Note 10 - Leases

12 Months Ended

Dec. 31, 2022

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

NOTE 10 Leases

The Company accounts for its leases in accordance with ASU 2016-02, Leases (Topic 842) and as of December 31, 2022 a $0.5 million operating lease right-of-use asset and an offsetting lease payment obligation liability were recorded on the consolidated balance sheet in other assets and other liabilities, respectively.

Operating lease right-of-use assets represent our right to use an underlying asset during the lease term and operating lease liabilities represent our 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 Bank branches with remaining lease terms between 20 and 59 months. Certain leases contain extension options which typically range from 3 to 10 years. Because these extension options are not considered reasonably certain of exercise, they are not included in the lease term. As of December 31, 2022, operating lease right-of-use assets and liabilities were $0.5 million.

Operating lease costs were $0.2 million and $0.7 million in 2022 and 2021, respectively. The decrease in operating lease costs in 2022 relates to the purchase of the combined corporate office and branch facility in Rochester, Minnesota during 2021 that had previously been leased.

The table below summarizes other information related to our operating leases for the years ended December 31, 2022 and 2021.

(Dollars in thousands)	2022			2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	226			739
Weighted-average remaining lease term – operating leases, in years		2.8			2.3
Weighted-average discount rate – operating leases		2.64	%		1.85	%

The table below summarizes the maturity of remaining lease liabilities:

(Dollars in thousands)	December 31, 2022
2023	$	232
2024		212
2025		58
2026		27
2027 and thereafter		25
Total lease payments		554
Less: Interest		(21	)
Present value of lease liabilities	$	533