LEASES

12 Months Ended

Dec. 31, 2019

Leases [Abstract]

LEASES

LEASES

Lease Arrangements

The Company has entered into leases in the normal course of business primarily for real property for branches and office space with terms extending through 2034.

The Company has elected not to recognize leases with original lease terms of 12 months or less (short-term leases) on the Company's balance sheet. The Company has not been reasonably certain that the Company would exercise any lease term options, and therefore, does not include lease extensions and termination options in the lease term recognized on the balance sheet.

Leases are classified as operating or finance leases at the lease commencement date based on the estimated present value of lease payments over the lease term. Leases expense for operating leases and short-term leases is recognized on a straight-line basis over the lease term. Right-of-use (ROU) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

The Company uses its incremental borrowing rate at lease commencement to calculate the present value of lease payments when the rate implicit in a lease is not known. The Company's incremental borrowing rate is initially based on the FHLB amortizing advance rate, adjusted for the lease term and other factors.

ROU assets and lease liabilities by lease type, and the associated balance sheet classification, are as follows:

Lease right-of-use assets	Classification	December 31, 2019
Operating leases	Other Assets	$	39,594
Finance lease	Other Assets	2,819
Total right-of-use assets		$	42,413
Lease liabilities	Classification	December 31, 2019
Operating leases	Other Liabilities	$	41,308
Finance lease	Other Liabilities	2,942
Total lease liabilities		$	44,250

Lease Expense

Rent expense related to these leases was $5,904, $5,528 and $4,454 for 2019, 2018 and 2017, respectively. Interest expense related to the finance lease was $164 for the year ended December 31, 2019.

The components of total lease cost were as follows for the period ending:

Lease costs	December 31, 2019
Operating lease cost	$	5,069
Variable lease cost	406
Short-term lease cost	228
Finance lease cost
Interest on lease liabilities(1)	164
Amortization of right-of-use asset	201
Total lease cost	$	6,068
(1) Included in interest expense on Federal Home Loan Advances and other borrowings in the Company's consolidated statement of income. All other lease costs in this table are included in occupancy and equipment expense.

Lease Obligations

Future undiscounted lease payments for finance and operating leases with initial terms of one year or more as of December 31, 2019, are as follows:

December 31, 2019	Finance Lease		Operating Leases
2020	$	276	$	4,849
2021	280		4,871
2022	284		4,856
2023	288		4,885
2024	293		4,901
Thereafter	2,840		31,277
Total undiscounted lease payments(1)	4,261		55,639
Less: imputed interest	(1,319)		(14,331)
Net lease liabilities	$	2,942	$	41,308

⁽¹⁾ On February 5, 2020, the Company purchased the properties at Columbia Avenue and 120 9th Avenue locations in Franklin, Tennessee, therefore ending the lease agreements. The total undiscounted operating lease payments at December 31, 2019 would be reduced by approximately $27,553 from $55,639 to $28,086 at December 31, 2019 taking in consideration these purchases.

Supplemental Lease Information

Weighted-average remaining lease term	December 31, 2019
Operating leases	11.16 years
Finance lease	14.01 years
Weighted-average discount rate
Operating leases	5.49	%
Finance lease	5.49	%

Cash flow information:	December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	4,743
Operating cash flows from finance leases	164
Financing cash flows from finance lease	108

We lease certain branch facilities from various partnership interests of certain directors. Payments related to these partnership leases are noted in Note 15, “Related Party Transactions”.

LEASES

LEASES

Lease Arrangements

The Company has entered into leases in the normal course of business primarily for real property for branches and office space with terms extending through 2034.

The Company has elected not to recognize leases with original lease terms of 12 months or less (short-term leases) on the Company's balance sheet. The Company has not been reasonably certain that the Company would exercise any lease term options, and therefore, does not include lease extensions and termination options in the lease term recognized on the balance sheet.

Leases are classified as operating or finance leases at the lease commencement date based on the estimated present value of lease payments over the lease term. Leases expense for operating leases and short-term leases is recognized on a straight-line basis over the lease term. Right-of-use (ROU) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

The Company uses its incremental borrowing rate at lease commencement to calculate the present value of lease payments when the rate implicit in a lease is not known. The Company's incremental borrowing rate is initially based on the FHLB amortizing advance rate, adjusted for the lease term and other factors.

ROU assets and lease liabilities by lease type, and the associated balance sheet classification, are as follows:

Lease right-of-use assets	Classification	December 31, 2019
Operating leases	Other Assets	$	39,594
Finance lease	Other Assets	2,819
Total right-of-use assets		$	42,413
Lease liabilities	Classification	December 31, 2019
Operating leases	Other Liabilities	$	41,308
Finance lease	Other Liabilities	2,942
Total lease liabilities		$	44,250

Lease Expense

Rent expense related to these leases was $5,904, $5,528 and $4,454 for 2019, 2018 and 2017, respectively. Interest expense related to the finance lease was $164 for the year ended December 31, 2019.

The components of total lease cost were as follows for the period ending:

Lease costs	December 31, 2019
Operating lease cost	$	5,069
Variable lease cost	406
Short-term lease cost	228
Finance lease cost
Interest on lease liabilities(1)	164
Amortization of right-of-use asset	201
Total lease cost	$	6,068
(1) Included in interest expense on Federal Home Loan Advances and other borrowings in the Company's consolidated statement of income. All other lease costs in this table are included in occupancy and equipment expense.

Lease Obligations

Future undiscounted lease payments for finance and operating leases with initial terms of one year or more as of December 31, 2019, are as follows:

December 31, 2019	Finance Lease		Operating Leases
2020	$	276	$	4,849
2021	280		4,871
2022	284		4,856
2023	288		4,885
2024	293		4,901
Thereafter	2,840		31,277
Total undiscounted lease payments(1)	4,261		55,639
Less: imputed interest	(1,319)		(14,331)
Net lease liabilities	$	2,942	$	41,308

⁽¹⁾ On February 5, 2020, the Company purchased the properties at Columbia Avenue and 120 9th Avenue locations in Franklin, Tennessee, therefore ending the lease agreements. The total undiscounted operating lease payments at December 31, 2019 would be reduced by approximately $27,553 from $55,639 to $28,086 at December 31, 2019 taking in consideration these purchases.

Supplemental Lease Information

Weighted-average remaining lease term	December 31, 2019
Operating leases	11.16 years
Finance lease	14.01 years
Weighted-average discount rate
Operating leases	5.49	%
Finance lease	5.49	%

Cash flow information:	December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	4,743
Operating cash flows from finance leases	164
Financing cash flows from finance lease	108

We lease certain branch facilities from various partnership interests of certain directors. Payments related to these partnership leases are noted in Note 15, “Related Party Transactions”.