GlobeNewswire Inc | Jul 30, 2021 04:05PM EDT

July 30, 2021

DUNMORE, Pa., July 30, 2021 (GLOBE NEWSWIRE) -- FNCB Bancorp, Inc. (NASDAQ: FNCB; www.fncb.com), the parent company of Dunmore-based FNCB Bank (the Bank), (collectively, "FNCB")today reported net income of $5.2million, or $0.26 per basic and diluted share, for the three months ended June 30, 2021, an increase of $1.2 million, or 30.0% from $4.0 million, or $0.20 per basic and diluted share, for the same three months of2020. The increase in second quarter 2021 earnings was largely due to a $2.4 million increase in net interest income, coupled with a $0.7 million reduction in the provision for loan and lease losses. These positive factors were partially offset by a $0.8 million reduction in non-interest income and a $0.8 million increase in non-interest expense. For the six months ended June 30, 2021, net income totaled $11.1 million, or $0.55 per basicand diluted share, an increase of $5.0 million, or 81.8%, from $6.1 million, or $0.30 per basic and diluted share,for the same six months of 2020. The earnings improvement for the year-to-date period ending June 30, 2021 was primarily due to a $4.7 million increase in net interest income, coupled with $1.6 million reduction in the provision for loan and lease losses, partially offset by a $0.8 million increase in non-interest expense.

For the three and sixmonths ended June 30, 2021, the annualized return on average assetswas1.38% and 1.49%, respectively, and 1.21% and 0.96%, respectively, for the same period of 2020. The annualized return on average equity was 13.37% and 14.31%, respectively for the three and six months ended June 30, 2021, compared to 11.62% and 8.87%, for the comparable periods of 2020. FNCB declared and paid dividends to holders of common stockof $0.060 per sharefor the second quarter of 2021 and $0.120 per share for the six months endedJune 30, 2021, a 9.1%increase compared to $0.055and $0.110 per share for thesame periodsof 2020.

Secondquarter 2021 results as compared to the second quarter of 2020:

Second quarter net income increased $1.2 million, or 30.0%, to $5.2 ? million, or $0.26 per share in 2021 compared to $4.0 million, or $0.20 per share in 2020; ? Yield on earnings assets (FTE) increased 10 basis points to 3.80% in 2021 from 3.70% in 2020; ? Cost of funds decreased 39 basis points to 0.30% in 2021 from 0.69% in 2020; ? Net interest margin (FTE) increased 40 basis points to 3.58% in 2021, compared to 3.18% in 2020; ? Provision for loan and lease losses decreased $0.7 million, or 81.3%; ? Non-interest income decreased $0.8 million, or 31.7%; ? Non-interest expense increased $0.8 million, or 12.5%; and ? Efficiency ratio improved to 51.86% in 2021 compared to 56.53% in 2020.

Summary financial position at June 30, 2021as compared to December 31, 2020:

? Total assets grew $59.1 million, or 4.0%, to $1.525 billion at June 30, 2021 from $1.466 billion at December 31, 2020; Loans, net of deferred loan fees and cost and unearned income, increased ? $75.4 million, or 8.4%, to $976.5 million at June 30, 2021 from $901.1 million at December 31, 2020; ? Included in net loans were PPP loans outstanding, net of loan origination fees and costs, of $85.8 million at June 30, 2021; ? Total deposits increased $50.7 million, or 3.9% to $1.338 billion at June 30, 2021 from $1.287 billion at December 31, 2020; ? Non-performing loans as a percentage of total loans improved to 0.47% at June 30, 2021 from 0.62% at December 31, 2020; and The Bank was well capitalized with total risk-based capital and leverage ? ratios of 15.79% and 9.90%, respectively, at June 30, 2021, and 15.79% and 9.57%, respectively, at December 31, 2020.

"We are very pleased with our second quarter performance," stated Gerard A. Champi, President and CEO."Our net interest income was favorably impacted by origination fees recognized on forgiven PPP loans and the early payoff of two loans originated under the Federal Reserve Bank's Main Street Lending Program. Additionally, we were able to continue to reduce our deposit costs for eightconsecutive quarters. We also redirected some of our excess liquidity into the investmentportfolio to enhance net interest income going forward. We experienced an uptick in loan demand during the second quarter of 2021.Demand for our proprietary WOW mortgage product was very strongand we saw some renewed demand in the commercial sector as well. Our asset quality remainsfavorable, with continued improvement in non-accrual loan levelsand delinquency rates. As we head into the second half of the year, we are cautiously optimistic but remain vigilant as the COVID-19 pandemic continues to evolve,"concluded Champi.

Impact of the COVID-19pandemic

On December 27, 2020, the Consolidated Appropriations Relief Actwas signed into law that extended and modified several provisions of the PPP to includean additional allocation of $284 billion in funding. On January 19, 2021, FNCB began originating additional PPP loans under this round of funding. The SBA continued to accept new applications through May 31, 2021. During the six months ended June 30, 2021, FNCB had generated and received SBA approval and funding for 679 PPP loans totaling $76.3 million and received $3.6 million in related deferred loan origination fees associated with this funding.During the six months ended June 30, 2021, FNCB received forgiveness for PPP loans totaling $69.1 million, with $2.3 million in PPP loan origination fees, net of loan origination costs, recognized into interest income upon forgiveness. PPP loans outstanding at June 30, 2021 were $85.8 million. FNCB expects to apply and receive forgiveness for the majority of the outstanding PPPloans by the end of 2021.

During the first half of 2021, widespread availability and distribution of vaccines has led to lifting of restrictions, reopening of the economy and improvingeconomic growth across the United States and more specifically within our market area. In early April 2021, the Governor of Pennsylvania reduced some of the restrictions on certain businesses, primarily restaurants and hospitality-related businesses. However, lingering effects from theCOVID-19 pandemic continue to impact employment and supply-chains affecting national, regional and local economies.FNCB branches are open, and while fully operational,FNCB continues to follow CDC and Commonwealth guidance and take additional precautions to ensure the safety of its customers and its employees. Specifically, plexiglass shields are utilizedin teller and personal bankerareas and 6 feet social distancing signage remains in place. Fully-vaccinated customers and employees are allowed to enter bank premises without face masks. FNCB requires employees who are not fully-vaccinated to wear masks at all times whileon bank premises.

Regarding our banking operations, commercial activity within our market area, while improving, remains volatile andhas not returned to pre-pandemic levels. Economic restrictions adopted in2020 caused many borrowers to request payment deferrals and other payment accommodations. As of the end of the second quarter of 2021, nearly all have resumed making contractual principal and interest payments. While positive developments have occurred, management is keenly aware that uncertainty regarding the pandemic still exists. The number of positive cases has risen in recent weeks, as the Delta variant of the virus has begun rapidly spreading, specifically in areas with low vaccination rates. The reinstitution of restrictions by federal, state and local governments, if adopted, could negatively impact economic recovery, and result in financial distress for FNCBs business and consumer customers, which could impede loan growth and result in asset quality deterioration. Additionally, FNCB's commercial customer base includes businesses in industries such as hotel/lodging, restaurants, hospitality, and retail and commercial real estate, all of which had been significantly and adversely impacted in 2020 by economic restriction related to the COVID-19 pandemic. Management continues to closely monitor customers within these industries as the economic recovery unfolds.

Management expects the COVID-19 pandemic, as well as certain provisions of legislative and regulatory relief efforts, to continue to impact FNCB's operations. The full impact is still unknown, continues to evolve and will be contingent upon the spread of variant strains, vaccination rates and continued economic recovery. At this time, management cannot determine or estimate the full magnitude of the impact and cannot provide any assurances as to the effect onFNCB's results of operations or financial position. The FNCB team will continue to work diligently to address any issues related to the COVID-19 pandemic in a safe and sound manner as they arise. Managementbelieves that FNCB's balance sheet and capital position are strong and will allow FNCBto withstand any further challenges that may be presented.

Summary Results

Net interest income on a tax-equivalent basis increased $2.5million, or 25.3%, to $12.3 million for the three months ended June 30, 2021from $9.8 million for the comparable period of 2020. The improvement in tax-equivalent net interest income primarily reflected an increase in tax-equivalent interest income of $1.6million or 14.3%, to $13.0 million for the second quarter of 2021 from $11.4 million for the same quarterof 2020,coupled with a decreasein interest expense of $0.8 million, or 52.4%, to $0.8 million from $1.6 million comparing the second quarters of 2021 and 2020.The $1.6 million, or 14.3%, increase intax-equivalent interest income comparing the second quarters of 2021 and 2020 largely reflected higher volumes of earning assets, coupled with a net increase in the tax-equivalent yield on earning assets.Total average earning assets increased $138.1 million, or 11.2%, to $1.371 billion for the three months ended June 30, 2021 from $1.233 billion for the same three months of 2020, which reflected growth in both average loan balances, primarily PPP loans, and average security balances.In addition to the volume increase there wasa 10-basis point increase in the tax-equivalent yieldon earning assets to 3.80% for the three months ended June 30, 2021 compared to 3.70% for the same three months of 2020. Specifically, the tax-equivalent yield on the loan portfolio increased 35 basis points to 4.33% for the three months ended June 30, 2021 compared to 3.98% for the same three months of 2020. Loan yields were favorably impacted by the recognition of $1.1 million in net deferred loan origination fees on forgiven PPP loans. Partially offsetting the positive impact due to the increase in loan yields, was a 30-basis point reduction in the tax-equivalent yield on the securities portfolio to 2.63% for the second quarter of 2021 from 2.93% for the same quarter of 2020.The $0.8 million, or 52.4%, decrease in interest expense was primarilydue to a 39-basis pointreduction in the cost of funds to 0.30% for the three months ended June 30, 2021 from 0.69% for the same three months of 2020. Specifically, the average rate paid forinterest-bearing deposits decreased 37basis points to 0.28% for the second quarter of 2021from 0.65% for the same period of 2020. The average rates paid forinterest-bearing demand and time deposits, which reflected the reduction in market interest rates and repricing of higher-costing time deposits upon maturity,decreased 34basis points and 53basis points, respectively, comparingthe three months ended June 30, 2021 and 2020. FNCB experienced strong deposit growth due to additional fiscal stimulus in the first quarter of 2021. Changing customer deposit preferencesdue to the reduction in economic activity and uncertainty related to the COVID-19 pandemic also contributed to the deposit growth, as well as deposit migration of time deposits into non-maturity deposits. Specifically, average interest-bearing deposits increased $169.1million, or 19.9%, to $1.020 billion from $850.5 million comparing the second quarters of 2021 and 2020, respectively.Average interest-bearing demand deposits increased $149.3million, or 26.5%, to $712.8million for the second quarter of 2021compared to $563.5 million for the same quarter of 2020, while average savings deposits increased $23.8 million, or 24.0%, to $123.2 million from $99.4million comparing the second quarters of 2021 and 2020, respectively. Conversely, average time deposits decreased $4.0 million, or 2.1%,to $183.6 million for the three months ended June 30, 2021 from $187.6 million for the same three months of 2020.The strong growth in deposit volumes resulted in a combined net increase tointerest expense of $0.1 million.FNCB used the excess liquidity from deposit growth to reduce its reliance on higher-costing borrowed funds. As a result, average borrowed funds decreased $71.5 million, or 87.4%, to $10.3 million from $81.8million comparing the second quarters of 2021 and 2020.

On a year-to-date basis, tax-equivalent net interest income increased $4.8 million, or 25.1%, to $23.9 million for the sixmonths ended June 30, 2021from $19.1 million for the comparable period of 2020. The improvement in tax-equivalent net interest income was due to a $2.8 million, or12.5%, increase in tax-equivalent interest income,coupled with a $2.0 million, or 54.9%,decreasein interest expense.The increase in tax-equivalent interest income for the year-to-date period resulted primarily from the $179.8 million, or 15.3%, increase in average earning assetbalances. Average total security balances increased $97.9 million, or 34.0%, to $385.7 million for the six months endedJune 30, 2021 from $287.8 million for the same period of 2020. In addition, average loan balances increased $59.8 million, or 6.8%, to $937.5 million for the six months ended June 30, 2021, compared to $877.7 million for the same six months of 2020.The $2.0 million, or 54.9%, decrease in interest expense resulted primarily from a decrease in funding costs, and a reduction in average borrowed funds, partially offset by an increase in average interest-bearing deposits. FNCB's total cost of funds decreased47 basis points to 0.32% for the six months ended June 30, 2021 from 0.79% for the same six months of 2020, which largely reflected a decrease in thecost of interest-bearing deposits of43basis points to 0.30% from 0.73%, respectively, comparing the six months ended June 30, 2021 and 2020. Specifically,comparing the year-to-date periods of 2021 and 2020, the rates paid on time deposits, interest-bearing demand deposits and savings deposits decreased 56 basis points, 41 basis points and 4 basis points, respectively.Regarding volumes of interest-bearing liabilities, borrowed funds averaged $10.3 million for the six months ended June 30, 2021, a decrease of$61.5 million, or 85.7%, from $71.8 million for the same period of 2020.Partially offsetting this decrease was a $173.5 million, or 20.8%, increase in average interest-bearing deposits to $1.009 billion for the first half of 2021 compared to $835.9 million for the same period of 2021.

The tax-equivalent net interest margin, a key measurement used in the banking industry to measure income from earning assets relative to the cost to fund those assets, is calculated by dividing tax-equivalent net interest income by average interest-earning assets. FNCBs tax-equivalent net interest margin improved 40basis points to 3.58% for the second quarter of 2021from 3.18% for the same quarter of 2020, and 30 basis points to 3.53% for the six months ended June 30, 2021, from 3.23% for the same six-month period of 2020. The marginimprovement was primarily impacted by activity related to PPP loans, coupled with decreases in funding costs. Additionally, rate spread, the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities shown on a fully tax-equivalent basis, improved 49 basis points to 3.50% for the three months ended June 30, 2021from3.01% for the same three months of 2020. For the year-to-date period ended June 30, 2021, the rate spread improved 41 basis points to 3.45% from 3.04%for the same period of 2020.

For the three months ended June 30, 2021, non-interest income decreased $0.8 million, or 31.7%, to $1.7 millionfrom $2.5million for the three months ended June 30,2020. The decrease was largely due to reductionsin net gains on the sale of available-for-sale debt securities of $922 thousand and loan referral fees of $198 thousand, partially offset by an increase in deposit service charges of $248 thousand. There were nonet gains realized on the sale of available-for-sale debt securities during the three months ended June 30, 2021. Comparatively, net gains realized on the sale of available-for-sale debt securities were $922 thousand for the same three-month period of 2020. Loan referral fees include fees received from counterparties related to various commercial loan interest rate swap transactions and fees received for the referral of FHA residential mortgage loans to a third-party broker. The reduction in loan referral fees reflected a decrease in the number and volume of such transactions in 2021 as compared to 2020. These reductions were partiallyoffset by a$248 thousand, or 35.0%,increase in deposit service charges to $956 thousand for the three months ended June 30, 2021 compared to$708 thousand for the three months ended June 30,2020.For the six months ended June 30, 2021, non-interest income increased $288 thousand, or 6.9%,to $4.5 million from $4.2 million for the same period of 2020. The increase resulted primarilyfroma settlement in the amount of $426 thousand frombank-owned life insurance death benefit claim that was recognized in 2021,coupled with increases in net gains on equity securities, deposit service chargesand loan-related fees.Net gains on equity securities were $400 thousand for the six months ended June 30, 2021, compared to $18thousand for the same period of 2020, an increase of $382 thousand. Deposit service charges increased $297 thousand, or 19.4%, to $1.8 million from $1.5 million for the same six-month period of 2020, resulting primarily froman increase in debit card usage. Additionally, loan-related fees increased $156thousand, or 192.6%, to $237thousand for the six months ended June 30, 2021, compared to $81 thousand for the six months ended June 30, 2020. The increase in loan related fees was due primarily to the recognition of servicing fees on loans originated under the Main Street Lending Program.These increases wereslightly offset by a $858 thousand, or 80.1%, decreasein net gains on available-for-sale debt securities to $213 thousand for the six months ended June 30, 2021 from $1.1 million for the same period of 2020.

Non-interest expense increased $802 thousand, or 12.5%, to$7.2 million forthe three months ended June 30, 2021 from $6.4 million for the three months June 30, 2020. The increase primarily reflected increases in salaries and benefits, data processing,and advertising expenses. Salaries and benefits increased $540 thousand, or 15.4%, to $4.0 million for the three months ended June 30, 2021, from $3.5million for the same period in 2020. Data processing and advertising expenses increased $176 thousand and $101 thousand, respectively, to $885 thousand and $214 thousand, respectively, for the second quarter of 2021 when compared tothe same quarter of 2020.For the six months ended June 30, 2021, non-interest expense increased $768 thousand, or 5.6%, to $14.4 million compared to $13.6 million for the same six-month period of 2020, primarily due to the increase in salaries and employee benefits, data processing expenses and regulatory assessments. Salaries and employee benefits increased $347 thousand, or 4.7%, to $7.8 million at June 30, 2021, compared to $7.4 million for the six months ended June 30, 2020. Data processing expenses increased $270 thousand, or 18.8%, to $1.7 million for the first half of2021, compared to $1.4 million forthe same period of 2020, primarily due to added costs associated with employees working remotely, coupled with additions to FNCB's digital banking services. Regulatory assessments increased $167 thousand, or 125.6%, to $300 thousand at June 30, 2021, from $133 thousand forthe six months ended June 30, 2020,which reflectedFDIC small bank assessment credits that were utilized in 2020.Marketing initiatives were very limitedduring the second quarter of 2020 as FNCB was operating under its pandemic preparedness plan. With the reopening of the economy and FNCB branches fully operational, marketing initiatives have since resumed, which resulted in the increase in advertising costs for the second quarter of 2021.In comparing boththe second quarter and year-to-date periods of 2021 and 2020, the increase in salaries and employee benefits was largely due to a decrease in the amount of payroll-related loan origination costs that are deferred and amortized over the life of the loan. The increase in dataprocessing costs reflected added costs associated with a remote work environment, enhancements made for cybersecurity protection and higher software costs. The year-over-year increase in regulatory assessments reflected the utilization of the remaining FDIC small bank assessment credits in 2020.

Asset Quality

FNCB's asset quality improved during the first half of 2021, astotal non-performing loans decreased $1.0 million, or 18.4%,to $4.6 million, or 0.47% of total loans,at June 30, 2021 from $5.6 million, or 0.62% of total loans, at December 31, 2020. The improvement primarily reflected the payoff of one commercial relationship, strong repayment activity and the return of several loans to accrual status. Year-over-year, non-performing loans decreased $2.2 million, or 32.4%, from $6.7 million, or 0.71% of total loans, at June 30, 2020.FNCBs loan delinquency rate (total delinquent loans as a percentage of total loans) improved to 0.56% at June 30, 2021, compared to 0.99% at December 31, 2020 and 0.89% at June 30, 2020. FNCB recorded a provision for loan and lease losses of $0.2 million for the second quarter of 2021 compared to $0.8 million for the same quarter of 2020. For the six months ended June 30, 2021, the provision for loan and lease losses totaled $0.3 million compared to $2.0 million for the same period of 2020. The credit provisioning in 2020 wasdirectly related to the economic disruption and uncertainty caused bythe onset of COVID-19 pandemic. The allowance for loan and lease losses was $12.3million, or 1.26% of total loans,at June 30, 2021, compared to $11.9 million, or 1.33% of total loans, at December 31, 2020 and $11.0 million, or 1.16% of total loans, at June 30, 2020.Excluding PPP loans, which are 100.0% guaranteed by the federal government, this ratio was 1.37% at June 30, 2021.

Financial Condition

Total assets increased $59.1 million, or 4.0%, to $1.525 billion at June 30, 2021from $1.466billion at December 31, 2020. The change in total assets primarily reflected increases in net loans and available-for-sale debt securities, which were partiallyoffset by a decrease in cash and cash equivalents. Net loans increased$75.1 million, or 8.4%, to $964.3 million at June 30, 2021 from $889.2million at December 31, 2020,primarily due to the origination and funding of a second round of PPP loans, partially offset by first-round PPP loan forgiveness. Available-for-sale debt securities increased$82.8 million, or 23.6%, to$432.8 million at June 30, 2021from $350.0million at December 31, 2020, which primarily reflected the deployment of excess liquidity into the investment portfolio. Conversely, cash and cash equivalents decreased $99.9 million, or 64.1%, to $55.9 million at June 30, 2021 from $155.8 million at December 31, 2020.Total deposits increased$50.7 million, or 3.9%, to $1.338 billion at June 30, 2021 from$1.287billion atDecember 31, 2020. Specifically, non-interest-bearing deposits increased $40.9 million, or 15.1%, due primarily to second round PPP loan funding and additional fiscal stimulus payments, while interest-bearing deposits increased$9.8 million, or 1.0%.Borrowed funds remained constant at $10.3million at June 30, 2021andDecember 31, 2020, comprised entirely of $10.3 million in FNCB's junior subordinated debentures.

Additionally, on January 27, 2021, FNCB's Board of Directors authorized a stock repurchase program under which up to 975,000 shares of FNCB's outstanding common stock may be acquired in the open market.Repurchases are subject to SEC regulations as well as certain price, market volume and timing constraints specified in the trading plan,and the repurchased shares will be returned to the status of authorized but unissued shares of Common Stock. During the six months ended June 30, 2021, FNCB repurchased 193,530 shares at a weighted-average price per share of $7.18, or $1.4 million in aggregate. There is not a guarantee as to the exact number of shares that will be repurchased by FNCB, and FNCB may discontinue at any time thatmanagement determines additional repurchases are no longer warranted.

Total shareholders equity increased $4.7million, or 3.1%, to $160.6 million at June 30, 2021from $155.9million at December 31, 2020. The increase in capital was primarily due to net income for the six months ended June 30, 2021 of $11.1million, partially offsetby $2.4 million in dividends declared and paidfor the six months ended June 30, 2021,a $2.7 million decrease in accumulated other comprehensive income related primarily to the depreciation in the fair value of FNCB's available-for-sale debt securities, net of deferred taxes, and $1.4 million for the repurchase of common shares.FNCB Bank's total risk-based capital and Tier 1 leverage ratios were 15.79% and 9.90% at June 30, 2021, respectively, compared to 15.79% and 9.57% at December 31, 2020, respectively.

Availability of Filings

Copies of FNCBs 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. FNCBs 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 ofFNCBs 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 110 years, FNCB Bank continues as a premier community bank in Northeastern Pennsylvania offering a full suite of personal, small business and commercial banking solutions with industry-leading mobile, online and in-branch products and services. FNCB currently operates through 17community offices located in Lackawanna, Luzerne and Wayne Countiesand 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 OfficerFNCB 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 FNCBs beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions, that are subject to significant risks and uncertainties, and are subject to change based on various factors (some of which are beyond our control). The words may, could, should, will, would, believe, anticipate, estimate, expect, intend, plan,project,futureand similar expressions are intended to identify forward-looking statements. The following factors, among others, could cause FNCBs financial performance to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements: the effect of the novel Coronavirus Disease 2019("COVID-19") pandemic on FNCB and its customers, the Commonwealth of Pennsylvania and the United States, related to the economy and overall financial stability; government and regulatory responses to the COVID-19 pandemic; government intervention in the U.S. financial system including the effects of recent legislative, tax, accounting and regulatory actions and reforms, including, but not limited to,the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act), the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act)and the Tax Cuts and Jobs Act; political instability; the ability of FNCB to manage credit risk; weakness in the economic environment, in general, and within FNCBs market area; the deterioration of one or a few of the commercial real estate loans with relatively large balances contained in FNCBs loan portfolio; greater risk of loan defaults and losses from concentration of loans held by FNCB, including those to insiders and related parties; if FNCBsportfolio of loans to small and mid-sized community-based businesses increases its credit risk; if FNCBs ALLL is not sufficient to absorb actual losses or if increases to the ALLL were required; FNCB is subject to interest-rate risk and any changes in interest rates could negatively impact net interest income or the fair value of FNCB's financial assets; if management concludes that the decline in value of any of FNCBs investment securities is other-than-temporary could result in FNCB recording an impairment loss; if FNCBsrisk management framework is ineffective in mitigating risks or losses toFNCB; if FNCB is unable to successfully compete with others for business; a loss of depositor confidence resulting from changes in either FNCBs financial condition or in the general banking industry; if FNCBis 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 FNCBs information systems; any systems failures or interruptions in information technology and telecommunications systems of third parties on which FNCB depends; security breaches; if FNCBs 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 managements 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 FNCBs 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 Banks 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 FNCBs 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 managements analysis only as of the date of this report, even if subsequently made available by FNCB on its website or otherwise. FNCB does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of FNCB to reflect events or circumstances occurring after the date of this press release.Readers should carefully review the risk factors described in the Annual Report and other documents that FNCB periodically files with the SEC, including its Form10-K for the year ended December 31, 2020 and Form 10-Q for the quarter ended March 31, 2021.

FNCB Bancorp, Inc.Selected Financial Data Jun 30, Mar 31, Dec 31, Sept 30, Jun 30, 2021 2021 2020 2020 2020 Per share data:Net income(fully $ 0.26 $ 0.29 $ 0.26 $ 0.20 $ 0.20 diluted)Cash dividends $ 0.060 $ 0.060 $ 0.055 $ 0.055 $ 0.055 declaredBook value $ 7.99 $ 7.65 $ 7.70 $ 7.41 $ 7.19 Tangible book $ 7.99 $ 7.65 $ 7.70 $ 7.41 $ 7.19 valueMarket value: High $ 7.98 $ 8.94 $ 7.95 $ 6.93 $ 7.19 Low $ 6.90 $ 5.80 $ 5.16 $ 5.08 $ 5.15 Close $ 7.27 $ 7.54 $ 6.40 $ 5.32 $ 5.75 Common shares 20,102,602 20,240,668 20,245,649 20,243,589 20,208,607 outstanding Selected ratios:Annualizedreturn on 1.38 % 1.61 % 1.41 % 1.15 % 1.21 %average assetsAnnualizedreturn onaverage 13.37 % 15.27 % 13.49 % 11.05 % 11.62 %shareholders'equityEfficiency 51.86 % 51.87 % 54.89 % 66.66 % 56.53 %ratioTier Ileverage ratio 9.90 % 9.88 % 9.57 % 10.17 % 10.60 %(FNCB Bank)Totalrisk-basedcapital to 15.79 % 16.26 % 15.79 % 16.09 % 15.68 %risk-adjustedassets (FNCBBank)Averageshareholders'equity to 10.35 % 10.53 % 10.42 % 10.40 % 10.38 %average totalassetsYield onearning assets 3.80 % 3.85 % 4.05 % 3.65 % 3.70 %(FTE)Cost of funds 0.30 % 0.34 % 0.44 % 0.59 % 0.69 %Net interest 3.50 % 3.51 % 3.61 % 3.06 % 3.01 %spread (FTE)Net interest 3.58 % 3.59 % 3.70 % 3.19 % 3.18 %margin (FTE)Totaldelinquent 0.56 % 0.70 % 0.99 % 0.81 % 0.89 %loans/totalloansAllowance forloan and lease 1.26 % 1.30 % 1.33 % 1.28 % 1.16 %losses/totalloansNon-performingloans/total 0.47 % 0.52 % 0.62 % 0.64 % 0.71 %loansAnnualized net(recoveries) (0.02 %) 0.03 % 0.09 % (0.49 %) (0.12 %)charge-offs /average loans

FNCB Bancorp, Inc.Year-to-Date Consolidated Statements of Income Six Months Ended June 30, (in thousands, except share data) 2021 2020 Interest income Interest and fees on loans $ 20,028 $ 18,199 Interest and dividends on securities: Taxable 3,886 3,544 Tax-exempt 1,002 445 Dividends 121 122 Total interest and dividends on 5,009 4,111 securitiesInterest on interest-bearing deposits 4 24 in other banksTotal interest income 25,041 22,334 Interest expense Interest on deposits 1,516 3,036 Interest on borrowed funds Federal Reserve Bank Discount Window - 14 advancesFederal Home Loan Bank of Pittsburgh - 379 advancesJunior subordinated debentures 96 148 Total interest on borrowed funds 96 541 Total interest expense 1,612 3,577 Net interest income before provision 23,429 18,757 for loan and lease lossesProvision for loan and lease losses 341 1,982 Net interest income after provision for 23,088 16,775 loan and lease lossesNon-interest income Deposit service charges 1,830 1,533 Net gain on the sale of 213 1,071 available-for-sale securitiesNet gain on equity securities 400 18 Net gain on the sale of mortgage loans 271 279 held for saleLoan-related fees 237 81 Income from bank-owned life insurance 263 248 Bank-owned life insurance settlement 426 - Loan referral fees 16 262 Merchant services revenue 294 247 Other 533 456 Total non-interest income 4,483 4,195 Non-interest expense Salaries and employee benefits 7,774 7,427 Occupancy expense 1,040 1,020 Equipment expense 686 731 Advertising expense 331 320 Data processing expense 1,704 1,434 Regulatory assessments 300 133 Bank shares tax 657 615 Professional fees 371 381 Other operating expenses 1,534 1,568 Total non-interest expense 14,397 13,629 Income before income taxes 13,174 7,341 Income tax expense 2,112 1,257 Net income $ 11,062 $ 6,084 Income per share Basic $ 0.55 $ 0.30 Diluted $ 0.55 $ 0.30 Cash dividends declared per common $ 0.120 $ 0.110 shareWeighted average number of shares outstanding:Basic 20,232,183 20,182,012 Diluted 20,243,094 20,184,046

FNCB Bancorp, Inc.Quarter-to-Date Consolidated Statements of Income Three Months Ended Jun 30, Mar 31, Dec 31, Sept 30, Jun 30, (in thousands, except 2021 2021 2020 2020 2020 share data)Interest income Interest and fees on $ 10,242 $ 9,786 $ 10,338 $ 9,078 $ 9,060 loansInterest anddividends on securitiesTaxable 1,980 1,906 1,832 1,698 1,692 Tax-exempt 516 486 465 463 388 Dividends 59 62 64 62 47 Total interest anddividends on 2,555 2,454 2,361 2,223 2,127 securitiesInterest oninterest-bearing 1 3 3 1 3 deposits in otherbanksTotal interest income 12,798 12,243 12,702 11,302 11,190 Interest expense Interest on deposits 718 798 1,077 1,291 1,376 Interest on borrowed fundsFederal Reserve BankDiscount Window - - - 18 14 advancesFederal Home LoanBank of Pittsburgh - - - 95 160 advancesJunior subordinated 48 48 50 52 60 debenturesTotal interest on 48 48 50 165 234 borrowed fundsTotal interest 766 846 1,127 1,456 1,610 expenseNet interest incomebefore provision 12,032 11,397 11,575 9,846 9,580 (credit) for loan andlease lossesProvision (credit)for loan and lease 155 186 (115 ) 74 831 lossesNet interest incomeafter provision 11,877 11,211 11,690 9,772 8,749 (credit) for loan andlease lossesNon-interest income Deposit service 956 874 875 844 708 chargesNet gain on the saleof available-for-sale - 213 24 433 922 securitiesNet gain on equity 36 364 307 846 4 securitiesNet gain on the saleof mortgage loans 47 224 188 186 183 held for saleLoan-related fees 104 133 148 119 25 Income frombank-owned life 142 121 116 118 119 insuranceBank-owned life 4 422 - - - insurance settlementLoan referral fees/interest rate swap 16 - 52 76 214 revenueMerchant services 156 138 164 154 112 revenueOther 248 285 211 194 214 Total non-interest 1,709 2,774 2,085 2,970 2,501 incomeNon-interest expense Salaries and employee 4,038 3,736 3,984 3,835 3,498 benefitsOccupancy expense 431 609 532 500 466 Equipment expense 333 353 365 381 360 Advertising expense 214 117 190 175 113 Data processing 885 819 745 754 709 expenseRegulatory 112 188 131 122 74 assessmentsBank shares tax 342 315 (92 ) 263 315 Professional fees 112 259 339 279 193 Other operating 759 775 1,249 1,534 696 expensesTotal non-interest 7,226 7,171 7,443 7,843 6,424 expenseIncome before income 6,360 6,814 6,332 4,899 4,826 taxesIncome tax expense 1,131 981 1,176 792 805 Net income $ 5,229 $ 5,833 $ 5,156 $ 4,107 $ 4,021 Income per share Basic $ 0.26 $ 0.29 $ 0.26 $ 0.20 $ 0.20 Diluted $ 0.26 $ 0.29 $ 0.26 $ 0.20 $ 0.20 Cash dividendsdeclared per common $ 0.060 $ 0.060 $ 0.055 $ 0.055 $ 0.055 shareWeighted averagenumber of shares outstanding:Basic 20,222,216 20,242,262 20,241,730 20,235,384 20,191,527 Diluted 20,232,694 20,253,606 20,244,652 20,235,384 20,191,527

FNCB Bancorp, Inc.Consolidated Balance Sheets Jun 30, Mar 31, Dec 31, Sept 30, Jun 30, (in thousands) 2021 2021 2020 2020 2020 Assets Cash and cash equivalents:Cash and due from $ 24,782 $ 22,382 $ 24,822 $ 26,121 $ 20,089 banksInterest-bearingdeposits in other 31,160 76,172 130,989 78,895 81,390 banksTotal cash and cash 55,942 98,554 155,811 105,016 101,479 equivalentsAvailable-for-saledebt securities, at 432,807 407,396 350,035 321,399 305,611 fair valueEquity securities, at 4,303 4,267 3,026 2,719 938 fair valueRestricted stock, at 1,099 1,149 1,745 1,791 3,309 costLoans held for sale 642 267 2,107 662 765 Loans, net of deferredloan fees and costs 976,538 931,943 901,102 960,229 948,428 and unearned incomeAllowance for loan and (12,285 ) (12,076 ) (11,950 ) (12,269 ) (11,024 )lease lossesNet loans 964,253 919,867 889,152 947,960 937,404 Bank premises and 17,360 17,407 17,579 17,413 17,467 equipment, netAccrued interest 4,485 4,567 4,286 4,693 5,201 receivableBank-owned life 33,216 33,074 31,712 31,596 31,478 insuranceOther assets 10,656 13,488 10,226 9,942 14,519 Total assets $ 1,524,763 $ 1,500,036 $ 1,465,679 $ 1,443,191 $ 1,418,171 Liabilities Deposits: Demand $ 312,408 $ 319,532 $ 271,499 $ 274,110 $ 266,846 (non-interest-bearing)Interest-bearing 1,025,770 1,003,296 1,015,949 998,128 902,781 Total deposits 1,338,178 1,322,828 1,287,448 1,272,238 1,169,627 Borrowed funds: Federal Reserve BankDiscount Window - - - - 36,242 advancesFederal Home Loan Bank - - - - 42,809 of Pittsburgh advancesJunior subordinated 10,310 10,310 10,310 10,310 10,310 debenturesTotal borrowed funds 10,310 10,310 10,310 10,310 89,361 Accrued interest 87 99 108 139 248 payableOther liabilities 15,574 11,869 11,953 10,458 13,578 Total liabilities 1,364,149 1,345,106 1,309,819 1,293,145 1,272,814 Shareholders' equity Preferred stock - - - - - Common stock 25,128 25,300 25,307 25,304 25,260 Additional paid-in 80,591 81,640 81,587 81,500 81,261 capitalRetained earnings 43,698 39,691 35,080 31,044 28,057 Accumulated other 11,197 8,299 13,886 12,198 10,779 comprehensive incomeTotal shareholders' 160,614 154,930 155,860 150,046 145,357 equityTotal liabilities and $ 1,524,763 $ 1,500,036 $ 1,465,679 $ 1,443,191 $ 1,418,171 shareholders? equity

FNCB Bancorp, Inc.Summary Tax-equivalent Net Interest Income Three Months Ended Jun 30, Mar 31, Dec 31, Sept 30, Jun 30, (dollars in 2021 2021 2020 2020 2020 thousands)Interest income Loans: Loans - taxable $ 9,897 $ 9,401 $ 9,938 $ 8,688 $ 8,661 Loans - tax-free 437 487 506 494 505 Total loans 10,334 9,888 10,444 9,182 9,166 Securities: Securities, 2,039 1,968 1,896 1,760 1,739 taxableSecurities, 653 615 589 586 491 tax-freeTotal interest anddividends on 2,692 2,583 2,485 2,346 2,230 securitiesInterest-bearingdeposits in other 1 3 3 1 3 banksTotal interest 13,027 12,474 12,932 11,529 11,399 incomeInterest expense Deposits 718 798 1,077 1,291 1,376 Borrowed funds 48 48 50 165 234 Total interest 766 846 1,127 1,456 1,610 expenseNet interest $ 12,261 $ 11,628 $ 11,805 $ 10,073 $ 9,789 income Average balances Earning assets: Loans: Loans - taxable $ 909,833 $ 873,544 $ 889,964 $ 908,095 $ 875,119 Loans - tax-free 44,583 46,897 46,444 44,826 46,836 Total loans 954,416 920,441 936,408 952,921 921,955 Securities: Securities, 326,848 286,128 255,111 232,081 247,939 taxableSecurities, 82,304 75,876 71,154 69,973 56,220 tax-freeTotal securities 409,152 362,004 326,265 302,054 304,159 Interest-bearingdeposits in other 7,042 13,490 14,808 8,286 6,439 banks (a)Totalinterest-earning 1,370,610 1,295,935 1,277,481 1,263,261 1,232,553 assets (a)Non-earning assets 145,861 175,301 181,708 159,037 108,608 (a)Total assets $ 1,516,471 $ 1,471,236 $ 1,459,189 $ 1,422,298 $ 1,341,161 Interest-bearing liabilities:Deposits $ 1,019,612 $ 999,085 $ 1,016,916 $ 943,754 $ 850,525 Borrowed funds 10,310 10,310 10,310 51,629 81,813 Totalinterest-bearing 1,029,922 1,009,395 1,027,226 995,383 932,338 liabilitiesDemand deposits 317,670 294,525 268,531 267,636 258,609 Other liabilities 11,998 12,413 11,377 11,384 11,065 Shareholders' 156,881 154,903 152,055 147,895 139,149 equityTotal liabilitiesand shareholders' $ 1,561,471 $ 1,471,236 $ 1,459,189 $ 1,422,298 $ 1,341,161 equity Yield/Cost Earning assets: Loans: Interest and fees 4.35 % 4.30 % 4.47 % 3.83 % 3.96 %on loans - taxableInterest and feeson loans - 3.92 % 4.15 % 4.36 % 4.41 % 4.31 %tax-freeTotal loans 4.33 % 4.30 % 4.46 % 3.85 % 3.98 %Securities: Securities, 2.50 % 2.75 % 2.97 % 3.03 % 2.81 %taxableSecurities, 3.17 % 3.24 % 3.31 % 3.35 % 3.49 %tax-freeTotal securities 2.63 % 2.85 % 3.05 % 3.11 % 2.93 %Interest-bearingdeposits in other 0.06 % 0.09 % 0.08 % 0.05 % 0.19 %banks (a)Total earning 3.80 % 3.85 % 4.05 % 3.65 % 3.70 %assets (a)Interest-bearing liabilities:Interest on 0.28 % 0.32 % 0.42 % 0.55 % 0.65 %depositsInterest on 1.86 % 1.86 % 1.94 % 1.28 % 1.14 %borrowed fundsTotalinterest-bearing 0.30 % 0.34 % 0.44 % 0.59 % 0.69 %liabilitiesNet interest 3.50 % 3.51 % 3.61 % 3.06 % 3.01 %spread (a)Net interest 3.58 % 3.59 % 3.70 % 3.19 % 3.18 %margin (a) (a) Reflects revisions to average balances for the three months ended September30, 2020 and June 30, 2020 to reclassify certain average deposits in otherbanks from interest-bearing deposits in other banks to non-earning assets inthe amount of $62,315 and $21,419, respectively.

FNCB Bancorp, Inc.Asset Quality Data Jun 30, Mar 31, Dec 31, Sept 30, Jun 30, (in thousands) 2021 2021 2020 2020 2020 At period end Non-accrualloans,includingnon-accruing $ 4,555 $ 4,842 $ 5,581 $ 6,176 $ 6,740 troubled debtrestructuredloans (TDRs)Loans past due90 days or - - - - - more and stillaccruingTotalnon-performing 4,555 4,842 5,581 6,176 6,740 loansOther realestate owned 236 58 58 58 85 (OREO)Othernon-performing 1,773 1,900 1,900 1,900 1,900 assetsTotalnon-performing $ 6,564 $ 6,800 $ 7,539 $ 8,134 $ 8,725 assets Accruing TDRs $ 6,823 $ 6,962 $ 6,975 $ 7,216 $ 8,592 For the three months endedAllowance forloan and lease lossesBeginning $ 12,076 $ 11,950 $ 12,269 $ 11,024 $ 9,907 balanceLoans 136 361 338 582 316 charged-offRecoveries ofcharged-off 190 301 134 1,753 602 loansNet(recoveries) (54 ) 60 204 (1,171 ) (286 )charge-offsProvision(credit) for 155 186 (115 ) 74 831 loan and leaselossesEnding balance $ 12,285 $ 12,076 $ 11,950 $ 12,269 $ 11,024

FNCB Bancorp, Inc.Non-GAAP Reconciliations Jun 30, Mar 31, Dec 31, Sept 30, Jun 30, (dollars in 2021 2021 2020 2020 2020 thousands)Annualizednet interestmargin:Netinterestmargin (1 3.58 % 3.59 % 3.70 % 3.19 % 3.18 %divided by3)Netinterestmargin,excluding 3.45 % 3.37 % 3.49 % 3.40 % 3.34 %PPP loans(non-GAAP)(2 dividedby 4) Netinterest $ 12,261 $ 11,628 $ 11,805 $ 10,073 $ 9,789 income(FTE) (1)PPP loaninterest 1,319 1,499 1,485 298 223 and feeincomeNetinterestincome(FTE), $ 10,942 $ 10,129 $ 10,320 $ 9,775 $ 9,566 excludingPPP loans(non-GAAP)(2) Averageearning $ 1,370,610 $ 1,295,935 $ 1,277,481 $ 1,263,261 $ 1,232,553 assets (3)(a)Average PPP 101,779 94,801 95,837 114,395 86,241 loansAverageearningassets,excluding $ 1,268,831 $ 1,201,134 $ 1,181,644 $ 1,148,866 $ 1,146,312 PPP loans(non-GAAP)(4) Allowancefor loanand leaselosses/ totalperiod endloansAllowancefor loansand leaselosses/total 1.26 % 1.30 % 1.33 % 1.28 % 1.16 %period endloans (5divided by6)Allowancefor loansand leaselosses/totalperiod end 1.37 % 1.46 % 1.45 % 1.45 % 1.32 %loans,excludingPPP loans(5 dividedby 7) Allowancefor loans $ 12,285 $ 12,076 $ 11,950 $ 12,269 $ 11,024 and leaselosses (5) Totalperiod end $ 976,538 $ 931,943 $ 901,102 $ 960,229 $ 948,428 loans (6)PPP loansoutstanding 82,354 103,466 76,004 114,784 113,193 at periodendTotalperiod endloans, $ 894,184 $ 828,477 $ 825,098 $ 845,445 $ 835,235 excludingPPP loans(7) (a) Reflects revisions to average balances for the three months ended September30, 2020 and June 30, 2020 to reclassify certain average deposits in other banks from interest-bearing deposits in other banks to non-earning assets inthe amount of $62,315 and $21,419, respectively.