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)

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

and all subsequent ASUs that modified this topic (collectively referred to as “Topic

842”

). For the Company, Topic

842

primarily affected the accounting treatment for operating lease agreements in which the Company is the lessee.

Substantially all of the leases in which the Company is the lessee are comprised of real estate for branches and office space with terms extending through

2027.

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 arrangements 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 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.

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.

Operating lease cost was

$43

thousand and

$104

thousand for the

three

and

nine

months ended

September 30, 2019,

respectively.

As of

September 30, 2019,

the weighted average remaining lease term was

5.44

years and the weighted average discount rate was

2.07%.

The following table represents the future maturities of the Company’s operating lease liabilities and other lease information.

Twelve Months Ended September 30,	Lease Liabilitiy
2020	$	185
2021		134
2022		80
2023		45
2024		45
After September 30, 2024		139
Total Lease Payments	$	628
Less: Interest		(43	)
Present Value of Lease Liabilities	$	585

Supplemental Lease Information:	September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases (cash payments)	$	104
Operating cash flows from operating leases (lease liability reduction)	$	101
Operating lease right-of-use assets obtained in exchange for leases entered into during the period	$	193

Classification

September 30, 2019

Operating lease right-of-use assets

Other Assets

Liabilities

Operating lease liabilities

Other Liabilites