Executive Summary

Q1 2024 EPS was $0.18 (vs $0.14 in Q1 2023 and $0.17 in Q4 2023) as net interest income and NIM expanded for the third straight quarter; net income rose 32.6% YoY to $3.5M, with ROA 0.78% and ROE 10.58% .
NIM (FTE) improved to 3.06% (from 2.78% in Q1 2023 and 2.87% in Q4 2023) on higher asset yields; cost of funds held flat Q/Q at 2.76% despite deposit competition, supporting spread expansion to 2.48% .
Asset quality weakened: NPL/loans rose to 0.48% (0.44% in Q4 2023), annualized net charge-offs increased to 0.33% (0.18% in Q4 2023), and provision for credit losses rose to $1.49M, largely tied to commercial equipment finance amid trucking industry contraction .
Deposits declined $47.7M Q/Q; management increased brokered deposits to $181.8M and added borrowed funds to manage liquidity and interest-rate risk; the efficiency ratio improved to 62.17% .
PFIS merger: shareholders approved on Mar 22, 2024; management now expects close in 2H 2024 (vs H1 2024 expectation in prior release), pending regulatory approvals—an important catalyst for the stock once timing is clarified .

What Went Well and What Went Wrong

What Went Well
- NIM (FTE) rose to 3.06%, marking a third consecutive quarter of margin improvement; CEO: “disciplined approach to balance sheet management has translated into margin improvement for the third consecutive quarter” .
- Net interest income increased YoY, supported by 79 bps higher yield on earning assets to 5.24% and 9.8% YoY average loan growth; efficiency ratio improved to 62.17% .
- Capital strong: Total risk-based capital 13.45% and Tier 1 leverage 9.47% (well-capitalized) .
What Went Wrong
- Asset quality pressure: NPL/loans climbed to 0.48% and net charge-offs annualized to 0.33%, concentrated in commercial equipment finance (tractor-trailers) as trucking contracted; provision for credit losses increased to $1.49M .
- Deposit outflows of $47.7M Q/Q; greater reliance on brokered deposits ($181.8M vs $148.7M in Q4) and higher-rate time deposits to secure liquidity and manage rate risk .
- Non-interest income dipped 2.6% YoY, and merger-related expenses ($0.28M) added to non-interest expense; contributions tied to tax credit programs also rose .

Income statement snapshot

Metric ($USD Millions, except per-share)	Q1 2023	Q4 2023	Q1 2024
Total Interest Income	18.679	22.092	22.885
Net Interest Income (before provision)	11.585	12.476	13.229
Provision for Credit Losses	0.975	0.376	1.486
Non-Interest Income	1.671	2.332	1.628
Non-Interest Expense	8.921	10.599	9.187
Net Income	2.663	3.353	3.532
Diluted EPS ($)	0.14	0.17	0.18
Cash Dividend/Share ($)	0.090	0.090	0.090

Margins and profitability

Metric	Q1 2023	Q4 2023	Q1 2024
Yield on Earning Assets (FTE)	4.45%	5.04%	5.24%
Cost of Funds	2.15%	2.76%	2.76%
Net Interest Spread (FTE)	2.30%	2.28%	2.48%
Net Interest Margin (FTE)	2.78%	2.87%	3.06%
Efficiency Ratio	67.69%	69.48%	62.17%
ROA (annualized)	0.62%	0.73%	0.78%
ROE (annualized)	8.84%	11.21%	10.58%

Balance sheet and credit KPIs (period-end)

Metric	Q1 2023	Q4 2023	Q1 2024
Total Assets ($B)	1.809	1.881	1.866
Net Loans & Leases ($B)	1.152	1.208	1.238
Total Deposits ($B)	1.463	1.529	1.481
Borrowed Funds ($MM)	196.6	200.3	229.9
NPLs/Total Loans	0.23%	0.44%	0.48%
Total Delinquencies/Loans	0.40%	0.75%	0.79%
ACL/Total Loans	1.06%	0.98%	1.00%
Annualized Net Charge-offs/Avg Loans	0.09%	0.18%	0.33%
Total Risk-Based Capital (Bank)	12.97%	12.66%	13.45%
Tier 1 Leverage (Bank)	8.96%	8.76%	9.47%

Segment breakdown: Not applicable; no segment disclosure in the Q1 2024 earnings release .

Metric	Period	Previous Guidance	Current Guidance	Change
PFIS Merger Closing Timing	2024	Expected H1 2024 (Q4’23 release)	Expected 2H 2024, pending regulatory approvals	Delayed/updated
Dividend per Common Share	Quarterly	$0.09 recent run-rate	$0.09 declared in Q1 2024	Maintained

Note: No quantitative guidance provided for revenue, margins, operating expenses, tax rate, or segment-specific metrics in Q1 2024 materials .

No Q1 2024 earnings call transcript was available; themes below draw from the 8-K and prior quarters’ releases.

Topic	Q-2 (Q3 2023)	Q-1 (Q4 2023)	Current (Q1 2024)	Trend
Rate environment & deposit competition	Challenging rate environment; NIM stabilization begins	NIM improved Q/Q; funding costs elevated (2.76%)	NIM up to 3.06%; cost of funds stable at 2.76%	Gradual NIM improvement; funding costs high but stabilizing
Asset quality (equip. finance/trucking)	Uptick in delinquencies/NPLs	NPLs rose to 0.44%	Further NPL uptick to 0.48%; higher NCOs; underwriting tightened	Deteriorating but addressed with underwriting
Liquidity & brokered deposits	Increased brokered usage	Brokered deposits $148.7M at YE23	Brokered deposits increased to $181.8M	Rising reliance on brokered funding
PFIS merger	Expected by April 1, 2024	Expected H1 2024	Expected 2H 2024; shareholder approval obtained	Timeline extended; progressing through approvals

“We are very pleased with our first quarter 2024 results… Our disciplined approach to balance sheet management has translated into margin improvement for the third consecutive quarter.” — CEO Gerard A. Champi .
“We experienced some weakening in asset quality… particularly related to our commercial equipment financing line… In the first quarter of 2024, we adjusted our underwriting standards with respect to this line to maintain asset quality.” — CEO Gerard A. Champi .
“As we anticipate the strategic merger with PFIS later in 2024, we continue to work together towards the integration of our businesses to ensure a smooth transition…” — CEO Gerard A. Champi .

No Q1 2024 earnings call transcript was found; no additional Q&A themes or clarifications were available beyond the 8-K disclosures [ListDocuments: earnings-call-transcript returned none].

Wall Street (S&P Global) consensus estimates were not available via our S&P Global interface for FNCB this quarter; as a result, we cannot provide an EPS or revenue vs-consensus comparison. Where appropriate, future updates will incorporate S&P Global consensus once accessible.

Earnings quality improved as NIM expanded to 3.06% and cost of funds stabilized Q/Q, supporting EPS growth to $0.18 despite higher credit provisioning .
Credit normalization bears watching: equipment finance exposures tied to trucking drove higher NPLs and net charge-offs; management tightened underwriting—monitor for further impact on provision and losses .
Funding mix shifted: Q/Q deposit outflows and higher brokered deposits (to $181.8M) helped liquidity but at higher cost and potential sensitivity to market conditions .
Operating discipline improved: efficiency ratio fell to 62.17%, aided by stronger NII; merger-related costs were modest ($0.28M) this quarter .
Capital remains solid: bank-level total risk-based 13.45% and Tier 1 leverage 9.47% provide capacity to absorb credit and fund growth .
Catalysts: clarity and timing of PFIS merger approvals/close (timeline now 2H 2024) and progression in asset quality metrics should drive near-term sentiment .
Near-term positioning: constructive on continued NIM stabilization/expansion if deposit costs remain contained; balanced by caution on equipment finance credit and funding mix reliance.

Additional detail

Other press releases in Q1 timeframe: none identified beyond the 8-K release for Q1 2024 .
Prior quarters’ trend analysis incorporated from Q3 2023 and Q4 2023 8-Ks .