Leasing
Lessor Arrangements
The Company leases certain types of machinery and equipment to its customers through sales-type and direct financing leases as part of its equipment financing portfolio. These leases generally have remaining lease terms of one to ten years, some of which include renewal options and/or options for the lessee to purchase the asset near or at the end of the lease term. The Company recognized interest income from its sales-type and direct financing lessor activities of $23.2 million, $19.3 million, and $18.7 million for the years ended December 31, 2025, 2024, and 2023, respectively. The Company does not have any significant operating leases in which it is the lessor. Additional information regarding the Company’s equipment financing portfolio can be found within Note 4: Loans and Leases.
The following table summarizes the components of the Company’s net investment in its sales-type and direct financing leases: | | | | | | | | |
| December 31, |
| (In thousands) | 2025 | 2024 |
| Lease receivables | $ | 482,274 | $ | 394,489 |
Unguaranteed residual values (1) | 65,452 | 63,014 |
| Total net investment | $ | 547,726 | $ | 457,503 |
(1)The Company performs quarterly reviews of residual values associated with its equipment finance leasing portfolio considering factors such as the subject equipment, structure of the transaction, industry, prior experience with the lessee, and other factors that may impact the residual value to assess for impairment.
The following table reconciles undiscounted future lease payments to the total sales-type and direct financing leases’ net investment: | | | | | |
| (In thousands) | December 31, 2025 |
| 2026 | $ | 168,284 |
| 2027 | 119,080 |
| 2028 | 109,704 |
| 2029 | 70,740 |
| 2030 | 42,181 |
| Thereafter | 111,104 |
| Total lease payments receivable | 621,093 |
| Present value adjustment | (73,367) |
| Total net investment | $ | 547,726 |
Lessee Arrangements
The Company enters into operating leases in the normal course of business, primarily for office space, banking centers, and other operational activities. These leases generally have remaining lease terms of one to ten years. The Company does not have any finance leases in which it is the lessee, nor any significant sub-lease arrangements.
The following table summarizes the Company’s ROU lease assets and operating lease liabilities: | | | | | | | | | | | | | | |
| | | December 31, |
| (In thousands) | Consolidated Balance Sheet Line Item | | 2025 | 2024 |
| ROU lease assets, net | Premises and equipment, net | | $ | 176,672 | $ | 163,827 |
| Operating lease liabilities | Accrued expenses and other liabilities | | 202,742 | 193,188 |
The following table summarizes the components of operating lease expense and other relevant information: | | | | | | | | | | | |
| Years ended December 31, |
| (Dollars in thousands) | 2025 | 2024 | 2023 |
| Lease Cost: | | | |
| Operating lease cost | $ | 37,430 | $ | 36,235 | $ | 33,880 |
| Variable lease cost | 6,970 | 4,880 | 4,617 |
| Sublease income | (745) | (909) | (223) |
| Total operating lease expense | $ | 43,655 | $ | 40,206 | $ | 38,274 |
| | | |
| Other Information: | | | |
| Cash paid for amounts included in the measurement of operating lease liabilities | $ | 40,937 | $ | 36,080 | $ | 37,615 |
ROU lease assets obtained in exchange for operating lease liabilities (1) | 42,611 | 10,444 | 22,989 |
| Weighted-average remaining lease term (in years) | 7.41 | 7.08 | 7.46 |
| Weighted-average discount rate | 3.86 | % | 3.20 | % | 2.96 | % |
(1)Excludes $0.5 million of ROU lease assets acquired from Ametros for the year ended December 31, 2024.
The following table reconciles undiscounted future lease payments to total operating lease liabilities: | | | | | | |
| (In thousands) | December 31, 2025 | |
| 2026 | $ | 36,360 | |
| 2027 | 37,005 | |
| 2028 | 35,087 | |
| 2029 | 30,784 | |
| 2030 | 24,235 | |
| Thereafter | 75,419 | |
| Total operating lease payments | 238,890 | |
| Present value adjustment | (36,148) | |
| Total operating lease liabilities | $ | 202,742 | |
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.