Leases

The Company follows ASU 2016-02, "Leases (Topic 842)," which revised certain aspects of recognition, measurement, presentation, and disclosure of leasing transactions. ASU 2016-02 requires that a lessee recognize the assets and liabilities on its balance sheet that arise from all leases with a term greater than 12 months. The core principle requires the lessee to recognize a liability to make lease payments and a "right-of-use" asset. The Company adopted this standard as of January 1, 2019. In accordance with ASU 2018-01, we have elected to apply ASU 2016-02 as of the beginning of the period of adoption and will not restate comparative periods.

Operating leases in which we are the lessee are recorded as right of use ("ROU") assets and lease liabilities and are included in Prepaid expenses and other assets and Accrued expenses and other liabilities, respectively, on our Consolidated Balance Sheets. We do not currently have any finance leases in which we are the lessee.

Operating lease ROU assets represent our right to use an underlying asset during the lease term and operating lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at lease commencement based on the present value of the remaining lease payments using a discount rate that represents our incremental borrowing rate. The incremental borrowing rate was calculated for each lease by taking a variable rate FHLB ARC product (based on Libor plus a spread) and then swapping it to a fixed rate borrowing by adding a fixed mid swap rate for the desired term. The borrowing rate for each lease is unique based on the lease term. Operating lease expense, which is comprised of amortization of the ROU asset and the implicit interest accreted on the operating lease liability, is recognized on a straight-line basis over the lease term, and is recorded in Occupancy expense in the Consolidated Statements of Income.

Our leases relate primarily to bank branches and equipment with remaining lease terms of generally 1 to 10 years. Certain lease arrangements contain extension options which typically range from 1 to 5 years at the then fair market rental rates. As these extension options are not generally considered reasonably certain of exercise, they are not included in the lease term.

As of March 31, 2019, operating lease ROU assets and operating lease liabilities were $2.7 million, respectively. The table below summarizes information related to our operating leases:



(In thousands, except percentages and years)	For the three months ended March 31, 2019
Right-of-use assets recognized	$	2,765
Operating cash flows from operating leases	$	138
Weighted average remaining lease term in years	7.83
Weighted average discount rate	5.62		%

The table below summarizes the maturity of remaining lease liabilities:



(In thousands)	March 31, 2019
2019 (excluding the three months ended March 31, 2019)	$	365
2020	427
2021	393
2022	349
2023	358
2024 and thereafter	1,412
Total lease payments	$	3,304
Less: Interest	(639		)
Present value of lease liabilities	$	2,665

Operating lease right-of-use assets	$	2,656