Note 7 – 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 $190 thousand and an operating lease liability of $194 thousand as of December 31, 2020. The Bank has no finance leases.

Rent expense under the operating leases was $598 thousand for 2020 and $600 thousand for 2019.

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

	Year Ended December 31, 2020

Cash paid for amounts included in the measurement of lease liabilities for operating leases:	$	351
ROU assets obtained in exchange for lease liabilities	$	190
Weighted average remaining lease term in months		4
Weighted average discount rate		2.75	%

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

Year ended December 31, 2021	$	195
Total Future Minimum Lease Payments		195
Amounts Representing Interest		(1	)
Present Value of Net Future Minimum Lease Payments	$	194