COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2024

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

NOTE 8 — 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 Company currently leases two branch banking facilities and one parcel of land under operating leases. At September 30, 2024, right-of-use assets and lease liabilities were recorded related to these operating leases totaling $1,427,000 and $1,943,000, respectively. At December 31, 2023, right-of-use assets and lease liabilities stood at $1,472,000 and $1,976,000, respectively, in the consolidated balance sheets. Options to extend or terminate a lease may be included in our lease agreements. When it is reasonably certain that we will exercise those options, the right-of-use asset and lease liability will reflect the renewal or termination option. 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 Company recognized total operating lease costs for the nine months ended September 30, 2024 and 2023 of $142,000 and $167,000, respectively. Operating lease costs are included in occupancy, net in the accompanying statements of income. Cash payments totaled $132,000 and $155,000, respectively, for the nine months ended September 30, 2024 and 2023.

The following table displays the weighted-average term and discount rates for operating leases outstanding as of September 30, 2024 and December 31, 2023.

	September 30,	December 31,
	2024	2023
Weighted-average term (years)	19.31	19.75
Weighted-average discount rate	4.20%	4.22%

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)
	September 30,		December 31,
Minimum Lease Payments due:	2024		2023
Within one year	$	149	$	175
After one but within two years		140		140
After two but within three years		150		140
After three but within four years		157		154
After four but within five years		157		157
After five years		2,199		2,317
Total undiscounted cash flows		2,952		3,083
Discount on cash flows		(1,009)		(1,107)
Total lease liability	$	1,943	$	1,976