Note 14 - Leases

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Lessee, Operating Lease, Disclosure [Table Text Block]

NOTE 14 - LEASES

On January 1, 2021, the Company adopted ASU 2016-02, Leases (Topic 842) and elected the package of practical expedients that permits the Company to not reassess its prior conclusions about lease identification, lease classification and initial direct costs. The Company also elected all of the new standard’s available transition practical expedients, including the short-term lease recognition exemption that includes not recognizing Right-of-Use (“ROU”) assets or lease liabilities for existing short-term leases, and the practical expedient to not separate lease and non-lease components for all of the Company's leases.

The Company determines if a contract arrangement is a lease at inception and primarily enters into operating lease contracts for its branch locations, office space, and certain equipment. As part of its property lease agreements, the Company may seek to include options to extend or terminate at lease when it is reasonably certain that the Company will exercise those options. The Company's measurement of the ROU assets and operating lease liabilities does not include payments associated with the option to extend or terminate the lease. The ROU lease asset also includes any lease payments made and lease incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company did not possess any leases that have variable lease payments or residual value guarantees as of June 30, 2022.

The ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The Company uses its incremental borrowing rate to determine the present value of its lease liabilities.

The Company leases several of its operating facilities under various non-cancellable operating leases expiring at various dates through 2036. The Company is also responsible for common area maintenance, taxes, and insurance at the various branch locations.

Future minimum rent payments on the Company’s leases were as follows at June 30, 2022:

(dollars in thousands)
As of June 30, 2022:
2022 remaining	$	2,247
2023		4,805
2024		3,655
2025		3,485
2026		3,478
Thereafter		10,520
Total	$	28,190
Less amount of payment representing interest		(1,367	)
Total present value of lease payments	$	26,823

The minimum rent payments shown above are given for the existing lease obligation and are not a forecast of future rental expense. Total rental expense, recognized on a straight-line basis, was $1.3 million and $1.3 million for the three months ended June 30, 2022 and 2021, respectively and $2.6 million and $2.6 million for the six months ended  June 30, 2022 and 2021, respectively. The Company received rental income of $135,000 and $98,000 in the second quarter of 2022 and 2021, respectively and $270,000 and $203,000 for the six months ended  June 30, 2022 and 2021, respectively. During second quarter of 2022, the Company extended the lease at a New York branch for another ten years and recognized additional $4.8 million right-of-use asset and lease liability.

The following table presents the operating lease related assets and liabilities recorded on the Consolidated Balance Sheet, and the weighted-average remaining lease terms and discount rates as of  June 30, 2022 and December 31, 2021:

	June 30,			December 31,
(dollars in thousands)	2022			2021
Operating Leases
ROU assets	$	25,931		$	22,454
Lease liabilities		26,823			23,282
Weighted-average remaining lease term (in years)		7.32			6.84
Weighted-average discount rate		1.68	%		1.01	%