SR Bancorp(SRBK) - 2025 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements (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 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) 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) 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 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] Consolidated Statements of Cash Flows 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 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][35] - 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][50] - 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][85] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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 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 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 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 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][158] - 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][181] Market Risk 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 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] Item 4. Controls and Procedures 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] - 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] PART II. OTHER INFORMATION Item 1. Legal Proceedings 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] Item 1A. Risk Factors 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] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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 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] Item 6. Exhibits 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