Leases

9 Months Ended

Sep. 30, 2025

NOTE 7. Leases

Lease liabilities represent the Company’s obligation to make lease payments and are presented at each reporting date as the net present value of the remaining contractual cash flows. Cash flows are discounted at the Company’s incremental borrowing rate in effect at the commencement date of the lease. Right-of-use assets represent the Company’s right to use the underlying asset for the lease term and are calculated as the sum of the lease liability and if applicable, prepaid rent, initial direct costs and any incentives received from the lessor. Right-of-use assets and lease liabilities are included in Other Assets and Other Liabilities, respectively, in the Consolidated Balance Sheets. During the first quarter of 2025, the Company entered into a long-term lease with the intention of establishing a full-service branch in McLean, Virginia and moving the Tysons loan production office into the new location. The new lease will replace an expiring lease and resulted in the initial recognition of a right-of-use asset and lease liability of $773 thousand.

The Company’s six long-term lease agreements are classified as operating leases. These leases offer the option to extend the lease term and the Company has included such extensions in its calculation of the lease liability to the extent the options are reasonably certain of being exercised. The lease agreements do not provide for a residual value guarantee and have no restrictions or covenants that would impact dividends or require incurring additional financial obligations.

The following tables present information about the Company’s leases:


(dollars in thousands)
	September 30, 2025			December 31, 2024
Lease liabilities	$	10,019		$	9,779
Right-of-use assets	$	9,641		$	9,465
Weighted average remaining lease term	12 years			12 years
Weighted average discount rate		4.24	%		4.16	%

	Three Months Ended						Nine Months Ended
Lease Cost	September 30, 2025			September 30, 2024			September 30, 2025		September 30, 2024
Operating lease cost	$	310		$	132		$	904	$	396
Short-term lease cost		4			4			11		11
Total lease cost	$	314		$	136		$	915	$	407

Cash paid for amounts included in the measurement of lease liabilities	$	279		$	120		$	788	$	359

A maturity analysis of operating lease liabilities and reconciliation of the undiscounted cash flows to the total operating lease liabilities is as follows:


(dollars in thousands)	As of
Lease payments due	September 30, 2025
2025, remainder	$	280
2026		1,022
2027		1,035
2028		1,058
2029		1,083
Thereafter		8,564
Total undiscounted cash flows	$	13,042
Discount		(3,023	)
Lease liabilities	$	10,019