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Leases

6 Months Ended

Jun. 30, 2019

14. LEASES

Effective January 1, 2019, the Company adopted ASU 2016-02 and ASU 2018-11 which outline new guidance on the accounting for leases. The Company enters into lease agreements for real estate that is primarily used for office space in the ordinary course of business. These leases are accounted for as operating leases, whereby lease expense is recognized on a straight-line basis over the term of the lease. Most leases include an option to extend or renew the lease term. The exercise of the renewal is at the Company’s discretion. The operating lease liability includes lease payments related to options to extend or renew the lease term if the Company is reasonably certain of exercise those options. The Company, in determining the present value of lease payments utilizes either the rate implicit in the lease if that rate is readily determinable or the Company’s incremental secured borrowing rate commensurate with terms of the underlying lease.

Supplemental information related to operating leases is as follows for the periods indicated:

	Three Months Ended		Six Months Ended
(Dollars in thousands)	June 30,		June 30,
Lease expense incurred:		2019		2019
Operating lease cost	$	6,031	$	11,218

	At June 30,
(Dollars in thousands)	2019
Operating lease right of use assets	$	62,468
Operating lease liabilities		69,191

	Six Months Ended
	June 30,
(Dollars in thousands)	2019
Operating cash flows from operating leases	$	(8,926)

	At June 30,
	2019
Weighted average remaining operating lease term	5.9 years
Weighted average discount rate on operating leases	4.48	%

Maturities of the existing lease liabilities are expected to occur as follows:

(Dollars in thousands)
Remainder of 2019	$	9,459
2020		18,653
2021		9,823
2022		9,543
2023		9,291
2024		9,000
Thereafter		20,424
Undiscounted lease payments		86,193
Less: present value adjustment		17,002
Total operating lease liability	$	69,191

On July 2, 2019, the Company entered into a lease agreement to relocate its corporate offices from Liberty Corner, New Jersey to a corporate complex in Warren, New Jersey. The new lease, which covers approximately 315,000 square feet of office space, will be effective October 1, 2019 and runs through 2036. The initial base rent payment of the lease will be approximately $650 thousand per month or $7,800 thousand per year. The Company expects to relocate the existing operations and employees of the Liberty Corner, New Jersey facility to the new corporate complex by the end of 2020.

The amount of operating lease liabilities is not separately presented in the consolidated financial statements but is included in other liabilities. Disclosures regarding minimum lease payments under previous lease accounting guidance can be found in the Company’s 2018 Form 10-K.