Company Quick10K Filing
Consumers Bancorp
Price18.43 EPS2
Shares3 P/E9
MCap50 P/FCF16
Net Debt-13 EBIT10
TEV38 TEV/EBIT4
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-08
10-Q 2019-12-31 Filed 2020-02-12
10-Q 2019-09-30 Filed 2019-11-08
10-K 2019-06-30 Filed 2019-09-12
10-Q 2019-03-31 Filed 2019-05-15
10-Q 2018-12-31 Filed 2019-02-14
10-Q 2018-09-30 Filed 2018-11-14
10-K 2018-06-30 Filed 2018-09-12
10-Q 2018-03-31 Filed 2018-05-15
10-Q 2017-12-31 Filed 2018-02-14
10-Q 2017-09-30 Filed 2017-11-07
10-K 2017-06-30 Filed 2017-09-21
10-Q 2017-03-31 Filed 2017-05-15
10-Q 2016-12-31 Filed 2017-02-14
10-Q 2016-09-30 Filed 2016-11-14
10-K 2016-06-30 Filed 2016-09-22
10-Q 2016-03-31 Filed 2016-05-16
10-Q 2015-12-31 Filed 2016-02-16
10-Q 2015-09-30 Filed 2015-11-16
10-K 2015-06-30 Filed 2015-09-23
10-Q 2015-03-31 Filed 2015-05-15
10-Q 2014-12-31 Filed 2015-02-17
10-Q 2014-09-30 Filed 2014-11-14
10-K 2014-06-30 Filed 2014-09-24
10-Q 2014-03-31 Filed 2014-05-15
10-Q 2013-12-31 Filed 2014-02-14
10-Q 2013-09-30 Filed 2013-11-14
10-K 2013-06-30 Filed 2013-09-24
10-Q 2013-03-31 Filed 2013-05-15
10-Q 2012-12-31 Filed 2013-02-14
10-Q 2012-09-30 Filed 2012-11-14
10-K 2012-06-30 Filed 2012-09-21
10-Q 2012-03-31 Filed 2012-05-14
10-Q 2011-12-31 Filed 2012-02-13
10-Q 2011-09-30 Filed 2011-11-10
10-K 2011-06-30 Filed 2011-09-16
10-Q 2011-03-31 Filed 2011-05-16
10-Q 2010-12-31 Filed 2011-02-11
10-Q 2010-09-30 Filed 2010-11-15
10-K 2010-06-30 Filed 2010-09-22
10-Q 2010-03-31 Filed 2010-05-17
10-Q 2009-12-31 Filed 2010-02-12
8-K 2020-04-22 Earnings, Exhibits
8-K 2020-03-13 Officers
8-K 2020-03-11 Other Events
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 Other Events
8-K 2019-01-22 Earnings, Exhibits
8-K 2018-10-18 Earnings, Exhibits
8-K 2018-10-18 Officers, Shareholder Vote
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 10Q Quarterly Report

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
Note 10 - Covid - 19
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-31.1 ex_184572.htm
EX-31.2 ex_184577.htm
EX-32.1 ex_184578.htm

Consumers Bancorp Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
0.60.50.40.20.10.02012201420172020
Assets, Equity
0.10.10.10.00.00.02016201720182020
Rev, G Profit, Net Income
0.10.10.0-0.0-0.1-0.12012201420172020
Ops, Inv, Fin

10-Q 1 cbkm20200331_10q.htm FORM 10-Q cbkm20200331_10q.htm
 


 

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 March 31, 2020

 

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 Exchange Act. ☐

 

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

 

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

None

   

 

There were 3,015,578 shares of Registrant’s common stock, no par value, outstanding as of May 4, 2020.

 



 

 

 

CONSUMERS BANCORP, INC.

FORM 10-Q

QUARTER ENDED March 31, 2020

 

Table of Contents

 

 

Page

Number (s)

Part I – Financial Information

 

 

Item 1 – Financial Statements (Unaudited)

 

Consolidated Balance Sheets at March 31, 2020 and June 30, 2019

1

 

 

Consolidated Statements of Income for the three and nine months ended March 31, 2020 and 2019

2

 

 

Consolidated Statements of Comprehensive Income for the three and nine months ended March 31, 2020 and 2019

3

 

 

Condensed Consolidated Statements of Changes in Shareholders’ Equity for the three and nine months ended March 31, 2020 and 2019

4

 

 

Condensed Consolidated Statements of Cash Flows for the nine months ended March 31, 2020 and 2019

5

 

 

Notes to the Consolidated Financial Statements

6-20

 

 

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

21-29

 

 

Item 3 – Not Applicable for Smaller Reporting Companies

 

 

 

Item 4 – Controls and Procedures

30

Part II – Other Information

Item 1 – Legal Proceedings

31

 

 

Item 1A – Not Applicable for Smaller Reporting Companies

31

 

 

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

31

 

 

Item 3 – Defaults Upon Senior Securities

31

 

 

Item 4 – Mine Safety Disclosure

31

 

 

Item 5 – Other Information

31

 

 

Item 6 – Exhibits

31

 

 

Signatures

32

 

 

 

 

 

PART I – FINANCIAL INFORMATION

Item 1 – Financial Statements

 

CONSUMERS BANCORP, INC.

CONSOLIDATED BALANCE SHEETS (Unaudited)

 

 

(Dollars in thousands, except per share data)

 

March 31,

2020

   

June 30,

2019

 

ASSETS

               

Cash on hand and noninterest-bearing deposits in financial institutions

  $ 12,452     $ 9,322  

Federal funds sold and interest-bearing deposits in financial institutions

    92       139  

Total cash and cash equivalents

    12,544       9,461  

Certificates of deposit in other financial institutions

    11,908       1,983  

Securities, available-for-sale

    139,383       144,010  

Securities, held-to-maturity (fair value of $3,792 at March 31, 2020 and $3,821 at June 30, 2019)

    3,580       3,786  

Federal bank and other restricted stocks, at cost

    2,472       1,723  

Loans held for sale

    1,830       1,657  

Total loans

    467,804       369,175  

Less allowance for loan losses

    (4,468

)

    (3,788

)

Net loans

    463,336       365,387  

Cash surrender value of life insurance

    9,376       9,606  

Premises and equipment, net

    15,154       14,155  

Goodwill

    836        

Core deposit intangible, net

    263        

Accrued interest receivable and other assets

    2,595       2,168  

Total assets

  $ 663,277     $ 553,936  
                 

LIABILITIES

               

Deposits

               

Noninterest-bearing demand

  $ 137,554     $ 116,239  

Interest bearing demand

    84,273       81,469  

Savings

    212,613       162,261  

Time

    128,582       112,205  

Total deposits

    563,022       472,174  
                 

Short-term borrowings

    6,386       3,686  

Federal Home Loan Bank advances

    27,079       22,700  

Accrued interest and other liabilities

    5,462       4,210  

Total liabilities

    601,949       502,770  

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; 3,124,053 shares issued as of March 31, 2020 and 2,854,133 as of June 30, 2019)

    19,974       14,656  

Retained earnings

    39,300       36,487  

Treasury stock, at cost (108,475 and 120,288 common shares as of March 31, 2020 and June 30, 2019, respectively)

    (1,454

)

    (1,543

)

Accumulated other comprehensive income

    3,508       1,566  

Total shareholders’ equity

    61,328       51,166  

Total liabilities and shareholders’ equity

  $ 663,277     $ 553,936  

 

See accompanying notes to consolidated financial statements

 

1

 

 

CONSUMERS BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

 

   

Three Months ended

March 31,

   

Nine Months ended

March 31,

 

(Dollars in thousands, except per share amounts)

 

2020

   

2019

   

2020

   

2019

 
                                 

Interest and dividend income

                               

Loans, including fees

  $ 5,654     $ 4,115     $ 15,277     $ 12,123  

Securities, taxable

    488       566       1,478       1,641  

Securities, tax-exempt

    387       403       1,186       1,177  

Federal bank and other restricted stocks

    16       19       56       63  

Federal funds sold and other interest-bearing deposits

    61       16       103       73  

Total interest and dividend income

    6,606       5,119       18,100       15,077  

Interest expense

                               

Deposits

    918       749       2,773       1,881  

Short-term borrowings

    14       10       38       38  

Federal Home Loan Bank advances

    80       118       218       243  

Total interest expense

    1,012       877       3,029       2,162  

Net interest income

    5,594       4,242       15,071       12,915  

Provision for loan losses

    445       105       760       (555

)

Net interest income after provision for loan losses

    5,149       4,137       14,311       13,470  
                                 

Noninterest income

                               

Service charges on deposit accounts

    355       298       1,088       935  

Debit card interchange income

    367       338       1,142       1,065  

Bank owned life insurance death benefit

                324        

Bank owned life insurance income

    65       66       199       203  

Securities gains (losses), net

    121       1       231       561  

Other

    199       157       617       535  

Total noninterest income

    1,107       860       3,601       3,299  
                                 

Noninterest expenses

                               

Salaries and employee benefits

    2,760       2,129       7,140       6,203  

Occupancy and equipment

    655       543       1,782       1,546  

Data processing expenses

    206       154       732       461  

Debit card processing expenses

    204       182       599       565  

Professional and director fees

    414       140       804       481  

FDIC assessments

    54       38       52       114  

Franchise taxes

    106       89       296       266  

Marketing and advertising

    125       87       399       322  

Telephone and network communications

    79       65       223       201  

Amortization of intangible

    7             7        

Other

    464       385       1,280       1,217  

Total noninterest expenses

    5,074       3,812       13,314       11,376  

Income before income taxes

    1,182       1,185       4,598       5,393  

Income tax expense

    164       150       637       836  

Net income

  $ 1,018     $ 1,035     $ 3,961     $ 4,557  
                                 

Basic and diluted earnings per share

  $ 0.34     $ 0.38     $ 1.40     $ 1.67  

 

See accompanying notes to consolidated financial statements

 

2

 

 

CONSUMERS BANCORP, INC.

Consolidated statements of comprehensive income

(Unaudited)

 

(Dollars in thousands)

                               
   

Three Months ended

March 31,

   

Nine Months ended

March 31,

 
   

2020

   

2019

   

2020

   

2019

 
                                 

Net income

  $ 1,018     $ 1,035     $ 3,961     $ 4,557  
                                 

Other comprehensive income, net of tax:

                               

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

                               

Unrealized gains arising during the period

    1,900       1,946       2,690       2,840  

Reclassification adjustment for gains included in income

    (121

)

    (1

)

    (231

)

    (561

)

Net unrealized gains

    1,779       1,945       2,459       2,279  

Income tax effect

    (373

)

    (410

)

    (517

)

    (480

)

Other comprehensive income

    1,406       1,535       1,942       1,799  
                                 

Total comprehensive income

  $ 2,424     $ 2,570     $ 5,903     $ 6,356  

 

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)

 

Common Stock

   

Retained
Earnings

   

Treasury
Stock

   

Accumulated
Other
Comprehensive
Income (Loss)

   

Total
Shareholders’
Equity

 

Balance, December 31, 2018

  $ 14,628     $ 35,154     $ (1,515

)

  $ (1,371

)

  $ 46,896  

Net income

            1,035                       1,035  

Other comprehensive income

                            1,535       1,535  

Cash dividends declared ($0.13 per share)

            (355

)

                    (355

)

Balance, March 31, 2019

  $ 14,628     $ 35,834     $ (1,515

)

  $ 164     $ 49,111  
                                         
                                         

Balance, December 31, 2019

  $ 14,697     $ 38,691     $ (1,454

)

  $ 2,102     $ 54,036  

Net income

            1,018                       1,018  

Other comprehensive income

                            1,406       1,406  

269,920 shares issued for the Peoples acquisition

    5,277                               5,277  

Cash dividends declared ($0.135 per share)

            (409

)

                    (409

)

Balance, March 31, 2020

  $ 19,974     $ 39,300     $ (1,454

)

  $ 3,508     $ 61,328  

 

(Dollars in thousands, except per share data)

 

Common
Stock

   

Retained
Earnings

   

Treasury
Stock

   

Accumulated
Other
Comprehensive
Income (Loss)

   

Total
Shareholders’
Equity

 

Balance, June 30, 2018

  $ 14,630     $ 32,342     $ (1,576

)

  $ (1,635

)

  $ 43,761  

Net income

            4,557                       4,557  

Other comprehensive income

                            1,799       1,799  

3,997 shares associated with vested and expired stock awards

    (2

)

            61               59  

Cash dividends declared ($0.39 per share)

            (1,065

)

                    (1,065

)

Balance, March 31, 2019

  $ 14,628     $ 35,834     $ (1,515

)

  $ 164     $ 49,111  
                                         
                                         

Balance, June 30, 2019

  $ 14,656     $ 36,487     $ (1,543

)

  $ 1,566     $ 51,166  

Net income

            3,961                       3,961  

Other comprehensive income

                            1,942       1,942  

269,920 shares issued for the Peoples acquisition

    5,277                               5,277  

11,813 shares associated with vested stock awards

    41               89               130  

Cash dividends declared ($0.405 per share)

            (1,148

)

                    (1,148

)

Balance, March 31, 2020

  $ 19,974     $ 39,300     $ (1,454

)

  $ 3,508     $ 61,328  

 

See accompanying notes to consolidated financial statements.

 

4

 

 

CONSUMERS BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

(Dollars in thousands)

 

Nine Months Ended

March 31,

 
   

2020

   

2019

 

Cash flows from operating activities

               

Net cash from operating activities

  $ 5,024     $ 5,275  

Cash flow from investing activities

               

Purchases of securities, available-for-sale

    (18,610

)

    (16,778

)

Maturities, calls and principal pay downs of securities, available-for-sale

    17,575       13,721  

Sale of securities, available-for-sale

    11,841       7,670  

Principal pay downs of securities, held-to-maturity

    206       200  

Net decrease in certificate of deposit in other financial institutions

    1,914       990  

Purchase of Federal Reserve Bank stock, at cost

    (595

)

     

Net increase in loans

    (43,405

)

    (28,239

)

Acquisition, net of cash acquired

    (4,295

)

     

Proceeds from BOLI death benefit

    753        

Premises and equipment purchases

    (453

)

    (1,528

)

Sale of other repossessed assets

    39        

Net cash from investing activities

    (35,030

)

    (23,964

)

Cash flow from financing activities

               

Net increase in deposit accounts

    29,997       29,326  

Net change in short-term borrowings

    352       (9,342

)

Proceeds from Federal Home Loan Bank advances

    17,500       2,400  

Repayments of Federal Home Loan Bank advances

    (13,612

)

    (2,050

)

Dividends paid

    (1,148

)

    (1,065

)

Net cash from financing activities

    33,089       19,269  

Increase in cash or cash equivalents

    3,083       580  

Cash and cash equivalents, beginning of period

    9,461       7,772  

Cash and cash equivalents, end of period

  $ 12,544     $ 8,352  

Supplemental disclosure of cash flow information:

               

Cash paid during the period:

               

Interest

  $ 3,048     $ 2,102  

Federal income taxes

    675       645  

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        

Acquisition of Peoples:

               

Consideration paid

  $ 10,405          

Noncash assets acquired:

               

Certificates of deposit in other financial institutions

    11,839          

Securities, available-for-sale

    4,051          

Federal bank and other restricted stocks, at cost

    154          

Loans, net

    55,320          

Premises and equipment

    818          

Goodwill

    836          

Core deposit intangible

    270          

Accrued interest receivable and other assets

    140          

Total noncash assets acquired

    73,428          

Liabilities assumed:

               

Deposits

    60,851          

Federal funds purchased

    2,348          

Federal Home Loan Bank advances

    491          

Other liabilities

    166          

Total liabilities assumed

    63,856          

Net noncash assets acquired

    9,572          

Cash acquired

    833          

 

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.

 

Acquisition: At the date of acquisition the Corporation records the assets and liabilities of acquired companies on the Consolidated Balance Sheet at their fair value. The results of operations for acquired companies are included in the Corporation’s Consolidated Statements of Income beginning at the acquisition date. Expenses arising from acquisition activities are recorded in the Consolidated Statements of Income during the periods incurred.

 

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. As of March 31, 2020, the Corporation had contractual operating lease commitments of $500.

 

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 smaller reporting company.

 

6

CONSUMERS BANCORP, INC.
Notes to the Consolidated Financial Statements
(Unaudited) (continued)
 
(Dollars in thousands, except per share amounts)

 

 

Note 2 – Acquisition

 

On June 14, 2019, the Corporation entered into an Agreement and Plan of Merger with Peoples Bancorp of Mt. Pleasant, Inc. (Peoples) and its wholly owned subsidiary, The Peoples National Bank of Mount Pleasant (Peoples Bank). On January 1, 2020, Consumers completed the acquisition by merger of Peoples in a stock and cash transaction for an aggregate consideration of approximately $10,405. In connection with the acquisition, the Corporation issued 269,920 shares of common stock and paid $5,128 in cash to the former shareholders of Peoples. Immediately following the merger, Peoples Bank, was merged into the Corporation’s banking subsidiary, Consumers National Bank.

 

On December 31, 2019, Peoples had approximately $72,016 in total assets, $55,273 in loans and $60,826 in deposits at its three banking centers located in Mt. Pleasant, Adena, and Dillonvale, Ohio. The assets and liabilities of Peoples were recorded on the Corporation’s Balance Sheet at their estimated fair values as of January 1, 2020, the acquisition date, and Peoples’ results of operations are included in the Corporation’s Consolidated Statements of Income beginning on that date.

 

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition of Peoples. 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.

 

Consideration Paid

          $ 10,405  

Net assets acquired:

               

Cash and cash equivalents

  $ 833          

Certificates of deposit in other financial institutions

    11,839          

Securities, available-for-sale

    4,051          

Federal bank and other restricted stocks, at cost

    154          

Loans, net

    55,320          

Premises and equipment

    818          

Core deposit intangible

    270          

Accrued interest receivable and other assets

    140          

Noninterest-bearing deposits

    (11,979

)

       

Interest-bearing deposits

    (48,872

)

       

Federal funds purchased

    (2,348

)

       

Federal Home Loan Bank advances

    (491

)

       

Other liabilities

    (166

)

       

Total net assets acquired

            9,569  

Goodwill

          $ 836  

 

The acquired assets and liabilities were measured at estimated fair values. Management made certain estimates and exercised judgement in accounting for the acquisition. The fair value of loans was estimated using discounted contractual cash flows. The book balance of the loans at the time of the acquisition was $55,273 before considering Peoples’ allowance for loan losses, which was not carried over. The fair value disclosed above reflects a credit-related adjustment of $(890) and an adjustment for other factors of $937. Loans evidencing credit deterioration since origination, purchased credit impaired loans, included in loans receivable were immaterial. Acquisition costs of $433 were recorded during the third quarter of fiscal year 2020 and $755 for the nine-month period ended March 31, 2020. The fair value measurements of assets acquired and liabilities assumed are subject to refinement for up to one year after the closing date of the acquisition as additional information relative to closing date fair values becomes available.

 

7

CONSUMERS BANCORP, INC.
Notes to the Consolidated Financial Statements
(Unaudited) (continued)
 
(Dollars in thousands, except per share amounts)

 

 

Note 3 – Securities

 

 

Available –for-Sale

 

 

Amortized
Cost

   

Gross
Unrealized
Gains

   

Gross
Unrealized
Losses

   

Fair
Value

 

March 31, 2020

                               

U.S. Treasury

  $ 1,747     $ 14     $     $ 1,761  

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

    10,574       290             10,864  

Obligations of state and political subdivisions

    56,969       1,969       (5

)

    58,933  

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

    55,248       1,822       (1

)

    57,069  

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

    1,397       6    

——

      1,403  

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

    9,007       346             9,353  

Total available-for-sale securities

  $ 134,942     $ 4,447     $ (6

)

  $ 139,383  

 

Held-to-Maturity

 

 

Amortized
Cost

   

Gross
Unrecognized
Gains

   

Gross
Unrecognized Losses

   

Fair
Value

 

March 31, 2020

                               

Obligations of state and political subdivisions

  $ 3,580     $ 212     $     $ 3,792  

Total held-to-maturity securities

  $ 3,580     $ 212     $     $ 3,792  

 

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

March 31,

   

Nine Months Ended

March 31,

 
   

2020

   

2019

   

2020

   

2019

 

Proceeds from sales

  $ 5,731     $ 2,772     $ 11,841     $ 7,670  

Gross realized gains

    121       12       231       606  

Gross realized losses

          11             45  

 

The income tax provision related to the net realized gains amounted to $26 and $49 for the three and nine months ended March 31, 2020. The income tax provision related to net realized gains amounted to $118 for the nine months ended March 31, 2019.

 

8

CONSUMERS BANCORP, INC.
Notes to the Consolidated Financial Statements
(Unaudited) (continued)
 
(Dollars in thousands, except per share amounts)

 

The amortized cost and fair values of debt securities at March 31, 2020, 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

  $ 8,341     $ 8,401  

Due after one year through five years

    15,554       15,963  

Due after five years through ten years

    13,703       14,023  

Due after ten years

    31,692       33,171  

Total

    69,290       71,558  
                 

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

    65,652       67,825  

Total available-for-sale securities

  $ 134,942     $ 139,383  
                 

Held-to-Maturity

               

Due after five years through ten years

  $ 412     $ 430  

Due after ten years

    3,168       3,362  

Total held-to-maturity securities

  $ 3,580     $ 3,792  

 

The following table summarizes the securities with unrealized losses at March 31, 2020 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

 

March 31, 2020

                                               

Obligations of states and political subdivisions

  $ 1,357     $ (5

)

  $     $     $ 1,357     $ (5

)

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

                648       (1

)

    648       (1

)

Total temporarily impaired

  $ 1,357     $ (5

)

  $ 648     $ (1

)

  $ 2,005     $ (6

)

 

   

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 March 31, 2020 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 municipal and mortgage backed security spreads and the fair value is expected to recover. 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:

   

March 31,

2020

   

June 30,

2019

 

Commercial

  $ 85,848     $ 80,453  

Commercial real estate:

               

Construction

    16,673       16,120  

Other

    229,329       195,269  

1 – 4 Family residential real estate:

               

Owner occupied

    87,631       55,941  

Non-owner occupied

    19,391       14,517  

Construction

    7,417       1,931  

Consumer

    21,563       5,150  

Subtotal

    467,852       369,381  

Net Deferred loan fees and costs

    (48

)

    (206

)

Allowance for loan losses

    (4,468

)

    (3,788

)

Net Loans

  $ 463,336     $ 365,387  

 

The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ended March 31, 2020:

 

                   

1-4 Family

                 
           

Commercial

   

Residential

                 
           

Real

   

Real

                 
   

Commercial

   

Estate

   

Estate

   

Consumer

   

Total

 
                                         

Allowance for loan losses:

                                       

Beginning balance

  $ 766     $ 2,652     $ 615     $ 62     $ 4,095  

Provision for loan losses

    25       203       116       101       445  

Loans charged-off

                      (91

)

    (91

)

Recoveries

          1       1       17       19  

Total ending allowance balance

  $ 791     $ 2,856     $ 732     $ 89     $ 4,468  

 

The following table presents the activity in the allowance for loan losses by portfolio segment for the nine months ended March 31, 2020:

 

                   

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

    131       278       236       115       760  

Loans charged-off

                      (114

)

    (114

)

Recoveries

          3       2       29       34  

Total ending allowance balance

  $ 791     $ 2,856     $ 732     $ 89     $ 4,468  

 

The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ended March 31, 2019:

 

                   

1-4 Family

                 
           

Commercial

   

Residential

                 
           

Real

   

Real

                 
   

Commercial

   

Estate

   

Estate

   

Consumer

   

Total

 
                                         

Allowance for loan losses:

                                       

Beginning balance

  $ 622     $ 2,397     $ 496     $ 54     $ 3,569  

Provision for loan losses

          102       5       (2

)

    105  

Loans charged-off

          (25

)

          (9

)

    (34

)

Recoveries

          7       2       7       16  

Total ending allowance balance

  $ 622     $ 2,481     $ 503     $ 50     $ 3,656  

 

10

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 nine months ended March 31, 2019:

 

                   

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

    36       (591

)

    (2

)

    2       (555

)

Loans charged-off

          (80

)

          (30

)

    (110

)

Recoveries

          875       6       18       899  

Total ending allowance balance

  $ 622     $ 2,481     $ 503     $ 50     $ 3,656  

 

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 March 31, 2020. Included in the recorded investment in loans is $1,045 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

  $ 1     $ 8     $     $     $ 9  

Acquired loans collectively evaluated for impairment

          13       37             50  

Originated loans collectively evaluated for impairment

    790       2,835       695       89       4,409  

Total ending allowance balance

  $ 791     $ 2,856     $ 732     $ 89     $ 4,468  
                                         

Recorded investment in loans:

                                       

Loans individually evaluated for impairment

  $ 177     $ 1,063     $ 284     $     $ 1,524  

Acquired loans collectively evaluated for impairment

    1,527       9,462       27,562       13,519       52,070  

Originated loans collectively evaluated for impairment

    84,275       235,513       87,363       8,104       415,255  

Total ending loans balance

  $ 85,979     $ 246,038     $ 115,209     $ 21,623     $ 468,849  

 

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 March 31, 2020 and for the nine months ended March 31, 2020:

 

   

As of March 31, 2020

   

Nine Months ended March 31, 2020

 
   

Unpaid

           

Allowance

for Loan

   

Average

   

Interest

   

Cash Basis

 
   

Principal

   

Recorded

   

Losses

   

Recorded

   

Income

   

Interest

 
   

Balance

   

Investment