LEASES

9 Months Ended

Sep. 30, 2021

LEASES

LEASES

9.LEASES

As a result of the Merger, the Company acquired $45.6 million of operating lease assets and $45.3 million of operating lease liabilities on the Merger Date.  

During the nine months ended September 30, 2021, the Company elected to terminate three leases in connection with the combination of three branches into other locations, which resulted in a decrease to the Company’s operating lease liabilities of $3.7 million, and an early termination fee of $4.0 million.  The early termination fee is reported in branch restructuring costs in the consolidated statements of income.  

The Company recognizes operating lease assets and corresponding lease liabilities related to its office facilities and retail branches. The operating lease assets represent the Company’s right to use an underlying asset for the lease term, and the lease liability represents the Company’s obligation to make lease payments over the lease term.

The operating lease asset and lease liability are determined at the commencement date of the lease based on the present value of the lease payments. As most of our leases do not provide an implicit rate, the Company used its incremental borrowing rate, the rate of interest to borrow on a collateralized basis for a similar term, at the lease commencement date.

The Company made a policy election to exclude the recognition requirements of ASU 2016-02 to short-term leases, those leases with original terms of 12 months or less. Short-term lease payments are recognized in the income statement on a straight-line basis over the lease term. Certain leases may include one or more options to renew. The exercise of lease renewal options is typically at the Company’s discretion and are included in the operating lease liability if it is reasonably certain that the renewal option will be exercised. Certain real estate leases may contain lease and non-lease components, such as common area maintenance charges, real estate taxes, and insurance, which are generally accounted for separately and are not included in the measurement of the lease liability since they are generally able to be segregated. The Company does not sublease any of its leased properties. The Company does not lease properties from any related parties.

Maturities of the Company’s operating lease liabilities at September 30, 2021 are as follows:

	Rent to be
(In thousands)	Capitalized
2021	$	3,374
2022		11,006
2023		9,301
2024		9,186
2025		8,941
Thereafter		25,439
Total undiscounted lease payments		67,247
Less amounts representing interest		(4,377)
Operating lease liabilities	$	62,870

Other information related to operating leases was as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In thousands)	2021		2020		2021		2020
Operating lease cost	$	4,012	$	1,636	$	11,178	$	4,867
Cash paid for amounts included in the measurement of operating lease liabilities		3,724		1,745		10,496		5,295

The weighted average remaining lease term at September 30, 2021 and December 31, 2020 was 6.9 years and 6.5 years, respectively. The weighted average discount rate at September 30, 2021 and December 31, 2020 was 1.82% and 3.23%, respectively.