Leases

12 Months Ended

Dec. 31, 2021

Leases

Leases

NOTE 9: Leases

The Corporation’s leases comprise primarily leases of real estate and office equipment in which the Corporation is the lessee.  Lease cost for the years ended December 31, 2021, 2020 and 2019 is as follows:

	Year Ended December 31,
(Dollars in thousands)	2021		2020		2019
Operating lease cost	$	1,331	$	1,616	$	1,681
Finance lease cost:
Amortization of right-of-use asset		314		166		—
Interest on lease liability		129		70		—
Short-term lease cost		142		219		128
Variable lease cost		46		52		43
Total lease cost	$	1,962	$	2,123	$	1,852

Interest on lease liability cost is included in “Interest expense – Borrowings” and all other lease costs are included in “Occupancy” on the Consolidated Statements of Income. Variable lease payments primarily represent payments for common area maintenance related to real estate leases and taxes and fees related to equipment leases that are not included

in base rent payments and changes in lease payments that are adjusted for inflation.

Certain of the Corporation’s leases contain options to extend the lease term beyond the initial term.  Options to extend the lease term are recognized as part of the Corporation’s lease liabilities and right-of-use assets at the commencement of a lease to the extent the Corporation is reasonably certain to exercise such options.

The Corporation’s right-of-use assets, lease liabilities, weighted average remaining lease term and weighted average discount rate of the Corporation’s leases are set forth in the table below.

		December 31,			December 31,
(Dollars in thousands)		2021			2020
Operating leases:
Right of use assets	$	3,221		$	2,404
Lease liabilities		3,324			2,488
Weighted average remaining lease term (years)		7.0			3.0
Weighted average discount rate		1.7	%		2.2	%
Finance leases:
Right of use assets	$	5,879		$	6,193
Lease liabilities		6,346			6,305
Weighted average remaining lease term (years)		18.5			19.5
Weighted average discount rate		2.0	%		2.0	%

Right of use assets are included in “Other Assets” on the Consolidated Balance Sheets.  Operating lease liabilities are included in “Other Liabilities,” and Finance lease liabilities are included in “Long-term Borrowings” in the Consolidated Balance Sheets.  During the year ended December 31, 2021, the Corporation obtained right-of-use assets in exchange for lease liabilities in operating leases of $2.48 million.  During the year ended December 31, 2020, the Corporation obtained right-of-use assets in exchange for lease liabilities in operating leases and finance leases of $1.11 million and $6.36 million, respectively.  During the year ended December 31, 2019, the Corporation obtained right-of-use assets in exchange for lease liabilities in operating leases of $1.14 million.

Cash paid for amounts included in the measurement of lease liabilities for the years ended December 31, 2021, 2020 and 2019 is set forth in the table below.  In addition to the amounts paid shown below, the Corporation received lease incentives of $236,000 related to finance leases during the year ended December 31, 2021, $115,000 related to operating leases during the year ended December 31, 2020 and $27,000 related to operating leases during the year ended December 31, 2019.

	Year Ended December 31,
(Dollars in thousands)	2021		2020		2019
Operating leases:
Operating cash flows	$	1,313	$	1,659	$	1,567
Finance leases:
Operating cash flows		129		70		—
Financing cash flows		195		53		—
Total cash flows	$	1,637	$	1,782	$	1,567

Maturities of the Corporation’s lease liabilities are as follows:

	December 31, 2021
(Dollars in thousands)	Operating Leases		Finance Leases
2022	$	870	$	302
2023		751		337
2024		536		346
2025		323		355
2026		214		364
Thereafter		881		6,009
Total		3,575		7,713
Imputed interest		(251)		(1,367)
Lease liabilities	$	3,324	$	6,346