Note 5 - Premises and Equipment, Net and Leases

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

NOTE 5 - PREMISES AND EQUIPMENT, NET AND LEASES

Premises and equipment, net, at the dates indicated are summarized as follows:

	December 31,
(Dollars in thousands)	2023			2022
Land	$	6,179		$	6,179
Buildings and Improvements		32,416			28,592
Furniture and Equipment		11,797			13,848
Construction in Progress		413			3,045
Total Premises and Equipment		50,805			51,664
Less: Accumulated Depreciation		(22,168	)		(23,704	)
Total Premises and Equipment, Net	$	28,637		$	27,960

Construction in progress of $413,000 at December 31, 2023 primarily included building and construction costs associated with renovations to our existing branches. Depreciation expense on premises and equipment was $2.1 million and $2.0 million for the years ended December 31, 2023 and 2022, respectively. Loss on disposal of premises and equipment was $29,000 during 2023.

The Company has operating leases on six of its branches. During the year ended December 31, 2023, the Company made cash payments in the amount of $524,000 for operating leases. The lease expense recognized during this period was $523,000 and is included in occupancy expense within the Consolidated Statements of Income. The operating lease liability had a net decrease of $462,000 during the year ended December 31, 2023.  At December 31, 2023, the Company had operating lease ROU assets of $1.4 million and an operating lease liability of $1.4 million recorded on its consolidated balance sheet compared to operating lease ROU assets of $1.9 million and an operating lease liability of $1.9 million at December 31, 2022. The lease agreements have maturity dates ranging from 2025 through 2028, some of which include options for multiple five or ten year extensions. At December 31, 2023, the remaining weighted average lease term was 3.16 years and the weighted average discount rate used was 3.2%.

The ROU asset and lease liability are recognized at lease commencement by calculating the present value of lease payments over the lease term. The ROU assets also include any initial direct costs incurred and lease payments made at or before the commencement date and are reduced by any lease incentives.

At December 31, 2023, future undiscounted lease payments for operating leases with initial terms of one year or more were as follows:

Year ended December 31,	(Dollars in thousands)
2024	$	522
2025		475
2026		364
2027		148
2028		10
Thereafter		—
Total undiscounted lease payments		1,519
Less: effect of discounting		77
Present value of estimated lease payments (lease liability)	$	1,442