CONSUMERS BANCORP INC /OH/

Previous 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:

Current wording

**Net Income.**Net income increased by $2,497, or 28.8%, to $11,164 for fiscal year 2026 compared with $8,667 for fiscal year 2025. The following key factors summarize our results of operations for the year ended June 30, 2026 compared with the same prior year period:

Previous 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.

Current wording

Return on average equity and return on average assets were 13.11% and 0.92%, respectively, for fiscal year 2026 compared with 12.05% and 0.78%, 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. The taxable equivalent adjustment improved in fiscal year 2025 since the municipal securities were transferred to CNB which does not have any interest expense.

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. Although the interest expense attributable to carrying tax exempt securities is not deductible, the taxable equivalent adjustment improved in fiscal year 2026 since the municipal securities were transferred to CNBI in fiscal year 2025 and CNBI does not have any interest expense.

Previous 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.

Current wording

FTE net interest income for fiscal year 2026 was $40,351, an increase of $6,154 or 18.0%, from $34,197 in fiscal year 2025. The Company’s tax equivalent net interest margin was 3.45% for fiscal year 2026 and 3.15% for fiscal year 2025. FTE interest income for fiscal year 2026 was $60,000, an increase of $6,861, or 12.9%, from fiscal year 2025, primarily because of an $89,491, or 8.5%, increase in average interest-earning assets and a 24-basis point increase in the yield on interest earning assets from fiscal year 2025. The Company’s yield on average interest-earning assets was 5.14% for fiscal year 2026 compared with 4.90% 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 2026 by the transfer of municipal bonds to CNBI in fiscal year 2025.

Previous 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.

Current wording

Interest expense for fiscal year 2026 was $19,649, an increase of $707 from fiscal year 2025. Interest expense increased because of a $68,627, or 8.6% increase in average interest-bearing liabilities. The increased expense due to volume was partially offset by a decline in the cost of time deposits and short-term borrowings. The Company’s average cost of funds was 2.27% for fiscal year 2026 compared with 2.37% for the same prior year period.

Previous 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.

Current wording

A provision for credit losses on loans of $990 was recorded in fiscal year 2026 compared with $1,137 in fiscal year 2025. The decline in the provision for expected credit losses on loans recorded in fiscal year 2026 was primarily because of lower net charge-offs compared with the prior year. For fiscal year 2026, net charge-offs of $195, or 0.02% of total loans, were recorded compared with $597, or 0.07% of total loans, for the same period last year. The allowance for credit losses as a percentage of loans was 0.99% at June 30, 2026 and 1.04% for fiscal year end 2025. The allowance for credit losses as a percentage of total loans was lower in fiscal year 2026 primarily because of a decline in the calculated peer benchmark loss rates from the prior year that are used as the basis to estimate expected credit losses. Management elected to utilize benchmark peer loss history data to estimate historical loss rates since the Company has had limited loss experience. Also, the forecasted unemployment rate projections remained within a relatively narrow range compared with the prior year and the economy has remained stable through fluctuations market interest rates and the continued changes in trade policies.

Previous 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.

Current wording

Non-performing loans were $696, or 0.07% of total loans, as of June 30, 2026. This compared with $1,031, or 0.11% of total loans, as of June 30, 2025. 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, 2026, loans classified as special mention totaled $4,061 and substandard totaled $12,372. The balances of loans classified as special mention and substandard are 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 leased, and the customer implemented operational changes which have improved their financial performance. The commercial real estate securing these loans has recently been appraised for an amount that exceeds the outstanding loan balance. 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

Noninterest Income. Total noninterest income increased by $554, or 11.3%, to $5,450 for fiscal year 2025. Debit card interchange income increased by $163, or 7.1% in fiscal year 2025 because of an increase in customer usage. Bank owned life insurance income increased by $113, or 40.6%, because of the purchase of a new life insurance policy during fiscal year 2025. Service charges on deposit accounts increased by $61, or 3.6%, in fiscal year 2025 primarily because of an increase in new commercial deposit customers and an increase in the usage of our cash management products by our existing business customers. Mortgage banking revenue increased by $53, or 15.3%.

Current wording

Noninterest Income. Total noninterest income increased by $611, or 11.2%, to $6,061 for fiscal year 2026. Debit card interchange income increased by $209, or 8.4% in fiscal year 2026 because of an increase in customer usage; bank owned life insurance income increased by $86, or 22.0%, because of the purchase of a new life insurance policies during fiscal year 2026; and mortgage banking revenue increased by $121, or 30.3%, because of an increase in mortgage volume. Included in other noninterest income is $106 of interest rate swap fees that were recognized on this product that began to be offered in fiscal year 2026.

Previous 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.

Current wording

**Noninterest Expenses.**Total noninterest expenses were $31,468 for the year ended June 30, 2026; an increase of $3,382, or 12.0%, from $28,086 for the year ended June 30, 2025.

Previous 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.

Current wording

Salaries and employee benefit expenses increased by $2,291, or 14.7%, during fiscal year 2026 primarily due to merit and cost of living increases, higher sales and incentive expenses, and additions to staff in the retail and lending areas.

Previous 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.

Current wording

Occupancy and equipment expenses increased by $581, or 15.6%, in fiscal year 2026 because of investments in new software, increases in software licensing fees, and because of the two new branch locations that were opened during the third quarter of fiscal year 2025 and second quarter of fiscal year 2026. Professional and director fees decreased by $87, or 6.7%, primarily because of lower audit and legal fees. Debit card processing expenses increased by $127, or 9.0%, in fiscal year 2026 compared to the same prior year period primarily because of an increase in customer card usage. Financial institution tax expenses increased by $111, or 21.9%, in fiscal year 2026 since this is a capital-based tax and total capital was higher as of the measurement date in fiscal year 2026.

Previous 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.

Current wording

Income Tax Expense. Income tax expense totaled $2,013 and $1,657 and the effective tax rates were 15.3% and 16.0% for the fiscal years ended June 30, 2026 and 2025, respectively. Income tax expense was calculated utilizing a statutory federal income tax rate of 21.0% in fiscal years 2026 and 2025. 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, 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.

Current wording

Total assets as of June 30, 2026 were $1.28 billion compared with $1.17 billion at June 30, 2025, an increase of $115,365, or 9.9%. The growth in total assets is mainly attributable to an increase of $124,075, or 15.3%, in total loans and was primarily funded by an $84,144, or 8.1%, increase in total deposits.

Previous 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:

Current wording

Securities. Total securities were $261,892 at June 30, 2026, of which $257,584 were classified as available-for-sale and $4,308 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, 2026 and 2025 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive loss:

Previous 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:

Current wording

Loans. Loan receivables increased by $124,075, or 15.3%, to $937,533 at June 30, 2026 compared to $813,458 at June 30, 2025. Commercial & industrial loans increased by $37,255 primarily because of a third-party residential mortgage warehouse line-of-credit that had a balance of $19,293 as of June 30, 2026, and a zero balance as of June 30, 2025. The line-of-credit was not drawn in fiscal year 2025 and the outstanding balance fluctuates based on mortgage volume and the funding needs of the lead bank. Consumer loans increased by $35,335, or 28.5%, 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 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.

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, 2026, individually evaluated loans totaled $19,970 and included the $19,293 third-party residential mortgage warehouse line-of-credit and $677 of nonaccrual loans. As of June 30, 2026, there was a specific reserve of $8 allocated to the individually evaluated loans. As of June 30, 2025, individually evaluated loans totaled $930 and there was a specific reserve of $52 allocated to these individually evaluated 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.

Previous wording

While management’s periodic analysis of the adequacy of the allowance for credit losses may allocate portions of the allowance for specific problem loan situations, the entire allowance is available for any loan charge-off that may occur. While the Company has historically experienced strong trends in asset quality, an increase in the provision could occur if economic conditions and factors which affect credit quality, real estate values and general business conditions worsen. Management closely monitors changes in the existing loan portfolio and analyzes potential loan opportunities carefully in order to manage credit risk.

Current wording

While management’s periodic analysis of the adequacy of the allowance for credit losses may allocate portions of the allowance for specific problem loan situations, the entire allowance is available for any loan charge-off that may occur. While the Company historically has experienced strong trends in asset quality, an increase in the provision could occur if economic conditions and factors which affect credit quality, real estate values and general business conditions worsen. Management closely monitors changes in the existing loan portfolio and analyzes potential loan opportunities carefully in order to manage credit risk.

Previous 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.

Current wording

Deposits. Total deposits increased by $84,144 or 8.1%, from $1.04 billion at June 30, 2025 to $1.12 billion at June 30, 2026. As of June 30, 2026, the Company maintained a favorable funding mix with 22.0% of total deposits in noninterest-bearing demand deposits, 14.0% in interest-bearing demand deposits, 39.2% in savings and money market deposits, and 24.8% in certificates and other time deposits.

Previous 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.

Current wording

Uninsured deposits as of June 30, 2026 were $370,163, or 33.0% of total deposits, and include $105,584 of uninsured public fund deposits that are fully collateralized. 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, 2026 and 2025 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 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.

Current wording

Repurchase agreements are financing arrangements with local customers that mature daily. The Bank pledges securities as collateral for the repurchase agreements. 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, 2026, the available credit on the Company’s line of credit was $4,775. 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 $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.

Current wording

Total shareholders’ equity increased by $13,614 from $76,271 as of June 30, 2025 to $89,885 at June 30, 2026. The primary reason for the increase in shareholders’ equity was because of net income of $11,164 for fiscal year 2026 and an improvement of $4,695 in the accumulated other comprehensive loss from the mark-to-market of available-for-sale securities which were partially offset by $2,644 in cash dividends paid. The total accumulated other comprehensive loss was $17,859 as of June 30, 2026 and $22,554 as of June 30, 2025. 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 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%.

Current wording

For fiscal year 2026, the average equity to average total assets ratio was 7.04% and the dividend payout ratio was 23.7%. For fiscal year 2025, the average equity to average total assets ratio was 6.44% and the dividend payout ratio was 27.5%.

Previous 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.

Current wording

For fiscal year 2026, net cash inflows from operating activities were $11,189, net cash inflows from financing activities were $99,655 and net cash outflows from investing activities were $104,489. Major sources of cash were an $84,144 net increase in deposits and $41,477 in cash received from maturities, calls, and principal pay downs of available-for-sale securities. Major uses of cash were a $124,270 increase in net loans and $21,068 purchases of available-for-sale securities. Total cash and cash equivalents were $26,263 as of June 30, 2026 compared to $19,908 at June 30, 2025.

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 2.37% for fiscal year 2025.

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 2.27% for fiscal year 2026.

Previous 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.

Current wording

Jumbo time deposits (those with balances of $250 and over) were $94,028 and $76,683 at June 30, 2026 and 2025, 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, 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.

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, 2026 and 2025, there were $4 and $1,420, respectively, of brokered deposits within savings deposits. Brokered deposits are typically used to fund the seasonal decline of public fund deposits.

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, 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.

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, 2026, advances from the FHLB of Cincinnati totaled $27,007 compared with $22,551 as of June 30, 2025. As of June 30, 2026, the Bank had the ability to borrow an additional $97,723 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, 2026, the Company had approximately $94,430 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, 2025, the Bank could, without prior approval, declare a dividend of approximately $17,085.

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, 2026, the Bank could, without prior approval, declare a dividend of approximately $18,899.

Previous wording

Management evaluated goodwill as of April 30, 2025, the measurement date, utilizing an income approach that incorporated a discounted cash flow model that involved management assumptions based upon future growth and earnings projections. The estimated fair value of the reporting unit was then compared to the current carrying value to determine if impairment had occurred. It is our opinion that, as of the measurement date, the aggregate fair value of the reporting unit exceeded the carrying value of the reporting unit. Therefore, management concluded that goodwill was not impaired. Although we believe our assumptions are reasonable, actual results may vary significantly and it is impossible to know the future impact of evolving economic conditions. If for any future period it is determined that there has been impairment in the carrying value of our goodwill balances, the Company will record a charge to earnings, which could have a material adverse effect on net income, but not risk-based capital ratios.

Current wording

Management evaluated goodwill as of April 30, 2026, the measurement date, utilizing a quantitative impairment assessment. The estimated fair value of the reporting unit was compared to the current carrying value to determine if impairment had occurred. It is our opinion that, as of the measurement date, the aggregate fair value of the reporting unit exceeded the carrying value of the reporting unit. Therefore, management concluded that goodwill was not impaired. Although we believe our assumption was reasonable, actual results may vary significantly and it is impossible to know the future impact of evolving economic conditions. If for any future period it is determined that there has been impairment in the carrying value of our goodwill balances, the Company will record a charge to earnings, which could have a material adverse effect on net income, but not risk-based capital ratios.