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Note 4 - Premises and Equipment, Net

6 Months Ended

Jun. 30, 2025

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

4. PREMISES AND EQUIPMENT, NET

Premises and equipment are comprised of the following:

		June 30,				December 31,
(Dollars in thousands)		2025				2024

Land and improvements		$	14,060			$	14,021
Buildings			64,411				62,365
Furniture and equipment			28,364				26,657
			106,835				103,043
Less: accumulated depreciation			52,043				49,616

Premises and equipment, net		$	54,792			$	53,427

Depreciation expense totaled $1.3 million and $1.5 million during the second quarters of 2025 and 2024, respectively.

We enter into facility leases in the normal course of business. As of June 30, 2025, we were under lease contracts for eleven of our banking facilities. The leases have maturity dates ranging from November, 2025 through May, 2048, with a weighted average life of 9.3 years as of June 30, 2025. All of our leases have multiple three- to five-year extensions; however, these were not factored in the lease maturities and weighted average lease term as it was not reasonably certain we would exercise the options on the dates we entered into the lease agreements.

Leases are classified as either operating or finance leases at the lease commencement date, with all of our current leases determined to be operating leases. Lease expense for operating leases is recognized on a straight-line basis over the lease term. Right-of-use assets represent our right to use an underlying asset for the lease term, while lease liabilities represent our obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the lease commencement date at the estimated present value of lease payments over the lease term. We use our incremental borrowing rate, on a collateralized basis, at lease commencement to calculate the present value of lease payments. The weighted average discount rate for leases was 6.53% as of June 30, 2025.

The right-of-use assets, included in premises and equipment, net on our Consolidated Balance Sheets, and the lease liabilities, included in other liabilities on our Consolidated Balance Sheets, totaled $4.2 million and $4.4 million as of June 30, 2025, and December 31, 2024, respectively. As permitted by applicable accounting standards, we have elected not to recognize short-term leases with original terms of twelve months or less on our Consolidated Balance Sheets. Total operating lease expense associated with the leases aggregated $0.3 million during the second quarter of 2025 and $0.4 million during the second quarter of 2024.

Future lease payments were as follows as of June 30, 2025:

(Dollars in thousands)
2025		$	593
2026			1,159
2027			1,089
2028			913
2029			713
Thereafter			1,215
Total undiscounted lease payments			5,682
Less effect of discounting			(1,453	)
Present value of future lease payments (lease liability)		$	4,229