Leases

6 Months Ended

Jun. 30, 2024

Operating Leases

The Company leases certain office space, stand-alone buildings and equipment which are recognized as operating lease right-of-use (“ROU”) assets and operating lease liabilities and are included in the consolidated balance sheets. Lease liabilities represent the Company's liability to make lease payments under these leases, on a discounted basis. For leases with renewal options available, the Company evaluates each lease to determine if exercise of the renewal option is reasonably certain. As of June 30, 2024, the Company's operating lease ROU asset and operating lease liability totaled $20.9 million and $21.9 million, respectively.

In order to calculate its ROU assets and lease liabilities, ASC Topic 842 requires the Company to use the rate of interest implicit in the lease when readily determinable. If the rate implicit in the lease is not readily determinable, the Company is required to use its incremental borrowing rate, which is the rate of interest the Company would have to pay to borrow on a collateralized basis over a similar term in a similar economic environment. The Company was unable to determine the implicit interest rate in any of the leases and therefore used its incremental borrowing rate.

As of June 30, 2024, the weighted-average discount rate for the Company's operating leases was 4.72%. The Company's lease terms range from less than one year to one hundred forty-four months. The weighted-average remaining term of the leases was 8.25 years.

Lease costs for the three and six months ended June 30, 2024 and 2023 were as follows and are included in occupancy and equipment expense on the consolidated statements of income:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(Dollars in thousands)	2024		2023		2024		2023
Operating lease cost	$	845	$	755	$	1,677	$	1,464
Short-term lease cost		9		41		19		103
Variable lease cost		308		306		646		579
Total lease cost	$	1,162	$	1,102	$	2,342	$	2,146

A schedule of the Company's lease liabilities by contractual maturity for operating leases with initial or remaining terms in excess of one year for each year through 2029 and thereafter is presented below:


(Dollars in thousands)	June 30, 2024
2024 (six months remaining)	$	1,594
2025		3,256
2026		3,331
2027		3,366
2028		3,176
2029 and thereafter		11,722
Total undiscounted lease liability		26,445
Less: Discount on cash flows		(4,526	)
Total operating lease liability	$	21,919