Leases

6 Months Ended

Jun. 30, 2021

A lease is defined as a contract that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. On January 1, 2019, the Company adopted ASU No. 2016-2 “Leases” (Topic 842) and has adopted all subsequent ASUs that modified Topic 842. For the Company, Topic 842 primarily affected the accounting treatment for operating lease agreements in which the Company is the lessee.

Substantially all of the leases in which the Company is the lessee are comprised of real estate property for branch offices, ATM locations, and corporate office space. Substantially all of our leases are classified as operating leases, and as such, were previously not recognized on the Company’s Consolidated Balance Sheets. With the adoption of Topic 842, operating lease agreements were required to be recognized on the Consolidated Balance Sheets as a right-of-use (“ROU”) asset and a corresponding lease liability.

As of June 30, 2021, the Company had $29.1 million of operating lease ROU assets and $31.7 million of operating lease liabilities on the Company’s Consolidated Balance Sheets. As of December 31, 2020, the Company had $25.2 million of operating lease ROU assets and $28.0 million of operating lease liabilities on the Company’s Consolidated Balance Sheets. The Company elects not to recognize ROU assets and lease liabilities arising from short-term leases, leases with initial terms of twelve months or less, or equipment leases (deemed immaterial) on the Consolidated Balance Sheets.

The leases contain terms and conditions of options to extend or terminate the lease which are recognized as part of the ROU assets and lease liabilities when an economic benefit to exercise the option exists and there is a 90% probability that the Company will exercise the option. If these criteria are not met, the options are not included in ROU assets and lease liabilities.

As of June 30, 2021, our leases do not contain material residual value guarantees or impose restrictions or covenants related to dividends or the Company’s ability to incur additional financial obligations. As of June 30, 2021, there were no leases that have been signed but did not yet commence as of the reporting date that create significant rights and obligations for the Company.

The following table presents lease costs and other lease information.


	Six Months Ended
(dollars in thousands)	June 30, 2021				June 30, 2020
Lease Cost
Operating Lease Cost (Cost resulting from lease payments)	$	4,172			$	4,005
Variable Lease Cost (Cost excluded from lease payments)	473				518
Sublease Income	(174)				(174)
Net Lease Cost	$	4,471			$	4,349

Operating Lease - Operating Cash Flows (Fixed Payments)	$	4,352			$	4,419
Right-of-Use Assets - Operating Leases	$	29,066			$	25,368
Weighted Average Lease Term - Operating Leases	6.16			yrs	4.62			yrs
Weighted Average Discount Rate - Operating Leases	3.33		%		4.00		%

Future minimum payments for operating leases with initial or remaining terms of more than one year as of June 30, 2021 were as follows:


(dollars in thousands)
Twelve Months Ended:
June 30, 2022	$	5,280
June 30, 2023	6,272
June 30, 2024	5,674
June 30, 2025	4,962
June 30, 2026	3,507
Thereafter	9,082
Total Future Minimum Lease Payments	34,777
Amounts Representing Interest	(3,115)
Present Value of Net Future Minimum Lease Payments	$	31,662