Leases

3 Months Ended

Mar. 31, 2024

Note 8 ‑ Leases:

The Company leases certain office space and equipment for use in its operations. The Company assesses each of these contracts to determine whether the arrangement contains a lease as defined by ASC Topic 842. In order to meet the definition of a lease under ASC Topic 842, the contractual arrangement must convey to the Company the right to control the use of an identifiable asset for a period of time in exchange for consideration. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. Some leases contain renewal options and, in accordance with ASC Topic 842, the lease term includes those renewals only to the extent that they are reasonably certain to be exercised.

In accordance with ASC Topic 842, the lease liability is equal to the present value of the remaining lease payments while the ROU asset is based on the lease liability, subject to adjustment, such as for lease incentives. The Company’s leases do not provide a readily determinable implicit interest rate and, therefore, the Company must estimate its incremental borrowing rate. In determining an appropriate incremental borrowing rate, the Company considers the lease period, market interest rates, current interest rates on the Company’s notes payable and the effects of collateralization.

The Company’s lease population as of March 31, 2024 and December 31, 2023 is comprised of operating leases where the Company is the lessee, and these leases are primarily for office space for corporate and division offices, as well as certain equipment leases.

Lease cost included in the accompanying condensed consolidated statements of income as a component of selling, general and administrative costs is presented in the table below (in thousands).

	Three months ended March 31,
	2024		2023
Operating leases costs	$	170	$	143
Variable lease costs - operating	$	36	$	40

ROU assets are included within other assets and lease liabilities are included within accrued expenses and other liabilities in the accompanying condensed consolidated balance sheets.

The following table presents additional information about the Company’s leases (dollars in thousands):

	March 31, 2024			December 31, 2023
ROU assets	$	1,647		$	1,789
Lease liabilities	$	1,698		$	1,837
Weighted average remaining lease term (in months)		47			49
Weighted average discount rate		6.41	%		6.40	%

As of March 31, 2024, the future minimum payments required under operating leases are as follows (in thousands):

Year ending December 31,
2024 ⁽¹⁾	$	414
2025		473
2026		412
2027		368
2028		251
Total lease payments		1,918
Less: imputed interest		(220	)
Total lease liabilities	$	1,698

(1)	Remaining payments are for the nine months ending December 31, 2024.