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OPERATING LEASES

6 Months Ended

Jun. 30, 2023

Leases [Abstract]

LEASES

13. OPERATING 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. Renewal options that are likely to be exercised 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 include any short term leases in the calculation of the right-of-use assets and lease liabilities. 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 uses the collateralized interest rate that the Company would have to pay to borrow over a similar term to estimate the Company’s lease liability.

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

			Three Months Ended June 30,												Six Months Ended June 30,
(dollars in thousands)			2023						2022						2023						2022
Lease cost:
Operating lease cost			$	1,327					$	1,386					$	2,652					$	2,776
Variable lease cost			934						834						1,822						1,664
Less: Sublease income			(17)						(12)						(34)						(24)
Total lease cost			$	2,244					$	2,208					$	4,440					$	4,416
Other information:
Operating cash flows from operating leases			$	(1,302)					$	(1,515)					$	(2,692)					$	(3,021)
Weighted-average remaining lease term - operating leases			10.98 years						11.42 years						10.98 years						11.42 years
Weighted-average discount rate - operating leases			3.96		%				3.94		%				3.96		%				3.94		%

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 for the remainder of fiscal year 2023, the next five succeeding fiscal years and all years thereafter:

(dollars in thousands)						Undiscounted Cash Flows						Lease Liability Discount on Cash Flows						Lease Liability
Year Ending December 31,
2023 (remainder)						$	2,433					$	656					$	1,777
2024						4,467						1,210						3,257
2025						4,180						1,085						3,095
2026						4,118						965						3,153
2027						4,108						840						3,268
2028						3,509						723						2,786
Thereafter						19,683						2,908						16,775
Total						$	42,498					$	8,387					$	34,111

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

			Three Months Ended June 30,												Six Months Ended June 30,
(dollars in thousands)			2023						2022						2023						2022
Total rental income recognized			$	563					$	378					$	1,125					$	1,329

Based on the Company's leases as lessor as of June 30, 2023, estimated lease payments for the remainder of fiscal year 2023, the next five succeeding fiscal years and all years thereafter are as follows:

(dollars in thousands)
Year Ending December 31,
2023 (remainder)			$	675
2024			1,188
2025			1,073
2026			939
2027			899
2028			532
Thereafter			1,839
Total			$	7,145

LEASES

13. OPERATING 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. Renewal options that are likely to be exercised 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 include any short term leases in the calculation of the right-of-use assets and lease liabilities. 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 uses the collateralized interest rate that the Company would have to pay to borrow over a similar term to estimate the Company’s lease liability.

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

			Three Months Ended June 30,												Six Months Ended June 30,
(dollars in thousands)			2023						2022						2023						2022
Lease cost:
Operating lease cost			$	1,327					$	1,386					$	2,652					$	2,776
Variable lease cost			934						834						1,822						1,664
Less: Sublease income			(17)						(12)						(34)						(24)
Total lease cost			$	2,244					$	2,208					$	4,440					$	4,416
Other information:
Operating cash flows from operating leases			$	(1,302)					$	(1,515)					$	(2,692)					$	(3,021)
Weighted-average remaining lease term - operating leases			10.98 years						11.42 years						10.98 years						11.42 years
Weighted-average discount rate - operating leases			3.96		%				3.94		%				3.96		%				3.94		%

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 for the remainder of fiscal year 2023, the next five succeeding fiscal years and all years thereafter:

(dollars in thousands)						Undiscounted Cash Flows						Lease Liability Discount on Cash Flows						Lease Liability
Year Ending December 31,
2023 (remainder)						$	2,433					$	656					$	1,777
2024						4,467						1,210						3,257
2025						4,180						1,085						3,095
2026						4,118						965						3,153
2027						4,108						840						3,268
2028						3,509						723						2,786
Thereafter						19,683						2,908						16,775
Total						$	42,498					$	8,387					$	34,111

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

			Three Months Ended June 30,												Six Months Ended June 30,
(dollars in thousands)			2023						2022						2023						2022
Total rental income recognized			$	563					$	378					$	1,125					$	1,329

Based on the Company's leases as lessor as of June 30, 2023, estimated lease payments for the remainder of fiscal year 2023, the next five succeeding fiscal years and all years thereafter are as follows:

(dollars in thousands)
Year Ending December 31,
2023 (remainder)			$	675
2024			1,188
2025			1,073
2026			939
2027			899
2028			532
Thereafter			1,839
Total			$	7,145

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- Definition

The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 842
-SubTopic 20
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//842-20/tableOfContent

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- Definition

The entire disclosure for lessor's operating leases.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 842
-SubTopic 30
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//842-30/tableOfContent

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