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Leases

3 Months Ended

Mar. 31, 2025

Note 11. Leases

A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration.

Substantially all of the leases in which the Company is the lessee are comprised of real estate for branches and office space with terms extending through 2044. All of our leases are classified as operating leases. With the adoption of Topic 842, operating lease agreements are required to be recognized on the consolidated balance sheet as a right-of-use (“ROU”) asset and a corresponding lease liability.

The following table represents the consolidated balance sheet classification of the Company’s ROU assets and lease liabilities. The Company elected not to include short-term leases (i.e., leases with initial terms of twelve months or less), or equipment leases (deemed immaterial) on the consolidated balance sheet (in thousands):


	Balance Sheet	March 31,		December 31,
	Location	2025		2024
Assets:
Operating lease right-of-use assets	Other assets	$	11,627	$	11,951
Liabilities:
Operating lease liabilities	Other liabilities	$	12,242	$	12,472

The calculated amount of the ROU assets and lease liabilities in the table above are impacted by the length of the lease term and the discount rate used to present value of the minimum lease payments. The Company’s lease agreements often include one or more options to renew at the Company’s discretion. If, at lease inception, the Company considers the

exercising of a renewal option to be reasonably certain, the Company will include the extended term in the calculation of the ROU asset and lease liability. Regarding the discount rate, Topic 842 requires the use of the rate implicit in the lease whenever this rate is readily determinable. As this rate is rarely determinable, the Company utilizes its incremental borrowing rate at lease inception, on a collateralized basis, over a similar term.

As of March 31, 2025, the weighted average remaining lease term was 10.25 years and the weighted average discount rate was 3.56%.

The following table represents lease costs and other lease information. As the Company elected, for all classes of underlying assets, not to separate lease and non-lease components and instead to account for them as a single lease component, the variable lease cost primarily represents variable payments such as common area maintenance (in thousands):


	Three Months Ended
	March 31,
	2025		2024
Lease costs:
Operating lease costs	$	481	$	451
Variable lease costs		16		30
Sublease income		(24)		—
Net lease cost	$	473	$	481
Other information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	385	$	421

Future minimum payments for operating leases with initial or remaining terms of one year or more as of March 31, 2025, were as follows (in thousands):


	Amounts
Remainder of 2025	$	1,354
2026		1,695
2027		1,489
2028		1,469
2029		1,398
Thereafter		7,648
Total future minimum lease payments		15,053
Amounts representing interest		(2,811)
Present value of net future minimum lease payments	$	12,242