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Leases

12 Months Ended

Dec. 31, 2022

NOTE 9: Leases

The Corporation’s leases comprise primarily leases of real estate and office equipment in which the Corporation is the lessee. Lease cost for the years ended December 31, 2022, 2021 and 2020 is as follows:


	Year Ended December 31,
(Dollars in thousands)	2022		2021		2020
Operating lease cost	$	1,008	$	1,331	$	1,616
Finance lease cost:
Amortization of right-of-use asset		314		314		166
Interest on lease liability		125		129		70
Short-term lease cost		139		142		219
Variable lease cost		97		46		52
Total lease cost	$	1,683	$	1,962	$	2,123

Interest on lease liability cost is included in “Interest expense – Borrowings” and all other lease costs are included in “Occupancy” on the Consolidated Statements of Income. Variable lease payments primarily represent payments for common area maintenance related to real estate leases and taxes and fees related to equipment leases that are not included in base rent payments and changes in lease payments that are adjusted for inflation.

Certain of the Corporation’s leases contain options to extend the lease term beyond the initial term. Options to extend the lease term are recognized as part of the Corporation’s lease liabilities and right-of-use assets at the commencement of a lease to the extent the Corporation is reasonably certain to exercise such options.

The Corporation’s right-of-use assets, lease liabilities, weighted average remaining lease term and weighted average discount rate of the Corporation’s leases are set forth in the table below.


		December 31,			December 31,
(Dollars in thousands)		2022			2021
Operating leases:
Right of use assets	$	2,887		$	3,221
Lease liabilities		2,965			3,324
Weighted average remaining lease term (years)		6.5			7.0
Weighted average discount rate		1.6	%		1.7	%

Finance leases:
Right of use assets	$	5,565		$	5,879
Lease liabilities		6,141			6,346
Weighted average remaining lease term (years)		17.5			18.5
Weighted average discount rate		2.0	%		2.0	%

Right of use assets are included in “Other Assets” on the Consolidated Balance Sheets. Operating lease liabilities are included in “Other Liabilities,” and Finance lease liabilities are included in “Long-term Borrowings” in the Consolidated Balance Sheets. During the year ended December 31, 2022, the Corporation obtained right-of-use assets in exchange for lease liabilities in operating leases of $888,000. During the year ended December 31, 2021, the Corporation obtained right-of-use assets in exchange for lease liabilities in operating leases of $2.48 million. During the year ended December 31, 2020, the Corporation obtained right-of-use assets in exchange for lease liabilities in operating leases and finance leases of $1.11 million and $6.36 million, respectively.

Cash paid for amounts included in the measurement of lease liabilities for the years ended December 31, 2022, 2021 and 2020 is set forth in the table below. In addition to the amounts paid shown below, the Corporation received lease incentives of $235,000 related to finance leases during the year ended December 31, 2022, $236,000 related to finance leases during the year ended December 31, 2021 and $115,000 related to operating leases during the year ended December 31, 2020.


	Year Ended December 31,
(Dollars in thousands)	2022		2021		2020
Operating leases:
Operating cash flows	$	1,823	$	1,313	$	1,659
Finance leases:
Operating cash flows		125		129		70
Financing cash flows		440		195		53
Total cash flows	$	2,388	$	1,637	$	1,782

Maturities of the Corporation’s lease liabilities are as follows:


	December 31, 2022
(Dollars in thousands)	Operating Leases		Finance Leases
2023	$	744	$	310
2024		759		346
2025		472		355
2026		303		364
2027		123		373
Thereafter		773		5,637
Total		3,174		7,385
Imputed interest		(209)		(1,244)
Lease liabilities	$	2,965	$	6,141