NOTE 5 – LEASES

12 Months Ended

Dec. 31, 2020

Note 5 Leases

NOTE 5 – LEASES

NOTE 5 – LEASES

On January 1, 2019, the Bank adopted ASU 2016-02, “Leases (Topic 842)” and all subsequent ASUs that modified Topic 842. The Bank leases facilities and equipment with various expiration dates. The facilities leases have varying renewal options, generally require fixed annual rent, and provide that real estate taxes, insurance, and maintenance are to be paid by Salisbury. The leases for two Bank facilities were accounted for as finance leases (previously referred to as capital leases) at December 31, 2020. The remaining leases were classified as operating leases, and therefore, were previously not recognized on the Bank’s Consolidated Balance Sheet. Effective January 1, 2019, the Bank recorded approximately $1.6 million of right-of-use assets and corresponding lease liability related to these operating leases. The Bank does not have any leases with related parties and equipment leases are not material to Salisbury’s consolidated financial statements.

The following table provides the assets and liabilities as well as the costs of operating and finance leases that are included in the Bank’s consolidated balance sheet as of December 31, 2020 and 2019 and consolidated income statements for the years ended December 31, 2020 and 2019.

($ in thousands)	Classification		December 31, 2020		December 31, 2019
Assets
Operating	Other assets	$	1,182	$	1,360
Finance	Bank premises and equipment 1		1,402		1,503
Total Leased Assets		$	2,584	$	2,863
Liabilities
Operating	Accrued interest and other liabilities	$	1,182	$	1,360
Finance	Finance lease obligations		1,673		1,718
Total lease liabilities		$	2,855	$	3,078
1 Net of accumulated depreciation of $396 thousand and $294 thousand, respectively.

Lease cost ($ in thousands)	Classification		Twelve months ended		Twelve months ended
			December 31, 2020		December 31, 2019
Operating leases	Premises and equipment	$	261	$	255
Finance leases:
Amortization of leased assets	Premises and equipment		101		200
Interest on finance leases	Interest expense		141		173
Total lease cost		$	503	$	628

Weighted Average Remaining Lease Term	December 31, 2020		December 31, 2019
Operating leases	7.6 years		8.2 years
Financing leases	14.2 years		15.1 years
Weighted Average Discount Rate 1
Operating leases	3.67	%	3.70	%
Financing leases	8.37	%	8.41	%
1 Salisbury uses the FHLBB five-year Advance rate as the discount rate, as its leases do not provide an implicit rate.

The following is a schedule by years of the present value of the net minimum lease payments as of December 31, 2020.

Future minimum lease payments (in thousands)		Operating Leases			Finance Leases
2021	$	250		$	192
2022		199			195
2023		148			197
2024		129			200
2025		137			203
Thereafter		516			1,777
Total future minimum lease payments		1,379			2,764
Less amount representing interest		(197	)		(1,091	)
Total present value of net future minimum lease payments	$	1,182		$	1,673