Leases

3 Months Ended

Mar. 31, 2024

The Company leases real estate property for branches and office space. At March 31, 2024 and December 31, 2023, 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 March 31, 2024 and December 31, 2023, the weighted average remaining lease term for operating leases was 5.8 years and 5.9 years, respectively, and the weighted average discount rate used in the measurement of operating lease liabilities was 2.94% and 2.70%, respectively.

The Company accounts 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 the three months ended March 31, 2024 and 2023, operating and variable lease expenses totaled approximately $704,000 and $633,000, respectively.

There were no sale and leaseback transactions, leveraged leases or lease transactions with related parties during the three months ended March 31, 2024 and 2023. At March 31, 2024, the Company had entered into a lease related to an additional branch office location which had not yet commenced.

10. Leases (continued)

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


	Lease Payment Obligations at
	March 31,		December 31,
	2024		2023
	(In thousands)


One year or less	$	3,314	$	4,204
After one year to two years	4,037		3,536
After two years to three years	3,576		3,154
After three years to four years	2,694		2,271
After four years to five years	2,227		1,807
Thereafter	3,212		2,974
Total undiscounted cash flows	19,060		17,946
Discount on cash flows	(1,574)		(1,411)
Total lease liability	$	17,486	$	16,535