LEASES

3 Months Ended

Mar. 31, 2024

Leases [Abstract]

LEASES

LEASES

Operating Leases

The Corporation leases certain branch properties under long-term, operating lease agreements. The leases expire at various dates through 2033 and generally include renewal options. As of March 31, 2024, the weighted average remaining lease term was 7.56 years with a weighted average discount rate of 3.51%. Rent expense was $0.3 million for the three months ended March 31, 2024. Certain leases provide for increases in future minimum annual rent payments as defined in the lease agreements. The Corporation’s operating lease agreements contain both lease and non-lease components, which are generally accounted for separately. The Corporation’s lease agreements do not contain any residual value guarantees.

Leased branch properties at March 31, 2024 and December 31, 2023 consist of the following (in thousands):

	March 31, 2024		December 31, 2023
Operating lease right-of-use asset	$	5,648	$	6,449
Less: accumulated amortization	(200)		(801)
Less: lease termination	—		—
Add: new lease agreement and modifications	570		—
Operating lease right-of-use-assets, net	$	6,018	$	5,648

The following is a schedule by year of the undiscounted cash flows of the operating lease liabilities, excluding CAM charges, as of March 31, 2024 (in thousands):

Year	Amount
2024	$	717
2025	959
2026	965
2027	977
2028	845
2029 and thereafter	2,590
Total minimum lease payments	7,053
Less: amount representing interest	(856)
Present value of net minimum lease payments	$	6,197

The Corporation had one operating lease that was signed on October 19, 2023, but had not yet commenced.

Finance Leases

The Corporation leases certain buildings under finance leases. The lease arrangements require monthly payments through 2036. As of March 31, 2024, the weighted average remaining lease term was 9.10 years with a weighted average discount rate of 3.42%. The Corporation has included these leases in premises and equipment as of March 31, 2024 and December 31, 2023 as follows (in thousands):

	March 31, 2024		December 31, 2023
Buildings	$	5,572	$	5,572
Less: accumulated depreciation	(2,955)		(2,872)
Net book value	$	2,617	$	2,700

The following is a schedule by year of future minimum lease payments under the capitalized lease, together with the present value of net minimum lease payments as of March 31, 2024 (in thousands):

Year	Amount
2024	$	293
2025	409
2026	425
2027	428
2028	428
2029 and thereafter	1,560
Total minimum lease payments	3,543
Less: amount representing interest	(564)
Present value of net minimum lease payments	$	2,979

As of March 31, 2024, the Corporation had no finance leases that were signed, but had not yet commenced.

Related Party Transactions

The Bank leases its branch located at 2 Rush Street, Schenectady, New York, under a lease agreement through February, 2033 from a member of the Corporation's Board of Directors with monthly rent and CAM related expenses totaling $9 thousand per month. Rent and CAM related expenses paid to this Board member totaled $27 thousand and $26 thousand for the three month periods ended March 31, 2024 and 2023, respectively.

LEASES

LEASES

Operating Leases

The Corporation leases certain branch properties under long-term, operating lease agreements. The leases expire at various dates through 2033 and generally include renewal options. As of March 31, 2024, the weighted average remaining lease term was 7.56 years with a weighted average discount rate of 3.51%. Rent expense was $0.3 million for the three months ended March 31, 2024. Certain leases provide for increases in future minimum annual rent payments as defined in the lease agreements. The Corporation’s operating lease agreements contain both lease and non-lease components, which are generally accounted for separately. The Corporation’s lease agreements do not contain any residual value guarantees.

Leased branch properties at March 31, 2024 and December 31, 2023 consist of the following (in thousands):

	March 31, 2024		December 31, 2023
Operating lease right-of-use asset	$	5,648	$	6,449
Less: accumulated amortization	(200)		(801)
Less: lease termination	—		—
Add: new lease agreement and modifications	570		—
Operating lease right-of-use-assets, net	$	6,018	$	5,648

The following is a schedule by year of the undiscounted cash flows of the operating lease liabilities, excluding CAM charges, as of March 31, 2024 (in thousands):

Year	Amount
2024	$	717
2025	959
2026	965
2027	977
2028	845
2029 and thereafter	2,590
Total minimum lease payments	7,053
Less: amount representing interest	(856)
Present value of net minimum lease payments	$	6,197

The Corporation had one operating lease that was signed on October 19, 2023, but had not yet commenced.

Finance Leases

The Corporation leases certain buildings under finance leases. The lease arrangements require monthly payments through 2036. As of March 31, 2024, the weighted average remaining lease term was 9.10 years with a weighted average discount rate of 3.42%. The Corporation has included these leases in premises and equipment as of March 31, 2024 and December 31, 2023 as follows (in thousands):

	March 31, 2024		December 31, 2023
Buildings	$	5,572	$	5,572
Less: accumulated depreciation	(2,955)		(2,872)
Net book value	$	2,617	$	2,700

The following is a schedule by year of future minimum lease payments under the capitalized lease, together with the present value of net minimum lease payments as of March 31, 2024 (in thousands):

Year	Amount
2024	$	293
2025	409
2026	425
2027	428
2028	428
2029 and thereafter	1,560
Total minimum lease payments	3,543
Less: amount representing interest	(564)
Present value of net minimum lease payments	$	2,979

As of March 31, 2024, the Corporation had no finance leases that were signed, but had not yet commenced.

Related Party Transactions

The Bank leases its branch located at 2 Rush Street, Schenectady, New York, under a lease agreement through February, 2033 from a member of the Corporation's Board of Directors with monthly rent and CAM related expenses totaling $9 thousand per month. Rent and CAM related expenses paid to this Board member totaled $27 thousand and $26 thousand for the three month periods ended March 31, 2024 and 2023, respectively.