MainStreet Bancshares, Inc. Leases Disclosure
Note 14. Leases
Lessee Arrangements - The right-of-use assets and lease liabilities are included in other assets and other liabilities, respectively, in the Consolidated Statements of Financial Condition.
Lease liabilities represent the Company’s obligation to make lease payments and are presented at each reporting date as the net present value of the remaining contractual cash flows. Cash flows are discounted at the Company’s incremental borrowing rate in effect at the commencement date of the lease. The incremental borrowing rate was equal to the rate of borrowing from the FHLB that aligned with the term of the lease contract. Right-of-use assets represent the Company’s right to use the underlying asset for the lease term and are calculated as the sum of the lease liability and if applicable, prepaid rent, initial direct costs and any incentives received from the lessor.
The Company’s long-term lease agreements are classified as operating leases. Certain of these leases offer the option to extend the lease term and the Company has included such extensions in its calculation of the lease liabilities to the extent the options are reasonably assured of being exercised. The lease agreements do not provide for residual value guarantees and have no restrictions or covenants that would impact dividends or require incurring additional financial obligations.
Information regarding the Company's leases as of and for the years ended December 31, 2025 and 2024 were as follows:
| As of December 31, | ||||||||
| (Dollars in thousands) | 2025 | 2024 | ||||||
| Lease | $ | 5,935 | $ | 6,474 | ||||
| Right-of-use | $ | 5,218 | $ | 5,762 | ||||
| Weighted-average remaining lease term – operating leases (in months). | 137.3 | 145.4 | ||||||
| Weighted-average discount rate – operating leases | 2.79 | % | 2.81 | % | ||||
| For the year ended December 31, | ||||||||||||
| (Dollars in thousands) | 2025 | 2024 | 2023 | |||||||||
| Lease Cost | ||||||||||||
| Operating lease cost | $ | 717 | $ | 693 | $ | 677 | ||||||
| Total lease costs | $ | 717 | $ | 693 | $ | 677 | ||||||
| Cash paid for amounts included in measurement of lease liabilities | $ | 680 | $ | 671 | $ | 639 | ||||||
As of December 31, 2025, all of the Company’s lease obligations are classified as operating leases. The Company does have any finance lease obligations.
A maturity analysis of operating lease liabilities and reconciliation of the undiscounted cash flows to the total of operating lease liabilities as of December 31, 2025 is as follows:
| (Dollars in thousands) | ||||
| 2026 | $ | 688 | ||
| 2027 | 706 | |||
| 2028 | 594 | |||
| 2029 | 605 | |||
| 2030 | 620 | |||
| Thereafter | 3,743 | |||
| Total undiscounted cash flows | 6,956 | |||
| Discount | (1,021 | ) | ||
|
| $ | 5,935 |
Lessor Arrangements - The Company is the lessor for operating leases. One lease is extended on a month-to-month basis while the remainder of these leases have arrangements for longer terms, some with an option to extend the lease terms. The lease agreements do not provide for residual value guarantees and have no restrictions or covenants that would impact dividends or require incurring additional financial obligations. The Company's leases do not contain non-lease components. Total rent income on these operating leases is approximately $29,000 per month.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 13, 2026 | Showing above |
| 2024 | Mar 14, 2025 | |
| 2023 | Mar 20, 2024 | |
| 2022 | Mar 23, 2023 | |
| 2021 | Mar 23, 2022 | |
| 2020 | Mar 23, 2021 | |
| 2019 | Mar 23, 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.