CFSB Bancorp(CFSB) - 2024 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents the unaudited consolidated financial statements for CFSB Bancorp, Inc. as of December 31, 2023, along with detailed notes on accounting policies and presentation Consolidated Balance Sheets Total assets increased to $359,025 thousand at December 31, 2023, driven by higher cash and FHLB advances, while deposits slightly decreased and equity remained stable Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2023 | June 30, 2023 | | :--- | :--- | :--- | | Assets | | | | Total cash and cash equivalents | $15,724 | $6,861 | | Loans, net | $174,974 | $175,911 | | Securities held to maturity, net | $149,117 | $147,902 | | Total Assets | $359,025 | $349,007 | | Liabilities & Equity | | | | Total deposits | $257,940 | $263,376 | | Federal Home Loan Bank advances | $19,100 | $3,675 | | Total Liabilities | $283,230 | $273,118 | | Total Stockholders' Equity | $75,795 | $75,889 | Consolidated Statements of Net Income (Loss) The company reported a net loss of $210 thousand for the three months ended December 31, 2023, primarily due to increased interest expense outpacing interest income growth Net Income (Loss) Summary (in thousands, except per share data) | Metric | Three Months Ended Dec 31, 2023 | Three Months Ended Dec 31, 2022 | Six Months Ended Dec 31, 2023 | Six Months Ended Dec 31, 2022 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $1,639 | $2,341 | $3,445 | $4,704 | | Provision for (reversal of) credit losses | ($104) | $0 | ($270) | $0 | | Net Income (Loss) | ($210) | $341 | ($87) | $986 | | Basic EPS | ($0.03) | $0.05 | ($0.01) | $0.16 | | Diluted EPS | ($0.03) | $0.05 | ($0.01) | $0.16 | Consolidated Statements of Changes in Stockholders' Equity Stockholders' equity slightly decreased to $75,795 thousand at December 31, 2023, primarily due to a net loss and a CECL accounting adjustment, partially offset by compensation - The adoption of ASU 2016-13 resulted in a cumulative adjustment that reduced retained earnings by $223 thousand, net of tax. This adjustment included provisions for credit losses on loans, securities, and off-balance sheet exposures[78][87] Changes in Stockholders' Equity (in thousands) | Description | Six Months Ended Dec 31, 2023 | | :--- | :--- | | Balance at June 30, 2023 | $75,889 | | Cumulative effect accounting adjustment | ($223) | | Net income (loss) | ($87) | | Other comprehensive income | $2 | | Stock-based compensation | $179 | | ESOP shares committed to be released | $35 | | Balance at December 31, 2023 | $75,795 | Consolidated Statements of Cash Flows Cash and cash equivalents increased by $8,863 thousand for the six months ended December 31, 2023, primarily due to financing activities offsetting investing and operating cash uses Cash Flow Summary (in thousands) | Activity | Six Months Ended Dec 31, 2023 | Six Months Ended Dec 31, 2022 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | ($64) | $897 | | Net cash used in investing activities | ($1,110) | ($10,502) | | Net cash provided by (used in) financing activities | $10,037 | ($11,488) | | Net change in cash and cash equivalents | $8,863 | ($21,093) | | Cash and cash equivalents at beginning of period | $6,861 | $31,667 | | Cash and cash equivalents at end of period | $15,724 | $10,574 | Notes to Unaudited Consolidated Financial Statements This section details accounting policies and financial data, covering CECL adoption, portfolio breakdowns, borrowings, regulatory capital, and fair value measurements - On July 1, 2023, the Company adopted ASU 2016-13 (CECL), requiring estimation of credit losses over financial asset life, resulting in a net decrease to retained earnings of $223 thousand as of adoption[106][132][152] - The Bank's primary business involves taking deposits in Norfolk County, Massachusetts, and investing them in one- to four-family residential real estate loans[90] - Management identifies the allowance for credit losses and deferred income taxes as material estimates highly susceptible to near-term change[44] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes the company's financial condition and results, focusing on the net loss, changes in assets and liabilities, and components of net interest income and market risk - The company reported a net loss of $210 thousand for the three months ended December 31, 2023, a 161.6% decrease from net income in the prior year period[223] - Net interest income decreased by 30.0% for the quarter, as the increase in average rate paid on interest-bearing liabilities significantly outpaced the yield on interest-earning assets[224] - Total assets increased by $10,000 thousand (2.9%) to $359,000 thousand at December 31, 2023, primarily due to increased cash and FHLB borrowings for a leverage strategy[312] - The company adopted the CECL methodology (ASU 2016-13) on July 1, 2023, altering the allowance for credit losses estimation process[237] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, CFSB Bancorp, Inc. is exempt from providing detailed quantitative and qualitative market risk disclosures - The company is a smaller reporting company under Rule 12b-2 of the Exchange Act and is not required to provide this item's information[271] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2023, with no material changes to internal control over financial reporting - Management concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[282] - No material changes occurred in internal control over financial reporting during the quarter[274] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not involved in any material pending legal proceedings beyond routine matters in the ordinary course of business - The company reports no material pending legal proceedings outside of the ordinary course of business[284][290] Item 1A. Risk Factors As a smaller reporting company, CFSB Bancorp, Inc. is not required to provide risk factor disclosures in its Form 10-Q - As a smaller reporting company, the registrant is not required to provide information for this item[285] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL interactive data files - Exhibits filed include CEO and CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act, and XBRL data files[204]