FRANKLIN FINANCIAL SERVICES CORP /PA/ Leases Disclosure
The Corporation leases various assets in the course of its operations that are subject to recognition on the balance sheet. The Corporation considers all of its leases to be operating leases and it has no finance leases. The leased assets may include equipment, and buildings and land (collectively real estate). The equipment leases are shorter-term than the real estate leases and generally have a fixed payment over a defined term without renewal options. Certain equipment leases have purchase options and it was determined the option was not reasonably certain to be exercised. The real estate leases are longer-term and may contain renewal options after the initial term, but none of the real estate leases contain a purchase option. The renewal options on real estate leases were reviewed and if it was determined the option was reasonably certain to be renewed, the option term was considered in the determination of the lease liability. There is only one real estate lease with a variable payment based on an index included in the lease liability. None of the
leases contain any restrictive covenants and there are no significant leases that have not yet commenced. The discount rate used to determine the lease liability is based on the Bank’s fully secured borrowing rate from the Federal Home Loan Bank for a term similar to the lease term. Operating lease expense is included in net occupancy expense in the consolidated statements of income.
Lease Cost:
The components of total lease cost were as follows for the period ending:
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| For the years ended December 31, | ||||
(Dollars in thousands) |
| 2025 |
| 2024 | ||
Operating lease cost |
| $ | 724 |
| $ | 764 |
Short-term lease cost |
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| 15 |
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| 3 |
Variable lease cost |
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| 162 |
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| 156 |
Total lease cost |
| $ | 901 |
| $ | 923 |
Supplemental Lease Information:
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(Dollars in thousands) |
| For the years ended December 31, | ||||
Cash paid for amounts included in the measurement of lease liabilities: |
| 2025 |
| 2024 | ||
Operating cash flows from operating leases |
| $ | 713 |
| $ | 733 |
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Weighted-average remaining lease term (years) |
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| 11.2 |
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| 11.6 |
Weighted-average discount rate |
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| 3.64% |
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| 3.48% |
Lease Obligations:
Future undiscounted lease payments for operating leases with initial terms of one year or more as of December 31, 2025 are as follows:
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(Dollars in thousands) |
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2026 |
| $ | 601 |
2027 |
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| 467 |
2028 |
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| 416 |
2029 |
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| 420 |
2030 |
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| 397 |
2031 and beyond |
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| 2,412 |
Undiscounted cash flows |
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| 4,712 |
Imputed interest |
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| (872) |
Total lease liability |
| $ | 3,840 |
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 13, 2026 | Showing above |
| 2024 | Mar 14, 2025 | |
| 2023 | Mar 11, 2024 | |
| 2022 | Mar 10, 2023 | |
| 2021 | Mar 10, 2022 | |
| 2020 | Mar 11, 2021 | |
| 2019 | Mar 13, 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.