Note 11 - Leases

9 Months Ended

Sep. 30, 2022

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

(11) Leases

The Company accounts for its leases in accordance with ASU 2016-02, Leases (Topic 842). Operating lease right-of-use assets represent the Company’s right to use an underlying asset during the lease term and operating lease liabilities represent its obligation to make lease payments arising from the lease. Right-of-use assets and operating lease liabilities are recognized at lease commencement based on the present value of the remaining lease payments using a discount rate that represents the Company’s incremental borrowing rate at the lease commencement date. Because the Company only has operating leases and the right-of-use asset is offset by a lease payment obligation liability, the lease payments are the only amount that is recorded in occupancy expense in the consolidated statements of comprehensive (loss) income.

The Company’s leases relate to office space and bank branches with remaining lease terms between twenty-three and sixty-two months. Certain leases contain extension options which typically range from three to ten years. Because these extension options are not considered reasonably certain of exercise, they are not included in the lease term. As of September 30, 2022, operating lease right-of-use assets and liabilities were $0.6 million and recorded on the consolidated balance sheet in other assets and other liabilities, respectively.

The table below summarizes the Company’s net lease cost for the three and nine months ended September 30, 2022.

(Dollars in thousands)	Three Months Ended September 30, 2022		Nine Months Ended September 30, 2022
Operating lease cost	$	57		172

The table below summarizes other information related to the Company’s operating leases:

	Three Months Ended						Nine Months Ended
(Dollars in thousands)	September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021
Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases	$	57			223			172			672
Weighted-average remaining lease term – operating leases, in years		3.0			3.0			3.0			3.0
Weighted-average discount rate – operating leases		2.63	%		2.19	%		2.63	%		2.19	%

The decrease in the net lease cost and operating cash flows between the periods is related to the purchase of the combined corporate office and branch facility in Rochester, Minnesota during the fourth quarter of 2021. This facility had previously been leased by the Company.

The table below summarizes the maturity of remaining lease liabilities at September 30, 2022:

(Dollars in thousands)	September 30, 2022
2022	$	57
2023		232
2024		212
2025		58
2026		27
2027 and thereafter		25
Total lease payments		611
Less: Interest		(25	)
Present value of lease liabilities	$	586