Leases

3 Months Ended

Mar. 31, 2025

The Bank leases certain of its branch offices, parking facilities and certain equipment under operating leases. The leases have remaining lease terms of 2 years to 9 years, some of which include options to extend the leases for up to 5 years, and some of which include options to terminate the leases within 3 years. As the options are reasonably certain to be exercised, they are recognized as part of the right-of-use assets and lease liabilities.

For the three months ended March 31, 2025 and 2024, total operating lease expense was $0.12 million and $0.12 million respectively, and is included in occupancy expenses in the consolidated statements of income. Included in this for the three months ended March 31, 2025 and 2024 were $0.10 million and $0.10 million, respectively, of operating lease costs, $0.01 million and $0.01 million, respectively, of short term lease costs, and $0.01 million and $0.01 million, respectively, of variable lease costs.

For the three months ended March 31, 2025 and 2024, cash paid for amounts included in the measurement of operating lease liabilities was $0.10 million and $0.10 million, respectively.

As of March 31, 2025 and December 31, 2024, operating lease right-of-use assets included in other assets was $1.80 million and $1.87 million respectively. Operating lease liabilities included in other liabilities were $1.91 million and $1.97 million as of March 31, 2025 and December 31, 2024. As of March 31, 2025 and December 31, 2024, the weighted average remaining lease term for operating leases was 7.56 years and 7.75 years, respectively, and the weighted average discount rate for operating leases was 3.68% and 3.68%, respectively. Discount rates used were determined from FHLB borrowing rates for comparable terms.

As of March 31, 2025, maturities of lease liabilities were as follows:


Year ending December 31:	(Amounts In Thousands)
2025 (excluding the three months ended March 31, 2025)	$	249
2026	335
2027	333
2028	295
2029	172
Thereafter	812
Total lease payments	2,196
Less imputed interest	(290)
Total operating lease liabilities	$	1,906

HILLS BANCORPORATION 10-Q