GlobeNewswire Inc | Jan 28, 2022 04:05PM EST

January 28, 2022

DUNMORE, Pa., Jan. 28, 2022 (GLOBE NEWSWIRE) -- FNCB Bancorp, Inc. (NASDAQ: FNCB), the parent company of Dunmore-based FNCB Bank (the Bank), today reported net income for2021 of $21.4 million, or $1.06 per basic and diluted share, compared to net income of $15.3 million, or $0.76 per basic and diluted share, for 2020. The $6.0 million, or 39.3%, earnings improvementwasdue primarily to a $8.8 million, or 21.9%, increasein net interest income, coupled with a $1.8 million, or 91.5%, reduction in the provision for loan and lease losses. Partially offsetting these positive factorswas a $1.0 million, or 10.6%, decrease in non-interest income and a $2.2 million, or 7.5%, increase in non-interest expense. Net income for the fourth quarter of 2021 was $4.0 million, or $0.20 per basic and diluted share, adecrease of $1.2 million, or 23.2%, compared to $5.2 million, or $0.26 per basic and diluted share,for the same quarter of 2020. The reduction in fourth quarter earnings was largely due to increases in non-interest expense and credit provisioning, partially offset by an increase in net interest income.

Return on average assets and return on average shareholders equity were 1.36% and 13.46%, respectively, in 2021, compared to 1.13% and 10.66%, respectively in 2020. For the three months ended December 31, 2021, annualized return on average assets and annualized return on average shareholders equity were 0.94% and 9.82%, respectively. Comparatively, annualized return on average assets was 1.41%and annualized return on average shareholders equity was 13.49%for the three months ended December 31, 2020.

Dividends declared and paid in 2021 totaled$0.27 per share, an increase of $0.05 per share, or 22.7%, compared to $0.22 per share for 2020.Total dividends declared and paid for 2021 equated to a dividend yield of approximately 2.92% based on the closing stock price of $9.24 per share at December 31, 2021.

Stock Repurchase Program

On January 26, 2022, FNCB's Board of Directors authorized a stock repurchase program under which up to 750,000 shares of FNCB'soutstanding common stock may be acquired in the open market commencing no earlier than March 4, 2022 and expiring December 31, 2022 pursuant to a trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended.In 2021, the Board of Directors had authorized a similar program under which330,759 common shares were repurchased. The 2021 plan expired on December 31, 2021.

The repurchase of sharesunder the program is administered through an independent broker. Repurchases may occurfrom time to time at prevailing market prices, through open market transactions depending upon market conditions, and are subject to SEC regulations as well as certain price, market volume and timing constraints specified in the trading plan.Under the program, the purchases will be funded from working capital presently available to FNCB, and the repurchased shares will be returned to the status of authorized but unissued shares of Common Stock. There is not a guarantee as to the exact number of shares that will be repurchased by FNCB, and FNCB may discontinue purchases at any time that management determines additional repurchases are no longer warranted.As of December 31, 2021, FNCB had approximately 20.0 million shares outstanding.

2021Highlights:

Fourth quarter earnings per share decreased $0.06 per share, or 23.1%, to ? $0.20 per share in 2021 compared to $0.26 per share for the fourth quarter of 2020. For the full year, earnings per share increased $0.30 per share, or 39.5%, to $1.06 per share in 2021 from $0.76 per share in 2020; Return on average assets was 0.94% for the fourth quarter of 2021 and 1.41% ? for the same quarter of 2020. For the full year, return on average assets was 1.36% in 2021 compared to 1.13% in 2020; For the fourth quarter, return on average shareholders' equity was 9.82% in ? 2021 from 13.49% in 2020. Return on average shareholders' equity for all of 2021 improved to 13.46% compared to 10.66% for 2020; ? Tangible book value increased $0.43 per share, or 5.6%, to $8.13 per share at December 31, 2021 from $7.70 per share at December 31, 2020; Total risk-based capital and Tier I Leverage ratios (FNCB Bank) were 14.61% ? and 9.82% at December 31, 2021 compared to 15.79% and 9.57% at December 31, 2020, respectively; The earning asset yield (FTE) for the fourth quarter decreased 64 basis ? points to 3.41% in 2021 from 4.05% in 2020. Year over year, the earning asset yield (FTE) decreased 22 basis points to 3.63% in 2021 from 3.85% in 2020; Cost of funds for the fourth quarter of 2021 decreased 28 basis points to ? 0.16% from 0.44% for the fourth quarter of 2020. Year over year, cost of funds decreased 39 basis points to 0.25% in 2021 from 0.64% in 2020. The net interest margin (FTE) for the fourth quarter of 2021 decreased 41 ? basis points to 3.29% from 3.70% for the fourth quarter of 2020. Year over year, net interest margin (FTE) increased 10 basis points to 3.45% in 2021 from 3.35% in 2020; ? Ratio of non-performing loans to total loans improved to 0.39% at December 31, 2021 compared to 0.62% at December 31, 2020; and ? The efficiency ratio increased to 61.75% for the fourth quarter of 2021 from 54.89% for the same quarter of 2020.

"The strong performance generated by FNCB in 2021 speaks to the quality of the FNCB brand, ourability to provide superior customer service and adapt to changing market demands," stated Gerard A. Champi, President and Chief Executive Officer. "Earnings in 2021 benefitted from our leadership in originating PPP loans and assisting customers through the forgiveness process, as well as our ability to effectively managefunding costs and strengthen asset quality. During the fourth quarter we expanded our product offerings to include commercial equipment financing, including leasing,through the hiring of a team of seasoned professionals in this line of business. We are pleased to say that the buildout of this product offering is complete and is generating new loan originationsin line with expectations. Additionally in the fourth quarter of 2021, wereceived approval to consolidate our Dunmore-Wheeler community officeinto our state-of-the-art Main Office.The consolidation, which willbe finalized in the first quarter of 2022, will have minimal impact to customers, reduce operating expense run rates going forward and create efficiency within our branch network," concluded Mr. Champi.

COVID-19Pandemic Update

FNCB originated 679 PPP loans totaling $76.2millionunder a second round of funding, which expiredduring the first half of 2021 and 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 December 31, 2021, PPP loans outstanding were $20.9 million, net of $1.0 million in net unrecognized deferred origination fees. FNCB has been actively assisting customers through the forgiveness process. During the year ended December 31, 2021, FNCB received forgiveness for PPP loans totaling $130.3 million and recognized $4.8 million in net PPP loan origination fees upon forgiveness.

Due to the recent rise in the number of positive cases in our market area, FNCB branches are open for drive thru and by appointment only, with the exception of the Main Office and Plains Rt 315 community office, which are fully operational with lobbies open for consumer traffic.FNCB continues to follow CDC and Commonwealth of Pennsylvania guidance and take additional precautions to ensure the safety of its customers and its employees.Widespread availability and distribution of vaccines, including boosters, 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 the Delta and Omicron variants continue to adversely impact employment markets and supply-chains affecting national, regional and local economies, which has resulted inpronounced price inflation.

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 December 31,2021, all borrowers that previously received payment accommodations have resumed making contractual principal and interest payments. While positive developments have occurred, management is keenly aware that uncertainty regarding the pandemic may still exist.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 had 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

We make reference to certain non-GAAP measures in this release. See the reconciliations of the Non-GAAP adjusted measures to the GAAP measures in the tables that accompany this release.

For the three months ended December 31, 2021, FNCB's netinterest income on a fully tax-equivalent basisincreased $1.3 million, or 10.7%, to $13.1 million from $11.8 million for the same three months of 2020, which resulted from higher levels of tax-equivalent interest income, coupled with a reduction in interest expense. Forthe fourth quarterof 2021, tax-equivalent interest income increased$0.6 million, or 4.6%, to $13.5 million from $12.9 million in 2020. The increase in tax-equivalent interest income was caused primarily byhigher balances of earning assets, partially offset by a reduction in the tax-equivalent yield on earning assets.Average earning assetsincreased $311.6 million, or 24.4%, to $1.589 billion for the three months ended December 31, 2021 from $1.277 billion for the same three months of 2020, which largely reflected anincreasein the average balancesof investment securities of $175.6 million, or 53.8%, asmanagement redirected excess liquidity into the investment portfolio. Partially offsetting the increase in earning asset volumes was a 64-basis point reduction in the tax-equivalent yield on earning assets to 3.41% for the fourth quarter of 2021 from 4.05% for the same quarter of 2020. Specifically, the tax-equivalent yield on the loan portfolio decreased 13 basis points to 4.33% for the fourth quarter of 2021 from 4.46% for the same quarter of 2020, while the tax-equivalent yield on the investment portfolio decreased 61 basis points to 2.44% from 3.05% comparing the fourth quarters of 2021 and 2020, respectively. In addition, the improvement in tax-equivalent net interest income reflected a $0.7 million, or 58.8% reduction in interest expense driven by a further reduction in funding costs.FNCB's cost of funds decreased 28 basis points to 0.16% for the fourth quarter of 2021compared to 0.44% for the same quarter of 2020. FNCBs tax-equivalent net interest margin for the fourth quarter of 2021 contracted 41 basis points to 3.29% compared to 3.70% for the same quarter of 2020. The margin contraction reflected the significant growth in average earning assets at lower yields which overshadowed the reduction in funding costs. On a linked quarter basis, tax-equivalent net interest margin contracted 17 basis points from3.46% for the third quarter of 2021. Excluding the impact of PPP loans (non-GAAP), FNCB's tax-equivalent net interest margin wouldhave been 3.09% for the fourth quarter of 2021, compared to 3.49% for the fourth quarter of 2020 and 3.15% for the third quarter of 2021. For the year ended December 31, 2021, tax-equivalent net interest income increased $8.9 million, or 21.8%, to $49.9 million compared to $41.0 million for the year ended December 31, 2020. Similarly, the improvement in net interest income for the full-year period was due to an increase in tax-equivalent interest income due primarily to higher earning asset volumes coupled with a reduction in funding costs. Average earning assets increased $226.2 million, or 18.5%, to $1.449 billion in 2021 from $1.223 billion in 2020. Specifically, investment security volumes averaged $127.4 million, or 42.1% higher,while average interest-bearing deposits in other banks increased $59.7 million, or 649.0% and average loan volumes increased $3.4 million, or 4.3%, comparing the years ended December 31, 2021 and 2020.Additionally, net loan origination fees recognized on forgiven PPP loans totaled $4.8 million in 2021 compared to $1.2 million in 2020, an increase of $3.6 million. The low interest rate environment and continued oversupply of deposits in the market resulted in further reductions in funding costs. For the year ended December 31, 2021, the cost of funds decreased 39 basis points to 0.25% from 0.64% for the year ended December 31, 2020. The tax-equivalent net interest margin widened 10 basis points to 3.45% in 2021 from 3.35% in 2020. For purposes of presenting net interest income, earning-asset yields and net interest margin information on a tax-equivalent basis, tax-free interest income is adjusted using the statutory federal corporate income tax rate of 21.0% for2021 and 2020.

Non-interest income for the fourth quarter of 2021 was $1.9 million, a decrease of $0.2 million, or 6.8% from $2.1million for the fourth quarter of 2020.The decrease was largely due to reductionsin net gains on equity securities,net gains on the sale of mortgage loans held for sale, partially offset by an increase in deposit service charges. For the quarterended December 31, 2021, net gains on equity securities were $145 thousand, a decrease of $162 thousand, or 52.8%, compared to $307 thousand for the same three months of 2020. Net gains on the sale of mortgage loans held for sale were $40thousand for the fourth quarter of 2021, a decrease of $148 thousand, or 78.7%, compared to $188 thousand for the same quarter of 2020. These reductions were partiallyoffset by a$163 thousand, or 18.6%,increase in deposit service charges to $1.0 millionfor the three months ended December 31, 2021 compared to$875 thousand for the three months ended December 31,2020, which primarily reflected increases in debit card fees. For the year ended December 31, 2021,non-interest income decreased $1.0 million, or 10.6%,to $8.3 million from $9.3 million for the year ended December 31, 2020. The year-to-date reduction in non-interest income resulted primarilyfrom decreasesin net gains on the sale of 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 86.1%, to $213 thousand in 2021 compared to$1.5 million in 2020, while net gains on equity securities decreased $470 thousand, or 40.1%, to $701 thousand in 2021 from $1.2 million in 2020. As part of an asset/liability management initiative to enhance future interest income run rates, management elected to hold higher-qualitysaleable mortgage loans in the loan portfolio. This initiative was the major factor causing a $301 thousand, or 46.1%, decrease in net gains on the sale of mortgage loans to $352 thousand in 2021 as compared to $653 thousand in 2020. These decreases were partially offset by a $625 thousand, or 19.2%, 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.

Non-interest expense totaled $9.2 million for the fourth quarter of 2021, anincrease of$1.7 million, or 23.2%,from $7.4 million for the fourth quarter of 2020, which reflected increases in salaries and employee benefits, data processing costs and other operating expenses. Salaries and employee benefits expense increased $917 thousand, or 23.0%, to $4.9 million from $4.0 million comparing the three months ended December 31, 2021 and 2020, which was caused primarily by additional salary and benefit costs associated with the onboarding of the 1st Equipment Financing team of professionals, along withincreases in employee retirement plan contributions and incentive pay. Data processing costs for the fourth quarter increased $279 thousand, or 37.5%, to $1.0 million in 2021 from $745 thousand in 2020, reflecting additional costs associated with cybersecurity enhancements.Other operating expenses totaled $1.9 million for the fourth quarter of 2021, an increase of $630 thousand, or 50.4%, from $1.2 million for the same quarter of 2020. Included in other operating expense in the fourth quarter of 2021 were losses of $300 thousand associated withthe transfer of two bank-owned properties to other real estate owned. As part of management's ongoing initiative to optimize its branch network, in December 2021, FNCB received regulatory approval to consolidate a community office located in the Borough of Dunmore, Lackawanna County, Pennsylvania with its main office located in the same Borough. The consolidation is expected to be completed in the first quarter of 2022, and isexpected to generate annualoperating cost savings of approximately $230 thousand.Additionally, with the continuing evolution of digital banking and declining utilization ofbrick-and-mortar branches,management decided to sell land located in Lackawanna County that FNCB was holding for future branch expansion. For the year ended December 31, 2021, non-interest expense totaled $31.1 million, an increase of$2.1 million, or 7.5%, compared to $28.9 million for the year ended December 31, 2020. Similar to the fourth quarter increase, the yearly increase wasprimarily due to increased salaries and employee benefits, data processing expenses andother operating expenses. Salaries and employee benefits increased $1.4 million, or 9.5%, to $16.7million in 2021, compared to $15.2million in 2020.Data processing expenses increased $756 thousand, or 25.8%, to $3.7million in2021, compared to $2.9million in 2020. Other operating expenses amounted to $5.6 million in 2021, an increase of $235 thousand, or 4.3%, compared to $5.4 million in 2020.

Asset Quality

FNCB experienced steady improvement in asset quality throughout 2021, as exhibited by a decrease in total non-performing loans of $1.7million, or 30.8%,to $3.9 million, or 0.39% of total loans,at December 31, 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. On a linked-quarter basis, non-performing loans improved $612 thousand, or13.7%, from $4.5 million at September 30, 2021. FNCBs loan delinquency rate (total delinquent loans as a percentage of total loans) improved to 0.55% at December 31, 2021, compared to 0.99% at December 31, 2020 and 0.61% at September 30, 2021. FNCB recorded a provision for loan and lease losses of $166 thousand in 2021, a decrease of $1.8 million or 91.5%, compared to $1.9 million in 2020.The elevated amount of credit provisioning in 2020 wasdirectly related to the economic disruption and uncertainty caused bytheCOVID-19 pandemic. The allowance for loan and lease losses was $12.4million, or 1.27% of total loans,at December 31, 2021, compared to $11.9 million, or 1.33% of total loans, at December 31, 2020.Excluding PPP loans, which are 100.0% guaranteed by the federal government, this ratio (non-GAAP) was 1.30% at December 31, 2021 and 1.45% at December 31, 2020.

Financial Condition

Total assets increased $198.6 million, or 13.6%, to $1.664 billion at December 31, 2021,from $1.465billion at December 31, 2020.The strong balance sheet growth reflected substantial increases in available-for-sale debt securities, and loans, net of net deferred loan costs and unearned income. Available-for-sale debt securities increased $172.5 million, or 49.3%, to $522.6 million at December 31, 2021 from $350.0 million at December 31, 2020. Loans, net of net deferred loan costs and unearned income, grew $78.3 million, or 8.7%,to$979.4million at December 31, 2021, from$901.1 millionat December 31, 2020. Excluding activity related to the origination and forgiveness of PPP loans, loans, net of net deferred loan origination fees, increased$134.4 million, or 16.3%. Total deposits increased $167.6 million, or 13.0%, to $1.455 billionat December 31, 2021 from $1.287 billion at December 31, 2020. Interest-bearing deposits increased $119.0 million, or 11.7%, to $1.135billion at December 31, 2021 from $1.016 billion at December 31, 2020. Additionally,non-interest-bearing deposits increased $48.6 million, or 17.9%, to $320.1 million at December 31, 2021 from $271.5 million at December 31, 2020.

Total shareholders equity increased $6.6 million, or 4.2%, to $162.5 million at December 31, 2021 from $155.9 million at December 31, 2020.Contributing to the increase in capital was 2021 net income of $21.4 million partially offset by a $7.5million decrease in accumulated other comprehensive incomerelated primarily to depreciation in the fairvalue of FNCBs available-for-sale debt securities, net of deferred taxes and dividends declared and paid in 2021 of $5.4million. The repurchase of 330,759 common shares under the board-authorized 2021 stock repurchase program also reduced shareholders' equity by $2.4 million. FNCB's tangible book value per share improved $0.43,or 5.6%, to $8.13 pershare at December 31, 2021 from $7.70 per share at December 31, 2020.FNCB Banks total risk-based capital and Tier I leverage ratios were 14.61% and 8.92%, respectively, at December 31, 2021 compared to 15.79% and 9.57%, respectively, at December 31, 2020.

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 Counties, and remains dedicated to making its customers banking experience simply better. For more information about FNCB, visit www.fncb.com.

INVESTOR CONTACT:James M. Bone, Jr., CPAExecutive Vice President and Chief Financial OfficerFNCB Bank(570) 348-6419james.bone@fncb.com

Forward-looking Statements

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, including statements with respect to new product offerings, 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 FNCBto 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, June 30, 2021 and September 30, 2021.



FNCB Bancorp, Inc.Selected Financial Data

Dec 31, Sept 30, Jun 30, Mar 31, Dec 31, 2021 2021 2021 2021 2020 Per share data:Net income(fully $ 0.20 $ 0.31 $ 0.26 $ 0.29 $ 0.26 diluted)Cash dividends $ 0.075 $ 0.075 $ 0.060 $ 0.060 $ 0.055 declaredBook value $ 8.13 $ 8.10 $ 7.99 $ 7.65 $ 7.70 Tangible book $ 8.13 $ 8.10 $ 7.99 $ 7.65 $ 7.70 valueMarket value: High $ 9.40 $ 8.35 $ 7.98 $ 8.94 $ 7.95 Low $ 8.21 $ 7.17 $ 6.90 $ 5.80 $ 5.16 Close $ 9.24 $ 8.23 $ 7.27 $ 7.54 $ 6.40 Common shares 19,989,875 19,985,837 20,102,602 20,240,668 20,245,649 outstanding Selected ratios:Annualizedreturn on 0.94 % 1.58 % 1.38 % 1.61 % 1.41 %average assetsAnnualizedreturn onaverage 9.82 % 15.61 % 13.37 % 15.27 % 13.49 %shareholders'equityEfficiency 61.75 % 51.32 % 51.86 % 51.87 % 54.89 %ratioTier Ileverage ratio 8.92 % 9.80 % 9.90 % 9.88 % 9.57 %(FNCB Bank)Totalrisk-basedcapital to 14.64 % 15.91 % 15.79 % 16.26 % 15.79 %risk-adjustedassets (FNCBBank)Averageshareholders'equity to 9.61 % 10.14 % 10.35 % 10.53 % 10.42 %average totalassetsYield onearning assets 3.41 % 3.63 % 3.80 % 3.85 % 4.05 %(FTE)Cost of funds 0.16 % 0.23 % 0.30 % 0.34 % 0.44 %Net interest 3.25 % 3.40 % 3.50 % 3.51 % 3.61 %spread (FTE)Net interest 3.29 % 3.46 % 3.58 % 3.59 % 3.70 %margin (FTE)Totaldelinquent 0.55 % 0.61 % 0.56 % 0.70 % 0.99 %loans/totalloansAllowance forloan and lease 1.27 % 1.25 % 1.26 % 1.30 % 1.33 %losses/totalloansNon-performingloans/total 0.39 % 0.47 % 0.46 % 0.52 % 0.62 %loansAnnualized net(recoveries) (0.03 %) (0.03 %) (0.02 %) 0.03 % 0.09 %charge-offs/average loans

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

Year Ended December 31, (in thousands, except share data) 2021 2020 Interest income Interest and fees on loans $ 41,049 $ 37,615 Interest and dividends on securities: Taxable 8,237 7,073 Tax-exempt 2,086 1,373 Dividends 239 249 Total interest and dividends on 10,562 8,695 securitiesInterest on interest-bearing deposits 88 28 in other banksTotal interest income 51,699 46,338 Interest expense Interest on deposits 2,508 5,404 Interest on borrowed funds: Federal Reserve Bank Discount Window - 32 advancesFederal Home Loan Bank of Pittsburgh 6 474 advancesJunior subordinated debentures 191 250 Total interest on borrowed funds 197 756 Total interest expense 2,705 6,160 Net interest income before provision 48,994 40,178 for loan and lease lossesProvision for loan and lease losses 166 1,941 Net interest income after provision for 48,828 38,237 loan and lease lossesNon-interest income Deposit service charges 3,877 3,252 Net gain on the sale of 213 1,528 available-for-sale securitiesNet gain on equity securities 701 1,171 Net gain on the sale of mortgage loans 352 653 held for saleLoan-related fees 390 348 Income from bank-owned life insurance 541 482 Bank-owned life insurance settlement 426 - Merchant services revenue 593 565 Other 1,175 1,251 Total non-interest income 8,268 9,250 Non-interest expense Salaries and employee benefits 16,697 15,246 Occupancy expense 2,039 2,052 Equipment expense 1,338 1,477 Advertising expense 712 685 Data processing expense 3,689 2,933 Regulatory assessments 609 387 Bank shares tax 975 786 Professional fees 674 999 Other operating expenses 4,336 4,350 Total non-interest expense 31,069 28,915 Income before income taxes 26,027 18,572 Income tax expense 4,656 3,225 Net income $ 21,371 $ 15,347 Income per share Basic $ 1.06 $ 0.76 Diluted $ 1.06 $ 0.76 Cash dividends declared per common $ 0.27 $ 0.22 shareWeighted average number of shares outstanding:Basic 20,111,430 20,210,439 Diluted 20,126,853 20,212,187

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

Three Months Ended Dec 31, Sept 30, Jun 30, Mar 31, Dec 31, (in thousands, except 2021 2021 2021 2021 2020 share data)Interest income Interest and fees on $ 10,325 $ 10,696 $ 10,242 $ 9,786 $ 10,338 loans and leasesInterest anddividends on securities:Taxable 2,281 2,070 1,980 1,906 1,832 Tax-exempt 567 517 516 486 465 Dividends 63 55 59 62 64 Total interest anddividends on 2,911 2,642 2,555 2,454 2,361 securitiesInterest oninterest-bearing 53 31 1 3 3 deposits in otherbanksTotal interest income 13,289 13,369 12,798 12,243 12,702 Interest expense Interest on deposits 410 582 718 798 1,077 Interest on borrowed funds:Federal Home LoanBank of Pittsburgh 6 - - - - advancesJunior subordinated 48 47 48 48 50 debenturesTotal interest on 54 47 48 48 50 borrowed fundsTotal interest 464 629 766 846 1,127 expenseNet interest incomebefore provision 12,825 12,740 12,032 11,397 11,575 (credit) for loan andlease lossesProvision (credit)for loan and lease 338 (513 ) 155 186 (115 )lossesNet interest incomeafter provision 12,487 13,253 11,877 11,211 11,690 (credit) for loan andlease lossesNon-interest income Deposit service 1,038 1,009 956 874 875 chargesNet gain on the saleof available-for-sale - - - 213 24 securitiesNet gain on equity 145 156 36 364 307 securitiesNet gain on the saleof mortgage loans 40 41 47 224 188 held for saleLoan-related fees 76 77 104 133 148 Income frombank-owned life 139 139 142 121 116 insuranceBank-owned life - - 4 422 - insurance settlementMerchant services 140 159 156 138 164 revenueOther 365 261 264 285 263 Total non-interest 1,943 1,842 1,709 2,774 2,085 incomeNon-interest expense Salaries and employee 4,901 4,022 4,038 3,736 3,984 benefitsOccupancy expense 549 450 431 609 532 Equipment expense 333 319 333 353 365 Advertising expense 221 160 214 117 190 Data processing 1,024 961 885 819 745 expenseRegulatory 149 160 112 188 131 assessmentsBank shares tax (34 ) 352 342 315 (92 )Professional fees 150 153 112 259 339 Other operating 1,879 923 759 775 1,249 expensesTotal non-interest 9,172 7,500 7,226 7,171 7,443 expenseIncome before income 5,258 7,595 6,360 6,814 6,332 taxesIncome tax expense 1,300 1,244 1,131 981 1,176 Net income $ 3,958 $ 6,351 $ 5,229 $ 5,833 $ 5,156 Income per share Basic $ 0.20 $ 0.31 $ 0.26 $ 0.29 $ 0.26 Diluted $ 0.20 $ 0.31 $ 0.26 $ 0.29 $ 0.26 Cash dividendsdeclared per common $ 0.075 $ 0.075 $ 0.060 $ 0.060 $ 0.055 shareWeighted averagenumber of shares outstanding:Basic 19,988,272 19,997,021 20,222,216 20,242,262 20,241,730 Diluted 20,015,776 20,009,387 20,232,694 20,253,606 20,244,652

FNCB Bancorp, Inc.Consolidated Balance Sheets

Dec 31, Sept 30, Jun 30, Mar 31, Dec 31, (in thousands) 2021 2021 2021 2021 2020 Assets Cash and cash equivalents:Cash and due from $ 16,651 $ 24,612 $ 24,782 $ 22,382 $ 24,822 banksInterest-bearingdeposits in other 82,369 149,581 31,160 76,172 130,989 banksTotal cash and cash 99,020 174,193 55,942 98,554 155,811 equivalentsAvailable-for-saledebt securities, at 522,566 470,323 432,807 407,396 350,035 fair valueEquity securities, at 4,922 4,777 4,303 4,267 3,026 fair valueRestricted stock, at 1,911 1,826 1,099 1,149 1,745 costLoans held for sale - 491 642 267 2,107 Loans, net of netdeferred costs and 979,439 958,408 976,538 931,943 901,102 unearned incomeAllowance for loan and (12,416 ) (12,018 ) (12,285 ) (12,076 ) (11,950 )lease lossesNet loans 967,023 946,390 964,253 919,867 889,152 Bank premises and 16,082 17,269 17,360 17,407 17,579 equipment, netAccrued interest 4,643 4,593 4,485 4,567 4,286 receivableBank-owned life 33,494 33,355 33,216 33,074 31,712 insuranceOther assets 14,662 12,674 10,656 13,488 10,226 Total assets $ 1,664,323 $ 1,665,891 $ 1,524,763 $ 1,500,036 $ 1,465,679 Liabilities Deposits: Demand $ 320,089 $ 321,952 $ 312,408 $ 319,532 $ 271,499 (non-interest-bearing)Interest-bearing 1,134,939 1,160,114 1,025,770 1,003,296 1,015,949 Total deposits 1,455,028 1,482,066 1,338,178 1,322,828 1,287,448 Borrowed funds 30,310 10,310 10,310 10,310 10,310 Accrued interest 49 56 87 99 108 payableOther liabilities 16,479 11,509 15,574 11,869 11,953 Total liabilities 1,501,866 1,503,941 1,364,149 1,345,106 1,309,819 Shareholders' equity Preferred stock - - - - - Common stock 24,987 24,982 25,128 25,300 25,307 Additional paid-in 80,128 80,000 80,591 81,640 81,587 capitalRetained earnings 50,990 48,541 43,698 39,691 35,080 Accumulated other 6,352 8,427 11,197 8,299 13,886 comprehensive incomeTotal shareholders' 162,457 161,950 160,614 154,930 155,860 equity Total liabilitiesand shareholders? $ 1,664,323 $ 1,665,891 $ 1,524,763 $ 1,500,036 $ 1,465,679 equity

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

Three Months Ended Dec 31, Sept 30, Jun 30, Mar 31, Dec 31, (dollars in 2021 2021 2021 2021 2020 thousands)Interest income Loans: Loans and leases - $ 9,983 $ 10,364 $ 9,897 $ 9,401 $ 9,938 taxableLoans and leases - 433 420 437 487 506 tax-freeTotal loans 10,416 10,784 10,334 9,888 10,444 Securities: Securities, 2,344 2,125 2,039 1,968 1,896 taxableSecurities, 719 654 653 615 589 tax-freeTotal interest anddividends on 3,063 2,779 2,692 2,583 2,485 securitiesInterest-bearingdeposits in other 53 31 1 3 3 banksTotal interest 13,532 13,594 13,027 12,474 12,932 incomeInterest expense Deposits 410 582 718 798 1,077 Borrowed funds 54 47 48 48 50 Total interest 464 629 766 846 1,127 expenseNet interest $ 13,068 $ 12,965 $ 12,261 $ 11,628 $ 11,805 income Average balances Earning assets: Loans: Loans and leases - $ 915,693 $ 921,648 $ 909,833 $ 873,544 $ 889,964 taxableLoans and leases - 45,920 43,091 44,583 46,897 46,444 tax-freeTotal loans and 961,613 964,739 954,416 920,441 936,408 leasesSecurities: Securities, 409,210 357,684 326,848 286,128 255,111 taxableSecurities, 92,685 82,706 82,304 75,876 71,154 tax-freeTotal securities 501,895 440,390 409,152 362,004 326,265 Interest-bearingdeposits in other 125,609 94,434 7,042 13,490 14,808 banksTotalinterest-earning 1,589,117 1,499,563 1,370,610 1,295,935 1,277,481 assetsNon-earning assets 91,968 105,912 145,861 175,301 181,708 Total assets $ 1,681,085 $ 1,593,014 $ 1,516,471 $ 1,471,236 $ 1,459,189 Interest-bearing liabilities:Deposits $ 1,163,290 $ 1,080,312 $ 1,019,612 $ 999,085 $ 1,016,916 Borrowed funds 17,810 10,419 10,310 10,310 10,310 Totalinterest-bearing 1,181,100 1,090,731 1,029,922 1,009,395 1,027,226 liabilitiesDemand deposits 322,536 325,571 317,670 294,525 268,531 Other liabilities 15,846 15,258 11,998 12,413 11,377 Shareholders' 161,603 161,454 156,881 154,903 152,055 equityTotal liabilitiesand shareholders' $ 1,681,085 $ 1,593,014 $ 1,561,471 $ 1,471,236 $ 1,459,189 equity Yield/Cost Earning assets: Loans: Interest and feeson loans and 4.36 % 4.50 % 4.35 % 4.30 % 4.47 %leases - taxableInterest and feeson loans and 3.77 % 3.90 % 3.92 % 4.15 % 4.36 %leases - tax-freeTotal loans 4.33 % 4.47 % 4.33 % 4.30 % 4.46 %Securities: Securities, 2.29 % 2.38 % 2.50 % 2.75 % 2.97 %taxableSecurities, 3.10 % 3.16 % 3.17 % 3.24 % 3.31 %tax-freeTotal securities 2.44 % 2.52 % 2.63 % 2.85 % 3.05 %Interest-bearingdeposits in other 0.17 % 0.13 % 0.06 % 0.09 % 0.08 %banksTotal earning 3.41 % 3.63 % 3.80 % 3.85 % 4.05 %assetsInterest-bearing liabilities:Interest on 0.14 % 0.22 % 0.28 % 0.32 % 0.42 %depositsInterest on 1.21 % 1.80 % 1.86 % 1.86 % 1.94 %borrowed fundsTotalinterest-bearing 0.16 % 0.23 % 0.30 % 0.34 % 0.44 %liabilitiesNet interest 3.25 % 3.40 % 3.50 % 3.51 % 3.61 %spreadNet interest 3.29 % 3.46 % 3.58 % 3.59 % 3.70 %margin

FNCB Bancorp, Inc.Asset Quality Data

Dec 31, Sept 30, Jun 30, Mar 31, Dec 31, (in thousands) 2021 2021 2021 2021 2020 At period end Non-accrualloans,includingnon-accruing $ 3,863 $ 4,475 $ 4,555 $ 4,842 $ 5,581 troubled debtrestructuredloans (TDRs)Loans past due90 days or - - - - - more and stillaccruingTotalnon-performing 3,863 4,475 4,555 4,842 5,581 loans andleasesOther realestate owned 920 54 236 58 58 (OREO)Othernon-performing 1,773 1,773 1,773 1,900 1,900 assetsTotalnon-performing $ 6,556 $ 6,302 $ 6,564 $ 6,800 $ 7,539 assets Accruing TDRs $ 6,666 $ 6,666 $ 6,823 $ 6,962 $ 6,975 For the three months endedAllowance forloan and lease lossesBeginning $ 12,018 $ 12,285 $ 12,076 $ 11,950 $ 12,269 balanceLoans andleases 34 255 136 361 338 charged-offRecoveries ofcharged-off 94 501 190 301 134 loans andleasesNet(recoveries)/ (60 ) (246 ) (54 ) 60 204 charge-offsProvision(credit) for 338 (513 ) 155 186 (115 )loan and leaselossesEnding balance $ 12,416 $ 12,018 $ 12,285 $ 12,076 $ 11,950

FNCB Bancorp, Inc.Non-GAAP Reconciliations

Dec 31, Sept 30, Jun 30, Mar 31, Dec 31, (dollars in 2021 2021 2021 2021 2020 thousands)Annualizednet interestmargin:Netinterestmargin (1 3.29 % 3.46 % 3.58 % 3.59 % 3.70 %divided by3)Netinterestmargin,excluding 3.09 % 3.15 % 3.45 % 3.37 % 3.49 %PPP loans(non-GAAP)(2 dividedby 4) Netinterest $ 13,068 $ 12,965 $ 12,261 $ 11,628 $ 11,805 income(FTE) (1)PPP loaninterest 1,033 1,709 1,319 1,499 1,485 and feeincomeNetinterestincome(FTE), $ 12,035 $ 11,256 $ 10,942 $ 10,129 $ 10,320 excludingPPP loans(non-GAAP)(2) Averageearning $ 1,589,117 $ 1,499,563 $ 1,370,610 $ 1,295,935 $ 1,277,481 assets (3)(a)Average PPP 33,205 69,132 101,779 94,801 95,837 loansAverageearningassets,excluding $ 1,555,912 $ 1,430,431 $ 1,268,831 $ 1,201,134 $ 1,181,644 PPP loans(non-GAAP)(4) Allowancefor loanand leaselosses/ totalperiod endloansAllowancefor loansand leaselosses/total 1.27 % 1.25 % 1.26 % 1.30 % 1.33 %period endloans (5divided by6)Allowancefor loansand leaselosses/totalperiod end 1.30 % 1.32 % 1.37 % 1.46 % 1.45 %loans,excludingPPP loans(non-GAAP)(5 dividedby 7) Allowancefor loans $ 12,416 $ 12,018 $ 12,285 $ 12,076 $ 11,950 and leaselosses (5) Totalperiod end $ 979,439 $ 958,408 $ 976,538 $ 931,943 $ 901,102 loans (6)PPP loansoutstanding 21,940 49,434 82,354 103,466 76,004 at periodendTotalperiod endloans,excluding $ 957,499 $ 908,974 $ 894,184 $ 828,477 $ 825,098 PPP loans(non-GAAP)(7)