Leases

3 Months Ended

Mar. 31, 2020

A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration.

The Company’s leases are comprised of real estate property for branches, ATM locations and office space with terms extending through 2050. The majority of the Company’s leases are classified as operating leases, which are required to be recognized on the

consolidated statements of financial condition as a right-of-use (“ROU”) asset and a corresponding lease liability. The Company has one existing finance lease, which has a lease term through 2029.

The following table represents the classification of the Company’s ROU assets and lease liabilities on the consolidated statements of financial condition (in thousands):



		March 31, 2020		December 31, 2019
Lease ROU Assets	Classification
Operating lease ROU asset	Other assets	$	27,037	$	18,682
Finance lease ROU asset	Premises and equipment, net	1,494		1,534
Total Lease ROU Asset		$	28,531	$	20,216

Lease Liabilities
Operating lease liability	Other liabilities	$	27,322	$	18,893
Finance lease liability	Other borrowings	1,906		1,953
Total Lease Liability		$	29,228	$	20,846

The calculated amount of the ROU assets and lease liabilities are impacted by the lease term and the discount rate used to calculate the present value of the minimum lease payments. Lease agreements often include one or more options to renew the lease at the Company’s discretion. If the exercise of a renewal option is considered to be reasonably certain, the Company includes the extended term in the calculation of the ROU asset and lease liability. For the discount rate, the Company uses the rate implicit in the lease, provided the rate is readily determinable. As this rate is rarely determinable, the Company utilizes its incremental borrowing rate, at lease inception, over a similar term. For operating leases existing prior to January 1, 2019, the Company used the incremental borrowing rate for the remaining lease term as of January 1, 2019. For the finance lease, the Company utilized its incremental borrowing rate at lease inception.



	March 31, 2020		December 31, 2019
Weighted-Average Remaining Lease Term
Operating leases	7.66 years		9.69 years
Finance lease	9.35 years		9.60 years
Weighted-Average Discount Rate
Operating leases	3.00	%	3.45	%
Finance lease	5.63	%	5.63	%

The following table represents lease expenses and other lease information (in thousands):



	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Lease Expense
Operating Lease Expense	$	1,723	$	969
Finance Lease Expense:
Amortization of ROU assets	40		108
Interest on lease liabilities⁽¹⁾	27		90
Total	$	1,790	$	1,167

Other Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,648	$	934
Operating cash flows from finance leases	27		90
Financing cash flows from finance leases	47		127


(1)	Included in borrowed funds interest expense on the consolidated statements of income. All other costs are included in occupancy expense.

Future minimum payments for the finance lease and operating leases with initial or remaining terms of one year or more as of March 31, 2020 were as follows (in thousands):



	Finance Lease			Operating Leases
For the Twelve Months Ended March 31,
2021	$	295		$	6,570
2022	295			6,271
2023	295			4,046
2024	295			2,785
2025	295			2,456
Thereafter	868			9,199
Total	$	2,343		$	31,327
Less: Imputed Interest	(437		)	(4,005		)
Total Lease Liabilities	$	1,906		$	27,322

Leases

A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration.

The following table represents the classification of the Company’s ROU assets and lease liabilities on the consolidated statements of financial condition (in thousands):



		March 31, 2020		December 31, 2019
Lease ROU Assets	Classification
Operating lease ROU asset	Other assets	$	27,037	$	18,682
Finance lease ROU asset	Premises and equipment, net	1,494		1,534
Total Lease ROU Asset		$	28,531	$	20,216

Lease Liabilities
Operating lease liability	Other liabilities	$	27,322	$	18,893
Finance lease liability	Other borrowings	1,906		1,953
Total Lease Liability		$	29,228	$	20,846



	March 31, 2020		December 31, 2019
Weighted-Average Remaining Lease Term
Operating leases	7.66 years		9.69 years
Finance lease	9.35 years		9.60 years
Weighted-Average Discount Rate
Operating leases	3.00	%	3.45	%
Finance lease	5.63	%	5.63	%

The following table represents lease expenses and other lease information (in thousands):



	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Lease Expense
Operating Lease Expense	$	1,723	$	969
Finance Lease Expense:
Amortization of ROU assets	40		108
Interest on lease liabilities⁽¹⁾	27		90
Total	$	1,790	$	1,167

Other Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,648	$	934
Operating cash flows from finance leases	27		90
Financing cash flows from finance leases	47		127


(1)	Included in borrowed funds interest expense on the consolidated statements of income. All other costs are included in occupancy expense.

Future minimum payments for the finance lease and operating leases with initial or remaining terms of one year or more as of March 31, 2020 were as follows (in thousands):



	Finance Lease			Operating Leases
For the Twelve Months Ended March 31,
2021	$	295		$	6,570
2022	295			6,271
2023	295			4,046
2024	295			2,785
2025	295			2,456
Thereafter	868			9,199
Total	$	2,343		$	31,327
Less: Imputed Interest	(437		)	(4,005		)
Total Lease Liabilities	$	1,906		$	27,322