Leases
We have operating leases for branch locations, loan production offices, and our corporate office. The term for our leases begins on the date we become legally obligated for the rent payments or take possession of the premises, whichever is earlier. Our real estate leases have initial terms of one to 10.5 years and typically include one renewal option. As of December 31, 2025, our leases had remaining terms ranging from two months to 4.4 years. The operating leases require us to pay property taxes and operating expenses for the properties. We also have finance leases for certain equipment, including copier machines, which had an initial term of 5 years and a remaining term of approximately 4.0 years as of December 31, 2025.
The following table represents the Consolidated Balance Sheet classification of the Company’s lease right of use assets and lease liabilities at December 31, 2025 and 2024 (in thousands):
| | | | | | | | | | | | | | |
| | December 31, |
| | 2025 | | 2024 |
| Operating lease right of use assets | | $ | 3,319 | | | $ | 3,725 | |
| Finance lease right-of-use assets | | 104 | | | — | |
| Operating lease liabilities | | 3,565 | | | 4,013 | |
| Finance lease liabilities | | 106 | | | — | |
The following table represents the components of lease expense for the years ended December 31, 2025 and 2024 (in thousands):
| | | | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2025 | | 2024 |
| Operating lease expense: | | | | |
| Operating leases | | $ | 1,106 | | | $ | 1,083 | |
| Finance leases | | | | |
| Amortization of right-of-use assets | | 26 | | | |
| Interest on lease liabilities | | 5 | | | |
| Sublease income | | — | | | (4) | |
| Net lease expense | | $ | 1,137 | | | $ | 1,079 | |
The following table represents the maturity of lease liabilities at December 31, 2025 (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | December 31, 2025 | | | | | | | | | | |
| | Operating
Leases | | Finance Leases | | Total Lease Payments | | | | | | | | | | | | | | |
| Operating Lease Commitments | | | | | | | | | | | | | | | | | | | | |
| 2026 | | $ | 1,133 | | | $ | 29 | | | $ | 1,162 | | | | | | | | | | | | | | | |
| 2027 | | 1,125 | | | 29 | | | 1,154 | | | | | | | | | | | | | | | |
| 2028 | | 996 | | | 29 | | | 1,025 | | | | | | | | | | | | | | | |
| 2029 | | 456 | | | 29 | | | 485 | | | | | | | | | | | | | | | |
| 2030 | | 48 | | | — | | | 48 | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Total lease payments | | 3,758 | | | 116 | | | 3,874 | | | | | | | | | | | | | | | |
| Less: Present value discount | | 193 | | | 10 | | | 203 | | | | | | | | | | | | | | | |
| Present value of lease liabilities | | $ | 3,565 | | | $ | 106 | | | $ | 3,671 | | | | | | | | | | | | | | | |
Lease term and discount rate by lease type at December 31, 2025 and 2024 consisted of the following:
| | | | | | | | | | | | | | |
| | December 31, |
| | 2025 | | 2024 |
| Weighted-average remaining lease term: | | | | |
| Office leases | | 3.5 years | | 4.3 years |
| Finance leases | | 4.0 years | | 0.0 years |
Weighted-average discount rate: | | | | |
| Office leases | | 3.08 | % | | 2.88 | % |
| Finance leases | | 4.41 | % | | — | % |
Supplemental cash flow information related to leases for the years ended December 31, 2025 and 2024 was as follows (in thousands):
| | | | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2025 | | 2024 |
| Cash paid for amounts included in the measurement of lease liabilities for operating leases: | | | | |
| Operating cash flows: | | | | |
| Office leases | | $ | 1,147 | | | $ | 1,120 | |
| Finance leases | | 5 | | | — | |
| Financing cash flows: | | | | |
| Finance leases | | 24 | | | — | |
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.