Note 8 -- Leases

As of June 30, 2025, substantially all the Company's leases are operating leases for real estate property for bank branches, ATM locations, and office space.

For leases in effect at January 1, 2019 and for leases commencing thereafter, the Company recognizes a lease liability and a right-of-use asset, based on the present value of lease payments over the lease term. The discount rate used in determining present value was the Company's incremental borrowing rate which is the FHLB fixed advance rate based on the remaining lease term as of January 1, 2019, or the commencement date for leases subsequently entered into. The Company has elected to not include short-term leases (i.e. leases with terms of twelve months or less) on the consolidated balance sheets.

The following table contains supplemental balance sheet information related to leases (dollars in thousands):


	June 30, 2025			June 30, 2024			December 31, 2024
Operating lease right-of-use assets	$	13,152		$	14,981		$	13,861
Operating lease liabilities		13,590			15,286			14,190
Weighted-average remaining lease term (in years)		4.6			5.0		4.7
Weighted-average discount rate		3.48	%		3.20	%		3.22	%

Certain of the Company's leases contain options to renew the lease; however, not all renewal options are included in the calculation of lease liabilities as they are not reasonably certain to be exercised. The Company's leases do not contain residual value guarantees or material variable lease payments. The Company does not have any other material restrictions or covenants imposed by leases that would impact the Company's ability to pay dividends or cause the Company to incur additional financial obligations.

Maturities of lease liabilities are as follows (in thousands):


Year ending December 31,
2025	$	1,576
2026		3,103
2027		2,875
2028		2,219
2029		1,764
Thereafter		3,697
Total lease payments		15,234
Less imputed interest		(1,644	)
Total lease liability	$	13,590

The components of lease expense for the three and six months ended June 30, 2025 and 2024 were as follows (in thousands):


	Three months ended						Six months ended
	June 30,						June 30,
	2025			2024			2025			2024
Operating lease cost	$	841		$	822		$	1,667		$	1,668
Short-term lease cost		30			31			61			66
Variable lease cost		255			218			598			356
Total lease cost		1,126			1,071			2,326			2,090
Income from subleases		(91	)		(103	)		(171	)		(207	)
Net lease cost	$	1,035		$	968		$	2,155		$	1,883

As the Company elected not to separate lease and non-lease components, the variable lease cost primarily represents variable payment such as common area maintenance and copier expense. The Company does not have any material sub-lease agreements. Cash paid for amounts included in the measurement of lease liabilities was (in thousands):


	June 30, 2025		June 30, 2024
Operating cash flows from operating leases	$	1,639	$	1,672