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In its first full quarter since partially converting to a stock bank, Quincy-based Colonial Federal Savings Bank saw positive earnings after a first quarter earnings loss driven by a donation to its new charitable foundation.
Colonial Federal Savings Bank’s holding company, CFSB Bancorp Inc., had second quarter net income of $544,000 compared to net income of $396,000 in the second quarter of 2021, before the bank’s partial stock conversion. For the 12 months ending June 30, the bank had net income of $442,000 compared to net income of $1.39 million for the 12 months ending June 30, 2021.
“Colonial Federal saw improvements in both interest earning assets and net interest margin over the year,” Michael McFarland, Colonial Federal’s president and CEO, said in a statement yesterday announcing the second quarter earnings. “Our mortgage portfolio experienced increased purchase volume and less refinancing volume due to the rising rate environment. Our asset quality remains excellent and expenses were very well controlled during the year. We expect performance to improve due to rising interest rates for the remainder of the year.”
The bank had completed a reorganization into a two-tier form mutual holding company and had an initial public offering on Jan. 12, selling approximately 2.8 million shares of common stock at $10 per share. The first-step conversion to a stock bank saw 42 percent of the company’s shares sold in the IPO, while the majority of the shares, 55 percent, went to the bank’s federally chartered mutual holding company, 15 Beach.
The bank had seen a first quarter net loss of $828,000. As part of the conversion, the bank had established the Colonial Federal Savings Bank Charitable Foundation and donated $1.6 million in cash and stock to the foundation.
The bank had second quarter net interest income of $2.2 million, up $200,000, or 10.2 percent, year-over-year. Noninterest income was $167,000 in the second quarter, up from $146,000 in the second quarter of 2021.
The bank’s second quarter noninterest expenses were $1.8 million compared to $1.6 million in the second quarter of 2021. The bank attributed the higher expenses to a $42,000 increase in salaries and employee benefit expenses related to normal employee annual merit salary increases and expenses connected to the bank’s employee stock ownership plan, a $27,000 increase in occupancy expenses, and a $13,000 increase in data processing expenses. The bank said it also had a $128,000 increase in other expenses due to higher consultant and audit expenses.
Colonial Federal Savings Bank’s total assets were $366.2 million at the end of the second quarter, up from $338.9 million on June 30, 2021.
Total deposits were $287.07 million on June 30 compared to $284.67 million on the same date last year.
The bank’s net loans were $172.6 million in the second quarter, compared to $174.4 million in the second quarter of 2021. The bank said it had decreases of $1.6 million, or 10.1 percent, in multi-family real estate loans; $484,000, or 19.7 percent, in second mortgages; and $1.6 million, or 9.8 percent, in commercial real estate loans. These decreases were offset by increases of $1.7 million, or 1.2 percent, in one- to-four family residential real estate loans and $89,000, or 4.2 percent, in other loans.
