Operating Leases

6 Months Ended

Jun. 30, 2021

The Corporation’s operating leases consist of various retail branch locations and corporate offices. As of June 30, 2021, the Corporation’s leases have remaining lease terms ranging from eleven months to 21 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 right-of-use assets (“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, 2021, the Corporation’s ROU assets and related lease liabilities were $33.8 million and $39.4 million, respectively.

The components of lease expense were as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
(dollars in thousands)
Operating lease expense	$	1,013	$	1,198	$	2,116	$	2,396
Short term lease expense	14		14		29		29
Variable lease expense	297		308		621		665
Sublease income	(5)		(8)		(10)		(17)
Total lease expense	$	1,319	$	1,512	$	2,756	$	3,073

Supplemental cash flow information related to leases was as follows:


	Six Months Ended June 30,
	2021		2020
(dollars in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	2,158	$	2,348
ROU assets obtained in exchange for lease liabilities	575		—

Maturities of operating lease liabilities under FASB ASC 842 “Leases” as of June 30, 2021 are as follows:


	June 30, 2021
(dollars in thousands)
2021	$	2,161
2022	4,214
2023	3,918
2024	3,793
2025	3,859
2026 and thereafter	32,548
Total lease payments	50,493
Less: imputed interest	11,093
Present value of operating lease liabilities	$	39,400

As of June 30, 2021, the weighted-average remaining lease term, including extension options that the Corporation is reasonably certain will be exercised, for all operating leases is 13.46 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, 2021 is 3.57%.

As of June 30, 2021, the Corporation had not entered into any material leases that have not yet commenced.