CFSB Bancorp(CFSB) - 2023 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) This section presents CFSB Bancorp, Inc.'s unaudited consolidated financial statements, including balance sheets, income statements, and cash flows, with detailed accounting policy notes Consolidated Balance Sheets Total assets decreased to $356.8 million by December 2022, driven by reduced cash, while equity increased to $75.3 million | Account | Dec 31, 2022 ($ in thousands) | June 30, 2022 ($ in thousands) | | :--- | :--- | :--- | | Total Assets | $356,833 | $366,183 | | Cash and cash equivalents | $10,574 | $31,667 | | Loans, net | $178,569 | $172,593 | | Securities held to maturity | $149,473 | $145,239 | | Total Liabilities | $281,554 | $291,933 | | Total deposits | $275,462 | $287,075 | | Total Stockholders' Equity | $75,279 | $74,250 | Consolidated Statements of Net Income Net income increased to $341,000 for the quarter and $986,000 for six months, driven by higher net interest income | Metric ($ in thousands) | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | Six Months Ended Dec 31, 2022 | Six Months Ended Dec 31, 2021 | | :--- | :--- | :--- | :--- | :--- | | Total interest and dividend income | $2,681 | $2,268 | $5,286 | $4,529 | | Net interest income | $2,341 | $2,011 | $4,704 | $3,994 | | Net income | $341 | $234 | $986 | $706 | | Basic and diluted EPS | $0.05 | N/A | $0.16 | N/A | Consolidated Statements of Cash Flows Net cash and equivalents decreased by $21.1 million due to cash used in investing and financing activities, despite positive operating cash flow | Cash Flow Activity ($ in thousands) | Six Months Ended Dec 31, 2022 | Six Months Ended Dec 31, 2021 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $897 | $(30) | | Net cash used in investing activities | $(10,502) | $(15,189) | | Net cash (used in) provided by financing activities | $(11,488) | $22,374 | | Net change in cash and cash equivalents | $(21,093) | $7,155 | Notes to Unaudited Consolidated Financial Statements Notes detail accounting policies, loan portfolio composition (primarily residential real estate), regulatory capital, and employee benefit plans - The Bank primarily focuses on one- to four-family residential real estate loans, aiming to grow its balance sheet through originations and increased multi-family/commercial loans[24] Loan Portfolio Composition | Loan Type ($ in thousands) | Dec 31, 2022 | June 30, 2022 | | :--- | :--- | :--- | | 1-4 family residential | $140,898 | $141,073 | | Commercial real estate | $21,077 | $14,761 | | Multifamily | $13,239 | $14,310 | | Total loans | $180,699 | $174,689 | Regulatory Capital Ratios | Capital Ratios (as of Dec 31, 2022) | Actual Ratio | Minimum to be Well Capitalized | | :--- | :--- | :--- | | Total capital (to risk weighted assets) | 32.6% | 10.0% | | Common equity Tier 1 capital | 31.7% | 6.5% | | Tier 1 capital (to risk weighted assets) | 31.7% | 8.0% | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, focusing on net interest income, changes in financial condition, operating results, asset quality, and market risk management Comparison of Financial Condition (at Dec 31, 2022 and June 30, 2022) Total assets decreased by $9.4 million due to cash deployment into loans and securities, while equity increased by $1.0 million - The company strategically deployed excess cash into higher-yielding loans and securities, significantly decreasing cash and cash equivalents[108] - Net loans increased by $6.0 million (3.5%), driven by a 42.8% rise in commercial real estate loans, diversifying the portfolio[108] - Deposits decreased by $11.6 million (4.0%), mainly in savings and money market accounts, as management opted against raising interest rates[108] Comparison of Operating Results Net income increased 45.7% for the quarter and 39.7% for six months, driven by higher net interest income and expanded net interest margin Three Months Ended December 31, 2022 | Metric ($ in thousands) | Three Months Ended Dec 31, 2022 | Change (YoY) | | :--- | :--- | :--- | | Net Income | $341,000 | +45.7% | | Net Interest Income | $2.3 million | +16.4% | | Net Interest Margin | 2.77% | +27 bps | Six Months Ended December 31, 2022 | Metric ($ in thousands) | Six Months Ended Dec 31, 2022 | Change (YoY) | | :--- | :--- | :--- | | Net Income | $986,000 | +39.7% | | Net Interest Income | $4.7 million | +17.8% | | Net Interest Margin | 2.76% | +26 bps | - No provision for loan losses was recorded, reflecting strong asset quality with an allowance for loan losses at 0.97% of total loans[110] Management of Market Risk Primary market risk is interest rate risk, with a +200 bps shock projected to decrease NII by 8.7% and EVE by 22.4% Estimated Change in Net Interest Income | Interest Rate Change (bps) | Estimated Change in Net Interest Income (Year 1) | | :--- | :--- | | +200 | (8.7%) | | +100 | (4.7%) | | -100 | (0.5%) | | -200 | (1.9%) | Estimated Change in Economic Value of Equity (EVE) | Interest Rate Change (bps) | Estimated Change in Economic Value of Equity (EVE) | | :--- | :--- | | +200 | (22.4%) | | +100 | (11.2%) | | -100 | +9.5% | | -200 | +18.2% | Liquidity and Capital Resources The company maintains strong liquidity from deposits and loan payments, with $66.8 million FHLB access and exceeding all regulatory capital requirements - Primary sources of funds include deposits, loan and security payments, and access to Federal Home Loan Bank of Boston advances[143] - As of December 31, 2022, the company could borrow $66.8 million from FHLB of Boston, with no outstanding advances[143] - The Bank exceeded all regulatory capital requirements as of December 31, 2022[143] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, CFSB Bancorp, Inc. is not required to provide market risk disclosures under this item - The company, as a smaller reporting entity, is not required to provide quantitative and qualitative market risk disclosures[148] Controls and Procedures Management concluded disclosure controls and procedures were effective, with no material changes in internal control over financial reporting - The CEO and COO concluded that the company's disclosure controls and procedures were effective as of the period end[151] - No material changes occurred in the company's internal control over financial reporting during the quarter[152] PART II. OTHER INFORMATION Legal Proceedings The company is not involved in any material legal proceedings outside the ordinary course of business - The company reports no pending legal proceedings materially affecting its financial condition or results[155] Risk Factors As a smaller reporting company, CFSB Bancorp, Inc. is not required to provide risk factor disclosures under this item - The company, as a smaller reporting entity, is not required to provide risk factor disclosures[156] Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities during the reporting period - No unregistered sales of equity securities occurred during the period[158] Exhibits This section lists exhibits filed with Form 10-Q, including corporate governance documents, officer certifications, and XBRL data files - Exhibits filed include the Charter, Bylaws, CEO/CFO certifications, and XBRL interactive data files[167]