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Leases

9 Months Ended

Sep. 30, 2023

NOTE 7 Leases

Substantially all of the leases in which the Company is the lessee are comprised of real property for offices and office equipment rentals with terms extending through 2037. Portions of certain properties are subleased for terms extending through 2024. Substantially all of the Company’s leases are classified as operating leases. The Company has no existing finance leases.

The Company 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 financial statements. The following table presents the classification of the Company’s right-of-use, or ROU, assets and lease liabilities on the consolidated financial statements as of September 30, 2023 and December 31, 2022:


		September 30,		December 31,
(dollars in thousands)		2023		2022
Lease Right-of-Use Assets	Classification
Operating lease right-of-use assets	Operating lease right-of-use assets	$	5,986	$	5,419
Lease Liabilities
Operating lease liabilities	Operating lease liabilities	$	6,286	$	5,902

The calculated amount of the ROU assets and lease liabilities in the table above are impacted by the length of the lease term and the discount rate used to present value the minimum lease payments. The Company’s lease agreements often include one or more options to renew at the Company’s discretion. If at lease inception, the Company considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the calculation of the ROU asset and lease liability. The Company utilizes its incremental borrowing rate at lease inception, on a collateralized basis, over a similar term for the discount rate. For the Company’s only finance lease, the Company utilized its incremental borrowing rate at lease inception.


	September 30,		December 31,
	2023		2022
Weighted-average remaining lease term, years
Operating leases	7.2		5.0
Weighted-average discount rate
Operating leases	3.9	%	3.1	%

As the Company elected, for all classes of underlying assets, not to separate lease and non-lease components and instead to account for them as a single lease component, the variable lease cost primarily represents variable payments such as common area maintenance and utilities. Variable lease cost also includes payments for usage or maintenance of those capitalized equipment operating leases.

The following table presents lease costs and other lease information for the three and nine months ended September 30, 2023 and 2022:


	Three months ended				Nine months ended
	September 30,				September 30,
(dollars in thousands)	2023		2022		2023		2022
Lease costs
Operating lease cost	$	503	$	425	$	1,438	$	1,250
Variable lease cost		219		187		918		550
Short-term lease cost		46		188		128		276
Finance lease cost
Interest on lease liabilities		—		2		—		7
Amortization of right-of-use assets		—		29		—		87
Sublease income		(50)		(63)		(169)		(179)
Net lease cost	$	718	$	768	$	2,315	$	1,991
Other information
Cash paid for amounts included in the measurement of lease liabilities operating cash flows from operating leases	$	499	$	400	$	1,275	$	1,184
Right-of-use assets obtained in exchange for new operating lease liabilities		(1,240)		1,065		1,938		1,452

Future minimum payments for finance and operating leases with initial or remaining terms of one year or more as of September 30, 2023 were as follows:


	Operating
(dollars in thousands)	Leases
Twelve months ended
September 30, 2024	$	1,667
September 30, 2025		1,278
September 30, 2026		1,064
September 30, 2027		516
September 30, 2028		311
Thereafter		1,830
Total future minimum lease payments	$	6,666
Amounts representing interest		(380)
Total operating lease liabilities	$	6,286