Leases

9 Months Ended

Sep. 30, 2022

The Corporation has operating leases for retail and corporate offices, land, and equipment. The Corporation also has a finance lease for retail and corporate offices.

These leases have original terms of 1 year or longer with remaining maturities up to 40 years, some of which include options to extend the lease term. An analysis of the lease options has been completed and any purchase options or optional periods that the Corporation is reasonably likely to extend have been included in the capitalization.

The discount rate used to capitalize the operating leases is the Corporation's FHLB borrowing rate on the date of lease commencement. When determining the rate to discount specific lease obligations, the repayment period and term are considered.

Operating and finance lease costs and cash flows resulting from these leases are presented below:


	Three Months Ended Sep 30,				Nine Months Ended Sep 30,
($ in Thousands)	2022		2021		2022		2021
Operating lease costs	$	1,637	$	2,367	$	5,361	$	6,850
Finance lease costs	23		17		96		76
Operating lease cash flows	1,880		2,858		6,614		8,598
Finance lease cash flows	22		21		103		101

The lease classifications on the consolidated balance sheets were as follows:


($ in Thousands)	Consolidated Balance Sheets Category	Sep 30, 2022		Dec 31, 2021
Operating lease right-of-use asset	Premises and equipment	$	26,970	$	28,299
Finance lease right-of-use asset	Other assets	477		143
Operating lease liability	Accrued expenses and other liabilities	29,897		31,345
Finance lease liability	Other long-term funding	490		163

The lease payment obligations, weighted-average remaining lease term, and weighted-average original discount rate were as follows:


	Sep 30, 2022					Dec 31, 2021
($ in Thousands)	Lease payments		Weighted-average lease term (in years)	Weighted-average discount rate		Lease payments		Weighted-average lease term (in years)	Weighted-average discount rate
Operating leases
Retail and corporate offices	$	27,640	6.07	2.56	%	$	29,008	5.56	3.26	%
Land	4,963		7.53	3.13	%	5,551		8.29	3.12	%
Equipment	—		0.00	—	%	192		1.50	0.45	%
Total operating leases	$	32,604	6.28	2.65	%	$	34,751	5.94	3.22	%
Finance leases
Retail and corporate offices	$	508	5.50	1.32	%	$	112	1.25	1.32	%
Land	—		0.00	—	%	51		0.67	1.07	%
Total finance leases	$	508	5.50	1.32	%	$	164	1.07	1.24	%

Contractual lease payment obligations for each of the next five years and thereafter, in addition to a reconciliation to the Corporation’s lease liability, were as follows:


($ in Thousands)	Operating Leases		Finance Leases		Total Leases
Three months ending December 31, 2022	$	1,641	$	22	$	1,664
2023	6,224		92		6,316
2024	5,669		93		5,761
2025	4,548		93		4,641
2026	4,249		93		4,342
Beyond 2026	10,272		116		10,388
Total lease payments	$	32,604	$	508	$	33,111
Less: interest	2,707		18		2,724
Present value of lease payments	$	29,897	$	490	$	30,387

As of September 30, 2022 and December 31, 2021, additional operating leases, primarily retail and corporate offices, that had not yet commenced totaled $14 million and $13 million, respectively. The leases that had not yet commenced as of September 30, 2022 will commence between October 2022 and October 2023 with lease terms of 1 year to 6 years.