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Leases

9 Months Ended

Sep. 30, 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 one month 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.

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 $2.2 million and $1.9 million and was recorded in Occupancy and equipment on the Consolidated Statements of Income for the three month periods ended September 30, 2021 and 2020, respectively. The Company’s operating lease expense totaled $6.6 million and $5.7 million and was recorded in Occupancy and equipment on the Consolidated Statements of Income for the nine month periods ended September 30, 2021 and 2020, respectively.

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 September 30, 2021 and 2020 and approximately $129,000 and $102,000 for the nine month periods ended September 30, 2021 and 2020, included in Professional services on the Consolidated Statements of Income. The Company has $0.2 million and $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 September 30, 2021 and 2020. The Company has $0.8 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 nine months ended September 30, 2021 and 2020. At September 30, 2021, the weighted-average remaining lease term for our operating leases is approximately eight years and the weighted average discount rate is 3.2%. 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 2036.

Supplemental balance sheet information related to leases was as follows:




(Dollars in thousands)	September 30, 2021			December 31, 2020

Operating lease ROU asset	$	50,155		$	50,743

Operating lease liability	$	54,239		$	59,100

Weighted-average remaining lease term-operating leases		7.5 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:


	For the three months ended
(Dollars in thousands)	September 30, 2021		September 30, 2020

Lease Cost
Operating lease cost	$	2,217	$	1,895
Short-term lease cost		34		34
Variable lease cost		230		281
Total lease cost	$	2,481	$	2,210

Other information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	2,435	$	2,101
Right-of-use assets obtained in exchange for new operating lease liabilities	$	28	$	6,772


	For the nine months ended
(Dollars in thousands)	September 30, 2021		September 30, 2020

Lease Cost
Operating lease cost	$	6,565	$	5,676
Short-term lease cost		129		102
Variable lease cost		826		832
Total lease cost	$	7,520	$	6,610

Other information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	10,483	$	6,283
Right-of-use assets obtained in exchange for new operating lease liabilities	$	4,827	$	6,822

The Company’s minimum annual rental payments for Bank facilities due under non-cancelable leases are as follows as of September 30, 2021:


	Minimum Rental
	(In thousands)
Years ended December 31:
2021	$	1,995
2022		9,162
2023		9,292
2024		9,127
2025		8,479
Thereafter		22,897
Total minimum payments required		60,952
Less: Implied interest		6,713
Total lease obligations	$	54,239

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