Leases

12 Months Ended

Dec. 31, 2022

Leases [Abstract]

Leases

Leases

Operating lease assets represent the Corporation's right to use an underlying asset during the lease term and operating lease liabilities represent the Corporation's obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at lease commencement based on the present value of the remaining lease payments using a discount rate that represents the Corporation's incremental borrowing rate at the lease commencement date. Operating lease cost, which is comprised of amortization of the operating lease asset and the implicit interest accreted on the operating lease liability, is recognized on a straight-line basis over the lease term, and is recorded in net occupancy expense in the consolidated statements of income.

The Corporation leases certain full-service branch offices, land and equipment. Leases with an initial term of twelve months or less are not recorded on the balance sheet. Most leases include one or more options to renew and the exercise of the lease renewal options are at the Corporation's sole discretion. The Corporation includes lease extension and termination options in the lease term if, after considering relevant economic factors, it is reasonably certain the Corporation will exercise the option. Certain lease agreements of the Corporation include rental payments adjusted periodically for changes in the consumer price index.

Leases	Classification	December 31, 2022		December 31, 2021
Assets:
Operating lease assets	Operating lease right-of-use assets	$	32,307	$	19,928
Finance lease assets	Premises and equipment, net (1)	286		358
Total leased assets		$	32,593	$	20,286
Liabilities:
Operating lease liabilities	Operating lease liabilities	$	33,726	$	21,159
Finance lease liabilities	Accrued interest payable and other liabilities	383		469
Total leased liabilities		$	34,109	$	21,628

(1) Finance lease assets are recorded net of accumulated amortization of $930 thousand and $858 thousand as of December 31, 2022 and 2021, respectively.

The components of the Corporation's net lease expense for the year ended December 31, 2022, 2021 and 2020 were as follows:

Lease Cost	Classification	December 31, 2022		December 31, 2021		December 31, 2020
Operating lease cost	Net occupancy expense	$	2,264	$	1,801	$	1,785
Variable lease cost	Net occupancy expense	59		55		87
Finance lease cost:
Amortization of leased assets	Net occupancy expense	72		72		72
Interest on lease liabilities	Interest expense - borrowed funds	19		23		27
Sublease income (1)	Net occupancy expense	(79)		(71)		(86)
Net lease cost		$	2,335	$	1,880	$	1,885

(1) Sublease income excludes rental income from owned properties.

The following table sets forth future minimum rental payments under noncancelable leases with terms in excess of one year as of December 31, 2022:

Maturity of Lease Liabilities as of December 31, 2022	Operating Leases (1)		Finance Leases		Total
2023	$	2,367	$	105	$	2,472
2024	2,298		105		2,403
2025	2,293		105		2,398
2026	2,277		105		2,382
2027	2,220		—		2,220
After 2027	42,626		—		42,626
Total lease payments	54,081		420		54,501
Less: Interest	20,355		37		20,392
Present value of lease liabilities	$	33,726	$	383	$	34,109

(1) Operating lease payments include payments related to options to extend lease terms that are reasonably certain of being exercised and exclude $3.6 million of legally binding minimum lease payments for leases signed, but not yet commenced.

Other information related to the Corporation's lease liabilities as of December 31, 2022 and 2021 was as follows:

Lease Term and Discount Rate	December 31, 2022		December 31, 2021
Weighted-average remaining lease term (years)
Operating leases	23.9		18.8
Finance leases	4		5
Weighted-average discount rate
Operating leases	3.83	%	3.42	%
Finance leases	4.49	%	4.49	%

Other information related to the Corporation's lease liabilities as of December 31, 2022 and 2021 was as follows:

Other Information	December 31, 2022		December 31, 2021
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows used by operating leases	$	1,183	$	964

Leases

Leases

Operating lease assets represent the Corporation's right to use an underlying asset during the lease term and operating lease liabilities represent the Corporation's obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at lease commencement based on the present value of the remaining lease payments using a discount rate that represents the Corporation's incremental borrowing rate at the lease commencement date. Operating lease cost, which is comprised of amortization of the operating lease asset and the implicit interest accreted on the operating lease liability, is recognized on a straight-line basis over the lease term, and is recorded in net occupancy expense in the consolidated statements of income.

The Corporation leases certain full-service branch offices, land and equipment. Leases with an initial term of twelve months or less are not recorded on the balance sheet. Most leases include one or more options to renew and the exercise of the lease renewal options are at the Corporation's sole discretion. The Corporation includes lease extension and termination options in the lease term if, after considering relevant economic factors, it is reasonably certain the Corporation will exercise the option. Certain lease agreements of the Corporation include rental payments adjusted periodically for changes in the consumer price index.

Leases	Classification	December 31, 2022		December 31, 2021
Assets:
Operating lease assets	Operating lease right-of-use assets	$	32,307	$	19,928
Finance lease assets	Premises and equipment, net (1)	286		358
Total leased assets		$	32,593	$	20,286
Liabilities:
Operating lease liabilities	Operating lease liabilities	$	33,726	$	21,159
Finance lease liabilities	Accrued interest payable and other liabilities	383		469
Total leased liabilities		$	34,109	$	21,628

(1) Finance lease assets are recorded net of accumulated amortization of $930 thousand and $858 thousand as of December 31, 2022 and 2021, respectively.

The components of the Corporation's net lease expense for the year ended December 31, 2022, 2021 and 2020 were as follows:

Lease Cost	Classification	December 31, 2022		December 31, 2021		December 31, 2020
Operating lease cost	Net occupancy expense	$	2,264	$	1,801	$	1,785
Variable lease cost	Net occupancy expense	59		55		87
Finance lease cost:
Amortization of leased assets	Net occupancy expense	72		72		72
Interest on lease liabilities	Interest expense - borrowed funds	19		23		27
Sublease income (1)	Net occupancy expense	(79)		(71)		(86)
Net lease cost		$	2,335	$	1,880	$	1,885

(1) Sublease income excludes rental income from owned properties.

The following table sets forth future minimum rental payments under noncancelable leases with terms in excess of one year as of December 31, 2022:

Maturity of Lease Liabilities as of December 31, 2022	Operating Leases (1)		Finance Leases		Total
2023	$	2,367	$	105	$	2,472
2024	2,298		105		2,403
2025	2,293		105		2,398
2026	2,277		105		2,382
2027	2,220		—		2,220
After 2027	42,626		—		42,626
Total lease payments	54,081		420		54,501
Less: Interest	20,355		37		20,392
Present value of lease liabilities	$	33,726	$	383	$	34,109

(1) Operating lease payments include payments related to options to extend lease terms that are reasonably certain of being exercised and exclude $3.6 million of legally binding minimum lease payments for leases signed, but not yet commenced.

Other information related to the Corporation's lease liabilities as of December 31, 2022 and 2021 was as follows:

Lease Term and Discount Rate	December 31, 2022		December 31, 2021
Weighted-average remaining lease term (years)
Operating leases	23.9		18.8
Finance leases	4		5
Weighted-average discount rate
Operating leases	3.83	%	3.42	%
Finance leases	4.49	%	4.49	%

Other information related to the Corporation's lease liabilities as of December 31, 2022 and 2021 was as follows:

Other Information	December 31, 2022		December 31, 2021
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows used by operating leases	$	1,183	$	964