Commitments and Credit Risk

12 Months Ended

Jun. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

Note 20: Commitments and Credit Risk

The Company generates commercial, mortgage and consumer loans and receives deposits from customers located in the Illinois counties of Vermilion, Iroquois, Champaign, and Kankakee, as well as adjacent counties in Illinois and Indiana within 30 miles of a branch or loan production office. The Company generates commercial, mortgage and consumer loans from its location in Osage Beach, Missouri. The Company’s loans are generally secured by specific items of collateral including real property and consumer assets. Although the Company has a diversified loan portfolio, a substantial portion of its debtors’ ability to honor their contracts is dependent upon economic conditions in the Company’s various locations.

Commitments to Originate Loans

Commitments to originate loans are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since a portion of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Each customer’s creditworthiness is evaluated on a

case-by-case

basis. The amount of collateral obtained, if deemed necessary, is based on management’s credit evaluation of the counterparty. Collateral held varies, but may include accounts receivable, inventory, property, plant and equipment, commercial real estate and residential real estate.

At June 30, 2021 and 2020, the Company had outstanding commitments to originate loans aggregating approximately $19,137,000 and $16,873,000, respectively. The commitments extended over varying periods of time with the majority being disbursed within a

one-year

period. Loan commitments at fixed rates of interest amounted to $7,594,000 and $5,178,000 at June 30, 2021 and 2020, respectively, with the remainder subject to adjustable interest rates. The weighted average interest rates for fixed rate loan commitments were 3.59% and 3.49% as of June 30, 2021 and 2020, respectively.

Lines of Credit

Lines of credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Lines of credit generally have fixed expiration dates. Since a portion of the line may expire without being drawn upon, the total unused lines do not necessarily represent future cash requirements. Each customer’s creditworthiness is evaluated on a

case-by-case

basis. The amount of collateral obtained, if deemed necessary, is based on management’s credit evaluation of the counterparty. Collateral held varies but may include accounts receivable, inventory, property, plant and equipment, commercial real estate and residential real estate.

Management uses the same credit policies in granting lines of credit as it does for

on-balance-sheet

instruments.

At June 30, 2021, the Company had granted unused lines of credit to borrowers aggregating approximately $93,339,000 and $10,633,000 for commercial lines and

open-end

consumer lines, respectively. At June 30, 2020, the Company had granted unused lines of credit to borrowers aggregating approximately $78,600,000 and $7,582,000 for commercial lines and

open-end

consumer lines, respectively.

Other Credit Risks

At June 30, 2021 and 2020, the interest-bearing demand deposits on the consolidated balance sheets represent amounts on deposit with one financial institution, the Federal Home Loan Bank of Chicago.