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Leases

9 Months Ended

Sep. 30, 2019

15. 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		Nine Months Ended
(Dollars in thousands)	September 30,		September 30,
Lease expense incurred:		2019		2019
Operating lease cost	$	5,384	$	16,602

	At September 30,
(Dollars in thousands)	2019
Operating lease right of use assets	$	58,754
Operating lease liabilities		65,138

	Nine Months Ended
	September 30,
(Dollars in thousands)	2019
Operating cash flows from operating leases	$	(14,665)

	At September 30,
	2019
Weighted average remaining operating lease term	6.0 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	$	4,869
2020		19,383
2021		10,648
2022		10,390
2023		9,937
2024		9,549
Thereafter		17,037
Undiscounted lease payments		81,813
Less: present value adjustment		16,675
Total operating lease liability	$	65,138

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 during 2021.

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.