NOTE T – LEASES

The Company has operating leases for branches and certain equipment. The Company’s leases have remaining lease terms of 1 year to 15 years which may include options to extend the leases for up to 5 years per option period. The Company has some leases that are month to month or expire within 1 year that are not included below.

At December 31, 2019, the Company did not have any leases that had not yet commenced for which the Company had created a ROU asset and a lease liability. For the operating leases the Company has elected the practical expedient of not separating lease components from non-lease components and instead to account for each separate lease component and the non-lease components associated with that lease as a single lease component. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Most of the lease agreements include periodic rate adjustments for inflation.

Most leases include one or more options to renew, with renewal terms that can extend the lease term from 1 to 25 years. The exercise of lease renewal options is at our sole discretion. When it is reasonably certain that the Company will exercise the option to renew or extend the lease term, that option is included in determining the value of the ROU asset and lease liability.

The Company has operating leases for its corporate offices and branches that expire at various times through 2034. Future minimum lease payments under the leases for years subsequent to December 31, 2019 are as follows:


	Total Lease Payments
	(dollars in thousands)
2020	$	1,071
2021		1,097
2022		1,128
2023		1,063
2024		996
Years thereafter		6,400
	$	11,755

During 2019, 2018, and 2017, payments under operating leases were approximately $1.1 million, $1.2 million, and $408,000, respectively. Lease expense was accounted for on a straight line basis. Rental income earned on office space leased to third parties was $449,000, $426,000 and $148,000 for 2019, 2018 and 2017, respectively.

The components of lease expense were as follows (dollars in thousands):


	December 31,
	2019
Operating lease cost	$	1,054

Supplemental cash flow information related to leases was as follows:


	December 31,
	2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,054
Right-of-use assets obtained in exchange for lease obligations:
Operating leases		8,596

The following table presents the remaining weighted average lease terms and discount rates as of December 31, 2019:


Weighted Average Remaining Lease Term
Operating leases	6.8	years

Weighted Average Discount Rate
Operating leases	6.0	%

Maturities of lease liabilities were as follows:


	Operating
(In thousands)	Leases
Year Ending December 31,
2020	$	580
2021		642
2022		714
2023		693
2024		665
Thereafter		5,150
Lease payments		8,444
Amounts representing interest		(269)
Present Value of Net Future Minimum Lease Payments		8,175