On July 17, 2020, the Bank announced management’s decision to adopt a full-service branch model that streamlines retail branches to better align with shifting customer needs and preferences. The transformation resulted in six branch closures and a reduction in staffing. The announcement was the result of a nine-month comprehensive assessment of all lines of business and functional areas, conducted in partnership with a leading process improvement organization. The data-driven analysis identified, among other things, overlapping service areas, automation opportunities and streamlining of processes and operations that would enhance customer experiences and facilitate the long-term sustainability of current and future branches. The announced consolidations represented about ten percent of the branch network and impacted approximately six percent of the total Company workforce. Where possible, those impacted were offered alternative roles or the opportunity to apply for open positions in other areas of the Company. Separated associates received a comprehensive severance package based on tenure.

In October 2020, the Company announced the planned closure of one additional branch in January 2021. This location was not included in the branch consolidations announced in July 2020, as alternative options were being considered and consolidation was not possible given its significant distance from other Bank branches.

The Company incurred total pre-tax expense related to the branch closures of approximately $1.7 million, including approximately $0.2 million in employee severance, $0.5 million in lease termination costs and $1.0 million in valuation adjustments on branch facilities during 2020. Additional related restructuring charges of $1.6 million and $111 thousand were incurred in 2022 and 2021, respectively, as a result of property valuation adjustments to write-down certain real estate assets to fair market value based on existing purchase offers and current market conditions.

The following table represents the consolidated statements of income classification of the Company’s restructuring charges (in thousands):


	Income Statement Location	2022		2021		2020

Severance costs	Salaries and employee benefits	$	-	$	-	$	242
Lease termination costs	Restructuring charges		-		-		454
Valuation adjustments	Restructuring charges		1,619		111		1,038
Valuation adjustments	Net loss on other assets		—		11		-
Total		$	1,619	$	122	$	1,734

The following table represents the changes in the restructuring reserve (in thousands):


Balance, December 31, 2019	$	-
Restructuring charges		1,734
Cash payments		(287	)
Charges against assets		(202	)
Balance, December 31, 2020		1,245
Restructuring charges		122
Cash payments		(192	)
Charges against assets		(730	)
Balance, December 31, 2021		445
Restructuring charges		1,619
Cash payments		(59	)
Charges against assets		(1,703	)
Balance, December 31, 2022	$	302

In contemplation of the transactions noted above, certain long-lived assets had met the held for sale criteria as of December 31, 2022 and 2021. Long lived assets held for sale totaled $1.5 million and $3.2 million as of December 31, 2022 and 2021, respectively. For the year ended December 31, 2022 the Company recognized no gain or loss on the sale of long-lived assets held for sale.