Leases

12 Months Ended

Dec. 31, 2024

The Company determines if an arrangement is a lease at inception of the contract and assesses the appropriate classification as operating or financing. Operating leases with terms greater than one year are included in right-of-use assets and lease liabilities on the Company’s consolidated balance sheets. Agreements with both lease and non-lease components are accounted for separately, with only the lease component capitalized. Operating right-of-use assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the term using the interest rate implicit in the contract, when available, or the Company’s incremental collateralized borrowing rate with similar terms.

As of December 31, 2024, the Company maintained six operating leases on land and buildings for banking center facilities under long-term leases. These operating leases contain renewal options for periods ranging from one to five years that expire at various dates through October 31, 2033, with no residual value guarantees. Future obligations relating to the exercise of renewal options are included in the measurement if, based on the judgment of management, the renewal option is reasonably certain to be exercised. Factors in determining whether an option is reasonably certain of exercise include, but are not limited to, the value of leasehold improvements, the value of the renewal rate compared to market rates, and the presence of factors that would cause a significant economic penalty to the Company if the option is not exercised. Management reasonably plans to exercise all options, and as such, all renewal options are included in the measurement of the right-of-use assets and operating lease liabilities.

The Company elects to recognize the lease payments on leases with terms of one year or less in its consolidated statements of income on a straight-line basis over the lease term.

For the years ended December 31, 2024, 2023, and 2022, operating lease expenses were $581,000, $643,000, and $628,000, respectively. Operating lease expenses are included as a component of occupancy and equipment expenses within the accompanying consolidated statements of income.

Cash paid for amounts included in the measurement of lease liabilities for operating leases totaled $571,000, $625,000, and $606,000 for the years ended December 31, 2024, 2023, and 2022, respectively.

The table below summarizes other information related to the Company’s operating leases as of December 31, 2024 and 2023:


	December 31,
	2024		2023
Weighted average remaining operating lease term	5.51 years		6.70 years
Weighted average operating lease discount rate	3.3	%	3.3	%

Future obligations over the primary and renewal option terms of the Company’s long-term operating leases as of December 31, 2024, were as follows:


Years Ending December 31,	Amount
(in thousands)
2025	$	596
2026	540
2027	483
2028	485
2029	488
Thereafter	625
Total lease payments	3,217
Less: Imputed interest	(353)
Present value of lease liabilities	$	2,864