Leases

6 Months Ended

Jun. 30, 2020

Leases

Leases

(15)    Leases

The Company leases most of its premises and some vehicles and equipment under operating leases expiring on various dates through 2029. The majority of lease agreements relate to real estate and generally provide that the Company pay taxes, insurance, maintenance and certain other operating expenses applicable to the leased premises. Variable lease components and nonlease components are not included in the Company’s computation of the right-of-use (ROU) asset or lease liability. The Company also does not include short-term leases in the computation of the ROU asset or lease liability. Short-term leases are leases with a term at commencement of 12 months or less. Short-term lease

expense is recorded on a straight-line basis over the term of the lease. Lease agreements do not contain any residual value guarantees or restrictive covenants.

Certain leases have renewal options at the expiration of the lease terms. Generally, option periods are not included in the computation of the lease term, ROU asset or lease liability because the Company is not reasonably certain to exercise renewal options at the expiration of the lease terms. The Company has elected to use the package of practical expedients to: a) not reassess whether any expired or existing contracts are or contain leases, b) not reassess the lease classification for any expired or existing leases, and c) not reassess initial direct costs for any existing leases. The Company has also chosen the option to not restate comparative periods prior to the adoption of the new lease accounting standard.

Because the discount rates implicit in our leases are not known, discount rates have been estimated using the rates for fixed-rate, amortizing advances from the Federal Home Loan Bank (FHLB) for the approximate terms of the leases. FHLB advances are collateralized by a blanket pledge of the Bank’s assets that are not otherwise pledged.

The Company has entered into a lease agreement to relocate the Kahala Branch at a date that has yet to be determined. The term of the lease will be approximately ten years from the date of occupancy. This lease is not included in the following disclosures.

The table below presents lease costs and other information for the periods indicated:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(Dollars in thousands)	2020		2019		2020		2019
Lease Costs:
Operating lease costs	$	816	$	782	$	1,631	$	1,565
Short-term lease costs		6		10		12		16
Variable lease costs		36		28		77		53
Total lease costs	$	858	$	820	$	1,720	$	1,634
Cash paid for amounts included in measurement of lease liabilities	$	804	$	772	$	1,606	$	1,545
ROU assets obtained in exchange for new operating lease liabilities	$	18	$	13	$	1,786	$	13,008

At June 30, 2020, future minimum rental commitments under noncancellable operating leases are as follows:

(Dollars in thousands)
2020	$	1,582
2021		2,631
2022		2,373
2023		2,087
2024		1,800
Thereafter		3,112
Total		13,585
Less present value discount		1,043
Present value of leases	$	12,542

The table below presents other lease related information:

	June 30,			June 30,
	2020			2019
Weighted-average remaining lease term (years)		5.64			6.40
Weighted-average discount rate		2.75	%		2.91	%