Form 4: CFSB Director Sells Shares, Options in Merger

Paul N. Baharian, a director of CFSB Bancorp, Inc., disposed of all his common stock and stock options as part of the company's merger with Hometown Financial Group.

Summary

• Paul N. Baharian, a director of CFSB Bancorp, Inc., reported changes in beneficial ownership due to the company's merger.
• The merger agreement, dated May 20, 2025, involved CFSB Bancorp, Inc. and entities of Hometown Financial Group.
• At the effective time of the merger on October 31, 2025, each outstanding share of CFSB Common Stock was converted into the right to receive $14.25 in cash.
• Baharian disposed of 6,000 shares of Common Stock held directly and 19,000 shares held indirectly through an IRA, receiving $14.25 per share for a total of $356,250.
• All unvested restricted stock automatically vested in full at the effective time and were converted into common stock, receiving the merger consideration.
• 14,000 outstanding and unexercised stock options, with an exercise price of $9.09, were cancelled.
• Option holders received cash equal to the difference between the merger consideration ($14.25) and the exercise price ($9.09), multiplied by the number of shares, resulting in $5.16 per option for a total of $72,240.
• Following these transactions, Baharian holds no beneficial ownership in CFSB Bancorp, Inc.

Sentiment

Score: 7

Explanation: The filing reports the successful completion of a merger, resulting in a cash payout for the reporting person's equity holdings. This is a positive outcome for the individual, as their shares and in-the-money options were converted to cash at a predetermined value.

Positives

• The reporting person received a cash payout for all equity holdings, including common stock and in-the-money stock options, providing a clear exit from the investment.
• Unvested restricted stock automatically vested in full, ensuring the reporting person received the full value of these awards.
• Stock options were in-the-money, resulting in a cash payout of $5.16 per option, reflecting a positive return on these incentives.

Negatives

• The company, CFSB Bancorp, Inc., ceased to exist as an independent publicly traded entity, which means former shareholders no longer have direct equity exposure to its future performance.
• The reporting person no longer holds equity in the merged entity, limiting any potential future upside from the acquired company's operations.

Future Outlook

NA

Industry Context

This transaction reflects the ongoing consolidation trend within the financial services sector, particularly among smaller regional banks. Mergers like this allow larger entities like Hometown Financial Group to expand their market presence and achieve economies of scale, while providing an exit strategy for shareholders of acquired companies.

Comparison to Industry Standards

• The cash consideration of $14.25 per share for CFSB Bancorp, Inc. common stock can be compared to recent bank mergers in the New England region. Similar transactions involving community banks have seen price-to-book ratios ranging from 1.2x to 1.8x and price-to-tangible book values from 1.5x to 2.0x, depending on market conditions and the target's financial performance. Without specific financial statements for CFSB, a direct ratio comparison is limited, but the cash premium suggests a valuation consistent with a healthy acquisition target.
• The treatment of stock options, where in-the-money options are cashed out based on the difference between merger consideration and exercise price, is a standard practice in M&A transactions, ensuring option holders receive the intrinsic value of their equity incentives.

Management Changes

Stakeholder Impact

• Shareholders of CFSB Bancorp, Inc. received a cash payout of $14.25 per share, providing liquidity and a defined return on their investment.
• Employees of CFSB Bancorp, Inc. may experience changes in employment terms or organizational structure under the new ownership of Hometown Financial Group.
• The reporting person, as a director, has exited their equity position, concluding their financial interest in the acquired entity.

Next Steps

• No further actions or milestones are mentioned for the reporting person related to CFSB Bancorp, Inc., as their beneficial ownership has ceased.

Key Dates

Keywords

CFSB Bancorp, CFSB, Merger, Stock Options, Common Stock, Beneficial Ownership, Hometown Financial Group, Director, Insider Transaction, Equity Disposal