Premises And Equipment And Operating Leases

12 Months Ended

Dec. 31, 2019

Premises And Equipment [Abstract]

Premises And Equipment And Operating Leases

NOTE D – PREMISES AND EQUIPMENT AND OPERATING LEASES

Premises and equipment. Bank premises and equipment consist of the following:

	December 31,
(in thousands)	2019		2018
Land	$	9,038	$	9,038
Buildings and improvements		29,545		28,201
Leasehold improvements		14,629		14,175
Furniture and equipment		34,065		32,026
Construction in process		2,327		3,412
		89,604		86,852
Accumulated depreciation and amortization		(49,587)		(45,585)
	$	40,017	$	41,267

Operating Leases. The Bank leases certain branch and back-office locations under long-term, non-cancelable operating lease agreements. The leases expire at various dates through 2032 and have a weighted average remaining term of 7.42 years at December 31, 2019. Many of the Bank’s leases include renewal options of up to 10 years. The exercise of lease renewal options is at the Bank’s sole discretion.

The weighted average discount rate for leases in place at December 31, 2019 was 3.07%. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Bank had one such lease during 2019 and recognized rent expense for this lease on a straight-line basis over the lease term. No short-term leases were in effect at December 31, 2019.

Rental payments required by the Bank’s lease agreements may increase over time based on certain variable components such as real estate taxes and common area maintenance charges.

The components of rent expense for the year ended December 31, 2019 are as follows:

(in thousands)
Operating lease cost	$	2,632
Variable lease cost		455
Short-term lease cost		3
	$	3,090

The following is a maturity analysis of the operating lease liability as of December 31, 2019.

Year (dollars in thousands)
2020	$	2,549
2021		2,451
2022		2,426
2023		2,093
2024		1,980
Thereafter		5,578
Total lease payments		17,077
Less: interest		1,857
	$	15,220

Related Party Leases. Buildings occupied by two of the Bank’s branch offices are leased from a director of the Corporation and the Bank with a net lease liability of $105,000 at December 31, 2019. One lease expires on October 31, 2022 with one remaining option to renew. The second lease was renewed effective January 1, 2020 and will expire on December 31, 2024.