The Bank is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments primarily include commitments to extend credit. The Bank’s exposure to credit loss, in the event of nonperformance by the other party to the financial instrument for commitments to extend credit, is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.



		December 31,
		2020		2019
		(In Thousands)
Loan origination commitments	$	49,605	$	27,787
Standby letters of credit		2,784		4,094
Construction loans in process		82,336		57,824
Unused lines of credit		118,791		109,255
	$	253,516	$	198,960

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, total commitment amounts do not necessarily represent future cash requirements. The Bank evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Bank upon extension of credit, is based on management’s credit evaluation of the counterparty. Collateral held varies but primarily includes residential real estate properties.

At December 31, 2020, the Company leased 28 of its offices under various operating lease agreements. The leases have remaining terms of 1 year to 12 years. The leases contain provisions for the payment by the Company of its pro-rata share of real estate taxes, insurance, common area maintenance and other variable expenses. The Company will allocate payments made under such leases between lease and non-lease components. Some leases contain renewal options and options to purchase the assets.

The Company evaluates its contracts and service agreements in order to determine if there is an asset imbedded in such contracts and agreements. Such determination is based upon whether there is a specific asset covered by the agreement, whether the Company is entitled to all of the economic benefits to the asset over the term of the agreement, and whether the Company has full control and use of the asset over the term of the agreement without substitution rights or direction of use of the asset by the lessor.

The Company includes in its determination of its lease liability and concurrent right of use asset those renewal or purchase options for which it is reasonably certain it will exercise. Currently, the Company does not expect to exercise such purchase options and, accordingly, those are excluded in the determination of the lease liabilities and the concurrent right of use assets.

The Company has elected not to recognize a lease liability and a right of use asset for leases with a lease term of 12 or fewer months.

To calculate its lease liabilities, the Company used a discount rate based upon the applicable borrowing rates of the Federal Home Loan Bank at the inception of the lease agreement, which corresponds to the length of the lease term.

The following tables present certain information related to the Company’s lease obligations (in thousands):


		Twelve Months Ended December 31, 2020
Operating lease cost	$	3,509
Variable lease cost-operating leases	$	824

		At December 31, 2020
Supplemental balance sheet information related to leases:
Operating Leases
Operating lease right-of-use assets	$	14,988

Operating Lease Liabilities:
Current liabilities	$	2,992
Operating lease liabilities (noncurrent portion)		12,232
Total operating lease liabilities	$	15,224

The following tables summarize the Company’s weighted average remaining lease terms and weighted average discount rates:


Weighted Average Remaining Lease Term
Operating leases	6.57	years

Weighted Average Discount Rate
Operating leases	2.67	%

The following table summarizes the Company’s maturity of lease obligations for operating leases at December 31, 2020 (in thousands):


Maturities of lease liabilities (discounted):
		At December 31, 2020
		Operating Leases
One year or less	$	2,992
Over one year through three years		4,927
Over three years through five years		3,165
Over five years		4,140
Total	$	15,224