Leases

12 Months Ended

Jun. 30, 2021

Leases

Leases

Note 18 — Leases

A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration. On July 1, 2019, the Company adopted ASU No 2016-02 “Leases” (Topic 842) and all subsequent ASUs that modified Topic 842. The adoption of Topic 842 primarily affected the Company’s accounting treatment for operating lease agreements in which the Company is the lessee.

Substantially all of the leases in which the Company is the lessee include real estate property for branches and office space with terms extending through 2042. All of the Company’s leases are classified as operating leases, and therefore, were previously not recognized on the Company’s Consolidated Statements of Financial Condition. Topic 842 requires the Company to recognize a right-of-use (“ROU”) asset and corresponding lease liability included in accrued interest receivable and other assets and accrued interest payable and other liabilities, respectively, on the Company’s Consolidated Statements of Financial Condition.

The following tables present the Consolidated Statements of Financial Condition classification of the Company’s ROU assets and lease liabilities. The Company elected not to include short-term leases (i.e., leases with initial terms of twelve months of less), or equipment leases (deemed immaterial) on the Consolidated Statements of Financial Condition.

(in thousands)		June 30, 2021
Lease Right-of-Use Assets	Classification
Operating lease right-of-use assets	Other assets	$	2,108
Total Right-of-Use Assets		$	2,108

(in thousands)		June 30, 2021
Lease Liabilities	Classification
Operating lease liabilities	Other liabilities	$	2,307
Total Lease Liabilities		$	2,307

(in thousands)		June 30, 2020
Lease Right-of-Use Assets	Classification
Operating lease right-of-use assets	Other assets	$	1,663
Total Right-of-Use Assets		$	1,663

(in thousands)		June 30, 2020
Lease Liabilities	Classification
Operating lease liabilities	Other liabilities	$	1,638
Total Lease Liabilities		$	1,638

The calculated amount of the ROU assets and lease liabilities in the table above are impacted by the length of the lease term and the discount rate used to present value the minimum lease payments. The Company’s lease agreements often include one or more options to renew at the Company’s discretion. If at lease inception, the Company considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the calculation of the ROU asset and lease liability. Regarding the discount rate, Topic 842 requires the use of the rate implicit in the lease whenever this rate is readily determinable. As this rate is rarely determinable, the Company utilizes its incremental borrowing rate at lease inception, on a collateralized basis, over a similar term.

	June 30,
	2021
Weighted average remaining lease term
Operating leases	9.8	years
Weighted average discount rate
Operating leases	1.76	%

	June 30,
	2020
Weighted average remaining lease term
Operating leases	11.9	years
Weighted average discount rate
Operating leases	2.19	%

The Company recorded $365 thousand and $142 thousand of net lease costs during the years ended June 30, 2021 and 2020, respectively.  During the year ended June 30, 2021, the Company recognized a $162 thousand loss on lease abandonment associated with the closure of the Frankford branch effective June 30, 2021 as part of the Company’s branch consolidation efforts.  Future minimum payments for operating leases with initial or remaining terms of one year or more as of June 30, 2021 were as follows:

	June 30,
	2021
	Operating
(in thousands)	Leases
Twelve months ended:
2022	$	369
2023		376
2024		384
2025		367
2026		125
Thereafter		935
Total future minimum lease payments	$	2,556
Amounts representing interest		(249)
Present value of net future minimum lease payments	$	2,307