Leases

9 Months Ended

Sep. 30, 2025

NOTE 7 – Leases

The Company had operating right-of-use (“ROU”) assets, included in property and equipment, of $19.4 million and $20.6 million as of September 30, 2025 and December 31, 2024, respectively. The Company had lease liabilities, included in other liabilities, of $22.1 million and $23.2 million as of September 30, 2025 and December 31, 2024, respectively. We maintain operating leases on land and buildings for various office spaces. The lease agreements have maturity dates ranging from September 2027 to February 2032, some of which include options for multiple five-year extensions. The weighted average remaining life of the lease term for these leases was 4.55 years and 4.95 years as September 30, 2025 and December, 31, 2024, respectively. The ROU asset and lease liability are recognized at lease commencement by calculating the present value of lease payments over the lease term. The ROU assets also include any initial direct costs incurred and lease payments made at or before commencement date and are reduced by any lease incentives.

The discount rate used in determining the lease liability for each individual lease was the FHLB fixed advance rate which corresponded with the remaining lease term at implementation of the accounting standard and as of the lease commencement date for leases subsequently entered into. The weighted average discount rate for leases was 2.27% and 2.28% as of September 30, 2025 and December 31, 2024, respectively.

The total operating lease costs were $613,000 and $604,000 for the three months ended September 30, 2025 and 2024, respectively, and $1.8 million for the nine months ended September 30, 2025 and 2024, respectively.

Operating lease payments due as of September 30, 2025 were as follows:

Schedule of operating lease payments
	Operating
(dollars in thousands)	Leases
2025	$	544
2026		2,210
2027		2,267
2028		2,015
2029		1,501
Thereafter		18,686
Total undiscounted lease payments		27,223
Discount effect of cash flows		5,125
Total lease liability	$	22,098

SOUTHERN FIRST BANCSHARES INC 10-Q