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Note 10 - Leases

9 Months Ended

Sep. 30, 2020

10. Leases

The Company determines if a contract arrangement is a lease at inception and primarily enters into operating lease contracts for its branch locations, office space and certain equipment. As part of its property lease agreements, the Company may seek to include options to extend or terminate at lease when it is reasonably certain that the Company will exercise those options. The Right-of-Use (“ROU”) lease asset also includes any lease payments made and lease incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company does not possess any leases that have variable lease payments or residual value guarantees as of September 30, 2020.

Accounting Policy Elections - The Company has elected the package of practical expedients that permits the Company to not reassess its prior conclusions about lease identification, lease classification and initial direct costs. The Company also elected all of the new standard’s available transition practical expedients, including the short-term lease recognition exemption that includes not recognizing ROU assets or lease liabilities for existing short-term leases, and the practical expedient to not separate lease and non-lease components for all of the Company’s leases.

The ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The Company uses its incremental borrowing rate to determine the present value of its lease liabilities.

The following table presents the operating lease related assets and liabilities recorded on the Condensed Consolidated Balance Sheet, and the weighted-average remaining lease terms and discount rates as of September 30, 2020 and December 31, 2019:

	September 30, 2020			December 31, 2019
	($ In millions)

Operating Leases:
ROU assets	$	32.6		$	34.0
Lease liabilities	$	35.1		$	35.9

Weighted-average remaining lease term (in years)		4.9			5.4
Weighted-average discount rate		2.79	%		3.10	%

Operating lease expense was $3.1 million and $3.3 million for the three months ended September 30, 2020 and September 30, 2019, respectively, and includes short-term leases that were immaterial. Operating lease expense was $8.8 million and $10.1 million for the nine months ended September 30, 2020 and September 30, 2019, respectively, and includes short-term leases that were immaterial. Operating cash flows from operating leases were $2.2 million and $2.1 million for the three months ended September 30, 2020 and 2019, respectively. Operating cash flows from operating leases were $6.8 million and $6.2 million for the nine months ended September 30, 2020 and 2019, respectively.

The following table presents a maturity analysis of the Company’s operating lease liabilities as of September 30, 2020 and December 31, 2019, respectively.

	As of September 30, 2020
	Operating Leases
	(In thousands)
Remaining 2020	$	2,392
2021		9,235
2022		8,183
2023		6,758
2024		4,570
Thereafter		6,641
Total lease payments		37,779
Less amount of payment representing interest		(2,663	)
Total present value of lease payments	$	35,116

	As of December 31, 2019
	Operating Leases
	(In thousands)
2020	$	8,764
2021		7,923
2022		6,771
2023		5,714
2024		3,852
Thereafter		6,199
Total lease payments		39,223
Less amount of payment representing interest		(3,350	)
Total present value of lease payments	$	35,873