Leases

6 Months Ended

Jun. 30, 2020

Leases

Leases

Note 9 — Leases

As of June 30, 2020, we had operating ROU assets of $123.6 million and operating lease liabilities of $127.7 million. Operating ROU assets increased this quarter $36.7 million mostly due to the merger with CSB. We maintain operating leases on land and buildings for our operating centers, branch facilities and ATM locations. Most leases include one or more options to renew, with renewal terms extending up to 24 years. The exercise of renewal options is based on the sole judgment of management and what they consider to be reasonably certain given the environment today. Factors in determining whether an option is reasonably certain of exercise include, but are not limited to, the value of leasehold improvements, the value of renewal rate compared to market rates, and the presence of factors that would cause a significant economic penalty to us if the option is not exercised. Leases with an initial term of 12 months or less are not recorded on the balance sheet and instead are recognized in lease expense on a straight-line basis over the lease term.

The Company also holds a small number of finance leases assumed in connection to the CSFL merger. These leases are all real estate leases. Terms and conditions are similar to those real estate operating leases described above. Lease classifications from the acquired institutions were retained.

	Three Months Ended				Six Months Ended
(Dollars in thousands)	June 30,				June 30,
	2020		2019		2020		2019
Lease Cost Components:
Amortization of ROU assets - finance leases	$	47	$	—	$	47	$	—
Interest on lease liabilities - finance leases		5		—		5		—
Operating lease cost (cost resulting from lease payments)		3,058		2,173		5,316		4,319
Short-term lease cost		99		132		197		276
Variable lease cost (cost excluded from lease payments)		203		117		369		186
Total lease cost	$	3,412	$	2,422	$	5,934	$	4,781
Supplemental Cash Flow and Other Information Related to Leases:
Finance lease - operating cash flows	$	8	$	—	$	8	$	—
Finance lease - financing cash flows		40		—		40		—
Operating lease - operating cash flows (fixed payments)		2,784		1,918		4,456		3,808
Operating lease - operating cash flows (net change asset/liability)		(2,409)		248		(2,678)		504
New ROU assets - operating leases		39,278		2,994		39,736		4,950
New ROU assets - finance leases		5,374		—		5,374		—
Weighted - average remaining lease term (years) - finance leases						10.63		—
Weighted - average remaining lease term (years) - operating leases						11.81		14.40
Weighted - average discount rate - finance leases						1.9%		—
Weighted - average discount rate - operating leases						3.3%		4.0%
Operating lease payments due:
2020 (excluding the six months ended June 30, 2020)					$	9,252
2021						16,141
2022						14,772
2023						13,808
2024						12,610
Thereafter						92,073
Total undiscounted cash flows						158,656
Discount on cash flows						(30,962)
Total operating lease liabilities					$	127,694

As of June 30, 2020, we determined that the number and dollar amount of our equipment leases was immaterial. As of June 30, 2020, we did not have additional operating leases that have not yet commenced from an amendment to a current lease.