Note 6 - Leases

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Lessee, Leases [Text Block]

Note 6: Leases

As of March 31, 2021, the Company has recorded operating Right of Use (“ROU”) assets of $8,320,050 and corresponding operating ROU liabilities of $8,420,949. At December 31, 2020, operating ROU assets were $8,469,661 with corresponding liabilities of $8,560,892. Additionally, as of March 31, 2021, the Company had financing ROU assets and liabilities of $538,825 compared to balances of $510,526 as of December 31, 2020. 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 months ended March 31, 2021 and 2020 are as follows:

	Three months ended
	March 31,			March 31,
	2021			2020
	(In Thousands)
Finance lease cost:
Amortization of right-of-use assets	$	44,657		$	30,977
Interest on lease liabilities		1,696			2,096
Operating lease cost		272,545			272,335
Sublease income		(6,300	)		(12,300	)
Total lease costs	$	312,598		$	293,108
Additional lease information:
Weighted-average remaining lease term - financing leases (in years)		3.4			3.3
Weighted-average remaining lease term - operating leases (in years)		14.2			14.9
Weighted-average discount rate - financing leases		1.20	%		1.96	%
Weighted-average discount rate - operating leases		5.70	%		5.62	%

The following table sets forth, as of March 31, 2021, 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:	2021	$	143		$	759		$	902
	2022		184			1,011			1,195
	2023		111			1,014			1,125
	2024		68			856			924
	2025		40			752			792
	Thereafter		1			8,228			8,229
	Total undiscounted future minimum lease cash payments	$	547		$	12,620		$	13,167
	Present value discount		(8	)		(4,199	)		(4,207	)
	Lease liability	$	539		$	8,421		$	8,960