MetroCity Bankshares, Inc. Leases Disclosure
NOTE 6 – OPERATING LEASES
The Company has entered into various operating leases for certain branch locations with terms extending through December 2034. Generally, these leases have initial lease terms of ten years or less. Many of the leases have one or more renewal options which typically are for five years at the then fair market rental rates. We assessed these renewal options using a threshold of reasonably certain. For leases where we were reasonably certain to renew, those option periods were included within the lease term, and therefore, the measurement of the right-of-use (“ROU”) asset and lease liability. None of our leases include options to terminate the lease and none have initial terms of 12 months or less (i.e. short-term leases). Operating leases in which the Company is the lessee are recorded as operating lease ROU assets and operating lease liabilities on the Consolidated Balance Sheets. The Company currently does not have any finance leases.
Operating lease ROU assets represent the Company’s right to use an underlying asset during the lease term and operating lease liabilities represent its obligation to make lease payments arising from the lease. ROU assets and operating lease liabilities are recognized at lease commencement based on the present value of the remaining lease payments using a discount rate that represents the Company’s incremental collateralized borrowing rate provided by the FHLB at the lease commencement date. ROU assets are further adjusted for lease incentives, if any. Operating lease expense, which is comprised of amortization of the ROU asset and the implicit interest accreted on the operating lease liability, is recognized on a straight-line basis over the lease term, and is recorded in “Occupancy and Equipment” expense in the Consolidated Statements of Income.
The components of lease cost for the years ended December 31, 2025, 2024 and 2023 were as follows:
Year Ended | |||||||||
(Dollars in thousands) | | December 31, 2025 | December 31, 2024 | | December 31, 2023 | ||||
Operating lease cost | $ | 2,184 | $ | 2,183 | $ | 1,990 | |||
Variable lease cost |
| 218 |
| 204 |
| 179 | |||
Short-term lease cost |
| 25 |
| — |
| — | |||
Sublease income |
| — |
| — |
| — | |||
Total net lease cost | $ | 2,427 | $ | 2,387 | $ | 2,169 | |||
Future maturities of the Company’s operating lease liabilities are summarized as follows:
(Dollars in thousands) | |||
Year Ended : | | Lease Liability | |
December 31, 2026 | $ | 3,694 | |
December 31, 2027 |
| 3,385 | |
December 31, 2028 |
| 2,983 | |
December 31, 2029 |
| 2,253 | |
December 31, 2030 |
| 1,668 | |
After December 31, 2030 |
| 3,238 | |
Total lease payments |
| 17,221 | |
Less: interest discount |
| (1,915) | |
Present value of lease liabilities | $ | 15,306 | |
(Dollars in thousands) |
| ||
Supplemental Lease Information | | December 31, 2025 |
|
Weighted-average remaining lease term (years) |
| 5.9 | |
Weighted-average discount rate |
| 3.94 | % |
Year Ended December 31, | ||||||
| 2025 | | 2024 | |||
Cash paid for amounts included in the measurement of lease liabilities: |
| |
| | ||
Operating cash flows from operating leases (cash payments) | $ | 2,203 | $ | 2,113 | ||
Operating cash flows from operating leases (lease liability reduction) | $ | 1,903 | $ | 1,831 | ||
Operating lease right-of-use assets obtained in exchange for leases entered into during the period | $ | 2,883 | $ | 1,133 | ||
Operating lease right-of-use assets obtained from First IC acquisition | $ | 7,421 | $ | — | ||
The Company signed an agreement to lease space in Norcross, Georgia with an entity in which the Chairman of the Company serves as a managing member. The lease is a five year non-cancellable lease which expires in September 2028. During the years ended December 31, 2025, 2024 and 2023, $158,000, $156,000 and $162,000, respectively, in rents were paid under this lease. Management believes the terms of this lease are no less favorable to the Company than would have been achieved with an unaffiliated third party.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 16, 2026 | Showing above |
| 2024 | Mar 10, 2025 | |
| 2023 | Mar 11, 2024 | |
| 2022 | Mar 10, 2023 | |
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.