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Leases | 3 Months Ended
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Mar. 31, 2020
Leases [Abstract] |
Leases | (5)Leases On January 1, 2019, Mid Penn adopted ASU No. 2016-02, Leases (Topic 842), and all subsequent ASUs that modified Topic 842, which primarily affected the accounting treatment for operating lease agreements in which Mid Penn is the lessee. As of the January 1, 2019 adoption date, Mid Penn leased twenty-four branch locations under non-cancelable operating leases, which expire at various dates through the year ending December 31, 2035. Three of Mid Penn’s operating leases are with related parties. Subsequent to the adoption of Topic 842, Mid Penn entered into a lease agreement for one facility under a non-cancelable finance lease, which commenced March 1, 2019 and expires February 28, 2039. In 2016, Mid Penn entered into two subleasing agreements with unrelated parties on one of its properties under an operating lease. Both subleases included escalation clauses. The first sublease agreement began on April 1, 2016, while the second sublease began on July 1, 2016. One sublease was terminated during the first quarter of 2019 due to the bankruptcy of the tenant. The remaining sublease ends on March 31, 2021. Operating and finance lease right-of-use assets, as well as operating lease liabilities, are presented as separate line items on the Consolidated Balance Sheet, while finance lease liabilities are classified as a component of long term debt. Mid Penn has elected not to include short-term leases (i.e., leases with initial terms of twelve months or less) or equipment leases (deemed immaterial) on the Consolidated Balance Sheet. There were no sale and leaseback transactions, leveraged leases, or leases that had not commenced as of March 31, 2020. Below is a summary of the operating and finance lease right-of-use assets and related lease liabilities, as well as the weighted average lease term (in years) and weighted average discount rate for each of the lease classifications as of March 31, 2020 and December 31, 2019.
(Dollars in thousands) |  | March 31, 2020 |  |  | December 31, 2019 |
|  | Operating Leases |  |  | Finance Lease |  |  | Operating Leases |  |  | Finance Lease |
Right of use asset |  | $ | 10,999 |  |  | $ | 3,402 |  |  | $ | 11,442 |  |  | $ | 3,447 |
Lease liability |  | $ | 12,070 |  |  | $ | 3,530 |  |  | $ | 12,544 |  |  | $ | 3,551 |
Weighted average remaining lease term (in years) |  |  | 8.58 |  |  |  | 18.92 |  |  |  | 8.64 |  |  |  | 19.17 |
Weighted average discount rate |  |  | 3.33 | % |  |  | 3.81 | % |  |  | 3.33 | % |  |  | 3.81 | %
A summary of lease costs during the three months ended March 31, 2020 and 2019 are presented below. Interest expense on finance lease liabilities is included in other interest expense, while all other lease costs are included in occupancy expense on Mid Penn’s Consolidated Statements of Income.
(Dollars in thousands) |  | Three Months Ended |
|  | March 31, 2020 |  |  | March 31, 2019 |
Finance lease cost: |  |  |  |  |  |  |  |
Amortization of right-of-use asset |  | $ | 45 |  |  | $ | 15 |
Interest expense on lease liability |  |  | 34 |  |  |  | 11 |
Total finance lease cost |  |  | 79 |  |  |  | 26 |
Operating lease cost |  |  | 528 |  |  |  | 515 |
Short-term and equipment lease cost |  |  | 9 |  |  |  | 28 |
Variable lease cost |  |  | — |  |  |  | — |
Sublease income |  |  | (6 | ) |  |  | (5 | )
Total lease costs |  | $ | 610 |  |  | $ | 564 |
A summary of cash paid for amounts included in the measurement of lease liabilities is presented below.
(Dollars in thousands) |  | Three Months Ended |
|  | March 31, 2020 |  |  | March 31, 2019 |
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |  |  |  |  |
Operating cash flows from finance leases |  | $ | 34 |  |  | $ | 11 |
Operating cash flows from operating leases |  |  | 544 |  |  |  | 542 |
Financing cash flows from finance leases |  |  | 21 |  |  |  | 15 |
A maturity analysis of operating and finance lease liabilities and a reconciliation of the undiscounted cash flows to the total operating and finance lease liability amounts is presented below.
(Dollars in thousands) |  | March 31, 2020 |
|  | Operating Leases |  |  | Finance Lease |
Lease payments due: |  |  |  |  |  |  |  |
Within one year |  | $ | 1,561 |  |  | $ | 163 |
After one but within two years |  |  | 1,868 |  |  |  | 216 |
After two but within three years |  |  | 1,824 |  |  |  | 217 |
After three but within four years |  |  | 1,572 |  |  |  | 217 |
After four but within five years |  |  | 1,512 |  |  |  | 252 |
After five years |  |  | 5,585 |  |  |  | 3,992 |
Total undiscounted cash flows |  |  | 13,922 |  |  |  | 5,057 |
Discount on cash flows |  |  | (1,852 | ) |  |  | (1,527 | )
Total lease liability |  | $ | 12,070 |  |  | $ | 3,530 |

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