CoastalSouth Bancshares, Inc. Leases Disclosure
NOTE 10 — LEASES
The Company has entered into several operating leases for properties for branch banking and other banking operations. The leases have various initial terms and expire on various dates. The lease agreements generally provide that the Company is responsible for ongoing repairs and maintenance, insurance, and real estate taxes. The leases also provide for renewal options and certain scheduled increases in monthly lease payments. The Company does not consider exercise of any of these lease renewal options to be reasonably certain.
Leases with an initial term of 12 months or less are not recorded on the balance sheet. For these short-term leases, lease expense is recognized on a straight-line basis over the lease term. Rental expense recorded under short-term leases for the year ended December 31, 2025 was $13 thousand. There were no rental expenses recorded under short-term leases for the year ended December 31, 2024. At December 31, 2025 and 2024, the Company had no leases classified as finance leases.
At December 31, 2025 and 2024, the Company had an operating lease ROU asset of $3.9 million and $4.0 million, and an operating lease liability of $4.6 million and $4.8 million, respectively. The ROU asset and operating lease liability are recorded in and , respectively, in the Consolidated Balance Sheets.
Rental expense recorded under long-term leases for the years ended December 31, 2025 and 2024 was $1.1 million for each of the periods.
The weighted-average remaining lease term and the weighted-average discount rate for operating leases were 6.22 years and 3.02%, respectively, at December 31, 2025.
A maturity analysis of the Company's operating lease liabilities and reconciliation of the undiscounted cash flows to the operating lease liability at December 31, 2025 is as follows (in thousands of dollars):
2026 |
|
$ |
809 |
|
2027 |
|
|
879 |
|
2028 |
|
|
804 |
|
2029 |
|
|
730 |
|
2030 |
|
|
703 |
|
Thereafter |
|
|
1,116 |
|
Total undiscounted cash flows |
|
|
5,041 |
|
Discount on cash flows |
|
|
(487 |
) |
Total lease liability |
|
$ |
4,554 |
|
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.