Leases

12 Months Ended

Dec. 31, 2021

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. 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 balance sheets. With the adoption of ASC 842, operating lease agreements were required to be recognized on the consolidated balance sheets as a right-of-use (“ROU”) asset and a corresponding lease liability.

As of December 31, 2021, the Company had $30.6 million of operating lease ROU assets and $35.5 million of operating lease liabilities on the Company’s Consolidated Balance Sheet. The Company has elected 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 Balance Sheets.

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, 2021, 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. In 2021, the Company entered into two new leases, renewed/extended three leases and had five leases expire (three branches were closed and two operations center locations were consolidated into one new location)

The following table presents lease costs and other lease information.


	Years Ended
(dollars in thousands)	December 31, 2021				December 31, 2020
Lease cost
Operating lease cost (cost resulting from lease payments)	$	8,104			$	8,411
Variable lease cost (cost excluded from lease payments)	876				971
Sublease income	(348)				(347)
Net lease cost	$	8,632			$	9,035

Operating lease - operating cash flows (fixed payments)	$	6,046			$	9,232
Right-of-use assets - operating leases	$	30,555			$	25,237
Operating lease liabilities	$	35,501			$	28,022
Weighted average lease term - operating leases	6.26			yrs	6.20			yrs
Weighted average discount rate - operating leases	3.05		%		4.00		%

Future minimum payments for operating leases with initial or remaining terms of one year or more as of December 31, 2021 were as follows:


(dollars in thousands)
Twelve Months Ended:
December 31, 2022	$	7,231
December 31, 2023	7,037
December 31, 2024	6,293
December 31, 2025	5,331
December 31, 2026	4,186
Thereafter	8,407
Total Future Minimum Lease Payments	38,485
Amounts Representing Interest	(2,984)
Present Value of Net Future Minimum Lease Payments	$	35,501