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Leases

12 Months Ended

Dec. 31, 2019

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 were required to be recognized on the consolidated statements of condition as a right-of-use (“ROU”) asset and a corresponding lease liability.

As of December 31, 2019, the Company had $27.4 million of operating lease ROU assets and $30.0 million of operating lease liabilities on the Company’s Consolidated Balance Sheet. The Company elects not to recognize ROU 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 ROU 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 ROU assets and lease liabilities.

As of December 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 December 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.


	Year Ended
(dollars in thousands)	12/31/2019
Lease Cost
Operating Lease Cost (Cost resulting from lease payments)	$	7,829
Variable Lease Cost (Cost excluded from lease payments)		1,090
Sublease Income		(348)
Net Lease Cost	$	8,571

Operating Lease - Operating Cash Flows (Fixed Payments)		8,542
Right-of-Use Assets - Operating Leases		27,372
Weighted Average Lease Term - Operating Leases		4.94	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 December 31, 2019 were as follows:


(dollars in thousands)
Twelve Months Ended:
December 31, 2020	$	8,468
December 31, 2021		7,545
December 31, 2022		5,220
December 31, 2023		4,276
December 31, 2024		3,398
Thereafter		3,560
Total Future Minimum Lease Payments		32,467
Amounts Representing Interest		(2,508)
Present Value of Net Future Minimum Lease Payments	$	29,959