GlobeNewswire Inc | Oct 29, 2021 04:05PM EDT

October 29, 2021

DUNMORE, Pa., Oct. 29, 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 $6.4million, or $0.31per basic and diluted share, for the three months ended September 30, 2021, an increase of $2.3million, or 54.6% from $4.1million, or $0.20 per basic and diluted share, for the same three months of2020. The increase in third quarter 2021 earnings was largely due to a $2.9million increase in net interest income, coupled with a $0.5 million release ofloan and lease loss reservesand a $0.3 million decrease in non-interest expense. These positive factors were partially offset by a $1.1million reduction in non-interest income. For the ninemonths ended September 30, 2021, net income totaled $17.4million, or $0.86per basicand diluted share, an increase of $7.2 million, or 70.9%, from $10.2 million, or $0.50per basic and diluted share,for the same ninemonths of 2020. The earnings improvement for the year-to-date period ending September 30, 2021 was primarily due to a $7.6million increase in net interest income.Additionally, a $0.2 million release of reserves for the year-to-date period of 2021 compared to a provision of loan and lease losses of $2.1 million for the same period of 2020, contributed to the improvement in earnings.Partially offsetting these favorable variances wasa $0.8 million decrease in non-interest income and a $0.4million increase in non-interest expense.

For the three and nine months ended September 30, 2021, the annualized return on average assetswas1.58% and 1.52%, respectively, and 1.15% and 1.03%, respectively, for the same period of 2020. The annualized return on average equity was 15.61% and 14.76%, respectively for the three and nine months ended September 30, 2021, compared to 11.05% and 9.63%, for the comparable periods of 2020. FNCB declared and paid dividends to holders of common stockof $0.075per sharefor the third quarter of 2021 and $0.195per share for the ninemonths endedSeptember 30, 2021, compared to $0.055and $0.165per share for thesame periodsof 2020.

Third quarter 2021 results as compared to the third quarter of 2020:

Third quarter net income increased $2.3 million, or 54.6%, to $6.4 million, ? or $0.31 per share in 2021 compared to $4.1 million, or $0.20 per share in 2020; ? Yield on earning assets (FTE) decreased 2 basis points to 3.63% in 2021 from 3.65% in 2020; ? Cost of funds decreased 36 basis points to 0.23% in 2021 from 0.59% in 2020; ? Net interest margin (FTE) increased 27 basis points to 3.46% in 2021, compared to 3.19% in 2020; ? Credit for loan and lease losses of $0.5 million in 2021, compared to a $0.1 million provision in 2020; ? Non-interest income decreased $1.1 million, or 38.0%; ? Non-interest expense decreased $0.3 million, or 4.4%; and ? Efficiency ratio improved to 51.18% in 2021 compared to 66.66% in 2020.

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

? Total assets grew $200.2 million, or 13.7%, to $1.666 billion at September 30, 2021 from $1.466 billion at December 31, 2020; Loans and leases, net of deferred loan fees and cost and unearned income, ? increased $57.3 million, or 6.4%, to $958.4 million at September 30, 2021 from $901.1 million at December 31, 2020; Included in net loans and leases, were PPP loans outstanding, net of loan ? origination fees and costs, of $47.5 million at September 30, 2021, and $76.0 million at December 31, 2020; ? Total deposits increased $194.6 million, or 15.1% to $1.482 billion at September 30, 2021 from $1.287 billion at December 31, 2020; ? Non-performing loans as a percentage of total loans improved to 0.47% at September 30, 2021 from 0.62% at December 31, 2020; ? Tangible book value was $8.10 per share at September 30, 2021, an increase of $0.40 per share, or 5.2%, from $7.70 per share at December 31, 2020; and The Bank was well capitalized with total risk-based capital and leverage ? ratios of 15.91% and 9.80%, respectively, at September 30, 2021, and 15.79% and 9.57%, respectively, at December 31, 2020.

"We are very pleased with our thirdquarter 2021 results," stated Gerard A. Champi, President and CEO."We continued to expand our balance sheet, with total assets increasing $200.2 million year-to-date, as we strategically redirected excess liquidity fromdeposit inflows,into the investment portfolio. Our net interest income continued to be favorably impacted by reduced funding costs,origination fees recognized on forgiven PPP loans and organic loan growth,as borrowers took advantage of our proprietary "WOW" mortgage product. During the third quarter, we also expanded our commercial credit product offerings to include commercial equipment financing, through direct finance leases and simple interest loans. We hired a team of experienced professionals to establishthis lending program, which is doing business under the name of 1st Equipment Finance.Weexpect that this new product offering will positively impact future revenues and enhance our net interest margin going forward. We continue to experience improvement in asset quality with further reductions in non-accrual loan levelsand delinquency rates. We believe our balance sheet iswell positioned as we look ahead to 2022,"concluded Champi.

COVID-19Pandemic Update

FNCB originated 679 PPP loans totaling $76.2million during the first half of 2021 under a second round of fundingand received $3.6 million in related loan origination fees associated with these originations, which was deferred and is being recognized upon forgiveness or repayment. As of September 30, 2021, PPP loans outstanding were $47.4million, net of $2.0 million in net deferred origination fees. FNCB has been actively assisting customers through the forgiveness process. During the nine months ended September 30, 2021, FNCB received forgiveness for PPP loans totaling $105.4million and expects toreceive forgiveness for the majority of the balance PPP loans outstanding bythe end of 2021.

During the first nine months of2021, widespread availability and distribution of vaccines has led toimprovedeconomic growth across the United States and more specifically within our market area. However, lingering effects from theCOVID-19 pandemic, including the effects of variants, such as the Delta variant, 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 of Pennsylvania guidance and take additional precautions to ensure the safety of its customers and its employees.

Regarding our banking operations, commercial activity within our market area, while improving, remains volatile andhas not returned to pre-pandemic levels. Economic restrictions adopted in 2020 caused many borrowers to request payment deferrals and other payment accommodations. As of the end of the third quarter of 2021, 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. Additionally, FNCB's commercial customer base includes businesses in industries such as automobile, hotel/lodging, restaurants, hospitality, and retail and commercial real estate, all of which have been significantly and adversely impacted in 2020 and 2021 by economic restrictions and employment and supply-chain constraintsrelated to the COVID-19 pandemic. Management continues to closely monitor customers within these industries as the economic recovery continues to unfold.

Management expects the COVID-19 pandemic, as well as certain provisions of legislative and regulatory relief efforts, to continue to impact FNCB's operations. 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 $2.9million, or 28.7%, to $13.0million for the three months ended September30, 2021from $10.1million for the comparable period of 2020. The improvement in tax-equivalent net interest income primarily reflected an increase in tax-equivalent interest income of $2.1million or 17.9%, to $13.6million for the third quarter of 2021 from $11.5million for the same quarterof 2020,coupled with a decreasein interest expense of $0.8 million, or 56.8%, to $0.6million from $1.4million comparing the third quarters of 2021 and 2020.The $2.1million, or 17.9%, increase intax-equivalent interest income comparing the third quarters of 2021 and 2020 largely reflected higher volumes of earning assets, coupled with a net increase in the tax-equivalent yield on the loan portfolio.Total average earning assets increased $236.3 million, or 18.7%, to $1.500 billion for the three months ended September 30, 2021 from $1.263billion for the same three months of 2020, which reflected growth in both average loan and lease balances and average security balances.The tax-equivalent yield on the loan portfolio increased 62 basis points to 4.47% for the three months ended September 30, 2021 compared to 3.85% for the same three months of 2020. Loan yields were favorably impacted by the recognition of $1.5million in net deferred loan origination fees on forgiven PPP loans. Partially offsetting the positive impact due to the increase in loan and lease yields, was a 59-basis point reduction in the tax-equivalent yield on the securities portfolio to 2.52% for the third quarter of 2021 from 3.11% for the same quarter of 2020.The $0.8 million, or 56.8%, decrease in interest expense was primarilydue to a 36-basis pointreduction in the cost of funds to 0.23% for the three months ended September 30, 2021 from 0.59% for the same three months of 2020. Specifically, the average rate paid forinterest-bearing deposits decreased 33basis points to 0.22% for the third quarter of 2021from 0.55% for the same period of 2020, which reflected the reduction in market interest rates and repricing of higher-costing time deposits upon maturity.FNCB experienced strong deposit growth due to additional fiscal stimulus and changes inconsumer and business spendingdue to the reduction in economic activity and uncertainty related to the COVID-19 pandemic. FNCB also experiencedmigration of time deposits into non-maturity deposits, due to sustained low market rates.Specifically, average interest-bearing deposits increased $136.6million, or 14.5%, to $1.080 billion from $943.8 million comparing the third quarters of 2021 and 2020, respectively.Average interest-bearing demand deposits increased $136.8 million, or 21.4%, to $774.9 million for the third quarter of 2021compared to $638.1 million for the same quarter of 2020, while average savings deposits increased $24.4million, or 23.2%, to $129.8million from $105.4 million comparing the third quarters of 2021 and 2020, respectively. Conversely, average time deposits decreased $24.7million, or 12.3%,to $175.6million for the three months ended September 30, 2021 from $200.3million for the same three months of 2020.

On a year-to-date basis, tax-equivalent net interest income increased $7.7million, or 26.5%, to $36.9million for the ninemonths ended September 30, 2021from $29.2million for the comparable period of 2020. The improvement in tax-equivalent net interest income was due primarily to a $4.9million, or14.3%, increase in tax-equivalent interest income,coupled with a $2.8million, or 55.5%,decreasein interest expense.The increase in tax-equivalent interest income for the year-to-date period resulted mainly from the recognition of $3.9 million in PPP originationfees upon forgiveness and a$196.0million, or 16.3%, increase in average earning assetbalances. The $2.8million, or 55.5%, decrease in interest expense resulted primarily from a decrease in funding costsand a reduction in average borrowed funds,partially offset by an increase in average interest-bearing deposits. FNCB's total cost of funds decreased43basis points to 0.29% for the nine months ended September 30, 2021 from 0.72% for the same nine months of 2020, which largely reflected a decrease in thecost of interest-bearing deposits of 39basis points to 0.27% from 0.66%, respectively, comparing the nine months ended September 30, 2021 and 2020.Regarding volumes of interest-bearing liabilities, average borrowed fundsdecreased$54.7million, or 84.1%, to $10.3 million for the nine months ended September 30, 2021, from $65.0 million for the same period of 2020, which reflected deposit oversupply as average interest-bearing deposits increased $161.2 million or 18.5% to 1.033 billion for the nine months ended September 30, 2021 from $872.1 million for the same period of 2020.

FNCBs tax-equivalent net interest margin improved 27basis points to 3.46% for the third quarter of 2021from 3.19% for the same quarter of 2020.On a year-to-date basis, the tax equivalent net interest margin improved 28basis points to 3.51% for the nine months ended September 30, 2021, from 3.23% for the same nine-month period of 2020. The marginimprovement was primarily impacted by activity related to PPP loans, coupled with a decreasein funding costs.

For the three months ended September30, 2021, non-interest income decreased $1.1million, or 38.0%, to $1.8millionfrom $2.9million for the three months ended September30,2020. The decrease was largely due to reductionsin net gains on equity securities, net gains on the sale of available-for-sale debt securities and net gains on the sale of mortgage loans held for sale, partially offset by an increase in deposit service charges. For the three months ended September 30, 2021, net gains on equity securities were $156 thousand, a decrease of $690 thousand, or 81.6%, compared to $846 thousand for the same three months of 2020. Additionally, there were nonet gains realized on the sale of available-for-sale debt securities during the three months ended September 30, 2021. Comparatively, net gains realized on the sale of available-for-sale debt securities were $433 thousand for the same three-month period of 2020. Net gains on the sale of mortgage loans held for sale were $41 thousand for the third quarter of 2021, a decrease of $145 thousand, or 78.0%, compared to $186 thousand for the same quarter of 2020. These reductions were partiallyoffset by a$165thousand, or 19.6%,increase in deposit service charges to $1.0millionfor the three months ended September 30, 2021 compared to$844thousand for the three months ended September 30,2020, which reflected increases in debit card and NSF fees. For the ninemonths ended September30, 2021, non-interest income decreased $0.9 million, or 11.7%,to $6.3million from $7.2million for the same period of 2020. Similar to the quarterly period, the year-to-date decrease resulted primarilyfromdecreases in net gains on available-for-sale debt securities,net gains on equity securities and net gains on the sale of mortgage loans held for sale. Net gains on the sale of available-for-sale securities decreased$1.3 million, or 85.8%, to $213 thousand for the nine months ended September 30, 2021 compared to$1.5 million for the same nine-month period of 2020. This was coupled with a $308 thousand, or 35.7% decrease in net gains on the sale of equity securities and $153 thousand, or 32.9%, decrease in the net gain on the sale of mortgage loans held for sale comparing the nine months ended September 30, 2021 and 2020.In addition, loan referral fees decreased $284 thousand, or 84.1%, to $54 thousand for the nine months ended September 30, 2021 from $338 thousand for the same nine months of 2020. These decreases were partially offset by a $462 thousand, or 19.4%, increase in deposit service charges, resulting primarily from an increase in debit card usage, and asettlement in the amount of $426 thousand from a bank-owned life insurance death benefit claim that was recognized in 2021. Loan-related fees increased $114 thousand, or 57.1%, to $314 thousand for the nine months ended September 30, 2021 from $200 thousand for the same period of 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.

Non-interest expense decreased $343thousand, or 4.4% to$7.5million forthe three months ended September 30, 2021 from $7.8million for the three months ended September 30, 2020, which primarily reflected decreases in other operating expenses and professional fees. Other operating expenses decreased $612 thousand, or 52.4% to $556 thousand for the third quarter of 2021, compared to $1.2 million for the same quarter of 2020. During the third quarter of 2020, FNCB incurred penalties of $399 thousand related to the prepayment of high-costing FHLB advances. There were no such penalties incurred during 2021.The reduction in other operating expenseswas coupled with a $126 thousand, or 45.2%,decrease in professional fees to $153 thousand for the three months ended September 30, 2021 from $279 thousand for the same three-month period of 2020. These decreases were partially offset by increases in salaries and benefits anddata processing expenses. Salaries and benefits increased $187 thousand, or 4.9%, to $4.0 million for the three months ended September 30, 2021, from $3.8million for the same period in 2020. Data processing costs increased $207thousand,or 27.5%, to $961thousandfor the third quarter of 2021 from $754 thousand, when compared tothe same quarter of 2020.For the ninemonths ended September30, 2021, non-interest expense increased $425thousand, or 2.0%, to $21.9million compared to $21.5million for the same nine-month period of 2020. The increase wasprimarily due toincreasedsalaries and employee benefits, data processing expenses and regulatory assessments, partially offset by a reduction in other operating expenses. Salaries and employee benefits increased $534 thousand, or 4.7%, to $11.8million at September 30, 2021, compared to $11.3million for the ninemonths ended September 30, 2020, reflecting higher full-time salaries, payroll taxes and benefits associated with staff additions. Data processing expenses increased $477 thousand, or 21.8%, to $2.7million for the nine months ended September 30, 2021, compared to $2.2million forthe same period of 2020, which included added costs associated with a remote work environment, enhancements made to FNCB's digital banking services, includingcybersecurity protection, and higher software costs.Regulatory assessments increased $204 thousand, or 79.8%, to $460 thousand at September 30, 2021, from $256 thousandfor the nine months ended September 30, 2020,which reflected the utilization of the remaining FDIC small bank assessment credits in 2020.

Asset Quality

FNCB's asset quality improved throughout 2021, astotal non-performing loans decreased $1.1million, or 19.8%,to $4.5million, or 0.47% of total loans,at September 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 $1.7million, or 27.5%, from $6.2million, or 0.64% of total loans, at September 30, 2020.FNCBs loan delinquency rate (total delinquent loans as a percentage of total loans) improved to 0.61% at September 30, 2021, compared to 0.99% at December 31, 2020 and 0.81% at September 30, 2020. FNCB recorded a credit to provision for loan and lease losses of $0.5million for the thirdquarter of 2021 compared to $0.1million provision for the same quarter of 2020. For the nine months ended September 30, 2021, the credit toprovision for loan and lease losses totaled $0.2million compared to $2.0 million provision for the same period of 2020. The credit provisioning in 2020 wasdirectly related to the economic disruption and uncertainty caused bythe onset of the COVID-19 pandemic. The allowance for loan and lease losses was $12.0million, or 1.25% of total loans,at September 30, 2021, compared to $11.9 million, or 1.33% of total loans, at December 31, 2020 and $12.3million, or 1.28% of total loans, at September 30, 2020.Excluding PPP loans, which are 100.0% guaranteed by the federal government, this ratio was 1.32% at September 30, 2021.

Financial Condition

Total assets increased $200.2million, or 13.7%, to $1.666billion at September 30, 2021from $1.466billion at December 31, 2020. The change in total assets primarily reflected increases in net loans and leases,available-for-sale debt securities and cash and cash equivalents. Available-for-sale debt securities increased$120.3 million, or 34.4%, to$470.3 million at September 30, 2021from $350.0million at December 31, 2020, which was primarily due to the deployment of excess liquidity into the investment portfolio. Also contributing to balance sheet expansion was a $57.2 million, or 6.4%, increase in net loans and leases to $946.4 million at September 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 byPPP loan forgiveness. Cash and cash equivalents increased $18.4million, or 11.8%, to $174.2 million at September 30, 2021 from $155.8 million at December 31, 2020.Total deposits increased $194.6million, or 15.1%, to $1.482billionat September 30, 2021 from$1.287billion atDecember 31, 2020. Total borrowed funds, comprised entirely of FNCB's junior subordinated debentures,remained constant at $10.3million at September 30, 2021andDecember 31, 2020.

Total shareholders equity increased $6.1million, or 4.0%, to $162.0million at September 30, 2021from $155.9million at December 31, 2020. The increase in capital was primarily due to net income for the ninemonths ended September 30, 2021 of $17.4million, partially offsetby $3.9million in dividends declared and paidfor the ninemonths ended September30, 2021,a $5.5million 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 $2.4 million for the repurchase of 330,759 common shares under a board authorized stock repurchase program. FNCB Bank was considered well capitalized withtotal risk-based capital and Tier 1 leverage ratios of 15.91% and 9.80% at September 30, 2021, and 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 quarters ended March 31, 2021 and June 30, 2021.

FNCB Bancorp, Inc.Selected Financial Data

Sept 30, Jun 30, Mar 31, Dec 31, Sept 30, 2021 2021 2021 2020 2020 Per share data:Net income(fully $ 0.31 $ 0.26 $ 0.29 $ 0.26 $ 0.20 diluted)Cash dividends $ 0.075 $ 0.060 $ 0.060 $ 0.055 $ 0.055 declaredBook value $ 8.10 $ 7.99 $ 7.65 $ 7.70 $ 7.41 Tangible book $ 8.10 $ 7.99 $ 7.65 $ 7.70 $ 7.41 valueMarket value: High $ 8.35 $ 7.98 $ 8.94 $ 7.95 $ 6.93 Low $ 7.17 $ 6.90 $ 5.80 $ 5.16 $ 5.08 Close $ 8.23 $ 7.27 $ 7.54 $ 6.40 $ 5.32 Common shares 19,985,837 20,102,602 20,240,668 20,245,649 20,243,589 outstanding Selected ratios:Annualizedreturn on 1.58 % 1.38 % 1.61 % 1.41 % 1.15 %average assetsAnnualizedreturn onaverage 15.61 % 13.37 % 15.27 % 13.49 % 11.05 %shareholders'equityEfficiency 51.18 % 51.86 % 51.87 % 54.89 % 66.66 %ratioTier Ileverage ratio 9.80 % 9.90 % 9.88 % 9.57 % 10.17 %(FNCB Bank)Totalrisk-basedcapital to 15.91 % 15.79 % 16.26 % 15.79 % 16.09 %risk-adjustedassets (FNCBBank)Averageshareholders'equity to 10.14 % 10.35 % 10.53 % 10.42 % 10.40 %average totalassetsYield onearning assets 3.63 % 3.80 % 3.85 % 4.05 % 3.65 %(FTE)Cost of funds 0.23 % 0.30 % 0.34 % 0.44 % 0.59 %Net interest 3.40 % 3.50 % 3.51 % 3.61 % 3.06 %spread (FTE)Net interest 3.46 % 3.58 % 3.59 % 3.70 % 3.19 %margin (FTE)Totaldelinquent 0.61 % 0.56 % 0.70 % 0.99 % 0.81 %loans/totalloansAllowance forloan and lease 1.25 % 1.26 % 1.30 % 1.33 % 1.28 %losses/totalloansNon-performingloans/total 0.47 % 0.46 % 0.52 % 0.62 % 0.64 %loansAnnualized net(recoveries) (0.03 %) (0.02 %) 0.03 % 0.09 % (0.49 %)charge-offs /average loans

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

Nine Months Ended September 30, (in thousands, except share data) 2021 2020 Interest income Interest and fees on loans and leases $ 30,724 $ 27,277 Interest and dividends on securities: Taxable 5,956 5,242 Tax-exempt 1,519 908 Dividends 176 184 Total interest and dividends on 7,651 6,334 securitiesInterest on interest-bearing deposits 35 25 in other banksTotal interest income 38,410 33,636 Interest expense Interest on deposits 2,098 4,327 Interest on borrowed funds Federal Reserve Bank Discount Window - 32 advancesFederal Home Loan Bank of Pittsburgh - 474 advancesJunior subordinated debentures 143 200 Total interest on borrowed funds 143 706 Total interest expense 2,241 5,033 Net interest income before (credit) 36,169 28,603 provision for loan and lease losses(Credit) provision for loan and lease (172 ) 2,056 lossesNet interest income after (credit) 36,341 26,547 provision for loan and lease lossesNon-interest income Deposit service charges 2,839 2,377 Net gain on the sale of 213 1,504 available-for-sale debt securitiesNet gain on equity securities 556 864 Net gain on the sale of mortgage loans 312 465 held for saleLoan-related fees 314 200 Income from bank-owned life insurance 402 366 Bank-owned life insurance settlement 426 - Loan referral fees 54 338 Merchant services revenue 453 401 Other 756 650 Total non-interest income 6,325 7,165 Non-interest expense Salaries and employee benefits 11,796 11,262 Occupancy expense 1,490 1,520 Equipment expense 1,005 1,112 Advertising expense 491 495 Data processing expense 2,665 2,188 Regulatory assessments 460 256 Bank shares tax 1,009 878 Professional fees 524 660 Other operating expenses 2,457 3,101 Total non-interest expense 21,897 21,472 Income before income taxes 20,769 12,240 Income tax expense 3,356 2,049 Net income $ 17,413 $ 10,191 Income per share Basic $ 0.86 $ 0.50 Diluted $ 0.86 $ 0.50 Cash dividends declared per common $ 0.195 $ 0.165 shareWeighted average number of shares outstanding:Basic 20,152,934 20,199,933 Diluted 20,164,331 20,201,289

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

Three Months Ended Sept 30, Jun 30, Mar 31, Dec 31, Sept 30, (in thousands, except 2021 2021 2021 2020 2020 share data)Interest income Interest and fees on $ 10,696 $ 10,242 $ 9,786 $ 10,338 $ 9,078 loans and leasesInterest anddividends on securitiesTaxable 2,070 1,980 1,906 1,832 1,698 Tax-exempt 517 516 486 465 463 Dividends 55 59 62 64 62 Total interest anddividends on 2,642 2,555 2,454 2,361 2,223 securitiesInterest oninterest-bearing 31 1 3 3 1 deposits in otherbanksTotal interest income 13,369 12,798 12,243 12,702 11,302 Interest expense Interest on deposits 582 718 798 1,077 1,291 Interest on borrowed fundsFederal Reserve BankDiscount Window - - - - 18 advancesFederal Home LoanBank of Pittsburgh - - - - 95 advancesJunior subordinated 47 48 48 50 52 debenturesTotal interest on 47 48 48 50 165 borrowed fundsTotal interest 629 766 846 1,127 1,456 expenseNet interest incomebefore (credit) 12,740 12,032 11,397 11,575 9,846 provision for loanand lease losses(Credit) provisionfor loan and lease (513 ) 155 186 (115 ) 74 lossesNet interest incomeafter (credit) 13,253 11,877 11,211 11,690 9,772 provision for loanand lease lossesNon-interest income Deposit service 1,009 956 874 875 844 chargesNet gain on the saleof available-for-sale - - 213 24 433 debt securitiesNet gain on equity 156 36 364 307 846 securitiesNet gain on the saleof mortgage loans 41 47 224 188 186 held for saleLoan-related fees 77 104 133 148 119 Income frombank-owned life 139 142 121 116 118 insuranceBank-owned life - 4 422 - - insurance settlementLoan referral fees 38 16 - 52 76 Merchant services 159 156 138 164 154 revenueOther 223 248 285 211 194 Total non-interest 1,842 1,709 2,774 2,085 2,970 incomeNon-interest expense Salaries and employee 4,022 4,038 3,736 3,984 3,835 benefitsOccupancy expense 450 431 609 532 500 Equipment expense 319 333 353 365 381 Advertising expense 160 214 117 190 175 Data processing 961 885 819 745 754 expenseRegulatory 160 112 188 131 122 assessmentsBank shares tax 352 342 315 (92 ) 263 Professional fees 153 112 259 339 279 Other operating 923 759 775 1,249 1,534 expensesTotal non-interest 7,500 7,226 7,171 7,443 7,843 expenseIncome before income 7,595 6,360 6,814 6,332 4,899 taxesIncome tax expense 1,244 1,131 981 1,176 792 Net income $ 6,351 $ 5,229 $ 5,833 $ 5,156 $ 4,107 Income per share Basic $ 0.31 $ 0.26 $ 0.29 $ 0.26 $ 0.20 Diluted $ 0.31 $ 0.26 $ 0.29 $ 0.26 $ 0.20 Cash dividendsdeclared per common $ 0.075 $ 0.060 $ 0.060 $ 0.055 $ 0.055 shareWeighted averagenumber of shares outstanding:Basic 19,997,021 20,222,216 20,242,262 20,241,730 20,235,384 Diluted 20,009,387 20,232,694 20,253,606 20,244,652 20,235,384

FNCB Bancorp, Inc.Consolidated Balance Sheets

Sept 30, Jun 30, Mar 31, Dec 31, Sept 30, (in thousands) 2021 2021 2021 2020 2020 Assets Cash and cash equivalents:Cash and due from $ 24,612 $ 24,782 $ 22,382 $ 24,822 $ 26,121 banksInterest-bearingdeposits in other 149,581 31,160 76,172 130,989 78,895 banksTotal cash and cash 174,193 55,942 98,554 155,811 105,016 equivalentsAvailable-for-saledebt securities, at 470,323 432,807 407,396 350,035 321,399 fair valueEquity securities, at 4,777 4,303 4,267 3,026 2,719 fair valueRestricted stock, at 1,826 1,099 1,149 1,745 1,791 costLoans held for sale 491 642 267 2,107 662 Loans and leases, netof deferred loan fees 958,408 976,538 931,943 901,102 960,229 and costs and unearnedincomeAllowance for loan and (12,018 ) (12,285 ) (12,076 ) (11,950 ) (12,269 )lease lossesNet loans and leases 946,390 964,253 919,867 889,152 947,960 Bank premises and 17,269 17,360 17,407 17,579 17,413 equipment, netAccrued interest 4,593 4,485 4,567 4,286 4,693 receivableBank-owned life 33,355 33,216 33,074 31,712 31,596 insuranceOther assets 12,674 10,656 13,488 10,226 9,942 Total assets $ 1,665,891 $ 1,524,763 $ 1,500,036 $ 1,465,679 $ 1,443,191 Liabilities Deposits: Demand $ 321,952 $ 312,408 $ 319,532 $ 271,499 $ 274,110 (non-interest-bearing)Interest-bearing 1,160,114 1,025,770 1,003,296 1,015,949 998,128 Total deposits 1,482,066 1,338,178 1,322,828 1,287,448 1,272,238 Borrowed funds 10,310 10,310 10,310 10,310 10,310 Accrued interest 56 87 99 108 139 payableOther liabilities 11,509 15,574 11,869 11,953 10,458 Total liabilities 1,503,941 1,364,149 1,345,106 1,309,819 1,293,145 Shareholders' equity Preferred stock - - - - - Common stock 24,982 25,128 25,300 25,307 25,304 Additional paid-in 80,000 80,591 81,640 81,587 81,500 capitalRetained earnings 48,541 43,698 39,691 35,080 31,044 Accumulated other 8,427 11,197 8,299 13,886 12,198 comprehensive incomeTotal shareholders' 161,950 160,614 154,930 155,860 150,046 equityTotal liabilities and $ 1,665,891 $ 1,524,763 $ 1,500,036 $ 1,465,679 $ 1,443,191 shareholders? equity

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

Three Months Ended Sept 30, Jun 30, Mar 31, Dec 31, Sept 30, (dollars in 2021 2021 2021 2020 2020 thousands)Interest income Loans: Loans - taxable $ 10,364 $ 9,897 $ 9,401 $ 9,938 $ 8,688 Loans - tax-free 420 437 487 506 494 Total loans 10,784 10,334 9,888 10,444 9,182 Securities: Securities, 2,125 2,039 1,968 1,896 1,760 taxableSecurities, 654 653 615 589 586 tax-freeTotal interest anddividends on 2,779 2,692 2,583 2,485 2,346 securitiesInterest-bearingdeposits in other 31 1 3 3 1 banksTotal interest 13,594 13,027 12,474 12,932 11,529 incomeInterest expense Deposits 582 718 798 1,077 1,291 Borrowed funds 47 48 48 50 165 Total interest 629 766 846 1,127 1,456 expenseNet interest $ 12,965 $ 12,261 $ 11,628 $ 11,805 $ 10,073 income Average balances Earning assets: Loans: Loans - taxable $ 921,648 $ 909,833 $ 873,544 $ 889,964 $ 908,095 Loans - tax-free 43,091 44,583 46,897 46,444 44,826 Total loans 964,739 954,416 920,441 936,408 952,921 Securities: Securities, 357,684 326,848 286,128 255,111 232,081 taxableSecurities, 82,706 82,304 75,876 71,154 69,973 tax-freeTotal securities 440,390 409,152 362,004 326,265 302,054 Interest-bearingdeposits in other 94,434 7,042 13,490 14,808 8,286 banks (a)Totalinterest-earning 1,499,563 1,370,610 1,295,935 1,277,481 1,263,261 assets (a)Non-earning assets 105,912 145,861 175,301 181,708 159,037 (a)Total assets $ 1,593,014 $ 1,516,471 $ 1,471,236 $ 1,459,189 $ 1,422,298 Interest-bearing liabilities:Deposits $ 1,080,312 $ 1,019,612 $ 999,085 $ 1,016,916 $ 943,754 Borrowed funds 10,419 10,310 10,310 10,310 51,629 Totalinterest-bearing 1,090,731 1,029,922 1,009,395 1,027,226 995,383 liabilitiesDemand deposits 325,571 317,670 294,525 268,531 267,636 Other liabilities 15,258 11,998 12,413 11,377 11,384 Shareholders' 161,454 156,881 154,903 152,055 147,895 equityTotal liabilitiesand shareholders' $ 1,593,014 $ 1,561,471 $ 1,471,236 $ 1,459,189 $ 1,422,298 equity Yield/Cost Earning assets: Loans: Interest and fees 4.50 % 4.35 % 4.30 % 4.47 % 3.83 %on loans - taxableInterest and feeson loans - 3.90 % 3.92 % 4.15 % 4.36 % 4.41 %tax-freeTotal loans 4.47 % 4.33 % 4.30 % 4.46 % 3.85 %Securities: Securities, 2.38 % 2.50 % 2.75 % 2.97 % 3.03 %taxableSecurities, 3.16 % 3.17 % 3.24 % 3.31 % 3.35 %tax-freeTotal securities 2.52 % 2.63 % 2.85 % 3.05 % 3.11 %Interest-bearingdeposits in other 0.13 % 0.06 % 0.09 % 0.08 % 0.05 %banks (a)Total earning 3.63 % 3.80 % 3.85 % 4.05 % 3.65 %assets (a)Interest-bearing liabilities:Interest on 0.22 % 0.28 % 0.32 % 0.42 % 0.55 %depositsInterest on 1.80 % 1.86 % 1.86 % 1.94 % 1.28 %borrowed fundsTotalinterest-bearing 0.23 % 0.30 % 0.34 % 0.44 % 0.59 %liabilitiesNet interest 3.40 % 3.50 % 3.51 % 3.61 % 3.06 %spread (a)Net interest 3.46 % 3.58 % 3.59 % 3.70 % 3.19 %margin (a) (a) Reflects revisions to average balances for the three months ended September30, 2020 to reclassify certain average deposits in other banks frominterest-bearing deposits in other banks to non-earning assets in the amount of$62,315.

FNCB Bancorp, Inc.Asset Quality Data

Sept 30, Jun 30, Mar 31, Dec 31, Sept 30, (in thousands) 2021 2021 2021 2020 2020 At period end Non-accrualloans,includingnon-accruing $ 4,475 $ 4,555 $ 4,842 $ 5,581 $ 6,176 troubled debtrestructuredloans (TDRs)Loans past due90 days or - - - - - more and stillaccruingTotalnon-performing 4,475 4,555 4,842 5,581 6,176 loansOther realestate owned 54 236 58 58 58 (OREO)Othernon-performing 1,773 1,773 1,900 1,900 1,900 assetsTotalnon-performing $ 6,302 $ 6,564 $ 6,800 $ 7,539 $ 8,134 assets Accruing TDRs $ 6,666 $ 6,823 $ 6,962 $ 6,975 $ 7,216 For the three months endedAllowance forloan and lease lossesBeginning $ 12,285 $ 12,076 $ 11,950 $ 12,269 $ 11,024 balanceLoans 255 136 361 338 582 charged-offRecoveries ofcharged-off 501 190 301 134 1,753 loansNet(recoveries) (246 ) (54 ) 60 204 (1,171 )charge-offs(Credit)provision for (513 ) 155 186 (115 ) 74 loan and leaselossesEnding balance $ 12,018 $ 12,285 $ 12,076 $ 11,950 $ 12,269

FNCB Bancorp, Inc.Non-GAAP Reconciliations

Sept 30, Jun 30, Mar 31, Dec 31, Sept 30, (dollars in 2021 2021 2021 2020 2020 thousands)Annualizednet interestmargin:Netinterestmargin (1 3.46 % 3.58 % 3.59 % 3.70 % 3.19 %divided by3)Netinterestmargin,excluding 3.15 % 3.45 % 3.37 % 3.49 % 3.40 %PPP loans(non-GAAP)(2 dividedby 4) Netinterest $ 12,965 $ 12,261 $ 11,628 $ 11,805 $ 10,073 income(FTE) (1)PPP loaninterest 1,709 1,319 1,499 1,485 298 and feeincomeNetinterestincome(FTE), $ 11,256 $ 10,942 $ 10,129 $ 10,320 $ 9,775 excludingPPP loans(non-GAAP)(2) Averageearning $ 1,499,563 $ 1,370,610 $ 1,295,935 $ 1,277,481 $ 1,263,261 assets (3)(a)Average PPP 69,132 101,779 94,801 95,837 114,395 loansAverageearningassets,excluding $ 1,430,431 $ 1,268,831 $ 1,201,134 $ 1,181,644 $ 1,148,866 PPP loans(non-GAAP)(4) Allowancefor loanand leaselosses/ totalperiod endloansAllowancefor loansand leaselosses/total 1.25 % 1.26 % 1.30 % 1.33 % 1.28 %period endloans (5divided by6)Allowancefor loansand leaselosses/totalperiod end 1.32 % 1.37 % 1.46 % 1.45 % 1.45 %loans,excludingPPP loans(5 dividedby 7) Allowancefor loans $ 12,018 $ 12,285 $ 12,076 $ 11,950 $ 12,269 and leaselosses (5) Totalperiod end $ 958,408 $ 976,538 $ 931,943 $ 901,102 $ 960,229 loans (6)PPP loansoutstanding 49,434 82,354 103,466 76,004 114,784 at periodendTotalperiod endloans, $ 908,974 $ 894,184 $ 828,477 $ 825,098 $ 845,445 excludingPPP loans(7) (a) Reflects revisions to average balances for the three months ended September30, 2020 to reclassify certain average deposits in other banks from interest-bearing deposits in other banks to non-earning assets in the amount of$62,315.