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New Accounting Pronouncements (Policies) | 3 Months Ended
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Sep. 30, 2023
Accounting Policies [Abstract] |
Liabilities | In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . The ASU requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. Organizations will continue to use judgment to determine which loss estimation method is appropriate for their circumstances. Additionally, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. For public companies eligible to be smaller reporting companies (SRC), this update was effective for interim and annual periods beginning after December 15, 2022. In preparation for the adoption of ASU 2016-13, we engaged a firm specializing in ACL modeling and had been transition modeling prior to the adoption. We also had our CECL model validated by an independent firm. The Company early adopted ASU 2016-13 using the current expected credit loss (“CECL”) methodology for financial assets measured at amortized cost, effective July 1, 2022. Results for the periods beginning after July 1, 2022 are presented under ASU 2016-13. The Company recorded a reduction to retained earnings of approximately $388,000 upon adoption of ASU 2016-13. The transition adjustment included an increase to the allowance for credit losses on loans of $47,000 and an increase to the allowance to credit losses on off-balance sheet credit exposure of $496,000. The transition adjustment included a corresponding increase in deferred tax assets. The following table illustrates the impact of ASU 2016-13 adoption (in thousands):
|  | July 1, 2022 |
|  | Allowance for credit losses as reported under ASU 2016-13 |  |  | Allowance pre-ASU 2016-13 Adoption |  |  | Impact on Allowance of ASU 2016-13 Adoption |
Assets: |  |  |  |  |  |  |  |  |  |  |  |
Real Estate Loans |  |  |  |  |  |  |  |  |  |  |  |
One- to four-family |  | $ | 1,410 |  |  | $ | 1,028 |  |  | $ | 382 |
Multi-Family |  |  | 1,235 |  |  |  | 1,375 |  |  |  | (140 | )
Commercial |  |  | 2,370 |  |  |  | 1,985 |  |  |  | 385 |
HELOC |  |  | 103 |  |  |  | 70 |  |  |  | 33 |
Construction |  |  | 681 |  |  |  | 489 |  |  |  | 192 |
Commercial Business |  |  | 1,207 |  |  |  | 2,025 |  |  |  | (818 | )
Consumer |  |  | 93 |  |  |  | 80 |  |  |  | 13 |
Allowance for credit losses for all loans |  | $ | 7,099 |  |  | $ | 7,052 |  |  | $ | 47 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Allowance for credit losses on off-balance sheet exposures |  | $ | 496 |  |  | $ | — |  |  | $ | 496 |
In March 2022, FASB issued ASU 2022-02, Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures . The amendments in this update eliminate the accounting guidance and related disclosures for TDRs by creditors in Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors , while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty and requiring an entity to disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial Instruments—Credit Losses—Measured at Amortized Cost . The amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years and are applied prospectively, except with respect to the recognition and measurement of TDRs, where an entity has the option to apply a modified retrospective transition method. The Company adopted ASU 2022-02, effective July 1, 2023, with changes applied prospectively, except with respect to the recognition and measurement of TDRs where a modified retrospective transition method was applied. The adoption of this accounting guidance did not have a material impact on the Company’s consolidated financial statements.

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- Definition Disclosure of accounting policy for estimating its liability as of the balance sheet date for the ultimate cost of settling reported and unreported claims incurred and claims adjustment expenses (including effects of inflation and other societal and economic factors). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Name Accounting Standards Codification -Topic 944 -SubTopic 40 -Publisher FASB -URI https://asc.fasb.org//944-40/tableOfContent + Details
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