Note

– Leases

As of

March 31, 2020,

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

2055,

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

years as of

March 31, 2020.

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 estimates it would 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

5.47%

as of

March 31, 2020.

Total rental expense was

$120,000

for the

three

months ended

March 31, 2020

and

$65,000

for the

three

months ended

March 31, 2019.

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

$2.9

million as of

March 31, 2020

and

$445,000

as of

March 31, 2019.

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

March 31, 2020 (

in thousands):

	March 31, 2020

2020	$	383
2021		260
2022		242
2023		246
2024		246
Thereafter		3,720
Total minimum lease payments		5,097
Discount effect of cash flows		(2,214	)
Present value of lease liabilities	$	2,883