Executive Summary

Q1 FY2025 produced a small net loss of $6,000 ($0.00 EPS) as net interest margin compressed year over year to 1.92% and deposit costs remained elevated; sequentially, net interest income was modestly higher while NIM edged down 1 bp .
Interest income rose 17.4% YoY on higher yields and larger average cash balances, but was more than offset by a 70.2% YoY increase in interest expense as deposit mix shifted toward higher-cost certificates of deposit and FHLB balances rose .
Asset quality remained strong with no non-performing or delinquent loans; allowance for credit losses on loans was 0.89% of total loans (vs. 0.94% YoY) and credit loss reversals supported results .
No formal guidance was provided; Wall Street consensus estimates via S&P Global were unavailable for Q1 FY2025, limiting beat/miss framing. Subsequent strategic catalyst: announced merger agreement (May 20, 2025) with Hometown Financial Group at $14.25 per share cash consideration .

What Went Well and What Went Wrong

What Went Well

Strong asset quality: “no non-performing or delinquent loans” at quarter end; ACL on loans at 0.89% and credit loss reversals across loans and HTM securities supported earnings .
Interest income growth: total interest and dividend income increased $481,000 YoY (+17.4%) on higher yields and larger average cash balances; securities and cash interest were notable drivers .
Management positioning on rates: CEO emphasized early rate reductions by the Fed and expectation that a flatter curve will ease deposit pricing pressures as assets reprice higher (“look forward to a flat yield curve… challenges on competitive deposit rates should start to diminish”) .

What Went Wrong

NIM compression and funding costs: NIM fell to 1.92% from 2.22% YoY, with cost of deposits rising to 2.15% from 1.34% YoY; interest-bearing deposit expense rose $581,000 YoY on mix shift to CDs .
Tax headwind despite low pretax income: tax expense of $19,000 exceeded pretax income of $13,000 due to a $46,000 increase to the valuation allowance on charitable contribution carryover .
Sequential OpEx uptick: non-interest expense rose $106,000 QoQ (+6.0%), driven by higher salaries/benefits (pension cost), occupancy/equipment, and data processing .

Financial Results

Metric	Q1 FY2024 (Sep 30, 2023)	Q3 FY2024 (Mar 31, 2024)	Q4 FY2024 (Jun 30, 2024)	Q1 FY2025 (Sep 30, 2024)
Total Interest & Dividend Income ($USD Thousands)	$2,732	$3,007	$3,128	$3,219
Total Interest Expense ($USD Thousands)	$926	$1,368	$1,507	$1,576
Net Interest Income ($USD Thousands)	$1,806	$1,639	$1,621	$1,643
Net Interest Income (Tax-Equivalent) ($USD Thousands)	$1,832	$1,663	$1,643	$1,663
Net Interest Margin %	2.22%	1.96%	1.93%	1.92%
Non-interest Income ($USD Thousands)	$160	$167	$166	$170
Non-interest Expense ($USD Thousands)	$1,916	$1,908	$1,765	$1,871
Income (Loss) Before Taxes ($USD Thousands)	$216	$(82)	$54	$13
Provision (Benefit) for Taxes ($USD Thousands)	$93	$(42)	$(106)	$19
Net Income (Loss) ($USD Thousands)	$123	$(40)	$160	$(6)
EPS (Basic) ($USD)	$0.02	$(0.01)	$0.03	$0.00
EPS (Diluted) ($USD)	$0.02	$(0.01)	$0.03	$0.00
Cost of Deposits %	1.34%	1.84%	2.09%	2.15%
Cost of Funds %	1.40%	1.99%	2.18%	2.24%

Segment/Balance Mix – Deposits (Period-end)

Deposit Category ($USD Thousands)	Sep 30, 2023	Jun 30, 2024	Sep 30, 2024
Non-interest-bearing NOW & Demand	$30,918	$34,124	$31,190
Interest-bearing NOW & Demand	$30,902	$28,262	$29,200
Regular & Other	$60,389	$54,192	$54,659
Money Market Accounts	$24,877	$21,956	$22,387
Term Certificates	$113,587	$132,307	$134,234
Total Deposits	$260,673	$270,841	$271,670

Key KPIs and Balance Sheet

KPI	Q3 FY2024 (Mar 31, 2024)	Q4 FY2024 (Jun 30, 2024)	Q1 FY2025 (Sep 30, 2024)
Total Assets ($USD Thousands)	$358,064	$363,439	$364,486
Total Loans ($USD Thousands)	$172,848	$172,378	$169,908
Loans, Net ($USD Thousands)	$170,888	$170,438	$168,023
FHLB Advances ($USD Thousands)	$10,350	$10,350	$10,350
ACL on Loans / Total Loans %	0.90%	0.90%	0.89%
Net Interest Rate Spread %	1.35%	1.25%	1.21%
Net Interest-Earning Assets ($USD Thousands)	$92,877	$94,547	$96,396
Ratio IEA to IBL %	137.67%	138.33%	138.62%

Guidance Changes

No formal quantitative guidance (revenue/NII, margins, OpEx, tax rate, dividends) was issued for Q1 FY2025 in the press release or 8‑K .

Metric	Period	Previous Guidance	Current Guidance	Change
NII / NIM	Q2 FY2025 onward	None	None	N/A
OpEx	FY2025	None	None	N/A
Tax rate	FY2025	None	None	N/A
Dividends	FY2025	None	None	N/A

Earnings Call Themes & Trends

No earnings call transcript was available for Q1 FY2025 (none listed in company filings); themes below draw from quarterly press releases.

Topic	Previous Mentions (Q3 FY2024)	Previous Mentions (Q4 FY2024)	Current Period (Q1 FY2025)	Trend
Yield curve inversion, rate backdrop	“Liabilities reprice faster than assets… slight realignment will assist us”	“Business model strained over two years due to continued inversion”	CEO expects rate reductions and flatter curve to ease deposit pricing as assets reprice	Improving tone
Deposit mix shift to CDs	Continued shift to higher-yielding term CDs; QoQ increases	Term CDs +$21.6MM YoY; promotions driving mix	CDs up YoY and QoQ; mix continues to favor CDs	Continuing
Asset repricing / interest income	Higher yields on securities/cash; interest income up	Interest income up QoQ; yields higher	Interest income +17.4% YoY; yield on IEAs +39 bps	Improving
Funding costs / cost of deposits	Cost of deposits rising sharply YoY	Cost of deposits 2.09% (+94 bps YoY)	Cost of deposits 2.15% (+81 bps QoQ, +81 bps YoY vs Q1 FY2024)	Deteriorating
Credit quality	Substandard loans minimal; reversals of credit losses	No non-performing loans; ACL 0.90%	No NPLs; ACL 0.89%; reversals across categories	Stable strong
Tax/valuation allowance	Deferred tax valuation impacts noted	Deferred tax adjustments drove tax benefit	Tax expense > pretax income due to valuation allowance increase	Mixed

Management Commentary

CEO: “Returns on equity and assets in the first quarter of 2025 were significantly lower than our long-term performance… We have seen the beginning of rate reductions from the Federal Reserve and look forward to a flat yield curve. As assets continue to reprice the challenges on competitive deposit rates should start to diminish as the market adjusts.”
Operating drivers: Interest income increased on higher yields and cash balances; deposit cost and FHLB balances drove interest expense higher YoY .
Balance sheet strategy: Certificates of deposit promotions aligned with customer preference for higher rates; modest increase in FHLB advances maintained liquidity .

Q&A Highlights

No public earnings call transcript or Q&A was available for Q1 FY2025 in the company’s filings. Key clarifications were embedded in the press release/8‑K (e.g., tax valuation allowance impact, credit loss reversals) .

Estimates Context

Wall Street consensus EPS and revenue/NII estimates via S&P Global were unavailable for Q1 FY2025, likely due to limited analyst coverage; therefore, an estimates-based beat/miss assessment cannot be provided at this time.
Implication: Absent consensus, investors should track sequential NIM, deposit mix, and tax valuation allowance effects to infer trajectory rather than headline beats/misses .

Key Takeaways for Investors

NIM pressure persisted YoY (1.92% vs. 2.22%) as deposit costs rose and mix shifted toward CDs; sequential NII improved modestly but margins remain tight, suggesting earnings leverage hinges on liability repricing catching up to assets .
Asset quality is a bright spot—no NPLs and continued credit loss reversals—limiting downside risk and supporting capital stability during margin compression .
Tax valuation allowance created an outsized tax expense versus minimal pretax income; monitor for normalization in subsequent quarters to avoid disproportionate EPS impacts .
Deposit promotions drove CDs higher; while supportive of deposit stability, they elevate funding cost—watch for promotions to moderate as rate cuts flow through to deposit pricing .
Sequentially, interest income and tax-equivalent NII improved versus June quarter, but OpEx rose on pensions/occupancy; sustained cost discipline will be important to defend efficiency ratio .
Balance sheet remains liquid with steady FHLB advances ($10.35MM) and growing cash/short-term investments; capacity exists to reposition as rate environment evolves .
Strategic catalyst: agreed sale to Hometown Financial Group at $14.25/share (May 20, 2025); pending approvals, transaction sets a valuation anchor and may cap near-term trading range while spread arbitrage dynamics dominate .

Sources: Q1 FY2025 press release and 8‑K (Item 2.02) ; Prior quarter releases for context ; Merger announcement (May 20, 2025) .

CFSB Bancorp, Inc. /MA/ (CFSB)·Q1 2025 Earnings Summary