Leases

3 Months Ended

Mar. 31, 2025

The Corporation has committed to rent premises used in business operations under non-cancelable operating leases and determines if an arrangement meets the definition of a lease upon inception. Upon commencement of a new lease, a ROU asset and corresponding lease liability is recognized. The Corporation recognizes an adjustment to the ROU asset and lease liability when lease agreements are amended and executed. The discount rate used in determining the present value of lease payments is based on the lessor’s implicit rate in the lease if known or the Corporation’s incremental borrowing rate for borrowing terms similar to the lease upon commencement date. Operating lease ROU assets amounted to $36.0 million and $26.9 million, respectively, as of March 31, 2025 and December 31, 2024. Operating lease liabilities totaled $38.7 million and $29.6 million, respectively, as of March 31, 2025 and December 31, 2024.

In the first quarter of 2025, sales-leaseback transactions were completed for five branch locations and a pre-tax net gain on the sale of the bank-owned properties totaling $7.0 million was recognized in noninterest income. In addition, operating lease ROU assets of $10.0 million and operating lease liabilities of $10.0 million were recorded on the balance sheet. The leases expire in 17 years and include options to renew for two additional 15-year terms.

As of both March 31, 2025 and December 31, 2024, there were no operating leases that had not yet commenced.

The following table presents information regarding the Corporation’s operating leases:


	Mar 31, 2025		Dec 31, 2024
Weighted average discount rate	5.27	%	3.80	%
Range of lease expiration dates	1 month - 22 years		4 months - 23 years
Range of lease renewal options	1 year - 15 years		1 year - 5 years
Weighted average remaining lease term	13.7 years		12.6 years

The following table presents the undiscounted annual lease payments under the terms of the Corporation’s operating leases at March 31, 2025, including a reconciliation to the present value of operating lease liabilities recognized in the Consolidated Balance Sheets:


(Dollars in thousands)
April 1, 2025 to December 31, 2025						$3,582
2026						4,554
2027						4,029
2028						3,707
2029						3,597
2030 and thereafter						35,641
Total operating lease payments						55,110
Less: interest						16,394
Present value of operating lease liabilities (1)						$38,716

(1)Includes short-term operating lease liabilities of $2.9 million.

The following table presents the components of total lease expense and operating cash flows:


(Dollars in thousands)
Three months ended March 31,	2025	2024
Lease Expense:
Operating lease expense	$1,271	$1,123
Variable lease expense	45	40
Total lease expense (1)	$1,316	$1,163
Cash Paid:
Cash paid reducing operating lease liabilities	$1,239	$1,165

(1)Included in net occupancy expenses in the Consolidated Statements of Income.