Leases

12 Months Ended

Dec. 31, 2024

NOTE 18 - LEASES

The Corporation has operating leases for certain financial centers, corporate offices and land.

The following table presents the components of lease expense, which is included in net occupancy expense on the consolidated statements of income (dollars in thousands):


	2024		2023		2022
Operating lease expense	$	27,893	$	19,372	$	17,766
Variable lease expense	3,147		3,160		3,017
Sublease income	(1,224)		(1,111)		(964)
Total lease expense	$	29,816	$	21,421	$	19,819

Supplemental consolidated balance sheet information related to leases was as follows as of December 31 (dollars in thousands):


Operating Leases	Balance Sheet Classification	2024			2023
ROU assets	Other assets	$	140,997		$	88,188
Lease liabilities	Other liabilities	$	154,176		$	95,230
Weighted average remaining lease term		9.30 years			6.48 years
Weighted average discount rate		5.51		%	3.34		%

The discount rate used in determining the lease liability for each individual lease is the Bank's incremental borrowing rate which corresponds with the remaining lease term.

Supplemental cash flow information related to operating leases was as follows (dollars in thousands):


	2024		2023
Cash paid for amounts included in the measurement of lease liabilities	$	25,161	$	20,898
ROU assets obtained in exchange for lease obligations	78,278		20,184

Lease payment obligations for each of the next five years and thereafter, with a reconciliation to the Corporation's lease liability were as follows (dollars in thousands):


Year	Operating Leases

2025	$	27,122
2026	25,744
2027	23,464
2028	20,254
2029	16,669
Thereafter	91,077
Total lease payments	204,330
Less: imputed interest	(50,154)
Present value of lease liabilities	$	154,176

On May 10, 2024, the Bank and Fulton Financial Realty Company, a wholly owned subsidiary of the Corporation, entered into the Sale-Leaseback Transaction for 40 financial center office locations for an aggregate cash purchase price of $55.4 million. The Bank entered into a lease for each of the locations sold in the Sale-Leaseback Transaction for an initial term of 15 years, with the option to extend the term of each for up to three successive terms of up to five years each. During the initial lease terms, the base rental amount will increase annually at a rate of 2.25%. The Corporation recorded a pre-tax gain, after deduction of transaction-related expenses, of approximately $20.3 million in connection with the Sale-Leaseback Transaction. The properties are located in Pennsylvania, New Jersey, Delaware, and Maryland.

As of December 31, 2024, the Corporation had not entered into any significant leases that have not yet commenced.