We have operating leases for several branch locations and office space. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. We also lease certain office equipment under operating leases. Many of our leases include both lease (e.g., minimum rent payments) and non-lease (e.g., common-area or other maintenance costs) components. The Company accounts for each component separately based on the standalone price of each component. In addition, we have several operating leases with lease terms of less than one year and therefore, we have elected the practical expedient to exclude these short-term leases from our right-of-use ("ROU") assets and lease liabilities.

Most leases include one or more options to renew. The exercise of lease renewal options is typically at our sole discretion. The majority of renewals to extend the lease terms are included in our ROU assets and lease liabilities as they are reasonably certain of exercise.

As most of our leases do not provide an implicit rate, we use the fully collateralized FHLB borrowing rate, commensurate with the lease terms based on the information available at the lease commencement date in determining the present value of the lease payments.

The balance sheet information related to our operating leases were as follows as of September 30, 2025 and December 31, 2024:


	Classification on the Consolidated Balance Sheet	September 30, 2025		December 31, 2024
Assets:
Operating lease	Other assets	$	2,562	$	1,063
Liabilities:
Operating lease	Accrued expenses and other liabilities	$	2,562	$	1,063

The cost components of our operating leases were as follows for the three and nine months ended September 30, 2025 and September 30, 2024:


	Three Months Ended
	September 30,
	2025			2024
Lease cost
Operating lease cost	$	198		$	174
Short-term lease cost		11			11
Sublease income		(7	)		(6	)
Total lease cost	$	202		$	179


	Nine Months Ended
	September 30,
	2025			2024
Lease cost
Operating lease cost	$	615		$	630
Short-term lease cost		35			63
Sublease income		(17	)		(28	)
Total lease cost	$	633		$	665

Maturities of our lease liabilities for all operating leases for each of the next five years and thereafter is as follows:



2025 (remaining three months ending December 31, 2025)	$	198
2026		754
2027		740
2028		583
2029		395
Thereafter		78
Total lease payments	$	2,748
Less: Imputed Interest		186
Present value of lease liabilities	$	2,562

The weighted average remaining lease terms and discount rates for all of our operating leases were as follows as of September 30, 2025:



Weighted-average remaining lease term-operating leases (years)	3.40
Weighted-average discount rate-operating leases	3.88	%

The Company is the lessor of equipment under operating leases to a wide variety of customers, from commercial and industrial to government and healthcare. The operating lease assets are presented on the balance sheet as premises and equipment. Total cost, net of accumulated depreciation, of leased assets was $14,917 and $19,136 as of September 30, 2025 and December 31, 2024, respectively. The Company records lease revenue over the term of the lease and retains ownership of the related assets which are depreciated over the estimated useful life, normally two to six years.

The Company also leases equipment to customers under direct financing leases. At the inception of each lease, the lease receivables, together with the present value of the estimated unguaranteed residual values, are presented on the balance sheet as Loans. The excess of the lease receivables and residual values over the cost of the equipment is recorded as unearned lease income and will be recognized over the lease term, normally two to six years as well.