LEASES

3 Months Ended

Mar. 31, 2023

9. LEASES

Lessee Arrangements

The Company leases space, primarily for branch facilities and small equipment under operating leases. The Company’s leases often include one or more options to renew at the Company’s discretion, and some of the Company’s leases include options to terminate within one year. When it is reasonably certain that the Company will exercise the option to renew or extend the lease term, that option is included in estimating the value of the ROU asset and lease liability. The Company’s leases contain customary restrictions and covenants and do not contain any residual value guarantees. The Company has certain intercompany leases and subleases between its subsidiaries, and these transactions and balances have been eliminated in consolidation and are not reflected in the tables and information presented below. As of March 31, 2023 and December 31, 2022, the Company had no finance leases.

The balance sheet components of the Company’s leases are as follows (in thousands):

	March 31, 2023		December 31, 2022
Operating lease right of use assets (included in Other assets)	$	7,871	$	7,938
Operating lease liabilities (included in Accrued expenses and other liabilities)		8,829		8,897

The Company does not generally enter into leases which contain variable payments, other than due to the passage of time. Operating lease costs, including short-term lease costs were $705 thousand and $597 thousand, respectively, for the three months ended March 31, 2023 and 2022.

Supplemental cash flow information related to leases is as follows (in thousands):

	Three Months Ended March 31,
	2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	503	$	—
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases	$	318	$	—

For operating leases the Company’s weighted average remaining lease terms in years and weighted average discount rate was 9.70% and 4.73%, respectively, as of March 31, 2023. The weighted average remaining lease terms in years and weighted average discount rate was 9.83% and 4.65%, respectively as of December 31, 2022.

Future undiscounted lease payments at March 31, 2023, under operating lease agreements, are presented below (in thousands).

2023	$	1,443
2024		1,501
2025		1,102
2026		1,101
2027		1,063
Thereafter		5,050
Total minimum lease payments		11,260
Less: Amount representing interest		(2,431	)
Lease liabilities	$	8,829

As of March 31, 2023, the Company had one additional operating lease that had not yet commenced with aggregate future minimum lease payments of approximately $255 thousand. This lease is expected to commence in May 2023 with a lease term of three years.

Lessor Arrangements

The Company leases certain facilities and office space under operating lease agreements to outside parties. Operating lease income for the three months ended March 31, 2023, and 2022 was $204 thousand and $216 thousand, respectively and is included in occupancy and equipment, net in the consolidated statements of comprehensive income (loss).