Leases

A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. On January 1, 2019, the Company adopted ASU No. 2016-02 Leases (Topic 842) and all subsequent ASUs that modified Topic 842. For the Company, Topic 842 primarily affected the accounting treatment for operating lease agreements in which the Company is the lessee.

Lessee Accounting:

Substantially all of the leases in which the Company is the lessee are comprised of real estate property for branches and office space with terms extending through 2033. Substantially all of our leases are classified as operating leases, and therefore, were previously not recognized on the Company’s consolidated balance sheet. With the adoption of Topic 842, operating lease agreements are required to be recognized on the consolidated balance sheet as a right-of-use (“ROU”) asset and a corresponding lease liability.

The following table represents the consolidated balance sheet classification of the Company’s ROU assets and lease liabilities. The Company elected not to include short-term leases (i.e., leases with initial terms of twelve months or less), or equipment leases (deemed immaterial) on the consolidated balance sheet (dollars in thousands):



Lease Right-of-Use Assets	Classification	March 31, 2019
Operating lease right-of-use assets	Operating lease right-of-use assets	$2,215

Lease Liabilities
Operating lease liabilities	Operating lease liabilities	$2,222

The calculated amount of the ROU assets and lease liabilities in the table above are impacted by the length of the lease term and the discount rate used to present value the minimum lease payments. The Company’s lease agreements often include one or more options to renew at the Company’s discretion. If at lease inception the Company considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the calculation of the ROU asset and lease liability. Regarding the discount rate, Topic 842 requires the use of the rate implicit in the lease whenever this rate is readily determinable. As this rate is rarely determinable, the Company utilizes its incremental borrowing rate at lease inception, on a collateralized basis, over a similar term. For operating leases existing prior to January 1, 2019, the rate for the remaining lease term as of January 1, 2019 was used.

As of March 31, 2019, the weighted average remaining lease term was 7.81 years and the weighted average discount rate was 3.24%.

Note 8. Leases, Continued

The following table represents lease costs and other lease information, in thousands. As the Company elected, for all classes of underlying assets, not to separate lease and non-lease components and instead to account for them as a single lease component, the variable lease cost primarily represents variable payments such as common area maintenance.



	Three Months Ended
Lease Costs	March 31, 2019

Operating lease costs	$	146
Short term lease costs	36
Variable lease costs	23
Total	205


Other information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	139

Future minimum payments for operating leases with initial or remaining terms of one year or more as of March 31, 2019 were as follows (in thousands):



	Amounts
March 31, 2020	$	533
March 31, 2021	531
March 31, 2022	332
March 31, 2023	213
March 31, 2024	107
Thereafter	842
Total future minimum lease payments	2,558
Amounts representing interest	(336		)
Present value of net future minimum lease payments	$	2,222