Core Insights - SR Bancorp returned to profitability in Q4 2025, reporting GAAP net income of $823,000 ($0.10 per share), a significant recovery from a GAAP net loss of $3.0 million ($0.34 per share) in Q4 2024 [1][2] - Revenue reached $7.97 million, marking a 96.7% increase year-over-year, primarily due to improved asset quality and the absence of merger-related costs from the previous year [1][2] - The net interest margin narrowed to 2.90% from 3.22%, reflecting rising funding costs and competitive pressures in the deposit market [1][7] Financial Performance - Net income increased by $3.9 million compared to the prior year, driven by the completion of merger-related restructuring and normalization of taxes and credit provisions [5] - Adjusted net income (Non-GAAP) was $515,000, compared to a loss of $499,000 in the previous year [2][5] - Total deposits rose to $846.0 million, a 4.8% increase from $807.1 million in Q4 2024 [2][7] Business Overview - SR Bancorp operates as a community bank in New Jersey, offering a range of banking services including deposit accounts, residential and commercial mortgages, and business lending solutions [3] - The company's growth strategy focuses on market expansion, particularly following the acquisition of Regal Bancorp, which enhanced its commercial lending capabilities [3] Operational Highlights - Loan portfolio growth was robust, with net loans increasing by 8.9% year-over-year, driven by residential and multi-family loans [7] - Noninterest income improved significantly, moving from a loss in the prior period to a positive figure, as the company did not repeat last year's loss from security sales [6] - Noninterest expense rose by 3.3%, with higher salaries and benefits partially offset by lower data processing costs post-merger [8] Future Outlook - Management did not provide explicit forward guidance for fiscal 2026, highlighting ongoing challenges related to net interest margin pressure and rising funding costs [11] - Investors are expected to monitor the bank's core profitability and seek clarity on potential margin stabilization, with asset quality and deposit mix being key factors [12]

[Financial Highlights](index=1&type=section&id=Financial%20Highlights) SR Bancorp achieved significant financial recovery in FY2025, marked by a return to profitability and robust asset growth [Quarterly Results (Q4 2025)](index=1&type=section&id=Quarterly%20Results%20%28Q4%202025%29) SR Bancorp reported a Q4 2025 net income of **$823,000**, a significant turnaround from a **$3.0 million** net loss in Q4 2024, primarily due to the absence of prior year's securities sale loss | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Net Income (Loss)** | $823,000 | ($3.0 million) | | **EPS (Basic & Diluted)** | $0.10 | N/A | | **Adjusted Net Income (Loss)** | $515,000 | ($499,000) | [Annual Results (FY 2025)](index=1&type=section&id=Annual%20Results%20%28FY%202025%29) For FY2025, the company achieved **$3.7 million** net income, a substantial improvement from a **$10.9 million** net loss in FY2024, driven by reduced one-time expenses | Metric | Year Ended June 30, 2025 | Year Ended June 30, 2024 | | :--- | :--- | :--- | | **Net Income (Loss)** | $3.7 million | ($10.9 million) | | **EPS (Basic & Diluted)** | $0.44 | N/A | | **Adjusted Net Income** | $1.7 million | $1.0 million | [Balance Sheet Summary](index=1&type=section&id=Balance%20Sheet%20Summary) As of June 30, 2025, total assets grew **6.1%** to **$1.08 billion**, fueled by an **8.9%** increase in net loans and a **4.8%** rise in deposits | Balance Sheet Item | June 30, 2025 | June 30, 2024 | YoY Change | | :--- | :--- | :--- | :--- | | **Total Assets** | $1.08 billion | $1.02 billion | +6.1% | | **Net Loans** | $797.3 million | $731.9 million | +8.9% | | **Total Deposits** | $846.0 million | $807.1 million | +4.8% | [Corporate Developments](index=1&type=section&id=Corporate%20Developments) The company successfully completed its mutual-to-stock conversion and integrated Regal Bancorp, enhancing its organizational structure [Completed Stock Offering and Merger](index=1&type=section&id=Completed%20Stock%20Offering%20and%20Merger) The company completed its mutual-to-stock conversion and a **$90.55 million** stock offering on September 19, 2023, followed by the merger with Regal Bancorp - Completed the conversion from mutual to stock form and a related stock offering on **September 19, 2023**[5](index=5&type=chunk) - Successfully merged with Regal Bancorp and its subsidiary Regal Bank, subsequently renaming the combined bank entity to **Somerset Regal Bank**[6](index=6&type=chunk) [Comparison of Operating Results](index=2&type=section&id=Comparison%20of%20Operating%20Results) Operating results show a significant turnaround in profitability, despite some net interest margin compression, driven by reduced one-time costs [For the Three Months Ended June 30, 2025 and 2024](index=2&type=section&id=For%20the%20Three%20Months%20Ended%20June%2030%2C%202025%20and%202024) Net income for Q4 2025 improved to **$823,000** from a **$3.0 million** loss, primarily due to the absence of a **$4.4 million** securities sale loss, despite a **6.1%** decrease in net interest income | Metric | Q4 2025 | Q4 2024 | Change | | :--- | :--- | :--- | :--- | | **Net Interest Income** | $7.5 million | $7.9 million | -6.1% | | **Net Interest Rate Spread** | 2.33% | 2.69% | -36 bps | | **Net Interest Margin** | 2.90% | 3.22% | -32 bps | - Provision for credit losses was **$81,000**, reflecting loan growth. The bank had no charge-offs and no non-performing loans at quarter-end[13](index=13&type=chunk) - Noninterest income increased by **$4.4 million**, primarily because the prior-year period included a **$4.4 million** loss on the sale of available-for-sale securities[14](index=14&type=chunk) - Noninterest expense rose **3.3%** to **$6.8 million**, mainly due to higher salaries and professional fees, partially offset by lower data processing costs post-merger[15](index=15&type=chunk) [For the Year Ended June 30, 2025 and 2024](index=3&type=section&id=For%20the%20Year%20Ended%20June%2030%2C%202025%20and%202024) FY2025 net income reached **$3.7 million** from a **$10.9 million** loss in FY2024, primarily due to a **$7.5 million** decrease in noninterest expenses, despite a **26 basis point** decline in net interest margin | Metric | FY 2025 | FY 2024 | Change | | :--- | :--- | :--- | :--- | | **Net Interest Income** | $29.6 million | $29.4 million | +0.7% | | **Net Interest Rate Spread** | 2.35% | 2.73% | -38 bps | | **Net Interest Margin** | 2.93% | 3.19% | -26 bps | - A recovery for credit losses of **$24,000** was recorded for the year, compared to a **$4.1 million** provision in the prior year, which was related to the Regal Bancorp acquisition[21](index=21&type=chunk) - Noninterest income increased by **$4.7 million**, primarily due to the absence of the prior year's **$4.4 million** loss on securities sales[22](index=22&type=chunk) - Noninterest expense decreased by **21.8%** to **$27.1 million**, mainly because the prior year included a **$5.4 million** charitable contribution and higher one-time merger-related costs[24](index=24&type=chunk) [Comparison of Financial Condition](index=5&type=section&id=Comparison%20of%20Financial%20Condition%20at%20June%2030%2C%202025%20and%20June%2030%2C%202024) The company's financial condition improved with asset growth funded by increased deposits and new borrowings, while equity saw a slight decrease due to stock repurchases [Assets](index=5&type=section&id=Assets) Total assets grew **6.1%** to **$1.08 billion** as of June 30, 2025, driven by an **8.9%** increase in net loans, partially offset by a decrease in securities | Asset Category | June 30, 2025 | June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | **Total Assets** | $1.08 billion | $1.02 billion | +$62.2M | | **Cash & Cash Equivalents** | $57.8 million | $45.9 million | +$11.9M | | **Securities** | $141.8 million | $156.1 million | -$14.3M | | **Net Loans Receivable** | $797.3 million | $731.9 million | +$65.5M | [Liabilities and Equity](index=5&type=section&id=Liabilities%20and%20Equity) Asset growth was funded by a **4.8%** increase in total deposits to **$846.0 million** and **$30.0 million** in new FHLB borrowings, while total equity decreased **3.6%** due to stock repurchases - Total deposits increased by **$38.9 million (4.8%)** to **$846.0 million**, driven by competitive rates on interest-bearing products[29](index=29&type=chunk) - The Bank borrowed **$30.0 million** from the FHLB of New York during the year to fund loan growth; no borrowings were outstanding at the prior year-end[30](index=30&type=chunk) - Total equity decreased by **$7.1 million (3.6%)** to **$192.4 million**, mainly due to **$11.3 million** in stock repurchases[31](index=31&type=chunk) [Financial Statements](index=7&type=section&id=Financial%20Statements) Detailed financial statements reflect the company's improved financial health, showing increased assets, deposits, and a return to profitability [Consolidated Statements of Financial Condition](index=7&type=section&id=Consolidated%20Statements%20of%20Financial%20Condition) As of June 30, 2025, the balance sheet shows total assets of **$1.08 billion**, supported by **$846.0 million** in deposits and **$192.4 million** in stockholders' equity, with net loans as the largest asset Balance Sheet Summary (in thousands) | Category | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$1,083,016** | **$1,020,844** | | Total cash and cash equivalents | $57,779 | $45,909 | | Loans receivable, net | $797,324 | $731,859 | | **Total Liabilities** | **$890,625** | **$821,361** | | Total deposits | $846,022 | $807,100 | | Borrowings | $30,000 | $0 | | **Total Stockholders' Equity** | **$192,391** | **$199,483** | [Consolidated Statements of Income (Quarterly)](index=8&type=section&id=Consolidated%20Statements%20of%20Income%20%28Quarterly%29) For Q4 2025, the company reported **$11.7 million** in total interest income and **$7.5 million** in net interest income, resulting in a net income of **$823,000** after expenses and taxes Quarterly Income Statement Summary (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Net Interest Income** | **$7,452** | **$7,939** | | Provision for Credit Losses | $81 | $153 | | Total noninterest income (loss) | $522 | ($3,885) | | Total noninterest expense | $6,815 | $6,599 | | **Net Income (Loss)** | **$823** | **($3,032)** | [Consolidated Statements of Income (Annual)](index=9&type=section&id=Consolidated%20Statements%20of%20Income%20%28Annual%29) For FY2025, the company generated **$46.3 million** in total interest income and **$29.6 million** in net interest income, achieving a net income of **$3.7 million** due to credit loss recovery and lower expenses Annual Income Statement Summary (in thousands) | Metric | Year Ended June 30, 2025 | Year Ended June 30, 2024 | | :--- | :--- | :--- | | **Net Interest Income** | **$29,581** | **$29,371** | | (Credit) Provision for Credit Losses | ($24) | $4,066 | | Total noninterest income (loss) | $2,228 | ($2,491) | | Total noninterest expense | $27,055 | $34,583 | | **Net Income (Loss)** | **$3,747** | **($10,860)** | [Key Financial Ratios and Non-GAAP Measures](index=10&type=section&id=Key%20Financial%20Ratios%20and%20Non-GAAP%20Measures) Key financial ratios demonstrate improved profitability and strong asset quality, with non-GAAP adjustments providing a clearer view of core performance [Selected Ratios](index=10&type=section&id=Selected%20Ratios) FY2025 profitability significantly improved with ROA at **0.35%** and ROE at **1.95%**, while net interest margin compressed to **2.93%**, and asset quality remained excellent with **0.00%** non-performing loans Key Ratios | Ratio | Year Ended June 30, 2025 | Year Ended June 30, 2024 | | :--- | :--- | :--- | | **Return on average assets (ROA)** | 0.35% | (1.10)% | | **Return on average equity (ROE)** | 1.95% | (5.93)% | | **Net interest margin** | 2.93% | 3.19% | | **Non-performing loans / total gross loans** | 0.00% | 0.01% | | **Tangible book value per share** | $18.67 | $18.02 | [Non-GAAP Financial Information](index=11&type=section&id=Non-GAAP%20Financial%20Information) Non-GAAP adjusted net income for FY2025 was **$1.7 million**, up from **$950,000** in the prior year, providing a clearer view of core operational performance by excluding non-recurring items Non-GAAP Net Income Reconciliation (in thousands) | Metric | Year Ended June 30, 2025 | Year Ended June 30, 2024 | | :--- | :--- | :--- | | **Net Income (Loss) - GAAP** | **$3,747** | **($10,860)** | | One-time merger related expenses | $0 | $4,390 | | Provision for credit losses (acquired) | $0 | $4,165 | | Sale of AFS securities | $0 | $4,446 | | Net accretion/amortization | ($2,824) | ($4,131) | | Charitable contribution | $0 | $5,433 | | Tax impact of adjustments | ($794) | $2,493 | | **Net Income, adjusted (Non-GAAP)** | **$1,717** | **$950** |

Core Viewpoint - SR Bancorp, Inc. has authorized a stock repurchase program for up to 10% of its outstanding shares, totaling 886,137 shares, marking its second repurchase initiative since its mutual-to-stock conversion in September 2023 [1] Group 1: Stock Repurchase Program - The new repurchase program will commence after the completion of the first program, which has 13,802 shares remaining [2] - Repurchases may occur in open market or private transactions, block trades, or through trading plans compliant with SEC Rule 10b5-1 [2][3] - The timing and amount of repurchases will depend on factors such as stock availability, market conditions, trading price, alternative capital uses, and the Company's financial performance [3] Group 2: Company Overview - SR Bancorp, Inc. is the holding company for Somerset Regal Bank, a full-service commercial bank in New Jersey with 14 branches across several counties [4] - As of March 31, 2025, Somerset Regal Bank reported total assets of $1.07 billion, net loans of $780.8 million, deposits of $835.6 million, and total equity of $199.1 million [4]

Company Overview - SR Bancorp has undergone significant changes in recent years, including a reorganization in 2023 after existing under various names since the late 1800s [1]. Market Perspective - The financial markets are viewed as efficient, with most stocks reflecting their real current value, suggesting that the best investment opportunities may arise from less-followed stocks or those that do not accurately represent market opportunities [1].

PART I. FINANCIAL INFORMATION [Item 1. Consolidated Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements%20(unaudited)) SR Bancorp's unaudited consolidated financial statements for periods ended March 31, 2025, detail financial condition, income, and cash flows with explanatory notes [Consolidated Statements of Financial Condition](index=3&type=section&id=Consolidated%20Statements%20of%20Financial%20Condition) Total assets increased to $1.07 billion, driven by loan growth, while liabilities rose due to deposits and new borrowings, and equity slightly decreased from share repurchases Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$1,073,907** | **$1,020,844** | | Cash and cash equivalents | $62,224 | $45,909 | | Loans receivable, net | $780,795 | $731,859 | | Securities held-to-maturity | $145,413 | $156,144 | | **Total Liabilities** | **$878,839** | **$821,361** | | Total deposits | $835,584 | $807,100 | | Borrowings | $30,000 | $0 | | **Total Stockholders' Equity** | **$195,068** | **$199,483** | [Consolidated Statements of Income (Loss)](index=4&type=section&id=Consolidated%20Statements%20of%20Income%20(Loss)) Net income for the three months ended March 31, 2025, decreased to $537,000, while the nine-month period saw a significant recovery to $2.9 million from a prior-year loss Income Statement Summary (in thousands, except per share data) | Metric | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | Nine Months Ended Mar 31, 2025 | Nine Months Ended Mar 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $7,184 | $8,268 | $22,017 | $21,432 | | Provision (Credit) for Credit Losses | $37 | $(142) | $(105) | $3,913 | | Total Noninterest Income | $541 | $516 | $1,965 | $1,394 | | Total Noninterest Expense | $7,062 | $7,571 | $20,386 | $27,984 | | **Net Income (Loss)** | **$537** | **$1,063** | **$2,925** | **$(7,828)** | | **Diluted EPS** | **$0.06** | **$0.12** | **$0.34** | **$(1.27)** | [Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Total comprehensive income for the three months ended March 31, 2025, was $355,000, improving to $2.7 million for the nine-month period from a prior-year loss Comprehensive Income (Loss) Summary (in thousands) | Metric | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | Nine Months Ended Mar 31, 2025 | Nine Months Ended Mar 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income (Loss) | $537 | $1,063 | $2,925 | $(7,828) | | Total other comprehensive (loss) income | $(182) | $139 | $(227) | $643 | | **Total comprehensive income (loss)** | **$355** | **$1,202** | **$2,698** | **$(7,185)** | [Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Stockholders' equity decreased to $195.1 million, primarily due to share repurchases, partially offset by net income - Key activities impacting equity during the nine months ended March 31, 2025, include net income of **$2.9 million**, repurchase of common shares for **$7.3 million**, and cash dividends of **$425,000**[15](index=15&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities was $2.9 million, while investing activities used $37.9 million, and financing activities provided $51.3 million, resulting in a $16.3 million increase in cash Cash Flow Summary (in thousands) | Cash Flow Activity | Nine Months Ended Mar 31, 2025 | Nine Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $2,928 | $(6,410) | | Net cash used in investing activities | $(37,919) | $8,309 | | Net cash provided by financing activities | $51,306 | $28,145 | | **Net increase in cash and cash equivalents** | **$16,315** | **$30,044** | [Notes to Unaudited Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) The notes provide essential context to the financial statements, detailing the basis of presentation, the significant business combination with Regal Bancorp, and specifics on key financial statement line items - On September 19, 2023, the Company completed its acquisition of Regal Bancorp, which resulted in the recognition of **$20.4 million** in goodwill and **$9.1 million** in core deposit intangibles[34](index=34&type=chunk)[35](index=35&type=chunk) - The loan portfolio is concentrated in real estate located primarily in New Jersey. At March 31, 2025, commercial loans represented **45.5%** of net loans, with no non-accrual commercial loans[26](index=26&type=chunk)[50](index=50&type=chunk) - The Bank is subject to regulatory capital requirements and was categorized as 'well capitalized' as of March 31, 2025, with a Tier 1 capital to average assets ratio of **15.86%**, significantly above the **9.00%** minimum[82](index=82&type=chunk)[85](index=85&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition and operating results, focusing on asset and liability changes, lending, asset quality, and interest rate impacts on profitability [Comparison of Financial Condition](index=35&type=section&id=Comparison%20of%20Financial%20Condition) Total assets grew by 5.2% to $1.07 billion, fueled by loan growth and funded by deposits and new borrowings, while stockholders' equity decreased due to share repurchases Key Balance Sheet Changes (Mar 31, 2025 vs. Jun 30, 2024) | Account | Change ($M) | Change (%) | | :--- | :--- | :--- | | Total Assets | +$53.1 | +5.2% | | Net Loans Receivable | +$48.9 | +6.7% | | Deposits | +$28.5 | +3.5% | | Borrowings | +$30.0 | N/A | | Total Equity | -$4.4 | -2.2% | [Lending Activities](index=36&type=section&id=Lending%20Activities) The loan portfolio shifted towards commercial lending, with total commercial loans comprising 45.6% of the portfolio, driven by significant growth in multi-family loans Loan Portfolio Composition (in thousands) | Loan Type | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Total commercial loans | $356,974 (45.6%) | $328,636 (44.7%) | | Residential mortgage loans | $413,918 (52.8%) | $394,723 (53.7%) | | **Total loans** | **$783,724** | **$735,017** | [Non-Performing and Problem Assets](index=37&type=section&id=Non-Performing%20and%20Problem%20Assets) Asset quality improved significantly, with total non-performing assets decreasing to zero at March 31, 2025, and no non-accrual loans or real estate owned reported Non-Performing Assets (in thousands) | Metric | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Total non-accrual loans | $0 | $50 | | Real estate owned | $0 | $0 | | **Total non-performing assets** | **$0** | **$50** | | Total non-performing assets to total assets | 0.00% | <0.01% | [Comparison of Operating Results](index=42&type=section&id=Comparison%20of%20Operating%20Results) Net income decreased for the quarter due to margin compression but significantly improved for the nine-month period, reversing a prior-year loss burdened by one-time expenses - **3-Month Performance (Q3'25 vs Q3'24):** Net income fell to **$537k** from **$1.1M**. Net interest margin decreased to **2.82%** from **3.31%** as funding costs rose[155](index=155&type=chunk)[158](index=158&type=chunk) - **9-Month Performance (YTD'25 vs YTD'24):** Net income was **$2.9M** compared to a loss of **$7.8M**. The improvement was driven by a **$7.6M** decrease in noninterest expense, as the prior year included a **$5.4M** charitable contribution and **$4.1M** in merger costs[169](index=169&type=chunk)[181](index=181&type=chunk) [Market Risk](index=49&type=section&id=Market%20Risk) Interest rate sensitivity analysis indicates that a 200 basis point increase in rates would decrease Economic Value of Equity by 20.01% and Net Interest Income by 6.77% over the next year Interest Rate Sensitivity Analysis (at March 31, 2025) | Change in Interest Rates (bps) | Estimated Change in EVE | Estimated Change in NII (Year 1) | | :--- | :--- | :--- | | +200 | (20.01)% | (6.77)% | | -200 | +7.75% | (8.83)% | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=53&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section cross-references the detailed discussion on market risk provided in Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operation - For information regarding market risk, readers are referred to the 'Market Risk' section within Item 2 of this report[207](index=207&type=chunk) [Item 4. Controls and Procedures](index=53&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[207](index=207&type=chunk) - No changes in internal control over financial reporting that materially affected, or are reasonably likely to materially affect, internal controls were identified during the quarter[208](index=208&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=54&type=section&id=Item%201.%20Legal%20Proceedings) The company reports that it is not a party to any pending legal proceedings expected to have a material adverse effect on its financial condition, results of operations, or cash flows - The company is not currently involved in any material legal proceedings[211](index=211&type=chunk) [Item 1A. Risk Factors](index=54&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended June 30, 2024 - No material changes in risk factors have occurred since the company's last annual report[212](index=212&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=54&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the three months ended March 31, 2025, the company repurchased 280,404 shares of its common stock under its publicly announced share repurchase program Share Repurchases (Q3 2025) | Period | Shares Purchased | Average Price Paid ($) | | :--- | :--- | :--- | | January 2025 | 177,992 | $11.98 | | February 2025 | 65,624 | $12.34 | | March 2025 | 36,788 | $11.77 | | **Total for Quarter** | **280,404** | **N/A** | [Item 5. Other Information](index=55&type=section&id=Item%205.%20Other%20Information) The company states that none of its directors or executive officers adopted or terminated any Rule 10b5-1 trading plans or other non-Rule 10b5-1 trading arrangements during the three months ended March 31, 2025 - No directors or executive officers adopted or terminated Rule 10b5-1 trading plans during the quarter[216](index=216&type=chunk) [Item 6. Exhibits](index=55&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications by the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act, and XBRL data files

[Financial Highlights](index=1&type=section&id=Financial%20Highlights) [Quarterly and Nine-Month Financial Results Summary](index=1&type=section&id=Quarterly%20and%20Nine-Month%20Financial%20Results%20Summary) SR Bancorp reported a significant decrease in quarterly net income to $537,000 for Q1 2025 from $1.1 million in Q1 2024, while for the nine months ended March 31, 2025, net income rose sharply to $2.9 million from a net loss of $7.8 million in the prior-year period, primarily due to the absence of significant one-time expenses that impacted 2024 results, alongside growth in total assets, loans, and deposits since June 30, 2024 Net Income and EPS Summary | Period | Net Income | Basic & Diluted EPS | | :--- | :--- | :--- | | **Three Months Ended Mar 31, 2025** | $537,000 | $0.06 | | **Three Months Ended Mar 31, 2024** | $1.1 million | $0.12 | | **Nine Months Ended Mar 31, 2025** | $2.9 million | $0.34 | | **Nine Months Ended Mar 31, 2024** | ($7.8 million) | N/A | - Excluding fair value adjustments and one-time merger costs, adjusted net income for Q1 2025 was **$124,000**, compared to **$258,000** for Q1 2024[2](index=2&type=chunk) - For the nine-month period, adjusted net income was **$1.2 million** in 2025, compared to **$1.4 million** in 2024 after excluding a **$5.4 million** charitable contribution and **$4.1 million** in merger costs from the 2024 results[3](index=3&type=chunk) Balance Sheet Highlights | Balance Sheet Item | Value at Mar 31, 2025 ($) | Change from Jun 30, 2024 ($) | % Change | | :--- | :--- | :--- | :--- | | Total Assets | $1.07 billion | +$53.1 million | +5.2% | | Net Loans | $780.8 million | +$48.9 million | +6.7% | | Total Deposits | $835.6 million | +$28.5 million | +3.5% | [Operating Results Analysis](index=2&type=section&id=Operating%20Results%20Analysis) [Comparison of Operating Results for the Three Months Ended March 31, 2025 and 2024](index=2&type=section&id=Comparison%20of%20Operating%20Results%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202025%20and%202024) For the three months ended March 31, 2025, net income decreased by 49.5% to $537,000, driven by a 13.1% decline in net interest income due to margin compression as interest expense growth outpaced the slight decrease in interest income, and the company recorded a provision for credit losses compared to a recovery in the prior year, partially offset by a 6.7% reduction in noninterest expense mainly from the absence of prior-year merger-related costs - Net income fell by **$526,000**, or **49.5%**, from **$1.1 million** in Q1 2024 to **$537,000** in Q1 2025[7](index=7&type=chunk) - Net interest income decreased by **$1.1 million** (**13.1%**) due to a **58 basis point** drop in net interest rate spread and a **49 basis point** decrease in net interest margin[10](index=10&type=chunk) - Interest expense rose by **$919,000** (**27.2%**), primarily driven by a **106 basis point** increase in the cost of interest-bearing demand deposits to remain competitive[9](index=9&type=chunk) - The company recorded a **$38,000** provision for credit losses, compared to a **$142,000** recovery in the prior-year quarter[13](index=13&type=chunk) - Noninterest expense decreased by **$509,000** (**6.7%**), largely due to the absence of **$242,000** in one-time merger-related deconversion fees paid in Q1 2024 and lower occupancy costs from branch consolidation[15](index=15&type=chunk) [Comparison of Operating Results for the Nine Months Ended March 31, 2025 and 2024](index=3&type=section&id=Comparison%20of%20Operating%20Results%20for%20the%20Nine%20Months%20Ended%20March%2031%2C%202025%20and%202024) For the nine months ended March 31, 2025, the company reported net income of $2.9 million, a significant turnaround from a net loss of $7.8 million in the same period last year, primarily driven by a $7.6 million (27.2%) decrease in noninterest expense as the prior-year period included a $5.4 million charitable contribution and $4.1 million in merger-related costs, with net interest income also growing by 2.7% despite net interest margin compression - Net income increased by **$10.7 million**, from a loss of **$7.8 million** to a profit of **$2.9 million**[17](index=17&type=chunk) - Noninterest expense decreased by **$7.6 million**, mainly because the prior year included a **$5.4 million** charitable contribution and significant one-time merger-related costs[24](index=24&type=chunk) - Net interest income increased by **$585,000** (**2.7%**), though the net interest margin decreased by **25 basis points** to **2.93%** as the cost of liabilities rose faster than asset yields[21](index=21&type=chunk) - A recovery for credit losses of **$105,000** was recorded, compared to a **$3.9 million** provision in the prior-year period, reflecting updates to model assumptions[22](index=22&type=chunk) - Noninterest income grew by **$571,000** (**41.0%**), driven by higher service charges and fees[23](index=23&type=chunk) [Financial Condition Analysis](index=5&type=section&id=Financial%20Condition%20Analysis) [Comparison of Financial Condition at March 31, 2025 and June 30, 2024](index=5&type=section&id=Comparison%20of%20Financial%20Condition%20at%20March%2031%2C%202025%20and%20June%2030%2C%202024) As of March 31, 2025, total assets grew by 5.2% to $1.07 billion since June 30, 2024, primarily fueled by a 6.7% increase in net loans, which was funded through a 3.5% rise in deposits and $30.0 million in new borrowings from the Federal Home Loan Bank, while total equity decreased by 2.2% to $195.1 million as $7.3 million in stock repurchases more than offset the $2.9 million in net earnings Balance Sheet Comparison | Balance Sheet Item | March 31, 2025 ($) | June 30, 2024 ($) | Change ($) | | :--- | :--- | :--- | :--- | | Total Assets | $1.07 billion | $1.02 billion | +$53.1M | | Net Loans Receivable | $780.8 million | $731.9 million | +$48.9M | | Total Deposits | $835.6 million | $807.1 million | +$28.5M | | Borrowings | $30.0 million | $0 | +$30.0M | | Total Equity | $195.1 million | $199.5 million | -$4.4M | - Loan growth was driven by a **$19.2 million** net increase in residential mortgage loans and a **$28.3 million** net increase in total commercial loans[28](index=28&type=chunk) - The decrease in equity was primarily due to the repurchase of **627,461 shares** of common stock at a cost of **$7.3 million**, partially offset by net earnings[31](index=31&type=chunk) [Financial Statements and Ratios](index=7&type=section&id=Financial%20Statements%20and%20Ratios) [Consolidated Statements of Financial Condition](index=7&type=section&id=Consolidated%20Statements%20of%20Financial%20Condition) This section presents the detailed unaudited balance sheets as of March 31, 2025, and June 30, 2024, providing a snapshot of the company's assets, such as cash, securities, and loans, and its liabilities and equity, including deposits, borrowings, and retained earnings - The detailed Consolidated Statements of Financial Condition are provided, showing total assets of **$1.074 billion** at March 31, 2025, up from **$1.021 billion** at June 30, 2024[37](index=37&type=chunk) [Consolidated Statements of Income](index=8&type=section&id=Consolidated%20Statements%20of%20Income) This section provides the detailed unaudited income statements for the three and nine-month periods ending March 31, 2025, and 2024, breaking down the components of revenues (interest and noninterest income) and expenses to arrive at the net income or loss for each period - The detailed Consolidated Statements of Income are presented, showing line-item breakdowns for interest income, interest expense, noninterest income, noninterest expense, and taxes for the respective three and nine-month periods[39](index=39&type=chunk) [Selected Ratios](index=10&type=section&id=Selected%20Ratios) This section provides key performance, asset quality, and other financial ratios, with profitability ratios like Return on Average Assets (0.20%) and Return on Average Equity (1.13%) declining for the three months ended March 31, 2025, compared to the prior year, and the Net Interest Margin compressing to 2.82%, while asset quality remained strong with zero non-performing loans Key Performance Ratios | Performance Ratios (Annualized) | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Return on average assets (ROA) | 0.20% | 0.39% | | Return on average equity (ROE) | 1.13% | 2.12% | | Net interest margin | 2.82% | 3.31% | | Efficiency ratio | 91.41% | 86.19% | - Asset quality ratios show non-performing loans as a percentage of total gross loans was **0.00%** at March 31, 2025, an improvement from **0.03%** at March 31, 2024[41](index=41&type=chunk) - Tangible book value per share increased to **$18.29** at March 31, 2025, from **$17.95** at March 31, 2024[41](index=41&type=chunk)[43](index=43&type=chunk) [Other Information](index=5&type=section&id=Other%20Information) [About Somerset Regal Bank](index=5&type=section&id=About%20Somerset%20Regal%20Bank) Somerset Regal Bank is a full-service commercial bank headquartered in New Jersey, operating 14 branches across six counties, and as of March 31, 2025, the bank held $1.07 billion in total assets, $780.8 million in net loans, and $835.6 million in deposits - The bank operates **14 branches** in Essex, Hunterdon, Middlesex, Morris, Somerset, and Union Counties, New Jersey[32](index=32&type=chunk) - As of March 31, 2025, the bank had total assets of **$1.07 billion** and total equity of **$195.1 million**[32](index=32&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) This section contains a standard safe harbor disclaimer, cautioning that the report includes forward-looking statements based on current management expectations, and warns that actual results could differ materially due to various risks and uncertainties, such as competitive pressures, interest rate changes, economic conditions, and regulatory changes - This is a legal disclaimer intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995[33](index=33&type=chunk) - It identifies several risk factors that could cause actual results to differ, including changes in the interest rate environment, inflation, real estate market values, and potential cyber attacks[34](index=34&type=chunk)

Company Overview - SR Bancorp, Inc. is the holding company for Somerset Regal Bank, a full-service commercial bank located in Bound Brook, New Jersey, operating 14 branches across several counties [2] - As of December 31, 2024, Somerset Regal Bank reported total assets of $1.06 billion, net loans of $775.8 million, deposits of $824.1 million, and total equity of $198.1 million [2] Dividend Announcement - The Board of Directors of SR Bancorp, Inc. has declared an initial quarterly cash dividend of $0.05 per share [1] - This dividend will be paid on April 15, 2025, to stockholders of record as of March 31, 2025 [1] - The CEO of SR Bancorp, Inc. expressed satisfaction with the company's strong financial position, enabling the payment of the cash dividend [1]

Financial Position - Total assets increased by $43.7 million, or 4.3%, to $1.06 billion at December 31, 2024, primarily driven by new loan originations [131]. - Total liabilities increased by $45.0 million, or 5.5%, to $866.4 million at December 31, 2024, primarily due to a $30.0 million advance from the Federal Home Loan Bank of New York [135]. - Total equity decreased by $1.3 million, or 0.7%, to $198.1 million at December 31, 2024, primarily due to the repurchase of 347,057 shares of common stock at a cost of $3.9 million [138]. - Cash and cash equivalents increased by $7.5 million, or 16.4%, to $53.4 million at December 31, 2024, due to the maturity of securities [132]. - Deposits increased by $17.0 million, or 2.1%, to $824.1 million at December 31, 2024, with $95.0 million, or 11.5%, consisting of noninterest-bearing deposits [136]. Loan Portfolio - Loans receivable, net, increased by $43.9 million, or 6.0%, to $775.8 million at December 31, 2024, with residential mortgage loans increasing by $19.7 million and commercial loans by $23.4 million [133]. - As of December 31, 2024, residential mortgage loans comprised 53.2% of the total loan portfolio, while commercial loans accounted for 45.2% [139]. - The total loan portfolio increased to $778.683 million as of December 31, 2024, up from $735.017 million as of June 30, 2024, representing a growth of approximately 5.5% [141]. - The total commercial loans reached $352.061 million, which is 45.21% of the total loan portfolio, an increase from $328.636 million (44.71%) as of June 30, 2024 [141]. - Multi-family loans increased to $211.531 million, representing 27.16% of total loans, up from $180.364 million (24.54%) as of June 30, 2024 [141]. Credit Quality - Total non-performing loans were $0 as of December 31, 2024, compared to $50,000 as of June 30, 2024, indicating a significant improvement in loan performance [149]. - The allowance for credit losses was $5.087 million as of December 31, 2024, compared to $5.229 million as of June 30, 2024 [141]. - The company has maintained its allowance for credit losses at levels deemed necessary to absorb expected losses in the loan portfolio [150]. - The ending balance of the allowance for credit losses allocated to multi-family loans was $1,903,000, representing 37.41% of the total allocated allowance [156]. - The total allowance for credit losses allocated to residential mortgage loans was $1,876,000, accounting for 36.88% of the total [156]. Income and Expenses - Net income decreased by $586,000 to $1.0 million for the three months ended December 31, 2024, compared to $1.6 million for the same period in 2023 [167]. - Interest income decreased by $741,000, or 6.0%, to $11.5 million for the three months ended December 31, 2024, from $12.3 million in the prior year [168]. - Interest expense increased by $1.0 million, or 31.8%, to $4.3 million for the three months ended December 31, 2024, from $3.3 million in the same period of 2023 [169]. - Net interest income decreased by $1.8 million, or 19.7%, to $7.2 million for the three months ended December 31, 2024, compared to $9.0 million for the same period in 2023 [170]. - Noninterest income increased by $262,000, or 71.8%, to $627,000 for the three months ended December 31, 2024, compared to $365,000 for the same period in 2023 [179]. Regulatory and Capital Position - Somerset Regal Bank exceeded all regulatory capital requirements and is considered "well capitalized" under regulatory guidelines as of December 31, 2024 [216]. - The company repurchased $3.9 million of its common stock in the six-month period ended December 31, 2024 [215]. - The estimated economic value of equity (EVE) would decrease by 20.10% with a 200 basis point increase in interest rates, amounting to a reduction of $38.6 million [201]. - The company raised rates on certain interest-bearing deposit products to remain competitive, impacting non-maturity savings accounts [214]. Interest Rate Sensitivity - The net interest rate spread decreased by 81 basis points to 2.27% for the three months ended December 31, 2024, from 3.08% in the prior year [170]. - Net interest income (NII) would decrease by 8.05% in the event of a 200 basis point increase in market interest rates [206]. - Changes in market interest rates have a greater impact on the company's performance than inflation due to the monetary nature of its assets and liabilities [220].

Financial Performance - The company reported a net income of $1.0 million for the three months ended December 31, 2024, a decrease of 36.5% from $1.6 million for the same period in 2023 [6] - For the six months ended December 31, 2024, net income increased to $2.4 million from a net loss of $8.9 million in the same period in 2023, representing a 126.9% increase [16] - Excluding net accretion income related to fair value adjustments, net income for the three months ended December 31, 2024 would have been $452,000 [1] Interest Income and Expense - Interest income decreased by $741,000, or 6.0%, to $11.5 million for the three months ended December 31, 2024, primarily due to a decrease in the yield on interest-earning assets [7] - Interest expense increased by $1.0 million, or 31.8%, to $4.3 million for the same period, driven by higher costs on deposits [8] - For the six months ended December 31, 2024, interest income increased by $5.2 million, or 29.1%, to $23.0 million, while interest expense rose by $3.5 million, or 75.3%, to $8.2 million [17][18] Net Interest Income - Net interest income decreased by $1.8 million, or 19.7%, to $7.2 million for the three months ended December 31, 2024 [9] - For the six months ended December 31, 2024, net interest income increased by $1.7 million, or 12.7%, to $14.8 million [19] Provision for Credit Losses - The company recorded a provision for credit losses of $12,000 for the three months ended December 31, 2024, compared to a credit of $107,000 for the same period in 2023 [12] - For the six months ended December 31, 2024, a recovery for credit losses of $142,000 was recorded, contrasting with a provision of $4.1 million in the same period in 2023 [20] Noninterest Income and Expense - Noninterest income increased by $262,000, or 71.8%, to $627,000 for the three months ended December 31, 2024, primarily due to increases in service charges and other noninterest income [13] - Noninterest expense decreased by $967,000, or 35.4%, to $6.5 million for the same period, mainly due to a reduction in salaries and employee benefits [14] Financial Condition - Total assets increased by $43.7 million, or 4.3%, to $1.06 billion at December 31, 2024, driven by new loan originations [24] - Net loans increased by $43.9 million, or 6.0%, to $775.8 million, while total deposits rose by $17.0 million, or 2.1%, to $824.1 million [26][27] - Equity decreased by $1.0 million, or 0.7%, to $198.1 million at December 31, 2024, primarily due to stock repurchases [29] Market Position - The company operates as a full-service commercial bank in New Jersey, with total assets of $1.06 billion, net loans of $775.8 million, and total deposits of $824.1 million as of December 31, 2024 [30]

[Financial Highlights](index=1&type=section&id=Financial%20Highlights) The company reported varied quarterly and six-month financial results, alongside completing a significant stock offering and merger [Quarterly and Six-Month Performance Summary](index=1&type=section&id=Quarterly%20and%20Six-Month%20Performance%20Summary) SR Bancorp, Inc. reported a net income of $1.0 million for Q4 2024, a decrease from $1.6 million in Q4 2023. For the six months ended December 31, 2024, net income was $2.4 million, a significant turnaround from a net loss of $8.9 million in the same period of 2023. The company's balance sheet showed growth, with total assets reaching $1.06 billion, driven by a 6.0% increase in net loans Quarterly Financial Results (Three Months Ended Dec 31) | Metric | Q4 2024 | Q4 2023 | | :--- | :--- | :--- | | **Net Income** | $1.0 million | $1.6 million | | **EPS (basic and diluted)** | $0.12 | - | | **Adjusted Net Income*** | $452,000 | $605,000 | Six-Month Financial Results (Six Months Ended Dec 31) | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | **Net Income (Loss)** | $2.4 million | ($8.9 million) | | **EPS (basic and diluted)** | $0.27 | - | | **Adjusted Net Income** | $1.1 million | $1.2 million | Balance Sheet Highlights (as of Dec 31, 2024 vs Jun 30, 2024) | Metric | Dec 31, 2024 | Jun 30, 2024 | Change | | :--- | :--- | :--- | :--- | | **Total Assets** | $1.06 billion | $1.02 billion | +4.3% | | **Net Loans** | $775.8 million | $731.9 million | +6.0% | | **Total Deposits** | $824.1 million | $807.1 million | +2.1% | - Loan growth was primarily funded by a **$30.0 million** short-term borrowing and an increase in deposits[4](index=4&type=chunk) [Completed Stock Offering and Merger](index=1&type=section&id=Completed%20Stock%20Offering%20and%20Merger) The company completed its conversion from a mutual to a stock form of organization and a related stock offering on September 19, 2023, concurrently finalizing the merger with Regal Bancorp to form Somerset Regal Bank - On September 19, 2023, the company completed its conversion and stock offering, selling **9,055,172 shares** at **$10.00 per share**[5](index=5&type=chunk) - A charitable foundation, Somerset Regal Charitable Foundation, Inc., was established with a contribution of **452,758 shares** and **$905,517** in cash[5](index=5&type=chunk) - Following the conversion, Regal Bancorp merged into the Company, and Regal Bank merged into Somerset Bank, which was then renamed Somerset Regal Bank[6](index=6&type=chunk) [Operating Results Analysis](index=2&type=section&id=Operating%20Results%20Analysis) Analysis of quarterly and six-month operating results reveals shifts in net income, interest income, expenses, and tax impacts [Comparison of Operating Results for the Three Months Ended December 31, 2024 and 2023](index=2&type=section&id=Comparison%20of%20Operating%20Results%20for%20the%20Three%20Months%20Ended%20December%2031%2C%202024%20and%202023) Net income for the fourth quarter of 2024 decreased by 36.5% to $1.0 million from $1.6 million in the prior-year period, primarily due to a 19.7% decrease in net interest income from margin compression, partially offset by a 35.4% reduction in noninterest expenses [General Overview](index=2&type=section&id=Q4%20General%20Overview) Net income fell by $586,000 to $1.0 million for the three months ended December 31, 2024, with current quarter results including $791,000 of net accretion income from fair value adjustments related to the merger, compared to $1.4 million last year Q4 Net Income Comparison | Metric | Q4 2024 | Q4 2023 | | :--- | :--- | :--- | | **Net Income** | $1.0 million | $1.6 million | | **Change** | -$586,000 | -36.5% | [Net Interest Income Analysis](index=2&type=section&id=Q4%20Net%20Interest%20Income%20Analysis) Net interest income decreased by $1.8 million, or 19.7%, to $7.2 million, caused by a 68 basis point compression in the net interest margin to 2.88%, stemming from a 31.8% increase in interest expense while interest income fell by 6.0% - Interest income decreased by **$741,000 (6.0%)** due to a **26 basis point** drop in asset yields and a lower average balance of interest-earning assets[9](index=9&type=chunk) - Interest expense increased by **$1.0 million (31.8%)**, driven by higher rates paid on interest-bearing demand deposits and certificates of deposit to remain competitive[10](index=10&type=chunk) Q4 Net Interest Margin & Spread | Metric | Q4 2024 | Q4 2023 | | :--- | :--- | :--- | | **Net Interest Income** | $7.2 million | $9.0 million | | **Net Interest Rate Spread** | 2.27% | 3.08% | | **Net Interest Margin** | 2.88% | 3.56% | [Provision for Credit Losses](index=2&type=section&id=Q4%20Provision%20for%20Credit%20Losses) The Bank recorded a minimal provision for credit losses of $12,000, compared to a credit of $107,000 in the prior-year quarter, maintaining strong asset quality with no charge-offs or non-performing loans at December 31, 2024 - A provision of **$12,000** was recorded in Q4 2024, compared to a **$107,000** credit in Q4 2023[14](index=14&type=chunk) - The allowance for credit losses as a percentage of total loans was **0.65%** at December 31, 2024, down from **0.74%** a year prior[14](index=14&type=chunk) [Noninterest Income and Expense](index=3&type=section&id=Q4%20Noninterest%20Income%20and%20Expense) Noninterest income rose by 71.8% to $627,000, while noninterest expense fell by 35.4% to $6.5 million, primarily due to lower salaries, employee benefits, and data processing costs - Noninterest income increased by **$262,000 (71.8%)**, mainly from higher other noninterest income and service charges[15](index=15&type=chunk) - Noninterest expense decreased by **$967,000 (35.4%)**, driven by a **$509,000** drop in salaries and benefits and a **$173,000** decrease in data processing expenses[16](index=16&type=chunk) [Income Tax Expense](index=3&type=section&id=Q4%20Income%20Tax%20Expense) Income tax expense was $324,000 for the quarter, with an effective tax rate of 24.1%, up from 20.2% in the same period last year Q4 Income Tax Comparison | Metric | Q4 2024 | Q4 2023 | | :--- | :--- | :--- | | **Income Tax Expense** | $324,000 | $408,000 | | **Effective Tax Rate** | 24.1% | 20.2% | [Comparison of Operating Results for the Six Months Ended December 31, 2024 and 2023](index=3&type=section&id=Comparison%20of%20Operating%20Results%20for%20the%20Six%20Months%20Ended%20December%2031%2C%202024%20and%202023) For the six-month period, the company reported net income of $2.4 million, a significant improvement from a net loss of $8.9 million in the prior year, largely due to the absence of a $5.4 million charitable contribution and $3.9 million in merger-related costs that impacted the 2023 period, alongside 12.7% net interest income growth and a recovery for credit losses [General Overview](index=3&type=section&id=H1%20General%20Overview) Net income increased by $11.3 million to $2.4 million for the six months ended December 31, 2024, as the prior-year period included significant one-time expenses, including a $5.4 million charitable contribution and $3.9 million in merger costs Six-Month Net Income (Loss) Comparison | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | **Net Income (Loss)** | $2.4 million | ($8.9 million) | | **Change** | +$11.3 million | +126.9% | [Net Interest Income Analysis](index=3&type=section&id=H1%20Net%20Interest%20Income%20Analysis) Net interest income for the six-month period grew by 12.7% to $14.8 million, driven by a 29.1% increase in interest income from a larger post-merger loan portfolio, though the net interest margin slightly compressed by 12 basis points to 2.98% as the cost of liabilities increased faster than asset yields - Interest income increased by **$5.2 million (29.1%)** due to a larger average balance of interest-earning assets and higher yields on loans post-merger[19](index=19&type=chunk) - Interest expense rose by **$3.5 million (75.3%)**, primarily from a **$3.5 million** increase in interest on deposits due to higher balances and rates[20](index=20&type=chunk) Six-Month Net Interest Margin & Spread | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | **Net Interest Income** | $14.8 million | $13.2 million | | **Net Interest Rate Spread** | 2.39% | 2.69% | | **Net Interest Margin** | 2.98% | 3.10% | [Provision for Credit Losses](index=4&type=section&id=H1%20Provision%20for%20Credit%20Losses) The Bank recorded a recovery for credit losses of $142,000 for the six-month period, compared to a provision of $4.1 million in the prior year, reflecting updates to model assumptions following the merger and changes in loan portfolio composition - A recovery of **$142,000** was recorded for H1 2025, compared to a **$4.1 million** provision in H1 2024[22](index=22&type=chunk) - There were no charge-offs during the period and no non-performing loans at the end of the period[22](index=22&type=chunk) [Noninterest Income and Expense](index=4&type=section&id=H1%20Noninterest%20Income%20and%20Expense) Noninterest income increased by 45.7% to $1.3 million, while noninterest expense saw a significant decrease of 35.4% to $13.2 million, primarily due to the absence of a $5.4 million charitable contribution and other merger-related costs in the prior-year period - Noninterest income increased by **$401,000 (45.7%)**, driven by higher service charges and fees[23](index=23&type=chunk) - Noninterest expense decreased by **$7.2 million (35.4%)**, mainly due to the absence of the **$5.4 million** charitable contribution made in the prior year[24](index=24&type=chunk) [Income Tax Expense](index=5&type=section&id=H1%20Income%20Tax%20Expense) The provision for income taxes was $687,000, compared to a benefit of $1.5 million in the prior-year period, with an effective tax rate of 22.3% for the six months ended December 31, 2024 Six-Month Income Tax Comparison | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | **Income Tax Expense (Benefit)** | $687,000 | ($1.5 million) | | **Effective Tax Rate** | 22.3% | 14.7% | [Financial Condition Analysis](index=5&type=section&id=Financial%20Condition%20Analysis) An in-depth review of the balance sheet highlights asset growth, liability changes, and equity movements [Comparison of Financial Condition at December 31, 2024 and June 30, 2024](index=5&type=section&id=Comparison%20of%20Financial%20Condition%20at%20December%2031%2C%202024%20and%20June%2030%2C%202024) As of December 31, 2024, total assets grew by 4.3% to $1.06 billion since June 30, 2024, fueled by a 6.0% increase in net loans funded through a 2.1% rise in deposits and a new $30.0 million borrowing, while total equity slightly decreased by 0.7% due to share repurchases offsetting net earnings [Assets](index=5&type=section&id=Assets) Total assets increased by $43.7 million to $1.06 billion, driven by a $43.9 million increase in net loans receivable, with cash and cash equivalents also rising by $7.5 million, while securities held-to-maturity decreased by $7.3 million due to repayments and maturities - Net loans receivable increased by **$43.9 million (6.0%)** to **$775.8 million**, driven by growth in both residential mortgage and commercial loans[29](index=29&type=chunk) - Cash and cash equivalents increased by **$7.5 million (16.4%)** to **$53.4 million**[28](index=28&type=chunk) [Liabilities (Deposits & Borrowings)](index=5&type=section&id=Liabilities%20%28Deposits%20%26%20Borrowings%29) Total deposits grew by $17.0 million to $824.1 million, with growth in interest-bearing checking accounts offsetting declines in non-maturity savings, and the Bank also took on a new $30.0 million borrowing from the FHLB of New York to fund loan growth - Deposits increased by **$17.0 million (2.1%)** to **$824.1 million**, with noninterest-bearing deposits constituting **11.5%** of total deposits[30](index=30&type=chunk) - The Bank borrowed **$30.0 million** from the Federal Home Loan Bank of New York to provide additional liquidity[31](index=31&type=chunk) [Equity](index=5&type=section&id=Equity) Total equity decreased by $1.0 million to $198.1 million, primarily due to the company repurchasing 347,057 shares of its common stock for $3.9 million, partially offset by $2.4 million in net earnings - Equity decreased by **$1.0 million (0.7%)** due to **$3.9 million** in share repurchases, partially offset by **$2.4 million** in net income[32](index=32&type=chunk) [Financial Statements and Ratios](index=7&type=section&id=Financial%20Statements%20and%20Ratios) Detailed financial statements and key performance ratios provide a comprehensive overview of the company's financial health and operational efficiency [Consolidated Statements of Financial Condition](index=7&type=section&id=Consolidated%20Statements%20of%20Financial%20Condition) The consolidated balance sheet as of December 31, 2024, shows total assets of $1.06 billion, supported by $824.1 million in deposits and $198.1 million in stockholders' equity, with net loans receivable at $775.8 million Key Balance Sheet Items (in thousands) | Account | Dec 31, 2024 | Jun 30, 2024 | | :--- | :--- | :--- | | **Total Assets** | $1,064,505 | $1,020,844 | | Total cash and cash equivalents | $53,426 | $45,909 | | Loans receivable, net | $775,751 | $731,859 | | **Total Liabilities** | $866,360 | $821,361 | | Total deposits | $824,081 | $807,100 | | Borrowings | $30,000 | $0 | | **Total Stockholders' Equity** | $198,145 | $199,483 | [Consolidated Statements of Income](index=8&type=section&id=Consolidated%20Statements%20of%20Income) For the three months ended December 31, 2024, the company generated $7.2 million in net interest income and reported a net income of $1.0 million, or $0.12 per diluted share; for the six-month period, net interest income was $14.8 million, resulting in a net income of $2.4 million, or $0.27 per diluted share Key Income Statement Items (in thousands) | Account | Three Months Ended Dec 31, 2024 | Six Months Ended Dec 31, 2024 | | :--- | :--- | :--- | | **Total Interest Income** | $11,545 | $23,012 | | **Total Interest Expense** | $4,306 | $8,179 | | **Net Interest Income** | $7,239 | $14,833 | | **Provision (Credit) for Credit Losses** | $12 | ($142) | | **Total Noninterest Income** | $627 | $1,279 | | **Total Noninterest Expense** | $6,509 | $13,179 | | **Net Income (Loss)** | $1,021 | $2,388 | | **Diluted EPS** | $0.12 | $0.27 | [Selected Ratios](index=9&type=section&id=Selected%20Ratios) Key performance ratios for the three months ended December 31, 2024, include an annualized return on average assets (ROA) of 0.39%, return on average equity (ROE) of 2.16%, and a net interest margin of 2.88%, with asset quality remaining pristine as non-performing loans were 0.00% of total loans and tangible book value per share was $18.45 Key Performance Ratios (Q4 2024 vs Q4 2023) | Ratio | Q4 2024 | Q4 2023 | | :--- | :--- | :--- | | **Return on average assets (annualized)** | 0.39% | 0.60% | | **Return on average equity (annualized)** | 2.16% | 3.36% | | **Net interest margin** | 2.88% | 3.56% | | **Efficiency ratio** | 82.75% | 79.67% | Asset Quality and Other Data (as of Dec 31, 2024) | Ratio | Value | | :--- | :--- | | **Allowance for credit losses / total gross loans** | 0.65% | | **Non-performing loans / total gross loans** | 0.00% | | **Tangible book value per share** | $18.45 | [Other Information](index=5&type=section&id=Other%20Information) This section provides an overview of Somerset Regal Bank and important disclosures regarding forward-looking statements [About Somerset Regal Bank](index=5&type=section&id=About%20Somerset%20Regal%20Bank) Somerset Regal Bank is a full-service commercial bank based in New Jersey, operating 14 branches across six counties, holding $1.06 billion in total assets, $775.8 million in net loans, and $824.1 million in deposits as of December 31, 2024 - The bank operates **14 branches** in Essex, Hunterdon, Middlesex, Morris, Somerset, and Union Counties, New Jersey[33](index=33&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) This section contains standard safe harbor language, cautioning that the report includes forward-looking statements based on current management expectations, subject to significant business, economic, and competitive risks and uncertainties that could cause actual results to differ materially - The report contains forward-looking statements subject to risks and uncertainties as defined by the Private Securities Litigation Reform Act of 1995[35](index=35&type=chunk) - Key risks include competitive pressures, interest rate changes, inflation, economic conditions, and regulatory changes[35](index=35&type=chunk)