Leases

12 Months Ended

Sep. 30, 2020

ASC Topic 842, Leases ("ASC 842"), became effective for the Company on October 1, 2019. ASC 842 requires a lease, whether classified as an operating lease or a financing lease, be accounted for as a right-of-use asset ("ROU asset") with a related lease liability recorded at the present value of the lease payments. The ROU asset represents the Company's right to use an underlying asset for the lease term and is included in other assets on the Company's consolidated balance sheets. The lease liability represents the Company's obligation to make lease payments and is included in accrued expenses and other liabilities on the Company's consolidated balance sheets. The cost of the lease is recognized on a straight-line basis over the lease term as lease expense. As permitted by ASC 842, the Company elected not to reassess (i) whether any expired or existing contracts are leases or contain leases, (ii) the lease classification of any expired or existing leases, and (iii) the initial direct costs for existing leases.

Subsequent to the adoption of ASC 842, the Company assesses contracts at inception to determine whether the contract is a lease or contains an embedded lease. A ROU asset and lease liability is recorded on the consolidated balance sheet for all leases, except those with an original lease term of twelve months or less. Most of these leases include one or more renewal options, and certain leases also include lessee termination options. As these renewal options are generally not considered reasonably certain of exercise, they are not included in the lease term.

The Company leases certain branch and corporate offices, land and ATM facilities through operating leases with terms typically ranging from 1 to 15 years, with the longest term having a lease expiration of March 31, 2034. The Company has no significant financing leases as of September 30, 2020.


	September 30, 2020
	(dollars in thousands)
ROU asset	$	22,709
Total lease liability	24,114
Weighted average remaining lease term	6.29 years
Weighted average discount rate ¹	1.83		%
1 The Company uses its incremental borrowing rate to calculate the present value of lease payments when the interest rate implicit in the lease is not disclosed.

Total lease expense incurred by the Company was $7.1 million for the fiscal year ended September 30, 2020, principally made up of contractual lease payments for operating leases.

As of September 30, 2020, the Company had no operating leases that had not yet commenced.

The following table presents supplemental cash flow information related to leases for the fiscal year ended September 30, 2020:


	Fiscal Years Ended September 30,
	2020
	(dollars in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows paid for operating leases	$	5,720
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases	$	8,517

The following table presents a maturity analysis of the Company's operating lease liability as of September 30, 2020.


Fiscal year	Amount
	(dollars in thousands)
2021	5,441
2022	4,764
2023	4,212
2024	3,406
2025 and thereafter	7,832
Total undiscounted lease payments	25,655
Less: Amounts representing interest	(1,541)
Lease liability	$	24,114