Leases

9 Months Ended

Sep. 30, 2025

The Corporation has committed to rent premises used in business operations under non-cancelable operating leases and determines if an arrangement meets the definition of a lease upon inception. Upon commencement of a new lease, a ROU asset and corresponding lease liability is recognized. The Corporation recognizes an adjustment to the ROU asset and lease liability when lease agreements are amended and executed. The discount rate used in determining the present value of lease payments is based on the lessor’s implicit rate in the lease if known or the Corporation’s incremental borrowing rate for borrowing terms similar to the lease upon commencement date.

In the first quarter of 2025, sales-leaseback transactions were completed for five branch locations and a pre-tax net gain on the sale of the bank-owned properties totaling $7.0 million was recognized in noninterest income. In addition, operating lease ROU assets of $10.0 million and operating lease liabilities of $10.0 million were recorded. These leases expire in 17 years and include options to renew for two additional 15-year terms.

As of both September 30, 2025 and December 31, 2024, there were no operating leases that had not yet commenced.

The following table presents information regarding the Corporation’s operating leases:


	Sep 30, 2025		Dec 31, 2024
Operating lease ROU assets	$35,968		$26,943
Operating lease liabilities	$38,741		$29,578
Weighted average discount rate	5.37	%	3.80	%
Range of lease expiration dates	1 month - 22 years		4 months - 23 years
Range of lease renewal options	3 years - 15 years		1 year - 5 years
Weighted average remaining lease term	13.1 years		12.6 years

The following table presents the undiscounted annual lease payments under the terms of the Corporation’s operating leases at September 30, 2025, including a reconciliation to the present value of operating lease liabilities recognized in the Consolidated Balance Sheets:


(Dollars in thousands)
October 1, 2025 to December 31, 2025						$1,272
2026						4,787
2027						4,297
2028						4,015
2029						3,909
2030 and thereafter						36,302
Total operating lease payments						54,582
Less: interest						15,841
Present value of operating lease liabilities (1)						$38,741

(1)Includes short-term operating lease liabilities of $3.1 million.

The following table presents the components of total lease expense and operating cash flows:


(Dollars in thousands)	Three Months		Nine Months
Periods ended September 30,	2025	2024	2025	2024
Lease Expense:
Operating lease expense	$1,333	$1,115	$3,960	$3,362
Variable lease expense	54	44	150	125
Total lease expense (1)	$1,387	$1,159	$4,110	$3,487
Cash Paid:
Cash paid reducing operating lease liabilities	$1,282	$1,116	$3,823	$3,401

(1)Included in net occupancy expenses in the Consolidated Statements of Income.