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The parent company of Quincy-based Colonial Federal Savings Bank has seen three straight quarters with positive income after recording a loss of $828,000 in the first quarter of 2022, when the bank had a partial initial public offering and used some of the proceeds for a donation to its new charitable foundation.
CFSB Bancorp Inc. had fourth quarter net income of $341,000, or $0.05 per basic and diluted share, compared to net income of $645,000, or $0.10 per basic and diluted share, in the third quarter. In the fourth quarter of 2021, before the bank partially converted to a stock bank, net income was $234,000.
The bank had total assets as of Dec. 31 of $356.8 million, down 1.1 percent from Sept. 30 and 1.4 percent compared to Dec. 31, 2021.
Total loans were $180.7 million at the end of the fourth quarter compared to $177.34 million at the end of September and $175.03 million at the end of 2021. The bank attributed loan growth mainly to commercial real estate loans, which grew $5.4 million, or 34.8 percent, from the third quarter to $21.1 million as of Dec. 31. The bank said the growth in commercial loans was part of its focus on diversifying its loan mix.
“We are pleased to see loan growth during the quarter and continued improvement in interest-earning asset yields,” Michael E. McFarland, Colonial Federal Savings Bank’s president and CEO, said in the bank’s earnings statement. “We are proud of the Bank’s accomplishments during calendar year 2022, and I want to thank our employees for their continued efforts and commitment.”
Total deposits were $275.46 million at the end of 2022, down $4.6 million, or 1.6 percent, from the third quarter and by 10.4 percent year-over-year. The bank said it experienced decreases in customer deposits in the fourth quarter from the absence of government stimulus and increases in inflation, as well as changes by depositors to higher-yielding term certificates due to the higher interest rate environment.
“Looking forward, we are likely to see headwinds in deposit pricing in our highly competitive banking environment,” McFarland said. “We will continue to focus on pricing and expense discipline in the current rising interest rate and inflationary environment.”
Net interest income in the fourth quarter was $2.4 million, down 1 percent from the third quarter. The bank attributed the decrease primarily to an increase of 41 basis points in the average rate paid for certificates of deposit, which was partially offset by an increase of 13 basis points in the average yield earned for interest-earning assets.
In the fourth quarter of 2021, before the partial conversion, the bank’s net interest income was $2 million. The bank’s net interest margin at the end of the fourth quarter was 2.77 percent, up 27 basis points year-over-year.
The bank had completed a reorganization into a two-tier 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.
