FNCB Bancorp Inc. (FNCB)

[56Chevy]

First National Community Bancorp, Inc. Reports First Quarter 2014 Net Income of $3.5 Million

Date : 05/12/2014 @ 4:12PM
Source : PR Newswire (US)
Stock : First National Community Bancorp, Inc. (QB) (FNCB)
Quote : $5.45 0.0 (0.00%) @ 4:26PM

DUNMORE, Pa., May 12, 2014 /PRNewswire/ -- First National Community Bancorp, Inc. (OTCQB: FNCB), the parent company of Dunmore-based First National Community Bank, today announced its operating results for the quarter ended March 31, 2014. The Company reported net income of $3.5 million, or $0.21 per basic and diluted share, compared to net income of $1.7 million or $0.11 per basic and diluted share, for the prior year first quarter. The improved performance for the first quarter 2014 was a result of higher non-interest income, primarily related to a net gain on the sale of securities, an increase in the credit for loan and lease losses, and lower non-interest expense compared to the first quarter 2013.

Performance Highlights:

•A 7.2% increase in net interest income after credit for loan and lease losses, compared to prior year quarter
•Continued improvement in asset quality metrics, with a 9.2% decrease in non-performing loans from December 31, 2013
•A 10 basis point improvement in the ratio of non-performing loans to total loans to 0.89%, compared to 0.99% at December 31, 2013
•$3.4 million in other real estate owned, representing a 19.4% reduction compared to December 31, 2013, and a 12.5% decline compared to March 31, 2013
•An increase of $4.3 million, or 4.7%, in the Bank's total risk-based capital to $94.3 million at March 31, 2014 from December 31, 2013.

"We believe our $3.5 million first quarter profit is indicative of our solid all-around performance, which included strong loan growth, improved asset quality and effective management of non-interest expense," said Steven R. Tokach, President and Chief Executive Officer. "This was our fifth consecutive quarter of positive net earnings, which started in the first quarter of 2013, and indicates to us that 2013 was an inflection point for the Bank's performance. During this 15 month period we have substantially strengthened our capital position, continuously improved our asset quality metrics, significantly reduced non-interest expense and realized strong organic loan growth across our portfolios. During the first quarter we completed the sale of our Monroe County retail banking presence, which allowed us to refocus our service area, and realize a gain of more than $600 thousand from the sale. We believe that the significant progress realized during the last five quarters positions FNCB for solid performance through the remainder of 2014."

Summary Results for the Three Months Ended March 31, 2014

Net interest income before credit for loan and lease losses was $6.6 million for the first three months of 2014, compared to $6.4 million for the same period in 2013, resulting mainly from a decrease in funding costs. Net interest margin for the three months ended March 31, 2014 was 3.10%, a decrease of 17 basis points from the same period in 2013. Interest expense was $1.6 million for the three months ended March 31, 2014, reflecting a decrease of $284 thousand, or 15.29%, compared to the same period in 2013,and resulting from an 18 basis-point decline in the Bank's cost of funds, partially offset by an increase in average interest-bearing liabilities.

Non-interest income was $3.5 million for the three months ended March 31, 2014, compared to $2.5 million for the same period in 2013. The increase in non-interest income was primarily the result of $726 thousand increase in net gains on the sale of securities, and a $607 thousand gain on branch divestitures.

Non-interest expense for the three months ended March 31, 2014 was $8.0 million, a decrease of $314 thousand from $8.3 million in the same period in 2013. Professional fees, consisting of accounting and consulting expenses, decreased by $101 thousand for the quarter ended March 31, 2013 to $450 thousand for the same period in 2014. Professional fees are expected to continue to decline to more normalized levels in coming quarters, reflecting less reliance on outside advisors and consultants.

Improved Asset Quality

The Company's asset quality ratios continued to improve through March 31, 2014 as a result of aggressive problem credit resolutions. The Company's total non-performing loans were $5.8 million at March 31, 2014, a decrease of $587 thousand, or 9.21%, from December 31, 2013. The ratio of non-performing loans to total loans improved 10 basis points to 0.89% at March 31, 2014, compared to 0.99% at December 31, 2013. (The FDIC average for commercial banks with assets between $100 million and $1 billion at March 31, 2014 was 1.38%). The allowance for loan and lease losses as a percentage of loans was 1.93% at March 31, 2014 versus 2.18% at the end of 2013. (The above described FDIC peer group average was 1.59% at March 31, 2014). The Company's ratio of net charge-offs (recoveries) to average loans outstanding for the quarter ended March 31, 2014 was (0.02) % reflecting net recoveries of $142 thousand in the quarter. (The above described FDIC peer group had average net charge-offs of 0.03% for the quarter ended March 31, 2014.)

Financial Condition

The Company's total assets at March 31, 2014 were $974.1 million, a decrease of $29.7 million as compared to December 31, 2013, which reflected a decrease in cash and cash equivalents resulting from the decrease in deposits. Total loans (before allowance for loan and lease losses) at March 31, 2014 were $654.2 million, an increase of $10.3 million as compared to December 31, 2013. Total deposits at March 31, 2014 were $835.2 million, a decrease of $49.5 million from December 31, 2013, which resulted primarily from cyclical deposit trends of municipal customers and the Company's first quarter branch divestiture. Total borrowed funds of $69.8 million at March 31, 2014 were up $7.4 million from December 31, 2013.

At March 31, 2014, First National Community Bank's capital ratios were as follows: total risk-based capital ratio of 13.86%, tier 1 risk-based capital ratio of 12.60%, and tier 1 leverage ratio of 8.76%.

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* I do not own shares of FNCB at this time.