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LEASES

9 Months Ended

Sep. 30, 2020

Operating Leases

The Corporation leases certain branch properties under long-term, operating lease agreements. The leases expire at various dates through 2033 and generally include renewal options. As of September 30, 2020, the weighted average remaining lease term was 10.5 years with a weighted average discount rate of 3.39%. Rent expense was $0.2 million for the three months ended September 30, 2020. Rent expense was $0.7 million for the nine months ended September 30, 2020. Certain leases provide for increases in future minimum annual rent payments as defined in the lease agreements. The Corporation’s operating lease agreements contain both lease and non-lease components, which are generally accounted for separately. The Corporation’s lease agreements do not contain any residual value guarantees.

Leased branch properties at September 30, 2020 and December 31, 2019 consist of the following (in thousands):


	September 30, 2020		December 31, 2019
Operating lease right-of-use asset	$	8,713	$	8,713
Less: accumulated amortization	(1,239)		(712)
Operating lease right-of-use-assets, net	$	7,474	$	8,001

The following is a schedule by year of the undiscounted cash flows of the operating lease liabilities, excluding CAM charges, as of September 30, 2020 (in thousands):


Year	Amount
2020	$	233
2021	930
2022	869
2023	889
2024	880
2025 and thereafter	5,347
Total minimum lease payments	9,148
Less: amount representing interest	(1,564)
Present value of net minimum lease payments	$	7,584

As of September 30, 2020, the Corporation had no operating leases that were signed, but had not yet commenced.

Finance Leases

The Corporation leases certain buildings under finance leases. The lease arrangements require monthly payments through 2036. As of September 30, 2020, the weighted average remaining lease term was 12.3 years with a weighted average discount rate of 3.35%. The Corporation has included these leases in premises and equipment as of September 30, 2020 and December 31, 2019 as follows (in thousands):


	September 30, 2020		December 31, 2019
Buildings	$	5,572	$	5,572
Less: accumulated depreciation	(1,791)		(1,541)
Net book value	$	3,781	$	4,031

The following is a schedule by year of future minimum lease payments under the capitalized lease, together with the present value of net minimum lease payments as of September 30, 2020 (in thousands):


Year	Amount
2020	$	94
2021	388
2022	391
2023	391
2024	391
2025 and thereafter	3,250
Total minimum lease payments	4,905
Less: amount representing interest	(995)
Present value of net minimum lease payments	$	3,910

As of September 30, 2020, the Corporation had no finance leases that were signed, but had not yet commenced.

Related Party Transactions

The Bank leases its branch located at 1365 New Scotland Road, Slingerlands, New York, under a lease agreement through July, 2022 from a member of the Corporation's Board of Directors with monthly rent expense totaling $3 thousand per month. Rent paid to this Board of Directors member totaled $13 thousand and $12 thousand for the three month periods ended September 30, 2020 and 2019, respectively. Rent paid to this Board of Directors member totaled $40 thousand for the nine month periods ended September 30, 2020 and 2019.

The Bank leases its branch located at 2 Rush Street, Schenectady, New York, under a lease agreement through February 2033 from a member of the Corporation's Board of Directors with monthly rent expense totaling $7 thousand per month. Rent paid to this Board of Directors member totaled $26 thousand and $24 thousand for the three month periods ended September 30, 2020 and 2019, respectively. Rent paid to this Board of Directors member totaled $76 thousand and $69 thousand for the nine month periods ended September 30, 2020 and 2019, respectively.

LEASES