NOTE (6) - Leases

The Bank has a combined operating lease for its corporate headquarters and main retail branch and a photocopier lease. The ROU asset and operating lease liability are recorded in office properties and equipment and other liabilities, respectively, in the consolidated statements of financial condition.

Our ROU asset represents our right to use an underlying asset during the lease term. Operating lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized based on the present value of the remaining lease payments using a discount rate that represents our incremental borrowing rate at the date of implementation of the new accounting standard.

The operating lease for our corporate headquarters and main retail branch has one 5-year extension option at the then fair market rate. As this extension option is not reasonably certain of exercise, it is not included in the lease term. The Bank had a ROU asset of $460 thousand and an operating lease liability of $468 thousand as of June 30, 2020. The Bank has no finance leases.

The Bank recorded operating lease expense costs of $121 thousand and $123 thousand for the quarters ended June 30, 2020 and June 30, 2019, respectively, and $242 thousand and $245 thousand for the first six months of 2020 and the first six months of 2019, respectively.

Additional information regarding our operating leases is summarized below as of or for the periods ended June 30, 2020 indicated (dollars in thousands):


	Quarter ended		Six Months ended
	June 30, 2020		June 30, 2020
Cash paid for amounts included in the measurement of lease liabilities for operating leases:	$	88	$	174
Weighted average remaining lease term in months				10
Weighted average discount rate				2.75	%

The future minimum payments for operating leases with remaining terms of one year or more as of June 30, 2020 were as follows (in thousands):


Six months ended December 31, 2020	$	279
Year ended December 31, 2021		195
Total Future Minimum Lease Payments		474
Amounts Representing Interest		(6)
Present Value of Net Future Minimum Lease Payments	$	468