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Leases

12 Months Ended

Dec. 31, 2021

LEASES

Leases under which BancShares is a Lessee

The following table presents lease assets and liabilities as of December 31, 2021 and 2020:


(Dollars in thousands)	Classification	December 31, 2021		December 31, 2020
Assets:
Operating	Other assets	$	63,207	$	68,048
Finance	Premises and equipment	4,310		6,478
Total leased assets		$	67,517	$	74,526
Liabilities:
Operating	Other liabilities	$	64,431	$	68,343
Finance	Other borrowings	4,311		6,308
Total lease liabilities		$	68,742	$	74,651

The following table presents lease costs for the years ended December 31, 2021 and 2020. Variable lease cost primarily represents variable payments such as common area maintenance and utilities recognized in the period in which the expense was incurred. Certain of our lease agreements also include rental payments adjusted periodically for inflation. While lease liabilities are not remeasured as a result of these changes, these adjustments are treated as variable lease costs and recognized in the period in which the expense is incurred.


(Dollars in thousands)	Classification	2021		2020
Lease cost:
Operating lease cost (1)	Occupancy expense	$	13,993	$	15,023
Finance lease cost:
Amortization of leased assets	Equipment expense	2,168		2,168
Interest on lease liabilities	Interest expense - Other borrowings	162		220
Variable lease cost	Occupancy expense	3,110		3,231
Sublease income	Occupancy expense	(355)		(350)
Net lease cost		$	19,078	$	20,292
(1) Operating lease cost includes short-term lease cost, which is immaterial.

The following table presents lease liability maturities in the next five years and thereafter:


(Dollars in thousands)	Operating Leases		Finance Leases		Total
2022	$	12,840	$	1,876	$	14,716
2023	11,162		993		12,155
2024	9,356		617		9,973
2025	6,462		635		7,097
2026	5,450		431		5,881
Thereafter	29,236		—		29,236
Total lease payments	$	74,506	$	4,552	$	79,058
Less: Interest	10,075		241		10,316
Present value of lease liabilities	$	64,431	$	4,311	$	68,742

The following table presents the remaining weighted average lease terms and discount rates as of December 31, 2021:


Weighted average remaining lease term (years):	December 31, 2021
Operating	8.9
Finance	3.5
Weighted average discount rate:
Operating	3.00	%
Finance	3.12

The following table presents supplemental cash flow information related to leases for the years ended December 31, 2021 and 2020:


	Year ended December 31
(Dollars in thousands)	2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	13,054	$	14,237
Operating cash flows from finance leases	162		220
Financing cash flows from finance leases	1,997		1,922
Right-of-use assets obtained in exchange for new operating lease liabilities	6,535		4,595

Leases under which BancShares is a Lessor

BancShares provides equipment financing using a variety of loan and lease structures. Typical items financed and leased include commercial equipment and vehicles. The following table presents the components of the investment in direct or sales type financing leases, included in loans in the consolidated balance sheets as of December 31, 2021 and 2020:


(Dollars in thousands)	Year ended December 31
	2021		2020
Total minimum lease payment to be received	$	261,469	$	335,385
Estimated unguaranteed residual value of leased assets	24,472		19,428
Gross investment in direct or sales type financing leases	285,941		354,813
Unearned income	(18,262)		(23,970)
Initial direct costs	783		548
Total net investment	$	268,462	$	331,391

At December 31, 2021, future minimum lease payments to be received under direct or sales type financing leases were as follows:


Years ending December 31
2022	$	96,974
2023	70,635
2024	46,407
2025	28,065
2026	13,630
Thereafter	5,758
Future minimum lease payments	$	261,469

Leases