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Leases

3 Months Ended

Mar. 31, 2019

Leases [Abstract]

Note 6. Leases

A lease is defined as a contract that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. On January 1, 2019, the Company adopted ASU No. 2016-02 “Leases” (Topic 842) and all subsequent ASUs that modified Topic 842. For the Company, Topic 842 primarily affected the accounting treatment for operating lease agreements in which the Company is the lessee.

Substantially all of the leases in which the Company is the lessee are comprised of real estate property for branch offices, ATM locations, and corporate office space. Substantially all of our leases are classified as operating leases, and as such, were previously not recognized on the Company’s consolidated statements of condition. With the adoption of Topic 842, operating lease agreements are required to be recognized on the consolidated statements of condition as a right-of-use (“ROU”) asset and a corresponding lease liability.

On January 1, 2019, the Company recorded $29.6 million of right-of-use assets in the premises and equipment line item on the Company’s Consolidated Balance Sheets. On January 1, 2019, the Company recorded $33.5 million of lease liabilities in Other Liabilities on the Consolidated Balance Sheet. The Company elects not to recognize right of use assets and lease liabilities arising from short-term leases, leases with initial terms of twelve months or less, or equipment leases (deemed immaterial) on the Consolidated Statements of Condition.

Our leases contain terms and conditions of options to extend or terminate the lease which are recognized as part of the right of use assets and lease liabilities when an economic benefit to exercise the option exists and there is a 90% probability that the Company will exercise the option. If these criteria are not met, the options are not included in our right of use assets and lease liabilities.

As of March 31, 2019, our leases do not contain material residual value guarantees or impose restrictions or covenants related to dividends or the Company’s ability to incur additional financial obligations. As of March 31, 2019, there were no leases that have been signed but did not yet commence as of the reporting date that create significant rights and obligations for the Company.

The following table presents lease costs and other lease information.

		Three Months Ended
(dollars in thousands)		March 31, 2019
Lease Cost
Operating Lease Cost (Cost resulting from lease payments)			1,863
Variable Lease Cost (Cost excluded from lease payments)			244
Sublease Income			(94	)
Net Lease Cost			2,013

Operating Lease - Operating Cash Flows (Fixed Payments)			2,024
Operating Lease - Operating Cash Flows (Liability Reduction)			1,715
Right-of-Use Assets - Operating Leases			28,928
Weighted Average Lease Term - Operating Leases			5.50 yrs
Weighted Average Discount Rate - Operating Leases			4.00	%

Future minimum payments for operating leases with initial or remaining terms of one year or more as of March 31, 2019 were as follows:

(dollars in thousands)
Twelve Months Ended:
March 31, 2020			8,045
March 31, 2021			7,380
March 31, 2022			6,619
March 31, 2023			4,234
March 30, 2024			3,500
Thereafter			5,894
Total Future Minimum Lease Payments			35,672
Amounts Representing Interest			(2,920	)
Present Value of Net Future Minimum Lease Payments			32,752