COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2021

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

NOTE 11 — COMMITMENTS AND CONTINGENCIES

In the normal course of business, there are various pending legal actions and proceedings that are not reflected in the consolidated financial statements. Management does not believe the outcome of these actions and proceedings will have a material effect on the consolidated financial position of the Corporation.

The Corporation currently leases three branch banking facilities and one parcel of land under operating leases. At December 31, 2021, right-of-use assets and lease liabilities were recorded related to these operating leases totaling $1,025,000 and $1,499,000, respectively. Further options to extend or terminate the leases are not applicable for any of the four leases. No significant assumptions or judgements were made in determining whether a contract contained a lease or in the consideration of lease versus non-lease components. None of the leases contained an implicit rate; therefore, our incremental borrowing rate was used for each of the leases.

The Corporation recognized total operating lease costs for the years ended December 31, 2021 and 2020 of $178,000 and $413,000, respectively. Cash payments totaled $156,000 and $154,000 for the years ended December 31, 2021 and 2020, respectively.

The Corporation currently has one finance lease for equipment. At December 31, 2021, right-of-use assets and lease liabilities were recorded related to this finance lease totaling $34,000 and $16,000, respectively. Amounts recognized as right-of-use assets related to finance leases are included in premises and equipment, net in the accompanying consolidated balance sheets. Further options to extend or terminate the lease are not applicable. No significant assumptions or judgements were made in determining whether a contract contained a lease or in the

consideration of lease versus non-lease components. The lease does not contain an implicit rate; therefore, our incremental borrowing rate was used for the lease.

Total finance lease costs that were recognized by the Corporation for the years ended December 31, 2021 and 2020 were immaterial. Cash payments totaled $10,000 and $4,000 for the years ended December 31, 2021 and 2020, respectively.

The following table displays the weighted-average term and discount rates for operating and finance leases outstanding as of December 31, 2021 and 2020.

	December 31,	December 31,	December 31,	December 31,
	2021	2020	2021	2020
	Operating	Operating	Finance	Finance
Weighted-average term (years)	24.51	25.09	1.67	5.55
Weighted-average discount rate	3.89%	3.86%	0.68%	0.88%

A maturity analysis of operating lease liabilities and reconciliation of the undiscounted cash flows to the total operating lease liability is as follows:

(Dollars in thousands)	December 31,		December 31,		December 31,		December 31,
	2021		2020		2021		2020
Minimum Lease Payments due:	Operating		Operating		Finance		Finance
Within one year	$	120	$	140	$	10	$	19
After one but within two years		68		86		7		19
After two but within three years		68		68		—		15
After three but within four years		68		68		—		9
After four but within five years		68		68		—		9
After five years		2,190		2,258		—		16
Total undiscounted cash flows		2,582		2,688		17		87
Discount on cash flows		(1,083)		(1,175)		(1)		(3)
Total lease liability	$	1,499	$	1,513	$	16	$	84