Leases

6 Months Ended

Jun. 30, 2021

LeasesA lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. The Company’s leases are comprised of real estate property for branches, automated teller machine locations and office space with terms extending through 2050. The Company has one existing finance lease, which has a lease term through 2029.

The following table represents the classification of the Company’s right-of-use (“ROU”) assets and lease liabilities on the consolidated statements of financial condition (in thousands):


		June 30, 2021		December 31, 2020
Lease ROU Assets	Classification
Operating lease ROU asset	Other assets	$	21,627	$	22,555
Finance lease ROU asset	Premises and equipment, net	1,595		1,694
Total lease ROU asset		$	23,222	$	24,249

Lease Liabilities
Operating lease liability	Other liabilities	$	22,163	$	22,990
Finance lease liability	Other borrowings	2,003		2,100
Total lease liability		$	24,166	$	25,090

The calculated amount of the ROU assets and lease liabilities are impacted by the lease term and the discount rate used to calculate the present value of the minimum lease payments. Lease agreements often include one or more options to renew the lease at the Company’s discretion. If the exercise of a renewal option is considered to be reasonably certain, the Company includes the extended term in the calculation of the ROU asset and lease liability. For the discount rate, Leases (Topic 842) requires the Company to use the rate implicit in the lease, provided the rate is readily determinable. As this rate is rarely determinable, the Company utilizes its incremental borrowing rate, at lease inception, over a similar term. For operating leases existing prior to January 1, 2019, the Company used the incremental borrowing rate for the remaining lease term as of January 1, 2019. For the finance lease, the Company utilized its incremental borrowing rate at lease inception.


	June 30, 2021		December 31, 2020
Weighted-Average Remaining Lease Term
Operating leases	8.04 years		7.77 years
Finance lease	8.10 years		8.59 years
Weighted-Average Discount Rate
Operating leases	2.97	%	3.01	%
Finance lease	5.63	%	5.63	%

The following table represents lease expenses and other lease information (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Lease Expense
Operating lease expense	$	1,471	$	1,590	$	2,961	$	3,313
Finance lease expense:
Amortization of ROU assets	49		41		99		81
Interest on lease liabilities(1)	28		26		57		53
Total	$	1,548	$	1,657	$	3,117	$	3,447

Other Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,347	$	1,404	$	2,797	$	3,052
Operating cash flows from finance leases	28		26		57		53
Financing cash flows from finance leases	48		47		96		94

(1)Included in borrowed funds interest expense on the consolidated statements of income. All other costs are included in occupancy expense.

Future minimum payments for the finance lease and operating leases with initial or remaining terms of one year or more as of June 30, 2021 were as follows (in thousands):


	Finance Lease		Operating Leases
For the Twelve Months Ended June 30,
2022	$	307	$	5,667
2023	307		3,809
2024	307		3,148
2025	307		2,866
2026	307		2,153
Thereafter	951		7,843
Total	2,486		25,486
Less: Imputed interest	(483)		(3,323)
Total lease liabilities	$	2,003	$	22,163

Leases

The following table represents the classification of the Company’s right-of-use (“ROU”) assets and lease liabilities on the consolidated statements of financial condition (in thousands):


		June 30, 2021		December 31, 2020
Lease ROU Assets	Classification
Operating lease ROU asset	Other assets	$	21,627	$	22,555
Finance lease ROU asset	Premises and equipment, net	1,595		1,694
Total lease ROU asset		$	23,222	$	24,249

Lease Liabilities
Operating lease liability	Other liabilities	$	22,163	$	22,990
Finance lease liability	Other borrowings	2,003		2,100
Total lease liability		$	24,166	$	25,090


	June 30, 2021		December 31, 2020
Weighted-Average Remaining Lease Term
Operating leases	8.04 years		7.77 years
Finance lease	8.10 years		8.59 years
Weighted-Average Discount Rate
Operating leases	2.97	%	3.01	%
Finance lease	5.63	%	5.63	%

The following table represents lease expenses and other lease information (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Lease Expense
Operating lease expense	$	1,471	$	1,590	$	2,961	$	3,313
Finance lease expense:
Amortization of ROU assets	49		41		99		81
Interest on lease liabilities(1)	28		26		57		53
Total	$	1,548	$	1,657	$	3,117	$	3,447

Other Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,347	$	1,404	$	2,797	$	3,052
Operating cash flows from finance leases	28		26		57		53
Financing cash flows from finance leases	48		47		96		94

(1)Included in borrowed funds interest expense on the consolidated statements of income. All other costs are included in occupancy expense.

Future minimum payments for the finance lease and operating leases with initial or remaining terms of one year or more as of June 30, 2021 were as follows (in thousands):


	Finance Lease		Operating Leases
For the Twelve Months Ended June 30,
2022	$	307	$	5,667
2023	307		3,809
2024	307		3,148
2025	307		2,866
2026	307		2,153
Thereafter	951		7,843
Total	2,486		25,486
Less: Imputed interest	(483)		(3,323)
Total lease liabilities	$	2,003	$	22,163