COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2024

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

NOTE 11 — COMMITMENTS AND CONTINGENCIES

In the normal course of business, there are various pending legal actions and proceedings that are not reflected in the consolidated financial statements. Management does not believe the outcome of these actions and proceedings will have a material effect on the consolidated financial position of the Corporation.

The Corporation currently leases two branch banking facilities and one parcel of land under operating leases. At December 31, 2024, right-of-use assets and lease liabilities were recorded related to these operating leases totaling $1,400,000 and $1,920,000, respectively, in the consolidated balance sheets. Options to extend or terminate a lease may be included in the Corporation’s lease agreements. When it is reasonably certain that the Corporation will exercise those options, the right-of-use asset and lease liability will reflect the renewal or termination option. No significant assumptions or judgements were made in determining whether a contract contained a lease or in the consideration of lease versus non-lease components. None of the leases contained an implicit rate; therefore, the Corporation’s incremental borrowing rate was used for each of the leases.

The Corporation recognized total operating lease costs for the years ended December 31, 2024 and 2023 of $213,000 and $220,000, respectively. Cash payments totaled $198,000 and $204,000 for the years ended December 31, 2024 and 2023, respectively, in the consolidated statements of income.

The Corporation’s one finance lease for equipment expired as of August 31, 2023. The equipment will continue to depreciate for an additional two years. At December 31, 2024, right-of-use assets were recorded related to this finance lease totaling $29,000. Amounts recognized as right-of-use assets related to finance leases are included in premises and equipment, net in the accompanying consolidated balance sheets.

There were no finance lease costs that were recognized by the Corporation for the years ended December 31, 2024 and finance lease costs recognized during the year ended December 31, 2023 were immaterial. Cash payments totaled $0 and $7,000 for the years ended December 31, 2024 and 2023, respectively.

The following table displays the weighted-average term and discount rates for operating leases outstanding as of December 31, 2024 and 2023.

	December 31,	December 31,
	2024	2023
Weighted-average term (years)	18.95	19.75
Weighted-average discount rate	4.19%	4.22%

A maturity analysis of operating lease liabilities and reconciliation of the undiscounted cash flows to the total operating lease liability is as follows:

(Dollars in thousands)
	December 31,		December 31,
Minimum Lease Payments due:	2024		2023
Within one year	$	175	$	175
After one but within two years		140		140
After two but within three years		154		140
After three but within four years		157		154
After four but within five years		157		157
After five years		2,160		2,317
Total undiscounted cash flows		2,943		3,083
Discount on cash flows		(1,023)		(1,107)
Total lease liability	$	1,920	$	1,976