Leases

9 Months Ended

Sep. 30, 2024

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 38 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 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)	2024		2023		2024		2023
Operating lease costs	$	1,631	$	1,594	$	4,727	$	4,536
Finance lease costs	23		23		68		69
Operating lease cash flows	1,795		1,917		5,027		5,442
Finance lease cash flows	23		23		69		69

The right-of-use asset and lease liability by lease classifications on the consolidated balance sheets were as follows:


($ in thousands)	Consolidated Balance Sheets Category	Sep 30, 2024		Dec 31, 2023
Operating lease right-of-use asset	Premises and equipment	$	28,425	$	24,712
Finance lease right-of-use asset	Other assets	303		368
Operating lease liability	Accrued expenses and other liabilities	30,723		27,311
Finance lease liability	Other long-term funding	317		383

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


	Sep 30, 2024					Dec 31, 2023
($ 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	$	31,317	6.51	3.65	%	$	25,729	5.76	3.12	%
Land	3,435		6.69	3.51	%	4,050		6.98	3.48	%
Equipment	204		1.75	4.62	%	408		2.50	4.62	%
Total operating leases	$	34,955	6.50	3.64	%	$	30,187	5.88	3.19	%
Finance leases
Retail and corporate offices	$	324	3.50	1.32	%	$	394	4.25	1.32	%

Total finance leases	$	324	3.50	1.32	%	$	394	4.25	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
Three months ended December 31, 2024	$	1,590	$	23	$	1,613
2025	6,550		93		6,643
2026	6,062		93		6,155
2027	5,401		93		5,493
2028	4,727		23		4,750
Beyond 2028	10,625		—		10,625
Total lease payments	$	34,955	$	324	$	35,279
Less: interest	4,232		7		4,239
Present value of lease payments	$	30,723	$	317	$	31,040

As of September 30, 2024 and December 31, 2023, additional operating leases, primarily retail and corporate offices, that had not yet commenced totaled $6 million and $3 million, respectively. The leases that had not yet commenced as of September 30, 2024 will commence between October 2024 and April 2025 with lease terms of 1 year to 7 years. Rental income generated by the Corporation's leases is included within occupancy expense on the consolidated statements of income.