Leases

Effective January 1, 2019, the Company adopted ASU 2016-02, Leases (Topic 842). As of September 30, 2019, the Company had operating real estate leases for three branch locations, one loan production office and two ATM locations, as well as a finance real estate lease for land upon which a new branch location was constructed. The lease agreements have maturity dates ranging from July 2020 to September 2047. As of September 30, 2019, the weighted average remaining life of the lease term for the operating leases and finance lease was 6.06 years and 28 years, respectively.

The discount rate used in determining the lease liability for each individual lease was the FHLB fixed advance rate as of January 2019 that corresponded to the remaining lease term for each of these leases at adoption of the ASU. As of September 30, 2019, the weighted average discount rate for operating leases and the finance lease was 3.31% and 3.98%, respectively.

The operating lease right-of-use assets, included in Other assets on the consolidated balance sheet, were $436 thousand, and the operating lease liabilities, included in Accrued interest and other liabilities on the consolidated balance sheet, were $437 thousand as of September 30, 2019. The finance lease right-of-use assets, included in Premises and equipment, net on the consolidated balance sheet, were $1.4 million, and the finance lease liabilities, included in Accrued interest and other liabilities on the consolidated balance sheet, were $1.5 million as of September 30, 2019.

The components of lease expense were as follows:



	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
	(Dollars in thousands)
Operating lease cost	$	31	$	93

Finance lease cost:
Amortization of right-of-use assets	$	13	$	39
Interest on lease liabilities	14		44
	$	27	$	83

Total estimated rental commitments for operating and finance leases were as follows as of September 30, 2019:



	Operating Leases		Finance Leases
	(Dollars in thousands)
2019	$	51	$	18
2020	113		70
2021	99		72
2022	51		73
2023	39		75
Thereafter	154		2,288
Total	$	507	$	2,596

A reconciliation of the undiscounted cash flows in the maturity analysis above and the lease liability recognized in the consolidated balance sheet as of September 30, 2019, is shown below:



	Operating Leases			Finance Leases
	(Dollars in thousands)
Undiscounted cash flows	$	507		$	2,596
Discount effect of cash flows	(70		)	(1,110		)
Lease liabilities	$	437		$	1,486