LEASES

9 Months Ended

Sep. 30, 2024

Leases in which the Company is determined to be the lessee are primarily operating leases comprised of real estate property and office space for our corporate headquarters and profit centers with terms that extend to 2036. In accordance with ASC 842, operating leases are required to be recognized as a right-of-use asset with a corresponding lease liability.

The Company elected to not include short-term leases with initial terms of twelve months or less on the Condensed Consolidated Balance Sheets. The following table presents the classification of the right-of-use assets and corresponding liabilities within the Condensed Consolidated Balance Sheets, as of the dates noted:


(dollars in thousands)		September 30, 2024		December 31, 2023
Lease Right-of-Use Assets	Classification
Operating lease right-of-use assets	Other assets	$	18,511	$	8,929

Lease Liabilities	Classification
Operating lease liabilities	Other liabilities	$	21,334	$	10,900

The Company’s operating lease agreements typically include an option to renew the lease at the Company’s discretion. To the extent the Company is reasonably certain it will exercise the renewal option at the inception of the lease, the Company will include the extended term in the calculation of the right-of-use asset and lease liability. ASC 842 requires the use of the rate implicit in the lease when it is readily determinable. As this rate is typically not readily determinable, at the inception of the lease, the Company uses its collateralized incremental borrowing rate over a similar term. The amount of the right-of-use asset and lease liability are impacted by the discount rate used to calculate the present value of the minimum lease payments over the term of the lease. The following table presents information related to operating leases:


	September 30, 2024		December 31, 2023
Weighted-Average Remaining Lease Term
Operating leases	9.72 years		4.67 years

Weighted-Average Discount Rate
Operating leases	4.12	%	2.78	%

The Company’s operating leases contain fixed and variable lease components and it has elected to account for all classes of underlying assets as a single lease component. Variable lease costs primarily represent common area maintenance and parking. The Company recognized lease costs in Occupancy and equipment expense in the accompanying Condensed Consolidated Statements of Income. The following presents the Company’s net lease costs during the periods presented:


(dollars in thousands)	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Lease Costs
Operating lease cost	$	874	$	720	$	2,474	$	2,239
Variable lease cost	591		453		1,723		1,426
Lease costs, net	$	1,465	$	1,173	$	4,197	$	3,665

The following presents a maturity analysis of the Company’s operating lease liabilities on an annual basis for each of the next five years and total amounts thereafter (dollars in thousands):


Year Ending December 31,	Operating Leases
2024⁽¹⁾	$	904
2025	2,935
2026	2,443
2027	3,415
2028	3,115
Thereafter	15,122
Total future minimum lease payments	27,934
Less: imputed interest	(6,600)
Present value of net future minimum lease payments	$	21,334

______________________________________

(1)Amount represents the remaining three months of year.

Leases in which the Company is determined to be the lessor are considered operating leases and consist of the partial lease of Company owned buildings. In accordance with ASC 842, these leases have been accounted for as operating leases. The Company recognized $0.1 million of lease income during the three months ended September 30, 2024 and 2023. The Company recognized $0.2 million and $0.3 million of lease income during the nine months ended September 30, 2024 and 2023, respectively.

The following presents a maturity analysis of the Company's lease payments to be received on an annual basis for each of the next five years and total amounts thereafter (dollars in thousands):


Year Ending December 31,	Undiscounted Operating Lease Income
2024⁽¹⁾	$	66
2025	188
2026	144
2027	119

Thereafter	—
Total undiscounted operating lease income	$	517

______________________________________

(1)Amount represents the remaining three months of the year.