UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

~~[X]~~☒

Quarterly Report Pursuant to Section 13 or 15 (d) ofof the Securities Exchange Act of 1934

For the quarterly period ended ~~December~~March 31, ~~2017~~2022

☐	Transition Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

Commission File No. 033-79130

CONSUMERS BANCORP, INC.

(Exact name of registrant as specified in its charter)

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

614 East Lincoln Way, P.O. Box 256, Minerva, Ohio	44657
(Address of principal executive offices)	(Zip Code)

(330) 868-7701

(~~Registrant~~’sRegistrant’s telephone number)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter pe~~riod~~period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web~~ ~~site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “~~large~~“large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☐ ~~(Do not check if smaller reporting company)~~	Smaller reporting company ☒
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the ~~Securities~~Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None

There were ~~2,729,644~~3,053,752 shares of ~~Registrant~~’sRegistrant’s common stock, no par value, outstanding as of ~~February 9, 2018.~~May 10, 2022.

CONSUMERS BANCORP, INC.

FORM 10-Q

QUARTER ENDED ~~December~~March 31,~~, 2017~~ 2022

Table of Contents

Page

Number (s)

Part I – Financial Information

Item 1 – Financial Statements ~~(Unaudited)~~
Consolidated Balance Sheets at ~~December~~March 31, ~~2017~~2022 and June 30, ~~2017~~2021	1

Consolidated Statements of Income for the three and ~~six~~nine months ended ~~December~~March 31, ~~2017~~2022 and ~~2016~~2021 (unaudited)	2

Consolidated Statements of Comprehensive Income ~~(Loss)~~ for the three and ~~six~~nine months ended ~~December~~March 31, ~~2017~~2022 and ~~2016~~2021 (unaudited)	3

Condensed Consolidated Statements of Changes in ~~Shareholders~~’Shareholders’ Equity for the three and ~~six~~nine months ended ~~December~~March 31, ~~2017~~2022 and ~~2016~~2021 (unaudited)	4

Condensed Consolidated Statements of Cash Flows for the ~~six~~nine months ended ~~December~~March 31, ~~2017~~2022 and ~~2016~~2021 (unaudited)	5

Notes to the Consolidated Financial Statements (unaudited)	~~6-2~~66-22

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations	2~~7-35~~23-32

Item 3 – Not Applicable for Smaller Reporting Companies

Item 4 – Controls and Procedures	3633
Part II – Other Information
Item 1 – Legal Proceedings	3734

Item 1A – Not Applicable for Smaller Reporting Companies	3734

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds	3734

Item 3 – Defaults Upon Senior Securities	3734

Item 4 – Mine Safety Disclosure	3734

Item 5 – Other Information	3734

Item 6 – Exhibits	3734

Signatures	3835

PART I – FINANCIAL INFORMATION

Item 1 – Financial Statements

CONSUMERS BANCORP, INC.

CONSOLIDATED BALANCE SHEETS ~~(Unaudited)~~

(Dollars in thousands, except per share data)	December 31, 2017			June 30, 2017			March 31, 2022 (unaudited)			June 30, 2021
ASSETS
Cash on hand and noninterest-bearing deposits in financial institutions	$	8,910		$	9,439		$	13,524		$	8,902
Federal funds sold and interest-bearing deposits in financial institutions		231			473			37,804			9,627
Total cash and cash equivalents		9,141			9,912			51,328			18,529
Certificates of deposit in other financial institutions		3,921			3,921			4,041			5,825
Securities, available-for-sale		135,738			142,086			288,375			207,760
Securities, held-to-maturity (fair value of $4,083 at December 31, 2017 and $4,329 at June 30, 2017)		4,061			4,259
Securities, held-to-maturity (fair value of $6,877 at March 31, 2022 and $8,352 at June 30, 2021)								7,020			7,996
Equity securities, at fair value								428			424
Federal bank and other restricted stocks, at cost		1,425			1,425			2,525			2,472
Loans held for sale		814			1,252			429			1,457
Total loans		293,594			272,867			603,595			566,427
Less allowance for loan losses		(3,225	)		(3,086	)		(6,997	)		(6,471	)
Net loans		290,369			269,781			596,598			559,956
Cash surrender value of life insurance		9,201			9,065			9,895			9,702
Premises and equipment, net		13,137			13,398			16,491			15,793
Other real estate owned		57			71
Goodwill								2,452			836
Core deposit intangible, net								484			229
Accrued interest receivable and other assets		2,418			2,713			7,483			2,825
Total assets	$	470,282		$	457,883		$	987,549		$	833,804

LIABILITIES
Deposits
Non-interest bearing demand	$	108,503		$	102,683
Noninterest-bearing demand							$	255,528		$	229,102
Interest bearing demand		55,056			54,123			153,432			127,447
Savings		152,659			151,154			375,104			282,761
Time		66,771			66,511			106,570			87,539
Total deposits		382,989			374,471			890,634			726,849

Short-term borrowings		22,507			23,986			11,834			12,203
Federal Home Loan Bank advances		17,188			12,320			16,271			18,050
Accrued interest and other liabilities		3,427			3,571			6,844			6,802
Total liabilities		426,111			414,348			925,583			763,904
Commitments and contingent liabilities

SHAREHOLDERS’ EQUITY
Preferred stock (no par value, 350,000 shares authorized, none outstanding)		—			—
Common stock (no par value, 3,500,000 shares authorized; 2,854,133 shares issued as of December 31, 2017 and June 30, 2017)		14,630			14,630
Preferred stock (no par value, 350,000 shares authorized, none outstanding)								0			0
Common stock (no par value, 8,500,000 shares authorized; 3,129,134 and 3,124,053 shares issued as of March 31, 2022 and June 30, 2021, respectively)								20,229			20,011
Retained earnings		31,044			30,122			54,615			47,663
Treasury stock, at cost (124,489 and 130,606 common shares as of December 31, 2017 and June 30, 2017, respectively)		(1,576	)		(1,662	)
Accumulated other comprehensive income		73			445
Total shareholders’ equity		44,171			43,535
Total liabilities and shareholders’ equity	$	470,282		$	457,883
Treasury stock, at cost (75,382 and 95,953 common shares as of March 31, 2022 and June 30, 2021, respectively)								(1,117	)		(1,324	)
Accumulated other comprehensive income (loss)								(11,761	)		3,550
Total shareholders’ equity								61,966			69,900
Total liabilities and shareholders’ equity							$	987,549		$	833,804

See accompanying notes to consolidated financial ~~statements~~statements.

CONSUMERS BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

Three Months ended
December 31,

Six Months ended
December 31,

(Dollars in thousands, except per share amounts)

2017

2016

2017

2016

Interest income

Loans, including fees
$ 3,437 $ 3,022 $ 6,665 $ 6,206
Securities, taxable
459 377 970 779
Securities, tax-exempt
367 357 734 708
Federal funds sold and other interest bearing deposits
28 30 65 60
Total interest income
4,291 3,786 8,434 7,753
Interest expense

Deposits
253 183 501 353
Short-term borrowings
57 11 112 23
Federal Home Loan Bank advances
54 56 108 114
Total interest expense
364 250 721 490
Net interest income
3,927 3,536 7,713 7,263
Provision for loan losses
60 140 150 276
Net interest income after provision for loan losses
3,867 3,396 7,563 6,987

Non-interest income

Service charges on deposit accounts
301 314 609 644
Debit card interchange income
325 285 648 536
Bank owned life insurance income
68 63 136 112
Securities gains, net
— 22 38 125
Loss on disposition of other real estate owned
— (3
)
- (3
)
Other
145 116 280 231
Total non-interest income
839 797 1,711 1,645

Non-interest expenses

Salaries and employee benefits
1,966 1,790 3,776 3,528
Occupancy and equipment
465 478 920 930
Data processing expenses
147 145 295 290
Debit card processing expenses
188 149 368 282
Professional and director fees
122 146 239 278
FDIC assessments
46 46 92 101
Franchise taxes
84 84 168 168
Marketing and advertising
61 65 139 144
Telephone and network communications
75 76 157 157
Other
406 347 799 734
Total non-interest expenses
3,560 3,326 6,953 6,612
Income before income taxes
1,146 867 2,321 2,020
Income tax expense
489 145 735 397
Net income
$ 657 $ 722 $ 1,586 $ 1,623

Basic and diluted earnings per share
$ 0.24 $ 0.27 $ 0.58 $ 0.60

~~See accompanying notes to consolidated financial statements~~

~~CONSUMERS BANCORP, INC.~~

~~Consolidated statements of comprehensive income~~ ~~(Loss)~~

~~(Unaudited)~~

~~(Dollars in thousands)~~

Three Months ended
December 31

Six Months ended
December 31,

2017

2016

2017

2016

Net income
$ 657 $ 722 $ 1,586 $ 1,623

Other comprehensive income (loss), net of tax:

Net change in unrealized gains (losses) on securities available-for-sale:

Unrealized losses arising during the period
(631
)
(3,319
)
(527
)
(3,742
)
Reclassification adjustment for gains included in income
— (22
)
(38
)
(125
)
Net unrealized losses
(631
)
(3,341
)
(565
)
(3,867
)
Income tax effect
215 1,136 193 1,315
Other comprehensive loss
(416
)
(2,205
)
(372
)
(2,552
)

Total comprehensive income (loss)
$ 241 $ (1,483
)
$ 1,214 $ (929
)

	Three Months ended March 31,					Nine Months ended March 31,
(Dollars in thousands, except per share amounts)	2022			2021		2022			2021

Interest and dividend income
Loans, including fees	$	6,775		$	5,840	$	21,340		$	18,912
Securities, taxable		903			368		2,420			1,084
Securities, tax-exempt		516			428		1,502			1,275
Equity securities		8			8		25			8
Federal bank and other restricted stocks		19			19		59			58
Federal funds sold and other interest-bearing deposits		31			41		124			130
Total interest and dividend income		8,252			6,704		25,470			21,467
Interest expense
Deposits		274			299		844			1,363
Short-term borrowings		1			2		4			8
Federal Home Loan Bank advances		62			67		189			208
Total interest expense		337			368		1,037			1,579
Net interest income		7,915			6,336		24,433			19,888
Provision for loan losses		85			185		545			445
Net interest income after provision for loan losses		7,830			6,151		23,888			19,443

Noninterest income
Service charges on deposit accounts		362			290		1,086			911
Debit card interchange income		492			467		1,523			1,368
Mortgage banking activity		122			149		551			631
Bank owned life insurance income		63			64		193			195
Securities gains, net		0			6		2			14
Loss on disposition or write-down of other real estate owned		(5	)		0		(5	)		0
Other		86			78		264			229
Total noninterest income		1,120			1,054		3,614			3,348

Noninterest expenses
Salaries and employee benefits		3,400			2,527		9,916			7,978
Occupancy and equipment		792			662		2,228			1,938
Data processing expenses		198			182		604			544
Debit card processing expenses		246			242		773			696
Professional and director fees		162			188		664			674
FDIC assessments		159			76		429			224
Franchise taxes		137			132		403			349
Marketing and advertising		142			114		520			364
Telephone and network communications		90			84		292			247
Amortization of intangible		14			6		40			20
Other		497			452		1,449			1,261
Total noninterest expenses		5,837			4,665		17,318			14,295
Income before income taxes		3,113			2,540		10,184			8,496
Income tax expense		528			424		1,772			1,472
Net income	$	2,585		$	2,116	$	8,412		$	7,024

Basic and diluted earnings per share	$	0.85		$	0.70	$	2.77		$	2.33

See accompanying notes to consolidated financial statements.

CONSUMERS BANCORP, INC.

~~CONDENSED~~ CONSOLIDATED STATEMENTS OF ~~CHANGES IN SHAREHOLDERS’ EQUITY~~COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(Dollars in thousands, except per share data)

Three Months ended
December 31,

Six Months ended
December 31,

2017

2016

2017

2016

Balance at beginning of period
$ 44,271 $ 44,020 $ 43,535 $ 43,793

Net income
657 722 1,586 1,623
Other comprehensive loss
(416
)
(2,205
)
(372
)
(2,552
)
6,321 shares issued associated with stock awards during the six months ended December 31, 2017
— — 90 —
204 and 231 Dividend reinvestment plan shares associated with forfeited and expired restricted stock awards retired to treasury stock during the six months ended December 31, 2017 and 2016, respectively
— — — —
Common cash dividends
(341
)
(327
)
(668
)
(654
)

Balance at the end of the period
$ 44,171 $ 42,210 $ 44,171 $ 42,210

Common cash dividends per share
$ 0.125 $ 0.12 $ 0.245 $ 0.24

(Dollars in thousands)	Three Months ended March 31,						Nine Months ended March 31,
	2022			2021			2022			2021

Net income	$	2,585		$	2,116		$	8,412		$	7,024

Other comprehensive income, net of tax:
Net change in unrealized losses on securities available-for-sale:
Unrealized losses arising during the period		(16,891	)		(2,269	)		(19,379	)		(1,921	)
Reclassification adjustment for gains included in income		0			(6	)		(2	)		(14	)
Net unrealized losses		(16,891	)		(2,275	)		(19,381	)		(1,935	)
Income tax effect		3,548			478			4,070			407
Other comprehensive loss		(13,343	)		(1,797	)		(15,311	)		(1,528	)

Total comprehensive income (loss)	$	(10,758	)	$	319		$	(6,899	)	$	5,496

See accompanying notes to consolidated financial statements.

CONSUMERS BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

(Dollars in thousands)

Six Months Ended
December 31,

2017

2016

Cash flows from operating activities

Net cash from operating activities
$ 3,484 $ 2,152

Cash flow from investing activities

Securities available-for-sale

Purchases
(5,101
)
(17,368
)
Maturities, calls and principal pay downs
8,848 11,753
Proceeds from sales
1,586 3,383
Securities held-to-maturity

Purchases
— (1,000
)
Principal pay downs
198 198
Net decrease in certificates of deposits in other financial institutions
— 990
Net increase in loans
(20,967
)
(9,255
)
Purchase of Bank owned life insurance
— (2,000
)
Acquisition of premises and equipment
(129
)
(252
)
Sale of other real estate owned
71 7
Net cash from investing activities
(15,494
)
(13,544
)

Cash flow from financing activities

Net increase in deposit accounts
8,518 8,797
Net change in short-term borrowings
(1,479
)
223
Proceeds from Federal Home Loan Bank advances
5,400 18,325
Repayments of Federal Home Loan Bank advances
(532
)
(14,630
)
Dividends paid
(668
)
(654
)
Net cash from financing activities
11,239 12,061

Increase (decrease) in cash or cash equivalents
(771
)
669

Cash and cash equivalents, beginning of period
9,912 10,181
Cash and cash equivalents, end of period
$ 9,141 $ 10,850

Supplemental disclosure of cash flow information:

Cash paid during the period:

Interest
$ 709 $ 484
Federal income taxes
405 150
Non-cash items:

Transfer from loans to other real estate owned
57 10
Transfer from loans held for sale to portfolio
172 —
Issuance of treasury stock for stock awards
90 —
Expired and forfeited dividend reinvestment plan shares associated with restricted stock awards that were retired to treasury stock
4 4

(Dollars in thousands, except per share data)	Common Stock		Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
Balance, December 31, 2021	$	20,175	$	52,518		$	(1,117	)	$	1,582		$	73,158
Net income				2,585									2,585
Other comprehensive loss										(13,343	)		(13,343	)
2,260 shares issued associated with dividend reinvestment plan and stock purchase plan		54											54
Cash dividends declared ($0.16 per share)				(488	)								(488	)
Balance, March 31, 2022	$	20,229	$	54,615		$	(1,117	)	$	(11,761	)	$	61,966


Balance, December 31, 2020	$	20,011	$	44,492		$	(1,324	)	$	4,529		$	67,708
Net income				2,116									2,116
Other comprehensive loss										(1,797	)		(1,797	)
Cash dividends declared ($0.15 per share)				(454	)								(454	)
Balance, March 31, 2021	$	20,011	$	46,154		$	(1,324	)	$	2,732		$	67,573

(Dollars in thousands, except per share data)	Common Stock		Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
Balance, June 30, 2021	$	20,011	$	47,663		$	(1,324	)	$	3,550		$	69,900
Net income		0		8,412									8,412
Other comprehensive loss										(15,311	)		(15,311	)
5,081 shares issued associated with dividend reinvestment plan and stock purchase plan		116											116
20,571 shares associated with vested stock awards		102					207						309
Cash dividends declared ($0.48 per share)				(1,460	)								(1,460	)
Balance, March 31, 2022	$	20,229	$	54,615		$	(1,117	)	$	(11,761	)	$	61,966

Balance, June 30, 2020	$	19,974	$	40,460		$	(1,454	)	$	4,260		$	63,240
Net income				7,024									7,024
Other comprehensive loss										(1,528	)		(1,528	)
12,522 shares associated with vested stock awards		37					130						167
Cash dividends declared ($0.44 per share)				(1,330	)								(1,330	)
Balance, March 31, 2021	$	20,011	$	46,154		$	(1,324	)	$	2,732		$	67,573

See accompanying notes to consolidated financial statements.

CONSUMERS BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

(Dollars in thousands)	Nine Months Ended March 31,
	2022			2021
Cash flows from operating activities
Net cash from operating activities	$	11,723		$	11,421
Cash flow from investing activities
Purchases of securities, available-for-sale		(111,050	)		(63,825	)
Maturities, calls and principal pay downs of securities, available-for-sale		24,473			30,890
Sale of securities, available-for-sale		1,000			5,545
Purchase of securities, held-to-maturity		0			(4,700	)
Principal pay downs of securities, held-to-maturity		976			205
Purchase of equity securities		0			(400	)
Net decrease in certificate of deposit in other financial institutions		1,784			4,300
Purchase of Federal Reserve Bank stock, at cost		(53	)		0
Net increase in loans		(17,327	)		(10,332	)
Acquisition, net cash received		66,552			0
Premises and equipment purchases		(1,147	)		(433	)
Disposal of premises and equipment		30			0
Sale of Other Real Estate Owned		83			0
Sale of other repossessed assets		0			17
Net cash from investing activities		(34,679	)		(38,733	)
Cash flow from financing activities
Net increase in deposit accounts		59,247			70,633
Net change in short-term borrowings		(369	)		2,476
Proceeds from Federal Home Loan Bank advances		0			1,300
Repayments of Federal Home Loan Bank advances		(1,779	)		(14,394	)
Proceeds from dividend reinvestment and stock purchase plan		116			0
Dividends paid		(1,460	)		(1,330	)
Net cash from financing activities		55,755			58,685
Increase in cash or cash equivalents		32,799			31,373
Cash and cash equivalents, beginning of period		18,529			9,659
Cash and cash equivalents, end of period	$	51,328		$	41,032

Supplemental disclosure of cash flow information:
Cash paid during the period:
Interest	$	1,025		$	1,627
Federal income taxes		1,380			1,930
Non-cash items:
Transfer from loans to repossessed assets		83			9
Issuance of treasury stock for stock awards		309			167
Branch acquisition:
Noncash assets acquired:
Securities, available-for-sale		15,602
Loans		19,943
Premises and equipment		413
Goodwill		1,616
Core deposit intangible		295
Accrued interest receivable and other assets		216
Total noncash assets acquired		38,085
Liabilities assumed:
Deposits		104,538
Other liabilities		99
Total liabilities assumed		104,637
Net noncash assets acquired		(66,552	)

See accompanying notes to consolidated financial statements.

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited)

(Dollars in thousands, except per share amounts)

Note 1 – Summary of Significant Accounting Policies:

Nature of Operations: Consumers Bancorp, Inc. (the Corporation) is a bank holding company headquartered in Minerva, Ohio that provides, through its banking subsidiary, Consumers National Bank (the Bank), a broad array of products and services throughout its primary market area of Carroll, Columbiana, Jefferson, Stark, Summit, Wayne and contiguous counties in ~~Ohio.~~Ohio, Pennsylvania, and West Virginia. 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 primary market area.

Basis of Presentation: The consolidated financial statements for interim periods are unaudited and reflect all adjustments (consisting of only normal recurring adjustments), which, in the opinion of management, are necessary to present fairly the financial position and results of operations and cash flows for the periods presented. The unaudited financial statements are presented in accordance with the requirements of Form 10-Q and do not include all disclosures normally required by accounting principles generally accepted in the United States of America. The financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Corporation’s Form 10-K for the year ended June 30, ~~2017.~~2021. The results of operations for the interim period disclosed herein are not necessarily indicative of the results that may be expected for a full year.

The consolidated financial statements include the accounts of the Corporation and the ~~Ban~~k.Bank. All significant inter-company transactions and accounts have been eliminated in consolidation.

Segment Information: The Corporation is a bank holding company engaged in the business of commercial and retail banking, which accounts for substantially all of the revenues, operating income, and assets. Accordingly, all ~~of its~~the Corporation’s operations are recorded in one segment, banking.

Reclassifications: Certain items in prior financial statements have been reclassified to conform to the current presentation. Any reclassifications had no impact on prior year net income or shareholders’ equity.

Recently Issued Accounting Pronouncements Not Yet Effective: In ~~May 2014,~~ ~~FASB issued Accounting Standards Update (ASU)~~ ~~2014~~-~~09,~~ ~~Revenue from Contracts with Customers (Topic~~ ~~606~~~~). The ASU creates a new topic, Topic~~ ~~606,~~ to provide guidance on revenue recognition for entities that enter into contracts with customers to transfer goods or services or enter into contracts for the transfer of nonfinancial assets. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additional disclosures are required to provide quantitative and qualitative information regarding the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new guidance is effective for annual reporting periods, and interim reporting periods within those annual periods, beginning after ~~December 15, 2017.~~ ~~Most of the Corporation’s revenue is derived from loans and financial instruments, which is not part of the scope of this ASU.The adoption of ASU~~ ~~2014~~-09 ~~as it relates to non-interest income, such as service charges and debit card interchange income, is~~ ~~not~~ ~~expected to have a material effect on the Corporation’s financial statements.~~

In ~~January 2016,~~ ~~the FASB issued ASU~~ ~~2016~~-~~01,~~ ~~Financial Instruments~~ ~~– Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. The main provisions of ASU~~ ~~2016~~-01 address the valuation and impairment of certain equity investments along with simplified disclosures about those investments. Equity securities with readily determinable fair values will be treated in the same manner as other financial instruments. ASU ~~2016~~-01 ~~is effective for fiscal years beginning after~~ ~~December 15, 2017,~~ ~~including interim periods within those fiscal years. The adoption of ASU~~ ~~2016~~-01 is ~~not~~ ~~expected to have a material impact on the Corporation's financial statements.~~

~~CONSUMERS BANCORP, INC.~~

~~Notes to the Consolidated Financial Statements~~

~~(Unaudited) (continued)~~

~~(Dollars in thousands, except per share amounts)~~

In June 2016, ~~FASB Issued~~the Financial Accounting Standards Board (FASB) issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU adds a new Topic 326 to the codification and removes 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. ~~GAAP,~~generally accepted accounting principles, companies generally recognize credit losses when it is probable that the loss has been incurred. The revised guidance will remove all current loss recognition thresholds and will require 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 also amends 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 effective for “public business entities,” as defined in the guidance, that are SEC filers for fiscal years and for interim periods ~~with~~within those fiscal years beginning after December 15, 2019. Early adoption of the guidance is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. ~~Management is currently evaluating~~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 impact of the adoption of this guidance on the Corporation’s consolidated financial statements, and are in the midst of gathering critical data to evaluate the impact. However, it is too early to estimate the impact.

In ~~February 2016,~~ ~~the FASB issued ASU~~ ~~2016~~-02 ~~- Leases (Topic~~ ~~842~~~~). The ASU will require all organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights~~ ~~and obligations created by those leases. Additional qualitative and quantitative disclosures will be required so that users can understand more about the nature of an entity’s leasing activities.~~effective date. The new guidance is effective for annual ~~reporting periods~~ and interim ~~reporting periods within those annual~~ periods beginning after December 15, ~~2018.~~2022 ~~Early adoption~~for certain entities, including smaller reporting companies. The Corporation is ~~permitted. Management~~a smaller reporting company. The Corporation is ~~currently~~ evaluating ~~the~~how adopting this new guidance will impact of the ~~adoption of this guidance on the Corporation’s~~ consolidated financial statements and ~~expects~~the Corporation’s current systems and processes. 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 the new guidance is adopted, we expect our allowance for loan losses to ~~recognize an~~increase through a one-time adjustment to retained earnings; however, until our evaluation is complete, the estimated increase in ~~other assets and other liabilities for~~allowance will be unknown. The Corporation is planning to adopt this new guidance within the ~~rights and obligations created by leasing of branch offices. Management also expects minimal impact in the income statement with respect to occupancy expense related to leases.~~time frame noted above.

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

(Dollars in thousands, except per share amounts)

Note 2 – ~~Securities~~ Acquisition

On July 16, 2021, the Corporation completed its acquisition of two branches located in Calcutta and Wellsville, Ohio from CFBank, National Association. In connection with the 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 by unrelated financial institutions and $19,943 of loans. This transaction qualifies as a business combination.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed by the Corporation at the date of 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 acquisition. The fair value of loans was estimated using discounted contractual cash flows. The book balance of the loans at the time of the acquisition was $20,325. The fair value disclosed above reflects a credit-related adjustment of $(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 $144 pre-tax, or $118 after-tax, were recorded during the first quarter of fiscal year 2022. The fair value measurements of assets acquired and liabilities assumed are subject to refinement for up to one year after the closing date of the acquisition as additional information relative to closing date fair values becomes available.

Available –for-Sale

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Fair
Value

December 31, 2017

Obligations of U.S. government-sponsored entities and agencies
$ 13,752 $ 30 $ (146
)
$ 13,636
Obligations of state and political subdivisions
56,718 746 (283
)
57,181
Mortgage-backed securities – residential
58,051 98 (631
)
57,518
Mortgage-backed securities– commercial
1,446 — (10
)
1,436
Collateralized mortgage obligations– residential
5,483 — (137
)
5,346
Pooled trust preferred security
178 443 — 621
Total available-for-sale securities
$ 135,628 $ 1,317 $ (1,207
)
$ 135,738
7

Held-to-Maturity

Amortized
Cost

Gross
Unrecognized
Gains

Gross
Unrecognized Losses

Fair
Value

December 31, 2017

Obligations of state and political subdivisions
$ 4,061 $ 22 $ — $ 4,083

Available–for-Sale

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Fair
Value

June 30, 2017

Obligations of U.S. government-sponsored entities and agencies
$ 12,571 $ 90 $ (74
)
$ 12,587
Obligations of state and political subdivisions
56,824 890 (254
)
�� 57,460
Mortgage-backed securities – residential
64,092 184 (438
)
63,838
Mortgage-backed securities – commercial
1,459 — (1
)
1,458
Collateralized mortgage obligations - residential
6,310 1 (100
)
6,211
Pooled trust preferred security
155 377 — 532
Total available-for-sale securities
$ 141,411 $ 1,542 $ (867
)
$ 142,086

Held-to-Maturity

Amortized
Cost

Gross
Unrecognized
Gains

Gross
Unrecognized
Losses

Fair
Value

June 30, 2017

Obligations of state and political subdivisions
$ 4,259 $ 73 $ (3
)
$ 4,329

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

(Dollars in thousands, except per share amounts)

Note 3– Securities

Debt securities

The following tables summarize the Corporation’s debt securities as of March 31, 2022 and June 30, 2021:

Available –for-Sale	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
March 31, 2022
Obligations of U.S. Treasury	$	8,901	$	0	$	(376	)	$	8,525
Obligations of U.S. government-sponsored entities and agencies		27,883		11		(1,348	)		26,546
Obligations of state and political subdivisions		97,144		783		(3,644	)		94,283
U.S. Government-sponsored mortgage-backed securities–residential		113,267		51		(7,291	)		106,027
U.S. Government-sponsored mortgage-backed securities– commercial		8,627		0		(840	)		7,787
U.S. Government-sponsored collateralized mortgage obligations– residential		30,025		8		(1,645	)		28,388
Other debt securities		17,414		6		(601	)		16,819
Total securities available-for-sale	$	303,261	$	859	$	(15,745	)	$	288,375

Held-to-Maturity	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses			Fair Value
March 31, 2022
Obligations of state and political subdivisions	$	7,020	$	20	$	(163	)	$	6,877

Available–for-Sale	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
June 30, 2021
Obligations of U.S. government-sponsored entities and agencies	$	14,746	$	301	$	(14	)	$	15,033
Obligations of state and political subdivisions		73,013		3,561		(75	)		76,499
U.S. Government-sponsored mortgage-backed securities – residential		90,065		1,136		(684	)		90,517
U.S. Government-sponsored mortgage-backed securities – commercial		8,641		204		0			8,845
U.S. Government-sponsored collateralized mortgage obligations – residential		16,302		129		(57	)		16,374
Other debt securities		500		0		(8	)		492
Total securities available-for-sale	$	203,267	$	5,331	$	(838	)	$	207,760

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	$	0	$	8,352

CONSUMERS BANCORP, INC.
Notes to the Consolidated Financial Statements
(Unaudited) (continued)

(Dollars in thousands, except per share amounts)

Proceeds from the sale and call of available-for-sale securities were as follows:

	Three Months Ended December 31				Six Months Ended December 31,				Three Months Ended March 31,					Nine Months Ended March 31,
	2017		2016		2017		2016		2022		2021		2022		2021
Proceeds from sales	$	—	$	1,594	$	1,586	$	3,383
Proceeds from sales and calls									$	0	$	2,812		1,000		5,545
Gross realized gains		—		24		39		127		0		13		2		44
Gross realized losses		—		2		1		2
Gross realized losses										0		7		0		30

The i~~ncome~~income tax provision related to ~~these~~the net realized gain amounted to less than $1 for the nine-month period ended March 31, 2022. The income tax provision related to the net realized gains ~~and losses~~ amounted to ~~$13~~ ~~for the~~ ~~six~~ ~~months ended~~ ~~December 31, 2017~~ $1 and $8 ~~and~~ ~~$43~~3 for the three- and ~~six~~nine ~~months~~-month periods ended ~~December~~March 31, ~~2016.~~2021.

The amortized cost and fair values of debt securities at ~~December~~March 31, ~~2017,~~2022, 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, ~~collateralized mortgage obligations and the pooled trust preferred security~~ are shown separately.

Available-for-Sale	Amortized Cost		Estimated Fair Value
Due in one year or less	$	2,953	$	2,959
Due after one year through five years		36,065		35,272
Due after five years through ten years		40,580		39,053
Due after ten years		71,744		68,889
Total		151,342		146,173

U.S. Government-sponsored mortgage-backed and related securities		151,919		142,202
Total securities available-for-sale	$	303,261	$	288,375

Held-to-Maturity
Due after one year through five years	$	253	$	254
Due after five years through ten years		4,532		3,869
Due after ten years		2,235		2,754
Total securities held-to-maturity	$	7,020	$	6,877

Securities with a carrying value of approximately $122,812 and $96,970 were pledged at March 31, 2022, and June 30, 2021, respectively, to secure public deposits and commitments as required or permitted by law.

Available-for-Sale

Amortized
Cost

Estimated Fair
Value

Due in one year or less
$ 2,170 $ 2,192
Due after one year through five years
18,053 18,167
Due after five years through ten years
28,838 28,992
Due after ten years
21,409 21,466
Total
70,470 70,817

U.S. Government-sponsored mortgage-backed and related securities
64,980 64,300
Pooled trust preferred security
178 621
Total available-for-sale securities
$ 135,628 $ 135,738

Held-to-Maturity

Due after five years through ten years
564 579
Due after ten years
3,497 3,504
Total held-to-maturity securities
$ 4,061 $ 4,083

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

(Dollars in thousands, except per share amounts)

The following table summarizes the securities with unrealized losses at ~~December~~March 31, ~~2017~~2022 and June 30, 2021, ~~30,~~~~2017,~~aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:

~~(Dollars in thousands, except per share amounts)~~

	Less than 12 Months					12 Months or more					Total
Available-for-sale	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
March 31, 2022
Obligation of U.S. Treasury	$	8,525	$	(376	)	$	0	$	0		$	8,525	$	(376	)
Obligations of U.S. government-sponsored entities and agencies		22,152		(1,348	)		0		0			22,152		(1,348	)
Obligations of state and political subdivisions		49,905		(3,368	)		2,194		(276	)		52,099		(3,644	)
U.S. Government-sponsored mortgage-backed securities – residential		74,063		(4,813	)		23,592		(2,478	)		97,655		(7,291	)
U.S. Government-sponsored mortgage-backed securities – commercial		7,787		(840	)		0		0			7,787		(840	)
Collateralized mortgage obligations - residential		20,906		(1,590	)		643		(55	)		21,549		(1,645	)
Other debt securities		15,334		(581	)		479		(20	)		15,813		(601	)
Total temporarily impaired	$	198,672	$	(12,916	)	$	26,908	$	(2,829	)	$	225,580	$	(15,745	)

Less than 12 Months

12 Months or more

Total

Available-for-sale

Fair
Value

Unrealized
Loss

Fair
Value

Unrealized
Loss

Fair
Value

Unrealized
Loss

December 31, 2017

Obligations of US government-sponsored entities and agencies
$ 9,901 $ (146
)
$ — $ — $ 9,901 $ (146
)
Obligations of states and political subdivisions
11,862 (93
)
8,179 (190
)
20,041 (283
)
Mortgage-backed securities - residential
27,316 (243
)
22,415 (388
)
49,731 (631
)
Mortgage-backed securities - commercial
1,435 (10
)
— — 1,435 (10
)
Collateralized mortgage obligations – residential
— — 5,346 (137
)
5,346 (137
)
Total temporarily impaired
$ 50,514 $ (492
)
$ 35,940 $ (715
)
$ 86,454 $ (1,207
)

	Less than 12 Months					12 Months or more				Total
Held to Maturity	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
March 31, 2022
Obligations of state and political subdivisions		6,004		(163	)		0		0		6,004		(163	)
Total temporarily impaired	$	6,004	$	(163	)	$	0	$	0	$	6,004	$	(163	)

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, 2017

Obligations of US government-sponsored entities and agencies
$ 4,336 $ (74
)
$ — $ — $ 4,336 $ (74
)
Obligations of states and political subdivisions
13,881 (241
)
834 (13
)
14,715 (254
)
Mortgage-backed securities - residential
42,071 (391
)
2,805 (47
)
44,876 (438
)
Mortgage-backed securities - commercial
1,458 (1
)
— — 1,458 (1
)
Collateral mortgage obligation - residential
5,417 (88
)
654 (12
)
6,071 (100
)
Total temporarily impaired
$ 67,163 $ (795
)
$ 4,293 $ (72
)
$ 71,456 $ (867
)

	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, 2021
Obligations of U.S. government-sponsored entities and agencies	$	2,003	$	(14	)	$	0	$	0		$	2,003	$	(14	)
Obligations of state and political subdivisions		7,398		(75	)		0		0			7,398		(75	)
Mortgage-backed securities – residential		42,378		(684	)		0		0			42,378		(684	)
Collateralized mortgage obligations - residential		7,707		(56	)		552		(1	)		8,259		(57	)
Other debt securities		492		(8	)		0		0			492		(8	)
Total temporarily impaired	$	59,978	$	(837	)	$	552	$	(1	)	$	60,530	$	(838	)

Management evaluates securities for other-than-temporary ~~impairme~~ntimpairment (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) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (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.

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

(Dollars in thousands, except per share amounts)

At March 31, 2022, there were a total of 281 available-for-sale and 2 held-to-maturity securities in the portfolio with unrealized losses mainly due to an increase in market rates when compared to the time of purchase. The unrealized losses within the securities portfolio as of ~~December~~March 31, ~~2017~~2022 have not been recognized into income because the decline in fair value is not attributed to credit quality and management does not intend to sell, and it is not likely that management will be required to sell, the securities prior to their anticipated recovery. ~~The decline in fair value within the securities portfolio is largely due to changes in interest rates and the fair value is expected to recover as the securities approach maturity.~~ 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.

Equity Securities

The Corporation owned equity securities with an amortized cost of $400 and a fair value of $428 and $424 as of March 31, 2022 and June 30, 2021, respectively. Changes in the fair value of these securities are included in noninterest income on the consolidated statements of income. There were 0 unrealized gains and losses on equity securities during the three- and nine-month periods ended March 31, 2022 and 2021. Also, there were no sales of equity securities during the three- and nine-month periods ended March 31, 2022 and 2021.

Note 34– – Loans

Major classifications of loans were as follows:

	December 31, 2017			June 30, 2017			March 31, 2022			June 30, 2021
Commercial	$	49,561		$	46,336		$	91,429		$	112,337
Commercial real estate:
Construction		5,936			5,588			13,436			10,525
Other		169,692			157,861			291,726			269,679
1 – 4 Family residential real estate:
Owner occupied		45,351			41,581			137,923			118,269
Non-owner occupied		16,163			14,377			21,879			19,151
Construction		1,931			1,993			6,431			9,073
Consumer		4,960			5,131			40,773			29,646
Subtotal		293,594			272,867			603,597			568,680
Net deferred loan fees and costs								(2	)		(2,253	)
Allowance for loan losses		(3,225	)		(3,086	)		(6,997	)		(6,471	)
Net Loans	$	290,369		$	269,781		$	596,598		$	559,956

~~Loans presented~~The commercial loan category in the above ~~are net~~table includes PPP loans of ~~deferred loan fees~~ $5,238 as of March 31, 2022 and ~~costs~~$50,686 as of $~~313~~ ~~and~~ ~~$294~~ ~~for~~ ~~December 31, 2017~~ ~~and~~ June 30, ~~2017,~~ 2021.~~respectively.~~

~~CONSUMERS BANCORP, INC.~~

~~Notes to the Consolidated Financial Statements~~

~~(Unaudited) (continued)~~

~~(Dollars in thousands, except per share amounts)~~

The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ended ~~December~~March 31, ~~2017:~~2022:

						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	$	572		$	2,081	$	473		$	68		$	3,194		$	976	$	4,049		$	1,490		$	417		$	6,932
Provision for loan losses		(17	)		57		20			—			60			48		(58	)		(16	)		111			85
Loans charged-off		—			—		(33	)		(5	)		(38	)		0		0			(1	)		(30	)		(31	)
Recoveries		—			6		1			2			9			2		0			0			9			11
Total ending allowance balance	$	555		$	2,144	$	461		$	65		$	3,225		$	1,026	$	3,991		$	1,473		$	507		$	6,997

CONSUMERS BANCORP, INC.
Notes to the Consolidated Financial Statements
(Unaudited) (continued)

(Dollars in thousands, except per share amounts)

The following table presents the activity in the allowance for loan losses by portfolio segment for the ~~six~~nine months ended ~~December~~March 31, ~~2017:~~2022:

																		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	$	518	$	2,038	$	473		$	57		$	3,086		$	904	$	3,949	$	1,307		$	311		$	6,471
Provision for loan losses		35		82		20			13			150			99		40		191			215			545
Loans charged-off		—		—		(33	)		(8	)		(41	)		0		0		(41	)		(77	)		(118	)
Recoveries		2		24		1			3			30			23		2		16			58			99
Total ending allowance balance	$	555	$	2,144	$	461		$	65		$	3,225		$	1,026	$	3,991	$	1,473		$	507		$	6,997

The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ended ~~December~~March 31, ~~2016:~~2021:

1-4 Family

Commercial

Residential

Real

Real

Commercial

Estate

Estate

Consumer

Total

Allowance for loan losses:

Beginning balance
$ 510 $ 2,643 $ 411 $ 120 $ 3,684
Provision for loan losses
(14
)
157 51 (54
)
140
Loans charged-off
— (700
)
(23
)
(8
)
(731
)
Recoveries
1 — 26 3 30
Total ending allowance balance
$ 497 $ 2,100 $ 465 $ 61 $ 3,123

~~CONSUMERS BANCORP, INC.~~

~~Notes to the Consolidated Financial Statements~~

~~(Unaudited) (continued)~~

~~(Dollars in thousands, except per share amounts)~~

						1-4 Family
			Commercial			Residential
			Real			Real
	Commercial		Estate			Estate			Consumer			Total

Allowance for loan losses:
Beginning balance	$	858	$	3,817		$	1,028		$	209		$	5,912
Provision for loan losses		79		(109	)		166			49			185
Loans charged-off		0		0			(4	)		(39	)		(43	)
Recoveries		0		1			1			20			22
Total ending allowance balance	$	937	$	3,709		$	1,191		$	239		$	6,076

The following table presents the activity in the allowance for loan losses by portfolio segment for the ~~six~~nine months ended ~~December~~March 31, ~~2016:~~2021:

						1-4 Family
				Commercial		Residential
				Real		Real
	Commercial			Estate		Estate			Consumer			Total

Allowance for loan losses:
Beginning balance	$	947		$	3,623	$	989		$	119		$	5,678
Provision for loan losses		12			83		205			145			445
Loans charged-off		(22	)		0		(4	)		(95	)		(121	)
Recoveries		0			3		1			70			74
Total ending allowance balance	$	937		$	3,709	$	1,191		$	239		$	6,076

1-4 Family

Commercial

Residential

Real

Real

Commercial

Estate

Estate

Consumer

Total

Allowance for loan losses:

Beginning balance
$ 505 $ 2,518 $ 402 $ 141 $ 3,566
Provision for loan losses
(9
)
282 78 (75
)
276
Loans charged-off
— (700
)
(44
)
(12
)
(756
)
Recoveries
1 — 29 7 37
Total ending allowance balance
$ 497 $ 2,100 $ 465 $ 61 $ 3,123
12

CONSUMERS BANCORP, INC.
Notes to the Consolidated Financial Statements
(Unaudited) (continued)

(Dollars in thousands, except per share amounts)

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 ~~December~~March 31, ~~2017.~~2022. Included in the recorded investment in loans is ~~$695~~$1,241 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
$ — $ 30 $ — $ — $ 30
Collectively evaluated for impairment
555 2,114 461 65 3,195
Total ending allowance balance
$ 555 $ 2,144 $ 461 $ 65 $ 3,225

Recorded investment in loans:

Loans individually evaluated for impairment
$ 122 $ 1,303 $ 340 $ — $ 1,765
Loans collectively evaluated for impairment
49,553 174,707 63,293 4,971 292,524
Total ending loans balance
$ 49,675 $ 176,010 $ 63,633 $ 4,971 $ 294,289

~~CONSUMERS BANCORP, INC.~~

~~Notes to the Consolidated Financial Statements~~

~~(Unaudited) (continued)~~

~~(Dollars in thousands, except per share amounts)~~

					1-4 Family
			Commercial		Residential
			Real		Real
	Commercial		Estate		Estate		Consumer		Total
Ending allowance for loan losses balance attributable to loans:
Individually evaluated for impairment	$	1	$	0	$	0	$	0	$	1
Acquired loans collectively evaluated for impairment		1		63		87		0		151
Originated loans collectively evaluated for impairment		1,024		3,928		1,386		507		6,845
Total ending allowance balance	$	1,026	$	3,991	$	1,473	$	507	$	6,997

Recorded investment in loans:
Loans individually evaluated for impairment	$	405	$	250	$	50	$	0	$	705
Acquired loans collectively evaluated for impairment		434		11,202		27,828		3,786		43,250
Originated loans collectively evaluated for impairment		90,642		293,656		139,612		36,971		560,881
Total ending loans balance	$	91,481	$	305,108	$	167,490	$	40,757	$	604,836

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, ~~2017.~~2021. Included in the recorded investment in loans is ~~$581~~$1,184 of accrued ~~intere~~stinterest 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	$	—	$	42	$	2	$	—	$	44	$	1	$	0	$	3	$	0	$	4
Collectively evaluated for impairment		518		1,996		471		57		3,042
Acquired loans collectively evaluated for impairment												0		83		77		0		160
Originated loans collectively evaluated for impairment												903		3,866		1,227		311		6,307
Total ending allowance balance	$	518	$	2,038	$	473	$	57	$	3,086	$	904	$	3,949	$	1,307	$	311	$	6,471

Recorded investment in loans:
Loans individually evaluated for impairment	$	444	$	1,587	$	203	$	—	$	2,234	$	437	$	921	$	596	$	0	$	1,954
Loans collectively evaluated for impairment		45,993		162,176		57,901		5,144		271,214
Acquired loans collectively evaluated for impairment												834		6,542		21,363		6,488		35,227
Originated loans collectively evaluated for impairment												109,016		272,563		125,689		23,162		530,430
Total ending loans balance	$	46,437	$	163,763	$	58,104	$	5,144	$	273,448	$	110,287	$	280,026	$	147,648	$	29,650	$	567,611

CONSUMERS BANCORP, INC.
Notes to the Consolidated Financial Statements
(Unaudited) (continued)

(Dollars in thousands, except per share amounts)

The following table presents information related to unpaid principal balance, recorded investment and interest income associated with loans individually evaluated for impairment by class of loans as of ~~December~~March 31, ~~2017~~2022 and for the ~~six~~nine months ended ~~December~~March 31, ~~2017:~~2022:

As of December 31, 2017

Six Months ended December 31, 2017

Unpaid

Allowance
for Loan

Average

Interest

Cash Basis

Principal

Recorded

Losses

Recorded

Income

Interest

Balance

Investment

Allocated

Investment

Recognized

Recognized

With no related allowance recorded:

Commercial
$ 122 $ 122 $ — $ 117 $ 3 $ 3
Commercial real estate:

Other
973 976 — 1,057 16 16
1-4 Family residential real estate:

Owner occupied
25 25 — 80 — —
Non-owner occupied
315 315 — 322 — —
With an allowance recorded:

Commercial real estate:

Other
327 327 30 337 5 5
Total
$ 1,762 $ 1,765 $ 30 $ 1,913 $ 24 $ 24

~~CONSUMERS BANCORP, INC.~~

~~Notes to the Consolidated Financial Statements~~

~~(Unaudited) (continued)~~

~~(Dollars in~~ ~~thousands, except per share amounts)~~

	As of March 31, 2022							Nine Months ended March 31, 2022
	Unpaid					Allowance for Loan		Average		Interest		Cash Basis
	Principal		Recorded			Losses		Recorded		Income		Interest
	Balance		Investment		��	Allocated		Investment		Recognized		Recognized
With no related allowance recorded:
Commercial	$	421	$	289		$	—	$	294	$	0	$	0
Commercial real estate:
Other		401		250			—		620		104		104
1-4 Family residential real estate:
Owner occupied		51		23			—		242		4		4
Non-owner occupied		27		27			—		114		75		75
With an allowance recorded:
Commercial		116		116			1		126		6		6
Total	$	1,016	$	705		$	1	$	1,396	$	189	$	189

The following table presents information related to average recorded investment and interest income associated with loans individually evaluated for impairment by class of loans for the three months ended ~~December~~March 31, 2022:~~2017:~~

	Average		Interest		Cash Basis		Average		Interest		Cash Basis
	Recorded		Income		Interest		Recorded		Income		Interest
	Investment		Recognized		Recognized		Investment		Recognized		Recognized
With no related allowance recorded:
Commercial	$	120	$	1	$	1	$	289	$	0	$	0
Commercial real estate:
Other		1,061		6		6		255		2		2
1-4 Family residential real estate:
Owner occupied		318		—		—		91		1		1
Non-owner occupied		58		—		—		13		0		0
With an allowance recorded:
Commercial real estate:
Other		330		5		5
Commercial								120		2		2
Total	$	1,887	$	12	$	12	$	768	$	5	$	5

CONSUMERS BANCORP, INC.
Notes to the Consolidated Financial Statements
(Unaudited) (continued)

(Dollars in thousands, except per share amounts)

The following table presents information related to unpaid principal balance, recorded investment and interest income associated with loans individually evaluated for impairment by class of loans as of June 30, ~~2017~~2021 and for the ~~six~~nine months ended ~~December~~March 31, ~~2016:~~2021:

	As of June 30, 2017						Six Months ended December 31, 2016						As of June 30, 2021						Nine Months ended March 31, 2021
	Unpaid				Allowance for Loan		Average		Interest		Cash Basis		Unpaid				Allowance for Loan		Average		Interest		Cash Basis
	Principal		Recorded		Losses		Recorded		Income		Interest		Principal		Recorded		Losses		Recorded		Income		Interest
	Balance		Investment		Allocated		Investment		Recognized		Recognized		Balance		Investment		Allocated		Investment		Recognized		Recognized
With no related allowance recorded:
Commercial	$	482	$	444	$	—	$	330	$	80	$	80	$	421	$	303	$	—	$	77	$	0	$	0
Commercial real estate:
Construction		—		—		—		170		6		6
Other		1,928		1,039		—		1,081		105		105		1,062		921		—		893		6		6
1-4 Family residential real estate:
Owner occupied		104		103		—		127		—		—		409		367		—		577		11		11
Non-owner occupied		—		—		—		205		—		—		267		202		—		220		0		0
With an allowance recorded:
Commercial		—		—		—		7		—		—		133		134		1		154		6		6
Commercial real estate:
Other		548		548		42		2,030		15		15		0		0		0		160		7		7
1-4 Family residential real estate:
Owner occupied		99		100		2		139		3		3		28		27		3		13		0		0
Total	$	3,161	$	2,234	$	44	$	4,089	$	209	$	209	$	2,320	$	1,954	$	4	$	2,094	$	30	$	30

~~CONSUMERS BANCORP, INC.~~

~~Notes to the Consolidated Financial Statements~~

~~(Unaudited)~~ ~~(continued)~~

~~(Dollars in thousands, except per share amounts)~~

	Average		Interest		Cash Basis
	Recorded		Income		Interest
	Investment		Recognized		Recognized
With no related allowance recorded:
Commercial	$	308	$	0	$	0
Commercial real estate:
Other		941		2		2
1-4 Family residential real estate:
Owner occupied		473		0		0
Non-owner occupied		211		0		0
With an allowance recorded:
Commercial		142		2		2
Commercial real estate:
Other		68		1		1
1-4 Family residential real estate:
Owner occupied		29		0		0
Total	$	2,172	$	5	$	5

Average

Interest

Cash Basis

Recorded

Income

Interest

Investment

Recognized

Recognized

With no related allowance recorded:

Commercial real estate:

Construction
$ 10 $ — $ —
Other
607 — —
1-4 Family residential real estate:

Owner occupied
127 — —
Non-owner occupied
202 — —
With an allowance recorded:

Commercial
14 — —
Commercial real estate:

Other
1,612 7 7
1-4 Family residential real estate:

Owner occupied
101 1 1
Total
$ 2,673 $ 8 $ 8
15

CONSUMERS BANCORP, INC.
Notes to the Consolidated Financial Statements
(Unaudited) (continued)

(Dollars in thousands, except per share amounts)

The ~~following~~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 ~~December~~March 31, ~~2017~~2022 and June 30, ~~2017:~~2021:

	December 31, 2017				June 30, 2017				March 31, 2022				June 30, 2021
			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	$	—	$	—	$	368	$	—
Commercial									$	289	$	0	$	303	$	0
Commercial real estate:
Other		537		—		729		—		206		0		874		0
1 – 4 Family residential:
Owner occupied		13		—		90		—		22		0		392		0
Non-owner occupied		315		—		—		—		27		0		202		0
Consumer										0		0		0		0
Total	$	865	$	—	$	1,187	$	—	$	544	$	0	$	1,771	$	0

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.

~~CONSUMERS BANCORP, INC.~~

~~Notes to the Consolidated Financial Statements~~

~~(Unaudited) (continued)~~

~~(Dollars in thousands, except per share amounts)~~

The following table presents the aging of the recorded investment in past due loans as of ~~December~~March 31, ~~2017~~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	$	—	$	—	$	—	$	—	$	49,675	$	49,675	$	0	$	0	$	0	$	0	$	91,481	$	91,481
Commercial real estate:
Construction		—		—		—		—		5,943		5,943		0		0		0		0		13,396		13,396
Other		230		—		—		230		169,837		170,067		0		0		0		0		291,712		291,712
1-4 Family residential:
Owner occupied		12		—		—		12		45,477		45,489		53		0		0		53		139,040		139,093
Non-owner occupied		—		—		—		—		16,210		16,210		0		0		27		27		21,869		21,896
Construction		—		—		—		—		1,934		1,934		1		0		0		1		6,500		6,501
Consumer		4		2		—		6		4,965		4,971		308		31		0		339		40,418		40,757
Total	$	246	$	2	$	—	$	248	$	294,041	$	294,289	$	362	$	31	$	27	$	420	$	604,416	$	604,836

The above table of past due loans includes the recorded investment in non-accrual loans of $27 in the ~~$865~~90 days or greater category and $517 in the loans not past due category.

The following table presents the aging of the recorded investment in past due loans as of June 30, ~~2017~~2021 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	$	—	$	—	$	35	$	35	$	46,402	$	46,437	$	0	$	0	$	0	$	0	$	110,287	$	110,287
Commercial real estate:
Construction		—		—		—		—		5,596		5,596		0		0		0		0		10,478		10,478
Other		—		—		130		130		158,037		158,167		0		175		629		804		268,744		269,548
1-4 Family residential:
Owner occupied		13		—		74		87		41,605		41,692		29		0		365		394		118,937		119,331
Non-owner occupied		—		—		—		—		14,416		14,416		0		0		0		0		19,148		19,148
Construction		—		—		—		—		1,996		1,996		—		0		0		0		9,169		9,169
Consumer		22		—		—		22		5,122		5,144		95		11		0		106		29,544		29,650
Total	$	35	$	—	$	239	$	274	$	273,174	$	273,448	$	124	$	186	$	994	$	1,304	$	566,307	$	567,611

The above table of past due loans includes the recorded investment in non-accrual loans of~~$239~~ $994 in the 90 days or greater category and ~~$948~~$777 in the loans not past due category.

CONSUMERS BANCORP, INC.
Notes to the Consolidated Financial Statements
(Unaudited) (continued)

(Dollars in thousands, except per share amounts)

Troubled Debt ~~Restructurings:~~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 was available to most borrowers whose loan was not past due on March 22, 2020, the date this loan modification program was adopted. The program offered principal and interest payment deferrals for up to 90 days or interest only payments for up to 90 days. Borrowers were eligible for an additional 90 days of payment deferrals if situations warranted a need for an extension. Interest was deferred but continued to accrue during the deferment period and the maturity date on amortizing loans was 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 were not classified as TDRs. As of March 31, 2022, 2 borrowers with an aggregate outstanding balance of $38 were in payment deferral status under this loan modification program. This modification program was ended effective April 26, 2022.

As of ~~December~~March 31, ~~2017,~~2022 and June 30, 2021, the ~~recorded investment~~Corporation had $448 and $688, respectively, of loans classified as ~~troubled debt restructurings was~~ ~~$1,582~~ ~~with~~ ~~$30~~ ~~of specific reserves allocated to these loans.~~TDRs which are included in impaired loans above. As of ~~December~~March 31, ~~2017,~~2022 and June 30, 2021, the Corporation had notcommitted to lend anany additional ~~$192~~funds to customers with outstanding loans that were classified as troubled debt restructurings. As of March 31, 2022 and June 30, ~~2017,~~2021, the ~~recorded investment of loans classified as troubled debt restructurings was~~ ~~$1,740~~ ~~with~~ ~~$33~~Corporation had $1 and $4, respectively, of specific ~~reserves~~reserve allocated to these loans. ~~As of~~ ~~June 30, 2017,~~ ~~the Corporation had committed to lend an additional~~ ~~$175~~ ~~to customers with outstanding loans that were classified as troubled debt restructurings.~~

~~CONSUMERS BANCORP, INC.~~

~~Notes to the Consolidated Financial Statements~~

~~(Unaudited) (continued)~~

~~(Dollars in thousands, except per share amounts)~~

During the three- and ~~six~~nine ~~months~~-month periods ended ~~December~~March 31, ~~2017~~2022 and ~~2016~~2021,, there were no0 loan modifications completed that were classified as troubled debt restructurings. There were no ~~charge offs~~0 charge-offs from troubled debt restructurings that were completed during the three- and ~~six~~nine ~~month~~-month periods ended ~~December~~March 31, ~~2017~~2022 and ~~2016.~~2021.

~~The~~reThere were no0 loans classified as troubled debt restructurings for which there was a payment default within 12 months following the modification during the three- and ~~six~~nine ~~month~~-month periods ended ~~December~~March 31, ~~2017~~2022 and ~~2016.~~2021. A loan is considered ~~to be~~ 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: ~~curren~~tcurrent financial information, historical payment experience, credit documentation, public information, current economic trends and other relevant information. 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~~$100 and non-homogeneous loans, such as commercial and commercial real estate loans. Management monitors the loans on an ongoing basis for any changes in the borrower’s ability to service their debt and ~~affirm~~affirms the risk ratings for the loans and leases in their respective portfolio on an annual basis. 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, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

(Dollars in thousands, except per share amounts)

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~~either less than $100 or are included in groups of homogeneous loans. Generally, 1-4 Family Residential and Consumer loans are not risk rated, except when collateral is used for a business purpose. These loans are evaluated based on delinquency status, which are disclosed in the previous table within this footnote. Based on the most recent analysis performed, the recorded investment by risk category of loans by class of loans was as follows:

As of December 31, 2017

Special

Not

Pass

Mention

Substandard

Doubtful

Rated

Commercial
$ 48,091 $ 883 $ 339 $ — $ 362
Commercial real estate:

Construction
5,941 — 2 — —
Other
156,415 10,365 1,772 537 978
1-4 Family residential real estate:

Owner occupied
2,661 58 14 13 42,743
Non-owner occupied
14,669 203 433 315 590
Construction
765 — — — 1,169
Consumer
119 — — — 4,852
Total
$ 228,661 $ 11,509 $ 2,560 $ 865 $ 50,694

As of June 30, 2017

Special

Not

Pass

Mention

Substandard

Doubtful

Rated

Commercial
$ 44,435 $ 907 $ 642 $ — $ 453
Commercial real estate:

Construction
4,514 1,035 — 4 43
Other
150,460 5,110 1,566 470 561
1-4 Family residential real estate:

Owner occupied
2,668 — 11 30 38,983
Non-owner occupied
13,633 210 261 187 125
Construction
1,223 — — — 773
Consumer
145 — — — 4,999
Total
$ 217,078 $ 7,262 $ 2,480 $ 691 $ 45,937

	As of March 31, 2022
			Special						Not
	Pass		Mention		Substandard		Doubtful		Rated
Commercial	$	90,101	$	781	$	116	$	289	$	194
Commercial real estate:
Construction		13,396		0		0		0		0
Other		283,308		2,077		5,458		206		663
1-4 Family residential real estate:
Owner occupied		1,167		0		0		22		137,904
Non-owner occupied		21,345		146		75		27		303
Construction		1,789		0		0		0		4,712
Consumer		690		0		0		0		40,067
Total	$	411,796	$	3,004	$	5,649	$	544	$	183,843

~~CONSUMERS BANCORP, INC.~~

~~Notes to~~As of June 30, 2021, and based on the ~~Consolidated Financial Statements~~

~~(Unaudited) (continued)~~most recent analysis performed, the recorded investment by risk category of loans by class of loans is as follows:

~~(Dollars in thousands, except per share amounts)~~

	As of June 30, 2021
			Special						Not
	Pass		Mention		Substandard		Doubtful		Rated
Commercial	$	109,118	$	280	$	309	$	303	$	277
Commercial real estate:
Construction		10,478		0		0		0		0
Other		259,327		3,700		4,718		874		929
1-4 Family residential real estate:
Owner occupied		1,715		0		6		392		117,218
Non-owner occupied		18,312		163		197		202		274
Construction		1,849		0		0		0		7,320
Consumer		694		0		0		0		28,956
Total	$	401,493	$	4,143	$	5,230	$	1,771	$	154,974

Note 45 - 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~~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.

~~Leve~~lLevel 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~~’scompany’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 ~~recurrin~~grecurring basis include the following:

Securities available-for-sale: When available, the fair values of available-for-sale 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).

CONSUMERS BANCORP, INC.
Notes to the Consolidated Financial Statements
(Unaudited) (continued)

(Dollars in thousands, except per share amounts)

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 me~~asure~~measure fair value:

Fair Value Measurements at
December 31, 2017 Using

Balance at
December 31,
2017

Level 1

Level 2

Level 3

Assets:

Obligations of U.S. government-sponsored entities and agencies
$ 13,636 $ — $ 13,636 $ —
Obligations of states and political subdivisions
57,181 — 57,181 —
Mortgage-backed securities – residential
57,518 — 57,518 —
Mortgage-backed securities – commercial
1,436 — 1,436 —
Collateralized mortgage obligations - residential
5,346 — 5,346 —
Pooled trust preferred security
621 — 621 —

	Balance at		Fair Value Measurements at March 31, 2022
	March 31, 2022		Level 1		Level 2		Level 3
Assets:
Obligations of U.S. Treasury	$	8,525	$	8,525	$	0	$	0
Obligations of U.S. government-sponsored entities and agencies		26,546		0		26,546		0
Obligations of state and political subdivisions		94,283		0		94,283		0
U.S. Government-sponsored mortgage-backed securities – residential		106,027		0		106,027		0
U.S. Government-sponsored mortgage-backed securities – commercial		7,787		0		7,787		0
U.S. Government-sponsored collateralized mortgage obligations - residential		28,388		0		28,388		0
Other debt securities		16,819		0		16,819		0
Equity securities		428		0		428		0

~~CONSUMERS BANCORP, INC.~~

~~Notes to the Consolidated Financial Statements~~

~~(Unaudited) (continued)~~

~~(Dollars in thousands, except per share amounts)~~

Fair Value Measurements at
June 30, 2017 Using

Balance at
June 30,
2017

Level 1

Level 2

Level 3

Assets:

Obligations of U.S. government-sponsored entities and agencies
$ 12,587 $ — $ 12,587 $ —
Obligations of states and political subdivisions
57,460 — 57,460 —
Mortgage-backed securities - residential
63,838 — 63,838 —
Mortgage-backed securities - commercial
1,458 — 1,458 —
Collateralized mortgage obligations - residential
6,211 — 6,211 —
Pooled trust preferred security
532 — 532 —

	Balance at		Fair Value Measurements at June 30, 2021
	June 30, 2021		Level 1		Level 2		Level 3
Assets:
Obligations of U.S. government-sponsored entities and agencies	$	15,033	$	0	$	15,033	$	0
Obligations of state and political subdivisions		76,499		0		76,499		0
U.S. government-sponsored mortgage-backed securities - residential		90,517		0		90,517		0
U.S. government-sponsored mortgage-backed securities - commercial		8,845		0		8,845		0
U.S. government-sponsored collateralized mortgage obligations - residential		16,374		0		16,374		0
Other debt securities		492		0		492		0
Equity securities		424		0		424		0

There were no transfers between Level 1 and Level 2 during the three or-month and ~~six~~nine ~~month~~-month periods ended ~~December~~March 31, ~~2017~~ 2022.or ~~2016.~~

Certain ~~financial~~ assets and ~~financial~~ 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. ~~Financial assets~~Assets and ~~financial~~ 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. There were 0 impaired loans measured at fair value on a non-recurring basis at March 31, 2022 or June 30, 2021 and there was 0 impact to the provision for loan losses for the three- or nine-month periods ended March 31, 2022 or 2021.

CONSUMERS BANCORP, INC.
Notes to the Consolidated Financial Statements
(Unaudited) (continued)

(Dollars in thousands, except per share amounts)

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.

~~CONSUMERS BANCORP, INC.~~

~~Notes to the Consolidated Financial Statements~~

~~(Unaudited) (continued)~~

~~(Dollars in thousands, except per~~ ~~share amounts)~~

There ~~were~~ no ~~financial assets measured at fair value on a non-recurring basis at~~ ~~December 31, 2017.~~ ~~Financial assets measured at fair value on a non-recurring basis at~~ ~~June 30, 2017~~ ~~are summarized below:~~

Fair Value Measurements at
June 30, 2017 Using

Balance at
June 30, 2017

Level 1

Level 2

Level 3

Impaired loans:

Commercial Real Estate - Other
$ 130 $ — $ — $ 130
Other Real Estate Owned:

1-4 Family residential real estate
71 — — 71

~~There were~~ no ~~impaired loans measured at fair value on a non-recurring basis at~~ ~~December 31, 2017~~ ~~and there~~ was no ~~impact to the provision for loan losses for the~~ ~~three~~ ~~months ended~~ ~~December 31, 2017.~~ ~~The resulting impact to the provision for loan losses was a decrease of~~ ~~$17~~ ~~being recorded for the~~ ~~six~~ ~~months ended~~ ~~December 31, 2017.~~ ~~Impaired loans, measured for impairment using the fair value of the collateral, had a recorded investment of~~ ~~$130,~~ ~~with~~ no ~~valuation allowance at~~ ~~June 30, 2017.~~ ~~The resulting impact to the provision for loan losses was a decrease of~~ ~~$87~~ ~~and~~ ~~$47~~ ~~being recorded for the~~ ~~three~~ ~~and~~ ~~six~~ ~~months ended~~ ~~December 31, 2016,~~ ~~respectively.~~

~~Other real estate owned, which is measured at the lower of carrying or fair value less costs to sell, had a net carrying amount of~~ ~~$71,~~ ~~which was made up of the outstanding balance of~~ ~~$103,~~ ~~net of a valuation allowance of~~ ~~$32~~ at ~~June 30, 2017.~~ ~~There were~~ no0 other real estate owned or other repossessed assets being carried at fair value as of ~~December~~March 31, ~~2017.~~2022

~~The following tables present quantitative information about Level~~ 3 ~~fair value measurements for financial instruments measured at fair value on a non-recurring basis at~~or June 30, ~~2017:~~2021.

June 30, 2017

Fair
Value

Valuation
Technique

Unobservable
Inputs

Range

Weighted
Average

Impaired loans:

Commercial Real Estate – Other
$ 130
Bid Indications
N/A 0.0
%
0.0
%
Other Real Estate Owned:

1-4 Family residential real estate
$ 71
Bid Indications
N/A 0.0
%
0.0
%

~~CONSUMERS BANCORP, INC.~~

~~Notes to the Consolidated Financial Statements~~

~~(Unaudited) (continued)~~

~~(Dollars in thousands, except per share amounts)~~

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

December 31, 2017

June 30, 2017

Carrying
Amount

Estimated
Fair
Value

Carrying
Amount

Estimated
Fair
Value

Financial Assets:

Level 1 inputs:

Cash and cash equivalents
$ 9,141 $ 9,141 $ 9,912 $ 9,912
Level 2 inputs:

Certificates of deposits in other financial institutions
3,921 3,924 3,921 3,927
Loans held for sale
814 833 1,252 1,286
Accrued interest receivable
1,310 1,310 1,212 1,212
Level 3 inputs:

Securities held-to-maturity
4,061 4,083 4,259 4,329
Loans, net
290,369 284,618 269,781 266,041
Financial Liabilities:

Level 2 inputs:

Demand and savings deposits
316,218 316,218 307,960 307,960
Time deposits
66,771 66,676 66,511 66,535
Short-term borrowings
22,507 22,507 23,986 23,986
Federal Home Loan Bank advances
17,188 16,796 12,320 12,054
Accrued interest payable
74 74 40 40

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

~~Cash and cash equivalents:~~ ~~The carrying value of cash, deposits in other financial institutions and federal funds sold 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. For adjustable rate loans that reprice at least annually and for fixed rate commercial loans with maturities of ~~six~~ months or less which possess normal risk characteristics, carrying value was determined to be fair value. Fair value of other types of loans (including adjustable rate loans which reprice less frequently than annually and fixed rate term loans or loans which possess higher risk characteristics) was estimated by discounting future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for similar anticipated maturities resulting in a Level 3 ~~classification. The methods utilized to estimate the fair value of loans do~~ ~~not~~ ~~necessarily represent an exit price.~~

~~CONSUMERS BANCORP, INC.~~

~~Notes to the Consolidated Financial Statements~~

~~(Unaudited) (continued)~~

~~(Dollars in thousands, except per share amounts)~~

~~Securities held-to-maturity:~~ The held-to-maturity securities are general obligation and revenue bonds made to local municipalities. The fair values of these securities are estimated 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~~ ~~December 31, 2017~~ ~~and~~ ~~June 30, 2017,~~ ~~for deposits of similar remaining maturities, resulting in a 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~~ ~~December 31, 2017~~ ~~and~~ ~~June 30, 2017~~ ~~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.~~

	March 31, 2022				June 30, 2021
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial Assets:
Level 1 inputs:
Cash and cash equivalents	$	51,328	$	51,328	$	18,529	$	18,529
Level 2 inputs:
Certificates of deposit in other financial institutions		4,041		4,114		5,825		5,955
Loans held for sale		428		437		1,457		1,488
Accrued interest receivable		2,650		2,650		2,077		2,077
Level 3 inputs:
Securities held-to-maturity		7,020		6,877		7,996		8,352
Loans, net		596,598		572,637		559,956		560,208
Financial Liabilities:
Level 2 inputs:
Demand and savings deposits		784,064		784,064		639,310		639,310
Time deposits		106,570		106,933		87,539		88,147
Short-term borrowings		11,834		11,834		12,203		12,203
Federal Home Loan Bank advances		16,271		15,565		18,050		18,247
Accrued interest payable		63		63		51		51

Note 56 – 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. There were ~~2,062~~0 shares of restricted stock that were anti-dilutive for the three-month periods ended March 31, 2022 and ~~six~~2021. ~~months ended~~ ~~December 31, 2017.~~ There were no ~~equity instruments~~8,878 and 3,622 shares of restricted stock that were anti-dilutive for the ~~three~~nine-month periods ended March 31, 2022 and ~~six~~2021, ~~months ended~~ ~~December 31, 2016.~~ respectively. The following table details the calculation of basic and diluted earnings per share:

	For the Three Months Ended December 31,				For the Six Months Ended December 31,				For the Three Months Ended March 31,				For the Nine Months Ended March 31,
	2017		2016		2017		2016		2022		2021		2022		2021
Basic:
Net income available to common shareholders	$	657	$	722	$	1,586	$	1,623	$	2,585	$	2,116	$	8,412	$	7,024
Weighted average common shares outstanding		2,727,666		2,724,061		2,725,859		2,723,988		3,039,049		3,018,529		3,036,473		3,017,773
Basic income per share	$	0.24	$	0.27	$	0.58	$	0.60	$	0.85	$	0.70	$	2.77	$	2.33

Diluted:
Net income available to common shareholders	$	657	$	722	$	1,586	$	1,623	$	2,585	$	2,116	$	8,412	$	7,024
Weighted average common shares outstanding		2,727,666		2,724,061		2,725,859		2,723,988		3,039,049		3,018,529		3,036,473		3,017,773
Dilutive effect of restricted stock		—		19		—		13		503		320		275		0
Total common shares and dilutive potential common shares		2,727,666		2,724,080		2,725,859		2,724,001		3,039,552		3,018,849		3,036,748		3,017,773
Dilutive income per share	$	0.24	$	0.27	$	0.58	$	0.60	$	0.85	$	0.70	$	2.77	$	2.33

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

(Dollars in thousands, except per share amounts)

Note 67 –Accumulated Other Comprehensive Income (Loss)

The components of other comprehensive income related to unrealized gains and losses on available-for-sale securities for the three and ~~six~~nine ~~month period~~-month periods ended ~~December~~March 31, ~~2017~~2022 and ~~2016,~~2021, were as follows:

	Pretax			Tax Effect			After-tax			Affected Line Item in Consolidated Statements of Income
Balance as of December 31, 2021	$	2,003		$	(421	)	$	1,582
Net current period other comprehensive loss		(16,891	)		3,548			(13,343	)
Balance as of March 31, 2022	$	(14,888	)	$	3,127		$	(11,761	)
��
Balance as of December 31, 2020	$	5,733		$	(1,204	)	$	4,529
Unrealized holding losses on available-for-sale securities arising during the period		(2,269	)		477			(1,792	)
Amounts reclassified from accumulated other comprehensive income		(6	)		1			(5	)	(a)(b)
Net current period other comprehensive loss		(2,275	)		478			(1,797	)
Balance as of March 31, 2021	$	3,458		$	(726	)	$	2,732

	Pretax			Tax Effect			After-tax			Affected Line Item in Consolidated Statements of Income
Balance as of June 30, 2021	$	4,493		$	(943	)	$	3,550
Unrealized holding losses on available-for-sale securities arising during the period		(19,379	)		4,070			(15,309	)
Amounts reclassified from accumulated other comprehensive income		(2	)		0			(2	)	(a)(b)
Net current period other comprehensive loss		(19,381	)		4,070			(15,311	)
Balance as of March 31, 2022	$	(14,888	)	$	3,127		$	(11,761	)

Pretax

Tax Effect

After-tax

Affected Line
Item in
Consolidated
Statements of
Income
Balance as of September 30, 2017
$ 741 $ (252
)
$ 489
Unrealized holding loss on available-for-sale securities arising during the period
(631
)
215 (416
)

Balance as of December 31, 2017
$ 110 $ (37
)
$ 73

Balance as of September 30, 2016
$ 3,095 $ (1,053
)
$ 2,042
Unrealized holding loss on available-for-sale securities arising during the period
(3,319
)
1,128 (2,191
)

Amounts reclassified from accumulated other comprehensive income
(22
)
8 (14
)
(a)(b)
Net current period other comprehensive loss
(3,341
)
1,136 (2,205
)

Balance as of December 31, 2016
$ (246
)
$ 83 $ (163
)

21

CONSUMERS BANCORP, INC.
Notes to the Consolidated Financial Statements
(Unaudited) (continued)

(a)Dollars in thousands, except per share amounts)

Balance as of June 30, 2020	$	5,393		$	(1,133	)	$	4,260
Unrealized holding losses on available-for-sale securities arising during the period		(1,921	)		404			(1,517	)
Amounts reclassified from accumulated other comprehensive income		(14	)		3			(11	)	(a)(b)
Net current period other comprehensive loss		(1,935	)		407			(1,528	)
Balance after reclassification as of March 31, 2021	$	3,458		$	(726	)	$	2,732

(a) Securities ~~gains,~~(gains) losses, net

(b) Income tax expense

~~CONSUMERS BANCORP, INC.~~

~~Notes to the Consolidated Financial Statements~~

~~(Unaudited) (continued)~~

Pretax

Tax Effect

After-tax

Affected Line
Item in
Consolidated
Statements of
Income
Balance as of June 30, 2017
$ 675 $ (230
)
$ 445
Unrealized holding loss on available-for-sale securities arising during the period
(527
)
180 (347 )
Amounts reclassified from accumulated other comprehensive income
(38
)
13 (25
)
(a)(b)
Net current period other comprehensive loss
(565
)
193 (372
)

Balance as of December 31, 2017
$ 110 $ (37
)
$ 73

Balance as of June 30, 2016
$ 3,621 $ (1,232
)
$ 2,389
Unrealized holding loss on available-for-sale securities arising during the period
(3,742
)
1,272 (2,470
)

Amounts reclassified from accumulated other comprehensive income
(125
)
43 (82
)
(a)(b)
Net current period other comprehensive loss
(3,867
)
1,315 (2,552
)

Balance as of December 31, 2016
$ (246
)
$ 83 $ (163
)

~~(a) Securities gains, net~~

~~(b) Income tax expense~~

Note 78 – COVID-19~~Income Taxes~~

OnIn December ~~22, 2017,~~2019, a novel strain of coronavirus surfaced in Wuhan, China, and has spread around the ~~U.S. government enacted comprehensive tax legislation commonly referred to as~~world, resulting in business and social disruption. The coronavirus was declared a Pandemic by the ~~Tax Cuts~~World Health Organization on March 11, 2020. The operations and ~~Jobs Act (Tax Act). The Tax Act significantly revises the future ongoing U.S. corporate income tax by, among other things, decreasing U.S. corporate income tax rates to~~ ~~21.0%~~ ~~from~~ ~~35.0%.~~ Asbusiness results of the Corporation ~~has a~~could be materially adversely affected. The extent to which the coronavirus ~~June 30~~may ~~fiscal year-end,~~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 ~~lower corporate income tax rate will be phased in, resulting in a blended U.S. statutory federal rate of approximately~~ ~~27.55%~~ ~~for the Corporation's fiscal year ending~~ ~~June 30, 2018,~~ ~~and~~ ~~21.0%~~ ~~for subsequent fiscal years. In addition, the reduction~~severity of the ~~corporate tax rate~~coronavirus and the actions required to contain the ~~Corporation to revalue~~coronavirus or treat its ~~deferred tax assets and liabilities based on the lower federal tax rate of~~ ~~21.0%.~~

impact, among others. As a result of the ~~new legislation, during~~economic shutdown engineered to slow down the ~~quarter ended~~ spread of COVID-~~December 31, 2017,~~ 19,the ~~Corporation recorded a~~ ~~one~~~~-time income tax expense~~ability of $~~348~~our customers to make payments on loans could be adversely impacted, resulting in ~~conjunction with writing down its net deferred tax assets. The impact of using the~~ ~~27.55%~~ ~~blended federal tax rate for the quarter ended~~ ~~December 31, 2017~~ ~~versus a~~ ~~34.0%~~ ~~rate reduced the income tax expense by approximately~~ ~~$95.~~ ~~Therefore, the effective tax rate was~~ ~~42.7%~~elevated loan losses and ~~31.7%~~ ~~for the~~ ~~three~~ ~~and~~ ~~six~~ ~~months ended~~ ~~December 31, 2017,~~ ~~respectively, compared to~~ ~~16.7%~~ ~~and~~ ~~19.7%~~ ~~for the~~ ~~three~~ ~~and~~ ~~six~~ ~~months ended~~ ~~December 31, 2016,~~ ~~respectively.~~

~~The changes included~~an increase in the T~~ax Act~~Corporation’s allowance for loan losses. Additional information regarding COVID-19 procedures and policies are ~~broad and complex. The final transition impacts~~contained in the COVID-19 Pandemic section of ~~the Tax Act~~ ~~may~~ differ from the above estimates, possibly materially, due to, among other things, changes in interpretations of the Tax Act, any legislative action to address questions that arise because of the Tax Act, and any changes in accounting standards for income taxes or related interpretations in response to the Tax Act.

~~Item 2~~ – Management’s Discussion and Analysis of Financial Condition and Results of Operations.

CONSUMERS BANCORP, INC.
Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Dollars in thousands, except per share data)

General
The following is ~~management~~’smanagement’s analysis of the Corporation’s results of operations for the ~~three~~three- and ~~six months~~nine-month periods ended ~~December~~March 31, ~~2017,~~2022, compared to the same ~~period~~periods in ~~2016,~~2021, and the consolidated balance sheet at ~~December~~March 31, ~~2017,~~2022, compared to June 30, ~~2017.~~2021. This discussion is designed to provide a more comprehensive review of the operating results and financial condition 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.

Overview
Consumers Bancorp, Inc., a bank holding company incorporated under the laws of the State of Ohio (the Corporation), owns all ~~of th~~ethe issued and outstanding common shares of Consumers National Bank, a bank chartered under the laws of the United States of America (the Bank). The Corporation’s activities have been limited primarily to holding the common shares 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, Stark, Summit, Wayne and contiguous counties in ~~Ohio.~~Ohio, Pennsylvania, and 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 its acquisition of two branches located in Calcutta and Wellsville, Ohio from CFBank, National Association (CFBank). As part of the acquisition, the Corporation 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 acquisition, the Corporation recorded goodwill of $1,616.
COVID-19 Pandemic
In response to COVID-19, management actively pursued multiple avenues to assist customers during these uncertain times. For commercial borrowers, the Coronavirus Aid, Relief and Economic Security Act (the CARES Act) includes key SBA initiatives to assist small businesses. The Paycheck Protection Program (PPP) was designed to provide a direct incentive for small businesses to keep their workers on the payroll. The SBA will forgive loans obtained under this program if the borrower meets payroll and other requirements. The Bank originated a total of $113,367 of PPP loans during the first and second rounds of assistance. As of March 31, 2022, there were $5,238 of PPP loans outstanding.
Additionally, on March 22, 2020 the Corporation adopted a loan modification program to assist borrowers impacted by COVID-19. The program was available to most borrowers whose loan was not past due on March 22, 2020, the date this loan modification program was adopted. The program offered principal and interest payment deferrals for up to 90 days or interest only payments for up to 90 days. Borrowers were eligible for an additional 90 days of payment deferrals if situations warranted a need for an extension. Interest was deferred but continued to accrue during the deferment period and the maturity date on amortizing loans was 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 were not classified as troubled debt restructurings. As of March 31, 2022, two borrowers with an outstanding balance of $38 in the aggregate were in payment deferral status under this loan modification program. This modification program was ended effective April 26, 2022.
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. In addition, the consumer reserve personal line of credit, an unsecured line of credit that is linked to a personal checking account, was redesigned to provide easier access to credit and a lower initial rate.
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. 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.
23
CONSUMERS BANCORP, INC.
Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)

(Dollars in thousands, except per share data)
Results of Operations
~~Three~~ Three-and Nine-Month Periods Ended March 31, 2022 and ~~Six~~ ~~Months Ended~~ ~~December 31~~~~, 2017 and~~ ~~December 31~~~~, 2016~~2021

InNet income for the ~~second~~third quarter of fiscal year ~~2018, pre-tax income increased by $279,~~2022 was $2,585, or ~~32.2% from the same period last year. Net income for the second quarter of fiscal year 2018 was $657, or $0.24~~$0.85 per common share, compared to ~~$722,~~$2,116, or ~~$0.27~~$0.70 per common share for the three months ended ~~December~~March 31, ~~2016.~~2021. The following are key highlights of our results of operations for the three months ended ~~December~~March 31, ~~2017:~~2022, compared to the prior fiscal year comparable period:
●
~~the estimated impact of the enactment of the Tax Act resulted in a net increase of $253 in income tax expense;~~

●
net interest income increased by ~~$391~~$1,579 to ~~$3,927,~~$7,915, or ~~by 11.1%~~24.9%, in the ~~second~~third quarter of fiscal year ~~2018~~2022 from the same prior year period primarily as a result of the growth in average interest-earning assets along with a reduction in the cost of funds;
●
an $85 provision for loans loss expense was recorded for the third quarter of fiscal year 2022 compared with $185 for the same prior year period;
●
noninterest income increased by $66, or 6.3%, in the third quarter of fiscal year 2022 from the same prior year period primarily due to a $72, or 24.8%, increase in service charges on deposit accounts and a $25, or 5.4%, increase in debit card interchange income which were partially offset by a $27, or 18.1%, decline in mortgage banking activity; and
●
noninterest expenses increased by $1,172, or 25.1%, in the third quarter of fiscal year 2022 from the same prior year period primarily due to increases in salaries and employee benefits; occupancy and equipment expenses; and Federal Deposit Insurance Corporation (FDIC) assessments that was primarily driven by the growth in the organization from the branch acquisition.
In the first nine months of fiscal year 2022, net income was $8,412, or $2.77 per common share, compared to $7,024, or $2.33 per common share, for the nine months ended March 31, 2021. The following are key highlights of our results of operations for the nine months ended March 31, 2022, compared to the prior fiscal year-to-date comparable period:
●
net interest income increased by $4,545 to $24,433, or by 22.9%, in the first nine months of fiscal year 2022 from the same prior year period;

●
~~the~~ a $545 provision for loan ~~losses~~loss expense was recorded in the ~~second quarter~~first nine months of fiscal year ~~2018 totaled $60~~2022 compared ~~to $140 in~~with $445 during the same prior year period;

●
~~non-interest~~noninterest income increased by $~~42,~~$266, or ~~5.3%~~7.9%, in the ~~second quarter~~first nine months of fiscal year ~~2018~~2022 primarily due to a $175, or 19.2%, increase in service charges on deposit accounts and a $155, or 11.3%, increase in debit card interchange income which were partially offset by an $80, or 12.7%, decline in income from ~~the same prior year period;~~mortgage banking activity; and

●
~~non-interest~~noninterest expenses increased by $~~234,~~$3,023, or ~~7.0%~~21.1%, in the ~~second quarter~~first nine months of fiscal year ~~2018~~2022 from the same prior year ~~period.~~period primarily due to an increase in salaries and employee benefit expenses.

~~In the first six months of fiscal year 2018,~~ pre-tax income increased by $301, or 14.9% from the same period last year. Net income for the six months ended December 31, 2017 was $1,586, or $0.58 per common share, compared to $1,623, or $0.60 per common share for the six months ended December 31, 2016. The ~~following are key highlights of our results of operations for the six months ended December 31, 2017:~~
●
~~net interest income increased by $450, or 6.2%, in fiscal year 2018 from the same prior year period;~~
●
~~the provision for loan losses~~ ~~totaled $150 in fiscal year 2018 compared to $276 in the same prior year period;~~
●
~~non-interest income increased by $66, or 4.0% in fiscal year 2018 from the same prior year period;~~
●
~~non-interest expenses increased by $341, or 5.2% in fiscal year 2018 from the same prior year period; and~~
●
~~the estimated impact of the enactment of the~~ ~~Tax Act resulted in a net increase of $253 in income tax expense in fiscal year 2018.~~
~~Return~~annualized return on average equity and return on average assets were ~~7.09%~~15.63% and ~~0.67%~~1.18%, respectively, for the ~~first six~~nine months ~~of fiscal year 2018~~ended March 31, 2022 compared to ~~7.34%~~14.05% and ~~0.74%~~1.24%, respectively, for the same prior year period.

~~CONSUMERS BANCORP, INC.~~
~~Management's Discussion and Analysis of Financial Condition~~
~~and Results of Operations (continued)~~
~~(Dollars in thousands, except per share~~ ~~data)~~

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~~’sCorporation’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. Net interest margin is calculated by dividing net interest income on a fully tax equivalent basis (FTE) by total average interest-earning assets. FTE income includes tax-exempt income, restated to a pre-tax equivalent, based on the statutory federal income tax rate. The federal income tax rate in effect for the ~~2018~~2022 and 2021 fiscal ~~year~~years was 27.55% and for the 2017 fiscal year was 34.0%. With the enactment of the Tax Act, the statutory tax rate was changed in the second quarter of fiscal year 2018 to 27.55% by using a blended rate of the new 21.0% ~~federal rate that went into effect on January 1, 2018 and the previous federal rate of 34.0%~~. 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.

The ~~Corporation~~’sCorporation’s net interest margin was ~~3.61%~~3.50% for the three months ended ~~December~~March 31, ~~2017,~~2022, compared with ~~3.62%~~3.56% for the same period in ~~2016.~~2021. FTE net interest income for the three months ended ~~December~~March 31, ~~2017~~2022 increased by ~~$290,~~$1,608, or ~~7.8%~~25.0%, to ~~$4,011~~$8,043 from ~~$3,721~~$6,435 for ~~the same year ago period.~~
~~Tax-equivalent~~ interest income for the three months ended December 31, 2017 increased by $404, or 10.2%, from the same year ago period. Interest income was positively impacted by a $31,513, or 7.7%, increase in average interest-earning assets from the same prior year period. The Corporation’s yield on average interest-earning assets increased to 3.94% for the three months ended December 31, 2017 from 3.86% for the same period last year. The yield on average interest-earning assets increased despite a decline in the tax-equivalent yield on nontaxable securities which occurred as a result of the decline in the statutory federal tax rate. The increase in the yield on average interest-earning assets was primarily a result of a positive change in the earning asset mix with higher yielding loans increasing faster than lower yielding securities as well as an increase in interest rates.
~~Interest expense for the three months ended~~ December 31, 2017 increased by $114 from the same year ago period. The Corporation’s cost of funds was 0.46% for the three months ended December 31, 2017 compared with 0.34% for the same year ago period. The increase in short term market interest rates has impacted the rates paid on money market accounts, short-term borrowings and time deposits.
~~The Corporation~~’s net interest margin was 3.62% for the six months ended December 31, 2017 compared with 3.74% for the same period in 2016. FTE net interest income for the six months ended December 31, 2017 increased by $356, or 4.7%, to $7,985 from $7,629 for the same year ago period.
~~Tax-equivalent~~ interest income for the six months ended December 31, 2017 increased by $587, or 7.2%, from the same year ago period. The Corporation’s yield on average interest-earning assets declined to 3.95% for the six months ended December 31, 2017 from 3.98% for the same period last year. For the six months ended December 31, 2017, the tax-equivalent yield on nontaxable securities was negatively impacted by 0.36% due to the enactment of the Tax Act and the resulting decline in the statutory federal tax rate. Interest expense for the six months ended December 31, 2017 increased by $231 from the same year ago period. The Corporation’s cost of funds was 0.46% for the six months ended December 31, 2017 compared with 0.34% for the same year ago period.

24

~~CONSUMER~~SCONSUMERS BANCORP, INC.

Management's Discussion and Analysis of Financial Condition

and Results of Operations ~~(continued)~~(continued)

(Dollars in thousands, except per share data)

Average Balance Sheets and Analysis of Net Interest Income for the Three Months Ended December 31,
(In thousands, except percentages)

2017

2016

Average
Balance

Interest

Yield/
Rate

Average
Balance

Interest

Yield/
Rate

Interest-earning assets:

Taxable securities
$ 81,941 $ 459 2.22
%
$ 75,524 $ 377 2.01
%
Nontaxable securities (1)
60,556 448 2.97 60,326 535 3.58
Loans receivable (1)
292,149 3,440 4.67 263,909 3,029 4.55
Interest bearing deposits and federal funds sold
6,533 28 1.70 9,907 30 1.20
Total interest-earning assets
441,179 4,375 3.94
%
409,666 3,971 3.86
%

Noninterest-earning assets
31,646 29,148

Total Assets
$ 472,825 $ 438,814

Interest-bearing liabilities:

NOW
$ 53,913 $ 20 0.15
%
$ 48,960 $ 19 0.15
%
Savings
152,502 78 0.20 138,402 36 0.10
Time deposits
66,770 155 0.92 66,425 128 0.76
Short-term borrowings
26,249 57 0.86 20,481 11 0.21
FHLB advances
12,829 54 1.67 14,042 56 1.58
Total interest-bearing liabilities
312,263 364 0.46
%
288,310 250 0.34
%

Noninterest-bearing liabilities:

Noninterest-bearing checking accounts
112,039 103,143
Other liabilities
3,956 3,695
Total liabilities
428,258 395,148
Shareholders’ equity
44,567 43,666

Total liabilities and shareholders’ equity
$ 472,825 $ 438,814

Net interest income, interest rate spread (1)
$ 4,011 3.48
%
$ 3,721 3.52
%

Net interest margin (net interest as a percent of average interest-earning assets) (1)
3.61
%
3.62
%

Federal tax exemption on non-taxable securities and loans included in interest income
$ 84 $ 185

Average interest-earning assets to interest-bearing liabilities
141.28
%
142.09
%

~~(1) calculated~~Tax-equivalent interest income for the three months ended March 31, 2022 increased by $1,577, or 23.2%, from the same prior year period. Interest income was positively impacted by a $190,390, or 25.8%, increase in average interest-earning assets from the same prior year period due to the additional assets acquired as part of the acquisition of the two branches from CFBank and as well as organic growth. The yield on average interest-earning assets declined to 3.65% for the three months ended March 31, 2022 compared with 3.76% for the same period last year.

Interest expense for the three months ended March 31, 2022 decreased by $31, or 8.4%, from the same prior year period primarily due to a ~~fully taxable equivalent basis~~ ~~utilizing~~reduction in deposit and borrowing costs as a ~~statutory federal~~result of lower market interest rates. The Corporation’s cost of funds was 0.21% for the three months ended March 31, 2022 compared with 0.30% for the same prior year period.

The Corporation’s net interest margin was 3.63% for the nine months ended March 31, 2022, compared with 3.76% for the same period in 2021. FTE net interest income ~~tax rate~~for the nine months ended March 31, 2022 increased by $4,616, or 22.9%, to $24,807 from $20,191 for the same prior year period.

Tax-equivalent interest income for the nine months ended March 31, 2022 increased by $4,074, or 18.7%, from the same prior year period. Interest income was positively impacted by a $190,421, or 26.4%, increase in average interest-earning assets from the same prior year period primarily due to the assets acquired from the CFBank branch acquisition as well as organic growth. Additionally, interest income was positively impacted by the accretion of ~~27.55%~~origination fees from the PPP loans. The PPP loans had an average balance of $22,968 for the nine-month period ended March 31, 2022 and, during this same period, $2,419 of interest and fee income was recognized on the PPP loans. This compares with an average balance of $64,761 for the nine-month period ended March 31, 2021 and the recognition of $2,205 of interest and fee income on the PPP loans during the nine-month period ended March 31, 2021. A reduction in the ~~2018~~accretion of origination fees from PPP loans as these loans are forgiven could ultimately result in a decline in interest income. The Corporation’s yield on average interest-earning assets was 3.78% for the nine months ended March 31, 2022 compared with 4.05% for the same period last year.

Interest expense for the nine months ended March 31, 2022 decreased by $542 from the same prior year period. The Corporation’s cost of funds was 0.22% for the nine months ended March 31, 2022 compared with 0.43% for the same prior year period. The lower short-term market interest rates in fiscal year ~~and 34.0% in~~2022 as compared with the ~~2017~~ fiscal year 2021 had an impact on the rates paid on all interest-bearing deposit products and short-term borrowings. Recent increases in short-term market rates are not expected to have a rapid increase in funding costs due to our current liquidity levels that have been impacted by significant deposit growth.

CONSUMERS BANCORP, INC.

Management's Discussion and Analysis of Financial Condition

and Results of Operations (continued)

(Dollars in thousands, except per share data)

Average Balance Sheets and Analysis of Net Interest Income for the Six Months Ended December 31,
(In thousands, except percentages)

2017

2016

Average
Balance

Interest

Yield/
Rate

Average
Balance

Interest

Yield/
Rate

Interest-earning assets:

Taxable securities
$ 83,578 $ 970 2.30
%
$ 75,745 $ 779 2.07
%
Nontaxable securities (1)
60,635 997 3.30 59,710 1,061 3.61
Loans receivable (1)
286,273 6,674 4.62 262,296 6,219 4.70
Interest bearing deposits and federal funds sold
7,546 65 1.71 9,225 60 1.29
Total interest-earning assets
438,032 8,706 3.95
%
406,976 8,119 3.98
%

Noninterest-earning assets
31,699 28,008

Total Assets
$ 469,731 $ 434,984

Interest-bearing liabilities:

NOW
$ 53,556 $ 40 0.15
%
$ 48,770 $ 36 0.15
%
Savings
152,080 158 0.21 135,957 67 0.10
Time deposits
66,595 303 0.90 66,216 250 0.75
Short-term borrowings
26,197 112 0.85 19,965 23 0.23
FHLB advances
12,915 108 1.66 14,583 114 1.55
Total interest-bearing liabilities
311,343 721 0.46
%
285,491 490 0.34
%

Noninterest-bearing liabilities:

Noninterest-bearing checking accounts
110,111 102,144
Other liabilities
3,920 3,507
Total liabilities
425,374 391,142
Shareholders’ equity
44,357 43,842

Total liabilities and shareholders’ equity
$ 469,731 $ 434,984

Net interest income, interest rate spread (1)
$ 7,985 3.49
%
$ 7,629 3.64
%

Net interest margin (net interest as a percent of average interest-earning assets) (1)
3.62
%
3.74
%

Federal tax exemption on non-taxable securities and loans included in interest income
$ 272 $ 366

Average interest-earning assets to interest-bearing liabilities
140.69
%
142.55
%

Average Balance Sheets and Analysis of Net Interest Income for the Three Months Ended March 31,

(In thousands, except percentages)

	2022								2021
	Average Balance			Interest		Yield/ Rate			Average Balance			Interest		Yield/ Rate
Interest-earning assets:
Taxable securities	$	195,650		$	903		1.83	%	$	87,488		$	368		1.74	%
Nontaxable securities (1)		88,734			642		3.00			70,195			523		3.18
Loans receivable (1)		606,363			6,777		4.53			544,669			5,844		4.35
Federal bank and other restricted stocks		2,489			19		3.10			2,472			19		3.12
Equity securities		432			8		7.51			400			8		8.11
Interest bearing deposits and federal funds sold		36,037			31		0.35			34,091			41		0.49
Total interest-earning assets		929,705			8,380		3.65	%		739,315			6,803		3.76	%

Noninterest-earning assets		39,501								31,129

Total Assets	$	969,206							$	770,444

Interest-bearing liabilities:
NOW	$	146,651		$	33		0.09	%	$	109,758		$	33		0.12	%
Savings		361,569			94		0.11			260,416			73		0.11
Time deposits		109,876			130		0.48			94,338			193		0.83
Short-term borrowings		10,521			18		0.69			8,426			2		0.10
FHLB advances		16,276			62		1.54			18,072			67		1.50
Total interest-bearing liabilities		644,893			337		0.21	%		491,010			368		0.30	%

Noninterest-bearing liabilities:
Noninterest-bearing checking accounts		246,005								204,716
Other liabilities		7,390								6,136
Total liabilities		898,288								701,862
Shareholders’ equity		70,918								68,582

Total liabilities and shareholders’ equity	$	969,206							$	770,444

Net interest income, interest rate spread (1)				$	8,043		3.44	%				$	6,435		3.46	%

Net interest margin (net interest as a percent of average interest-earning assets) (1)							3.50	%							3.56	%

Federal tax exemption on non-taxable securities and loans included in interest income				$	128							$	99

Average interest-earning assets to interest-bearing liabilities		144.16	%							150.57	%

(1) calculated on a fully taxable equivalent basis utilizing a statutory federal income tax rate of ~~27.55% in the 2018 fiscal year and 34.0% in the 2017 fiscal year~~21.0%

CONSUMERS BANCORP, INC.

Management's Discussion and Analysis of Financial Condition

and Results of Operations (continued)

(Dollars in thousands, except per share data)

Average Balance Sheets and Analysis of Net Interest Income for the Nine Months Ended March 31,

(In thousands, except percentages)

	2022								2021
	Average Balance			Interest		Yield/ Rate			Average Balance			Interest		Yield/ Rate
Interest-earning assets:
Taxable securities	$	177,284		$	2,420		1.81	%	$	79,934		$	1,084		1.86	%
Nontaxable securities (1)		85,677			1,870		3.01			68,173			1,566		3.22
Loans receivable (1)		592,351			21,346		4.80			547,262			18,924		4.61
Federal bank and other restricted stocks		2,478			59		3.17			2,472			58		3.13
Equity securities		427			25		7.80			136			8		7.84
Interest bearing deposits and federal funds sold		53,736			124		0.31			23,555			130		0.74
Total interest-earning assets		911,953			25,844		3.78	%		721,532			21,770		4.05	%

Noninterest-earning assets		37,393								30,774

Total Assets	$	949,346							$	752,306

Interest-bearing liabilities:
NOW	$	142,593		$	101		0.09	%	$	106,365		$	116		0.15	%
Savings		343,204			275		0.11			241,302			262		0.14
Time deposits		115,928			451		0.52			107,326			985		1.22
Short-term borrowings		10,332			21		0.27			8,301			8		0.13
FHLB advances		16,389			189		1.54			20,750			208		1.34
Total interest-bearing liabilities		628,446			1,037		0.22	%		484,044			1,579		0.43	%

Noninterest-bearing liabilities:
Noninterest-bearing checking accounts		242,012								195,707
Other liabilities		7,183								5,945
Total liabilities		877,641								685,696
Shareholders’ equity		71,705								66,610

Total liabilities and shareholders’ equity	$	949,346							$	752,306

Net interest income, interest rate spread (1)				$	24,807		3.56	%				$	20,191		3.62	%

Net interest margin (net interest as a percent of average interest-earning assets) (1)							3.63	%							3.76	%

Federal tax exemption on non-taxable securities and loans included in interest income				$	374							$	303

Average interest-earning assets to interest-bearing liabilities		145.11	%							149.06	%

(1) calculated on a fully taxable equivalent basis utilizing a statutory federal income tax rate of 21.0%

CONSUMERS BANCORP, INC.
Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)

(Dollars in thousands, except per share data)

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~~’smanagement’s assessment of the estimated probable incurred credit losses in the Bank’s loan portfolio that have been incurred at each balance sheet date. For the ~~three months~~nine-month period ended ~~December~~March 31, ~~2017,~~2022, the provision for loan losses was ~~$60~~$545 compared ~~to $140~~with $445 for the same prior year period. ~~For~~Net charge-offs of $19 and $47 were recorded during the ~~six-month period~~nine-month periods ended ~~December~~March 31, ~~2017,~~2022 and 2021, respectively. The loan loss provision expense recorded in fiscal year 2022 was primarily due to the ~~provision for~~organic growth within the loan ~~losses was $150 compared to $276 for the same prior year period.~~portfolio.

Non-performing loans were $~~865~~$544 as of ~~December~~March 31, ~~2017~~2022, compared with ~~$1,187~~$1,771 as of June 30, ~~2017~~2021 and ~~$1,589~~$1,883 as of ~~December~~March 31, ~~2016. For~~2021. Non-performing loans to total loans were 0.09% at March 31, 2022 and 0.31% at June 30, 2021. Non-performing loans declined primarily due to the ~~six months ended December 31, 2017 net charge-offs totaled $11 compared with net charge-offs~~full payoff of ~~$719~~two loans that had a balance of $831 as of June 30, 2021 that were on non-accrual for ~~the same prior year~~an extended period. The allowance for loan losses as a percentage of loans was ~~1.10%~~1.16% at ~~December~~March 31, ~~2017~~2022 and ~~1.13%~~1.14% at June 30, ~~2017. The~~2021. Uncertainty remains regarding future levels of criticized and classified loans, non-performing loans and charge-offs. Management will continue to closely monitor changes in the loan portfolio and adjust the provision ~~for loan losses for the period ended December 31, 2017 was considered sufficient by management for maintaining an appropriate allowance for probable incurred credit losses.~~accordingly.

~~Non-Interest~~Noninterest Income

~~Non-interest~~Noninterest income increased by ~~$42~~,$66, or ~~5.3%~~6.3%, for the ~~second~~third quarter of fiscal year ~~2018~~2022 from the same period last year. For the nine-month period ended March 31, 2022, noninterest income increased by $266, or 7.9%, from the same period last year primarily due to a $175, or 19.2% increase in service charges on deposit accounts and ~~by $66,~~a $155, or ~~4.0%~~11.3%, ~~for the first six months of fiscal year 2018 from the same period last year. Non-interest income was positively impacted by increases~~increase in debit card interchange income. Service charges on deposit accounts may be negatively impacted by an industry wide trend of reducing overdraft fees as large banks have announced a reduction in these types of fees in response to regulatory pressure. These increases were partially offset by income ~~gains~~from mortgage banking activity decreasing by $80, or 12.7%, from the same prior year period. Gains from the sale of mortgage loans ~~and earnings on bank owned life insurance. These increases were partially offset by~~to the secondary market declined as refinancing of mortgages slowed as a ~~decline~~result of the increase in ~~gains~~mortgage rates from the ~~sale of securities.~~record lows in the previous year.

~~Non-Interest~~Noninterest Expenses

Total ~~non-interest~~noninterest expenses increased ~~to $3,560,~~by $1,172, or ~~by 7.0%~~25.1%, ~~during~~for the ~~second~~third quarter of fiscal year ~~2018,~~2022 compared with ~~$3,326 during~~ the same ~~year ago period.~~ period last year. Increases in salaries and employee benefits; FDIC assessments; and occupancy and equipment expenses contributed to the increase in noninterest expenses for the three-month period ended March 31, 2022.

Total ~~non-interest~~noninterest expenses increased ~~to $6,953,~~by $3,023, or ~~by 5.2%~~21.1%, ~~during~~for the ~~first six months of fiscal year 2018,~~nine-month period ended March 31, 2022 compared with ~~$6,612 during~~ the same ~~year ago period. Total non-interest~~period last year. Salaries and employee benefit expenses ~~were impacted~~increased by $1,938, or 24.3%, due to the addition of staff at three new office locations, the addition of lending staff, and increases in ~~salary, incentive and debit card processing expenses.~~health care costs. FDIC assessments increased by $205, or 91.5%, for the current fiscal year-to-date period ended March 31, 2022 primarily due to the growth within the organization.

Income Taxes

Income tax expense was ~~$489~~$528 and ~~$735~~$1,772 for the ~~three~~three- and ~~six months~~nine-month periods ended ~~December~~March 31, ~~2017,~~2022, respectively, compared to ~~$145~~$424 and ~~$397~~$1,472 for the ~~three~~three- and ~~six months~~nine-month periods ended ~~December~~March 31, ~~2016,~~2021, respectively. The effective tax ~~rate was 42.7%~~rates were 17.4% and ~~31.7%~~17.3% for the ~~three~~nine-month periods ended March 31, 2022 and ~~six months ended December 31, 2017, respectively, compared to 16.7% and 19.7% for the three and six months ended December 31, 2016,~~2021, respectively. ~~Income tax expense and the~~The effective tax rate was higher in the 2018 fiscal year compared to the same prior year periods primarily due to the enactment of the Tax Act and increased income before income taxes. As a result of the enactment of the Tax Act, a one-time income tax expense of $253 was recorded in conjunction with revaluing the Company's net deferred tax assets and utilization of a blended tax rate. The enactment of the Tax Act required the Corporation to revalue its deferred tax assets and liabilities based upon the lower enacted federal corporate income tax rate at which the Corporation expects to recognize the benefit. During the three months ended December 31, 2017 a one-time income tax expense of $348 was recorded in conjunction with writing down its net deferred tax assets. In addition, the Company will utilize a blended tax rate for its fiscal year ending June 30, 2018 given the Tax Act loweredrates differed from the federal ~~corporate tax~~statutory rate ~~beginning January 1, 2018. As a result~~because of ~~utilizing a blended tax rate for its fiscal year ending June 30, 2018, the Company recognized a $95 benefit to~~tax-exempt income ~~tax expense for both the three~~from obligations of state and ~~six months ended December 31, 2017.~~ political subdivisions, loans, and bank owned life insurance income.

Financial Condition

Total assets at ~~December~~as of March 31, ~~2017~~2022 were ~~$470,282~~$987,549 compared to ~~$457,883~~$833,804 at June 30, ~~2017,~~2021, an increase of ~~$12,399,~~$153,745, or an annualized ~~5.4%~~24.6%. Since June 30, 2021, total deposits increased by $163,785, or an annualized 30.0% and includes $104,538 of deposits acquired as part of the acquisition of the branches from CFBank. The Corporation has maintained a favorable deposit mix, with 28.7% in noninterest-bearing deposits, 17.2% in interest bearing demand deposits, 42.1% in savings and money market deposits, and 12.0% in time deposits as of March 31, 2022.

CONSUMERS BANCORP, INC.

Management's ~~Discussion~~Discussion and Analysis of Financial Condition

and Results of Operations (continued)

(Dollars in thousands, except per share data)

Available-for-sale securities increased from $207,760 as of June 30, 2021, to $288,375 as of March 31, 2022 as excess liquidity was deployed from lower yielding interest-bearing deposits into the securities portfolio. The portfolio had an unrealized loss of $14,886 as of March 31, 2022 due to recent increases in market interest rates compared with the yields within the portfolio that were available at the time the underlying securities were purchased. The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such securities decline. As of March 31, 2022, the projected cash flow from the portfolio over the next 12 months was approximately $25,700 that will be available to reinvest into loans or securities at the then current market rates.

Total loans increased by $~~20,727,~~$37,168, or an annualized ~~15.2%~~8.7%, from ~~$272,867 at~~ June 30, ~~2017 to $293,594 at December 31, 2017.~~2021. The ~~growth~~increase in ~~the loan portfolio was primarily related to growth within the commercial real estate and 1-4 family residential real estate segments to borrowers within the Bank’s primary market area. The~~loans included organic loan growth ~~was primarily funded~~of $67,741 and loans acquired as part of the acquisition of the branches from CFBank with an outstanding balance of $14,875 as of March 31, 2022. These increases were partially offset by ~~an increase~~a $45,448 decline in PPP loans from June 30, 2021, to $5,238 as of ~~$8,518, or an annualized 4.5%, in total deposits and a decline~~March 31, 2022, as the pace of ~~$6,348 in available-for-sale securities.~~PPP loan forgiveness remained high.

Non-Performing Assets

The following table presents the aggregate amounts of non-performing assets and ~~respective~~select ratios as of the dates indicated.

	December 31, 2017			June 30, 2017			December 31, 2016			March 31, 2022			June 30, 2021			March 31, 2021
Non-accrual loans	$	865		$	1,187		$	1,589		$	544		$	1,771		$	1,883
Loans past due over 90 days and still accruing		—			—			—			—			—			—
Total non-performing loans		865			1,187			1,589
Other real estate owned		57			71			—
Total non-performing assets	$	922		$	1,258		$	1,589
Total non-performing loans											544			1,771			1,883
Other real estate and repossessed assets											—			—			—
Total non-performing assets										$	544		$	1,771		$	1,883

Non-performing loans to total loans		0.29	%		0.44	%		0.60	%		0.09	%		0.31	%		0.34	%
Allowance for loan losses to total non-performing loans		372.83	%		259.98	%		196.54	%		1,286.21	%		365.39	%		322.68	%

As of ~~December~~March 31, ~~2017,~~2022, impaired loans totaled ~~$1,765,~~$705, of which ~~$865~~$544 are included in non-accrual loans. As of June 30, 2021, impaired loans totaled $1,954, of which $1,771 are included in non-accrual loans. 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. Impaired loans and 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 are closely monitoring these loans and believe that the prospects for recovery of principal and interest, less identified specific reserves, are favorable.

Contractual Obligations, Commitments, Contingent Liabilities and Off-Balance Sheet Arrangements

Liquidity

The objective of liquidity management is to ensure adequate cash flows to accommodate the demands of our customers and provide adequate flexibility for the Corporation to take advantage of market opportunities under both normal operating conditions and under unpredictable circumstances of industry or market stress. Cash is used to fund loans, purchase investments, fund the maturity of liabilities, and, at times, to fund deposit outflows and operating activities. The Corporation’s principal sources of funds are deposits; amortization and prepayments of loans; maturities, sales and principal receipts from securities; borrowings; and operations. Management considers the asset position of the Corporation to be sufficiently liquid to meet normal operating needs and conditions. The Corporation’s earning assets are mainly comprised of loans and investment securities. Management continually strives to obtain the best mix of loans and investments to both maximize yield and ~~insure~~ensure the soundness of the portfolio, as well as to provide funding for loan demand as needed.

For the nine months ended March 31, 2022, net cash inflow from operating activities was $11,723, net cash outflows from investing activities was $34,679 and net cash inflows from financing activities was $55,755. A major source of cash was $66,552 from the acquisition of the branches from CFBank, a $59,247 increase in organic deposits and $25,473 from maturity, calls, principal pay downs and sales of available-for-sale securities. A major use of cash included $111,050 purchases of available-for-sale securities and a $17,327 increase in loans. Total cash and cash equivalents were $51,328 as of March 31, 2022, compared to $18,529 at June 30, 2021 and $41,032 at March 31, 2021.

CONSUMERS BANCORP, INC.

Management's Discussion and Analysis of Financial Condition

and Results of Operations (continued)

(Dollars in thousands, except per share data)

For the six months ended December 31, 2017, net cash inflow from operating activities was $3,484, net cash outflows from investing activities was $15,494 and net cash inflows from financing activities was $11,239. A major source of cash was $10,434 from sales, maturities, calls or principal pay downs on available-for-sale securities, $8,518 increase in deposits and $5,400 proceeds from FHLB advances. The ~~major use of cash was a $20,967 increase in loans. Total cash and cash equivalents was $9,141 as of December 31, 2017, compared to $9,912 at June 30, 2017 and $10,850 at December 31, 2016.~~

~~The~~ Bank offers several types of deposit products to its customers. We believe the rates offered by the Bank and the fees charged for them are competitive with ~~others~~the rates and fees charged by other banks for similar deposit products currently available in the market area. Deposits totaled ~~$382,989~~$890,634 at ~~December~~March 31, ~~2017~~2022 compared with ~~$374,471~~$726,849 at June 30, ~~2017.~~2021.

To provide an additional source of liquidity, the Corporation has entered into an agreement with the ~~FHLB~~Federal Home Loan Bank (FHLB) of Cincinnati. At ~~December~~March 31, ~~2017,~~2022, advances from the FHLB of Cincinnati totaled ~~$17,188~~$16,271 compared with ~~$12,320~~$18,050 at June 30, ~~2017.~~2021. As of ~~December~~March 31, ~~2017,~~2022, the Bank had the ability to borrow an additional ~~$17,032~~$86,892 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.

Short-term borrowings consisted of repurchase agreements, which are financing arrangements that mature daily, and ~~federal funds purchased from correspondent banks.~~a line of credit for the Corporation. The Bank pledges securities as collateral for the repurchase agreements. Short-term borrowings totaled ~~$22,507~~$11,834 at ~~December~~March 31, ~~2017~~2022 and ~~$23,986~~$12,203 at June 30, ~~2017.~~2021.

Jumbo time deposits (those with balances of $250 and over) totaled ~~$13,754 at December~~$19,827 as of March 31, ~~2017~~2022 and ~~$14,252 at~~$18,488 as of June 30, ~~2017.~~2021. These deposits are monitored closely by the Corporation and are mainly 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. The Corporation, however, does not rely upon these deposits as a primary source of funding. Although management monitors interest rates on an ongoing basis, a quarterly rate sensitivity report is used to determine the effect of interest rate changes on the financial statements. In the opinion of management, enough assets or liabilities could be repriced over the near term (up to three years) to compensate for such changes. The spread on interest rates, or the difference between the average earning assets and the average interest-bearing liabilities, is monitored quarterly.

~~CONSUMERS BANCORP, INC.~~

~~Management's Discussion and Analysis of Financial Condition~~

~~and Results of Operations (continued)~~

~~(Dollars in thousands, except per share data)~~

~~Off-Balance Sheet~~ ~~Arrangements~~

~~In the normal course of business, to~~To meet the financial needs of our customers, ~~we are a party to financial instruments with off-balance sheet risk. These financial instruments generally include~~ commitments to originate mortgage, commercial, construction, and consumer l~~oans,~~loans and ~~involve to varying degrees, elements~~commitments for commercial, home equity, and consumer lines of credit and interest rate risk in excess of amounts recognized in the Consolidated Balance Sheets. The maximum exposure to credit loss in the event of nonperformance by the borrower is represented by the contractual amount of those instruments.have been issued. Since commitments to extend credit have a fixed expiration date or other termination clause, some commitments will expire without being drawn upon and the total commitment amounts do not necessarily represent future cash requirements. The same credit policies are used in making commitments as are used for on-balance sheet instruments and collateral is required in instances where deemed necessary. Undisbursed balances of loans closed include funds not disbursed but committed for construction projects. Unused lines of credit include funds not disbursed, but committed for home equity, commercial and consumer lines of credit. Financial standby letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party. The same credit ~~risk involved~~policies are used in ~~issuing~~making commitments and financial standby letters of credit ~~is essentially the same~~ as ~~that involved in extending loan facilities to customers.~~are used for on-balance sheet instruments. Total unused commitments were ~~$62,158 at December~~$182,286 as of March 31, ~~2017~~2022 and ~~$53,742 at~~$119,299 as of June 30, ~~2017.~~2021.

Capital Resources

Total ~~shareholders~~’shareholders’ equity ~~increased~~declined to ~~$44,171~~$61,966 as of ~~December~~March 31, ~~2017~~2022, from ~~$43,535~~$69,900 as of June 30, ~~2017.~~2021. The ~~increase was the result of net income of $1,586~~primary reason for the ~~2018 fiscal year which~~decline in shareholders’ equity was ~~partially offset by $668~~a net reduction of $15,311 in ~~cash dividends paid and a $372~~accumulated other comprehensive ~~loss from~~income due to a ~~decline~~shift in unrealized gains on the mark-to-market of available-for-sale ~~securities.~~securities to a net unrealized loss and by cash dividends paid of $1,460. These declines were partially offset by net income of $8,412 for the first nine months of fiscal year 2022. During the second quarter of fiscal year 2022, the Corporation acquired an unsecured $5,000 line of credit to provide capital support to the Bank and for other general corporate purposes. As of March 31, 2022, the outstanding balance on the line of credit was $1,720.

The Bank is subject to various regulatory capital requirements administered by federal regulatory 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. Failure to meet various capital requirements can initiate regulatory action that could have a direct material effect on the Corporation’s financial statements.

As of ~~December~~March 31, ~~2017,~~2022, the Bank’s common equity tier 1 capital and tier 1 capital ratios were ~~12.64%~~11.27% and the leverage and total risk-based capital ratios were ~~9.00%~~7.45% and ~~13.60%~~12.36%, respectively. This compares with common equity tier 1 capital and tier 1 capital ratios of ~~13.21%~~11.87% and leverage and total risk-based capital ratios of ~~9.06%~~7.83% and ~~14.20%~~13.06%, respectively, as of June 30, ~~2017.~~2021. The Bank exceeded minimum regulatory capital requirements to be considered well-capitalized for both periods. Management is not aware of any matters occurring subsequent to ~~December~~March 31, ~~2017~~2022 that would cause the Bank’s capital category to change.

CONSUMERS BANCORP, INC.

Management's Discussion and Analysis of Financial Condition

and Results of Operations (continued)

(Dollars in thousands, except per share data)

Critical Accounting Policies

The Corporation’s consolidated financial ~~condition and results of operations for the Corporation presented~~statements are prepared in accordance with accounting principles generally accepted in the ~~Consolidated Financial Statements, accompanying notes to~~United States of America and follow general practices within the ~~Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations are, to a large degree, dependent upon the Corporation’s accounting policies. The selection and application~~industry in which it operates. Application of these principles requires management to make estimates or judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates are based on information available as of the date of the financial statements; accordingly, as this information changes, the financial statements could reflect different estimates or judgments. Certain policies inherently have a greater reliance on the use of estimates, and as such have a greater possibility of producing results that could be materially different than originally reported.

Critical accounting policies ~~involve~~are those policies that are highly dependent on subjective or complex judgments, estimates and ~~uncertainties that are susceptible to change.~~

assumptions and where changes in those estimates and assumptions could have a significant impact on the financial statements. The Corporation has identified the appropriateness of the allowance for loan losses and the evaluation of goodwill for impairment as a critical accounting ~~policy~~policies and an understanding of ~~this policy~~these policies is necessary to understand the financial statements. ~~Critical accounting policies are those policies that require management’s most difficult, subjective or complex judgments often as a result of the need to make estimates about the effect of matters that are inherently uncertain.~~ Note one (Summary of Significant Accounting Policies - Allowance for Loan ~~Losses)~~Losses and Goodwill and Other Intangible Assets), ~~note three~~Note four (Loans), Note six (Goodwill and Intangible Assets) and Management’s Discussion and Analysis of Financial Condition and Results of Operation (Critical Accounting Policies and Use of Significant Estimates) of the ~~2017~~2021 Form 10-K provide detail ~~with regard to~~regarding the Corporation’s accounting for the ~~allowance for loan losses.~~critical accounting policies. There have been no significant changes in the application of accounting policies since June 30, ~~2017.~~2021.

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 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 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 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 of goodwill 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 to its carrying value. If the current estimated fair value 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. As of April 30, 2021, the measurement date, a qualitative assessment was performed to determine whether there is a more likely than not (greater than 50% likelihood) that the fair value of the Corporation was less than its carrying amount. The impairment test of goodwill indicated no impairment existed as of the measurement date. However, it is impossible to know the future impact of the evolving economic 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.

CONSUMERS BANCORP, INC.
Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)

(Dollars in thousands, except per share data)

Forward-Looking Statements

~~When used~~Certain statements contained in this ~~report (including information incorporated by reference in this report~~),Quarterly Report on Form 10-Q, 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 ~~or phrases “will likely result,~~“may,” ~~“are expected to,” “will continue,” “is anticipated,~~“continue,” “estimate,” “intend,” “plan,” “seek,” “will,” “believe,” “project,” ~~“believe” or~~“expect,” “anticipate” and similar expressions are intended to identify ~~“forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.~~forward-looking statements. These forward-looking statements may involve risks and uncertainties that are difficult to predict, may be beyond ~~the Corporation’s~~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, ~~the Corporation undertakes~~we undertake no obligation to update these forward-looking statements to reflect subsequent events or circumstances. ~~Factors~~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 risks and uncertainties that could cause actual results for future periods to differ materially from those anticipated or projected include, but are not limited to:

●

~~material unforeseen~~ changes in ~~the financial condition or results of Consumers National Bank’s customers;~~

●

local, regional and national economic conditions becoming less favorable than ~~expected,~~we expect, resulting in, among other things, high unemployment rates, a deterioration in credit quality of our assets ~~and the underlying value of collateral could prove to be less valuable than otherwise assumed~~ or debtors being unable to meet their obligations;

	●	rapid fluctuations in market interest rates could result in changes in fair market valuations and a decline in net interest income;
	●	~~pricing~~changes in the level of non-performing assets and charge-offs;
	●	unanticipated changes in our liquidity ~~pressures~~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;
	●	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 ~~in a rising market rate environment;~~of COVID-19 or otherwise;

	●	our ability to attract and retain qualified employees;
	●	competitive pressures on product pricing and services;

	●	~~the economic impact from the oil~~breaches of security or failures of our technology systems due to technological or other factors and ~~gas activity in the region could be less than expected or the timeline for development could be longer than anticipated;~~cybersecurity threats; and
	●	changes in the ~~nature, extent, and timing~~reliability of ~~government and regulatory actions.~~our vendors, internal control systems or information systems.

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

CONSUMERS BANCORP, INC.

~~Management's Discussion and Analysis of Financial Condition~~

~~and Results of Operations (continued)~~

~~(Dollars in thousands, except per share data)~~

Item 4 – Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by the report, an evaluation was performed under the supervision and with the participation of the ~~Corporation~~’sCorporation’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Corporation’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15e. Based on the evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Corporation’s disclosure controls and procedures were effective as of ~~December~~March 31, ~~2017.~~2022.

Changes in Internal Controls Over Financial Reporting

There have not been any changes in the ~~Corporation~~’sCorporation’s internal control over financial reporting that occurred during the Corporation’s last quarter that have materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

CONSUMERS BANCORP, INC.

PART II – OTHER INFORMATION

Item 1 – Legal Proceedings

None

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3 – Defaults Upon Senior Securities

None

Item 4 – Mine Safety Disclosures

Not Applicable

Item 5 – Other Information

None

Item 6 – Exhibits

Exhibit

Number

Description

~~Exhibit 11~~

~~Statement regarding Computation of Per Share Earnings (included in Note 5 to the Consolidated Financial Statements).~~

Exhibit 31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.

Exhibit 31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.

Exhibit 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.INS	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)
101.DEF	Inline XBRL Taxonomy Extension Definitions Linkbase Document (1)
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document (1)
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)

~~Exhibit 101~~(1)	~~The following materials from Consumers Bancorp, Inc.’s Form 10-Q Report~~These interactive date files shall not be deemed filed for purposes of Section 11 or 12 of the ~~quarterly period ended December 31, 2017, formatted in XBRL (Extensible Business Reporting Language) include: (1) Unaudited Consolidated Balance Sheets, (2) Unaudited Consolidated Statements~~Securities Act of ~~Income, (3) Unaudited Consolidated Statements~~1933, as amended, or Section 18 of ~~Comprehensive Income, (4) Unaudited Consolidated Statement~~the Securities Exchange Act of ~~Changes in Shareholders’ Equity, (5) Unaudited Condensed Consolidated Statements of Cash Flows, and (6) the Notes~~1934, as amended, or otherwise subject to ~~Unaudited Condensed Consolidated Financial Statements.~~liability under those sections.

SIGNATURES

Pursuant to the requirements 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. (Registrant)

Date: ~~February 14, 201~~8May 13, 2022	/s/ Ralph J. Lober, II
	Ralph J. Lober, II President & Chief Executive Officer (principal executive officer)

Date: ~~February 14, 201~~8May 13, 2022

/s/ Renee K. Wood

Renee K. Wood

Chief Financial Officer & Treasurer

(principal financial officer)

(Dollars in thousands, except per share data)
	Three Months ended December 31,						Six Months ended December 31,
	2017			2016			2017			2016

Balance at beginning of period	$	44,271		$	44,020		$	43,535		$	43,793

Net income		657			722			1,586			1,623
Other comprehensive loss		(416	)		(2,205	)		(372	)		(2,552	)
6,321 shares issued associated with stock awards during the six months ended December 31, 2017		—			—			90			—
204 and 231 Dividend reinvestment plan shares associated with forfeited and expired restricted stock awards retired to treasury stock during the six months ended December 31, 2017 and 2016, respectively		—			—			—			—
Common cash dividends		(341	)		(327	)		(668	)		(654	)

Balance at the end of the period	$	44,171		$	42,210		$	44,171		$	42,210

Common cash dividends per share	$	0.125		$	0.12		$	0.245		$	0.24

Held-to-Maturity	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses			Fair Value
June 30, 2017
Obligations of state and political subdivisions	$	4,259	$	73	$	(3	)	$	4,329

	As of December 31, 2017						Six Months ended December 31, 2017
	Unpaid				Allowance for Loan		Average		Interest		Cash Basis
	Principal		Recorded		Losses		Recorded		Income		Interest
	Balance		Investment		Allocated		Investment		Recognized		Recognized
With no related allowance recorded:
Commercial	$	122	$	122	$	—	$	117	$	3	$	3
Commercial real estate:
Other		973		976		—		1,057		16		16
1-4 Family residential real estate:
Owner occupied		25		25		—		80		—		—
Non-owner occupied		315		315		—		322		—		—
With an allowance recorded:
Commercial real estate:
Other		327		327		30		337		5		5
Total	$	1,762	$	1,765	$	30	$	1,913	$	24	$	24

			Fair Value Measurements at June 30, 2017 Using
	Balance at June 30, 2017		Level 1		Level 2		Level 3
Impaired loans:
Commercial Real Estate - Other	$	130	$	—	$	—	$	130
Other Real Estate Owned:
1-4 Family residential real estate		71		—		—		71

	●	~~the estimated impact of the enactment of the Tax Act resulted in a net increase of $253 in income tax expense;~~
	●	net interest income increased by ~~$391~~$1,579 to ~~$3,927,~~$7,915, or ~~by 11.1%~~24.9%, in the ~~second~~third quarter of fiscal year ~~2018~~2022 from the same prior year period primarily as a result of the growth in average interest-earning assets along with a reduction in the cost of funds;
	●	an $85 provision for loans loss expense was recorded for the third quarter of fiscal year 2022 compared with $185 for the same prior year period;
	●	noninterest income increased by $66, or 6.3%, in the third quarter of fiscal year 2022 from the same prior year period primarily due to a $72, or 24.8%, increase in service charges on deposit accounts and a $25, or 5.4%, increase in debit card interchange income which were partially offset by a $27, or 18.1%, decline in mortgage banking activity; and
	●	noninterest expenses increased by $1,172, or 25.1%, in the third quarter of fiscal year 2022 from the same prior year period primarily due to increases in salaries and employee benefits; occupancy and equipment expenses; and Federal Deposit Insurance Corporation (FDIC) assessments that was primarily driven by the growth in the organization from the branch acquisition.

	●	net interest income increased by $4,545 to $24,433, or by 22.9%, in the first nine months of fiscal year 2022 from the same prior year period;
	●	~~the~~ a $545 provision for loan ~~losses~~loss expense was recorded in the ~~second quarter~~first nine months of fiscal year ~~2018 totaled $60~~2022 compared ~~to $140 in~~with $445 during the same prior year period;
	●	~~non-interest~~noninterest income increased by $~~42,~~$266, or ~~5.3%~~7.9%, in the ~~second quarter~~first nine months of fiscal year ~~2018~~2022 primarily due to a $175, or 19.2%, increase in service charges on deposit accounts and a $155, or 11.3%, increase in debit card interchange income which were partially offset by an $80, or 12.7%, decline in income from ~~the same prior year period;~~mortgage banking activity; and
	●	~~non-interest~~noninterest expenses increased by $~~234,~~$3,023, or ~~7.0%~~21.1%, in the ~~second quarter~~first nine months of fiscal year ~~2018~~2022 from the same prior year ~~period.~~period primarily due to an increase in salaries and employee benefit expenses.

	●	~~net interest income increased by $450, or 6.2%, in fiscal year 2018 from the same prior year period;~~
	●	~~the provision for loan losses~~ ~~totaled $150 in fiscal year 2018 compared to $276 in the same prior year period;~~
	●	~~non-interest income increased by $66, or 4.0% in fiscal year 2018 from the same prior year period;~~
	●	~~non-interest expenses increased by $341, or 5.2% in fiscal year 2018 from the same prior year period; and~~
	●	~~the estimated impact of the enactment of the~~ ~~Tax Act resulted in a net increase of $253 in income tax expense in fiscal year 2018.~~