Leases

6 Months Ended

Jun. 30, 2019

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

seven

years and generally contain options to extend from

three

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 $27.5 million as of June 30, 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 $

25.6

million as of June 30, 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 maturities of the Company’s operating lease liabilities are as follows:

In thousands	June 30, 2019
2019 (remaining six months)	$	3,015
2020		7,224
2021		5,901
2022		4,607
2023		4,011
Thereafter		7,262
Total future minimum lease payments		32,020
Present value adjustment		(4,566	)
Operating lease liability	$	27,454

The following table present the Company’s lease expense for the periods indicated:

In thousands	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019
Operating leases	$	1,936	$	3,868
Short-term leases		86		167
Total lease expense	$	2,022	$	4,035

Supplemental cash flow and non-cash information related to the Company’s operating leases are presented below:

In thousands	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019
Cash paid for operating leases	$	1,695	$	3,433
Lease assets and liabilities acquired (1)	$	2,300	$	6,125

(1)

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

As of June 30, 2019, the weighted-average remaining lease term and weighted-average discount rate were

5.4

years and

5.54

%, respectively.