Lease Accounting

3 Months Ended

Mar. 31, 2020

On adoption of ASU 2016-02 on January 1, 2019, the Company recognized $124.1 million of lease liabilities and $108.5 million of right-of-use ("ROU") assets on the face of the balance sheet. ROU assets obtained in exchange for lease liabilities are net of tenant improvement allowances and deferred rent. There was no impact to the Company’s Consolidated Statements of Cash Flows upon adoption, since the net impact of all adjustments recorded upon transition represents non-cash activity. See Part I. Item 1. “Notes to Unaudited Consolidated Financial Statements - Note 15: Recent Accounting Pronouncements” for additional information on the Company's adoption of this standard.

The Company, as lessee, has 42 real estate leases for office and ATM locations classified as operating leases. The Company determines if an arrangement is a lease or contains a lease at inception. The terms of the real estate leases generally have annual increases in payments based off of a fixed or variable rate, such as the Consumer Price Index rate, that is outlined within the respective contracts. Generally, the initial terms of the leases for our leased properties range from five to fifteen years. Most of the leases also include options to renew for periods of five to ten years at contractually agreed upon rates or at market rates at the time of the extension. On a quarterly basis, the Company evaluates whether the renewal of each lease is reasonably certain. If the lease doesn’t provide the implicit interest rate, the Bank uses its incremental borrowing rate at the commencement date of the lease in determining the present value of lease payments. No other significant judgments or assumptions were made in applying the requirements of ASU 2016-02.

The following table presents information about the Company's leases as of the dates indicated.


	Three months ended March 31,
	2020		2019
	(In thousands)
Lease cost
Operating lease cost	$	4,601	$	4,685
Short-term lease cost	48		32
Variable lease cost	(9)		2
Less: Sublease income	(28)		(18)
Total operating lease cost	$	4,612	$	4,701


	Three months ended March 31, 2020
	(In thousands, except years and percentages)
Other information

Cash paid for amounts included in the measurement of lease liabilities

Operating cash flows from operating leases	$	5,100


ROU assets obtained in exchange for new operating lease liabilities	$	443

Weighted-average remaining lease term for operating leases	7.9 years

Weighted-average discount rate for operating leases	3.2		%

The Company is obligated for minimum payments under non-cancelable operating leases. In accordance with the terms of these leases, the Company is currently committed to minimum annual payments as follows as of March 31, 2020:


	March 31, 2020
	(In thousands)
Remainder of 2020	$	14,962
2021	19,974
2022	19,934
2023	18,984
2024	12,961
Thereafter	44,194
Total future minimum lease payments	131,009
Less: Amounts representing interest	(17,435)
Present value of net future minimum lease payments	$	113,574