The Company recognizes a lease liability and a right-of-use asset, based on the present value of lease payments over the lease term. The discount rate used in determining the present value is the Company's incremental borrowing rate which is the FHLB fixed advance rate based on the lease commencement date. In addition, the Company has elected not to include short-term leases (i.e., leases with terms of twelve months or less) or equipment leases (primarily copiers) deemed immaterial, on the consolidated balance sheets. The following table contains supplemental balance sheet information related to leases (dollars in thousands):


	June 30, 2026			December 31, 2025
Operating lease right-of-use assets	$	12,640		$	12,674
Operating lease liabilities		13,195			13,210
Weighted-average remaining lease term (in years)		4.0		4.4
Weighted-average discount rate		3.57	%		3.54	%

Certain of the Company's leases contain options to renew the lease; however, not all renewal options are included in the calculation of lease liabilities as they are not reasonably certain to be exercised. The Company's leases do not contain residual value guarantees or material variable lease payments. The Company does not have any other material restrictions or covenants imposed by leases that would impact the Company's ability to pay dividends or cause the Company to incur additional financial obligations.


Year Ended December 31,	Operating Leases
2026	$	1,835
2027		3,419
2028		2,753
2029		2,271
2030		1,541
Thereafter		2,748
Total minimum lease payments		14,567
Less imputed interest		(1,372	)
Total lease liabilities	$	13,195

The components of lease expense for the three and six months ended June 30, 2026 and 2025 were as follows (in thousands):


	Three months ended						Six months ended
	June 30,						June 30,
	2026			2025			2026			2025
Operating lease cost	$	926		$	841		$	1,838		$	1,667
Short-term lease cost		39			30			76			61
Variable lease cost		247			255			420			598
Total lease cost		1,212			1,126			2,334			2,326
Income from subleases		(85	)		(91	)		(162	)		(171	)
Net lease cost	$	1,127		$	1,035		$	2,172		$	2,155

As the Company elected not to separate lease and non-lease components, the variable lease cost primarily represents variable payment such as common area maintenance and copier expense. The Company does not have any material sub-lease agreements. In October 2025, the Company recognized a $630,000 gain on the sale of their branch location in St. Louis, MO and subsequently leased the property back from the buyer with a lease term ending on December 31, 2026. Cash paid for amounts included in the measurement of lease liabilities was (in thousands):

Note 9 -- Leases