$ 127,459

$ 125,566

$ 106,926

$ 93,902

Property, Plant and Equipment Disclosure [Text Block]

4. PREMISES AND EQUIPMENT, NET

Premises and equipment are comprised of the following:

	March 31,		December 31,
(Dollars in thousands)	2024		2023

Land and improvements	$	12,782	$	12,782
Buildings		57,881		56,778
Furniture and equipment		25,428		25,157
		96,091		94,717
Less: accumulated depreciation		45,256		43,789

Premises and equipment, net	$	50,835	$	50,928

Depreciation expense totaled $1.6 million and $1.5 million during the first quarters of 2024 and 2023, respectively.

We enter into facility leases in the normal course of business. As of March 31, 2024, we were under lease contracts for ten of our banking facilities. The leases have maturity dates ranging from April, 2024 through May, 2048, with a weighted average life of 9.6 years as of March 31, 2024. 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 was not reasonably certain we would exercise the options on the dates we entered into the lease agreements.

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 6.5% as of March 31, 2024.

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 $4.7 million and $3.7 million as of March 31, 2024, and December 31, 2023, 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 Sheets. Total operating lease expense associated with the leases aggregated $0.4 million during the first three months of 2024 and $0.3 million during the first three months of 2023.

Future lease payments were as follows as of March 31, 2024:

(Dollars in thousands)
2024	$	920
2025		1,010
2026		950
2027		878
2028		697
Thereafter		1,519
Total undiscounted lease payments		5,974
Less effect of discounting		(1,298	)
Present value of future lease payments (lease liability)	$	4,676