$ 43,253

$ 41,543

$ 15,803

$ 15,778

Commitments and Contingencies Disclosure [Text Block]

Note 10. Commitments and Contingencies

Leases

FNCB is obligated under operating leases for certain bank branches, office space, automobiles and equipment. Operating lease right of use ("ROU") assets represent FNCB's right to use an underlying asset during the lease term, and operating liabilities represent FNCB's obligation to make lease payments under the lease agreement. ROU assets and operating lease liabilities are recognized at lease commencement based on the present value of the remaining lease payments using a discount rate that represents FNCB's incremental borrowing rate at the commencement date. ROU assets are included in other assets and operating lease liabilities are included in other liabilities in the consolidated statements of financial condition. As of March 31, 2024, ROU assets and lease liabilities were $2.9 million and $3.1 million, respectively.

Operating lease expense associated with bank branches and office space is included in occupancy expense, while operating lease expenses associated with automobiles and office equipment are included in equipment expense in the consolidated statements of income. Rental expense incurred for each of the three months ended March 31, 2024 and 2023 totaled $100 thousand.

The following table summarizes the maturity of remaining operating lease liabilities as of March 31, 2024:

(in thousands)	*March 31, 2024*
2024	$	310
2025		388
2026		387
2027		388
2028		370
2029 and thereafter		1,904
Total lease payments		3,747
Less: imputed interest		617
Present value of operating lease liabilities	$	3,130

The following table presents other information related to our operating leases:

(dollars in thousands)	*March 31, 2024*			*March 31, 2023*
Weighted-average remaining lease term (in years)		10.5			11.3
Weighted-average discount rate		3.25	%		3.31	%
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	104		$	130

Litigation

FNCB has been subject to tax audits, and is also a party to routine litigation involving various aspects of its business, such as employment practice claims, workers compensation claims, claims to enforce liens, condemnation proceedings on properties in which FNCB holds security interests, claims involving the making and servicing of real property loans and other issues incident to its business, none of which has or is expected to have a material adverse impact on the consolidated financial condition, results of operations or liquidity of FNCB.