Operating Leases

The Company leases certain office space, stand-alone buildings and equipment which are recognized as operating lease right-of-use (“ROU”) assets and operating lease liabilities and are included in the consolidated balance sheets. Lease liabilities represent the Company's liability to make lease payments under these leases, on a discounted basis. For leases with renewal options available, the Company evaluates each lease to determine if exercise of the renewal option is reasonably certain. As of March 31, 2026, the Company's operating lease ROU asset and operating lease liability totaled $17.6 million and $18.7 million, respectively.

In order to calculate its ROU assets and lease liabilities, ASC Topic 842 requires the Company to use the rate of interest implicit in the lease when readily determinable. If the rate implicit in the lease is not readily determinable, the Company is required to use its incremental borrowing rate, which is the rate of interest the Company would have to pay to borrow on a collateralized basis over a similar term in a similar economic environment. The Company was unable to determine the implicit interest rate in any of the leases and therefore used its incremental borrowing rate.

As of March 31, 2026 and December 31, 2025, the weighted-average discount rate for the Company's operating leases was 4.72% and 4.75%, respectively. The Company's lease terms range from less than one year to one hundred forty-four months. As of March 31, 2026 and December 31, 2025, the weighted-average remaining term of the leases was 6.75 years and 6.81 years, respectively.

For the three months ended March 31, 2026 and 2025, operating lease cash flows (fixed payments) were approximately $853,000 and $821,000, respectively.