Leases

6 Months Ended

Jun. 30, 2022

Leases [Abstract]

Leases

Leases:

As of June 30, 2022, the Company was the lessee in 56 operating leases and 1 finance lease of certain branch, mortgage and operations locations, of which 45 operating leases and 1 finance lease currently have remaining terms varying from greater than one year to 33 years. Leases with initial terms of less than one year are not recorded on the consolidated balance sheets. The Company also does not include equipment leases and leases in which the Company is the lessor on the consolidated balance sheets as these are insignificant.

Many leases include one or more options to renew, with renewal terms that can extend the lease up to an additional 20 years or more. Certain lease agreements contain provisions to periodically adjust rental payments for inflation. Renewal options that management is reasonably certain to renew and fixed rent escalations are included in the right-of-use asset and lease liability.

During the year ended December 31, 2020, the Company entered into a lease for a new corporate headquarters building located in downtown Nashville. The building is currently under construction and anticipated commencement is in the third quarter of 2022. Upon commencement, the Company anticipates recording an ROU asset and operating lease liability of approximately $23,000 and $26,000, respectively, in connection with the initial term of this lease based on current information available, subject to changes based on borrowing rate changes and the Company's evaluation of renewal options and other terms.

Information related to the Company's leases is presented below as of June 30, 2022 and December 31, 2021:

		June 30,			December 31,
	Classification	2022			2021
Right-of-use assets:
Operating leases	Operating lease right-of-use assets	$	41,070		$	41,686
Finance leases	Premises and equipment, net	1,422			1,487
Total right-of-use assets		$	42,492		$	43,173
Lease liabilities:
Operating leases	Operating lease liabilities	$	45,917		$	46,367
Finance leases	Borrowings	1,466			1,518
Total lease liabilities		$	47,383		$	47,885
Weighted average remaining lease term (in years) -     operating		11.9			12.4
Weighted average remaining lease term (in years) -     finance		12.9			13.4
Weighted average discount rate - operating		2.74		%	2.73		%
Weighted average discount rate - finance		1.76		%	1.76		%

The components of total lease expense included in the consolidated statements of income were as follows:

		Three Months Ended				Six Months Ended
		June 30,				June 30,
	Classification	2022		2021		2022		2021
Operating lease costs:
Amortization of right-of-use asset	Occupancy and equipment	$	1,851	$	2,171	$	3,561	$	4,110
Short-term lease cost	Occupancy and equipment	144		102		255		189
Variable lease cost	Occupancy and equipment	293		241		549		476
Lease impairment	Mortgage restructuring expense	364		—		364		—
Gain on lease modifications and     terminations	Occupancy and equipment	—		(787)		(18)		(787)
Finance lease costs:
Interest on lease liabilities	Interest expense on borrowings	6		8		15		14
Amortization of right-of-use asset	Occupancy and equipment	28		27		65		55
Total lease cost		$	2,686	$	1,762	$	4,791	$	4,057

During the three months and six months ended June 30, 2022, the Company recorded $364 of lease impairment related to vacating two locations associated with the Mortgage restructuring. Additionally, during the six months ended June 30, 2022 and 2021, the Company recorded gains of $18 and $787, respectively, related to early lease terminations and modifications on other vacated locations.

The Company does not separate lease and non-lease components and instead elects to account for them as a single lease component. Variable lease cost primarily represents variable payments such as common area maintenance, utilities, and property taxes.

A maturity analysis of operating and finance lease liabilities and a reconciliation of undiscounted cash flows to the total lease liability as of June 30, 2022 is as follows:

	Operating		Finance
	Leases		Lease
Lease payments due:
June 30, 2023	$	3,886	$	58
June 30, 2024	6,735		118
June 30, 2025	5,447		120
June 30, 2026	5,125		121
June 30, 2027	5,039		123
Thereafter	28,877		1,102
Total undiscounted future minimum lease payments	55,109		1,642
Less: imputed interest	(9,192)		(176)
Lease liability	$	45,917	$	1,466

Leases

Leases:

As of June 30, 2022, the Company was the lessee in 56 operating leases and 1 finance lease of certain branch, mortgage and operations locations, of which 45 operating leases and 1 finance lease currently have remaining terms varying from greater than one year to 33 years. Leases with initial terms of less than one year are not recorded on the consolidated balance sheets. The Company also does not include equipment leases and leases in which the Company is the lessor on the consolidated balance sheets as these are insignificant.

Many leases include one or more options to renew, with renewal terms that can extend the lease up to an additional 20 years or more. Certain lease agreements contain provisions to periodically adjust rental payments for inflation. Renewal options that management is reasonably certain to renew and fixed rent escalations are included in the right-of-use asset and lease liability.

During the year ended December 31, 2020, the Company entered into a lease for a new corporate headquarters building located in downtown Nashville. The building is currently under construction and anticipated commencement is in the third quarter of 2022. Upon commencement, the Company anticipates recording an ROU asset and operating lease liability of approximately $23,000 and $26,000, respectively, in connection with the initial term of this lease based on current information available, subject to changes based on borrowing rate changes and the Company's evaluation of renewal options and other terms.

Information related to the Company's leases is presented below as of June 30, 2022 and December 31, 2021:

		June 30,			December 31,
	Classification	2022			2021
Right-of-use assets:
Operating leases	Operating lease right-of-use assets	$	41,070		$	41,686
Finance leases	Premises and equipment, net	1,422			1,487
Total right-of-use assets		$	42,492		$	43,173
Lease liabilities:
Operating leases	Operating lease liabilities	$	45,917		$	46,367
Finance leases	Borrowings	1,466			1,518
Total lease liabilities		$	47,383		$	47,885
Weighted average remaining lease term (in years) -     operating		11.9			12.4
Weighted average remaining lease term (in years) -     finance		12.9			13.4
Weighted average discount rate - operating		2.74		%	2.73		%
Weighted average discount rate - finance		1.76		%	1.76		%

The components of total lease expense included in the consolidated statements of income were as follows:

		Three Months Ended				Six Months Ended
		June 30,				June 30,
	Classification	2022		2021		2022		2021
Operating lease costs:
Amortization of right-of-use asset	Occupancy and equipment	$	1,851	$	2,171	$	3,561	$	4,110
Short-term lease cost	Occupancy and equipment	144		102		255		189
Variable lease cost	Occupancy and equipment	293		241		549		476
Lease impairment	Mortgage restructuring expense	364		—		364		—
Gain on lease modifications and     terminations	Occupancy and equipment	—		(787)		(18)		(787)
Finance lease costs:
Interest on lease liabilities	Interest expense on borrowings	6		8		15		14
Amortization of right-of-use asset	Occupancy and equipment	28		27		65		55
Total lease cost		$	2,686	$	1,762	$	4,791	$	4,057

During the three months and six months ended June 30, 2022, the Company recorded $364 of lease impairment related to vacating two locations associated with the Mortgage restructuring. Additionally, during the six months ended June 30, 2022 and 2021, the Company recorded gains of $18 and $787, respectively, related to early lease terminations and modifications on other vacated locations.

The Company does not separate lease and non-lease components and instead elects to account for them as a single lease component. Variable lease cost primarily represents variable payments such as common area maintenance, utilities, and property taxes.

A maturity analysis of operating and finance lease liabilities and a reconciliation of undiscounted cash flows to the total lease liability as of June 30, 2022 is as follows:

	Operating		Finance
	Leases		Lease
Lease payments due:
June 30, 2023	$	3,886	$	58
June 30, 2024	6,735		118
June 30, 2025	5,447		120
June 30, 2026	5,125		121
June 30, 2027	5,039		123
Thereafter	28,877		1,102
Total undiscounted future minimum lease payments	55,109		1,642
Less: imputed interest	(9,192)		(176)
Lease liability	$	45,917	$	1,466