Leases

12 Months Ended

Dec. 31, 2022

Leases [Abstract]

Leases

Leases:

As of December 31, 2022, the Company was the lessee in 58 operating leases and 1 finance lease of certain branch, mortgage and operations locations with original terms greater than one year. Leases with initial terms of less than one year and equipment leases are not included 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 an operating lease for a new corporate headquarters office located in downtown Nashville. During the year ended December 31, 2022, construction of the exterior of the building was completed and the Company took possession of the leased space and began the build-out of the interior space. On August 1, 2022, the Company recorded an ROU asset and operating lease liability of $16,095 and $20,037, respectively, in connection with the initial term of this lease.

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

		December 31,
	Classification	2022			2021
Right-of-use assets:
Operating leases	Operating lease right-of-use assets	$	60,043		$	41,686
Finance leases	Premises and equipment, net	1,367			1,487
Total right-of-use assets		$	61,410		$	43,173
Lease liabilities:
Operating leases	Operating lease liabilities	$	69,754		$	46,367
Finance leases	Borrowings	1,420			1,518
Total lease liabilities		$	71,174		$	47,885
Weighted average remaining lease term (in years) -     operating		12.1			12.4
Weighted average remaining lease term (in years) -     finance		12.4			13.4
Weighted average discount rate - operating		3.08		%	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:

		Years Ended December 31,
	Classification	2022		2021		2020
Operating lease costs:
Amortization of right-of-use asset	Occupancy and equipment	$	8,441	$	7,636	$	6,228
Short-term lease cost	Occupancy and equipment	526		427		456
Variable lease cost	Occupancy and equipment	1,078		1,003		602
Lease impairment	(1)	364		—		2,142
Gain on lease modifications and terminations	Occupancy and equipment	(18)		(805)		—
Finance lease costs:
Interest on lease liabilities	Interest expense on borrowings	28		25		11
Amortization of right-of-use asset	Occupancy and equipment	120		101		43
Sub-lease income	Occupancy and equipment	(993)		(573)		(346)
Total lease cost		$	9,546	$	7,814	$	9,136

(1) Operating lease impairment is included in "Mortgage restructuring expense" and "Merger costs" within the Company's consolidated statements of income for the years ended December 31, 2022 and 2020, respectively.

During the year ended December 31, 2022, the Company recorded $364 of lease impairment related to vacating two locations associated with restructuring the Company's Mortgage segment and recorded gains of $18 related to early lease terminations and modifications on other vacated locations. During the year ended December 31, 2021, the Company recorded $805 in gains on lease modifications and terminations on certain vacated locations that were consolidated as a result of previous business combinations. During the year ended December 31, 2020, the Company recorded $2,142 of lease impairment related to vacating certain locations as a result of its business combination activity and location consolidation. See Note 2, "Mergers and Acquisitions" for additional information on the Company's business combination activity.

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 December 31, 2022 is as follows:

	Operating		Finance
	Leases		Lease
Lease payments due:
December 31, 2023	$	8,085	$	118
December 31, 2024	8,210		120
December 31, 2025	7,909		121
December 31, 2026	7,724		123
December 31, 2027	7,340		125
Thereafter	46,503		977
Total undiscounted future minimum lease payments	85,771		1,584
Less: imputed interest	(16,017)		(164)
Lease liability	$	69,754	$	1,420

Leases

Leases:

As of December 31, 2022, the Company was the lessee in 58 operating leases and 1 finance lease of certain branch, mortgage and operations locations with original terms greater than one year. Leases with initial terms of less than one year and equipment leases are not included 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 an operating lease for a new corporate headquarters office located in downtown Nashville. During the year ended December 31, 2022, construction of the exterior of the building was completed and the Company took possession of the leased space and began the build-out of the interior space. On August 1, 2022, the Company recorded an ROU asset and operating lease liability of $16,095 and $20,037, respectively, in connection with the initial term of this lease.

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

		December 31,
	Classification	2022			2021
Right-of-use assets:
Operating leases	Operating lease right-of-use assets	$	60,043		$	41,686
Finance leases	Premises and equipment, net	1,367			1,487
Total right-of-use assets		$	61,410		$	43,173
Lease liabilities:
Operating leases	Operating lease liabilities	$	69,754		$	46,367
Finance leases	Borrowings	1,420			1,518
Total lease liabilities		$	71,174		$	47,885
Weighted average remaining lease term (in years) -     operating		12.1			12.4
Weighted average remaining lease term (in years) -     finance		12.4			13.4
Weighted average discount rate - operating		3.08		%	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:

		Years Ended December 31,
	Classification	2022		2021		2020
Operating lease costs:
Amortization of right-of-use asset	Occupancy and equipment	$	8,441	$	7,636	$	6,228
Short-term lease cost	Occupancy and equipment	526		427		456
Variable lease cost	Occupancy and equipment	1,078		1,003		602
Lease impairment	(1)	364		—		2,142
Gain on lease modifications and terminations	Occupancy and equipment	(18)		(805)		—
Finance lease costs:
Interest on lease liabilities	Interest expense on borrowings	28		25		11
Amortization of right-of-use asset	Occupancy and equipment	120		101		43
Sub-lease income	Occupancy and equipment	(993)		(573)		(346)
Total lease cost		$	9,546	$	7,814	$	9,136

(1) Operating lease impairment is included in "Mortgage restructuring expense" and "Merger costs" within the Company's consolidated statements of income for the years ended December 31, 2022 and 2020, respectively.

During the year ended December 31, 2022, the Company recorded $364 of lease impairment related to vacating two locations associated with restructuring the Company's Mortgage segment and recorded gains of $18 related to early lease terminations and modifications on other vacated locations. During the year ended December 31, 2021, the Company recorded $805 in gains on lease modifications and terminations on certain vacated locations that were consolidated as a result of previous business combinations. During the year ended December 31, 2020, the Company recorded $2,142 of lease impairment related to vacating certain locations as a result of its business combination activity and location consolidation. See Note 2, "Mergers and Acquisitions" for additional information on the Company's business combination activity.

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 December 31, 2022 is as follows:

	Operating		Finance
	Leases		Lease
Lease payments due:
December 31, 2023	$	8,085	$	118
December 31, 2024	8,210		120
December 31, 2025	7,909		121
December 31, 2026	7,724		123
December 31, 2027	7,340		125
Thereafter	46,503		977
Total undiscounted future minimum lease payments	85,771		1,584
Less: imputed interest	(16,017)		(164)
Lease liability	$	69,754	$	1,420