Leases

12 Months Ended

Dec. 31, 2023

Leases

Leases

NOTE 10 Leases

A lease is defined as a contract, or part of a contract, that conveys the right to control the use of an identified property, plant or equipment for a period of time in exchange for consideration. Substantially all the leases in which the Company is the lessee are comprised of real estate property for branches, and office equipment rentals with terms extending through 2037. Portions of certain properties are subleased for terms extending through 2024. Substantially all of the Company’s leases are classified as operating leases. The Company has no existing finance leases.

The Company elected not to include short-term leases (i.e., leases with initial terms of twelve months or less), or equipment leases (deemed immaterial) on the consolidated financial statements. The following table presents the classification of the Company’s right-of-use, or ROU, assets and lease liabilities on the consolidated financial statements as of December 31, 2023 and 2022:

		December 31,		December 31,
(dollars in thousands)		2023		2022
Lease Right-of-Use Assets	Classification
Operating lease right-of-use assets	Operating lease right-of-use assets	$	5,436	$	5,419
Lease Liabilities
Operating lease liabilities	Operating lease liabilities	$	5,751	$	5,902

The calculated amount of the ROU assets and lease liabilities in the table above are impacted by the length of the lease term and the discount rate used to present value the minimum lease payments. The Company’s lease agreements often include one or more options to renew at the Company’s discretion. If at lease inception, the Company considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the calculation of the ROU asset and lease liability. The Company utilizes its incremental borrowing rate at lease inception,

on a collateralized basis, over a similar term for the discount rate. For the Company’s only finance lease, the Company utilized its incremental borrowing rate at lease inception.

	December 31,		December 31,
	2023		2022
Weighted-average remaining lease term, years
Operating leases	7.3		5.0
Weighted-average discount rate
Operating leases	3.9	%	3.1	%

As the Company elected, for all classes of underlying assets, not to separate lease and non-lease components and instead to account for them as a single lease component, the variable lease cost primarily represents variable payments such as common area maintenance utilities. Variable lease cost also includes payments for usage or maintenance of those capitalized equipment operating leases.

The following table presents lease costs and other lease information for the years ending December 31, 2023, 2022 and 2021:

	Year ended
	December 31,
(dollars in thousands)	2023		2022		2021
Lease costs
Operating lease cost	$	1,914	$	1,799	$	1,827
Variable lease cost		1,159		899		823
Short-term lease cost		167		217		181
Finance lease cost
Interest on lease liabilities		—		7		25
Amortization of right-of-use assets		—		87		116
Sublease income		(219)		(238)		(228)
Net lease cost	$	3,021	$	2,771	$	2,744
Other information
Cash paid for amounts included in the measurement of lease liabilities operating cash flows from operating leases	$	1,755	$	1,706	$	1,763
Right-of-use assets obtained in exchange for new operating lease liabilities		1,868		4,266	$	267

Future minimum payments for leases with initial or remaining terms of one year or more as of December 31, 2023 are as follows:

	Operating
(dollars in thousands)	Leases
Year ended
December 31, 2024	$	1,626
December 31, 2025		1,243
December 31, 2026		1,064
December 31, 2027		516
December 31, 2028		311
Thereafter		1,831
Total future minimum lease payments	$	6,591
Amounts representing interest		(840)
Total operating lease liabilities	$	5,751