Note 5 - Premises and Equipment and Premises Held for Sale

12 Months Ended

Dec. 31, 2024

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

(5) Premises & Equipment and Premises Held for Sale

A summary of premises and equipment follows:

December 31, (in thousands)	2024			2023
Land	$	22,360		$	22,517
Buildings and improvements		73,369			71,695
Furniture and equipment		25,358			24,602
Construction in progress		5,079			2,782
Right-of-use operating lease asset		29,695			21,007
Total		155,861			142,603
Accumulated depreciation and amortization		(43,125	)		(41,429	)
Total premises and equipment	$	112,736		$	101,174

Depreciation expense related to premises and equipment was $6.6 million in 2024, $7.7 million in 2023 and $6.5 million in 2022, respectively.

Premises and equipment are presented on the consolidated balance sheets net of related depreciation on the respective assets as well as fair value adjustments associated with purchase accounting. As of December 31, 2024, Bancorp’s branch network consists of 72 locations throughout Louisville, central, eastern and northern, Kentucky, as well as the Indianapolis, Indiana and Cincinnati, Ohio markets.

In addition to the premises and equipment detailed above, premises held for sale totaling $2.3 million was also recorded on Bancorp’s consolidated balance sheets as of December 31, 2024, which consists of three undeveloped parcels of land, a former administrative building and one former branch location.

Bancorp has operating leases (land and building) for various locations with terms ranging from approximately three months to 24 years, several of which include options to extend the leases in five-year increments. Options reasonably expected to be exercised are included in determination of the right-of-use asset. Bancorp elected to use a practical expedient to expense short-term lease obligations associated with leases with original terms of 12 months or less. Bancorp elected not to separate non-lease components from lease components for its operating leases. The right-of-use lease asset and operating lease liability are recorded in premises and equipment and other liabilities on the consolidated balance sheet.

Balance sheet, income statement, and cash flow detail regarding operating leases follows:

December 31, (dollars in thousands)	2024			2023
Balance Sheet
Operating lease right-of-use asset	$	29,695		$	21,007
Operating lease liability		31,194			22,487
Weighted average remaining lease term (years)		10.8			9.8
Weighted average discount rate		3.69	%		2.84	%
Maturities of lease liabilities:
One year or less	$	3,955		$	3,365
Year two		3,869			2,864
Year three		3,881			2,543
Year four		3,924			2,536
Year five		3,794			2,547
Greater than five years		19,120			12,059
Total lease payments	$	38,543		$	25,914
Less imputed interest		7,349			3,427
Total	$	31,194		$	22,487

Years ended December 31, (in thousands)	2024		2023		2022
Income Statement
Components of lease expense:
Operating lease cost	$	4,241	$	3,338	$	3,077
Variable lease cost		345		313		237
Less sublease income		102		101		96
Total lease cost	$	4,484	$	3,550	$	3,218

Years ended December 31, (in thousands)	2024		2023		2022
Cash flow Statement
Supplemental cash flow information:
Operating cash flows from operating leases	$	4,672	$	4,063	$	3,833

As of December 31, 2024, Bancorp had entered into one land lease agreement that had yet to commence.