NOTE (6) - Leases

The Bank has a combined operating lease for its corporate headquarters and main retail branch and a photocopier lease. The ROU asset and operating lease liability are recorded in fixed assets and other liabilities, respectively, in the consolidated statements of financial condition.

Our ROU asset represents our right to use an underlying asset during the lease term. Operating lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized based on the present value of the remaining lease payments using a discount rate that represents our incremental borrowing rate at the date of implementation of the new accounting standard.

The operating lease for our corporate headquarters and main retail branch has one 5-year extension option at the then fair market rate. As this extension option is not reasonably certain of exercise, it is not included in the lease term. The Bank recorded a ROU asset of $859 thousand and an operating lease liability of $867 thousand as of September 30, 2019. The Bank has no finance leases.

The Bank recorded operating lease expense costs of $123 thousand for each of the quarters ended September 30, 2019 and September 30, 2018, and $368 thousand and $369 thousand for the nine months ended September 30, 2019 and 2018, respectively.

Additional information regarding our operating leases is summarized below for the periods indicated dollars in thousands):


	Quarter ended		Nine Months ended
	September 30, 2019		September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities for operating leases:	$	135	$	404
ROU assets obtained in exchange for lease liabilities			$	859
Weighted average remaining lease term in months				19
Weighted average discount rate				2.75	%

The future minimum payments for operating leases with remaining terms of one year or more as of September 30, 2019 were as follows (in thousands):


Three months ended December 31, 2019	$	137
Year ended December 31, 2020		555
Year ended December 31, 2021		195
Total Future Minimum Lease Payments		887
Amounts Representing Interest		(20)
Present Value of Net Future Minimum Lease Payments	$	867