Note 5 - Leases

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

NOTE

5

–

LEASES

Effective

January 1, 2019,

the Company adopted ASU

2016

-

02,

Leases (Topic

842

). As of

January 1, 2019,

the Company had

two

leases. During

2019,

the Company assumed

three

leases as a result of the branch transaction, and also commenced the lease for a new branch in Lexington. As of

December 31, 2019,

the Company leases real estate for

six

branch offices or offsite ATM machines under various operating lease agreements. The lease agreements have maturity dates ranging from

2021

to

2055,

including all expected extension periods. The weighted average remaining life of the lease term for these leases was

22

years as of

December 31, 2019.

In determining the present value of lease payments, the Bank uses the implicit lease rate when readily determinable. As most of the Bank’s leases do

not

provide an implicit rate, the incremental borrowing rate based on the information available at commencement date is used. The incremental borrowing rate is the rate of interest that the Bank would have to pay to borrow on a collateralized basis over a similar term in an amount equal to the lease payments in a similar economic environment. This methodology will be continued for the commencement of any subsequent lease agreements. The weighted average discount rate for the leases was

5.46%

as of

December 31, 2019.

Total rental expense was

$294,000

for the year ended

December 31, 2019.

The right-of-use asset, included in premises and equipment, and lease liability, included in other liabilities, was

$

3.1

million as of

December 31, 2019.

Total estimated rental commitments for the operating leases were as follows as of

December 31, 2019 (

in thousands):

	2019
2020	$	510
2021		279
2022		262
2023		266
2024		266
Thereafter		3,721
Total minimum lease payments		5,304
Discount effect of cash flows		(2,234	)
Present value of lease liabilities	$	3,070