Right-of-Use Assets and Lease Liabilties

3 Months Ended

Mar. 31, 2019

RIGHT-OF-USE ASSETS AND LEASE LIABILITIES

We determine if a contract is or contains a lease at inception. Leases are classified as either finance or operating leases. We recognize leases on our Consolidated Balance Sheets as ROU assets and related lease liabilities. Finance ROU assets are included in property and equipment and related finance lease liabilities are included in long-term borrowings. Operating lease ROU assets are included in other assets and related operating lease liabilities are included in other liabilities. We estimate lease liabilities and ROU assets using our estimated incremental borrowing rate with similar terms at commencement date. Lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise those options. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term for operating leases. Interest and amortization expenses are recognized for finance leases over the lease term.

We have 44 lease contracts that we have recognized under the new lease standard, ASC Topic 842. These leases are for our branch, loan production and support services facilities. We have recognized 42 operating leases and two finance leases under the new lease accounting standard. Leases with an initial term of 12 months or less are not recorded on the balance sheet and the related lease expense is recognized on a straight-line basis over the lease term in Net Occupancy on our Consolidated Statements of Comprehensive Income.

The following tables present our ROU assets, lease expense, weighted average term, discount rate and maturity analysis of lease liabilities for finance and operating leases at March 31, 2019:



(in thousands, except weighted-averages)	March 31, 2019
Operating Lease Expense		$	1,031
Amortization of ROU Assets - Finance Leases		23
Interest on Lease Liabilities - Finance Leases		18
Total Lease Expense		$	1,072
Operating Leases
ROU Assets		$	35,686
Operating Cash Flows		$	302
Finance Leases
ROU Assets		$	1,213
Operating Cash Flows		$	18
Financing Cash Flows		$	11
Weighted Average Lease Term
Operating Leases		20.4
Finance Leases		15.5
Weighted Average Discount Rate
Operating Leases		5.98		%
Finance Leases		6.15		%



(dollars in thousands)
Maturity Analysis	Finance			Operating				Total
2019	$	105			$	2,796		$	2,901
2020	125				3,615			3,740
2021	126				3,599			3,725
2022	128				3,682			3,810
2023	129				3,697			3,826
Thereafter	1,375				59,336			60,711
Total	$	1,988			$	76,725		$	78,713
Less: Present value discount	(753		)		(36,500		)	(37,253		)
Lease Liabilities	$	1,235			$	40,225		$	41,460

RIGHT-OF-USE ASSETS AND LEASE LIABILITIES

The following tables present our ROU assets, lease expense, weighted average term, discount rate and maturity analysis of lease liabilities for finance and operating leases at March 31, 2019:



(in thousands, except weighted-averages)	March 31, 2019
Operating Lease Expense		$	1,031
Amortization of ROU Assets - Finance Leases		23
Interest on Lease Liabilities - Finance Leases		18
Total Lease Expense		$	1,072
Operating Leases
ROU Assets		$	35,686
Operating Cash Flows		$	302
Finance Leases
ROU Assets		$	1,213
Operating Cash Flows		$	18
Financing Cash Flows		$	11
Weighted Average Lease Term
Operating Leases		20.4
Finance Leases		15.5
Weighted Average Discount Rate
Operating Leases		5.98		%
Finance Leases		6.15		%



(dollars in thousands)
Maturity Analysis	Finance			Operating				Total
2019	$	105			$	2,796		$	2,901
2020	125				3,615			3,740
2021	126				3,599			3,725
2022	128				3,682			3,810
2023	129				3,697			3,826
Thereafter	1,375				59,336			60,711
Total	$	1,988			$	76,725		$	78,713
Less: Present value discount	(753		)		(36,500		)	(37,253		)
Lease Liabilities	$	1,235			$	40,225		$	41,460