COASTAL FINANCIAL CORPCCB

COASTAL FINANCIAL CORP Leases Disclosure

10-KFiled Feb 27, 20263 min read
Leases
The Company has committed to rent premises and equipment used in business operations under non-cancelable operating and finance leases and determines if an arrangement meets the definition of a lease upon inception.
Operating and finance lease right-of-use (“ROU”) assets represent a right to use an underlying asset for the contractual lease term. Lease liabilities represent an obligation to make lease payments arising from the lease. A lease ROU asset and lease liability will be recognized for any new leases at the commencement of the new lease.
The Company’s leases do not provide an implicit interest rate, therefore the Company used its incremental collateralized borrowing rates commensurate with the underlying lease terms to determine the present value of operating and finance lease liabilities at the inception of the lease. The weighted average discount rate as of December 31, 2025 was 4.0% for operating leases and 4.75% for finance leases and is based off the discount rate and term at the time the lease is originated or renewed.
The Company’s operating lease agreements contain both lease and non-lease components, which are generally accounted for separately. The Company’s lease agreements do not contain any residual value guarantees.
Operating leases with original terms of 12 months or less are not included in ROU assets and corresponding operating lease liabilities are not recorded in our consolidated balance sheets. Operating lease terms include options to extend when it is reasonably certain that the Company will exercise such options, determined on a lease-by-lease basis. At December 31, 2025, lease expiration dates ranged from less than twelve months to 21.2 years, with additional renewal options on certain leases typically ranging from zero to 10 years. At December 31, 2025, the dollar weighted average remaining lease term for the Company’s operating leases was 7.4 years. The weighted average remaining lease term for the Company's finance lease was 9 months.
Rental expense for operating leases is recognized on a straight-line basis over the lease term and amounted to $1.2 million for the years ended December 31, 2025, 2024 and 2023. Variable lease components, such as inflation adjustments, are expensed as incurred and not included in ROU assets and operating lease liabilities.
Amortization expense for the finance lease is recognized on a straight-line basis over the lease term and amounted to $34,000 and $43,000 for the year December 31, 2025 and December 31, 2024, respectively. Interest on the finance lease was $2,000 and $5,000 for the year December 31, 2025 and December 31, 2024, respectively. There was no amortization expense or interest on finance leases in 2023.
The following sets forth, as of December 31, 2025, the minimum annual lease payments under the terms of these leases, inclusive of renewal options that the Company is reasonably certain to renew:
OperatingFinance
(dollars in thousands)December 31,
2025
2026$1,225 $27 
20261,097 — 
2027695 — 
2028459 — 
2029413 — 
2031 and thereafter1,869 — 
Total lease payments5,757 27 
Less: amounts representing interest799 1 
Present value of lease liabilities$4,958 $26 
Office space at a small number of branches is leased and sub-leased to a few tenants on month-to-month and multi-year leases. Lease and sublease income was $180,000, $204,000 and $205,000 for 2025, 2024 and 2023, respectively.
The following table presents the components of total lease expense and operating cash flows for the periods presented:
For the Year Ended
(dollars in thousands) December 31,
2025		December 31,
2024		December 31,
2023
Lease expense:
Operating lease expense (1)
1,071 $1,020 1,074 
Variable lease expense413 362 236 
Finance lease cost
Right-of-use amortization (2)
$34 $43 $— 
Interest expense (3)
2 5 — 
Total lease expense$1,520 $1,430 $1,310 
Cash paid:
Cash paid from operating leases$1,500 $1,396 $1,334 
Cash paid from finance leases$36 $47 $— 
(1)Included in net occupancy expense and in the Consolidated Statements of Income.
(2)Included in other expense in the Consolidated Statements of Income.
(3)Included in interest on borrowed funds Consolidated Statements of Income.
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Historical Timeline

Fiscal YearFiled
2025Feb 27, 2026Showing above
2024Mar 17, 2025
2023Mar 15, 2024
2022Mar 16, 2023
2021Mar 14, 2022
2020Mar 12, 2021
2019Mar 12, 2020

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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