A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. The Company has adopted ASU No. 2016-02 “Leases” (Topic 842) and all subsequent ASUs that modified Topic 842. For the Company, Topic 842 primarily affected the accounting treatment for operating lease agreements in which the Company is the lessee.

Substantially all of the leases in which the Company is the lessee are comprised of real estate property for branches and office space with terms extending through 2036. Substantially all of our leases are classified as operating leases, and therefore, were previously not recognized on the Company’s consolidated statements of condition. With the adoption of Topic 842, operating lease agreements are required to be recognized on the consolidated statements of condition as a right-of-use (ROU) asset and a corresponding lease liability. The Company elected to use the optional transition method, which allowed for a modified retrospective method of adoption with an immaterial cumulative effect adjustment to retained earnings without restating comparable periods. The Company also elected the relief package of practical expedients for which there is no requirement to reassess existence of leases, their classification, and initial direct costs. The Company also applied the exemption for short-term leases with a term of less than one year and therefore we do not recognize a lease liability or right-of-use asset on the balance sheet but instead recognize lease payments as an expense over the lease term as appropriate.

The following table represents the consolidated statements of financial condition classification of the Company’s ROU assets and lease liabilities. 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 condition.


Lease Right-of-Use Assets	Classification on Consolidated Statement of Financial Condition	December 31, 2023		December 31, 2022
Operating lease right-of-use assets	Other Assets	$	3,243	$	3,582

Lease Liabilities	Classification on Consolidated Statement of Financial Condition	December 31, 2023		December 31, 2022
Operating lease liabilities	Accrued interest payable and other liabilities	$	3,407	$	3,716

The calculated amount of the ROU assets and lease liabilities in the table above are impacted by the length of the lease term and the discount rate used to present value the minimum lease payments. The Company’s lease agreements often include one or more options to renew at the Company’s discretion. If at lease inception, the Company considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the calculation of the ROU asset and lease liability. The exercise of lease renewal options is typically at the Company's sole discretion; therefore, a majority of renewals to extend lease terms are not included in the right-of-use assets and lease liabilities as they are not reasonably certain to be exercised. Renewal options are regularly evaluated and when they are reasonably certain to be exercised, are included in lease terms. Regarding the discount rate, Topic 842 requires the use of the rate implicit in the lease whenever this rate is readily determinable. As this rate is rarely determinable, the Company utilizes its incremental borrowing rate at lease inception, on a collateralized basis, over a similar term. For operating leases existing prior to January 1, 2019, the rate for the remaining lease term as of January 1, 2019 was used.


	December 31, 2023			December 31, 2022
Weighted-average remaining lease term for operating leases	8.50 Years			9.62 Years
Weighted-average discount rate for operating leases		6.00	%		6.00	%

Future minimum payments for operating leases with initial or remaining terms of one year or more as of December 31, 2023 were as follows:


	Operating Leases
January 1, 2024 - December 31 2024	$	805
January 1, 2025 - December 31 2025		678
January 1, 2026 - December 31 2026		479
January 1, 2027 - December 31 2027		415
January 1, 2028 - December 31 2028		378
Afterward		1,705
Total future minimum lease payments		4,460
Amounts representing Interest		(1,053	)
Present value of net future minimum lease payments	$	3,407

Total rent expense for 2023 and 2022 was approximately $1.0 million and $853 thousand, respectively.