Leases

9 Months Ended

Sep. 30, 2024

12. LEASES

The Company’s operating leases, where the Company is a lessee, include real estate, such as office space and banking centers. Lease expense for operating leases is recognized on a straight-line basis over the term of the lease and is reflected in the consolidated statement of earnings. Right-of-use (“ROU”) assets and lease liabilities are included in other assets and other liabilities, respectively, on the Company’s condensed consolidated balance sheet.

While the Company has, as a lessor, certain equipment finance leases, such leases are not material to the Company’s consolidated financial statements.

The tables below present the components of lease costs and supplemental information related to leases as of and for the periods presented.


	September 30, 2024		December 31, 2023
	(Dollars in thousands)
Lease Assets and Liabilities
ROU assets	$	32,516	$	21,655
Total lease liabilities		34,943		24,056


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(Dollars in thousands)
Lease Cost
Operating lease expense (1)	$	1,965	$	1,832	$	5,650	$	5,513
Sublease income		—		—		—		—
Total lease expense	$	1,965	$	1,832	$	5,650	$	5,513

(1)

Includes short-term leases and variable lease costs, which are immaterial.


Other Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases, net	$	1,948	$	1,682	$	5,726	$	4,951


	September 30, 2024			December 31, 2023
Lease Term and Discount Rate
Weighted average remaining lease term (years)		7.83			3.94
Weighted average discount rate		5.26	%		3.48	%

During the third quarter of 2024, the Bank executed sale-leaseback transactions with the sale of two properties for an aggregate sale price of $17 million. The Bank simultaneously entered into lease agreements with the respective purchasers for initial terms of 15 and 18 years with specified renewal options for each respective lease. These sale-leaseback transactions resulted in a pre-tax net gain of $9.1 million for the third quarter of 2024. The Bank also recorded ROU assets and corresponding operating lease liabilities each totaling $11.2 million.

The Company’s lease arrangements that have not yet commenced as of September 30, 2024 and the Company’s short-term lease costs and variable lease costs, for the nine months ended September 30, 2024 and 2023 are not material to the consolidated financial statements. The future lease payments required for leases that have initial or remaining non-cancelable lease terms in excess of one year as of September 30, 2024, excluding property taxes and insurance, are as follows:


	September 30, 2024
	(Dollars in thousands)
Year:
2024 (excluding the nine months ended September 30, 2024)	$	2,064
2025		8,524
2026		7,438
2027		6,003
2028		4,180
Thereafter		16,988
Total future lease payments		45,197
Less: Imputed interest		(10,254	)
Present value of lease liabilities	$	34,943