SR Bancorp(SRBK) - 2024 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section provides the unaudited condensed consolidated financial statements and management's discussion and analysis for the period ended September 30, 2023 Item 1. Financial Statements Presents unaudited condensed consolidated financial statements, reflecting the impact of the September 2023 conversion and merger Condensed Consolidated Statements of Financial Condition Total assets increased to $1.11 billion, driven by the Regal Bancorp acquisition and common stock issuance | Financial Metric | September 30, 2023 (Unaudited) (in Thousands) | June 30, 2023 (in Thousands) | | :--- | :--- | :--- | | Total Assets | $1,108,452 | $651,486 | | Total cash and cash equivalents | $121,111 | $42,449 | | Loans receivable, net | $692,403 | $362,252 | | Goodwill and intangible assets | $29,487 | $0 | | Total Liabilities | $913,973 | $529,402 | | Total deposits | $877,294 | $503,917 | | Total Stockholders' Equity | $194,479 | $122,084 | Condensed Consolidated Statements of (Loss) Income The company reported a $10.5 million net loss for Q3 2023, driven by credit loss provisions and increased noninterest expenses | Metric (in Thousands) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Net Interest Income | $4,145 | $3,427 | | Provision for Credit Losses | $(4,162) | $0 | | Total Noninterest Income | $513 | $341 | | Total Noninterest Expense | $12,937 | $3,369 | | (Loss) Income Before Income Tax | $(12,441) | $399 | | Net (Loss) Income | $(10,498) | $354 | | Diluted EPS | $(10.03) | N/A | Condensed Consolidated Statements of Comprehensive (Loss) Total comprehensive loss reached $11.56 million in Q3 2023, including net loss and other comprehensive losses | Metric (in Thousands) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Net (Loss) Income | $(10,498) | $354 | | Total other comprehensive loss | $(1,063) | $(774) | | Total comprehensive loss | $(11,561) | $(420) | Condensed Consolidated Statements of Changes in Stockholders' Equity Stockholders' equity increased to $194.5 million, primarily due to common stock issuance, partially offset by net loss - Common stock issued in the quarter amounted to 9,507,930 shares, contributing $91.6 million to equity[14] - The net loss for the quarter reduced retained earnings by $10.5 million[14] Condensed Consolidated Statements of Cash Flows Cash and cash equivalents increased by $78.7 million, primarily from financing activities including common stock issuance | Cash Flow Activity (in Thousands) | Three Months Ended Sep 30, 2023 | | :--- | :--- | | Net cash (used in) provided by operating activities | $(6,080) | | Net cash used in investing activities | $(571) | | Net cash provided by financing activities | $85,313 | | Net increase in cash and cash equivalents | $78,662 | - The company received $84.0 million in proceeds from the issuance of common stock as part of its conversion and stock offering[16] Notes to Unaudited Condensed Consolidated Financial Statements Detailed notes on accounting policies and significant events, including the September 2023 conversion and merger - On September 19, 2023, the company completed its conversion to a stock organization, sold 9,055,172 shares at $10.00 per share, and merged with Regal Bancorp, Inc[18][19][20] - The company adopted the CECL standard (ASU 2016-13) on July 1, 2023, resulting in a cumulative effect adjustment that decreased retained earnings by $34,000[31][82] - The acquisition of Regal Bancorp resulted in the recognition of $20.5 million in goodwill and a $9.0 million core deposit intangible asset[88] - As of September 30, 2023, the Bank was categorized as 'well capitalized' under regulatory framework, with a Tier 1 capital to average assets ratio of 15.32%[137] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial condition and results, highlighting the impact of the September 2023 conversion and merger - The company completed its conversion to a stock organization and merger with Regal Bancorp on September 19, 2023, with the income statement for the quarter including only 11 days of combined operations[152][154][155] - Total assets increased by $457.0 million (70.1%) to $1.11 billion, primarily due to the $429.4 million in assets acquired from Regal Bancorp and net proceeds from the stock offering[174] - A net loss of $10.5 million was recorded for Q3 2023, compared to a $354,000 net income in Q3 2022, driven by a $5.4 million charitable contribution, a $4.2 million provision for credit losses, and $3.9 million in other merger-related costs[182] - The loan portfolio composition shifted significantly post-merger, with residential mortgage loans decreasing from 97.8% to 52.2% of total loans, while commercial loans increased to 46.1% of the portfolio[178][179] Quantitative and Qualitative Disclosures About Market Risk Assesses market risk, primarily interest rate risk, and its estimated impact on Economic Value of Equity and Net Interest Income | Change in Interest Rates (bps) | Estimated Change in EVE | Estimated Change in NII (Year 1) | | :--- | :--- | :--- | | +200 | (17.27)% | (1.8)% | | +100 | (6.82)% | +3.0% | | -100 | +4.37% | (4.9)% | | -200 | +6.45% | (10.2)% | Controls and Procedures Management concluded that disclosure controls and procedures were effective with no material changes to internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[221] - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal controls[222] PART II. OTHER INFORMATION Provides additional information including legal proceedings, risk factors, and equity security sales Legal Proceedings The company reports no pending legal proceedings with a material adverse effect on its financials - The company reports no pending legal proceedings that would have a material adverse effect on its financial condition or operations[224] Risk Factors No material changes to risk factors were reported compared to the prior fiscal year's Form 10-K - No material changes in risk factors were reported compared to the Form 10-K for the year ended June 30, 2023[225] Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities No unregistered sales of equity securities, use of proceeds, or issuer purchases were reported - None reported[226]