Commitments and Contingent Liabilities

12 Months Ended

Jun. 30, 2024

Commitments and Contingent Liabilities [Abstract]

Note 13.

Commitments and Contingent Liabilities

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, which are not reflected in the accompanying consolidated financial statements.

The Company’s unfunded loan commitments and unused lines of credit are as follows at June 30, 2024 and 2023:

(In thousands)	2024		2023
Unfunded loan commitments	$	107,966	$	124,498
Unused lines of credit		99,176		94,898
Standby letters of credit		754		179
Total credit-related financial instruments with off-balance sheet risk	$	207,896	$	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 June 30, 2024, the allowance for credit losses on unfunded commitments totaled $1.3 million.

The Company and its subsidiaries are, from time to time, parties to various legal proceedings arising out of their businesses. The Company believes that it is not a party to any pending legal, arbitration, or regulatory proceedings that would have a material adverse impact on the business, consolidated financial condition, results of operations or cash flows of the Company or any of its subsidiaries.