Leases
(In Thousands)
The Company enters into leases in both lessor and lessee capacities.
Lessor Arrangements
The Company finances various types of equipment arrangements for customers through operating, direct financing and sales-type leases. As of December 31, 2025 and 2024, the net investment in these leases was $29,531 and $30,846, comprised of $25,124 and $26,655 in lease receivables, $8,035 and $7,961 in residual balances and $3,628 and $3,770 in deferred income, respectively. In order to mitigate potential exposure to residual asset risk, the Company utilizes first amendment or terminal rental adjustment clause leases.
For the years ended December 31, 2025 and 2024, the Company generated $960 and $1,080 in income from these leases, respectively, which is included in interest income on loans on the Consolidated Statements of Income.
The maturities of the lessor arrangements outstanding at December 31, 2025 is presented in the table below.
| | | | | |
| 2026 | $ | 409 | |
| 2027 | 123 | |
| 2028 | 380 | |
| 2029 | 6,983 | |
| 2030 | 2,640 | |
| Thereafter | 18,996 | |
| Total lease receivables | $ | 29,531 | |
Lessee Arrangements
As of December 31, 2025 and 2024, right-of-use assets totaled $55,920 and $46,811 and lease liabilities totaled $57,227 and $49,385, respectively. These amounts are included in “Premises and equipment, net” and “Other liabilities” on the Consolidated Balance Sheets. The table below provides the components of lease cost and supplemental information for the periods presented.
| | | | | | | | | | | |
| Year ended December 31, |
| 2025 | | 2024 |
| Operating lease cost (cost resulting from lease payments) | $ | 8,003 | | | $ | 6,705 | |
| Short-term lease cost | 102 | | | 51 | |
| Variable lease cost (cost excluded from lease payments) | 919 | | | 960 | |
| Sublease income | (1,652) | | | (639) | |
| Net lease cost | $ | 7,372 | | | $ | 7,077 | |
| Operating lease - operating cash flows (fixed payments) | 7,643 | | | 6,714 | |
| Operating lease - operating cash flows (liability reduction) | 5,587 | | | 4,943 | |
| Weighted average lease term - operating leases (in years) (at period end) | 16.31 | | 18.11 |
| Weighted average discount rate - operating leases (at period end) | 3.86 | % | | 3.55 | % |
| | | |
| Right-of-use assets obtained in exchange for new lease liabilities - operating leases | $ | 18,925 | | | $ | 4,630 | |
The maturities of the lessee arrangements outstanding at December 31, 2025 are presented in the table below.
| | | | | |
| 2026 | $ | 6,939 | |
| 2027 | 6,531 | |
| 2028 | 6,296 | |
| 2029 | 6,117 | |
| 2030 | 5,844 | |
| Thereafter | 45,424 | |
| Total undiscounted cash flows | 77,151 | |
| Discount on cash flows | (19,924) | |
| Total operating lease liabilities | $ | 57,227 | |
Rental expense was $7,545, $6,136, and $6,859 for 2025, 2024, and 2023, respectively.
For more information on lease accounting, see Note 1, “Significant Accounting Policies” and on lease financing receivables, see Note 4, “Loans.”