Leases

3 Months Ended

Mar. 31, 2024

Leases

Park is a lessee in several noncancellable operating lease arrangements, primarily for retail branches, administrative and warehouse buildings, ATMs, and certain office equipment within its Ohio, North Carolina, South Carolina, and Kentucky markets. Certain of these leases contain renewal options for periods ranging from one year to five years. Park’s leases generally

do not include termination options for either party to the lease or restrictive financial or other covenants. Payments due under

the lease arrangements include fixed payments plus, for many of Park’s real estate leases, variable payments such as Park's

proportionate share of property taxes, insurance and common area maintenance.

Park's operating lease ROU asset and lease liability are presented in “Operating lease ROU asset" and "Operating lease liability," respectively, on Park's Consolidated Condensed Balance Sheets. The carrying amounts of Park's ROU asset and lease liability at March 31, 2024 were $15.8 million and $16.5 million, respectively. At December 31, 2023, the carrying amounts of Park's ROU asset and lease liability were $15.7 million and $16.6 million, respectively. Park's operating lease expense is recorded in "Occupancy expense" on the Company's consolidated condensed statements of income.

Other information related to operating leases for the three-month periods ended March 31, 2024 and 2023 follows:


	Three Months Ended
(in thousands)	March 31, 2024		March 31, 2023
Lease cost
Operating lease cost	$	622	$	732
Sublease income	(10)		(63)
Total lease cost	$	612	$	669

Other information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	794	$	923
ROU assets obtained in exchange for new operating lease liabilities	$	547	$	136
Reductions to ROU assets resulting from reductions to lease obligations	$	(658)	$	(777)

Park's operating leases had a weighted average remaining term of 10.0 years and 10.1 years at March 31, 2024 and at December 31, 2023, respectively. The weighted average discount rate of Park's operating leases was 3.6% and 3.5% at March 31, 2024 and at December 31, 2023, respectively.

Undiscounted cash flows included in lease liabilities have expected contractual payments as follows:


(in thousands)	March 31, 2024
Nine months ending December 31, 2024	$	1,759
2025	2,240
2026	2,177
2027	2,078
2028	2,092
Thereafter	9,806
Total undiscounted minimum lease payments	$	20,152
Present value adjustment	(3,642)
Total lease liabilities	$	16,510

In March 2024, the Company entered into a noncancellable operating lease for an additional retail office for an initial term

of 88 months, with three five-year renewal options. This lease is expected to commence no later than the fourth quarter of 2024, and, therefore, was not recognized as of March 31, 2024. The fixed payments due on an undiscounted basis over the noncancellable 88-month period of the lease are $1.6 million. The Company will assess the lease renewal options as of the lease commencement date.