Leases

9 Months Ended

Mar. 31, 2022

Leases [Abstract]

Leases

Leases

As Lessee - Operating Leases

The Company's operating leases primarily include office space and bank branches. Certain leases include one or more options to renew, with renewal terms that can extend the lease term up to 15 additional years. The exercise of lease renewal options is at management's sole discretion. When it is reasonably certain that the Company will exercise its option to renew or extend the lease term, that option is included in estimating the value of the ROU and lease liability. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. Most of the Company's lease agreements include periodic rate adjustments for inflation. The depreciable life of ROU assets and leasehold improvements are limited to the shorter of the useful life or the expected lease term. Leases with an initial term of 12 months or less are not recorded on the Company's Consolidated Balance Sheet. The Company recognizes lease expenses for these leases over the lease term.

The following table presents supplemental balance sheet information related to operating leases. ROU assets are included in other assets and lease liabilities are included in other liabilities.

Supplemental Balance Sheet Information:	March 31, 2022			June 30, 2021
ROU assets	$	6,172		$	5,498
Lease liabilities	6,961			5,926
Weighted-average remaining lease terms (years)	10.78			9.49
Weighted-average discount rate	2.89		%	3.18		%

The following schedule summarizes aggregate future minimum lease payments under these operating leases at March 31, 2022:

Fiscal year ending June 30:
Remaining 2022	$	1,573
2023	1,293
2024	847
2025	541
2026	414
Thereafter	3,653
Total undiscounted minimum lease payments	8,321
Less: amount representing interest	(1,360)
Total lease liability	$	6,961

The following table presents components of operating lease expense for the three and nine months ended March 31, 2022 and 2021:

	Three Months Ended March 31,				Nine Months Ended March 31,
	2022		2021		2022		2021
Operating lease cost (included in occupancy expense, net)	$	347	$	398	$	1,215	$	1,192
Variable lease cost (included in occupancy expense, net)	7		6		13		18
Sublease income (included in other, noninterest income)	(60)		(33)		(154)		(147)
Total operating lease expense, net	$	294	$	371	$	1,074	$	1,063

As Lessee - Finance Lease

The Company currently leases land for one of its branch office locations under a finance lease. The ROU asset for the finance lease totaled $2,052 at March 31, 2022 and June 30, 2021 and is included in other assets. The corresponding lease liability totaled $1,773 and $1,804 at March 31, 2022 and June 30, 2021, respectively, and is included in other liabilities. For the three and nine months ended March 31, 2022, interest expense on the lease liability totaled $23 and $70, respectively. The finance lease has a maturity date of July 2028 and a discount rate of 5.18%.

The following schedule summarizes aggregate future minimum lease payments under this finance lease obligation at March 31, 2022:

Fiscal year ending June 30:
Remaining 2022	$	33
2023	134
2024	145
2025	146
2026	146
Thereafter	1,702
Total undiscounted minimum lease payments	2,306
Less: amount representing interest	(533)
Total lease liability	$	1,773

Supplemental lease cash flow information for the nine months ended March 31, 2022 and 2021:

	Nine Months Ended March 31,
	2022		2021
ROU assets - noncash additions (operating leases)	$	1,186	$	599
Cash paid for amounts included in the measurement of lease liabilities (operating leases)	1,281		1,632
Cash paid for amounts included in the measurement of lease liabilities (finance leases)	100		100

As Lessor - General

The Company leases equipment to commercial end users under operating and finance lease arrangements. The Company's equipment finance leases consist mainly of construction, transportation, medical, and manufacturing equipment. Many of its operating and finance leases offer the lessee the option to purchase the equipment at fair value or for a nominal fixed purchase option; and most of the leases that do not have a nominal purchase option include renewal provisions resulting in some leases continuing beyond initial contractual terms. The Company's leases do not include early termination options, and continued rent payments are due if leased equipment is not returned at the end of the lease.

As Lessor - Operating Leases

Operating lease income is recognized as a component of noninterest income on a straight-line basis over the lease term. Lease terms range from one to five years. Assets related to operating leases are included in other assets and the corresponding depreciation expense is recorded on a straight-line basis as a component of other noninterest expense. The net book value of leased assets totaled $21,117 and $25,932 with a residual value of $12,941 and $15,330 as of March 31, 2022 and June 30, 2021, respectively.

The following table presents total equipment finance operating lease income and depreciation expense for the three and nine months ended March 31, 2022 and 2021:

	Three Months Ended March 31,				Nine Months Ended March 31,
	2022		2021		2022		2021
Operating lease income	$	1,661	$	1,432	$	4,920	$	4,107
Depreciation expense	1,339		1,417		4,221		4,371

The following schedule summarizes aggregate future minimum lease payments to be received at March 31, 2022:

Fiscal year ending June 30:
Remaining 2022	$	1,436
2023	4,989
2024	2,895
2025	889
2026	246
Thereafter	13
Total of future minimum lease payments	$	10,468

As Lessor - Direct Financing Leases

Finance lease income is recognized as a component of loan interest income over the lease term. The finance leases are included as a component of the equipment finance class of financing receivables under the commercial loan segment of the loan portfolio. For the three months ended March 31, 2022 and 2021, total interest income on equipment finance leases totaled $763 and $638, respectively. For the nine months ended March 31, 2022 and 2021, total interest income on equipment finance leases totaled $2,275 and $1,736, respectively.

The lease receivable component of finance lease net investment included within equipment finance class of financing receivables was $62.6 million and $63.3 million at March 31, 2022 and June 30, 2021, respectively.

The following schedule summarizes aggregate future minimum finance lease payments to be received at March 31, 2022:

Fiscal year ending June 30:
Remaining 2022	$	5,853
2023	21,226
2024	18,262
2025	13,038
2026	8,405
Thereafter	4,299
Total undiscounted minimum lease payments	71,083
Less: amount representing interest	(8,476)
Total lease receivable	$	62,607

Leases

Leases

As Lessee - Operating Leases

The Company's operating leases primarily include office space and bank branches. Certain leases include one or more options to renew, with renewal terms that can extend the lease term up to 15 additional years. The exercise of lease renewal options is at management's sole discretion. When it is reasonably certain that the Company will exercise its option to renew or extend the lease term, that option is included in estimating the value of the ROU and lease liability. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. Most of the Company's lease agreements include periodic rate adjustments for inflation. The depreciable life of ROU assets and leasehold improvements are limited to the shorter of the useful life or the expected lease term. Leases with an initial term of 12 months or less are not recorded on the Company's Consolidated Balance Sheet. The Company recognizes lease expenses for these leases over the lease term.

The following table presents supplemental balance sheet information related to operating leases. ROU assets are included in other assets and lease liabilities are included in other liabilities.

Supplemental Balance Sheet Information:	March 31, 2022			June 30, 2021
ROU assets	$	6,172		$	5,498
Lease liabilities	6,961			5,926
Weighted-average remaining lease terms (years)	10.78			9.49
Weighted-average discount rate	2.89		%	3.18		%

The following schedule summarizes aggregate future minimum lease payments under these operating leases at March 31, 2022:

Fiscal year ending June 30:
Remaining 2022	$	1,573
2023	1,293
2024	847
2025	541
2026	414
Thereafter	3,653
Total undiscounted minimum lease payments	8,321
Less: amount representing interest	(1,360)
Total lease liability	$	6,961

The following table presents components of operating lease expense for the three and nine months ended March 31, 2022 and 2021:

	Three Months Ended March 31,				Nine Months Ended March 31,
	2022		2021		2022		2021
Operating lease cost (included in occupancy expense, net)	$	347	$	398	$	1,215	$	1,192
Variable lease cost (included in occupancy expense, net)	7		6		13		18
Sublease income (included in other, noninterest income)	(60)		(33)		(154)		(147)
Total operating lease expense, net	$	294	$	371	$	1,074	$	1,063

As Lessee - Finance Lease

The Company currently leases land for one of its branch office locations under a finance lease. The ROU asset for the finance lease totaled $2,052 at March 31, 2022 and June 30, 2021 and is included in other assets. The corresponding lease liability totaled $1,773 and $1,804 at March 31, 2022 and June 30, 2021, respectively, and is included in other liabilities. For the three and nine months ended March 31, 2022, interest expense on the lease liability totaled $23 and $70, respectively. The finance lease has a maturity date of July 2028 and a discount rate of 5.18%.

The following schedule summarizes aggregate future minimum lease payments under this finance lease obligation at March 31, 2022:

Fiscal year ending June 30:
Remaining 2022	$	33
2023	134
2024	145
2025	146
2026	146
Thereafter	1,702
Total undiscounted minimum lease payments	2,306
Less: amount representing interest	(533)
Total lease liability	$	1,773

Supplemental lease cash flow information for the nine months ended March 31, 2022 and 2021:

	Nine Months Ended March 31,
	2022		2021
ROU assets - noncash additions (operating leases)	$	1,186	$	599
Cash paid for amounts included in the measurement of lease liabilities (operating leases)	1,281		1,632
Cash paid for amounts included in the measurement of lease liabilities (finance leases)	100		100

As Lessor - General

The Company leases equipment to commercial end users under operating and finance lease arrangements. The Company's equipment finance leases consist mainly of construction, transportation, medical, and manufacturing equipment. Many of its operating and finance leases offer the lessee the option to purchase the equipment at fair value or for a nominal fixed purchase option; and most of the leases that do not have a nominal purchase option include renewal provisions resulting in some leases continuing beyond initial contractual terms. The Company's leases do not include early termination options, and continued rent payments are due if leased equipment is not returned at the end of the lease.

As Lessor - Operating Leases

Operating lease income is recognized as a component of noninterest income on a straight-line basis over the lease term. Lease terms range from one to five years. Assets related to operating leases are included in other assets and the corresponding depreciation expense is recorded on a straight-line basis as a component of other noninterest expense. The net book value of leased assets totaled $21,117 and $25,932 with a residual value of $12,941 and $15,330 as of March 31, 2022 and June 30, 2021, respectively.

The following table presents total equipment finance operating lease income and depreciation expense for the three and nine months ended March 31, 2022 and 2021:

	Three Months Ended March 31,				Nine Months Ended March 31,
	2022		2021		2022		2021
Operating lease income	$	1,661	$	1,432	$	4,920	$	4,107
Depreciation expense	1,339		1,417		4,221		4,371

The following schedule summarizes aggregate future minimum lease payments to be received at March 31, 2022:

Fiscal year ending June 30:
Remaining 2022	$	1,436
2023	4,989
2024	2,895
2025	889
2026	246
Thereafter	13
Total of future minimum lease payments	$	10,468

As Lessor - Direct Financing Leases

Finance lease income is recognized as a component of loan interest income over the lease term. The finance leases are included as a component of the equipment finance class of financing receivables under the commercial loan segment of the loan portfolio. For the three months ended March 31, 2022 and 2021, total interest income on equipment finance leases totaled $763 and $638, respectively. For the nine months ended March 31, 2022 and 2021, total interest income on equipment finance leases totaled $2,275 and $1,736, respectively.

The lease receivable component of finance lease net investment included within equipment finance class of financing receivables was $62.6 million and $63.3 million at March 31, 2022 and June 30, 2021, respectively.

The following schedule summarizes aggregate future minimum finance lease payments to be received at March 31, 2022:

Fiscal year ending June 30:
Remaining 2022	$	5,853
2023	21,226
2024	18,262
2025	13,038
2026	8,405
Thereafter	4,299
Total undiscounted minimum lease payments	71,083
Less: amount representing interest	(8,476)
Total lease receivable	$	62,607

Leases

Leases

As Lessee - Operating Leases

The Company's operating leases primarily include office space and bank branches. Certain leases include one or more options to renew, with renewal terms that can extend the lease term up to 15 additional years. The exercise of lease renewal options is at management's sole discretion. When it is reasonably certain that the Company will exercise its option to renew or extend the lease term, that option is included in estimating the value of the ROU and lease liability. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. Most of the Company's lease agreements include periodic rate adjustments for inflation. The depreciable life of ROU assets and leasehold improvements are limited to the shorter of the useful life or the expected lease term. Leases with an initial term of 12 months or less are not recorded on the Company's Consolidated Balance Sheet. The Company recognizes lease expenses for these leases over the lease term.

The following table presents supplemental balance sheet information related to operating leases. ROU assets are included in other assets and lease liabilities are included in other liabilities.

Supplemental Balance Sheet Information:	March 31, 2022			June 30, 2021
ROU assets	$	6,172		$	5,498
Lease liabilities	6,961			5,926
Weighted-average remaining lease terms (years)	10.78			9.49
Weighted-average discount rate	2.89		%	3.18		%

The following schedule summarizes aggregate future minimum lease payments under these operating leases at March 31, 2022:

Fiscal year ending June 30:
Remaining 2022	$	1,573
2023	1,293
2024	847
2025	541
2026	414
Thereafter	3,653
Total undiscounted minimum lease payments	8,321
Less: amount representing interest	(1,360)
Total lease liability	$	6,961

The following table presents components of operating lease expense for the three and nine months ended March 31, 2022 and 2021:

	Three Months Ended March 31,				Nine Months Ended March 31,
	2022		2021		2022		2021
Operating lease cost (included in occupancy expense, net)	$	347	$	398	$	1,215	$	1,192
Variable lease cost (included in occupancy expense, net)	7		6		13		18
Sublease income (included in other, noninterest income)	(60)		(33)		(154)		(147)
Total operating lease expense, net	$	294	$	371	$	1,074	$	1,063

As Lessee - Finance Lease

The Company currently leases land for one of its branch office locations under a finance lease. The ROU asset for the finance lease totaled $2,052 at March 31, 2022 and June 30, 2021 and is included in other assets. The corresponding lease liability totaled $1,773 and $1,804 at March 31, 2022 and June 30, 2021, respectively, and is included in other liabilities. For the three and nine months ended March 31, 2022, interest expense on the lease liability totaled $23 and $70, respectively. The finance lease has a maturity date of July 2028 and a discount rate of 5.18%.

The following schedule summarizes aggregate future minimum lease payments under this finance lease obligation at March 31, 2022:

Fiscal year ending June 30:
Remaining 2022	$	33
2023	134
2024	145
2025	146
2026	146
Thereafter	1,702
Total undiscounted minimum lease payments	2,306
Less: amount representing interest	(533)
Total lease liability	$	1,773

Supplemental lease cash flow information for the nine months ended March 31, 2022 and 2021:

	Nine Months Ended March 31,
	2022		2021
ROU assets - noncash additions (operating leases)	$	1,186	$	599
Cash paid for amounts included in the measurement of lease liabilities (operating leases)	1,281		1,632
Cash paid for amounts included in the measurement of lease liabilities (finance leases)	100		100

As Lessor - General

The Company leases equipment to commercial end users under operating and finance lease arrangements. The Company's equipment finance leases consist mainly of construction, transportation, medical, and manufacturing equipment. Many of its operating and finance leases offer the lessee the option to purchase the equipment at fair value or for a nominal fixed purchase option; and most of the leases that do not have a nominal purchase option include renewal provisions resulting in some leases continuing beyond initial contractual terms. The Company's leases do not include early termination options, and continued rent payments are due if leased equipment is not returned at the end of the lease.

As Lessor - Operating Leases

Operating lease income is recognized as a component of noninterest income on a straight-line basis over the lease term. Lease terms range from one to five years. Assets related to operating leases are included in other assets and the corresponding depreciation expense is recorded on a straight-line basis as a component of other noninterest expense. The net book value of leased assets totaled $21,117 and $25,932 with a residual value of $12,941 and $15,330 as of March 31, 2022 and June 30, 2021, respectively.

The following table presents total equipment finance operating lease income and depreciation expense for the three and nine months ended March 31, 2022 and 2021:

	Three Months Ended March 31,				Nine Months Ended March 31,
	2022		2021		2022		2021
Operating lease income	$	1,661	$	1,432	$	4,920	$	4,107
Depreciation expense	1,339		1,417		4,221		4,371

The following schedule summarizes aggregate future minimum lease payments to be received at March 31, 2022:

Fiscal year ending June 30:
Remaining 2022	$	1,436
2023	4,989
2024	2,895
2025	889
2026	246
Thereafter	13
Total of future minimum lease payments	$	10,468

As Lessor - Direct Financing Leases

Finance lease income is recognized as a component of loan interest income over the lease term. The finance leases are included as a component of the equipment finance class of financing receivables under the commercial loan segment of the loan portfolio. For the three months ended March 31, 2022 and 2021, total interest income on equipment finance leases totaled $763 and $638, respectively. For the nine months ended March 31, 2022 and 2021, total interest income on equipment finance leases totaled $2,275 and $1,736, respectively.

The lease receivable component of finance lease net investment included within equipment finance class of financing receivables was $62.6 million and $63.3 million at March 31, 2022 and June 30, 2021, respectively.

The following schedule summarizes aggregate future minimum finance lease payments to be received at March 31, 2022:

Fiscal year ending June 30:
Remaining 2022	$	5,853
2023	21,226
2024	18,262
2025	13,038
2026	8,405
Thereafter	4,299
Total undiscounted minimum lease payments	71,083
Less: amount representing interest	(8,476)
Total lease receivable	$	62,607

Leases

Leases

As Lessee - Operating Leases

The Company's operating leases primarily include office space and bank branches. Certain leases include one or more options to renew, with renewal terms that can extend the lease term up to 15 additional years. The exercise of lease renewal options is at management's sole discretion. When it is reasonably certain that the Company will exercise its option to renew or extend the lease term, that option is included in estimating the value of the ROU and lease liability. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. Most of the Company's lease agreements include periodic rate adjustments for inflation. The depreciable life of ROU assets and leasehold improvements are limited to the shorter of the useful life or the expected lease term. Leases with an initial term of 12 months or less are not recorded on the Company's Consolidated Balance Sheet. The Company recognizes lease expenses for these leases over the lease term.

The following table presents supplemental balance sheet information related to operating leases. ROU assets are included in other assets and lease liabilities are included in other liabilities.

Supplemental Balance Sheet Information:	March 31, 2022			June 30, 2021
ROU assets	$	6,172		$	5,498
Lease liabilities	6,961			5,926
Weighted-average remaining lease terms (years)	10.78			9.49
Weighted-average discount rate	2.89		%	3.18		%

The following schedule summarizes aggregate future minimum lease payments under these operating leases at March 31, 2022:

Fiscal year ending June 30:
Remaining 2022	$	1,573
2023	1,293
2024	847
2025	541
2026	414
Thereafter	3,653
Total undiscounted minimum lease payments	8,321
Less: amount representing interest	(1,360)
Total lease liability	$	6,961

The following table presents components of operating lease expense for the three and nine months ended March 31, 2022 and 2021:

	Three Months Ended March 31,				Nine Months Ended March 31,
	2022		2021		2022		2021
Operating lease cost (included in occupancy expense, net)	$	347	$	398	$	1,215	$	1,192
Variable lease cost (included in occupancy expense, net)	7		6		13		18
Sublease income (included in other, noninterest income)	(60)		(33)		(154)		(147)
Total operating lease expense, net	$	294	$	371	$	1,074	$	1,063

As Lessee - Finance Lease

The Company currently leases land for one of its branch office locations under a finance lease. The ROU asset for the finance lease totaled $2,052 at March 31, 2022 and June 30, 2021 and is included in other assets. The corresponding lease liability totaled $1,773 and $1,804 at March 31, 2022 and June 30, 2021, respectively, and is included in other liabilities. For the three and nine months ended March 31, 2022, interest expense on the lease liability totaled $23 and $70, respectively. The finance lease has a maturity date of July 2028 and a discount rate of 5.18%.

The following schedule summarizes aggregate future minimum lease payments under this finance lease obligation at March 31, 2022:

Fiscal year ending June 30:
Remaining 2022	$	33
2023	134
2024	145
2025	146
2026	146
Thereafter	1,702
Total undiscounted minimum lease payments	2,306
Less: amount representing interest	(533)
Total lease liability	$	1,773

Supplemental lease cash flow information for the nine months ended March 31, 2022 and 2021:

	Nine Months Ended March 31,
	2022		2021
ROU assets - noncash additions (operating leases)	$	1,186	$	599
Cash paid for amounts included in the measurement of lease liabilities (operating leases)	1,281		1,632
Cash paid for amounts included in the measurement of lease liabilities (finance leases)	100		100

As Lessor - General

The Company leases equipment to commercial end users under operating and finance lease arrangements. The Company's equipment finance leases consist mainly of construction, transportation, medical, and manufacturing equipment. Many of its operating and finance leases offer the lessee the option to purchase the equipment at fair value or for a nominal fixed purchase option; and most of the leases that do not have a nominal purchase option include renewal provisions resulting in some leases continuing beyond initial contractual terms. The Company's leases do not include early termination options, and continued rent payments are due if leased equipment is not returned at the end of the lease.

As Lessor - Operating Leases

Operating lease income is recognized as a component of noninterest income on a straight-line basis over the lease term. Lease terms range from one to five years. Assets related to operating leases are included in other assets and the corresponding depreciation expense is recorded on a straight-line basis as a component of other noninterest expense. The net book value of leased assets totaled $21,117 and $25,932 with a residual value of $12,941 and $15,330 as of March 31, 2022 and June 30, 2021, respectively.

The following table presents total equipment finance operating lease income and depreciation expense for the three and nine months ended March 31, 2022 and 2021:

	Three Months Ended March 31,				Nine Months Ended March 31,
	2022		2021		2022		2021
Operating lease income	$	1,661	$	1,432	$	4,920	$	4,107
Depreciation expense	1,339		1,417		4,221		4,371

The following schedule summarizes aggregate future minimum lease payments to be received at March 31, 2022:

Fiscal year ending June 30:
Remaining 2022	$	1,436
2023	4,989
2024	2,895
2025	889
2026	246
Thereafter	13
Total of future minimum lease payments	$	10,468

As Lessor - Direct Financing Leases

Finance lease income is recognized as a component of loan interest income over the lease term. The finance leases are included as a component of the equipment finance class of financing receivables under the commercial loan segment of the loan portfolio. For the three months ended March 31, 2022 and 2021, total interest income on equipment finance leases totaled $763 and $638, respectively. For the nine months ended March 31, 2022 and 2021, total interest income on equipment finance leases totaled $2,275 and $1,736, respectively.

The lease receivable component of finance lease net investment included within equipment finance class of financing receivables was $62.6 million and $63.3 million at March 31, 2022 and June 30, 2021, respectively.

The following schedule summarizes aggregate future minimum finance lease payments to be received at March 31, 2022:

Fiscal year ending June 30:
Remaining 2022	$	5,853
2023	21,226
2024	18,262
2025	13,038
2026	8,405
Thereafter	4,299
Total undiscounted minimum lease payments	71,083
Less: amount representing interest	(8,476)
Total lease receivable	$	62,607