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Note 5 - Premises, Equipment, Other Assets and Other Liabilities

12 Months Ended

Dec. 31, 2023

Other Assets and Liabilities Disclosure [Text Block]

Note 5: Premises, Equipment, Other Assets and Other Liabilities

Premises and equipment consisted of the following:

	At December 31,
	Cost		Accumulated Depreciation and Amortization			Net Book Value
	(In thousands)
2023
Land	$	11,453	$	-		$	11,453
Building and improvements		43,185		(31,742	)		11,443
Leasehold improvements		7,622		(6,550	)		1,072
Furniture and equipment		26,586		(23,538	)		3,048
Total	$	88,846	$	(61,830	)	$	27,016
2022
Land	$	11,453	$	-		$	11,453
Building and improvements		42,528		(30,601	)		11,927
Leasehold improvements		8,157		(6,897	)		1,260
Furniture and equipment		26,766		(22,587	)		4,179
Total	$	88,904	$	(60,085	)	$	28,819

Depreciation and amortization of premises and equipment included in noninterest expense amounted to $2,942 thousand in 2023, $2,899 thousand in 2022, and $2,978 thousand in 2021.

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Other assets consisted of the following:

	At December 31,		At December 31,
	2023		2022
	(In thousands)
Cost method equity investments:
Federal Reserve Bank stock ⁽¹⁾	$	14,069	$	11,743
Other investments		158		158
Total cost method equity investments		14,227		11,901
Life insurance cash surrender value		66,611		63,816
Net deferred tax asset		99,507		125,140
Right-of-use asset		18,814		15,746
Limited partnership investments		28,667		34,421
Interest receivable		54,568		53,558
Prepaid assets		5,200		4,894
Other assets		9,716		9,670
Total other assets	$	297,310	$	319,146

⁽¹⁾A bank applying for membership in the Federal Reserve System is required to subscribe to stock in the Federal Reserve Bank (FRB) in its district in a sum equal to six percent of the bank’s paid-up capital stock and surplus. One-half of the amount of the bank's subscription shall be paid to the FRB and the remaining half will be subject to call when deemed necessary by the Board of Governors of the Federal Reserve System.

The Company owns 211 thousand shares of Visa Inc. (“Visa”) class B common stock which have transfer restrictions; the carrying value is $-0- thousand. Visa Inc. disclosed a revised conversion rate applicable to its class B common stock in its Form 8-K dated October 2, 2023. The conversion rate of class B common stock into class A common stock, which is unrestricted and trades actively on the New York Stock Exchange, was reduced from 1.5902 to 1.5875 per share, effective as of September 28, 2023. Visa class A common stock had a closing price of $260.35 per share on December 29, 2023, the last day of stock market trading for the fourth quarter 2023. The ultimate value of the Company’s Visa class B shares is subject to the extent of Visa Inc.’s future litigation escrow fundings, the resulting conversion rate to class A common stock, and current and future trading restrictions on the class B common stock. At its Annual Meeting held January 23, 2024, Visa proposed a Class B Exchange Offer Program authorizing Visa to conduct one or more exchange offers that would allow Class B stockholders to exchange portions of their Class B common stock into freely tradable shares. The proposal was approved by Visa stockholders. Under an initial exchange offer, current Class B shares will be exchanged into Class B-1 shares. In potential exchange offers, a Class B-1 stockholder can elect to exchange a portion of its Class B-1 shares for Class C common stock which is transferable and convertible to Class A common stock. Any exchange of Class B-1 shares into Class C common stock requires the stockholder to execute an indemnification agreement with Visa for Visa’s related unresolved litigation.

The Company invests in flow-through limited liability entities that manage or invest in affordable housing projects that qualify for low-income housing tax credits. At December 31, 2023, these investments totaled $28,667 thousand and $15,561 thousand of this amount represents outstanding equity capital commitments that are included in other liabilities. At December 31, 2022, these investments totaled $34,421 thousand and $22,647 thousand of this amount represents outstanding equity capital commitments that are included in other liabilities. At December 31, 2023, the $15,561 thousand of outstanding equity capital commitments are expected to be paid as follows: $14,077 thousand in 2024, $600 thousand in 2025, $145 thousand in 2026, $189 thousand in 2027, $550 thousand in 2028 or thereafter.

The amounts recognized in net income for these investments include:

	For the Years Ended December 31,
	2023		2022		2021
	(In thousands)
Investment loss included in pre-tax income	$	5,754	$	5,724	$	2,620
Tax credits recognized in provision for income taxes		3,435		3,250		2,300

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Other liabilities consisted of the following:

	At December 31,		At December 31,
	2023		2022
	(In thousands)
Operating lease liability	$	18,814	$	15,746
Other liabilities		40,455		49,379
Total other liabilities	$	59,269	$	65,125

The Company has entered into leases for most branch locations and certain other offices that were classified as operating leases primarily with original terms of five years. Certain lease arrangements contain extension options, which can be exercised at the Company’s option, for one or more additional five year terms. Unexercised extension options are not considered reasonably certain of exercise and have not been included in the lease term used to determine the lease liability or right-of-use asset. The Company did not have any finance leases as of December 31, 2023.

As of December 31, 2023, the Company’s lease liability and right-of-use asset were $18,814 thousand. The weighted average remaining life of operating leases and weighted average discount rate used to determine operating lease liabilities were 3.7 years and 2.94%, respectively, at December 31, 2023. The Company did not have any material lease incentives, unamortized initial direct costs, prepaid lease expense, or accrued lease expense as of December 31, 2023.

Total lease costs of $6,604 thousand, $6,575 thousand and $6,581 thousand, during the year ended December 31, 2023, 2022 and 2021, respectively, were recorded within occupancy and equipment expense. The Company did not have any material short-term or variable leases costs or sublease income during the year ended December 31, 2023, 2022 and 2021.

The following table summarizes the remaining lease payments of operating lease liabilities:

	Minimum future lease payments
	At December 31,
	2023
	(In thousands)
2024	$	6,067
2025		5,178
2026		3,518
2027		2,621
2028		1,865
Thereafter		818
Total minimum lease payments		20,067
Less: discount		(1,253	)
Present value of lease liability	$	18,814

See Note 10 to the consolidated financial statements for additional information related to the net deferred tax asset.