Commitments and Contingencies

6 Months Ended

Dec. 31, 2021

Commitments and Contingencies

Commitments and Contingencies

NOTE 12 – Commitments and Contingencies

In the normal course of business, the Company is involved in various legal proceedings. In the opinion of management, any liability resulting from such proceedings would not have a material adverse effect on the condensed consolidated financial statements.

The Company is 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, financial

guarantees, and standby letters of credit. They involve, to varying degrees, elements of credit risk in excess of amounts recognized on the consolidated balance sheets.

The Company's exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual notional amount of those instruments. The Company uses the same credit policies in making commitments and issuing letters of credit as they do for on-balance-sheet instruments.

A summary of the contract or notional amount of the Company's exposure to off-balance-sheet risk is as follows:

	December 31, 2021		June 30, 2021
Financial instruments whose contract amounts represent credit risk:
Commitments to extend credit to borrowers	$	23,723,228	$	20,938,071
Sold loan commitments	$	13,763,340	$	41,039,038
Credit card commitments	$	488,454	$	500,204

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the counterparty. Collateral held varies but may include accounts receivable, inventory, property and equipment, and income-producing commercial properties. Sold loan commitments are agreements to sell loans to loan correspondents on a best efforts basis. Credit card commitments are unsecured.

As of December 31, 2021 and June 30, 2021, the Company did not engage in the use of interest rate swaps, futures or option contracts.