Note 5 - Operating Leases

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

Note 5 - Leases

On January 1, 2019, the Company adopted ASU 2016-02, Leases (Topic 842), and all subsequent ASUs that are related to Topic 842. The Company, as lessee, leases certain assets for use in its operations. Leased assets primarily include retail branches and operation centers. For each lease with an original term greater than 12 months, the Company records a lease liability and a corresponding right of use ("ROU") asset, based on the present value of lease payments over the lease term. The discount rate used in determining the present value is the Company's incremental borrowing rate using the FHLB fixed advance rate based on the remaining lease term as of January 1, 2019, or the commencement date for subsequent leases. At December 31, 2021, the Company's ROU assets included in other assets and lease liabilities included in other liabilities were $7.6 million and $7.7 million, respectively.

Total costs incurred by the Company, as a lessee, were $868,000 and $587,000 for the years ended December 31, 2021 and 2020, respectively, and principally related to contractual lease payments on operating leases. The Company's leases do not impose significant covenants or other restrictions on the Company.

The Bank has lease agreements with unaffiliated parties for eight locations, including five full-service branches, two business centers, and a parking easement. Lease expirations range from one to twenty years, with additional renewal options on certain leases ranging from two to ten years. If the exercise of a renewal option is considered to be reasonably certain, the Company includes the extended term in the calculation of the right-of-use asset and lease liability.

The following table presents amounts relevant to the Company's assets leased for use in its operations for the years ended  December 31, 2021 and 2020:

	December 31, 2021		December 31, 2020
	(In Thousands)
Operating cash flows from operating leases	$	868	$	587
Right of use assets obtained in exchange for new operating lease liabilities		4,364		1,047

The following table presents the weighted-average remaining lease terms and discount rates of the Company's assets leased for use in its operations at December 31, 2021:

	December 31, 2021			December 31, 2020
Weighted-average remaining lease term of operating leases (in years)		10.8			12.5
Weighted-average discount rate of operating leases		2.4	%		3.2	%

All lease agreements require the Bank to pay its pro-rata share of building operating expenses. The minimum annual lease payments under non-cancelable operating leases with initial or remaining terms of one year or more through the initial lease term are as follows:

	December 31, 2021
Twelve-month period ending:	(In Thousands)
2022	$	831
2023		852
2024		886
2025		925
2026		903
Thereafter		4,825
Total minimum payments required	$	9,222
Less imputed interest		1,488
Present value of lease liabilities	$	7,734