Leases

9 Months Ended

Sep. 30, 2022

Leases

Leases

Note 10 — Leases

The Company has operating leases and finance leases all comprised of real estate property. The operating leases comprise substantially all of the Company’s obligations in which the Company is the lessee, with remaining lease terms ranging between 2 and 9 years. Most operating lease agreements consist of initial lease terms ranging between 5 and 10 years, with options to renew the leases or extend the term. The finance lease has a remaining lease term of 95 years. The payment structure of all leases is fixed rental payments with lease payments increasing on pre-determined dates at either a predetermined amount or change in the consumer price index.

In accordance with ASC 842, the Company recognized operating and financing lease assets and corresponding lease liabilities related to office facilities and retail branches. The operating and financing lease assets represent the Company’s right to use an underlying asset for the lease term, and the lease liability represents the Company’s obligation to make lease payments over the lease term. The Company has elected that any short term leases would be expensed as incurred.

The operating and financing lease asset and lease liability are determined at the commencement date of the lease based on the present value of the lease payments. Our leases do not provide an implicit interest rate. The company used its incremental borrowing rate, the rate of interest to borrow in a collateralized basis for a similar term, at the lease commencement date.

All of the leases are net leases and, therefore, do not contain non-lease components. The Company either pays directly or reimburses the lessor for property and casualty insurance cost and the property taxes assessed on the property, as well as a portion of the common area maintenance associated with the property which are categorized as non-components as outlined in the applicable guidance.

At September 30, 2022 and December 31, 2021, the quantitative data relating to the Company’s leases are as follows (in thousands):

	September 30,			December 31,
	2022			2021
Finance Lease Amounts:
ROU asset	$	356		$	359
Lease liability	$	524		$	496
Operating Lease Amounts:
ROU assets	$	2,161		$	2,564
Lease liabilities	$	2,210		$	2,604
Weighted-average remaining lease term
Finance lease		95 years			95 years
Operating leases		6.73 years			7.02 years
Weighted-average discount rate
Finance lease		9.50	%		9.50	%
Operating leases		1.14	%		1.22	%

The components of lease expense and cash flow information related to leases as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(Dollars In Thousands)				(Dollars In Thousands)
Finance Lease Cost
Amortization of ROU asset	$	1		1	$	3	$	3
Interest on lease liability	$	9		9	$	28	$	27
Operating Lease Costs	$	140		142	$	423	$	425
Cash paid for amounts included in the measurement of lease liabilities
Finance lease	$	—		—	$	—	$	—
Operating leases	$	279		136	$	417	$	407

Maturities of lease liabilities at September 30, 2022 are as follows (in thousands):

	Operating		Finance
	Leases		Lease
Years ended December 31:
2022	$	129	$	23
2023		423		30
2024		333		30
2025		302		30
2026		235		31
Thereafter		875		4,158
Total lease payments	$	2,297	$	4,302
Interest		(87)		(3,778)
Lease liability	$	2,210	$	524