Note 4 - Premises and Equipment, Net

12 Months Ended

Dec. 31, 2023

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:

(Dollars in thousands)	2023		2022
Land and improvements	$	12,782	$	13,532
Buildings		56,778		53,865
Furniture and equipment		25,157		22,941
		94,717		90,338
Less: accumulated depreciation		43,789		38,862
Total premises and equipment	$	50,928	$	51,476

Depreciation expense totaled $6.0 million in 2023 and 2022, and $5.8 million in 2021.

We enter into facility leases in the normal course of business. As of December 31, 2023, we were under lease contracts for eleven of our branch facilities. The leases have maturity dates ranging from April, 2024 through May, 2048, with a weighted average life of 10.9 years as of December 31, 2023. 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 5.93% as of December 31, 2023.

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 $3.7 million and $3.5 million as of December 31, 2023, and  December 31, 2022, 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 Sheets. Total operating lease expense associated with the leases aggregated $2.0 million, $1.3 million and $1.2 million in 2023, 2022 and 2021, respectively.

Future lease payments were as follows as of December 31, 2023:

(Dollars in thousands)
2024	$	1,127
2025		720
2026		651
2027		570
2028		380
Thereafter		1,316
Total undiscounted lease payments		4,764
Less effect of discounting		(1,072	)
Present value of future lease payments (lease liability)		3,692