other liabilities     12,184       12,251       16,479       11,509       15,574  
Total liabilities     1,567,573       1,511,161       1,501,866       1,503,941       1,364,149  
                                         
Shareholders’ equity                                        
Preferred stock                              
Common stock     24,594       24,604       24,987       24,982       25,128  
Additional paid-in capital     77,233       77,642       80,128       80,000       80,591  
Retained earnings     58,085       53,834       50,990       48,541       43,698  
Accumulated other comprehensive income     (34,400 )     (17,691 )     6,352       8,427       11,197  
Total shareholders’ equity     125,512       138,389       162,457       161,950       160,614  
Total liabilities and shareholders’ equity   $ 1,693,085     $ 1,649,550     $ 1,664,323     $ 1,665,891     $ 1,524,763  

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

    Three Months Ended  
    June 30,     Mar 31,     Dec 31,     Sept 30,     June 30,  
(dollars in thousands)   2022     2022     2021     2021     2021  
Interest income                                        
Loans:                                        
Loans – taxable   $ 10,743     $ 9,755     $ 9,983     $ 10,364     $ 9,897  
Loans – tax-free     452       439       433       420       437  
Total loans     11,195       10,194       10,416       10,784       10,334  
Securities:                                        
Securities, taxable     2,514       2,468       2,344       2,125       2,039  
Securities, tax-free     833       775       719       654       653  
Total interest and dividends on securities     3,347       3,243       3,063       2,779       2,692  
Interest-bearing deposits in other banks     8       7       53       31       1  
Total interest income     14,550       13,444       13,532       13,594       13,027  
Interest expense                                        
Deposits     346       324       410       582       718  
Borrowed funds     312       82       54       47       48  
Total interest expense     658       406       464       629       766  
Net interest income   $ 13,892     $ 13,038     $ 13,068     $ 12,965     $ 12,261  
                                         
Average balances                                        
Earning assets:                                        
Loans:                                        
Loans – taxable   $ 1,013,899     $ 946,201     $ 915,693     $ 921,648     $ 909,833  
Loans – tax-free     53,471       54,096       45,920       43,091       44,583  
Total loans     1,067,370       1,000,297       961,613       964,739       954,416  
Securities:                                        
Securities, taxable     442,998       437,955       409,210       357,684       326,848  
Securities, tax-free     109,948       103,086       92,685       82,706       82,304  
Total securities     552,946       541,041       501,895       440,390       409,152  
Interest-bearing deposits in other banks     4,488       17,464       125,609       94,434       7,042  
Total interest-earning assets     1,624,804       1,558,802       1,589,117       1,499,563       1,370,610  
Non-earning assets     55,303       78,394       91,968       105,912       145,861  
Total assets   $ 1,680,107     $ 1,637,196     $ 1,681,085     $ 1,593,014     $ 1,516,471  
Interest-bearing liabilities:                                        
Deposits   $ 1,101,947     $ 1,111,671     $ 1,163,920     $ 1,080,312     $ 1,019,612  
Borrowed funds     113,932       47,346       17,810       10,419       10,310  
Total interest-bearing liabilities     1,215,879       1,159,017       1,181,100       1,090,731       1,029,922  
Demand deposits     319,505       308,830       322,536       325,571       317,670  
Other liabilities     13,730       13,234       15,846       15,258       11,998  
Shareholders’ equity     130,993       156,115       161,603       161,454       156,881  
Total liabilities and shareholders’ equity   $ 1,680,107     $ 1,637,196     $ 1,681,085     $ 1,593,014     $ 1,561,471  
                                         
Yield/Cost                                        
Earning assets:                                        
Loans:                                        
Interest and fees on loans – taxable     4.24 %     4.12 %     4.36 %     4.50 %     4.35 %
Interest and fees on loans – tax-free     3.38 %     3.25 %     3.77 %     3.90 %     3.92 %
Total loans     4.20 %     4.08 %     4.33 %     4.47 %     4.33 %
Securities:                                        
Securities, taxable     2.27 %     2.25 %     2.29 %     2.38 %     2.50 %
Securities, tax-free     3.03 %     3.01 %     3.10 %     3.16 %     3.17 %
Total securities     2.42 %     2.40 %     2.44 %     2.52 %     2.63 %
Interest-bearing deposits in other banks     0.71 %     0.16 %     0.17 %     0.13 %     0.06 %
Total earning assets     3.58 %     3.45 %     3.41 %     3.63 %     3.80 %
Interest-bearing liabilities:                                        
Interest on deposits     0.13 %     0.12 %     0.14 %     0.22 %     0.28 %
Interest on borrowed funds     1.10 %     0.69 %     1.21 %     1.80 %     1.86 %
Total interest-bearing liabilities     0.22 %     0.14 %     0.16 %     0.23 %     0.30 %
Net interest spread     3.36 %     3.31 %     3.25 %     3.40 %     3.50 %
Net interest margin     3.42 %     3.35 %     3.29 %     3.46 %     3.58 %

FNCB Bancorp, Inc.
Asset Quality Data

    June 30,     Mar 31,     Dec 31,     Sept 30,     June 30,  
(in thousands)   2022     2022     2021     2021     2021  
At period end                                        
Non-accrual loans, including non-accruing troubled debt restructured loans (TDRs)   $ 2,764     $ 3,864     $ 3,863     $ 4,475     $ 4,555  
Loans past due 90 days or more and still accruing     14                          
Total non-performing loans     2,778       3,864       3,863       4,475       4,555  
Other real estate owned (OREO)     228       228       920       54       236  
Other non-performing assets     1,773       1,773       1,773       1,773       1,773  
Total non-performing assets   $ 4,779     $ 5,865     $ 6,556     $ 6,302     $ 6,564  
                                         
Accruing TDRs   $ 6,329     $ 6,455     $ 6,666     $ 6,666     $ 6,823  
                                         
                                         
For the three months ended                                        
Allowance for loan and lease losses                                        
Beginning balance   $ 13,129     $ 12,416     $ 12,018     $ 12,285     $ 12,076  
Loans charged-off     303       95       34       255       136  
Recoveries of charged-off loans     493       49       94       501       190  
Net (recoveries) charge-offs     (190 )     46       (60 )     (246 )     (54 )
Provision (credit) for loan and lease losses     62       759       338       (513 )     155  
Ending balance   $ 13,381     $ 13,129     $ 12,416     $ 12,018     $ 12,285  

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