Equibles

10-Q

CONSUMERS BANCORP INC /OH/ (CBKM)

10-Q 2021-11-12 For: 2021-09-30
View Original
Added on April 06, 2026

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

OR

☐ 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.<br> <br>FORM 10-Q<br> <br>QUARTER ENDED September 30, 2021
Table of Contents
Page<br> <br>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) June 30,<br> <br>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

All values are in US Dollars.

See accompanying notes to consolidated financial statements.

1

CONSUMERS BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

Three Months ended<br> <br>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.

2

CONSUMERS BANCORP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(Dollars in thousands) Three Months ended<br> <br>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.

3

CONSUMERS BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

(Dollars in thousands, except per share data) 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

All values are in US Dollars.

See accompanying notes to consolidated financial statements.

4

CONSUMERS BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands) Three Months Ended<br> <br>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.

5

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited)

(Dollars in thousands, except per share amounts)

Note 1 – Summary of Significant Accounting Policies:

Nature of Operations: Consumers Bancorp, Inc. (the Corporation) is a bank holding company headquartered in Minerva, Ohio that provides, through its banking subsidiary, Consumers National Bank (the Bank), a broad array of products and services throughout its primary market area of Carroll, Columbiana, Jefferson, Stark, Summit, Wayne and contiguous counties in Ohio, 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.

6

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.

7

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<br> <br>Cost Estimated Fair<br> <br>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.

10

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,<br> <br>2021 June 30,<br> <br>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<br> <br>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<br> <br>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<br> <br>September 30, 2021
September 30,<br> <br>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<br> <br>June 30, 2021
--- --- --- --- --- --- --- --- ---
June 30,<br> <br>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

19

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<br> <br>Item in<br> <br>Consolidated<br> <br>Statements of<br> <br>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.

20

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.

21

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.

22

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,<br> <br>(In thousands, except percentages)
2021 2020
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Average<br> <br>Balance Interest Yield/<br> <br>Rate Average<br> <br>Balance Interest Yield/<br> <br>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%

23

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.

24

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,<br> <br>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.

25

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.

26

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.

27

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.

28

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<br> <br>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.

29

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.<br> <br>(Registrant)
Date: November 12, 2021 /s/ Ralph J. Lober<br> <br>Ralph J. Lober, II<br> <br>President & Chief Executive Officer<br> <br>(principal executive officer)
Date: November 12, 2021 /s/ Renee K. Wood<br> <br>Renee K. Wood<br> <br>Chief Financial Officer & Treasurer<br> <br>(principal financial officer)

30

ex_303836.htm

EXHIBIT 31.1

I, Ralph J. Lober, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Consumers Bancorp, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
--- ---
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
--- ---
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a – 15(e) and 15d – 15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
--- ---
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
--- ---
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
--- ---
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
--- ---
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
--- ---
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
--- ---
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
--- ---
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
--- ---
November 12, 2021 By: /s/ Ralph J. Lober
--- --- ---
Date Ralph J. Lober, II<br><br> <br>President & Chief Executive Officer

ex_303837.htm

EXHIBIT 31.2

I, Renee K. Wood, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Consumers Bancorp, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
--- ---
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
--- ---
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a – 15(e) and 15d – 15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
--- ---
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
--- ---
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
--- ---
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
--- ---
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
--- ---
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
--- ---
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
--- ---
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
--- ---
November 12, 2021 By: /s/ Renee K. Wood
--- --- ---
Date Renee K. Wood<br><br> <br>Chief Financial Officer & Treasurer

ex_303838.htm

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Consumers Bancorp, Inc. (the “Corporation”) on Form 10-Q for the period ended September 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each undersigned officer of the Corporation does hereby certify that:

a) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
b) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.
--- ---
Date: November 12, 2021
---
/s/ Ralph J. Lober
Ralph J. Lober, II
President & Chief Executive Officer
/s/ Renee K. Wood
Renee K. Wood
Chief Financial Officer & Treasurer

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