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 month periods ending March 31, 2021 and 2020 (in thousands).


	Three months ended
	March 31,
	2021		2020
Lease cost
Financing lease cost:
Amortization of right-of-use asset	$	68	$	67
Interest expense		27		29
Operating lease cost		29		29
Total lease cost	$	124	$	125

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 March 31, 2021 and December 31, 2020.


	March 31, 2021				December 31, 2020

	Operating		Financing		Operating		Financing
Weighted-average remaining term (years)	11.2		15.8		11.4		16.0
Weighted-average discount rate	3.50	%	3.53	%	3.49	%	3.52	%

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.


March 31, 2021
	OPERATING		FINANCING
	(IN THOUSANDS)
Undiscounted cash flows due:
Within 1 year	$	120	$	317
After 1 year but within 2 years		85		320
After 2 years but within 3 years		69		290
After 3 years but within 4 years		69		251
After 4 years but within 5 years		69		231
After 5 years		504		2,714
Total undiscounted cash flows		916		4,123
Discount on cash flows		(164)		(1,066)
Total lease liabilities	$	752	$	3,057


December 31, 2020
	OPERATING		FINANCING
	(IN THOUSANDS)
Undiscounted cash flows due:
Within 1 year	$	120	$	316
After 1 year but within 2 years		98		320
After 2 years but within 3 years		69		309
After 3 years but within 4 years		69		249
After 4 years but within 5 years		69		248
After 5 years		520		2,760
Total undiscounted cash flows		945		4,202
Discount on cash flows		(169)		(1,093)
Total lease liabilities	$	776	$	3,109

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 March 31, 2021 and December 31, 2020, the Company had no short-term leases.