FNCB Bancorp, Inc. Reports Earnings Increase for 2021 of 39% and Announces Authorization of Stock Repurchase Program

Rhea-AI Summary

FNCB Bancorp, Inc. reported a net income of $21.4 million for 2021, a 39.3% increase from $15.3 million in 2020. The increase was primarily driven by an 21.9% boost in net interest income, reaching $49.9 million. However, fourth-quarter earnings fell by 23.2% to $4.0 million, mainly due to rising non-interest expenses. The company declared a $0.27 per share dividend, a 22.7% increase from 2020. FNCB authorized a new stock repurchase program for up to 750,000 shares. As of year-end, total assets grew to $1.664 billion, reflecting a 13.6% increase year-over-year.

Positive

• Net income increased by $6.0 million, or 39.3%, to $21.4 million in 2021.
• Earnings per share increased by $0.30, or 39.5%, to $1.06 for the full year 2021.
• Net interest income rose by $8.9 million, or 21.8%, to $49.9 million in 2021.
• Dividend declared increased by 22.7% to $0.27 per share in 2021.
• Total assets grew by $198.6 million, or 13.6%, to $1.664 billion at year-end 2021.

Negative

• Fourth-quarter net income fell by $1.2 million, or 23.2%, from the same quarter in 2020.
• Non-interest income decreased by $1.0 million, or 10.6%, to $8.3 million in 2021.
• Non-interest expenses increased by $2.1 million, or 7.5%, compared to 2020.

DUNMORE, Pa., Jan. 28, 2022 (GLOBE NEWSWIRE) -- FNCB Bancorp, Inc. (NASDAQ: FNCB), the parent company of Dunmore-based FNCB Bank (the “Bank”), today reported net income for 2021 of $21.4 million, or $1.06 per basic and diluted share, compared to net income of $15.3 million, or $0.76 per basic and diluted share, for 2020. The $6.0 million, or 39.3%, earnings improvement was due primarily to a $8.8 million, or 21.9%, increase in net interest income, coupled with a $1.8 million, or 91.5%, reduction in the provision for loan and lease losses.  Partially offsetting these positive factors was a $1.0 million, or 10.6%, decrease in non-interest income and a $2.2 million, or 7.5%, increase in non-interest expense. Net income for the fourth quarter of 2021 was $4.0 million, or $0.20 per basic and diluted share, a decrease of $1.2 million, or 23.2%, compared to $5.2 million, or $0.26 per basic and diluted share, for the same quarter of 2020. The reduction in fourth quarter earnings was largely due to increases in non-interest expense and credit provisioning, partially offset by an increase in net interest income. 

Return on average assets and return on average shareholders’ equity were 1.36% and 13.46%, respectively, in 2021, compared to 1.13% and 10.66%, respectively in 2020. For the three months ended December 31, 2021, annualized return on average assets and annualized return on average shareholders’ equity were 0.94% and 9.82%, respectively. Comparatively, annualized return on average assets was 1.41% and annualized return on average shareholders’ equity was 13.49% for the three months ended December 31, 2020.

Dividends declared and paid in 2021 totaled $0.27 per share, an increase of $0.05 per share, or 22.7%, compared to $0.22 per share for 2020. Total dividends declared and paid for 2021 equated to a dividend yield of approximately 2.92% based on the closing stock price of $9.24 per share at December 31, 2021. 

Stock Repurchase Program

On January 26, 2022, FNCB's Board of Directors authorized a stock repurchase program under which up to 750,000 shares of FNCB's outstanding common stock may be acquired in the open market commencing no earlier than March 4, 2022 and expiring December 31, 2022 pursuant to a trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. In 2021, the Board of Directors had authorized a similar program under which 330,759 common shares were repurchased. The 2021 plan expired on December 31, 2021.

The repurchase of shares under the program is administered through an independent broker. Repurchases may occur from time to time at prevailing market prices, through open market transactions depending upon market conditions, and are subject to SEC regulations as well as certain price, market volume and timing constraints specified in the trading plan. Under the program, the purchases will be funded from working capital presently available to FNCB, and the repurchased shares will be returned to the status of authorized but unissued shares of Common Stock.  There is not a guarantee as to the exact number of shares that will be repurchased by FNCB, and FNCB may discontinue purchases at any time that management determines additional repurchases are no longer warranted. As of December 31, 2021, FNCB had approximately 20.0 million shares outstanding.

2021 Highlights:

	●	Fourth quarter earnings per share decreased $0.06 per share, or 23.1%, to $0.20 per share in 2021 compared to $0.26 per share for the fourth quarter of 2020. For the full year, earnings per share increased $0.30 per share, or 39.5%, to $1.06 per share in 2021 from $0.76 per share in 2020;
	●	Return on average assets was 0.94% for the fourth quarter of 2021 and 1.41% for the same quarter of 2020. For the full year, return on average assets was 1.36% in 2021 compared to 1.13% in 2020;
	●	For the fourth quarter, return on average shareholders' equity was 9.82% in 2021 from 13.49% in 2020. Return on average shareholders' equity for all of 2021 improved to 13.46% compared to 10.66% for 2020;
	●	Tangible book value increased $0.43 per share, or 5.6%, to $8.13 per share at December 31, 2021 from $7.70 per share at December 31, 2020;
	●	Total risk-based capital and Tier I Leverage ratios (FNCB Bank) were 14.61% and 9.82% at December 31, 2021 compared to 15.79% and 9.57% at December 31, 2020, respectively;
	●	The earning asset yield (FTE) for the fourth quarter decreased 64 basis points to 3.41% in 2021 from 4.05% in 2020. Year over year, the earning asset yield (FTE) decreased 22 basis points to 3.63% in 2021 from 3.85% in 2020;
	●	Cost of funds for the fourth quarter of 2021 decreased 28 basis points to 0.16% from 0.44% for the fourth quarter of 2020. Year over year, cost of funds decreased 39 basis points to 0.25% in 2021 from 0.64% in 2020.
	●	The net interest margin (FTE) for the fourth quarter of 2021 decreased 41 basis points to 3.29% from 3.70% for the fourth quarter of 2020. Year over year, net interest margin (FTE) increased 10 basis points to 3.45% in 2021 from 3.35% in 2020;
	●	Ratio of non-performing loans to total loans improved to 0.39% at December 31, 2021 compared to 0.62% at December 31, 2020; and
	●	The efficiency ratio increased to 61.75% for the fourth quarter of 2021 from 54.89% for the same quarter of 2020.

"The strong performance generated by FNCB in 2021 speaks to the quality of the FNCB brand, our ability to provide superior customer service and adapt to changing market demands," stated Gerard A. Champi, President and Chief Executive Officer. "Earnings in 2021 benefitted from our leadership in originating PPP loans and assisting customers through the forgiveness process, as well as our ability to effectively manage funding costs and strengthen asset quality. During the fourth quarter we expanded our product offerings to include commercial equipment financing, including leasing, through the hiring of a team of seasoned professionals in this line of business. We are pleased to say that the buildout of this product offering is complete and is generating new loan originations in line with expectations. Additionally in the fourth quarter of 2021, we received approval to consolidate our Dunmore-Wheeler community office into our state-of-the-art Main Office. The consolidation, which will be finalized in the first quarter of 2022, will have minimal impact to customers, reduce operating expense run rates going forward and create efficiency within our branch network," concluded Mr. Champi. 

COVID-19 Pandemic Update

FNCB originated 679 PPP loans totaling $76.2 million under a second round of funding, which expired during the first half of 2021 and received $3.6 million in related loan origination fees associated with these originations, which was deferred and is being recognized upon forgiveness or repayment. As of December 31, 2021, PPP loans outstanding were $20.9 million, net of $1.0 million in net unrecognized deferred origination fees. FNCB has been actively assisting customers through the forgiveness process. During the year ended December 31, 2021, FNCB received forgiveness for PPP loans totaling $130.3 million and recognized $4.8 million in net PPP loan origination fees upon forgiveness. 

Due to the recent rise in the number of positive cases in our market area, FNCB branches are open for drive thru and by appointment only, with the exception of the Main Office and Plains Rt 315 community office, which are fully operational with lobbies open for consumer traffic. FNCB continues to follow CDC and Commonwealth of Pennsylvania guidance and take additional precautions to ensure the safety of its customers and its employees. Widespread availability and distribution of vaccines, including boosters, has led to improved economic growth across the United States and more specifically within our market area. However, lingering effects from the COVID-19 pandemic, including the effects of the Delta and Omicron variants continue to adversely impact employment markets and supply-chains affecting national, regional and local economies, which has resulted in pronounced price inflation. 

Regarding our banking operations, commercial activity within our market area, while improving, remains volatile and has not returned to pre-pandemic levels. Economic restrictions adopted in 2020 caused many borrowers to request payment deferrals and other payment accommodations. As of December 31, 2021, all borrowers that previously received payment accommodations have resumed making contractual principal and interest payments. While positive developments have occurred, management is keenly aware that uncertainty regarding the pandemic may still exist. Additionally, FNCB's commercial customer base includes businesses in industries such as automobile, hotel/lodging, restaurants, hospitality, and retail and commercial real estate, all of which had been significantly and adversely impacted in 2020 and 2021 by economic restrictions and employment and supply-chain constraints related to the COVID-19 pandemic. Management continues to closely monitor customers within these industries as the economic recovery continues to unfold.

Management expects the COVID-19 pandemic, as well as certain provisions of legislative and regulatory relief efforts, to continue to impact FNCB's operations. At this time, management cannot determine or estimate the full magnitude of the impact and cannot provide any assurances as to the effect on FNCB's results of operations or financial position. The FNCB team will continue to work diligently to address any issues related to the COVID-19 pandemic in a safe and sound manner as they arise. Management believes that FNCB's balance sheet and capital position are strong and will allow FNCB to withstand any further challenges that may be presented. 

Summary Results 

We make reference to certain non-GAAP measures in this release.  See the reconciliations of the Non-GAAP adjusted measures to the GAAP measures in the tables that accompany this release.

For the three months ended December 31, 2021, FNCB's net interest income on a fully tax-equivalent basis increased $1.3 million, or 10.7%, to $13.1 million from $11.8 million for the same three months of 2020, which resulted from higher levels of tax-equivalent interest income, coupled with a reduction in interest expense. For the fourth quarter of 2021, tax-equivalent interest income increased $0.6 million, or 4.6%, to $13.5 million from $12.9 million in 2020. The increase in tax-equivalent interest income was caused primarily by higher balances of earning assets, partially offset by a reduction in the tax-equivalent yield on earning assets. Average earning assets increased $311.6 million, or 24.4%, to $1.589 billion for the three months ended December 31, 2021 from $1.277 billion for the same three months of 2020, which largely reflected an increase in the average balances of investment securities of $175.6 million, or 53.8%, as management redirected excess liquidity into the investment portfolio. Partially offsetting the increase in earning asset volumes was a 64-basis point reduction in the tax-equivalent yield on earning assets to 3.41% for the fourth quarter of 2021 from 4.05% for the same quarter of 2020. Specifically, the tax-equivalent yield on the loan portfolio decreased 13 basis points to 4.33% for the fourth quarter of 2021 from 4.46% for the same quarter of 2020, while the tax-equivalent yield on the investment portfolio decreased 61 basis points to 2.44% from 3.05% comparing the fourth quarters of 2021 and 2020, respectively. In addition, the improvement in tax-equivalent net interest income reflected a $0.7 million, or 58.8% reduction in interest expense driven by a further reduction in funding costs. FNCB's cost of funds decreased 28 basis points to 0.16% for the fourth quarter of 2021 compared to 0.44% for the same quarter of 2020. FNCB’s tax-equivalent net interest margin for the fourth quarter of 2021 contracted 41 basis points to 3.29% compared to 3.70% for the same quarter of 2020. The margin contraction reflected the significant growth in average earning assets at lower yields which overshadowed the reduction in funding costs. On a linked quarter basis, tax-equivalent net interest margin contracted 17 basis points from 3.46% for the third quarter of 2021. Excluding the impact of PPP loans (non-GAAP), FNCB's tax-equivalent net interest margin would have been 3.09% for the fourth quarter of 2021, compared to 3.49% for the fourth quarter of 2020 and 3.15% for the third quarter of 2021. For the year ended December 31, 2021, tax-equivalent net interest income increased $8.9 million, or 21.8%, to $49.9 million compared to $41.0 million for the year ended December 31, 2020. Similarly, the improvement in net interest income for the full-year period was due to an increase in tax-equivalent interest income due primarily to higher earning asset volumes coupled with a reduction in funding costs. Average earning assets increased $226.2 million, or 18.5%, to $1.449 billion in 2021 from $1.223 billion in 2020. Specifically, investment security volumes averaged $127.4 million, or 42.1% higher, while average interest-bearing deposits in other banks increased $59.7 million, or 649.0% and average loan volumes increased $3.4 million, or 4.3%, comparing the years ended December 31, 2021 and 2020.  Additionally, net loan origination fees recognized on forgiven PPP loans totaled $4.8 million in 2021 compared to $1.2 million in 2020, an increase of $3.6 million. The low interest rate environment and continued oversupply of deposits in the market resulted in further reductions in funding costs. For the year ended December 31, 2021, the cost of funds decreased 39 basis points to 0.25% from 0.64% for the year ended December 31, 2020. The tax-equivalent net interest margin widened 10 basis points to 3.45% in 2021 from 3.35% in 2020. For purposes of presenting net interest income, earning-asset yields and net interest margin information on a tax-equivalent basis, tax-free interest income is adjusted using the statutory federal corporate income tax rate of 21.0% for 2021 and 2020. 

Non-interest income for the fourth quarter of 2021 was $1.9 million, a decrease of $0.2 million, or 6.8% from $2.1 million for the fourth quarter of 2020. The decrease was largely due to reductions in net gains on equity securities, net gains on the sale of mortgage loans held for sale, partially offset by an increase in deposit service charges. For the quarter ended December 31, 2021, net gains on equity securities were $145 thousand, a decrease of $162 thousand, or 52.8%, compared to $307 thousand for the same three months of 2020. Net gains on the sale of mortgage loans held for sale were $40 thousand for the fourth quarter of 2021, a decrease of $148 thousand, or 78.7%, compared to $188 thousand for the same quarter of 2020. These reductions were partially offset by a $163 thousand, or 18.6%, increase in deposit service charges to $1.0 million for the three months ended December 31, 2021 compared to $875 thousand for the three months ended December 31, 2020, which primarily reflected increases in debit card fees. For the year ended December 31, 2021, non-interest income decreased $1.0 million, or 10.6%, to $8.3 million from $9.3 million for the year ended December 31, 2020. The year-to-date reduction in non-interest income resulted primarily from decreases in net gains on the sale of available-for-sale debt securities, net gains on equity securities and net gains on the sale of mortgage loans held for sale. Net gains on the sale of available-for-sale securities decreased $1.3 million, or 86.1%, to $213 thousand in 2021 compared to $1.5 million in 2020, while net gains on equity securities decreased $470 thousand, or 40.1%, to $701 thousand in 2021 from $1.2 million in 2020. As part of an asset/liability management initiative to enhance future interest income run rates, management elected to hold higher-quality saleable mortgage loans in the loan portfolio. This initiative was the major factor causing a $301 thousand, or 46.1%, decrease in net gains on the sale of mortgage loans to $352 thousand in 2021 as compared to $653 thousand in 2020. These decreases were partially offset by a $625 thousand, or 19.2%, increase in deposit service charges, resulting primarily from an increase in debit card usage, and a settlement in the amount of $426 thousand from a bank-owned life insurance death benefit claim that was recognized in 2021. 

Non-interest expense totaled $9.2 million for the fourth quarter of 2021, an increase of $1.7 million, or 23.2%, from $7.4 million for the fourth quarter of 2020, which reflected increases in salaries and employee benefits, data processing costs and other operating expenses. Salaries and employee benefits expense increased $917 thousand, or 23.0%, to $4.9 million from $4.0 million comparing the three months ended December 31, 2021 and 2020, which was caused primarily by additional salary and benefit costs associated with the onboarding of the 1st Equipment Financing team of professionals, along with increases in employee retirement plan contributions and incentive pay. Data processing costs for the fourth quarter increased $279 thousand, or 37.5%, to $1.0 million in 2021 from $745 thousand in 2020, reflecting additional costs associated with cybersecurity enhancements.  Other operating expenses totaled $1.9 million for the fourth quarter of 2021, an increase of $630 thousand, or 50.4%, from $1.2 million for the same quarter of 2020. Included in other operating expense in the fourth quarter of 2021 were losses of $300 thousand associated with the transfer of two bank-owned properties to other real estate owned. As part of management's ongoing initiative to optimize its branch network, in December 2021, FNCB received regulatory approval to consolidate a community office located in the Borough of Dunmore, Lackawanna County, Pennsylvania with its main office located in the same Borough. The consolidation is expected to be completed in the first quarter of 2022, and is expected to generate annual operating cost savings of approximately $230 thousand. Additionally, with the continuing evolution of digital banking and declining utilization of brick-and-mortar branches, management decided to sell land located in Lackawanna County that FNCB was holding for future branch expansion. For the year ended December 31, 2021, non-interest expense totaled $31.1 million, an increase of $2.1 million, or 7.5%, compared to $28.9 million for the year ended December 31, 2020. Similar to the fourth quarter increase, the yearly increase was primarily due to increased salaries and employee benefits, data processing expenses and other operating expenses. Salaries and employee benefits increased $1.4 million, or 9.5%, to $16.7 million in 2021, compared to $15.2 million in 2020. Data processing expenses increased $756 thousand, or 25.8%, to $3.7 million in 2021, compared to $2.9 million in 2020. Other operating expenses amounted to $5.6 million in 2021, an increase of $235 thousand, or 4.3%, compared to $5.4 million in 2020. 

Asset Quality

FNCB experienced steady improvement in asset quality throughout 2021, as exhibited by a decrease in total non-performing loans of $1.7 million, or 30.8%, to $3.9 million, or 0.39% of total loans, at December 31, 2021 from $5.6 million, or 0.62% of total loans, at December 31, 2020. The improvement primarily reflected the payoff of one commercial relationship, strong repayment activity and the return of several loans to accrual status. On a linked-quarter basis, non-performing loans improved $612 thousand, or 13.7%, from $4.5 million at September 30, 2021. FNCB’s loan delinquency rate (total delinquent loans as a percentage of total loans) improved to 0.55% at December 31, 2021, compared to 0.99% at December 31, 2020 and 0.61% at September 30, 2021. FNCB recorded a provision for loan and lease losses of $166 thousand in 2021, a decrease of $1.8 million or 91.5%, compared to $1.9 million in 2020. The elevated amount of credit provisioning in 2020 was directly related to the economic disruption and uncertainty caused by the COVID-19 pandemic. The allowance for loan and lease losses was $12.4 million, or 1.27% of total loans, at December 31, 2021, compared to $11.9 million, or 1.33% of total loans, at December 31, 2020. Excluding PPP loans, which are 100.0% guaranteed by the federal government, this ratio (non-GAAP) was 1.30% at December 31, 2021 and 1.45% at December 31, 2020.

Financial Condition

Total assets increased $198.6 million, or 13.6%, to $1.664 billion at December 31, 2021, from $1.465 billion at December 31, 2020.  The strong balance sheet growth reflected substantial increases in available-for-sale debt securities, and loans, net of net deferred loan costs and unearned income. Available-for-sale debt securities increased $172.5 million, or 49.3%, to $522.6 million at December 31, 2021 from $350.0 million at December 31, 2020. Loans, net of net deferred loan costs and unearned income, grew $78.3 million, or 8.7%, to $979.4 million at December 31, 2021, from $901.1 million at December 31, 2020. Excluding activity related to the origination and forgiveness of PPP loans, loans, net of net deferred loan origination fees, increased $134.4 million, or 16.3%. Total deposits increased $167.6 million, or 13.0%, to $1.455 billion at December 31, 2021 from $1.287 billion at December 31, 2020. Interest-bearing deposits increased $119.0 million, or 11.7%, to $1.135 billion at December 31, 2021 from $1.016 billion at December 31, 2020. Additionally, non-interest-bearing deposits increased $48.6 million, or 17.9%, to $320.1 million at December 31, 2021 from $271.5 million at December 31, 2020. 

Total shareholders’ equity increased $6.6 million, or 4.2%, to $162.5 million at December 31, 2021 from $155.9 million at December 31, 2020. Contributing to the increase in capital was 2021 net income of $21.4 million partially offset by a $7.5 million decrease in accumulated other comprehensive income related primarily to depreciation in the fair value of FNCB’s available-for-sale debt securities, net of deferred taxes and dividends declared and paid in 2021 of $5.4 million. The repurchase of 330,759 common shares under the board-authorized 2021 stock repurchase program also reduced shareholders' equity by $2.4 million. FNCB's tangible book value per share improved $0.43, or 5.6%, to $8.13 per share at December 31, 2021 from $7.70 per share at December 31, 2020. FNCB Bank’s total risk-based capital and Tier I leverage ratios were 14.61% and 8.92%, respectively, at December 31, 2021 compared to 15.79% and 9.57%, respectively, at December 31, 2020. 

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 110 years, FNCB Bank continues as a premier community bank in Northeastern Pennsylvania – offering a full suite of personal, small business and commercial banking solutions with industry-leading mobile, online and in-branch products and services. FNCB currently operates through 17 community offices located in Lackawanna, Luzerne and Wayne Counties, and remains dedicated to making its customers’ banking experience simply better. For more information about FNCB, visit www.fncb.com.

INVESTOR CONTACT:
James M. Bone, Jr., CPA
Executive Vice President and Chief Financial Officer 
FNCB Bank
(570) 348-6419
james.bone@fncb.com

Forward-looking Statements

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: the effect of the novel Coronavirus Disease 2019 ("COVID-19") pandemic on FNCB and its customers, the Commonwealth of Pennsylvania and the United States, related to the economy and overall financial stability; government and regulatory responses to the COVID-19 pandemic; government intervention in the U.S. financial system including the effects of recent legislative, tax, accounting and regulatory actions and reforms, including, but not limited to, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and the Tax Cuts and Jobs Act; political instability; the ability of FNCB to manage credit risk; weakness in the economic environment, in general, and within FNCB’s market area; the deterioration of one or a few of the commercial real estate loans with relatively large balances contained in FNCB’s loan portfolio; greater risk of loan defaults and losses from concentration of loans held by FNCB, including those to insiders and related parties; if FNCB’s portfolio of loans to small and mid-sized community-based businesses increases its credit risk; if FNCB’s ALLL is not sufficient to absorb actual losses or if increases to the ALLL were required; FNCB is subject to interest-rate risk and any changes in interest rates could negatively impact net interest income or the fair value of FNCB's financial assets; if management concludes that the decline in value of any of FNCB’s investment securities is other-than-temporary could result in FNCB recording an impairment loss; if FNCB’s risk management framework is ineffective in mitigating risks or losses to FNCB; if FNCB is unable to successfully compete with others for business; a loss of depositor confidence resulting from changes in either FNCB’s financial condition or in the general banking industry; if FNCB is unable to retain or grow its core deposit base; inability or insufficient dividends from its subsidiary, FNCB Bank; if FNCB loses access to wholesale funding sources; interruptions or security breaches of FNCB’s information systems; any systems failures or interruptions in information technology and telecommunications systems of third parties on which FNCB depends; security breaches; if FNCB’s information technology is unable to keep pace with growth or industry developments or if technological developments result in higher costs or less advantageous pricing; the loss of management and other key personnel; dependence on the use of data and modeling in both its management’s decision-making generally and in meeting regulatory expectations in particular; additional risk arising from new lines of business, products, product enhancements or services offered by FNCB; inaccuracy of appraisals and other valuation techniques FNCB uses in evaluating and monitoring loans secured by real property and other real estate owned; unsoundness of other financial institutions; damage to FNCB’s reputation; defending litigation and other actions; dependence on the accuracy and completeness of information about customers and counterparties; risks arising from future expansion or acquisition activity; environmental risks and associated costs on its foreclosed real estate assets; any remediation ordered, or adverse actions taken, by federal and state regulators, including requiring FNCB to act as a source of financial and managerial strength for the FNCB Bank in times of stress; costs arising from extensive government regulation, supervision and possible regulatory enforcement actions; new or changed legislation or regulation and regulatory initiatives; noncompliance and enforcement action with the Bank Secrecy Act and other anti-money laundering statutes and regulations; failure to comply with numerous "fair and responsible banking" laws; any violation of laws regarding privacy, information security and protection of personal information or another incident involving personal, confidential or proprietary information of individuals; any rulemaking changes implemented by the Consumer Financial Protection Bureau; inability to attract and retain its highest performing employees due to potential limitations on incentive compensation contained in proposed federal agency rulemaking; any future increases in FNCB Bank’s FDIC deposit insurance premiums and assessments; and the success of FNCB at managing the risks involved in the foregoing and other risks and uncertainties, including those detailed in FNCB’s filings with the SEC.

FNCB cautions that the foregoing list of important factors is not all inclusive. Readers are also cautioned not to place undue reliance on any forward-looking statements, which reflect management’s analysis only as of the date of this report, even if subsequently made available by FNCB on its website or otherwise. FNCB does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of FNCB to reflect events or circumstances occurring after the date of this press release. Readers should carefully review the risk factors described in the Annual Report and other documents that FNCB periodically files with the SEC, including its Form 10-K for the year ended December 31, 2020 and Form 10-Q for the quarters ended March 31, 2021, June 30, 2021 and September 30, 2021. 

FNCB Bancorp, Inc.

Selected Financial Data

		Dec 31,				Sept 30,				Jun 30,				Mar 31,				Dec 31,
		2021				2021				2021				2021				2020
Per share data:
Net income (fully diluted)		$	0.20			$	0.31			$	0.26			$	0.29			$	0.26
Cash dividends declared		$	0.075			$	0.075			$	0.060			$	0.060			$	0.055
Book value		$	8.13			$	8.10			$	7.99			$	7.65			$	7.70
Tangible book value		$	8.13			$	8.10			$	7.99			$	7.65			$	7.70
Market value:
High		$	9.40			$	8.35			$	7.98			$	8.94			$	7.95
Low		$	8.21			$	7.17			$	6.90			$	5.80			$	5.16
Close		$	9.24			$	8.23			$	7.27			$	7.54			$	6.40
Common shares outstanding			19,989,875				19,985,837				20,102,602				20,240,668				20,245,649
Selected ratios:
Annualized return on average assets			0.94	%			1.58	%			1.38	%			1.61	%			1.41	%
Annualized return on average shareholders' equity			9.82	%			15.61	%			13.37	%			15.27	%			13.49	%
Efficiency ratio			61.75	%			51.32	%			51.86	%			51.87	%			54.89	%
Tier I leverage ratio (FNCB Bank)			8.92	%			9.80	%			9.90	%			9.88	%			9.57	%
Total risk-based capital to risk-adjusted assets (FNCB Bank)			14.64	%			15.91	%			15.79	%			16.26	%			15.79	%
Average shareholders' equity to average total assets			9.61	%			10.14	%			10.35	%			10.53	%			10.42	%
Yield on earning assets (FTE)			3.41	%			3.63	%			3.80	%			3.85	%			4.05	%
Cost of funds			0.16	%			0.23	%			0.30	%			0.34	%			0.44	%
Net interest spread (FTE)			3.25	%			3.40	%			3.50	%			3.51	%			3.61	%
Net interest margin (FTE)			3.29	%			3.46	%			3.58	%			3.59	%			3.70	%
Total delinquent loans/total loans			0.55	%			0.61	%			0.56	%			0.70	%			0.99	%
Allowance for loan and lease losses/total loans			1.27	%			1.25	%			1.26	%			1.30	%			1.33	%
Non-performing loans/total loans			0.39	%			0.47	%			0.46	%			0.52	%			0.62	%
Annualized net (recoveries) charge-offs/average loans			(0.03	%)			(0.03	%)			(0.02	%)			0.03	%			0.09	%

FNCB Bancorp, Inc.

Year-to-Date Consolidated Statements of Income

		Year Ended
		December 31,
(in thousands, except share data)		2021				2020
Interest income
Interest and fees on loans		$	41,049			$	37,615
Interest and dividends on securities:
Taxable			8,237				7,073
Tax-exempt			2,086				1,373
Dividends			239				249
Total interest and dividends on securities			10,562				8,695
Interest on interest-bearing deposits in other banks			88				28
Total interest income			51,699				46,338
Interest expense
Interest on deposits			2,508				5,404
Interest on borrowed funds:
Federal Reserve Bank Discount Window advances			-				32
Federal Home Loan Bank of Pittsburgh advances			6				474
Junior subordinated debentures			191				250
Total interest on borrowed funds			197				756
Total interest expense			2,705				6,160
Net interest income before provision for loan and lease losses			48,994				40,178
Provision for loan and lease losses			166				1,941
Net interest income after provision for loan and lease losses			48,828				38,237
Non-interest income
Deposit service charges			3,877				3,252
Net gain on the sale of available-for-sale securities			213				1,528
Net gain on equity securities			701				1,171
Net gain on the sale of mortgage loans held for sale			352				653
Loan-related fees			390				348
Income from bank-owned life insurance			541				482
Bank-owned life insurance settlement			426				-
Merchant services revenue			593				565
Other			1,175				1,251
Total non-interest income			8,268				9,250
Non-interest expense
Salaries and employee benefits			16,697				15,246
Occupancy expense			2,039				2,052
Equipment expense			1,338				1,477
Advertising expense			712				685
Data processing expense			3,689				2,933
Regulatory assessments			609				387
Bank shares tax			975				786
Professional fees			674				999
Other operating expenses			4,336				4,350
Total non-interest expense			31,069				28,915
Income before income taxes			26,027				18,572
Income tax expense			4,656				3,225
Net income		$	21,371			$	15,347
Income per share
Basic		$	1.06			$	0.76
Diluted		$	1.06			$	0.76
Cash dividends declared per common share		$	0.27			$	0.22
Weighted average number of shares outstanding:
Basic			20,111,430				20,210,439
Diluted			20,126,853				20,212,187

FNCB Bancorp, Inc.

Quarter-to-Date Consolidated Statements of Income

		Three Months Ended
		Dec 31,				Sept 30,				Jun 30,				Mar 31,				Dec 31,
(in thousands, except share data)		2021				2021				2021				2021				2020
Interest income
Interest and fees on loans and leases		$	10,325			$	10,696			$	10,242			$	9,786			$	10,338
Interest and dividends on securities:
Taxable			2,281				2,070				1,980				1,906				1,832
Tax-exempt			567				517				516				486				465
Dividends			63				55				59				62				64
Total interest and dividends on securities			2,911				2,642				2,555				2,454				2,361
Interest on interest-bearing deposits in other banks			53				31				1				3				3
Total interest income			13,289				13,369				12,798				12,243				12,702
Interest expense
Interest on deposits			410				582				718				798				1,077
Interest on borrowed funds:
Federal Home Loan Bank of Pittsburgh advances			6				-				-				-				-
Junior subordinated debentures			48				47				48				48				50
Total interest on borrowed funds			54				47				48				48				50
Total interest expense			464				629				766				846				1,127
Net interest income before provision (credit) for loan and lease losses			12,825				12,740				12,032				11,397				11,575
Provision (credit) for loan and lease losses			338				(513	)			155				186				(115	)
Net interest income after provision (credit) for loan and lease losses			12,487				13,253				11,877				11,211				11,690
Non-interest income
Deposit service charges			1,038				1,009				956				874				875
Net gain on the sale of available-for-sale securities			-				-				-				213				24
Net gain on equity securities			145				156				36				364				307
Net gain on the sale of mortgage loans held for sale			40				41				47				224				188
Loan-related fees			76				77				104				133				148
Income from bank-owned life insurance			139				139				142				121				116
Bank-owned life insurance settlement			-				-				4				422				-
Merchant services revenue			140				159				156				138				164
Other			365				261				264				285				263
Total non-interest income			1,943				1,842				1,709				2,774				2,085
Non-interest expense
Salaries and employee benefits			4,901				4,022				4,038				3,736				3,984
Occupancy expense			549				450				431				609				532
Equipment expense			333				319				333				353				365
Advertising expense			221				160				214				117				190
Data processing expense			1,024				961				885				819				745
Regulatory assessments			149				160				112				188				131
Bank shares tax			(34	)			352				342				315				(92	)
Professional fees			150				153				112				259				339
Other operating expenses			1,879				923				759				775				1,249
Total non-interest expense			9,172				7,500				7,226				7,171				7,443
Income before income taxes			5,258				7,595				6,360				6,814				6,332
Income tax expense			1,300				1,244				1,131				981				1,176
Net income		$	3,958			$	6,351			$	5,229			$	5,833			$	5,156
Income per share
Basic		$	0.20			$	0.31			$	0.26			$	0.29			$	0.26
Diluted		$	0.20			$	0.31			$	0.26			$	0.29			$	0.26
Cash dividends declared per common share		$	0.075			$	0.075			$	0.060			$	0.060			$	0.055
Weighted average number of shares outstanding:
Basic			19,988,272				19,997,021				20,222,216				20,242,262				20,241,730
Diluted			20,015,776				20,009,387				20,232,694				20,253,606				20,244,652

FNCB Bancorp, Inc.

Consolidated Balance Sheets

		Dec 31,				Sept 30,				Jun 30,				Mar 31,				Dec 31,
(in thousands)		2021				2021				2021				2021				2020
Assets
Cash and cash equivalents:
Cash and due from banks		$	16,651			$	24,612			$	24,782			$	22,382			$	24,822
Interest-bearing deposits in other banks			82,369				149,581				31,160				76,172				130,989
Total cash and cash equivalents			99,020				174,193				55,942				98,554				155,811
Available-for-sale debt securities, at fair value			522,566				470,323				432,807				407,396				350,035
Equity securities, at fair value			4,922				4,777				4,303				4,267				3,026
Restricted stock, at cost			1,911				1,826				1,099				1,149				1,745
Loans held for sale			-				491				642				267				2,107
Loans, net of net deferred costs and unearned income			979,439				958,408				976,538				931,943				901,102
Allowance for loan and lease losses			(12,416	)			(12,018	)			(12,285	)			(12,076	)			(11,950	)
Net loans			967,023				946,390				964,253				919,867				889,152
Bank premises and equipment, net			16,082				17,269				17,360				17,407				17,579
Accrued interest receivable			4,643				4,593				4,485				4,567				4,286
Bank-owned life insurance			33,494				33,355				33,216				33,074				31,712
Other assets			14,662				12,674				10,656				13,488				10,226
Total assets		$	1,664,323			$	1,665,891			$	1,524,763			$	1,500,036			$	1,465,679
Liabilities
Deposits:
Demand (non-interest-bearing)		$	320,089			$	321,952			$	312,408			$	319,532			$	271,499
Interest-bearing			1,134,939				1,160,114				1,025,770				1,003,296				1,015,949
Total deposits			1,455,028				1,482,066				1,338,178				1,322,828				1,287,448
Borrowed funds			30,310				10,310				10,310				10,310				10,310
Accrued interest payable			49				56				87				99				108
Other liabilities			16,479				11,509				15,574				11,869				11,953
Total liabilities			1,501,866				1,503,941				1,364,149				1,345,106				1,309,819
Shareholders' equity
Preferred stock			-				-				-				-				-
Common stock			24,987				24,982				25,128				25,300				25,307
Additional paid-in capital			80,128				80,000				80,591				81,640				81,587
Retained earnings			50,990				48,541				43,698				39,691				35,080
Accumulated other comprehensive income			6,352				8,427				11,197				8,299				13,886
Total shareholders' equity			162,457				161,950				160,614				154,930				155,860
Total liabilities and shareholders’ equity		$	1,664,323			$	1,665,891			$	1,524,763			$	1,500,036			$	1,465,679

FNCB Bancorp, Inc.

Summary Tax-equivalent Net Interest Income

		Three Months Ended
		Dec 31,				Sept 30,				Jun 30,				Mar 31,				Dec 31,
(dollars in thousands)		2021				2021				2021				2021				2020
Interest income
Loans:
Loans and leases - taxable		$	9,983			$	10,364			$	9,897			$	9,401			$	9,938
Loans and leases - tax-free			433				420				437				487				506
Total loans			10,416				10,784				10,334				9,888				10,444
Securities:
Securities, taxable			2,344				2,125				2,039				1,968				1,896
Securities, tax-free			719				654				653				615				589
Total interest and dividends on securities			3,063				2,779				2,692				2,583				2,485
Interest-bearing deposits in other banks			53				31				1				3				3
Total interest income			13,532				13,594				13,027				12,474				12,932
Interest expense
Deposits			410				582				718				798				1,077
Borrowed funds			54				47				48				48				50
Total interest expense			464				629				766				846				1,127
Net interest income		$	13,068			$	12,965			$	12,261			$	11,628			$	11,805
Average balances
Earning assets:
Loans:
Loans and leases - taxable		$	915,693			$	921,648			$	909,833			$	873,544			$	889,964
Loans and leases - tax-free			45,920				43,091				44,583				46,897				46,444
Total loans and leases			961,613				964,739				954,416				920,441				936,408
Securities:
Securities, taxable			409,210				357,684				326,848				286,128				255,111
Securities, tax-free			92,685				82,706				82,304				75,876				71,154
Total securities			501,895				440,390				409,152				362,004				326,265
Interest-bearing deposits in other banks			125,609				94,434				7,042				13,490				14,808
Total interest-earning assets			1,589,117				1,499,563				1,370,610				1,295,935				1,277,481
Non-earning assets			91,968				105,912				145,861				175,301				181,708
Total assets		$	1,681,085			$	1,593,014			$	1,516,471			$	1,471,236			$	1,459,189
Interest-bearing liabilities:
Deposits		$	1,163,290			$	1,080,312			$	1,019,612			$	999,085			$	1,016,916
Borrowed funds			17,810				10,419				10,310				10,310				10,310
Total interest-bearing liabilities			1,181,100				1,090,731				1,029,922				1,009,395				1,027,226
Demand deposits			322,536				325,571				317,670				294,525				268,531
Other liabilities			15,846				15,258				11,998				12,413				11,377
Shareholders' equity			161,603				161,454				156,881				154,903				152,055
Total liabilities and shareholders' equity		$	1,681,085			$	1,593,014			$	1,561,471			$	1,471,236			$	1,459,189
Yield/Cost
Earning assets:
Loans:
Interest and fees on loans and leases - taxable			4.36	%			4.50	%			4.35	%			4.30	%			4.47	%
Interest and fees on loans and leases - tax-free			3.77	%			3.90	%			3.92	%			4.15	%			4.36	%
Total loans			4.33	%			4.47	%			4.33	%			4.30	%			4.46	%
Securities:
Securities, taxable			2.29	%			2.38	%			2.50	%			2.75	%			2.97	%
Securities, tax-free			3.10	%			3.16	%			3.17	%			3.24	%			3.31	%
Total securities			2.44	%			2.52	%			2.63	%			2.85	%			3.05	%
Interest-bearing deposits in other banks			0.17	%			0.13	%			0.06	%			0.09	%			0.08	%
Total earning assets			3.41	%			3.63	%			3.80	%			3.85	%			4.05	%
Interest-bearing liabilities:
Interest on deposits			0.14	%			0.22	%			0.28	%			0.32	%			0.42	%
Interest on borrowed funds			1.21	%			1.80	%			1.86	%			1.86	%			1.94	%
Total interest-bearing liabilities			0.16	%			0.23	%			0.30	%			0.34	%			0.44	%
Net interest spread			3.25	%			3.40	%			3.50	%			3.51	%			3.61	%
Net interest margin			3.29	%			3.46	%			3.58	%			3.59	%			3.70	%

FNCB Bancorp, Inc.

Asset Quality Data

		Dec 31,				Sept 30,				Jun 30,				Mar 31,				Dec 31,
(in thousands)		2021				2021				2021				2021				2020
At period end
Non-accrual loans, including non-accruing troubled debt restructured loans (TDRs)		$	3,863			$	4,475			$	4,555			$	4,842			$	5,581
Loans past due 90 days or more and still accruing			-				-				-				-				-
Total non-performing loans and leases			3,863				4,475				4,555				4,842				5,581
Other real estate owned (OREO)			920				54				236				58				58
Other non-performing assets			1,773				1,773				1,773				1,900				1,900
Total non-performing assets		$	6,556			$	6,302			$	6,564			$	6,800			$	7,539
Accruing TDRs		$	6,666			$	6,666			$	6,823			$	6,962			$	6,975
For the three months ended
Allowance for loan and lease losses
Beginning balance		$	12,018			$	12,285			$	12,076			$	11,950			$	12,269
Loans and leases charged-off			34				255				136				361				338
Recoveries of charged-off loans and leases			94				501				190				301				134
Net (recoveries)/charge-offs			(60	)			(246	)			(54	)			60				204
Provision (credit) for loan and lease losses			338				(513	)			155				186				(115	)
Ending balance		$	12,416			$	12,018			$	12,285			$	12,076			$	11,950

FNCB Bancorp, Inc.

Non-GAAP Reconciliations

		Dec 31,				Sept 30,				Jun 30,				Mar 31,				Dec 31,
(dollars in thousands)		2021				2021				2021				2021				2020
Annualized net interest margin:
Net interest margin (1 divided by 3)			3.29	%			3.46	%			3.58	%			3.59	%			3.70	%
Net interest margin, excluding PPP loans (non-GAAP) (2 divided by 4)			3.09	%			3.15	%			3.45	%			3.37	%			3.49	%
Net interest income (FTE) (1)		$	13,068			$	12,965			$	12,261			$	11,628			$	11,805
PPP loan interest and fee income			1,033				1,709				1,319				1,499				1,485
Net interest income (FTE), excluding PPP loans (non-GAAP) (2)		$	12,035			$	11,256			$	10,942			$	10,129			$	10,320
Average earning assets (3)(a)		$	1,589,117			$	1,499,563			$	1,370,610			$	1,295,935			$	1,277,481
Average PPP loans			33,205				69,132				101,779				94,801				95,837
Average earning assets, excluding PPP loans (non-GAAP) (4)		$	1,555,912			$	1,430,431			$	1,268,831			$	1,201,134			$	1,181,644
Allowance for loan and lease losses/total period end loans
Allowance for loans and lease losses/total period end loans (5 divided by 6)			1.27	%			1.25	%			1.26	%			1.30	%			1.33	%
Allowance for loans and lease losses/total period end loans, excluding PPP loans (non-GAAP) (5 divided by 7)			1.30	%			1.32	%			1.37	%			1.46	%			1.45	%
Allowance for loans and lease losses (5)		$	12,416			$	12,018			$	12,285			$	12,076			$	11,950
Total period end loans (6)		$	979,439			$	958,408			$	976,538			$	931,943			$	901,102
PPP loans outstanding at period end			21,940				49,434				82,354				103,466				76,004
Total period end loans, excluding PPP loans (non-GAAP) (7)		$	957,499			$	908,974			$	894,184			$	828,477			$	825,098

FAQ

What was FNCB's net income for 2021?

FNCB's net income for 2021 was $21.4 million, an increase of 39.3% from 2020.

How much did FNCB raise its dividend in 2021?

FNCB raised its dividend by 22.7% to $0.27 per share in 2021.

What impact did COVID-19 have on FNCB's operations?

FNCB's operations were affected by the COVID-19 pandemic, impacting employment markets and supply chains, although all borrowers that previously received payment accommodations resumed payments.

What was the stock repurchase program authorized by FNCB?

FNCB's Board authorized a stock repurchase program for up to 750,000 shares, set to commence on March 4, 2022.

What was the total asset growth for FNCB in 2021?

FNCB's total assets grew by $198.6 million, or 13.6%, to $1.664 billion at the end of 2021.