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Leases

12 Months Ended

Jun. 30, 2024

Note 4: Leases

The Corporation accounts for its leases in accordance with ASC 842, which was implemented on July 1, 2019, and 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 Consolidated Statements of Financial Condition. At June 30, 2024, all 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 Bank utilizes the FHLB - San Francisco interest 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 fiscal years ended June 30, 2024 and 2023, expenses associated with the Corporation’s leases totaled $927,000 and $882,000, respectively, and were recorded in premises and occupancy expenses and equipment expenses in the Consolidated Statements of Operations.

The following table presents supplemental information related to operating leases at the date and for the years indicated:


	As of June 30,
(In Thousands)	2024			2023
Consolidated Statements of Condition:
Premises and equipment - Operating lease right of use assets	$	1,356	$	2,147
Accounts payable, accrued interest and other liabilities – Operating lease liabilities	$	1,407	$	2,169


	Year Ended June 30,
		2024		2023
Consolidated Statements of Operations:
Premises and occupancy expenses from operating leases⁽¹⁾	$	789	$	787
Equipment expenses from operating leases⁽¹⁾		138		95
Total lease expense	$	927	$	882

Consolidated Statements of Cash Flows:
Operating cash flows from operating leases, net	$	884	$	879

(1)	Includes immaterial variable lease costs.

The following table provides information related to remaining minimum contractual lease payments and other information associated with the Corporation’s leases as of June 30, 2024:


	Amount⁽¹⁾
Year Ending June 30,	(In Thousands)
2025	$	678
2026		387
2027		192
2028		156
2029		74
Thereafter		—
Total contract lease payments	$	1,487

Total liability to make lease payments	$	1,407
Difference in undiscounted and discounted future lease payments	$	80
Weighted average discount rate		3.34	%
Weighted average remaining lease term (years)		3.0

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