The Company enters into leases in the normal course of business primarily for headquarters, back-office operations locations and business development offices. The Company’s leases have remaining terms ranging from 27 to 59 months, some of which include termination or renewal options to extend the lease for up to 5 years.

The Company leases its administrative offices in San Jose under a noncancellable operating lease. The lease expires in 2027 and has one five-year renewal option. The Company also leases office space for loan production offices in Redwood City, California and San Francisco, California. At the end of September 2021, the Company closed its Palo Alto branch office and the space has been subleased. In the first quarter of 2025, the Redwood City loan production office lease expired. The Company then executed a new Redwood City loan production office lease, in a new location, with a five-year term that expires in 2030. The San Francisco loan production office lease also expires in 2030.

Leases are classified as operating or finance leases at the lease commencement date. The Company does not currently have any significant finance leases in which it is the lessee. Lease expense for operating leases and short-term leases is recognized on a straight-line basis over the lease term. Right-of-use 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. Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term.

The Company uses its incremental borrowing rate at lease commencement to calculate the present value of lease payments when the rate implicit in a lease is not known. The Company’s incremental borrowing rate is based on the Federal Home Loan Bank of San Francisco, adjusted for the lease term and other factors.

Right-of-use assets and lease liabilities by lease type, and the associated balance sheet classifications, are as follows:


(In thousands)
Balance Sheet Classification	September 30, 2025		December 31, 2024
Right-of-use assets:
Operating leases - Accrued interest receivable and other assets	$	6,119	$	6,933
Total right-of-use assets	$	6,119	$	6,933

Lease liabilities:
Operating leases - Accrued interest payable and other liabilities	$	6,763	$	7,686
Total lease liabilities	$	6,763	$	7,686

Lease Expense

Total lease cost was comprised solely of operating lease expense and was as follows for the periods presented:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2025		2024		2025		2024
Operating lease cost	$	600	$	770	$	1,956	$	2,301
Total lease cost, net	$	600	$	770	$	1,956	$	2,301

Future undiscounted lease payments for operating leases with initial terms of one year or more as of September 30, 2025 are as follows: (in thousands)


September 30,	Leases
2026	$	2,665
2027		2,742
2028		994
2029		857
2030		556
Thereafter		–
Total undiscounted lease payments		7,814
Less imputed interest		1,051
Net lease liabilities	$	6,763


Supplemental Lease Information
	September 30, 2025		December 31, 2024
Operating lease weighted average remaining lease term (years)	3.33		3.87
Operating lease weighted average discount rate	2.50	%	2.52	%