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Leases

12 Months Ended

Dec. 31, 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. The Corporation includes lease extension and termination options in the lease term if, after considering relevant economic factors, it is is reasonably certain the Corporation will exercise the option. Certain lease agreements of the Corporation include rental payments adjusted periodically for changes in the consumer price index.



Leases	Classification	December 31, 2019
Assets:
Operating lease assets	Operating lease assets	$	18,422
Finance lease assets	Premises and equipment, net ⁽¹⁾	501
Total leased assets		$	18,923

Liabilities:
Operating lease liabilities	Operating lease liabilities	$	19,363
Finance lease liabilities	Accrued interest payable and other liabilities	629
Total leased liabilities		$	19,992

(1) Finance lease assets are recorded net of accumulated amortization of $715 as of December 31, 2019.

The components of the Corporation's net lease expense for the year ended December 31, 2019 were as follows:



Lease Cost	Classification	December 31, 2019
Operating lease cost	Net occupancy expense	$	1,666
Variable lease cost	Net occupancy expense	98
Finance lease cost:
Amortization of leased assets	Net occupancy expense	72
Interest on lease liabilities	Interest expense - borrowed funds	30
Sublease income ⁽¹⁾	Net occupancy expense	(83		)
Net lease cost		$	1,783

(1) Sublease income excludes rental income from owned properties.

Rental expense, net of rental income, charged to occupancy expense for 2018 and 2017was $932 and $870, respectively.

The following table sets forth future minimum rental payments under noncancelable leases with terms in excess of one year as of December 31, 2019:



Maturity of Lease Liabilities as of December 31, 2019	Operating Leases		Finance Leases		Total
2020	$	1,533	$	105	$	1,638
2021	1,586		105		1,691
2022	1,630		105		1,735
2023	1,518		105		1,623
2024	1,487		105		1,592
After 2024	19,373		209		19,582
Total lease payments	27,127		734		27,861
Less: Interest	7,764		105		7,869
Present value of lease liabilities	$	19,363	$	629	$	19,992

Other information related to the Corporation's lease liabilities as of December 31, 2019 was as follows:



Lease Term and Discount Rate	December 31, 2019
Weighted-average remaining lease term (years)
Operating leases	18.7
Finance leases	7.0

Weighted-average discount rate
Operating leases	3.52	%
Finance leases	4.49	%



Other Information	December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	757

Leases



Leases	Classification	December 31, 2019
Assets:
Operating lease assets	Operating lease assets	$	18,422
Finance lease assets	Premises and equipment, net ⁽¹⁾	501
Total leased assets		$	18,923

Liabilities:
Operating lease liabilities	Operating lease liabilities	$	19,363
Finance lease liabilities	Accrued interest payable and other liabilities	629
Total leased liabilities		$	19,992