Note 4 - Premises and Equipment, Net

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

NOTE 4 - PREMISES AND EQUIPMENT, NET

Year-end premises and equipment were as follows:

	2021		2020
Land and improvements	$	15,111,000	$	16,533,000
Buildings		56,168,000		56,114,000
Furniture and equipment		22,974,000		21,522,000
		94,253,000		94,169,000
Less: accumulated depreciation		36,955,000		35,210,000
Total premises and equipment	$	57,298,000	$	58,959,000

Depreciation expense totaled $5.8 million in 2021, $5.2 million in 2020, and $3.9 million in 2019.

We enter into facility leases in the normal course of business. As of December 31, 2021, we were under lease contracts for ten of our branch facilities. The leases have maturity dates ranging from June, 2022 through December, 2026, with a weighted average life of the lease term of 2.8 years as of December 31, 2021. All of our leases have multiple three- to five-year extensions; however, these were not factored in the lease maturities and weighted average lease term as it is not reasonably certain we will exercise the options.

Leases are classified as either operating or finance leases at the lease commencement date, with all of our current leases determined to be operating leases. Lease expense for operating leases is recognized on a straight-line basis over the lease term. Right-of-use assets represent our right to use an underlying asset for the lease term, while lease liabilities represent our obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the lease commencement date at the estimated present value of lease payments over the lease term. We use our incremental borrowing rate, on a collateralized basis, at lease commencement to calculate the present value of lease payments. The weighted average discount rate for leases was 4.71% as of December 31, 2021.

The right-of-use assets, included in premises and equipment, net on our Consolidated Balance Sheets, and the lease liabilities, included in other liabilities on our Consolidated Balance Sheets, totaled $2.9 million and $2.8 million as of December 31, 2021, respectively, and totaled $1.1 million and $0.9 million as of December 31, 2020, respectively. As permitted by applicable accounting standards, we have elected not to recognize short-term leases with original terms of twelve months or less on our Consolidated Balance Sheet. Total operating lease expense associated with the leases aggregated $0.6 million in each of 2021 and 2020, and $0.5 million in 2019.

Future lease payments at December 31, 2021 totaled $3.6 million, comprised of $0.8 million in one year, $1.4 million in one to three years, $0.3 million in three to five years and $1.1 million in over five years. Future lease payments at December 31, 2020 totaled $3.4 million, comprised of $0.6 million in one year, $1.2 million in one to three years, $0.5 million in three to five years and $1.1 million in over five years.