CFSB BANCORP, INC. ANNOUNCES FISCAL FIRST QUARTER 2024 FINANCIAL RESULTS

PR Newswire
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In this article:

QUINCY, Mass., Oct. 25, 2023 /PRNewswire/ -- CFSB Bancorp, Inc. (the "Company") (NASDAQ Capital Market: CFSB), the holding company for Colonial Federal Savings Bank (the "Bank"), today announced net income of $123,000, or $0.02 per basic and diluted share, for the three months ended September 30, 2023 compared to net income of $105,000, or $0.02 per basic and diluted share, for the three months ended June 30, 2023 and net income of $645,000, or $0.10 per basic and diluted share for the three months ended September 30, 2022.

Michael E. McFarland, President and Chief Executive Officer, stated, "We continue to navigate the high interest rate environment by remaining disciplined with our pricing and expense management. We remain optimistic that the economy will avoid recession in the near term and we are positioned to benefit from a decline in interest rates."

First Quarter Operating Results
Net interest income, on a fully tax-equivalent basis decreased by $83,000, or 4.3%, to $1.8 million for the three months ended September 30, 2023 from $1.9 million for the three months ended June 30, 2023. This decrease was primarily due to a 41 basis point increase in the average rate paid on certificates of deposit and a 39 basis point increase in the average rate paid on FHLB advances, partially offset by a 9 basis point increase in the average yield earned on securities. The interest earned on loans increased $3,000, for the three months ended September 30, 2023 compared to the three months ended June 30, 2023. The interest earned on loans benefited from rising interest rates, partially offset by a $1.8 million decrease in the average balance of loans to $176.7 million during the three months ended September 30, 2023. The net interest margin decreased by 9 basis points to 2.22% for the three months ended September 30, 2023 from 2.31% for the three months ended June 30, 2023.

Net interest income, on a fully tax-equivalent basis decreased by $560,000, or 23.4%, to $1.8 million for the three months ended September 30, 2023, from $2.4 million for the three months ended September 30, 2022. The net interest margin decreased by 54 basis points to 2.22% for the three months ended September 30, 2023 from 2.76% for the three months ended September 30, 2022. The decline was primarily due to a 223 basis point increase in the average rate paid for certificates of deposit, partially offset by a $20.8 million decrease in the average balance of interest-bearing deposits and a 31 basis point increase in the average yield earned for interest-earning assets. The interest earned on loans increased $103,000, to $1.7 million for the three months ended September 30, 2023, from $1.6 million for the three months ended September 30, 2022. The interest earned on loans benefited from rising interest rates and a $30,000 increase in the average balance of loans during the three months ended September 30, 2023.

The Company recorded a reversal of credit losses of $166,000 for the three months ended September 30, 2023. The reversal for credit losses was recorded due to improved forecasted economic conditions. The Company did not record a provision for loan losses during the three months ended June 30, 2023 or September 30, 2022. The allowance for credit losses as a percentage of total loans was 0.94%, 0.98% and 0.99% at September 30, 2023, June 30, 2023 and September 30, 2022, respectively.

Non-interest income decreased $4,000, or 2.4%, to $160,000 for the quarter ended September 30, 2023 from $164,000 for the quarter ended June 30, 2023, due to a decrease of $7,000 in other income.

Non-interest income decreased $40,000, or 20.0%, to $160,000 for the three months ended September 30, 2023, from $200,000 for the three months ended September 30, 2022, principally due to a decrease of $45,000 in safe deposit box income.

Non-interest expenses decreased $17,000, or 0.9%, to $1.9 million for the quarter ended September 30, 2023 from $1.9 million for the quarter ended June 30, 2023. The decrease was due to a decrease in occupancy and equipment expense of $20,000, or 7.3%, primarily attributed to declines in service contract expenses.

Non-interest expenses increased $168,000, or 9.6%, to $1.9 million for the quarter ended September 30, 2023 from $1.7 million for the quarter ended September 30, 2022. The increase was principally due to an increase in salaries and employee benefits of $126,000, or 12.4%, attributed to an increase in headcount and stock-based compensation expense, due to increases in other general and administrative expenses of $25,000, or 7.5%, attributed to stock-based compensation for the board of directors, and due to increases in occupancy and equipment expenses of $11,000, or 4.5%, attributed to increases in service contract expenses.

Income tax expense was $93,000 for the three months ended September 30, 2023, compared to $19,000 for the three months ended June 30, 2023 and $170,000 for the three months ended September 30, 2022. The increase in income tax expense for the three months ended September 30, 2023, compared to the three months ended June 30, 2023 was due to increases in income before income taxes. The decrease in income tax expense for the three months ended September 30, 2023, compared to the three months ended September 30, 2022 was due to decreases in income before income taxes.

Balance Sheet
At September 30, 2023, total assets amounted to $346.2 million, compared to $349.0 million at June 30, 2023, a decrease of $2.8 million, or 0.8%, due to a $1.8 million decrease in net loans, a $743,000 decrease in cash and cash equivalents and a $365,000 decrease in securities held to maturity. The decrease in net loans was due to decreased loan demand in the higher interest rate environment and accelerated prepayment speeds during the quarter ended September 30, 2023.  Deposits decreased by $2.7 million, or 1.0%, in the quarter, as the Bank experienced decreases of customer deposits with the absence of government stimulus and increases in inflation and competition. In addition, the Bank experienced mix-shift changes by depositors to higher-yielding term certificates due to the higher interest rate environment. Federal Home Loan Bank of Boston advances were $3.3 million at September 30, 2023 to add liquidity in light of the decreases in customer deposits.

Total stockholders' equity increased $8,000 to $75.9 million at September 30, 2023 compared to $75.9 million at June 30, 2023. This increase reflects net income of $123,000, earned ESOP compensation of $18,000, and stock-based award expense of $90,000, partially offset by the cumulative effect of the adoption of ASU 2016-13 Financial Instruments - Credit Losses (Topic 326), net of tax, of $223,000.

Total assets at September 30, 2023 decreased $14.7 million, or 4.1%, from $360.9 million at September 30, 2022. Contributing to the decrease in assets was a decrease of $9.6 million in cash and cash equivalents to $6.1 million at September 30, 2023 from $15.7 million at September 30, 2022, a decline of $4.6 million in securities held to maturity and a decline of $1.2 million in net loans. Total deposits decreased by $19.4 million, or 6.9%, to $260.7 million at September 30, 2023 from $280.1 million at September 30, 2022, principally due to decreases in customer deposits with the absence of government stimulus, increases in inflation and competition, in addition to mix-shift changes by depositors to higher-yielding term certificates in the higher interest rate environment. Federal Home Loan Bank of Boston advances were $3.3 million at September 30, 2023 to add liquidity in light of the decreases in customer deposits.

Total stockholders' equity was $75.9 million at September 30, 2023 compared to $74.9 million at September 30, 2022. The increase of $980,000 was due to net income earned during the previous twelve months of $924,000, earned ESOP compensation of $82,000 and stock-based award expense of $199,000, partially offset by the cumulative effect of the adoption of ASU 2016-13, net of tax, of $223,000.

On July 1, 2023, the Company adopted ASU 2016-13, which replaces the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss methodology ("CECL"). The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loans receivable and securities held to maturity. In addition, ASU 326 made changes to the accounting of securities available for sale. It also applies to off-balance sheet credit exposures not accounted for as insurance, such as loan commitments, standby letters of credit, financial guarantees, and other similar instruments. The following table illustrates the impact of ASC 326:



Pre-ASC Adoption



As Reported Under ASC 326





(In thousands)


June 30, 2023



July 1, 2023



Impact of ASC 326 Adoption


Assets










Allowance for credit losses on
securities held to maturity


$

-



$

(276)



$

(276)


Allowance for credit losses on loans



(1,747)




(1,759)




(12)


Deferred tax asset on allowance for
credit losses



466




378




(88)












Liabilities










Allowance for credit losses on off-
balance sheet exposures


$

-



$

23



$

23












Shareholders' Equity










Retained earnings


$

50,416



$

50,193



$

(223)


 

About CFSB Bancorp, Inc.
CFSB Bancorp, Inc. is a federal corporation organized as the mid-tier holding company of Colonial Federal Savings Bank and is the majority-owned subsidiary of 15 Beach, MHC. Colonial Federal Savings Bank is a federally chartered stock savings bank that has served the banking needs of its customers on the south shore of Massachusetts since 1889. It operates from three full-service offices and one limited-service office in Quincy, Holbrook and Weymouth, Massachusetts.

Forward Looking Statements
This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, which can be identified by the use of words such as "estimate," "project," "believe," "intend," "anticipate," "assume," "plan," "seek," "expect," "will," "may," "should," "indicate," "would," "contemplate," "continue," "target" and words of similar meaning. These forward-looking statements are based on our current beliefs and expectations and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Certain factors that could cause actual results to differ materially from expected results include increased competitive pressures, demand for loan products, deposit flows, changes in the interest rate environment, the effects of inflation, potential recessionary conditions, general economic conditions or conditions within the securities markets, monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Board of Governors of the FRB, changes in the quality, size and composition of our loan and securities portfolios, changes in liquidity, including the size and composition of our deposit portfolio, including the percentage of uninsured deposits in the portfolio; changes in demand for our products and services, legislative, accounting, tax and regulatory changes, the current or anticipated impact of military conflict, terrorism or other geopolitical events, a failure in or breach of our operational or security systems or infrastructure, including cyberattacks that could adversely affect the Company's financial condition and results of operations and the business in which the Company and the Bank are engaged, the failure to maintain current technologies and the failure to retain or attract employees.

You should not place undue reliance on forward-looking statements. CFSB Bancorp, Inc. undertakes no obligation to revise these forward-looking statements or to reflect events or circumstances after the date of this press release.

 

CFSB Bancorp, Inc. and Subsidiary

Consolidated Balance Sheets (Unaudited)

(In thousands, except per share data)













% Change




September 30,



June 30,



September 30,



Sep 2023 vs.



Sep 2023 vs.




2023



2023



2022



Jun 2023



Sep 2022


Assets:
















Cash and due from banks


$

1,394



$

1,486



$

1,481




(6.2)

%



(5.9)

%

Short-term investments



4,724




5,375




14,260




(12.1)

%



(66.9)

%

Total cash and cash equivalents



6,118




6,861




15,741




(10.8)

%



(61.1)

%

Securities available for sale, at fair value



139




146




183




(4.8)

%



(24.0)

%

Securities held to maturity, at amortized cost, net of
allowance for credit losses



147,537




147,902




152,141




(0.2)

%



(3.0)

%

Loans:
















1-4 family



137,743




140,109




143,417




(1.7)

%



(4.0)

%

Multifamily



12,883




12,638




13,055




1.9

%



(1.3)

%

Second mortgages and home equity lines of credit



3,129




2,699




2,514




15.9

%



24.5

%

Construction



-




-




415




-

%



(100.0)

%

Commercial



20,110




20,323




15,639




(1.0)

%



28.6

%

Total mortgage loans on real estate



173,865




175,769




175,040




(1.1)

%



(0.7)

%

Consumer



65




49




71




32.7

%



(8.5)

%

Home improvement



2,180




2,191




2,231




(0.5)

%



(2.3)

%

Total loans



176,110




178,009




177,342




(1.1)

%



(0.7)

%

Allowance for credit losses



(1,649)




(1,747)




(1,747)




(5.6)

%



(5.6)

%

Net deferred loan costs and fees, and purchase premiums



(381)




(351)




(350)




8.5

%



8.9

%

Loans, net



174,080




175,911




175,245




(1.0)

%



(0.7)

%

Federal Home Loan Bank of Boston stock, at cost



405




381




191




6.3

%



112.0

%

Premises and equipment, net



3,354




3,413




3,310




(1.7)

%



1.3

%

Accrued interest receivable



1,395




1,363




1,306




2.3

%



6.8

%

Bank-owned life insurance



10,468




10,402




10,208




0.6

%



2.5

%

Deferred tax asset



1,132




1,079




1,139




4.9

%



(0.6)

%

Operating lease right of use asset



930




953




1,021




(2.4)

%



(8.9)

%

Other assets



663




596




457




11.2

%



45.1

%

Total assets


$

346,221



$

349,007



$

360,942




(0.8)

%



(4.1)

%

















Liabilities and Stockholders' Equity:
















Deposits:
















Non-interest bearing NOW and demand


$

30,918



$

32,760



$

34,148




(5.6)

%



(9.5)

%

Interest bearing NOW and demand



30,902




28,778




32,791




7.4

%



(5.8)

%

Regular and other



60,389




64,184




74,703




(5.9)

%



(19.2)

%

Money market accounts



24,877




26,995




43,349




(7.8)

%



(42.6)

%

Term certificates



113,587




110,659




95,061




2.6

%



19.5

%

Total deposits



260,673




263,376




280,052




(1.0)

%



(6.9)

%

Federal Home Loan Bank of Boston advances



3,250




3,675




-




(11.6)

%



-

%

Mortgagors' escrow accounts



1,626




1,596




1,618




1.9

%



0.5

%

Operating lease liability



941




962




1,023




(2.2)

%



(8.0)

%

Accrued expenses and other liabilities



3,834




3,509




3,332




9.3

%



15.1

%

Total liabilities



270,324




273,118




286,025




(1.0)

%



(5.5)

%

















Stockholders' Equity:
















Common stock



65




65




65




0.0

%



0.0

%

Additional paid-in capital



27,896




27,814




27,718




0.3

%



0.6

%

Retained earnings



50,316




50,416




49,615




(0.2)

%



1.4

%

Accumulated other comprehensive loss, net of tax



(3)




(3)




(1)




0.0

%



200.0

%

Unearned compensation - ESOP



(2,377)




(2,403)




(2,480)




(1.1)

%



(4.2)

%

Total stockholders' equity



75,897




75,889




74,917




0.0

%



1.3

%

Total liabilities and stockholders' equity


$

346,221



$

349,007



$

360,942




(0.8)

%



(4.1)

%

 

CFSB Bancorp, Inc. and Subsidiary

Consolidated Statements of Net Income (Unaudited)

(In thousands, except per share data)




For the Three Months Ended




September 30,



June 30,



September 30,




2023



2023



2022


Interest and dividend income:










Interest and fees on loans


$

1,722



$

1,719



$

1,619


Interest and dividends on debt securities:










Taxable



868




845




751


Tax-exempt



97




99




108


Interest on short-term investments and certificates of deposit



45




38




127


Total interest and dividend income



2,732




2,701




2,605












Interest expense:










Deposits



876




757




242


Borrowings



50




51




-


Total interest expense



926




808




242












Net interest income



1,806




1,893




2,363


Provision for (reversal of) credit losses



(166)




-




-


Net interest income after provision for (reversal of) credit losses



1,972




1,893




2,363












Non-interest income:










Customer service fees



40




36




37


Income on bank-owned life insurance



66




67




64


Other income



54




61




99


Total non-interest income



160




164




200












Non-interest expenses:










Salaries and employee benefits



1,144




1,146




1,018


Occupancy and equipment



254




274




243


Advertising



38




37




39


Data processing



89




82




94


Deposit insurance



33




43




21


Other general and administrative



358




351




333


Total non-interest expenses



1,916




1,933




1,748












Income before income taxes



216




124




815


Provision for income taxes



93




19




170


Net income


$

123



$

105



$

645












Net income per share:










Basic


$

0.02



$

0.02



$

0.10


Diluted


$

0.02



$

0.02



$

0.10












Weighted average shares outstanding:










Basic



6,282,203




6,279,656




6,271,977


Diluted



6,282,203




6,279,790




6,271,977


 

CFSB Bancorp, Inc. and Subsidiary

Average Balances and Yields, Fully Tax-Equivalent Basis (Unaudited)

(Dollars in thousands)



Average Balance and Yields



Three Months Ended



September 30, 2023



June 30, 2023



September 30, 2022



Average



Interest



Average



Average



Interest



Average



Average



Interest



Average



Outstanding



Earned/



Yield/



Outstanding



Earned/



Yield/



Outstanding



Earned/



Yield/


(Dollars in thousands)

Balance



Paid



Rate



Balance



Paid



Rate



Balance



Paid



Rate


Interest-earning assets:



























Loans

$

176,668



$

1,722




3.90

%


$

178,474



$

1,719




3.85

%


$

176,638



$

1,619




3.67

%

Securities (1)


149,259




991




2.66

%



150,383




968




2.57

%



148,774




888




2.39

%

Cash and short-term investments


3,852




45




4.67

%



3,331




38




4.56

%



21,717




127




2.34

%

Total interest-earning assets


329,779




2,758




3.35

%



332,188




2,725




3.28

%



347,129




2,634




3.04

%

Noninterest-earning assets


16,655










17,118










15,933








Total assets

$

346,434









$

349,306









$

363,062








Interest-bearing liabilities:



























Interest-bearing demand deposits

$

29,912



$

4




0.05

%


$

30,051



$

4




0.05

%


$

33,133



$

4




0.05

%

Savings deposits


62,446




16




0.10

%



64,996




16




0.10

%



75,444




19




0.10

%

Money market deposits


26,271




17




0.26

%



28,890




19




0.26

%



45,493




31




0.27

%

Certificates of deposit


111,812




839




3.00

%



111,041




718




2.59

%



97,153




188




0.77

%

Total interest-bearing deposits


230,441




876




1.52

%



234,978




757




1.29

%



251,223




242




0.39

%

FHLB advances


3,571




50




5.60

%



3,916




51




5.21

%



-




-




0.00

%

Total interest-bearing liabilities


234,012




926




1.58

%



238,894




808




1.35

%



251,223




242




0.39

%

Noninterest-bearing liabilities:



























  Noninterest-bearing demand deposits


30,971










28,881










32,522








  Other noninterest-bearing liabilities


5,740










5,726










3,195








Total liabilities


270,723










273,501










286,940








Total stockholders' equity


75,711










75,805










76,122








Total liabilities and stockholders' equity

$

346,434









$

349,306









$

363,062








Net interest income




$

1,832









$

1,917









$

2,392





Net interest rate spread(2)








1.77

%









1.93

%









2.65

%

Net interest-earning assets(3)

$

95,767









$

93,294









$

95,906








Net interest margin(4)








2.22

%









2.31

%









2.76

%

Cost of deposits(5)








1.34

%









1.15

%









0.34

%

Cost of funds(6)








1.40

%









1.21

%









0.34

%

Ratio of interest-earning assets to interest-bearing liabilities


140.92

%









139.05

%









138.18

%









(1)

Includes tax equivalent adjustments for municipal securities, based on a statutory tax rate of 21%, of $24,000, $22,000, and $28,000 for the three months ended September 30, 2023, June 30, 2023 and September 30, 2022, respectively.

(2)

Net interest rate spread represents the difference between the weighted average yield earned on interest-earning assets and the weighted average rate paid on interest-bearing liabilities.

(3)

Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(4)

Net interest margin represents net interest income divided by average total interest-earning assets.

(5)

Cost of deposits represents the total interest paid on deposits, divided by total interest-bearing deposits plus total noninterest-bearing deposits.

(6)

Cost of funds represents the total interest paid on liabilities, divided by total interest-bearing liabilities plus total noninterest-bearing deposits.

 

CFSB Bancorp, Inc. and Subsidiary

Reconciliation of Fully Tax-Equivalent Income (Unaudited)

(In thousands)




For the Three Months Ended




September 30,



June 30,



September 30,




2023



2023



2022


Securities interest income (no tax adjustment)


$

965



$

944



$

859


Tax-equivalent adjustment



26




22




29


Securities (tax-equivalent basis)


$

991



$

966



$

888


Net interest income (no tax adjustment)


$

1,806



$

1,893



$

2,363


Tax-equivalent adjustment



26




22




29


Net interest income (tax-equivalent adjustment)


$

1,832



$

1,915



$

2,392


 

CFSB Bancorp, Inc. and Subsidiary


At or for the Three Months Ended


Selected Financial Highlights (Unaudited)


September 30,



June 30,



September 30,


(In thousands, except share and per share amounts)


2023



2023



2022


Performance Ratios










Return on average assets (GAAP) (1, 4)



0.14

%



0.12

%



0.71

%

Return on average equity ("ROAE") (GAAP) (1, 5)



0.65

%



0.55

%



3.39

%

Noninterest expense to average assets (GAAP) (1)



2.21

%



2.21

%



1.93

%

Total loans to total deposits



67.56

%



67.59

%



63.32

%

Total loans to total assets



50.87

%



51.00

%



49.13

%

Efficiency ratio (GAAP) (6)



97.46

%



93.97

%



68.20

%

Capital Ratios










Total capital to risk-weighted assets



33.28

%



32.88

%



34.28

%

Common equity tier 1 capital to risk-weighted assets



32.32

%



32.00

%



33.37

%

Tier 1 capital to risk-weighted assets



32.32

%



32.00

%



33.37

%

Tier 1 capital to average assets (2)



18.35

%



18.18

%



17.69

%

Asset Quality Ratios










Allowance for credit losses on loans as a percentage of total loans (3)



0.94

%



0.98

%



0.99

%

Allowance for credit losses on loans as a percentage of non-performing loans


NM



NM



NM


Net (charge-offs) recoveries to average outstanding loans



-

%



-

%



-

%

Non-performing loans as a percentage of total loans



-

%



-

%



-

%

Non-performing loans as a percentage of total assets



-

%



-

%



-

%

Total non-performing loans as a percentage of total assets



-

%



-

%



-

%

Informational Items










Fair value of held to maturity securities


$

128,959



$

132,273



$

133,775


Book value per share (7)


$

11.44



$

11.44



$

11.49


Outstanding common shares



6,632,642




6,632,642




6,521,642




(1)

Annualized.

(2)

Average assets calculated on a quarterly basis.

(3)

Total loans exclude net deferred loan costs and fees.

(4)

Represents net income divided by average assets.

(5)

Represents net income divided by average stockholders' equity

(6)

Represents total non-interest expenses divided by net interest income and non-interest income.

(7)

Represents total stockholders' equity divided by outstanding shares at period end.

 

CisionCision
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View original content:https://www.prnewswire.com/news-releases/cfsb-bancorp-inc-announces-fiscal-first-quarter-2024-financial-results-301967783.html

SOURCE CFSB Bancorp, Inc.

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