v3.26.1
OPERATING LEASES
 6 Months Ended
Jun. 30, 2026
Leases [Abstract]  
LEASES
13. OPERATING LEASES

The Company leases certain land and buildings for its bank branches and ATMs. Some leases include renewal options, which are evaluated and included in the measurement of right-of-use ("ROU") assets and lease liabilities when it is reasonably certain that the options will be exercised, in accordance with ASC 842, "Leases."

All leases are classified as operating leases. Several leases contain variable payments, primarily related to common area maintenance costs and Hawaii state tax rates.

The Company has elected the short-term exemption, for leases with terms of 12 months or less. Such leases are excluded from the calculation of the ROU assets and lease liabilities and are not included on the Company's balance sheets. The Company has also elected to account for lease and non-lease components as a single lease component for all classes of underlying assets.

The most significant assumption in applying ASC 842 is the discount rate. Because most lease agreements do not specify an implicit interest rate, the Company estimates the discount rate using the collateralized borrowing rate it would pay for a loan with a similar term.

The following table presents total lease cost, cash flow information, weighted-average remaining lease term and weighted-average discount rate for the periods presented:

Three Months Ended June 30,Six Months Ended June 30,
(dollars in thousands)2026202520262025
Lease cost:
Operating lease cost$1,259 $1,336 $2,519 $2,643 
Variable lease cost1,132 643 1,426 1,262 
Total lease cost$2,391 $1,979 $3,945 $3,905 
Other information:
Operating cash flows from operating leases$(1,262)$(1,279)$(2,494)$(2,559)
Weighted-average remaining lease term - operating leases 8.9 years10.0 years8.9 years10.0 years
Weighted-average discount rate - operating leases4.18 %4.13 %4.18 %4.13 %
The following table presents a schedule of annual undiscounted cash flows for our operating leases and a reconciliation of those cash flows to the operating lease liabilities as of June 30, 2026, for the remainder of fiscal year 2026, the next five succeeding fiscal years and all years thereafter:

(dollars in thousands)Undiscounted Cash FlowsLease Liability ExpenseLease Liabilities
Year Ending December 31,
2026 (remainder)$2,510 $479 $2,031 
20274,257 843 3,414 
20283,432 722 2,710 
20293,016 619 2,397 
20303,036 519 2,517 
20312,683 420 2,263 
Thereafter10,166 1,435 8,731 
Total $29,100 $5,037 $24,063 

During the third quarter of 2025, as part of a strategic consolidation of the Company's Operations Center into its main headquarters, the Company terminated its lease for the Operations Center, which was originally scheduled to run through 2038. As a result of the lease termination, the Company recognized a reduction of the ROU asset of $4.7 million, a reduction of the ROU liability of $4.1 million, and a credit of $0.6 million to other operating expense.

In addition, the Company, as lessor, leases certain properties that it owns. All of these leases are operating leases. The following table presents lease income related to these leases that was recognized for the periods presented:

Three Months Ended June 30,Six Months Ended June 30,
(dollars in thousands)2026202520262025
Total rental income recognized$414 $481 $780 $949 

The following table presents estimated lease payments, based on the Company's leases as lessor as of June 30, 2026, for the remainder of fiscal year 2026, the next five succeeding fiscal years, and all years thereafter:

(dollars in thousands)
Year Ending December 31,
2026 (remainder)$759 
20271,402 
2028965 
2029806 
2030669 
2031578 
Thereafter691 
Total $5,870 
LEASES
13. OPERATING LEASES

The Company leases certain land and buildings for its bank branches and ATMs. Some leases include renewal options, which are evaluated and included in the measurement of right-of-use ("ROU") assets and lease liabilities when it is reasonably certain that the options will be exercised, in accordance with ASC 842, "Leases."

All leases are classified as operating leases. Several leases contain variable payments, primarily related to common area maintenance costs and Hawaii state tax rates.

The Company has elected the short-term exemption, for leases with terms of 12 months or less. Such leases are excluded from the calculation of the ROU assets and lease liabilities and are not included on the Company's balance sheets. The Company has also elected to account for lease and non-lease components as a single lease component for all classes of underlying assets.

The most significant assumption in applying ASC 842 is the discount rate. Because most lease agreements do not specify an implicit interest rate, the Company estimates the discount rate using the collateralized borrowing rate it would pay for a loan with a similar term.

The following table presents total lease cost, cash flow information, weighted-average remaining lease term and weighted-average discount rate for the periods presented:

Three Months Ended June 30,Six Months Ended June 30,
(dollars in thousands)2026202520262025
Lease cost:
Operating lease cost$1,259 $1,336 $2,519 $2,643 
Variable lease cost1,132 643 1,426 1,262 
Total lease cost$2,391 $1,979 $3,945 $3,905 
Other information:
Operating cash flows from operating leases$(1,262)$(1,279)$(2,494)$(2,559)
Weighted-average remaining lease term - operating leases 8.9 years10.0 years8.9 years10.0 years
Weighted-average discount rate - operating leases4.18 %4.13 %4.18 %4.13 %
The following table presents a schedule of annual undiscounted cash flows for our operating leases and a reconciliation of those cash flows to the operating lease liabilities as of June 30, 2026, for the remainder of fiscal year 2026, the next five succeeding fiscal years and all years thereafter:

(dollars in thousands)Undiscounted Cash FlowsLease Liability ExpenseLease Liabilities
Year Ending December 31,
2026 (remainder)$2,510 $479 $2,031 
20274,257 843 3,414 
20283,432 722 2,710 
20293,016 619 2,397 
20303,036 519 2,517 
20312,683 420 2,263 
Thereafter10,166 1,435 8,731 
Total $29,100 $5,037 $24,063 

During the third quarter of 2025, as part of a strategic consolidation of the Company's Operations Center into its main headquarters, the Company terminated its lease for the Operations Center, which was originally scheduled to run through 2038. As a result of the lease termination, the Company recognized a reduction of the ROU asset of $4.7 million, a reduction of the ROU liability of $4.1 million, and a credit of $0.6 million to other operating expense.

In addition, the Company, as lessor, leases certain properties that it owns. All of these leases are operating leases. The following table presents lease income related to these leases that was recognized for the periods presented:

Three Months Ended June 30,Six Months Ended June 30,
(dollars in thousands)2026202520262025
Total rental income recognized$414 $481 $780 $949 

The following table presents estimated lease payments, based on the Company's leases as lessor as of June 30, 2026, for the remainder of fiscal year 2026, the next five succeeding fiscal years, and all years thereafter:

(dollars in thousands)
Year Ending December 31,
2026 (remainder)$759 
20271,402 
2028965 
2029806 
2030669 
2031578 
Thereafter691 
Total $5,870