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Leases

12 Months Ended

Dec. 31, 2019

9. 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:

	Year Ended December 31,
(Dollars in thousands)		2019
Lease expense incurred:
Operating lease cost	$	24,524

		At December 31,
(Dollars in thousands)		2019
Operating lease right of use assets	$	161,435
Operating lease liabilities		169,909

	Year Ended December 31,
(Dollars in thousands)		2019
Operating cash flows from operating leases	$	(20,041)

	At December 31,
	2019
Weighted average remaining operating lease term	12.6 years
Weighted average discount rate on operating leases	3.91	%

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

(Dollars in thousands)
2020	$	19,945
2021		17,153
2022		18,985
2023		18,169
2024		17,872
Thereafter		126,250
Undiscounted lease payments		218,374
Less: present value adjustment		48,465
Total operating lease liability	$	169,909

As of December 31, 2018, the Company accounted for leases per the guidance codified in Accounting Standards Codification, Topic 740-Leases. Based on prior guidance, the future minimum rental commitments, exclusive of cost escalation clauses, at December 31, 2018, for all of the Company’s operating leases were $91,841 thousand. The breakdown of the minimum rental commitments as of December 31, 2018, were as follows: $18,992 thousand for 2019, $18,365 thousand for 2020, $9,469 thousand for 2021, $9,180 thousand for 2022, $8,919 thousand for 2023 and $26,916 thousand for all years thereafter.

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, became effective in October, 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.