RIGHT-OF-USE LEASE ASSETS AND LEASE LIABILITIES
The Company accounts for its leases in accordance with ASC Topic 842, Leases, which requires recognition of most leases, including operating leases, with a term greater than 12 months on the balance sheet. At lease commencement, the lease contract is reviewed to determine whether the contract is a finance lease or an operating lease; a lease liability is recognized on a discounted basis, related to the Company’s obligation to make lease payments; and a right-of-use asset is also recognized related to the Company’s right to use, or control the use of, a specified asset for the lease term. The Company accounts for lease and non-lease components (such as taxes, insurance and common area maintenance costs) separately as such amounts are generally readily determinable under the lease contracts. Lease payments over the expected term are discounted using the Company’s FHLB advance rates for borrowings of similar term. If it is reasonably certain that a renewal or termination option will be exercised, the effects of such options are included in the determination of the expected lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term.
The Company’s leases are classified as operating leases with a term, including expected renewal or termination options, greater than one year, and are related to certain office facilities and office equipment. The following table presents information as of December 31, 2025 and 2024 related to the Company’s right-of-use lease assets, included in premises and equipment, and lease liabilities, included in accrued interest and other liabilities.
| | | | | | | | | | | |
| (Dollars in thousands) | 2025 | | 2024 |
| Right-of-use lease assets | $ | 51,203 | | | $ | 67,224 | |
| Lease liabilities | 53,212 | | | 69,319 | |
| | | |
| Weighted average remaining lease term | 8.04 years | | 8.33 years |
| Weighted average discount rate | 4.18 | % | | 3.81 | % |
Operating lease cost for the years ended December 31, 2025, 2024 and 2023 was $15.7 million, $16.1 million, and $15.7 million, respectively.
The Company’s remaining undiscounted minimum lease payments on operating leases as of December 31, 2025 are as follows:
| | | | | |
| Year | (In thousands) |
| 2026 | $ | 11,629 | |
| 2027 | 9,279 | |
| 2028 | 7,775 | |
| 2029 | 6,734 | |
| 2030 | 5,723 | |
| Thereafter | 22,548 | |
| Total undiscounted minimum lease payments | 63,688 | |
| Less: Net present value adjustment | 10,476 | |
| Lease liability included in other liabilities | $ | 53,212 | |
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.