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LEASES | 6 Months Ended
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Jun. 30, 2020
Leases [Abstract] |
LEASES | 6. LEASES The Company enters into both lessor and lessee arrangements and determines if an arrangement is a lease at inception. As both a lessee and lessor, the Company elected the practical expedient permitted under the transition guidance within the standard to account for lease and non-lease components as a single lease component for all asset classes. Lessor Arrangements The Company’s lessor arrangements consist of sales-type and direct financing leases for equipment. Lease payment terms are fixed and are typically payable in monthly installments with terms ranging from 31 to 125 months. The lease arrangements may contain renewal options and purchase options that allow the lessee to purchase the leased equipment at the end of the lease term. The leases generally do not contain non-lease components. The Company has no lease transactions with related parties. At lease inception the Company estimates the expected residual value of the leased property at the end of the lease term by considering both internal and third-party appraisals. In certain cases, the Company obtains lessee-provided residual value guarantees and third-party RVI to reduce its residual asset risk. At June 30, 2020 the carrying value of residual assets covered by residual value guarantees and RVI was $7.5 million. ​ The net investment in sales-type and direct financing leases consists of the carrying amount of the lease receivables plus unguaranteed residual assets, net of unearned income and any deferred selling profit on direct financing leases. The lease receivables include the lessor’s right to receive lease payments and the guaranteed residual asset value the lessor expects to derive from the underlying assets at the end of the lease term. At June 30, 2020, the total net investment in sales-type and direct financing leases was $81.3 million, comprised of $78.7 million in lease receivables and $2.6 million in unguaranteed residuals. There were no significant changes in the balance of the Company’s unguaranteed residual assets for the period ending June 30, 2020. The Company’s net investment in sales-type and direct financing leases are included in Loans Held for Investment (net of deferred fees and costs) on the Company’s Consolidated Balance Sheets. For the three and six months ended June 30, 2020, total lease income was $290,000 and $340,000, and is recorded within Interest Income on the Company’s Consolidated Statements of Income. There was no lease income for the three and six months ended June 30, 2019. ​ Lessee Arrangements The Company’s lessee arrangements consist of operating and finance leases; however the majority of the leases have been classified as non-cancellable operating leases and are primarily for real estate leases with remaining lease terms of up to 14 years. The Company’s real estate lease agreements do not contain residual value guarantees and most agreements do not contain restrictive covenants. The Company does not have any material arrangements where the Company is in a sublease contract. ​ Lessee arrangements with an initial term of twelve months or less are not recorded on the Consolidated Balance Sheet. The ROU Assets and lease liabilities associated with operating and finance leases greater than twelve months are recorded in the Company’s Consolidated Balance Sheets; ROU Assets within Other Assets and lease liabilities within Other Liabilities. ROU Assets represent the Company’s right to use an underlying asset over the course of the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The initial measurement of lease liabilities and ROU Assets are the same for operating and finance leases. Lease liabilities are recognized at the commencement date based on the present value of the remaining lease payments, discounted using the incremental borrowing rate. As most of the Company’s leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. ROU Assets are recognized at commencement date based on the initial measurement of the lease liability, any lease payments made excluding lease incentives, and any initial direct costs incurred. Most of the Company’s operating leases include one or more options to renew; however, the Company is not reasonably certain to exercise those options and therefore does not include the renewal options in the measurement of the operating ROU Assets and lease liabilities. ​ Lease expense for operating lease payments is recognized on a straight-line basis over the lease term and recorded in Occupancy Expense within noninterest expense on the Company’s Consolidated Statements of Income. Finance lease expenses consist of straight-line amortization expense of the ROU Assets recognized over the lease term and interest expense on the lease liability. Total finance lease expenses for the amortization of the ROU Assets are recorded in Occupancy Expense within noninterest expense on the Company’s Consolidated Statements of Income and interest expense on the finance lease liability is recorded in Interest Expense on Long-Term Borrowings within total interest expense on the Company’s Consolidated Statements of Income. ​ As of June 30, 2020, the Company had no sales leaseback transactions or leases that have no t yet commenced that create significant rights and obligations. The tables below provide information about the Company’s lessee lease portfolio and other supplemental lease information (dollars in thousands): ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | June 30, 2020 | ​ | ​ | ​ | December 31, 2019
​ | ​ | Operating | ​ | ​ | Finance | ​ | ​ | ​ | Operating
Right-of-use-assets | ​ | $ | 53,208 | ​ | ​ | $ | 7,884 | ​ | ​ | $ | 54,941 | ​
Lease liabilities | ​ | ​ | 63,523 | ​ | ​ | ​ | 10,559 | ​ | ​ | ​ | 66,052 | ​
Lease Term and Discount Rate of Operating leases: |  | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Weighted-average remaining lease term (years) |  | ​ | 7.00 | ​ | ​ | ​ | 8.58 | ​ | ​ | ​ | 7.36 | ​
Weighted-average discount rate (1) |  | ​ | 2.43 | % | ​ | ​ | 1.17 | % | ​ | ​ | 2.69 | %
(1) | An incremental borrowing rate is used based on information available at commencement date of lease.
​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Six months ended June 30,
​ |  | 2020 | ​ | 2019
Cash paid for amounts included in measurement of lease liabilities: | ​ | ​ | ​ | ​ | ​ | ​
Operating Cash Flows from Finance Leases | ​ | $ | 10 | ​ | $ | -
Operating Cash Flows from Operating Leases | ​ |  | 6,893 | ​ | ​ | 6,880
Right-of-use assets obtained in exchange for lease obligations: | ​ | ​ |  | ​ | ​ | ​
Operating leases | ​ |  | 3,183 | ​ | ​ | 3,619
Finance leases | ​ | ​ | 10,549 | ​ | ​ | -
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three months ended June 30, | ​ | Six months ended June 30,
​ | ​ | ​ | 2020 | ​ | ​ | 2019 | ​ | ​ | 2020 | ​ | ​ | 2019
Net Operating Lease Cost | ​ | $ | 2,928 | ​ | $ | 3,134 | ​ | $ | 5,847 | ​ | $ | 6,136
Finance Lease Cost: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Amortization of right-of-use assets | ​ | ​ | 77 | ​ | ​ | - | ​ | ​ | 77 | ​ | ​ | -
Interest on lease liabilities | ​ | ​ | 10 | ​ | ​ | - | ​ | ​ | 10 | ​ | ​ | -
Total Lease Cost | ​ | $ | 3,015 | ​ | $ | 3,134 | ​ | $ | 5,934 | ​ | $ | 6,136
​ The maturities of lessor and lessee arrangements outstanding at June 30, 2020 are presented in the tables below (dollars in thousands): ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | June 30, 2020
​ | ​ | Lessor | ​ | Lessee
​ | ​ | ​ | Sales-type and Direct Financing | ​ | Operating | ​ | Finance
For the remaining six months of 2020 |  | $ | 7,894 | ​ | $ | 6,526 | ​ | $ | —
2021 | ​ |  | 16,216 | ​ | ​ | 12,182 | ​ | ​ | 1,261
2022 | ​ |  | 17,093 | ​ | ​ | 10,920 | ​ | ​ | 1,292
2023 | ​ |  | 15,503 | ​ | ​ | 9,958 | ​ | ​ | 1,325
2024 | ​ |  | 13,130 | ​ | ​ | 8,640 | ​ | ​ | 1,358
2025 | ​ | ​ | 4,310 | ​ | ​ | 6,296 | ​ | ​ | 1,392
Thereafter | ​ |  | 10,548 | ​ | ​ | 15,088 | ​ | ​ | 4,515
Total undiscounted cash flows | ​ |  | 84,694 | ​ | ​ | 69,610 | ​ | ​ | 11,143
Less: Adjustments (1) | ​ |  | 5,996 | ​ | ​ | 6,087 | ​ | ​ | 584
Total (2) | ​ | $ | 78,698 | ​ | $ | 63,523 | ​ | $ | 10,559
(1) | Lessor – unearned income and guaranteed residual value; Lessee – imputed interest.
(2) | Represents lease receivables for lessor arrangements and lease liabilities for lessee arrangements
​

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