Lease Commitments and Contingencies

6 Months Ended

Jun. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

Lease Commitments and Contingencies

11. LEASE COMMITMENTS AND CONTINGENCIES

Due to the adoption of ASU 2016-02, Leases (Topic 842), the Company determined that two of its three office locations are under operating leases. Several assumptions and judgments were made when applying the requirements of Topic 842 to the Company’s existing lease commitments, including the allocation of consideration in the contracts between lease and non-lease components, determination of the lease term, and determination of the discount rate used in calculating the present value of the lease payments. The Company has elected to account for the variable non-lease components, such as common area maintenance charges, utilities, real estate taxes, and insurance, separately from the lease component. Such variable non-lease components are reported in net occupancy expense on the Consolidated Statements of Operations when paid. These variable non-lease components were excluded from the calculation of the present value of the remaining lease payments, therefore, they are not included in the right-of-use assets and lease liabilities reported on the Balance Sheet. The following table presents the lease cost associated with leases for the three and six months ending June 30, 2021. Total rent expense recorded during the three and six months ended June 30, 2020 was $112, and $229, respectively. The Company leases its administration and operating facility and three offices under lease agreements with various expirations through March 2031. 

Lease cost (In Thousands)	Three months ended June 30, 2021		Six months ended June 30, 2021
Amortization of right-of-use asset	$	69	$	139
Interest expense		48		96
Total lease cost	$	118	$	235
Weighted-average remaining term (years)				14.0
Weighted-average discount rate				5.0	%

Certain of the Company’s leases contain options to renew the lease after the initial term. Management considers the Company’s historical pattern of exercising renewal options on leases and the positive performance of the leased locations, when determining whether it is reasonably certain that the leases will be renewed. If management concludes that there is reasonable certainty about the renewal option, it is included in the calculation of the remaining term of each applicable lease. The discount rate utilized in calculating the present value of the remaining lease payments for each lease was the cost of funds on the Company’s subordinated notes.

The following table presents the undiscounted cash flows due related to operating leases as of June 30, 2021:

(In Thousands)	Amount
2021	$	199
2022		403
2023		409
2024		426
2025 and thereafter		4,857
Total Undiscounted Cash Flows	$	6,294
Discount on Cash Flows		(1,866	)
Total lease liabilities	$	4,428