Leases

3 Months Ended

Mar. 31, 2020

16.

LEASES

Due to the adoption of ASU 2016-02, Leases (Topic 842) on December 31, 2019, the Company completed a comprehensive review and analysis of all its property contracts. As a result of this review, it was determined that the Company leases parking spaces which qualifies as an operating lease. Several assumptions and judgments were made when applying the requirements of Topic 842 to the Company’s existing lease commitments, including the allocation of consideration in the contracts, the determination of the lease term and the determination of the discount rate used in calculating the present value of the lease payments. The lease did not include any nonlease components, such as common area maintenance charges, utilities, real estate taxes or insurance. Additionally, the lease did not include any renewal options as of March 31, 2020.

The discount rate utilized in calculating the present value of the remaining lease payments for the 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 lease term and discount rate for the lease outstanding at March 31, 2020.

	Operating
Weighted-average remaining term (years)		1.3
Weighted-average discount rate		1.87	%

The following table presents the undiscounted cash flows due to operating leases as of March 31, 2020, along with a reconciliation to the discounted amount recorded on the Consolidated Balance Sheets:

Undiscounted cash flows due:	Operating
Within 1 year	$	6,000
After 1 year but within 2 years		2,000
After 2 years		-
Total undiscounted cash flows		8,000
Discount on cash flows		(105	)
Total lease liabilities	$	7,895

Under Topic 842, the lessee can elect to not record on the Consolidated Balance Sheets a lease whose term is 12 months or less and does not include a purchase option that the lessee is reasonably certain to exercise. As of March 31, 2020, the Company had no leases that had a term of 12 months or less. The Company has recorded a right-of-use asset of $7,895 and a lease liability of $7,895 included with premises and equipment and other liabilities, respectively, on the Consolidated Balance Sheet as of March 31, 2020.

Rental expense under operating leases totaled $1,500 for each of the three months ended March 31, 2020 and 2019.

SSB Bancorp, Inc. 10-Q