Leases

9 Months Ended

Sep. 30, 2021

Leases [Abstract]

Leases

Note 5 – Leases

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 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.

During the second quarter of 2021, one of the Company’s long-term branch leases was reassessed by management and it was determined that it was not reasonably certain that the options to renew would be exercised after the initial lease term of 10 years. This resulted in a shorter lease term and a reduction of the lease liability and right-to-use assets as compared to the first quarter of 2021 when the lease was initially placed into service.  

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

(Dollars in thousands)	September 30, 2021			December 31, 2020
Lease liabilities	$	5,686		$	4,874
Right-of-use assets	$	5,512		$	4,795
Weighted average remaining lease term		9.85	years		10.49	years
Weighted average discount rate		2.83	%		2.89	%

	For the Three Months Ended				For the Nine Months Ended
Lease cost (in thousands)	September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020
Operating lease cost	$	207	$	177	$	601	$	534
Short-term lease cost		—		—		—		—
Total lease cost	$	207	$	177	$	601	$	534
Cash paid for amounts included in the measurement of lease liabilities	$	174	$	168	$	505	$	498

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)	September 30, 2021
Three months ending December 31, 2021	$	192
Twelve months ending December 31, 2022		772
Twelve months ending December 31, 2023		740
Twelve months ending December 31, 2024		709
Twelve months ending December 31, 2025		573
Twelve months ending December 31, 2026		568
Thereafter		3,033
Total undiscounted cash flows	$	6,587
Discount		901
Lease liabilities	$	5,686