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Note 7 - Leases

3 Months Ended

Mar. 31, 2022

Note 7. Leases

Operating leases are recorded as a right of use (“ROU”) asset and operating lease liability. The ROU asset is recorded in other assets, while the lease liability is recorded in other liabilities on the condensed balance sheet beginning January 1, 2019, when the Company adopted ASU 2016-02, on a prospective basis. The ROU asset represents the right to use an underlying asset during the lease term and the lease liability represents the obligation to make lease payments arising from the lease. The ROU asset and lease liability have been recognized based on the present value of the lease payments using a discount rate that represented our incremental borrowing rate at the lease commencement date or the date of adoption of ASU 2016-02. The lease expense, which is comprised of the amortization of the ROU asset and the implicit interest accreted on the lease liability, is recognized on a straight-line basis over the lease term, and is recorded in occupancy expense in the condensed statements of income.

The Company’s current operating leases relate to one existing bank branch and the remaining two operating leases were acquired in separate bank acquisitions. Neither of the two acquired operating leases are for bank branches. One of the leases terminates in April of 2022; while the other acquired lease will terminate in July of 2029. No ROU assest was recorded in the acquisition transaction for the lease maturing in April 2022, as the ROU asset was deemed impaired at the acquisition date; a lease liability was recorded in the amount of $82 thousand. The Company’s ROU asset was $718 thousand as of March 31, 2022 compared to $741 thousand as of December 31, 2021. The operating lease liability as of March 31, 2022 was $739 thousand compared to $770 thousand as of December 31, 2021. The Company’s total operating leases have remaining terms of 1 month to 7.25 years;compared with 4 months to 7.5 years as of December 31, 2021. The March 31, 2022 weighted average discount rate of 3.22% did not change from December 31, 2021.

Future minimum lease payments as of the dates indicated are as follows:

Year	*March 31, 2022*
(Amounts in thousands)
2023	$	122
2024		119
2025		113
2026		101
2027 and thereafter		336
Total lease payments		791
Less: Interest		(52	)
Present value of lease liabilities	$	739

Year	*December 31, 2021*
(Amounts in thousands)
2022	$	131
2023		119
2024		117
2025		101
2026 and thereafter		362
Total lease payments		830
Less: Interest		(60	)
Present value of lease liabilities	$	770