Note 13 — Leases

The Company enters into leases in the normal course of business primarily for financial centers, back-office operations locations, business development offices, information technology data centers and information technology equipment.  The Company’s leases have remaining terms ranging from one to thirteen years, some of which include renewal or termination options to extend the lease for up to five years.

The Company includes lease extension and termination options in the lease term if, after considering relevant economic factors, it is reasonably certain the Company will exercise the option.  In addition, the Company has elected to account for any non-lease components in its real estate leases as part of the associated lease component.  The Company has also elected not to recognize leases with original lease terms of 12 months or less (short-term leases) on the Company’s balance sheet.

Leases are classified as operating or finance leases at the lease commencement date.  Lease expense for operating leases and short-term leases is recognized on a straight-line basis over the term of the lease.  Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.  Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of the lease payments over the lease term.

As of June 30, 2021, the outstanding balances for our right-of-use asset and lease liability were $47.4 million and $50.4 million, respectively. The outstanding balances of the right-of-use asset and lease liability were $52.2 million and $54.0 million, respectively, as of December 31, 2020.

In determining the discount rates, since most of our leases do not provide an implicit rate, we used our incremental borrowing rate provided by the FHLB of San Francisco based on the information available at the commencement date to calculate the present value of lease payments.

At June 30, 2021, future minimum rental commitments under these non-cancelable operating leases, with initial or remaining terms of one year or more, were as follows:

Weighted average remaining lease terms for the Company's operating leases were 8.39 years and 8.75 years as of June 30, 2021 and December 31, 2020, respectively. Weighted average discount rates used for the Company's operating leases were 2.42 percent and 2.43 percent as of June 30, 2021 and December 31, 2020, respectively. Net lease expense recognized for the three months ended June 30, 2021 and 2020 was $2.0 million and $2.0 million, respectively. For each of the six months ended June 30, 2021 and 2020, net lease expense recognized was $4.1 million. This included operating lease costs of $1.9 million for each of the three months ended June 30, 2021 and 2020. For the six months ended June 30, 2021 and 2020, operating lease costs were $3.9 million. Sublease income for operating leases was inconsequential for the three and six months ended June 30, 2021 and 2020.

Cash paid and included in cash flows from operating activities for amounts used in the measurement of the lease liability of the Company's operating leases was $1.9 million and $3.9 million for each of the three and six months ended June 30, 2021 and 2020.