LEASES

3 Months Ended

Mar. 31, 2026

NOTE 13. LEASES

A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. Most of our leases are for branches, ATM locations, and office space and have terms extending through 2046. All leases are classified as operating leases, and are recognized on the consolidated balance sheets as a right-of-use (“ROU”) asset with a corresponding lease liability.

The following table presents the consolidated statements of condition classification of the ROU assets and lease liabilities:


(in thousands)	Classification	March 31, 2026			December 31, 2025
Lease Right-of-Use Assets
Operating lease right-of-use assets	Other assets	$	8,875		$	9,251
Lease Liabilities
Operating lease liabilities	Other liabilities		9,642			9,990

The calculated amount of the ROU assets and lease liabilities in the table above are impacted by the length of the lease term and the discount rate used for the present value of the minimum lease payments. The lease agreements often include one or more options to renew at our discretion. If at lease inception, we consider the exercising of a renewal option to be reasonably certain, we will include the extended term in the calculation of the ROU asset and lease liability.

The following table presents the weighted average lease term and discount rate of the leases:


		March 31, 2026			December 31, 2025
Weighted-average remaining lease term (in years)
Operating leases		10.91			10.94
Weighted-average discount rate
Operating leases		3.12	%		3.15	%

The following table represents lease costs and other lease information. As we have elected, for all classes of underlying assets, not to separate lease and non-lease components and instead to account for them as a single lease component, the variable lease cost primarily represents variable payments such as real estate taxes, common area maintenance and utilities.


	Three Months Ended
(in thousands)	March 31, 2026			March 31, 2025
Lease Costs
Operating lease cost	$	435		$	374
Variable lease cost		38			66
Total lease cost	$	473		$	440

Supplemental cash flow information related to leases was as follows:
Cash paid for amounts included in the measurement of operating lease liabilities		411			376
Right-of-use assets obtained in exchange for new operating lease obligations		347			313

Future minimum payments for operating leases with initial or remaining terms of one year or more as of March 31, 2026 are, as follows:


(in thousands)		Payments
Twelve Months Ended:
March 31, 2027		$	1,654
March 31, 2028			1,494
March 31, 2029			1,156
March 31, 2030			887
March 31, 2031			716
Thereafter			4,691
Total future minimum lease payments			10,598
Amounts representing interest			(956)
Present value of net future minimum lease payments		$	9,642