LEASES
The Company leases certain office facilities under long-term operating lease agreements. The leases expire at various dates through 2044 and some include renewal options. Many of these leases require the payment of property taxes, insurance premiums, maintenance, utilities and other costs. In many cases, rentals are subject to increase in relation to a cost-of-living index. The Company accounts for lease and non-lease components together as a single lease component. The Company determines if an arrangement is a lease at inception. Operating leases are recorded as a right-of-use ("ROU") lease assets and are included in other assets on the consolidated balance sheet. The Company’s corresponding lease obligations are included in other liabilities on the consolidated balance sheet. ROU lease assets represent the Company’s right to use an underlying asset for the lease term and lease obligations represent the Company’s obligation to make lease payments arising from the lease. Operating ROU lease assets and obligations are recognized at the commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The ROU lease asset also includes any lease payments made and excludes lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.
NOTE 22 - LEASES (continued)
Lease expense for lease payments is recognized on a straight-line basis over the lease term. Short-term leases are leases having a term of twelve months or less. The Company recognizes short-term leases on a straight-line basis and does not record a related lease asset or liability for such leases, as allowed as practical expedient of the lease standard.
The following is a maturity analysis of the operating lease liabilities as of December 31, 2025:
| | | | | |
| Years ending December 31, (in thousands) | Operating Lease
Obligation |
| 2026 | $ | 971 | |
| 2027 | 919 | |
| 2028 | 869 | |
| 2029 | 743 | |
| 2030 | 661 | |
| 2031 and thereafter | 5,191 | |
| Total undiscounted lease payments | 9,354 | |
| Less imputed interest | (2,286) | |
| Lease liability | $ | 7,068 | |
| Right-of-use asset | $ | 7,068 | |
| | | | | | | | | | | | | | | | | |
| Year Ended | | Year Ended | | Year Ended |
| (dollars in thousands) | December 31, 2025 | | December 31, 2024 | | December 31, 2023 |
| Lease cost | | | | | |
| Operating lease cost | $ | 863 | | | $ | 742 | | | $ | 724 | |
| Short-term lease cost | 4 | | | 7 | | | 18 | |
| Total lease cost | $ | 867 | | | $ | 749 | | | $ | 742 | |
| | | | | | | | | | | | | | | | | |
| Other information | | | | | |
| Operating cash outflows from operating leases | $ | 863 | | | $ | 742 | | | $ | 724 | |
| Weighted-average remaining lease term - operating leases | 6.6 years | | 7.6 years | | 6.3 years |
| Weighted average discount rate - operating leases | 3.8 | % | | 3.7 | % | | 2.5 | % |
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.