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]
SR Bancorp(SRBK) - 2025 Q1 - Quarterly Report