SR BANCORP, INC. ANNOUNCES QUARTERLY FINANCIAL RESULTS
SR Bancorp, Inc. reported a net income of $1.1 million for Q1 2024, down from $1.6 million in Q4 2023. Excluding certain costs, net income would have been $258,000. Total assets, loans, and deposits saw significant increases. The Bank completed a core system data conversion during the quarter.
Total assets increased by 61.6% to $1.05 billion from June 30, 2023, driven by the acquisition of Regal Bancorp.
Net loans rose by 92.9%, reaching $698.9 million compared to June 30, 2023.
Total deposits surged by 66.3% to $838.0 million, up from $503.9 million at June 30, 2023.
Net income decreased by 33.9% to $1.1 million in Q1 2024 from $1.6 million in Q4 2023.
Net interest income dropped by 8.3% to $8.3 million, with a decrease in net interest rate spread and margin.
Noninterest expense increased by 1.3% to $7.6 million, mainly due to higher data processing expenses.
Insights
BOUND BROOK, N.J., April 30, 2024 /PRNewswire/ -- SR BANCORP, INC. (the "Company") (NASDAQ: SRBK), the holding company for Somerset Regal Bank (the "Bank"), announced net income of
The financial information contained in this earnings release as of and for the periods ended March 31, 2024 and December 31, 2023 is for SR Bancorp and Somerset Regal Bank. Financial information as of June 30, 2023 is for Somerset Savings Bank, SLA, on a stand-alone basis.
Completed Stock Offering and Merger
The conversion of Somerset Savings Bank, SLA from the mutual to stock form of organization and related stock offering by the Company was completed on September 19, 2023. SR Bancorp, Inc.'s common stock began trading on the Nasdaq Capital Market under the trading symbol "SRBK" on September 20, 2023.
The Company sold 9,055,172 shares of common stock at a price of
Promptly following the completion of the conversion and related stock offering, Regal Bancorp, Inc., a
On January 10, 2024, the Company closed one of its retail branch locations in
March 31, 2024 Highlights:
- Net income was
for the three months ended March 31, 2024, compared to net income of$1.1 million for the three months ended December 31, 2023. Excluding$1.6 million of net accretion income related to fair value adjustments, offset by$1.4 million of merger-related costs, net income would have been$242,000 for the three months ended March 31, 2024.$258,000 - Total assets were
, an increase of$1.05 billion , or$401.3 million 61.6% , from at June 30, 2023.$651.5 million - Net loans were
, an increase of$698.9 million , or$336.6 million 92.9% , from at June 30, 2023.$362.3 million - Total deposits were
, an increase of$838.0 million , or$334.1 million 66.3% , from at June 30, 2023.$503.9 million - During the three months ended March 31, 2024, the Bank completed the data conversion of its core system, merging the legacy Regal Bank core system into its existing platform.
Comparison of Operating Results for the Three Months Ended March 31, 2024 and December 31, 2023
General. Net income decreased
Interest Income. Interest income decreased
Interest Expense. Interest expense increased
Net Interest Income. Net interest income decreased
Provision for Credit Losses. The Bank establishes provisions for credit losses, which are charged to operations in order to maintain the allowance for credit losses at a level it considers necessary to absorb probable credit losses attributable to uncollectible loans that are reasonably estimable at the balance sheet date. In determining the level of the allowance for credit losses, the Bank considers, among other things, past and current loss experience, evaluations of real estate collateral, economic conditions, the amount and type of lending, adverse situations that may affect a borrower's ability to repay a loan and the levels of delinquent, classified and criticized loans. The amount of the allowance is based on estimates and the ultimate losses may vary from such estimates as more information becomes available or conditions change. The Bank assesses the allowance for credit losses and records provisions for credit losses on a quarterly basis.
The Bank recorded a recovery for credit losses of
Noninterest Income. Noninterest income increased
Noninterest Expense. Noninterest expense increased
Income Tax Expense. The provision for income taxes was
Comparison of Financial Condition at March 31, 2024 and June 30, 2023
Assets. Assets increased
Cash and Cash Equivalents. Cash and cash equivalents increased
Securities. Total securities (securities available-for-sale and securities held-to-maturity) decreased
Loans. Loans receivable, net, increased
Goodwill and Intangible Assets. Goodwill and intangible assets were
Deposits. Deposits increased
Borrowings. During the year ended June 30, 2023, the Bank borrowed
Equity. Equity increased
About Somerset Regal Bank
Somerset Regal Bank is a full-service
Forward-Looking Statements
Certain statements contained herein are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements, which are based on certain current assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of the words "may," "will," "should," "could," "would," "plan," "potential," "estimate," "project," "believe," "intend," "anticipate," "expect," "target" and similar expressions. Forward-looking statements are based on current beliefs and expectations of management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. Certain factors that could cause actual results to differ materially from expected results include increased competitive pressures, changes in the interest rate environment, inflation, general economic conditions or conditions within the securities markets, our ability to successfully integrate acquired operations and realize the expected level of synergies and cost savings, potential recessionary conditions, real estate market values in the Bank's lending area changes in the quality of our loan and security portfolios, increases in non-performing and classified loans, economic assumptions that may impact our allowance for credit losses calculation, changes in liquidity, including the size and composition of our deposit portfolio, and the percentage of uninsured deposits in the portfolio, the availability of low-cost funding, monetary and fiscal policies of the
SR Bancorp, Inc. and Subsidiaries | ||||||||
Consolidated Statements of Financial Condition | ||||||||
March 31, 2024 | June 30, 2023 | |||||||
(Unaudited) | ||||||||
Assets | ||||||||
Cash and due from banks | $ | 52,775 | $ | 8,657 | ||||
Interest-bearing deposits at other banks | 19,718 | 33,792 | ||||||
Total cash and cash equivalents | 72,493 | 42,449 | ||||||
Securities available-for-sale, at fair value | 32,628 | 36,076 | ||||||
Securities held-to-maturity, at amortized cost | 161,817 | 171,185 | ||||||
Equity securities, at fair value | 27 | 24 | ||||||
Loans receivable, net of allowance for credit losses of | 698,891 | 362,252 | ||||||
Premises and equipment, net | 4,954 | 3,546 | ||||||
Right-of-use asset | 2,772 | 19 | ||||||
Restricted equity securities, at cost | 1,274 | 726 | ||||||
Accrued interest receivable | 2,487 | 1,189 | ||||||
Bank owned life insurance | 36,840 | 28,714 | ||||||
Goodwill and intangible assets | 28,608 | — | ||||||
Other assets | 10,034 | 5,306 | ||||||
Total assets | $ | 1,052,825 | $ | 651,486 | ||||
Liabilities and Equity | ||||||||
Liabilities | ||||||||
Deposits: | ||||||||
Noninterest-bearing | $ | 123,463 | $ | 40,687 | ||||
Interest-bearing | 714,572 | 463,230 | ||||||
Total deposits | 838,035 | 503,917 | ||||||
Borrowings | — | 20,000 | ||||||
Advance payments by borrowers for taxes and insurance | 7,123 | 4,313 | ||||||
Accrued interest payable | 224 | — | ||||||
Lease liability | 2,859 | 19 | ||||||
Other liabilities | 5,311 | 1,153 | ||||||
Total liabilities | 853,552 | 529,402 | ||||||
Equity | ||||||||
Common stock, | 95 | — | ||||||
Additional paid-in capital | 91,444 | — | ||||||
Retained earnings | 119,237 | 127,099 | ||||||
Unearned compensation ESOP | (7,131) | — | ||||||
Accumulated other comprehensive loss | (4,372) | (5,015) | ||||||
Total stockholders' equity | 199,273 | 122,084 | ||||||
Total liabilities and stockholders' equity | $ | 1,052,825 | $ | 651,486 |
SR Bancorp, Inc. and Subsidiaries | ||||||||
Consolidated Statements of Income | ||||||||
Three Months Ended | ||||||||
March 31, 2024 | December 31, 2023 | |||||||
(Unaudited) | ||||||||
Interest Income | ||||||||
Loans, including fees | $ | 9,819 | $ | 10,186 | ||||
Securities: | ||||||||
Taxable | 779 | 852 | ||||||
Non-taxable | — | — | ||||||
Federal funds sold | 76 | 71 | ||||||
Interest bearing deposits at other banks | 974 | 1,177 | ||||||
Total interest income | 11,648 | 12,286 | ||||||
Interest Expense | ||||||||
Deposits: | ||||||||
Demand | 122 | 335 | ||||||
Savings and time | 3,031 | 2,692 | ||||||
Borrowings | 227 | 240 | ||||||
Total interest expense | 3,380 | 3,267 | ||||||
Net Interest Income | 8,268 | 9,019 | ||||||
Provision (Credit) for Credit Losses | (142) | (107) | ||||||
Net Interest Income After Provision (Credit) For Credit Losses | 8,410 | 9,126 | ||||||
Noninterest Income | ||||||||
Service charges and fees | 193 | 212 | ||||||
Increase in cash surrender value of bank owned life insurance | 247 | 233 | ||||||
Fees and service charges on loans | 36 | 6 | ||||||
Unrealized gain on equity securities | 2 | 5 | ||||||
Realized gain on sale of loans | 19 | 31 | ||||||
Other | 19 | (122) | ||||||
Total noninterest income | 516 | 365 | ||||||
Noninterest Expense | ||||||||
Salaries and employee benefits | 3,631 | 3,875 | ||||||
Occupancy | 772 | 665 | ||||||
Furniture and equipment | 285 | 228 | ||||||
Data Processing | 951 | 634 | ||||||
Advertising | 75 | 72 | ||||||
FDIC premiums | 120 | 145 | ||||||
Directors fees | 103 | 97 | ||||||
Professional fees | 357 | 564 | ||||||
Insurance | 165 | 108 | ||||||
Telephone, postage and supplies | 210 | 97 | ||||||
Other | 902 | 991 | ||||||
Total noninterest expense | 7,571 | 7,476 | ||||||
Income Before Income Tax Expense | 1,355 | 2,015 | ||||||
Income Tax Expense | 292 | 408 | ||||||
Net Income | 1,063 | 1,607 | ||||||
Basic earnings per share | $ | 0.12 | $ | 0.18 | ||||
Diluted earnings per share | $ | 0.12 | $ | 0.18 |
SR Bancorp, Inc. and Subsidiaries | ||||
Selected Ratios | ||||
Three Months Ended | ||||
March 31, 2024 | December 31, 2023 | |||
(Unaudited) | ||||
Performance Ratios: (1) | ||||
Return on average assets (2) | 0.39 % | 0.60 % | ||
Return on average equity (3) | 2.12 % | 3.36 % | ||
Net interest margin (4) | 3.31 % | 3.56 % | ||
Net interest rate spread (5) | 2.83 % | 3.08 % | ||
Efficiency ratio (6) | 86.19 % | 79.67 % | ||
Total gross loans to total deposits | 84.00 % | 83.12 % | ||
Asset Quality Ratios: | ||||
Allowance for credit losses on loans as a percentage of total gross loans | 0.72 % | 0.74 % | ||
Allowance for credit losses on loans as a percentage of non-performing | 2307.27 % | 3598.62 % | ||
Net (charge-offs) recoveries to average outstanding loans during the period | 0.00 % | 0.00 % | ||
Non-performing loans as a percentage of total gross loans | 0.03 % | 0.02 % | ||
Non-performing assets as a percentage of total assets | 0.02 % | 0.01 % | ||
Other Data: | ||||
Tangible book value per common share (7) | ||||
Tangible common equity to tangible assets | 16.66 % | 16.25 % |
(1) Performance ratios for the three month periods ended March 31, 2024 and December 31, 2023 are annualized. |
(2) Represents net income divided by average total assets. |
(3) Represents net income divided by average equity. |
(4) Represents net interest income as a percentage of average interest-earning assets. (5) Represents net interest rate spread as a percentage of average interest-earning assets. |
(6) Represents non-interest expense divided by the sum of net interest income and non-interest income. |
(7) Tangible book value per share is calculated based on total stockholders' equity, excluding intangible assets (goodwill and core deposit intangibles), divided by total shares outstanding as of the balance sheet date. Goodwill and core deposit intangibles were |
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SOURCE SR Bancorp, Inc.
FAQ
What was SR Bancorp's net income for Q1 2024?
SR Bancorp reported a net income of $1.1 million for the three months ending March 31, 2024.
How did SR Bancorp's net income change from Q4 2023?
SR Bancorp's net income decreased from $1.6 million in Q4 2023 to $1.1 million in Q1 2024.
What were SR Bancorp's total assets at the end of Q1 2024?
SR Bancorp's total assets were $1.05 billion at the end of Q1 2024.
What caused the decrease in SR Bancorp's net interest income?
The decrease in net interest income was due to a drop in net interest rate spread and margin.
How much did SR Bancorp's noninterest expense increase by?
SR Bancorp's noninterest expense increased by 1.3% to $7.6 million.