Note 9 - Regulatory Matters Subsequent Event

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Regulatory Capital Requirements under Banking Regulations [Text Block]

Note

9

. Regulatory Matters/Subsequent Event

On

January 28, 2019,

FNCB announced that it had commenced a public offering of shares of its common stock in a firm commitment underwritten offering. The offering closed on

February 8, 2019

and FNCB issued

3,285,550

shares of its common stock, which included

428,550

shares issued upon the exercise in full of the option to purchase additional shares granted to underwriters, at an offering price of

$7.00

per share, less an underwriting discount of

$0.35

per share. FNCB received net proceeds after deducting the underwriting discount and offering expenses of

$21.3

million. Following the receipt of the proceeds, during the

first

quarter of

2019,

FNCB made a capital investment in FNCB Bank, its wholly-owned subsidiary of

$17.8

million.

FNCB’s ability to pay dividends to its shareholders is largely dependent on the Bank’s ability to pay dividends to FNCB. Bank regulations limit the amount of dividends that

may

be paid without prior approval of the Bank’s regulatory agency. For the

three

months ended

March 31, 2019 

and

2018,

cash dividends declared and paid by FNCB were

$0.05

 per share and

$0.04

 per share, respectively. FNCB offers a Dividend Reinvestment and Stock Purchase Plan (“DRP”) to its shareholders. Effective

July 1, 2017,

shares acquired under the DRP were purchased in open market transactions. Previously, FNCB issued shares under the DRP from authorized but unissued common shares. In

January 2018,

FNCB elected to continue purchasing dividend reinvestment shares in open market transactions, but decided to issue shares from authorized but unissued common shares for optional cash purchases. Common shares issued under the DRP for the

three

months ended

March 31, 2019 

and

2018

 totaled

1,640

and

8,637

, respectively. Additionally, on

April 24, 2019,

FNCB declared a cash dividend for the

second

quarter of

2019

 of

$0.05

 per share, which is payable on

June 17, 2019

 

to shareholders of record as of

June 3, 2019

.

FNCB and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material adverse effect on FNCB’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, FNCB and the Bank must meet specific capital guidelines that involve quantitative measures of FNCB's and the Bank's assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. FNCB's and the Bank's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.  Management believes, as of

March 31, 2019,

that FNCB and the Bank meet all applicable capital adequacy requirements.

Current quantitative measures established by regulation to ensure capital adequacy require FNCB to maintain minimum amounts and ratios (set forth in the tables below) of Total capital, Tier I capital, and Tier I common equity (as defined in the regulations) to risk-weighted assets (as defined), and of Tier I capital (as defined) to average assets (as defined).

The following tables present summary information regarding FNCB’s and the Bank’s risk-based capital and related ratios at

March 31, 2019 

and

December 31, 2018:

	Consolidated					Bank Only					Minimum Required For Capital Adequacy Purposes			Minimum Required For Capital Adequacy Purposes with Conservation Buffer			Minimum Required To Be Well Capitalized Under Prompt Corrective Action Regulations*
(in thousands)	Amount		Ratio			Amount		Ratio			Ratio			Ratio			Ratio
March 31, 2019
Total capital (to risk-weighted assets)	$	138,537		15.06	%	$	132,980		14.49	%		8.00	%		10.50	%		10.00	%
Tier I capital (to risk-weighted assets)		129,009		14.03	%		123,452		13.45	%		6.00	%		8.50	%		8.00	%
Tier I common equity (to risk-weighted assets)		119,009		12.94	%		123,452		13.45	%		4.50	%		7.00	%		6.50	%
Tier I capital (to average assets)		129,009		10.45	%		123,452		10.07	%		4.00	%		4.00	%		5.00	%
Total risk-weighted assets		919,672					917,523
Total average assets		1,234,306					1,226,302

	Consolidated					Bank Only					Minimum Required For Capital Adequacy Purposes			Minimum Required For Capital Adequacy Purposes with Conservation Buffer			Minimum Required To Be Well Capitalized Under Prompt Corrective Action Regulations*
(in thousands)	Amount		Ratio			Amount		Ratio			Ratio			Ratio			Ratio
December 31, 2018
Total capital (to risk-weighted assets)	$	117,213		12.69	%	$	112,128		12.17	%		8.00	%		9.875	%		10.00	%
Tier I capital (to risk-weighted assets)		105,439		11.42	%		102,354		11.11	%		6.00	%		7.875	%		8.00	%
Tier I common equity (to risk-weighted assets)		96,692		10.47	%		102,354		11.11	%		4.50	%		6.375	%		6.50	%
Tier I capital (to average assets)		105,439		8.50	%		102,354		8.27	%		4.00	%		4.000	%		5.00	%
Total risk-weighted assets		923,441					921,126
Total average assets		1,239,898					1,238,347

*Applies to the Bank only.