Leases

6 Months Ended

Jun. 30, 2020

Note 15 – Leases

The Company has entered into operating lease agreements for two of its community banking branch locations, all of its mortgage banking office locations, and some of its office equipment. The leases have fixed terms defined regarding the payments and length. The Company elected not to include short-term leases (i.e., leases with initial terms of twelve months or less), or equipment leases (deemed immaterial) on the consolidated statements of financial condition. Some of the leases included options to extend the leases. These options are reviewed and factored into the length of the lease if the option is expected to be extended. Leases did not contain an implicit rate; therefore, the Company used the incremental borrowing rates for the discount rate. There were no sale and leaseback transactions, leveraged leases, or lease transactions with related parties during the three or six months ended June 30, 2020 and June 30, 2019.

At June 30, 2020, the Company had lease liabilities totaling $7.7 million and right-of-use assets totaling $7.2 million related to these leases. Lease liabilities and right-of-use assets are reflected in other liabilities and other assets, respectively, on the consolidated statements of financial condition.

The cost components of our operating leases were as follows for the three and six months ended June 30, 2020 and June 30, 2019:

	Three months ended June 30, 2020		Three months ended June 30, 2019		Six months ended June 30, 2020		Six months ended June 30, 2019
	(In Thousands)
Operating lease cost	$	770	$	804	$	1,594	$	1,562
Variable cost		131		156		240		416
Short-term lease cost		121		294		314		527
Total	$	1,022	$	1,254	$	2,148	$	2,505

At June 30, 2020, the Company had leases that had not yet commenced, but will create approximately $718,000 of additional lease liabilities and right-of-use assets for the Company in the third quarter of 2020.

The table below summarizes other information related to our operating leases:

	Six months ended June 30, 2020
	(Dollars in Thousands)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	1,807
Initial recognition of right of use asset		437
Initial recognition of lease liabilities		437
Weighted average remaining lease term - operating leases, in years		3.1
Weighted average discount rate - operating leases		5.9	%

As of June 30, 2020, lease liability information for the Company is summarized in the following table.

Maturity analysis	Operating leases
	(In Thousands)
One year or less	$	3,042
More than one year through two years		2,134
More than two years through three years		1,589
More than three years through four years		962
More than four years through five years		157
More than five years		940
Total lease payments		8,824
Present value discount		(1,157	)
Lease liability	$	7,667