Note 8 - Borrowed Funds

12 Months Ended

Dec. 31, 2022

Notes to Financial Statements

Debt Disclosure [Text Block]

Note 8. BORROWED FUNDS

Short-term borrowings available to FNCB include overnight advances through the FHLB of Pittsburgh advances, federal funds lines of credit and the Federal Reserve Discount Window, which generally represent overnight or less than 30-day borrowings. FNCB's maximum borrowing capacity under federal funds lines of credit, which are unsecured, was $75.0 million at December 31, 2022 and $72.0 million at December 31, 2021. There were no amounts outstanding on federal funds lines of credit at December 31, 2022 or 2021.

FNCB has an agreement with the FHLB of Pittsburgh which allows for borrowings, either overnight or term, up to a maximum borrowing capacity based on a percentage of qualifying loans pledged under a blanket pledge agreement. In addition to pledging loans, FNCB is required to purchase FHLB of Pittsburgh stock based upon the amount of credit extended. Loans that were pledged to collateralize borrowings under this agreement were $482.1 million at December 31, 2022 and $478.3 million at December 31, 2021. FNCB’s maximum borrowing capacity was $394.5 million at December 31, 2022. At December 31, 2022 and 2021, there were $47.5 million and $7.5 million, respectively, in letters of credit to secure municipal deposits outstanding under this agreement. There were $139.4 million in overnight advances and $32.7 million in term advances through the FHLB of Pittsburgh outstanding at December 31, 2022. There were $20.0 million in term advances through the FHLB of Pittsburgh outstanding at December 31, 2021. 

Advances through the Federal Reserve Bank Discount Window generally include short-term advances which are fully collateralized by certain pledged loans of $25.8 million under the Federal Reserve Bank’s Borrower-in-Custody (“BIC”) program. There were no advances under the BIC program outstanding at December 31, 2022 and December 31, 2021. FNCB had available borrowing capacity of $19.0 million under this program at December 31, 2022.

	As of and for the Year Ended December 31, 2022
							Weighted			Weighted
					Maximum		Average			Average
	Ending		Average		Month-End		Rate for			Rate at
(dollars in thousands)	Balance		Balance		Balance		the Year			Period End
FHLB of Pittsburgh advances - term	$	32,650	$	5,830	$	32,650		4.51	%		4.45	%
FHLB of Pittsburgh advances - overnight		139,400		93,309		170,350		2.56			4.45
Federal Reserve discount window BIC advances		-		66		-		3.77			-
Junior subordinated debentures		10,310		10,310		10,310		3.47			6.44

	As of and for the Year Ended December 31, 2021
							Weighted			Weighted
					Maximum		Average			Average
	Ending		Average		Month-End		Rate for			Rate at
(dollars in thousands)	Balance		Balance		Balance		the Year			Period End
FHLB of Pittsburgh advances - term		20,000	$	1,890	$	20,000		0.33	%		0.07	%
Federal funds		-		28		-		-			-
Junior subordinated debentures		10,310		10,310		10,310		1.85			1.87

On December 14, 2006, the Issuing Trust issued $10.0 million of trust preferred securities (the “Trust Securities”) at a variable interest rate of 7.02%, with a scheduled maturity of December 15, 2036. FNCB owns 100.0% of the ownership interest in the Issuing Trust. The proceeds from the issue were invested in $10.3 million, 7.02% Junior Subordinated Debentures (the “Debentures”) issued by FNCB. The interest rate on the Trust Securities and the Debentures resets quarterly at a spread of 1.67% above the current 3-month LIBOR rate. Upon the expected phase-out of LIBOR on June 30, 2023, the interest rate on the debentures will reset quarterly at a spread of 1.67% above 3-month CME Term SOFR plus 0.26161%. The average interest rate paid on the Debentures was 3.47% in 2022 and 1.85% in 2021. The Debentures are unsecured and rank subordinate and junior in right to all indebtedness, liabilities and obligations of FNCB. The Debentures represent the sole assets of the Trust. Interest on the Trust Securities is deferrable until a period of twenty consecutive quarters has elapsed. FNCB has the option to prepay the Trust Securities beginning December 15, 2011. FNCB has, under the terms of the Debentures and the related Indenture, as well as the other operative corporate documents, agreed to irrevocably and unconditionally guarantee the Trust’s obligations under the Debentures. FNCB has reflected this investment on a deconsolidated basis. As a result, the Debentures totaling $10.3 million, have been reflected in borrowed funds in the consolidated statements of financial condition at December 31, 2022 and 2021 under the caption “Junior Subordinated Debentures”. FNCB records interest expense on the Debentures in its consolidated statements of income. FNCB also records its common stock investment issued by First National Community Statutory Trust I in other assets in its consolidated statements of financial condition at  December 31, 2022 and 2021. At  December 31, 2022 and 2021, accrued and unpaid interest associated with the Debentures amounted to $31 thousand and $9 thousand, respectively.

The following table presents the contractual maturities of borrowed funds at  December 31, 2022: 

(in thousands)	December 31, 2022
2023	$	139,400
2024		12,650
2025		20,000
2026		-
2027		-
2028 and thereafter		10,310
Total	$	182,360