The Company is obligated under various lease agreements covering its main office, private banking offices, and other locations. These agreements are accounted for as operating leases and their terms expire between 2019 and 2030 and, in some instances, contain options to renew for periods up to 30 years.

The Company adopted Accounting Standards Update No. 2016-02 - Leases (“ASU 2016-02”) during the quarter ended March 31, 2019 and began recognizing its operating leases on its balance sheet by recording a lease liability, representing the Company’s legal obligation to make lease payments, and a Right-Of-Use (ROU) Asset, representing the Company’s legal right to use the leased office space and banking centers. The Company, by policy, does not include renewal options for leases as part of its right-of-use assets and lease liabilities unless they are deemed reasonably certain to exercise. The Company does not have any material sub-lease agreements.

The following table summarizes information related to the Company’s right-of-use asset and net lease liability:

	June 30, 2019
	Operating Leases		Balance Sheet Location
	(dollars in thousands)
Right-of-use asset	$	35,604	Other assets
Lease liability	$	36,982	Other liabilities

Operating lease expenses are comprised of operating lease costs and variable lease costs, net of sublease income. The pattern and measurement of expense recognition of these costs were not significantly impacted by ASU 2016-02 and subsequent ASUs issued to amend this Topic.

Variable lease payments that are not dependent on an index or a rate or changes in variable payments based on an index or rate after the commencement date are excluded from the measurement of the lease liability, recognized in the period incurred and included within variable lease costs below.

The Company determines whether a contract contains a lease based on whether a contract, or a part of a contract, conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The discount rate is determined as either the rate implicit in the lease or when a rate cannot be readily determined, the Company’s incremental borrowing rate. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term.

The components of operating lease cost and other related information are as follows:

	Three Months Ended June 30,			Six Months Ended June 30,
	2019			2019
	(dollars in thousands)
Operating lease cost	$	1,321		$	2,501
Short-term lease cost		—			—
Variable lease cost (Cost excluded from lease payments)		—			—
Sublease income		(16	)		(32	)
Total Operating Lease Cost	$	1,305		$	2,469
Other Information
Cash paid for amounts included in the measurement of lease liabilities - operating cash flows from operating leases	$	1,231		$	2,308
Operating Lease - Operating Cash Flows (Liability reduction)		937			1,744
Right-of-use assets obtained in exchange for new operating lease liabilities		4,656			4,656
Weighted average lease term - operating Leases	8.56 Years			8.56 Years
Weighted average discount Rate - operating leases		3.38	%		3.38	%

The Company recorded additional ROU assets of $4.7 million during the second quarter of 2019 associated with leases acquired from the merger with Optima.

The total minimum rentals due in future periods under these agreements in effect at June 30, 2019 and December 31, 2018 were as follows:

	Future Minimum
June 30, 2019	Lease Payments
	(dollars in thousands)
Remainder of 2019		5,426
2020		5,527
2021		5,428
2022		5,181
2023		4,864
Thereafter		16,380
Total minimum lease payments		42,806
Less: interest		(5,824	)
Total lease liability	$	36,982

Year Ended	Future Minimum
December 31,	Lease Payments
	(dollars in thousands)
2019		4,448
2020		4,661
2021		4,662
2022		4,553
2023		4,455
Thereafter		17,128
Total minimum lease payments	$	39,907

Several of the Company’s lease agreements contain clauses calling for escalation of minimum lease payments contingent on increases in real estate taxes, gross income adjustments, percentage increases in the consumer price index, and certain ancillary maintenance costs. Total rental expense was $1.4 million and $1.1 million for the quarter ended June 30, 2019 and June 30, 2018, respectively. Total rental expense was $2.7 million and $2.2 million for the six months ended June 30, 2019 and June 30, 2018, respectively.

Under the terms of the Company’s sole sublease agreement, the Company will receive minimum annual rental payments of approximately $32,000. This agreement expired on July 31, 2019. Total rental income was $16,000 for the quarters ended June 30, 2019 and June 30, 2018. Total rental income was $32,000 for the six months ended June 30, 2019 and June 30, 2018.