Leases

9 Months Ended

Sep. 30, 2023

The Company follows ASC Topic 842, Leases, recognizing a ROU and related lease liabilities on the Company’s Consolidated Balance Sheets. At September 30, 2023, the Company had 13 operating leases for retail branch locations. The remaining lease terms range from eight months to 7.3 years, with most leases carrying optional extensions of three to five years. The Company will include optional lease term extensions in the ROU and lease liabilities when management believes it is reasonably certain that the term extension will be exercised, which will be determined based on indicators that the Company would have an economic incentive to extend the lease. The Company has elected to not apply ASU 2016-02 to short term leases, which are those that have a term of one year or less. To calculate the present value of lease payments not yet paid, the Company uses the incremental borrowing rate, which is equal to the FHLB advance rate for the remaining term of the lease 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 September 30, 2023, the Company was committed to paying $74,000 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 on the Company’s Consolidated Income Statements 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 following table includes details on these items at and for the dates indicated:


	At or For the Three and Nine Months Ended September 30, 2023			At or For the Three and Nine Months Ended September 30, 2022
	(Dollars in thousands)
Lease expense, quarter-to-date	$	279		$	270
Lease expense, year-to-date	862			835
ROU	2,818			3,260
Lease liability	3,011			3,441
Weighted average remaining term	4.9 years			5.8 years
Weighted average discount rate	2.29		%	1.98		%

The following table provides a reconciliation between the undiscounted minimum lease payments at September 30, 2023 and the discounted lease liability at that date:


	September 30, 2023
	(In thousands)
Due through one year	$	868
Due after one year through two years	740
Due after two years through three years	445
Due after three years through four years	303
Due after four years through five years	309
Due after five years	510
Total minimum lease payments	3,175
Less: present value discount	164
Lease liability	$	3,011