Leases

The Company’s primary leasing activities relate to certain real estate leases entered into in support of the Company’s branch operations and back office operations. The Company leases five of its full service branches and seven other locations for corporate/administration activities, operations, and loan production. All property leases under lease agreements have been designated as operating leases. The Company does not have leases designated as finance leases.

Note 7 - Leases (continued)

The Company determines if an arrangement is a lease at inception. Operating lease right-of-use (“ROU”) assets are included in premises and equipment, and operating lease liabilities are included as other liabilities in the consolidated balance sheets. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The historical weighted average discount rate used was 5.08% at December 31, 2024 and 3.79% at December 31, 2023. The operating lease ROU asset also includes any lease pre-payments. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components, which the Company has elected to account for separately as the non-lease component amounts are readily determinable under most leases.

As of December 31, 2024, the Company’s net lease ROU assets and related lease liabilities were $5.3 million and $5.9 million, respectively, compared to December 31, 2023 balances of $3.6 million of ROU assets and $3.8 million of lease liabilities, and have remaining terms ranging from one to eight years, including extension options that the Company is reasonably certain will be exercised. As of December 31, 2024, the Company had not entered into any material leases that have not yet commenced. The Company’s lease information is summarized as follows:



(in thousands)	2024		2023
Lease Right-of-Use Asset:
Lease asset	$	6,821	$	6,810
Less: Accumulated amortization	(1,557)		(3,223)
Net lease asset	$	5,264	$	3,587

Lease Liability:
Lease liability	$	7,154	$	6,892
Less: Accumulated amortization	(1,282)		(3,101)
Net lease liability	$	5,872	$	3,791

Future minimum payments for operating leases with initial or remaining terms of one year or more are as follows at December 31, 2024:



(in thousands)	2024
Amounts due in:
2025	$	2,030
2026	1,933
2027	626
2028	449
2029	441
Thereafter	1,188
Total future lease payments	6,667
Discount of cash flows	(795)
Present value of net future lease payments	$	5,872

Operating lease and rent expense totaled $1.5 million and $1.3 million for the years ended December 31, 2024 and 2023, respectively.

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.

Capital Bancorp Inc Leases Disclosure

About Leases Disclosures

Other Available Disclosures