SR Bancorp (SRBK 2.08%), a New Jersey-based community banking company, released results for the fourth quarter of fiscal 2025 (ended June 30, 2025) on July 31, 2025. The company reported a return to profitability, posting GAAP net income of $823,000 ($0.10 per share). This compares to a GAAP net loss of $3.0 million ($0.34 per share) in the fourth quarter of fiscal 2024 (ended June 30, 2024). Revenue, which includes both net interest and noninterest income, reached $7.97 million, a 96.7% increase from the prior-year period. There were no formal analyst estimates for comparison in the quarter. Profitability rebounded largely due to the absence of last year’s merger-related costs and improved asset quality. However, net interest margin narrowed to 2.90% from 3.22%, reflecting rising funding costs and competitive pressures. Overall, the period showed improving fundamentals and successful merger integration, but it also highlighted continued margin pressure and increased competition for deposits.
| Metric | Q4 2025 | Q4 2024 | Y/Y Change |
|---|---|---|---|
| EPS (GAAP) | $0.10 | ($0.34) | NM |
| Net Income (GAAP) | $823,000 | ($3,032,000) | NM |
| Net Income, adjusted (Non-GAAP) | $515,000 | ($499,000) | NM |
| Revenue (Net Interest + Noninterest Income) | $7,974,000 | N/A | N/A |
| Net Interest Margin | 2.90% | 3.22% | (0.32) pp |
| Total Deposits | $846.0 million | $807.1 million | 4.8% |
Company overview and business focus
SR Bancorp operates as a community bank, providing a full suite of banking services to individuals and businesses across New Jersey. Its key products include a mix of deposit accounts, residential and commercial mortgages, multi-family loans, and business lending solutions. The company’s growth strategy centers around market expansion, particularly following its acquisition of Regal Bancorp. This move added significant reach and enhanced its commercial lending capabilities. Today, it serves customers from 14 branches spread across several counties in the state.
In recent periods, the company’s main areas of focus have included integration of the Regal Bancorp operations, growth of its loan and deposit base, and maintaining strong asset quality. Success factors for the business depend on balancing loan growth with deposit stability, keeping credit losses low, and managing funding costs. The migration toward digital banking is a notable area of industry-wide attention, although the company has yet to report significant advances in this space.
Quarter highlights and developments
The period marked a significant turnaround in profitability from the prior year. Net income rose by $3.9 million compared to the prior-year period, with the swing primarily due to the completion of merger-related restructuring and a normalization of taxes and credit provisions. Adjusted net income, which excludes certain merger-related accretion income, stood at $515,000.
Net interest income was lower, as rising deposit costs outpaced increases in interest income from new loans. Interest expense jumped 23.4% due to both higher average balances on deposits and increases in the rates the company pays to customers. Noninterest income, which includes service fees and income on bank-owned life insurance policies, improved sharply, moving from a loss in the prior period to a positive figure, as the company did not repeat last year’s loss from security sales.
Loan portfolio growth remained robust, with net loans rising 8.9% year over year, driven by gains in both residential mortgages and multi-family loans. Asset quality continued to be a bright spot, with the allowance for credit losses holding steady at 0.65% of loans and no charge-offs or non-performing loans reported at period-end. On the deposit side, balances increased 4.8% year over year, although the company had to raise interest rates on deposit products to maintain competitiveness. This, in turn, pressured net interest margin, which dropped to 2.90% from 3.22%.
Noninterest expense rose just 3.3%, with higher salaries and benefits partially offset by lower data processing costs after the merger. The reduced overall cost base reflects the absence of one-time integration and foundation expenses linked to the Regal Bancorp acquisition. There were no material one-time charges. Efficiency ratio, a measure of cost to revenue, improved but remains elevated at 86.2% compared to industry benchmarks.
Product families and business lines
The company's main product families include residential mortgages, multi-family mortgages, commercial and industrial loans, and deposit accounts for both individuals and businesses. Residential mortgages are traditional home loans, while multi-family mortgages are loans made to owners of apartment buildings and similar properties. Commercial loans finance businesses for equipment, working capital, or property. Growth in residential and multi-family lending contributed most to the company’s loan expansion during fiscal 2025. Deposit products such as checking, savings, and time deposits form the funding backbone of the bank’s lending activities. The company did not participate in federal Paycheck Protection Program (PPP) lending, indicating a focus on its core banking businesses.
Looking ahead
Management did not provide any explicit forward guidance for the upcoming quarters or for fiscal 2026. Management highlighted ongoing challenges related to net interest margin pressure and rising funding costs. It also noted uncertainties in the interest rate environment and deposit competition. No near-term margin or earnings targets were disclosed, and leadership made no announcements regarding new digital initiatives or product rollouts in this reporting period.
Investors will continue to monitor the bank’s core profitability and seek clarity on potential margin stabilization. Asset quality and deposit mix remain key factors to watch.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
