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Leases

12 Months Ended

Dec. 31, 2020

Lessee Disclosure [Abstract]

Leases

LEASES

Old National determines if an arrangement is or contains a lease at contract inception.  Operating leases are included in operating lease right-of-use assets and operating lease liabilities in our consolidated balance sheets.  Finance leases are included in premises and equipment and other borrowings in our consolidated balance sheets.

Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.  Right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.  In determining the present value of lease payments, we use the implicit lease rate when readily determinable.  As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date.  The incremental borrowing rate is the rate of interest that we would have to pay to borrow on a collateralized basis over a similar term in an amount equal to the lease payments in a similar economic environment.

Old National has operating and finance leases for land, office space, banking centers, and equipment.  These leases are generally for periods of 10 to 20 years with various renewal options.  We include certain renewal options in the measurement of our right-of-use assets and lease liabilities if they are reasonably certain to be exercised.  Variable lease payments that are dependent on an index or a rate are initially measured using the index or rate at the commencement date and are included in the measurement of the lease liability. Variable lease payments that are not dependent on an index or a rate are excluded from the measurement of the lease liability and are recognized in profit and loss when incurred.  Variable lease payments are defined as payments made for the right to use an asset that vary because of changes in facts or circumstances occurring after the commencement date, other than the passage of time.

Old National has lease agreements with lease and non-lease components, which are generally accounted for separately.  For real estate leases, non-lease components and other non-components, such as common area maintenance charges, real estate taxes, and insurance are not included in the measurement of the lease liability since they are generally able to be segregated.  For certain equipment leases, Old National accounts for the lease and non-lease components as a single lease component using the practical expedient available for that class of assets.

Old National does not have any material sub-lease agreements.

The components of lease expense were as follows:

			Affected Line Item in the Statement of Income			Years Ended December 31,
(dollars in thousands)						2020						2019
Operating lease cost			occupancy/equipment expense			$	23,548					$	17,001
Finance lease cost:
Amortization of right-of-use assets			occupancy expense			1,044						651
Interest on lease liabilities			interest expense			364						320
Short-term lease cost			occupancy expense			—						6
Sub-lease income			occupancy expense			(512)						(703)
Total						$	24,444					$	17,275

Lease expense for operating leases was $17.9 million in 2018.

Supplemental balance sheet information related to leases was as follows:

			December 31,
(dollars in thousands)			2020						2019
Operating Leases
Operating lease right-of-use assets			$	76,197					$	95,477
Operating lease liabilities			86,598						99,500
Finance Leases
Premises and equipment, net			11,351						7,170
Other borrowings			11,813						7,406
Weighted-Average Remaining Lease Term (in Years)
Operating leases			10.6						10.6
Finance leases			10.3						11.3
Weighted-Average Discount Rate
Operating leases			3.40		%				3.45		%
Finance leases			3.46		%				4.43		%

Supplemental cash flow information related to leases was as follows:

			Years Ended December 31,
(dollars in thousands)			2020						2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases			$	15,906					$	17,493
Operating cash flows from finance leases			364						320
Financing cash flows from finance leases			819						465

The following table presents a maturity analysis of the Company’s lease liability by lease classification at December 31, 2020:

(dollars in thousands)			Operating Leases						Finance Leases
2021			$	14,245					$	1,394
2022			13,241						1,412
2023			9,534						1,438
2024			8,366						1,444
2025			8,116						1,437
Thereafter			50,462						7,006
Total undiscounted lease payments			103,964						14,131
Amounts representing interest			(17,366)						(2,318)
Lease liability			$	86,598					$	11,813

Old National leases certain office space and buildings to unrelated parties in exchange for consideration.  All of these tenant leases are classified as operating leases.  

The following table presents a maturity analysis of the Company’s tenant leases at December 31, 2020:

(dollars in thousands)			Tenant Leases
2021			$	2,422
2022			1,900
2023			1,541
2024			1,409
2025			1,056
Thereafter			1,464
Total undiscounted lease payments			$	9,792

Leases

LEASES

Old National determines if an arrangement is or contains a lease at contract inception.  Operating leases are included in operating lease right-of-use assets and operating lease liabilities in our consolidated balance sheets.  Finance leases are included in premises and equipment and other borrowings in our consolidated balance sheets.

Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.  Right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.  In determining the present value of lease payments, we use the implicit lease rate when readily determinable.  As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date.  The incremental borrowing rate is the rate of interest that we would have to pay to borrow on a collateralized basis over a similar term in an amount equal to the lease payments in a similar economic environment.

Old National has operating and finance leases for land, office space, banking centers, and equipment.  These leases are generally for periods of 10 to 20 years with various renewal options.  We include certain renewal options in the measurement of our right-of-use assets and lease liabilities if they are reasonably certain to be exercised.  Variable lease payments that are dependent on an index or a rate are initially measured using the index or rate at the commencement date and are included in the measurement of the lease liability. Variable lease payments that are not dependent on an index or a rate are excluded from the measurement of the lease liability and are recognized in profit and loss when incurred.  Variable lease payments are defined as payments made for the right to use an asset that vary because of changes in facts or circumstances occurring after the commencement date, other than the passage of time.

Old National has lease agreements with lease and non-lease components, which are generally accounted for separately.  For real estate leases, non-lease components and other non-components, such as common area maintenance charges, real estate taxes, and insurance are not included in the measurement of the lease liability since they are generally able to be segregated.  For certain equipment leases, Old National accounts for the lease and non-lease components as a single lease component using the practical expedient available for that class of assets.

Old National does not have any material sub-lease agreements.

The components of lease expense were as follows:

			Affected Line Item in the Statement of Income			Years Ended December 31,
(dollars in thousands)						2020						2019
Operating lease cost			occupancy/equipment expense			$	23,548					$	17,001
Finance lease cost:
Amortization of right-of-use assets			occupancy expense			1,044						651
Interest on lease liabilities			interest expense			364						320
Short-term lease cost			occupancy expense			—						6
Sub-lease income			occupancy expense			(512)						(703)
Total						$	24,444					$	17,275

Lease expense for operating leases was $17.9 million in 2018.

Supplemental balance sheet information related to leases was as follows:

			December 31,
(dollars in thousands)			2020						2019
Operating Leases
Operating lease right-of-use assets			$	76,197					$	95,477
Operating lease liabilities			86,598						99,500
Finance Leases
Premises and equipment, net			11,351						7,170
Other borrowings			11,813						7,406
Weighted-Average Remaining Lease Term (in Years)
Operating leases			10.6						10.6
Finance leases			10.3						11.3
Weighted-Average Discount Rate
Operating leases			3.40		%				3.45		%
Finance leases			3.46		%				4.43		%

Supplemental cash flow information related to leases was as follows:

			Years Ended December 31,
(dollars in thousands)			2020						2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases			$	15,906					$	17,493
Operating cash flows from finance leases			364						320
Financing cash flows from finance leases			819						465

The following table presents a maturity analysis of the Company’s lease liability by lease classification at December 31, 2020:

(dollars in thousands)			Operating Leases						Finance Leases
2021			$	14,245					$	1,394
2022			13,241						1,412
2023			9,534						1,438
2024			8,366						1,444
2025			8,116						1,437
Thereafter			50,462						7,006
Total undiscounted lease payments			103,964						14,131
Amounts representing interest			(17,366)						(2,318)
Lease liability			$	86,598					$	11,813

Old National leases certain office space and buildings to unrelated parties in exchange for consideration.  All of these tenant leases are classified as operating leases.  

The following table presents a maturity analysis of the Company’s tenant leases at December 31, 2020:

(dollars in thousands)			Tenant Leases
2021			$	2,422
2022			1,900
2023			1,541
2024			1,409
2025			1,056
Thereafter			1,464
Total undiscounted lease payments			$	9,792

X

- References

No definition available.

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X

- Definition

The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance lease liability.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 842
-SubTopic 20
-URI http://asc.fasb.org/subtopic&trid=77888251

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X

- Definition

The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 842
-SubTopic 20
-URI http://asc.fasb.org/subtopic&trid=77888251

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