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 also 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. As stated in the Company's 2018 Form 10-K, the implementation of the new standard resulted in recognition of a right-of-use asset and lease liability of $4.4 million at the date of adoption, which is related to the Company's lease of premises used in operations. In connection with the HomeTown merger, the Company added $1.8 million to the right-of-use asset and lease liability. The right-of-use asset and lease liability are included in other assets and other liabilities, respectively, in the Company's 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 as of and for the year ended December 31, 2019 (dollars in thousands):



	December 31, 2019
Lease liabilities	$	5,369
Right-of-use assets	$	5,340
Weighted average remaining lease term	8.17 years
Weighted average discount rate	3.21		%



	Year Ended December 31, 2019
Lease cost
Operating lease cost	$	1,040
Short-term lease cost	3
Total lease cost	$	1,043

Cash paid for amounts included in the measurement of lease liabilities	$	1,013

A maturity analysis of operating lease liabilities and reconciliation of the undiscounted cash flows to the total of operating lease liabilities is as follows (dollars in thousands):



Lease payments due	As of December 31, 2019
2020	$	959
2021	943
2022	920
2023	817
2024	499
2025 and after	2,022
Total undiscounted cash flows	$	6,160
Discount	(791		)
Lease liabilities	$	5,369

Lease expense, a component of occupancy and equipment expense, for the years ended December 31, 2019, 2018, and 2017 was $1,187,000, $919,000, and $961,000, respectively. The amounts recognized in lease expense include insurance, property taxes, and common area maintenance.