SALE AND LEASEBACK TRANSACTIONS

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

SALE AND LEASEBACK TRANSACTIONS

NOTE 11 SALE AND LEASEBACK TRANSACTIONS:

In anticipation of certain sale and leaseback transactions, the Company adopted ASU No. 2016-02 Leases (Topic 842) in 2017. This ASU revised certain aspects of recognition, measurement, presentation, and disclosure of leasing transactions. As a result of this transaction the Company recognized initial right-to-use assets – operating leases of approximately $5.3 million, along with corresponding lease liabilities of approximately $5.3 million. The $5.3 million was determined by calculating the present value of the annual cash lease payments using a discount rate of 3.25%. The 3.25% discount rate was determined to be the 15-year incremental borrowing rate as of May 31, 2017.

On September 17, 2019, the Bank completed the sale and leaseback, with an unrelated third party of a branch office located in Lebanon Virginia. The sale resulted in a gain of $803 thousand. The execution of the 15 year lease resulted in the recognition of an additional right-to–use asset – operating lease of approximately $1.2 million, along with a corresponding lease liability of a similar amount. The $1.2 million was determined using a discount rate of 2.82% which was determined to be the 15-year incremental borrowing rate.

For the three and nine months ended September 30, 2019 and 2018 operating lease expenses were $123 thousand and $120 thousand, and $361 thousand and $359 thousand, respectively. At September 30, 2019, the weighted average remaining term for these leases was 13.08 years, and the weighted average discount rate was 3.16%.

The Company’s other operating leases were evaluated and determined to be immaterial to the financial statements. At September 30, 2019, future minimum rental commitments under the non-cancellable operating leases discussed above are as follows (dollars are in thousands):

2019	$	137
2020		534
2021		511
2022		530
2023		544
Thereafter		5,070
Total lease payments		7,326
Less imputed interest		1,393
Total	$	5,933