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Leases

3 Months Ended

Mar. 31, 2020

8. Leases

The Company has 21 operating leases for branches (including headquarters) and office spaces, nine operating leases for vehicles, and one operating lease for equipment. Our leases have remaining lease terms ranging from eight months to 12 years, none of which has a renewal option reasonably certain of exercise, which has been reflected in the Company’s calculation of lease term.

The Company has elected the short-term lease recognition exemption such that the Company will not recognize Right-Of-Use (“ROU”) assets or lease liabilities for leases with a term of less than 12 months from the commencement date. The Company’s operating lease expense totaled $1.9 million and was recorded in Occupancy and equipment on the Consolidated Statements of Income for each of the three month periods ended March 31, 2020 and 2019. The Company has one agreement that qualifies as a short-term lease with expense totaling approximately $34,000 for each of the three month periods ended March 31, 2020 and 2019, included in Professional services on the Consolidated Statements of Income. The Company has $0.3 million and $0.2 million in variable lease payments, which include insurance and real estate tax expenses and was recorded in Occupancy and equipment on the Consolidated Statements of Income, for the three months ended March 31, 2020 and 2019, respectively. At March 31, 2020, the weighted-average remaining lease term for our operating leases is approximately seven years and the weighted average discount rate is 3.8%. Our lease agreements do not contain any residual value guarantees.

Certain leases have escalation clauses for operating expenses and real estate taxes. The Company’s non-cancelable operating lease agreements expire through 2032.

Supplemental balance sheet information related to leases was as follows:




(Dollars in thousands)	March 31, 2020			December 31, 2019

Operating lease ROU assets	$	39,729		$	41,254

Operating lease liabilities	$	47,726		$	49,367

Weighted-average remaining lease term-operating leases		7.4 years			8.0 years
Weighted average discount rate-operating leases		3.8	%		3.8	%

The components of lease expense and cash flow information related to leases were as follows:


	For the three months ended
(Dollars in thousands)	March 31, 2020		March 31, 2019

Lease Cost
Operating lease cost	$	1,885	$	1,892
Short-term lease cost		34		34
Variable lease cost		264		246
Total lease cost	$	2,183	$	2,172

Other information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	1,982	$	2,025
Right-of-use assets obtained in exchange for new operating lease liabilities	$	23	$	21

The Company’s minimum annual rental payments for Bank facilities due under non-cancelable leases are as follows as of March 31, 2020 and December 31, 2019:


	Minimum Rental
	(In thousands)
Years ended December 31:
2020	$	6,004
2021		7,680
2022		7,265
2023		7,398
2024		7,425
Thereafter		19,148
Total minimum payments required		54,920
Less: implied interest		7,194
Total lease obligations	$	47,726