Leases

12 Months Ended

Dec. 31, 2022

Leases

The Corporation leases various office spaces and specialized lending production offices under non-cancellable operating leases which expire on various dates through 2033. The Corporation also leases office equipment. The Corporation recognizes a right-of-use asset and an operating lease liability for all leases, with the exception of short-term leases. Right-of-use assets represent the right to use an underlying asset for the lease term and lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. Lease expense for operating leases and short-term leases is recognized on a straight-line basis over the lease term.

In November 2022, the Corporation relocated its Southeast Wisconsin office resulting in a $1.6 million right-of-use asset and $2.5 million lease liability. The Corporation received a $991,000 tenant improvement allowance related to this lease, which is recognized as a lease incentive and deducted from the right-of-use asset. In October 2022, the Corporation also entered into a new lease in the Kansas City metropolitan area that will begin in June 2023, resulting in a $2.6 million right-of-use asset and $3.7 million lease liability. The Corporation received a $1.1 million tenant improvement allowance related to this lease.

In 2019, the Corporation entered into a sublease for office space it vacated in its Kansas City metropolitan area which expires in May 2023. During the first quarter of 2022, the Corporation amended the sublease agreement and the amendment did not result in any impairment.

The components of total lease expense were as follows:


	For the Year Ended December 31,
	2022		2021		2020
	(In Thousands)
Operating lease cost	$	1,544	$	1,513	$	1,494
Short-term lease cost	148		158		222
Variable lease cost	604		492		522
Less: sublease income	(179)		(170)		(113)
Total lease cost, net	$	2,117	$	1,993	$	2,125

Quantitative information regarding the Corporation’s operating leases was as follows:


	December 31, 2022		December 31, 2021		December 31, 2020
Weighted-average remaining lease term (in years)	8.06		5.05		5.80
Weighted-average discount rate	3.40	%	2.51	%	3.03	%

The following maturity analysis shows the undiscounted cash flows due on the Corporation’s operating lease liabilities:


(In Thousands)
2023	$	1,511
2024	1,527
2025	1,408
2026	1,400
2027	1,428
Thereafter	4,688
Total undiscounted cash flows	11,962
Discount on cash flows	(1,787)
Total lease liability	$	10,175