LEASES

3 Months Ended

Mar. 31, 2019

12. LEASES

We lease certain land and buildings for our bank branches and ATMs. In some instances, a lease may contain renewal options to extend the term of the lease. All renewal options are likely to be exercised and therefore have been recognized as part of our right-of-use assets and lease liabilities in accordance with ASC 842, "Leases". Certain leases also contain variable payments that are primarily determined based on common area maintenance costs and Hawaii state tax rates. All leases are operating leases and we do not have any short term leases. The most significant assumption related to the Company’s application of ASC 842 was the discount rate assumption. As most of the Company’s lease agreements do not provide for an implicit interest rate, the Company used the collateralized interest rate that the Company would have to pay to borrow over a similar term to estimate the Company’s lease liability as of January 1, 2019.

Total lease cost, cash flow information, weighted-average remaining lease term and weighted-average discount rate is summarized below for the period indicated:



	Three Months Ended March 31,
(dollars in thousands)	2019
Lease cost:
Operating lease cost	$	1,628
Variable lease cost	647
Less: sublease income	(11		)
Total lease cost	$	2,264

Other information:
Operating cash flows from operating leases	$	(1,549	)
Weighted-average remaining lease term - operating leases	14.10 years
Weighted-average discount rate - operating leases	3.92		%

The following is a schedule of annual undiscounted cash flows for our operating leases and a reconciliation of those cash flows to the operating lease liabilities:



Year Ending December 31,	Undiscounted cash flows		Lease liability expense		Lease liability reduction
2019 (remainder)	$	4,663	$	1,557	$	3,106
2020	6,015		1,939		4,076
2021	5,705		1,787		3,918
2022	5,268		1,645		3,623
2023	4,970		1,512		3,458
2024	4,812		1,383		3,429
Thereafter	40,920		7,669		33,251
Total	$	72,353	$	17,492	$	54,861

In addition, the Company, as lessor, leases certain properties that it owns. All of these leases are operating leases. The following represents lease income related to these leases that was recognized for the period indicated:



	Three Months Ended March 31,
(dollars in thousands)	2019
Total rental income recognized	$	535

Based on the Company's leases as lessor as of March 31, 2019, estimated lease payments for the remainder of fiscal year 2019, the next five succeeding fiscal years and all years thereafter are as follows:



Year Ending December 31,
2019 (remainder)	$	1,486
2020	1,774
2021	1,849
2022	1,275
2023	446
2024	88
Thereafter	267
Total	$	7,185

LEASES

12. LEASES

Total lease cost, cash flow information, weighted-average remaining lease term and weighted-average discount rate is summarized below for the period indicated:



	Three Months Ended March 31,
(dollars in thousands)	2019
Lease cost:
Operating lease cost	$	1,628
Variable lease cost	647
Less: sublease income	(11		)
Total lease cost	$	2,264

Other information:
Operating cash flows from operating leases	$	(1,549	)
Weighted-average remaining lease term - operating leases	14.10 years
Weighted-average discount rate - operating leases	3.92		%

The following is a schedule of annual undiscounted cash flows for our operating leases and a reconciliation of those cash flows to the operating lease liabilities:



Year Ending December 31,	Undiscounted cash flows		Lease liability expense		Lease liability reduction
2019 (remainder)	$	4,663	$	1,557	$	3,106
2020	6,015		1,939		4,076
2021	5,705		1,787		3,918
2022	5,268		1,645		3,623
2023	4,970		1,512		3,458
2024	4,812		1,383		3,429
Thereafter	40,920		7,669		33,251
Total	$	72,353	$	17,492	$	54,861



	Three Months Ended March 31,
(dollars in thousands)	2019
Total rental income recognized	$	535



Year Ending December 31,
2019 (remainder)	$	1,486
2020	1,774
2021	1,849
2022	1,275
2023	446
2024	88
Thereafter	267
Total	$	7,185