LEASES
The Company’s operating leases comprise primarily real estate leases of bank branch locations, loan production offices, and office spaces with remaining lease terms ranging from 1 year to 12 years at December 31, 2025. In addition, the Company leases ATM equipment located at certain branches with remaining lease terms of up to 7 years. Certain lease arrangements contain extension options, which are typically around five years. As these extension options are not generally considered reasonably certain of exercise, they are not included in the lease term.
The table below summarizes supplemental information related to operating leases:
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| December 31, |
| 2025 | | 2024 |
| (Dollars in thousands) |
| Operating lease ROU assets | $ | 57,443 | | | $ | 39,432 | |
| Current portion of long-term lease liabilities | 17,532 | | | 13,946 | |
| Long-term lease liabilities | 41,726 | | | 30,113 | |
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The Company assumed operating leases with the acquisition of Territorial. The ROU assets and related lease liabilities recorded for the assumed leases were $22.7 million and $21.1 million, respectively, at the close of the Territorial acquisition on April 2, 2025. ROU assets related to the acquisition reflect net favorable adjustments of approximately $1.9 million. The ROU assets from Territorial included 26 real estate and one equipment leases. See Note 19 “Business Combinations” for additional information regarding the Merger. The Company uses its incremental borrowing rate to present value lease payments in order to recognize a ROU asset and the related lease liability. The Company calculates its incremental borrowing rate by adding a spread to the FHLB borrowing interest rate at a given period. During the year ended December 31, 2025, the Company extended eight leases and, aside from the leases acquired from Territorial, entered into two new lease contracts, one of which had not yet commenced. Lease extension terms ranged from one to twelve years and the Company reassessed the ROU assets and lease liabilities related to these leases.
The table below summarizes the Company’s net operating lease cost:
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| Year Ended December 31, |
| 2025 | | 2024 | | 2023 |
| (Dollars in thousands) |
| Operating lease cost | $ | 17,393 | | | $ | 14,495 | | | $ | 15,309 | |
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| Variable lease cost | 5,385 | | | 3,495 | | | 3,341 | |
| Sublease income | (416) | | | (243) | | | (143) | |
| Net lease cost | $ | 22,362 | | | $ | 17,747 | | | $ | 18,507 | |
The table below summarizes supplemental information related to the Company’s operating leases:
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| At or for the Year Ended December 31, |
| 2025 | | 2024 |
| (Dollars in thousands) |
| Cash paid for amounts included in the measurement of lease liabilities: | | | |
| Operating cash outflows for operating leases | $ | 17,962 | | | $ | 15,721 | |
| Weighted-average remaining lease term - operating leases | 5.2 years | | 3.6 years |
| Weighted-average discount rate - operating leases | 4.00 | % | | 3.12 | % |
The table below summarizes the maturity of remaining lease liabilities:
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| December 31, 2025 |
| (Dollars in thousands) |
| 2026 | $ | 19,522 | |
| 2027 | 14,278 | |
| 2028 | 9,278 | |
| 2029 | 6,814 | |
| 2030 | 5,043 | |
| 2031 and thereafter | 11,716 | |
| Total lease payments | 66,651 | |
| Less: imputed interest | 7,393 | |
| Total lease obligations | $ | 59,258 | |
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At December 31, 2025, the Company had one operating lease commitment that had not yet commenced, totaling $1.1 million in lease payments over ten years.
The Company had no finance leases at December 31, 2025 and 2024.