FNCB Bancorp, Inc. Announces Third Quarter 2022 Net Income and Results of Operations

DUNMORE, Pa., Oct. 28, 2022 (GLOBE NEWSWIRE) — FNCB Bancorp, Inc. (NASDAQ: FNCB; www.fncb.com), the parent company of Dunmore-based FNCB Bank (the �Bank”), (collectively, “FNCB”) today reported net income of $5.4 million, or $0.28 per basic and diluted share, for the three months ended September 30, 2022, a decrease of $1.0 million, or 14.4%, compared to $6.4 million, or $0.31 per share for the same period of 2021. Higher non-interest expense, coupled with an increase in the provision for loan and lease losses, were the primary factors leading to the reduction in third quarter 2022 earnings. These reductions were partially offset by an increase in net interest income and non-interest income. For the nine months ended September 30, 2022, net income totaled $15.5 million, or $0.79 per basic and diluted share, a decrease of $1.9 million, or 10.8%, from $17.4 million, or $0.86 per basic or diluted share, for the same nine months of 2021. The reduction in earnings comparing the year-to-date periods of 2022 and 2021 was due primarily to increases in non-interest expense and the provision for loan and lease losses coupled with a decrease in non-interest income, which were partially mitigated by an increase in net interest income.

For the three and nine months ended September 30, 2022, the annualized return on average assets was 1.26% and 1.24%, respectively, compared to 1.58% and 1.52%, respectively, for the same periods of 2021. The annualized return on average equity was 16.95% and 15.04%, respectively for the three and nine months ended September 30, 2022, compared to 15.61% and 14.76% for the respective periods of 2021. FNCB declared and paid dividends to shareholders of common stock of $0.090 per share for the third quarter of 2022 and $0.240 per share for the nine months ended September 30, 2022, a 20.0% and 23.1% increase, respectively, compared to $0.075 per share and $0.195 per share for the third quarter and year-to-date period of 2021. 

Third quarter 2022 results as compared to the third quarter of 2021: 

• Third quarter net income was $5.4 million, or $0.28 per share, compared to $6.4 million, or $0.31 per share for the third quarter of 2021;
• Yield on earning assets (FTE) increased 24 basis points to 3.87% for the third quarter of 2022 from 3.63% for the same quarter of 2021, and improved 29 basis points on a linked-quarter basis from 3.58% for the second quarter of 2022;
• Cost of funds increased 36 basis points to 0.59% from 0.23% comparing the third quarters of 2022 and 2021, and increased 37 basis points on a linked-quarter basis from 0.22% for the second quarter of 2022;
• Net interest margin (FTE) contracted 3 basis points to 3.43% for the third quarter of 2022, compared to 3.46% for the same period of 2021, but widened 1 basis point on a linked-quarter basis from 3.42% for the second quarter of 2022;
• Efficiency ratio was 54.88% for the third quarter of 2022 compared to 51.32% for the third quarter of 2021. 

Summary financial position at September 30, 2022 as compared to December 31, 2021:

• Total assets increased $40.2 million, or 2.4%, to $1.705 billion at September 30, 2022 from $1.664 billion at December 31, 2021;
• Net loans and leases increased $130.4 million, or 13.5%, to $1.097 billion at September 30, 2022 from $976.0 million at December 31, 2021;
• Total deposits increased $47.6 million, or 3.3% to $1.503 billion at September 30, 2022 from $1.455 billion at December 31, 2021;
• Non-performing loans as a percentage of total loans improved to 0.25% at September 30, 2022 from 0.39% at December 31, 2021;
• The Bank was well capitalized with total risk-based capital and leverage ratios of 14.16% and 9.38%, respectively, at September 30, 2022, and 14.64% and 8.92%, respectively, at December 31, 2021.

“FNCB’s continued success reflects our ongoing efforts to execute on our strategic initiatives focused on adding quality earning assets and enhancing net interest income and non-interest revenue streams,” said FNCB President and CEO, Gerard A. Champi. “We continued to experience strong loan growth through the third quarter of 2022 as the new commercial equipment financing product offerings continued to exceed expectations. Additionally, at the end of the third quarter we announced the acquisition of Chiaro Investment Services, LLC which combined with FNCB’s Wealth Management team and is now operating under a new brand, 1st Investment Services. We are excited for this combination as we continue to deliver on our legacy of providing exceptional service to the clients while creating a meaningful impact to non-interest income. While the current economic environment may pose some challenges, we believe the strength of our balance sheet and asset quality positions will allow us to move forward and continue to create value for our shareholders over the long-term,” concluded Champi.

Summary Results 

Net interest income on a tax-equivalent basis increased $1.3 million, or 9.8%, to $14.3 million for the three months ended September 30, 2022 from $13.0 million for the comparable period of 2021. The improvement in tax-equivalent net interest income primarily reflected an increase in tax-equivalent interest income of $2.5 million or 18.2%, to $16.1 million for the third quarter of 2022 from $13.6 million for the same quarter of 2021, partially offset by an increase in interest expense of $1.2 million, or 191.9%, to $1.8 million from $0.6 million comparing the third quarter of 2022 and 2021, respectively. The increase in tax-equivalent interest income largely reflected higher volumes of earning assets, as total average earning assets increased $159.6 million, or 10.6%, to $1.659 billion for the three months ended September 30, 2022 from $1.500 billion for the same three months of 2021. Specifically, average total loans and leases increased $137.8 million, or 14.3%, to $1.103 billion for the third quarter of 2022 from $964.8 million for the same quarter of 2021, which was largely due to strong organic loan demand, FNCB’s new commercial equipment financing and leasing product offering and the acquisition of third-party originated loan pools. In addition, total securities averaged $552.0 million for the third quarter of 2022, an increase of $111.6 million, or 25.3%, from $440.4 million for the third quarter of 2021, reflecting the redeployment of excess liquidity in the fourth quarter of 2021 and first quarter of 2022. Net interest income was also favorably impacted by an increase in the tax-equivalent yield on average earning assets of 24 basis points to 3.87% for the three months ended September 30, 2022 from 3.63% for the same three months of 2021. The tax-equivalent yield on the investment portfolio increased 14 basis points to 2.66% for the third quarter of 2022 from 2.52% for the same quarter of 2021. In addition, the tax-equivalent yield on the loan portfolio increased 2 basis points to 4.49% for the third quarter of 2022 from 4.47% for the same quarter of 2021, as the effects of the 300-basis point increase in the prime rate more than offset a $1.5 million reduction in net origination fees earned on forgiven PPP loans. The $1.2 million, or 191.9%, increase in interest expense was primarily due to an increase in average interest-bearing liabilities, coupled with higher funding costs. Interest-bearing liabilities averaged $1.249 billion for the third quarter of 2022, an increase of $158.7 million, or 14.5%, from $1.091 billion for the same quarter of 2021. Specifically, average borrowed funds increased $120.1 million, or 1152.2%, to $130.5 million for the three months ended September 30, 2022 from $10.4 million for the three months ended September 30, 2021. The increase in borrowed funds was entirely due to an increase in utilization of advances through the FHLB of Pittsburgh. In addition, average interest-bearing deposits increased $38.6 million, or 3.6%, to $1.119 billion from $1.080 billion, comparing the third quarters of 2022 and 2021, respectively. Average interest-bearing demand deposits increased $32.6 million, or 4.2%, to $807.5 million for the third quarter of 2022 compared to $774.9 million for the same quarter of 2021, while average savings accounts increased $16.7 million, or 12.9%, to $146.5 million for the three months ended September 30, 2022 from $129.8 million for the comparable three months of 2021. Conversely, average time deposits decreased $10.7 million, or 6.1%, to $164.9 million for the three months ended September 30, 2022 from $175.6 million for the same three months of 2021. Also factoring into the increase in interest expense was a 36-basis point increase in the cost of funds to 0.59% for the three months ended September 30, 2022 from 0.23% for the same three months of 2021. Specifically, the average rate paid for interest-bearing deposits increased 14 basis points to 0.36% for the third quarter of 2022 from 0.22% for the same period of 2021. In addition, the cost of average borrowed funds increased 76 basis points to 2.56% for the third quarter of 2022 from 1.80% for the same quarter of 2021. FNCB’s tax-equivalent net interest margin compressed 3 basis points to 3.43% for the third quarter of 2022 from 3.46% for the same quarter of 2021. Additionally, the net interest spread declined 12 basis points to 3.28% for the three months ended September 30, 2022 from 3.40% for the same three months of 2021. The reduction in margin and spread largely reflected increases in funding costs, coupled with the decline in PPP loan origination fees recognized, comparing the third quarters of 2022 and 2021. On a linked-quarter basis, the tax-equivalent net interest margin widened 1 basis points from 3.42%, while the net interest rate spread declined 8 basis points from 3.36%, for the second quarter of 2022. 

On a year-to-date basis, tax-equivalent net interest income increased $4.3 million, or 11.7%, to $41.2 million for the nine months ended September 30, 2022 from $36.9 million for the comparable period of 2021. The improvement in year-to-date tax-equivalent net interest income was due to an increase in tax-equivalent interest income of $5.0 million, or 12.7%, partially offset by a $0.7 million, or 29.4%, increase in interest expense. The increase in tax-equivalent interest income largely reflected higher earning asset volumes, which were partially offset by lower earning asset yields. Earning assets averaged $1.615 billion for the nine months ended September 30, 2022, an increase of $212.8 million, or 15.2%, from $1.402 billion for the same period of 2021. Average loan balances increased $110.4 million, or 11.7%, to $1.057 billion for the nine months ended September 30, 2022, compared to $946.7 million for the same nine months of 2021. Average total security balances increased $143.4 million, or 35.4%, to $548.7 million for the nine months ended September 30, 2022 from $405.3 million for the same period of 2021. The tax equivalent yield on average earning assets, on a year-to-date basis, decreased 8 basis points to 3.64% in 2022 from 3.72% in 2021. Specifically, the tax-equivalent yield on the loan and investment portfolios decreased 11 basis points and 16 basis points, respectively, comparing the nine months ended September 30, 2022 and 2021. Similar to the quarterly period, loan yields were impacted by a $2.9 million, or 75.1%, reduction in net loan origination fees recognized on the forgiveness of PPP loans to $1.0 million for the nine months ended September 30, 2022 from $3.9 million for the same nine months of 2021. The $0.7 million, or 29.4%, increase in interest expense resulted primarily from an increase in average borrowed funds, partially offset by changes in funding costs. Borrowed funds averaged $97.6 million for the nine months ended September 30, 2022, an increase of $87.3 million, or 842.9%, from $10.3 million for the nine months ended September 30, 2021. Total interest-bearing deposits increased $77.6 million, or 7.5%, to $1.111 billion for the nine months ended September 30, 2022 from $1.033 billion for the same period of 2021. FNCB’s total cost of funds increased 3 basis points to 0.32% for the nine months ended September 30, 2022 from 0.29% for the same nine months of 2021. Despite the increase in overall funding costs, the cost of interest-bearing deposits decreased 7 basis points to 0.20% from 0.27%, respectively, comparing the nine months ended September 30, 2022 and 2021. Specifically, comparing the year-to-date periods of 2022 and 2021, the rates paid on time deposits, decreased 45 basis points, while the rates paid on interest-bearing demand deposits and savings deposits increased by 2 basis points each. Additionally, the cost of borrowed funds decreased 16 basis points to 1.68% for the nine months ended September 30, 2022 from 1.84% for the nine months ended September 30, 2021. On a year-to-date basis, the tax-equivalent net interest margin compressed 11 basis points to 3.40% in 2022 from 3.51% in 2021, while the tax-equivalent spread also compressed 11 basis points to 3.32% in 2022 from 3.43% in 2021.

For the three months ended September 30, 2022, non-interest income increased $299 thousand, or 16.2%, to $2.1 million from $1.8 million for the three months ended September 30, 2021, largely reflecting increases in deposit service charges, BOLI income, net gain on the sale of mortgages held for sale and other non-interest income, partially offset by decreases in net gains on equity securities. Deposit service charges increased $124 thousand, or 12.3%, to $1.1 million for the three months ended September 30, 2022, compared to $1.0 million for the three months ended September 30, 2021. BOLI income increased $61 thousand, or 43.9%, to $0.2 million for the three months ended September 20, 2022 from $0.1 million for the same period of 2021, due to the purchase of additional BOLI policies earlier in 2022. Other non-interest income increased $143 thousand, or 54.8%, to $404 thousand, compared to $261 thousand for the same three months of 2021, which was primarily due to an increase in referral fees from loan swap transactions. For the three months ended September 30, 2022, net gains on the sale of mortgages held for sale totaled $91 thousand, an increase of $50 thousand, or 121.9%, from $41 thousand recorded for the same quarter of 2021. These increases were partially offset by $70 thousand, or 44.9%, decline in net gains on equity securities to $86 thousand for the three months ended September 30, 2022, compared to $156 thousand for the same three months of 2021. For the nine months ended September 30, 2022, non-interest income decreased $737 thousand, or 11.7%, to $5.6 million from $6.3 million for the same period of 2021 due primarily to an unfavorable change in the market value of equity securities, reductions in net gains on the sale of available-for-sale securities and mortgage loans held for sale, and loan-related fees. Stock market volatility resulted in FNCB recording a net loss on equity securities of $121 thousand for the nine months ended September 30, 2022 compared to a net gain on equity securities of $556 thousand for the nine months ended September 30, 2021. Comparing the year-to-date periods ended September 30, 2022 and 2021, due to changing market conditions, FNCB also experienced reductions in the net gains on the sale of available-for-sale debt securities and mortgages held for sale, which decreased $248 thousand, or 116.4%, and $189 thousand, or 60.5%, respectively. Additionally, loan-related fees decreased $153 thousand, or 48.8%, to $161 thousand from $314 thousand comparing the nine months ended September 30, 2022 and 2021, respectively, which was largely due to a reduction in fees received on the servicing of loans under the Federal Reserve Bank’s Main Street Lending Program. In addition, non-interest income for the nine-month period of 2021 included non-recurring income of $426 thousand from a bank-owned life insurance death benefit claim. These decreases in non-interest income were partially offset by a $409 thousand, or 14.4%, increase in deposit service charges, to $3.2 million for the nine months ended September 30, 2022 compared to $2.8 million for the same period of 2021.

Non-interest expense increased $1.5 million, or 20.4%, to $9.0 million for the three months ended September 30, 2022 from $7.5 million for the three months ended September 30, 2021, which primarily reflected increases in salaries and employee benefits, the provision for off-balance sheet commitments, professional fees and other non-interest expenses. Salaries and employee benefits increased $559 thousand, or 13.9%, to $4.6 million for the third quarter of 2022 from $4.0 million for the same quarter of 2021, which primarily reflected additional personnel costs associated with the 1st Equipment Finance team of lending professionals. During the third quarter of 2022, FNCB recorded a provision for off-balance sheet commitments of $338 thousand, an increase of $423 thousand, or 497.6%, compared to a credit for off-balance sheet commitments of $85 thousand for the respective quarter of 2021, which primarily reflected high volumes of commercial construction commitments. Professional fees increased $144 thousand, or 94.1%, to $297 thousand from $153 thousand comparing the third quarters of 2022 and 2021, respectively. Comparing the three months ended September 30, 2022 and 2021, other operating expenses increased $167 thousand, or 26.1%, which was largely due to increases in correspondent bank charges and servicing costs associated with purchased loan pools. For the nine months ended September 30, 2022, non-interest expense increased $3.9 million or 17.9%, to $25.8 million compared to $21.9 million for the same nine- month period of 2021, primarily due to similar increases experienced for the quarterly period. Salaries and employee benefits increased $2.0 million, or 16.6%, to $13.8 million for the nine months ended September 30, 2022, compared to $11.8 million for the nine months ended September 30, 2021. The provision for off-balance sheet commitments increased $674 thousand, or 316.4%, to $461 thousand for the nine months ended September 30, 2022, compared to a credit of $213 thousand recorded for the same nine-month period of 2021. Professional fees increased $313 thousand, or 59.7%, to $837 thousand for the nine months ended September 30, 2022 from $534 thousand for the same nine months of 2021, while other operating expenses increased $228 thousand, or 12.3%, to $2.1 million from $1.8 million, respectively, comparing the nine months ended September 30, 2022 and 2021. Additionally, for the year-to-date period, data processing expense increased $381 thousand, or 14.3%, to $3.0 million in 2022 from $2.6 million in 2021, which was largely due to additional costs associated with the new retail mortgage and commercial lending platforms.

Asset Quality

FNCB’s asset quality remained favorable through third quarter 2022, as total non-performing loans decreased $1.7 million, or 27.9%, to $4.7 million at September 30, 2022, representing 0.25% of total loans and leases, gross at September 30, 2022 from $3.9 million, or 0.39% of total loans and leases, gross at December 31, 2021. Year-over-year, non-performing loans decreased $1.7 million, or 39.0%, from $4.6 million, or 0.47% of total loans, gross, at September 30, 2021. FNCB’s loan delinquency rate (total delinquent loans as a percentage of total loans, gross) decreased to 0.43% at September 30, 2022 compared to 0.55% at December 31, 2021, and 0.61% at September 30, 2021. FNCB recorded a provision for loan and lease losses of $513 thousand for the third quarter of 2022 compared to a release of reserves of $513 thousand for the same quarter of 2021. For the nine months ended September 30, 2022, the provision for loan and lease losses totaled $1.3 million compared to a release of reserves of $172 thousand for the same period of 2021. The increase was primarily attributable to increases in loan and lease volumes. The allowance for loan and lease losses was $13.8 million, or 1.24% of total loans and leases, gross, at September 30, 2022, compared to $12.4 million, or 1.27% of total loans and leases, gross, at December 31, 2021 and $12.0 million, or 1.25% of total loans and leases, gross, at September 30, 2021.

Financial Condition

Total assets increased $40.2 million, or 2.4%, to $1.705 billion at September 30, 2022 from $1.664 billion at December 31, 2021. The change in total assets primarily reflected increases in loans and leases, net of ALLL, partially offset by decreases in cash and cash equivalents and available-for-sale debt securities. Loans and leases, net of the allowance for loan and lease losses, increased $130.4 million, or 13.5%, to $1.097 billion at September 30, 2022 from $967.0 million at December 31, 2021. Increases were experienced across all loan categories, which reflected originations from the new commercial equipment financing product offerings, strong organic loan demand and the purchase of third-party originated loans and loan pools. Cash and cash equivalents decreased $64.9 million, or 65.5%, to $34.1 million at September 30, 2022 from $99.0 million at December 31, 2021. Available-for-sale debt securities decreased $50.1 million, or 9.6%, to $472.5 million at September 30, 2022 from $522.6 million at December 31, 2021. Total deposits increased $47.6 million, or 3.3%, to $1.503 billion at September 30, 2022 from $1.455 billion at December 31, 2021. Total borrowed funds increased $45.7 million to $76.0 million at September 30, 2022 from $30.3 million at December 31, 2021. The increase was entirely due to increased utilization of advances through the FHLB of Pittsburgh. 

Total shareholders’ equity decreased $50.9 million, or 31.3%, to $111.6 million at September 30, 2022 from $162.5 million at December 31, 2021. The decrease in capital was primarily due to an accumulated other comprehensive loss of $52.1 million at September 30, 2022, compared to accumulated other comprehensive income of $6.3 million at December 31, 2021. This $58.4 million reduction was related primarily to the depreciation in the fair value of FNCB’s available-for-sale debt securities, net of deferred taxes, due to the dramatic increase in market interest rates. Also impacting capital was net income for the nine months ended September 30, 2022 of $15.5 million, partially offset by $3.6 million utilized for the repurchase of common shares under a board authorized stock repurchase program and $4.7 million in dividends declared and paid for the nine months ended September 30, 2022. Tangible book value was $5.67 per share at September 30, 2022, compared to $8.13 per share at December 31, 2021, reflecting the reduction in fair value of available-for-sale securities. FNCB Bank was considered well capitalized with total risk-based capital and Tier 1 leverage ratios of 14.16% and 9.38%, respectively, at September 30, 2022, and 14.64% and 8.92%, respectively, at December 31, 2021.

Availability of Filings

Copies of FNCB’s most recent Annual Report on Form 10-K and Quarterly Reports on form 10-Q will be provided upon request from: Shareholder Relations, FNCB Bancorp, Inc., 102 East Drinker Street, Dunmore, PA 18512 or by calling (570) 348-6419. FNCB’s SEC filings including its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q are also available free of charge on the Investor Relations page of FNCB’s website, www.fncb.com, and on the SEC website at: http://www.sec.gov/edgar/searchedgar/companysearch.html

About FNCB Bancorp, Inc.:

FNCB Bancorp, Inc. is the bank holding company of FNCB Bank. Locally-based for over 112 years, FNCB Bank continues as a premier community bank in Northeastern Pennsylvania – offering a full suite of personal, small business and commercial banking solutions with industry-leading mobile, online and in-branch products and services. FNCB currently operates through 16 community offices located in Lackawanna, Luzerne and Wayne Counties and remains dedicated to making its customers’ banking experience simply better. For more information about FNCB, visit www.fncb.com.

INVESTOR CONTACT:

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

FNCB may from time to time make written or oral “forward-looking statements,” including statements contained in our filings with the Securities and Exchange Commission (“SEC”), in our reports to shareholders, and in our other communications, which are made in good faith by us pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995.

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

FNCB cautions that the foregoing list of important factors is not all inclusive. Readers are also cautioned not to place undue reliance on any forward-looking statements, which reflect management’s analysis only as of the date of this report, even if subsequently made available by FNCB on its website or otherwise. FNCB does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of FNCB to reflect events or circumstances occurring after the date of this press release. Readers should carefully review the risk factors described in the Annual Report and other documents that FNCB periodically files with the SEC, including its Form 10-K for the year ended December 31, 2021 and Form 10-Q for the quarters ended March 31, 2022 and June 31, 2022.

FNCB Bancorp, Inc.
Selected Financial Data

		Sept 30,				June 30,				Mar 31,				Dec 31,				Sept 30,
		2022				2022				2022				2021				2021
Per share data:
Net income (fully diluted)		$	0.28			$	0.29			$	0.22			$	0.20			$	0.31
Cash dividends declared		$	0.090			$	0.075			$	0.075			$	0.075			$	0.075
Book value		$	5.67			$	6.38			$	7.03			$	8.13			$	8.10
Tangible book value		$	5.67			$	6.38			$	7.03			$	8.13			$	8.10
Market value:
High		$	8.65			$	10.02			$	10.15			$	9.40			$	8.35
Low		$	7.49			$	7.36			$	8.67			$	8.21			$	7.17
Close		$	7.51			$	8.00			$	9.49			$	9.24			$	8.23
Common shares outstanding			19,680,474				19,675,557				19,683,671				19,989,875				19,985,837
Selected ratios:
Annualized return on average assets			1.26	%			1.37	%			1.08	%			0.94	%			1.58	%
Annualized return on average shareholders’ equity			16.95	%			17.57	%			11.31	%			9.82	%			15.61	%
Efficiency ratio			54.88	%			53.35	%			58.12	%			61.75	%			51.32	%
Tier I leverage ratio (FNCB Bank)			9.38	%			9.32	%			9.30	%			8.92	%			9.80	%
Total risk-based capital to risk-adjusted assets (FNCB Bank)			14.16	%			13.90	%			14.10	%			14.64	%			15.91	%
Average shareholders’ equity to average total assets			7.44	%			7.80	%			9.54	%			9.61	%			10.14	%
Yield on earning assets (FTE)			3.87	%			3.58	%			3.45	%			3.41	%			3.63	%
Cost of funds			0.59	%			0.22	%			0.14	%			0.16	%			0.23	%
Net interest spread (FTE)			3.28	%			3.36	%			3.31	%			3.25	%			3.40	%
Net interest margin (FTE)			3.43	%			3.42	%			3.35	%			3.29	%			3.46	%
Total delinquent loans/total loans			0.43	%			0.39	%			0.55	%			0.55	%			0.61	%
Allowance for loan and lease losses/total loans			1.24	%			1.23	%			1.27	%			1.27	%			1.25	%
Non-performing loans/total loans			0.25	%			0.26	%			0.37	%			0.39	%			0.47	%
Annualized net (recoveries) charge-offs /average loans			0.03	%			(0.07	%)			0.02	%			(0.03	%)			(0.10	%)

FNCB Bancorp, Inc.
Year-to-Date Consolidated Statements of Income

		Nine Months Ended
		September 30,
(in thousands, except share data)		2022				2021
Interest income
Interest and fees on loans and leases		$	33,472			$	30,724
Interest and dividends on securities:
Taxable			7,425				5,956
Tax-exempt			1,961				1,519
Dividends			353				176
Total interest and dividends on securities			9,739				7,651
Interest on interest-bearing deposits in other banks			34				35
Total interest income			43,245				38,410
Interest expense
Interest on deposits			1,671				2,098
Interest on borrowed funds
Federal Home Loan Bank of Pittsburgh advances			1,009				–
Junior subordinated debentures			220				143
Total interest on borrowed funds			1,229				143
Total interest expense			2,900				2,241
Net interest income before provision (credit) for loan and lease losses			40,345				36,169
Provision (credit) for loan and lease losses			1,334				(172	)
Net interest income after provision (credit) for loan and lease losses			39,011				36,341
Non-interest income
Deposit service charges			3,248				2,839
Net (loss) gain on the sale of available-for-sale debt securities			(35	)			213
Net (loss) gain on equity securities			(121	)			556
Net gain on the sale of mortgage loans held for sale			123				312
Loan-related fees			161				314
Income from bank-owned life insurance			542				402
Bank-owned life insurance settlement			–				426
Merchant services revenue			544				453
Other			1,126				810
Total non-interest income			5,588				6,325
Non-interest expense
Salaries and employee benefits			13,758				11,796
Occupancy expense			1,512				1,490
Equipment expense			954				1,005
Advertising expense			561				491
Data processing expense			3,046				2,665
Regulatory assessments			651				460
Bank shares tax			1,091				1,009
Professional fees			837				524
Insurance expense			477				425
Provision (credit) for off-balance sheet commitments			461				(213	)
Other operating expenses			2,460				2,245
Total non-interest expense			25,808				21,897
Income before income taxes			18,791				20,769
Income tax expense			3,265				3,356
Net income		$	15,526			$	17,413
Income per share
Basic		$	0.79			$	0.86
Diluted		$	0.79			$	0.86
Cash dividends declared per common share		$	0.240			$	0.195
Weighted average number of shares outstanding:
Basic			19,765,814				20,152,934
Diluted			19,786,855				20,164,331

FNCB Bancorp, Inc.
Quarter-to-Date Consolidated Statements of Income

		Three Months Ended
		Sept 30,				June 30,				Mar 31,				Dec 31,				Sept 30,
(in thousands, except share data)		2022				2022				2022				2021				2021
Interest income
Interest and fees on loans and leases		$	12,270			$	11,100			$	10,102			$	10,325			$	10,696
Interest and dividends on securities
Taxable			2,633				2,402				2,390				2,281				2,070
Tax-exempt			691				658				612				567				517
Dividends			163				112				78				63				55
Total interest and dividends on securities			3,487				3,172				3,080				2,911				2,642
Interest on interest-bearing deposits in other banks			19				8				7				53				31
Total interest income			15,776				14,280				13,189				13,289				13,369
Interest expense
Interest on deposits			1,001				346				324				410				582
Interest on borrowed funds
Federal Home Loan Bank of Pittsburgh advances			736				242				31				6				–
Junior subordinated debentures			99				70				51				48				47
Total interest on borrowed funds			835				312				82				54				47
Total interest expense			1,836				658				406				464				629
Net interest income before provision (credit) for loan and lease losses			13,940				13,622				12,783				12,825				12,740
Provision (credit) for loan and lease losses			513				62				759				338				(513	)
Net interest income after provision (credit) for loan and lease losses			13,427				13,560				12,024				12,487				13,253
Non-interest income
Deposit service charges			1,133				1,065				1,050				1,038				1,009
Net (loss) gain on the sale of available-for-sale debt securities			–				(35	)			–				–				–
Net (loss) gain on equity securities			86				(82	)			(125	)			145				156
Net gain on the sale of mortgage loans held for sale			91				32				–				40				41
Loan-related fees			54				50				57				76				77
Income from bank-owned life insurance			200				197				145				139				139
Merchant services revenue			173				172				199				140				159
Other			404				258				464				365				261
Total non-interest income			2,141				1,657				1,790				1,943				1,842
Non-interest expense
Salaries and employee benefits			4,581				4,519				4,658				4,901				4,022
Occupancy expense			517				447				548				549				450
Equipment expense			314				316				324				333				319
Advertising expense			202				227				132				221				160
Data processing expense			974				1,009				1,063				1,024				961
Regulatory assessments			230				196				225				149				160
Bank shares tax			375				375				341				(34	)			352
Professional fees			297				213				327				150				153
Insurance expense			167				155				154				156				137
Provision (credit) for off-balance sheet commitments			338				75				48				183				(85	)
Other operating expenses			1,037				700				724				1,540				701
Total non-interest expense			9,032				8,232				8,544				9,172				7,500
Income before income taxes			6,536				6,985				5,270				5,258				7,595
Income tax expense			1,101				1,247				917				1,300				1,244
Net income		$	5,435			$	5,738			$	4,353			$	3,958			$	6,351
Income per share
Basic		$	0.28			$	0.29			$	0.22			$	0.20			$	0.31
Diluted		$	0.28			$	0.29			$	0.22			$	0.20			$	0.31
Cash dividends declared per common share		$	0.090			$	0.075			$	0.075			$	0.075			$	0.075
Weighted average number of shares outstanding:
Basic			19,687,766				19,677,109				19,935,288				19,988,272				19,997,021
Diluted			19,697,047				19,694,125				19,972,113				20,015,776				20,009,387

FNCB Bancorp, Inc.
Consolidated Balance Sheets

		Sept 30,				June 30,				Mar 31,				Dec 31,				Sept 30,
(in thousands)		2022				2022				2022				2021				2021
Assets
Cash and cash equivalents:
Cash and due from banks		$	29,231			$	23,355			$	19,383			$	16,651			$	24,612
Interest-bearing deposits in other banks			4,896				4,037				4,719				82,369				149,581
Total cash and cash equivalents			34,127				27,392				24,102				99,020				174,193
Available-for-sale debt securities			472,451				495,604				514,133				522,566				470,323
Equity securities, at fair value			5,496				5,307				5,018				4,922				4,777
Restricted stock, at cost			4,838				5,787				4,020				1,911				1,826
Loans held for sale			248				667				–				–				491
Loans and leases, net of deferred loan fees and costs and unearned income			1,111,230				1,088,748				1,036,400				979,439				958,408
Allowance for loan and lease losses			(13,819	)			(13,381	)			(13,129	)			(12,416	)			(12,018	)
Net loans and leases			1,097,411				1,075,367				1,023,271				967,023				946,390
Bank premises and equipment, net			15,526				15,619				15,895				16,082				17,269
Accrued interest receivable			5,629				5,103				4,870				4,643				4,593
Bank-owned life insurance			37,036				36,836				36,639				33,494				33,355
Other assets			31,754				25,403				21,602				14,662				12,674
Total assets		$	1,704,516			$	1,693,085			$	1,649,550			$	1,664,323			$	1,665,891
Liabilities
Deposits:
Demand (non-interest-bearing)		$	320,879			$	317,725			$	317,541			$	320,089			$	321,952
Interest-bearing			1,181,747				1,109,219				1,094,052				1,134,939				1,160,114
Total deposits			1,502,626				1,426,944				1,411,593				1,455,028				1,482,066
Borrowed funds			76,010				128,360				87,260				30,310				10,310
Accrued interest payable			101				85				57				49				56
Other liabilities			14,187				12,184				12,251				16,479				11,509
Total liabilities			1,592,924				1,567,573				1,511,161				1,501,866				1,503,941
Shareholders’ equity
Preferred stock			–				–				–				–				–
Common stock			24,600				24,594				24,604				24,987				24,982
Additional paid-in capital			77,381				77,233				77,642				80,128				80,000
Retained earnings			61,737				58,085				53,834				50,990				48,541
Accumulated other comprehensive income			(52,126	)			(34,400	)			(17,691	)			6,352				8,427
Total shareholders’ equity			111,592				125,512				138,389				162,457				161,950
Total liabilities and shareholders’ equity		$	1,704,516			$	1,693,085			$	1,649,550			$	1,664,323			$	1,665,891

FNCB Bancorp, Inc.
Summary Tax-equivalent Net Interest Income

		Three Months Ended
		Sept 30,				June 30,				Mar 31,				Dec 31,				Sept 30,
(dollars in thousands)		2022				2022				2022				2021				2021
Interest income
Loans:
Loans – taxable		$	11,870			$	10,743			$	9,755			$	9,983			$	10,364
Loans – tax-free			506				452				439				433				420
Total loans			12,376				11,195				10,194				10,416				10,784
Securities:
Securities, taxable			2,796				2,514				2,468				2,344				2,125
Securities, tax-free			875				833				775				719				654
Total interest and dividends on securities			3,671				3,347				3,243				3,063				2,779
Interest-bearing deposits in other banks			19				8				7				53				31
Total interest income			16,066				14,550				13,444				13,532				13,594
Interest expense
Deposits			1,001				346				324				410				582
Borrowed funds			835				312				82				54				47
Total interest expense			1,836				658				406				464				629
Net interest income		$	14,230			$	13,892			$	13,038			$	13,068			$	12,965
Average balances
Earning assets:
Loans:
Loans – taxable		$	1,045,474			$	1,013,899			$	946,201			$	915,693			$	921,648
Loans – tax-free			57,099				53,471				54,096				45,920				43,091
Total loans			1,102,573				1,067,370				1,000,297				961,613				964,739
Securities:
Securities, taxable			438,339				442,998				437,955				409,210				357,684
Securities, tax-free			113,629				109,948				103,086				92,685				82,706
Total securities			551,968				552,946				541,041				501,895				440,390
Interest-bearing deposits in other banks			4,634				4,488				17,464				125,609				94,434
Total interest-earning assets			1,659,175				1,624,804				1,558,802				1,589,117				1,499,563
Non-earning assets			51,847				55,303				78,394				91,968				105,912
Total assets		$	1,711,022			$	1,680,107			$	1,637,196			$	1,681,085			$	1,593,014
Interest-bearing liabilities:
Deposits		$	1,118,909			$	1,101,947			$	1,111,671			$	1,163,920			$	1,080,312
Borrowed funds			130,481				113,932				47,346				17,810				10,419
Total interest-bearing liabilities			1,249,390				1,215,879				1,159,017				1,181,100				1,090,731
Demand deposits			318,656				319,505				308,830				322,536				325,571
Other liabilities			15,742				13,730				13,234				15,846				15,258
Shareholders’ equity			127,234				130,993				156,115				161,603				161,454
Total liabilities and shareholders’ equity		$	1,711,022			$	1,680,107			$	1,637,196			$	1,681,085			$	1,593,014
Yield/Cost
Earning assets:
Loans:
Interest and fees on loans – taxable			4.54	%			4.24	%			4.12	%			4.36	%			4.50	%
Interest and fees on loans – tax-free			3.54	%			3.38	%			3.25	%			3.77	%			3.90	%
Total loans			4.49	%			4.20	%			4.08	%			4.33	%			4.47	%
Securities:
Securities, taxable			2.55	%			2.27	%			2.25	%			2.29	%			2.38	%
Securities, tax-free			3.08	%			3.03	%			3.01	%			3.10	%			3.16	%
Total securities			2.66	%			2.42	%			2.40	%			2.44	%			2.52	%
Interest-bearing deposits in other banks			1.64	%			0.71	%			0.16	%			0.17	%			0.13	%
Total earning assets			3.87	%			3.58	%			3.45	%			3.41	%			3.63	%
Interest-bearing liabilities:
Interest on deposits			0.36	%			0.13	%			0.12	%			0.14	%			0.22	%
Interest on borrowed funds			2.56	%			1.10	%			0.69	%			1.21	%			1.80	%
Total interest-bearing liabilities			0.59	%			0.22	%			0.14	%			0.16	%			0.23	%
Net interest spread			3.28	%			3.36	%			3.31	%			3.25	%			3.40	%
Net interest margin			3.43	%			3.42	%			3.35	%			3.29	%			3.46	%

FNCB Bancorp, Inc.
Asset Quality Data

		Sept 30,				June 30,				Mar 31,				Dec 31,				Sept 30,
(in thousands)		2022				2022				2022				2021				2021
At period end
Non-accrual loans, including non-accruing troubled debt restructured loans (TDRs)		$	2,654			$	2,764			$	3,864			$	3,863			$	4,475
Loans past due 90 days or more and still accruing			74				14				–				–				–
Total non-performing loans			2,728				2,778				3,864				3,863				4,475
Other real estate owned (OREO)			228				228				228				920				54
Other non-performing assets			1,773				1,773				1,773				1,773				1,773
Total non-performing assets		$	4,729			$	4,779			$	5,865			$	6,556			$	6,302
Accruing TDRs		$	6,201			$	6,329			$	6,455			$	6,666			$	6,666
For the three months ended
Allowance for loan and lease losses
Beginning balance		$	13,381			$	13,129			$	12,416			$	12,018			$	12,285
Loans charged-off			411				303				95				34				255
Recoveries of charged-off loans			336				493				49				94				501
Net (recoveries) charge-offs			75				(190	)			46				(60	)			(246	)
Provision (credit) for loan and lease losses			513				62				759				338				(513	)
Ending balance		$	13,819			$	13,381			$	13,129			$	12,416			$	12,018