OPERATING LEASES

6 Months Ended

Jun. 30, 2024

Leases [Abstract]

LEASES

12. OPERATING LEASES

The Company leases certain land and buildings for its bank branches and ATMs. In some instances, a lease may contain renewal options to extend the term of the lease. Renewal options that are likely to be exercised have been recognized as part of our right-of-use assets and lease liabilities in accordance with ASC 842, "Leases". Certain leases also contain variable payments that are primarily determined based on common area maintenance costs and Hawaii state tax rates. All leases are operating leases and we do not include any short-term leases in the calculation of the right-of-use assets and lease liabilities. The most significant assumption related to the Company’s application of ASC 842 was the discount rate assumption. As most of the Company’s lease agreements do not provide for an implicit interest rate, the Company uses the collateralized interest rate that the Company would have to pay to borrow over a similar term to estimate the Company’s lease liabilities.

The following table presents total lease cost, cash flow information, weighted-average remaining lease term and weighted-average discount rate for the periods presented:

	Three Months Ended June 30,						Six Months Ended June 30,
(dollars in thousands)	2024			2023			2024			2023
Lease cost:
Operating lease cost	$	1,437		$	1,327		$	2,740		$	2,652
Variable lease cost	927			934			1,862			1,822
Less: Sublease income	—			(17)			—			(34)
Total lease cost	$	2,364		$	2,244		$	4,602		$	4,440
Other information:
Operating cash flows from operating leases	$	(1,425)		$	(1,302)		$	(2,682)		$	(2,692)
Weighted-average remaining lease term - operating leases	10.87 years			10.98 years			10.87 years			10.98 years
Weighted-average discount rate - operating leases	4.09		%	3.96		%	4.09		%	3.96		%

The following table presents a schedule of annual undiscounted cash flows for our operating leases and a reconciliation of those cash flows to the operating lease liabilities as of June 30, 2024, for the remainder of fiscal year 2024, the next five succeeding fiscal years and all years thereafter:

(dollars in thousands)	Undiscounted Cash Flows		Lease Liability Discount on Cash Flows		Lease Liability
Year Ending December 31,
2024 (remainder)	$	2,443	$	644	$	1,799
2025	4,499		1,179		3,320
2026	4,441		1,050		3,391
2027	4,428		915		3,513
2028	3,611		794		2,817
2029	3,144		688		2,456
Thereafter	18,965		2,839		16,126
Total	$	41,531	$	8,109	$	33,422

In addition, the Company, as lessor, leases certain properties that it owns. All of these leases are operating leases. The following table presents lease income related to these leases that was recognized for the periods presented:

	Three Months Ended June 30,				Six Months Ended June 30,
(dollars in thousands)	2024		2023		2024		2023
Total rental income recognized	$	511	$	563	$	1,020	$	1,125

The following table presents estimated lease payments, based on the Company's leases as lessor as of June 30, 2024, for the remainder of fiscal year 2024, the next five succeeding fiscal years, and all years thereafter:

(dollars in thousands)
Year Ending December 31,
2024 (remainder)	$	644
2025	1,157
2026	1,015
2027	960
2028	608
2029	553
Thereafter	1,293
Total	$	6,230

LEASES

12. OPERATING LEASES

The Company leases certain land and buildings for its bank branches and ATMs. In some instances, a lease may contain renewal options to extend the term of the lease. Renewal options that are likely to be exercised have been recognized as part of our right-of-use assets and lease liabilities in accordance with ASC 842, "Leases". Certain leases also contain variable payments that are primarily determined based on common area maintenance costs and Hawaii state tax rates. All leases are operating leases and we do not include any short-term leases in the calculation of the right-of-use assets and lease liabilities. The most significant assumption related to the Company’s application of ASC 842 was the discount rate assumption. As most of the Company’s lease agreements do not provide for an implicit interest rate, the Company uses the collateralized interest rate that the Company would have to pay to borrow over a similar term to estimate the Company’s lease liabilities.

The following table presents total lease cost, cash flow information, weighted-average remaining lease term and weighted-average discount rate for the periods presented:

	Three Months Ended June 30,						Six Months Ended June 30,
(dollars in thousands)	2024			2023			2024			2023
Lease cost:
Operating lease cost	$	1,437		$	1,327		$	2,740		$	2,652
Variable lease cost	927			934			1,862			1,822
Less: Sublease income	—			(17)			—			(34)
Total lease cost	$	2,364		$	2,244		$	4,602		$	4,440
Other information:
Operating cash flows from operating leases	$	(1,425)		$	(1,302)		$	(2,682)		$	(2,692)
Weighted-average remaining lease term - operating leases	10.87 years			10.98 years			10.87 years			10.98 years
Weighted-average discount rate - operating leases	4.09		%	3.96		%	4.09		%	3.96		%

The following table presents a schedule of annual undiscounted cash flows for our operating leases and a reconciliation of those cash flows to the operating lease liabilities as of June 30, 2024, for the remainder of fiscal year 2024, the next five succeeding fiscal years and all years thereafter:

(dollars in thousands)	Undiscounted Cash Flows		Lease Liability Discount on Cash Flows		Lease Liability
Year Ending December 31,
2024 (remainder)	$	2,443	$	644	$	1,799
2025	4,499		1,179		3,320
2026	4,441		1,050		3,391
2027	4,428		915		3,513
2028	3,611		794		2,817
2029	3,144		688		2,456
Thereafter	18,965		2,839		16,126
Total	$	41,531	$	8,109	$	33,422

In addition, the Company, as lessor, leases certain properties that it owns. All of these leases are operating leases. The following table presents lease income related to these leases that was recognized for the periods presented:

	Three Months Ended June 30,				Six Months Ended June 30,
(dollars in thousands)	2024		2023		2024		2023
Total rental income recognized	$	511	$	563	$	1,020	$	1,125

The following table presents estimated lease payments, based on the Company's leases as lessor as of June 30, 2024, for the remainder of fiscal year 2024, the next five succeeding fiscal years, and all years thereafter:

(dollars in thousands)
Year Ending December 31,
2024 (remainder)	$	644
2025	1,157
2026	1,015
2027	960
2028	608
2029	553
Thereafter	1,293
Total	$	6,230