Leases

9 Months Ended

Sep. 30, 2024

15. Leases

The Company leases land and office facilities under long-term, non-cancelable operating lease agreements. The leases expire at various dates through 2044 and do not include renewal options based on economic factors that would have implied that continuation of the lease was reasonably certain. Certain leases provide for increases in future minimum annual rental payments as defined in the lease agreements. The leases generally include real estate taxes and common area maintenance charges in the rental payments. Short-term leases are leases having a term of twelve months or less. The Company does not separate nonlease components from the associated lease component of our operating leases. As a result, the Company accounts for these components as a single component since (i) the timing and pattern of transfer of the nonlease components and the associated lease component are the same and (ii) the lease component, if accounted for separately, would be classified as an operating lease. The Company recognizes short term leases on a straight-line basis and does not record a related right-of-use ("ROU") asset and liability for such leases. In addition, equipment leases were determined to be immaterial and a related ROU asset and liability for such leases is not recorded.

As of September 30, 2024, the balances of the ROU asset and lease liability were $43.0 million and $45.8 million, respectively. As of December 31, 2023, the balances of the ROU asset and lease liability were $42.2 million and $45.0 million, respectively. The ROU asset is included in bank premises and equipment, net, and the lease liability is included in accrued interest payable and other liabilities.

The minimum rental commitments under these noncancelable operating leases are as follows (in thousands) as of September 30, 2024 and December 31, 2023:


	September 30, 2024		December 31, 2023
2024	$	2,678	$	9,373
2025	10,201		8,549
2026	9,468		8,111
2027	8,144		7,223
2028	6,368		5,496
Thereafter	22,053		19,827
Total future minimum lease payments	$	58,912	$	58,579
Discount effect of cash flows	(13,064)		(13,551)
Present value of net future minimum lease payments	$	45,848	$	45,028

Additional information (dollar amounts in thousands):


	Three Months Ended						Nine Months Ended
Lease expense:	September 30, 2024			September 30, 2023			September 30, 2024			September 30, 2023
Operating lease expense	$	2,266		$	2,059		$	6,901		$	5,937
Short-term lease expense	—			—			—			—
Variable lease expense	302			289			895			810
Total lease expense	$	2,568		$	2,348		$	7,796		$	6,747
Other information:
Cash paid for amounts included in the measurement of lease liabilities	$	1,972		$	2,136		$	6,802		$	6,146
Weighted-average remaining lease term (in years)	7.64			8.33			7.75			8.62
Weighted-average discount rate	3.52		%	3.43		%	3.46		%	3.44		%

The Company currently leases two properties from two related parties. Total rent expense from the leases was $35,000, or 1.37% of total lease expense and $97,000, or 1.25% of total lease expense, for the three and nine months ended September 30, 2024, respectively.