Third Coast Bancshares, Inc. Leases Disclosure
Operating Leases
The Company leases certain office space, stand-alone buildings and equipment which are recognized as operating lease right-of-use (“ROU”) assets and operating lease liabilities and are included in the consolidated balance sheets. Lease liabilities represent the Company's liability to make lease payments under these leases, on a discounted basis. For leases with renewal options available, the Company evaluates each lease to determine if exercise of the renewal option is reasonably certain. As of December 31, 2025, the Company's operating lease ROU asset and operating lease liability totaled $17.1 million and $18.1 million, respectively.
In order to calculate its ROU assets and lease liabilities, ASC Topic 842 requires the Company to use the rate of interest implicit in the lease when readily determinable. If the rate implicit in the lease is not readily determinable, the Company is required to use its incremental borrowing rate, which is the rate of interest the Company would have to pay to borrow on a collateralized basis over a similar term in a similar economic environment. The Company was unable to determine the implicit interest rate in any of the leases and therefore used its incremental borrowing rate.
As of December 31, 2025 and 2024, the weighted-average discount rate for the Company's operating leases was 4.75% and 4.73%, respectively, and the weighted-average remaining term of the leases was 6.81 years and 7.78 years, respectively. The Company's lease terms range from less than one year to one hundred forty-four months.
For the years ended December 31, 2025 and 2024, operating lease cash flows (fixed payments) were approximately $3.3 million and $3.1 million respectively.
Lease costs for the years ended December 31, 2025, 2024, and 2023 were as follows and are included in occupancy and equipment expense on the consolidated statements of income:
|
|
For the Years Ended December 31, |
|
|||||||||
(Dollars in thousands) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Operating lease cost |
|
$ |
3,320 |
|
|
$ |
3,341 |
|
|
$ |
3,091 |
|
Short-term lease cost |
|
|
21 |
|
|
|
31 |
|
|
|
149 |
|
Variable lease cost |
|
|
1,400 |
|
|
|
1,324 |
|
|
|
1,190 |
|
Total lease cost |
|
$ |
4,741 |
|
|
$ |
4,696 |
|
|
$ |
4,430 |
|
A schedule of the Company's lease liabilities by contractual maturity for operating leases with initial or remaining terms in excess of one year for each year through 2030 and thereafter is presented below:
(Dollars in thousands) |
|
December 31, 2025 |
|
|
2026 |
|
$ |
3,346 |
|
2027 |
|
|
3,383 |
|
2028 |
|
|
3,151 |
|
2029 |
|
|
2,985 |
|
2030 |
|
|
2,538 |
|
Thereafter |
|
|
5,758 |
|
Total undiscounted lease liability |
|
|
21,161 |
|
Less: Discount on cash flows |
|
|
(3,031 |
) |
Total operating lease liability |
|
$ |
18,130 |
|
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 4, 2026 | Showing above |
| 2024 | Mar 5, 2025 | |
| 2023 | Mar 7, 2024 | |
| 2022 | Mar 15, 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.