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Leases

12 Months Ended

Dec. 31, 2020

NOTE 10: Leases

The Corporation’s leases comprise primarily leases of real estate and office equipment in which the Corporation is the lessee. Lease cost for the years ended December 31, 2020 and 2019 is as follows:


	Year Ended December 31,
(Dollars in thousands)	2020		2019
Operating lease cost	$	1,616	$	1,681
Finance lease cost:
Amortization of right-of-use asset		166		—
Interest on lease liability		70		—
Short-term lease cost		219		128
Variable lease cost		52		43
Total lease cost	$	2,123	$	1,852

Interest on lease liability cost is included in “Interest expense – Borrowings” and all other lease costs are included in “Occupancy” on the Consolidated Statements of Income. Variable lease payments primarily represent payments for common area maintenance related to real estate leases and taxes and fees related to equipment leases that are not included in base rent payments and changes in lease payments that are adjusted for inflation.

The Corporation adopted ASC 842 effective January 1, 2019. Prior to January 1, 2019, the Corporation measured lease expense in accordance with ASC Topic 840. During the year ended December 31, 2018, the Corporation recognized lease expense of $1.68 million.

Certain of the Corporation’s leases contain options to extend the lease term beyond the initial term. Options to extend the lease term are recognized as part of the Corporation’s lease liabilities and right-of-use assets at the commencement of a lease to the extent the Corporation is reasonably certain to exercise such options.

The Corporation’s right-of-use assets, lease liabilities, weighted average remaining lease term and weighted average discount rate of the Corporation’s leases are set forth in the table below.


		December 31,			December 31,
(Dollars in thousands)		2020			2019
Operating leases:
Right of use assets	$	2,404		$	2,785
Lease liabilities		2,488			2,813
Weighted average remaining lease term (years)		3.0			3.0
Weighted average discount rate		2.2	%		3.2	%

Finance leases:
Right of use assets	$	6,193		$	—
Lease liabilities		6,305			—
Weighted average remaining lease term (years)		19.5			—
Weighted average discount rate		2.0	%		—	%

Right of use assets are included in “Other Assets” on the Consolidated Balance Sheets. Operating lease liabilities are included in “Other Liabilities,” and Finance lease liabilities are included in “Long-term Borrowings” in the Consolidated Balance Sheets. During the year ended December 31, 2020, the Corporation obtained right-of-use assets in exchange for lease liabilities in operating leases and finance leases of $1.11 million and $6.36 million, respectively. During the year ended December 31, 2019, the Corporation obtained right of use assets in exchange for lease liabilities in operating leases of $1.14 million.

Cash paid for amounts included in the measurement of lease liabilities for the years ended December 31, 2020 and 2019 is as follows:


	Year Ended December 31,
(Dollars in thousands)	2020		2019
Operating leases:
Operating cash flows	$	1,659	$	1,567
Finance leases:
Operating cash flows		70		—
Financing cash flows		53		—
Total cash flows	$	1,782	$	1,567

Maturities of the Corporation’s lease liabilities are as follows:


	December 31, 2020
(Dollars in thousands)	Operating Leases		Finance Leases
2021	$	1,172	$	61
2022		670		329
2023		460		338
2024		161		346
2025		122		355
Thereafter		17		6,373
Total		2,602		7,802
Imputed interest		(114)		(1,497)
Lease liabilities	$	2,488	$	6,305