Consumers Bancorp, Inc. (Corporation) is a bank holding company as defined under the Bank Holding Company Act of 1956, as amended (BHCA), and is a registered bank holding company under that act and was incorporated under the laws of the State of Ohio in 1994. In February 1995, the Corporation acquired all the issued and outstanding capital stock of Consumers National Bank (Bank), a bank chartered under the laws of the United States of America. The Corporation’s activities have been limited primarily to holding the common stock of the Bank.

Consumers National Bank is a community-oriented financial institution that offers a wide range of commercial and consumer loan and deposit products, as well as mortgage, financial planning and investment services to individuals, farmers and small and medium sized businesses in our markets. Since 1965, the Bank’s main office has been serving ~~the~~ Minerva, Ohio, and surrounding areas from its location at 614 East Lincoln Way, Minerva, Ohio. The Bank seeks to be the provider of choice for financial solutions to customers who value exceptional personalized service, local decision making, and modern banking technology. The Bank’s business involves attracting deposits from businesses and individual customers and using such deposits to originate commercial, mortgage and consumer loans in its market area, consisting primarily of Carroll, Columbiana, Jefferson, Mahoning, Stark, Summit and Wayne ~~and~~counties in Ohio. Its market includes these counties as well as the contiguous counties in northeast Ohio, western Pennsylvania, and northern West Virginia. As of June 30, ~~2021,~~2023, the Bank had 1921 full-service branch locations and one loan production office. The Bank also invests in securities consisting primarily of obligations of U.S. government-sponsored entities, municipal obligations and mortgage-backed securities issued by Fannie Mae, Freddie Mac and Ginnie Mae.

On ~~January 1, 2020,~~July 16, 2021, the Corporation completed ~~the~~its acquisition ~~by merger~~(branch acquisition) of Peoples Bancorp of Mt. Pleasant, Inc. (Peoples) in a stock and cash transaction for an aggregate consideration of approximately $10,405. As a result of the acquisition, the Corporation received loans with an estimated fair value of $55,320, as of the date of the acquisition, and deposits at three banking centerstwo branches located in ~~Mt. Pleasant, Adena,~~Calcutta and ~~Dillonvale,~~Wellsville, Ohio ~~with an estimated fair value of $60,851, as of the date of the acquisition.~~from CFBank, National Association. In connection with the branch acquisition, the Corporation assumed $104,538 in branch deposits for a deposit premium of 1.75%. In addition, the Corporation acquired $15,602 of subordinated debt securities issued ~~269,920 shares~~by unrelated financial institutions, $19,943 of ~~common stock~~loans, and ~~paid $5,128 in cash to the former shareholders~~recorded goodwill of ~~Peoples. The financial position and results of operations of Peoples prior to its acquisition date are not included in the Corporations’ financial results for periods prior to the acquisition date.~~$1,616. This transaction qualified as a business combination.

The Corporation and the Bank are subject to regulation by the Securities and Exchange Commission (SEC), the Board of Governors of the Federal Reserve System (Federal Reserve Board), the Office of the Comptroller of the Currency (OCC) and other federal and state regulators. The regulatory framework is intended primarily for the protection of depositors, federal deposit insurance funds and the banking system as a whole and not for the protection of shareholders and creditors. Earnings and dividends of the Corporation are affected by state and federal laws and regulations and by policies of various regulatory authorities. Changes in applicable law or in the policies of various regulatory authorities could affect materially the business and prospects of the Corporation and the Bank. The following describes selected federal and state statutory and regulatory provisions that have, or could have, a material impact on the Corporation. The following discussion of supervision and regulation is qualified in its entirety by reference to the statutory and regulatory provisions discussed.

The Bank Holding Company Act: As a bank holding company, the Corporation is subject to regulation under the BHCA, and the examination and reporting requirements of the Federal Reserve Board. Under the BHCA, the Corporation is subject to periodic examination by the Federal Reserve Board and is required to file periodic reports regarding its operations and any additional information that the Federal Reserve Board may require.

The BHCA generally limits the activities of a bank holding company to banking, managing or controlling banks, furnishing services to or performing services for its subsidiaries and engaging in any other activities that the Federal Reserve Board has determined to be so closely related to banking or to managing or controlling banks as to be a proper incident to those activities. In addition, subject to certain exceptions, the BHCA requires every bank holding company to obtain the approval of the Federal Reserve Board prior to acquiring substantially all the assets of any bank, acquiring direct or indirect ownership or control of more than 5% of the voting shares of a bank or merging or consolidating with another bank holding company.

Under Federal Reserve Board policy, a bank holding company is expected to act as a source of financial strength to each subsidiary bank and to commit resources to support those subsidiary banks. Under this policy, the Federal Reserve Board may require a bank holding company to contribute additional capital to an undercapitalized subsidiary bank and may disapprove of the payment of dividends to shareholders if the Federal Reserve Board believes the payment of such dividends would be an unsafe or unsound practice. The Federal Reserve Board has extensive enforcement authority over bank holding companies for violations of laws and regulations and unsafe or unsound practices.

Privacy Provisions of Gramm-Leach-Bliley Act: The Gramm-Leach-Bliley Act of 1999 contains extensive provisions on a customer’s right to privacy of non-public personal information. Under these provisions, a financial institution must provide to its customers with the institution’s policies and procedures regarding the handling of customers’ non-public personal information. Except in certain cases, an institution may not provide personal information to unaffiliated third parties unless the institution discloses that such information may be disclosed, and the customer is given the opportunity to opt out of such disclosure. The Corporation and the Bank are also subject to certain state laws that deal with the use and distribution of non-public personal information.

Sarbanes-Oxley Act: The Sarbanes-Oxley Act of 2002 contains important requirements for public companies in the areas of financial disclosure and corporate governance. In accordance with section 302(a) of the Sarbanes-Oxley Act, written certifications by the Corporation’s Chief Executive Officer and Chief Financial Officer are required. These certifications attest that the Corporation’s quarterly and annual reports filed with the SEC do not contain any untrue statement of a material fact or omit to state a material fact.

As a national bank, the Bank is subject to regulation, supervision, and examination by the OCC and by the Federal Deposit Insurance Corporation (FDIC). These examinations are designed primarily for the protection of the depositors of the Bank.

Dividend Restrictions: Dividends from the Bank are the primary source of funds for payment of dividends to the Corporation’s shareholders. There are statutory limits, however, on the amount of dividends the Bank can pay without regulatory approval. Under regulations promulgated by the OCC, the Bank may not declare a dividend in excess of its undivided profits. Additionally, the Bank may not declare a dividend if the total amount of all dividends, including the proposed dividend, declared by the Bank in any calendar year exceeds the total of its retained net income of that year to date, combined with its retained net income of the two preceding years, unless the dividend is approved by the OCC. The Bank may not declare or pay any dividend if, after making the dividend, the Bank would be “undercapitalized,” as defined in the federal regulations.

FDIC: The FDIC is an independent federal agency, which insures the deposits of federally insured banks and savings associations up to certain prescribed limits and safeguards the safety and soundness of financial institutions. The deposits of the Bank are subject to the deposit insurance assessments of the Deposit Insurance Fund of the FDIC. Under the FDIC’s deposit insurance assessment system, the assessment rate for any insured institution varies according to regulatory capital levels of the institution and other factors such as supervisory evaluations.

The FDIC is authorized to prohibit any insured institution from engaging in any activity that poses a serious threat to the insurance fund and may initiate enforcement actions against banks, after first giving the institution’s primary regulatory authority an opportunity to take such action. The FDIC may also terminate the deposit insurance of any institution that has engaged in or is engaging in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, order or condition imposed by the FDIC.

~~The Coronavirus Aid, Relief, and Economic Security Act of 2020:~~ In response to the novel COVID-19 pandemic (COVID-19), the Coronavirus Aid, Relief, and Economic Security Act of 2020, as amended (the CARES Act), was signed into law on March 27, 2020, to provide national emergency economic relief measures. Many of the CARES Act’s programs are dependent upon the direct involvement of U.S. financial institutions, such as the Corporation and the Bank, and have been implemented through rules and guidance adopted by federal departments and agencies, including the U.S. Department of Treasury, the Federal Reserve Board and other federal banking agencies, including those with direct supervisory jurisdiction over the Corporation. Furthermore, as COVID-19 evolves, federal regulatory authorities continue to issue additional guidance with respect to the implementation, lifecycle, and eligibility requirements for the various CARES Act programs as well as industry-specific recovery procedures for COVID-19. In addition, it is possible that Congress will enact supplementary COVID-19 response legislation, including amendments to the CARES Act or new bills comparable in scope to the CARES Act. The Corporation continues to assess the impact of the CARES Act and other statues, regulations and supervisory guidance related to COVID-19.

The CARES Act amended the loan program of the U.S. Small Business Administration (SBA), in which the Bank participates, to create a guaranteed, unsecured loan program, the Paycheck Protection Program (PPP), to fund operational costs of eligible businesses, organizations and self-employed persons during COVID-19. In June 2020, the Paycheck Protection Program Flexibility Act was enacted, which, among other things, gave borrowers additional time and flexibility to use PPP loan proceeds. Shortly thereafter, and due to the evolving impact of COVID-19, Congress enacted additional legislation authorizing the SBA to resume accepting PPP applications on July 6, 2020 and extending the PPP application deadline to August 8, 2020. On September 29, 2020, the federal bank regulatory agencies issued a final rule that neutralizes the regulatory capital and liquidity coverage ratio effects of participating in certain COVID-19 liquidity facilities due to the fact there is no credit or market risk in association with exposures pledged to such facilities. As a result, the final rule supports the flow of credit to households and businesses affected by COVID-19. In December 2020, the Bipartisan-Bicameral Omnibus COVID Relief Deal was enacted to provide additional economic stimulus to individuals and businesses in response to the extended economic distress caused by the pandemic. This legislation included provisions for additional stimulus payments to individuals and their dependents, the extension of enhanced unemployment benefits, $284 billion of additional funds for a second round of PPP loans and a new simplified forgiveness procedure for PPP loans of $150,000 or less. As a participating lender in the PPP, the Corporation continues to monitor legislative, regulatory, and supervisory developments related thereto.

Certain provisions within the CARES Act encourage financial institutions to practice prudent efforts to work with borrowers impacted by the pandemic. Under these provisions, loan modifications deemed to be COVID-19 related would not be considered a troubled debt restructuring (TDR) if the loan was not more than 30 days past due as of December 31, 2019 and the deferral was executed between March 1, 2020 and the earlier of 60 days after the date of the termination of the COVID-19 national emergency or December 31, 2020. The banking regulators issued a similar guidance, which also clarified that a COVID-19 related modification should not be considered a TDR if the borrower was current on payments at the time the underlying loan modification program was implemented and if the modification is considered short-term. Recently, Section 541 of the Consolidated Appropriations Act, 2021, extended this relief to the earlier of 60 days after the end of the national emergency proclamation or January 1, 2022. The Corporation implemented a short-term modification program that offers principal and interest payment deferrals for up to 90 days or interest only payments for up to 90 days. Borrowers are eligible for an additional 90 days of payment deferrals if situations warrant a need for an extension. Interest will be deferred but will continue to accrue during the deferment period and the maturity date on amortizing loans will be extended by the number of months the payment was deferred. Consistent with issued regulatory guidance, modifications made under this program in response to COVID-19 will not be classified as troubled debt restructurings.

Current Expected Credit Loss Model: In December 2018, the OCC, the Federal Reserve Board, and the FDIC issued a final rule to address regulatory treatment of credit loss allowances under the current expected credit loss (CECL) model. The rule revised the federal banking agencies’ regulatory capital rules to identify which credit loss allowances under the CECL model are eligible for inclusion in regulatory capital and to provide banking organizations the option to phase in over three years the day one adverse effects on regulatory capital that may result from the adoption of the CECL model. The Bank ~~is required to adopt~~adopted the CECL model byon July 1, 2023 since it’s a smaller reporting ~~company.~~company and expects to elect to phase in the day-one effect of adopting CECL for regulatory capital purposes.

Risk-Based Capital Requirements: The Federal Reserve Board and the OCC employ similar risk-based capital guidelines in their examination and regulation of bank holding companies and national banks, respectively. The Corporation meets the definition of a Small Bank Holding Company and, therefore, was exempt from maintaining consolidated regulatory capital ratios. Instead, regulatory capital ratios only apply at the subsidiary bank level. The guidelines involve a process of assigning various risk weights to different classes of assets, then evaluating the sum of the risk-weighted balance sheet structure against the capital base. If capital falls below the minimum levels established by the guidelines, the bank holding company or bank may be denied approval to acquire or establish additional banks or non-bank businesses or to open new facilities. In addition, failure to satisfy capital guidelines could subject a banking institution to a variety of enforcement actions by federal bank regulatory authorities, including the termination of deposit insurance by the FDIC and a prohibition on the acceptance of “brokered deposits.”

Effective January 1, 2020, qualifying community banking organizations may elect to comply with a greater than 9% community bank leverage ratio (CBLR) requirement in lieu of the currently applicable requirements for calculating and reporting risk-based capital ratios. The CBLR is equal to Tier 1 capital divided by average total consolidated assets. In order to qualify for the CBLR election, a community bank must (i) have a leverage capital ratio greater than 9 percent, (ii) have less than $10 billion in average total consolidated assets, (iii) not exceed certain levels of off-balance sheet exposure and trading assets plus trading liabilities and (iv) not be an advanced approaches banking organization. A community bank that meets the above qualifications and elects to utilize the CBLR is considered to have satisfied the risk-based and leverage capital requirements in the generally applicable capital rules and is also considered to be "well capitalized" under the prompt corrective action rules. The Bank has not elected to be subject to the CBLR.

Unless a community bank qualifies for, and elects to comply with the CBLR beginning on January 1, 2020, national banks are required to maintain the Basel III minimum levels of regulatory capital. The Basel III capital requirements for U.S. banking organizations became effective on January 1, 2015 and were fully phased in by January 1, 2019. Under Basel III, the Bank is required to maintain a minimum common equity Tier 1 capital ratio of 4.5%, a Tier 1 capital ratio of 6%, a total capital ratio of 8%, and a Tier 1 leverage ratio of 4%. Basel III also established a “capital conservation buffer” of 2.5% above the new regulatory minimum capital requirements, which effectively resulted in a minimum common equity Tier 1 capital ratio of 7%, a Tier 1 capital ratio of 8.5%, a total capital ratio of 10.5% and a Tier 1 leverage ratio of 6.5%. The capital conservation buffer is designed to absorb losses during periods of economic stress. Banking institutions with a common equity Tier 1 ratio to risk-weighted assets above the minimum but below the conservation buffer will face constraints on dividends, equity repurchases, and compensation based on the amount of the shortfall.

The OCC and the FDIC may take various corrective actions against any undercapitalized bank and any bank that fails to submit an acceptable capital restoration plan or fails to implement a plan accepted by the OCC or the FDIC. These powers include, but are not limited to, requiring the institution to be recapitalized, prohibiting asset growth, restricting interest rates paid, requiring prior approval of capital distributions by any bank holding company that controls the institution, requiring divestiture by the institution of its subsidiaries or by the holding company of the institution itself, requiring new election of directors, and requiring the dismissal of directors and officers. The OCC’s final supervisory judgment concerning an institution’s capital adequacy could differ significantly from the conclusions that might be derived from the absolute level of an institution’s risk-based capital ratios. Therefore, institutions generally are expected to maintain risk-based capital ratios that exceed the minimum ratios. As of June 30, ~~2021,~~2023, the Bank exceeded minimum regulatory capital requirements to be considered well-capitalized.

Dodd-Frank Wall Street Reform and Consumer Protection Act: The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) created many new restrictions and an expanded framework of regulatory oversight for financial institutions, including depository institutions. The Dodd-Frank Act centralized responsibility for consumer financial protection by creating a new agency,established the Consumer Financial Protection Bureau (CFPB), which regulates consumer financial products and ~~giving it responsibility for implementing, examining~~services and ~~enforcing compliance with federal consumer protection laws.~~certain financial services providers. The CFPB ~~has examination~~is authorized to prevent unfair, deceptive and abusive acts or practices and seeks to ensure consistent enforcement ~~authority over all banks with more than $10 billion in assets, as well as their affiliates. Although the CFPB does not~~of laws so that consumers have ~~direct supervisory authority over banks with less than $10 billion in assets,~~access to fair, transparent and competitive markets for consumer financial products and services. Since it was established the CFPB has ~~broad~~exercised extensive rulemaking ~~authority for a wide range of consumer financial laws that apply to all banks, including, among other things, the authority to prohibit “unfair, deceptive or abusive” acts~~ and practices. Abusive acts or practices are defined as those that materially interfere with a consumer’s ability to understand a term or condition of a consumer financial product or service or take unreasonable advantage of a consumer’s (i) lack of financial savvy, (ii) inability to protect himself in the selection or use of consumer financial products or services, or (iii) reasonable reliance on a covered entity to act in the consumer’s interests. The Corporation is closely monitoring all relevant sections of the Dodd-Frank Act to ensure continued compliance with these regulatory requirements and assess their potential impact on our business.interpretive authority.

Interstate Banking and Branching: The Interstate Banking and Branch Efficiency Act of 1995 has eased restrictions on interstate expansion and consolidation of banking operations by, among other things: (i) permitting interstate bank acquisitions regardless of host state laws, (ii) permitting interstate merger of banks unless specific states have opted out of this provision, and (iii) permitting banks to establish new branches outside the state provided the law of the host state specifically allows interstate bank branching.

Community Reinvestment Act: The Community Reinvestment Act (CRA) requires depository institutions to assist in meeting the credit needs of their market areas, including low- and moderate-income areas, consistent with safe and sound banking practices. Under this Act, each institution is required to adopt a statement for each of its market areas describing the depository institution’s efforts to assist in its community’s credit needs. Depository institutions are periodically examined for compliance and assigned ratings. Banking regulators consider these ratings when considering approval of a proposed transaction by an institution. The Bank’s most recent CRA rating is satisfactory.

USA PATRIOT Act: In 2001, Congress enacted the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Patriot Act). The Patriot Act is designed to deny terrorists and criminals the ability to obtain access to the United States’ financial system and has significant implications for depository institutions, brokers, dealers, and other businesses involved in the transfer of money. The Patriot Act mandates that financial services companies implement additional policies and procedures with respect to additional measures designed to address any or all of the following matters: money laundering, terrorist financing, identifying and reporting suspicious activities and currency transactions, and currency crimes.

The Anit-Money Laundering Act: In 2021, Congress enacted the Anti-Money Laundering Act of 2020 (AMLA), which amended the Bank Secrecy Act of 1970 (BSA). The AMLA is intended to be a comprehensive reform and modernization to U.S. bank secrecy and anti-money laundering laws. Among other things, the AMLA codifies a risk-based approach to anti-money laundering compliance for financial institutions; requires the development of standards for evaluating technology and internal processes for BSA compliance; expands enforcement-related and investigation-related authority, including increasing available sanctions for certain BSA violations and instituting BSA whistleblower initiatives and protections.

Office of Foreign Assets Control Regulation: The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) administers and enforces economic and trade sanctions against targeted foreign countries and regimes, under authority of various laws, including designated foreign countries, nationals and others. OFAC publishes lists of specially designated targets and countries. We are responsible for, among other things, blocking accounts of, and transactions with, such targets and countries, prohibiting unlicensed trade and financial transactions with them and reporting blocked transactions after their occurrence. Failure to comply with these sanctions could have serious financial, legal and reputational consequences, including applicable bank regulatory authorities not approving merger or acquisition transactions when regulatory approval is required or prohibiting such transactions even if approval is not required. Regulatory authorities have imposed cease and desist orders and civil money penalties against institutions found to be violating these obligations.

Cybersecurity: In March 2015, federal regulators issued two related statements regarding cybersecurity. One statement indicates that financial institutions should design multiple layers of security controls to establish lines of defense and to ensure that their risk management processes also address the risk posed by compromised customer credentials, including security measures to reliably authenticate customers accessing internet-based services of the financial institution. The other statement indicates that a financial institution’s management is expected to maintain sufficient business continuity planning processes to ensure the rapid recovery, resumption and maintenance of the institution’s operations after a cyberattack involving destructive malware. A financial institution is also expected to develop appropriate processes to enable recovery of data and business operations and address rebuilding network capabilities and restoring data if the institution or its critical service providers fall victim to this type of cyberattack.

In February 2018, the SEC published interpretive guidance to assist public companies in preparing disclosures about cybersecurity risks and incidents. These SEC guidelines, and any other regulatory guidance, are in addition to notification and disclosure requirements under state and federal banking law and regulations. In addition, in July 2023, the SEC adopted rules that require disclosure of material cybersecurity incidents, processes, if any, for assessing, identifying and managing material cybersecurity risk as well as whether any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect the Corporation.

In November 2021, the OCC, the FRB and the FDIC issued a final rule, which became effective in May 2022, requiring banking organizations that experience a computer-security incident to notify certain entities. A computer-security incident occurs when actual or potential harm to the confidentiality, integrity, or availability of an information system or the information occurs, or there is a violation or imminent threat of a violation to banking security policies and procedures. The affected bank must notify its respective federal regulator of the computer-security incident as soon as possible and no later than 36 hours after the bank determines a computer-security incident that rises to the level of a notification event has occurred. These notifications are intended to promote early awareness of threats to banking organizations and will help banks react to those threats before they manifest into larger incidents. This rule also requires bank service providers to notify their bank organization customers of a computer-security incident that has caused, or is reasonably likely to cause, a material service disruption or degradation.

Furthermore, the Cyber Incident Reporting for Critical Infrastructure Act, enacted in March 2022, will require, once administrative rules are adopted, certain covered entities, including those in the financial services industry, to report a covered cyber incident to the U.S. Department of Homeland Security’s Cybersecurity & Infrastructure Security Agency (CISA) within 72 hours after it reasonably believes an incident has occurred. Separate reporting to CISA will also be required within 24 hours if a ransom payment is made as a result of a ransomware attack.

State regulators have also been increasingly active in implementing privacy and cybersecurity standards and regulations. Recently, several states have adopted regulations requiring certain financial institutions to implement cybersecurity programs and many states have also recently implemented or modified their data breach notification, information security and data privacy requirements. We expect this trend of state-level activity in those areas to continue and we are monitoring developments in the states in which our customers are located.

In the ordinary course of business, electronic communications and information systems are relied upon to conduct operations, to deliver services to customers and to store sensitive data. The Corporation employs a variety of preventative and detective tools to monitor, block, and provide alerts regarding suspicious activity, as well as to report on any suspected advanced persistent threats. Risks and exposures related to cybersecurity attacks are expected to remain high for the foreseeable future due to the rapidly evolving nature and sophistication of these threats, increasing volume of attacks, as well as due to the expanding use of internet banking, mobile banking and other technology-based products and services by the Corporation and its customers.

Government Monetary Policy: The earnings of the Corporation are affected by general and local economic conditions and by the policies of various governmental regulatory authorities. In particular, the Federal Reserve Board regulates money and credit conditions and interest rates to influence general economic conditions, primarily through open market acquisitions or dispositions of United States Government securities, varying the discount rate on member bank borrowings and setting reserve requirements against member and nonmember bank deposits. Federal Reserve Board monetary policies have had a significant effect on the interest income and interest expense of commercial banks, including the Bank, and are expected to continue to do so in the future.

Executive and Incentive Compensation: Under the Dodd-Frank Act and rules adopted by the SEC in October 2022, public companies will be required, once stock exchanges adopt additional listing requirements, to adopt and implement “clawback” policies for incentive compensation payments and to disclose the details of the procedures for recovery of incentive compensation that was paid on the basis of erroneous financial information necessitating an accounting restatement due to material noncompliance with financial reporting requirements. Such clawback policies are intended to apply to compensation paid within the three completed fiscal years immediately preceding the date the issuer is required to prepare a restatement and would cover all executives (including former executives) who received incentive awards.

As of June 30, ~~2021,~~2023, the Bank employed ~~156~~173 full-time and 2021 part-time employees. None of the employees are represented by a collective bargaining group. Management considers its relations with employees to be good.

The Corporation files annual, quarterly, and current reports, proxy statements, and other information with the SEC. These filings are available to the public over the Internet at the SEC’s website at www.sec.gov. Shareholders may also read and copy any document that the Corporation files at the SEC’s public reference room located at 100 F Street, NE, Washington, DC 20549. Shareholders may call the SEC at 1-800-SEC-0330 for further information on the public reference room.

The Corporation’s reports on Forms 10-K, 10-Q and 8-K, and amendments to those reports, are available, free of charge, on our website (www.consumers.bank) as soon as reasonably practicable after such reports are filed with or furnished to the SEC. The Corporation’s Code of Ethics Policy, which is applicable to all directors, officers and employees of the Corporation, and its Code of Ethics for Principal Financial Officers, which is applicable to the principal executive officer and the principal financial officer, are each available on the Investor Relations section under Corporate Governance of the Corporation’s website. The Corporation intends to post amendments to or waivers from either of its Code of Ethics Policies on its website. A printed copy of any of these documents will be provided to any requesting shareholder.

The Bank operates ~~nineteen~~21 full-service banking facilities and one loan production office (LPO) as noted below:

The Bank considers its physical properties to be in good operating condition and suitable for the purposes for which they are being used. In management’s opinion, all properties owned and operated by the Bank are adequately insured.

The Corporation is not a party to any pending material legal or administrative proceedings, other than ordinary routine litigation incidental to the business of the Corporation. Further, there are no material legal proceedings in which any director, executive officer, principal shareholder or affiliate of the Corporation is a party or has a material interest therein that is adverse to the Corporation. No routine litigation in which the Corporation is involved is expected to have a material adverse impact on the financial position or results of operations of the Corporation.

Item 5—Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities

The Corporation had ~~3,028,100~~3,096,100 common shares outstanding on June 30, ~~2021~~2023, with ~~752~~730 shareholders of record and an estimated ~~723~~816 additional beneficial holders whose stock was held in nominee name. Attention is directed to Item 12 in this Form 10-K for information regarding the Corporation’s equity incentive plans, which information is incorporated herein by reference.

The common shares of Consumers Bancorp, Inc. are quoted on the OTCQX® Best Market under the symbol CBKM. The following quoted market prices reflect inter-dealer prices, without adjustments for retail markups, markdowns, or commissions and may not represent actual transactions. The market prices represent highs and lows reported during the applicable quarterly period.

Management does not have knowledge of the prices paid in all transactions and has not verified the accuracy of those prices that have been reported. Because of the lack of an established market for the Corporation’s common shares, these prices may not reflect the prices at which the common shares would trade in an active market.

The Corporation’s management is currently committed to continuing to pay regular cash dividends; however, there can be no assurance as to future dividends because they are dependent on the Corporation’s future earnings, capital requirements and financial condition. The Corporation’s principal source of funds for dividend payment is dividends received from the Bank. Banking regulations limit the amount of dividends that may be paid without prior approval of regulatory agencies. Under these regulations, the amount of dividends that may be paid in any calendar year is limited to the current year’s net profits, combined with the retained net profits of the preceding two years, subject to the capital requirements described above. See Note 1 and Note 13 to the Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations for dividend restrictions.

There were no repurchases of the Corporation’s securities during ~~the 2021~~ fiscal ~~year.~~year 2023.

Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following is management’s analysis of the Corporation’s financial condition and results of operations as of and for the years ended June 30, ~~2021~~2023 and ~~2020.~~2022. This discussion is designed to provide a more comprehensive review of the operating results and financial position than could be obtained from an examination of the financial statements alone. This analysis should be read in conjunction with the consolidated financial statements and related footnotes and the selected financial data included elsewhere in this report.

Certain statements contained in this Annual Report on Form 10-K, which are not statements of historical fact, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words “may,” “continue,” “estimate,” “intend,” “plan,” “seek,” “will,” “believe,” “project,” “expect,” “anticipate” and similar expressions are intended to identify forward-looking statements. These forward-looking statements may involve risks and uncertainties that are difficult to predict, may be beyond our control, and could cause actual results to differ materially from those described in such statements. Any such forward-looking statements are made only as of the date of this report or the respective dates of the relevant incorporated documents, as the case may be, and, except as required by law, we undertake no obligation to update these forward-looking statements to reflect subsequent events or circumstances. The COVID-19 pandemic is affecting us, our customers, employees, and third-party service providers, and the ultimate extent of the impact on our business, financial position, results of operations, liquidity, and prospects is uncertain. Other risksRisks and uncertainties that could cause actual results for future periods to differ materially from those anticipated or projected include, but are not limited to:

The risks and uncertainties identified above are not the only risks we face. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial also may adversely affect us. Should any known or unknown risks and uncertainties develop into actual events, those developments could have material adverse effects on our business, financial condition, and results of operations.

Consumers Bancorp, Inc., a bank holding company incorporated under the laws of the State of Ohio, owns all the issued and outstanding capital stock of Consumers National Bank, a bank chartered under the laws of the United States of America. The Corporation’s activities have been limited primarily to holding the common stock of the Bank. The Bank’s business involves attracting deposits from businesses and individual customers and using such deposits to originate commercial, mortgage and consumer loans in its market area, consisting primarily of Carroll, Columbiana, Jefferson, Mahoning, Stark, Summit, and Wayne ~~and~~counties in Ohio. Its market includes these counties as well as the contiguous counties in northeast Ohio, western Pennsylvania, and northern West Virginia. The Bank also invests in securities consisting primarily of U.S. government-sponsored entities, municipal obligations, mortgage-backed and collateralized mortgage obligations issued by Fannie Mae, Freddie Mac and Ginnie Mae.

On July 16, 2021, the Corporation completed the branch acquisition and assumed $104,538 of branch deposits for a 1.75% deposit premium and purchased $15,602 in subordinated debt securities issued by unrelated financial institutions and $19,943 in loans. In relation to the branch acquisition, the Corporation recorded goodwill of $1,616. This transaction qualified as a business combination.

On January 1, 2020, the Corporation completed the acquisition by merger of Peoples in a stock and cash transaction for an aggregate consideration of approximately $10,405. As a result of the acquisition, the Corporation received loans with an estimated fair value of $55,320, as of the date of the acquisition, and deposits at three banking centers located in Mt. Pleasant, Adena, and Dillonvale, Ohio with an estimated fair value of $60,851, as of the date of the acquisition. In connection with the acquisition, the Corporation issued 269,920 shares of common stock and paid $5,128 in cash to the former shareholders of Peoples. The financial position and results of operations of Peoples prior to its acquisition date are not included in the Corporations’ financial results for periods prior to the acquisition date.

In response to COVID-19, management is actively pursuing multiple avenues to assist customers during these uncertain times. For commercial borrowers, the CARES Act includes key SBA initiatives to assist small businesses. The PPP loans were designed to provide a direct incentive for small businesses to keep their workers on the payroll, From the first round of assistance, the Bank originated a total of $68,788 of PPP loans and $6,107 remained outstanding as of June 30, 2021. Under the second round of the PPP program, a total of $44,579 of loans were funded and outstanding as of June 30, 2021.

Additionally, on March 22, 2020 the Corporation adopted a loan modification program to assist borrowers impacted by COVID-19. The program is available to most borrowers whose loan was not past due on March 22, 2020, the date this loan modification program was adopted. The program offers principal and interest payment deferrals for up to 90 days or interest only payments for up to 90 days. Interest will be deferred but will continue to accrue during the deferment period and the maturity date on amortizing loans will be extended by the number of months the payment was deferred. Consistent with issued regulatory guidance, modifications made under this program in response to COVID-19 will not be classified as troubled debt restructurings. As of June 30, 2021, eight borrowers with an outstanding balance of $198 are in payment deferral status under this loan modification program.

We have assisted and may continue to assist customers who are experiencing financial hardship due to COVID-19 by waiving late charges, refunding NSF and overdraft fees, and waiving CD prepayment penalties. The consumer reserve personal line of credit, an unsecured line of credit that is linked to a personal checking account, has been redesigned to provide easier access and a lower initial rate. Commercial customers have been encouraged to access available funds on their lines of credit, and we have been ready to provide emergency commercial lines of credit to qualified borrowers in order to assist in meeting payroll and other recurring fixed expenses. In response to COVID-19, we provided four emergency lines of credit; however, the lines of credit have since been closed as the borrowers did not need to access the funds.

Given the dynamic nature of the circumstances surrounding the pandemic, it is difficult to ascertain the full impact that the ongoing economic disruption will have on the Corporation. The Corporation has modified its business practices with a portion of employees working remotely from their homes to limit interruptions to operations as much as possible and to help reduce the risk of COVID-19 infecting entire departments. The branch lobbies were closed at various times throughout the pandemic but are now open for normal business. The Corporation is encouraging virtual meetings and conference calls in place of in-person meetings. Additionally, travel for business has been restricted. The Corporation is promoting social distancing, frequent hand washing and thorough disinfection of all surfaces. The Corporation will continue to closely monitor situations arising from the pandemic and adjust operations accordingly.

Comparison of Results of Operations for the Years Ended June 30, ~~2021~~2023 and June 30, ~~2020~~2022

Net Income. Net income was ~~$8,988~~$10,674 for fiscal year ~~2021~~2023 compared with ~~$5,527~~$11,192 for fiscal year ~~2020.~~2022. The following key factors summarize our results of operations for the year ended June 30, ~~2021~~2023 compared with the same prior year period:

Return on average equity and return on average assets were ~~13.36%~~20.27% and ~~1.16%~~1.05%, respectively, for ~~the 2021~~ fiscal ~~year-to-date period~~year 2023 compared with ~~9.67%~~16.43% and ~~0.89%~~1.17%, respectively, for the same period last year.

Net Interest Income. Net interest income, the difference between interest income earned on interest-earning assets and interest expense incurred on interest-bearing liabilities, is the largest component of the Corporation’s earnings. Net interest income is affected by changes in the volumes, rates and composition of interest-earning assets and interest-bearing liabilities. In addition, prevailing economic conditions, fiscal and monetary policies, and the policies of various regulatory agencies all affect market rates of interest and the availability and cost of credit, which, in turn, can significantly affect net interest income. Since the Federal Open Market Committee establishing a near-zero target range for the federal funds rate, earnings could be negatively affected if the interest we receive on loans and securities falls more quickly than interest we pay on deposits and borrowings.

Net interest margin is calculated by dividing net interest income on a fully tax equivalent basis (FTE) by total interest-earning assets. FTE income includes tax-exempt income, restated to a pre-tax equivalent, based on the statutory federal income tax rate of 21.0%. All average balances are daily average balances. Non-accruing loans are included in average loan ~~balances.~~balances and average securities include unrealized gains and losses on securities available for sale, while yields are based on average amortized cost.

FTE net interest income for ~~the 2021~~ fiscal year 2023 was ~~$27,002,~~$33,919, an increase of ~~$5,192~~$660 or ~~23.8%~~2.0%, from ~~$21,810~~$33,259 in ~~the 2020~~ fiscal ~~year.~~year 2022. The Corporation’s tax equivalent net interest margin was ~~3.67%~~3.37% for ~~the year ended June 30, 2021 and was 3.72% for the~~ fiscal year ~~ended 2020.~~2023 and 3.60% for fiscal year 2022. FTE interest income for ~~the 2021~~ fiscal year 2023 was ~~$28,902,~~$41,143, an increase of ~~$3,271,~~$6,470, or ~~12.8%~~18.70%, from ~~the 2020~~ fiscal year ~~such change~~2022, primarily due to a ~~result of a $151,376,~~$51,065, or ~~25.7%~~5.6%, increase in average interest-earning assets from ~~the 2020~~ fiscal ~~year.~~year 2022. The growth in average interest-earning assets was primarily a result of ~~organic loan growth and the addition of PPP~~a $65,313, or 10.9%, increase in average loans. ~~Interest~~In fiscal year 2022, interest income was positively impacted by ~~the accretion of origination fees from the PPP loans and from a change~~$2,612 in the earning asset mix, with higher yielding loans increasing faster than lower yielding securities. PPP loans had an average balance of $63,761 for the twelve-month period ended June 30, 2021, with a total of $2,549 of interest and fee income that was recognized during the twelve-month period ended June 30, 2021. As of June 30, 2021, there was a total of $2,449 of unamortized net fees associated with the PPP loans which will be amortized into income over the life of theon Paycheck Protection Program loans. A reduction in the accretion of origination fees from PPP loans as these loans are forgiven, combined with the significant decline in interest rates, will continue to impact the yield on interest-earning assets and could ultimately result in a decline in interest income. The Corporation’s yield on average interest-earning assets was ~~3.93%~~4.09% for the ~~2021~~2023 fiscal year compared with ~~4.37%~~3.75% for the same period last year.

Interest expense for ~~the 2021~~ fiscal year 2023 was ~~$1,900, a decrease~~$7,224, an increase of ~~$1,921, or 50.3%,~~$5,810 from fiscal year 2022 primarily because of the ~~2020 fiscal year.~~rapid increase in current market interest rates and the increased competition for deposits. The Corporation’s average cost of funds was ~~0.38%~~1.03% for ~~the 2021~~ fiscal year 2023 compared with ~~0.91%~~0.22% for the same prior year period. ~~The decline in short term market interest rates had an impact on the rates paid on all interest-bearing deposit products and Federal Home Loan Bank (FHLB) advances.~~

The following table presents the changes in the Corporation’s interest income and interest expense resulting from changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities. Changes attributable to both rate and volume that cannot be segregated have been allocated in proportion to the changes due to rate and volume.

Provision for Loan Losses. The provision for loan losses represents the charge to income necessary to adjust the allowance for loan losses to an amount that represents management’s assessment of the estimated probable credit losses in the Corporation’s loan portfolio that have been incurred at each balance sheet date. The amount of the provision is affected by loan charge-offs, recoveries and changes in specific and general allocations required for the allowance for loan losses. Management considers a number of factors that impact the provision for loan losses, such as historical loss experience, the present and prospective financial condition of borrowers, the current conditions within the markets where the Corporation originates loans, the status of nonperforming assets, the estimated underlying value of the collateral and other factors related to the ultimate collectability of the loan portfolio. ~~In fiscal year 2021, a~~

A provision for loan loss expense of ~~$850~~$855 was recorded ~~compared with $1,980~~ in fiscal year ~~2020. The provision for loan loss expense was higher~~2023 compared with $735 in fiscal year ~~2020~~2022. The loan loss provision expense recorded in fiscal year 2023 was primarily due to the ~~deterioration in~~organic growth within the ~~economic environment as a result of the impact of COVID-19 and higher~~ loan ~~balances from organic loan growth.~~

portfolio. For ~~the 2021~~ fiscal year 2023, net charge offs of ~~$57~~$291, or 0.04% of total loans, were recorded compared with ~~$90~~$46, or 0.01% of total loans, for the same period last year. The allowance for loan losses as a percentage of loans was ~~1.14%~~1.09% at June 30, ~~2021~~2023 and ~~1.05%~~1.17% at June 30, ~~2020.~~2022. The ~~loans acquired from the Peoples acquisition were recorded at fair value without a related allowance for loan losses. As of June 30, 2020,~~decline in the allowance for loan losses as a percentage of total loans ~~excluding~~was due to the improvement in economic conditions as the economy has remained resilient following the pandemic and through the rapid rise in short-term interest rates. Also, substandard and non-accrual loans ~~acquired in the Peoples acquisition, was 1.15%.~~are at very low levels.

Non-performing loans were ~~$1,771~~$104, or 0.01% of total loans, as of June 30, ~~2021 and represented 0.31% of total loans.~~2023. This compared with ~~$1,226,~~$440, or ~~0.23%~~0.07% of total loans, atas of June 30, ~~2020.~~2022. Non-performing loans declined primarily because two loans that had a balance of $382 as of June 30, 2022 were returned to accrual status during fiscal year 2023. Non-performing loans have been considered in management’s analysis of the appropriateness of the allowance for loan losses. Management and the Board of Directors closely monitor these loans and believe the prospect for recovery of principal, less identified specific reserves, are favorable.

Other Income. Total other income ~~decreased~~increased by ~~$237,~~$12, or ~~5.0%~~0.3%, to ~~$4,466~~$4,747 for ~~the 2021 fiscal year. Other income in the 2020~~ fiscal year ~~includes $324 of income recognized~~2023. Service charges on deposit accounts increased by $138, or 9.5%, in fiscal year 2023 primarily as a result of ~~proceeds received from a bank owned life insurance policy claim~~increases in personal and ~~net securities gains of $355 compared to net security gains of $14 in fiscal year 2021.~~

business service charges on demand deposit accounts. Debit card interchange income increased by ~~$316,~~$112, or ~~20.1%,~~5.4% in ~~2021 to $1,891 primarily as a result~~fiscal year 2023 because of increased debit card usage and an increase in the number of cards issued. ~~Gain on sale of mortgage loans increased by $210, or 38.7%, in 2021 primarily as a result of an increase in volume due to refinances as mortgage rates declined.~~ These increases were partially offset by ~~a decline~~mortgage banking activity income decreasing by $287 in fiscal year 2023 because of ~~$130, or 9.6%,~~the increase in ~~service charges on deposit accounts primarily due to a decline in overdraft charges as many eligible individuals have received Economic Impact Payments~~mortgage rates impacting refinancing and ~~consumer spending habits have changed during the pandemic, resulting in fewer overdrafts.~~new home sales volume.

Other Expenses. Total other expenses were ~~$19,361~~$24,685 for the year ended June 30, ~~2021;~~2023; an increase of ~~$1,593,~~$1,470, or ~~9.0%~~6.3%, from ~~$17,768~~$23,215 for the year ended June 30, ~~2020.~~2022.

Salaries and employee benefit expenses increased by ~~$1,270,~~$760, or ~~13.3%~~5.7%, during ~~the 2021~~ fiscal year 2023 primarily ~~since the 2021 fiscal year includes a full year~~due to merit and cost of living increases and lower deferred loan costs. These increases were partially offset by lower salary continuation plan expenses ~~associated with the three new office locations and additional staff gained as a result~~because of ~~the merger with Peoples compared with only six months of these expense being included~~an increase in the ~~prior year period. In addition,~~discount rate and lower incentive ~~accruals and mortgage commissions also increased during the 2021 fiscal year.~~expenses.

~~Occupancy~~Professional and ~~equipment expenses~~director fees increased by ~~$122,~~$187, or ~~4.9%~~21.3%, during ~~the 2021~~ fiscal year 2023 from the same period last year primarily because of an increase in director fees and consulting expenses. Director fees increased mainly due to the issuance of restricted stock awards and units in fiscal year 2023 as the Corporation started issuing restricted stock units in fiscal year 2023 to better align the expense recognition with the performance criteria. In addition, consulting fees were higher in fiscal year 2023 as the Corporation prepared for the additional documentation and audit requirements of the FDIC Improvement Act of 1991 since the Corporation now has over $1 billion in total assets and as it prepared for the adoption of the current expected credit loss model accounting standard.

Financial institutions tax expenses decreased by $64, or 11.8%, in fiscal year 2023 since this is a capital-based tax and total capital was lower as of the measurement date in fiscal year 2023 because of the accumulated other comprehensive loss.

Other expenses increased by $256, or 12.7%, because of increases primarily in insurance, postage, and loan expenses as a result of ~~higher real estate taxes, custodial, building upkeep, maintenance, lease and utility expenses for~~ the ~~additional office locations acquired~~growth in the Peoples acquisition and the new leased Green, Ohio office location that opened during the 2021 fiscal year. This was partially offset by lower depreciation expense in the 2021 fiscal year for the Salem branch location since it was expected that this location would be replaced in the spring of 2021.

Data processing expenses decreased by $179, or 19.7% and professional and director fees decreased by $170, or 16.6%, during the 2021 fiscal year from the same period last year primarily since the 2020 fiscal year included system conversion and termination costs, investment banker, legal, accounting and auditing fees associated with the acquisition of Peoples.

~~FDIC assessments increased by $196, or 184.9%, for the 2021 fiscal year since the Small Bank Assessment Credits were applied to the FDIC insurance invoices during the 2020 fiscal year.~~

Debit card processing expenses increased by $140, or 17.3% primarily as a result of increased debit card usage. The increase in debit card usage is also reflected in debit card interchange income which increased by $316, or 20.1% from the prior year.organization.

Income Tax Expense. Income tax expense totaled ~~$1,850~~$2,248 and ~~$912~~$2,339 and the effective tax rates were ~~17.1%~~17.4% and ~~14.2%~~17.3% for the fiscal years ended June 30, ~~2021~~2023 and ~~2020,~~2022, respectively. Income tax expense was calculated utilizing a statutory federal income tax rate of 21.0% in ~~the 2020~~fiscal years 2023 and ~~2021 fiscal years.~~2022. The effective tax rate differs from the federal statutory rate as a result of tax-exempt income from obligations of states and political subdivisions, loans and bank owned life insurance ~~earnings and death benefit.~~earnings.

Total assets as of June 30, 2023 were $1,060,024 compared with $977,313 at June 30, ~~2021 were $833,804 compared with $740,820 at June 30, 2020,~~2022, an increase of ~~$92,984,~~$82,711, or ~~12.6%~~8.5%. The growth in total assets is mainly attributable to an increase of ~~$68,297,~~$98,519, or ~~46.3%~~16.1%, in ~~available-for-sale~~total loans and ~~held-to-maturity securities which~~ was primarily funded by a ~~$93,494,~~$65,971, or ~~14.8%~~7.4%, increase in total deposits.

Securities. Total securities were ~~$215,756~~$286,575 at June 30, ~~2021,~~2023, of which ~~$207,760~~$279,605 were classified as available-for-sale and ~~$7,996~~$6,970 were classified as held-to-maturity. The securities portfolio is mainly comprised of mortgage-backed securities and collateralized mortgage obligations issued by Fannie Mae, Freddie Mac and Ginnie Mae, state and political subdivisions and government-sponsored enterprises.

The following tables summarize the amortized cost and fair value of available-for-sale securities at June 30, ~~2021~~2023 and ~~2020~~2022 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income or loss:

The following tables summarize the amortized cost and fair value of held-to-maturity securities at June 30, ~~2021~~2023 and ~~2020~~2022 and the corresponding gross unrecognized gains and losses:

The following tables summarize the amounts and distribution of the Corporation’s securities held and the weighted average yields as of June 30, ~~2021:~~2023:

The weighted average interest rates are based on coupon rates for securities purchased at par value and on effective yields considering amortization or accretion if the securities were purchased at a premium or discount. The weighted average yield on tax-exempt obligations has been calculated on a tax equivalent basis. Average yields are based on amortized cost balances.

Loans. Loan receivables increased by ~~$23,566~~$98,519, or 16.1%, to ~~$566,427~~$710,362 at June 30, ~~2021~~2023 compared to ~~$542,861~~$611,843 at June 30, ~~2020.~~2022. Commercial loans ~~include PPP loans~~increased by $25,547, or 29.3%, primarily because of ~~$50,686 and $66,606 as of June 30, 2021 and 2020, respectively, and~~ a third-party residential mortgage warehouse line-of-credit that had a balance of $10,000 as of June 30, 2023 and had a zero balance as of June 30, 2021 compared with an outstanding balance of $32,869 as of June 30, 2020. Excluding the declines in the PPP loans and the residential mortgage warehouse line-of-credit, organic loan growth was $72,355, or 16.3%. The increase in the 1-4 family residential real estate portfolio was primarily due to a majority of the mortgage loans originated in the third quarter of fiscal year 2021 being kept within the portfolio rather than being sold to the secondary market.2022. Consumer loans increased by ~~$8,241,~~$20,588, or ~~38.6%~~45.9%, primarily as a result of the expansion of indirect auto lending and an increase in direct auto loans ~~as a result of~~due to successful marketing campaigns. Major classifications of loans, net of deferred loan fees and costs, were as follows as of June 30:

The following table shows the major classifications of loans, net of deferred fees and costs, which are based on the contractual terms for repayment of principal, that are due in the periods indicated as of June 30, ~~2021:~~2023:

The following is a schedule of fixed and variable rate 1-4 family residential real estate construction, commercial and commercial real estate loans due after one year (variable rate loans are those loans with floating or adjustable interest rates) as of June 30, ~~2021:~~2023:

Allowance for Loan Losses. The allowance for loan losses balance and the provision charged to expense are judgmentally determined by management based upon a periodic review of the loan portfolio for valuation purposes and to determine the adequacy of the allowance for loan losses. Management establishes allowances for estimated losses on loans based upon its evaluation of the pertinent factors underlying the types and quality of loans; historical loss experience based on volume and types of loans; trend in portfolio volume and composition; level and trend of nonperforming assets; detailed analysis of individual loans for which full collectability may not be assured; determination of the existence and realizable value of the collateral and guarantees securing such loans and the current economic conditions affecting the collectability of loans in the portfolio.

Failure to receive principal and interest payments when due on any loan results in efforts to restore such loan to a current status. Loans are classified as non-accrual when, in the opinion of management, full collection of principal and accrued interest is not expected. The loans must be brought and kept current for six sustained payments before being considered for removal from non-accrual status. Commercial and commercial real estate loans are classified as impaired if management determines that full collection of principal and interest, in accordance with the terms of the loan documents, is not probable. If a loan is impaired, a portion of the allowance is allocated so the loan is reported, net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected from the collateral. Loans are evaluated for impairment when payments are delayed, typically 90 days or more, or when it is probable that not all principal and interest amounts will be collected according to the original terms of the loan. As of June 30, ~~2021,~~2023, impaired loans totaled ~~$1,954,~~$405, of which ~~$1,771~~$54 are included in non-accrual loans. Continued unsuccessful collection efforts generally lead to initiation of foreclosure or other legal proceedings.

The following table summarizes non-accrual loans, non-performing assets, impaired and restructured loans, and associated ratios for the years ended June 30:

The non-performing loans are either in the process of foreclosure or efforts are being made to work with the borrower to bring the loan current. Properties and vehicles acquired by the Corporation as a result of foreclosure or repossession, or by deed in lieu of foreclosure, are classified as “other real estate and repossessed assets owned” until they are sold or otherwise disposed of.

The following table summarizes the Corporation’s loan loss experience, and provides a breakdown of the charge-off, recovery and other activity for the years ended June 30:

The following schedule is a breakdown of the allowance for loan losses allocated by type of loan and related ratios:

While management’s periodic analysis of the adequacy of the allowance for loan ~~loss~~losses may allocate portions of the allowance for specific problem loan situations, the entire allowance is available for any loan charge-off that may occur. While the Corporation has historically experienced strong trends in asset quality, ~~as a result of~~due to the current ~~situation regarding the COVID-19 pandemic,~~economic concerns with high inflation and rising interest rates, uncertainty remains regarding future levels of criticized and classified loans, nonperforming loans and charge-offs. Management will continue to closely monitor changes in the loan portfolio and adjust the provision accordingly.

~~Goodwill:~~Other Assets: ~~Goodwill remained unchanged at $826 at~~As of June 30, ~~2021 and 2020. Goodwill represents the excess of~~2023, the total ~~purchase price paid~~accrued interest receivable and other assets were $22,967 compared with $10,184 as of June 30, 2022. As of June 30, 2023, a $10,250 investment in a limited partnership that invests in qualified affordable housing projects that will generate tax benefits for the ~~acquisition over~~investors is included in other assets. See Note 16—Affordable Tax Credit Partnership to the ~~fair value of~~Consolidated Financial Statements, for information concerning the identifiable assets acquired, net of the fair value of the liabilities assumed. Goodwill is evaluated for impairment at least annually and more frequently if events and circumstances indicate that the asset might be impaired. Management evaluated goodwill and concluded that no impairment existed during the year ended June 30, 2021.low-income housing tax credit investment.

~~Funding Sources.~~Deposits. Total deposits increased by ~~$93,494,~~$65,971, or ~~14.8%~~7.4%, from ~~$633,355~~$886,562 at June 30, ~~2020~~2022 to ~~$726,849~~$952,533 at June 30, ~~2021. For the fiscal year ended June 30, 2021, noninterest-bearing demand deposits increased by $38,868, or 20.4%, savings and money~~2023. As market deposits increased by $54,194, or 23.7%, and interest-bearing demand deposits increased by $28,274, or 28.5%, from the same prior year period. Certificates and other time deposits decreased by $27,843, or 24.1%, from the same prior year period asrates have risen, customers ~~chose~~have chosen to move funds tofrom savings and money market deposit products ~~due~~ to higher yielding certificates of deposits. As of June 30, 2023, the ~~low-rate environment.~~Corporation maintained a favorable funding mix with 26.3% of total deposits in noninterest-bearing demand deposits, 16.0% in interest-bearing demand deposits, 35.2% in savings and money market deposits, and 22.5% in certificates and other time deposits.

The following is a schedule of average deposit amounts and average rates paid on each category for the periods included:

Uninsured deposits as of June 30, 2023 were $267,449, or 28.1% of total deposits, and includes $95,445 of uninsured public fund deposits that are fully collateralized. Uninsured deposits as of June 30, 2022 were $264,350, or 29.8% of total deposits, and includes $95,075 of uninsured public fund deposits that are fully collateralized. Uninsured deposits as of June 30, 2023 and 2022 are based on estimates and include portions of FDIC-insured deposit accounts that exceed the insurance limit of $250 thousand per separately insured depositor.

The following table summarizes time deposits issued in amounts of ~~$100 or~~ more than $250 thousand as of June 30, ~~2021~~2023 by time remaining until maturity:

Short-term Borrowings:Short-term borrowings increased by ~~$5,260,~~$5,072, or ~~75.8%~~23.8%, to ~~$12,203~~$26,367 at June 30, ~~2021~~2023 from ~~$6,943~~$21,295 at June 30, ~~2020.~~2022. This increase was primarily associated with large new deposits from existing local commercial customers into the ~~retention of PPP loan proceeds in commercial~~ sweep repurchase agreement ~~accounts.~~product that is fully collateralized. See Note 8—Short-Term Borrowings to the Consolidated Financial Statements, for information concerning short-term borrowings.

Other Liabilities: As of June 30, 2023, the total accrued interest payable and other liabilities was $16,864 compared with $7,230 as of June 30, 2022. As of June 30, 2023, an unfunded commitment of $9,668 associated with an affordable housing tax credit investment was included in other liabilities. See Note 16—Affordable Tax Credit Partnership to the Consolidated Financial Statements, for information concerning the low-income housing tax credit investment.

Total shareholders’ equity increased by ~~$6,660~~$1,514 from ~~$63,240~~$53,970 as of June 30, 2022 to $55,484 at June 30, ~~2020 to $69,900 at June 30, 2021.~~2023. The primary reason for the increase in shareholders’ equity was because of net income of ~~$8,988~~$10,674 for the ~~current~~2023 fiscal year which was partially offset by an increase of $7,855 in the accumulated other comprehensive loss from the mark-to-market of available-for-sale securities and from cash dividends paid of ~~$1,785. For~~$2,095. The total accumulated other comprehensive loss was $29,961 as of June 30, 2023. Available-for-sale securities and shareholders’ equity were impacted by rapidly rising interest rates during 2022 and 2023 causing the ~~2021~~accumulated other comprehensive loss to increase as available-for-sale securities are marked to fair market value. As market interest rates rise, the fair value of fixed-rate securities decline with a corresponding net of tax decline recorded in the accumulated other comprehensive loss portion of equity. This unrealized loss in securities is temporary and is adjusted monthly for additional market interest rate fluctuations, principal paydowns, calls, and maturities. The Corporation has significant sources of liquidity and therefore does not expect to have to sell securities to fund growth.

For fiscal year 2023, the average equity to average total assets ratio was ~~8.71%~~5.16% and the dividend payout ratio was ~~19.9%~~19.6%. For ~~the 2020~~ fiscal year 2022, the average equity to average total assets ratio was ~~9.19%~~7.10% and the dividend payout ratio was ~~28.1%~~17.4%.

At June 30, ~~2021,~~2023, management believes the Bank complied with all regulatory capital requirements. Based on the Bank’s computed regulatory capital ratios, the OCC has determined the Bank to be well capitalized under the Federal Deposit Insurance Act as of its latest exam date. The Bank’s actual and required capital amounts are disclosed in Note 13-Regulatory Matters to the Consolidated Financial Statements. Management is not aware of any matters occurring subsequent to that exam that would cause the Bank’s capital category to change.

At June 30, 2023, the Corporation had no unconsolidated, related special purpose entities, nor did the Corporation engage in hedging contracts, such as interest rate swaps, which may expose the Corporation to liabilities greater than the amounts recorded on the consolidated balance sheet. The Corporation’s investment policy prohibits engaging in derivative contracts for speculative trading purposes; however, in the future, the Corporation may pursue certain contracts, such as interest rate swaps, to execute a sound and defensive interest rate risk management policy.

Management considers the asset position of the Bank to be sufficiently liquid to meet normal operating needs and conditions. The Bank’s earning assets are divided primarily between loans and available-for-sale securities, with any excess funds placed in federal funds sold or interest-bearing deposit accounts with other financial institutions.

~~Net~~For fiscal year 2023, net cash inflows from operating activities ~~for the 2021 fiscal year~~ were ~~$14,013 and~~$13,316, net cash inflows from financing activities were ~~$83,858. Net~~$69,706 and net cash outflows from investing activities were ~~$89,001. The major~~$92,219. Major sources of cash were a ~~$93,494~~$65,971 net increase in deposits and ~~a $42,820 increase~~$37,794 in cash received from sales, maturities, or principal pay downs onof available-for-sale securities. ~~The major~~Major uses of cash were ~~the $108,168 purchase of available-for-sale securities and~~ a ~~$23,471~~$98,945 net increase in ~~loans.~~loans and $31,799 of purchases of available-for-sale securities. Total cash and cash equivalents were ~~$18,529~~$20,952 as of June 30, ~~2021~~2023 compared to ~~$9,659~~$18,529 at June 30, ~~2020.~~2022.

The Bank groups its loan portfolio into four major categories: commercial loans; commercial real estate loans; 1-4 family residential real estate loans; and consumer loans. The Bank’s 1-4 family residential real estate loan portfolio primarily consists of fixed and variable rate mortgage loans for terms generally not longer than thirty years and variable rate home equity lines of credit. Commercial and commercial real estate loans are comprised of both variable rate notes subject to interest rate changes based on the prime rate or Treasury index, and fixed rate notes having maturities of generally not greater than twenty years. Consumer loans offered by the Bank are generally written for periods of up to seven years, based on the nature of the collateral. These may be either installment loans having regular monthly payments or demand type loans for short periods of time.

Funds not allocated to the Bank’s loan portfolio are invested in various securities having diverse maturity schedules. A majority of the Bank’s securities are held in obligations of U.S. Government-sponsored entities, mortgage-backed securities, and investments in tax-exempt municipal bonds.

The Bank offers several forms of deposit products to its customers. We believe the rates offered by the Bank and the fees charged for them are competitive with others currently available in the market area. While the Bank continues to be under competitive pressures in the Bank’s market area as financial institutions attempt to attract and keep new deposits, we believe many commercial and retail customers are turning to community banks. Compared to our peers, the Corporation’s core deposits consist of a larger percentage of noninterest-bearing demand deposits resulting in ~~the~~a lower cost of funds ~~remaining at a relatively low level~~ of ~~0.38%.~~1.03% for fiscal year 2023.

Jumbo time deposits (those with balances of $250 and over) were ~~$18,488~~$46,822 and ~~$36,747~~$18,164 at June 30, ~~2021~~2023 and ~~2020,~~2022, respectively. These deposits are monitored closely by the Bank and typically priced on an individual basis. When these deposits are from a municipality, certain bank-owned securities are pledged to guarantee the safety of these public fund deposits as required by Ohio law. The Corporation has the option to use a fee paid broker to obtain deposits from outside its normal service area as an additional source of funding. However, these deposits are not relied upon as a primary source of funding and there were no brokered deposits as of June 30, ~~2021~~2023 or ~~2020.~~2022.

To provide additional sources of liquidity, the Corporation has lines of credit with other financial institutions and has entered into agreements with the Federal Home Loan Bank of Cincinnati (FHLB) and the Federal Reserve Discount Window. As of June 30, 2023, advances from the FHLB of Cincinnati totaled $8,776 compared with $8,256 as of June 30, 2022. As of June 30, 2023, the Bank had the ability to borrow an additional $109,442 from the FHLB of Cincinnati based on a blanket pledge of qualifying first mortgage and multi-family loans. The Corporation considers the FHLB of Cincinnati to be a reliable source of liquidity funding, secondary to its deposit base.

Dividends from the Bank are the primary source of funds for payment of dividends to our shareholders. However, there are statutory limits on the amount of dividends the Bank can pay without regulatory approval. Under these regulations, the amount of dividends that may be paid in any calendar year is limited to the current year’s net profits, combined with the retained net profits of the preceding two years, subject to the capital requirements described above. Additionally, the Bank may not declare or pay any dividend if, after making the dividend, the Bank would be “undercapitalized,” as defined in the federal regulations. As of June 30, ~~2021,~~2023, the Bank could, without prior approval, declare a dividend of approximately ~~$8,741.~~$21,811.

The financial statements and related data presented herein have been prepared in accordance with U.S. generally accepted accounting principles, which require the measurement of financial position and results of operations primarily in terms of historical dollars without considering changes in the relative purchasing power of money over time due to inflation. Unlike most industrial companies, virtually all the assets and liabilities of the Corporation are monetary in nature. Therefore, as a financial institution, interest rates have a more significant impact on the Corporation’s performance than the effects of general levels of inflation. Interest rates do not necessarily move in the same direction or in the same magnitude as the prices of goods and services. The liquidity, maturity structure and quality of the Corporation’s assets and liabilities are critical to the maintenance of acceptable performance levels.

The financial condition and results of operations for the Corporation presented in the Consolidated Financial Statements, accompanying notes to the Consolidated Financial Statements and management’s discussion and analysis are, to a large degree, dependent upon the Corporation’s accounting policies. The selection and application of these accounting policies involve judgments, estimates and uncertainties that are susceptible to change. The most significant accounting policies followed by the Corporation are presented in Note 1-Summary of Significant Accounting Policies to the Consolidated Financial Statements. These policies, along with the disclosures presented in the other financial statement notes, provide information on how significant assets and liabilities are valued in the financial statements and how those values are determined.

Management views critical accounting policies to be those which are highly dependent on subjective or complex judgments, estimates and assumptions, and where changes in those estimates and assumptions could have a significant impact on the financial statements. In the event different assumptions or conditions were to prevail, and depending upon the severity of such changes, the possibility of materially different financial condition or results of operations is a reasonable likelihood. Management has identified the following as critical accounting policies:

Allowance for Loan Losses. The determination of the allowance for loan losses involves considerable subjective judgment and estimation by management. The allowance for loan losses is a reserve established through a provision for loan losses charged to expense, which represents management’s best estimate of probable losses that have been incurred within the existing portfolio of loans. The balance in the allowance for loan losses is determined based on management’s review and evaluation of the loan portfolio in relation to past loss experience, the size and composition of the portfolio, current economic events and conditions and other pertinent factors, including management’s assumptions as to future delinquencies, recoveries, and losses. All of these factors may be susceptible to significant change. Among the many factors affecting the allowance for loan losses, some are quantitative while others require qualitative judgment. Although management believes its process for determining the allowance adequately considers all of the potential factors that could potentially result in credit losses, the process includes subjective elements and may be susceptible to significant change. To the extent actual outcomes differ from management’s estimates, additional provisions for loan losses may be required that would adversely impact the Corporation’s financial condition or earnings in future periods.

Goodwill. The ~~Company~~Corporation accounts for business combinations using the acquisition method of accounting. Accordingly, the identifiable assets acquired and the liabilities assumed are recorded at their estimated fair values as of the date of acquisition with any excess of the cost of the acquisition over the fair value recorded as goodwill. The ~~Company performs an evaluation~~carrying value of goodwill is tested annually for impairment, ~~on an annual basis,~~ or more frequently if events or changes in circumstances indicate that the asset might be impaired. The evaluation for impairment involves comparing the current estimated fair value of ~~the Company~~a reporting unit to its carrying value. If the current estimated fair value of a reporting unit exceeds the carrying value, no additional testing is required, and an impairment loss is not recorded. If the estimated fair value is less than the carrying value, further valuation procedures are performed that could result in impairment of goodwill being recorded. AsFurther valuation procedures would include allocating the estimated fair value to all assets and liabilities of the reporting unit to determine an implied goodwill value. If the implied value of goodwill of a reporting unit is less than the carrying amount of that goodwill, an impairment loss is recognized in an amount equal to that excess.

Management evaluated goodwill as of April 30, ~~2021,~~2023, the measurement date, utilizing an income approach that incorporated a ~~qualitative assessment was performed to determine whether there is a more likely than not (greater than 50% likelihood)~~discounted cash flow model that ~~the~~involved management assumptions based upon future growth and earnings projections. The estimated fair value of the ~~Corporation~~reporting unit was ~~less than its~~then compared to the current carrying ~~amount. The~~value to determine if impairment ~~test of goodwill indicated no impairment existed~~had occurred. It is our opinion that, as of the measurement ~~date. However,~~date, the aggregate fair value of the reporting unit exceeded the carrying value of the reporting unit. Therefore, management concluded that goodwill was not impaired. Although we believe our assumptions are reasonable, actual results may vary significantly and it is impossible to know the future impact of ~~the~~ evolving economic ~~conditions related to COVID-19.~~conditions. If for any future period it is determined that there has been impairment in the carrying value of our goodwill balances, the Corporation will record a charge to earnings, which could have a material adverse effect on net income, but not risk based capital ratios.

The following table presents, as of June 30, ~~2021,~~2023, the Corporation’s significant fixed and determinable contractual obligations by payment date. The payment amounts represent those amounts contractually due to the recipient and do not include any unamortized premiums or discounts. Further discussion of the nature of each obligation is included in the referenced note to the consolidated financial statements.

Note 14-Commitments with Off-Balance Sheet Risk to the Consolidated Financial Statements discusses in greater detail other commitments and contingencies and the various obligations that exist under those agreements. These commitments and contingencies consist primarily of commitments to extend credit to borrowers under lines of credit.

At June 30, 2021, the Corporation had no unconsolidated, related special purpose entities, nor did the Corporation engage in derivatives and hedging contracts, such as interest rate swaps, which may expose the Corporation to liabilities greater than the amounts recorded on the consolidated balance sheet. The Corporation’s investment policy prohibits engaging in derivative contracts for speculative trading purposes; however, in the future, the Corporation may pursue certain contracts, such as interest rate swaps, to execute a sound and defensive interest rate risk management policy.

We have audited the accompanying consolidated balance ~~sheet~~sheets of Consumers Bancorp, ~~Inc.~~Inc and subsidiaries (the “Company”) as of June 30, ~~2021,~~2023 and 2022; the related consolidated statements of income, comprehensive income, changes in shareholders' equity, and cash flows for the ~~year~~years then ~~ended,~~ended; and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of June 30, ~~2021,~~2023 and 2022, and the results of its operations and its cash flows for each of the ~~year~~years then ended in conformity with accounting principles generally accepted in the United States of America.

The Company's management is responsible for these financial statements. Our responsibility is to express an opinion on the Company’s financial statements based on our ~~audit.~~audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ~~("PCAOB"~~(“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our ~~audit~~audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting in accordance with the standards of the PCAOB. As part of our ~~audit~~audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our ~~audit~~audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our ~~audit~~audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our ~~audit provides~~audits provide a reasonable basis for our opinion.

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Allowance for Loan Losses –- Significant Assumptions in General Reserves - Refer to Notes 1 and 4 to the Financial Statements

The allowance for loan losses (allowance) represents management’s best estimate of probable losses that have been incurred within the existing portfolio of loans. The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired. The general component covers ~~non-impaired~~nonimpaired loans and is based on historical loss experience ~~over the estimated loss emergence period~~ adjusted for current factors based on the risks present for each portfolio segment. These factors include consideration of the following: levels of and trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures and practices; experience, ability and depth of lending management and other relevant staff; volume and severity of ~~past due~~past-due loans and other similar conditions; quality of the loan review system; value of underlying collateral for collateral dependent loans; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations.

We identified the Company’s significant assumptions in general reserves in the allowance for loan losses as a critical audit matter. Given the significant estimates and assumptions management makes to estimate the current factor adjustments of the allowance for loan losses, performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions required a high degree of auditor judgment and an increased extent of effort.

Our audit procedures related to the qualitative factors within the allowance included the following, among others:

We have audited the accompanying consolidated balance sheet of Consumers Bancorp, Inc. (the "Company") as of June 30, 2020, and the related consolidated statements of income, comprehensive income, changes in shareholders' equity and cash flows for the year then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2020, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting in accordance with the standards of the PCAOB. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

When OTTI occurs, the amount of the OTTI recognized in earnings depends on whether the Corporation intends to sell the security, or it is more likely than not it will be required to sell the security before recovery of its amortized cost basis. If the Corporation intends to sell or it is more likely than not it will be required to sell the security before recovery of its amortized cost basis, the OTTI will be recognized in earnings equal to the entire difference between the security's amortized cost basis and its fair value at the balance sheet date. The previous amortized cost basis less the OTTI recognized in earnings becomes the new amortized cost basis of the security. If a security is determined to be other-than-temporarily impaired, but the Corporation does not intend to sell the security, only the credit portion of the estimated loss is recognized in earnings, with the other portion of the loss recognized in other comprehensive income.

Equity Securities: Equity securities are carried at fair value, with changes in fair value reported in net income. Equity securities without readily determinable fair values are carried at cost, minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment.

Federal Bank and Other Restricted Stocks: The Bank is a member of the FHLB system. Members are required to own a certain amount of stock based on the level of borrowings and other factors and may invest in additional amounts. FHLB stock, included with Federal bank and other restricted stocks on the Consolidated Balance Sheet, is carried at cost, classified as a restricted security and periodically evaluated for impairment based on ultimate recovery of par value. Federal Reserve Bank stock is also carried at cost. Since these stocks are viewed as a long-term investment, impairment is based on ultimate recovery of par value. Both cash and stock dividends are reported as income.

Loans Held for Sale: Mortgage loans originated and intended for sale in the secondary market are carried at the lower of aggregate cost or fair value, as determined by outstanding commitments from investors. Mortgage loans held for sale are generally sold with servicing rights released. Net unrealized losses, if any, are recorded as a valuation allowance and charged to earnings. Gains and losses on sales of mortgage loans are based on the difference between the selling price and the carrying value of the related loan sold.

Mortgage Banking Derivatives: Commitments to fund mortgage loans (interest rate locks) to be sold into the secondary market are accounted for as free-standing derivatives. The fair value of the interest rate lock is recorded at the time the commitment to fund the mortgage loan is executed and is adjusted for the expected exercise of the commitment before the loan is funded. Changes in the fair values of these derivatives are included in net gains on sales of loans.

Loans: Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of deferred loan fees and costs, and an allowance for loan losses. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the level-yield method without anticipating prepayments. The recorded investment in loans includes accrued interest receivable.

Interest income on commercial, commercial real estate and ~~1-4~~1-4 family residential loans is discontinued at the time the loan is 90 days delinquent unless the loan is well-secured and in the process of collection. Consumer loans are typically charged off no later than 120 days past due. Past due status is determined by the contractual terms of the loan. In all cases, loans are placed on non-accrual or charged-off at an earlier date if collection of principal or interest is considered doubtful.

All interest accrued but not received on loans placed on non-accrual is reversed against interest income. Interest received on such loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when the customer has exhibited the ability to repay and demonstrated this ability over at least a consecutive ~~six-month~~six-month period and future payments are reasonably assured.

~~During the 2021 fiscal year~~, the Corporation funded PPP loans to provide liquidity to small businesses during the COVID-19 pandemic. The loans are guaranteed by the SBA and are forgivable by the SBA if certain criteria are met. The Corporation originated PPP loans totaling $46,761 during the 2021 fiscal year. PPP processing fees received from the SBA were deferred along with loan origination costs and recognized as interest income using the effective yield method. Upon forgiveness of a loan and resulting repayment by the SBA, any unrecognized net fee for a given loan is recognized as interest income. Approximately $1,911of fees from the SBA were recognized in interest income in the 2021 fiscal year and there were $2,449 of unamortized net deferred fees as of June 30, 2021.

Loan Commitments and Related Financial Instruments: Financial instruments include off-balance sheet credit instruments, such as commitments to make loans and commercial letters of credit, issued to meet customer financing needs. The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay. Such financial instruments are recorded when funded.

Concentrations of Credit Risk: The Bank grants consumer, real estate, and commercial loans primarily to borrowers in Carroll, Columbiana, Jefferson, Mahoning, Stark, Summit, Wayne, and ~~Wayne~~contiguous counties. Therefore, the Corporation’s exposure to credit risk is significantly affected by changes in the economy in these counties. Automobiles and other consumer assets, business assets and residential and commercial real estate secure most loans.

Allowance for Loan Losses: The allowance for loan losses is a valuation allowance for probable incurred credit losses. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. Management estimates the allowance balance required based on past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions, and other factors. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged-off.

The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired. The general component covers non-classified loans and is based on historical loss experience adjusted for current factors.

A loan is considered impaired when, based on current information and events, it is probable that the Corporation will be unable to collect all amounts due according to the contractual terms of the loan agreement. Loans, for which the terms have been modified, resulting in a concession, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings, and classified as impaired. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

Impairment is evaluated collectively for smaller-balance loans of similar nature such as residential mortgage, consumer loans and on an individual loan basis for other loans. If a loan is impaired, a portion of the allowance is allocated so the loan is reported, net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected from the collateral. Loans are evaluated for impairment when payments are delayed, typically 90 days or more, or when it is probable that not all principal and interest amounts will be collected according to the original terms of the loan. Troubled debt restructurings are separately identified for impairment disclosures and are measured at the present value of estimated future cash flows using the loan’s effective interest rate at inception. If a troubled debt restructuring is considered to be a collateral dependent loan, the loan is reported, net, at the fair value of the collateral. For troubled debt restructurings that subsequently default, the Corporation determines the amount of reserve in accordance with the accounting policy for the allowance for loan losses.

The general component covers non-impaired loans and is based on historical loss experience ~~over the estimated loss emergence period~~ adjusted for current factors based on the risks present for each portfolio segment. The historical loss experience is determined by portfolio segment and is based on the actual loss history experienced by the Corporation over the most recent ~~three-year~~three-year period, depending on loan segment. This actual loss experience is supplemented with economic and other factors based on the risks present for each portfolio segment. These factors include consideration of the following: levels of and trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures, and practices; experience, ability and depth of lending management and other relevant staff; volume and severity of past due loans and other similar conditions; quality of the loan review system; value of underlying collateral for collateral dependent loans; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations. The following portfolio segments have been identified:

Commercial: Commercial loans are made for a wide variety of general business purposes, including financing for equipment, inventories and accounts receivable. The term of each commercial loan varies by its purpose. Commercial loans are underwritten after evaluating and understanding the borrower’s ability to operate profitably and prudently expand its business. Current and projected cash flows are evaluated to determine the ability of the borrower to repay their obligations as agreed. Commercial loans are primarily made based on the identified cash flows of the borrower and secondarily made based on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and usually incorporate a personal guarantee; however, some short-term loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers. The commercial loan portfolio includes loans to a wide variety of corporations and businesses across many industrial classifications in the areas where the Bank operates.

Commercial Real Estate: Commercial real estate loans include mortgage loans to farmers, owners of multi-family investment properties, developers and owners of commercial real estate. Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally largely dependent on the successful operation of the property securing the loan, the business conducted on the property securing the loan or, in the case of loans to farmers, management and operation of the farm. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. The properties securing the Corporation’s commercial real estate portfolio are diverse in terms of type and geographic location. This diversity helps reduce the Corporation’s exposure to adverse economic events that affect any single market or industry. Management monitors and evaluates commercial real estate loans based on collateral, geography and risk grade criteria. In addition, management tracks the level of owner-occupied commercial real estate loans versus nonowner-occupied loans.

~~1-4~~1-4 Family Residential Real Estate: Residential real estate loans are secured by one to four family residential properties and include both owner occupied, non-owner occupied and home equity loans. Credit approval for residential real estate loans requires demonstration of sufficient income to repay the principal and interest and the real estate taxes and insurance, stability of employment, an established credit record and an appropriately appraised value of the real estate securing the loan that generally requires that the residential real estate loan amount be no more than 85% of the purchase price or the appraised value of the real estate securing the loan unless the borrower provides private mortgage insurance.

Consumer: The Corporation originates direct and indirect consumer loans, primarily automobile loans, personal lines of credit, and unsecured consumer loans in its primary market areas. Credit approval for consumer loans requires income sufficient to repay principal and interest due, stability of employment, an established credit record and sufficient collateral for secured loans. Consumer loans typically have shorter terms and lower balances with higher yields as compared to real estate mortgage loans, but generally carry higher risks of default. Consumer loan collections are dependent on the borrower’s continuing financial stability, and thus are more likely to be affected by adverse personal circumstances.

Low Income Housing Tax Credits (LIHTC): The Corporation has invested in LIHTCs through funds that assist corporations in investing in limited partnerships and limited liability companies that own, develop and operate low income residential rental properties for purposes of qualifying for the LIHTCs. These investments are accounted for under the proportional amortization method which recognizes the amortization of the investment in proportion to the tax credit and other tax benefits received.

Other Real Estate and Repossessed Assets Owned: Real estate properties and other repossessed assets, which are primarily vehicles, acquired through, or in lieu of, loan foreclosure are initially recorded at fair value less costs to sell at the date of acquisition, establishing a new cost basis. Any reduction to fair value from the carrying value of the related loan at the time of acquisition is accounted for as a loan loss. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. If the fair value declines after acquisition, a valuation allowance is recorded as a charge to income. Operating costs after acquisition are expensed. Gains and losses on disposition are reported as a charge to income.

Transfers of Financial Assets: Transfers of financial assets are accounted for as sales when control over the assets has been relinquished. Control over transferred assets is deemed to be surrendered when the assets have been isolated from the Corporation, the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and the Corporation does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

Premises and Equipment: Land is carried at cost. Premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed primarily using the straight-line method over the estimated useful life of the owned asset and, for leasehold improvements, generally over the lesser of the remaining term of the lease facility or the estimated economic life of the improvement. Useful lives range from three years for software to thirty-nine and ~~one-half~~one-half years for buildings.

Cash Surrender Value of Life Insurance: The Bank has purchased single-premium life insurance policies to insure the lives of current and former participants in the salary continuation plan. As of June 30, ~~2021,~~2023, the Bank had policies with total death benefits of ~~$19,107~~$19,167 and total cash surrender values of ~~$9,702.~~$10,222. As of June 30, ~~2020,~~2022, the Bank had policies with total death benefits of ~~$19,067~~$19,128 and total cash surrender values of ~~$9,442.~~$9,959. Bank owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement. Tax-exempt income is recognized from the periodic increases in cash surrender value of these policies.

Goodwill and Other Intangible Assets: Goodwill results from business acquisitions and represents the excess of the purchase price over the fair value of acquired assets and liabilities. Core deposit intangible assets arise from whole bank or branch acquisitions and are measured at fair value and then are amortized over their estimated useful lives. Goodwill is not amortized but is assessed at least annually for impairment. Any such impairment will be recognized in the period identified. The Corporation has selected April 30 as the date to perform the annual impairment test. Goodwill is the only intangible asset with an indefinite life on the Corporation’s balance sheet.

Long-Term Assets: Premises, equipment and other long-term assets are reviewed for impairment when events indicate their carrying amount may not be recoverable from future undiscounted cash flows. If impaired, the assets are recorded at fair value.

Repurchase Agreements: Substantially all repurchase agreement liabilities, which are classified as short-term borrowings, represent amounts advanced by various customers. Securities are pledged to cover these liabilities, which are not covered by federal deposit insurance.

Retirement Plans: The Bank maintains a ~~401(k)~~401(k) savings and retirement plan covering all eligible employees and matching contributions are expensed as made. Salary continuation plan expense allocates the benefits over years of service.

Income Taxes: The Corporation files a consolidated federal income tax return. Income tax expense is the sum of the current-year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax consequences of temporary differences between the carrying amounts and tax basis of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. The Corporation applies a more likely than not recognition threshold for all tax uncertainties in accordance with U.S. generally accepted accounting principles. A tax position is recognized as a benefit only if it is more likely than not that the position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit greater than 50% likely of being realized on examination. The Corporation recognizes interest and/or penalties related to income tax matters in income tax expense.

Earnings per Common Share: Basic earnings per common share is net income divided by the weighted average number of common shares outstanding during the period. Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable upon the vesting of restricted stock awards.

Stock-Based Compensation: Compensation cost is recognized for restricted stock awards issued to employees over the required service period, generally defined as the vesting period. The fair value of restricted stock awards is estimated by using the market price of the Corporation’s common stock at the date of grant. For awards with graded vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award. Forfeitures are recognized as incurred.

Comprehensive Income: Comprehensive income consists of net income and other comprehensive income (loss). Other comprehensive income (loss) includes unrealized gains and losses on securities available-for-sale, which are also recognized as a separate component of equity, net of tax.

Loss Contingencies: Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable, and an amount or range of loss can be reasonably estimated. Management does not believe there are such matters that will have a material effect on the Corporation’s financial statements.

Fair Value of Financial Instruments: Fair value of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in Note 15 of the Consolidated Financial Statements. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, discounted cash flows, prepayments, and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect these estimates.

Dividend Restrictions: Banking regulations require maintaining certain capital levels and may limit the dividends paid by the Bank to the holding company or by the holding company to shareholders.

Reclassifications: Certain reclassifications have been made to the June 30, ~~2020~~2022 financial statements to be comparable to the June 30, ~~2021~~2023 presentation. The reclassifications had no impact on prior year net income or shareholders’ equity.

Recently Issued Accounting Pronouncements Not Yet Effective: In June 2016, Financial Accounting Standards Board (FASB) issued ASU ~~2016-13,~~2016-13, Financial Instruments—Credit Losses (Topic ~~326)~~326): Measurement of Credit Losses on Financial Instruments. This ASU ~~adds~~added a new Topic 326 to the codification and ~~removes~~removed the thresholds that companies apply to measure credit losses on financial instruments measured at amortized cost, such as loans, receivables, and held-to-maturity debt securities. Under ~~current~~ U.S. generally accepted accounting principles, companies generally ~~recognize~~recognized credit losses when it is probable that the loss ~~has~~had been incurred. ~~The revised guidance will remove~~ASU 2016-13 removes all current loss recognition thresholds and ~~will require~~requires companies to recognize an allowance for credit losses for the difference between the amortized cost basis of a financial instrument and the amount of amortized cost that the corporation expects to collect over the instrument’s contractual life. ~~ASU 2016-13~~The new guidance also ~~amends~~amended the credit loss measurement guidance for available-for-sale debt securities and beneficial interests in securitized financial assets. The guidance in ASU ~~2016-13 is~~2016-13 was effective for “public business entities,” as defined in the guidance, that are SEC filers for fiscal years and for interim periods within those fiscal years beginning after December 15, 2019. Early adoption of the guidance iswas permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. However, during July 2019, FASB unanimously voted for a proposal to delay this ASU to January 2023 for smaller reporting companies. On October 16, 2019, FASB approved a final ASU delaying the effective date. The new guidance is effective for annual and interim periods beginning after December 15, 2022 for certain entities, including smaller reporting companies. The Corporation is a smaller reporting company. The Corporation is currently evaluating the impact of adopting this new guidance on the consolidated financial statements, current systems and processes. At this time, the Corporation is reviewing potential methodologies for estimating expected credit losses using reasonable and supportable forecast information and has identified certain data and system requirements. Once adopted, we expect our allowance for loan losses to increase through a one-time adjustment to retained earnings; however, until our evaluation is complete, the estimated increase in allowance will be unknown. The Corporation is planning to adopt this new guidance within the time frame noted above.

The Corporation adopted this new guidance on July 1, 2023. Management analyzed and finalized its pool segmentation, established the peer group that will be used as the source of loss experience data, and completed parallel calculations in preparation for adoption of the new methodology. The Net Present Value of Discounted Cash Flow methodology is being used for all loan pools and the implementation of ASU No.2016-13 is expected to increase the balance of the allowance for loan losses by less than $250. In addition, a reserve for unfunded commitments that are not unconditionally cancellable will be established and is expected to be between $275 and $350. Upon adoption of the new guidance, a one-time adjustment to the allowance for loan losses and reserve for unfunded commitments will be made with an offsetting decrease to retained earnings, net of tax. The Corporation is also developing disclosure documentation related to adoption of this standard.

In March ~~2020, the~~ 2022, FASB issued ASU ~~2020-04, "Facilitation~~2022-02, Financial Instruments – Credit Losses (ASC 326): Troubled Debt Restructurings (TDRs) and Vintage Disclosures. The guidance amends ASC 326 to eliminate the accounting guidance for TDRs by creditors, while enhancing disclosure requirements for certain loan refinancing and restructuring activities by creditors when a borrower is experiencing financial difficulty. Specifically, rather than applying TDR recognition and measurement guidance, creditors will be required to determine whether a modification results in a new loan or continuation of ~~the Effects of Reference Rate Reform on Financial Reporting". The ASU is~~existing loan. These amendments are intended to ~~provide relief~~enhance existing disclosure requirements and introduce new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. Additionally, the amendments in ASC 326 require that an entity disclose current-period gross write-offs by year of origination within the vintage disclosures, which require that an entity disclose the amortized cost basis of financing receivables by credit quality indicator and class of financing receivable by year of origination. The guidance is only for ~~companies preparing~~entities that have adopted the amendments in Update 2016-13 for ~~discontinuation of interest rates based on LIBOR, or other reference rates that may be discontinued,~~fiscal years, and provides optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria. The ASU also provides for a one-time sale and/or transfer to available-for-sale or trading to be made for held-to-maturity (HTM) debt securities that both reference an eligible reference rate and were classified as HTM before January 1, 2020. ASU 2020-04interim periods within those fiscal years, beginning after December 15, 2022. This update is effective March 12, 2020 through December 31, 2022. The ASU requires companies to apply the guidance prospectively to contract modifications and hedging relationships while the one-time election to sell and/or transfer debt securities classified as HTM may be made any time after March 12, 2020. The Corporation does not ~~expect ASU 2020-04~~ expected to have a ~~material~~significant impact on ~~its~~the Corporation’s financial ~~statements and disclosures.~~statements.

NOTE 2—ACQUISITION

On July 16, 2021, the Corporation completed its acquisition of two branches ~~(Branches) from CFBank, National Association (CFBank)~~ located in Calcutta and Wellsville, ~~Ohio.~~Ohio from CFBank, National Association. In connection with the branch acquisition, ~~CFBank transferred to~~ the ~~Bank~~Corporation assumed $104,538 in branch deposits for a deposit premium of 1.75%. In addition, the ~~land, buildings and other associated assets of the Branches; $104 million in deposits attributable to the Branches; $15 million in aggregate principal amount~~Corporation acquired $15,602 of subordinated debt securities issued by unrelated financial ~~institutions; $13 million~~institutions and $19,943 of ~~loans attributable to~~loans. This transaction qualifies as a business combination.

The following table summarizes the ~~Branches~~estimated fair values of the assets acquired and other single family residential mortgage loans and home equity lines of credit from CFBank’s Northeast Ohio loan portfolio. In addition, the Bank purchased $7.7 million in aggregate principal amount of participation interests in commercial and commercial real estate loans originated by and held in CFBank’s portfolio. An additional $7.3 million in participation interests is expected to be purchasedliabilities assumed by the Bank by December 31, 2021. As consideration for the Branches, the Bank paid CFBank the net book value of the land, building and associated assets of the Branches; a deposit premium equal to 1.75% of the average daily deposits of the Branches for the 30 days preceding the closing; and the par value of the subordinated debt securities and loans acquired by the Bank.

~~On January 1, 2020, the~~ Corporation completed the acquisition by merger of Peoples and its wholly owned subsidiary, The Peoples National Bank of Mount Pleasant (Peoples Bank) in a stock and cash transaction for an aggregate consideration of approximately $10,405. In connection with the acquisition, the Corporation issued 269,920 shares of common stock and paid $5,128 in cash to the former shareholders of Peoples. As ofat the date of ~~acquisition of Peoples,~~acquisition. The core deposit intangible will be amortized over ten years on a straight-line basis. Goodwill will not be amortized, but instead will be evaluated for impairment.

Assets acquired:
Cash and cash equivalents	$	515
Securities, available-for-sale		15,602
Loans		19,943
Premises and equipment		413
Core deposit intangible		295
Accrued interest receivable		216
Total assets acquired		36,984
Liabilities assumed:
Noninterest-bearing deposits		10,535
Interest-bearing deposits		94,003
Other liabilities		99
Total liabilities assumed		104,637
Fair value of net liabilities assumed		(67,653	)
Cash received		66,037
Goodwill	$	1,616

The acquired assets and liabilities were measured at estimated fair values. Management made certain estimates and exercised judgement in accounting for the ~~estimated~~acquisition. The fair value of loans ~~received~~ was ~~$55,320 and~~estimated using discounted contractual cash flows. The book balance of the ~~estimated~~loans at the time of the acquisition was $20,325. The fair value disclosed above reflects a credit-related adjustment of ~~deposits assumed was $60,851.~~$(388) and an adjustment for other factors of $6. Loans evidencing credit deterioration since origination, purchased credit impaired loans, included in loans receivable were immaterial. Acquisition costs of ~~$827~~$144 pre-tax, or ~~$680~~$118 after-tax, were ~~expensed~~recorded during ~~the twelve-month period ended June 30, 2020. The transaction created $836 of goodwill, none of which is deductible for tax purposes.~~fiscal year 2022.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3—SECURITIES

The following table summarizes the amortized cost and fair value of securities available-for-sale and held-to-maturity at June 30, ~~2021~~ 2023 and ~~2020~~2022 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) and gross unrecognized gains and losses:

Available-for-sale	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
June 30, 2021
June 30, 2023
Obligation of U.S Treasury										$	8,941	$	—	$	(533	)	$	8,408
Obligations of U.S. government-sponsored entities and agencies	$	14,746	$	301	$	(14	)	$	15,033		29,430		7		(3,745	)		25,692
Obligations of state and political subdivisions		73,013		3,561		(75	)		76,499		92,891		63		(8,982	)		83,972
U.S. Government-sponsored mortgage-backed securities - residential		90,065		1,136		(684	)		90,517		104,689		12		(15,066	)		89,635
U.S. Government-sponsored mortgage-backed securities - commercial		8,641		204		—			8,845		8,604		—		(1,809	)		6,795
U.S. Government-sponsored collateralized mortgage obligations – residential		16,302		129		(57	)		16,374		55,800		8		(5,738	)		50,070
Other debt securities		500		—		(8	)		492		17,175		—		(2,142	)		15,033
Total available-for-sale securities	$	203,267	$	5,331	$	(838	)	$	207,760	$	317,530	$	90	$	(38,015	)	$	279,605

Held-to-maturity

Amortized
Cost

Gross
Unrecognized
Gains

Gross
Unrecognized

Losses

Fair
Value

June 30, 2023

Obligations of state and political subdivisions

6,970

—

(676

)

6,294

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

Available-for-sale	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
June 30, 2022
Obligation of U.S Treasury	$	8,909	$	—	$	(462	)	$	8,447
Obligations of U.S. government-sponsored entities and agencies		28,689		—		(2,424	)		26,265
Obligations of state and political subdivisions		105,977		129		(8,749	)		97,357
U.S. Government-sponsored mortgage-backed securities - residential		113,812		13		(11,642	)		102,183
U.S. Government-sponsored mortgage-backed securities - commercial		8,623		—		(1,322	)		7,301
U.S. Government-sponsored collateralized mortgage obligations – residential		40,952		1		(2,774	)		38,179
Other debt securities		17,367		—		(752	)		16,615
Total available-for-sale securities	$	324,329	$	143	$	(28,125	)	$	296,347

Held-to-maturity

Amortized
Cost

Gross
Unrecognized
Gains

Gross
Unrecognized
Losses

Fair
Value

June 30, 2021

Obligations of state and political subdivisions
$ 7,996 $ 356 $ — $ 8,352

Available-for-sale

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Fair
Value

June 30, 2020

Obligations of U.S. Treasury
$ 1,248 $ 8 $ — $ 1,256
Obligations of U.S. government-sponsored entities and agencies
10,133 399 — 10,532
Obligations of state and political subdivisions
60,343 3,149 — 63,492
U.S. Government-sponsored mortgage-backed securities - residential
48,645 1,515 (4
)
50,156
U.S. Government-sponsored mortgage-backed securities – commercial
8,444 55 (2
)
8,497
U.S. Government-sponsored collateralized mortgage obligations – residential
9,712 285 (12
)
9,985
Total available-for-sale securities
$ 138,525 $ 5,411 $ (18
)
$ 143,918

Held-to-maturity	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses		Fair Value		Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses			Fair Value
June 30, 2020
June 30, 2022
Obligations of state and political subdivisions	$	3,541	$	327	$	—	$	3,868	$	7,874	$	47	$	(90	)	$	7,831

Proceeds from sales of available-for-sale securities during fiscal year ~~2021~~2023 and fiscal year ~~2020~~2022 were as follows:

	2021			2020		2023			2022
Proceeds from sales	$	5,545		$	18,421	$	16,472		$	2,722
Gross realized gains		44			355		87			8
Gross realized losses		(30	)		—		(73	)		(2	)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The income tax provision related to ~~these~~the net realized gains amounted to $3 in fiscal year ~~2021~~2023 and ~~$74~~$1 in fiscal year ~~2020.~~2022.

The amortized cost and fair values of debt securities at June 30, ~~2021~~2023 by expected maturity are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date, primarily mortgage-backed securities and collateralized mortgage obligations are shown separately.

Available-for-sale	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	5,642	$	5,712	$	4,997	$	4,899
Due after one year through five years		12,346		12,800		29,105		27,640
Due after five years through ten years		20,295		20,824		51,133		44,817
Due after ten years		49,976		52,688		63,202		55,749
Total		88,259		92,024		148,437		133,105
U.S. Government-sponsored mortgage-backed and related securities		115,008		115,736		169,093		146,500
Total	$	203,267	$	207,760	$	317,530	$	279,605

Held-to-maturity

Amortized
Cost

Fair Value

Due after one year through five years
$ 294 $ 309
Due after five years through ten years
5,367 5,547
Due after ten years
2,335 2,496
Total
$ 7,996 $ 8,352

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

Held-to-maturity	Amortized Cost		Fair Value
Due after one year through five years	$	3,092	$	2,988
Due after five years through ten years		533		488
Due after ten years		3,345		2,818
Total	$	6,970	$	6,294

Securities with a carrying value of approximately ~~$96,970~~$137,896 and ~~$69,048~~$126,679 were pledged at June 30, ~~2021~~ 2023 and ~~2020,~~2022, respectively, to secure public deposits and commitments as required or permitted by law. At June 30, ~~2021~~ 2023 and ~~2020,~~2022, there were no holdings of securities of any one issuer, other than obligations of U.S. government-sponsored entities and agencies, with an aggregate book value greater than 10% of shareholders’ equity.

The following table summarizes the securities with unrealized and unrecognized losses at June 30, ~~2021~~ 2023 and ~~2020,~~2022, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position:

	Less than 12 Months					12 Months or more					Total					Less than 12 Months					12 Months or more					Total
June 30, 2023																Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Available-for-sale	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss

June 30, 2021
Obligations of U.S Treasury																$	—	$	—		$	8,408	$	(533	)	$	8,408	$	(533	)
Obligations of U.S. government-sponsored entities and agencies	$	2,003	$	(14	)	$	—	$	—		$	2,003	$	(14	)		1,008		(10	)		23,551		(3,735	)		24,559		(3,745	)
Obligations of state and political subdivisions		7,398		(75	)		—		—			7,398		(75	)		16,009		(344	)		62,492		(8,638	)		78,501		(8,982	)
Mortgage-backed securities – residential		42,378		(684	)		—		—			42,378		(684	)		3,334		(84	)		85,096		(14,982	)		88,430		(15,066	)
Mortgage-backed securities – commercial																	—		—			6,795		(1,809	)		6,795		(1,809	)
Collateralized mortgage obligations - residential		7,707		(56	)		552		(1	)		8,259		(57	)		22,039		(638	)		27,023		(5,100	)		49,062		(5,738	)
Other		492		(8	)		—		—			492		(8	)
Other debt securities																	—		—			15,033		(2,142	)		15,033		(2,142	)
Total temporarily impaired	$	59,978	$	(837	)	$	552	$	(1	)	$	60,530	$	(838	)	$	42,390	$	(1,076	)	$	228,398	$	(36,939	)	$	270,788	$	(38,015	)

	Less than 12 Months				12 Months or more					Total
June 30, 2023	Fair Value		Unrecognized Loss		Fair Value		Unrecognized Loss			Fair Value		Unrecognized Loss
Held-to-maturity
Obligations of state and political subdivisions	$	—	$	—	$	6,294	$	(676	)	$	6,294	$	(676	)

Less than 12 Months

12 Months or more

Total

Available-for-sale

Fair
Value

Unrealized
Loss

Fair
Value

Unrealized
Loss

Fair
Value

Unrealized
Loss

June 30, 2020

Mortgage-backed securities – residential
$ — $ — $ 625 $ (4
)
$ 625 $ (4
)
Mortgage-backed securities – commercial
1,806 (2
)
— — 1,806 (2
)
Collateralized mortgage obligations – residential
1,700 (12
)
— — 1,700 (12
)
Total temporarily impaired
$ 3,506 $ (14
)
$ 625 $ (4
)
$ 4,131 $ (18
)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Less than 12 Months					12 Months or more					Total
June 30, 2022	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Available-for-sale
Obligations of U.S Treasury	$	8,447	$	(462	)	$	—	$	—		$	8,447	$	(462	)
Obligations of U.S. government-sponsored entities and agencies		26,265		(2,424	)		—		—			26,265		(2,424	)
Obligations of state and political subdivisions		80,445		(8,331	)		2,047		(418	)		82,492		(8,749	)
Mortgage-backed securities – residential		76,526		(7,586	)		24,569		(4,056	)		101,095		(11,642	)
Mortgage-backed securities – commercial		7,301		(1,322	)		—		—			7,301		(1,322	)
Collateralized mortgage obligations – residential		30,729		(2,308	)		2,713		(466	)		33,442		(2,774	)
Other debt securities		16,156		(711	)		459		(41	)		16,615		(752	)
Total temporarily impaired	$	245,869	$	(23,144	)	$	29,788	$	(4,981	)	$	275,657	$	(28,125	)

	Less than 12 Months					12 Months or more				Total
June 30, 2022	Fair Value		Unrecognized Loss			Fair Value		Unrecognized Loss		Fair Value		Unrecognized Loss
Held-to-maturity
Obligations of state and political subdivisions	$	3,522	$	(90	)	$	—	$	—	$	3,522	$	(90	)

Management evaluates securities for other-than-temporary impairment (OTTI) on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. The securities portfolio is evaluated for OTTI by segregating the portfolio into two general segments and applying the appropriate OTTI model. Investment securities are generally evaluated for OTTI under FASB ASC Topic 320, Accounting for Certain Investments in Debt and Equity Securities.

In determining OTTI under the ASC Topic 320 model, management considers many factors, including: ~~(1)~~(1) the length of time and the extent to which the fair value has been less than cost, ~~(2)~~(2) the financial condition and near-term prospects of the issuer, ~~(3)~~(3) whether the market decline was affected by macroeconomic conditions, and ~~(4)~~(4) whether the entity has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. The assessment of whether an other-than-temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time.

As of June 30, ~~2021,~~ 2023, the Corporation’s securities portfolio consisted of ~~312~~414 available-for-sale and four held-to-maturity securities. There were 48400 available-for-sale securities in an unrealized loss position at June 30, ~~2021, one~~2023, 333 of which ~~was~~were in a continuous loss position for twelve or more months. There were nofour held-to-maturity securities in an unrealized loss position at June 30, ~~2021.~~ 2023. The unrealized losses within the available-for-sale ~~securities portfolio~~and held-to-maturity security portfolios in ~~the 2021~~ fiscal year2023 was primarily attributed to a change in rates. The mortgage-backed securities and collateralized mortgage obligations were primarily issued by Fannie Mae, Freddie Mac and Ginnie Mae, institutions which the government has affirmed its commitment to support. The Corporation does not own any private label mortgage-backed securities. Also, management monitors the financial condition of the individual municipal securities to ensure they meet minimum credit ~~standards.~~standards, all are paying as agreed, and there have been no missed payments. Since the Corporation does not intend to sell these securities and it is not likely the Corporation will be required to sell these securities at an unrealized loss position prior to any anticipated recovery in fair value, which may be maturity, management does not believe there is any OTTI related to these securities at June 30, ~~2021.~~ 2023. Also, there was no OTTI recognized at June 30, ~~2020.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~2022.

As of June 30, ~~2021,~~ 2023, the Corporation owned equity securities with an amortized cost of $400. The following table presents the net unrealized gains and losses on equity securities recognized in earnings for the twelve months ended June 30, ~~2021~~ 2023 and ~~2020.~~2022. There were no realized gains or losses on the sale of equity securities during the periods presented. ~~The Corporation did not own any equity securities as of June 30, 2020.~~

		2023				2022
Unrealized loss recognized on equity securities held at the end of the period		$	(14	)		$	(24	)

2021

2020

Unrealized gains recognized on equity securities held at the end of the period
$ 24 $ —

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4—LOANS

Major classifications of loans were as follows as of June 30:

2021

2020

Commercial
$ 112,337 $ 158,667
Commercial real estate:

Construction
10,525 16,235
Other
269,679 229,029
1 – 4 Family residential real estate:

Owner occupied
118,269 90,494
Non-owner occupied
19,151 19,370
Construction
9,073 9,344
Consumer
29,646 21,334
Subtotal
568,680 544,473
Net deferred loan fees and costs
(2,253
)
(1,612
)
Allowance for loan losses
(6,471
)
(5,678
)
Net loans
$ 559,956 $ 537,183

The commercial loan category in the above table includes PPP loans of $50,686 as of June 30, 2021 and $66,606 as of June 30, 2020 and a mortgage loan warehouse line of credit to another financial institution with a zero outstanding balance as of June 30, 2021 and $32,869 as of June 30, 2020. The outstanding balance of the warehouse line of credit can fluctuate significantly based on the other financial institution’s funding needs.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

	2023			2022
Commercial	$	112,558		$	87,008
Commercial real estate:
Construction		23,981			15,158
Other		318,636			291,847
1 – 4 Family residential real estate:
Owner occupied		156,989			142,244
Non-owner occupied		23,880			26,029
Construction		8,443			4,317
Consumer		65,617			44,964
Subtotal		710,104			611,567
Net deferred loan fees and costs		258			276
Allowance for loan losses		(7,724	)		(7,160	)
Net loans	$	702,638		$	604,683

The following table presents the activity in the allowance for loan losses by portfolio segment for the year ended June 30, ~~2021:~~2023:

						1-4 Family													1-4 Family
				Commercial		Residential											Commercial		Residential
				Real		Real											Real		Real
	Commercial			Estate		Estate			Consumer			Total			Commercial		Estate		Estate			Consumer			Total
Allowance for loan losses:
Beginning balance	$	947		$	3,623	$	989		$	119		$	5,678		$	960	$	3,927	$	1,645		$	628		$	7,160
Provision for loan losses		(21	)		322		319			230			850			348		15		(72	)		564			855
Loans charged-off		(22	)		—		(4	)		(122	)		(148	)		—		—		(6	)		(441	)		(447	)
Recoveries		—			4		3			84			91			—		1		4			151			156
Total ending allowance balance	$	904		$	3,949	$	1,307		$	311		$	6,471		$	1,308	$	3,943	$	1,571		$	902		$	7,724

The following table presents the activity in the allowance for loan losses by portfolio segment for the year ended June 30, ~~2020:~~2022:

						1-4 Family
			Commercial			Residential
			Real			Real
	Commercial		Estate			Estate			Consumer			Total
Allowance for loan losses:
Beginning balance	$	904	$	3,949		$	1,307		$	311		$	6,471
Provision for loan losses		33		(24	)		359			367			735
Loans charged-off		—		—			(41	)		(132	)		(173	)
Recoveries		23		2			20			82			127
Total ending allowance balance	$	960	$	3,927		$	1,645		$	628		$	7,160

1-4 Family

Commercial

Residential

Real

Real

Commercial

Estate

Estate

Consumer

Total

Allowance for loan losses:

Beginning balance
$ 660 $ 2,575 $ 494 $ 59 $ 3,788
Provision for loan losses
287 1,044 497 152 1,980
Loans charged-off
— — (6
)
(140
)
(146
)
Recoveries
— 4 4 48 56
Total ending allowance balance
$ 947 $ 3,623 $ 989 $ 119 $ 5,678
39

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of June 30, 2023. Included in the recorded investment in loans is $1,598 of accrued interest receivable.

					1-4 Family
			Commercial		Residential
			Real		Real
	Commercial		Estate		Estate		Consumer		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—
Acquired loans collectively evaluated for impairment		—		40		74		—		114
Originated loans collectively evaluated for impairment		1,308		3,903		1,497		902		7,610
Total ending allowance balance	$	1,308	$	3,943	$	1,571	$	902	$	7,724

Recorded investment in loans:
Loans individually evaluated for impairment	$	314	$	88	$	3	$	—	$	405
Acquired loans collectively evaluated for impairment		622		6,953		23,038		1,230		31,843
Originated loans collectively evaluated for impairment		111,890		335,660		167,798		64,364		679,712
Total ending loans balance	$	112,826	$	342,701	$	190,839	$	65,594	$	711,960

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of June 30, ~~2021.~~ 2022. Included in the recorded investment in loans is ~~$1,184~~$1,214 of accrued interest receivable.

					1-4 Family										1-4 Family
			Commercial		Residential								Commercial		Residential
			Real		Real								Real		Real
	Commercial		Estate		Estate		Consumer		Total		Commercial		Estate		Estate		Consumer		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	1	$	—	$	3	$	—	$	4	$	—	$	—	$	—	$	—	$	—
Acquired loans collectively evaluated for impairment		—		83		77		—		160		1		62		85		—		148
Originated loans collectively evaluated for impairment		903		3,866		1,227		311		6,307		959		3,865		1,560		628		7,012
Total ending allowance balance	$	904	$	3,949	$	1,307	$	311	$	6,471	$	960	$	3,927	$	1,645	$	628	$	7,160

Recorded investment in loans:
Loans individually evaluated for impairment	$	437	$	921	$	596	$	—	$	1,954	$	276	$	42	$	155	$	—	$	473
Acquired loans collectively evaluated for impairment		834		6,542		21,363		6,488		35,227		665		10,095		27,731		3,051		41,542
Originated loans collectively evaluated for impairment		109,016		272,563		125,689		23,162		530,430		86,310		296,776		146,058		41,898		571,042
Total ending loans balance	$	110,287	$	280,026	$	147,648	$	29,650	$	567,611	$	87,251	$	306,913	$	173,944	$	44,949	$	613,057

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents ~~the balance in the allowance~~information related to loans individually evaluated for ~~loan losses and the recorded investment in~~impairment by class of loans ~~by portfolio segment and based on impairment method~~ as of and for the year ended June 30, ~~2020. Included in the recorded investment in loans is $1,936 of accrued interest receivable.~~2023:

1-4 Family

Commercial

Residential

Real

Real

Commercial

Estate

Estate

Consumer

Total

Allowance for loan losses:

Ending allowance balance attributable to loans:

Individually evaluated for impairment
$ 28 $ 6 $ — $ — $ 34
Acquired loans collectively evaluated for impairment
— 103 94 — 197
Originated loans collectively evaluated for impairment
919 3,514 895 119 5,447
Total ending allowance balance
$ 947 $ 3,623 $ 989 $ 119 $ 5,678

Recorded investment in loans:

Loans individually evaluated for impairment
$ 179 $ 1,045 $ 699 $ — $ 1,923
Acquired loans collectively evaluated for impairment
1,095 8,072 27,252 12,550 48,969
Originated loans collectively evaluated for impairment
156,054 236,840 92,168 8,843 493,905
Total ending loans balance
$ 157,328 $ 245,957 $ 120,119 $ 21,393 $ 544,797

	Unpaid				Allowance for		Average		Interest		Cash Basis
	Principal		Recorded		Loan Losses		Recorded		Income		Interest
	Balance		Investment		Allocated		Investment		Recognized		Recognized
With no related allowance recorded:
Commercial	$	404	$	314	$	—	$	306	$	37	$	37
Commercial real estate:
Other		127		88		—		52		6		6
1-4 Family residential real estate:
Owner occupied		24		—		—		38		2		2
Non-owner occupied		3		3		—		29		—		—
Total	$	558	$	405	$	—	$	425	$	45	$	45

The following table presents information related to loans individually evaluated for impairment by class of loans as of and for the year ended June 30, ~~2021:~~2022:

													Unpaid				Allowance for		Average		Interest		Cash Basis
	Unpaid				Allowance for		Average		Interest		Cash Basis		Principal		Recorded		Loan Losses		Recorded		Income		Interest
	Principal		Recorded		Loan Losses		Recorded		Income		Interest		Balance		Investment		Allocated		Investment		Recognized		Recognized
	Balance		Investment		Allocated		Investment		Recognized		Recognized
With no related allowance recorded:
Commercial	$	421	$	303	$	—	$	153	$	—	$	—	$	414	$	276	$	—	$	291	$	—	$	—
Commercial real estate:
Other		1,062		921		—		902		7		7		83		42		—		518		193		193
1-4 Family residential real estate:
Owner occupied		409		367		—		539		20		20		48		22		—		187		8		8
Non-owner occupied		267		202		—		216		—		—		193		133		—		93		75		75
With an allowance recorded:
Commercial		133		134		1		150		8		8		—		—		—		113		6		6
Commercial real estate:
Other		—		—		—		120		7		7
1-4 Family residential real estate:
Owner occupied		28		27		3		16		—		—
Total	$	2,320	$	1,954	$	4	$	2,096	$	42	$	42	$	738	$	473	$	—	$	1,202	$	282	$	282

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~The following table presents information related to loans individually evaluated for impairment by class of loans as of and for the year ended June 30, 2020:~~

Unpaid

Allowance
for

Average

Interest

Cash Basis

Principal

Recorded

Loan Losses

Recorded

Income

Interest

Balance

Investment

Allocated

Investment

Recognized

Recognized

With no related allowance recorded:

Commercial
$ — $ — $ — $ 4 $ — $ —
Commercial real estate:

Other
922 836 — 521 88 88
1-4 Family residential real estate:

Owner occupied
604 463 — 117 12 12
Non-owner occupied
284 236 — 247 — —
With an allowance recorded:

Commercial
176 179 28 168 9 9
Commercial real estate:

Other
209 209 6 217 13 13
Total
$ 2,195 $ 1,923 $ 34 $ 1,274 $ 122 $ 122

The following table presents the recorded investment in non-accrual and loans past due over 90 days still on accrual by class of loans as of June 30, ~~2021~~ 2023 and ~~2020:~~2022:

	June 30, 2021				June 30, 2020				June 30, 2023				June 30, 2022
			Loans Past Due				Loans Past Due				Loans Past Due				Loans Past Due
			Over 90 Days				Over 90 Days				Over 90 Days				Over 90 Days
			Still				Still				Still				Still
	Non-accrual		Accruing		Non-accrual		Accruing		Non-accrual		Accruing		Non-accrual		Accruing
Commercial	$	303	$	—	$	21	$	—	$	—	$	—	$	276	$	9
Commercial real estate:
Other		874		—		785		—		51		—		—		—
1 – 4 Family residential:
Owner occupied		392		—		143		29		—		—		22		—
Non-owner occupied		202		—		236		—		3		—		133		—
Consumer		—		—		—		12		—		50		—		—
Total	$	1,771	$	—	$	1,185	$	41	$	54	$	50	$	431	$	9

Non-accrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans.

The following table presents the aging of the recorded investment in past due loans as of June 30, ~~2021~~ 2023 by class of loans:

	Days Past Due												Days Past Due
	30 –59		60 - 89		90 Days or		Total		Loans Not				30 – 59		60 - 89		90 Days or		Total		Loans Not
	Days		Days		Greater		Past Due		Past Due		Total		Days		Days		Greater		Past Due		Past Due		Total
Commercial	$	—	$	—	$	—	$	—	$	110,287	$	110,287	$	—	$	—	$	—	$	—	$	112,826	$	112,826
Commercial real estate:
Construction		—		—		—		—		10,478		10,478		—		—		—		—		23,996		23,996
Other		—		175		629		804		268,744		269,548		—		—		51		51		318,654		318,705
1-4 Family residential:
Owner occupied		29		—		365		394		118,937		119,331		17		124		—		141		158,296		158,437
Non-owner occupied		—		—		—		—		19,148		19,148		—		—		3		3		23,885		23,888
Construction		—		—		—		—		9,169		9,169		—		—		—		—		8,514		8,514
Consumer		95		11		—		106		29,544		29,650		438		120		50		608		64,986		65,594
Total	$	124	$	186	$	994	$	1,304	$	566,307	$	567,611	$	455	$	244	$	104	$	803	$	711,157	$	711,960

The above table of past due loans includes the recorded investment in non-accrual loans of ~~$994~~$54 in the 90 days or greater ~~category and $777 in the loans not past due~~ category.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

The following table presents the aging of the recorded investment in past due loans as of June 30, ~~2020~~ 2022 by class of loans:

	Days Past Due												Days Past Due
	30 –59		60 - 89		90 Days or		Total		Loans Not				30 – 59		60 - 89		90 Days or		Total		Loans Not
	Days		Days		Greater		Past Due		Past Due		Total		Days		Days		Greater		Past Due		Past Due		Total
Commercial	$	—	$	—	$	21	$	21	$	157,307	$	157,328	$	—	$	—	$	9	$	9	$	87,242	$	87,251
Commercial real estate:
Construction		—		—		—		—		16,241		16,241		—		—		—		—		15,138		15,138
Other		—		2		628		630		229,086		229,716		52		—		—		52		291,723		291,775
1-4 Family residential:
Owner occupied		—		—		172		172		91,102		91,274		125		—		—		125		143,381		143,506
Non-owner occupied		—		—		—		—		19,410		19,410		—		—		27		27		26,036		26,063
Construction		—		—		—		—		9,435		9,435		—		—		—		—		4,375		4,375
Consumer		127		49		12		188		21,205		21,393		381		79		—		460		44,489		44,949
Total	$	127	$	51	$	833	$	1,011	$	543,786	$	544,797	$	558	$	79	$	36	$	673	$	612,384	$	613,057

The above table of past due loans includes the recorded investment in non-accrual loans of $2$27 in the ~~60-89 days, $792 in the~~ 90 days or greater category and ~~$391~~$404 in the loans not past due category.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Troubled Debt Restructurings (TDR):

The Corporation has certain loans that have been modified in order to maximize collection of loan balances that are classified as TDRs. A modified loan is usually classified as a TDR if, for economic reasons, management grants a concession to the original terms and conditions of the loan to a borrower who is experiencing financial difficulties that it would not have otherwise considered. In response to COVID-19, on March 22, 2020, the Corporation adopted a loan modification program to assist borrowers impacted by the virus. The program is available to most borrowers whose loan was not past due on March 22, 2020, the date this loan modification program was adopted. The program offers principal and interest payment deferrals for up to 90 days or interest only payments for up to 90 days. Borrowers are eligible for an additional 90 days of payment deferrals if situations warrant a need for an extension. Interest will be deferred but will continue to accrue during the deferment period and the maturity date on amortizing loans will be extended by the number of months the payment was deferred. Consistent with issued regulatory guidance, modifications made under this program in response to COVID-19 will not be classified as TDRs. As of June 30, 2021, eight borrowers with an aggregate outstanding balance of $198 are in payment deferral status under this loan modification program that are not classified as TDRs.

~~On June 30, 2021 and 2020, the~~The Corporation had ~~$688~~$351 and ~~$974, respectively,~~$318 of loans classified as TDRs ~~which are included in impaired loans above. On~~ as of June 30, ~~2021~~ 2023 and ~~2020, the Corporation had $4 and $12, respectively, of~~2022, respectively. There were no specific reserves allocated to these ~~loans.~~loans and TDRs are also included as impaired loans that are listed above. For the ~~year~~years ended June 30, ~~2021,~~2023 and 2022, there were no loans modified that were classified as a troubled debt restructuring.

During the fiscal year ended June 30, 2020, the terms of one loan was modified as a troubled debt restructuring by extending the maturity date. As of June 30, 2020, the Corporation had not committed to lend any additional funds to customers with outstanding loans that were classified as troubled debt restructurings. The following table presents loans by class modified as troubled debt restructurings that occurred during the year ended June 30, 2020:

Pre-Modification

Post-Modification

Number of

Outstanding
Recorded

Outstanding
Recorded

Loans

Investment

Investment

1-4 Family residential:

Owner occupied
1 $ 314 $ 314
Total
1 $ 314 $ 314

~~The troubled debt restructuring described above did not result in any charge-off nor did it increase the allowance for loan losses during the twelve months ended June 30, 2020.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

There were no loans classified as troubled debt restructurings for which there was a payment default within 12 months following the modification during the ~~twelve-month~~twelve-month periods ended June 30, ~~2021~~ 2023 and ~~2020.~~2022. A loan is considered in payment default once it is 90 days contractually past due under the modified terms.

Credit Quality Indicators:

The Corporation categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Corporation analyzes loans individually by classifying the loans as to credit risk. This analysis includes loans with a total outstanding loan relationship greater than $100 and non-homogeneous loans, such as commercial and commercial real estate loans. This analysis is performed monthly. The Corporation uses the following definitions for risk ratings:

Special Mention. Loans classified as special mention have a potential weakness that deserves management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution's credit position at some future date.

Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, based on currently existing facts, conditions, and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans. Loans listed as not rated are either less than ~~$100~~$100 or are included in groups of homogeneous loans. These loans are evaluated based on delinquency status, which was discussed previously.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of June 30, ~~2021,~~ 2023, and based on the most recent analysis performed, the recorded investment by risk category of loans by class of loans is as follows:

			Special						Not
	Pass		Mention		Substandard		Doubtful		Rated
Commercial	$	110,928	$	1,174	$	573	$	—	$	151
Commercial real estate:
Construction		23,996		—		—		—		—
Other		310,427		7,097		468		51		662
1-4 Family residential real estate:
Owner occupied		2,013		—		17		—		156,407
Non-owner occupied		23,474		50		105		3		256
Construction		3,227		—		—		—		5,287
Consumer		597		—		—		—		64,997
Total	$	474,662	$	8,321	$	1,163	$	54	$	227,760

As of June 30, 2022, and based on the most recent analysis performed, the recorded investment by risk category of loans by class of loans is as follows:

Special

Not

Pass

Mention

Substandard

Doubtful

Rated

Commercial
$ 109,118 $ 280 $ 309 $ 303 $ 277
Commercial real estate:

Construction
10,478 — — — —
Other
259,327 3,700 4,718 874 929
1-4 Family residential real estate:

Owner occupied
1,715 — 6 392 117,218
Non-owner occupied
18,312 163 197 202 274
Construction
1,849 — — — 7,320
Consumer
694 — — — 28,956
Total
$ 401,493 $ 4,143 $ 5,230 $ 1,771 $ 154,974

~~As of June 30, 2020, and based on the most recent analysis performed, the recorded investment by risk category of loans by class of loans is as follows:~~

Special

Not

Pass

Mention

Substandard

Doubtful

Rated

Commercial
$ 152,911 $ 143 $ 3,979 $ 21 $ 274
Commercial real estate:

Construction
16,241 — — — —
Other
220,311 1,469 5,378 785 1,773
1-4 Family residential real estate:

Owner occupied
2,419 — 334 — 88,521
Non-owner occupied
18,435 186 223 236 330
Construction
3,234 — — — 6,201
Consumer
153 — — — 21,240
Total
$ 413,704 $ 1,798 $ 9,914 $ 1,042 $ 118,339

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

			Special						Not
	Pass		Mention		Substandard		Doubtful		Rated
Commercial	$	86,265	$	350	$	178	$	276	$	182
Commercial real estate:
Construction		15,138		—		—		—		—
Other		283,877		2,500		4,711		—		687
1-4 Family residential real estate:
Owner occupied		1,321		—		—		22		142,163
Non-owner occupied		25,606		59		—		133		265
Construction		1,234		—		—		—		3,141
Consumer		605		—		—		—		44,344
Total	$	414,046	$	2,909	$	4,889	$	431	$	190,782

NOTE 5—PREMISES AND EQUIPMENT

Major classifications of premises and equipment were as follows as of June 30:

	2021			2020			2023			2022
Land	$	1,603		$	1,603		$	2,417		$	1,685
Land improvements		381			349			414			318
Building and leasehold improvements		15,522			14,191			15,973			15,608
Furniture, fixture and equipment		6,616			6,333			7,600			7,206
Total premises and equipment		24,122			22,476			26,404			24,816
Accumulated depreciation and amortization		(8,329	)		(7,575	)		(9,222	)		(8,296	)
Premises and equipment, net	$	15,793		$	14,901		$	17,182		$	16,521

Depreciation ~~expense was $940~~expenses were $1,051 and ~~$1,044~~$991 for the years ended June 30, ~~2021~~ 2023 and ~~2020,~~2022, respectively.

As of June 30, ~~2021,~~ 2023, the Corporation leased real estate for seven office locations and various equipment under operating lease agreements. The lease agreements have maturity dates ranging from one year or less to May 31, 2035, including extension periods. Lease agreements for ~~three~~two locations have a lease term of 12 months or less and are therefore considered short-term leases. Most leases include one or more options to renew. The exercise of lease renewal options is typically at our sole discretion. The majority of renewals to extend the lease terms are included in our right-of-use assets and lease liabilities as they are reasonably certain of exercise. As most of our leases do not provide an implicit rate, we use the fully collateralized FHLB borrowing rate, commensurate with the lease terms based on the information available at the lease commencement date in determining the present value of the lease payments. The weighted average remaining life of the lease term for the leases with a term over 12 months was ~~87.68 months~~7.87 years as of June 30, ~~2021.~~2023 and the weighted-average discount rate was 1.95%.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Rent expense for all the operating leases was ~~$205~~$254 and ~~$196~~$228 for the ~~twelve-month~~twelve-month periods ended June 30, ~~2021~~ 2023 and ~~2020,~~2022, respectively. The right-of-use asset, included in premises and equipment, and the lease liability, included in other liabilities, were ~~$1,177~~$921 and ~~$473~~$951 as of June 30, ~~2021 and 2020, respectively.~~2023.

Total estimated rental commitments for the operating leases with a term over 12 months were as follows as of June 30, ~~2021:~~2023:

Period Ending June 30
2022	$	167
2023		167
2024		146	$	177
2025		114		145
2026				125
2027				115
2028				115
Thereafter		685		342
Total	$	1,279
Total undiscounted cash flows			$	1,019
Less: present value discount			$	(68	)
Total lease liabilities			$	951

NOTE 6 – GOODWILL AND ACQUIRED INTANGIBLE ASSETS

The change in goodwill was as follows:

	2021		2020		2023		2022
Beginning of year	$	836	$	—	$	2,452	$	836
Acquired goodwill		—		836		—		1,616
Ending balance as of June 30,	$	836	$	836	$	2,452	$	2,452

The following table summarizes the Corporation’s acquired intangible assets as of June 30, ~~2021~~ 2023 and ~~2020.~~2022.

June 30, 2021

June 30, 2020

Gross Carrying
Amount

Accumulated Amortization

Gross Carrying
Amount

Accumulated Amortization

Core deposit intangible
$ 270 $ 41 $ 270 $ 14

June 30, 2023

June 30, 2022

Gross Carrying

Amount

Accumulated

Amortization

Gross Carrying

Amount

Accumulated

Amortization

Core deposit intangible

565

151

565

Goodwill and the core deposit intangible assets resulted from the acquisition of Peoples Bancorp of Mt. Pleasant, Inc. that was completed on January 1, ~~2020. Goodwill represents~~2020, and the ~~excess of the total purchase price paid for the~~branch acquisition ~~over the fair value of the identifiable assets acquired, net of the fair value of the liabilities assumed.~~ that was completed on July 16, 2021. Goodwill is not amortized but is evaluated for impairment on an annual basis or whenever events or changes in circumstances indicate the asset might be impaired. Impairment exists when a reporting unit’s carrying amount exceeds its fair value. For the goodwill impairment analysis, the Corporation is the only reporting unit. Management performed a ~~qualitative~~quantitative impairment ~~test~~assessment at April 30, 2023. The assessment estimated fair value on an income approach that incorporated a discounted cash flow model that involved management assumptions based upon future growth and earnings projections. The results of the ~~Corporation’s goodwill during the fourth quarter~~assessment indicated no impairment as of the ~~2021 fiscal year. Based on this test, management concluded that it was more likely than not that the fair value of the reporting unit exceeded its carrying value, resulting in no impairment.~~measurement date. Goodwill is the only intangible asset on the Corporation’s balance sheet with an indefinite life.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~ Management will continue to monitor its goodwill for possible impairment.

The core deposit intangible asset is amortized on a straight-line basis over ten years. The Corporation recorded intangible amortization expense of ~~$27~~$56 in ~~2021~~2023 and ~~$14~~$54 in ~~2020.~~2022. The intangible amortization expense ~~for the core deposit intangible asset recorded as of June 30, 2021~~ is expected to be ~~$27~~$57 per year for each of the next ~~five~~four fiscal years and ~~$94~~$186 thereafter. ~~The core deposit intangible asset that will be recorded for the two branches that were purchased and closed on July 16, 2021 will impact these numbers.~~

NOTE 7—DEPOSITS

Interest-bearing deposits as of June 30, ~~2021~~ 2023 and ~~2020~~2022 were as follows:

	2021		2020		2023		2022
Demand	$	127,447	$	99,173	$	152,053	$	157,462
Savings and money market		282,761		228,567		335,231		369,054
Time:
$250 and over		18,488		36,747		46,822		18,164
Other		69,051		78,635		167,521		84,217
Total	$	497,747	$	443,122	$	701,627	$	628,897

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Scheduled maturities of time deposits at June 30, ~~2021~~2023 were as follows:

Twelve Months Ending June 30

2022
$ 56,866
2023
21,554
2024
2,151
2025
3,579
2026
1,415
Thereafter
1,974
$ 87,539

~~As of June 30, 2021, FHLB public unit deposit standby letters of credit of $7,000 were issued to collateralize public fund deposits.~~

Twelve Months Ending June 30
2024	$	193,381
2025		16,089
2026		2,890
2027		1,373
2028		434
Thereafter		176
	$	214,343

NOTE 8—SHORT-TERM BORROWINGS

Short-term borrowings consisted of federal funds purchased, repurchase agreements, and ~~federal funds purchased.~~a line of credit for the Corporation. Information concerning all short-term borrowings at June 30, ~~2021~~2023 and ~~2020,~~2022, maturing in less than one year is summarized as follows:

	2021			2020			2023			2022
Balance at June 30	$	12,203		$	6,943		$	26,367		$	21,295
Average balance during the year		8,895			4,306			22,603			12,960
Maximum month-end balance		13,275			7,705			26,367			21,878
Average interest rate during the year		0.10	%		1.00	%		1.76	%		0.36	%
Weighted average rate, June 30		0.05	%		0.25	%		2.20	%		0.61	%

~~Securities sold under~~In fiscal year 2022, the Corporation obtained an unsecured $5,000 line of credit to provide capital support to the Bank and for other general corporate purposes. The outstanding balance on the line of credit was $1,200 and $1,270 as of June 30, 2023 and 2022, respectively. Repurchase agreements ~~to repurchase~~ are ~~utilized~~financing arrangements that mature daily and are used to facilitate the needs of our customers. Physical control of all the securities is maintained for all securities pledged to secure repurchase agreements. ~~Securities available-for-sale~~Available-for-sale securities pledged for repurchase agreements as of June 30, ~~2021~~ 2023 and ~~2020~~2022 are presented in the following table:

	Overnight and Continuous				Overnight and Continuous
	2021		2020		2023		2022
U.S. government-sponsored entities and agencies pledged	$	767	$	1,031	$	3,730	$	3,331
Residential mortgage-backed securities pledged		6,493		2,720		19,648		11,954
Commercial mortgage-backed securities		6,042		3,288		3,641		6,682
Total pledged	$	13,302	$	7,039	$	27,019	$	21,967
Repurchase agreements	$	12,203	$	6,943	$	23,783	$	20,025

Total interest expense on short-term borrowings was $9$397 and ~~$43~~$47 for the years ended June 30, ~~2021~~ 2023 and ~~2020,~~2022, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9—FEDERAL HOME LOAN BANK ADVANCES

A summary of Federal Home Loan Bank (FHLB) advances were as follows:

						June 30, 2021					June 30, 2020											June 30, 2023					June 30, 2022
	Stated Interest Rate Range							Weighted Average					Weighted Average			Stated Interest Rate Range								Weighted Average					Weighted Average
Advance Type	From			To		Amount		Rate			Amount		Rate			*From*			To			*Amount*		*Rate*			*Amount*		*Rate*
Fixed rate, amortizing		1.37	%	1.37	%	$	350		1.37	%	$	461		1.37	%		1.37	%		1.37	%	$	176		1.37	%	$	256		1.37	%
Fixed rate		0.90		1.97			17,700		1.40			24,200		1.59			0.90			1.18			8,000		1.04			8,000		1.04
Variable rate		—		—			—		—			6,500		0.26			5.19			5.19			600		5.19			—		—

Each fixed rate advance has a prepayment penalty equal to the present value of 100% of the lost cash flow based upon the difference between the contract rate on the advance and the current rate on a comparable new advance. The following table is a summary of the scheduled principal payments for all ~~advances:~~advances as of June 30, 2023:

Twelve Months Ending June 30	Principal Payments		Principal Payments
2022	$	1,799
2023		79
2024		6,567	$	671
2025		5,556		4,056
2026				46
2027				3
2028				—
Thereafter		4,049		4,000
Total	$	18,050	$	8,776

Pursuant to collateral agreements with the FHLB, advances are secured by all the stock invested in the FHLB and certain qualifying first mortgage and multi-family loans. The advances were collateralized by ~~$127,703~~$169,993 and ~~$92,056~~$152,868 of first mortgage and multi-family loans under a blanket lien arrangement at June 30, ~~2021~~ 2023 and ~~2020,~~2022, respectively. Based on this collateral, ~~and the Corporation’s holdings of FHLB stock,~~ the Bank was eligible to borrow up to a total of ~~$65,491~~$109,442 in additional advances at June 30, ~~2021.~~2023.

NOTE 10—EMPLOYEE BENEFIT PLANS

The Bank maintains a ~~401(k)~~401(k) savings and retirement plan that permits eligible employees to make before- or after-tax contributions to the plan, subject to the dollar limits from Internal Revenue Service regulations. The Bank matches 100% of the employee’s voluntary contributions to the plan based on the amount of each participant’s contributions up to a maximum of 4% of eligible compensation. All regular full-time and part-time employees who complete six months of service and are at least 21 years of age are eligible to participate. Amounts charged to operations were ~~$321~~$390 and ~~$282~~$364 for the years ended June 30, ~~2021~~ 2023 and ~~2020,~~2022, respectively.

The Bank maintains a nonqualified Salary Continuation Plan (SCP) to reward and encourage certain Bank executives to remain employees of the Bank. The SCP is considered an unfunded plan for tax and Employee Retirement Income Security Act (ERISA) purposes and all obligations arising under the SCP are payable from the general assets of the Corporation. The estimated present value of future benefits to be paid to certain current and former executives totaled ~~$3,140~~$3,687 as of June 30, ~~2021~~2023 and ~~$2,695~~$3,564 as of June 30, ~~2020~~2022 and is included in other liabilities. For purposes of calculating the present value of future benefits, a discount rate of 5.75% was used to project the liability through June 30, 2023 and 3.0% was ~~in effect~~used at June 30, ~~2021 and 4.0% was in effect at June 30, 2020.~~ 2022. For the years ended June 30, ~~2021~~ 2023 and ~~2020, $530~~2022, $256 and ~~$305,~~$534, respectively, have been charged to expense in connection with the SCP. Distributions to participants were ~~$85~~$133 for ~~each~~the fiscal year ended June 30, ~~2021~~ 2023 and ~~2020.~~$110 for the fiscal year ended June 30, 2022.

The Amended and Restated 2010 Omnibus Incentive Plan ~~(2010~~(2010 Plan) is a nonqualified share-based compensation plan. The 2010 Plan was established to promote alignment between key employees’ performance and the Corporation’s shareholder interests by motivating performance through the award of stock-based compensation. The purpose of the 2010 Plan ~~is intended~~was to attract, retain, and motivate talented employees and compensate outside directors for their service to the Corporation. The 2010 Plan ~~has been~~was approved by the Corporation’s shareholders. The Compensation Committee of the Corporation’s Board of Directors has sole authority to select the employees, establish the awards to be issued, and approve the terms and conditions of each award contract.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Under the 2010 Plan, the Corporation ~~may~~could grant, among other things, nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, or any combination thereof to any employee and outside director. Each award iswas evidenced by an award agreement that specifies the number of shares awarded, the vesting period, the performance requirements, and such other provisions as the Compensation Committee determines. Upon a change-in-control of the Corporation, as defined in the 2010 Plan, all outstanding awards immediately vest.

The Corporation has granted restricted stock awards and restricted stock units to certain employees and directors. Restricted stock units and awards are issued at no cost to the recipient and can be settled ~~only~~ in shares or cash at the end of the vesting ~~period. Awards~~period depending on the type of award. Restricted stock awards are made at the end of the measurement period ofonce certain specified ~~performance targets once those~~ performance targets as established by the Compensation Committee are ~~achieved. Some~~achieved with some awards ~~primarily the awards made to directors, vest~~fully vesting on the date of ~~grant. For other awards, primarily the awards made to executive management,~~grant and others vesting 25% ~~vest~~ on the grant date, ~~which is the end of the performance period,~~ with the remaining vesting 25% per year over a ~~three-year~~three-year period. Restricted stock awards provide the holder with ~~full voting rights and~~ dividends during the vesting period. Cash dividends are reinvested into shares of stock and are subject to the same restrictions and vesting as the initial award. ~~All dividends~~Restricted stock units begin to vest at the end of the measurement period once certain specified performance targets as established by the Compensation Committee are ~~forfeitable in~~achieved. Some units, primarily the ~~event~~awards made to directors and senior management, are 100% vested at the ~~shares do not vest.~~end of the measurement period. For other unit awards, primarily the awards made to executive management, 25% vest at the end of the performance period, with the remaining vesting 25% per year over a three-year period. The fair value of the restricted stock units and awards, which is used to measure compensation expense, is the closing market price of the Corporation’s common stock on the date of the grant and compensation expense is recognized over the vesting ~~period of~~period. All dividends are forfeitable in the ~~awards.~~event the shares do not vest.

The following table summarizes the status of the restricted stock ~~awards:~~awards and restricted stock units:

	Restricted Stock Awards			Weighted- Average Grant Date Fair Value Per Share		Restricted Stock Awards			Weighted- Average Grant Date Fair Value Per Share		Restricted Stock Units			Weighted- Average Grant Date Fair Value Per Share
Outstanding at June 30, 2020		8,686		$	19.31
Outstanding at June 30, 2022							17,069		$	19.95		—		$	—
Granted		12,522			15.70		26,743			18.74		17,578			18.74
Vested		(9,747	)		17.22		(20,768	)		18.93		(8,500	)		18.74
Non-vested at June 30, 2021		11,461		$	17.14
Non-vested at June 30, 2023							23,044		$	19.46		9,078		$	18.74

There was ~~$168~~$579 in expense recognized in ~~the 2021~~ fiscal year 2023and ~~$159~~$361 in expense recognized in ~~the 2020~~ fiscal year2022 in connection with the restricted stock units and awards. As of June 30, ~~2021,~~ 2023, there was ~~$125~~$473 of total unrecognized compensation expense related to non-vested shares and ~~the~~a weighted-average expense ~~is expected to be recognized over the next three~~recognition period of 1.7 years.

NOTE 11—INCOME TAXES

The provision for income taxes consisted of the following for the years ended June 30, calculated utilizing a statutory federal income tax rate of 21.0%:

	2021			2020			2023			2022
Current income taxes	$	2,170		$	1,273		$	2,344		$	2,193
Deferred income tax benefit		(320	)		(361	)
Deferred income tax expense (benefit)								(96	)		146
Total income tax expense	$	1,850		$	912		$	2,248		$	2,339

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The net deferred income tax asset (liability) consisted of the following components at June 30:

	2021			2020			2023			2022
Deferred tax assets:
Allowance for loan losses	$	1,317		$	1,119		$	1,622		$	1,504
Deferred compensation		896			722			986			999
Deferred income		32			46			31			18
Non-accrual loan interest income		54			42			20			29
Net unrealized securities loss								7,964			5,876
Other		1			9			3			6
Gross deferred tax asset		2,300			1,938			10,626			8,432

Deferred tax liabilities:
Depreciation		(718	)		(742	)		(783	)		(821	)
Loan fees		(498	)		(402	)		(640	)		(582	)
FHLB stock dividends		(102	)		(102	)		(102	)		(102	)
Prepaid expenses		(56	)		(72	)		(150	)		(150	)
Intangible assets		(88	)		(102	)		(199	)		(209	)
Net unrealized securities gain		(944	)		(1,132	)
Gross deferred tax liabilities		(2,406	)		(2,552	)		(1,874	)		(1,864	)
Net deferred liability	$	(106	)	$	(614	)
Net deferred asset							$	8,752		$	6,568

The difference between the provision for income taxes and amounts computed by applying the statutory income tax rate of 21.0% to income before taxes consisted of the following for the years ended June 30:

	2021			2020			2023			2022
Income taxes computed at the statutory rate on pretax income	$	2,276		$	1,352		$	2,714		$	2,842
Tax exempt income		(360	)		(317	)		(400	)		(431	)
Cash surrender value income and death benefit		(55	)		(124	)
Cash surrender value income								(55	)		(54	)
Tax credit		(22	)		(25	)		(17	)		(22	)
Other non-deductible expenses		11			26			6			4
Total income tax expense	$	1,850		$	912		$	2,248		$	2,339

The effective tax rate was ~~17.1%~~17.4% for the year ended June 30, ~~2021~~ 2023 compared to ~~14.2%~~17.3% for the year ended June 30, ~~2020.~~ 2022. At June 30, ~~2021~~ 2023 and June 30, ~~2020,~~ 2022, the Corporation had no unrecognized tax benefits recorded. The Corporation does not expect the total amount of unrecognized tax benefits to significantly increase within the next twelve months. There were no interest or penalties recorded for the years ended June 30, ~~2021~~ 2023 and ~~2020~~2022 and there were no amounts accrued for interest and penalties at June 30, ~~2021~~ 2023 and ~~2020.~~2022.

The Corporation and the Bank are subject to U.S. federal income tax as an income-based tax and a capital-based ~~franchise~~financial institutions tax in the State of Ohio. The Corporation and the Bank are no longer subject to examination by taxing authorities for years before ~~2017.~~2019.

NOTE 12—RELATED PARTY TRANSACTIONS

In the ordinary course of business, the Bank has granted loans to certain executive officers, directors, and their affiliates. A summary of activity during the year ended June 30, ~~2021~~2023 of related party loans were as follows:

Principal balance, July 1	$	5,354		$	2,546
New loans, net of refinancing		61			210
Repayments		(635	)		(99	)
Changes due to changes in related parties		(2,444	)
Principal balance, June 30	$	2,336		$	2,657

Deposits from executive officers, directors and their affiliates totaled ~~$5,500~~$6,100 at June 30, ~~2021~~2023 and ~~$4,332~~$6,781 at June 30, ~~2020.~~2022.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13—REGULATORY MATTERS

Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and prompt corrective-action regulations involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weightings, and other factors and the regulators can lower classifications in certain cases. Failure to meet various capital requirements can initiate regulatory action that could have a direct material effect on the financial statements.

The prompt corrective action regulations provide five classifications, including well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and plans for capital restoration are required.

As of fiscal year-end ~~2021~~2023 and ~~2020,~~2022, the Corporation met the definition of a Small Bank Holding Company and, therefore, was exempt from maintaining consolidated regulatory capital ratios. Instead, regulatory capital ratios only apply at the subsidiary bank level. The Basel III Capital Rules ~~became effective for the Bank on January 1, 2015 and certain provisions were subject to~~include a ~~phase-in period. The implementation of the~~ capital conservation buffer ~~was phased in from 0.625% on January 1, 2016 to~~of 2.5% ~~on January 1, 2019. The capital conservation buffer~~that is designed to absorb losses during periods of economic stress. Banking institutions with a ratio of Common Equity Tier 1 capital to risk-weighted assets above the minimum but below the conservation buffer will face constraints on dividends, equity repurchases, and compensation based on the amount of the shortfall. The net unrealized gain or loss on available for sale securities is not included in computing regulatory capital. Management believes as of June 30, ~~2021,~~ 2023, the Bank met all capital adequacy requirements to which it was subject.

The following table presents actual and required capital ratios as of June 30,2023 and June 30, ~~2021 and June 30, 2020~~ 2022 for the Bank:

	Actual					Minimum Capital Required – Basel III (1)					Minimum Required To Be Considered Well Capitalized					Actual					Minimum Capital Required – Basel III (1)					Minimum Required To Be Considered Well Capitalized
	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
June 30, 2021
June 30, 2023
Common equity Tier 1 to risk-weighted assets	$	64.7		11.87	%	$	24.5		4.50	%	$	35.4		6.50	%	$	83.5		11.05	%	$	34.0		4.50	%	$	49.1		6.50	%
Tier 1 capital to risk weighted assets		64.7		11.87			32.7		6.00			43.6		8.00			83.5		11.05			45.4		6.00			60.5		8.00
Total capital to risk weighted assets		71.2		13.06			43.6		8.00			54.5		10.00			91.2		12.07			60.5		8.00			75.6		10.00
Tier 1 capital to average assets		64.7		7.83			33.1		4.00			41.3		5.00			83.5		7.72			43.3		4.00			54.1		5.00

	Actual					Minimum Capital Required - Basel III (1)					Minimum Required To Be Considered Well Capitalized					Actual					Minimum Capital Required - Basel III (1)					Minimum Required To Be Considered Well Capitalized
	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
June 30, 2020
June 30, 2022
Common equity Tier 1 to risk-weighted assets	$	57.6		11.55	%	$	22.4		4.50	%	$	32.4		6.50	%	$	74.1		11.39	%	$	29.3		4.50	%	$	42.3		6.50	%
Tier 1 capital to risk weighted assets		57.6		11.55			29.9		6.00			39.9		8.00			74.1		11.39			39.0		6.00			52.1		8.00
Total capital to risk weighted assets		63.2		12.69			39.9		8.00			49.8		10.00			81.3		12.49			52.1		8.00			65.1		10.00
Tier 1 capital to average assets		57.6		8.04			28.7		4.00			35.8		5.00			74.1		7.39			40.1		4.00			50.1		5.00

~~(1)~~(1)

These amounts exclude the capital conservation buffer.

As of the latest regulatory examination, the Bank was categorized as well capitalized. There are no conditions or events since that examination that management believes may have changed the Bank’s category.

The Corporation’s principal source of funds for dividend payment is dividends received from the Bank. Banking regulations limit the amount of dividends that may be paid without prior approval of regulatory agencies. Under these regulations, the amount of dividends that may be paid in any calendar year is limited to the current year’s net profits, combined with the retained net profits of the preceding two years, subject to the capital requirements described above. As of June 30, ~~2021~~2023 the Bank could, without prior approval, declare a dividend of approximately ~~$8,741.~~$21,811.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14—COMMITMENTS WITH OFF-BALANCE SHEET RISK

The Bank is a party to commitments to extend credit in the normal course of business to meet the financing needs of its customers. Commitments are agreements to lend to customers providing that there are no violations of any condition established in the contract. Commitments to extend credit have a fixed expiration date or other termination clause. These instruments involve elements of credit and interest rate risk more than the amount recognized in the statements of financial position. The Bank uses the same credit policies in making commitments to extend credit as it does for on-balance sheet instruments.

The Bank evaluates each customer’s credit on a case-by-case basis. The amount of collateral obtained is based on management’s credit evaluation of the customer. The amount of commitments to extend credit and the exposure to credit loss for non-performance by the customer (before considering collateral) was ~~$118,284~~$142,767 and ~~$98,923~~$148,390 as of June 30, ~~2021~~ 2023 and ~~2020,~~2022, respectively. OfAs of June 30,2023, $126,698 of the ~~June 30, 2021~~ commitments ~~$93,030~~ carried variable rates and ~~$25,254~~$16,069 carried fixed rates ofwith interest rates ranging from ~~2.99%~~3.05% to ~~6.75%~~11.00% with maturity dates from July ~~2021~~ 2023 to ~~July 2052. Of~~August 2060. As of June 30,2022, $119,637 of the ~~June 30, 2020~~ commitments ~~$75,614~~ carried variable rates and ~~$23,309~~$28,753 carried fixed rates ofwith interest rates ranging from ~~3.25%~~2.62% to ~~6.75%~~8.25% with maturity dates from ~~September 2020~~ July 2022 to ~~August 2051.~~ December 2053. Financial standby letters of credit were ~~$1,015~~$1,178 and ~~$2,103~~$1,110 as of June 30, ~~2021~~ 2023 and ~~2020,~~2022, respectively. In addition, commitments to extend credit of ~~$10,634~~$11,834 and ~~$10,323~~$11,621 as of June 30, ~~2021~~ 2023 and ~~2020,~~2022, respectively, were available to checking account customers related to the overdraft protection program. Since some loan commitments expire without being used, the amount does not necessarily represent future cash commitments.

NOTE 15—FAIR VALUE

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

Financial assets and financial liabilities measured at fair value on a recurring basis include the following:

Securities available-for-sale and equity securities: When available, the fair values of available-for-sale and equity securities are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs). For securities where quoted market prices are not available, fair values are calculated based on market prices of similar securities (Level 2 inputs). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other unobservable inputs (Level 3 inputs).

Assets and liabilities measured at fair value on a recurring basis are summarized below, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

									Fair Value Measurements at June 30, 2023 Using
	Fair Value Measurements at June 30, 2021 Using								Balance at June 30, 2023		Level 1		Level 2		Level 3
Assets:	Balance at June 30, 2021		Level 1		Level 2		Level 3
Obligations of U.S. treasury									$	8,408			$	8,408
Obligations of U.S. government-sponsored entities and agencies	$	15,033		—	$	15,033		—		25,692		—		25,692		—
Obligations of states and political subdivisions		76,499		—		76,499		—		83,972		—		83,972		—
U.S. government-sponsored mortgage-backed securities - residential		90,517		—		90,517		—		89,635		—		89,635		—
U.S. government-sponsored mortgage-backed securities - commercial		8,845		—		8,845		—		6,795		—		6,795		—
U.S. government-sponsored collateralized mortgage obligations		16,374		—		16,374		—		50,070		—		50,070		—
Other debt securities		492		—		492		—		15,033		—		15,033		—
Equity securities		424		—		424		—		386		—		386		—

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fair Value Measurements at
June 30, 2020 Using

Assets:

Balance at
June 30, 2020

Level 1

Level 2

Level 3

Obligations of U.S. Treasury
$ 1,256 $ — $ 1,256 $ —
Obligations of U.S. government-sponsored entities and agencies
10,532 — 10,532 —
Obligations of states and political subdivisions
63,492 — 63,492 —
U.S. government-sponsored mortgage-backed securities - residential
50,156 — 50,156 —
U.S. government-sponsored mortgage-backed securities - commercial
8,497 — 8,497 —
U.S. government-sponsored collateralized mortgage obligations
9,985 — 9,985 —

	Balance at June 30, 2022		Level 1		Level 2		Level 3
Assets:
Obligations of U.S. treasury	$	8,447		—	$	8,447		—
Obligations of U.S. government-sponsored entities and agencies		26,265				26,265
Obligations of states and political subdivisions		97,357		—		97,357		—
U.S. government-sponsored mortgage-backed securities - residential		102,183		—		102,183		—
U.S. government-sponsored mortgage-backed securities – commercial		7,301		—		7,301		—
U.S. government-sponsored collateralized mortgage obligations		38,179		—		38,179		—
Other debt securities		16,615		—		16,615		—
Equity securities		400		—		400		—

There were no transfers between Level 1 and Level 2 during the ~~2021~~2023 or the ~~2020~~2022 fiscal year.

Certain assets and liabilities are measured at fair value on a non-recurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances. Assets and liabilities measured at fair value on a non-recurring basis include the following:

Impaired Loans: At the time a loan is considered impaired, it is valued at the lower of cost or fair value. Impaired loans carried at fair value generally receive specific allocations of the allowance for loan losses or are charged down to their fair value. For collateral dependent loans, fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

Other Real Estate and Repossessed Assets Owned: Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Real estate owned properties and other repossessed assets, which are primarily vehicles, are evaluated on a quarterly basis for additional impairment and adjusted accordingly. There was no other real estate owned or other repossessed assets being carried at fair value as of June 30, ~~2021~~ 2023 or June 30, ~~2020.~~2022. As of June 30, 2023, the balance of other real estate owned was $124.

There were no assets measured at fair value on a non-recurring basis at June 30, ~~2021~~ 2023 or ~~2020~~2022 and there was no impact to the provision for loan losses for the twelve months ended June 30, ~~2021~~ 2023 or ~~2020.~~2022.

The following table shows the estimated fair values of financial instruments that are reported at amortized cost in the Corporation’s consolidated balance sheets, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

	2021				2020				2023				2022
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial Assets:
Level 1 inputs:
Cash and cash equivalents	$	18,529	$	18,529	$	9,659	$	9,659	$	11,755	$	11,755	$	20,952	$	20,952
Level 2 inputs:
Certificates of deposit in other financial institutions		5,825		5,955		11,635		11,889		2,501		2,450		3,781		3,847
Loans held for sale		1,457		1,488		3,507		3,566		764		774		1,165		1,188
Accrued interest receivable		2,077		2,077		2,646		2,646		3,024		3,024		2,703		2,703
Level 3 inputs:
Securities held-to-maturity		7,996		8,352		3,541		3,868		6,970		6,294		7,874		7,831
Loans, net		559,956		560,208		537,183		548,247		702,638		656,737		604,683		577,708
Financial Liabilities:
Level 2 inputs:
Demand and savings deposits		639,310		639,310		517,973		517,973		738,190		738,190		784,181		784,181
Time deposits		87,539		88,147		115,382		116,238		214,343		211,856		102,381		102,622
Short-term borrowings		12,203		12,203		6,943		6,943		26,367		26,367		21,295		21,295
Federal Home Loan Bank advances		18,050		18,247		31,161		31,571		8,776		7,678		8,256		7,215
Accrued interest payable		51		51		107		107		344		344		49		49

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The assumptions used to estimate fair value are described as follows:

Cash and cash equivalents: The carrying value of cash and deposits in other financial institutions were considered to approximate fair value resulting in a Level 1 classification.

Certificates of deposits in other financial institutions: Fair value of certificates of deposits in other financial institutions was estimated using current rates for deposits of similar remaining maturities resulting in a Level 2 classification.

Accrued interest receivable and payable, demand and savings deposits and short-term borrowings: The carrying value of accrued interest receivable and payable, demand and savings deposits and short-term borrowings were considered to approximate fair value due to their short-term duration resulting in a Level 2 classification.

Loans held for sale: The fair value of loans held for sale is estimated based upon binding contracts and quotes from third party investors resulting in a Level 2 classification.

Loans: Fair value for loans was estimated for portfolios of loans with similar financial characteristics. The estimated fair value approximates carrying value for variable-rate loans that reprice frequently and with no significant change in credit risk. The fair value of fixed-rate loans and variable-rate loans which reprice on an infrequent basis is estimated by discounting future cash flows using the current interest rates at which similar loans with similar terms would be made to borrowers of similar credit quality resulting in a Level 3 classification. An overall valuation adjustment is made for specific credit risks as well as general portfolio credit risk. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price.

Securities held-to-maturity: The held-to-maturity securities are general obligation and revenue bonds issued by local municipalities. The fair value of these securities are calculated using a spread to the applicable municipal fair market curve resulting in a Level 3 classification.

Time deposits: Fair value of fixed-maturity certificates of deposit was estimated using the rates offered at June 30, 2023 and 2022 for deposits of similar remaining maturities, resulting in Level 2 classification. Estimated fair value does not include the benefit that results from low-cost funding provided by the deposit liabilities compared to the cost of borrowing funds in the market.

Federal Home Loan Bank advances: Fair value of Federal Home Loan Bank advances was estimated using current rates at June 30, 2023 and 2022 for similar financing resulting in a Level 2 classification.

Federal bank and other restricted stocks, at cost: Federal bank and other restricted stocks include stock acquired for regulatory purposes, such as Federal Home Loan Bank stock and Federal Reserve Bank stock that are accounted for at cost due to restrictions placed on their transferability, and, therefore, are not subject to the fair value disclosure requirements.

Off-balance sheet commitments: The Corporation’s lending commitments have variable interest rates and “escape” clauses if the customer’s credit quality deteriorates. Therefore, the fair values of these items are not significant and are not included in the above table.

NOTE 16—AFFORDABLE TAX CREDIT PARTNERSHIP

In April 2023, the Corporation invested in a limited partnership that will in turn invest in qualified affordable housing projects that will generate tax benefits for the limited partner investors, including federal low-income housing tax credits pursuant to Section 42 of the Internal Revenue Code. This partnership investment is an unconsolidated Variable Interest Entity (VIE) for which the Corporation holds an interest in but is not the primary beneficiary of the VIE. The purpose of this investment is to achieve a satisfactory return on capital, to facilitate the sale of additional affordable housing product offerings, and to assist in achieving goals associated with the Community Reinvestment Act. The primary activities of the limited partnership include the identification, development, and operation of multi-family housing that is leased to qualifying residential tenants. Generally, these types of investments are funded through a combination of debt and equity.

The Corporation uses the proportional amortization method to account for its investment. The investment is included in other assets and the unfunded commitment is included in other liabilities. As of June 30, 2023, the balance of the affordable housing tax credit investment was $10,250 and the balance of the associated unfunded commitment was $9,668. As a limited partner, there is no recourse to the Corporation by the creditors of the limited partnership, however, the tax credits are generally subject to recapture should the partnership fail to comply with the applicable government regulations.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 17—PARENT COMPANY FINANCIAL STATEMENTS

The condensed financial information of Consumers Bancorp. Inc. (parent company only) follows:

	June 30, 2021		June 30, 2020
Condensed Balance Sheets					June 30, 2023		June 30, 2022
Assets:
Cash	$	226	$	258	$	26	$	76
Equity securities, at fair value		424		—		386		400
Other assets		38		274		22		17
Investment in subsidiary		69,267		62,853		56,328		54,823
Total assets	$	69,955	$	63,385	$	56,762	$	55,316

Liabilities and Shareholders’ Equity:
Short-term borrowings					$	1,200	$	1,270
Other liabilities	$	55	$	145		78		76
Shareholders’ equity		69,900		63,240		55,484		53,970
Total liabilities & shareholders’ equity	$	69,955	$	63,385	$	56,762	$	55,316

	Year Ended June 30, 2021			Year Ended June 30, 2020
Condensed Statements of Income and Comprehensive Income							Year Ended June 30, 2023			Year Ended June 30, 2022
Cash dividends from Bank subsidiary	$	2,050		$	6,120		$	1,575		$	195
Dividend income								33			33
Net change in market value of equity securities								(14	)		(24	)
Other income		46			25			14			2
Interest expense								(75	)		(31	)
Other expense		281			1,050			(295	)		(258	)
Income before income taxes and equity in undistributed net income of subsidiary		1,815			5,095
Income (loss) before income taxes and equity in undistributed net income of subsidiary								1,238			(83	)
Income tax benefit		(49	)		(189	)		(76	)		(63	)
Income before equity in undistributed net income of Bank subsidiary		1,864			5,284
Income (loss) before equity in undistributed net income of Bank subsidiary								1,314			(20	)
Equity in undistributed net income of subsidiary		7,124			243			9,360			11,212
Net income	$	8,988		$	5,527		$	10,674		$	11,192
Comprehensive income	$	8,278		$	8,221
Comprehensive income (loss)							$	2,819		$	(14,464	)

Condensed Statements of Cash Flows	Year Ended June 30, 2021			Year Ended June 30, 2020			Year Ended June 30, 2023			Year Ended June 30, 2022
Cash flows from operating activities:
Net income	$	8,988		$	5,527		$	10,674		$	11,192
Equity in undistributed net income of Bank subsidiary		(7,124	)		(243	)		(9,360	)		(11,212	)
Securities amortization and accretion, net		—			(8	)
Net change in market value of equity securities								14			24
Change in other assets and liabilities		122			(158	)		(3	)		24
Net cash flows from operating activities		1,986			5,118			1,325			28
Cash flows from investing activities:
Purchase of equity securities		(400	)		—
Proceeds from sale of available-for-sale securities		—			1,654
Acquisition		—			(5,128	)
Disposal of premises and equipment								—			18
Net cash flows from investing activities		(400	)		(3,474	)		—			18
Cash flows from financing activities:
Dividend paid		(1,785	)		(1,554	)		(2,095	)		(1,949	)
Restricted stock units								159			—
Net change in short-term borrowings								(70	)		1,270
Proceeds from dividend reinvestment and stock purchase plan								238			174
Issuance of treasury stock for stock awards		167			130			393			309
Net cash flows from financing activities		(1,618	)		(1,424	)		(1,375	)		(196	)
Change in cash and cash equivalents		(32	)		220			(50	)		(150	)
Beginning cash and cash equivalents		258			38			76			226
Ending cash and cash equivalents	$	226		$	258		$	26		$	76

5354

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1718—EARNINGS PER SHARE

Basic earnings per share is the amount of earnings available to each share of common stock outstanding during the reporting period and is equal to net income divided by the weighted average number of shares outstanding during the period. Diluted earnings per share is the amount of earnings available to each share of common stock outstanding during the reporting period adjusted to include the effect of potentially dilutive common shares that may be issued upon the vesting of restricted stock ~~awards.~~awards and restricted stock units. There were ~~1,711~~14,800 shares of restricted stock and 9,078 restricted stock units that were anti-dilutive for the year ending June 30, 2023. There were 7,911 shares of restricted stock that were anti-dilutive for the year ending June 30, ~~2021. There were 1,655 shares of restricted stock that were anti-dilutive for the year ending June 30, 2020.~~ 2022. The following table details the calculation of basic and diluted earnings per share:

	For the year Ended June 30,				For the year Ended June 30,
	2021		2020		2023		2022
Basic:
Net income available to common shareholders	$	8,988	$	5,527	$	10,674	$	11,192
Weighted average common shares outstanding		3,019,118		2,874,234		3,090,187		3,039,607
Basic income per share	$	2.98	$	1.92	$	3.45	$	3.68

Diluted:
Net income available to common shareholders	$	8,988	$	5,527	$	10,674	$	11,192
Weighted average common shares outstanding		3,019,118		2,874,234		3,090,187		3,039,607
Dilutive effect of restricted stock		—		—		—		246
Total common shares and dilutive potential common shares		3,019,118		2,874,234		3,090,187		3,039,853
Dilutive income per share	$	2.98	$	1.92	$	3.45	$	3.68

NOTE 1819–ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The components of other comprehensive income related to unrealized gains (losses) on available-for-sale securities for the periods ended June 30, ~~2021~~ 2023 and June 30, ~~2020,~~ 2022, were as follows:

	Pretax			Tax Effect			After-tax			Affected Line Item in Consolidated Statements of Income	Pretax			Tax Effect			After-tax			Affected Line Item in Consolidated Statements of Income

Balance as of June 30, 2019	$	1,982		$	(416	)	$	1,566
Unrealized holding gain on available-for-sale securities arising during the period		3,766			(791	)		2,975
Amounts reclassified from accumulated other comprehensive income		(355	)		74			(281	)	(a)(b)
Net current period other comprehensive income		3,411			(717	)		2,694
Balance as of June 30, 2020	$	5,393		$	(1,133	)	$	4,260
Balance as of June 30, 2021											$	4,493		$	(943	)	$	3,550
Unrealized holding loss on available-for-sale securities arising during the period	$	(886	)	$	187		$	(699	)			(32,469	)		6,818			(25,651	)
Amounts reclassified from accumulated other comprehensive income		(14	)		3			(11	)	(a)(b)		(6	)		1			(5	)	(a)(b)
Net current period other comprehensive loss		(900	)		190			(710	)			(32,475	)		6,819			(25,656	)
Balance as of June 30, 2021	$	4,493		$	(943	)	$	3,550
Balance as of June 30, 2022											$	(27,982	)	$	5,876		$	(22,106	)
Unrealized holding loss on available-for-sale securities arising during the period											$	(9,929	)	$	2,085		$	(7,844	)
Amounts reclassified from accumulated other comprehensive income												(14	)		3			(11	)	(a)(b)
Net current period other comprehensive loss												(9,943	)		2,088			(7,855	)
Balance as of June 30, 2023											$	(37,925	)	$	7,964		$	(29,961	)

(a) Securities gain, net

(b) Income tax expense

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1920 – REVENUE RECOGNITION

~~On July 1, 2018, the~~The Corporation ~~adopted ASU 2014-09 "Revenue~~accounts for revenues from contracts with customers under ASC 606, Revenue from Contracts with ~~Customers" (Topic 606) and all subsequent ASUs that modified Topic 606.~~Customers. Interest income, net securities gains (losses), gains from the sale of mortgage loans and bank-owned life insurance are not included within the scope of ~~Topic~~ ASC 606. For the revenue streams in the scope of ~~Topic~~ ASC 606, service charges on deposits and electronic banking fees, there are no significant judgments related to the amount and timing of revenue recognition. All the Corporation's revenue from contracts with customers is recognized within noninterest income.

Service charges on deposit accounts: The Corporation earns fees from its deposit customers for transaction-based, account maintenance and overdraft services. Transaction-based fees, which include services such as stop payment charges, statement rendering and other fees, are recognized at the time the transaction is executed as that is the point in time the Corporation fulfills the customer's request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which the Corporation satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the customer's account balance.

Interchange income: The Corporation earns interchange income from cardholder transactions conducted through the various payment networks. Interchange income from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provided to the cardholder. The gross amount of these fees isare processed through noninterest income.

Other income: Other noninterest income consists of other recurring revenue streams such as check order fees, wire transfer fees, and other miscellaneous revenue streams. Check order income mainly represents fees charged to customers for checks. Wire transfer fees represent revenue from processing wire transfers.

The following table presents the Corporation's sources of noninterest income for the ~~year~~years ended June 30, ~~2021~~ 2023 and ~~2020.~~2022.

	For the year Ended June 30,				For the year Ended June 30,
	2021		2020		2023		2022
Noninterest income
In scope of Topic 606:
Service charges on deposit accounts	$	1,220	$	1,350	$	1,598	$	1,460
Debit card interchange income		1,891		1,575		2,181		2,069
Other income		304		291		360		335

Noninterest income (in scope of Topic 606)		3,415		3,216		4,139		3,864
Noninterest income (out-of-scope of Topic 606)		1,051		1,487		608		871

Total noninterest income	$	4,466	$	4,703	$	4,747	$	4,735

~~Note 20~~ – ~~COVID-19~~

In December 2019, a novel strain of coronavirus surfaced in Wuhan, China, and has spread around the world, resulting in business and social disruption. The coronavirus was declared a Pandemic by the World Health Organization on March 11, 2020. The operations and business results of the Corporation could be materially adversely affected. The extent to which the coronavirus may impact business activity or investment results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the coronavirus and the actions required to contain the coronavirus or treat its impact, among others. As a result of the economic shutdown engineered to slow down the spread of COVID-19, the ability of our customers to make payments on loans could be adversely impacted, resulting in elevated loan losses and an increase in the Corporation’s allowance for loan losses.

5556

Item 9—Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

None.

Item 9A—Controls and Procedures

Evaluation of Disclosure Controls and Procedures

With the participation of the Corporation’s management, including the Chief Executive Officer and Chief Financial Officer, an evaluation of the effectiveness of the Corporation’s disclosure controls and procedures (as defined under Rule 13a-15(e) of the Securities Exchange Act of 1934) was performed, as of the end of the period covered by this Annual Report on Form 10-K. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Corporation’s disclosure controls and procedures were effective.

Management’s Report on Internal Control Over Financial Reporting

The management of Consumers Bancorp, Inc. is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by the board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

Management assessed the effectiveness of our internal control over financial reporting as of June 30, ~~2021~~2023 based on the criteria for effective internal control over financial reporting established in “Internal Control-Integrated Framework,” issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission in 2013. Based on that assessment, we have concluded that, as of June 30, ~~2021,~~2023, our internal control over financial reporting is effective based on those criteria.

This annual report does not include an attestation report of the Corporation’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Corporation’s registered public accounting firm pursuant to rules of the SEC that permit the Corporation to provide only management’s report in this annual report.

Changes In Internal Control Over Financial Reporting

There were no changes in the Corporation’s internal controls over financial reporting that occurred during the fourth quarter of fiscal year ~~2021~~2023 that have materially affected, or are reasonably likely to materially affect, the Corporation’s internal controls over financial reporting.

Item 9B—Other Information

None.

Item9C—Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not Applicable.

PART III

Item 10— Directors, Executive Officers and Corporate Governance

The information required by this item is set forth in the Corporation’s Proxy Statement dated September ~~16, 2021,~~7, 2023, under the captions “Election of Directors,” “Directors and Executive Officers,” “The Board of Directors and its Committees,” “Delinquent Section 16(a) Reports,” and “Certain Transactions and Relationships and Legal Proceedings,” and is incorporated herein by reference.

The Corporation’s Code of Ethics Policy, which is applicable to all directors, officers and employees of the Corporation, and its Code of Ethics for Principal Financial Officers, which is applicable to the principal executive officer and the principal financial officer, are each available on the Investor Relations section under Governance Documents of the Corporation’s website (www.consumers.bank). Copies of either of the Code of Ethics Policies are also available in print to shareholders upon request, addressed to the Corporate Secretary at Consumers Bancorp, Inc., 614 East Lincoln Way, Minerva, Ohio 44657. The Corporation intends to post amendments to or waivers from either of its Code of Ethics Policies on its website.

Item 11—Executive Compensation

The information required by this item is set forth in the Corporation’s Proxy Statement dated September ~~16, 2021~~7, 2023 under the captions “Director Compensation,” “Executive Compensation,” “Defined Contribution Plan,” “Outstanding Equity Awards at Fiscal Year-End,” and “Salary Continuation Program,” and is incorporated herein by reference.

Item 12—Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Equity Compensation Plan Information

The following table sets forth information about common stock authorized for issuance, segregated between stock-based compensation plans approved by shareholders and stock-based compensation plans not approved by shareholders, as of June 30, ~~2021.~~2023. Additional information regarding stock-based compensation plans is presented in Note 10 - Employee Benefit Plans to the Consolidated Financial Statements located elsewhere in this report.

Plan Category

Number of securities

be issued upon

exercise of

outstanding options,

warrants, and rights

Weighted-average

exercise price of

outstanding options,

warrants and rights

Number of securities

remaining

available for future issuance

under

equity compensation plans

(excluding

securities issuable under

outstanding

options, warrants and rights)

Plans approved by shareholders

—

~~64,452~~199,560

Plans not approved by shareholders

—

Total

—

~~64,452~~199,560

The remaining information required by this item is set forth in the Corporation’s Proxy Statement, dated September ~~16, 2021,~~7, 2023, under the caption “Security Ownership of Certain Beneficial Owners,” and is incorporated herein by reference.

Item 13—Certain Relationships and Related Transactions, and Director Independence

The information required by this item is set forth in the Corporation’s Proxy Statement, dated September ~~16, 2021,~~7, 2023, under the caption “Certain Transactions and Relationships and Legal Proceedings,” and is incorporated herein by reference.

Item 14— Principal Accounting Fees and Services

Our independent registered public accounting firm is Plante & Moran, PLLC, Auburn Hills, MI (PCAOB ID: 00166).

The information required by this item is set forth in the Corporation’s Proxy Statement, dated September ~~16, 2021,~~7, 2023, under the caption “Principal Accounting Fees and Services,” and is incorporated herein by reference.

PART IV

Item 15— Exhibit and Financial Statement Schedules

(a)	The following documents are filed as part of this report:

(1)

The ~~following documents are filed as part~~report of ~~this report:~~independent registered accounting firm and the consolidated financial statements appearing in Item 8.

~~(1)~~

(2)

~~The report of independent registered accounting firm and~~Financial statement schedules are omitted as they are not required or are not applicable, or the ~~consolidated~~required information is included in the financial ~~statements appearing in Item 8.~~statements.

~~(2)~~(3)

~~Financial statement schedules~~The exhibits required by this item are ~~omitted as they are not required or are not applicable, or the required information is included~~listed in the ~~financial statements.~~Exhibit Index of this Form 10-K.

~~(3)~~

~~The exhibits required by this item are listed in the Exhibit Index of this Form 10-K.~~

(b)	The exhibits to this Form 10-K begin on page 5962 of this report.

(c)	See Item 15(a)(2) above.

Item 16—Form 10-K Summary

Not applicable.

EXHIBIT INDEX

~~Exhibit~~Number		Description of Document
2.1		Agreement and Plan of Merger by and among Consumers Bancorp, Inc., Consumers National Bank, Peoples Bancorp of Mt. Pleasant, Inc., and The Peoples National Bank of Mount Pleasant, dated June 14, 2019. Reference is made to the Registration Statement on S-4 (File No. 333-233306) filed on August 15, 2019.

3.1		Amended and Restated Articles of Incorporation of the Corporation. Reference is made to Form 10-Q (File No. 033-79130) of the Corporation filed November 8, 2019, which is incorporated herein by reference.

3.2		Amended and Restated Code of Regulations of the Corporation. Reference is made to Form 10-K (File No. 033-79130) of the Corporation filed September 15, 2008, which is incorporated herein by reference.

4		Form of Certificate of Common Shares. Reference is made to Form 10-KSB (File No. 033-79130) of the Corporation filed September 30, 2002, which is incorporated herein by reference.

4.1		Description of Securities of Consumers Bancorp, Inc. Reference is made to Form 10-K of the Corporation filed September 23, 2020, which is incorporated herein by reference.

10.3		Lease Agreement entered into between Furey Holdings, LLC and Consumers National Bank on December 23, 2005. Reference is made to Form 10-Q (File No. 033-79130) of the Corporation filed February 14, 2006, which is incorporated herein by reference.

10.8		Consumers Bancorp 2010 Omnibus Incentive Plan Form of Restricted Stock Award Agreement. Reference is made to Form 8-K (File No. 033-79130) of the Corporation filed September 16, 2011, which is incorporated herein by reference.

10.10		First Amendment dated June 13, 2018, to Lease Agreement entered into between Furey Holdings, LLC and Consumers National Bank on December 23, 2005. Reference is made to Form 8-K (File No. 033-79130) of the Corporation filed June 15, 2018, which is incorporated herein by reference.

10.11		Form of Salary Continuation Agreement. Reference is made to Form 8-K (File No. 033-79130) of the Corporation filed December 29, 2020, which is incorporated herein by reference.

10.12		Branch Purchase and Assumption Agreement entered into with CFBank National Association on December 29, 2020. Reference is made to Form 10-Q (File No. 033-79130) of the Corporation filed February 12, 2021, which is incorporated herein by reference.

10.13		Consumers Bancorp Amended and Restated 2010 Omnibus Incentive Plan. Reference is made to the Definitive Proxy Statement for the 2022 Annual Meeting of Shareholders (File No. 033-79130) of the Corporation filed September 15, 2022, which is incorporated herein by reference.

19		Consumers Bancorp, Inc. Insider Trading and Section 16 Reporting Policy

21		Subsidiaries of Consumers Bancorp, Inc. Filed with this Annual Report on Form 10-K.

~~23.1~~23		Consent of Plante & Moran, PLLC

~~23.2~~		~~Consent of Crowe LLP~~

31.1		Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer and Treasurer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~101~~101.INS		~~The following material from Consumers Bancorp, Inc.’s Form 10-K Report~~Inline XBRL Instance Document (The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document) (1)
101.SCH		Inline XBRL Taxonomy Extension Schema Document (1)
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document (1)
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101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document (1)
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101.1)
(1)		These interactive date files shall not be deemed filed for purposes of Section 11 or 12 of the ~~year ended June 30, 2021, formatted in XBRL (Extensible Business Reporting Language) includes: (1) Consolidated Balance Sheets, (2) Consolidated Statements~~Securities Act of ~~Income, (3) Consolidated Statements~~1933, as amended, or Section 18 of ~~Comprehensive Income, (4) Consolidated Statement~~the Securities Exchange Act of ~~Changes in Shareholders’ Equity, (5) Consolidated Statements of Cash Flows, and (6) the Notes~~1934, as amended, or otherwise subject to ~~Consolidated Financial Statements.~~liability under those sections.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	CONSUMERS BANCORP, INC.

Date: September ~~16, 2021~~7, 2023	By:	/s/ Ralph J. Lober, II
		President and Chief Executive Officer (principal executive officer)

	By:	/s/ Renee K. Wood
		Chief Financial Officer and Treasurer (principal financial officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on September ~~16, 2021.~~7, 2023.

Signatures	Signatures

/s/ Laurie L. McClellan	/s/ Ralph J. Lober, II
Laurie L. McClellan Chairman of the Board of Directors	Ralph J. Lober, II President, Chief Executive Officer and Director (principal executive officer)


/s/ Renee K. Wood	/s/ John P. Furey
Renee K. Wood Chief Financial Officer and Treasurer (principal financial officer)	John P. Furey Director


/s/ ~~Bradley Goris~~Ann Gano	/s/ ~~Richard T. Kiko, Jr.~~Bradley Goris
~~Bradley Goris~~Ann Gano Director	~~Richard T. Kiko, Jr.~~Bradley Goris Director


/s/ ~~Shawna L’Italien~~Richard T. Kiko, Jr.	/s/ ~~Frank L. Paden~~Shawna L’Italien
Richard T. Kiko, Jr. Director	Shawna L’Italien ~~Director~~	~~Frank L. Paden~~ Director


/s/ Frank L. Paden	/s/ John W. Parkinson	~~/s/ Harry W. Schmuck, Jr.~~
~~John W. Parkinson~~Frank L. Paden Director	~~Harry~~John W. ~~Schmuck, Jr.~~Parkinson Director


/s/ Harry W. Schmuck, Jr.	/s/ Michael A. Wheeler
Harry W. Schmuck, Jr. Director
Michael A. Wheeler Director

6061

~~OHIO~~Ohio	34-1771400
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Common Shares, no par value
(Title of each class)	(Trading Symbol(s))	(Name of each ~~class)~~exchange on which registered)	~~(Trading Symbol(s))~~	~~(Name of each exchange on which registered)~~

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☐☒	Smaller reporting company ☒
	Emerging growth company ☐

PART I.

Item 1—Business	3
Item 1A—Risk Factors	7
Item 1B—Unresolved Staff Comments	7
Item 2—Properties	78
Item 3—Legal Proceedings	8
Item 4—Mine Safety Disclosures	8

PART II.

Item 5—Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities	9
~~ITEM~~Item 6—[Reserved]
Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
Item 7A—Quantitative and Qualitative Disclosures About Market Risk	22
Item 8—Financial Statements and Supplementary Data	23
Item 9—Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	5657
Item 9A—Controls and Procedures	5657
Item 9B—Other Information	5657
Item 9C—Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	57

PART III.

Item 10—Directors, Executive Officers and Corporate Governance	5758
Item 11—Executive Compensation	5758
Item 12—Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	5758
Item 13—Certain Relationships and Related Transactions, and Director Independence	5758
Item 14—Principal Accounting Fees and Services	5758

PART IV.

Item 15—Exhibit and Financial Statement Schedules	5859
Item 16—Form 10-K Summary	5859

Signatures	61

Location	Address	Owned	Leased
Adena	9 East Main Street, Adena, OHOhio 43901	X
Alliance	610 West State Street, Alliance, Ohio 44601		X
Bergholz	256 2nd Street, Bergholz, Ohio 43908		X
Brewster	210 Wabash Ave S, Brewster, OHOhio 44613	X
Calcutta	49028 Foulks Drive, Calcutta, Ohio 43920	X
Carrollton	1017 Canton Road NW, Carrollton, Ohio 44615		X
Dillonvale	44 Smithfield Street, Dillonvale, OHOhio 43917	X
East Canton	440 W. Noble, East Canton, Ohio 44730	X
Fairlawn	3680 Embassy Parkway Suite B, Fairlawn, Ohio 44333		X
Green	4086 Massillon Road, Green, Ohio 44685		X
Hanoverton	30034 Canal Street, P.O. Box 178, Hanoverton, Ohio 44423	X
Hartville	1215 W. Maple Street, Hartville, Ohio 44632	X
Jackson-Belden	4026 Dressler Road NW, Canton, Ohio 44718	X
Lisbon	7985 Dickey Drive, Lisbon, Ohio 44432	X
Louisville	1111 N. Chapel Street, Louisville, Ohio 44641	X
Malvern	4070 Alliance Road, Malvern, Ohio 44644		X
Minerva	614 E. Lincoln Way, P.O. Box 256, Minerva, Ohio 44657	X
Mount Pleasant	298 Union Street, Mount Pleasant, OHOhio 43939	X
Salem	141 S. Ellsworth Avenue, P.O. Box 798, Salem, Ohio 44460	X
Waynesburg	8607 Waynesburg Drive SE, P.O. Box 746, Waynesburg, Ohio 44688	X
~~Wooster~~Wellsville	565 Main Street, Wellsville, Ohio 43968	X
Boardman LPO	~~146 East Liberty Street, Wooster,~~725 Boardman-Canfield Road, Building 1, Boardman, Ohio ~~44691~~44512		X

☐
☐	Transition Report ~~Under~~Pursuant To Section 13 orOr 15(d) ~~of the~~Of The Securities Exchange Act ofOf 1934

Quarter Ended	September 30, 2020		December 31, 2020		March 31, 2021		June 30, 2021		September 30, 2022		December 31, 2022		March 31, 2023		June 30, 2023
High	$	16.00	$	19.50	$	20.00	$	19.76	$	21.00	$	21.00	$	20.45	$	18.50
Low		14.40		15.50		19.12		19.11		18.20		17.90		17.21		15.83
Cash dividends paid per share		0.145		0.145		0.15		0.15		0.17		0.17		0.17		0.17

Quarter Ended	September 30, 2019		December 31, 2019		March 31, 2020		June 30, 2020		September 30, 2021		December 31, 2021		March 31, 2022		June 30, 2022
High	$	18.73	$	19.55	$	20.00	$	15.05	$	23.75	$	23.20	$	24.50	$	23.40
Low		17.45		17.99		13.00		14.16		19.21		21.47		21.86		19.00
Cash dividends paid per share		0.135		0.135		0.135		0.135		0.16		0.16		0.16		0.16

	●	changes in local, regional and national economic conditions becoming less favorable than we expect, resulting in ~~among other things, high unemployment rates,~~ a deterioration in asset credit quality ~~of our assets~~ or debtors being unable to meet their ~~obligations;~~obligations because of high unemployment rates and inflationary pressures;
	●	~~sustained low~~rapid fluctuations in market interest rates could result in changes in fair market valuations and a decline in ~~the net interest margin and~~ net interest income;
	●	changes in the level of non-performing assets and charge-offs;
	●	~~the effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities, and insurance) with which we must comply;~~
	●	~~declining asset values impacting the underlying value of collateral;~~
	●	unanticipated changes in our liquidity position, including, but not limited to, changes in the cost of liquidity and our ability to find alternative funding sources;
	●	the effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities, and insurance) with which we must comply;
	●	the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve Board;
	●	breaches of security or failures of our technology systems due to technological or other factors and cybersecurity threats;
	●	changes in consumer spending, borrowing and savings habits;
	●	declining asset values impacting the underlying value of collateral;
	●	changes in accounting policies, rules and ~~interpretations that may come as a result of COVID-19 or otherwise;~~interpretations;
	●	our ability to attract and retain qualified employees;
	●	competitive pressures on product pricing and services;
	●	~~breaches of security or failures of our technology systems due to technological or other factors and cybersecurity threats;~~ and
	●	changes in the reliability of our vendors, internal control systems or information systems.

	●	net interest income increased by ~~$5,099,~~$969, or ~~23.7%~~3.0%, in fiscal year ~~2021,~~2023, primarily ~~as a result~~because of a ~~$151,376,~~$51,065, or ~~25.7%~~5.6%, increase in average interest-earning ~~assets, which was primarily due to organic loan growth and the addition of PPP loan receivables;~~assets;
	●	a ~~$850~~$855 provision for loan loss expense was recorded during ~~the 2021~~ fiscal year 2023 compared with ~~$1,980~~$735 during ~~the 2020 fiscal year. The higher provision recorded in the 2020~~ fiscal year ~~was primarily the result of the decline in economic conditions triggered by the COVID-19 pandemic;~~
	●	total other income decreased by $237, or 5.0%, in fiscal year 2021, primarily since the prior year period included $324 of income recognized as a result of proceeds received from a bank owned life insurance policy claim and a $355 gain on the sale of securities. These reductions were partially offset by a $316, or 20.1%, increase in debit card interchange income, and a $210, or 38.7%, increase on gains from the sale of mortgage loans;2022; and
	●	total other expenses increased by ~~$1,593,~~$1,470, or ~~9.0%~~6.3%, in fiscal year ~~2021~~2023 due to increases in salaries and ~~includes a full year of expenses associated with the three new office locations~~employee benefits; occupancy and ~~additional staff gained as a result of the merger with Peoples compared with only six months of these expense being included in the prior year period. In addition, incentive accruals~~equipment expenses; and ~~mortgage commissions also increased during the 2021 fiscal year.~~professional and director fees.

Net Interest Income Year ended June 30,	2021			2020			2023			2022
Net interest income	$	26,583		$	21,484		$	33,715		$	32,746
Taxable equivalent adjustments to net interest		419			326			204			513
Net interest income, fully taxable equivalent	$	27,002		$	21,810		$	33,919		$	33,259
Net interest margin		3.62	%		3.67	%		3.35	%		3.54	%
Taxable equivalent adjustment		0.05			0.05			0.02			0.06
Net interest margin, fully taxable equivalent		3.67	%		3.72	%		3.37	%		3.60	%

	2021 Compared to 2020 Increase / (Decrease)									2020 Compared to 2019 Increase / (Decrease)									2023 Compared to 2022 Increase / (Decrease)									2022 Compared to 2021 Increase / (Decrease)
	Total Change			Change due to Volume			Change due to Rate			Total Change			Change due to Volume			Change due to Rate			Total Change			Change due to Volume			Change due to Rate			Total Change			Change due to Volume			Change due to Rate
	(In thousands)																		(In thousands)
Interest earning assets:
Taxable securities	$	(338	)	$	162		$	(500	)	$	(260	)	$	(176	)	$	(84	)	$	1,766		$	975		$	791		$	1,978		$	1,932		$	46
Nontaxable securities (1)		234			269			(35	)		(4	)		(34	)		30			(121	)		177			(298	)		432			558			(126	)
Loan receivables (2)		3,348			5,376			(2,028	)		4,952			4,845			107			4,541			3,188			1,353			3,315			2,188			1,127
Federal bank and other restricted stocks		1			17			(16	)		(11	)		21			(32	)		67			(4	)		71			6			1			5
Interest bearing deposits and federal funds sold		9			144			(135	)		64			101			(37	)		217			(238	)		455			24			92			(68	)
Equity securities		17			17			—			—			—			—			—			(3	)		3			16			17			(1	)
Total interest and dividend income		3,271			5,985			(2,714	)		4,741			4,757			(16	)		6,470			4,095			2,375			5,771			4,788			983
Interest bearing liabilities:
Interest bearing demand		(279	)		103			(382	)		(119	)		28			(147	)		962			12			950			17			41			(24	)
Savings deposits		(466	)		197			(663	)		93			127			(34	)		2,125			4			2,121			55			115			(60	)
Time deposits		(1,126	)		(278	)		(848	)		726			505			221			2,451			290			2,161			(565	)		107			(672	)
Short-term borrowings		(34	)		23			(57	)		(8	)		10			(18	)		350			57			293			38			6			32
FHLB advances		(16	)		37			(53	)		(27	)		21			(48	)		(78	)		(77	)		(1	)		(31	)		(84	)		53
Total interest expense		(1,921	)		82			(2,003	)		665			691			(26	)		5,810			286			5,524			(486	)		185			(671	)
Net interest income	$	5,192		$	5,903		$	(711	)	$	4,076		$	4,066		$	10		$	660		$	3,809		$	(3,149	)	$	6,257		$	4,603		$	1,654

(2)
~~(2)~~	Non-accrual loan balances are included for purposes of computing the rate and volume effects although interest on these balances has been excluded.

June 30, 2021 Available-for-sale	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
June 30, 2023 Available-for-sale										Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Obligation of U.S Treasury										$	8,941	$	—	$	(533	)	$	8,408
Obligations of U.S. government-sponsored entities and agencies	$	14,746	$	301	$	(14	)	$	15,033		29,430		7		(3,745	)		25,692
Obligations of state and political subdivisions		73,013		3,561		(75	)		76,499		92,891		63		(8,982	)		83,972
U.S. Government-sponsored mortgage-backed securities - residential		90,065		1,136		(684	)		90,517		104,689		12		(15,066	)		89,635
U.S. Government-sponsored mortgage-backed securities - commercial		8,641		204		—			8,845
U.S. Government-sponsored mortgage-backed securities – commercial											8,604		—		(1,809	)		6,795
U.S. Government-sponsored collateralized mortgage obligations – residential		16,302		129		(57	)		16,374		55,800		8		(5,738	)		50,070
Other debt securities		500		—		(8	)		492		17,175		—		(2,142	)		15,033
Total available-for-sale securities	$	203,267	$	5,331	$	(838	)	$	207,760	$	317,530	$	90	$	(38,015	)	$	279,605

June 30, 2020 Available-for-sale	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
June 30, 2022 Available-for-sale										Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury	$	1,248	$	8	$	—		$	1,256	$	8,909	$	—	$	(462	)	$	8,447
Obligations of U.S. government-sponsored entities and agencies		10,133		399		—			10,532		28,689		—		(2,424	)		26,265
Obligations of state and political subdivisions		60,343		3,149		—			63,492		105,977		129		(8,749	)		97,357
U.S. government-sponsored mortgage-backed securities - residential		48,645		1,515		(4	)		50,156		113,812		13		(11,642	)		102,183
U.S. government-sponsored mortgage-backed securities - commercial		8,444		55		(2	)		8,497		8,623		—		(1,322	)		7,301
U.S. government-sponsored collateralized mortgage obligations - residential		9,712		285		(12	)		9,985
U.S. government-sponsored collateralized mortgage obligations – residential											40,952		1		(2,774	)		38,179
Other debt securities											17,367		—		(752	)		16,615
Total available-for-sale securities	$	138,525	$	5,411	$	(18	)	$	143,918	$	324,329	$	143	$	(28,125	)	$	296,347

	2021							2020							2023							2022
	Average Balance		Interest		Yield/ Rate			Average Balance		Interest		Yield/ Rate			Average Balance		Interest		Yield/ Rate			Average Balance		Interest		Yield/ Rate
Interest earning assets:
Taxable securities	$	89,424	$	1,594		1.82	%	$	81,609	$	1,932		2.40	%	$	209,906	$	5,338		2.24	%	$	185,741	$	3,572		1.87	%
Nontaxable securities (1)		70,878		2,148		3.18			61,215		1,914		3.24			84,023		2,459		2.67			86,710		2,580		3.00
Loan receivables (1)		549,890		24,901		4.53			433,948		21,553		4.97			662,163		32,757		4.95			596,850		28,216		4.73
Federal bank and other restricted stocks		2,472		76		3.07			1,960		75		3.83			2,360		149		6.31			2,489		82		3.29
Equity securities		202		17		8.42			—		—		—			384		33		8.59			427		33		7.73
Interest bearing deposits and federal funds sold		27,831		166		0.60			10,589		157		1.48			12,118		407		3.36			47,672		190		0.40
Total interest earning assets		740,697		28,902		3.93	%		589,321		25,631		4.37	%		970,954		41,143		4.09	%		919,889		34,673		3.75	%
Noninterest earning assets		31,283							32,180							48,917							39,059
Total assets	$	771,980						$	621,501						$	1,019,871						$	958,948
Interest bearing liabilities:
Interest bearing demand	$	112,801	$	149		0.13	%	$	86,418	$	428		0.50	%	$	157,508	$	1,128		0.72	%	$	147,312	$	166		0.11	%
Savings		251,138		333		0.13			191,119		799		0.42			352,897		2,513		0.71			349,380		388		0.11
Time deposits		102,554		1,133		1.10			118,847		2,259		1.90			156,357		3,019		1.93			113,143		568		0.50
Short-term borrowings		8,895		9		0.10			4,306		43		1.00			22,603		397		1.76			12,960		47		0.36
FHLB advances		20,077		276		1.37			17,630		292		1.66			10,019		167		1.67			14,639		245		1.67
Total interest-bearing liabilities		495,465		1,900		0.38	%		418,320		3,821		0.91	%		699,384		7,224		1.03	%		637,434		1,414		0.22	%
Noninterest-bearing liabilities		209,262							146,050							267,837							253,407
Total liabilities		704,727							564,370							967,221							890,841
Shareholders’ equity		67,253							57,131							52,650							68,107
Total liabilities and shareholders’ equity	$	771,980						$	621,501						$	1,019,871						$	958,948
Net interest income, interest rate spread (1)			$	27,002		3.55	%			$	21,810		3.46	%			$	33,919		3.06	%			$	33,259		3.53	%
Net interest margin (net interest as a percent of average interest earning assets) (1)						3.67	%						3.72	%						3.37	%						3.60	%
Federal tax exemption on non-taxable securities and loans included in interest income			$	419						$	326						$	204						$	513
Average interest earning assets to interest bearing liabilities						149.50	%						140.88	%						138.83	%						144.31	%

	2021		2020		2023		2022
Commercial	$	109,922	$	157,029	$	112,627	$	87,080
Commercial real estate:
Construction		10,462		16,190		23,905		15,095
Other		269,157		228,552		318,054		291,310
1-4 Family residential real estate:
Owner occupied		119,046		91,006		158,037		143,180
Non-owner occupied		19,114		19,337		23,840		25,988
Construction		9,156		9,418		8,490		4,369
Consumer loans		29,570		21,329		65,409		44,821
Total loans	$	566,427	$	542,861	$	710,362	$	611,843

	Maturing										Maturing
			After one year		After five years								After one year		After five years
	Within		but within		But within		After				Within		but within		But within		After
	one year		five years		Fifteen years		Fifteen years		Total		one year		five years		Fifteen years		Fifteen years		Total
Commercial	$	13,458	$	66,898	$	28,031	$	1,535	$	109,922	$	25,056	$	39,994	$	47,450	$	127	$	112,627
Commercial real estate:
Construction		209		7,983		—		2,270		10,462		1		12,718		2,878		8,308		23,905
Other		11,610		14,757		106,502		136,288		269,157		10,626		12,959		123,828		170,641		318,054
1-4 Family residential real estate:
Owner occupied		1,202		5,482		32,906		79,456		119,046		985		2,396		35,547		119,109		158,037
Non-owner occupied		1,087		1,392		11,545		5,090		19,114		696		1,264		14,649		7,231		23,840
Construction		1,511		335		—		7,310		9,156		—		3,215		—		5,275		8,490
Consumer loans		726		18,078		10,570		196		29,570		1,839		33,369		30,018		183		65,409
Total loans	$	29,803	$	114,925	$	189,554	$	232,145	$	566,427	$	39,203	$	105,915	$	254,370	$	310,874	$	710,362

	Years Ended June 30,										Years Ended June 30,
	2021					2020					2023					2022
	Amount		Rate			Amount		Rate			Amount		Rate			Amount		Rate
Noninterest-bearing demand deposit	$	203,181		—		$	140,826		—		$	258,463		—		$	246,089		—
Interest-bearing demand deposit		112,801		0.13	%		86,418		0.50	%		157,508		0.72	%		147,312		0.11	%
Savings		251,138		0.13			191,119		0.42			352,897		0.71			349,380		0.11
Certificates and other time deposits		102,554		1.10			118,847		1.90			156,357		1.93			113,143		0.50
Total	$	669,674		0.24	%	$	537,210		0.65	%	$	925,225		0.72	%	$	855,924		0.13	%

								Amortized Cost		Fair Value		Average Yield
Collateralized mortgage obligations:
Mortgage-backed securities – commercial:
Over 1 year through 5 years								$	1,321	$	1,071		1.69	%
Over 5 years through 10 years									2,920		2,379		1.90
Over 10 years									4,363		3,345		2.12
Total mortgage-backed securities - commercial									8,604		6,795		1.98

Collateralized mortgage obligations:
3 months or less									110		109		1.47
Over 3 months through 1 year									812		810		5.41
Over 1 year through 5 years									19,508		18,723		4.33
Over 5 years through 10 years									32,513		28,190		2.75
Over 10 years									2,857		2,238		1.67
Total collateralized mortgage obligations									55,800		50,070		3.28
Other debt securities
Over 5 years through ten years									17,175		15,033		3.52
Total other debt securities									17,175		15,033		3.52
Total available-for-sale securities								$	317,530	$	279,605		2.61	%

Held-to-maturity	Amortized Cost		Fair Value		Average Yield
Obligations of state and political subdivisions:
Over 1 year through 5 years	$	294	$	309		2.89	%	$	3,092	$	2,988		2.14	%
Over 5 years through 10 years		5,367		5,547		1.86			533		533		4.23
Over 10 years		2,335		2,496		3.13			3,345		2,818		3.01
Total held-to-maturity securities	$	7,996	$	8,352		2.27	%	$	6,970	$	6,294		2.72	%

		Fixed Interest Rates				Variable Interest Rates
Total 1-4 family residential real estate construction, commercial and commercial real estate loans due after one year		$	237,875			$	134,034

Total due after one year:	Fixed Interest Rates		Variable Interest Rates
Commercial	$	76,299	$	11,272
Commercial real estate:
Construction		3,128		20,776
Other		154,356		153,072
1-4 Family residential real estate:
Owner occupied		126,204		30,848
Non-owner occupied		15,300		7,844
Construction		4,904		3,586
Consumer loans		63,543		27

	2021			2020
Allowance for loan losses at beginning of year	$	5,678		$	3,788
Loans charged off:
Commercial		22			—
1-4 Family residential real estate		4			6
Consumer loans		122			140
Total charge offs		148			146
Recoveries:
Commercial real estate		4			4
1-4 Family residential real estate		3			4
Consumer loans		84			48
Total recoveries		91			56
Net charge offs		57			90
Provision for loan losses charged to operations		850			1,980
Allowance for loan losses at end of year	$	6,471		$	5,678

Ratio of net charge offs to average loans outstanding		0.01	%		0.02	%
ALLL to total loans		1.14	%		1.05	%

	Allocation of the Allowance for Loan Losses										Allocation of the Allowance for Loan Losses
	Allowance Amount		% of Loan Type to Total Loans			Allowance Amount		% of Loan Type to Total Loans			Allowance Amount		% of Loan Type to Total Loans			Allowance Amount		% of Loan Type to Total Loans
	June 30, 2021					June 30, 2020					June 30, 2023					June 30, 2022
Commercial	$	904		19.4	%	$	947		28.9	%	$	1,308		15.9	%	$	960		14.2	%
Commercial real estate loans		3,949		49.4			3,623		45.1			3,943		48.1			3,927		50.1
1-4 Family residential real estate		1,307		26.0			989		22.1			1,571		26.8			1,645		28.4
Consumer loans		311		5.2			119		3.9			902		9.2			628		7.3
Total	$	6,471		100.0	%	$	5,678		100.0	%	$	7,724		100.0	%	$	7,160		100.0	%

Maturing in:
Under 3 months	$	8,744	$	16,270
Over 3 to 6 months		7,390		6,384
Over 6 to 12 months		11,699		19,796
Over 12 months		15,616		3,122
Total	$	43,449	$	45,572

	Note Reference		2022		2023		2024		2025		2026		Thereafter		Total		Note Reference		2024		2025		2026		2027		2028		Thereafter		Total
Certificates of deposit		7	$	56,866	$	21,554	$	2,151	$	3,579	$	1,415	$	1,974	$	87,539		7	$	193,381	$	16,089	$	2,890	$	1,373	$	434	$	176	$	214,343
Short-term borrowings		8		12,203		—		—		—		—		—		12,203		8		26,367		—		—		—		—		—		26,367
Federal Home Loan advances		9		1,799		79		6,567		5,556		4,049		—		18,050		9		671		4,056		46		3		—		4,000		8,776
Salary continuation plan		10		106		146		142		141		141		2,464		3,140		10		142		141		141		141		253		2,869		3,687
Operating leases		5		167		167		146		114		685		—		1,279		5		177		145		125		115		115		342		1,019
Deposits without maturity				—		—		—		—		—		—		639,310				—		—		—		—		—		—		738,190

	●	We evaluated the reasonableness of ~~management's~~management’s judgments and tests of accuracy of underlying support related to the ~~estimated loss emergence period.~~

~~We evaluated the design of controls over the application of management’s~~ qualitative ~~factor methodology in the estimate of general reserves.~~factors.

	Common Shares		Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
Balance, June 30, 2019	$	14,656	$	36,487		$	(1,543	)	$	1,566		$	51,166
Net income				5,527									5,527
Other comprehensive income										2,694			2,694
269,920 shares issued for the Peoples acquisition		5,277											5,277
11,813 shares associated with vested stock awards		41					89						130
Cash dividends declared ($0.54 per share)				(1,554	)								(1,554	)
Balance, June 30, 2020	$	19,974	$	40,460		$	(1,454	)	$	4,260		$	63,240
Net income				8,988									8,988
Other comprehensive loss										(710	)		(710	)
12,522 shares associated with vested stock awards		37					130						167
Cash dividends declared ($0.59 per share)				(1,785	)								(1,785	)
Balance, June 30, 2021	$	20,011	$	47,663		$	(1,324	)	$	3,550		$	69,900

		2021				2020
Unrealized gains recognized on equity securities held at the end of the period		$	24			$	—

			Pre-Modification		Post-Modification
	Number of		Outstanding Recorded		Outstanding Recorded
	Loans		Investment		Investment
1-4 Family residential:
Owner occupied		1	$	314	$	314
Total		1	$	314	$	314

	Fair Value Measurements at June 30, 2020 Using
Assets:	Balance at June 30, 2020		Level 1		Level 2		Level 3
Obligations of U.S. Treasury	$	1,256	$	—	$	1,256	$	—
Obligations of U.S. government-sponsored entities and agencies		10,532		—		10,532		—
Obligations of states and political subdivisions		63,492		—		63,492		—
U.S. government-sponsored mortgage-backed securities - residential		50,156		—		50,156		—
U.S. government-sponsored mortgage-backed securities - commercial		8,497		—		8,497		—
U.S. government-sponsored collateralized mortgage obligations		9,985		—		9,985		—