On January 1, 2019, the Company adopted ASU No. 2016-02 “Leases (Topic 842)” and all subsequent ASUs that modified Topic 842. The Company elected the prospective application approach provided by ASU 2018-11 and did not adjust prior periods for ASC 842. The Company also elected certain practical expedients within the standard and consistent with such elections did not reassess whether any expired or existing contracts are or contain leases, did not reassess the lease classification for any expired or existing leases, and did not reassess any initial direct costs for existing leases. As stated in the Company’s 2019 Form 10-K, the implementation of the new standard resulted in recognition of a right-of-use asset and lease liability of $3.8 million at the date of adoption, which is related to the Company’s lease of premises used in operations. The right-of-use asset and lease liability are included in other assets and other liabilities, respectively, in the Consolidated Balance Sheets. During the first quarter of 2020, the Company entered into a long-term lease agreement for a loan production office in Tysons Corner, Virginia. This resulted in the initial recognition of a right-of-use asset and lease liability of $549 thousand, also reflected in other assets and other liabilities.

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 two long-term lease agreements are 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. The lease agreements do not provide for a residual value guarantee and have no restrictions or covenants that would impact dividends or require incurring additional financial obligations.

(dollars in thousands)
	September 30, 2020			December 31, 2019
Lease liabilities	$	4,138		$	3,680
Right-of-use assets	$	4,047		$	3,618
Weighted average remaining lease term	18 years			20 years
Weighted average discount rate		3.35	%		3.62	%

	Nine Months Ended
Lease Cost	September 30, 2020			September 30, 2019
Operating lease cost	$	222		$	196
Variable lease cost		—			—
Short-term lease cost		12			12
Total lease cost	$	234		$	208

Cash paid for amounts included in the measurement of lease liabilities	$	184		$	150

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	September 30, 2020
Twelve months ending September 30, 2021	$	293
Twelve months ending September 30, 2022		321
Twelve months ending September 30, 2023		323
Twelve months ending September 30, 2024		326
Twelve months ending September 30, 2025		387
Thereafter		4,081
Total undiscounted cash flows	$	5,731
Discount		(1,593	)
Lease liabilities	$	4,138