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Leases
12 Months Ended
Dec. 31, 2021
Leases [Abstract]  
Leases

NOTE 13. Leases

The Company leases certain office properties and equipment used in its operations in the normal course of business.  Leases greater than 12 months in duration are recorded in the consolidated balance sheets at the lease commencement date and are classified as either operating or finance leases based on the Company's assessment of the underlying agreement.  During the last quarter of 2021, the Company entered into a long-term lease agreement for a branch office in Warrenton, Virginia. The commencement of this lease resulted in the initial recognition of a right-of-use asset and lease liability of $1.3 million.

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 four long-term lease agreements for office properties are all classified as operating leases.  These leases offer the option to extend the lease term and the Company has included such extensions in its calculation of the lease liability to the extent the options are reasonably certain of being exercised.  These 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. Right-of-use assets and leases liabilities are included in other assets and other liabilities, respectively, in the Consolidated Balance Sheets.

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

 

(dollars in thousands)

 

December 31, 2021

 

 

December 31, 2020

 

Lease liability

 

$

5,289

 

 

$

4,113

 

Right-of-use asset

 

$

5,139

 

 

$

4,014

 

Weighted average remaining lease term

 

15 years

 

 

17 years

 

Weighted average discount term

 

 

2.99

%

 

 

3.34

%

 

 

 

Twelve Months Ended

 

Lease Cost

 

December 31, 2021

 

 

December 31, 2020

 

Operating lease cost

 

$

376

 

 

$

287

 

Variable lease cost

 

 

 

 

 

 

Short-term lease cost

 

 

19

 

 

 

16

 

Total lease cost

 

$

395

 

 

$

303

 

 

 

 

 

 

 

 

 

 

Cash paid for amounts included in the measurement of lease liabilities

 

$

314

 

 

$

239

 

 

 

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

 

 

 

As of

 

Lease payments due

 

December 31, 2021

 

Twelve months ending December 31, 2022

 

$

455

 

Twelve months ending December 31, 2023

 

 

473

 

Twelve months ending December 31, 2024

 

 

480

 

Twelve months ending December 31, 2025

 

 

504

 

Twelve months ending December 31, 2026

 

 

397

 

Thereafter

 

 

4,540

 

Total undiscounted cash flows

 

$

6,849

 

Discount

 

 

(1,560

)

Lease liability

 

$

5,289