Leases

3 Months Ended

Mar. 31, 2025

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 Sheet.

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 March 31, 2025 and December 31, 2024, the Company had $32.8 million and $18.5 million of operating lease ROU assets respectively, and $38.5 million and $23.8 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 Sheet.

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 March 31, 2025, 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 three months ended March 31, 2025, the Company commenced a new lease for its future headquarters at 7500 Old Georgetown Road in downtown Bethesda, MD. The lease commencement date was January 1, 2025, and it matures on July 31, 2037.

The following table presents lease costs and other lease information.


	Three Months Ended March 31,
(dollars in thousands)	2025			2024
Lease cost
Operating lease cost (cost resulting from lease payments)	$	1,892		$	1,601
Variable lease cost (cost excluded from lease payments)	115			241
Sublease income	—			(30)
Net lease cost	$	2,007		$	1,812

Operating lease - operating cash flows (fixed payments)	$	1,499		$	1,778

(dollars in thousands)	March 31, 2025			December 31, 2024
Right-of-use assets - operating leases	$	32,769		$	18,494
Operating lease liabilities	$	38,484		$	23,815
Weighted average lease term - operating leases (in years)	9.11			6.78
Weighted average discount rate - operating leases	3.57		%	3.03		%

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


(dollars in thousands)
Twelve months ended:
March 31, 2026	$	5,445
March 31, 2027	4,692
March 31, 2028	4,922
March 31, 2029	4,785
March 31, 2030	4,272
Thereafter	22,321
Total future minimum lease payments	46,437
Amounts representing interest	(7,953)
Present value of net future minimum lease payments	$	38,484