Leases

12 Months Ended

Dec. 31, 2020

Leases [Abstract]

LEASES

10. LEASES

As a lessee, the Company enters into leases for its bank branches, corporate offices, and certain equipment. As a lessor, the Company primarily provides financing through its equipment leasing business.

Lessee

The Company's ongoing leases have remaining lease terms of less than 1 year to 42 years, which includes renewal options that are exercised at its discretion. The Company's lease terms to calculate the lease liability and right-of-use asset include options to extend the lease when it is reasonably certain that the Company will exercise the option. The lease liability and right-of-use asset is included in Other liabilities and Other assets, respectively, in the Consolidated Statement of Financial Condition. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Lease expense is recognized on a straight-line basis over the lease term. Operating lease expense is included in Occupancy expense in the Consolidated Statement of Income. The Company accounts for lease components separately from nonlease components and subleases certain real estate to third parties.

The components of the Company's ongoing operating lease cost under ASC 842, Leases (as adopted on January 1, 2019) were as follows:

	Twelve months ended
(Dollars in thousands)	December 31, 2020		December 31, 2019
Operating lease cost (1)	$	18,690	$	19,574
Sublease income	(372)		(486)
Net lease cost	$	18,318	$	19,088

(1)Includes variable lease cost and short-term lease cost.

Rent expense under ASC 840, Leases was $12.9 million in 2018.

Supplemental balance sheet information related to operating leases was as follows:

(Dollars in thousands)	December 31, 2020			December 31, 2019
Assets
Right-of-use assets	$	150,985		$	166,221
Total assets	$	150,985		$	166,221
Liabilities
Lease liabilities	$	166,451		$	181,814
Total liabilities	$	166,451		$	181,814
Lease term and discount rate
Weighted average remaining lease term (in years)
Operating leases	19.36			19.06
Weighted average discount rate
Operating leases	4.26		%	4.17		%

Maturities of operating lease liabilities were as follows:

(Dollars in thousands)	December 31, 2020
2021	$	17,013
2022	16,976
2023	17,093
2024	15,919
2025	15,920
After 2025	180,219
Total lease payments	263,140
Less: Interest	(96,689)
Present value of lease liabilities	$	166,451

Supplemental cash flow information related to leases was as follows:

	Twelve months ended
(Dollars in thousands)	December 31, 2020		December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	18,452	$	17,606
Right of use assets obtained in exchange for new operating lease liabilities (non-cash)	—		61,693

Lessor Equipment Leasing

The Company provides equipment and small business lease financing through its leasing subsidiary, NewLane Finance®, acquired from its Beneficial acquisition. Interest income from direct financing leases where the Company is a lessor is recognized in Interest and fees on loans and leases on the Consolidated Statements of Income. The allowance for credit losses on finance leases are included within Provision for credit losses on the Consolidated Statements of Income.

The components of direct finance lease income are summarized in the table below:

	Twelve months ended
(Dollars in thousands)	December 31, 2020		December 31, 2019
Direct financing leases:
Interest income on lease receivable	$	15,805	$	9,032
Interest income on deferred fees and costs	433		427
Total direct financing lease income	$	16,238	$	9,459

Equipment leasing receivables relate to direct financing leases. The composition of the net investment in direct financing leases was as follows:

(Dollars in thousands)	December 31, 2020		December 31, 2019
Lease receivables	$	281,601	$	217,076
Unearned income	(36,669)		(28,446)
Deferred fees and costs	3,953		1,962
Net investment in direct financing leases	$	248,885	$	190,592

Future minimum lease payments to be received for direct financing leases were as follows:

(Dollars in thousands)	December 31, 2020
2021	$	90,032
2022	74,821
2023	57,434
2024	38,983
2025	18,005
After 2025	2,326
Total lease payments	$	281,601

LEASES

10. LEASES

As a lessee, the Company enters into leases for its bank branches, corporate offices, and certain equipment. As a lessor, the Company primarily provides financing through its equipment leasing business.

Lessee

The Company's ongoing leases have remaining lease terms of less than 1 year to 42 years, which includes renewal options that are exercised at its discretion. The Company's lease terms to calculate the lease liability and right-of-use asset include options to extend the lease when it is reasonably certain that the Company will exercise the option. The lease liability and right-of-use asset is included in Other liabilities and Other assets, respectively, in the Consolidated Statement of Financial Condition. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Lease expense is recognized on a straight-line basis over the lease term. Operating lease expense is included in Occupancy expense in the Consolidated Statement of Income. The Company accounts for lease components separately from nonlease components and subleases certain real estate to third parties.

The components of the Company's ongoing operating lease cost under ASC 842, Leases (as adopted on January 1, 2019) were as follows:

	Twelve months ended
(Dollars in thousands)	December 31, 2020		December 31, 2019
Operating lease cost (1)	$	18,690	$	19,574
Sublease income	(372)		(486)
Net lease cost	$	18,318	$	19,088

(1)Includes variable lease cost and short-term lease cost.

Rent expense under ASC 840, Leases was $12.9 million in 2018.

Supplemental balance sheet information related to operating leases was as follows:

(Dollars in thousands)	December 31, 2020			December 31, 2019
Assets
Right-of-use assets	$	150,985		$	166,221
Total assets	$	150,985		$	166,221
Liabilities
Lease liabilities	$	166,451		$	181,814
Total liabilities	$	166,451		$	181,814
Lease term and discount rate
Weighted average remaining lease term (in years)
Operating leases	19.36			19.06
Weighted average discount rate
Operating leases	4.26		%	4.17		%

Maturities of operating lease liabilities were as follows:

(Dollars in thousands)	December 31, 2020
2021	$	17,013
2022	16,976
2023	17,093
2024	15,919
2025	15,920
After 2025	180,219
Total lease payments	263,140
Less: Interest	(96,689)
Present value of lease liabilities	$	166,451

Supplemental cash flow information related to leases was as follows:

	Twelve months ended
(Dollars in thousands)	December 31, 2020		December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	18,452	$	17,606
Right of use assets obtained in exchange for new operating lease liabilities (non-cash)	—		61,693

Lessor Equipment Leasing

The Company provides equipment and small business lease financing through its leasing subsidiary, NewLane Finance®, acquired from its Beneficial acquisition. Interest income from direct financing leases where the Company is a lessor is recognized in Interest and fees on loans and leases on the Consolidated Statements of Income. The allowance for credit losses on finance leases are included within Provision for credit losses on the Consolidated Statements of Income.

The components of direct finance lease income are summarized in the table below:

	Twelve months ended
(Dollars in thousands)	December 31, 2020		December 31, 2019
Direct financing leases:
Interest income on lease receivable	$	15,805	$	9,032
Interest income on deferred fees and costs	433		427
Total direct financing lease income	$	16,238	$	9,459

Equipment leasing receivables relate to direct financing leases. The composition of the net investment in direct financing leases was as follows:

(Dollars in thousands)	December 31, 2020		December 31, 2019
Lease receivables	$	281,601	$	217,076
Unearned income	(36,669)		(28,446)
Deferred fees and costs	3,953		1,962
Net investment in direct financing leases	$	248,885	$	190,592

Future minimum lease payments to be received for direct financing leases were as follows:

(Dollars in thousands)	December 31, 2020
2021	$	90,032
2022	74,821
2023	57,434
2024	38,983
2025	18,005
After 2025	2,326
Total lease payments	$	281,601