FNCB Bancorp, Inc. Announces 13% Increase in Third Quarter 2017 Earnings and 31% Increase in 2017 Year-to-Date Earnings

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DUNMORE, Pa., Nov. 07, 2017 — FNCB Bancorp, Inc. (OTCQX:FNCB), the parent company of Dunmore-based FNCB Bank (the “Bank”), reported net income of $2.272 million, or $0.14 per basic and diluted share, for the third quarter of 2017, an increase of $255 thousand, or 12.6%, compared to net income of $2.017 million, or $0.12 per basic and diluted share, for the same quarter of 2016. Net income for the nine months ended September 30, 2017 increased $1.5 million, or 30.8%, to $6.3 million, or $0.37 per basic and diluted share, from $4.8 million, or $0.29 per basic and diluted share, for the comparable nine-month period of 2016. The favorable variances in third quarter and year-to-date earnings were largely due to improved net interest income and non-interest income, coupled with a reduction in non-interest expense. Annualized return on average assets was 0.80% and 0.74%, respectively, for the three and nine months ended September 30, 2017, compared to 0.73% and 0.58%, for the respective periods of 2016. Annualized return on average equity was 9.27% and 8.87%, respectively, for the three- and nine-month periods ended September 30, 2017, compared to 8.46% and 6.95%, respectively, for the comparable periods in 2016. Dividends declared and paid were $0.03 per share for the third quarter of 2017 and $0.09 per share for the year-to-date period of 2017, which represented a 50.0% increase compared to $0.02 per share and $0.06 per share, respectively, for the three and nine months ended September 30, 2016. Year-to-date dividends declared and paid represented a 1.6% annualized return to shareholders based on the closing stock price of $7.57 per share at September 30, 2017.
Performance Highlights:7.9% increase in tax-equivalent net interest income, comparing the third quarters of 2017 and 2016;Earning asset yield improves 19 basis points comparing third quarters of 2017 and 2016;Tax-equivalent net interest margin increases 13 basis points comparing the third quarters of 2017 and 2016;Efficiency ratio improved to 65.09% for the third quarter of 2017 from 70.96% for the comparable quarter of 2016;Year over year growth in total deposits of $52.3 million, or 5.6%;Closing stock price increases $2.57 per share, or 51.4%, year over year;Tier I leverage ratio at September 30, 2017 improved 57 basis points, or 7.6%, from December 31, 2016;Accelerated a $5.0 million principal reduction on FNCB’s subordinated notes originally due September 1, 2018 to September 1, 2017; andElected three new members to the boards of directors of FNCB and the Bank.“Our strong third quarter performance reflected solid, organic loan and deposit growth, improved earning asset yields and a continued focus on improving efficiency and maintaining stable non-interest expense levels,” stated Gerard A. Champi, President and Chief Executive Officer. “Also in the third quarter, we were pleased to welcome three new members to the boards of directors of both FNCB and the Bank. The new directors, all accomplished leaders among their respective industries and the communities we serve, will add great value and support to our organization in executing our strategic objectives,” concluded Mr. Champi.Summary Results for the Three and Nine Months Ended September 30, 2017Tax-equivalent net interest income improved $0.6 million, or 7.9%, to $8.5 million for the third quarter of 2017, from $7.9 million for the same quarter of 2016. For the nine months ended September 30, 2017, tax-equivalent net interest income increased $1.4 million, or 5.9%, to $24.8 million, compared to $23.4 million for the same nine months of 2016. The improvement for both the quarter and year-to-date periods primarily reflected higher yields earned on and growth in average earning assets, coupled with reduced reliance on borrowed funds, partially offset by higher funding costs. Tax-equivalent earning asset yields improved 19 basis points for the third quarter and 8 basis points for the nine months ended September 30, 2017 over the same periods of 2016. Average earning assets grew $36.8 million, or 3.7%, and $41.1 million, or 4.1%, comparing the quarter and year-to-date periods ended September 30, 2017 and 2016, respectively. Strong growth in lower-costing interest-bearing demand and savings accounts resulted in reduced reliance on higher-costing Federal Home Loan Bank of Pittsburgh (“FHLB”) advances, which provided for relatively stable funding costs despite upward movements in short-term interest rates. Comparing the three months ended September 30, 2017 and 2016, average interest-bearing deposits increased $55.2 million, or 7.5%, while average borrowed funds decreased $30.7 million, or 29.5%. For the nine months ended September 30, interest-bearing deposits averaged $794.7 million in 2017, an increase of $65.2 million, or 8.9%, compared to $729.5 million in 2016. Conversely, borrowed funds averaged $74.6 million for the nine months ended September 30, 2017, a decrease of $36.9 million, or 33.1%, from $111.5 million averaged for the same period of 2016. Comparing the three months and nine months ended September 30, 2017 and 2016, FNCB’s cost of funds increased 7 basis points and 3 basis points, respectively. The tax-equivalent net interest margin improved 13 basis points to 3.27% for the third quarter of 2017 from 3.14% for the same quarter 2016. In addition, the third quarter 2017 margin was a 6-basis point improvement from 3.21% for the second quarter of 2017. For the nine months ended September 30, 2017 the tax-equivalent net interest margin was 3.18%, a 5-basis point improvement compared to 3.13% for the same nine months of 2016.For the three months and nine months ended September 30, 2017, non-interest income increased $0.3 million, or 24.2%, and $0.5 million, or 10.4%, compared to the respective periods of 2016. The improvement in both the quarter and year-to-date periods resulted primarily from increases in net gains realized on the sale of available-for-sale securities.For the three months ended September 30, 2017, non-interest expense totaled $6.4 million, a decrease of $0.2 million, or 2.4%, from $6.6 million for the same three months of 2016. The decrease in non-interest expense comparing the quarterly periods reflected a decrease in rent expense associated with long-term facilities planning, coupled with reductions in legal, regulatory, and advertising expenses and other losses. For the nine months ended September 30, 2017, non-interest expense decreased $0.1 million, or 0.6%, compared to the same year-to-date period of 2016. The decrease in non-interest expense for the year-to-date periods was due largely to lower salary and benefit costs due to open positions and a decline in severance costs, coupled with lower regulatory and legal expenses, partially offset by higher occupancy and equipment expenses.Asset QualityAsset quality improved during the third quarter, as total non-performing loans decreased $1.0 million to $2.6 million at September 30, 2017 from $3.7 million at June 30, 2017, but were $0.4 million higher than $2.2 million at December 31, 2016. The ratio of non-performing loans to total loans was 0.35% at September 30, 2017, compared to 0.50% at June 30, 2017 and 0.31% at December 31, 2016. FNCB’s asset quality compared favorably to the peer average of 0.70% at June 30, 2017, the most recent data reported for FDIC-insured banks having assets between $1.0 billion and $3.0 billion. The allowance for loan and lease losses as a percentage of gross loans was 1.17% at September 30, 2017, compared to 1.16% at June 30, 2017 and 1.15% at December 31, 2016.Financial ConditionTotal assets increased $49.4 million, or 4.5%, to $1.157 billion at September 30, 2017 from $1.108 billion at June 30, 2017. The increase reflected strong deposit growth, which was used to fund earning asset growth and accelerate a $5.0 million principal payment on FNCB’s subordinated notes originally due September 1, 2018 to September 1, 2017. Total deposits increased $50.5 million, or 5.4%, which was due largely to cyclical deposit trends of municipal customers, as well as the development of new municipal relationships. Net loans grew $31.0 million, or 4.3%, to $750.6 million at September 30, 2017 from $719.6 million at June 30, 2017. Total assets at September 30, 2017 decreased $38.5 million, or 3.2%, from $1.196 billion at December 31, 2016. The change in total assets from year-end 2016, primarily resulted from a $68.6 million, or 61.0%, reduction in cash and cash equivalents, which was driven by a $31.9 million reduction in total deposits, coupled with the repayment of borrowed funds of $18.2 million. The decrease in total deposits was attributed primarily to the anticipated exit of short-term deposits in the first quarter of 2017 that were received late in 2016, with the remainder used to fund earning asset growth. Net loans grew $27.8 million, or 3.8%, to $750.6 million at September 30, 2017 from $722.9 million at December 31, 2016. Additionally, securities available for sale increased $6.0 million, or 2.2%, to $282.0 million at the end of the third quarter of 2017 from $276.0 million at year-end 2016.Total shareholders’ equity increased $7.1 million, or 7.9%, to $97.5 million at September 30, 2017 from $90.4 million at December 31, 2016. The capital improvement resulted primarily from net income of $6.3 million, coupled with a $1.7 million increase in accumulated other comprehensive income, from the appreciation in the fair value of available-for-sale securities, net of tax effects. 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.htmlAbout FNCB Bancorp, Inc.:
FNCB Bancorp, Inc. is the bank holding company of FNCB Bank, which provides personal, small business and commercial banking services to individuals and businesses throughout Northeastern Pennsylvania through its 18 branch offices and Allentown-based Limited Purpose Banking Office.  The institution was established as a National Banking Association in 1910 as The First National Bank of Dunmore, and had been operating under the name First National Community Bank from 1988 through June 2016. Effective June 30, 2016, the institution changed its name to FNCB Bank upon its conversion from a national charter to a Pennsylvania state charter.  For more information about 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                                      
[email protected]                                           
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, fiscal and tax 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 stock 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]     

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Maria Burns

Maria Burns

Maria is a Viral News Editor who graduated from the University Of California. She likes social media trends, being semi-healthy, Buffalo Wild Wings and vodka with lime. When she isn’t writing, Maria loves to travel. She last went to Thailand to play with elephants and is planning a trip to Bali.
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