Leases

9 Months Ended

Sep. 30, 2023

The Company leases land and premises for its branch banking-offices, administration facility, and ITMs. The initial terms of these leases expire at various dates through 2032. Under the provisions of most of these leases, the Company has the option to extend the leases beyond their original terms at rental rates adjusted to certain economic indices or market conditions. Lease terms may also include options for termination. Under guidance from Topic 842, the discount rate applied to the lease liability is calculated by determining the Bank’s incremental borrowing rate. Current rates for fully-secured loans with amounts and terms similar to the lease amount and term at inception are used to calculate the incremental borrowing rate. The liability is reduced at each reporting period based on the discounted present value of remaining payments. As of September 30, 2023, the Company had 13 operating leases and no financing leases. At September 30, 2022, the Company had 13 operating leases and no financing leases.

The components of lease expense are as follows:


	Three Months Ended				Nine Months Ended
(In thousands)	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022



Operating lease expense	$	178	$	185	$	533	$	553
Variable lease expense	—		—		—		—

Total	$	178	$	185	$	533	$	553

Supplemental information related to leases is as follows:


	Nine Months Ended
(Dollars in thousands)	September 30, 2023			September 30, 2022




Operating cash flows from operating leases	$	533		$	553



Weighted-average remaining lease term in years for operating leases	4.24			4.59

Weighted-average discount rate for operating leases	5.10		%	5.12		%

Maturities of lease liabilities are as follows:


(In thousands)	September 30, 2023
2023	$	640
2024	450
2025	218
2026	122
2027	110
Thereafter	237
Total undiscounted cash flows	1,777
Less: present value discount	(178)
Present value of net future minimum lease payments	$	1,599