12. Lease Commitments

The Company has operating and financing leases for several office locations and equipment. Several assumptions and judgments were made when applying the requirements of ASU 2016-02, Leases (Topic 842) to the Company's lease commitments, including the allocation of consideration in the contracts between lease and non-lease components, determination of the lease term, and determination of the discount rate used in calculating the present value of the lease payments.

Many of our leases include both lease (e.g., minimum rent payments) and non-lease components, such as common area maintenance charges, utilities, real estate taxes, and insurance. The Company has elected to account for the variable non-lease components separately from the lease component. Such variable non-lease components are reported in net occupancy expense on the Consolidated Statements of Operations when incurred. These variable non-lease components were excluded from the calculation of the present value of the remaining lease payments, therefore, they are not included in the right-of-use assets and lease liabilities reported on the Consolidated Balance Sheets. The following table presents the lease cost associated with both operating and financing leases for the three and nine month periods ending September 30, 2020 and 2019 (in thousands).


	Three months ended				Nine months ended
	September 30,				September 30,
	2020		2019		2020		2019
Lease cost
Financing lease cost:
Amortization of right-of-use asset	$	68	$	64	$	203	$	193
Interest expense		28		29		85		88
Operating lease cost		29		29		87		87
Total lease cost	$	125	$	122	$	375	$	368

Certain of the Company's leases contain options to renew the lease after the initial term. Management considers the Company's historical pattern of exercising renewal options on leases and the performance of the leased locations, when determining whether it is reasonably certain that the leases will be renewed. If management concludes that there is reasonable certainty about the renewal option, it is included in the calculation of the remaining term of each applicable lease. The discount rate utilized in calculating the present value of the remaining lease payments for each lease was the Federal Home Loan Bank of Pittsburgh advance rate corresponding to the remaining maturity of the lease. The following table presents the weighted-average remaining lease term and discount rate for the leases outstanding at September 30, 2020 and December 31, 2019.


	September 30, 2020				December 31, 2019
	Operating		Financing		Operating		Financing
Weighted-average remaining term (years)	11.5		16.1		11.9		17.1
Weighted-average discount rate	3.48	%	3.51	%	3.46	%	3.60	%

The following table presents the undiscounted cash flows due related to operating and financing leases, along with a reconciliation to the discounted amount recorded on the Consolidated Balance Sheets (in thousands).


September 30, 2020
	OPERATING		FINANCING
Undiscounted cash flows due:
Within 1 year	$	119	$	316
After 1 year but within 2 years		110		319
After 2 years but within 3 years		69		320
After 3 years but within 4 years		69		253
After 4 years but within 5 years		69		252
After 5 years		539		2,821
Total undiscounted cash flows		975		4,281
Discount on cash flows		(177)		(1,120)
Total lease liabilities	$	798	$	3,161


December 31, 2019
	OPERATING		FINANCING
Undiscounted cash flows due:
Within 1 year	$	118	$	296
After 1 year but within 2 years		120		275
After 2 years but within 3 years		98		277
After 3 years but within 4 years		69		274
After 4 years but within 5 years		69		236
After 5 years		589		3,007
Total undiscounted cash flows		1,063		4,365
Discount on cash flows		(198)		(1,202)
Total lease liabilities	$	865	$	3,163

Under Topic 842, the lessee can elect to not record on the Consolidated Balance Sheets a lease whose term is twelve months or less and does not include a purchase option that the lessee is reasonably certain to exercise. As of September 30, 2020, the Company had no short-term leases. As of December 31, 2019, the Company had one short-term equipment lease which it elected to not record on the Consolidated Balance Sheets.