Leases

12 Months Ended

Dec. 31, 2022

The Company follows ASC Topic 842, Leases, recognizing ROU assets and lease liabilities on the Company’s consolidated balance sheets. At December 31, 2022, the Company had thirteen operating leases for retail branch locations. The remaining initial lease terms range from one month to 8.1 years, with most leases carrying optional extensions of three to five years. The Company will include optional lease term extensions in the ROU assets and lease liabilities when management believes it is reasonably certain that the term extension will be exercised, and will be determined based on indicators that the Company would have an economic incentive to extend the lease. Short term leases, having a term of one year or less, are expensed in the period of the lease. To calculate the present value of future lease payments, the Company uses the incremental borrowing rate, which is equal to the FHLB advance rate at the time of the lease inception, or at January 1, 2019, for leases in place at that date.

The minimum monthly lease payments are generally based on square footage of the leased premises, with escalating minimum rent over the lease term. At December 31, 2022, the Company was committed to paying $71,000 per month in minimum monthly lease payments. The minimum monthly lease payment over the initial lease term, including any free rent period, was used to calculate the ROU and lease liability. The Company’s current leases do not include any non-lease components.

Total lease expense included in the Company’s consolidated income statement includes the amortized lease expense under ASC Topic 842, Leases, combined with variable lease expenses for maintenance or other expenses as defined in the individual lease agreements. The Company’s consolidated balance sheet includes the ROU and lease liability. The following table includes details on these items at and for the years ended December 31, 2022, and 2021.


	December 31, 2022		December 31, 2021
	(Dollars in thousands)
Lease expense, year-to-date	$	1,107	$	1,061
ROU	3,275		3,646
Lease liability	3,454		3,805
Weighted average remaining term (in years)	5.16		6.26
Weighted average discount rate	2.10%		1.91%

The following table provides a reconciliation between the undiscounted minimum lease payments at December 31, 2022 and the discounted lease liability at that date:


	December 31, 2022
	(In thousands)
Due through one year	$	844
Due after one year through two years	761
Due after two years through three years	669
Due after three years through four years	363
Due after four years through five years	298
Due after five years	730
Total minimum lease payments	3,665
Less: present value discount	211
Lease liability	$	3,454