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COMMITMENTS
 12 Months Ended
Sep. 30, 2024
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS

NOTE O - COMMITMENTS

 

1.       Lease Commitments

 

Accounting Standard Update ASC 842, “Leases” requires lessees to recognize a lease liability and a right-of-use (“ROU”) asset, measured at the present value of the future minimum lease payments, at the lease commencement date.

 

The Company has operating leases for six branch locations. Our leases have remaining lease terms of up to 10 years, some of which include options to extend the leases for up to 10 additional years. Operating leases are recorded as ROU assets and lease liabilities and are included within other assets and accounts payable and other liabilities, respectively, on our Consolidated Balance Sheets.

 

On April 1, 2024, the Bank entered into a lease agreement to rent a retail office space in Martinsville, New Jersey to increase its presence in Somerset County. The initial term of the lease is for five years, ending on March 31, 2029, but does include the option for two additional terms of five years each. In accordance with ASC 842, a lease liability and ROU asset in the amount of $180 thousand was recognized on April 1, 2024 within accounts payable and other liabilities and other assets, respectively, on our Consolidated Balance Sheets. The discount rate used to determine the lease liability was 4.22% and derived from the Federal Home Loan Bank of New York advance rate for the same term.

 

Operating lease ROU assets represent our right to use an underlying asset during the lease term and operating lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at lease commencement base on the present value of the remaining lease payments using a discount rate that represents our incremental borrowing rate. The incremental borrowing rate used by the Company to value its operating leases is based on the interpolated term advance rate available from the FHLBNY, based on the remaining lease term.

 

The following table presents the balance sheet information related to our leases:

 

   September 30,   September 30, 
   2024   2023 
   (Dollars in thousands) 
         
Operating lease right-of-use asset  $2,223   $2,687 
Operating lease liabilities  $2,413   $2,944 
Weighted average remaining lease term in years   6.0    6.4 
Weighted average discount rate   2.4%    2.2% 

 

The following table summarizes the maturity of our remaining lease liabilities by year:

 

   September 30, 2024 
    (In thousands) 
For the Year Ending:     
2025   558 
2026   490 
2027   370 
2028   337 
2029   318 
2030 and thereafter   600 
Total lease payments   2,673 
Less imputed interest   (260)
Present value of lease liabilities  $2,413 

 

Total rental expense, included in occupancy expense, was approximately $809 thousand for the years ended September 30, 2024 and 2023.

 

2.       Contingencies

 

The Company and its subsidiaries, from time to time, are a party to routine litigation that arises in the normal course of business. In the opinion of management, the resolution of this litigation, if any, would not have a material adverse effect on the Company’s consolidated financial position or results of operations.