Leases (Notes)

12 Months Ended

Dec. 31, 2020

LEASES

The Company leases certain premises and equipment under operating leases. Portions of certain properties are subleased for terms extending through 2024. The Company adopted Update 2016-02, Topic 842, Leases, on January 1, 2019, and recorded an operating lease right-of-use asset of $18.7 million, a corresponding liability of $20.2 million and a cumulative adjustment to retained earnings of $125,000.

At December 31, 2020, the Company had lease liabilities totaling $18.2 million and right-of-use assets totaling $16.8 million related to these leases. At December 31, 2019, the Company had lease liabilities totaling $19.8 million and right-of-use assets totaling $18.3 million. The calculated amount of the right-of-use asset and lease liabilities are impacted by the length of the lease term and the discount rate used to calculate the present value of the minimum lease payments. The Company's lease agreements often include one or more options to renew at the Company's discretion. If at lease inception, the Company considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the calculation of the right-of-use asset and lease liability. The Company uses its incremental borrowing rate at lease inception, on a collateralized basis, over a similar term. For leases existing prior to January 1, 2019, the rate for the remaining lease term as of January 1, 2019 was used.

For the year ended December 31, 2020, the weighted average remaining lease term for operating leases was 9.69 years and the weighted average discount rate used in the measurement of operating lease liabilities was 3.41%. For the year ended December 31, 2019, the weighted average remaining lease term for operating leases was 10.32 years and the weighted average discount rate used in the measurement of operating lease liabilities was 3.51%.

As the Company elected not to separate lease and non-lease components and instead to account for them as a single lease component, the variable lease cost primarily represents variable payments such as common area maintenance and utilities. Lease costs were as follows:


(in thousands)	2020		2019
Operating lease cost	$	3,312	$	3,293
Short-term lease cost	—		—
Variable lease cost	90		133
Sublease income	(122)		(122)
Net lease cost	$	3,280	$	3,304

Rent expense for years ended December 31, 2018, prior to the adoption of ASU 2016-02, was $3.0 million.

The table below presents other information on the Company's operating leases for the years ended December 31, 2020 and 2019:


(in thousands)	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	2,790	$	2,654
Right-of-use asset obtained in exchange for new operating lease liabilities	1,159		1,748

There were no sale and leaseback transactions, leveraged leases or lease transactions with related parties during the year ended December 31, 2020. At December 31, 2020, the Company had no leases that had not yet commenced.

A maturity analysis of operating lease liabilities and reconciliation of the undiscounted cash flows to the total operating lease liability at December 31, 2020 is as follows:


(in thousands)
Within one year	$	3,322
After one year but within three years	5,399
After three years but within five years	4,345
After 5 years	8,693
Total undiscounted cash flows	21,759
Discount on cash flows	(3,576)
Total lease liability	$	18,183