FNCB Bancorp, Inc. (NASDAQ: FNCB; www.fncb.com), the parent company
of Dunmore-based FNCB Bank (the “Bank” and collectively,
“FNCB”) today reported net income of $13.0 million, or $0.66
per diluted shares, for 2023, compared to $20.4 million or $1.03
per diluted share, for 2022. The 36.5% reduction in net income was
primarily due to a $6.1 million decrease in net interest income,
which largely reflected higher deposit costs and greater
utilization of wholesale funds. Also impacting year-to-date net
income was a $1.3 million decrease in non-interest income and
a $1.4 million increase in non-interest expense. These reductions
to earnings were partially offset by a $1.4 million decrease in
income tax expense. For the three months ended December 31,
2023, net income was $3.3 million, or $0.17 per diluted share,
a decrease of $1.6 million, or 31.8%, compared to $4.9
million, or $0.24 per diluted share for the same three-month period
of 2022. Similar to the year-to-date period, reductions in net
interest income and non-interest income, coupled with an
increase in non-interest expenses, were the primary factors
leading to the reduction in fourth quarter
2023 earnings.
Annualized return on average assets and the
return on average shareholders' equity were 0.72% and 10.59%,
respectively, for 2023, compared to 1.21% and 15.55%, respectively,
for 2022. For the three months ended December 31, 2023,
annualized return on average assets and annualized return on
average shareholders' equity were 0.73% and 11.21% respectively.
Comparatively, annualized return on average assets was 1.13% and
annualized return on average shareholders' equity was 17.40% for
the three months ended December 31, 2022.
FNCB declared and paid dividends to shareholders
of common stock of $0.09 per share for the fourth
quarters of 2023 and 2022. Year-to-date, dividends declared and
paid totaled $0.36 per share for the year ended December
31, 2023, an increase of $0.03 per share, or 9.0%, compared to
$0.33 per share for the year ended December 31, 2022.
Based on the closing price of $6.79 per share of FNCB's common
stock on December 31, 2023, dividends declared and paid in 2023
equated to a dividend yield of 5.3%.
Agreement and Plan of
Merger
On September 27, 2023, FNCB and Peoples
Financial Services Corp. (“PFIS”) (NASDAQ:PFIS) announced that both
companies had entered into a strategic combination and executed an
Agreement and Plan of Merger (the “Merger Agreement”) pursuant to
which FNCB will merge with and into PFIS, with PFIS as the
surviving entity. Immediately after this merger, the Bank will
merge with and into Peoples Security Bank and Trust Company
(“Peoples Bank”) with Peoples Bank as the surviving bank and a
wholly-owned subsidiary of PFIS. Pending regulatory and shareholder
approvals, FNCB expects the merger to be consummated in the first
half of 2024, however, there can be no assurance that the
transaction will be consummated during this time period, or at
all.
Fourth quarter
2023 performance:
- Fourth quarter net income was $3.3 million, or $0.17 per
diluted share, compared to $4.9 million, or $0.24 per diluted share
for the fourth quarter of 2022;
- Yield on earning assets (FTE) increased 81 basis points to
5.04% for the fourth quarter of 2023 from 4.23% for the same
quarter of 2022, and improved 11 basis points on a linked-quarter
basis from 4.93% for the third quarter of 2023;
- Cost of funds increased 157 basis points to 2.76% from 1.19%
comparing the fourth quarters of 2023 and 2022, and increased 10
basis points on a linked-quarter basis from 2.66% for the third
quarter of 2023;
- Net interest margin (FTE) contracted 45 basis points to 2.87%
for the fourth quarter of 2023, compared to 3.32% for the same
period of 2022, and improved 2 basis points on a linked-quarter
basis from 2.85% for the third quarter of 2023;
- Efficiency ratio was 69.48% for the fourth quarter of 2023
compared to 59.37% for the same period of 2022.
Year-to-date 2023 performance:
- Net income was $13.0 million, or $0.66 per diluted share, for
the year ended December 31, 2023, compared to $20.4 million, or
$1.03 per diluted share for the year ended December 31, 2022;
- Yield on earning assets (FTE) increased 98 basis points to
4.77% for 2023 from 3.79% for 2022;
- Cost of funds increased 196 basis points to 2.51% for 2023 from
0.55% for 2022;
- Net interest margin (FTE) contracted 57 basis points to 2.81%
for 2023, compared to 3.38% for 2022;
- Efficiency ratio was 68.04% for 2023 compared to 56.42% for
2022.
Summary financial position at December 31, 2023 as
compared to December 31, 2022:
- Total assets increased $135.5 million, or 7.8%, to $1.881
billion at December 31, 2023 from $1.746 billion at December 31,
2022;
- Net loans and leases increased $98.2 million, or 8.8%, to
$1.208 billion at December 31, 2023 from $1.110 billion at December
31, 2022;
- Total deposits increased $108.3 million, or 7.4%, to $1.529
billion at December 31, 2023 from $1.421 billion at December 31,
2022;
- Non-performing loans as a percentage of total loans
were 0.44% at December 31, 2023 and 0.25% at December 31,
2022;
- FNCB Bank was well capitalized with total risk-based capital
and leverage ratios of 12.66% and 8.76%, respectively, at December
31 2023, and 13.11% and 8.77%, respectively, at December 31,
2022.
"FNCB's performance in 2023 reflects
management's ability to adapt and navigate
through a challenging rate environment and
strong competition for deposits in our market area.
Specifically, our focus on prudent balance sheet management has
translated into margin improvement for the second consecutive
quarter," commented FNCB President and CEO, Gerard A. Champi.
"Management remains focused on managing interest rate
risk, controlling funding costs and non-interest expense, as we
continue to work towards the anticipated strategic
merger with PFIS," concluded Champi.
Summary Results - Fourth Quarter 2023 and 2022
Comparison
Net interest income on a tax-equivalent basis
decreased $1.2 million, or 8.9%, to $12.8 million for the
three months ended December 31, 2023, from $14.0 million for the
comparable period of 2022, as interest expense increased by a
greater magnitude than tax-equivalent interest income. The
increase in both interest expense and tax-equivalent interest
income were largely due to changes in market rates stemming from
the eleven FOMC rate increases beginning March 17,
2022 through December 31, 2023. FNCB's tax-equivalent
net interest margin contracted 45 basis points to 2.87% for
the fourth quarter of 2023 from 3.32% for the same quarter of
2022. Additionally, the net interest spread declined 76 basis
points to 2.28% for the three months ended December 31,
2023, from 3.04% for the same three months of 2022. The
reduction in margin and spread largely reflected rapid increases in
funding costs that outpaced the increases in yields on average
earning assets. However, margin compression has appeared
to stabilize, as FNCB's tax-equivalent net interest margin widened
for the second consecutive quarter. The tax-equivalent net interest
margin increased 2 basis points to 2.87% for the fourth quarter of
2023 from 2.85% for the third quarter of 2023. The fourth quarter
increase followed a 10-basis point improvement from 2.75% for the
second quarter of 2023. Interest expense increased $5.8
million, to $9.6 million for the fourth quarter of
2023 from $3.8 million for the same quarter of 2022. The
increase was largely caused by higher deposit and borrowing costs,
coupled with a greater reliance on wholesale funding, which
generally carries higher costs. FNCB's average deposit costs
increased 165 basis points to 2.46% for the fourth quarter of
2023 compared to 0.81% for the same quarter of 2022. Average
borrowed funds, including advances through the FHLB of Pittsburgh
and the Federal Reserve Bank's Bank Term Funding
Program, increased $29.3 million to $174.3 million from
$145.0 million comparing the three months ended December
31, 2023, and 2022, respectively. Moreover, the average cost of
borrowed funds increased 64 basis points to 4.87% for the fourth
quarter of 2023 from 4.23% for the same quarter of 2022. Average
interest-bearing deposits increased $78.8 million, or 6.9%, to
$1.218 billion from $1.139 billion, comparing the fourth
quarters of 2023 and 2022, respectively. However, FNCB
experienced some deposit migration from non-maturity deposits and
non-interest-bearing deposits into time deposits, as customers have
become increasingly rate-sensitive. Additionally, management
utilized brokered deposits in managing interest rate and liquidity
risk. Average interest-bearing demand deposits decreased $89.0
million, or 10.7%, to $742.5 million for the
fourth quarter of 2023 compared to $831.5 million for the
same quarter of 2022, while average savings deposits decreased
$15.2 million, or 10.4%, to $131.2 million from $146.4 million
comparing the three months ended December 31, 2023 and 2022,
respectively. Conversely, average time deposits increased
$183.0 million, or 113.7%, to $343.9 million for the three
months ended December 31, 2023, from $160.9 million for the same
three months of 2022. Earlier in 2023, FNCB offered several
certificate of deposit specials with promotional rates and terms in
response to changing customer preferences and to attract new
depositors, which contributed to the year-over-year increase in
time deposits. Additionally, FNCB utilized brokered deposits
for various ALCO strategies to control interest sensitivity and for
liquidity purposes. Brokered deposits averaged $113.0 million for
the three months ended December 31, 2023, an increase of $92.9
million from $20.1 million for the same three months of 2022.
Tax-equivalent interest income increased $4.5 million, or 25.5%, to
$22.4 million from $17.8 million comparing the fourth
quarter of 2023 and 2022, respectively,
which largely reflected higher earning-asset yields, coupled
with an increase in average earning-asset volumes. The
tax-equivalent yield on average earning assets increased
81 basis points to 5.04% for the three months ended December
31, 2023, from 4.23% for the same three months of 2022.
Specifically, the tax-equivalent yield on the loan portfolio
increased 92 basis points to 5.83% for the fourth quarter of
2023 from 4.91% for the same quarter of 2022. In addition, the
tax-equivalent yield on the investment portfolio increased 35 basis
points to 3.19% for the fourth quarter of 2023 from 2.84% for
the same quarter of 2022. Regarding asset volumes, total
average earning assets increased $88.7 million, or 5.3%, to
$1.774 billion for the three months ended December 31, 2023, from
$1.686 billion for the same three months of 2022. Specifically,
average total loans and leases increased $100.1 million, or 8.9%,
to $1.225 billion for the fourth quarter of 2023 from $1.125
billion for the same quarter of 2022, which was largely due to
strong organic loan demand concentrated in commercial equipment
financing. Partially offsetting the increase in average loan
volumes was a $31.2 million, or 5.6%, decrease in average
securities to $522.9 million for the fourth quarter of 2023
from $554.1 million for the fourth quarter of 2022, as the majority
of proceeds from sales and repayments of securities were used to
fund higher-yielding loan products.
Non-interest income for the fourth quarter of
2023 totaled $2.3 million, a decrease of $61 thousand, or 2.5%,
from $2.4 million for the fourth quarter of 2022. The reduction in
non-interest revenue for the fourth quarter of 2023 largely
reflected non-recurring transactions recorded in the comparable
quarter of 2022. Specifically, FNCB received a BOLI death
benefit settlement of $273 thousand in the fourth quarter of 2022,
which was partially offset by a loss on the sale of
available-for-sale debt securities in the amount of $188 thousand.
Comparing the fourth quarters of 2023 and 2022, FNCB experienced an
increase in net gain on equity securities, coupled with increases
in deposit service charges and loan-related fees. Net gains on
equity securities increased $85 thousand, or 97.7%, to $172
thousand for the three months ended December 31, 2023 from $87
thousand for the same three months of 2022, which reflected
improvement in values of FNCB's holdings of the common and
preferred stock of other publicly traded financial institutions.
Additionally, deposits service charges increased $51 thousand, or
4.4%, while loan-related fees increased $81 thousand, or 98.8%,
comparing the fourth quarters of 2023 and 2022. Offsetting these
increases were reductions in net gains on the sale of mortgage
loans held for sale, merchant services revenue and other income.
Net gains on the sale of mortgage loans held for sale decreased $78
thousand to $4 thousand in the fourth quarter of 2023
from $82 thousand for the same quarter of 2022, reflecting a
reduction in mortgage activity due to the steep increase in
mortgage rates. Merchant services revenue decreased $40 thousand,
or 23.8%, to $128 thousand from $168 thousand, while other
non-interest income decreased $53 thousand or 15.8%, to $283
thousand from $336 thousand comparing the three months ended
December 31, 2023 and 2022. The reduction in merchant services
revenue reflected a reduction in card transaction volume, while the
decrease in other income was primarily due to a reduction in loan
referral fees, specifically commissions received on loan swap
transactions comparing the fourth quarters of 2023 and
2022.
Non-interest expense increased $933 thousand, or
9.7%, to $10.6 million for the three months ended
December 31, 2023, from $9.7 million for the three months
ended December 31, 2022, which primarily reflected
acquisition-related costs incurred, coupled with an increase
in regulatory assessments. FNCB recorded merger and acquisition
costs associated with the strategic combination with PFIS of $943
thousand for the fourth quarter of 2023. No such costs were
recorded in 2022. Regulatory assessments increased $147 thousand,
or 91.8%, to $307 thousand for the three months ended December 31,
2023, compared to $160 thousand for the same three-month period of
2022, which was largely due to an increase in deposit insurance
assessment rates. These increases were partially offset by
reductions in salaries and employee benefits, equipment
expenses and professional fees. Salaries and employee
benefits decreased $150 thousand, to $5.4 million in the
fourth quarter of 2023, compared to $5.5 million for the fourth
quarter of 2022, which was primarily caused by a reduction in the
number of full-time equivalent employees. Equipment expenses
and professional fees decreased $111 thousand and $124
thousand, respectively in comparing the fourth quarter periods
of 2023 and 2022. The decrease in equipment expenses was primarily
due to a decrease in depreciation expense, while the reduction in
professional fees reflected non-recurring outsourcing expenses and
charges incurred in the fourth quarter of 2022 associated with the
implementation of ASU-2016-13, “Financial Instruments-Credit Losses
(Topic 326).”
Summary Results - Full Year 2023 and 2022
Comparison
On a year-to-date basis, tax equivalent net
interest income decreased $6.2 million, or 11.2%, to $49.0
million for the year ended December 31, 2023, from $55.2 million
for the comparable period of 2022. Similar to the quarterly
period, the increase in tax-equivalent interest income was
overshadowed by a greater increase in interest expense. The steep
and rapid rise in market interest rates sustained in 2023 caused
significant increases in funding costs and margin contraction
throughout the banking industry. FNCB's tax-equivalent interest
margin contracted 56 basis points to 2.81% in 2023 from 3.38% in
2022. For the year ended December 31, 2023, interest expense
increased $27.4 million, to $34.1 million, compared to $6.7
million for the same period of 2022. The increase in interest
expense more than offset a $21.2 million, or
6.6%, increase in tax-equivalent interest income to
$83.1 million for the year ended December 31, 2023 from $61.9
million for the year ended December 31, 2022. The increase in
interest expense was primarily due to higher funding costs, coupled
with an increase in average interest-bearing liabilities,
specifically wholesale borrowings. FNCB's cost of funds
increased 196 basis points to 2.51% for the year ended
December 31, 2023, from just 0.55% for the same period of 2022.
Year-to-date, interest-bearing liabilities averaged $1.360 billion
for 2023, an increase of $133.0 million, or 10.8%, compared to
$1.227 billion for the same period of 2022. Specifically, average
balances of borrowed funds, which increased $88.1 million, or
80.4%, to $197.6 million in 2023 from $109.5 comprised the majority
of the increase in average interest-bearing liabilities. With
regard to the increase in tax-equivalent interest income, the $21.2
million increase largely reflected an increase in the
tax-equivalent yield on average earning assets of 98 basis
points, to 4.77% for the year-to-date period of 2023, from
3.79% in 2022. In addition, total average earning assets
increased to $1.740 billion for the year ended December 31,
2023, from $1.632 billion, for the same period of
2022, representing an increase of $107.9 million, or
6.6%. Similar to the quarterly period, this was primarily due to an
increase in average total loans and leases which increased $112.9
million, or 10.5%, to $1.187 billion for the year ended December
31, 2023, from $1.074 billion for the same comparable period of
2022.
For the year ended December 31, 2023,
non-interest income decreased $1.3 million, or 16.7%, to $6.6
million, compared to $7.9 million for the same period of 2022.
FNCB recorded a net loss on equity securities of $1.6 million
for the year ended December 31, 2023, compared to a net loss of $34
thousand recorded for the same period of 2022.
Partially offsetting the increase in loss recognized on equity
securities was a net gain on the sale of
available-for-sale debt securities of $252
thousand in 2023, a favorable variance of $475 thousand
compared to a net loss on the sale of available-for-sale debt
securities of $223 thousand for the same period of 2022. Also
impacting non-interest revenue were increases in wealth management
services income, loan-related fees and deposit service charges,
partially offset by reductions in net gains on the sale of mortgage
loans held for sale, merchant services revenue and other
income and the non-recurring income associated with a BOLI death
benefit claim in the amount of $273 thousand recorded in 2022.
Wealth management services increased $380 thousand, or 67.4%, to
$944 thousand for the year ended December 31, 2023, compared to
$564 thousand for the comparable period of 2022, which
reflected FNCB's purchase of Chiaro Investment Services, LLC at the
end of the third quarter of 2022. Increases in commissions received
on loan swap transactions, servicing fees and letter of credit fees
contributed to an increase in loan-related fees of $155 thousand,
or 63.8%, to $398 thousand in 2023 from $243 thousand in 2022.
Deposit service charges increased $122 thousand or 2.8%, to $4.5
million in 2023 from $4.4 million in 2022. Meanwhile, net gains on
the sale of mortgage loans held for sale decreased
$199 thousand to just $6 thousand in 2023 from $205
thousand in 2022, reflecting a marked decrease in mortgage-related
activity due to higher market interest rates in 2023. Merchant
services revenue decreased $120 thousand, or 16.9%, to $592
thousand from $712 thousand, while other non-interest income
decreased $351 thousand or 31.5%, to $765 thousand from $1.1
million comparing the years ended December 31, 2023 and
2022.
For the year ended December 31, 2023,
non-interest expense increased $1.4 million, or 4.0%, to $36.9
million compared to $35.5 million for the same period of 2022,
which was primarily due to merger and acquisition costs incurred in
2023, coupled with increases in salaries and employee
benefits, other non-interest expenses and regulatory
assessments. Merger and acquisition costs amounted to $1.5
million for the year-to-date period of 2023. There were no such
merger and acquisition costs recorded in 2022. Salaries and
employee benefits increased $951 thousand, or 4.9%, to $20.2
million for the year ended December 31, 2023, from $19.3
million for the same period of 2022, which was primarily
caused by higher full-time salaries and an increase in health
insurance costs. The higher salary costs reflected increases
in starting salaries and salary ranges in order to
remain competitive in attracting and retaining qualified
staff. Other non-interest expenses increased $721 thousand, or
15.6%, to $5.3 million for the year ended December 31,
2023, compared to $4.6 million for the same period of 2022,
reflecting increases in check fraud losses, correspondent bank
services charges, lending expenses, debit card-related costs and
contributions to not-for-profit organizations as part of state tax
credit programs. Additionally, the increase in FDIC deposit
insurance rates resulted in an increase in regulatory assessments
of $304 thousand, or 37.5%, to $1.1 million in 2023 from $811
thousand in 2022. These increases were partially offset by a
credit for unfunded commitments and a reduction in bank shares tax
expense. FNCB recorded a credit for unfunded commitments of
$803 thousand, for the year ended December 31, 2023, compared to a
provision of $366 thousand for the same period of 2022. Bank
shares tax decreased $406 thousand, or 44.4%, to $509 thousand
for the year ended December 31, 2023, from $915 thousand for
the same comparable period of 2022.
Asset Quality
Total non-performing loans
increased $2.6 million, or 89.2%, to $5.4 million,
representing 0.44% of total loans and leases, at December
31, 2023, from $2.8 million, or 0.25% of total loans and
leases, at December 31, 2022. FNCB’s loan delinquency
rate (total delinquent loans as a percentage of total
loans) increased to 0.75% at December 31, 2023, compared
to 0.45% at December 31, 2022. The increase in loan
delinquencies was concentrated in commercial and industrial loans,
specifically commercial equipment financing and commercial real
estate loans. FNCB recorded a credit to the provision for credit
losses of $376 thousand for the fourth quarter of
2023 compared to a provision of $628 thousand for
the same quarter of 2022. For the year ended December 31, 2023, the
provision for credit losses totaled $1.9 million, compared to
$2.0 million provision for credit losses, for the same
period of 2022. The allowance for credit losses was $12.0
million, or 0.98% of total loans and leases, at December 31,
2023, which included a $2.6 million adjustment to the ACL on loans,
related to the adoption of CECL. At December 31, 2022,
allowance for loan and lease losses was $14.2 million, or 1.26% of
total loans and leases.
Financial Condition
Total assets increased $135.5 million, or 7.8%,
to $1.881 billion at December 31, 2023, from $1.746 billion at
December 31, 2022. The change in total assets primarily reflected
increases in loans and leases, net of the ACL, and cash and cash
equivalents, partially offset by decreases
in available-for-sale debt securities as security repayments
were used to fund loan originations. Loans and leases, net of the
ACL, increased $98.2 million, or 8.8%, to $1.208 billion at
December 31, 2023, from $1.110 billion at December 31,
2022. The increase in loans and leases was largely
concentrated in commercial and industrial loans reflecting strong
demand for the equipment financing product offerings. Cash and
cash equivalents increased $66.0 million, or 157.3%, to
$107.9 million at December 31, 2023, from $41.9 million at
December 31, 2022, while available-for-sale debt securities
decreased $25.3 million, or 5.3%, to $450.8 million at
December 31, 2023, from $476.1 million at December 31, 2022. Total
deposits increased $108.3 million, or 7.4%, to $1.529
billion at December 31, 2023, from $1.421 billion
at December 31, 2022. FNCB experienced migration from
non-maturity deposits, non-interest-bearing and interest-bearing
demand and savings deposits, into time deposits, as customers have
become increasingly rate-sensitive. Additionally, FNCB
increased utilization of brokered deposits to secure liquidity
and for interest rate risk management purposes. Total non-maturity
deposits decreased $92.0 million, or 7.3%, to $1.171 billion
at December 31, 2023 from $1.263 billion at December 31, 2022.
Total time deposits increased $200.3 million, or 126.9%, to
$358.2 million at the end of the fourth quarter of 2023 from $157.9
million at December 31, 2022. Included in time deposits at December
31, 2023 were brokered deposits of $148.7 million, an increase of
$124.8 million from $23.9 million at December 31, 2022. Total
borrowed funds increased $17.9 million to $200.3 million
at December 31, 2023, from $182.4 million at December 31, 2022,
which was due to a $25 million advance under the Federal
Reserve Bank's Bank Term Funding program ("BTFP").
Total shareholders’ equity increased $15.7
million, or 13.2%, to $134.6 million at December 31, 2023 from
$118.9 million at December 31, 2022. The increase in
shareholders' equity was primarily attributable to a $7.8 million,
or 16.4%, decrease in the accumulated other comprehensive loss,
coupled with year-to-date net income of $13.0 million and a
cumulative effect adjustment related to the adoption of ASU 2016-13
of $1.1 million. This was partially offset by year-to-date
dividends declared of $7.1 million. Tangible book value was $6.80
per share at December 31, 2023, compared to $6.04 per share at
December 31, 2022. The Bank was considered well capitalized
with total risk-based capital and Tier 1 leverage ratios of
12.66% and 8.76%, respectively, at December 31, 2023 and
13.11% and 8.77%, respectively, at December 31, 2022.
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 114 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., CPAExecutive Vice President
and Chief Financial
Officer FNCB
Bank(570) 348-6419james.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,
including statements with respect to future changes in monetary
policy or interest rates, or new product offerings and
the anticipated merger between FNCB and Peoples Financial Services
Corp., (“PFIS”) under the Agreement and Plan of Merger, dated
September 27, 2023 (the “Merger Agreement”) pursuant to which FNCB
will merge with and into PFIS, with PFIS as the surviving entity,
along with the transaction occurring immediately after such merger,
whereby FNCB’s wholly owned subsidiary, FNCB Bank (the “Bank”) will
merge with and into Peoples Security Bank and Trust Company
(“Peoples Bank”), with Peoples Bank as the surviving bank and a
wholly-owned subsidiary of PFIS, 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: government intervention in the U.S. financial system
including the effects of recent legislative, tax, accounting and
regulatory actions and reforms; political instability; acts of
world terrorism; global unrest; the ability of FNCB to manage
credit risk; weakness in the economic environment, in general, and
within FNCB’s market area; the occurrence of any event, change or
other circumstances that could give rise to the right of one or
both of the parties to terminate the merger agreement between FNCB
and PFIS; the possibility that the parties may be unable to achieve
expected synergies and operating efficiencies in the merger within
the expected timeframes or at all and to successfully integrate
operations of FNCB and FNCB Bank and those of PFIS and Peoples
Bank, its wholly-owned subsidiary, which may be more difficult,
time consuming or costly than expected; diversion of management's
attention from ongoing business operations and opportunities;
effects of the announcement, pendency or completion of the proposed
transaction on the ability of FNCB and PFIS to retain customers and
retain and hire key personnel and maintain relationships with their
vendors, and on their operating results and businesses generally;
the deterioration of one or a few of the large balance commercial
and/or commercial real estate loans 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 allowance for credit losses ("ACL") is not sufficient
to absorb actual losses or if increases to the ACL 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
caused by a credit-related event 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 documents that FNCB periodically files with
the SEC, including the 2022 Annual Report and Quarterly
Reports on Form 10-Q for the periods ended March 31, 2023, June 30,
2023 and September 30, 2023.
Additional Information regarding the
Merger and Where to Find It
In connection with the proposed merger, PFIS
filed a registration statement on Form S-4 with the SEC. The
registration statement includes a joint proxy statement of PFIS and
FNCB, which also constitutes a prospectus of PFIS that was sent to
shareholders of PFIS and shareholders of FNCB seeking certain
approvals related to the proposed transaction.
The information contained in this release does
not constitute an offer to sell or a solicitation of an offer to
buy any securities or a solicitation of any vote or approval, nor
shall there be any sale of securities in any jurisdiction in which
such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction. INVESTORS AND SHAREHOLDERS OF PFIS AND FNCB AND THEIR
RESPECTIVE AFFILIATES ARE URGED TO READ, THE REGISTRATION STATEMENT
ON FORM S-4, THE JOINT PROXY STATEMENT/PROSPECTUS INCLUDED WITHIN
THE REGISTRATION STATEMENT ON FORM S-4 AND ANY OTHER RELEVANT
DOCUMENTS FILED OR TO BE FILED WITH THE SEC IN CONNECTION WITH THE
PROPOSED TRANSACTION, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO
THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION
ABOUT PFIS, FNCB AND THE PROPOSED STRATEGIC COMBINATION.
Investors and shareholders will be able to
obtain a free copy of the registration statement, including the
joint proxy statement/prospectus as well as other relevant
documents filed with the SEC containing information about PFIS and
FNCB without charge, at the SEC’s website www.sec.gov. Copies of
documents filed with the SEC by PFIS will be made available free of
charge in the "Investor Relations" section of PFIS' website,
www.psbt.com under the heading "SEC Filings." Copies of documents
filed with the SEC by FNCB will be made available free of charge in
the "About FNCB" section of FNCB's website,www.fncb.com.
Participants in Solicitation
FNCB and certain of its directors and executive
officers may be deemed to be participants in the solicitation of
proxies in respect of the proposed strategic combination with PFIS
under the rules of the SEC. Information regarding FNCB directors
and executive officers is available in FNCB's proxy statement for
its 2023 Annual Meeting of Shareholders, which was filed with the
SEC on April 10, 2023. Other information regarding the participants
in the solicitation of proxies in respect of the proposed merger
and a description of their direct and indirect interests, by
security holdings or otherwise, is contained in the joint proxy
statement/prospectus and other relevant materials filed with the
SEC. Free copies of these documents may be obtained as described in
the preceding paragraph.
|
FNCB Bancorp, Inc. |
|
Selected Financial Data |
| |
| |
|
Dec 31, |
|
|
Sept 30, |
|
|
Jun 30, |
|
|
Mar 31, |
|
|
Dec 31, |
|
|
|
|
2023 |
|
|
2023 |
|
|
2023 |
|
|
2023 |
|
|
2022 |
|
|
Per share data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (fully
diluted) |
|
$ |
0.17 |
|
|
$ |
0.21 |
|
|
$ |
0.14 |
|
|
$ |
0.14 |
|
|
$ |
0.24 |
|
| Cash dividends declared |
|
$ |
0.09 |
|
|
$ |
0.09 |
|
|
$ |
0.09 |
|
|
$ |
0.09 |
|
|
$ |
0.09 |
|
| Book value |
|
$ |
6.80 |
|
|
$ |
5.96 |
|
|
$ |
6.28 |
|
|
$ |
6.43 |
|
|
$ |
6.04 |
|
| Tangible book value |
|
$ |
6.80 |
|
|
$ |
5.96 |
|
|
$ |
6.28 |
|
|
$ |
6.43 |
|
|
$ |
6.04 |
|
| Market value: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High |
|
$ |
7.15 |
|
|
$ |
6.88 |
|
|
$ |
6.82 |
|
|
$ |
9.00 |
|
|
$ |
8.70 |
|
|
Low |
|
$ |
5.54 |
|
|
$ |
5.47 |
|
|
$ |
5.45 |
|
|
$ |
6.09 |
|
|
$ |
7.34 |
|
|
Close |
|
$ |
6.79 |
|
|
$ |
5.95 |
|
|
$ |
5.97 |
|
|
$ |
6.20 |
|
|
$ |
8.21 |
|
| Common shares outstanding |
|
|
19,787,031 |
|
|
|
19,780,317 |
|
|
|
19,750,092 |
|
|
|
19,683,873 |
|
|
|
19,681,644 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Selected
ratios: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Annualized return on average
assets |
|
|
0.73 |
% |
|
|
0.91 |
% |
|
|
0.63 |
% |
|
|
0.62 |
% |
|
|
1.13 |
% |
| Annualized return on average
shareholders' equity |
|
|
11.21 |
% |
|
|
13.39 |
% |
|
|
8.89 |
% |
|
|
8.84 |
% |
|
|
17.40 |
% |
| Efficiency ratio |
|
|
69.48 |
% |
|
|
66.75 |
% |
|
|
68.11 |
% |
|
|
67.69 |
% |
|
|
59.37 |
% |
| Tier I leverage ratio (FNCB
Bank) |
|
|
8.76 |
% |
|
|
9.11 |
% |
|
|
8.98 |
% |
|
|
8.96 |
% |
|
|
8.77 |
% |
| Total risk-based capital to
risk-adjusted assets (FNCB Bank) |
|
|
12.66 |
% |
|
|
13.21 |
% |
|
|
12.97 |
% |
|
|
12.97 |
% |
|
|
13.11 |
% |
| Average shareholders' equity
to average total assets |
|
|
6.51 |
% |
|
|
6.83 |
% |
|
|
7.07 |
% |
|
|
6.96 |
% |
|
|
6.50 |
% |
| Yield on earning assets
(FTE) |
|
|
5.04 |
% |
|
|
4.93 |
% |
|
|
4.67 |
% |
|
|
4.45 |
% |
|
|
4.23 |
% |
| Cost of funds |
|
|
2.76 |
% |
|
|
2.66 |
% |
|
|
2.45 |
% |
|
|
2.15 |
% |
|
|
1.19 |
% |
| Net interest spread (FTE) |
|
|
2.28 |
% |
|
|
2.27 |
% |
|
|
2.22 |
% |
|
|
2.30 |
% |
|
|
3.04 |
% |
| Net interest margin (FTE) |
|
|
2.87 |
% |
|
|
2.85 |
% |
|
|
2.75 |
% |
|
|
2.78 |
% |
|
|
3.32 |
% |
| Total delinquent loans/total
loans |
|
|
0.75 |
% |
|
|
0.72 |
% |
|
|
0.50 |
% |
|
|
0.40 |
% |
|
|
0.45 |
% |
| Allowance for credit
losses/total loans |
|
|
0.98 |
% |
|
|
1.01 |
% |
|
|
1.07 |
% |
|
|
1.06 |
% |
|
|
1.26 |
% |
| Non-performing loans/total
loans |
|
|
0.44 |
% |
|
|
0.43 |
% |
|
|
0.31 |
% |
|
|
0.23 |
% |
|
|
0.25 |
% |
| Annualized net
charge-offs/average loans |
|
|
0.18 |
% |
|
|
0.15 |
% |
|
|
0.07 |
% |
|
|
0.09 |
% |
|
|
0.09 |
% |
|
FNCB Bancorp, Inc. |
|
Year-to-Date Consolidated Statements of Income |
| |
| |
|
Year Ended |
|
| |
|
December 31, |
|
| (in
thousands, except share data) |
|
2023 |
|
|
2022 |
|
|
Interest income |
|
|
|
|
|
|
|
|
| Interest and fees on loans and
leases |
|
$ |
65,364 |
|
|
$ |
47,193 |
|
| Interest and dividends on
securities: |
|
|
|
|
|
|
|
|
|
Taxable |
|
|
12,451 |
|
|
|
10,281 |
|
|
Tax-exempt |
|
|
2,207 |
|
|
|
2,662 |
|
|
Dividends |
|
|
991 |
|
|
|
549 |
|
|
Total interest and dividends on securities |
|
|
15,649 |
|
|
|
13,492 |
|
| Interest on interest-bearing
deposits in other banks |
|
|
1,011 |
|
|
|
91 |
|
|
Total interest income |
|
|
82,024 |
|
|
|
60,776 |
|
| Interest
expense |
|
|
|
|
|
|
|
|
| Interest on deposits |
|
|
24,461 |
|
|
|
3,970 |
|
|
Interest on borrowed funds |
|
|
9,666 |
|
|
|
2,762 |
|
|
Total interest expense |
|
|
34,127 |
|
|
|
6,732 |
|
| Net interest income
before provision for credit losses |
|
|
47,897 |
|
|
|
54,044 |
|
| Provision for credit
losses |
|
|
1,880 |
|
|
|
1,962 |
|
| Net interest income
after provision for credit losses |
|
|
46,017 |
|
|
|
52,082 |
|
| Non-interest
income |
|
|
|
|
|
|
|
|
| Deposit service charges |
|
|
4,537 |
|
|
|
4,415 |
|
| Net gain (loss) on the sale of
available-for-sale debt securities |
|
|
252 |
|
|
|
(223 |
) |
| Net loss on equity
securities |
|
|
(1,601 |
) |
|
|
(34 |
) |
| Net gain on the sale of
mortgage loans held for sale |
|
|
6 |
|
|
|
205 |
|
| Loan-related fees |
|
|
398 |
|
|
|
243 |
|
| Income from bank-owned life
insurance |
|
|
752 |
|
|
|
710 |
|
| Bank-owned life insurance
settlement |
|
|
- |
|
|
|
273 |
|
| Merchant services revenue |
|
|
592 |
|
|
|
712 |
|
| Wealth management services
revenue |
|
|
944 |
|
|
|
564 |
|
| Other |
|
|
765 |
|
|
|
1,116 |
|
|
Total non-interest income |
|
|
6,645 |
|
|
|
7,981 |
|
| Non-interest
expense |
|
|
|
|
|
|
|
|
| Salaries and employee
benefits |
|
|
20,234 |
|
|
|
19,283 |
|
| Occupancy expense |
|
|
2,156 |
|
|
|
2,093 |
|
| Equipment expense |
|
|
963 |
|
|
|
1,295 |
|
| Advertising expense |
|
|
836 |
|
|
|
801 |
|
| Data processing expense |
|
|
4,008 |
|
|
|
4,027 |
|
| Regulatory assessments |
|
|
1,115 |
|
|
|
811 |
|
| Bank shares tax |
|
|
509 |
|
|
|
915 |
|
| Professional fees |
|
|
1,093 |
|
|
|
1,273 |
|
| (Credit) provision for
unfunded commitments |
|
|
(803 |
) |
|
|
366 |
|
| Merger and acquisition
expenses |
|
|
1,480 |
|
|
|
- |
|
| Other operating expenses |
|
|
5,331 |
|
|
|
4,610 |
|
|
Total non-interest expense |
|
|
36,922 |
|
|
|
35,474 |
|
| Income before income
taxes |
|
|
15,740 |
|
|
|
24,589 |
|
| Income tax expense |
|
|
2,757 |
|
|
|
4,144 |
|
| Net
income |
|
$ |
12,983 |
|
|
$ |
20,445 |
|
| |
|
|
|
|
|
|
|
|
| Income per
share |
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.66 |
|
|
$ |
1.04 |
|
|
Diluted |
|
$ |
0.66 |
|
|
$ |
1.03 |
|
| |
|
|
|
|
|
|
|
|
| Cash dividends
declared per common share |
|
$ |
0.36 |
|
|
$ |
0.33 |
|
| Weighted average
number of shares outstanding: |
|
|
|
|
|
|
|
|
|
Basic |
|
|
19,739,416 |
|
|
|
19,744,477 |
|
|
Diluted |
|
|
19,741,541 |
|
|
|
19,762,566 |
|
|
FNCB Bancorp, Inc. |
|
Quarter-to-Date Consolidated Statements of Income |
|
|
| |
|
Three Months Ended |
|
| |
|
Dec 31, |
|
|
Sept 30, |
|
|
Jun 30, |
|
|
Mar 31, |
|
|
Dec 31, |
|
| (in
thousands, except share data) |
|
2023 |
|
|
2023 |
|
|
2023 |
|
|
2023 |
|
|
2022 |
|
|
Interest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest and fees on loans and
leases |
|
$ |
17,722 |
|
|
$ |
17,224 |
|
|
$ |
15,853 |
|
|
$ |
14,565 |
|
|
$ |
13,721 |
|
| Interest and dividends on
securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable |
|
|
3,247 |
|
|
|
3,063 |
|
|
|
3,064 |
|
|
|
3,077 |
|
|
|
2,856 |
|
|
Tax-exempt |
|
|
537 |
|
|
|
539 |
|
|
|
544 |
|
|
|
587 |
|
|
|
701 |
|
|
Dividends |
|
|
247 |
|
|
|
248 |
|
|
|
223 |
|
|
|
273 |
|
|
|
196 |
|
|
Total interest and dividends on securities |
|
|
4,031 |
|
|
|
3,850 |
|
|
|
3,831 |
|
|
|
3,937 |
|
|
|
3,753 |
|
| Interest on interest-bearing
deposits in other banks |
|
|
339 |
|
|
|
243 |
|
|
|
252 |
|
|
|
177 |
|
|
|
57 |
|
|
Total interest income |
|
|
22,092 |
|
|
|
21,317 |
|
|
|
19,936 |
|
|
|
18,679 |
|
|
|
17,531 |
|
| Interest
expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest on deposits |
|
|
7,493 |
|
|
|
6,446 |
|
|
|
6,145 |
|
|
|
4,377 |
|
|
|
2,299 |
|
|
Interest on borrowed funds |
|
|
2,123 |
|
|
|
2,664 |
|
|
|
2,162 |
|
|
|
2,717 |
|
|
|
1,533 |
|
|
Total interest expense |
|
|
9,616 |
|
|
|
9,110 |
|
|
|
8,307 |
|
|
|
7,094 |
|
|
|
3,832 |
|
| Net interest income
before provision (credit to provision) for credit
losses |
|
|
12,476 |
|
|
|
12,207 |
|
|
|
11,629 |
|
|
|
11,585 |
|
|
|
13,699 |
|
| Provision (credit to
provision) for credit losses |
|
|
376 |
|
|
|
(270 |
) |
|
|
799 |
|
|
|
975 |
|
|
|
628 |
|
| Net interest income
after provision (credit to provision) for credit
losses |
|
|
12,100 |
|
|
|
12,477 |
|
|
|
10,830 |
|
|
|
10,610 |
|
|
|
13,071 |
|
| Non-interest
income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Deposit service charges |
|
|
1,218 |
|
|
|
1,132 |
|
|
|
1,123 |
|
|
|
1,064 |
|
|
|
1,167 |
|
| Net gain (loss) on the sale of
available-for-sale debt securities |
|
|
- |
|
|
|
- |
|
|
|
90 |
|
|
|
162 |
|
|
|
(188 |
) |
| Net gain (loss) on equity
securities |
|
|
172 |
|
|
|
(233 |
) |
|
|
(1,032 |
) |
|
|
(508 |
) |
|
|
87 |
|
| Net gain on the sale of
mortgage loans held for sale |
|
|
4 |
|
|
|
1 |
|
|
|
- |
|
|
|
1 |
|
|
|
82 |
|
| Loan-related fees |
|
|
163 |
|
|
|
64 |
|
|
|
52 |
|
|
|
119 |
|
|
|
82 |
|
| Income from bank-owned life
insurance |
|
|
140 |
|
|
|
210 |
|
|
|
205 |
|
|
|
197 |
|
|
|
168 |
|
| Bank-owned life insurance
settlement |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
273 |
|
| Merchant services revenue |
|
|
128 |
|
|
|
146 |
|
|
|
157 |
|
|
|
161 |
|
|
|
168 |
|
| Wealth management services
revenue |
|
|
224 |
|
|
|
237 |
|
|
|
245 |
|
|
|
238 |
|
|
|
218 |
|
| Other |
|
|
283 |
|
|
|
137 |
|
|
|
108 |
|
|
|
237 |
|
|
|
336 |
|
|
Total non-interest income |
|
|
2,332 |
|
|
|
1,694 |
|
|
|
948 |
|
|
|
1,671 |
|
|
|
2,393 |
|
| Non-interest
expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Salaries and employee
benefits |
|
|
5,375 |
|
|
|
4,935 |
|
|
|
4,529 |
|
|
|
5,395 |
|
|
|
5,525 |
|
| Occupancy expense |
|
|
569 |
|
|
|
516 |
|
|
|
550 |
|
|
|
521 |
|
|
|
581 |
|
| Equipment expense |
|
|
230 |
|
|
|
229 |
|
|
|
232 |
|
|
|
272 |
|
|
|
341 |
|
| Advertising expense |
|
|
241 |
|
|
|
198 |
|
|
|
188 |
|
|
|
209 |
|
|
|
240 |
|
| Data processing expense |
|
|
1,024 |
|
|
|
1,034 |
|
|
|
952 |
|
|
|
998 |
|
|
|
981 |
|
| Regulatory assessments |
|
|
307 |
|
|
|
283 |
|
|
|
312 |
|
|
|
213 |
|
|
|
160 |
|
| Bank shares tax |
|
|
(167 |
) |
|
|
264 |
|
|
|
263 |
|
|
|
149 |
|
|
|
(176 |
) |
| Professional fees |
|
|
312 |
|
|
|
265 |
|
|
|
214 |
|
|
|
302 |
|
|
|
436 |
|
| Adjustment to provision for
unfunded commitments |
|
|
(74 |
) |
|
|
(235 |
) |
|
|
(225 |
) |
|
|
(269 |
) |
|
|
(95 |
) |
| Merger and acquisition
expenses |
|
|
943 |
|
|
|
537 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Other operating expenses |
|
|
1,839 |
|
|
|
1,274 |
|
|
|
1,087 |
|
|
|
1,131 |
|
|
|
1,673 |
|
|
Total non-interest expense |
|
|
10,599 |
|
|
|
9,300 |
|
|
|
8,102 |
|
|
|
8,921 |
|
|
|
9,666 |
|
| Income before income
taxes |
|
|
3,833 |
|
|
|
4,871 |
|
|
|
3,676 |
|
|
|
3,360 |
|
|
|
5,798 |
|
| Income tax expense |
|
|
480 |
|
|
|
709 |
|
|
|
871 |
|
|
|
697 |
|
|
|
879 |
|
| Net
income |
|
$ |
3,353 |
|
|
$ |
4,162 |
|
|
$ |
2,805 |
|
|
$ |
2,663 |
|
|
$ |
4,919 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income per
share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.17 |
|
|
$ |
0.21 |
|
|
$ |
0.14 |
|
|
$ |
0.14 |
|
|
$ |
0.25 |
|
|
Diluted |
|
$ |
0.17 |
|
|
$ |
0.21 |
|
|
$ |
0.14 |
|
|
$ |
0.14 |
|
|
$ |
0.24 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash dividends
declared per common share |
|
$ |
0.090 |
|
|
$ |
0.090 |
|
|
$ |
0.090 |
|
|
$ |
0.090 |
|
|
$ |
0.090 |
|
| Weighted average
number of shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
19,782,236 |
|
|
|
19,776,342 |
|
|
|
19,715,136 |
|
|
|
19,682,357 |
|
|
|
19,681,437 |
|
|
Diluted |
|
|
19,782,452 |
|
|
|
19,776,360 |
|
|
|
19,715,136 |
|
|
|
19,690,859 |
|
|
|
19,690,676 |
|
|
FNCB Bancorp, Inc. |
|
Consolidated Balance Sheets |
|
|
| |
|
Dec 31, |
|
|
Sept 30, |
|
|
Jun 30, |
|
|
Mar 31, |
|
|
Dec 31, |
|
| (in
thousands) |
|
2023 |
|
|
2023 |
|
|
2023 |
|
|
2023 |
|
|
2022 |
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash and cash
equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
$ |
27,819 |
|
|
$ |
42,081 |
|
|
$ |
32,893 |
|
|
$ |
20,418 |
|
|
$ |
26,588 |
|
|
Interest-bearing deposits in other banks |
|
|
80,049 |
|
|
|
34,990 |
|
|
|
72,107 |
|
|
|
49,153 |
|
|
|
15,328 |
|
|
Total cash and cash equivalents |
|
|
107,868 |
|
|
|
77,071 |
|
|
|
105,000 |
|
|
|
69,571 |
|
|
|
41,916 |
|
| Available-for-sale debt
securities, at fair value |
|
|
450,814 |
|
|
|
437,142 |
|
|
|
452,877 |
|
|
|
473,119 |
|
|
|
476,091 |
|
| Equity securities, at fair
value |
|
|
4,786 |
|
|
|
6,104 |
|
|
|
6,337 |
|
|
|
7,369 |
|
|
|
7,717 |
|
| Restricted stock, at cost |
|
|
8,814 |
|
|
|
8,842 |
|
|
|
9,325 |
|
|
|
8,482 |
|
|
|
8,545 |
|
| Loans held for sale |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
60 |
|
| Loans and leases, net of
deferred loan fees and costs and unearned income |
|
|
1,220,265 |
|
|
|
1,205,752 |
|
|
|
1,200,595 |
|
|
|
1,163,789 |
|
|
|
1,124,317 |
|
| Allowance for credit
losses |
|
|
(11,986 |
) |
|
|
(12,149 |
) |
|
|
(12,873 |
) |
|
|
(12,279 |
) |
|
|
(14,193 |
) |
| Net loans and leases |
|
|
1,208,279 |
|
|
|
1,193,603 |
|
|
|
1,187,722 |
|
|
|
1,151,510 |
|
|
|
1,110,124 |
|
| Bank premises and equipment,
net |
|
|
14,546 |
|
|
|
14,790 |
|
|
|
15,028 |
|
|
|
15,316 |
|
|
|
15,616 |
|
| Accrued interest
receivable |
|
|
7,085 |
|
|
|
6,599 |
|
|
|
6,329 |
|
|
|
6,143 |
|
|
|
5,957 |
|
| Bank-owned life insurance |
|
|
37,251 |
|
|
|
37,111 |
|
|
|
36,901 |
|
|
|
36,696 |
|
|
|
36,499 |
|
| Other assets |
|
|
41,543 |
|
|
|
45,511 |
|
|
|
42,353 |
|
|
|
41,275 |
|
|
|
43,005 |
|
|
Total assets |
|
$ |
1,880,986 |
|
|
$ |
1,826,773 |
|
|
$ |
1,861,872 |
|
|
$ |
1,809,481 |
|
|
$ |
1,745,530 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand (non-interest-bearing) |
|
$ |
285,548 |
|
|
$ |
297,740 |
|
|
$ |
285,674 |
|
|
$ |
281,114 |
|
|
$ |
305,850 |
|
|
Interest-bearing |
|
|
1,243,434 |
|
|
|
1,204,635 |
|
|
|
1,190,390 |
|
|
|
1,182,192 |
|
|
|
1,114,797 |
|
|
Total deposits |
|
|
1,528,982 |
|
|
|
1,502,375 |
|
|
|
1,476,064 |
|
|
|
1,463,306 |
|
|
|
1,420,647 |
|
| Borrowed funds |
|
|
200,272 |
|
|
|
186,733 |
|
|
|
242,022 |
|
|
|
196,648 |
|
|
|
182,360 |
|
| Accrued interest payable |
|
|
1,355 |
|
|
|
1,001 |
|
|
|
1,089 |
|
|
|
848 |
|
|
|
171 |
|
| Other liabilities |
|
|
15,778 |
|
|
|
18,862 |
|
|
|
18,638 |
|
|
|
22,185 |
|
|
|
23,403 |
|
|
Total liabilities |
|
|
1,746,387 |
|
|
|
1,708,971 |
|
|
|
1,737,813 |
|
|
|
1,682,987 |
|
|
|
1,626,581 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shareholders'
equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Preferred stock |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Common stock |
|
|
24,733 |
|
|
|
24,725 |
|
|
|
24,687 |
|
|
|
24,604 |
|
|
|
24,602 |
|
| Additional paid-in
capital |
|
|
78,253 |
|
|
|
78,050 |
|
|
|
77,757 |
|
|
|
77,636 |
|
|
|
77,502 |
|
| Retained earnings |
|
|
71,782 |
|
|
|
70,221 |
|
|
|
67,851 |
|
|
|
66,834 |
|
|
|
64,873 |
|
| Accumulated other
comprehensive income |
|
|
(40,169 |
) |
|
|
(55,194 |
) |
|
|
(46,236 |
) |
|
|
(42,580 |
) |
|
|
(48,028 |
) |
|
Total shareholders' equity |
|
|
134,599 |
|
|
|
117,802 |
|
|
|
124,059 |
|
|
|
126,494 |
|
|
|
118,949 |
|
|
Total liabilities and shareholders’ equity |
|
$ |
1,880,986 |
|
|
$ |
1,826,773 |
|
|
$ |
1,861,872 |
|
|
$ |
1,809,481 |
|
|
$ |
1,745,530 |
|
|
FNCB Bancorp, Inc. |
|
Summary Tax-equivalent Net Interest Income |
|
|
| |
|
Three Months Ended |
|
| |
|
Dec 31, |
|
|
Sept 30, |
|
|
Jun 30, |
|
|
Mar 31, |
|
|
Dec 31, |
|
|
(dollars in thousands) |
|
2023 |
|
|
2023 |
|
|
2023 |
|
|
2023 |
|
|
2022 |
|
|
Interest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loans and leases: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loans and leases -
taxable |
|
$ |
17,229 |
|
|
$ |
16,768 |
|
|
$ |
15,411 |
|
|
$ |
14,145 |
|
|
$ |
13,328 |
|
| Loans and leases -
tax-free |
|
|
625 |
|
|
|
577 |
|
|
|
559 |
|
|
|
532 |
|
|
|
498 |
|
| Total loans |
|
|
17,854 |
|
|
|
17,345 |
|
|
|
15,970 |
|
|
|
14,677 |
|
|
|
13,826 |
|
| Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Securities, taxable |
|
|
3,494 |
|
|
|
3,311 |
|
|
|
3,287 |
|
|
|
3,350 |
|
|
|
3,052 |
|
| Securities, tax-free |
|
|
680 |
|
|
|
682 |
|
|
|
689 |
|
|
|
743 |
|
|
|
888 |
|
| Total interest and dividends
on securities |
|
|
4,174 |
|
|
|
3,993 |
|
|
|
3,976 |
|
|
|
4,093 |
|
|
|
3,940 |
|
| Interest-bearing deposits in
other banks |
|
|
339 |
|
|
|
243 |
|
|
|
252 |
|
|
|
177 |
|
|
|
57 |
|
| Total interest
income |
|
|
22,367 |
|
|
|
21,581 |
|
|
|
20,198 |
|
|
|
18,947 |
|
|
|
17,823 |
|
| Interest
expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Deposits |
|
|
7,493 |
|
|
|
6,446 |
|
|
|
6,145 |
|
|
|
4,377 |
|
|
|
2,299 |
|
| Borrowed funds |
|
|
2,123 |
|
|
|
2,664 |
|
|
|
2,162 |
|
|
|
2,717 |
|
|
|
1,533 |
|
| Total interest
expense |
|
|
9,616 |
|
|
|
9,110 |
|
|
|
8,307 |
|
|
|
7,094 |
|
|
|
3,832 |
|
| Net interest
income |
|
$ |
12,751 |
|
|
$ |
12,471 |
|
|
$ |
11,891 |
|
|
$ |
11,853 |
|
|
$ |
13,991 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average
balances |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loans and leases: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loans and leases -
taxable |
|
$ |
1,168,557 |
|
|
$ |
1,152,611 |
|
|
$ |
1,122,385 |
|
|
$ |
1,082,830 |
|
|
$ |
1,069,260 |
|
| Loans and leases -
tax-free |
|
|
56,889 |
|
|
|
55,100 |
|
|
|
55,142 |
|
|
|
54,045 |
|
|
|
56,064 |
|
| Total loans |
|
|
1,225,446 |
|
|
|
1,207,711 |
|
|
|
1,177,527 |
|
|
|
1,136,875 |
|
|
|
1,125,324 |
|
| Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Securities, taxable |
|
|
428,901 |
|
|
|
430,977 |
|
|
|
438,157 |
|
|
|
449,351 |
|
|
|
439,998 |
|
| Securities, tax-free |
|
|
93,977 |
|
|
|
94,276 |
|
|
|
94,964 |
|
|
|
99,836 |
|
|
|
114,128 |
|
| Total securities |
|
|
522,878 |
|
|
|
525,253 |
|
|
|
533,121 |
|
|
|
549,187 |
|
|
|
554,126 |
|
| Interest-bearing deposits in
other banks |
|
|
26,036 |
|
|
|
18,874 |
|
|
|
20,620 |
|
|
|
17,068 |
|
|
|
6,185 |
|
| Total interest-earning
assets |
|
|
1,774,360 |
|
|
|
1,751,838 |
|
|
|
1,731,268 |
|
|
|
1,703,130 |
|
|
|
1,685,635 |
|
| Non-earning assets |
|
|
48,063 |
|
|
|
53,906 |
|
|
|
57,463 |
|
|
|
51,930 |
|
|
|
39,355 |
|
| Total
assets |
|
$ |
1,822,423 |
|
|
$ |
1,805,744 |
|
|
$ |
1,788,731 |
|
|
$ |
1,755,060 |
|
|
$ |
1,724,990 |
|
| Interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Deposits |
|
$ |
1,217,659 |
|
|
$ |
1,156,345 |
|
|
$ |
1,179,288 |
|
|
$ |
1,096,758 |
|
|
$ |
1,138,817 |
|
| Borrowed funds |
|
|
174,261 |
|
|
|
215,801 |
|
|
|
176,838 |
|
|
|
223,694 |
|
|
|
144,995 |
|
| Total interest-bearing
liabilities |
|
|
1,391,920 |
|
|
|
1,372,146 |
|
|
|
1,356,126 |
|
|
|
1,320,452 |
|
|
|
1,283,812 |
|
| Demand deposits |
|
|
289,982 |
|
|
|
287,846 |
|
|
|
284,053 |
|
|
|
287,975 |
|
|
|
309,372 |
|
| Other liabilities |
|
|
21,853 |
|
|
|
22,444 |
|
|
|
22,030 |
|
|
|
24,487 |
|
|
|
19,659 |
|
| Shareholders' equity |
|
|
118,668 |
|
|
|
123,308 |
|
|
|
126,522 |
|
|
|
122,146 |
|
|
|
112,147 |
|
| Total liabilities and
shareholders' equity |
|
$ |
1,822,423 |
|
|
$ |
1,805,744 |
|
|
$ |
1,788,731 |
|
|
$ |
1,755,060 |
|
|
$ |
1,724,990 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yield/Cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loans and leases: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest and fees on loans and
leases - taxable |
|
|
5.90 |
% |
|
|
5.82 |
% |
|
|
5.49 |
% |
|
|
5.23 |
% |
|
|
4.99 |
% |
| Interest and fees on loans and
leases - tax-free |
|
|
4.40 |
% |
|
|
4.19 |
% |
|
|
4.05 |
% |
|
|
3.94 |
% |
|
|
3.56 |
% |
| Total loans |
|
|
5.83 |
% |
|
|
5.74 |
% |
|
|
5.42 |
% |
|
|
5.16 |
% |
|
|
4.91 |
% |
| Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Securities, taxable |
|
|
3.26 |
% |
|
|
3.07 |
% |
|
|
3.00 |
% |
|
|
2.98 |
% |
|
|
2.77 |
% |
| Securities, tax-free |
|
|
2.89 |
% |
|
|
2.89 |
% |
|
|
2.90 |
% |
|
|
2.98 |
% |
|
|
3.11 |
% |
| Total securities |
|
|
3.19 |
% |
|
|
3.04 |
% |
|
|
2.98 |
% |
|
|
2.98 |
% |
|
|
2.84 |
% |
| Interest-bearing deposits in
other banks |
|
|
5.21 |
% |
|
|
5.15 |
% |
|
|
4.89 |
% |
|
|
4.15 |
% |
|
|
3.69 |
% |
| Total earning
assets |
|
|
5.04 |
% |
|
|
4.93 |
% |
|
|
4.67 |
% |
|
|
4.45 |
% |
|
|
4.23 |
% |
| Interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest on deposits |
|
|
2.46 |
% |
|
|
2.23 |
% |
|
|
2.08 |
% |
|
|
1.60 |
% |
|
|
0.81 |
% |
| Interest on borrowed
funds |
|
|
4.87 |
% |
|
|
4.94 |
% |
|
|
4.89 |
% |
|
|
4.86 |
% |
|
|
4.23 |
% |
| Total interest-bearing
liabilities |
|
|
2.76 |
% |
|
|
2.66 |
% |
|
|
2.45 |
% |
|
|
2.15 |
% |
|
|
1.19 |
% |
| Net interest
spread |
|
|
2.28 |
% |
|
|
2.27 |
% |
|
|
2.22 |
% |
|
|
2.30 |
% |
|
|
3.04 |
% |
| Net interest
margin |
|
|
2.87 |
% |
|
|
2.85 |
% |
|
|
2.75 |
% |
|
|
2.78 |
% |
|
|
3.32 |
% |
|
FNCB Bancorp, Inc. |
|
Asset Quality Data |
|
|
| |
|
Dec 31, |
|
|
Sept 30, |
|
|
Jun 30, |
|
|
Mar 31, |
|
|
Dec 31, |
|
| (in
thousands) |
|
2023 |
|
|
2023 |
|
|
2023 |
|
|
2023 |
|
|
2022 |
|
|
At period end |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-accrual loans and
leases |
|
$ |
5,338 |
|
|
$ |
5,084 |
|
|
$ |
3,711 |
|
|
$ |
2,601 |
|
|
$ |
2,763 |
|
| Loans past due 90 days or more
and still accruing |
|
|
38 |
|
|
|
59 |
|
|
|
49 |
|
|
|
52 |
|
|
|
78 |
|
|
Total non-performing loans and leases |
|
|
5,376 |
|
|
|
5,143 |
|
|
|
3,760 |
|
|
|
2,653 |
|
|
|
2,841 |
|
| Other real estate owned
(OREO) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Other non-performing
assets |
|
|
2,067 |
|
|
|
1,647 |
|
|
|
1,647 |
|
|
|
1,773 |
|
|
|
1,773 |
|
|
Total non-performing assets |
|
$ |
7,443 |
|
|
$ |
6,790 |
|
|
$ |
5,407 |
|
|
$ |
4,426 |
|
|
$ |
4,614 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the three months
ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Allowance for credit
losses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Beginning balance, prior to
adoption of ASU 2016-13 |
|
$ |
12,149 |
|
|
$ |
12,873 |
|
|
$ |
12,279 |
|
|
$ |
14,193 |
|
|
$ |
13,819 |
|
| Impact of ASU 2016-13 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(2,636 |
) |
|
|
- |
|
| Loans and leases
charged-off |
|
|
1,194 |
|
|
|
818 |
|
|
|
553 |
|
|
|
776 |
|
|
|
497 |
|
| Recoveries of charged-off
loans and leases |
|
|
655 |
|
|
|
364 |
|
|
|
348 |
|
|
|
523 |
|
|
|
243 |
|
| Net charge-offs |
|
|
539 |
|
|
|
454 |
|
|
|
205 |
|
|
|
253 |
|
|
|
254 |
|
| Provision (credit to
provision) for credit losses |
|
|
376 |
|
|
|
(270 |
) |
|
|
799 |
|
|
|
975 |
|
|
|
628 |
|
| Ending balance |
|
$ |
11,986 |
|
|
$ |
12,149 |
|
|
$ |
12,873 |
|
|
$ |
12,279 |
|
|
$ |
14,193 |
|
FNCB Bancorp (NASDAQ:FNCB)
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