Leases

3 Months Ended

Mar. 31, 2023

The Corporation has operating leases for retail and corporate office, 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 Mar 31,
($ in thousands)	2023		2022
Operating lease costs	$	1,464	$	1,798
Finance lease costs	23		41
Operating lease cash flows	1,828		2,407
Finance lease cash flows	22		44

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


($ in thousands)	Consolidated Balance Sheets Category	Mar 31, 2023		Dec 31, 2022
Operating lease right-of-use asset	Premises and equipment	$	24,377	$	25,617
Finance lease right-of-use asset	Other assets	433		455
Operating lease liability	Accrued expenses and other liabilities	26,938		28,357
Finance lease liability	Other long-term funding	448		469

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


	Mar 31, 2023					Dec 31, 2022
($ 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	$	24,738	5.76	2.63	%	$	26,140	5.92	2.62	%
Land	4,569		7.44	3.15	%	4,766		7.59	3.14	%
Equipment	—		0.00	—	%	—		0.00	—	%
Total operating leases	$	29,307	6.01	2.71	%	$	30,906	6.17	2.70	%
Finance leases
Retail and corporate offices	$	463	5.00	1.32	%	$	485	5.25	1.32	%

Total finance leases	$	463	5.00	1.32	%	$	485	5.25	1.32	%

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
Nine months ended December 31, 2023	$	4,540	$	69	$	4,609
2024	5,735		93		5,827
2025	4,512		93		4,605
2026	4,246		93		4,339
2027	3,807		93		3,899
Beyond 2027	6,468		23		6,491
Total lease payments	$	29,307	$	463	$	29,770
Less: interest	2,369		15		2,384
Present value of lease payments	$	26,938	$	448	$	27,386

As of March 31, 2023 and December 31, 2022, additional operating leases, primarily retail and corporate offices, that had not yet commenced totaled $12 million and $13 million, respectively. The leases that had not yet commenced as of March 31, 2023 will commence between April 2023 and January 2024 with lease terms of 1 year to 6 years.