Leases

3 Months Ended

Mar. 31, 2024

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

These leases have original terms of 1 year or longer with remaining maturities up to 39 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)	2024		2023
Operating lease costs	$	1,545	$	1,464
Finance lease costs	23		23
Operating lease cash flows	1,844		1,828
Finance lease cash flows	23		22

The right-of-use asset and lease liability by lease classifications on the consolidated balance sheets were as follows:


($ in thousands)	Consolidated Balance Sheets Category	Mar 31, 2024		Dec 31, 2023
Operating lease right-of-use asset	Premises and equipment	$	23,310	$	24,712
Finance lease right-of-use asset	Other assets	347		368
Operating lease liability	Accrued expenses and other liabilities	25,813		27,311
Finance lease liability	Other long-term funding	361		383

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


	Mar 31, 2024					Dec 31, 2023
($ 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
Retail and corporate offices	$	24,223	5.61	3.14	%	$	25,729	5.76	3.12	%
Land	3,846		6.87	3.49	%	4,050		6.98	3.48	%
Equipment	408		2.25	4.62	%	408		2.50	4.62	%
Total operating leases	$	28,476	5.73	3.21	%	$	30,187	5.88	3.19	%
Finance leases
Retail and corporate offices	$	370	4.00	1.32	%	$	394	4.25	1.32	%

Total finance leases	$	370	4.00	1.32	%	$	394	4.25	1.32	%

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, 2024	$	4,828	$	69	$	4,898
2025	5,629		93		5,721
2026	5,023		93		5,116
2027	4,312		93		4,404
2028	3,428		23		3,451
Beyond 2028	5,257		—		5,257
Total lease payments	$	28,476	$	370	$	28,847
Less: interest	2,663		9		2,673
Present value of lease payments	$	25,813	$	361	$	26,174

As of March 31, 2024 and December 31, 2023, additional operating leases, primarily retail and corporate offices, that had not yet commenced totaled $6 million and $3 million, respectively. The leases that had not yet commenced as of March 31, 2024 will commence between May 2024 and April 2025 with lease terms of 1 year to 11 years.