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Leases

6 Months Ended

Dec. 31, 2023

Note 9: Leases

The Corporation accounts for its leases in accordance with ASC 842 which requires the Corporation to record liabilities for future lease obligations as well as assets representing the right to use the underlying leased assets. The Corporation's leases primarily represent future obligations to make payments for the use of buildings, space or equipment for its operations. Liabilities to make future lease payments are recorded in accounts payable, accrued interest and other liabilities, while right-of-use assets are recorded in premises and equipment in the Corporation's Condensed Consolidated Statements of Financial Condition. At December 31, 2023, all of the Corporation's leases were classified as operating leases and the Corporation did not have any operating leases with an initial term of 12 months or less ("short-term leases"). Liabilities to make future lease payments and right-of-use assets are recorded for operating leases and do not include short-term leases. These liabilities and right-of-use assets are determined based on the total contractual base rents for each lease, which include options to extend or renew each lease, where applicable, and where the Corporation believes it has an economic incentive to extend or renew the lease. Since lease extensions are not reasonably certain, the Corporation generally does not recognize payments occurring during option periods in the calculation of its operating right-of-use lease assets and operating lease liabilities. The Corporation utilizes the FHLB – San Francisco rates as a discount rate for each of the remaining contractual terms at the adoption date as well as for future leases if the discount rate is not stated in the lease. For leases that contain variable lease payments, the Corporation assumes future lease payment escalations based on a lease payment escalation rate specified in the lease or the specified index rate observed at the time of lease commencement. Liabilities to make future lease payments are accounted for using the interest method, being reduced by periodic contractual lease payments net of periodic interest accretion. Right-of-use assets for operating leases are amortized over the term of the associated lease by amounts that represent the difference between periodic straight-line lease expense and periodic interest accretion in the related liability to make future lease payments.

For the quarters ended December 31, 2023 and 2022, expenses associated with the Corporation’s leases totaled $247,000 and $216,000, respectively. For the six months ended December 31, 2023 and 2022, expenses associated with the Corporation’s leases totaled $494,000 and $431,000, respectively. Expenses associated with the Corporation’s leases are recorded in either premises and occupancy or equipment, as applicable, in the Condensed Consolidated Statements of Operations.

The following tables present supplemental information related to operating leases at the date and for the periods indicated:


	As of
(In Thousands)	December 31, 2023			June 30, 2023
Condensed Consolidated Statements of Condition:
Premises and equipment - Operating lease right of use assets	$	1,732	$	2,147
Accounts payable, accrued interest and other liabilities – Operating lease liabilities	$	1,778	$	2,169


	Quarter Ended				Six Months Ended
	December 31,				December 31,
(In Thousands)	2023			2022	2023			2022
Condensed Consolidated Statements of Operations:
Premises and occupancy expenses from operating leases⁽¹⁾	$	212	$	193	$	425	$	386
Equipment expenses from operating leases		35		23		69		45
Total lease expense	$	247	$	216	$	494	$	431

(1)	Includes immaterial variable lease costs.


	Six Months Ended		Six Months Ended
(In Thousands)	December 31, 2023		December 31, 2022
Condensed Consolidated Statements of Cash Flows:
Operating cash flows from operating leases, net	$	463	$	437

The following table provides information related to remaining minimum contractual lease payments and other information associated with the Corporation’s leases as of December 31, 2023:


	Amount⁽¹⁾
Year Ending June 30,	(In Thousands)
2024	$	433
2025		673
2026		382
2027		188
2028		151
Thereafter		55
Total contract lease payments	$	1,882

Total liability to make lease payments	$	1,778
Difference in undiscounted and discounted future lease payments	$	104
Weighted average discount rate		3.33	%
Weighted average remaining lease term (years)		3.1

(1)	Contractual base rents do not include property taxes and other operating expenses due under respective lease agreements.