PEOPLES FINANCIAL SERVICES CORP. Leases Disclosure
8. Operating lease commitments and contingencies:
The Company is obligated under non-cancellable operating leases for certain branch locations. At lease inception, the Company determines whether a contract contains a lease by assessing whether the arrangement conveys the right to control the use of an identified asset in exchange for consideration. For leases with original terms greater than 12 months, the Company recognizes a right-of-use (“ROU”) asset and a corresponding lease liability at the lease commencement date.
ROU assets for operating leases are included in premises and equipment, and lease liabilities are included in other liabilities in the consolidated balance sheet. Leases with an initial term of 12 months or less are not recorded on the balance sheet and the related lease expense is recognized on a straight-line basis over the lease term.
Certain leases contain renewal options, generally in five-year increments. Renewal periods that are reasonably certain of being exercised are included in the lease term. On December 31, 2025, the Company’s leases had a weighted‑average remaining lease term of 21.3 years and 15.8 years at December 31, 2024. The discount rate used to measure lease liabilities is the Company’s incremental borrowing rate, determined by using the Federal Home Loan Bank fixed‑advance rate for terms corresponding to the term of each lease on its commencement date. At December 31, 2025, and December 31, 2024, discount rates ranged from 1.60 percent to 5.86 percent and from 1.60 percent to 5.25 percent with an average discount rate of 4.50 percent and 3.57 percent respectively.
At December 31, 2025, the Company’s operating lease ROU assets were $17.8 million and operating lease liabilities were $18.4 million. On December 31, 2024, operating lease ROU assets totaled $12.3 million and corresponding lease liabilities totaled $12.7 million. Rent expense for the years ended December 31, 2025, 2024, and 2023 was $2.2 million, $1.2 million, and $1.0 million, respectively, and is included in occupancy expenses. The Company entered into lease agreements for four branches and recorded aggregate right of use assets and corresponding lease liabilities of $7.1 million during the year ended December 31, 2025.
Future minimum lease payments under operating leases are summarized as follows:
(Dollars in thousands) | |||
2026 | | $ | 1,515 |
2027 |
| 1,448 | |
2028 |
| 1,458 | |
2029 |
| 1,416 | |
2030 |
| 1,331 | |
Thereafter |
| 23,076 | |
Total future minimum lease payments | 30,244 | ||
Less amount representing interest | (11,805) | ||
Present value of future minimum lease payments | $ | 18,439 |
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 16, 2026 | Showing above |
| 2024 | Mar 28, 2025 | |
| 2023 | Mar 15, 2024 | |
| 2022 | Mar 15, 2023 | |
| 2021 | Mar 16, 2022 | |
| 2020 | Mar 16, 2021 | |
| 2019 | Mar 16, 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.