Leases

3 Months Ended

Sep. 30, 2019

As Lessee - Operating Leases

Company operating leases primarily include office space and bank branches. Certain leases include one or more options to renew, with renewal terms that can extend the lease term up to 15 additional years. The exercise of lease renewal options is at our sole discretion. When it is reasonably certain that we will exercise our option to renew or extend the lease term, that option is included in estimating the value of the ROU and lease liability. At September 30, 2019, we did not have any leases that had not yet commenced for which we had created a ROU asset and a lease liability. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Most of our lease agreements include periodic rate adjustments for inflation. The depreciable life of ROU assets and leasehold improvements are limited to the shorter of the useful life or the expected lease term. Leases with an initial term of 12 months or less are not recorded on our Consolidated Balance Sheets; we recognize lease expenses for these leases over the lease term.

The following tables present supplemental balance sheet information related to operating leases. ROU assets are included in other assets and lease liabilities are included in other liabilities.



Supplemental Balance Sheet Information:	September 30, 2019
ROU assets	$	5,105
Lease liabilities	5,102
Weighted-average remaining lease terms	5.45
Weighted-average discount rate	3.13		%

The following schedule summarizes aggregate future minimum lease payments under these operating leases at September 30, 2019:



Fiscal year ending June 30:
Remaining 2020	$	1,003
2021	1,123
2022	1,026
2023	989
2022	522
Thereafter	896
Total of future minimum payments	$	5,559

The following table presents components of operating lease expense for the three months ended September 30, 2019:



Operating lease cost (included in occupancy expense)	$	473
Sublease income (included in other, net noninterest income)	(64		)
Total operating lease expense, net	409

As Lessee - Finance Lease

The Company currently leases land for one of its branch office locations under a finance lease. The ROU asset for the finance lease totaled $2,052 at September 30, 2019 and is included in other assets. The amount was previously recorded in premises and equipment, net. The corresponding lease liability totaled $1,870 at September 30, 2019 and is included in other liabilities. Interest expense on the lease liability totaled $24 for the three months ended September 30, 2019. The finance lease has a maturity date of July 2028 and a discount rate of 5.18%. Upon adoption of ASC 842, the capital lease obligation for June 30, 2019 was also reclassified to other liabilities.

The following schedule summarizes aggregate future minimum lease payments under this finance lease obligation at September 30, 2019:



Fiscal year ending June 30:
Remaining 2020	$	100
2021	134
2022	134
2023	134
2023	145
Thereafter	1,993
Total minimum lease payments	2,640
Less: amount representing interest	(770		)
Present value of net minimum lease payments	$	1,870

Supplemental lease cash flow information for the three months ended September 30, 2019:



ROU assets - noncash additions (operating leases)	$	5,296
ROU assets - noncash addition (finance lease)	2,052
Cash paid for amounts included in the measurement of lease liabilities (operating leases)	558
Cash paid for amounts included in the measurement of lease liabilities (finance leases)	33

As Lessor - General

The Company leases equipment to commercial end users under operating and finance lease arrangements. Our equipment finance leases consist mainly of transportation, medical, and agricultural equipment. Many of our operating and finance leases offer the lessee the option to purchase the equipment at fair value or for a nominal fixed purchase option; and most of the leases that do not have a nominal purchase option include renewal provisions resulting in some leases continuing beyond initial contractual terms. Our leases do not include early termination options, and continued rent payments are due if leased equipment is not returned at the end of the lease.

As Lessor - Operating Leases

Operating lease income is recognized as a component of noninterest income on a straight-line basis over the lease term. Lease terms range from 1 to 4 years. Assets related to operating leases are included in other assets and the corresponding depreciation expense is recorded on a straight-line basis as a component of other noninterest expense. Leased assets totaled $11,252 with a residual value of $6,450 as of September 30, 2019. For the three months ended September 30, 2019, total equipment finance operating lease income totaled $568 and depreciation expense totaled $350.

The following schedule summarizes aggregate future minimum operating lease payments to be received at September 30, 2019:



Fiscal year ending June 30:
Remaining 2020	$	1,823
2021	5,423
2022	2,540
2023	1,746
2022	663
Thereafter	—
Total of future minimum payments	$	12,195

As Lessor - Finance Leases

Finance lease income is recognized as a component of loan interest income over the lease term. The finance leases are included as a component of the equipment finance class of financing receivables under the commercial loan segment. For the three months ended September 30, 2019, total interest income on equipment finance leases totaled $319.

The following table presents components of finance lease net investment included within equipment finance class of financing receivables:



	September 30, 2019
Lease receivables	$	25,145

The following schedule summarizes aggregate future minimum finance lease payments to be received at September 30, 2019:



Fiscal year ending June 30:
Remaining 2020	$	5,240
2021	6,927
2022	6,093
2023	5,494
2024	3,244
Thereafter	994
Total minimum payments	27,992
Less: amount representing interest	(2,847		)
Total	$	25,145

Leases

As Lessee - Operating Leases

The following tables present supplemental balance sheet information related to operating leases. ROU assets are included in other assets and lease liabilities are included in other liabilities.



Supplemental Balance Sheet Information:	September 30, 2019
ROU assets	$	5,105
Lease liabilities	5,102
Weighted-average remaining lease terms	5.45
Weighted-average discount rate	3.13		%

The following schedule summarizes aggregate future minimum lease payments under these operating leases at September 30, 2019:



Fiscal year ending June 30:
Remaining 2020	$	1,003
2021	1,123
2022	1,026
2023	989
2022	522
Thereafter	896
Total of future minimum payments	$	5,559

The following table presents components of operating lease expense for the three months ended September 30, 2019:



Operating lease cost (included in occupancy expense)	$	473
Sublease income (included in other, net noninterest income)	(64		)
Total operating lease expense, net	409

As Lessee - Finance Lease

The following schedule summarizes aggregate future minimum lease payments under this finance lease obligation at September 30, 2019:



Fiscal year ending June 30:
Remaining 2020	$	100
2021	134
2022	134
2023	134
2023	145
Thereafter	1,993
Total minimum lease payments	2,640
Less: amount representing interest	(770		)
Present value of net minimum lease payments	$	1,870

Supplemental lease cash flow information for the three months ended September 30, 2019:



ROU assets - noncash additions (operating leases)	$	5,296
ROU assets - noncash addition (finance lease)	2,052
Cash paid for amounts included in the measurement of lease liabilities (operating leases)	558
Cash paid for amounts included in the measurement of lease liabilities (finance leases)	33

As Lessor - General

As Lessor - Operating Leases

The following schedule summarizes aggregate future minimum operating lease payments to be received at September 30, 2019:



Fiscal year ending June 30:
Remaining 2020	$	1,823
2021	5,423
2022	2,540
2023	1,746
2022	663
Thereafter	—
Total of future minimum payments	$	12,195

As Lessor - Finance Leases

The following table presents components of finance lease net investment included within equipment finance class of financing receivables:



	September 30, 2019
Lease receivables	$	25,145

The following schedule summarizes aggregate future minimum finance lease payments to be received at September 30, 2019:



Fiscal year ending June 30:
Remaining 2020	$	5,240
2021	6,927
2022	6,093
2023	5,494
2024	3,244
Thereafter	994
Total minimum payments	27,992
Less: amount representing interest	(2,847		)
Total	$	25,145

Leases

As Lessee - Operating Leases

The following tables present supplemental balance sheet information related to operating leases. ROU assets are included in other assets and lease liabilities are included in other liabilities.



Supplemental Balance Sheet Information:	September 30, 2019
ROU assets	$	5,105
Lease liabilities	5,102
Weighted-average remaining lease terms	5.45
Weighted-average discount rate	3.13		%

The following schedule summarizes aggregate future minimum lease payments under these operating leases at September 30, 2019:



Fiscal year ending June 30:
Remaining 2020	$	1,003
2021	1,123
2022	1,026
2023	989
2022	522
Thereafter	896
Total of future minimum payments	$	5,559

The following table presents components of operating lease expense for the three months ended September 30, 2019:



Operating lease cost (included in occupancy expense)	$	473
Sublease income (included in other, net noninterest income)	(64		)
Total operating lease expense, net	409

As Lessee - Finance Lease

The following schedule summarizes aggregate future minimum lease payments under this finance lease obligation at September 30, 2019:



Fiscal year ending June 30:
Remaining 2020	$	100
2021	134
2022	134
2023	134
2023	145
Thereafter	1,993
Total minimum lease payments	2,640
Less: amount representing interest	(770		)
Present value of net minimum lease payments	$	1,870

Supplemental lease cash flow information for the three months ended September 30, 2019:



ROU assets - noncash additions (operating leases)	$	5,296
ROU assets - noncash addition (finance lease)	2,052
Cash paid for amounts included in the measurement of lease liabilities (operating leases)	558
Cash paid for amounts included in the measurement of lease liabilities (finance leases)	33

As Lessor - General

As Lessor - Operating Leases

The following schedule summarizes aggregate future minimum operating lease payments to be received at September 30, 2019:



Fiscal year ending June 30:
Remaining 2020	$	1,823
2021	5,423
2022	2,540
2023	1,746
2022	663
Thereafter	—
Total of future minimum payments	$	12,195

As Lessor - Finance Leases

The following table presents components of finance lease net investment included within equipment finance class of financing receivables:



	September 30, 2019
Lease receivables	$	25,145

The following schedule summarizes aggregate future minimum finance lease payments to be received at September 30, 2019:



Fiscal year ending June 30:
Remaining 2020	$	5,240
2021	6,927
2022	6,093
2023	5,494
2024	3,244
Thereafter	994
Total minimum payments	27,992
Less: amount representing interest	(2,847		)
Total	$	25,145

Leases

As Lessee - Operating Leases

The following tables present supplemental balance sheet information related to operating leases. ROU assets are included in other assets and lease liabilities are included in other liabilities.



Supplemental Balance Sheet Information:	September 30, 2019
ROU assets	$	5,105
Lease liabilities	5,102
Weighted-average remaining lease terms	5.45
Weighted-average discount rate	3.13		%

The following schedule summarizes aggregate future minimum lease payments under these operating leases at September 30, 2019:



Fiscal year ending June 30:
Remaining 2020	$	1,003
2021	1,123
2022	1,026
2023	989
2022	522
Thereafter	896
Total of future minimum payments	$	5,559

The following table presents components of operating lease expense for the three months ended September 30, 2019:



Operating lease cost (included in occupancy expense)	$	473
Sublease income (included in other, net noninterest income)	(64		)
Total operating lease expense, net	409

As Lessee - Finance Lease

The following schedule summarizes aggregate future minimum lease payments under this finance lease obligation at September 30, 2019:



Fiscal year ending June 30:
Remaining 2020	$	100
2021	134
2022	134
2023	134
2023	145
Thereafter	1,993
Total minimum lease payments	2,640
Less: amount representing interest	(770		)
Present value of net minimum lease payments	$	1,870

Supplemental lease cash flow information for the three months ended September 30, 2019:



ROU assets - noncash additions (operating leases)	$	5,296
ROU assets - noncash addition (finance lease)	2,052
Cash paid for amounts included in the measurement of lease liabilities (operating leases)	558
Cash paid for amounts included in the measurement of lease liabilities (finance leases)	33

As Lessor - General

As Lessor - Operating Leases

The following schedule summarizes aggregate future minimum operating lease payments to be received at September 30, 2019:



Fiscal year ending June 30:
Remaining 2020	$	1,823
2021	5,423
2022	2,540
2023	1,746
2022	663
Thereafter	—
Total of future minimum payments	$	12,195

As Lessor - Finance Leases

The following table presents components of finance lease net investment included within equipment finance class of financing receivables:



	September 30, 2019
Lease receivables	$	25,145

The following schedule summarizes aggregate future minimum finance lease payments to be received at September 30, 2019:



Fiscal year ending June 30:
Remaining 2020	$	5,240
2021	6,927
2022	6,093
2023	5,494
2024	3,244
Thereafter	994
Total minimum payments	27,992
Less: amount representing interest	(2,847		)
Total	$	25,145