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Operating lease commitments and contingencies

12 Months Ended

Dec. 31, 2020

Operating lease commitments and contingencies

Operating lease commitments and contingencies

7. Operating lease commitments and contingencies:

The Company is obligated under non-cancelable operating leases for certain branch locations. We determine if an arrangement is a lease at inception by assessing whether a contract contains a right to control an identified asset for a period of time in exchange for consideration. For all leases, we recognize a right-of-use asset and lease liability at the effective date of the lease. Operating leases right-of-use assets are included in premises and equipment, and lease liabilities are included in other liabilities in the consolidated balance sheet commencing at January 1, 2019. We have no

finance leases. Leases with an initial term of 12 months or less are not recorded on the balance sheet and the related lease expense is recognized on a straight-line basis over the lease term.

Certain leases include options to renew, with renewal terms generally containing one or more five-year renewal options. At December 31, 2020, the Company’s leases have remaining renewal terms that can extend the lease term from three years to twenty-one years that are reasonably certain of being exercised. The weighted average remaining lease term at December 31, 2020 is thirteen years. At December 31, 2019, the weighted average remaining lease term was sixteen years. The discount rate used in determining the lease liability for each individual lease was the FHLB fixed advance rate which corresponded with the remaining lease term as of January 1, 2019 for leases that existed at adoption and as of the lease commencement date for leases subsequently entered into after January 1, 2019. At December 31, 2020, discount rates ranged from 1.95% to 3.85% with an-average discount rate of 3.19%. At December 31, 2019, discount rates ranged from 2.89% to 3.85% with an average discount rate of 3.46%.

At December 31, 2020, right-of-use assets of $6,282 were included in premises and equipment, and the related lease liability totaled $6,425 and was included in other liabilities in the consolidated balance sheet. Right-of-use assets and the related lease liability were $6,125 and $6,194, respectively, at December 31, 2019. The lease liability decreased due to payments of $660 offset by $326 of lease expense and the termination of two leases. One additional lease was entered into and added $899 to the liability. Rent expense for the years ended December 31, 2020, 2019 and 2018 amounted to $727, $670, and $492, respectively, and is included in occupancy expenses.

Future minimum lease payments under operating leases are summarized as follows:


2021	$	611
2022		618
2023		560
2024		488
2025		504
Thereafter		5,500
Total future minimum lease payments		8,281
Less amount representing interest		(1,856)
Present value of future minimum lease payments	$	6,425