Leases

6 Months Ended

Jun. 30, 2023

Leases

Leases

5. Leases

On January 1, 2022, 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. The implementation of the new standard resulted in recognition of right-of-use assets and lease liabilities totaling $247,000 at the date of adoption, which are related to the Company’s lease of premises and equipment used in operations.

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 assured 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 as of June 30, 2023 and December 31, 2022, and for the three and six months ended June 30, 2023 and 2022 (dollars in thousands):

		June 30,			December 31,
		2023			2022
Right-to-use assets	$	903			953
Lease liability	$	861			910
Weighted average remaining lease term		12.47	years		12.67	years
Weighted average discount rate		4.52	%		4.43	%
		Three Months			Three Months			Six Months		Six Months
		Ended			Ended			Ended		Ended
		June 30,			June 30,			June 30,		June 30,
		2023			2022			2023		2022
Operating lease cost	$	24		$	15		$	48	$	31
Short-term lease cost		20			—			41		—
Total lease costs	$	44		$	15		$	89	$	31
Cash paid for amounts included in the measurement of lease liabilities	$	33		$	16		$	66	$	32

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
	June 30,
Lease payments due (in thousands):	2023
Six months ending December 31, 2023	$	66
2024		130
2025		122
2026		70
2027		66
Thereafter		713
Total undiscounted cash flows		1,167
Discount		306
Lease Liability	$	861