CFSB Bancorp Inc reported a modest top-line improvement in QQ2 2025, with revenue of $3.443 million, up 1.59% QoQ and 11.97% YoY. However, the quarter delivered a net loss of $0.162 million and an operating loss of $0.111 million, signaling a weak operating lever that failed to convert revenue into positive earnings. The gross margin remained healthy at approximately 56%, but operating and net margins remained negative (-3.22% and -4.71% respectively), underscoring ongoing cost pressures and limited scale in profitability for this small regional bank.
From a balance sheet perspective, total assets stood at $362.8 million with cash and cash equivalents of $28.8 million. The liquidity profile appears tight when viewed through traditional current ratio lenses (current ratio 0.111, quick ratio 0.111, cash ratio 0.106), anchored by a sizable current liabilities base of $272.0 million. Net debt is negative at approx. $17.6 million, reflecting a cash cushion versus debt, but the structure suggests potential liquidity and funding concentration risks given the low operating liquidity metrics.
On the investment side, the company carries a meaningful position in long-term investments (about $315.1 million) relative to total assets, indicating a conservative, asset-heavy balance sheet that may affect liquidity management and revenue mix. The equity base is $75.7 million, translating to a book value that, when adjusted for the negative earnings trajectory, implies a discounted valuation by traditional multiples (P/B around 0.56) despite tangible asset backing. The firm’s earnings per share are negative (-$0.03) and do not reflect a path to profitability in the near term based on current cost structure and revenue mix. Investors should monitor deposit growth dynamics, expense discipline, and potential restructurings aimed at extracting operating leverage.
Overall investment thesis remains cautious: there is a valuation discount versus peers evident in price-to-book and a relatively low debt burden, but the near-term profitability and liquidity concerns warrant a selective, risk-adjusted approach until operating efficiency improves and earnings turn positive.
Key Performance Indicators
Revenue
3.44M
QoQ: 1.59% | YoY:11.97%
Gross Profit
1.93M
56.14% margin
QoQ: 2.60% | YoY:0.94%
Operating Income
-111.00K
QoQ: -953.85% | YoY:42.78%
Net Income
-162.00K
QoQ: -2 600.00% | YoY:22.86%
EPS
-0.03
QoQ: -2 900.00% | YoY:0.00%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $3.443 million for QQ2 2025, up 11.97% YoY; QoQ growth of 1.59%. The topline gain is modest and does not fully cover rising costs.
Operating Income: -$0.111 million; Operating margin -3.22%. QoQ deterioration from a positive operating result in Q1 2025 to an operating loss in QQ2 2025 (-$0.111m from +$0.013m).
Net Income / EPS: Net income -$0.162 million; Net margin -4.71%; EPS -$0.03. YoY net income improved from a prior year loss, but QoQ the company deepened the loss (Q1 2025 net income was -$0.006m; QQ2 2025 net income -$0.162m).
Balance Sheet: Total assets $362.758m; Total liabilities $287.087m; Total stockholders’ equity $75.671m. Cash and cash equivalents $28.829m. Long-term debt $11.183m; Net debt including cash position is -$17.646m (net cash).
Financial Highlights
- Revenue: $3.443 million for QQ2 2025, up 11.97% YoY; QoQ growth of 1.59%. The topline gain is modest and does not fully cover rising costs.
- Gross Profit: $1.933 million; Gross margin ~56.14% (gross profit of $1.933m / revenue $3.443m).
- Operating Income: -$0.111 million; Operating margin -3.22%. QoQ deterioration from a positive operating result in Q1 2025 to an operating loss in QQ2 2025 (-$0.111m from +$0.013m).
- Net Income / EPS: Net income -$0.162 million; Net margin -4.71%; EPS -$0.03. YoY net income improved from a prior year loss, but QoQ the company deepened the loss (Q1 2025 net income was -$0.006m; QQ2 2025 net income -$0.162m).
- Balance Sheet: Total assets $362.758m; Total liabilities $287.087m; Total stockholders’ equity $75.671m. Cash and cash equivalents $28.829m. Long-term debt $11.183m; Net debt including cash position is -$17.646m (net cash).
- Liquidity: Current ratio 0.111, quick ratio 0.111, cash ratio 0.106. The company shows a meaningful mismatch between current assets and current liabilities, signaling liquidity and funding concentration considerations despite the net cash position on debt.
- Leverage & Alpha: Debt to capital ratios are modest (total debt to capitalization ~12.9%; long-term debt to capitalization ~12%); ROA approx -0.0447% and ROE approx -0.214% indicate negative profitability despite low leverage.
- Cash Flow: Operating cash flow -$0.199m; Free cash flow -$0.199m; Net change in cash -$1.838m for the period. Cash at period end $28.829m.
- Valuation: Price-to-book ~0.56, Price-to-sales ~12.31, and a negative price-to-earnings due to the loss. Enterprise value is negative, reflecting a strong net cash position versus equity value in the period.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
3.44M
11.97%
1.59%
Gross Profit
1.93M
0.94%
2.60%
Operating Income
-111.00K
42.78%
-953.85%
Net Income
-162.00K
22.86%
-2 600.00%
EPS
-0.03
0.00%
-2 900.00%
Key Financial Ratios
currentRatio
0.11
grossProfitMargin
54.3%
operatingProfitMargin
-3.22%
netProfitMargin
-4.71%
returnOnAssets
-0.04%
returnOnEquity
-0.21%
debtEquityRatio
0.15
operatingCashFlowPerShare
$-0.03
freeCashFlowPerShare
$-0.03
priceToBookRatio
0.56
priceEarningsRatio
-65.43
Net Income vs. Revenue
Expense Breakdown
Management Commentary
- Note: No QQ2 2025 earnings call transcript was provided in the materials. Consequently, there are no management-by-theme highlights or quotes to summarize from the call. If a transcript becomes available, we will extract strategic, operational, and market-condition insights with direct quotes to anchor the narrative.
N/A
— N/A
N/A
— N/A
Forward Guidance
- The company did not publish formal forward guidance in the disclosed materials. Given the results, near-term guidance may hinge on improving operating leverage, controlling administrative and interest expenses, and growing sustainable net interest income as loan volumes and deposit bases evolve. Investors should monitor: (i) deposit growth and cost of funds, (ii) loan origination volumes and mix (residential, commercial real estate, and consumer lending), (iii) expense discipline and potential headcount or structural cost reductions, (iv) capital adequacy and liquidity metrics, and (v) any forthcoming strategic initiatives (e.g., balance sheet optimization, fee-based revenue expansion).
- Industry context: For small regional banks, a favorable rate environment could help NII, but only if funding costs remain controlled. Any guidance around reserve releases or credit quality would also materially influence the outlook.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
CFSB Focus
56.14%
-3.22%
-0.21%
-65.43%
CRZBF
-41.50%
-1.34%
1.67%
12.20%
ECBK
36.00%
6.37%
0.48%
32.92%
PDLB
96.10%
10.50%
0.64%
16.01%
OFED
0.00%
17.60%
1.23%
18.97%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Base case: The stock trades at a meaningful discount to book value (P/B ~0.56) and presents a potential upside if operating leverage improves and profitability returns to positive territory. However, QQ2 2025 demonstrates continued profitability headwinds and liquidity vulnerabilities, which cap near-term upside. investors would require visible improvements in net interest income, cost controls, and working capital efficiency to justify a higher multiple.
Scenario considerations:
- Bull case: Mild revenue growth accelerates NII gains as loan volumes increase and funding costs are contained; cost synergies materialize; profitability turns positive in the next two to four quarters, lifting margins and cash generation.
- Bear case: Persistent negative margins, rising funding costs, or adverse credit developments trigger continued losses, compressing book value and eroding liquidity buffers.
Recommendation: Given the current mix of modest revenue growth and negative earnings with weak liquidity signals, the stance is cautious; consider a wait-and-see approach until management demonstrates clear progress on profitability and liquidity normalization. The stock could appeal to value-focused investors willing to tolerate near-term earnings volatility for a potential book-value-based entry point, contingent on improved cash flow and sustainable earnings.
Key Investment Factors
Growth Potential
Limited top-line growth potential in QQ2 2025, with revenue growth of 11.97% YoY and 1.59% QoQ, but profitability remains negative due to operating leverage challenges. Upside potential hinges on higher net interest income from loan growth and better cost discipline to convert revenue gains into earnings.
Profitability Risk
Key risks include continued profitability headwinds (operating loss in QQ2 2025), liquidity stress indicators suggested by very low current/quick/cash ratios, reliance on a relatively small asset base, and potential credit and funding risks in a tightening economy. The large position in long-term investments could expose the balance sheet to market value volatility if rates or spreads move meaningfully.
Financial Position
Strong cash position relative to debt (net cash of approximately -$17.6m) but a fragile liquidity profile given current liabilities exceed current assets. Low leverage on debt is favorable, yet negative profitability and weak cash flow offset balance-sheet comfort. The P/B of ~0.56 indicates a substantial discount to book value, potentially attractive to value-oriented investors, but earnings quality should improve before meaningfully lifting multiple valuations.
SWOT Analysis
Strengths
Net cash position (net debt negative) provides liquidity cushion for funding needs.
Low leverage and conservative debt profile relative to peers.
Sustained gross margin in the mid-50s% range supports potential for operating leverage if costs are controlled.
Weaknesses
Persistent net loss and negative operating margin pattern in QQ2 2025.
Severe working capital constraints implied by current liabilities far exceeding current assets (current ratio ~0.11).
Small scale and limited revenue diversification, increasing sensitivity to rate and credit cycles.
Opportunities
Deposit growth and loan origination expansion to unlock operating leverage.
Fee-based advisory and services to diversify revenue beyond traditional net interest income.
Potential balance sheet optimization to improve liquidity metrics and funding stability.
Threats
Macroeconomic downturn or rising credit costs could amplify losses.
Regulatory and compliance costs for a small regional bank.
Competition from larger banks and digital lenders could pressure margins and growth.