Leases

6 Months Ended

Jun. 30, 2022

Leases [Abstract]

Leases

Leases

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. 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		Three Months Ended
	June 30, 2022		June 30, 2021
Finance Lease Cost:
Amortization of Right-of -Use Assets	$	53	$	52
Interest on Lease Liabilities	82		87
Operating Lease Cost	376		342
Short-term Lease Cost	3		7
Total Lease Cost	$	514	$	488

	Six Months Ended		Six Months Ended
	June 30, 2022		June 30, 2021
Finance Lease Cost:
Amortization of Right-of -Use Assets	$	105	$	104
Interest on Lease Liabilities	165		175
Operating Lease Cost	745		761
Short-term Lease Cost	27		7
Total Lease Cost	$	1,042	$	1,047

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

	June 30, 2022		June 30, 2021
Weighted Average Remaining Lease Term:
Finance Leases	10 years		11 years
Operating Leases	8 years		8 years
Weighted Average Discount Rate:
Finance Leases	11.43	%	11.47	%
Operating Leases	2.85	%	3.15	%

Supplemental balance sheet information related to leases were as follows:

	June 30, 2022		June 30, 2021
Finance Leases
Premises, Furniture and Equipment, Net	$	1,963	$	2,173
Other Borrowings	2,957		3,140
Operating Leases
Operating Lease Right-of-Use Assets	$	6,510	$	6,260
Operating Lease Liabilities	6,645		6,357

Supplemental cash flow information related to leases were as follows:

	Six Months Ended		Six Months Ended
	June 30, 2022		June 30, 2021
Cash paid for amounts in the measurement of lease liabilities:
Operating Cash Flows from Finance Leases	$	166	$	175
Operating Cash Flows from Operating Leases	701		1,805
Financing Cash Flows from Finance Leases	91		69

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

	June 30, 2022
	Finance Leases		Operating Leases
Year 1	$	519	$	1,331
Year 2	519		1,110
Year 3	519		972
Year 4	519		868
Year 5	519		756
Thereafter	2,174		2,425
Total Lease Payments	4,769		7,462
Less Imputed Interest	(1,812)		(817)
Total	$	2,957	$	6,645

Leases

Leases

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. 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		Three Months Ended
	June 30, 2022		June 30, 2021
Finance Lease Cost:
Amortization of Right-of -Use Assets	$	53	$	52
Interest on Lease Liabilities	82		87
Operating Lease Cost	376		342
Short-term Lease Cost	3		7
Total Lease Cost	$	514	$	488

	Six Months Ended		Six Months Ended
	June 30, 2022		June 30, 2021
Finance Lease Cost:
Amortization of Right-of -Use Assets	$	105	$	104
Interest on Lease Liabilities	165		175
Operating Lease Cost	745		761
Short-term Lease Cost	27		7
Total Lease Cost	$	1,042	$	1,047

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

	June 30, 2022		June 30, 2021
Weighted Average Remaining Lease Term:
Finance Leases	10 years		11 years
Operating Leases	8 years		8 years
Weighted Average Discount Rate:
Finance Leases	11.43	%	11.47	%
Operating Leases	2.85	%	3.15	%

Supplemental balance sheet information related to leases were as follows:

	June 30, 2022		June 30, 2021
Finance Leases
Premises, Furniture and Equipment, Net	$	1,963	$	2,173
Other Borrowings	2,957		3,140
Operating Leases
Operating Lease Right-of-Use Assets	$	6,510	$	6,260
Operating Lease Liabilities	6,645		6,357

Supplemental cash flow information related to leases were as follows:

	Six Months Ended		Six Months Ended
	June 30, 2022		June 30, 2021
Cash paid for amounts in the measurement of lease liabilities:
Operating Cash Flows from Finance Leases	$	166	$	175
Operating Cash Flows from Operating Leases	701		1,805
Financing Cash Flows from Finance Leases	91		69

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

	June 30, 2022
	Finance Leases		Operating Leases
Year 1	$	519	$	1,331
Year 2	519		1,110
Year 3	519		972
Year 4	519		868
Year 5	519		756
Thereafter	2,174		2,425
Total Lease Payments	4,769		7,462
Less Imputed Interest	(1,812)		(817)
Total	$	2,957	$	6,645