Avidbank Holdings, Inc. Leases Disclosure
6. LEASES
Lease Arrangements
The Company enters into leases in the normal course of business primarily for headquarters, back-office operations locations and business development offices. The Company’s leases have remaining terms ranging from 22 to 53 months, some of which include termination or renewal options to extend the lease for up to 5 years.
The Company leases its administrative offices in San Jose under a non-cancellable operating lease. The lease expires in 2027 and has -year renewal option. The Company also leases office space for loan production offices in Redwood City, California and San Francisco, California. At the end of September 2021, the Company closed its Palo Alto branch office, and the space has been subleased. In the first quarter of 2025, the Redwood City loan production office lease expired. The Company executed a new Redwood City loan production office lease, in a new location, with a five-year term that expires in 2030. The San Francisco loan production office lease expires in 2030.
Leases are classified as operating or finance leases at the lease commencement date. The Company does not currently have any significant finance leases in which it is the lessee. Lease expense for operating leases and short-term leases is recognized on a straight-line basis over the lease term. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term.
The Company uses its incremental borrowing rate at lease commencement to calculate the present value of lease payments when the rate implicit in a lease is not known. The Company's incremental borrowing rate is based on the Federal Home Loan Bank of San Francisco, adjusted for the lease term and other factors.
Right-of-use assets and lease liabilities by lease type, and the associated statement of financial condition classifications, are as follows: (in thousands)
| December 31, | ||||||||
| Statement of Financial Condition Classification | 2025 | 2024 | ||||||
| Right-of-use assets: | ||||||||
|
| $ | 5,606 | $ | 6,933 | ||||
| Total right-of-use assets | $ | 5,606 | $ | 6,933 | ||||
| Lease liabilities: | ||||||||
|
| $ | 6,211 | $ | 7,686 | ||||
| Total lease liabilities | $ | 6,211 | $ | 7,686 | ||||
Lease Expense
Total lease cost for the years ended December 31, 2025 and 2024 is as follows:
| December 31, | ||||||||
| (In thousands) | 2025 | 2024 | ||||||
| Operating lease cost | $ | 2,549 | $ | 3,078 | ||||
| Sublease income | (348 | ) | (379 | ) | ||||
| Total lease cost, net | $ | 2,201 | $ | 2,699 | ||||
Lease Obligations
Future undiscounted lease payments for operating leases with initial terms of one year or more as of December 31, 2025 are as follows: (in thousands)
| December 31, | Leases | |||
| 2026 | $ | 2,684 | ||
| 2027 | 2,432 | |||
| 2028 | 838 | |||
| 2029 | 863 | |||
| 2030 | 338 | |||
| Thereafter | - | |||
| Total undiscounted lease payments | 7,155 | |||
| Less imputed interest | 944 | |||
| Net lease liabilities | $ | 6,211 | ||
| Supplemental Lease Information | December 31, | |||||||
| 2025 | 2024 | |||||||
| Operating lease weighted average remaining lease term (years) | 3.12 | 3.87 | ||||||
| Operating lease weighted average discount rate | 2.46 | % | 2.52 | % | ||||
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.