Leases

12 Months Ended

Dec. 31, 2021

Leases [Abstract]

Leases

Leases

Operating lease assets represent our right to use an underlying asset during the lease term and operating lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at lease commencement based on the present value of the remaining lease payments using a discount rate that represents our incremental borrowing rate at the lease commencement date. Operating lease cost, which is comprised of amortization of the operating lease asset and the implicit interest accreted on the operating lease liability, is recognized on a straight-line basis over the lease term, and is recorded in net occupancy expense in the consolidated statements of income.

The Corporation leases certain full-serve branch offices, land and equipment. Leases with an initial term of twelve months or less are not recorded on the balance sheet. Most leases include one or more options to renew and the exercise of the lease renewal options are at the Corporation's sole discretion. The Corporation includes lease extension and termination options in the lease term if, after considering relevant economic factors, it is reasonably certain the Corporation will exercise the option. Certain lease agreements of the Corporation include rental payments adjusted periodically for changes in the consumer price index.

Leases	Classification	December 31, 2021		December 31, 2020
Assets:
Operating lease assets	Operating lease right-of-use assets	$	19,928	$	18,407
Finance lease assets	Premises and equipment, net (1)	358		429
Total leased assets		$	20,286	$	18,836
Liabilities:
Operating lease liabilities	Operating lease liabilities	$	21,159	$	19,449
Finance lease liabilities	Accrued interest payable and other liabilities	469		550
Total leased liabilities		$	21,628	$	19,999

(1) Finance lease assets are recorded net of accumulated amortization of $858 thousand and $787 thousand as of December 31, 2021 and 2020, respectively.

The components of the Corporation's net lease expense for the year ended December 31, 2021, 2020 and 2019 were as follows:

Lease Cost	Classification	December 31, 2021		December 31, 2020		December 31, 2019
Operating lease cost	Net occupancy expense	$	1,801	$	1,785	$	1,666
Variable lease cost	Net occupancy expense	55		87		98
Finance lease cost:
Amortization of leased assets	Net occupancy expense	72		72		72
Interest on lease liabilities	Interest expense - borrowed funds	23		27		30
Sublease income (1)	Net occupancy expense	(71)		(86)		(83)
Net lease cost		$	1,880	$	1,885	$	1,783

(1) Sublease income excludes rental income from owned properties.

The following table sets forth future minimum rental payments under noncancelable leases with terms in excess of one year as of December 31, 2021:

Maturity of Lease Liabilities as of December 31, 2021	Operating Leases (1)		Finance Leases		Total
2022	$	1,804	$	105	$	1,909
2023	1,693		105		1,798
2024	1,649		105		1,754
2025	1,637		105		1,742
2026	1,605		105		1,710
After 2026	20,564		0		20,564
Total lease payments	28,952		525		29,477
Less: Interest	7,793		56		7,849
Present value of lease liabilities	$	21,159	$	469	$	21,628

(1) Operating lease payments include payments related to options to extend lease terms that are reasonably certain of being exercised and exclude $10.4 million of legally binding minimum lease payments for leases signed, but not yet commenced.

Other information related to the Corporation's lease liabilities as of December 31, 2021 and 2020 was as follows:

Lease Term and Discount Rate	December 31, 2021		December 31, 2020
Weighted-average remaining lease term (years)
Operating leases	18.8		19.0
Finance leases	5.0		6.0
Weighted-average discount rate
Operating leases	3.42	%	3.46	%
Finance leases	4.49	%	4.49	%

Other information related to the Corporation's lease liabilities as of December 31, 2021 and 2020 was as follows:

Other Information	December 31, 2021		December 31, 2020
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows used by operating leases	$	964	$	922

Leases

Leases

Operating lease assets represent our right to use an underlying asset during the lease term and operating lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at lease commencement based on the present value of the remaining lease payments using a discount rate that represents our incremental borrowing rate at the lease commencement date. Operating lease cost, which is comprised of amortization of the operating lease asset and the implicit interest accreted on the operating lease liability, is recognized on a straight-line basis over the lease term, and is recorded in net occupancy expense in the consolidated statements of income.

The Corporation leases certain full-serve branch offices, land and equipment. Leases with an initial term of twelve months or less are not recorded on the balance sheet. Most leases include one or more options to renew and the exercise of the lease renewal options are at the Corporation's sole discretion. The Corporation includes lease extension and termination options in the lease term if, after considering relevant economic factors, it is reasonably certain the Corporation will exercise the option. Certain lease agreements of the Corporation include rental payments adjusted periodically for changes in the consumer price index.

Leases	Classification	December 31, 2021		December 31, 2020
Assets:
Operating lease assets	Operating lease right-of-use assets	$	19,928	$	18,407
Finance lease assets	Premises and equipment, net (1)	358		429
Total leased assets		$	20,286	$	18,836
Liabilities:
Operating lease liabilities	Operating lease liabilities	$	21,159	$	19,449
Finance lease liabilities	Accrued interest payable and other liabilities	469		550
Total leased liabilities		$	21,628	$	19,999

(1) Finance lease assets are recorded net of accumulated amortization of $858 thousand and $787 thousand as of December 31, 2021 and 2020, respectively.

The components of the Corporation's net lease expense for the year ended December 31, 2021, 2020 and 2019 were as follows:

Lease Cost	Classification	December 31, 2021		December 31, 2020		December 31, 2019
Operating lease cost	Net occupancy expense	$	1,801	$	1,785	$	1,666
Variable lease cost	Net occupancy expense	55		87		98
Finance lease cost:
Amortization of leased assets	Net occupancy expense	72		72		72
Interest on lease liabilities	Interest expense - borrowed funds	23		27		30
Sublease income (1)	Net occupancy expense	(71)		(86)		(83)
Net lease cost		$	1,880	$	1,885	$	1,783

(1) Sublease income excludes rental income from owned properties.

The following table sets forth future minimum rental payments under noncancelable leases with terms in excess of one year as of December 31, 2021:

Maturity of Lease Liabilities as of December 31, 2021	Operating Leases (1)		Finance Leases		Total
2022	$	1,804	$	105	$	1,909
2023	1,693		105		1,798
2024	1,649		105		1,754
2025	1,637		105		1,742
2026	1,605		105		1,710
After 2026	20,564		0		20,564
Total lease payments	28,952		525		29,477
Less: Interest	7,793		56		7,849
Present value of lease liabilities	$	21,159	$	469	$	21,628

(1) Operating lease payments include payments related to options to extend lease terms that are reasonably certain of being exercised and exclude $10.4 million of legally binding minimum lease payments for leases signed, but not yet commenced.

Other information related to the Corporation's lease liabilities as of December 31, 2021 and 2020 was as follows:

Lease Term and Discount Rate	December 31, 2021		December 31, 2020
Weighted-average remaining lease term (years)
Operating leases	18.8		19.0
Finance leases	5.0		6.0
Weighted-average discount rate
Operating leases	3.42	%	3.46	%
Finance leases	4.49	%	4.49	%

Other information related to the Corporation's lease liabilities as of December 31, 2021 and 2020 was as follows:

Other Information	December 31, 2021		December 31, 2020
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows used by operating leases	$	964	$	922