SR Bancorp Reports Decrease in Q1 Net Income, Despite Asset Growth and Merger Benefits

SR Bancorp, Inc. reported a net income of $537,000 for the three months ended March 31, 2025, a decrease of 49.5% compared to $1.1 million for the same period in 2024. The decline in profitability was attributed to a significant reduction in net interest income, which fell to $7.2 million from $8.3 million year-over-year. This decrease was primarily driven by increased interest expenses, which rose 27.2% to $4.3 million, largely due to higher rates on interest-bearing deposits and borrowings. In contrast, net income for the nine months ended March 31, 2025, increased to $2.9 million, a substantial recovery from a net loss of $7.8 million in the prior year, bolstered by net accretion income related to fair value adjustments from the company's recent merger.

Total assets for SR Bancorp increased by 5.2% to $1.07 billion as of March 31, 2025, up from $1.02 billion at the end of June 2024. This growth was primarily driven by a $48.9 million increase in loans receivable, which reached $780.8 million, reflecting a strategic focus on residential and multi-family commercial loans. The company also saw a notable increase in cash and cash equivalents, which rose by 35.5% to $62.2 million, supported by a $30 million borrowing from the Federal Home Loan Bank of New York. However, securities held-to-maturity decreased by 6.9% to $145.4 million, primarily due to principal repayments and maturities.

In terms of operational developments, SR Bancorp's merger with Regal Bancorp, completed in September 2023, has significantly expanded its commercial lending capabilities. The merger has allowed the company to enhance its loan portfolio, with commercial loans now representing 45.5% of total loans. The company is actively pursuing strategies to increase its market share in commercial loan originations within its primary market area. As of March 31, 2025, the company had 8,996,835 shares of common stock outstanding, reflecting ongoing efforts to manage its equity structure post-merger.

Looking ahead, SR Bancorp remains focused on navigating the competitive landscape of the banking sector, particularly in light of rising interest rates and changing market conditions. The company plans to continue leveraging its expanded commercial lending capabilities while managing interest rate risk through strategic asset-liability management. The outlook for the upcoming quarters will depend on the company's ability to maintain deposit growth and manage interest expenses effectively, as well as the overall economic environment impacting loan demand and credit quality.