Leases

12 Months Ended

Dec. 31, 2020

15. Leases

CTBI has one finance lease for property but no material sublease or leasing arrangements for which it is the lessor or property or equipment. CTBI has operating leases for banking and ATM locations. These leases have remaining lease terms of 1 year to 45 years, some of which include options to extend the leases for up to 5 years. We evaluated the original lease terms for each operating lease, some of which include options to extend the leases for up to 5 years, using hindsight. These options, some of which include variable costs related to rent escalations based on recent financial indices, such as the Consumer Price Index, where CTBI estimates future rent increases, are included in the calculation of the lease liability and right-of-use asset when management determines it is reasonably certain the option will be exercised. CTBI determines this on each lease by considering all relevant contract-based, asset-based, market-based, and entity-based economic factors. Right-of-use assets and lease liabilities are recognized at lease commencement based on the present value of the remaining lease payments using a discount rate that represents our incremental borrowing rate on a collateralized basis, over a similar term at the lease commencement date. Right-of-use assets are further adjusted for prepaid rent, lease incentives, and initial direct costs, if any.

The components of lease expense for the year ended December 31, 2020 were as follows:

(in thousands)	Year Ended December 31, 2020		Year Ended December 31, 2019
Finance lease cost:
Amortization of right-of-use assets – finance leases	$	50	$	52
Interest on lease liabilities – finance leases		53		54
Total finance lease cost		103		106

Short-term lease cost		294		306
Operating lease cost		1,769		1,773

Sublease income		253		257

Total lease cost	$	1,913	$	1,928

Supplemental cash flow information related to CTBI’s operating and finance leases for the year ended December 31, 2020 was as follows:

(in thousands)	Year Ended December 31, 2020			Year Ended December 31, 2019
Finance lease – operating cash flows	$	53		$	54
Finance lease – financing cash flows	$	15		$	14
Operating lease – operating cash flows (fixed payments)	$	1,682		$	1,665
Operating lease – operating cash flows (liability reduction)	$	1,198		$	0
New right-of-use assets – operating leases	$	0		$	9
Weighted average lease term – financing leases	25.02 years			26.02 years
Weighted average lease term – operating leases	13.46 years			13.84 years
Weighted average discount rate – financing leases		3.70	%		3.70	%
Weighted average discount rate – operating leases		3.43	%		3.45	%

Maturities of lease liabilities as of December 31, 2020 are as follows:

(in thousands)	Operating Leases			Finance Leases
2021	$	1,717		$	75
2022		1,703			75
2023		1,626			75
2024		1,313			75
2025		1,121			75
Thereafter		8,528			1,913
Total lease payments		16,008			2,288
Less imputed interest		(3,477	)		(847	)
Total	$	12,531		$	1,441