The Company enters into leases in the normal course of business.  As of December 31, 2022, the Company operated four offices for which the land and buildings are leased.  All of the Company’s leases are operating leases under applicable accounting standards and the lease agreements have maturity dates ranging from March 2023 through January 2026, some of which include extension options.  The weighted average remaining life of the lease term for these leases was 2 years as of December 31, 2022.  As permitted by applicable accounting standards, the Company has elected not to recognize leases with original lease terms of 12 months or less (short-term leases) on the Company’s Consolidated Balance Sheets.

 

Leases are classified as either operating or finance leases at the lease commencement date, and as previously noted, all of the Company’s leases have been determined to be operating leases.  Lease expense for operating leases and short-term leases is recognized on a straight-line basis over the lease term.  Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease.

Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term.

The Company uses its incremental borrowing rate, on a collateralized basis, at lease commencement to calculate the present value of lease payments when the rate implicit in the lease is not known.  The weighted average discount rate for leases was 0.58% as of December 31, 2022.

The right-of-use assets and lease liabilities were $625,000 and $627,000, respectively, as of December 31, 2022, and were $866,000 and $861,000, respectively at December 31, 2021. Right-of-use assets are included in other assets and lease liabilities are included in accrued expenses and other liabilities on the Company’s Consolidated Balance Sheets.

Total operating lease expense charged to operations under all operating lease agreements was $451,000 in 2022 and $431,000 in 2021.

Future undiscounted lease payments for operating leases with initial terms of one year or more as of December 31, 2022 are as follows (dollars in thousands):

2023		$	360
2024			155
2025			114
2026			—
2027			—
Thereafter			—
Total undiscounted lease payments			629
Less effect of discounting			(2	)
Present value of estimated lease payments (lease liability)		$	627