Leases

12 Months Ended

Dec. 31, 2023

The Company leases real estate property for branches and office space. At December 31, 2023 and 2022, all of the Company's leases are classified as operating leases.

The Company determines if an arrangement is a lease at inception. Topic 842 requires lessees to recognize a right-of-use asset and a lease liability, measured at the present value of the future minimum lease payments, at the lease commencement date. The calculated amount of the right-of-use asset and lease liabilities are impacted by the length of the lease term and the discount rate used to calculate the present value of minimum lease payments.

At December 31, 2023 and 2022, the weighted average remaining lease term for operating leases was 5.9 years and 6.5 years, respectively, and the weighted average discount rate used in the measurement of operating lease liabilities was 2.70% and 2.35%, respectively.

The Company elected to account for the lease and non-lease components separately since such amounts are readily determinable under the Company's lease contracts. Operating lease expense is recognized on a straight-line basis over the lease term, while variable lease payments are recognized as incurred. Variable lease payments include common area maintenance charges, real estate taxes, repairs and maintenance costs and utilities. Operating and variable lease expenses are recorded in occupancy expense in the Consolidated Statements of Income. During both the years ended December 31, 2023 and 2022, operating and variable lease expenses totaled approximately $2.7 million.

There were no sale and leaseback transactions, leveraged leases or lease transactions with related parties during the years ended December 31, 2023 and 2022. At December 31, 2023, the Company had no leases which had not yet commenced.

The following table summarizes lease payment obligations for each of the next five years and thereafter as follows:


	Lease Payment Obligations at December 31,
	2023		2022
	(In thousands)

One year or less	$	4,204	$	4,290
After one year to two years	3,536		3,745
After two years to three years	3,154		3,075
After three years to four years	2,271		2,773
After four years to five years	1,807		2,000
Thereafter	2,974		4,345
Total undiscounted cash flows	17,946		20,228
Discount on cash flows	(1,411)		(1,613)
Total lease liability	$	16,535	$	18,615