LeasesAccounting Policies and Matters Requiring Management's Judgment
When evaluating leases under Topic 842, the Company uses its incremental borrowing rate on its senior notes payable to determine the discount rate. Specifically, Management applies its senior notes payable's effective annual interest rate at the end of the prior fiscal year to leases entered into in the following year. For example, the senior notes payable's effective annual interest rate of 9.9% at March 31, 2024 was used as the discount rate when determining the lease type and the present value of lease payments for leases entered into in fiscal 2025.
Based on its historical practice, the Company believes it is reasonably certain to exercise a given option associated with a given office space lease. Therefore, the Company classifies all lease options for office space as “reasonably certain” unless it has specific knowledge to the contrary for a given lease. The Company does not believe it is reasonably certain to exercise any options associated with its office equipment leases.
Periodic Disclosures
The Company's operating leases consist of real estate leases for office space as well as office equipment. Both the branch real estate and office equipment lease terms generally range from three years to five years, and generally contain options to extend which mirror the original terms of the lease.
During the second quarter of fiscal 2023, the lease terms associated with the Company's finance leases expired and the Company exercised its purchase option to acquire the IT equipment. Because it was reasonably certain that the Company would obtain the assets at the end of their lease terms, the ROU assets were amortized over the useful life of the assets, rather than over the lease terms. As of March 31, 2025 and 2024, the Company had no finance leases.
The following table reports information about the Company's lease costs for the years ended March 31, 2025, 2024, and 2023: | | | | | | | | | | | | | | | | | | | | |
| | | 2025 | | 2024 | | 2023 |
| Lease Cost | | | | | | |
| Finance lease cost | | $ | — | | | $ | — | | | $ | 205,975 | |
| Amortization of ROU assets | | — | | | — | | | 204,552 | |
| Interest on lease liabilities | | — | | | — | | | 1,423 | |
| Operating lease cost | | $ | 25,244,452 | | | $ | 25,291,087 | | | $ | 27,408,284 | |
| | | | | | |
| Variable lease cost | | 3,958,271 | | | 3,823,435 | | | 3,710,560 | |
| | | | | | |
| Total lease cost | | $ | 29,202,723 | | | $ | 29,114,522 | | | $ | 31,324,819 | |
The following table reports other information about the Company's leases for the years ended March 31, 2025, 2024, and 2023: | | | | | | | | | | | | | | | | | | | | |
| | | 2025 | | 2024 | | 2023 |
| Other Lease Information | | | | | | |
| Cash paid for amounts included in the measurement of lease liabilities | | $ | 25,158,809 | | | $ | 25,292,363 | | | $ | 26,476,133 | |
| Operating cash flows from finance leases | | — | | | — | | | 1,423 | |
| Operating cash flows from operating leases | | 25,158,809 | | | 25,292,363 | | | 26,394,643 | |
| Financing cash flows from finance leases | | — | | | — | | | 80,067 | |
| | | | | | |
| ROU assets obtained in exchange for new operating lease liabilities | | $ | 16,102,245 | | | $ | 18,024,157 | | | $ | 16,924,511 | |
| | | | | | |
| Weighted average remaining lease term — operating leases | | 6.4 years | | 6.8 years | | 7.1 years |
| | | | | | |
| Weighted-average discount rate — operating leases | | 7.0 | % | | 6.3 | % | | 6.0 | % |
The aggregate annual lease obligations as of March 31, 2025, are as follows:
| | | | | | | | | | | | |
| | Operating Leases | | | | |
| 2026 | | $ | 22,960,545 | | | | | |
| 2027 | | 18,512,178 | | | | | |
| 2028 | | 14,992,110 | | | | | |
| 2029 | | 11,064,504 | | | | | |
| 2030 | | 7,436,457 | | | | | |
| Thereafter | | 22,969,812 | | | | | |
| Total undiscounted lease liability | | $ | 97,935,606 | | | | | |
| Imputed interest | | 19,245,883 | | | | | |
| Total discounted lease liability | | $ | 78,689,723 | | | | | |
The Company had no leases with related parties as of March 31, 2025 or 2024.