Leases

6 Months Ended

Jun. 30, 2023

Leases [Abstract]

Leases

For the Three Months Ended June 30,

For the Six Months Ended June 30,

2023

2022

2023

2022

(Dollars in thousands)

Finance lease amortization of right-of-use asset

$

71

$

92

$

141

$

92

Finance lease interest on lease liability

68

46

137

46

Operating lease expense

731

603

1,463

1,329

Variable lease expense

488

345

881

558

Short-term lease expense

5

5

10

10

Total lease expense

$

1,363

$

1,091

$

2,632

$

2,035

Future minimum commitments due under these lease agreements as of June 30, 2023 are as follows:

Operating Leases

Finance Lease

(Dollars in thousands)

Remainder of 2023

$

2,059

$

245

2024

3,289

490

2025

3,309

490

2026

3,350

490

2027

3,340

528

Thereafter

12,619

8,296

Total lease payments

$

27,966

$

10,539

Less imputed interest

3,421

3,027

Total

$

24,545

$

7,512

Supplemental cash flow information –

Operating cash flows paid for operating lease amounts included in the measurement of

lease liabilities were $

1.8

 million and $

1.4

 million for the six-months ended June 30, 2023 and 2022, respectively. Operating cash flows

paid for finance lease amounts included in the measurement of lease liabilities was $

0.2

 million and $

0.1

 million for the six-months

ended June 30, 2023 and 2022, respectively. During the six-months ended June 30, 2023, the Company did

no

t record any ROU assets

that were exchanged for operating lease liabilities.

Note 4: Leases

The Company’s leases primarily include bank branches located in Kansas City, Missouri; Tulsa, Oklahoma; Dallas, Texas; Frisco,

Texas; Phoenix, Arizona; Denver, Colorado and Colorado Springs, Colorado. The remaining lease terms on these branch leases range

from less than

one year

 to

nineteen years

 with certain options to renew. Renewal terms can extend the lease term between

five years

 and

twenty years

. The exercise of lease renewal options is at the Company’s sole discretion. When it is reasonably certain that the Company

will exercise its option to renew or extend the lease term, that option is included in the estimated value of the right of use (“ROU”) asset

and lease liability. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive

covenants. As of June 30, 2023, the Company recognized one finance lease and the remaining Company leases are classified as

operating leases.

During the second quarter of 2023, the Company entered into a lease agreement for a new bank branch in Oklahoma City,

Oklahoma. The lease is expected to commence at the beginning of 2025. The lease will be recognized in the Company’s consolidated

financial statements during the period that includes the lease’s commencement date.

The ROU asset is included in “other assets” on the consolidated statements of financial condition, and was $

29

 million and $

31

million at June 30, 2023 and December 31, 2022, respectively. Certain adjustments to the ROU asset may be required for items such as

initial direct costs paid or incentives received. The lease liability is located in “Interest payable and other liabilities” on the consolidated

statements of financial condition and was $

32

 million and $

34

 million at June 30, 2023 and December 31, 2022, respectively. 

As of June 30, 2023, the remaining weighted-average lease term is

11.3

 years, and the weighted-average discount rate was

2.55

%

utilizing the Company’s incremental Federal Home Loan Bank (“FHLB”) borrowing rate for borrowings of a similar term at the date of

lease commencement.

The following table presents components of operating lease expense in the accompanying consolidated statements of operations

for the three-and six-month periods ended June 30, 2023 and 2022: