Commitments and Contingencies

6 Months Ended

Dec. 31, 2020

Commitments and Contingencies.

Commitments and Contingencies

Note 11 – Commitments and Contingencies

William Penn Bancorp is a 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. Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in William Penn Bancorp’s consolidated statements of financial condition.

A summary of William Penn Bancorp's loan commitments is as follows as of December 31, 2020 and June 30, 2020:

	December 31,		June 30,
(Dollars in thousands)	2020		2020
Commitments to extend credit	$	12,616	$	18,602
Unfunded commitments under lines of credit		43,850		52,432
Standby letters of credit		1,000		—

Commitments to extend credit are agreements to lend to a customer if there is no violation of any condition established in the contract. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Commitments generally have 90-day fixed expiration dates or other termination clauses and may require payment of a fee. William Penn Bancorp evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by William Penn Bancorp upon extension of credit, is based on management’s credit evaluation. Collateral held varies, but primarily includes residential and commercial real estate.

Periodically, there have been other various claims and lawsuits against the Bank, such as claims to enforce liens, condemnation proceedings on properties in which it holds security interests, claims involving the making and servicing of real property loans and other issues incident to its business. The Bank is not a party to any pending legal proceedings that it believes would have a material adverse effect on its financial condition, results of operations or cash flows.