0001437749-20-022108.txt : 20201030 0001437749-20-022108.hdr.sgml : 20201030 20201030160652 ACCESSION NUMBER: 0001437749-20-022108 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 15 CONFORMED PERIOD OF REPORT: 20201030 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20201030 DATE AS OF CHANGE: 20201030 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FNCB Bancorp, Inc. CENTRAL INDEX KEY: 0001035976 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 232900790 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-38408 FILM NUMBER: 201277379 BUSINESS ADDRESS: STREET 1: 102 EAST DRINKER STREET CITY: DUMORE STATE: PA ZIP: 18512 BUSINESS PHONE: 7173486438 MAIL ADDRESS: STREET 1: 102 EAST DRINKER STREET CITY: DUNMORE STATE: PA ZIP: 18512 FORMER COMPANY: FORMER CONFORMED NAME: FIRST NATIONAL COMMUNITY BANCORP INC DATE OF NAME CHANGE: 19970318 8-K 1 fncb20200817b_8k.htm FORM 8-K fncb20190415_8k.htm
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): October 30, 2020
FNCB Bancorp, Inc.
(Exact name of registrant as specified in its Charter)
 
Pennsylvania
 
000-53869
 
23-2900790
(State or other jurisdiction
 
(Commission file number)
 
(IRS Employer 
of incorporation)
 
 
 
Identification No.)
 
102 E. Drinker St., Dunmore, PA, 18512
(Address of Principal Executive Offices) (Zip Code)
 
Registrant’s telephone number, including area code: 570.346.7667
 
N/A
(Former Name or Former Address, if Changed Since Last Report)
 
Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (See General Instruction A.2. below):
 
            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common stock, $1.25 par value
FNCB
NASDAQ Capital Market
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).  Emerging growth company
 
 
If an emerging growth company, indicated by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
 
 

 
 
Item 2.02
Results of Operations and Financial Condition.
 
On October 30, 2020, FNCB Bancorp, Inc. issued a press release announcing its unaudited results of operations for the three and nine months ended September 30, 2020 and financial condition as of September 30, 2020. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. The information in this Item 2.02 shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into a filing under the Securities Act of 1933, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
 
 
Item 9.01
Financial Statements and Exhibits
 
Exhibits:
 
 
104      Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
 
 

 
 
Signature
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
FNCB BANCORP, INC.
 
 
 
 
 
By:
/s/ James M. Bone, Jr., CPA
 
 
James M. Bone, Jr., CPA
 
 
Executive Vice President and Chief Financial Officer
 
 
Dated: October 30, 2020
 
 
 

EX-99.1 2 ex_200138.htm EXHIBIT 99.1 ex_133424.htm

Exhibit 99.1

 

fncbprheader.jpg

 

FOR IMMEDIATE RELEASE

 

  

FNCB Bancorp, Inc. Announces 71% Increase in Third Quarter 2020 Net Income

 

Dunmore, Pa., October 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. 

   

 

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"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.

 

 

 
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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.  

 

3

 

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 to $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.

 

 

 

4

 

 

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 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.

 

 

5

 

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 %

 

6

 

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  

 

7

 

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  

 

8

 

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  

 

9

 

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 %

 

10

 

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  

 

11

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Document And Entity Information
Oct. 30, 2020
Document Information [Line Items]  
Entity, Registrant Name FNCB Bancorp, Inc.
Document, Type 8-K
Document, Period End Date Oct. 30, 2020
Entity, Incorporation, State or Country Code PA
Entity, File Number 000-53869
Entity, Tax Identification Number 23-2900790
Entity, Address, Address Line One 102 E. Drinker St.
Entity, Address, City or Town Dunmore
Entity, Address, State or Province PA
Entity, Address, Postal Zip Code 18512
City Area Code 570
Local Phone Number 346.7667
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common stock
Trading Symbol FNCB
Security Exchange Name NASDAQ
Entity, Emerging Growth Company false
Amendment Flag false
Entity, Central Index Key 0001035976
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