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Leases | 3 Months Ended
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Mar. 31, 2022
Leases [Abstract] |
Leases | (6)Leases Mid Penn adopted FASB Topic 842, Leases, 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. 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 Sheets. As of the merger with Riverview on November 30, 2021, Mid Penn assumed eight operating leases. Subsequent to the merger, and prior to March 31, 2022, two of the leases expired and were not renewed. Three additional leases are connected with branch locations added during the merger that have been closed prior to March 31, 2022, and Mid Penn will not retain these leases upon expiration, with the latest expiring in December of 2023. The three remaining operating leases are open branch locations that Mid Penn currently intends to continue to operate. In 2016, Mid Penn entered into a subleasing agreement with an unrelated party on one of its properties under an operating lease. The sublease included an escalation clause. The initial term of the sublease agreement began on July 1, 2016 and ended on March 31, 2022, and was extended for an additional one-year term ending March 31, 2023. As of March 31, 2022 and December 31, 2021, two of Mid Penn’s operating leases were with related parties. There were no sale and leaseback transactions, leveraged leases, or leases that had not commenced as of March 31, 2022. 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, 2022 and December 31, 2021.
(Dollars in thousands) |  | March 31, 2022 |  |  | December 31, 2021 |
|  | Operating Leases |  |  | Finance Lease |  |  | Operating Leases |  |  | Finance Lease |
Right of use asset |  | $ | 8,751 |  |  | $ | 3,042 |  |  | $ | 9,055 |  |  | $ | 3,087 |
Lease liability |  | $ | 10,923 |  |  | $ | 3,358 |  |  | $ | 11,363 |  |  | $ | 3,380 |
Weighted average remaining lease term (in years) |  |  | 6.86 |  |  |  | 16.92 |  |  |  | 7.03 |  |  |  | 17.17 |
Weighted average discount rate |  |  | 3.14 | % |  |  | 3.81 | % |  |  | 3.12 | % |  |  | 3.81 | %
A summary of lease costs during the three and nine months ended March 31, 2022 and 2021 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, |
|  | 2022 |  |  | 2021 |
Finance lease cost: |  |  |  |  |  |  |  |
Amortization of right-of-use asset |  | $ | 45 |  |  | $ | 45 |
Interest expense on lease liability |  |  | 32 |  |  |  | 33 |
Total finance lease cost |  |  | 77 |  |  |  | 78 |
Operating lease cost |  |  | 497 |  |  |  | 516 |
Short-term and equipment lease cost |  |  | 20 |  |  |  | 10 |
Variable lease cost |  |  | — |  |  |  | — |
Sublease income |  |  | (6 | ) |  |  | (9 | )
Total lease costs |  | $ | 588 |  |  | $ | 595 |
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, 2022 |  |  | March 31, 2021 |
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |  |  |  |  |
Operating cash flows from finance leases |  | $ | 32 |  |  | $ | 34 |
Operating cash flows from operating leases |  |  | 620 |  |  |  | 544 |
Financing cash flows from finance leases |  |  | 22 |  |  |  | 21 |
Future minimum payments for operating and finance leases 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, 2022 |
|  | Operating Leases |  |  | Finance Lease |
Lease payments due for each of the years ending December 31, |  |  |  |  |  |  |  |
2022 |  | $ | 1,832 |  |  | $ | 163 |
2023 |  |  | 2,068 |  |  |  | 217 |
2024 |  |  | 1,903 |  |  |  | 252 |
2025 |  |  | 1,479 |  |  |  | 259 |
2026 |  |  | 1,249 |  |  |  | 259 |
Thereafter |  |  | 3,636 |  |  |  | 3,473 |
Total undiscounted cash flows |  |  | 12,167 |  |  |  | 4,623 |
Discount on cash flows |  |  | (1,244 | ) |  |  | (1,265 | )
Total lease liability |  | $ | 10,923 |  |  | $ | 3,358 |

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