COMMITMENTS & CONTINGENCIES

9 Months Ended

Sep. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments & Contingencies

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 leases 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.

The table below details the Right of Use asset (net of accumulated amortization), lease liability and other information related to the Company's operating leases:

(dollars in thousands)	September 30, 2020			December 31, 2019
Operating Leases
Operating lease right of use asset, net	$	8,005		$	8,382
Operating lease liability	$	8,193		$	8,495
Weighted average remaining lease term	18.35 years			18.80 years
Weighted average discount rate	3.52		%	3.50		%
Remaining lease term - min	0.9 years			0.0 years
Remaining lease term - max	24.0 years			25.0 years

The right of use assets and lease liabilities are impacted by the length of the lease term and the rate used to discount the minimum lease payments to present value. The Company's lease agreements often include one or more options to renew at the Company's discretion. If at lease inception, the Company reasonably expects to exercise renewal option, 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.

The table below details the Company's lease cost, which is included in occupancy expense in the Unaudited Consolidated Statements of Income.

	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands)	2020		2019		2020		2019
Operating lease cost	$	198	$	204	$	594	$	640
Cash paid for lease liability	$	175	$	181	$	521	$	549

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 September 30, 2020
Lease payments due:
Within one year	$	696
After one but within two years	599
After two but within three years	610
After three but within four years	618
After four but within five years	646
After five years	8,284
Total undiscounted cash flows	$	11,453
Discount on cash flows	3,260
Total lease liability	$	8,193