Premises and Equipment

6 Months Ended

Jun. 30, 2022

Leases [Abstract]

Premises and Equipment

Note 4 – Premises and Equipment

The following table presents the components of premises and equipment as of the periods shown:

(Dollars in thousands)	June 30, 2022		December 31, 2021
Land	$	3,465	$	3,465
Buildings and improvements	13,393		13,393
Furniture, fixtures and equipment	17,719		16,841
Software	5,367		4,176
Construction in progress	502		531
Leasehold improvements	2,963		2,895
	43,409		41,301
Accumulated depreciation	(18,137)		(16,249)
Premises and equipment, net	$	25,272	$	25,052

We lease certain premises and equipment under operating and finance leases. At June 30, 2022, we had lease liabilities totaling $15.7 million, substantially all of which was related to operating leases, and right-of-use assets totaling $14.6 million, substantially all of which was related to operating leases. Lease liabilities and right-of-use assets are reflected in other liabilities and other assets, respectively. At June 30, 2022, the weighted-average remaining lease term for operating leases was 11.9 years and the weighted-average discount rate used in the measurement of operating lease liabilities was 3.0%. At June 30, 2022, the weighted-average remaining lease term for finance leases was 2.2 years and the weighted-average discount rate used in the measurement of finance lease liabilities was 1.4%.

At December 31, 2021, we had lease liabilities totaling $18.6 million, of which $18.5 million was related to operating leases and $0.1 million was related to finance leases, and right-of-use assets totaling $17.5 million, of which $17.5 million was related to operating leases. Lease liabilities and right-of-use assets are reflected in other liabilities and other assets, respectively. At December 31, 2021, the weighted-average remaining lease term for operating leases was 12 years and the weighted-average discount rate used in the measurement of operating lease liabilities was 2.8%. At December 31, 2021, the weighted-average remaining lease term for finance leases was 1.8 years and the weighted-average discount rate used in the measurement of finance lease liabilities was 2.0%.

The following table presents lease costs for the periods shown:

	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in thousands)	2022		2021		2022		2021
Operating lease cost	$	445	$	477	$	890	$	954
Short-term lease cost	8		2		14		3
Variable lease cost	10		9		19		19
Amortization of right-of-use assets, finance leases	14		14		29		28
Interest on lease liabilities, finance leases	—		—		—		1
Total lease cost	$	477	$	502	$	952	$	1,005

For operating leases with initial or remaining terms of one year or more as of June 30, 2022, the following table presents future minimum payments for the twelve month periods ended June 30:

(Dollars in thousands)	Operating Leases
2023	$	851
2024	1,651
2025	1,579
2026	1,576
2027	1,584
2028 and thereafter	11,735
Total future minimum lease payments	$	18,976
Less: Amounts representing interest	(3,340)
Present value of net future minimum lease payments	$	15,636

There are no material future minimum payments on finance leases as of June 30, 2022.

Premises and Equipment

Note 4 – Premises and Equipment

The following table presents the components of premises and equipment as of the periods shown:

(Dollars in thousands)	June 30, 2022		December 31, 2021
Land	$	3,465	$	3,465
Buildings and improvements	13,393		13,393
Furniture, fixtures and equipment	17,719		16,841
Software	5,367		4,176
Construction in progress	502		531
Leasehold improvements	2,963		2,895
	43,409		41,301
Accumulated depreciation	(18,137)		(16,249)
Premises and equipment, net	$	25,272	$	25,052

We lease certain premises and equipment under operating and finance leases. At June 30, 2022, we had lease liabilities totaling $15.7 million, substantially all of which was related to operating leases, and right-of-use assets totaling $14.6 million, substantially all of which was related to operating leases. Lease liabilities and right-of-use assets are reflected in other liabilities and other assets, respectively. At June 30, 2022, the weighted-average remaining lease term for operating leases was 11.9 years and the weighted-average discount rate used in the measurement of operating lease liabilities was 3.0%. At June 30, 2022, the weighted-average remaining lease term for finance leases was 2.2 years and the weighted-average discount rate used in the measurement of finance lease liabilities was 1.4%.

At December 31, 2021, we had lease liabilities totaling $18.6 million, of which $18.5 million was related to operating leases and $0.1 million was related to finance leases, and right-of-use assets totaling $17.5 million, of which $17.5 million was related to operating leases. Lease liabilities and right-of-use assets are reflected in other liabilities and other assets, respectively. At December 31, 2021, the weighted-average remaining lease term for operating leases was 12 years and the weighted-average discount rate used in the measurement of operating lease liabilities was 2.8%. At December 31, 2021, the weighted-average remaining lease term for finance leases was 1.8 years and the weighted-average discount rate used in the measurement of finance lease liabilities was 2.0%.

The following table presents lease costs for the periods shown:

	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in thousands)	2022		2021		2022		2021
Operating lease cost	$	445	$	477	$	890	$	954
Short-term lease cost	8		2		14		3
Variable lease cost	10		9		19		19
Amortization of right-of-use assets, finance leases	14		14		29		28
Interest on lease liabilities, finance leases	—		—		—		1
Total lease cost	$	477	$	502	$	952	$	1,005

For operating leases with initial or remaining terms of one year or more as of June 30, 2022, the following table presents future minimum payments for the twelve month periods ended June 30:

(Dollars in thousands)	Operating Leases
2023	$	851
2024	1,651
2025	1,579
2026	1,576
2027	1,584
2028 and thereafter	11,735
Total future minimum lease payments	$	18,976
Less: Amounts representing interest	(3,340)
Present value of net future minimum lease payments	$	15,636

There are no material future minimum payments on finance leases as of June 30, 2022.