Leases

12 Months Ended

Dec. 31, 2023

Capital Leases in Financial Statements of Lessee Disclosure

Leases

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 39 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:


	Twelve Months Ended December 31,
($ in thousands)	2023		2022		2021
Operating lease costs	$	6,281	$	6,812	$	8,712
Finance lease costs	92		119		107
Operating lease cash flows	7,171		8,440		11,183
Finance lease cash flows	92		125		137

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


	Consolidated Balance Sheets Category
($ in thousands)		December 31, 2023		December 31, 2022
Operating lease right-of-use asset	Premises and equipment	$	24,712	$	25,617
Finance lease right-of-use asset	Other assets	368		455
Operating lease liability	Accrued expenses and other liabilities	27,311		28,357
Finance lease liability	Other long-term funding	383		469

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


	December 31, 2023					December 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	$	25,729	5.76	3.12	%	$	26,140	5.92	2.62	%
Land	4,050		6.98	3.48	%	4,766		7.59	3.14	%
Equipment	408		2.50	4.62	%	—		0.00	—	%
Total operating leases	$	30,187	5.88	3.19	%	$	30,906	6.17	2.70	%
Finance leases
Retail and corporate offices	$	394	4.25	1.32	%	$	485	5.25	1.32	%

Total finance leases	$	394	4.25	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
Twelve months ending December 31, 2024	$	6,459	$	93	$	6,552
2025	5,628		93		5,721
2026	5,043		93		5,135
2027	4,373		93		4,465
2028	3,428		23		3,451
Beyond 2028	5,257		—		5,257
Total lease payments	$	30,187	$	394	$	30,581
Less: interest	2,877		11		2,887
Present value of lease payments	$	27,311	$	383	$	27,694

At December 31, 2023 and 2022, additional operating leases, primarily retail and corporate offices, that had not yet commenced totaled $3 million and $13 million, respectively. The leases that had not yet commenced as of December 31, 2023 will commence between January 2024 and April 2025 with lease terms of 1 year to 7 years.

The Corporation conducts a portion of its business through certain facilities and equipment under non-cancelable operating leases. The Corporation also leases a subdivision of some of its facilities and receives rental income from such lease agreements. The approximate minimum annual rental payments and rental receipts under non-cancelable agreements and leases are as follows:


($ in thousands)	Payments		Receipts
2024	$	6,352	$	3,522
2025	5,436		3,854
2026	5,117		3,539
2027	4,447		3,146
2028	3,448		2,338
Beyond 2028	5,447		12,446
Total	$	30,247	$	28,843

Total rental expense from leases, net of lease income, totaled $2 million in 2023, $3 million in 2022, and $5 million in 2021