BayFirst Financial Corp.BAFN

BayFirst Financial Corp. Leases Disclosure

10-KFiled Mar 25, 20252 min read
LEASES
On December 23, 2024, the Bank agreed to a sale-leaseback transaction with Mountainseed Real Estate Services, LLC (the “Buyer”), pursuant to which the Bank sold to the Buyer two properties owned and operated as branch locations (the “Properties”) for an aggregate purchase price of $15,000, including customary closing adjustments. On December 31, 2024, the Bank also entered into triple net lease agreements (the “Lease Agreements”) with the Buyer under which the Bank leases each of the Properties, and pursuant to which the Bank is responsible for the insurance, real estate taxes, and maintenance and repairs for each of the properties. Each of the Lease Agreements became effective upon the closing and have an initial term of 15 years. The Bank’s obligations under the Lease Agreements are guaranteed by BayFirst Financial Corp.
As the rate implicit in the leases generally is not readily determinable for our operating leases, the discount rates used to determine the present value of our lease liability are based on our incremental borrowing rate at the lease commencement date and commensurate with the remaining lease term. Our incremental borrowing rate for a lease is the rate of interest we would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.
For the year ended December 31, 2024 and December 31, 2023, the components of total lease cost and supplemental information related to operating leases were as follows:
Year Ended
December 31,
20242023
Operating lease cost
$948 $1,202 
Short-term lease cost
118 (88)
Total lease cost, net (1)
$1,066 $1,114 
(1) Includes lease costs reported as discontinued operations of $131 and $136 for the year ended December 31, 2024 and December 31, 2023, respectively.
Year Ended
December 31,
20242023
Gain on sale-leaseback transaction, net$11,649 $— 
Cash flows related to operating lease liabilities
813 1,149 
Right-of-use assets obtained in exchange for new operating lease liabilities
14,276 — 
At December 31, 2024, the weighted average discount rate of operating leases was 6.84% and the weighted average remaining life of operating leases was 13.17 years.
The future minimum lease payments for operating leases, subsequent to December 31, 2024, as recorded on the balance sheet, are summarized as follows:
2025$2,032 
20262,119 
20271,751 
20281,313 
20291,339 
Thereafter14,961 
Total undiscounted lease payments
$23,515 
Less: imputed interest
(9,005)
Net lease liabilities
$14,510 
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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.

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