Lease Liabilities

6 Months Ended

Jun. 30, 2023

The Company includes commercial operating leases with an original cost of $7.1 million and $2.8 million within premises and equipment, net as of June 30, 2023 and December 31, 2022, respectively. Net book value of the operating leases as of June 30, 2023 and December 31, 2022 was $6.7 million and $2.7 million. Rental income from operating leases for the three months ended June 30, 2023 was $0.2 million and for the three months ended June 30, 2022 was a de minimis amount. Rental income from operating leases for the six months ended June 30, 2023 was $0.3 million and for the six months ended June 30, 2022 was a de minimis amount. Depreciation expense for the related premises and equipment was $0.5 million and $0.1 million for the three months ended June 30, 2023 and 2022, respectively. Depreciation expense for the related premises and equipment was $0.9 million and $0.2 million for the six months ended June 30, 2023 and 2022, respectively.

The Company leases its facilities under noncancelable operating leases. Rent expense for the three months ended June 30, 2023 and 2022 was $0.2 million and $0.3 million, respectively. Rent expense for the six months ended June 30, 2023 and 2022 was $0.5 million and $0.6 million, respectively. Future minimum annual undiscounted rental payments for these operating leases are as follows ($ in thousands):


Six Months Ended December 31, 2023	$	558
Year Ended December 31, 2024	1,104
Year Ended December 31, 2025	1,086
Year Ended December 31, 2026	1,118
Year Ended December 31, 2027	1,152
Thereafter	2,203
Total	7,221
Less present value discount	(429)
Operating lease liabilities	$	6,792

The Company entered into one lease during the six months ended June 30, 2022 to provide additional space while the Murray office construction was completed. ASC 842 does not apply due to the short-term period of this lease and immateriality. The tables below present information regarding the Company’s lease assets and liabilities.


	Six Months Ended
	June 30, 2023		June 30, 2022

Weighted-average remaining lease term – operating leases (in years)	6.3		7.2
Weighted-average discount rate – operating leases	1.9	%	1.9	%

Supplemental cash flow information related to leases were as follows (in thousands):


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
($ in thousands)
Operating cash flows from operating leases	$	21	$	28	$	292	$	56
Right-of-use assets obtained in exchange for operating lease liabilities	—		—		—		7,380

The components of lease expense were as follows (in thousands):


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
(in thousands)
Operating leases
Operating lease cost	$	219	$	278	$	438	$	514
Variable lease cost	9		4		18		8
Operating lease expense	228		282		456		522
Short-term lease rent expense	—		28		—		28
Net rent expense	$	228	$	310	$	456	$	550