Leases

12 Months Ended

Jun. 30, 2023

Leases

Leases

Note 17 — 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. 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 2043. Topic 842 requires the Company to recognize a right-of-use (“ROU”) asset and corresponding lease liability for each of its operating leases. The operating lease ROU asset was $8.9 million and $6.8 million as of June 30, 2023 and 2022, respectively, and the operating lease liability was $9.1 million and $6.9 million as of June 30, 2023 and 2022, respectively. 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.

The calculated amount of the ROU assets and lease liabilities 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.

During the year ended June 30, 2023, the Company’s lease agreements for the Levittown and Morrisville branch office locations commenced, which resulted in an increase of the ROU asset and lease liability of $1.7 million and $970 thousand, respectively.

	June 30,
	2023
Weighted average remaining lease term
Operating leases	16.4	years
Weighted average discount rate
Operating leases	2.89	%

	June 30,
	2022
Weighted average remaining lease term
Operating leases	17.6	years
Weighted average discount rate
Operating leases	2.01	%

The Company recorded $798 thousand and $590 thousand of net lease costs during the years ended June 30, 2023 and 2022, respectively.  During the year ended June 30, 2022, the Company recognized a $117 thousand gain on lease abandonment associated with the closure of the Frankford branch effective June 30, 2022 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, 2023 were as follows:

	June 30,
	2023
	Operating
(in thousands)	Leases
Twelve months ended June 30,
2024	$	811
2025		825
2026		620
2027		636
2028		649
Thereafter		8,037
Total future minimum lease payments	$	11,578
Amounts representing interest		(2,471)
Present value of net future minimum lease payments	$	9,107