Leases

9 Months Ended

Sep. 30, 2020

We have historically entered into a number of lease arrangements under which we are the lessee. Specifically, all of our physical locations are subject to operating leases. In addition, we have elected the short-term lease practical expedient related to operating leases.

Two of our office leases, including our corporate headquarters, include multiple optional renewal periods. To the extent we conclude that it is reasonably certain that a renewal option will be exercised, that renewal period is then included in the lease term, and the related payments are reflected in the ROU asset and lease liability. We did not consider any additional renewal periods to be reasonably certain of being exercised for our corporate headquarters because of the length of the lease term to renewal.

All of our leases include fixed rental payments. We commonly enter into leases under which the lease payments increase at predetermined dates. While the majority of our leases are gross leases, we also have a number of leases in which we make separate payments to the lessor based on the lessor’s property and casualty insurance costs and the property taxes assessed on the property, as well as a portion of the common area maintenance associated with the property.

During the three and nine months ended September 30, 2020 and 2019, we recognized rent expense associated with our leases as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Lease cost	(Dollars in thousands)
Finance lease cost:


Operating lease cost	$	609	$	585	$	1,828	$	1,688
Short-term lease cost(1)	33		29		106		119

Total lease cost	$	642	$	614	$	1,934	$	1,807



Weighted-average remaining lease term—operating leases (in years)	4.62		5.61		4.62		5.61

(1) Includes leases that are less than 12 months and equipment leases that are accounted for on a cash basis.

Because we generally do not have access to the rate implicit in the lease, we utilize our borrowing rate with the FHLB as the discount rate. The weighted average discount rate associated with operating leases as of September 30, 2020 and 2019 is 2.31% and 1.57%, respectively.

Supplemental balance sheet information related to leases was as follows:


	Financial Statement Classification	September 30, 2020		December 31, 2019
		(Dollars in thousands)
Operating right-of-use assets	Other assets	$	10,543	$	12,159
Operating lease liabilities	Other liabilities	$	11,479	$	13,020

During the nine months ended September 30, 2020 and 2019, we had the following cash and noncash activities associated with our leases:


	Nine Months Ended September 30,		Nine Months Ended September 30,
	2020		2019
	(Dollars in thousands)
Cash paid for amounts included in the measurement of lease liabilities

Operating cash flows from operating leases (fixed payments)	$	1,753	$	1,688



Noncash activities:
Right-of-use assets obtained in exchange for new operating lease liabilities	$	—	$	12,625

Maturities of operating lease liabilities as of September 30, 2020 are as follows:


(Dollars in thousands)
For the years ending December 31,
Remainder of 2020	$	611
2021	2,490
2022	2,575
2023	2,662
2024	2,750
2025 and beyond	1,020
Total	12,108
Less: Imputed interest	(629)
Total Lease liabilities	$	11,479