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Leases | 9 Months Ended
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Sep. 30, 2024
Leases [Abstract] |
Leases | Leases The Company has committed to rent premises and equipment used in business operations under non-cancelable operating and finance leases and determines if an arrangement meets the definition of a lease upon inception. Operating and finance lease right-of-use (“ROU”) assets represent a right to use an underlying asset for the contractual lease term. Lease liabilities represent an obligation to make lease payments arising from the lease. A lease ROU asset and lease liability will be recognized for any new leases at the commencement of the new lease. The Company’s leases do not provide an implicit interest rate, therefore the Company used its incremental collateralized borrowing rates commensurate with the underlying lease terms to determine the present value of operating and finance lease liabilities. The weighted average discount rate as of September 30, 2024 was 3.99% for operating leases and 4.75% for finance leases and is based off the discount rate at the time the lease is originated or renewed. The Company’s operating lease agreements contain both lease and non-lease components, which are generally accounted for separately. The Company’s lease agreements do not contain any residual value guarantees. Leases with terms of 12 months or less are not included in ROU assets and lease liabilities recorded in the Company’s consolidated balance sheet. Operating lease terms include options to extend when it is reasonably certain that the Company will exercise such options, determined on a lease-by-lease basis. At September 30, 2024, lease expiration dates ranged from 2 months to 20.4 years, with additional renewal options on certain leases typically ranging from 0 to 10 years. At September 30, 2024, the weighted average remaining lease term inclusive of renewal options that the Company is reasonably certain to renew for the Company’s operating leases was 8.6 years. The weighted average remaining lease term for the Company's finance lease was 2.0 years. Rental expense for operating leases is recognized on a straight-line basis over the lease term and amounted to $317,000 and $913,000 for the three and nine months ended September 30, 2024, respectively, and $292,000 and $933,000 for the three and nine months ended September 30, 2023, respectively. Variable lease components, such as inflation adjustments, are expensed as incurred and not included in ROU assets and operating lease liabilities. Amortization expense for finance leases is recognized on a straight-line basis over the lease term and amounted to $8,000 and $34,000 for the three and nine months ended September 30, 2024, respectively. Interest on finance leases was $1,000 and $4,000 for the three and nine months ended September 30, 2024, respectively. This is a new lease for 2024, so there was no amortization or interest expense for the three and nine months ended September 30, 2023. The following table presents the minimum annual lease payments under the terms of these leases, inclusive of renewal options that the Company is reasonably certain to renew, at September 30, 2024:
|  | Operating |  | Finance
(dollars in thousands; unaudited) |  | September 30, 2024 |  | September 30, 2024
October 1 to December 31, 2024 |  | $ | 257 |  |  | $ | 9 |
2025 |  | 977 |  |  | 36 |
2026 |  | 977 |  |  | 27 |
2027 |  | 913 |  |  | — |
2028 |  | 692 |  |  | — |
2029 and thereafter |  | 2,763 |  |  | — |
Total lease payments |  | 6,579 |  |  | 72 |
Less: amounts representing interest |  | 1,038 |  |  | 4 |
Present value of lease liabilities |  | $ | 5,541 |  |  | $ | 68 |
The following table presents the components of total lease expense, including finance lease costs and operating cash flows for the three and nine months ended September 30, 2024 and 2023:
| Three Months Ended |  | Nine Months Ended
| September 30, 2024 |  | September 30, 2023 |  | September 30, 2024 |  | September 30, 2023
| (dollars in thousands; unaudited)
Lease expense: |  |  |  |  |  |  |
Operating lease expense (1) | $ | 255 |  |  | $ | 251 |  |  | $ | 766 |  |  | $ | 819 |
Variable lease expense | 85 |  |  | 69 |  |  | 276 |  |  | 173 |
Finance lease cost |  |  |  |  |  |  |
Right-of-use amortization (2) | 8 |  |  | — |  |  | 34 |  |  | — |
Interest expense (3) | 1 |  |  | — |  |  | 4 |  |  | — |
Total lease expense | $ | 349 |  |  | $ | 320 |  |  | $ | 1,080 |  |  | $ | 992 |
Cash paid: |  |  |  |  |  |  |
Cash paid from operating leases | $ | 344 |  |  | $ | 320 |  |  | $ | 1,052 |  |  | $ | 1,013 |
Cash paid from finance leases | $ | 9 |  |  | $ | — |  |  | $ | 39 |  |  | $ | — |
(1)Included in net occupancy expense and in the Condensed Consolidated Statements of Income (unaudited). (2)Included in other expense in the Condensed Consolidated Statements of Income (unaudited). (3)Included in interest on borrowed funds Condensed Consolidated Statements of Income (unaudited).

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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 842 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/842-20/tableOfContent + Details
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