NATIONAL BANKSHARES INC Leases Disclosure
Note 19: Leases
The Company categorizes leases as short-term, operating or finance leases. Leases with terms of 12 months or less are designated as short-term and are not capitalized. Operating and finance leases are capitalized as right-of-use assets and lease liabilities. Right-of-use assets, included in other 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. Lease liabilities, included in other liabilities, represent the Company’s obligation to make lease payments and are reported at 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 Company does not separate non-lease components from lease components within a single contract. Counterparties for the Company’s lease contracts are external to the Company and not related parties.
In 2025, the Company entered into one new lease and renewed two leases, adding $937 to the right of use asset and lease liability. The Company’s acquisition of FCB in 2024 added two long-term branch leases, which were remeasured using the Company’s incremental borrowing rate and remaining lease terms on the acquisition date, adding $548 to the right of use asset and the lease liability.
Lease payments
Short-term lease payments are recognized as lease expense on a straight-line basis over the lease term, or for variable lease payments, in the period in which the obligation was incurred. Operating and finance lease payments may be fixed for the term of the lease or variable. If the escalation factor for a variable lease payment is known, such as a specified percentage increase per year or a stated increase at a specified time, the variable payment is included in the cash flows used to determine the lease liability. If the variable payment is based upon an unknown escalator, such as the consumer price index at a future date, the increase is not included in the cash flows used to determine the lease liability.
Options to Extend, Residual Value Guarantees, and Restrictions and Covenants
Certain of the Company’s operating 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 certain 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. The following tables present information about leases as of the dates and for the dates and periods indicated:
|
|
December 31, |
|
|
December 31, |
|
||
|
|
2025 |
|
|
2024 |
|
||
|
$ |
2,038 |
|
|
$ |
1,523 |
|
|
|
$ |
1,839 |
|
|
$ |
1,305 |
|
|
Weighted average remaining lease term (in years) |
|
|
4.26 |
|
|
|
4.76 |
|
Weighted average discount rate |
|
|
3.90 |
% |
|
|
3.87 |
% |
|
|
For the Year Ended December 31, |
|
|||||
Lease Expense |
|
2025 |
|
|
2024 |
|
||
Operating lease expense |
|
$ |
451 |
|
|
$ |
423 |
|
Short-term lease expense |
|
|
- |
|
|
|
21 |
|
Total lease expense |
|
$ |
451 |
|
|
$ |
444 |
|
Cash paid for amounts included in lease liabilities |
|
$ |
470 |
|
|
$ |
442 |
|
Right-of-use assets obtained in exchange for operating lease |
|
$ |
937 |
|
|
$ |
548 |
|
The following table presents a maturity schedule of undiscounted cash flows that contribute to the lease liability as of the dates indicated:
Undiscounted Cash Flow for the Period |
|
As of |
|
|
Twelve months ending December 31, 2026 |
|
$ |
556 |
|
Twelve months ending December 31, 2027 |
|
|
518 |
|
Twelve months ending December 31, 2028 |
|
|
510 |
|
Twelve months ending December 31, 2029 |
|
|
320 |
|
Twelve months ending December 31, 2030 |
|
|
226 |
|
Thereafter |
|
|
70 |
|
Total undiscounted cash flows |
|
$ |
2,200 |
|
Less: discount |
|
|
(162 |
) |
Lease liability |
|
$ |
2,038 |
|
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 27, 2026 | Showing above |
| 2024 | Mar 28, 2025 | |
| 2023 | Mar 19, 2024 | |
| 2022 | Mar 10, 2023 | |
| 2021 | Mar 11, 2022 | |
| 2020 | Mar 18, 2021 | |
| 2019 | Mar 11, 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.