CONSUMERS BANCORP INC /OH/

Previous wording

**Net Income.**Net income was $8,580 for fiscal year 2024 compared with $10,674 for fiscal year 2023. The following key factors summarize our results of operations for the year ended June 30, 2024 compared with the same prior year period:

Current wording

**Net Income.**Net income was $8,667 for fiscal year 2025 compared with $8,580 for fiscal year 2024. The following key factors summarize our results of operations for the year ended June 30, 2025 compared with the same prior year period:

Previous wording

Return on average equity and return on average assets were 14.95% and 0.80%, respectively, for fiscal year 2024 compared with 20.27% and 1.05%, respectively, for the same period last year.

Current wording

Return on average equity and return on average assets were 12.05% and 0.78%, respectively, for fiscal year 2025 compared with 14.95% and 0.80%, respectively, for the same period last year.

Previous wording

Net interest margin is calculated by dividing net interest income on a fully tax equivalent basis (FTE) by total interest-earning assets. FTE income includes tax-exempt income, restated to a pre-tax equivalent, based on the statutory federal income tax rate of 21.0%. All average balances are daily average balances. Non-accruing loans are included in average loan balances and average securities include unrealized gains and losses on securities available for sale, while yields are based on average amortized cost. In fiscal year 2024, the taxable equivalent adjustment to net interest income was negative since the interest expense attributable to carrying tax exempt securities is not deductible.

Current wording

Net interest margin is calculated by dividing net interest income on a fully tax equivalent basis (FTE) by total interest-earning assets. FTE income includes tax-exempt income, restated to a pre-tax equivalent, based on the statutory federal income tax rate of 21.0%. All average balances are daily average balances. Non-accruing loans are included in average loan balances and average securities include unrealized gains and losses on securities available for sale, while yields are based on average amortized cost. In fiscal year 2024, the taxable equivalent adjustment to net interest income was negative since the interest expense attributable to carrying tax exempt securities is not deductible. The taxable equivalent adjustment improved in fiscal year 2025 since the municipal securities were transferred to CNB which does not have any interest expense.

Previous wording

FTE net interest income for fiscal year 2024 was $31,699, a decrease of $2,220 or 6.5%, from $33,919 in fiscal year 2023. The Company’s tax equivalent net interest margin was 3.00% for fiscal year 2024 and 3.37% for fiscal year 2023. FTE interest income for fiscal year 2024 was $48,925, an increase of $7,782, or 18.9%, from fiscal year 2023, primarily because of a 55-basis point increase in the yield on interest earning assets and a $44,481, or 4.6%, increase in average interest-earning assets from fiscal year 2023. The Company’s yield on average interest-earning assets was 4.64% for the 2024 fiscal year compared with 4.09% for the same period last year. The growth in average interest-earning assets was primarily a result of a $70,533, or 10.7%, increase in average loans.

Current wording

FTE net interest income for fiscal year 2025 was $34,197, an increase of $2,498 or 7.9%, from $31,699 in fiscal year 2024. The Company’s tax equivalent net interest margin was 3.15% for fiscal year 2025 and 3.00% for fiscal year 2024. FTE interest income for fiscal year 2025 was $53,139, an increase of $4,214, or 8.6%, from fiscal year 2024, primarily because of a 26-basis point increase in the yield on interest earning assets and a $39,977, or 3.9%, increase in average interest-earning assets from fiscal year 2024. The Company’s yield on average interest-earning assets was 4.90% for fiscal year 2025 compared with 4.64% for the same period last year. The yield on average interest-earning assets increased as loans and securities repriced up to higher current market rates and the tax-equivalent yield on nontaxable securities was positively impacted in fiscal year 2025 by the transfer of municipal bonds to CNB.

Previous wording

Interest expense for fiscal year 2024 was $17,226, an increase of $10,002 from fiscal year 2023 primarily because of an increase in deposit and short-term borrowing costs as a result of higher market interest rates and increased competition for deposits. The Company’s average cost of funds was 2.25% for fiscal year 2024 compared with 1.03% for the same prior year period.

Current wording

Interest expense for fiscal year 2025 was $18,942, an increase of $1,716 from fiscal year 2024. Interest expense increased primarily because of an increase in the cost of savings deposits, which includes money market accounts that have seen the largest increase in rates. Also, interest expense was impacted by a $31,220, or 4.1%, increase in average interest-bearing liabilities. The Company’s average cost of funds was 2.37% for fiscal year 2025 compared with 2.25% for the same prior year period.

Previous wording

A provision for credit losses on loans of $556 was recorded in fiscal year 2024 compared with a $855 provision for loan losses in fiscal year 2023. The provision for credit losses on loans recorded in fiscal year 2024 was primarily due to the organic growth within the loan portfolio. For fiscal year 2024, net charge offs of $402, or 0.05% of total loans, were recorded compared with $291, or 0.04% of total loans, for the same period last year. The allowance for credit losses as a percentage of loans was 1.04% at June 30, 2024 and 1.09% at June 30, 2023. The decline in the allowance for credit losses as a percentage of total loans was due to the improvement in economic conditions, as the economy has remained resilient following the pandemic and through the rapid rise in short-term interest rates, as well as, substandard and non-accrual loans being at low levels.

Current wording

For fiscal year 2025, net charge-offs of $597, or 0.07% of total loans, were recorded compared with $402, or 0.05% of total loans, for the same period last year. The allowance for credit losses as a percentage of loans was 1.04% at June 30, 2025 and 2024. The allowance for credit losses as a percentage of total loans was stable between the two periods since the forecasted unemployment rate projections remained within a relatively narrow range. The economy has remained resilient through the rapid rise in short-term interest rates and the recent changes in trade policies.

Previous wording

Non-performing loans were $858, or 0.11% of total loans, as of June 30, 2024. This compared with $104, or 0.01% of total loans, as of June 30, 2023. Non-performing loans have been considered in management’s analysis of the appropriateness of the allowance for credit losses. Management and the Board of Directors closely monitor these loans and believe the prospect for recovery of principal, less identified specific reserves, are favorable.

Current wording

Non-performing loans were $1,031, or 0.11% of total loans, as of June 30, 2025. This compared with $858, or 0.10% of total loans, as of June 30, 2024. Non-performing loans have been considered in management’s analysis of the appropriateness of the allowance for credit losses. Management and the Board of Directors closely monitor these loans and believe the prospect for recovery of principal, less identified specific reserves, are favorable. As of June 30, 2025, loans classified as special mention were $15,750, compared with $4,455 as of June 30, 2024. The increase was primarily related to one commercial customer because of a combination of a delay in a construction project and reduced revenue in the industry. The construction project for this commercial customer is now complete and operations have commenced in the new building, a portion of the property is being leased out, and the customer has implemented cost saving measures which are all expected to improve its financial performance. Also, the real estate secured position on this credit is further improved by existing and approved/pending Small Business Administration 504 debentures. Uncertainty remains regarding future levels of criticized and classified loans, non-performing loans and charge-offs. Management will continue to closely monitor changes in the loan portfolio and will work with borrowers as needed to mitigate losses to the Company.

Previous wording

**Other Expenses.**Total other expenses were $25,844 for the year ended June 30, 2024; an increase of $1,159, or 4.7%, from $24,685 for the year ended June 30, 2023.

Current wording

**Noninterest Expenses.**Total noninterest expenses were $28,086 for the year ended June 30, 2025; an increase of $2,242, or 8.7%, from $25,844 for the year ended June 30, 2024.

Previous wording

Salaries and employee benefit expenses increased by $396, or 2.8%, during fiscal year 2024 primarily due to merit and cost of living increases that were partially offset by lower incentive expenses.

Current wording

Salaries and employee benefit expenses increased by $1,175, or 8.2%, during fiscal year 2025 primarily due to merit and cost of living increases and higher sales and incentive expenses.

Previous wording

Debit card processing expenses increased by $110, or 9.8%, in fiscal year 2024 compared to the same prior year period primarily due to an increase in customer card usage and an increase in the number of cards issued. FDIC assessments increased by $193, or 31.7%, in fiscal year 2024 primarily because of an increase in the initial base deposit insurance assessment rate paid by all insured depository institutions. Financial institutions tax expenses decreased by $45, or 9.4%, in fiscal year 2024 since this is a capital-based tax and total capital was lower as of the measurement date in fiscal year 2024 because of the accumulated other comprehensive loss. Other expenses increased by $268, or 13.0%, primarily because of increased check and debit card fraud losses. Management has implemented new software fraud monitoring tools that it believes will help to mitigate these losses in the future.

Current wording

Occupancy and equipment expenses increased by $279, or 8.1%, in fiscal year 2025 because of investments in new software, increases in software licensing fees, and increases in building maintenance and repair expenses. Professional and director fees increased by $257, or 24.9%, primarily because of an increase in director fees due to the accrual for a restricted stock award and due to higher legal fees. Debit card processing expenses increased by $175, or 14.2%, in fiscal year 2025 compared to the same prior year period primarily because of an increase in customer card usage and an increase in fees. Financial institution tax expenses increased by $74, or 17.1%, in fiscal year 2025 since this is a capital-based tax and total capital was higher as of the measurement date in fiscal year 2025.

Previous wording

Income Tax Expense. Income tax expense totaled $1,845 and $2,248 and the effective tax rates were 17.7% and 17.4% for the fiscal years ended June 30, 2024 and 2023, respectively. Income tax expense was calculated utilizing a statutory federal income tax rate of 21.0% in fiscal years 2024 and 2023. The effective tax rate differs from the federal statutory rate as a result of tax-exempt income from obligations of states and political subdivisions, loans, bank owned life insurance earnings, and the low-income housing tax credits.

Current wording

Income Tax Expense. Income tax expense totaled $1,657 and $1,845 and the effective tax rates were 16.0% and 17.7% for the fiscal years ended June 30, 2025 and 2024, respectively. Income tax expense was calculated utilizing a statutory federal income tax rate of 21.0% in fiscal years 2025 and 2024. The effective tax rate differs from the federal statutory rate as a result of tax-exempt income from obligations of states and political subdivisions, loans, bank owned life insurance earnings, and the low-income housing tax credits.

Previous wording

Total assets as of June 30, 2024 were $1,097,089 compared with $1,060,024 at June 30, 2023, an increase of $37,065, or 3.5%. The growth in total assets is mainly attributable to an increase of $48,752, or 6.9%, in total loans and was primarily funded by a $20,447, or 2.1%, increase in total deposits.

Current wording

Total assets as of June 30, 2025 were $1.17 billion compared with $1.10 billion at June 30, 2024, an increase of $67,919, or 6.2%. The growth in total assets is mainly attributable to an increase of $54,344, or 7.2%, in total loans that was funded by a $63,838, or 6.6%, increase in total deposits.

Previous wording

Securities. Total securities were $270,856 at June 30, 2024, of which $264,802 were classified as available-for-sale and $6,054 were classified as held-to-maturity. The securities portfolio is mainly comprised of mortgage-backed securities and collateralized mortgage obligations issued by U.S. government sponsored entities and obligations of state and political subdivisions. The following tables summarize the amortized cost and fair value of available-for-sale securities at June 30, 2024 and 2023 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive loss:

Current wording

Securities. Total securities were $279,042 at June 30, 2025, of which $273,875 were classified as available-for-sale and $5,167 were classified as held-to-maturity. The securities portfolio is mainly comprised of mortgage-backed securities and collateralized mortgage obligations issued by U.S. government sponsored entities and obligations of state and political subdivisions. The following tables summarize the amortized cost and fair value of available-for-sale securities at June 30, 2025 and 2024 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive loss:

Previous wording

Loans. Loan receivables increased by $48,752, or 6.9%, to $759,114 at June 30, 2024 compared to $710,362 at June 30, 2023. Commercial & industrial loans increased by $15,184, or 13.5%, primarily because of a third-party residential mortgage warehouse line-of-credit that had a balance of $26,159 as of June 30, 2024 and a balance of $10,000 as of June 30, 2023. Consumer loans increased by $7,265, or 11.1%, primarily as a result of the expansion of indirect auto lending. Major classifications of loans, net of deferred loan fees and costs, were as follows as of June 30:

Current wording

Loans. Loan receivables increased by $54,344, or 7.2%, to $813,458 at June 30, 2025 compared to $759,114 at June 30, 2024. Commercial & industrial loans decreased by $14,298 primarily because of a third-party residential mortgage warehouse line-of-credit that had a balance of $26,159 as of June 30, 2024 that was paid down to zero as of June 30, 2025. The paydown was a result of lower mortgage volume due to higher mortgage rates and the funding needs of the lead bank. The outstanding balance of this line-of-credit is expected to increase in future periods if mortgage volume increases and as the funding needs of the lead bank changes. Consumer loans increased by $39,642, or 54.5%, because of the expansion of indirect auto lending within our market areas. Major classifications of loans, net of deferred loan fees and costs, were as follows as of June 30:

Previous wording

The allowance for credit losses consists of general and specific components. The general component covers loans collectively evaluated for credit loss and is based on peer historical loss experience adjusted for current and forecasted factors. Management's adjustments to the quantitative evaluation may be for trends in delinquencies, trends in the volume of loans, changes in underwriting standards, changes in the value of underlying collateral, the existence and effect of portfolio concentration, regulatory environment, economic conditions, Company management and the status of portfolio administration including the Company’s loan review function.

Current wording

The ACL consists of general and specific components. The general component covers loans collectively evaluated for credit loss and is based on peer historical loss experience adjusted for current and forecasted factors. Management's adjustments to the quantitative evaluation may be for trends in delinquencies, trends in the volume of loans, changes in underwriting standards, changes in the value of underlying collateral, the existence and effect of portfolio concentration, regulatory environment, economic conditions, Company management and the status of portfolio administration including the Company’s loan review function.

Previous wording

The specific component includes loans that do not share similar risk characteristics that are evaluated on an individual basis and are excluded from the pooling approach. As of June 30, 2024, individually evaluated loans totaled $26,933 and included the $26,159 third-party residential mortgage warehouse line-of-credit and $774 of nonaccrual loans. The warehouse line-of-credit is included in individually evaluated loans because of the unique structure of the loan given the short-term nature of the advances, curtailment features provided by the financial institution that the line-of-credit is issued to, as well as being secured by individual residential properties. As of June 30, 2023, under the incurred loan loss methodology, individually evaluated loans totaled $405 and included $351 of performing loans classified as troubled debt restructurings and $54 of nonaccrual loans. As of June 30, 2024, there was a specific reserve of $67 allocated to the individually evaluated loans and there was no specific allocation as of June 30, 2023.

Current wording

The specific component includes loans that do not share similar risk characteristics that are evaluated on an individual basis and are excluded from the pooling approach. As of June 30, 2025, individually evaluated loans totaled $930 and there was a specific reserve of $52 allocated to these individually evaluated loans. As of June 30, 2024, individually evaluated loans totaled $26,933 and included the $26,159 third-party residential mortgage warehouse line-of-credit and $774 of nonaccrual loans. The warehouse line-of-credit is included in individually evaluated loans because of the unique structure of the loan given the short-term nature of the advances, curtailment features provided by the financial institution that the line-of-credit is issued to, as well as being secured by individual residential properties. As of June 30, 2024, there was a specific reserve of $67 allocated to the individually evaluated loans.

Previous wording

Failure to receive principal and interest payments when due on any loan results in efforts to restore such loan to a current status. Loans are classified as non-accrual when, in the opinion of management, full collection of principal and accrued interest is not expected. The loans must be brought and kept current for six sustained payments before being considered for removal from non-accrual status. The Company adopted ASU 2022-02, Financial Instruments- Credit Losses (Topic 326): Troubled Debt Restructuring and Vintage Disclosures, during fiscal year 2024. This amendment eliminated the troubled debt restructuring recognition and measurement guidance and, instead, requires that an entity evaluate (consistent with the accounting for other loan modifications) whether the modification represents a new loan or a continuation of an existing loan. There were no reportable loan modifications during the fiscal year ended June 30, 2024. Under the previous incurred loan loss methodology, as of June 30, 2023, impaired loans totaled $405, of which $54 are included in non-accrual loans. Continued unsuccessful collection efforts generally lead to initiation of foreclosure or other legal proceedings.

Current wording

Failure to receive principal and interest payments when due on any loan results in efforts to restore such loan to a current status. Loans are classified as non-accrual when, in the opinion of management, full collection of principal and accrued interest is not expected. The loans must be brought and kept current for six sustained payments before being considered for removal from non-accrual status. Occasionally, loans to borrowers in financial distress are modified by providing principal forgiveness, interest rate reduction, term extension, or an other-than-insignificant payment delay. If principal forgiveness is provided, the amount of forgiveness is charged-off against the allowance for credit losses. One concession or multiple types of concessions may be provided on one loan. There were no modifications of loans to borrowers in financial distress completed during the fiscal years ended June 30, 2025 and 2024. Continued unsuccessful collection efforts generally lead to initiation of foreclosure or other legal proceedings.

Previous wording

Deposits. Total deposits increased by $20,447, or 2.1%, from $952,533 at June 30, 2023 to $972,980 at June 30, 2024. As market rates have risen, customers have chosen to move funds from savings and money market deposit products to higher yielding certificates of deposits. As of June 30, 2024, the Company maintained a favorable funding mix with 23.1% of total deposits in noninterest-bearing demand deposits, 14.6% in interest-bearing demand deposits, 36.1% in savings and money market deposits, and 26.2% in certificates and other time deposits.

Current wording

Deposits. Total deposits increased by $63,838 or 6.6%, from $972,980 at June 30, 2024 to $1.04 billion at June 30, 2025. As of June 30, 2025, the Company maintained a favorable funding mix with 23.1% of total deposits in noninterest-bearing demand deposits, 14.8% in interest-bearing demand deposits, 36.6% in savings and money market deposits, and 25.5% in certificates and other time deposits.

Previous wording

Uninsured deposits as of June 30, 2024 were $263,345, or 27.1% of total deposits, and includes $87,357 of uninsured public fund deposits that are fully collateralized. Uninsured deposits as of June 30, 2023 were $267,449, or 28.1% of total deposits, and includes $95,445 of uninsured public fund deposits that are fully collateralized. Uninsured deposits as of June 30, 2024 and 2023 are based on estimates and include portions of FDIC-insured deposit accounts that exceed the insurance limit of $250 thousand per separately insured depositor.

Current wording

Uninsured deposits as of June 30, 2025 were $310,119, or 29.9% of total deposits, and include $110,412 of uninsured public fund deposits that are fully collateralized. Uninsured deposits as of June 30, 2024 were $263,345, or 27.1% of total deposits, and include $87,357 of uninsured public fund deposits that are fully collateralized. Uninsured deposits as of June 30, 2025 and 2024 are based on estimates and include portions of FDIC-insured deposit accounts that exceed the insurance limit of $250 thousand per separately insured depositor.

Previous wording

Repurchase agreements are financing arrangements with local customers that mature daily. The Bank pledges securities as collateral for the repurchase agreements. The Federal Reserve’s Bank Term Funding Program (BTFP) was a facility established in 2023 in response to liquidity concerns within the banking industry and the program ceased making new loans on March 11, 2024. The BTFP was designed to provide additional funding to eligible depository institutions in order to help assure that banks had the ability to meet the needs of all their depositors. Under the program, eligible depository institutions could obtain loans of up to one year in length by pledging certain U.S. Treasuries, agency debt, mortgage-backed securities, and other qualifying assets as collateral. These assets were valued at par. A line of credit from another financial institution was established since the Company does not conduct operations and its primary sources of liquidity are dividend upstreams from the Bank and borrowings from outside sources. As of June 20, 2024, the available credit on the Company’s line of credit was $5,000. See Note 7—Short-Term Borrowings to the Consolidated Financial Statements, for additional information concerning short-term borrowings.

Current wording

Repurchase agreements are financing arrangements with local customers that mature daily. The Bank pledges securities as collateral for the repurchase agreements. The Federal Reserve’s Bank Term Funding Program was a facility established in 2023 in response to liquidity concerns within the banking industry, the program ceased making new loans in March 2024, and the outstanding balance of this loan was repaid in November 2024. A line of credit from another financial institution was established since the Company does not conduct operations and its primary sources of liquidity are dividend upstreams from the Bank and borrowings from outside sources. As of June 20, 2025, the available credit on the Company’s line of credit was $5,000. See Note 7—Short-Term Borrowings to the Consolidated Financial Statements, for additional information concerning short-term borrowings.

Previous wording

Total shareholders’ equity increased by $8,201 from $55,484 as of June 30, 2023 to $63,685 at June 30, 2024. The primary reason for the increase in shareholders’ equity was because of net income of $8,580 for the 2024 fiscal year and a decrease of $1,629 in the accumulated other comprehensive loss from the mark-to-market of available-for-sale securities which were partially offset by cash dividends paid of $2,246. The total accumulated other comprehensive loss was $28,332 as of June 30, 2024 and $29,961 as of June 30, 2023. Available-for-sale securities and shareholders’ equity were impacted by rapidly rising interest rates during 2022 and 2023 causing the accumulated other comprehensive loss to increase as available-for-sale securities are marked to fair market value. As market interest rates rise, the fair value of fixed-rate securities decline with a corresponding net of tax decline recorded in the accumulated other comprehensive loss portion of equity. This unrealized loss in securities is temporary and is adjusted monthly for additional market interest rate fluctuations, principal paydowns, calls, and maturities. The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such securities decline. The Company has significant sources of liquidity and therefore does not expect to have to sell securities to fund growth.

Current wording

Total shareholders’ equity increased by $12,586 from $63,685 as of June 30, 2024 to $76,271 at June 30, 2025. The primary reason for the increase in shareholders’ equity was because of net income of $8,667 for fiscal year 2025 and a decrease of $5,778 in the accumulated other comprehensive loss from the mark-to-market of available-for-sale securities which were partially offset by $2,383 in cash dividends paid. The total accumulated other comprehensive loss was $22,554 as of June 30, 2025 and $28,332 as of June 30, 2024. Available-for-sale securities and shareholders’ equity were impacted by rapidly rising interest rates during 2022 and 2023 causing the accumulated other comprehensive loss to increase as available-for-sale securities are marked to fair market value. As market interest rates rise, the fair value of fixed-rate securities decline with a corresponding net of tax decline recorded in the accumulated other comprehensive loss portion of equity. This unrealized loss in securities is temporary and is adjusted monthly for additional market interest rate fluctuations, principal paydowns, calls, and maturities. The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such securities decline. The Company has significant sources of liquidity and therefore does not expect to have to sell securities to fund growth.

Previous wording

For fiscal year 2024, the average equity to average total assets ratio was 5.35% and the dividend payout ratio was 26.2%. For fiscal year 2023, the average equity to average total assets ratio was 5.16% and the dividend payout ratio was 19.6%.

Current wording

For fiscal year 2025, the average equity to average total assets ratio was 6.44% and the dividend payout ratio was 27.5%. For fiscal year 2024, the average equity to average total assets ratio was 5.35% and the dividend payout ratio was 26.2%.

Previous wording

For fiscal year 2024, net cash inflows from operating activities were $9,376, net cash inflows from financing activities were $27,038 and net cash outflows from investing activities were $30,446. Major sources of cash were a $20,447 net increase in deposits and $29,882 in cash received from sales, maturities, or principal pay downs of available-for-sale securities. Major uses of cash were a $49,268 net increase in loans and $13,624 of purchases of available-for-sale securities. Total cash and cash equivalents were $17,723 as of June 30, 2024 compared to $11,755 at June 30, 2023.

Current wording

For fiscal year 2025, net cash inflows from operating activities were $7,934, net cash inflows from financing activities were $55,948 and net cash outflows from investing activities were $61,697. Major sources of cash were a $63,838 net increase in deposits and $38,548 in cash received from maturities, calls, and principal pay downs of available-for-sale securities. Major uses of cash were a $55,017 net increase in loans and $40,292 purchases of available-for-sale securities. Total cash and cash equivalents were $19,908 as of June 30, 2025 compared to $17,723 at June 30, 2024.

Previous wording

The Bank offers several forms of deposit products to its customers. We believe the rates offered by the Bank and the fees charged for them are competitive with others currently available in the market area. While the Bank continues to be under competitive pressures in the Bank’s market area as financial institutions attempt to attract and keep new deposits, we believe many commercial and retail customers are turning to community banks. Compared to our peers, the Company’s core deposits consist of a larger percentage of noninterest-bearing demand deposits resulting in a lower cost of funds of 2.25% for fiscal year 2024.

Current wording

The Bank offers several forms of deposit products to its customers. We believe the rates offered by the Bank and the fees charged for them are competitive with others currently available in the market area. While the Bank continues to be under competitive pressures in the Bank’s market area as financial institutions attempt to attract and keep new deposits, we believe many commercial and retail customers are turning to community banks. Compared to our peers, the Company’s core deposits consist of a larger percentage of noninterest-bearing demand deposits resulting in a lower cost of funds of 2.37% for fiscal year 2025.

Previous wording

Jumbo time deposits (those with balances of $250 and over) were $59,233 and $46,822 at June 30, 2024 and 2023, respectively. These deposits are monitored closely by the Bank and typically priced on an individual basis. When these deposits are from a municipality, certain bank-owned securities are pledged to guarantee the safety of these public fund deposits as required by Ohio law.

Current wording

Jumbo time deposits (those with balances of $250 and over) were $74,683 and $59,233 at June 30, 2025 and 2024, respectively. These deposits are monitored closely by the Bank and typically priced on an individual basis. When these deposits are from a municipality, certain bank-owned securities are pledged to guarantee the safety of these public fund deposits as required by Ohio law.

Previous wording

The Company has the option to use a third-party broker to obtain deposits from outside its normal service area as an additional source of funding, however, these deposits are not relied upon as a primary source of funding. As of June 30, 2024, there were $6,004 of brokered deposits within savings deposits that were used to fund the seasonal decline of public fund deposits. There were no brokered deposits as of June 30, 2023.

Current wording

The Company has the option to use a third-party broker to obtain deposits from outside its normal service area as an additional source of funding, however, these deposits are not relied upon as a primary source of funding. As of June 30, 2025, there were $1,420 of brokered deposits within savings deposits that were used to fund the seasonal decline of public fund deposits. There were $6,004 of brokered deposits as of June 30, 2024.

Previous wording

To provide additional sources of liquidity, the Company has lines of credit with other financial institutions and has entered into agreements with the Federal Home Loan Bank of Cincinnati (FHLB) and the Federal Reserve Discount Window. As of June 30, 2024, advances from the FHLB of Cincinnati totaled $13,709 compared with $8,776 as of June 30, 2023. As of June 30, 2024, the Bank had the ability to borrow an additional $99,814 from the FHLB of Cincinnati based on a blanket pledge of qualifying first mortgage and multi-family loans. The Company considers the FHLB of Cincinnati to be a reliable source of liquidity funding, secondary to its deposit base. In addition, at June 30, 2024, the Company had approximately $94,949 in securities unencumbered by a pledge that could be used to support additional borrowings, as needed, through the Federal Reserve discount window.

Current wording

To provide additional sources of liquidity, the Company has lines of credit with other financial institutions and has entered into agreements with the Federal Home Loan Bank of Cincinnati (FHLB) and the Federal Reserve Discount Window. As of June 30, 2025, advances from the FHLB of Cincinnati totaled $22,551 compared with $13,709 as of June 30, 2024. As of June 30, 2025, the Bank had the ability to borrow an additional $86,330 from the FHLB of Cincinnati based on a blanket pledge of qualifying first mortgage and multi-family loans. The Company considers the FHLB of Cincinnati to be a reliable source of liquidity funding, secondary to its deposit base. In addition, at June 30, 2025, the Company had approximately $91,626 in securities unencumbered by a pledge that could be used to support additional borrowings, as needed, through the Federal Reserve discount window.

Previous wording

Dividends from the Bank are the primary source of funds for payment of dividends to our shareholders. However, there are statutory limits on the amount of dividends the Bank can pay without regulatory approval. Under these regulations, the amount of dividends that may be paid in any calendar year is limited to the current year’s net profits, combined with the retained net profits of the preceding two years, subject to the capital requirements described above. Additionally, the Bank may not declare or pay any dividend if, after making the dividend, the Bank would be “undercapitalized,” as defined in the federal regulations. As of June 30, 2024, the Bank could, without prior approval, declare a dividend of approximately $18,593.

Current wording

Dividends from the Bank are the primary source of funds for payment of dividends to our shareholders. However, there are statutory limits on the amount of dividends the Bank can pay without regulatory approval. Under these regulations, the amount of dividends that may be paid in any calendar year is limited to the current year’s net profits, combined with the retained net profits of the preceding two years, subject to the capital requirements described above. Additionally, the Bank may not declare or pay any dividend if, after making the dividend, the Bank would be “undercapitalized,” as defined in the federal regulations. As of June 30, 2025, the Bank could, without prior approval, declare a dividend of approximately $17,085.

Previous wording

In some cases, management may determine that an individual loan exhibits unique risk characteristics which differentiate the loan from other loans within the loan segments. In such cases, the loans are evaluated for expected credit losses on an individual basis and excluded from the general component. Specific reserves in the ACL are determined by analyzing the borrower's ability to repay amounts owed, collateral deficiencies, the relative risk grade of the loan and economic conditions affecting the borrower's industry, among other things. 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 fair value of collateral supporting collateral dependent loans is evaluated on a quarterly basis. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. Although management believes its process for determining the allowance adequately considers all the potential factors that could potentially result in credit losses, the process includes subjective elements and may be susceptible to significant change. To the extent actual outcomes differ from management’s estimates, additional provisions for credit losses may be required that would adversely impact the Company’s financial condition or earnings in future periods.

Current wording

In some cases, management may determine that an individual loan exhibits unique risk characteristics which differentiate the loan from other loans within the loan segments. In such cases, the loans are evaluated for expected credit losses on an individual basis and excluded from the general component. Specific reserves in the ACL are determined by analyzing the borrower's ability to repay amounts owed, collateral deficiencies, the relative risk grade of the loan and economic conditions affecting the borrower's industry, among other things. A loan is considered 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 fair value of collateral supporting collateral dependent loans is evaluated on a quarterly basis. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. Although management believes its process for determining the allowance adequately considers all the potential factors that could potentially result in credit losses, the process includes subjective elements and may be susceptible to significant change. To the extent actual outcomes differ from management’s estimates, additional provisions for credit losses may be required that would adversely impact the Company’s financial condition or earnings in future periods.