LEASES

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

LEASES

NOTE 4 - LEASES

On January 1, 2019, the Bank adopted ASU 2016-02, “Leases (Topic 842) and all subsequent ASUs that modified Topic 842. The Bank leases facilities and equipment with various expiration dates through 2036. The facilities leases have varying renewal options, generally require fixed annual rent, and provide that real estate taxes, insurance, and maintenance are to be paid by Salisbury. The leases for three Bank facilities are accounted for as finance leases (previously referred to as capital leases). The remaining leases are classified as operating leases, and therefore, were previously not recognized on the Bank's Consolidated Balance Sheets. Effective January 1, 2019, the Bank recorded approximately $1.6 million of right-of-use assets and corresponding lease liability related to these operating leases. The Bank does not have any leases with related parties and equipment leases are not material to Salisbury's consolidated financial statements.

The following table provides the assets and liabilities as well as the costs of operating and financial leases which are included in the Bank's consolidated income statement for the three months ended March 31, 2019.

Three months ended (in thousands, except lease term and discount rate)	Classification		March 31, 2019
Assets
Operating	Other assets	$	1,505
Finance	Bank premises and equipment 1		2,801
Total Leased Assets		$	4,306
Liabilities
Operating	Other liabilities	$	1,505
Finance	Finance lease		3,046
Total lease liabilities		$	4,551
1 Net of accumulated depreciation of $472 thousand.
Lease cost	Classification		March 31, 2019
Operating leases	Premises and equipment	$	61
Finance leases:
Amortization of leased assets	Premises and equipment		47
Interest on finance leases	Interest expense		46
Total lease cost		$	154
Weighted Average Remaining Lease Term
Operating leases			8.7 years
Financing leases			13.2 years
Weighted Average Discount Rate 1
Operating leases			3.7	%
Financing leases			7.5	%
1 Salisbury uses the FHLB five year Advance rate as the discount rate, as our leases do not provide an implicit rate.

The following is a schedule by years of the present value of the net minimum lease payments as of March 31, 2019.

Future minimum lease payments (in thousands)		Operating Leases			Finance Leases
2019	$	185		$	254
2020		246			336
2021		228			342
2022		199			345
2023		148			347
Thereafter		782			2,956
Total future minimum lease payments		1,788			4,580
Less amount representing interest		(283	)		(1,534	)
Total present value of net future minimum lease payments	$	1,505		$	3,046