Leases

12 Months Ended

Dec. 31, 2021

Note 13. Leases

The Company’s long-term lease agreements are classified as operating leases. Certain of these leases offer the option to extend the lease terms and the Company has included such extensions in its calculation of the lease liabilities to the extent the options are reasonably assured of being exercised. The lease agreements do not provide for residual value guarantees and The following table presents a summary of the activity in the Company's allowance for loan losses and the ratio of net charge-offs to average loans outstanding for the periods stated.

The Company assumed five operating leases for real estate in the Bay Banks Merger. In accordance with ASC 842 – Leases, the original classification of each lease was retained and not re-evaluated as part of the accounting for the business combination. The Company measured each of the assumed lease liabilities as if the lease was new, determined the appropriate lease liability and ROU asset fair value based on the Company's incremental borrowing rate at merger date, and obtained independent assessments of favorable or unfavorable market terms for each lease contract.

The following tables present information about the Company’s leases as of and for the periods stated.


(Dollars in thousands)	December 31, 2021
Lease liability	$	7,651
ROU asset	$	6,317
Weighted average remaining lease term (years)	6.79
Weighted average discount rate		1.86	%


	For the year ended December 31,
(Dollars in thousands)	2021		2020
Operating lease cost	$	2,383	$	1,731
Total lease cost	$	2,383	$	1,731
Cash paid for amounts included in the measurement of lease liabilities	$	2,014	$	—

The following table presents a maturity analysis of operating lease liabilities and reconciliation of the undiscounted cash flows to the total of operating lease liabilities for periods following the date stated.


(Dollars in thousands)	December 31, 2021
2022	$	1,638
2023		1,276
2024		946
2025		849
2026		767
Thereafter		2,442
Total undiscounted cash flows		7,918
Discount		(267	)
Lease liability	$	7,651