Operating Leases

6 Months Ended

Jun. 30, 2019

On January 1, 2019, the Corporation adopted ASU 2016-02 (Topic 842), “Leases”, as further explained in Note 2, Recent Accounting Pronouncements.

The Corporation’s operating leases consist of various retail branch locations and corporate offices. As of June 30, 2019, the Corporation’s leases have remaining lease terms ranging from six months to 23 years, including extension options that the Corporation is reasonably certain will be exercised.

The Corporation’s leases include fixed rental payments, and certain of our leases also include variable rental payments where lease payments may increase at pre-determined dates based on the change in the consumer price index. The Corporation’s lease agreements include gross leases as well as leases in which we make separate payments to the lessor for items such as the property taxes assessed on the property or a portion of the common area maintenance associated with the property. We have elected the practical expedient not to separate lease and non-lease components for all of our building leases. The Corporation also elected to not recognize ROU assets and lease liabilities for short-term leases, which consist of certain leases of the Corporation’s limited-hour retirement community offices.

As of June 30, 2019 the Corporation’s ROU assets and related lease liabilities were $43.1 million and $47.4 million, respectively.

The components of lease expense were as follows:



	Three Months Ended June 30, 2019			Six Months Ended June 30, 2019
(dollars in thousands)
Operating lease expense	$	1,333		$	2,663
Short term lease expense	14			29
Variable lease expense	392			810
Sublease income	(7		)	(16		)
Total lease expense	$	1,732		$	3,486

Supplemental cash flow information related to leases was as follows:



	Six Months Ended June 30, 2019
(dollars in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	2,561
ROU assets obtained in exchange for lease liabilities	44,944

Maturities of operating lease liabilities under FASB ASC 842 “Leases” as of June 30, 2019 are as follows:



	June 30, 2019
(dollars in thousands)
2019	$	2,613
2020	4,707
2021	4,484
2022	4,209
2023	4,061
2024 and thereafter	41,862
Total lease payments	61,936
Less: imputed interest	14,543
Present value of operating lease liabilities	$	47,393

As of June 30, 2019, the weighted-average remaining lease term, including extension options that the Corporation is reasonably certain will be exercised, for all operating leases is 14.51 years.

Because we generally do not have access to the rate implicit in the lease, we utilize our incremental borrowing rate as the discount rate. The weighted average discount rate associated with operating leases as of June 30, 2019 is 3.56%.

As of June 30, 2019, the Corporation had not entered into any material leases that have not yet commenced.

Future minimum cash rent commitments from various operating leases under FASB ASC 840 “Leases” as of December 31, 2018 are as follows:



(dollars in thousands)	December 31, 2018
2019	$	5,211
2020	4,700
2021	4,478
2022	4,203
2023	4,051
2024 and thereafter	41,845
Total	$	64,488