The
Company
enters
into
leases
in
the
normal
course
of
business
primarily
for
banking
centers
and
back-office
operations. As of
December 31, 2022, the
Company leased nine
of the ten
banking centers and
the headquarter building.
The Company
is obligated
under non-cancelable
operating leases
for these
premises
with expiration
dates ranging
from
2026 to 2036, many of these leases have extension
clauses which the Company could exercise which
would extend these
The Company
has classified
all leases as
operating leases.
Lease expense
for operating
leases are
recognized on
a
straight-line basis over
the lease term.
Right-of-use (“ROU”)
assets represent the
right to use
the underlying
asset for the
lease
term
and
lease
liabilities
represent
the
obligation
to
make
lease
payments
arising
from
the
lease.
The
Company
elected the short-term
lease recognition exemption
for all leases
that qualify,
meaning those
with terms under
12 months.
ROU assets or lease liabilities are not to be recognized
for short-term leases.
ROU assets and
lease liabilities are
recognized at the lease
commencement date based on
the estimated present value
of lease payments
over the
lease term.
In the Comp
any’s Consolidated
Balance Sheets,
ROU assets
are reported
under
other assets while lease liabilities are classified under
accrued interest and other liabilities.
As
most
of
the
Company’s
leases
do
not
provide
an
implicit
rate,
the
incremental
borrowing
rate
based
on
the
information available
at commencement
date is
used. The
Company’s incremental
borrowing rate
is based
on the
FHLB
advance rate matching or nearing the lease term.
The following table presents the ROU assets and lease liabilities
as of December 31, 2022 and 2021 (in thousands):
The weighted average remaining lease term and weighted average
discount rate as of December 31, 2022 and 2021:
2022
2021
Weighted average remaining lease term (in years):
Operating leases
6.98
8.28
Weighted average discount rate:
2.94
%
2.32
%
Future lease payment obligations and a reconciliation to lease
liability as of December 31, 2022 (in thousands):
2023
$
3,158
2024
3,236
2025
3,312
2026
2,383
2027
951
Thereafter
3,478
Total
future minimum lease payments
16,518
Less: interest component
(2,123)
$
14,395