XML 44 R15.htm IDEA: XBRL DOCUMENT

Leases

9 Months Ended

Sep. 30, 2019

LEASES

The Company adopted ASU 2016-02, "Leases (Topic 842)," effective January 1, 2019 and applied the guidance to all leases within the scope of Topic 842 as of that date. We have adopted the guidance using the optional transition method under ASU 2018-11, “Leases (Topic 842): Targeted Improvements,” and recognized a cumulative effect adjustment to retained earnings without prior periods restated, effectively applying the requirements of the new standard prospectively.

We determine if an arrangement is a lease at inception by assessing whether there is an identified asset, and whether the contract conveys the right to control the use of the identified asset for a period of time in exchange for consideration. Topic 842 also requires a lessee to classify a lease as either finance or operating. The Company only had operating leases as of September 30, 2019, related to our leased facilities which consisted of 75 full-service branch offices and 76 other offices.

ROU assets represent a lessee's right to use an underlying asset for the lease term and lease liabilities represent a lessee's obligation to make lease payments arising from the lease. On January 1, 2019, ROU assets and operating lease liabilities were initially recognized based on the present value of future minimum lease payments over the remaining lease terms. We used our incremental borrowing rates on January 1, 2019 to determine the present value of future payments. The ROU assets also include any prepaid lease payments and initial direct costs incurred less any lease incentives received. We amortize the operating lease ROU assets and record interest expense on the operating lease liabilities over the lease terms.

Our leases have remaining terms ranging from 1 to 27 years. Short-term leases (initial term of less than 12 months) are not recorded on the balance sheet and lease expense is recognized on a straight-line basis over the lease term. We have lease agreements with lease and non-lease components, which are accounted for as a single lease component. Most leases include one or more options to renew, with renewal terms that can extend the lease from one to ten years. The exercise of lease renewal options is at our sole discretion. Some of our leases also include termination options. We have determined that we do not meet the reasonably certain threshold to exercise any renewal or termination options, therefore our lease terms do not reflect any optional periods. We rent or sublease certain office space to third parties. Our subleases consist of operating leases for offices that we have fully or partially vacated.

Certain of our lease agreements also include rental payments that adjust periodically based on changes in the CPI. We initially measured our lease payments using the index at the lease commencement date. Subsequent increases in the CPI are treated as variable lease payments and recognized in the period in which the obligation for those payments is incurred. The ROU assets and lease liabilities are not re-measured as a result of changes in the CPI. Our lease agreements do not contain any purchase options, residual value guarantees, or restrictive covenants.

Operating Leases as a Lessee

Our lease expense is a component of "Occupancy expense" on our condensed consolidated statements of earnings. The following table presents the components of lease expense for the period indicated:



	Three Months Ended			Nine Months Ended
	September 30, 2019			September 30, 2019
	(In thousands)
Operating lease expense:
Fixed costs	$	8,347		$	25,183
Variable costs	7			77
Short-term lease costs	126			849
Sublease income	(1,010		)	(3,190		)
Net lease expense	$	7,470		$	22,919

The following table presents supplemental cash flow information related to leases for the period indicated:



	Nine Months Ended
	September 30, 2019

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	24,674
ROU assets obtained in exchange for lease obligations:
Operating leases	$	172,189

The following table presents supplemental balance sheet and other information related to operating leases as of the date indicated:



	September 30, 2019
	(Dollars in thousands)
Operating leases:
Operating lease right-of-use assets, net	$	134,122
Operating lease liabilities	$	149,185

Weighted average remaining lease term (in years)	4.8
Weighted average discount rate	2.79		%

The following table presents maturities of operating lease liabilities as of the date indicated:



	September 30, 2019
	(In thousands)
Period ending December 31,
2019	$	8,303
2020	32,345
2021	30,090
2022	24,304
2023	21,472
Thereafter	47,582
Total operating lease liabilities	164,096
Less: Imputed interest	(14,911		)
Present value of operating lease liabilities	$	149,185

Operating Leases as a Lessor

We provide equipment financing through operating leases where we facilitate the purchase of equipment leased to our customers. The equipment is on our balance sheet as "Equipment leased to others under operating leases" and is depreciated to its estimated residual value at the end of the lease term, shown as "Leased equipment depreciation" in the condensed consolidated statements of earnings, according to our fixed asset accounting policy. We receive periodic rental income payments under the leases, which are recorded as "Noninterest Income" in the condensed consolidated statements of earnings.

The following table presents the rental payments to be received on operating leases as of the date indicated:



	September 30, 2019
	(In thousands)
Period Ending December 31,
2019	$	8,727
2020	35,447
2021	31,743
2022	25,199
2023	22,096
Thereafter	52,717
Total undiscounted cash flows	$	175,929

Leases