CBKM 10-K & 10-Q changes, risk factors and insider trading

Consumers Bancorp, Inc., a bank holding company incorporated under the laws of the State of Ohio, owns all the issued and outstanding capital stock of Consumers National Bank, a bank chartered under the laws of the United States of America. The Company’s activities have been limited primarily to holding the common stock of the Bank. The Bank’s business involves attracting deposits from businesses and individual customers and using such deposits to originate commercial, mortgagemortgage, and consumer loans in its market area, consisting primarily of Carroll, Columbiana, Jefferson, Mahoning, Stark, and Summit counties in Ohio. Its market includes these counties as well as the contiguous counties in northeast Ohio, western Pennsylvania, and northern West Virginia. The Bank also invests in securities consisting primarily of U.S. government-sponsored agencies, municipal obligations, agency issued mortgage-backed and collateralized mortgage obligations.

Net Income. Net income wasincreased by $2,497, or 28.8%, to $11,164 for fiscal year 2026 compared with $8,667 for fiscal year 2025 compared with $8,580 for fiscal year 2024.2025. The following key factors summarize our results of operations for the year ended June 30, 20252026 compared with the same prior year period:

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 sinceAlthough the interest expense attributable to carrying tax exempt securities is not deductible.deductible, Thethe taxable equivalent adjustment improved in fiscal year 20252026 since the municipal securities were transferred to CNBCNBI whichin fiscal year 2025 and CNBI does not have any interest expense.

FTE net interest income for fiscal year 20252026 was $34,197,$40,351, an increase of $2,498$6,154 or 7.9%,18.0%, from $31,699$34,197 in fiscal year 2024.2025. The Company’s tax equivalent net interest margin was 3.45% for fiscal year 2026 and 3.15% for fiscal year 2025 and 3.00% for fiscal year 2024.2025. FTE interest income for fiscal year 20252026 was $53,139,$60,000, an increase of $4,214,$6,861, or 8.6%,12.9%, from fiscal year 2024,2025, primarily because of an $89,491, or 8.5%, increase in average interest-earning assets and a 26-basis24-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 2024.2025. The Company’s yield on average interest-earning assets was 4.90%5.14% for fiscal year 20252026 compared with 4.64%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 20252026 by the transfer of municipal bonds to CNB.CNBI in fiscal year 2025.

Interest expense for fiscal year 20252026 was $18,942,$19,649, an increase of $1,716$707 from fiscal year 2024.2025. 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,$68,627, or 4.1%,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 2.37%2.27% for fiscal year 20252026 compared with 2.25%2.37% for the same prior year period.

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 2025,2026, net charge-offs of $597,$195, or 0.07%0.02% of total loans, were recorded compared with $402,$597, or 0.05%0.07% of total loans, for the same period last year. The allowance for credit losses as a percentage of loans was 1.04%0.99% at June 30, 20252026 and 2024.1.04% for fiscal year end 2025. The allowance for credit losses as a percentage of total loans was stablelower betweenin fiscal year 2026 primarily because of a decline in the twocalculated periodspeer 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.range Thecompared with the prior year and the economy has remained resilientstable through thefluctuations rapid rise in short-termmarket interest rates and the recentcontinued changes in trade policies.

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. 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, 2025,2026, loans classified as special mention weretotaled $15,750,$4,061 comparedand withsubstandard $4,455totaled $12,372. The balances of loans classified as ofspecial Junemention 30,and 2024.substandard The increase wasare 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 completecomplete, and operations have commenced in the new building, a portion of the property is being leased out,leased, and the customer has implemented costoperational saving measureschanges which arehave allimproved expected to improve itstheir 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 loansloans, 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.

Noninterest Income. Total noninterest income increased by $554,$611, or 11.3%,11.2%, to $5,450$6,061 for fiscal year 2025.2026. Debit card interchange income increased by $163,$209, or 7.1%8.4% in fiscal year 20252026 because of an increase in customer usage.usage; Bankbank owned life insurance income increased by $113,$86, or 40.6%,22.0%, because of the purchase of a new life insurance policypolicies during fiscal year 2025.2026; Serviceand chargesmortgage onbanking deposit accountsrevenue increased by $61,$121, or 3.6%, in fiscal year 2025 primarily30.3%, because of an increase in newmortgage commercialvolume. deposit customers and an increaseIncluded in theother usagenoninterest income is $106 of ourinterest cashrate managementswap productsfees bythat ourwere existingrecognized businesson customers.this Mortgageproduct bankingthat revenuebegan increasedto bybe $53,offered orin 15.3%.fiscal year 2026.

Salaries and employee benefit expenses increased by $1,175,$2,291, or 8.2%,14.7%, during fiscal year 20252026 primarily due to merit and cost of living increases andincreases, higher sales and incentive expenses.expenses, and additions to staff in the retail and lending areas.

Occupancy and equipment expenses increased by $279,$581, or 8.1%,15.6%, in fiscal year 20252026 because of investments in new software, increases in software licensing fees, and increasesbecause inof buildingthe maintenancetwo new branch locations that were opened during the third quarter of fiscal year 2025 and repairsecond expenses.quarter of fiscal year 2026. Professional and director fees increaseddecreased by $257,$87, or 24.9%,6.7%, primarily because of anlower increase in director fees due to the accrual for a restricted stock awardaudit and due to higher legal fees. Debit card processing expenses increased by $175,$127, or 14.2%,9.0%, in fiscal year 20252026 compared to the same prior year period primarily because of an increase in customer card usage and an increase in fees.usage. Financial institution tax expenses increased by $74,$111, or 17.1%,21.9%, in fiscal year 20252026 since this is a capital-based tax and total capital was higher as of the measurement date in fiscal year 2025.2026.

Total assets as of June 30, 20252026 were $1.17$1.28 billion compared with $1.10$1.17 billion at June 30, 2024,2025, an increase of $67,919,$115,365, or 6.2%.9.9%. The growth in total assets is mainly attributable to an increase of $54,344,$124,075, or 7.2%,15.3%, in total loans thatand was primarily funded by aan $63,838,$84,144, or 6.6%,8.1%, increase in total deposits.

Loans. Loan receivables increased by $54,344,$124,075, or 7.2%,15.3%, to $937,533 at June 30, 2026 compared to $813,458 at June 30, 2025 compared to $759,114 at June 30, 2024.2025. Commercial & industrial loans decreasedincreased by $14,298$37,255 primarily because of a third-party residential mortgage warehouse line-of-credit that had a balance of $26,159$19,293 as of June 30, 20242026, thatand was paid down toa zero balance as of June 30, 2025. The paydownline-of-credit was anot resultdrawn ofin lowerfiscal year 2025 and the outstanding balance fluctuates based on 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,$35,335, or 54.5%,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:

Allowance for Credit Losses on Loans. The determination of the balance of the allowance for credit losses is based on the CECL methodology and utilizes a lifetime “expected credit loss” measurement objective for the recognition of credit losses for loans, held-to-maturity securitiessecurities, and other receivables at the time the financial asset is originated or acquired. The expected credit losses are adjusted each period for changes in expected lifetime credit losses. The allowance for credit losses (ACL) is maintained at a level considered by management to be adequate to cover credit losses currently expected over the weighted average life of each loan segment.

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. 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.

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 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.

Deposits. Total deposits increased by $63,838$84,144 or 6.6%,8.1%, from $972,980 at June 30, 2024 to $1.04 billion at June 30, 2025.2025 to $1.12 billion at June 30, 2026. As of June 30, 2025,2026, the Company maintained a favorable funding mix with 23.1%22.0% of total deposits in noninterest-bearing demand deposits, 14.8%14.0% in interest-bearing demand deposits, 36.6%39.2% in savings and money market deposits, and 25.5%24.8% in certificates and other time deposits.

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, 2025,2026, the available credit on the Company’s line of credit was $5,000.$4,775. See Note 7—Short-Term Borrowings to the Consolidated Financial Statements, for additional information concerning short-term borrowings.

Total shareholders’ equity increased by $12,586$13,614 from $63,685$76,271 as of June 30, 20242025 to $76,271$89,885 at June 30, 2025.2026. The primary reason for the increase in shareholders’ equity was because of net income of $8,667$11,164 for fiscal year 20252026 and aan decreaseimprovement of $5,778$4,695 in the accumulated other comprehensive loss from the mark-to-market of available-for-sale securities which were partially offset by $2,383$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 and $28,332 as of June 30, 2024.2025. 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.

For fiscal year 2025,2026, net cash inflows from operating activities were $7,934,$11,189, net cash inflows from financing activities were $55,948$99,655 and net cash outflows from investing activities were $61,697.$104,489. Major sources of cash were aan $63,838$84,144 net increase in deposits and $38,548$41,477 in cash received from maturities, calls, and principal pay downs of available-for-sale securities. Major uses of cash were a $55,017 net$124,270 increase in net loans and $40,292$21,068 purchases of available-for-sale securities. Total cash and cash equivalents were $19,908$26,263 as of June 30, 20252026 compared to $17,723$19,908 at June 30, 2024.2025.

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 $1,420$4 and $1,420, respectively, of brokered deposits within savings deposits. Brokered deposits thatare weretypically used to fund the seasonal decline of public fund deposits. There were $6,004 of brokered deposits as of June 30, 2024.

Management evaluated goodwill as of April 30, 2025,2026, the measurement date, utilizing an income approach that incorporated a discountedquantitative cashimpairment flow model that involved management assumptions based upon future growth and earnings projections.assessment. 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 assumptionsassumption arewas 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.

The following is management’s analysis of the Company’s results of operations for the three- and six-monthnine-month periods ended DecemberMarch 31, 2025,2026, compared to the same periods in fiscal year 2025, and the consolidated balance sheet at DecemberMarch 31, 2025,2026, compared to June 30, 2025. This discussion is designed to provide a more comprehensive review of the operating results and financial condition than could be obtained from an examination of the financial statements alone. This analysis should be read in conjunction with the consolidated financial statements and related footnotes and the selected financial data included elsewhere in this report.

Three- and Six- MonthNine-Month Periods Ended DecemberMarch 31, 20252026 and 20242025

Net income for the secondthird quarter of fiscal year 2026 was $2,755,$2,817, or $0.87$0.90 per common share, compared with $2,287,$1,851, or $0.73$0.59 per common share for the three months ended DecemberMarch 31, 2024.2025. The following are key highlights of our results of operations for the three months ended DecemberMarch 31, 2025,2026, compared with the prior fiscal year comparable period:

Net income for the first sixnine months of fiscal year 2026 was $5,389,$8,206, or $1.71$2.61 per common share, compared with $4,523,$6,374, or $1.45$2.04 per common share for the sixnine months ended DecemberMarch 31, 2024.2025. The following are key highlights of our results of operations for the sixnine months ended DecemberMarch 31, 2025,2026, compared with the prior fiscal year comparable period:

The annualized return on average equity and return on average assets were 12.90%12.82% and 0.91%,0.94%, respectively, for the three months ended DecemberMarch 31, 2025,2026, compared to 12.55%10.35% and 0.81%,0.68%, respectively, for the same prior year period. The annualized return on average equity and return on average assets were 13.15%13.04% and 0.90%,0.91%, respectively, for the sixnine months ended DecemberMarch 31, 2025,2026, compared to 12.81%11.98% and 0.81%,0.77%, respectively, for the same prior year period.

The Company’s net interest margin was 3.43%3.53% for the three months ending DecemberMarch 31, 2025,2026, compared with 3.02%3.27% for the same prior year period. FTE net interest income for the three months ended DecemberMarch 31, 2025,2026, increased by $1,807,$1,556, or 21.9%,18.0%, to $10,045$10,212 from $8,238$8,656 for the same prior year period.

The yield on average interest-earning assets increased to 5.11%5.21% for the three months ended DecemberMarch 31, 2025,2026, compared with 4.81%4.93% for the same period last year. Tax-equivalent interest income increased by $1,814,$2,007, or 13.8%,15.4%, for the three months ended DecemberMarch 31, 2025,2026, from the same prior year period primarily because of 30-basisa $109,485, or 10.5%, increase in average interest-earning assets and a 28-basis point increase in the yield on average interest-earning assets and a $84,215, or 8.0%, increase in average interest-earning assets. The tax-equivalent yield on tax-exempt securities was positively impacted in the second quarter of fiscal year 2026 by the Company’s transfer of municipal bonds to CNB Investment Co. Also, the yield on taxable securities and loans was positively impacted by new and repricing assets being invested at higher current market rates. Interest expense for the three months ended DecemberMarch 31, 20252026 increased by $7,$451, or 0.1%,10.3%, from the same prior year period primarily as a result of a $64,243,$82,864, or 8.1%,10.5%, increase in interest bearing liabilities that was mostlypartially offset by lower time deposit costs because of recent declines in shorter-term market interest rates. The Company’s cost of funds decreasedwas to 2.27%2.25% for both of the threethree-month monthsperiods endedending DecemberMarch 31, 20252026 comparedand withMarch 2.45%31, for the same prior year period.2025.

The Company’s net interest margin was 3.40%3.45% for the sixnine months ending DecemberMarch 31, 2025,2026, compared with 2.97%3.07% for the same prior year period. FTE net interest income for the sixnine months ended DecemberMarch 31, 2025,2026, increased by $3,548,$5,104, or 21.9%,20.6%, to $19,726$29,938 from $16,178$24,834 for the same prior year period.

The yield on average interest-earning assets increased to 5.09%5.13% for the sixnine months ended DecemberMarch 31, 2025,2026, compared with 4.81%4.85% for the same period last year. Tax-equivalent interest income increased by $3,291,$5,298, or 12.6%,13.5%, for the sixnine months ended DecemberMarch 31, 2025,2026, from the same prior year period primarily because of 28-basis point increase in the yield on average interest-earning assets and aan $74,440,$85,954, or 7.1%,8.2%, increase in average interest-earning assets. The tax-equivalent yield on tax-exempt securities was positively impacted in the first sixnine months of fiscal year 2026 by the Company’s transfer of municipal bonds to CNB Investment Co. Also, the yield on taxable securities and loans was positively impacted by new and repricing assets being invested at higher current market rates. Interest expense for the sixnine months ended DecemberMarch 31, 20252026 decreasedincreased by $257,$194, or 2.6%,1.3%, from the same prior year period primarily as a result of lower time deposit costs because of recenta declines$64,175, or 8.1%, increase in shorter-termaverage marketinterest-bearing interest rates.liabilities. The Company’s cost of funds decreased to 2.28%2.27% for the sixnine months ended DecemberMarch 31, 20252026 compared with 2.51%2.42% for the same prior year period.period from lower time deposit and short-term borrowing costs because of declines in shorter-term market interest rates.

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 DecemberMarch 31, 2025,2026, individually evaluated loans totaled $20,255$19,674 and included a $19,360$19,130 third-party residential mortgage warehouse line-of-credit and $895$526 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, 2025, individually evaluated loans totaled $930 of nonaccrual loans. There was no specific allocation of the allowance for credit losses to individually evaluated loans as of DecemberMarch 31, 2025,2026, and there was a $52 specific allocation of the allowance for credit losses to individually evaluated loans as of June 30, 2025.

The allowance for credit losses as a percentage of loans was 1.01%0.98% as of DecemberMarch 31, 20252026 and 1.04% as of June 30, 2025. The provision for credit losses recorded in the first six months of fiscal year 2026 was higher than the prior year because of the significant growth in the loan portfolio. Net charge-offs of $188,$257, or an annualized 0.04% of total loans, were recorded during the six monthnine-month period ended DecemberMarch 31, 2025,2026, compared with net charge offs of $248,$540, or an annualized 0.07%0.09% of total loans, for the same period last year.

Non-performing loans were $902$547 as of DecemberMarch 31, 2025,2026, compared with $1,031 as of June 30, 2025. As of DecemberMarch 31, 2025 and June 30, 2025,2026, non-performing loans included $332$140 that iswas guaranteed by the Small Business Administration.Administration as compared to $332 that was guaranteed as of June 30, 2025. Excluding the guaranteed portion, non-performing loans to total loans were 0.07%0.04% as of DecemberMarch 31, 20252026, and 0.09% as of June 30, 2025. As of DecemberMarch 31, 2025,2026, loans classified as special mention were $5,484$6,855 and substandard were $8,325.$8,887. 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 relationship is now complete, and operations have commenced in the new building, a portion of the property is being leased out,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, and the customer has a signed letter of intent for the purchase of the real estate that, if executed,consummated, will pay off a substantial portion of this loan relationship. 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.

The allowance for credit losses on off-balance sheet credit exposures is a liability account representing expected credit losses over the contractual period for which the Company is exposed to credit risk resulting from a contractual obligation to extend credit. The reserve for unfunded commitments is primarily related to 1 - 4 family home equity lines of credit and commercial construction loans. For the six-monthnine-month period ended DecemberMarch 31, 2025,2026, an increase of $110$160 was recorded to the reserve for unfunded commitments compared with a reduction of $5$10 for the same period last year. The balance of the reserve for unfunded commitments was $490$540 and $380 as of DecemberMarch 31, 20252026 and June 30, 2025, respectively.

Noninterest income increased by $221,$154, or 16.2%,12.1%, for the secondthird quarter of fiscal year 2026 from the same period last year primarily because of $88an increase of revenue$61, recognizedor on10.4%, interestin ratedebit swaps,card interchange income due to increased customer usage, an increase of $84,$23, or 147.4%,31.9%, in mortgage banking activity, and an increase of $24, or 24.0%,24.7%, in bank owned life insurance income because of the purchase of additional life insurance policies. For the six-monthnine-month period ended DecemberMarch 31, 2025,2026, noninterest income increased $297,$451, ofor 10.8%11.2%, from the same period last year. The increase in noninterest income was primarily due to $88$98 of revenue recognized on interest rate swaps, an increase of $62,$123, or 4.9%,6.6%, in debit card interchange income due to increased customer usage, and an increase of $79$102 or 41.6%38.9% in mortgage banking activity.activity, and an increase of $64, or 22.1%, in bank owned life insurance income because of the purchase of additional life insurance policies.

Total noninterest expenses increased by $1,137,$785, or 16.8%,11.0%, for the secondthird quarter of fiscal year 2026 and $2,067$2,852 or 15.3%13.8% for the six-monthnine-month period ended DecemberMarch 31, 20252026 compared with the same periods last year. Salaries and employee benefits increased by $1,247,$1,752, or 16.4%,15.2%, for the six-monthnine-month period ended DecemberMarch 31, 2025,2026, compared with the same prior year period primarily because of the addition of lending sales and support staff, hiring of staff for the new branch locations, and annual merit and cost of living adjustments. Occupancy and equipment expenses increased by $314,$464, or 17.7%,16.9%, for the first sixnine months of the fiscal year 2026 compared with the same period last year primarily because of increases in software license expense,expenses, additional investments in security monitoring software, and increases in occupancy and premise expenses as a result of the new branch locations. Other non-interest expenses increased by $215,$200, or 17.8%,10.4%, primarily because of higher loan expenses related to the increased volume in loan originations and expenses associated with the 60th anniversary celebration.

Income tax expenses were $495$524 and $972$1,496 for the three- and six-monthnine-month periods ended DecemberMarch 31, 2025,2026, compared to $488$274 and $968$1,242 for the three- and six-monthnine-month periods ended DecemberMarch 31, 2024.2025. The effective tax rates were 15.2%15.7% and 15.3%15.4% for the three- and six-monthnine-month periods ended DecemberMarch 31, 2025,2026, respectively, and 17.6%12.9% and 16.3% for the three- and six-monthnine-month periods ended DecemberMarch 31, 2024.2025. The effective tax rates differed from the federal statutory rate because of tax-exempt income from obligations of state and political subdivisions, loans, bank owned life insurance income, and the low-income housing tax credits.

Total assets as of DecemberMarch 31, 20252026 were $1,212,530$1,238,168 compared to $1,165,008 at June 30, 2025, an increase of $47,522,$73,160, or an annualized 8.2%.8.4%. From June 30, 2025 to DecemberMarch 31, 2025,2026, total loans increased by $58,934,$90,599, or an annualized 14.5%,14.9%, and total deposits increased by $52,236$73,066 or an annualized 10.1%.9.4%.

Available-for-sale securities decreased by $11,528$15,504 from $273,875 as of June 30, 2025, to $262,347$258,371 as of DecemberMarch 31, 20252026 primarily because of $24,358$20,871 of cash received from maturities, callssales, calls, and principal pay downs.downs Inthat addition,was thenot reinvested into securities but was rather invested in loans. The unrealized loss on the portfolio was $21,525$23,431 as of DecemberMarch 31, 2025,2026, an improvement of $7,024$5,118 from June 30, 2025. The unrealized loss is a result of the increase in market interest rates compared with the yields within the portfolio that were available at the time the underlying securities were purchased. The fair value is expected to recover as the securities approach their maturity or repricing dates or if market yields for such securities decline. The portfolio is primarily comprised of agency mortgage-backed securities, obligations of state and political subdivisions, other government agencies’ debt, corporate debt, and U.S. Treasury notes. The municipal bond portfolio consists of tax-exempt and taxable general obligations and revenue bonds to a broad range of counties, towns, school districts, and other essential service providers. As of DecemberMarch 31, 2025,2026, 97.5% of the municipal bonds held in the available-for-sale portfolio had an S&P or Moody’s investment grade rating, and 2.5% were non-rated issues. The other debt securities consist of subordinated notes issued by other bank holding companies. As of DecemberMarch 31, 2025,2026, the projected cash flow from the portfolio over the next 12 months was approximately $30,072,$44,462, which may be available to reinvest into loans or securities at the then current market rates.

As of DecemberMarch 31, 2025,2026, non-accrual loans include loans that are guaranteed by the Small Business Administration. Excluding the guaranteed portion, non-performing loans were $637,$407, or 0.07%0.04% of total loans as of DecemberMarch 31, 2025.2026.

The objective of liquidity management is to ensure adequate cash flows to accommodate the demands of our customers and provide adequate flexibility for the Company to take advantage of market opportunities under both normal operating conditions and under unpredictable circumstances of industry or market stress. Cash is used to fund loans, purchase investments, fund the maturity of liabilities, and, at times, to fund deposit outflows and operating activities. The Company’s principal sources of funds are deposits; amortization and prepayments of loans; maturities, calls and principal receipts from securities; borrowings; and operations. Management considers the asset position of the Company to be sufficiently liquid to meet normal operating needs and conditions. The Company’s earninginterest-earning assets are mainly comprised of loans and investment securities. Management continually strives to obtain the best mix of loans and investments to both maximize yield and ensure the soundness of the portfolio, as well as to provide funding for loan demand as needed.

For the sixnine months ended DecemberMarch 31, 2025,2026, net cash inflows from operating activities were $6,011,$7,611, net cash outflows for investing activities was $41,668$71,932 and net cash inflows from financing activities was $37,262.$61,734. A major source of cash was $52,236$73,066 from the increase in deposits and $24,358$33,616 from maturity, calls, and principal pay downs of available-for-sale securities. A major use of cash was $59,122$90,856 for loan originations. Total cash and cash equivalents were $21,513$17,321 as of DecemberMarch 31, 2025,2026, compared to $19,908 at June 30, 20252025, and $20,382$34,435 at DecemberMarch 31, 2024.2025.

The Bank offers several types of deposit products to a diverse base of business, public fund, and personal customers. We believe the rates offered by the Bank and the fees charged for them are competitive with the rates and fees charged by other banks for similar deposit products currently available in the market area. Deposits totaled $1,089,054$1,109,884 at DecemberMarch 31, 2025,2026, an increase of $52,236,$73,066, or an annualized 10.1%,9.4%, compared with $1,036,818 at June 30, 2025. As of DecemberMarch 31, 2025,2026, the estimated percentage of uninsured deposits, excluding collateralized public fund deposits, was 23.2%.23.8%.

Jumbo time deposits (those with balances of $250 and over) totaled $101,696$89,821 as of DecemberMarch 31, 20252026 and $74,683 as of June 30, 2025 and are from local customers, businesses, and public entities. These deposits are monitored closely by the Company and are mainly priced on an individual basis. The Company has the option to use a fee-paid broker or CD listing service to obtain deposits from outside its normal service area as an additional source of funding. The Company, however, does not rely upon these types of deposits as a primary source of funding. There were $4,038$2,030 and $1,420 deposits classified as brokered deposits as of DecemberMarch 31, 20252026 and June 30, 2025, respectively. Although management monitors interest rates on an ongoing basis, a quarterly rate sensitivity report is used to determine the effect of interest rate changes on the financial statements. In the opinion of management, enough assets or liabilities could be repriced over the near term (up to three years) to compensate for such changes. The spread on interest rates, or the difference between the average earning assets and the average interest-bearing liabilities, is monitored monthly.

To provide additional sources of liquidity, the Company has lines of credit with other financial institutions and entered into agreements with the FHLB of Cincinnati and the Federal Reserve discount window. At DecemberMarch 31, 2025,2026, advances from the FHLB of Cincinnati totaled $4,028$7,017 compared with $22,551 as of June 30, 2025. As of DecemberMarch 31, 2025,2026, the Bank had the ability to borrow an additional $98,349$110,555 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, as of DecemberMarch 31, 2025,2026, the Company had approximately $92,903$98,894 in securities unencumbered by a pledge that could be used to support additional borrowings, as needed, through the Federal Reserve discount window.

Short-term borrowings consisted of repurchase agreements, federal funds purchased, and a line of credit from another financial institution and totaled $21,696 as of March 31, 2026 and $15,511 as of June 30, 2025. Repurchase agreements are classified as borrowings and totaledwere $17,827the most significant component of short-term borrowings with a balance of $17,801 as of DecemberMarch 31, 20252026 and $15,511 as of June 30, 2025. Repurchase agreements are financing arrangements with local customers that mature daily and the Bank pledges securities as collateral for these borrowings. Federal funds purchased totaled $3,670 as of March 31, 2026 and are used as a short-term source of funding. The company has access to a line of credit from another financial institution since the holding company does not conduct operations and its primary sources of liquidity are dividends upstreamed from the Bank and borrowings from outside sources. As of DecemberMarch 31, 2025,2026, the outstanding balance on the holding company’s line of credit was $225 and the availability on the line of credit was $4,775.

To meet the financial needs of our customers, we have issued commitments to originate mortgage, commercial, construction, and consumer loans and commitments for commercial, home equity, and consumer lines of credit. Since commitments to extend credit have a fixed expiration date or other termination clause, some commitments will expire without being drawn upon and the total commitment amounts do not necessarily represent future cash requirements. Financial standby letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party. The same credit policies are used in making commitments and financial standby letters of credit as are used for on-balance sheet instruments. Total unused commitments were $221,219$214,082 as of DecemberMarch 31, 2025,2026, and $212,550 as of June 30, 2025.

Total shareholders’ equity increased by $9,855$10,583 to $86,126$86,854 as of DecemberMarch 31, 2025,2026, from $76,271 as of June 30, 2025 because of net income of $8,206 for the first nine months of fiscal year 2026 and an improvement of $5,549$4,044 in the accumulated other comprehensive loss from the mark-to-market of available-for-sale securities and from net income of $5,389 for the first six months of fiscal year 2026securities, which was partially offset by cash dividends paid of $1,322.$1,983. As market interest rates rise, the fair value of fixed-rate available-for-sale securities decline with a corresponding net of tax decline recorded in the accumulated other comprehensive loss portion of equity. 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.

As of DecemberMarch 31, 2025,2026, the Bank’s common equity tier 1 capital and tier 1 capital ratios were 10.94%11.06% and the leverage and total risk-based capital ratios were 8.28%8.37% and 11.94%,12.07%, respectively. This compares with common equity tier 1 capital and tier 1 capital ratios of 10.99% and leverage and total risk-based capital ratios of 8.23% and 12.00%, respectively, as of June 30, 2025. The Bank exceeded minimum regulatory capital requirements to be considered well-capitalized for both periods. Management is not aware of any matters occurring after DecemberMarch 31, 20252026 that would cause the Bank’s capital category to change.