Leases

12 Months Ended

Dec. 31, 2019

LEASES

On January 1, 2019, the Company adopted ASU 2016-02, “Leases (Topic 842)”, using the modified retrospective approach under ASC 842. The Company’s operating leases are real estate leases which are comprised of bank branches, loan production offices, and office spaces with remaining lease terms ranging from 1 year to 11 years as of December 31, 2019. Certain lease arrangements contain extension options which are typically around 5 years. As these extension options are not generally considered reasonably certain of exercise, they are not included in the lease term. As of December 31, 2019, the Company did not have any finance leases.

Operating lease right-of-use (“ROU”) assets represent the Company’s right to use the underlying asset during the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and operating lease liabilities are recognized at lease commencement based on the present value of the remaining lease payments using the Company’s incremental borrowing rate at the lease commencement date. The Company’s occupancy expense also includes variable lease costs which is comprised of the Company's share of actual costs for utilities, common area maintenance, property taxes, and insurance that are not included in lease liabilities and are expensed as incurred. Variable lease costs also include rent escalations based on changes to indices, such as the Consumer Price Index.

The table below summarizes the Company’s net lease cost:



	Year Ended
	December 31, 2019
	(Dollars in thousands)
Operating lease cost	$	16,039
Variable lease cost	3,397
Short term lease cost	9
Sublease income	(664		)
Net lease cost	$	18,781

The Company uses its incremental borrowing rate to present value lease payments in order to recognize a ROU asset and the related lease liability. The Company calculates its incremental borrowing rate by adding a spread to the FHLB borrowing interest rate at a given period.

The following table summarizes supplemental balance sheet information related to operating leases:



	Year Ended
	December 31, 2019
	(Dollars in thousands)
Operating leases
Operating lease right-of-use assets	$	58,593
Current portion of long-term lease liabilities	12,807
Long-term lease liabilities	47,699
Weighted-average remaining lease term - operating leases	5.83 years
Weighted-average discount rate - operating leases	3.09		%

The table below summarizes supplemental cash flow information related to operating leases:



	Year Ended
	December 31, 2019
	(Dollars in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows for operating leases	$	14,705
Right-of-use assets obtained in exchange for lease liabilities, net	66,531

The table below summarizes the maturity of remaining lease liabilities:



	December 31, 2019
	(Dollars in thousands)
2020	$	14,461
2021	13,799
2022	9,704
2023	7,565
2024	6,010
2025 and thereafter	14,996
Total lease payments	66,535
Less: imputed interest	6,029
Total lease obligations	$	60,506

As of December 31, 2019, the Company did not have any additional operating lease commitments that have not yet commenced.