RIGHT-OF-USE ASSETS AND LEASE LIABILITIES
We have 41 lease contracts, including 39 operating leases and 2 finance leases at December 31, 2025. These leases are for our branch, loan production and support services facilities. We had one lease with an S&T director for approximately $0.2 million which was included in lease expense in 2024 and 2023.
The following table presents our lease expense for operating and finance leases for the years ended December 31:
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| (dollars in thousands) | | 2025 | | 2024 | | 2023 |
| Operating lease expense | | $ | 5,083 | | | $ | 5,126 | | | $ | 5,199 | |
| Amortization of ROU assets - finance leases | | 90 | | | 90 | | | 90 | |
| Interest on lease liabilities - finance leases | | 51 | | | 56 | | | 60 | |
| Total Lease Expense | | $ | 5,224 | | | $ | 5,272 | | | $ | 5,349 | |
The following table presents our ROU assets, weighted average term and the discount rates for operating and finance leases as of December 31:
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| (dollars in thousands) | | | | 2025 | | 2024 |
| Operating Leases | | | | | | |
| ROU assets | | | | $ | 38,075 | | | $ | 40,331 | |
| Operating cash flows | | | | $ | 7,092 | | | $ | 7,253 | |
| Finance Leases | | | | | | |
| ROU assets | | | | $ | 605 | | | $ | 695 | |
| Operating cash flows | | | | $ | 51 | | | $ | 56 | |
| Financing cash flows | | | | $ | 81 | | | $ | 75 | |
| Weighted Average Lease Term - Years | | | | | | |
| Operating leases | | | | 16.7 | | 17.2 |
| Finance leases | | | | 11.0 | | 11.4 |
| Weighted Average Discount Rate | | | | | | |
| Operating leases | | | | 6.19 | % | | 5.99 | % |
| Finance leases | | | | 6.05 | % | | 6.03 | % |
The following table presents the maturity analysis of lease liabilities for operating and finance leases as of December 31, 2025:
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| (dollars in thousands) | Operating | | Finance | | Total |
| Maturity Analysis | | | | | | |
| 2026 | | $ | 4,874 | | | $ | 133 | | | $ | 5,007 | |
| 2027 | | 4,552 | | | 135 | | | 4,687 | |
| 2028 | | 4,519 | | | 130 | | | 4,649 | |
| 2029 | | 4,526 | | | 61 | | | 4,587 | |
| 2030 | | 4,467 | | | 62 | | | 4,529 | |
| Thereafter | | 52,577 | | | 625 | | | 53,202 | |
| Total | | 75,515 | | | 1,146 | | | 76,661 | |
| Less: Present value discount | | (30,677) | | | (329) | | | (31,006) | |
| Lease Liabilities | | $ | 44,838 | | | $ | 817 | | | $ | 45,655 | |
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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.