Note 12. Leases

The Company has three operating lease agreements, each for the use of office space in the ordinary course of business. The original term of the first lease was to automatically renew on an annual basis and was amended on December 26, 2024, when the Company and its subsidiary, Bankers Fidelity Life Insurance Company, entered into a Second Amendment to the Lease Agreement (the “Second Amendment”) with 4370 Peachtree LLC. The Second Amendment amends the Lease Agreement, dated November 1, 2007, by and among the same parties (as previously amended, the “Lease Agreement”), pursuant to which the Company leases space for its principal offices and for some of its insurance operations in an office building located in Atlanta, Georgia. Pursuant to the Second Amendment, the Lease Agreement was modified to increase the base rent payable by the Company, beginning January 1, 2025. The Second Amendment also provides for rent adjustment on January 1, 2027, January 1, 2030 and each five years thereafter.

The original term of the second lease was ten years and amended in January 2017 to provide for an additional seven years, with a termination date on September 30, 2026. The second lease was amended on April 2, 2026 to extend the lease, commencing on October 1, 2026 and expiring on July 31, 2037. The rate used in determining the present value of lease payments is based upon an estimate of the Company’s incremental secured borrowing rate commensurate with the term of the underlying lease.

The original term of the third lease was three years and renewed for an additional three years, effective August 1, 2025 with a termination date on July 31, 2028. The rate used in determining the present value of lease payments is based upon an estimate of the Company’s incremental secured borrowing rate commensurate with the term of the underlying lease.

These leases are accounted for as operating leases, whereby lease expense is recognized on a straight-line basis over the term of the lease. Lease expense reported for each of the years ended December 31, 2025 and 2024 was $1,186 and $1,014.

Additional information regarding the Company’s real estate operating leases is as follows:

	Year Ended December 31, 2025			Year Ended December 31, 2024
Other information on operating leases:
Cash payments included in the measurement of lease liabilities reported in operating cash flows	$	1,254		$	1,065
Right-of-use assets included in other assets on the consolidated balance sheet		4,632			5,225
Weighted average discount rate		7.9	%		6.8	%
Weighted average remaining lease term in years	6.7 years			7.9 years

The following table presents maturities and present value of the Company’s lease liabilities:

	Lease Liability
2026	$	1,113
2027		693
2028		673
2029		645
2030		719
Thereafter		2,876
Total undiscounted lease payments		6,719
Less: present value adjustment		2,023
Operating lease liability included in accounts payable and accrued expenses on the consolidated balance sheet	$	4,696