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Note 18 - Leases

12 Months Ended

Dec. 31, 2024

Note 18 – Leases

Under ASC 842, operating lease expense is generally recognized on a straight-line basis over the term of the lease. On February 22, 2024, the Bank closed its previously announced sale-leaseback transaction with MountainSeed Real Estate Services, LLC (the “Buyer”), pursuant to which the Bank sold to the Buyer five properties owned and operated as branch locations (the “Properties”) for an aggregate purchase price of $17.2 million, including customary closing adjustments. Under the Sale Agreement, the Bank also entered into triple net lease agreements (the “Lease Agreements”) with the Buyer under which the Bank leases each of the Properties, and pursuant to which the Bank is responsible for the insurance, real estate taxes, and maintenance and repairs for each of the properties. Each of the Lease Agreements became effective upon the closing of the sale-leaseback transaction and have an initial term of 15 years. The Bank’s obligations under the Lease Agreements are guaranteed by the Company.

As the rate implicit in the leases generally is not readily determinable for our operating leases, the discount rates used to determine the present value of our lease liability are based on our incremental borrowing rate at the lease commencement date and commensurate with the remaining lease term. Our incremental borrowing rate for a lease is the rate of interest we would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Leases with an initial term of 12 months or less are not recorded on the balance sheet and are excluded from our weighted-average remaining lease term.

The following table summarizes supplemental cash flow and other information related to our operating leases:

(Dollars in thousands)	Twelve months ended December 31,
	2024			2023

Gain on sale-leaseback transaction, net	$	(11,772	)	$	-

Operating cash flows
Cash paid for amounts included in the measurement of lease liabilities for leases		1,360			69

ROU assets obtained in the exchange for lease liabilities - Operating leases (1)		16,140			-

Weighted-average remaining lease terms (in years) - Operating leases		14			5

Weighted-average discount rate - Operating leases		7.67	%		3.00	%

Variable lease Payments	$	279		$	-

Total lease Costs (2)		1,767			103

(1) Right of Use Asset Included in Premises and equipment on the consolidated balance sheet

(2) Included in Occupancy and equipment costs on the consolidated statements of income

The following table represents the maturity of the Company's operating lease liabilities as of December 31, 2024:

(Dollars in thousands)

Maturity Analysis
2025		1,590
2026		1,622
2027		1,657
2028		1,692
2029		1,679
Thereafter		16,788
Total		25,028
Less: Present value discount		(10,024	)
Lease liability (3)	$	15,004

(3) Included in Other Liabilities on the consolidated balance sheet