Leases

12 Months Ended

Dec. 31, 2024

The Company accounts for leases in accordance with ASC Topic 842. A lease is defined as 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 comprise real estate for branch offices, ATM locations and corporate office space. Substantially all of our leases are classified as operating leases and are included in operating lease right-of-use ("ROU") assets and operating lease liabilities in the consolidated balance sheets.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. In determining the present value of the lease payments, we use the implicit lease rate if available. If the implicit lease rate is not available, we use the incremental borrowing rate at commencement date. The incremental borrowing rate is the rate of interest that we would have to pay to borrow on a collateralized basis over a similar term in an amount equal to the lease payments in a similar economic environment.

As of December 31, 2024 and December 31, 2023, the Company had $18.5 million and $19.1 million of operating lease ROU assets respectively, and $23.8 million and $23.2 million of operating lease liabilities respectively, on the Company’s Consolidated Balance Sheets. The Company elects not to recognize ROU assets and lease liabilities arising from short-term leases, leases with initial terms of twelve months or less or equipment leases (deemed immaterial) on the Consolidated Balance Sheets.

The leases contain options to extend or terminate the lease, which are recognized as part of the ROU assets and lease liabilities when an economic benefit to exercise the option exists and there is a 90% probability that the Company will exercise the option. If these criteria are not met, the options are not included in our ROU assets and lease liabilities.

As of December 31, 2024, our leases do not contain material residual value guarantees or impose restrictions or covenants related to dividends or the Company’s ability to incur additional financial obligations.

During the year ended December 31, 2024, the Company entered into a new lease agreement for its headquarters in Bethesda, MD, which is further discussed below. The Company also extended two existing leases, one each in Maryland and District of Columbia, and one additional lease expired during the same period.

The following table presents lease costs and other lease information.


	Years Ended December 31,
(dollars in thousands)	2024				2023
Lease cost
Operating lease cost (cost resulting from lease payments)	$	6,124			$	6,590
Variable lease cost (cost excluded from lease payments)	694				1,000
Sublease income	(40)				(119)
Net lease cost	$	6,778			$	7,471

Operating lease - operating cash flows (fixed payments)	$	6,524			$	7,198

(dollars in thousands)	December 31, 2024				December 31, 2023
Right-of-use assets - operating leases	$	18,494			$	19,129
Operating lease liabilities	$	23,815			$	23,238
Weighted average lease term - operating leases	6.78			yrs	4.93			yrs
Weighted average discount rate - operating leases	3.03		%		2.78		%

Future minimum payments for operating leases with initial or remaining terms of one year or more as of December 31, 2024 were as follows:


(dollars in thousands)
Twelve months ended:
December 31, 2025	$	5,688
December 31, 2026	3,406
December 31, 2027	3,456
December 31, 2028	3,054
December 31, 2029	2,618
Thereafter	8,547
Total future minimum lease payments	26,769
Amounts representing interest	(2,954)
Present value of net future minimum lease payments	$	23,815

Recognizing the connection between high-quality and high-performing workplaces coupled with a desire to maintain a strong presence in the community we serve, EagleBank has entered into a long-term lease agreement to relocate its corporate headquarters to 7500 Old Georgetown Road in downtown Bethesda, MD in 2025. The lease commencement date is January 1, 2025, and matures on July 31, 2037.