UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-K

(Mark One)


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

For the fiscal year ended June 30, ~~2024~~2025


☐	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

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

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 ☐	Emerging growth company ☒	Non-accelerated filer ☒ Smaller reporting 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 has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes ☐ No ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐

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

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant, computed by reference to the last sale price at the end of the most recently completed second quarter was $17.4 million.

As of September 18, ~~2024~~2025, the registrant had 6,~~621~~548,~~152~~575 shares of common stock, $0.01 par value per share, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Certain portions of the registrant’s definitive proxy statement, in connection with its 2024 annual meeting of stockholders, to be filed within 120 days of June 30, 2024, are incorporated by reference into Part III of this Annual Report on Form 10-K.

Table of Contents

		Page
PART I
Item 1.	Business	3
Item 1A.	Risk Factors	3029
Item 1B.	Unresolved Staff Comments	40
Item 1C.	Cybersecurity Risk, Management, Strategy and Governance	40
Item 2.	Properties	42
Item 3.	Legal Proceedings	42
Item 4.	Mine Safety Disclosures	4243
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	4344
Item 6.	[Reserved]	4344
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4445
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	5455
Item 8.	Financial Statements and Supplementary Data	F-1
Item 9.	Changes in and Disagreements ~~With~~with Accountants on Accounting and Financial Disclosure	5055
Item 9A.	Controls and Procedures	5055
Item 9B.	Other Information	5055
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	5155
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	5256
Item 11.	Executive Compensation	5259
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	5264
Item 13.	Certain Relationships and Related Transactions, and Director Independence	5265
Item 14.	Principal Accounting Fees and Services	5366
PART IV
Item 15.	Exhibits and Financial Statement Schedules	5467
Item 16.	Form 10-K Summary	5568
Signatures		5669

PART I

This annual report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”), which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “assume,” “plan,” “seek,” “expect,” “will,” “may,” “should,” “indicate,” “would,” “contemplate,” “continue,” “target” and words of similar meaning. These forward-looking statements include, but are not limited to:

•

statements of our goals, intentions and expectations;

•

statements regarding our business plans, prospects, growth and operating strategies;

•

statements regarding the quality of our loan and investment portfolios; and

•

estimates of our risks and future costs and benefits.

These forward-looking statements are based on our current beliefs and expectations and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. We are under no duty to and do not assume any obligation to update any forward-looking statements after the date of this report.

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:

•

general economic conditions, either nationally or in our market areas, that are worse than expected;

•

changes in the amount of loan or trend in delinquencies and write-offs and changes in the estimates of or the methodology to calculate the adequacy of the allowance for credit losses;

•

failure to complete the proposed merger with Hometown Financial Group, Inc. ("Hometown Financial") or unexpected delays related to the merger or either party's inability to satisfy closing conditions required to complete the merger;

•

failure to obtain necessary regulatory approvals (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the proposed merger;

•

certain restrictions during the pendency of the proposed merger with Hometown Financial that may impact the Company's ability to pursue certain business opportunities or strategic transactions;

•

because of the merger, the diversion of management's attention from ongoing business operations and opportunities;

•

our ability to access cost-effective funding;

•

fluctuations in real estate values and both residential and commercial real estate market conditions;

•

demand for loans and deposits in our market area;

•

our ability to implement and change our business strategy;

•

competition among depository and other financial institutions;

•

inflation and changes in the interest rate environment that reduce our margins and yields, the fair value of financial instruments or our level of loan originations, or increase the level of defaults, losses and prepayments on loans we have made and make;

•

adverse changes in the securities or secondary mortgage markets;

•

changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees, capital requirements, insurance premiums and changes in the monetary policies of the U. S. Treasury and the Board of Governors of the Federal Reserve System;

•

changes in the quality or composition of our loan or investment portfolios;

•

technological changes that may be more difficult or expensive than expected;

•

the inability of third-party providers to perform as expected;

•

a failure or breach of our operational or security systems or infrastructure, including cyberattacks;

•

our ability to manage market risk, credit risk and operational risk;

•

our ability to enter new markets successfully and capitalize on growth opportunities;

•

our ability to successfully integrate into our operations any assets, liabilities, customers, systems and management personnel we may acquire and our ability to realize related revenue synergies and cost savings within expected time frames, and any goodwill charges related thereto;

•

changes in consumer spending, borrowing and savings habits;

•

changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board (the “"FASB”"), the Securities and Exchange Commission (the “"SEC") or the Public Company Accounting Oversight Board (the “"PCAOB”");

•

the current or anticipated impact of military conflict, terrorism or other geopolitical event;

•

our ability to retain key employees;

•

our compensation expense associated with equity allocated or awarded to our employees; and

•

changes in the financial condition, results of operations or future prospects of issuers of securities that we own.

Because of these and a variety of other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements.

Item 1. Business.

CFSB Bancorp, Inc.

CFSB Bancorp, Inc. (“"CFSB Bancorp”" or the “"Company”") is a federal corporation that was formed in January 2022 to become the savings and loan holding company of Colonial Federal Savings Bank (the “"Bank”") as part of the mutual holding company reorganization of the Bank. Since its incorporation, other than holding the common stock of the Bank, retaining approximately 50% of the net cash proceeds of the stock offering and making a loan to the employee stock ownership plan (the "ESOP") of the Bank, CFSB Bancorp has not engaged in any other business activities.

CFSB Bancorp completed its stock offering in connection with the mutual holding company reorganization of the Bank on January 12, 2022. The Company sold 2,804,306 shares of common stock at $10.00 per share for gross proceeds of $28.0 million. In connection with the reorganization, the Company also contributed 130,433 shares of common stock and $250,000 in cash to the Colonial Federal Savings Bank Charitable Foundation and issued 3,586,903 shares of common stock to 15 Beach, MHC, its federally-chartered mutual holding company parent. Shares of the Company’s common stock began trading on January 13, 2022 on the Nasdaq Stock Market under the trading symbol “"CFSB.”"

CFSB Bancorp, as the holding company of the Bank, is authorized to pursue other business activities permitted by applicable laws and regulations, which may include the acquisition of banking and financial services companies. We currently have no agreements to acquire other financial institutions or financial services companies~~, although we may determine to do so in the future~~.

CFSB Bancorp’s cash flows will depend on earnings from the investment of the net offering proceeds and from any dividends it receives from the Bank. The Bank is subject to regulatory limitations on the amount of dividends that it may pay. ~~Initially,~~ CFSB Bancorp ~~will~~does not own or lease any property, but instead ~~will~~pays ~~pay~~ the Bank for the use of its premises, furniture, and equipment. We ~~intend~~only to employ as officers of CFSB Bancorp only persons who are officers of the Bank. However, we will use the support staff of the Bank from time to time. We will pay the Bank for the time the Bank employees devote to CFSB Bancorp; however, these individuals will not be separately compensated by CFSB Bancorp. ~~CFSB Bancorp may hire additional employees, as appropriate, to the extent it expands its business in the future.~~

At June 30, 2025, CFSB Bancorp, on a consolidated basis, had total assets of $366.6 million, total deposits of $274.2 million and total equity of $75.7 million. We had a net loss of $265,000 for the year ended June 30, 2025, compared to net income of $33,000 for the year ended June 30, 2024.

Proposed Merger

On May 20, 2025, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Hometown Financial Group, MHC (“Hometown MHC”), Hometown Financial, Hometown Financial Acquisition Corp. II (“Merger Sub”). Pursuant to the Merger Agreement, 15 Beach MHC will merge with and into Hometown MHC (the “MHC Merger”) with Hometown MHC as the surviving entity. Immediately following the MHC Merger, the Company will merge with Merger Sub (the “Merger”) with the Company as the surviving entity. Immediately following the Merger, the Company will merge with and into Hometown (the “Second-Step Merger”) with Hometown Financial as the surviving corporation. Immediately following the Second-Step Merger, the Bank will merge with and into North Shore Bank, a wholly owned subsidiary of Hometown Financial, with North Shore Bank as the surviving entity.

Pursuant to the terms of the Merger Agreement, the Company shareholders will receive $14.25 in cash for each share of the Company’s common stock.

On September 16, 2025, CFSB Bancorp, Inc. (the “Company”) held a Special Meeting of Shareholders (the “Special Meeting”). At the close of business on the record date for the Special Meeting, there were 6,548,575 shares of Company common stock outstanding and entitled to vote at the Special Meeting.

The proposal to approve the Agreement and Plan of Merger, by and among Hometown Financial Group, MHC, Hometown Financial Group, Inc. (“Hometown Financial”), Hometown Financial Acquisition Corp. II (“Merger Sub”), a newly formed wholly-owned subsidiary of Hometown Financial, 15 Beach, MHC and the Company, dated May 20, 2025, pursuant to which (i) the Company will merge with Merger Sub, with the Company as the surviving corporation and a wholly owned subsidiary of Hometown Financial, and (ii) Colonial Federal Savings Bank will merge with and into North Shore Bank, with North Shore Bank as the surviving entity, was approved by the affirmative vote of a majority of the votes cast by shareholders at the Special Meeting.

15 Beach, MHC

15 Beach, MHC was formed in January 2022 as a federally-chartered mutual holding company in connection with the reorganization of the Bank into the “two-tier” mutual holding company form of organization. 15 Beach, MHC will, for as long as it is in existence, own a majority of the outstanding shares of CFSB Bancorp’s common stock. As a mutual holding company, 15 Beach, MHC is a non-stock company.

15 Beach, MHC’s principal assets are the common stock of CFSB Bancorp it received in the reorganization and offering and $100,000 cash in initial capitalization. Presently, it is expected that the only business activity of 15 Beach, MHC is to own a majority of CFSB Bancorp’s common stock. 15 Beach, MHC is authorized, however, to engage in any other business activities that are permissible for mutual holding companies under federal law, including investing in loans and securities. 15 Beach, MHC is subject to comprehensive regulation and examination by the Federal Reserve Board.

Colonial Federal Savings Bank

Our 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, home equity lines of credit and consumer loans. Subject to market conditions, we will continue our focus on growing our balance sheet and improving profitability by continuing to originate one- to four-family residential mortgage loans and emphasizing the origination of multi-family and commercial real estate loans.

At June 30, 2024, we had total assets of $363.4 million, total deposits of $270.8 million and total equity of $76.1 million. We had net income of $33,000 for the year ended June 30, 2024, compared to net income of $1.4 million for the year ended June 30, 2023.

Corporate Information

Our principal executive offices are located at 15 Beach Street Quincy, Massachusetts, 02170, and our telephone number is (617) 471-0750. Our website address is www.colonialfed.com. The information contained on, or that can be accessed through, our website is not part of, and is not incorporated by reference into this Form 10-K.

Available Information

We file annual, quarterly, and current reports, proxy statements and other documents with the SEC under the Exchange Act. The SEC maintains an Internet website that contains reports, proxy and information statements, and other information regarding issuers, including us, that file electronically with the SEC. The public can obtain any documents that we file with the SEC at www.sec.gov. Copies of each of our filings with the SEC can also be viewed and downloaded free of charge at our website, www.colonialfed.com, after the reports and amendments are electronically filed with or furnished to the SEC.

Market Area

We conduct our operations from our three full-service banking offices and one limited-service banking office located in Norfolk County, Massachusetts. We consider our primary lending market area to be Norfolk and Plymouth Counties, Massachusetts, however, we occasionally make loans secured by properties located outside of our primary lending market.

Norfolk County is located directly south of Boston, Massachusetts. The county includes 28 communities, all of which are residential suburbs of Boston. Norfolk County is the wealthiest county in the Commonwealth of Massachusetts and is characterized by a high concentration of white-collar professionals who work in the Boston Metropolitan Statistical Area. According to the United States Census Bureau, the total population of Norfolk County was 727,473 as of July 1, 2023, the most recent date for which data is available.

According to the United States Census Bureau from 2018 through 2022:

The median household income in Norfolk County was $120,621 compared to a median household income for Massachusetts of $96,505 and $75,149 for the United States;

The median home value was $612,100, compared to $483,900 for Massachusetts and $281,900 for the United States;

Approximately 56.3% of the population of Norfolk County held a bachelor’s degree or higher, compared to 45.9% for Massachusetts and 34.3% for the United States; and

Approximately 6.5% of the population of Norfolk County had incomes below the poverty level, compared to 10.4% for Massachusetts and 11.5% for the United States.

Additionally, according to the U.S. Bureau of Labor Statistics, the unemployment rate at June 30, 2024 was 3.8% for Norfolk County, compared to 3.2% for Massachusetts and 4.1% for the United States.

Norfolk County is located directly south of Boston, Massachusetts. The county includes 28 communities, all of which are residential suburbs of Boston. Norfolk County is the wealthiest county in the Commonwealth of Massachusetts and is characterized by a high concentration of white-collar professionals who work in the Boston Metropolitan Statistical Area. According to the United States Census Bureau, the total population of Norfolk County was 740,754 as of July 1, 2024, the most recent date for which data is available.

According to the United States Census Bureau from 2019 through 2023:

•

The median household income in Norfolk County was $126,497 compared to a median household income for Massachusetts of $101,341 and $80,610 for the United States;

•

The median home value was $649,400, compared to $615,000 for Massachusetts and $398,400 for the United States;

•

Approximately 57.6% of the population of Norfolk County held a bachelor’s degree or higher, compared to 50.6% for Massachusetts and 34.9% for the United States; and

•

Approximately 7.7% of the population of Norfolk County had incomes below the poverty level, compared to 11.1% for Massachusetts and 11.7% for the United States.

Additionally, according to the U.S. Bureau of Labor Statistics, the unemployment rate at June 30, 2025 was 4.9% for Norfolk County, compared to 4.8% for Massachusetts and 4.1% for the United States.

Competition

We face significant competition within our market both in making loans and attracting deposits. Our market area has a high concentration of financial institutions, including large money centers and regional banks, community banks and credit unions. Some of our competitors offer products and services that we currently do not offer, such as trust services and private banking. Our competition for loans and deposits comes principally from commercial banks, savings institutions, mortgage banking firms, consumer finance companies and credit unions. We face additional competition for deposits from short-term money market funds, brokerage firms, mutual funds, and insurance companies.

As of June 30, ~~2023~~2024 (the latest date for which information is available), our market share was 0.7880% of total deposits in Norfolk County, Massachusetts, making us the 22nd largest out of 39 banks operating in Norfolk County.

Lending Activities

Our principal lending activity is 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, home equity lines of credit and consumer loans. Subject to market conditions and our asset-liability analysis, we expect to increase our focus on the origination of multi-family and commercial real estate loans in an effort to diversify our overall loan portfolio and increase the overall yield earned on our portfolio. We compete by focusing on personalized service for consumers as well as businesses. Due to our structure, we are able to move quickly on customer requests and are able to price competitively compared to our competitors. Our responsiveness has historically enabled us to grow and retain our customer base.

Loan Portfolio Composition. The following table sets forth the composition of our loan portfolio by type of loan at the dates indicated. At June 30, ~~2024~~2025 and ~~2023~~2024, we had no loans held for sale.

	At June 30,
	2024						2023
	2025						2024
(In thousands)	Amount			Percent			Amount			Percent
Mortgage loans on real estate:
Residential:
1-4 family	$	~~138~~142,~~005~~252			8079.0642	%	$	~~140~~138,~~109~~005			7880.7106	%
Multifamily		1216,~~066~~366			79.0014			12,~~638~~066			7.1000
Second mortgages and home equity lines of credit		34,~~372~~195			12.9634			23,~~699~~372			1.5296
Commercial		1614,~~833~~296			97.7798			2016,~~323~~833			119.4277
Total mortgage loans on real estate		~~170~~177,~~276~~109			98.7988			~~175~~170,~~769~~276			98.7579
Consumer loans:
Consumer		6581			0.04			4965			0.0304
Home improvement		21,~~037~~933			1.1708			2,~~191~~037			1.2217
Total other loans		2,~~102~~014			1.2112			2,~~240~~102			1.2521
Total loans		~~172~~179,~~378~~123			100.00	%		~~178~~172,~~009~~378			100.00	%
Less:
Allowance for credit losses		(1,~~553~~547	)					(1,~~747~~553	)
Net deferred loan fees		(~~387~~362	)					(~~351~~387	)
Loans, net	$	~~170~~177,~~438~~214					$	~~175~~170,~~911~~438

The Company adopted ASU 2016-13 on July 1, 2023 with a modified retrospective approach. Accordingly, at June 30, 2025 and June 30, 2024, the allowance for credit losses was determined in accordance with Accounting Standards Codification ("ASC") 326, “Financial Instruments - Credit Losses.”

Contractual Maturities. The following tables set forth the contractual maturities of our loan portfolio at June 30, ~~2024~~2025. Demand loans, loans having no stated repayment schedule or maturity, and overdraft loans are reported as being due in one year or less. The tables present contractual maturities and do not reflect repricing or the effect of prepayments. Actual maturities may differ.

June 30, 2024

June 30, 2025

Amounts Due in:

(In thousands)

One Year or Less

More than One to Five Years

More than Five to Fifteen Years

More than Fifteen Years

Total

Mortgage loans on real estate:

Residential:

1-4 family

3579

2,~~600~~393

2723,~~003~~871

~~108~~115,~~367~~909

~~138~~142,~~005~~252

Multifamily

-150

1,~~149~~393

1014,~~917~~823

1216,~~066~~366

Second mortgages and home equity lines of credit

7135

23,~~705~~460

~~596~~700

34,~~372~~195

Commercial

~~275~~-

84227

21,~~856~~338

1312,~~618~~731

1614,~~833~~296

Total mortgage loans on real estate

~~310~~79

2,~~755~~805

3330,~~713~~062

~~133~~144,~~498~~163

~~170~~177,~~276~~109

Consumer loans:

Consumer

2748

3327

6581

Home improvement

2922

1,~~092~~100

~~916~~811

21,~~037~~933

Total other loans

3428

1,~~119~~148

~~916~~811

3327

2,~~102~~014

Total loans

~~344~~107

3,~~874~~953

3430,~~629~~873

~~133~~144,~~531~~190

~~172~~179,~~378~~123

Fixed Versus Adjustable-Rate Loans. The following table sets forth our fixed-rate and adjustable-rate loans at June 30, 2025 that are contractually due after June 30, 2026:

Fixed Versus Adjustable-Rate Loans. The following table sets forth our fixed-rate and adjustable-rate loans at June 30, 2024 that are contractually due after June 30, 2025:


	Balance at June 30, 2025
(Dollars in thousands)	Fixed		Adjustable		Total
Mortgage loans on real estate:
Residential:
1-4 family	$	135,428	$	6,746	$	142,174
Multifamily		2,696		13,670		16,366
Second mortgages and home equity lines of credit		3,141		1,054		4,195
Commercial		435		13,861		14,296
Total mortgage loans on real estate		141,700		35,331		177,031
Consumer loans:
Consumer		48		27		75
Home Improvement		1,911		-		1,911
Total other loans		1,959		27		1,986
Total loans	$	143,659	$	35,358	$	179,017

	Balance at June 30, 2024
(Dollars in thousands)	Fixed		Adjustable		Total
Mortgage loans on real estate:
Residential:
1-4 family	$	127,823	$	10,147	$	137,970
Multifamily		1,802		10,264		12,066
Second mortgages and home equity lines of credit		2,550		822		3,372
Commercial		1,310		15,248		16,558
Total mortgage loans on real estate		133,485		36,481		169,966
Consumer loans:
Consumer		27		33		60
Home Improvement		2,008		-		2,008
Total other loans		2,035		33		2,068
Total loans	$	135,520	$	36,514	$	172,034

One- to Four-Family Residential Real Estate Lending. Our primary lending activity is the origination of one- to four-family, owner-occupied, residential mortgage loans, virtually all of which are secured by properties located in our market area. At June 30, 2025, one- to four-family residential real estate loans totaled $142.3 million, or 79.4% of our total loan portfolio. The average principal balance of our one- to four-family residential real estate loans was $255,000 at June 30, 2025.

~~One~~We currently offer one- to ~~Four~~four-~~Family~~family ~~Residential~~residential ~~Real~~real ~~Estate~~estate ~~Lending~~loans with terms of up to 30 years. ~~Our~~The ~~primary~~one- ~~lending~~to ~~activity~~four-family isresidential ~~the~~real ~~origination~~estate loans that we originate are generally underwritten to Fannie Mae and Freddie Mac guidelines. We currently retain in our portfolio all of the one- to four-family, ~~owner~~residential real estate loans we originate. We primarily originate fixed-~~occupied,~~rate one- to four-family residential ~~mortgage~~real estate loans, ~~virtually~~but, ~~all~~on ofa ~~which~~much ~~are~~more ~~secured~~limited bybasis, ~~properties~~also ~~located~~originate inadjustable-rate ~~our market area~~loans. At June 30, ~~2024~~2025, $135.4 million, or 95.2%, of our one- to four- family residential real estate loans ~~totaled~~had fixed rates of interest, and $~~138~~6.07 million, or 804.17%, of our ~~total~~one- ~~loan~~to ~~portfolio.~~four-family ~~The~~residential ~~average~~real ~~principal~~estate ~~loan~~loans, ~~balance~~had adjustable rates of ~~our~~interest. ~~one~~One- to four-family residential real estate loans ~~was~~often ~~$243,000~~remain atoutstanding ~~June~~for 30significantly shorter periods than their contractual terms because borrowers have the right to refinance or prepay their loans. We generally limit the loan-to-value ratios of our mortgage loans to 80% of the sales price or appraised value, ~~2024~~whichever is lower.

We currently offer one- to four-family residential real estate loans with terms of up to 30 years. The one- to four-family residential real estate loans that we originate are generally underwritten to Fannie Mae and Freddie Mac guidelines. We currently retain in our portfolio all of the one- to four-family residential real estate loans we originate. We primarily originate fixed-rate one- to four-family residential real estate loans, but, on a much more limited basis, also originate adjustable-rate loans. At June 30, 2024, $127.9 million, or 92.7%, of our one- to four- family residential real estate loans had fixed rates of interest, and $10.1 million, or 7.3%, of our one- to four-family residential real estate loans, had adjustable rates of interest. One- to four-family residential real estate loans often remain outstanding for significantly shorter periods than their contractual terms because borrowers have the right to refinance or prepay their loans. We generally limit the loan-to-value ratios of our mortgage loans to 80% of the sales price or appraised value, whichever is lower.

Our adjustable-rate one- to four-family residential real estate loans carry terms to maturity ranging from 10 to 30 years and generally have fixed rates for initial terms of one, three or five years, and adjust annually thereafter at a margin, which in recent years has been tied to the one-year constant maturity U.S. Treasury rate. The maximum amount by which the interest rate may be increased or decreased is, subject to a contractual floor (which is generally the initial interest rate on the loan), generally 2% annually, with a lifetime interest rate cap of generally 6% over the initial interest rate of the loan.

Although adjustable-rate mortgage loans may reduce to an extent our vulnerability to changes in market interest rates because they periodically re-price, as interest rates increase, the required payments due from the borrower also increase (subject to rate caps), increasing the potential for default by the borrower. At the same time, the ability of the borrower to repay the loan and the marketability of the underlying collateral may be adversely affected by higher interest rates. Upward adjustments of the contractual interest rate are also limited by our maximum periodic and lifetime rate adjustments. As a result, the effectiveness of adjustable-rate mortgage loans in compensating for changes in market interest rates may be limited.

At June 30, ~~2024~~2025, $1815.34 million, or 10.69%, of the one- to four-family residential real estate loan portfolio, was secured by non-owner-occupied properties. We generally originate these loans to individuals to whom we have had a previous borrowing relationship. Generally, we require personal guarantees on these properties if the loan is made to an entity other than individual borrowers. We will not make loans in excess of 80% loan-to-value on non-owner- occupied properties.

We have not offered “interest only” mortgage loans on permanent one- to four-family residential real estate loans (where the borrower pays interest for an initial period, after which the loan converts to a fully amortizing loan). We also have not offered loans that provide for negative amortization of principal, such as “Option ARM” loans, where the borrower can pay less than the interest owed on the loan, resulting in an increased principal balance during the life of the loan. We have not offered “Alt-A” loans (i.e., loans that generally target borrowers with better credit

We also have not offered loans that provide for negative amortization of principal, such as “Option ARM” loans, where the borrower can pay less than the interest owed on the loan, resulting in an increased principal balance during the life of the loan. We have not offered “Alt-A” loans (i.e., loans that generally target borrowers with better credit scores who borrow with alternative documentation such as little or no verification of income). We also do not originate subprime loans to customers with weakened credit histories.

We require title insurance on all of our one- to four-family residential real estate mortgage loans, and we also require that borrowers maintain fire and extended coverage casualty insurance (and, if appropriate, flood insurance) in an amount at least equal to the lesser of the loan balance or the replacement cost of the improvements. We do not conduct environmental testing on residential real estate ~~mortgage loans~~ unless specific concerns for hazards are identified in the appraisal conducted in connection with the origination of the loan.

When underwriting residential real estate loans, we review and verify each loan applicant’s employment, income, and credit history and, if applicable, our experience with the borrower. Our policy is to obtain credit reports on all borrowers and guarantors. We also obtain tax returns and financial statements for non-owner-occupied loans. All properties securing residential real estate loans are appraised by independent appraisers.

Multi-Family and Commercial Real Estate Lending. At June 30, ~~2024~~2025, multi-family real estate loans totaled $1216.14 million, or 79.01% of our loan portfolio. Our multi-family real estate loans are generally secured by properties consisting of five or more rental units within our market area. At June 30, ~~2024~~2025, commercial real estate loans totaled $1614.83 million, or 9.8.0% of our portfolio. Our commercial real estate loans are generally secured by office buildings, small retail facilities, mixed-use facilities, and warehouses within our market area. We currently offer multi-family and commercial real estate loans with terms of up to 30 years. We currently retain in our portfolio all of the multi-family and commercial real estate loans we originate.

We primarily originate adjustable-rate multi-family and commercial real estate loans, but we do, on a much more limited basis, originate fixed-rate loans. At June 30, ~~2024~~2025, $1013.37 million, or 8583.15%, of multi-family real estate loans had adjustable rates of interest, and $12.87 million, or 1416.95%, of our multi-family real estate loans, had fixed rates of interest. At June 30, ~~2024~~2025, $1513.29 million, or 9297.10%, of our commercial real estate loans had adjustable rates of interest, and $~~1.3 million~~435,000, or 73.90%, of our commercial real estate loans, had fixed rates of interest. Interest rates on our adjustable-rate multi-family and commercial real estate loans are generally fixed for the first five years and adjust annually thereafter based on the one-year U.S. Treasury constant maturity rate, plus a margin.

At June 30, ~~2024~~2025, the average ~~loan~~ size of our outstanding multi-family real estate loans was $~~575~~564,000, and our largest multi-family residential real estate loan had an outstanding balance of $1.87 million and is secured by an apartment building located in our primary market area. At June 30, ~~2024~~2025, this loan was performing according to its original terms. At June 30, ~~2024~~2025, the average ~~loan~~ size of our outstanding commercial real estate loans was $~~601~~841,000, and our largest commercial real estate loan had an outstanding balance of $54.09 million and is secured by three properties related to an ambulance dispatching and maintenance center located in our primary market area. At June 30, ~~2024~~2025, this loan was performing according to its original terms.

We consider a number of factors in originating multi-family and commercial real estate loans. We evaluate the qualifications, income level, and financial condition of the borrower, including project-level and global cash flows, credit history, management expertise, as well as the value and condition of the property securing the loan. When evaluating the qualifications of the borrower, we consider the financial resources of the borrower, the borrower’s experience in owning or managing similar properties, and the borrower’s payment history with us and other financial institutions. In evaluating the property securing the loan, the factors we consider include the net operating income of the mortgaged property before debt service and depreciation, the ratio of the loan amount to the appraised value of the mortgaged property, and the debt service coverage ratio (the ratio of net operating income to debt service). We generally require a debt service ratio of at least 1.20x. Multi-family and commercial real estate loans have loan-to-value ratios of up to 80% of the appraised value of the property securing the loans. When underwriting multi-family and commercial real estate loans, we review and verify each loan applicant’s employment, income and credit history. Our policy is to obtain credit reports, financial statements, and tax returns on all borrowers and guarantors. Generally, all properties securing real estate loans are appraised by independent appraisers. Generally, we require personal guaranties from the principals on the loans.

Multi-family and commercial real estate loans entail greater credit risks compared to one- to four-family residential real estate loans because they typically involve larger loan balances concentrated with single borrowers or groups of related borrowers. In addition, the payment of loans secured by income-producing properties typically depends on the successful operation of the property, as repayment of the loan generally is dependent, in large part, on sufficient income from the property to cover operating expenses and debt service. Changes in economic conditions affect the value of the collateral for the loan or the future cash flows of the property. Additionally, any decline in real estate values may be more pronounced for commercial real estate than residential properties. If we foreclose on a

depends on the successful operation of the property, as repayment of the loan generally is dependent, in large part, on sufficient income from the property to cover operating expenses and debt service. Changes in economic conditions affect the value of the collateral for the loan or the future cash flows of the property. Additionally, any decline in real estate values may be more pronounced for commercial real estate than residential properties. If we foreclose on a multi-family or commercial real estate loan, the marketing and liquidation period to convert the real estate asset to cash can be lengthy with substantial holding costs. In addition, vacancies, deferred maintenance, repairs, and market stigma can result in prospective buyers expecting sale price concessions to offset their real or perceived economic losses for the time it takes them to return the property to profitability. Depending on the individual circumstances, initial charge-offs and subsequent losses on multi-family and commercial real estate loans can be both unpredictable and substantial.

Second Mortgage Loans and Home Equity Lines of Credit. At June 30, ~~2024~~2025, second mortgage loans and home equity lines of credit totaled $3.4.2 million, or 2.03%, of our loan portfolio. Second mortgage loans and home equity lines of credit are multi-purpose loans used to finance various home or personal needs for which a one- to four-family primary or secondary residence serves as collateral. We generally originate home equity lines of credit on owner-occupied properties with adjustable rates of interest based on the prime interest rate published in The Wall Street Journal, plus a margin. We generally originate home equity lines of credit with a maximum loan-to-value ratio of 80% (including the value of the underlying mortgage loan) and with terms of up to 20 years. We originate second mortgage loans on owner-occupied properties with fixed rates of interest. We generally originate these loans with a maximum loan-to-value ratio of 80% (including the value of the underlying mortgage loan) and with terms of up to 15 years.

The procedures for underwriting these loans include assessing the applicant’s payment history on other indebtedness, the applicant’s ability to meet existing obligations and payments on the proposed loan, and the loan-to-value ratio. Although the applicant’s creditworthiness is a primary consideration, the underwriting process also includes a comparison of the value of the collateral, if any, to the proposed loan amount.

Consumer Lending. We offer a variety of consumer loans to individuals, including home improvement loans, and new and used automobile loans. At June 30, ~~2024~~2025, our consumer loan portfolio totaled $2.10 million, or 1.21%, of our total loan portfolio, $21.09 million of which were home improvement loans. Home improvement loans are unsecured fixed-rate loans that must be used to improve a one- to four-family residential real estate property with a maximum amount of $25,000 and up to a term of ~~five~~seven years. Automobile loans are made with a term of five years for vehicles that are two years old or less and up to four years for vehicles that are more than two years old. These loans may be originated with loan-to-value ratios of up to 90% of the value of the vehicle.

Consumer loans generally entail greater risk than one- to four-family residential mortgage loans, particularly in the case of loans that are unsecured or are secured by assets that tend to depreciate in value. As a result, consumer loan collections are primarily dependent on the borrower’s continuing financial stability and thus are more likely to be adversely affected by job loss, divorce, illness, or personal bankruptcy. In these cases, repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment for the outstanding loan, and the remaining value often does not warrant further substantial collection efforts against the borrower.

Originations, Sales, Participations and Purchases of Loans

Most of our loan originations are generated by our loan personnel and from referrals from existing customers, real estate brokers, accountants, and other professionals. All loans we originate are underwritten pursuant to our policies and procedures. While we originate both fixed-rate and adjustable-rate loans, our ability to generate each type of loan depends upon relative borrower demand, market conditions, the interest rate environment and pricing levels established by competing banks, thrifts, credit unions, and mortgage banking companies. Our volume of loan originations is influenced significantly by market interest rates, borrower demand and competition and, accordingly, the volume of our loan originations can vary from period to period. We do not sell any of the loans we originate.

From time to time, we may purchase loan participations in which we are not the lead lender. From time to time, we may also purchase whole loans. In both of these situations, we follow our customary loan underwriting and approval policies. At June 30, ~~2024~~2025, the outstanding balances of our loan participations where we are not the lead lender totaled $1.24 million, or 0.78%, of our loan portfolio, and consisted of four borrower relationships secured by multi-family and commercial real estate located in Connecticut. All such loans were performing in accordance with their original terms. We did not purchase any whole loans during the years ended June 30, ~~2024~~2025 and ~~2023~~2024. We also did not participate out portions of loans during the years ended June 30, ~~2024~~2025 or ~~2023~~2024.

Loan Approval Procedures and Authority

Pursuant to federal law, the aggregate amount of loans that the Bank is permitted to make to any one borrower or a group of related borrowers is generally limited to 15% of the Bank’s unimpaired capital and surplus (25% if the amount in excess of 15% is secured by “readily marketable collateral” or 30% for certain residential development loans). At June 30, 2024, based on the 15% limitation, the Bank’s loans-to-one-borrower limit was approximately $9.8 million. On the same date, the Bank had no borrowers with outstanding balances in excess of this amount. At June 30, 2024, our largest loan relationship with one borrower was for $7.3 million and consisted of two loans secured by mixed-use real estate. These loans were performing in accordance with their original terms on that date.

amount in excess of 15% is secured by “readily marketable collateral” or 30% for certain residential development loans). At June 30, 2025, based on the 15% limitation, the Bank’s loans-to-one-borrower limit was approximately $9.9 million. On the same date, the Bank had no borrowers with outstanding balances in excess of this amount. At June 30, 2025, our largest loan relationship with one borrower was for $7.1 million and consisted of two loans secured by mixed-use real estate. These loans were performing in accordance with their original terms on that date.

Our lending is subject to written underwriting standards and origination procedures. Decisions on loan applications are made on the basis of detailed information submitted by the prospective borrower, credit histories that we obtain, and property valuations (consistent with our appraisal policy) prepared by outside independent licensed appraisers approved by our board of directors or internal evaluations, where permitted by regulations.

The board of directors has granted loan approval authority to a Loan Committee that is comprised of our President and Chief Executive Officer, Treasurer and Chief Operating Officer, Senior Vice President of Retail Lending, Senior Vice President of Financial Markets and Assistant Vice President of Operations. The Loan Committee can approve individual loans up to prescribed limits, depending on the type of loan as follows:

•

For all real estate loans, the approval of two Loan Committee members is required for loans up to $400,000 and the approval of three Loan Committee members (one of which must be our President and Chief Executive Officer) is required for loans between $400,000 and $750,000. Real estate loans greater than $750,000 require the approval of three Loan Committee members (one of which must be our President and Chief Executive Officer) and the board of directors.

•

For consumer loans, the approval of two Loan Committee members is required for loans up to $50,000 and the approval of three Loan Committee members is required for consumer loans greater than $50,000.

Loans that involve policy exceptions also must be approved by the Loan Committee and ratified by the board of directors.

Delinquencies and Non-Performing Assets

Delinquency Procedures. A late notice is sent to a borrower between the 16th and 18th day after a loan is past due. When the loan is 30 days past due, we mail the borrower a letter reminding the borrower of the delinquency and attempt to contact the borrower personally to determine the reason for the delinquency. If necessary, at 45 days past due, additional contact will be made with the borrower, which usually includes an in-person meeting, and the account will be monitored on a regular basis thereafter. The collateral will be inspected between the 30th and 90th day of delinquency. When the loan reaches the 60th day of delinquency, we will send the borrower a letter informing the borrower of their rights and our intent to proceed with further collection efforts, including foreclosure, if the loan default is not cured within 90 days. At the end of the 90-day cure period, a decision will be made whether to begin foreclosure proceedings. Loans are charged off when we believe that the recovery of principal is improbable. A summary report of all loans 30 days or more past due is provided to the board of directors each month.

Modifications made to Borrowers Experiencing Financial Difficulties ("BEFD"). A loan is classified as a modification to borrowers experiencing financial difficulties if, for economic or legal reasons related to the borrower’s financial difficulties, we grant a concession to the borrower that we would not otherwise consider. This usually includes a modification of loan terms, such as a reduction of the interest rate to below market terms, capitalizing past due interest or extending the maturity date and possibly a partial forgiveness of the principal amount due. Interest income on modified loans is accrued after the borrower demonstrates the ability to pay under the modified terms through a sustained period of repayment performance, which is generally six consecutive months. We had no loans classified as BEFD at June 30, 2025 or June 30, 2024.

The CARES Act, in addition to providing financial assistance to both businesses and consumers, created a forbearance program for federally-backed mortgage loans, protected borrowers from negative credit reporting due to loan accommodations related to the national emergency, and provided financial institutions the option to temporarily suspend certain requirements under U.S. generally accepted accounting principles related to troubled debt restructurings for a limited period of time to account for the effects of COVID-19. The federal banking regulatory agencies also issued guidance encouraging financial institutions to work prudently with borrowers who are, or may be, unable to meet their contractual payment obligations because of the effects of COVID-19. That guidance, with concurrence of the Financial Accounting Standards Board and provisions of the CARES Act, allows modifications made on a good faith basis in response to COVID-19 to borrowers who were generally current with their payments on December 31, 2019, to not be treated as troubled debt restructurings. Modifications may include payment deferrals, fee waivers, extensions of repayment term, or other delays in payment. We worked with our customers affected by

~~default is not cured within 90 days. At the end of the 90~~COVID-~~day~~19 ~~cure~~and ~~period,~~accommodated a26 ~~decision~~loan ~~will~~modifications betotaling ~~made whether to begin foreclosure proceedings~~$9.5 ~~Loans~~million, ~~are~~none ~~charged off when we believe that the recovery~~ of ~~principal~~which isremained ~~improbable.~~on Amodified ~~summary~~payment ~~report~~status ofat ~~all~~June ~~loans~~ 30, ~~days or more past due is provided to the board of directors each month~~2025.

~~Modifications~~Delinquent ~~made to Borrowers Experiencing Financial Difficulties ("BEFD")~~Loans. AThere ~~loan~~were isno ~~classified~~loans as a modification to borrowers experiencing financial difficulties if, for economic or legal reasons related to the borrower’s financial difficulties, we grant a concession to the borrower that we would not otherwise consider. This usually includes a modification of loan terms, such as a reduction of the interest rate to below market terms, capitalizing past due ~~interest~~more orthan ~~extending~~30 ~~the~~days maturity date and possibly a partial forgiveness of the principal amount due. Interest income on modified loans is accrued after the borrower demonstrates the ability to pay under the modified terms through a sustained period of repayment performance, which is generally six consecutive months. We had no loans classified as BEFD at June 30, ~~2024~~2025 or ~~troubled debt restructured at June 30, 2023~~2024.

The CARES Act, in addition to providing financial assistance to both businesses and consumers, created a forbearance program for federally-backed mortgage loans, protected borrowers from negative credit reporting due to loan accommodations related to the national emergency, and provided financial institutions the option to temporarily suspend certain requirements under U.S. generally accepted accounting principles related to troubled debt restructurings for a limited period of time to account for the effects of COVID-19. The Federal banking regulatory agencies also issued guidance encouraging financial institutions to work prudently with borrowers who are, or may be, unable to meet their contractual payment obligations because of the effects of COVID-19. That guidance, with concurrence of the Financial Accounting Standards Board and provisions of the CARES Act, allows modifications made on a good faith basis in response to COVID-19 to borrowers who were generally current with their payments on December 31, 2019, to not be treated as troubled debt restructurings. Modifications may include payment deferrals, fee waivers, extensions of repayment term, or other delays in payment. We worked with our customers affected by COVID-19 and accommodated 26 loan modifications totaling $9.5 million, none of which remained on modified payment status at June 30, 2024.

Delinquent Loans. There were no loans past due more than 30 days at June 30, 2024 or 2023.

Loans Past Due and Non-performing Assets. Loans are reviewed on a regular basis. Management determines that a loan is non-performing or requires individual evaluation when it is probable at least a portion of the loan will not be collected in accordance with the original terms due to a deterioration in the financial condition of the borrower or the value of the underlying collateral if the loan is collateral dependent. For an individually evaluated loan, the measurement of the loan in the allowance for credit losses is based on the present value of expected future cash flows, except that all collateral-dependent loans are measured for impairment based on the fair value of the collateral. Non-accrual loans are loans for which collectability is questionable and, therefore, interest on such loans will no longer be recognized on an accrual basis. All loans that become 90 days or more delinquent are placed on non-accrual status unless the loan is well secured and is in the process of collection. When loans are placed on non-accrual status, unpaid accrued interest is fully reversed, and further income is recognized only to the extent received on a cash basis or cost recovery method.

We generally cease accruing interest on our loans when contractual payments of principal or interest have become 90 days past due or management has serious doubts about further collectability of principal or interest, even though the loan is currently performing. A loan may remain on accrual status if it is in the process of collection and is either guaranteed or well secured. Interest received on non-accrual loans generally is applied against principal and is recognized on a cash basis. Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time and the ultimate collectability of the total contractual principal and interest is no longer in doubt.

We had no non-performing loans at June 30, ~~2024~~2025 or ~~2023~~2024.

Real Estate Owned. When we acquire real estate as a result of foreclosure, the real estate is classified as real estate owned. The real estate owned is recorded at fair value, less estimated costs to sell. Soon after acquisition, we order a new appraisal, or evaluation when acceptable, to determine the current market value of the property. Any excess of the recorded value of the loan satisfied over the market value of the property is charged against the allowance for credit losses, or, if the existing allowance is inadequate, charged to expense, in either case during the applicable period of such determination. After acquisition, all costs incurred in maintaining the property are expensed. Costs relating to the development and improvement of the property, however, are capitalized to the extent of estimated fair value less estimated costs to sell. We had no real estate owned at June 30, ~~2024~~2025 or ~~2023~~2024.

11Non-Performing Assets. There were no non-performing assets at June 30, 2025 or 2024.

Non-Performing Assets. There were no non-performing assets at June 30, 2024 or 2023.

Classified Assets. Federal regulations provide for the classification of loans and other assets, such as debt and equity securities considered by the Office of the Comptroller of the Currency (the “OCC”) to be of lesser quality, as “substandard,” “doubtful” or “loss.” An asset is considered “substandard” if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. “Substandard” assets include those characterized by the “distinct possibility” that the insured institution will sustain “some loss” if the deficiencies are not corrected. Assets classified as “doubtful” have all of the weaknesses inherent in those classified “substandard,” with the added characteristic that the weaknesses present make “collection or liquidation in full,” on the basis of currently existing facts, conditions, and values, “highly questionable and improbable.” Assets classified as “loss” are those considered “uncollectible” and of such little value that their continuance as assets without the establishment of a specific loss reserve is not warranted. Assets that do not currently expose the insured institution to sufficient risk to warrant classification in one of the aforementioned categories but possess weaknesses are designated as “special mention” by our management.

When an insured institution classifies problem assets as either substandard or doubtful, it may establish general allowances in an amount deemed prudent by management to cover probable accrued losses in the loan portfolio. General allowances represent loss allowances that have been established to cover probable accrued losses associated with lending activities, but that, unlike specific allowances, have not been allocated to particular problem assets. When an insured institution classifies problem assets as “loss,” it is required either to establish a specific allowance for losses equal to 100% of that portion of the asset so classified or to charge-off such amount. An institution’s determination as to the classification of its assets and the amount of its valuation allowances is subject to review by the regulatory authorities, which may require the establishment of additional general or specific loss allowances.

In accordance with our loan policy, we regularly review the problem loans in our portfolio to determine whether any loans require classification in accordance with applicable regulations. Loans are listed on the “watch list” initially because of emerging financial weaknesses even though the loan is currently performing as agreed, or if the loan possesses weaknesses although currently performing. If a loan deteriorates in asset quality, the classification is changed to “special mention,” “substandard,” “doubtful” or “loss” depending on the circumstances and the evaluation. Generally, loans 90 days or more past due are placed on non-accrual status and classified “substandard.” Management reviews the status of each individually evaluated loan on our watch list on a quarterly basis.

On the basis of this review of our assets, our classified and special mention loans at the dates indicated were as follows:

	At June 30,
(In thousands)	~~2024~~2025		~~2023~~2024
Substandard	$	1,~~390~~352	$	-1,390
Doubtful		-		-
Loss		-		-
Total classified loans	$	1,~~390~~352	$	-1,390
Special mention loans	$	-	$	~~1,431~~-

The $1.4 million of substandard loans at June 30, ~~2024~~2025 ~~are~~and ~~the $1.4 million of special mention loans at~~ June 30, ~~2023~~2024, ~~which~~ consisted of four residential real estate loans to one borrower, ~~reclassified~~classified ~~at June 30, 2024~~ due to the borrowers continued inability to show that property operations are sufficient to cover annual debt service. These loans were performing according to their terms at June 30, 2025.

Allowance for Credit Losses

Allowance for credit losses on loans

The allowance for credit losses (“ACL”) is an estimate of current expected losses within the Company's loan portfolio. The ACL, as reported on our consolidated balance sheet, is adjusted by a credit loss expense, which is reported in earnings, and reduced by loan charge-offs, net of recoveries. Accrued interest receivable on loans was $~~520~~581,000 at June 30, ~~2024~~2025 and $~~506~~520,000 at June 30, ~~2023~~2024, and iswas excluded from the estimate of credit losses.

The loan loss estimation process involves procedures to appropriately consider the unique characteristics of loan portfolio segments, which are disaggregated by call report code. For each of these pools, the Company collects historical loss data, dating back to March 2008, from a selection of peer banks and applies the annual historical loss rate over the estimated remaining average life of the loan portfolio segment. The use of peer banks' historical loss rates is due to the lack of loss history experienced by the Bank. The average remaining life of a loan portfolio segment is adjusted for estimated prepayment and curtailment expectations. The modeling for estimated prepayment speeds and curtailment rates is based on a combination of internal and market estimates. The quantitative component of the ACL on loans is model-based and utilizes a forward-looking macroeconomic forecast. The Company uses a Weighted Average Remaining Maturity (“WARM”) method, incorporating historical loss data based on statistically derived economic variable loss drivers, to estimate expected credit losses. This process includes estimates which involve modeling loss projections attributable to existing loan balances, and considers historical experience, current conditions, and future expectations for segments of loans over a reasonable and supportable forecast period. The historical information is collected from a selection of peer banks and is derived from a combination of recessionary and non-recessionary performance periods for which data is available.

Allowance for credit losses on off-balance sheet credit exposures, including unfunded loan commitments

The Company maintains a separate allowance for credit losses for off-balance sheet credit exposures, including unfunded loan commitments, which is included in accrued expenses and other liabilities on the balance sheet. Management estimates the amount of expected losses by calculating a commitment usage factor over the contractual period for exposures that are not unconditionally cancelable by the Company and applying the loss factors used in the ACL methodology to the results of the usage calculation to estimate the liability for credit losses related to unfunded commitments for each loan type. No estimate for credit losses is reported for off-balance sheet exposures that are unconditionally cancelable by the Company, such as undrawn amounts under ~~such~~ arrangements that may be drawn prior to the cancellation of the agreement. The allowance for credit losses on off-balance sheet credit exposures is adjusted as credit loss expense. Categories of off-balance sheet credit exposures correspond to the loan portfolio segment used for the allowance for credit losses on loans. Management evaluates the need for a reserve on unfunded loan commitments in a manner consistent with loans.

We will continue to monitor and modify our allowance for credit losses as conditions dictate. No assurances can be given that the level of allowance for credit losses will cover all of the ~~inherent~~current expected losses on the loans or that future adjustments to the allowance for credit losses will not be necessary if economic and other conditions differ substantially from the economic and other conditions used by management to determine the current level of the allowance for credit losses.

As an integral part of their examination process, the OCC periodically reviews our allowance for credit losses, and as a result of such reviews, we may have to adjust our allowance for credit losses. However, regulatory agencies are not directly involved in the process of establishing the allowance for credit losses as the process is our responsibility and any increase or decrease in the allowance is the responsibility of management.

Allowance for Credit Losses. The following table sets forth activity in our allowance for credit losses for the years indicated.

	At or For the Year Ended June 30,
	2024			2023
	2025			2024
Allowance for credit losses	$	1,~~553~~547		$	1,~~747~~553
Total loans outstanding		~~172~~179,~~378~~123			~~178~~172,~~009~~378
Allowance for credit losses to total loans outstanding		0.9086	%		0.9890	%
Non-accrual loans	$	-		$	-
Total loans outstanding		~~172~~179,~~378~~123			~~178~~172,~~009~~378
Non-accrual loans to total loans outstanding	$	-		$	-
Allowance for credit losses	$	1,~~553~~547		$	1,~~747~~553
Non-accrual loans	$	-		$	-
Allowance for credit losses to non-accrual loans		-	%		-	%
Net charge-offs (recovery) during the period to daily average outstanding loans outstanding
Residential one-to four- family
Net charge-off (recovery) during period	$	-		$	-
Average amount outstanding	$	137,~~593~~968		$	~~141~~137,~~097~~593
Annualized net charge-off ratio		-	%		-	%
Multifamily
Net charge-off (recovery) during period	$	-		$	-
Average amount outstanding	$	1213,~~463~~602		$	1312,~~026~~463
Annualized net charge-off ratio		-	%		-	%
Second mortgages and home equity lines of credit
Net charge-off (recovery) during period	$	-		$	-
Average amount outstanding	$	3,~~255~~692		$	23,~~667~~255
Annualized net charge-off ratio		-	%		-	%
Construction
Net charge-off (recovery) during period	$	-		$	-
Average amount outstanding	$	-		$	~~535~~-
Annualized net charge-off ratio		-	%		-	%
Commercial real estate
Net charge-off (recovery) during period	$	-		$	-
Average amount outstanding	$	1915,~~500~~590		$	1819,~~460~~500
Annualized net charge-off ratio		-	%		-	%
Consumer
Net charge-off (recovery) during period	$	3-		$	-3
Average amount outstanding	$	6975		$	6569
Annualized net charge-off ratio		~~4.35~~-	%		-4.35	%
Home improvement
Net charge-off (recovery) during period	$	-		$	-
Average amount outstanding	$	21,~~148~~931		$	2,~~193~~148
Annualized net charge-off ratio		-	%		-	%
Total loans
Net charge-off (recovery) during period	$	3-		$	-3
Average amount outstanding	$	~~175~~172,~~028~~859		$	~~178~~175,~~043~~028
Annualized net charge-off ratio		-	%		-	%

Allocation of Allowance for Credit Losses. The following table sets forth the allowance for credit losses allocated by loan category and the percent of the allowance in each category to the total allocated allowance at the dates indicated. The allowance for credit losses allocated to each category is not necessarily indicative of future losses in any particular category and does not restrict the use of the allowance to absorb losses in other categories.

	At June 30,
	2024								2023
	2025								2024
(In thousands)	Allowance for Credit Losses		Percent of Allowance to Total Allowance			Percent of Loans to Total Loans			Allowance for Loan Losses		Percent of Allowance to Total Allowance			Percent of Loans to Total Loans
Mortgage loans on real estate:
Residential:
1-4 family	$	1,~~043~~028		6766.1745	%		8079.0642	%	$	~~974~~1,043		5567.7517	%		7880.7106	%
Multifamily		~~191~~208		1213.3045			79.0014			~~190~~191		1012.8830			7.1000
Second mortgages and home equity lines of credit		1852		13.1636			12.9634			2918		1.6616			1.5296
Commercial		~~240~~201		1512.4599			97.7798			~~346~~240		1915.8145			119.4277
Total real estate		1,~~492~~489		96.0825	%		98.7988	%		1,~~539~~492		8896.1008	%		98.7579	%
Consumer loans:
Consumer		1		0.06			0.04			-1		-0.06			0.0304
Home improvement		6057		3.8669			1.1708			6460		3.6686			1.2217
Total consumer		6158		3.9275	%		1.2112	%		6461		3.6692	%		1.2521	%
Total allocated allowance		1,~~553~~547		100.00	%		100.00	%		1,~~603~~553		91100.7600	%		100.00	%
Unallocated		-		-						~~144~~-		~~8.24~~-
Total	$	1,~~553~~547		100.00	%				$	1,~~747~~553		100.00	%

Although we believe that we use the best information available to establish the allowance for credit losses, future adjustments to the allowance may be necessary if economic conditions differ substantially from the assumptions used in making the evaluation. In addition, the OCC, as an integral part of its examination process, periodically review our allowance for credit losses, and as a result of such reviews, we may have to adjust our allowance for credit losses. However, regulatory agencies are not directly involved in establishing the allowance for credit losses as the process is our responsibility and any increase or decrease in the allowance is the responsibility of management. A large loss could deplete the allowance and require increased provisions to replenish the allowance, which would adversely affect earnings.

Investment Activities

~~General.~~ The board of directors is responsible for approving and overseeing the investment policy, which is reviewed at least annually by the board. The objectives of our investment policy are to: (1) provide liquidity necessary to meet short- and long-term business needs in accordance with our liquidity policy; (2) maintain a balance of high-quality, diversified investments to minimize risk; (3) provide collateral for pledging requirements; (4) generate a reasonable rate of return within the context of our liquidity and credit risk objectives; (5) help mitigate interest rate risk and (6) take advantage of allowable tax benefits. The board has delegated to our President and Chief Executive Officer the primary responsibility for oversight and implementation of daily investment activities. The President and Chief Executive Officer has appointed the Treasurer and Chief Operating Officer and the Senior Vice President of Financial Markets as investment officers to assist in overseeing our investing activities and strategies. Investment officers may purchase or sell on our behalf up to $2.0 million of individual securities and up to $10.0 million in the aggregate per calendar month. Amounts that exceed those thresholds require the approval of the board of directors. The board of directors reviews the activities of the investment officers at each of its meetings.

Our current investment policy authorizes us to invest in various types of investment grade investment securities and liquid assets, including U.S. Treasury obligations (up to 55% of our total investment portfolio), securities of various government-sponsored enterprises (up to 55% of our total investment portfolio), corporate debt (up to 45% of our total investment portfolio), mortgage-backed securities (up to 75% of our total investment portfolio), collateralized mortgage obligations (up to 45% of our total investment portfolio), asset-backed securities (up to 10% of our total investment portfolio), municipal obligations (up to 55% of our total investment portfolio), mutual funds (up to 10% of our total investment portfolio) and certificates of deposit of federally insured institutions (up to 10% of our total investment portfolio). We do not engage in any investment hedging activities or trading activities, nor do we purchase any high-risk mortgage derivative products, corporate junk bonds, or certain types of structured notes.

Generally accepted accounting principles require that, at the time of purchase, we designate a debt security as held to maturity, available for sale, or trading, depending on our ability and intent to hold such security. Debt securities designated as available for sale are reported at fair value, while debt securities designated as held to maturity are reported at amortized cost.15

As of ~~June~~our ~~30,~~total ~~2024,~~investment ~~HTM~~portfolio) ~~securities are carried at amortized cost~~ and ~~AFS~~certificates ~~securities~~of ~~are~~deposit ~~carried~~of atfederally ~~fair~~insured ~~value.~~institutions ~~On July 1, 2023, the Company adopted ASU 2016-13 Financial Instruments – Credit Losses~~ (~~Topic~~up ~~326):~~to ~~Measurement~~10% of ~~Credit~~our ~~Losses~~total oninvestment ~~Financial Instruments, as amended, which replaces the incurred loss methodology with an expected loss methodology that is referred to as CECL methodology~~portfolio). ~~The~~We ~~measurement~~do ofnot ~~expected~~engage ~~credit~~in ~~losses~~any ~~under~~investment ~~the~~hedging ~~CECL~~activities ~~methodology~~or istrading ~~applicable to financial assets measured at amortized cost~~activities, ~~including~~nor ~~loan~~do ~~receivables~~we ~~and~~purchase ~~HTM~~any ~~debt securities. The Company measures expected credit losses on HTM debt securities on a collective basis by security type and~~ high-risk ~~rating~~mortgage ~~where~~derivative ~~available.~~products, ~~Any~~corporate ~~expected~~junk ~~credit~~bonds, ~~losses~~or oncertain ~~HTM~~types ~~securities~~of ~~would~~structured ~~be presented as an allowance for credit loss~~notes.

Generally accepted accounting principles require that, at the time of purchase, we designate a debt security as held to maturity ("HTM"), available for sale ("AFS"), or trading, depending on our ability and intent to hold such security. Debt securities designated as available for sale are reported at fair value, while debt securities designated as held to maturity are reported at amortized cost.

On July 1, 2023, the Company adopted ASU 2016-13 Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as amended, which replaces the incurred loss methodology with an expected loss methodology that is referred to as Current Expected Credit Losses ("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 HTM debt securities. The Company measures expected credit losses on HTM debt securities on a collective basis by security type and risk rating where available. Any expected credit losses on HTM securities would be presented as an allowance for credit loss.

In addition, ASC 326 made changes to the accounting for AFS debt securities. The Company measures expected credit losses on AFS debt securities based upon the gain or loss position of the security. If the Company does not expect to recover the entire amortized cost basis of an AFS debt 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 AFS debt security or it is more likely than not that the Company will be required to sell the AFS 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.

At June 30, ~~2024~~2025, our investment portfolio totaled $~~147~~145.18 million, which consisted of debt obligations, mortgage-backed securities and collateralized mortgage obligations issued by U.S. government-sponsored enterprises as well as corporate and municipal bonds. At such date, $~~147~~145.08 million was designated as held to maturity and $~~113~~91,000 was designated as available for sale. At June 30, ~~2024~~2025, we did not hold any trading securities. At June 30, ~~2024~~2025, the allowance for credit losses - investments was $~~149~~204,000. At June 30, ~~2024~~2025, we also owned $704,000 of Federal Home Loan Bank of Boston stock. As a member of the Federal Home Loan Bank of Boston, we are required to purchase stock in the Federal Home Loan Bank of Boston, which is carried at cost and classified as a restricted investment.

The following table sets forth the amortized cost and fair values of our securities portfolio at the dates indicated.

	At June 30,
	2024				2023
	2025				2024
(In thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Securities available for sale:
Government-sponsored enterprises:
Mortgage-backed securities-residential	$	~~114~~90	$	~~113~~91	$	~~147~~114	$	~~142~~113
Collateralized mortgage obligations		-		-		4		4
Total securities available for sale	$	90	$	91	$	114	$	113
Total securities available for sale	$	114	$	113	$	151	$	146
Securities held to maturity:
Government-sponsored enterprises:
Debt obligations	$	~~998~~-	$	~~979~~-	$	~~996~~998	$	~~962~~979
Mortgage-backed securities-residential		4650,~~556~~224		4348,~~806~~891		46,~~619~~556		43,~~119~~806
Mortgage-backed securities-commercial		4,~~462~~872		4,~~470~~869		-4,462		-4,470
Collateralized mortgage obligations		24,~~975~~167		24,~~984~~162		12,975		12,984
Municipal bonds		4137,~~171~~950		3432,~~822~~515		4341,~~865~~171		3734,~~445~~822
Corporate bonds		5048,~~981~~743		4645,~~359~~998		5650,~~421~~981		5046,~~746~~359
Total securities held to maturity	$	~~147~~145,~~143~~956	$	~~133~~136,~~420~~435	$	147,~~902~~143	$	~~132~~133,~~273~~420

The following table sets forth the weighted average yield for each range of contractual maturities of available for sale securities and held to maturity securities portfolios at June 30, 2024. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Weighted average yields in the table below have been calculated based on the amortized cost of the security. Yields on tax-exempt obligations have not been computed on a tax-exempt basis.16

	June 30, 2024
	Within 1 Year					After 1 Year Through 5 Years					After 5 Years Through 10 Years					Over 10 Years					Total
(Dollars in thousands)	Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield
Securities available for sale:
Government-sponsored enterprises:
Mortgage-backed securities-residential	$	1		4.00	%	$	8		5.00	%	$	93		5.97	%	$	12		4.58	%	$	114		5.75	%
Total securities available for sale	$	1		4.00	%	$	8		5.00	%	$	93		5.97	%	$	12		4.58	%	$	114		5.75	%
Securities held to maturity:
Government-sponsored enterprises:
Debt obligations	$	998		3.11	%	$	-	-			$	-	-			$	-	-			$	998		3.11	%
Mortgage-backed securities-residential		-	-				3,255		2.56	%		17,201		2.20	%		26,100		3.97	%		46,556		3.22	%
Mortgage-backed securities-commercial		-	-				1,006		5.97	%		3,456		6.03	%		-	-				4,462		6.02	%
Collateralized mortgage obligations		-	-				-	-				2,975		6.12	%		-	-				2,975		6.12	%
Municipal bonds		3,320		2.66	%		7,144		3.87	%		13,510		2.53	%		17,197		2.06	%		41,171		2.58	%
Corporate bonds		1,247		3.37	%		38,095		2.76	%		9,946		2.51	%		1,693		2.47	%		50,981		2.72	%
Total securities held to maturity	$	5,565		2.90	%	$	49,500		2.97	%	$	47,088		2.89	%	$	44,990		3.18	%	$	147,143		3.01	%

The following table sets forth the weighted average yield for each range of contractual maturities of available for sale securities and held to maturity securities portfolios at June 30, 2025. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Weighted average yields in the table below have been calculated based on the amortized cost of the security. Yields on tax-exempt obligations have not been computed on a tax-exempt basis.


	June 30, 2025
	Within 1 Year					After 1 Year Through 5 Years					After 5 Years Through 10 Years					Over 10 Years					Total
(Dollars in thousands)	Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield
Securities available for sale:
Government-sponsored enterprises:
Mortgage-backed securities-residential	$	-	-			$	11		4.91	%	$	70		5.59	%	$	9		4.67	%	$	90		5.42	%
Total securities available for sale	$	-	-			$	11		4.91	%	$	70		5.59	%	$	9		4.67	%	$	90		5.42	%

Securities held to maturity:
Government-sponsored enterprises:
Mortgage-backed securities-residential	$	19		3.42	%	$	3,059		2.71	%	$	12,497		2.21	%	$	34,649		4.42	%	$	50,224		3.77	%
Mortgage-backed securities-commercial		-	-				3,414		4.98	%		1,458		5.12	%		-	-				4,872		5.02	%
Collateralized mortgage obligations		-	-				974		4.89	%		3,193		5.05	%		-	-				4,167		5.01	%
Municipal bonds		404		3.42	%		8,169		3.29	%		14,630		2.78	%		14,747		2.27	%		37,950		2.70	%
Corporate bonds		2,500		2.56	%		39,512		2.63	%		5,052		3.02	%		1,679		2.47	%		48,743		2.66	%
Total securities held to maturity	$	2,923		2.69	%	$	55,128		2.91	%	$	36,830		2.91	%	$	51,075		3.74	%	$	145,956		3.20	%

For additional information regarding our investment securities portfolio, see Note 3 to the notes to our consolidated financial statements.

Sources of Funds

General. Deposits are our primary source of funds for use in lending and investment activities. We also use borrowings, primarily Federal Home Loan Bank of Boston advances, to supplement cash flow needs, lengthen or shorten the maturities of liabilities for interest rate risk purposes and to manage the cost of funds. In addition, we receive funds from scheduled loan payments, loan prepayments, maturities, prepayments, and calls of securities, retained earnings and income on earning assets. While scheduled loan payments and income on earning assets are relatively stable sources of funds, deposit inflows and outflows can vary widely and are influenced by prevailing interest rates, market conditions and levels of competition.

Deposits. Our deposits are generated primarily from residents within our primary market area. We offer a selection of deposit accounts, including non-interest-bearing checking accounts, interest-bearing checking accounts, money market accounts, savings accounts, and certificates of deposit. Deposit account terms vary, with the principal differences being the minimum balance required, the amount of time the funds must remain on deposit and the interest rate. At June 30, 2024, our core deposits, which are deposits other than certificates of deposit, were $138.5 million, representing 51.1% of total deposits. As part of our business strategy, we intend to increase our core deposits.

money market accounts, savings accounts, and certificates of deposit. Deposit account terms vary, with the principal differences being the minimum balance required, the amount of time the funds must remain on deposit and the interest rate. At June 30, 2025, our core deposits, which are deposits other than certificates of deposit, were $133.8 million, representing 48.8% of total deposits.

Interest rates, maturity terms, service fees and withdrawal penalties are established on a periodic basis. Deposit rates and terms are based primarily on current operating strategies and market rates, liquidity requirements, rates paid by competitors and growth goals. The variety of deposit accounts that we offer allows us to be competitive in generating deposits and to respond with flexibility to changes in our customers’ demands. Our ability to gather deposits is impacted by the competitive market in which we operate, which includes numerous financial institutions of varying sizes offering a wide range of products. We believe that deposits are a stable source of funds, but our ability to attract and maintain deposits at favorable rates will be affected by market conditions, including competition and prevailing interest rates.

The following table sets forth the distribution of total average deposits by account type at the dates indicated.

	For the Years Ended June 30,
	2024								2023
	2025								2024
(In thousands)	Amount		Percent			Average Rate			Amount		Percent			Average Rate
Non-interest bearing NOW and demand	$	2928,~~380~~829		1110.2566	%		-	%	$	3129,~~170~~380		11.3625	%		-	%
Interest bearing NOW and demand		29,~~845~~913		11.4306			0.05			3229,~~252~~845		11.7643			0.05
Regular and other		5852,~~569~~945		2219.4257			0.10			7058,~~338~~569		2522.6442			0.10
Money market deposits		2421,~~044~~593		97.2098			0.24			3724,~~197~~044		139.5620			0.2524
Total non-certificate accounts		~~141~~133,~~838~~280		5449.3027			0.0908			~~170~~141,~~957~~838		6254.3130			0.1009
Term certificates of $250,000 or more		2326,~~879~~128		9.1466			43.4472			23,~~585~~879		89.6014			34.1944
Term certificates less than $250,000		95111,~~503~~101		3641.5607			43.2268			7995,~~825~~503		2936.0956			24.7622
Total certificate accounts		~~119~~137,~~382~~229		4550.7073			43.3669			~~103~~119,~~410~~382		3745.6970			24.8636
Total deposits	$	~~261~~270,~~220~~509		100.00	%		21.1388	%	$	~~274~~261,~~367~~220		100.00	%		12.2613	%

The following tables set forth the amount and maturities of our term certificates by interest rate at the dates indicated.

	As of June 30, 2024
	As of June 30, 2025
	Amount Due
(In thousands)	Three Months or Less		Over Three Months to Twelve Months		Over 1 Year to 2 Years		Over 2 Years to 3 Years		Over Three Years		Total
0.00%-1.00%	$	24,~~449~~732	$	12,~~738~~307	$	42,~~558~~885	$	~~1,165~~866	$	~~311~~576	$	21,~~221~~366
1.01%-2.00%		~~569~~-		~~342~~-		-		-		-		~~911~~-
2.01%-3.00%		~~835~~-		-		-		-		-		~~835~~-
3.01%-4.00%		-		-23,052		-		-		-		-23,052
4.01%-5.00%		1164,~~548~~957		4129,~~427~~930		31,~~642~~061		~~1,066~~-		-		5795,~~683~~948
5.01%-6.00%		~~32,052~~-		~~19,605~~-		-		-		-		~~51,657~~-
Total	$	4769,~~453~~689	$	7465,~~112~~289	$	83,~~200~~946	$	~~2,231~~866	$	~~311~~576	$	~~132~~140,~~307~~366

At June 30, ~~2024~~2025 and ~~2023~~2024, the estimated amounts of uninsured deposits were $4237.93 million and $3542.39 million, respectively. In addition, as of June 30, ~~2024~~2025, the aggregate amount of certificates of deposit that exceeded the FDIC insurance limit of $250,000 was $2628.1 million. We have no deposits that are uninsured for any reason other than being in excess of the maximum amount for federal deposit insurance. The following table sets forth the maturity of certificates of deposit of $250,000 or more as of June 30, ~~2024~~2025.

(In thousands)	June 30, ~~2024~~2025
Maturity Period:
Three months or less	$	815,~~519~~126
Over three through six months		67,~~698~~487
Over six through twelve months		84,~~019~~115
Over twelve months		21,~~877~~327
Total	$	2628,~~113~~055

Borrowed Funds. We may obtain advances from the Federal Home Loan Bank of Boston upon the security of our capital stock in the Federal Home Loan Bank of Boston and certain of our mortgage loans. Such advances may be made pursuant to several different credit programs, each of which has its own interest rate and range of maturities. We use such advances to provide funding as a supplement to our deposits. To the extent such borrowings have different terms to repricing than our deposits, they can change our interest rate risk profile. At June 30, ~~2024~~2025, we had $10.4 million outstanding in ~~long~~short-term advances or advances having a maturity less than one year from the Federal Home Loan Bank of Boston, with a weighted average interest rate of 4.51%. At June 30, ~~2024~~2025, we had the capacity to borrow an additional $4853.30 million in Federal Home Loan Bank of Boston advances. For the year ended June 30, ~~2024~~2025, the average amount of FHLB borrowings outstanding during the period was $910.14 million. The maximum borrowings outstanding at any month end during the year ended June 30, ~~2024~~2025 was $1910.14 million.

Additionally, at June 30, ~~2024~~2025, we had a $2.4 million available line of credit with the Federal Home Loan Bank of Boston, none of which was drawn at June 30, ~~2024~~2025.

Human Capital Resources

Employees

As of June 30, ~~2024~~2025, we had 2728 full-time employees. None of our employees are represented by a labor union or covered by collective bargaining agreements, and we believe our relationship with our employees is good.

Diversity and Inclusion

We are committed to creating and maintaining a workplace free from discrimination or harassment on the basis of color, race, sex, national origin, ethnicity, religion, age, disability, sexual orientation, gender identification or expression, or any other status protected by applicable law. Our management team and employees are expected to exhibit and promote honest, ethical, and respectful conduct in the workplace. All of our employees must adhere to a code of conduct that sets standards for appropriate behavior and are required to attend annual training to help prevent, identify, report, and stop any type of discrimination and harassment. Recruitment, hiring, development, training, compensation, and advancement at our company are based on qualifications, performance, skills, and experience without regard to gender, race, and ethnicity.

of conduct that sets standards for appropriate behavior and are required to attend annual training to help prevent, identify, report, and stop any type of discrimination and harassment. Recruitment, hiring, development, training, compensation, and advancement are based on qualifications, performance, skills, and experience without regard to gender, race, and ethnicity.

Competitive Pay and Benefits

We strive to provide pay, comprehensive benefits, and services that help meet the varying needs of our employees. Our total rewards package includes competitive pay, comprehensive healthcare benefits package for employees, family medical leave, pension plan, and flexible work schedules. We sponsor a 401(k) plan and we match employee contributions up to a certain limit. In addition, nearly all of our employees are stockholders of the Company through participation in our Employee Stock Ownership Plan, which aligns stockholder interests by providing stock ownership on a tax-deferred basis at no cost to the employee.

Employee Development and Training

We focus on attracting, retaining, and cultivating talented individuals. We emphasize employee development and training by providing access to a wide range of online and instructor-led development and continual learning programs. Employees are encouraged to attend meetings and conferences and have access to broad resources they need to be successful.

Supervision and Regulation

General

As a federal savings bank, the Bank is subject to examination, supervision, and regulation by the OCC and by the FDIC as deposit insurer pursuant to its backup examination authority. The federal system of regulation and supervision establishes a comprehensive framework of activities in which the Bank may engage and is intended primarily for the protection of depositors and the FDIC’s Deposit Insurance Fund, and not for the protection of security holders. The regulatory structure also gives the regulatory authorities extensive discretion in connection with their supervisory, enforcement, rulemaking, and examination activities and policies, including rules or policies that: establish minimum capital levels; restrict the timing and amount of dividend payments; govern the classification of assets; provide oversight for the adequacy of loan loss reserves for regulatory purposes; and establish the timing and amounts of assessments and fees.

Moreover, as part of their examination authority, the banking regulators assign numerical ratings to banks and savings associations relating to capital, asset quality, management, liquidity, earnings, interest rate sensitivity and other factors. These ratings are inherently subjective and the receipt of a less than satisfactory rating in one or more categories may result in supervisory or enforcement action by the banking regulators against a financial institution. A less than satisfactory rating may also prevent a financial institution from obtaining necessary regulatory approvals to access the capital markets, pay dividends, acquire other financial institutions, or establish new branches.

In addition, the Bank must comply with significant anti-money laundering and anti-terrorism financing laws and regulations, the Community Reinvestment Act and its implementing regulations, and fair lending laws and regulations. Government agencies have the authority to impose monetary penalties and other sanctions on institutions that fail to comply with these laws and regulations, which could significantly affect our business activities, including our ability to acquire other financial institutions or expand our branch network. In addition, the Bank is a member of and owns stock in the Federal Home Loan Bank of Boston, which is one of the 11 regional banks in the Federal Home Loan Bank System.

to acquire other financial institutions or expand our branch network. In addition, the Bank is a member of and owns stock in the Federal Home Loan Bank of Boston, which is one of the 11 regional banks in the Federal Home Loan Bank System.

As a savings and loan holding company, CFSB Bancorp is required to comply with the rules and regulations of the Federal Reserve Board. It is subject to examination and supervision by, and is required to file certain reports with, the Federal Reserve Board. CFSB Bancorp is also subject to the rules and regulations of the SEC under the federal securities laws.

Set forth below are certain material regulatory requirements that are applicable to CFSB Bancorp and the Bank. This description of statutes and regulations is not intended to be a complete description of such statutes and regulations and their effects on CFSB Bancorp and the Bank. Any ~~change~~changes in applicable laws or regulations, whether by Congress, the OCC, the FDIC, the Federal Reserve Board, or the SEC, ~~or Congress,~~ could have a material adverse impact on the operations and financial performance of CFSB Bancorp and/or the Bank.

Set forth below are certain material regulatory requirements that are applicable to CFSB Bancorp and the Bank. This description of statutes and regulations is not intended to be a complete description of such statutes and regulations and their effects on CFSB Bancorp and the Bank. Any changes in these laws or regulations, whether by Congress or the applicable regulatory agencies, could have a material adverse impact on CFSB Bancorp, the Bank and their operations. 20

Federal Banking Regulation

Business Activities. A federal savings bank derives its lending and investment powers from the Home Owners’ Loan Act, as amended, and applicable federal regulations. Under this statute and its implementing regulations, the Bank may generally invest in mortgage loans secured by residential and commercial real estate and consumer loans, certain types of debt securities and certain other assets, subject to applicable limits. The Bank may also establish, subject to specified investment limits, subsidiaries that may engage in certain activities not otherwise permissible for the Bank, including real estate investment and securities and insurance brokerage.

The OCC permits an eligible federal savings bank with assets of $20.0 billion or less as of December 31, 2017 to elect to operate with the business powers of a national bank, generally subject to the same limitations and restrictions, without converting to a national bank charter. A federal savings bank that makes the so-called “covered savings association” election must divest any activities or investments that are not permitted for a national bank. The Bank had not made such an election as of June 30, ~~2024~~2025.

Capital Requirements. Federal regulations require federally insured depository institutions to meet several minimum capital standards: a common equity Tier 1 capital to risk-based assets ratio of 4.5%, a Tier 1 capital to risk-based assets ratio of 6.0%, a total capital to risk-based assets ratio of 8.0%, and a Tier 1 capital to total assets leverage ratio of 4.0%.

In determining the amount of risk-weighted assets for calculating risk-based capital ratios, all assets, including certain off-balance sheet assets (e.g., recourse obligations, direct credit substitutes, residual interests) are multiplied by a risk-weight factor assigned by the regulations based on the risks believed inherent in the type of asset. Higher levels of capital are required for asset categories believed to present greater risk. Common equity Tier 1 capital is generally defined as common stockholders’ equity and retained earnings. Tier 1 capital is generally defined as common equity Tier 1 and additional Tier 1 capital. Additional Tier 1 capital includes certain non-cumulative perpetual preferred stock and related surplus and minority interests in equity accounts of consolidated subsidiaries. Total capital includes Tier 1 capital (common equity Tier 1 capital plus additional Tier 1 capital) and Tier 2 capital. Tier 2 capital is comprised of capital instruments and related surplus, meeting specified requirements, and may include cumulative preferred stock and long-term perpetual preferred stock, mandatory convertible securities, intermediate preferred stock, and subordinated debt. Also included in Tier 2 capital is the allowance for credit losses limited to a maximum of 1.25% of risk-weighted assets. Calculation of all types of regulatory capital is subject to deductions and adjustments specified in the regulations.

In addition to establishing the minimum regulatory capital requirements, the regulations limit capital distributions and certain discretionary bonus payments to management if the institution does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets above the amount necessary to meet its minimum risk-based capital requirements.

Financial institutions and their holding companies with total consolidated assets of less than $10 billion, and that meet certain qualifying criteria, may elect to use the optional community bank leverage ratio framework to satisfy regulatory capital requirements, including the risk-based capital requirements. This framework requires maintaining a “Community Bank Leverage Ratio” (the ratio of Tier 1 capital to average total consolidated assets) of greater than 9.0%. The Bank has not elected to be subject to the Community Bank Leverage Ratio framework.

At June 30, ~~2024~~2025, the Bank’s capital exceeded all applicable minimum regulatory requirements.

Qualified Thrift Lender Test. As a federal savings bank, the Bank must satisfy the qualified thrift lender, or QTL, test. Under the QTL test, it must maintain at least 65% of its “portfolio assets” in “qualified thrift investments” (primarily residential mortgages and related investments, including mortgage-backed securities) in at least nine months of the most recent 12-month period. “Portfolio assets” generally means total assets of a federal savings ~~association~~bank, less the sum of specified liquid assets up to 20% of total assets, goodwill and other intangible assets, and the value of property used in the conduct of the federal savings ~~association~~bank’s business.

A federal savings ~~association~~bank that fails the QTL test must operate under specified restrictions set forth in the Home Owners’ Loan Act. The Dodd-Frank Act made noncompliance with the QTL test subject to agency enforcement action for a violation of law. At June 30, ~~2024~~2025, the Bank complied with the QTL test.

Loans-to-One Borrower. Generally, a federal savings bank may not make a loan or extend credit to a single or related group of borrowers in excess of 15% of unimpaired capital and surplus. An additional amount may be loaned, equal to 10% of unimpaired capital and surplus, if secured by readily marketable collateral, which generally includes certain financial instruments (but not real estate). As of June 30, 2024, the Bank was in compliance with the loans-to-one borrower limitations.

Standards for Safety and Soundness. Federal law requires each federal banking agency to prescribe certain standards for all insured depository institutions. These standards relate to, among other things, internal controls, information systems and audit systems, loan documentation, credit underwriting, interest rate risk exposure, asset growth, compensation and other operational and managerial standards as the agency deems appropriate. Interagency guidelines set forth the safety and soundness standards that the federal banking agencies use to identify and address problems at insured depository institutions before capital becomes impaired. If the appropriate federal banking agency determines that an institution fails to meet any standard prescribed by the guidelines, the agency may require the institution to submit to the agency an acceptable plan to achieve compliance with the standard. Failure to implement such a plan can result in further enforcement action, including the issuance of a cease-and-desist order or the imposition of civil money penalties. 21

equal to 10% of unimpaired capital and surplus, if secured by readily marketable collateral, which generally includes certain financial instruments (but not real estate). As of June 30, 2025, the Bank was in compliance with the loans-to-one borrower limitations.

Standards for Safety and Soundness. Federal law requires each federal banking agency to prescribe certain standards for all insured depository institutions. These standards relate to, among other things, internal controls, information systems and audit systems, loan documentation, credit underwriting, interest rate risk exposure, asset growth, compensation, and other operational and managerial standards as the agency deems appropriate. Interagency guidelines set forth the safety and soundness standards that the federal banking agencies use to identify and address problems at insured depository institutions before capital becomes impaired. If the appropriate federal banking agency determines that an institution fails to meet any standard prescribed by the guidelines, the agency may require the institution to submit to the agency an acceptable plan to achieve compliance with the standard. Failure to implement such a plan can result in further enforcement action, including the issuance of a cease-and-desist order or the imposition of civil money penalties.

Prompt Corrective Action. Federal law requires, among other things, that federal bank regulators take “prompt corrective action” with respect to institutions that do not meet minimum capital requirements. For this purpose, the law establishes five capital categories: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized. Under applicable regulations, an institution is deemed to be “well capitalized” if it has a total risk-based capital ratio of 10.0% or greater, a Tier 1 risk-based capital ratio of 8.0% or greater, a leverage ratio of 5.0% or greater, and a common equity Tier 1 capital ratio of 6.5% or greater. An institution is deemed to be “adequately capitalized” if it has a total risk-based capital ratio of 8.0% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater, a leverage ratio of 4.0% or greater, and a common equity Tier 1 capital ratio of 4.5% or greater. An institution is deemed to be “undercapitalized” if it has a total risk-based capital ratio of less than 8.0%, a Tier 1 risk-based capital ratio of less than 6.0%, a leverage ratio of less than 4.0%, or a common equity Tier 1 capital ratio of less than 4.5%. An institution is deemed to be “significantly undercapitalized” if it has a total risk-based capital ratio of less than 6.0%, a Tier 1 risk-based capital ratio of less than 4.0%, a leverage ratio of less than 3.0%, or a common equity Tier 1 capital ratio of less than 3.0%. An institution is considered to be “critically undercapitalized” if it has a ratio of tangible equity (as defined in the regulations) to total assets that is equal to or less than 2.0%.

At each successive lower capital category, an insured depository institution is subject to more restrictions and prohibitions, including restrictions on growth, restrictions on interest rates paid on deposits, restrictions or prohibitions on the payment of dividends, and restrictions on the acceptance of brokered deposits. Furthermore, if an insured depository institution is classified in one of the undercapitalized categories, it is required to submit a capital restoration plan to the appropriate federal banking agency, and the holding company must guarantee the performance of that plan.

At June 30, ~~2024~~2025, the Bank met the criteria for being considered “well capitalized.”

Capital Distributions. Federal regulations govern capital distributions by a federal savings bank, which include cash dividends and other transactions charged to the bank’s capital account. A federal savings bank must file an application with the OCC for approval of a capital distribution if:

•

it would not be at least well capitalized following the distribution;

•

the total capital distributions for the applicable calendar year exceed the sum of its net income for that year to date plus its retained net income for the preceding two years;

•

its proposed capital distribution would reduce the amount of or retire any part of its common or preferred stock or retire any part of debt instruments such as notes or debentures included in capital;

•

its proposed capital distribution is payable in property other than cash;

•

it is directly or indirectly controlled by a mutual savings and loan holding company or by a company that is not a savings and loan holding company; or

•

the distribution would violate any applicable statute, regulation, agreement or regulatory condition.

Even if an application is not otherwise required, every federal savings bank that is a subsidiary of a savings and loan holding company must file a notice with the Federal Reserve Board at least 30 days before the bank’s board of directors declares a dividend or approves a capital distribution. If a federal savings bank subsidiary of a savings and loan holding company is filing a notice with the Federal Reserve Board for a dividend, and an application to the OCC is not otherwise required, then the bank must provide to the OCC an informational copy of the notice filed with the Federal Reserve Board at the same time the notice is filed.

loan holding company is filing a notice with the Federal Reserve Board for a dividend, and an application to the OCC is not otherwise required, then the bank must provide to the OCC an informational copy of the notice filed with the Federal Reserve Board at the same time the notice is filed.

An application or notice related to a capital distribution may be disapproved by the agency if:

•

the federal savings bank would be undercapitalized, significantly undercapitalized or critically undercapitalized following the distribution;

•

the proposed capital distribution raises safety and soundness concerns; or

•

the capital distribution would violate a prohibition contained in any statute, regulation, agreement or regulatory condition.

In addition, an insured depository institution may not make any capital distribution if, after making such distribution, the institution would fail to meet any applicable regulatory capital requirement.

Community Reinvestment Act and Fair Lending Laws. All federal savings banks have a responsibility under the Community Reinvestment Act and its implementing regulations to help meet the credit needs of their communities, including low- and moderate-income borrowers. The OCC is required to assess a federal savings bank’s record of compliance with the Community Reinvestment Act. A federal savings bank’s failure to comply with the provisions of the Community Reinvestment Act could, at a minimum, result in denial of certain corporate applications such as branches or mergers, or in restrictions on its activities. The Community Reinvestment Act requires all institutions insured by the FDIC to publicly disclose their rating. The Bank received a “Satisfactory” rating in its most recent evaluation.

In 2023, the OCC and the other bank regulatory agencies issued a final rule to strengthen and modernize the Community Reinvestment Act regulations and framework. Although the effective date of the final rule is April 1, 2024, the applicability date under the rule for most provisions is January 1, 2026, with additional requirements applicable under the rule on January 1, 2027.

In addition, the Equal Credit Opportunity Act and the Fair Housing Act prohibit lenders from discriminating in their lending practices. The failure to comply with the Equal Credit Opportunity Act and the Fair Housing Act could result in enforcement actions by the OCC, as well as other federal regulatory agencies and the Department of Justice.

Transactions with Affiliates. A federal savings bank’s authority to engage in transactions with its affiliates is limited by Sections 23A and 23B of the Federal Reserve Act and Regulation W of the Federal Reserve Board. Under Sections 23A and B23B and Regulation W, an affiliate includes a company that controls, or is under common control with, an insured depository institution such as the Bank. CFSB Bancorp and 15 Beach MHC are affiliates of the Bank because both entities control the Bank. Certain "covered transactions" between an insured depository institution and its affiliates are subject to quantitative limits and collateral requirements, must be consistent with safe and sound banking practices, and not involve the purchase of low-quality assets from an affiliate.. In addition, federal regulations prohibit a federal savings bank from lending to any of its affiliates that are engaged in activities that are not permissible for bank holding companies and from purchasing or investing in securities issued by any affiliate, other than a subsidiary. Finally, transactions with affiliates must be on terms and under circumstances that are substantially the same, or at least as favorable to, the institution as those prevailing at the time for comparable transactions with or involving non-affiliates.

because both entities control the Bank. In general, transactions between an insured depository institution and its affiliates are subject to certain quantitative limits and collateral requirements. In addition, federal regulations prohibit a federal savings bank from lending to any of its affiliates that are engaged in activities that are not permissible for bank holding companies and from purchasing or investing in securities issued by any affiliate, other than a subsidiary. Finally, transactions with affiliates must be consistent with safe and sound banking practices, not involve the purchase of low-quality assets from an affiliate, and be on terms and under circumstances that are substantially the same, or at least as favorable to, the institution as those prevailing at the time for comparable transactions with or involving non-affiliates.

Extensions of Credit to Insiders. The Bank’s authority to extend credit to its or its affiliates’ insiders, i.e., its directors, executive officers and 10% or greater stockholders, as well as to their related interests, i.e., entities controlled by such persons, is governed by the requirements of Sections 22(g) and 22(h) of the Federal Reserve Act and Regulation O of the Federal Reserve Board. Among other things, these provisions generally require that extensions of credit to insiders and their related interests:

•

be made on terms that are substantially the same as, and follow credit underwriting procedures that are not less stringent than, those prevailing at the time for comparable transactions with unaffiliated persons and that do not involve more than the normal risk of repayment or present other unfavorable features; and

•

not exceed certain limitations on the amount of credit extended to such persons, individually and in the aggregate, which limits are based, in part, on the amount of the Bank’s unimpaired capital and unimpaired surplus.

In addition, extensions of credit in excess of certain limits must be approved by a majority of the Bank’s board of directors. Extensions of credit to executive officers are subject to additional limits based on the type of extension involved. 23

~~Enforcement.~~In ~~The OCC has primary enforcement responsibility over federal savings banks and has authority to bring enforcement actions against all “institution-affiliated parties~~addition,” aextensions ~~term~~of ~~that~~credit ~~includes directors, officers, employees, and controlling stockholders, stockholders who participate~~ in ~~the~~excess ~~affairs~~ of ~~the~~certain ~~bank,~~limits asmust ~~well~~be asapproved ~~attorneys,~~by ~~appraisers~~a ~~and~~majority ~~accountants who knowingly or recklessly participate in violations~~ of ~~law~~the orBank’s ~~regulation,~~board ~~breaches~~ of ~~fiduciary duty, or unsafe or unsound practices~~directors. ~~Formal~~Extensions ~~enforcement actions by the OCC may include the issuance~~ of acredit ~~capital~~to ~~directive,~~executive ~~formal agreement, cease and desist orders, and removals and prohibitions of~~ officers ~~and/or~~are ~~directors~~subject ofto ~~the~~additional ~~institution,~~limits asbased ~~well~~on as the ~~assessment~~type of ~~civil~~credit ~~money~~extension ~~penalties (“CMPs”)~~involved. ~~CMPs can be assessed for various types of conduct against the institution and/or its officers and directors.~~

Enforcement. The OCC has primary enforcement responsibility over federal savings banks and has authority to bring enforcement actions against all the banks' "institution-affiliated parties,” a term that includes directors, officers, employees, and controlling stockholders, stockholders who participate in the affairs of the bank, as well as attorneys, appraisers and accountants who knowingly or recklessly participate in violations of law or regulation, breaches of fiduciary duty, or unsafe or unsound practices. Formal enforcement actions by the OCC may include the issuance of a capital directive, formal agreement, cease and desist orders, and removals and prohibitions of officers and/or directors of the institution, as well as the assessment of civil money penalties (“CMPs”). CMPs can be assessed for various types of conduct against the institution and/or its institution-affiliated parties.

The FDIC also has the authority to terminate deposit insurance or recommend to the OCC that enforcement action be taken with respect to a particular federal savings bank. If such action is not taken, the FDIC has authority to take action under specified circumstances.

Anti-Money Laundering. The Bank must comply with the anti-money laundering (“AML”) provisions of the Bank Secrecy Act (“BSA”) as amended by the USA PATRIOT Act and implementing regulations issued by the Financial Crimes Enforcement Network (“FinCEN”) of the U.S. Department of the Treasury, as well as AML- related regulations issued by the OCC. The USA PATRIOT Act gives the federal government powers to address terrorist threats through enhanced domestic security measures, expanded surveillance powers, increased information sharing, and broadened AML requirements.

The federal bank regulatory agencies have increased the regulatory scrutiny of BSA/AML programs maintained by financial institutions. Significant penalties and fines, as well as other supervisory orders may be imposed on a financial institution for non-compliance with these requirements. In addition, the federal bank regulatory agencies must consider the effectiveness of financial institutions’ efforts to combat money laundering when these institutions seek to engage in a merger transaction. The Bank has adopted policies and procedures in compliance with these requirements.

On January 1, 2021, Congress passed the Anti-Money Laundering Act of 2020 (“AML Act”), part of the National Defense Authorization Act, which enacted the most significant overhaul of the BSA since the USA Patriot Act. On September 29, 2022, FinCEN issued a final rule implementing the amendments with respect to the reporting

of beneficial ownership, the first rule required under the AML Act. On December 22, 2023, FINCEN issued a final rule governing access to its newly created beneficial ownership database, which will require banks to implement certain safeguards related to accessing information stored in the database, among other things.

Branching. A federal savings bank that has not elected “covered savings association” status generally has authority to establish branches in any state or states of the United States and its territories. Such authority is subject to OCC approval for new branches.

Insurance of Deposit Accounts. The Deposit Insurance Fund of the FDIC insures deposits at FDIC-insured financial institutions such as the Bank generally up to a maximum of $250,000 per separately insured depositor per account ownership category.

The FDIC imposes deposit insurance assessments against all insured depository institutions. An institution’s assessment rate depends upon the perceived risk of the institution to the Deposit Insurance Fund, with institutions deemed less risky paying lower rates. Currently, assessments for institutions of less than $10 billion of total assets are based on financial measures and supervisory ratings derived from statistical models estimating the probability of failure within three years. Effective January 1, 2023, the assessment range for insured institutions with less than $10 billion in total assets is 2.5 to 32 basis points of total assets less tangible equity.

The FDIC has authority to increase insurance assessments. Any significant increases would have an adverse effect on the operating expenses and results of operations of the Bank. The Bank cannot predict what assessment rates will be in the future.

Insurance of deposits may be terminated by the FDIC upon a finding that an institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, order, or condition imposed by the FDIC. We do not currently know of any practice, condition or violation that may lead to termination of our deposit insurance.

Privacy Regulations. Federal regulations generally require that the Bank disclose its privacy policy, including identifying with whom it shares a customer’s “non-public personal information,” to customers at the time of establishing the customer relationship and annually thereafter. In addition, the Bank is required to provide its customers with the ability to “opt-out” of having their personal information shared with unaffiliated third parties and not to disclose account numbers or access codes to non-affiliated third parties for marketing purposes. The Bank currently has a privacy policy in place and believes that such policy complies with the regulations.

not to disclose account numbers or access codes to non-affiliated third parties for marketing purposes. The Bank currently has a privacy policy in place and believes that such policy complies with the regulations.

Prohibitions Against Tying Arrangements. Federal savings banks are prohibited, subject to certain exceptions, from extending credit to or offering any other service, or fixing or varying the consideration for such extension of credit or service, on the condition that the customer obtain some additional service from the institution or its affiliates or not obtain services of a competitor of the institution.

Other Regulations

Interest and other charges collected or contracted for by the Bank are subject to state usury laws and federal laws concerning interest rates. Loan operations are also subject to state and federal laws applicable to credit transactions, such as the:

•

Truth-in-Lending Act, governing disclosures of credit terms to consumer borrowers;

•

Home Mortgage Disclosure Act, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves;

•

Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, color, religion, national origin and other prohibited factors in extending credit;

•

Fair Credit Reporting Act, governing the use and provision of information to credit reporting agencies;

•

Fair Debt Collection Practices Act, governing the manner in which consumer debts may be collected; and

•

Truth in Savings Act, governing disclosures with respect to deposit accounts; and

rules and regulations of the various federal agencies charged with the responsibility of implementing such federal laws.

The operations of the Bank also are subject to the:

•

Truth in Savings Act, governing disclosures and advertising with respect to deposit accounts;

•

Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records;

•

Electronic Funds Transfer Act and Regulation E promulgated thereunder, which govern automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services;

•

Check Clearing for the 21st Century Act (also known as “Check 21”), which gives “substitute checks,” such as digital check images and copies made from that image, the same legal standing as the original paper check; and

•

Regulations of the Office of Foreign Assets Control that enforce economic and trade sanctions against targeted foreign countries, regimes, and other designated individuals and organizations.

Banking organizations are required to notify their primary federal regulator as soon as possible and no later than 36 hours of determining that a “computer-security incident” that arises to the level of a “notification incident” has occurred. A notification incident is a “computer-security incident” that has materially disrupted or degraded, or is reasonably likely to materially disrupt or degrade, the banking organization’s ability to deliver services to a material portion of its customer base, jeopardize the viability of key operations of the banking organization, or impact the stability of the financial sector. Bank service providers are also required to notify any affected bank to or on behalf of which the service provider provides services “as soon as possible” after determining that it has experienced an incident that materially disrupts or degrades, or is reasonably likely to materially disrupt or degrade, covered services provided to such bank for four or more hours.

Federal Home Loan Bank System

The Bank is a member of the Federal Home Loan Bank System, which consists of 11 regional Federal Home Loan Banks. The Federal Home Loan Bank provides a central credit facility primarily for member institutions. Members of the Federal Home Loan Bank are required to acquire and hold shares of capital stock in the Federal Home Loan Bank. The Bank was in compliance with this requirement at June 30, 2024. Based on redemption provisions of the Federal Home Loan Bank of Boston, the stock has no quoted market value and is carried at cost. The Bank reviews for impairment, based on the ultimate recoverability, the cost basis of the Federal Home Loan Bank of Boston stock. At June 30, 2024, no impairment had been recognized. 25

26The Bank is a member of the Federal Home Loan Bank System, which consists of 11 regional Federal Home Loan Banks. The Federal Home Loan Bank provides a central credit facility primarily for member institutions. Members of the Federal Home Loan Bank are required to acquire and hold shares of capital stock in the Federal Home Loan Bank. The Bank was in compliance with this requirement at June 30, 2025. Based on redemption provisions of the Federal Home Loan Bank of Boston, the stock has no quoted market value and is carried at cost. The Bank reviews for impairment, based on the ultimate recoverability, the cost basis of the Federal Home Loan Bank of Boston stock. At June 30, 2025, no impairment had been recognized.

Holding Company Regulation

General. CFSB Bancorp and 15 Beach, MHC are savings and loan holding companies within the meaning of the Home Owners’ Loan Act. As such, CFSB Bancorp and 15 Beach, MHC are registered with the Federal Reserve Board and subject to the regulation, examination, supervision, and reporting requirements applicable to savings and loan holding companies. In addition, the Federal Reserve Board has enforcement authority over CFSB Bancorp, 15 Beach, MHC and ~~its~~their non-savings association subsidiaries. Among other things, this authority permits the Federal Reserve Board to restrict or prohibit activities that are determined to be a serious risk to the Bank.

Permissible Activities. Under present law, the business activities of CFSB Bancorp and 15 Beach, MHC are generally limited to those activities permissible for ~~financial holding companies provided certain conditions are met and financial holding company status is elected, and for~~ multiple savings and loan holding companies. Aunless ~~financial~~they ~~holding~~have ~~company~~elected ~~may engage in activities that are~~ financial inholding ~~nature,~~company ~~including underwriting equity securities and insurance as well as activities that are incidental to financial activities or complementary to a financial activity~~status. CFSB Bancorp and 15 Beach, MHC have not elected financial holding company status. A multiple savings and loan holding company is generally limited to activities permissible for bank holding companies under Section 4(c)(8) of the Bank Holding Company Act, subject to regulatory approval, and certain additional activities authorized by federal regulations.

Federal law prohibits savings and loan holding companies, including CFSB Bancorp and 15 Beach, MHC, directly or indirectly, or through one or more subsidiaries, from acquiring more than 5% of another savings association or savings and loan holding company, without prior Federal Reserve Board approval. In evaluating applications by savings and loan holding companies to acquire savings associations, the Federal Reserve Board considers factors such as the financial and managerial resources, future prospects of the company and institution involved, the effect of the acquisition on and the risk to the Deposit Insurance Fund, the convenience and needs of the community, and competitive factors.

The Federal Reserve Board is prohibited from approving any acquisition that would result in a savings and loan holding company controlling savings associations in more than one state, subject to two exceptions:

•

the approval of interstate supervisory acquisitions by savings and loan holding companies; and

•

the acquisition of a savings association in another state if the laws of the state of the target savings association specifically permit such acquisition.

Capital. Savings and loan holding companies with less than $3.0 billion in consolidated assets are generally not subject to the regulatory capital requirements unless otherwise advised by the Federal Reserve Board.

Source of Strength. The Dodd-Frank Act extended the “source of strength” doctrine to savings and loan holding companies. The Federal Reserve Board has issued regulations requiring that all savings and loan holding companies serve as a source of financial and managerial strength to their subsidiary depository institutions.

Dividends and Stock Repurchases. The Federal Reserve Board has issued a policy statement regarding the payment of dividends and the repurchase of shares of common stock by holding companies. In general, the policy provides that dividends should be paid only out of current earnings and only if the prospective rate of earnings retention by the holding company appears consistent with the organization’s capital needs, asset quality and overall supervisory financial condition. Regulatory guidance provides for prior consultation with Federal Reserve Bank staff concerning dividends in certain circumstances such as where the company’s net income for the past four quarters, net of capital distributions previously paid over that period, is insufficient to fully fund the dividend or the company’s overall rate or earnings retention is inconsistent with the company’s capital needs and overall financial condition. The ability of a holding company to pay dividends may be restricted if a subsidiary federal savings bank becomes undercapitalized. Federal Reserve Board guidance also states that a holding company should inform Federal Reserve Bank supervisory staff prior to redeeming or repurchasing common stock or perpetual preferred stock if the holding company is experiencing financial weaknesses or the repurchase or redemption would result in a net reduction, at the end of a quarter, in the amount of such equity instruments outstanding compared with the beginning of the quarter in which the redemption or repurchase occurred. These regulatory policies may affect the ability of CFSB Bancorp to pay dividends, repurchase shares of common stock or otherwise engage in capital distributions.

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quarter, in the amount of such equity instruments outstanding compared with the beginning of the quarter in which the redemption or repurchase occurred. These regulatory policies may affect the ability of CFSB Bancorp to pay dividends, repurchase shares of common stock or otherwise engage in capital distributions.

Waivers of Dividends by 15 Beach, MHC. CFSB Bancorp may pay dividends on its common stock to public stockholders. If it does, it is also required to pay dividends to 15 Beach, MHC, unless 15 Beach, MHC elects to waive the receipt of dividends. 15 Beach, MHC must receive the approval of the Federal Reserve Board before it may waive the receipt of any dividends from CFSB Bancorp. The Federal Reserve Board has issued an interim final rule providing that it will not object to dividend waivers under certain circumstances, including circumstances where the waiver is not detrimental to the safe and sound operation of the savings bank and a majority of the mutual holding company’s members have approved the waiver of dividends by the mutual holding company within the previous twelve months. In addition, for a “non-grandfathered” mutual holding company such as 15 Beach, MHC, each officer or director of CFSB Bancorp and the Bank, and any tax-qualified stock benefit plan or non-tax-qualified stock benefit plan in which such individual participates that holds any shares of stock to which the waiver would apply, must waive the right to receive any such dividend declared. In addition, any dividends waived by 15 Beach, MHC must be considered in determining an appropriate exchange ratio in the event of a conversion of the mutual holding company to stock form.

Change in Bank Control Act and Implementing Regulations

Under the Change in Bank Control Act and its implementing regulations, no person may acquire “control” of a savings and loan holding company, such as CFSB Bancorp, unless the Federal Reserve Board has been given 60 days’ prior written notice and has not issued a notice disapproving the proposed acquisition, taking into consideration certain factors, including the financial and managerial resources of the acquirer and the competitive effects of the acquisition. Control, as defined under the Change in Bank Control Act, means the power, directly or indirectly, to direct the management or policies of an insured depository institution or to vote 25% or more of any class of voting securities of an insured depository institution. There is a presumption of control upon the acquisition of 10% or more of a class of voting stock under certain circumstances, such as where the holding company involved has its shares registered under Section 12 of the Exchange Act.

Sarbanes-Oxley Act of 2002

The Sarbanes-Oxley Act of 2002 is intended to improve corporate responsibility, to provide for enhanced penalties for accounting and auditing improprieties at publicly traded companies and to protect investors by improving the accuracy and reliability of corporate disclosures pursuant to the securities laws. We have policies, procedures and systems designed to comply with this Act and its implementing regulations, and we review and document such policies, procedures, and systems to ensure continued compliance with this Act and its implementing regulations.

Emerging Growth Company Status

CFSB Bancorp is an emerging growth company. For as long as CFSB Bancorp continues to be an emerging growth company, it may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to “emerging growth companies,” including, but not limited to, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. As an emerging growth company, CFSB Bancorp also is not subject to Section 404(b) of the Sarbanes-Oxley Act of 2002, which would require that its independent auditors review and attest as to the effectiveness of its internal control over financial reporting. CFSB Bancorp has also elected to use the extended transition period to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. Such an election is irrevocable during the period a company is an emerging growth company. Accordingly, its financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards.

A company loses emerging growth company status on the earlier of: (1) the last day of the fiscal year of the company during which it had total annual gross revenues of $1.235 billion or more; (2) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the company pursuant to an effective registration statement under the Securities Act of 1933; (3) the date on which such company has, during the previous three-year period, issued more than $1.0 billion in non-convertible debt; or (4) the date on ~~which such company is deemed to be a “large accelerated filer” under SEC regulations (generally, at least $700 million of voting and non-voting equity held by non-affiliates).~~

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which such company is deemed to be a “large accelerated filer” under SEC regulations (generally, at least $700 million of voting and non-voting equity held by non-affiliates).

Taxation

15 Beach, MHC, CFSB Bancorp and the Bank are subject to federal and state income taxation in the same general manner as other corporations, with some exceptions discussed below. The following discussion of federal and state taxation is intended only to summarize material income tax matters and is not a comprehensive description of the tax rules applicable to 15 Beach, MHC, CFSB Bancorp and the Bank.

Our federal and state tax returns have not been audited in the past five years.

Federal Taxation

Method of Accounting. For federal income tax purposes, the Bank currently reports its income and expenses on the accrual method of accounting and uses a tax year ending June 30 for filing its federal income tax returns. CFSB Bancorp and the Bank file a consolidated federal income tax return. The Small Business Protection Act of 1996 eliminated the use of the reserve method of accounting for income taxes on bad debt reserves by savings institutions with more than $500 million in assets. For taxable years beginning after 1995, the Bank has been subject to the same bad debt reserve rules as commercial banks. It currently utilizes the experience method under Section 585(b)(2) of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”).

Net Operating Loss Carryovers. Effective with the passage of the Tax Cuts and Jobs Act, net operating loss carrybacks are no longer permitted, and net operating losses are allowed to be carried forward indefinitely. Net operating loss carryforwards arising from tax years beginning after January 1, 2018 are limited to offset a maximum of 80% of a future year’s taxable income.

Capital Loss Carryovers. Generally, a financial institution may carry back capital losses to the preceding three taxable years and forward to the succeeding five taxable years. Any capital loss carryback or carryover is treated as a short-term capital loss for the year to which it is carried. As such, it is grouped with any other capital losses for the year to which carried and is used to offset any capital gains. Any loss remaining after the five-year carryover period that has not been deducted is no longer deductible. At June 30, ~~2024~~2025, the Bank had no capital loss carryovers.

Corporate Dividends. CFSB Bancorp may generally exclude from its income 100% of dividends received from the Bank as a member of the same affiliated group of corporations.

State Taxation

Financial institutions in Massachusetts are required to file combined income tax returns. The current Massachusetts excise tax rate for financial institutions is 9.0% of federal taxable income, adjusted for certain items. Taxable income includes gross income as defined under the Internal Revenue Code, plus interest from bonds, notes and evidences of indebtedness of any state, including Massachusetts, less deductions, but not the credits, allowable under the provisions of the Internal Revenue Code, except for those deductions relating to dividends received and income or franchise taxes imposed by a state or political subdivision. Carryforwards and carrybacks of net operating losses and capital losses are not allowed.

A financial institution or business corporation is generally entitled to special tax treatment as a “security corporation” under Massachusetts law provided that: (1) its activities are limited to buying, selling, dealing in or holding securities on its own behalf and not as a broker; and (2) it has applied for, and received, classification as a “security corporation” by the Commissioner of the Massachusetts Department of Revenue. A security corporation that is also a bank holding company under the Internal Revenue Code must pay a tax equal to 0.33% of its gross income. A security corporation that is not a bank holding company under the Internal Revenue Code must pay a tax equal to 1.32% of its gross income. Beach Street Securities Corporation is qualified as a security corporation that is not a bank holding company. As such, it has received security corporation classification by the Massachusetts Department of Revenue and does not conduct any activities deemed impermissible under the governing statutes and the various regulations, directives, letter rulings and administrative pronouncements issued by the Massachusetts Department of Revenue.

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Item 1A. Risk Factors.

The material risks that management believes affect the Company are described below. You should carefully consider the risks as described below, together with all of the information included herein. The risks described below are not the only risks the Company faces. Additional risks not presently known also may have a material adverse effect on the Company’s results of operations and financial condition.

Risks Related to the Merger

CFSB Bancorp will be subject to business uncertainties and contractual restrictions while the merger is pending.

Uncertainty about the effect of the merger on employees and customers may have an adverse effect on CFSB Bancorp. These uncertainties may impair CFSB Bancorp’s ability to attract, retain and motivate key personnel until the merger is consummated, and could cause customers and others that do business with CFSB Bancorp to seek to change existing business relationships with CFSB Bancorp. In addition, the merger agreement restricts CFSB Bancorp from taking certain actions without the consent of Hometown Financial until the merger occurs. These restrictions may prevent CFSB Bancorp from pursuing attractive business opportunities that may arise prior to the completion of the merger.

CFSB Bancorp has incurred and expects to continue to incur significant costs related to the merger.

CFSB Bancorp has incurred and expects to incur significant, non-recurring costs in connection with negotiating the merger agreement and closing the merger. CFSB Bancorp will also incur significant legal and financial advisory fees relating to regulatory filings and notices, SEC filing fees, printing and mailing fees and other costs associated with the merger. Some of these costs are payable regardless of whether the merger is completed.

CFSB Bancorp may also incur additional costs to maintain employee morale and to retain key employees. There can be no assurances that the expected benefits and efficiencies related to the integration of the businesses will be realized to offset these transaction and integration costs over time.

The merger agreement limits CFSB Bancorp’s ability to pursue alternatives to the merger and could discourage a potential acquirer that might be willing to pay more to acquire or merge with CFSB Bancorp.

The merger agreement contains provisions that limit CFSB Bancorp’s ability to solicit, initiate, encourage or take any actions to facilitate competing third-party proposals to acquire all or substantially all of CFSB Bancorp. These provisions, which include a $1.6 million termination fee, payable to Hometown Financial under certain circumstances, might discourage a potential competing acquiror that might have an interest in acquiring all or substantially all of CFSB Bancorp from considering or proposing that acquisition even if it were prepared to pay consideration with a higher per share market price than that proposed in the merger, or might result in a potential competing acquiror proposing to pay a lower per share price to acquire CFSB Bancorp than it might otherwise have proposed to pay.

Regulatory approvals may not be received, may take longer to receive than expected or may impose burdensome conditions that are not presently anticipated.

Before the merger may be completed, certain approvals or consents must be obtained from the various bank regulatory and other authorities of the United States and the Commonwealth of Massachusetts. These governmental entities, including the Federal Reserve Board and the Massachusetts Division of Banks, may impose conditions on the completion of the merger or require changes to the terms of the merger. While Hometown Financial and CFSB Bancorp do not currently expect that any such conditions or changes would be imposed, there can be no assurance that they will not be, and such conditions or changes could have the effect of delaying completion of the merger or imposing additional costs on or limiting the revenues of Hometown Financial following the merger, any of which might have a material adverse effect on Hometown Financial following the merger. Hometown Financial is not obligated to complete the merger if the regulatory approvals received in connection with the completion of the merger include any conditions or restrictions that would constitute a “Burdensome Condition” as defined in the merger agreement.

Although the parties believe they have filed all applications and notice materials and have submitted or will submit all requested supplemental information necessary to obtain these regulatory approvals or confirmations in accordance with applicable law, there can be no assurance as to whether the regulatory approvals will be received or the timing of the approvals.

If the merger is not completed by March 31, 2026, either Hometown Financial or CFSB Bancorp may choose not to proceed with the merger.

Either Hometown Financial or CFSB Bancorp may terminate the merger agreement if the merger has not been completed by March 31, 2026, unless the failure of the merger to be completed has resulted from the failure of the party seeking to terminate the merger agreement to perform its obligations.

Failure to complete the merger could negatively impact the future business and financial results of CFSB Bancorp.

If the merger is not completed, the ongoing business of CFSB Bancorp may be adversely affected and CFSB Bancorp will be subject to several risks, including the following:

•

CFSB Bancorp may be required, under certain circumstances, to pay Hometown Financial a termination fee of $1.6 million under the merger agreement;

•

CFSB Bancorp will be required to pay certain costs relating to the merger, whether or not the merger is completed, such as legal and financial advisor and printing fees;

•

under the merger agreement, CFSB Bancorp is subject to certain restrictions on the conduct of its business before completion of the merger, which may adversely affect its ability to execute certain of its business strategies; and

•

matters relating to the merger may require substantial commitments of time and resources by CFSB Bancorp’s management, which could otherwise have been devoted to other opportunities that may have been beneficial to CFSB Bancorp as an independent company.

In addition, if the merger is not completed, CFSB Bancorp may experience negative reactions from its customers and employees. CFSB Bancorp also could be subject to litigation related to any failure to complete the merger. If the merger is not completed, CFSB Bancorp cannot assure its stockholders that the risks described above will not materialize and will not materially affect the business and financial results of CFSB Bancorp.

Stockholder litigation could prevent or delay the completion of the merger or otherwise negatively impact the business and operations of Hometown Financial and CFSB Bancorp.

Stockholders of CFSB Bancorp may file lawsuits against CFSB Bancorp and/or its directors and officers in connection with the merger. One of the conditions to the closing is that no order, injunction or decree issued by any court or governmental entity of competent jurisdiction or other legal restraint preventing the consummation of the merger, the bank merger or any of the other transactions contemplated by the merger agreement be in effect. If any plaintiff were successful in obtaining an injunction prohibiting the completion of the merger, the bank merger or any of the other transactions contemplated by the merger agreement, then such injunction may delay or prevent the effectiveness of the merger and could result in significant costs to CFSB Bancorp, including any cost associated with the indemnification of directors and officers of each company. CFSB Bancorp may incur costs in connection with the defense or settlement of any stockholder lawsuits filed in connection with the merger. Such litigation could have an adverse effect on the financial condition and results of operations of CFSB Bancorp and could prevent or delay the completion of the merger.

Risks Related to our Lending Activities

Almost all of our loans are secured by real estate, and a downturn in the local real estate market could negatively impact our profitability.

At June 30, ~~2024~~2025, approximately $~~170~~177.31 million, or 98.89%, of our total loan portfolio was secured by real estate, most of which is located in our primary lending market area of Norfolk and Plymouth Counties, Massachusetts. ~~Future~~Declines ~~declines~~ in the real estate values in our primary lending markets ~~because of an economic downturn~~ could significantly impair the value of the particular collateral securing our loans and our ability to sell the collateral upon foreclosure for an amount necessary to satisfy the borrower’s obligations to us. This could require increasing our allowance for credit losses to address the decrease in the value of the real estate securing our loans, which could have a material adverse effect on our business, financial condition, results of operations and growth prospects.

If our allowance for credit losses is not sufficient to cover actual loan losses, our earnings could decrease.

We make various assumptions and judgments about the collectability of our loan portfolio, including the creditworthiness of our borrowers and the value of the real estate and other assets serving as collateral for the repayment of many of our loans. In determining the amount of the allowance for credit losses, we review our loans and our and our peers' loss and delinquency experience, and we evaluate economic conditions. If our assumptions or the results of our analyses are incorrect, our allowance for credit losses may not be sufficient to cover current expected losses in our loan portfolio, resulting in additions to our allowance. In addition, our emphasis on loan growth and on increasing our portfolio of multi-family and commercial real estate loans, as well as any future credit deterioration, could require us to increase our allowance for credit losses in the future. At June 30~~, 2024, our allowance for credit losses as a percentage of total loans was 0.90%. Material additions to our allowance would materially decrease our net income.~~

~~The~~We ~~Current~~make ~~Expected~~various ~~Credit~~assumptions ~~Losses~~and ~~(“CECL")~~judgments ~~standard~~about ~~was~~the ~~effective~~collectability ~~for~~of ~~CFSB~~our ~~Bancorp~~loan onportfolio, ~~July~~including 1,the ~~2023.~~creditworthiness ~~CECL~~of ~~requires~~our ~~financial~~borrowers ~~institutions~~and tothe ~~determine~~value ~~periodic~~of ~~estimates~~the real estate and other assets serving as collateral for the repayment of ~~lifetime~~many ~~expected~~of our loans. In determining the amount of the allowance for credit losses, onwe review our loans and ~~recognize~~our and our peers' loss and delinquency experience, and we evaluate economic conditions. If our assumptions or the ~~expected~~results ~~credit~~of ~~losses~~our asanalyses ~~allowances~~are incorrect, our allowance for credit losses. ~~This~~may ~~changed~~not ~~from~~be ~~the~~sufficient ~~previous~~to ~~method~~cover ofcurrent ~~providing~~expected ~~allowances~~losses ~~for~~in our loan ~~losses~~portfolio, ~~that~~resulting ~~are~~in ~~incurred~~additions orto ~~probable~~our allowance. In addition, ~~which~~our ~~increased~~emphasis ~~the~~on ~~types~~loan ofgrowth ~~data~~and weon ~~need~~increasing toour ~~collect~~portfolio of multi-family and ~~review~~commercial real estate loans, as well as any future credit deterioration, could require us to ~~determine~~increase ~~the~~our ~~appropriate~~allowance ~~level~~for ofcredit ~~the~~losses. At June 30, 2025, our allowance for credit losses as a percentage of total loans was 0.86%. Material additions to our allowance would materially decrease our net income.

In addition, bank regulators periodically review our allowance for credit losses and, as a result of such reviews, we may be required to increase our provision for credit losses or recognize further loan charge-offs. Any increase in our allowance for credit losses or loan charge-offs as a result of such review or otherwise may have a material adverse effect on our financial condition and results of operations.

We intend to increase the origination of multi-family and commercial real estate loans. These loans involve credit risks that could adversely affect our financial condition and results of operations.

At June 30, ~~2024~~2025, commercial real estate loans totaled $1614.83 million, or 9.8.0% of our loan portfolio and multi-family real estate loans totaled $1216.14 million, or 79.01% of our loan portfolio. Given their larger balances and the complexity of the underlying collateral, multi-family and commercial real estate loans generally have more risk than the owner-occupied one- to four-family residential real estate loans that we originate. Because the repayment of multi-family and commercial real estate loans depends on the successful management and operation of the borrower’s properties or related businesses, repayment of such loans can be affected by adverse conditions in the local real estate market or economy. If we foreclose on these loans, our holding period for the collateral typically is longer than for a one- to four-family residential property because there are fewer potential purchasers of the collateral. In addition, multi-family and commercial real estate loans typically involve larger loan balances to single borrowers or groups of related borrowers compared to one- to four-family residential loans. Accordingly, charge-offs on multi-family and commercial real estate loans may be larger on a per loan basis than those incurred by our one- to four-family residential real estate or consumer loan portfolios.

commercial real estate loans may be larger on a per loan basis than those incurred by our one- to four-family residential real estate or consumer loan portfolios.

As our multi-family and commercial real estate loan portfolio increases, the corresponding risks and potential for losses from these loans may also increase, which would adversely affect our business, financial condition, and results of operations.

Our non-owner-occupied one- to four-family residential real estate loans may expose us to increased credit risk.

At June 30, ~~2024~~2025, $1815.34 million, or 10.69% of our total loan portfolio consisted of loans secured by non-owner-occupied one- to four-family residential real estate properties. At June 30, ~~2024~~2025, all of our non-owner-occupied one- to four-family residential real estate loans were performing in accordance with their repayment terms. One- to four-family residential loans secured by non-owner-occupied properties generally expose a lender to greater risk of non-payment and loss than loans secured by owner-occupied properties because repayment of such loans depend primarily on the tenant’s continuing ability to pay rent to the property owner, who is our borrower, or, if the property owner is unable to find a tenant, the property owner’s ability to repay the loan without the benefit of a rental income stream. In addition, the physical condition of non-owner-occupied properties may be below that of owner-occupied properties due to lenient property maintenance standards that negatively impact the value of the collateral properties.

Risks Related to Economic Conditions

Inflation can have an adverse impact on our business and on our customers.

Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the value of money. In response to a rise in inflation the Federal Reserve Board raised certain benchmark interest rates which remain at an elevated level. As inflation increases, the value of our investment securities, particularly those with longer maturities, would decrease, although this effect can be less pronounced for floating rate instruments. In addition, inflation increases the cost of goods and services we use in our business operations, such as electricity and other utilities, which increases our noninterest expense. Furthermore, our customers are also affected by inflation and the rising costs of goods and services used in their households and businesses, which could have a negative impact on their ability to repay their loans with us.

We have a high concentration of loans secured by real estate in our market area. Adverse economic conditions, both generally and in our market area, could adversely affect our financial condition and results of operations.

Unlike larger financial institutions that are more geographically diversified, our profitability depends primarily on the general economic conditions in our primary market area. Local economic conditions have a significant impact on our real estate and other types of lending, including the ability of borrowers to repay these loans and the value of the collateral securing these loans.

Moreover, a significant decline in general economic conditions, caused by inflation, acts of terrorism, an outbreak of hostilities or other international or domestic calamities or other factors beyond our control could further impact ~~these~~ local economic conditions and could further negatively affect our financial performance. In addition, deflationary pressures, while possibly lowering our operating costs, could have a significant negative effect on our borrowers, especially our business borrowers, and the values of underlying collateral securing loans, which could negatively affect our financial performance.

Risks Related to our Business Strategy

Our business strategy includes loan growth, and our financial condition and results of operations could be negatively affected if we fail to grow or fail to manage our growth effectively. Growing our operations could also cause our expenses to increase faster than our revenues.

Our business strategy primarily focuses on loan growth, funded by deposits. Achieving such growth may require us to attract customers that currently bank at other financial institutions in our market area. Our ability to successfully grow will depend on a variety of factors, including our ability to attract and retain experienced bankers, the continued availability of desirable business opportunities, the level of competition from other financial institutions in our market area and our ability to manage our growth. Growth opportunities may not be available, or we may not be able to manage our growth successfully. If we do not manage our growth effectively, our financial condition and operating results could be negatively affected. Furthermore, there can be considerable costs involved in opening branches and expanding lending capacity, and generally a period of time is required to generate the necessary revenues to offset these costs, especially in areas in which we do not have an established presence. Accordingly, any business expansion can be expected to negatively impact our earnings until certain economies of scale are reached. Our expenses could be further increased if we encounter delays in the opening of new branches.

be able to manage our growth successfully. If we do not manage our growth effectively, our financial condition and operating results could be negatively affected. Furthermore, there can be considerable costs involved in opening branches and expanding lending capacity, and generally a period of time is required to generate the necessary revenues to offset these costs, especially in areas in which we do not have an established presence. Accordingly, any business expansion can be expected to negatively impact our earnings until certain economies of scale are reached. Our expenses could be further increased if we encounter delays in the opening of new branches.

A significant percentage of our assets is invested in securities, which have a lower yield than our loan portfolio.

Our results of operations depend substantially on our net interest income. At June 30, ~~2024~~2025, 4746.95% of our assets were invested in investment securities and cash and cash equivalents. These investments yield less than the loans we hold in our portfolio. While we intend to invest a greater proportion of our assets in loans with the goal of increasing our net interest income, we may not be able to increase originations of loans that are acceptable to us. Further, at June 30, ~~2024~~2025, $~~147~~145.08 million, or 99.9%, of our securities portfolio was designated as held to maturity. As a result, we are unable to sell these securities to respond to changes in interest rates that may occur in the future.

We depend on our management team and other key personnel to implement our business strategy and execute successful operations and we could be harmed by the loss of their services or the inability to hire additional personnel.

We depend on the services of the members of our senior management team who direct our strategy and operations. Our executive officers and lending personnel possess substantial expertise, extensive knowledge of our markets and key business relationships. Any one of them could be difficult to replace. Our loss of these persons, or our inability to hire additional qualified personnel, could impact our ability to implement our business strategy and could have a material adverse effect on our results of operations and our ability to compete in our markets.

Risks Related to Our Securities Portfolio

Our investments in corporate and municipal debt securities obligations expose us to additional credit risks, which could adversely affect our financial condition and results of operations.

Our investment portfolio historically has consisted primarily of mortgage-backed securities insured or guaranteed by the United States or agencies thereof. We also have invested in bank-qualified municipal obligations and corporate bonds that are not backed by the federal government and expose us to a greater credit risk than U.S. agency securities. Any decline in the credit quality of these securities exposes us to the risk that the market value of the securities could decrease that may require us to write down their value and could lead to a possible default in payment.

agency securities. Any decline in the credit quality of these securities exposes us to the risk that the market value of the securities could decrease that may require us to write down their value and could lead to a possible default in payment.

Changes in the valuation of our securities portfolio may reduce our profits and our capital levels.

Our securities portfolio may be affected by fluctuations in market value, potentially reducing accumulated other comprehensive income or earnings. Fluctuations in market value may be caused by changes in market interest rates, lower market prices for securities and limited investor demand. In analyzing a debt issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, industry analysts’ reports and spread differentials between the effective rates on instruments in the portfolio compared to risk-free rates. If this evaluation shows impairment to the actual or projected cash flows associated with one or more securities, we may take a charge to earnings to reflect such impairment. Changes in interest rates may also have an adverse effect on our financial condition, as our available-for-sale securities are reported at their estimated fair value, and therefore are affected by fluctuations in interest rates. We increase or decrease our stockholders’ equity by the amount of change in the estimated fair value of the available-for-sale securities, net of taxes. Declines in market value may result in other-than-temporary impairments of these assets, which may lead to accounting charges that could have a material adverse effect on our net income and stockholders’ equity.

Risks Related to Market Interest Rates

Future changes in interest rates could negatively affect our operating results and asset values.

Net income is the amount by which net interest income and non-interest income exceed non-interest expense and the provision for credit losses. Net interest income makes up a majority of our income and is based on the difference between:

•

the interest income we earn on interest-earning assets, such as loans and securities; and

•

the interest expense we pay on interest-bearing liabilities, such as deposits and borrowings.

The rates we earn on our assets and the rates we pay on our liabilities are generally fixed for a contractual period of time. Like many savings institutions, our liabilities generally have shorter contractual maturities than our assets. This is exacerbated due to our historical focus on one- to four-family residential real estate loans, ~~the~~almost ~~substantial~~all ~~majority~~ of which have fixed interest rates. This imbalance can create significant earnings volatility because market interest rates change over time. In a period of rising interest rates, the interest income we earn on our assets may not increase as rapidly as the interest we pay on our liabilities. Furthermore, increases in interest rates may adversely affect our ability to originate loans and/or the ability of our borrowers to make loan repayments on adjustable-rate loans, as the interest owed on such loans would increase as interest rates increase. In a period of declining interest rates, the interest income we earn on our assets may decrease more rapidly than the interest we pay on our liabilities, as borrowers prepay mortgage loans, and mortgage-backed securities and callable securities are called, requiring us to reinvest those cash flows at lower interest rates.

In addition, changes in interest rates can affect the average life of loans and mortgage-backed and related securities. A decline in interest rates generally results in increased prepayments of loans and mortgage-backed and related securities as borrowers refinance their debt to reduce their borrowing costs. This creates reinvestment risk, which is the risk that we may not be able to reinvest prepayments at rates that are comparable to the rates we earned on the prepaid loans or securities. Furthermore, an inverted interest rate yield curve, where short-term interest rates (which are usually the rates at which financial institutions borrow funds) are higher than long-term interest rates (which are usually the rates at which financial institutions lend funds for fixed-rate loans) can reduce a financial institution’s net interest margin and create financial risk for financial institutions that originate longer-term, fixed-rate mortgage loans.

Any substantial, unexpected, prolonged change in market interest rates could have a material adverse effect on our financial condition, liquidity, and results of operations. Changes in the level of interest rates also may negatively affect the value of our assets and ultimately affect our earnings.

We monitor interest rate risk through the use of simulation models, including estimates of the amounts by which the fair value of our assets and liabilities (our economic value of equity or “EVE”) and our net interest income would change in the event of a range of assumed changes in market interest rates. As of June 30, ~~2024~~2025, in the event of an instantaneous 100 basis point increase in interest rates, we estimate that we would experience a 9.8% decrease in EVE and a 3.7% decrease in net interest income. For further discussion of how changes in interest rates could impact us, see Item 7 - “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Colonial Federal Savings Bank—Management of Market Risk.”

instantaneous 100 basis point increase in interest rates, we estimate that we would experience a 10.3% decrease in EVE and a 7.1% decrease in net interest income. For further discussion of how changes in interest rates could impact us, see Item 7 - “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Colonial Federal Savings Bank—Management of Market Risk.”

Risks Related to Our Funding

Our inability to generate core deposits may cause us to rely more heavily on wholesale funding strategies for funding and liquidity needs, which could have an adverse effect on our net interest margin and profitability.

We must maintain sufficient funds to respond to the needs of depositors and borrowers. Deposits have traditionally been our primary source of funds for use in lending and investment activities. We also receive funds from loan repayments, investment maturities and income on other interest-earning assets. Certificates of deposit comprised $~~132~~140.34 million, or 4851.92%, of our total deposits at June 30, ~~2024~~2025. Certificates of deposit due within one year of June 30, ~~2024~~2025 totaled $~~121~~135.60 million, or 4449.92%, of total deposits. While we emphasize generating transaction accounts, we cannot guarantee if and when this will occur. Further, the considerable competition for deposits in our market area also has made, and may continue to make, it difficult for us to obtain reasonably priced deposits. Moreover, deposit balances can decrease if customers perceive alternative investments as providing a better risk/return tradeoff. If we are not able to increase our lower-cost transactional deposits at a level necessary to fund our asset growth or deposit outflows, we may be forced to seek other sources of funds, including other certificates of deposit, Federal Home Loan Bank advances, brokered deposits and lines of credit to meet the borrowing and deposit withdrawal requirements of our customers, which may be more expensive and have an adverse effect on our net interest margin and profitability.

are not able to increase our lower-cost transactional deposits at a level necessary to fund our asset growth or deposit outflows, we may be forced to seek other sources of funds, including other certificates of deposit, Federal Home Loan Bank advances, brokered deposits and lines of credit to meet the borrowing and deposit withdrawal requirements of our customers, which may be more expensive and have an adverse effect on our net interest margin and profitability.

Risks Related to Competitive Matters

Strong competition within our market areas may limit our growth and profitability.

Competition in the banking and financial services industry is intense. In our market area, we compete with commercial banks, savings institutions, mortgage brokerage firms, credit unions, finance companies, mutual funds, insurance companies, and securities brokerage firms and unregulated or less regulated non-banking entities, operating locally and elsewhere. Many of these competitors have substantially greater resources and higher lending limits than we have and offer certain services that we do not or cannot provide. If we have to raise interest rates paid on deposits or lower interest rates charged on our loans to remain competitive, our net interest margin and profitability could be adversely affected. In addition, some of our competitors offer loans with lower interest rates or more attractive terms than loans we offer. Competition also makes it increasingly difficult and costly to attract and retain qualified employees. Our profitability depends upon our continued ability to successfully compete in our market area.

The financial services industry could become even more competitive as a result of new legislative, regulatory, and technological changes and continued consolidation. Banks, securities firms, and insurance companies can merge under the umbrella of a financial holding company, which can offer virtually any type of financial service, including banking, securities underwriting, insurance (both agency and underwriting) and merchant banking. Also, technology has lowered barriers to entry and made it possible for non-banks, such as financial technology companies, securities companies, and specialty finance companies to offer products and services traditionally provided by banks, such as automatic transfer and automatic payment systems. Many of our competitors have fewer regulatory constraints and may have lower cost structures. Additionally, due to their size, many competitors may be able to achieve economies of scale and, as a result, may offer a broader range of products and services as well as better pricing for those products and services than we can. For additional information see “Item 1 - "Business of Colonial Federal Savings Bank—Market Area” and “—Competition.”

Our asset size may make it more difficult for us to compete.

Our asset size may make it more difficult to compete with other financial institutions that are larger and can more easily afford to invest in the marketing and technologies needed to attract and retain customers. Because our principal source of income is the net interest income we earn on our loans and investments after deducting interest paid on deposits and other sources of funds, our ability to generate the revenues needed to cover our expenses and finance such investments is limited by the size of our loan and investment portfolios. Accordingly, we are not always able to offer new products and services as quickly as our competitors. Our lower earnings may also make it more difficult to offer competitive salaries and benefits. In addition, our smaller customer base may make it difficult to generate meaningful non-interest income from non-traditional banking activities. Finally, as a smaller institution, we ~~are disproportionately affected by the continually increasing costs of compliance with new banking and other regulations.~~

are disproportionately affected by the continually increasing costs of compliance with new banking and other regulations.

Risks Related to Laws and Regulations

Changes in laws and regulations and the cost of regulatory compliance with new laws and regulations may adversely affect our operations and/or increase our costs of operations.

The Bank is subject to extensive regulation, supervision, and examination by the OCC, and CFSB Bancorp is subject to extensive regulation, supervision, and examination by the Federal Reserve Board. Such regulation and supervision governs the activities in which an institution and its holding company may engage and are intended primarily for the protection of the federal deposit insurance fund and our depositors and borrowers, rather than for our stockholders.

Regulatory authorities have extensive discretion in their supervisory and enforcement activities, including the imposition of restrictions on our operations, the classification of our assets and determination of the level of our allowance for credit losses. These regulations, along with existing tax, accounting, securities, insurance and monetary laws, rules, standards, policies, and interpretations, control the methods by which financial institutions conduct business, implement strategic initiatives, and tax compliance, and govern financial reporting and disclosures. Any change in such regulation and oversight, whether in the form of regulatory policy, regulations, legislation, executive order or supervisory action, may have a material impact on our operations. Further, changes in accounting standards can be both difficult to predict and involve judgment and discretion in their interpretation by us and our independent accounting firm. These changes could materially impact, potentially even retroactively, how we report our financial condition and results of operations.

laws, rules, standards, policies, and interpretations, control the methods by which financial institutions conduct business, implement strategic initiatives, and tax compliance, and govern financial reporting and disclosures. Any change in such regulation and oversight, whether in the form of regulatory policy, regulations, legislation, or supervisory action, may have a material impact on our operations. Further, changes in accounting standards can be both difficult to predict and involve judgment and discretion in their interpretation by us and our independent accounting firm. These changes could materially impact, potentially even retroactively, how we report our financial condition and results of operations.

Non-compliance with the USA PATRIOT Act, Bank Secrecy Act, or other laws and regulations could result in fines or sanctions.

The USA PATRIOT and Bank Secrecy Acts require financial institutions to develop programs to prevent financial institutions from being used for money laundering and terrorist activities. If such activities are detected, financial institutions are obligated to file suspicious activity reports with the U.S. Treasury’s Office of Financial Crimes Enforcement Network. These rules require financial institutions to establish procedures for identifying and verifying the identity of customers seeking to open new financial accounts. Failure to comply with these regulations could result in fines or sanctions, including restrictions on pursuing acquisitions or establishing new branches. The policies and procedures we have adopted that are designed to assist in compliance with these laws and regulations may not be effective in preventing violations of these laws and regulations.

The Federal Reserve Board may require us to commit capital resources to support the Bank, and we may not have sufficient access to such capital resources.

Federal law requires that a holding company act as a source of financial and managerial strength to its subsidiary bank and to commit resources to support such subsidiary bank. Under the “source of strength” doctrine, the Federal Reserve Board may require a holding company to make capital injections into a troubled subsidiary bank and may charge the holding company with engaging in unsafe and unsound practices for failure to commit resources to a subsidiary bank. A capital injection may be required at times when the holding company may not have the resources to provide it and therefore may be required to attempt to borrow the funds or raise capital. Any loans by a holding company to its subsidiary bank are subordinate in right of payment to deposits and to certain other indebtedness of such subsidiary bank. It is possible that we will be unable to borrow funds when we need to do so.

Changes to trade policies and tariffs can have an adverse impact on our business and our customers.

Changes in trade policies, including the imposition of tariffs or the escalation of a trade war, could negatively impact the economic conditions in the markets we serve. Our customers—particularly local businesses engaged in manufacturing and retail—may face higher costs for imported goods and materials, reduced export demand and supply chain disruptions due to increased tariffs. These challenges could lead to lower revenues, reduced profitability and potential layoffs, all of which may impair our customers’ ability to meet their financial obligations. Furthermore, prolonged trade tensions and economic uncertainty could lead to market volatility, declining asset values and weakened consumer confidence. If our customers experience financial stress, we could see loan delinquencies and credit losses, negatively affecting our asset quality and overall financial performance. Additionally, any decline in

local economic activity could reduce loan demand and deposit growth, which are critical to our long-term success. While we actively monitor economic and policy developments, we cannot predict the outcome of trade negotiations or the full impact of tariffs and trade restrictions on our business, customers, and the broader economy. Any adverse effects from tariffs or a trade war could materially and negatively impact our financial condition, results of operations, and future growth prospects.

Monetary policies and regulations of the Federal Reserve Board could adversely affect our business, financial condition, and results of operations.

In addition to being affected by general economic conditions, our earnings and growth are affected by the policies of the Federal Reserve Board. An important function of the Federal Reserve Board is to regulate the money supply and credit conditions. Among the instruments used by the Federal Reserve Board to implement these objectives are open market purchases and sales of U.S. government securities, adjustments of the discount rate and changes in banks’ reserve requirements against bank deposits. These instruments are used in varying combinations to influence inflation, overall economic growth and the distribution of credit, bank loans, investments, and deposits. Their use also affects market interest rates, which impacts the rates we charge on loans or pay on deposits.

The monetary policies and regulations of the Federal Reserve Board have had a significant effect on the operating results of financial institutions in the past and are expected to continue to do so in the future. The effects of such policies upon our business, financial condition and results of operations cannot be predicted.

We are an emerging growth company, and any decision on our part to comply only with certain reduced reporting and disclosure requirements applicable to emerging growth companies could make our common stock less attractive to investors.

We are an emerging growth company, and, for as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to “emerging growth companies,” including, but not limited to, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. As an emerging growth company, we also will not be subject to Section 404(b) of the Sarbanes-Oxley Act, which would require that our independent auditors review and attest as to the effectiveness of our internal controls over financial reporting. We have also elected to use the extended transition period to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. Accordingly, our financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards.

of our internal control over financial reporting. We have also elected to use the extended transition period to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. Accordingly, our financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards.

We can remain an “emerging growth company” for up to five years, or until the earliest of (1) the last day of the first fiscal year in which our annual gross revenues exceed $1.235 billion, (2) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (3) the date on which we have issued more than $1.0 billion in non-convertible debt during the preceding three-year period.

As a result, our stockholders may not have access to certain information they may deem important, and investors may find our common stock less attractive if we choose to rely on these exemptions. This could result in a less active trading market for our common stock and the price of our common stock may be more volatile.

We qualify as a smaller reporting company, and any decision on our part to comply only with certain reduced reporting and disclosure requirements applicable to smaller reporting companies could make our common stock less attractive to investors.

We are a smaller reporting company, and, for as long as we continue to qualify as a smaller reporting company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to smaller reporting companies, including, but not limited to, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and two years of audited financial statements in our annual report instead of three years. As long as we are not an accelerated filer, we will not be subject to Section 404(b) of the Sarbanes-Oxley Act, which requires that our independent registered public accountants review and attest as to the effectiveness of our internal control over financial reporting. In addition, as a non-accelerated filer, we will have longer deadlines to file our periodic reports with the Securities and Exchange Commission.

We would remain a smaller reporting company and a non-accelerated filer for so long as our voting and non-voting equity held by non-affiliates (“public float”) is less than $250 million or our annual revenues are less than $100 million and our public float is less than $700 million. Public float is determined each year as of the end of a company’s previous second fiscal quarter.

As a result of our smaller reporting company and non-accelerated filer status, our stockholders may not have access to certain information they may deem important, and investors may find our common stock less attractive if we choose to rely on these exemptions. This could result in a less active trading market for our common stock and the price of our common stock may be more volatile.

Risks Related to Operational Matters

We face significant operational risks because of our reliance on technology. Our information technology systems may be subject to failure, interruption, or security breaches.

Information technology systems are critical to our business. Our business requires us to collect, process, transmit and store significant amounts of confidential information regarding our customers, employees, ~~and our~~ business, operations, plans, and business strategies. We use various technology systems to manage our customer relationships, general ledger, securities investments, deposits, and loans. Our computer systems, data management and internal processes, as well as those of third parties, are integral to our performance. Our operational risks include the risk of malfeasance by employees or persons outside our company, errors relating to transaction processing and technology, systems failures or interruptions, breaches of our internal control systems and compliance requirements, and business continuation and disaster recovery. There have been increasing efforts by third parties to breach data security at financial institutions. Such attacks include computer viruses, malicious or destructive code, phishing attacks, denial of service or information or other security breaches that could result in the unauthorized release, gathering, monitoring, misuse, loss or destruction of confidential, proprietary and other information, damages to systems, or other material disruptions to network access or business operations. Although we take protective measures and believe that we have not experienced any of the data breaches described above, the security of our computer systems, software, and networks may be vulnerable to breaches, unauthorized access, misuse, computer viruses, or other malicious code and cyber-attacks that could have an impact on information security. Because the techniques used to cause security breaches change frequently, we may be unable to proactively address these techniques or to implement adequate preventative measures.

used to cause security breaches change frequently, we may be unable to proactively address these techniques or to implement adequate preventative measures.

In the event of a breakdown in our internal control systems, improper operation of systems or improper employee actions, or a breach of our security systems, including if confidential or proprietary information were to be mishandled, misused or lost, we could suffer financial loss, loss of customers and damage to our reputation, and face regulatory action or civil litigation. Any of these events could have a material adverse effect on our financial condition and results of operations. Insurance coverage may not be available for such losses, or where available, such losses may exceed insurance limits.

We rely on third-party vendors, which could expose us to additional cybersecurity risks.

Third-party vendors provide key components of our business infrastructure, including certain data processing and information services. Accordingly, our operations are exposed to risk that these vendors will not perform in accordance with our contractual agreements with them, or we also could be adversely affected if such an agreement is not renewed by the third-party vendor or is renewed on terms less favorable to us. If our third-party providers encounter difficulties, or if we have difficulty communicating with those service providers, our ability to adequately process and account for transactions could be affected, and our business operations could be adversely affected, which could have a material adverse effect on our financial condition and results of operations. Threats to information security also exist in the processing of customer information through various other vendors and their personnel.

We may be subject to risks and losses resulting from fraudulent activities that could adversely impact our financial performance and results of operations.

As a bank, we are susceptible to fraudulent activity that may be committed against us or our customers, which may result in financial losses or increased costs to us or our customers, disclosure or misuse of our information or our customer information, misappropriation of assets, privacy breaches against our customers, litigation or damage to our reputation. We are most susceptible to fraud and compliance risk in connection with the origination of loans, automated clearing house transactions, wire transactions, automated teller machine transactions, checking transactions, debit cards that we have issued to our customers and through our online banking portals.

automated clearing house transactions, wire transactions, automated teller machine transactions, checking transactions, debit cards that we have issued to our customers and through our online banking portals.

We maintain a system of internal controls and insurance coverage to mitigate against such risks, including data processing system failures and errors, and customer fraud. If our internal controls fail to prevent or detect any such occurrence, or if any resulting loss is not insured or exceeds applicable insurance limits, it could have a material adverse effect on our business, financial condition, and results of operations.

The cost of additional finance and accounting systems, procedures, and controls to satisfy our public company reporting requirements will increase our expenses.

The obligations of being a public company, including the substantial public reporting obligations, require significant expenditures and place additional demands on our management team. We have made, and may continue to make, changes to our internal controls and procedures for financial reporting and accounting systems to meet our reporting obligations as a public company. However, the measures we take may not be sufficient to satisfy our obligations as a public company. Section 404 of the Sarbanes-Oxley Act of 2002 requires annual management assessments of the effectiveness of our internal control over financial reporting. Any failure to achieve and maintain an effective internal control environment could have a material adverse effect on our business and stock price.

Risks Related to Accounting Matters

Changes in accounting standards could affect reported earnings.

The bodies responsible for establishing accounting standards, including the Financial Accounting Standards Board, the SEC and other regulatory bodies, periodically change the financial accounting and reporting guidance that govern the preparation of our financial statements. These changes can be hard to predict and can materially impact how we record and report our financial condition and results of operations. In some cases, we could be required to apply new or revised guidance retroactively.

If management’s estimates and assumptions are incorrect, it may have a material impact on our consolidated financial statements and our financial condition or operating results.

In preparing the periodic reports we are required to file under the Exchange Act, including our consolidated financial statements, our management is required under applicable rules and regulations to make estimates and assumptions as of a specified date. These estimates and assumptions are based on management’s best estimates and experience as of that date and are subject to substantial risk and uncertainty. Materially different results may occur as circumstances change and additional information becomes known. The most significant areas requiring significant estimates and assumptions by management ~~include~~is our evaluation of the adequacy of our allowance for credit losses.

Other Risks Related to Our Business

Legal and regulatory proceedings and related matters could adversely affect us.

We have been and may in the future become involved in legal and regulatory proceedings. We consider most of the proceedings to be in the normal course of our business or typical for the industry;. ~~however~~However, it is ~~inherently~~ difficult to assess the outcome of these matters, and we may not prevail in any proceedings or litigation. There could be substantial costs and management diversion in such litigation and proceedings, and any adverse determination could have a materially adverse effect on our business, brand or image, or our financial condition and results of our operations.

Societal responses to climate change could adversely affect our business and performance, including indirectly through impacts on our customers.

Concerns over the long-term effects of climate change have led and will continue to lead to governmental efforts around the world to mitigate those impacts. Consumers and businesses also may voluntarily change their behavior as a result of these concerns. We and our customers will need to respond to new laws and regulations as well as consumer and business preferences resulting from climate change concerns. We and our customers may face cost increases, asset value reductions and operating process changes. The impact on our customers will likely vary depending on their specific attributes, including reliance on or role in carbon intensive activities. Among the impacts to us could be a drop in demand for our products and services, particularly in certain sectors. In addition, we could face reductions in creditworthiness on the part of some customers or in the value of assets securing loans. Our efforts to take these risks into account in making lending and other decisions, including by increasing our business with climate-friendly companies, may not be effective in protecting us from the negative impact of new laws and regulations or changes in consumer or business behavior.

to take these risks into account in making lending and other decisions, including by increasing our business with climate-friendly companies, may not be effective in protecting us from the negative impact of new laws and regulations or changes in consumer or business behavior.

We are a community bank and our ability to maintain our reputation is critical to the success of our business, and failure to do so may materially adversely affect our performance.

We are a community bank, and our reputation is one of the most valuable components of our business. A key component of our business strategy is to rely on our reputation for customer service and knowledge of local markets to expand our presence by capturing new business opportunities from existing and prospective customers in our market area and contiguous areas. As such, we strive to conduct our business in a manner that enhances our reputation. This is done, in part, by recruiting, hiring, and retaining employees or by retaining, appointing, or electing directors who share our core values of being an integral part of the communities we serve, delivering superior service to our customers and caring about our customers and employees. If our reputation is negatively affected by the actions of our employees or directors, by our inability to conduct our operations in a manner that is appealing to current or prospective customers, or otherwise, our business and, therefore, our operating results may be materially adversely affected.

Risks Related to the Ownership of Stock

Our public stockholders own a minority of CFSB Bancorp’s common stock and cannot exercise voting control over most matters put to a vote of stockholders.

Public stockholders own a minority of the outstanding shares of CFSB Bancorp’s common stock. As a result, stockholders other than 15 Beach, MHC cannot exercise voting control over most matters put to a vote of stockholders. 15 Beach, MHC owns a majority of CFSB Bancorp’s common stock and, through its board of directors, can exercise voting control over most matters put to a vote of stockholders. The same directors and officers who manage the Bank also manage CFSB Bancorp and 15 Beach, MHC. The board of directors and officers of 15 Beach, MHC must ensure that the interests of depositors of the Bank (as members of 15 Beach, MHC) are represented and considered in matters put to a vote of stockholders of CFSB Bancorp. Therefore, 15 Beach, MHC may take action that the public stockholders believe to be contrary to their interests. For example, 15 Beach, MHC may exercise its voting control to defeat a stockholder nominee for election to the board of directors of CFSB Bancorp.

In addition, stockholders will not be able to force a merger or second-step conversion transaction without the consent of 15 Beach, MHC since such transactions also require the approval of a majority of all of the outstanding voting stock of CFSB Bancorp, which can only be achieved if 15 Beach, MHC votes to approve such transactions. Some stockholders may desire a sale or merger transaction, since stockholders typically receive a premium for their shares, or a second-step conversion transaction, since, on a fully-converted basis, most full stock institutions tend to trade at higher multiples than mutual holding companies.

Our common stock is not heavily traded, and the stock price may fluctuate significantly.

Our common stock is traded on The Nasdaq Stock Market. Certain brokers currently make a market in the common stock, but such transactions are infrequent and the volume of shares traded is relatively small. Management cannot predict whether these or other brokers will continue to make a market in our common stock. Prices on stock that is not heavily traded can be more volatile than heavily traded stock. Factors such as our financial results, the introduction of new products and services by us or our competitors, publicity regarding the banking industry, and various other factors affecting the banking industry may have a significant impact on the market price of the shares of the common stock. Management also cannot predict the extent to which an active public market for our common stock will develop or be sustained in the future. Accordingly, stockholders may not be able to sell their shares of our common stock at the volumes, prices, or times that they desire.

Federal Reserve Board regulations and policy effectively prohibit 15 Beach, MHC from waiving the receipt of dividends, which will likely preclude us from paying any dividends on our common stock.

CFSB Bancorp’s board of directors have the authority to declare dividends on our common stock subject to statutory and regulatory requirements. We currently intend to retain all our future earnings for use in our business and do not expect to pay any cash dividends on our common stock in the foreseeable future. Any future determination to pay cash dividends will be made by our board of directors and will depend upon our financial condition, results of ~~operations, capital requirements, restrictions under Federal Reserve Board regulations and policy, our business strategy, and other factors that our board of directors deems relevant.~~

operations, capital requirements, restrictions under Federal Reserve Board regulations and policy, our business strategy, and other factors that our board of directors deems relevant.

Under Federal Reserve Board regulations and policy, if CFSB Bancorp pays dividends to its public stockholders, it also would be required to pay dividends to 15 Beach, MHC, unless 15 Beach, MHC waives the receipt of such dividends. Federal Reserve Board regulations implemented after the enactment of the Dodd–Frank Wall Street Reform and Consumer Protection Act effectively prohibit federally-chartered mutual holding companies from waiving dividends declared by their subsidiaries. See “Supervision and Regulation—Holding Company Regulation—Waivers of Dividends by 15 Beach, MHC” for a further discussion of the applicable requirements related to the potential waiver of dividends by a mutual holding company. Unless Federal Reserve Board regulations and policy change by allowing 15 Beach, MHC to waive the receipt of dividends declared by CFSB Bancorp without diluting minority stockholders, it is unlikely that CFSB Bancorp will pay any dividends.

Various factors may make takeover attempts more difficult to achieve.

Stock banks or their holding companies, as well as individuals, may not acquire control of a mutual holding company, such as CFSB Bancorp. As a result, the only persons that may acquire control of a mutual holding company are other mutual savings institutions or mutual holding companies. Accordingly, it is very unlikely that CFSB Bancorp would be subject to any takeover attempt by activist stockholders or other financial institutions. There also are provisions in our charter and bylaws that may be used to delay or block a takeover attempt, including a provision that prohibits any person, other than 15 Beach, MHC, from voting more than 10% of the shares of common stock outstanding. In addition, federal banking laws, including regulatory approval requirements, could make it more difficult for a third party to acquire control of CFSB Bancorp without our board of directors’ prior approval.

39Under federal law, subject to certain exemptions, a person, entity, or group must notify the Federal Reserve Board before acquiring control of a savings and loan holding company. Acquisition of 10% or more of any class of voting stock of a savings and loan holding company creates a rebuttable presumption that the acquirer “controls” the savings and loan holding company. Also, a savings and loan holding company must obtain the prior approval of the Federal Reserve Board before, among other things, acquiring direct or indirect ownership or control of more than 5% of any class of voting shares of any financial institution holding company or bank, including the Bank.

would be subject to any takeover attempt by activist stockholders or other financial institutions. There also are provisions in our charter and bylaws that may be used to delay or block a takeover attempt, including a provision that prohibits any person, other than 15 Beach, MHC, from voting more than 10% of the shares of common stock outstanding. In addition, federal banking laws, including regulatory approval requirements, could make it more difficult for a third party to acquire control of CFSB Bancorp without our board of directors’ prior approval.

Under Federal Reserve Board regulations, for a period of three years following completion of the stock offering, no person may directly or indirectly acquire or offer to acquire beneficial ownership of more than 10% of our common stock without prior approval of the Federal Reserve Board. In addition, under federal law, subject to certain exemptions, a person, entity, or group must notify the Federal Reserve Board before acquiring control of a savings and loan holding company. Acquisition of 10% or more of any class of voting stock of a savings and loan holding company creates a rebuttable presumption that the acquirer “controls” the savings and loan holding company. Also, a savings and loan holding company must obtain the prior approval of the Federal Reserve Board before, among other things, acquiring direct or indirect ownership or control of more than 5% of any class of voting shares of any financial institution holding company or bank, including the Bank.

In addition, a section in CFSB Bancorp’s charter provides that for a period of five years from the closing of the offering, no person, other than 15 Beach, MHC, may directly or indirectly offer to acquire or acquire the beneficial ownership of more than 10% of any class of equity security of CFSB Bancorp, held by persons other than 15 Beach, MHC, and that any shares acquired in excess of this limit will not be entitled to be voted and will not be counted as voting stock in connection with any matters submitted to the stockholders for a vote.

Taken as a whole, these statutory provisions and provisions in our charter and bylaws make it very difficult for any potential acquiror from acquiring control of CFSB Bancorp without the approval of our board of directors, which could adversely affect the market price of our common stock.

Item 1B. Unresolved Staff Comments.

None.

Item 1C. Cybersecurity Risk, Management, Strategy and Governance.

Cybersecurity is a significant and integrated component of CFSB Bancorp’s risk management strategy, designed to protect the confidentiality, integrity, and availability of sensitive information contained within the Company’s information services. As a financial services company, cyber threats are present and growing, and the potential exists for a cybersecurity incident to disrupt business operations, compromise sensitive data or both. To date, we have not, to our knowledge, experienced a cybersecurity incident materially affecting or reasonably likely to materially affect the Company.

To prepare and respond to incidents, the Company has implemented a multi-layered “defense-in-depth” cybersecurity strategy, integrating people, technology, and processes. This includes employee training, the use of innovative technologies, and the implementation of policies and procedures in the areas of Information Security, Data Governance, Business Continuity and Disaster Recovery, Privacy, Third-Party Risk Management, and Incident Response. Core activities supporting our strategy include cybersecurity training, technology optimization, threat intelligence, vulnerability and patch management and the testing of incident response, business continuity and disaster recovery capabilities. The Company engages third-party consultants and independent auditors to, among other things, conduct penetration tests and audits of the areas noted above, including cybersecurity-related vendors.

The Board of Directors designated the Vice President Information Systems as the Information Security Office (the "ISO") and for oversight, the full Board receives threat intelligence reports and a Cybersecurity Executive Dashboard from the ISO each month. The ISO has more than thirty years’ experience with the Company and meets with the full Board of Directors in person at least annually. The ISO works with the Company’s third-party Security Operations Center and the Company’s Compliance/Enterprise Risk Management ("ERM") Team to identify, assess, and manage material risks from cybersecurity threats. The ISO also oversees the Company’s Information Security Program, which governs various information security and cybersecurity processes, systems development, change control, disaster recovery/business continuity, physical asset classification and control policies. The Information Security Program identifies data sources, threats, and vulnerabilities and ensures awareness, accountability, and

~~oversight~~intelligence, ~~for~~vulnerability ~~data protection throughout the Company~~ and ~~with~~patch ~~trusted~~management ~~third parties to ensure that data is protected~~ and ~~able to be recovered in~~ the ~~event~~testing of aincident ~~breach~~response, orbusiness ~~failure~~continuity ~~(technical~~and ordisaster ~~other~~recovery ~~disaster)~~capabilities. The ~~ISO~~Company isengages athird-party ~~member~~consultants ofand ~~various~~independent ~~management~~auditors ~~committees~~to, ~~including~~among ~~the~~other ~~quarterly~~things, ~~Management~~conduct ~~Control~~penetration ~~meetings~~tests ~~which~~and ~~serve~~audits asof the ~~Company’s~~areas ITnoted ~~Steering~~above, ~~Committee~~including cybersecurity-related vendors.

The Board of Directors designated the Chief Information Officer as the Information Security Officer (the "ISO") and for oversight, the full Board receives threat intelligence reports and a Cybersecurity Executive Dashboard from the ISO each month. The ISO has more than thirty years’ experience with the Company and meets with full Board of Directors in person at least annually. The ISO works with the Company’s third-party Security Operations Center and the Company’s Compliance/Enterprise Risk Management ("ERM") Team to identify, assess, and manage material risks from cybersecurity threats. The ISO also oversees the Company’s Information Security Program, which governs various information security and cybersecurity processes, systems development, change control, disaster recovery/business continuity, physical asset classification and control policies. The Information Security Program identifies data sources, threats, and vulnerabilities and ensures awareness, accountability, and oversight for data protection throughout the Company and with trusted third parties to ensure that data is protected and able to be recovered in the event of a breach or failure (technical or other disaster). The ISO is a member of various management committees, including the quarterly Management Control meetings which serve as the Company’s IT Steering Committee.

Risk Assessment

On a periodic basis, but not less than annually, the ISO in conjunction with the Compliance/ERM Team, identifies and documents internal and external vulnerabilities that could result in unauthorized disclosure, misuse, alteration, or destruction of customer information or customer records. Based on the results of the risk assessment, the Company’s Information Security Program may be revised to protect against any anticipated threats or hazards to the security or integrity of such information. The Compliance/ERM Team reviews changes to the program designed to monitor, measure, and respond to vulnerabilities identified.

Response to Security Vulnerabilities

In response to identified risks, management may take certain steps to correct and respond to security vulnerabilities, which may include:

•

Eliminating unwarranted risks by applying vendor-provided software fixes, commonly called patches.

•

Ensuring that changes to security configurations are documented, approved, and tested.

•

Ensuring that exploitable files and services are assessed and removed or disabled based upon known vulnerabilities and business needs.

•

Updating vulnerability scanning and intrusion detection tools to identify known vulnerabilities and related unauthorized activities.

•

Conducting subsequent penetration testing and vulnerability assessments, as warranted.

•

Reviewing performance with service providers to ensure security maintenance and reporting responsibilities are operating according to contract provisions and that service providers provide notification of system security breaches that may affect the Company.

Employees and Training

Employees are an integral part in the line of defense against cybersecurity risks. Every employee is responsible for protecting Company and client information. Accordingly, employees complete formal training including regular simulated phishing assessments designed to sharpen threat detection and reporting capabilities. Our employees are supported with solutions designed to identify, prevent, detect, respond to, and recover from incidents. Notable technologies include firewalls, intrusion detection systems, managed endpoint security automation and response capabilities, user behavior analytics, multi-factor authentication when available, encrypted data backups, and business continuity applications. Notable services include 24/7 security monitoring and response, real-time vulnerability scanning, third-party monitoring, and threat intelligence.

Service Providers

The Company relies on third-party vendor services and solutions to support its operations. Many of these vendors have access to sensitive and proprietary information. Third-party vendors continue to be a notable source of operational and informational risk. Accordingly, the Company has implemented an Outsourcing Management Policy which includes a detailed onboarding process and periodic reviews of vendors with access to sensitive Company data. The Outsourcing Management program is audited as part of the Company’s external audit program.

Board Reporting

At least annually, the ISO reports to the Board the overall status of the Information Security Program and the Company’s compliance with the Interagency Guidelines for Safeguarding Customer Information. Any material findings related to the risk assessment, risk management and control decisions, service provider arrangements, results of testing, security breaches or violations are discussed as are management’s responses and any recommendations for program changes.

of testing, security breaches or violations are discussed as are management’s responses and any recommendations for program changes.

Program Adjustments

The ISO monitors, evaluates, and adjusts the Information Security Program considering any relevant changes in technology, the sensitivity of its customer information, internal or external threats to information, and changing business arrangements, such as mergers and acquisitions, alliances and joint ventures, outsourcing arrangements, and changes to customer information systems.

Incident Response Plan

The Company has implemented an Incident Response Plan (the "IRP") to provide a structured and systematic incident response process for information security incidents that affect any of the information technology systems, network, or data. The Company's business continuity and disaster recovery programs provide a coordinated response when responding to incidents. The IRP is implemented and maintained by the ISO and is subject to annual review and approval by the Board. Cybersecurity metrics are reported to the board monthly.

The IRP includes:

•

Identifying the incident response team (the "IRT") and any appropriate sub-teams to address specific information security incidents, or categories of information security incidents.

•

Coordinating IRT activities, including developing, maintaining, and following appropriate procedures to respond to and document identified information security incidents.

•

Conducting post-incident reviews to gather feedback on information security incident response procedures and address any identified gaps in security measures.

•

Providing training and conducting periodic exercises to promote employee and stakeholder preparedness and awareness of the IRP.

•

Reviewing the IRP at least annually, or whenever there is a material change in the Company’s business practices that may reasonably affect its cyber incident response procedures.

Item 2. Properties.

We conduct our operations from our main office in Quincy, Massachusetts and two additional branch offices in Holbrook and Weymouth, Massachusetts. We also maintain a limited branch office located within, and only available to residents of, a senior citizen housing facility in Quincy, Massachusetts. All of our branch offices are located in Norfolk County, Massachusetts. As of June 30, ~~2024~~2025, the net book value of our real properties, including land, buildings and building improvements, was $3.20 million.

Item 3. Legal Proceedings.

From time to time, we may be involved in legal proceedings arising in the ordinary course of our business. We are not presently a party to any legal proceedings that, in the opinion of management, would have a material adverse effect on our business. Regardless of outcome, litigation can have an adverse impact on us due to defense and settlement costs, diversion of management resources, negative publicity and reputational harm, and other factors.

effect on our business. Regardless of outcome, litigation can have an adverse impact on us due to defense and settlement costs, diversion of management resources, negative publicity and reputational harm, and other factors.

Item 4. Mine Safety Disclosures.

Not applicable.

4243

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information

Our common stock is traded on the Nasdaq Stock Market under the symbol “CFSB”.” Trading of our common stock commenced on January 13, 2022, following the completion of our initial public offering. Prior to that time, there was no established public trading market for our common stock.

Stockholders

As of September 16, ~~2024~~2025, there were ~~212~~200 stockholders of record of our common stock. This number does not include beneficial owners whose shares are held in street name.

Dividends

We have not declared or paid any dividends to our stockholders since our inception and we do not plan to declare or pay cash dividends in the foreseeable future. We currently anticipate that we will retain all available funds and any future earnings for the operation and expansion of our business. Any future determination related to dividend policy will be made at the discretion of our board of directors and will depend on, among other factors, our results of operations, financial condition, capital requirements, contractual restrictions, business prospects and other factors our board of directors may deem relevant. Investors should not purchase our common stock with the expectation of receiving cash dividends.

Unregistered Securities and Share Repurchases

There were no sales of unregistered securities during the year ended June 30, ~~2024~~2025.

On April 5, 2024, the Company announced it had adopted a plan to repurchase up to 152,287 shares of its common stock, which was approximately 5% of its then outstanding common stock (excluding shares held by 15 Beach, MHC). The program does not have a scheduled expiration date and the Board of Directors has the right to suspend or discontinue the program at any time.

Period	Total Number of Shares Purchased		Weighted Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs
May 1, 2024 through May 31, 2024		7,700	$	6.82		7,700		144,587
June 1, 2024 through June 30, 2024		3,790		6.68		3,790		140,797
Total		11,490	$	6.78		11,490		140,797

The following table provides information on repurchases made during the three months ended June 30, 2025:


Period	Total Number of Shares Purchased		Weighted Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs
April 1, 2025 through April 30, 2025		-	$	-		84,067		68,220
May 1, 2025 through May 31, 2025		-		-		84,067		68,220
June 1, 2025 through June 30, 2025		-		-		84,067		68,220
Total		-	$	-		84,067		68,220

Item 6. [Reserved.]

4344

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This discussion and analysis reflects our consolidated financial statements and other relevant statistical data and is intended to enhance your understanding of our financial condition and results of operations. The information in this section has been derived from our audited consolidated financial statements, which appear beginning on page F-1 of this Form 10-K. You should read the information in this section in conjunction with the business and financial information regarding the ~~Bank~~Company provided elsewhere in this Form 10-K.

Overview

Our results of operations depend primarily on our net interest income and, to a lesser extent, non-interest income. Net interest income is the difference between the interest income we earn on our interest-earning assets, consisting primarily of loans, securities, and other interest-earning assets (primarily cash and cash equivalents), and the interest we pay on our interest-bearing liabilities, consisting of deposits and borrowings. Non-interest income consists primarily of earnings on bank-owned life insurance, service charges, on deposit accounts and other income. Our results of operations also are affected by our provision for credit losses and non-interest expense. Non-interest expense consists primarily of salaries and employee benefits, occupancy and equipment, data processing costs, advertising, FDIC deposit insurance premiums, and other expenses. Our results of operations also may be affected significantly by general and local economic and competitive conditions, changes in market interest rates, government policies and actions of regulatory authorities.

Critical Accounting Policies

The discussion and analysis of the financial condition and results of operations are based on our audited consolidated financial statements, which are prepared in conformity with generally accepted accounting principles used in the United States of America. The preparation of these consolidated financial statements requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and the reported amounts of income and expenses. We consider the accounting policy discussed below to be a critical accounting policy. The estimates and assumptions that we use are based on historical experience and various other factors and are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions, resulting in a change that could have a material impact on the carrying value of our assets and liabilities and our results of operations.

The Jumpstart Our Business Startups Act contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies. As an “emerging growth company,” we may delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. We intend to take advantage of the benefits of this extended transition period. Accordingly, our audited consolidated financial statements may not be comparable to companies that comply with such new or revised accounting standards.

On July 1, 2023, the Company adopted Accounting Standards Update (ASU) 2016-13 2016-13 “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” 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 held-to-maturity debt securities. 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 available-for-sale debt securities, including the requirement that impairment related to credit losses be presented as an allowance rather than as a write-down. For further discussion related to the implementation of CECL please refer to Notes 1, 3 and 4 of the consolidated financial statements.

4445

Allowance for Credit Losses

The credit loss estimation process involves procedures to appropriately consider the unique characteristics of loan portfolio segments, which are disaggregated by call report code. For each of these pools, the Company collects historical loss data, dating back to March 2008, from a selection of peer banks and applies the annual historical loss rate over the estimated remaining average life of the loan portfolio segment. The use of peer banks'’ historical loss rates is due to the lack of loss history experienced by the Bank. The average remaining life of a loan portfolio segment is adjusted for estimated prepayment and curtailment expectations. The modeling for estimated prepayment speeds and curtailment rates is based on a combination of internal and market estimates. The quantitative component of the ACL on loans is model-based and utilizes a forward-looking macroeconomic forecast. The Company uses a Weighted Average Remaining Maturity (“WARM”) method, incorporating historical loss data based on statistically derived economic variable loss drivers, to estimate expected credit losses. This process includes estimates which involve modeling loss projections attributable to existing loan balances, and considers historical experience, current conditions, and future expectations for segments of loans over a reasonable and supportable forecast period. The historical information is collected from a selection of peer banks and is derived from a combination of recessionary and non-recessionary performance periods for which data is available.

Although we believe that we use the best information available to establish the allowance for credit losses, future adjustments to the allowance may be necessary if economic conditions differ substantially from the assumptions used in making the evaluation. In addition, the OCC, as an integral part of its examination process, periodically reviews our allowance for credit losses, and as a result of such reviews, we may have to adjust our allowance for credit losses. However, regulatory agencies are not directly involved in establishing the allowance for credit losses as the process is our responsibility and any increase or decrease in the allowance is the responsibility of management. A large loss could deplete the allowance and require increased provisions to replenish the allowance, which would adversely affect earnings.

~~The~~Comparison ~~allowance~~of ~~for~~Financial ~~loan~~Condition ~~losses~~at ~~as of~~ June 30, ~~2023~~2025 ~~was~~and ~~calculated~~June ~~under~~30, ~~the incurred loss model.~~2024

~~For~~Total ~~additional~~Assets. ~~information~~Total onassets ~~our~~increased ~~critical~~$3.2 ~~accounting policies~~million, ~~please~~or ~~refer~~0.9%, to ~~the~~$366.6 ~~information~~million ~~contained~~at June 30, 2025 from $363.4 million at June 30, 2024. The increase resulted primarily from an increase in ~~Note~~net 1loans of ~~the~~$6.8 ~~audited~~million, ~~consolidated~~or ~~financial~~4.0%, ~~statements~~partially ~~contained~~offset ~~elsewhere~~by ~~within~~a ~~this~~decrease ~~Form~~in ~~10-K~~cash and cash equivalents of $2.3 million, or 8.5%, and a decrease in securities held to maturity of $1.2 million, or 0.8%.

~~Business~~Cash ~~Strategy~~and Cash Equivalents. Cash and cash equivalents decreased $2.3 million, or 8.5%, to $24.7 million at June 30, 2025 from $27.0 million at June 30, 2024. The decrease in cash and cash equivalents was due to increases in loans, partially offset by decreases in securities and increases in deposits.

~~Our~~Securities ~~current~~Available ~~business~~for ~~strategy~~Sale. ~~consists~~Securities ofavailable ~~the~~for ~~following:~~sale decreased $22,000 to $91,000 at June 30, 2025 from $113,000 at June 30, 2024. The decrease was due to principal payments on mortgage-backed securities.

~~Grow~~Securities ~~our~~Held ~~balance~~to ~~sheet and improve profitability~~Maturity. ~~Given~~Securities ~~our~~held ~~attractive market area, we believe we are well positioned~~ to ~~strategically~~maturity ~~grow~~decreased ~~our~~$1.2 ~~balance~~million, ~~sheet~~or ~~without a proportional increase in overhead expense~~0. ~~Accordingly~~8%, ~~we intend~~ to ~~increase,~~$145.8 onmillion aat ~~managed~~June ~~basis~~30, ~~our~~2025 ~~assets~~from ~~and liabilities, particularly loans and deposits~~$147.0 Asmillion weat ~~grow~~June ~~our assets~~30, ~~particularly by increasing our loans~~2024, inas ~~particular,~~maturities ~~one- to four-family residential, multi-family~~ and ~~commercial~~prepayments ~~real~~exceeded ~~estate~~purchases ~~loans, as a percentage~~ of ~~assets, while controlling our expenses, we anticipate improving our earnings~~securities.

~~Grow~~Net ~~our~~Loans. ~~loan~~Net ~~portfolio~~loans ~~prudently~~increased ~~with~~$6.8 amillion, ~~focus~~or on4.0% ~~residential,~~to ~~multi-family~~$177.2 ~~and~~million ~~commercial~~at ~~real~~June ~~estate~~30, ~~lending~~2025 from $170.4 ~~Our~~million ~~principal~~at ~~business~~June ~~activity~~30, ~~historically~~2024. ~~has~~The ~~been~~increase ~~the~~was ~~origination~~due to an increase of $4.2 million, or 3.1%, in one- to four-family residential ~~mortgage~~real estate loans, ~~supplemented,~~an toincrease aof ~~lesser~~$4.3 ~~extent~~million, ~~with~~or 35.6%, in multi-family real estate loans, and an increase of $823,000, or 24.4%, in second mortgages and home equity lines of credit, partially offset by a decrease of $2.5 million, or 15.1%, in commercial real estate loans, and a decrease of $104,000, or 5.1%, Wein ~~expect~~home ~~that~~improvement loans. The increases in one- to four-family residential real estate ~~lending~~loans, ~~will~~and ~~remain~~multi-family ~~our~~real ~~primary~~estate ~~focus.~~loans, Weduring ~~intend~~the ~~also~~year toending ~~increase~~June ~~our~~30, ~~focus~~2025, onwere ~~originating~~primarily ~~multi-family~~due ~~and~~to ~~commercial~~originations ~~real~~outpacing ~~estate~~normal ~~loans.~~principal payments.

~~Continue~~Total toLiabilities. ~~increase~~Total ~~core~~liabilities ~~deposits,~~increased ~~with~~$3.5 anmillion, ~~emphasis~~or ~~on low-cost demand deposits~~1.2%, ~~We seek core deposits~~ to ~~provide a stable source of funds to support loan growth at costs consistent with improving our net interest rate spread and margin~~$290.9 ~~Core~~million ~~deposits also help us maintain loan-to-deposit ratios~~ at ~~levels~~June ~~consistent with regulatory expectations. We consider our core deposits to include NOW and demand accounts~~30, ~~savings~~2025 ~~accounts,~~from ~~and money market accounts. Core deposits decreased to~~ $~~138~~287.54 million, ~~or 51.1% of total deposits,~~ at June 30, 2024. ~~from~~The ~~$152.7~~increase ~~million,~~was orprimarily ~~58.0%~~the result of ~~total~~an ~~deposits,~~increase atin ~~June~~interest-bearing ~~30,~~deposits ~~2023.~~of

Continue to manage credit risk to maintain a low level of non-performing assets. We believe strong asset quality is a key to our long-term financial success. Our strategy for credit risk management focuses on having an experienced team of credit professionals, well-defined policies and procedures, appropriate loan underwriting criteria and active credit monitoring. At both June 30, 2024 and 2023, we did not have any non-performing assets. At June 30, 2024, we had four loans with one borrower totaling $1.4 million classified as substandard and no loans classified as special mention, doubtful or loss.

Continue to provide value to our community. Our goal is to provide long-term value to our customers, employees, and the communities we serve by executing a safe and sound service-oriented business strategy that produces increased earnings. We believe there is a significant opportunity for a community-focused bank in our market area, and the increased capital we raised in the stock offering will enable us to compete more effectively with other financial institutions.

Comparison of Financial Condition at June 30, 2024 and June 30, 2023

Total Assets. Total assets increased $14.4 million, or 4.1%, to $363.4 million at June 30, 2024 from $349.0 million at June 30, 2023. The increase resulted primarily from an increase in cash and cash equivalents of $20.1 million, or 292.9%, partially offset by decreases in securities held to maturity of $908,000, or 0.6% and in net loans of $5.5 million, or 3.1%.

Cash and Cash Equivalents. Cash and cash equivalents increased $20.1 million, or 292.9%, to $27.0 million at June 30, 2024 from $6.9 million at June 30, 2023. The increase in cash and cash equivalents was due to increases in deposits and FHLBB advances and decreases in loans and securities.

Securities Available for Sale. Securities available for sale decreased $33,000 to $113,000 at June 30, 2024 from $146,000 at June 30, 2023. The decrease was due to principal payments on mortgage-backed securities.

Securities Held to Maturity. Securities held to maturity decreased $908,000, or 0.6%, to $147.0 million at June 30, 2024 from $147.9 million at June 30, 2023, as maturities and prepayments slightly exceeded the purchase of securities.

Net Loans. Net loans decreased $5.5 million, or 3.1% to $170.4, million at June 30, 2024 from $175.9 million at June 30, 2023. The decrease was due to a decrease of $3.5 million, or 17.2%, in commercial real estate loans, a decrease of $2.1 million, or 1.5%, in one- to four-family residential real estate loans, and a decrease of $572,000, or 4.5%, in multi-family real estate loans, partially offset by an increase of $673,000, or 24.9% in second mortgages and home equity lines of credit and a reduction in the allowance for credit losses of $194,000. The decreases in commercial real estate loans, one- to four-family residential real estate loans and multi-family real estate loans were primarily due to normal principal payments during June 30, 2024 outpacing originations.

Total Liabilities. Total liabilities increased $14.3 million, or 5.2%, to $287.4 million at June 30, 2024 from $273.1 million at June 30, 2023. The increase was primarily the result of an increase in interest-bearing deposits of $6.1 million, or 2.6%, an increase in non-interest-bearing deposits of $1.4 million, or 4.2%, and an increase in Federal Home Loan Bank advances of $6.8 million, or 181.6%.

Deposits. Deposits increased $7.5 million, or 2.8%, to $270.8 million at June 30, 2024 from $263.4 million at June 30, 2023. The increase was the result of an increase in interest-bearing deposits of $6.1 million, or 2.6%, and an increase in non-interest-bearing deposits of $1.4 million, or 4.2%. The increase in interest-bearing deposits was the result of increases in term certificates of $21.6 million, or 19.6%, and an increase in NOW and demand accounts of $848,000, or 1.4%, offset by a decrease of $10.0 million, or 15.6%, in regular and other account and a decrease of $5.0 million, or 18.7% in money market accounts as new and existing depositors moved funds to products offering higher interest rates. At June 30, 2024, the Bank held $42.9 million in uninsured deposits.

Borrowings. Borrowings, consisting entirely of Federal Home Loan Bank advances, were $10.4 million at June 30, 2024 compared to $3.7 million at June 30, 2023, increasing short-term investments as we implemented a leverage strategy to increase liquidity and income during the year ended June 30, 2024.

~~Stockholders' Equity. Total stockholders' equity increased~~ $~~161,000, or 0~~4.2%, ~~to $76.1~~ million ~~at June 30~~, ~~2024~~or ~~from $75~~1.98% ~~million~~and atan ~~June 30, 2023. The~~ increase ~~was~~in ~~due~~mortgagor's toescrow ~~net~~accounts ~~income~~ of $33109,000 ~~for the year ended June 30~~, ~~2024,~~or ~~stock-based compensation of $358~~7.1%,~~000~~ ~~and~~partially ~~ESOP shares committed to be released of $102,000, primarily~~ offset by ~~the~~a ~~adoption~~decrease ofin ~~CECL~~non-interest-bearing deposits of $~~223~~850,000, ~~and~~or ~~the repurchase of CFSB Bancorp stock of $78,000~~2.5%.

~~Comparison~~Deposits. ofDeposits ~~Operating~~increased ~~Results~~$3.3 ~~for~~million, ~~the~~or ~~Year~~1.2%, ~~Ended~~to $274.2 million at June 30, 2025 from $270.8 million at June 30, 2024. The increase was the result of an increase in interest-bearing deposits of $4.2 million, or 1.8%, offset by a decrease in non-interest-bearing deposits of $850,000, or 2.5%. The increase in interest-bearing deposits was the result of increases in term certificates of $8.1 million, or 6.1%, offset by a decrease of $2.8 million, or 12.7%, in money market accounts, a decrease of $1.2 million, or 1.9%, in NOW and ~~2023~~demand accounts, and a decrease of $730,000, or 1.3%, in regular and other accounts as new and existing depositors moved funds to products offering higher interest rates. At June 30, 2025, the Bank held $37.3 million in uninsured deposits.

~~General~~Borrowings. WeBorrowings, ~~had~~consisting ~~net~~entirely ~~income~~ of ~~$33,000~~Federal ~~for~~Home ~~the~~Loan ~~year~~Bank ~~ended June 30~~advances, ~~2024,~~were ~~compared to net income of~~ $110.4 million ~~for~~at ~~the year ended~~ June 30, ~~2023,~~2025 a decrease of $1.4 million, or 97.7%. The decrease in net income was primarily due to a decrease in net interest income of $2.1 million, or 23.3%, partially offset by a decrease in tax expense of $340,000, or 112.9%, and ~~a decrease in the provision for credit losses of $322,000~~2024.

~~Interest~~Stockholders' ~~and Dividend Income~~Equity. ~~Interest~~Total ~~and~~stockholders' ~~dividend~~equity ~~income~~decreased ~~increased~~ $~~993~~319,000, or 90.34%, to $1175.7 million ~~for~~at ~~the year ended~~ June 30, ~~2024~~2025 from $1076.71 million ~~for~~at ~~the year ended~~ June 30, ~~2023~~2024. The ~~increase~~decrease was due to annet ~~increase~~loss of $~~508~~265,000, or 15.7%, in interest and dividends on taxable debt securities, an increase of $325,000, or 4.8%, in interest and fees on loans and an increase of $211,000, or 61.8%, in interest on short-term investments, offset by a decrease of $51,000 or 12.3% in interest and dividends on tax-exempt debt securities. Interest income on loans increased due to an increase in the average yield on loans of 25 basis points to 4.01% for the year ended June 30, ~~2024~~2025, ~~from~~and ~~3.76% for~~ the ~~year~~repurchase ~~ended~~of ~~June~~CFSB ~~30,~~Bancorp ~~2023,~~stock ~~offset by a decrease in the average balance~~ of ~~loans of~~ $~~3.0 million to $175.0 million for the year ended June 30~~495, ~~2024 from $178.0 million for the year ended June 30~~000, 2023. Interest income on securities increased due to an increase in the average yield on securities of 31 basis points to 2.81% for the year ended June 30, 2024 from 2.50% for the year ended June 30, 2023, offset by astock-based ~~decrease~~compensation ~~in the average balance~~ of ~~securities of~~ $~~1.1 million to $149.2 million for the year ended June 30~~358,000 ~~2024~~and ~~from~~ESOP ~~$150.3~~shares ~~million~~committed ~~for the year ended June 30, 2023. The interest income on short-term investments increased due~~ to anbe ~~increase~~released ~~in the average yield~~ of ~~197 basis points to 5.09% for the year ended June 30~~$81, ~~2024, from 3~~000.~~12% for the year ended June 30, 2023. The increased yields were due to the higher interest rate environment.~~

~~Interest~~Comparison Expense. Interest expense increased $3.0 million, or 157.8%, to $5.0 million for the year ended June 30, 2024 from $1.9 million for the year ended June 30, 2023. The increase was primarily due to an increase of ~~$2.7~~Operating ~~million,~~Results ~~or 159.4%, in interest expense on certificates of deposit. The average cost of certificates of deposit increased 204 basis points to 3.67%~~ for the ~~year~~Year ~~ended~~Ended June 30, ~~2024~~2025 ~~from 1.63% for the year ended June 30, 2023, due to increased market rates~~ and ~~intense competition, while the average balance of certificates of deposit increased $16.0 million to $119.4 million for the year ended June 30,~~ 2024 from $103.4 million for the year ended June 30, 2023. Additionally, interest expense on borrowings, consisting entirely of FHLB advances, increased $399,000, to $453,000 for the year ended June 30, 2024 from $54,000 for the year ended June 30, 2023 due to the increase in the average balance of borrowings to $9.1 million for the year ended June 30, 2024 from $1.0 million for the year ended June 30, 2023, offset by a decrease in the average cost of 23 basis points to 4.98% for the year ended June 30, 2024 from 5.21% for the year ended June 30, 2023 as we lengthened the terms of the borrowings.

~~Net Interest Income~~General. ~~Net~~We ~~interest~~had ~~income~~net ~~decreased~~loss ~~$2.1~~of ~~million~~$265,000 ~~or 23.3%, to $6.7 million~~ for the year ended June 30, ~~2024~~2025, ~~from~~compared ~~$8.8~~to ~~million~~net income of $33,000 for the year ended June 30, ~~2023~~2024, a decrease of $298,000. The decrease in net income was primarily due to an increase in the ~~cost~~provision offor ~~certificates~~credit losses of ~~deposit~~$368,000 and inan ~~the~~increase ~~average~~in ~~balance~~non-interest expenses of ~~interest-bearing liabilities~~$207,000, offset by an increase in ~~the~~net ~~average rate earned on~~ interest~~-earning~~ ~~assets~~income of ~~33 basis points to 3.51% for the year ended June 30~~$274, ~~2024 from 3.18% for the year ended June 30~~000, ~~2023.~~or ~~Our net interest margin decreased to 2~~4.031% ~~for the year ended June 30, 2024 compared to 2~~.~~61% for the year ended June 30, 2023.~~

~~Provision~~Interest ~~for~~and ~~Credit~~Dividend ~~Losses~~Income. AInterest ~~reversal~~and ofdividend income increased $~~322~~1.4 million,~~000~~ or 12.2%, to ~~the~~$13.1 ~~provision~~million for ~~credit~~the ~~losses~~year ~~was~~ended ~~recorded~~June 30, 2025 from $11.7 million for the year ended June 30, 2024. AThe ~~reversal~~increase was due to an increase of $~~127~~586,000, toor ~~the~~15.7%, ~~provision~~in ~~for~~interest ~~credit~~and ~~losses~~dividends on ~~investments~~taxable ~~was~~debt ~~primarily~~securities, ~~due~~an toincrease ~~the~~of ~~aging~~$287,000, ofor ~~the~~4.1%, ~~portfolio~~in interest and ~~the~~fees ~~impact~~on ~~that~~loans ~~aging~~and ~~can~~an ~~have~~increase of $624,000, or 113.0%, in interest on ~~the~~short-term ~~probability~~investments, ofoffset ~~default.~~by ~~The~~a decrease of $875,000, ~~provision~~or ~~for~~20.7%, ~~credit~~in ~~losses~~interest ~~for~~and ~~off~~dividends on tax-~~balance~~exempt ~~sheet~~debt ~~exposures~~securities. ~~was~~Interest ~~primarily~~income on loans increased due to an increase in the average yield on loans of ~~$1.3~~23 ~~million~~basis inpoints ~~unfunded~~to ~~commitments~~4.24% for ~~multifamily~~the ~~real~~year ~~estate~~ended ~~loans~~June 30, 2025 from 4.01% for the year ended June 30, 2024., Aoffset ~~reversal~~by a decrease in the average balance of loans of $~~203,000~~2.8 million to $172.2 million for the ~~provision~~year ended June 30, 2025 from $175.0 million for ~~credit~~the ~~losses~~year onended ~~loans~~June ~~was~~30, ~~primarily~~2024. Interest income on securities increased due to ~~strong~~an ~~asset~~increase ~~quality,~~in ~~improving~~the ~~economic~~average ~~factors~~yield ~~and~~on ~~reduced~~securities ~~loan~~of ~~balances.~~36 ~~The~~basis ~~allowance~~points ~~for~~to ~~credit~~3.17% ~~losses~~ for ~~loans~~the ~~was~~year ~~$1.6~~ended ~~million~~June 30, or2025 0from 2.9081% offor ~~total~~the ~~loans,~~year atended June 30, 2024, ~~compared~~offset toby a decrease in the average balance of securities of $1.71 million, orto 0$148.~~98%~~0 ofmillion ~~total~~for ~~loans,~~the atyear ended June 30, ~~2023~~2025 from $149.2 Atmillion for the year ended June 30, 2024,. ~~the~~The ~~Company~~interest ~~had~~income ~~$1.4~~on ~~million~~short-term ininvestments ~~residential~~increased ~~one-~~due to ~~four~~an increase in the average balance of short-~~family~~term ~~loans~~investments ~~rated~~of ~~substandard~~$14.2 ~~and~~million, ~~individually~~offset ~~evaluated~~by ~~due~~a todecrease in the ~~borrowers'~~average ~~inability~~yield toof ~~show~~40 ~~sufficient~~basis ~~rent~~points ~~receipts~~ to ~~support~~4.69% for the ~~debt~~year ~~coverage~~ended ~~with~~June a30, ~~provision~~2025, offrom ~~$10,000~~5.09% ~~These~~for ~~loans~~the ~~are~~year ~~current~~ended asJune ~~the~~30, ~~borrower~~2024.

Interest Expense. Interest expense increased $1.1 million, or 23.1%, to $6.1 million for the year ended June 30, 2025 from $5.0 million for the year ended June 30, 2024. The increase was primarily due to an increase of $1.1 million, or 26.1%, in interest expense on certificates of deposit. The average cost of certificates of deposit increased 35 basis points to 4.02% for the year ended June 30, 2025 from 3.67% for the year ended June 30, 2024, due to increased market rates and intense competition, while the average balance of certificates of deposit increased $17.8 million to $137.2 million for the year ended June 30, 2025 from $119.4 million for the year ended June 30, 2024. Interest expense on borrowings, consisting entirely of FHLB advances, increased $20,000, to $473,000 for the year ended June 30, 2025 from $453,000 for the year ended June 30, 2024 due to the increase in the average balance of borrowings to $10.4 million for the year ended June 30, 2025 from $9.1 million for the year ended June 30, 2024, offset by a decrease in the average cost of 41 basis points to 4.57% for the year ended June 30, 2025 from 4.98% for the year ended June 30, 2024 as we lengthened the terms of the borrowings.

Net Interest Income. Net interest income increased $274,000, or 4.1%, to $7.0 million for the year ended June 30, 2025 from $6.7 million for the year ended June 30, 2024. The increase was primarily due to an increase in the average balance of interest-earning assets of $10.3 million, to $345.3 million for the year ended June 30, 2025 from $335.0 million for the year ended June 30, 2024, and an increase in the average rate earned on interest-earning assets

~~continues~~of to30 ~~make~~basis ~~timely~~points ~~payments~~to 3.81% ~~There~~for ~~were~~the noyear ~~loans~~ended ~~categorized~~from as3.51% ~~special~~for ~~mention~~the year ended June 30, ~~doubtful~~2024, oroffset ~~loss~~by ~~and~~an noincrease ~~non-performing~~in ~~loans~~the average balance of certificates of deposit of $17.8 Wemillion ~~had~~to $3137.2 million for the year ended June 30,~~000~~ 2025 from $119.4 million for the year ended June 30, 2024 and an increase in ~~charge-offs~~the ~~related~~average tocost ~~overdrawn~~of certificates of deposit ~~accounts~~of ~~and~~35 nobasis ~~recoveries~~points to 4.02% for the ~~years~~year ended June 30, 2025, compared to 3.67% for the year ended June 30, 2024. ~~and~~Our ~~2023~~net interest margin increased to 2.04% for the year ended June 30, 2025 compared to 2.03% for the year ended June 30, 2024.

Provision for Credit Losses. A provision for credit losses of $46,000 was recorded for the year ended June 30, 2025 compared to a reversal of credit to the provision for credit losses of $322,000 for the year ended June 30, 2024. A provision of $55,000 to the provision for credit losses on investments for the year ended June 30, 2025 was primarily due to the change in Moody's baseline economic forecast for June 2025 which led to increases in the probability of default for most corporate bonds, resulting in a higher reserve. The reversal of $3,000 to the provision for credit losses for the year ended June 30, 2025 for off-balance sheet exposures was primarily due to a decrease of $120,000 in unfunded commitments for multifamily real estate loans and a decrease of $190,000 in unfunded commitments for 1-4 family residential first liens for the year ended June 30, 2025. A reversal of $6,000 to the provision for credit losses on loans was primarily due to strong asset quality, improving economic factors and reduced loan balances. The allowance for credit losses for loans was $1.5 million, or 0.86% of total loans, at June 30, 2025, compared to $1.6 million, or 0.90% of total loans, at June 30, 2024. At June 30, 2025, the Company had $1.4 million in residential one- to four-family loans rated substandard and individually evaluated due to the borrowers' inability to show sufficient rent receipts to support the debt coverage with a provision of $10,000. These loans are current as the borrower continues to make timely payments. There were no loans categorized as special mention, doubtful or loss and no non-performing loans.

Non-Interest Income. Non-interest income information is as follows.

	Year Ended
	June 30,				Change
(Dollars in thousands)	~~2024~~2025		~~2023~~2024		Amount			Percent
Customer service fees	$	~~155~~149	$	~~146~~155	$	9(6	)		6(3.29	%)
Income on bank-owned life insurance		~~268~~286		~~258~~268		1018			36.97	%
Other income		~~242~~244		~~260~~242		~~(18~~2	)		(60.98	%)
Total non-interest income	$	~~665~~679	$	~~664~~665	$	114			0.2.1	%

Non-interest income increased $114,000, or 0.2.1%, to $~~665~~679,000 for the year ended June 30, ~~2024~~2025 from $~~664~~665,000 for the year ended June 30, ~~2023~~2024. The increase was due to aan $918,000 increase in ~~customer~~income ~~service~~on ~~fees~~bank-owned life insurance and a $102,000 increase in ~~income~~other ~~on bank-owned life insurance~~income, offset by a $186,000 decrease in ~~other~~customer ~~income~~service fees.

Non-Interest Expense. Non-interest expense information is as follows.

	Year Ended
	June 30,				Change
(Dollars in thousands)	~~2024~~2025		~~2023~~2024		Amount			Percent
Salaries and employee benefits	$	4,~~558~~361	$	4,~~517~~558	$	41(197	)		0(4.93	%)
Occupancy and equipment		~~975~~974		~~1,028~~975		(531	)		(50.21	%)
Advertising		~~140~~141		~~185~~140		~~(45~~1	)		~~(24~~0.37	%)
Data processing		~~369~~402		~~344~~369		2533			78.39	%
Deposit insurance		~~133~~138		~~106~~133		275			253.58	%
Other		1,~~523~~889		1,~~489~~523		34366			224.30	%
Total non-interest expense	$	7,~~698~~905	$	7,~~669~~698	$	29207			02.47	%

Non-interest expense increased $29207,000, or 02.47%, to $7.9 million for the year ended June 30, 2025 from $7.7 million for the year ended June 30, 2024. The increase was due primarily to a $41366,000 increase in ~~salaries~~other ~~and~~non-interest ~~employee benefit~~ expense due to ~~normal~~merger ~~employee annual merit salary benefit increases and stock-based compensation~~costs, a $3433,000 increase in ~~other~~data ~~non-interest~~processing ~~expense,~~fees and a $275,000 increase in deposit insurance ~~and a $25~~,~~000~~ ~~increase in data processing fees,~~ offset by a $53197,000 decrease in ~~occupancy~~salaries and ~~equipment~~employee benefit expense ~~and~~due ato ~~$45,000~~reduced ~~decrease~~head ~~in advertising expense~~count.

Provision for Income Taxes. The Company recorded an income tax benefit of $39,000 for the year ended June 30, 2024, compared to a provision for income taxes of $301,000 for the year ended June 30, 2023. Our effective tax (benefit) rate was (650.0%) and 17.2% for the years ended June 30, 2024 and 2023, respectively. The lower effective tax rate for the years ended June 30, 2024 and 2023 as compared to the statutory rate reflected the benefit of our investment in tax-advantaged municipal securities and bank-owned life insurance as well as reduced state taxes through utilization of a Massachusetts securities corporation to hold our investment securities. The benefit for income taxes for the year ended June 30, 2024 was due to the reduced income as well as a recovery of income tax payable on a post-retirement benefit.

Average Balance and Yields. The following tables set forth average balance sheets, average yields and costs, and certain other information for the periods indicated. All average balances are daily average balances. Tax-equivalent adjustments have been made. The yields set forth below include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense. Deferred loan fees totaled $387,000 and $351,000 at June 30, 2024 and 2023, respectively.

	For the Year Ended June 30,
	2024							2023
(Dollars in thousands)	AverageOutstandingBalance		Interest		AverageYield/Rate			AverageOutstandingBalance		Interest		AverageYield/Rate
Interest-earning assets:
Loans	$	175,028	$	7,020		4.01	%	$	178,044	$	6,695		3.76	%
Securities(1)		149,160		4,195		2.81	%		150,334		3,752		2.50	%
Other		10,849		552		5.09	%		10,923		341		3.12	%
Total interest-earning assets		335,037		11,767		3.51	%		339,301		10,788		3.18	%
Non-interest-earning assets		16,838							16,701
Total assets	$	351,875						$	356,002
Interest-bearing liabilities:
Interest-bearing demand deposits	$	29,845	$	14		0.05	%	$	32,252	$	16		0.05	%
Savings deposits		58,569		61		0.10	%		70,338		70		0.10	%
Money market deposits		24,044		59		0.25	%		37,197		98		0.26	%
Certificates of deposit		119,382		4,379		3.67	%		103,410		1,688		1.63	%
Total interest-bearing deposits		231,840		4,513		1.95	%		243,197		1,872		0.77	%
FHLB advances		9,091		453		4.98	%		1,037		54		5.21	%
Total interest-bearing liabilities		240,931		4,966		2.06	%		244,234		1,926		0.79	%
Noninterest-bearing liabilities
Non-interest-bearing demand deposits		29,380							31,170
Other non-interest-bearing liabilities		5,765							5,334
Total liabilities		276,076							280,738
Stockholders' equity		75,799							75,264
Total liabilities and stockholders' equity	$	351,875						$	356,002
Net interest income - FTE			$	6,801						$	8,862
Net interest rate spread(2)						1.45	%						2.39	%
Net interest-earning assets(3)	$	94,106						$	95,067
Net interest margin - FTE(4)						2.03	%						2.61	%
Average interest-bearing assets to interest-bearing liabilities						139.06	%						138.92	%

Provision for Income Taxes. The Company recorded an income tax benefit of $28,000 for the year ended June 30, 2025, compared to a benefit for income taxes of $39,000 for the year ended June 30, 2024. The lower effective tax rate for the years ended June 30, 2025 and 2024 as compared to the statutory rate reflected the benefit of our investment in tax-advantaged municipal securities and bank-owned life insurance, as well as reduced state taxes through utilization of a Massachusetts securities corporation to hold our investment securities.

~~Includes~~Average ~~tax~~Balance and Yields. The following tables set forth average balance sheets, average yields and costs, and certain other information for the periods indicated. All average balances are daily average balances. Tax-equivalent adjustments ~~for~~have ~~municipal~~been ~~securities,~~made. ~~based~~The onyields aset ~~statutory~~forth ~~rate~~below include the effect of ~~21%~~deferred fees, ofdiscounts, and premiums that are amortized or accreted to interest income or interest expense. Deferred loan fees totaled $96362,000 and $~~110~~387,000 ~~for~~at ~~the years ended~~ June 30, ~~2024~~2025 and ~~2023~~2024, respectively.


	For the Year Ended June 30,
	2025							2024
(Dollars in thousands)	Average Outstanding Balance		Interest		Average Yield/Rate			Average Outstanding Balance		Interest		Average Yield/Rate
Interest-earning assets:
Loans	$	172,244	$	7,307		4.24	%	$	175,028	$	7,020		4.01	%
Securities(1)		148,045		4,687		3.17	%		149,160		4,195		2.81	%
Other		25,056		1,176		4.69	%		10,849		552		5.09	%
Total interest-earning assets		345,345		13,170		3.81	%		335,037		11,767		3.51	%
Non-interest-earning assets		17,190							16,838
Total assets	$	362,535						$	351,875
Interest-bearing liabilities:
Interest-bearing demand deposits	$	29,913	$	14		0.05	%	$	29,845	$	14		0.05	%
Savings deposits		52,945		55		0.10	%		58,569		61		0.10	%
Money market deposits		21,593		52		0.24	%		24,044		59		0.25	%
Certificates of deposit		137,229		5,520		4.02	%		119,382		4,379		3.67	%
Total interest-bearing deposits		241,680		5,641		2.33	%		231,840		4,513		1.95	%
FHLB advances		10,350		473		4.57	%		9,091		453		4.98	%
Total interest-bearing liabilities		252,030		6,114		2.43	%		240,931		4,966		2.06	%
Noninterest-bearing liabilities
Non-interest-bearing demand deposits		28,829							29,380
Other non-interest-bearing liabilities		5,827							5,765
Total liabilities		286,686							276,076
Stockholders' equity		75,849							75,799
Total liabilities and stockholders' equity	$	362,535						$	351,875
Net interest income - FTE			$	7,056						$	6,801
Net interest rate spread(2)						1.39	%						1.45	%
Net interest-earning assets(3)	$	93,315						$	94,106
Net interest margin - FTE(4)						2.04	%						2.03	%
Average interest-bearing assets to interest-bearing liabilities						137.03	%						139.06	%

(1)

Includes tax equivalent adjustments for municipal securities, based on a statutory rate of 21%, of $77,000 and $96,000 for the years ended June 30, 2025 and 2024, respectively.

(2)

Net interest rate spread represents the difference between the weighted average yield earned on interest-earning assets and the weighted average rate paid on interest-bearing liabilities.

(3)

Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(4)

Net interest margin represents net interest income divided by average total interest-earning assets.

A reconciliation of income presented on a ~~GAAP~~generally accepted accounting principles basis as compared to a fully-tax equivalent basis is below:

	For the Year Ended
	June 30,		June 30,
	2024		2023
	2025		2024
Securities interest income (no tax adjustment)	$	4,~~099~~610	$	34,~~642~~099
Tax-equivalent adjustment		9677		~~110~~96
Securities (tax-equivalent basis)	$	4,~~195~~687	$	34,~~752~~195
Net interest income (no tax adjustment)		6,~~705~~979		86,~~752~~705
Tax-equivalent adjustment		9677		~~110~~96
Net interest income (tax-equivalent adjustment)	$	67,~~801~~056	$	86,~~862~~801

4950

Rate/Volume Analysis

The following table presents the effects of changing rates and volumes on our net interest income for the periods indicated. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The total column represents the sum of the prior columns. For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately based on the changes due to rate and the changes due to volume. There were no out-of-period items or adjustments required to be excluded from the table below.

	For the Year Ended
	June 30, 2024 vs. 2023
	June 30, 2025 vs. 2024
(In thousands)	Increase (Decrease) Due to Volume			Increase (Decrease) Due to Rate			Total Increase (Decrease)
Interest-earning assets:
Loans	$	(~~113~~112	)	$	~~438~~399		$	~~325~~287
Securities		(2931	)		~~472~~523			~~443~~492
Other		(2723	)		~~213~~(99	)		~~211~~624
Total interest-earning assets		~~(144~~580	)		~~1,123~~823			~~979~~1,403
Interest-bearing liabilities:
Interest-bearing demand deposits		(1-	)		(1-	)		(2-	)
Savings deposits		(126	)		3-			(96	)
Money market deposits		(356	)		(41	)		(397	)
Certificates of deposit		~~261~~655			~~2,430~~486			21,~~691~~141
Total deposits		~~213~~643			~~2,428~~485			21,~~641~~128
FHLB advances		~~419~~63			(2043	)		~~399~~20
Total interest-bearing liabilities		~~632~~706			~~2,408~~442			31,~~040~~148
Change in net interest income	$	(~~776~~126	)	$	~~(1,285~~381	)	$	~~(2,061~~255	)

Includes tax equivalent adjustments for municipal securities, based on a statutory rate of 21%, of $9677,000 and $~~110~~96,000 for the years ended June 30, ~~2024~~2025 and ~~2023~~2024, respectively.

Management of Market Risk

General. The majority of our assets and liabilities are monetary in nature. Consequently, our most significant form of market risk is interest rate risk. Our assets, consisting primarily of mortgage loans and investment securities, have longer maturities than our liabilities, consisting primarily of deposits. As a result, a principal part of our business strategy is to manage the impact of changes in market interest rates on net interest income and capital. We have an Asset/Liability Committee that is responsible for evaluating the interest rate risk inherent in our assets and liabilities, for determining the level of risk that is appropriate, given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the guidelines approved by the board of directors. The Asset/Liability Committee establishes and monitors the amount, maturities, pricing and mix of assets and funding sources with the objective of managing assets and funding sources to provide results that are consistent with liquidity, growth, risk limits and profitability goals.

As part of our ongoing asset-liability management, we use the following strategies to manage our interest rate risk:

•

market our non-interest-bearing demand, money market, savings, and demand accounts;

•

diversify our loan mix;

•

invest in short- to medium-term repricing and/or maturing securities whenever the market allows; and

•

maintain a strong capital position.

We do not engage in hedging activities, such as engaging in futures, options, or interest rate swap transactions, or investing in high-risk mortgage derivatives, such as collateralized mortgage obligation residual interests, real estate mortgage investment conduit residual interests or stripped mortgage-backed securities.

5051

We consider two types of simulations impacted by changes in interest rates, which are (1) net interest income and (2) changes in the economic value of equity.

Net Interest Income Analysis. We analyze our sensitivity to changes in interest rates through our net interest income simulation model, the results of which are provided to us by an independent third party. Net interest income is the difference between the interest income we earn on our interest-earning assets, such as loans and securities, and the interest we pay on our interest-bearing liabilities, such as deposits and borrowings. We estimate what our net interest income would be for a one-year period based on current interest rates. We then calculate what the net interest income would be for the same period under different interest rate assumptions. The following table shows the estimated impact on net interest income for the one-year period beginning June 30, ~~2024~~2025 resulting from potential changes in interest rates, expressed in basis points. These estimates require certain assumptions to be made, including loan and mortgage-related investment prepayment speeds, reinvestment rates, and deposit maturities and decay rates. These assumptions are inherently uncertain. As a result, no simulation model can precisely predict the impact of changes in interest rates on our net interest income.

Although the net interest income table below provides an indication of our interest rate risk exposure at a particular point in time, such estimates are not intended to, and do not, provide a precise forecast of the effect of changes in market interest rates on our net interest income and will differ from actual results.

Change in Interest Rates (basis points)(1)	Net Interest IncomeYear 1 Forecast (In thousands)		Year 1 Change from Level
+400	$	5,~~955~~762		(1527.23	%)
+300		6,~~221~~290		(1120.47	%)
+200		6,~~486~~817		(714.60	%)
+100		67,~~763~~370		(3.7.1	%)
Level		7,~~022~~931		-
-100		78,~~029~~168		03.10	%
-200		68,~~968~~293		(04.86	%)
-300		68,~~876~~414		(26.1	%)
-400		68,~~751~~441		(36.94	%)

(1)

Assumes an immediate uniform change in interest rates at all maturities.

5152

Economic Value of Equity. We monitor interest rate risk through the use of a simulation model that estimates the amounts by which the fair value of our assets and liabilities (our economic value of equity or “EVE”) would change in the event of a range of assumed changes in market interest rates. The quarterly reports developed in the simulation model assist us in identifying, measuring, monitoring, and controlling interest rate risk to ensure compliance within our policy guidelines.

The table below sets forth, as of June 30, ~~2024~~2025, the calculation of the estimated changes in the Company's EVE that would result from the designated immediate changes in the United States Treasury yield curve.

As of June 30, 2024
As of June 30, 2025
			Estimated Increase (Decrease) in EVE						EVE as a Percentage of Present Value of Assets(3)
Change in Interest Rates (basis points)(1)	Estimated EVE(2)(In thousands)		Amount (In thousands)			Percent			EVE Ratio(4)			Decrease (basis points)
+400	$	3233,~~497~~814	$	(1922,~~569~~872	)		(3740.63	%)		11.13	%		(~~460~~530	)
+300		3739,~~043~~238		(1517,~~023~~448	)		(2830.98	%)		12.37	%		(~~340~~390	)
+200		4144,~~848~~932		(1011,~~218~~754	)		(1920.67	%)		1314.50	%		(~~220~~260	)
+100		4650,~~981~~871		(5,~~085~~815	)		(910.83	%)		1415.64	%		(~~110~~120	)
Level		5256,~~066~~686		-			-			1516.76	%		-
-100		5661,~~162~~269		4,~~096~~583			78.91	%		1617.4	%		7080
-200		5964,~~715~~542		7,~~649~~856			1413.79	%		17.09	%		130
-300		6267,~~519~~139		10,453			2018.14	%		1718.31	%		~~160~~150
-400		6366,~~614~~280		119,~~548~~594			2216.29	%		17.16	%		~~140~~100

(1)

Assumes an immediate uniform change in interest rates at all maturities.

(2)

EVE is the discounted present value of expected cash flows from assets, liabilities, and off-balance sheet contracts.

(3)

Present value of assets represents the discounted present value of incoming cash flows on interest-earning assets.

(4)

EVE Ratio represents EVE divided by the present value of assets.

The table above indicates that at June 30, ~~2024~~2025, in the event of an instantaneous 200 basis point increase in interest rates, we would experience a 1920.67% decrease in EVE, and in the event of an instantaneous 200 basis point decrease in interest rates, we would experience a 1413.79% increase in EVE.

Certain shortcomings are inherent in the methodologies used in the above interest rate risk measurements. Modeling changes require making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. In this regard, the net interest income and EVE tables presented assume that the composition of our interest-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and assume that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. Accordingly, although the tables provide an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates and will differ from actual results.

Interest rate calculations also may not reflect the fair values of financial instruments. For example, decreases in market interest rates can increase the fair values of our loans, deposits, and borrowings.

Liquidity and Capital Resources

Liquidity. Liquidity describes our ability to meet the financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures. Our primary sources of funds are deposits, principal and interest payments on loans and securities and proceeds from maturities and calls of securities. We also have the ability to borrow from the Federal Home Loan Bank of Boston. At June 30, ~~2024~~2025, we had $10.4 million outstanding in advances from the Federal Home Loan Bank of Boston. At June 30, ~~2024~~2025, we had the ability to borrow an additional $4853.30

5253

million in Federal Home Loan Bank of Boston advances. Additionally, ~~at June 30, 2024,~~ we had a $2.4 million line of credit with the Federal Home Loan Bank of Boston, none of which was drawn at June 30, ~~2024~~2025.

While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions, and competition. Our most liquid assets are cash and cash equivalents. The levels of these assets are dependent on our operating, financing, lending, and investing activities during any given period.

Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities. Net cash provided by operating activities was $~~405~~465,000 and $~~2.1~~404,000 ~~million~~ for the years ended June 30, ~~2024~~2025 and ~~2023~~2024, respectively. Net cash ~~provided~~used byin investing activities, which consists primarily of disbursements for loan originations and the purchase of investment securities, offset by principal collections on loans and proceeds from maturing securities and pay downs on securities, was $5.7 million for the year ended June 30, ~~2024~~2025, primarily due to a net ~~decrease~~increase in loans of $5.6.7 million, and ~~maturities,~~the ~~prepayments~~purchase ~~and calls~~ of ~~securities of~~ $1715.17 million of securities, partially offset by ~~the~~maturities, ~~purchase~~prepayments and calls of securities of $16.78 million ~~of securities~~. Net cash flows ~~used~~provided inby investing activities for the year ended June 30, ~~2023~~2024 was $65.97 million, primarily related to ~~purchases~~a ofdecrease ~~securities held to maturity of $16.8 million and an increase~~ in net loans of $35.36 million, ~~partially~~and ~~offset by~~ maturities, prepayments and calls of securities held to maturity of $1317.71 million., ~~Net~~offset ~~cash provided~~ by ~~financing~~purchases ~~activities~~of ~~was~~securities ~~$14.0~~held ~~million for the year ended June 30, 2024, primarily due~~ to amaturity ~~net increase in deposits~~ of $716.~~5 million and the net increase in FHLB advances of $6.~~7 million. Net cash ~~used~~provided inby financing activities was $202.09 million for the year ended June 30, ~~2023~~2025, primarily ~~from~~due ~~the~~to a net ~~decrease~~increase in deposits, ~~offset~~of ~~by a~~ $3.73 million ~~increase in FHLB advances~~.

We are committed to maintaining a strong liquidity position and monitor our liquidity position on a daily basis. We anticipate that we will have sufficient funds to meet our current funding commitments based on our current strategy to increase loans with an increase in core deposits as supplemented by the use of Federal Home Loan Bank of Boston advances as needed.

Capital Resources. At June 30, ~~2024~~2025 and ~~2023~~2024 the Bank exceeded all of its regulatory capital requirements. See Note 9 to the consolidated financial statements of this annual report.

Off-Balance Sheet Arrangements and Contractual Obligations

Off-Balance Sheet Arrangements. We are a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of our customers. The financial instruments include commitments to originate loans, unused lines of credit and standby letters of credit, which involve elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets. Our exposure to credit loss is represented by the contractual amount of the instruments. We use the same credit policies in making commitments as we do for on-balance sheet instruments.

At June 30, ~~2024~~2025, we had $~~775~~585,000 of commitments to originate loans and $65.16 million of unadvanced funds under home equity lines of credit. See Note 10 to the audited consolidated financial statements for further information.

Contractual Obligations. In the ordinary course of our operations, we enter into certain contractual obligations. Such obligations include data processing services, operating leases for premises and equipment, agreements with respect to borrowed funds and deposit liabilities.

Recent Accounting Pronouncements

For a discussion of the impact of recent accounting pronouncements, see Note 1 of the notes to our consolidated financial statements beginning on page F-1 of this Form 10-K. As an emerging growth company, we have elected to use the extended transition period to delay the adoption of new or re-issued accounting pronouncements applicable to public companies until such pronouncements are applicable to non-public companies.

5354

Impact of Inflation and Changing Prices

The audited consolidated financial statements and related data presented herein have been prepared in accordance with generally accepted accounting principles in the United States of America, which requires the measurement of financial position and operating results in terms of historical dollars without considering changes in the relative purchasing power of money over time due to inflation. The primary impact of inflation on our operations is reflected in increased operating costs. Unlike most industrial companies, virtually all of the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates, generally, have a more significant impact on a financial institution’s performance than does inflation. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

For information regarding market risk, see Item 7. “Management’s Discussion and Analysis of Financial Conditions and Results of Operations—Management of Market Risk.”

5455

Item 8. Index to Consolidated Financial Statements

Page


Report of Independent Registered Public Accounting Firm (PCAOB ID: 392)	F-2
Consolidated Balance Sheets	F-3
Consolidated Statements of Operations	F-4
Consolidated Statements of Comprehensive Income	F-5
Consolidated Statements of Stockholders’ Equity	F-6
Consolidated Statements of Cash Flows	F-7
Notes to Consolidated Financial Statements	F-8

F-1

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of CFSB Bancorp, Inc.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of CFSB Bancorp, Inc. and subsidiaries (the Company) as of June 30, ~~2024~~2025 and ~~2023~~2024, the related consolidated statements of operations, comprehensive income, changes in ~~shareholders~~stockholders' equity, and cash flows for the years then ended and the related notes (collectively, “the financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, ~~2024~~2025 and ~~2023~~2024, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Emphasis of Matter

As discussed in Note 1 to the financial statements, during the year ended June 30, 2024, the Company has changed its method of accounting for credit losses due to the adoption of ASC Topic 326, Financial Instruments - Credit Losses. Our opinion is not modified with respect to this matter.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the Company's auditor since 2004.

By:/s/ Wolf & Company, P.C.

Boston, Massachusetts

September 18, ~~2024~~2025

F-2

CFSB Bancorp, Inc. and Subsidiary

Consolidated Balance Sheets

(Dollars in thousands, except per share data)

	June 30,			June 30,
	2024			2023
	2025			2024
Assets:
Cash and due from banks	$	1,~~339~~691		$	1,~~486~~339
Short-term investments		2522,~~620~~974			525,~~375~~620
Total cash and cash equivalents		2624,~~959~~665			626,~~861~~959
Securities available for sale, at fair value		~~113~~91			~~146~~113
Securities held to maturity, at amortized cost, net of $149,000 in allowance for credit loss, fair value of $133,420 at June 30, 2024 and $132,273 at June 30, 2023		146,994			147,902
Securities held to maturity, net of allowance for credit losses of $204 and $149, fair value of $136,435 and $133,420 at June 30, 2025 and June 30, 2024, respectively		145,752			146,994
Federal Home Loan Bank stock, at cost		704			~~381~~704
Loans, net of allowance for credit losses of $1,553 at June 30, 2024 and $1,747 at June 30, 2023		170,438			175,911
Loans, net of allowance for credit losses of $1,547 at June 30, 2025 and $1,553 at June 30, 2024		177,214			170,438
Premises and equipment, net		3,~~246~~027			3,~~413~~246
Accrued interest receivable		1,~~398~~451			1,~~363~~398
Bank-owned life insurance		10,~~670~~956			10,~~402~~670
Deferred tax asset		1,~~245~~291			1,~~079~~245
Operating lease right of use asset		~~860~~764			~~953~~860
Other assets		~~812~~690			~~596~~812
Total assets	$	~~363~~366,~~439~~605		$	~~349~~363,~~007~~439
Liabilities and Stockholders' Equity:
Deposits
Non-interest bearing	$	3433,~~124~~274		$	3234,~~760~~124
Interest-bearing		~~236~~240,~~717~~901			~~230~~236,~~616~~717
Total deposits		~~270~~274,~~841~~175			~~263~~270,~~376~~841
Federal Home Loan Bank of Boston advances		10,350			310,~~675~~350
Mortgagors' escrow accounts		1,~~525~~634			1,~~596~~525
Operating lease liability		~~877~~789			~~962~~877
Accrued expenses and other liabilities		3,~~796~~926			3,~~509~~796
Total liabilities		~~287~~290,~~389~~874			~~273~~287,~~118~~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, 6,621,152 issued and outstanding as of June 30, 2024 and 6,632,642 issued and outstanding as of June 30, 2023		65			65
Common Stock, $.01 par value, 90,000,000 shares authorized, 6,548,575 issued and outstanding as of June 30, 2025 and 6,621,152 issued and outstanding as of June 30, 2024		65			65
Additional paid-in capital		28,~~139~~476			2728,~~814~~139
Treasury stock at cost, 11,490 shares at June 30, 2024		(78	)		-
Treasury stock at cost, 84,067 and 11,490 shares at June 30, 2025 and 2024, respectively		(573	)		(78	)
Retained earnings		5049,~~226~~961			50,~~416~~226
Accumulated other comprehensive loss		(1	)		(3	)
Accumulated other comprehensive income (loss)		1			(1	)
Unearned compensation - ESOP, 230,084 and 240,310 shares unallocated at June 30, 2024 and June 30, 2023, respectively		(2,301	)		(2,403	)
Unearned compensation - ESOP, 219,856 and 230,084 shares unallocated at June 30, 2025 and June 30, 2024, respectively		(2,199	)		(2,301	)
Total stockholders' equity		7675,~~050~~731			7576,~~889~~050
Total liabilities and stockholders' equity	$	~~363~~366,~~439~~605		$	~~349~~363,~~007~~439

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

F-3

CFSB Bancorp, Inc. and Subsidiary

Consolidated Statements of Operations

(Dollars in thousands, except per share data)

	For the Year Ended
	June 30,			June 30,
	2024			2023
	2025			2024
Interest and dividend income:
Interest and fees on loans	$	7,~~020~~307		$	67,~~695~~020
Interest and dividends on debt securities:
Taxable		34,~~736~~322			3,~~228~~736
Tax-exempt		~~363~~288			~~414~~363
Interest on short-term investments		~~552~~1,176			~~341~~552
Total interest and dividend income		1113,~~671~~093			1011,~~678~~671
Interest expense:
Deposits		45,~~513~~641			14,~~872~~513
Borrowings		~~453~~473			54453
Total interest expense		46,~~966~~114			14,~~926~~966
Net interest income		6,~~705~~979			86,~~752~~705
Provision for (reversal of) credit losses:
Loans		(203	)		-
Securities held to maturity		55			(127	)
Off-balance sheet credit exposures-loans		8(3	)		-8
Securities held to maturity		(127	)		-
Loans		(6	)		(203	)
Total provision for (reversal of) credit losses:		~~(322~~46	)		-(322	)
Net interest income after provision for (reversal of) credit losses		76,~~027~~933			87,~~752~~027
Non-interest income:
Customer service fees		~~155~~149			~~146~~155
Income on bank-owned life insurance		~~268~~286			~~258~~268
Other income		~~242~~244			~~260~~242
Total non-interest income		~~665~~679			~~664~~665
Non-interest expenses:
Salaries and employee benefits		4,~~558~~361			4,~~517~~558
Occupancy and equipment		~~975~~974			~~1,028~~975
Advertising		~~140~~141			~~185~~140
Data processing		~~369~~402			~~344~~369
Deposit insurance		~~133~~138			~~106~~133
Other general and administrative		1,~~523~~889			1,~~489~~523
Total non-interest expenses		7,~~698~~905			7,~~669~~698
Income (loss) before income taxes		(6	)		1,747
Loss before income taxes		(293	)		(6	)
Provision (benefit) for income taxes		(39	)		301
Benefit for income taxes		(28	)		(39	)
Net income	$	33		$	1,446
Net (loss) income	$	(265	)	$	33
Net income per share:
Net (loss) income per share:
Basic	$	(0.0104	)	$	0.2301
Diluted	$	(0.0104	)	$	0.2301
Weighted average shares outstanding:
Basic		6,~~291~~267,~~529~~146			6,~~275~~291,~~819~~529
Diluted		6,~~291~~267,~~529~~146			6,~~275~~291,~~874~~529

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

F-4

CFSB Bancorp, Inc. and Subsidiary

Consolidated Statements of Comprehensive Income

(Dollars in thousands)

	For the Year Ended
	June 30,
	2024			2023
	2025			2024
Net income	$	33		$	1,446
Net (loss) income	$	(265	)	$	33
Other comprehensive loss:
Change in unrealized holding losses		42			(54	)
Net change in unrealized losses		42			(54	)
Tax effect		(2-	)		(2	)
Net-of-tax amount		2			(32	)
Comprehensive income	$	35		$	1,443
Comprehensive (loss) income	$	(263	)	$	35

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

F-5

CFSB Bancorp, Inc. and Subsidiary

Consolidated Statements of Stockholders’ Equity

(Dollars in thousands, except share data)

															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		-			-		-			-			(265	)		-			-			(265	)
Other comprehensive income		-			-		-			-			-			2			-			2
Stock-based compensation		-			-		358			-			-			-			-			358
Treasury stock purchased		(72,577	)		-		-			(495	)		-			-			-			(495	)
ESOP shares committed to be released		-			-		(21	)		-			-			-			102			81
Balance at June 30, 2025		6,548,575		$	65	$	28,476		$	(573	)	$	49,961		$	1		$	(2,199	)	$	75,731
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 income		-			-		-			-			33			-			-			33
Other comprehensive income		-			-		-			-			-			2			-			2
Stock-based compensation		-			-		358			-			-			-			-			358
Treasury stock purchased		(11,490	)		-		-			(78	)		-			-			-			(78	)
ESOP shares committed to be released		-			-		(33	)		-			-			-			102			69
Balance at June 30, 2024		6,621,152		$	65	$	28,139		$	(78	)	$	50,226		$	(1	)	$	(2,301	)	$	76,050
Balance at June 30, 2022		6,521,642		$	65	$	27,720		$	-		$	48,970		$	-		$	(2,505	)	$	74,250
Net income		-			-		-			-			1,446			-			-			1,446
Other comprehensive loss		-			-		-			-			-			(3	)		-			(3	)
Restricted stock awards granted		111,000			-		-			-			-			-			-			-
Stock-based compensation		-			-		109			-			-			-			-			109
ESOP shares committed to be released		-			-		(15	)		-			-			-			102			87
Balance at June 30, 2023		6,632,642		$	65	$	27,814		$	-		$	50,416		$	(3	)	$	(2,403	)	$	75,889

(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. Amount shown in the table above is presented net of tax.

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

F-6

CFSB Bancorp, Inc. and Subsidiary

Consolidated Statements of Cash Flows

(Dollars in thousands)

	For the Year Ended
	June 30,
	2024			2023
	2025			2024
Cash flows from operating activities:
Net income	$	33		$	1,446
Net (loss) income	$	(265	)	$	33
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for (reversal of) credit losses		~~(322~~46	)		-(322	)
Amortization of securities, net		~~327~~170			~~437~~327
Net change in deferred loan costs and fees		36(26	)		236
Increase in cash surrender value of bank-owned life insurance		(~~268~~286	)		(~~258~~268	)
Deferred income tax expense		(8046	)		2(80	)
Depreciation and amortization, net		~~238~~223			~~235~~238
ESOP expense		6981			8769
Stock-based compensation		358			~~109~~358
Net increase in accrued interest receivable		(3553	)		(9835	)
Other, net		48263			9148
Net cash provided by operating activities		~~404~~465			~~2,053~~404
Cash flows from investing activities:
Activity in securities available for sale:
Maturities, prepayments and calls		3724			4837
Activity in securities held to maturity:
Maturities, prepayments and calls		1716,~~132~~760			1317,~~668~~132
Purchases		(1615,~~700~~743	)		(16,~~768~~700	)
Purchases of Federal Home Loan Bank of Boston stock		~~(323~~-	)		(~~190~~323	)
Loan originations and payments, net		5(6,~~628~~744	)		(35,~~320~~628	)
Additions to premises and equipment		(714	)		(~~314~~71	)
Net cash provided by (used in) investing activities		5,703			(6,876	)
Net cash (used in) provided by investing activities		(5,707	)		5,703
Cash flows from financing activities:
Net increase (decrease) in deposits		7,465			(23,699	)
Net increase in deposits		3,334			7,465
Treasury stock purchased		(78495	)		-(78	)
Net decrease in short-term borrowings		(3,675	)		3,675
Net change in short-term borrowings		-			(3,675	)
Proceeds from long-term borrowings		10,350			-
Net change in long-term borrowings		-			10,350
Net (decrease) increase in mortgagors' escrow accounts		(71	)		41
Net change in mortgagors' escrow accounts		109			(71	)
Net cash provided by (used in) financing activities		13,991			(19,983	)
Net cash provided by financing activities		2,948			13,991
Net change in cash and cash equivalents		20(2,~~098~~294	)		~~(24~~20,~~806~~098	)
Cash and cash equivalents at beginning of period		626,~~861~~959			316,~~667~~861
Cash and cash equivalents at end of period	$	2624,~~959~~665		$	626,~~861~~959
Supplemental information:
Interest paid on deposits and short-term borrowings	$	46,~~898~~145		$	14,~~926~~898
Income taxes paid	$	8543		$	~~540~~85
Adoption of ASU 2016-2	$	-		$	1,044
Adoption of ASU 2016-13	$	-		$	223
Adoption of ASU 2016-13	$	223		$	-

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

F-7

CFSB Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements

1. Summary of Significant Accounting Policies

Basis of presentation and consolidation

These 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 Security Corporation, which was established to buy, hold, and sell securities. All significant intercompany balances and transactions have been eliminated in consolidation.

In the opinion of management, all adjustments necessary for a fair presentation are reflected in these consolidated financial statements, and all adjustments made are of a normal recurring nature.

Business

The Bank provides a variety of financial services to individuals and small businesses through its offices in Quincy, Holbrook, and Weymouth. Its primary deposit products are savings, checking and term certificate accounts, and its primary lending ~~product~~products isare one- to four-family residential mortgage, multi-family, and commercial real estate loans.

Proposed Merger

On May 20, 2025, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Hometown Financial Group, MHC (“Hometown MHC”), Hometown Financial, Hometown Financial Acquisition Corp. II (“Merger Sub”). Pursuant to the Merger Agreement, 15 Beach will merge with and into Hometown MHC (the “MHC Merger”) with Hometown MHC as the surviving entity. Immediately following the MHC Merger, the Company will merge with Merger Sub (the “Merger”) with the Company as the surviving entity. Immediately following the Merger, the Company will merge with and into Hometown (the “Second-Step Merger”) with Hometown Financial as the surviving corporation. Immediately following the Second-Step Merger, the Bank will merge with and into North Shore Bank, a wholly owned subsidiary of Hometown Financial, with North Shore Bank as the surviving entity.

Pursuant to the terms of the Merger Agreement, the Company shareholders will receive $14.25 in cash for each share of the Company’s common stock.

Reorganization and Offering

On January 12, 2022, the Bank reorganized from a federally chartered mutual savings bank to a 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. The Company, a stock 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 Company sold 43% of its common stock in a stock offering on a priority basis to depositors of the Bank and the tax qualified employee plans of the Bank and contributed 2% of its common stock to a charitable foundation established as a part of the reorganization. The remainder of the Company common stock is held by the MHC. The Company sold 2,804,306 shares of common stock at $10.00 per share for gross offering proceeds of $28.0 million.

Following the completion of the reorganization, all depositors who had liquidation rights with respect to the Bank as of the effective date of the reorganization will continue to have such rights solely with respect to 15 Beach, MHC so long as they continue to hold their deposit accounts with the Bank. In addition, all persons who become depositors of the Bank subsequent to the reorganization will have such liquidation rights with respect to 15 Beach, MHC.

Employee Stock Ownership Plan (the "ESOP")

The cost of shares issued to the ESOP, but not yet allocated to participants, is shown as a reduction of ~~shareholders~~stockholders' equity. The Company records compensation expense for the ESOP equal to the fair market value of shares when they are committed to be released from the suspense account to participants' accounts under the plan.

Earnings Per Share

Basic earnings per share (“EPS”) is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period. For purposes of calculating basic EPS, weighted average common shares outstanding excludes unallocated ESOP shares and non-vested restricted shares. Diluted EPS is computed using the same method as basic EPS and reflects the potential dilution that could occur if stock options shares were exercised and converted into common stock. The potentially diluted shares would then be included in the weighted average number of shares outstanding for the period using the treasury stock method. For the year ended June 30, 2024, there were no anti-dilutive shares. For the year ended June 30, 2023, 272,945 shares were excluded from the computation of diluted earnings per share because they were anti-dilutive. Anti-dilutive shares are common stock equivalents with weighted average exercise prices in excess of the average market value for the periods presented.

F-8

CFSB Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (continued)

~~The~~Earnings ~~following~~Per ~~is a reconciliation of the numerators and denominators of the basic and diluted EPS calculation for the years ended June 30, 2024 and 2023.~~Share

	For the Year Ended
(Dollars In thousands)	June 30, 2024			June 30, 2023
Net income	$	33		$	1,446
Weighted average number of common shares outstanding		6,631,443		$	6,555,275
Less: Average unallocated ESOP shares		(235,611	)	$	(245,823	)
Less: Average non-vested restricted shares		(104,303	)	$	(33,633	)
Weighted average number of common shares outstanding used to calculate basic earnings per common share		6,291,529			6,275,819
Dilutive effect of share-based compensation		-			55
Weighted average number of common shares outstanding used to calculate diluted earnings per common share		6,291,529			6,275,874
Earnings per common share
Basic	$	0.01		$	0.23
Diluted	$	0.01		$	0.23

Basic earnings per share (“EPS”) is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the period. For purposes of calculating basic EPS, weighted average common shares outstanding excludes unallocated ESOP shares and non-vested restricted shares. Diluted EPS is computed using the same method as basic EPS but also reflects the potential dilution that could occur if stock options shares were exercised and converted into common stock. The potentially diluted shares would then be included in the weighted average number of shares outstanding for the period using the treasury stock method. For the years ended June 30, 2025, and June 30, 2024, there were no anti-dilutive shares. Anti-dilutive shares are common stock equivalents with weighted average exercise prices in excess of the average market value for the periods presented.

The following is a reconciliation of the numerators and denominators of the basic and diluted EPS calculation for the years ended June 30, 2025 and 2024.


	For the Year Ended
(Dollars In thousands, except per share amounts)	June 30, 2025			June 30, 2024
Net (loss) income	$	(265	)	$	33

Weighted average number of common shares outstanding		6,574,761			6,631,443
Less: Average unallocated ESOP shares		(225,388	)		(235,611	)
Less: Average non-vested restricted shares		(82,226	)		(104,303	)
Weighted average number of common shares outstanding used to calculate basic earnings per common share		6,267,146			6,291,529
Dilutive effect of share-based compensation		-			-
Weighted average number of common shares outstanding used to calculate diluted earnings per common share		6,267,146			6,291,529

Earnings (loss) per common share
Basic	$	(0.04	)	$	0.01
Diluted	$	(0.04	)	$	0.01

Use of estimates

In preparing consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated balance sheet and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. A material estimate that is particularly susceptible to significant change in the near term is the determination of the allowance for credit losses.

Reclassification

Certain amounts in the ~~2023~~2024 consolidated financial statements have been reclassified to conform to the ~~2024~~2025 presentation.

Cash and cash equivalents

For purposes of the consolidated statements of cash flows, cash and cash equivalents include cash and balances due from banks, and interest-bearing deposits consisting primarily of balances at the Federal Reserve Bank of Boston and deposits sold that mature overnight. The Company may from time to time have deposits in financial institutions which exceed federally insured limits. At June 30, ~~2024~~2025 and ~~2023~~2024, the Company had a concentration of cash on deposit at the Federal Reserve Bank of Boston amounting to $2218,~~682~~469,000 and $122,~~660~~682,000, respectively.

Fair value hierarchy

F-9

CFSB Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (continued)

The Company groups its assets that are measured at fair value in three levels, based on the markets in which the assets are traded and the reliability of the assumptions used to determine fair value.

Level 1 – Valuation is based on quoted prices in active exchange markets for identical assets. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

Level 2 – Valuation is based on observable inputs other than Level 1 prices, such as quoted prices for similar assets; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets.

Level 3 – Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets. Level 3 assets include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

F-9

CFSB Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (continued)

Securities

Debt securities that management has the positive intent and ability to hold to maturity are classified as “held to maturity” ("HTM") and recorded at amortized cost. Securities not classified as held to maturity are classified as “available for sale” ("AFS") and recorded at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income, net of tax effects.

Purchase premiums and discounts are recognized in interest income using the level yield method over the terms of the securities except for purchase premiums on callable securities which are amortized to the earliest call date. Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method.

As of June 30, ~~2024~~2025, HTM securities are carried at amortized cost and AFS securities are carried at fair value. On July 1, 2023, the Company adopted ASU 2016-13 Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as amended, which ~~replaces~~replaced the incurred loss methodology with an expected loss methodology that is referred to as the Current Expected Credit Losses ("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 HTM debt securities. The Company measures expected credit losses on HTM debt securities on a collective basis by security type and risk rating where available. Any expected credit losses on HTM securities would be presented as an allowance for credit loss.

Federal Home Loan Bank Stock

The Bank, as a member of the Federal Home Loan Bank (“FHLB”) system, is required to maintain an investment in capital stock of the FHLB of Boston. Based on redemption provisions of the FHLB, the stock has no quoted market value and is carried at cost. At its discretion, the FHLB of Boston may declare dividends on the stock. The Company reviews its investment in FHLB stock for impairment based on the ultimate recoverability of the cost basis in the FHLB stock. As of June 30, ~~2024~~2025 and ~~2023~~2024, no impairment has been recognized.

Loans

The Company’s loan portfolio includes residential real estate, commercial real estate, construction, and consumer loan segments. Residential real estate loans include classes for one- to four-family, multi-family, second mortgages and home equity lines of credit.

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off generally are reported at their outstanding unpaid principal balances adjusted for charge-offs, the allowance for credit losses, and any deferred fees or costs on originated loans. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the related loan yield using the interest method. When loans are sold or paid off, any unamortized fees and costs are recorded in earnings.

The accrual of interest on all loans is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection. Past due status is based on contractual terms of the loan. In all cases, loans are placed on non-accrual status if collection of principal or interest is considered doubtful. All interest accrued but not collected for loans that are placed on non-accrual status is reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are less than 90 days past due and future payments are reasonably assured, generally after six months.

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CFSB Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (continued)

The accrual of interest on loans is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection. Past due status is based on contractual terms of the loan. In all cases, loans are placed on non-accrual status if collection of principal or interest is considered doubtful. All interest accrued but not collected for loans that are placed on non-accrual status is reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are less than 90 days past due and future payments are reasonably assured, generally after six months.

Allowance for credit losses

The allowance for credit losses (“ACL”) is an estimate of expected losses inherent within the Company's existing loan portfolio. The ACL, as reported on our consolidated balance sheet, is adjusted by a credit loss expense, which is reported in earnings, and reduced by the charge-off of loan amounts, net of recoveries. Accrued interest receivable on loans was $581,000 at June 30, 2025, and $520,000 at June 30, 2024, and iswas excluded from the ACL.

Residential one- to four-family: This segment consists of one- to four-family, owner-occupied, residential mortgage loans, virtually all of which are secured by properties in our market area. Generally, mortgages with loan-to-value ratios greater than 80% require private mortgage insurance, with limited exceptions. Underwriting approval is dependent on review of the borrower's ability to repay and credit history in accordance with the Company's policy. The overall health of the economy, including unemployment rates and housing pricing, will have an effect on the credit quality of this segment.

Multi-family: This segment consists of real estate loans secured by properties of five or more rental units within our market area. We consider a number of factors in originating multi-family loans. We evaluate the qualifications, income level and financial condition of the borrower, including project-level and global cash flows, credit history, and management expertise, as well as the value and condition of the property securing the loan. The underlying cash flows generated by the properties can be adversely impacted by a downturn in the economy due to increased vacancy rates or diminished cash flows, which in turn, would have an effect on the credit quality of this segment. Management obtains financial information annually and continually monitors the cash flows of these loans.

Second mortgages and home equity lines of credit: Second mortgage loans and home equity lines of credit are multi-purpose loans used to finance various home or personal needs for which a one- to four-family primary or secondary residence serves as collateral. We generally originate home equity lines of credit with a maximum loan-to-value ratio of 80% (including the value of the underlying mortgage loan) and with terms of up to 20 years. We originate second mortgage loans on owner-occupied properties with fixed rates of interest. We generally originate these loans with a maximum loan-to-value ratio of 80% (including the value of the underlying mortgage loan) and with terms of up to 15 years. Underwriting approval is dependent on review of the borrower's ability to repay and credit history in accordance with the Company's policy. The overall health of the economy, including unemployment rates and housing pricing, will have an effect on the credit quality of this segment.

Commercial real estate: This segment consists of real estate loans generally secured by office buildings, small retail facilities, mixed-use facilities, and warehouses within our market area. We consider a number of factors in originating commercial real estate loans. We evaluate the qualifications, income level and financial condition of the borrower, including project-level and global cash flows, credit history, and management expertise, as well as the value and condition of the property securing the loan. The underlying cash flows generated by the properties can be adversely impacted by a downturn in the economy due to diminished cash flows, which in turn, would have an effect on the

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CFSB Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (continued)

~~credit~~with ~~quality~~a maximum loan-to-value ratio of ~~this~~80% ~~segment~~(including the value of the underlying mortgage loan) and with terms of up to 15 years. ~~Management~~Underwriting ~~obtains~~approval ~~financial~~is ~~information~~dependent ~~annually~~on review of the borrower's ability to repay and ~~continually~~credit ~~monitors~~history in accordance with the ~~cash~~Company's ~~flows~~policy. The overall health of ~~these~~

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