Leases

12 Months Ended

Sep. 30, 2023

10.

LEASES

A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. The Company accounts for all its leases in accordance with Topic 842. For the Company, Topic 842 primarily affects the accounting treatment for operating lease agreements in which the Company is the lessee.

Lessee Accounting

Substantially all of the leases in which the Company is the lessee are comprised of real estate property for branches, ATM locations, and office space with terms extending through 2044. All of our leases are classified as operating leases on the Company’s Consolidated Balance Sheet for both periods.

The following table presents the Consolidated Balance Sheet classification of the Company’s right-of-use assets and lease liabilities. The Company elected not to include short-term leases (i.e., leases with initial terms of twelve months or less), or equipment leases (deemed immaterial) on the Consolidated Balance sheet.


(in thousands)		September 30, 2023
Lease Right-of-Use Assets	Classification
Operating lease right-of-use assets	Other assets	$	6,046
Total Lease Right-Of-Use Assets		$	6,046

(in thousands)		September 30, 2023
Lease Liabilities	Classification
Operating lease liabilities	Other liabilities	$	6,288
Total Lease Liabilities		$	6,288

(in thousands)		September 30, 2022
Lease Right-of-Use Assets	Classification
Operating lease right-of-use assets	Other assets	$	6,075
Total Lease Right-Of-Use Assets		$	6,075

(in thousands)		September 30, 2022
Lease Liabilities	Classification
Operating lease liabilities	Other liabilities	$	6,275
Total Lease Liabilities		$	6,275

The calculated amount of the ROU assets and lease liabilities in the table above are impacted by the length of the lease term and the discount rate used to present value the minimum lease payments. The Company’s lease agreements often include one or more options to renew at the Company’s discretion. If at lease inception, the Company considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the calculation of the ROU asset and lease liability. Regarding the discount rate, Topic 842 requires the use of the rate implicit in the lease whenever this rate is readily determinable. As this rate is rarely determinable, the Company utilizes its incremental borrowing rate at lease inception, on a collateralized basis, over a similar term.


	September 30, 2023
Weighted average remaining lease term
Operating leases	11.7 years
Weighted average discount rate
Operating leases		3.29	%

	September 30, 2022
Weighted average remaining lease term
Operating leases	12.2 years
Weighted average discount rate
Operating leases		2.38	%

The following table represents lease costs and other lease information. As the Company elected, for all classes of underlying assets, not to separate lease and non-lease components and instead to account for them as a single lease component, the variable lease cost primarily represents variable payments such as common area maintenance and utilities.


Lease Costs (in thousands)	Twelve Months Ended September 30, 2023
Operating lease cost	$	977
Variable lease cost		245
Net lease cost	$	1,222
Lease Costs (in thousands)	Twelve Months Ended September 30, 2022
Operating lease cost	$	1,025
Variable lease cost		330
Net lease cost	$	1,355

Future minimum payments for leases with initial or remaining terms of one year or more as of September 30, 2023 were as follows:


(in thousands)	Leases
Twelve months Ended:
September 30, 2024	$	988
September 30, 2025		792
September 30, 2026		738
September 30, 2027		604
September 30, 2028		579
Thereafter		4,029
Total future minimum lease payments		7,730
Amounts representing interest		(1,442	)
Present Value of Net Future Minimum Lease Payments	$	6,288