Note

Leases

January 1, 2019,

the Company adopted ASU

No.

2016

“Leases (Topic

842

)”

and all subsequent ASUs that modified Topic

842.

We adopted the guidance using the modified retrospective method and practical expedients for transition. The practical expedients allow us to largely account for our existing leases consistent with current guidance except for the incremental balance sheet recognition for lessees. We have performed an evaluation of our leasing contracts and activities. We have developed our methodology to estimate the right-of use assets and lease liabilities, which is based on the present value of lease payments. Prior to adoption, all of the Company’s leases were classified as operating leases and remain operating leases at adoption.

Contracts that commence subsequent to adoption are evaluated to determine whether they are or contain a lease in accordance with Topic

842.

The Company has elected the practical expedient provided by Topic

842

not

to allocate consideration in a contract between lease and non-lease components. The Company also elected, as provided by the standard,

not

to recognize right-of-use assets and lease liabilities for short-term leases, defined by the standard as leases with terms of

months or less. Since adoption, the Company entered into a new operating lease and recognized right-of-use assets and lease liabilities.

Lease liabilities represent the Company’s obligation to make lease payments and are presented at each reporting date as the net present value of the remaining contractual cash flows. Cash flows are discounted at the Company’s incremental borrowing rate in effect at the commencement date of the lease. For our incremental borrowing rate, we used the Federal Home Loan Bank available at the time of the lease. The right-of-use assets represent the Company’s right to use the underlying asset for the lease term and are calculated as the sum of the lease liability and if applicable, prepaid rent, initial direct costs and any incentives received from the lessor.

The contracts in which the Company is lessee are with parties external to the Company and

not

related parties. The Company’s lease right-of-use assets are included in other assets and the lease liabilities are included in other liabilities. The following tables present information about leases:

(dollars in thousands)	201 9

Lease liabilities	$	729
Right-of-use assets	$	729
Weighted average remaining lease term (years)		8.06
Weighted average discount rate		2.39	%

(dollars in thousands)	201 9

Lease Expense
Operating lease expense	$	73
Short-term lease expense		97
Total lease expense	$	170

Cash paid for amounts included in lease liabilities	$	73

The following table presents a maturity schedule of undiscounted cash flows that contribute to the lease liabilities:

(dollars in thousands)

Twelve months ending December 31, 2020	$	123
Twelve months ending December 31, 2021		128
Twelve months ending December 31, 2022		97
Twelve months ending December 31, 2023		66
Twelve months ending December 31, 2024		68
Thereafter		330
Total undiscounted cash flows	$	812
Less discount		(83	)
Lease liabilities	$	729