Employee Benefits Plan

12 Months Ended

Jun. 30, 2025

11. Employee Benefits Plan

Employee Stock Ownership Plan

As part of the stock offering, the Company established the Colonial Federal Savings Bank Employee Stock Ownership Plan ("ESOP") to provide eligible employees of the Company the opportunity to own Company common stock. The ESOP is a tax-qualified retirement plan for the benefit of Company employees. Contributions are allocated to eligible participants on the basis of compensation, subject to federal limits. The number of shares committed to be released per year is 10,226.

The ESOP funded its purchase of 255,648 shares through a loan from the Company equal to 100% of the purchase price of the common stock. The ESOP trustee will repay the loan principally through the Company's contributions to the ESOP over the loan term of 25 years. At June 30, 2025, the principal balance on the ESOP loan was $2.3 million.

Total compensation expense recognized in connection with the ESOP for the years ended June 30, 2025 and 2024 was $81,000 and $69,000, respectively.

Shares held by the ESOP include the following:


	June 30, 2025		June 30, 2024
Shares held by the ESOP include the following:
Allocated		30,678		20,452
Committed to be allocated		5,114		5,112
Unallocated		219,856		230,084
Total		255,648		255,648

The fair value of unallocated shares was approximately $3.0 million and $1.5 million at June 30, 2025 and June 30, 2024, respectively.

On September 16, 2025, the board of directors approved a resolution authorizing the Company to freeze the ESOP as of October 31, 2025.

Defined benefit plan

The Company participates in the Pentegra Defined Benefit Plan for Financial Institutions (“the Pentegra DB Plan”), a tax-qualified defined-benefit pension plan. The Pentegra DB Plan operates as a multi-employer plan for accounting purposes and is subject to the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code. There are no collective bargaining agreements in place that require contributions to the Pentegra DB Plan.

The risks of participating in this multi-employer plan are different from a single-employer plan in the following aspects:

a. Assets contributed to the multi-employer plan by one employer may be used to provide benefits to employees of other participating employers.

b. If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers.

c. If the Company chooses to stop participating in its multi-employer plan, the Company may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability.

Pension expense under the plan for the years ended June 30, 2025 and 2024 amounted to $441,000 and $703,000, respectively.

Total contributions made to the Pentegra DB Plan, as reported on Form 5500 amounted to $63,406,000 and $151,773,000 for the plan years ended June 30, 2024 and June 30, 2023, respectively, the latest data on file. The Company’s contributions to the Pentegra DB Plan are not more than 5% of the total contributions to the Pentegra DB

Plan. Contributions of $439,000 and $675,000 were paid by the Company during the years ended June 30, 2025 and 2024, respectively.

The funded status (market value of plan assets divided by funding target) of the Company’s portion of the Pentegra DB Plan as of July 1, 2024 and 2023, was 101.90% and 102.91%, respectively, per the valuation reports. Market value of plan assets reflects any contributions received applied to the 2023-2024 plan year.

On August 19, 2025, the board of directors approved a resolution authorizing the Company to freeze the Pentegra DB Plan as of October 31, 2025.

401(k) plan

The Company has a savings plan which is intended to qualify under Section 401(k) of the Internal Revenue Code. The plan provides for voluntary contributions by participating employees ranging from two percent to fifteen percent of their compensation, subject to certain limitations. The Company matches 10% of the employee’s voluntary contributions up to 3% of their compensation. Employer 401(k) plan contribution expense amounted to $21,000 for the years ended June 30, 2025 and 2024.

On September 16, 2025, the board of directors approved a resolution authorizing the Company to freeze the 401(k) Plan as of October 31, 2025.

Supplemental compensation plan

The Company has entered into a Supplemental Executive Retirement Plan (the “SERP”) with certain officers, which provides for payments upon attaining the retirement age noted in the SERP. The present value of these future payments is provided over the remaining terms of the officers’ employment and at June 30, 2025 and 2024, the accrued liability amounted to $1,007,000 and $941,000, respectively. SERP expense for the years ended June 30, 2025 and amounted to $65,000 and $64,000, respectively. In connection with these SERPs, the Company purchased life insurance policies, which have a cash surrender value of $6.3 million and $6.1 million at June 30, 2025 and 2024, respectively.

In addition, the Company provides death benefits for officers and directors of the Company under the terms of Split Dollar Agreements. The Company has purchased life insurance contracts in connection with these agreements and the cash surrender value of the policies at June 30, 2025 and 2024 amounted to $4.6 million. For the years ended June 30, 2025 and 2024, post-retirement expense related to these obligations amounted to $82,000 and $59,000, respectively.

CFSB Bancorp, Inc. /MA/ 10-K