OPERATING LEASES

6 Months Ended

Jun. 30, 2026

NOTE 8 – OPERATING LEASES

The Company has entered into various operating leases for certain branch locations with terms extending through April 2036. Generally, these leases have initial lease terms of ten years or less. Many of the leases have one or more renewal options which typically are for five years at the then fair market rental rates. We assessed these renewal options using a threshold of reasonably certain. For leases where we were reasonably certain to renew, those option periods were included within the lease term, and therefore, the measurement of the right-of-use (“ROU”) asset and lease liability. None of our leases include options to terminate the lease. Operating leases in which the Company is the lessee are recorded as operating lease ROU assets and operating lease liabilities on the Consolidated Balance Sheets. The Company currently does not have any finance leases.

Operating lease ROU assets represent the Company’s right to use an underlying asset during the lease term and operating lease liabilities represent its obligation to make lease payments arising from the lease. ROU assets and operating lease liabilities are recognized at lease commencement based on the present value of the remaining lease payments using a discount rate that represents the Company’s incremental collateralized borrowing rate provided by the FHLB at the lease commencement date. ROU assets are further adjusted for lease incentives, if any. Operating lease expense, which is comprised of amortization of the ROU asset and the implicit interest accreted on the operating lease liability, is recognized on a straight-line basis over the lease term, and is recorded in “Occupancy and Equipment” expense in the Consolidated Statements of Income.

The components of lease cost for three and six months ended June 30, 2026 and 2025 were as follows:


	Three Months Ended June 30,					Six Months Ended June 30,
(Dollars in thousands)	2026			2025		2026			2025
Operating lease cost	$	939		$	536	$	1,887		$	1,105
Variable lease cost		60			53		120			107
Short-term lease cost		78			—		155			—
Sublease income		—			—		—			—
Total net lease cost	$	1,077		$	589	$	2,162		$	1,212

Future maturities of the Company’s operating lease liabilities are summarized as follows:


(Dollars in thousands)
Twelve Months Ended:		Lease Liability
June 30, 2027		$	1,970
June 30, 2028			3,686
June 30, 2029			3,242
June 30, 2030			2,483
June 30, 2031			1,875
After June 30, 2031			3,418
Total lease payments			16,674
Less: interest discount			(2,543)
Present value of lease liabilities		$	14,131



Supplemental Lease Information		June 30, 2026
Weighted-average remaining lease term (years)		5.6
Weighted-average discount rate		3.97	%


		Six Months Ended June 30,
(Dollars in thousands)		2026			2025
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases (cash payments)		$	1,861		$	1,102
Operating cash flows from operating leases (lease liability reduction)			1,580			951
Operating lease right-of-use assets obtained in exchange for leases entered into during the period			406			1,233