Leases

A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property or equipment for a period of time in exchange for consideration. On January 1, 2019, the Company adopted ASU 2016-02 - Leases (Topic 842) and elected the optional transition method, which allows the Company to not separate non-lease components from the associated lease component if certain conditions are met. In addition, the Company elected not to adjust prior comparative periods.

The Company has two operating leases that are used for general office operations with remaining lease terms of two to four years. With the adoption of ASU 2016-02, operating lease agreements are required to be recognized on the condensed consolidated balance sheets as a right-of-use asset and a corresponding lease liability.

The following table shows the components of lease expense.



(in thousands)	Three Months Ended
	March 31, 2020		March 31, 2019
Operating lease cost	$	215	$	187

The following table shows supplemental cash flow information related to leases.



(in thousands)	Three Months Ended
	March 31, 2020		March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	231	$	200

The following table shows the operating leases’ impact on the condensed consolidated balance sheets. The Company elected not to include short-term leases (leases with original terms of 12 months or less) or equipment leases, as those amounts are insignificant. The Company’s leases do not provide an implicit rate. The discount rate utilized to determine the present value of lease payments is the Company’s incremental borrowing rate based on the information available at the lease inception date. The incremental borrowing rate is the rate of interest the Company would have to pay to borrow on a collateralized basis over a similar term in an amount equal to the lease payments in a similar economic environment.



(dollars in thousands)
	March 31, 2020			December 31, 2019
Operating lease right-of-use assets	$	(1,485	)	$	1,602
Operating lease liabilities	(1,485		)	1,602

Weighted-average remaining lease term (years)
Operating leases	2.2			2.4

Weighted-average discount rate
Operating leases	2.0		%	2.0		%

The following table shows the future minimum payments of operating leases with initial or remaining terms of one year or more as of March 31, 2020.



(in thousands)
Twelve months ended March 31,
2021	$	824
2022	315
2023	230
2024	58
2025	—
Thereafter	—
Total lease payments	1,427
Less: imputed interest	(39		)
Total	$	1,388