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Leases | 9 Months Ended
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Sep. 30, 2019
Leases [Abstract] |
Leases | LEASES As of January 1, 2019, the Corporation adopted certain accounting standard updates related to accounting for leases (Topic 842 - Leases), primarily ASU 2016-02 and subsequent updates. This guidance requires a lessee to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model. The Corporation adopted the provisions of ASU 2016-02 on January 1, 2019, and elected several practical expedients made available by the FASB. Specifically, the Corporation elected the transition practical expedient to not recast comparative periods upon the adoption of the new guidance. In addition, the Corporation elected to apply certain practical adoption expedients provided under the updates whereby we did not reassess (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases and (3) initial direct costs for any existing leases. As a result, the Corporation recognized approximately $12.5 million of right of use assets, approximately $800 thousand in prepaid rent, and $13.3 million of related lease liabilities as of January 1, 2019. Operating lease assets represent our right to use an underlying asset during the lease term and operating lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at lease commencement based on the present value of the remaining lease payments using a discount rate that represents our incremental borrowing rate at the lease commencement date. Operating lease cost, which is comprised of amortization of the operating lease asset and the implicit interest accreted on the operating lease liability, is recognized on a straight-line basis over the lease term, and is recorded in net occupancy expense in the consolidated statements of income. The Corporation leases certain full-serve branch offices, land and equipment. Leases with an initial term of twelve months or less are not recorded on the balance sheet. Most leases include one or more options to renew and the exercise of the lease renewal options are at the Corporation's sole discretion. Certain lease agreements of the Corporation include rental payments adjusted periodically for changes in the consumer price index.
Leases |  | Classification |  | September 30, 2019
Assets: |  |  |  |
Operating lease assets |  | Operating lease assets |  | $ | 16,837 |
Finance lease assets |  | Premises and equipment, net (1) |  | 519 |
Total leased assets |  |  |  | $ | 17,356 |
Liabilities: |  |  |  |
Operating lease liabilities |  | Operating lease liabilities |  | $ | 17,696 |
Finance lease liabilities |  | Accrued interest payable and other liabilities |  | 648 |
Total leased liabilities |  |  |  | $ | 18,344 |
(1) Finance lease assets are recorded net of accumulated amortization of $697 as of September 30, 2019. The components of the Corporation's net lease expense for the three and nine months ended September 30, 2019 were as follows:
|  |  |  | Three months ended September 30, |  | Nine months ended September 30,
Lease Cost |  | Classification |  | 2019 |  | 2019
Operating lease cost |  | Net occupancy expense |  | $ | 423 |  |  | $ | 1,228 |
Variable lease cost |  | Net occupancy expense |  | 33 |  |  | 82 |
Finance lease cost: |  |  |  |  |  |
Amortization of leased assets |  | Net occupancy expense |  | 18 |  |  | 54 |
Interest on lease liabilities |  | Interest expense - borrowed funds |  | 7 |  |  | 23 |
Sublease income (1) |  | Net occupancy expense |  | (21 | ) |  | (62 | )
Net lease cost |  |  |  | $ | 460 |  |  | $ | 1,325 |
(1) Sublease income excludes rental income from owned properties. The following table sets forth future minimum rental payments under noncancelable leases with terms in excess of one year as of September 30, 2019:
Maturity of Lease Liabilities as of September 30, 2019 |  | Operating Leases (1) |  | Finance Leases |  | Total
2019 |  | $ | 339 |  |  | $ | 26 |  |  | $ | 365 |
2020 |  | 1,430 |  |  | 105 |  |  | 1,535 |
2021 |  | 1,483 |  |  | 105 |  |  | 1,588 |
2022 |  | 1,538 |  |  | 105 |  |  | 1,643 |
2023 |  | 1,458 |  |  | 105 |  |  | 1,563 |
After 2023 |  | 17,932 |  |  | 315 |  |  | 18,247 |
Total lease payments |  | 24,180 |  |  | 761 |  |  | 24,941 |
Less: Interest |  | 6,484 |  |  | 113 |  |  | 6,597 |
Present value of lease liabilities |  | $ | 17,696 |  |  | $ | 648 |  |  | $ | 18,344 |
(1) Operating lease payments include payments related to options to extend lease terms that are reasonably certain of being exercised and exclude $3,173 of legally binding minimum lease payments for leases signed, but not yet commenced. Other information related to the Corporation's lease liabilities as of the nine months ended September 30, 2019 was as follows:
Lease Term and Discount Rate |  | September 30, 2019
Weighted-average remaining lease term (years) |  |
Operating leases |  | 16.9 |
Finance leases |  | 7.3 |
Weighted-average discount rate |  |
Operating leases |  | 3.60 | %
Finance leases |  | 4.54 | %
Other Information |  | September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities |  |
Operating cash flows from operating leases |  | $ | 557 |
Leased assets obtained in exchange from new operating lease liabilities |  | 17,674 |

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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 -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=77888251 + Details
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