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Leases

3 Months Ended

Mar. 31, 2021

Note 27 – Leases

The Corporation enters in the ordinary course of business into operating and finance leases for land, buildings and equipment. These contracts generally do not include purchase options or residual value guarantees. The remaining lease terms of 0.1 to 32.8 years considers options to extend the leases for up to 20.0 years. The Corporation identifies leases when it has both the right to obtain substantially all of the economic benefits from the use of the asset and the right to direct the use of the asset.

The Corporation recognizes right-of-use assets (“ROU assets”) and lease liabilities related to operating and finance leases in its Consolidated Statements of Financial Condition under the caption of other assets and other liabilities, respectively. Refer to Note 12 and Note 16, respectively, for information on the balances of these lease assets and liabilities.

The Corporation uses the incremental borrowing rate for purposes of discounting lease payments for operating and finance leases, since it does not have enough information to determine the rates implicit in the leases. The discount rates are based on fixed-rate and fully amortizing borrowing facilities of its banking subsidiaries that are collateralized. For leases held by non-banking subsidiaries, a credit spread is added to this rate based on financing transactions with a similar credit risk profile.

On October 27, 2020, PB authorized and approved a strategic realignment of its New York Metro branch network that resulted in eleven branch closures, of which nine were leased properties. The branch closures were completed on January 29, 2021. An impairment loss of ROU assets amounting to $15.9 million was recognized in connection with this transaction during the fourth quarter of 2020.

The following table presents the undiscounted cash flows of operating and finance leases for each of the following periods:

March 31, 2021
(In thousands)		Remaining 2021		2022		2023		2024		2025		Later Years		Total Lease Payments		Less: Imputed Interest		Total
Operating Leases	$	21,007	$	24,843	$	22,657	$	21,549	$	18,605	$	52,393	$	161,054	$	(20,925)	$	140,129
Finance Leases		2,491		3,402		3,492		3,589		3,701		8,850		25,525		(4,086)		21,439

The following table presents the lease cost recognized by the Corporation in the Consolidated Statements of Operations as follows:

		Quarters ended March 31,
(In thousands)		2021		2020
Finance lease cost:
	Amortization of ROU assets	$	581	$	520
	Interest on lease liabilities		273		313
Operating lease cost			7,055		7,914
Short-term lease cost			87		57
Variable lease cost			30		11
Sublease income			(19)		(30)
Total lease cost^[1]		$	8,007	$	8,785
[1]	Total lease cost is recognized as part of net occupancy expense.

The following table presents supplemental cash flow information and other related information related to operating and finance leases.

			Quarters ended March 31,
(Dollars in thousands)			2021			2020
Cash paid for amounts included in the measurement of lease liabilities:
	Operating cash flows from operating leases^[1]	$	15,197		$	7,822
	Operating cash flows from finance leases		273			313
	Financing cash flows from finance leases^[1]		1,133			538
ROU assets obtained in exchange for new lease obligations:
	Operating leases	$	2,394		$	259
Weighted-average remaining lease term:
	Operating leases		8.2	years		8.6	years
	Finance leases		8.9	years		7.3	years
Weighted-average discount rate:
	Operating leases		3.0	%		3.4	%
	Finance leases		5.1	%		5.7	%
[1]	During the quarter ended March 31, 2021, the Corporation made base lease termination payments amounting to $7.8 million in connection with the closure of nine branches as a result of the strategic realignment of PB’s New York Metro branch network.

As of March 31, 2021, the Corporation has additional operating leases contracts that have not yet commenced with an undiscounted contract amount of $3.6 million, which will have lease terms ranging from 10 to 20 years.