Note 8 -- Leases

As of September 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):


	September 30, 2025			September 30, 2024			December 31, 2024
Operating lease right-of-use assets	$	13,329		$	14,560		$	13,861
Operating lease liabilities		13,876			14,873			14,190
Weighted-average remaining lease term (in years)		4.7			4.9		4.7
Weighted-average discount rate		3.52	%		3.18	%		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	$	837
2026		3,327
2027		3,090
2028		2,435
2029		1,979
Thereafter		3,822
Total lease payments		15,490
Less imputed interest		(1,614	)
Total lease liability	$	13,876

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


	Three months ended						Nine months ended
	September 30,						September 30,
	2025			2024			2025			2024
Operating lease cost	$	837		$	885		$	2,504		$	2,553
Short-term lease cost		40			23			101			89
Variable lease cost		303			216			901			572
Total lease cost		1,180			1,124			3,506			3,214
Income from subleases		(79	)		(110	)		(250	)		(317	)
Net lease cost	$	1,101		$	1,014		$	3,256		$	2,897

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):


	September 30, 2025		September 30, 2024
Operating cash flows from operating leases	$	2,483	$	2,502