Financial Analysis

13. Commitments and Contingencies The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit. Such commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated statements of financial condition. The Company's exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contractual notional amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. At June 30, 2026 , total unfunded loan-related commitments, including lines of credit, amounted to $71.0 million, comprised of $40.8 million for unused equity lines of credit and $30.2 million to originate and purchase loans, expiring within three months. At June 30, 2025 , total unfunded loan-related commitments, including lines of credit, amounted to $79.0 million, comprised of $38.0 million for unused equity lines of credit and $41.0 million to originate and purchase loans, expiring within three months. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

9. Borrowings At June 30, 2026 there were $65.0 million of borrowings from the FHLB of New York. At June 30, 2026 and June 30, 2025 , the Company could borrow overnight funds from the FHLB-NY under a redesigned overnight advance program up to the Company's maximum borrowing capacity based on the Company's ability to collateralize such borrowings. At June 30, 2026 , the Company's maximum borrowing capacity was $135.0 million. At June 30, 2026 and June 30, 2025 , the Company's Board of Directors had authorized borrowings of up to $25.0 million from the Federal Reserve Bank of New York (FRB-NY). All borrowings are secured by pledges of the Company's qualifying loan portfolio and are generally on overnight terms with an interest rate quoted at the time of the borrowing. …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

"11. Stock- Based Compensation The Company has several compensation and benefit arrangements involving shares of the Companys stock. Stock-based compensation involves the following components for the years ended June 30, 2026 , and 2025 : June 30, 2026 June 30, 2025 (In thousands) Fair value of 38,032 shares earned by ESOP participants $ 620 $ 439 Incentive Plan Awards: Stock options $ 741 $ 327 Restricted stock awards 778 340 Total stock-based compensation expense $ 1,519 $ 667 Related tax benefits recognized in earnings $ - $ 188 On November 20, 2024, the Company adopted the SR Bancorp, Inc. 2024 Equity Incentive Plan ( ""2024 Equity Plan). The 2024 Equity Plan authorizes 1,331,110 shares of common stock for equity-based compensation awards including restricted stock awards, restricted stock units, non-qualified stock options, and incentive stock options. As of June 30, 2026 , there were 183,959 shares available for future grants. Stock Options On November 21, 2024, the Company granted 237,695 stock options to non-employee directors. On January 29, 2025, February 5, 2025 and December 17, 2025, the Company granted 465,889, 57,009 and 58,805, respectively, of stock options to certain officers and employees of the Company. The stock options vest in equal annual installments over a five -year period beginning on the first anniversary of the date of grant. The fair value of each option grant was estimated on the date of grant using the Black-Scholes option pricing model. The fol …

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16. Fair Value Measurements and Disclosures The Bank uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. From time to time, the Bank may be required to record at fair value other assets or liabilities on a non-recurring basis. These non-recurring fair value adjustments involve the application of lower-of-cost-or-market accounting or write-downs of individual assets. FASB ASC 820, Fair Value Measurements and Disclosures , defines fair value as an exit price representing the amount that would be received to sell an asset or settle a liability in an orderly transaction between market participants. A three -level hierarchy has been established for fair value measurements based upon the inputs to the valuation of an asset or liability. Level 1 - Valuation is based on quoted prices in active markets for identical assets or liabilities; Level 2 - Valuation is determined from quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument; Level 3 - Valuation is derived from model-based and other techniques in which at least one significant input is unobservable and which may be based on the Companys own estimates about the assump …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

7. Goodwill and Intangible Assets Goodwill and core deposit intangibles resulted from the Company's acquisition of Regal Bancorp, which was accounted for under FASB ASC 805, Business Combinations . In accordance with ASC 805, the Company recorded $20.4 million of goodwill along with $9.1 million of core deposit intangibles. The intangible assets are related to core deposits and are being amortized over 10 years, using an accelerated method. The changes in the carrying amount of goodwill and core deposit intangibles are summarized as follows: June 30, 2026 June 30, 2025 (In thousands) Balance at beginning of period $ 26,708 $ 28,141 Acquisition of Regal Bancorp Amortization expense (1,168 ) (1,433 ) Balance at end of period $ 25,540 $ 26,708 Goodwill and Intangible assets at June 30, 2026 and June 30, 2025 : June 30, 2026 June 30, 2025 (In thousands) Goodwill $ 20,417 $ 20,417 Core deposit intangible, net of amortization 5,123 6,291 Goodwill and intangible assets $ 25,540 $ 26,708 As of June 30, 2026 , the amortization of the core deposit intangibles in future fiscal years is as follows: Amount (In thousands) 2027 $ 951 2028 774 2029 657 2030 650 Thereafter 2,091 Total $ 5,123 …

GoodwillAndIntangibleAssetsDisclosureTextBlock · excerpt; the full note is in the filing

12. Income Taxes Prior to the year ended June 30, 2024, the Bank qualified as a Savings Institution under the provisions of the Internal Revenue Code and, therefore, prior to January 1, 1996, was permitted to calculate its bad debt deduction using either the experience method or the specific charge off method. Retained earnings at June 30, 2026 and June 30, 2025 included approximately $5.3 million of such bad debt allowance for which federal income taxes have not been provided. After January 1, 1996, the Bank was only permitted to deduct actual charge offs. If such amount is used for purposes other than for bad debt losses, including distributions in liquidation, it will be subject to income tax at the then current rate. The components of income tax expense are as follows for years ended June 30, 2026 and June 30, 2025 : Year Ended Year Ended June 30, June 30, 2026 2025 (In thousands) Current tax expense: Federal income $ 339 $ 117 State income 54 79 Total current 393 196 Deferred tax expense: Federal income 447 612 State income 234 183 Total deferred 681 795 Change in valuation allowance (27 ) Total $ 1,047 $ 991 The following table presents a reconciliation between the effective income tax expense and the income tax expense which would be computed by applying the federal statutory tax rate of 21% for the years ended June 30, 2026 and June 30, 2025 : June 30, 2026 June 30, 2025 Amount Percent Amount Percent (In thousands) (In thousands) Federal income tax expense, at the sta …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

6. Leases The Company accounts for its leases in accordance with ASC Topic 842. The Company's right-of-use asset and operating lease liability are recognized at lease commencement based on the present value of the remaining lease payment obligations using discount rates that represent the Companys incremental borrowing rate as of the lease commencement dates. The Company leases only office space and equipment under operating leases, with original lease terms ranging from five to ten years. The Company elected not to include short-term leases with initial terms of twelve months or less on the consolidated statements of financial condition. The operating lease agreements recognized on the consolidated statements of financial condition as a right-of-use asset and a corresponding lease liability, as well as other information related to the Company's operating leases, are summarized in the table below. Year Ended June 30, 2026 2025 (Dollars in thousands) Right-of-use asset $ 2,747 $ 3,156 Lease liability $ 2,785 $ 3,211 Weighted-average remaining lease term, in years 3.53 4.23 Weighted-average discount rate 1.56 % 1.50 % Future undiscounted minimum lease payments for operating leases with initial terms of one year or more as of June 30, 2026 are as follows: June 30, 2026 (In thousands) June 30, 2027 $ 888 June 30, 2028 785 June 30, 2029 733 June 30, 2030 353 June 30, 2031 103 Thereafter Total future minimum lease payments 2,862 Less: imputed interest (77 ) Total $ 2,785 Future und …

LesseeOperatingLeasesTextBlock · excerpt; the full note is in the filing

"Accounting Pronouncements Adopted In November 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023 - 07, Segment Reporting (Topic 280 ): Improvements to Reportable Segment Disclosures . The amendments in this ASU require improved reportable segment information on an annual and interim basis, primarily through enhanced disclosures about significant segment expenses. This update will be effective for financial statements issued for fiscal years beginning after December 15, 2023, and interim periods for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company adopted this standard on July 1, 2024. The adoption of this standard did not have a material impact on the Companys consolidated financial statements. In December 2023, FASB issued ASU 2023 - 09, Income Taxes (Topic 740 ): Improvements to Income Tax Disclosures. The amendments in this ASU require improved annual income tax disclosures surrounding rate reconciliation, income taxes paid, and other disclosures. This update will be effective for annual financial statements issued for fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments in this ASU require annual disclosure of more detailed tax rate reconciliation categories and income taxes paid by geography and jurisdiction. The Company adopted this standard on July 1, 2025, which did not have a material impact on our financial statements. The Company updated its income tax disclosures in …

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10. Benefit Plans Retirement Plan The Bank has a non-contributory pension plan covering all eligible employees. The plan is a defined benefit plan that provides benefits based on a participants years of service and overall annual compensation. The following tables set forth the plans funded status and components of net periodic pension: Year Ended Year Ended June 30, June 30, 2026 2025 (Dollars in thousands) Change in benefit obligation: Obligation, beginning $ 14,491 $ 14,564 Service cost Interest cost 648 661 Actuarial (gain) loss 49 78 Benefit payments (884 ) (812 ) Curtailments Obligation, ending $ 14,304 $ 14,491 Change in plan assets: Fair value of plan assets, beginning $ 16,533 $ 16,075 Actual gain (loss) on plan assets 1,386 1,270 Employer contributions Benefit payments (884 ) (812 ) Fair value of plan assets, ending $ 17,035 $ 16,533 Funded status, Accumulated benefit obligation $ 14,304 $ 14,491 Projected benefit obligation $ (14,304 ) $ (14,491 ) Fair value of assets 17,035 16,533 Funded status included in other assets $ 2,731 $ 2,042 Assumptions used to determine benefit obligation: Discount rate 5.22 % 5.06 % Rate of increase in compensation n/a n/a The Company's mortality rate assumptions use the projected mortality improvement scale, Mortality Projection- 2021 , as published by the Society of Actuaries. The components of the pension and post-retirement net periodic benefit cost for the periods indicated are provided in the table below: Year Ended Year Ended Ju …

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15. Related-Party Transactions In the ordinary course of business, the Bank has engaged, and continues to engage, in banking transactions with its directors, officers and their related parties. At June 30, 2026 , the Bank had $195,000 in outstanding loans to directors, officers and their related parties. June 30, June 30, 2026 2025 (In thousands) Balance, beginning of year $ 267 $ 330 New loans and advances Repayments (72 ) (63 ) Balance, end of year $ 195 $ 267 Deposits from directors, officers and their related parties held by the Bank at June 30, 2026 and June 30, 2025 amounted to $8.0 million and $14.1 million, respectively. The Company leases two branch facilities under agreements with companies directly or indirectly affiliated with a director, as a result of the Merger. Lease expense recognized in connection with these leases amounted to $240,000 for the year ended June 30, 2026 . …

RelatedPartyTransactionsDisclosureTextBlock · excerpt; the full note is in the filing

"1. Summary of Significant Accounting Policies Business The Company, a Maryland corporation, is the holding company for Somerset Regal Bank. The Bank, which was formed in 1887, serves Essex, Hunterdon, Middlesex, Morris, Somerset and Union counties in New Jersey. The Bank is a New Jersey chartered commercial bank subject to federal and state laws and regulations. As a locally managed community bank, the Bank provides retail and commercial banking services to individuals, businesses and local municipalities through its 14 full-service branch locations. Somerset Savings Bank converted from the mutual to stock form of organization and SR Bancorp, Inc. (the ""Company"") completed its stock offering on September 19, 2023. The Companys common stock began trading on the Nasdaq Capital Market under the trading symbol SRBK on September 20, 2023. Promptly following the completion of the conversion and related stock offering, Regal Bancorp, Inc., a New Jersey corporation (Regal Bancorp), merged with and into the Company, with the Company as the surviving entity (the Merger). Regal Bank, a New Jersey chartered commercial bank headquartered in Livingston, New Jersey and the wholly-owned subsidiary of Regal Bancorp, merged with and into Somerset Bank, which had converted to a commercial bank charter, and was renamed Somerset Regal Bank (the Bank). Principles of Consolidation The consolidated financial statements include the accounts of SR Bancorp, Inc. and its wholly owned subsidiary the B …

SignificantAccountingPoliciesTextBlock · excerpt; the full note is in the filing