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EX-32.1 - EXHIBIT 32.1 - CONSUMERS BANCORP INC /OH/ex_99044.htm
EX-31.2 - EXHIBIT 31.2 - CONSUMERS BANCORP INC /OH/ex_99043.htm
EX-31.1 - EXHIBIT 31.1 - CONSUMERS BANCORP INC /OH/ex_99042.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 September 30, 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 ☐   

Accelerated filer ☐  

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

Smaller reporting company ☒

Emerging growth company

 

         

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Securities 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 2,729,644 shares of Registrant’s common stock, no par value, outstanding as of November 7, 2017.

 

 

 

 

CONSUMERS BANCORP, INC.

FORM 10-Q

QUARTER ENDED September 30, 2017

 

Table of Contents

 

 

Page

Number (s)

Part I – Financial Information

   

Item 1 – Financial Statements (Unaudited)

 

Consolidated Balance Sheets at September 30, 2017 and June 30, 2017

1

   

Consolidated Statements of Income for the three months ended September 30, 2017 and 2016

2

   

Consolidated Statements of Comprehensive Income for the three months ended September 30, 2017 and 2016

3

   

Condensed Consolidated Statements of Changes in Shareholders’ Equity for the three months ended September 30, 2017 and 2016

4

   

Condensed Consolidated Statements of Cash Flows for the three months ended September 30, 2017 and 2016

5

   

Notes to the Consolidated Financial Statements

6-26

   

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

27-35

   

Item 3 – Not Applicable for Smaller Reporting Companies

 
   

Item 4 – Controls and Procedures

36

Part II – Other Information

Item 1 – Legal Proceedings

37

   

Item 1A – Not Applicable for Smaller Reporting Companies

37

   

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

37

   

Item 3 – Defaults Upon Senior Securities

37

   

Item 4 – Mine Safety Disclosure

37

   

Item 5 – Other Information

37

   

Item 6 – Exhibits

37

   

Signatures

38

 

 

 

 

PART I – FINANCIAL INFORMATION
Item 1 – Financial Statements

 

CONSUMERS BANCORP, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)

 

 

(Dollars in thousands, except per share data)

 

September 30,

2017

   

June 30,

2017

 

ASSETS

               

Cash on hand and noninterest-bearing deposits in financial institutions

  $ 9,896     $ 9,439  

Federal funds sold and interest-bearing deposits in financial institutions

    4,283       473  

Total cash and cash equivalents

    14,179       9,912  

Certificates of deposit in other financial institutions

    3,921       3,921  

Securities, available-for-sale

    136,382       142,086  

Securities, held-to-maturity (fair value of $4,258 at September 30, 2017 and $4,329 at June 30, 2017)

    4,164       4,259  

Federal bank and other restricted stocks, at cost

    1,425       1,425  

Loans held for sale

    2,061       1,252  

Total loans

    287,718       272,867  

Less allowance for loan losses

    (3,194 )     (3,086 )

Net loans

    284,524       269,781  

Cash surrender value of life insurance

    9,133       9,065  

Premises and equipment, net

    13,287       13,398  

Other real estate owned

          71  

Accrued interest receivable and other assets

    2,571       2,713  

Total assets

  $ 471,647     $ 457,883  
                 

LIABILITIES

               

Deposits

               

Non-interest bearing demand

  $ 110,407     $ 102,683  

Interest bearing demand

    54,289       54,123  

Savings

    152,515       151,154  

Time

    66,629       66,511  

Total deposits

    383,840       374,471  
                 

Short-term borrowings

    27,905       23,986  

Federal Home Loan Bank advances

    12,304       12,320  

Accrued interest and other liabilities

    3,327       3,571  

Total liabilities

    427,376       414,348  

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, 2017 and June 30, 2017)

    14,630       14,630  

Retained earnings

    30,728       30,122  

Treasury stock, at cost (124,489 and 130,606 common shares as of September 30, 2017 and June 30, 2017, respectively)

    (1,576 )     (1,662 )

Accumulated other comprehensive income

    489       445  

Total shareholders’ equity

    44,271       43,535  

Total liabilities and shareholders’ equity

  $ 471,647     $ 457,883  

 

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)

 

2017

   

2016

 
                 

Interest income

               

Loans, including fees

  $ 3,228     $ 3,184  

Securities, taxable

    511       402  

Securities, tax-exempt

    367       351  

Federal funds sold and other interest bearing deposits

    37       30  

Total interest income

    4,143       3,967  

Interest expense

               

Deposits

    248       170  

Short-term borrowings

    55       12  

Federal Home Loan Bank advances

    54       58  

Total interest expense

    357       240  

Net interest income

    3,786       3,727  

Provision for loan losses

    90       136  

Net interest income after provision for loan losses

    3,696       3,591  
                 

Non-interest income

               

Service charges on deposit accounts

    308       330  

Debit card interchange income

    323       251  

Bank owned life insurance income

    68       49  

Securities gains, net

    38       103  

Other

    135       115  

Total non-interest income

    872       848  
                 

Non-interest expenses

               

Salaries and employee benefits

    1,810       1,738  

Occupancy and equipment

    455       452  

Data processing expenses

    148       145  

Debit card processing expenses

    180       133  

Professional and director fees

    117       132  

FDIC assessments

    46       55  

Franchise taxes

    84       84  

Marketing and advertising

    78       79  

Telephone and network communications

    82       81  

Other

    393       387  

Total non-interest expenses

    3,393       3,286  

Income before income taxes

    1,175       1,153  

Income tax expense

    246       252  

Net income

  $ 929     $ 901  
                 

Basic and diluted earnings per share

  $ 0.34     $ 0.33  

 

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,

 
   

2017

   

2016

 
                 

Net income

  $ 929     $ 901  
                 

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

    104       (423 )

Reclassification adjustment for gains included in income

    (38 )     (103 )

Net unrealized gain (losses)

    66       (526 )

Income tax effect

    (22 )     179  

Other comprehensive income (loss)

    44       (347 )
                 

Total comprehensive income

  $ 973     $ 554  

 

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,

 
   

2017

   

2016

 
                 

Balance at beginning of period

  $ 43,535     $ 43,793  
                 

Net income

    929       901  

Other comprehensive income (loss)

    44       (347 )

6,321 shares associated with stock awards during the three months ended September 30, 2017

    90        

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

           

Common cash dividends

    (327 )     (327 )
                 

Balance at the end of the period

  $ 44,271     $ 44,020  
                 

Common cash dividends per share

  $ 0.12     $ 0.12  

 

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,

 
   

2017

   

2016

 

Cash flows from operating activities

               

Net cash from operating activities

  $ 503     $ 581  
                 

Cash flow from investing activities

               

Securities available-for-sale

               

Purchases

    (426 )     (3,229 )

Maturities, calls and principal pay downs

    4,412       5,796  

Proceeds from sales

    1,586       1,789  

Securities held-to-maturity

               

Purchases

          (1,000 )

Principal pay downs

    95       95  

Net decrease in certificates of deposits in other financial institutions

          250  

Net increase in loans

    (14,833 )     (4,237 )

Acquisition of premises and equipment

    (86 )     (191 )

Sale of other real estate owned

    71        

Net cash from investing activities

    (9,181 )     (727 )
                 

Cash flow from financing activities

               

Net increase in deposit accounts

    9,369       6,323  

Net change in short-term borrowings

    3,919       1,417  

Proceeds from Federal Home Loan Bank advances

          9,700  

Repayments of Federal Home Loan Bank advances

    (16 )     (14,615 )

Dividends paid

    (327 )     (327 )

Net cash from financing activities

    12,945       2,498  
                 

Increase in cash or cash equivalents

    4,267       2,352  
                 

Cash and cash equivalents, beginning of period

    9,912       10,181  

Cash and cash equivalents, end of period

  $ 14,179     $ 12,533  
                 

Supplemental disclosure of cash flow information:

               

Cash paid during the period:

               

Interest

  $ 347     $ 242  

Federal income taxes

           

Non-cash items:

               

Transfer from loans to other real estate owned

          10  

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

    4       4  

 

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, 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, 2017. 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. The adoption of ASU 2014-09 as it relates to non-interest income, such as service charges and debit card interchange income, is not expected to have a material effect on the Corporation’s financial statements.

 

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 are in the midst of gathering critical data to evaluate the impact. However, it is too early to estimate the impact.

 

In February 2016, the FASB issued ASU 2016-02 - Leases (Topic 842). The ASU will require all organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. Additional qualitative and quantitative disclosures will be required so that users can understand more about the nature of an entity’s leasing activities. The new guidance is effective for annual reporting periods and interim reporting periods within those annual periods, beginning after December 15, 2018. Early adoption is permitted. Management is currently evaluating the impact of the adoption of this guidance on the Corporation’s consolidated financial statements and expects to recognize an increase in other assets and other liabilities for the rights and obligations created by leasing of branch offices. Management also expects minimal impact in the income statement with respect to occupancy expense related to leases.

 

7

 

 

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

 

(Dollars in thousands, except per share amounts)

 

Note 2 – Securities

 

Available –for-Sale

 

 

Amortized
Cost

   

Gross
Unrealized

Gains

   

Gross
Unrealized

Losses

   

Fair
Value

 

September 30, 2017

                               

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

  $ 12,503     $ 89     $ (73 )   $ 12,519  

Obligations of state and political subdivisions

    56,231       872       (217 )     56,886  

Mortgage-backed securities – residential

    59,536       164       (356 )     59,344  

Mortgage-backed securities– commercial

    1,452             (4 )     1,448  

Collateralized mortgage obligations– residential

    5,738             (100 )     5,638  

Pooled trust preferred security

    181       366             547  

Total available-for-sale securities

  $ 135,641     $ 1,491     $ (750 )   $ 136,382  

 

Held-to-Maturity

 

 

Amortized
Cost

   

Gross
Unre
cognized
Gains

   

Gross
Unre
cognized Losses

   

Fair
Value

 

September 30, 2017

                               

Obligations of state and political subdivisions

  $ 4,164     $ 94     $     $ 4,258  

 

Available–for-Sale

 

Amortized
Cost

   

Gross
Unrealized

Gains

   

Gross
Unrealized

Losses

   

Fair
Value

 

June 30, 2017

                               

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

  $ 12,571     $ 90     $ (74 )   $ 12,587  

Obligations of state and political subdivisions

    56,824       890       (254 )     57,460  

Mortgage-backed securities – residential

    64,092       184       (438 )     63,838  

Mortgage-backed securities – commercial

    1,459             (1 )     1,458  

Collateralized mortgage obligations - residential

    6,310       1       (100 )     6,211  

Pooled trust preferred security

    155       377             532  

Total available-for-sale securities

  $ 141,411     $ 1,542     $ (867 )   $ 142,086  

 

Held-to-Maturity

 

 

Amortized
Cost

   

Gross
Unre
cognized
Gains

   

Gross
Unre
cognized
Losses

   

Fair
Value

 

June 30, 2017

                               

Obligations of state and political subdivisions

  $ 4,259     $ 73     $ (3 )   $ 4,329  

 

8

 

 

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

 

(Dollars in thousands, except per share amounts)

 

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

 

   

Three Months Ended

September 30,

 
   

2017

   

2016

 

Proceeds from sales

  $ 1,586     $ 1,789  

Gross realized gains

    39       103  

Gross realized losses

    1        

 

The income tax provision related to these net realized gains and losses amounted to $13 for the three months ended September 30, 2017 and $35 for the three months ended September 30, 2016.

 

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

  $ 2,839     $ 2,854  

Due after one year through five years

    16,018       16,314  

Due after five years through ten years

    27,350       27,664  

Due after ten years

    22,527       22,573  

Total

    68,734       69,405  
                 

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

    66,726       66,430  

Pooled trust preferred security

    181       547  

Total available-for-sale securities

  $ 135,641     $ 136,382  
                 

Held-to-Maturity

               
                 

Due after five years through ten years

    601       626  

Due after ten years

    3,563       3,632  

Total held-to-maturity securities

  $ 4,164     $ 4,258  

 

9

 

 

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

 

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

 

(Dollars in thousands, except per share amounts)

 

   

Less than 12 Months

   

12 Months or more

   

Total

 

Available-for-sale

 

Fair
Value

   

Unrealized
Loss

   

Fair
Value

   

Unrealized
Loss

   

Fair
Value

   

Unrealized
Loss

 

September 30, 2017

                                               

Obligations of US government-sponsored entities and agencies

  $ 3,921     $ (73 )   $     $     $ 3,921     $ (73 )

Obligations of states and political subdivisions

    12,984       (198 )     1,740       (19 )     14,724       (217 )

Mortgage-backed securities - residential

    43,781       (307 )     3,381       (49 )     47,162       (356 )

Mortgage-backed securities - commercial

    1,448       (4 )                 1,448       (4 )

Collateralized mortgage obligations residential

    5,036       (89 )     602       (11 )     5,638       (100 )

Total temporarily impaired

  $ 67,170     $ (671 )   $ 5,723     $ (79 )   $ 72,893     $ (750 )

 

    Less than 12 Months     12 Months or more     Total  

Available-for-sale

 

Fair
Value

   

Unrealized
Loss

   

Fair
Value

   

Unrealized
Loss

   

Fair
Value

   

Unrealized
Loss

 

June 30, 2017

                                               

Obligations of US government-sponsored entities and agencies

  $ 4,336     $ (74 )   $     $     $ 4,336     $ (74 )

Obligations of states and political subdivisions

    13,881       (241 )     834       (13 )     14,715       (254 )

Mortgage-backed securities - residential

    42,071       (391 )     2,805       (47 )     44,876       (438 )

Mortgage-backed securities - commercial

    1,458       (1 )                 1,458       (1 )

Collateral mortgage obligation - residential

    5,417       (88 )     654       (12 )     6,071       (100 )

Total temporarily impaired

  $ 67,163     $ (795 )   $ 4,293     $ (72 )   $ 71,456     $ (867 )

 

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.

 

10

 

 

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

 

(Dollars in thousands, except per share amounts)

 

The unrealized losses within the securities portfolio as of September 30, 2017 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 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.

 

Note 3 – Loans

Major classifications of loans were as follows:

 

   

September 30,

2017

   

June 30,

2017

 

Commercial

  $ 51,479     $ 46,336  

Commercial real estate:

               

Construction

    7,437       5,588  

Other

    163,991       157,861  

1 – 4 Family residential real estate:

               

Owner occupied

    42,861       41,581  

Non-owner occupied

    14,072       14,377  

Construction

    2,725       1,993  

Consumer

    5,153       5,131  

Subtotal

    287,718       272,867  

Allowance for loan losses

    (3,194 )     (3,086 )

Net Loans

  $ 284,524     $ 269,781  

 

Loans presented above are net of deferred loan fees and costs of $299 and $294 for September 30, 2017 and June 30, 2017, respectively.

 

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 September 30, 2017:

 

                    1-4 Family                  
            Commercial     Residential                  
            Real     Real                  
    Commercial    

Estate

    Estate     Consumer    

Total

 
                                         

Allowance for loan losses:

                                       

Beginning balance

  $ 518     $ 2,038     $ 473     $ 57     $ 3,086  

Provision for loan losses

    52       25             13       90  

Loans charged-off

                      (3 )     (3 )

Recoveries

    2       18             1       21  

Total ending allowance balance

  $ 572     $ 2,081     $ 473     $ 68     $ 3,194  

 

The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ended September 30, 2016:

 

                    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

    5       125       27       (21 )     136  

Loans charged-off

                (21 )     (4 )     (25 )

Recoveries

                3       4       7  

Total ending allowance balance

  $ 510     $ 2,643     $ 411     $ 120     $ 3,684  

 

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 September 30, 2017. Included in the recorded investment in loans is $679 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

  $     $ 33     $     $     $ 33  

Collectively evaluated for impairment

    572       2,048       473       68       3,161  

Total ending allowance balance

  $ 572     $ 2,081     $ 473     $ 68     $ 3,194  
                                         

Recorded investment in loans:

                                       

Loans individually evaluated for impairment

  $ 125     $ 1,462     $ 425     $     $ 2,012  

Loans collectively evaluated for impairment

    51,463       170,356       59,400       5,166       286,385  

Total ending loans balance

  $ 51,588     $ 171,818     $ 59,825     $ 5,166     $ 288,397  

 

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, 2017. Included in the recorded investment in loans is $581 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

  $     $ 42     $ 2     $     $ 44  

Collectively evaluated for impairment

    518       1,996       471       57       3,042  

Total ending allowance balance

  $ 518     $ 2,038     $ 473     $ 57     $ 3,086  
                                         

Recorded investment in loans:

                                       

Loans individually evaluated for impairment

  $ 444     $ 1,587     $ 203     $     $ 2,234  

Loans collectively evaluated for impairment

    45,993       162,176       57,901       5,144       271,214  

Total ending loans balance

  $ 46,437     $ 163,763     $ 58,104     $ 5,144     $ 273,448  

 

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 September 30, 2017 and for the three months ended September 30, 2017:

 

 

   

As of September 30, 2017

    Three Months ended September 30, 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

  $ 124     $ 125     $     $ 114     $ 2     $ 2  

Commercial real estate:

                                               

Other

    1,121       1,123             1,053       10       10  

1-4 Family residential real estate:

                                               

Owner occupied

    102       101             102              

Non-owner occupied

    324       324             327              

With an allowance recorded:

                                               

Commercial real estate:

                                               

Other

    338       339       33       343              

Total

  $ 2,009     $ 2,012     $ 33     $ 1,939     $ 12     $ 12  

 

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 June 30, 2017 and for the three months ended September 30, 2016:

 

   

As of June 30, 2017

    Three Months ended September 30, 2016  
   

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

  $ 482     $ 444     $     $ 660     $ 80     $ 80  

Commercial real estate:

                                               

Construction

                      329       6       6  

Other

    1,928       1,039             1,555       105       105  

1-4 Family residential real estate:

                                               

Owner occupied

    104       103             127              

Non-owner occupied

                      208              

With an allowance recorded:

                                               

Commercial real estate:

                                               

Other

    548       548       42       2,449       8       8  

1-4 Family residential real estate:

                                               

Owner occupied

    99       100       2       177       2       2  

Total

  $ 3,161     $ 2,234     $ 44     $ 5,505     $ 201     $ 201  

 

15

 

 

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, 2017 and June 30, 2017:

 

   

September 30, 2017

    June 30, 2017  
           

Loans Past Due

   

 

    Loans Past Due  
           

Over 90 Days

   

 

    Over 90 Days  
           

Still

   

 

    Still  
   

Non-accrual

   

Accruing

   

Non-accrual

   

Accruing

 

Commercial

  $     $     $ 368     $  

Commercial real estate:

                               

Other

    565             729        

1 – 4 Family residential:

                               

Owner occupied

    89             90        

Non-owner occupied

    324                    

Total

  $ 978     $     $ 1,187     $  

 

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.

 

16

 

 

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

 

(Dollars in thousands, except per share amounts)

 

The following table presents the aging of the recorded investment in past due loans as of September 30, 2017 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

  $     $     $     $     $ 51,588     $ 51,588  

Commercial real estate:

                                               

Construction

                            7,452       7,452  

Other

                            164,366       164,366  

1-4 Family residential:

                                               

Owner occupied

    23             74       97       42,885       42,982  

Non-owner occupied

                            14,112       14,112  

Construction

                            2,731       2,731  

Consumer

    18                   18       5,148       5,166  

Total

  $ 41     $     $ 74     $ 115     $ 288,282     $ 288,397  

 

The above table of past due loans includes the recorded investment in non-accrual loans of $74 in the 90 days or greater category and $904 in the loans not past due category.

 

The following table presents the aging of the recorded investment in past due loans as of June 30, 2017 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

  $     $     $ 35     $ 35     $ 46,402     $ 46,437  

Commercial real estate:

                                               

Construction

                            5,596       5,596  

Other

                130       130       158,037       158,167  

1-4 Family residential:

                                               

Owner occupied

    13             74       87       41,605       41,692  

Non-owner occupied

                            14,416       14,416  

Construction

                            1,996       1,996  

Consumer

    22                   22       5,122       5,144  

Total

  $ 35     $     $ 239     $ 274     $ 273,174     $ 273,448  

 

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

 

Troubled Debt Restructurings:

As of September 30, 2017, the recorded investment of loans classified as troubled debt restructurings was $1,732 with $30 of specific reserves allocated to these loans. As of September 30, 2017, the Corporation had committed to lend an additional $57 to customers with outstanding loans that were classified as troubled debt restructurings. As of June 30, 2017, the recorded investment of loans classified as troubled debt restructurings was $1,740 with $33 of specific reserves allocated to these loans. As of June 30, 2017, the Corporation had committed to lend an additional $175 to customers with outstanding loans that were classified as troubled debt restructurings.

 

17

 

 

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

 

(Dollars in thousands, except per share amounts)

 

During the three months ended September 30, 2017 and 2016 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, 2017 and 2016.

 

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, 2017 and 2016. A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms.

 

Credit Quality Indicators:

The Corporation categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: 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 affirm 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.

 

18

 

 

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, 2017

 
           

Special

   

 

            Not  
   

Pass

   

Mention

   

Substandard

   

Doubtful

   

Rated

 

Commercial

  $ 50,091     $ 808     $ 303     $     $ 386  

Commercial real estate:

                                       

Construction

    6,221       1,186       4             41  

Other

    154,075       7,072       1,915       566       738  

1-4 Family residential real estate:

                                       

Owner occupied

    2,420             25       15       40,522  

Non-owner occupied

    12,958       206       440       324       184  

Construction

    1,154                         1,577  

Consumer

    131                         5,035  

Total

  $ 227,050     $ 9,272     $ 2,687     $ 905     $ 48,483  

 

   

As of June 30, 2017

 
           

Special

                  Not  
   

Pass

   

Mention

   

Substandard

   

Doubtful

   

Rated

 

Commercial

  $ 44,435     $ 907     $ 642     $     $ 453  

Commercial real estate:

                                       

Construction

    4,514       1,035             4       43  

Other

    150,460       5,110       1,566       470       561  

1-4 Family residential real estate:

                                       

Owner occupied

    2,668             11       30       38,983  

Non-owner occupied

    13,633       210       261       187       125  

Construction

    1,223                         773  

Consumer

    145                         4,999  

Total

  $ 217,078     $ 7,262     $ 2,480     $ 691     $ 45,937  

 

19

 

 

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

 

(Dollars in thousands, except per share amounts)

 

Note 4 - Fair Value

 

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

 

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

 

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

 

Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

 

Financial assets and financial liabilities measured at fair value on a recurring basis include the following: 

 

Securities available-for-sale: When available, the fair values of available-for-sale securities are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs). For securities where quoted market prices are not available, fair values are calculated based on market prices of similar securities (Level 2 inputs). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other unobservable inputs (Level 3 inputs).

 

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

 

           

Fair Value Measurements at

September 30, 2017 Using

 
   

Balance at

September 30,

2017

   

Level 1

   

Level 2

   

Level 3

 

Assets:

                               

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

  $ 12,519     $     $ 12,519     $  

Obligations of states and political subdivisions

    56,886             56,886        

Mortgage-backed securities – residential

    59,344             59,344        

Mortgage-backed securities – commercial

    1,448             1,448        

Collateralized mortgage obligations - residential

    5,638             5,638        

Pooled trust preferred security

    547             547        

 

20

 

 

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

 

(Dollars in thousands, except per share amounts)

 

           

Fair Value Measurements at

June 30, 2017 Using

 
   

Balance at

June 30, 2017

   

Level 1

   

Level 2

   

Level 3

 

Assets:

                               

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

  $ 12,587     $     $ 12,587     $  

Obligations of states and political subdivisions

    57,460             57,460        

Mortgage-backed securities - residential

    63,838             63,838        

Mortgage-backed securities - commercial

    1,458             1,458        

Collateralized mortgage obligations - residential

    6,211             6,211        

Pooled trust preferred security

    532             532        

 

There were no transfers between Level 1 and Level 2 during the three month periods ended September 30, 2017 or 2016.

 

Certain financial assets and financial liabilities are measured at fair value on a non-recurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances. Financial assets and financial liabilities measured at fair value on a non-recurring basis include the following:

 

Impaired Loans: At the time a loan is considered impaired, it is valued at the lower of cost or fair value. Impaired loans carried at fair value generally receive specific allocations of the allowance for loan losses or are charged down to their fair value. For collateral dependent loans, fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

 

Other Real Estate Owned: Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Real estate owned properties are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

 

21

 

 

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

 

(Dollars in thousands, except per share amounts)

 

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

 

           

Fair Value Measurements at

June 30, 2017 Using

 
   

Balance at

June 30, 2017

   

Level 1

   

Level 2

   

Level 3

 

Impaired loans:

                               

Commercial Real Estate - Other

  $ 130     $     $     $ 130  

Other Real Estate Owned:

                               

1-4 Family residential real estate

    71                   71  

 

There were no impaired loans measured at fair value on a non-recurring basis at September 30, 2017. The resulting impact to the provision for loan losses was a decrease of $17 being recorded for the three months ended September 30, 2017. Impaired loans, measured for impairment using the fair value of the collateral, had a recorded investment of $130, with no valuation allowance at June 30, 2017. The resulting impact to the provision for loan losses was an increase of $41 being recorded for the three months ended September 30, 2016.

 

Other real estate owned which is measured at the lower of carrying or fair value less costs to sell, had a net carrying amount of $71, which was made up of the outstanding balance of $103, net of a valuation allowance of $32 at June 30, 2017. There were no other real estate owned being carried at fair value as of September 30, 2017.

 

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

 

June 30, 2017

 

Fair

Value

 

Valuation

Technique

 

Unobservable

Inputs

   

Range

   

Weighted

Average

 

Impaired loans:

                                 

Commercial Real Estate – Other

  $ 130  

Bid Indications

    N/A       0.0 %     0.0 %

Other Real Estate Owned:

                                 

1-4 Family residential real estate

  $ 71  

Bid Indications

    N/A       0.0 %     0.0 %

 

22

 

 

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

 

(Dollars in thousands, except per share amounts)

 

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

 

   

September 30, 2017

   

June 30, 2017

 
   

Carrying
Amount

   

Estimated
Fair
Value

   

Carrying
Amount

   

Estimated
Fair
Value

 

Financial Assets:

                               

Level 1 inputs:

                               

Cash and cash equivalents

  $ 14,179     $ 14,179     $ 9,912     $ 9,912  

Level 2 inputs:

                               

Certificates of deposits in other financial institutions

    3,921       3,924       3,921       3,927  

Loans held for sale

    2,061       2,102       1,252       1,286  

Accrued interest receivable

    1,442       1,442       1,212       1,212  

Level 3 inputs:

                               

Securities held-to-maturity

    4,164       4,258       4,259       4,329  

Loans, net

    284,524       284,618       269,781       266,041  

Financial Liabilities:

                               

Level 2 inputs:

                               

Demand and savings deposits

    317,211       317,211       307,960       307,960  

Time deposits

    66,629       66,620       66,511       66,535  

Short-term borrowings

    27,905       27,905       23,986       23,986  

Federal Home Loan Bank advances

    12,304       12,038       12,320       12,054  

Accrued interest payable

    50       50       40       40  

 

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

 

Cash and cash equivalents: The carrying value of cash, deposits in other financial institutions and federal funds sold were considered to approximate fair value resulting in a Level 1 classification.

 

Certificates of deposits in other financial institutions: Fair value of certificates of deposits in other financial institutions was estimated using current rates for deposits of similar remaining maturities resulting in a Level 2 classification.

 

Accrued interest receivable and payable, demand and savings deposits and short-term borrowings: The carrying value of accrued interest receivable and payable, demand and savings deposits and short-term borrowings were considered to approximate fair value due to their short-term duration resulting in a Level 2 classification.

 

23

 

 

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

 

(Dollars in thousands, except per share amounts)

 

Loans held for sale: The fair value of loans held for sale is estimated based upon binding contracts and quotes from third party investors resulting in a Level 2 classification.

 

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

 

Securities held-to-maturity: The held-to-maturity securities are general obligation and revenue bonds made to local municipalities. The fair values of these securities are estimated using a spread to the applicable municipal fair market curve resulting in a Level 3 classification.

 

Time deposits: Fair value of fixed-maturity certificates of deposit was estimated using the rates offered at September 30, 2017 and June 30, 2017, for deposits of similar remaining maturities, resulting in a Level 2 classification. Estimated fair value does not include the benefit that results from low-cost funding provided by the deposit liabilities compared to the cost of borrowing funds in the market.

 

Federal Home Loan Bank advances: Fair value of Federal Home Loan Bank advances was estimated using current rates at September 30, 2017 and June 30, 2017 for similar financing resulting in a Level 2 classification.

 

Federal bank and other restricted stocks, at cost: Federal bank and other restricted stocks include stock acquired for regulatory purposes, such as Federal Home Loan Bank stock and Federal Reserve Bank stock that are accounted for at cost due to restrictions placed on their transferability; and therefore, are not subject to the fair value disclosure requirements.

 

Off-balance sheet commitments: The Corporation’s lending commitments have variable interest rates and “escape” clauses if the customer’s credit quality deteriorates. Therefore, the fair values of these items are not significant and are not included in the above table.

 

24

 

 

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

 

(Dollars in thousands, except per share amounts)

 

Note 5 – Earnings Per Share

 

Basic earnings per share is the amount of earnings available to each share of common stock outstanding during the reporting period and is equal to net income divided by the weighted average number of shares outstanding during the period.  Diluted earnings per share is the amount of earnings available to each share of common stock outstanding during the reporting period adjusted to include the effect of potentially dilutive common shares that may be issued upon the vesting of restricted stock awards.  There were 2,062 shares of restricted stock that were anti-dilutive for the three months ended September 30, 2017. There were no equity instruments that were anti-dilutive for the three months ended September 30, 2016. The following table details the calculation of basic and diluted earnings per share:

 

   

For the Three Months Ended September 30,

 
   

2017

   

2016

 

Basic:

               

Net income available to common shareholders

  $ 929     $