Leases
The Company enters into leases for certain retail branches, land, and office space. Operating leases are included in other assets and the lease liability is included in other liabilities in our balance sheets. The Company does not have any finance leases.
Lease right-of-use (ROU) assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company uses its incremental borrowing rate at commencement date in determining the present value of lease payments when the rate implicit in a lease is not known. The Company's incremental borrowing rate is based on the FHLB amortizing advance rate, adjusted for the lease term and other factors. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.
The Company's leases are generally for periods of five to 15 years with various renewal options. The exercise of such lease renewal options is not included in the present value of lease obligations unless it is reasonably certain that the option will be exercised. The Company has lease agreements which contain both lease and non-lease components such as common area maintenance charges, real estate taxes, and insurance. Non-lease components are not included in the measurement of the lease liability and are recognized in expense when incurred. The Company has elected not to recognize short-term leases, with original lease terms of twelve months or less, on the Company's balance sheet. Certain of the Company's lease arrangements include rental payments adjusted periodically for inflation. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.
Supplemental balance sheet information related to leases is presented in the table below as of December 31, 2025 and 2024:
| | | | | | | | | | | |
| 2025 | | 2024 |
| | | |
| Operating lease assets | $ | 629 | | | $ | 393 | |
| Total lease ROU assets | $ | 629 | | | $ | 393 | |
| | | |
| Operating lease liabilities | $ | 643 | | | $ | 404 | |
| Total lease liabilities | $ | 643 | | | $ | 404 | |
| | | |
| Weighted average remaining lease term (years) | | | |
| Operating leases | 7.1 | | 6.2 |
| Weighted average discount rate | | | |
| Operating leases | 3.86 | % | | 3.37 | % |
The table below presents the components of lease expense for the years ended December 31, 2025 and 2024:
| | | | | | | | | | | |
| 2025 | | 2024 |
| | | |
| Lease cost: | | | |
| Operating lease cost | $ | 104 | | | $ | 92 | |
| Total lease cost: | $ | 104 | | | $ | 92 | |
Supplemental cash flow information related to leases is presented in the tables below.
| | | | | |
| Maturity of lease liabilities | |
| 2026 | $ | 99 | |
| 2027 | 101 | |
| 2028 | 103 | |
| 2029 | 88 | |
| 2030 | 84 | |
| Thereafter | 270 | |
| Total lease payments | $ | 745 | |
| Less: Present value discount | 102 | |
| Present value of lease liabilities | $ | 643 | |
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.