COMMUNITY FINANCIAL SYSTEM, INC. Leases Disclosure
NOTE O: LEASES
The Company has operating and finance leases for certain premises and operating leases for certain equipment. These leases have remaining terms that range from less than one year to 15 years. Options to extend the leases range from a single extension option of one year to multiple extension options for up to 40 years. Certain agreements include an option to terminate the lease within one year.
The components of lease expense are as follows:
(000’s omitted) | | 2025 | 2024 | 2023 | |||||
Operating lease cost | $ | 11,314 | $ | 10,536 | $ | 9,358 | |||
Finance lease cost: | |||||||||
Amortization of right-of-use assets | 588 | 283 | 0 | ||||||
Interest on lease liabilities | 423 | 215 | 0 | ||||||
Variable lease cost |
| 95 | 80 | 68 | |||||
Short-term lease cost (1) |
| 155 | 99 | 64 | |||||
Total lease cost | $ | 12,575 | $ | 11,213 | $ | 9,490 | |||
(1) | Short-term lease cost includes the cost of leases with terms of twelve months or less, excluding leases with terms of one month or less. |
Supplemental cash flow information related to leases is as follows:
(000’s omitted) | | 2025 |
| 2024 | ||
Cash paid for amounts included in the measurement of lease liabilities: |
| | ||||
Operating cash outflows for operating leases | $ | 9,328 | $ | 8,756 | ||
Operating cash outflows for finance leases | 423 | 86 | ||||
Financing cash outflows for finance leases | 352 | 71 | ||||
Right-of-use assets obtained in exchange for lease obligations: |
| |||||
Operating leases | 17,472 | 16,043 | ||||
Finance leases |
| 0 | 8,608 | |||
Supplemental balance sheet information related to leases is as follows:
(000’s omitted, except lease term and discount rate) | | 2025 |
| 2024 | |||
Operating leases |
| | |||||
$ | 53,175 | $ | 46,240 | ||||
56,728 | 48,947 | ||||||
Finance leases |
| ||||||
7,737 | 8,325 | ||||||
8,331 | 8,667 | ||||||
Weighted average remaining lease term |
| ||||||
Operating leases |
| 7.8 years | 7.4 years | ||||
Finance leases | 13.4 years | 14.4 years | |||||
Weighted average discount rate |
| ||||||
Operating leases |
| 4.38 | % | 4.23 | % | ||
Finance leases | 5.01 | % | 5.01 | % | |||
Maturities of lease liabilities as of December 31, 2025 are as follows:
(000’s omitted) | | Operating Leases | | Finance Leases | ||
2026 | $ | 11,824 | $ | 782 | ||
2027 |
| 9,878 | 789 | |||
2028 |
| 8,049 | 796 | |||
2029 |
| 6,702 | 809 | |||
2030 |
| 5,750 | 874 | |||
Thereafter |
| 25,621 | 7,513 | |||
Total lease payments |
| 67,824 | 11,563 | |||
Less imputed interest |
| (11,096) | (3,232) | |||
Total | $ | 56,728 | $ | 8,331 | ||
Maturities of lease liabilities as of December 31, 2024 are as follows:
(000’s omitted) | | Operating Leases | | Finance Leases | ||
2025 | $ | 10,808 | $ | 775 | ||
2026 |
| 9,520 | 782 | |||
2027 |
| 7,338 | 789 | |||
2028 |
| 5,892 | 796 | |||
2029 |
| 4,522 | 809 | |||
Thereafter |
| 19,951 | 8,370 | |||
Total lease payments |
| 58,031 | 12,321 | |||
Less imputed interest |
| (9,084) | (3,654) | |||
Total | $ | 48,947 | $ | 8,667 | ||
Included in the Company’s operating leases are related party leases where BPAS-APS and OneGroup, subsidiaries of the Company, lease office space from 706 North Clinton, LLC (“706 North Clinton”), an entity the Company holds a 50% membership interest in through its subsidiary OPFC II. As of December 31, 2025, the operating lease right-of-use assets and operating lease liabilities associated with these related party leases total $2.6 million and $2.6 million, respectively. As of December 31, 2024, the operating lease right-of-use assets and operating lease liabilities associated with these related party leases total $2.6 million and $2.7 million, respectively. As of December 31, 2025, the weighted average remaining lease term and weighted average discount rate for the Company’s related party leases are 4.8 years and 3.74%, respectively. As of December 31, 2024, the weighted average remaining lease term and weighted average discount rate for the Company’s related party leases are 5.2 years and 3.69%, respectively.
The maturities of the Company’s related party lease liabilities as of December 31, 2025 are as follows:
(000’s omitted) | 706 North Clinton, LLC | ||
2026 | | $ | 615 |
2027 |
| 615 | |
2028 | 615 | ||
2029 | 615 | ||
2030 |
| 320 | |
Thereafter |
| 108 | |
Total lease payments |
| 2,888 | |
Less imputed interest |
| (240) | |
Total | $ | 2,648 | |
The maturities of the Company’s related party lease liabilities as of December 31, 2024 are as follows:
(000’s omitted) | | 706 North Clinton, LLC | |
2025 | $ | 605 | |
2026 |
| 615 | |
2027 |
| 506 | |
2028 |
| 506 | |
2029 |
| 506 | |
Thereafter |
| 211 | |
Total lease payments |
| 2,949 | |
Less imputed interest |
| (261) | |
Total | $ | 2,688 | |
As of December 31, 2025, the Company has two additional operating leases for office space associated with new bank branches that are signed but have not yet commenced with lease terms of 10 years. The Company will be involved to varying degrees in the construction and design of the space and anticipates that the operating leases will commence during 2026. Upon commencement, lease right-of-use assets and lease liabilities of approximately $3.7 million will be recorded in the consolidated statements of condition.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 28, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2017 | Mar 1, 2018 | |
| 2016 | Mar 1, 2017 | |
| 2015 | Feb 29, 2016 | |
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.