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LEASES

9 Months Ended

Dec. 31, 2022

15. LEASES

The Company has a finance lease for the shell of the building constructed as the Company's operations center which expires in November 2039. The Company is also obligated under various noncancelable operating lease agreements for land, buildings and equipment that require future minimum rental payments. For operating each lease, the Company records an operating lease right-of-use asset (representing the right to use the underlying asset for the lease term) and an operating lease liability (representing the obligation to make lease payments required under the terms of the lease). Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The Company uses its estimated incremental borrowing rate – derived from information available at the lease commencement date – as the discount rate when determining the present value of lease payments. The Company does not have any operating leases with an initial term of 12 months or less. Certain operating leases contain various provisions for increases in rental rates, based either on changes in the published Consumer Price Index or a predetermined escalation schedule. Certain operating leases provide the Company with the option to extend the lease term one or more times following expiration of the initial term. Lease extensions are not reasonably certain and the Company generally does not include payments occurring during option periods in the calculation of its operating lease right-of-use assets and operating lease liabilities. In accordance with ASC 842, the Company records in the consolidated balance sheet operating lease right-of-use (“ROU”) assets and operating lease liabilities for leases with an initial term of more than 12 months.

The table below presents the ROU assets and lease liabilities recorded in the consolidated balance sheets at the dates indicated (in thousands):


	December 31,			March 31,			Classification in the
Leases	2022			2022			consolidated balance sheets
Finance lease ROU assets	$	1,298		$	1,355		Financing lease ROU assets
Finance lease liability	$	2,243		$	2,283		Finance lease liability
Finance lease remaining lease term		16.93	years		17.68	years
Finance lease discount rate		7.16	%		7.16	%

Operating lease ROU assets	$	7,008		$	7,907		Prepaid expenses and other assets
Operating lease liabilities	$	7,379		$	8,306		Accrued expenses and other liabilities
Operating lease weighted-average remaining lease term		6.36	years		7.02	years
Operating lease weighted-average discount rate		1.79	%		1.81	%

The table below presents certain information related to the lease costs for operating leases, which are recorded in occupancy and depreciation in the accompanying consolidated statements of income at the dates indicated (in thousands):


	Three months ended		Three months ended
Lease Costs	December 31, 2022		December 31, 2021
Finance lease amortization of right-of-use asset	$	20	$	20
Finance lease interest on lease liability		41		41
Operating lease costs		283		316
Variable lease costs		52		53
Total lease cost ⁽¹⁾	$	396	$	430


	Nine months ended		Nine months ended
Lease Costs	December 31, 2022		December 31, 2021
Finance lease amortization of right-of-use asset	$	58	$	58
Finance lease interest on lease liability		122		124
Operating lease costs		849		946
Variable lease costs		157		158
Total lease cost ⁽¹⁾	$	1,186	$	1,286

(1)	Income related to sub-lease activity is not significant and not presented herein.

Supplemental cash flow information - Operating cash flows paid for operating lease amounts included in the measurement of lease liabilities was $338,000 and $1.0 million for the three and nine months ended December 31, 2022, respectively, compared to $365,000 and $1.1 million for the three and nine months ended December 31, 2021, respectively. During the three and nine months ended December 31, 2022 and 2021, the Company did not record any ROU assets that were exchanged for operating lease liabilities.

The following table reconciles the undiscounted cash flows for the periods presented related to the Company’s lease liabilities as of December 31, 2022 (in thousands):


Year Ending March 31:	Operating		Finance
	Leases		Lease
Remaining of 2023	$	340	$	54
2024		1,370		219
2025		1,375		222
2026		1,125		226
2027		1,116		230
Thereafter		2,530		2,944
Total minimum lease payments		7,856		3,895
Less: amount of lease payment representing interest		(477)		(1,652)
Lease liabilities	$	7,379	$	2,243