SR Bancorp, Inc.

Previous 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.

Current wording

The following management discussion and analysis of the Company’s consolidated financial condition as of March 31, 2026 and the results of operations for the three and nine months ended March 31, 2026 and 2025 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 March 31, 2026, 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 nine months ended March 31, 2026 and 2025. 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

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.

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 asset.

Previous 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.

Current wording

Total Assets. Total assets increased $59.0 million, or 5.4%, to $1.14 billion at March 31, 2026 from $1.08 billion at June 30, 2025. The increase was driven by new loan originations, resulting in a net increase of $61.9 million in loans receivable, as well as an increase in cash and cash equivalents of $5.9 million primarily due to an increase in deposits and borrowings, partially offset by a decrease of $7.0 million in securities held-to-maturity.

Previous 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.

Current wording

Cash and Cash Equivalents. Cash and cash equivalents increased $5.9 million, or 10.2%, to $63.7 million at March 31, 2026 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 $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.

Current wording

Securities. Securities held-to-maturity decreased $7.0 million, or 5.0%, to $134.8 million at March 31, 2026 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 issued by another financial institution.

Previous 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.

Current wording

Loans. Loans receivable, net, increased $61.9 million, or 7.8%, to $859.1 million at March 31, 2026 from $797.2 million at June 30, 2025, driven by commercial loan growth of $33.9 million, residential mortgage loan growth of $27.0 million and consumer loan growth of $1.0 million as a result of strong market demand.

Previous 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.

Current wording

Bank Owned Life Insurance. Bank owned life insurance increased $1.5 million, or 4.1%, to $38.1 million at March 31, 2026 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 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.

Current wording

Goodwill and Intangible Assets. Goodwill and the core deposit intangible asset recognized from the acquisition of Regal Bancorp in September 2023 totaled $25.8 million at March 31, 2026 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 $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.

Current wording

Total Liabilities. Total liabilities increased $68.4 million, or 7.7%, to $959.0 million at March 31, 2026 from $890.6 million at June 30, 2025. The increase was primarily due to a $48.3 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 $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.

Current wording

Deposits. Deposits increased $48.3 million, or 5.7%, to $894.3 million at March 31, 2026 from $846.0 million at June 30, 2025.*** ***Increases in interest-bearing deposit accounts were driven by the Bank having raised rates on certain interest-bearing deposit accounts in an effort to remain competitive in the market area, resulting in increases in the balances of demand deposits and certificates of deposit, while the balance of savings and club accounts decreased. At March 31, 2026, $111.3 million, or 12.4%, of total deposits consisted of noninterest-bearing deposits. At March 31, 2026, $164.6 million, or 18.4%, of total deposits were uninsured.

Previous 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.

Current wording

Borrowings. During the nine months ended March 31, 2026, the Company borrowed an additional $20.0 million from the Federal Home Loan Bank of New York to provide additional liquidity to fund new loans. At March 31, 2026 and 2025, the Company had $50.0 million and $30.0 million in outstanding borrowings, respectively.

Previous 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.

Current wording

Total Equity. Total equity decreased $9.3 million, or 4.8%, to $184.5 million at March 31, 2026 from $193.8 million at June 30, 2025. The decrease was primarily due to the repurchase of 761,229 shares of common stock at a cost of $12.3 million and cash dividends of $0.15 per share at a cost of $1.2 million, partially offset by net earnings of $2.4 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 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.

Current wording

We offer a variety of loans, including residential, commercial real estate, multi-family, commercial and industrial and consumer loans. At March 31, 2026, residential mortgage loans comprised 52.7% of our total loan portfolio and commercial loans comprised 45.7%, which consisted largely of multi-family loans.

Previous wording

Non-Performing Assets. The following table sets forth information regarding our non-performing assets. The

Current wording

***Non-Performing Assets.***The Bank had no non-performing assets as of March 31, 2026 and 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 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.

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 March 31, 2026 and June 30, 2025, we held $28.9 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 March 31, 2026 and June 30, 2025, we had no brokered deposits.

Previous 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.

Current wording

As of March 31, 2026 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 $164.6 million and $145.3 million, respectively. In addition, as of March 31, 2026 and June 30, 2025, the aggregate amount of all our uninsured certificates of deposit was $31.1 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 $26.5 million and $31.8 million at March 31, 2026, 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 $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.

Current wording

General. Net income increased $349,000, or 65.0%, to $886,000 for the three months ended March 31, 2026 compared to net income of $537,000 for the three months ended March 31, 2025. Net income for the three months ended March 31, 2026 and 2025 included $142,000 and $575,000, 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 $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.

Current wording

Interest Income**.** Interest income increased $992,000, or 8.6%, to $12.5 million for the three months ended March 31, 2026 from $11.5 million for the three months ended March 31, 2025, due to a $21.5 million increase in the average balance of interest-earning assets and a 29 basis point increase in the yield. These increases resulted from a $1.0 million, or 9.9%, increase in interest income on loans and a $43,000, or 7.2%, increase in interest income on securities, partly offset by a $77,000, or 14.3%, decrease in interest income on interest-bearing deposits at other banks. The increase in interest income on loans was primarily due to a $70.0 million increase in the average balance of loans from $778.5 million for the three months ended March 31, 2025 to $848.5 million for the three months ended March 31, 2026. The increase in interest income on securities was due to a 23 basis point increase in the yield, partially offset by a $9.4 million decrease in the average balance. The decrease in interest income on interest-bearing deposits at other banks was due to a $39.0 million decrease in the average balance of deposits.

Previous 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.

Current wording

Interest Expense. Interest expense increased $363,000, or 8.4%, to $4.7 million for the three months ended March 31, 2026 from $4.3 million for the three months ended March 31, 2025, due to a $68.4 million increase in the average balance of interest-bearing liabilities. The increase in the average balance was primarily due to an increase of $61.0 million, or 20.0%, in the average balance of interest-bearing demand deposits and a $20.0 million, or 66.7%, increase in the average balance of borrowings for the three months ended March 31, 2026 compared to the three months ended March 31, 2025, partially offset by a decrease of $23.2 million in the average balance of savings and club accounts. The increase in interest expense was offset by a one basis point decrease in the average cost of interest-bearing deposits, which was primarily due to a 40 basis point decrease in the average rate of certificates of deposit offset by 22 basis point increase in the average rate of interest-bearing demand deposits to 1.97% for the three months ended March 31, 2026 from 1.75% for the three months ended March 31, 2025, resulting from competitively priced rates.

Previous 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.

Current wording

***Net Interest Income.***Net interest income increased $629,000, or 8.8%, to $7.8 million for the three months ended March 31, 2026 from $7.2 million for the three months ended March 31, 2025. Net interest rate spread increased 30 basis points to 2.55% for the three months ended March 31, 2026 from 2.25% for the three months ended March 31, 2025. Net interest margin increased 18 basis points to 3.00% for the three months ended March 31, 2026 from 2.82% for the three months ended March 31, 2025. Net interest-earning assets decreased $46.9 million, or 18.1%, to $211.9 million for the three months ended March 31, 2026 from $258.8 million for the three months ended March 31, 2025. The increase in the Company’s net interest rate spread and net interest margin were primarily a result of an increase in the yield on interest-earning assets and the decrease in the cost of interest-bearing liabilities.

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 $118,000 and $101,000 for the three months ended December 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 $59,000 and $101,000 for the three months ended March 31, 2026 and 2025, respectively.

Previous wording

The Company recorded a provision for credit losses of $49,000 during the three months ended December 31, 2025 reflecting the loan growth during the period, compared to a provision for credit losses of $12,000 for the three months ended December 31, 2024. The Company had no charge-offs for the three 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.

Current wording

The Company recorded a provision for credit losses of $84,000 during the three months ended March 31, 2026 reflecting the loan growth during the period, compared to a provision for credit losses of $37,000 for the three months ended March 31, 2025. The Company had no charge-offs for the three months ended March 31, 2026 or 2025, respectively. The Company had no non-performing loans at March 31, 2026 or March 31, 2025. The Company’s allowance for credit losses as a percentage of total loans was 0.66% at March 31, 2026 compared to 0.65% at March 31, 2025.

Previous wording

Noninterest expense increased $726,000, or 11.2%, to $7.2 million for the three months ended December 31, 2025 from $6.5 million for the three months ended December 31, 2024 predominantly due to a $558,000, or 16.6%, increase in salaries and employee benefits expense driven by annual merit increases as well as the recognition of stock-based compensation during the three months ended December 31, 2025 compared to a partial period of such expense during the three months ended December 31, 2024 as the initial expense recognition commenced on November 21, 2024.

Current wording

Noninterest expense increased $44,000, or 0.6%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 due to a $318,000, or 8.6%, increase in salaries and employee benefits expense driven by annual merit increases and the recognition of employee stock-based compensation during the three months ended March 31, 2026 compared to a partial period of expense during the three months ended March 31, 2025, offset by decreases in professional fees of $46,000 and other expenses of $184,000, primarily driven by a decrease of $65,000 in the amortization expense of the core deposit intangible asset.

Previous 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.

Current wording

Income Tax Expense. The provision for income taxes was $282,000 for the three months ended March 31, 2026 compared to $89,000 for the three months ended March 31, 2025. The Company’s effective tax rate was 24.1% for the three months ended March 31, 2026 compared to 14.2% for the three months ended March 31, 2025. The higher effective rate was due to the non-deductibility of expenses related to incentive stock options.

Previous wording

Comparison of Operating Results for the Six Months Ended December 31, 2025 and 2024

Current wording

Comparison of Operating Results for the Nine Months Ended March 31, 2026 and 2025

Previous wording

General. Net income decreased $861,000, or 36.1%, to $1.5 million for the six months ended December 31, 2025 compared to net income of $2.4 million for the six months ended December 31, 2024. Net income for the six months ended December 31, 2025 and 2024 included $505,000 and $1.8 million, respectively, of net accretion income related to fair value adjustments resulting from the acquisition of Regal Bancorp in September 2023.

Current wording

General. Net income decreased $512,000, or 17.5%, to $2.4 million for the nine months ended March 31, 2026 compared to net income of $2.9 million for the nine months ended March 31, 2025. Net income for the nine months ended March 31, 2026 and 2025 included $647,000 and $2.4 million, 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 $1.2 million, or 5.4%, to $24.2 million for the six months ended December 31, 2025 from $23.0 million for the six months ended December 31, 2024 due to a $12.6 million increase in the average balance of interest-earning assets, and a 19 basis point increase in the yield. The increase resulted from a $1.5 million, or 7.1%, increase in interest income on loans, offset by a $129,000, or 10.3%, decrease in interest income on securities and a $105,000, or 10.1%, decrease in interest income on interest-bearing deposits at other banks. The increase in interest income on loans was due to a $61.1 million increase in the average balance of loans from $759.7 million for the six months ended December 31, 2024 to $820.8 million for the six months ended December 31, 2025, partially offset by a five basis point decrease in the yield on loans. The decrease in interest income on securities was primarily due to a $14.4 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 $34.1 million decrease in the average balance of deposits at other banks.

Current wording

Interest Income**.** Interest income increased $2.2 million, or 6.5%, to $36.7 million for the nine months ended March 31, 2026 from $34.5 million for the nine months ended March 31, 2025 due to a $15.1 million increase in the average balance of interest-earning assets, and a 22 basis point increase in the yield. The increase resulted from a $2.5 million, or 8.0%, increase in interest income on loans, offset by a $181,000, or 11.5%, decrease in interest income on interest-bearing deposits at other banks and an $87,000, or 4.7%, decrease in interest income on securities. The increase in interest income on loans was due to a $64.1 million increase in the average balance of loans from $765.9 million for the nine months ended March 31, 2025 to $830.0 million for the nine months ended March 31, 2026. The decrease in interest income on securities was primarily due to a $12.8 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 $36.1 million decrease in the average balance, offset by a 141 basis point increase in the yield.

Previous wording

Interest Expense. Interest expense increased $679,000, or 8.3%, to $8.9 million for the six months ended December 31, 2025 from $8.2 million for the six months ended December 31, 2024, due to a $57.4 million increase in the average balance of interest-bearing liabilities. The increase in the average balance was due to a $20.4 million, or 111.5%, increase in the average balance of borrowings for the six months ended December 31, 2025 compared to the six months ended December 31, 2024, as well as an increase of $64.7 million, or 23.3%, in the average balance of interest-bearing demand deposits. In addition, there was an increase of 35 basis points in the cost of interest-bearing demand deposits to 1.91% for the six months ended December 31, 2025 from 1.56% for the six months ended December 31, 2024 resulting from competitively priced rates offered on certain interest-bearing deposit products in the market area.

Current wording

Interest Expense. Interest expense increased $1.0 million, or 8.4%, to $13.5 million for the nine months ended March 31, 2026 from $12.5 million for the nine months ended March 31, 2025, due to a $61.0 million increase in the average balance of interest-bearing liabilities. The increase in the average balance was due to an increase of $63.5 million, or 22.1%, in the average balance of interest-bearing demand deposits and a $20.3 million, or 91.3%, increase in the average balance of borrowings for the nine months ended March 31, 2026 compared to the nine months ended March 31, 2025, partially offset by a decrease of $23.7 million in the average balance of savings and club accounts. The increase in interest expense was offset by a 49 basis point decrease in the average rate of certificates of deposits offset by a 30 basis point increase in the average rate of interest-bearing demand deposits to 1.93% for the nine months ended March 31, 2026 from 1.63% for the nine months ended March 31, 2025 resulting from competitively priced rates.

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 $167,000 and $168,000 for the six months ended December 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 $226,000 and $168,000 for the nine months ended March 31, 2026 and 2025, respectively.

Previous 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.

Current wording

Provision for Credit Losses. The Company recorded a provision for credit losses of $305,000 during the nine months ended March 31, 2026 reflecting the loan growth during the period, compared to a recovery for credit losses of $105,000 for the nine months ended March 31, 2025, which reflected updates made to certain qualitative factors in the calculation of the Company’s allowance. The Company had no charge-offs for the nine months ended March 31, 2026 or 2025, respectively. The Company had no non-performing loans at March 31, 2026 or March 31, 2025. The Company’s allowance for credit losses as a percentage of total loans was 0.66% at March 31, 2026 compared to 0.65% at March 31, 2025.

Previous wording

Noninterest income decreased $133,000, or 10.4%, to $1.1 million for the six months ended December 31, 2025 from $1.3 million for the six months ended December 31, 2024, primarily due to a decrease in service charges and fees on deposits of $98,000 and a decrease in fees and service charges on loans of $38,000 during the six months ended December 31, 2025 compared to the six months ended December 31, 2024.

Current wording

Noninterest income decreased $274,000, or 13.9%, to $1.7 million for the nine months ended March 31, 2026 from $2.0 million for the nine months ended March 31, 2025, primarily due to a decrease in service charges and fees of $110,000 and a decrease in other income of $97,000 during the nine months ended March 31, 2026 compared to the nine months ended March 31, 2025.

Previous 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.

Current wording

Noninterest expense increased $1.1 million, or 5.2%, to $21.4 million for the nine months ended March 31, 2026 from $20.3 million for the nine months ended March 31, 2025 predominantly due to a $1.5 million, or 14.5%, increase in salaries and employee benefits expense driven by the recognition of stock-based compensation during the nine months ended March 31, 2026 compared to a partial period of expense during the nine months ended March 31, 2025, as well annual merit increases in employee compensation. The increase in salaries and employee benefits was partially offset by decreases of $77,000 in data processing expenses, $85,000 in insurance expenses and $335,000 in other expenses, primarily driven by a decrease of $204,000 in the amortization expense of the core deposit intangible asset.

Previous wording

Income Tax Expense. The provision for income taxes was $254,000 for the three months ended December 31, 2025 compared to $324,000 for the three months ended December 31, 2024. The Company’s effective tax rate was 23.3% for the three months ended December 31, 2025 compared to 24.1% for the three months ended December 31, 2024.

Current wording

Income Tax Expense. The provision for income taxes was $738,000 for the nine months ended March 31, 2026, compared to $776,000 for the nine months ended March 31, 2025. The Company’s effective tax rate was 23.4% for the nine months ended March 31, 2026 compared to 21.0% for the nine months ended March 31, 2025.

Previous 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.

Current wording

The table above indicates that at March 31, 2026, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would experience a 15.25% decrease in EVE, and in the event of an instantaneous 200 basis point decrease in interest rates, we would experience a 9.20% increase in EVE.

Previous 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.

Current wording

The table above indicates that at March 31, 2026, we would have experienced a 6.19% decrease in NII in the event of an instantaneous parallel 200 basis point increase in market interest rates and a 0.37% 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 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.

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 and maturity of 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 15%. At March 31, 2026, this ratio was 7.1%. We believe that we have sufficient sources of liquidity to satisfy our short- and long-term liquidity needs as of March 31, 2026.

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 December 31, 2025, cash and cash equivalents totaled $81.8 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 March 31, 2026, cash and cash equivalents totaled $63.7 million.

Previous 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.

Current wording

At March 31, 2026, we had $29.5 million in outstanding loan commitments and $43.0 million of unused lines of credit. Certificates of deposit due within one year of March 31, 2026 totaled $258.6 million, or 28.9% 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, 2027. 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 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.

Current wording

Our primary investing activities are originating and purchasing loans and purchasing securities. During the nine months ended March 31, 2026, we originated $102.5 million of loans and purchased an additional $26.7 million. During the nine months ended March 31, 2026, 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 $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.

Current wording

Financing activities consist primarily of activity in deposit accounts, borrowings and repurchases of common stock. Deposits increased $48.3 million, or 5.7%, to $894.3 million at March 31, 2026 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 certain interest-bearing deposit accounts in an effort to remain competitive in the market area, offset in part by decreases in non-maturity savings accounts.