Leases

12 Months Ended

Dec. 31, 2022

NOTE 5. Leases

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 if the rate implicit in the lease is unattainable. 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 Company’s long-term lease agreements are classified as operating leases. Certain of these leases offer the option to extend the lease term and the Company has included such extensions in its calculation of the lease liabilities to the extent the options are reasonably assured of being exercised. The lease agreements do not provide for residual value guarantees and have no restrictions or covenants that would impact dividends or require incurring additional financial obligations.

The following tables present information about the Company’s leases:

(dollars in thousands)	December 31, 2022
Lease liabilities	$	1,632
Right-of-use assets	$	1,579
Weighted average remaining lease term	4.24 years
Weighted average discount rate		2.87	%

	Years Ended December 31,
Lease cost (in thousands)	2022		2021
Operating lease cost	$	349	$	347
Total lease cost	$	349	$	347
Cash paid for amounts included in the measurement of lease liabilities	$	344	$	351

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

	As of
Lease payments due (in thousands)	December 31, 2022
Twelve months ending December 31, 2023	$	418
Twelve months ending December 31, 2024		436
Twelve months ending December 31, 2025		395
Twelve months ending December 31, 2026		278
Thereafter		231
Total undiscounted cash flows	$	1,758
Discount		(126	)
Lease liabilities	$	1,632

The aggregate rental expense of premises and equipment was $415 thousand and $470 thousand for years ended December 31, 2022 and 2021, respectively.