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NOTE 4 – LEASES

9 Months Ended

Sep. 30, 2022

NOTE 4 – LEASES

The Bank leases facilities and equipment with various expiration dates. The facilities leases have varying renewal options, generally require fixed annual rent, and provide that real estate taxes, insurance, and maintenance expenses are to be paid by Salisbury. The following table provides the assets and liabilities as of September 30, 2022 and December 31, 2021, as well as the costs of operating and financial leases, which are included in the Bank’s consolidated income statement for the nine months ended September 30, 2022 and 2021.

($ in thousands, except lease term and discount rate)	Classification		September 30, 2022		December 31, 2021
Assets
Operating	Other assets	$	1,231	$	1,021
Finance	Bank premises and equipment ¹		3,912		3,791
Total Leased Assets		$	5,143	$	4,812
Liabilities
Operating	Other liabilities	$	1,231	$	1,021
Finance	Finance lease		4,296		4,107
Total Lease Liabilities		$	5,527	$	5,128
¹ Net of accumulated depreciation of $664 thousand and $496 thousand, respectively.

Lease cost	Classification		Nine months ended		Three months ended
			September 30, 2022		September 30, 2022
Operating leases	Premises and equipment	$	218	$	72
Finance leases:
Amortization of leased assets	Premises and equipment		167		55
Interest on finance leases	Interest expense		41		41
Total lease cost		$	426	$	168

Lease cost	Classification		Nine months ended		Three months ended
			September 30, 2021		September 30, 2021
Operating leases	Premises and equipment	$	221	$	74
Finance leases:
Amortization of leased assets	Premises and equipment		76		25
Interest on finance leases	Interest expense		103		36
Total lease cost		$	400	$	135

Weighted Average Remaining Lease Term	September 30, 2022		December 31, 2021
Operating leases	6.1 years		6.9 years
Financing leases	21.7 years		23.5 years
Weighted Average Discount Rate ¹
Operating leases	3.6	%	3.6	%
Financing leases	3.7	%	5.0	%
¹ Salisbury uses the applicable FHLBB Advance rate as the discount rate, as its leases do not provide an implicit rate.

The following is a schedule by years of the present value of the net minimum lease payments as of September 30, 2022.

Future minimum lease payments (in thousands)		Operating Leases			Finance Leases
2022	$	80		$	74
2023		241			304
2024		204			314
2025		213			324
2026		137			334
Thereafter		507			4,968
Total future minimum lease payments		1,382			6,317
Less amount representing interest		(151	)		(2,022	)
Total present value of net future minimum lease payments	$	1,231		$	4,295