LEASES

9 Months Ended

Sep. 30, 2019

NOTE 11 – LEASES

The Company has entered into various operating leases for certain branch locations, ATM locations, loan production offices, and corporate support services locations with terms extending through June 2028. Generally, these leases have initial lease terms of ten years or less. Many of the leases have one or more lease renewal options. The exercise of lease renewal options is at our sole discretion. The Company does not consider exercise of any lease renewal options reasonably certain. Certain of our lease agreements contain early termination options. No renewal options or early termination options have been included in the calculation of the operating right-of-use assets or operating lease liabilities. Certain of our lease agreements provide for periodic adjustments to rental payments for inflation. As the majority of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate at the commencement date in determining the present value of lease payments. The incremental borrowing rate is based on the term of the lease. Incremental borrowing rates on January 1, 2019 were used for operating leases that commenced prior to that date. Leases with an initial term of 12 months or less are not recorded on the balance sheet. For these short-term leases, lease expense is recognized on a straight-line basis over the lease term. At September 30, 2019, the Company had no leases classified as finance leases.

Operating lease cost was $3.3 million and $6.7 million for the three and nine months ended September 30, 2019, respectively. For the nine months ended September 30, 2019, the Company had no sublease income offsetting operating lease cost. Variable rent expense and short-term lease expense were not material for the nine months ended September 30, 2019.

The following table presents the impact of leases on the Company's consolidated balance sheet at September 30, 2019:



(dollars in thousands)	Location	September 30, 2019
Operating lease right-of-use assets	Other assets	$	39,611
Operating lease liabilities	Other liabilities	42,050

Future maturities of the Company's operating lease liabilities are summarized as follows:



(dollars in thousands)
Twelve Months Ended September 30,	Lease Liability
2020	$	11,497
2021	10,133
2022	7,155
2023	5,748
2024	3,304
After September 30, 2024	7,276
Total lease payments	$	45,113
Less: Interest	(3,063		)
Present value of lease liabilities	$	42,050



Supplemental lease information
(dollars in thousands)	September 30, 2019
Weighted-average remaining lease term (years)	5.1
Weighted-average discount rate	2.57		%
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases (cash payments)	$	6,628
Operating cash flows from operating leases (lease liability reduction)	$	6,610
Operating lease right-of-use assets obtained in exchange for leases entered into during the period, net of business combinations	$	3,370