Leases

3 Months Ended

Mar. 31, 2023

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
	March 31, 2023		March 31, 2022
Finance Lease Cost:
Amortization of Right-of -Use Assets	$	52	$	52
Interest on Lease Liabilities	78		83
Operating Lease Cost	373		369
Short-term Lease Cost	—		24
Total Lease Cost	$	503	$	528

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

	March 31, 2023		March 31, 2022
Weighted Average Remaining Lease Term:
Finance Leases	4 years		10 years
Operating Leases	7 years		8 years
Weighted Average Discount Rate:
Finance Leases	7.58	%	11.44	%
Operating Leases	2.82	%	2.90	%

Supplemental balance sheet information related to leases were as follows:

	March 31, 2023		March 31, 2022
Finance Leases
Premises, Furniture and Equipment, Net	$	1,805	$	2,015
Other Borrowings	2,806		3,004
Operating Leases
Operating Lease Right-of-Use Assets	$	5,971	$	7,128
Operating Lease Liabilities	6,127		7,249

Supplemental cash flow information related to leases were as follows:

	Three Months Ended		Three Months Ended
	March 31, 2023		March 31, 2022
Cash paid for amounts in the Measurement of Lease liabilities:
Operating Cash Flows from Finance Leases	$	78	$	83
Operating Cash Flows from Operating Leases	366		337
Financing Cash Flows from Finance Leases	50		45

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

	March 31, 2023
	Finance Leases		Operating Leases
Year 1	$	519	$	1,325
Year 2	519		1,159
Year 3	519		951
Year 4	519		800
Year 5	465		645
Thereafter	1,838		1,953
Total Lease Payments	4,379		6,833
Less Imputed Interest	(1,573)		(706)
Total	$	2,806	$	6,127

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
	March 31, 2023		March 31, 2022
Finance Lease Cost:
Amortization of Right-of -Use Assets	$	52	$	52
Interest on Lease Liabilities	78		83
Operating Lease Cost	373		369
Short-term Lease Cost	—		24
Total Lease Cost	$	503	$	528

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

	March 31, 2023		March 31, 2022
Weighted Average Remaining Lease Term:
Finance Leases	4 years		10 years
Operating Leases	7 years		8 years
Weighted Average Discount Rate:
Finance Leases	7.58	%	11.44	%
Operating Leases	2.82	%	2.90	%

Supplemental balance sheet information related to leases were as follows:

	March 31, 2023		March 31, 2022
Finance Leases
Premises, Furniture and Equipment, Net	$	1,805	$	2,015
Other Borrowings	2,806		3,004
Operating Leases
Operating Lease Right-of-Use Assets	$	5,971	$	7,128
Operating Lease Liabilities	6,127		7,249

Supplemental cash flow information related to leases were as follows:

	Three Months Ended		Three Months Ended
	March 31, 2023		March 31, 2022
Cash paid for amounts in the Measurement of Lease liabilities:
Operating Cash Flows from Finance Leases	$	78	$	83
Operating Cash Flows from Operating Leases	366		337
Financing Cash Flows from Finance Leases	50		45

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

	March 31, 2023
	Finance Leases		Operating Leases
Year 1	$	519	$	1,325
Year 2	519		1,159
Year 3	519		951
Year 4	519		800
Year 5	465		645
Thereafter	1,838		1,953
Total Lease Payments	4,379		6,833
Less Imputed Interest	(1,573)		(706)
Total	$	2,806	$	6,127