Q3false0001951276--06-30http://fasb.org/us-gaap/2024#AccountingStandardsUpdate201613Memberhttp://fasb.org/us-gaap/2024#AccountingStandardsUpdate201613MemberFive Yearshttp://fasb.org/us-gaap/2024#MarketApproachValuationTechniqueMemberhttp://fasb.org/us-gaap/2024#MeasurementInputAppraisedValueMemberhttp://fasb.org/us-gaap/2024#MarketApproachValuationTechniqueMemberhttp://fasb.org/us-gaap/2024#MeasurementInputAppraisedValueMember0001951276srbk:DependentLoanMemberus-gaap:ResidentialRealEstateMembersrbk:OwnerOccupiedCommercialRealEstateLoansMember2025-03-310001951276srbk:OwnerOccupiedCommercialRealEstateLoansMember2023-07-012024-03-310001951276us-gaap:AdditionalPaidInCapitalMember2024-06-3000019512762023-06-300001951276us-gaap:UnusedLinesOfCreditMember2025-03-310001951276us-gaap:RestrictedStockMembersrbk:TwoThousandTwentyFourEquityIncentivePlanMember2024-12-310001951276us-gaap:ResidentialMortgageMember2024-07-012025-03-310001951276us-gaap:ResidentialMortgageMember2025-01-012025-03-310001951276us-gaap:FederalNationalMortgageAssociationCertificatesAndObligationsFNMAMember2024-06-300001951276srbk:OtherCommercialRealEstateMember2024-06-300001951276us-gaap:FinancialAssetNotPastDueMemberus-gaap:ResidentialMortgageMember2024-06-300001951276srbk:OtherCommercialRealEstateMember2024-01-012024-03-310001951276srbk:MultiFamilyLoansMember2024-03-310001951276srbk:TotalCommercialLoansMember2024-06-300001951276us-gaap:SpecialMentionMember2024-06-300001951276us-gaap:SubstandardMemberus-gaap:ResidentialMortgageMember2025-03-310001951276us-gaap:CommercialRealEstateMembersrbk:DependentLoanMember2024-06-300001951276srbk:TwoThousandTwentyFourEquityIncentivePlanMember2025-03-310001951276us-gaap:FinancialAssetNotPastDueMembersrbk:OtherCommercialRealEstateMember2024-06-300001951276srbk:BusinessAssetsMembersrbk:DependentLoanMembersrbk:OtherCommercialRealEstateMember2025-03-310001951276srbk:LoanOriginationAndPurchaseCommitmentsMember2025-03-310001951276us-gaap:CommercialRealEstateMembersrbk:MultiFamilyLoansMembersrbk:DependentLoanMember2025-03-310001951276us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember2024-07-012025-03-310001951276srt:FederalHomeLoanBankOfNewYorkMember2025-03-310001951276us-gaap:CommercialPortfolioSegmentMemberus-gaap:DoubtfulMember2025-03-310001951276us-gaap:RetainedEarningsMember2025-03-310001951276srbk:DependentLoanMembersrbk:ConsumerAndOtherPortfolioSegmentMemberus-gaap:ResidentialRealEstateMember2024-06-300001951276us-gaap:SubstandardMembersrbk:OwnerOccupiedCommercialRealEstateLoansMember2024-06-300001951276us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:EquitySecuritiesMember2024-06-3000019512762023-12-310001951276us-gaap:ResidentialMortgageMembersrbk:DependentLoanMemberus-gaap:ResidentialRealEstateMember2024-06-300001951276us-gaap:AdditionalPaidInCapitalMember2024-03-3100019512762023-07-012024-06-300001951276srbk:TwoThousandTwentyFourEquityIncentivePlanMember2025-01-012025-03-310001951276srbk:OwnerOccupiedCommercialRealEstateLoansMember2024-01-012024-03-310001951276us-gaap:ResidentialMortgageMember2024-06-300001951276srbk:BusinessAssetsMembersrbk:DependentLoanMembersrbk:OtherCommercialRealEstateMember2024-06-300001951276us-gaap:SubstandardMembersrbk:MultiFamilyLoansMember2024-06-300001951276srbk:RegalBancorpIncMember2023-07-012024-03-310001951276us-gaap:CommonStockMember2024-03-310001951276us-gaap:CommercialPortfolioSegmentMember2023-12-310001951276srbk:GrossChargeOffsMember2024-06-300001951276us-gaap:AccountingStandardsUpdate201613Member2023-06-300001951276us-gaap:SubstandardMemberus-gaap:ResidentialMortgageMember2024-06-300001951276srbk:ConsumerAndOtherPortfolioSegmentMemberus-gaap:SpecialMentionMember2025-03-310001951276us-gaap:EmployeeStockOptionMembersrbk:TwoThousandTwentyFourEquityIncentivePlanMember2024-07-012024-12-310001951276srbk:ConsumerAndOtherPortfolioSegmentMembersrbk:DependentLoanMember2025-03-310001951276srbk:UnearnedEmployeesStockOptionPlanCompensationMember2025-01-012025-03-310001951276us-gaap:FederalHomeLoanMortgageCorporationCertificatesAndObligationsFHLMCMember2025-03-310001951276us-gaap:FinancialAssetNotPastDueMember2024-06-300001951276srbk:ConsumerAndOtherPortfolioSegmentMemberus-gaap:AccountingStandardsUpdate201613Member2023-06-300001951276srbk:ConsumerAndOtherPortfolioSegmentMember2024-06-300001951276us-gaap:FinancialAssetNotPastDueMembersrbk:OwnerOccupiedCommercialRealEstateLoansMember2025-03-310001951276us-gaap:FinancialAssetPastDueMemberus-gaap:ResidentialMortgageMember2025-03-310001951276us-gaap:CommercialRealEstateMembersrbk:DependentLoanMember2025-03-310001951276us-gaap:FairValueInputsLevel2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2025-03-310001951276srbk:ConsumerAndOtherPortfolioSegmentMemberus-gaap:SpecialMentionMember2024-06-300001951276srbk:MultiFamilyLoansMemberus-gaap:AccountingStandardsUpdate201613Member2023-06-300001951276srbk:ConsumerAndOtherPortfolioSegmentMember2024-01-012024-03-310001951276srbk:ConsumerAndOtherLoansMember2025-03-310001951276srbk:RegalBancorpIncMember2023-09-192023-09-190001951276us-gaap:CommercialPortfolioSegmentMember2025-03-310001951276us-gaap:CommonStockMembersrbk:TwoThousandTwentyFourEquityIncentivePlanMember2024-11-200001951276srbk:OwnerOccupiedCommercialRealEstateLoansMember2024-03-310001951276us-gaap:ResidentialMortgageMember2024-01-012024-03-310001951276srbk:MultiFamilyLoansMember2024-12-310001951276us-gaap:SubordinatedDebtMember2025-03-310001951276srbk:DependentLoanMembersrbk:OtherCommercialRealEstateMember2025-03-310001951276us-gaap:UnlikelyToBeCollectedFinancingReceivableMembersrbk:OwnerOccupiedCommercialRealEstateLoansMember2024-06-300001951276us-gaap:SubstandardMemberus-gaap:CommercialPortfolioSegmentMember2025-03-310001951276us-gaap:CommercialRealEstateMembersrbk:ConsumerAndOtherPortfolioSegmentMembersrbk:DependentLoanMember2024-06-300001951276srbk:CommercialAndIndustrialLoansMember2024-06-300001951276srbk:UnearnedEmployeesStockOptionPlanCompensationMember2024-01-012024-03-310001951276srbk:RegalBancorpIncMember2024-03-310001951276us-gaap:CommercialPortfolioSegmentMemberus-gaap:CommercialRealEstateMembersrbk:DependentLoanMember2025-03-310001951276srbk:GrossChargeOffsMember2025-03-310001951276srbk:RegalBancorpIncMemberus-gaap:CoreDepositsMember2023-09-190001951276us-gaap:CommercialPortfolioSegmentMembersrbk:DependentLoanMember2025-03-310001951276srbk:ResidentialMortgageLoansMember2024-06-300001951276us-gaap:CommercialPortfolioSegmentMembersrbk:DependentLoanMember2024-06-300001951276srbk:ConsumerAndOtherPortfolioSegmentMembersrbk:DependentLoanMember2024-06-300001951276srbk:ConsumerAndOtherPortfolioSegmentMember2025-01-012025-03-3100019512762023-09-192023-09-190001951276us-gaap:RestrictedStockMember2025-01-012025-03-310001951276srbk:OwnerOccupiedCommercialRealEstateLoansMember2023-06-300001951276us-gaap:SubstandardMemberus-gaap:CommercialPortfolioSegmentMember2024-06-300001951276srbk:CommercialAndIndustrialLoansMember2025-03-310001951276us-gaap:CommercialLoanMember2025-03-310001951276us-gaap:CommercialRealEstateMembersrbk:DependentLoanMembersrbk:ConsumerAndOtherPortfolioSegmentMember2025-03-310001951276srbk:MultiFamilyLoansMember2024-01-012024-03-310001951276srbk:OtherCommercialRealEstateMember2025-01-012025-03-310001951276us-gaap:ResidentialMortgageMember2024-03-310001951276us-gaap:FinancingReceivables30To59DaysPastDueMember2024-06-300001951276us-gaap:FinancialAssetNotPastDueMember2025-03-310001951276us-gaap:CommercialPortfolioSegmentMemberus-gaap:UnlikelyToBeCollectedFinancingReceivableMember2024-06-300001951276us-gaap:LandMember2024-06-300001951276srbk:ConsumerAndOtherPortfolioSegmentMemberus-gaap:DoubtfulMember2024-06-300001951276srbk:ConsumerAndOtherLoansMember2024-06-300001951276us-gaap:CoreDepositsMember2024-07-012025-03-310001951276us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMembersrbk:IndividuallyEvaluatedLoansMember2024-06-300001951276srbk:SomersetRegalCharitableFoundationIncMember2023-09-192023-09-190001951276srbk:ResidentialMortgageLoansMember2025-03-310001951276srbk:ConsumerAndOtherPortfolioSegmentMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2025-03-310001951276us-gaap:FinancialAssetNotPastDueMembersrbk:OwnerOccupiedCommercialRealEstateLoansMember2024-06-300001951276us-gaap:DoubtfulMembersrbk:OtherCommercialRealEstateMember2024-06-300001951276us-gaap:ResidentialMortgageMembersrbk:DependentLoanMember2024-06-300001951276us-gaap:SpecialMentionMemberus-gaap:CommercialPortfolioSegmentMember2025-03-310001951276us-gaap:ResidentialMortgageMemberus-gaap:CommercialRealEstateMembersrbk:DependentLoanMember2024-06-300001951276srbk:ForeignGovernmentBondMember2025-03-310001951276srbk:UnearnedEmployeesStockOptionPlanCompensationMember2024-07-012025-03-310001951276srbk:DependentLoanMemberus-gaap:ResidentialRealEstateMembersrbk:OwnerOccupiedCommercialRealEstateLoansMember2024-06-300001951276us-gaap:EstimateOfFairValueFairValueDisclosureMember2024-06-300001951276us-gaap:FairValueInputsLevel2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2024-06-300001951276us-gaap:RetainedEarningsMember2023-12-310001951276us-gaap:CollateralizedMortgageObligationsMember2024-06-300001951276us-gaap:FinancialAssetNotPastDueMemberus-gaap:CommercialPortfolioSegmentMember2024-06-300001951276us-gaap:CommonStockMember2024-07-012025-03-310001951276us-gaap:AdditionalPaidInCapitalMember2023-12-310001951276us-gaap:UnlikelyToBeCollectedFinancingReceivableMembersrbk:OtherCommercialRealEstateMember2025-03-310001951276us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-12-310001951276us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:EquitySecuritiesMember2025-03-310001951276us-gaap:CommercialRealEstateMembersrbk:DependentLoanMembersrbk:OwnerOccupiedCommercialRealEstateLoansMember2025-03-310001951276us-gaap:AdditionalPaidInCapitalMember2024-01-012024-03-310001951276srbk:MultiFamilyLoansMember2024-06-300001951276srbk:ConsumerAndOtherPortfolioSegmentMember2024-12-310001951276srbk:OtherCommercialRealEstateLoansMember2025-03-310001951276srbk:ConsumerAndOtherPortfolioSegmentMemberus-gaap:PassMember2025-03-310001951276srbk:ConsumerAndOtherPortfolioSegmentMemberus-gaap:FinancialAssetNotPastDueMember2024-06-300001951276us-gaap:PassMember2025-03-310001951276us-gaap:PassMemberus-gaap:CommercialPortfolioSegmentMember2025-03-310001951276us-gaap:FairValueMeasurementsRecurringMemberus-gaap:EquitySecuritiesMember2024-06-300001951276us-gaap:RetainedEarningsMember2024-01-012024-03-310001951276us-gaap:RestrictedStockMembersrbk:TwoThousandTwentyFourEquityIncentivePlanMember2025-01-012025-03-310001951276srbk:OtherCommercialRealEstateMember2024-07-012025-03-310001951276us-gaap:CommercialPortfolioSegmentMemberus-gaap:DoubtfulMember2024-06-300001951276srbk:SomersetSavingsBankEmployeeStockOwnershipPlanMember2023-09-192023-09-190001951276us-gaap:CommercialPortfolioSegmentMember2023-07-012024-03-310001951276us-gaap:SpecialMentionMembersrbk:OtherCommercialRealEstateMember2024-06-300001951276us-gaap:ResidentialMortgageMember2024-12-310001951276us-gaap:CommercialPortfolioSegmentMember2024-01-012024-03-310001951276srbk:MultiFamilyLoansMember2025-01-012025-03-310001951276srbk:BuildingsAndLeaseholdImprovementsMember2025-03-310001951276us-gaap:PassMemberus-gaap:ResidentialMortgageMember2024-06-300001951276srbk:DependentLoanMembersrbk:OwnerOccupiedCommercialRealEstateLoansMember2024-06-300001951276us-gaap:GovernmentNationalMortgageAssociationCertificatesAndObligationsGNMAMember2025-03-3100019512762025-03-310001951276us-gaap:EmployeeStockOptionMembersrbk:TwoThousandTwentyFourEquityIncentivePlanMember2025-03-310001951276us-gaap:FederalNationalMortgageAssociationCertificatesAndObligationsFNMAMember2025-03-310001951276us-gaap:DoubtfulMember2024-06-300001951276srbk:MultiFamilyLoansMembersrbk:DependentLoanMemberus-gaap:ResidentialRealEstateMember2025-03-310001951276us-gaap:SpecialMentionMembersrbk:OwnerOccupiedCommercialRealEstateLoansMember2025-03-310001951276srbk:OwnerOccupiedCommercialRealEstateLoansMember2024-06-300001951276srbk:DependentLoanMembersrbk:OwnerOccupiedCommercialRealEstateLoansMember2025-03-310001951276us-gaap:RestrictedStockMembersrbk:TwoThousandTwentyFourEquityIncentivePlanMember2024-07-012025-03-310001951276srbk:OtherCommercialRealEstateMember2023-07-012024-03-310001951276us-gaap:FairValueMeasurementsRecurringMember2025-03-310001951276srbk:BusinessAssetsMembersrbk:ConsumerAndOtherPortfolioSegmentMembersrbk:DependentLoanMember2024-06-300001951276srbk:MultiFamilyLoansMember2024-07-012025-03-310001951276us-gaap:SubordinatedDebtMember2024-06-300001951276us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-12-310001951276us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2024-06-300001951276us-gaap:PassMember2024-06-300001951276us-gaap:SpecialMentionMemberus-gaap:CommercialPortfolioSegmentMember2024-06-300001951276srbk:ConsumerAndOtherPortfolioSegmentMemberus-gaap:PassMember2024-06-300001951276us-gaap:EmployeeStockOptionMember2025-01-012025-03-310001951276srt:MaximumMember2025-03-310001951276us-gaap:EmployeeStockOptionMembersrbk:TwoThousandTwentyFourEquityIncentivePlanMember2024-12-310001951276srbk:SecurePublicFundsMember2025-03-310001951276us-gaap:CollateralizedMortgageObligationsMember2025-03-310001951276us-gaap:CommercialPortfolioSegmentMembersrbk:BusinessAssetsMembersrbk:DependentLoanMember2024-06-300001951276stpr:NJsrbk:ResidentialMortgageConsumerAndOtherLoansMember2025-03-310001951276srbk:OwnerOccupiedCommercialRealEstateLoansMember2025-01-012025-03-310001951276us-gaap:FairValueInputsLevel1Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2025-03-3100019512762023-09-190001951276srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:RetainedEarningsMember2023-06-300001951276srt:MinimumMember2025-03-310001951276us-gaap:RestrictedStockMembersrbk:TwoThousandTwentyFourEquityIncentivePlanMember2025-01-292025-01-290001951276srbk:MultiFamilyLoansMember2023-07-012024-03-310001951276srbk:OwnerOccupiedCommercialRealEstateLoansMember2025-03-310001951276us-gaap:CommonStockMember2024-06-300001951276srbk:UnearnedEmployeesStockOptionPlanCompensationMember2025-03-310001951276srbk:UnearnedEmployeesStockOptionPlanCompensationMember2024-12-310001951276us-gaap:SubstandardMembersrbk:OwnerOccupiedCommercialRealEstateLoansMember2025-03-310001951276srbk:ConsumerAndOtherPortfolioSegmentMemberus-gaap:FinancialAssetPastDueMember2024-06-300001951276srbk:OwnerOccupiedCommercialRealEstateLoansMember2024-07-012025-03-310001951276us-gaap:FinancialAssetNotPastDueMembersrbk:MultiFamilyLoansMember2024-06-300001951276srbk:BusinessAssetsMembersrbk:MultiFamilyLoansMembersrbk:DependentLoanMember2024-06-300001951276us-gaap:DoubtfulMember2025-03-310001951276us-gaap:AdditionalPaidInCapitalMember2023-07-012024-03-310001951276us-gaap:FinancingReceivables30To59DaysPastDueMember2025-03-310001951276us-gaap:CommercialRealEstateMembersrbk:DependentLoanMembersrbk:OtherCommercialRealEstateMember2024-06-300001951276srbk:BusinessAssetsMembersrbk:DependentLoanMembersrbk:OwnerOccupiedCommercialRealEstateLoansMember2025-03-310001951276us-gaap:SubstandardMember2024-06-300001951276us-gaap:CommercialRealEstateMembersrbk:MultiFamilyLoansMembersrbk:DependentLoanMember2024-06-300001951276us-gaap:FederalReserveBankAdvancesMember2024-06-3000019512762025-05-120001951276us-gaap:RestrictedStockMembersrbk:TwoThousandTwentyFourEquityIncentivePlanMember2024-06-300001951276us-gaap:FairValueInputsLevel1Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2024-06-300001951276us-gaap:SpecialMentionMembersrbk:OtherCommercialRealEstateMember2025-03-310001951276srbk:MultiFamilyLoansMembersrbk:DependentLoanMember2024-06-300001951276us-gaap:RetainedEarningsMember2023-07-012024-03-310001951276srbk:DependentLoanMemberus-gaap:ResidentialRealEstateMembersrbk:OtherCommercialRealEstateMember2024-06-300001951276us-gaap:FinancialAssetPastDueMemberus-gaap:CommercialPortfolioSegmentMember2024-06-300001951276us-gaap:PassMembersrbk:OtherCommercialRealEstateMember2025-03-310001951276us-gaap:ResidentialMortgageMembersrbk:BusinessAssetsMembersrbk:DependentLoanMember2024-06-300001951276us-gaap:FinancingReceivables30To59DaysPastDueMemberus-gaap:ResidentialMortgageMember2025-03-310001951276us-gaap:ResidentialMortgageMember2024-07-012025-03-310001951276srbk:ConsumerAndOtherPortfolioSegmentMember2024-03-310001951276us-gaap:SubstandardMembersrbk:OtherCommercialRealEstateMember2025-03-310001951276us-gaap:FinancingReceivables30To59DaysPastDueMemberus-gaap:ResidentialMortgageMember2024-06-300001951276srbk:ConsumerAndOtherPortfolioSegmentMembersrbk:DependentLoanMemberus-gaap:ResidentialRealEstateMember2025-03-310001951276us-gaap:FinancialAssetPastDueMember2025-03-310001951276us-gaap:EmployeeStockOptionMembersrbk:TwoThousandTwentyFourEquityIncentivePlanMember2025-01-292025-01-290001951276us-gaap:FurnitureAndFixturesMember2024-06-300001951276us-gaap:PassMembersrbk:OwnerOccupiedCommercialRealEstateLoansMember2024-06-300001951276us-gaap:CommercialPortfolioSegmentMemberus-gaap:AccountingStandardsUpdate201613Member2023-06-300001951276us-gaap:CommercialPortfolioSegmentMember2024-03-310001951276us-gaap:CommercialPortfolioSegmentMemberus-gaap:UnlikelyToBeCollectedFinancingReceivableMember2025-03-310001951276us-gaap:CommercialPortfolioSegmentMember2024-12-310001951276us-gaap:FurnitureAndFixturesMember2025-03-310001951276us-gaap:FederalHomeLoanMortgageCorporationCertificatesAndObligationsFHLMCMember2024-06-300001951276srbk:MultiFamilyLoansMember2023-12-310001951276us-gaap:UnlikelyToBeCollectedFinancingReceivableMembersrbk:OwnerOccupiedCommercialRealEstateLoansMember2025-03-310001951276us-gaap:EstimateOfFairValueFairValueDisclosureMember2025-03-310001951276srbk:DependentLoanMemberus-gaap:ResidentialRealEstateMember2025-03-310001951276us-gaap:UnusedLinesOfCreditMember2024-06-300001951276us-gaap:RetainedEarningsMember2023-06-300001951276us-gaap:EmployeeStockOptionMembersrbk:TwoThousandTwentyFourEquityIncentivePlanMember2025-02-052025-02-050001951276srbk:RegalBancorpIncMember2025-03-310001951276us-gaap:RetainedEarningsMember2024-12-310001951276us-gaap:ResidentialMortgageMember2023-06-300001951276srbk:UnearnedEmployeesStockOptionPlanCompensationMember2024-06-300001951276srbk:MultiFamilyLoansMembersrbk:DependentLoanMember2025-03-310001951276us-gaap:AdditionalPaidInCapitalMember2024-07-012025-03-310001951276us-gaap:RestrictedStockMembersrbk:TwoThousandTwentyFourEquityIncentivePlanMember2025-03-310001951276srbk:UnearnedEmployeesStockOptionPlanCompensationMember2023-07-012024-03-310001951276srbk:TotalCommercialLoansMember2025-03-310001951276us-gaap:SubstandardMembersrbk:MultiFamilyLoansMember2025-03-310001951276us-gaap:CommercialPortfolioSegmentMembersrbk:DependentLoanMemberus-gaap:ResidentialRealEstateMember2025-03-310001951276us-gaap:SubstandardMembersrbk:OtherCommercialRealEstateMember2024-06-300001951276srbk:ConsumerAndOtherPortfolioSegmentMemberus-gaap:SubstandardMember2024-06-300001951276srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2023-07-012024-03-310001951276us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-06-300001951276us-gaap:FinancialAssetNotPastDueMembersrbk:OtherCommercialRealEstateMember2025-03-310001951276srbk:FairValueAdjustmentsMember2023-09-190001951276us-gaap:FinancialAssetPastDueMember2024-06-300001951276srbk:BusinessAssetsMembersrbk:DependentLoanMembersrbk:ConsumerAndOtherPortfolioSegmentMember2025-03-310001951276srbk:SecurePublicFundsMember2024-06-300001951276us-gaap:PassMembersrbk:OtherCommercialRealEstateMember2024-06-300001951276srbk:ConsumerAndOtherPortfolioSegmentMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2024-06-300001951276srt:FederalHomeLoanBankOfNewYorkMember2024-07-012025-03-310001951276us-gaap:ResidentialMortgageMember2023-12-310001951276us-gaap:FinancialAssetNotPastDueMemberus-gaap:CommercialPortfolioSegmentMember2025-03-310001951276srbk:BusinessAssetsMembersrbk:MultiFamilyLoansMembersrbk:DependentLoanMember2025-03-310001951276us-gaap:CommercialRealEstateMembersrt:MaximumMember2025-03-310001951276us-gaap:CoreDepositsMember2024-06-300001951276us-gaap:CommercialPortfolioSegmentMembersrbk:DependentLoanMemberus-gaap:ResidentialRealEstateMember2024-06-300001951276srbk:DependentLoanMembersrbk:OtherCommercialRealEstateMember2024-06-300001951276srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:RetainedEarningsMember2023-07-012024-03-310001951276us-gaap:CarryingReportedAmountFairValueDisclosureMember2024-06-300001951276srbk:RegalBancorpIncMemberus-gaap:CoreDepositsMember2025-03-310001951276us-gaap:FinancialAssetNotPastDueMemberus-gaap:ResidentialMortgageMember2025-03-310001951276srbk:UnearnedEmployeesStockOptionPlanCompensationMember2023-12-310001951276srbk:MultiFamilyLoansMembersrbk:DependentLoanMemberus-gaap:ResidentialRealEstateMember2024-06-300001951276us-gaap:PassMembersrbk:MultiFamilyLoansMember2025-03-310001951276srbk:ConsumerAndOtherPortfolioSegmentMember2023-12-310001951276srbk:ConsumerAndOtherPortfolioSegmentMemberus-gaap:DoubtfulMember2025-03-310001951276srbk:DependentLoanMemberus-gaap:ResidentialRealEstateMember2024-06-300001951276us-gaap:CarryingReportedAmountFairValueDisclosureMember2025-03-3100019512762024-07-012025-03-310001951276srbk:BusinessAssetsMembersrbk:DependentLoanMembersrbk:OwnerOccupiedCommercialRealEstateLoansMember2024-06-300001951276us-gaap:CommercialPortfolioSegmentMembersrbk:BusinessAssetsMembersrbk:DependentLoanMember2025-03-310001951276us-gaap:SpecialMentionMembersrbk:MultiFamilyLoansMember2024-06-300001951276us-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2024-06-300001951276srbk:MultiFamilyMixedUseAndOwnerOccupiedLoansMember2025-03-310001951276us-gaap:SubstandardMember2025-03-310001951276srbk:OtherCommercialRealEstateMember2025-03-310001951276srbk:OwnerOccupiedCommercialRealEstateLoansMember2024-12-310001951276us-gaap:AccountingStandardsUpdate201613Membersrbk:OwnerOccupiedCommercialRealEstateLoansMember2023-06-300001951276us-gaap:EmployeeStockOptionMembersrbk:TwoThousandTwentyFourEquityIncentivePlanMember2025-02-050001951276us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2025-03-310001951276us-gaap:CoreDepositsMember2023-07-012024-03-310001951276us-gaap:ResidentialMortgageMemberus-gaap:AccountingStandardsUpdate201613Member2023-06-300001951276us-gaap:ResidentialMortgageMembersrbk:DependentLoanMemberus-gaap:ResidentialRealEstateMember2025-03-310001951276us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-07-012024-03-310001951276us-gaap:CommonStockMember2025-03-310001951276us-gaap:ResidentialMortgageMemberus-gaap:DoubtfulMember2024-06-300001951276us-gaap:SpecialMentionMember2025-03-310001951276us-gaap:ResidentialMortgageMember2025-03-310001951276srbk:OtherCommercialRealEstateMember2023-12-310001951276us-gaap:ResidentialMortgageMemberus-gaap:UnlikelyToBeCollectedFinancingReceivableMember2024-06-300001951276us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-07-012025-03-310001951276srbk:DependentLoanMemberus-gaap:ResidentialRealEstateMembersrbk:OtherCommercialRealEstateMember2025-03-310001951276us-gaap:AdditionalPaidInCapitalMember2025-03-310001951276srbk:RegalBancorpIncMember2023-09-190001951276srbk:OtherCommercialRealEstateLoansMember2024-06-300001951276srbk:ConsumerAndOtherPortfolioSegmentMemberus-gaap:SubstandardMember2025-03-310001951276us-gaap:AccumulatedOtherComprehensiveIncomeMember2025-01-012025-03-310001951276us-gaap:DoubtfulMembersrbk:OtherCommercialRealEstateMember2025-03-310001951276srbk:MultiFamilyLoansMemberus-gaap:UnlikelyToBeCollectedFinancingReceivableMember2024-06-300001951276us-gaap:CoreDepositsMember2025-03-310001951276us-gaap:ResidentialMortgageMemberus-gaap:UnlikelyToBeCollectedFinancingReceivableMember2025-03-310001951276us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-03-310001951276us-gaap:ResidentialMortgageMemberus-gaap:CommercialRealEstateMembersrbk:DependentLoanMember2025-03-310001951276srbk:DependentLoanMember2025-03-310001951276srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2023-06-300001951276srbk:OtherCommercialRealEstateMember2023-06-300001951276srbk:ConsumerAndOtherPortfolioSegmentMember2023-07-012024-03-310001951276us-gaap:RestrictedStockMember2024-07-012025-03-310001951276stpr:NJus-gaap:CommercialLoanMember2025-03-3100019512762024-03-310001951276us-gaap:LandMember2025-03-310001951276us-gaap:SpecialMentionMemberus-gaap:ResidentialMortgageMember2025-03-310001951276us-gaap:RetainedEarningsMember2025-01-012025-03-310001951276srbk:MultiFamilyLoansMember2023-06-300001951276srbk:UnearnedEmployeesStockOptionPlanCompensationMember2024-03-310001951276us-gaap:DoubtfulMembersrbk:OwnerOccupiedCommercialRealEstateLoansMember2025-03-310001951276us-gaap:UnlikelyToBeCollectedFinancingReceivableMembersrbk:OtherCommercialRealEstateMember2024-06-300001951276us-gaap:CommercialRealEstateMembersrbk:DependentLoanMembersrbk:OtherCommercialRealEstateMember2025-03-310001951276us-gaap:FinancialAssetPastDueMemberus-gaap:ResidentialMortgageMember2024-06-300001951276srbk:BusinessAssetsMembersrbk:DependentLoanMember2024-06-300001951276us-gaap:AdditionalPaidInCapitalMember2024-12-310001951276srbk:BusinessAssetsMembersrbk:DependentLoanMember2025-03-310001951276us-gaap:AccumulatedOtherComprehensiveIncomeMember2025-03-310001951276srbk:TwoThousandTwentyFourEquityIncentivePlanMember2024-07-012025-03-310001951276us-gaap:FederalReserveBankAdvancesMember2025-03-310001951276srbk:LoanOriginationAndPurchaseCommitmentsMember2024-06-300001951276us-gaap:EmployeeStockOptionMember2024-07-012025-03-3100019512762024-06-300001951276us-gaap:PassMembersrbk:OwnerOccupiedCommercialRealEstateLoansMember2025-03-310001951276us-gaap:CommercialRealEstateMembersrbk:DependentLoanMembersrbk:OwnerOccupiedCommercialRealEstateLoansMember2024-06-300001951276us-gaap:FairValueMeasurementsRecurringMember2024-06-300001951276us-gaap:DoubtfulMembersrbk:OwnerOccupiedCommercialRealEstateLoansMember2024-06-300001951276us-gaap:PassMemberus-gaap:ResidentialMortgageMember2025-03-310001951276us-gaap:CommonStockMember2023-07-012024-03-310001951276srbk:ConsumerAndOtherPortfolioSegmentMember2024-07-012025-03-310001951276srbk:OtherCommercialRealEstateMember2024-12-310001951276srbk:OwnerOccupiedCommercialRealEstateLoansMember2023-12-310001951276us-gaap:RestrictedStockMembersrbk:TwoThousandTwentyFourEquityIncentivePlanMember2025-02-052025-02-050001951276us-gaap:EmployeeStockOptionMembersrbk:TwoThousandTwentyFourEquityIncentivePlanMember2024-07-012025-03-310001951276us-gaap:SpecialMentionMembersrbk:OwnerOccupiedCommercialRealEstateLoansMember2024-06-300001951276us-gaap:CommercialPortfolioSegmentMember2024-06-3000019512762023-07-012024-03-310001951276us-gaap:ResidentialMortgageMembersrbk:DependentLoanMember2025-03-310001951276us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-06-300001951276srbk:RegalBancorpIncMemberus-gaap:CoreDepositsMember2023-09-192023-09-1900019512762025-01-012025-03-310001951276us-gaap:EmployeeStockOptionMembersrbk:TwoThousandTwentyFourEquityIncentivePlanMember2025-01-012025-03-310001951276us-gaap:EmployeeStockOptionMembersrbk:TwoThousandTwentyFourEquityIncentivePlanMember2025-01-290001951276us-gaap:CommonStockMember2023-12-310001951276srbk:MultifamilyLoanMember2024-07-012025-03-310001951276us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMembersrbk:IndividuallyEvaluatedLoansMember2025-03-310001951276us-gaap:ResidentialMortgageMemberus-gaap:DoubtfulMember2025-03-310001951276us-gaap:FinancingReceivables60To89DaysPastDueMember2025-03-310001951276srbk:DependentLoanMember2024-06-300001951276us-gaap:CommercialPortfolioSegmentMember2024-07-012025-03-310001951276srbk:ConsumerAndOtherPortfolioSegmentMemberus-gaap:UnlikelyToBeCollectedFinancingReceivableMember2024-06-300001951276us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-01-012024-03-310001951276us-gaap:UnlikelyToBeCollectedFinancingReceivableMember2025-03-310001951276us-gaap:PassMembersrbk:MultiFamilyLoansMember2024-06-300001951276us-gaap:ResidentialMortgageMembersrbk:BusinessAssetsMembersrbk:DependentLoanMember2025-03-3100019512762024-01-012024-03-310001951276us-gaap:CommercialPortfolioSegmentMember2023-06-300001951276us-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2025-03-310001951276srbk:RegalBancorpIncMember2024-07-012025-03-310001951276us-gaap:RetainedEarningsMember2024-07-012025-03-310001951276srbk:ConsumerAndOtherPortfolioSegmentMemberus-gaap:FinancialAssetNotPastDueMember2025-03-310001951276srbk:MultiFamilyLoansMemberus-gaap:DoubtfulMember2025-03-310001951276us-gaap:PassMemberus-gaap:CommercialPortfolioSegmentMember2024-06-300001951276us-gaap:CommonStockMember2024-12-310001951276us-gaap:SpecialMentionMembersrbk:MultiFamilyLoansMember2025-03-310001951276us-gaap:GovernmentNationalMortgageAssociationCertificatesAndObligationsGNMAMember2024-06-300001951276us-gaap:CommercialLoanMember2024-07-012025-03-310001951276us-gaap:AccountingStandardsUpdate201613Membersrbk:OtherCommercialRealEstateMember2023-06-300001951276srbk:ConsumerAndOtherPortfolioSegmentMemberus-gaap:UnlikelyToBeCollectedFinancingReceivableMember2025-03-310001951276us-gaap:CommercialPortfolioSegmentMember2025-01-012025-03-310001951276us-gaap:AdditionalPaidInCapitalMember2025-01-012025-03-310001951276srbk:ConsumerAndOtherPortfolioSegmentMemberus-gaap:FinancialAssetPastDueMember2025-03-310001951276us-gaap:RetainedEarningsMember2024-03-310001951276us-gaap:FinancialAssetNotPastDueMembersrbk:MultiFamilyLoansMember2025-03-310001951276us-gaap:FairValueMeasurementsRecurringMemberus-gaap:EquitySecuritiesMember2025-03-310001951276srbk:MultiFamilyLoansMember2025-03-3100019512762024-12-310001951276us-gaap:ResidentialMortgageMember2023-07-012024-03-310001951276us-gaap:CommercialPortfolioSegmentMemberus-gaap:CommercialRealEstateMembersrbk:DependentLoanMember2024-06-300001951276srbk:BuildingsAndLeaseholdImprovementsMember2024-06-300001951276srbk:OtherCommercialRealEstateMember2024-03-310001951276srbk:ConsumerAndOtherPortfolioSegmentMember2025-03-310001951276srbk:MultiFamilyLoansMemberus-gaap:DoubtfulMember2024-06-300001951276us-gaap:RetainedEarningsMember2024-06-300001951276srbk:ConsumerAndOtherPortfolioSegmentMember2023-06-300001951276srt:FederalHomeLoanBankOfNewYorkMember2024-06-300001951276us-gaap:SpecialMentionMemberus-gaap:ResidentialMortgageMember2024-06-300001951276srbk:ForeignGovernmentBondMember2024-06-300001951276us-gaap:UnlikelyToBeCollectedFinancingReceivableMember2024-06-300001951276us-gaap:CommonStockMember2025-01-012025-03-310001951276srbk:MultiFamilyLoansMemberus-gaap:UnlikelyToBeCollectedFinancingReceivableMember2025-03-31srbk:Loanxbrli:purexbrli:sharesiso4217:USDxbrli:sharessrbk:Locationiso4217:USD

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to _____________

Commission File Number: 001-41808

 

SR Bancorp, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Maryland

92-2601722

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

 

 

220 West Union Avenue

Bound Brook, New Jersey

08805

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (732) 560-1700

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $0.01 per share

 

SRBK

 

The Nasdaq Stock Market, LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of May 12, 2025, the registrant had 8,996,835 shares of common stock, $0.01 par value per share, outstanding.

 

 

 

 

 


 

Table of Contents

 

 

 

Page

 

 

 

PART I.

FINANCIAL INFORMATION

1

 

 

 

Item 1.

Consolidated Financial Statements (unaudited)

1

 

Consolidated Statements of Financial Condition

1

 

Consolidated Statements of Income (Loss)

2

 

Consolidated Statements of Comprehensive Income (Loss)

3

 

Consolidated Statements of Changes in Stockholders' Equity

4

 

Consolidated Statements of Cash Flows

5

 

Notes to Unaudited Consolidated Financial Statements

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

29

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

50

Item 4.

Controls and Procedures

50

 

 

 

PART II.

OTHER INFORMATION

51

 

 

 

Item 1.

Legal Proceedings

51

Item 1A.

Risk Factors

51

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

51

Item 3.

Defaults Upon Senior Securities

51

Item 4.

Mine Safety Disclosures

51

Item 5.

Other Information

52

Item 6.

Exhibits

52

Signatures

53

 

i


 

PART I—FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements (unaudited).

 

SR Bancorp, Inc. and Subsidiaries

Consolidated Statements of Financial Condition

March 31, 2025 and June 30, 2024

(In thousands, except for share data, unaudited)

 

 

March 31, 2025

 

 

June 30, 2024

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

Cash and due from banks

 

$

4,537

 

 

$

8,622

 

Interest-bearing deposits at other banks

 

 

57,687

 

 

 

37,287

 

Total cash and cash equivalents

 

 

62,224

 

 

 

45,909

 

Securities held-to-maturity, at amortized cost

 

 

145,413

 

 

 

156,144

 

Equity securities, at fair value

 

 

32

 

 

 

25

 

Loans receivable, net of allowance for credit losses of $5,124 and
   $
5,229, respectively

 

 

780,795

 

 

 

731,859

 

Premises and equipment, net

 

 

4,972

 

 

 

5,419

 

Right-of-use asset

 

 

1,926

 

 

 

2,311

 

Restricted equity securities, at cost

 

 

2,581

 

 

 

1,231

 

Accrued interest receivable

 

 

2,964

 

 

 

2,695

 

Bank owned life insurance

 

 

37,876

 

 

 

37,093

 

Goodwill and intangible assets

 

 

27,039

 

 

 

28,141

 

Other assets

 

 

8,085

 

 

 

10,017

 

Total assets

 

$

1,073,907

 

 

$

1,020,844

 

Liabilities and Equity

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

Noninterest-bearing

 

$

106,020

 

 

$

108,026

 

Interest-bearing

 

 

729,564

 

 

 

699,074

 

Total deposits

 

 

835,584

 

 

 

807,100

 

Borrowings

 

 

30,000

 

 

 

 

Advance payments by borrowers for taxes and insurance

 

 

8,318

 

 

 

8,073

 

Accrued interest payable

 

 

237

 

 

 

149

 

Lease liability

 

 

2,012

 

 

 

2,403

 

Other liabilities

 

 

2,688

 

 

 

3,636

 

Total liabilities

 

 

878,839

 

 

 

821,361

 

Equity

 

 

 

 

 

 

Preferred Stock, $0.01 par value, 5,000,000 shares authorized, none issued

 

 

 

 

 

 

Common stock, $0.01 par value, 50,000,000 authorized;
   
9,184,700 and 9,507,930 shares issued and outstanding
   as of March 31, 2025, and June 30, 2024, respectively

 

 

92

 

 

 

95

 

Additional paid-in capital

 

 

84,466

 

 

 

91,436

 

Retained earnings

 

 

118,705

 

 

 

116,205

 

Unearned compensation ESOP

 

 

(6,751

)

 

 

(7,036

)

Accumulated other comprehensive loss

 

 

(1,444

)

 

 

(1,217

)

Total stockholders' equity

 

 

195,068

 

 

 

199,483

 

Total liabilities and stockholders' equity

 

$

1,073,907

 

 

$

1,020,844

 

 

The accompanying notes are an integral part of the consolidated financial statements

1


 

SR Bancorp, Inc. and Subsidiaries

Consolidated Statements of Income (Loss)

For the Three and Nine Months Ended March 31, 2025 and 2024

(In thousands, except for share data, unaudited)

 

 

Three Months Ended
March 31,

 

 

Nine Months Ended
March 31,

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Interest Income

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

10,346

 

 

$

9,819

 

 

$

31,069

 

 

$

23,760

 

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

600

 

 

 

779

 

 

 

1,848

 

 

 

2,489

 

Federal funds sold

 

 

 

 

 

76

 

 

 

 

 

 

157

 

Interest bearing deposits at other banks

 

 

537

 

 

 

974

 

 

 

1,578

 

 

 

3,071

 

Total interest income

 

 

11,483

 

 

 

11,648

 

 

 

34,495

 

 

 

29,477

 

Interest Expense

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

Demand

 

 

1,332

 

 

 

122

 

 

 

3,500

 

 

 

504

 

Savings and time

 

 

2,584

 

 

 

3,031

 

 

 

8,136

 

 

 

6,834

 

Borrowings

 

 

383

 

 

 

227

 

 

 

842

 

 

 

707

 

Total interest expense

 

 

4,299

 

 

 

3,380

 

 

 

12,478

 

 

 

8,045

 

Net Interest Income

 

 

7,184

 

 

 

8,268

 

 

 

22,017

 

 

 

21,432

 

Provision (Credit) for Credit Losses

 

 

37

 

 

 

(142

)

 

 

(105

)

 

 

3,913

 

Net Interest Income After Provision (Credit)
   for Credit Losses

 

 

7,147

 

 

 

8,410

 

 

 

22,122

 

 

 

17,519

 

Noninterest Income

 

 

 

 

 

 

 

 

 

 

 

 

Service charges and fees

 

 

230

 

 

 

193

 

 

 

782

 

 

 

576

 

Increase in cash surrender value of bank owned life insurance

 

 

259

 

 

 

247

 

 

 

783

 

 

 

655

 

Fees and service charges on loans

 

 

35

 

 

 

36

 

 

 

128

 

 

 

47

 

Unrealized gain on equity securities

 

 

3

 

 

 

1

 

 

 

7

 

 

 

3

 

Realized gain on sale of investments

 

 

 

 

 

19

 

 

 

 

 

 

33

 

Realized gain on sale of loans

 

 

 

 

 

 

 

 

51

 

 

 

 

Other

 

 

14

 

 

 

20

 

 

 

214

 

 

 

80

 

Total noninterest income

 

 

541

 

 

 

516

 

 

 

1,965

 

 

 

1,394

 

Noninterest Expense

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

3,681

 

 

 

3,631

 

 

 

10,288

 

 

 

12,050

 

Occupancy

 

 

557

 

 

 

772

 

 

 

1,681

 

 

 

1,674

 

Furniture and equipment

 

 

346

 

 

 

285

 

 

 

924

 

 

 

674

 

Data Processing

 

 

552

 

 

 

951

 

 

 

1,642

 

 

 

2,392

 

Advertising

 

 

97

 

 

 

75

 

 

 

264

 

 

 

204

 

FDIC premiums

 

 

120

 

 

 

120

 

 

 

360

 

 

 

348

 

Directors fees

 

 

93

 

 

 

103

 

 

 

287

 

 

 

288

 

Professional fees

 

 

467

 

 

 

357

 

 

 

1,423

 

 

 

1,775

 

Insurance

 

 

133

 

 

 

165

 

 

 

451

 

 

 

389

 

Telephone, postage and supplies

 

 

197

 

 

 

210

 

 

 

569

 

 

 

391

 

Other

 

 

819

 

 

 

902

 

 

 

2,497

 

 

 

7,799

 

Total noninterest expense

 

 

7,062

 

 

 

7,571

 

 

 

20,386

 

 

 

27,984

 

Income (Loss) Before Income Tax Expense (Benefit)

 

 

626

 

 

 

1,355

 

 

 

3,701

 

 

 

(9,071

)

Income Tax Expense (Benefit)

 

 

89

 

 

 

292

 

 

 

776

 

 

 

(1,243

)

Net Income (Loss)

 

$

537

 

 

$

1,063

 

 

$

2,925

 

 

$

(7,828

)

Basic earnings (loss) per share

 

$

0.06

 

 

$

0.12

 

 

$

0.34

 

 

$

(1.27

)

Diluted earnings (loss) per share

 

$

0.06

 

 

$

0.12

 

 

$

0.34

 

 

$

(1.27

)

Weighted average number of common
   shares outstanding - basic

 

 

8,303,795

 

 

 

8,790,082

 

 

 

8,567,520

 

 

 

6,187,588

 

Weighted average number of common
   shares outstanding - diluted

 

 

8,315,030

 

 

 

8,790,082

 

 

 

8,572,283

 

 

 

6,187,588

 

 

The accompanying notes are an integral part of these condensed financial statements

2


 

SR Bancorp, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

For the Three and Nine Months Ended March 31, 2025 and 2024

(In thousands, unaudited)

 

 

Three Months Ended March 31,

 

 

Nine Months Ended March 31,

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Net Income (Loss)

 

$

537

 

 

$

1,063

 

 

$

2,925

 

 

$

(7,828

)

Other Comprehensive Income (Loss)

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized holding gains on securities available-for-
   sale arising during the year 2024, net of income tax
   benefit (expense) of $
59 and $(238), respectively

 

 

 

 

 

(167

)

 

 

 

 

 

660

 

Change in defined pension plan for unrealized
   actuarial gains (losses) net of income tax (expense)
   benefit of $
71, $(120), $90 and $6, respectively

 

 

(182

)

 

 

306

 

 

 

(227

)

 

 

(17

)

Total other comprehensive (loss) income

 

 

(182

)

 

 

139

 

 

 

(227

)

 

 

643

 

Total comprehensive income (loss)

 

$

355

 

 

$

1,202

 

 

$

2,698

 

 

$

(7,185

)

 

 

The accompanying notes are an integral part of these consolidated financial statements

3


 

SR Bancorp, Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders' Equity

For the Three and Nine Months Ended March 31, 2025 and 2024

(In thousands, except for share data, unaudited)

 

 

 

Common
Stock
Shares

 

 

Common
Stock
Amount

 

 

Additional
Paid in
Capital

 

 

Retained
Earnings

 

 

Unearned
ESOP
Compensation

 

 

Accumulated
Other
Comprehensive
Loss

 

 

Total

 

Balance, December 31, 2024

 

 

9,255,948

 

 

$

93

 

 

$

87,567

 

 

$

118,593

 

 

$

(6,846

)

 

$

(1,262

)

 

$

198,145

 

Net income

 

 

 

 

 

 

 

 

 

 

 

537

 

 

 

 

 

 

 

 

 

537

 

Other comprehensive loss,
   net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(182

)

 

 

(182

)

ESOP shares earned, 9,508
   shares

 

 

 

 

 

 

 

 

19

 

 

 

 

 

 

95

 

 

 

 

 

 

114

 

Repurchase of common shares

 

 

(280,404

)

 

 

(3

)

 

 

(3,392

)

 

 

 

 

 

 

 

 

 

 

 

(3,395

)

Cash dividends declared on common stock, $0.05 per share

 

 

 

 

 

 

 

 

 

 

 

(425

)

 

 

 

 

 

 

 

 

(425

)

Restricted stock awards issued

 

 

209,156

 

 

 

2

 

 

 

(2

)

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

274

 

 

 

 

 

 

 

 

 

 

 

 

274

 

Balance, March 31, 2025

 

 

9,184,700

 

 

$

92

 

 

$

84,466

 

 

$

118,705

 

 

$

(6,751

)

 

$

(1,444

)

 

$

195,068

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, June 30, 2024

 

 

9,507,930

 

 

$

95

 

 

$

91,436

 

 

$

116,205

 

 

$

(7,036

)

 

$

(1,217

)

 

$

199,483

 

Net income

 

 

 

 

 

 

 

 

 

 

 

2,925

 

 

 

 

 

 

 

 

 

2,925

 

Other comprehensive loss,
   net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(227

)

 

 

(227

)

ESOP shares earned, 28,524
   shares

 

 

 

 

 

 

 

 

31

 

 

 

 

 

 

285

 

 

 

 

 

 

316

 

Repurchase of common shares

 

 

(627,461

)

 

 

(6

)

 

 

(7,306

)

 

 

 

 

 

 

 

 

 

 

 

(7,312

)

Cash dividends declared on common stock, $0.05 per share

 

 

 

 

 

 

 

 

 

 

 

(425

)

 

 

 

 

 

 

 

 

(425

)

Restricted stock awards issued

 

 

304,231

 

 

 

3

 

 

 

(3

)

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

308

 

 

 

 

 

 

 

 

 

 

 

 

308

 

Balance, March 31, 2025

 

 

9,184,700

 

 

$

92

 

 

$

84,466

 

 

$

118,705

 

 

$

(6,751

)

 

$

(1,444

)

 

$

195,068

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2023

 

 

9,507,930

 

 

$

95

 

 

$

91,449

 

 

$

118,174

 

 

$

(7,226

)

 

$

(4,511

)

 

$

197,981

 

Net income

 

 

 

 

 

 

 

 

 

 

 

1,063

 

 

 

 

 

 

 

 

 

1,063

 

Other comprehensive income,
   net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

139

 

 

 

139

 

ESOP shares commited for allocation
   to participants,
9,508 shares

 

 

 

 

 

 

 

 

(5

)

 

 

 

 

 

95

 

 

 

 

 

 

90

 

Balance, March 31, 2024

 

 

9,507,930

 

 

$

95

 

 

$

91,444

 

 

$

119,237

 

 

$

(7,131

)

 

$

(4,372

)

 

$

199,273

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, June 30, 2023

 

 

 

 

$

 

 

$

 

 

$

127,099

 

 

$

 

 

$

(5,015

)

 

$

122,084

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(7,828

)

 

 

 

 

 

 

 

 

(7,828

)

Other comprehensive income,
   net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

643

 

 

 

643

 

Cumulative adjustment for
change in accounting principle
(ASU No. 2016-13)

 

 

 

 

 

 

 

 

 

 

 

(34

)

 

 

 

 

 

 

 

 

(34

)

Common stock issued,
   
9,507,930 shares

 

 

9,507,930

 

 

 

95

 

 

 

91,491

 

 

 

 

 

 

 

 

 

 

 

 

91,586

 

Unearned ESOP shares,
   
760,364 shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,606

)

 

 

 

 

 

(7,606

)

Repurchase of common shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted stock awards issued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ESOP shares committed for
   allocation to participants,
47,540 shares

 

 

 

 

 

 

 

 

(47

)

 

 

 

 

 

475

 

 

 

 

 

 

428

 

Balance, March 31, 2024

 

 

9,507,930

 

 

$

95

 

 

$

91,444

 

 

$

119,237

 

 

$

(7,131

)

 

$

(4,372

)

 

$

199,273

 

 

The accompanying notes are an integral part of these consolidated financial statements

4


 

SR Bancorp, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

For the Nine Months Ended March 31, 2025 and 2024

(In thousands, except for share data, unaudited)

 

 

 

Nine Months Ended March 31,

 

 

 

2025

 

 

2024

 

Cash Flows from Operating Activities

 

 

 

 

 

 

Net income (loss)

 

$

2,925

 

 

$

(7,828

)

Adjustments to reconcile net income to net cash provided by operating activities:
   by operating activities:

 

 

 

 

 

 

(Credit) provision for credit losses

 

 

(105

)

 

 

3,913

 

Depreciation

 

 

703

 

 

 

520

 

Deferred income tax benefit

 

 

(107

)

 

 

(1,454

)

Accretion of acquisition fair value adjustments, net

 

 

(3,498

)

 

 

(3,878

)

Amortization of core deposit intangible asset

 

 

1,102

 

 

 

933

 

Net amortization of premiums and discounts on securities

 

 

776

 

 

 

220

 

Net amortization of deferred loan fees, costs and discounts

 

 

217

 

 

 

279

 

Income from cash surrender value of bank owned life insurance

 

 

(783

)

 

 

(655

)

Stock-based compensation expense

 

 

624

 

 

 

428

 

Unrealized gain on equity securities

 

 

(7

)

 

 

(3

)

Gain on sale of investments, net

 

 

 

 

 

(33

)

Gain on sale of loans held for sale

 

 

(51

)

 

 

 

Proceeds from sales of loans held for sale

 

 

575

 

 

 

 

Originations of loans held for sale

 

 

(524

)

 

 

 

Noncash expense of common shares contributed to Somerset Regal Bank Charitable Foundation

 

 

 

 

 

 

(Increase) decrease in:

 

 

 

 

 

 

Accrued interest receivable

 

 

(447

)

 

 

(84

)

Other assets

 

 

2,476

 

 

 

1,133

 

(Decrease) increase in other liabilities

 

 

(948

)

 

 

99

 

Net cash provided by (used in) operating activities

 

 

2,928

 

 

 

(6,410

)

Cash Flows from Investing Activities

 

 

 

 

 

 

Proceeds from sales, maturities, and principal repayments of securities available-for-sale

 

 

 

 

 

16,808

 

Proceeds from maturities, calls and principal repayments of securities held-to-maturity

 

 

10,477

 

 

 

11,747

 

Proceeds from sale of time deposits in other financial institutions

 

 

 

 

 

8,810

 

Net increase in loans receivable

 

 

(45,439

)

 

 

(14,454

)

Purchase of premises and equipment

 

 

(257

)

 

 

(358

)

Purchase of restricted equity securities

 

 

(2,700

)

 

 

 

Cash paid for acquisition

 

 

 

 

 

(69,538

)

Cash received from acquisition

 

 

 

 

 

55,294

 

Net cash used in investing activities

 

 

(37,919

)

 

 

8,309

 

Cash Flows from Financing Activities

 

 

 

 

 

 

Net increase (decrease) in interest bearing deposits

 

 

30,379

 

 

 

(35,330

)

Net decrease in non-interest bearing deposits

 

 

(2,006

)

 

 

(3,315

)

Net increase in advance payments by borrowers for taxes and insurance

 

 

245

 

 

 

2,810

 

Net increase (decrease) in short-term borrowings

 

 

30,000

 

 

 

(20,000

)

Cash proceeds from issuance of common stock

 

 

 

 

 

83,980

 

Repurchase of common stock

 

 

(7,312

)

 

 

 

Net cash provided by financing activities

 

 

51,306

 

 

 

28,145

 

Net increase in cash and cash equivalents

 

 

16,315

 

 

 

30,044

 

Cash and Cash Equivalents, Beginning of Period

 

 

45,909

 

 

 

42,449

 

Cash and Cash Equivalents, End of Period

 

$

62,224

 

 

$

72,493

 

Supplementary Cash Flow Information

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

Interest paid

 

$

12,436

 

 

$

6,361

 

Income taxes paid

 

 

 

 

 

475

 

Acquisition:

 

 

 

 

 

 

Fair value of assets acquired, net of cash and cash equivalents acquired

 

 

 

 

 

372,739

 

Goodwill recorded at merger

 

 

 

 

 

20,417

 

Fair value of liabilities assumed

 

 

 

 

 

378,972

 

Fair value of 452,758 common shares contributed to Somerset Regal Bank Charitable Foundation

 

 

 

 

 

 

 

The accompanying notes are an integral part of these consolidated financial statements

5


SR Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

 

1.
Summary of Significant Accounting Policies

Basis of Presentation and Use of Estimates

The accompanying unaudited consolidated financial statements of SR Bancorp, Inc. (the “Company”) have been prepared in conformity with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q. The consolidated financial statements are prepared on an accrual basis and include the accounts of the Company’s wholly-owned subsidiary, Somerset Regal Bank (the “Bank”) and its wholly-owned subsidiaries Somerset Investment Co. (the “Investment Co.”), RB Properties, LLC and Somerset Consumer Service Corp. (“SCS”). All significant intercompany accounts and transactions have been eliminated in consolidation.

The Investment Co. is a special purpose entity subject to the investment company provisions of the New Jersey Corporation Business Tax Act whose activities are limited to holding investment securities and recognizing income and other gains/losses thereon. RB Properties, LLC was formed to own and manage real estate property acquired through foreclosure or in lieu of foreclosure in connection with loans. RB Properties, LLC is currently inactive. SCS has had limited activity.

The interim consolidated financial statements reflect all adjustments, including normal and recurring accruals, which are, in the opinion of management, considered necessary for a fair presentation of the financial condition and results of operations for the periods presented. The results of operations for the three and nine months ended March 31, 2025 are not necessarily indicative of the results of operations that may be expected for the full fiscal year or any other period. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the statements of financial condition and the results of operations for the periods presented. Actual results could differ from these estimates.

Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) have been condensed or omitted, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2024.

Conversion, Stock Offering and Merger

The conversion of Somerset Savings Bank, SLA from the mutual to stock form of organization and related stock offering by the Company, the holding company for Somerset Savings Bank, SLA, was completed on September 19, 2023. The Company’s common stock began trading on the Nasdaq Capital Market under the trading symbol “SRBK” on September 20, 2023.

The Company sold 9,055,172 shares of its common stock at a price of $10.00 per share, which included 760,634 shares sold to Somerset Regal Bank’s Employee Stock Ownership Plan. Additionally, the Company contributed 452,758 shares and $905,517 in cash to the Somerset Regal Charitable Foundation, Inc., a charitable foundation formed in connection with the conversion. Upon the completion of the conversion and offering, 9,507,930 shares of Company common stock were outstanding.

Promptly following the completion of the conversion and related stock offering, Regal Bancorp, Inc., a New Jersey corporation (“Regal Bancorp”), merged with and into the Company, with the Company as the surviving entity (the “Merger”). Immediately following the Merger, Regal Bank, a New Jersey chartered commercial bank headquartered in Livingston, New Jersey and the wholly-owned subsidiary of Regal Bancorp, merged with and into Somerset Bank, which had converted into a commercial bank charter, and was renamed Somerset Regal Bank (the “Bank”). In connection with the Merger, each outstanding share of Regal Bancorp common stock converted into the right to receive $23.00 in cash. The Merger was completed on September 19, 2023. The accounts and operations of Regal Bancorp and Regal Bank are included in these consolidated financial statements since the Merger on September 19, 2023.

6


SR Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

 

Business

SR Bancorp, Inc., a Maryland corporation, is the holding company for Somerset Regal Bank. The Bank, which was formed in 1887, serves Essex, Hunterdon, Middlesex, Morris, Somerset and Union counties in New Jersey. The Bank is a New Jersey chartered commercial bank subject to the laws and regulations of federal and state agencies. As a locally managed commercial bank, the Bank provides retail and commercial banking services to individuals, businesses and local municipalities through its 14 full-service branch locations.

Concentrations of Credit Risk

The Company's lending activity is concentrated in loans secured by real estate located primarily in New Jersey. Credit risk exposure in this area of lending is mitigated by adhering to conservative underwriting practices and policies, and close monitoring of the loan portfolio. The Company does not have any significant concentrations to any one industry or customer.

Notes 4 discusses the types of investment securities in which the Company invests. Credit risk as it relates to investment activities is mitigated through the monitoring of ratings. The Company's portfolio consists principally of highly-rated government-sponsored agency securities.

Recent Accounting Standards Not Yet Adopted

In November 2023, FASB issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures". The amendments in this ASU require improved reportable segment information on an annual and interim basis, primarily through enhanced disclosures about significant segment expenses. This update will be effective for financial statements issued for fiscal years beginning after December 15, 2023, and interim periods for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of this standard on our consolidated financial statements, which is not expected to have a material impact on our financial statements.

In December 2023, FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures". The amendments in this ASU require improved annual income tax disclosures surrounding rate reconciliation, income taxes paid, and other disclosures. This update will be effective for financial statements issued for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of this standard on our consolidated financial statements, which is not expected to have a material impact on our financial statements.

Accounting Standards Update 2024-01, "Compensation - Stock Compensation (Topic 718) - Scope Application of Profits Interest and Similar Awards" ("ASU 2024-01"), clarifies how an entity determines whether a profits interest or similar award is within the scope of Topic 718 or is not a share-based payment arrangement and therefore within the scope of other guidance. ASU 2024-01 provides an illustrative example with multiple fact patterns and also amends certain language in the "Scope" and "Scope Exceptions" sections of Topic 718 to improve its clarity and operability without changing the guidance. Entities can apply the amendments either retrospectively to all prior periods presented in the financial statements or prospectively to profits interest and similar awards granted or modified on or after the date of adoption. If prospective application is elected, an entity must disclose the nature of and reason for the change in accounting principle. ASU 2024-01 is effective July 1, 2025, including interim periods, and is not expected to have a material impact on our financial statements.

Accounting Standards Update 2024-02, "Codification Improvements" ("ASU 2024-02"), amends the Codification to remove references to various concept statements and impacts a variety of topics in the Codification. The amendments apply to all reporting entities within the scope of the affected accounting guidance, but in most instances the references removed are extraneous and not required to understand or apply the guidance. Generally, the amendments in ASU 2024-02 are not intended to result in significant accounting changes for most entities. ASU 2024-02 is effective for the Company on July 1, 2025, and is not expected to have a material impact on our financial statements.

7


SR Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

 

Accounting Standards Update 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures" ("ASU 2024-03"), requires additional expense disclosures by public entities in the notes to the financial statements. ASU 2024-03 outlines the specific costs that are required to be disclosed, which include costs such as: employee compensation, depreciation, intangible asset amortization, selling costs and depreciation. It also requires qualitative descriptions of the amounts remaining in the relevant income statement captions that are not separately disaggregated quantitatively in the notes to the financial statements and the entity's definition of selling expenses. The disclosures are required for each interim and annual reporting period. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026. In January 2025, the FASB issued Accounting Standards Update 2025-01, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures: Clarifying the Effective Date" ("ASU 2025-01"), clarifying the interim reporting date when an entity must adopt ASU 2024-03. According to ASU 2025-01, ASU 2024-03 is effective for interim periods within fiscal years beginning after December 15, 2027. The Company is currently evaluating the impact of this standard on our consolidated financial statements, which is not expected to have a material impact on our financial statements.

Subsequent Events

The Company has evaluated subsequent events for recognition or disclosure through May 15, 2025, the date the consolidated financial statements were available to be issued.

2.
Business Combination

On September 19, 2023, the Company completed its acquisition of Regal Bancorp and Regal Bank, under which Regal Bancorp merged with and into the Company, with the Company as the resulting entity. Immediately following the Merger, Regal Bank merged with and into Somerset Bank, which had converted to a commercial bank charter, with Somerset Bank as the surviving entity, and was renamed Somerset Regal Bank. In connection with the Merger, each outstanding share of Regal Bancorp common stock converted into the right to receive $23.00 in cash.

The assets acquired and liabilities assumed have been accounted for under the acquisition method of accounting. The assets and liabilities, both tangible and intangible, were recorded at their fair values as of September 19, 2023 based on management’s best estimate using the information available as of the merger date. The application of the acquisition method of accounting resulted in the recognition of goodwill of $20.4 million and a core deposit intangible of $9.1 million. Accounting guidance provides that an acquirer must recognize adjustments to provisional amounts that are identified during the measurement period, which ran through September 19, 2024. The acquirer must record in the financial statements, the effect on earnings of changes in depreciation, amortization or other income effects, if any, as a result of the changes to the provisional amounts, calculated as if the accounting had been completed at the acquisition date.

8


SR Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

 

The following table sets forth assets acquired and liabilities assumed in the acquisition of Regal Bancorp, at their estimated fair values as of the closing date of the transaction:

 

 

As recorded
by Regal
Bancorp

 

 

Fair value
adjustments

 

 

 

As recorded
at acquisition

 

 

 

(In thousands)

 

Consideration paid (3,023,369 Regal
   Bancorp shares at $
23.00 per share)

 

 

 

 

 

 

 

 

 

69,538

 

Assets Acquired

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

55,294

 

 

$

 

 

 

$

55,294

 

Time deposits in other financial institutions

 

 

8,810

 

 

 

 

 

 

 

8,810

 

Securities available-for-sale, at fair value

 

 

12,487

 

 

 

 

 

 

 

12,487

 

Securities held-to-maturity, at amortized cost

 

 

2,587

 

 

 

 

 

 

 

2,587

 

Federal Home Loan Bank stock and
   other restricted stock

 

 

548

 

 

 

 

 

 

 

548

 

Loans receivable, net

 

 

335,971

 

 

 

(14,371

)

(a)

 

 

321,600

 

Allowance for credit losses

 

 

(4,076

)

 

 

4,076

 

(b)

 

 

 

Accrued interest receivable

 

 

1,214

 

 

 

 

 

 

 

1,214

 

Premises and equipment, net

 

 

1,570

 

 

 

 

 

 

 

1,570

 

Right-of-use asset

 

 

3,416

 

 

 

 

 

 

 

3,416

 

Goodwill

 

 

1,047

 

 

 

(1,047

)

(c)

 

 

 

Core deposit intangible

 

 

26

 

 

 

9,038

 

(d)(e)

 

 

9,064

 

Deferred costs

 

 

224

 

 

 

(224

)

(f)

 

 

 

Bank owned life insurance

 

 

7,470

 

 

 

 

 

 

 

7,470

 

Net deferred tax asset

 

 

1,634

 

 

 

(78

)

(g)(i)

 

 

1,556

 

Other assets

 

 

2,430

 

 

 

(201

)

(i)

 

 

2,229

 

Total assets acquired

 

$

430,652

 

 

$

(2,807

)

 

 

$

427,845

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities assumed

 

 

 

 

 

 

 

 

 

 

Deposits

 

$

373,174

 

 

$

(1,299

)

(h)

 

$

371,875

 

Lease liability

 

 

3,444

 

 

 

 

 

 

 

3,444

 

Deferred compensation

 

 

1,521

 

 

 

 

 

 

 

1,521

 

Accrued expenses and other liabilities

 

 

2,132

 

 

 

(248

)

(i)

 

 

1,884

 

Total liabilities assumed

 

$

380,271

 

 

$

(1,547

)

 

 

$

378,724

 

Net assets acquired

 

 

 

 

 

 

 

 

$

49,121

 

Goodwill recorded at merger

 

 

 

 

 

 

 

 

 

20,417

 

 

(a)
Adjustment for interest rate and credit risk to reduce loans to fair value, to be amortized as an increase to interest income over their remaining term.
(b)
Elimination of Regal Bank allowance for loan losses.
(c)
Elimination of pre-existing goodwill.
(d)
Recording of new intangible asset for the fair value of core deposits, to be amortized on an accelerated basis over the estimated average life of the deposit base.
(e)
Elimination of pre-existing intangible asset for the fair value of core deposits.
(f)
Elimination of deferred costs.
(g)
Recording of the deferred income tax effects of fair value adjustments.
(h)
Adjustment to reduce time deposits to fair value, to be amortized as an increase to interest expense over their remaining term.
(i)
Final adjustments of income taxes, other assets and other liabilities.

During the nine months ended March 31, 2024, the Company recorded one-time merger-related expenses of $4.1 million in the consolidated statements of income (loss), consisting of $2.6 million for change in control payments, $612,000 for investment banking services, $414,000 related to the termination of a data processing contract, $99,000 for legal expenses, $42,000 for severance payments, $17,000 in other professional services and $30,000 in other miscellaneous expenses. In addition, the Company recorded a $4.2 million provision for estimated credit losses in connection with the acquired loan portfolio.

 

9


SR Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

 

The fair value of loans acquired from Regal Bank was estimated using cash flow projections based on the remaining maturity and repricing terms. Cash flows were adjusted by estimating future credit losses and the rate of prepayments. Projected monthly cash flows were then discounted to present value using a risk-adjusted market rate for similar loans. There was no carryover of Regal Bank’s allowance for loan losses associated with the loans that were acquired. The core deposit intangible asset recognized is being amortized over its estimated useful life of approximately 10 years utilizing the sum-of-the-years digits method. The acquisition was accounted for under the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. Accordingly, the Company recognizes amounts for identifiable assets acquired and liabilities assumed at their estimated acquisition date fair value. At June 30, 2024, the Company finalized its review of the acquired assets and assumed liabilities and did not record any further adjustments to the carrying value.

 

The fair value of retail demand and interest-bearing deposit accounts was assumed to approximate the carrying value as these accounts have no stated maturity and are payable on demand. The fair value of time deposits was estimated by discounting the contractual future cash flows using market rates offered for time deposits of similar remaining maturities.

3.
Earnings (Loss) Per Share

Basic earnings (loss) per share represents income available to common stockholders divided by the weighted-average number of common shares outstanding. Diluted earnings per share have been calculated in a manner similar to that of basic earnings per share except that weighted-average number of common shares outstanding is increased to include the number of additional common shares that would have been outstanding if all potential dilutive common shares (such as those resulting from the exercise of stock options and vested restricted stock awards) were issued during the period, computed using the treasury stock method. Unallocated ESOP shares are not deemed outstanding for earnings per share calculations.

The following table presents the composition of the weighted average common shares used in the earnings per share calculation:

 

 

 

Three Months Ended March 31,

 

 

Nine Months Ended March 31,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Net income (loss)

 

$

537

 

 

$

1,063

 

 

$

2,925

 

 

$

(7,828

)

Weighted average common
   shares outstanding used to
   calculate basic earnings per
   common share

 

 

8,303,795

 

 

 

8,790,082

 

 

 

8,567,520

 

 

 

6,187,588

 

Add: Dilutive effect of common
   stock equivalents

 

 

11,235

 

 

 

 

 

 

4,763

 

 

 

 

Weighted average common
   shares outstanding used to
   calculate diluted earnings per
   common share

 

 

8,315,030

 

 

 

8,790,082

 

 

 

8,572,283

 

 

 

6,187,588

 

Basic income (loss) per
   common share

 

$

0.06

 

 

$

0.12

 

 

$

0.34

 

 

$

(1.27

)

Diluted income (loss) per
   common share

 

$

0.06

 

 

$

0.12

 

 

$

0.34

 

 

$

(1.27

)

Number of common stock
   equivalents excluded from the
   calculation of diluted earnings
   as they are anti-dilutive
   include:

 

 

 

 

 

 

 

 

 

 

 

 

      Stock options

 

 

760,593

 

 

 

 

 

 

760,593

 

 

 

 

      Restricted stock awards

 

 

209,156

 

 

 

 

 

 

209,156

 

 

 

 

 

10


SR Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

 

4.
Investment Securities

The Company owned no investment securities available-for-sale at March 31, 2025 or June 30, 2024. The amortized cost and approximate fair value of securities held-to-maturity are as follows at the dates indicated:

 

 

March 31, 2025

 

 

 

Amortized
Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Fair
Value

 

 

 

(In thousands)

 

Federal National Mortgage Association

 

$

88,894

 

 

$

9

 

 

$

(15,583

)

 

$

73,320

 

Federal Home Loan Mortgage Corporation

 

 

46,227

 

 

 

1

 

 

 

(7,698

)

 

 

38,530

 

Government National Mortgage Association

 

 

235

 

 

 

2

 

 

 

 

 

 

237

 

Subordinated Debt

 

 

7,750

 

 

 

 

 

 

(504

)

 

 

7,246

 

CMO

 

 

2,107

 

 

 

 

 

 

(141

)

 

 

1,966

 

Foreign Government Bonds

 

 

200

 

 

 

 

 

 

 

 

 

200

 

Total

 

$

145,413

 

 

$

12

 

 

$

(23,926

)

 

$

121,499

 

 

 

June 30, 2024

 

 

 

Amortized
Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Fair
Value

 

 

 

(In thousands)

 

Federal National Mortgage Association

 

$

95,338

 

 

$

1

 

 

$

(16,822

)

 

$

78,517

 

Federal Home Loan Mortgage Corporation

 

 

50,060

 

 

 

78

 

 

 

(8,252

)

 

 

41,886

 

Government National Mortgage Association

 

 

273

 

 

 

 

 

 

(3

)

 

 

270

 

Subordinated Debt

 

 

7,750

 

 

 

 

 

 

(1,488

)

 

 

6,262

 

CMO

 

 

2,423

 

 

 

 

 

 

(222

)

 

 

2,201

 

Foreign Government Bonds

 

 

300

 

 

 

 

 

 

 

 

 

300

 

Total

 

$

156,144

 

 

$

79

 

 

$

(26,787

)

 

$

129,436

 

 

There were no purchases or sales of available-for sale securities in the three and nine months ended March 31, 2025. During the nine months ended March 31, 2024, the Company acquired $20.9 million of available-for-sale securities from the Regal Bancorp acquisition. Following the completion of the Merger, the Company sold $19.2 million of its available-for-sale portfolio, which resulted in a realized gain of $17,000 in the nine months ended March 31, 2024. The Company did not purchase or sell any other available-for-sale securities during the three and nine months ended March 31, 2024.

 

The amortized cost and fair value of securities held-to-maturity by contractual maturity at March 31, 2025 are shown in the following table. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations. Securities are assigned to categories based on contractual maturity except for mortgage-backed securities and CMOs, which are based on the estimated average life of the securities.

 

 

March 31, 2025

 

 

Amortized
Cost

 

 

Fair
Value

 

 

 

(In thousands)

 

Due within 1 year

 

$

 

 

$

 

Due after 1 but within 5 years

 

 

200

 

 

 

200

 

Due after 5 but within 10 years

 

 

7,750

 

 

 

7,246

 

Due after 10 years

 

 

 

 

 

 

Mortgage-backed securities

 

 

137,463

 

 

 

114,053

 

Total

 

$

145,413

 

 

$

121,499

 

 

11


SR Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

 

The unrealized losses as of March 31, 2025 and June 30, 2024, categorized by the length of time of continuous loss position, and the fair value of the related securities held-to-maturity are as follows:

 

 

March 31, 2025

 

 

Less than 12 Months

 

 

More than 12 Months

 

 

Total

 

 

 

Fair
Value

 

 

Unrealized
Losses

 

 

Fair
Value

 

 

Unrealized
Losses

 

 

Fair
Value

 

 

Unrealized
Losses

 

 

 

(In thousands)

 

Federal National Mortgage
   Association

 

$

 

 

$

 

 

$

72,967

 

 

$

(15,583

)

 

$

72,967

 

 

$

(15,583

)

Federal Home Loan Mortgage
   Corporation

 

 

 

 

 

 

 

 

38,500

 

 

 

(7,698

)

 

 

38,500

 

 

 

(7,698

)

Subordinated Debt

 

 

 

 

 

 

 

 

7,246

 

 

 

(504

)

 

 

7,246

 

 

 

(504

)

CMO

 

 

 

 

 

 

 

 

1,966

 

 

 

(141

)

 

 

1,966

 

 

 

(141

)

Total

 

$

 

 

$

 

 

$

120,679

 

 

$

(23,926

)

 

$

120,679

 

 

$

(23,926

)

 

 

June 30, 2024

 

 

Less than 12 Months

 

 

More than 12 Months

 

 

Total

 

 

 

Fair
Value

 

 

Unrealized
Losses

 

 

Fair
Value

 

 

Unrealized
Losses

 

 

Fair
Value

 

 

Unrealized
Losses

 

 

 

(In thousands)

 

Federal National Mortgage
   Association

 

$

 

 

$

 

 

$

78,160

 

 

$

(16,822

)

 

$

78,160

 

 

$

(16,822

)

Federal Home Loan Mortgage
   Corporation

 

 

 

 

 

 

 

 

41,838

 

 

 

(8,252

)

 

 

41,838

 

 

 

(8,252

)

Government National
   Mortgage Association

 

 

 

 

 

 

 

 

270

 

 

 

(3

)

 

 

270

 

 

 

(3

)

Subordinated Debt

 

 

 

 

 

 

 

 

6,262

 

 

 

(1,488

)

 

 

6,262

 

 

 

(1,488

)

CMO

 

 

 

 

 

 

 

 

2,201

 

 

 

(222

)

 

 

2,201

 

 

 

(222

)

Total

 

$

 

 

$

 

 

$

128,731

 

 

$

(26,787

)

 

$

128,731

 

 

$

(26,787

)

 

On a quarterly basis, management evaluates whether there is a credit loss associated with any declines in fair value. Management considers the nature of the collateral, default rates, delinquency rates, credit ratings and interest rate changes, among other factors. However, the Company has determined that highly rated issues and mortgage-backed securities of U.S. government and government-sponsored agencies have a zero expected credit loss.

 

 

 

Three Months Ended
March 31,

 

 

Nine Months Ended
March 31,

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

 

 

(In thousands)

 

 

(In thousands)

 

Net gains recognized on equity securities

 

$

3

 

 

$

1

 

 

$

7

 

 

$

3

 

Less: Net gains recognized on equity
   securities sold/acquired

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized gains recognized on
   equity securities

 

$

3

 

 

$

1

 

 

$

7

 

 

$

3

 

 

At March 31, 2025 and June 30, 2024, mortgage-backed securities with a carrying value of approximately $1.8 million and $1.8 million, respectively, were pledged as collateral to secure public funds on deposit. During the three and nine months ended March 31, 2025 and 2024, there were no sales of securities held-to-maturity.

12


SR Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

 

5.
Loans Receivable

 

Loans at March 31, 2025 and June 30, 2024 are summarized as follows:

 

 

March 31, 2025

 

 

June 30, 2024

 

 

 

(In thousands)

 

Owner occupied commercial real estate loans

 

$

56,002

 

 

$

59,968

 

Other commercial real estate loans

 

 

73,618

 

 

 

75,782

 

Multi-family loans

 

 

216,058

 

 

 

180,364

 

Commercial and industrial loans

 

 

11,296

 

 

 

12,522

 

Total commercial loans

 

 

356,974

 

 

 

328,636

 

Residential mortgage loans

 

 

413,918

 

 

 

394,723

 

Consumer and other loans

 

 

12,832

 

 

 

11,658

 

Total loans

 

 

783,724

 

 

 

735,017

 

Allowance for credit losses

 

 

(5,124

)

 

 

(5,229

)

Deferred loan costs, net

 

 

2,195

 

 

 

2,071

 

Loans receivable, net

 

$

780,795

 

 

$

731,859

 

 

 

The Company engages primarily in the lending of fixed-rate and adjustable-rate commercial real estate and residential mortgage loans. Lending activities are targeted to individuals within the Company's geographic footprint. Risks associated with lending activities include changes in economic conditions and interest rates, which can adversely impact both the ability of borrowers to repay their loans and the value of the associated collateral. Credit risk exposure is minimized by the evaluation of the creditworthiness of the borrower, including debt-to-income ratios, credit scores and conservative underwriting standards with loan-to-value ratios of generally no more than 75% for commercial loans, 80% for multifamily loans and 80% for residential loans. Residential mortgage loans granted in excess of the 80% loan-to-value ratio criterion generally require private mortgage insurance. The real estate home equity portfolio consists of fixed-rate home equity loans and variable-rate home equity lines of credit. Risks associated with second lien loans secured by residential properties are generally lower than commercial loans and include general economic risks, such as the strength of the job market, employment stability and the strength of the housing market.

 

At March 31, 2025, commercial loans represented 45.5% of net loans, while residential mortgage, consumer and other loans represented 54.5%, nearly all of which is concentrated within our primary market area in New Jersey. The Company holds 96.8% of its commercial loan portfolio in commercial real estate, consisting of multi-family, mixed use and owner occupied loans, with less than 1% secured by office buildings. At March 31, 2025, the Company had no non-accrual commercial loans.

13


SR Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

 

The following tables summarize the activity in the allowance for credit losses by loan class for the three and nine months ended March 31, 2025 and 2024.

 

 

Three Months Ended March 31, 2025

 

 

Owner
Occupied
Commercial
Real Estate

 

 

Other
Commercial
Real Estate

 

 

Multi-
Family

 

 

Commercial
and
Industrial

 

 

Residential
Mortgage

 

 

Consumer
and Other

 

 

Total

 

 

 

(In thousands)

 

Allowance for Credit
   Losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

750

 

 

$

196

 

 

$

1,903

 

 

$

132

 

 

$

1,876

 

 

$

230

 

 

$

5,087

 

Charge-offs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recoveries

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provisions (credits)

 

 

(9

)

 

 

(3

)

 

 

39

 

 

 

 

 

 

(2

)

 

 

12

 

 

 

37

 

Ending balance

 

$

741

 

 

$

193

 

 

$

1,942

 

 

$

132

 

 

$

1,874

 

 

$

242

 

 

$

5,124

 

Ending balance,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated
   for impairment

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

Ending balance,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Collectively evaluated
   for impairment

 

$

741

 

 

$

193

 

 

$

1,942

 

 

$

132

 

 

$

1,874

 

 

$

242

 

 

$

5,124

 

Loans Receivable:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending balance

 

$

56,002

 

 

$

73,618

 

 

$

216,058

 

 

$

11,296

 

 

$

413,918

 

 

$

12,832

 

 

$

783,724

 

Ending balance,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated
   for impairment

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

Ending balance,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Collectively evaluated
   for impairment

 

$

56,002

 

 

$

73,618

 

 

$

216,058

 

 

$

11,296

 

 

$

413,918

 

 

$

12,832

 

 

$

783,724

 

 

 

Three Months Ended March 31, 2024

 

 

Owner
Occupied
Commercial
Real Estate

 

 

Other
Commercial
Real Estate

 

 

Multi-
Family

 

 

Commercial
and
Industrial

 

 

Residential
Mortgage

 

 

Consumer
and Other

 

 

Total

 

 

 

(In thousands)

 

Allowance for Credit
   Losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

1,364

 

 

$

533

 

 

$

1,869

 

 

$

146

 

 

$

1,285

 

 

$

21

 

 

$

5,218

 

Charge-offs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recoveries

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provisions (credits)

 

 

(27

)

 

 

(11

)

 

 

40

 

 

 

(3

)

 

 

(152

)

 

 

11

 

 

 

(142

)

Ending balance

 

$

1,337

 

 

$

522

 

 

$

1,909

 

 

$

143

 

 

$

1,133

 

 

$

32

 

 

$

5,076

 

Ending balance,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated
   for impairment

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

Ending balance,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Collectively evaluated
   for impairment

 

$

1,337

 

 

$

522

 

 

$

1,909

 

 

$

143

 

 

$

1,133

 

 

$

32

 

 

$

5,076

 

Loans Receivable:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending balance

 

$

60,413

 

 

$

75,973

 

 

$

166,907

 

 

$

12,358

 

 

$

375,065

 

 

$

11,296

 

 

$

702,012

 

Ending balance,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated
   for impairment

 

$

 

 

$

 

 

$

 

 

$

72

 

 

$

148

 

 

$

 

 

$

220

 

Ending balance,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Collectively evaluated
   for impairment

 

$

60,413

 

 

$

75,973

 

 

$

166,907

 

 

$

12,286

 

 

$

374,917

 

 

$

11,296

 

 

$

701,792

 

 

14


SR Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

 

 

 

Nine Months Ended March 31, 2025

 

 

Owner
Occupied
Commercial
Real Estate

 

 

Other
Commercial
Real Estate

 

 

Multi-
Family

 

 

Commercial
and
Industrial

 

 

Residential
Mortgage

 

 

Consumer
and Other

 

 

Total

 

 

 

(In thousands)

 

Allowance for Credit
   Losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

1,331

 

 

$

502

 

 

$

1,998

 

 

$

146

 

 

$

1,175

 

 

$

77

 

 

$

5,229

 

Charge-offs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recoveries

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provisions (credits)

 

 

(590

)

 

 

(309

)

 

 

(56

)

 

 

(14

)

 

 

699

 

 

 

165

 

 

 

(105

)

Ending balance

 

$

741

 

 

$

193

 

 

$

1,942

 

 

$

132

 

 

$

1,874

 

 

$

242

 

 

$

5,124

 

Ending balance,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated
   for impairment

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

Ending balance,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Collectively evaluated
   for impairment

 

$

741

 

 

$

193

 

 

$

1,942

 

 

$

132

 

 

$

1,874

 

 

$

242

 

 

$

5,124

 

Loans Receivable:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending balance

 

$

56,002

 

 

$

73,618

 

 

$

216,058

 

 

$

11,296

 

 

$

413,918

 

 

$

12,832

 

 

$

783,724

 

Ending balance,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated
   for impairment

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

Ending balance,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Collectively evaluated
   for impairment

 

$

56,002

 

 

$

73,618

 

 

$

216,058

 

 

$

11,296

 

 

$

413,918

 

 

$

12,832

 

 

$

783,724

 

 

 

Nine Months Ended March 31, 2024

 

 

Owner
Occupied
Commercial
Real Estate

 

 

Other
Commercial
Real Estate

 

 

Multi-
Family

 

 

Commercial
and
Industrial

 

 

Residential
Mortgage

 

 

Consumer
and Other

 

 

Total

 

 

 

(In thousands)

 

Allowance for Credit
   Losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

 

 

$

4

 

 

$

 

 

$

 

 

$

1,039

 

 

$

73

 

 

$

1,116

 

Impact of ASU 2016-13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

27

 

 

 

20

 

 

 

47

 

Charge-offs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recoveries

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provisions (credits)

 

 

1,337

 

 

 

518

 

 

 

1,909

 

 

 

143

 

 

 

67

 

 

 

(61

)

 

 

3,913

 

Ending balance

 

$

1,337

 

 

$

522

 

 

$

1,909

 

 

$

143

 

 

$

1,133

 

 

$

32

 

 

$

5,076

 

Ending balance,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated
   for impairment

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

Ending balance,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Collectively evaluated
   for impairment

 

$

1,337

 

 

$

522

 

 

$

1,909

 

 

$

143

 

 

$

1,133

 

 

$

32

 

 

$

5,076

 

Loans Receivable:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending balance

 

$

60,413

 

 

$

75,973

 

 

$

166,907

 

 

$

12,358

 

 

$

375,065

 

 

$

11,296

 

 

$

702,012

 

Ending balance,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated
   for impairment

 

$

 

 

$

 

 

$

 

 

$

72

 

 

$

148

 

 

$

 

 

$

220

 

Ending balance,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Collectively evaluated
   for impairment

 

$

60,413

 

 

$

75,973

 

 

$

166,907

 

 

$

12,286

 

 

$

374,917

 

 

$

11,296

 

 

$

701,792

 

 

15


SR Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

 

The following table presents the credit risk profile of loans by class and fiscal year of origination as of March 31, 2025 and June 30, 2024:

 

 

March 31, 2025

 

 

2025

 

 

2024

 

 

2023

 

 

2022

 

 

2021

 

 

Prior

 

 

Revolving

 

 

Total

 

 

 

(In thousands)

 

Owner Occupied Commercial
   Real Estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk Rating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

 

 

$

7,043

 

 

$

7,101

 

 

$

7,976

 

 

$

5,377

 

 

$

28,505

 

 

$

 

 

$

56,002

 

Special mention

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Substandard

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Owner Occupied Commercial
   Real Estate

 

$

 

 

$

7,043

 

 

$

7,101

 

 

$

7,976

 

 

$

5,377

 

 

$

28,505

 

 

$

 

 

$

56,002

 

Other Commercial Real Estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk Rating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

5,467

 

 

$

1,364

 

 

$

3,540

 

 

$

925

 

 

$

1,708

 

 

$

60,614

 

 

$

 

 

$

73,618

 

Special mention

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Substandard

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Other Commercial Real Estate

 

$

5,467

 

 

$

1,364

 

 

$

3,540

 

 

$

925

 

 

$

1,708

 

 

$

60,614

 

 

$

 

 

$

73,618

 

Multi-Family

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk Rating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

40,123

 

 

$

28,668

 

 

$

28,497

 

 

$

25,277

 

 

$

13,355

 

 

$

80,138

 

 

$

 

 

$

216,058

 

Special mention

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Substandard

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Multi-Family

 

$

40,123

 

 

$

28,668

 

 

$

28,497

 

 

$

25,277

 

 

$

13,355

 

 

$

80,138

 

 

$

 

 

$

216,058

 

Commercial and Industrial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk Rating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

89

 

 

$

988

 

 

$

4,242

 

 

$

2,471

 

 

$

61

 

 

$

3,445

 

 

$

 

 

$

11,296

 

Special mention

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Substandard

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Commercial and Industrial

 

$

89

 

 

$

988

 

 

$

4,242

 

 

$

2,471

 

 

$

61

 

 

$

3,445

 

 

$

 

 

$

11,296

 

Residential Mortgage

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk Rating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

51,205

 

 

$

63,573

 

 

$

51,600

 

 

$

73,237

 

 

$

68,138

 

 

$

106,165

 

 

$

 

 

$

413,918

 

Special mention

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Substandard

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Residential Mortgage

 

$

51,205

 

 

$

63,573

 

 

$

51,600

 

 

$

73,237

 

 

$

68,138

 

 

$

106,165

 

 

$

 

 

$

413,918

 

Consumer and Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk Rating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

674

 

 

$

1,250

 

 

$

365

 

 

$

742

 

 

$

1,123

 

 

$

1,650

 

 

$

7,028

 

 

$

12,832

 

Special mention

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Substandard

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Consumer and Other

 

$

674

 

 

$

1,250

 

 

$

365

 

 

$

742

 

 

$

1,123

 

 

$

1,650

 

 

$

7,028

 

 

$

12,832

 

Total Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

97,558

 

 

$

102,886

 

 

$

95,345

 

 

$

110,628

 

 

$

89,762

 

 

$

280,517

 

 

$

7,028

 

 

$

783,724

 

Special mention

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Substandard

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Loans

 

$

97,558

 

 

$

102,886

 

 

$

95,345

 

 

$

110,628

 

 

$

89,762

 

 

$

280,517

 

 

$

7,028

 

 

$

783,724

 

Gross charge-offs

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

16


SR Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

 

 

 

June 30, 2024

 

 

2024

 

 

2023

 

 

2022

 

 

2021

 

 

2020

 

 

Prior

 

 

Revolving

 

 

Total

 

 

 

(In thousands)

 

Owner Occupied Commercial
   Real Estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk Rating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

7,133

 

 

$

7,403

 

 

$

8,210

 

 

$

5,507

 

 

$

1,977

 

 

$

29,738

 

 

$

 

 

$

59,968

 

Special mention

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Substandard

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Owner Occupied Commercial
   Real Estate

 

$

7,133

 

 

$

7,403

 

 

$

8,210

 

 

$

5,507

 

 

$

1,977

 

 

$

29,738

 

 

$

 

 

$

59,968

 

Other Commercial Real Estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk Rating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

1,379

 

 

$

3,978

 

 

$

3,168

 

 

$

1,745

 

 

$

10,938

 

 

$

54,574

 

 

$

 

 

$

75,782

 

Special mention

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Substandard

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Other Commercial Real Estate

 

$

1,379

 

 

$

3,978

 

 

$

3,168

 

 

$

1,745

 

 

$

10,938

 

 

$

54,574

 

 

$

 

 

$

75,782

 

Multi-Family

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk Rating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

21,100

 

 

$

29,070

 

 

$

25,713

 

 

$

14,135

 

 

$

8,989

 

 

$

81,357

 

 

$

 

 

$

180,364

 

Special mention

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Substandard

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Multi-Family

 

$

21,100

 

 

$

29,070

 

 

$

25,713

 

 

$

14,135

 

 

$

8,989

 

 

$

81,357

 

 

$

 

 

$

180,364

 

Commercial and Industrial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk Rating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

1,225

 

 

$

4,158

 

 

$

2,722

 

 

$

90

 

 

$

1,470

 

 

$

2,807

 

 

$

 

 

$

12,472

 

Special mention

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Substandard

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

50

 

 

 

 

 

 

50

 

Doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Commercial and Industrial

 

$

1,225

 

 

$

4,158

 

 

$

2,722

 

 

$

90

 

 

$

1,470

 

 

$

2,857

 

 

$

 

 

$

12,522

 

Residential Mortgage

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk Rating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

69,868

 

 

$

54,675

 

 

$

76,714

 

 

$

74,771

 

 

$

30,347

 

 

$

88,348

 

 

$

 

 

$

394,723

 

Special mention

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Substandard

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Residential Mortgage

 

$

69,868

 

 

$

54,675

 

 

$

76,714

 

 

$

74,771

 

 

$

30,347

 

 

$

88,348

 

 

$

 

 

$

394,723

 

Consumer and Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk Rating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

1,327

 

 

$

940

 

 

$

810

 

 

$

869

 

 

$

310

 

 

$

1,989

 

 

$

5,413

 

 

$

11,658

 

Special mention

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Substandard

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Consumer and Other

 

$

1,327

 

 

$

940

 

 

$

810

 

 

$

869

 

 

$

310

 

 

$

1,989

 

 

$

5,413

 

 

$

11,658

 

Total Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

102,032

 

 

$

100,224

 

 

$

117,337

 

 

$

97,117

 

 

$

54,031

 

 

$

258,813

 

 

$

5,413

 

 

$

734,967

 

Special mention

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Substandard

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

50

 

 

 

 

 

 

50

 

Doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Loans

 

$

102,032

 

 

$

100,224

 

 

$

117,337

 

 

$

97,117

 

 

$

54,031

 

 

$

258,863

 

 

$

5,413

 

 

$

735,017

 

Gross charge-offs

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

17


SR Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

 

The following table presents the amortized cost of collateral-dependent non-accrual loans by portfolio segment and type of collateral as of March 31, 2025 and June 30, 2024.

 

 

March 31, 2025

 

 

 

Type of Collateral

 

 

 

 

 

Residential
Property

 

 

Commercial
Property

 

 

Business
Assets

 

 

Total

 

 

 

(In thousands)

 

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

Owner occupied commercial real estate

 

$

 

 

$

 

 

$

 

 

$

 

Other commercial real estate

 

 

 

 

 

 

 

 

 

 

 

 

Multi-family

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

 

 

 

 

 

 

 

 

 

 

 

Residential Mortgage

 

 

 

 

 

 

 

 

 

 

 

 

Consumer and Other

 

 

 

 

 

 

 

 

 

 

 

 

Total collateral dependent loans

 

$

 

 

$

 

 

$

 

 

$

 

 

 

June 30, 2024

 

 

 

Type of Collateral

 

 

 

 

 

Residential
Property

 

 

Commercial
Property

 

 

Business
Assets

 

 

Total

 

 

 

(In thousands)

 

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

Owner occupied commercial real estate

 

$

 

 

$

 

 

$

 

 

$

 

Other commercial real estate

 

 

 

 

 

 

 

 

 

 

 

 

Multi-family

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

 

 

 

 

50

 

 

 

 

 

 

 

Residential Mortgage

 

 

 

 

 

 

 

 

 

 

 

 

Consumer and Other

 

 

 

 

 

 

 

 

 

 

 

 

Total collateral dependent loans

 

$

 

 

$

50

 

 

$

 

 

$

 

 

 

The following tables present the classes of loans summarized by past due status as of March 31, 2025 and June 30, 2024:

 

 

March 31, 2025

 

 

 

Delinquency Status

 

 

30-59 Days
Past Due

 

 

60-89 Days
Past Due

 

 

90 Days or
More Past
Due and
Still
Accruing
Past Due

 

 

Non-
Accrual

 

 

Total
Past
Due

 

 

Total
Current

 

 

Total

 

 

 

(In thousands)

 

Owner occupied commercial
   real estate

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

56,002

 

 

$

56,002

 

Other commercial real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

73,618

 

 

 

73,618

 

Multi-family

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

216,058

 

 

 

216,058

 

Commercial and industrial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11,296

 

 

 

11,296

 

Residential mortgage

 

 

584

 

 

 

 

 

 

 

 

 

 

 

 

584

 

 

 

413,334

 

 

 

413,918

 

Consumer and Other

 

 

2

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

 

12,830

 

 

 

12,832

 

Total

 

$

586

 

 

$

 

 

$

 

 

$

 

 

$

586

 

 

$

783,138

 

 

$

783,724

 

 

18


SR Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

 

 

 

June 30, 2024

 

 

 

Delinquency Status

 

 

30-59 Days
Past Due

 

 

60-89 Days
Past Due

 

 

90 Days or
More Past
Due and
Still
Accruing
Past Due

 

 

Non-
Accrual

 

 

Total
Past
Due

 

 

Total
Current

 

 

Total

 

 

 

(In thousands)

 

Owner occupied commercial
   real estate

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

59,968

 

 

$

59,968

 

Other commercial real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

75,782

 

 

 

75,782

 

Multi-family

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

180,364

 

 

 

180,364

 

Commercial and industrial

 

 

 

 

 

 

 

 

 

 

 

50

 

 

 

50

 

 

 

12,472

 

 

 

12,522

 

Residential mortgage

 

 

572

 

 

 

 

 

 

 

 

 

 

 

 

572

 

 

 

394,151

 

 

 

394,723

 

Consumer and Other

 

 

40

 

 

 

 

 

 

 

 

 

 

 

 

40

 

 

 

11,618

 

 

 

11,658

 

Total

 

$

612

 

 

$

 

 

$

 

 

$

50

 

 

$

662

 

 

$

734,355

 

 

$

735,017

 

At March 31, 2025 and June 30, 2024, the Company had no foreclosed real estate owned and there were no loan modifications to borrowers experiencing financial difficulty.

6.
Premises and Equipment

Premises and equipment at March 31, 2025 and June 30, 2024 are summarized as follows:

 

 

March 31, 2025

 

 

June 30, 2024

 

 

(In thousands)

 

Land

 

$

926

 

 

$

926

 

Buildings and leasehold improvements

 

 

8,988

 

 

 

9,181

 

Furniture, fixtures and equipment

 

 

5,983

 

 

 

5,882

 

Total

 

 

15,897

 

 

 

15,989

 

Accumulated depreciation

 

 

(10,925

)

 

 

(10,570

)

Net

 

$

4,972

 

 

$

5,419

 

 

Depreciation expense amounted to $703,000 and $520,000 for the nine months ended March 31, 2025 and 2024, respectively.

7.
Leases

The Company accounts for its leases in accordance with ASC Topic 842. The Company's right-of-use asset and operating lease liability are recognized at lease commencement based on the present value of the remaining lease payment obligations using discount rates that represent the Company’s incremental borrowing rate as of the lease commencement dates. The Company leases only office space and equipment under operating leases, with original lease terms ranging from five to ten years. The Company elected not to include short-term leases with initial terms of twelve months or less on the Consolidated Statements of Financial Condition. As of March 31, 2025, the Company had not entered into any material leases that have not yet commenced. The operating lease agreements recognized on the Consolidated Statements of Financial Condition as a right-of-use asset and a corresponding lease liability, as well as other information related to the Company's operating leases, are summarized in the table below.

 

 

 

Three Months Ended March 31,

 

 

2025

 

 

2024

 

 

(In thousands)

 

Operating lease cost

 

$

206

 

 

$

276

 

Cash paid for amounts included in the
   measurement of lease liabilities

 

$

226

 

 

$

270

 

 

19


SR Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

 

 

 

 

Nine Months Ended March 31,

 

 

2025

 

 

2024

 

 

(In thousands)

 

Operating lease cost

 

$

661

 

 

$

556

 

Cash paid for amounts included in the
   measurement of lease liabilities

 

$

677

 

 

$

543

 

 

 

March 31, 2025

 

 

June 30, 2024

 

 

(In thousands)

 

Right-of-use asset

 

$

1,926

 

 

$

2,311

 

Lease liability

 

$

2,012

 

 

$

2,403

 

Weighted-average remaining lease term, in years

 

 

3.73

 

 

 

3.57

 

Weighted-average discount rate

 

 

1.86

%

 

 

1.70

%

Future undiscounted minimum lease payments for operating leases with initial terms of one year or more as of March 31, 2025 are as follows:

 

March 31,

 

(Dollars in
thousands)

 

2026

 

$

828

 

2027

 

 

499

 

2028

 

 

368

 

2029

 

 

205

 

2030

 

 

172

 

Thereafter

 

 

 

Total future minimum lease payments

 

 

2,072

 

Less: imputed interest

 

 

(60

)

Total

 

$

2,012

 

 

8.
Goodwill and Intangible Assets

Goodwill and core deposit intangibles resulted from the Company's acquisition of Regal Bancorp, which was accounted for under FASB ASC 805, Business Combinations. In accordance with FASB ASC 805, the Company recorded $20.4 million of goodwill and $9.1 million of core deposit intangibles. The intangible assets are related to core deposits and are being amortized over 10 years, using an accelerated method.

The changes in the carrying amount of goodwill and core deposit intangibles for the nine months ended March 31, 2025 and 2024 are summarized as follows:

 

 

 

Nine Months Ended March 31,

 

 

 

2025

 

 

2024

 

 

 

(In thousands)

 

Balance at beginning of period

 

$

28,141

 

 

$

 

Acquisition of Regal Bancorp

 

 

 

 

 

29,541

 

Amortization expense

 

 

(1,102

)

 

 

(933

)

Balance at end of period

 

$

27,039

 

 

$

28,608

 

 

20


SR Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

 

 

Goodwill and Intangible assets at March 31, 2025 and June 30, 2024:

 

 

 

March 31, 2025

 

 

June 30, 2024

 

 

 

(In thousands)

 

Goodwill

 

$

20,417

 

 

$

20,417

 

Core Deposit Intangible, net of amortization

 

 

6,622

 

 

 

7,724

 

Goodwill and Intangible Assets

 

$

27,039

 

 

$

28,141

 

 

As of March 31, 2025, the amortization of the core deposit intangibles in future fiscal years is as follows:

 

 

 

Amount

 

 

 

(In thousands)

 

2025

 

$

331

 

2026

 

 

1,167

 

2027

 

 

951

 

2028

 

 

774

 

2029

 

 

657

 

Thereafter

 

 

2,742

 

Total

 

$

6,622

 

 

9.
Deposits

Deposits at March 31, 2025 and June 30, 2024 consisted of the following:

 

 

March 31, 2025

 

 

June 30, 2024

 

 

(In thousands)

 

Demand accounts:

 

 

 

 

 

 

Interest-bearing

 

$

306,935

 

 

$

252,880

 

Noninterest-bearing

 

 

106,020

 

 

 

108,026

 

Total demand accounts

 

 

412,955

 

 

 

360,906

 

Savings and club

 

 

151,196

 

 

 

173,375

 

Certificates of deposit

 

 

271,433

 

 

 

272,819

 

Total

 

$

835,584

 

 

$

807,100

 

 

Certificates of deposit with balances in excess of the Federal Deposit Insurance Corporation (the "FDIC") insurance limit of $250,000 at March 31, 2025 and June 30, 2024 amounted to approximately $25.2 million and $21.9 million, respectively. Uninsured deposits of municipalities and local government agencies are protected under a New Jersey supplemental insurance program with collateralized assets.

At March 31, 2025, the scheduled maturities of certificates of deposit are as follows:

 

 

 

(In thousands)

 

Year ending March 31, 2026

 

$

246,834

 

Year ending March 31, 2027

 

 

18,433

 

Year ending March 31, 2028

 

 

3,862

 

Year ending March 31, 2029

 

 

1,371

 

Year ending March 31, 2030

 

 

933

 

Total

 

$

271,433

 

 

21


SR Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

 

10.
Borrowings

The Company can borrow overnight funds from the Federal Home Loan Bank ("FHLB") under a redesigned overnight advance program up to the Company’s maximum borrowing capacity based on the Company’s ability to collateralize such borrowings. At March 31, 2025 and June 30, 2024, the Company's maximum borrowing capacity was $100.0 million.

At March 31, 2025, the Company had a $30.0 million advance with the Federal Home Loan Bank of New York at a fixed rate of 4.48%, which matures on May 5, 2025. At June 30, 2024, the Company had no outstanding borrowings.

At March 31, 2025 and June 30, 2024, the Company's Board of Directors authorized borrowings of up to $25.0 million from the Federal Reserve Bank of New York (“FRB-NY”), secured by pledges of the Company’s qualifying loan portfolio and generally on overnight terms with an interest rate quoted at the time of the borrowing. The Company had no outstanding borrowings from the FRB-NY at March 31, 2025 or June 30, 2024, respectively.

11.
Commitments and Contingencies

The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit. Such commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the statement of financial position.

The Company's exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contractual notional amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.

At March 31, 2025, total unfunded loan-related commitments, including lines of credit, amounted to $58.7 million, comprised of $37.1 million for unused equity lines of credit and $21.6 million to originate and purchase loans, expiring within three months.

At June 30, 2024, total unfunded loan-related commitments, including lines of credit, amounted to $72.1 million, comprised of $36.1 million for unused equity lines of credit and $36.0 million to originate and purchase loans, expiring within three months.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained if deemed necessary by the Company upon extension of credit is based on management’s credit evaluation of the counterparty.

A reserve for unfunded commitments is recognized and included in other liabilities on the consolidated statements of financial condition. Periodic adjustments to either increase or decrease the reserve are recognized in non-interest expense in the consolidated statements of income. The Company recorded $40,000 and $0 expense for the nine months ended March 31, 2025 and 2024, respectively. The balance for unfunded commitments was $40,000 at March 31, 2025 and $0 at June 30, 2024.

12.
Stock-Based Compensation

On November 20, 2024, the Company adopted the SR Bancorp, Inc. 2024 Equity Incentive Plan ("2024 Equity Plan”). The 2024 Equity Plan authorizes 1,331,110 shares of common stock for equity-based compensation awards including restricted stock awards, restricted stock units, non-qualified stock options, and incentive stock options. As of March 31, 2025, there were 266,286 shares available for future grants.

22


SR Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

 

Stock Options

On January 29, 2025 and February 5, 2025, the Company granted 465,889 and 57,009, respectively, of stock options to certain officers and employees of the company with a contractual term of 10 years. The stock options vest in equal annual installments over a five-year period beginning on the first anniversary of the date of grant. The fair value of each option grant was estimated on the date of grant using the Black-Scholes option pricing model. The following table sets forth information regarding the grants:

 

Date of grant

 

January 29, 2025

 

 

February 5, 2025

 

Options granted

 

 

465,889

 

 

 

57,009

 

Exercise price

 

$

12.50

 

 

$

12.36

 

Vesting period (years)

 

 

5.00

 

 

 

5.00

 

Expiration date

 

January 29, 2035

 

 

February 5, 2035

 

Expected Volatility(1)

 

 

27.87

%

 

 

27.87

%

Expected term (years)(2)

 

 

6.50

 

 

 

6.50

 

Expected dividend yield(3)

 

 

0.00

%

 

 

0.00

%

Forfeiture rate

 

 

0.00

%

 

 

0.00

%

Risk free rate of return(4)

 

 

4.44

%

 

 

4.33

%

Fair value per option

 

$

4.82

 

 

$

4.73

 

 

(1)
Expected volatility is based on the standard deviation of the historical volatility of the daily adjusted closing price of a group of peers' shares
(2)
Expected term represents the period of time that the option is expected to be outstanding, determined using the "Simplified Method"
(3)
Expected dividend yield is determined based on management's expectations regarding issuing dividends in the foreseeable future.
(4)
The risk-free rate of return is based on the U.S. Treasury yield curve in effect at the time of grant for a period equivalent to the expected term of the option

The following table represents stock option activities for the period indicated:

 

 

 

Three Months Ended March 31, 2025

 

 

Nine Months Ended March 31, 2025

 

 

Shares

 

 

Weighted-
Average
Exercise Price

 

 

Weighted-
Average
Remaining
Contractual
Term (years)

 

 

Aggregate
Intrinsic Value

 

 

Shares

 

 

Weighted-
Average
Exercise Price

 

 

Weighted-
Average
Remaining
Contractual
Term (years)

 

 

Aggregate
Intrinsic Value

 

 

 

 

 

 

 

 

 

 

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

(In thousands)

 

Balance at beginning of period

 

 

237,695

 

 

$

11.04

 

 

 

9.89

 

 

$

 

 

 

 

 

$

 

 

 

 

 

 

 

Granted

 

 

522,898

 

 

 

12.48

 

 

 

9.83

 

 

 

 

 

 

760,593

 

 

 

12.03

 

 

 

9.89

 

 

 

 

Exercised

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vested

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Forfeited or expired

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at end of period

 

 

760,593

 

 

$

12.03

 

 

 

9.77

 

 

$

212

 

 

 

760,593

 

 

$

12.03

 

 

 

9.77

 

 

$

212

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercisable at end of period

 

 

 

 

$

 

 

 

 

 

$

 

 

 

 

 

$

 

 

 

 

 

$

 

 

The aggregate intrinsic value is the amount by which the fair value of the underlying stock exceeds the exercise price of an option on the exercise date.

Restricted Stock Awards

On January 29, 2025 and February 5, 2025, the Company granted 186,356 and 22,800, respectively, of restricted stock awards to certain officers and employees. The restricted stock awards vest in equal annual installments over a five-year period. The restricted stock awards are measured based on grant-date fair value, which reflects the closing price of the Company’s stock on the date of grant.

23


SR Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

 

The following table represents information regarding restricted stock award activities for the periods indicated:

 

 

Three Months Ended
March 31, 2025

 

 

Nine Months Ended
March 31, 2025

 

 

Number
of Shares

 

 

Weighted-
Average Grant
Date Fair Value
Per Share

 

 

Number
of Shares

 

 

Weighted-
Average Grant
Date Fair Value
Per Share

 

Balance at beginning of period

 

 

95,075

 

 

$

11.04

 

 

 

 

 

$

 

Granted

 

 

209,156

 

 

 

12.48

 

 

 

304,231

 

 

 

12.03

 

Vested

 

 

 

 

 

 

 

 

 

 

 

 

Forfeited

 

 

 

 

 

 

 

 

 

 

 

 

Balance at end of period

 

 

304,231

 

 

$

12.03

 

 

 

304,231

 

 

$

12.03

 

 

The following table represents the compensation expense and income tax benefit recognized for stock options and restricted stock awards for the period indicated:

 

 

 

Three Months Ended
March 31, 2025

 

 

Nine Months Ended
March 31, 2025

 

 

 

(In thousands)

 

 

(In thousands)

 

Stock-based compensation expense

 

 

 

 

 

 

Stock options

 

$

134

 

 

$

151

 

Restricted stock awards

 

 

140

 

 

 

157

 

Total stock-based compensation expense

 

$

274

 

 

$

308

 

Related tax benefits recognized in earnings

 

$

77

 

 

$

87

 

 

The following table sets forth the total compensation cost related to non-vested awards not yet recognized and the weighted average period (in years) over which it is expected to be recognized as of March 31, 2025:

 

 

Amount

 

 

Weighted
Average
Period (years)

 

 

(In thousands)

 

 

 

 

Stock options

 

$

3,372

 

 

 

4.78

 

Restricted stock awards

 

 

3,504

 

 

 

4.78

 

Total

 

$

6,876

 

 

 

 

 

13.
Regulatory Capital

The Bank is subject to regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of its assets, liabilities and certain off-balance sheet items calculated under regulatory accounting practices. The capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk-weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the maintenance of minimum amounts and ratios (set forth in the following table) of total capital, Tier 1 capital (as defined in the regulations) and common equity Tier 1 capital to risk-weighted assets, and of Tier 1 capital to average assets. A capital conservation buffer of 2.50%, comprised of common equity Tier I capital, is also established above the regulatory minimum capital requirements and must be maintained to avoid limitations on capital distributions.

24


SR Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

 

 

In 2021, the Bank adopted the new community bank leverage ratio framework. This framework simplifies the regulatory capital requirements by requiring the Bank to meet only the Tier 1 capital to average assets (leverage) ratio. The Bank must only maintain a leverage ratio greater than the 9.0% required minimum to be considered well capitalized under this framework. The Bank can opt out of the new framework and return to the risk-weighting framework at any time.

 

Market risk, credit risk, operational risk and deposit outflows are some of the factors that can impact the capital adequacy ratio and in turn, adversely affect the performance of the Bank. As of March 31, 2025, the Bank met all capital adequacy requirements to which it is subject. As of March 31, 2025, the most recent notification from the FDIC categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, an institution must maintain minimum ratios as set forth in the following tables. There are no conditions or events since that notification that management believes have changed the Bank's category. The Bank's actual capital amounts and ratios are as follows:

 

 

 

Actual

 

 

To be Well Capitalized
under Prompt Corrective
Action Provisions

 

 

Amount

 

 

Ratio

 

 

Amount

 

 

Ratio

 

 

(In thousands)

 

March 31, 2025

 

 

 

 

 

 

 

 

 

 

 

 

Tier 1 capital (to average total assets)

 

$

164,734

 

 

 

15.86

%

 

$

93,492

 

 

 

9.00

%

June 30, 2024:

 

 

 

 

 

 

 

 

 

 

 

 

Tier 1 capital (to average total assets)

 

$

170,364

 

 

 

16.83

%

 

$

91,122

 

 

 

9.00

%

 

14.
Fair Value Measurements and Disclosures

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The Company’s securities available-for-sale are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record at fair value other assets or liabilities on a non-recurring basis. These non-recurring fair value adjustments involve the application of lower-of-cost-or-market accounting or write-downs of individual assets.

FASB ASC 820, Fair Value Measurements and Disclosures, defines fair value as an exit price representing the amount that would be received to sell an asset or settle a liability in an orderly transaction between market participants. A three-level hierarchy has been established for fair value measurements based upon the inputs to the valuation of an asset or liability.

Level 1 - Valuation is based on quoted prices in active markets for identical assets or liabilities;

Level 2 - Valuation is determined from quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument;

Level 3 - Valuation is derived from model-based and other techniques in which at least one significant input is unobservable and which may be based on the Company’s own estimates about the assumptions that a market participant would use to value the asset or liability.

The Company's available-for-sale portfolio is carried at estimated fair value on a recurring basis, with any unrealized gains and losses, net of taxes, reported as accumulated other comprehensive income or loss. The securities available-for-sale portfolio consists of U.S. government-sponsored enterprise and mortgage-backed securities. The fair values of these securities were obtained from an independent nationally recognized pricing service. The independent pricing service provided prices categorized as Level 2, as quoted prices in active markets for identical assets are generally not available for the securities.

25


SR Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

 

For financial assets measured at fair value on a recurring basis as of March 31, 2025 and June 30, 2024, the fair value measurements by level within the fair value hierarchy used are as follows:

 

 

March 31, 2025

 

Description

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

 

Total

 

 

 

(In thousands)

 

Equity securities

 

 

32

 

 

 

 

 

 

 

 

 

32

 

Total

 

$

32

 

 

$

 

 

$

 

 

$

32

 

 

 

June 30, 2024

 

Description

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

 

Total

 

 

 

(In thousands)

 

Equity securities

 

 

25

 

 

 

 

 

 

 

 

 

25

 

Total

 

$

25

 

 

$

 

 

$

 

 

$

25

 

 

The classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

Other securities are measured at fair value using quoted market prices in an active market for identical assets and are classified as Level 1 in the hierarchy. The estimated fair values of equity securities are determined by obtaining quoted prices on nationally recognized exchanges (Level 1 inputs).

All debt securities are measured at fair value using matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices and are classified as Level 2 in the hierarchy.

There were no transfers between levels within the fair value hierarchy during the nine months ended March 31, 2025 and 2024.

Financial Assets Measured at Fair Value on a Nonrecurring Basis

The following tables present those assets and liabilities measured at fair value on a non-recurring basis at March 31, 2025 and June 30, 2024, and additional quantitative information about the valuation techniques and inputs utilized to determine fair value. All such assets and liabilities were measured using Level 3 inputs:

 

March 31, 2025

 

Fair Value Measurement

 

 

Quantitative Information

 

Recorded
Investment

 

 

Valuation
Allowance

 

 

Fair
Value

 

 

Valuation
Technique

 

Unobservable
Inputs

 

Value/Range

 

(In thousands)

 

 

 

 

 

 

 

Individually
   evaluated loans

$

 

 

$

 

 

$

 

 

Appraisal of collateral

 

Selling costs

 

15%

 

 

June 30, 2024

 

Fair Value Measurement

 

 

Quantitative Information

 

Recorded
Investment

 

 

Valuation
Allowance

 

 

Fair
Value

 

 

Valuation
Technique

 

Unobservable
Inputs

 

Value/Range

 

(In thousands)

 

 

 

 

 

 

 

Individually
   evaluated loans

$

50

 

 

$

 

 

$

50

 

 

Appraisal of collateral

 

Selling costs

 

15%

 

26


SR Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

 

Fair Value of Financial Instruments not Carried at Fair Value

The Company discloses fair value information about financial assets, whether or not recognized in the statements of financial condition, for which it is practicable to estimate that value. The fair value of financial assets that are not measured at fair value in the financial statements were based on the exit price notion. The following estimated fair value amounts have been determined using available market information and appropriate valuation methodologies. However, the estimates below are not necessarily indicative of amounts that could be realized in the marketplace. The use of different market assumptions or valuation methodologies may have a material effect on the estimated fair value amounts.

For financial assets measured at fair value on a nonrecurring basis, the fair value measurements by level within the fair value hierarchy used at March 31, 2025 and June 30, 2024 were as follows:

 

 

March 31, 2025

 

Description

 

Carrying Value

 

 

Fair Value

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

 

 

(In thousands)

 

Financial Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

62,224

 

 

$

62,224

 

 

$

62,224

 

 

$

 

 

$

 

Securities held-to-maturity, at amortized cost

 

 

145,413

 

 

 

121,499

 

 

 

 

 

 

121,499

 

 

 

 

Restricted equity securities, at cost

 

 

2,581

 

 

 

2,581

 

 

 

 

 

 

2,581

 

 

 

 

Loans receivable, net

 

 

780,795

 

 

 

748,761

 

 

 

 

 

 

 

 

 

748,761

 

Accrued interest receivable

 

 

2,964

 

 

 

2,964

 

 

 

 

 

 

2,964

 

 

 

 

Financial Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

835,584

 

 

 

750,888

 

 

 

 

 

 

750,888

 

 

 

 

Borrowings

 

 

30,000

 

 

 

30,000

 

 

 

 

 

 

30,000

 

 

 

 

 

 

June 30, 2024

 

Description

 

Carrying Value

 

 

Fair Value

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

 

 

(In thousands)

 

Financial Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

45,909

 

 

$

45,909

 

 

$

45,909

 

 

$

 

 

$

 

Securities held-to-maturity, at amortized cost

 

 

156,144

 

 

 

129,436

 

 

 

 

 

 

129,436

 

 

 

 

Restricted equity securities, at cost

 

 

1,231

 

 

 

1,231

 

 

 

 

 

 

1,231

 

 

 

 

Loans receivable, net

 

 

731,859

 

 

 

696,757

 

 

 

 

 

 

 

 

 

696,757

 

Accrued interest receivable

 

 

2,695

 

 

 

2,695

 

 

 

 

 

 

2,695

 

 

 

 

Financial Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

807,100

 

 

 

704,566

 

 

 

 

 

 

704,566

 

 

 

 

Borrowings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

The fair values of performing loans was estimated by segregating the portfolio into its primary loan categories—owner occupied commercial real estate, other commercial real estate, multi-family, commercial and industrial, residential and consumer. These categories were further disaggregated based upon significant financial characteristics such as type of interest rate (fixed/variable). The Company discounts the contractual cash flows for each loan category using interest rates currently being offered for loans with similar terms to borrowers of similar quality and incorporates estimates of future loan prepayments.

27


SR Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

 

Deposits

The fair value of deposits with no defined maturities (e.g. demand deposits, interest-bearing demand accounts, money market accounts and savings accounts) is the amount payable on demand of the liabilities at the reporting date (i.e. their carrying amounts). This approach to estimating fair value excludes the significant benefit that results from the low -cost funding provided by such deposit liabilities, as compared to alternative sources of funding. Deposits with stated maturities (time deposits) have been valued using the present value of cash flows discounted at rates approximating the current market for similar deposits.

Borrowed Funds

The fair value of federal funds purchased is equal to the amount borrowed. The fair value of FRB-NY or FHLB advances represents contractual repayments discounted using interest rates currently available for borrowings with similar characteristics and remaining maturities. The discount rates used are representative of approximate rates currently offered on borrowings with similar characteristics and maturities.

28


 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following management discussion and analysis of the Company’s consolidated financial condition as of March 31, 2025 and the results of operations for the three and nine months ended March 31, 2025 and 2024 (“MD&A”) should be read in conjunction with the consolidated audited financial statements, including notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2024, as filed with the Securities and Exchange Commission, and the other information therein and in conjunction with the Consolidated Statements of Financial Condition as of March 31, 2025, the Consolidated Statements of Income (Loss), the Consolidated Statements of Comprehensive Income (Loss), the Consolidated Statements of Changes in Stockholders’ Equity and the Consolidated Statements of Cash Flows for the three and nine months ended March 31, 2025 and 2024, which are unaudited. The Consolidated Statement of Financial Condition as of June 30, 2024 was derived from the audited Consolidated Statements of Financial Condition that was included in the Company's Annual Report on Form 10-K for the year ended June 30, 2024. The consolidated financial statements include, in the opinion of management, all adjustments considered necessary for a fair presentation of such data. As used in this Quarterly Report on Form 10-Q, “we,” “us,” “our,” “the Bank” and “the Company” refer to SR Bancorp, Inc., and its consolidated subsidiaries, unless otherwise noted.

Forward-Looking Statements

This quarterly report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “assume,” “plan,” “seek,” “expect,” “will,” “may,” “should,” “indicate,” “would,” “believe,” “contemplate,” “continue,” “target” and words of similar meaning. These forward-looking statements include, but are not limited to:

statements of our goals, intentions and expectations;
statements regarding our business plans, prospects, financial performance, growth and operating strategies;
statements regarding the quality of our loan and investment portfolios; and
estimates of our risks and future costs and benefits.

These forward-looking statements are based on our current beliefs and expectations and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. We are under no duty to and do not take any obligation to update any forward-looking statements after the date of this report.

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:

general economic conditions, either nationally or in our market areas, that are worse than expected, including potential recessionary conditions;
inflation and changes in the interest rate environment that reduce our margins and yields, the fair value of financial instruments or our level of loan originations, or increase the level of defaults, losses and prepayments on loans we have made and make;
our inability to successfully integrate acquired employees or operations or achieve the expected level of synergies or cost savings;
changes in the level and direction of loan delinquencies and write-offs and changes in estimates of and the methodology calculating the adequacy of the allowance for credit losses;
our ability to access cost-effective funding;
changes in liquidity, including the size and composition of our deposit portfolio and the percentage of uninsured deposits in the portfolio;

29


 

fluctuations in real estate values and both residential and commercial real estate market conditions;
demand for loans and deposits in our market area;
our ability to implement and change our business strategy;
competition among depository and other financial institutions;
adverse changes in the securities or secondary mortgage markets;
changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees, capital requirements and insurance premiums or changes in the fiscal or monetary policies of the U.S. Treasury or Board of Governors of the Federal Reserve System;
the imposition of tariffs or other domestic or international governmental policies;
changes in the quality or composition of our loan or investment portfolios;
technological changes that may be more difficult or expensive than expected;
the failure to maintain current technologies and/or to successfully implement future information technology enhancements;
the inability of third-party providers to perform as expected;
a failure or breach of our operational or security systems or infrastructure, including cyberattacks;
our ability to manage market risk, credit risk and operational risk;
changes in consumer spending, borrowing and savings habits;
changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission or the Public Company Accounting Oversight Board;
the current or anticipated impact of military conflict, terrorism or other geopolitical event;
our ability to retain key employees;
our compensation expense associated with equity allocated or awarded to our employees; and
changes in the financial condition, results of operations or future prospects of issuers of securities that we own.

Because of these and a wide variety of other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements.

Critical Accounting Policies

Certain of our accounting policies are important to the presentation of our financial condition and results of operation, since they require management to make difficult, complex or subjective judgments, some of which may relate to matters that are inherently uncertain. Estimates associated with these policies are susceptible to material changes as a result of changes in facts and circumstances. Facts and circumstances that could affect these judgments include, but are not limited to, changes noted above in "Forward-Looking Statements." Our significant accounting policies are discussed in detail in Note 1 to our Consolidated Financial Statements included elsewhere in this document.

The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies. As an “emerging growth company,” we plan to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. Accordingly, our consolidated financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards.

30


 

Management believes our most critical accounting policies, which involve the most complex or subjective decisions or assessments, are as follows: the determination of the allowance for credit losses, the assessment of the impairment of goodwill and intangible assets and the valuation of our deferred tax assets.

Allowance for Credit Losses: The allowance for credit losses (“ACL”), calculated in accordance with ASC 326, is deducted from the amortized cost basis of loans. The ACL represents an amount that, in management’s judgment, is adequate to absorb the lifetime expected credit losses that may be experienced on outstanding loans at the balance sheet date based on the evaluation of the size and current risk characteristics of the loan portfolio, past events, current conditions, reasonable and supportable forecasts of economic conditions and prepayment experience. The allowance for credit losses is measured and recorded upon the initial recognition of a financial asset. Determination of the adequacy of the allowance is inherently complex and requires the use of significant and highly subjective estimates. Loans are charged-off against the allowance when deemed uncollectible by management. Adjustments to the allowance are reported in our income statement as a component of the provision for credit losses.

In calculating the allowance for credit losses, loans are segmented into pools based upon similar characteristics and risk profiles. Common characteristics and risk profiles include the type of loan, underlying collateral, geographical similarity and historical or expected credit loss patterns. The Company applies two methodologies to estimate the allowance on its pooled portfolio segments: a cohort method based on common characteristics and the weighted average remaining life method. The models related to these methodologies utilize the Company’s historical default and loss experience adjusted for future economic forecasts. The reasonable and supportable forecast period represents a one-year economic outlook for the applicable economic variables.

In some cases, management may determine that an individual loan exhibits unique risk characteristics that differentiate the loan from other loans within our loan pools. In such cases, the loans are evaluated for expected credit losses on an individual basis and excluded from the collective evaluation. Specific allocations of the allowance for credit losses are determined by analyzing, among other things, the borrower’s ability to repay amounts owed, collateral deficiencies, the relative risk rating of the loan and economic conditions affecting the borrower.

Management qualitatively adjusts model results for risk factors that are not considered within our modeling processes but are nonetheless relevant in assessing the expected credit losses within our loan pools. These qualitative factor adjustments may increase or decrease management’s estimate of expected credit losses by a calculated percentage or amount based upon the estimated level of risk. The various risks that may be considered in making qualitative factor adjustments include, among other things: the impact of changes in lending policies and procedures, including changes in underwriting standards and practices for collections, write-offs, and recoveries; actual and expected changes in national, regional, and local economic and business conditions and developments that affect the collectability of the loan pools; changes in the composition and size of the loan portfolio and in the terms of the underlying loans; changes in the experience, ability, and depth of our lending management and staff; changes in volume and severity of past due and nonaccrual assets; changes to the quality of our internal loan review system; the existence, growth, and effect of any concentrations of credit; and regulatory, legal and environmental events. Management believes it uses relevant information available to make determinations about the allowance and that it has established the existing allowance in accordance with GAAP. However, the determination of the allowance requires significant judgment, and estimates of expected lifetime losses in the loan portfolio can vary significantly from the amounts actually observed. While management uses available information to recognize expected losses, future additions to the allowance may be necessary based on changes in the loans comprising the portfolio, changes in the current and forecasted economic conditions, changes to the interest rate environment and changes in the financial condition of borrowers.

Goodwill and Other Intangible Assets: Our intangible assets consist of goodwill and core deposit intangibles. The initial recording of goodwill and other intangible assets requires subjective judgments concerning estimates of the fair value of the acquired assets and assumed liabilities. Goodwill is not amortized but is subject to annual tests for impairment, or more often if events or circumstances indicate it may be impaired. We may elect to perform a qualitative assessment as a part of the annual impairment test. If the qualitative assessment indicates it is more likely than not that the fair value of a reporting unit is less than its carrying amount, or if we elect not to perform a qualitative assessment, then we would be required to perform a quantitative test for goodwill impairment. If the estimated fair value of the reporting unit less than the carrying value, goodwill is impaired and is written down to its estimated fair value.

31


 

During the year ended June 30, 2024, we performed a qualitative assessment of goodwill. Based on that assessment, we determined that it was more likely than not that the reporting unit's fair value was not less than its carrying amount. We concluded that our goodwill was not impaired as of June 30, 2024. As of March 31, 2025, no triggering events were identified and therefore, we did not perform an interim impairment evaluation.

Core deposit intangibles are amortized on an accelerated basis using an estimated life of ten years. The core deposit intangibles are evaluated annually for impairment in accordance with GAAP. An impairment loss will be recognized if the carrying amount of the intangible asset is not recoverable and exceeds fair value. The carrying amount of the intangible asset is not considered recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use of the asset.

Deferred Tax Assets: Income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The measurement of deferred tax assets is reduced by a valuation allowance for the amount of the deferred tax asset that is more likely than not to be realized.

A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.

We recognize interest and/or penalties related to income tax matters in other operating expenses.

Comparison of Financial Condition at March 31, 2025 and June 30, 2024

Total Assets. Total assets increased $53.1 million, or 5.2%, to $1.07 billion at March 31, 2025 from $1.02 billion at June 30, 2024. The increase was primarily driven by new loan originations, resulting in a net increase of $48.9 million in loans receivable and a $16.3 million increase in cash, partially offset by a $10.7 million decrease in securities.

Cash and Cash Equivalents. Cash and cash equivalents increased $16.3 million, or 35.5%, to $62.2 million at March 31, 2025 from $45.9 million at June 30, 2024, primarily due to borrowings of $30.0 million from the Federal Home Loan Bank of New York during the nine months ended March 31, 2025, a $28.5 million increase in deposits and the maturity of securities, offset by increased loan originations.

Securities. Securities held-to-maturity decreased $10.7 million, or 6.9%, to $145.4 million at March 31, 2025 from $156.1 million at June 30, 2024. The decrease was primarily due to principal repayments and maturities.

Loans. Loans receivable, net, increased $48.9 million, or 6.7%, to $780.8 million at March 31, 2025 from $731.9 million at June 30, 2024, driven by an increase in residential mortgage loans of $19.2 million and an increase in multi-family commercial loans of $28.3 million through an increased emphasis on this type of lending. Commercial loans (consisting of multi-family and commercial real estate loans and commercial and industrial loans) accounted for 45.5% of loans at March 31, 2025. For further information about our loans, see "Lending Activities" below.

Bank Owned Life Insurance. Bank owned life insurance increased $783,000, or 2.1%, to $37.9 million at March 31, 2025 from $37.1 million at June 30, 2024 due to an increase in the cash surrender value of the underlying assets.

Goodwill and Intangible Assets. Goodwill and the core deposit intangible asset recognized from the Merger totaled $27.0 million at March 31, 2025 compared to $28.1 million at June 30, 2024. The decrease was due to the amortization of the core deposit intangible.

32


 

Total Liabilities. Total liabilities increased $57.5 million, or 7.0%, to $878.8 million at March 31, 2025 from $821.4 million at June 30, 2024. The increase was primarily due to a $30.0 million advance from the Federal Home Loan Bank of New York and a $28.5 million increase in deposits.

Deposits. Deposits increased $28.5 million, or 3.5%, to $835.6 million at March 31, 2025 from $807.1 million at June 30, 2024. Increases in interest-bearing deposit accounts resulted from the Bank raising rates on certain interest-bearing deposit products in an effort to remain competitive in the market area. At March 31, 2025, $106.0 million, or 12.7%, of total deposits consisted of noninterest-bearing deposits. At March 31, 2025, $133.9 million, or 16.0%, of total deposits were uninsured.

Borrowings. During the nine months ended March 31, 2025, the Bank borrowed $30.0 million from the Federal Home Loan Bank of New York to provide additional liquidity to fund new loans. Such borrowings remained outstanding at March 31, 2025. At June 30, 2024, there were no outstanding borrowings.

Total Equity. Total equity decreased $4.4 million, or 2.2%, to $195.1 million at March 31, 2025 from $199.5 million at June 30, 2024. The decrease 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 of $2.9 million.

Lending Activities

We offer a variety of loans, including residential, commercial real estate, multi-family, commercial and industrial and consumer loans. Historically, a significant portion of our loan portfolio was concentrated in residential loans. The Merger greatly expanded our commercial loan portfolio and commercial lending capabilities. At March 31, 2025, residential mortgage loans comprised 52.8% of our total loan portfolio and commercial loans comprised 45.5%, which largely consisted of multi-family loans.

In the future, we intend to continue to concentrate on ways to compete for a greater share of commercial loan originations in our primary market area.

Loan Portfolio Composition. The following table sets forth the composition of our loan portfolio by type of loan at the dates indicated.

 

 

March 31, 2025

 

 

June 30, 2024

 

 

Amount

 

 

Percent

 

 

Amount

 

 

Percent

 

 

(In thousands)

 

Owner occupied commercial real estate loans

 

$

56,002

 

 

 

7.15

%

 

$

59,968

 

 

 

8.16

%

Other commercial real estate loans

 

 

73,618

 

 

 

9.39

%

 

 

75,782

 

 

 

10.31

%

Multi-family loans

 

 

216,058

 

 

 

27.57

%

 

 

180,364

 

 

 

24.54

%

Commercial and industrial loans

 

 

11,296

 

 

 

1.44

%

 

 

12,522

 

 

 

1.70

%

Total commercial loans

 

 

356,974

 

 

 

45.55

%

 

 

328,636

 

 

 

44.71

%

Residential mortgage loans

 

 

413,918

 

 

 

52.81

%

 

 

394,723

 

 

 

53.70

%

Consumer and other loans

 

 

12,832

 

 

 

1.64

%

 

 

11,658

 

 

 

1.59

%

Total loans

 

 

783,724

 

 

 

100.00

%

 

 

735,017

 

 

 

100.00

%

Allowance for credit losses

 

 

(5,124

)

 

 

 

 

 

(5,229

)

 

 

 

Net deferred loan origination fees

 

 

2,195

 

 

 

 

 

 

2,071

 

 

 

 

Loans, net

 

$

780,795

 

 

 

 

 

$

731,859

 

 

 

 

 

33


 

Contractual Maturities. The following tables set forth the contractual maturities of our total loan portfolio at March 31, 2025. Demand loans, loans having no stated repayment schedule or maturity, and overdraft loans are reported as being due in one year or less. The tables present contractual maturities and do not reflect repricing or the effect of prepayments. Actual maturities may differ.

 

 

Owner
Occupied
Commercial
Real Estate

 

 

Other
Commercial
Real Estate

 

 

Multi-
Family

 

 

Commercial
and
Industrial

 

 

Residential
Mortgage

 

 

Consumer
and Other

 

 

Total

 

 

(In thousands)

 

Amounts due in:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

One year or less

 

$

72

 

 

$

895

 

 

$

120

 

 

$

3,339

 

 

$

157

 

 

$

7,282

 

 

$

11,865

 

After one through five years

 

 

831

 

 

 

6,207

 

 

 

23,752

 

 

 

3,317

 

 

 

6,070

 

 

 

807

 

 

 

40,984

 

After five through 15 years

 

 

17,517

 

 

 

26,843

 

 

 

81,633

 

 

 

2,388

 

 

 

78,422

 

 

 

4,088

 

 

 

210,891

 

More than 15 years

 

 

37,582

 

 

 

39,673

 

 

 

110,553

 

 

 

2,252

 

 

 

329,269

 

 

 

655

 

 

 

519,984

 

Total

 

$

56,002

 

 

$

73,618

 

 

$

216,058

 

 

$

11,296

 

 

$

413,918

 

 

$

12,832

 

 

$

783,724

 

 

Fixed Versus Adjustable-Rate Loans. The following tables sets forth our fixed and adjustable-rate loans at March 31, 2025 that are contractually due after March 31, 2026.

 

 

Due After March 31, 2026

 

 

Fixed

 

 

Adjustable

 

 

Total

 

 

(In thousands)

 

Owner occupied commercial real estate loans

 

$

 

 

$

55,930

 

 

$

55,930

 

Other commercial real estate loans

 

 

 

 

 

72,723

 

 

 

72,723

 

Multi-family loans

 

 

 

 

 

215,938

 

 

 

215,938

 

Commercial and industrial loans

 

 

 

 

 

7,957

 

 

 

7,957

 

Total commercial loans

 

$

 

 

$

352,548

 

 

$

352,548

 

Residential mortgage loans

 

 

323,666

 

 

 

90,095

 

 

 

413,761

 

Consumer and other loans

 

 

2,925

 

 

 

2,625

 

 

 

5,550

 

Total loans

 

$

326,591

 

 

$

445,268

 

 

$

771,859

 

 

Non-Performing and Problem Assets

When a loan is 15 days past due, we send the borrower a late charge notice. If the loan delinquency is not corrected, other forms of collections are implemented, including telephone calls and collection letters. We attempt personal, direct contact with the borrower to determine the reason for the delinquency, to ensure that the borrower understands the terms of the loan and to emphasize the importance of making timely payments. If necessary, subsequent late charges and delinquency notices are issued and the account will be monitored on a regular basis thereafter. By the 90th day of delinquency, we will send the borrower a final demand for payment, after which we may refer the loan to legal counsel to commence foreclosure proceedings. Any of our loan officers can shorten these time frames in consultation with the senior lending officer.

Generally, loans are placed on non-accrual status when payment of principal or interest is 90 days or more delinquent unless the loan is considered well-secured and in the process of collection. Loans are also placed on non-accrual status if collection of principal or interest in full is in doubt. When loans are placed on a non-accrual status, unpaid accrued interest is fully reversed, and further income is recognized only to the extent received. The loan may be returned to accrual status if both principal and interest payments are brought current and factors indicating doubtful collection no longer exist, including performance by the borrower under the loan terms for a six-month period. Our Senior Mortgage Lending Officer reports monitored loans, including all loans rated special mention, substandard, doubtful or loss, to the Board of Directors on a quarterly basis. In addition, management presents a quarterly credit loss allowance analysis to our Board of Directors.

 

34


 

The following table sets forth our loan delinquencies by type and amount at the dates indicated.

 

 

March 31, 2025

 

 

 

Delinquency Status

 

 

30-59 Days
Past Due

 

 

60-89 Days
Past Due

 

 

90 Days or
More Past
Due and
Still
Accruing
Past Due

 

 

Non-
Accrual

 

 

Total
Past
Due

 

 

Total
Current

 

 

Total

 

 

 

(In thousands)

 

Owner occupied commercial
   real estate

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

56,002

 

 

$

56,002

 

Other commercial real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

73,618

 

 

 

73,618

 

Multi-family

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

216,058

 

 

 

216,058

 

Commercial and industrial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11,296

 

 

 

11,296

 

Residential mortgage

 

 

584

 

 

 

 

 

 

 

 

 

 

 

 

584

 

 

 

413,334

 

 

 

413,918

 

Consumer and Other

 

 

2

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

 

12,830

 

 

 

12,832

 

Total

 

$

586

 

 

$

 

 

$

 

 

$

 

 

$

586

 

 

$

783,138

 

 

$

783,724

 

 

 

June 30, 2024

 

 

 

Delinquency Status

 

 

30-59 Days
Past Due

 

 

60-89 Days
Past Due

 

 

90 Days or
More Past
Due and
Still
Accruing
Past Due

 

 

Non-
Accrual

 

 

Total
Past
Due

 

 

Total
Current

 

 

Total

 

 

 

(In thousands)

 

Owner occupied commercial
   real estate

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

59,968

 

 

$

59,968

 

Other commercial real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

75,782

 

 

 

75,782

 

Multi-family

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

180,364

 

 

 

180,364

 

Commercial and industrial

 

 

 

 

 

 

 

 

 

 

 

50

 

 

 

50

 

 

 

12,472

 

 

 

12,522

 

Residential mortgage

 

 

572

 

 

 

 

 

 

 

 

 

 

 

 

572

 

 

 

394,151

 

 

 

394,723

 

Consumer and Other

 

 

40

 

 

 

 

 

 

 

 

 

 

 

 

40

 

 

 

11,618

 

 

 

11,658

 

Total

 

$

612

 

 

$

 

 

$

 

 

$

50

 

 

$

662

 

 

$

734,355

 

 

$

735,017

 

 

Non-Performing Assets. The following table sets forth information regarding our non-performing assets. The Bank had no loan modifications to borrowers experiencing financial difficulty as of March 31, 2025 or June 30, 2024.

 

 

March 31, 2025

 

 

June 30, 2024

 

 

(In thousands)

 

Non-accrual loans:

 

 

 

 

 

 

Residential mortgage loans

 

$

 

 

$

 

Commercial loans

 

 

 

 

 

50

 

Total non-accrual loans

 

 

 

 

 

50

 

Accruing loans past due 90 days or more:

 

 

 

 

 

 

Residential mortgage loans

 

 

 

 

 

 

Total non-performing loans

 

 

 

 

 

50

 

Real estate owned

 

 

 

 

 

 

Total non-performing assets

 

$

 

 

$

50

 

Total non-performing loans to total loans

 

 

%

 

 

0.01

%

Total non-accrual loans to total loans

 

 

%

 

 

0.01

%

Total non-performing assets to total assets

 

 

%

 

 

%

 

35


 

Allowance for Credit Losses

Our allowance for credit losses ("ACL") is maintained at a level necessary to absorb the lifetime expected credit losses. Management, in determining the allowance for credit losses, considers the losses in our loan portfolio and changes in the nature and volume of loan activities, along with the general economic and real estate market conditions. A description of our methodology in establishing our allowance for credit losses is set forth in the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations of SR Bancorp—Critical Accounting Policies-Allowance for Credit Losses” in our Form 10-K as of and for the year ended June 30, 2024 and in this Form 10-Q. The allowance for credit losses as of March 31, 2025 and June 30, 2024 were maintained at levels that represent management’s best estimate of current expected losses in the loan portfolio. However, this analysis process is inherently subjective, as it requires us to make estimates that are susceptible to revisions as more information becomes available. Although we believe that we have established the allowance at levels to absorb current expected losses, future additions may be necessary if economic or other conditions in the future differ from the current environment.

In addition, as an integral part of their examination process, the Federal Deposit Insurance Corporation and the New Jersey Department of Banking and Insurance have authority to periodically review our allowance for credit losses. Such agencies may require that we recognize additions to the allowance based on their judgments of information available to them at the time of their examination.

Allocation of Allowance for Credit Losses. The following tables set forth the allowance for credit losses allocated by loan category and the percent of the allowance in each category to the total allocated allowance at the dates indicated. The allowance for credit losses allocated to each category is not necessarily indicative of future losses in any particular category and does not restrict the use of the allowance to absorb losses in other categories.

 

March 31, 2025

 

 

ACL

 

 

Percent of
ACL
in Each
Category
to Total
Allocated
Allowance

 

 

Percent
of Loans
in Each
Category
to Total
Loans

 

 

ACL to
Total Loans

 

 

(In thousands)

 

Owner occupied commercial real estate loans

 

$

741

 

 

 

14.46

%

 

 

7.15

%

 

 

0.09

%

Other commercial real estate loans

 

 

193

 

 

 

3.77

%

 

 

9.39

%

 

 

0.02

%

Multi-family loans

 

 

1,942

 

 

 

37.90

%

 

 

27.57

%

 

 

0.25

%

Commercial and industrial loans

 

 

132

 

 

 

2.58

%

 

 

1.44

%

 

 

0.02

%

Residential mortgage loans

 

 

1,874

 

 

 

36.57

%

 

 

52.81

%

 

 

0.24

%

Consumer and other loans

 

 

242

 

 

 

4.72

%

 

 

1.64

%

 

 

0.03

%

Total allocated allowance

 

 

5,124

 

 

 

100.00

%

 

 

100.00

%

 

 

0.65

%

Unallocated

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

5,124

 

 

 

 

 

 

 

 

 

 

Allowance to non-performing loans

 

 

 

 

 

 

 

 

 

 

 

 

Allowance to total loans outstanding at
   the end of the year

 

 

0.65

%

 

 

 

 

 

 

 

 

 

Net (charge-offs) recoveries to average
   loans outstanding during the year

 

 

 

 

 

 

 

 

 

 

 

 

 

36


 

 

 

June 30, 2024

 

 

 

ACL

 

 

Percent of
ACL
in Each
Category
to Total
Allocated
Allowance

 

 

Percent
of Loans
in Each
Category
to Total
Loans

 

 

ACL to
Total Loans

 

 

 

(In thousands)

 

Owner occupied commercial real estate loans

 

$

1,331

 

 

 

25.46

%

 

 

8.16

%

 

 

0.18

%

Other commercial real estate loans

 

 

502

 

 

 

9.60

 

 

10.31

 

 

0.07

 

Multi-family loans

 

 

1,998

 

 

 

38.21

 

 

24.54

 

 

0.27

 

Commercial and industrial loans

 

 

146

 

 

 

2.79

 

 

 

1.70

 

 

0.02

 

Residential mortgage loans

 

 

1,175

 

 

 

22.47

 

 

 

53.70

 

 

0.16

 

Consumer and other loans

 

 

77

 

 

 

1.47

 

 

1.59

 

 

0.01

 

Total allocated allowance

 

 

5,229

 

 

 

100.00

%

 

 

100.00

%

 

 

0.71

%

Unallocated

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

5,229

 

 

 

 

 

 

 

 

 

 

Allowance to non-performing loans

 

 

10458.00

%

 

 

 

 

 

 

 

 

 

Allowance to total loans outstanding at
   the end of the year

 

 

0.71

%

 

 

 

 

 

 

 

 

 

Net (charge-offs) recoveries to average
   loans outstanding during the year

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment Activities

General. The goals of our investment policy are to maximize portfolio yield over the long term in a manner that is consistent with minimizing risk, and to meet liquidity needs, pledging requirements, and asset/liability management and interest rate risk strategies. We monitor the balance of our investment securities portfolio based on loan demand, our asset/liability management and interest rate risk analysis and our liquidity needs.

At March 31, 2025 and June 30, 2024, our investment portfolio consisted of securities held-to-maturity, primarily of securities and obligations issued by U.S. government-sponsored enterprises, subordinated debentures issued by financial institutions in the Mid-Atlantic region, collateralized mortgage obligations and foreign government bonds.

 

The following table presents the maturity distribution and weighted average yields of our investment securities portfolio on a contractual maturity basis and our residential mortgage-backed securities at March 31, 2025:

 

 

March 31, 2025

 

 

Held to Maturity

 

 

Amortized
Cost

 

 

Fair Value

 

 

Weighted
Average
Yield

 

 

 

(In thousands)

 

Due within one year

 

$

 

 

$

 

 

 

 

Due after one year through five years

 

 

200

 

 

 

200

 

 

 

4.40

%

Due after five years through ten years

 

 

7,750

 

 

 

7,246

 

 

 

3.10

%

Due after ten years

 

 

 

 

 

 

 

 

 

Residential mortgage-backed securities:

 

 

 

 

 

 

 

 

 

Issued by FNMA and FHLMC

 

 

135,121

 

 

 

111,850

 

 

 

1.66

%

Issued by GNMA

 

 

235

 

 

 

237

 

 

 

4.87

%

CMO

 

 

2,107

 

 

 

1,966

 

 

 

2.50

%

Total

 

$

145,413

 

 

$

121,499

 

 

 

 

 

37


 

 

For additional information regarding our investment securities portfolio, see Note 4 to the Notes to Financial Statements.

Deposit Accounts. Deposits are primarily attracted from within our market area through the offering of a broad selection of deposit instruments, including noninterest-bearing demand deposits (such as checking accounts), interest-bearing demand accounts (such as NOW accounts), savings accounts, money market accounts and certificates of deposit. At March 31, 2025 and June 30, 2024, we held $33.0 million and $22.2 million, respectively, of accounts from a variety of local municipal relationships, which are protected under a New Jersey supplemental insurance program with collateralized assets. At March 31, 2025 and June 30, 2024, we had no brokered deposits.

We also offer a variety of deposit accounts designed for the businesses operating in our market area. Our business banking deposit products include a business checking account designed for small businesses, and savings and money market accounts. We offer bill payment services through our online banking system.

Deposit account terms vary according to the minimum balance required, the time period the funds must remain on deposit and the interest rate, among other factors. In determining the terms of our deposit accounts, we consider the rates offered by our competition, the rates on borrowings, our liquidity needs, profitability to us, and customer preferences and concerns. We generally review our deposit mix and pricing weekly. Our deposit pricing strategy has generally been to offer competitive rates on all types of deposit products, and to periodically offer special rates to attract deposits of a specific type or term.

The following table sets forth the distribution of total deposits by account type at the dates indicated.

 

 

March 31, 2025

 

 

June 30, 2024

 

 

Amount

 

 

Percent

 

 

Average
Rate

 

 

Amount

 

 

Percent

 

 

Average
Rate

 

 

(In thousands)

 

Non-interest-bearing demand
   deposits

 

$

106,020

 

 

 

12.69

%

 

 

%

 

$

108,026

 

 

 

13.39

%

 

 

%

Interest-bearing demand deposits

 

 

306,935

 

 

36.73

 

 

 

1.81

 

 

 

252,880

 

 

 

31.33

 

 

 

1.13

 

Savings and club accounts

 

 

151,196

 

 

 

18.10

 

 

 

0.06

 

 

 

173,375

 

 

 

21.48

 

 

 

0.07

 

Time deposits

 

 

271,433

 

 

32.48

 

 

 

3.65

 

 

 

272,819

 

 

 

33.80

 

 

 

3.81

 

Total

 

$

835,584

 

 

 

100.00

%

 

 

 

 

$

807,100

 

 

 

100.00

%

 

 

 

 

As of March 31, 2025 and June 30, 2024, the aggregate amount of uninsured deposits (deposits in amounts greater than $250,000, which is the maximum amount for federal deposit insurance) was $133.9 million and $109.7 million, respectively. In addition, as of March 31, 2025 and June 30, 2024, the aggregate amount of all our uninsured certificates of deposit was $25.2 million and $21.9 million, respectively. We have no deposits that are uninsured for any reason other than being in excess of the maximum amount for federal deposit insurance. Uninsured deposits of municipalities and local government agencies are protected under a New Jersey supplemental insurance program with collateralized assets.

The following table sets forth the maturity of the uninsured certificates of deposit as of the dates indicated.

 

 

March 31, 2025

 

 

June 30, 2024

 

 

(In thousands)

 

Maturity Period:

 

 

 

 

 

 

Three months or less

 

$

7,216

 

 

$

4,050

 

Over three through six months

 

 

6,027

 

 

 

5,733

 

Over six through twelve months

 

 

11,231

 

 

 

8,813

 

Over twelve months

 

 

749

 

 

 

3,351

 

Total

 

$

25,223

 

 

$

21,947

 

 

38


 

 

Comparison of Operating Results for the Three Months Ended March 31, 2025 and 2024

General. Net income decreased $526,000, or 49.5%, to $537,000 for the three months ended March 31, 2025 from $1.1 million for the three months ended March 31, 2024. Net income for the three months ended March 31, 2025 included $575,000 of net accretion income related to fair value adjustments resulting from the Merger. Net income for the three months ended March 31, 2024 included $242,000 of merger-related costs, offset by $1.4 million of net accretion income related to fair value adjustments.

Interest Income. Interest income decreased $165,000, or 1.4%, to $11.5 million for the three months ended March 31, 2025 from $11.6 million for the three months ended March 31, 2024. The decrease resulted from a $513,000, or 51.1%, decrease in interest income on interest bearing deposits at other banks and a $179,000, or 23.0%, decrease in interest income on securities, partially offset by a $527,000, or 5.4%, increase in interest income on loans. The increase in the interest income on loans was due to a $71.5 million increase in the average balance of loans from $707.1 million for the three months ended March 31, 2024 to $778.6 million for the three months ended March 31, 2025, offset in part by a 23 basis point decrease in the yield on loans in a lower interest rate environment. The decrease in interest income on securities was due to a $48.2 million decrease in the average balance of securities resulting primarily from the sale of $35.4 million of lower-yielding securities in the fourth quarter of fiscal year 2024 as part of a balance sheet repositioning, which resulted in a two basis point increase in the yield notwithstanding the lower interest rate environment.

Interest Expense. Interest expense increased $919,000, or 27.2%, to $4.3 million for the three months ended March 31, 2025 from $3.4 million for the three months ended March 31, 2024, due to a $981,000 increase in interest expense on interest-bearing demand deposits and a $156,000 increase in interest expense on borrowings, offset in part by a decrease in interest expense on certificates of deposit of $203,000 primarily resulting from a 28 basis point decrease in the average rate. The increase in interest expense on interest-bearing demand deposits was due to an increase of $101.5 million, or 49.9%, in the average balance and an increase of 106 basis points in the cost of interest-bearing deposits to 1.75% for the three months ended March 31, 2025 from 0.69% for the three months ended March 31, 2024 as the Bank raised rates on certain interest-bearing deposit products in an effort to remain competitive in the market area. Interest expense on borrowings also increased by $156,000 due to a higher average outstanding balance and higher average rates paid.

 

Net Interest Income. Net interest income decreased $1.1 million, or 13.1%, to $7.2 million for the three months ended March 31, 2025 from $8.3 million for the three months ended March 31, 2024. Net interest rate spread decreased 58 basis points to 2.25% for the three months ended March 31, 2025 from 2.83% for the three months ended March 31, 2024. Net interest margin decreased 49 basis points to 2.82% for the three months ended March 31, 2025 from 3.31% for the three months ended March 31, 2024. Net interest-earning assets decreased $2.9 million, or 1.1%, to $258.8 million for the three months ended March 31, 2025 from $261.8 million for the three months ended March 31, 2024. The decrease in the Bank’s net interest rate spread and net interest margin were primarily a result of the cost of interest-bearing liabilities increasing while the yield on interest-earning assets decreased.

39


 

Average Balances and Yields

The following tables set forth average balance sheets, average yields and costs, and certain other information for the periods indicated. All average balances are daily average balances. The yields set forth below include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense. Deferred loan fees totaled $101,000 and $134,000 for the three months ended March 31, 2025 and 2024, respectively.

 

 

Three Months Ended March 31,

 

 

2025

 

 

2024

 

 

Average
Outstanding
Balance

 

 

Interest

 

 

Average
Yield/Rate
(1)

 

 

Average
Outstanding
Balance

 

 

Interest

 

 

Average
Yield/Rate
(1)

 

 

(In thousands)

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$

778,572

 

 

$

10,346

 

 

 

5.32

%

 

$

707,072

 

 

$

9,819

 

 

 

5.55

%

Securities

 

 

149,628

 

 

 

600

 

 

 

1.60

%

 

 

197,810

 

 

 

779

 

 

 

1.58

%

Other

 

 

90,478

 

 

 

537

 

 

 

2.37

%

 

 

93,741

 

 

 

1,050

 

 

 

4.48

%

Total interest-earning
   assets

 

 

1,018,678

 

 

 

11,483

 

 

 

4.51

%

 

 

998,623

 

 

 

11,648

 

 

 

4.67

%

Noninterest-earning assets

 

 

47,157

 

 

 

 

 

 

 

 

 

78,881

 

 

 

 

 

 

 

Total assets

 

$

1,065,835

 

 

 

 

 

 

 

 

$

1,077,504

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Savings and club accounts

 

$

151,684

 

 

 

23

 

 

 

0.06

%

 

$

239,847

 

 

 

38

 

 

 

0.06

%

Interest-bearing demand
   accounts

 

 

304,808

 

 

 

1,332

 

 

 

1.75

%

 

 

203,285

 

 

 

351

 

 

 

0.69

%

Certificates of deposit

 

 

273,339

 

 

 

2,561

 

 

 

3.75

%

 

 

274,354

 

 

 

2,764

 

 

 

4.03

%

Total interest-bearing
   deposits

 

 

729,831

 

 

 

3,916

 

 

 

2.15

%

 

 

717,486

 

 

 

3,153

 

 

 

1.76

%

Federal Home Loan Bank
   advances

 

 

30,000

 

 

 

383

 

 

 

5.11

%

 

 

 

 

 

 

 

 

 

Other borrowings

 

 

 

 

 

 

 

 

 

 

 

19,355

 

 

 

227

 

 

 

4.69

%

Total interest-bearing
   liabilities

 

 

759,831

 

 

 

4,299

 

 

 

2.26

%

 

 

736,841

 

 

 

3,380

 

 

 

1.83

%

Noninterest-bearing deposits

 

 

104,850

 

 

 

 

 

 

 

 

 

118,535

 

 

 

 

 

 

 

Other noninterest-bearing
   liabilities

 

 

11,715

 

 

 

 

 

 

 

 

 

21,537

 

 

 

 

 

 

 

Total liabilities

 

 

876,396

 

 

 

 

 

 

 

 

 

876,913

 

 

 

 

 

 

 

Equity

 

 

189,439

 

 

 

 

 

 

 

 

 

200,591

 

 

 

 

 

 

 

Total liabilities and
   equity

 

$

1,065,835

 

 

 

 

 

 

 

 

$

1,077,504

 

 

 

 

 

 

 

Net interest income

 

 

 

 

$

7,184

 

 

 

 

 

 

 

 

$

8,268

 

 

 

 

Net interest rate spread

 

 

 

 

 

 

 

 

2.25

%

 

 

 

 

 

 

 

 

2.83

%

Net interest-earning
   assets (2)

 

$

258,847

 

 

 

 

 

 

 

 

$

261,782

 

 

 

 

 

 

 

Net interest margin (3)

 

 

 

 

 

 

 

 

2.82

%

 

 

 

 

 

 

 

 

3.31

%

Average interest-earning
   assets to interest-
   bearing liabilities

 

 

134.07

%

 

 

 

 

 

 

 

 

135.53

%

 

 

 

 

 

 

 

(1)
Annualized.
(2)
Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(3)
Net interest margin represents net interest income divided by average total interest-earning assets.

40


 

Rate/Volume Analysis

The following tables present the effects of changing rates and volumes on our net interest income for the periods indicated. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The total column represents the sum of the prior columns. For purposes of these tables, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately based on the changes due to rate and the changes due to volume. There were no out-of-period items or adjustments required to be excluded from the tables below.

 

 

Three Months Ended March 31,

 

 

 

2025 vs. 2024

 

 

Increase (Decrease)

 

 

Volume

 

 

Rate

 

 

Total Change

 

 

(In thousands)

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

Loans

 

$

993

 

 

$

(466

)

 

$

527

 

Securities

 

 

(190

)

 

 

11

 

 

 

(179

)

Other

 

 

(37

)

 

 

(476

)

 

 

(513

)

Total interest-earning assets

 

 

766

 

 

 

(931

)

 

 

(165

)

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

Savings and club accounts

 

 

(14

)

 

 

(1

)

 

 

(15

)

Interest-bearing accounts

 

 

175

 

 

 

806

 

 

 

981

 

Certificates of deposit

 

 

(10

)

 

 

(193

)

 

 

(203

)

Federal Home Loan Bank advances

 

 

383

 

 

 

 

 

 

383

 

Other borrowings

 

 

(227

)

 

 

 

 

 

(227

)

Total interest-bearing liabilities

 

 

(76

)

 

 

995

 

 

 

919

 

Change in net interest income

 

$

842

 

 

$

(1,926

)

 

$

(1,084

)

 

Provision for Credit Losses. The Bank establishes provisions for credit losses, which are charged to operations to maintain the allowance for credit losses at a level it considers necessary to absorb probable credit losses attributable to loans that are reasonably estimable at the balance sheet date. In determining the level of the allowance for credit losses, the Bank considers, among other things, past and current loss experience, evaluations of real estate collateral, economic conditions, the amount and type of lending, adverse situations that may affect a borrower’s ability to repay a loan and the levels of delinquent, classified and criticized loans. The amount of the allowance is based on estimates and the ultimate losses may vary from such estimates as more information becomes available or conditions change. The Bank assesses the allowance for credit losses and records provisions for credit losses on a quarterly basis.

The Bank recorded a provision for credit losses of $37,000 during the three months ended March 31, 2025 reflecting the loan growth during the period, compared to a recovery for credit losses of $142,000 for the three months ended March 31, 2024. The Bank had no charge-offs for the three months ended March 31, 2025 and no non-performing loans at March 31, 2025 compared to no charge-offs for the three months ended March 31, 2024 and $220,000 of non-performing loans at March 31, 2024. The Bank’s allowance for credit losses as a percentage of total loans was 0.65% at March 31, 2025 compared to 0.72% at March 31, 2024.

41


 

Noninterest Income. Noninterest income was as follows:

 

 

Three Months Ended March 31,

 

 

Change

 

 

2025

 

 

2024

 

 

Amount

 

 

Percent

 

 

(In thousands)

 

Service charges and fees on deposit

 

$

230

 

 

$

193

 

 

$

37

 

 

 

19.2

%

Increase in cash surrender value of bank-
   owned life insurance

 

 

259

 

 

 

247

 

 

 

12

 

 

 

4.9

%

Fees and service charges on loans

 

 

35

 

 

 

36

 

 

 

(1

)

 

 

(2.8

)%

Unrealized gain on equity securities

 

 

3

 

 

 

1

 

 

 

2

 

 

 

200.0

%

Realized gain on sale of securities

 

 

 

 

 

19

 

 

 

(19

)

 

 

(100.0

)%

Other

 

 

14

 

 

 

20

 

 

 

(6

)

 

 

(30.0

)%

Total noninterest income

 

$

541

 

 

$

516

 

 

$

25

 

 

 

4.8

%

 

Noninterest income increased $25,000, or 4.8%, to $541,000 for the three months ended March 31, 2025 from $516,000 for the three months ended March 31, 2024, primarily as a result of an increase of $37,000 in service charges and fees, offset by a decrease of $19,000 in realized gain on sale of investments.

Noninterest Expense. Noninterest expense was as follows:

 

 

Three Months Ended March 31,

 

 

Change

 

 

2025

 

 

2024

 

 

Amount

 

 

Percent

 

 

(In thousands)

 

Salaries and employee benefits

 

$

3,681

 

 

$

3,631

 

 

$

50

 

 

 

1.4

%

Occupancy

 

 

557

 

 

 

772

 

 

 

(215

)

 

 

(27.8

)%

Furniture and equipment

 

 

346

 

 

 

285

 

 

 

61

 

 

 

21.4

%

Data processing

 

 

552

 

 

 

951

 

 

 

(399

)

 

 

(42.0

)%

Advertising

 

 

97

 

 

 

75

 

 

 

22

 

 

 

29.3

%

Federal deposit insurance premiums

 

 

120

 

 

 

120

 

 

 

 

 

 

 

Directors fees

 

 

93

 

 

 

103

 

 

 

(10

)

 

 

(9.7

)%

Professional fees

 

 

467

 

 

 

357

 

 

 

110

 

 

 

30.8

%

Insurance

 

 

133

 

 

 

165

 

 

 

(32

)

 

 

(19.4

)%

Telephone, postage and supplies

 

 

197

 

 

 

210

 

 

 

(13

)

 

 

(6.2

)%

Other expenses

 

 

819

 

 

 

902

 

 

 

(83

)

 

 

(9.2

)%

Total noninterest expense

 

$

7,062

 

 

$

7,571

 

 

$

(509

)

 

 

(6.7

)%

 

Noninterest expense decreased $509,000, or 6.7%, to $7.1 million for the three months ended March 31, 2025 from $7.6 million for the three months ended March 31, 2024, due to a $399,000, or 42.0%, decrease in data processing expenses, as the 2024 period included $242,000 of one-time deconversion fees related to the Merger, and a $215,000, or 27.8%, decrease in occupancy expenses driven by the consolidation of branch offices, offset by an increase in professional fees of $110,000 primarily due to the costs of becoming compliant with the additional audit and reporting requirements under FDICIA, attendant with exceeding the $1 billion asset threshold.

Income Tax Expense. The provision for income taxes was $89,000 for the three months ended March 31, 2025, compared to $292,000 for the three months ended March 31, 2024. The Bank’s effective tax rate was 14.2% for the three months ended March 31, 2025 compared to 21.5% for the three months ended March 31, 2024.

42


 

Comparison of Operating Results for the Nine Months Ended March 31, 2025 and 2024

General. Net income increased $10.7 million, or 137.4%, to $2.9 million for the nine months ended March 31, 2025 from a net loss of $7.8 million for the nine months ended March 31, 2024. Net income for the nine months ended March 31, 2025 included $2.4 million of net accretion income related to fair value adjustments resulting from the Merger. Net income for the nine months ended March 31, 2024 included a $5.4 million charitable contribution and $4.1 million of merger-related costs, offset by $2.9 million of net accretion income related to fair value adjustments.

Interest Income. Interest income increased $5.0 million, or 17.0%, to $34.5 million for the nine months ended March 31, 2025 from $29.5 million for the nine months ended March 31, 2024 due to a 22 basis point increase in the yield on interest-earning assets and a $103.2 million increase in the average balance of interest-earning assets. The increase resulted from a $7.3 million, or 30.8%, increase in interest income on loans due to the increased size of the loan portfolio, largely as a result of the Merger as well as subsequent loan growth, and a higher average yield on the loan portfolio due to higher market rates and an increased proportion of higher-yielding commercial real estate loans, offset by a $641,000 decrease in interest income on securities, and a $1.7 million decrease in interest income from other interest-earning assets, in each case due to lower average balances and a lower interest rate environment. The decrease in interest income on securities was due to a $48.4 million decrease in the average balance of securities, resulting primarily from the sale of $35.4 million of lower-yielding securities in the fourth quarter of fiscal year 2024 as part of a balance sheet repositioning, that resulted in only a three basis point decrease in the average yield on securities notwithstanding the lower interest rate environment.

Interest Expense. Interest expense increased $4.4 million, or 55.1%, to $12.5 million for the nine months ended March 31, 2025 from $8.0 million for the nine months ended March 31, 2024 primarily due to a $3.0 million increase in interest expense on demand accounts. Interest expense on interest-bearing demand deposits increased due to an increase of $107.9 million in the average balance and an increase of 126 basis points in the cost of interest-bearing deposits to 1.63% for the nine months ended March 31, 2025 from 0.37% for the nine months ended March 31, 2024 as the Bank raised rates on certain interest-bearing deposit products in an effort to remain competitive in the market area. Interest expense on certificates of deposit increased $1.3 million as the average balance on certificates of deposit increased $34.0 million, or 14.0%, to $275.8 million for the nine months ended March 31, 2025 from $241.8 million for the nine months ended March 31, 2024 due to the highly competitive interest rate environment in our market area. Interest expense on borrowings also increased by $135,000 due to a higher average outstanding balance and higher average rates paid.

Net Interest Income. Net interest income increased $585,000, or 2.7%, to $22.0 million for the nine months ended March 31, 2025 from $21.4 million for the nine months ended March 31, 2024. Net interest rate spread decreased 40 basis points to 2.34% for the nine months ended March 31, 2025 from 2.74% for the nine months ended March 31, 2024. Net interest margin decreased 25 basis points to 2.93% for the nine months ended March 31, 2025 from 3.18% for the nine months ended March 31, 2024. Net interest-earning assets increased $22.9 million, or 9.6%, to $262.2 million for the nine months ended March 31, 2025 from $239.3 million for the nine months ended March 31, 2024. The decreases in the Bank’s net interest rate spread and net interest margin were primarily a result of the cost of interest-bearing liabilities increasing at a higher rate than the yield on interest-earning assets.

43


 

Average Balances and Yields

The following tables set forth average balance sheets, average yields and costs, and certain other information for the periods indicated. All average balances are daily average balances. The yields set forth below include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense. Deferred loan fees totaled $168,000 and $250,000 for the nine months ended March 31, 2025 and 2024, respectively.

 

 

Nine Months Ended March 31,

 

 

2025

 

 

2024

 

 

Average
Outstanding
Balance

 

 

Interest

 

 

Average
Yield/Rate
(1)

 

 

Average
Outstanding
Balance

 

 

Interest

 

 

Average
Yield/Rate
(1)

 

 

(In thousands)

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$

765,989

 

 

$

31,069

 

 

 

5.41

%

 

$

607,947

 

 

$

23,760

 

 

 

5.21

%

Securities

 

 

153,419

 

 

 

1,848

 

 

 

1.61

%

 

 

201,799

 

 

 

2,489

 

 

 

1.64

%

Other

 

 

83,665

 

 

 

1,578

 

 

 

2.51

%

 

 

90,070

 

 

 

3,228

 

 

 

4.78

%

Total interest-earning
   assets

 

 

1,003,073

 

 

 

34,495

 

 

 

4.59

%

 

 

899,816

 

 

 

29,477

 

 

 

4.37

%

Noninterest-earning assets

 

 

48,887

 

 

 

 

 

 

 

 

 

68,098

 

 

 

 

 

 

 

Total assets

 

$

1,051,960

 

 

 

 

 

 

 

 

$

967,914

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Savings and club accounts

 

$

155,746

 

 

 

71

 

 

 

0.06

%

 

$

219,611

 

 

 

84

 

 

 

0.05

%

Interest-bearing demand
   accounts

 

 

287,152

 

 

 

3,500

 

 

 

1.63

%

 

 

179,242

 

 

 

504

 

 

 

0.37

%

Certificates of deposit

 

 

275,776

 

 

 

8,065

 

 

 

3.90

%

 

 

241,804

 

 

 

6,750

 

 

 

3.72

%

Total interest-bearing
   deposits

 

 

718,674

 

 

 

11,636

 

 

 

2.16

%

 

 

640,657

 

 

 

7,338

 

 

 

1.53

%

Federal Home Loan Bank
   advances

 

 

22,206

 

 

 

842

 

 

 

5.06

%

 

 

 

 

 

 

 

 

 

Other borrowings

 

 

 

 

 

 

 

 

 

 

 

19,887

 

 

 

707

 

 

 

4.74

%

Total interest-bearing
   liabilities

 

 

740,880

 

 

 

12,478

 

 

 

2.25

%

 

 

660,544

 

 

 

8,045

 

 

 

1.62

%

Noninterest-bearing deposits

 

 

104,975

 

 

 

 

 

 

 

 

 

110,281

 

 

 

 

 

 

 

Other noninterest-bearing
   liabilities

 

 

13,921

 

 

 

 

 

 

 

 

 

18,832

 

 

 

 

 

 

 

Total liabilities

 

 

859,776

 

 

 

 

 

 

 

 

 

789,657

 

 

 

 

 

 

 

Equity

 

 

192,184

 

 

 

 

 

 

 

 

 

178,257

 

 

 

 

 

 

 

Total liabilities and
   equity

 

$

1,051,960

 

 

 

 

 

 

 

 

$

967,914

 

 

 

 

 

 

 

Net interest income

 

 

 

 

$

22,017

 

 

 

 

 

 

 

 

$

21,432

 

 

 

 

Net interest rate spread

 

 

 

 

 

 

 

 

2.34

%

 

 

 

 

 

 

 

 

2.74

%

Net interest-earning
   assets (2)

 

$

262,193

 

 

 

 

 

 

 

 

$

239,271

 

 

 

 

 

 

 

Net interest margin (3)

 

 

 

 

 

 

 

 

2.93

%

 

 

 

 

 

 

 

 

3.18

%

Average interest-earning
   assets to interest-
   bearing liabilities

 

 

135.39

%

 

 

 

 

 

 

 

 

136.22

%

 

 

 

 

 

 

 

(1)
Annualized.
(2)
Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(3)
Net interest margin represents net interest income divided by average total interest-earning assets.

44


 

Rate/Volume Analysis

The following tables present the effects of changing rates and volumes on our net interest income for the periods indicated. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The total column represents the sum of the prior columns. For purposes of these tables, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately based on the changes due to rate and the changes due to volume. There were no out-of-period items or adjustments required to be excluded from the tables below.

 

 

Nine Months Ended March 31,

 

 

 

2025 vs. 2024

 

 

Increase (Decrease)

 

 

Volume

 

 

Rate

 

 

Total Change

 

 

(In thousands)

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

Loans

 

$

6,177

 

 

$

1,132

 

 

$

7,309

 

Securities

 

 

(597

)

 

 

(44

)

 

 

(641

)

Other

 

 

(230

)

 

 

(1,420

)

 

 

(1,650

)

Total interest-earning assets

 

 

5,350

 

 

 

(332

)

 

 

5,018

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

Savings and club accounts

 

 

(24

)

 

 

11

 

 

 

(13

)

Interest-bearing accounts

 

 

303

 

 

 

2,693

 

 

 

2,996

 

Certificates of deposit

 

 

948

 

 

 

367

 

 

 

1,315

 

Federal Home Loan Bank advances

 

 

842

 

 

 

 

 

 

842

 

Other borrowings

 

 

(707

)

 

 

 

 

 

(707

)

Total interest-bearing liabilities

 

 

520

 

 

 

3,913

 

 

 

4,433

 

Change in net interest income

 

$

4,830

 

 

$

(4,245

)

 

$

585

 

 

Provision for Credit Losses. The Bank recorded a recovery for credit losses of $105,000 for the nine months ended March 31, 2025 as compared to a provision for credit losses of $3.9 million for the nine months ended March 31, 2024. The recovery reflects updates made to model assumptions in the calculation of the Bank's allowance for credit losses. The Bank had no charge-offs during the nine months ended March 31, 2025 and no non-performing loans at March 31, 2025 compared to no charge-offs for the nine months ended March 31, 2024 and $220,000 of non-performing loans at March 31, 2024. The Bank’s allowance for credit losses as a percentage of total loans was 0.65% at March 31, 2025 compared to 0.72% at March 31, 2024.

Noninterest Income. Noninterest income was as follows:

 

 

Nine Months Ended March 31,

 

 

Change

 

 

2025

 

 

2024

 

 

Amount

 

 

Percent

 

 

(In thousands)

 

Service charges and fees on deposit

 

$

782

 

 

$

576

 

 

$

206

 

 

 

35.8

%

Increase in cash surrender value of bank-
   owned life insurance

 

 

783

 

 

 

655

 

 

 

128

 

 

 

19.5

%

Fees and service charges on loans

 

 

128

 

 

 

47

 

 

 

81

 

 

 

172.3

%

Unrealized gain on equity securities

 

 

7

 

 

 

3

 

 

 

4

 

 

 

133.3

%

Realized gain on sale of securities

 

 

 

 

 

33

 

 

 

(33

)

 

 

(100.0

)%

Realized gain on sale of loans

 

 

51

 

 

 

 

 

 

51

 

 

 

100.0

%

Other

 

 

214

 

 

 

80

 

 

 

134

 

 

 

167.5

%

Total noninterest income

 

$

1,965

 

 

$

1,394

 

 

$

571

 

 

 

41.0

%

 

45


 

Noninterest income increased $571,000, or 41.0%, to $2.0 million for the nine months ended March 31, 2025 from $1.4 million for the nine months ended March 31, 2024, primarily as a result of an increase of $206,000 in service charges and fees, and a $128,000 increase in the cash surrender value of bank owned life insurance resulting from an increase in the average balance of the underlying assets, for the nine months ended March 31, 2025 compared to the nine months ended March 31, 2024.

Noninterest Expense. Noninterest expense was as follows:

 

 

Nine Months Ended March 31,

 

 

Change

 

 

2025

 

 

2024

 

 

Amount

 

 

Percent

 

 

(In thousands)

 

Salaries and employee benefits

 

$

10,288

 

 

$

12,050

 

 

$

(1,762

)

 

 

(14.6

)%

Occupancy

 

 

1,681

 

 

 

1,674

 

 

 

7

 

 

 

0.4

%

Furniture and equipment

 

 

924

 

 

 

674

 

 

 

250

 

 

 

37.1

%

Data processing

 

 

1,642

 

 

 

2,392

 

 

 

(750

)

 

 

(31.4

)%

Advertising

 

 

264

 

 

 

204

 

 

 

60

 

 

 

29.4

%

Federal deposit insurance premiums

 

 

360

 

 

 

348

 

 

 

12

 

 

 

3.4

%

Directors fees

 

 

287

 

 

 

288

 

 

 

(1

)

 

 

(0.3

)%

Professional fees

 

 

1,423

 

 

 

1,775

 

 

 

(352

)

 

 

(19.8

)%

Insurance

 

 

451

 

 

 

389

 

 

 

62

 

 

 

15.9

%

Telephone, postage and supplies

 

 

569

 

 

 

391

 

 

 

178

 

 

 

45.5

%

Other expenses

 

 

2,497

 

 

 

7,799

 

 

 

(5,302

)

 

 

(68.0

)%

Total noninterest expense

 

$

20,386

 

 

$

27,984

 

 

$

(7,598

)

 

 

(27.2

)%

 

Noninterest expense decreased $7.6 million, or 27.2%, to $20.4 million for the nine months ended March 31, 2025 from $28.0 million for the nine months ended March 31, 2024, primarily as a result of the $5.4 million charitable contribution made during the nine months ended March 31, 2024, a $1.8 million, or 14.6%, decrease in salaries and employee benefits resulting from one-time change in control payments incurred during the nine months ended March 31, 2024 and a $750,000, or 31.4%, decrease in data processing expense due to a $414,000 early termination fee and a $242,000 deconversion fee incurred during the nine months ended March 31, 2024, all related to the Merger.

Income Tax Expense. The provision for income taxes was $776,000 for the nine months ended March 31, 2025, compared to a benefit of $1.2 million for the nine months ended March 31, 2024, resulting from a net operating loss due to Merger related expenses. The Bank’s effective tax rate was 21.0% for the nine months ended March 31, 2025 compared to 13.7% for the nine months ended March 31, 2024.

Market Risk

General. Our most significant form of market risk is interest rate risk because, as a financial institution, the majority of our assets and liabilities are sensitive to changes in interest rates. Therefore, a principal part of our operations is to manage interest rate risk and limit the exposure of our financial condition and results of operations to changes in market interest rates. Our ALCO/Investment Committee, which consists of members of management, is responsible for evaluating the interest rate risk inherent in our assets and liabilities, for determining the level of risk that is appropriate, given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the policy and guidelines approved by our Board of Directors. We currently utilize a third-party modeling program, prepared on a quarterly basis, to evaluate our sensitivity to changing interest rates.

We have sought to manage our interest rate risk in order to minimize the exposure of our earnings and capital to changes in interest rates. We have implemented the following strategies to manage our interest rate risk:

growing transaction deposit accounts;
rebalancing our loan portfolio to include higher-yielding, shorter-term commercial real estate loans;

46


 

utilizing our investment securities portfolio as part of our balance sheet asset and liability and interest rate risk management strategy to reduce the impact of movements in interest rates on net interest income and economic value of equity; and
continuing to price our one-to-four family residential real estate loan products in a way that encourages borrowers to select our adjustable-rate loans as opposed to longer-term, fixed-rate loans.

By following these strategies, we believe that we are better positioned to react to changes in market interest rates.

We generally do not engage in hedging activities, such as engaging in futures or options, or investing in high-risk mortgage derivatives, such as collateralized mortgage obligation residual interests, real estate mortgage investment conduit residual interests or stripped mortgage-backed securities.

Economic Value of Equity. We compute amounts by which the net present value of our cash flow from assets, liabilities and off-balance sheet items (economic value of equity “EVE”) would change in the event of a range of assumed changes in market interest rates. We measure potential change in our EVE through the use of a financial model. This model uses a discounted cash flow analysis and an option-based pricing approach to measure the interest rate sensitivity of net portfolio value. A basis point equals one-hundredth of one percent, and 100 basis points equals one percent. An increase in interest rates from 3% to 4% would mean, for example, a 100-basis point increase in the “Basis Point Change in Interest Rates” column below.

The table below sets forth, as of March 31, 2025, the calculation of the estimated changes in our EVE that would result from the designated immediate changes in the United States Treasury yield curve.

 

At March 31, 2025

 

Change in Interest Rates

 

 

 

 

Estimated Increase (Decrease) in EVE

 

(basis points)(1)

 

Estimated EVE(2)

 

 

Amount

 

 

Percent

 

(In thousands)

 

+400

 

$

105,237

 

 

$

(88,160

)

 

 

(45.58

)%

+300

 

 

130,190

 

 

 

(63,206

)

 

 

(32.68

)%

+200

 

 

154,697

 

 

 

(38,699

)

 

 

(20.01

)%

+100

 

 

178,000

 

 

 

(15,397

)

 

 

(7.96

)%

 

 

193,397

 

 

 

 

 

 

 

-100

 

 

203,263

 

 

 

9,867

 

 

 

5.10

%

-200

 

 

208,389

 

 

 

14,992

 

 

 

7.75

%

-300

 

 

209,902

 

 

 

16,505

 

 

 

8.53

%

-400

 

 

208,074

 

 

 

14,677

 

 

 

7.59

%

 

(1)
Assumes an immediate uniform change in interest rates at all maturities.
(2)
EVE is the discounted present value of expected cash flows from assets, liabilities and off-balance sheet contracts.

The table above indicates that at March 31, 2025, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would experience a 20.01% decrease in EVE, and in the event of an instantaneous 200 basis point decrease in interest rates, we would experience a 7.75% increase in EVE.

47


 

Change in Net Interest Income. The following table sets forth, at March 31, 2025, the calculation of the estimated changes in our net interest income (“NII”) that would result from the designated immediate changes in the United States Treasury yield curve.

 

At March 31, 2025

 

Change in Interest
Rates (basis
points)
(1)

 

Net Interest
Income Year 1
Forecast

 

 

Year 1
Change
From Level

 

 

Net Interest
Income Year 2
Forecast

 

 

Year 2
Change
From Level

 

(In thousands)

 

+400

 

$

26,126

 

 

$

(6,563

)

 

$

31,343

 

 

$

(5,311

)

+300

 

 

28,029

 

 

 

(4,660

)

 

 

33,339

 

 

 

(3,315

)

+200

 

 

30,474

 

 

 

(2,215

)

 

 

36,242

 

 

 

(412

)

+100

 

 

33,238

 

 

 

550

 

 

 

38,344

 

 

 

1,690

 

 

 

32,688

 

 

 

 

 

 

36,654

 

 

 

 

-100

 

 

31,369

 

 

 

(1,320

)

 

 

33,302

 

 

 

(3,353

)

-200

 

 

29,801

 

 

 

(2,888

)

 

 

29,462

 

 

 

(7,192

)

-300

 

 

27,918

 

 

 

(4,771

)

 

 

25,026

 

 

 

(11,628

)

-400

 

 

25,688

 

 

 

(7,000

)

 

 

20,086

 

 

 

(16,568

)

 

The table above indicates that at March 31, 2025, we would have experienced a 6.77% decrease in NII in the event of an instantaneous parallel 200 basis point increase in market interest rates and a 8.83% decrease in NII in the event of an instantaneous 200 basis point decrease in market interest rates.

Certain shortcomings are inherent in the methodologies used in the above interest rate risk measurements. Modeling changes require making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. The above table assumes that the composition of our interest sensitive assets and liabilities existing at the date indicated remains constant uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. Accordingly, although the table provides an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on our NPV and will differ from actual results.

Liquidity and Capital Resources

Liquidity is the ability to fund assets and meet obligations as they come due. Our primary sources of funds consist of deposit inflows, loan repayments, and repayments from investment securities. In addition, we have the ability to borrow in the wholesale markets or from the Federal Home Loan Bank of New York. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions and competition. Our ALCO/Investment Committee is responsible for establishing and monitoring our liquidity targets and strategies in order to ensure that sufficient liquidity exists for meeting the borrowing needs and deposit withdrawals of our customers as well as unanticipated contingencies. We seek to maintain a ratio of liquid assets (including cash and federal funds sold) as a percentage of total deposits ranging between 4% and 30%. At March 31, 2025, this ratio was 7.4%. We believe that we have sufficient sources of liquidity to satisfy our short- and long-term liquidity needs as of March 31, 2025.

We regularly adjust our investments in liquid assets based upon our assessment of:

(i)
expected loan demand;
(ii)
expected deposit flows;
(iii)
yields available on interest-earning deposits and securities; and
(iv)
the objectives of our asset/liability management program.

Excess cash is invested generally in interest-earning deposits and short- and intermediate-term securities.

48


 

Our most liquid assets are cash and cash equivalents. The levels of these assets depend on our operating, financing and investing activities during any given period. At March 31, 2025, cash and cash equivalents totaled $62.2 million.

At March 31, 2025, we had $58.7 million in outstanding loan commitments and $37.1 million of unused lines of credit. Certificates of deposit due within one year of March 31, 2025 totaled $246.8 million, or 29.5%, of total deposits. If these deposits do not remain with us, we will be required to seek other funding sources, including loan sales, other deposit products, including replacement certificates of deposit, brokered deposits, securities sold under agreements to repurchase (repurchase agreements) or advances from the Federal Home Loan Bank of New York and other borrowing sources. Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the certificates of deposit due on or after March 31, 2026. We believe, however, based on past experience that a significant portion of such deposits will remain with us. We have the ability to attract and retain deposits by adjusting the interest rates offered.

Our cash flows are derived from operating activities, investing activities and financing activities as reported in our Consolidated Statements of Cash Flows included in our Consolidated Financial Statements.

Our primary investing activities are originating and purchasing loans and purchasing mortgage-backed securities. During the nine months ended March 31, 2025, we originated $77.2 million of loans and purchased $31.0 million. We had no purchases of securities classified as held-to-maturity during the nine months ended March 31, 2025.

Financing activities consist primarily of activity in deposit accounts, borrowings and repurchases of common stock. Deposits increased $28.5 million, or 3.5%, to $835.6 million at March 31, 2025 from $807.1 million at June 30, 2024 due primarily to increases in interest-bearing deposit accounts that were offset in part by decreases in non-maturity savings accounts due in part to the Bank having raised rates on certain interest-bearing deposit products in an effort to remain competitive in the market area.

We had outstanding borrowings of $30.0 million as of March 31, 2025 and none as of June 30, 2024. We repurchased $7.3 million of our common stock in the nine-month period ended March 31, 2025.

Somerset Regal Bank is subject to various regulatory capital requirements, including a risk-based capital measure. The risk-based capital guidelines include both a definition of capital and a framework for calculating risk-weighted assets by assigning balance sheet assets and off-balance sheet items to broad risk categories. At March 31, 2025, Somerset Regal Bank exceeded all regulatory capital requirements. Somerset Regal Bank is considered “well capitalized” under regulatory guidelines. See Note 13 of the Notes to the Consolidated Financial Statements.

The net proceeds from the offering significantly increased our capital resources. Our financial condition and results of operations were enhanced by the net proceeds from the offering, resulting in increased net interest-earning assets and net interest income. However, due to the increase in equity resulting from the net proceeds raised in the offering, our return on equity was adversely affected following the offering until such excess funds can be deployed.

Recent Accounting Pronouncements

For a discussion of the impact of recent accounting pronouncements, see Note 1 of the Notes to the Consolidated Financial Statements.

Impact of Inflation and Changing Prices

Our consolidated financial statements and related notes have been prepared in accordance with generally accepted accounting principles (“GAAP”). GAAP generally requires the measurement of financial position and operating results in terms of historical dollars without consideration for changes in the relative purchasing power of money over time due to inflation. The impact of inflation is reflected in the increased cost of our operations. Unlike industrial companies, our assets and liabilities are primarily monetary in nature. As a result, changes in market interest rates have a greater impact on our performance than the effects of inflation.

49


 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

For information regarding material risk, see “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation—Market Risk.”

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Management is responsible for the disclosure controls and procedures of the Company. Disclosure controls and procedures are controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods required by the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be so disclosed by an issuer is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial and Accounting Officer), of the effectiveness of the design and operation of the Corporation’s disclosure controls and procedures. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of March 31, 2025.

Changes in Internal Control over Financial Reporting

There were no changes in the Company's internal control over financial reporting (as defined in Rule 13a-15(f)) during the quarter ended March 31, 2025 that materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

50


 

PART II—OTHER INFORMATION

Periodically, there have been various claims and lawsuits against us, such as claims to enforce liens, condemnation proceedings on properties in which we hold security interests, claims involving the making and servicing of real property loans and other issues incident to our business. We are not a party to any pending legal proceedings that we believe would have a material adverse effect on our financial condition, results of operations or cash flows.

Item 1A. Risk Factors.

There have been no material changes in risk factors applicable to the Company from those disclosed in “Risk Factors” in Item 1A of the Company’s Annual Report on Form 10-K for the year ended June 30, 2024.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The Company did not have any unregistered sales of equity securities during the three months ended March 31, 2025. The table below summarizes the number of shares of the Company’s common stock that were repurchased during the three months ended March 31, 2025.

 

 

 

Total
Number
of Shares
Purchased
(1)

 

 

Average
Price Paid
per Share

 

 

Total
Shares
Purchased
as Part of
Publicly
Announced
Program
(1)

 

 

Maximum
Number of
Shares that
May Yet Be
Purchased
Under the
Program
(1)

 

January 1 - January 31, 2025

 

 

177,992

 

 

$

11.98

 

 

 

177,992

 

 

 

425,744

 

February 1 - February 28, 2025

 

 

65,624

 

 

 

12.34

 

 

 

65,624

 

 

 

360,120

 

March 1 - March 31, 2025

 

 

36,788

 

 

 

11.77

 

 

 

36,788

 

 

 

323,332

 

Three months ended March 31, 2025

 

 

280,404

 

 

 

 

 

 

280,404

 

 

 

 

 

(1)
On September 20, 2024, the Company adopted a program to repurchase up to 950,793 shares of its common stock, which is approximately 10% of its outstanding common stock. Shares may be repurchased in open market or private transactions, through block trades or pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities and Exchange Commission. The timing and amount of any repurchases will depend on a number of factors, including the availability of stock, general market conditions, the trading price of the stock, alternative uses for capital, and the Company’s financial performance. Open market purchases will be made in accordance with Rule 10b-18 of the Securities and Exchange Commission and other applicable legal requirements. The Company is not obligated to repurchase any particular number of shares or any shares in any specific time period. The program will expire on September 19, 2025.

Item 3. Defaults Upon Senior Securities.

Not applicable

Item 4. Mine Safety Disclosures.

Not applicable

51


 

Item 5. Other Information.

Securities Trading Plans of Directors and Executive Officers

During the three months ended March 31, 2025, none of our directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of the Corporation's securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.

Item 6. Exhibits.

 

Exhibit

Number

Description

3.1

 

Amended and Restated Articles of Incorporation of SR Bancorp, Inc. (Incorporated by reference to the Registrant's Registration Statement on Form S-1/A (File No. 333-270489) as filed on July 10, 2023)

3.2

 

Amended and Restated Bylaws of SR Bancorp, Inc. (Incorporated by reference to the Registrant's Annual Report on Form 10-K (File No. 001-41808) filed on September 28, 2023)

31.1*

Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*

Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*

Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*

Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS

Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.

101.SCH

 

Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

* Filed herewith.

52


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

SR Bancorp, Inc.

Date: May 15, 2025

By:

/s/ William P. Taylor

William P. Taylor

Chief Executive Officer

 

Date: May 15, 2025

By:

/s/ Harris M. Faqueri

 

 

 

Harris M. Faqueri

 

 

 

Vice President and Chief

 

 

 

Financial Officer

 

53