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LEASES

3 Months Ended

Mar. 31, 2024

NOTE 13 – LEASES

Accounting standards require lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements, establishing a right-of-use (“ROU”) model that requires a lessee to recognize a ROU lease asset and liability on the balance sheet for all leases with a term longer than 12 months. Leases are classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement.

Lessee Leases

The Company’s lessee leases are operating leases, and consist of leased real estate for branches. Options to extend and renew leases are generally exercised under normal circumstances. Advance notification is required prior to termination, and any noticing period is often limited to the months prior to renewal. Rent escalations are generally specified by a payment schedule, or are subject to a defined formula. The Company also elected the practical expedient to not separate lease and non-lease components for all leases, the majority of which consist of real estate common area maintenance expenses. Generally, leases do not include guaranteed residual values, but instead typically specify that the leased premises are to be returned in satisfactory condition with the Company liable for damages.

For operating leases, the lease liability and ROU asset (before adjustments) are recorded at the present value of future lease payments. Accounting standards require the use of the lease interest rate; however, this rate is typically not known. As an alternative, the use of an entity’s fully secured incremental borrowing rate is permitted. The Company is electing to utilize the Wall Street Journal Prime Rate on the date of lease commencement.


	Three Months Ended
(dollars in thousands)	March 31, 2024			March 31, 2023
Amortization of ROU Assets - Operating Leases	$	—		$	(1)
Interest on Lease Liabilities - Operating Leases		22			22
Operating Lease Cost (Cost resulting from lease payments)		21			21
Weighted Average Lease Term (Years) - Operating Leases		29.75			30.75
Weighted Average Discount Rate - Operating Leases		5.50	%		5.50	%

A maturity analysis of operating lease liabilities and reconciliation of the undiscounted cash flows to the total operating lease liabilities as of March 31, 2024 is as follows:


	March 31, 2024
Operating lease payments due:
Within one year	$	85
After one but within two years		88
After two but within three years		94
After three but within four years		94
After four years but within five years		94
After five years		3,020
Total undiscounted cash flows		3,475
Discount on cash flows		(1,891)
Total operating lease liabilities	$	1,584