s☐☐

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~~December 3031, 2024


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________

Commission File Number: 001-41220

CFSB Bancorp, Inc.

(Exact Name of Registrant as Specified in its Charter)


United States of America	87-4396534
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
15 Beach Street Quincy, Massachusetts	02170
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (617) 471-0750

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered

Stock, Par Value $0.01 Common Per Share CFSB The Nasdaq Stock Market, LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~November~~February 810, ~~2024~~2025, the registrant had 6,~~632~~548,~~642~~575 shares of common stock, $0.01 par value per share, outstanding.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	3
	Consolidated Balance Sheets	3
	Consolidated Statements of Net (loss) Income	4
	Consolidated Statements of Net Loss	4
	Consolidated Statements of Comprehensive (Loss) Income	5
	Consolidated Statements of Comprehensive Loss	5
	Consolidated Statements of Changes in Stockholders' Equity	6
	Consolidated Statements of Cash Flows	78
	Notes to Unaudited Consolidated Financial Statements	89
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4044
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5058
Item 4.	Controls and Procedures	5159
PART II.	OTHER INFORMATION	5260
Item 1.	Legal Proceedings	5260
Item 1A.	Risk Factors	5260
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5260
Item 3.	Defaults Upon Senior Securities	5260
Item 4.	Mine Safety Disclosures	5260
Item 5.	Other Information	5260
Item 6.	Exhibits	5361
Signatures		5462

Item 1. Financial Statements.

CFSB Bancorp, Inc. and Subsidiary

Consolidated Balance Sheets (Unaudited)

(In thousands, except per share data)

	September 30,			June 30,
	December 31,			June 30,
	2024			2024
Assets:
Cash and due from banks	$	1,~~157~~506		$	1,339
Short-term investments		2927,~~510~~323			25,620
Total cash and cash equivalents		3028,~~667~~829			26,959
Securities available for sale, at fair value		~~108~~103			113
Securities held to maturity, at amortized cost, net of $134 and $149 allowance for credit loss, fair value of $137,569 and $133,420 at September 30, 2024 and June 30, 2024, respectively		146,853			146,994
Securities held to maturity, net of allowance for credit losses of $119 and $149, fair value of $135,388 and $133,420 at December 31, 2024 and June 30, 2024, respectively		147,917			146,994
Federal Home Loan Bank stock, at cost		704			704
Loans, net of allowance for credit losses of $1,504 at September 30, 2024 and $1,553 at June 30, 2024		168,023			170,438
Loans, net of allowance for credit losses of $1,407 and $1,553 at December 31, 2024 and June 30, 2024, respectively		167,152			170,438
Premises and equipment, net		3,~~186~~130			3,246
Accrued interest receivable		1,~~354~~355			1,398
Bank-owned life insurance		10,~~739~~809			10,670
Deferred tax asset		1,~~243~~193			1,245
Operating lease right of use asset		~~836~~812			860
Other assets		~~773~~754			812
Total assets	$	~~364~~362,~~486~~758		$	363,439
Liabilities and Stockholders' Equity:
Deposits
Non-interest-bearing	$	3127,~~190~~991		$	34,124
Interest-bearing		~~240~~242,~~480~~367			236,717
Total deposits		~~271~~270,~~670~~358			270,841
Federal Home Loan Bank of Boston advances		10,350			10,350
Mortgagors' escrow accounts		1,~~590~~684			1,525
Operating lease liability		~~855~~833			877
Accrued expenses and other liabilities		3,~~986~~862			3,796
Total liabilities		~~288~~287,~~451~~087			287,389
Stockholders' Equity
Preferred Stock, $.01 par value, 10,000,000 shares authorized, none outstanding	$	-		$	-
Common Stock, $.01 par value, 90,000,000 shares authorized, 6,603,841 issued and outstanding as of September 30, 2024 and 6,621,152 issued and outstanding as of June 30, 2024		65			65
Common Stock, $.01 par value, 90,000,000 shares authorized, 6,558,407 issued and outstanding as of December 31, 2024 and 6,621,152 issued and outstanding as of June 30, 2024		65			65
Additional paid-in capital		28,~~220~~302			28,139
Treasury stock at cost, 28,801 and 11,490 shares at September 30, 2024 and June 30, 2024		(195	)		(78	)
Treasury stock at cost, 74,235 and 11,490 shares at December 31, 2024 and June 30, 2024, respectively		(504	)		(78	)
Retained earnings		50,~~220~~058			50,226
Accumulated other comprehensive loss		-			(1	)
Unearned compensation - ESOP, 227,528 and 230,084 shares unallocated at September 30, 2024 and June 30, 2024, respectively		(2,275	)		(2,301	)
Unearned compensation - ESOP, 224,970 and 230,084 shares unallocated at December 31, 2024 and June 30, 2024, respectively		(2,250	)		(2,301	)
Total stockholders' equity		7675,~~035~~671			76,050
Total liabilities and stockholders' equity	$	~~364~~362,~~486~~758		$	363,439

The accompanying notes are an integral part of these unaudited consolidated financial statements.

CFSB Bancorp, Inc. and Subsidiary

Consolidated Statements of Net (Loss) ~~Income~~ (Unaudited)

(In thousands, except per share data)

	For the Three Months Ended						For the Six Months Ended
	September 30,			September 30,
	December 31,			December 31,			December 31,			December 31,
	2024			2023			2024			2023
Interest and dividend income:
Interest and fees on loans	$	1,~~784~~765		$	1,~~722~~758		$	3,549		$	3,480
Interest and dividends on debt securities:
Taxable		1,~~028~~083			~~868~~904			2,111			1,772
Tax-exempt		7773			9793			150			190
Interest on short-term investments		~~330~~342			4549			672			94
Total interest and dividend income		3,~~219~~263			2,~~732~~804			6,482			5,536
Interest expense:
Deposits		1,~~457~~455			~~876~~1,051			2,912			1,927
Borrowings		119			50114			238			164
Total interest expense		1,~~576~~574			~~926~~1,165			3,150			2,091
Net interest income		1,~~643~~689			1,~~806~~639			3,332			3,445
Reversal of credit losses for securities held to maturity		(15	)		(4399	)		(30	)		(141	)
Reversal of credit losses for off-balance sheet exposures		(8	)		(13	)
Provision (reversal) of credit losses for off-balance sheet exposures		33			3			25			(12	)
Reversal of credit losses for loans		(4897	)		(~~110~~8	)		(145	)		(117	)
Net interest income after reversal of credit losses		1,714			1,972
Net interest income after reversal of provision for credit losses		1,768			1,743			3,482			3,715
Non-interest income:
Customer service fees		4136			4037			77			77
Income on bank-owned life insurance		6970			6668			139			134
Other income		6059			5467			119			121
Total non-interest income		~~170~~165			~~160~~172			335			332
Non-interest expenses:
Salaries and employee benefits		1,~~096~~218			1,~~144~~267			2,314			2,411
Occupancy and equipment		~~251~~237			~~254~~240			488			494
Advertising		3638			3836			74			74
Data processing		94108			89101			202			190
Deposit insurance		3435			33			69			66
Other general and administrative		~~360~~408			~~358~~432			768			790
Total non-interest expenses		12,~~871~~044			12,~~916~~109			3,915			4,025
Income before income taxes		13			216
Income (loss) before income taxes		(111	)		(194	)		(98	)		22
Provision for income taxes		1951			9316			70			109
Net (loss) income	$	(6	)	$	123
Net loss	$	(162	)	$	(210	)	$	(168	)	$	(87	)
Net income (loss) per share:
Net loss per share:
Basic	$	(0.0003	)	$	(0.0203	)	$	(0.03	)	$	(0.01	)
Diluted	$	(0.0003	)	$	(0.0203	)	$	(0.03	)	$	(0.01	)
Weighted average shares outstanding:
Basic		6,~~294~~271,~~603~~579			6,~~282~~284,~~203~~768			6,283,091			6,283,485
Diluted		6,~~294~~271,~~603~~579			6,~~282~~284,~~203~~768			6,283,091			6,283,485

The accompanying notes are an integral part of these unaudited consolidated financial statements.

CFSB Bancorp, Inc. and Subsidiary

Consolidated Statements of Comprehensive (Loss) ~~Income~~ (Unaudited)

(In thousands)

	For the Three Months Ended						For the Six Months Ended
	September 30,
	December 31,						December 31,
	2024			2023			2024			2023
Net (loss) income	$	(6	)	$	123
Net loss	$	(162	)	$	(210	)	$	(168	)	$	(87	)
Other comprehensive loss:
Change in unrealized holding losses		1-			-2			1			3
Net change in unrealized losses		1-			-2			1			3
Tax effect		-			-			-			(1	)
Net-of-tax amount		1-			-2			1			2
Comprehensive (loss) income	$	(5	)	$	123
Comprehensive loss	$	(162	)	$	(208	)	$	(167	)	$	(85	)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

CFSB Bancorp, Inc. and Subsidiary

Consolidated Statements of Changes in Stockholders' Equity (Unaudited)

(Dollars in thousands)

															Accumulated
						Additional									Other			Unearned
	Common Stock					Paid-in			Treasury			Retained			Comprehensive			Compensation
	Shares			Amount		Capital			Stock			Earnings			Income (Loss)			ESOP			Total
Balance at June 30, 2024		6,621,152		$	65	$	28,139		$	(78	)	$	50,226		$	(1	)	$	(2,301	)	$	76,050
Net loss		-			-		-			-			(6	)		-			-			(6	)
Other comprehensive income		-			-		-			-			-			1			-			1
Stock-based compensation		-			-		90			-			-			-			-			90
Treasury stock purchased		(17,311	)		-		-			(117	)		-			-			-			(117	)
ESOP shares committed to be released		-			-		(9	)		-			-			-			26			17
Balance at September 30, 2024		6,603,841		$	65	$	28,220		$	(195	)	$	50,220		$	-		$	(2,275	)	$	76,035
Balance at June 30, 2023		6,632,642		$	65	$	27,814		$	-		$	50,416		$	(3	)	$	(2,403	)	$	75,889
Net loss		-			-		-			-			(162	)		-			-			(162	)
Cumulative effect accounting adjustment(1)		-			-		-			-			(223	)		-			-			(223	)
Other comprehensive income		-			-		-			-			-			-			-			-
Net income		-			-		-			-			123			-			-			123
Other comprehensive loss		-			-		-			-			-			-			-			-
Stock-based compensation		-			-		90			-			-			-			-			90
ESOP shares committed to be released		-			-		(8	)		-			-			-			26			18
Treasury stock purchased		(45,434	)		-		-			(309	)		-			-			-			(309	)
ESOP shares committed to be released		-			-		(8	)		-			-			-			25			17
Balance at December 31, 2024		6,558,407		$	65	$	28,302		$	(504	)	$	50,058		$	-		$	(2,250	)	$	75,671
Balance at September 30, 2023		6,632,642		$	65	$	27,896		$	-		$	50,316		$	(3	)	$	(2,377	)	$	75,897
Net loss		-			-		-			-			(210	)		-			-			(210	)
Other comprehensive income		-			-		-			-			-			2			-			2
Stock-based compensation		-			-		89			-			-			-			-			89
ESOP shares committed to be released		-			-		(9	)		-			-			-			26			17
Balance at December 31, 2023		6,632,642		$	65	$	27,976		$	-		$	50,106		$	(1	)	$	(2,351	)	$	75,795

(1) Represents adjustment needed to reflect the cumulative impact on retained earnings pursuant to the Company's adoption of Accounting Standards Update 2016-13. The adjustment presented includes $12,000 ($9,000, net of tax) attributable to the change in accounting methodology for estimating the allowance for credit losses related to loans, $276,000 ($198,000, net of tax) attributable to the change in accounting methodology for estimating the allowance for credit losses related to securities held to maturity and $23,000 ($16,000, net of tax) related to the reserve for off-balance sheet exposures resulting from the Company's adoption of the standard. The amount shown in the table above is presented net of tax.

The accompanying notes are an integral part of these unaudited consolidated financial statements.

CFSB Bancorp, Inc. and Subsidiary

Consolidated Statements of Changes in Stockholders' Equity (Unaudited)

(Dollars in thousands)


															Accumulated
						Additional									Other			Unearned
	Common Stock					Paid-in			Treasury			Retained			Comprehensive			Compensation
	Shares			Amount		Capital			Stock			Earnings			Income (Loss)			ESOP			Total
Balance at June 30, 2024		6,621,152		$	65	$	28,139		$	(78	)	$	50,226		$	(1	)	$	(2,301	)	$	76,050
Net loss		-			-		-			-			(168	)		-			-			(168	)
Other comprehensive income		-			-		-			-			-			1			-			1
Stock-based compensation		-			-		180			-			-			-			-			180
Treasury stock purchased		(62,745	)		-					(426	)		-			-			-			(426	)
ESOP shares committed to be released		-			-		(17	)		-			-			-			51			34
Balance at December 31, 2024		6,558,407		$	65	$	28,302		$	(504	)	$	50,058		$	-		$	(2,250	)	$	75,671

Balance at June 30, 2023		6,632,642		$	65	$	27,814		$	-		$	50,416		$	(3	)	$	(2,403	)	$	75,889
Cumulative effect accounting adjustment(1)		-			-		-						(223	)		-			-			(223	)
Net loss		-			-		-			-			(87	)		-			-			(87	)
Other comprehensive income		-			-		-			-			-			2			-			2
Stock-based compensation		-			-		179															179
ESOP shares committed to be released		-			-		(17	)					-			-			52			35
Balance at December 31, 2023		6,632,642		$	65	$	27,976		$	-		$	50,106		$	(1	)	$	(2,351	)	$	75,795

The accompanying notes are an integral part of these unaudited consolidated financial statements.

CFSB Bancorp, Inc. and Subsidiary

Consolidated Statements of Changes of Cash Flows (Unaudited)

(In thousands)

	September 30,
	For the Six Months Ended
	December 31,
	2024			2023
Cash flows from operating activities:
Net (loss) income	$	(6	)	$	123
Net loss	$	(168	)	$	(87	)
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Reversal of credit losses		(71150	)		(~~166~~270	)
Amortization of securities, net		65108			96187
Net change in deferred loan costs and fees		(611	)		3044
Increase in cash surrender value of bank-owned life insurance		(69139	)		(66134	)
Depreciation and amortization, net		62118			59117
Deferred income tax expense		252			-
ESOP expense		1734			1835
Stock-based compensation		90180			90179
Net change in accrued interest receivable		4443			(32104	)
Other, net		~~238~~100			~~284~~(31	)
Net cash provided by operating activities		366			436
Net cash provided by (used in) operating activities		167			(64	)
Cash flows from investing activities:
Activity in securities available for sale:
Maturities, prepayments and calls		611			817
Activity in securities held to maturity:
Maturities, prepayments and calls		48,~~595~~284			37,~~897~~248
Purchases		(49,~~504~~284	)		(38,~~861~~784	)
Purchases of Federal Home Loan Bank of Boston stock		-			(24569	)
Loan originations and payments, net		23,~~470~~444			12,~~899~~249
Additions to premises and equipment		(2	)		-
Purchase of Participation Loans		-			(1,250	)
Net cash provided by investing activities		2,565			1,919
Additions to premises and equipment		(2	)		(21	)
Net cash provided by (used in) investing activities		2,453			(1,110	)
Cash flows from financing activities:
Net increase (decrease) in deposits		829			(2,703	)
Net decrease in deposits		(483	)		(5,436	)
Treasury stock purchased		(~~117~~426	)		-
Net decrease in short-term borrowings		-			(425	)
Net increase in short-term borrowings		-			5,075
Net increase in mortgagors' escrow accounts		65			30
Net increase in long-term borrowings		-			10,350
Net cash provided by (used in) financing activities		777			(3,098	)
Net increase in mortgagors' escrow accounts		159			48
Net change in cash and cash equivalents		3,708			(743	)
Net cash (used in) provided by financing activities		(750	)		10,037
Net change in cash and cash equivalents		1,870			8,863
Cash and cash equivalents at beginning of period		26,959			6,861
Cash and cash equivalents at end of period	$	3028,~~667~~829		$	615,~~118~~724
Supplemental information:
Interest paid on deposits and long-term borrowings	$	13,~~607~~182		$	~~913~~2,054
Income taxes paid	$	2030		$	6585
Adoption of ASU 2016-13	$	-		$	223

The accompanying notes are an integral part of these unaudited consolidated financial statements.

CFSB Bancorp, Inc. and Subsidiary

Notes to Unaudited Consolidated Financial Statements

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF BUSINESS

Basis of presentation and consolidation

These unaudited consolidated financial statements of CFSB Bancorp, Inc. (the "Company") include the accounts of Colonial Federal Savings Bank (the “Bank”) and its wholly owned subsidiary, Beach Street Securities Corporation, which was established for the purpose of buying, holding, and selling securities. All significant intercompany balances and transactions have been eliminated in consolidation.

The unaudited consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and disclosures required by GAAP for annual financial statements. In the opinion of management, all adjustments necessary for a fair presentation are reflected in these unaudited consolidated financial statements, and all adjustments made are of a normal recurring nature. The results of operations reported for interim periods are not necessarily indicative of the results of operations for the entire year or any subsequent interim period. These unaudited consolidated financial statements should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended June 30, 2024.

Reclassification

Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation.

Business

The Bank conducts operations from its three full-service banking offices and one limited-service banking office located in Quincy, Holbrook and Weymouth, Massachusetts, all within Norfolk County. The Bank considers its primary lending market area to be Norfolk and Plymouth Counties; however, the Bank occasionally makes loans secured by properties located outside of its primary lending market. The Bank's business consists primarily of taking deposits from the general public and investing those deposits, together with funds generated from operations, in one- to four-family residential real estate loans and, to a lesser extent, multi-family real estate loans, commercial real estate loans, second mortgage loans and home equity lines of credit, consumer loans and construction loans.

Reorganization and Offering

On January 12, 2022, the Bank reorganized from a federally chartered mutual savings bank into the two-tier mutual holding company structure. As part of the reorganization, a mutual holding company (the “MHC”) was formed as a federal corporation, into which all of the current voting rights of the members of the Bank were transferred. As part of the reorganization, the Bank converted to a federal stock savings bank. A stock holding company (the “Holding Company”) was established as a federal corporation and a majority-owned subsidiary of the MHC at all times so long as the MHC remains in existence. Concurrently with the reorganization, the Holding Company offered for sale 43% of its common stock in a stock offering and contributed 2% of its common stock to a charitable foundation established as a part of the reorganization. The remainder of the Holding Company common stock is held by the MHC. The Holding Company offered shares of common stock for sale on a priority basis to depositors of the Bank and the tax qualified employee plans of the Bank. The Company sold 2,804,306 shares of common stock at $10.00 per share for gross offering proceeds of $28.0 million.

Earnings Per Share

Basic earnings per share represent income available to common stockholders divided by the weighted- average number of common shares outstanding during the period. Diluted earnings per share is computed in a manner similar to that of basic earnings per share except that the weighted-average number of common shares outstanding is increased to include the number of incremental shares (computed using the treasury method) that would have been outstanding if all potentially dilutive common stock equivalents (such as

CFSB Bancorp, Inc. and Subsidiary

options) were issued during the period. There were no anti-dilutive options for the three and six months ended ~~September~~December 3031, 2024 or 2023. Unearned ESOP shares are not deemed outstanding for earnings per share calculations.

The following table presents the factors used in the earnings per share calculation:

	For the Three Months Ended						For the Six Months Ended
(Dollars In thousands)	~~September~~December 3031, 2024			~~September~~December 3031, 2023			December 31, 2024			December 31, 2023
Net (loss) income	$	(6	)	$	123
Net loss	$	(162	)	$	(210	)	$	(168	)	$	(87	)
Weighted average number of common shares outstanding		6,~~612~~587,~~616~~027			6,632,642			6,599,822			6,632,642
Less: Average unallocated ESOP shares		(~~229~~226,~~213~~648	)		(~~239~~236,~~439~~874	)		(227,931	)		(238,157	)
Less: Average non-vested restricted shares		(88,800	)		(111,000	)		(88,800	)		(111,000	)
Weighted average number of common shares outstanding used to calculate basic earnings per common share		6,~~294~~271,~~603~~579			6,~~282~~284,~~203~~768			6,283,091			6,283,485
Dilutive effect of share-based compensation		-			-			-			-
Weighted average number of common shares outstanding used to calculate diluted earnings per common share		6,~~294~~271,~~603~~579			6,~~282~~284,~~203~~768			6,283,091			6,283,485
Earnings (loss) per common share
Loss per common share
Basic	$	(0.0003	)	$	(0.0203	)	$	(0.03	)	$	(0.01	)
Diluted	$	(0.0003	)	$	(0.0203	)	$	(0.03	)	$	(0.01	)

Use of estimates

In preparing consolidated financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the unaudited consolidated balance sheet and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term are the allowance for credit losses and deferred income taxes.

Management believes that the allowance for credit losses was adequate as of ~~September~~December 3031, 2024 and June 30, 2024. While management uses current information and reasonable and supportable forecasts to recognize losses on loans, securities and off-balance sheet commitments, future additions to the allowance for credit losses may be necessary based on changes in economic conditions or other factors. In addition, the Office of the Comptroller of the Currency, as an integral part of its examination process, periodically reviews the Bank's allowance for credit losses, and as a result of such reviews, management may have to adjust the allowance for credit losses. However, regulatory agencies are not directly involved in establishing the allowance for credit losses as the process is management's responsibility and any increase or decrease in the allowance is the responsibility of management.

Management believes that the deferred tax provision was adequate as of ~~September~~December 3031, 2024 and June 30, 2024. In accordance with Accounting Standards Codification (“ASC”) Topic 740 “Income Taxes,” management uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. If currently available information raises doubt as to the realization of the deferred tax assets, a valuation allowance is established. A valuation allowance results in additional income tax expense in the period in which it is recognized, which would negatively affect earnings. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Management exercises significant judgment in evaluating the amount and timing of recognition of the resulting tax assets and liabilities. These judgments require management to make projections of future taxable income. The judgments and estimates management makes in determining the deferred tax assets are inherently subjective and are reviewed on a regular basis as regulatory, economic, or business factors change. Management believes, based upon current facts, that it is more likely than not that there will be sufficient taxable income in future years to realize the federal and state portion of its deferred tax asset.

910

CFSB Bancorp, Inc. and Subsidiary

Recent accounting pronouncements

In December 2023, the Financial Accounting Standards Board issued ASU 2023-09, Income Taxes-Improvements to Income Tax Disclosures (Topic 740), which requires entities to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. On an annual basis, entities must disclose: (1) the amount of income taxes paid, net of refunds, disaggregated by federal, state and foreign: and (2) the amount of income taxes paid, net of refunds, disaggregated by individual jurisdictions in which income taxes paid, net of refunds received, for amounts equal to or greater than 5% of total income taxes paid. Further, the amendments also require entities to disclose: (1) income or loss from continued operations before income tax expense (or benefit) disaggregated between domestic and foreign sources; and (2) income or loss from continued operations disaggregated by federal, state, and foreign sources. This ASU, as amended, is effective for the Company in fiscal years beginning after December 15, 2024 and is not expected to have a material impact on the Company's consolidated financial statements.

1011

CFSB Bancorp, Inc. and Subsidiary

RESTRICTIONS ON CASH AND AMOUNTS DUE FROM BANKS

Effective March 26, 2020, the Board of Governors of the Federal Reserve reduced reserve requirement ratios to zero percent and therefore no reserve balance was required at ~~September~~December 3031, 2024 or June 30, 2024.

SECURITIES

The amortized cost and fair value of securities, with gross unrealized gains and losses and allowance for credit losses, follows:

	September 30, 2024
	December 31, 2024
(In thousands)	Amortized Cost		Allowance for Credit Losses		Net Carrying Amount		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Securities available for sale:
Government-sponsored enterprises:
Mortgage-backed securities - residential	$	~~108~~103	$	-	$	~~108~~103	$	-	$	-		$	~~108~~103
Total securities available for sale	$	~~108~~103	$	-	$	~~108~~103	$	-	$	-		$	~~108~~103
Securities held to maturity:
Government-sponsored enterprises:
Debt obligations	$	~~998~~999	$	-	$	~~998~~999	$	-	$	(75	)	$	~~991~~994
Mortgage-backed securities - residential		4849,~~663~~824		-		4849,~~663~~824		~~222~~41		(12,~~615~~485	)		47,~~270~~380
Mortgage-backed securities - commercial		45,~~321~~015		-		45,~~321~~015		1011		(34	)		45,~~328~~022
Collateralized mortgage obligations		2,~~971~~950		-		2,~~971~~950		87		-			2,~~979~~957
Municipal bonds		39,~~111~~136		1		39,~~110~~135		4-		(46,~~953~~350	)		3432,~~161~~785
Corporate bonds		50,~~923~~112		~~133~~118		5049,~~790~~994		4111		(23,~~991~~755	)		4746,~~840~~250
Total securities held to maturity	$	~~146~~148,~~987~~036	$	~~134~~119	$	~~146~~147,~~853~~917	$	~~285~~70	$	(912,~~569~~599	)	$	~~137~~135,~~569~~388


	June 30, 2024
(In thousands)	Amortized Cost		Allowance for Credit Losses		Net Carrying Amount		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Securities available for sale:
Government-sponsored enterprises:
Mortgage-backed securities - residential	$	114	$	-	$	114	$	-	$	(1	)	$	113
Total securities available for sale	$	114	$	-	$	114	$	-	$	(1	)	$	113

Securities held to maturity:
Government-sponsored enterprises:
Debt obligations	$	998	$	-	$	998	$	-	$	(19	)	$	979
Mortgage-backed securities - residential		46,556		-		46,556		13		(2,763	)		43,806
Mortgage-backed securities - commercial		4,462		-		4,462		11		(3	)		4,470
Collateralized mortgage obligations		2,975		-		2,975		9		-			2,984
Municipal bonds		41,171		2		41,169		-		(6,347	)		34,822
Corporate bonds		50,981		147		50,834		3		(4,478	)		46,359
Total securities held to maturity	$	147,143	$	149	$	146,994	$	36	$	(13,610	)	$	133,420

Securities with an amortized cost of $32,~~175~~174,000 and a fair value of $2827,~~957~~998,000 at ~~September~~December 3031, 2024 were pledged to secure a credit line with the Federal Reserve Bank. See Note 7 of these unaudited consolidated financial statements.

1112

CFSB Bancorp, Inc. and Subsidiary

The amortized cost and fair value of debt securities, by contractual maturity, is shown below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	September 30, 2024
	December 31, 2024
	Due in One Year or Less				Due After One Year to Five Years				Due after Five Years to Ten Years				Due After 10 Years				Total
(In thousands)	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Securities available for sale:
Government-sponsored enterprises:
Mortgage-backed securities - residential	$	1-	$	1-	$	79	$	79	$	8983	$	9083	$	11	$	1011	$	~~108~~103	$	~~108~~103
Total securities available for sale	$	1-	$	1-	$	79	$	79	$	8983	$	9083	$	11	$	1011	$	~~108~~103	$	~~108~~103
Securities held to maturity:
Government-sponsored enterprises:
Debt obligations	$	~~998~~999	$	~~991~~994	$	-	$	-	$	-	$	-	$	-	$	-	$	~~998~~999	$	~~991~~994
Mortgage-backed securities - residential		626		625		32,~~025~~762		2,~~960~~692		1615,~~062~~230		1514,~~325~~295		2931,~~570~~806		2830,~~979~~368		4849,~~663~~824		47,~~270~~380
Mortgage-backed securities - commercial		-		-		~~915~~1,783		~~913~~1,779		3,~~406~~232		3,~~415~~243		-		-		45,~~321~~015		45,~~328~~022
Collateralized mortgage obligations		-		-		-		-		2,~~971~~950		2,~~979~~957		-		-		2,~~971~~950		2,~~979~~957
Municipal bonds		1,235		1,~~225~~231		7,~~155~~167		7,~~140~~054		1415,~~941~~977		13,~~177~~469		1514,~~780~~757		1211,~~619~~031		39,~~111~~136		3432,~~161~~785
Corporate bonds		21,~~251~~999		21,~~241~~988		3736,~~056~~522		3534,~~331~~326		9,~~926~~905		8,~~901~~664		1,~~690~~686		1,~~367~~272		50,~~923~~112		4746,~~840~~250
Total securities held to maturity	$	4,~~490~~259	$	4,~~463~~238	$	48,~~151~~234	$	4645,~~344~~851	$	47,~~306~~294	$	4342,~~797~~628	$	4748,~~040~~249	$	42,~~965~~671	$	~~146~~148,~~987~~036	$	~~137~~135,~~569~~388


	June 30, 2024
	Due in One Year or Less				Due After One Year to Five Years				Due after Five Years to Ten Years				Due After 10 Years				Total
(In thousands)	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Securities available for sale:
Government-sponsored enterprises:
Mortgage-backed securities - residential	$	1	$	1	$	8	$	8	$	93	$	92	$	12	$	12	$	114	$	113
Total securities available for sale	$	1	$	1	$	8	$	8	$	93	$	92	$	12	$	12	$	114	$	113

Securities held to maturity:
Government-sponsored enterprises:
Debt obligations	$	998	$	979	$	-	$	-	$	-	$	-	$	-	$	-	$	998	$	979
Mortgage-backed securities - residential		-		-		3,255		3,135		17,201		15,965		26,100		24,706		46,556		43,806
Mortgage-backed securities - commercial		-		-		1,006		1,004		3,456		3,466		-		-		4,462		4,470
Collateralized mortgage obligations		-		-		-		-		2,975		2,984		-		-		2,975		2,984
Municipal bonds		3,320		3,295		7,144		6,978		13,510		11,489		17,197		13,060		41,171		34,822
Corporate bonds		1,247		1,234		38,095		35,253		9,946		8,568		1,693		1,304		50,981		46,359
Total securities held to maturity	$	5,565	$	5,508	$	49,500	$	46,370	$	47,088	$	42,472	$	44,990	$	39,070	$	147,143	$	133,420

On July 1, 2023, the Company adopted ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurements of Credit Losses on Financial Instruments, as amended, which replaced the incurred loss methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables and securities held to maturity. In addition, ASC 326 made changes to the accounting for securities available for sale.

Allowance for Credit Losses - Securities Available for Sale

CFSB Bancorp, Inc. and Subsidiary

qualitative criteria to determine any expected loss. This includes among other items the financial health of, and specific prospects for the issuer, including whether the issuer is in compliance with the terms and covenants of the security. The Company also evaluates quantitative criteria including determining whether there has been an adverse change in expected future cash flows of the security. Securities available for sale which are guaranteed by government agencies do not currently have an allowance for credit loss, as the Company determined these securities are either backed by the full faith and credit of the U.S. government and/or there is an unconditional commitment to make interest payments and to return the principal investment in full to investors when a debt security reaches maturity. In assessing the Company’s investments in government-sponsored and U.S. government guaranteed mortgage-backed securities and government-sponsored enterprise obligations, the contractual cash flows of these investments are guaranteed by the respective government-sponsored enterprise Federal Home Loan Mortgage Corporation (“FHLMC”), Federal National Mortgage Association (“FNMA”), or Government National Mortgage Association (“GNMA”). Accordingly, it is expected that the securities would not be settled at a price less than the par value of the Company’s investments. Certain items may cause the Company to change this methodology, which include legislative changes that remove a government-sponsored enterprise’s ability to draw funds from the U.S. government, or legislative changes to housing policy that reduce or eliminate the U.S. government’s implicit guarantee on such securities. The Company will evaluate its position no less than annually. Accrued interest receivable on securities available for sale guaranteed by government agencies totaled $500 at September 30, 2024 and is excluded from the estimate of credit losses. If the Company does not expect to recover the entire amortized cost basis of the security, an allowance for credit losses would be recorded, with a related charge to earnings, limited by the amount of the fair value of the security less its amortized cost. If the Company intends to sell the security or it is more likely than not that the Company will be required to sell the debt security before recovery of its amortized cost basis, the Company recognizes the entire difference between the amortized cost basis of the security and its fair value in earnings. Any impairment that has not been recorded through an allowance for credit loss is recognized in other comprehensive income. There were no securities available for sale not guaranteed by government agencies at September 30, 2024.

Allowance for Credit Losses - Securities Held to Maturity

The Company measures expected credit losses on securities held to maturity on a collective basis by security type and risk rating where available. The reserve for each pool is calculated based on a Probability of Default/Loss Given Default basis taking into consideration the expected life of each security. Held-to-maturity securities which are issued by the United States Treasury or are guaranteed by government agencies do not currently have an allowance for credit loss as the Company determined these securities are either backed by the full faith and credit of the U.S. government and/or there is an unconditional commitment to make interest payments and to return the principal investment in full to investors when a debt security reaches maturity. In assessing the Company’s investments in government-sponsored and U.S. government guaranteed mortgage-backed securities and government-sponsored enterprise obligations, the contractual cash flows of these investments are guaranteed by the respective government-sponsored enterprise FHLMC, FNMA, or GNMA. Accordingly, it is expected that the securities would not be settled at a price less than the par value of the Company’s investments. Certain items may cause the Company to change this methodology which include legislative changes that remove a government-sponsored enterprise’s ability to draw funds from the U.S. government, or legislative changes to housing policy that reduce or eliminate the U.S. government’s implicit guarantee on such securities. The Company will evaluate its position no less than annually. Any expected credit losses on held-to-maturity securities would be presented as an allowance for credit loss. Accrued interest receivable on held-to-maturity securities totaled $845,000 at September 30, 2024 and is excluded from the estimate of credit losses.

CFSB Bancorp, Inc. and Subsidiary

~~The~~Allowance ~~following tables summarize the activity in the allowance~~ for ~~credit~~Credit ~~losses~~Losses ~~for~~- ~~securities~~Securities ~~held~~Available ~~to maturity by security type~~ for ~~the dates indicated:~~Sale

	Government-sponsored Enterprises
(In thousands)	Debt Obligations		Mortgage-backed Securities		Municipal Bonds			Corporate Bonds			Total
Balance at June 30, 2024	$	-	$	-	$	2		$	147		$	149
Provision for (reversal of) credit losses		-		-		(1	)		(14	)		(15	)
Balance at September 30, 2024	$	-	$	-	$	1		$	133		$	134

The Company measures expected credit losses on securities available for sale based upon the gain or loss position of the security. For securities available for sale in an unrealized loss position which the Company does not intend to sell, and it is not more likely than not that the Company will be required to sell the security before recovery of the amortized cost, the Company evaluates qualitative criteria to determine any expected loss. This includes among other items the financial health of, and specific prospects for the issuer, including whether the issuer is in compliance with the terms and covenants of the security. The Company also evaluates quantitative criteria including determining whether there has been an adverse change in expected future cash flows of the security. Securities available for sale which are guaranteed by government agencies do not have an allowance for credit losses, as these securities are either backed by the full faith and credit of the U.S. government and/or there is an unconditional commitment to make interest payments and to return the principal investment in full to investors when a debt security reaches maturity. In assessing the Company’s investments in government-sponsored and U.S. government guaranteed mortgage-backed securities and government-sponsored enterprise obligations, the contractual cash flows of these investments are guaranteed by the respective government-sponsored enterprise Federal Home Loan Mortgage Corporation (“FHLMC”), Federal National Mortgage Association (“FNMA”), or Government National Mortgage Association (“GNMA”). Accordingly, it is expected that the securities would not be settled at a price less than the par value of the Company’s investments. Certain items may cause the Company to change this methodology, which include legislative changes that remove a government-sponsored enterprise’s ability to draw funds from the U.S. government, or legislative changes to housing policy that reduce or eliminate the U.S. government’s implicit guarantee on such securities. The Company will evaluate its position no less than annually. Accrued interest receivable on securities available for sale guaranteed by government agencies totaled $1,000 at December 31, 2024 and is excluded from the estimate of credit losses. If the Company does not expect to recover the entire amortized cost basis of the security, an allowance for credit losses would be recorded, with a related charge to earnings, limited by the amount of the fair value of the security less its amortized cost. If the Company intends to sell the security or it is more likely than not that the Company will be required to sell the debt security before recovery of its amortized cost basis, the Company recognizes the entire difference between the amortized cost basis of the security and its fair value in earnings. Any impairment that has not been recorded through an allowance for credit loss is recognized in other comprehensive income. There were no securities available for sale not guaranteed by government agencies at June 30, 2024

	Government-sponsored Enterprises
(In thousands)	Debt Obligations		Mortgage-backed Securities		Municipal Bonds		Corporate Bonds			Total
Balance at June 30, 2023	$	-	$	-	$	-	$	-		$	-
Adoption of ASU 2016-13		-		-		2		274			276
Adjusted beginning balance	$	-	$	-	$	2	$	274		$	276
Provision for (reversal of) credit losses		-		-		-		(43	)		(43	)
Balance at September 30, 2023	$	-	$	-	$	2	$	231		$	233

Allowance for Credit Losses - Securities Held to Maturity

The Company measures expected credit losses on securities held to maturity on a collective basis by security type and risk rating where available. The reserve for each pool is calculated based on a Probability of Default/Loss Given Default basis taking into consideration the expected life of each security. Held-to-maturity securities which are issued by the United States Treasury or are guaranteed by government agencies do not have an allowance for credit losses as these securities are either backed by the full faith and credit of the U.S. government and/or there is an unconditional commitment to make interest payments and to return the principal investment in full to investors when a debt security reaches maturity. In assessing the Company’s investments in government-sponsored and U.S. government guaranteed mortgage-backed securities and government-sponsored enterprise obligations, the contractual cash flows of these investments are guaranteed by the respective government-sponsored enterprise FHLMC, FNMA, or GNMA. Accordingly, it is expected that the securities would not be settled at a price less than the par value of the Company’s investments. Certain items may cause the Company to change this methodology which include legislative changes that remove a government-sponsored enterprise’s ability to draw funds from the U.S. government, or legislative changes to housing policy that reduce or eliminate the U.S. government’s implicit guarantee on such securities. The Company will evaluate its position no less than annually. Any expected credit losses on held-to-maturity securities would be presented as an allowance for credit loss. Accrued interest receivable on held-to-maturity securities totaled $877,000 at June 30, 2024 and is excluded from the estimate of credit losses.

CFSB Bancorp, Inc. and Subsidiary

~~Information~~The ~~pertaining~~following totables ~~securities~~summarize ~~with~~the ~~gross~~activity ~~unrealized~~in ~~losses~~the atallowance ~~September~~for ~~30,~~credit ~~2024~~losses orfor ~~June~~securities ~~30,~~held ~~2024~~to ~~aggregated~~maturity by ~~investment~~security ~~category~~type ~~and~~for ~~length~~the ofdates ~~time that individual securities have been in a continuous loss position, follows~~indicated:

	September 30, 2024
		Government-sponsored Enterprises
	Less Than Twelve Months													Over Twelve Months
(In thousands)		Debt Obligations			Mortgage-backed Securities			Municipal Bonds			Corporate Bonds				Total
(In thousands)	Number of Securities			Gross Unrealized Losses			Estimated Fair Value			Depreciation from Amortized Cost Basis (%)				Number of Securities				Gross Unrealized Losses		Estimated Fair Value		Depreciation from Amortized Cost Basis (%)
Balance at September 30, 2024		$	-		$	-		$	1		$	133			$	134
Securities held to maturity:
Reversal of credit losses			-			-			-			(15	)			(15	)
Government-sponsored enterprises:
Balance at December 31, 2024		$	-		$	-		$	1		$	118			$	119
Debt obligations		-		$	-		$	-			-	%			1			$	7	$	991		0.7	%
Mortgage-backed securities - residential		2			1			999			0.1				105				1,614		30,581		5.0
Mortgage-backed securities - commercial		2			3			1,779			0.2				-				-		-		-
Municipal bonds		2			118			887			11.7				33				4,835		26,595		15.4
Corporate bonds		1			8			992			0.8				39				2,983		45,409		6.2
Total temporarily impaired securities held to maturity		7		$	130		$	4,657			2.7	%			178			$	9,439	$	103,576		8.4	%

	June 30, 2024
		Government-sponsored Enterprises
	Less Than Twelve Months														Over Twelve Months
(In thousands)		Debt Obligations			Mortgage-backed Securities			Municipal Bonds				Corporate Bonds				Total
(In thousands)	Number of Securities			Gross Unrealized Losses			Estimated Fair Value				Depreciation from Amortized Cost Basis (%)				Number of Securities				Gross Unrealized Losses		Estimated Fair Value		Depreciation from Amortized Cost Basis (%)
Balance at June 30, 2024		$	-		$	-		$	2			$	147			$	149
Securities available for sale:
Reversal of credit losses			-			-			(1	)			(29	)			(30	)
Mortgage-backed securities - residential		-		$	-		$	-				-	%			31			$	1	$	74		1.3	%
Balance at December 31, 2024		$	-		$	-		$	1			$	118			$	119
Total temporarily impaired securities available for sale		-		$	-		$	-				-	%			31			$	1	$	74		1.3	%
Securities held to maturity:
Government-sponsored enterprises:
Debt obligations		-		$	-		$	-				-	%			1			$	19	$	979		1.90	%
Mortgage-backed securities - residential		5			25			3,575				0.7				122				2,738		34,679		7.3
Mortgage-backed securities - commercial		2			3			1,885				0.1				-				-		-		-
Municipal bonds		8			56			3,724				1.5				41				6,291		30,085		17.3
Corporate bonds		1			5			1,529				0.3				38				4,473		43,975		9.2
Total temporarily impaired securities held to maturity		16		$	89		$	10,713				0.8	%			202			$	13,521	$	109,718		11.0	%

At September 30, 2024, 185 debt securities had unrealized losses with an aggregate depreciation of 8.1% from the Bank’s amortized cost basis. These unrealized losses are the result of changes in the interest rate environment and there have been no downgrades in the investment quality of these securities.


	Government-sponsored Enterprises
(In thousands)	Debt Obligations	Mortgage-backed Securities	Municipal Bonds	Corporate Bonds	Total
Balance at September 30, 2023	$-	$-	$2	$231	$233
Provision for (reversal of) credit losses	-	-	-	(99)	(99)
Balance at December 31, 2023	$-	$-	$2	$132	$134


	Government-sponsored Enterprises
(In thousands)	Debt Obligations	Mortgage-backed Securities	Municipal Bonds	Corporate Bonds	Total
Balance at June 30, 2023	$-	$-	$-	$-	$-
Adoption of ASU 2016-13	-	-	2	274	276
Adjusted beginning balance	$-	$-	$2	$274	$276
Provision for (reversal of) credit losses	-	-	-	(142)	(142)
Balance at December 31, 2023	$-	$-	$2	$132	$134

CFSB Bancorp, Inc. and Subsidiary

~~Credit~~Information ~~Quality~~pertaining ~~Indicators~~to securities with gross unrealized losses at December 31, 2024 or June 30, 2024 aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows:

The Company monitors the credit quality of securities through the use of credit ratings on a quarterly basis. Based on credit ratings, all securities are investment grade at September 30, 2024 and June 30, 2024. The following tables provide the amortized cost of securities available for sale and securities held to maturity at the dates indicated:


	December 31, 2024
	Less Than Twelve Months									Over Twelve Months
(In thousands)	Number of Securities		Gross Unrealized Losses		Estimated Fair Value		Depreciation from Amortized Cost Basis (%)			Number of Securities		Gross Unrealized Losses		Estimated Fair Value		Depreciation from Amortized Cost Basis (%)
Securities available for sale:
Mortgage-backed securities - residential		-	$	-	$	-		-	%		-	$	-	$	-		-	%
Total temporarily impaired securities available for sale		-	$	-	$	-		-	%		-	$	-	$	-		-	%

Securities held to maturity:
Government-sponsored enterprises:
Debt obligations		-	$	-	$	-		-	%		1	$	5	$	994		0.5	%
Mortgage-backed securities - residential		18		215		15,600		1.4			104		2,270		28,248		7.4
Mortgage-backed securities - commercial		2		4		1,779		0.2			-		-		-		-
Municipal bonds		10		220		6,043		3.5			33		6,130		25,324		19.5
Corporate bonds		1		8		992		0.8			38		3,747		43,837		7.9
Total temporarily impaired securities held to maturity		31	$	447	$	24,414		1.8	%		176	$	12,152	$	98,403		11.0	%

		September 30, 2024
	June 30, 2024
(In thousands)		Aaa			Aa1			Aa2			Aa3			A1			A2			A3			Baa2		Total
	Less Than Twelve Months												Over Twelve Months
Securities available for sale:
(In thousands)	Number of Securities			Gross Unrealized Losses			Estimated Fair Value			Depreciation from Amortized Cost Basis (%)			Number of Securities			Gross Unrealized Losses			Estimated Fair Value			Depreciation from Amortized Cost Basis (%)
Government-sponsored enterprises:
Securities available for sale:
Mortgage-backed securities - residential		$-	~~108~~	$	$-	-	$	$-	-		$-	-%		$31	-	$	$1	-	$	$74	-		$1.3	-%	$	~~108~~
Total securities available for sale		$	108		$	-		$	-		$	-		$	-		$	-		$	-		$	-	$	108
Total temporarily impaired securities available for sale		-		$	-		$	-			-	%		31		$	1		$	74			1.3	%
Securities held to maturity:
Government-sponsored enterprises:
Debt obligations		$-	~~998~~	$	$-	-	$	$-	-		$-	-%		$1	-	$	$19	-	$	$979	-		$1.9	-%	$	~~998~~
Mortgage-backed securities - residential		5	~~48,663~~		25	-		3,575	-		0.7	-		122	-		2,738	-		34,679	-		7.3	-		~~48,663~~
Mortgage-backed securities - commercial		2	~~4,321~~		3	-		1,885	-		0.1	-		-	-		-	-		-	-		-	-		~~4,321~~
Collateralized mortgage obligations			2,971			-			-			-			-			-			-			-		2,971
Municipal bonds		8			56			3,724			1.5			41			6,291			30,085			17.3
Municipal bonds			8,170			13,901			12,364			1,945			1,019			1,712			-			-		39,111
Corporate bonds		1			5			1,529			0.3			38			4,473			43,975			9.2
Corporate bonds			2,189			-			4,752			2,059			18,549			10,257			12,603			514		50,923
Total temporarily impaired securities held to maturity		16		$	89		$	10,713			0.8	%		202		$	13,521		$	109,718			11.0	%
Total securities held to maturity		$	67,312		$	13,901		$	17,116		$	4,004		$	19,568		$	11,969		$	12,603		$	514	$	146,987

At December 31, 2024, 207 debt securities had unrealized losses with an aggregate depreciation of 9.3% from the Bank’s amortized cost basis. These unrealized losses are the result of changes in the interest rate environment and there have been no downgrades in the investment quality of these securities.

CFSB Bancorp, Inc. and Subsidiary

	June 30, 2024
(In thousands)	Aaa		Aa1		Aa2		Aa3		A1		A2		A3		Baa2		Not Rated		Total
Securities available for sale:
Government-sponsored enterprises:
Mortgage-backed securities - residential	$	114	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	114
Total securities available for sale	$	114	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	114
Securities held to maturity:
Government-sponsored enterprises:
Debt obligations	$	998	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	998
Mortgage-backed securities - residential		46,556		-		-		-		-		-		-		-		-		46,556
Mortgage-backed securities - commercial		4,462		-		-		-		-		-		-		-		-		4,462
Collateralized mortgage obligations		2,975		-		-		-		-		-		-		-		-		2,975
Municipal bonds		8,741		13,882		13,173		2,643		1,020		1,712		-		-		-		41,171
Corporate bonds		2,192		-		4,767		2,062		16,475		14,281		10,690		514		-		50,981
Total securities held to maturity	$	65,924	$	13,882	$	17,940	$	4,705	$	17,495	$	15,993	$	10,690	$	514	$	-	$	147,143

Credit Quality Indicators

~~There~~The ~~were~~Company nomonitors ~~sales~~the credit quality of securities ~~during~~through the ~~three~~use ~~months~~of ~~ended~~Standard ~~September~~&Poor's 30credit ratings on a quarterly basis. Based on credit ratings, all securities are investment grade at December 31, 2024 orand ~~2023~~June 30, 2024. The following tables provide the amortized cost of securities available for sale and securities held to maturity at the dates indicated:


	December 31, 2024
(In thousands)	Aaa		Aa1		Aa2		Aa3		A1		A2		A3		Baa1		Baa2		Total
Securities available for sale:
Government-sponsored enterprises:
Mortgage-backed securities - residential	$	103	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	103
Total securities available for sale	$	103	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	103

Securities held to maturity:
Government-sponsored enterprises:
Debt obligations	$	999	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	999
Mortgage-backed securities - residential		49,824		-		-		-		-		-		-		-		-		49,824
Mortgage-backed securities - commercial		5,015		-		-		-		-		-		-		-		-		5,015
Collateralized mortgage obligations		2,950		-		-		-		-		-		-		-		-		2,950
Municipal bonds		9,174		12,913		12,369		2,967		-		1,713		-		-		-		39,136
Corporate bonds		2,186		-		4,737		5,578		15,005		10,237		8,004		3,852		513		50,112
Total securities held to maturity	$	70,148	$	12,913	$	17,106	$	8,545	$	15,005	$	11,950	$	8,004	$	3,852	$	513	$	148,036

CFSB Bancorp, Inc. and Subsidiary


	June 30, 2024
(In thousands)	Aaa		Aa1		Aa2		Aa3		A1		A2		A3		Baa2		Total
Securities available for sale:
Government-sponsored enterprises:
Mortgage-backed securities - residential	$	114	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	114
Total securities available for sale	$	114	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	114

Securities held to maturity:
Government-sponsored enterprises:
Debt obligations	$	998	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	998
Mortgage-backed securities - residential		46,556		-		-		-		-		-		-		-		46,556
Mortgage-backed securities - commercial		4,462		-		-		-		-		-		-		-		4,462
Collateralized mortgage obligations		2,975		-		-		-		-		-		-		-		2,975
Municipal bonds		8,741		13,882		13,173		2,643		1,020		1,712		-		-		41,171
Corporate bonds		2,192		-		4,767		2,062		16,475		14,281		10,690		514		50,981
Total securities held to maturity	$	65,924	$	13,882	$	17,940	$	4,705	$	17,495	$	15,993	$	10,690	$	514	$	147,143

There were no sales of securities during the six months ended December 31, 2024 or 2023.

CFSB Bancorp, Inc. and Subsidiary

LOANS AND ALLOWANCE FOR CREDIT LOSSES

A summary of the balances of loans follows:

(In thousands)	~~September~~December 3031, 2024			June 30, 2024
Mortgage loans on real estate:
Residential:
1-4 family	$	~~135~~136,~~834~~195		$	138,005
Multifamily		11,~~961~~720			12,066
Second mortgages and home equity lines of credit		34,~~232~~004			3,372
Commercial		1615,~~829~~056			16,833
Total mortgage loans on real estate		~~167~~166,~~856~~975			170,276
Consumer loans:
Consumer		7192			65
Home improvement		1,~~981~~868			2,037
Total other loans		21,~~052~~960			2,102
Total loans		~~169~~168,~~908~~935			172,378
Allowance for credit losses		(1,~~504~~407	)		(1,553	)
Net deferred loan fees		(~~381~~376	)		(387	)
Loans, net	$	~~168~~167,~~023~~152		$	170,438

Residential loans are subject to a blanket lien securing Federal Home Loan Bank (“FHLB”) advances. See Note 7 of these unaudited consolidated financial statements.

Effect of New Financial Accounting Standards

On July 1, 2023, the Company adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurements of Credit Losses on Financial Instruments, as amended, which requires that the recognition of the allowance for credit losses be estimated using the CECL methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables and securities held to maturity. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments in leases recognized by a lessor in accordance with Topic 842 on leases. In addition, ASC 326 made changes to the accounting for securities available for sale. One such change is to require credit losses be presented as an allowance rather than as a write-down on securities available for sale that are determined to have impairment related to credit losses.

The Company adopted ASC 326 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures. Results for reporting periods beginning July 1, 2023 are presented under ASC 326.

1819

CFSB Bancorp, Inc. and Subsidiary

The ~~company~~Company recorded a net decrease to retained earnings of $223,000 as of July 1, 2023 for the cumulative effect of adopting ASC 326, which includes a net deferred tax liability of $88,000.

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

Filing Compare · CFSB Bancorp, Inc. /MA/