Leases

3 Months Ended

Mar. 31, 2020

8. LEASES

United determines if an arrangement is a lease at inception. United and certain subsidiaries have entered into various noncancelable-operating leases for branch and loan production offices as well as operating facilities. Operating leases are included in operating lease

right-of-use

(“ROU”) assets and operating lease liabilities on the Consolidated Balance Sheets. Operating leases with an initial term of 12 months or less are not recorded on the Consolidated Balance Sheets. Presently, United does not have any finance leases.

United’s operating leases are subject to renewal options under various terms. United’s operating leases have remaining terms of 1 to 13 years, some of which include options to extend leases generally for periods of 5 years. United rents or subleases certain real estate to third parties. Our sublease portfolio consists of operating leases to other organizations for former branch offices.

ROU assets represent United’s right to use an underlying asset for the lease term and lease liabilities represent United’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of United’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Lease terms may include options to extend the lease when it is reasonably certain that United will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

The components of lease expense were as follows:


			Three Months Ended
	Classification		March 31, 2020			March 31, 2019
Operating lease cost		Net occupancy expense	$	5,066		$	4,821
Sublease income		Net occupancy expense		(205	)		(276	)

Net lease cost			$	4,861		$	4,545

Supplemental balance sheet information related to leases was as follows:


	Classification		March 31, 2020		December 31, 2019
Operating lease right-of-use assets		Operating lease right-of-use assets	$	57,280	$	57,783
Operating lease liabilities		Operating lease liabilities	$	60,887	$	61,342

Other information related to leases was as follows:


	March 31, 2020
Weighted-average remaining lease term:
Operating leases		5.1 years
Weighted-average discount rate:
Operating leases		3.13	%

Supplemental cash flow information related to leases was as follows:


	Three Months Ended
	March 31, 2020		March 31, 2019
Cash paid for amounts in the measurement of lease liabilities:
Operating cash flows from operating leases	$	5,017	$	4,718
ROU assets obtained in the exchange for lease liabilties		3,783		202

Maturities of lease liabilities by year and in the aggregate, under operating leases with initial or remaining terms of one year or more, for years subsequent to December 31, 2019, consists of the following as of March 31, 2020 and December 31, 2019:


	Amount
Year	As of March 31, 2020			As of December 31, 2019
2020	$	13,359		$	17,725
2021		15,596			15,180
2022		11,892			11,522
2023		9,130			8,751
2024		5,516			5,127
Thereafter		10,476			8,190

Total lease payments		65,969			66,495
Less: imputed interest		(5,082	)		(5,153	)

Total	$	60,887		$	61,342