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Note 4 - Premises and Equipment, Net

12 Months Ended

Dec. 31, 2022

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

NOTE 4 - PREMISES AND EQUIPMENT, NET

Year-end premises and equipment were as follows:

		2022				2021

Land and improvements		$	13,532,000			$	15,111,000
Buildings			53,865,000				56,168,000
Furniture and equipment			22,941,000				22,974,000
			90,338,000				94,253,000
Less: accumulated depreciation			38,862,000				36,955,000

Total premises and equipment		$	51,476,000			$	57,298,000

Depreciation expense totaled $6.0 million in 2022, $5.8 million in 2021, and $5.2 million in 2020.

We enter into facility leases in the normal course of business. As of December 31, 2022, we were under lease contracts for eleven of our branch facilities. The leases have maturity dates ranging from June, 2023 through December, 2029, with a weighted average life of 2.5 years as of December 31, 2022. All of our leases have multiple three- to five-year extensions; however, these were not factored in the lease maturities and weighted average lease term as it is not reasonably certain we will exercise the options.

Leases are classified as either operating or finance leases at the lease commencement date, with all of our current leases determined to be operating leases. Lease expense for operating leases is recognized on a straight-line basis over the lease term. Right-of-use assets represent our right to use an underlying asset for the lease term, while lease liabilities represent our obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the lease commencement date at the estimated present value of lease payments over the lease term. We use our incremental borrowing rate, on a collateralized basis, at lease commencement to calculate the present value of lease payments. The weighted average discount rate for leases was 5.47% as of December 31, 2022.

The right-of-use assets, included in premises and equipment, net on our Consolidated Balance Sheets, and the lease liabilities, included in other liabilities on our Consolidated Balance Sheets, totaled $3.5 million as of December 31, 2022, and totaled $2.9 million and $2.8 million as of December 31, 2021, respectively. As permitted by applicable accounting standards, we have elected not to recognize short-term leases with original terms of twelve months or less on our Consolidated Balance Sheet. Total operating lease expense associated with the leases aggregated $1.3 million, $1.2 million and $1.4 million in 2022, 2021 and 2020, respectively

Future lease payments were as follows as of December 31, 2022:

2023		$	1,091,000
2024			883,000
2025			443,000
2026			339,000
2027			288,000
Thereafter			1,589,000
Total undiscounted lease payments			4,633,000
Less effect of discounting			(1,118,000	)
Present value of future lease payments (lease liability)			3,515,000