Leases

12 Months Ended

Dec. 31, 2019

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” and subsequent amendments, which replaced existing lease guidance in GAAP and requires lessees to recognize right-of-use (ROU) assets and lease liabilities on the Consolidated Statement of Condition for leases greater than twelve months and disclose key information about leasing arrangements. We adopted the standard on January 1, 2019 using the modified retrospective method and used the effective date as our date of initial application. Financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019. There were no adjustments to “Retained earnings” on adoption. The new standard provides a number of optional practical expedients for transition. We elected the package of practical expedients under the transition guidance which permitted us not to reassess under the new standard our prior conclusions for lease identification and lease classification on expired or existing contracts and whether initial direct costs previously capitalized would qualify for capitalization under FASB Accounting Standards Codification (ASC) 842. We did not elect the hindsight practical expedient to determine the reasonably certain lease term for existing leases.

The new standard also provides practical expedients and recognition exemptions for an entity’s ongoing accounting policy elections. We are committed under short and long-term lease agreements for branch and ATM locations. Some of these agreements contain variable payment provisions that depend on an index or rate, initially measured using the index or rate at the lease commencement date, and are therefore not included in our future minimum lease payments. These variable lease agreements include usage-based payments for utilities, taxes, janitorial services and building maintenance. Our long-term lease agreements do not contain any material restrictive covenants.

Our property leases have remaining terms of less than 1 to 23 years. Some of these leases may include options to extend the leases for up to 29 years, and some may include options to terminate the leases within 30 days. For each lease containing a renewal option, the Company considers the likelihood that the option will be exercised. Only renewal options that are reasonably assured of being exercised are included in the calculation of the ROU asset and lease liability.

Operating lease amounts included in the Consolidated Statement of Condition are as follows:



(In thousands)		December 31, 2019
Assets	Classification
ROU assets	Other assets	$	33,501

Liabilities
Current lease liabilities	Other liabilities	3,256
Non-current lease liabilities	Other liabilities	32,666
Total lease liabilities		$	35,922

The components of operating lease expense, primarily included in “Net occupancy expense of premises,” were as follows:



(In thousands)	Year Ended December 31, 2019
Lease Costs
Operating lease cost	$	4,683
Variable lease cost	466
Short-term lease cost	1
Sublease income	(35		)
Total lease cost	$	5,115

At December 31, 2019, we did not have any material finance lease assets or liabilities.

Other information related to operating leases was as follows:



(In thousands)	Year Ended December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$4,680
Weighted-average remaining lease term on operating leases	13.85
Weighted-average discount rates on operating leases	3.53	%
ROU assets obtained in exchange for lease liabilities	$39,508

Future minimum lease payments under operating leases were as follows:



(In thousands)	Operating Leases
2020	$	4,454
2021	4,106
2022	4,059
2023	3,816
2024	3,684
2025 and subsequent years	26,605
Total lease payments	$	46,724
Less: Interest	(10,802		)
Present value of lease liabilities	$	35,922

At December 31, 2018, operating lease commitments under lessee arrangements were $4.8 million, $4.0 million, $3.6 million, $3.4 million, and $3.4 million for 2019 through 2023, respectively, and $13.0 million in aggregate for all years thereafter. These amounts include lease options to renew ranging from 5 to 20 years.