Leases

12 Months Ended

Dec. 31, 2022

Leases [Abstract]

Leases

LeasesAs a lessee, the Company enters into leases of buildings and our real estate leases primarily relate to bank branches and office space from nonaffiliated parties with remaining lease terms ranging from 1 to 10 years as of December 31, 2022. Certain lease arrangements contain extension option which are typically around 5 years. As these extension options are not generally considered reasonably certain of exercise, they are not included in the lease term.

At December 31, 2022 and 2021, operating right-of-use (“ROU”) assets were $9.1 million and $8.9 million, respectively, and related liabilities were $10.2 million and $10.3 million, respectively. Short-term operating leases, which are defined as leases with term of twelve months or less, were not recognized as ROU assets with related lease liabilities as permitted under ASU No. 2016-02. The lease payments on short-term operating leases are immaterial. The Company did not have any finance leases at December 31, 2022 and 2021.

Operating lease ROU assets represent the Company’s right to use the underlying asset during the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and operating lease liabilities are recognized at lease commencement based on the present value of the remaining lease payments using the Company’s incremental borrowing rate at the lease commencement date. Operating lease expense, which is comprised of amortization of the ROU asset and the implicit interest accreted on the operating lease liability, is recognized on a straight-line basis over the lease term and is recorded in occupancy expense in the consolidated statements of income. The Company’s occupancy expense also includes variable lease costs which is comprised of the Company's share of actual costs for utilities, common area maintenance, property taxes, and insurance that are not included in lease liabilities and are expensed as incurred. Variable lease costs can also include rent escalations based on changes to indices, such as the Consumer Price Index, where the Company estimates future rent increases and records the actual difference to variable costs.

The table below summarizes total lease cost for the periods indicated:

	Year Ended December 31,
($ in thousands)	2022		2021
Operating lease cost	$	2,046	$	1,852
Variable lease cost	859		739
Total lease cost	$	2,905	$	2,591

The tables below summarize other information related to the Company’s operating leases as of the associated period:

	Year Ended December 31,
($ in thousands)	2022			2021
Operating right-of-use assets	$	9,097		$	8,905
Operating lease liabilities	$	10,213		$	10,307
Weighted average remaining lease term - operating leases	6.3 years			6.9 years
Weighted average discount rate - operating leases	2.44		%	2.02		%

	Year Ended December 31,
($ in thousands)	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	2,253	$	2,082

Rent expense was $2.9 million, $2.6 million and $2.5 million for the years ended December 31, 2022 and 2021 and 2020, respectively.

The table below summarizes the remaining contractually obligated lease payments and a reconciliation to the lease liability reported on the Consolidated Balance Sheets as of December 31, 2022:

($ in thousands)	December 31,
2023	$	2,467
2024	2,466
2025	1,611
2026	1,969
2027	1,888
Thereafter	3,473
Total lease payments	13,874
Discount to present value	(3,661)
Total lease liability	$	10,213