UNITY BANCORP INC /NJ/ Leases Disclosure
8. Leases and Commitments
Leases
Operating leases in which the Company is the lessee and the term is greater than 12 months, are recorded as right of use ("ROU") assets and lease liabilities, and are included in Prepaid expenses and other assets and Accrued expenses and other liabilities, respectively, on the Company’s Consolidated Balance Sheets. The Company does not currently have any finance leases in which it is the lessee.
Operating lease ROU assets represent the Company’s right to use an underlying asset during the lease term and operating lease liabilities represent its obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at lease commencement based on the present value of the remaining lease payments using a discount rate that represents the Company’s incremental borrowing rate. The borrowing rate for each lease is unique based on the lease term. Operating lease expense, which is comprised of amortization of the ROU asset and the implicit interest accreted on the operating lease liability, is recognized on a straight-line basis over the lease term, and is recorded in Occupancy expense in the Consolidated Statements of Income.
The Company’s leases relate primarily to the Company’s bank branches and office space with remaining lease terms of generally 1 to 10 years. Certain lease arrangements contain extension options which typically range from 1 to 5 years at the then fair market rental rates. Extension options which are reasonably certain to be exercised are included in the calculation of the ROU asset and lease liability.
Certain real estate leases have lease payments that adjust based on annual changes in the Consumer Price Index ("CPI"). The leases that are dependent upon CPI are initially measured using the index or rate at the commencement date and are included in the measurement of the lease liability.
Operating lease ROU assets totaled $4.7 million at December 31, 2025, compared to $4.6 million at December 31, 2024. As of December 31, 2025, operating lease liabilities totaled $5.0 million, compared to $4.8 million at December 31, 2024.
The table below summarizes the Company’s net lease cost:
| For the years ended December 31, | |||||
(In thousands) | 2025 | 2024 | ||||
Operating lease cost | $ | 760 | $ | 732 | ||
Net lease cost | $ | 760 | $ | 732 | ||
The table below summarizes the cash and non-cash activities associated with the Company’s leases:
| For the years ended December 31, | |||||
(In thousands) | 2025 | 2024 | ||||
Cash paid for amounts included in the measurement of lease liabilities: |
| | | |||
Operating cash flows for operating leases | $ | 725 | $ | 711 | ||
As of December 31, 2025 and December 31, 2024, the Company had no lease terminations.
The table below summarizes other information related to the Company’s operating leases:
| December 31, 2025 | | December 31, 2024 |
| |||
Weighted average remaining lease term in years |
| 8.91 | 9.47 | ||||
Weighted average discount rate |
| 3.07 | % | 2.94 | % | ||
The table below summarizes the maturity of remaining lease liabilities:
(In thousands) | | December 31, 2025 | |
2026 | $ | 807 | |
2027 |
| 764 | |
2028 |
| 528 | |
2029 |
| 520 | |
2030 |
| 531 | |
2031 and thereafter |
| 2,481 | |
Total lease payments | $ | 5,631 | |
Less: Interest |
| (630) | |
$ | 5,001 | ||
As of December 31, 2025, the Company had not entered into any material leases that have not yet commenced.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 4, 2026 | Showing above |
| 2024 | Mar 7, 2025 | |
| 2023 | Mar 7, 2024 | |
| 2022 | Mar 10, 2023 | |
| 2021 | Mar 11, 2022 | |
| 2020 | Mar 25, 2021 | |
| 2019 | Mar 4, 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.