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Consumers Bancorp Inc. reports growing net income

MINERVA — Consumers Bancorp Inc. reported net income of $1.7 million for the first fiscal quarter of 2019, an increase of $744 thousand from the same period last year. Earnings per share for the first fiscal quarter of 2019 were $0.61 compared to $0.34 for the same period last year. Net income for the first fiscal quarter of 2019 was positively impacted by a net gain on sale of securities of $587,000, or $464,000 after-tax. Excluding the $464 thousand after-tax gain on sale of securities, net income was $1.2 million, or a 30.1 percent increase from the same period last year.

Assets at Sept. 30, 2018 totaled $510.8 million, an increase of $8.2 million, or an annualized 6.5 percent, from June 30, 2018. Loans increased by $10.2 million, or an annualized 12.8 percent, and deposits increased by $10.6 million, or an annualized 9.8 percent from June 30, 2018.

“A number of positive factors contributed to our strong first quarter earnings. A 13 percent increase in gross loans, a 15 percent increase in gains from the sale of mortgage loans, and a 159-basis point improvement in the bank’s core efficiency all supported a 30 percent increase in core first fiscal quarter of 2019 earnings1. In addition, the 21 percent statutory federal tax rate made effective by the Tax Cut and Jobs Act of 2017 is fully reflected in this quarter’s results,” said Ralph J. Lober II, president and chief executive officer. “The bank’s nonperforming assets and loan delinquency levels, both near historic lows, have also contributed to the strong first quarter results,” he said. “Strong commercial loan and mortgage pipelines reflect the impact of the bank’s prior investments in business development positions. We believe we gained new deposit and loan customers because of our strong marketing efforts and the closings of competitors’ branches in our markets. While new business activity is strong, the flattening yield curve through September 30, 2018 has slowed expected gains in the net interest margin,” he said.

The company defines core earnings as net income less after-tax gain on sale of securities. Net income, the most comparable GAAP financial measure, is disclosed in the first paragraph of this release. The company uses this non-GAAP financial measure internally to evaluate the performance of the business. We believe that presentation of this non-GAAP financial measure is helpful to an investor’s overall understanding of the company’s financial performance and ongoing business activities.

The net interest margin was 3.70 percent for the quarter ended Sept. 30, 2018, 3.70 percent for the quarter ended June 30, 2018 and was 3.63 percent for the quarter ended Sept. 30, 2017. The corporation’s yield on average interest-earning assets was 4.2 percent for the three months ended Sept. 30, 2018, an increase from 3.96 percent for the same period last year. The corporation’s cost of funds was 0.69 percent for the three months ended Sept. 30, 2018 and 0.46 percent for the same period last year.

Other income increased by $623 thousand to $1.5 million for the first quarter of fiscal year 2019 compared with $872 thousand for the same period last year. Other income for the first quarter of fiscal year 2019 included a $587 thousand gain from the sale of securities compared with a $38 thousand gain for the same prior year period. Excluding the securities gains, non-interest income increased by $74 thousand, or 8.9 percent, primarily as a result of increases in debit card interchange income and gain on sale of mortgage loans.

Other expenses increased by $291 thousand, or 8.6 percent, for the first fiscal quarter of 2019 from the same period last year. The increase in other expenses was primarily the result of an increase in salary and benefit expenses and professional fees.

Non-performing loans were $1.1 million at Sept. 30, 2018 and June 30, 2018 and $980 thousand at Sept. 30, 2017. The allowance for loan losses (ALLL) as a percent of total loans at Sept. 30, 2018 was 1.08 percent and the net charge-off ratio was zero for the three months ended Sept. 30, 2018. The ALLL to loans ratio was 1.11 percent at Sept. 30, 2017 and a net recovery of $18 thousand was recorded for the three-month period ended Sept. 30, 2017.

Consumers provides a complete range of banking and other investment services to businesses and clients through its thirteen full service locations and two loan production offices in Carroll, Columbiana, Jefferson, Stark, Summit and Wayne counties in Ohio. Information about Consumers National Bank can be accessed on the internet at http://www.consumersbank.com.

The information contained in this press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may involve risks and uncertainties that are difficult to predict, may be beyond Consumers’ control and could cause actual results to differ materially from those described in such statements. Although Consumers believes that the expectations reflected in such forward-looking statements are reasonable, Consumers can give no assurance that such expectations will prove to be correct. Important factors that could cause actual results to differ materially from those suggested by these forward-looking statements and that could adversely affect Consumers’ performance include, but are not limited to: changes in general economic, political, or industry conditions; uncertainty in U.S. fiscal and monetary policy, including the interest rate policies of the Federal Reserve Board; volatility and disruptions in global capital and credit markets; movements in interest rates; competitive pressures on product pricing and services; success, impact, and timing of our business strategies; the nature, extent, timing, and results of governmental actions; and other factors that may affect our future results. The forward-looking statements included in this discussion speak only as of the date they are made, and, except as required by law, Consumers undertakes no obligation to update these forward-looking statements to reflect subsequent events or circumstances.

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