LEASES

3 Months Ended

Mar. 31, 2021

Leases [Abstract]

LEASES

8. 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 41 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 unaudited Consolidated Statement of Financial Condition. Leases with an initial term of 12 months or less are not recorded on the unaudited Consolidated Statement of Financial Condition. Lease expense is recognized on a straight-line basis over the lease term. Operating lease expense is included in Occupancy expense in the unaudited Consolidated Statement of Income. The Company accounts for lease components separately from nonlease components. The Company subleases certain real estate to third parties.

The components of operating lease cost were as follows:

	Three months ended
(Dollars in thousands)	March 31, 2021		March 31, 2020
Operating lease cost (1)	$	4,654	$	4,550
Sublease income	(107)		(93)
Net lease cost	$	4,547	$	4,457

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

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

(Dollars in thousands)	March 31, 2021			December 31, 2020
Assets
Right of use assets	$	151,957		$	150,985
Total assets	$	151,957		$	150,985
Liabilities
Lease liabilities	$	166,410		$	166,451
Total liabilities	$	166,410		$	166,451
Lease term and discount rate
Weighted average remaining lease term (in years)	19.35			19.36
Weighted average discount rate	4.27		%	4.26		%

Maturities of operating lease liabilities were as follows:

(Dollars in thousands)	March 31, 2021
Remaining in 2021	$	13,009
2022	17,302
2023	17,418
2024	16,181
2025	16,186
After 2025	183,588
Total lease payments	263,684
Less: Interest	(97,274)
Present value of lease liabilities	$	166,410

Supplemental cash flow information related to operating leases was as follows:

	Three months ended
(Dollars in thousands)	March 31, 2021		March 31, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	4,382	$	4,667

Lessor Equipment Leasing

The Company provides equipment and small business lease financing through its leasing subsidiary, NewLane Finance®. 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 is included in (Recovery of) provision for credit losses on the Consolidated Statements of Income.

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

	Three months ended
(Dollars in thousands)	March 31, 2021		March 31, 2020
Direct financing leases:
Interest income on lease receivable	$	4,623	$	3,566
Interest income on deferred fees and costs, net	(318)		94
Total direct financing lease net interest income	$	4,305	$	3,660

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

(Dollars in thousands)	March 31, 2021		December 31, 2020
Lease receivables	$	299,445	$	281,601
Unearned income	(39,179)		(36,669)
Deferred fees and costs	4,671		3,953
Net investment in direct financing leases	$	264,937	$	248,885

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

(Dollars in thousands)	March 31, 2021
Remaining in 2021	$	72,911
2022	84,342
2023	66,683
2024	45,960
2025	25,794
After 2025	3,755
Total lease payments	$	299,445

LEASES

8. 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 41 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 unaudited Consolidated Statement of Financial Condition. Leases with an initial term of 12 months or less are not recorded on the unaudited Consolidated Statement of Financial Condition. Lease expense is recognized on a straight-line basis over the lease term. Operating lease expense is included in Occupancy expense in the unaudited Consolidated Statement of Income. The Company accounts for lease components separately from nonlease components. The Company subleases certain real estate to third parties.

The components of operating lease cost were as follows:

	Three months ended
(Dollars in thousands)	March 31, 2021		March 31, 2020
Operating lease cost (1)	$	4,654	$	4,550
Sublease income	(107)		(93)
Net lease cost	$	4,547	$	4,457

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

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

(Dollars in thousands)	March 31, 2021			December 31, 2020
Assets
Right of use assets	$	151,957		$	150,985
Total assets	$	151,957		$	150,985
Liabilities
Lease liabilities	$	166,410		$	166,451
Total liabilities	$	166,410		$	166,451
Lease term and discount rate
Weighted average remaining lease term (in years)	19.35			19.36
Weighted average discount rate	4.27		%	4.26		%

Maturities of operating lease liabilities were as follows:

(Dollars in thousands)	March 31, 2021
Remaining in 2021	$	13,009
2022	17,302
2023	17,418
2024	16,181
2025	16,186
After 2025	183,588
Total lease payments	263,684
Less: Interest	(97,274)
Present value of lease liabilities	$	166,410

Supplemental cash flow information related to operating leases was as follows:

	Three months ended
(Dollars in thousands)	March 31, 2021		March 31, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	4,382	$	4,667

Lessor Equipment Leasing

The Company provides equipment and small business lease financing through its leasing subsidiary, NewLane Finance®. 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 is included in (Recovery of) provision for credit losses on the Consolidated Statements of Income.

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

	Three months ended
(Dollars in thousands)	March 31, 2021		March 31, 2020
Direct financing leases:
Interest income on lease receivable	$	4,623	$	3,566
Interest income on deferred fees and costs, net	(318)		94
Total direct financing lease net interest income	$	4,305	$	3,660

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

(Dollars in thousands)	March 31, 2021		December 31, 2020
Lease receivables	$	299,445	$	281,601
Unearned income	(39,179)		(36,669)
Deferred fees and costs	4,671		3,953
Net investment in direct financing leases	$	264,937	$	248,885

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

(Dollars in thousands)	March 31, 2021
Remaining in 2021	$	72,911
2022	84,342
2023	66,683
2024	45,960
2025	25,794
After 2025	3,755
Total lease payments	$	299,445