COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2020

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

NOTE 7 — COMMITMENTS AND CONTINGENCIES

In the normal course of business, there are various pending legal actions and proceedings that are not reflected in the consolidated financial statements. Management does not believe the outcome of these actions and proceedings will have a material effect on the consolidated financial position or results of operations of the Company.

The Bank currently leases three branch banking facilities and one parcel of land under operating leases. At June 30, 2020, right-of-use assets and lease liabilities were recorded related to these operating leases totaling $1,218,000 and $1,556,000, respectively. At December 31, 2019, right-of-use assets and lease liabilities stood at $1,470,000 and $1,663,000, respectively. Further options to extend or terminate the lease are not applicable for any of the four leases. No significant assumptions or judgements were made in determining whether a contract contained a lease or in the consideration of lease versus non-lease components. None of the leases contained an implicit rate; therefore, our incremental borrowing rate was used for each of the leases.

The Bank recognized total operating lease costs for the six months ended June 30, 2020 and 2019 of $221,000 and $96,000, respectively. Cash payments totaled $77,000 for the six months ended June 30, 2020 and 2019.

The following table displays the weighted-average term and discount rates for operating leases outstanding as of June 30, 2020 and December 31, 2019.

	June 30,		December 31,
	2020		2019
	Operating		Operating
Weighted-average term (years)	25.50		25.63
Weighted-average discount rate	3.87	%	3.85	%

A maturity analysis of operating lease liabilities and reconciliation of the undiscounted cash flows to the total operating lease liability is as follows:

(Dollars in thousands)	June 30,		December 31,
	2020		2019
Minimum Lease Payments due:
Within one year	$	130	$	148
After one but within two years		102		106
After two but within three years		68		86
After three but within four years		68		68
After four but within five years		68		68
After five years		2,292		2,326
Total undiscounted cash flows		2,728		2,802
Discount on cash flows		(1,172)		(1,139)
Total lease liability	$	1,556	$	1,663