FNCB Bancorp, Inc. Announces First Quarter 2023 Results
April 29, 2023 at 01:36 am IST
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DUNMORE, Pa., April 28, 2023 (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 $2.7 million, or $0.14 per basic and diluted share, for the three months ended March 31, 2023, a decrease of $1.7 million, or 38.8%, compared to $4.4 million, or $0.22 per share for the same period of 2022. Lower net interest income and non-interest income, coupled with increases in non-interest expense, were the primary factors leading to the reduction in first quarter 2023 earnings. For the three months ended March 31, 2023, the annualized return on average assets and return on average equity was 0.62% and 8.84%, respectively, compared to 1.08% and 11.31%, respectively, for the same period of 2022. FNCB declared and paid dividends to shareholders of common stock of $0.090 per share for the first quarter of 2023, a 20.0% increase, compared to $0.075 per share for the first quarter of 2022.
First quarter 2023 performance:
●
First quarter net income was $2.7 million, or $0.14 per share, compared to $4.4 million, or $0.22 per share for the first quarter of 2022;
●
Yield on earning assets (FTE) increased 100 basis points to 4.45% for the first quarter of 2023 from 3.45% for the same quarter of 2022, and improved 22 basis points on a linked-quarter basis from 4.23% for the fourth quarter of 2022;
●
Cost of funds increased 201 basis points to 2.15% from 0.14% comparing the first quarters of 2023 and 2022, and increased 96 basis points on a linked-quarter basis from 1.19% for the fourth quarter of 2022;
●
Net interest margin (FTE) contracted 57 basis points to 2.78% for the first quarter of 2023, compared to 3.35% for the same period of 2022, and contracted 54 basis points on a linked-quarter basis from 3.32% for the fourth quarter of 2022;
●
Efficiency ratio was 67.69% for the first quarter of 2023 compared to 58.12% for the first quarter of 2022.
Summary financial position at March 31, 2023 as compared to December 31, 2022:
●
Total assets increased $64.0 million, or 3.7%, to $1.809 billion at March 31, 2023 from $1.746 billion at December 31, 2022;
●
Net loans and leases increased $41.4 million, or 3.3%, to $1.152 billion at March 31, 2023 from $1.110 billion at December 31, 2022;
●
Total deposits increased $42.7 million, or 3.0% to $1.463 billion at March 31,2023 from $1.421 billion at December 31, 2022;
●
Non-performing loans as a percentage of total loans improved to 0.23% at March 31, 2023 from 0.25% at December 31, 2022;
●
The Bank was well capitalized with total risk-based capital and leverage ratios of 12.97% and 8.96%, respectively, at March 31, 2023, and 13.10% and 8.77%, respectively, at December 31, 2022.
"The rapid rise in interest rates impacted FNCB's first quarter profitability as we have started to experience some margin and spread compression," said FNCB President and CEO, Gerard A. Champi. "We remain laser-focused on effective and prudent balance sheet and funding cost management. We continue to believe that FNCB is well positioned with strong asset quality, ample liquidity sources and a solid tangible capital base. Additionally, FNCB's level of uninsured deposits, at approximately 25% of total deposits, is low compared to our peers. With these strong metrics, we believe FNCB will be able to successfully navigate the many challenges presented by the current economic environment," concluded Champi.
Summary Results
Net interest income on a tax-equivalent basis decreased $1.2 million, or 9.1%, to $11.8 million for the three months ended March 31, 2023, from $13.0 million for the comparable period of 2022, which was caused by an increase in interest expense, partially offset by an increase in tax-equivalent interest income. The increase in both interest expense and tax-equivalent interest income reflected the nine FOMC rate increases beginning March 17, 2022 through March 31, 2023. However, the velocity and magnitude of the actions, coupled with increasing market competition and rate-sensitivity of depositors, has resulted in an acceleration of funding costs over earning-asset yields, causing both margin and spread compression. FNCB's tax-equivalent net interest margin compressed 57 basis points to 2.78% for the first quarter of 2023 from 3.35% for the same quarter of 2022. Additionally, the net interest spread declined 101 basis points to 2.30% for the three months ended March 31, 2023, from 3.31% for the same three months of 2022. The reduction in margin and spread largely reflected the rapid increases in funding costs that outpaced the increase in yield on average earning assets, comparing the first quarters of 2023 and 2022. On a linked-quarter basis, the tax-equivalent net interest margin declined 54 basis points from 3.32%, and the net interest rate spread declined 74 basis points from 3.01%, for the fourth quarter of 2022. Interest expense increased $6.7 million, to $7.1 million for the first quarter of 2023 from $0.4 million for the same quarter of 2022. The increase was largely caused by higher deposit and borrowing costs, coupled with greater reliance on higher-costing wholesale funding. FNCB's average deposit costs increased 148 basis points to 1.60% for the first quarter of 2023 compared to 0.12% for the same quarter of 2022, and increased 79 basis points on a linked-quarter basis from 0.81% for the fourth quarter of 2022. Average borrowed funds, specifically advances through the FHLB of Pittsburgh, increased $176.3 million to $223.7 million from $47.3 million comparing the three months ended March 31, 2023 and 2022, respectively. Moreover, the average cost of borrowed funds increased 417 basis points to 4.86% for the first quarter of 2023 from 0.69% for the same quarter of 2022. Conversely, average interest-bearing deposits decreased $14.9 million, or 1.3%, to $1.097 billion from $1.112 billion, comparing the first quarters of 2023 and 2022, respectively, which was due primarily to cyclical trends of FNCB's municipal deposit customers. FNCB did experience some deposit migration from non-maturity deposits and non-interest-bearing deposits into time deposits, as customers are becoming increasingly rate-sensitive. Average interest-bearing demand deposits decreased $112.5 million, or 13.6%, to $714.0 million for the first quarter of 2023 compared to $826.5 million for the same quarter of 2022. Additionally, non-interest-bearing demand deposits decreased $20.9 million, or 6.8%, to $288.0 million for the first quarter of 2023 from $308.9 million for the respective quarter of 2022. Conversely, average time deposits increased $95.0 million, or 65.7%, to $239.7 million for the three months ended March 31, 2023, from $144.7 million for the same three months of 2022, which reflected special certificate of deposit rate promotions during the first quarter. Tax-equivalent interest income increased $5.5 million, or 40.9%, to $18.9 million from $13.4 million comparing the first quarter of 2023 and 2022, respectively, which largely reflected higher earning-asset yields, coupled with an increase in average earning-asset volumes. The tax-equivalent yield on average earning assets increased 100 basis points to 4.45% for the three months ended March 31, 2023, from 3.45% for the same three months of 2022. Specifically, the tax-equivalent yield on the loan portfolio increased 108 basis points to 5.16% for the first quarter of 2023 from 4.08% for the same quarter of 2022. In addition, the tax-equivalent yield on the investment portfolio increased 58 basis points to 2.98% for the first quarter of 2023 from 2.40% for the same quarter of 2022. With regard to asset volumes, total average earning assets increased $144.3 million, or 9.3%, to $1.703 billion for the three months ended March 31, 2023, from $1.559 billion for the same three months of 2022. Specifically, average total loans and leases increased $136.6 million, or 13.7%, to $1.137 billion for the first quarter of 2023 from $1.000 billion for the same quarter of 2022, which was largely due to strong organic loan demand, the new commercial equipment finance product offering and the acquisition of third-party originated loan pools. In addition, total securities averaged $549.2 million for the first quarter of 2023, an increase of $8.1 million, or 1.5%, from $541.0 million for the first quarter of 2022.
For the three months ended March 31, 2023, non-interest income decreased $119 thousand, or 6.6%, to $1.7 million from $1.8 million for the three months ended March 31, 2022. The reduction in non-interest revenue was largely due to unrealized net losses recognized on equity securities, coupled with decreases in merchant services revenue and other income. Stock volatility in the financial service sector during first quarter of 2023 resulted in net unrealized losses of $508 thousand on equity securities of other financial institutions for the three months ended March 31, 2023, compared to $125 thousand in losses on equity securities recorded for the same quarter of 2022. Merchant services totaled $161 thousand for the first quarter of 2023, a decrease of $38 thousand, or 19.1%, from $199 thousand for the same three-month period of 2022. Other income decreased $106 thousand to $237 thousand for the first quarter of 2023 from $343 thousand for the respective quarter of 2022. These reductions were slightly offset by increases in net gains on the sale of available-for-sale debt securities that totaled $162 thousand for the three months ended March 31, 2023. There were no gains recognized on the sale of available-for-sale securities in the first quarter of 2022. In addition, BOLI income increased $52 thousand, or 36.0%, to $197 thousand for the three months ended March 31, 2023, from $145 thousand for the comparable period of 2022, due to the purchase of additional BOLI policies in 2022. While, loan-related fees, specifically servicing revenue, increased $62 thousand, or 108.5%, to $119 thousand, compared to $57 thousand for the same three months of 2022.
Non-interest expense increased $377 thousand, or 4.4%, to $8.9 million for the three months ended March 31, 2023, from $8.5 million for the three months ended March 31, 2022, which primarily reflected increases in salaries and employee benefits and other non-interest expenses. Salaries and employee benefits increased $737 thousand, or 15.8%, to $5.4 million for the first quarter of 2023 from $4.7 million for the same quarter of 2022, which primarily reflected higher full-time salaries and benefits associated with staff additions, in addition to increases in starting salaries and salary ranges, to stay competitive in attracting and retaining qualified staff. Comparing the three months ended March 31, 2023, and 2022, other operating expenses increased $253 thousand, or 28.8%, which was largely due to increases in correspondent bank charges and servicing costs associated with purchased loan pools. These increases were partially offset by decreases in the provision for unfunded commitments, occupancy and equipment expense, data processing expenses and professional fees. During the first quarter of 2023, FNCB recorded a credit to the provision for unfunded commitments of $269 thousand, a decrease of $317 thousand, compared to a provision for unfunded commitments of $48 thousand for the comparable quarter of 2022. Occupancy and equipment expenses, decreased $27 thousand and $52 thousand, respectively, comparing the first three months of 2023 and 2022. Data processing expenses decreased $65 thousand, or 6.1%, to $1.0 million for the three months ended March 31, 2023, from $1.1 million for the same three-month period in 2022. Professional fees totaled $302 thousand, a $25 thousand, or 7.8% decrease from $327 thousand comparing the first quarters of 2023 and 2022, respectively.
Asset Quality
As of January 1, 2023, FNCB adopted ASU 2016-13, commonly referred to as Current Expected Credit Losses ("CECL"), which requires financial assets (or a group of financial assets) to be measured at amortized cost basis and to be presented at the net amount expected to be collected, which will replace the current loss impairment methodology under GAAP. In applying the modified-retrospective method upon adoption of CECL, FNCB recorded the following adjustments on January 1, 2023, a decrease to the allowance for currently losses ("ACL") of $2.6 million, a decrease to deferred tax assets of $287 thousand, an increase to the reserve for unfunded commitments of $1.3 million, and an increase to retained earnings of $1.1 million.
FNCB's asset quality remained favorable through the first quarter of 2023, as total non-performing loans decreased $0.1 million, or 4.1%, to $2.7 million at March 31, 2023, representing 0.23% of total loans and leases, at March 31, 2023, from $2.8 million, or 0.25% of total loans and leases, at December 31, 2022. Year-over-year, non-performing loans decreased $1.2 million, or 31.3%, from $3.9 million, or 0.37% of total loans, at March 31, 2022. FNCB’s loan delinquency rate (total delinquent loans as a percentage of total loans) decreased to 0.40% at March 31, 2023, compared to 0.45% at December 31, 2022, and 0.55% at March 31, 2022. FNCB recorded a provision for credit losses of $975 thousand for the first quarter of 2022 compared to a provision of $759 thousand for the same quarter of 2022. The increase was primarily attributable to increases in loan and lease volumes. The allowance for credit losses was $12.3 million, or 1.06% of total loans and leases, at March 31, 2023, which included a $2.6 million adjustment to the ACL on loans, related to the adoption of CECL, as mentioned above. At December 31, 2022, allowance for loan and lease losses was $14.2 million, or 1.26% of total loans and leases.
Financial Condition
Total assets increased $64.0 million, or 3.7%, to $1.809 billion at March 31, 2023, from $1.746 billion at December 31, 2022. The change in total assets primarily reflected increases in loans and leases, net of the ACL, and cash and cash equivalents, partially offset by decreases in available-for-sale debt securities. Loans and leases, net of the ACL, increased $41.4 million, or 3.3%, to $1.152 billion at March 31, 2023, from $1.110 billion at December 31, 2022. Increases were experienced across the commercial and industrial and state and political subdivision loans, which primarily reflected commercial equipment financing originations. Cash and cash equivalents increased $27.7 million, or 66.0%, to $69.6 million at March 31, 2023, from $41.9 million at December 31, 2022. While, available-for-sale debt securities decreased $3.0 million, or 0.6%, to $473.0 million at March 31, 2023, from $476.0 million at December 31, 2022. Total deposits increased $42.7 million, or 3.0%, to $1.463 billion at March 31, 2023, from $1.421 billion at December 31, 2022. Following destabilization in the financial services industry, FNCB secured liquidity through the brokered deposit market. Additionally, FNCB experienced migration from non-maturity deposits, non-interest-bearing and interest-bearing demand and savings deposits, into time deposits due to several certificate of deposit rate-specials offered. Total non-maturity deposits decreased $158.4 million, or 12.5%, to $1.104 billion at March 31, 2023 from $1.263 billion at December 31, 2022. Total time deposits increased $201.1 million, or 127.4%, to $359.0 million at the end of the first quarter of 2023 from $157.9 million at December 31, 2022. Included in time deposits at March 31, 2023 were brokered deposits of $141.9 million, an increase of $118.0 million from $23.9 million at December 31, 2022. Total borrowed funds increased $14.3 million to $196.7 million at March 31, 2023, from $172.0 million at December 31, 2022, which was entirely due to additional advances through the FHLB of Pittsburgh.
Total shareholders’ equity increased $7.6 million, or 6.3%, to $126.5 million at March 31, 2023, from $118.9 million at December 31, 2022. The increase in capital was primarily due to market value appreciation of FNCB's available-for-sale debt securities, net of deferred taxes, which resulted in a $5.4 million decrease in the accumulated other comprehensive loss to $42.6 million at March 31, 2023, compared to an accumulated other comprehensive loss of $48.0 million at December 31, 2022. Also impacting capital was net income of $2.7 million for the three months ended March 31, 2023, partially offset by $1.8 million in dividends declared and paid for the three months ended March 31, 2023. Tangible book value was $6.43 per share at March 31, 2023, compared to $6.04 per share at December 31, 2022, reflecting the increase 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 12.97% and 8.96%, respectively, at March 31, 2023, and 13.10% and 8.77%, respectively, at December 31, 2022.
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 113 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., 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, including statements with respect to new product offerings, that are subject to significant risks and uncertainties, and are subject to change based on various factors (some of which are beyond our control). The words “may,” “could,” “should,” “will,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” “project,” “future” and similar expressions are intended to identify forward-looking statements. The following factors, among others, could cause FNCB’s financial performance to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements: government intervention in the U.S. financial system including the effects of recent legislative, tax, accounting and regulatory actions and reforms;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’sportfolio of loans to small and mid-sized community-based businesses increases its credit risk; if FNCB’s allowance for credit losses ("ACL")is not sufficient to absorb actual losses or if increases to the ACLwere 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 caused by a credit-related eventcould result in FNCB recording an impairment loss; if FNCB’srisk management framework is ineffective in mitigating risks or losses toFNCB; 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 FNCBis 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, 2022.
FNCB Bancorp, Inc.
Selected Financial Data
Mar 31,
Dec 31,
Sept 30,
Jun 30,
Mar 31,
2023
2022
2022
2022
2022
Per share data:
Net income (fully diluted)
$
0.14
$
0.24
$
0.28
$
0.29
$
0.22
Cash dividends declared
$
0.090
$
0.090
$
0.090
$
0.075
$
0.075
Book value
$
6.43
$
6.04
$
5.67
$
6.38
$
7.03
Tangible book value
$
6.43
$
6.04
$
5.67
$
6.38
$
7.03
Market value:
High
$
9.00
$
8.70
$
8.65
$
10.02
$
10.15
Low
$
6.09
$
7.34
$
7.49
$
7.36
$
8.67
Close
$
6.20
$
8.21
$
7.51
$
8.00
$
9.49
Common shares outstanding
19,683,873
19,681,644
19,680,474
19,675,557
19,683,671
Selected ratios:
Annualized return on average assets
0.62
%
1.13
%
1.26
%
1.37
%
1.08
%
Annualized return on average shareholders' equity
8.84
%
17.40
%
16.95
%
17.57
%
11.31
%
Efficiency ratio
67.69
%
59.37
%
54.88
%
53.35
%
58.12
%
Tier I leverage ratio (FNCB Bank)
8.96
%
8.77
%
9.38
%
9.32
%
9.30
%
Total risk-based capital to risk-adjusted assets (FNCB Bank)
12.97
%
13.10
%
14.16
%
13.90
%
14.10
%
Average shareholders' equity to average total assets
6.96
%
6.50
%
7.44
%
7.80
%
9.54
%
Yield on earning assets (FTE)
4.45
%
4.23
%
3.87
%
3.58
%
3.45
%
Cost of funds
2.15
%
1.19
%
0.59
%
0.22
%
0.14
%
Net interest spread (FTE)
2.30
%
3.04
%
3.28
%
3.36
%
3.31
%
Net interest margin (FTE)
2.78
%
3.32
%
3.43
%
3.42
%
3.35
%
Total delinquent loans/total loans
0.40
%
0.44
%
0.43
%
0.39
%
0.55
%
Allowance for loan and lease losses/total loans
1.06
%
1.26
%
1.24
%
1.23
%
1.27
%
Non-performing loans/total loans
0.23
%
0.25
%
0.25
%
0.26
%
0.37
%
Annualized net charge-offs (recoveries) /average loans
0.09
%
0.09
%
0.03
%
(0.07
%)
0.02
%
FNCB Bancorp, Inc.
Year-to-Date Consolidated Statements of Income
Three Months Ended
March 31,
(in thousands, except share data)
2023
2022
Interest income
Interest and fees on loans and leases
$
14,565
$
10,102
Interest and dividends on securities:
Taxable
3,077
2,390
Tax-exempt
587
612
Dividends
273
78
Total interest and dividends on securities
3,937
3,080
Interest on interest-bearing deposits in other banks
177
7
Total interest income
18,679
13,189
Interest expense
Interest on deposits
4,377
324
Interest on borrowed funds
Federal Home Loan Bank of Pittsburgh advances
2,551
31
Junior subordinated debentures
166
51
Total interest on borrowed funds
2,717
82
Total interest expense
7,094
406
Net interest income before provision for credit losses
11,585
12,783
Provision for credit losses
975
759
Net interest income after provision for credit losses
10,610
12,024
Non-interest income
Deposit service charges
1,064
1,050
Net gain on the sale of available-for-sale debt securities
162
-
Net (loss) gain on equity securities
(508
)
(125
)
Net gain on the sale of mortgage loans held for sale
1
0
Loan-related fees
119
57
Income from bank-owned life insurance
197
145
Merchant services revenue
161
199
Wealth management services revenue
238
121
Other
237
343
Total non-interest income
1,671
1,790
Non-interest expense
Salaries and employee benefits
5,395
4,658
Occupancy expense
521
548
Equipment expense
272
324
Advertising expense
209
132
Data processing expense
998
1,063
Regulatory assessments
213
225
Bank shares tax
149
341
Professional fees
302
327
(Credit) provision for unfunded commitments
(269
)
48
Other operating expenses
1,131
878
Total non-interest expense
8,921
8,544
Income before income taxes
3,360
5,270
Income tax expense
697
917
Net income
$
2,663
$
4,353
Income per share
Basic
$
0.14
$
0.22
Diluted
$
0.14
$
0.22
Cash dividends declared per common share
$
0.090
$
0.075
Weighted average number of shares outstanding:
Basic
19,682,357
19,935,288
Diluted
19,690,859
19,972,113
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)
2023
2022
2022
2022
2022
Interest income
Interest and fees on loans and leases
$
14,565
$
13,721
$
12,270
$
11,100
$
10,102
Interest and dividends on securities
Taxable
3,077
2,856
2,633
2,402
2,390
Tax-exempt
587
701
691
658
612
Dividends
273
196
163
112
78
Total interest and dividends on securities
3,937
3,753
3,487
3,172
3,080
Interest on interest-bearing deposits in other banks
177
57
19
8
7
Total interest income
18,679
17,531
15,776
14,280
13,189
Interest expense
Interest on deposits
4,377
2,299
1,001
346
324
Interest on borrowed funds
Federal Reserve Bank Discount Window advances
-
3
-
-
-
Federal Home Loan Bank of Pittsburgh advances
2,551
1,392
736
242
31
Junior subordinated debentures
166
138
99
70
51
Total interest on borrowed funds
2,717
1,533
835
312
82
Total interest expense
7,094
3,832
1,836
658
406
Net interest income before provision for credit losses
11,585
13,699
13,940
13,622
12,783
Provision for credit losses
975
628
513
62
759
Net interest income after provision for credit losses
10,610
13,071
13,427
13,560
12,024
Non-interest income
Deposit service charges
1,064
1,167
1,133
1,065
1,050
Net gain (loss) on the sale of available-for-sale debt securities
162
(188
)
-
(35
)
-
Net (loss) gain on equity securities
(508
)
87
86
(82
)
(125
)
Net gain on the sale of mortgage loans held for sale
1
82
91
32
-
Loan-related fees
119
82
54
50
57
Income from bank-owned life insurance
197
168
200
197
145
Bank-owned life insurance settlement
-
273
-
-
-
Merchant services revenue
161
168
173
172
199
Wealth management services revenue
238
218
109
115
121
Other
237
336
295
143
343
Total non-interest income
1,671
2,393
2,141
1,657
1,790
Non-interest expense
Salaries and employee benefits
5,395
5,525
4,581
4,519
4,658
Occupancy expense
521
581
517
447
548
Equipment expense
272
341
314
316
324
Advertising expense
209
240
202
227
132
Data processing expense
998
981
974
1,009
1,063
Regulatory assessments
213
160
230
196
225
Bank shares tax
149
(176
)
375
375
341
Professional fees
302
436
297
213
327
(Credit) provision for unfunded commitments
(269
)
(95
)
338
75
48
Other operating expenses
1,131
1,673
1,204
855
878
Total non-interest expense
8,921
9,666
9,032
8,232
8,544
Income before income taxes
3,360
5,798
6,536
6,985
5,270
Income tax expense
697
879
1,101
1,247
917
Net income
$
2,663
$
4,919
$
5,435
$
5,738
$
4,353
Income per share
Basic
$
0.14
$
0.25
$
0.28
$
0.29
$
0.22
Diluted
$
0.14
$
0.24
$
0.28
$
0.29
$
0.22
Cash dividends declared per common share
$
0.090
$
0.090
$
0.090
$
0.075
$
0.075
Weighted average number of shares outstanding:
Basic
19,682,357
19,681,437
19,687,766
19,677,109
19,935,288
Diluted
19,690,859
19,690,676
19,697,047
19,694,125
19,972,113
FNCB Bancorp, Inc.
Consolidated Balance Sheets
Mar 31,
Dec 31,
Sept 30,
Jun 30,
Mar 31,
(in thousands)
2023
2022
2022
2022
2022
Assets
Cash and cash equivalents:
Cash and due from banks
$
20,418
$
26,588
$
29,231
$
23,355
$
19,383
Interest-bearing deposits in other banks
49,153
15,328
4,896
4,037
4,719
Total cash and cash equivalents
69,571
41,916
34,127
27,392
24,102
Available-for-sale debt securities
473,119
476,091
472,451
495,604
514,133
Equity securities, at fair value
7,369
7,717
5,496
5,307
5,018
Restricted stock, at cost
8,482
8,545
4,838
5,787
4,020
Loans held for sale
-
60
248
667
-
Loans and leases, net of deferred loan fees and costs and unearned income
1,163,789
1,124,317
1,111,230
1,088,748
1,036,400
Allowance for credit losses
(12,279
)
(14,193
)
(13,819
)
(13,381
)
(13,129
)
Net loans and leases
1,151,510
1,110,124
1,097,411
1,075,367
1,023,271
Bank premises and equipment, net
15,316
15,616
15,526
15,619
15,895
Accrued interest receivable
6,143
5,957
5,629
5,103
4,870
Bank-owned life insurance
36,696
36,499
37,036
36,836
36,639
Other assets
41,275
43,005
31,754
25,403
21,602
Total assets
$
1,809,481
$
1,745,530
$
1,704,516
$
1,693,085
$
1,649,550
Liabilities
Deposits:
Demand (non-interest-bearing)
$
281,114
$
305,850
$
320,879
$
317,725
$
317,541
Interest-bearing
1,182,192
1,114,797
1,181,747
1,109,219
1,094,052
Total deposits
1,463,306
1,420,647
1,502,626
1,426,944
1,411,593
Borrowed funds
196,648
182,360
76,010
128,360
87,260
Accrued interest payable
848
171
101
85
57
Other liabilities
22,185
23,403
14,187
12,184
12,251
Total liabilities
1,682,987
1,626,581
1,592,924
1,567,573
1,511,161
Shareholders' equity
Preferred stock
-
-
-
-
-
Common stock
24,604
24,602
24,600
24,594
24,604
Additional paid-in capital
77,636
77,502
77,381
77,233
77,642
Retained earnings
66,834
64,873
61,737
58,085
53,834
Accumulated other comprehensive income
(42,580
)
(48,028
)
(52,126
)
(34,400
)
(17,691
)
Total shareholders' equity
126,494
118,949
111,592
125,512
138,389
Total liabilities and shareholders’ equity
$
1,809,481
$
1,745,530
$
1,704,516
$
1,693,085
$
1,649,550
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)
2023
2022
2022
2022
2022
Interest income
Loans and leases:
Loans and leases - taxable
$
14,145
$
13,328
$
11,870
$
10,743
$
9,755
Loans and leases - tax-free
532
498
506
452
439
Total loans
14,677
13,826
12,376
11,195
10,194
Securities:
Securities, taxable
3,350
3,052
2,796
2,514
2,468
Securities, tax-free
743
888
875
833
775
Total interest and dividends on securities
4,093
3,940
3,671
3,347
3,243
Interest-bearing deposits in other banks
177
57
19
8
7
Total interest income
18,947
17,823
16,066
14,550
13,444
Interest expense
Deposits
4,377
2,299
1,001
346
324
Borrowed funds
2,717
1,533
835
312
82
Total interest expense
7,094
3,832
1,836
658
406
Net interest income
$
11,853
$
13,991
$
14,230
$
13,892
$
13,038
Average balances
Earning assets:
Loans and leases:
Loans and leases - taxable
$
1,082,830
$
1,069,260
$
1,045,474
$
1,013,899
$
946,201
Loans and leases - tax-free
54,045
56,064
57,099
53,471
54,096
Total loans
1,136,875
1,125,324
1,102,573
1,067,370
1,000,297
Securities:
Securities, taxable
449,351
439,998
438,339
442,998
437,955
Securities, tax-free
99,836
114,128
113,629
109,948
103,086
Total securities
549,187
554,126
551,968
552,946
541,041
Interest-bearing deposits in other banks
17,068
6,185
4,634
4,488
17,464
Total interest-earning assets
1,703,130
1,685,635
1,659,175
1,624,804
1,558,802
Non-earning assets
51,930
39,355
51,847
55,303
78,394
Total assets
$
1,755,060
$
1,724,990
$
1,711,022
$
1,680,107
$
1,637,196
Interest-bearing liabilities:
Deposits
$
1,096,758
$
1,138,817
$
1,118,909
$
1,101,947
$
1,111,671
Borrowed funds
223,694
144,995
130,481
113,932
47,346
Total interest-bearing liabilities
1,320,452
1,283,812
1,249,390
1,215,879
1,159,017
Demand deposits
287,975
309,372
318,656
319,505
308,830
Other liabilities
24,487
19,659
15,742
13,730
13,234
Shareholders' equity
122,146
112,147
127,234
130,993
156,115
Total liabilities and shareholders' equity
$
1,755,060
$
1,724,990
$
1,711,022
$
1,680,107
$
1,637,196
Yield/Cost
Earning assets:
Loans and leases:
Interest and fees on loans and leases - taxable
5.23
%
4.99
%
4.54
%
4.24
%
4.12
%
Interest and fees on loans and leases - tax-free
3.94
%
3.56
%
3.54
%
3.38
%
3.25
%
Total loans
5.16
%
4.91
%
4.49
%
4.20
%
4.08
%
Securities:
Securities, taxable
2.98
%
2.77
%
2.55
%
2.27
%
2.25
%
Securities, tax-free
2.98
%
3.11
%
3.08
%
3.03
%
3.01
%
Total securities
2.98
%
2.84
%
2.66
%
2.42
%
2.40
%
Interest-bearing deposits in other banks
4.15
%
3.69
%
1.64
%
0.71
%
0.16
%
Total earning assets
4.45
%
4.23
%
3.87
%
3.58
%
3.45
%
Interest-bearing liabilities:
Interest on deposits
1.60
%
0.81
%
0.36
%
0.13
%
0.12
%
Interest on borrowed funds
4.86
%
4.23
%
2.56
%
1.10
%
0.69
%
Total interest-bearing liabilities
2.15
%
1.19
%
0.59
%
0.22
%
0.14
%
Net interest spread
2.30
%
3.04
%
3.28
%
3.36
%
3.31
%
Net interest margin
2.78
%
3.32
%
3.43
%
3.42
%
3.35
%
FNCB Bancorp, Inc.
Asset Quality Data
Mar 31,
Dec 31,
Sept 30,
Jun 30,
Mar 31,
(in thousands)
2023
2022
2022
2022
2022
At period end
Non-accrual loans and leases
$
2,601
$
2,763
$
2,654
$
2,764
$
3,864
Loans past due 90 days or more and still accruing
52
78
74
14
-
Total non-performing loans and leases
2,653
2,841
2,728
2,778
3,864
Other real estate owned (OREO)
-
-
228
228
228
Other non-performing assets
1,773
1,773
1,773
1,773
1,773
Total non-performing assets
$
4,426
$
4,614
$
4,729
$
4,779
$
5,865
For the three months ended
Allowance for credit losses
Beginning balance, prior to adoption of ASU 2016-13
FNCB Bancorp, Inc. is the bank holding company of FNCB Bank (the Bank). Its primary activity consists of owning and operating the Bank. The Bank is engaged in offering a suite of personal, small business and commercial banking solutions with mobile, online, and in-branch products and services. For personal customers, the Bank provides various deposit products, including savings, money markets, certificates of deposit and checking accounts, along with a line of preferred relationship products that offer premium benefits for higher-balance customers. The Bank offers a variety of financing alternatives to individuals and businesses generally in its primary market area through the origination of loans and leases, including residential real estate loans, construction, land acquisition and development loans, commercial real estate loans, commercial and industrial loans, and others. The Bank operates through about 16 community offices located in Lackawanna, Luzerne, and Wayne Counties.