Note 4 - Premises and Equipment, Net |
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| Property, Plant, and Equipment [Text Block] |
4. PREMISES AND EQUIPMENT, NET
Premises and equipment are comprised of the following:
Depreciation expense totaled $1.5 million during the third quarter of 2026 and $1.3 million during the third quarter of 2025, and $4.4 million and $3.8 million during the nine months ended September 30, 2026, and 2025, respectively.
We enter into facility leases in the normal course of business. As of September 30, 2026, we were under lease contracts for eleven of our banking facilities. The leases have maturity dates ranging from December, 2026 through May, 2048, with a weighted average life of 9.4 years as of September 30, 2026. All of our leases have multiple - to -year extensions; however, these were not factored in the lease maturities and weighted average lease term as it was not reasonably certain we would exercise the options on the dates we entered into the lease agreements.
Leases are classified as either operating or finance leases at the lease commencement date, with all of our current leases determined to be operating leases. Lease expense for operating leases is recognized on a straight-line basis over the lease term. Right-of-use assets represent our right to use underlying assets for the lease terms, while lease liabilities represent our obligation to make lease payments arising from the leases. Right-of-use assets and lease liabilities are recognized at the lease commencement date at the estimated present value of lease payments over the lease term. We use our incremental borrowing rate, on a collateralized basis, at lease commencement to calculate the present value of lease payments. The weighted average discount rate for leases was 6.34% as of September 30, 2026.
The right-of-use assets, included in premises and equipment, net on our Consolidated Balance Sheets, and the lease liabilities, included in other liabilities on our Consolidated Balance Sheets, totaled $3.3 million and $3.9 million as of September 30, 2026, and December 31, 2025, respectively. As permitted by applicable accounting standards, we have elected not to recognize short-term leases with original terms of twelve months or less on our Consolidated Balance Sheets. Total operating lease expense associated with the leases aggregated $0.3 million during both the third quarters of 2026 and 2025 and $0.9 million and $1.0 million during the nine months ended September 30, 2026, and 2025, respectively.
Future lease payments were as follows as of September 30, 2026:
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