Leases

9 Months Ended

Sep. 30, 2024

The Company’s leases primarily relate to real estate property for branches and office space with terms extending from one month up to 30.8 years. At September 30, 2024, all of the Company’s leases are classified as operating leases, which are required to be recognized on the consolidated balance sheets as a right-of-use asset and a corresponding lease liability.

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use assets and operating lease liabilities on the consolidated balance sheets. Right-of-use assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recorded at the present value of lease payments over the lease term. As the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate, at lease inception, over a similar term in determining the present value of lease payments. Certain leases include options to renew, with one or more renewal terms ranging from five to ten years. If the exercise of a renewal option is considered to be reasonably certain, the Company includes the extended term in the calculation of the right-of-use asset and lease liability.

At September 30, 2024, the Company’s operating lease right-of-use assets and operating lease liabilities included on the consolidated balance sheet were $28.9 million and $33.5 million, respectively. At December 31, 2023, the Company’s operating lease right-of-use assets and operating lease liabilities included on the consolidated balance sheet were $30.2 million and $35.2 million, respectively. Operating lease expense is recognized on a straight-line basis over the lease term, while variable lease payments are recognized as incurred. Variable lease payments include common area maintenance charges, real estate taxes, repairs and maintenance costs and utilities. Operating and variable lease expenses are recorded in occupancy expense on the consolidated statements of comprehensive income.

Supplemental lease information at or for the three and nine months ended September 30, 2024, and September 30, 2023 is as follows (dollars in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024			2023

Operating lease cost	$	1,452	$	1,471	$	4,382		$	4,482
Variable lease cost	787		1,067		2,751			2,909

Net lease cost	$	2,239	$	2,538	$	7,133		$	7,391
Cash paid for amounts included in measurement of operating lease liabilities	$	1,597	$	1,632	$	4,797		$	4,853
Right-of-use assets obtained in exchange for new operating lease liabilities	$	795	$	582	$	2,227		$	645
Weighted average remaining lease term					10.78 years			11.10 years
Weighted average discount rate					3.68		%	3.59		%

The following table summarizes lease payment obligations for each of the next five years and thereafter in addition to a reconcilement to the Company's current lease liability (in thousands):


Year	Amount
2024	$	1,609
2025	6,199
2026	5,440
2027	4,483
2028	4,221
Thereafter	20,011
Total lease payments	41,963
Less: imputed interest	(8,434)
Present value of lease liabilities	$	33,529

As of September 30, 2024, the Company had not entered into any leases that have not yet commenced.