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Leases

3 Months Ended

Mar. 31, 2021

7. Leases

The Company has 28 operating leases for branches (including headquarters) and office spaces, ten operating leases for vehicles, and one operating lease for equipment. Our leases have remaining lease terms ranging from two months to approximately 15 years, none of which has a renewal option reasonably certain of exercise, which has been reflected in the Company’s calculation of lease term.

During the first quarter of 2021, the Company executed extensions for two of its current branches, and had a rent modification for one of its current branches. Additionally, the Company executed a modification and reduction of space at the former Empire Bancorp, Inc. (“Empire”) headquarters and branch in Islandia, which resulted in a gain of $0.6 million on the disposition of the Right of Use (“ROU”) asset.

The Company has elected the short-term lease recognition exemption such that the Company will not recognize 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 $2.1 million and $1.9 million and was recorded in Occupancy and equipment on the Consolidated Statements of Income for the three month periods ended March 31, 2021 and 2020, respectively.

The Company has one agreement that qualifies as a short-term lease with expense totaling approximately $35,000 for each of the three month periods ended March 31, 2021 and 2020, included in Professional services on the Consolidated Statements of Income. The Company has $0.3 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 each of the three months ended March 31, 2021 and 2020. At March 31, 2021, the weighted-average remaining lease term for our operating leases is approximately eight years and the weighted average discount rate is 3.2%.

Certain leases have escalation clauses for operating expenses and real estate taxes. The Company’s non-cancelable operating lease agreements expire through 2036.

Supplemental balance sheet information related to leases was as follows:




(Dollars in thousands)	March 31, 2021			December 31, 2020

Operating lease ROU asset	$	53,802		$	50,743

Operating lease liability	$	58,080		$	59,100

Weighted-average remaining lease term-operating leases		7.9 years			8.3 years
Weighted average discount rate-operating leases		3.2	%		3.2	%

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


	At or for the three months ended
(Dollars in thousands)	March 31, 2021		March 31, 2020

Lease Cost
Operating lease cost	$	2,104	$	1,885
Short-term lease cost		35		34
Variable lease cost		298		264
Total lease cost	$	2,437	$	2,183

Other information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	5,630	$	1,982
Right-of-use assets obtained in exchange for new operating lease liabilities	$	4,760	$	23

The Company’s minimum annual rental payments for Bank facilities due under non-cancelable leases are as follows as of March 31, 2021:


	Minimum Rental
	(In thousands)
Years ended December 31:
2021	$	6,758
2022		9,145
2023		9,276
2024		9,119
2025		8,479
Thereafter		22,898
Total minimum payments required		65,675
Less: Implied interest		7,595
Total lease obligations	$	58,080

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


	Minimum Rental
	(In thousands)
Years ended December 31:
2021	$	8,757
2022		8,871
2023		9,006
2024		8,847
2024		8,212
Thereafter		23,547
Total minimum payments required	$	67,240
Less: Implied interest		8,140
Total lease obligations	$	59,100