The Company accounts for its leases under ASC 842, Leases. Right-of-use assets and lease liabilities are included in other assets and other liabilities, respectively, on the Consolidated Balance Sheets.

Lease liabilities represent the Company’s obligation to make lease payments and are measured as the present value of remaining contractual cash flows, discounted at the Company’s incremental borrowing rate in effect at the lease commencement date. Right-of-use assets represent the Company’s right to use the underlying asset for the lease term and are measured as the lease liability adjusted for prepaid rent, initial direct costs, and lease incentives received from the lessor.

The Company leases four operating locations under long-term leases. Two leases are classified as operating leases and two are classified as finance leases. Certain leases include options to extend the lease term, which are included in the measurement of lease liabilities to the extent the Company is reasonably certain to exercise the options. The lease agreements do not contain residual value guarantees, dividend restrictions, or other financial covenants.

The Bank leases approximately 32,400 square feet of office space at 828 Main Street, Lynchburg, Virginia, which serves as the Bank’s principal office, from Jamesview Investments, LLC (“Jamesview”), a Virginia limited liability company wholly owned by William C. Bryant III, a director of the Company. This lease is classified as a finance lease.

The Bank originally entered into this lease in October 2003. The lease was subsequently amended and restated effective June 1, 2019, with an initial term running through July 31, 2025. The Bank exercised its first renewal option, extending the term through July 31, 2029, with two additional five-year renewal options remaining. Monthly rent installments during the current renewal term are approximately $39,000, subject to variation based on parking space usage, plus an additional security fee. Total rent payments to Jamesview during 2025 were approximately $468,000. The lease was approved in accordance with the Company’s related party transaction approval policies. This lease is classified as a finance lease with a lease liability of $1.60 million and $2.00 million as of December 31, 2025 and 2024, respectively.

Note 23 – Leases (continued)

The following table represents information about the Company’s operating leases:


	December 31,
(Dollars in thousands)	2025		2024
Lease liabilities	$	1,179	$	1,308
Right-of-use assets	$	1,089	$	1,227
Weighted average remaining lease term in years		9.0		9.7
Weighted average discount rate		3.50%		3.51%

The following table represents information about the Company’s finance leases:


	December 31,
(Dollars in thousands)	2025		2024
Lease liabilities	$	2,169	$	2,620
Right-of-use assets	$	1,831	$	2,245
Weighted average remaining lease term in years		6.1		6.7
Weighted average discount rate		2.74%		2.73%


	For the Year Ended December 31,
Lease cost (in thousands)	2025		2024
Operating lease cost	$	182	$	182
Finance lease cost:
Amortization of right-of-use assets		414		414
Interest on lease liabilities		65		76
Total lease cost	$	661	$	672

Cash paid for amounts included in measurement
of operating lease liabilities	$	169	$	169

Cash paid for amounts included in measurement
of finance lease liabilities	$	515	$	478

‎

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


		Operating Lease		Finance Lease
		Liabilities		Liabilities
		As of December 31,		As of December 31,
Lease payments due (in thousands)		2025		2025
December 31, 2026	$	177	$	516
December 31, 2027		187		517
December 31, 2028		142		517
December 31, 2029		127		325
December 31, 2030		128		51
Thereafter		618		440
Total undiscounted cash flows	$	1,379	$	2,366
Discount		(200)		(197)
Lease Liabilities	$	1,179	$	2,169