Leases

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

Leases

Leases

On January 1, 2019, the Company adopted the amendments to ASC 842, Leases, which requires lessees to recognize lease assets and liabilities arising from operating leases on the balance sheet.

At the inception of a contract, an entity should determine whether the contract contains a lease. Topic 842 defines a lease as a contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration. Control over the use of an identified asset means that the customer has both (1) the right to obtain substantially all of the economic benefits from the use of the asset and (2) the right to direct the use of the asset.

German American has finance leases for branch offices as well as operating leases for branch offices, ATM locations and certain office equipment. In prior periods, German American included the finance leases on the balance sheet with a right-of-use asset as well as a lease liability. Upon adopting the amended guidance, German American recorded a right-of-use asset and lease liability for its operating leases in the amount of $9,034. Also, at this time, management considered a reasonable expectation of renewal periods to include for the leases. The right-of-use asset is included in the 'Premises, Furniture and Equipment, Net' line of the consolidated balance sheet. The lease liability is included in the 'Accrued Interest Payable and Other Liabilities' line of the consolidated balance sheet.

The Company used the implicit lease rate when determining the present value of lease payments for finance leases. The present value of lease payments for operating leases was determined using the incremental borrowing rate as of the date the Company adopted this standard.

The components of lease expense were as follows:

	Three Months Ended		Six Months Ended
	June 30, 2019		June 30, 2019
Finance Lease Cost:
Amortization of Right-of -Use Assets	$	52	$	104
Interest on Lease Liabilities	95		191
Operating Lease Cost	360		720
Short-term Lease Cost	15		30
Total Lease Cost	$	522	$	1,045

The weighted average lease term and discount rates were as follows:

	June 30, 2019
Weighted Average Remaining Lease Term:
Finance Leases	13 years
Operating Leases	9 years
Weighted Average Discount Rate:
Finance Leases	11.49	%
Operating Leases	3.44	%

Supplemental balance sheet information related to leases was as follows:

	June 30, 2019
Finance Leases
Premises, Furniture and Equipment, Net	$	2,593
Other Borrowings	3,453
Operating Leases
Operating Lease Right-of-Use Assets	$	8,464
Operating Lease Liabilities	8,498

Supplemental cash flow information related to leases was as follows:

	Six Months Ended
	June 30, 2019
Cash Paid for amounts in the measurement of lease liabilities:
Operating Cash Flows from Finance Leases	$	191
Operating Cash Flows from Operating Leases	687
Financing Cash Flows from Finance Leases	53

The following table presents a maturity analysis of Finance and Operating Lease Liabilities:

	June 30, 2019
	Finance Leases			Operating Leases
Year 1	$	519		$	1,362
Year 2	519			1,240
Year 3	519			1,134
Year 4	519			1,112
Year 5	519			1,069
Thereafter	3,732			4,099
Total Lease Payments	6,327			10,016
Less Imputed Interest	(2,874		)	(1,518		)
Total	$	3,453		$	8,498

Leases

Leases

On January 1, 2019, the Company adopted the amendments to ASC 842, Leases, which requires lessees to recognize lease assets and liabilities arising from operating leases on the balance sheet.

At the inception of a contract, an entity should determine whether the contract contains a lease. Topic 842 defines a lease as a contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration. Control over the use of an identified asset means that the customer has both (1) the right to obtain substantially all of the economic benefits from the use of the asset and (2) the right to direct the use of the asset.

German American has finance leases for branch offices as well as operating leases for branch offices, ATM locations and certain office equipment. In prior periods, German American included the finance leases on the balance sheet with a right-of-use asset as well as a lease liability. Upon adopting the amended guidance, German American recorded a right-of-use asset and lease liability for its operating leases in the amount of $9,034. Also, at this time, management considered a reasonable expectation of renewal periods to include for the leases. The right-of-use asset is included in the 'Premises, Furniture and Equipment, Net' line of the consolidated balance sheet. The lease liability is included in the 'Accrued Interest Payable and Other Liabilities' line of the consolidated balance sheet.

The Company used the implicit lease rate when determining the present value of lease payments for finance leases. The present value of lease payments for operating leases was determined using the incremental borrowing rate as of the date the Company adopted this standard.

The components of lease expense were as follows:

	Three Months Ended		Six Months Ended
	June 30, 2019		June 30, 2019
Finance Lease Cost:
Amortization of Right-of -Use Assets	$	52	$	104
Interest on Lease Liabilities	95		191
Operating Lease Cost	360		720
Short-term Lease Cost	15		30
Total Lease Cost	$	522	$	1,045

The weighted average lease term and discount rates were as follows:

	June 30, 2019
Weighted Average Remaining Lease Term:
Finance Leases	13 years
Operating Leases	9 years
Weighted Average Discount Rate:
Finance Leases	11.49	%
Operating Leases	3.44	%

Supplemental balance sheet information related to leases was as follows:

	June 30, 2019
Finance Leases
Premises, Furniture and Equipment, Net	$	2,593
Other Borrowings	3,453
Operating Leases
Operating Lease Right-of-Use Assets	$	8,464
Operating Lease Liabilities	8,498

Supplemental cash flow information related to leases was as follows:

	Six Months Ended
	June 30, 2019
Cash Paid for amounts in the measurement of lease liabilities:
Operating Cash Flows from Finance Leases	$	191
Operating Cash Flows from Operating Leases	687
Financing Cash Flows from Finance Leases	53

The following table presents a maturity analysis of Finance and Operating Lease Liabilities:

	June 30, 2019
	Finance Leases			Operating Leases
Year 1	$	519		$	1,362
Year 2	519			1,240
Year 3	519			1,134
Year 4	519			1,112
Year 5	519			1,069
Thereafter	3,732			4,099
Total Lease Payments	6,327			10,016
Less Imputed Interest	(2,874		)	(1,518		)
Total	$	3,453		$	8,498