Operating Leases

12 Months Ended

Dec. 31, 2020

The Corporation’s operating leases consist of various retail branch locations and corporate offices. As of December 31, 2020, the Corporation’s leases have remaining lease terms ranging from three months to twenty-one years, three months, 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.

The following table details the Corporation’s ROU assets and related lease liabilities as of December 31, 2020 and 2019:


	As of December 31,
(dollars in thousands)	2020		2019
Operating lease right-of-use assets	$	34,601	$	40,961
Operating lease liabilities	40,284		45,258

The components of lease expense were as follows:


	Year Ended December 31,
(dollars in thousands)	2020		2019
Operating lease expense	$	4,773	$	5,295
Short term lease expense	59		59
Variable lease expense	1,295		1,795
Sublease income	(36)		(32)
Total lease expense	$	6,091	$	7,117

The Corporation performs impairment assessments for ROU assets when events or changes in circumstances indicate that their carrying values may not be recoverable. In addition to the lease costs disclosed in the table above, during the fourth quarter of 2020, the Corporation recognized a $1.5 million impairment loss for an ROU asset related to a planned branch closure. The recognized loss was recorded within Impairment of long-lived-assets on the Consolidated Statement of Income.

Supplemental cash flow information related to leases was as follows:


	Year Ended December 31,
(dollars in thousands)	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	4,705	$	5,174
ROU assets obtained in exchange for lease liabilities	—		44,609
Reductions to ROU assets resulting from reductions to lease obligations	(1,818)		—

Maturities of operating lease liabilities under FASB ASC 842 “Leases” as of December 31, 2020 are as follows:


(dollars in thousands)	December 31, 2020
2021	$	4,176
2022	3,924
2023	3,771
2024	3,793
2025	3,859
2026 and thereafter	32,548
Total lease payments	52,071
Less: imputed interest	11,787
Present value of operating lease liabilities	$	40,284

As of December 31, 2020, the weighted-average remaining lease term, including extension options that the Corporation is reasonably certain will be exercised, for all operating leases is 13.93 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 December 31, 2020 is 3.59%.

As of December 31, 2020, the Corporation had not entered into any material leases that have not yet commenced.