UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
☒ | Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 |
For the quarterly period ended December 31, 2022September 30, 2023
OR
☐ | 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 | 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’s telephone number)
Not applicable
(Former name, former address and former fiscal year, if changed since last report)
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 |
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 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 every Interactive Data File required to be submitted 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 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 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 | 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 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:
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There were 3,089,3613,108,405 shares of Registrant’s common stock, no par value, outstanding as of FebruaryNovember 9, 2023.
CONSUMERS BANCORP, INC. FORM 10-Q QUARTER ENDED September 30, 2023
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Table of Contents |
Page Number (s) |
Part I – Financial Information | |
Item 1 – Financial Statements | |
Consolidated Balance Sheets at | 1 |
Consolidated Statements of Income for the three | 2 |
Consolidated Statements of Comprehensive Income for the three | 3 |
Condensed Consolidated Statements of Changes in Shareholders’ Equity for the three |
|
Condensed Consolidated Statements of Cash Flows for the |
|
Notes to the Consolidated Financial Statements (unaudited) |
|
Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations |
|
Item 3 – Not Applicable for Smaller Reporting Companies | |
Item 4 – Controls and Procedures | 33 |
Part II – Other Information | |
Item 1 – Legal Proceedings | 34 |
Item 1A – Not Applicable for Smaller Reporting Companies | 34 |
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds | 34 |
Item 3 – Defaults Upon Senior Securities | 34 |
Item 4 – Mine Safety Disclosure | 34 |
Item 5 – Other Information | 34 |
Item 6 – Exhibits | 34 |
Signatures | 35 |
PART I – FINANCIAL INFORMATION
Item 1 – Financial Statements
CONSUMERS BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data) | December 31, 2022 (unaudited) | June 30, 2022 | September 30, 2023 (unaudited) | June 30, 2023 | ||||||||||||
ASSETS | ||||||||||||||||
Cash on hand and noninterest-bearing deposits in financial institutions | $ | 13,133 | $ | 11,254 | $ | 15,557 | $ | 11,734 | ||||||||
Federal funds sold and interest-bearing deposits in financial institutions | 169 | 9,698 | 4,086 | 21 | ||||||||||||
Total cash and cash equivalents | 13,302 | 20,952 | 19,643 | 11,755 | ||||||||||||
Certificates of deposit in other financial institutions | 3,264 | 3,781 | 2,493 | 2,501 | ||||||||||||
Securities, available-for-sale | 287,142 | 296,347 | 261,030 | 279,605 | ||||||||||||
Securities, held-to-maturity (fair value of $6,911 at December 31, 2022 and $7,831 at June 30, 2022) | 7,338 | 7,874 | ||||||||||||||
Securities, held-to-maturity (fair value of $6,123 at September 30, 2023 and $6,294 at June 30, 2023) | 6,866 | 6,970 | ||||||||||||||
Equity securities, at fair value | 367 | 400 | 386 | 386 | ||||||||||||
Federal bank and other restricted stocks, at cost | 2,583 | 2,525 | 1,982 | 2,168 | ||||||||||||
Loans held for sale | 100 | 1,165 | — | 764 | ||||||||||||
Total loans | 664,969 | 611,843 | 717,921 | 710,362 | ||||||||||||
Less allowance for loan losses | (7,675 | ) | (7,160 | ) | ||||||||||||
Less allowance for credit losses | (7,782 | ) | (7,724 | ) | ||||||||||||
Net loans | 657,294 | 604,683 | 710,139 | 702,638 | ||||||||||||
Cash surrender value of life insurance | 10,089 | 9,959 | 10,290 | 10,222 | ||||||||||||
Premises and equipment, net | 16,278 | 16,521 | 17,197 | 17,182 | ||||||||||||
Goodwill | 2,452 | 2,452 | 2,452 | 2,452 | ||||||||||||
Core deposit intangible, net | 442 | 470 | 400 | 414 | ||||||||||||
Accrued interest receivable and other assets | 12,505 | 10,184 | 24,638 | 22,967 | ||||||||||||
Total assets | $ | 1,013,156 | $ | 977,313 | $ | 1,057,516 | $ | 1,060,024 | ||||||||
LIABILITIES | ||||||||||||||||
Deposits | ||||||||||||||||
Noninterest-bearing demand | $ | 254,646 | $ | 257,665 | $ | 236,565 | $ | 250,906 | ||||||||
Interest bearing demand | 151,848 | 157,462 | 151,661 | 152,053 | ||||||||||||
Savings | 354,406 | 369,054 | 342,684 | 335,231 | ||||||||||||
Time | 145,252 | 102,381 | 230,464 | 214,343 | ||||||||||||
Total deposits | 906,152 | 886,562 | 961,374 | 952,533 | ||||||||||||
Short-term borrowings | 25,380 | 21,295 | 21,945 | 26,367 | ||||||||||||
Federal Home Loan Bank advances | 24,603 | 8,256 | 8,146 | 8,776 | ||||||||||||
Accrued interest and other liabilities | 6,624 | 7,230 | 16,496 | 16,864 | ||||||||||||
Total liabilities | 962,759 | 923,343 | 1,007,961 | 1,004,540 | ||||||||||||
Commitments and contingent liabilities | ||||||||||||||||
SHAREHOLDERS’ EQUITY | ||||||||||||||||
Preferred stock (no par value, 350,000 shares authorized, none outstanding) | — | — | — | — | ||||||||||||
Common stock (no par value, 8,500,000 shares authorized; 3,138,000 and 3,132,056 shares issued as of December 31, 2022 and June 30, 2022, respectively) | 20,557 | 20,287 | ||||||||||||||
Common stock (no par value, 8,500,000 shares authorized; 3,157,044 and 3,144,739 shares issued as of September 30, 2023 and June 30, 2023, respectively) | 20,933 | 20,769 | ||||||||||||||
Retained earnings | 61,205 | 56,906 | 67,050 | 65,485 | ||||||||||||
Treasury stock, at cost (48,639 and 75,382 common shares as of December 31, 2022 and June 30, 2022, respectively) | (809 | ) | (1,117 | ) | ||||||||||||
Treasury stock, at cost (48,639 and 48,639 common shares as of September 30, 2023 and June 30, 2023, respectively) | (747 | ) | (809 | ) | ||||||||||||
Accumulated other comprehensive loss | (30,556 | ) | (22,106 | ) | (37,681 | ) | (29,961 | ) | ||||||||
Total shareholders’ equity | 50,397 | 53,970 | 49,555 | 55,484 | ||||||||||||
Total liabilities and shareholders’ equity | $ | 1,013,156 | $ | 977,313 | $ | 1,057,516 | $ | 1,060,024 |
See accompanying notes to consolidated financial statements.
CONSUMERS BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three Months ended December 31, | Six Months ended December 31, | Three Months ended September 30, | ||||||||||||||||||||||
(Dollars in thousands, except per share amounts) | 2022 | 2021 | 2022 | 2021 | 2023 | 2022 | ||||||||||||||||||
Interest and dividend income | ||||||||||||||||||||||||
Loans, including fees | $ | 7,955 | $ | 7,497 | $ | 15,085 | $ | 14,565 | $ | 9,697 | $ | 7,130 | ||||||||||||
Securities, taxable | 1,301 | 806 | 2,549 | 1,517 | 1,449 | 1,248 | ||||||||||||||||||
Securities, tax-exempt | 598 | 508 | 1,183 | 986 | 469 | 585 | ||||||||||||||||||
Equity securities | 9 | 9 | 17 | 17 | 8 | 8 | ||||||||||||||||||
Federal bank and other restricted stocks | 47 | 20 | 70 | 40 | 41 | 23 | ||||||||||||||||||
Federal funds sold and other interest-bearing deposits | 116 | 43 | 196 | 93 | 71 | 80 | ||||||||||||||||||
Total interest and dividend income | 10,026 | 8,883 | 19,100 | 17,218 | 11,735 | 9,074 | ||||||||||||||||||
Interest expense | ||||||||||||||||||||||||
Deposits | 1,127 | 274 | 1,724 | 570 | 3,417 | 597 | ||||||||||||||||||
Short-term borrowings | 95 | 1 | 154 | 3 | 126 | 59 | ||||||||||||||||||
Federal Home Loan Bank advances | 28 | 63 | 50 | 127 | 38 | 22 | ||||||||||||||||||
Total interest expense | 1,250 | 338 | 1,928 | 700 | 3,581 | 678 | ||||||||||||||||||
Net interest income | 8,776 | 8,545 | 17,172 | 16,518 | 8,154 | 8,396 | ||||||||||||||||||
Provision for loan losses | 225 | 270 | 635 | 460 | ||||||||||||||||||||
Net interest income after provision for loan losses | 8,551 | 8,275 | 16,537 | 16,058 | ||||||||||||||||||||
Provision for credit losses on loans | 40 | 410 | ||||||||||||||||||||||
Provision for credit losses on unfunded commitments | 79 | — | ||||||||||||||||||||||
Net interest income after provision for credit losses | 8,035 | 7,986 | ||||||||||||||||||||||
Noninterest income | ||||||||||||||||||||||||
Service charges on deposit accounts | 392 | 366 | 789 | 724 | 426 | 397 | ||||||||||||||||||
Debit card interchange income | 534 | 522 | 1,075 | 1,031 | 552 | 541 | ||||||||||||||||||
Mortgage banking activity | 72 | 171 | 154 | 429 | 98 | 82 | ||||||||||||||||||
Bank owned life insurance income | 65 | 65 | 130 | 130 | 68 | 65 | ||||||||||||||||||
Securities gains (losses), net | (4 | ) | 2 | (15 | ) | 2 | ||||||||||||||||||
Securities losses, net | (79 | ) | (11 | ) | ||||||||||||||||||||
Net change in market value of equity securities | (9 | ) | — | (33 | ) | — | — | (24 | ) | |||||||||||||||
Other | 105 | 95 | 186 | 178 | 92 | 81 | ||||||||||||||||||
Total noninterest income | 1,155 | 1,221 | 2,286 | 2,494 | 1,157 | 1,131 | ||||||||||||||||||
Noninterest expenses | ||||||||||||||||||||||||
Salaries and employee benefits | 3,591 | 3,269 | 7,030 | 6,516 | 3,498 | 3,439 | ||||||||||||||||||
Occupancy and equipment | 793 | 728 | 1,581 | 1,436 | 784 | 788 | ||||||||||||||||||
Data processing expenses | 192 | 192 | 384 | 406 | 196 | 192 | ||||||||||||||||||
Debit card processing expenses | 275 | 259 | 549 | 527 | 312 | 274 | ||||||||||||||||||
Professional and director fees | 352 | 158 | 587 | 502 | 236 | 235 | ||||||||||||||||||
FDIC assessments | 87 | 186 | 239 | 270 | 189 | 152 | ||||||||||||||||||
Franchise taxes | 141 | 133 | 282 | 266 | 96 | 141 | ||||||||||||||||||
Marketing and advertising | 203 | 164 | 407 | 378 | 228 | 204 | ||||||||||||||||||
Telephone and network communications | 95 | 88 | 182 | 202 | 88 | 87 | ||||||||||||||||||
Amortization of intangible | 14 | 15 | 28 | 26 | 14 | 14 | ||||||||||||||||||
Other | 577 | 457 | 1,129 | 952 | 624 | 552 | ||||||||||||||||||
Total noninterest expenses | 6,320 | 5,649 | 12,398 | 11,481 | 6,265 | 6,078 | ||||||||||||||||||
Income before income taxes | 3,386 | 3,847 | 6,425 | 7,071 | 2,927 | 3,039 | ||||||||||||||||||
Income tax expense | 577 | 685 | 1,081 | 1,244 | 517 | 504 | ||||||||||||||||||
Net income | $ | 2,809 | $ | 3,162 | $ | 5,344 | $ | 5,827 | $ | 2,410 | $ | 2,535 | ||||||||||||
Basic and diluted earnings per share | $ | 0.91 | $ | 1.04 | 1.74 | 1.92 | $ | 0.78 | $ | 0.83 |
See accompanying notes to consolidated financial statements.
CONSUMERS BANCORP, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)LOSS
(Unaudited)
(Dollars in thousands) | Three Months ended December 31, | Six Months ended December 31, | ||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Net income | $ | 2,809 | $ | 3,162 | $ | 5,344 | $ | 5,827 | ||||||||
Other comprehensive income (loss), net of tax: | ||||||||||||||||
Net change in unrealized gains (losses) on securities available-for-sale: | ||||||||||||||||
Unrealized gains (losses) arising during the period | 5,429 | (922 | ) | (10,711 | ) | (2,488 | ) | |||||||||
Reclassification adjustment for (gains) losses included in income | 4 | (2 | ) | 15 | (2 | ) | ||||||||||
Net unrealized gains (losses) | 5,433 | (924 | ) | (10,696 | ) | (2,490 | ) | |||||||||
Income tax effect | (1,141 | ) | 194 | 2,246 | 522 | |||||||||||
Other comprehensive income (loss) | 4,292 | (730 | ) | (8,450 | ) | (1,968 | ) | |||||||||
Total comprehensive income (loss) | $ | 7,101 | $ | 2,432 | $ | (3,106 | ) | $ | 3,859 |
(Dollars in thousands) | Three Months ended September 30, | |||||||
2023 | 2022 | |||||||
Net income | $ | 2,410 | $ | 2,535 | ||||
Other comprehensive loss, net of tax: | ||||||||
Net change in unrealized losses on securities available-for-sale: | ||||||||
Unrealized losses arising during the period | (9,852 | ) | (16,140 | ) | ||||
Reclassification adjustment for losses included in income | 79 | 11 | ||||||
Net unrealized losses | (9,773 | ) | (16,129 | ) | ||||
Income tax effect | 2,053 | 3,387 | ||||||
Other comprehensive loss | (7,720 | ) | (12,742 | ) | ||||
Total comprehensive loss | $ | (5,310 | ) | $ | (10,207 | ) |
See accompanying notes to consolidated financial statements.
CONSUMERS BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Unaudited)
(Dollars in thousands, except per share data) | Common Stock | Retained | Treasury | Accumulated | Total | |||||||||||||||
Balance, September 30, 2022 | $ | 20,385 | $ | 58,922 | $ | (1,001 | ) | $ | (34,848 | ) | $ | 43,458 | ||||||||
Net income | — | 2,809 | — | — | 2,809 | |||||||||||||||
Other comprehensive income | — | — | — | 4,292 | 4,292 | |||||||||||||||
26,743 shares associated with stock awards | — | — | 192 | — | 192 | |||||||||||||||
Restricted stock expense | 118 | — | — | 118 | ||||||||||||||||
2,879 shares issued associated with dividend reinvestment plan and stock purchase plan | 54 | — | — | — | 54 | |||||||||||||||
Cash dividends declared ($0.17 per share) | — | (526 | ) | — | — | (526 | ) | |||||||||||||
Balance, December 31, 2022 | $ | 20,557 | $ | 61,205 | $ | (809 | ) | $ | (30,556 | ) | $ | 50,397 |
(Dollars in thousands, except per share data) | Common Stock | Retained | Treasury | Accumulated | Total | |||||||||||||||
Balance, June 30, 2023 | $ | 20,769 | $ | 65,485 | $ | (809 | ) | $ | (29,961 | ) | $ | 55,484 | ||||||||
Adoption of ASU 2016-13 | — | (285 | ) | — | — | (285 | ) | |||||||||||||
Net income | — | 2,410 | — | — | 2,410 | |||||||||||||||
Other comprehensive loss | — | — | — | (7,720 | ) | (7,720 | ) | |||||||||||||
5,676 shares associated with vested stock awards | 47 | — | 62 | — | 109 | |||||||||||||||
Issuance of 8,519 stock-based incentive plan shares, net of forfeitures | 2 | — | — | — | 2 | |||||||||||||||
Restricted stock expense | 50 | — | — | — | 50 | |||||||||||||||
3,786 shares issued associated with dividend reinvestment plan and stock purchase plan | 65 | — | — | — | 65 | |||||||||||||||
Cash dividends declared ($0.18 per share) | — | (560 | ) | — | — | (560 | ) | |||||||||||||
Balance, September 30, 2023 | $ | 20,933 | $ | 67,050 | $ | (747 | ) | $ | (37,681 | ) | $ | 49,555 |
(Dollars in thousands, except per share data) | Common Stock | Retained | Treasury | Accumulated | Total | |||||||||||||||
Balance, September 30, 2021 | $ | 20,113 | $ | 49,844 | $ | (1,117 | ) | $ | 2,312 | $ | 71,152 | |||||||||
Net income | — | 3,162 | — | — | 3,162 | |||||||||||||||
Other comprehensive loss | — | — | — | (730 | ) | (730 | ) | |||||||||||||
2,821 shares issued associated with dividend reinvestment plan and stock purchase plan | 62 | — | — | — | 62 | |||||||||||||||
Cash dividends declared ($0.16 per share) | — | (488 | ) | — | — | (488 | ) | |||||||||||||
Balance, December 31, 2021 | $ | 20,175 | $ | 52,518 | $ | (1,117 | ) | $ | 1,582 | $ | 73,158 |
(Dollars in thousands, except per share data) | Common Stock | Retained | Treasury | Accumulated | Total | |||||||||||||||
Balance, June 30, 2022 | $ | 20,287 | $ | 56,906 | $ | (1,117 | ) | $ | (22,106 | ) | $ | 53,970 | ||||||||
Net income | — | 5,344 | — | — | 5,344 | |||||||||||||||
Other comprehensive loss | — | — | — | (8,450 | ) | (8,450 | ) | |||||||||||||
26,743 shares associated with vested stock awards | 35 | — | 308 | — | 343 | |||||||||||||||
Restricted stock expense | 118 | — | — | — | 118 | |||||||||||||||
5,944 shares issued associated with dividend reinvestment plan and stock purchase plan | 117 | — | — | — | 117 | |||||||||||||||
Cash dividends declared ($0.34 per share) | — | (1,045 | ) | — | — | (1,045 | ) | |||||||||||||
Balance, December 31, 2022 | $ | 20,557 | $ | 61,205 | $ | (809 | ) | $ | (30,556 | ) | $ | 50,397 |
CONSUMERS BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (CONTINUED)
(Unaudited)
(Dollars in thousands, except per share data) | Common Stock | Retained | Treasury | Accumulated | Total | |||||||||||||||
Balance, June 30, 2021 | $ | 20,011 | $ | 47,663 | $ | (1,324 | ) | $ | 3,550 | $ | 69,900 | |||||||||
Net income | — | 5,827 | — | — | 5,827 | |||||||||||||||
Other comprehensive loss | — | — | — | (1,968 | ) | (1,968 | ) | |||||||||||||
2,821 shares issued associated with dividend reinvestment plan and stock purchase plan | 62 | — | — | — | 62 | |||||||||||||||
20,571 shares associated with vested stock awards | 102 | — | 207 | — | 309 | |||||||||||||||
Cash dividends declared ($0.32 per share) | — | (972 | ) | — | — | (972 | ) | |||||||||||||
Balance, December 31, 2021 | $ | 20,175 | $ | 52,518 | $ | (1,117 | ) | $ | 1,582 | $ | 73,158 |
(Dollars in thousands, except per share data) | Common Stock | Retained | Treasury | Accumulated | Total | |||||||||||||||
Balance, June 30, 2022 | $ | 20,287 | $ | 56,906 | $ | (1,117 | ) | $ | (22,106 | ) | $ | 53,970 | ||||||||
Net income | — | 2,535 | — | — | 2,535 | |||||||||||||||
Other comprehensive loss | — | — | — | (12,742 | ) | (12,742 | ) | |||||||||||||
7,840 shares associated with vested stock awards | 35 | — | 116 | — | 151 | |||||||||||||||
3,065 shares issued associated with dividend reinvestment plan and stock purchase plan | 63 | — | — | — | 63 | |||||||||||||||
Cash dividends declared ($0.17 per share) | — | (519 | ) | — | — | (519 | ) | |||||||||||||
Balance, September 30, 2022 | $ | 20,385 | $ | 58,922 | $ | (1,001 | ) | $ | (34,848 | ) | $ | 43,458 |
See accompanying notes to consolidated financial statements.
CONSUMERS BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands) | Six Months Ended December 31, | Three Months Ended September 30, | ||||||||||||||
2022 | 2021 | 2023 | 2022 | |||||||||||||
Cash flows from operating activities | ||||||||||||||||
Net cash from operating activities | $ | 7,715 | $ | 8,548 | $ | 3,654 | $ | 3,957 | ||||||||
Cash flow from investing activities | ||||||||||||||||
Purchases of securities, available-for-sale | (17,091 | ) | (67,274 | ) | (1,603 | ) | (6,509 | ) | ||||||||
Maturities, calls and principal pay downs of securities, available-for-sale | 11,405 | 16,520 | 6,168 | 5,978 | ||||||||||||
Sale of securities, available-for-sale | 3,708 | 1,000 | 4,002 | 2,069 | ||||||||||||
Principal pay downs of securities, held-to-maturity | 536 | 976 | 104 | 105 | ||||||||||||
Net decrease in certificate of deposit in other financial institutions | 517 | 1,277 | ||||||||||||||
Net decrease in certificates of deposit in other financial institutions | 8 | 12 | ||||||||||||||
Net change in Federal Home Loan Bank stock, at cost | (58 | ) | — | 186 | 258 | |||||||||||
Net increase in loans | (53,257 | ) | (36,719 | ) | (7,593 | ) | (25,793 | ) | ||||||||
Acquisition, net cash received | — | 66,552 | ||||||||||||||
Premises and equipment purchases | (298 | ) | (794 | ) | (332 | ) | (191 | ) | ||||||||
Sale of other repossessed assets | 11 | — | ||||||||||||||
Net cash from investing activities | (54,527 | ) | (18,462 | ) | 940 | (24,071 | ) | |||||||||
Cash flow from financing activities | ||||||||||||||||
Net increase in deposit accounts | 19,590 | 16,833 | 8,841 | 25,521 | ||||||||||||
Net change in short-term borrowings | 4,085 | (1,521 | ) | (4,422 | ) | (349 | ) | |||||||||
Proceeds from Federal Home Loan Bank advances | 16,400 | — | ||||||||||||||
Repayments of Federal Home Loan Bank advances | (53 | ) | (1,764 | ) | (630 | ) | (39 | ) | ||||||||
Proceeds from dividend reinvestment and stock purchase plan | 185 | 62 | 65 | 63 | ||||||||||||
Dividends paid | (1,045 | ) | (972 | ) | (560 | ) | (519 | ) | ||||||||
Net cash from financing activities | 39,162 | 12,638 | 3,294 | 24,677 | ||||||||||||
Increase (decrease) in cash or cash equivalents | (7,650 | ) | 2,724 | |||||||||||||
Increase in cash or cash equivalents | 7,888 | 4,563 | ||||||||||||||
Cash and cash equivalents, beginning of period | 20,952 | 18,529 | 11,755 | 20,952 | ||||||||||||
Cash and cash equivalents, end of period | $ | 13,302 | $ | 21,253 | $ | 19,643 | $ | 25,515 | ||||||||
Supplemental disclosure of cash flow information: | ||||||||||||||||
Cash paid during the period: | ||||||||||||||||
Interest | $ | 1,815 | $ | 699 | $ | 3,418 | $ | 652 | ||||||||
Federal income taxes | 1,515 | 805 | 9 | 350 | ||||||||||||
Non-cash items: | ||||||||||||||||
Transfer from loans to repossessed assets | 11 | 83 | — | 11 | ||||||||||||
Issuance of treasury stock for vested stock awards | 343 | 309 | 109 | 151 | ||||||||||||
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 liabilities assumed | — | (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 data)
Note 1 – Summary of Significant Accounting Policies:
Nature of Operations: Consumers Bancorp, Inc. (the Corporation)Company) 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, Mahoning, Stark, Summit, Wayne, and contiguous counties in 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’sCompany’s Form 10-K for the year ended June 30, 2022.2023. 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 Corporationcompany and the Bank. All significant inter-company transactions and accounts have been eliminated in consolidation.
Segment Information: The CorporationCompany is a bank holding company engaged in the business of commercial and retail banking, which accounts for substantially all the revenues, operating income, and assets. Accordingly, all the Corporation’sCompany’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 IssuedAdoption of New Accounting Pronouncements Not Yet Effective:Standards: In June 2016, 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 toreplaces the codificationincurred loss methodology for recognizing credit losses and removes the thresholds thatrequires companies apply to measure the current expected credit losses (CECL) on financial instruments measured at amortized cost, such as loans, receivables, and held-to-maturity debt securities. Under current U.S. generally accepted accounting principles, companies generally recognizesecurities, and other receivables at the time the financial asset is originated or acquired and certain off-balance sheet credit exposures. The expected credit losses when itare adjusted each period for changes in expected lifetime credit losses. For available-for-sale securities where fair value is probable that the loss has been incurred. The revised guidance will remove all current loss recognition thresholds and will require companies to recognizeless than cost, credit-related impairment, if any, is recognized through an allowance for credit losses and adjusted each period for changes in credit risk.
This guidance became effective for the difference betweenCompany on July 1, 2023 and was adopted using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures. The Company’s results for periods beginning after July 1, 2023 are presented under ASC 326 while results for prior periods are presented in accordance with previously applicable accounting standards.
At adoption, the Company recognized an incremental allowance for credit losses on loans of $52 and a liability for off-balance sheet unfunded commitments of $308. Additionally, a $285 decrease to the retained earnings account associated with the increased estimated credit losses was recorded along with the $75 tax impact portion being recorded as part of the deferred tax asset in other assets on our Consolidated Balance Sheet.
Allowance for Credit Losses (ACL)
Topic 326 eliminates the probable initial recognition threshold in current GAAP and instead, requires an entity to reflect its current estimate of all expected credit losses based on historical experience, current conditions and reasonable and supportable forecasts. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. The allowance for credit losses is evaluated on a financial instrumentregular basis and the amount of amortized cost that the corporation expectsestablished through charges 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 definedearnings in the guidance,form of a provision for credit losses. When a loan or portion of a loan is determined to be uncollectible, the portion deemed uncollectible is charged against the allowance and subsequent recoveries, if any, are credited to the allowance. This evaluation is inherently subjective as it requires estimates that are SEC filers for fiscal years and for interim periods within those fiscal years beginning after December 15, 2019. Early adoption of the guidance is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. However, during July 2019, FASB unanimously voted for a proposalsusceptible to delay this ASU to January 2023 for smaller reporting companies. On October 16, 2019, FASB approved a final ASU delaying the effective date. The new guidance is effective for annual and interim periods beginning after December 15, 2022 for certain entities, including smaller reporting companies. The Corporation is a smaller reporting company.
The Corporation is evaluating how adopting this new guidance will impact the consolidated financial statements and the Corporation’s current systems and processes. Management has analyzed and finalized its pool segmentation, established the peer group that will be usedsignificant revision as the source of loss experience data, and has started back testing in preparation for adoption of the new methodology. Management plans to use the Net Present Value of Discounted Cash Flow methodology for all loan pools and expects the implementation of ASU No.2016-13 to increase the balance of the allowance for loan losses by less than 10%. In addition, a reserve for unfunded commitments will need to be established and Management expects it to be in a range of 0.25% to 0.50% of the amount of unfunded commitments that are not unconditionally cancellable. Management continues to evaluate the modeling and its potential impact on the Corporation's results of consolidated operations and financial position and, once the new guidance is adopted, the allowance for loan losses and reserve for unfunded commitments will increase through a one-time adjustment to retained earnings. The Corporation is also developing disclosure documentation related to adoption of this standard. The Corporation is planning to adopt this new guidance within the time frame noted above.more information becomes available.
CONSUMERS BANCORP, INC.
Notes to the Consolidated Financial Statements
(Unaudited) (continued)
(Dollars in thousands, except per share amounts)
Portfolio Segmentation
The allowance for credit losses consists of general and specific components. The general component covers loans within portfolio segments that are collectively evaluated for credit losses. Portfolio segmentation is the pooling of loans based upon similar risk characteristics so that quantitative methodologies and qualitative adjustment factors for estimating the allowance for credit losses can be applied to the pool of loans in each segment. The Company has identified six portfolio segments of loans including Commercial & Industrial, Commercial Real Estate, Farmland, Land Development, 1 – 4 Family Residential Real Estate, and Consumer loans. Each segment has a distinct set of risk characteristics that are monitored by management. Below are the risk characteristics of the loan segments.
Commercial & Industrial: Commercial loans are made for a wide variety of general business purposes, including financing for equipment, inventories and accounts receivable. The term of each commercial loan varies by its purpose. Commercial loans are underwritten after evaluating and understanding the borrower’s ability to operate profitably and prudently expand its business. Current and projected cash flows are evaluated to determine the ability of the borrower to repay their obligations as agreed. Commercial loans are primarily made based on the identified cash flows of the borrower and secondarily made based on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and usually incorporate a personal guarantee; however, some short-term loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers. The commercial loan portfolio includes loans to a wide variety of corporations and businesses across many industrial classifications in the areas where the Bank operates.
Commercial Real Estate: Commercial real estate loans include mortgage loans to owners of multi-family investment properties and owners of commercial real estate. Commercial real estate lending typically involves higher loan principal amounts, and the repayment of these loans is generally largely dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Current and projected cash flows are evaluated to determine the ability of the borrower to repay their obligations as agreed. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. The properties securing the Company’s commercial real estate portfolio are diverse in terms of type and geographic location. This diversity helps reduce the Company’s exposure to adverse economic events that affect any single market or industry. Management monitors and evaluates commercial real estate loans based on collateral, geography and risk grade criteria. In addition, management tracks the level of owner-occupied commercial real estate loans versus nonowner-occupied loans.
Farmland: Farmland loans include loans for agriculture purposes, such as crop and livestock production. Current and projected cash flows are evaluated to determine the ability of the borrower to repay their obligations as agreed. Agriculture lending is largely dependent on the successful management and operation of the farm and may be adversely affected by volatile commodity prices, rising farm production costs, and fluctuating land value.
Land Development: Land Development loans include loans to finance the construction of residential and commercial properties generally located within our primary market area. Land development loans are fixed-rate or adjustable-rate loans which may convert to permanent loans with maturities of up to 30 years. Our policies provide that construction loans may generally be made in amounts up to 80% of the appraised value of the property, and an independent appraisal of the property is required. Loan proceeds are disbursed in increments as construction progresses and as inspections warrant, and regular inspections are required to monitor the progress of construction. In underwriting construction loans, we consider the property owner’s and/or guarantor’s financial strength, expertise, credit history, and the projected cash flow of the subject property. Construction financing is considered to involve a higher degree of credit risk than long-term financing on improved, owner-occupied real estate. Risk of loss on a construction loan is dependent largely upon the accuracy of the initial estimate of the property’s value at completion of construction or development compared to the estimated cost (including interest) of construction. If the estimate of value proves to be inaccurate, we may be confronted with a project, when completed, having a value which is insufficient to assure full repayment. We attempt to reduce such risks on construction loans through inspections of construction progress on the property and by requiring personal guarantees and reviewing current personal financial statements and tax returns, as well as other projects of the developer.
Note 2– Acquisition
On July 16, 2021, the Corporation completed its acquisition (branch acquisition) of two branches located in Calcutta and Wellsville, Ohio from CFBank, National Association. In connection with the branch acquisition, the Corporation assumed $104,538 in branch deposits for a deposit premium of 1.75%. In addition, the Corporation acquired $15,602 of subordinated debt securities issued 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 the branch 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 branch acquisition. The fair value of loans was estimated using discounted contractual cash flows. The book balance of the loans at the time of the branch 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.
Notes to the Consolidated Financial Statements
(Unaudited) (continued)
(Dollars in thousands, except per share amounts)
1-4 Family Residential Real Estate: Residential real estate loans are secured by one to four family residential properties and include both owner occupied, non-owner occupied and home equity loans. Credit approval for residential real estate loans requires demonstration of sufficient income to repay the principal and interest and the real estate taxes and insurance, stability of employment, an established credit record and an appropriately appraised value of the real estate securing the loan that generally requires that the residential real estate loan amount be no more than 85% of the purchase price or the appraised value of the real estate securing the loan unless the borrower purchases private mortgage insurance.
Consumer: The Company originates direct and indirect consumer loans, primarily automobile loans, personal lines of credit, and unsecured consumer loans in its primary market areas. Credit approval for consumer loans requires income sufficient to repay principal and interest due, stability of employment, an established credit record and sufficient collateral for secured loans. Consumer loans typically have shorter terms and lower balances with higher yields as compared to real estate mortgage loans, but generally carry higher risks of default. Consumer loan collections are dependent on the borrower’s continuing financial stability, and thus are more likely to be affected by adverse personal circumstances and economic conditions.
The allowance for credit losses for portfolio segments is evaluated based upon periodic quantitative review of the collectability of the loans that correlates historical loan experience with reasonable and supportable forecasts using forward looking information. The Company utilizes a discounted cash flow (loss rate, expected loss) method to estimate the quantitative portion of the allowance for credit losses for all portfolio segments.
For each portfolio segment, a loss driver analysis (LDA) is performed to identify appropriate loss drivers and create a regression model for use in forecasting cash flows. The LDA analysis utilizes peer data from the Federal Financial Institutions Examination Council’s (FFIEC) Call Report data for all segments. The Company has established a one-year reasonable and supportable forecast period with a one-year straight-line reversion to the long-term historical average. Key inputs into the discounted cash flow model include loan-level detail, including the amortized cost basis of individual loans, payment structure, and forecasted loss drivers. Since the Company has had very limited loss experience, management elected to utilize benchmark peer loss history data to estimate historical loss rates. Management worked with a third-party advisory firm to identify an appropriate peer group for each loan segment that shares similar characteristics. The Company uses the central tendency seasonally adjusted civilian unemployment rate forecast from the FOMC for all portfolio segments. Other key assumptions include a maturity assumption for loans without maturity dates and prepayment / curtailment rates specific to each loan segment. Prepayment and curtailment rates are calculated based on the Company’s own data.
Adjustments may be made to the quantitative evaluation to account for differences in current or expected qualitative risk characteristics such as changes in underwriting standards, changes in the value of underlying collateral, the existence and effect of portfolio concentration, delinquency level, regulatory environment, economic conditions, Company management and the status of portfolio administration including the Company’s loan review function.
Individually Evaluated Loans
Loans that do not share similar risk characteristics are evaluated on an individual basis and are excluded from the pooling approach discussed above for the forecasted allowance for credit losses. The Company establishes a specific reserve for individually evaluated loans which do not share similar risk characteristics. Individually evaluated loans include the third-party residential mortgage warehouse line-of-credit, nonaccrual loans, modified loans to borrowers experiencing financial difficulty, and other loans deemed appropriate by management. Specific reserves on non-performing loans are typically based on management’s best estimate of the fair value of collateral securing these loans, adjusted for selling costs as appropriate.
Reserve for Unfunded Commitments
The reserve for unfunded commitments represents the expected credit losses on off-balance sheet commitments such as unfunded commitments to extend credit over the contractual period in which we are exposed to credit risk on the underlying commitments unless the obligation is unconditionally cancellable by the Company. Any reserve for off-balance sheet credit exposures is reported as an other liability on our Consolidated Balance Sheet and is increased or decreased via the provision for credit losses account on our Consolidated Statement of Income. The calculation includes consideration of the likelihood that funding will occur and forecasted credit losses on commitments expected to be funded over their estimated lives. The reserve is calculated using the same aggregate reserve rates calculated for the funded portion of loans at the portfolio level applied to the amount of commitments expected to be funded.
CONSUMERS BANCORP, INC.
Notes to the Consolidated Financial Statements
(Unaudited) (continued)
(Dollars in thousands, except per share amounts)
Available-for-Sale (AFS) and Held-to-Maturity (HTM) Debt Securities
For AFS securities in an unrealized loss position, management determines whether the Company intends to sell or if it is more likely than not that the Company will be required to sell the security before recovery of the amortized cost basis. If either of the criteria is met, the security’s amortized cost basis is written down to fair value through income with an allowance being established under CECL. For AFS securities with unrealized losses not meeting these criteria, management evaluates whether any decline in fair value is due to credit loss factors. In making this assessment, management considers any changes to the rating of the security by rating agencies and adverse conditions specifically related to the issuer of the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of the cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Changes in the allowance for credit losses under ASC 326-30 are recorded as provisions for (or reversal of) credit loss expense. Losses are charged against the allowance when the collectability of an AFS debt security is confirmed or when either of the criteria regarding intent or requirement to sell is met. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income, net of income taxes.
Since the adoption of CECL, the Company monitors the credit quality of HTM debt securities primarily through the financial condition of the issuer. Any allowance for credit losses on HTM securities would be a contra asset valuation account that would be deducted from the carrying amount of HTM securities to present the net amount expected to be collected and would be charged off against the allowance for credit losses when deemed uncollectible. Adjustments to the allowance for credit losses would be reported in the Company’s Consolidated Statements of Income in the provision for credit losses. Since all the HTM securities are non-rated municipal securities to local customers, management considers the financial condition of the issuer and whether issuers continue to make timely principal and interest payments under the contractual terms of the securities.
At September 30, 2023 and at adoption of CECL on July 1, 2023, there was no allowance for credit losses related to AFS or HTM debt securities. Accrued interest receivable on debt securities was excluded from the estimate of credit losses.
Accrued Interest Receivable
Upon adoption of ASU 2016-13 and its related amendments on July 1, 2023, the Company elected to do the following regarding accrued interest receivable:
• | Exclude accrued interest receivable that is included in the amortized cost of financing receivables and debt securities from related disclosure requirements. |
• | Continue its policy to write off accrued interest receivable by reversing it from interest income. For commercial and real estate loans, accruing interest is typically discontinued and any balance is written off when the loan becomes 90 days past due. For consumer loans, accrued interest is typically written off no later than when the loan becomes 120 days past due. Due to the composition of the securities portfolio, uncollectible accrued interest receivable on the securities portfolio is rare. Any accrued interest receivable would be written off by reversing interest income if the Company does not reasonably expect to receive payments. Due to the timely manner in which accrued interest receivables are written off, the amounts of such write offs are immaterial. |
• | Not measure an allowance for credit losses for accrued interest receivable due to the Company’s policy of writing off uncollectible accrued interest receivable balances in a timely manner, as described above. |
On July 1, 2023, the Company adopted ASU 2022-02, Financial Instruments – Credit Losses (ASC 326): Troubled Debt Restructurings (TDRs) and Vintage Disclosures. The guidance amends ASC 326 to eliminate the accounting guidance for TDRs by creditors, while enhancing disclosure requirements for certain loan refinancing and restructuring activities by creditors when a borrower is experiencing financial difficulty. The ASU requires enhanced disclosures related to certain modifications of receivables made to borrowers experiencing financial difficulty and require that an entity disclose current-period gross write-offs by year of origination within the vintage disclosures. The adoption of the ASU did not have a significant impact on the Company’s financial statements.
CONSUMERS BANCORP, INC.
Notes to the Consolidated Financial Statements
(Unaudited) (continued)
(Dollars in thousands, except per share amounts)
Note 32 – Securities
Debt securities
The following tables summarize the Corporation’sCompany’s debt securities as of December 31, 2022September 30, 2023 and June 30, 2022:
Available –for-Sale | Amortized | Gross | Gross | Fair | Amortized | Gross | Gross Losses | Fair | ||||||||||||||||||||||||
December 31, 2022 | ||||||||||||||||||||||||||||||||
September 30, 2023 | ||||||||||||||||||||||||||||||||
Obligations of U.S. Treasury | $ | 8,925 | $ | — | $ | (604 | ) | $ | 8,321 | $ | 8,949 | $ | — | $ | (470 | ) | $ | 8,479 | ||||||||||||||
Obligations of U.S. government-sponsored entities and agencies | 27,783 | — | (3,751 | ) | 24,032 | 28,908 | — | (4,405 | ) | 24,503 | ||||||||||||||||||||||
Obligations of state and political subdivisions | 106,075 | 119 | (10,259 | ) | 95,935 | 87,795 | 2 | (13,077 | ) | 74,720 | ||||||||||||||||||||||
U.S. Government-sponsored mortgage-backed securities–residential | 108,903 | 5 | (15,670 | ) | 93,238 | 101,834 | — | (19,292 | ) | 82,542 | ||||||||||||||||||||||
U.S. Government-sponsored mortgage-backed securities– commercial | 8,613 | — | (1,860 | ) | 6,753 | 8,599 | — | (2,175 | ) | 6,424 | ||||||||||||||||||||||
U.S. Government-sponsored collateralized mortgage obligations– residential | 48,249 | 22 | (5,187 | ) | 43,084 | 55,516 | 28 | (6,262 | ) | 49,282 | ||||||||||||||||||||||
Other debt securities | 17,272 | — | (1,493 | ) | 15,779 | 17,127 | — | (2,047 | ) | 15,080 | ||||||||||||||||||||||
Total securities available-for-sale | $ | 325,820 | $ | 146 | $ | (38,824 | ) | $ | 287,142 | $ | 308,728 | $ | 30 | $ | (47,728 | ) | $ | 261,030 |
Held-to-Maturity | Amortized | Gross | Gross | Fair | Amortized | Gross | Gross Losses | Fair | ||||||||||||||||||||||||
December 31, 2022 | ||||||||||||||||||||||||||||||||
September 30, 2023 | ||||||||||||||||||||||||||||||||
Obligations of state and political subdivisions | $ | 7,338 | $ | — | $ | (427 | ) | $ | 6,911 | $ | 6,866 | $ | — | $ | (743 | ) | $ | 6,123 |
Available-for-sale | Amortized | Gross | Gross | Fair | Amortized | Gross | Gross | Fair | ||||||||||||||||||||||||
June 30, 2022 | ||||||||||||||||||||||||||||||||
June 30, 2023 | ||||||||||||||||||||||||||||||||
Obligation of U.S Treasury | $ | 8,909 | $ | — | $ | (462 | ) | $ | 8,447 | $ | 8,941 | $ | — | $ | (533 | ) | $ | 8,408 | ||||||||||||||
Obligations of U.S. government-sponsored entities and agencies | 28,689 | — | (2,424 | ) | 26,265 | 29,430 | 7 | (3,745 | ) | 25,692 | ||||||||||||||||||||||
Obligations of state and political subdivisions | 105,977 | 129 | (8,749 | ) | 97,357 | 92,891 | 63 | (8,982 | ) | 83,972 | ||||||||||||||||||||||
U.S. Government-sponsored mortgage-backed securities – residential | 113,812 | 13 | (11,642 | ) | 102,183 | |||||||||||||||||||||||||||
U.S. Government-sponsored mortgage-backed securities – commercial | 8,623 | — | (1,322 | ) | 7,301 | |||||||||||||||||||||||||||
U.S. Government-sponsored mortgage-backed securities - residential | 104,689 | 12 | (15,066 | ) | 89,635 | |||||||||||||||||||||||||||
U.S. Government-sponsored mortgage-backed securities - commercial | 8,604 | — | (1,809 | ) | 6,795 | |||||||||||||||||||||||||||
U.S. Government-sponsored collateralized mortgage obligations – residential | 40,952 | 1 | (2,774 | ) | 38,179 | 55,800 | 8 | (5,738 | ) | 50,070 | ||||||||||||||||||||||
Other debt securities | 17,367 | — | (752 | ) | 16,615 | 17,175 | — | (2,142 | ) | 15,033 | ||||||||||||||||||||||
Total available-for-sale securities | $ | 324,329 | $ | 143 | $ | (28,125 | ) | $ | 296,347 | $ | 317,530 | $ | 90 | $ | (38,015 | ) | $ | 279,605 |
Held-to-maturity | Amortized | Gross | Gross Losses | Fair | Amortized | Gross | Gross Losses | Fair | ||||||||||||||||||||||||
June 30, 2022 | ||||||||||||||||||||||||||||||||
June 30, 2023 | ||||||||||||||||||||||||||||||||
Obligations of state and political subdivisions | $ | 7,874 | $ | 47 | $ | (90 | ) | $ | 7,831 | $ | 6,970 | $ | — | $ | (676 | ) | $ | 6,294 |
CONSUMERS BANCORP, INC.
Notes to the Consolidated Financial Statements
(Unaudited) (continued)
(Dollars in thousands, except per share amounts)
Proceeds from the sale of available-for-sale securities were as follows:
Three Months Ended December 31, | Six Months Ended December 31, | Three Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | 2023 | 2022 | |||||||||||||||||||
Proceeds from sales | $ | 1,639 | $ | 1,000 | $ | 3,708 | $ | 1,000 | $ | 4,002 | $ | 2,069 | ||||||||||||
Gross realized gains | 1 | 2 | 8 | 2 | — | 7 | ||||||||||||||||||
Gross realized losses | 5 | — | 23 | — | 79 | 18 |
The income tax benefit related to the net realized losslosses amounted to $1$16 for the three-month and $3 for the six-month periodsperiod ended December 31, 2022.September 30, 2023 The income tax provision related to the net realized gain amounted to less than $1and $2 for the three- and six-month periodsperiod ended December 31, 2021.September 30, 2022.
The amortized cost and fair values of debt securities as of December 31, 2022,September 30, 2023, by expected maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date, primarily mortgage-backed securities, are shown separately.
Available-for-Sale | Amortized Cost | Estimated Fair Value | Amortized Cost | Estimated Fair Value | ||||||||||||
Due in one year or less | $ | 2,747 | $ | 2,705 | $ | 6,575 | $ | 6,445 | ||||||||
Due after one year through five years | 31,708 | 30,013 | 26,884 | 25,275 | ||||||||||||
Due after five years through ten years | 52,323 | 46,902 | 52,244 | 45,075 | ||||||||||||
Due after ten years | 73,277 | 64,447 | 57,076 | 45,987 | ||||||||||||
Total | 160,055 | 144,067 | 142,779 | 122,782 | ||||||||||||
U.S. Government-sponsored mortgage-backed and related securities | 165,765 | 143,075 | 165,949 | 138,248 | ||||||||||||
Total securities available-for-sale | $ | 325,820 | $ | 287,142 | $ | 308,728 | $ | 261,030 | ||||||||
Held-to-Maturity | ||||||||||||||||
Due after one year through five years | $ | 171 | $ | 169 | $ | 3,092 | $ | 2,954 | ||||||||
Due after five years through ten years | 3,289 | 3,182 | 533 | 518 | ||||||||||||
Due after ten years | 3,878 | 3,560 | 3,241 | 2,651 | ||||||||||||
Total securities held-to-maturity | $ | 7,338 | $ | 6,911 | $ | 6,866 | $ | 6,123 |
Securities with a carrying value of approximately $131,731$137,347 and $126,679$137,896 were pledged at December 31, 2022September 30, 2023 and June 30, 2022,2023, respectively, to secure public deposits and commitments as required or permitted by law.
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 as of December 31, 2022September 30, 2023 and June 30, 2022,2023, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:
Less than 12 Months | 12 Months or more | Total | Less than 12 Months | 12 Months or more | Total | |||||||||||||||||||||||||||||||||||||||||||
Available-for-sale | Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | ||||||||||||||||||||||||||||||||||||
December 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||
September 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||
Obligation of U.S. Treasury | $ | — | $ | — | $ | 8,321 | $ | (604 | ) | $ | 8,321 | $ | (604 | ) | $ | — | $ | — | $ | 8,479 | $ | (470 | ) | $ | 8,479 | $ | (470 | ) | ||||||||||||||||||||
Obligations of U.S. government-sponsored entities and agencies | 11,941 | (1,392 | ) | 12,091 | (2,359 | ) | 24,032 | (3,751 | ) | 1,896 | (62 | ) | 22,607 | (4,343 | ) | 24,503 | (4,405 | ) | ||||||||||||||||||||||||||||||
Obligations of state and political subdivisions | 73,469 | (7,882 | ) | 11,583 | (2,377 | ) | 85,052 | (10,259 | ) | 11,781 | (606 | ) | 60,475 | (12,471 | ) | 72,256 | (13,077 | ) | ||||||||||||||||||||||||||||||
U.S. Government-sponsored mortgage-backed securities – residential | 32,106 | (2,959 | ) | 59,845 | (12,711 | ) | 91,951 | (15,670 | ) | 3,555 | (136 | ) | 78,987 | (19,156 | ) | 82,542 | (19,292 | ) | ||||||||||||||||||||||||||||||
U.S. Government-sponsored mortgage-backed securities – commercial | 2,279 | (610 | ) | 4,474 | (1,250 | ) | 6,753 | (1,860 | ) | — | — | 6,424 | (2,175 | ) | 6,424 | (2,175 | ) | |||||||||||||||||||||||||||||||
Collateralized mortgage obligations - residential | 27,929 | (1,662 | ) | 14,147 | (3,525 | ) | 42,076 | (5,187 | ) | 13,676 | (276 | ) | 31,518 | (5,986 | ) | 45,194 | (6,262 | ) | ||||||||||||||||||||||||||||||
Other debt securities | 6,569 | (554 | ) | 9,210 | (939 | ) | 15,779 | (1,493 | ) | — | — | 15,080 | (2,047 | ) | 15,080 | (2,047 | ) | |||||||||||||||||||||||||||||||
Total temporarily impaired | $ | 154,293 | $ | (15,059 | ) | $ | 119,671 | $ | (23,765 | ) | $ | 273,964 | $ | (38,824 | ) | $ | 30,908 | $ | (1,080 | ) | $ | 223,570 | $ | (46,648 | ) | $ | 254,478 | $ | (47,728 | ) |
Less than 12 Months | 12 Months or more | Total | Less than 12 Months | 12 Months or more | Total | |||||||||||||||||||||||||||||||||||||||||||
Held to Maturity | Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | ||||||||||||||||||||||||||||||||||||
December 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||
September 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||
Obligations of state and political subdivisions | $ | 3,729 | $ | (320 | ) | $ | 3,182 | $ | (107 | ) | $ | 6,911 | $ | (427 | ) | $ | — | $ | — | $ | 6,123 | $ | (743 | ) | $ | 6,123 | $ | (743 | ) | |||||||||||||||||||
Total temporarily impaired | $ | 3,729 | $ | (320 | ) | $ | 3,182 | $ | (107 | ) | $ | 6,911 | $ | (427 | ) | $ | — | $ | — | $ | 6,123 | $ | (743 | ) | $ | 6,123 | $ | (743 | ) |
Less than 12 Months | 12 Months or more | Total | Less than 12 Months | 12 Months or more | Total | |||||||||||||||||||||||||||||||||||||||||||
Available-for-sale | Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | ||||||||||||||||||||||||||||||||||||
June 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||
June 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||
Obligations of U.S. Treasury | $ | 8,447 | $ | (462 | ) | $ | — | $ | — | $ | 8,447 | $ | (462 | ) | $ | — | $ | — | $ | 8,408 | $ | (533 | ) | $ | 8,408 | $ | (533 | ) | ||||||||||||||||||||
Obligations of U.S. government-sponsored entities and agencies | 26,265 | (2,424 | ) | — | — | 26,265 | (2,424 | ) | 1,008 | (10 | ) | 23,551 | (3,735 | ) | 24,559 | (3,745 | ) | |||||||||||||||||||||||||||||||
Obligations of state and political subdivisions | 80,445 | (8,331 | ) | 2,047 | (418 | ) | 82,492 | (8,749 | ) | 16,009 | (344 | ) | 62,492 | (8,638 | ) | 78,501 | (8,982 | ) | ||||||||||||||||||||||||||||||
Mortgage-backed securities – residential | 76,526 | (7,586 | ) | 24,569 | (4,056 | ) | 101,095 | (11,642 | ) | 3,334 | (84 | ) | 85,096 | (14,982 | ) | 88,430 | (15,066 | ) | ||||||||||||||||||||||||||||||
Mortgage-backed securities – commercial | 7,301 | (1,322 | ) | — | — | 7,301 | (1,322 | ) | — | — | 6,795 | (1,809 | ) | 6,795 | (1,809 | ) | ||||||||||||||||||||||||||||||||
Collateralized mortgage obligations - residential | 30,729 | (2,308 | ) | 2,713 | (466 | ) | 33,442 | (2,774 | ) | 22,039 | (638 | ) | 27,023 | (5,100 | ) | 49,062 | (5,738 | ) | ||||||||||||||||||||||||||||||
Other debt securities | 16,156 | (711 | ) | 459 | (41 | ) | 16,615 | (752 | ) | — | — | 15,033 | (2,142 | ) | 15,033 | (2,142 | ) | |||||||||||||||||||||||||||||||
Total temporarily impaired | $ | 245,869 | $ | (23,144 | ) | $ | 29,788 | $ | (4,981 | ) | $ | 275,657 | $ | (28,125 | ) | $ | 42,390 | $ | (1,076 | ) | $ | 228,398 | $ | (36,939 | ) | $ | 270,788 | $ | (38,015 | ) |
Less than 12 Months | 12 Months or more | Total | ||||||||||||||||||||||
Held to Maturity | Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | ||||||||||||||||||
June 30, 2022 | ||||||||||||||||||||||||
Obligations of state and political subdivisions | $ | 3,522 | $ | (90 | ) | — | $ | — | $ | 3,522 | $ | (90 | ) | |||||||||||
Total temporarily impaired | $ | 3,522 | $ | (90 | ) | $ | — | $ | — | $ | 3,522 | $ | (90 | ) |
Management evaluates securities for other-than-temporary impairment (OTTI) on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. The securities portfolio is evaluated for OTTI by segregating the portfolio into two general segments and applying the appropriate OTTI model. Investment securities are generally evaluated for OTTI under FASB ASC Topic 320, Accounting for Certain Investments in Debt and Equity Securities.
Less than 12 Months | 12 Months or more | Total | ||||||||||||||||||||||
Held to Maturity | Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | ||||||||||||||||||
June 30, 2023 | ||||||||||||||||||||||||
Obligations of state and political subdivisions | $ | — | $ | — | $ | 6,294 | $ | (676 | ) | $ | 6,294 | $ | (676 | ) | ||||||||||
Total temporarily impaired | $ | — | $ | — | $ | 6,294 | $ | (676 | ) | $ | 6,294 | $ | (676 | ) |
CONSUMERS BANCORP, INC.
Notes to the Consolidated Financial Statements
(Unaudited) (continued)
(Dollars in thousands, except per share amounts)
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.
At December 31 2022,September 30, 2023, there were a total of 399407 available-for-sale and four held-to-maturity securities in the portfolio with unrealized losses due to an increase in market interest rates when compared to the time of purchase. The unrealized losses within the securities portfolio as of December 31, 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 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 CorporationCompany does not own any private label mortgage-backed securities. The municipal bond portfolio consists of tax-exempt and taxable general obligations and revenue bonds to a broad range of counties, towns, school districts, and other essential service providers. As of September 30, 2023, 98.7% of the municipal bonds held in the available-for-sale portfolio had an S&P or Moody’s investment grade rating, and 1.3% were non-rated issues. The municipal bonds in the held-to-maturity portfolio are all non-rated issues to local entities that are also deposit customers. All the municipal bonds are paying as agreed, and there have been no missed payments.
Equity Securities
The CorporationCompany owned equity securities with an amortized cost of $400 as of December 31, 2022,September 30, 2023, and June 30, 2022.2023. Changes in the fair value of these securities are included in noninterest income on the consolidated statements of income. The following table presents the net unrealized losses on equity securities recognized in earnings for the three and six-month periods ended December 31, 2022September 30, 2023 and 2021.2022. There were no sales of equity securities during the three and six-month periods ended December 31, 2022September 30, 2023 and 2021.2022.
Three Months Ended December 31, | Six Months Ended December 31, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Unrealized loss recognized on equity securities held at the end of the period | $ | (9 | ) | $ | — | $ | (33 | ) | $ | — |
Three Months Ended September 30, | ||||||||
2023 | 2022 | |||||||
Unrealized loss recognized on equity securities held at the end of the period | $ | — | $ | (24 | ) |
Note 43 – Loans and Allowance for Credit Losses
Major classifications ofThe following table presents loans were as follows:by major category.
December 31, 2022 | June 30, 2022 | |||||||
Commercial | $ | 103,513 | $ | 87,008 | ||||
Commercial real estate: | ||||||||
Construction | 16,656 | 15,158 | ||||||
Other | 301,646 | 291,847 | ||||||
1 – 4 Family residential real estate: | ||||||||
Owner occupied | 149,177 | 142,244 | ||||||
Non-owner occupied | 23,513 | 26,029 | ||||||
Construction | 7,707 | 4,317 | ||||||
Consumer | 62,470 | 44,964 | ||||||
Subtotal | 664,682 | 611,567 | ||||||
Net deferred loan fees and costs | 287 | 276 | ||||||
Allowance for loan losses | (7,675 | ) | (7,160 | ) | ||||
Net Loans | $ | 657,294 | $ | 604,683 |
The commercial loan category in the above table includes a mortgage loan warehouse line of credit to another financial institution with an outstanding balance of $9,998 as of December 31, 2022 and it was zero as of June 30, 2022.
September 30, 2023 | June 30, 2023 | |||||||
Commercial & Industrial | $ | 111,235 | $ | 112,558 | ||||
Commercial real estate: | ||||||||
Owner occupied | 154,688 | 151,005 | ||||||
Non-owner occupied | 143,341 | 140,002 | ||||||
Farmland | 40,610 | 40,606 | ||||||
Land Development | 9,396 | 11,004 | ||||||
1 – 4 family residential real estate | 189,501 | 189,312 | ||||||
Consumer | 68,948 | 65,617 | ||||||
Subtotal | 717,719 | 710,104 | ||||||
Unamortized deferred loan costs, net | 202 | 258 | ||||||
Allowance for credit losses | (7,782 | ) | (7,724 | ) | ||||
Net Loans | $ | 710,139 | $ | 702,638 |
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 31, 2022:
1-4 Family | ||||||||||||||||||||
Commercial | Residential | |||||||||||||||||||
Real | Real | |||||||||||||||||||
Commercial | Estate | Estate | Consumer | Total | ||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||||
Beginning balance | $ | 1,021 | $ | 4,072 | $ | 1,676 | $ | 777 | $ | 7,546 | ||||||||||
Provision for loan losses | (15 | ) | 11 | 1 | 228 | 225 | ||||||||||||||
Loans charged-off | — | — | — | (119 | ) | (119 | ) | |||||||||||||
Recoveries | — | 1 | — | 22 | 23 | |||||||||||||||
Total ending allowance balance | $ | 1,006 | $ | 4,084 | $ | 1,677 | $ | 908 | $ | 7,675 |
The following table presents the activity in the allowance for loancredit losses by portfolio segment for the sixthree months ended December 31, 2022:September 30, 2023.
1-4 Family | ||||||||||||||||||||
Commercial | Residential | |||||||||||||||||||
Real | Real | |||||||||||||||||||
Commercial | Estate | Estate | Consumer | Total | ||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||||
Beginning balance | $ | 960 | $ | 3,927 | $ | 1,645 | $ | 628 | $ | 7,160 | ||||||||||
Provision for loan losses | 46 | 156 | 36 | 397 | 635 | |||||||||||||||
Loans charged-off | — | — | (6 | ) | (191 | ) | (197 | ) | ||||||||||||
Recoveries | — | 1 | 2 | 74 | 77 | |||||||||||||||
Total ending allowance balance | $ | 1,006 | $ | 4,084 | $ | 1,677 | $ | 908 | $ | 7,675 |
1-4 Family | ||||||||||||||||||||||||||||
Commercial | Commercial | Residential | ||||||||||||||||||||||||||
& | Real | Land | Real | |||||||||||||||||||||||||
Industrial | Estate | Farmland | Development | Estate | Consumer | Total | ||||||||||||||||||||||
ACL beginning balance | $ | 1,308 | $ | 3,943 | $ | — | $ | — | $ | 1,571 | $ | 902 | $ | 7,724 | ||||||||||||||
Cumulative effect of change in accounting principle | (455 | ) | (53 | ) | 93 | 398 | 166 | (97 | ) | 52 | ||||||||||||||||||
Provision for expected credit losses | 121 | 61 | (2 | ) | (132 | ) | (99 | ) | 91 | 40 | ||||||||||||||||||
Charge-offs | — | — | — | — | — | (106 | ) | (106 | ) | |||||||||||||||||||
Recoveries | — | — | — | — | — | 72 | 72 | |||||||||||||||||||||
ACL ending balance | $ | 974 | $ | 3,951 | $ | 91 | $ | 266 | $ | 1,638 | $ | 862 | $ | 7,782 |
The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ended December 31, 2021:September 30, 2022:
1-4 Family | 1-4 Family | |||||||||||||||||||||||||||||||||||||||
Commercial | Residential | Commercial | Commercial | Residential | ||||||||||||||||||||||||||||||||||||
Real | Real | & | Real | Real | ||||||||||||||||||||||||||||||||||||
Commercial | Estate | Estate | Consumer | Total | Industrial | Estate | Estate | Consumer | Total | |||||||||||||||||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||||||||||||||||||||||||
Beginning balance | $ | 906 | $ | 3,985 | $ | 1,430 | $ | 356 | $ | 6,677 | $ | 960 | $ | 3,927 | $ | 1,645 | $ | 628 | $ | 7,160 | ||||||||||||||||||||
Provision for loan losses | 49 | 62 | 97 | 62 | 270 | 61 | 145 | 35 | 169 | 410 | ||||||||||||||||||||||||||||||
Loans charged-off | — | — | (40 | ) | (13 | ) | (53 | ) | — | — | (6 | ) | (72 | ) | (78 | ) | ||||||||||||||||||||||||
Recoveries | 21 | 2 | 3 | 12 | 38 | — | — | 2 | 52 | 54 | ||||||||||||||||||||||||||||||
Total ending allowance balance | $ | 976 | $ | 4,049 | $ | 1,490 | $ | 417 | $ | 6,932 | $ | 1,021 | $ | 4,072 | $ | 1,676 | $ | 777 | $ | 7,546 |
The following table presents the activity in the allowance for loan lossesamortized cost of non-accrual loans by portfolio segment for theclass as of six months ended December 31, 2021:September 30, 2023:
1-4 Family | ||||||||||||||||||||
Commercial | Residential | |||||||||||||||||||
Real | Real | |||||||||||||||||||
Commercial | Estate | Estate | Consumer | Total | ||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||||
Beginning balance | $ | 904 | $ | 3,949 | $ | 1,307 | $ | 311 | $ | 6,471 | ||||||||||
Provision for loan losses | 51 | 98 | 207 | 104 | 460 | |||||||||||||||
Loans charged-off | — | — | (40 | ) | (47 | ) | (87 | ) | ||||||||||||
Recoveries | 21 | 2 | 16 | 49 | 88 | |||||||||||||||
Total ending allowance balance | $ | 976 | $ | 4,049 | $ | 1,490 | $ | 417 | $ | 6,932 |
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 31, 2022. Included in the recorded investment in loans is $1,494 of accrued interest receivable.
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 | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Acquired loans collectively evaluated for impairment | — | 51 | 77 | — | 128 | |||||||||||||||
Originated loans collectively evaluated for impairment | 1,006 | 4,033 | 1,600 | 908 | 7,547 | |||||||||||||||
Total ending allowance balance | $ | 1,006 | $ | 4,084 | $ | 1,677 | $ | 908 | $ | 7,675 | ||||||||||
Recorded investment in loans: | ||||||||||||||||||||
Loans individually evaluated for impairment | $ | 315 | $ | 40 | $ | 47 | $ | — | $ | 402 | ||||||||||
Acquired loans collectively evaluated for impairment | 674 | 7,706 | 25,052 | 2,029 | 35,461 | |||||||||||||||
Originated loans collectively evaluated for impairment | 102,804 | 310,578 | 156,784 | 60,434 | 630,600 | |||||||||||||||
Total ending loans balance | $ | 103,793 | $ | 318,324 | $ | 181,883 | $ | 62,463 | $ | 666,463 |
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, 2022. Included in the recorded investment in loans is $1,214 of accrued interest receivable.
1-4 Family | ||||||||||||||||||||
Commercial | Residential | |||||||||||||||||||
Real | Real | |||||||||||||||||||
Commercial | Estate | Estate | Consumer | Total | ||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||||
Ending allowance balance attributable to loans: | ||||||||||||||||||||
Individually evaluated for impairment | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Acquired loans collectively evaluated for impairment | 1 | 62 | 85 | — | 148 | |||||||||||||||
Originated loans collectively evaluated for impairment | 959 | 3,865 | 1,560 | 628 | 7,012 | |||||||||||||||
Total ending allowance balance | $ | 960 | $ | 3,927 | $ | 1,645 | $ | 628 | $ | 7,160 | ||||||||||
Recorded investment in loans: | ||||||||||||||||||||
Loans individually evaluated for impairment | $ | 276 | $ | 42 | $ | 155 | $ | — | $ | 473 | ||||||||||
Acquired loans collectively evaluated for impairment | 665 | 10,095 | 27,731 | 3,051 | 41,542 | |||||||||||||||
Originated loans collectively evaluated for impairment | 86,310 | 296,776 | 146,058 | 41,898 | 571,042 | |||||||||||||||
Total ending loans balance | $ | 87,251 | $ | 306,913 | $ | 173,944 | $ | 44,949 | $ | 613,057 |
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 31, 2022 and for the six months ended December 31, 2022:
As of December 31, 2022 | Six Months ended December 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 | $ | 408 | $ | 315 | $ | — | $ | 297 | $ | 18 | $ | 18 | ||||||||||||
Commercial real estate: | ||||||||||||||||||||||||
Other | 79 | 40 | — | 40 | 4 | 4 | ||||||||||||||||||
1-4 Family residential real estate: | ||||||||||||||||||||||||
Owner occupied | 45 | 20 | — | 20 | 2 | 2 | ||||||||||||||||||
Non-owner occupied | 27 | 27 | — | 53 | — | — | ||||||||||||||||||
Total | $ | 559 | $ | 402 | $ | — | $ | 410 | $ | 24 | $ | 24 |
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 31, 2022:
Average | Interest | Cash Basis | ||||||||||
Recorded | Income | Interest | ||||||||||
Investment | Recognized | Recognized | ||||||||||
With no related allowance recorded: | ||||||||||||
Commercial | $ | 308 | $ | 8 | $ | 8 | ||||||
Commercial real estate: | ||||||||||||
Other | 40 | 1 | 1 | |||||||||
1-4 Family residential real estate: | ||||||||||||
Owner occupied | 20 | 1 | 1 | |||||||||
Non-owner occupied | 27 | — | — | |||||||||
Total | $ | 395 | $ | 10 | $ | 10 |
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, 2022 and for the six months ended December 31, 2021:
As of June 30, 2022 | Six Months ended December 31, 2021 | |||||||||||||||||||||||
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 | $ | 414 | $ | 276 | $ | — | $ | 297 | $ | — | $ | — | ||||||||||||
Commercial real estate: | ||||||||||||||||||||||||
Other | 83 | 42 | — | 802 | 102 | 102 | ||||||||||||||||||
1-4 Family residential real estate: | ||||||||||||||||||||||||
Owner occupied | 48 | 22 | — | 317 | 3 | 3 | ||||||||||||||||||
Non-owner occupied | 193 | 133 | — | 167 | 75 | 75 | ||||||||||||||||||
With an allowance recorded: | ||||||||||||||||||||||||
Commercial | — | — | — | 128 | 4 | 4 | ||||||||||||||||||
Total | $ | 738 | $ | 473 | $ | — | $ | 1,711 | $ | 184 | $ | 184 |
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 31, 2021:
Average | Interest | Cash Basis | ||||||||||
Recorded | Income | Interest | ||||||||||
Investment | Recognized | Recognized | ||||||||||
With no related allowance recorded: | ||||||||||||
Commercial | $ | 295 | $ | — | $ | — | ||||||
Commercial real estate: | ||||||||||||
Other | 691 | 99 | 99 | |||||||||
1-4 Family residential real estate: | ||||||||||||
Owner occupied | 272 | 1 | 1 | |||||||||
Non-owner occupied | 132 | 75 | 75 | |||||||||
With an allowance recorded: | ||||||||||||
Commercial | 126 | 2 | 2 | |||||||||
Total | $ | 1,516 | $ | 177 | $ | 177 |
September 30, 2023 | ||||||||||||
Interest Income | ||||||||||||
Non-accrual | Total | Recognized during | ||||||||||
loans with | Non-accrual | the period on | ||||||||||
no ACL | loans | non-accrual loans | ||||||||||
Commercial real estate: | ||||||||||||
Owner occupied | $ | 51 | $ | 51 | $ | — | ||||||
1 – 4 family residential real estate | 142 | 142 | — | |||||||||
Total | $ | 193 | $ | 193 | $ | — |
The following table presents the recorded investment inof non-accrual and loans past due over 90 days still on accrual by class of loans as of December 31, 2022 and June 30, 2022:2023:
December 31, 2022 | June 30, 2022 | |||||||||||||||
Loans Past Due | Loans Past Due | |||||||||||||||
Over 90 Days | Over 90 Days | |||||||||||||||
Still | Still | |||||||||||||||
Non-accrual | Accruing | Non-accrual | Accruing | |||||||||||||
Commercial | $ | — | $ | — | $ | 276 | $ | 9 | ||||||||
1 – 4 Family residential: | ||||||||||||||||
Owner occupied | 20 | — | 22 | — | ||||||||||||
Non-owner occupied | 27 | — | 133 | — | ||||||||||||
Total | $ | 47 | $ | — | $ | 431 | $ | 9 |
June 30, 2023 Non-accrual | ||||
Commercial Real Estate: | ||||
Other | $ | 51 | ||
1 – 4 family residential: | ||||
Non-owner occupied | 3 | |||
Total | $ | 54 |
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 inamortized cost of past due loans as of December 31, 2022September 30, 2023 by class of loans:
Days Past Due | ||||||||||||||||||||||||
30 - 59 | 60 - 89 | 90 Days or | Total | Loans Not | ||||||||||||||||||||
Days | Days | Greater | Past Due | Past Due | Total | |||||||||||||||||||
Commercial | $ | — | $ | — | $ | — | $ | — | $ | 103,793 | $ | 103,793 | ||||||||||||
Commercial real estate: | ||||||||||||||||||||||||
Construction | — | — | — | — | 16,655 | 16,655 | ||||||||||||||||||
Other | 52 | — | — | 52 | 301,617 | 301,669 | ||||||||||||||||||
1-4 Family residential: | ||||||||||||||||||||||||
Owner occupied | 532 | 6 | — | 538 | 150,033 | 150,571 | ||||||||||||||||||
Non-owner occupied | — | 4 | 27 | 31 | 23,497 | 23,528 | ||||||||||||||||||
Construction | — | — | — | — | 7,784 | 7,784 | ||||||||||||||||||
Consumer | 499 | 131 | — | 630 | 61,833 | 62,463 | ||||||||||||||||||
Total | $ | 1,083 | $ | 141 | $ | 27 | $ | 1,251 | $ | 665,212 | $ | 666,463 |
The above table of past due loans includes the recorded investment in non-accrual loans of $27 in the 90 days or greater category and $20 in the loans not past due category.
Loans 90 | ||||||||||||||||||||||||||||
Days Past Due | Days Past | |||||||||||||||||||||||||||
30 – 59 | 60 - 89 | 90 Days or | Total | Loans Not | Due and | |||||||||||||||||||||||
Days | Days | Greater | Past Due | Past Due | Total | Accruing | ||||||||||||||||||||||
Commercial & Industrial | $ | 26 | $ | — | $ | — | $ | 26 | $ | 111,282 | $ | 111,308 | $ | — | ||||||||||||||
Commercial real estate: | ||||||||||||||||||||||||||||
Owner occupied | — | — | 51 | 51 | 154,374 | 154,425 | — | |||||||||||||||||||||
Non-owner occupied | — | — | — | — | 143,017 | 143,017 | — | |||||||||||||||||||||
Farmland | 40,509 | 40,509 | — | |||||||||||||||||||||||||
Land development | — | — | — | — | 9,373 | 9,373 | — | |||||||||||||||||||||
1 – 4 family residential real estate | 15 | — | 160 | 175 | 190,388 | 190,563 | 18 | |||||||||||||||||||||
Consumer | 580 | 168 | 80 | 828 | 67,898 | 68,726 | 80 | |||||||||||||||||||||
Total | $ | 621 | $ | 168 | $ | 291 | $ | 1,080 | $ | 716,841 | $ | 717,921 | $ | 98 |
The following table presents the aging of the recorded investment in past due loans as of June 30, 20222023 by class of loans:
Days Past Due | ||||||||||||||||||||||||
30 - 59 | 60 - 89 | 90 Days or | Total | Loans Not | ||||||||||||||||||||
Days | Days | Greater | Past Due | Past Due | Total | |||||||||||||||||||
Commercial | $ | — | $ | — | $ | 9 | $ | 9 | $ | 87,242 | $ | 87,251 | ||||||||||||
Commercial real estate: | ||||||||||||||||||||||||
Construction | — | — | — | — | 15,138 | 15,138 | ||||||||||||||||||
Other | 52 | — | — | 52 | 291,723 | 291,775 | ||||||||||||||||||
1-4 Family residential: | ||||||||||||||||||||||||
Owner occupied | 125 | — | — | 125 | 143,381 | 143,506 | ||||||||||||||||||
Non-owner occupied | — | — | 27 | 27 | 26,036 | 26,063 | ||||||||||||||||||
Construction | — | — | — | — | 4,375 | 4,375 | ||||||||||||||||||
Consumer | 381 | 79 | — | 460 | 44,489 | 44,949 | ||||||||||||||||||
Total | $ | 558 | $ | 79 | $ | 36 | $ | 673 | $ | 612,384 | $ | 613,057 |
The above table of past due loans includes the recorded investment in non-accrual loans of $27 in the 90 days or greater category and $404 in the loans not past due category.
Troubled Debt Restructurings (TDR):
The Corporation has certain loans that have been modified in order to maximize collection of loan balances that are classified as TDRs. A modified loan is usually classified as a TDR if, for economic reasons, management grants a concession to the original terms and conditions of the loan to a borrower who is experiencing financial difficulties that it would not have otherwise considered.
As of December 31, 2022 and June 30, 2022, the Corporation had $354 and $318, respectively, of loans classified as TDRs which are included in impaired loans above. As of December 31, 2022 and June 30, 2022, the Corporation had not committed to lend any additional funds to customers with outstanding loans that were classified as troubled debt restructurings. As of December 31, 2022 and June 30, 2022 there were no specific reserves allocated to these loans.
During the three- and six-month periods ended December 31, 2022 and 2021, there were no loan modifications completed that were classified as troubled debt restructurings. There were no charge-offs from troubled debt restructurings that were completed during the three- and six-month periods ended December 31, 2022 and 2021.
There were no loans classified as troubled debt restructurings for which there was a payment default within 12 months following the modification during the three- and six-month periods ended December 31, 2022 and 2021. A loan is considered in payment default once it is 90 days contractually past due under the modified terms.
Loans 90 | ||||||||||||||||||||||||||||
Days Past Due | Days Past | |||||||||||||||||||||||||||
30 – 59 | 60 - 89 | 90 Days or | Total | Loans Not | Due and | |||||||||||||||||||||||
Days | Days | Greater | Past Due | Past Due | Total | Accruing | ||||||||||||||||||||||
Commercial & Industrial | $ | — | $ | — | $ | — | $ | — | $ | 112,826 | $ | 112,826 | $ | — | ||||||||||||||
Commercial real estate: | ||||||||||||||||||||||||||||
Construction | — | — | — | — | 23,996 | 23,996 | — | |||||||||||||||||||||
Other | — | — | 51 | 51 | 318,654 | 318,705 | — | |||||||||||||||||||||
1-4 family residential: | ||||||||||||||||||||||||||||
Owner occupied | 17 | 124 | — | 141 | 158,296 | 158,437 | — | |||||||||||||||||||||
Non-owner occupied | — | — | 3 | 3 | 23,885 | 23,888 | — | |||||||||||||||||||||
Construction | — | — | — | — | 8,514 | 8,514 | — | |||||||||||||||||||||
Consumer | 438 | 120 | 50 | 608 | 64,986 | 65,594 | 50 | |||||||||||||||||||||
Total | $ | 455 | $ | 244 | $ | 104 | $ | 803 | $ | 711,157 | $ | 711,960 | $ | 50 |
Credit Quality Indicators:
The CorporationCompany categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, current economic trends and other relevant information. The CorporationAt the time of origination, the Company analyzes all commercial loans individually by classifyingand classifies the loans as toby credit risk. This analysis includesManagement regularly monitors commercial loans with a total outstanding loan relationship greater than $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’sborrowers’ ability to service their debt and affirmscompletes an annual review to confirm the risk ratingsrating for thethose loans and leases in their respective portfolio on an annual basis.with total outstanding loan relationships greater than $500. The CorporationCompany 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 pass rated loans. Loans listed as not rated are 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 investmentfollowing tables present the amortized cost by internal risk category of loans byand class of loans was as follows:of September 30, 2023:
As of December 31, 2022 | ||||||||||||||||||||
Special | Not | |||||||||||||||||||
Pass | Mention | Substandard | Doubtful | Rated | ||||||||||||||||
Commercial | $ | 102,974 | $ | 206 | $ | 471 | $ | — | $ | 142 | ||||||||||
Commercial real estate: | ||||||||||||||||||||
Construction | 16,655 | — | — | — | — | |||||||||||||||
Other | 294,165 | 2,233 | 4,653 | — | 618 | |||||||||||||||
1-4 Family residential real estate: | ||||||||||||||||||||
Owner occupied | 1,326 | — | 19 | 20 | 149,206 | |||||||||||||||
Non-owner occupied | 23,075 | 55 | 110 | 27 | 261 | |||||||||||||||
Construction | 2,858 | — | — | — | 4,926 | |||||||||||||||
Consumer | 1,648 | — | — | — | 60,815 | |||||||||||||||
Total | $ | 442,701 | $ | 2,494 | $ | 5,253 | $ | 47 | $ | 215,968 |
Revolving | Revolving | ||||||||||||||||||||||||||||||||||||
Loans | Loans | ||||||||||||||||||||||||||||||||||||
Term Loans by Origination Year | Amortized | Converted | |||||||||||||||||||||||||||||||||||
2024 | 2023 | 2022 | 2021 | 2020 | Prior | Cost Basis | To Term | Total | |||||||||||||||||||||||||||||
Commercial & Industrial | |||||||||||||||||||||||||||||||||||||
Pass | $ | 13,175 | $ | 29,099 | $ | 32,109 | $ | 9,319 | $ | 4,716 | $ | 5,937 | $ | 15,284 | $ | — | $ | 109,639 | |||||||||||||||||||
Special Mention | — | — | 440 | 44 | 17 | 47 | 573 | — | 1,121 | ||||||||||||||||||||||||||||
Substandard | — | — | — | — | — | 16 | 532 | — | 548 | ||||||||||||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Total Commercial & Industrial | $ | 13,175 | $ | 29,099 | $ | 32,549 | $ | 9,363 | $ | 4,733 | $ | 6,000 | $ | 16,389 | $ | — | $ | 111,308 | |||||||||||||||||||
Current year-to-date gross write-offs | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||||||||||||||||
Owner occupied: | |||||||||||||||||||||||||||||||||||||
Pass | $ | 5,495 | $ | 19,460 | $ | 34,629 | $ | 23,581 | $ | 15,786 | $ | 44,807 | $ | 7,458 | $ | — | $ | 151,216 | |||||||||||||||||||
Special Mention | — | — | — | 39 | 915 | 1,634 | 151 | — | 2,739 | ||||||||||||||||||||||||||||
Substandard | — | — | — | — | — | 419 | — | — | 419 | ||||||||||||||||||||||||||||
Doubtful | — | — | — | — | — | 51 | — | — | 51 | ||||||||||||||||||||||||||||
Total owner occupied | $ | 5,495 | $ | 19,460 | $ | 34,629 | $ | 23,620 | $ | 16,701 | $ | 46,911 | $ | 7,609 | $ | — | $ | 154,425 | |||||||||||||||||||
Current year-to-date gross write-offs | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||
Non-owner occupied: | |||||||||||||||||||||||||||||||||||||
Pass | $ | 1,947 | $ | 38,625 | $ | 22,967 | $ | 25,701 | $ | 13,202 | $ | 36,344 | $ | 784 | $ | — | $ | 139,570 | |||||||||||||||||||
Special Mention | — | — | — | 3,447 | — | — | — | — | 3,447 | ||||||||||||||||||||||||||||
Substandard | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Total non-owner occupied | $ | 1,947 | $ | 38,625 | $ | 22,967 | $ | 29,148 | $ | 13,202 | $ | 36,344 | $ | 784 | $ | — | $ | 143,017 | |||||||||||||||||||
Current year-to-date gross write-offs | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||
Farmland: | |||||||||||||||||||||||||||||||||||||
Pass | $ | 405 | $ | 6,469 | $ | 6,023 | $ | 5,644 | $ | 2,426 | $ | 17,631 | $ | 1,063 | $ | — | $ | 39,661 | |||||||||||||||||||
Special Mention | — | — | — | — | — | 848 | — | — | 848 | ||||||||||||||||||||||||||||
Substandard | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Total Farmland | $ | 405 | $ | 6,469 | $ | 6,023 | $ | 5,644 | $ | 2,426 | $ | 18,479 | $ | 1,063 | $ | — | $ | 40,509 | |||||||||||||||||||
Current year-to-date gross write-offs | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||
Land Development: | |||||||||||||||||||||||||||||||||||||
Pass | $ | 110 | $ | 2,027 | $ | 1,066 | $ | 537 | $ | 388 | $ | 614 | $ | 4,631 | $ | — | $ | 9,373 | |||||||||||||||||||
Special Mention | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Substandard | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Total Land Development | $ | 110 | $ | 2,027 | $ | 1,066 | $ | 537 | $ | 388 | $ | 614 | $ | 4,631 | $ | — | $ | 9,373 | |||||||||||||||||||
Current year-to-date gross write-offs | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||
Total: | |||||||||||||||||||||||||||||||||||||
Pass | $ | 21,132 | $ | 95,680 | $ | 96,794 | $ | 64,782 | $ | 36,518 | $ | 105,333 | $ | 29,220 | $ | — | $ | 449,459 | |||||||||||||||||||
Special Mention | — | — | 440 | 3,530 | 932 | 2,529 | 724 | — | 8,155 | ||||||||||||||||||||||||||||
Substandard | — | — | — | — | — | 435 | 532 | — | 967 | ||||||||||||||||||||||||||||
Doubtful | — | — | — | — | — | 51 | — | — | 51 | ||||||||||||||||||||||||||||
Total | $ | 21,132 | $ | 95,680 | $ | 97,234 | $ | 68,312 | $ | 37,450 | $ | 108,348 | $ | 30,476 | $ | — | $ | 458,632 |
AsCONSUMERS BANCORP, INC.
Notes to the Consolidated Financial Statements
(Unaudited) (continued)
(Dollars in thousands, except per share amounts)
Management monitors the credit risk profile by payment activity for residential and consumer loan classes. Loans past due 90 days or more and loans on nonaccrual are considered nonperforming. The following table presents the amortized cost of residential real estate and consumer loans based on payment status as of JuneSeptember 30, 2022, 2023:and based
Revolving | Revolving | |||||||||||||||||||||||||||||||||||
Loans | Loans | |||||||||||||||||||||||||||||||||||
Term Loans by Origination Year | Amortized | Converted | ||||||||||||||||||||||||||||||||||
2024 | 2023 | 2022 | 2021 | 2020 | Prior | Cost Basis | To Term | Total | ||||||||||||||||||||||||||||
1 – 4 family residential real estate: | ||||||||||||||||||||||||||||||||||||
Performing | $ | 4,330 | $ | 21,676 | $ | 31,602 | $ | 53,188 | $ | 20,607 | $ | 31,907 | $ | 27,093 | $ | — | $ | 190,403 | ||||||||||||||||||
Nonperforming | — | — | — | — | — | 160 | — | — | 160 | |||||||||||||||||||||||||||
Total 1-4 family residential real estate | $ | 4,330 | $ | 21,676 | $ | 31,602 | $ | 53,188 | $ | 20,607 | $ | 32,067 | $ | 27,093 | $ | — | $ | 190,563 | ||||||||||||||||||
Current year-to-date gross write-offs | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||
Consumer: | ||||||||||||||||||||||||||||||||||||
Performing | $ | 9,053 | $ | 33,179 | $ | 17,740 | $ | 6,567 | $ | 1,245 | $ | 731 | $ | 131 | $ | — | $ | 68,646 | ||||||||||||||||||
Nonperforming | — | 17 | 50 | 13 | — | — | — | — | 80 | |||||||||||||||||||||||||||
Total consumer | $ | 9,053 | $ | 33,196 | $ | 17,790 | $ | 6,580 | $ | 1,245 | $ | 731 | $ | 131 | $ | — | $ | 68,726 | ||||||||||||||||||
Current year-to-date gross write-offs | $ | 12 | $ | 47 | $ | 21 | $ | 16 | $ | 10 | $ | — | $ | — | $ | — | $ | 106 | ||||||||||||||||||
Total: | ||||||||||||||||||||||||||||||||||||
Performing | $ | 13,383 | $ | 54,855 | $ | 49,342 | $ | 59,755 | $ | 21,852 | $ | 32,638 | $ | 27,224 | $ | — | $ | 259,049 | ||||||||||||||||||
Nonperforming | — | 17 | 50 | 13 | — | 160 | — | — | 240 | |||||||||||||||||||||||||||
Total | $ | 13,383 | $ | 54,872 | $ | 49,392 | $ | 59,768 | $ | 21,852 | $ | 32,798 | $ | 27,224 | $ | — | $ | 259,289 |
Based on the most recent analysis performed, the following table presents the recorded investment by risk category of loansand by class of loans is as follows:of June 30, 2023:
As of June 30, 2022 | Special | Not | ||||||||||||||||||||||||||||||||||||||
Special | Not | Pass | Mention | Substandard | Doubtful | Rated | ||||||||||||||||||||||||||||||||||
Pass | Mention | Substandard | Doubtful | Rated | ||||||||||||||||||||||||||||||||||||
Commercial | $ | 86,265 | $ | 350 | $ | 178 | $ | 276 | $ | 182 | ||||||||||||||||||||||||||||||
Commercial & Industrial | $ | 110,928 | $ | 1,174 | $ | 573 | $ | — | $ | 151 | ||||||||||||||||||||||||||||||
Commercial real estate: | ||||||||||||||||||||||||||||||||||||||||
Construction | 15,138 | — | — | — | — | 23,996 | — | — | — | — | ||||||||||||||||||||||||||||||
Other | 283,877 | 2,500 | 4,711 | — | 687 | 310,427 | 7,097 | 468 | 51 | 662 | ||||||||||||||||||||||||||||||
1-4 Family residential real estate: | ||||||||||||||||||||||||||||||||||||||||
Owner occupied | 1,321 | — | — | 22 | 142,163 | 2,013 | — | 17 | — | 156,407 | ||||||||||||||||||||||||||||||
Non-owner occupied | 25,606 | 59 | — | 133 | 265 | 23,474 | 50 | 105 | 3 | 256 | ||||||||||||||||||||||||||||||
Construction | 1,234 | — | — | — | 3,141 | 3,227 | — | — | — | 5,287 | ||||||||||||||||||||||||||||||
Consumer | 605 | — | — | — | 44,344 | 597 | — | — | — | 64,997 | ||||||||||||||||||||||||||||||
Total | $ | 414,046 | $ | 2,909 | $ | 4,889 | $ | 431 | $ | 190,782 | $ | 474,662 | $ | 8,321 | $ | 1,163 | $ | 54 | $ | 227,760 |
Modifications to Borrowers Experiencing Financial Difficulty
Occasionally, the Company modifies loans to borrowers experiencing financial difficulty to maximize collection of loan balances by providing principal forgiveness, term extension, an other-than insignificant payment delay, or an interest rate reduction. In some cases, the Company may provide multiple types of concessions on one loan. If principal forgiveness is provided, the amount of forgiveness is charged-off against the allowance for credit losses.
There were no modifications of loans to borrowers in financial distress completed during the quarter ended September 30, 2023.
CONSUMERS BANCORP, INC.
Notes to the Consolidated Financial Statements
(Unaudited) (continued)
(Dollars in thousands, except per share amounts)
Impaired Loans
The following impaired loan information relates to required disclosures under the previous incurred loan loss methodology and are only presented with prior period information.
The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of June 30, 2023. Included in the recorded investment in loans is $1,598 of accrued interest receivable.
1-4 Family | ||||||||||||||||||||
Commercial | Commercial | Residential | ||||||||||||||||||
& | Real | Real | ||||||||||||||||||
Industrial | Estate | Estate | Consumer | Total | ||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||||
Ending allowance balance attributable to loans: | ||||||||||||||||||||
Individually evaluated for impairment | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Acquired loans collectively evaluated for impairment | — | 40 | 74 | — | 114 | |||||||||||||||
Originated loans collectively evaluated for impairment | 1,308 | 3,903 | 1,497 | 902 | 7,610 | |||||||||||||||
Total ending allowance balance | $ | 1,308 | $ | 3,943 | $ | 1,571 | $ | 902 | $ | 7,724 | ||||||||||
Recorded investment in loans: | ||||||||||||||||||||
Loans individually evaluated for impairment | $ | 314 | $ | 88 | $ | 3 | $ | — | $ | 405 | ||||||||||
Acquired loans collectively evaluated for impairment | 622 | 6,953 | 23,038 | 1,230 | 31,843 | |||||||||||||||
Originated loans collectively evaluated for impairment | 111,890 | 335,660 | 167,798 | 64,364 | 679,712 | |||||||||||||||
Total ending loans balance | $ | 112,826 | $ | 342,701 | $ | 190,839 | $ | 65,594 | $ | 711,960 |
The following table presents 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, 2023 and for the three months ended September 30, 2022:
As of June 30, 2023 | Three Months ended September 30, 2022 | |||||||||||||||||||||||
| Allowance |
|
|
| ||||||||||||||||||||
Unpaid | for Loan | Average | Interest | Cash Basis | ||||||||||||||||||||
Principal | Recorded | Losses | Recorded | Income | Interest | |||||||||||||||||||
Balance | Investment | Allocated | Investment | Recognized | Recognized | |||||||||||||||||||
With no related allowance recorded: | ||||||||||||||||||||||||
Commercial & Industrial | $ | 404 | $ | 314 | $ | — | $ | 286 | $ | 10 | $ | 10 | ||||||||||||
Commercial real estate: | ||||||||||||||||||||||||
Other | 127 | 88 | — | 41 | 3 | 3 | ||||||||||||||||||
1-4 Family residential real estate: | ||||||||||||||||||||||||
Owner occupied | 24 | — | — | 21 | 1 | 1 | ||||||||||||||||||
Non-owner occupied | 3 | 3 | — | 62 | — | — | ||||||||||||||||||
Total | $ | 558 | $ | 405 | $ | — | $ | 410 | $ | 14 | $ | 14 |
CONSUMERS BANCORP, INC.
Notes to the Consolidated Financial Statements
(Unaudited) (continued)
(Dollars in thousands, except per share amounts)
Troubled Debt Restructurings (TDR):
The Company had certain loans that were modified to maximize collection of loan balances classified as TDRs. A modified loan was usually classified as a TDR if, for economic reasons, management granted a concession to the original terms and conditions of the loan to a borrower who was experiencing financial difficulties that it would not have otherwise considered. As of June 30, 2023, the Company had $351 of loans classified as TDRs which are included in impaired loans above.
Note 54 - Fair Value
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:
Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.
Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.
Financial assets and financial liabilities measured at fair value on a recurring basis include the following:
Securities available-for-sale: 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).
Assets and liabilities measured at fair value on a recurring basis are summarized below, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:
Balance at | Fair Value Measurements at December 31, 2022 | Balance at September 30, | Fair Value Measurements at September 30, 2023 | |||||||||||||||||||||||||||||
2022 | Level 1 | Level 2 | Level 3 | 2023 | Level 1 | Level 2 | �� | Level 3 | ||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
Obligations of U.S. Treasury | $ | 8,321 | $ | — | $ | 8,321 | $ | — | $ | 8,479 | $ | — | $ | 8,479 | $ | — | ||||||||||||||||
Obligations of U.S. government-sponsored entities and agencies | 24,032 | — | 24,032 | — | 24,503 | — | 24,503 | — | ||||||||||||||||||||||||
Obligations of state and political subdivisions | 95,935 | — | 95,935 | — | 74,720 | — | 74,720 | — | ||||||||||||||||||||||||
U.S. Government-sponsored mortgage-backed securities – residential | 93,238 | — | 93,238 | — | 82,542 | — | 82,542 | — | ||||||||||||||||||||||||
U.S. Government-sponsored mortgage-backed securities – commercial | 6,753 | — | 6,753 | — | 6,424 | — | 6,424 | — | ||||||||||||||||||||||||
U.S. Government-sponsored collateralized mortgage obligations - residential | 43,084 | — | 43,084 | — | 49,282 | — | 49,282 | — | ||||||||||||||||||||||||
Other debt securities | 15,779 | — | 15,779 | — | 15,080 | — | 15,080 | — | ||||||||||||||||||||||||
Equity securities | 367 | — | 367 | — | 386 | — | 386 | — |
Balance at June 30, | Fair Value Measurements at June 30, 2022 | |||||||||||||||
2022 | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Obligations of U.S. treasury | $ | 8,447 | $ | — | $ | 8,447 | $ | — | ||||||||
Obligations of U.S. government-sponsored entities and agencies | 26,265 | — | 26,265 | — | ||||||||||||
Obligations of state and political subdivisions | 97,357 | — | 97,357 | — | ||||||||||||
U.S. government-sponsored mortgage-backed securities - residential | 102,183 | — | 102,183 | — | ||||||||||||
U.S. government-sponsored mortgage-backed securities - commercial | 7,301 | — | 7,301 | — | ||||||||||||
U.S. government-sponsored collateralized mortgage obligations - residential | 38,179 | — | 38,179 | — | ||||||||||||
Other debt securities | 16,615 | — | 16,615 | — | ||||||||||||
Equity securities | 400 | — | 400 | — |
CONSUMERS BANCORP, INC.
Notes to the Consolidated Financial Statements
(Unaudited) (continued)
(Dollars in thousands, except per share amounts)
Balance at June 30, | Fair Value Measurements at June 30, 2023 | |||||||||||||||
2023 | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Obligations of U.S. treasury | $ | 8,408 | $ | — | $ | 8,408 | $ | — | ||||||||
Obligations of U.S. government-sponsored entities and agencies | 25,692 | — | 25,692 | — | ||||||||||||
Obligations of state and political subdivisions | 83,972 | — | 83,972 | — | ||||||||||||
U.S. government-sponsored mortgage-backed securities - residential | 89,635 | — | 89,635 | — | ||||||||||||
U.S. government-sponsored mortgage-backed securities - commercial | 6,795 | — | 6,795 | — | ||||||||||||
U.S. government-sponsored collateralized mortgage obligations - residential | 50,070 | — | 50,070 | — | ||||||||||||
Other debt securities | 15,033 | — | 15,033 | — | ||||||||||||
Equity securities | 386 | — | 386 | — |
There were no transfers between Level 1 and Level 2 during the three-month and six-month periodsperiod ended December 31, 2022.September 30, 2023.
Certain assets and liabilities are measured at fair value on a non-recurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances. Assets and liabilities measuredthat may be recorded at fair value on a non-recurringnonrecurring basis include individually evaluated collateral dependent loans (or impaired loans prior to the following:adoption of ASC 326), other real estate owned, and other repossessed assets.
Impaired Loans: AtThe fair value of collateral dependent loans with specific allocations of the time a loanallowance for credit losses is considered impaired, it is valued at the lower of cost or fair value.generally based on recent real estate appraisals. 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 no impaired loans measured at fair value on a non-recurring basis at December 31, 2022September 30, 2023 or June 30, 20222023 and there was no impact to the provision for loancredit losses for the three-month or six- month periodsperiod ended December 31, 2022September 30, 2023 or 2021.2022.
Other Real Estate and Repossessed Assets Owned: Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Real estate owned properties and other repossessed assets, which are primarily vehicles, are evaluated on a quarterly basis for additional impairment and adjusted accordingly. There was no other real estate owned or other repossessed assets being carried at fair value as of December 31, 2022September 30, 2023 or June 30, 2022.2023. As of September 30, 2023 and June 30, 2023 the balance of other real estate owned was $124.
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’sCompany’s consolidated balance sheets, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:
December 31, 2022 | June 30, 2022 | September 30, 2023 | June 30, 2023 | |||||||||||||||||||||||||||||
Carrying |
Estimated |
Carrying |
Estimated | Carrying | Estimated | Carrying | Estimated | |||||||||||||||||||||||||
Financial Assets: | ||||||||||||||||||||||||||||||||
Level 1 inputs: | ||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 13,302 | $ | 13,302 | $ | 20,952 | $ | 20,952 | $ | 19,643 | $ | 19,643 | $ | 11,755 | $ | 11,755 | ||||||||||||||||
Level 2 inputs: | ||||||||||||||||||||||||||||||||
Certificates of deposit in other financial institutions | 3,264 | 3,146 | 3,781 | 3,847 | 2,493 | 2,462 | 2,501 | 2,450 | ||||||||||||||||||||||||
Loans held for sale | 100 | 101 | 1,165 | 1,188 | — | — | 764 | 774 | ||||||||||||||||||||||||
Accrued interest receivable | 3,017 | 3,017 | 2,703 | 2,703 | 3,293 | 3,293 | 3,024 | 3,024 | ||||||||||||||||||||||||
Level 3 inputs: | ||||||||||||||||||||||||||||||||
Securities held-to-maturity | 7,338 | 6,911 | 7,874 | 7,831 | 6,866 | 6,123 | 6,970 | 6,294 | ||||||||||||||||||||||||
Loans, net | 657,294 | 600,039 | 604,683 | 577,708 | 710,139 | 652,758 | 702,638 | 656,737 | ||||||||||||||||||||||||
Financial Liabilities: | ||||||||||||||||||||||||||||||||
Level 2 inputs: | ||||||||||||||||||||||||||||||||
Demand and savings deposits | 760,900 | 760,900 | 784,181 | 784,181 | 730,910 | 730,910 | 738,190 | 738,190 | ||||||||||||||||||||||||
Time deposits | 145,252 | 145,027 | 102,381 | 102,622 | 230,464 | 229,325 | 214,343 | 211,856 | ||||||||||||||||||||||||
Short-term borrowings | 25,380 | 25,380 | 21,295 | 21,295 | 21,945 | 21,945 | 26,367 | 26,367 | ||||||||||||||||||||||||
Federal Home Loan Bank advances | 24,603 | 23,341 | 8,256 | 7,215 | 8,146 | 6,913 | 8,776 | 7,678 | ||||||||||||||||||||||||
Accrued interest payable | 162 | 162 | 49 | 49 | 507 | 507 | 344 | 344 |
The assumptions used to estimate fair value are described as follows:
Cash and cash equivalents: The carrying value of cash and deposits in other financial institutions were considered to approximate fair value resulting in a Level 1 classification.
Certificates of deposits in other financial institutions: Fair value of certificates of deposits in other financial institutions was estimated using current rates for deposits of similar remaining maturities resulting in a Level 2 classification.
Accrued interest receivable and payable, demand and savings deposits and short-term borrowings: The carrying value of accrued interest receivable and payable, demand and savings deposits and short-term borrowings were considered to approximate fair value due to their short-term duration resulting in a Level 2 classification.
Loans held for sale: The fair value of loans held for sale is estimated based upon binding contracts and quotes from third party investors resulting in a Level 2 classification.
Loans: Fair value for loans was estimated for portfolios of loans with similar financial characteristics. The estimated fair value approximates carrying value for variable-rate loans that reprice frequently and with no significant change in credit risk. The fair value of fixed-rate loans and variable-rate loans which reprice on an infrequent basis is estimated by discounting future cash flows using the current interest rates at which similar loans with similar terms would be made to borrowers of similar credit quality resulting in a Level 3 classification. An overall valuation adjustment is made for specific credit risks as well as general portfolio credit risk. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price.
Securities held-to-maturity: The held-to-maturity securities are general obligation and revenue bonds issued by local municipalities. The fair value of these securities are calculated using a spread to the applicable municipal fair market curve resulting in a Level 3 classification.
CONSUMERS BANCORP, INC.
Notes to the Consolidated Financial Statements
(Unaudited) (continued)
(Dollars in thousands, except per share amounts)
Time deposits: Fair value of fixed-maturity certificates of deposit was estimated using the rates offered at September 30, 2023 and 2022 for deposits of similar remaining maturities, resulting in Level 2 classification. Estimated fair value does not include the benefit that results from low-cost funding provided by the deposit liabilities compared to the cost of borrowing funds in the market.
Federal Home Loan Bank advances: Fair value of Federal Home Loan Bank advances was estimated using current rates at September 30, 2023 and 2022 for similar financing resulting in a Level 2 classification.
Federal bank and other restricted stocks, at cost: Federal bank and other restricted stocks include stock acquired for regulatory purposes, such as Federal Home Loan Bank stock and Federal Reserve Bank stock that are accounted for at cost due to restrictions placed on their transferability, and, therefore, are not subject to the fair value disclosure requirements.
Off-balance sheet commitments: The Company’s lending commitments have variable interest rates and “escape” clauses if the customer’s credit quality deteriorates. Therefore, the fair values of these items are not significant and are not included in the above table.
NOTE 5—AFFORDABLE TAX CREDIT PARTNERSHIP
In April 2023, the Company invested in a limited partnership that will in turn invest in qualified affordable housing projects that will generate tax benefits for the limited partner investors, including federal low-income housing tax credits pursuant to Section 42 of the Internal Revenue Code. This partnership investment is an unconsolidated Variable Interest Entity (VIE) for which the Company holds an interest in but is not the primary beneficiary of the VIE. The purpose of this investment is to achieve a satisfactory return on capital, to facilitate the sale of additional affordable housing product offerings, and to assist in achieving goals associated with the Community Reinvestment Act. The primary activities of the limited partnership include the identification, development, and operation of multi-family housing that is leased to qualifying residential tenants. Generally, these types of investments are funded through a combination of debt and equity.
The Company uses the proportional amortization method to account for its investment. The investment is included in other assets and the unfunded commitment is included in other liabilities. As a limited partner, there is no recourse to the Company by the creditors of the limited partnership, however, the tax credits are generally subject to recapture should the partnership fail to comply with the applicable government regulations.
The following table summarizes the balances of the affordable housing tax credit investment and related unfunded commitment at September 30, 2023 and June 30, 2023.
September 30, 2023 | June 30, 2023 | |||||||
Affordable housing tax credit investment | $ | 10,250 | $ | 10,250 | ||||
Less: amortization | (1 | ) | — | |||||
Net affordable housing tax credit investment | $ | 10,249 | $ | 10,250 | ||||
Unfunded commitments | $ | 9,305 | $ | 9,668 |
The following summarizes other information relating to the affordable housing tax credit investment for the three-month periods ended September 30, 2023 and 2022.
Three Months Ended September 30, | ||||||||
2023 | 2022 | |||||||
Tax credits and other tax benefits recognized | $ | 15 | $ | — | ||||
Proportional amortization expense included in provision for income taxes | 1 | — |
CONSUMERS BANCORP, INC.
Notes to the Consolidated Financial Statements
(Unaudited) (continued)
(Dollars in thousands, except per share amounts)
Note 6 – 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 6,216 shares of restricted stock that were anti-dilutive for the three-month and six-month periods ended December 31, 2022. There were no21,082 shares of restricted stock that were anti-dilutive for the three-month period ended December 31, 2021September 30, 2023. and 9,766There were 7,103 shares of restricted stock that were anti-dilutive for the sixthree month-month period ended December 31, 2021.September 30, 2022. 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 September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | 2023 | 2022 | |||||||||||||||||||
Basic: | ||||||||||||||||||||||||
Net income available to common shareholders | $ | 2,809 | $ | 3,162 | $ | 5,344 | $ | 5,827 | $ | 2,410 | $ | 2,535 | ||||||||||||
Weighted average common shares outstanding | 3,076,207 | 3,034,362 | 3,065,719 | 3,032,416 | 3,092,945 | 3,048,018 | ||||||||||||||||||
Basic income per share | $ | 0.91 | $ | 1.04 | $ | 1.74 | $ | 1.92 | $ | 0.78 | $ | 0.83 | ||||||||||||
Diluted: | ||||||||||||||||||||||||
Net income available to common shareholders | $ | 2,809 | $ | 3,162 | $ | 5,344 | $ | 5,827 | $ | 2,410 | $ | 2,535 | ||||||||||||
Weighted average common shares outstanding | 3,076,207 | 3,034,362 | 3,065,719 | 3,032,416 | 3,092,945 | 3,048,018 | ||||||||||||||||||
Dilutive effect of restricted stock | 814 | 438 | — | 233 | — | — | ||||||||||||||||||
Total common shares and dilutive potential common shares | 3,077,021 | 3,034,800 | 3,065,719 | 3,032,649 | 3,092,945 | 3,048,018 | ||||||||||||||||||
Dilutive income per share | $ | 0.91 | $ | 1.04 | $ | 1.74 | $ | 1.92 | $ | 0.78 | $ | 0.83 |
Note 7 –Accumulated Other Comprehensive Income (Loss)Loss
The components of other comprehensive income related to unrealized gains and losses on available-for-sale securities for the three-month periods ended December 31, 2022September 30, 2023 and 2021,2022, were as follows:
Pretax | Tax Effect | After-tax | Affected Line | ||||||||||
Balance as of September 30, 2022 | $ | (44,111 | ) | $ | 9,263 | $ | (34,848 | ) | |||||
Unrealized holding gains on available-for-sale securities arising during the period | 5,429 | (1,140 | ) | 4,289 | |||||||||
Amounts reclassified from accumulated other comprehensive income | 4 | (1 | ) | 3 | (a)(b) | ||||||||
Net current period other comprehensive gain | 5,433 | (1,141 | ) | 4,292 | |||||||||
Balance as of December 31, 2022 | $ | (38,678 | ) | $ | 8,122 | $ | (30,556 | ) |
Pretax | Tax Effect | After-tax | Affected Line | ||||||||||
Balance as of September 30, 2021 | $ | 2,927 | $ | (615 | ) | $ | 2,312 | ||||||
Unrealized holding losses on available-for-sale securities arising during the period | (922 | ) | 194 | (728 | ) | ||||||||
Amounts reclassified from accumulated other comprehensive income | (2 | ) | — | (2 | ) | (a)(b) | |||||||
Net current period other comprehensive loss | (924 | ) | 194 | (730 | ) | ||||||||
Balance as of December 31, 2021 | $ | 2,003 | $ | (421 | ) | $ | 1,582 |
Pretax | Tax Effect | After-tax | Affected Line Item in Consolidated Statements of Income | |||||||||||
Balance as of June 30, 2023 | $ | (37,925 | ) | $ | 7,964 | $ | (29,961 | ) | ||||||
Unrealized holding losses on available-for-sale securities arising during the period | (9,852 | ) | 2,069 | (7,783 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive loss | 79 | (16 | ) | 63 | (a)(b) | |||||||||
Net current period other comprehensive loss | (9,773 | ) | 2,053 | (7,720 | ) | |||||||||
Balance as of September 30, 2023 | $ | (47,698 | ) | $ | 10,017 | $ | (37,681 | ) |
CONSUMERS BANCORP, INC.
Notes to the Consolidated Financial Statements
(Unaudited) (continued)
(Dollars in thousands, except per share amounts)
Pretax | Tax Effect | After-tax | Affected Line | ||||||||||
Balance as of June 30, 2022 | $ | (27,982 | ) | $ | 5,876 | $ | (22,106 | ) | |||||
Unrealized holding losses on available-for-sale securities arising during the period | (10,711 | ) | 2,249 | (8,462 | ) | ||||||||
Amounts reclassified from accumulated other comprehensive income | 15 | (3 | ) | 12 | (a)(b) | ||||||||
Net current period other comprehensive loss | (10,696 | ) | 2,246 | (8,450 | ) | ||||||||
Balance as of December 31, 2022 | $ | (38,678 | ) | $ | 8,122 | $ | (30,556 | ) |
Pretax | Tax Effect | After-tax | Affected Line | ||||||||||
Balance as of June 30, 2021 | $ | 4,493 | $ | (943 | ) | $ | 3,550 | ||||||
Unrealized holding losses on available-for-sale securities arising during the period | (2,488 | ) | 522 | (1,966 | ) | ||||||||
Amounts reclassified from accumulated other comprehensive income | (2 | ) | — | (2 | ) | (a)(b) | |||||||
Net current period other comprehensive loss | (2,490 | ) | 522 | (1,968 | ) | ||||||||
Balance as of December 31, 2021 | $ | 2,003 | $ | (421 | ) | $ | 1,582 |
Pretax | Tax Effect | After-tax | Affected Line Item in Consolidated Statements of Income | |||||||||||
Balance as of June 30, 2022 | $ | (27,982 | ) | $ | 5,876 | $ | (22,106 | ) | ||||||
Unrealized holding losses on available-for-sale securities arising during the period | (16,140 | ) | 3,389 | (12,751 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive loss | 11 | (2 | ) | 9 | (a)(b) | |||||||||
Net current period other comprehensive loss | (16,129 | ) | 3,387 | (12,742 | ) | |||||||||
Balance as of September 30, 2022 | $ | (44,111 | ) | $ | 9,263 | $ | (34,848 | ) |
(a) Securities (gains) losses, net
(b) Income tax expense
Note 8– COVID-19
In December 2019, a novel strain of coronavirus surfaced in Wuhan, China, and has spread around the world, resulting in business and social disruption. The coronavirus was declared a Pandemic by the World Health Organization on March 11, 2020. The economic impacts related to the COVID-19 pandemic continue to linger due to supply chain disruptions, additional employee costs, rising inflationary pressures and the prospects of recession, all which may impact the ability of our customers to make payments on loans, resulting in elevated loan losses and an increase in the Corporation’s allowance for loan losses.
CONSUMERS BANCORP, INC.
Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
(Dollars in thousands, except per share amounts)
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’s analysis of the Corporation’sCompany’s results of operations for the three-and six-month periodsthree-month period ended December 31, 2022,September 30, 2023, compared to the same period in 2021,2022, and the consolidated balance sheet at December 31, 2022,September 30, 2023, compared to June 30, 2022.2023. 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)Company), owns all the 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’sCompany’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, Mahoning, Stark, Summit, Wayne and contiguous counties in 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.
Results of Operations
Three- and Six-MonthThree-Month Periods Ended December 31,September 30, 2023 and 2022 and 2021
Net income for the secondfirst quarter of fiscal year 20232024 was $2,809,$2,410, or $0.91$0.78 per common share, compared to $3,162,$2,535, or $1.04$0.83 per common share for the three months ended December 31, 2021.September 30, 2022. The following are key highlights of our results of operations for the three months ended December 31, 2022,September 30, 2023, compared towith the prior fiscal year comparable period:
● | net interest income |
● | a $40 provision for credit losses on loans and a $79 provision for credit losses on unfunded commitments were recorded for the three-month period ended September 30, 2023 compared with a $410 provision for loan loss expense for the same prior year period; |
● | noninterest income increased by $26, or 2.3%, in the first quarter of fiscal year 2024 from the same prior year period primarily as a result of | |
|
| |
|
|
● | noninterest expenses increased by |
In the first six months of fiscal year 2023, net income was $5,344, or $1.74 per common share, compared to $5,827, or $1.92 per common share for the six months ended December 31, 2021. The following are key highlights of our results of operations for the six months ended December 31, 2022, compared to the prior fiscal year comparable period:
|
| |
|
| |
|
| |
|
|
The annualized return on average equity and return on average assets were 21.01%17.31% and 1.06%0.90%, respectively, for the sixthree months ended December 31, 2022September 30, 2023 compared to 16.03%18.03% and 1.23%1.02%, respectively, for the same prior year period.
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’sCompany’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 20232024 and 20222023 fiscal years was 21.0%. All average balances are daily average balances. Non-accruing loans are included in average loan balances and average securities include unrealized gains and losses on securities available for sale,available-for-sale, while yields are based on average amortized cost.
CONSUMERS BANCORP, INC.
Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
(Dollars in thousands, except per share data)
The Corporation’sCompany’s net interest margin was 3.53%3.09% for the three months ended December 31, 2022,September 30, 2023, compared with 3.77%3.48% for the same period in 2021.2022. The net interest margin is expected to continue to be impacted by the rapid increase in the cost of funds because of the competition for deposits and other borrowing costs as well as the inverted yield curve. FTE net interest income for the three months ended December 31, 2022 increasedSeptember 30, 2023, decreased by $195,$406, or 2.2%4.8%, to $8,867$8,111 from $8,672$8,517 for the same prior year period.
The yield on average interest-earning assets increased to 4.03%4.45% for the three months ended December 31, 2022,September 30, 2023, compared with 3.92%3.76% for the same period last year. Tax-equivalent interest income increased by $1,107,$2,497, or 12.3%27.2%, for the three months ended December 31, 2022,September 30, 2023, from the same prior year period because of a $37,354,$59,404, or 4.1%6.3%, increase in average interest-earning assets as well as the increase in current market rates. Interest expense for the three months ended December 31, 2022September 30, 2023 increased by $912$2,903 from the same prior year period primarily due to an increase in deposit and short-term borrowing costs as a result of higher market interest rates.rates and increased competition for deposits. The Corporation’sCompany’s cost of funds increased to 0.72%1.91% for the three months ended December 31, 2022September 30, 2023 compared with 0.21% for the same prior year period.
The Corporation’s net interest margin was 3.51% for the six months ended December 31, 2022, compared with 3.70% for the same period in 2021. FTE net interest income for the six months ended December 31, 2022 increased by $620, or 3.7%, to $17,384 from $16,764 for the same prior year period.
Tax-equivalent interest income increased by $1,848, or 10.6%, for the six months ended December 31, 2022 from the same prior year period. Interest income was positively impacted by a $44,668, or 4.9%, increase in average interest-earning assets from the same prior year period as well by the impact of higher current market rates, which more than offset the loss of the $2,040 of interest and fee income that was recognized on the Paycheck Protection Program loans during the six-month period ended December 31, 2021 since these loans are now fully forgiven. The yield on average interest-earning assets increased to 3.90% for the six months ended December 31, 2022, compared with 3.85% for the same period last year.
Interest expense for the six months ended December 31, 2022 increased by $1,228 from the same prior year period primarily due to an increase in deposit and borrowing costs as a result of higher market interest rates. The Corporation’s cost of funds increased to 0.57% for the six months ended December 31, 2022 compared with 0.22%0.40% 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 amounts)
Average Balance Sheets and Analysis of Net Interest Income for the Three Months Ended December 31, (In thousands, except percentages) | ||||||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||||||
Average Balance | Interest | Yield/ Rate | Average Balance | Interest | Yield/ Rate | |||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||
Taxable securities | $ | 203,006 | $ | 1,301 | 2.19 | % | $ | 182,705 | $ | 806 | 1.75 | % | ||||||||||||
Nontaxable securities (1) | 85,446 | 687 | 2.83 | 86,093 | 633 | 3.02 | ||||||||||||||||||
Loans receivable (1) | 646,941 | 7,957 | 4.88 | 592,633 | 7,499 | 5.02 | ||||||||||||||||||
Federal bank and other restricted stocks | 2,276 | 47 | 8.19 | 2,472 | 20 | 3.21 | ||||||||||||||||||
Equity securities | 376 | 9 | 9.50 | 424 | 9 | 8.42 | ||||||||||||||||||
Interest bearing deposits and federal funds sold | 13,781 | 116 | 3.34 | 50,145 | 43 | 0.34 | ||||||||||||||||||
Total interest-earning assets | 951,826 | 10,117 | 4.03 | % | 914,472 | 9,010 | 3.92 | % | ||||||||||||||||
Noninterest-earning assets | 48,769 | 37,425 | ||||||||||||||||||||||
Total Assets | $ | 1,000,595 | $ | 951,897 | ||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||
NOW | $ | 158,998 | $ | 244 | 0.61 | % | $ | 143,318 | $ | 35 | 0.10 | % | ||||||||||||
Savings | 354,480 | 454 | 0.51 | 343,763 | 92 | 0.11 | ||||||||||||||||||
Time deposits | 140,192 | 429 | 1.21 | 116,664 | 147 | 0.50 | ||||||||||||||||||
Short-term borrowings | 21,878 | 95 | 1.72 | 8,910 | 1 | 0.04 | ||||||||||||||||||
FHLB advances | 8,973 | 28 | 1.24 | 16,291 | 63 | 1.53 | ||||||||||||||||||
Total interest-bearing liabilities | 684,521 | 1,250 | 0.72 | % | 628,946 | 338 | 0.21 | % | ||||||||||||||||
Noninterest-bearing liabilities: | ||||||||||||||||||||||||
Noninterest-bearing checking accounts | 263,866 | 243,465 | ||||||||||||||||||||||
Other liabilities | 7,060 | 6,998 | ||||||||||||||||||||||
Total liabilities | 955,447 | 879,409 | ||||||||||||||||||||||
Shareholders’ equity | 45,148 | 72,488 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 1,000,595 | $ | 951,897 | ||||||||||||||||||||
Net interest income, interest rate spread (1) | $ | 8,867 | 3.31 | % | $ | 8,672 | 3.71 | % | ||||||||||||||||
Net interest margin (net interest as a percent of average interest-earning assets) (1) | 3.53 | % | 3.77 | % | ||||||||||||||||||||
Federal tax exemption on non-taxable securities and loans included in interest income | $ | 91 | $ | 127 | ||||||||||||||||||||
Average interest-earning assets to interest-bearing liabilities | 139.05 | % | 145.40 | % |
Average Balance Sheets and Analysis of Net Interest Income for the Three Months Ended September 30,
(In thousands, except percentages)
2023 | 2022 | |||||||||||||||||||||||
Average Balance | Interest | Yield/ Rate | Average Balance | Interest | Yield/ Rate | |||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||
Taxable securities | $ | 209,311 | $ | 1,449 | 2.39 | % | $ | 214,023 | $ | 1,248 | 2.11 | % | ||||||||||||
Nontaxable securities (1) | 71,594 | 427 | 2.14 | 89,477 | 704 | 2.90 | ||||||||||||||||||
Loans receivable (1) | 713,498 | 9,696 | 5.39 | 623,840 | 7,132 | 4.54 | ||||||||||||||||||
Federal bank and other restricted stocks | 2,087 | 41 | 7.79 | 2,337 | 23 | 3.90 | ||||||||||||||||||
Equity securities | 386 | 8 | 8.22 | 400 | 8 | 7.93 | ||||||||||||||||||
Interest bearing deposits and federal funds sold | 6,573 | 71 | 4.29 | 13,968 | 80 | 2.27 | ||||||||||||||||||
Total interest-earning assets | 1,003,449 | 11,692 | 4.45 | % | 944,045 | 9,195 | 3.76 | % | ||||||||||||||||
Noninterest-earning assets | 57,645 | 46,432 | ||||||||||||||||||||||
Total Assets | $ | 1,061,094 | $ | 990,477 | ||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||
NOW | $ | 152,747 | $ | 373 | 0.97 | % | $ | 160,491 | $ | 175 | 0.43 | % | ||||||||||||
Savings | 335,453 | 1,137 | 1.34 | 368,287 | 260 | 0.28 | ||||||||||||||||||
Time deposits | 222,729 | 1,907 | 3.40 | 108,681 | 162 | 0.59 | ||||||||||||||||||
Short-term borrowings | 24,444 | 126 | 2.05 | 20,949 | 59 | 1.12 | ||||||||||||||||||
FHLB advances | 9,323 | 38 | 1.62 | 8,232 | 22 | 1.06 | ||||||||||||||||||
Total interest-bearing liabilities | 744,696 | 3,581 | 1.91 | % | 666,640 | 678 | 0.40 | % | ||||||||||||||||
Noninterest-bearing liabilities: | ||||||||||||||||||||||||
Noninterest-bearing checking accounts | 243,258 | 260,014 | ||||||||||||||||||||||
Other liabilities | 17,902 | 8,047 | ||||||||||||||||||||||
Total liabilities | 1,005,856 | 934,701 | ||||||||||||||||||||||
Shareholders’ equity | 55,238 | 55,776 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 1,061,094 | $ | 990,477 | ||||||||||||||||||||
Net interest income, interest rate spread (1) | $ | 8,111 | 2.54 | % | $ | 8,517 | 3.36 | % | ||||||||||||||||
Net interest margin (net interest as a percent of average interest-earning assets) (1) | 3.09 | % | 3.48 | % | ||||||||||||||||||||
Federal tax exemption on non-taxable securities and loans included in interest income | $ | (43 | ) | $ | 121 | |||||||||||||||||||
Average interest-earning assets to interest-bearing liabilities | 134.75 | % | 141.61 | % |
(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 amounts)
data)
Average Balance Sheets and Analysis of Net Interest Income for the Six Months Ended December 31, (In thousands, except percentages) | ||||||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||||||
Average Balance | Interest | Yield/ Rate | Average Balance | Interest | Yield/ Rate | |||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||
Taxable securities | $ | 208,514 | $ | 2,549 | 2.15 | % | $ | 168,323 | $ | 1,517 | 1.79 | % | ||||||||||||
Nontaxable securities (1) | 87,462 | 1,391 | 2.86 | 84,159 | 1,228 | 3.01 | ||||||||||||||||||
Loans receivable (1) | 635,391 | 15,089 | 4.71 | 585,497 | 14,569 | 4.94 | ||||||||||||||||||
Federal bank and other restricted stocks | 2,306 | 70 | 6.02 | 2,472 | 40 | 3.21 | ||||||||||||||||||
Equity securities | 388 | 17 | 8.69 | 424 | 17 | 7.95 | ||||||||||||||||||
Interest bearing deposits and federal funds sold | 13,875 | 196 | 2.80 | 62,393 | 93 | 0.30 | ||||||||||||||||||
Total interest-earning assets | 947,936 | 19,312 | 3.90 | % | 903,268 | 17,464 | 3.85 | % | ||||||||||||||||
Noninterest-earning assets | 47,588 | 36,269 | ||||||||||||||||||||||
Total Assets | $ | 995,524 | $ | 939,537 | ||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||
NOW | $ | 159,745 | $ | 419 | 0.52 | % | $ | 140,608 | $ | 68 | 0.10 | % | ||||||||||||
Savings | 361,384 | 714 | 0.39 | 334,222 | 181 | 0.11 | ||||||||||||||||||
Time deposits | 124,436 | 591 | 0.94 | 118,888 | 321 | 0.54 | ||||||||||||||||||
Short-term borrowings | 21,414 | 154 | 1.43 | 10,239 | 3 | 0.06 | ||||||||||||||||||
FHLB advances | 8,602 | 50 | 1.15 | 16,444 | 127 | 1.53 | ||||||||||||||||||
Total interest-bearing liabilities | 675,581 | 1,928 | 0.57 | % | 620,401 | 700 | 0.22 | % | ||||||||||||||||
Noninterest-bearing liabilities: | ||||||||||||||||||||||||
Noninterest-bearing checking accounts | 261,941 | 239,965 | ||||||||||||||||||||||
Other liabilities | 7,540 | 7,081 | ||||||||||||||||||||||
Total liabilities | 945,062 | 867,447 | ||||||||||||||||||||||
Shareholders’ equity | 50,462 | 72,090 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 995,524 | $ | 939,537 | ||||||||||||||||||||
Net interest income, interest rate spread (1) | $ | 17,384 | 3.33 | % | $ | 16,764 | 3.63 | % | ||||||||||||||||
Net interest margin (net interest as a percent of average interest-earning assets) (1) | 3.51 | % | 3.70 | % | ||||||||||||||||||||
Federal tax exemption on non-taxable securities and loans included in interest income | $ | 212 | $ | 246 | ||||||||||||||||||||
Average interest-earning assets to interest-bearing liabilities | 140.31 | % | 145.59 | % |
(1) calculated on a fully taxable equivalent basis utilizing a statutory federal income tax rate of 21.0%
Provision for LoanCredit Losses
On July 1, 2023, the Company adopted ASU 2016-13 CECL which caused an increase in the allowance for credit losses of $52 and the recording of a liability for expected credit losses on unfunded loans and other commitments of $308. The reserve for unfunded commitments is primarily related to 1 - 4 family home equity lines of credit, commercial construction loans, and 1 - 4 family construction loans. The increase in the allowance and the recording of the liability resulted in a decrease in the retained earnings account on our Consolidated Balance Sheet equal to the after-tax impact, with the tax impact portion being recorded in deferred taxes on our Consolidated Balance Sheet in accordance with FASB guidance.
The allowance for credit losses consists of general and specific components. The general component covers loans collectively evaluated for credit loss and is based on peer historical loss experience adjusted for current and forecasted factors. Management's adjustments to the quantitative evaluation may be for trends in delinquencies, trends in the volume of loans, changes in underwriting standards, changes in the value of underlying collateral, the existence and effect of portfolio concentration, regulatory environment, economic conditions, Company management and the status of portfolio administration including the Company’s loan review function.
The specific component includes loans that do not share similar risk characteristics that are evaluated on an individual basis and are excluded from the pooling approach. As of September 30, 2023, individually evaluated loans totaled $8,305 and included the $8,112 third-party residential mortgage warehouse line-of-credit and $193 of nonaccrual loans. The warehouse line-of-credit is included in individually analyzed loans because of the unique structure of the loan given the short-term nature of the advances, curtailment features provided by the financial institution that the line-of-credit is issued to, as well as being secured by individual residential properties. As of June 30, 2023, under the incurred loan loss methodology, individually evaluated loans totaled $405 and included $351 of performing loas classified as troubled debt restructurings and $54 of nonaccrual loans. There was no allowance for credit losses related to these individually evaluated loans as of September 30, 2023 or June 30, 2023.
For the three-month period ended September 30, 2023, the provision for credit losses was $119 and included a $40 provision for credit losses on loans and a $79 provision for credit losses on unfunded commitments. This compared with a provision for loan losses represents the charge to income necessary to adjust the allowance for loan losses to an amount that represents management’s assessment of the estimated probable incurred credit losses in the Bank’s loan portfolio that have been incurred at each balance sheet date. For the six-month period ended December 31, 2022, the provision for loan losses was $635 compared with $460 for the same period last year. Net charge-offs of $120 were recorded during the six-month period ended December 31, 2022 compared with net recoveries of $1$410 for the same period last year. The loan loss provision expense recorded in fiscal year 2023 was primarily due to the organic growth within the loan portfolio.
Non-performing loans were $47 as of December 31, 2022, compared with $440 as of June 30, 2022 and $744 as of December 31, 2021. Non-performing loans to total loans were 0.01% at December 31, 2022 and 0.07% at June 30, 2022. Non-performing loans declined from June 30, 2022 since two loans were upgraded and returned to accrual status during the first quarter of fiscal year 2023. The allowance for loancredit losses as a percentage of loans was 1.15%1.08% at December 31, 2022September 30, 2023 and 1.17%1.09% at June 30, 2022. Uncertainty2023. Net charge-offs of $34 were recorded during the three-month period ended September 30, 2023 compared with net charge off of $24 for the same period last year.
Non-performing loans were $291 as of September 30, 2023, compared with $104 as of June 30, 2023. Non-performing loans to total loans were 0.04% at September 30, 2023 and 0.01% at June 30, 2023. Due to the recent rapid increase in market interest rates 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 adjustwill work with borrowers as needed to mitigate losses to the provision accordingly.Company.
Noninterest Income
Noninterest income decreasedincreased by $66,$26, or 5.4%2.3%, for the secondfirst quarter of fiscal year 2023 from the same period last year. For the six-month period ended December 31, 2022, noninterest income decreased by $208, or 8.3%,2024 from the same period last year. The decreaseincrease in noninterest income was primarily the result of a reduction in mortgage banking activity from the same prior year period. Gains from the sale of mortgage loans to the secondary market declined as refinancing of mortgages slowed because of thean increase in mortgage rates from the previous record lows. The decline in mortgage banking revenue was partially offset by increases in service charges on deposit accounts of $65,$29, or 9.0%,7.3% and debit card interchange incomean increase in mortgage banking activity of $44,$16, or 4.3% for19.5%. These increases were partially offset by a $79 loss on the six-month period ended December 31, 2022 compared withsale of available-for-sale securities as lower yielding securities were sold in order to reinvest the same period last year. Effective March 1, 2022, the Bank made a small reduction to the non-sufficient funds/overdraft fee and eliminated many internal account transfer fees. The Bank may make future reductions to the non-sufficient funds/overdraft fee in response to the industry wide trend of reducing overdraft fees as large banks have announced a reduction in these types of fees in response to regulatory pressure. As a result, service charges on deposit accounts may be negatively impacted in future periods.proceeds into higher yielding loans.
Noninterest Expenses
Total noninterest expenses increased by $671,$187, or 11.9%3.1%, for the secondfirst quarter of fiscal year 2023 and by $917, or 8.0%, for the six-month period ended December 31, 20222024 compared with the same periodsperiod last year. Salaries and employee benefitbenefits expenses increased by $514 thousand,$59, or 7.9%1.7%, for the six-monththree-month period ended December 31, 2022September 30, 2023 compared to the same prior year period primarily due to merit and cost of living increases, the addition of lending and support staff and increaseswhich was partially offset by a reduction in health care costs. Occupancy and equipmentincentive expense accruals. Debit card processing expenses increased by $145,$38, or 10.1%13.9%, for the six-monththree-month period ended December 31, 2022September 30, 2023 compared to the same prior year period primarily becausedue to an increase in customer card usage and an increase in the number of investments in new security equipment and technology.
Thecards issued. FDIC assessments decreasedincreased by $31,$37, or 11.5%24.3%, for the six-monththree-month period ended December 31, 2022September 30, 2023 primarily due to a reductionbecause of an increase in the assessment multiplier for the Bank since there is lower one-year asset growth rate. On October 18, 2022, the FDIC issued a final rule that will increase the initial base deposit insurance assessment rate paid by all insured depository institutions by two basis points, beginning with the first quarterly assessment periodinstitutions.
CONSUMERS BANCORP, INC.
Management's Discussion and Analysis of calendar year 2023. According to the FDIC, the proposal increases the likelihood that its designated reserve ratio will reach the required minimum levelFinancial Condition
and Results of 1.35% by the statutory deadline of September 30, 2028 and will support progress toward achieving the long-term goal of a 2% ratio. The proposed increase would remain in effect until the long-term goal of a 2% FDIC designated reserve ratio is achieved. Progressively lower assessment rates will take effect when the reserve ratio reaches 2% and again when the reserve ratio reaches 2.5%.Operations (continued)
On September 2, 2022, the OCC announced reduced assessment rates for OCC-chartered community banks. Effective with the March 2023 assessment, the OCC will make a 40% reduction(Dollars in assessments based on the first $200 million in bank assets and a 20% reduction for assets between $200 million and $20 billion.thousands, except per share data)
Income Taxes
Income tax expense was $577 and $1,081expenses were $517 for the three- and six-monththree-month period ended September 30, 2023, compared to $504 for the three-month periods ended December 31, 2022, compared to $685 and $1,244 for the three-and six-month periods ended December 31, 2021.September 30, 2022. The effective tax rates were 16.8%17.7% and 17.6%16.4% for the six-monththree-month periods ended December 31,September 30, 2023 and 2022, and 2021, respectively. The effective tax rates differed from the federal statutory rate because of tax-exempt income from obligations of state and political subdivisions, loans, and bank owned life insurance income.
Financial Condition
Total assets as of December 31, 2022September 30, 2023 were $1,013,156$1,057,516 compared to $977,313$1,060,024 at June 30, 2022,2023, an increasedecrease of $35,843,$2,508, or an annualized 7.3%0.9%. From June 30, 2022,2023, total loans increased by $53,126,$7,559, or an annualized 17.4%4.3% and total deposits increased by $19,590,$8,841, or an annualized 4.4%3.7%.
Available-for-sale securities decreased from $296,347$279,605 as of June 30, 2022,2023, to $287,142$261,030 as of December 31, 2022. TheSeptember 30, 2023. As of September 30, 2023, the portfolio had an unrealized loss of $38,711 as of December 31, 2022$41,698 as a result of 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 or repricing dates or if market yields for such securities decline. The portfolio is primarily comprised of agency mortgage-backed securities, obligations of state and political subdivisions, other government agencies’ debt, corporate debt, and U.S. Treasury notes. The municipal bond portfolio consists of tax-exempt and taxable general obligations and revenue bonds to a broad range of counties, towns, school districts, and other essential service providers. As of December 31, 2022,September 30, 2023, 98.7% of the municipal bonds held in the available-for-sale portfolio had an S&P or Moody’s investment grade rating, and 1.3% were non-rated issues. As of September 30, 2023, the projected cash flow from the portfolio over the next 12 months was approximately $25,431$28,725 which willmay be available to reinvest into loans or securities at the then current market rates.
Total loans increased by $53,126,$7,559, or an annualized 17.4%4.3%, from June 30, 2022.2023. The growth in loans was primarily within the consumer, commercial, and commercial real estate and consumer loan portfolios. Consumer loan growth was primarily from indirect loans due to the expansion of consumer loan sales staff and an expanded dealer network. Commercial loans included a mortgage loan warehouse line of credit to another financial institution with an outstanding balance of $9,998 as of December 31, 2022 and it was zero as of June 30, 2022. The outstanding balance of the warehouse line of credit is expected to be at or near zero by March 31, 2023.
Non-Performing AssetsAsset Quality
The following table presents the aggregate amounts of non-performing assets and select ratios as of the dates indicated.
December 31, 2022 | June 30, 2022 | December 31, 2021 | September 30, 2023 | June 30, 2023 | September 30, 2022 | |||||||||||||||||||
Non-accrual loans | $ | 47 | $ | 431 | $ | 740 | $ | 193 | $ | 54 | $ | 47 | ||||||||||||
Loans past due over 90 days and still accruing | — | 9 | 4 | 98 | 50 | 19 | ||||||||||||||||||
Total non-performing loans | 47 | 440 | 744 | 291 | 104 | 66 | ||||||||||||||||||
Other real estate and repossessed assets | — | — | 83 | 124 | 124 | 11 | ||||||||||||||||||
Total non-performing assets | $ | 47 | $ | 440 | $ | 827 | $ | 415 | $ | 228 | $ | 77 | ||||||||||||
Non-performing loans to total loans | 0.01 | % | 0.07 | % | 0.12 | % | 0.04 | % | 0.01 | % | 0.01 | % | ||||||||||||
Allowance for loan losses to total non-performing loans | 16,329.79 | % | 1,661.25 | % | 931.72 | % |
As of December 31, 2022, impaired loans totaled $354, of which $47 are includedThe increase in non-accrual loans. Asloans in the first quarter of June 30, 2022, impaired loans totaled $473, of which $431 are includedfiscal year 2024 was primarily due to an increase in non-accrualresidential mortgage 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 CorporationCompany 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’sCompany’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 CorporationCompany to be sufficiently liquid to meet normal operating needs and conditions. The Corporation’sCompany’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 ensure the soundness of the portfolio, as well as to provide funding for loan demand as needed.
CONSUMERS BANCORP, INC.
Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
(Dollars in thousands, except per share amounts)
For the sixthree months ended December 31, 2022,September 30, 2023, net cash inflow from operating activities was $7,715,$3,654, net cash outflowsinflows from investing activities was $53,527$940 and net cash inflows from financing activities was $39,162.$3,294. A major source of cash was an increase of $16,400 in short term Federal Home Loan Bank (FHLB) advances, a $19,590 increase$8,841 in deposits and $15,113$10,170 from maturity, calls, principal pay downs, and sales of available-for-sale securities. A major use of cash was a $53,257$7,593 increase in loans and the purchase of $17,091 of available-for-sale securities.loans. Total cash and cash equivalents were $13,302$19,643 as of December 31, 2022,September 30, 2023, compared to $20,952$11,755 at June 30, 20222023 and $21,253$25,515 at December 31, 2021.September 30, 2022.
The Bank offers several types of deposit products to itsa diverse base of business, public fund, and personal customers. We believe the rates offered by the Bank and the fees charged for them are competitive with the rates and fees charged by other banks for similar deposit products currently available in the market area. Deposits totaled $906,152$961,374 at December 31, 2022September 30, 2023, an increase of $8,841, or 3.7%, compared with $886,562$952,533 at June 30, 2022.
To provide an additional source of liquidity, the Corporation has entered into an agreement with the FHLB of Cincinnati. At December 31, 2022, advances from the FHLB of Cincinnati totaled $24,603 compared with $8,256 at June 30, 2022.2023. As of December 31, 2022,September 30, 2023, the Bank had the ability to borrow an additional $86,995 from the FHLBestimated percentage 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 a line of credit for the Corporation. The Bank pledges securities as collateral for the repurchase agreements. Short-term borrowings totaled $25,380 at December 31, 2022 and $21,295 at June 30, 2022.uninsured deposits, excluding collateralized public fund deposits, was 18.0%.
Jumbo time deposits (those with balances of $250 and over) totaled $41,884$49,713 as of December 31, 2022September 30, 2023 and $18,164$46,822 as of June 30, 2022.2023 and are from local customers and businesses. These deposits are monitored closely by the CorporationCompany and are mainly priced on an individual basis. The CorporationCompany has the option to use a fee-paid broker or CD listing service to obtain deposits from outside its normal service area as an additional source of funding. The Corporation,Company, however, does not rely upon these types of 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.monthly.
To provide additional sources of liquidity, the Company has lines of credit with other financial institutions and entered into agreements with the FHLB of Cincinnati and the Federal Reserve Discount Window. At September 30, 2023, advances from the FHLB of Cincinnati totaled $8,146 compared with $8,776 at June 30, 2023. As of September 30, 2023, the Bank had the ability to borrow an additional $102,493 from the FHLB of Cincinnati based on a blanket pledge of qualifying first mortgage and multi-family loans. The Company 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 with local customers, which are financing arrangements that mature daily, and a line of credit for the Company. The Bank pledges securities as collateral for the repurchase agreements. Short-term borrowings totaled $21,945 at September 30, 2023 and $26,367 at June 30, 2023.
To meet the financial needs of our customers, we have issued commitments to originate mortgage, commercial, construction, and consumer loans and commitments for commercial, home equity, and consumer lines of credit have been issued.credit. 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. Financial standby letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party. The same credit policies are used in making commitments and financial standby letters of credit as are used for on-balance sheet instruments. Total unused commitments were $171,578$172,268 as of December 31, 2022September 30, 2023, and $149,500$143,945 as of June 30, 2022.2023.
Capital Resources
Total shareholders’ equity declineddecreased to $50,397$49,555 as of December 31, 2022,September 30, 2023, from $53,970$55,484 as of June 30, 2022. The primary reason for the decline in shareholders’ equity was2023 primarily because of an increase of $8,450$7,720 in the accumulated other comprehensive loss from the mark-to-market of available-for-sale securities and from cash dividends paid of $1,045.$560. These reductions were partially offset by net income of $2,410 for the three-month period ended September 30, 2023. As market interest rates rise, the fair value of fixed-rate available-for-sale securities decline with a corresponding net of tax decline recorded in the accumulated other comprehensive loss portion of equity. 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. These declines were partially offset by net income of $5,344 for the six-month period ended December 31, 2022.
CONSUMERS BANCORP, INC.
Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
(Dollars in thousands, except per share amounts)
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’sCompany’s financial statements.
As of December 31, 2022,September 30, 2023, the Bank’s common equity tier 1 capital and tier 1 capital ratios were 11.06%10.99% and the leverage and total risk-based capital ratios were 7.61%7.79% and 12.14%12.02%, respectively. This compares with common equity tier 1 capital and tier 1 capital ratios of 11.39%11.05% and leverage and total risk-based capital ratios of 7.39%7.72% and 12.49%12.07%, respectively, as of June 30, 2022.2023. 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 31, 2022September 30, 2023 that would cause the Bank’s capital category to change.
Critical Accounting Policies
The Corporation’sCompany’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America and follow general practices within the 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 are those policies that are highly dependent on subjective or complex judgments, estimates and assumptions and where changes in those estimates and assumptions could have a significant impact on the financial statements. The CorporationCompany has identified the appropriateness of the allowance for loancredit losses and the evaluation of goodwill for impairment as critical accounting policies and an understanding of these policies is necessary to understand the financial statements. Note one (Summary of Significant Accounting Policies -– Adoption of New Accounting Standards) and Note three (Loans and Allowance for Loan Losses and Goodwill and Other Intangible Assets), Note four (Loans),Credit Losses) of the Company’s Consolidated Financial Statements provide detail regarding the Company’s accounting for the allowance for credit losses. Note six (Goodwill and Acquired 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 20222023 Form 10-K provide detail regarding the Corporation’sCompany’s accounting for the critical accounting policies. There have been no significant changes in the application of accounting policies since June 30, 2022.Goodwill.
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, 2022, 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 qualitative 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.
Forward-Looking Statements
Certain statements contained in this 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 “may,” “continue,” “estimate,” “intend,” “plan,” “seek,” “will,” “believe,” “project,” “expect,” “anticipate” and similar expressions are intended to identify forward-looking statements. These forward-looking statements may involve risks and uncertainties that are difficult to predict, may be beyond our control, and could cause actual results to differ materially from those described in such statements. Any such forward-looking statements are made only as of the date of this report or the respective dates of the relevant incorporated documents, as the case may be, and, except as required by law, we undertake no obligation to update these forward-looking statements to reflect subsequent events or circumstances. 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:
● | changes in local, regional and national economic conditions becoming less favorable than we expect, resulting in a deterioration in asset credit quality or debtors being unable to meet their obligations because of high unemployment rates and inflationary pressures; |
● | rapid fluctuations in market interest rates could result in changes in fair market valuations and a decline in net interest income; |
● | changes in the level of non-performing assets and charge-offs; |
● | unanticipated changes in our liquidity position, including, but not limited to, changes in the cost of liquidity, |
● | the effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities, and insurance) with which we must comply; |
CONSUMERS BANCORP, INC.
Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
(Dollars in thousands, except per share data)
● | the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve Board; |
● | breaches of security or failures of our technology systems due to technological or other factors and cybersecurity threats; |
● | changes in consumer spending, borrowing and savings habits; |
● | declining asset values impacting the underlying value of collateral; |
● | changes in accounting policies, rules and |
● | our ability to attract and retain qualified employees; |
● | competitive pressures on product pricing and services; and |
● | changes in the reliability of our vendors, internal control systems or information systems. |
CONSUMERS BANCORP, INC.
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’sCompany’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Corporation’sCompany’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’sCompany’s disclosure controls and procedures were effective as of December 31, 2022.September 30, 2023.
Changes in Internal Controls Over Financial Reporting
There have not been any changes in the Corporation’sCompany’s internal control over financial reporting that occurred during the Corporation’sCompany’s last quarter that have materially affected, or are reasonably likely to materially affect, the Corporation’sCompany’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 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 |
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) |
(1) | These interactive date files shall not be deemed filed for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to 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: |
| /s/ Ralph J. Lober | |
Ralph J. Lober, II | |||
President & Chief Executive Officer
| |||
(principal executive officer) | |||
Date: |
| /s/ Renee K. Wood | |
Renee K. Wood | |||
Chief Financial Officer & Treasurer | |||
(principal financial officer) |