Note 8 - Leases

6 Months Ended

Jun. 30, 2020

Notes to Financial Statements

Lessee, Leases [Text Block]

Note 8: Leases

During the first quarter of 2019, the Company adopted ASU 2016-02, “Leases”. As of June 30, 2020, the Company had recorded operating Right of Use (“ROU”) assets of $8,764,297 and corresponding operating ROU liabilities of $8,836,193. At December 31, 2019, operating ROU assets were $9,052,941 with corresponding liabilities of $9,105,503. Additionally, as of June 30, 2020, the Company had financing ROU assets and liabilities of $376,472 compared to balances of $438,580 as of December 31, 2019. We maintain operating leases on land and buildings for certain branch facilities and our headquarters. Financing leases are primarily for equipment used at banking facilities. Most leases include options to renew, with renewal terms extending between one to twenty years. The exercise of renewal options is based on judgement of management as to whether or not the renewal option is reasonably certain to be exercised.   Factors in determining whether or not the renewal option is reasonably certain to be exercised include, but are not limited to, the value of the leasehold improvements, the value of the renewal rate compared to market rates and the presence of factors that would cause significant economic penalty to the Company if the option is not exercised.

Expenses for finance leases are included in other interest expense and occupancy expense line items, whereas, operating leases are expensed entirely in the occupancy expense line item. Leases with a term of less than twelve months are not recorded on the balance sheet and are expensed on a straight-line basis over the lease term. Discount rates used for the purpose of valuing the leases were based on rates available to the Company on fixed rate borrowings for similar lease terms.

The components of lease expense and their impact on the statement of income for the three and six months ended June 30, 2020 and 2019 are as follows:

	Six months ended						Three months ended
	June 30,			June 30,			June 30,			June 30,
	2020			2019			2020			2019
	(In Thousands)						(In Thousands)
Finance lease cost:
Amortization of right-of-use assets	$	62,109		$	54,858		$	31,132		$	27,213
Interest on lease liabilities		4,039			3,872			1,943			2,152
Operating lease cost		544,443			540,082			272,108			270,040
Sublease income		(24,600	)		(22,600	)		(12,300	)		(12,300	)
Total lease costs	$	585,991		$	576,212		$	292,883		$	287,105

Additional lease information:
Weighted-average remaining lease term - financing leases (in years)	3.0
Weighted-average remaining lease term - operating leases (in years)	14.7
Weighted-average discount rate - financing leases	1.95	%
Weighted-average discount rate - operating leases	5.64	%

The following table sets forth, as of June 30, 2020, the future minimum lease cash payments and a reconciliation of the undiscounted cash flows to the lease liability:

		Financing			Operating			Total
					(In Thousands)
Remainder of:	2020	$	66		$	522		$	588
	2021		132			1,020			1,152
	2022		126			1,011			1,137
	2023		53			1,002			1,055
	2024		10			856			866
	Thereafter		-			8,979			8,979
	Total undiscounted future minimum lease cash payments	$	387		$	13,390		$	13,777
	Present value discount		(11	)		(4,554	)		(4,565	)
	Lease liability	$	376		$	8,836		$	9,212