PATHWARD FINANCIAL, INC.CASH

PATHWARD FINANCIAL, INC. Leases Disclosure

10-KFiled Nov 25, 20252 min read
OPERATING LEASE RIGHT-OF-USE ASSETS AND LIABILITIES
Operating lease right-of-use ("ROU") assets, included in other assets, were $22.7 million and $24.4 million at September 30, 2025 and 2024, respectively.

Operating lease liabilities, included in accrued expenses and other liabilities, were $24.0 million and $26.0 million at September 30, 2025 and 2024, respectively.

The decreases in lease ROU assets and liabilities relate to normal amortization and lease payments made during the fiscal year ended September 30, 2025, but also include adjustments for lease assignments that occurred as a result of the commercial insurance premium finance business sale during the fiscal 2025 first quarter. Two office locations, Newport Beach, California and Addison, Texas, were included in the sale of the commercial insurance premium finance business and the relevant lease ROU assets and liabilities are no longer reflected in the Company's Condensed Consolidated Financial Statements after the transaction closed. The derecognition of the relevant lease ROU assets and liabilities resulted in a $0.5 million gain on remeasurement that was recognized as part of the overall gain on divestitures from the commercial insurance premium finance business sale. See Note 2. Divestitures to the Condensed Consolidated Financial Statements for further information.

Undiscounted future minimum operating lease payments and a reconciliation to the amount recorded as operating lease liabilities at September 30, 2025 were as follows:

(Dollars in thousands)
2026$3,441 
20273,356 
20283,447 
20293,486 
20303,276 
Thereafter9,831 
Total undiscounted future minimum lease payments 26,837 
Discount(2,881)
Total operating lease liabilities$23,956 
The weighted-average discount rate and remaining lease term for operating leases were as follows:

September 30, 2025September 30, 2024
Weighted-average discount rate2.65 %2.45 %
Weighted-average remaining lease term (years)7.978.78

The components of total lease costs for operating leases were as follows:

Fiscal Year Ended September 30,
(Dollars in thousands)202520242023
Lease expense$3,807 $3,997 $3,951 
Short-term and variable lease cost78 75 142 
Sublease income(1,377)(1,300)(1,409)
Total lease cost for operating leases$2,508 $2,772 $2,684 
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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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