Note 5 - Leases

3 Months Ended

Mar. 31, 2026

NOTE 5 – LEASES

Lease Arrangements

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 19 to 50 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 non-cancellable 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 statement of financial condition classifications, are as follows:

(In thousands)
Balance Sheet Classification	*March 31, 2026*		*December 31, 2025*
Right-of-use assets:
Operating leases - Accrued interest receivable and other assets	$	5,099	$	5,606
Total right-of-use assets		5,099		5,606

Lease liabilities:
Operating leases - Accrued interest payable and other liabilities		5,665		6,211
Total lease liabilities	$	5,665	$	6,211

Lease Expense

Total lease cost for the three months ended March 31, 2026 and 2025 is as follows:

	*Three Months Ended March 31,*
(In thousands)	*2026*			*2025*
Operating lease cost	$	664		$	770
Sublease income		(89	)		(87	)
Total lease cost, net	$	575		$	683

Lease Obligations

Future undiscounted lease payments for operating leases with initial terms of one year or more as of March 31, 2026 are as follows (in thousands):

March 31,	*Leases*
2026	$	2,018
2027		2,432
2028		838
2029		863
2030		347
Thereafter		-
Total undiscounted lease payments		6,498
Less imputed interest		833
Net lease liabilities	$	5,665

Supplemental Lease Information

	*March 31, 2026*			*December 31, 2025*
Operating lease weighted average remaining lease term (years)		2.93			3.12
Operating lease weighted average discount rate		2.42	%		2.46	%