7. Leases

As of June 30, 2020, the Company rents office space under operating leases expiring in 2021 through 2024, and the Company has no financing leases. The leases call for base rent plus escalations as well as other operating expenses. The following table represents the Company’s lease right-of-use assets and lease liabilities on the statements of financial condition. 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 statements of financial condition. The Company acquired two leases from its acquisition of StockCross, the impact of which is reflected in the following disclosures.

As of June 30, 2020, the Company does not believe that any of the renewal options under the existing leases are reasonably certain to be exercised; however, the Company will continue to assess and monitor the lease renewal options on an ongoing basis.

	As of June 30, 2020		As of December 31, 2019
Assets
Lease right-of-use assets	$	3,062,000	$	3,951,000
Liabilities
Lease liabilities	$	3,443,000	$	4,409,000

The calculated amounts of the lease right-of-use 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 leases some miscellaneous office equipment, but they are immaterial and therefore the Company records the costs associated with this office equipment on the statements of income rather than capitalizing them as lease right-of-use assets. The Company determined a discount rate of 5.0% would approximate the Company’s cost to obtain financing given its size, growth, and risk profile.

Lease Term and Discount Rate	As of June 30, 2020
Weighted average remaining lease term – operating leases (in years)		2.3
Weighted average discount rate – operating leases		5.0	%

The following table represents lease costs and other lease information. The Company has elected the practical expedient to not separate lease and non-lease components, and as such, the variable lease cost primarily represents variable payments such as common area maintenance and utilities which are determined by the leased square footage in proportion to the overall office building.

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Operating lease cost	$	575,000	$	396,000	$	1,146,000	$	759,000
Short-term lease cost		24,000		110,000		63,000		240,000
Variable lease cost		99,000		87,000		216,000		125,000
Sublease income		—		—		—		—
Total Rent and occupancy	$	698,000	$	593,000	$	1,425,000	$	1,124,000

Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	617,000	$	444,000	$	1,231,000	$	826,000

Lease right-of-use assets obtained in exchange for new lease liabilities
Operating leases	$	160,000	$	106,000	$	2,075,000	$	4,943,000

Lease Commitments

Future annual minimum payments for operating leases with initial terms of greater than one year as of June 30, 2020 were as follows:

Year	Amount
2020	$	1,214,000
2021		1,208,000
2022		624,000
2023		543,000
2024		56,000
Remaining balance of lease payments		3,645,000
Difference between undiscounted cash flows and discounted cash flows		202,000
Lease liabilities	$	3,443,000

Rent and occupancy expenses were $698,000 and $593,000 for the three months ended June 30, 2020 and 2019, respectively.

Rent and occupancy expenses were $1,425,000 and $1,124,000 for the six months ended June 30, 2020 and 2019, respectively.