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Premises and Equipment | 12 Months Ended
--- | ---
Dec. 31, 2022
Property, Plant and Equipment [Abstract] |
Premises and Equipment | Premises, Equipment and Lease Commitments Premises and Equipment Premises and equipment are described as follows:
| Estimated Useful Life |  | 2024 |  | 2023
| (dollars in thousands)
Land | Indefinite |  | $ | 14,471 |  |  | $ | 14,499 |
Buildings and improvements | 10-50 years |  | 75,063 |  |  | 74,622 |
Operating lease right of use asset | 1-25 years |  | 56,097 |  |  | 59,367 |
Leasehold improvements | 5-40 years |  | 40,765 |  |  | 39,752 |
Furniture and equipment | 3-7 years |  | 72,538 |  |  | 78,868 |
Software | 3-7 years |  | 42,989 |  |  | 45,218 |
Subtotal |  |  | 301,923 |  |  | 312,326 |
Less accumulated depreciation and amortization |  |  | 185,815 |  |  | 191,311 |
Total premises and equipment, net |  |  | $ | 116,108 |  |  | $ | 121,015 |
Depreciation related to premises and equipment included in noninterest expense for the years ended December 31, 2024, 2023 and 2022 amounted to $9.4 million, $9.6 million and $9.1 million, respectively. Amortization of lease right-of-use assets, which is included in noninterest expense, totaled $3.7 million in 2024, $3.6 million in 2023 and $3.4 million in 2022. Lease Commitments First Commonwealth has elected to apply certain practical expedients under ASU 2016-02 "Leases" (Topic 842), including (i) to not apply the requirements in the new standard to short-term leases (ii) to not reassess the lease classification for any expired or existing lease (iii) to account for lease and non-lease components separately, and (iv) to not reassess initial direct costs for any existing leases. The impact of this standard primarily relates to operating leases of certain real estate properties, primarily certain branch and ATM locations and office space. First Commonwealth has no material leasing arrangements for which it is the lessor of property or equipment. The following table represents the lease costs and other lease information for the years ended December 31.
|  | 2024 |  | 2023
|  | (dollars in thousands)
Balance sheet: |  |  |  |
Operating lease asset classified as premises and equipment |  | $ | 40,171 |  |  | $ | 45,005 |
Operating lease liability classified as other liabilities |  | 44,654 |  |  | 49,327 |
Income statement: |  |  |  |
Operating lease cost classified as occupancy and equipment expense |  | $ | 5,740 |  |  | $ | 6,089 |
Weighted average lease term, in years |  | 12.96 |  | 13.19
Weighted average discount rate |  | 3.77 | % |  | 3.54 | %
Operating cash flows |  | $ | 5,741 |  |  | $ | 6,169 |
The ROU assets and lease liabilities are impacted by the length of the lease term and the discount rate used to present value the minimum lease payments. First Commonwealth's lease agreements often include one or more options to renew at the Company's discretion. If we consider the renewal option to be reasonably certain, we include the extended term in the calculation of the ROU asset and lease liability. First Commonwealth uses incremental borrowing rates when calculating the lease liability because the rate implicit in the lease is not readily determinable. The incremental borrowing rate used by First Commonwealth is an amortizing loan rate obtained from the FHLB. This rate is consistent with a collateralized borrowing rate and is available for terms similar to the lease payment schedules. The following table reconciles future minimum lease payments due under non-cancelable operating leases (those amounts subject to recognition) to the lease liability a s of December 31, 2024 (dollars in thousands):
For the twelve months ended December 31, |  |
2025 |  | $ | 5,516 |
2026 |  | 5,036 |
2027 |  | 4,689 |
2028 |  | 4,482 |
2029 |  | 4,467 |
Thereafter |  | 33,165 |
Total future minimum lease payments |  | 57,355 |
Less remaining imputed interest |  | 12,701 |
Operating lease liability |  | $ | 44,654 |
Rent expense, net of rental income, for all operating leases totaled $5.9 million in 2024, $5.9 million in 2023 and $4.7 million in 2022. Rent expense includes amounts related to items that are not included in the determination of lease right-of-use assets including expenses related to short-term leases and non-lease components such as taxes, insurance, and common area maintenance costs.

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