#United States #SR Bancorp #Somerset Regal Bank #NASDAQ SRBK #Bound Brook

SR Bancorp, Inc. Quarterly Financial Results Overview

On January 31, 2025, SR Bancorp, Inc. (NASDAQ: SRBK), the parent company of Somerset Regal Bank, disclosed its financial performance for the quarter ending December 31, 2024. The report revealed a net income of $1.0 million, equivalent to $0.12 per share, representing a notable decrease compared to the $1.6 million net income reported for the same period in the previous year.

Financial Highlights

The reported income decline was primarily due to net accretion income related to fair value adjustments from the recently completed merger with Regal Bancorp. Excluding these adjustments, the net income for the latest quarter would stand at $452,000. In contrast, for the three months ended in December 2023, the adjusted net income was $605,000, when factoring in the merger costs and accretion income. Thus, the results highlight the overall changes and challenges following the merger process.

For the half-year period ending December 31, 2024, the company saw a shift towards a net income of $2.4 million, contrasting with a significant net loss of $8.9 million experienced in the previous year. Again, when accounting for merger-related adjustments, this net income for 2024 effectively reflects a strong turnaround, indicating a recovery trajectory for the bank.

Growth in Key Financial Metrics

As of December 31, 2024, SR Bancorp reported total assets amounting to $1.06 billion, marking a 4.3% increase from $1.02 billion on June 30, 2024. The growth in net loans was particularly notable, totaling $775.8 million, which represents a 6.0% increment from the $731.9 million recorded half a year earlier. Total deposits raised from $807.1 million to $824.1 million during the same period, illustrating a 2.1% rise, signifying increased customer confidence and retention.

The report attributes the increase in lending primarily to strategic borrowing, enhancing liquidity for new loan generation as evidenced by a $30 million short-term borrowing.

Analyzing Income Dynamics

Diving deeper into the income dynamics, the latest report showed a decrease in interest income, which dropped by approximately $741,000, or 6.0%, for the quarter compared to the previous year. This was accredited to a reduction in yields on interest-earning assets and a decline in the average balances of these assets. Notably, interest income from deposits at other banks decreased significantly.

Conversely, interest expense surged by 31.8%, reaching $4.3 million mainly due to heightened competition prompting the bank to raise rates on interest-bearing deposit products. This increase in expenses contributed to a net interest income decrease of 19.7% Year-over-Year, down to $7.2 million.

Operational Efficiency Amid Challenges

Operational efficiency reflected in noninterest expenses saw a commendable reduction, dropping to $6.5 million from $7.5 million year-on-year. This can be attributed to a decrease in employee benefits, a significant cost driver in bank operations. Conversely, the provision for credit losses remained modest with the bank establishing a $12,000 provision in the most recent quarter, compared to a recovery of $107,000 from the preceding year.

Future Outlook for SR Bancorp

Looking ahead, SR Bancorp's trajectory post-merger seems promising, with management focusing on optimizing operational efficiencies and strengthening customer trust. The management remained optimistic despite challenges in the interest environment and stressed commitment to enhancing core offerings to retain competitive positioning.

As the firm navigates through the post-merger landscape, continued performance monitoring and resource allocation strategies will be instrumental in sustaining this positive trajectory. Stakeholders can expect further strategic insights as the bank plans its path forward in the evolving financial landscape.