Equibles

10-Q

SR Bancorp, Inc. (SRBK)

10-Q 2026-02-13 For: 2025-12-31
View Original
Added on April 07, 2026

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 December 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<br><br>incorporation or organization) (I.R.S. Employer<br>Identification No.)
220 West Union Avenue<br><br>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<br><br>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 February 10, 2026, the registrant had 8,335,468 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 2
Consolidated Statements of Comprehensive Income 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 26
Item 3. Quantitative and Qualitative Disclosures About Market Risk 47
Item 4. Controls and Procedures 47
PART II. OTHER INFORMATION 48
Item 1. Legal Proceedings 48
Item 1A. Risk Factors 48
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 48
Item 3. Defaults Upon Senior Securities 48
Item 4. Mine Safety Disclosures 48
Item 5. Other Information 48
Item 6. Exhibits 49
Signatures 50

i

SR Bancorp, Inc. and Subsidiaries

Consolidated Statements of Income

For the Three and Six Months Ended December 31, 2025 and 2024

(In thousands, except for share data, unaudited)

Three Months Ended<br>December 31, Six Months Ended<br>December 31,
2025 2024 2025 2024
Interest Income
Loans, including fees $ 11,295 $ 10,438 $ 22,191 $ 20,724
Securities:
Taxable 534 586 1,118 1,247
Interest bearing deposits at other banks 481 521 936 1,041
Total interest income 12,310 11,545 24,245 23,012
Interest Expense
Deposits:
Demand 1,717 1,243 3,282 2,168
Savings and time 2,398 2,768 4,793 5,552
Borrowings 404 295 783 459
Total interest expense 4,519 4,306 8,858 8,179
Net Interest Income 7,791 7,239 15,387 14,833
Provision (Credit) for Credit Losses 49 12 221 (142 )
Net Interest Income After Provision (Credit)<br>   for Credit Losses 7,742 7,227 15,166 14,975
Noninterest Income
Service charges and fees 224 256 454 552
Increase in cash surrender value of bank owned life insurance 268 264 533 524
Fees and service charges on loans 23 37 55 93
Unrealized (loss) gain on equity securities (1 ) 3 (4 ) 5
Realized gain on sale of loans 17 28 17 51
Other 50 39 91 54
Total noninterest income 581 627 1,146 1,279
Noninterest Expense
Salaries and employee benefits 3,924 3,366 7,776 6,606
Occupancy 531 492 1,067 1,124
Furniture and equipment 312 285 665 578
Data Processing 508 461 1,049 1,089
Advertising 112 85 242 167
FDIC premiums 120 120 240 240
Directors fees 101 101 198 194
Professional fees 508 467 945 956
Insurance 117 159 250 318
Telephone, postage and supplies 167 191 369 372
Other 835 782 1,528 1,535
Total noninterest expense 7,235 6,509 14,329 13,179
Income Before Income Tax Expense 1,088 1,345 1,983 3,075
Income Tax Expense 254 324 456 687
Net Income $ 834 $ 1,021 $ 1,527 $ 2,388
Basic earnings per share $ 0.11 $ 0.12 $ 0.20 $ 0.27
Diluted earnings per share $ 0.11 $ 0.12 $ 0.20 $ 0.27
Weighted average number of common<br>   shares outstanding - basic 7,583,888 8,588,096 7,714,559 8,696,412
Weighted average number of common<br>   shares outstanding - diluted 7,694,569 8,590,981 7,810,512 8,697,854

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

SR Bancorp, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

For the Three and Six Months Ended December 31, 2025 and 2024

(In thousands, unaudited)

Six Months Ended December 31,
2024 2025 2024
Net Income 834 $ 1,021 $ 1,527 $ 2,388
Other Comprehensive Income
Change in defined pension plan for unrealized   actuarial gains (losses) net of income tax (expense) benefit   of 50, 149, (63) and 18, respectively (127 ) (382 ) 162 (45 )
Total other comprehensive (loss) income (127 ) (382 ) 162 (45 )
Total comprehensive income 707 $ 639 $ 1,689 $ 2,343

All values are in US Dollars.

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

SR Bancorp, Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders' Equity

For the Three and Six Months Ended December 31, 2025 and 2024

(In thousands, except for share data, unaudited)

Common<br>Stock<br>Amount Additional<br>Paid in<br>Capital Retained<br>Earnings Unearned<br>ESOP<br>Compensation Accumulated<br>Other<br>Comprehensive<br>Loss Total
Balance, September 30, 2025 8,676,860 $ 87 $ 78,321 $ 120,798 $ (6,560 ) $ (713 ) $ 191,933
Net income — — — 834 — — 834
Other comprehensive income,   net of tax — — — — — (127 ) (127 )
Repurchase of common shares (267,392 ) (3 ) (4,302 ) — — — (4,305 )
Cash dividends declared on   common stock, 0.05 per share — — — (389 ) — — (389 )
ESOP shares earned, 9,508   shares — — 51 — 95 — 146
Stock-based compensation — — 359 — — — 359
Restricted stock awards issued 23,522 — — — — — —
Balance, December 31, 2025 8,432,990 84 74,429 121,243 (6,465 ) (840 ) 188,451
Balance, June 30, 2025 8,875,170 $ 89 $ 80,843 $ 120,505 $ (6,655 ) $ (1,002 ) $ 193,780
Net income — — — 1,527 — — 1,527
Other comprehensive income,   net of tax — — — — — 162 162
Repurchase of common shares (465,702 ) (5 ) (7,226 ) — — — (7,231 )
Cash dividends declared on   common stock, 0.05 per share — — — (789 ) — — (789 )
ESOP shares earned, 19,016   shares — — 94 — 190 — 284
Stock-based compensation — — 718 — — — 718
Restricted stock awards issued 23,522 — — — — — —
Balance, December 31, 2025 8,432,990 $ 84 $ 74,429 $ 121,243 $ (6,465 ) $ (840 ) $ 188,451
Balance, September 30, 2024 9,441,642 $ 87 $ 90,706 $ 117,572 $ (6,941 ) $ (880 ) $ 200,544
Net income — — — 1,021 — — 1,021
Other comprehensive income,   net of tax — — — — — (382 ) (382 )
Repurchase of common shares (280,769 ) 5 (3,185 ) — — — (3,180 )
ESOP shares earned, 9,508   shares — — 13 — 95 — 108
Stock-based compensation — — 34 — — — 34
Restricted stock awards issued 95,075 1 (1 ) — — — —
Balance, December 31, 2024 9,255,948 $ 93 $ 87,567 $ 118,593 $ (6,846 ) $ (1,262 ) $ 198,145
Balance, June 30, 2024 9,507,930 $ 95 $ 91,436 $ 116,205 $ (7,036 ) $ (1,217 ) $ 199,483
Net income — — — 2,388 — — 2,388
Other comprehensive income,   net of tax — — — — — (45 ) (45 )
Repurchase of common shares (347,057 ) (3 ) (3,914 ) — — — (3,917 )
ESOP shares earned, 19,016   shares — — 12 — 190 — 202
Stock-based compensation — — 34 — — — 34
Restricted stock awards issued 95,075 1 (1 ) — — — —
Balance, December 31, 2024 9,255,948 $ 93 $ 87,567 $ 118,593 $ (6,846 ) $ (1,262 ) $ 198,145

All values are in US Dollars.

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

SR Bancorp, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

For the Six Months Ended December 31, 2025 and 2024

(In thousands, except for share data, unaudited)

Six Months Ended December 31,
2025 2024
Cash Flows from Operating Activities
Net income $ 1,527 $ 2,388
Adjustments to reconcile net income to net cash provided by operating<br>   activities:
Provision (Credit) for credit losses 221 (142 )
Depreciation 473 502
Deferred income tax benefit 21 (18 )
Accretion of acquisition fair value adjustments, net (1,119 ) (2,574 )
Amortization of core deposit intangible asset 614 753
Net amortization of premiums and discounts on securities 80 106
Net amortization of deferred loan fees, costs and discounts 167 168
Income from cash surrender value of bank owned life insurance (533 ) (524 )
Stock-based compensation expense 1,002 236
Unrealized loss (gain) on equity securities 4 (5 )
Gain on sale of loans held for sale (17 ) (51 )
Proceeds from sales of loans held for sale 2,854 575
Originations of loans held for sale (2,837 ) (524 )
(Increase) decrease in:
Accrued interest receivable (129 ) (179 )
Other assets 3,273 1,438
Increase in other liabilities (787 ) (1,792 )
Net cash provided by operating activities 4,814 357
Cash Flows from Investing Activities
Proceeds from maturities, calls and principal repayments of securities held-to-<br>   maturity 6,960 7,227
Purchase of securities held-to-maturity (6,000 ) —
Net increase in loans receivable (37,440 ) (41,251 )
Purchase of premises and equipment (570 ) (183 )
Purchase of restricted equity securities (900 ) (1,350 )
Net cash used in investing activities (37,950 ) (35,557 )
Cash Flows from Financing Activities
Net increase in interest bearing deposits 37,880 29,937
Net increase (decrease) in non-interest bearing deposits 7,608 (13,049 )
Net decrease in advance payments by borrowers for taxes and insurance (402 ) (254 )
Net increase in short-term borrowings 20,000 30,000
Dividend Paid (835 ) —
Repurchase of common stock (7,052 ) (3,917 )
Net cash provided by financing activities 57,199 42,717
Net increase in cash and cash equivalents 24,063 7,517
Cash and Cash Equivalents, Beginning of Period 57,779 45,909
Cash and Cash Equivalents, End of Period $ 81,842 $ 53,426
Supplementary Cash Flow Information
Cash paid during the period for:
Interest paid $ 7,982 $ 7,651
Income taxes paid — $ 100

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

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 (“GAAP”) 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 was originally formed to sell annuity products and is currently inactive.

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 six month periods ended December 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 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, 2025.

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, Hudson, 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.

On September 19, 2023, Somerset Savings Bank, SLA converted from the mutual to stock form of organization at which point, the Company became the holding company for Somerset Regal Bank. On that same date, SR Bancorp, Inc. completed its stock offering. The Company’s common stock began trading on the Nasdaq Capital Market under the trading symbol “SRBK” on September 20, 2023. Somerset Regal Bank was formed through the combination of Somerset Savings Bank, SLA and Regal Bank, two New Jersey chartered institutions, on September 19, 2023.

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.

SR Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 3 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.

Segment Reporting

Accounting Standards Codification ("ASC") Topic 280, Segment Reporting, establishes standards for the way business enterprises report information about operating segments in annual Consolidated Financial Statements. The Company operates exclusively as a community bank within the "Community Banking" financial services industry. Community Banking encompasses the Company's primary business, which includes providing a wide range of commercial, retail and related banking services. The Company's primary focus within Community Banking is to grow loans using deposits generated by the Company's branches. Our business is generated principally in central and northern New Jersey.

The Company’s CEO is the chief operating decision maker who uses consolidated net income to assess performance and profitability of our single business segment. The Company assesses consolidated net income on a monthly basis, including variances to budget and prior period results. Consideration is given to performance of components of the business, such as branches and geographic regions, which are then aggregated. This information is used to achieve strategic initiatives by allowing the chief operation decision maker to manage resources that drive our business and earnings. Additionally, consolidated net income is used to benchmark the Company against its banking peers.

Recently Adopted Accounting Changes

In November 2023, the Financial Accounting Standards Board (the “FASB”) issued ASU 2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07"). This update requires public entities with reportable segments to provide additional and more detailed disclosures. The Company adopted ASU 2023-07 on June 30, 2025, which did not have a material impact on its Consolidated Financial Statements.

In March 2024, the FASB issued ASU 2024-01 Compensation - Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards ("ASU 2024-01"). This update provides guidance for profits interest and similar awards. The Company adopted ASU 2024-01 on July 1, 2025, which did not have a material impact on its Consolidated 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. The Company adopted ASU 2024-02 on July 1, 2025, which did not have a material impact on its Consolidated Financial Statements.

Recent Accounting Standards Not Yet Adopted

In December 2023, the 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 annual 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, which is not expected to have a material impact on our 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

SR Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

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, which is not expected to have a material impact on our financial statements. Accounting Standards Update 2025-06, “Intangible - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software” (“ASU 2025-06”) to modernize the accounting for software costs that are accounted for under Subtopic 350-40, Intangibles—Goodwill and Other—Internal-Use Software (referred to as “internal-use software”). The amendments in this Update are effective for all entities for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period. The Company is currently evaluating the impact of this standard, which is not expected to have a material impact on our financial statements.

Subsequent Events

The Company has evaluated subsequent events occurring after December 31, 2025 up to the date these financial statements were issued and filed with the Securities and Exchange Commission and has not identified any subsequent events.

2.Earnings Per Share

Basic earnings 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 unvested 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. For the three and six months ended December 31, 2025, there were 605,225 common stock equivalents that were not included in the computation of diluted earnings per share because to do so would be anti-dilutive. Shares where the assumed exercise price is greater than the average market price of the common shares are considered anti-dilutive.

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

Three Months Ended December 31, Six Months Ended December 31,
2025 2024 2025 2024
Net income $ 834 $ 1,021 $ 1,527 $ 2,388
Weighted average number of common<br>   shares outstanding 8,534,724 9,319,791 8,672,493 9,411,676
Less: Average unallocated ESOP shares (651,293 ) (689,325 ) (656,047 ) (694,079 )
Less: Average unvested restricted stock<br>   awards (299,543 ) (42,370 ) (301,887 ) (21,185 )
Weighted average common shares<br>   outstanding used to calculate basic<br>   earnings per common share 7,583,888 8,588,096 7,714,559 8,696,412
Add: Dilutive effect of common stock<br>   equivalents 110,681 2,885 95,953 1,442
Weighted average common shares<br>   outstanding used to calculate diluted<br>   earnings per common share 7,694,569 8,590,981 7,810,512 8,697,854
Basic income per common share $ 0.11 $ 0.12 $ 0.20 $ 0.27
Diluted income per common share $ 0.11 $ 0.12 $ 0.20 $ 0.27

SR Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

3.Investment Securities

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

December 31, 2025
Amortized<br>Cost Gross<br>Unrealized<br>Gains Gross<br>Unrealized<br>Losses Fair<br>Value
(In thousands)
Federal National Mortgage Association $ 82,396 $ 4 $ (11,958 ) $ 70,442
Federal Home Loan Mortgage Corporation 42,452 2 (5,416 ) 37,038
Government National Mortgage Association 196 3 — 199
Subordinated Debt 13,750 — (339 ) 13,411
CMO 1,811 — (82 ) 1,729
Foreign Government Bonds 200 — — 200
Total $ 140,805 $ 9 $ (17,795 ) $ 123,019
June 30, 2025
--- --- --- --- --- --- --- --- --- ---
Amortized<br>Cost Gross<br>Unrealized<br>Gains Gross<br>Unrealized<br>Losses Fair<br>Value
(In thousands)
Federal National Mortgage Association $ 86,657 $ 2 $ (14,436 ) $ 72,223
Federal Home Loan Mortgage Corporation 45,009 1 (6,488 ) 38,522
Government National Mortgage Association 218 1 — 219
Subordinated Debt 7,750 — (609 ) 7,141
CMO 2,011 — (121 ) 1,890
Foreign Government Bonds 200 — — 200
Total $ 141,845 $ 4 $ (21,654 ) $ 120,195

There were no purchases or sales of available-for sale securities during the three and six months ended December 31, 2025 or 2024.

The amortized cost and fair value of securities held-to-maturity by contractual maturity at December 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.

December 31, 2025
Amortized<br>Cost Fair<br>Value
(In thousands)
Due within 1 year $ 200 $ 200
Due after 1 but within 5 years — —
Due after 5 but within 10 years 13,750 13,411
Due after 10 years — —
Mortgage-backed securities 126,855 109,408
Total $ 140,805 $ 123,019

During the three and six months ended December 31, 2025, the Company purchased a $6.0 million fixed-to-floating rate subordinated note at 7.75% per annum for the first five years, which then floats based on a benchmark rate (as defined) for the remaining five years. There were no purchases of securities held-to-maturity during the three and six months ended December 31, 2024.

SR Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

On a quarterly basis, management evaluates whether there is a credit loss associated with any declines in fair value on its securities portfolio. Management considers the nature of the collateral, default rates, delinquency rates, credit ratings and interest rate changes, among other factors. The Company's held-to-maturity portfolio predominantly consists of mortgage-backed securities issued by the U.S. government and government-sponsored agencies for which management has determined to have a zero expected credit loss. The Company's held-to-maturity portfolio also consists of three investment grade subordinated notes issued by bank holding companies located in New Jersey. At December 31, 2025 and June 30, 2025, the Company had no securities held-to-maturity that were past due 30 days or more with respect to principal or interest payments.

Equity securities consisted of several equity investments in consumer banking and financial services companies. At December 31, 2025 and June 30, 2025, the Company had $33,000 and $37,000, respectively, in equity securities recorded at fair value. The following is a summary of unrealized and realized gains and losses recognized in net income on equity securities for the three and six months ended December 31, 2025 and 2024:

Three Months Ended December 31, Six Months Ended December 31,
2025 2024 2025 2024
(In thousands) (In thousands)
Net (loss) gains recognized on equity securities $ (1 ) $ 3 $ (4 ) $ 5
Less: Net gains recognized on equity<br>   securities sold/acquired — — — —
Net unrealized (loss) gains recognized on<br>   equity securities $ (1 ) $ 3 $ (4 ) $ 5

At December 31, 2025 and June 30, 2025, mortgage-backed securities with a carrying value of approximately $1.6 million and $1.7 million, respectively, were pledged as collateral to secure public funds on deposit. During the three and six months ended December 31, 2025 and 2024, there were no sales of securities held-to-maturity.

4.Loans Receivable

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

December 31, 2025 June 30, 2025
(In thousands)
Owner occupied commercial real estate loans $ 51,666 $ 55,127
Other commercial real estate loans 91,616 72,542
Multi-family loans 225,043 219,934
Commercial and industrial loans 15,792 12,253
Total commercial loans 384,117 359,856
Residential mortgage loans 440,100 427,345
Consumer and other loans 14,397 13,038
Total loans 838,614 800,239
Allowance for credit losses (5,582 ) (5,362 )
Deferred loan costs, net 2,335 2,289
Loans receivable, net $ 835,367 $ 797,166

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

SR Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

and include general economic risks, such as the strength of the job market, employment stability and the strength of the housing market.

At December 31, 2025 and June 30, 2025, commercial loans represented 45.8% and 45.0% of net loans, respectively, while residential mortgage, consumer and other loans represented 54.2% and 55.0%, respectively, nearly all of which is concentrated within our primary market area in New Jersey. At December 31, 2025 and June 30, 2025, the Company held 95.9% and 96.6%, respectively, of its commercial loan portfolio in commercial real estate, consisting of multi-family, mixed use and owner occupied loans, with less than 2.60% secured by office buildings as of December 31, 2025 and less than 1.0% secured by office buildings as of June 30, 2025. The Company had one non-accrual commercial loan of $176,000 at December 31, 2025 and no non-accrual loans at June 30, 2025.

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

Three Months Ended December 31, 2025
Owner <br>Occupied <br>Commercial <br>Real Estate Other <br>Commercial <br>Real Estate Multi-<br>Family Commercial <br>and <br>Industrial Residential <br>Mortgage Consumer <br>and Other Total
(In thousands)
Allowance for Credit<br>   Losses:
Beginning balance $ 637 $ 219 $ 1,857 $ 196 $ 2,376 $ 248 $ 5,533
Charge-offs — — — — — — —
Recoveries — — — — — — —
Provisions (credits) (8 ) 15 51 (21 ) 1 11 49
Ending balance $ 629 $ 234 $ 1,908 $ 175 $ 2,377 $ 259 $ 5,582
Ending balance,
Individually evaluated<br>   for impairment $ — $ — $ — $ — $ — $ — $ —
Ending balance,
Collectively evaluated<br>   for impairment $ 629 $ 234 $ 1,908 $ 175 $ 2,377 $ 259 $ 5,582
Loans Receivable:
Ending balance $ 51,666 $ 91,616 $ 225,043 $ 15,792 $ 440,100 $ 14,397 $ 838,614
Ending balance,
Individually evaluated<br>   for impairment $ — $ — $ — $ 176 $ — $ — $ 176
Ending balance,
Collectively evaluated<br>   for impairment $ 51,666 $ 91,616 $ 225,043 $ 15,616 $ 440,100 $ 14,397 $ 838,438

SR Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Three Months Ended December 31, 2024
Owner <br>Occupied <br>Commercial <br>Real Estate Other <br>Commercial <br>Real Estate Multi-<br>Family Commercial <br>and <br>Industrial Residential <br>Mortgage Consumer <br>and Other Total
(In thousands)
Allowance for Credit<br>   Losses:
Beginning balance $ 789 $ 198 $ 1,889 $ 139 $ 1,839 $ 221 $ 5,075
Charge-offs — — — — — — —
Recoveries — — — — — — —
Provisions (credits) (39 ) (2 ) 14 (7 ) 37 9 12
Ending balance $ 750 $ 196 $ 1,903 $ 132 $ 1,876 $ 230 $ 5,087
Ending balance,
Individually evaluated<br>   for impairment $ — $ — $ — $ — $ — $ — $ —
Ending balance,
Collectively evaluated<br>   for impairment $ 750 $ 196 $ 1,903 $ 132 $ 1,876 $ 230 $ 5,087
Loans Receivable:
Ending balance $ 56,658 $ 72,388 $ 211,531 $ 11,484 $ 414,403 $ 12,219 $ 778,683
Ending balance,
Individually evaluated<br>   for impairment $ — $ — $ — $ — $ — $ — $ —
Ending balance,
Collectively evaluated<br>   for impairment $ 56,658 $ 72,388 $ 211,531 $ 11,484 $ 414,403 $ 12,219 $ 778,683
Six Months Ended December 31, 2025
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Owner <br>Occupied <br>Commercial <br>Real Estate Other <br>Commercial <br>Real Estate Multi-<br>Family Commercial <br>and <br>Industrial Residential <br>Mortgage Consumer <br>and Other Total
(In thousands)
Allowance for Credit<br>   Losses:
Beginning balance $ 675 $ 179 $ 1,830 $ 135 $ 2,308 $ 235 $ 5,362
Charge-offs — — — — — — —
Recoveries — — — — — — —
Provisions (credits) (46 ) 55 78 40 70 24 221
Ending balance $ 629 $ 234 $ 1,908 $ 175 $ 2,377 $ 259 $ 5,582
Ending balance,
Individually evaluated<br>   for impairment $ — $ — $ — $ — $ — $ — $ —
Ending balance,
Collectively evaluated<br>   for impairment $ 629 $ 234 $ 1,908 $ 175 $ 2,377 $ 259 $ 5,582
Loans Receivable:
Ending balance $ 51,666 $ 91,616 $ 225,043 $ 15,792 $ 440,100 $ 14,397 $ 838,614
Ending balance,
Individually evaluated<br>   for impairment $ — $ — $ — $ 176 $ — $ — $ 176
Ending balance,
Collectively evaluated<br>   for impairment $ 51,666 $ 91,616 $ 225,043 $ 15,616 $ 440,100 $ 14,397 $ 838,438

SR Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Six Months Ended December 31, 2024
Owner <br>Occupied <br>Commercial <br>Real Estate Other <br>Commercial <br>Real Estate Multi-<br>Family Commercial <br>and <br>Industrial Residential <br>Mortgage Consumer <br>and Other Total
(In thousands)
Allowance for Credit<br>   Losses:
Beginning balance $ 1,331 $ 502 $ 1,998 $ 146 $ 1,175 $ 77 $ 5,229
Charge-offs — — — — — — —
Recoveries — — — — — — —
Provisions (credits) (581 ) (306 ) (95 ) (14 ) 701 153 (142 )
Ending balance $ 750 $ 196 $ 1,903 $ 132 $ 1,876 $ 230 $ 5,087
Ending balance,
Individually evaluated<br>   for impairment $ — $ — $ — $ — $ — $ — $ —
Ending balance,
Collectively evaluated<br>   for impairment $ 750 $ 196 $ 1,903 $ 132 $ 1,876 $ 230 $ 5,087
Loans Receivable:
Ending balance $ 56,658 $ 72,388 $ 211,531 $ 11,484 $ 414,403 $ 12,219 $ 778,683
Ending balance,
Individually evaluated<br>   for impairment $ — $ — $ — $ — $ — $ — $ —
Ending balance,
Collectively evaluated<br>   for impairment $ 56,658 $ 72,388 $ 211,531 $ 11,484 $ 414,403 $ 12,219 $ 778,683

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 December 31, 2025 and June 30, 2025:

December 31, 2025
2026 2025 2024 2023 2022 Prior Revolving Total
(In thousands)
Owner Occupied Commercial<br>   Real Estate
Risk Rating
Pass $ 797 $ — $ 6,950 $ 4,984 $ 7,736 $ 31,199 $ — $ 51,666
Special mention — — — — — — — —
Substandard — — — — — — — —
Doubtful — — — — — — — —
Loss — — — — — — — —
Total Owner Occupied Commercial<br>   Real Estate $ 797 $ — $ 6,950 $ 4,984 $ 7,736 $ 31,199 $ — $ 51,666
Other Commercial Real Estate
Risk Rating
Pass $ 22,620 $ 6,411 $ 1,350 $ 3,487 $ 902 $ 56,846 $ — $ 91,616
Special mention — — — — — — — —
Substandard — — — — — — — —
Doubtful — — — — — — — —
Loss — — — — — — — —
Total Other Commercial Real Estate $ 22,620 $ 6,411 $ 1,350 $ 3,487 $ 902 $ 56,846 $ — $ 91,616
Multi-Family
Risk Rating
Pass $ 11,074 $ 53,047 $ 28,400 $ 25,616 $ 22,153 $ 84,753 $ — $ 225,043
Special mention — — — — — — — —
Substandard — — — — — — — —
Doubtful — — — — — — — —
Loss — — — — — — — —
Total Multi-Family $ 11,074 $ 53,047 $ 28,400 $ 25,616 $ 22,153 $ 84,753 $ — $ 225,043
Commercial and Industrial
Risk Rating
Pass $ 5,442 $ 1,374 $ 833 $ 3,075 $ 1,282 $ 3,610 $ — $ 15,616
Special mention — — — 176 — — — 176
Substandard — — — — — — — —
Doubtful — — — — — — — —
Loss — — — — — — — —
Total Commercial and Industrial $ 5,442 $ 1,374 $ 833 $ 3,251 $ 1,282 $ 3,610 $ — $ 15,792
Residential Mortgage
Risk Rating
Pass $ 36,204 $ 68,523 $ 58,479 $ 49,202 $ 69,514 $ 158,178 $ — $ 440,100
Special mention — — — — — — — —
Substandard — — — — — — — —
Doubtful — — — — — — — —
Loss — — — — — — — —
Total Residential Mortgage $ 36,204 $ 68,523 $ 58,479 $ 49,202 $ 69,514 $ 158,178 $ — $ 440,100
Consumer and Other
Risk Rating
Pass $ 783 $ 767 $ 1,078 $ 333 $ 60 $ 469 $ 10,907 $ 14,397
Special mention — — — — — — — —
Substandard — — — — — — — —
Doubtful — — — — — — — —
Loss — — — — — — — —
Total Consumer and Other $ 783 $ 767 $ 1,078 $ 333 $ 60 $ 469 $ 10,907 $ 14,397
Total Loans
Pass $ 76,920 $ 130,122 $ 97,090 $ 86,697 $ 101,647 $ 335,055 $ 10,907 $ 838,438
Special mention — — — 176 — — — 176
Substandard — — — — — — — —
Doubtful — — — — — — — —
Loss — — — — — — — —
Total Loans $ 76,920 $ 130,122 $ 97,090 $ 86,873 $ 101,647 $ 335,055 $ 10,907 $ 838,614
Gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

SR Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2025
2025 2024 2023 2022 2021 Prior Revolving Total
(In thousands)
Owner Occupied Commercial<br>   Real Estate
Risk Rating
Pass $ — $ 7,013 $ 6,761 $ 7,897 $ 5,335 $ 28,121 $ — $ 55,127
Special mention — — — — — — — —
Substandard — — — — — — — —
Doubtful — — — — — — — —
Loss — — — — — — — —
Total Owner Occupied Commercial<br>   Real Estate $ — $ 7,013 $ 6,761 $ 7,897 $ 5,335 $ 28,121 $ — $ 55,127
Other Commercial Real Estate
Risk Rating
Pass $ 6,451 $ 1,360 $ 3,523 $ 917 $ 1,695 $ 58,596 $ — $ 72,542
Special mention — — — — — — — —
Substandard — — — — — — — —
Doubtful — — — — — — — —
Loss — — — — — — — —
Total Other Commercial Real Estate $ 6,451 $ 1,360 $ 3,523 $ 917 $ 1,695 $ 58,596 $ — $ 72,542
Multi-Family
Risk Rating
Pass $ 49,898 $ 28,582 $ 28,305 $ 22,424 $ 13,092 $ 77,633 $ — $ 219,934
Special mention — — — — — — — —
Substandard — — — — — — — —
Doubtful — — — — — — — —
Loss — — — — — — — —
Total Multi-Family $ 49,898 $ 28,582 $ 28,305 $ 22,424 $ 13,092 $ 77,633 $ — $ 219,934
Commercial and Industrial
Risk Rating
Pass $ 1,388 $ 883 $ 4,178 $ 2,404 $ 52 $ 3,348 $ — $ 12,253
Special mention — — — — — — — —
Substandard — — — — — — — —
Doubtful — — — — — — — —
Loss — — — — — — — —
Total Commercial and Industrial $ 1,388 $ 883 $ 4,178 $ 2,404 $ 52 $ 3,348 $ — $ 12,253
Residential Mortgage
Risk Rating
Pass $ 73,256 $ 61,827 $ 50,561 $ 72,372 $ 66,725 $ 102,604 $ — $ 427,345
Special mention — — — — — — — —
Substandard — — — — — — — —
Doubtful — — — — — — — —
Loss — — — — — — — —
Total Residential Mortgage $ 73,256 $ 61,827 $ 50,561 $ 72,372 $ 66,725 $ 102,604 $ — $ 427,345
Consumer and Other
Risk Rating
Pass $ 1,313 $ 1,231 $ 357 $ 730 $ 1,116 $ 1,638 $ 6,653 $ 13,038
Special mention — — — — — — — —
Substandard — — — — — — — —
Doubtful — — — — — — — —
Loss — — — — — — — —
Total Consumer and Other $ 1,313 $ 1,231 $ 357 $ 730 $ 1,116 $ 1,638 $ 6,653 $ 13,038
Total Loans
Pass $ 132,306 $ 100,896 $ 93,685 $ 106,744 $ 88,015 $ 271,940 $ 6,653 $ 800,239
Special mention — — — — — — — —
Substandard — — — — — — — —
Doubtful — — — — — — — —
Loss — — — — — — — —
Total Loans $ 132,306 $ 100,896 $ 93,685 $ 106,744 $ 88,015 $ 271,940 $ 6,653 $ 800,239
Gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

SR Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

As of December 31, 2025 the Company had one commercial and industrial loan in the amount of $176,000 that was considered collateral-dependent and was placed on non-accrual. This loan was fully secured by personal assets of the borrower. In January 2026, full payment was received and no loss was recorded on the payoff. As of June 30, 2025, the Company had no collateral-dependent or non-accrual loans.

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

December 31, 2025
Delinquency Status
30-59 Days<br>Past Due 60-89 Days<br>Past Due 90 Days or<br>More Past<br>Due and<br>Still <br>Accruing<br>Past Due Non-<br>Accrual Total <br>Past<br>Due Total<br>Current Total
(In thousands)
Owner occupied commercial<br>   real estate $ — $ — $ — $ — $ — $ 51,666 $ 51,666
Other commercial real estate — — — — — 91,616 91,616
Multi-family — — — — — 225,043 225,043
Commercial and industrial — — — 176 — 15,616 15,792
Residential mortgage 1,830 102 — — 1,932 438,168 440,100
Consumer and other 128 — — — 128 14,269 14,397
Total $ 1,958 $ 102 $ — $ 176 $ 2,060 $ 836,378 $ 838,614
June 30, 2025
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Delinquency Status
30-59 Days<br>Past Due 60-89 Days<br>Past Due 90 Days or<br>More Past<br>Due and<br>Still<br>Accruing<br>Past Due Non-<br>Accrual Total<br>Past<br>Due Total<br>Current Total
(In thousands)
Owner occupied commercial<br>   real estate $ — $ — $ — $ — $ — $ 55,127 $ 55,127
Other commercial real estate — — — — — 72,542 72,542
Multi-family — — — — — 219,934 219,934
Commercial and industrial — — — — — 12,253 12,253
Residential mortgage 1,467 478 — — 1,945 425,400 427,345
Consumer and other 67 — — — 67 12,971 13,038
Total $ 1,534 $ 478 $ — $ — $ 2,012 $ 798,227 $ 800,239

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

5.Premises and Equipment

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

December 31, 2025 June 30, 2025
(In thousands)
Land $ 926 $ 926
Buildings and leasehold improvements 9,058 9,024
Furniture, fixtures and equipment 6,659 6,123
Total 16,643 16,073
Accumulated depreciation (11,604 ) (11,131 )
Net $ 5,039 $ 4,942

SR Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Depreciation expense amounted to $473,000 and $502,000 for the six months ended December 31, 2025 and 2024, respectively.

6.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 December 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 December 31, Six Months Ended December 31,
2025 2024 2025 2024
(In thousands) (In thousands)
Operating lease cost $ 219 $ 216 $ 438 $ 455
Cash paid for amounts included in the<br>   measurement of lease liabilities $ 213 $ 218 $ 425 $ 451
December 31, 2025 June 30, 2025
--- --- --- --- --- --- ---
(In thousands)
Right-of-use asset $ 2,743 $ 3,156
Lease liability $ 2,785 $ 3,211
Weighted-average remaining lease term, in years 3.82 4.23
Weighted-average discount rate 1.50 % 1.50 %

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

December 31, 2025 (Dollars in<br>thousands)
2026 $ 406
2027 797
2028 695
2029 643
2030 262
Thereafter 62
Total future minimum lease payments 2,865
Less: imputed interest (80 )
Total $ 2,785

7.Goodwill and Intangible Assets

Goodwill and core deposit intangibles resulted from the Company's acquisition of Regal Bancorp in September 2023, which was accounted for under FASB ASC 805, Business Combinations. As of December 31, 2025, the carrying amount of goodwill was $20.4 million and the carrying amount of the core deposit intangibles, net of accumulated amortization, was $5.7 million. The intangible assets are related to core deposits and are being amortized over 10 years, using an accelerated method.

SR Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

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

Six Months Ended December 31,
2025 2024
(In thousands)
Balance at beginning of period $ 26,708 $ 28,141
Amortization expense (614 ) (753 )
Balance at end of period $ 26,094 $ 27,388

Goodwill and intangible assets at December 31, 2025 and June 30, 2025:

December 31, 2025 June 30, 2025
(In thousands)
Goodwill $ 20,417 $ 20,417
Core deposit intangibles, net of amortization 5,677 6,291
Goodwill and intangible assets $ 26,094 $ 26,708

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

Amount
(In thousands)
2026 $ 554
2027 951
2028 774
2029 657
2030 650
Thereafter 2,091
Total $ 5,677

8.Deposits

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

December 31, 2025 June 30, 2025
(In thousands)
Demand accounts:
Interest-bearing $ 352,366 $ 319,829
Noninterest-bearing 121,715 114,107
Total demand accounts 474,081 433,936
Savings and club 130,139 143,881
Certificates of deposit 287,320 268,205
Total $ 891,540 $ 846,022

As of December 31, 2025 and June 30, 2025, the aggregate amount of uninsured deposits (deposits in amounts greater than $250,000, which is the maximum amount for federal deposit insurance) was $172.6 million and $145.3 million, respectively. Certificates of deposit with balances in excess of the Federal Deposit Insurance Corporation (the "FDIC") insurance limit of $250,000 at December 31, 2025 and June 30, 2025 amounted to approximately $72.1 million and $58.9 million, respectively. Uninsured deposits totaling $30.3 million and $31.8 million at December 31, 2025 and June 30, 2025, respectively, of municipalities and local government agencies are protected under a New Jersey supplemental insurance program with collateralized assets.

SR Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

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

(In thousands)
Year ending December 31, 2026 $ 244,646
Year ending December 31, 2027 38,339
Year ending December 31, 2028 2,873
Year ending December 31, 2029 682
Year ending December 31, 2030 780
Total $ 287,320

9.Borrowings

The Company can borrow overnight funds from the Federal Home Loan Bank (the "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 December 31, 2025 and June 30, 2025, the Company's maximum borrowing capacity at the FHLB was $100.0 million.

At December 31, 2025, the Company had advances of $35.0 million and $15.0 million outstanding with the Federal Home Loan Bank of New York at fixed rates of 3.67% and 4.03%, respectively, maturing on September 8, 2027 and February 17, 2026, respectively. At June 30, 2025, the Company had a $30.0 million advance at a fixed rate of 4.42%, which matured on July 7, 2025.

As of December 31, 2025 and June 30, 2025, the Company's Board of Directors had authorized borrowings of up to $25.0 million from the Federal Reserve Bank of New York (the “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 December 31, 2025 or June 30, 2025.

10.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 December 31, 2025, total unfunded loan-related commitments, including lines of credit, amounted to $68.4 million, comprised of $43.3 million for unused equity lines of credit and $25.1 million to originate and purchase loans, expiring within three months.

At June 30, 2025, total unfunded loan-related commitments, including lines of credit, amounted to $79.0 million, comprised of $38.0 million for unused equity lines of credit and $41.0 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.

SR Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

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 $7,000 and $37,000 of expense for the six months ended December 31, 2025 and 2024, respectively. The balance for unfunded commitments was $44,000 at December 31, 2025 and $42,000 at June 30, 2025.

11.Stock-Based Compensation

The Company has several compensation and benefit arrangements involving shares of the Company’s stock. Stock-based compensation expense involves the following components for the three and six month periods ended December 31, 2025, and 2024:

Three Months Ended December 31, Six Months Ended December 31,
2025 2024 2025 2024
(In thousands) (In thousands) (In thousands) (In thousands)
Fair value of 9,508 and 19,016 shares earned<br>   by ESOP participants $ 146 108 284 202
Stock options 176 17 352 17
Restricted stock awards 183 17 366 17
Total stock-based compensation expense $ 505 $ 142 $ 1,002 $ 236

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 December 31, 2025, there were 183,959 shares available for future grants.

Stock Options

On November 21, 2024, the stockholders of the Company granted 237,695 stock options to non-employee directors. 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. On December 17, 2025, the Company granted 58,805 shares to certain executive officers. The stock option grants have 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 options granted December 17, 2025:

Date of grant December 17, 2025
Options granted 58,805
Exercise Price $ 16.55
Vesting period (years) 5.00
Expiration date December 17, 2035
Expected Volatility(1) 28.70 %
Expected term (years)(2) 6.50
Expected dividend yield(3) 1.44 %
Forfeiture rate 0.00 %
Risk free rate of return(4) 3.91 %
Fair value per option $ 5.18

SR Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

The following table represents stock option activities for the six months ended December 31, 2025, and 2024, respectively:

Six Months Ended December 31, 2025
Shares Weighted-<br>Average<br>Exercise Price Weighted-<br>Average<br>Remaining<br>Contractual<br>Term (years) Aggregate<br>Intrinsic Value
(In thousands)
Balance at beginning of period 760,593 $ 12.03 — $ —
Granted 58,805 16.55 — —
Exercised — — — —
Forfeited or expired — — — —
Balance at end of period 819,398 $ 12.36 9.09 $ 2,819
Exercisable at end of period 47,540 $ 11.04 8.90 $ 223
Six Months Ended December 31, 2024
--- --- --- --- --- --- --- --- ---
Shares Weighted-<br>Average<br>Exercise Price Weighted-<br>Average<br>Remaining<br>Contractual<br>Term (years) Aggregate<br>Intrinsic Value
(In thousands)
Balance at beginning of period — $ — — $ —
Granted 237,695 11.04 — —
Exercised — — — —
Forfeited or expired — — — —
Balance at end of period 237,695 $ 11.04 9.89 $ 207
Exercisable at end of period — $ — — $ —

The aggregate intrinsic values in the preceding tables represent the pre-tax intrinsic values calculated by multiplying the number of in the-money shares by the difference between the Company’s closing stock price on the last trading day of the current reporting period and the exercise price.

Restricted Stock Awards

On November 21, 2024, the Company granted 95,075 restricted stock awards to non-employee directors. 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 beginning on the first anniversary of the date of grant. 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.

The following table represents information regarding restricted stock award activities for the six months ended December 31, 2025, and 2024, respectively:

Six Months Ended <br>December 31, 2025 Six Months Ended <br>December 31, 2024
Number<br>of Shares Weighted-<br>Average Grant<br>Date Fair Value<br>Per Share Number<br>of Shares Weighted-<br>Average Grant<br>Date Fair Value<br>Per Share
Balance at beginning of period-non-vested 304,231 $ 12.03 — $ —
Granted 23,522 16.55 95,075 11.04
Vested (19,015 ) 11.04 — —
Forfeited or expired — — — —
Balance at end of period-non-vested 308,738 $ 12.44 95,075 $ 11.04

SR Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

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 December 31, 2025:

Amount Weighted<br>Average<br>Period (years)
(In thousands)
Stock options $ 3,149 4.12
Restricted stock awards 3,344 4.14
Total $ 6,493

12.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.

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 December 31, 2025, the Bank met all capital adequacy requirements to which it is subject. As of December 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<br>under Prompt Corrective<br>Action Provisions
Amount Ratio Amount Ratio
(In thousands)
December 31, 2025
Tier 1 capital (to average total assets) $ 159,779 14.85 % $ 96,827 9.00 %
June 30, 2025:
Tier 1 capital (to average total assets) $ 162,261 15.51 % $ 94,167 9.00 %

13.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. 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.

SR Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

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.

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

December 31, 2025
Description (Level 1) (Level 2) (Level 3) Total
(In thousands)
Equity securities 33 — — 33
Total $ 33 $ — $ — $ 33
June 30, 2025
--- --- --- --- --- --- --- --- ---
Description (Level 1) (Level 2) (Level 3) Total
(In thousands)
Equity securities 37 — — 37
Total $ 37 $ — $ — $ 37

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

Equity 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).

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

Financial Assets Measured at Fair Value on a Nonrecurring Basis

There were no financial assets measured at fair value on a nonrecurring basis at at December 31, 2025 and June 30, 2025.

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.

SR Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

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

December 31, 2025
Description Carrying Value Fair Value (Level 1) (Level 2) (Level 3)
(In thousands)
Financial Assets:
Cash and cash equivalents $ 81,842 $ 81,842 $ 81,842 $ — $ —
Securities held-to-maturity, at amortized cost 140,805 123,019 — 123,019 —
Restricted equity securities, at cost 3,508 3,508 — 3,508 —
Loans receivable, net 835,367 823,823 — — 823,823
Accrued interest receivable 3,201 3,201 — 3,201 —
Financial Liabilities:
Deposits 891,540 802,833 516,282 286,551 —
Borrowings 50,000 50,070 50,070 — —
June 30, 2025
--- --- --- --- --- --- --- --- --- --- ---
Description Carrying Value Fair Value (Level 1) (Level 2) (Level 3)
(In thousands)
Financial Assets:
Cash and cash equivalents $ 57,779 $ 57,779 $ 57,779 $ — $ —
Securities held-to-maturity, at amortized cost 141,845 120,195 — 120,195 —
Restricted equity securities, at cost 2,608 2,608 — 2,608 —
Loans receivable, net 797,166 770,473 — — 770,473
Accrued interest receivable 3,072 3,072 — 3,072 —
Financial Liabilities:
Deposits 846,022 764,094 — 764,094 —
Borrowings 30,000 30,000 30,000 — —

Securities Held-to-Maturity

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.

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 market interest rates for loans with similar terms to borrowers of similar quality and incorporates estimates of future loan prepayments.

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.

SR Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

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.

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 December 31, 2025 and the results of operations for the three and six months ended December 31, 2025 and 2024 should be read in conjunction with the Consolidated audited Financial Statements, including notes thereto, and the other information therein included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2025, as filed with the Securities and Exchange Commission, and in conjunction with the Consolidated Statements of Financial Condition as of December 31, 2025, the Consolidated Statements of Income, the Consolidated Statements of Comprehensive Income, the Consolidated Statements of Changes in Stockholders’ Equity and the Consolidated Statements of Cash Flows for the six months ended December 31, 2025 and 2024. The Consolidated Statement of Financial Condition as of June 30, 2025 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, 2025. As used in this Quarterly Report on Form 10-Q, “we,” “us,” “our,” 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 condition and 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, and/or increase the level of defaults, losses and prepayments on loans we have made and make;

  • 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;

  • 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 and any retaliatory responses;

  • the impact of any federal government shutdown;

  • changes in the quality or composition of our loan or investment portfolios;

  • technological changes that may be more difficult or expensive than expected to implement;

  • 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 material 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.

Management believes our most critical accounting policies, which involve the most complex or subjective decisions or assessments, are 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 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 on 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 amount 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, then goodwill is impaired and written down to its estimated fair value. If the estimated fair value of the reporting unit less than the carrying value, then goodwill is impaired and is written down to its estimated fair value.

During the year ended June 30, 2025, 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, 2025. As of December 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 December 31, 2025 and June 30, 2025

Total Assets. Total assets increased $58.6 million, or 5.4%, to $1.14 billion at December 31, 2025 from $1.08 billion at June 30, 2025. The increase was driven by new loan originations, resulting in a net increase of $38.2 million in loans receivable, as well as an increase in cash and cash equivalents of $24.1 million primarily due to an increase in deposits and borrowings.

Cash and Cash Equivalents. Cash and cash equivalents increased $24.1 million, or 41.6%, to $81.8 million at December 31, 2025 from $57.8 million at June 30, 2025 due to an increase in deposits and borrowings from the Federal Home Loan Bank of New York.

Securities. Securities held-to-maturity decreased $1.0 million, or 0.7%, to $140.8 million at December 31, 2025 from $141.8 million at June 30, 2025. The decrease was primarily due to principal repayments and maturities, partially offset by the purchase of a $6.0 million subordinated note.

Loans. Loans receivable, net, increased $38.2 million, or 4.8%, to $835.4 million at December 31, 2025 from $797.2 million at June 30, 2025, driven by commercial loan growth of $24.2 million, residential mortgage loan growth of $12.7 million and consumer loan growth of $1.3 million as a result of strong market demand.

Bank Owned Life Insurance. Bank owned life insurance increased $532,000, or 1.5%, to $37.1 million at December 31, 2025 from $36.6 million at June 30, 2025 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 acquisition of Regal Bancorp in September 2023 totaled $26.1 million at December 31, 2025 compared to $26.7 million at June 30, 2025. The decrease was due to the amortization of the core deposit intangible asset.

Total Liabilities. Total liabilities increased $63.9 million, or 7.2%, to $954.5 million at December 31, 2025 from $890.6 million at June 30, 2025. The increase was primarily due to a $45.5 million increase in deposits and a $20.0 million increase in borrowings from the Federal Home Loan Bank of New York.

Deposits. Deposits increased $45.5 million, or 5.4%, to $891.5 million at December 31, 2025 from $846.0 million at June 30, 2025. Increases in interest-bearing deposit accounts resulted from the Bank having raised rates on time deposit accounts in an effort to remain competitive in the market area. At December 31, 2025, $121.7 million, or 13.7%, of total deposits consisted of noninterest-bearing deposits.

Borrowings. At June 30, 2025, the Company had a $30.0 million advance at a fixed rate of 4.42%, which matured on July 7, 2025. During the six months ended December 31, 2025, the Bank borrowed an additional $20.0 million from the Federal Home Loan Bank of New York to provide additional liquidity to fund new loans. At December 31, 2025 and 2024, the Bank had $50.0 million and $30.0 million in outstanding borrowings, respectively.

Total Equity. Total equity decreased $5.3 million, or 2.8%, to $188.5 million at December 31, 2025 from $193.8 million at June 30, 2025. The decrease was primarily due to the repurchase of 465,702 shares of common stock at a cost of $7.1 million, partially offset by net earnings of $1.5 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 acquisition of Regal Bancorp in September 2023 greatly expanded our commercial loan portfolio and commercial lending capabilities. At December 31, 2025, residential mortgage loans comprised 52.5% of our total loan portfolio and commercial loans comprised 45.8%, which consisted largely 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.

December 31, 2025 June 30, 2025
Amount Percent Amount Percent
(In thousands)
Owner occupied commercial real estate loans $ 51,666 6.16 % $ 55,127 6.89 %
Other commercial real estate loans 91,616 10.92 % 72,542 9.07 %
Multi-family loans 225,043 26.84 % 219,934 27.48 %
Commercial and industrial loans 15,792 1.88 % 12,253 1.53 %
Total commercial loans 384,117 45.80 % 359,856 44.97 %
Residential mortgage loans 440,100 52.48 % 427,345 53.40 %
Consumer and other loans 14,397 1.72 % 13,038 1.63 %
Total loans 838,614 100.00 % 800,239 100.00 %
Allowance for credit losses (5,582 ) (5,362 )
Net deferred loan origination fees 2,335 2,289
Loans, net $ 835,367 $ 797,166

Contractual Maturities. The following tables set forth the contractual maturities of our total loan portfolio at December 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 <br>Occupied <br>Commercial<br>Real Estate Other <br>Commercial<br>Real Estate Multi-<br>Family Commercial<br>and <br>Industrial Residential <br>Mortgage Consumer <br>and Other Total
(In thousands)
Amounts due in:
One year or less $ 18 $ 1,045 $ 3,613 $ 2,137 $ 263 $ 7,891 $ 14,967
After one through five years 705 4,467 20,946 9,260 7,456 754 43,588
After five through 15 years 15,257 30,181 74,474 2,189 70,137 4,883 197,121
More than 15 years 35,686 55,923 126,010 2,206 362,244 869 582,938
Total $ 51,666 $ 91,616 $ 225,043 $ 15,792 $ 440,100 $ 14,397 $ 838,614

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

Due After December 31, 2026
Fixed Adjustable Total
(In thousands)
Owner occupied commercial real estate loans $ — $ 51,648 $ 51,648
Other commercial real estate loans — 90,571 90,571
Multi-family loans — 221,430 221,430
Commercial and industrial loans — 13,655 13,655
Total commercial loans $ — $ 377,304 $ 377,304
Residential mortgage loans 330,657 109,180 439,837
Consumer and other loans 3,450 3,056 6,506
Total loans $ 334,107 $ 489,540 $ 823,647

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. All monitored loans, including those rated special mention, substandard, doubtful or loss, are reported to the Board of Directors on a quarterly basis. In addition, management presents a quarterly credit loss allowance analysis to our Board of Directors.

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

December 31, 2025
Delinquency Status
30-59 Days<br>Past Due 60-89 Days<br>Past Due 90 Days or<br>More Past<br>Due and<br>Still <br>Accruing<br>Past Due Non-<br>Accrual Total <br>Past<br>Due Total<br>Current Total
(In thousands)
Owner occupied commercial<br>   real estate $ — $ — $ — $ — $ — $ 51,666 $ 51,666
Other commercial real estate — — — — — 91,616 91,616
Multi-family — — — — — 225,043 225,043
Commercial and industrial — — — 176 — 15,616 15,792
Residential mortgage 1,830 102 — — 1,932 438,168 440,100
Consumer and other 128 — — — 128 14,269 14,397
Total $ 1,958 $ 102 $ — $ 176 $ 2,060 $ 836,378 $ 838,614
June 30, 2025
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Delinquency Status
30-59 Days<br>Past Due 60-89 Days<br>Past Due 90 Days or<br>More Past<br>Due and<br>Still<br>Accruing<br>Past Due Non-<br>Accrual Total<br>Past<br>Due Total<br>Current Total
(In thousands)
Owner occupied commercial<br>   real estate $ — $ — $ — $ — $ — $ 55,127 $ 55,127
Other commercial real estate — — — — — 72,542 72,542
Multi-family — — — — — 219,934 219,934
Commercial and industrial — — — — — 12,253 12,253
Residential mortgage 1,467 478 — — 1,945 425,400 427,345
Consumer and other 67 — — — 67 12,971 13,038
Total $ 1,534 $ 478 $ — $ — $ 2,012 $ 798,227 $ 800,239

The Bank had no loan modifications to borrowers experiencing financial difficulty as of December 31, 2025 or June 30, 2025.

Non-Performing Assets. The following table sets forth information regarding our non-performing assets. The

Bank had one non-performing asset of $176,000 as of December 31, 2025 and none as of June 30, 2025.

December 31, 2025 June 30, 2025
(In thousands)
Non-accrual loans:
Residential mortgage loans $ — $ —
Commercial loans 176 —
Total non-accrual loans 176 —
Accruing loans past due 90 days or more:
Residential mortgage loans — —
Total non-performing loans 176 —
Real estate owned — —
Total non-performing assets $ 176 $ —
Total non-performing loans to total loans 0.02 % — %
Total non-accrual loans to total loans 0.02 % — %
Total non-performing assets to total assets — % — %

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 historic losses 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 for the year ended June 30, 2025 and in this Form 10-Q. The allowance for credit losses as of December 31, 2025 and June 30, 2025 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.

December 31, 2025
ACL Percent of<br>ACL<br>in Each<br>Category<br>to Total<br>Allocated<br>Allowance Percent<br>of Loans<br>in Each<br>Category<br>to Total<br>Loans ACL to<br>Total Loans
(In thousands)
Owner occupied commercial real estate loans $ 629 11.27 % 6.16 % 0.08 %
Other commercial real estate loans 234 4.19 10.92 0.03
Multi-family loans 1,908 34.18 26.84 0.23
Commercial and industrial loans 175 3.14 1.88 0.02
Residential mortgage loans 2,377 42.58 52.48 0.28
Consumer and other loans 259 4.64 1.72 0.03
Total allocated allowance 5,582 100.00 % 100.00 % 0.67 %
Allowance to non-performing loans —
Allowance to total loans outstanding at<br>   the end of the period 0.67 %
Net (charge-offs) recoveries to average<br>   loans outstanding during the period —
June 30, 2025
--- --- --- --- --- --- --- --- --- --- --- --- ---
ACL Percent of<br>ACL<br>in Each<br>Category<br>to Total<br>Allocated<br>Allowance Percent<br>of Loans<br>in Each<br>Category<br>to Total<br>Loans ACL to<br>Total Loans
(In thousands)
Owner occupied commercial real estate loans $ 675 12.59 % 6.89 % 0.08 %
Other commercial real estate loans 179 3.34 9.07 0.02
Multi-family loans 1,830 34.13 27.48 0.23
Commercial and industrial loans 135 2.52 1.53 0.02
Residential mortgage loans 2,308 43.04 53.40 0.29
Consumer and other loans 235 4.38 1.63 0.03
Total allocated allowance 5,362 100.00 % 100.00 % 0.67 %
Allowance to non-performing loans —
Allowance to total loans outstanding at<br>   the end of the period 0.67 %
Net (charge-offs) recoveries to average<br>   loans outstanding during the period —

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 December 31, 2025 and June 30, 2025, our investment portfolio consisted entirely 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 December 31, 2025:

December 31, 2025
Held to Maturity
Amortized<br>Cost Fair Value Weighted<br>Average<br>Yield
(In thousands)
Due within one year $ 200 $ 200 4.40 %
Due after one year through five years — — —
Due after five years through ten years 13,750 13,411 5.13 %
Due after ten years
Residential mortgage-backed securities:
Issued by FNMA and FHLMC 124,848 107,480 1.64 %
Issued by GNMA 196 199 5.63 %
CMO 1,811 1,729 2.50 %
Total $ 140,805 $ 123,019 2.00 %

For additional information regarding our investment securities portfolio, see Note 3 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 December 31, 2025 and June 30, 2025, we held $30.3 million and $31.8 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 December 31, 2025 and June 30, 2025, 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, our profitability, 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.

December 31, 2025 June 30, 2025
Amount Percent Average<br>Rate Amount Percent Average<br>Rate
(In thousands)
Non-interest-bearing demand<br>   deposits $ 121,715 13.65 % — % $ 114,107 13.49 % — %
Interest-bearing demand deposits 352,366 39.52 1.98 319,829 37.80 1.88
Savings and club accounts 130,139 14.60 0.06 143,881 17.01 0.07
Time deposits 287,320 32.23 3.34 268,205 31.70 3.52
Total $ 891,540 100.00 % $ 846,022 100.00 %

As of December 31, 2025 and June 30, 2025, the aggregate amount of uninsured deposits (deposits in amounts greater than $250,000, which is the maximum amount for federal deposit insurance) was $172.6 million and $145.3 million, respectively. In addition, as of December 31, 2025 and June 30, 2025, the aggregate amount of all our uninsured certificates of deposit was $31.4 million and $24.9 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 totaling $30.3 million and $31.8 million at December 31, 2025, and June 30, 2025, respectively, 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.

December 31, 2025 June 30, 2025
(In thousands)
Maturity Period:
Three months or less $ 6,440 $ 8,473
Over three through six months 5,281 6,530
Over six through twelve months 14,226 7,479
Over twelve months 5,410 2,467
Total $ 31,357 $ 24,949

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

General. Net income decreased $187,000, or 18.3%, to $834,000 for three months ended December 31, 2025 compared to net income of $1.0 million for the three months ended December 31, 2024. Net income for the three months ended December 31, 2025 and 2024 included $202,000 and $791,000, respectively, of net accretion income related to fair value adjustments resulting from the acquisition of Regal Bancorp in September 2023.

Interest Income. Interest income increased $765,000, or 6.6%, to $12.3 million for the three months ended December 31, 2025 from $11.5 million for the three months ended December 31, 2024 due to a $13.4 million increase in the average balance of interest-earning assets and a 24 basis point increase in the yield. The increase resulted from a $857,000, or 8.2%, increase in interest income on loans, partly offset by a $52,000, or 8.9%, decrease in interest income on securities, and a $40,000, or 7.7%, decrease in interest income on interest-bearing deposits at other banks. The increase in interest income on loans was primarily due to a $61.4 million increase in the average balance of loans from $770.6 million for the three months ended December 31, 2024 to $832.0 million for the three months ended December 31, 2025. The decrease in interest income on securities was primarily due to a $14.3 million decrease in the average balance of securities resulting from maturities and repayments, offset by the purchase of a $6.0 million subordinated note. The decrease in interest income on interest-bearing deposits at other banks was due a $33.7 million decrease in the average balance of deposits.

Interest Expense. Interest expense increased $213,000, or 4.9%, to $4.5 million for the three months ended December 31, 2025 from $4.3 million for the three months ended December 31, 2024, due to a $59.6 million increase in the average balance of interest-bearing liabilities partially offset by a seven basis point decrease in the cost. The increase in the average balance was primarily due to an increase of $68.1 million, or 24.0%, in the average balance of interest-bearing demand deposits and a $18.3 million, or 74.3%, increase in the average balance of borrowings for the three months ended December 31, 2025 compared to the three months ended December 31, 2024. The decrease in yield was primarily due to a 49 basis point decrease in the average rate of certificates of deposit, offset by an increase of 20 basis points in the cost of interest-bearing demand deposits to 1.95% for the three months ended December 31, 2025 from 1.75% for the three months ended December 31, 2024, as the Bank offered competitive rates on certain interest-bearing deposit products in the market area.

Net Interest Income. Net interest income increased $552,000, or 7.6%, to $7.8 million for the three months ended December 31, 2025, from $7.2 million for the three months ended December 31, 2024. Net interest rate spread increased 30 basis points to 2.57% for the three months ended December 31, 2025 from 2.27% for the three months ended December 31, 2024. Net interest margin increased 18 basis points to 3.06% for the three months ended December 31, 2025 from 2.88% for the three months ended December 31, 2024. Net interest-earning assets decreased $46.3 million, or 17.4%, to $219.1 million for the three months ended December 31, 2025 from $265.4 million for the three months ended December 31, 2024. The increase in the Company’s net interest rate spread and net interest margin were primarily a result of a decrease in the cost of interest-bearing liabilities while the yield on interest-earning assets increased. Net interest income includes loan prepayment penalty fees and amortization and accretion of premiums and discounts from fair value adjustments. For the three months ended December 31, 2025, loan prepayment penalty fees totaled $115,000 compared to $34,000 for the three months ended December 31, 2024. The net interest income impact of amortization and accretion of premiums and discounts from fair value measurements of assets acquired and liabilities assumed due to acquisition totaled $501,000 during the quarter ended December 31, 2025, compared to $1.2 million in the quarter ended December 31, 2024.

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 $118,000 and $101,000 for the three months ended December 31, 2025 and 2024, respectively.

Three Months Ended December 31,
2025 2024
Average<br>Outstanding<br>Balance Interest Average<br>Yield/Rate(1) Average<br>Outstanding<br>Balance Interest Average<br>Yield/Rate(1)
(In thousands)
Interest-earning assets:
Loans $ 832,009 11,295 5.43 % $ 770,559 $ 10,438 5.42 %
Securities 139,173 534 1.53 % 153,515 586 1.53 %
Other 47,472 481 4.05 % 81,215 521 2.57 %
Total interest-earning<br>   assets 1,018,654 12,310 4.83 % 1,005,289 11,545 4.59 %
Noninterest-earning assets 90,542 47,447
Total assets $ 1,109,196 $ 1,052,736
Interest-bearing liabilities:
Savings and club accounts $ 130,999 22 0.07 % $ 154,892 25 0.07 %
Interest-bearing demand<br>   accounts 351,476 1,717 1.95 % 283,412 1,243 1.75 %
Certificates of deposit 274,250 2,376 3.47 % 277,055 2,743 3.96 %
Total interest-bearing<br>   deposits 756,725 4,115 2.18 % 715,359 4,011 2.24 %
Federal Home Loan Bank<br>   advances 42,833 404 3.77 % 24,577 295 4.80 %
Other borrowings — — 0.00 % — — —
Total interest-bearing<br>   liabilities 799,558 4,519 2.26 % 739,936 4,306 2.33 %
Noninterest-bearing deposits 107,567 105,628
Other noninterest-bearing<br>   liabilities 4,175 17,660
Total liabilities 911,300 863,224
Equity 197,896 189,512
Total liabilities and<br>   equity $ 1,109,196 $ 1,052,736
Net interest income 7,791 $ 7,239
Net interest rate spread 2.57 % 2.27 %
Net interest-earning<br>   assets (2) $ 219,096 $ 265,353
Net interest margin (3) 3.06 % 2.88 %
Average interest-earning<br>   assets to interest-<br>   bearing liabilities 127.40 % 135.86 %
  • Annualized.
  • Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
  • Net interest margin represents net interest income divided by average total interest-earning assets.

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 December 31,
2025 vs. 2024
Increase (Decrease)
Volume Rate Total Change
(In thousands)
Interest-earning assets:
Loans $ 832 $ 25 $ 857
Securities (55 ) 3 (52 )
Other (216 ) 176 (40 )
Total interest-earning assets 561 204 765
Interest-bearing liabilities:
Savings and club accounts (4 ) 1 (3 )
Interest-bearing accounts 299 175 474
Certificates of deposit (28 ) (339 ) (367 )
Federal Home Loan Bank advances 219 (110 ) 109
Other borrowings — — —
Total interest-bearing liabilities 486 (273 ) 213
Change in net interest income $ 75 $ 477 $ 552

Provision for Credit Losses. The Company 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 Company considers, among other factors, past and current loss experience, evaluations of real estate collateral, economic conditions, the type and amount of lending, adverse situations that may affect a borrower’s repayment capacity, while adjusting for delinquency trends, classified or criticized loans, and other risk factors. The allowance is developed using reasonable and supportable forecasts and quantitative modeling techniques, combined with qualitative factors to address risks not captured in historical data, including emerging loan products or localized economic changes. Actual losses may vary from such estimates as more information becomes available or conditions change. The Company assesses the allowance for credit losses and records provisions for credit losses in the income statement on a quarterly basis.

The Company recorded a provision for credit losses of $49,000 during the three months ended December 31, 2025 reflecting the loan growth during the period, compared to a provision for credit losses of $12,000 for the three months ended December 31, 2024. The Company had no charge-offs for the three months ended December 31, 2025 or 2024. The Company had one non-performing loan of $176,000 at December 31, 2025 and no non-performing loans at December 31, 2024. The Company’s allowance for credit losses as a percentage of total loans was 0.67% at December 31, 2025 compared to 0.65% at December 31, 2024.

Noninterest Income. Noninterest income was as follows:

Three Months Ended<br>December 31, Change
2025 2024 Amount Percent
(In thousands)
Service charges and fees on deposits $ 224 $ 256 $ (32 ) (12.5 )%
Increase in cash surrender value of bank-<br>   owned life insurance 268 264 4 1.5 %
Fees and service charges on loans 23 37 (14 ) (37.8 )%
Unrealized (loss) gain on equity securities (1 ) 3 (4 ) (133.3 )%
Realized gain on sale of loans 17 28 (11 ) (39.3 )%
Other 50 39 11 28.2 %
Total noninterest income $ 581 $ 627 $ (46 ) (7.3 )%

Noninterest income decreased $46,000, or 7.3%, to $581,000 for the three months ended December 31, 2025 from $627,000 for the three months ended December 31, 2024 primarily due to a decrease in service charges and fees on deposits of $32,000 and a decrease in fees and service charges on loans of $14,000 during the three months ended December 31, 2025 compared to the three months ended December 31, 2024.

Noninterest Expense. Noninterest expense was as follows:

Three Months Ended<br>December 31, Change
2025 2024 Amount Percent
(In thousands)
Salaries and employee benefits $ 3,924 $ 3,366 $ 558 16.6 %
Occupancy 531 492 39 7.9 %
Furniture and equipment 312 285 27 9.5 %
Data processing 508 461 47 10.2 %
Advertising 112 85 27 31.8 %
FDIC premiums 120 120 — —
Directors fees 101 101 — —
Professional fees 508 467 41 8.8 %
Insurance 117 159 (42 ) (26.4 )%
Telephone, postage and supplies 167 191 (24 ) (12.6 )%
Other 835 782 53 6.8 %
Total noninterest expense $ 7,235 $ 6,509 $ 726 11.2 %

Noninterest expense increased $726,000, or 11.2%, to $7.2 million for the three months ended December 31, 2025 from $6.5 million for the three months ended December 31, 2024 predominantly due to a $558,000, or 16.6%, increase in salaries and employee benefits expense driven by annual merit increases as well as the recognition of stock-based compensation during the three months ended December 31, 2025 compared to a partial period of such expense during the three months ended December 31, 2024 as the initial expense recognition commenced on November 21, 2024.

Income Tax Expense. The provision for income taxes was $254,000 for the three months ended December 31, 2025 compared to $324,000 for the three months ended December 31, 2024. The Company’s effective tax rate was 23.3% for the three months ended December 31, 2025 compared to 24.1% for the three months ended December 31, 2024.

Comparison of Operating Results for the Six Months Ended December 31, 2025 and 2024

General. Net income decreased $861,000, or 36.1%, to $1.5 million for the six months ended December 31, 2025 compared to net income of $2.4 million for the six months ended December 31, 2024. Net income for the six months ended December 31, 2025 and 2024 included $505,000 and $1.8 million, respectively, of net accretion income related to fair value adjustments resulting from the acquisition of Regal Bancorp in September 2023.

Interest Income. Interest income increased $1.2 million, or 5.4%, to $24.2 million for the six months ended December 31, 2025 from $23.0 million for the six months ended December 31, 2024 due to a $12.6 million increase in the average balance of interest-earning assets, and a 19 basis point increase in the yield. The increase resulted from a $1.5 million, or 7.1%, increase in interest income on loans, offset by a $129,000, or 10.3%, decrease in interest income on securities and a $105,000, or 10.1%, decrease in interest income on interest-bearing deposits at other banks. The increase in interest income on loans was due to a $61.1 million increase in the average balance of loans from $759.7 million for the six months ended December 31, 2024 to $820.8 million for the six months ended December 31, 2025, partially offset by a five basis point decrease in the yield on loans. The decrease in interest income on securities was primarily due to a $14.4 million decrease in the average balance of securities resulting from maturities and repayments. The decrease in interest income on interest-bearing deposits at other banks was due to a $34.1 million decrease in the average balance of deposits at other banks.

Interest Expense. Interest expense increased $679,000, or 8.3%, to $8.9 million for the six months ended December 31, 2025 from $8.2 million for the six months ended December 31, 2024, due to a $57.4 million increase in the average balance of interest-bearing liabilities. The increase in the average balance was due to a $20.4 million, or 111.5%, increase in the average balance of borrowings for the six months ended December 31, 2025 compared to the six months ended December 31, 2024, as well as an increase of $64.7 million, or 23.3%, in the average balance of interest-bearing demand deposits. In addition, there was an increase of 35 basis points in the cost of interest-bearing demand deposits to 1.91% for the six months ended December 31, 2025 from 1.56% for the six months ended December 31, 2024 resulting from competitively priced rates offered on certain interest-bearing deposit products in the market area.

Net Interest Income. Net interest income increased $554,000, or 3.7%, to $15.4 million for the six months ended December 31, 2025 from $14.8 million for the six months ended December 31, 2024. Net interest rate spread increased 18 basis points to 2.57% for the six months ended December 31, 2025 from 2.39% for the six months ended December 31, 2024. Net interest margin increased seven basis points to 3.05% for the six months ended December 31, 2025 from 2.98% for the six months ended December 31, 2024. Net interest-earning assets decreased $44.8 million, or 17.0%, to $219.1 million for the six months ended December 31, 2025 from $263.9 million for the six months ended December 31, 2024. The increase in the Company’s net interest rate spread and net interest margin were primarily a result of the yield on interest-earning assets increasing at a faster rate than the cost of interest bearing liabilities. Net interest income includes loan prepayment penalty fees and amortization and accretion of premiums and discounts from fair value adjustments. For the six months ended December 31, 2025, loan prepayment penalty fees totaled $124,000 compared to $101,000 for the six months ended December 31, 2024. The net interest income impact of amortization and accretion of premiums and discounts from fair value measurements of assets acquired and liabilities assumed due to acquisition totaled $1.1 million during the six months ended December 31, 2025, compared to $2.6 million in the six months ended December 31, 2024.

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 $167,000 and $168,000 for the six months ended December 31, 2025 and 2024, respectively.

Six Months Ended December 31,
2025 2024
Average<br>Outstanding<br>Balance Interest Average<br>Yield/Rate(1) Average<br>Outstanding<br>Balance Interest Average<br>Yield/Rate(1)
(In thousands)
Interest-earning assets:
Loans $ 820,786 22,191 5.41 % $ 759,697 $ 20,724 5.46 %
Securities 140,888 1,118 1.59 % 155,314 1,247 1.61 %
Other 46,163 936 4.06 % 80,258 1,041 2.59 %
Total interest-earning<br>   assets 1,007,837 24,245 4.81 % 995,269 23,012 4.62 %
Noninterest-earning assets 91,921 49,726
Total assets $ 1,099,758 $ 1,044,995
Interest-bearing liabilities:
Savings and club accounts $ 133,778 41 0.06 % $ 157,776 48 0.06 %
Interest-bearing demand<br>   accounts 343,041 3,282 1.91 % 278,324 2,168 1.56 %
Certificates of deposit 273,219 4,752 3.48 % 276,995 5,504 3.97 %
Total interest-bearing<br>   deposits 750,038 8,075 2.15 % 713,095 7,720 2.17 %
Federal Home Loan Bank<br>   advances 38,722 783 4.04 % 18,310 459 5.01 %
Other borrowings — — 0.00 % — — —
Total interest-bearing<br>   liabilities 788,760 8,858 2.25 % 731,405 8,179 2.24 %
Noninterest-bearing deposits 107,466 105,038
Other noninterest-bearing<br>   liabilities 9,350 14,997
Total liabilities 905,576 851,440
Equity 194,182 193,555
Total liabilities and<br>   equity $ 1,099,758 $ 1,044,995
Net interest income 15,387 $ 14,833
Net interest rate spread 2.57 % 2.39 %
Net interest-earning<br>   assets (2) $ 219,077 $ 263,864
Net interest margin (3) 3.05 % 2.98 %
Average interest-earning<br>   assets to interest-<br>   bearing liabilities 127.77 % 136.08 %
  • Annualized.
  • Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
  • Net interest margin represents net interest income divided by average total interest-earning assets.

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.

Six Months Ended December 31,
2025 vs. 2024
Increase (Decrease)
Volume Rate Total Change
(In thousands)
Interest-earning assets:
Loans $ 1,666 $ (199 ) $ 1,467
Securities (116 ) (13 ) (129 )
Other (442 ) 337 (105 )
Total interest-earning assets 1,108 125 1,233
Interest-bearing liabilities:
Savings and club accounts (7 ) — (7 )
Interest-bearing accounts 504 610 1,114
Certificates of deposit (75 ) (677 ) (752 )
Federal Home Loan Bank advances 512 (188 ) 324
Other borrowings — — —
Total interest-bearing liabilities 934 (255 ) 679
Change in net interest income $ 174 $ 380 $ 554

Provision for Credit Losses. The Company recorded a provision for credit losses of $221,000 during the six months ended December 31, 2025 reflecting the loan growth during the period, compared to a recovery for credit losses of $142,000 for the six months ended December 31, 2024, which reflected updates made to certain qualitative factors in the calculation of the Company's allowance. The Company had no charge-offs for the six months ended December 31, 2025 or 2024. The Company had one non-performing loan of $176,000 at December 31, 2025 and no non-performing loans at December 31, 2024. The Company’s allowance for credit losses as a percentage of total loans was 0.67% at December 31, 2025 compared to 0.65% at December 31, 2024.

Noninterest Income. Noninterest income was as follows:

Six Months Ended<br>December 31, Change
2025 2024 Amount Percent
(In thousands)
Service charges and fees on deposits $ 454 $ 552 $ (98 ) (17.8 )%
Increase in cash surrender value of bank-<br>   owned life insurance 533 524 9 1.7 %
Fees and service charges on loans 55 93 (38 ) (40.9 )%
Unrealized (loss) gain on equity securities (4 ) 5 (9 ) (180.0 )%
Realized gain on sale of loans 17 51 (34 ) (66.7 )%
Other 91 54 37 68.5 %
Total noninterest income $ 1,146 $ 1,279 $ (133 ) (10.4 )%

Noninterest income decreased $133,000, or 10.4%, to $1.1 million for the six months ended December 31, 2025 from $1.3 million for the six months ended December 31, 2024, primarily due to a decrease in service charges and fees on deposits of $98,000 and a decrease in fees and service charges on loans of $38,000 during the six months ended December 31, 2025 compared to the six months ended December 31, 2024.

Noninterest Expense. Noninterest expense was as follows:

Six Months Ended<br>December 31, Change
2025 2024 Amount Percent
(In thousands)
Salaries and employee benefits $ 7,776 $ 6,606 $ 1,170 17.7 %
Occupancy 1,067 1,124 (57 ) (5.1 )%
Furniture and equipment 665 578 87 15.1 %
Data processing 1,049 1,089 (40 ) (3.7 )%
Advertising 242 167 75 44.9 %
FDIC premiums 240 240 — —
Directors fees 198 194 4 2.1 %
Professional fees 945 956 (11 ) (1.2 )%
Insurance 250 318 (68 ) (21.4 )%
Telephone, postage and supplies 369 372 (3 ) (0.8 )%
Other 1,528 1,535 (7 ) (0.5 )%
Total noninterest expense $ 14,329 $ 13,179 $ 1,150 8.7 %

Noninterest expense increased $1.2 million, or 8.7%, to $14.3 million for the six months ended December 31, 2025 from $13.2 million for the six months ended December 31, 2024 predominantly due to a $1.2 million, or 17.7%, increase in salaries and employee benefits expense driven by annual merit increases as well as the recognition of stock-based compensation during the six months ended December 31, 2025 compared to a partial period of expense during the six months ended December 31, 2024 as the initial expense recognition commenced on November 21, 2024. The increase in salaries and employee benefits was partially offset by a decrease of $68,000 in insurance expenses and a decrease of $57,000 in occupancy expenses due to the closure of a retail branch location.

Income Tax Expense. The provision for income taxes was $456,000 for the six months ended December 31, 2025, compared to $687,000 for the six months ended December 31, 2024. The Company’s effective tax rate was 23.0% for the six months ended December 31, 2025 compared to 22.3% for the six months ended December 31, 2024 due to the non-deductibility of expenses recognized related to incentive stock options.

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 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;
  • 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 December 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 December 31, 2025
Change in Interest Rates Estimated Increase (Decrease) in EVE
(basis points)(1) Estimated EVE(2) Amount Percent
(In thousands)
+400 $ 147,574 $ (69,818 ) (32.12 )%
+300 167,898 (49,493 ) (22.77 )%
+200 186,435 (30,956 ) (14.24 )%
+100 203,068 (14,324 ) (6.59 )%
— 217,391 — —
-100 228,169 10,777 4.96 %
-200 234,539 17,148 7.89 %
-300 237,416 20,024 9.21 %
-400 234,222 16,830 7.74 %
  • Assumes an immediate uniform change in interest rates at all maturities.
  • EVE is the discounted present value of expected cash flows from assets, liabilities and off-balance sheet contracts.

The table above indicates that at December 31, 2025, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would experience a 14.24% decrease in EVE, and in the event of an instantaneous 200 basis point decrease in interest rates, we would experience a 7.89% increase in EVE.

Change in Net Interest Income. The following table sets forth, at December 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 December 31, 2025
Change in Interest<br>Rates (basis<br>points)(1) Net Interest<br>Income Year 1<br>Forecast Year 1<br>Change<br>From Level Net Interest<br>Income Year 2<br>Forecast Year 2<br>Change<br>From Level
(In thousands)
+400 $ 30,472 $ (3,630 ) $ 34,972 $ (1,404 )
+300 31,647 (2,456 ) 35,929 (446 )
+200 32,641 (1,462 ) 36,462 87
+100 33,454 (648 ) 36,593 218
— 34,102 — 36,375 —
-100 34,004 (98 ) 34,811 (1,565 )
-200 33,608 (494 ) 32,708 (3,668 )
-300 32,888 (1,214 ) 30,167 (6,209 )
-400 31,614 (2,488 ) 26,896 (9,479 )

The table above indicates that at December 31, 2025, we would have experienced a 4.28% decrease in NII in the event of an instantaneous parallel 200 basis point increase in market interest rates and a 1.45% 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 and security repayments. 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 15%. At December 31, 2025, this ratio was 9.2%. We believe that we have sufficient sources of liquidity to satisfy our short- and long-term liquidity needs as of December 31, 2025.

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

  • expected loan demand;
  • expected deposit flows;
  • yields available on interest-earning deposits and securities; and
  • the objectives of our asset/liability management program.

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

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 December 31, 2025, cash and cash equivalents totaled $81.8 million.

At December 31, 2025, we had $25.1 million in outstanding loan commitments and $43.3 million of unused lines of credit. Certificates of deposit due within one year of December 31, 2025 totaled $244.6 million, or 27.4% 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 December 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 six months ended December 31, 2025, we originated $63.6 million of loans and purchased $15.7 million. During the six months ended December 31, 2025, we purchased a $6.0 million fixed-to-floating rate subordinated note from another financial institution classified as a security held-to-maturity.

Financing activities consist primarily of activity in deposit accounts, borrowings and repurchases of common stock. Deposits increased $45.5 million, or 5.4%, to $891.5 million at December 31, 2025 from $846.0 million at June 30, 2025 due primarily to increases in interest-bearing deposit accounts resulting from the Bank having raised rates on time deposit accounts in an effort to remain competitive in the market area, offset in part by decreases in non-maturity savings accounts.

We had outstanding borrowings of $50.0 million as of December 31, 2025 and $30.0 million as of June 30, 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 December 31, 2025, Somerset Regal Bank exceeded all regulatory capital requirements. Somerset Regal Bank is considered “well capitalized” under regulatory guidelines. See Note 12 of the Notes to the Consolidated Financial Statements.

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 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.

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, expect as discussed below, the Company's Chief Executive Officer and the Chief Financial Officer concluded that, as of the end of the period covered by this report, the Company's disclosure controls and procedures were effective for the purpose of ensuring that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.

Previously Identified Material Weakness

As reported in our Annual Report on Form 10-K filed with the SEC on September 29, 2025, we identified a material weakness in internal controls related to the untimely recognition of income from life insurance contracts resulting from the death of a former employee. The identified material weakness resulted in a material misstatement in the Company’s consolidated financial statements for the year ended June 30, 2025. We have implemented remedial changes to improve our internal control over financial reporting as described below.

Remediation Plan

Since identifying the material weakness, management, under the oversight of the Audit Committee, has instituted a new reconciliation control to address the above control deficiency. The deficiency originated from differences in the contract balances reported by our bank-owned life insurance (“BOLI”) administrator as compared to the underlying insurance carriers. The new control requires that in the event of a death of an individual insured by any active BOLI policies, management will obtain the death benefit information for which it is contractually entitled to receive from the insurance carriers and reconcile such information to the BOLI administrator records. All required entries will be recorded in the period in which the death occurred. Management believes the foregoing efforts will effectively remediate the material weakness. As management continues to evaluate and work to improve its internal control over financial reporting, management may determine to take additional measures to address control deficiencies or determine to modify the remediation plan described above.

Changes in Internal Control over Financial Reporting

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

Item 6. Exhibits.

Exhibit<br><br>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.

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: February 13, 2026 By: /s/ Christopher J. Pribula
Christopher J. Pribula
President and Chief Executive Officer
Date: February 13, 2026 By: /s/ Harris M. Faqueri
Harris M. Faqueri
Senior Vice President and
Chief Financial Officer

EX-31.1

Exhibit 31.1

CERTIFICATION 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

I, Christopher J. Pribula, certify that:

  • I have reviewed this Quarterly Report on Form 10-Q of SR Bancorp, Inc.;
  • Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
  • Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
  • The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
  • Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
  • Designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
  • Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
  • Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
  • The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
  • All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
  • Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: February 13, 2026 By: /s/ Christopher J. Pribula
Christopher J. Pribula
President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION 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

I, Harris M. Faqueri, certify that:

  • I have reviewed this Quarterly Report on Form 10-Q of SR Bancorp, Inc.;
  • Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
  • Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
  • The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
  • Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
  • Designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
  • Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
  • Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
  • The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
  • All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
  • Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: February 13, 2026 By: /s/ Harris M. Faqueri
Harris M. Faqueri
Senior Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of SR Bancorp, Inc. (the “Company”) on Form 10-Q for the period ended December 31, 2025 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

  • The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
  • The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
Date: February 13, 2026 By: /s/ Christopher J. Pribula
Christopher J. Pribula
President and Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of SR Bancorp, Inc. (the “Company”) on Form 10-Q for the period ended December 31, 2025 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

  • The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
  • The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
Date: February 13, 2026 By: /s/ Harris M. Faqueri
Harris M. Faqueri
Senior Vice President and Chief Financial Officer

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