CONSUMERS BANCORP INC /OH/ - Quarter Report: 2021 September (Form 10-Q)

cbkm20210930_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2021

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

Commission File No. 033-79130

CONSUMERS BANCORP, INC.

(Exact name of registrant as specified in its charter)

Ohio	34-1771400
(State or other jurisdiction	(I.R.S. Employer Identification No.)
of incorporation or organization)

614 East Lincoln Way, P.O. Box 256, Minerva, Ohio	44657
(Address of principal executive offices)	(Zip Code)

(330) 868-7701

(Registrant’s telephone number)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☒
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None

There were 3,048,671 shares of Registrant’s common stock, no par value, outstanding as of November 8, 2021.

CONSUMERS BANCORP, INC.

FORM 10-Q

QUARTER ENDED September 30, 2021

Table of Contents

Page

Number (s)

Part I – Financial Information

Item 1 – Financial Statements
Consolidated Balance Sheets at September 30, 2021 and June 30, 2021	1

Consolidated Statements of Income for the three months ended September 30, 2021 and 2020 (unaudited)	2

Consolidated Statements of Comprehensive Income for the three months ended September 30, 2021 and 2020 (unaudited)	3

Condensed Consolidated Statements of Changes in Shareholders’ Equity for the three months ended September 30, 2021 and 2020 (unaudited)	4

Condensed Consolidated Statements of Cash Flows for the three months ended September 30, 2021 and 2020 (unaudited)	5

Notes to the Consolidated Financial Statements (unaudited)	6-20

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations	21-27

Item 3 – Not Applicable for Smaller Reporting Companies

Item 4 – Controls and Procedures	28
Part II – Other Information
Item 1 – Legal Proceedings	29

Item 1A – Not Applicable for Smaller Reporting Companies	29

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds	29

Item 3 – Defaults Upon Senior Securities	29

Item 4 – Mine Safety Disclosure	29

Item 5 – Other Information	29

Item 6 – Exhibits	29

Signatures	30

PART I – FINANCIAL INFORMATION

Item 1 – Financial Statements

CONSUMERS BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)	September 30, 2021 (unaudited)			June 30, 2021
ASSETS
Cash on hand and noninterest-bearing deposits in financial institutions	$	10,104		$	8,902
Federal funds sold and interest-bearing deposits in financial institutions		76,988			9,627
Total cash and cash equivalents		87,092			18,529
Certificates of deposit in other financial institutions		5,560			5,825
Securities, available-for-sale		245,414			207,760
Securities, held-to-maturity (fair value of $8,219 at September 30, 2021 and $8,352 at June 30, 2021)		7,896			7,996
Equity securities, at fair value		424			424
Federal bank and other restricted stocks, at cost		2,472			2,472
Loans held for sale		1,803			1,457
Total loans		577,161			566,427
Less allowance for loan losses		(6,677	)		(6,471	)
Net loans		570,484			559,956
Cash surrender value of life insurance		9,767			9,702
Premises and equipment, net		16,469			15,793
Goodwill		2,452			836
Core deposit intangible, net		513			229
Accrued interest receivable and other assets		3,540			2,825
Total assets	$	953,886		$	833,804

LIABILITIES
Deposits
Noninterest-bearing demand	$	243,418		$	229,102
Interest bearing demand		145,686			127,447
Savings		338,502			282,761
Time		121,580			87,539
Total deposits		849,186			726,849

Short-term borrowings		10,773			12,203
Federal Home Loan Bank advances		16,300			18,050
Accrued interest and other liabilities		6,475			6,802
Total liabilities		882,734			763,904
Commitments and contingent liabilities

SHAREHOLDERS’ EQUITY
Preferred stock (no par value, 350,000 shares authorized, none outstanding)		—			—
Common stock (no par value, 8,500,000 shares authorized; 3,124,053 shares issued as of September 30, 2021 and June 30, 2021)		20,113			20,011
Retained earnings		49,844			47,663
Treasury stock, at cost (75,382 and 95,953 common shares as of September 30, 2021 and June 30, 2021, respectively)		(1,117	)		(1,324	)
Accumulated other comprehensive income		2,312			3,550
Total shareholders’ equity		71,152			69,900
Total liabilities and shareholders’ equity	$	953,886		$	833,804

See accompanying notes to consolidated financial statements.

CONSUMERS BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

	Three Months ended September 30,
(Dollars in thousands, except per share amounts)	2021		2020

Interest and dividend income
Loans, including fees	$	7,068	$	6,489
Securities, taxable		711		372
Securities, tax-exempt		478		420
Equity securities		8		—
Federal bank and other restricted stocks		20		18
Federal funds sold and other interest-bearing deposits		50		47
Total interest and dividend income		8,335		7,346
Interest expense
Deposits		296		577
Short-term borrowings		2		4
Federal Home Loan Bank advances		64		71
Total interest expense		362		652
Net interest income		7,973		6,694
Provision for loan losses		190		130
Net interest income after provision for loan losses		7,783		6,564

Noninterest income
Service charges on deposit accounts		358		307
Debit card interchange income		509		456
Gain on sale of mortgage loans		258		236
Bank owned life insurance income		65		66
Other		83		76
Total noninterest income		1,273		1,141

Noninterest expenses
Salaries and employee benefits		3,247		2,691
Occupancy and equipment		708		640
Data processing expenses		214		186
Debit card processing expenses		268		238
Professional and director fees		344		237
FDIC assessments		84		61
Franchise taxes		133		109
Marketing and advertising		214		134
Telephone and network communications		114		84
Amortization of intangible		11		6
Other		495		413
Total noninterest expenses		5,832		4,799
Income before income taxes		3,224		2,906
Income tax expense		559		505
Net income	$	2,665	$	2,401

Basic and diluted earnings per share	$	0.88	$	0.80

See accompanying notes to consolidated financial statements.

CONSUMERS BANCORP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(Dollars in thousands)	Three Months ended September 30,
	2021			2020

Net income	$	2,665		$	2,401

Other comprehensive income, net of tax:
Net change in unrealized gains (losses) on securities:
Unrealized gains (losses) arising during the period		(1,566	)		70
Income tax effect		328			(14	)
Other comprehensive income (loss)		(1,238	)		56

Total comprehensive income	$	1,427		$	2,457

See accompanying notes to consolidated financial statements.

CONSUMERS BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

(Dollars in thousands, except per share data)	Common Stock		Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
Balance, June 30, 2021	$	20,011	$	47,663		$	(1,324	)	$	3,550		$	69,900
Net income				2,665									2,665
Other comprehensive loss										(1,238	)		(1,238	)
14,963 shares associated with vested stock awards		102					207						309
Cash dividends declared ($0.16 per share)				(484	)								(484	)
Balance, September 30, 2021	$	20,113	$	49,844		$	(1,117	)	$	2,312		$	71,152

Balance, June 30, 2020	$	19,974	$	40,460		$	(1,454	)	$	4,260		$	63,240
Net income				2,401									2,401
Other comprehensive income										56			56
12,522 shares associated with vested stock awards		37					130						167
Cash dividends declared ($0.145 per share)				(437	)								(437	)
Balance, September 30, 2020	$	20,011	$	42,424		$	(1,324	)	$	4,316		$	65,427

See accompanying notes to consolidated financial statements.

CONSUMERS BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)	Three Months Ended September 30,
	2021			2020
Cash flows from operating activities
Net cash from operating activities	$	2,778		$	1,041
Cash flow from investing activities
Purchases of securities, available-for-sale		(31,123	)		(500	)
Maturities, calls and principal pay downs of securities, available-for-sale		7,159			7,355
Principal pay downs of securities, held-to-maturity		100			100
Net decrease in certificate of deposit in other financial institutions		265			2,763
Net decrease (increase) in loans		9,225			(19,327	)
Acquisition, net cash received		66,552			—
Premises and equipment purchases		(528	)		(106	)
Sale of other repossessed assets		—			8
Net cash from investing activities		51,650			(9,707	)
Cash flow from financing activities
Net increase in deposit accounts		17,799			6,743
Net change in short-term borrowings		(1,430	)		1,471
Proceeds from Federal Home Loan Bank advances		—			1,300
Repayments of Federal Home Loan Bank advances		(1,750	)		(1,562	)
Dividends paid		(484	)		(437	)
Net cash from financing activities		14,135			7,515
Increase (decrease) in cash or cash equivalents		68,563			(1,151	)
Cash and cash equivalents, beginning of period		18,529			9,659
Cash and cash equivalents, end of period	$	87,092		$	8,508

Supplemental disclosure of cash flow information:
Cash paid during the period:
Interest	$	347		$	652
Federal income taxes		—			300
Non-cash items:
Issuance of treasury stock for stock awards		309			167
Branch acquisition:
Noncash assets acquired:
Securities, available-for-sale		15,602
Loans		19,943
Premises and equipment		413
Goodwill		1,616
Core deposit intangible		295
Accrued interest receivable and other assets		216
Total noncash assets acquired		38,085
Liabilities assumed:
Deposits		104,538
Other liabilities		99
Total liabilities assumed		104,637
Net noncash assets acquired		(66,552	)

See accompanying notes to consolidated financial statements.

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited)

(Dollars in thousands, except per share 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, Pennsylvania, and West Virginia. The Bank’s business involves attracting deposits from businesses and individual customers and using such deposits to originate commercial, mortgage and consumer loans in its primary market area.

Basis of Presentation: The consolidated financial statements for interim periods are unaudited and reflect all adjustments (consisting of only normal recurring adjustments), which, in the opinion of management, are necessary to present fairly the financial position and results of operations and cash flows for the periods presented. The unaudited financial statements are presented in accordance with the requirements of Form 10-Q and do not include all disclosures normally required by accounting principles generally accepted in the United States of America. The financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Corporation’s Form 10-K for the year ended June 30, 2021. The results of operations for the interim period disclosed herein are not necessarily indicative of the results that may be expected for a full year.

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

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

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

Recently Issued Accounting Pronouncements Not Yet Effective: In June 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU adds a new Topic 326 to the codification and removes the thresholds that companies apply to measure credit losses on financial instruments measured at amortized cost, such as loans, receivables, and held-to-maturity debt securities. Under current U.S. generally accepted accounting principles, companies generally recognize credit losses when it is probable that the loss has been incurred. The revised guidance will remove all current loss recognition thresholds and will require companies to recognize an allowance for credit losses for the difference between the amortized cost basis of a financial instrument and the amount of amortized cost that the corporation expects to collect over the instrument’s contractual life. ASU 2016-13 also amends the credit loss measurement guidance for available-for-sale debt securities and beneficial interests in securitized financial assets. The guidance in ASU 2016-13 is effective for “public business entities,” as defined in the guidance, that are SEC filers for fiscal years and for interim periods within those fiscal years beginning after December 15, 2019. Early adoption of the guidance is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. However, during July 2019, FASB unanimously voted for a proposal to delay this ASU to January 2023 for smaller reporting companies. On October 16, 2019, FASB approved a final ASU delaying the effective date. The new guidance is effective for annual and interim periods beginning after December 15, 2022 for certain entities, including smaller reporting companies. The Corporation is a smaller reporting company. The Corporation is evaluating how adopting this new guidance will impact the consolidated financial statements and the Corporation’s current systems and processes. The Corporation is reviewing potential methodologies for estimating expected credit losses using reasonable and supportable forecast information and has identified certain data and system requirements. Once the new guidance is adopted, we expect our allowance for loan losses to increase through a one-time adjustment to retained earnings; however, until our evaluation is complete, the estimated increase in allowance will be unknown. The Corporation is planning to adopt this new guidance within the time frame noted above.

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

(Dollars in thousands, except per share amounts)

Note 2 – Acquisition

On July 16, 2021, the Corporation completed its acquisition of two branches located in Calcutta and Wellsville, Ohio from CFBank, National Association. In connection with the acquisition, the Corporation assumed $104,538 in branch deposits for a deposit premium of 1.75%. In addition, the Corporation acquired $15,602 of subordinated debt securities issued by unrelated financial institutions and $19,943 of loans. This transaction qualifies as a business combination.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed by the Corporation at the date of acquisition. The core deposit intangible will be amortized over ten years on a straight-line basis. Goodwill will not be amortized, but instead will be evaluated for impairment.

Assets acquired:
Cash and cash equivalents	$	515
Securities, available-for-sale		15,602
Loans		19,943
Premises and equipment		413
Core deposit intangible		295
Accrued interest receivable		216
Total assets acquired		36,984
Liabilities assumed:
Noninterest-bearing deposits		10,535
Interest-bearing deposits		94,003
Other liabilities		99
Total liabilities assumed		104,637
Fair value of net liabilities assumed		(67,653	)
Cash received		66,037
Goodwill	$	1,616

The acquired assets and liabilities were measured at estimated fair values. Management made certain estimates and exercised judgement in accounting for the acquisition. The fair value of loans was estimated using discounted contractual cash flows. The book balance of the loans at the time of the acquisition was $20,325. The fair value disclosed above reflects a credit-related adjustment of $(388) and an adjustment for other factors of $6. Loans evidencing credit deterioration since origination, purchased credit impaired loans, included in loans receivable were immaterial. Acquisition costs of $144 pre-tax, or $118 after-tax, were recorded during the first quarter of fiscal year 2022. The fair value measurements of assets acquired and liabilities assumed are subject to refinement for up to one year after the closing date of the acquisition as additional information relative to closing date fair values becomes available.

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

(Dollars in thousands, except per share amounts)

Note 3 – Securities

Debt securities

The following tables summarize the Corporation’s debt securities as of September 30, 2021 and June 30, 2021:

Available –for-Sale	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
September 30, 2021
Obligations of U.S. government-sponsored entities and agencies	$	14,248	$	186	$	(115	)	$	14,319
Obligations of state and political subdivisions		77,315		3,091		(225	)		80,181
U.S. Government-sponsored mortgage-backed securities–residential		104,215		1,097		(1,110	)		104,202
U.S. Government-sponsored mortgage-backed securities– commercial		8,636		37		(23	)		8,650
U.S. Government-sponsored collateralized mortgage obligations– residential		22,010		100		(121	)		21,989
Other debt securities		16,063		77		(67	)		16,073
Total securities available-for-sale	$	242,487	$	4,588	$	(1,661	)	$	245,414

Held-to-Maturity	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses		Fair Value
September 30, 2021
Obligations of state and political subdivisions	$	7,896	$	323	$	—	$	8,219

Available–for-Sale	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
June 30, 2021
Obligations of U.S. government-sponsored entities and agencies	$	14,746	$	301	$	(14	)	$	15,033
Obligations of state and political subdivisions		73,013		3,561		(75	)		76,499
U.S. Government-sponsored mortgage-backed securities – residential		90,065		1,136		(684	)		90,517
U.S. Government-sponsored mortgage-backed securities – commercial		8,641		204		—			8,845
U.S. Government-sponsored collateralized mortgage obligations – residential		16,302		129		(57	)		16,374
Other debt securities		500		—		(8	)		492
Total securities available-for-sale	$	203,267	$	5,331	$	(838	)	$	207,760

Held-to-Maturity	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses		Fair Value
June 30, 2021
Obligations of state and political subdivisions	$	7,996	$	356	$	—	$	8,352

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

(Dollars in thousands, except per share amounts)

The amortized cost and fair values of debt securities at September 30, 2021, by expected maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date, primarily mortgage-backed securities, are shown separately.

Available-for-Sale	Amortized Cost		Estimated Fair Value
Due in one year or less	$	5,366	$	5,401
Due after one year through five years		25,848		26,285
Due after five years through ten years		22,183		22,527
Due after ten years		54,229		56,360
Total		107,626		110,573

U.S. Government-sponsored mortgage-backed and related securities		134,861		134,841
Total securities available-for-sale	$	242,487	$	245,414

Held-to-Maturity
Due after one year through five years	$	294	$	305
Due after five years through ten years		5,367		4,854
Due after ten years		2,235		3,060
Total securities held-to-maturity	$	7,896	$	8,219

Securities with a carrying value of approximately $114,320 and $96,970 were pledged at September 30, 2021 and June 30, 2021, respectively, to secure public deposits and commitments as required or permitted by law.

The following table summarizes the securities with unrealized losses at September 30, 2021 and June 30, 2021, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:

	Less than 12 Months					12 Months or more				Total
Available-for-sale	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
September 30, 2021
Obligations of U.S. government-sponsored entities and agencies	$	5,696	$	(115	)	$	—	$	—	$	5,696	$	(115	)
Obligations of state and political subdivisions		14,428		(225	)		—		—		14,428		(225	)
U.S. Government-sponsored mortgage-backed securities – residential		62,030		(1,110	)		—		—		62,030		(1,110	)
U.S. Government-sponsored mortgage-backed securities – commercial		2,783		(23	)		—		—		2,783		(23	)
Collateralized mortgage obligations - residential		14,488		(121	)		—		—		14,488		(121	)
Other debt securities		9,729		(67	)		—		—		9,729		(67	)
Total temporarily impaired	$	109,154	$	(1,661	)	$	—	$	—	$	109,154	$	(1,661	)

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

(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
June 30, 2021
Obligations of U.S. government-sponsored entities and agencies	$	2,003	$	(14	)	$	—	$	—		$	2,003	$	(14	)
Obligations of state and political subdivisions		7,398		(75	)		—		—			7,398		(75	)
Mortgage-backed securities – residential		42,378		(684	)		—		—			42,378		(684	)
Collateralized mortgage obligations - residential		7,707		(56	)		552		(1	)		8,259		(57	)
Other debt securities		492		(8	)		—		—			492		(8	)
Total temporarily impaired	$	59,978	$	(837	)	$	552	$	(1	)	$	60,530	$	(838	)

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.

At September 30, 2021, there were a total of 87 available-for-sale securities in the portfolio with unrealized losses mainly due to an increase in market rates when compared to the time of purchase. The unrealized losses within the securities portfolio as of September 30, 2021 have not been recognized into income because the decline in fair value is not attributed to credit quality and management does not intend to sell, and it is not likely that management will be required to sell, the securities prior to their anticipated recovery. The mortgage-backed securities and collateralized mortgage obligations were primarily issued by Fannie Mae, Freddie Mac and Ginnie Mae, institutions which the government has affirmed its commitment to support. The Corporation does not own any private label mortgage-backed securities.

Equity Securities

As of September 30, 2021 and June 30, 2021, the Corporation owned equity securities with an amortized cost of $400 and fair value of $424. Changes in the fair value of these securities are included in noninterest income on the consolidated statements of income. There were no unrealized gains and losses on equity securities during the three-month periods ended September 30, 2021 and 2020. Also, there were no sales of equity securities during the three-month periods ended September 30, 2021 and 2020.

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

(Dollars in thousands, except per share amounts)

Note 4 – Loans

Major classifications of loans were as follows:

	September 30, 2021			June 30, 2021
Commercial	$	95,568		$	112,337
Commercial real estate:
Construction		17,477			10,525
Other		269,627			269,679
1 – 4 Family residential real estate:
Owner occupied		137,037			118,269
Non-owner occupied		20,123			19,151
Construction		6,591			9,073
Consumer		32,109			29,646
Subtotal		578,532			568,680
Net deferred loan fees and costs		(1,371	)		(2,253	)
Allowance for loan losses		(6,677	)		(6,471	)
Net Loans	$	570,484		$	559,956

The commercial loan category in the above table includes PPP loans of $29,505 as of September 30, 2021 and $50,686 as of June 30, 2021.

The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ended September 30, 2021:

					1-4 Family
			Commercial		Residential
			Real		Real
	Commercial		Estate		Estate		Consumer			Total

Allowance for loan losses:
Beginning balance	$	904	$	3,949	$	1,307	$	311		$	6,471
Provision for loan losses		2		36		110		42			190
Loans charged-off		—		—		—		(34	)		(34	)
Recoveries		—		—		13		37			50
Total ending allowance balance	$	906	$	3,985	$	1,430	$	356		$	6,677

The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ended September 30, 2020:

						1-4 Family
				Commercial		Residential
				Real		Real
	Commercial			Estate		Estate		Consumer			Total

Allowance for loan losses:
Beginning balance	$	947		$	3,623	$	989	$	119		$	5,678
Provision for loan losses		15			70		8		37			130
Loans charged-off		(22	)		—		—		(44	)		(66	)
Recoveries		—			1		—		24			25
Total ending allowance balance	$	940		$	3,694	$	997	$	136		$	5,767

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, 2021. Included in the recorded investment in loans is $1,292 of accrued interest receivable.

					1-4 Family
			Commercial		Residential
			Real		Real
	Commercial		Estate		Estate		Consumer		Total
Ending allowance for loan losses balance attributable to loans:
Individually evaluated for impairment	$	—	$	—	$	3	$	—	$	3
Acquired loans collectively evaluated for impairment		1		67		100		—		168
Originated loans collectively evaluated for impairment		905		3,918		1,327		356		6,506
Total ending allowance balance	$	906	$	3,985	$	1,430	$	356	$	6,677

Recorded investment in loans:
Loans individually evaluated for impairment	$	429	$	911	$	558	$	—	$	1,898
Acquired loans collectively evaluated for impairment		810		12,219		32,402		5,807		51,238
Originated loans collectively evaluated for impairment		93,125		273,879		132,022		26,291		525,317
Total ending loans balance	$	94,364	$	287,009	$	164,982	$	32,098	$	578,453

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, 2021. Included in the recorded investment in loans is $1,184 of accrued interest receivable.

					1-4 Family
			Commercial		Residential
			Real		Real
	Commercial		Estate		Estate		Consumer		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	1	$	—	$	3	$	—	$	4
Acquired loans collectively evaluated for impairment		—		83		77		—		160
Originated loans collectively evaluated for impairment		903		3,866		1,227		311		6,307
Total ending allowance balance	$	904	$	3,949	$	1,307	$	311	$	6,471

Recorded investment in loans:
Loans individually evaluated for impairment	$	437	$	921	$	596	$	—	$	1,954
Acquired loans collectively evaluated for impairment		834		6,542		21,363		6,488		35,227
Originated loans collectively evaluated for impairment		109,016		272,563		125,689		23,162		530,430
Total ending loans balance	$	110,287	$	280,026	$	147,648	$	29,650	$	567,611

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

(Dollars in thousands, except per share amounts)

The following table presents information related to unpaid principal balance, recorded investment and interest income associated with loans individually evaluated for impairment by class of loans as of September 30, 2021 and for the three months ended September 30, 2021:

	As of September 30, 2021						Three Months ended September 30, 2021
	Unpaid				Allowance for Loan		Average		Interest		Cash Basis
	Principal		Recorded		Losses		Recorded		Income		Interest
	Balance		Investment		Allocated		Investment		Recognized		Recognized
With no related allowance recorded:
Commercial	$	421	$	298	$	—	$	299	$	—	$	—
Commercial real estate:
Other		1,053		911		—		914		3		3
1-4 Family residential real estate:
Owner occupied		403		359		—		363		2		2
Non-owner occupied		267		199		—		200		—		—
With an allowance recorded:
Commercial		130		131		3		131		2		2
Total	$	2,274	$	1,898	$	3	$	1,907	$	7	$	7

The following table presents information related to unpaid principal balance, recorded investment and interest income associated with loans individually evaluated for impairment by class of loans as of June 30, 2021 and for the three months ended September 30, 2020:

	As of June 30, 2021						Three Months ended September 30, 2020
	Unpaid				Allowance for Loan		Average		Interest		Cash Basis
	Principal		Recorded		Losses		Recorded		Income		Interest
	Balance		Investment		Allocated		Investment		Recognized		Recognized
With no related allowance recorded:
Commercial	$	421	$	303	$	—	$	—	$	—	$	—
Commercial real estate:
Other		1,062		921		—		826		1		1
1-4 Family residential real estate:
Owner occupied		409		367		—		539		6		6
Non-owner occupied		267		202		—		229		—		—
With an allowance recorded:
Commercial		133		134		1		171		2		2
Commercial real estate:
Other		—		—		—		206		3		3
1-4 Family residential real estate:
Owner occupied		28		27		3		—		—		—
Total	$	2,320	$	1,954	$	4	$	1,971	$	12	$	12

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

(Dollars in thousands, except per share amounts)

The following table presents the recorded investment in non-accrual and loans past due over 90 days still on accrual by class of loans as of September 30, 2021 and June 30, 2021:

	September 30, 2021				June 30, 2021
			Loans Past Due				Loans Past Due
			Over 90 Days				Over 90 Days
			Still				Still
	Non-accrual		Accruing		Non-accrual		Accruing
Commercial	$	298	$	—	$	303	$	—
Commercial real estate:
Other		865		—		874		—
1 – 4 Family residential:
Owner occupied		357		—		392		29
Non-owner occupied		199		—		202		—
Consumer		—		—		—		12
Total	$	1,719	$	—	$	1,771	$	41

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

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

(Dollars in thousands, except per share amounts)

The following table presents the aging of the recorded investment in past due loans as of September 30, 2021 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	$	—	$	—	$	—	$	—	$	94,364	$	94,364
Commercial real estate:
Construction		—		—		—		—		17,459		17,459
Other		—		—		629		629		268,921		269,550
1-4 Family residential:
Owner occupied		—		209		123		332		137,854		138,186
Non-owner occupied		—		—		—		—		20,131		20,131
Construction		—		—		—		—		6,665		6,665
Consumer		130		16		—		146		31,952		32,098
Total	$	130	$	225	$	752	$	1,107	$	577,346	$	578,453

The above table of past due loans includes the recorded investment in non-accrual loans of $209 in the 60 to 89 days category, $752 in the 90 days or greater category and $758 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, 2021 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	$	—	$	—	$	—	$	—	$	110,287	$	110,287
Commercial real estate:
Construction		—		—		—		—		10,478		10,478
Other		—		175		629		804		268,744		269,548
1-4 Family residential:
Owner occupied		29		—		365		394		118,937		119,331
Non-owner occupied		—		—		—		—		19,148		19,148
Construction		—		—		—		—		9,169		9,169
Consumer		95		11		—		106		29,544		29,650
Total	$	124	$	186	$	994	$	1,304	$	566,307	$	567,611

The above table of past due loans includes the recorded investment in non-accrual loans of $994 in the 90 days or greater category and $777 in the loans not past due category.

Troubled Debt Restructurings (TDR):

The Corporation has certain loans that have been modified in order to maximize collection of loan balances that are classified as TDRs. A modified loan is usually classified as a TDR if, for economic reasons, management grants a concession to the original terms and conditions of the loan to a borrower who is experiencing financial difficulties that it would not have otherwise considered. In response to COVID-19, on March 22, 2020 the Corporation adopted a loan modification program to assist borrowers impacted by the virus. The program is available to most borrowers whose loan was not past due on March 22, 2020, the date this loan modification program was adopted. The program offers principal and interest payment deferrals for up to 90 days or interest only payments for up to 90 days. Borrowers are eligible for an additional 90 days of payment deferrals if situations warrant a need for an extension. Interest will be deferred but will continue to accrue during the deferment period and the maturity date on amortizing loans will be extended by the number of months the payment was deferred. Consistent with issued regulatory guidance, modifications made under this program in response to COVID-19 will not be classified as TDRs. As of September 30, 2021, four borrowers with an aggregate outstanding balance of $51 are in payment deferral status under this loan modification program.

As of September 30, 2021 and June 30, 2021, the Corporation had $675 and $688, respectively, of loans classified as TDRs which are included in impaired loans above. As of September 30, 2021 and June 30, 2021, the Corporation had not committed to lend any additional funds to customers with outstanding loans that were classified as troubled debt restructurings. As of September 30, 2021 and June 30, 2021, the Corporation had $3 and $4, respectively, of specific reserve allocated to these loans.

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

(Dollars in thousands, except per share amounts)

During the three-month periods ended September 30, 2021 and 2020, 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, 2021 and 2020.

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, 2021 and 2020. A loan is considered in payment default once it is 90 days contractually past due under the modified terms.

Credit Quality Indicators:

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

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

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

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

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered pass rated loans. Loans listed as not rated are either less than $100 or are included in groups of homogeneous loans. Generally, 1-4 Family Residential and Consumer loans are not risk rated, except when collateral is used for a business purpose. These loans are evaluated based on delinquency status, which are disclosed in the previous table within this footnote. Based on the most recent analysis performed, the recorded investment by risk category of loans by class of loans was as follows:

	As of September 30, 2021
			Special						Not
	Pass		Mention		Substandard		Doubtful		Rated
Commercial	$	92,817	$	707	$	291	$	298	$	251
Commercial real estate:
Construction		17,459		—		—		—		—
Other		258,628		4,430		4,677		865		950
1-4 Family residential real estate:
Owner occupied		1,028		—		6		357		136,795
Non-owner occupied		19,425		157		79		199		271
Construction		1,439		—		—		—		5,226
Consumer		551		—		—		—		31,547
Total	$	391,347	$	5,294	$	5,053	$	1,719	$	175,040

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

(Dollars in thousands, except per share amounts)

As of June 30, 2021, and based on the most recent analysis performed, the recorded investment by risk category of loans by class of loans is as follows:

	As of June 30, 2021
			Special						Not
	Pass		Mention		Substandard		Doubtful		Rated
Commercial	$	109,118	$	280	$	309	$	303	$	277
Commercial real estate:
Construction		10,478		—		—		—		—
Other		259,327		3,700		4,718		874		929
1-4 Family residential real estate:
Owner occupied		1,715		—		6		392		117,218
Non-owner occupied		18,312		163		197		202		274
Construction		1,849		—		—		—		7,320
Consumer		694		—		—		—		28,956
Total	$	401,493	$	4,143	$	5,230	$	1,771	$	154,974

Note 5 - Fair Value

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

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

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

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

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

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

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

(Dollars in thousands, except per share amounts)

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

	Balance at		Fair Value Measurements at September 30, 2021
	September 30, 2021		Level 1		Level 2		Level 3
Assets:
Obligations of U.S. government-sponsored entities and agencies	$	14,319	$	—	$	14,319	$	—
Obligations of state and political subdivisions		80,181		—		80,181		—
U.S. Government-sponsored mortgage-backed securities – residential		104,202		—		104,202		—
U.S. Government-sponsored mortgage-backed securities – commercial		8,650		—		8,650		—
U.S. Government-sponsored collateralized mortgage obligations - residential		21,989		—		21,989		—
Other debt securities		16,073		—		16,073		—
Equity securities		424		—		424		—

	Balance at		Fair Value Measurements at June 30, 2021
	June 30, 2021		Level 1		Level 2		Level 3
Assets:
Obligations of U.S. government-sponsored entities and agencies	$	15,033	$	—	$	15,033	$	—
Obligations of state and political subdivisions		76,499		—		76,499		—
U.S. government-sponsored mortgage-backed securities - residential		90,517		—		90,517		—
U.S. government-sponsored mortgage-backed securities - commercial		8,845		—		8,845		—
U.S. government-sponsored collateralized mortgage obligations - residential		16,374		—		16,374		—
Other debt securities		492		—		492		—
Equity securities		424		—		424		—

There were no transfers between Level 1 and Level 2 during the three-month period ended September 30, 2021.

Certain assets and liabilities are measured at fair value on a non-recurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances. Assets and liabilities 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. There were no impaired loans measured at fair value on a non-recurring basis at September 30, 2021 or June 30, 2021 and there was no impact to the provision for loan losses for the three -month periods ended September 30, 2021 or 2020.

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

(Dollars in thousands, except per share amounts)

Other Real Estate and Repossessed Assets Owned: Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Real estate owned properties and other repossessed assets, which are primarily vehicles, are evaluated on a quarterly basis for additional impairment and adjusted accordingly. There was no other real estate owned or other repossessed assets being carried at fair value as of September 30, 2021 and June 30, 2021.

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, 2021				June 30, 2021
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial Assets:
Level 1 inputs:
Cash and cash equivalents	$	87,092	$	87,092	$	18,529	$	18,529
Level 2 inputs:
Certificates of deposit in other financial institutions		5,560		5,693		5,825		5,955
Loans held for sale		1,803		1,834		1,457		1,488
Accrued interest receivable		2,531		2,531		2,077		2,077
Level 3 inputs:
Securities held-to-maturity		7,896		8,219		7,996		8,352
Loans, net		570,484		578,780		559,956		560,208
Financial Liabilities:
Level 2 inputs:
Demand and savings deposits		727,606		727,606		639,310		639,310
Time deposits		121,580		122,296		87,539		88,147
Short-term borrowings		10,773		10,773		12,203		12,203
Federal Home Loan Bank advances		16,300		16,342		18,050		18,247
Accrued interest payable		66		66		51		51

Note 6 – Earnings Per Share

Basic earnings per share is the amount of earnings available to each share of common stock outstanding during the reporting period and is equal to net income divided by the weighted average number of shares outstanding during the period. Diluted earnings per share is the amount of earnings available to each share of common stock outstanding during the reporting period adjusted to include the effect of potentially dilutive common shares that may be issued upon the vesting of restricted stock awards. There were 11,461 shares of restricted stock that were anti-dilutive for the three-month period ended September 30, 2020. The following table details the calculation of basic and diluted earnings per share:

	For the Three Months Ended September 30,
	2021		2020
Basic:
Net income available to common shareholders	$	2,665	$	2,401
Weighted average common shares outstanding		3,024,794		3,010,844
Basic income per share	$	0.88	$	0.80

Diluted:
Net income available to common shareholders	$	2,665	$	2,401
Weighted average common shares outstanding		3,024,794		3,010,844
Dilutive effect of restricted stock		202		—
Total common shares and dilutive potential common shares		3,024,996		3,010,844
Dilutive income per share	$	0.88	$	0.80

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

(Dollars in thousands, except per share amounts)

Note 7 –Accumulated Other Comprehensive Income (Loss)

The components of other comprehensive income related to unrealized gains and losses on available-for-sale securities and equity securities for the three-period ended September 30, 2021 and 2020, were as follows:

	Pretax			Tax Effect			After-tax			Affected Line Item in Consolidated Statements of Income
Balance as of June 30, 2021	$	4,493		$	(943	)	$	3,550
Unrealized holding losses on securities arising during the period		(1,566	)		328			(1,238	)	(a)(b)
Balance as of September 30, 2021	$	2,927		$	(615	)	$	2,312

Balance as of June 30, 2020	$	5,393		$	(1,133	)	$	4,260
Unrealized holding gains on available-for-sale securities arising during the period		70			(14	)		56		(a)(b)
Balance after reclassification as of September 30, 2020	$	5,463		$	(1,147	)	$	4,316

(a) Securities (gains) losses, net

(b) Income tax expense

Note 8 – COVID-19

In December 2019, a novel strain of coronavirus surfaced in Wuhan, China, and has spread around the world, resulting in business and social disruption. The coronavirus was declared a Pandemic by the World Health Organization on March 11, 2020. The operations and business results of the Corporation could be materially adversely affected. The extent to which the coronavirus may impact business activity or investment results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the coronavirus and the actions required to contain the coronavirus or treat its impact, among others. As a result of the economic shutdown engineered to slow down the spread of COVID-19, the ability of our customers to make payments on loans could be adversely impacted, resulting in elevated loan losses and an increase in the Corporation’s allowance for loan losses.

CONSUMERS BANCORP, INC.

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

(Dollars in thousands, except per share data)

General

The following is management’s analysis of the Corporation’s results of operations for the three-month periods ended September 30, 2021, compared to the same period in 2020, and the consolidated balance sheet at September 30, 2021, compared to June 30, 2021. This discussion is designed to provide a more comprehensive review of the operating results and financial condition than could be obtained from an examination of the financial statements alone. This analysis should be read in conjunction with the consolidated financial statements and related footnotes and the selected financial data included elsewhere in this report.

Overview

Consumers Bancorp, Inc., a bank holding company incorporated under the laws of the State of Ohio (the Corporation), owns all the issued and outstanding common shares of Consumers National Bank, a bank chartered under the laws of the United States of America (the Bank). The Corporation’s activities have been limited primarily to holding the common shares of the Bank. The Bank’s business involves attracting deposits from businesses and individual customers and using such deposits to originate commercial, mortgage and consumer loans in its market area, consisting primarily of Carroll, Columbiana, Jefferson, Stark, Summit, Wayne and contiguous counties in Ohio, Pennsylvania, and West Virginia. The Bank also invests in securities consisting primarily of U.S. government sponsored entities, municipal obligations, mortgage-backed and collateralized mortgage obligations issued by Fannie Mae, Freddie Mac and Ginnie Mae.

On July 16, 2021, the Corporation completed its acquisition of two branches located in Calcutta and Wellsville, Ohio from CFBank, National Association. As part of the acquisition, the Corporation assumed $104,538 of branch deposits for a 1.75% deposit premium and purchased $15,602 in subordinated debt securities issued by unrelated financial institutions and $19,943 in loans. In relation to the acquisition, the Corporation recorded goodwill of $1,616.

COVID-19 Pandemic

In response to COVID-19, management actively pursued multiple avenues to assist customers during these uncertain times. For commercial borrowers, the Coronavirus Aid, Relief and Economic Security Act (the CARES Act) includes key SBA initiatives to assist small businesses. The Paycheck Protection Program (PPP) was designed to provide a direct incentive for small businesses to keep their workers on the payroll. The SBA will forgive loans obtained under this program if the borrower meets payroll and other requirements. The Bank originated a total of $113,367 of PPP loans during the first and second rounds of assistance. As of September 30, 2021, there were $29,505 of PPP loans outstanding.

Additionally, on March 22, 2020 the Corporation adopted a loan modification program to assist borrowers impacted by COVID-19. The program is available to most borrowers whose loan was not past due on March 22, 2020, the date this loan modification program was adopted. The program offers principal and interest payment deferrals for up to 90 days or interest only payments for up to 90 days. Borrowers are eligible for an additional 90 days of payment deferrals if situations warrant a need for an extension. Interest will be deferred but will continue to accrue during the deferment period and the maturity date on amortizing loans will be extended by the number of months the payment was deferred. Consistent with issued regulatory guidance, modifications made under this program in response to COVID-19 will not be classified as troubled debt restructurings. As of September 30, 2021, four borrowers with an outstanding balance of $51 are in payment deferral status under this loan modification program.

We have assisted, and may continue to assist, customers who are experiencing financial hardship due to COVID-19 by waiving late charges, refunding NSF and overdraft fees, and waiving CD prepayment penalties. The consumer reserve personal line of credit, an unsecured line of credit that is linked to a personal checking account, was redesigned to provide easier access and a lower initial rate.

Given the dynamic nature of the circumstances surrounding the pandemic, it is difficult to ascertain the full impact that the ongoing economic disruption will have on the Corporation. The Corporation has modified its business practices with a portion of employees working remotely from their homes to limit interruptions to operations as much as possible and to help reduce the risk of COVID-19 infecting entire departments. The branch lobbies were closed at various times throughout the pandemic but are now open for normal business. The Corporation is encouraging virtual meetings and conference calls in place of in-person meetings. Additionally, travel for business has been restricted. The Corporation is promoting social distancing, frequent hand washing and thorough disinfection of all surfaces. The Corporation will continue to closely monitor situations arising from the pandemic and adjust operations accordingly.

CONSUMERS BANCORP, INC.

Management's Discussion and Analysis of Financial Condition

and Results of Operations (continued)

(Dollars in thousands, except per share data)

Results of Operations

Three-Month Periods Ended September 30, 2021 and 2020

Net income for the first quarter of fiscal year 2022 was $2,665, or $0.88 per common share, compared to $2,401, or $0.80 per common share for the three months ended September 20, 2020. The following are key highlights of our results of operations for the three months ended September 30, 2021 compared to the prior fiscal year comparable period:

	●	net interest income increased by $1,279 to $7,973, or 19.1%, in the first quarter of fiscal year 2022 from the same prior year period primarily as a result of the recognition of origination fees on PPP loans that were forgiven during the quarter, the growth in average interest-earning assets along with a reduction in the cost of funds;
	●	a $190 provision for loans loss expense was recorded for the first quarter of fiscal year 2022 compared with $130 for the same prior year period;
	●	noninterest income increased by $132 in the first quarter of fiscal year 2022 from the same prior year period primarily due to a $53, or 11.6%, increase in debit card interchange income, a $51, or 16.6%, increase in service charges on deposit accounts and a $22, or 9.3%, increase on gains on the sale of mortgage loans; and
	●	noninterest expenses increased by $1,033 in the first quarter of fiscal year 2022 from the same prior year period primarily due to increases in salaries and employee benefits; professional and director fees; and marketing and advertising expenses contributing to the increase.

Return on average equity and return on average assets were 14.75% and 1.14%, respectively, for the three months ended September 30, 2021 compared to 14.74% and 1.29%, respectively, for the same prior year period.

Net Interest Income

Net interest income, the difference between interest income earned on interest-earning assets and interest expense incurred on interest-bearing liabilities, is the largest component of the Corporation’s earnings. Net interest income is affected by changes in the volumes, rates and composition of interest-earning assets and interest-bearing liabilities. In addition, prevailing economic conditions, fiscal and monetary policies and the policies of various regulatory agencies all affect market rates of interest and the availability and cost of credit, which, in turn, can significantly affect net interest income. As a result of the Federal Open Market Committee establishing a near-zero target range for the federal funds rate, earnings could be negatively affected if the interest we receive on loans and securities falls more quickly than interest we pay on deposits and borrowings. Net interest margin is calculated by dividing net interest income on a fully tax equivalent basis (FTE) by total average interest-earning assets. FTE income includes tax-exempt income, restated to a pre-tax equivalent, based on the statutory federal income tax rate. The federal income tax rate in effect for the 2022 and 2021 fiscal years was 21.0%. All average balances are daily average balances. Non-accruing loans are included in average loan balances.

The Corporation’s net interest margin was 3.62% for the three months ended September 30, 2021, compared with 3.84% for the same period in 2020. FTE net interest income for the three months ended September 30, 2021 increased by $1,300, or 19.1%, to $8,092 from $6,792 for the same prior year period.

Tax-equivalent interest income for the three months ended September 30, 2021 increased by $1,010, or 13.6%, from the same prior year period. Interest income was positively impacted by the recognition of origination fees on PPP loans that were forgiven during the quarter. The PPP loans had an average balance of $42,735 in the first quarter of fiscal year 2022 and, during this same period, $997 of interest and fee income was recognized on the PPP loans. Interest income was also positively impacted by a $185,452, or 26.2%, increase in average interest-earning assets from the same prior year period due to the additional assets acquired as part of the branch acquisition. The yield on average interest-earning assets declined to 3.78% for the three months ended September 30, 2021 compared with 4.21% for the same period last year. A reduction in the accretion of origination fees from PPP loans as these loans are forgiven combined with the significant decline in interest rates, will continue to impact the yield on interest-earning assets and could ultimately result in a decline in interest income.

Interest expense for the three months ended September 30, 2021 decreased by $290, or 44.5%, from the same prior year period primarily due to a reduction in deposit and borrowing costs as a result of lower market interest rates. The Corporation’s cost of funds was 0.23% for the three months ended September 30, 2021 compared with 0.54% for the same prior year period.

CONSUMERS BANCORP, INC.

Management's Discussion and Analysis of Financial Condition

and Results of Operations (continued)

(Dollars in thousands, except per share data)

Average Balance Sheets and Analysis of Net Interest Income for the Three Months Ended September 30,

(In thousands, except percentages)

	2021								2020
	Average Balance			Interest		Yield/ Rate			Average Balance			Interest		Yield/ Rate
Interest-earning assets:
Taxable securities	$	153,942		$	711		1.85	%	$	78,430		$	372		1.94	%
Nontaxable securities (1)		82,250			595		3.00			66,475			514		3.23
Loans receivable (1)		578,361			7,070		4.85			544,164			6,493		4.73
Federal bank and other restricted stocks		2,472			20		3.21			2,472			18		2.89
Equity securities		400			8		7.93			—			—		—
Interest bearing deposits and federal funds sold		74,641			50		0.27			15,073			47		1.24
Total interest-earning assets		892,066			8,454		3.78	%		706,614			7,444		4.21	%

Noninterest-earning assets		35,102								30,338

Total Assets	$	927,168							$	736,952

Interest-bearing liabilities:
NOW	$	137,899		$	33		0.09	%	$	102,102		$	45		0.17	%
Savings		324,680			89		0.11			228,493			105		0.18
Time deposits		121,112			174		0.57			114,816			427		1.48
Short-term borrowings		11,568			2		0.07			7,881			4		0.20
FHLB advances		16,597			64		1.53			24,111			71		1.17
Total interest-bearing liabilities		611,856			362		0.23	%		477,403			652		0.54	%

Noninterest-bearing liabilities:
Noninterest-bearing checking accounts		236,456								189,134
Other liabilities		7,164								5,797
Total liabilities		855,476								672,334
Shareholders’ equity		71,692								64,618

Total liabilities and shareholders’ equity	$	927,168							$	736,952

Net interest income, interest rate spread (1)				$	8,092		3.55	%				$	6,792		3.67	%

Net interest margin (net interest as a percent of average interest-earning assets) (1)							3.62	%							3.84	%

Federal tax exemption on non-taxable securities and loans included in interest income				$	119							$	98

Average interest-earning assets to interest-bearing liabilities		145.80	%							148.01	%

(1) calculated on a fully taxable equivalent basis utilizing a statutory federal income tax rate of 21.0%

CONSUMERS BANCORP, INC.

Management's Discussion and Analysis of Financial Condition

and Results of Operations (continued)

(Dollars in thousands, except per share data)

Provision for Loan Losses

The provision for loan losses represents the charge to income necessary to adjust the allowance for loan losses to an amount that represents management’s assessment of the estimated probable incurred credit losses in the Bank’s loan portfolio that have been incurred at each balance sheet date. For the three-month period ended September 30, 2021, the provision for loan losses was $190 compared with $130 for the same prior year period. Net recoveries of $16 were recorded during the three-month period ended September 30, 2021, compared with net charge-offs of $41 during the three-month period ended September 30, 2020. In the first quarter of fiscal year 2022, the provision for loan losses was sufficient to maintain an adequate allowance of loan losses due to the organic loan growth.

Non-performing loans were $1,719 as of September 30, 2021, compared with $1,771 as of June 30, 2021 and $1,369 as of September 30, 2020. Non-performing loans to total loans were 0.30% at September 30, 2021 and 0.31% at June 30, 2021. The allowance for loan losses as a percentage of loans was 1.16% at September 30, 2021 and 1.14% at June 30, 2021.

Noninterest Income

Noninterest income increased by $132, or 11.6%, for the first quarter of fiscal year 2022 from the same period last year primarily due to a $53, or 11.6%, increase in debit card interchange income, a $51, or 16.6%, increase in service charges on deposit accounts, and a $22, or 9.3%, increase in the gains from the sale of mortgage loans.

Noninterest Expenses

Total noninterest expenses increased by $1,033, or 21.5%, for the first quarter of fiscal year 2022 compared with the same period last year. Increases in salaries and employee benefits; professional and director fees; and marketing and advertising expenses contributed to the increase in noninterest expenses for the three-month period ended September 30, 2021. Included within noninterest expenses is $144 of expenses related to the acquisition of the Calcutta and Wellsville, Ohio branch locations, a majority of which were consulting and legal expenses.

Income Taxes

Income tax expense was $559 for the three-month period ended September 30, 2021 compared to $505 for the three-month period ended September 30, 2020. The effective tax rate was 17.3% for the three-month period ended September 30, 2021 compared with 17.4% for the three-month period ended September 30, 2020. The effective tax rates differed from the federal statutory rate because of tax-exempt income from obligations of state and political subdivisions, loans, and bank owned life insurance income.

Financial Condition

Total assets as of September 30, 2021 were $953,886 compared to $833,804 at June 30, 2021, an increase of $120,082, or an annualized 57.6%. Since June 30, 2021, total deposits increased by $122,337, or an annualized 67.3% and includes $104,538 of deposits acquired as part of the branch acquisition. The Corporation has maintained a favorable deposit mix, with 28.7% in noninterest-bearing deposits, 17.1% in interest bearing demand deposits, 39.9% in savings and money market deposits, and 14.3% in time deposits as of September 30, 2021. Since June 30, 2021, total cash and cash equivalents increased by $68,563 primarily as a result of the cash received from the branch acquisition. These funds are expected to be redeployed into higher yielding loans and securities.

Total loans increased by $10,734, or an annualized 7.6%, from June 30, 2021. As the pace of PPP loan forgiveness has increased since June 30, 2021, the outstanding balance of these loans declined by $21,181 to $29,505 as of September 30, 2021. The decline in the PPP loans was offset by the addition of loans acquired as part of the branch acquisition that had an outstanding balance of $17,789 as of September 30, 2021 and organic loan growth of $14,126.

CONSUMERS BANCORP, INC.

Management's Discussion and Analysis of Financial Condition

and Results of Operations (continued)

(Dollars in thousands, except per share data)

Non-Performing Assets

The following table presents the aggregate amounts of non-performing assets and select ratios as of the dates indicated.

	September 30, 2021			June 30, 2021			September 30, 2020
Non-accrual loans	$	1,719		$	1,771		$	1,369
Loans past due over 90 days and still accruing		—			—			—
Total non-performing loans		1,719			1,771			1,369
Other real estate and repossessed assets		—			—			9
Total non-performing assets	$	1,719		$	1,771		$	1,378

Non-performing loans to total loans		0.30	%		0.31	%		0.24	%
Allowance for loan losses to total non-performing loans		388.42	%		365.39	%		421.26	%

As of September 30, 2021, impaired loans totaled $1,898, of which $1,719 are included in non-accrual loans. Commercial and commercial real estate loans are classified as impaired if management determines that full collection of principal and interest, in accordance with the terms of the loan documents, is not probable. Impaired loans and non-performing loans have been considered in management’s analysis of the appropriateness of the allowance for loan losses. Management and the Board of Directors are closely monitoring these loans and believe that the prospects for recovery of principal and interest, less identified specific reserves, are favorable.

Contractual Obligations, Commitments, Contingent Liabilities and Off-Balance Sheet Arrangements

Liquidity

The objective of liquidity management is to ensure adequate cash flows to accommodate the demands of our customers and provide adequate flexibility for the Corporation to take advantage of market opportunities under both normal operating conditions and under unpredictable circumstances of industry or market stress. Cash is used to fund loans, purchase investments, fund the maturity of liabilities, and, at times, to fund deposit outflows and operating activities. The Corporation’s principal sources of funds are deposits; amortization and prepayments of loans; maturities, sales and principal receipts from securities; borrowings; and operations. Management considers the asset position of the Corporation to be sufficiently liquid to meet normal operating needs and conditions. The Corporation’s earning assets are mainly comprised of loans and investment securities. Management continually strives to obtain the best mix of loans and investments to both maximize yield and ensure the soundness of the portfolio, as well as to provide funding for loan demand as needed.

For the three months ended September 30, 2021, net cash inflow from operating activities was $2,778, net cash inflows from investing activities was $51,650 and net cash inflows from financing activities was $14,135. A major source of cash was $66,552 from the branch acquisition, a $17,799 increase in organic deposits and a $9,225 decrease in organic loans primarily due to PPP loan forgiveness. A major use of cash was $31,123 purchases of available-for-sale securities. Total cash and cash equivalents were $87,092 as of September 30, 2021, compared to $18,529 at June 30, 2021 and $8,508 at September 30, 2020.

The Bank offers several types of deposit products to its customers. We believe the rates offered by the Bank and the fees charged for them are competitive with the rates and fees charged by other banks for similar deposit products currently available in the market area. Deposits totaled $849,186 at September 30, 2021 compared with $726,849 at June 30, 2021.

To provide an additional source of liquidity, the Corporation has entered into an agreement with the FHLB of Cincinnati. At September 30, 2021, advances from the FHLB of Cincinnati totaled $16,300 compared with $18,050 at June 30, 2021. As of September 30, 2021, the Bank had the ability to borrow an additional $76,040 from the FHLB of Cincinnati based on a blanket pledge of qualifying first mortgage and multi-family loans. The Corporation considers the FHLB of Cincinnati to be a reliable source of liquidity funding, secondary to its deposit base.

CONSUMERS BANCORP, INC.

Management's Discussion and Analysis of Financial Condition

and Results of Operations (continued)

(Dollars in thousands, except per share data)

Short-term borrowings consisted of repurchase agreements, which are financing arrangements that mature daily. The Bank pledges securities as collateral for the repurchase agreements. Short-term borrowings totaled $10,773 at September 30, 2021 and $12,203 at June 30, 2021.

Jumbo time deposits (those with balances of $250 and over) totaled $21,499 as of September 30, 2021 and $18,488 as of June 30, 2021. These deposits are monitored closely by the Corporation and are mainly priced on an individual basis. The Corporation has the option to use a fee-paid broker to obtain deposits from outside its normal service area as an additional source of funding. The Corporation, however, does not rely upon these deposits as a primary source of funding. Although management monitors interest rates on an ongoing basis, a quarterly rate sensitivity report is used to determine the effect of interest rate changes on the financial statements. In the opinion of management, enough assets or liabilities could be repriced over the near term (up to three years) to compensate for such changes. The spread on interest rates, or the difference between the average earning assets and the average interest-bearing liabilities, is monitored quarterly.

Off-Balance Sheet Arrangements

In the normal course of business, to meet the financial needs of our customers, we are a party to financial instruments with off-balance sheet risk. These financial instruments generally include commitments to originate mortgage, commercial and consumer loans, and involve to varying degrees, elements of credit and interest rate risk in excess of amounts recognized in the Consolidated Balance Sheets. The maximum exposure to credit loss in the event of nonperformance by the borrower is represented by the contractual amount of those instruments. Since commitments to extend credit have a fixed expiration date or other termination clause, some commitments will expire without being drawn upon and the total commitment amounts do not necessarily represent future cash requirements. The same credit policies are used in making commitments as are used for on-balance sheet instruments and collateral is required in instances where deemed necessary. Undisbursed balances of loans closed include funds not disbursed but committed for construction projects. Unused lines of credit include funds not disbursed, but committed for home equity, commercial and consumer lines of credit. Financial standby letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. Total unused commitments were $137,549 as of September 30, 2021 and $119,299 as of June 30, 2021.

Capital Resources

Total shareholders’ equity increased to $71,152 as of September 30, 2021 from $69,900 as of June 30, 2021. The primary reason for the increase in shareholders’ equity was from net income of $2,665 for the first three months of fiscal year 2022 which was partially offset by a decrease of $1,238 in accumulated other comprehensive income due to a decline in the unrealized gain in the mark-to-market of available-for-sale securities and by cash dividends paid of $484.

The Bank is subject to various regulatory capital requirements administered by federal regulatory agencies. Capital adequacy guidelines and prompt corrective-action regulations involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Failure to meet various capital requirements can initiate regulatory action that could have a direct material effect on the Corporation’s financial statements.

As of September 30, 2021, the Bank’s common equity tier 1 capital and tier 1 capital ratios were 10.91% and the leverage and total risk-based capital ratios were 6.99% and 12.02%, respectively. This compares with common equity tier 1 capital and tier 1 capital ratios of 11.87% and leverage and total risk-based capital ratios of 7.83% and 13.06%, respectively, as of June 30, 2021. The Bank exceeded minimum regulatory capital requirements to be considered well-capitalized for both periods. Management is not aware of any matters occurring subsequent to September 30, 2021 that would cause the Bank’s capital category to change.

Critical Accounting Policies

The financial condition and results of operations for the Corporation presented in the Consolidated Financial Statements, accompanying notes to the Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations are, to a large degree, dependent upon the Corporation’s accounting policies. The selection and application of these accounting policies involve judgments, estimates and uncertainties that are susceptible to change.

The Corporation has identified the appropriateness of the allowance for loan losses and the evaluation of goodwill for impairment as critical accounting policies and an understanding of these policies is necessary to understand the financial statements. Critical accounting policies are those policies that require management’s most difficult, subjective or complex judgments often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Note one (Summary of Significant Accounting Policies - Allowance for Loan Losses and Goodwill and Other Intangible Assets), Note four (Loans), Note six (Goodwill and Intangible Assets) and Management’s Discussion and Analysis of Financial Condition and Results of Operation (Critical Accounting Policies and Use of Significant Estimates) of the 2021 Form 10-K provide detail with regard to the Corporation’s accounting for the allowance for loan losses. There have been no significant changes in the application of accounting policies since June 30, 2021.

CONSUMERS BANCORP, INC.

Management's Discussion and Analysis of Financial Condition

and Results of Operations (continued)

(Dollars in thousands, except per share data)

Forward-Looking Statements

Certain statements contained in this Quarterly Report on Form 10-Q, which are not statements of historical fact, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words “may,” “continue,” “estimate,” “intend,” “plan,” “seek,” “will,” “believe,” “project,” “expect,” “anticipate” and similar expressions are intended to identify forward-looking statements. These forward-looking statements may involve risks and uncertainties that are difficult to predict, may be beyond our control, and could cause actual results to differ materially from those described in such statements. Any such forward-looking statements are made only as of the date of this report or the respective dates of the relevant incorporated documents, as the case may be, and, except as required by law, we undertake no obligation to update these forward-looking statements to reflect subsequent events or circumstances. The COVID-19 pandemic is affecting us, our customers, employees, and third-party service providers, and the ultimate extent of the impact on our business, financial position, results of operations, liquidity, and prospects is uncertain. Other risks and uncertainties that could cause actual results for future periods to differ materially from those anticipated or projected include, but are not limited to:

	●	changes in local, regional and national economic conditions becoming less favorable than we expect, resulting in, among other things, high unemployment rates, a deterioration in credit quality of our assets or debtors being unable to meet their obligations;
	●	sustained low market interest rates could result in a decline in the net interest margin and net interest income;
	●	changes in the level of non-performing assets and charge-offs;
	●	the effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities, and insurance) with which we must comply;
	●	declining asset values impacting the underlying value of collateral;
	●	unanticipated changes in our liquidity position, including, but not limited to, changes in the cost of liquidity and our ability to find alternative funding sources;
	●	the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve Board;
	●	changes in consumer spending, borrowing and savings habits;
	●	changes in accounting policies, rules and interpretations that may come as a result of COVID-19 or otherwise;
	●	our ability to attract and retain qualified employees;
	●	competitive pressures on product pricing and services;
	●	breaches of security or failures of our technology systems due to technological or other factors and cybersecurity threats; and
	●	changes in the reliability of our vendors, internal control systems or information systems.

CONSUMERS BANCORP, INC.

Item 4 – Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by the report, an evaluation was performed under the supervision and with the participation of the Corporation’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Corporation’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15e. Based on the evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Corporation’s disclosure controls and procedures were effective as of September 30, 2021.

Changes in Internal Controls Over Financial Reporting

There have not been any changes in the Corporation’s internal control over financial reporting that occurred during the Corporation’s last quarter that have materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

CONSUMERS BANCORP, INC.

PART II – OTHER INFORMATION

Item 1 – Legal Proceedings

None

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

None

Item 3 – Defaults Upon Senior Securities

None

Item 4 – Mine Safety Disclosures

Not Applicable

Item 5 – Other Information

None

Item 6 – Exhibits

Exhibit Number	Description

Exhibit 31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.

Exhibit 31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.

Exhibit 32.1	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes Oxley Act of 2002.

101.INS	Inline XBRL Instance Document (The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document) (1)
101.SCH	Inline XBRL Taxonomy Extension Schema Document (1)
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document (1)
101.DEF	Inline XBRL Taxonomy Extension Definitions Linkbase Document (1)
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document (1)
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document (1)
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101.1)

(1)	These interactive date files shall not be deemed filed for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under those sections.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CONSUMERS BANCORP, INC. (Registrant)

Date: November 12, 2021	/s/ Ralph J. Lober Ralph J. Lober, II President & Chief Executive Officer (principal executive officer)


Date: November 12, 2021	/s/ Renee K. Wood Renee K. Wood Chief Financial Officer & Treasurer (principal financial officer)