TFS Financial CORPTFSL

TFS Financial CORP Leases Disclosure

10-KFiled Nov 25, 20253 min read
LEASES
As a lessee, the Company enters into operating leases of buildings and land. The Company occupies certain banking branches, loan production and customer care call center offices and a disaster recovery site through non-cancellable operating leases with remaining terms from less than one year to 12 years. Most of the leases have fixed payment terms with annual fixed-escalation clauses. Certain leases have annual rent escalations based on subsequent year-to-year changes in the consumer price index. These year-to-year changes in the consumer price index are excluded from the calculation of right-of-use assets and lease liabilities and recognized as expense in the period in which they are incurred. Additionally, all variable lease costs that are not based on an index or rate, such as "common area maintenance" costs, are expensed as incurred. Most of the Company's leases include options to extend for five years. The leases do not have early-termination options. The Company has not included term extensions in the calculation of the lease term, as the Company does not consider it reasonably certain that the options will be exercised. As the interest rate implicit in all of the Company's lease contracts is not readily determinable, the Company utilized its incremental borrowing rate, which is the rate that would be incurred to borrow on a collateralized basis over a similar term on an amount equal to the total contractual lease payments in a similar economic environment. The incremental borrowing rate utilized for all the Company's leases is an FHLB Advance rate based on the lease term at commencement in determining the present value of lease payments.
Operating lease expense for the years ended September 30, 2025, 2024 and 2023, totaled $5,684, $5,781 and $5,573, respectively. Variable lease expense for the years ended September 30, 2025, 2024 and 2023, totaled $1,626, $1,731 and $1,514, respectively. During the years ended September 30, 2025, 2024 and 2023, the Company paid $5,623, $5,708 and $5,556, respectively, in cash for amounts included in the measurement of lease liabilities. As of September 30, 2025 and 2024, the Company has not entered into any material leases that have not yet commenced.
The following table summarizes information relating to the Company's operating leases:
September 30,
20252024
Right-of-use assets, net of accumulated amortization (a)
$17,483$17,841
Lease liabilities (b)$17,992$18,304
Weighted Average Remaining Lease Term5.07 years5.30 years
Weighted Average Discount Rate3.67%3.17%
(a) Included in Other assets in the CONSOLIDATED STATEMENTS OF CONDITION. Effective September 30, 2025, and for all periods presented, right-of-use assets are disclosed net of accumulated amortization. Prior to this date they were presented as the gross amount. At September 30, 2024, the gross right-of-use assets was $42,868 and accumulated amortization was $25,027.
(b) Included in Accrued expenses and other liabilities in the CONSOLIDATED STATEMENTS OF CONDITION
The following table summarizes the maturities of lease liabilities at the periods presented:
September 30,
20252024
Maturing in:
12 months or less$5,224 $5,495 
13 to 24 months4,151 4,388 
25 to 36 months3,430 3,093 
37 to 48 months2,633 2,359 
49 to 60 months1,868 1,548 
over 60 months2,437 3,139 
Total minimum lease payments19,743 20,022 
Less imputed interest1,751 1,718 
Total lease liabilities$17,992 $18,304 

Historical Timeline

Fiscal YearFiled
2025Nov 25, 2025Showing above
2024Nov 22, 2024
2023Nov 21, 2023
2022Nov 22, 2022
2021Nov 24, 2021
2020Nov 24, 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.

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