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EX-32.1 - EXHIBIT 32.1 - CONSUMERS BANCORP INC /OH/ex32-1.htm
EX-31.2 - EXHIBIT 31.2 - CONSUMERS BANCORP INC /OH/ex31-2.htm
EX-31.1 - EXHIBIT 31.1 - CONSUMERS BANCORP INC /OH/ex31-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

[X]

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

 

For the quarterly period ended March 31, 2017

 

 

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

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 ☐     

Non-accelerated filer ☐  (Do not check if smaller reporting company)     

Emerging growth company

Accelerated filer ☐

Smaller reporting 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 ☒

 

There were 2,724,956 shares of Registrant’s common stock, no par value, outstanding as of May 10, 2017.

 

 
 

 

 

CONSUMERS BANCORP, INC.

FORM 10-Q

QUARTER ENDED March 31, 2017

 

Table of Contents

 

Page

Number (s)

Part I – Financial Information

 

Item 1 – Financial Statements (Unaudited)

 

Consolidated Balance Sheets at March 31, 2017 and June 30, 2016

1

   

Consolidated Statements of Income for the three and nine months ended March 31, 2017 and 2016

2

   

Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended March 31, 2017 and 2016

3

   

Condensed Consolidated Statements of Changes in Shareholders’ Equity for the three and nine months ended March 31, 2017 and 2016

4

   

Condensed Consolidated Statements of Cash Flows for the nine months ended March 31, 2017 and 2016

5

   

Notes to the Consolidated Financial Statements

6-30

   

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

31-42

   

Item 3 – Not Applicable for Smaller Reporting Companies

 
   

Item 4 – Controls and Procedures

43

Part II – Other Information

Item 1 – Legal Proceedings

44

   

Item 1A – Not Applicable for Smaller Reporting Companies

44

   

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

44

   

Item 3 – Defaults Upon Senior Securities

44

   

Item 4 – Mine Safety Disclosure

44

   

Item 5 – Other Information

44

   

Item 6 – Exhibits

44

   

Signatures

45

 

 
 

 

 

PART I – FINANCIAL INFORMATION

Item 1 – Financial Statements

CONSUMERS BANCORP, INC.

CONSOLIDATED BALANCE SHEETS (Unaudited)

 

(Dollars in thousands, except per share data)

 

March 31,

2017

   

June 30,

2016

 

ASSETS

               

Cash on hand and noninterest-bearing deposits in financial institutions

  $ 10,068     $ 8,164  

Federal funds sold and interest-bearing deposits in financial institutions

    2,162       2,017  

Total cash and cash equivalents

    12,230       10,181  

Certificates of deposit in other financial institutions

    4,166       5,906  

Securities, available-for-sale

    130,871       133,369  

Securities, held-to-maturity (fair value of $4,335 at March 31, 2017 and $3,619 at June 30, 2016)

    4,296       3,494  

Federal bank and other restricted stocks, at cost

    1,396       1,396  

Loans held for sale

    811       1,048  

Total loans

    272,325       256,278  

Less allowance for loan losses

    (3,371 )     (3,566 )

Net loans

    268,954       252,712  

Cash surrender value of life insurance

    8,997       6,819  

Premises and equipment, net

    13,279       13,585  

Accrued interest receivable and other assets

    3,177       1,880  

Total assets

  $ 448,177     $ 430,390  
                 

LIABILITIES

               

Deposits

               

Non-interest bearing demand

  $ 103,175     $ 98,224  

Interest bearing demand

    51,740       48,810  

Savings

    145,069       134,606  

Time

    66,865       65,008  

Total deposits

    366,849       346,648  
                 

Short-term borrowings

    21,901       19,129  

Federal Home Loan Bank advances

    13,335       17,281  

Accrued interest and other liabilities

    3,433       3,539  

Total liabilities

    405,518       386,597  

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 March 31, 2017 and June 30, 2016)

    14,630       14,630  

Retained earnings

    29,644       28,432  

Treasury stock, at cost (130,606 and 130,375 common shares as of March 31, 2017 and June 30, 2016, respectively)

    (1,662 )     (1,658 )

Accumulated other comprehensive income

    47       2,389  

Total shareholders’ equity

    42,659       43,793  

Total liabilities and shareholders’ equity

  $ 448,177     $ 430,390  

 

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)

 

2017

   

2016

   

2017

   

2016

 

 

 
Interest income                                

Loans, including fees

  $ 2,989     $ 2,805     $ 9,195     $ 8,389  

Securities, taxable

    429       485       1,208       1,430  

Securities, tax-exempt

    365       352       1,073       1,047  

Federal funds sold and other interest bearing deposits

    29       30       89       84  

Total interest income

    3,812       3,672       11,565       10,950  

Interest expense

                               

Deposits

    202       166       555       513  

Short-term borrowings

    20       9       43       27  

Federal Home Loan Bank advances

    60       48       174       131  

Total interest expense

    282       223       772       671  

Net interest income

    3,530       3,449       10,793       10,279  

Provision for loan losses

    255       130       531       414  

Net interest income after provision for loan losses

    3,275       3,319       10,262       9,865  
                                 

Non-interest income

                               

Service charges on deposit accounts

    296       298       940       932  

Debit card interchange income

    299       233       835       707  

Bank owned life insurance income

    66       49       178       144  

Securities gains, net

    17       87       142       122  

Loss on disposition of other real estate owned

                (3 )      

Other

    90       69       321       288  

Total non-interest income

    768       736       2,413       2,193  
                                 

Non-interest expenses

                               

Salaries and employee benefits

    1,801       1,752       5,329       5,230  

Occupancy and equipment

    474       454       1,404       1,148  

Data processing expenses

    146       146       436       433  

Debit card processing expenses

    172       113       454       344  

Professional and director fees

    156       87       434       361  

FDIC assessments

    29       67       130       195  

Franchise taxes

    85       84       253       249  

Marketing and advertising

    71       60       215       232  

Telephone and network communications

    76       85       233       235  

Other

    405       343       1,139       1,107  

Total non-interest expenses

    3,415       3,191       10,027       9,534  

Income before income taxes

    628       864       2,648       2,524  

Income tax expense

    62       156       459       450  

Net income

  $ 566     $ 708     $ 2,189     $ 2,074  

Basic and diluted earnings per share

  $ 0.21     $ 0.26     $ 0.80     $ 0.76  

  

See accompanying notes to consolidated financial statements

 

 
2

 

  

CONSUMERS BANCORP, INC.

Consolidated statements of comprehensive income (Loss)

(Unaudited)

 

(Dollars in thousands)

                 
   

Three Months ended

March 31,

   

Nine Months ended

March 31,

 
   

2017

   

2016

   

2017

   

2016

 
                                 

Net income

  $ 566     $ 708     $ 2,189     $ 2,074  
                                 

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

    336       1,288       (3,406 )     1,691  

Reclassification adjustment for gains included in income

    (17 )     (87 )     (142 )     (122 )

Net unrealized gain (losses)

    319       1,201       (3,548 )     1,569  

Income tax effect

    (109 )     (408 )     1,206       (533 )

Other comprehensive income (losses)

    210       793       (2,342 )     1,036  
                                 

Total comprehensive income (loss)

  $ 776     $ 1,501     $ (153 )   $ 3,110  

  

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

March 31,

   

Nine Months ended

March 31,

 
   

2017

   

2016

   

2017

   

2016

 
                                 

Balance at beginning of period

  $ 42,210     $ 42,420     $ 43,793     $ 41,466  
                                 

Net income

    566       708       2,189       2,074  

Other comprehensive income (loss)

    210       793       (2,342 )     1,036  

231 Dividend reinvestment plan shares associated with forfeited and expired restricted stock awards retired to treasury stock during the nine months ended March 31, 2017 and 30 and 305 shares during the three and nine months ended March 31 2016, respectively

                       

Common cash dividends

    (327 )     (328 )     (981 )     (983 )
                                 

Balance at the end of the period

  $ 42,659     $ 43,593     $ 42,659     $ 43,593  
                                 

Common cash dividends per share

  $ 0.12     $ 0.12     $ 0.36     $ 0.36  

 

 

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,

 
   

2017

   

2016

 

Cash flows from operating activities

               

Net cash from operating activities

  $ 4,095     $ 3,262  
                 

Cash flow from investing activities

               

Securities available-for-sale

               

Purchases

    (20,757 )     (19,737 )

Maturities, calls and principal pay downs

    15,071       15,964  

Proceeds from sales of available-for-sale securities

    3,946       6,665  

Securities held-to-maturity

               

Purchases

    (1,000 )      

Principal pay downs

    198       125  

Net (increase) decrease in certificates of deposits in other financial institutions

    1,740       (700 )

Net increase in loans

    (17,019 )     (18,153 )

Purchase of Bank owned life insurance

    (2,000 )      

Acquisition of premises and equipment

    (278 )     (2,353 )

Sale of other real estate owned

    7        

Net cash from investing activities

    (20,092 )     (18,189 )
                 

Cash flow from financing activities

               

Net increase in deposit accounts

    20,201       13,313  

Net change in short-term borrowings

    2,772       4,735  

Proceeds from Federal Home Loan Bank advances

    19,325       6,700  

Repayments of Federal Home Loan Bank advances

    (23,271 )     (5,244 )

Dividends paid

    (981 )     (983 )

Net cash from financing activities

    18,046       18,521  
                 

Increase in cash or cash equivalents

    2,049       3,594  
                 

Cash and cash equivalents, beginning of period

    10,181       10,544  

Cash and cash equivalents, end of period

  $ 12,230     $ 14,138  
                 

Supplemental disclosure of cash flow information:

               

Cash paid during the period:

               

Interest

  $ 769     $ 670  

Federal income taxes

    300       575  

Non-cash items:

               

Transfer from loans to other real estate owned

    10       38  

Transfer from loans held for sale to portfolio

    342        

Expired and forfeited dividend reinvestment plan shares associated with restricted stock awards that were retired to treasury stock

    4       5  

 

See accompanying notes to consolidated financial statements.

 

 
5

 

  

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

 

(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, 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, 2016. 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 of the revenues, operating income, and assets. Accordingly, all of its operations are recorded in one segment, banking.

 

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

 

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

 

 
6

 

 

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

 

(Dollars in thousands, except per share amounts)

 

In June 2016, FASB Issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.  This ASU adds a new Topic 326 to the Codification and removes the thresholds that companies apply to measure credit losses on financial instruments measured at amortized cost, such as loans, receivables, and held-to-maturity debt securities. Under current U.S. GAAP, 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, that are SEC filers for fiscal years and for interim periods with those fiscal years beginning after December 15, 2019. Early adoption of the guidance is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Management is currently evaluating the impact of the adoption of this guidance on the Corporation’s consolidated financial statements and it is too early to estimate any impact.

 

Note 2 – Securities

 

Available –for-Sale

 

 

Amortized
Cost

   

Gross
Unrealized

Gains

   

Gross
Unrealized

Losses

   

Fair
Value

 

March 31, 2017

                               

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

  $ 11,071     $ 67     $ (126 )   $ 11,012  

Obligations of state and political subdivisions

    57,036       624       (512 )     57,148  

Mortgage-backed securities – residential

    54,450       292       (450 )     54,292  

Mortgage-backed securities– commercial

    1,466             (5 )     1,461  

Collateralized mortgage obligations– residential

    6,620       2       (112 )     6,510  

Pooled trust preferred security

    155       293             448  

Total available-for-sale securities

  $ 130,798     $ 1,278     $ (1,205 )   $ 130,871  

 

Held-to-Maturity

 

Amortized
Cost

   

Gross
Unrecognized

Gains

   

Gross
Unrecognized Losses

   

Fair
Value

 

March 31, 2017

                               

Obligations of state and political subdivisions

  $ 4,296     $ 39     $     $ 4,335  

 

 
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, 2016

                               

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

  $ 9,682     $ 362     $     $ 10,044  

Obligations of state and political subdivisions

    53,952       2,010       (8 )     55,954  

Mortgage-backed securities – residential

    58,702       920       (26 )     59,596  

Mortgage-backed securities – commercial

    1,485       41             1,526  

Collateralized mortgage obligations - residential

    5,774       49       (3 )     5,820  

Pooled trust preferred security

    153       276             429  

Total available-for-sale securities

  $ 129,748     $ 3,658     $ (37 )   $ 133,369  

 

Held-to-Maturity

 

Amortized
Cost

   

Gross
Unrecognized

Gains

   

Gross
Unrecognized

Losses

   

Fair
Value

 

June 30, 2016

                               

Obligations of state and political subdivisions

  $ 3,494     $ 125     $     $ 3,619  

 

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

 

   

Three Months Ended

March 31,

   

Nine Months Ended

March 31,

 
   

2017

   

2016

   

2017

   

2016

 

Proceeds from sales

  $ 563     $ 4,675     $ 3,946     $ 6,665  

Gross realized gains

    17       87       144       122  

Gross realized losses

                2        

 

The income tax provision applicable to these net realized gains amounted to $5 and $48 for the three and nine months ended March 31, 2017 and $30 and $41 for the three and nine months ended March 31, 2016.

 

The amortized cost and fair values of debt securities at March 31, 2017, by expected maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date, primarily mortgage-backed securities, collateralized mortgage obligations and the pooled trust preferred security are shown separately.

 

Available-for-Sale

 

Amortized

Cost

   

Estimated Fair

Value

 

Due in one year or less

  $ 3,054     $ 3,060  

Due after one year through five years

    17,699       17,944  

Due after five years through ten years

    26,244       26,301  

Due after ten years

    21,110       20,855  

Total

    68,107       68,160  

 

 
8

 

 

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

 

(Dollars in thousands, except per share amounts) 

 

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

    62,536       62,263  

Pooled trust preferred security

    155       448  

Total available-for-sale securities

  $ 130,798     $ 130,871  

 

Held-to-Maturity

               
                 

Due after five years through ten years

    638       652  

Due after ten years

    3,658       3,683  

Total held-to-maturity securities

  $ 4,296     $ 4,335  

 

,

The following table summarizes the securities with unrealized losses at March 31, 2017 and June 30, 2016, 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, 2017

                                               

Obligations of US government-sponsored entities and agencies

  $ 6,254     $ (126 )   $     $     $ 6,254     $ (126 )

Obligations of states and political subdivisions

    22,735       (507 )     270       (5 )     23,005       (512 )

Mortgage-backed securities - residential

    35,121       (398 )     3,020       (52 )     38,141       (450 )

Mortgage-backed securities - commercial

    1,461       (5 )                 1,461       (5 )

Collateralized mortgage obligations – residential

    5,641       (97 )     680       (15 )     6,321       (112 )

Total temporarily impaired

  $ 71,212     $ (1,133 )   $ 3,970     $ (72 )   $ 75,182     $ (1,205 )

 

   

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, 2016

                                               

Obligations of states and political subdivisions

  $ 572     $ (6 )   $ 641     $ (2 )   $ 1,213     $ (8 )

Mortgage-backed securities - residential

    4,899       (12 )     4,836       (14 )     9,735       (26 )

Collateral mortgage obligation - residential

                1,212       (3 )     1,212       (3 )

Total temporarily impaired

  $ 5,471     $ (18 )   $ 6,689     $ (19 )   $ 12,160     $ (37 )

 

 
9

 

 

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

 

(Dollars in thousands, except per share amounts) 

 

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 December 31, 2016 have not been recognized into income because the decline in fair value is not attributed to credit quality, management does not intend to sell and it is likely that management will not 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.

 

Note 3 – Loans

Major classifications of loans were as follows:

   

March 31,

2017

   

June 30,

2016

 

Commercial

  $ 45,291     $ 43,156  

Commercial real estate:

               

Construction

    9,493       7,755  

Other

    155,859       152,766  

1 – 4 Family residential real estate:

               

Owner occupied

    40,201       31,091  

Non-owner occupied

    14,811       14,438  

Construction

    1,895       1,269  

Consumer

    4,775       5,803  

Subtotal

    272,325       256,278  

Allowance for loan losses

    (3,371 )     (3,566 )

Net Loans

  $ 268,954     $ 252,712  

 

Loans presented above are net of deferred loan fees and costs of $308 and $360 for March 31, 2017 and June 30, 2016, respectively.

 

 
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 three months ended March 31, 2017:

 

                    1-4 Family                  
            Commercial     Residential                  
            Real     Real                  
    Commercial     Estate     Estate     Consumer     Total  
                                         
Allowance for loan losses:                                        

Beginning balance

  $ 497     $ 2,100     $ 465     $ 61     $ 3,123  

Provision for loan losses

    25       195       15       20       255  

Loans charged-off

                      (20 )     (20 )

Recoveries

                7       6       13  

Total ending allowance balance

  $ 522     $ 2,295     $ 487     $ 67     $ 3,371  

 

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

 

                    1-4 Family                  
            Commercial     Residential                  
            Real     Real                  
   

Commercial

    Estate     Estate     Consumer     Total  
                                         
Allowance for loan losses:                                        

Beginning balance

  $ 505     $ 2,518     $ 402     $ 141     $ 3,566  

Provision for loan losses

    16       477       93       (55 )     531  

Loans charged-off

          (700 )     (44 )     (32 )     (776 )

Recoveries

    1             36       13       50  

Total ending allowance balance

  $ 522     $ 2,295     $ 487     $ 67     $ 3,371  

 

 
11

 

 

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

 

(Dollars in thousands, except per share amounts) 

 

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

 

                    1-4 Family                  
            Commercial     Residential                  
            Real     Real                  
   

Commercial

    Estate     Estate     Consumer     Total  
                                         
Allowance for loan losses:                                        

Beginning balance

  $ 397     $ 1,728     $ 307     $ 123     $ 2,555  

Provision for loan losses

    61       52       17             130  

Loans charged-off

                (18 )     (7 )     (25 )

Recoveries

                      3       3  

Total ending allowance balance

  $ 458     $ 1,780     $ 306     $ 119     $ 2,663  

 

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

 

                    1-4 Family                  
            Commercial     Residential                  
            Real     Real                  
    Commercial    

Estate

    Estate     Consumer     Total  
                                         
Allowance for loan losses:                                        

Beginning balance

  $ 316     $ 1,660     $ 289     $ 167     $ 2,432  

Provision for loan losses

    142       125       155       (8 )     414  

Loans charged-off

          (5 )     (138 )     (58 )     (201 )

Recoveries

                      18       18  

Total ending allowance balance

  $ 458     $ 1,780     $ 306     $ 119     $ 2,663  

 

 
12

 

 

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

 

(Dollars in thousands, except per share amounts)

 

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of March 31, 2017. Included in the recorded investment in loans is $592 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

  $ 4     $ 330     $ 2     $     $ 336  

Collectively evaluated for impairment

    518       1,965       485       67       3,035  

Total ending allowance balance

  $ 522     $ 2,295     $ 487     $ 67     $ 3,371  
                                         
Recorded investment in loans:                                        

Loans individually evaluated for impairment

  $ 4     $ 3,303     $ 397     $     $ 3,704  

Loans collectively evaluated for impairment

    45,387       162,379       56,660       4,787       269,213  

Total ending loans balance

  $ 45,391     $ 165,682     $ 57,057     $ 4,787     $ 272,917  

 

 
13

 

 

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 June 30, 2016. Included in the recorded investment in loans is $549 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

  $     $ 868     $ 6     $     $ 874  

Collectively evaluated for impairment

    505       1,650       396       141       2,692  
Total ending allowance balance   $ 505     $ 2,518     $ 402     $ 141     $ 3,566  
                                         

Recorded investment in loans:

                                       

Loans individually evaluated for impairment

  $ 1,029     $ 5,105     $ 758     $     $ 6,892  

Loans collectively evaluated for impairment

    42,219       155,734       46,166       5,816       249,935  

Total ending loans balance

  $ 43,248     $ 160,839       46,924     $ 5,816     $ 256,827  

 

 
14

 

 

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 average recorded investment and interest income associated with loans individually evaluated for impairment by class of loans as of March 31, 2017 and for the nine months ended March 31, 2017:

 

    As of March 31, 2017     Nine Months ended March 31, 2017  
    Unpaid             Allowance for     Average     Interest     Cash Basis  
   

Principal

    Recorded     Loan Losses     Recorded     Income     Interest  
    Balance     Investment     Allocated     Investment     Recognized     Recognized  
With no related allowance recorded:                                                

Commercial

  $     $     $     $ 220     $ 80     $ 80  

Commercial real estate:

                                               
Construction     6       5             115       6       6  
Other     1,857       969             1,026       105       105  

1-4 Family residential real estate:

                                               
Owner occupied     188       188             124              
Non-owner occupied     193       192             202              
With an allowance recorded:                                                

Commercial

    4       4       4       6              

Commercial real estate:

                                               
Other     2,334       2,329       330       1,936       18       18  

1-4 Family residential real estate:

                                               
Owner occupied     17       17       2       126       4       4  

Total

  $ 4,599     $ 3,704     $ 336     $ 3,755     $ 213     $ 213  

 

 
15

 

 

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 average recorded investment and interest income associated with loans individually evaluated for impairment by class of loans for the three months ended March 31, 2017:

 

    Average     Interest     Cash Basis  
    Recorded     Income     Interest  
    Investment     Recognized     Recognized  
With no related allowance recorded:                        

Commercial real estate:

                       
Construction   $ 6     $     $  
Other     917              

1-4 Family residential real estate:

                       
Owner occupied     119              
Non-owner occupied     195              
With an allowance recorded:                        

Commercial

    4              

Commercial real estate:

                       
Other     1,747       3       3  

1-4 Family residential real estate:

                       
Owner occupied     101       1       1  

Total

  $ 3,089     $ 4     $ 4  

   

 
16

 

 

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 average recorded investment and interest income associated with loans individually evaluated for impairment by class of loans as of June 30, 2016 and for the nine months ended March 31, 2016:

 

    As of June 30, 2016     Nine Months ended March 31, 2016  
   

Unpaid

           

Allowance for

   

Average 

   

Interest

   

Cash Basis

 
   

Principal

   

Recorded

   

Loan Losses

   

Recorded

   

Income

   

Interest

 
   

Balance

   

Investment

   

Allocated

   

Investment

   

Recognized