Executive Summary

Q2 FY2025 showed modest improvement in net interest margin to 1.98% (+6 bps QoQ), but the company posted a net loss of $0.162M ($0.03 EPS) as non-interest expenses rose and tax valuation allowances increased .
Net interest income grew 2.7% QoQ on higher asset yields, while interest expense was effectively flat; credit quality remained strong with reversals of loan credit loss provisions and allowance coverage down to 0.83% .
No formal quantitative guidance was provided; management emphasized optimism as assets reprice higher and deposit/wholesale funding costs peak and decline .
A significant catalyst emerged post-quarter: Hometown Financial Group agreed to acquire CFSB for $14.25 per share in cash (announced May 20, 2025) .

What Went Well and What Went Wrong

Net interest margin expanded to 1.98% (+6 bps QoQ), with net interest income up 2.7% QoQ driven by higher average yields on interest-earning assets; interest income rose $43K QoQ .
Credit quality solid: $97K reversal of loan credit losses in Q2; allowance for credit losses on loans decreased to 0.83% of total loans, with no charge-offs in the six months ended Dec 31, 2024 .
Management signaled improving asset yields and peaking deposit costs: “Returns on interest-earning assets continue to show improvement while the cost of deposits have peaked… As our assets continue to reprice higher and our liabilities… reprice lower, conditions have become more favorable” .

Non-interest expense increased $173K QoQ (+9.2%) to $2.044M, led by salaries/benefits (+$177K) and G&A (+$48K); this pressured bottom-line results .
Net loss widened to $0.162M from a $0.006M loss in Q1; EPS moved from $0.00 to $(0.03) .
Tax provision rose to $51K versus $19K in Q1 and $16K in prior-year Q2, driven by higher deferred tax valuation allowance on charitable contribution carryover .

Metric	Q4 FY2024 (Jun 30, 2024)	Q1 FY2025 (Sep 30, 2024)	Q2 FY2025 (Dec 31, 2024)
EPS ($)	$0.03	$0.00	$(0.03)
Net Income (Loss) ($USD Millions)	$0.160	$(0.006)	$(0.162)
Total Interest & Dividend Income ($USD Millions)	$3.128	$3.219	$3.263
Total Interest Expense ($USD Millions)	$1.507	$1.576	$1.574
Net Interest Income ($USD Millions)	$1.621	$1.643	$1.689
Net Interest Margin (%)	1.93%	1.92%	1.98%
Non-Interest Income ($USD Millions)	$0.166	$0.170	$0.165
Non-Interest Expense ($USD Millions)	$1.765	$1.871	$2.044
Provision for Income Taxes ($USD Millions)	$(0.106)	$0.019	$0.051

KPIs and Balance Sheet

KPI	Q4 FY2024	Q1 FY2025	Q2 FY2025
Total Assets ($USD Millions)	$363.439	$364.486	$362.758
Total Deposits ($USD Millions)	$270.841	$271.670	$270.358
Certificates of Deposit ($USD Millions)	$132.307	$134.234	$139.091
Non-Interest-Bearing NOW & Demand ($USD Millions)	$34.124	$31.190	$27.991
Allowance for Credit Losses on Loans (% of Loans)	0.90%	0.89%	0.83%
Net Interest Rate Spread (%)	1.25%	1.21%	1.32%
Cost of Deposits (%)	2.09%	2.15%	2.16%
Cost of Funds (%)	2.18%	2.24%	2.25%

Note: No Wall Street consensus comparisons included due to unavailability via S&P Global this quarter.

Metric	Period	Previous Guidance	Current Guidance	Change
N/A	N/A	N/A	N/A	N/A

Management did not provide formal quantitative guidance metrics in the Q2 materials .

Note: No earnings call transcript found for Q2 FY2025.

Topic	Previous Mentions (Q4 FY2024)	Previous Mentions (Q1 FY2025)	Current Period (Q2 FY2025)	Trend
Rate environment / yield curve	“Liabilities continue to reprice at a faster pace than assets… inversion of yield curve”	“Returns on equity/assets… significantly lower… historically long and deep inversion”	“Returns on interest-earning assets continue to show improvement; cost of deposits have peaked… assets reprice higher; liabilities reprice lower”	Improving tone; expecting easing in liability costs
Deposit mix / CDs	Shift to higher-cost CDs; certificates up YoY	Further increase in CDs; promotions driving mix	Certificates of deposit up to $139.1M; non-interest-bearing balances down	Mix tilting to CDs; non-interest-bearing decline
Asset repricing / yields	Higher yields on interest-earning assets QoQ	Higher yields across assets; NIM compressed	NIM expands to 1.98%; net interest income up 2.7% QoQ	Gradual margin recovery
Credit quality / provisions	Reversals of credit losses; strong asset quality	Reversals continue; allowance ~0.89%	$97K loan provision reversal; allowance down to 0.83%; no charge-offs in 6M	Stable/strong
FHLB advances / liquidity	Implemented leverage strategy; FHLB advances increased	Higher average FHLB advances QoQ	FHLB advances steady at $10.35M	Stable
Taxes / valuation allowance	Deferred tax adjustments drove benefits	Valuation allowance increased; tax expense > pre-tax income	Tax provision increased due to valuation allowance on charitable carryover	Ongoing headwind

“Returns on interest-earning assets continue to show improvement while the cost of deposits have peaked and short-term instruments should continue to decline… As our assets continue to reprice higher and our liabilities… reprice lower, conditions have become more favorable” — Michael E. McFarland, President & CEO .
“Returns on equity and assets in the first quarter of 2025 were significantly lower… reflecting… increase in short-term interest rates… and a historically long and deep inversion of the yield curve” — Michael E. McFarland .
“Liabilities continue to reprice at a faster pace than assets… As assets reprice upward combined with some reductions from the Federal Reserve on interest rates these challenges should begin to diminish” — Michael E. McFarland .

No Q2 FY2025 earnings call transcript was available; no Q&A themes to report [ListDocuments returned none].

We attempted to retrieve Wall Street consensus (EPS and revenue) via S&P Global for Q2 FY2025, but estimates were unavailable due to API limits; therefore, we cannot assess beats/misses this quarter. Values retrieved from S&P Global were unavailable due to access limitations.
Absent consensus, focus remains on internal progression: NIM expansion (+6 bps QoQ), net interest income growth (+2.7% QoQ), and stable credit quality .

Margin trajectory improving: NIM rose to 1.98% and net interest income increased QoQ as asset yields reprice higher; monitor deposit cost trends and mix to gauge sustainability .
Expense discipline is a priority: Non-interest expense jumped $173K QoQ, largely salaries/benefits; watch for normalization and targeted reductions to support profitability .
Credit quality remains a strength: Continued reversals in loan credit losses and allowance ratio down to 0.83%, with no charge-offs in the six-month period .
Funding mix risks: CDs continue to rise while non-interest-bearing deposits decline; while stabilizing rates should help, the mix could keep funding costs elevated near term .
Tax headwinds: Deferred tax valuation allowances increased the tax provision despite pre-tax loss; expect ongoing volatility in effective tax rate until allowances normalize .
Corporate action catalyst: The agreed sale to Hometown Financial Group at $14.25 per share in cash provides valuation support and should anchor near-term trading; timing and regulatory approvals remain key milestones .
Near-term positioning: With improving asset yields and peaking deposit costs, incremental margin expansion is probable; tactically, monitor CDs promotional intensity, NIM prints, and any subsequent operational updates post-merger announcement .