FNCB Bancorp, Inc. Announces 71% Increase in Third Quarter 2020 Net Income
10/30/2020 - 04:05 PM
DUNMORE, Pa., Oct. 30, 2020 (GLOBE NEWSWIRE) -- FNCB Bancorp, Inc. (NASDAQ: FNCB; www.fncb.com), the parent company of Dunmore-based FNCB Bank (the “Bank”), today reported net income of $4.1 million , or $0.20 per basic and diluted share, for the three months ended September 30, 2020, an increase of $1.7 million , or 70.9% from $2.4 million , or $0.12 per basic and diluted share, for the comparable period of 2019. The increase in earnings comparing the third quarters of 2020 and 2019 was primarily due to increases in net interest income and non-interest income, coupled with a reduction in the provision for loan and lease losses. Net income for the nine months ended September 30, 2020 totaled $10.2 million , or $0.50 per basic and diluted share, an increase of $2.6 million , or 34.3% , compared to $7.6 million , or $0.39 per basic and diluted share, for the same nine months of 2019. The increased earnings for the year-to-date period of 2020 reflected increases in net interest income and non-interest income and a decrease in non-interest expense, partially offset by an increase in the provision for loan and lease losses. Additionally, the results for the third quarter and year-to-date periods of 2020 include the effect on interest income, not including the recognition of any net origination fee income, of $118.6 million in loans originated through the Paycheck Protection Program ("PPP") of United States Small Business Administration ("SBA"), as well as COVID-19 related expenses of approximately $199 thousand .
For the three and nine months ended September 30, 2020, the annualized return on average assets was 1.15% and 1.03% , respectively, compared to 0.80% and 0.84% , respectively, for the same periods of 2019. The annualized return on average equity was 11.05% and 9.63% , respectively, for the three- and nine-month periods ended September 30, 2020, and 7.30% and 8.32% , respectively, for the comparable periods of 2019. Dividends declared and paid were $0.055 per share for the third quarter and $0.165 per share for the year-to-date period of 2020, a 10.0% increase compared to $0.05 per share and $0.15 per share, respectively, for the three and nine months ended September 30, 2019. The dividend pay-out ratio was 32.7% for the nine months ended September 30, 2020 and 39.8% for the comparable period of 2019. Year-to-date 2020 dividends equated to an annualized dividend yield of approximately 4.1% based on the closing stock price of $5.32 per share at September 30, 2020.
Third quarter 2020 results as compared to the third quarter of 2019 :
● Net interest income (FTE) increased $0.9 million , or 10.1% ; ● Yield on earnings assets (FTE) decreased 74 basis points to 3.48% in 2020 from 4.22% in 2019; ● Cost of funds decreased 52 basis points to 0.59% in 2020 from 1.11% in 2019; ● Net interest margin (FTE) contracted 28 basis points to 3.04% in 2020, compared to 3.32% in 2019; ● Provision for loan and lease losses decreased $0.6 million , or 88.4% ; ● Non-interest income increased $1.1 million , or 62.2% ; ● Non-interest expense increased $0.5 million , or 7.01% ; and ● Efficiency ratio improved to 66.66% in 2020 compared to 69.20% in 2019.
Summary financial position at September 30, 2020 as compared to December 31, 2019:
● Total assets grew $239.7 million , or 19.9% , to $1.443 billion at September 30, 2020 from $1.204 billion at December 31, 2019; ● Net loans increased $128.4 million , or 15.7% , to $947.9 million at September 30, 2020 from $819.5 million at December 31, 2019; ● Included in net loans were PPP loans outstanding of $118.6 million at September 30, 2020; ● Total deposits increased $270.5 million , or 27.0% to $1.272 billion at September 30, 2020 from $1.002 billion at December 31, 2019; ● Total capital increased $16.4 million , or 12.3% to $150.0 million at September 30, 2020 from $133.6 million at December 31, 2019; and ● Tangible book value improved $0.79, or 11.9% , to $7.41 per share at September 30, 2020 from $6.62 per share at December 31, 2019.
"We are pleased with FNCB's performance not only from a financial perspective, but also in how our entire FNCB team continues to adapt and respond to the changing needs of our customers and communities as the pandemic persists," stated Gerard A. Champi, President and CEO. "With the SBA now accepting PPP loan forgiveness applications, we are providing our customers with educational tools including an on-demand webinar and online tutorials, as well as direct outreach, to help them navigate the forgiveness process. Additionally, while loan deferral and modification requests have lessened, which is a positive sign, we continue to proactively communicate with our lending customers to provide prudent assistance as needed. FNCB's asset quality metrics have been favorable and the Company's earnings performance has benefitted from several large loan recoveries received in the third quarter. FNCB's performance was also favorably impacted by lower funding costs, however the challenging rate environment and low-yielding PPP loans have started to place pressure on net interest margins. We remain cautiously optimistic that our strong balance sheet and favorable liquidity position will allow us to meet our financial goals and continue to assist our customers for the remainder of 2020 and beyond," concluded Champi.
Summary Results
Net interest income on a tax-equivalent basis increased $927 thousand , or 10.1% , to $10.1 million for the three months ended September 30, 2020 from $9.1 million for the comparable period of 2019. The improvement in tax-equivalent net interest income for the third quarter of 2020 was primarily due to a decrease in interest expense of $1.0 million , or 40.7% , to $1.5 million from $2.5 million for the same period of 2019, slightly offset by a decrease in tax-equivalent interest income of $72 thousand , or 0.6% , to $11.5 million for the three months ended September 30, 2020 from $11.6 million for the same period of 2019. The decrease in interest expense primarily reflected a decline in market interest rates as FNCB's cost of funds decreased 52 basis points to 0.59% for the third quarter of 2020 from 1.11% for the same quarter of 2019. Specifically, the cost of interest-bearing deposits fell 41 basis points to 0.55% from 0.96% comparing the third quarters of 2020 and 2019, while average borrowing costs decreased 130 basis points to 1.28% for the three months ended September 30, 2020 from 2.58% for the three months ended September 30, 2019. FNCB continued to experience a deposit surge in the third quarter of 2020 as changing customer deposit preferences and higher balances due to the reduction in economic activity and uncertainty related to the COVID-19 pandemic persisted. Total average interest-bearing deposits increased $148.8 million , or 18.7% , to $943.8 million from $795.0 million comparing the third quarters of 2020 and 2019. The increase in deposit volumes had little impact on interest expense, as FNCB used the excess liquidity to repay higher-costing borrowed funds. Average borrowed funds decreased $34.3 million , or 39.9% , to $51.6 million for the third quarter of 2020 from $85.9 million for the same quarter of 2019. The reduction in interest expense was slightly offset by a decrease in tax-equivalent interest income of $72 thousand , or 0.6% , to $11.5 million for the three months ended September 30, 2020 from $11.6 million for the same period of 2019, as a 74 basis point decrease in the tax-equivalent yield on earning assets was almost entirely offset by a $224.7 million , or 20.4% , increase in average earning assets. Accounting for the majority of the decrease was an 82 basis point decrease in the tax-equivalent yield on the loan portfolio to 3.85% for the three months ended September 30, 2020 from 4.67% for the same three months of 2019. With regard to earning asset volumes, average earning assets increased $224.7 million , or 20.4% , to $1.326 billion for the three months ended September 30, 2020 from $1.101 billion for the same three months of 2019. The origination of $118.6 million in PPP loans was the predominant factor causing an increase in average loans of $133.3 million , or 16.3% , to $952.9 million for the third quarter of 2020 from $819.6 million for the same quarter of 2019. Additionally, comparing the third quarters of 2020 and 2019, average securities and average interest-bearing deposits in other banks increased $30.8 million , or 11.4% , and $60.6 million , or 605.5% , respectively. On a linked quarter basis, FNCB's tax-equivalent net interest margin contracted 8 basis points to 3.04% for the third quarter of 2020 from 3.12% for the second quarter, and 28 basis points compared to 3.32% for the third quarter of 2019.
For the nine months ended September 30, 2020, tax-equivalent net interest income increased $1.9 million , or 6.9% , to $29.2 million from $27.3 million for the same nine months of 2019. Similarly, the improvement in tax-equivalent net interest income comparing the year-to-date period ended September 30, 2020 and 2019 was due to a $2.6 million , or 34.0% , reduction in interest expense, partially offset by a $699 thousand , or 2.0% , decrease in tax-equivalent interest income. The decrease in interest expense for the year-to-date period reflected decreases in funding costs due to lower market rates, coupled with changes in volumes of average interest-bearing liabilities. FNCB's total cost of funds decreased 39 basis points to 0.72% for the nine months ended September 30, 2020 from 1.11% for the same period of 2019. Specifically, comparing the nine months ended September 30, 2020 and 2019, reductions in rates paid on FNCB's deposit products led to a 33 basis point decrease in the cost of interest-bearing deposits, while the cost of borrowed funds declined 128 basis points. For the nine months ended September 30, 2020, interest-bearing liabilities averaged $937.1 million , an increase of $21.8 million , or 2.4% , from $915.3 million for the same nine-month period of 2019. FNCB experienced a migration of maturing, higher-costing time deposits into lower-costing non-maturity deposit products. Specifically, average balances of higher-costing time deposits decreased $57.9 million , or 22.8% comparing the nine months ended September 30, 2020 and 2019. Volumes of average interest-bearing demand deposits and average savings deposits increased by $73.5 million and $6.7 million , respectively, comparing the nine months ended September 30, 2020 and 2019. The $699 thousand decrease in year-to-date tax-equivalent interest income largely reflected 44 basis point reduction in the tax-equivalent yield on average earning assets to 3.70% in 2020 from 4.14% in 2019. The effect on interest income from yield decline was almost entirely offset by a $107.6 million , or 9.6% , increase in average earning assets to $1.231 billion for the nine months ended September 30, 2020, compared to $1.124 billion for the same nine months of 2019.
Specifically, the reduction in market interest rates, coupled with the origination of lower-yielding PPP loans, resulted in a 53 basis point decrease in the tax-equivalent yield on loans to 4.08% for the nine months ended September 30, 2020 from 4.61% for the same nine months of 2019. PPP loans averaged $69.5 million for the nine months ended September 30, 2020, with an average yield of 0.99% . Additionally, yields earned on average interest-bearing deposits in other banks and federal funds sold decreased 174 basis points to 0.09% for the nine months ended September 30, 2020 from 1.83% for the same period of 2019. With regard to the increase in earning asset volumes, comparing the first nine months of 2020 and 2019, average loans increased $75.3 million , or 9.1% , while average securities increased $7.8 million , or 2.8% and average interest-deposits in other banks and federal funds sold increased $24.4 million , or 216.1% . For the nine months ended September 30, 2020, FNCB's tax-equivalent net interest margin compressed 8 basis points to 3.16% compared to 3.24% for the same period of 2019.
Non-interest income increased significantly for the third quarter and year-to-date periods, which was primarily due to increases in net gains on equity securities, net gains on the sale of mortgage loans held for sale and net gains on available-for-sale debt securities. Also contributing to the increase in non-interest income for the three and nine months ended September 30, 2020 were increases in loan referral fees and deposit service charges. Non-interest income increased $1.1 million , or 62.2% , to $2.9 million for the three months ended September 30, 2020 from $1.8 million for the same three months of 2019. Net gains on equity securities increased $841 thousand to $846 thousand for the third quarter of 2020 compared to $5 thousand for the same quarter of 2019. FNCB realized a gain of $1.1 million on the conversion of an equity security of a bank holding company that was part of a merger and acquisition completed in the third quarter of 2020. Partially offsetting this gain was a net unrealized loss on equity securities held of $287 thousand . FNCB realized net gains on the sale of mortgage loans of $186 thousand for the three months ended September 30, 2020, a $117 thousand or 169.6% , increase compared to $69 thousand in net gains realized for the same three-month period of 2019. Net gains on the sales of available-for-sale securities increased $54 thousand , or 14.2% , to $433 thousand for the third quarter of 2020 compared to $379 thousand for the same quarter of 2019. Additionally loan referral fees and deposit services charges increased $22 thousand , or 40.7% , and $47 thousand , or 5.9% , respectively, comparing the three months ended September 30, 2020 and 2019. For the nine months ended September 30, 2020, non-interest income increased $2.3 million , or 45.5% , to $7.2 million from $4.9 million for the same period of 2019.
Non-interest expense increased $514 thousand , or 7.0% , to $7.8 million for the three months ended September 30, 2020 from $7.3 million for the three months ended September 30, 2019. The increase primarily reflected increases in other operating expenses, regulatory assessments, professional fees and bank shares tax, partially offset by a reduction in salaries and benefits. Other operating expenses in the third quarter increased $288 thousand , or 35.3% , to $1.1 million in 2020 from $815 thousand in 2019. The increase was largely due to $399 thousand in FHLB prepayment penalties paid in the third quarter of 2020 related to the decision to use excess liquidity to prepay high-costing FHLB term advances. Comparing the three months ended September 30, 2020 and 2019, regulatory assessments increased $102 thousand , or 485.7% , professional fees increased $90 thousand , or 47.6% , and bank shares tax increased $58 thousand or 28.3% . The increase in regulatory assessments reflected the full utilization of the FDIC's Small Bank Assessment Credit during the second quarter of 2020, coupled with an increase in FNCB's assessment base due to balance sheet growth. The increase in professional fees reflected the timing of certain services performed coupled with a contract renegotiation credit received in the third quarter of 2019, while the increase in bank shares tax was due to the increase in FNCB Bank's capital. Slightly offsetting these increases, was a $76 thousand , or 1.9% decrease in salaries and employee benefits, due primarily to reduction in staff. For the nine months ended September 30, 2020, non-interest expense decreased $404 thousand , or 1.8% , to $21.5 million compared to $21.9 million for the same nine-month period of 2019, primarily due to the decline in salaries and employee benefits, data processing expenses, other operating expenses and professional fees. For the nine months ended September 30, 2020, FNCB incurred COVID-19 related costs, including stay-at-home pay, computer-related equipment to enable employees to work remotely, cleaning and sanitizing facilities and safety supplies of $199 thousand which is included in non-interest expense. The increases in net interest income and non-interest income, coupled with the reduction in non-interest expense, resulted in an improvement in FNCB's efficiency ratio year over year to 66.66% for the third quarter of 2020 from 69.20% for the same quarter of 2019.
Asset Quality
FNCB's asset quality improved steadily during 2020 as total non-performing loans decreased $2.9 million , or 32.0% , to $6.2 million , or 0.64% of total loans, at September 30, 2020 from $9.1 million , or 1.10% of total loans, at December 31, 2019. The improvement was attributable to the return of two large commercial loan relationships that returned to accrual status. On a linked quarter basis, non-performing loans decreased $564 thousand , or 8.4% , from $6.7 million , or 0.71% of total loans, at June 30, 2020. FNCB’s loan delinquency rate (total delinquent loans as a percentage of total loans) was 0.81% at September 30, 2020 compared to 1.46% at December 31, 2019 and 1.16% at September 30, 2019. FNCB recorded net recoveries of $1.2 million for the third quarter of 2020 due to large recoveries received on two previously charged-off commercial loans. Annualized net loans charged off (recovered), as a percentage of average loans, was (0.12% ) for the three months ended September 30, 2020 compared to 0.03% for the same three months of 2019. Despite receipt of the large recoveries and the overall improvement in asset quality metrics, FNCB recorded provisions for loan and lease losses of $74 thousand and $2.1 million , respectively, for the three and nine months ended September 30, 2020. The increase in credit provisioning in 2020 was directly related to economic disruption and uncertainty caused by the COVID-19 pandemic. The allowance for loan and lease losses was $12.3 million , or 1.28% of total loans at September 30, 2020, compared to $8.9 million , or 1.08% of total loans at December 31, 2019 and $9.3 million , or 1.11% , at September 30, 2019. FNCB had provided short-term, COVID-19 related payment deferments for 916 loans with 860 of those loans having an aggregate recorded investment of $173.6 million , or 18.0% of gross loans, as of September 30, 2020. Additionally, FNCB provided a second deferral to 71 loans with an aggregate recorded investment of $21.4 million , or 2.2% of gross loans, of which 16 loans with an aggregate balance of $8.0 million , or 0.8% of gross loans, were still under deferral as of September 30, 2020.
Financial Condition
Total assets increased $239.7 million , or 19.9% , to $1.443 billion at September 30, 2020 from $1.204 billion at December 31, 2019. The change in total assets primarily reflected increases in net loans, available-for-sale debt securities and cash and cash equivalents. Net loans increased $128.4 million , or 15.7% , to $947.9 million at September 30, 2020 from $819.5 million at December 31, 2019. Excluding the $118.6 million in PPP loans outstanding at September 30, 2020, net loans increased $9.8 million , or 1.2% , from December 31, 2019. Cash and cash equivalents increased $70.4 million , or 203.8% , to $105.0 million at September 30, 2020 from $34.6 million at December 31, 2019. Also contributing to the balance sheet expansion was a $48.6 million , or 17.8% , increase in available-for-sale debt securities to $321.4 million at September 30, 2020 from $272.8 million at December 31, 2019. FNCB experienced unprecedented deposit demand during the first nine months of 2020 as total deposits increased $270.5 million , or 27.0% , to $1.272 billion at September 30, 2020 from $1.002 billion at December 31, 2019. FNCB used excess liquidity to repay FHLB of Pittsburgh advances. As a result, total borrowed funds decreased $46.9 million , or 82.0% , to $10.3 million at September 30, 2020 from $57.2 million at December 31, 2019. FNCB had no term or overnight borrowings through the FHLB of Pittsburgh outstanding as of September 30, 2020.
Total shareholders’ equity increased $16.4 million , or 12.3% , to $150.0 million at September 30, 2020 from $133.6 million at December 31, 2019. Contributing to the increase in capital was net income for the nine months ended September 30, 2020 of $10.2 million and a $9.1 million increase in accumulated other comprehensive income related primarily to appreciation in the fair value of FNCB’s available-for-sale debt securities, net of deferred taxes. Partially offsetting these increases were dividends declared and paid of $3.3 million for the nine months ended September 30, 2020. FNCB's tangible book value per share improved $0.79 t o $7.41 per share at September 30, 2020 from $6.62 per share at December 31, 2019. FNCB Bank's total risk-based capital and Tier 1 leverage ratios were 16.09% and 10.17% at September 30, 2020, respectively, compared to 14.77% and 10.36% at December 31, 2019, respectively.
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 Ban corp, Inc. :
FNCB Bancorp, Inc. is the bank holding company of FNCB Bank. Locally-based for 110 years, FNCB Bank continues as a premier community bank in Northeastern Pennsylvania – offering a full suite of personal, small business and commercial banking solutions with industry-leading mobile, online and in-branch products and services. FNCB currently operates through 17 community offices located in Lackawanna, Luzerne and Wayne Counties and a limited purpose office in Lehigh County, and remains dedicated to making its customers’ banking experience simply better. For more information about FNCB, visit www.fncb.com .
INVESTOR CONTACT: James M. Bone, Jr., CPA Executive Vice President and Chief Financial Officer FNCB Bank (570) 348-6419 james.bone@fncb.com
FNCB may from time to time make written or oral “forward-looking statements,” including statements contained in our filings with the Securities and Exchange Commission (“SEC”), in our reports to shareholders, and in our other communications, which are made in good faith by us pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements include statements with respect to FNCB’s beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions, that are subject to significant risks and uncertainties, and are subject to change based on various factors (some of which are beyond our control). The words “may,” “could,” “should,” “will,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” “project,” “future” and similar expressions are intended to identify forward-looking statements. The following factors, among others, could cause FNCB’s financial performance to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements: the effect of the 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 report.
Readers should carefully review the risk factors described in the Annual Report and other documents that FNCB periodically files with the SEC, including its Form 10-K for the year ended December 31, 2019 and Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020.
FNCB Bancorp, Inc. Selected Financial Data
Sept 30, Jun 30, Mar 31, Dec 31, Sept 30, 2020 2020 2020 2019 2019 Per share data: Net income (fully diluted) $ 0.20 $ 0.20 $ 0.10 $ 0.17 $ 0.12 Cash dividends declared $ 0.055 $ 0.055 $ 0.055 $ 0.050 $ 0.050 Book value $ 7.41 $ 7.19 $ 6.84 $ 6.62 $ 6.57 Tangible book value $ 7.41 $ 7.19 $ 6.84 $ 6.62 $ 6.57 Market value: High $ 6.93 $ 7.19 $ 8.54 $ 8.86 $ 9.41 Low $ 5.08 $ 5.15 $ 5.10 $ 7.03 $ 7.03 Close $ 5.32 $ 5.75 $ 6.91 $ 8.45 $ 7.81 Common shares outstanding 20,243,589 20,208,607 20,174,250 20,171,408 20,169,492 Selected ratios: Annualized return on average assets 1.15 % 1.21 % 0.69 % 1.15 % 0.80 % Annualized return on average shareholders' equity 11.05 % 11.62 % 6.06 % 10.43 % 7.30 % Efficiency ratio 66.66 % 56.53 % 66.46 % 67.35 % 69.20 % Tier I leverage ratio (FNCB Bank) 10.17 % 10.60 % 11.09 % 10.36 % 11.01 % Total risk-based capital to risk-adjusted assets (FNCB Bank) 16.09 % 15.68 % 15.44 % 14.77 % 15.37 % Average shareholders' equity to average total assets 10.40 % 10.38 % 11.37 % 11.01 % 10.96 % Yield on earning assets (FTE) 3.48 % 3.64 % 4.05 % 4.16 % 4.22 % Cost of funds 0.59 % 0.69 % 0.89 % 0.98 % 1.11 % Net interest spread (FTE) 2.89 % 2.95 % 3.16 % 3.18 % 3.11 % Net interest margin (FTE) 3.04 % 3.12 % 3.35 % 3.38 % 3.32 % Total delinquent loans/total loans 0.81 % 0.89 % 1.41 % 1.46 % 1.16 % Allowance for loan and lease losses/total loans 1.28 % 1.16 % 1.19 % 1.08 % 1.11 % Non-performing loans/total loans 0.64 % 0.71 % 1.03 % 1.10 % 0.73 % Annualized net charge-offs(recoveries)/average loans (0.49 %) (0.12 %) 0.09 % 0.16 % 0.13 %
FNCB Bancorp, Inc. Year-to-Date Consolidated Statements of Income
Nine Months Ended September 30, (in thousands, except share data) 2020 2019 Interest income Interest and fees on loans $ 27,277 $ 28,313 Interest and dividends on securities U.S. government agencies 1,833 2,723 State and political subdivisions, tax-free 908 112 State and political subdivisions, taxable 2,241 2,545 Other securities 1,352 729 Total interest and dividends on securities 6,334 6,109 Interest on interest-bearing deposits in other banks 25 155 Total interest income 33,636 34,577 Interest expense Interest on deposits 4,327 6,283 Interest on borrowed funds Interest on Federal Reserve Bank discount window advances 32 - Interest on Federal Home Loan Bank of Pittsburgh advances 474 988 Interest on subordinated debentures - 24 Interest on junior subordinated debentures 200 331 Total interest on borrowed funds 706 1,343 Total interest expense 5,033 7,626 Net interest income before provision for loan and lease losses 28,603 26,951 Provision for loan and lease losses 2,056 830 Net interest income after provision for loan and lease losses 26,547 26,121 Non-interest income Deposit service charges 2,377 2,203 Net gain on the sale of securities 1,504 702 Net gain on equity securities 864 31 Net gain on the sale of mortgage loans held for sale 465 198 Net gain on the sale of other real estate owned 0 20 Loan-related fees 200 231 Income from bank-owned life insurance 366 394 Loan referral fees 338 74 Merchant services revenue 401 391 Other 650 680 Total non-interest income 7,165 4,924 Non-interest expense Salaries and employee benefits 11,262 11,634 Occupancy expense 1,520 1,454 Equipment expense 1,112 968 Data processing expense 2,188 2,312 Regulatory assessments 256 265 Bank shares tax 878 760 Professional fees 660 724 Other operating expenses 3,596 3,759 Total non-interest expense 21,472 21,876 Income before income taxes 12,240 9,169 Income tax expense 2,049 1,582 Net income $ 10,191 $ 7,587 Income per share Basic $ 0.50 $ 0.39 Diluted $ 0.50 $ 0.39 Cash dividends declared per common share $ 0.165 $ 0.150 Weighted average number of shares outstanding: Basic 20,199,933 19,678,031 Diluted 20,201,289 19,683,522
FNCB Bancorp, Inc. Quarter-to-Date Consolidated Statements of Income
Three Months Ended Sept 30, Jun 30, Mar 31, Dec 31, Sept 30, (in thousands, except share data) 2020 2020 2020 2019 2019 Interest income Interest and fees on loans $ 9,078 $ 9,060 $ 9,139 $ 9,505 $ 9,488 Interest and dividends on securities U.S. government agencies 494 589 750 822 924 State and political subdivisions, tax-free 463 388 57 37 37 State and political subdivisions, taxable 741 735 765 718 713 Other securities 525 415 412 364 314 Total interest and dividends on securities 2,223 2,127 1,984 1,941 1,988 Interest on interest-bearing deposits in other banks 1 3 21 33 30 Total interest income 11,302 11,190 11,144 11,479 11,506 Interest expense Interest on deposits 1,291 1,376 1,660 1,818 1,901 Interest on borrowed funds Interest on Federal Reserve Bank discount window advances 18 14 - - - Interest on Federal Home Loan Bank of Pittsburgh advances 95 160 219 253 448 Interest on junior subordinated debentures 52 60 88 99 106 Total interest on borrowed funds 165 234 307 352 554 Total interest expense 1,456 1,610 1,967 2,170 2,455 Net interest income before provision (credit) for loan and lease losses 9,846 9,580 9,177 9,309 9,051 Provision (credit) for loan and lease losses 74 831 1,151 (33 ) 637 Net interest income after provision (credit) for loan and lease losses 9,772 8,749 8,026 9,342 8,414 Non-interest income Deposit service charges 844 708 825 832 797 Net gain on the sale of securities 433 922 149 525 379 Net gain (loss) on equity securities 846 4 14 (2 ) 5 Net gain on the sale of mortgage loans held for sale 186 183 96 55 69 Net gain on the sale of other real estate owned - - - - 11 Loan-related fees 119 25 56 147 80 Income from bank-owned life insurance 118 119 129 126 134 Loan referral fees 76 214 48 681 54 Merchant services revenue 154 112 135 145 142 Other 194 214 242 187 160 Total non-interest income 2,970 2,501 1,694 2,696 1,831 Non-interest expense Salaries and employee benefits 3,835 3,498 3,929 3,884 3,911 Occupancy expense 500 466 554 494 460 Equipment expense 381 360 371 351 332 Data processing expense 754 709 725 801 742 Regulatory assessments 123 74 59 41 21 Bank shares tax 263 315 300 (194 ) 205 Professional fees 279 193 188 332 189 Other operating expenses 1,708 809 1,079 2,097 1,469 Total non-interest expense 7,843 6,424 7,205 7,806 7,329 Income before income taxes 4,899 4,826 2,515 4,232 2,916 Income tax expense 792 805 452 744 513 Net income $ 4,107 $ 4,021 $ 2,063 $ 3,488 $ 2,403 Income per share Basic $ 0.20 $ 0.20 $ 0.10 $ 0.17 $ 0.12 Diluted $ 0.20 $ 0.20 $ 0.10 $ 0.17 $ 0.12 Cash dividends declared per common share $ 0.055 $ 0.055 $ 0.055 $ 0.050 $ 0.050 Weighted average number of shares outstanding: Basic 20,235,384 20,191,527 20,172,498 20,170,241 20,168,529 Diluted 20,235,384 20,191,527 20,176,565 20,175,758 20,172,282
FNCB Bancorp, Inc. Consolidated Balance Sheets
Sept 30, Jun 30, Mar 31, Dec 31, Sept 30, (in thousands) 2020 2020 2020 2019 2019 Assets Cash and cash equivalents: Cash and due from banks $ 26,121 $ 20,089 $ 15,243 $ 22,861 $ 30,900 Interest-bearing deposits in other banks 78,895 81,390 30,304 11,704 6,611 Total cash and cash equivalents 105,016 101,479 45,547 34,565 37,511 Available-for-sale debt securities, at fair value 321,399 305,611 302,638 272,839 254,666 Equity securities, at fair value 2,719 938 934 920 922 Restricted stock, at cost 1,791 3,309 4,224 3,804 4,194 Loans held for sale 662 765 470 1,061 1,140 Loans, net of net deferred costs and unearned income 960,229 948,428 834,935 828,479 836,877 Allowance for loan and lease losses (12,269 ) (11,024 ) (9,907 ) (8,950 ) (9,315 ) Net loans 947,960 937,404 825,028 819,529 827,562 Bank premises and equipment, net 17,413 17,467 17,447 17,518 17,274 Accrued interest receivable 4,693 5,201 3,387 3,234 3,038 Bank-owned life insurance 31,596 31,478 31,359 31,230 31,104 Other real estate owned 58 85 85 289 412 Other assets 9,884 14,434 17,113 18,552 19,367 Total assets $ 1,443,191 $ 1,418,171 $ 1,248,232 $ 1,203,541 $ 1,197,190 Liabilities Deposits: Demand (non-interest-bearing) $ 274,110 $ 266,846 $ 181,223 $ 179,465 $ 179,025 Interest-bearing 998,128 902,781 820,339 822,244 785,035 Total deposits 1,272,238 1,169,627 1,001,562 1,001,709 964,060 Borrowed funds: Federal Reserve Bank discount window advances - 36,242 10,000 - - Federal Home Loan Bank of Pittsburgh advances - 42,809 77,934 46,909 79,458 Junior subordinated debentures 10,310 10,310 10,310 10,310 10,310 Total borrowed funds 10,310 89,361 98,244 57,219 89,768 Accrued interest payable 139 248 261 258 401 Other liabilities 10,458 13,578 10,233 10,748 10,394 Total liabilities 1,293,145 1,272,814 1,110,300 1,069,934 1,064,623 Shareholders' equity Preferred stock - - - - - Common stock 25,304 25,260 25,217 25,214 25,211 Additional paid-in capital 81,500 81,261 81,209 81,130 81,058 Retained earnings 31,044 28,057 25,155 24,207 21,733 Accumulated other comprehensive income 12,198 10,779 6,351 3,056 4,565 Total shareholders' equity 150,046 145,357 137,932 133,607 132,567 Total liabilities and shareholders’ equity $ 1,443,191 $ 1,418,171 $ 1,248,232 $ 1,203,541 $ 1,197,190
FNCB Bancorp, Inc. Summary Tax-equivalent Net Interest Income
Three Months Ended Sept 30, Jun 30, Mar 31, Dec 31, Sept 30, (dollars in thousands) 2020 2020 2020 2019 2019 Interest income Loans: Loans - taxable $ 8,688 $ 8,661 $ 8,693 $ 9,138 $ 9,170 Loans - tax-free 494 505 565 464 403 Total loans 9,182 9,166 9,258 9,602 9,573 Securities: Securities, taxable 1,760 1,739 1,927 1,904 1,951 Securities, tax-free 586 491 72 47 47 Total interest and dividends on securities 2,346 2,230 1,999 1,951 1,998 Interest-bearing deposits in other banks 1 3 21 33 30 Total interest income 11,529 11,399 11,278 11,586 11,601 Interest expense Deposits 1,291 1,376 1,660 1,818 1,901 Borrowed funds 165 234 307 352 554 Total interest expense 1,456 1,610 1,967 2,170 2,455 Net interest income $ 10,073 $ 9,789 $ 9,311 $ 9,416 $ 9,146 Average balances Earning assets: Loans: Loans - taxable $ 908,095 $ 875,119 $ 780,855 $ 791,577 $ 781,963 Loans - tax-free 44,826 46,836 52,615 42,954 37,638 Total loans 952,921 921,955 833,470 834,531 819,601 Securities: Securities, taxable 232,081 247,939 263,697 258,790 266,653 Securities, tax-free 69,973 56,220 7,698 4,598 4,611 Total securities 302,054 304,159 271,395 263,388 271,264 Interest-bearing deposits in other banks 70,601 27,858 8,396 16,841 10,007 Total interest-earning assets 1,325,576 1,253,972 1,113,261 1,114,760 1,100,872 Non-earning assets 96,722 87,189 90,387 90,245 90,807 Total assets $ 1,422,298 $ 1,341,161 $ 1,203,648 $ 1,205,005 $ 1,191,679 Interest-bearing liabilities: Deposits $ 943,754 $ 850,525 $ 821,216 $ 830,318 $ 794,971 Borrowed funds 51,629 81,813 61,843 57,682 85,927 Total interest-bearing liabilities 995,383 932,338 883,059 888,000 880,898 Demand deposits 267,636 258,609 172,132 172,935 169,416 Other liabilities 11,384 11,065 11,636 11,361 10,730 Shareholders' equity 147,895 139,149 136,821 132,709 130,635 Total liabilities and shareholders' equity $ 1,422,298 $ 1,341,161 $ 1,203,648 $ 1,205,005 $ 1,191,679 Yield/Cost Earning assets: Loans: Interest and fees on loans - taxable 3.83 % 3.96 % 4.45 % 4.62 % 4.69 % Interest and fees on loans - tax-free 4.41 % 4.31 % 4.29 % 4.32 % 4.28 % Total loans 3.85 % 3.98 % 4.44 % 4.60 % 4.67 % Securities: Securities, taxable 3.03 % 2.81 % 2.92 % 2.94 % 2.93 % Securities, tax-free 3.35 % 3.49 % 3.74 % 4.09 % 4.08 % Total securities 3.11 % 2.93 % 2.95 % 2.96 % 2.95 % Interest-bearing deposits in other banks 0.01 % 0.04 % 1.00 % 0.78 % 1.20 % Total earning assets 3.48 % 3.64 % 4.05 % 4.16 % 4.22 % Interest-bearing liabilities: Interest on deposits 0.55 % 0.65 % 0.81 % 0.88 % 0.96 % Interest on borrowed funds 1.28 % 1.14 % 1.99 % 2.44 % 2.58 % Total interest-bearing liabilities 0.59 % 0.69 % 0.89 % 0.98 % 1.11 % Net interest spread 2.89 % 2.95 % 3.16 % 3.18 % 3.11 % Net interest margin 3.04 % 3.12 % 3.35 % 3.38 % 3.32 %
FNCB Bancorp, Inc. Asset Quality Data
Sept 30, Jun 30, Mar 31, Dec 31, Sept 30, (in thousands) 2020 2020 2020 2019 2019 At period end Non-accrual loans, including non-accruing troubled debt restructured loans (TDRs) $ 6,176 $ 6,740 $ 8,576 $ 9,084 $ 6,119 Loans past due 90 days or more and still accruing - - - - - Total non-performing loans 6,176 6,740 8,576 9,084 6,119 Other real estate owned (OREO) 58 85 85 289 412 Other non-performing assets 1,900 1,900 1,900 1,900 1,900 Total non-performing assets $ 8,134 $ 8,725 $ 10,561 $ 11,273 $ 8,431 Accruing TDRs $ 7,216 $ 8,592 $ 7,729 $ 7,745 $ 7,828 For the three months ended Allowance for loan and lease losses Beginning balance $ 11,024 $ 9,907 $ 8,950 $ 9,315 $ 8,945 Loans charged-off 582 316 329 620 417 Recoveries of charged-off loans 1,753 602 135 288 150 Net (recoveries) charge-offs (1,171 ) (286 ) 194 332 267 Provision (credit) for loan and lease losses 74 831 1,151 (33 ) 637 Ending balance $ 12,269 $ 11,024 $ 9,907 $ 8,950 $ 9,315