Mechanics BancorpMCHB

Mechanics Bancorp Leases Disclosure

10-KFiled Mar 17, 20262 min read
LEASES
The Company leases certain premises. The Company has entered into various operating leases for its branches and
operating facilities. These operating leases expire at dates through 2035 and generally contain renewal options for periods
of 5 years to 10 years. These leases include provisions for periodic rent increases as well as payment by the lessee of
certain operating expenses. The Company includes lease extension and termination options in the lease term if, after
considering relevant economic factors, it is reasonably certain the Company will exercise the option. In addition, the
Company has elected to account for any non-lease component in its real estate leases as part of the associated lease
components.
Leases are classified as operating leases at lease commencement date. Lease expense for operating leases and short-term
leases is recognized over a straight-line basis over the lease term. Operating lease expense, which represents the only
component of lease cost, and is included in occupancy expense in the consolidated income statements, was $19.5 million
and $15.0 million for 2025 and 2024, respectively. Right-of-use assets represent the right to use the underlying asset for the
lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Right of use assets
and lease obligations are recognized at the lease commencement date based on the estimated present value of lease
payments over the lease term.
The Company uses its incremental borrowing rate at lease commencement to calculate the present value of lease payments
when the rate implicit in the lease is not known. The Company’s incremental borrowing rate is based on the FHLB advance
rate, adjusted for the lease term and other factors.
Supplemental cash flow and other information related to leases was as follows:
December 31,
(dollars in thousands)
2025
2024
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
$19,182
$14,953
ROU assets obtained in exchange for lease obligations:
Operating leases
$16,559
$12,392
Weighted-average remaining lease term (in years)
4.7
5.3
Weighted-average discount rate
4.1%
3.9%
At December 31, 2025, the approximate minimum future lease payments under non-cancellable operating lease agreements
were:
(in thousands)
2026
$25,742
2027
24,025
2028
13,933
2029
8,948
2030
6,237
thereafter
13,376
Total undiscounted operating lease liabilities
92,261
Less: imputed interest
5,467
Total operating lease liabilities
$86,794

Historical Timeline

Fiscal YearFiled
2025Mar 17, 2026Showing above
2024Mar 7, 2025
2023Mar 6, 2024
2022Mar 6, 2023
2021Mar 4, 2022
2020Mar 12, 2021
2019Mar 6, 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.

Other Available Disclosures

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