LEASES

6 Months Ended

Jun. 30, 2020

Leases [Abstract]

Leases

NOTE 14 – LEASES

The Company leases real estate properties for its network of bank branches, financial centers and corporate offices. All of the Company’s leases are currently classified as operating. Most lease agreements include one or more options to renew, with renewal terms that can extend the original lease term from one to twenty years or more. The Company does not sublease any of its leased real estate properties.

At June 30, 2020, ROU assets and lease liabilities totaled $70.2 million and $81.2 million, respectively. For the three and six months ended June 30, 2020, the Company recognized total operating lease expense in the amount of $3.4 million and $6.1 million, respectively, compared to $2.8 million and $5.7 million, respectively, for the three and six months ended June 30, 2019. Cash paid for amounts included in the measurement of lease liabilities for the three and six months ended June 30, 2020, was $3.3 million and $6.0 million, respectively, compared to $2.2 million and $4.3 million, respectively, for the three and six months ended June 30, 2019, and is included in net cash provided by operating activities in our Condensed Consolidated Statements of Cash Flows.

The Company added two locations from the acquisition of RPJ during the first quarter of 2020. The associated new ROU asset obtained in exchange for lease obligations totaled $0.3 million.

On April 1, 2020, in conjunction with the acquisition of Revere, the Company added 15 additional operating leases (at 12 locations), one of which is expected to commence operations in 2021. The associated new ROU asset of $7.4 million obtained in exchange for lease obligations of $8.7 million was recorded at the close of the acquisition. The ROU asset recorded at acquisition included $1.1 million for acquisition related unfavorable fair value marks and a tenant allowance of $0.2 million. During the current quarter, subsequent to and resulting from the acquisition, the Company determined that due to market overlap and other synergies, the Company would more-likely-than-not terminate seven of the acquired leases, comprising of six branch locations and one office space location, prior to the end of 2020. The decision resulted in an impairment charge of $2.3 million, which was recorded to merger and acquisition expense in the Condensed Consolidated Statements of Income/ (Loss). The Company estimated the fair value of the leases to be equal to the cash payments remaining between the impairment date and the anticipated abandonment date.

At June 30, 2020, the maturities of the Company’s operating lease liabilities were as follows:

(In thousands)	Amount
Maturity:
Remaining for 2020	$	6,701
2021		12,879
2022		11,361
2023		11,193
2024		9,113
Thereafter		44,407
Total undiscounted lease payments		95,654
Less: Present value discount		(14,439)
Lease Liability	$	81,215

At June 30, 2020, the weighted average remaining lease term was 9.6 years and the weighted average operating discount rate used to determine the operating lease liability was 3.07%.

The Company recognized a lease liability of $2.1 million and ROU asset of $1.4 million for one additional operating lease that has not yet commenced operations at June 30, 2020 and is expected to commence operations in 2021. This ROU asset includes approximately $0.2 million of tenant allowance for improvements to the space and $0.5 million for an acquisition related unfavorable fair value market adjustment. The Company does not have any lease arrangements with any of its related parties as of June 30, 2020.