Leases

3 Months Ended

Mar. 31, 2024

The Company accounts for leases in accordance with ASC Topic 842. 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. Substantially all of the leases in which the Company is the lessee comprise real estate property for branch offices, ATM locations, and corporate office space. Substantially all of our leases are classified as operating leases, and are included in operating lease right-of-use ("ROU") assets and operating lease liabilities in the Consolidated Balance Sheets.

As of March 31, 2024 and December 31, 2023, the Company had $17.7 million and $19.1 million of operating lease ROU assets, respectively, and $21.6 million and $23.2 million of operating lease liabilities, respectively, 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 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 March 31, 2024, the Company's leases do not contain material residual value guarantees or impose restrictions or covenants related to dividends or its ability to incur additional financial obligations. During the three months ended March 31, 2024, the Company did not enter into new leases nor renew or extend any leases. The Company had no leases expire during that period; however, one lease expired in April 2024.

The following table presents lease costs and other lease information.


	Three Months Ended
(dollars in thousands)		March 31, 2024				March 31, 2023
Lease cost
Operating lease cost (cost resulting from lease payments)		$	1,601			$	1,716
Variable lease cost (cost excluded from lease payments)		241				256
Sublease income		(30)				(30)
Net lease cost		$	1,812			$	1,942

Operating lease - operating cash flows (fixed payments)		$	1,778			$	1,859

(dollars in thousands)		March 31, 2024				December 31, 2023
Right-of-use assets - operating leases		$	17,679			$	19,129
Operating lease liabilities		$	21,611			$	23,238
Weighted average lease term - operating leases		4.81			yrs	4.93			yrs
Weighted average discount rate - operating leases		2.73		%		2.78		%

Future minimum payments for operating leases with initial or remaining terms of more than one year as of March 31, 2024 were as follows:


(dollars in thousands)
Twelve months ended:
March 31, 2025	$	5,147
March 31, 2026	6,078
March 31, 2027	2,988
March 31, 2028	2,599
March 31, 2029	2,176
Thereafter	3,751
Total future minimum lease payments	22,739
Amounts representing interest	(1,128)
Present value of net future minimum lease payments	$	21,611