FNCB Bancorp, Inc. Announces Second Quarter 2023 Results
July 29, 2023 at 01:36 am IST
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DUNMORE, Pa., July 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 $2.8 million, or $0.14 per basic and diluted share, for the three months ended June 30, 2023, a decrease of $2.9 million, or 51.1%, compared to $5.7 million, or $0.29 per share for the same period of 2022. Lower net interest income and non-interest income, coupled with an increase in the provision for credit losses, were the primary factors leading to the reduction in second quarter 2023 earnings. For the six months, ended June 30, 2023, net income totaled $5.5 million, or $0.28 per basic and diluted share, a decrease of $4.6 million, or 45.8%, from $10.1 million, or $0.51 per basic and diluted share, for the same six months of 2022.
For the three and six months ended June 30, 2023, the annualized return on average assets was 0.63% and 0.62%, respectively, compared to 1.37% and 1.23%, respectively, for the same period of 2022. The annualized return on average equity was 8.89% and 8.87%, respectively, for the three and six months ended June 30, 2023, compared to 17.57% and 14.18%, respectively, for the comparable periods of 2022. FNCB declared and paid dividends to shareholders of common stock of $0.090 per share for the second quarter of 2023 and $0.180 per share for the six months ended June 30, 2022, a 20.0% increase, compared to $0.075 per share and $0.150 per share for the same periods of 2022.
Second quarter 2023 performance:
●
Second quarter net income was $2.8 million, or $0.14 per share, compared to $5.7 million, or $0.29 per share for the second quarter of 2022;
●
Yield on earning assets (FTE) increased 109 basis points to 4.67% for the second quarter of 2023 from 3.58% for the same quarter of 2022, and improved 22 basis points on a linked-quarter basis from 4.45% for the first quarter of 2023;
●
Cost of funds increased 223 basis points to 2.45% from 0.22% comparing the second quarters of 2023 and 2022, and increased 30 basis points on a linked-quarter basis from 2.15% for the first quarter of 2023;
●
Net interest margin (FTE) contracted 67 basis points to 2.75% for the second quarter of 2023, compared to 3.42% for the same period of 2022, and contracted 3 basis points on a linked-quarter basis from 2.78% for the first quarter of 2023;
●
Efficiency ratio was 68.11% for the second quarter of 2023 compared to 53.35% for the second quarter of 2022.
Summary financial position at June 30, 2023 as compared to December 31, 2022:
●
Total assets increased $116.3 million, or 6.7%, to $1.862 billion at June 30, 2023 from $1.746 billion at December 31, 2022;
●
Net loans and leases increased $77.6 million, or 7.0%, to $1.188 billion at June 30, 2023 from $1.110 billion at December 31, 2022;
●
Total deposits increased $55.4 million, or 3.9% to $1.476 billion at June 30, 2023 from $1.421 billion at December 31, 2022;
●
Non-performing loans as a percentage of total loans were 0.31% at June 30, 2023 and 0.25% at December 31, 2022;
●
The Bank was well capitalized with total risk-based capital and leverage ratios of 12.97% and 8.98%, respectively, at June 30, 2023, and 13.10% and 8.77%, respectively, at December 31, 2022.
"FNCB's second quarter earnings continued to be impacted by margin compression brought on by the challenging rate environment and increased competition for deposits in our market area," commented FNCB President and CEO, Gerard A. Champi. "Management is actively engaged in managing interest rate risk, controlling funding costs and non-interest expense. On a positive note, we are beginning to see our margins stabilize, while our asset quality and liquidity positions remain strong," concluded Champi.
Summary Results
Net interest income on a tax-equivalent basis decreased $2.0 million, or 14.4%, to $11.9 million for the three months ended June 30, 2023, from $13.9 million for the comparable period of 2022, which resulted from 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 were largely due to changes in market rates stemming from the ten FOMC rate increases beginning March 17, 2022 through June 30, 2023. FNCB's tax-equivalent net interest margin compressed 67 basis points to 2.75% for the second quarter of 2023 from 3.42% for the same quarter of 2022. Additionally, the net interest spread declined 114 basis points to 2.22% for the three months ended June 30, 2023, from 3.36% for the same three months of 2022. The reduction in margin and spread largely reflected the rapid increase in funding costs that outpaced the increase in yield on average earning assets. However, on a linked-quarter basis, margins have appeared to stabilize. The tax-equivalent net interest margin declined only 3 basis points from 2.78% for the first quarter of 2023. Interest expense increased $7.6 million, to $8.3 million for the second quarter of 2023 from $0.7 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 195 basis points to 2.08% for the second quarter of 2023 compared to 0.13% for the same quarter of 2022. Average borrowed funds, specifically advances through the FHLB of Pittsburgh and the Federal Reserve Bank's Bank Term Funding Program, increased $62.9 million to $176.8 million from $113.9 million comparing the three months ended June 30, 2023, and 2022, respectively. Moreover, the average cost of borrowed funds increased 379 basis points to 4.89% for the second quarter of 2023 from 1.10% for the same quarter of 2022. Average interest-bearing deposits increased $77.3 million, or 7.0%, to $1.179 billion from $1.102 billion, comparing the second quarters of 2023 and 2022, respectively. However, FNCB experienced some deposit migration from non-maturity deposits and non-interest-bearing deposits into time deposits, as customers have become increasingly rate-sensitive. Average interest-bearing demand deposits decreased $112.9 million, or 14.2%, to $683.9 million for the second quarter of 2023 compared to $796.8 million for the same quarter of 2022, while average savings deposits decreased $6.6 million to $137.3 million from $143.9 million comparing the three months ended June 30, 2023 and 2022, respectively. Additionally, non-interest-bearing demand deposits decreased $35.4 million, or 11.1%, to $284.1 million for the second quarter of 2023 from $319.5 million for the respective quarter of 2022. Conversely, average time deposits increased $196.8 million, or 122.1%, to $358.1 million for the three months ended June 30, 2023, from $161.3 million for the same three months of 2022, which reflected special certificate of deposit rate promotions offered during the first quarter of 2023. Tax-equivalent interest income increased $5.6 million, or 38.8%, to $20.2 million from $14.6 million comparing the second 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 109 basis points to 4.67% for the three months ended June 30, 2023, from 3.58% for the same three months of 2022. Specifically, the tax-equivalent yield on the loan portfolio increased 122 basis points to 5.42% for the second quarter of 2023 from 4.20% for the same quarter of 2022. In addition, the tax-equivalent yield on the investment portfolio increased 56 basis points to 2.98% for the second quarter of 2023 from 2.42% for the same quarter of 2022. Regarding asset volumes, total average earning assets increased $106.5 million, or 6.6%, to $1.731 billion for the three months ended June 30, 2023, from $1.625 billion for the same three months of 2022. Specifically, average total loans and leases increased $110.2 million, or 10.3%, to $1.178 billion for the second quarter of 2023 from $1.067 billion for the same quarter of 2022, which was largely due to strong organic loan demand concentrated in commercial equipment financing. Conversely, total securities averaged $533.1 million for the second quarter of 2023, a decrease of $19.8 million, or 3.6%, from $552.9 million for the second quarter of 2022, as proceeds from sales and repayments of securities were redirected into higher-yielding loan products.
On a year-to-date basis, tax equivalent net interest income decreased $3.2 million, or 11.8%, to $23.7 million for the six months ended June 30, 2023, from $26.9 million for the comparable period of 2022. Similar to the quarterly period, the decrease in tax-equivalent net interest income for the year-to-date period, reflected an increase in interest expense of $14.3 million, to $15.4 million, compared to $1.1 million for the same period of 2022. Partially offsetting this was an $11.1 million, or 39.8%, increase in tax-equivalent interest income to $39.1 million for the six months ended June 30, 2023 from $28.0 million for the six months ended June 30, 2022. Tax equivalent yield on average earning assets increased 104 basis points, to 4.56% for the first half of 2023, from 3.52% for the same period in 2022. In addition, total average earning assets increased to $1.717 billion for the six months ended June 30, 2023, from $1.592 billion, for the same period of 2022, representing an increase of $125.3 million, or 7.9%. Similar to the quarterly period, this was primarily due to an increase in average total loans and leases that increased $123.3 million, or 11.9%, to $1.157 billion for the six months ended June 30, 2023, from $1.034 billion for the same comparable period of 2022.
For the three months ended June 30, 2023, non-interest income decreased $709 thousand, or 42.8%, to $948 thousand from $1.6 million for the three months ended June 30, 2022. The reduction in non-interest revenue was largely due to unrealized net losses recognized on equity securities, coupled with a decrease in the net gains on the sale of mortgage loans held for sale. Continued stock volatility in the financial service sector during the first half of 2023 resulted in net unrealized losses of $1.0 million on holdings of equity securities, for the three months ended June 30, 2023, compared to $82 thousand in losses on equity securities recorded for the same quarter of 2022. Equity securities are comprised primarily of common and preferred stock of other financial institutions. There were no net gains on the sale of mortgage loans held for sale in the second quarter of 2023, compared to $32 thousand recognized for the three months ended June 30, 2022. These reductions were slightly offset by net gains on the sale of available-for-sale debt securities of $90 thousand for the three months ended June 30, 2023, an increase of $125 thousand compared to a $35 thousand loss on the sale of available-for-sale securities in the second quarter of 2022. Wealth management service revenue generated by 1st Investment Services increased $130 thousand, or 113.0%, to $245 thousand, compared to $115 thousand for the same three-month period of 2022, which resulted primarily from the purchase of Chiaro Investment Services, LLC at the end of the third quarter of 2022. For the six months ended June 30, 2023, non-interest income decreased $828 thousand, or 24.0%, to $2.6 million, compared to $3.4 million for the same period of 2022. FNCB recorded a net loss on equity securities of $1.5 million for the six months ended June 30, 2023, compared to a net loss of $207 thousand recorded for the same six months of 2022. Partially offsetting the increase in loss recognized on equity securities was a net gain on the sale of available-for-sale debt securities of $252 thousand during the six months ended June 30, 2023, an increase of $287 thousand compared to a net loss on the sale of available-for-sale debt securities of $35 thousand for the same period of 2022. In addition, wealth management services and deposit service charges increased $247 thousand, or 104.7%, and $72 thousand, or 3.4%, respectively, comparing the six months ended June 30, 2023 and 2022.
Non-interest expense decreased $130 thousand, or 1.6%, to $8.1 million for the three months ended June 30, 2023, from $8.2 million for the three months ended June 30, 2022, which primarily reflected a credit for unfunded commitments of $225 thousand for the second quarter of 2023, compared to a provision of $75 thousand, for the respective quarter of 2022, coupled with decreases in bank shares tax, equipment expenses, data processing and advertising expenses. These expense reductions were partially offset by increases in occupancy expenses, regulatory assessments and other operating expenses. For the second quarter of 2023, occupancy expenses, increased $103 thousand, or 23.0%, compared to the second quarter of 2022, while regulatory assessments and other operating expenses increased $312 thousand and $216 thousand, respectively, in comparing the three months ended June 30, 2023, and 2022. The increase in occupancy expense reflected higher utility costs, while the increase in regulatory assessments was due to higher FDIC insurance rates. Contributing to the increase in other operating expenses were loan-related costs associated with a no closing cost home equity line of credit promotion. For the six months ended June 30, 2023, non-interest expense increased $247 thousand, or 1.5%, to $17.0 million compared to $16.8 million for the same period of 2022, primarily due to increases in salaries and employee benefits, regulatory assessments, occupancy expense and other operating expenses. Salaries and employee benefits increased $747 thousand, or 8.1%, to $9.9 million for the six months ended June 30, 2023, from $9.2 million for the same period 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. For the six months ended June 30, 2023, regulatory assessments increased $104 thousand, or 24.6%, compared to the same six-month period of 2022, while occupancy and other operating expenses increased $76 thousand, or 7.6%, and $452 thousand, or 31.8%, respectively, comparing the six months ended June 30, 2023, and 2022.The increase in other operating expenses, was largely due to increases in correspondent bank charges and servicing costs associated with purchased loan pools, coupled with costs associated with the home equity line of credit promotion. Similar to the quarterly period, these increases were slightly offset by decreases in the provision for unfunded commitments, bank shares tax, equipment and data processing expenses. Year-to-date, FNCB recorded a credit for unfunded commitments of $494 thousand, compared to a provision of $123 thousand for the six months ended June 2022.
Asset Quality
Total non-performing loans slightly increased $0.9 million, or 32.3%, to $3.8 million, representing 0.31% of total loans and leases, at June 30, 2023, from $2.8 million, or 0.25% of total loans and leases, at December 31, 2022. Year-over-year, non-performing loans increased $1.0 million, or 35.3%, from $2.8 million, or 0.26% of total loans, at June 30, 2022. FNCB’s loan delinquency rate (total delinquent loans as a percentage of total loans) slightly increased to 0.50% at June 30, 2023, compared to 0.45% at December 31, 2022, and 0.39% at June 30, 2022. FNCB recorded a provision for credit losses of $799 thousand for the second quarter of 2023 compared to a provision of $62 thousand for the same quarter of 2022. For the six months ended June 30, 2023, the provision for credit losses totaled $1.8 million, compared to $0.8 million provision for credit losses, for the same six-month period of 2022. The increases in the quarter and the year-to-date periods, were primarily attributable to increases in loan and lease volumes. The allowance for credit losses was $12.9 million, or 1.07% of total loans and leases, at June 30, 2023, which included a $2.6 million adjustment to the ACL on loans, related to the adoption of CECL. 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 $116.3 million, or 6.7%, to $1.862 billion at June 30, 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 as security repayments were re-directed to fund loan originations. Loans and leases, net of the ACL, increased $77.6 million, or 7.0%, to $1.188 billion at June 30, 2023, from $1.110 billion at December 31, 2022. Increases were experienced across the commercial and industrial loans, construction, land and acquisition and development and state and political subdivision loans, which primarily reflected commercial equipment financing originations. Cash and cash equivalents increased $63.1 million, or 150.5%, to $105.0 million at June 30, 2023, from $41.9 million at December 31, 2022, while available-for-sale debt securities decreased $23.2 million, or 4.9%, to $452.9 million at June 30, 2023, from $476.1 million at December 31, 2022. Total deposits increased $55.4 million, or 3.9%, to $1.476 billion at June 30, 2023, from $1.421 billion at December 31, 2022. FNCB continued to utilize and secure liquidity through the brokered deposit market. Additionally, FNCB continued to experience migration from non-maturity deposits, non-interest-bearing and interest-bearing demand and savings deposits, into time deposits and increased utilization of brokered deposits. Total non-maturity deposits decreased $143.2 million, or 11.3%, to $1.120 billion at June 30, 2023 from $1.263 billion at December 31, 2022. Total time deposits increased $198.6 million, or 125.8%, to $356.5 million at the end of the second quarter of 2023 from $157.9 million at December 31, 2022. Included in time deposits at June 30, 2023 were brokered deposits of $126.2 million, an increase of $102.3 million from $23.9 million at December 31, 2022. Total borrowed funds increased $59.6 million to $242.0 million at June 30, 2023, from $182.4 million at December 31, 2022, which was due to additional advances through the FHLB of Pittsburgh and the Federal Reserve Discount Window Bank Term Funding Program.
Total shareholders’ equity increased $5.1 million, or 4.3%, to $124.0 million at June 30, 2023, from $118.9 million at December 31, 2022. The increase in capital was primarily due to net income for the six months ended June 30, 2023 of $5.5 million. Also impacting capital was market value appreciation of FNCB's available-for-sale debt securities, net of deferred taxes, which was the primary cause of a $1.8 million reduction in the accumulated other comprehensive loss to $46.2 million at June 30, 2023, compared to an accumulated other comprehensive loss of $48.0 million at December 31, 2022. Partially offsetting these capital increases were $3.5 million in dividends declared and paid for the six months ended June 30, 2023. Tangible book value was $6.28 per share at June 30, 2023, compared to $6.04 per share at December 31, 2022. FNCB Bank was considered well capitalized with total risk-based capital and Tier 1 leverage ratios of 12.97% and 8.98%, respectively, at June 30, 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 and Form 10-K for the quarter ended March 31, 2023.
FNCB Bancorp, Inc.
Selected Financial Data
Jun 30,
Mar 31,
Dec 31,
Sept 30,
Jun 30,
2023
2023
2022
2022
2022
Per share data:
Net income (fully diluted)
$
0.14
$
0.14
$
0.24
$
0.28
$
0.29
Cash dividends declared
$
0.090
$
0.090
$
0.090
$
0.090
$
0.075
Book value
$
6.28
$
6.43
$
6.04
$
5.67
$
6.38
Tangible book value
$
6.28
$
6.43
$
6.04
$
5.67
$
6.38
Market value:
High
$
6.82
$
9.00
$
8.70
$
8.65
$
10.02
Low
$
5.45
$
6.09
$
7.34
$
7.49
$
7.36
Close
$
5.97
$
6.20
$
8.21
$
7.51
$
8.00
Common shares outstanding
19,750,092
19,683,873
19,681,644
19,680,474
19,675,557
Selected ratios:
Annualized return on average assets
0.63
%
0.62
%
1.13
%
1.26
%
1.37
%
Annualized return on average shareholders' equity
8.89
%
8.84
%
17.40
%
16.95
%
17.57
%
Efficiency ratio
68.11
%
67.69
%
59.37
%
54.88
%
53.35
%
Tier I leverage ratio (FNCB Bank)
8.98
%
8.96
%
8.77
%
9.38
%
9.32
%
Total risk-based capital to risk-adjusted assets (FNCB Bank)
12.97
%
12.97
%
13.10
%
14.16
%
13.90
%
Average shareholders' equity to average total assets
7.07
%
6.96
%
6.50
%
7.44
%
7.80
%
Yield on earning assets (FTE)
4.67
%
4.45
%
4.23
%
3.87
%
3.58
%
Cost of funds
2.45
%
2.15
%
1.19
%
0.59
%
0.22
%
Net interest spread (FTE)
2.22
%
2.30
%
3.04
%
3.28
%
3.36
%
Net interest margin (FTE)
2.75
%
2.78
%
3.32
%
3.43
%
3.42
%
Total delinquent loans/total loans
0.50
%
0.40
%
0.44
%
0.43
%
0.39
%
Allowance for credit losses/total loans
1.07
%
1.06
%
1.26
%
1.24
%
1.23
%
Non-performing loans/total loans
0.31
%
0.23
%
0.25
%
0.25
%
0.26
%
Annualized net charge-offs (recoveries)/average loans
0.07
%
0.09
%
0.09
%
0.03
%
(0.07
%)
FNCB Bancorp, Inc.
Year-to-Date Consolidated Statements of Income
Six Months Ended
June 30,
(in thousands, except share data)
2023
2022
Interest income
Interest and fees on loans and leases
$
30,418
$
21,202
Interest and dividends on securities:
Taxable
6,141
4,792
Tax-exempt
1,131
1,270
Dividends
496
190
Total interest and dividends on securities
7,768
6,252
Interest on interest-bearing deposits in other banks
429
15
Total interest income
38,615
27,469
Interest expense
Interest on deposits
10,522
670
Interest on borrowed funds
Federal Reserve Discount Window advances
92
-
Federal Home Loan Bank of Pittsburgh advances
4,447
273
Junior subordinated debentures
340
121
Total interest on borrowed funds
4,879
394
Total interest expense
15,401
1,064
Net interest income before provision for credit losses
23,214
26,405
Provision for credit losses
1,774
821
Net interest income after provision for credit losses
21,440
25,584
Non-interest income
Deposit service charges
2,187
2,115
Net gain (loss) on the sale of available-for-sale debt securities
252
(35
)
Net loss on equity securities
(1,540
)
(207
)
Net gain on the sale of mortgage loans held for sale
1
32
Loan-related fees
171
107
Income from bank-owned life insurance
402
342
Merchant services revenue
318
371
Wealth management services revenue
483
236
Other
345
486
Total non-interest income
2,619
3,447
Non-interest expense
Salaries and employee benefits
9,924
9,177
Occupancy expense
1,071
995
Equipment expense
504
640
Advertising expense
397
359
Data processing expense
1,950
2,072
Regulatory assessments
525
421
Bank shares tax
412
716
Professional fees
516
540
(Credit) provision for unfunded commitments
(494
)
123
Other operating expenses
2,218
1,733
Total non-interest expense
17,023
16,776
Income before income taxes
7,036
12,255
Income tax expense
1,568
2,164
Net income
$
5,468
$
10,091
Income per share
Basic
$
0.28
$
0.51
Diluted
$
0.28
$
0.51
Cash dividends declared per common share
$
0.180
$
0.150
Weighted average number of shares outstanding:
Basic
19,698,837
19,805,485
Diluted
19,703,089
19,832,405
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)
2023
2023
2022
2022
2022
Interest income
Interest and fees on loans and leases
$
15,853
$
14,565
$
13,721
$
12,270
$
11,100
Interest and dividends on securities
Taxable
3,064
3,077
2,856
2,633
2,402
Tax-exempt
544
587
701
691
658
Dividends
223
273
196
163
112
Total interest and dividends on securities
3,831
3,937
3,753
3,487
3,172
Interest on interest-bearing deposits in other banks
252
177
57
19
8
Total interest income
19,936
18,679
17,531
15,776
14,280
Interest expense
Interest on deposits
6,145
4,377
2,299
1,001
346
Interest on borrowed funds
Federal Reserve Bank Discount Window advances
92
-
3
-
-
Federal Home Loan Bank of Pittsburgh advances
1,896
2,551
1,392
736
242
Junior subordinated debentures
174
166
138
99
70
Total interest on borrowed funds
2,162
2,717
1,533
835
312
Total interest expense
8,307
7,094
3,832
1,836
658
Net interest income before provision for credit losses
11,629
11,585
13,699
13,940
13,622
Provision for credit losses
799
975
628
513
62
Net interest income after provision for credit losses
10,830
10,610
13,071
13,427
13,560
Non-interest income
Deposit service charges
1,123
1,064
1,167
1,133
1,065
Net gain (loss) on the sale of available-for-sale debt securities
90
162
(188
)
-
(35
)
Net (loss) gain on equity securities
(1,032
)
(508
)
87
86
(82
)
Net gain on the sale of mortgage loans held for sale
-
1
82
91
32
Loan-related fees
52
119
82
54
50
Income from bank-owned life insurance
205
197
168
200
197
Bank-owned life insurance settlement
-
-
273
-
-
Merchant services revenue
157
161
168
173
172
Wealth management services revenue
245
238
218
109
115
Other
108
237
336
295
143
Total non-interest income
948
1,671
2,393
2,141
1,657
Non-interest expense
Salaries and employee benefits
4,529
5,395
5,525
4,581
4,519
Occupancy expense
550
521
581
517
447
Equipment expense
232
272
341
314
316
Advertising expense
188
209
240
202
227
Data processing expense
952
998
981
974
1,009
Regulatory assessments
312
213
160
230
196
Bank shares tax
263
149
(176
)
375
375
Professional fees
214
302
436
297
213
(Credit) provision for unfunded commitments
(225
)
(269
)
(95
)
338
75
Other operating expenses
1,087
1,131
1,673
1,204
855
Total non-interest expense
8,102
8,921
9,666
9,032
8,232
Income before income taxes
3,676
3,360
5,798
6,536
6,985
Income tax expense
871
697
879
1,101
1,247
Net income
$
2,805
$
2,663
$
4,919
$
5,435
$
5,738
Income per share
Basic
$
0.14
$
0.14
$
0.25
$
0.28
$
0.29
Diluted
$
0.14
$
0.14
$
0.24
$
0.28
$
0.29
Cash dividends declared per common share
$
0.090
$
0.090
$
0.090
$
0.090
$
0.075
Weighted average number of shares outstanding:
Basic
19,715,136
19,682,357
19,681,437
19,687,766
19,677,109
Diluted
19,715,136
19,690,859
19,690,676
19,697,047
19,694,125
FNCB Bancorp, Inc.
Consolidated Balance Sheets
Jun 30,
Mar 31,
Dec 31,
Sept 30,
Jun 30,
(in thousands)
2023
2023
2022
2022
2022
Assets
Cash and cash equivalents:
Cash and due from banks
$
32,893
$
20,418
$
26,588
$
29,231
$
23,355
Interest-bearing deposits in other banks
72,107
49,153
15,328
4,896
4,037
Total cash and cash equivalents
105,000
69,571
41,916
34,127
27,392
Available-for-sale debt securities
452,877
473,119
476,091
472,451
495,604
Equity securities, at fair value
6,337
7,369
7,717
5,496
5,307
Restricted stock, at cost
9,325
8,482
8,545
4,838
5,787
Loans held for sale
-
-
60
248
667
Loans and leases, net of deferred loan fees and costs and unearned income
1,200,595
1,163,789
1,124,317
1,111,230
1,088,748
Allowance for credit losses
(12,873
)
(12,279
)
(14,193
)
(13,819
)
(13,381
)
Net loans and leases
1,187,722
1,151,510
1,110,124
1,097,411
1,075,367
Bank premises and equipment, net
15,028
15,316
15,616
15,526
15,619
Accrued interest receivable
6,329
6,143
5,957
5,629
5,103
Bank-owned life insurance
36,901
36,696
36,499
37,036
36,836
Other assets
42,353
41,275
43,005
31,754
25,403
Total assets
$
1,861,872
$
1,809,481
$
1,745,530
$
1,704,516
$
1,693,085
Liabilities
Deposits:
Demand (non-interest-bearing)
$
285,674
$
281,114
$
305,850
$
320,879
$
317,725
Interest-bearing
1,190,390
1,182,192
1,114,797
1,181,747
1,109,219
Total deposits
1,476,064
1,463,306
1,420,647
1,502,626
1,426,944
Borrowed funds
242,022
196,648
182,360
76,010
128,360
Accrued interest payable
1,089
848
171
101
85
Other liabilities
18,638
22,185
23,403
14,187
12,184
Total liabilities
1,737,813
1,682,987
1,626,581
1,592,924
1,567,573
Shareholders' equity
Preferred stock
-
-
-
-
-
Common stock
24,687
24,604
24,602
24,600
24,594
Additional paid-in capital
77,757
77,636
77,502
77,381
77,233
Retained earnings
67,851
66,834
64,873
61,737
58,085
Accumulated other comprehensive income
(46,236
)
(42,580
)
(48,028
)
(52,126
)
(34,400
)
Total shareholders' equity
124,059
126,494
118,949
111,592
125,512
Total liabilities and shareholders’ equity
$
1,861,872
$
1,809,481
$
1,745,530
$
1,704,516
$
1,693,085
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)
2023
2023
2022
2022
2022
Interest income
Loans and leases:
Loans and leases - taxable
$
15,411
$
14,145
$
13,328
$
11,870
$
10,743
Loans and leases - tax-free
559
532
498
506
452
Total loans
15,970
14,677
13,826
12,376
11,195
Securities:
Securities, taxable
3,287
3,350
3,052
2,796
2,514
Securities, tax-free
689
743
888
875
833
Total interest and dividends on securities
3,976
4,093
3,940
3,671
3,347
Interest-bearing deposits in other banks
252
177
57
19
8
Total interest income
20,198
18,947
17,823
16,066
14,550
Interest expense
Deposits
6,145
4,377
2,299
1,001
346
Borrowed funds
2,162
2,717
1,533
835
312
Total interest expense
8,307
7,094
3,832
1,836
658
Net interest income
$
11,891
$
11,853
$
13,991
$
14,230
$
13,892
Average balances
Earning assets:
Loans and leases:
Loans and leases - taxable
$
1,122,385
$
1,082,830
$
1,069,260
$
1,045,474
$
1,013,899
Loans and leases - tax-free
55,142
54,045
56,064
57,099
53,471
Total loans
1,177,527
1,136,875
1,125,324
1,102,573
1,067,370
Securities:
Securities, taxable
438,157
449,351
439,998
438,339
442,998
Securities, tax-free
94,964
99,836
114,128
113,629
109,948
Total securities
533,121
549,187
554,126
551,968
552,946
Interest-bearing deposits in other banks
20,620
17,068
6,185
4,634
4,488
Total interest-earning assets
1,731,268
1,703,130
1,685,635
1,659,175
1,624,804
Non-earning assets
57,463
51,930
39,355
51,847
55,303
Total assets
$
1,788,731
$
1,755,060
$
1,724,990
$
1,711,022
$
1,680,107
Interest-bearing liabilities:
Deposits
$
1,179,288
$
1,096,758
$
1,138,817
$
1,118,909
$
1,101,947
Borrowed funds
176,838
223,694
144,995
130,481
113,932
Total interest-bearing liabilities
1,356,126
1,320,452
1,283,812
1,249,390
1,215,879
Demand deposits
284,053
287,975
309,372
318,656
319,505
Other liabilities
22,030
24,487
19,659
15,742
13,730
Shareholders' equity
126,522
122,146
112,147
127,234
130,993
Total liabilities and shareholders' equity
$
1,788,731
$
1,755,060
$
1,724,990
$
1,711,022
$
1,680,107
Yield/Cost
Earning assets:
Loans and leases:
Interest and fees on loans and leases - taxable
5.49
%
5.23
%
4.99
%
4.54
%
4.24
%
Interest and fees on loans and leases - tax-free
4.05
%
3.94
%
3.56
%
3.54
%
3.38
%
Total loans
5.42
%
5.16
%
4.91
%
4.49
%
4.20
%
Securities:
Securities, taxable
3.00
%
2.98
%
2.77
%
2.55
%
2.27
%
Securities, tax-free
2.90
%
2.98
%
3.11
%
3.08
%
3.03
%
Total securities
2.98
%
2.98
%
2.84
%
2.66
%
2.42
%
Interest-bearing deposits in other banks
4.89
%
4.15
%
3.69
%
1.64
%
0.71
%
Total earning assets
4.67
%
4.45
%
4.23
%
3.87
%
3.58
%
Interest-bearing liabilities:
Interest on deposits
2.08
%
1.60
%
0.81
%
0.36
%
0.13
%
Interest on borrowed funds
4.89
%
4.86
%
4.23
%
2.56
%
1.10
%
Total interest-bearing liabilities
2.45
%
2.15
%
1.19
%
0.59
%
0.22
%
Net interest spread
2.22
%
2.30
%
3.04
%
3.28
%
3.36
%
Net interest margin
2.75
%
2.78
%
3.32
%
3.43
%
3.42
%
FNCB Bancorp, Inc.
Asset Quality Data
Jun 30,
Mar 31,
Dec 31,
Sept 30,
Jun 30,
(in thousands)
2023
2023
2022
2022
2022
At period end
Non-accrual loans and leases
$
3,711
$
2,601
$
2,763
$
2,654
$
2,764
Loans past due 90 days or more and still accruing
49
52
78
74
14
Total non-performing loans and leases
3,760
2,653
2,841
2,728
2,778
Other real estate owned (OREO)
-
-
-
228
228
Other non-performing assets
1,647
1,773
1,773
1,773
1,773
Total non-performing assets
$
5,407
$
4,426
$
4,614
$
4,729
$
4,779
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.