Note 6 - Leases

6 Months Ended

Jun. 30, 2021

Notes to Financial Statements

Lessee, Leases [Text Block]

Note 6: Leases

As of June 30, 2021, the Company has recorded operating Right of Use (“ROU”) assets of $8,338,954 and corresponding operating ROU liabilities of $8,449,519. At December 31, 2020, operating ROU assets were $8,469,661 with corresponding liabilities of $8,560,892. Additionally, as of June 30, 2021, the Company had financing ROU assets and liabilities of $593,856 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 and six months ended June 30, 2021 and 2020 are as follows:

	Six months ended						Three months ended
	June 30,			June 30,			June 30,			June 30,
	2021			2020			2021			2020
Finance lease cost:
Amortization of right-of-use assets	$	83,330		$	62,109		$	38,673		$	31,132
Interest on lease liabilities		3,379			4,039			1,683			1,943
Operating lease cost		545,896			544,443			273,351			272,108
Sublease income		(12,600	)		(24,600	)		(6,300	)		(12,300	)
Total lease costs	$	620,005		$	585,991		$	307,407		$	292,883
Additional lease information:
Weighted-average remaining lease term - financing leases (in years)		3.4			3.0
Weighted-average remaining lease term - operating leases (in years)		13.9			14.7
Weighted-average discount rate - financing leases		1.14	%		1.95	%
Weighted-average discount rate - operating leases		5.71	%		5.64	%

The following table sets forth, as of June 30, 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	$	107		$	523		$	630
	2022		206			1,049			1,255
	2023		132			1,053			1,185
	2024		89			894			983
	2025		61			790			851
	Thereafter		9			8,241			8,250
Total undiscounted future minimum lease cash payments		$	604		$	12,550		$	13,154
	Present value discount		(10	)		(4,100	)		(4,110	)
	Lease liability	$	594		$	8,450		$	9,044