Leases

12 Months Ended

Dec. 31, 2022

A 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 2038. The Company has one existing finance lease, which has a lease term through 2029.

The following table represents the classification of the Company’s ROU assets and lease liabilities on the Consolidated Statements of Financial Condition (in thousands):


		For the Year Ended
		December 31, 2022		December 31, 2021
Lease ROU Assets	Classification
Operating lease ROU assets	Other assets	$	19,055	$	17,442
Finance lease ROU asset	Premises and equipment, net	1,532		1,495
Total lease ROU assets		$	20,587	$	18,937

Lease Liabilities
Operating lease liabilities (1)	Other liabilities	$	20,053	$	17,982
Finance lease liability	Other borrowings	1,934		1,904
Total lease liabilities		$	21,987	$	19,886

(1) Operating lease liabilities excludes liabilities for future rent and estimated lease termination payments related to closed branches of $7.7 million and $8.2 million as of December 31, 2022 and 2021, respectively.

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, ASC Topic 842, Leases 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.


	December 31, 2022		December 31, 2021
Weighted-Average Remaining Lease Term
Operating leases	6.87 years		8.22 years
Finance lease	6.60 years		7.59 years
Weighted-Average Discount Rate
Operating leases	2.86	%	2.97	%
Finance lease	5.63	%	5.63	%

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


	For the Year Ended December 31,
	2022		2021		2020
Lease Expense
Operating lease expense	$	5,000	$	5,935	$	6,438
Finance lease expense:
Amortization of ROU assets	207		199		174
Interest on lease liabilities (1)	104		112		110
Total	$	5,311	$	6,246	$	6,722

Other Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	4,466	$	5,263	$	6,298
Operating cash flows from finance leases	104		112		110
Financing cash flows from finance leases	214		195		187

(1)Included in borrowed funds interest expense on the Consolidated Statements of Income. All other costs are included in occupancy expense on the Consolidated Statements of Income.

Future minimum payments for the finance lease and operating leases with initial or remaining terms of one year or more as of December 31, 2022 were as follows (in thousands):


	Finance Lease		Operating Leases
For the Year Ending December 31,
2023	$	350	$	4,333
2024	350		3,961
2025	350		3,741
2026	350		3,008
2027	350		2,027
Thereafter	559		5,348
Total	2,309		22,418
Less: Imputed interest	(375)		(2,365)
Total lease liabilities	$	1,934	$	20,053

Leases

The following table represents the classification of the Company’s ROU assets and lease liabilities on the Consolidated Statements of Financial Condition (in thousands):


		For the Year Ended
		December 31, 2022		December 31, 2021
Lease ROU Assets	Classification
Operating lease ROU assets	Other assets	$	19,055	$	17,442
Finance lease ROU asset	Premises and equipment, net	1,532		1,495
Total lease ROU assets		$	20,587	$	18,937

Lease Liabilities
Operating lease liabilities (1)	Other liabilities	$	20,053	$	17,982
Finance lease liability	Other borrowings	1,934		1,904
Total lease liabilities		$	21,987	$	19,886


	December 31, 2022		December 31, 2021
Weighted-Average Remaining Lease Term
Operating leases	6.87 years		8.22 years
Finance lease	6.60 years		7.59 years
Weighted-Average Discount Rate
Operating leases	2.86	%	2.97	%
Finance lease	5.63	%	5.63	%

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


	For the Year Ended December 31,
	2022		2021		2020
Lease Expense
Operating lease expense	$	5,000	$	5,935	$	6,438
Finance lease expense:
Amortization of ROU assets	207		199		174
Interest on lease liabilities (1)	104		112		110
Total	$	5,311	$	6,246	$	6,722

Other Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	4,466	$	5,263	$	6,298
Operating cash flows from finance leases	104		112		110
Financing cash flows from finance leases	214		195		187

(1)Included in borrowed funds interest expense on the Consolidated Statements of Income. All other costs are included in occupancy expense on the Consolidated Statements of Income.

Future minimum payments for the finance lease and operating leases with initial or remaining terms of one year or more as of December 31, 2022 were as follows (in thousands):


	Finance Lease		Operating Leases
For the Year Ending December 31,
2023	$	350	$	4,333
2024	350		3,961
2025	350		3,741
2026	350		3,008
2027	350		2,027
Thereafter	559		5,348
Total	2,309		22,418
Less: Imputed interest	(375)		(2,365)
Total lease liabilities	$	1,934	$	20,053