Note 9 - Leases

9 Months Ended

Sep. 30, 2023

9. Leases

The Company is obligated under various non-cancelable operating leases primarily for office space. The initial terms of the leases expire on various dates through 2030. We determine if an arrangement is a lease at inception.

The components of the Company's operating lease expenses are reflected in the condensed consolidated statements of income for the three and nine months ended September 30, 2023 and 2022 as follows:

	*Three Months Ended September 30,*				*Nine Months Ended September 30,*
	*2023*		*2022*		*2023*		*2022*
	(in thousands)
Lease liability cost	$	1,798	$	1,953	$	5,294	$	4,602
Short-term lease expenses (1)		138		173		592		1,522
Variable lease cost not included in the lease liability (2)		119		97		365		166
Total lease cost	$	2,055	$	2,223	$	6,251	$	6,290

(1) Short-term lease expenses include rent expenses from leases of 12 months or less on the transition date or lease commencement.

(2) Variable lease cost includes common area maintenance, property taxes, and fluctuations in rent due to a change in an index or rate.

Our lease agreements generally contain lease and non-lease components. Non-lease components primarily include payments for maintenance and utilities. We elected to combine fixed payments for non-lease components, for all classes of underlying assets, with our lease payments and account for them together as a single lease component which increases the amount of our lease assets and liabilities.

During the nine months ended September 30, 2023 and 2022, right-of-use assets obtained in exchange for new operating lease liabilities amounted to $3.7 million and $6.8 million, respectively.

Other information related to operating leases for the three and nine months ended September 30, 2023 and 2022, is as follows:

	*Three Months Ended September 30,*				*Nine Months Ended September 30,*
	*2023*		*2022*		*2023*		*2022*
	(in thousands)
Cash paid for amounts included in the measurement of the lease liability:
Operating cash flows from operating leases	$	1,659	$	1,594	$	5,324	$	4,100

As of September 30, 2023, our operating leases had a weighted average remaining lease term of 3.6 years and a weighted average discount rate of 5.4%.

As of December 31, 2022, our operating leases had a weighted average remaining lease term of 4.4 years and a weighted average discount rate of 5.1%.

The maturity schedule of the operating lease liabilities as of September 30, 2023 is as follows:

Year Ending December 31:
	(in thousands)
2023 (three months)	$	1,599
2024		5,583
2025		3,762
2026		2,489
2027		1,711
Thereafter		2,001
Total future lease payments	$	17,145
Less: Present value adjustment		(1,818	)
Present value of future lease payments ⁽¹⁾	$	15,327

(1) Includes the current portion of operating lease liabilities of $5.3 million, which is reflected in accrued expenses and other liabilities in the condensed consolidated balance sheets.