Note 8 - Leases

12 Months Ended

Dec. 31, 2022

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

Note 8 – Leases

The right-of-use assets and lease liabilities relate to banking offices and other space occupied by the Company under noncancelable operating lease agreements. The aggregate right-of-use assets and lease liabilities are included in other assets and other liabilities, respectively, in the Company's consolidated balance sheets. Lease liabilities represent the Company's obligation to make lease payments and are presented at each reporting date as the net present value of the remaining contractual cash flows. Cash flows are discounted at the Company's incremental borrowing rate in effect at the commencement date of the lease. Right-of-use assets represent the Company's right to use the underlying asset for the lease term and are calculated as the sum of the lease liability and if applicable, prepaid rent, initial direct costs and any incentives received from the lessor.

The Company's long-term lease agreements are classified as operating leases. Certain of these leases offer the option to extend the lease term, and the Company has included such extensions in its calculation of the lease liabilities to the extent the options are reasonably certain of being exercised. The lease agreements do not provide for residual value guarantees and have no restrictions or covenants that would impact dividends or require incurring additional financial obligations.

The following tables present information about the Company's leases as of December 31, 2022 and 2021 and for the years ended December 31, 2022, 2021 and 2020 (dollars in thousands):

	December 31, 2022			December 31, 2021
Lease liabilities	$	3,318		$	4,023
Right-of-use assets	$	3,245		$	3,939
Weighted average remaining lease term (in years)		6.77			6.92
Weighted average discount rate		3.16	%		3.09	%

	Year Ended		Year Ended		Year Ended
	December 31, 2022		December 31, 2021		December 31, 2020
Lease cost
Operating lease cost	$	1,072	$	1,069	$	993
Short-term lease cost		—		—		3
Total lease cost	$	1,072	$	1,069	$	996
Cash paid for amounts included in the measurement of lease liabilities	$	1,083	$	1,047	$	959

A maturity analysis of operating lease liabilities and reconciliation of the undiscounted cash flows to the total of operating lease liabilities is as follows (dollars in thousands):

Lease payments due	As of December 31, 2022
2023	$	1,002
2024		573
2025		516
2026		279
2027		208
2028 and after		1,142
Total undiscounted cash flows	$	3,720
Discount		(402	)
Lease liabilities	$	3,318

Lease expense, a component of occupancy and equipment expense, for the years ended December 31, 2022 and 2021 totaled $1.3 million and December 31, 2020 totaled $1.2 million. The amounts recognized in lease expense include insurance, property taxes, and common area maintenance.