OPERATING LEASES
The Company evaluates all contracts at commencement to determine if a lease is present. In accordance with ASC Topic 842, leases are defined as either operating or finance leases. The Company's lease contracts are classified as operating leases and create operating ROU assets and corresponding lease liabilities on the Consolidated Statements of Financial Condition. The leases are primarily ROU assets of land and building for branch and loan production locations. ROU assets are reported in Accrued Interest Receivable and Other Assets and the related lease liabilities in Accrued Interest Payable and Other Liabilities on the Consolidated Statements of Financial Condition.
The following tables present the lease expense, ROU assets, weighted average term, discount rate and maturity analysis of lease liabilities for operating leases for the periods and dates indicated.
| | | | | | | | |
| Year Ended December 31, | 2025 | 2024 |
| (Dollars in Thousands) | | |
| | |
| Operating | $ | 499 | | $ | 432 | |
| | |
| Variable | 48 | | 38 | |
| Total Lease Expense | $ | 547 | | $ | 470 | |
| | | | | | | | |
| December 31, | 2025 | 2024 |
| (Dollars in Thousands) | | |
| | |
| Operating Leases: | | |
| ROU Assets | $ | 2,529 | | $ | 2,761 | |
| Weighted Average Lease Term in Years | 10.42 | 11.07 |
| Weighted Average Discount Rate | 4.25 | % | 4.18 | % |
| | | | | |
| December 31, | 2025 |
| (Dollars in Thousands) | |
| |
| Maturity Analysis: | |
| Due in One Year | $ | 471 | |
| Due After One Year to Two Years | 411 | |
| Due After Two Years to Three Years | 376 | |
| Due After Three Years to Four Years | 288 | |
| Due After Four to Five Years | 266 | |
| Due After Five Years | 1,541 | |
| Total | $ | 3,353 | |
| Less: Present Value Discount | 746 | |
| Lease Liabilities | $ | 2,607 | |
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.