Leases

6 Months Ended

Jun. 30, 2020

Leases [Abstract]

Leases

Note 6 – Leases

On January 1, 2019, the Company adopted ASU No. 2016-02 “Leases (Topic 842)” and all subsequent ASUs that modified Topic 842. The Company elected the prospective application approach provided by ASU 2018-11 and did not adjust prior periods for ASC 842.  The Company also elected certain practical expedients within the standard and consistent with such elections did not reassess whether any expired or existing contracts are or contain leases, did not reassess the lease classification for any expired or existing leases, and did not reassess any initial direct costs for existing leases.  As stated in the Company’s 2019 Form 10-K, the implementation of the new standard resulted in recognition of right-of-use assets and lease liabilities totaling $3.8 million at the date of adoption, which are primarily related to the Company’s lease of premises used in operations. During the course of 2019, the Company recognized additional right-of-use assets and lease liabilities of $1.4 million, primarily related to the lease of additional premises used in operations. During the first quarter of 2020, the Company renewed its copier lease for all locations which added approximately $419 thousand to right-of-use assets and lease liabilities.

Lease liabilities represent the Company’s obligation to make lease payments and are presented at each reporting date as the net present value of the remaining contractual cash flows.  Cash flows are discounted at the Company’s incremental borrowing rate in effect at the commencement date of the lease.  Right-of-use assets represent the Company’s right to use

the underlying asset for the lease term and are calculated as the sum of the lease liability and if applicable, prepaid rent, initial direct costs and any incentives received from the lessor.

The Company’s long-term lease agreements are classified as operating leases.  Certain of these leases offer the option to extend the lease term and the Company has included such extensions in its calculation of the lease liabilities to the extent the options are reasonably certain of being exercised.  The lease agreements do not provide for residual value guarantees and have no restrictions or covenants that would impact dividends or require incurring additional financial obligations.

The following tables present information about the Company’s leases:

(Dollars in thousands)	June 30, 2020			December 31, 2019
Lease liabilities	$	4,941		$	4,792
Right-of-use assets	$	4,879		$	4,771
Weighted average remaining lease term		10.94	years		11.76	years
Weighted average discount rate		2.93	%		3.13	%

	For the three months ended		For the six months ended
Lease cost (in thousands)	June 30, 2020		June 30, 2020
Operating lease cost	$	177	$	358
Short-term lease cost		—		—
Total lease cost	$	177	$	358
Cash paid for amounts included in the measurement of lease liabilities	$	167	$	330

A maturity analysis of operating lease liabilities and reconciliation of the undiscounted cash flows to the total of operating lease liabilities is as follows:

	As of
Lease payments due (in thousands)	June 30, 2020
Nine months ending December 31, 2020		332
Twelve months ending December 31, 2021	$	647
Twelve months ending December 31, 2022		634
Twelve months ending December 31, 2023		618
Twelve months ending December 31, 2024		562
Twelve months ending December 31, 2025		465
Thereafter		2,956
Total undiscounted cash flows	$	6,214
Discount		1,273
Lease liabilities	$	4,941