Leases

3 Months Ended

Mar. 31, 2022

The Corporation has operating leases for retail and corporate offices, land, and equipment. The Corporation also has finance leases for land and retail and corporate offices.

These leases have original terms of 1 year or longer with remaining maturities up to 41 years, some of which include options to extend the lease term. An analysis of the lease options has been completed and any purchase options or optional periods that the Corporation is reasonably likely to extend have been included in the capitalization.

The discount rate used to capitalize the operating leases is the Corporation's FHLB borrowing rate on the date of lease commencement. When determining the rate to discount specific lease obligations, the repayment period and term are considered.

Operating and finance lease costs and cash flows resulting from these leases are presented below:


	Three Months Ended Mar 31,
($ in Thousands)	2022		2021
Operating lease costs	$	1,798	$	2,240
Finance lease costs	41		39
Operating lease cash flows	2,407		2,963
Finance lease cash flows	44		40

The lease classifications on the consolidated balance sheets were as follows:


($ in Thousands)	Consolidated Balance Sheets Category	Mar 31, 2022		Dec 31, 2021
Operating lease right-of-use asset	Premises and equipment	$	28,354	$	28,299
Finance lease right-of-use asset	Other assets	545		143
Operating lease liability	Accrued expenses and other liabilities	31,585		31,345
Finance lease liability	Other long-term funding	562		163

The lease payment obligations, weighted-average remaining lease term, and weighted-average original discount rate were as follows:


	Mar 31, 2022					Dec 31, 2021
($ in Thousands)	Lease payments		Weighted-average lease term (in years)	Weighted-average discount rate		Lease payments		Weighted-average lease term (in years)	Weighted-average discount rate
Operating leases
Equipment	$	191	1.25	0.44	%	$	192	1.50	0.45	%
Retail and corporate offices	28,482		5.76	2.24	%	29,008		5.56	3.26	%
Land	5,356		8.11	3.12	%	5,551		8.29	3.12	%
Total operating leases	$	34,028	6.08	2.37	%	$	34,751	5.94	3.22	%
Finance leases
Retail and corporate offices	$	553	6.00	1.32	%	$	112	1.25	1.32	%
Land	30		0.42	1.07	%	51		0.67	1.07	%
Total finance leases	$	583	5.70	1.31	%	$	164	1.07	1.24	%

Contractual lease payment obligations for each of the next five years and thereafter, in addition to a reconciliation to the Corporation’s lease liability, were as follows:


($ in Thousands)	Operating Leases		Finance Leases		Total Leases
Nine months ended December 31, 2022	$	5,692	$	98	$	5,790
2023	6,252		92		6,344
2024	5,660		93		5,752
2025	4,363		93		4,456
2026	3,799		93		3,891
Beyond 2026	8,263		116		8,379
Total lease payments	$	34,028	$	583	$	34,611
Less: interest	2,444		21		2,465
Present value of lease payments	$	31,585	$	562	$	32,147

As of March 31, 2022 and December 31, 2021, additional operating leases, primarily retail and corporate offices, that had not yet commenced totaled $14 million and $13 million, respectively. The leases that had not yet commenced as of March 31, 2022 will commence between April 2022 and October 2023 with lease terms of 3 year to 6 years.