Notes to the Consolidated Financial Statements
(Unaudited) (continued)
(Dollars in thousands, except per share amounts)
Note 1 – Summary of Significant Accounting Policies
:
Nature of Operations:
Consumers Bancorp, Inc. (the Corporation) is a bank holding company headquartered in Minerva, Ohio that provides, through its banking subsidiary, Consumers National Bank (the Bank), a broad array of products and services throughout its
primary market area of Carroll, Columbiana, Stark, Summit, Wayne and contiguous counties in Ohio.
The Bank’s business involves attracting deposits from businesses and individual customers and using such deposits to originate commercial, mortgage and consumer loans in its primary market area.
Basis of Presentation
: The consolidated financial statements for interim periods are unaudited and reflect all adjustments (consisting of only normal recurring adjustments), which, in the opinion of management, are necessary to present fairly the financial position and results of operations and cash flows for the periods presented. The unaudited financial statements are presented in accordance with the requirements of Form 10-Q and do not include all disclosures normally required by accounting principles generally accepted in the United States of America.
The financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Corporation’s Form 10-K for the year ended June 30, 2016. The results of operations for the interim period disclosed herein are not necessarily indicative of the results that may be expected for a full year.
The consolidated financial statements include the accounts of the Corporation and the Bank. All significant inter-company transactions and accounts have been eliminated in consolidation.
Segment Information:
The Corporation is a bank holding company engaged in the business of commercial and retail banking, which accounts for substantially all of the revenues, operating income, and assets. Accordingly, all of its operations are recorded in one segment, banking.
Reclassifications:
Certain items in prior financial statements have been reclassified to conform to the current presentation. Any reclassifications had no impact on prior year net income or shareholders’ equity.
Recently Issued Accounting Pronouncements Not Yet Effective:
In 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.
CONSUMER 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, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of U.S. government-sponsored entities and agencies
|
|
$
|
10,078
|
|
|
$
|
250
|
|
|
$
|
—
|
|
|
$
|
10,328
|
|
Obligations of state and political subdivisions
|
|
|
54,131
|
|
|
|
1,737
|
|
|
|
(9
|
)
|
|
|
55,859
|
|
Mortgage-backed securities – residential
|
|
|
54,013
|
|
|
|
832
|
|
|
|
(33
|
)
|
|
|
54,812
|
|
Mortgage-backed securities– commercial
|
|
|
1,479
|
|
|
|
24
|
|
|
|
—
|
|
|
|
1,503
|
|
Collateralized mortgage obligations– residential
|
|
|
5,360
|
|
|
|
29
|
|
|
|
(1
|
)
|
|
|
5,388
|
|
Pooled trust preferred security
|
|
|
154
|
|
|
|
266
|
|
|
|
—
|
|
|
|
420
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total available-for-sale securities
|
|
$
|
125,215
|
|
|
$
|
3,138
|
|
|
$
|
(43
|
)
|
|
$
|
128,310
|
|
Held-to-Maturity
|
|
Amortized
Cost
|
|
|
Gross
Unrecognized
Gains
|
|
|
Gross
Unrecognized Losses
|
|
|
Fair
Value
|
|
September 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of state and political subdivisions
|
|
$
|
4,399
|
|
|
$
|
111
|
|
|
$
|
—
|
|
|
$
|
4,510
|
|
Available–for-Sale
|
|
Amortized
Cost
|
|
|
Gross
Unrealized
Gains
|
|
|
Gross
Unrealized
Losses
|
|
|
Fair
Value
|
|
June 30, 201
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of U.S. government-sponsored entities and agencies
|
|
$
|
9,682
|
|
|
$
|
362
|
|
|
$
|
—
|
|
|
$
|
10,044
|
|
Obligations of state and political subdivisions
|
|
|
53,952
|
|
|
|
2,010
|
|
|
|
(8
|
)
|
|
|
55,954
|
|
Mortgage-backed securities – residential
|
|
|
58,702
|
|
|
|
920
|
|
|
|
(26
|
)
|
|
|
59,596
|
|
Mortgage-backed securities – commercial
|
|
|
1,485
|
|
|
|
41
|
|
|
|
—
|
|
|
|
1,526
|
|
Collateralized mortgage obligations - residential
|
|
|
5,774
|
|
|
|
49
|
|
|
|
(3
|
)
|
|
|
5,820
|
|
Pooled trust preferred security
|
|
|
153
|
|
|
|
276
|
|
|
|
—
|
|
|
|
429
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total available-for-sale securities
|
|
$
|
129,748
|
|
|
$
|
3,658
|
|
|
$
|
(37
|
)
|
|
$
|
133,369
|
|
CONSUMER BANCORP, INC.
Notes to the Consolidated Financial Statements
(Unaudited) (continued)
(Dollars in thousands, except per share amounts)
Held-to-Maturity
|
|
Amortized
Cost
|
|
|
Gross
Unrecognized
Gains
|
|
|
Gross
Unrecognized
Losses
|
|
|
Fair
Value
|
|
June 30, 201
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of state and political subdivisions
|
|
$
|
3,494
|
|
|
$
|
125
|
|
|
$
|
—
|
|
|
$
|
3,619
|
|
Proceeds from the sale of available-for-sale securities were as follows:
|
|
Three Months Ended
September 30,
|
|
|
|
2016
|
|
|
2015
|
|
Proceeds from sales
|
|
$
|
1,789
|
|
|
$
|
1,990
|
|
Gross realized gains
|
|
|
103
|
|
|
|
35
|
|
Gross realized losses
|
|
|
—
|
|
|
|
—
|
|
The income tax provision applicable to these net realized gains amounted to $35 for the three months ended September 30, 2016 and $12 for the three months ended September 30, 2015.
The amortized cost and fair values of debt securities at September 30, 2016, by expected maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date, primarily mortgage-backed securities, collateralized mortgage obligations and the pooled trust preferred security are shown separately.
Available-for-Sale
|
|
Amortized
Cost
|
|
|
Estimated Fair
Value
|
|
Due in one year or less
|
|
$
|
3,697
|
|
|
$
|
3,724
|
|
Due after one year through five years
|
|
|
14,804
|
|
|
|
15,287
|
|
Due after five years through ten years
|
|
|
27,972
|
|
|
|
28,917
|
|
Due after ten years
|
|
|
17,736
|
|
|
|
18,259
|
|
Total
|
|
|
64,209
|
|
|
|
66,187
|
|
|
|
|
|
|
|
|
|
|
U.S. Government-sponsored mortgage-backed and related securities
|
|
|
60,852
|
|
|
|
61,703
|
|
Pooled trust preferred security
|
|
|
154
|
|
|
|
420
|
|
Total available-for-sale securities
|
|
$
|
125,215
|
|
|
$
|
128,310
|
|
|
|
|
|
|
|
|
|
|
Held-to-Maturity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due after five years through ten years
|
|
|
674
|
|
|
|
702
|
|
Due after ten years
|
|
|
3,725
|
|
|
|
3,808
|
|
Total held-to-maturity securities
|
|
$
|
4,399
|
|
|
$
|
4,510
|
|
CONSUMERS BANCORP, INC.
Notes to the Consolidated Financial Statements
(Unaudited) (continued)
(Dollars in thousands, except per share amounts)
The following table summarizes the securities with unrealized losses at September 30, 2016 and June 30, 2016, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:
|
|
Less than 12 Months
|
|
|
12 Months or more
|
|
|
Total
|
|
Available-for-sale
|
|
Fair
Value
|
|
|
Unrealized
Loss
|
|
|
Fair
Value
|
|
|
Unrealized
Loss
|
|
|
Fair
Value
|
|
|
Unrealized
Loss
|
|
September 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of states and political
subdivisions
|
|
$
|
2,018
|
|
|
$
|
(6
|
)
|
|
$
|
275
|
|
|
$
|
(3
|
)
|
|
$
|
2,293
|
|
|
$
|
(9
|
)
|
Mortgage-backed securities -
residential
|
|
|
7,573
|
|
|
|
(15
|
)
|
|
|
3,427
|
|
|
|
(18
|
)
|
|
|
11,000
|
|
|
|
(33
|
)
|
Collateralized mortgage obligations –
residential816(1)——816(1)
|
|
|
—
|
|
|
|
—
|
|
|
|
1,103
|
|
|
|
(1
|
)
|
|
|
1,103
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total temporarily impaired
|
|
$
|
9,591
|
|
|
$
|
(21
|
)
|
|
$
|
4,805
|
|
|
$
|
(22
|
)
|
|
$
|
14,396
|
|
|
$
|
(43
|
)
|
|
|
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, 201
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of states and political subdivisions
|
|
$
|
572
|
|
|
$
|
(6
|
)
|
|
$
|
641
|
|
|
$
|
(2
|
)
|
|
$
|
1,213
|
|
|
$
|
(8
|
)
|
Mortgage-backed securities - residential
|
|
|
4,899
|
|
|
|
(12
|
)
|
|
|
4,836
|
|
|
|
(14
|
)
|
|
|
9,735
|
|
|
|
(26
|
)
|
Collateral mortgage obligation - residential
|
|
|
—
|
|
|
|
—
|
|
|
|
1,212
|
|
|
|
(3
|
)
|
|
|
1,212
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total temporarily impaired
|
|
$
|
5,471
|
|
|
$
|
(18
|
)
|
|
$
|
6,689
|
|
|
$
|
(19
|
)
|
|
$
|
12,160
|
|
|
$
|
(37
|
)
|
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.
CONSUMER 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, 2016 have not been recognized into income because the decline in fair value is not attributed to credit quality, management does not intend to sell and it is likely that management will not be required to sell the securities prior to their anticipated recovery. The decline in fair value of the mortgage-backed securities, obligations of state and political subdivisions and collateralized mortgage obligations is largely due to changes in interest rates. 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,
|
|
|
June 30,
|
|
|
|
2016
|
|
|
2016
|
|
Commercial
|
|
$
|
44,855
|
|
|
$
|
43,156
|
|
Commercial real estate:
|
|
|
|
|
|
|
|
|
Construction
|
|
|
7,170
|
|
|
|
7,755
|
|
Other
|
|
|
153,375
|
|
|
|
152,766
|
|
1 – 4 Family residential real estate:
|
|
|
|
|
|
|
|
|
Owner occupied
|
|
|
32,150
|
|
|
|
31,091
|
|
Non-owner occupied
|
|
|
15,093
|
|
|
|
14,438
|
|
Construction
|
|
|
2,348
|
|
|
|
1,269
|
|
Consumer
|
|
|
5,496
|
|
|
|
5,803
|
|
Subtotal
|
|
|
260,487
|
|
|
|
256,278
|
|
Allowance for loan losses
|
|
|
(3,684
|
)
|
|
|
(3,566
|
)
|
Net Loans
|
|
$
|
256,803
|
|
|
$
|
252,712
|
|
CONSUMERS BANCORP, INC.
Notes to Consolidated Financial Statements
(Unaudited) (continued)
(Dollars in thousands, except per share amounts)
Loans presented above are net of deferred loan fees and costs of $342 and $360 for September 30, 2016 and June 30, 2016, respectively.
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
|
|
The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ended September 30, 2015:
|
|
|
|
|
|
|
|
|
|
1-4 Family
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
Residential
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real
|
|
|
Real
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
Estate
|
|
|
Estate
|
|
|
Consumer
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
$
|
316
|
|
|
$
|
1,660
|
|
|
$
|
289
|
|
|
$
|
167
|
|
|
$
|
2,432
|
|
Provision for loan losses
|
|
|
71
|
|
|
|
70
|
|
|
|
(11
|
)
|
|
|
(38
|
)
|
|
|
92
|
|
Loans charged-off
|
|
|
—
|
|
|
|
(3
|
)
|
|
|
—
|
|
|
|
(18
|
)
|
|
|
(21
|
)
|
Recoveries
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
11
|
|
|
|
11
|
|
Total ending allowance balance
|
|
$
|
387
|
|
|
$
|
1,727
|
|
|
$
|
278
|
|
|
$
|
122
|
|
|
$
|
2,514
|
|
CONSUMERS BANCORP, INC.
Notes to 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, 2016. Included in the recorded investment in loans is $578 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
|
|
$
|
—
|
|
|
$
|
895
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
901
|
|
Collectively evaluated for impairment
|
|
|
510
|
|
|
|
1,748
|
|
|
|
405
|
|
|
|
120
|
|
|
|
2,783
|
|
Total ending allowance balance
|
|
$
|
510
|
|
|
$
|
2,643
|
|
|
$
|
411
|
|
|
$
|
120
|
|
|
$
|
3,684
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recorded investment in loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans individually evaluated for impairment
|
|
$
|
—
|
|
|
$
|
2,612
|
|
|
$
|
510
|
|
|
$
|
—
|
|
|
$
|
3,122
|
|
Loans collectively evaluated for impairment
|
|
|
44,953
|
|
|
|
158,277
|
|
|
|
49,206
|
|
|
|
5,507
|
|
|
|
257,943
|
|
Total ending loans balance
|
|
$
|
44,953
|
|
|
$
|
160,889
|
|
|
$
|
49,716
|
|
|
$
|
5,507
|
|
|
$
|
261,065
|
|
CONSUMERS BANCORP, INC.
Notes to Consolidated Financial Statements
(Unaudited) (continued)
(Dollars in thousands, except per share amounts)
The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of June 30, 2016. Included in the recorded investment in loans is $549 of accrued interest receivable net of deferred loans fees and cost of $360.
|
|
|
|
|
|
|
|
|
|
1-4 Family
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
Residential
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real
|
|
|
Real
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
Estate
|
|
|
Estate
|
|
|
Consumer
|
|
|
Total
|
|
Allowance for loan losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending allowance balance attributable to loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated for impairment
|
|
$
|
—
|
|
|
$
|
868
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
874
|
|
Collectively evaluated for impairment
|
|
|
505
|
|
|
|
1,650
|
|
|
|
396
|
|
|
|
141
|
|
|
|
2,692
|
|
Total ending allowance balance
|
|
$
|
505
|
|
|
$
|
2,518
|
|
|
$
|
402
|
|
|
$
|
141
|
|
|
$
|
3,566
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recorded investment in loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans individually evaluated for impairment
|
|
$
|
1,029
|
|
|
$
|
5,105
|
|
|
$
|
758
|
|
|
$
|
—
|
|
|
$
|
6,892
|
|
Loans collectively evaluated for impairment
|
|
|
42,219
|
|
|
|
155,734
|
|
|
|
46,166
|
|
|
|
5,816
|
|
|
|
249,935
|
|
Total ending loans balance
|
|
$
|
43,248
|
|
|
$
|
160,839
|
|
|
$
|
46,924
|
|
|
$
|
5,816
|
|
|
$
|
256,827
|
|
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 September 30, 2016 and for the three months ended September 30, 2016:
|
|
As of September 30, 2016
|
|
|
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
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
660
|
|
|
$
|
80
|
|
|
$
|
80
|
|
Commercial real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction
|
|
|
16
|
|
|
|
16
|
|
|
|
—
|
|
|
|
329
|
|
|
|
6
|
|
|
|
6
|
|
Other
|
|
|
62
|
|
|
|
62
|
|
|
|
—
|
|
|
|
1,555
|
|
|
|
105
|
|
|
|
105
|
|
1-4 Family residential real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owner occupied
|
|
|
127
|
|
|
|
127
|
|
|
|
—
|
|
|
|
127
|
|
|
|
—
|
|
|
|
—
|
|
Non-owner occupied
|
|
|
207
|
|
|
|
206
|
|
|
|
—
|
|
|
|
208
|
|
|
|
—
|
|
|
|
—
|
|
With an allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
2,728
|
|
|
|
2,534
|
|
|
|
895
|
|
|
|
2,449
|
|
|
|
8
|
|
|
|
8
|
|
1-4 Family residential real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owner occupied
|
|
|
176
|
|
|
|
177
|
|
|
|
6
|
|
|
|
177
|
|
|
|
2
|
|
|
|
2
|
|
Total
|
|
$
|
3,316
|
|
|
$
|
3,122
|
|
|
$
|
901
|
|
|
$
|
5,505
|
|
|
$
|
201
|
|
|
$
|
201
|
|
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 loans individually evaluated for impairment by class of loans as of June 30, 2016 and for the three months ended September 30, 2015:
|
|
As of June 30, 2016
|
|
|
Three Months ended September 30, 2015
|
|
|
|
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
|
|
$
|
1,033
|
|
|
$
|
1,029
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Commercial real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction
|
|
|
386
|
|
|
|
384
|
|
|
|
—
|
|
|
|
12
|
|
|
|
—
|
|
|
|
—
|
|
Other
|
|
|
2,121
|
|
|
|
2,106
|
|
|
|
—
|
|
|
|
2,059
|
|
|
|
—
|
|
|
|
—
|
|
1-4 Family residential real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owner occupied
|
|
|
175
|
|
|
|
174
|
|
|
|
—
|
|
|
|
267
|
|
|
|
—
|
|
|
|
—
|
|
Non-owner occupied
|
|
|
722
|
|
|
|
407
|
|
|
|
—
|
|
|
|
77
|
|
|
|
—
|
|
|
|
—
|
|
With an allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
2,802
|
|
|
|
2,615
|
|
|
|
868
|
|
|
|
894
|
|
|
|
9
|
|
|
|
9
|
|
1-4 Family residential real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owner occupied
|
|
|
177
|
|
|
|
177
|
|
|
|
6
|
|
|
|
122
|
|
|
|
2
|
|
|
|
2
|
|
Non-owner occupied
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
458
|
|
|
|
4
|
|
|
|
4
|
|
Total
|
|
$
|
7,416
|
|
|
$
|
6,892
|
|
|
$
|
874
|
|
|
$
|
3,889
|
|
|
$
|
15
|
|
|
$
|
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, 2016 and June 30, 2016:
|
|
September 30, 2016
|
|
|
June 30, 2016
|
|
|
|
|
|
|
|
Loans Past Due
|
|
|
|
|
|
|
Loans Past Due
|
|
|
|
|
|
|
|
Over 90 Days
|
|
|
|
|
|
|
Over 90 Days
|
|
|
|
|
|
|
|
Still
|
|
|
|
|
|
|
Still
|
|
|
|
Non-accrual
|
|
|
Accruing
|
|
|
Non-accrual
|
|
|
Accruing
|
|
Commercial
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,009
|
|
|
$
|
—
|
|
Commercial real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction
|
|
|
16
|
|
|
|
—
|
|
|
|
384
|
|
|
|
—
|
|
Other
|
|
|
1,945
|
|
|
|
—
|
|
|
|
4,000
|
|
|
|
—
|
|
1 – 4 Family residential:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owner occupied
|
|
|
187
|
|
|
|
—
|
|
|
|
234
|
|
|
|
—
|
|
Non-owner occupied
|
|
|
206
|
|
|
|
—
|
|
|
|
407
|
|
|
|
—
|
|
Consumer
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
$
|
2,354
|
|
|
$
|
—
|
|
|
$
|
6,034
|
|
|
$
|
—
|
|
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, 2016 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
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
44,953
|
|
|
$
|
44,953
|
|
Commercial real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,182
|
|
|
|
7,182
|
|
Other
|
|
|
—
|
|
|
|
—
|
|
|
|
1,578
|
|
|
|
1,578
|
|
|
|
152,129
|
|
|
|
153,707
|
|
1-4 Family residential:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owner occupied
|
|
|
11
|
|
|
|
—
|
|
|
|
187
|
|
|
|
198
|
|
|
|
32,035
|
|
|
|
32,233
|
|
Non-owner occupied
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
15,132
|
|
|
|
15,132
|
|
Construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,351
|
|
|
|
2,351
|
|
Consumer
|
|
|
5
|
|
|
|
9
|
|
|
|
—
|
|
|
|
14
|
|
|
|
5,493
|
|
|
|
5,507
|
|
Total
|
|
$
|
16
|
|
|
$
|
9
|
|
|
$
|
1,765
|
|
|
$
|
1,790
|
|
|
$
|
259,275
|
|
|
$
|
261,065
|
|
The above table of past due loans includes the recorded investment in non-accrual loans of $1,765 in the 90 days or greater category and $589 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, 2016 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
|
|
$
|
123
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
123
|
|
|
$
|
43,125
|
|
|
$
|
43,248
|
|
Commercial real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,764
|
|
|
|
7,764
|
|
Other
|
|
|
59
|
|
|
|
—
|
|
|
|
2,110
|
|
|
|
2,169
|
|
|
|
150,906
|
|
|
|
153,075
|
|
1-4 Family residential:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owner occupied
|
|
|
15
|
|
|
|
—
|
|
|
|
218
|
|
|
|
233
|
|
|
|
30,947
|
|
|
|
31,180
|
|
Non-owner occupied
|
|
|
—
|
|
|
|
—
|
|
|
|
196
|
|
|
|
196
|
|
|
|
14,278
|
|
|
|
14,474
|
|
Construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,270
|
|
|
|
1,270
|
|
Consumer
|
|
|
7
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7
|
|
|
|
5,809
|
|
|
|
5,816
|
|
Total
|
|
$
|
204
|
|
|
$
|
—
|
|
|
$
|
2,524
|
|
|
$
|
2,728
|
|
|
$
|
254,099
|
|
|
$
|
256,827
|
|
The above table of past due loans includes the recorded investment in non-accrual loans of $2,524 in the 90 days or greater category and $3,510 in the loans not past due category.
Troubled Debt Restructurings:
As of September 30, 2016, the recorded investment of loans classified as troubled debt restructurings was $768 with $38 of specific reserves allocated to these loans. As of September 30, 2016, the Corporation had not committed to lend any additional amounts to customers with outstanding loans that are classified as troubled debt restructurings. As of June 30, 2016, the recorded investment of loans classified as troubled debt restructurings was $3,529 with $43 of specific reserves allocated to these loans.
As of June 30, 2016, the Corporation had committed to lend any additional $207 to customers with outstanding loans that were classified as troubled debt restructurings.
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, 2016 and 2015 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, 2016 and 2015.
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, 2016 and 2015. 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.
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, 2016
|
|
|
|
|
|
|
|
Special
|
|
|
|
|
|
|
|
|
|
|
Not
|
|
|
|
Pass
|
|
|
Mention
|
|
|
Substandard
|
|
|
Doubtful
|
|
|
Rated
|
|
Commercial
|
|
$
|
37,910
|
|
|
$
|
6,461
|
|
|
$
|
74
|
|
|
$
|
—
|
|
|
$
|
508
|
|
Commercial real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction
|
|
|
7,118
|
|
|
|
—
|
|
|
|
—
|
|
|
|
16
|
|
|
|
48
|
|
Other
|
|
|
147,315
|
|
|
|
2,377
|
|
|
|
1,827
|
|
|
|
1,945
|
|
|
|
243
|
|
1-4 Family residential real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owner occupied
|
|
|
3,357
|
|
|
|
71
|
|
|
|
346
|
|
|
|
47
|
|
|
|
28,412
|
|
Non-owner occupied
|
|
|
14,111
|
|
|
|
182
|
|
|
|
272
|
|
|
|
206
|
|
|
|
361
|
|
Construction
|
|
|
760
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,591
|
|
Consumer
|
|
|
161
|
|
|
|
—
|
|
|
|
5
|
|
|
|
—
|
|
|
|
5,341
|
|
Total
|
|
$
|
210,732
|
|
|
$
|
9,091
|
|
|
$
|
2,524
|
|
|
$
|
2,214
|
|
|
$
|
36,504
|
|
|
|
As of June 30, 2016
|
|
|
|
|
|
|
|
Special
|
|
|
|
|
|
|
|
|
|
|
Not
|
|
|
|
Pass
|
|
|
Mention
|
|
|
Substandard
|
|
|
Doubtful
|
|
|
Rated
|
|
Commercial
|
|
$
|
35,243
|
|
|
$
|
6,190
|
|
|
$
|
1,162
|
|
|
$
|
—
|
|
|
$
|
653
|
|
Commercial real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction
|
|
|
7,305
|
|
|
|
—
|
|
|
|
384
|
|
|
|
—
|
|
|
|
75
|
|
Other
|
|
|
144,101
|
|
|
|
2,482
|
|
|
|
4,026
|
|
|
|
2,150
|
|
|
|
316
|
|
1-4 Family residential real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owner occupied
|
|
|
3,506
|
|
|
|
72
|
|
|
|
349
|
|
|
|
47
|
|
|
|
27,206
|
|
Non-owner occupied
|
|
|
12,999
|
|
|
|
406
|
|
|
|
486
|
|
|
|
196
|
|
|
|
387
|
|
Construction
|
|
|
235
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,035
|
|
Consumer
|
|
|
210
|
|
|
|
—
|
|
|
|
6
|
|
|
|
—
|
|
|
|
5,600
|
|
Total
|
|
$
|
203,599
|
|
|
$
|
9,150
|
|
|
$
|
6,413
|
|
|
$
|
2,393
|
|
|
$
|
35,272
|
|
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 market indicators (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, 2016 Using
|
|
|
|
Balance at
September 30,
2016
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of U.S. government-sponsored entities and agencies
|
|
$
|
10,328
|
|
|
$
|
—
|
|
|
$
|
10,328
|
|
|
$
|
—
|
|
Obligations of states and political subdivisions
|
|
|
55,859
|
|
|
|
—
|
|
|
|
55,859
|
|
|
|
—
|
|
Mortgage-backed securities – residential
|
|
|
54,812
|
|
|
|
—
|
|
|
|
54,812
|
|
|
|
—
|
|
Mortgage-backed securities – commercial
|
|
|
1,503
|
|
|
|
—
|
|
|
|
1,503
|
|
|
|
—
|
|
Collateralized mortgage obligations - residential
|
|
|
5,388
|
|
|
|
—
|
|
|
|
5,388
|
|
|
|
—
|
|
Pooled trust preferred security
|
|
|
420
|
|
|
|
—
|
|
|
|
420
|
|
|
|
—
|
|
CONSUMERS BANCORP, INC.
Notes to the Consolidated Financial Statements
(Unaudited) (continued)
(Dollars in thousands, except per share amounts)
|
|
|
|
|
|
Fair Value Measurements at
June 30, 2016 Using
|
|
|
|
Balance at
June 30, 2016
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of U.S. government-sponsored entities and agencies
|
|
$
|
10,044
|
|
|
$
|
—
|
|
|
$
|
10,044
|
|
|
$
|
—
|
|
Obligations of states and political subdivisions
|
|
|
55,954
|
|
|
|
—
|
|
|
|
55,954
|
|
|
|
—
|
|
Mortgage-backed securities - residential
|
|
|
59,596
|
|
|
|
—
|
|
|
|
59,596
|
|
|
|
—
|
|
Mortgage-backed securities - commercial
|
|
|
1,526
|
|
|
|
—
|
|
|
|
1,526
|
|
|
|
—
|
|
Collateralized mortgage obligations - residential
|
|
|
5,820
|
|
|
|
—
|
|
|
|
5,820
|
|
|
|
—
|
|
Pooled trust preferred security
|
|
|
429
|
|
|
|
—
|
|
|
|
429
|
|
|
|
—
|
|
There were no transfers between Level 1 and Level 2 during the three month periods ended September 30, 2016 or 2015.
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. 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.
Financial assets and financial liabilities measured at fair value on a non-recurring basis are summarized below:
|
|
|
|
|
|
Fair Value Measurements at
September 30, 2016 Using
|
|
|
|
Balance at
September 30, 2016
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Impaired loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Real Estate - Other
|
|
$
|
744
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
744
|
|
CONSUMERS BANCORP, INC.
Notes to the Consolidated Financial Statements
(Unaudited) (continued)
(Dollars in thousands, except per share amounts)
|
|
|
|
|
|
Fair Value Measurements at
June 30, 2016 Using
|
|
|
|
Balance at
June 30, 2016
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Impaired loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Real Estate - Other
|
|
$
|
1,206
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,206
|
|
1-4 Family residential real estate
Non-owner occupied
|
|
|
197
|
|
|
|
—
|
|
|
|
—
|
|
|
|
197
|
|
Impaired loans, which are generally measured for impairment using the fair value of the collateral for collateral dependent loans, had a recorded investment of $1,531, with a valuation allowance of $787 at September 30, 2016. The resulting impact to the provision for loan losses was an increase of $41 being recorded for the three months ended September 30, 2016. As of June 30, 2016, the recorded investment of impaired loans was $2,150, with a valuation allowance of $747. The resulting impact to the provision for loan losses was a reduction of $3 being recorded for the three months ended September 30, 2015.
The following tables presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at September 30, 2016 and June 30, 2016:
September 30, 2016
|
|
Fair Value
|
|
Valuation Technique
|
|
Unobservable Inputs
|
|
|
Range
|
|
|
Weighted Average
|
|
Impaired loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Real Estate – Other
|
|
$
|
744
|
|
Bid Indications
|
|
|
N/A
|
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
June 30, 2016
|
|
Fair Value
|
|
Valuation Technique
|
|
Unobservable Inputs
|
|
|
Range
|
|
|
Weighted Average
|
|
Impaired loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Real Estate – Other
|
|
$
|
459
|
|
Settlement Contract
|
|
|
N/A
|
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
Commercial Real Estate – Other
|
|
$
|
754
|
|
Bid Indications
|
|
|
N/A
|
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
1-4 Family residential real estate non-owner occupied
|
|
$
|
197
|
|
Bid Indications
|
|
|
N/A
|
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
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, 2016
|
|
|
June 30, 2016
|
|
|
|
Carrying
Amount
|
|
|
Estimated
Fair
Value
|
|
|
Carrying
Amount
|
|
|
Estimated
Fair
Value
|
|
Financial Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1 inputs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
12,533
|
|
|
$
|
12,533
|
|
|
$
|
10,181
|
|
|
$
|
10,181
|
|
Level 2 inputs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certificates of deposits in other financial institutions
|
|
|
5,656
|
|
|
|
5,656
|
|
|
|
5,906
|
|
|
|
5,906
|
|
Loans held for sale
|
|
|
1,810
|
|
|
|
1,850
|
|
|
|
1,048
|
|
|
|
1,067
|
|
Accrued interest receivable
|
|
|
1,303
|
|
|
|
1,303
|
|
|
|
1,077
|
|
|
|
1,077
|
|
Level 3 inputs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities held-to-maturity
|
|
|
4,399
|
|
|
|
4,510
|
|
|
|
3,494
|
|
|
|
3,619
|
|
Loans, net
|
|
|
256,803
|
|
|
|
257,789
|
|
|
|
252,712
|
|
|
|
253,155
|
|
Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 2 inputs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand and savings deposits
|
|
|
286,951
|
|
|
|
286,951
|
|
|
|
281,640
|
|
|
|
281,640
|
|
Time deposits
|
|
|
66,020
|
|
|
|
66,146
|
|
|
|
65,008
|
|
|
|
65,111
|
|
Short-term borrowings
|
|
|
20,546
|
|
|
|
20,546
|
|
|
|
19,129
|
|
|
|
19,129
|
|
Federal Home Loan Bank advances
|
|
|
12,366
|
|
|
|
12,377
|
|
|
|
17,281
|
|
|
|
17,486
|
|
Accrued interest payable
|
|
|
38
|
|
|
|
38
|
|
|
|
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.
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, 2016 and June 30, 2016, for deposits of similar remaining maturities. 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 resulting in a Level 2 classification.
Federal Home Loan Bank advances:
Fair value of Federal Home Loan Bank advances was estimated using current rates at September 30, 2016 and June 30, 2016 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.
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 no equity instruments that were anti-dilutive for the three months ended September 30, 2016 and 2015. The following table details the calculation of basic and diluted earnings per share:
|
|
For the Three Months
Ended September 30,
|
|
|
|
2016
|
|
|
2015
|
|
Basic:
|
|
|
|
|
|
|
|
|
Net income available to common shareholders
|
|
$
|
901
|
|
|
$
|
727
|
|
Weighted average common shares outstanding
|
|
|
2,723,915
|
|
|
|
2,724,372
|
|
Basic income per share
|
|
$
|
0.33
|
|
|
$
|
0.27
|
|
|
|
|
|
|
|
|
|
|
Diluted:
|
|
|
|
|
|
|
|
|
Net income available to common shareholders
|
|
$
|
901
|
|
|
$
|
727
|
|
Weighted average common shares outstanding
|
|
|
2,723,915
|
|
|
|
2,724,372
|
|
Dilutive effect of restricted stock
|
|
|
4
|
|
|
|
189
|
|
Total common shares and dilutive potential common shares
|
|
|
2,723,919
|
|
|
|
2,724,561
|
|
Dilutive income per share
|
|
$
|
0.33
|
|
|
$
|
0.27
|
|
CONSUMERS BANCORP, INC.
Notes to the Consolidated Finanacial Statements
(Unaudited) (continued)
(Dollars in thousand, except per share amounts)
Note 6 –Accumulated Other Comprehensive Income
The components of other comprehensive income related to unrealized gains and losses on available-for-sale securities for the three month periods ended September 30, 2016 and 2015, were as follows:
|
|
Pretax
|
|
|
Tax Effect
|
|
|
After-tax
|
|
Affected Line
Item in
Consolidated
Statements of
Income
|
Balance as of June 30, 2016
|
|
$
|
3,621
|
|
|
$
|
(1,232
|
)
|
|
$
|
2,389
|
|
|
Unrealized holding loss on available-for-sale securities arising during the period
|
|
|
(423
|
)
|
|
|
144
|
|
|
|
(279
|
)
|
|
Amounts reclassified from accumulated other comprehensive income
|
|
|
(103
|
)
|
|
|
35
|
|
|
|
(68
|
)
|
(a)(b)
|
Net current period other comprehensive income
|
|
|
(526
|
)
|
|
|
179
|
|
|
|
(347
|
)
|
|
Balance as of September 30, 2016
|
|
$
|
3,095
|
|
|
$
|
(1,053
|
)
|
|
$
|
2,042
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2015
|
|
$
|
1,363
|
|
|
$
|
(464
|
)
|
|
$
|
899
|
|
|
Unrealized holding gain on available-for-sale securities arising during the period
|
|
|
813
|
|
|
|
(276
|
)
|
|
|
537
|
|
|
Amounts reclassified from accumulated other comprehensive income
|
|
|
(35
|
)
|
|
|
12
|
|
|
|
(23
|
)
|
(a)(b)
|
Net current period other comprehensive income
|
|
|
778
|
|
|
|
(264
|
)
|
|
|
514
|
|
|
Balance as of September 30, 2015
|
|
$
|
2,141
|
|
|
$
|
(728
|
)
|
|
$
|
1,413
|
|
|
(a) Securities gains, net
(b) Income tax expense