Leases

6 Months Ended

Jun. 30, 2021

At June 30, 2021, the Company had 34 operating leases under which the Company is a lessee. Of the 34 leases, 22 leases were for real property, including leases for 18 of the Company’s branch offices and 4 leases for general office space including the Company’s headquarters. All of the real property leases include one or more options to extend the lease term. Four of the branch office leases are for the land on which the branch offices are located and the Company owns the leasehold improvements.

In addition, the Company had 12 leases for office equipment, consisting primarily of copiers and printers. None of these leases include extensions and generally have three to five year terms.

At June 30, 2021, the Company did not have any finance leases.

For the three and six months ended June 30, 2021 and 2020, the Company recognized rent and equipment expense associated with leases as follows:


(In thousands)	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Operating lease cost:
Fixed rent expense and equipment expense	$	622	$	670	$	1,289	$	1,337
Variable rent expense	—		—		—		—
Short-term lease expense	4		11		6		23
Sublease income	—		—		—		—
Net lease cost	$	626	$	681	$	1,295	$	1,360


(In thousands)	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Lease cost - occupancy expense	$	619	$	626	$	1,232	$	1,240
Lease cost - other expense	7		55		63		120
Net lease cost	$	626	$	681	$	1,295	$	1,360

For the six months ended June 30, 2021 and 2020, the following cash and non-cash activities were associated with the leases:


	Six Months Ended June 30,
(In thousands)	2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,229	$	1,266

Non-cash investing and financing activities:
Additions to right-of-use assets obtained from:
Net lease cost	—		—
New operating lease liabilities	11		144

The future payments due under operating leases at June 30, 2021 and 2020 were as follows:


	At June 30,
(In thousands)	2021		2020
Due in less than one year	$	2,113	$	2,058
Due in one year but less than two years	2,056		2,030
Due in two years but less than three years	1,930		2,021
Due in three years but less than four years	1,766		1,929
Due in four years but less than five years	1,682		1,766
Thereafter	12,601		14,243
Total future payments	$	22,148	$	24,047
Less: Implied interest	(5,536)		(6,011)
Total lease liability	$	16,612	$	18,036

At June 30, 2021 and 2020, future payments due under operating leases were based on ASC Topic 842 and included, in general, at least one lease renewal option on all real estate leases except on one land lease where all renewal options were included. As of June 30, 2021, the weighted-average remaining lease term for all operating leases was 14.5 years. The weighted average discount rate associated with the operating leases at June 30, 2021 was 3.32%.

1ST CONSTITUTION BANCORP 10-Q