NOTE 8 — LEASES

The Company has entered into several operating leases for properties for branch banking and other banking operations. The leases have various initial terms and expire on various dates. The lease agreements generally provide that the Company is responsible for ongoing repairs and maintenance, insurance, and real estate taxes. The leases also provide for renewal options and certain scheduled increases in monthly lease payments. The Company does not consider exercise of any of these lease renewal options to be reasonably certain.

Leases with an initial term of 12 months or less are not recorded on the balance sheet. For these short-term leases, lease expense is recognized on a straight-line basis over the lease term. Rental expense recorded under short-term lease for the three months ended June 30, 2026 and 2025 was $6 thousand and $13 thousand, respectively. Rental expense recorded under short-term lease for the six months ended June 30, 2026 and 2025 was $11 thousand and $13 thousand, respectively. At June 30, 2026 and December 31, 2025, the Company had no leases classified as finance leases.

At June 30, 2026 and December 31, 2025, the Company had an operating lease right-of-use ("ROU") asset of $5.5 million and $3.9 million, respectively, and an operating lease liability of $6.9 million and $4.6 million, respectively. The ROU asset and operating lease liability are recorded in other assets and other liabilities, respectively, in the Consolidated Balance Sheets.

Rental expense recorded under long-term leases for the three months ended June 30, 2026 and 2025 was $292 thousand and $263 thousand, respectively. Rental expense recorded under long-term leases for the six months ended June 30, 2026 and 2025 was $558 thousand and $553 thousand, respectively.

The weighted-average remaining lease term and the weighted-average discount rate for operating leases were 5.94 years and 3.49%, respectively, at June 30, 2026.