Leases

12 Months Ended

Dec. 31, 2022

NOTE 13. Leases

The Company leases certain office properties and equipment used in its operations in the normal course of business. Leases greater than 12 months in duration are recorded in the consolidated balance sheets at the lease commencement date and are classified as either operating or finance leases based on the Company's assessment of the underlying agreement.

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. 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 four long-term lease agreements for office properties are all classified as operating leases. These leases offer the option to extend the lease term and the Company has included such extensions in its calculation of the lease liability to the extent the options are reasonably certain of being exercised. These 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. Right-of-use assets and leases liabilities are included in other assets and other liabilities, respectively, in the Consolidated Balance Sheets.

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


(dollars in thousands)	December 31, 2022			December 31, 2021
Lease liability	$	4,978		$	5,289
Right-of-use asset	$	4,766		$	5,139
Weighted average remaining lease term	14 years			15 years
Weighted average discount term		3.04	%		2.99	%


	Twelve Months Ended
Lease Cost	December 31, 2022		December 31, 2021
Operating lease cost	$	528	$	376
Variable lease cost		—		—
Short-term lease cost		15		19
Total lease cost	$	543	$	395

Cash paid for amounts included in the measurement of lease liabilities	$	466	$	314

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


	As of
Lease payments due	December 31, 2022
Twelve months ending December 31, 2023	$	473
Twelve months ending December 31, 2024		480
Twelve months ending December 31, 2025		504
Twelve months ending December 31, 2026		397
Twelve months ending December 31, 2027		391
Thereafter		4,149
Total undiscounted cash flows	$	6,394
Discount		(1,416	)
Lease liability	$	4,978