Note 3 - Loans and Allowance for Credit Losses

3 Months Ended

Sep. 30, 2024

Notes to Financial Statements

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

Note 3 – Loans and Allowance for Credit Losses

The following table presents loans by major category.

	September 30, 2024			June 30, 2024
Commercial & Industrial	$	125,100		$	127,782
Commercial real estate:
Owner occupied		166,027			163,856
Non-owner occupied		151,219			146,827
Farmland		38,481			38,898
Land Development		13,377			12,654
1 – 4 family residential real estate		196,098			196,098
Consumer		76,101			72,915
Subtotal		766,403			759,030
Unamortized deferred loan costs, net		70			84
Allowance for credit losses		(7,948	)		(7,930	)
Net Loans	$	758,525		$	751,184

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

(Dollars in thousands, except per share amounts)

The following table presents the activity in the allowance for credit losses by portfolio segment for the three months ended September 30, 2024.

	Commercial			Commercial							1-4 Family
	&			Real					Land		Residential
	Industrial			Estate		Farmland			Development		Real Estate			Consumer			Total
ACL beginning balance	$	1,144		$	3,650	$	89		$	174	$	2,018		$	855		$	7,930
Provision for expected credit losses		(57	)		28		(2	)		9		(1	)		100			77
Charge-offs		—			—		—			—		—			(126	)		(126	)
Recoveries		1			—		—			—		1			65			67
ACL ending balance	$	1,088		$	3,678	$	87		$	183	$	2,018		$	894		$	7,948

The following table presents the activity in the allowance for credit losses by portfolio segment for the three months ended September 30, 2023.

	Commercial			Commercial									1-4 Family
	&			Real						Land			Residential
	Industrial			Estate			Farmland			Development			Real Estate			Consumer			Total
ACL beginning balance	$	1,308		$	3,943		$	—		$	—		$	1,571		$	902		$	7,724
Cumulative effect of change in accounting principle		(455	)		(53	)		93			398			166			(97	)		52
Provision for expected credit losses		121			61			(2	)		(132	)		(99	)		91			40
Charge-offs		—			—			—			—			—			(106	)		(106	)
Recoveries		—			—			—			—			—			72			72
ACL ending balance	$	974		$	3,951		$	91		$	266		$	1,638		$	862		$	7,782

The following table presents the amortized cost of non-accrual loans by class as of September 30, 2024 and the interest income recognized on non-accrual loans for the three month period ended September 30, 2024:

	September 30, 2024
					Interest Income
	Non-accrual		Total		Recognized during
	loans with		Non-accrual		the period on
	no ACL		loans		non-accrual loans
Commercial & Industrial	$	50	$	306	$	—
Commercial real estate:
Owner occupied		138		138		6
1 – 4 family residential real estate		452		467		—
Total	$	640	$	911	$	6

The following table presents the amortized cost of non-accrual loans by class as of June 30, 2024 and the interest income recognized on non-accrual loans for the three month period ended September 30, 2023:

	June 30, 2024				Three months ended September 30, 2023
					Interest Income
	Non-accrual		Total		Recognized during
	loans with		Non-accrual		the period on
	no ACL		loans		non-accrual loans
Commercial & Industrial	$	51	$	308	$	—
Commercial real estate:
Owner occupied		189		189		—
1 – 4 family residential real estate		262		277		—
Total	$	502	$	774	$	—

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 amortized cost of past due loans as of September 30, 2024 by class of loans:

													Loans 90
	Days Past Due												Days Past
	30 – 59 Days		60 - 89 Days		90 Days or Greater		Total Past Due		Loans Not Past Due		Total		Due and Accruing
Commercial & Industrial	$	—	$	—	$	256	$	256	$	124,840	$	125,096	$	—
Commercial real estate:
Owner occupied		195		—		138		333		165,397		165,730		—
Non-owner occupied		—		—		—		—		150,925		150,925		—
Farmland		—		—		—		—		38,379		38,379		—
Land development		—		—		—		—		13,341		13,341		—
1 – 4 family residential real estate		397		189		215		801		196,343		197,144		—
Consumer		481		156		8		645		75,213		75,858		8
Total	$	1,073	$	345	$	617	$	2,035	$	764,438	$	766,473	$	8

The above table of past due loans includes the recorded investment in non-accrual loans of $117 in the loans not past due category, $185 in the loans 60-89 days past due category and $609 in the 90 days or greater category.

The following table presents the aging of the amortized cost of past due loans as of June 30, 2024 by class of loans:

													Loans 90
	Days Past Due												Days Past
	30 – 59 Days		60 - 89 Days		90 Days or Greater		Total Past Due		Loans Not Past Due		Total		Due and Accruing
Commercial & Industrial	$	—	$	—	$	308	$	308	$	127,503	$	127,811	$	—
Commercial real estate:
Owner occupied		311		—		189		500		163,043		163,543		—
Non-owner occupied		—		—		—		—		146,529		146,529		—
Farmland		—		—		—		—		38,799		38,799		—
Land development		—		—		—		—		12,615		12,615		—
1 – 4 family residential real estate		294		—		158		452		196,691		197,143		68
Consumer		575		98		16		689		71,985		72,674		16
Total	$	1,180	$	98	$	671	$	1,949	$	757,165	$	759,114	$	84

The above table of past due loans includes the recorded investment in non-accrual loans of $187 in the loans not past due category and $587 in the 90 days or greater category.

Modifications to Borrowers Experiencing Financial Difficulty

Occasionally, the Company modifies loans to borrowers experiencing financial difficulty to maximize collection of loan balances by providing principal forgiveness, term extension, an other-than insignificant payment delay, or an interest rate reduction. In some cases, the Company may provide multiple types of concessions on one loan. If principal forgiveness is provided, the amount of forgiveness is charged-off against the allowance for credit losses.

There were no modifications of loans to borrowers in financial distress completed during the three-month periods ended September 30, 2024 and 2023.

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

(Dollars in thousands, except per share amounts)

Collateral Dependent Loans

A loan is considered to be collateral dependent when, based upon management's assessment, the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. In such cases, expected credit losses are based on the fair value of the collateral at the measurement date, adjusted for estimated selling costs if satisfaction of the loan depends on the sale of the collateral. The following table presents the amortized cost of collateral dependent loans and the related allowance for credit losses allocated to these loans:

September 30, 2024:	Real Estate		Other		ACL
Commercial & Industrial	$	—	$	256	$	66
Commercial real estate:
Owner occupied		139		—		—
Total loans	$	139	$	256	$	66

June 30, 2024:	Real Estate		Other		ACL
Commercial & Industrial	$	—	$	257	$	67
Commercial real estate:
Owner occupied		189		—		—
Total loans	$	189	$	257	$	67

Credit Quality Indicators:

The Company 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. At the time of origination, the Company analyzes all commercial loans individually and classifies the loans by credit risk. Management regularly monitors commercial loans for any changes in the borrowers’ ability to service their debt and completes an annual review to confirm the risk rating for those loans with total outstanding loan relationships greater than $500. The Company uses the following definitions for risk ratings:

Pass. Loans classified as pass exhibit a wide array of characteristics but at a minimum represent minimal level of risk and are considered collectable. Borrowers in this rating may have leveraged but acceptable balance sheet positions, satisfactory asset quality, stable to favorable sales and earnings trends, acceptable liquidity, and adequate cash flow. While generally adhering to credit policy, these loans may exhibit occasional exceptions that do not result in undue risk. Borrowers are generally capable of absorbing setbacks, financial and otherwise.

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.

Not Rated. Loans listed as not rated are included in groups of homogeneous loans. Past due information is the primary credit indicator for groups of homogenous loans.

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

(Dollars in thousands, except per share amounts)

Based on the most recent analysis performed, the following tables present the amortized cost by internal risk category and class of loans as of September 30, 2024:

	Term Loans by Fiscal Year of Origination												Revolving Loans Amortized		Revolving Loans Converted
	2025		2024		2023		2022		2021		Prior		Cost Basis		To Term		Total
Commercial & Industrial
Pass	$	2,136	$	16,633	$	21,992	$	26,746	$	6,577	$	6,511	$	43,284	$	92	$	123,971
Special Mention		—		145		63		189		9		112		536		—		1,054
Substandard		—		—		—		—		7		—		—		—		7
Doubtful		—		—		—		—		—		—		64		—		64
Total Commercial & Industrial	$	2,136	$	16,778	$	22,055	$	26,935	$	6,593	$	6,623	$	43,884	$	92	$	125,096
Current year-to-date gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial real estate:
Owner occupied:
Pass	$	1,643	$	19,029	$	20,128	$	34,157	$	20,961	$	55,894	$	12,223	$	136	$	164,171
Special Mention		—		—		—		—		640		504		152		—		1,296
Substandard		—		—		—		—		—		249		—		—		249
Doubtful		—		—		—		—		14		—		—		—		14
Total owner occupied	$	1,643	$	19,029	$	20,128	$	34,157	$	21,615	$	56,647	$	12,375	$	136	$	165,730
Current year-to-date gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Non-owner occupied:
Pass	$	2,823	$	19,797	$	36,753	$	22,091	$	23,278	$	45,465	$	718	$	—	$	150,925
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Total non-owner occupied	$	2,823	$	19,797	$	36,753	$	22,091	$	23,278	$	45,465	$	718	$	—	$	150,925
Current year-to-date gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Farmland:
Pass	$	408	$	1,792	$	5,805	$	5,818	$	5,248	$	18,203	$	962	$	139	$	38,375
Special Mention		—		—		—		—		—		4		—		—		4
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Total Farmland	$	408	$	1,792	$	5,805	$	5,818	$	5,248	$	18,207	$	962	$	139	$	38,379
Current year-to-date gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Land Development:
Pass	$	257	$	6,304	$	1,991	$	345	$	468	$	756	$	3,220	$	—	$	13,341
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Total Land Development	$	257	$	6,304	$	1,991	$	345	$	468	$	756	$	3,220	$	—	$	13,341
Current year-to-date gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Total:
Pass	$	7,267	$	63,555	$	86,669	$	89,157	$	56,532	$	126,829	$	60,407	$	367	$	490,783
Special Mention		—		145		63		189		649		620		688		—		2,354
Substandard		—		—		—		—		7		249		—		—		256
Doubtful		—		—		—		—		14		—		64		—		78
Total	$	7,267	$	63,700	$	86,732	$	89,346	$	57,202	$	127,698	$	61,159	$	367	$	493,471

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

(Dollars in thousands, except per share amounts)

Management monitors the credit risk profile by payment activity for residential and consumer loan classes. Loans past due 90 days or more and loans on nonaccrual are considered nonperforming. The following table presents the amortized cost of residential real estate and consumer loans based on payment status as of September 30, 2024:

	Term Loans by Fiscal Year of Origination												Revolving Loans Amortized		Revolving Loans Converted
	2025		2024		2023		2022		2021		Prior		Cost Basis		To Term		Total
1 – 4 family residential real estate:
Performing	$	2,957	$	17,783	$	23,047	$	29,005	$	53,329	$	45,784	$	24,697	$	75	$	196,677
Nonperforming		—		—		129		273		—		65		—		—		467
Total 1-4 family residential real estate	$	2,957	$	17,783	$	23,176	$	29,278	$	53,329	$	45,849	$	24,697	$	75	$	197,144
Current year-to-date gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Consumer:
Performing	$	10,353	$	27,211	$	23,004	$	10,980	$	3,544	$	580	$	178	$	—	$	75,850
Nonperforming		—		—		—		8		—		—		—		—		8
Total consumer	$	10,353	$	27,211	$	23,004	$	10,988	$	3,544	$	580	$	178	$	—	$	75,858
Current year-to-date gross write-offs	$	6	$	23	$	19	$	76	$	—	$	2	$	—	$	—	$	126
Total:
Performing	$	13,310	$	44,994	$	46,051	$	39,985	$	56,873	$	46,364	$	24,875	$	75	$	272,527
Nonperforming		—		—		129		281		—		65		—		—		475
Total	$	13,310	$	44,994	$	46,180	$	40,266	$	56,873	$	46,429	$	24,875	$	75	$	273,002

Based on the most recent analysis performed, the following tables present the amortized cost by internal risk category and class of commercial loans as of June 30, 2024:

	Term Loans by Fiscal Year of Origination												Revolving Loans Amortized		Revolving Loans Converted
	2024		2023		2022		2021		2020		Prior		Cost Basis		To Term		Total
Commercial & Industrial
Pass	$	43,540	$	24,263	$	28,588	$	7,370	$	3,448	$	3,954	$	14,868	$	93	$	126,124
Special Mention		151		67		569		12		—		61		755		—		1,615
Substandard		—		—		—		8		—		—		—		—		8
Doubtful		—		—		—		—		—		—		64		—		64
Total Commercial & Industrial	$	43,691	$	24,330	$	29,157	$	7,390	$	3,448	$	4,015	$	15,687	$	93	$	127,811
Current year-to-date gross write-offs	$	—	$	—	$	—	$	—	$	—	$	6	$	—	$	—	$	6
Commercial real estate:
Owner occupied:
Pass	$	16,207	$	20,615	$	34,572	$	21,405	$	14,877	$	41,035	$	11,684	$	—	$	160,395
Special Mention		—		—		—		650		320		1,708		151		—		2,829
Substandard		—		—		—		—		—		254		—		—		254
Doubtful		—		—		—		14		—		51		—		—		65
Total owner occupied	$	16,207	$	20,615	$	34,572	$	22,069	$	15,197	$	43,048	$	11,835	$	—	$	163,543
Current year-to-date gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Non-owner occupied:
Pass	$	16,395	$	37,241	$	22,324	$	23,564	$	11,616	$	34,570	$	819	$	—	$	146,529
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Total non-owner occupied	$	16,395	$	37,241	$	22,324	$	23,564	$	11,616	$	34,570	$	819	$	—	$	146,529
Current year-to-date gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

(Dollars in thousands, except per share amounts)

	Term Loans by Fiscal Year of Origination												Revolving Loans Amortized		Revolving Loans Converted
	2024		2023		2022		2021		2020		Prior		Cost Basis		To Term		Total
Farmland:
Pass	$	1,543	$	5,854	$	5,867	$	5,309	$	2,280	$	16,591	$	1,201	$	143	$	38,788
Special Mention		—		—		—		—		—		11		—		—		11
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Total Farmland	$	1,543	$	5,854	$	5,867	$	5,309	$	2,280	$	16,602	$	1,201	$	143	$	38,799
Current year-to-date gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Land Development:
Pass	$	4,449	$	2,005	$	353	$	512	$	285	$	504	$	4,507	$	—	$	12,615
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Total Land Development	$	4,449	$	2,005	$	353	$	512	$	285	$	504	$	4,507	$	—	$	12,615
Current year-to-date gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Total:
Pass	$	82,134	$	89,978	$	91,704	$	58,160	$	32,506	$	96,654	$	33,079	$	236	$	484,451
Special Mention		151		67		569		662		320		1,780		906		—		4,455
Substandard		—		—		—		8		—		254		—		—		262
Doubtful		—		—		—		14		—		51		64		—		129
Total	$	82,285	$	90,045	$	92,273	$	58,844	$	32,826	$	98,739	$	34,049	$	236	$	489,297

Management monitors the credit risk profile by payment activity for residential and consumer loan classes. Loans past due 90 days or more and loans on nonaccrual are considered nonperforming. The following table presents the amortized cost of residential real estate and consumer loans based on payment status as of June 30, 2024:

	Term Loans by Fiscal Year of Origination												Revolving Loans Amortized		Revolving Loans Converted
	2024		2023		2022		2021		2020		Prior		Cost Basis		To Term		Total
1 – 4 family residential real estate:
Performing	$	16,675	$	23,451	$	29,857	$	54,816	$	18,891	$	28,792	$	24,235	$	81	$	196,798
Nonperforming		—		—		277		—		—		68		—		—		345
Total 1-4 family residential real estate	$	16,675	$	23,451	$	30,134	$	54,816	$	18,891	$	28,860	$	24,235	$	81	$	197,143
Current year-to-date gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Consumer:
Performing	$	29,800	$	25,179	$	12,422	$	4,241	$	586	$	236	$	194	$	—	$	72,658
Nonperforming		8		—		8		—		—		—		—		—		16
Total consumer	$	29,808	$	25,179	$	12,430	$	4,241	$	586	$	236	$	194	$	—	$	72,674
Current year-to-date gross write-offs	$	63	$	140	$	265	$	56	$	35	$	1	$	—	$	—	$	560
Total:
Performing	$	46,475	$	48,630	$	42,279	$	59,057	$	19,477	$	29,028	$	24,429	$	81	$	269,456
Nonperforming		8		—		285		—		—		68		—		—		361
Total	$	46,483	$	48,630	$	42,564	$	59,057	$	19,477	$	29,096	$	24,429	$	81	$	269,817

CONSUMERS BANCORP, INC.

Notes to the Consolidated Financial Statements

(Unaudited) (continued)

(Dollars in thousands, except per share amounts)