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LEASES

9 Months Ended

Jun. 30, 2020

NOTE H – LEASES

The Company adopted Accounting Standard Update (“ASU”) No. 2016-02, Leases (Topic 842), on October 1, 2019. Topic 842 requires lessees to recognize a lease liability and a right-of-use (“ROU”) asset, measured at the present value of the future minimum lease payments, at the lease commencement date. The Company adopted this guidance on October 1, 2019, electing the modified retrospective transition approach method that does not adjust previous periods. The Company also elected not to include short-term leases (i.e., leases with initial term of twelve months or less), or equipment leases (deemed immaterial) on the consolidated statements of condition as provided for in the guidance.

The Company has operating leases for five branch locations. Our leases have remaining lease terms of up to 11 years, some of which include options to extend the leases for up to 10 additional years. Operating leases are recorded as ROU assets and lease liabilities and are included within Other assets and Accounts payable and other liabilities, respectively, on our Consolidated Balance Sheets.

Operating lease ROU assets represent our right to use an underlying asset during the lease term and operating lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at lease commencement base on the present value of the remaining lease payments using a discount rate that represents our incremental borrowing rate. The Company recorded a $3.8 million operating lease right-of-use asset and operating lease liability beginning October 1, 2019. The incremental borrowing rate used by the Company to value its operating leases was based on the interpolated term advance rate available from the Federal Home Loan Bank of New York, based on the remaining lease term as of October 1, 2019.

At June 30, 2020, the Company’s operating lease right-of-use assets and operating lease liabilities totaled $3.4 million and $3.8 million, respectively.

The following table presents the balance sheet information related to our leases:

	June 30, 2020
	(Dollars in thousands)

Operating lease right-of-use asset	$	3,389
Operating lease liabilities	$	3,787
Weighted average remaining lease term in years		7.5
Weighted average discount rate		2.2%

The following table summarizes the maturity of our remaining lease liabilities by year:

	June 30, 2020
	(In thousands)
For the Year Ending:
2020	$	175
2021		705
2022		595
2023		602
2024		602
2025 and thereafter		1,528
Total lease payments		4,207
Less imputed interest		(420	)
Present value of lease liabilities	$	3,787

Total lease expense recorded on the Consolidated Statements of Income within Occupancy expense were $606,000 and $593,000 for the nine months ended June 30, 2020 and 2019, respectively.