NOTE 5 – Leases

The Company had operating right-of-use (“ROU”) assets, included in property and equipment, of $23.9 million and $19.0 million as of June 30, 2026 and December 31, 2025, respectively.  The Company had lease liabilities, included in other liabilities, of $26.8 million and $21.7 million as of June 30, 2026 and December 31, 2025, respectively. We maintain operating leases on land and buildings for various office spaces. The lease agreements have maturity dates ranging from January 2028 to December 2036, some of which include options for multiple five-year extensions which have been included in the calculations of the ROU assets and liabilities. The weighted average remaining life of the lease term for these leases was 5.32 years and 4.31 years as of June 30, 2026 and December 31, 2025, respectively. The ROU asset and lease liability are recognized at lease commencement by calculating the present value of lease payments over the lease term.  The ROU assets also include any initial direct costs incurred and lease payments made at or before commencement date and are reduced by any lease incentives.

The discount rate used in determining the lease liability for each individual lease was the FHLB fixed advance rate which corresponded with the remaining lease term as of the lease commencement date. The weighted average discount rate for leases was 3.18% and 2.27% as of June 30, 2026 and December 31, 2025, respectively.

The total operating lease costs were $740,000 and $617,000 for the three months ended June 30, 2026, and 2025, respectively, and $1.5 million and $1.2 million for the six months ended June 30, 2026 and 2025. Cash paid for amounts included in the measurement of lease liabilities was $550,000 and $537,000 for the three months ended June 30, 2026, and 2025, respectively, and $1.1 million for the six months ended June 30, 2026 and 2025.

Operating lease payments due as of June 30, 2026 were as follows: