Leases

12 Months Ended

Dec. 31, 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:

	December 31, 2022		December 31, 2021
Finance Lease Cost:
Amortization of Right-of-Use Assets	$	210	$	210
Interest on Lease Liabilities	326		345
Operating Lease Cost	1,508		1,423
Short-term Lease Cost	—		80
Total Lease Cost	$	2,044	$	2,058

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

	December 31, 2022		December 31, 2021
Weighted Average Remaining Lease Term:
Finance Leases	9 years		10 years
Operating Leases	7 years		7 years
Weighted Average Discount Rate:
Finance Leases	11.41	%	11.45	%
Operating Leases	2.98	%	3.02	%

Supplemental balance sheet information related to leases were as follows:

	December 31, 2022		December 31, 2021
Finance Leases
Premises, Furniture and Equipment, Net	$	1,858	$	2,068
Other Borrowings	$	2,857	$	3,051
Operating Leases
Operating Lease Right-of-Use Assets	$	6,297	$	6,115
Operating Lease Liabilities	$	6,447	$	6,227

Supplemental cash flow information related to leases were as follows:

	December 31, 2022		December 31, 2021
Cash Paid for Amounts in the Measurement of Lease Liabilities:
Operating Cash Flows from Finance Leases	$	326	$	345
Operating Cash Flows from Operating Leases	1,449		2,808
Financing Cash Flows from Finance Leases	186		155

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

	December 31, 2022
	Finance Leases		Operating Leases
Year 1	$	519	$	1,376
Year 2	519		1,187
Year 3	519		1,021
Year 4	519		845
Year 5	492		662
Thereafter	1,985		2,108
Total Lease Payments	4,553		7,199
Less Imputed Interest	(1,696)		(752)
Total	$	2,857	$	6,447

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:

	December 31, 2022		December 31, 2021
Finance Lease Cost:
Amortization of Right-of-Use Assets	$	210	$	210
Interest on Lease Liabilities	326		345
Operating Lease Cost	1,508		1,423
Short-term Lease Cost	—		80
Total Lease Cost	$	2,044	$	2,058

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

	December 31, 2022		December 31, 2021
Weighted Average Remaining Lease Term:
Finance Leases	9 years		10 years
Operating Leases	7 years		7 years
Weighted Average Discount Rate:
Finance Leases	11.41	%	11.45	%
Operating Leases	2.98	%	3.02	%

Supplemental balance sheet information related to leases were as follows:

	December 31, 2022		December 31, 2021
Finance Leases
Premises, Furniture and Equipment, Net	$	1,858	$	2,068
Other Borrowings	$	2,857	$	3,051
Operating Leases
Operating Lease Right-of-Use Assets	$	6,297	$	6,115
Operating Lease Liabilities	$	6,447	$	6,227

Supplemental cash flow information related to leases were as follows:

	December 31, 2022		December 31, 2021
Cash Paid for Amounts in the Measurement of Lease Liabilities:
Operating Cash Flows from Finance Leases	$	326	$	345
Operating Cash Flows from Operating Leases	1,449		2,808
Financing Cash Flows from Finance Leases	186		155

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

	December 31, 2022
	Finance Leases		Operating Leases
Year 1	$	519	$	1,376
Year 2	519		1,187
Year 3	519		1,021
Year 4	519		845
Year 5	492		662
Thereafter	1,985		2,108
Total Lease Payments	4,553		7,199
Less Imputed Interest	(1,696)		(752)
Total	$	2,857	$	6,447