GlobeNewswire Inc | Jul 20, 2020 05:26PM EDT

July 20, 2020

DUNMORE, Pa., July 20, 2020 (GLOBE NEWSWIRE) -- FNCB Bancorp, Inc. (NASDAQ: FNCB; www.fncb.com), the parent company of Dunmore-based FNCB Bank (the Bank), today reported net income of $4.0 million, or $0.20 per basic and diluted share, for the three months ended June 30, 2020, an increase of $1.5 million, or 57.7% from $2.5 million, or $0.13 per basic and diluted share, for the comparable period of2019. Net income for the six months ended June 30, 2020 totaled $6.1 million, or $0.30 per basic and diluted share, an increase of $0.9 million, or 17.4%, compared to $5.2 million, or $0.27 per basic and diluted share, for the same six months of 2019. The increase in secondquarter and year-to-date 2020 earnings reflected increases in net interest income and non-interest income, coupled with a decrease in non-interest expense. Partially offsetting these positive factors wasan increase in the provision for loan and lease losses. Additionally, the results for the second quarter and year-to-date periods of 2020 include the effect of $117.0 million in loans originated through the Paycheck Protection Program (PPP) ofUnited States Small Business Administration (SBA), as well as COVID-19 related expenses of $183 thousand.

For the threeand six months ended June 30, 2020, the annualized return on average assets was 1.21% and 0.96%, respectively, compared to 0.85% and 0.86%, respectively, for the same periods of 2019. The annualized return on average equity was 11.62% and 8.87%, respectively, for the three- and six-month periods ended June 30, 2020, and 8.19% and 8.89%, respectively, for the comparableperiods of 2019. Dividend declared and paid were $0.055 per share for the second quarter and $0.11 per share for the year-to-date period of 2020, a 10.0% increase compared to $0.05 per share and $0.10 per share, respectively, for the three and six months ended June 30, 2019. The dividend pay-out ratio was 36.5% for thesix months ended June 30, 2020 and38.8% for the comparable period of 2019.Year-to-date2020 dividends equated to an annualizeddividend yield of approximately 3.8% based on the closing stock price of $5.75 per share at June 30, 2020.

Second quarter 2020 resultsas compared to the secondquarter of 2019:

? Net interest income (FTE) increased $0.7 million, or 8.1%; ? Yield on earnings assets (FTE) decreased 51 basis points to 3.64% in 2020 from 4.15% in 2019; ? Cost of funds decreased 42 basis points to 0.69% in 2020 from 1.11% in 2019; ? Net interest margin (FTE) contracted 13 basis points to 3.12% in 2020, compared to 3.25% in 2019; ? Provision for loan and lease losses increased $0.5 million, or 139.5%; ? Non-interest income increased $0.9 million, or 58.5%; ? Non-interest expense decreased $0.7 million, or 9.8%; and ? Efficiency ratio improved to 56.53% in 2020 compared to 68.12% in 2019.

Summary financial position at June 30, 2020 as compared to December 31, 2019:

? Total assets grew $214.6 million, or 17.8%, to $1.418 billion at June 30, 2020 from $1.204 billion at December 31, 2019; ? Net loans increased $117.9 million, or 14.4%, to $937.4 million at June 30, 2020 from $819.5 million at December 31, 2019; ? Included in net loans were PPP loans outstanding of $117.0 million at June 30, 2020; ? Total deposits increased $167.9 million, or 16.8% to $1.170 billion at June 30, 2020 from $1.002 billion at December 31, 2019; ? Total capital increased $11.8 million, or 8.8% to $145.4 million at June 30, 2020 from $133.6 million at December 31, 2019; and ? Tangible book value improved $0.57, or 8.6%, to $7.19 per share at June 30, 2020 from $6.62 per share at December 31, 2019.

We are extremely pleased with the results achieved by our Company for the second quarter of 2020, stated Gerard A. Champi, President and Chief Executive Officer. The solid performance reflects the underlying strength of our franchise andthe hard work and dedication of the entire FNCB team. As essential employees, I am extremely proud of the effort put forth by our employees in assisting our customers and communities in navigatingthrough the many challenges presented by the COVID-19 pandemic in a safe and sound manner. Ourteamworked around the clockto ensure our small business customers gainedaccess to theresourcesavailableto be able to continue their livelihoods.On an additional note, I am pleased to announce thatFNCB Bank is one of eleven lenders within the Commonwealth of Pennsylvania participating in the Federal Reserve Boards Main Street Lending Program. Participating in this important program is just another example of ourcommitment to assisting local businesses within our communities maintain their operations during this uncertain time.With the economy slowly beginningto re-open, all of our community offices are now open and we remaincommitted to delivering exceptional servicewhile taking into consideration the safety of our customers and employees by requiring the wearing of masks and adhering to social distancing guidelines. However, we are keenly aware that circumstances surrounding the pandemic are evolving. We are closely monitoring the situation and are ready to adjust our operations as necessary to protect our customers and employees, concluded Champi.

Summary Results

For the three months ended June 30, 2020, tax-equivalent net interest income increased $0.7 million, or 8.1% to $9.8 million from $9.1 million for the same three months of 2019.The second quarter increasewas largely due to a $0.9 million, or 35.8%, decrease in interest expense, whichprimarily reflected a 42 basis point decrease in the cost of funds to 0.69% for the second quarter of 2020 from 1.11% for the same quarter of 2019. The cost of interest-bearing deposits fell 36 basis points to 0.65% for the second quarter of 2020 from 1.01% for the comparable quarter of 2019, while average borrowing costs decreased 164 basis points to 1.14% from 2.78% comparing the second quarters of 2020 and 2019, respectively. Partially offsetting the reduction in interest expense wasa $0.2 million, or 1.4%,decrease in tax-equivalent interest income, which was caused primarily by a 51 basis point decrease in the tax-equivalent yield on earning assets, partially mitigated by a $140.4 million, or 12.6%, increase in average earning assets.On a linked quarter basis, tax-equivalent net interest income increased $0.5 million, or 5.1% from $9.3 million for the first quarter of 2020, which was reflective of a $0.4 million decline in interest expense, coupled witha $0.1 million increase in tax-equivalent interest income. The tax-equivalent net interest margin fell 13 basis points to 3.12% from 3.25% comparing the second quarters of 2020 and 2019, and 23 basis points from 3.35% for the first quarter of 2020. The margin decline was impacted by the origination of PPP loans, which averaged $88.0 million at an average yield of 0.99% for the second quarter of 2020.

For the six months ended June 30, 2020, tax-equivalent net interest income increased $1.0 million, or 5.3% to $19.1 million, from $18.1 million for the same six months of 2019. The increase inyear-to-date tax-equivalent net interest income primarily reflecteda $1.6 million, or 30.8%, reduction in interest expense caused bya decrease in funding costs, coupled with lower average balances of interest-bearing liabilities.Due to lower market interest rates, FNCBs cost of funds for the six months ended June 30, decreased 32 basis points to 0.79% in 2020 from 1.11% in 2019. Additionally, average interest-bearing liabilities decreased $25.1 million, or 2.7%, comparing the year-to-date periods of 2020 and 2019.Partially offsetting the reduction in interest expense was a $0.6 million, or 2.7%, decrease in tax-equivalent interest income to $22.7 million for the six months ended June 30, 2020 from $23.3 million for the comparable six-month period of 2019. The tax-equivalent yield on loans decreased 38 basis points to 4.20% for the six months ended June 30, 2020 from 4.58% for the same six months of 2019. Partially mitigatingthe reduction in loan yields was a $46.0 million, or5.5%, increase in average loan balances to $877.7 million from $831.7 million comparing the year-to-date periods of 2020 and 2019, respectively. On a year-to-date basis, the tax-equivalent net interest margin improved 4 basis points to 3.23% in 2020 compared to 3.19% in 2019. PPP loans averaged $44.9 million for the six months ended June 30, 2020, with an average yield of 0.99%. 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% for the three and six months ended June 30, 2020 and 2019.

For the second quarter, non-interest income increased $923 thousand to $2.5 million in 2020 compared to $1.6 million in 2019. The 58.5% increase was primarily due to highernet gains on the sale of available-for-sale securities, coupled with increases in loan referral fees and net gains on the sale of mortgage loans held for sale. FNCB realized net gains on the sale of available-for-sale debt securities of $922 thousand for the second quarter of 2020, an increase of $759 thousand, or 466.6%, compared to $163 thousand for the same quarter of 2019. Loan referral fees, which include commissions received from a correspondent bank related to an off-balance sheet commercial interest-rate hedge program and the referral of FHA residential mortgage loans to a third-party broker, increased $208 thousand, or 3466.7% to $214 thousand for the second quarter of 2020from $6 thousand for the same quarter of 2019. Comparing the second quarters of 2020 and 2019, net gains on the sale of residential mortgage loans held for sale increased $110 thousand, or 150.7%, to $183 thousand in 2020 compared to $73 thousand in 2019. For the six months ended June 30, 2020, non-interest income increased $1.1 million, or 35.6%, to $4.2 million from $3.1 million for the same period of 2019. Similarly, the increase in non-interest income for the year-to-date period was due to increases in net gains on the sale of available-for-sale securities, loan referral fees and net gains on the sale of residential mortgage loansheld for sale. Additionally, deposit service charges increased $127 thousand, or 9.0%, which reflected enhancements made to FNCBs fee structure implemented in the fourth quarter of 2019.

For the three months ended June 30, 2020, non-interest expense decreased by $698 thousand, or 9.8%, to $6.4 million from $7.1 million for the comparable three months of 2019. Non-interest expense for the six months ended June 30, 2020, decreased $918 thousand, or 6.3%, to $13.6 million from $14.5 million for the same six months of 2019.The decrease in the three- and six-month periodsprimarily reflected decreases in salaries and employee benefits,data processing costs and other operating expenses, which were partially offset by increases in occupancy and equipment expenses and bank shares tax. For the six months ended June 30, 2020, FNCB incurred COVID-19 related costs, including stay-at-home pay, computer-related equipment to enable employees to work remotely, cleaning and sanitizing facilities and safety supplies,totaling $183 thousand, which is included innon-interest expense.

The increases in net interest income and non-interest income, coupled with the reduction in non-interest expense, resulted in an improvement in FNCBs efficiency ratio year over yearto 56.53% for the secondquarter of 2020 from 68.12% for the same quarter of 2019.

Asset Quality

Total non-performing loans were $6.7 million, or 0.71% of total loans,at June 30, 2020, anincrease of $1.4 million, or 27.1%, compared to $5.3 million, or 0.65% of total loans, at June 30, 2019. The year-over-year increase was due to several smaller-balance commercial credits that were placed on nonaccrual status. On a linked quarter basis, non-performing loans decreased $1.8 million, or 21.4%, from $8.6 million, or 1.03% of total loans, at March 31, 2020. The decrease in non-performing loans from the end of the previous quarter end primarily reflected the return of two large commercial loan relationships to accrual status.FNCBs loan delinquency rate (total delinquent loans as a percentage of total loans) was 0.89% at June 30, 2020 compared to 1.46% at December 31, 2019 and 0.99% at June 30, 2019. FNCB recorded net recoveries of $286 thousandduring the second quarter of 2020 due to asubstantialrecovery received ona previously charged-off loan. Annualized net loans charged off (recovered), as a percentage of average loans, was (0.12%) for the three months ended June 30, 2020 compared to 0.32% for the second quarter of 2019. Despite receipt of the large recovery and the improvement in non-performing assets and delinquency rate, FNCB recorded a provision for loan and lease losses of $0.8 million for the second quarter of 2020, an increase of $0.5 million, or 139.5%, from $0.3 million for the second quarter of 2019. For the six months ended June 30, 2020, the provision for loan and lease losses was $2.0 million, an increase of $1.8 million, from $0.2 million for the same six months of 2019. The increase in credit provisioning in2020 was primarily related to economic disruption and uncertainty caused by the COVID-19 pandemic. The allowance for loan and lease losses was $11.0 million, or 1.16% of total loansat June 30, 2020, compared to $8.9 million, or 1.08% of total loans at December 31, 2019 and $8.9million, or 1.10%, at June 30, 2019. At June 30, 2020, FNCB provided short-term, COVID-19 relatedpayment defermentfor 905 loans with aggregate balance totaling$176.6 million, or 18.6%, ofgross loans outstanding. Additionally, of the 905 loans, there were 12 loans with an aggregate balance of $7.0 million, or 0.7% of gross loans outstanding, that were provided a second short-termpayment defermentas of June 30, 2020. All of the loans that were granted a paymentdeferment were current and in good standing at December 31, 2019.

Financial Condition

Total assets increased $214.6 million, or 17.8%, to $1.418 billion at June 30, 2020 from $1.204 billion at December 31, 2019.The change in the balance sheet primarily reflectedincreases in net loans, available-for-sale debt securitiesand cash and cash equivalents. Net loans were $937.4 million at June 30, 2020, an increase of$117.9 million, or 14.4%, from $819.5 million at December 31, 2019. The increase in loans primarily reflected the origination and funding of PPP loans, of which$117.0million were outstanding at June 30, 2020. Available-for-sale debt securities increased $32.8 million, or 12.0%, to $305.6 million at June 30, 2020 from $272.8 million at December 31, 2019.Cash and cash equivalents were $101.5 million at June 30, 2020, an increase of $66.9 million, or 193.6%, compared to $34.6 million at December 31, 2019. Total deposits increased $167.9 million, or 16.8%, to$1.170 billionat June 30, 2020 from $1.002 billion atDecember 31, 2019. Non-interest-bearing deposits increased $87.4 million, or 48.7%, while interest-bearing deposits rose $80.5 million, or 9.8%, comparing balances outstanding at June 30, 2020 and December 31, 2019.Total borrowed funds increased $32.2 million, or 56.2%,to $89.4 million at June 30, 2020 from $57.2 million at December 31, 2019. The increase was primarily the result of receipt of $36.2 million in funding through the Federal Reserve Bank Discount Window Paycheck Protection Program Liquidity Facility (PPPLF).

Total shareholders equity increased $11.8 million, or 8.8%, to $145.4 million at June 30, 2020 from $133.6 million at December 31, 2019. Factoring into the capital improvementwas net income for the six months ended June 30, 2020 of $6.1 million and a $7.7 million positive change in accumulatedother comprehensive income related primarilyto appreciation in the fair value of available-for-sale debt securities, net of deferred taxes, partially offset bydividends declared of $2.2 million. FNCB's tangible book value improved $0.57, or 8.6%, to $7.19 per share at June 30, 2020 from $6.62 per share at December 31, 2019, and $0.75 per share, or 11.6%, year over year from $6.44 per share at June 30, 2019.FNCB Banks total risk-based capital and Tier I leverage ratios improved to 15.68% and 10.60%, respectively, at June 30, 2020 compared to 14.77% and 10.36%, respectively, at December 31, 2019.

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 for110 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 a limited purpose office in Lehigh County, 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

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 coronavirus (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 report.

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, 2019 and Form 10-Q for the quarter ended March 31, 2020.

FNCB Bancorp, Inc.Selected Financial Data

Jun 30, Mar 31, Dec 31, Sept 30, Jun 30, 2020 2020 2019 2019 2019 Per share data:Net income(fully $ 0.20 $ 0.10 $ 0.17 $ 0.12 $ 0.13 diluted)Cash dividends $ 0.055 $ 0.055 $ 0.050 $ 0.050 $ 0.050 declaredBook value $ 7.19 $ 6.84 $ 6.62 $ 6.57 $ 6.44 Tangible book $ 7.19 $ 6.84 $ 6.62 $ 6.57 $ 6.44 valueMarket value: High $ 7.19 $ 8.54 $ 8.86 $ 9.41 $ 8.12 Low $ 5.15 $ 5.10 $ 7.03 $ 7.03 $ 7.16 Close $ 5.75 $ 6.91 $ 8.45 $ 7.81 $ 7.74 Common shares 20,208,607 20,174,250 20,171,408 20,169,492 20,148,017 outstanding Selected ratios:Annualizedreturn on 1.21 % 0.69 % 1.15 % 0.80 % 0.85 %average assetsAnnualizedreturn onaverage 11.62 % 6.06 % 10.43 % 7.30 % 8.19 %shareholders'equityEfficiency 56.53 % 66.46 % 67.35 % 69.20 % 68.12 %ratioTier Ileverage ratio 10.60 % 11.09 % 10.36 % 11.01 % 10.69 %(FNCB Bank)Totalrisk-basedcapital to 15.68 % 15.44 % 14.77 % 15.37 % 15.25 %risk-adjustedassets (FNCBBank)Averageshareholders'equity to 10.38 % 11.37 % 11.01 % 10.96 % 10.41 %average totalassetsYield onearning assets 3.64 % 4.05 % 4.16 % 4.22 % 4.15 %(FTE)Cost of funds 0.69 % 0.89 % 0.98 % 1.11 % 1.11 %Net interest 2.95 % 3.16 % 3.18 % 3.11 % 3.04 %spread (FTE)Net interest 3.12 % 3.35 % 3.38 % 3.32 % 3.25 %margin (FTE)Totaldelinquent 0.89 % 1.41 % 1.46 % 1.16 % 0.99 %loans/totalloansAllowance forloan and lease 1.16 % 1.19 % 1.08 % 1.11 % 1.10 %losses/totalloansNon-performingloans/total 0.71 % 1.03 % 1.10 % 0.73 % 0.65 %loansAnnualized netcharge-offs (0.12 %) 0.09 % 0.16 % 0.13 % 0.32 %(recoveries)/average loans

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

Six Months Ended June 30, (in thousands, except share data) 2020 2019 Interest income Interest and fees on loans $ 18,199 $ 18,825 Interest and dividends on securities U.S. government agencies 1,339 1,799 State and political subdivisions, 445 75 tax-freeState and political subdivisions, 1,500 1,832 taxableOther securities 827 415 Total interest and dividends on 4,111 4,121 securitiesInterest on interest-bearing deposits 24 125 in other banksTotal interest income 22,334 23,071 Interest expense Interest on deposits 3,036 4,382 Interest on borrowed funds Interest on Federal Reserve Bank 14 - discount window advancesInterest on Federal Home Loan Bank of 379 540 Pittsburgh advancesInterest on subordinated debentures - 24 Interest on junior subordinated 148 225 debenturesTotal interest on borrowed funds 541 789 Total interest expense 3,577 5,171 Net interest income before provision 18,757 17,900 for loan and lease lossesProvision for loan and lease losses 1,982 193 Net interest income after provision for 16,775 17,707 loan and lease lossesNon-interest income Deposit service charges 1,533 1,406 Net gain on the sale of securities 1,071 323 Net gain on equity securities 18 26 Net gain on the sale of mortgage loans 279 129 held for saleLoan-related fees 81 151 Income from bank-owned life insurance 248 260 Merchant services revenue 247 249 Loan referral fees 262 20 Other 456 529 Total non-interest income 4,195 3,093 Non-interest expense Salaries and employee benefits 7,427 7,723 Occupancy expense 1,020 994 Equipment expense 731 636 Data processing expense 1,434 1,570 Regulatory assessments 133 244 Bank shares tax 615 555 Professional fees 381 535 Other operating expenses 1,888 2,290 Total non-interest expense 13,629 14,547 Income before income taxes 7,341 6,253 Income tax expense 1,257 1,069 Net income $ 6,084 $ 5,184 Income per share Basic $ 0.30 $ 0.27 Diluted $ 0.30 $ 0.27 Cash dividends declared per common $ 0.110 $ 0.100 shareWeighted average number of shares outstanding:Basic 20,182,012 19,428,717 Diluted 20,184,046 19,435,076

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, 2020 2020 2019 2019 2019 except share data)Interest income Interest and fees $ 9,060 $ 9,139 $ 9,505 $ 9,488 $ 9,418 on loansInterest anddividends on securitiesU.S. government 589 750 822 924 906 agenciesState and politicalsubdivisions, 388 57 37 37 38 tax-freeState and politicalsubdivisions, 735 765 718 713 811 taxableOther securities 415 412 364 314 210 Total interest anddividends on 2,127 1,984 1,941 1,988 1,965 securitiesInterest oninterest-bearing 3 21 33 30 79 deposits in otherbanksTotal interest 11,190 11,144 11,479 11,506 11,462 incomeInterest expense Interest on 1,376 1,660 1,818 1,901 2,144 depositsInterest on borrowed fundsInterest on FederalReserve Bank 14 - - - - discount windowadvancesInterest on FederalHome Loan Bank of 160 219 253 448 253 Pittsburgh advancesInterest on juniorsubordinated 60 88 99 106 111 debenturesTotal interest on 234 307 352 554 364 borrowed fundsTotal interest 1,610 1,967 2,170 2,455 2,508 expenseNet interest incomebefore provision 9,580 9,177 9,309 9,051 8,954 (credit) for loanand lease lossesProvision (credit)for loan and lease 831 1,151 (33 ) 637 347 lossesNet interest incomeafter provision 8,749 8,026 9,342 8,414 8,607 (credit) for loanand lease lossesNon-interest income Deposit service 708 825 832 797 721 chargesNet gain on the 922 149 525 379 163 sale of securitiesNet gain (loss) on 4 14 (2 ) 5 14 equity securitiesNet gain on thesale of mortgage 183 96 55 69 73 loans held for saleNet gain on thesale of other real - - - 11 9 estate ownedLoan-related fees 25 56 147 80 72 Income frombank-owned life 119 129 126 134 129 insuranceMerchant services 112 135 145 142 131 revenueLoan referral fees 214 48 681 54 6 Other 214 242 187 160 260 Total non-interest 2,501 1,694 2,696 1,831 1,578 incomeNon-interest expenseSalaries and 3,498 3,929 3,884 3,911 3,824 employee benefitsOccupancy expense 466 554 494 460 444 Equipment expense 360 371 351 332 329 Data processing 709 725 801 742 789 expenseRegulatory 74 59 41 21 76 assessmentsBank shares tax 315 300 (194 ) 205 277 Professional fees 193 188 332 189 203 Other operating 809 1,079 2,097 1,469 1,180 expensesTotal non-interest 6,424 7,205 7,806 7,329 7,122 expenseIncome before 4,826 2,515 4,232 2,916 3,063 income taxesIncome tax expense 805 452 744 513 514 Net income $ 4,021 $ 2,063 $ 3,488 $ 2,403 $ 2,549 Income per share Basic $ 0.20 $ 0.10 $ 0.17 $ 0.12 $ 0.13 Diluted $ 0.20 $ 0.10 $ 0.17 $ 0.12 $ 0.13 Cash dividendsdeclared per common $ 0.055 $ 0.055 $ 0.050 $ 0.050 $ 0.050 shareWeighted averagenumber of shares outstanding:Basic 20,191,527 20,172,498 20,170,241 20,168,529 20,129,150 Diluted 20,191,527 20,176,565 20,175,758 20,172,282 20,133,850

FNCB Bancorp, Inc.Consolidated Balance Sheets

Jun 30, Mar 31, Dec 31, Sept 30, Jun 30, (in thousands) 2020 2020 2019 2019 2019 Assets Cash and cash equivalents:Cash and due from $ 20,089 $ 15,243 $ 22,861 $ 30,900 $ 24,277 banksInterest-bearingdeposits in other 81,390 30,304 11,704 6,611 5,627 banksTotal cash and cash 101,479 45,547 34,565 37,511 29,904 equivalentsAvailable-for-saledebt securities, at 305,611 302,638 272,839 254,666 285,855 fair valueEquity securities, at 938 934 920 922 917 fair valueRestricted stock, at 3,309 4,224 3,804 4,194 4,618 costLoans held for sale 765 470 1,061 1,140 419 Loans, net of netdeferred costs and 948,428 834,935 828,479 836,877 814,420 unearned incomeAllowance for loan and (11,024 ) (9,907 ) (8,950 ) (9,315 ) (8,945 )lease lossesNet loans 937,404 825,028 819,529 827,562 805,475 Bank premises and 17,467 17,447 17,518 17,274 15,923 equipment, netAccrued interest 5,201 3,387 3,234 3,038 3,640 receivableBank-owned life 31,478 31,359 31,230 31,104 31,275 insuranceOther real estate 85 85 289 412 560 ownedOther assets 14,434 17,113 18,552 19,367 20,208 Total assets $ 1,418,171 $ 1,248,232 $ 1,203,541 $ 1,197,190 $ 1,198,794 Liabilities Deposits: Demand $ 266,846 $ 181,223 $ 179,465 $ 179,025 $ 157,856 (non-interest-bearing)Interest-bearing 902,781 820,339 822,244 785,035 803,208 Total deposits 1,169,627 1,001,562 1,001,709 964,060 961,064 Borrowed funds: Federal Reserve Bankdiscount window 36,242 10,000 - - - advancesFederal Home Loan Bank 42,809 77,934 46,909 79,458 87,223 of Pittsburgh advancesJunior subordinated 10,310 10,310 10,310 10,310 10,310 debenturesTotal borrowed funds 89,361 98,244 57,219 89,768 97,533 Accrued interest 248 261 258 401 389 payableOther liabilities 13,578 10,233 10,748 10,394 10,102 Total liabilities 1,272,814 1,110,300 1,069,934 1,064,623 1,069,088 Shareholders' equity Preferred stock - - - - - Common stock 25,260 25,217 25,214 25,211 25,184 Additional paid-in 81,261 81,209 81,130 81,058 80,864 capitalRetained earnings 28,057 25,155 24,207 21,733 20,345 Accumulated other 10,779 6,351 3,056 4,565 3,313 comprehensive incomeTotal shareholders' 145,357 137,932 133,607 132,567 129,706 equityTotal liabilities and $ 1,418,171 $ 1,248,232 $ 1,203,541 $ 1,197,190 $ 1,198,794 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 2020 2020 2019 2019 2019 thousands)Interest income Loans: Loans - taxable $ 8,661 $ 8,693 $ 9,138 $ 9,170 $ 9,084 Loans - tax-free 505 565 464 403 423 Total loans 9,166 9,258 9,602 9,573 9,507 Securities: Securities, 1,739 1,927 1,904 1,951 1,927 taxableSecurities, 491 72 47 47 48 tax-freeTotal interest anddividends on 2,230 1,999 1,951 1,998 1,975 securitiesInterest-bearingdeposits in other 3 21 33 30 79 banksTotal interest 11,399 11,278 11,586 11,601 11,561 incomeInterest expense Deposits 1,376 1,660 1,818 1,901 2,144 Borrowed funds 234 307 352 554 364 Total interest 1,610 1,967 2,170 2,455 2,508 expenseNet interest $ 9,789 $ 9,311 $ 9,416 $ 9,146 $ 9,053 income Average balances Earning assets: Loans: Loans - taxable $ 875,119 $ 780,855 $ 791,577 $ 781,963 $ 778,540 Loans - tax-free 46,836 52,615 42,954 37,638 41,436 Total loans 921,955 833,470 834,531 819,601 819,976 Securities: Securities, 247,939 263,697 258,790 266,653 274,552 taxableSecurities, 56,220 7,698 4,598 4,611 4,624 tax-freeTotal securities 304,159 271,395 263,388 271,264 279,176 Interest-bearingdeposits in other 27,858 8,396 16,841 10,007 14,420 banksTotalinterest-earning 1,253,972 1,113,261 1,114,760 1,100,872 1,113,572 assetsNon-earning assets 87,189 90,387 90,245 90,807 85,429 Total assets $ 1,341,161 $ 1,203,648 $ 1,205,005 $ 1,191,679 $ 1,199,001 Interest-bearing liabilities:Deposits $ 850,525 $ 821,216 $ 830,318 $ 794,971 $ 851,726 Borrowed funds 81,813 61,843 57,682 85,927 52,313 Totalinterest-bearing 932,338 883,059 888,000 880,898 904,039 liabilitiesDemand deposits 258,609 172,132 172,935 169,416 158,413 Other liabilities 11,065 11,636 11,361 10,730 11,698 Shareholders' 139,149 136,821 132,709 130,635 124,851 equityTotal liabilitiesand shareholders' $ 1,341,161 $ 1,203,648 $ 1,205,005 $ 1,191,679 $ 1,199,001 equity Yield/Cost Earning assets: Loans: Interest and fees 3.96 % 4.45 % 4.62 % 4.69 % 4.67 %on loans - taxableInterest and feeson loans - 4.31 % 4.29 % 4.32 % 4.28 % 4.08 %tax-freeTotal loans 3.98 % 4.44 % 4.60 % 4.67 % 4.64 %Securities: Securities, 2.81 % 2.92 % 2.94 % 2.93 % 2.81 %taxableSecurities, 3.49 % 3.74 % 4.09 % 4.08 % 4.15 %tax-freeTotal securities 2.93 % 2.95 % 2.96 % 2.95 % 2.83 %Interest-bearingdeposits in other 0.04 % 1.00 % 0.78 % 1.20 % 2.19 %banksTotal earning 3.64 % 4.05 % 4.16 % 4.22 % 4.15 %assetsInterest-bearing liabilities:Interest on 0.65 % 0.81 % 0.88 % 0.96 % 1.01 %depositsInterest on 1.14 % 1.99 % 2.44 % 2.58 % 2.78 %borrowed fundsTotalinterest-bearing 0.69 % 0.89 % 0.98 % 1.11 % 1.11 %liabilitiesNet interest 2.95 % 3.16 % 3.18 % 3.11 % 3.04 %spreadNet interest 3.12 % 3.35 % 3.38 % 3.32 % 3.25 %margin

FNCB Bancorp, Inc.Asset Quality Data

Jun 30, Mar 31, Dec 31, Sept 30, Jun 30, (in thousands) 2020 2020 2019 2019 2019 At period end Non-accrualloans,includingnon-accruing $ 6,740 $ 8,576 $ 9,084 $ 6,119 $ 5,302 troubled debtrestructuredloans (TDRs)Loans past due90 days or - - - - - more and stillaccruingTotalnon-performing 6,740 8,576 9,084 6,119 5,302 loansOther realestate owned 85 85 289 412 560 (OREO)Othernon-performing 1,900 1,900 1,900 1,900 1,900 assetsTotalnon-performing $ 8,725 $ 10,561 $ 11,273 $ 8,431 $ 7,762 assets Accruing TDRs $ 8,592 $ 7,729 $ 7,745 $ 7,828 $ 7,897 For the three months endedAllowance forloan and lease lossesBeginning $ 9,907 $ 8,950 $ 9,315 $ 8,945 $ 9,253 balanceLoans 316 329 620 417 1,123 charged-offRecoveries ofcharged-off 602 135 288 150 468 loansNetcharge-offs (286 ) 194 332 267 655 (recoveries)Provision(credit) for 831 1,151 (33 ) 637 347 loan and leaselossesEnding balance $ 11,024 $ 9,907 $ 8,950 $ 9,315 $ 8,945