Leases

6 Months Ended

Jun. 30, 2022

The Company’s leases primarily relate to real estate property for branches and office space with terms extending from nine months up to 33.0 years. At June 30, 2022, all of the Company's leases are classified as operating leases, which are required to be recognized on the consolidated balance sheets as a right-of-use asset and a corresponding lease liability.

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use assets and operating lease liabilities on the consolidated balance sheets. Right-of-use assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recorded at the present value of lease payments over the lease term. As the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate, at lease inception, over a similar term in determining the present value of lease payments. Certain leases include options to renew, with one or more renewal terms ranging from five to ten years. If the exercise of a renewal option is considered to be reasonably certain, the Company includes the extended term in the calculation of the right-of-use asset and lease liability.

At June 30, 2022, the Company’s operating lease right-of-use assets and operating lease liabilities included on the consolidated balance sheet were $36.6 million and $42.3 million, respectively. At December 31, 2021, the Company’s operating lease right-of-use assets and operating lease liabilities included on the consolidated balance sheet were $33.9 million and $39.9 million, respectively. Operating lease expense is recognized on a straight-line basis over the lease term, while variable lease payments are recognized as incurred. Variable lease payments include common area maintenance charges, real estate taxes, repairs and maintenance costs and utilities. Operating and variable lease expenses are recorded in occupancy expense on the consolidated statements of comprehensive income.

Supplemental lease information at or for the three and six months ended June 30, 2022, and June 30, 2021 is as follows (dollars in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022			2021

Operating lease cost	$	1,521	$	1,453	$	2,990		$	2,908
Variable lease cost	863		1,010		1,828			2,245

Net lease cost	$	2,384	$	2,463	$	4,818		$	5,153
Cash paid for amounts included in measurement of operating lease liabilities	$	1,597	$	1,691	$	3,161		$	3,399
Right-of-use assets obtained in exchange for new operating lease liabilities	$	4,983	$	—	$	4,983		$	—
Weighted average remaining lease term					11.37 years			12.24 years
Weighted average discount rate					3.52		%	3.61		%

The following table summarizes lease payment obligations for each of the next five years and thereafter in addition to a reconcilement to the Company's current lease liability (in thousands):


Year	Amount
2022	$	3,188
2023	6,490
2024	6,069
2025	5,729
2026	4,967
Thereafter	26,564
Total lease payments	53,007
Less: imputed interest	10,709
Present value of lease liabilities	$	42,298

As of June 30, 2022, the Company had not entered into any leases that have not yet commenced.