SR Bancorp, Inc.

Previous 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.

Current wording

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.

Previous wording

the imposition of tariffs or other domestic or international governmental policies;

Current wording

the imposition of tariffs or other domestic or international governmental policies and any retaliatory responses;

Previous wording

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 volume 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.

Current wording

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.

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. 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, 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.

Previous 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.

Current wording

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.

Previous 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.

Current wording

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.

Previous 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.

Current wording

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.

Previous wording

Loans. Loans receivable, net, increased $29.2 million, or 3.7%, to $826.4 million at September 30, 2025 from $797.2 million at June 30, 2025, driven by a net growth in residential mortgage loans of $12.5 million and a net growth in total commercial loans of $16.0 million, in each case as a result of strong market demand due to the lower rate environment.

Current wording

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.

Previous 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.

Current wording

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.

Previous 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.

Current wording

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.

Previous 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.

Current wording

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.

Previous 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.

Current wording

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.

Previous 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.

Current wording

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.

Previous 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.

Current wording

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.

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 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.

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 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.

Previous wording

Fixed Versus Adjustable-Rate Loans. The following tables sets forth our fixed and adjustable-rate loans at September 30, 2025 that are contractually due after September 30, 2026.

Current wording

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.

Previous wording

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. Our Senior Mortgage Lending Officer reports monitored loans, including all loans rated special mention, substandard, doubtful or loss, to the Board of Directors on a quarterly basis. In addition, management presents a quarterly credit loss allowance analysis to our Board of Directors.

Current wording

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.

Previous 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.

Current wording

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

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 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.

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 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.

Previous wording

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, profitability to us, 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.

Current wording

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.

Previous 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.

Current wording

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.

Previous 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.

Current wording

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.

Previous 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.

Current wording

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.

Previous 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.

Current wording

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.

Previous 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.

Current wording

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.

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 $50,000 and $67,000 for the three months ended September 30, 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 $118,000 and $101,000 for the three months ended December 31, 2025 and 2024, respectively.

Previous wording

Provision for Credit Losses. The Bank 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 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.

Current wording

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.

Previous wording

Noninterest income decreased $236,000, or 29.5%, to $565,000 for the three months ended September 30, 2025 from $801,000 for the three months ended September 30, 2024, primarily due to a decrease in other income of $123,000 and a decrease in service charges and fees of $66,000 primarily due to a lower volume of account fees and card charges incurred during the three months ended September 30, 2025 compared to the three months ended September 30, 2024.

Current wording

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.

Previous 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.

Current wording

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.

Previous wording

Noninterest expense increased $275,000, or 4.0%, to $7.1 million for the three months ended September 30, 2025 from $6.8 million for the three months ended September 30, 2024, due to a $613,000, or 18.9%, increase in salaries and employee benefits expense primarily driven by stock awards granted to non-employee directors and certain officers and employees of the Company after September 30, 2024. The increase in salaries and employee benefits was offset by a decrease of $210,000 in other expenses, driven by a decrease of $71,000 in the amortization expense of fair value adjustments resulting from the acquisition of Regal Bank in September 2023, a decrease of $96,000 in occupancy expenses due to the closure of a retail branch location and a decrease of $89,000 in data processing fees.

Current wording

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.

Previous 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.

Current wording

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.

Previous 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.

Current wording

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.

Previous 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.

Current wording

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.

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 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.

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 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.

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 September 30, 2025, cash and cash equivalents totaled $58.3 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 December 31, 2025, cash and cash equivalents totaled $81.8 million.

Previous 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.

Current wording

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.

Previous 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.

Current wording

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.

Previous 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.

Current wording

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.

Previous wording

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

Current wording

We had outstanding borrowings of $50.0 million as of December 31, 2025 and $30.0 million as of June 30, 2025.