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Derivative and Other Financial Instruments with Off-Balance Sheet Risks
 3 Months Ended
Sep. 30, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative and Other Financial Instruments with Off-Balance Sheet Risks
Note 7: Derivative and Other Financial Instruments with Off-Balance Sheet Risks
 
The Corporation is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers.  These financial instruments include commitments to extend credit in the form of originating loans or providing funds under existing lines of credit, loan sale commitments to third parties and option contracts.  These instruments involve, to varying degrees, elements of credit and interest-rate risk in excess of the amount recognized in the accompanying Condensed Consolidated Statements of Financial Condition.  The Corporation's exposure to credit loss, in the event of non-performance by the counterparty to these financial instruments, is represented by the contractual amount of these instruments.  The Corporation uses the same credit policies in entering into financial instruments with off-balance sheet risk as it does for on-balance sheet instruments.  As of September 30, 2018 and June 30, 2018, the Corporation had commitments to extend credit (on loans to be held for investment and loans to be held for sale) of $49.2 million and $66.3 million, respectively.
 
The following table provides information at the dates indicated regarding undisbursed funds on construction loans, undisbursed funds to borrowers on existing lines of credit with the Corporation as well as commitments to originate loans to be held for investment at the dates indicated below.
Commitments
  
September 30, 2018
    
June 30, 2018
  
(In Thousands)
            
             
Undisbursed loan funds – Construction loans
  
$
5,110
    
$
4,302
  
Undisbursed lines of credit – Commercial business loans
    
1,548
      
495
  
Undisbursed lines of credit – Consumer loans
    
497
      
503
  
Commitments to extend credit on loans to be held for investment
    
6,793
      
9,352
  
Total
  
$
13,948
    
$
14,652
  
 
The following table provides information regarding the allowance for loan losses for the undisbursed funds and commitments to extend credit on loans to be held for investment for the quarters ended September 30, 2018 and 2017.
   
For the Quarters
Ended
September 30,
  
(In Thousands)
  
2018
    
2017
  
Balance, beginning of the period
  
$
157
    
$
277
  
Recovery
    
(8
)
    
(64
)
Balance, end of the period
  
$
149
    
$
213
  
In accordance with ASC 815, "Derivatives and Hedging," and interpretations of the Derivatives Implementation Group of the FASB, the fair value of the commitments to extend credit on loans to be held for sale, loan sale commitments, to be announced ("TBA") MBS trades, put option contracts and call option contracts are recorded at fair value on the Condensed Consolidated Statements of Financial Condition.  At September 30, 2018, $765,000 was included in other assets and $30,000 was included in other liabilities; at June 30, 2018, $849,000 was included in other assets and $464,000 was included in other liabilities.  The Corporation does not apply hedge accounting to its derivative financial instruments; therefore, all changes in fair value are recorded in earnings.
 
The net impact of derivative financial instruments is recorded within the gain on sale of loans contained in the Condensed Consolidated Statements of Operations during the quarters ended September 30, 2018 and 2017 was as follows:
   
For the Quarters
Ended
September 30,
  
Derivative Financial Instruments
  
2018
    
2017
  
(In Thousands)
            
Commitments to extend credit on loans to be held for sale
  
$
(329
)
  
$
(122
)
Mandatory loan sale commitments and TBA MBS trades
    
679
      
(209
)
Option contracts, net
    
—
      
(37
)
Total net gain (loss)
  
$
350
    
$
(368
 
 
The outstanding derivative financial instruments and other loan sale agreements at the dates indicated were as follows:
   
September 30, 2018
    
June 30, 2018
  
Derivative Financial Instruments
  
Amount
    
Fair
Value
    
Amount
    
Fair
Value
  
(In Thousands)
                        
Commitments to extend credit on loans to be held for sale (1)
  
$
42,403
    
$
496
    
$
56,906
    
$
825
  
Best efforts loan sale commitments
    
(24,843
)
    
—
      
(29,502
)
    
—
  
Mandatory loan sale commitments and TBA MBS trades
    
(93,793
)
    
239
      
(117,759
)
    
(440
)
Total
  
$
(76,233
)
  
$
735
    
$
(90,355
)
  
$
385
  
(1)
Net of 22.6% at September 30, 2018 and 24.7% at June 30, 2018 of commitments which management has estimated may not fund.