COMMITMENTS & CONTINGENCIES

3 Months Ended

Mar. 31, 2020

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS & CONTINGENCIES

Operating Leases

A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. On January 1, 2019, the Company adopted ASU No. 2016-02 “Leases” (Topic 842) and all subsequent ASUs that modified Topic 842. For the Company, Topic 842 primarily affected the accounting treatment for operating lease agreements in which the Company is the lessee. All of the leases in which the Company is the lessee are for branches and office space. All of these leases are classified as operating leases, and therefore, were previously not recognized on the Company’s consolidated balance sheet. With the adoption of Topic 842, operating lease agreements are required to be recognized on the consolidated balance sheet as a right-of-use-asset with a corresponding lease liability.

At March 31, 2020, the Company had lease liabilities totaling $8.4 million and right of use assets totaling $8.3 million related to these leases. Remaining lease terms range from 1.40 years to 25 years. The right of use assets and lease liabilities are impacted by the length of the lease term and the discount rate used to present value the minimum lease payments. The Company's lease agreements often include one or more options to renew at the Company's discretion. If at lease inception, the Company considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the calculation of the right of use asset and lease liability. Topic 842 requires the use of the rate implicit in the lease whenever this rate is readily determinable. As this rate is rarely determinable, the Company utilizes its incremental borrowing rate at lease inception over a similar term. For operating leases existing prior to January 1, 2019, the FHLB fixed advance rate which corresponded with the remaining lease term as of January 1, 2019 was used.

For the three months ended March 31, 2020, the weighted average remaining lease term for operating leases was 18.7 years and the weighted average discount rate used in the measurement of operating leases was 3.50%. Operating lease cost for the three months ended March 31, 2020 and 2019 was $198,000 and $231,000, respectively and cash paid for amounts included in the measurement of lease liabilities for the same time periods were $172,000 and $183,000 respectively.

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)	As of March 31, 2020

Lease payments due:
Within one year	$	701
After one but within two years	643
After two but within three years	605
After three but within four years	614
After four but within five years	624
After five years	8,615
Total undiscounted cash flows	$	11,802
Discount on cash flows	3,405
Total lease liability	$	8,397