Company Quick10K Filing
Consumers Bancorp
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 3 $51
10-Q 2019-11-08 Quarter: 2019-09-30
10-K 2019-09-12 Annual: 2019-06-30
10-Q 2019-05-15 Quarter: 2019-03-31
10-Q 2019-02-14 Quarter: 2018-12-31
10-Q 2018-11-14 Quarter: 2018-09-30
10-K 2018-09-12 Annual: 2018-06-30
10-Q 2018-05-15 Quarter: 2018-03-31
10-Q 2018-02-14 Quarter: 2017-12-31
10-Q 2017-11-07 Quarter: 2017-09-30
10-K 2017-09-21 Annual: 2017-06-30
10-Q 2017-05-15 Quarter: 2017-03-31
10-Q 2017-02-14 Quarter: 2016-12-31
10-Q 2016-11-14 Quarter: 2016-09-30
10-K 2016-09-22 Annual: 2016-06-30
10-Q 2016-05-16 Quarter: 2016-03-31
10-Q 2016-02-16 Quarter: 2015-12-31
10-Q 2015-11-16 Quarter: 2015-09-30
10-K 2015-09-23 Annual: 2015-06-30
10-Q 2015-05-15 Quarter: 2015-03-31
10-Q 2015-02-17 Quarter: 2014-12-31
10-Q 2014-11-14 Quarter: 2014-09-30
10-K 2014-09-24 Annual: 2014-06-30
10-Q 2014-05-15 Quarter: 2014-03-31
10-Q 2014-02-14 Quarter: 2013-12-31
10-Q 2013-11-14 Quarter: 2013-09-30
10-K 2013-09-24 Annual: 2013-06-30
10-Q 2013-05-15 Quarter: 2013-03-31
10-Q 2013-02-14 Quarter: 2012-12-31
10-Q 2012-11-14 Quarter: 2012-09-30
10-K 2012-09-21 Annual: 2012-06-30
10-Q 2012-05-14 Quarter: 2012-03-31
10-Q 2012-02-13 Quarter: 2011-12-31
10-Q 2011-11-10 Quarter: 2011-09-30
10-K 2011-09-16 Annual: 2011-06-30
10-Q 2011-05-16 Quarter: 2011-03-31
10-Q 2011-02-11 Quarter: 2010-12-31
10-Q 2010-11-15 Quarter: 2010-09-30
10-K 2010-09-22 Annual: 2010-06-30
10-Q 2010-05-17 Quarter: 2010-03-31
10-Q 2010-02-12 Quarter: 2009-12-31
8-K 2020-01-16 Earnings, Exhibits
8-K 2020-01-01 M&A, Officers, Other Events, Exhibits
8-K 2019-10-17
8-K 2019-10-16
8-K 2019-10-15
8-K 2019-07-31 Earnings, Other Events, Exhibits
8-K 2019-06-14 Regulation FD
8-K 2019-04-18 Earnings, Exhibits
8-K 2019-01-22 Earnings, Exhibits
8-K 2019-01-22 Other Events
8-K 2018-10-18 Officers, Shareholder Vote
8-K 2018-10-18 Earnings, Exhibits
8-K 2018-07-26 Earnings, Exhibits
8-K 2018-06-13 Enter Agreement, Exhibits
8-K 2018-04-24 Earnings, Exhibits
8-K 2018-01-26 Earnings, Exhibits
CBKM 2019-09-30
Part I - Financial Information
Item 1 - Financial Statements
Note 1 - Summary of Significant Accounting Policies:
Note 2 - Acquisition
Note 3 - Securities
Note 4 - Loans
Note 5 - Fair Value
Note 6 - Earnings per Share
Note 7 -Accumulated Other Comprehensive Income (Loss)
Note 8 - Revenue Recognition
Note 9 - Leases
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 4 - Controls and Procedures
Part II - Other Information
Item 1 - Legal Proceedings
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds
Item 3 - Defaults Upon Senior Securities
Item 4 - Mine Safety Disclosures
Item 5 - Other Information
Item 6 - Exhibits
EX-3.1 ex_163001.htm
EX-31.1 ex_163002.htm
EX-31.2 ex_163003.htm
EX-32.1 ex_163004.htm

Consumers Bancorp Earnings 2019-09-30

CBKM 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
CYBF 52 0 1 0 0 -0 -0 52 -221.1 -1,194,273%
SKKY 51 1 0 1 1 -0 -0 51 139% -122.7 -45%
PFHO 51 10 1 7 0 1 2 44 0% 24.0 12%
FMFG 51 436 389 0 0 5 7 28 4.2 1%
XSPL 51 30 17 16 5 -4 -2 49 32% -21.7 -13%
CBKM 51 554 503 3 0 6 10 41 0% 4.2 1%
WAYS 50 0 1 0 0 -6 -6 50 1% -8.9 -73,176%
AXIM 49 3 9 0 0 -6 -6 47 66% -7.7 -224%
PUBC 49 0 6 0 0 -1 -1 49 67% -58.5 -275%
CSTL 49 33 37 11 9 -1 1 57 81% 110.6 -4%

10-Q 1 cbkm20190930_10q.htm FORM 10-Q cbkm20190930_10q.htm
 

 



 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

[X]

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

 

For the quarterly period ended September 30, 2019

 

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)

 

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 Securities Act. ☐

 

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

 

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

None

   

 

There were 2,745,658 shares of Registrant’s common stock, no par value, outstanding as of November 4, 2019.

 



 

 

 
 
 

 

 

CONSUMERS BANCORP, INC.

FORM 10-Q

QUARTER ENDED September 30, 2019

 

Table of Contents

 

 

Page

Number (s)

Part I – Financial Information

 

 

Item 1 – Financial Statements (Unaudited)

 

Consolidated Balance Sheets at September 30, 2019 and June 30, 2019

1

 

 

Consolidated Statements of Income for the three months ended September 30, 2019 and 2018

2

 

 

Consolidated Statements of Comprehensive Income for the three months ended September 30, 2019 and 2018

3

 

 

Condensed Consolidated Statements of Changes in Shareholders’ Equity for the three months ended September 30, 2019 and 2018

4

 

 

Condensed Consolidated Statements of Cash Flows for the three months ended September 30, 2019 and 2018

5

 

 

Notes to the Consolidated Financial Statements

6-20

 

 

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

21-27

 

 

Item 3 – Not Applicable for Smaller Reporting Companies

 

 

 

Item 4 – Controls and Procedures

28

Part II – Other Information

Item 1 – Legal Proceedings

29

 

 

Item 1A – Not Applicable for Smaller Reporting Companies

29

 

 

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

29

 

 

Item 3 – Defaults Upon Senior Securities

29

 

 

Item 4 – Mine Safety Disclosure

29

 

 

Item 5 – Other Information

29

 

 

Item 6 – Exhibits

29

 

 

Signatures

30

 

 

 

 

PART I – FINANCIAL INFORMATION

Item 1 – Financial Statements

 

 

CONSUMERS BANCORP, INC.

CONSOLIDATED BALANCE SHEETS (Unaudited)

 

 

(Dollars in thousands, except per share data)

 

September 30,

2019

   

June 30,

2019

 

ASSETS

               

Cash on hand and noninterest-bearing deposits in financial institutions

  $ 11,642     $ 9,322  

Federal funds sold and interest-bearing deposits in financial institutions

    860       139  

Total cash and cash equivalents

    12,502       9,461  

Certificates of deposit in other financial institutions

    1,493       1,983  

Securities, available-for-sale

    137,603       144,010  

Securities, held-to-maturity (fair value of $3,764 at September 30, 2019 and $3,821 at June 30, 2019)

    3,686       3,786  

Federal bank and other restricted stocks, at cost

    1,723       1,723  

Loans held for sale

    2,436       1,657  

Total loans

    383,820       369,175  

Less allowance for loan losses

    (3,909

)

    (3,788

)

Net loans

    379,911       365,387  

Cash surrender value of life insurance

    9,245       9,606  

Premises and equipment, net

    14,539       14,155  

Accrued interest receivable and other assets

    2,049       2,168  

Total assets

  $ 565,187     $ 553,936  
                 

LIABILITIES

               

Deposits

               

Noninterest-bearing demand

  $ 122,196     $ 116,239  

Interest bearing demand

    86,887       81,469  

Savings

    166,937       162,261  

Time

    111,414       112,205  

Total deposits

    487,434       472,174  
                 

Short-term borrowings

    3,754       3,686  

Federal Home Loan Bank advances

    16,300       22,700  

Accrued interest and other liabilities

    4,706       4,210  

Total liabilities

    512,194       502,770  

Commitments and contingent liabilities

               
                 

SHAREHOLDERS’ EQUITY

               

Preferred stock (no par value, 350,000 shares authorized, none outstanding)

           

Common stock (no par value, 3,500,000 shares authorized; 2,854,133 shares issued as of September 30, 2019 and June 30, 2019)

    14,697       14,656  

Retained earnings

    37,621       36,487  

Treasury stock, at cost (108,475 and 120,288 common shares as of September 30, 2019 and June 30, 2019, respectively)

    (1,454

)

    (1,543

)

Accumulated other comprehensive income

    2,129       1,566  

Total shareholders’ equity

    52,993       51,166  

Total liabilities and shareholders’ equity

  $ 565,187     $ 553,936  

 

See accompanying notes to consolidated financial statements

 

1

 

 

 

CONSUMERS BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

 

   

Three Months ended

September 30,

 

(Dollars in thousands, except per share amounts)

 

2019

   

2018

 
                 

Interest and dividend income

               

Loans, including fees

  $ 4,761     $ 3,949  

Securities, taxable

    510       526  

Securities, tax-exempt

    399       375  

Federal bank and other restricted stocks

    20       22  

Federal funds sold and other interest-bearing deposits

    26       23  

Total interest and dividend income

    5,716       4,895  

Interest expense

               

Deposits

    945       514  

Short-term borrowings

    11       14  

Federal Home Loan Bank advances

    79       68  

Total interest expense

    1,035       596  

Net interest income

    4,681       4,299  

Provision for loan losses

    130       115  

Net interest income after provision for loan losses

    4,551       4,184  
                 

Noninterest income

               

Service charges on deposit accounts

    373       316  

Debit card interchange income

    391       358  

Bank owned life insurance death benefit

    324        

Bank owned life insurance income

    68       69  

Securities gains, net

    106       587  

Other

    207       165  

Total noninterest income

    1,469       1,495  
                 

Noninterest expenses

               

Salaries and employee benefits

    2,173       1,975  

Occupancy and equipment

    532       488  

Data processing expenses

    385       150  

Debit card processing expenses

    201       194  

Professional and director fees

    257       170  

FDIC assessments

    (7

)

    38  

Franchise taxes

    95       89  

Marketing and advertising

    181       104  

Telephone and network communications

    74       72  

Other

    414       404  

Total noninterest expenses

    4,305       3,684  

Income before income taxes

    1,715       1,995  

Income tax expense

    212       322  

Net income

  $ 1,503     $ 1,673  
                 

Basic and diluted earnings per share

  $ 0.55     $ 0.61  

 

See accompanying notes to consolidated financial statements

 

2

 

 

 

CONSUMERS BANCORP, INC.

Consolidated statements of comprehensive income

(Unaudited)

 

(Dollars in thousands)

   

Three Months ended

September 30,

 
   

2019

   

2018

 
                 

Net income

  $ 1,503     $ 1,673  
                 

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

    818       (893

)

Reclassification adjustment for gains included in income

    (106

)

    (587

)

Net unrealized gains (losses)

    712       (1,480

)

Income tax effect

    (149

)

    312  

Other comprehensive income (loss)

    563       (1,168

)

                 

Total comprehensive income

  $ 2,066     $ 505  

 

See accompanying notes to consolidated financial statements.

 

3

 

 

 

CONSUMERS BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

 

(Dollars in thousands, except per share data)

   

Three Months ended

September 30,

 
   

2019

   

2018

 
                 

Balance at beginning of period

  $ 51,166     $ 43,761  
                 

Net income

    1,503       1,673  

Other comprehensive income (loss)

    563       (1,168

)

11,813 and 4,201 shares issued associated with stock awards during the three months ended September 30, 2019 and 2018, respectively

    130       59  

Common cash dividends

    (369

)

    (355

)

                 

Balance at the end of the period

  $ 52,993     $ 43,970  
                 

Common cash dividends per share

  $ 0.135     $ 0.13  

 

See accompanying notes to consolidated financial statements.

 

4

 

 

 

CONSUMERS BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

(Dollars in thousands)

 

Three Months Ended

September 30,

 
   

2019

   

2018

 

Cash flows from operating activities

               

Net cash from operating activities

  $ 806     $ 533  
                 

Cash flow from investing activities

               

Securities available-for-sale

               

Purchases

    (2,318

)

    (2,060

)

Maturities, calls and principal pay downs

    4,893       4,730  

Proceeds from sales

    4,460       2,573  

Securities held-to-maturity

               

Principal pay downs

    100       95  

Net decrease in certificate of deposit in other financial institutions

    490        

Net increase in loans

    (14,654

)

    (10,247

)

Proceeds from BOLI death benefit

    753        

Acquisition of premises and equipment

    (48

)

    (350

)

Net cash from investing activities

    (6,324

)

    (5,259

)

                 

Cash flow from financing activities

               

Net increase in deposit accounts

    15,260       10,576  

Net change in short-term borrowings

    68       (10,465

)

Proceeds from Federal Home Loan Bank advances

    1,500       8,000  

Repayments of Federal Home Loan Bank advances

    (7,900

)

    (17

)

Dividends paid

    (369

)

    (355

)

Net cash from financing activities

    8,559       7,739  
                 

Increase in cash or cash equivalents

    3,041       3,013  
                 

Cash and cash equivalents, beginning of period

    9,461       7,772  

Cash and cash equivalents, end of period

  $ 12,502     $ 10,785  
                 

Supplemental disclosure of cash flow information:

               

Cash paid during the period:

               

Interest

  $ 1,050     $ 576  

Federal income taxes

           

Non-cash items:

               

Transfer from loans held for sale to portfolio

          75  

Issuance of treasury stock for stock awards

    89       59  

Right of use assets obtained in exchange for lease liabilities

    582        

 

See accompanying notes to consolidated financial statements.

 

5

 

 

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited)

 

(Dollars in thousands, except per share amounts)

 

 

Note 1 – Summary of Significant Accounting Policies:

 

Nature of Operations: Consumers Bancorp, Inc. (the Corporation) is a bank holding company headquartered in Minerva, Ohio that provides, through its banking subsidiary, Consumers National Bank (the Bank), a broad array of products and services throughout its primary market area of Carroll, Columbiana, Jefferson, Stark, Summit, Wayne and contiguous counties in Ohio. The Bank’s business involves attracting deposits from businesses and individual customers and using such deposits to originate commercial, mortgage and consumer loans in its primary market area.

 

Basis of Presentation: The consolidated financial statements for interim periods are unaudited and reflect all adjustments (consisting of only normal recurring adjustments), which, in the opinion of management, are necessary to present fairly the financial position and results of operations and cash flows for the periods presented. The unaudited financial statements are presented in accordance with the requirements of Form 10-Q and do not include all disclosures normally required by accounting principles generally accepted in the United States of America. The financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Corporation’s Form 10-K for the year ended June 30, 2019. The results of operations for the interim period disclosed herein are not necessarily indicative of the results that may be expected for a full year.

 

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

 

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

 

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

 

Adoption of New Accounting Standards: In February 2016, FASB issued accounting standards update (ASU) 2016-02, Leases (Topic 842). This ASU requires all organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. Additional qualitative and quantitative disclosures are required so users can understand more about the nature of an entity’s leasing activities. The new guidance was effective for annual reporting periods, and interim reporting periods within those annual periods, beginning after December 15, 2018. The Corporation has several lease agreements, such as branch locations, which were previously considered operating leases, and therefore, not recognized on the Corporation’s consolidated condensed statements of financial condition. The new guidance requires these lease agreements to now be recognized on the consolidated condensed statements of financial condition as a right-of-use asset and a corresponding lease liability. As of July 1, 2019, the Corporation adopted ASU 2016-02 using the modified retrospective method. There was no cumulative-effect adjustment to the opening balance of retained earnings for the period of adoption. At September 30, 2019, the Corporation had contractual operating lease commitments of $555, before considering renewal options that are generally present.

 

6

 

 

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

 

(Dollars in thousands, except per share amounts)

 

Recently Issued Accounting Pronouncements Not Yet Effective: In June 2016, Financial Accounting Standards Board (FASB) issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU adds a new Topic 326 to the codification and removes the thresholds that companies apply to measure credit losses on financial instruments measured at amortized cost, such as loans, receivables, and held-to-maturity debt securities. Under current U.S. generally accepted accounting principles, companies generally recognize credit losses when it is probable that the loss has been incurred. The revised guidance will remove all current loss recognition thresholds and will require companies to recognize an allowance for credit losses for the difference between the amortized cost basis of a financial instrument and the amount of amortized cost that the corporation expects to collect over the instrument’s contractual life. ASU 2016-13 also amends the credit loss measurement guidance for available-for-sale debt securities and beneficial interests in securitized financial assets. The guidance in ASU 2016-13 is effective for “public business entities,” as defined in the guidance, that are SEC filers for fiscal years and for interim periods 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 proposal to delay this ASU to January 2023 for smaller reporting companies. On October 16, 2019, FASB approved a final ASU delaying the effective date. The new guidance is effective for annual and interim periods beginning after December 15, 2022 for certain entities, including smaller reporting companies. The Corporation is a small reporting company.

 

 

Note 2 – Acquisition

 

On June 14, 2019, Consumers entered into an Agreement and Plan of Merger (Merger Agreement) with Peoples Bancorp of Mt. Pleasant, Inc. (Peoples) and its wholly owned subsidiary, The Peoples National Bank of Mount Pleasant. Each Peoples shareholder will receive 63.16 common shares of Consumers common stock or $1,200.00 in cash, subject to total consideration being paid 50% in Consumers common shares and 50% cash as provided in the Merger Agreement. Based on Consumers’ 20-day average closing price of $19.07 on June 13, 2019, the aggregate implied transaction value was approximately $10.3 million. On September 30, 2019, Peoples had approximately $72.4 million in total assets, $54.2 million in loans and $62.7 million in deposits at its three banking centers located in Mt. Pleasant, Adena, and Dillonvale, Ohio. The transaction is expected to close in January 2020, pending the completion of customary closing conditions. All necessary shareholder and regulatory approvals have been received.

 

 

Note 3 – Securities

 

Available –for-Sale

 

Amortized
Cost

   

Gross
Unrealized
Gains

   

Gross
Unrealized
Losses

   

Fair
Value

 

September 30, 2019

                               

Obligations of U.S. government-sponsored entities and agencies

  $ 14,646     $ 184     $ (13

)

  $ 14,817  

Obligations of state and political subdivisions

    55,737       1,966       (4

)

    57,699  

U.S. Government-sponsored mortgage-backed securities–residential

    54,497       576       (209

)

    54,864  

U.S. Government-sponsored mortgage-backed securities– commercial

    1,651       11       (2

)

    1,660  

U.S. Government-sponsored collateralized mortgage obligations– residential

    8,378       201       (16

)

    8,563  

Total available-for-sale securities

  $ 134,909     $ 2,938     $ (244

)

  $ 137,603  

 

Held-to-Maturity

 

Amortized
Cost

   

Gross
Unrecognized
Gains

   

Gross
Unrecognized Losses

   

Fair
Value

 

September 30, 2019

                               

Obligations of state and political subdivisions

  $ 3,686     $ 78     $     $ 3,764  

Total held-to-maturity securities

  $ 3,686     $ 78     $     $ 3,764  

 

7

 

 

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

 

(Dollars in thousands, except per share amounts)

 

Available–for-Sale

 

Amortized
Cost

   

Gross
Unrealized
Gains

   

Gross
Unrealized
Losses

   

Fair
Value

 

June 30, 2019

                               

Obligations of U.S. government-sponsored entities and agencies

  $ 19,227     $ 287     $ (1

)

  $ 19,513  

Obligations of state and political subdivisions

    56,405       1,557       (33

)

    57,929  

U.S. Government-sponsored mortgage-backed securities – residential

    56,309       450       (448

)

    56,311  

U.S. Government-sponsored collateralized mortgage obligations – residential

    10,087       198       (28

)

    10,257  

Total available-for-sale securities

  $ 142,028     $ 2,492     $ (510

)

  $ 144,010  

 

Held-to-Maturity

 

Amortized
Cost

   

Gross
Unrecognized
Gains

   

Gross
Unrecognized
Losses

   

Fair
Value

 

June 30, 2019

                               

Obligations of state and political subdivisions

  $ 3,786     $ 35     $     $ 3,821  

Total held-to-maturity securities

  $ 3,786     $ 35     $     $ 3,821  

 

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

 

   

Three Months Ended

September 30,

 
   

2019

   

2018

 

Proceeds from sales and calls

  $ 4,460     $ 2,573  

Gross realized gains

    106       593  

Gross realized losses

          6  

 

The income tax provision related to the net realized gains amounted to $22 for the three months ended September 30, 2019. The income tax benefit related to the net realized losses amounted to $124 for the three months ended September 30, 2018.

 

The amortized cost and fair values of debt securities at September 30, 2019, 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

 

Due in one year or less

  $ 5,362     $ 5,382  

Due after one year through five years

    14,540       14,802  

Due after five years through ten years

    23,261       23,727  

Due after ten years

    27,220       28,605  

Total

    70,383       72,516  
                 

U.S. Government-sponsored mortgage-backed and related securities

    64,526       65,087  

Total available-for-sale securities

  $ 134,909     $ 137,603  
                 

Held-to-Maturity

               

Due after five years through ten years

  $ 451     $ 472  

Due after ten years

    3,235       3,292  

Total held-to-maturity securities

  $ 3,686     $ 3,764  

 

8

 

 

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

 

(Dollars in thousands, except per share amounts)

 

The following table summarizes the securities with unrealized losses at September 30, 2019 and June 30, 2019, 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

 

Available-for-sale

 

Fair
Value

   

Unrealized
Loss

   

Fair
Value

   

Unrealized
Loss

   

Fair
Value

   

Unrealized
Loss

 

September 30, 2019

                                               

Obligations of US government-sponsored entities and agencies

  $ 2,668     $ (13

)

  $     $     $ 2,668     $ (13

)

Obligations of states and political subdivisions

    1,780       (3

)

    209       (1

)

    1,989       (4

)

U.S. Government-sponsored mortgage-backed securities – residential

    2,558       (6

)

    29,328       (203

)

    31,886       (209

)

U.S. Government-sponsored mortgage-backed securities – commercial

    705       (2

)

                705       (2

)

U.S. Government-sponsored collateralized mortgage obligations – residential

    462       (1

)

    1,486       (15

)

    1,948       (16

)

Total temporarily impaired

  $ 8,173     $ (25

)

  $ 31,023     $ (219

)

  $ 39,196     $ (244

)

 

   

Less than 12 Months

   

12 Months or more

   

Total

 

Available-for-sale

 

Fair
Value

   

Unrealized
Loss

   

Fair
Value

   

Unrealized
Loss

   

Fair
Value

   

Unrealized
Loss

 

June 30, 2019

                                               

Obligations of U.S. government-sponsored entities and agencies

  $     $     $ 998     $ (1

)

  $ 998     $ (1

)

Obligations of states and political subdivisions

                5,201       (33

)

    5,201       (33

)

U.S. Government-sponsored mortgage-backed securities – residential

                36,362       (448

)

    36,362       (448

)

U.S. Government-sponsored collateralized mortgage obligations - residential

                3,277       (28

)

    3,277       (28

)

Total temporarily impaired

  $     $     $ 45,838     $ (510

)

  $ 45,838     $ (510

)

 

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

 

In determining OTTI under the ASC Topic 320 model, management considers many factors, including: (1) 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.

 

The unrealized losses within the securities portfolio as of September 30, 2019 have not been recognized into income because the decline in fair value is not attributed to credit quality and management does not intend to sell, and it is not likely that management will be required to sell, the securities prior to their anticipated recovery. The decline in fair value within the securities portfolio is largely due to changes in interest rates and the fair value is expected to recover as the securities approach maturity. The mortgage-backed securities and collateralized mortgage obligations were primarily issued by Fannie Mae, Freddie Mac and Ginnie Mae, institutions which the government has affirmed its commitment to support. The Corporation does not own any private label mortgage-backed securities.

 

9

 

 

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

 

(Dollars in thousands, except per share amounts)

 

 

Note 4 – Loans

 

Major classifications of loans were as follows:

 

   

September 30,

2019

   

June 30,

2019

 

Commercial

  $ 81,782     $ 80,453  

Commercial real estate:

               

Construction

    14,583       16,120  

Other

    205,214       195,269  

1 – 4 Family residential real estate:

               

Owner occupied

    58,406       55,941  

Non-owner occupied

    14,936       14,517  

Construction

    3,115       1,931  

Consumer

    5,912       5,150  

Subtotal

    383,948       369,381  

Net Deferred loan fees and costs

    (128

)

    (206

)

Allowance for loan losses

    (3,909

)

    (3,788

)

Net Loans

  $ 379,911     $ 365,387  

 

The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ended September 30, 2019:

 

                   

1-4 Family

                 
           

Commercial

   

Residential

                 
           

Real

   

Real

                 
   

Commercial

   

Estate

   

Estate

   

Consumer

   

Total

 
                                         

Allowance for loan losses:

                                       

Beginning balance

  $ 660     $ 2,575     $ 494     $ 59     $ 3,788  

Provision for loan losses

    (11

)

    69       56       16       130  

Loans charged-off

                      (16

)

    (16

)

Recoveries

          1             6       7  

Total ending allowance balance

  $ 649     $ 2,645     $ 550     $ 65     $ 3,909  

 

The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ended September 30, 2018:

 

                   

1-4 Family

                 
           

Commercial

   

Residential

                 
           

Real

   

Real

                 
   

Commercial

   

Estate

   

Estate

   

Consumer

   

Total

 
                                         

Allowance for loan losses:

                                       

Beginning balance

  $ 586     $ 2,277     $ 499     $ 60     $ 3,422  

Provision for loan losses

    16       100       5       (6

)

    115  

Loans charged-off

                      (7

)

    (7

)

Recoveries

          1       3       4       8  

Total ending allowance balance

  $ 602     $ 2,378     $ 507     $ 51     $ 3,538  

 

10

 

 

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

 

(Dollars in thousands, except per share amounts)

 

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of September 30, 2019. Included in the recorded investment in loans is $764 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

  $ 2     $ 7     $     $     $ 9  

Collectively evaluated for impairment

    647       2,638       550       65       3,900  

Total ending allowance balance

  $ 649     $ 2,645     $ 550     $ 65     $ 3,909  
                                         

Recorded investment in loans:

                                       

Loans individually evaluated for impairment

  $ 167     $ 460     $ 266     $     $ 893  

Loans collectively evaluated for impairment

    81,639       219,298       76,822       5,932       383,691  

Total ending loans balance

  $ 81,806     $ 219,758     $ 77,088     $ 5,932     $ 384,584  

 

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, 2019. Included in the recorded investment in loans is $891 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

  $ 2     $ 7     $     $     $ 9  

Collectively evaluated for impairment

    658       2,568       494       59       3,779  

Total ending allowance balance

  $ 660     $ 2,575     $ 494     $ 59     $ 3,788  
                                         

Recorded investment in loans:

                                       

Loans individually evaluated for impairment

  $ 174     $ 658     $ 357     $     $ 1,189  

Loans collectively evaluated for impairment

    80,413       210,709       72,591       5,164       368,877  

Total ending loans balance

  $ 80,587     $ 211,367     $ 72,948     $ 5,164     $ 370,066  

 

11

 

 

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

 

(Dollars in thousands, except per share amounts)

 

The following table presents information related to unpaid principal balance, recorded investment and interest income associated with loans individually evaluated for impairment by class of loans as of September 30, 2019 and for the three months ended September 30, 2019:

 

   

As of September 30, 2019

   

Three Months ended September 30, 2019

 
   

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 real estate:

                                               

Other

  $ 316       240     $     $ 362     $ 86     $ 86  

1-4 Family residential real estate:

                                               

Owner occupied

    43       12             39       7       7  

Non-owner occupied

    292       255             257              

With an allowance recorded:

                                               

Commercial real estate:

                                               

Other

    218       220       7       220       3       3  

Commercial

    167       169       2       170       3       3  

Total

  $ 1,036     $ 896     $ 9     $ 1,048     $ 99     $ 99  

 

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, 2019 and for the three months ended September 30, 2018:

 

   

As of June 30, 2019

   

Three Months ended September 30, 2018

 
   

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

  $     $     $     $ 71     $ 1     $ 1  

Commercial real estate:

                                               

Other

    580       436             1,369       11       11  

1-4 Family residential real estate:

                                               

Owner occupied

    124       93             99              

Non-owner occupied

    297       264             292              

With an allowance recorded:

                                               

Commercial real estate:

                                               

Other

    221       222       7       231       3       3  

Commercial

    173       174       2                    

Total

  $ 1,395     $ 1,189     $ 9     $ 2,062     $ 15     $ 15  

 

12

 

 

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

 

(Dollars in thousands, except per share amounts)

 

The following table presents the recorded investment in non-accrual and loans past due over 90 days still on accrual by class of loans as of September 30, 2019 and June 30, 2019:

 

   

September 30, 2019

   

June 30, 2019

 
           

Loans Past Due

           

Loans Past Due

 
           

Over 90 Days

           

Over 90 Days

 
           

Still

           

Still

 
   

Non-accrual

   

Accruing

   

Non-accrual

   

Accruing

 

Commercial real estate:

                               

Other

  $ 185     $     $ 436     $  

1 – 4 Family residential:

                               

Owner occupied

    5             85        

Non-owner occupied

    254             264        

Total

  $ 444     $     $ 785     $  

 

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

 

The following table presents the aging of the recorded investment in past due loans as of September 30, 2019 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

  $     $     $     $     $ 81,806     $ 81,806  

Commercial real estate:

                                               

Construction

                            14,540       14,540  

Other

          8             8       205,210       205,218  

1-4 Family residential:

                                               

Owner occupied

          5             5       58,974       58,979  

Non-owner occupied

                            14,936       14,936  

Construction

                            3,173       3,173  

Consumer

    16                   16       5,916       5,932  

Total

  $ 16     $ 13     $     $ 29     $ 384,555     $ 384,584  

 

The above table of past due loans includes the recorded investment in non-accrual loans of $13 in the 60-89 days category and $431 in the loans not past due category.

 

The following table presents the aging of the recorded investment in past due loans as of June 30, 2019 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

  $     $     $     $     $ 80,587     $ 80,587  

Commercial real estate:

                                               

Construction

                            16,075       16,075  

Other

    199                   199       195,093       195,292  

1-4 Family residential:

                                               

Owner occupied

    40             80       120       56,347       56,467  

Non-owner occupied

                            14,518       14,518  

Construction

                            1,963       1,963  

Consumer

    1                   1       5,163       5,164  

Total

  $ 240     $     $ 80     $ 320     $ 369,746     $ 370,066  

 

The above table of past due loans includes the recorded investment in non-accrual loans of $198 in the 30-59 days, $80 in the 90 days or greater category and $507 in the loans not past due category.

 

13

 

 

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

 

(Dollars in thousands, except per share amounts)

 

Troubled Debt Restructurings (TDR):

The Corporation has certain loans that have been modified in order to maximize collection of loan balances. A modified loan is 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.

 

At September 30, 2019 and June 30, 2019, the Corporation had $706 and $725, respectively, of loans classified as TDRs which are included in impaired loans above. As of September 30, 2019, the Corporation had not committed to lend any additional funds to customers with outstanding loans that were classified as troubled debt restructurings. As of June 30, 2019, the Corporation had committed to lend an additional $9 to customers with outstanding loans that were classified as troubled debt restructurings. At September 30, 2019 and June 30, 2019, the Corporation had $9 of specific reserves allocated to these loans.

 

During the three-month periods ended September 30, 2019 and 2018, 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-month periods ended September 30, 2019 and 2018.

 

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-month periods ended September 30, 2019 and 2018. A loan is considered in payment default once it is 90 days contractually past due under the modified terms.

 

Credit Quality Indicators:

The Corporation categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, current economic trends and other relevant information. The Corporation analyzes loans individually by classifying the loans as to credit risk. This analysis includes loans with a total outstanding loan relationship greater than $100 and non-homogeneous loans, such as commercial and commercial real estate loans. Management monitors the loans on an ongoing basis for any changes in the borrower’s ability to service their debt and affirms the risk ratings for the loans and leases in their respective portfolio on an annual basis. The Corporation uses the following definitions for risk ratings:

 

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

 

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

 

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

 

14

 

 

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

 

(Dollars in thousands, except per share amounts)

 

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans. Loans listed as not rated are either less than $100 or are included in groups of homogeneous loans. These loans are evaluated based on delinquency status, which are disclosed in the previous table within this footnote. Based on the most recent analysis performed, the recorded investment by risk category of loans by class of loans was as follows:

 

   

As of September 30, 2019

 
           

Special

                   

Not

 
   

Pass

   

Mention

   

Substandard

   

Doubtful

   

Rated

 

Commercial

  $ 76,118     $ 4,448     $ 959     $     $ 281  

Commercial real estate:

                                       

Construction

    14,540                          

Other

    191,044       6,741       5,308       185       1,940  

1-4 Family residential real estate:

                                       

Owner occupied

    2,192             23       4       56,760  

Non-owner occupied

    13,823       200       311       255       347  

Construction

    105                         3,068  

Consumer

    24                         5,908  

Total

  $ 297,846     $ 11,389     $ 6,601     $ 444     $ 68,304  

 

As of June 30, 2019, and based on the most recent analysis performed, the recorded investment by risk category of loans by class of loans is as follows:

 

   

As of June 30, 2019

 
           

Special

                   

Not

 
   

Pass

   

Mention

   

Substandard

   

Doubtful

   

Rated

 

Commercial

  $ 74,393     $ 4,942     $ 1,012     $     $ 240  

Commercial real estate:

                                       

Construction

    16,075                          

Other

    179,952       8,071       5,337       436       1,496  

1-4 Family residential real estate:

                                       

Owner occupied

    2,245             24       5       54,193  

Non-owner occupied

    13,413       205       318       263       319  

Construction

                            1,963  

Consumer

    32                         5,132  

Total

  $ 286,110     $ 13,218     $ 6,691     $ 704     $ 63,343  

 

 

Note 5 - 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).

 

15

 

 

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

 

(Dollars in thousands, except per share amounts)

 

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

 

           

Fair Value Measurements at

September 30, 2019 Using

 
   

Balance at

September 30,

2019

   

Level 1

   

Level 2

   

Level 3

 

Assets:

                               

Obligations of U.S. government-sponsored entities and agencies

  $ 14,817     $     $ 14,817     $  

Obligations of states and political subdivisions

    57,699             57,699        

U.S. Government-sponsored mortgage-backed securities – residential

    54,864             54,864        

U.S. Government-sponsored mortgage-backed securities – commercial

    1,660             1,660        

U.S. Government-sponsored collateralized mortgage obligations - residential

    8,563             8,563        

 

           

Fair Value Measurements at

June 30, 2019 Using

 
   

Balance at

June 30,

2019

   

Level 1

   

Level 2

   

Level 3

 

Assets:

                               

Securities available-for-sale:

                               

Obligations of government-sponsored entities

  $ 19,513     $     $ 19,513     $