Leases

9 Months Ended

Sep. 30, 2022

Leases [Abstract]

Leases

Leases

At the inception of a contract, an entity should determine whether the contract contains a lease. Topic 842 defines a lease as a contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration. Control over the use of an identified asset means that the customer has both (1) the right to obtain substantially all of the economic benefits from the use of the asset and (2) the right to direct the use of the asset.

German American has finance leases for branch offices as well as operating leases for branch offices, ATM locations and certain office equipment. The right-of-use asset is included in the 'Premises, Furniture and Equipment, Net' line of the Consolidated Balance Sheet. The lease liability is included in the 'Accrued Interest Payable and Other Liabilities' line of the Consolidated Balance Sheet.

The Company used the implicit lease rate when determining the present value of lease payments for finance leases. The present value of lease payments for operating leases was determined using the incremental borrowing rate as of the date the Company adopted this standard.

The components of lease expense were as follows:

	Three Months Ended		Three Months Ended
	September 30, 2022		September 30, 2021
Finance Lease Cost:
Amortization of Right-of -Use Assets	$	52	$	53
Interest on Lease Liabilities	81		86
Operating Lease Cost	360		331
Short-term Lease Cost	—		36
Total Lease Cost	$	493	$	506

	Nine Months Ended		Nine Months Ended
	September 30, 2022		September 30, 2021
Finance Lease Cost:
Amortization of Right-of -Use Assets	$	157	$	157
Interest on Lease Liabilities	246		261
Operating Lease Cost	1,105		1,092
Short-term Lease Cost	27		43
Total Lease Cost	$	1,535	$	1,553

The weighted average lease term and discount rates were as follows:

	September 30, 2022		September 30, 2021
Weighted Average Remaining Lease Term:
Finance Leases	10 years		10 years
Operating Leases	8 years		7 years
Weighted Average Discount Rate:
Finance Leases	11.42	%	11.46	%
Operating Leases	2.87	%	3.04	%

Supplemental balance sheet information related to leases were as follows:

	September 30, 2022		September 30, 2021
Finance Leases
Premises, Furniture and Equipment, Net	$	1,910	$	2,120
Other Borrowings	2,908		3,096
Operating Leases
Operating Lease Right-of-Use Assets	$	6,195	$	6,241
Operating Lease Liabilities	6,338		6,344

Supplemental cash flow information related to leases were as follows:

	Nine Months Ended		Nine Months Ended
	September 30, 2022		September 30, 2021
Cash paid for amounts in the measurement of lease liabilities:
Operating Cash Flows from Finance Leases	$	246	$	261
Operating Cash Flows from Operating Leases	1,054		2,522
Financing Cash Flows from Finance Leases	138		111

The following table presents a maturity analysis of Finance and Operating Lease Liabilities:

	September 30, 2022
	Finance Leases		Operating Leases
Year 1	$	519	$	1,271
Year 2	519		1,063
Year 3	519		944
Year 4	519		867
Year 5	507		702
Thereafter	2,057		2,263
Total Lease Payments	4,640		7,110
Less Imputed Interest	(1,732)		(772)
Total	$	2,908	$	6,338

Leases

Leases

At the inception of a contract, an entity should determine whether the contract contains a lease. Topic 842 defines a lease as a contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration. Control over the use of an identified asset means that the customer has both (1) the right to obtain substantially all of the economic benefits from the use of the asset and (2) the right to direct the use of the asset.

German American has finance leases for branch offices as well as operating leases for branch offices, ATM locations and certain office equipment. The right-of-use asset is included in the 'Premises, Furniture and Equipment, Net' line of the Consolidated Balance Sheet. The lease liability is included in the 'Accrued Interest Payable and Other Liabilities' line of the Consolidated Balance Sheet.

The Company used the implicit lease rate when determining the present value of lease payments for finance leases. The present value of lease payments for operating leases was determined using the incremental borrowing rate as of the date the Company adopted this standard.

The components of lease expense were as follows:

	Three Months Ended		Three Months Ended
	September 30, 2022		September 30, 2021
Finance Lease Cost:
Amortization of Right-of -Use Assets	$	52	$	53
Interest on Lease Liabilities	81		86
Operating Lease Cost	360		331
Short-term Lease Cost	—		36
Total Lease Cost	$	493	$	506

	Nine Months Ended		Nine Months Ended
	September 30, 2022		September 30, 2021
Finance Lease Cost:
Amortization of Right-of -Use Assets	$	157	$	157
Interest on Lease Liabilities	246		261
Operating Lease Cost	1,105		1,092
Short-term Lease Cost	27		43
Total Lease Cost	$	1,535	$	1,553

The weighted average lease term and discount rates were as follows:

	September 30, 2022		September 30, 2021
Weighted Average Remaining Lease Term:
Finance Leases	10 years		10 years
Operating Leases	8 years		7 years
Weighted Average Discount Rate:
Finance Leases	11.42	%	11.46	%
Operating Leases	2.87	%	3.04	%

Supplemental balance sheet information related to leases were as follows:

	September 30, 2022		September 30, 2021
Finance Leases
Premises, Furniture and Equipment, Net	$	1,910	$	2,120
Other Borrowings	2,908		3,096
Operating Leases
Operating Lease Right-of-Use Assets	$	6,195	$	6,241
Operating Lease Liabilities	6,338		6,344

Supplemental cash flow information related to leases were as follows:

	Nine Months Ended		Nine Months Ended
	September 30, 2022		September 30, 2021
Cash paid for amounts in the measurement of lease liabilities:
Operating Cash Flows from Finance Leases	$	246	$	261
Operating Cash Flows from Operating Leases	1,054		2,522
Financing Cash Flows from Finance Leases	138		111

The following table presents a maturity analysis of Finance and Operating Lease Liabilities:

	September 30, 2022
	Finance Leases		Operating Leases
Year 1	$	519	$	1,271
Year 2	519		1,063
Year 3	519		944
Year 4	519		867
Year 5	507		702
Thereafter	2,057		2,263
Total Lease Payments	4,640		7,110
Less Imputed Interest	(1,732)		(772)
Total	$	2,908	$	6,338