OPERATING LEASE OBLIGATIONS

12 Months Ended

Dec. 31, 2023

OPERATING LEASE OBLIGATIONS

OPERATING LEASE OBLIGATIONS

12. OPERATING LEASE OBLIGATIONS

The Company has four operating leases, of which one is with a related party. The leases are comprised of real estate property for branch and office space with terms extending through 2029. As of December 31, 2023, the Company had operating lease right of use (“ROU”) assets totaling $318,000 included in other assets and operating lease liabilities totaling $326,000 included in other liabilities.

The calculated amount of the ROU assets and lease liabilities are impacted by the length of the lease term and the discount rate used to calculate the present value of 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.

Topic 842 requires the use of the rate implicit in the lease as the discount rate if that rate is readily determinable. As this rate is rarely determinable, the Company utilized its incremental borrowing rate at lease inception, which is the rate the Company would have incurred to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar economic environment.

As of December 31, 2023, the weighted-average remaining operating lease term was 4.3 years, and the weighted-average discount rate was 5.02%. As of December 31, 2022, the weighted-average remaining operating lease term was 5.1 years, and the weighted-average discount rate was 4.97%.

The Company’s total operating lease cost for the years ended December 31, 2023 and 2022 was $109,000 and $110,000, respectively. During the years ended December 31, 2023 and 2022, total operating lease payments made to a related party totaled $25,000 and $24,000, respectively.

The future minimum payments for operating leases with initial or remaining terms of one year or more as of December 31, 2023 were as follows:

(Dollars in thousands)
Years ending December 31,	Lease Obligation
2024	$	107
2025		95
2026		52
2027		49
2028		38
2029 and beyond		24
Total Future Minimum Lease Payments		365
Amounts Representing Interest		(39)
Present Value of Net Future Minimum Lease Payments (Lease Liability)	$	326