SR Bancorp(SRBK) - 2025 Q2 - Quarterly Report

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].