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Leases
3 Months Ended
Sep. 30, 2021
Leases [Abstract]  
Leases

Note 13. Leases

 

As of September 30, 2021, the Company leases real estate for eleven branch offices and one administrative office, including its corporate headquarters, under various operating lease agreements. The Company’s leases have maturities which range from 2022 to 2041, some of which include lessee options to extend the lease term. The weighted average remaining life of the lease terms for these leases was 9.58 years as of September 30, 2021.

 

The operating lease asset and lease liability are determined at the commencement date of the lease based on the present value of the lease payments. As most of our leases do not provide an implicit rate, the Company used its incremental borrowing rate, the rate of interest to borrow on a collateralized basis for a similar term, at the lease commencement date. The Company utilized a weighted average discount rate of 2.39% in determining the lease liability as of September 30, 2021.

 

The Company made a policy election to exclude the recognition requirements of ASC 842 to short-term leases, those leases with original terms of 12 months or less. Short-term lease payments are recognized in the income statement on a straight-line basis over the lease term. The Company had no short-term lease cost for the three months ended September 30, 2021 or 2020. Certain leases may include one or more options to renew. The exercise of lease renewal options is typically at the Company’s discretion and are included in the operating lease liability if it is reasonably certain that the renewal option will be exercised. Certain real estate leases may contain lease and non-lease components, such as common area maintenance charges, real estate taxes, and insurance, which are generally accounted for separately and are not included in the measurement of the lease liability since they are generally able to be segregated. The Company does not sublease any of its leased properties. There were no sale and leaseback transactions, leveraged leases or lease transactions with related parties during the three months ended September 30, 2021 or 2020.

 

Total operating lease cost was $504,000 for both, the three months ended September 30, 2021 and 2020. The right-of-use asset, included in premises and equipment, net, was $9.2 million and the corresponding lease liability, included in other liabilities was $9.5 million as of September 30, 2021.

 

 

Future minimum lease payments for the fiscal years ending June 30 and a reconciliation of undiscounted lease cash flows and the lease liability recognized in the consolidated balance sheet as of September 30, 2021 is shown below:

 

(dollars in thousands)

 

 

 

2022

$

1,523

 

2023

 

1,940

 

2024

 

1,569

 

2025

 

1,276

 

2026

 

748

 

Thereafter

 

3,802

 

Total future minimum lease payments (undiscounted)

 

10,858

 

Discounting effect on cash flows

 

(1,384

)

Lease liability (discounted)

$

9,474