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Leases

9 Months Ended

Sep. 30, 2020

Note 13. Leases

On January 1, 2019, the Company adopted ASU No. 2016-02 “Leases (Topic 842)” and all subsequent ASUs that modified Topic 842. The Company elected the prospective application approach provided by ASU 2018-11 and did not adjust prior periods for ASC 842.The Company elected certain practical expedients within the standard and consistent with such elections did not reassess whether any expired or existing contracts are or contain leases, did not reassess the lease classification for any expired or existing leases, and did not reassess any initial direct costs for existing leases.The implementation of the new standard resulted in recognition of a right-of-use asset and lease liability of $1.03million at the date of adoption, which is related to the Company’s lease of premises used in operations. The right-of-use asset and lease liability are included in other assets and other liabilities, respectively, in the Consolidated Balance Sheets.

Lease liabilities represent the Company’s obligation to make lease payments and are presented at each reporting date as the net present value of the remaining contractual cash flows. Cash flows are discounted at the Company’s incremental borrowing rate in effect at the commencement date of the lease. Right-of-use assets represent the Company’s right to use the underlying asset for the lease term and are calculated as the sum of the lease liability and if applicable, prepaid rent, initial direct costs and any incentives received from the lessor.

The Company’s long-term lease agreements are classified as operating leases. Certain of these leases offer the option to extend the lease term and the Company has included such extensions in its calculation of the lease liabilities to the extent the options are reasonably assured of being exercised. The lease agreements do not provide for residual value guarantees and have no restrictions or covenants that would impact dividends or require incurring additional financial obligations.

The following tables present information about the Company’s leases:

(Dollars in thousands)							September 30, 2020
Lease Liabilities							$	882
Right-of-use assets							$	867
Weighted average remaining lease term							4.35 years
Weighted average discount rate								3.47	%
	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Lease cost (in thousands)
Operating lease cost	$	30	$	32	$	88	$	96
Total lease cost	$	30	$	32	$	88	$	96

Cash paid for amounts included in the measurement of lease liabilities	$	28	$	38	$	98	$	113

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

	As of
	September 30, 2020
Three months ending December 31, 2020	$	26
Twelve months ending December 31, 2021		127
Twelve months ending December 31, 2022		129
Twelve months ending December 31, 2023		93
Twelve months ending December 31, 2024		92
Thereafter		629
Total undiscounted cash flows	$	1,096
Discount		214
Lease liabilities	$	882