Note 4. Leases

The Company adopted a new lease accounting standard in January 2019. See Note 2, “Basis of Presentation and Significant Accounting Policies,” for an overview of the transition to this standard.

The Company maintains lease agreements related to its branch network and for its corporate headquarters. The branch lease agreements range from five to seven years and generally contain options to extend from three to five years. The corporate headquarters lease agreement is for eleven years and contains an option to extend for ten years. All of the Company’s lease agreements are considered operating leases. None of the Company’s lease payments are dependent on a rate or index that may change after the commencement date, other than the passage of time.

The Company’s lease liability was $26.5 million as of March 31, 2019. This liability is based on the present value of the remaining minimum rental payments using a discount rate that is determined based on the Company’s incremental borrowing rate on its senior revolving credit facility. The lease asset was $24.8 million as of March 31, 2019. This asset includes right-of-use assets equaling the lease liability, net of prepaid rent and deferred rents that existed as of the adoption of the new lease standard.

The Company has made several policy elections related to lease assets and liabilities. The Company elected to utilize the package of transition practical expedients, which includes not reassessing the following at adoption: (i) whether existing contracts contained leases, (ii) the existing classification of leases as operating or financing, or (iii) the initial direct costs of leases. In addition, the Company did not use hindsight to determine the lease term or include options to extend for leases existing at the transition date.

Lease agreements with terms of twelve months or less are not capitalized as part of lease assets or liabilities and are expensed as incurred. The Company has elected to account for each separate lease component of a contract and its associated non-lease components as a single lease component for its branch leases. The Company has elected not to apply this policy in relation to the corporate headquarters lease. The Company has also determined that it is reasonably certain that the first option to extend lease contracts will be exercised for new branch locations; therefore, the first option to extend is included in the lease asset and liability calculation.

Future minimum lease payments under non-cancellable operating leases in effect as of March 31, 2019, are as follows:


In thousands	Future Payments
2019 (remaining nine months)	$	4,922
2020		6,797
2021		5,488
2022		4,247
2023		3,700
Thereafter		5,815

Total future minimum lease payments		30,969
Present value adjustment		(4,495	)

Operating lease liability	$	26,474

The following tables present additional quantitative information about the Company’s operating leases for the three months ended March 31, 2019:


In thousands	Lease Expense
Operating leases	$	1,932
Short-term leases		81

Total	$	2,013


In thousands	Other Information
Cash paid for operating leases	$	1,738
Lease assets and liabilities acquired (1)	$	3,825
Weighted-average remaining lease term in years		5.34
Weighted-average discount rate		5.56%

(1)

Excludes $24.1 million of lease assets and liabilities recorded on the transition date.