CFSB Bancorp, Inc. /MA/ (CFSB)·Q4 2024 Earnings Summary

Executive Summary

• Q4 FY2024 delivered net income of $0.16M ($0.03 per diluted share), improving from a Q3 loss of $(0.04)M ($(0.01) per share) and up vs Q4 FY2023 net income of $0.105M ($0.02) as cost controls and a tax benefit offset ongoing net interest margin (NIM) compression .
• NIM compressed to 1.93% (down 3 bps q/q and 38 bps y/y) as deposit costs rose and the deposit mix continued shifting into higher-cost certificates; cost of deposits rose to 2.09% from 1.84% in Q3 and 1.15% a year ago .
• Operating expenses fell 7.5% q/q to $1.77M; the efficiency ratio improved to 98.77% from 105.65% q/q, though remains elevated vs 93.97% in Q4 FY2023 .
• Asset quality remains pristine (no non-performing or delinquent loans), enabling a small provision reversal; management reiterated yield-curve inversion as the core headwind but sees relief as assets reprice and if the Fed cuts rates .
• No formal guidance or consensus estimate comparison provided; management commentary emphasizes funding cost pressures and eventual relief as repricing and policy easing materialize .

What Went Well and What Went Wrong

• What Went Well

  • Sequential return to profitability: Q4 net income of $0.16M vs Q3 loss of $(0.04)M; diluted EPS $0.03 vs $(0.01) in Q3 .
  • Cost discipline: Non-interest expense down 7.5% q/q to $1.77M, driven by lower salaries/benefits, occupancy, and data processing; efficiency ratio improved to 98.77% from 105.65% q/q .
  • Asset quality strength: No non-performing or delinquent loans; allowance for credit losses at 0.90% of total loans; small provision reversals reflect strong credit and lower balances .
  • Management tone on path forward: “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.” — CEO Michael E. McFarland .

• What Went Wrong

  • NIM and NII pressure: NIM fell to 1.93% (−3 bps q/q; −38 bps y/y) and net interest income declined both q/q and y/y amid higher deposit costs and mix shift to CDs .
  • Funding cost escalation: Cost of deposits rose to 2.09% from 1.84% q/q, reflecting continued competitive rate environment and migration to higher-yielding term certificates .
  • Revenue efficiency still stretched: Despite sequential improvement, the efficiency ratio at 98.77% remains materially above last year’s 93.97%, underscoring margin pressure and limited scale benefits .

Financial Results

• Income and margin metrics (fiscal quarters; oldest → newest)

• Balance sheet and ratios (period-end unless noted; oldest → newest)

• Asset quality (period-end; oldest → newest)

Note: “—%” indicates zero/none as presented. Q4 FY2024 narrative confirms no non-performing or delinquent loans .

• Segment breakdown and KPIs: The company does not report operating segments; banking KPIs are presented above .

Guidance Changes

CFSB did not provide formal quantitative guidance in the Q4 FY2024 materials; no ranges were disclosed for NIM, expenses, revenues, or tax rate. Management commentary focused on ongoing yield curve inversion and expected relief as assets reprice and if the Fed cuts .

Earnings Call Themes & Trends

Note: No separate earnings call transcript was provided; themes are drawn from the 8-K/press release narratives for each quarter.

Management Commentary

• Strategic message: Management underscores that liability costs are repricing faster than assets due to the inverted yield curve; as asset yields reset higher and if the Fed reduces rates, the headwind should ease .
• Quote: “Liabilities continue to reprice at a faster pace than assets. Our business model has been strained over the last two years due to continued inversion of the yield curve. As assets reprice upward combined with some reductions from the Federal Reserve on interest rates these challenges should begin to diminish.” — Michael E. McFarland, President & CEO .
• Expense control and credit discipline: Sequential expense reductions were driven by lower pension costs, reduced service contracts, and lower data processing fees; provision reversals were supported by continued strong asset quality and lower loan balances .

Q&A Highlights

• No analyst Q&A was available in the company’s Q4 FY2024 press materials; management commentary is limited to the press release narrative .

Estimates Context

• We were unable to retrieve S&P Global consensus at this time, and the company did not provide external estimate comparisons in its Q4 FY2024 materials; as a result, no vs-consensus comparisons are included .

Key Takeaways for Investors

• Margin pressure persists: NIM fell to 1.93% (−3 bps q/q; −38 bps y/y) as deposit costs (2.09%) continue to rise with the mix shifting toward CDs; near-term NII growth remains challenged absent rate cuts or faster asset repricing .
• Sequential profitability recovery: Q4 returned to profit ($0.16M; $0.03 EPS) from Q3’s loss, aided by expense control and a tax benefit, though revenue efficiency remains stretched (efficiency ratio 98.77%) .
• Strong credit provides cushion: Zero NPLs and small provision reversals provide resilience despite margin pressure; ACL remains a conservative 0.90% of loans .
• Liquidity and funding: Deposits increased y/y (+$7.5M) with greater reliance on term CDs; FHLB advances utilized as part of a leverage/liquidity strategy (now $10.4M), supporting balance sheet flexibility .
• Watch for catalysts: Any Fed rate cuts or repricing of assets into higher yields could relieve NIM pressure; continued expense control and maintaining pristine credit can help bridge to a more favorable curve .
• Balance sheet trajectory: Loans have trended lower as borrower repayments exceed originations in a higher-rate backdrop; monitoring loan growth inflection and deposit competition will be key .