The Company enters into leases in the normal course of business primarily for its banking facilities and branches. The Company’s operating leases have varying maturity dates through year end 2036, some of which include renewal or termination options to extend the lease. In addition, the Company leases or subleases real estate to third parties. The Company includes lease extension and termination options in the lease term if, after considering relevant economic factors, it is reasonably certain the Company will exercise the option. In addition, the Company has elected to account for any non-lease components in its real estate leases as part of the associated lease component. The Company has also elected not to recognize leases with original lease terms of 12 months or less ("short-term leases") on the Company’s Condensed Consolidated Statements of Financial Condition.

Leases are classified at the lease commencement date. 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 following table summarizes the amount and balance sheet line item for our operating lease right-of-use asset and liability as of the dates presented:


	Balance Sheet Line Item	June 30, 2026		December 31, 2025
Operating lease right-of-use asset	Accrued interest receivable and other assets	$	8,829	$	9,034
Operating lease liability	Accrued interest payable and other liabilities		9,507		9,851

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 ("FHLB") regular advance rate, adjusted for the lease term and other factors. At June 30, 2026, the weighted average discount rate of operating leases was 3.83% and the weighted average remaining life of operating leases was 4.6 years, compared to 3.58% and 4.7 years as of December 31, 2025.

The following table presents components of total lease costs included as a component of occupancy expense on the Condensed Consolidated Statements of Operations for the periods presented:


	Three Months Ended June 30,						Six Months Ended June 30,
	2026			2025			2026			2025
Operating lease cost	$	736		$	676		$	1,461		$	1,388
Short-term lease cost		83			146			198			280
Variable lease cost		299			475			552			865
Less: Sublease income		(156	)		(135	)		(304	)		(268	)
Total lease cost, net	$	962		$	1,162		$	1,907		$	2,265

Operating cash flows paid for operating lease amounts included in the measure of lease liabilities were $848,000 and $976,000 for the three months ended June 30, 2026 and 2025, respectively. Operating cash flows paid for operating lease amounts included in the measure of lease liabilities were $1.7 million and $1.8 million for the six months ended June 30, 2026 and 2025, respectively.

The future minimum lease payments for operating leases, subsequent to June 30, 2026, as recorded on the Condensed Consolidated Statements of Financial Condition, are summarized as follows:


	Operating Lease Commitments
Remainder of 2026	$	1,527
2027		2,456
2028		2,170
2029		1,963
2030		1,045
Thereafter		1,292
Total undiscounted lease payments		10,453
Less: Imputed interest		(946	)
Net lease liabilities	$	9,507