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Note 8 - Leases
12 Months Ended
Dec. 31, 2020
Notes to Financial Statements  
Lessee, Leases [Text Block]

NOTE 8:         LEASES

 

As discussed in Note 19, on January 1, 2019, the Company adopted ASU 2016-02, “Leases”. The Company recorded initial balances during the quarter ending March 31, 2019 for operating Right of Use (“ROU”) assets and liabilities of $9,655,304. Additionally, the Company recorded initial balances for financing ROU assets and liabilities of $481,830. As of December 31, 2020, operating lease liability balances were $8,560,892 and financing lease liability amounts were $510,526. 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 as of December 31, 2020 and 2019 is as follows:

 

  

Year ended

 
  

December 31,

 
  

2020

  

2019

 
  

(In Thousands)

 

Finance lease cost:

        

Amortization of right-of-use assets

 $142,582  $111,559 

Interest on lease liabilities

  7,736   8,346 

Operating lease cost

  1,081,620   1,080,226 

Sublease income

  (47,200)  (45,200)
         

Total lease costs

 $1,184,738  $1,154,931 
         
         

Additional lease information:

        

Weighted-average remaining lease term - financing leases (in years)

  3.4   3.5 

Weighted-average remaining lease term - operating leases (in years)

  14.4   15.2 

Weighted-average discount rate - financing leases

  1.32%  1.96%

Weighted-average discount rate - operating leases

  5.68%  5.60%

 

The following table sets forth the future minimum lease cash payments and a reconciliation of the undiscounted cash flows to the lease liability as of December 31, 2020:

 

  

Financing

  

Operating

  

Total

 
      

(In Thousands)

     

2021

 $175  $1,020  $1,195 

2022

  170   1,011   1,181 

2023

  97   1,014   1,111 

2024

  53   856   909 

2025

  25   752   777 

Thereafter

  -   8,228   8,228 

Total undiscounted future minimum lease cash payments

 $520  $12,881  $13,401 

Present value discount

  (9)  (4,320)  (4,329)

Lease liability

 $511  $8,561  $9,072