Leases

9 Months Ended

Sep. 30, 2021

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. Operating lease right-of-use (“ROU”) assets amounted to $27.5 million and $29.5 million, respectively, as of September 30, 2021 and December 31, 2020. Operating lease liabilities totaled $29.8 million and $31.7 million, respectively, as of September 30, 2021 and December 31, 2020.

As of September 30, 2021, there were three operating leases that had not yet commenced. As of December 31, 2020, there were no operating leases that had not yet commenced.

Rental expense for operating leases is recognized on a straight-line basis over the lease term and amounted to $1.0 million and $3.1 million respectively, for the three and nine months ended September 30, 2021, compared to $1.0 million and $3.0 million, respectively, for the same periods in 2020. 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 the Corporation’s operating leases:


	Sep 30, 2021		Dec 31, 2020
Weighted average discount rate	3.35	%	3.34	%
Range of lease expiration dates	10 months - 19 years		7 months - 20 years
Range of lease renewal options	1 year - 5 years		1 year - 5 years
Weighted average remaining lease term	13.0 years		13.4 years

The following table presents the undiscounted annual lease payments under the terms of the Corporation’s operating leases at September 30, 2021, including a reconciliation to the present value of operating lease liabilities recognized in the Unaudited Consolidated Balance Sheets:


(Dollars in thousands)
October 1, 2021 to December 31, 2021			$978
2022			3,981
2023			3,881
2024			3,670
2025			2,932
2026 and thereafter			22,099
Total operating lease payments (1)			37,541
Less: interest			7,731
Present value of operating lease liabilities (2)			$29,810

(1) Includes $1.4 million related to options to extend lease terms that are reasonably certain of being exercised.

(2) Includes short-term operating lease liabilities of $3.1 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,	2021	2020	2021	2020
Lease Expense:
Operating lease expense	$1,004	$1,005	$3,011	$2,915
Variable lease expense	10	14	44	41
Total lease expense (1)	$1,014	$1,019	$3,055	$2,956
Cash Paid:
Cash paid reducing operating lease liabilities	$932	$956	$2,910	$2,831

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