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 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 $594 thousand and an operating lease liability of $603 thousand as of March 31, 2020. The Bank has no finance leases.

The Bank recorded operating lease expense costs of $121 thousand and $123 thousand for the quarters ended March 31, 2020 and March 31, 2019, respectively.

Additional information regarding our operating leases is summarized below as of or for the three months ended March 31, 2020 (dollars in thousands):


Cash paid for amounts included in the measurement of lease liabilities for operating leases:	$	86
Weighted average remaining lease term in months		13
Weighted average discount rate		2.75	%

The future minimum payments for operating leases with remaining terms of one year or more as of March 31, 2020 were as follows (in thousands):


Nine months ended December 31, 2020	$	418
Year ended December 31, 2021		195
Total Future Minimum Lease Payments		613
Amounts Representing Interest		(10)
Present Value of Net Future Minimum Lease Payments	$	603