Consumers Bancorp, Inc. · OTC:CBKM
Consumers Bancorp — Shareholder Meeting (October 2022)
46 slides from Consumers Bancorp's shareholder meeting presentation, Oct 27, 2022
Slide 1: 2022 Fiscal Year In Review
2022 Fiscal Year In Review 2022 Annual Shareholders Meeting • October 27, 2022
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain statements contained in this Annual Report on Form 10-K, which are not statements of historical fact, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words “may,” “continue,” “estimate,” “intend,
Slide 3: Forward-Looking Information (continued)
Forward-Looking Information (continued) sustained low market interest rates could result in a decline in the net interest margin and net interest income; changes in the level of non-performing assets and charge-offs; the effect of changes in laws and regulations (including laws and regulations conce
Slide 4: Laurie L. McClellan, Chairman of the Board
CONSUMERS Laurie L. McClellan Chairman of the Board of Directors
Slide 5: Fifty-Seven Years of Progress
Fifty-Seven Years of Progress
Slide 6: Moving Communities Forward
Moving Communities Forward Shareholders Consumers Community
Slide 7: Renee K. Wood, Chief Financial Officer
CONSUMERS Renee K. Wood Executive Vice President Chief Financial Officer
Slide 8: Steady Balance Sheet Growth
Steady Balance Sheet Growth Total Assets Total Loans $977.3 $644.8 $833.8 $542.9 $566.4 $740.8 $502.6 $553.9 $369.2 $318.5 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 CAGR: 18.1% CAGR: 19.3% Total Deposits Total Shareholders’ Equity $886.6 $69.9 $63.2 $726.8 $633.4 $51.2 $54.0 $43.8 $430.0 $47
Slide 9: Strong Earnings
Strong Earnings Core Net Income $11,310 Core ROA and Core ROE 1.40% 1.18% 1.18% $9,078 1.10% 1.20% 0.95% 1.00% 16.61% $5,731 $5,883 0.75% 0.80% 13.50% 12.32% 0.60% $3,581 10.30% 0.40% 8.15% 0.20% 0.00% FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 Core Net Income Co
Slide 10: Net Interest Margin
NET INTEREST MARGIN 3.64% 3.59% 3.64% 3.66% 3.74% 3.71% 3.61% 3.48% 3.18% 3.13% LTM 6/30/18 LTM 6/30/19 LTM 6/30/20 LTM 6/30/21 LTM 6/30/22 Consumers Peers* *Peers are public and private commercial banks located in Ohio, Pennsylvania and West Virginia with assets between $750 million and $1.5 billio
Slide 11: Cost of Funds Trend
COST OF FUNDS TREND 1.20% 1.05% 1.05% 1.00% 0.88% 0.91% 0.80% 0.72% 0.58% 0.53% 0.60% 0.38% 0.36% 0.40% 0.22% 0.20% 0.00% LTM 6/30/18 LTM 6/30/19 LTM 6/30/20 LTM 6/30/21 LTM 6/30/22 Consumers National Bank Peers* *Peers are public and private commercial banks located in Ohio, Pennsylvania and West V
Slide 12: Low-Cost Core Deposits
LOW-COST CORE DEPOSITS Total deposits of $886.6 million, or a 22.0% Time, increase from prior year SAV - 11.5% MMDA, Cost of funds of 0.22% 41.6% Loan-to-deposit ratio of 69.0% Non-interest-bearing deposits represented DDA, 29.1% of total deposits 29.1% Combined, demand deposit & NOW NOW, accounts r
Slide 13: Securities Portfolio Distribution
SECURITIES PORTFOLIO DISTRIBUTION U.S. Gov't Sponsored Entities & Securities portfolio yield was 2.24% for the 2022 Agencies, fiscal year compared with peers of 1.97% Other Debt, 11.6% 5.3% Projected weighted average life of 7.1 years as of June 30, 2022 with $23.5 million, or 7.2%, of principal cas
Slide 14: Sources of Revenue
Sources of Revenue Fee Income Net Interest Income Fee income represents a $32,746 strong source of revenue as $26,583 the balance sheet continues $21,484 $17,389 to grow $15,886 $3,391 $4,268 $4,703 $4,466 $4,735 Total mortgage originations 2018 2019 2020 2021 2022 of loans held for sale were Source
Slide 15: Efficiency Ratio
Efficiency Ratio Efficiency Ratio Efficiency Ratio improved 71.8% 70.5% 67.0% to its lowest level in FY 61.5% 61.1% 2022 due to the significant growth in earnings Salaries and benefits is the FY2018 FY 2019 FY 2020 FY 2021 FY 2022 largest component of non- interest expenses and is comparable with ou
Slide 16: Nonperforming Assets/Total Assets
NONPERFORMING ASSETS/TOTAL ASSETS 0.50% 0.46% 0.43% 0.45% 0.40% 0.38% 0.40% 0.35% 0.30% 0.27% 0.25% 0.22% 0.21% 0.20% 0.16% 0.14% 0.15% 0.10% 0.04% 0.05% 0.00% LTM 6/30/18 LTM 6/30/19 LTM 6/30/20 LTM 6/30/21 LTM 6/30/22 Consumers Peers* *Peers are public and private commercial banks located in Ohio,
Slide 17: Net Charge-Offs / Average Loans
NET CHARGE-OFFS / AVERAGE LOANS 0.13% 0.15% 0.08% 0.08% 0.10% 0.06% 0.06% 0.05% -0.01% 0.02% 0.01% 0.01% 0.00% LTM 6/30/18 LTM 6/30/19 LTM 6/30/20 LTM 6/30/21 LTM 6/30/22 -0.05% -0.10% Fiscal 2019 Reflects a net recovery of $807,000 from a charge-off recorded in the 2017 fiscal year -0.15% Zero OREO
Slide 18: Allowance for Loan Losses
Allowance for Loan Losses Allowance / Loans $611,843 $542,861 $566,427 1.17% 1.14% Allowance for loan losses was $369,175 $318,509 1.17% as of June 30, 2022 1.07% 1.05% 1.03% Strong reserve levels reflect potential credit stress in future periods due to uncertain 2018 2019 2020 2021 2022 economic co
Slide 19: Scott E. Dodds, Senior Loan Officer
CONSUMERS Scott E. Dodds Executive Vice President Senior Loan Officer
Slide 20: Total Loan Balance Trend
TOTAL LOAN BALANCE TREND 2022 $0.18 $612 Total loans increased $45.4 million, or 8.0% over fiscal 2021 2021 $50.70 $517 Non-PPP loan balances increased 2020 $66.60 $479 $95 million, or 18.4% in fiscal 2022 Core loan balances 2019 $0.00 $369 have more than doubled in the last five years 2018 $0.00 $3
Slide 21: 2022 Growth by Portfolio
2022 GROWTH BY PORTFOLIO Non-PPP loan 2022 Portfolio Growth balances increased $95 million, or 18.4% $15,251, in fiscal 2021 16% $27,665, 29% 57% of growth was in the commercial and commercial real estate portfolios 27% of growth in 1-4 family real estate $26,221, 27% $26,786, 16% of growth in 28% c
Slide 22: Loan Production
LOAN PRODUCTION Production Trend by Type Net of PPP, Total loan production 2022 $50 $75 $179 increased to $304 million; or 2021 $38 $101 $125 $47 15% over fiscal 2021 2020 $14 $70 $82 $67 CAGR-- Consumer and 2019 $14 $46 $96 $0 Excluding residential 2018 $10 $32 $70 $0 PPP: mortgage lending 27.8% re
Slide 23: 2022 Mortgage Production
2022 MORTGAGE PRODUCTION Commitments Units 4% 2% 4% 3% 17% 7% 8% 12% 65% 78% Secondary Market Portfolio, Conventional CommercialPortfolio, Conventional Secondary Market Commercial Portfolio, Construction Portfolio, Bridge Portfolio, Construction Portfolio, Bridge Real Estate Portfolio, Community Por
Slide 24: High-Quality & Diversified Loan Portfolio
HIGH-QUALITY & DIVERSIFIED LOAN PORTFOLIO Portfolio Composition (000) Commercial RE 9% 7.30% 7% 7.60% 51% 28.47% 33% Commercial Commercial Owner-Occ Non-Owner Occ 13.21% Real Estate Construction Multifamily $613 MillionFarm Balanced Portfolio 74% ($456.8 million) of the portfolio is secured by real
Slide 25: Diversified Commercial Loan Portfolio
DIVERSIFIED COMMERCIAL LOAN PORTFOLIO Top Industries (Million) Real Estate Leasing $149.4 35% Manufacturing $47.6 11% Agricultural $47.4 11% Commercial Healthcare $30.4 7% Commercial Real Estate Retail & WS Trade $28.8 7% Farm Construction $26.0 6% Other Services $23.9 6% Professional & $23.9 6% Rea
Slide 26: Ralph J. Lober II, President and CEO
CONSUMERS Ralph J. Lober Il President Chief Executive Officer
Slide 27: Introduction
INTRODUCTION Staff Community Banking Business Model Commercial CommercialConsumers Market Area Real Estate Bank Accomplishments CBKM Performance Farm Opportunities and Strengths Economic Review Fiscal 2023 First Quarter Results
Slide 28: Experienced Community Bankers
MANAGEMENT TEAM EXPERIENCED COMMUNITY BANKERS Years Industry Average Management Consumers Tenure: 12 with Experienc Years Company e Ralph J. Lober President & CEO 15 32 Average Industry Experience: 25 Years Scott E. Dodds EVP, Senior Loan Officer 8 36 Renee K. Wood EVP, Chief Financial Officer 17 28
Slide 29: Community Banking Model—The Differentiator
COMMUNITY BANKING MODEL—THE DIFFERENTIATOR Local Shareholders & Capital Local Dividends Local Deposits Culture STRONGER LOCAL COMMUNITIES Products & Local Lending & Technology Community Bank Community Profits Investments Local Employment Engaged, In-Market Local Bankers & Economic Growth Local Direc
Slide 30: National & Super-Regional Banking Model
NATIONAL & SUPER-REGIONAL BANKING MODEL 30
Slide 31: Community Banking Model—The Differentiator
COMMUNITY BANKING MODEL—THE DIFFERENTIATOR Local Shareholders & Capital Local Dividends Local Deposits Culture STRONGER LOCAL COMMUNITIES Products & Local Lending & Technology Community Bank Community Profits Investments Local Employment Engaged, In-Market Local Bankers & Economic Growth Local Direc
Slide 32: Banking Locations
BANKING LOCATIONS 21 Full services offices One Loan Production Office Commercial Commercial The Green Office (southern Real Estate Summit County) opened in April 2021 Farm Calcutta & Wellsville offices were acquired in July 2021 Green, Calcutta, and Wellsville fill gaps in our market coverage and ex
Slide 33: Deposit Market Area
DEPOSIT MARKET AREA Deposit Consumers Market Rank Deposit Distribution by Market Deposits Share ($000) ($000) County 3% Carroll $454,712 $113,356 24.93% 2/5 13% Columbiana $2,049,029 $253,301 12.36% 4/10 Jefferson $1,184,709 $100,352 8.47% 6/9 Commercial Commercial Stark $9,319,384 $396,074 4.25% 7/
Slide 34: Business Development Market Area
BUSINESS DEVELOPMENT MARKET AREA Actively solicit business in twenty counties in Ohio, Pennsylvania, and West Virginia Consumers ranks 20th of 65 institutions operating in the twenty-county market area Total market area deposit growth: 18.6% Commercial Commercial Consumers Growth: 21.94% Real Estate
Slide 35: Commercial Deposit & Loan Trend
COMMERCIAL DEPOSIT & LOAN TREND $450,000 $425,000 Five Year CAGR $400,000 Commercial Deposits 20.27% $375,000 $350,000 Commercial Loans 13.04% $325,000 $300,000 $275,000 Commercial Thousands $250,000 Commercial $225,000 Real Estate $200,000 $175,000 $150,000 $125,000 Farm $100,000 $75,000 $50,000 $2
Slide 36: Accomplishments
ACCOMPLISHMENTS Commercial Commercial Real Estate Farm
Slide 37: 12-Month Stock Price Change
12 - Month Stock Price Change 12 Month Stock Price Change CBKM -15.68% Market Price (10-19-2022) $18.90 NASDAQ Banks -17.40% Book Value / Share (6-30-2022) $17.66 S & P BMI US Banks -24.04% Fiscal 2022 EPS $3.68 Annualized Dividend Yield 3.60%
Slide 38: Performance & Valuation Metrics
PERFORMANCE & VALUATION METRICS Consumers OTC Midwest NYSE & National Mid Atlantic NASDAQ $500 M – Bank (Median) 1.5B (Median) ROAA 1.17% .94% .96% Net Interest 3.39% 3.18% 3.01% Margin Performance Efficiency Ratio 61.2% 68.3% 69.3% Metrics Nonperforming Assets / Total .05% .32% .30% Assets ROAE 16.
Slide 39: The Rest of the Story
THE REST OF THE STORY OPPORTUNITIES STRENGTHS Market Natural Liquidity & Business Disruptions Resources Core Deposits Development Bank Western Stark Market size & Participations Reputation in County Diversity Market Consumer Mahoning Technology Asset Quality Lending County Industry Efficiency Engage
Slide 40: Economic Outlook
ECONOMIC OUTLOOK The FED expect up to 100 BP increases in FF by Year end; up to an additional 50 BP in 2023; and declining short-term rates through 2024 and 2025 The market (futures contract) predicts a 75 BP FF increase by year end, but predicts falling rates through 2023 The yield curve is signifi
Slide 41: Economic Outlook
ECONOMIC OUTLOOK “For the last two years, the FED has aggressively fought to keep us out of a recession, knowing it might cause inflation. Now the fed is aggressively fighting inflation, knowing it may cause a recession.” Carl Huxley, The Baker Group FED FUNDS 41
Slide 42: Fed Funds Rate Change
FED FUNDS RATE CHANGE FED FUNDS CHANGE FF and prime increased 300 BP in 6 100 months. 75 Expect another 75 to 125 BP over next 50 two FED meetings Extremely fast to be reflected in a 25 change in economic activity 0 Significant discrepancy between FED and Futures -25 -50 -75 -100 BP CHANGE 42
Slide 43: Economic Outlook
ECONOMIC OUTLOOK The Federal Reserve Bank’s future predictions are generally off and tend to overshoot the end point in the direction they are moving. Last Fall, the FED did not predict higher rates in 2022 We believe that longer term yields will moderate or fall through year end as the FED continue
Slide 44: 2023 First Quarter
2023 FIRST QUARTER $2.5 Million Earnings $.83 Earnings per Share $25.8 million (16.8% annualized) increase in total Loans $25.5 million (11.5% annualized) increase in deposits Total Loan Delinquency & Nonaccrual: .09% Net Charge-off (Recovery) Ratio: 0.01% Nonperforming Loans to Loans: 0.01% 6.25% D
Slide 45: 2018 Objective
2018 OBJECTIVE MEET OUR NEW
Slide 46: 2022 Shareholders Meeting
2022 SHAREHOLDERS MEETING 46
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