Beacon Financial CorpBBT
Beacon Financial Corp Leases Disclosure
Commitments and Contingencies
Off-Balance Sheet Financial Instruments
The Company is party to off-balance sheet financial instruments in the normal course of business to meet the financing needs of its customers and to reduce its own exposure to fluctuations in interest rates. These financial instruments include loan commitments, standby and commercial letters of credits, and loan level derivatives. According to GAAP, these financial instruments are not recorded in the financial statements until they are funded or related fees are incurred or received.
The contract amounts reflect the extent of the involvement the Company has in particular classes of these instruments. Such commitments involve, to varying degrees, elements of credit risk and interest-rate risk in excess of the amount recognized in the consolidated balance sheets. The Company's exposure to credit loss in the event of non-performance by the counterparty is represented by the fair value of the instruments. The Company uses the same policies in making commitments and conditional obligations as it does for on-balance sheet instruments.
Financial instruments with off-balance-sheet risk at the dates indicated follow:
| At December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| (In Thousands) | |||||||||||
| Financial instruments whose contract amounts represent credit risk: | |||||||||||
| Commitments to originate loans and leases: | |||||||||||
| Commercial real estate | $ | 99,457 | $ | 11,126 | |||||||
| Commercial | 137,923 | 144,721 | |||||||||
| Residential mortgage | 23,115 | 14,607 | |||||||||
| Home equity | 9,022 | — | |||||||||
| Unadvanced portion of loans and leases | 2,483,239 | 1,076,783 | |||||||||
| Unused lines of credit: | |||||||||||
| Home equity | 1,175,702 | 780,214 | |||||||||
| Other consumer | 148,358 | 113,838 | |||||||||
| Other commercial | — | 398 | |||||||||
| Unused letters of credit: | |||||||||||
| Financial standby letters of credit | 10,440 | 12,702 | |||||||||
| Performance standby letters of credit | 25,025 | 24,325 | |||||||||
| Commercial and similar letters of credit | 58,074 | 2,330 | |||||||||
| Interest rate derivatives (notional amounts) | 192,468 | 225,000 | |||||||||
| Loan level derivatives (notional amounts): | |||||||||||
| Receive fixed, pay variable | 3,505,840 | 1,672,948 | |||||||||
| Pay fixed, receive variable | 3,505,840 | 1,672,948 | |||||||||
| Risk participation-out agreements | 670,834 | 539,731 | |||||||||
| Risk participation-in agreements | 153,185 | 102,198 | |||||||||
| Foreign exchange contracts (notional amounts): | |||||||||||
| Buys foreign currency, sells U.S. currency | 2,785 | 5,849 | |||||||||
| Sells foreign currency, buys U.S. currency | 2,800 | 5,408 | |||||||||
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require the payment of a fee by the customer. Since some of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer's creditworthiness on a case-by-case basis. The amount of collateral obtained, if any, is based on management's credit evaluation of the borrower.
Standby and commercial letters of credits are conditional commitments issued by the Company to guarantee performance of a customer to a third party. These standby and commercial letters of credit are primarily issued to support the financing needs of the Company's commercial customers. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers.
The reserve for unfunded credit commitments, which is included in other liabilities, was $13.7 million and $6.0 million as of December 31, 2025 and December 31, 2024, respectively. See Note 7, "Allowance for Credit Losses" for further discussion on the Company's methodology for determining the ACL, which includes the reserve for unfunded commitments.
From time to time, the Company enters into loan level derivatives, risk participation agreements or foreign exchange contracts with commercial customers and third-party financial institutions. These derivatives allow the Company to offer long-term fixed-rate commercial loans while mitigating the interest-rate or foreign exchange risk of holding those loans. In a loan level derivative transaction, the Company lends to a commercial customer on a floating-rate basis and then enters into a loan
level derivative with that customer. Concurrently, the Company enters into offsetting swaps with a third-party financial institution, effectively minimizing its net interest-rate risk exposure resulting from such transactions. The fair value of these derivatives are presented in Note 16, "Derivative and Hedging Activities".
Lease Commitments
The Company leases certain office space under various noncancellable operating leases as well as other assets. These leases have terms ranging from 1 year to over 18 years. Certain leases contain renewal options and escalation clauses which can increase rental expenses based principally on the consumer price index and fair market rental value provisions. All of the Company's current outstanding leases are classified as operating leases.
The Company considered the following criteria when determining whether a contract contains a lease, the existence of an identifiable asset and the right to obtain substantially all of the economic benefits from use of the asset through the period. The Company used the FHLB classic advance rates available as of the lease's start dates as the discount rate to determine the net present value of the remaining lease payments.
Total lease commitments increased from $44.8 million as of December 31, 2024 to $90.7 million as of December 31, 2025. The increase is due to the addition of leases from Legacy Berkshire branch locations.
| At December 31, 2025 | At December 31, 2024 | At December 31, 2023 | |||||||||
| (In Thousands) | |||||||||||
| The components of lease expense were as follow: | |||||||||||
| Operating lease cost | $ | 11,293 | $ | 8,983 | $ | 8,527 | |||||
| Supplemental cash flow information related to leases was as follows: | |||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||
| Operating cash flows for operating leases | $ | 12,294 | $ | 9,044 | $ | 8,901 | |||||
| Right-of-use assets obtained in exchange for new lease obligations: | |||||||||||
| Operating leases assets | $ | 46,186 | $ | 18,093 | $ | 15,073 | |||||
| Operating leases liabilities | $ | 53,127 | $ | 18,093 | $ | 16,672 | |||||
| Supplemental balance sheet information related to leases was as follows: | |||||||||||
| Operating Leases | |||||||||||
| Operating lease right-of-use assets | $ | 82,817 | $ | 43,527 | $ | 30,863 | |||||
| Operating lease liabilities | 90,713 | 44,785 | 31,998 | ||||||||
| Weighted Average Remaining Lease Term | |||||||||||
| Operating leases | 7.95 years | 8.90 | 8.87 | ||||||||
| Weighted Average Discount Rate | |||||||||||
| Operating leases | 4.2 | % | 4.1 | % | 4.0 | % | |||||
A summary of future minimum rental payments under such leases at the dates indicated follows:
| Year ended December 31, | Minimum Rental Payments | ||||
| (In Thousands) | |||||
| 2026 | $ | 18,702 | |||
| 2027 | 17,372 | ||||
| 2028 | 14,712 | ||||
| 2029 | 11,741 | ||||
| 2030 | 9,166 | ||||
| Thereafter | 34,280 | ||||
| Total | $ | 105,973 | |||
| Less imputed interest | (15,260) | ||||
| $ | 90,713 | ||||
Certain leases contain escalation clauses for real estate taxes and other expenditures, which are not included above. Total rental expense was $11.3 million in 2025. This compares to total rent expense of $9.0 million and $8.5 million in 2024 and 2023, respectively.
A portion of the Company's headquarters was rented to third-party tenants which generated rental income of $0.6 million in 2025 compared to $0.2 million for both 2024 and 2023 respectively.
Legal Proceedings
At December 31, 2025, the Bank was involved in pending lawsuits that arose in the ordinary course of business. Management has reviewed these pending lawsuits with legal counsel and has taken into consideration the view of counsel as to their outcome. In the opinion of management, the consolidated financial position and results of operations of the Company are not expected to be affected materially by the outcome of such proceedings.
The litigation matters described in the preceding paragraph primarily include claims that have been brought against the Bank for damages, but do not include litigation matters where the Bank seeks to collect amounts owed to it by third parties (such as litigation initiated to collect delinquent loans). These excluded, collection-related matters may involve claims or counterclaims by the opposing party or parties, but the Company has excluded such matters from the disclosure contained in the preceding paragraph in all cases where it believes the possibility of the Company or the Bank paying damages to any opposing party is remote.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 2, 2026 | Showing above |
| 2024 | Mar 3, 2025 | |
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.