Premises and Equipment

12 Months Ended

Dec. 31, 2020

Property, Plant and Equipment [Abstract]

Premises and Equipment

Note 6 – Premises and Equipment

Premises and equipment are summarized as follows:

	Estimated Useful Life (Years)	2020		2019
	(dollars in thousands)
Land	-	$	7,232	$	2,403
Buildings	10-25		15,159		15,159
Furniture, fixtures and equipment	3-7		40,930		35,637
Leasehold improvements	10-20		28,860		16,842
Subtotal			92,181		70,041
Less: accumulated depreciation, amortization and fair value adjustments			62,073		50,805
Total premises and equipment, net		$	30,108	$	19,236

Depreciation and amortization expense of premises and equipment was $4.2 million, $3.1 million and $3.1 million for 2020, 2019 and 2018, respectively.

Finance Leases: The Company acquired a lease agreement for a building under a finance lease. The lease arrangement requires monthly payments through 2028.

The Company has included this lease in premises and equipment as follows:

	2020		2019
	(dollars in thousands)
Capital Lease	$	3,408	$	3,408
Less: accumulated amortization		2,038		1,867
	$	1,370	$	1,541

The following is a schedule by year of future minimum lease payments under the finance lease, together with the present value of net minimum lease payments as of December 31, 2020 (dollars in thousands):

2021	$	321
2022		321
2023		323
2024		353
2025		353
Thereafter		1,029
Total minimum lease payments		2,700
Less amount representing interest		567
Present value of net minimum lease payments	$	2,133

- 84 -

CONNECTONE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 6 – Premises and Equipment – (continued)

The Company leases certain premises and equipment under operating leases. As of December 31, 2020, the Company had lease liabilities totaling $18.0 million and right-of-use assets totaling $16.2 million. As of December 31, 2020, the weighted average remaining lease term for operating leases was 6.0 years and the weighted average discount rate used in the measurement of operating lease liabilities was 2.9%. Total lease costs for the year ended December 31, 2020 was $4.3 million. As of December 31, 2019, the Company had lease liabilities totaling $16.4 million and right-of-use assets totaling $15.1 million. As of December 31, 2019, the weighted average remaining lease term for operating leases was 7.2 years and the weighted average discount rate used in the measurement of operating lease liabilities was 3.0%. Total lease costs for the year ended December 31, 2019 was $3.1 million.

A maturity analysis of operating lease liabilities and reconciliation of the undiscounted cash flows to the total operating lease liability is as follows:

	December 31, 2020
	(dollars in thousands)
Lease payments due:
Less than 1 year	$	4,229
1 year through less than 2 years		3,378
2 years through less than 3 years		3,060
3 years through less than 4 years		2,523
4 years through 5 years		2,231
After 5 years		4,435
Total undiscounted cash flows		19,856
Impact of discounting		(1,830	)
Total lease liability	$	18,026