Derivative and Other Financial Instruments with Off-Balance Sheet Risks

12 Months Ended

Jun. 30, 2022

Derivative and Other Financial Instruments with Off-Balance Sheet Risks

Derivative and Other Financial Instruments with Off-Balance Sheet Risks

Note 14: 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 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 June 30, 2022 and 2021, the Corporation had commitments to extend credit on loans to be held for investment of $43.4 million and $21.9 million, respectively.

The following table provides information at the dates indicated regarding 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:

	June 30,
Commitments	2022		2021
(In Thousands)
Undisbursed loan funds – Construction loans	$	3,384	$	4,479
Undisbursed lines of credit – Commercial business loans		541		460
Undisbursed lines of credit – Consumer loans		390		425
Commitments to extend credit on loans to be held for investment		43,386		21,887
Total	$	47,701	$	27,251

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 years ended June 30, 2022 and 2021:

	Year Ended
	June 30,
(In Thousands)	2022		2021
Balance, beginning of the year	$	127	$	126
Provision		3		1
Balance, end of the year	$	130	$	127