Net Investment in Direct Financing Lease

9 Months Ended

Sep. 30, 2013

Net Investment in Direct Financing Lease [Abstract]

Net Investment in Direct Financing Lease

Note 9.  Net Investment in Direct Financing Lease

During the second quarter of 2010, the Corporation entered into a lease of its former operations facility under a direct financing lease. The lease has a 15 year term with no renewal options. According to the terms of the lease, the lessee has an obligation to purchase the property underlying the lease in either year seven (7), ten (10) or fifteen (15) at predetermined prices for those years as provided in the lease. The structure of the minimum lease payments and the purchase prices as provided in the lease provide an inducement to the lessee to purchase the property in year seven (7).

At September 30, 2013 and December 31, 2012, the net investment in direct financing lease consists of a minimum lease receivable of $4,537,000 and $4,699,000, respectively, and unearned interest income of $781,000 and $928,000, respectively, for a net investment in direct financing lease of $3,756,000 and $3,771,000, respectively. The net investment in direct financing lease is carried as a component of loans in the Corporation’s consolidated statements of condition.

Minimum future lease receipts of the direct financing lease are as follows:

	September 30, 2013
For years ending December 31,	(in thousands)
2013	$	54
2014		216
2015		228
2016		265
2017		265
Thereafter		2,728
Total minimum future lease receipts	$	3,756