[PART I. FINANCIAL INFORMATION](index=2&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for CFSB Bancorp, Inc. as of March 31, 2022, following its January 2022 reorganization and stock offering Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2022 (in thousands) | June 30, 2021 (in thousands) | | :--- | :--- | :--- | | **Assets** | | | | Total cash and cash equivalents | $37,265 | $40,678 | | Securities held to maturity | $134,719 | $105,114 | | Loans, net | $172,758 | $174,433 | | **Total assets** | **$362,539** | **$338,854** | | **Liabilities & Equity** | | | | Total deposits | $283,980 | $284,634 | | Total liabilities | $288,880 | $290,209 | | Total stockholders' equity | $73,659 | $48,645 | | **Total liabilities and stockholders' equity** | **$362,539** | **$338,854** | Consolidated Statements of Net Income (Loss) Highlights (Unaudited) | Metric (in thousands) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Nine Months Ended March 31, 2022 | Nine Months Ended March 31, 2021 | | :--- | :--- | :--- | :--- | :--- | | Net interest income | $2,051 | $1,868 | $6,045 | $5,445 | | Provision for loan losses | $1 | $15 | $26 | $45 | | Total non-interest expense | $3,227 | $1,530 | $6,775 | $4,791 | | **Net income (loss)** | **($828)** | **$401** | **($122)** | **$996** | - The company completed its reorganization into a mutual holding company structure and a stock offering on January 12, 2022, selling 2,804,306 shares at $10.00 per share for gross proceeds of **$28.0 million**[5](index=5&type=chunk)[23](index=23&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) These notes detail accounting policies, securities and loan portfolios, deposit structures, regulatory capital, and employee benefit plans, including the new ESOP Securities Portfolio Breakdown (March 31, 2022) | Security Type (in thousands) | Amortized Cost | Fair Value | | :--- | :--- | :--- | | **Available for sale** | **$226** | **$231** | | **Held to maturity** | **$134,719** | **$128,089** | | Mortgage-backed securities | $40,305 | $39,164 | | Municipal bonds | $44,025 | $40,924 | | Corporate bonds | $50,380 | $47,992 | Loan Portfolio Composition (in thousands) | Loan Category | March 31, 2022 | June 30, 2021 | | :--- | :--- | :--- | | Residential 1-4 family | $140,080 | $139,687 | | Multifamily | $15,353 | $15,868 | | Commercial | $15,307 | $16,366 | | Other Loans | $2,159 | $2,111 | | **Total loans** | **$174,854** | **$176,486** | - As of March 31, 2022, the Bank was categorized as **"well capitalized"** under the regulatory framework, exceeding all minimum capital requirements, with total capital to risk-weighted assets at **35.0%**, significantly above the **8.0%** minimum requirement[56](index=56&type=chunk)[57](index=57&type=chunk) - As part of the stock offering, the company established an Employee Stock Ownership Plan (ESOP), which purchased 255,648 shares funded by a **$2.6 million** loan from the company[65](index=65&type=chunk)[66](index=66&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses key factors affecting financial condition and operating results, including balance sheet changes, market risk, liquidity, and the impact of the stock offering and charitable foundation funding [Comparison of Financial Condition](index=24&type=section&id=Comparison%20of%20Financial%20Condition) Total assets increased by **7.0%** to **$362.5 million**, driven by a **$29.6 million** rise in securities, while stockholders' equity grew **51.4%** to **$73.7 million** from stock offering proceeds - Total assets increased by **7.0%** to **$362.5 million**, mainly due to a **28.2%** increase in securities held to maturity as the company invested excess cash[89](index=89&type=chunk)[93](index=93&type=chunk) - Stockholders' equity increased by **51.4%** to **$73.7 million**, primarily due to **$26.4 million** in net proceeds from the stock offering, partially offset by the ESOP stock purchase[97](index=97&type=chunk) [Comparison of Operating Results](index=24&type=section&id=Comparison%20of%20Operating%20Results) The company reported net losses for both three and nine-month periods ending March 31, 2022, primarily due to a **$1.6 million** charitable foundation contribution, despite growth in net interest income - For the three months ended March 31, 2022, a **$828,000 net loss** was recorded, compared to a **$401,000 net income** in the same period of 2021, primarily due to a one-time **$1.6 million** contribution to a new charitable foundation[98](index=98&type=chunk)[108](index=108&type=chunk) - Net interest income for the three months ended March 31, 2022, increased by **9.8%** to **$2.1 million**, driven by an increase in the net interest margin to **2.38%** from **2.34%** a year prior[102](index=102&type=chunk) - For the nine months ended March 31, 2022, the **$122,000 net loss** compared to a **$996,000 net income** in the prior year, also driven by the charitable foundation funding, while net interest income for this period increased by **11.0%** to **$6.0 million**[116](index=116&type=chunk)[120](index=120&type=chunk) [Management of Market Risk](index=32&type=section&id=Management%20of%20Market%20Risk) The company manages interest rate risk by analyzing Net Interest Income and Economic Value of Equity sensitivity, projecting a **2.8%** NII decrease and **14.4%** EVE decrease under a **+200 basis point** rate shock Net Interest Income Sensitivity Analysis (Year 1 Forecast) | Change in Interest Rates (bps) | Change from Level | | :--- | :--- | | +400 | -5.7% | | +200 | -2.8% | | +100 | -1.3% | | -100 | -4.5% | Economic Value of Equity (EVE) Sensitivity Analysis | Change in Interest Rates (bps) | Estimated Decrease in EVE (%) | | :--- | :--- | | +400 | (27.8%) | | +200 | (14.4%) | | +100 | (7.2%) | | -100 | 4.5% | [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity from deposits and loan payments, with **$69.0 million** in additional borrowing capacity and enhanced capital from the stock offering, exceeding regulatory requirements - Primary sources of liquidity are deposits, loan and security payments, and borrowing capacity from the Federal Home Loan Bank of Boston, which stood at an additional **$69.0 million** as of March 31, 2022[142](index=142&type=chunk) - The net proceeds from the recent stock offering have significantly enhanced liquidity and capital resources, positioning the company to fund future loan growth[142](index=142&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is exempt from providing quantitative and qualitative market risk disclosures as it qualifies as a smaller reporting company - The company is exempt from this disclosure requirement because it qualifies as a smaller reporting company[148](index=148&type=chunk) [Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of March 31, 2022, with no material changes to internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[151](index=151&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, these controls[152](index=152&type=chunk) [PART II. OTHER INFORMATION](index=37&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) The company is not involved in any material pending legal proceedings beyond routine business operations - There are no material legal proceedings pending against the company[154](index=154&type=chunk) [Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) The company is exempt from providing risk factor disclosures as it qualifies as a smaller reporting company - The company is exempt from this disclosure requirement because it qualifies as a smaller reporting company[155](index=155&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reports no unregistered sales of equity securities during the period - There were no unregistered sales of equity securities[156](index=156&type=chunk) [Exhibits](index=38&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate documents and CEO/CFO certifications required by Sarbanes-Oxley Act - The report includes certifications from the Chief Executive Officer and Chief Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[161](index=161&type=chunk)

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Presents Colonial Federal Savings Bank's unaudited consolidated financial statements for periods ending December 31, 2021, before reorganization - The financial statements and other information in this report pertain to Colonial Federal Savings Bank, as the reorganization into CFSB Bancorp, Inc. was not completed until January 12, 2022, after the reporting period ended[5](index=5&type=chunk) Consolidated Balance Sheets Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2021 | June 30, 2021 | Change (%) | | :--- | :--- | :--- | :--- | | **Total Assets** | **$361,829** | **$338,854** | **+6.8%** | | Total cash and cash equivalents | $47,833 | $40,678 | +17.6% | | Loans, net | $172,931 | $174,433 | -0.9% | | Securities held to maturity | $122,931 | $105,114 | +16.9% | | **Total Liabilities** | **$312,489** | **$290,209** | **+7.7%** | | Total deposits | $307,560 | $284,634 | +8.1% | | **Total Retained Earnings** | **$49,340** | **$48,645** | **+1.4%** | Consolidated Statements of Net Income Net Income Performance (in thousands) | Period | Three Months Ended Dec 31, 2021 | Three Months Ended Dec 31, 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Net Interest Income | $2,011 | $1,816 | +10.7% | | Net Income | $234 | $215 | +8.8% | | **Period** | **Six Months Ended Dec 31, 2021** | **Six Months Ended Dec 31, 2020** | **Change (%)** | | Net Interest Income | $3,994 | $3,577 | +11.7% | | Net Income | $706 | $594 | +18.9% | Consolidated Statements of Cash Flows Cash Flow Summary for Six Months Ended Dec 31 (in thousands) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(30) | $549 | | Net cash (used in) provided by investing activities | $(15,189) | $8,439 | | Net cash provided by financing activities | $22,374 | $2,090 | | **Net change in cash and cash equivalents** | **$7,155** | **$11,078** | Notes to Unaudited Consolidated Financial Statements - On January 12, 2022, the Bank completed its reorganization into a two-tier mutual holding company structure, concurrently selling **2,804,306 shares** of common stock at **$10.00 per share**, raising gross proceeds of **$28.0 million**[25](index=25&type=chunk) - The loan portfolio is primarily composed of residential real estate loans (**$139.1M**), with smaller portions of multifamily (**$16.2M**) and commercial real estate (**$15.5M**) as of December 31, 2021[41](index=41&type=chunk) - The Bank maintains capital ratios significantly above the 'well capitalized' regulatory requirements, with a Total Capital to risk-weighted assets ratio of **29.3%** as of December 31, 2021, compared to the **10.0%** minimum[57](index=57&type=chunk) - As of December 31, 2021, the Bank had outstanding commitments to grant loans of **$3.5 million** and unadvanced funds on equity lines of credit of **$4.7 million**[60](index=60&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition and operating results, analyzing balance sheet, income, asset quality, market risk, liquidity, and capital Comparison of Financial Condition - Total assets increased by **$22.9 million (6.8%)** to **$361.8 million**, primarily driven by a **$17.8 million** increase in securities held-to-maturity and a **$7.1 million** increase in cash and cash equivalents[86](index=86&type=chunk) - Net loans decreased slightly by **$1.5 million (0.9%)** to **$172.9 million**, as repayments in commercial real estate and lower originations in one- to four-family residential loans outpaced new lending[88](index=88&type=chunk) - Total liabilities grew by **$22.3 million (7.7%)**, fueled by a **$23.0 million** increase in deposits, mainly due to a **$22.2 million** rise in non-interest-bearing deposits, including stock offering subscription funds[91](index=91&type=chunk)[92](index=92&type=chunk) Comparison of Operating Results (Three Months) - Net income for the quarter increased by **$19,000 (8.8%)** to **$234,000**, primarily due to a **$195,000 (10.7%)** increase in net interest income[94](index=94&type=chunk) - Net interest margin expanded to **2.46%** from **2.27%** in the prior-year quarter, as the cost of interest-bearing liabilities fell more rapidly than the yield on interest-earning assets[98](index=98&type=chunk) - Non-interest expense rose by **$142,000 (8.1%)**, mainly from a **$124,000** increase in other expenses related to higher consultant and audit fees[104](index=104&type=chunk) Comparison of Operating Results (Six Months) - Net income for the six-month period increased by **$112,000 (18.9%)** to **$706,000**, driven by higher net interest income and non-interest income[111](index=111&type=chunk) - Net interest income grew by **$417,000 (11.7%)** to **$4.0 million**, benefiting from an improved net interest rate spread (**2.37%** vs **2.02%**)[116](index=116&type=chunk) - Non-interest income increased by **$64,000 (18.1%)**, primarily due to a **$48,000** gain on the sale of a U.S. Treasury security[119](index=119&type=chunk) Management of Market Risk - The company's most significant market risk is interest rate risk, monitored using Net Interest Income (NII) and Economic Value of Equity (EVE) simulation models[128](index=128&type=chunk)[130](index=130&type=chunk) Interest Rate Sensitivity Analysis (as of Dec 31, 2021) | Rate Shock (bps) | Change in Net Interest Income (Year 1) | Change in Economic Value of Equity (EVE) | | :--- | :--- | :--- | | +300 | +2.7% | -20.3% | | +200 | +2.4% | -12.9% | | +100 | +1.9% | -5.6% | | -100 | -6.4% | -1.9% | Liquidity and Capital Resources - Primary liquidity sources include deposits, loan and security payments, and borrowings from the Federal Home Loan Bank (FHLB) of Boston, with **$68.4 million** in additional FHLB advances available at December 31, 2021[137](index=137&type=chunk) - The company exceeded all regulatory capital requirements, with a Tier 1 leverage ratio of **14.4%** (versus a **5.0%** requirement for 'well-capitalized') and a total risk-based capital ratio of **29.3%** (versus a **10.0%** requirement)[137](index=137&type=chunk) - The net proceeds from the January 2022 stock offering will significantly increase liquidity and capital, though management anticipates an initial reduction in return on equity[137](index=137&type=chunk)[138](index=138&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, the registrant is exempt from providing detailed market risk disclosures - As a smaller reporting company, the registrant is exempt from providing detailed quantitative and qualitative disclosures about market risk under this item[142](index=142&type=chunk) [Item 4. Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective, with no material changes to internal control over financial reporting - The CEO and COO concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[145](index=145&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal controls[146](index=146&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no material legal proceedings beyond routine matters in the ordinary course of business - The company reports no material legal proceedings other than routine matters occurring in the ordinary course of business as of December 31, 2021[148](index=148&type=chunk) [Item 1A. Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, the company is exempt from providing risk factor disclosures in its Form 10-Q - The company is a smaller reporting company and is not required to provide the information for this item[149](index=149&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details the January 2022 stock offering, including shares sold, gross proceeds, and allocation of net proceeds - The company completed its initial public stock offering on January 12, 2022, selling **2,804,306 shares** at **$10.00 per share** for gross proceeds of approximately **$28.0 million**[150](index=150&type=chunk) Use of Net Proceeds from Stock Offering (~$26.5 million) | Use of Proceeds | Amount (in millions) | | :--- | :--- | | Loan to ESOP | $2.6 | | Contribution to Foundation | $0.25 | | Investment in the Bank | $13.2 | | Retained for Corporate Purposes | $13.3 | [Other Disclosures (Items 3, 4, 5 & 6)](index=35&type=section&id=Other%20Disclosures) Confirms no defaults on senior securities or mine safety disclosures, and lists filed exhibits including CEO and CFO certifications - No defaults upon senior securities (Item 3) or mine safety disclosures (Item 4) were reported for the period[151](index=151&type=chunk)[152](index=152&type=chunk) - A list of exhibits filed with the 10-Q is provided, including Sarbanes-Oxley certifications and XBRL data files[155](index=155&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ | --- | --- | |---------------------------------------------------------------------------------------- ...