CFSB Bancorp(CFSB) - 2024 Q3 - Quarterly Results

Financial Results Summary Summarizes CFSB Bancorp, Inc.'s financial performance, detailing net income and earnings per share for the quarter and nine-month periods Overview of Financial Performance CFSB Bancorp, Inc. reported a net loss of $40,000 for Q3 FY2024 and a $127,000 net loss for the nine months ended March 31, 2024, reflecting a decline from prior year's profitability Net Income (Loss) and Basic & Diluted EPS | Period | Net Income (Loss) | Basic & Diluted EPS | | :--- | :--- | :--- | | Q3 2024 (ended Mar 31, 2024) | ($40,000) | ($0.01) | | Q2 2024 (ended Dec 31, 2023) | ($210,000) | ($0.03) | | Q3 2023 (ended Mar 31, 2023) | $355,000 | $0.06 | | Nine Months 2024 (ended Mar 31, 2024) | ($127,000) | ($0.02) | | Nine Months 2023 (ended Mar 31, 2023) | $1,300,000 | $0.21 | - The CEO noted that liabilities are repricing faster than assets, which has challenged lending operations, with a potential realignment of the yield curve anticipated to provide future assistance[8] Operating Results Analyzes the company's operational performance, focusing on key drivers of net income and loss for both the third quarter and year-to-date periods Third Quarter Operating Results (ended March 31, 2024) The company's third-quarter performance was primarily impacted by a significant year-over-year decrease in net interest income due to margin compression from rising deposit costs, partially offset by a reversal of the provision for credit losses, modest non-interest income growth, and controlled expenses Net Interest Income Net interest income decreased by 23.6% year-over-year to $1.7 million, with the net interest margin contracting by 63 basis points to 1.96%, driven by faster repricing of liabilities Net Interest Income and Margin | Metric | Q3 2024 (ended Mar 31, 2024) | Q3 2023 (ended Mar 31, 2023) | Change | | :--- | :--- | :--- | :--- | | Net Interest Income (tax-equivalent) | $1.7 million | $2.2 million | -23.6% | | Net Interest Margin | 1.96% | 2.59% | -63 bps | - Compared to the prior quarter (Q2 2024), net interest income was stable at $1.7 million, though the net interest margin slightly decreased by six basis points from 2.02%[27] Provision for Credit Losses The company recorded a $20,000 reversal of the provision for credit losses for the quarter, attributed to improved forecasted economic conditions, lower loan balances, and sustained strong asset quality - A reversal of the provision for credit losses of $20,000 was recorded in Q3 2024, compared to a reversal of $104,000 in Q2 2024 and no provision in Q3 2023[3] - The allowance for credit losses as a percentage of total loans decreased to 0.90% at March 31, 2024, down from 0.93% at December 31, 2023, and 0.98% at March 31, 2023[3] Non-Interest Income and Expense Non-interest income increased by 12.8% year-over-year to $167,000, driven by higher customer service fees, while non-interest expense remained relatively flat, increasing by just 0.4% to $1.9 million Non-Interest Income and Expense | Item | Q3 2024 (ended Mar 31, 2024) | Q3 2023 (ended Mar 31, 2023) | Change | | :--- | :--- | :--- | :--- | | Non-Interest Income | $167,000 | $148,000 | +12.8% | | Non-Interest Expense | $1.9 million | $1.9 million | +0.4% | - Compared to the previous quarter, non-interest expense decreased by $201,000 (9.5%), primarily due to lower salaries and employee benefits from a reduced headcount[29] Income Tax An income tax benefit of $42,000 was recorded for the quarter, a significant shift from the $47,000 provision in the prior-year quarter, primarily due to decreased income before taxes - The company recorded an income tax benefit of $42,000 in Q3 2024, compared to a provision of $16,000 in Q2 2024 and a provision of $47,000 in Q3 2023[5] Year-to-Date Operating Results (Nine months ended March 31, 2024) For the first nine months of fiscal 2024, the company experienced a significant decline in profitability, swinging to a net loss from a net income in the prior year, primarily driven by a 25.7% decrease in net interest income due to higher interest expenses Net Interest Income (YTD) Net interest income for the nine-month period decreased by 25.7% to $5.2 million, with the net interest margin compressing by 65 basis points to 2.06%, as the cost of interest-bearing liabilities outpaced asset yields Net Interest Income and Margin (YTD) | Metric | Nine Months 2024 | Nine Months 2023 | Change | | :--- | :--- | :--- | :--- | | Net Interest Income (tax-equivalent) | $5.2 million | $6.9 million | -25.7% | | Net Interest Margin | 2.06% | 2.71% | -65 bps | Provision for Credit Losses (YTD) A reversal of the provision for credit losses of $290,000 was recorded for the nine months ended March 31, 2024, attributed to improved economic forecasts, lower loan balances, and strong asset quality - The company recognized a reversal of the provision for credit losses of $290,000 for the nine-month period[6] Non-Interest Income and Expense (YTD) For the nine-month period, non-interest income was nearly flat at $499,000, while non-interest expenses rose by 3.4% to $5.9 million, primarily due to increased salaries and benefits Non-Interest Income and Expense (YTD) | Item | Nine Months 2024 | Nine Months 2023 | Change | | :--- | :--- | :--- | :--- | | Non-Interest Income | $499,000 | $500,000 | -0.2% | | Non-Interest Expense | $5.9 million | $5.7 million | +3.4% | Income Tax (YTD) Income tax expense for the nine-month period decreased substantially to $67,000 from $282,000 in the prior year, reflecting the significant drop in pre-tax income - Income tax expense decreased by $215,000 year-over-year due to lower income before taxes[32] Balance Sheet and Financial Condition Examines the company's financial position, including asset growth, loan portfolio changes, deposit trends, and equity movements Balance Sheet Overview As of March 31, 2024, total assets grew to $358.1 million, a 2.6% increase, driven by higher cash and FHLBB advances funded by deposits, partially offset by a decrease in the net loan portfolio Balance Sheet Summary | Balance Sheet Item | March 31, 2024 | June 30, 2023 | Change | | :--- | :--- | :--- | :--- | | Total Assets | $358.1 million | $349.0 million | +2.6% | | Cash and cash equivalents | $21.7 million | $6.9 million | +215.5% | | Net Loans | $170.9 million | $175.9 million | -2.8% | | Total Deposits | $265.6 million | $263.4 million | +0.9% | | FHLBB Advances | $10.4 million | $3.7 million | +182.4% | Asset Quality The company's asset quality remained strong as of March 31, 2024, with no non-performing loans and the allowance for credit losses at 0.90% of total loans - At March 31, 2024, there were four current loans rated substandard but no loans rated special mention, doubtful, or loss, reflecting continued strong asset quality[14] - The allowance for credit losses as a percentage of total loans was 0.90% at March 31, 2024[3] Stockholders' Equity Total stockholders' equity experienced a slight decrease of $27,000 to $75.9 million at March 31, 2024, primarily due to the net loss and CECL adoption, partially offset by stock-based compensation - Total stockholders' equity decreased by $27,000 to $75.9 million at March 31, 2024, from June 30, 2023[14] - Key factors for the decrease included the net loss of $127,000 and the adoption of ASU 2016-13 (net of taxes) of $223,000, offset by stock-based compensation of $269,000[14] Financial Statements and Supplementary Data Presents the company's unaudited consolidated financial statements and key supplementary data for detailed financial analysis Consolidated Balance Sheets This statement provides a detailed, unaudited snapshot of the company's financial position, outlining assets, liabilities, and stockholders' equity as of March 31, 2024, and June 30, 2023 - The Consolidated Balance Sheets are presented in the report, showing detailed line items for assets, liabilities, and equity[19][38] Consolidated Statements of Net Income (Loss) This statement details the company's revenues and expenses, leading to the net income or loss for the three and nine-month periods ended March 31, 2024, with comparative data for prior periods - The Consolidated Statements of Net Income (Loss) are presented, detailing performance for the three and nine months ended March 31, 2024 and 2023[20][40] Average Balances and Yields This supplementary table provides a detailed analysis of average asset and liability balances, interest earned and paid, and the corresponding average yields and rates, crucial for understanding net interest income - The report includes detailed tables on average balances, interest earned/paid, and average yields/rates on a fully tax-equivalent basis for both the three-month and nine-month periods[22][43] Selected Financial Highlights This section presents key performance, capital, and asset quality ratios, offering a concise overview of the company's financial health and operational efficiency for the reported periods - The report provides a table of selected financial highlights, including performance ratios (ROA, ROE), capital ratios (Tier 1, Total Capital), and asset quality ratios[45] Other Information Provides background information on CFSB Bancorp, Inc. and important disclaimers regarding forward-looking statements About CFSB Bancorp, Inc. CFSB Bancorp, Inc. serves as the federal mid-tier holding company for Colonial Federal Savings Bank, established in 1889, serving customers on the south shore of Massachusetts - CFSB Bancorp, Inc. is the holding company for Colonial Federal Savings Bank, which has operated in Massachusetts since 1889[16] Forward-Looking Statements The press release includes forward-looking statements based on current beliefs and expectations, subject to significant business, economic, and competitive uncertainties, with no obligation to update - This press release contains forward-looking statements that are subject to risks and uncertainties, including competitive pressures, interest rate changes, and general economic conditions[17]