LEASE COMMITMENTS

12 Months Ended

Dec. 31, 2020

LEASE COMMITMENTSEffective January 1, 2019, the Corporation adopted the new lease accounting standard, ASU 2016-12, using the modified-retrospective method. As such, for reporting periods beginning on or after January 1, 2019, leases are recognized, presented and disclosed in accordance with ASU 2016-02, while periods prior to the adoption date were not adjusted and are reported in accordance with ASC 840, Leases.

The Corporation enters into noncancellable lease arrangements primarily for some of its community offices. Certain lease arrangements contain clauses requiring increasing rental payments over the lease term, which are generally contractually stipulated. Many of these lease arrangements provide the Corporation with the option to renew the lease arrangement after the initial lease term. These options are included in determining the lease term used to establish the right-of-use assets and lease liabilities when it is reasonably certain the Corporation will exercise its renewal option. As most of the Corporation’s leases do not have a readily determinable implicit rate, the incremental borrowing rate is primarily used to determine the discount rate for purposes of measuring the right-of-use assets and lease liabilities. The Corporation’s lease arrangements do not contain any material residual value guarantees or material restrictive covenants.

The following right-of-use assets and lease liabilities are reported within the consolidated statements of condition as follows:


In thousands	December 31, 2020
Operating Leases:
Right of use assets	$	3,145
Lease liabilities	3,138


In thousands	December 31, 2019
Operating Leases:
Right of use assets	$	3,502
Lease liabilities	3,502

Supplemental balance sheet information related to leases was as follows for the year ended December 31, 2020:


Operating Leases:
Weighted average remaining lease term	7.0 years
Weighted average discount rate	5.63	%

The following summarizes the remaining scheduled future minimum lease payments for operating leases as of December 31, 2020:


Years Ending	In thousands
2021	$	805
2022	646
2023	560
2024	540
2025	518
Thereafter	1,260
Total minimum lease payments	4,329
Less: Amount representing interest (1)	1,191
Present value of net minimum lease payments	$	3,138

(1) Amount necessary to reduce net minimum lease payments to present value calculated at the Corporation’s incremental borrowing rate.

As of December 31, 2020, the Corporation does not have any significant additional operating or finance leases that have not yet commenced. The total rent expense for all operating leases was $1,024,000 and $883,000 for the years ended December 31, 2020 and 2019, respectively.

ACNB leased space at several of its owned offices to other unrelated organizations. Total rental income for these properties was $84,000 and $94,000 for the years ended December 31, 2020 and 2019, respectively.