SouthState Bank Corp Leases Disclosure
Note 21—Lease Commitments
Our outstanding lease agreements are for real estate properties, including retail branch locations, operations and administration locations and stand-alone ATM locations. We have determined the number and dollar amount of our equipment leases is not material.
As of December 31, 2022 and 2021, we had operating ROU assets of $108.0 million and $110.3 million, respectively, and operating lease liabilities of $115.6 million and $115.9 million, respectively. We maintain operating leases on land and buildings for our operating centers, branch facilities and ATM locations. Most leases include one or more options to renew, with renewal terms extending up to 21 years. The exercise of renewal options is based on the sole judgment of management and what is considered to be reasonably certain given the current environment. Factors in determining whether an option is reasonably certain of exercise include, but are not limited to, the value of leasehold improvements, the value of renewal rate compared to market rates, and the presence of factors that would cause a significant economic penalty to us if the option is not exercised. Leases with an initial term of 12 months or less are not
recorded on the balance sheet and instead are recognized in lease expense on a straight-line basis over the lease term. We do not sublease any portion of these locations to third parties.
(Dollars in thousands) | Year Ended December 31, |
| ||||||||
| 2022 |
| 2021 |
| 2020 |
| ||||
Lease Cost Components: | ||||||||||
Amortization of ROU assets - finance leases | $ | 466 | $ | 466 | $ | 289 | ||||
Interest on lease liabilities - finance leases | 49 | 56 | 44 | |||||||
Operating lease cost (cost resulting from lease payments) | 17,782 | 17,236 | 14,266 | |||||||
Short-term lease cost | 820 | 446 | 404 | |||||||
Variable lease cost (cost excluded from lease payments) |
| 2,399 |
| 2,768 |
| 1,081 | ||||
Total lease cost | $ | 21,516 | $ | 20,972 | $ | 16,084 | ||||
Supplemental Cash Flow and Other Information Related to Leases: | ||||||||||
Finance lease - operating cash flows | $ | 49 | $ | 56 | $ | 42 | ||||
Finance lease - financing cash flows | 434 | 427 | 255 | |||||||
Operating lease - operating cash flows (fixed payments) |
| 17,253 |
| 16,435 |
| 12,876 | ||||
Operating lease - operating cash flows (net change asset/liability) | (13,723) | (12,790) | (9,123) | |||||||
New ROU assets - operating leases | 12,635 | 9,623 | 43,583 | |||||||
New ROU assets - finance leases | — | — | 5,374 | |||||||
Weighted - average remaining lease term (years) - finance leases | 5.42 | 6.41 | 7.40 | |||||||
Weighted - average remaining lease term (years) - operating leases |
| 10.03 |
| 10.95 |
| 11.51 | ||||
Weighted - average discount rate - finance leases | 1.7% | 1.7% | 1.7% | |||||||
Weighted - average discount rate - operating leases |
| 3.0% |
| 3.2% |
| 3.3% | ||||
Operating lease payments due: | ||||||||||
2023 | $ | 16,280 |
| |||||||
2024 |
| 14,909 |
| |||||||
2025 |
| 13,546 |
| |||||||
2026 |
| 13,135 |
| |||||||
2027 | 12,172 | |||||||||
Thereafter |
| 66,551 | ||||||||
Total undiscounted cash flows |
| 136,593 | ||||||||
Discount on cash flows | (20,983) | |||||||||
$ | 115,610 | |||||||||
As of December 31, 2022, the Company held a small number of finance leases assumed in connection to the CenterState merger completed in 2020. These leases were all real estate leases. Terms and conditions are similar to those real estate operating leases described above. Lease classifications from the acquired institutions were retained. At December 31, 2022, we did not maintain any leases with related parties, and determined that the number and dollar amount of equipment leases was immaterial. As of December 31, 2022, we had no additional operating leases that had not yet commenced.
See further discussion in Note 1—Summary of Significant Accounting Policies on page F-17 on accounting for leases.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2022 | Feb 24, 2023 | Showing above |
| 2021 | Feb 25, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Feb 21, 2020 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.