Leases

9 Months Ended

Sep. 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. As of September 30, 2020, there were no operating leases that had not yet commenced, compared to one operating lease that had not yet commenced as of December 31, 2019.

Rental expense for operating leases is recognized on a straight-line basis over the lease term and amounted to $1.0 million and $3.0 million respectively, for the three and nine months ended September 30, 2020, compared to $944 thousand and $2.8 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:


	Sep 30, 2020		Dec 31, 2019
Weighted average discount rate	3.36	%	3.67	%
Range of lease expiration dates	10 months - 20 years		4 months - 21 years
Range of lease renewal options	1 year - 5 years		1 year - 5 years
Weighted average remaining lease term	13.6 years		14.0 years

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


(Dollars in thousands)
October 1, 2020 to December 31, 2020			$3,905
2021			3,801
2022			3,775
2023			3,625
2024			3,061
2025 and thereafter			22,566
Total operating lease payments (1)			40,733
Less interest			8,721
Present value of operating lease liabilities (2)			$32,012

(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 $2.9 million.

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


(Dollars in thousands)
	Three Months		Nine Months
Periods ended September 30,	2020	2019	2020	2019
Lease Expense:
Operating lease expense	$1,005	$931	$2,915	$2,787
Variable lease expense	14	13	41	36
Total lease expense (1)	$1,019	$944	$2,956	$2,823
Cash Paid:
Cash paid reducing operating lease liabilities	$956	$926	$2,831	$2,677

(1) Included in net occupancy expenses in the Unaudited Consolidated Income Statement.