We make commitments to extend credit in the normal course of business to meet the financing needs of our customers. These financial instruments include commitments to extend credit in the form of loans or through standby letters of credit. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Because various commitments will expire without being fully drawn, the total commitment amount does not necessarily represent future cash requirements.

Our credit loss exposure is equal to the contractual amount of the commitment in the event of nonperformance by the borrower. We use the same credit underwriting criteria for all credit exposure. The amount of collateral obtained, if deemed necessary by us, is based on management's credit evaluation of the borrower. Collateral types pledged may include accounts receivable, inventory, other personal property and real property.

The contractual amount of unfunded loan commitments and standby letters of credit not reflected in the consolidated statements of condition are as follows:


(in thousands)	June 30, 2026		December 31, 2025
Commercial lines of credit	$	214,448	$	232,758
Revolving home equity lines	206,266		208,509
Undisbursed construction loans	18,366		13,946
Personal and other lines of credit	7,748		7,900
Standby letters of credit	3,311		1,615
Total unfunded loan commitments and standby letters of credit	$	450,139	$	464,728

We record an allowance for credit losses on unfunded loan commitments at the balance sheet date based on estimates of the probability that these commitments will be drawn upon according to historical utilization experience of the different types of commitments and expected loss rates determined for pooled funded loans. The allowance for credit losses on unfunded commitments totaled $1.1 million at both June 30, 2026 and December 31, 2025, which is included in interest payable and other liabilities in the consolidated statements of condition. There was no provision for credit losses on unfunded loan commitments in the three and six months ended June 30, 2026 and 2025.

We lease premises under long-term non-cancelable operating leases with remaining terms of 4 months to 15 years, 11 months, most of which include escalation clauses and one or more options to extend the lease term, and some of which contain lease termination clauses. Lease terms may include certain renewal options that were considered reasonably certain to be exercised.

We lease certain equipment under finance leases with initial terms of three years to five years. The equipment finance leases do not contain renewal options, bargain purchase options or residual value guarantees.


(in thousands)	June 30, 2026		December 31, 2025
Operating leases:
Operating lease right-of-use assets	$	21,146	$	22,499
Operating lease liabilities	$	23,493	$	24,747
Finance leases:
Finance lease right-of-use assets	$	766	$	766
Accumulated amortization	(161)		(73)
Finance lease right-of-use assets, net1	$	605	$	693
Finance lease liabilities 2	$	625	$	709
1 Included in premises and equipment in the consolidated statements of condition.
2 Included in borrowings and other obligations in the consolidated statements of condition.

The following table shows supplemental disclosures of noncash investing and financing activities for the periods presented.


	Six months ended
(in thousands)	June 30, 2026		June 30, 2025
Right-of-use assets obtained in exchange for operating lease liabilities	$	689	$	1,387


	Three months ended				Six months ended
(in thousands)	June 30, 2026		June 30, 2025		June 30, 2026		June 30, 2025
Operating lease cost 1	$	1,221	$	1,207	$	2,439	$	2,392


Finance lease cost:
Amortization of right-of-use assets 2	$	44	$	37	$	88	$	74
Interest on finance lease liabilities 3	6		1		12		2
Total finance lease cost	$	50	$	38	$	100	$	76
Total lease cost	$	1,271	$	1,245	$	2,539	$	2,468
1 Included in occupancy and equipment expense in the consolidated statements of comprehensive income (loss).
2 Included in depreciation and amortization in the consolidated statements of comprehensive income (loss).
3 Included in interest on borrowings and other obligations in the consolidated statements of comprehensive income (loss).

The following table shows the future minimum lease payments, weighted average remaining lease terms, and weighted average discount rates under operating and finance lease arrangements as of June 30, 2026. The total lease payments do not include future minimum payment obligations of approximately $2.3 million, excluding renewal options, for operating lease agreements related to an existing administrative and retail branch that commenced subsequent to June 30, 2026. The discount rates used to calculate the present value of lease liabilities were based on the collateralized FHLB borrowing rates that were commensurate with lease terms and minimum payments on the lease commencement date.


(in thousands)	June 30, 2026
Year	Operating Leases			Finance Leases
2026	$	2,360		$	96
2027	4,428			188
2028	3,992			183
2029	3,366			183
2030	3,148			15
Thereafter	9,935			—
Total minimum lease payments	27,229			665
Amounts representing interest (present value discount)	(3,736)			(40)
Present value of net minimum lease payments (lease liability)	$	23,493		$	625
Weighted average remaining term (in years)	7.82			3.55
Weighted average discount rate	3.38		%	3.67		%

Bancorp may be subject to legal actions that arise from time to time in the normal course of business. Bancorp's management is not aware of any pending legal proceedings to which either it or the Bank may be a party or has

The Bank is responsible for a proportionate share of certain litigation indemnifications provided to Visa U.S.A. ("Visa") by its member banks in connection with Visa's lawsuits related to anti-trust charges and interchange fees ("Covered Litigation"). We sold our remaining shares on July 13, 2023, however our proportionate share of the litigation indemnification liability does not change or transfer upon the sale of our Class B Visa shares to member banks or, per the terms of the sale, to the recent purchaser of our shares. Visa established an escrow account for the Covered Litigation that it periodically funds, which is expected to cover the settlement payment obligations.

Litigation is ongoing, and until the court approval process is complete, there is no assurance that Visa will resolve the claims as contemplated by the amended class settlement agreement, and additional lawsuits may arise from individual merchants who opted out of the class settlement. However, until the escrow account is fully depleted and the conversion rate of Class B to Class A common stock is reduced to zero, no future cash settlement payments are required by the member banks, such as us, on the Covered Litigation. Therefore, we are not required to record any contingent liabilities for the indemnification related to the Covered Litigation, as we consider the probability of losses to be remote.