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 we take possession of the building premises, whichever is earlier. Generally, our real estate leases have initial terms of three to 10 years and typically include one renewal option. Our leases have remaining terms of five months to 4.5 years. The operating leases require us to pay property taxes and operating expenses for the properties.
The following table represents the Consolidated Balance Sheet classification of the Company’s lease right of use assets and lease liabilities at December 31, 2024 and 2023 (in thousands):
| | | | | | | | | | | | | | |
| | December 31, |
| | 2024 | | 2023 |
| Operating lease right of use assets | | $ | 3,725 | | | $ | 4,496 | |
| Operating lease liabilities | | 4,013 | | | 4,821 | |
The following table represents the components of lease expense for the years ended December 31, 2024 and 2023 (in thousands):
| | | | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2024 | | 2023 |
| Operating lease expense: | | | | |
| Office leases | | $ | 1,083 | | | $ | 1,078 | |
| | | | |
| Sublease income | | (4) | | | (11) | |
| Net lease expense | | $ | 1,079 | | | $ | 1,067 | |
The following table represents the maturity of lease liabilities at December 31, 2024 (in thousands):
| | | | | | | | | | | | | | |
| | December 31, 2024 | | |
| | Office
Leases | | | | | | |
| Operating Lease Commitments | | | | | | | | |
| 2025 | | $ | 1,024 | | | | | | | |
| 2026 | | 1,007 | | | | | | | |
| 2027 | | 1,009 | | | | | | | |
| 2028 | | 881 | | | | | | | |
| 2029 | | 341 | | | | | | | |
| | | | | | | | |
| Total lease payments | | 4,262 | | | | | | | |
| Less: Present value discount | | 249 | | | | | | | |
| Present value of lease liabilities | | $ | 4,013 | | | | | | | |
Lease term and discount rate by lease type at December 31, 2024 and 2023 consisted of the following:
| | | | | | | | | | | | | | |
| | December 31, |
| | 2024 | | 2023 |
| Weighted-average remaining lease term: | | | | |
| Office leases | | 4.3 years | | 5.2 years |
| | | | |
Weighted-average discount rate: | | | | |
| Office leases | | 2.88 | % | | 2.77 | % |
| | | | |
Supplemental cash flow information related to leases for the years ended December 31, 2024 and 2023 was as follows (in thousands):
| | | | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2024 | | 2023 |
| Cash paid for amounts included in the measurement of lease liabilities for operating leases: | | | | |
| Operating cash flows | | | | |
| Office leases | | $ | 1,120 | | | $ | 1,092 | |
| | | | |
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.