SR Bancorp, Inc.

Previous wording

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

Current wording

The following management discussion and analysis of the Company’s consolidated financial condition as of September 30, 2025 and the results of operations for the three months ended September 30, 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 September 30, 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 three months ended September 30, 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.

Previous wording

statements regarding our business plans, prospects, financial performance, growth and operating strategies;

Current wording

statements regarding our business plans, prospects, financial condition and performance, growth and operating strategies;

Previous wording

inflation and changes in the interest rate environment that reduce our margins and yields, the fair value of financial instruments or our level of loan originations, or increase the level of defaults, losses and prepayments on loans we have made and make;

Current wording

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;

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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.

Previous wording

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

Current wording

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.

Previous wording

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

Current wording

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.

Previous wording

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

Current wording

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. If the estimated fair value of the reporting unit less than the carrying value, goodwill is impaired and is written down to its estimated fair value.

Previous wording

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

Current wording

Total Assets. Total assets increased $25.7 million, or 2.4%, to $1.11 billion at September 30, 2025 from $1.08 billion at June 30, 2025. The increase was primarily driven by new loan originations, resulting in a net increase of $29.2 million in loans receivable, offset by a $3.6 million decrease in securities.

Previous wording

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

Current wording

Cash and Cash Equivalents. Cash and cash equivalents increased $526,000, or 0.9%, to $58.3 million at September 30, 2025 from $57.8 million at June 30, 2025.

Previous wording

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

Current wording

Securities. Securities held-to-maturity decreased $3.6 million, or 2.5%, to $138.2 million at September 30, 2025 from $141.8 million at June 30, 2025. The decrease was primarily due to principal repayments and maturities.

Previous wording

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

Current wording

Bank Owned Life Insurance. Bank owned life insurance increased $264,000, or 0.7%, to $36.9 million at September 30, 2025 from $36.6 million at June 30, 2025 due to an increase in the cash surrender value of the underlying assets.

Previous wording

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

Current wording

Goodwill and Intangible Assets. Goodwill and the core deposit intangible asset recognized from the acquisition of Regal Bank in September 2023 totaled $26.4 million at September 30, 2025 compared to $26.7 million at June 30, 2025. The decrease was due to the amortization of the core deposit intangible.

Previous wording

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

Current wording

Total Liabilities. Total liabilities increased $27.5 million, or 3.1%, to $918.2 million at September 30, 2025 from $890.6 million at June 30, 2025. The increase was primarily due to a $23.6 million increase in deposits and a $5.0 million increase in borrowings from the Federal Home Loan Bank of New York.

Previous wording

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

Current wording

Deposits. Deposits increased $23.6 million, or 2.8%, to $869.6 million at September 30, 2025 from $846.0 million at June 30, 2025. Increases in interest-bearing deposit accounts resulted from the Bank raising rates on certain time deposit accounts in an effort to remain competitive in the market area. At September 30, 2025, $116.9 million, or 13.4%, of total deposits consisted of noninterest-bearing deposits. At September 30, 2025, $168.2 million, or 19.3%, of total deposits were uninsured.

Previous wording

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

Current wording

Borrowings. During the three months ended September 30, 2025, the Bank borrowed an additional $5.0 million from the Federal Home Loan Bank of New York to provide additional liquidity to fund new loans. At September 30, 2025 and 2024, the Bank had $35.0 million and $30.0 million in outstanding borrowings, respectively.

Previous wording

Total Equity. Total equity decreased $4.4 million, or 2.2%, to $195.1 million at March 31, 2025 from $199.5 million at June 30, 2024. The decrease was primarily due to the repurchase of 627,461 shares of common stock at a cost of $7.3 million, partially offset by net earnings of $2.9 million.

Current wording

Total Equity. Total equity decreased $1.8 million, or 1.0%, to $191.9 million at September 30, 2025 from $193.8 million at June 30, 2025. The decrease was primarily due to the repurchase of 198,310 shares of common stock at a cost of $2.9 million, partially offset by net earnings of $693,000.

Previous wording

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

Current wording

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 Bank in September 2023 greatly expanded our commercial loan portfolio and commercial lending capabilities. At September 30, 2025, residential mortgage loans comprised 53.0% of our total loan portfolio and commercial loans comprised 45.3%, which largely consisted of multi-family loans.

Previous wording

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

Current wording

The Bank had no non-performing assets or loan modifications to borrowers experiencing financial difficulty as of September 30, 2025 or June 30, 2025.

Previous wording

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

Current wording

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 September 30, 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.

Previous wording

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

Current wording

At September 30, 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.

Previous wording

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

Current wording

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 September 30, 2025 and June 30, 2025, we held $34.9 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 September 30, 2025 and June 30, 2025, we had no brokered deposits.

Previous wording

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

Current wording

As of September 30, 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 $168.2 million and $145.3 million, respectively. In addition, as of September 30, 2025 and June 30, 2025, the aggregate amount of all our uninsured certificates of deposit was $27.0 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 of municipalities and local government agencies are protected under a New Jersey supplemental insurance program with collateralized assets.

Previous wording

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

Current wording

General. Net income decreased $674,000, or 49.3%, to $693,000 for the three months ended September 30, 2025 compared to net income of $1.4 million for the three months ended September 30, 2024. Net income for the three months ended September 30, 2025 and 2024 included $303,000 and $1.0 million, respectively, of net accretion income related to fair value adjustments resulting from the acquisition of Regal Bank in September 2023.

Previous wording

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

Current wording

Interest Income. Interest income increased $468,000, or 4.1%, to $11.9 million for the three months ended September 30, 2025 from $11.5 million for the three months ended September 30, 2024 due to a $50.6 million increase in the average balance of interest-earning assets, offset by a 6 basis point decrease in the yield. The increase resulted from a $609,000, or 5.9%, increase in interest income on loans, offset by a $64,000, or 12.3%, decrease in interest income on interest-bearing deposits at other banks and a $77,000, or 11.6%, decrease in interest income on securities. The increase in interest income on loans was due to a $60.7 million increase in the average balance of loans from $748.8 million for the three months ended September 30, 2024 to $809.5 million for the three months ended September 30, 2025, offset by an 11 basis point decrease in the yield on loans. The decrease in interest income on securities was primarily due to a $14.5 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 107 basis point decrease in the yield.

Previous wording

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

Current wording

Interest Expense. Interest expense increased $467,000, or 12.1%, to $4.3 million for the three months ended September 30, 2025 from $3.9 million for the three months ended September 30, 2024,due to a $55.1 million increase in the average balance of interest-bearing liabilities and an nine basis point increase in the cost. The increase in the average balance was primarily due to a $22.6 million, or 187.4%, increase in the average balance of borrowings for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 and an increase of $61.4 million, or 22.5%, in the average balance of interest-bearing deposits. The increase in the cost of interest-bearing liabilities was primarily due to an increase of 51 basis points in the cost of interest-bearing deposits to 1.87% for the three months ended September 30, 2025 from 1.36% for the three months ended September 30, 2024, as the Bank raised rates on certain interest-bearing deposit products in an effort to remain competitive in the market area, offset by a 50 basis point decrease in the average rate of certificates of deposit.

Previous wording

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

Current wording

Net Interest Income. Net interest income remained unchanged at $7.6 million for the three months ended September 30, 2025, compared to the three months ended September 30, 2024. Net interest rate spread decreased 14 basis points to 2.56% for the three months ended September 30, 2025 from 2.70% for the three months ended September 30, 2024. Net interest margin decreased 16 basis points to 3.05% for the three months ended September 30, 2025 from 3.21% for the three months ended September 30, 2024. Net interest-earning assets decreased $4.5 million, or 2.0%, to $219.0 million for the three months ended September 30, 2025 from $223.5 million for the three months ended September 30, 2024. The decrease in the Bank’s net interest rate spread and net interest margin were primarily a result of the cost of interest-bearing liabilities increasing while the yield on interest-earning assets decreased.

Previous wording

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

Current wording

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 $50,000 and $67,000 for the three months ended September 30, 2025 and 2024, respectively.

Previous wording

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

Current wording

The Bank recorded a provision for credit losses of $171,000 during the three months ended September 30, 2025 reflecting the loan growth during the period, compared to a recovery for credit losses of $154,000 for the three months ended September 30, 2024 reflecting updates made to the risk levels of certain qualitative factors in the calculation of the Bank's allowance. The Bank had no charge-offs for the three months ended September 30, 2025 or 2024. The Bank had no non-performing loans at September 30, 2025 and $9,000 of non-performing loans at September 30, 2024. The Bank’s allowance for credit losses as a percentage of total loans was 0.67% at September 30, 2025 compared to 0.66% at September 30, 2024.

Previous wording

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

Current wording

Income Tax Expense. The provision for income taxes was $202,000 for the three months ended September 30, 2025, compared to $363,000 for the three months ended September 30, 2024. The Bank’s effective tax rate was 22.6% for the three months ended September 30, 2025 compared to 21.0% for the three months ended September 30, 2024. The higher effective tax rate in 2025 related to the non-deductibility of expenses recognized related to incentive stock options.

Previous wording

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

Current wording

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.

Previous wording

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

Current wording

The table above indicates that at September 30, 2025, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would experience a 17.40% decrease in EVE, and in the event of an instantaneous 200 basis point decrease in interest rates, we would experience a 9.30% increase in EVE.

Previous wording

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

Current wording

The table above indicates that at September 30, 2025, we would have experienced a 4.97% decrease in NII in the event of an instantaneous parallel 200 basis point increase in market interest rates and a 0.55% decrease in NII in the event of an instantaneous 200 basis point decrease in market interest rates.

Previous wording

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

Current wording

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 30%. At September 30, 2025, this ratio was 6.7%. We believe that we have sufficient sources of liquidity to satisfy our short- and long-term liquidity needs as of September 30, 2025.

Previous wording

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

Current wording

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 September 30, 2025, cash and cash equivalents totaled $58.3 million.

Previous wording

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

Current wording

At September 30, 2025, we had $67.7 million in outstanding loan commitments and $43.3 million of unused lines of credit. Certificates of deposit due within one year of September 30, 2025 totaled $238.6 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 September 30, 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.

Previous wording

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

Current wording

Our primary investing activities are originating and purchasing loans and purchasing mortgage-backed securities. During the three months ended September 30, 2025, we originated $43.7 million of loans and purchased $9.3 million. We had no purchases of securities classified as held-to-maturity during the three months ended September 30, 2025.

Previous wording

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

Current wording

Financing activities consist primarily of activity in deposit accounts, borrowings and repurchases of common stock. Deposits increased $23.6 million, or 2.8%, to $869.6 million at September 30, 2025 from $846.0 million at June 30, 2025 due primarily to increases in interest-bearing deposit accounts that were offset in part by decreases in non-maturity savings accounts due in part to the Bank having raised rates on certain interest-bearing deposit products in an effort to remain competitive in the market area.

Previous wording

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

Current wording

We had outstanding borrowings of $35.0 million as of September 30, 2025 and $30.0 million as of June 30, 2025.

Previous wording

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

Current wording

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.