Leases

9 Months Ended

Sep. 30, 2023

Note 7. Leases

Effective January 1, 2022, the Company adopted the provisions of Topic 842 using the prospective transition approach. Therefore, prior period comparative information has not been adjusted and continues to be reported under GAAP in effect prior to the adoption of Topic 842.

The Company has 16 operating leases for branches (including headquarters) and office spaces and five operating leases for equipment. Our leases have remaining lease terms ranging from less than one year to approximately 15 years, none of which has a renewal option reasonably certain of exercise, which has been reflected in the Company’s calculation of lease term.

Certain leases have escalation clauses for operating expenses and real estate taxes. The Company’s non-cancelable operating lease agreements expire through 2038.

Supplemental balance sheet information related to leases was as follows:


	September 30,			December 31,
	2023			2022
	(Dollars in thousands)
Operating lease ROU assets	$	32,110		$	33,423
Operating lease liabilities		33,459			34,532
Weighted-average remaining lease term-operating leases	12.8 years			13.5 years
Weighted average discount rate-operating leases		4.9	%		4.9	%

The components of lease expense and cash flow information related to leases were as follows:


		For the Three Months Ended				For the Nine Months Ended
		September 30,				September 30,
		2023		2022		2023		2022
		(Dollars in thousands)
Lease Cost
Operating lease cost	Occupancy and equipment	$	1,029	$	1,042	$	3,123	$	3,100
Operating lease cost	Other operating expenses		4		1		14		2
Short-term lease cost	Other operating expenses		5		—		15		6
Variable lease cost	Occupancy and equipment		32		35		94		122
Total lease cost		$	1,070	$	1,078	$	3,246	$	3,230

The Company’s minimum annual rental payments under the terms of the leases are as follows at September 30, 2023:


	Minimum Rental
Years ended December 31:	(in thousands)
Remainder of 2023	$	961
2024		3,866
2025		3,818
2026		3,668
2027		3,537
2028		3,594
Thereafter		25,474
Total Minimum payments required		44,918
Less: implied interest		11,459
Present value of lease liabilities	$	33,459

Lease Commitments: As of September 30, 2023, there are noncancelable operating leases for office space that expire on various dates through 2038. Certain of these leases contains escalation clauses providing for increased rental based on pre-scheduled annual increases or on increases in real estate taxes.