NOTE 16 – RIGHT OF USE ASSET AND LEASE LIABILITY

The Company leases corporate and branch office locations. Six of the branch office leases have options to renew. The exercise of lease renewal options is at our sole discretion; therefore, our Right of Use (ROU) assets and lease liabilities include extensions for one option period. The Company has elected certain optional practical expedients, to not restate comparative periods and forego a reassessment, to exclude short-term leases from our ROU assets and lease liabilities. The eleven corporate and branch location leases are classified as operating leases while the remaining leases are all short-term leases. The Company adopted ASU No. 2016-02 on January 1, 2019 and recorded $2.7 million in ROU assets and lease liabilities on adoption.

As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments. The Company’s weighted average incremental borrowing rate used in the calculation of the right-of-use assets and lease liabilities was estimated at 2.59%. At March 31, 2019 the ROU assets and lease liabilities included on the consolidated balance sheet in other assets and other liabilities, respectively totaled $2.6 million.

The weighted average remaining lease term is 6.2 years.

Total lease costs for the three months ended March 31, 2019 was $221 thousand consisting of $123 thousand related to operating leases, $98 thousand related to short term leases. Rent expense for the three months ended March 31, 2018, prior to the adoption of ASU 2016-02, was $166 thousand.

Cash paid on operating leases was $240 thousand for the three months ended March 31, 2019.

Maturities of lease liabilities were as follows:



(Dollars in Thousands)
Year Ending,	Operating Leases
2019	$	901
2020	421
2021	370
2022	386
2023	388
Thereafter	1,514
Total lease payments (a) (b)	3,980
Less imputed interest	(963		)
Total	$	3,017
(a) includes short term lease liabilities outside the scope of Topic 842
(b) lease liability maturities include 1st option of extension

As of March 31, 2019, we have one additional operating lease that has not yet commenced of $1.8 million. The operating lease will commence in fiscal year 2019 with a 7 year lease term.