LEASES

6 Months Ended

Jun. 30, 2023

Leases [Abstract]

LEASES

LEASES

Operating Leases

The Corporation leases certain branch properties under long-term, operating lease agreements. The leases expire at various dates through 2033 and generally include renewal options. As of June 30, 2023, the weighted average remaining lease term was 8.24 years with a weighted average discount rate of 3.37%. Rent expense was $0.2 million for the three months ended June 30, 2023. Rent expense was $0.5 million for the six months ended June 30, 2023. Certain leases provide for increases in future minimum annual rent payments as defined in the lease agreements. The Corporation’s operating lease agreements contain both lease and non-lease components, which are generally accounted for separately. The Corporation’s lease agreements do not contain any residual value guarantees.

Leased branch properties at June 30, 2023 and December 31, 2022 consist of the following (in thousands):

	June 30, 2023		December 31, 2022
Operating lease right-of-use asset	$	6,449	$	7,234
Less: accumulated amortization	(399)		(785)
Less: lease termination	—		—
Add: new lease agreement and modifications	—		—
Operating lease right-of-use-assets, net	$	6,050	$	6,449

The following is a schedule by year of the undiscounted cash flows of the operating lease liabilities, excluding CAM charges, as of June 30, 2023 (in thousands):

Year	Amount
2023	$	498
2024	924
2025	841
2026	845
2027	854
2028 and thereafter	3,169
Total minimum lease payments	7,131
Less: amount representing interest	(903)
Present value of net minimum lease payments	$	6,228

As of June 30, 2023, the Corporation had no operating leases that were signed, but had not yet commenced.

Finance Leases

The Corporation leases certain buildings under finance leases. The lease arrangements require monthly payments through 2036. As of June 30, 2023, the weighted average remaining lease term was 9.77 years with a weighted average discount rate of 3.41%. The Corporation has included these leases in premises and equipment as of June 30, 2023 and December 31, 2022 as follows (in thousands):

	June 30, 2023		December 31, 2022
Buildings	$	5,572	$	5,572
Less: accumulated depreciation	(2,706)		(2,540)
Net book value	$	2,866	$	3,032

The following is a schedule by year of future minimum lease payments under the capitalized lease, together with the present value of net minimum lease payments as of June 30, 2023 (in thousands):

Year	Amount
2023	$	195
2024	391
2025	409
2026	425
2027	428
2028 and thereafter	1,988
Total minimum lease payments	3,836
Less: amount representing interest	(647)
Present value of net minimum lease payments	$	3,189

As of June 30, 2023, the Corporation had no finance leases that were signed, but had not yet commenced.

Related Party Transactions

The Bank leases its branch located at 1365 New Scotland Road, Slingerlands, New York, under a lease agreement through July, 2024 from a former member of the Corporation's Board of Directors with monthly rent and CAM related expenses totaling $4 thousand per month. This Board member retired from the Corporation's Board of Directors as of June 7, 2022. Rent and CAM paid to this Board member while serving on the Board totaled $25 thousand for the six month period ended June 30, 2022.

The Bank leases its branch located at 2 Rush Street, Schenectady, New York, under a lease agreement through February, 2033 from a member of the Corporation's Board of Directors with monthly rent and CAM related expenses totaling $9 thousand per month. Rent and CAM related expenses paid to this Board member totaled $27 thousand and $25 thousand for the three month periods ended June 30, 2023 and 2022, respectively. Rent and CAM related expenses paid to this Board of Directors member totaled $53 thousand and $51 thousand for the six month periods ended June 30, 2023 and 2022, respectively.

LEASES

LEASES

Operating Leases

The Corporation leases certain branch properties under long-term, operating lease agreements. The leases expire at various dates through 2033 and generally include renewal options. As of June 30, 2023, the weighted average remaining lease term was 8.24 years with a weighted average discount rate of 3.37%. Rent expense was $0.2 million for the three months ended June 30, 2023. Rent expense was $0.5 million for the six months ended June 30, 2023. Certain leases provide for increases in future minimum annual rent payments as defined in the lease agreements. The Corporation’s operating lease agreements contain both lease and non-lease components, which are generally accounted for separately. The Corporation’s lease agreements do not contain any residual value guarantees.

Leased branch properties at June 30, 2023 and December 31, 2022 consist of the following (in thousands):

	June 30, 2023		December 31, 2022
Operating lease right-of-use asset	$	6,449	$	7,234
Less: accumulated amortization	(399)		(785)
Less: lease termination	—		—
Add: new lease agreement and modifications	—		—
Operating lease right-of-use-assets, net	$	6,050	$	6,449

The following is a schedule by year of the undiscounted cash flows of the operating lease liabilities, excluding CAM charges, as of June 30, 2023 (in thousands):

Year	Amount
2023	$	498
2024	924
2025	841
2026	845
2027	854
2028 and thereafter	3,169
Total minimum lease payments	7,131
Less: amount representing interest	(903)
Present value of net minimum lease payments	$	6,228

As of June 30, 2023, the Corporation had no operating leases that were signed, but had not yet commenced.

Finance Leases

The Corporation leases certain buildings under finance leases. The lease arrangements require monthly payments through 2036. As of June 30, 2023, the weighted average remaining lease term was 9.77 years with a weighted average discount rate of 3.41%. The Corporation has included these leases in premises and equipment as of June 30, 2023 and December 31, 2022 as follows (in thousands):

	June 30, 2023		December 31, 2022
Buildings	$	5,572	$	5,572
Less: accumulated depreciation	(2,706)		(2,540)
Net book value	$	2,866	$	3,032

The following is a schedule by year of future minimum lease payments under the capitalized lease, together with the present value of net minimum lease payments as of June 30, 2023 (in thousands):

Year	Amount
2023	$	195
2024	391
2025	409
2026	425
2027	428
2028 and thereafter	1,988
Total minimum lease payments	3,836
Less: amount representing interest	(647)
Present value of net minimum lease payments	$	3,189

As of June 30, 2023, the Corporation had no finance leases that were signed, but had not yet commenced.

Related Party Transactions

The Bank leases its branch located at 1365 New Scotland Road, Slingerlands, New York, under a lease agreement through July, 2024 from a former member of the Corporation's Board of Directors with monthly rent and CAM related expenses totaling $4 thousand per month. This Board member retired from the Corporation's Board of Directors as of June 7, 2022. Rent and CAM paid to this Board member while serving on the Board totaled $25 thousand for the six month period ended June 30, 2022.

The Bank leases its branch located at 2 Rush Street, Schenectady, New York, under a lease agreement through February, 2033 from a member of the Corporation's Board of Directors with monthly rent and CAM related expenses totaling $9 thousand per month. Rent and CAM related expenses paid to this Board member totaled $27 thousand and $25 thousand for the three month periods ended June 30, 2023 and 2022, respectively. Rent and CAM related expenses paid to this Board of Directors member totaled $53 thousand and $51 thousand for the six month periods ended June 30, 2023 and 2022, respectively.