NOTE 16 – RIGHT OF USE ASSET AND LEASE LIABILITY

The Company leases corporate and branch office locations. Seven 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 and to exclude short-term leases from our ROU assets and lease liabilities. The twelve 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 ROU assets and lease liabilities was estimated at 2.60%. At June 30, 2019 the ROU assets and lease liabilities included on the consolidated balance sheet in other assets and other liabilities, respectively, totaled $5.2 million.

On May 24, 2019, the Company entered into a new operating lease agreement for its new corporate center in Paramus, NJ. The lease has a 7 year term with two five year options of renewal. The ROU asset and lease liability at commencement, including one 5 year option, was $2.8 million.

The weighted average remaining lease term is 9.4 years.

The operating lease cost for the three and six months ended June 30, 2019 was $123 thousand and $246 thousand, respectively. The short term lease expenses for the three and six months ended June 30, 2019 were $278 thousand and $376 thousand, respectively. The rent expense for the three and six months ended June 30, 2018, prior to the adoption of ASU 2016-02, was $168 thousand and $339 thousand, respectively.

The Company incurred a one-time rent expense of $123 thousand due to the early termination of the lease of its corporate center in Rockaway, NJ.

Cash paid on operating leases was $272 thousand and $512 thousand, respectively, for the three and six months ended June 30, 2019.

Maturities of lease liabilities are as follows:



(Dollars in Thousands)
Year Ending,	Operating Leases
2019	$	363
2020	670
2021	624
2022	640
2023	643
Thereafter	2,826
Total lease payments (1)	5,766
Less imputed interest	(546		)
Total	$	5,220
(1) lease liability maturities include 1st option of extension