Lease Liabilities

9 Months Ended

Sep. 30, 2023

The Company includes commercial operating leases with an original cost of $8.4 million and $2.8 million within premises and equipment, net as of September 30, 2023 and December 31, 2022, respectively. Net book value of the operating leases as of September 30, 2023 and December 31, 2022 was $7.6 million and $2.7 million. Rental income from operating leases for the three months ended September 30, 2023 was $0.5 million and for the three months ended September 30, 2022 was a de minimis amount. Rental income from operating leases for the nine months ended September 30, 2023 was $0.8 million and for the nine months ended September 30, 2022 was a de minimis amount. Depreciation expense for the related premises and equipment was $0.4 million and a de minimis amount for the three months ended September 30, 2023 and 2022, respectively. Depreciation expense for the related premises and equipment was $0.6 million and a de minimis amount for the nine months ended September 30, 2023 and 2022, respectively.

The Company leases its facilities under noncancelable operating leases. Rent expense for the three months ended September 30, 2023 and 2022 was $0.2 million and $0.3 million, respectively. Rent expense for the nine months ended

September 30, 2023 and 2022 was $0.7 million and $0.8 million, respectively. Future minimum annual undiscounted rental payments for these operating leases are as follows ($ in thousands):


Three Months Ended December 31, 2023	$	279
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	6,942
Less present value discount	(397)
Operating lease liabilities	$	6,545

The Company entered into one lease during the nine months ended September 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.


	Nine Months Ended September 30,
	2023		2022

Weighted-average remaining lease term – operating leases (in years)	6.0		7.0
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 September 30,				For the Nine Months Ended September 30,
	2023		2022		2023		2022
($ in thousands)
Operating cash flows from operating leases	$	279	$	178	$	571	$	234
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 September 30,				For the Nine Months Ended September 30,
	2023		2022		2023		2022
(in thousands)
Operating leases
Operating lease cost	$	219	$	278	$	657	$	791
Variable lease cost	8		4		26		12
Operating lease expense	227		282		683		803
Short-term lease rent expense	—		9		—		38
Net rent expense	$	227	$	291	$	683	$	841