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Commitments and Contingent Liabilities
9 Months Ended
Mar. 31, 2024
Commitments and Contingent Liabilities [Abstract]  
Commitments and Contingent Liabilities
(13)        Commitments and Contingent Liabilities



Credit-Related Financial Instruments



In the normal course of business, the Company offers financial instruments with off-balance sheet risk to meet the financing needs of its customers. These transactions include commitments to extend credit, standby letters of credit, and lines of credit, which involve, to varying degrees, elements of credit risk.



The table summarizes the outstanding amounts of credit-related financial instruments with off-balance sheet risk:


(In thousands)
 
March 31, 2024
   
June 30, 2023
 
Unfunded loan commitments
 
$
108,186
   
$
124,498
 
Unused lines of credit
   
94,768
     
94,898
 
Standby letters of credit
   
429
     
179
 
Total credit-related financial instruments with off-balance sheet risk
 
$
203,383
   
$
219,575
 


The Company enters into contractual commitments to extend credit to its customers in the form of loan commitments and lines of credit, generally with fixed expiration dates and other termination clauses, and may require payment of a fee. Substantially all of the Company’s commitments to extend credit are contingent upon its customers maintaining specific credit standards at the time of loan funding, and are often secured by real estate collateral. Since the majority of the Company’s commitments typically expire without being funded, the total contractual amount does not necessarily represent the Company’s future payment requirements.



The Company evaluates each customer’s credit worthiness on a case-by-case basis.  The amount of collateral, if any, required upon an extension of credit is based on management’s evaluation of customer credit. Commitments to extend mortgage credit are primarily collateralized by first liens on real estate. Collateral on extensions of commercial lines of credit vary but may include accounts receivable, inventory, property, plant and equipment, and income producing commercial property.



Allowance for Credit Losses on Unfunded Commitments



The Company estimates expected credit losses over the contractual period in which the Company has exposure to a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The allowance for credit losses on unfunded commitments exposure is recognized in other liabilities and is adjusted as an expense in other noninterest expense. At March 31, 2024, the allowance for credit losses on unfunded commitments totaled $1.3 million.