Leases
We lease three retail branches, a loan office, and a parcel of land for a retail branch location. These leases generally have remaining terms of 10 years or less except the land lease, which has a remaining lease term of eighty-two years. Some of the leases may include options to renew the leases. The exercise of lease renewal is at our sole discretion.
Our right-of-use assets and lease liabilities for operating leases are included in other assets and other liabilities on our consolidated balance sheets. We use the interest rate implicit in the lease or incremental borrowing rate in determining the present value of lease payments. At December 31, 2024, we had future minimum lease payments of $26.9 million and imputed interest of $24.7 million and lease liability of $2.2 million. The weighted average remaining lease term was 51.3 years and weighted average discount rate was 7.27% at December 31, 2024, respectively. Our operating lease expense is included in occupancy expenses within non-interest expense in our consolidated statements of income. Total operating lease expense consists of operating lease cost, which is recognized on a straight-line basis over the lease term, and variable lease cost, which is recognized based on actual amounts incurred.
The components of the Company's ongoing operating lease cost were as follows:
| | | | | | | | | | | | | | |
| | Twelve Months Ended |
| | (Dollars in thousands) |
| | 2024 | | 2023 |
| Lease Cost | | $ | 409 | | | $ | 405 | |
| Sublease income | | (219) | | | (217) | |
| Net lease cost | | $ | 190 | | | $ | 188 | |
The following table presents information about our operating leases during the year ended December 31, 2024.
| | | | | |
| Dollars in thousands | 2024 |
| Lease right of use assets (ROU) | $ | 2,212 | |
| Lease liabilities | $ | 2,212 | |
The following table presents future undiscounted cash flows on our operating leases:
| | | | | |
| Years Ended December 31, | (Dollars in thousands) |
| 2025 | $ | 365 | |
| 2026 | 283 | |
| 2027 | 187 | |
| 2028 | 192 | |
| 2029 | 210 | |
| Thereafter | 25,712 | |
| Total undiscounted lease payments | $ | 26,949 | |
| Impact of present value discount | $ | (24,737) | |
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.