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)

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]