Lease Commitments
The Corporation’s operating leases consist of various retail branch locations and loan production offices. As of December 31, 2025, the Corporation’s leases have remaining lease terms ranging from 8 months to 14 years, including extension options.
The Corporation’s leases include fixed rental payments, and certain of our leases also include variable rental payments where lease payments may increase at pre-determined dates based on the change in the consumer price index. The Corporation’s lease agreements include gross leases as well as leases in which we make separate payments to the lessor for items such as the property taxes assessed on the property or a portion of the common area maintenance associated with the property. We have elected the practical expedient not to separate lease and non-lease components for all of our building leases. The Corporation also elected to not recognize ROU assets and lease liabilities for short-term leases.
As of December 31, 2025, the Corporation’s ROU assets and related lease liabilities were $10.4 million and $10.7 million, respectively. As of December 31, 2024, the Corporation’s ROU assets and related lease liabilities were $6.9 million and $7.0 million, respectively. . These amounts are included within other assets and other liabilities, respectively.
The components of lease expense were as follows:
| | | | | | | | | | | |
| Year Ended
December 31, |
| (dollars in thousands) | 2025 | | 2024 |
| Operating lease expense | $ | 1,739 | | | $ | 3,031 | |
| Short term lease expense | 35 | | | — | |
| | | |
| Total lease expense | $ | 1,775 | | | $ | 3,031 | |
Operating lease expense decreased $1.4 million, net, due to fees, credits and other disposal costs for the early termination of the Blue Bell lease.
Supplemental cash flow information related to leases was as follows:
| | | | | | | | | | | |
| (dollars in thousands) | December 31, 2025 | | December 31, 2024 |
| Cash paid for amounts included in the measurement of lease liabilities | | | |
| Operating cash flows from operating leases | $ | 1,553 | | | $ | 2,890 | |
| ROU asset obtained in exchange for lease liabilities | 4,941 | | | (491) | |
Maturities of operating lease liabilities were as follows for the period indicated:
| | | | | |
| (dollars in thousands) | December 31, 2025 |
| 2026 | $ | 1,651 | |
| 2027 | 1,692 |
| 2028 | 1,256 |
| 2029 | 1,260 |
| 2030 | 1,028 |
| Thereafter | 6,666 |
| $ | 13,553 | |
| Less: Present value discount | (2,823) | |
| Total operating lease liabilities | $ | 10,730 | |
As of December 31, 2025, the weighted-average remaining lease term for all operating leases, including extension options that the Corporation is reasonably certain will be exercised for retail branch locations, is 10.3 years.
Because we generally do not have access to the rate implicit in the lease, we utilize our incremental borrowing rate as the discount rate. The weighted average discount rate associated with operating leases as of December 31, 2025 and 2024 was 4.13% and 3.09%, respectively.