Mid Penn adopted FASB Topic 842, Leases, and all subsequent ASUs that modified Topic 842, which primarily affected the accounting treatment for operating lease agreements in which Mid Penn is the lessee. Operating and finance lease right-of-use assets, as well as operating lease liabilities, are presented as separate line items on the Consolidated Balance Sheet, while finance lease liabilities are classified as a component of long-term debt. Mid Penn has elected not to include short-term leases (i.e., leases with initial terms of twelve months or less) or equipment leases (deemed immaterial) on the Consolidated Balance Sheets.

As of the merger with Riverview on November 30, 2021, Mid Penn assumed eight operating leases. Subsequent to the merger, and prior to March 31, 2022, two of the leases expired and were not renewed. Three additional leases are connected with branch locations added during the merger that have been closed prior to March 31, 2022, and Mid Penn will not retain these leases upon expiration, with the latest expiring in December of 2023. The three remaining operating leases are open branch locations that Mid Penn currently intends to continue to operate.

In 2016, Mid Penn entered into a subleasing agreement with an unrelated party on one of its properties under an operating lease. The sublease included an escalation clause. The initial term of the sublease agreement began on July 1, 2016 and ended on March 31, 2022, and was extended for an additional one-year term ending March 31, 2023. As of March 31, 2022 and December 31, 2021, two of Mid Penn’s operating leases were with related parties.

There were no sale and leaseback transactions, leveraged leases, or leases that had not commenced as of March 31, 2022.

Below is a summary of the operating and finance lease right-of-use assets and related lease liabilities, as well as the weighted average lease term (in years) and weighted average discount rate for each of the lease classifications as of March 31, 2022 and December 31, 2021.

(Dollars in thousands)	March 31, 2022						December 31, 2021
	Operating Leases			Finance Lease			Operating Leases			Finance Lease
Right of use asset	$	8,751		$	3,042		$	9,055		$	3,087
Lease liability	$	10,923		$	3,358		$	11,363		$	3,380
Weighted average remaining lease term (in years)		6.86			16.92			7.03			17.17
Weighted average discount rate		3.14	%		3.81	%		3.12	%		3.81	%

A summary of lease costs during the three and nine months ended March 31, 2022 and 2021 are presented below. Interest expense on finance lease liabilities is included in other interest expense, while all other lease costs are included in occupancy expense on Mid Penn’s Consolidated Statements of Income.

(Dollars in thousands)	Three Months Ended March 31,
	2022			2021
Finance lease cost:
Amortization of right-of-use asset	$	45		$	45
Interest expense on lease liability		32			33
Total finance lease cost		77			78
Operating lease cost		497			516
Short-term and equipment lease cost		20			10
Variable lease cost		—			—
Sublease income		(6	)		(9	)
Total lease costs	$	588		$	595

A summary of cash paid for amounts included in the measurement of lease liabilities is presented below.

(Dollars in thousands)	Three Months Ended
	March 31, 2022		March 31, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	32	$	34
Operating cash flows from operating leases		620		544
Financing cash flows from finance leases		22		21

Future minimum payments for operating and finance leases and a reconciliation of the undiscounted cash flows to the total operating and finance lease liability amounts is presented below.

(Dollars in thousands)	March 31, 2022
	Operating Leases			Finance Lease
Lease payments due for each of the years ending December 31,
2022	$	1,832		$	163
2023		2,068			217
2024		1,903			252
2025		1,479			259
2026		1,249			259
Thereafter		3,636			3,473
Total undiscounted cash flows		12,167			4,623
Discount on cash flows		(1,244	)		(1,265	)
Total lease liability	$	10,923		$	3,358