Leases

6 Months Ended

Jun. 30, 2020

The Corporation has committed to rent premises used in business operations under non-cancelable operating leases and determines if an arrangement meets the definition of a lease upon inception.

Rental expense for operating leases is recognized on a straight-line basis over the lease term and amounted to $973 thousand and $1.9 million respectively, for the three and six months ended June 30, 2020, compared to $940 thousand and $1.9 million, respectively, for the same periods in 2019. Variable lease components, such as consumer price index adjustments, are expensed as incurred and not included in ROU assets and operating lease liabilities.

The following table presents information regarding Corporation’s operating leases:



	Jun 30, 2020		Dec 31, 2019
Weighted average discount rate	3.56	%	3.67	%
Operating leases not yet commenced	—		1
Range of lease expiration dates	1 year - 21 years		4 months - 21 years
Range of lease renewal options	1 year - 5 years		1 year - 5 years
Weighted average remaining lease term	13.3 years		14.0 years

The following table presents the undiscounted annual lease payments under the terms of the Corporation’s operating leases at June 30, 2020, including a reconciliation to the present value of operating lease liabilities recognized in the Unaudited Consolidated Balance Sheets:



(Dollars in thousands)
July 1, 2020 to December 31, 2020		$3,718
2021	3,499
2022	3,493
2023	3,356
2024	2,921
2025 and thereafter	20,567
Total operating lease payments (1)	37,554
Less interest	8,429
Present value of operating lease liabilities (2)		$29,125


(1)	Includes $2.6 million related to options to extend lease terms that are reasonably certain of being exercised.


(2)	Includes short-term operating lease liabilities of $2.7 million.

The following table presents the components of total lease expense and operating cash flows:



(Dollars in thousands)
	Three Months				Six Months
Periods ended June 30,	2020		2019		2020		2019
Lease Expense:
Operating lease expense		$959		$928		$1,909		$1,856
Variable lease expense	14		12		28		23
Total lease expense (1)		$973		$940		$1,937		$1,879
Cash Paid:
Cash paid reducing operating lease liabilities		$942		$831		$1,875		$1,751

(1)

Included in net occupancy expenses in the Unaudited Consolidated Income Statement.