Leases

3 Months Ended

Mar. 31, 2023

Leases

Park is a lessee in several noncancellable operating lease arrangements, primarily for retail branches, administrative and warehouse buildings, ATMs, and certain office equipment within its Ohio, North Carolina, South Carolina, and Kentucky markets. Certain of these leases contain renewal options for periods ranging from one to five years. Park’s leases generally do not include termination options for either party to the lease or restrictive financial or other covenants. Payments due under the lease arrangements include fixed payments plus, for many of Park’s real estate leases, variable payments such as Park's proportionate share of property taxes, insurance and common area maintenance.

Park's operating lease ROU asset and lease liability are presented in “Operating lease right-of-use asset" and "Operating lease liability," respectively, on Park's Consolidated Condensed Balance Sheets. The carrying amounts of Park's ROU asset and lease liability at March 31, 2023 were $17.2 million and $18.7 million, respectively. At December 31, 2022, the carrying amounts of Park's ROU asset and lease liability were $17.6 million and $19.3 million, respectively. Park's operating lease expense is recorded in "Occupancy expense" on the Company's Consolidated Condensed Statements of Income.

Other information related to operating leases for the three-month periods ended March 31, 2023 and 2022 follows:


	Three Months Ended
(in thousands)	March 31, 2023		March 31, 2022
Lease cost
Operating lease cost	$	732	$	724
Sublease income	(63)		(63)
Total lease cost	$	669	$	661

Other information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	923	$	773
ROU assets obtained in exchange for new operating lease liabilities	$	136	$	—
Reductions to ROU assets resulting from reductions to lease obligations	$	(777)	$	(698)

At both March 31, 2023 and December 31, 2022, Park's operating leases had a weighted average remaining term of 10.0 years. The weighted average discount rate of Park's operating leases was 3.3% at both March 31, 2023 and December 31, 2022.

Undiscounted cash flows included in lease liabilities have expected contractual payments as follows:


(in thousands)	March 31, 2023
Nine months ending December 31, 2023	$	2,713
2024	2,523
2025	2,180
2026	2,132
2027	2,030
Thereafter	11,020
Total undiscounted minimum lease payments	$	22,598
Present value adjustment	(3,947)
Total lease liabilities	$	18,651