The Bank is a party to credit-related 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 and advance funds on lines of credit. Such commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the unaudited consolidated balance sheets.

The Bank’s exposure to credit loss is represented by the contractual amount of these commitments. The Bank uses the same credit policies in making commitments as it does for on-balance sheet instruments.

At December 31, 2024 and June 30, 2024, the following financial instruments were outstanding:


(In thousands)	December 31, 2024		June 30, 2024
Commitments to grant loans	$	3,072	$	775
Unadvanced funds on equity lines of credit		3,839		4,107
Unadvanced funds on commercial and other lines of credit		2,001		1,998

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. The commitments for construction loans and lines of credit may expire without being drawn upon. Therefore, the total commitment amounts do not necessarily represent future cash requirements. The Bank evaluates each customer’s credit worthiness on a case-by-case basis and the commitments are collateralized by real estate.

The Company adopted ASU 2016-02, Leases (Topic 842), on July 1, 2022, and began recognizing operating leases on its consolidated balance sheet by recording a Right-Of-Use ("ROU") asset, representing the Company's legal right to use the leased assets and a net lease liability, representing the Company's legal obligation to make these lease payments. The Company, by policy, does not include renewal options for leases as part of its ROU asset and lease liabilities unless they are deemed reasonably certain to exercise. At December 31, 2024, the Company had two non-cancelable operating lease agreements for branch locations, one of which contains a renewal option to extend lease payments for a period of five years. At December 31, 2024, the weighted average remaining lease term for operating leases was 7.38 years and the weighted average discount rate used in the measurement of operating lease liabilities was 3.56%.

Pursuant to the terms of these lease agreements in effect at December 31, 2024 pertaining to premises, future minimum rent commitments for the fiscal years ending 2025 through 2029 and thereafter are as follows:


	Years ending
(In thousands)	June 30,
2025	$	59
2026		117
2027		119
2028		134
2029		134
Thereafter		386
Total minimum lease payments	$	949
Less: Imputed interest		(116	)
Total lease liability	$	833

The cost of lease payments is not included above. Total lease expense for the three and six months ended December 31, 2024 amounted to $34,000 and $68,000, respectively. Total lease expense for the three and six months ended December 31, 2023 amounted to $37,000 and $71,000, respectively.

Various legal claims also arise from time to time in the normal course of business which, in the opinion of management, will not have a material effect on the Bank’s unaudited consolidated financial statements.