Leases

3 Months Ended

Jun. 30, 2022

Note 8. Leases

The Company maintains lease agreements related to its branch network and for its corporate headquarters. The branch lease agreements range from one to five years and generally contain options to extend from one to three years. The corporate headquarters lease agreement was renewed with a lease maturity date of March 2023. All of the Company’s lease agreements are considered operating leases. None of the Company’s lease payments are dependent on a rate or index that may change after the commencement date, other than the passage of time.

The Company’s lease liability was $4.2 million and $4.4 million as of June 30, 2022 and March 31, 2022, respectively. This liability is calculated using the present value of the remaining minimum rental payments and a discount rate of 6.5 percent, which is based on the Company's incremental borrowing rate. Despite the fact that the Company's incremental borrowing rate has improved to 3.30 percent as of June 30, 2022, the Company has determined that keeping the discount rate at 6.5 percent for the foreseeable future is reasonable. While the Company's new Line of Credit was established at a lower rate, due to the current state of the economy, SOFR rates have been increasing. Financial experts predict that the forward curve of the interest rate forecast will rise in the near future. The lease asset was $4.1 million and $4.3 million as of June 30, 2022 and March 31, 2022, respectively.

Future minimum lease payments under non-cancellable operating leases in effect as of June 30, 2022, are as follows:


in thousands
FY2023 (remaining nine months)	$	1,251
FY2024		1,215
FY2025		972
FY2026		581
FY2027		298
Thereafter	$	482
Total future minimum lease payments		4,799
Present value adjustment		(571	)
Operating lease liability	$	4,228

The following table reports information about the Company’s lease cost for the three months ended June 30, 2022 (in thousands):


Lease cost:
Operating lease cost	$	458
Variable lease cost		95
Total lease cost	$	553

The following table reports information about the Company’s lease cost for the three months ended June 30, 2021 (in thousands):


Lease cost:
Operating lease cost	$	390
Variable lease cost		86
Total lease cost	$	476

The following table reports other information about the Company’s leases for the three months ended June 30, 2022 (dollar amounts in thousands):


Other Lease Information
Operating Lease - Operating Cash Flows (Fixed Payments)	$	445
Operating Lease - Operating Cash Flows (Liability Reduction)	$	379
Weighted Average Lease Term - Operating Leases		4.0 years
Weighted Average Discount Rate - Operating Leases		6.5%

The following table reports other information about the Company’s leases for the three months ended June 30, 2021 (dollar amounts in thousands):


Other Lease Information
Operating Lease - Operating Cash Flows (Fixed Payments)	$	385
Operating Lease - Operating Cash Flows (Liability Reduction)	$	335
Weighted Average Lease Term - Operating Leases		3.0 years
Weighted Average Discount Rate - Operating Leases		6.5%