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Leases

9 Months Ended

Mar. 31, 2025

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 for operating leases and borrowings for finance leases, while right-of-use assets are recorded in premises and equipment in the Corporation's Condensed Consolidated Statements of Financial Condition. At March 31, 2025, the Corporation's leases were classified as operating leases and finance leases; and the Corporation did not have any operating or finance 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 finance 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 right-of-use lease assets and 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 lease term in amounts that represent the difference between straight-line lease expense and interest accretion on the related liability. For finance leases, right-of-use assets are amortized on a straight-line basis over the useful life of the underlying asset, while the interest accretion on the lease liability is recognized as interest expense in the Corporation’s Condensed Statements of Operations.

For the quarters and nine months ended March 31, 2025 and 2024, expenses associated with the Corporation’s leases totaled $181,000, $222,000, $600,000 and $716,000, respectively. Expenses associated with the Corporation’s leases are recorded in either premises and occupancy or equipment expense for operating leases; while for finance leases, expenses are recorded in equipment expense and interest expense on borrowings, as applicable, in the Condensed Consolidated Statements of Operations.

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


	As of
(In Thousands)	March 31, 2025			June 30, 2024
Condensed Consolidated Statements of Condition:

Operating Leases:
Premises and equipment - Operating lease right-of-use assets	$	1,801	$	1,356
Accounts payable, accrued interest and other liabilities – Operating lease liabilities	$	1,838	$	1,407

Finance Leases:
Premises and equipment at cost	$	84	$	—
Accumulated amortization		(4)		—
Premises and equipment - Finance lease right-of-use assets	$	80	$	—

Borrowings - Finance lease liabilities	$	80	$	—


	Quarter Ended				Nine Months Ended
	March 31,				March 31,
(In Thousands)	2025			2024	2025			2024
Condensed Consolidated Statements of Operations:

Operating lease expense:
Premises and occupancy expenses from operating leases⁽¹⁾	$	167	$	188	$	517	$	613
Equipment expenses from operating leases⁽¹⁾		6		34		75		103
Total operating lease expense		173		222		592		716

Finance lease expense:
Equipment expenses from finance leases⁽¹⁾		7		—		7		—
Interest on finance lease liabilities		1		—		1		—
Total finance lease expense		8		—		8		—

Total lease expense	$	181	$	222	$	600	$	716

(1)	Includes immaterial variable lease costs.


	Nine Months Ended		Nine Months Ended
(In Thousands)	March 31, 2025		March 31, 2024
Condensed Consolidated Statements of Cash Flows:
Operating cash flows from operating leases, net	$	592	$	666
Operating cash flows from finance leases, net	$	4	$	—
Financing cash flows from finance leases, net	$	4	$	—

Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	979	$	68
Finance leases	$	84	$	—

The following table provides information related to remaining minimum contractual lease payments and other information associated with the Corporation’s leases as of March 31, 2025:


	Operating Leases			Finance Leases
	Amount⁽¹⁾			Amount⁽¹⁾
Fiscal Year Ending June 30,	(In Thousands)			(In Thousands)
Remainder of fiscal 2025	$	173		$	8
Fiscal 2026		695			30
Fiscal 2027		506			30
Fiscal 2028		436			17
Fiscal 2029		141			—
Thereafter		11			—
Total contract lease payments	$	1,962		$	85

Total liability to make lease payments	$	1,838		$	80
Difference in undiscounted and discounted future lease payments	$	124		$	5
Weighted average discount rate		3.85	%		4.50	%
Weighted average remaining lease term (years)		3.1			2.8

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