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FNCB Bancorp, Inc. Announces Earnings for 2017, Reflecting Federal Tax Law Changes

DUNMORE, Pa., Jan. 31, 2018 (GLOBE NEWSWIRE) -- FNCB Bancorp, Inc. (OTCQX:FNCB) (“FNCB”), the parent company of Dunmore-based FNCB Bank (the “Bank”), today reported net income of $0.1 million, or $0.01 per basic and diluted share, for 2017, compared to net income of $6.3 million, or $0.38 per basic and diluted share, for 2016. For the fourth quarter of 2017, FNCB recorded a net loss of $6.1 million, or $0.36 per basic and diluted share, compared to net income of $1.5 million, or $0.09 per basic and diluted share, for the same quarter of 2016. During the fourth quarter of 2017, FNCB recognized additional, non-recurring income tax expense of $8.0 million resulting from the revaluation of FNCB’s net deferred tax assets following the enactment of the Tax Cuts and Jobs Act (the “Act”) on December 22, 2017. For the year ended December 31, 2017, FNCB’s adjusted net income, which excludes the non-recurring income tax expense related to the revaluation of FNCB’s net deferred tax assets, was $8.1 million, or $0.49 per basic and diluted share, compared to $6.3 million, or $0.38 per basic and diluted share, in 2016, an improvement of $1.8 million, or 29.2%. For the fourth quarter of 2017, adjusted net income, excluding the non-recurring income tax expense related to revaluation of the net deferred tax assets was $1.9 million, or $0.11 per basic and diluted share, an improvement of $0.4 million, or 24.2%, from $1.5 million, or $0.09 per basic and diluted share, for the same quarter of 2016.

On December 22, 2017, President Trump signed the Act into law, which, among other things, reduced the corporate statutory tax rate from a maximum corporate income tax rate of 35% to 21% effective January 1, 2018. Generally accepted accounting principles required FNCB, upon enactment of the Act, to revalue its net deferred tax asset, resulting in an $8.0 million reduction in their value. This non-cash, non-recurring valuation adjustment has been recorded as additional income tax expense in the fourth quarter of 2017. Going forward, FNCB expects to benefit from the lower corporate income tax rate.

2017 HIGHLIGHTS

  • FNCB Bancorp, Inc. named to the 2018 OTCQX Best 50 list.
  • Dividends declared for 2017 totaled $0.13 per share, an increase of 44.4% compared to $0.09 per share for 2016.
  • Net interest income increased $2.5 million, or 8.2%, to $33.0 million in 2017 from $30.5 million in 2016.
  • Net loans grew $38.7 million to $761.6 million at December 31, 2017 from $722.9 million at December 31, 2016, an increase of 5.4%.
  • Non-performing assets decreased $0.9 million, or 14.6%, from $6.4 million at December 31, 2016 to $5.5 million at the close of 2017.
  • FNCB accelerated the payment of $5.0 million in principal on the subordinated debt due September 1, 2018 to September 1, 2017.

“Our strong operating performance continued through the fourth quarter illustrated by solid organic loan and deposit growth, improved earning asset yields and a continued focus on improving efficiency and maintaining stable non-interest expense levels,” said Gerard A. Champi, President and Chief Executive Officer. “Although FNCB recognized a significant one-time, non-cash charge in the fourth quarter of 2017 relating to the revaluation of its net deferred tax assets as a result of the enactment of the new tax law, fourth quarter and 2017 adjusted net income, excluding this charge, were up significantly, and we believe FNCB will realize significant future benefit from the recent tax law changes that are well in excess of the related one-time charge recognized in the fourth quarter of 2017. Importantly, the partial write-down of FNCB’s deferred tax assets had no significant impact on FNCB’s regulatory capital ratios, liquidity, or its ability to continue to pay regular cash dividends. We’re excited by the anticipated positive and ongoing earnings impact that we believe FNCB will recognize in the future from the Tax Cuts and Jobs Act of 2017, and we believe that the reduction in corporate income tax rates will accelerate our efforts to build value for FNCB shareholders.”

For the fourth quarter and year ended December 31, 2017, dividends declared and paid were $0.04 and $0.13 per share, respectively. In comparison, dividends declared and paid for the fourth quarter and year ended December 31, 2016 were $0.03 per share and $0.09 per share, respectively. The closing price of FNCB’s common stock was $7.30 per share at December 31, 2017, an increase of $1.25 per share from the closing price of $6.05 per share at December 31, 2016. The price appreciation, combined with dividends declared, equated to a total return for shareholders of 22.8% for 2017.

Return on average assets and return on average shareholders’ equity were 0.01% and 0.15%, respectively, in 2017. For the three months ended December 31, 2017, return on average assets and return on average shareholders’ equity were (2.09%) and (24.98%), respectively. Return on average assets was 0.55% and 0.57%, respectively, and return on average shareholders’ equity was 6.43% and 6.82%, respectively, for the three months and year ended December 31, 2016.

Summary Results for 2017

For the three months ended December 31, 2017, net interest income increased $1.1 million to $8.8 million compared to $7.7 million for the same period of 2016. FNCB’s tax-equivalent net interest margin improved 24 basis points to 3.35% for the fourth quarter of 2017 from 3.11% for the same quarter of 2016. For the year ended December 31, 2017 net interest income increased $2.5 million, or 7.9%, to $33.0 million in 2017 from $30.5 million in 2016. The tax-equivalent net interest margin widened 10 basis points to 3.23% in 2017 from 3.13% in 2016. The margin improvement for both the fourth quarter and year ended December 31, 2017 reflected strong growth in earning assets, coupled with increases in earning asset yields, partially offset by increases in FNCB’s cost of funds.

For the fourth quarter of 2017, non-interest income increased $0.5 million to $1.9 million from $1.4 million for the same quarter of 2016. The 37.2% increase was largely due to an increase in other income of $0.3 million and net gains on the sale of investment securities of $0.3 million in the fourth quarter of 2017. For the year ended December 31, 2017, non-interest income increased $1.0 million, or 16.5%, to $7.2 million from $6.2 million for the year ended December 31, 2016. Similarly, the yearly improvement primarily reflected a $0.6 million, or 66.4%, increase in net gains on the sale of securities, coupled with a $0.4 million increase in other income.

Non-interest expense for the three months ended December 31, 2017 increased $0.6 million, or 8.9%, to $7.8 million from $7.2 million for the same period of 2016. The increase primarily resulted from a $0.4 million increase in other expenses, coupled with higher salaries and employee benefits, occupancy expense, data processing costs and professional fees. For the year ended December 31, 2017, non-interest expense increased $0.5 million, or 1.9%, to $28.1 million compared to $27.5 million for the year ended December 31, 2016.

Asset Quality

Total non-performing assets decreased $0.9 million, or 14.6%, to $5.5 million at December 31, 2017 from $6.4 million at December 31, 2016. The improvement was primarily due to reductions in other real estate owned and other non-performing assets of $1.0 million and $0.3 million, respectively, comparing December 31, 2017 and 2016. Partially offsetting these decreases was a $0.3 million increase in non-accrual loans to $2.6 million at December 31, 2017 from $2.2 million at December 31, 2016. Despite the increase in non-accrual loans, FNCB’s loan delinquency rate (total delinquent loans as a percentage of total loans) improved to 0.72% at December 31, 2017 from 0.81% at the end of 2016.

The ratio of non-performing loans to total loans was 0.34% and 0.31% at December 31, 2017 and 2016, respectively. The allowance for loan and lease losses as a percentage of total loans was 1.17% at December 31, 2017 compared to 1.15% at the end of 2016. Net charge-offs as a percentage of average loans outstanding for the year ended December 31, 2017 was 0.02%, compared to 0.21% for the year ended December 31, 2016.

Financial Position

Total assets decreased $33.3 million, or 2.8%, to $1.162 billion at December 31, 2017 from $1.196 billion at December 31, 2016. Loans, net of net deferred loan costs and unearned income grew $39.4 million, or 5.4%, to $770.6 million at December 31, 2017 from $731.3 million at December 31, 2016. In addition, securities available for sale increased $14.4 million, or 5.2%, to $290.4 million at December 31, 2017 from $276.0 million at the end of 2016. Total deposits decreased $12.7 million, or 1.3%, to $1.002 billion at December 31, 2017 from $1.015 billion at December 31, 2016. The decrease in total deposits reflected cyclical deposit trends of public funds, coupled with the anticipated exit of short-term funds in the first quarter of 2017 that were received at the end of 2016 related to the sale of a municipal utility. Despite the decrease from year-end 2016, FNCB experienced strong growth in both non-interest bearing and interest-bearing deposits throughout the remainder of 2017. Total deposits grew $79.0 million, or 8.6%, from $923.4 million at March 31, 2017.

Total shareholders’ equity was $89.2 million at December 31, 2017 compared to $90.4 million at December 31, 2016. The $1.2 million reduction was due primarily to dividends declared and paid of $2.2 million, partially offset by common shares issued through the dividend reinvestment and optional cash purchase plans of $0.4 million and stock-based compensation of $0.3 million.

FNCB’s total risk-based capital ratio and the Tier 1 leverage ratio were 12.08% and 7.74%, respectively at December 31, 2017, a slight improvement compared to 12.06% and 7.53%, respectively, at December 31, 2016. The ratios exceeded the 10.00% and 5.00% required to be well capitalized under the prompt corrective action provisions of the Basel III capital framework for U.S. Banking organizations.

Non-GAAP Financial Measures

This release references adjusted net income, which is a non-GAAP financial measure. Adjusted net income represents net income, excluding the $8.0 million non-recurring additional income tax expense resulting from the revaluation of FNCB’s net deferred tax assets required by the change in the statutory corporate income tax rate effective January 1, 2018. Management believes this presentation provides the reader with supplemental information that gives a more concise understanding of the impact from the required revaluation of deferred tax assets and facilitates period-to-period comparisons.

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 the 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 100 years, FNCB Bank continues as Northeastern Pennsylvania’s premier community bank – offering a full suite of personal, small business and commercial banking solutions with industry-leading mobile, online and in-branch products and services. FNCB operates through 18 branch offices located in Lackawanna, Luzerne and Wayne Counties and a limited purpose office in Lehigh County, and remains dedicated to the communities it serves with an on-going mission to be: Simply a better bank. For more information about the BauerFinancial 5-Star rated 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 its reports to shareholders, and in 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,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan” 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 strength of the United States economy in general and the strength of the local economies in our markets; the effects of, and changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; inflation, interest rate, market and monetary fluctuations; the timely development of and acceptance of new products and services; the ability of FNCB to compete with other institutions for business; the composition and concentrations of FNCB’s lending risk and the adequacy of FNCB’s reserves to manage those risks; the valuation of FNCB’s investment securities; the ability of FNCB to pay dividends or repurchase common shares; the ability of FNCB to retain key personnel; the impact of any pending or threatened litigation against FNCB; the marketability of shares of FNCB and fluctuations in the value of FNCB’s share price; the effectiveness of FNCB’s system of internal controls; the ability of FNCB to attract additional capital investment; the impact of changes in financial services’ laws and regulations (including laws concerning capital adequacy, taxes, banking, securities and insurance); the impact of technological changes and security risks upon our information technology systems; changes in consumer spending and saving habits; the nature, extent, and timing of governmental actions and reforms, and the success of FNCB at managing the risks involved in the foregoing and other risks and uncertainties, including those detailed in FNCB’s filings with the SEC.

FNCB cautions that the foregoing list of important factors is not all inclusive. Readers are also cautioned not to place undue reliance on any forward-looking statements, which reflect management’s analysis only as of the date of this report, even if subsequently made available by FNCB on its website or otherwise. FNCB does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of FNCB to reflect events or circumstances occurring after the date of this report.

Readers should carefully review the risk factors described in the Annual Report and other documents that FNCB periodically files with the Securities and Exchange Commission, including its Form 10-K for the year ended December 31, 2016.

[FNCB provides tabular information as follows]



FNCB Bancorp, Inc.
Selected Financial Data
Dec 31, Sept 30, Jun 30, Mar 31, Dec 31,
2017
2017
2017
2017
2016
Per share data:
Net income (fully diluted) $(0.36) $0.14 $0.11 $0.13 $0.09
Cash dividends declared $0.04 $0.03 $0.03 $0.03 $0.03
Book value $5.32 $5.82 $5.76 $5.58 $5.43
Tangible book value $5.32 $5.82 $5.76 $5.58 $5.43
Market value:
High $7.99 $8.00 $8.13 $7.50 $6.30
Low $6.54 $7.41 $6.35 $6.05 $5.00
Close $7.30 $7.57 $7.80 $6.37 $6.05
Common shares outstanding 16,757,963 16,757,963 16,757,963 16,692,314 16,645,845
Selected ratios:
Annualized return on average assets (2.09%) 0.80% 0.65% 0.78% 0.55%
Annualized return on average shareholders' equity (24.98%) 9.27% 7.60% 9.77% 6.43%
Efficiency ratio 73.42% 65.09% 72.81% 74.08% 77.25%
Tier I leverage ratio 7.74% 8.10% 7.99% 7.55% 7.53%
Total risk-based capital to risk-adjusted assets 12.08% 12.17% 12.53% 12.38% 12.06%
Average shareholders' equity to average total assets 8.35% 8.61% 8.49% 7.97% 8.50%
Yield on earning assets (FTE) 3.84% 3.77% 3.66% 3.47% 3.53%
Cost of funds 0.59% 0.59% 0.53% 0.48% 0.49%
Net interest spread (FTE) 3.25% 3.18% 3.13% 2.99% 3.03%
Net interest margin (FTE) 3.35% 3.27% 3.21% 3.07% 3.11%
Total delinquent loans/total loans 0.72% 0.81% 0.94% 0.75% 0.81%
Allowance for loan and lease losses/total loans 1.17% 1.17% 1.16% 1.16% 1.15%
Non-performing loans/total loans 0.34% 0.35% 0.50% 0.27% 0.31%
Annualized net charge-offs (recoveries)/average loans 0.06% 0.08% 0.14% (0.20%) 0.20%


FNCB Bancorp, Inc.
Non-GAAP Financial Measures
Reconciliation of net income to adjusted net income:
Three Months Ended Year Ended
December 31, December 31,
(dollars in thousands) 2017
2016
2017
2016
Net (loss) income $(6,114) $1,524 $147 $6,309
Deferred tax revaluation charge 8,007 - 8,007 -
Adjusted net income $1,893 $1,524 $8,154 $6,309
Reconciliation of net income per share to adjusted net income per share:
Three Months Ended Year Ended
December 31, December 31,
(dollars in thousands) 2017
2016
2017
2016
Basic:
Net (loss) income per share (basic) $(0.36) $- $0.01 $0.38
Deferred tax revaluation charge (basic) $0.48 $- $0.48 $-
Adjusted net income per share (basic) $0.11 $- $0.49 $0.38
Diluted:
Net (loss) income per share (diluted) $(0.36) $0.09 $0.01 $0.38
Deferred tax revaluation charge (diluted) $0.48 $- $0.48 $-
Adjusted net income per share (diluted) $0.11 $0.09 $0.49 $0.38
Adjusted return on average assets:
Three Months Ended Year Ended
December 31, December 31,
(dollars in thousands) 2017
2016
2017
2016
Adjusted net income $1,893 $1,524 $8,154 $6,309
Average assets 1,162,459 1,108,653 1,137,556 1,098,876
Adjusted return on average assets 0.65% 0.55% 0.72% 0.57%
Adjusted return on average equity:
Three Months Ended Year Ended
December 31, December 31,
(dollars in thousands) 2017
2016
2017
2016
Adjusted net income $1,893 $1,524 $8,154 $6,309
Average equity 97,089 94,271 95,056 92,565
Adjusted return on average equity 7.74% 6.41% 8.58% 6.82%


FNCB Bancorp, Inc.
Year-to-Date Consolidated Statements of Income
Year Ended
December 31,
(in thousands, except share data) 2017 2016
Interest income
Interest and fees on loans $29,821 $27,993
Interest and dividends on securities
U.S. government agencies 3,426 3,557
State and political subdivisions, tax-free 49 46
State and political subdivisions, taxable 3,809 2,574
Other securities 563 545
Total interest and dividends on securities 7,847 6,722
Interest on interest-bearing deposits in other banks 180 33
Total interest income 37,848 34,748
Interest expense
Interest on deposits 3,521 2,730
Interest on borrowed funds
Interest on Federal Home Loan Bank of Pittsburgh advances 599 595
Interest on subordinated debentures 380 625
Interest on junior subordinated debentures 300 247
Total interest on borrowed funds 1,279 1,467
Total interest expense 4,800 4,197
Net interest income before provision for loan and lease losses 33,048 30,551
Provision for loan and lease losses 769 1,153
Net interest income after provision for loan and lease losses 32,279 29,398
Non-interest income
Deposit service charges 2,903 2,892
Net gain on the sale of securities 1,597 960
Net gain on the sale of mortgage loans held for sale 304 340
Net gain on the sale of SBA guaranteed loans 79 51
Net gain on the sale of other repossessed assets 47 -
Net gain on the sale of other real estate owned 79 49
Loan-related fees 384 439
Income from bank-owned life insurance 527 552
Other 1,305 920
Total non-interest income 7,225 6,203
Non-interest expense
Salaries and employee benefits 14,161 14,320
Occupancy expense 2,105 1,777
Equipment expense 1,815 1,732
Data processing expense 2,023 1,997
Regulatory assessments 686 729
Bank shares tax 800 836
Expense of other real estate owned 488 409
Legal expense 128 362
Professional fees 956 961
Insurance expense 519 516
Other operating expenses 4,388 3,906
Total non-interest expense 28,069 27,545
Income before income taxes 11,435 8,056
Income tax expense 11,288 1,747
Net income $147 $6,309
Income per share
Basic $0.01 $0.38
Diluted $0.01 $0.38
Cash dividends declared per common share $0.13 $0.09
Weighted average number of shares outstanding:
Basic 16,722,966 16,571,262
Diluted 16,740,288 16,572,695


FNCB Bancorp, Inc.
Quarter-to-Date Consolidated Statements of (Loss) Income
Three Months Ended
Dec 31, Sept 30, Jun 30, Mar 31, Dec 31,
(in thousands, except share data) 2017
2017 2017
2017
2016
Interest income
Interest and fees on loans $8,073 $7,576 $7,192 $6,980 $7,008
Interest and dividends on securities
U.S. government agencies 860 816 850 900 879
State and political subdivisions, tax-free 7 7 12 23 16
State and political subdivisions, taxable 993 1,016 978 822 740
Other securities 154 166 119 124 114
Total interest and dividends on securities 2,014 2,005 1,959 1,869 1,749
Interest on interest-bearing deposits in other banks 34 24 32 90 19
Total interest income 10,121 9,605 9,183 8,939 8,776
Interest expense
Interest on deposits 1,008 943 826 744 721
Interest on borrowed funds
Interest on Federal Home Loan Bank of Pittsburgh advances 175 163 130 131 123
Interest on subordinated debentures 57 97 114 112 145
Interest on junior subordinated debentures 81 77 73 69 67
Total interest on borrowed funds 313 337 317 312 335
Total interest expense 1,321 1,280 1,143 1,056 1,056
Net interest income before provision (credit) for loan and lease losses 8,800 8,325 8,040 7,883 7,720
Provision (credit) for loan and lease losses 283 543 421 (478) 295
Net interest income after provision (credit) for loan and lease losses 8,517 7,782 7,619 8,361 7,425
Non-interest income
Deposit service charges 756 728 728 691 735
Net gain on the sale of securities 259 367 693 278 -
Net gain on the sale of mortgage loans held for sale 63 106 110 25 102
Net (loss) gain on the sale of other repossessed assets - - (10) 57 -
Net gain on the sale of SBA guaranteed loans - 23 56 - -
Net gain on the sale of other real estate owned 22 - 6 51 20
Loan-related fees 132 96 65 91 152
Income from bank-owned life insurance 128 129 135 135 126
Other 558 265 240 242 263
Total non-interest income 1,918 1,714 2,023 1,570 1,398
Non-interest expense
Salaries and employee benefits 4,092 3,247 3,298 3,524 3,954
Occupancy expense 538 394 586 587 476
Equipment expense 435 474 446 460 455
Data processing expense 521 506 509 487 475
Regulatory assessments 189 160 164 173 100
Bank shares tax 38 252 252 258 90
Expense of other real estate owned 56 104 288 40 74
Legal expense 13 23 24 68 77
Professional fees 294 206 180 276 245
Insurance expense 134 132 128 125 132
Other operating expenses 1,494 899 1,065 930 1,085
Total non-interest expense 7,804 6,397 6,940 6,928 7,163
Income before income taxes 2,631 3,099 2,702 3,003 1,660
Income tax expense 8,745 827 910 806 136
Net (loss) income $(6,114) $2,272 $1,792 $2,197 $1,524
(Loss) Income per share
Basic $(0.36) $0.14 $0.11 $0.13 $0.09
Diluted $(0.36) $0.14 $0.11 $0.13 $0.09
Cash dividends declared per common share $0.04 $0.03 $0.03 $0.03 $0.03
Weighted average number of shares outstanding:
Basic 16,757,963 16,757,963 16,716,899 16,657,551 16,621,467
Diluted 16,774,209 16,777,671 16,736,995 16,670,788 16,621,467


FNCB Bancorp, Inc.
Consolidated Balance Sheets
Dec 31, Sept 30, Jun 30, Mar 31, Dec 31,
(in thousands) 2017
2017
2017
2017
2016
Assets
Cash and cash equivalents:
Cash and due from banks $22,755 $24,881 $24,169 $23,571 $20,562
Interest-bearing deposits in other banks 14,991 18,929 1,991 3,154 91,883
Total cash and cash equivalents 37,746 43,810 26,160 26,725 112,445
Securities available for sale, at fair value 290,387 282,037 283,040 288,295 276,015
Stock in Federal Home Loan Bank of Pittsburgh at cost 2,753 2,450 2,282 2,678 3,311
Loans held for sale 1,095 147 617 563 596
Loans, net of net deferred costs and unearned income 770,643 759,489 728,141 715,450 731,279
Allowance for loan and lease losses (9,034) (8,862) (8,469) (8,306) (8,419)
Net loans 761,609 750,627 719,672 707,144 722,860
Bank premises and equipment, net 10,388 10,482 10,715 10,914 10,784
Accrued interest receivable 3,234 3,203 2,784 2,950 2,757
Bank-owned life insurance 30,460 30,332 30,203 30,068 29,933
Other real estate owned 1,023 1,088 1,183 1,352 2,048
Other assets 23,610 32,935 31,083 33,414 34,850
Total assets $1,162,305 $1,157,111 $1,107,739 $1,104,103 $1,195,599
Liabilities
Deposits:
Demand (non-interest-bearing) $176,325 $162,426 $147,878 $156,901 $173,702
Interest-bearing 826,123 820,786 784,872 766,525 841,437
Total deposits 1,002,448 983,212 932,750 923,426 1,015,139
Borrowed funds:
Federal Home Loan Bank of Pittsburgh advances 44,968 45,350 44,903 56,632 58,537
Subordinated debentures 5,000 5,000 10,000 10,000 10,000
Junior subordinated debentures 10,310 10,310 10,310 10,310 10,310
Total borrowed funds 60,278 60,660 65,213 76,942 78,847
Accrued interest payable 241 244 235 225 242
Other liabilities 10,147 15,513 12,797 10,107 11,000
Total liabilities 1,073,114 1,059,629 1,010,995 1,010,700 1,105,228
Shareholders' equity
Preferred stock - - - - -
Common stock 20,947 20,947 20,947 20,865 20,807
Additional paid-in capital 63,210 63,143 63,076 62,841 62,593
Retained earnings 6,779 13,282 11,517 10,228 8,531
Accumulated other comprehensive (loss) income (1,745) 110 1,204 (531) (1,560)
Total shareholders' equity 89,191 97,482 96,744 93,403 90,371
Total liabilities and shareholders’ equity $1,162,305 $1,157,111 $1,107,739 $1,104,103 $1,195,599


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) 2017
2017
2017
2017
2016
Interest income
Loans:
Loans - taxable $7,736 $7,266 $6,874 $6,643 $6,709
Loans - tax-free 511 470 482 511 453
Total loans 8,247 7,736 7,356 7,154 7,162
Securities:
Securities, taxable 2,007 1,998 1,947 1,846 1,733
Securities, tax-free 11 11 18 35 24
Total interest and dividends on securities 2,018 2,009 1,965 1,881 1,757
Interest-bearing deposits in other banks 34 24 32 90 19
Total interest income 10,299 9,769 9,353 9,125 8,938
Interest expense
Deposits 1,008 943 826 744 721
Borrowed funds 313 337 317 312 335
1,321 1,280 1,143 1,056 1,056
Net interest income $8,978 $8,489 $8,210 $8,069 $7,882
Average balances
Earning assets:
Loans:
Loans - taxable $725,988 $700,729 $682,426 $680,518 $684,225
Loans - tax-free 41,548 38,109 40,190 43,822 41,081
Total loans 767,536 738,838 722,616 724,340 725,306
Securities:
Securities, taxable 292,307 290,348 287,133 284,712 270,634
Securities, tax-free 600 600 1,105 2,571 1,664
Total securities 292,907 290,948 288,238 287,283 272,298
Interest-bearing deposits in other banks 12,215 7,499 12,676 39,520 15,727
Total interest-earning assets 1,072,658 1,037,285 1,023,530 1,051,143 1,013,331
Non-earning assets 89,801 92,603 90,672 92,368 95,322
Total assets $1,162,459 $1,129,888 $1,114,202 $1,143,511 $1,108,653
Interest-bearing liabilities:
Deposits $824,680 $792,649 $783,672 $807,981 $775,565
Borrowed funds 67,476 73,168 72,347 78,306 78,780
Total interest-bearing liabilities 892,156 865,817 856,019 886,287 854,345
Demand deposits 162,135 156,483 152,974 155,010 149,008
Other liabilities 11,079 10,325 10,633 11,045 11,029
Shareholders' equity 97,089 97,263 94,576 91,169 94,271
Total liabilities and shareholders' equity $1,162,459 $1,129,888 $1,114,202 $1,143,511 $1,108,653
Yield/Cost
Earning assets:
Loans:
Interest and fees on loans - taxable 4.26% 4.15% 4.03% 3.90% 3.94%
Interest and fees on loans - tax-free 4.92% 4.93% 4.80% 4.66% 4.41%
Total loans 4.30% 4.19% 4.07% 3.95% 3.97%
Securities:
Securities, taxable 2.75% 2.75% 2.71% 2.59% 2.56%
Securities, tax-free 7.33% 7.33% 6.51% 5.42% 5.83%
Total securities 2.76% 2.76% 2.73% 2.62% 2.58%
Interest-bearing deposits in other banks 1.11% 1.28% 1.01% 0.91% 0.48%
Total earning assets 3.84% 3.77% 3.66% 3.47% 3.53%
Interest-bearing liabilities:
Interest on deposits 0.49% 0.48% 0.42% 0.37% 0.37%
Interest on borrowed funds 1.86% 1.84% 1.75% 1.59% 1.70%
Total interest-bearing liabilities 0.59% 0.59% 0.53% 0.48% 0.49%
Net interest spread 3.25% 3.18% 3.13% 2.99% 3.03%
Net interest margin 3.35% 3.27% 3.21% 3.07% 3.11%


FNCB Bancorp, Inc.
Asset Quality Data
Dec 31, Sept 30, Jun 30, Mar 31, Dec 31,
(in thousands) 2017 2017 2017 2017
2016
At period end
Non-accrual loans, including non-accruing troubled debt restructured loans (TDRs) $2,578 $2,642 $3,681 $1,922 $2,234
Loans past due 90 days or more and still accruing - - - - -
Total non-performing loans 2,578 2,642 3,681 1,922 2,234
Other real estate owned (OREO) 1,023 1,088 1,183 1,352 2,048
Other non-performing assets 1,900 1,900 1,900 2,006 2,160
Total non-performing assets $5,501 $5,630 $6,764 $5,280 $6,442
Accruing TDRs $9,299 $9,283 $9,306 $8,775 $4,176
For the three months ended
Allowance for loan and lease losses
Beginning balance $8,862 $8,469 $8,306 $8,419 $8,490
Loans charged-off 310 377 465 297 572
Recoveries of charged-off loans 199 227 207 662 206
Net charge-offs (recoveries) 111 150 258 (365) 366
Provision (credit) for loan and lease losses 283 543 421 (478) 295
Ending balance $9,034 $8,862 $8,469 $8,306 $8,419

Source:FNCB Bancorp, Inc.

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