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)

Financial Position - Total assets increased by $32.1 million, or 3.1%, to $1.05 billion at September 30, 2024, from $1.02 billion at June 30, 2024, primarily driven by new loan originations [115] - Total liabilities rose by $31.1 million, or 3.8%, to $852.4 million at September 30, 2024, primarily due to a $20.0 million advance borrowing and a $12.7 million increase in deposits [119] - Total equity increased by $1.1 million, or 0.5%, to $200.5 million at September 30, 2024, driven by net earnings of $1.4 million [122] - Cash and cash equivalents rose by $1.4 million, or 3.0%, to $47.3 million at September 30, 2024, due to increases in deposits and borrowings [116] - The company had outstanding borrowings of $20.0 million as of September 30, 2024, compared to no borrowings at June 30, 2024 [189] Loan Portfolio - Loans receivable, net, increased by $35.9 million, or 4.9%, to $767.7 million at September 30, 2024, with a $25.6 million, or 14.2%, increase in multi-family loans and an $11.5 million, or 2.9%, increase in residential mortgage loans [117] - The total loan portfolio reached $770.6 million at September 30, 2024, with a net deferred loan origination fee of $2.2 million [125] - Residential mortgage loans comprised 52.7% of the total loan portfolio, while commercial loans accounted for 45.8% as of September 30, 2024 [123] - The company intends to focus on increasing its share of commercial loan originations in its primary market area going forward [124] - Outstanding loan commitments were $64.2 million and unused lines of credit were $36.1 million as of September 30, 2024 [185] Credit Quality - The allowance for credit losses is determined based on the evaluation of the loan portfolio's size and risk characteristics, past events, and economic forecasts [106] - Total non-performing loans decreased from $50,000 to $9,000, representing a reduction of 82% [134] - The total allowance for credit losses included $1,889,000 for multi-family loans and $1,839,000 for residential mortgage loans [137] - The allowance for credit losses (ACL) was maintained at $5,075,000, reflecting management's best estimate of probable losses [137] - The total non-performing assets to total assets ratio remained at 0.00% as of September 30, 2024 [134] Income and Expenses - Net income increased by $11.9 million to $1.4 million for the three months ended September 30, 2024, compared to a net loss of $10.5 million for the same period in 2023 [157] - Interest income rose by $5.9 million, or 106.9%, to $11.5 million for the three months ended September 30, 2024, driven by a 163 basis point increase in yield on interest-earning assets and a $343.2 million increase in average loan balances [158] - Net interest income increased by $3.4 million, or 83.2%, to $7.6 million for the three months ended September 30, 2024, with net interest margin rising 80 basis points to 3.21% [160] - Total noninterest expense decreased by $6.1 million, or 47.3%, to $6.8 million for the three months ended September 30, 2024, from $12.9 million for the same period in 2023 [169] - Noninterest income increased by $288,000, or 56.1%, to $801,000 for the three months ended September 30, 2024, from $513,000 for the same period in 2023 [168] Deposits and Funding - Deposits increased by $12.3 million, or 1.5%, to $819.4 million at September 30, 2024, with 12.5% of total deposits being noninterest-bearing [120] - The aggregate amount of uninsured deposits was $137.6 million as of September 30, 2024, compared to $109.7 million as of June 30, 2024 [155] - The total amount of uninsured certificates of deposit was $24.0 million as of September 30, 2024, up from $21.9 million as of June 30, 2024 [155] - The average balance of certificates of deposit increased by $100.9 million, or 57.3%, to $276.9 million for the three months ended September 30, 2024 [159] - The company raised interest rates on certain deposit products to remain competitive, contributing to the increase in interest-bearing checking accounts [188] Risk Management - The company is subject to various risks including economic conditions, interest rate changes, and competition among financial institutions [100] - The Bank has implemented strategies to manage interest rate risk, including growing transaction deposit accounts and rebalancing the loan portfolio [172] - The estimated economic value of equity (EVE) would decrease by 17.87% with a 200 basis point increase in interest rates as of September 30, 2024 [177] - As of September 30, 2024, net interest income (NII) is forecasted to decrease by 8.21% with a 200 basis point increase in market interest rates, and by 6.64% with a 200 basis point decrease [179] Regulatory Compliance - Somerset Regal Bank exceeded all regulatory capital requirements and is considered "well capitalized" as of September 30, 2024 [190] - The company plans to delay the adoption of new accounting pronouncements applicable to public companies until they are made applicable to private companies [104]

Financial Performance - Net income for the three months ended September 30, 2024, was $1.4 million, a significant increase of $11.9 million, or 113.0%, compared to a net loss of $10.5 million for the same period in 2023[1][5] - The company reported a net income of $1,367 thousand for the three months ended September 30, 2024, compared to a net loss of $10,498 thousand for the same period in 2023[29] - The return on average assets improved to 0.53% for the three months ended September 30, 2024, from a loss of 5.74% in the same period last year[30] - The efficiency ratio significantly improved to 81.23% for the three months ended September 30, 2024, compared to 277.74% for the same period in 2023[30] Asset and Loan Growth - Total assets increased by $32.1 million, or 3.1%, to $1.05 billion at September 30, 2024, driven by new loan originations[2][15] - Net loans rose by $35.9 million, or 4.9%, to $767.7 million at September 30, 2024, with multi-family loans increasing by $25.6 million, or 14.2%[2][18] - Total assets increased to $1,052,960 thousand as of September 30, 2024, compared to $1,020,844 thousand as of June 30, 2024, reflecting a growth of 3.3%[28] Deposit Growth - Total deposits increased by $12.3 million, or 1.5%, to $819.4 million at September 30, 2024, with $114.3 million, or 13.9%, consisting of noninterest-bearing deposits[2][20] - Total deposits increased to $819,384 thousand as of September 30, 2024, from $807,100 thousand as of June 30, 2024, marking a growth of 1.6%[28] Interest Income and Expenses - Interest income surged by $5.9 million, or 106.9%, to $11.5 million for the three months ended September 30, 2024, primarily due to a 163 basis point increase in yield on interest-earning assets[6] - Net interest income increased by $3.4 million, or 83.2%, to $7.6 million for the three months ended September 30, 2024, with net interest margin rising to 3.21%[8] - Net interest income for the three months ended September 30, 2024, was $7,594 thousand, up 83.5% from $4,145 thousand for the same period in 2023[29] - The company recorded total interest income of $11,467 thousand for the three months ended September 30, 2024, compared to $5,543 thousand for the same period in 2023, representing a growth of 106.5%[29] - Noninterest income rose by $288,000, or 56.1%, to $801,000 for the three months ended September 30, 2024, driven by increased service charges and fees[12] - Noninterest expense decreased by $6.1 million, or 47.3%, to $6.8 million for the three months ended September 30, 2024, primarily due to a prior year's charitable contribution[13] Credit Quality - The provision for credit losses recorded a recovery of $154,000 for the three months ended September 30, 2024, compared to a provision of $4.2 million for the same period in 2023[11] - The allowance for credit losses on loans as a percentage of total gross loans was 0.66% as of September 30, 2024, down from 0.77% a year earlier[30] - Non-performing loans as a percentage of total gross loans remained at 0.00% as of September 30, 2024, compared to 0.02% in the same period last year[30] Equity and Book Value - Equity increased by $1.1 million, or 0.5%, to $200.5 million at September 30, 2024, primarily due to net earnings of $1.4 million[22] - Tangible book value per common share increased to $18.17 as of September 30, 2024, from $17.35 a year earlier[30]

Loan Portfolio and Asset Quality - The company offers unsecured personal loans up to $5,000 and rehabilitation loans up to $10,000, with rehabilitation loans subject to a 70% loan-to-value limit [37]. - As of June 30, 2024, the company had loan participations of $4.9 million and purchased $41.5 million of loans from mortgage brokers for its portfolio, compared to $42.6 million in the previous year [39]. - The maximum amount that can be lent to one borrower is limited to 15% of stated capital and reserves, which equates to $29.9 million as of June 30, 2024 [41]. - Total non-performing loans amounted to $50, with a non-performing loans to total loans ratio of 0.01% as of June 30, 2024, compared to 0.06% in the previous year [48]. - The company reported total past due loans of $734,355,000 and total current loans of $735,017,000 as of June 30, 2024 [44]. - The delinquency status for residential mortgages showed 572 loans past due for 30-59 days, with a total of 394,723 current loans [44]. - The company had no troubled debt restructurings as of June 30, 2024, indicating stable asset quality [47]. - The Management Loan Committee can approve residential and commercial loans up to $1.0 million and $3.0 million respectively, with larger loans requiring Board approval [40]. - The company has a loan policy limit of $15.0 million for one borrower and $20.0 million for related borrowers [41]. - As of June 30, 2024, the company had no real estate owned, indicating effective management of foreclosures [49]. - As of June 30, 2024, the company had $50,000 in loans classified as substandard, a decrease from $145,000 as of June 30, 2023, with no assets classified as doubtful or loss [51]. - The allowance for credit losses (ACL) as of June 30, 2024, was $5,229,000, reflecting a comprehensive assessment of probable and estimable losses in the loan portfolio [59]. - The ACL allocated to owner-occupied commercial real estate loans was $1,331,000, representing 25.46% of the total allocated allowance [59]. - The company has established a methodology for determining the allowance for credit losses, which is subject to review by regulatory agencies [52]. Investment Portfolio - The company sold $35.4 million in lower-yielding investment securities during the year ended June 30, 2024, resulting in a pre-tax realized loss of approximately $4.4 million [64]. - The redeployment of $30.9 million from the sale of securities into residential and commercial real estate mortgages is expected to generate an additional $1.4 million in pre-tax earnings annually [64]. - The investment portfolio as of June 30, 2024, consisted primarily of U.S. government-sponsored enterprises totaling $145.7 million, with additional investments in subordinated debentures and collateralized mortgage obligations [63]. - The weighted average yield of the investment securities portfolio was 1.73% as of June 30, 2024, with various maturities contributing to the overall yield [66]. - The company maintains an investment in Federal Home Loan Bank of New York stock as part of its regulatory requirements [63]. - The company aims to maximize portfolio yield while minimizing risk and meeting liquidity needs through its investment policy [61]. Deposits and Funding - As of June 30, 2024, total deposits amounted to $807.1 million, a significant increase from $503.9 million in 2023, representing a growth of 59.9% [74]. - Non-interest-bearing demand deposits increased to $108.0 million (13.39% of total deposits) from $40.7 million (8.07% of total deposits) in 2023 [74]. - Interest-bearing deposits rose to $252.9 million (31.33% of total deposits) with an average interest rate of 1.13%, compared to $137.5 million (27.29%) at an average rate of 0.06% in 2023 [74]. - Time deposits increased to $272.8 million (33.80% of total deposits) with an average interest rate of 3.81%, up from $159.5 million (31.65%) at an average rate of 2.22% in 2023 [74]. - The aggregate amount of uninsured deposits grew to $109.7 million in 2024 from $21.2 million in 2023, indicating a substantial rise in higher-value deposits [74]. - The company had access to Federal Home Loan Bank advances of up to $100.0 million based on unused qualifying collateral as of June 30, 2024 [77]. Employee and Organizational Structure - As of June 30, 2024, the company had 116 full-time employees and two part-time employees, with no union representation [78]. - The company offers a competitive total rewards package, including a 401(k) plan with matching contributions and an Employee Stock Ownership Plan [80]. - The company maintains a strong commitment to employee development, providing access to various training programs and resources [81]. - Somerset Regal Bank, the company's only subsidiary, operates three additional subsidiaries focused on real estate and investment management [83]. Capital and Regulatory Compliance - Somerset Regal Bank exceeded all capital requirements as of June 30, 2024, and was classified as a "well capitalized" institution [95]. - The bank maintains a common equity Tier 1 capital ratio of 7.0%, a Tier 1 capital ratio of 8.5%, and a total capital ratio of 10.5% due to the capital conservation buffer [94]. - Somerset Regal Bank opted into the community bank leverage ratio framework, requiring a leverage ratio greater than 9% to satisfy regulatory capital requirements [95]. - The FDIC assesses institutions with less than $10 billion in total assets at rates ranging from 24.5 to 32 basis points of total assets less tangible capital [104]. - Somerset Regal Bank's most recent FDIC CRA rating, dated May 31, 2022, was "Satisfactory" [108]. - The bank is a member of the Federal Home Loan Bank System and was in compliance with capital stock requirements as of June 30, 2024 [109]. - The FDIC has the authority to establish higher capital requirements for individual institutions deemed necessary [95]. - Somerset Regal Bank's capital distributions and discretionary bonus payments are limited if it does not hold the required capital conservation buffer [94]. - The bank's loans to insiders must follow stringent credit underwriting procedures and are subject to specific limitations [103]. - The FDIC may terminate deposit insurance if the institution engages in unsafe practices or violates applicable laws [105]. - SR Bancorp has consolidated assets of less than $3 billion, thus not subject to consolidated regulatory capital requirements unless advised by the Federal Reserve [112]. - As of June 30, 2024, Somerset Regal Bank had approximately $3.6 million in federal net operating loss carryovers and approximately $7.2 million in state net operating loss carryovers [124]. - At June 30, 2024, Somerset Regal Bank had approximately $2.5 million in capital loss carryovers [125]. - The Corporation Business Tax rate in New Jersey is 9% on adjusted entire net income, with reduced rates for corporations with lower income levels [126]. - SR Bancorp qualifies as an "emerging growth company" under the JOBS Act, allowing it to take advantage of certain reporting exemptions [121]. - Federal Reserve policies dictate that dividends should only be paid out of current earnings and if consistent with the organization's capital needs [115]. - SR Bancorp's common stock is registered with the SEC, subjecting it to various regulatory requirements under the Exchange Act [119]. - The Federal Reserve requires prior written notice for stock repurchases if the gross consideration equals 10% or more of the company's consolidated net worth [114]. - Federal law mandates that bank holding companies act as a source of financial and managerial strength to their subsidiary depository institutions [113]. - SR Bancorp has no plans to elect "financial holding company" status at this time [112].

Financial Performance - The Company reported a net loss of $3.0 million for the three months ended June 30, 2024, compared to a net income of $1.1 million for the previous quarter, marking a decrease of 385.2%[3] - SR Bancorp, Inc. reported a net loss of $10.9 million for the year ended June 30, 2024, compared to a net income of $1.6 million for the year ended June 30, 2023[26] - Noninterest income decreased by $4.4 million, or 852.9%, resulting in a loss of $3.9 million for the three months ended June 30, 2024, primarily due to a loss on the sale of investment securities[32] - The company incurred $4.4 million in merger-related expenses during the year, impacting overall financial performance[26] - The efficiency ratio deteriorated to 162.78% for the three months ended June 30, 2024, compared to 86.19% in the previous quarter, indicating increased operational costs[44] - Basic and diluted earnings per share were both reported at $(0.34) for the three months ended June 30, 2024, compared to $0.12 in the previous quarter[43] Assets and Deposits - Total assets increased by $369.4 million, or 56.7%, to $1.02 billion as of June 30, 2024, compared to $651.5 million a year earlier[6] - Total deposits increased by $303.2 million, or 60.2%, to $807.1 million as of June 30, 2024, driven by the assumption of Regal Bank's deposits[16] - Total assets increased to $1,020,844 thousand as of June 30, 2024, compared to $651,486 thousand in the previous year, representing a growth of 56.5%[40] - Total deposits rose to $807,100 thousand, up from $503,917 thousand year-over-year, reflecting a significant increase of 59.9%[40] Loans and Credit Losses - Net loans rose by $369.6 million, or 102.0%, to $731.9 million as of June 30, 2024, primarily due to the acquisition of Regal Bank's loan portfolio[15] - The Company recorded a provision for credit losses of $153,000 for the three months ended June 30, 2024, reflecting loan growth during the period[12] - The provision for credit losses was $4.2 million for the year ended June 30, 2024, reflecting the company's strategy related to the acquisition of Regal Bancorp[26] - Non-performing loans as a percentage of total gross loans remained low at 0.01% as of June 30, 2024, compared to 0.03% in the previous quarter[44] - The allowance for credit losses on loans as a percentage of non-performing loans was exceptionally high at 10,458.00%[44] Equity and Capital - Equity increased by $77.4 million, or 63.4%, to $199.5 million as of June 30, 2024, largely due to $86.9 million in net proceeds from the Company's initial public offering[17] - Goodwill and intangible assets were recorded at $28.1 million as of June 30, 2024, resulting from the merger with Regal Bancorp[36] Interest Income and Expenses - Net interest income decreased by $329,000, or 4.0%, to $7.9 million for the three months ended June 30, 2024, with a net interest margin of 3.22%[11] - Total interest income increased to $40.9 million for the year ended June 30, 2024, up from $16.1 million in the previous year, representing a growth of 153.5%[22] - Net interest income after provision for credit losses was $25.3 million for the year ended June 30, 2024, compared to $13.7 million in the previous year[22] - Total noninterest expense rose to $34.6 million for the year ended June 30, 2024, up from $13.2 million in the previous year, indicating increased operational costs[22] - Net interest income after provision for credit losses was $7,786 thousand for the three months ended June 30, 2024, down from $8,410 thousand in the previous quarter, a decrease of 7.4%[43] - The net interest margin decreased to 3.22% for the three months ended June 30, 2024, down from 3.31% in the previous quarter[44] Mergers and Acquisitions - The merger with Regal Bancorp was completed on September 19, 2023, resulting in significant increases in assets and deposits[7] - The Company closed two retail branch locations in New Jersey due to proximity to other branches following the merger[8]

(State or Other Jurisdiction of Incorporation) Maryland 001-41808 92-2601722 (Commission File No.) (I.R.S. Employer UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Identification No.) FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): May 23, 2024 SR BANCORP, INC. (Exact Name of Registrant as Specified in Charter) ☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 2 ...

Core Viewpoint - SR Bancorp, Inc. has completed a balance sheet repositioning strategy by selling lower-yielding investment securities to enhance future earnings potential [1][2]. Financial Performance - The company sold $35.4 million in book value of investment securities, incurring a pre-tax realized loss of approximately $4.4 million [2]. - The anticipated proceeds of $30.9 million from the sale will be redeployed into residential and commercial real estate mortgages, expected to generate an additional $1.4 million in pre-tax earnings annually, with a positive spread differential of approximately 465 basis points [2]. - The loss from the sale is projected to be recouped within approximately 3.27 years [2]. Capital Position - The loss on the sale of securities had a minimal impact on shareholders' equity and the company's book value per share [3]. - Somerset Regal Bank's capital levels remain well above the requirements to be categorized as well-capitalized following the sale [3]. Future Outlook - The repositioning strategy is expected to be accretive to earnings, net interest margin, and return on assets in future periods [3]. Company Overview - Somerset Regal Bank, a full-service commercial bank headquartered in Bound Brook, New Jersey, operates 15 branches across several counties [4]. - As of March 31, 2024, the bank reported total assets of $1.05 billion, net loans of $698.9 million, deposits of $838.0 million, and total equity of $199.3 million [4].