SR Bancorp, Inc. (SRBK) - Q2 2026 Filing Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended December 31, 2025 (Second Quarter of Fiscal Year 2026). SR Bancorp, Inc. is the holding company for Somerset Regal Bank, a New Jersey-chartered commercial bank serving central and northern New Jersey through 14 full-service branches. The Company is classified as a non-accelerated filer and an emerging growth company.
Key Financial Metrics
| Metric | Q2 2026 (3 Months) | YTD 2026 (6 Months) | Balance Sheet (Dec 31, 2025) |
|---|---|---|---|
| Net Income | $0.83 million | $1.53 million | — |
| Earnings Per Share (Diluted) | $0.11 | $0.20 | — |
| Total Assets | — | — | $1.14 billion |
| Total Loans (Net) | — | — | $835.4 million |
| Total Deposits | — | — | $891.5 million |
| Net Interest Margin (NIM) | 3.06% | 3.05% | — |
| Allowance for Credit Losses (ACL) | — | — | $5.58 million (0.67% of loans) |
| Cash and Equivalents | — | — | $81.8 million |
| Stockholders' Equity | — | — | $188.5 million |
Material Changes vs. Prior Period
- Profitability Decline: Net income decreased 18.3% to $0.83 million for the quarter and 36.1% to $1.53 million year-to-date compared to the prior year periods. This decline is largely attributed to a significant reduction in net accretion income from the 2023 Regal Bancorp acquisition ($0.20 million in Q2 2026 vs. $0.79 million in Q2 2025).
- Asset Growth: Total assets increased 5.4% to $1.14 billion, driven by a $38.2 million increase in loans receivable and a $24.1 million increase in cash equivalents.
- Expense Pressure: Noninterest expense increased 11.2% for the quarter, primarily due to a 16.6% rise in salaries and employee benefits driven by merit increases and the full-period recognition of stock-based compensation.
- Deposit Growth: Total deposits grew 5.4% to $891.5 million, with interest-bearing demand deposits increasing significantly as the bank raised rates to remain competitive.
- Capital Actions: The Company repurchased 267,392 shares of common stock during the quarter at an average price of $15.04, reducing total equity by approximately $4.3 million for the quarter.
Outlook, Risks, and Contingencies
- Asset Quality: Asset quality remains strong with only one non-accrual loan of $176,000 (commercial and industrial) as of December 31, 2025. This loan was fully paid off in January 2026 with no loss recorded. There were no charge-offs during the period.
- Interest Rate Risk: The Company is asset-sensitive. Modeling indicates that a 200 basis point increase in interest rates would result in a 14.24% decrease in Economic Value of Equity (EVE) and a 4.28% decrease in Net Interest Income (NII) in Year 1.
- Internal Control Remediation: The Company previously identified a material weakness regarding the untimely recognition of income from life insurance contracts. Management has implemented a new reconciliation control to address this deficiency and believes the weakness is remediated.
- Liquidity: Liquidity is considered sufficient with a liquid asset ratio of 9.2% of total deposits. The bank has $50.0 million in outstanding borrowings from the Federal Home Loan Bank and $100.0 million in available borrowing capacity.
Investor Verification Checklist
- Accretion Run-off: Verify the trajectory of accretion income from the Regal Bancorp acquisition, as the decline in this non-recurring income is a primary driver of the current earnings compression.
- Stock-Based Compensation: Review the impact of the new 2024 Equity Incentive Plan on future expense lines, as stock-based compensation expense increased significantly year-over-year.
- Deposit Cost Trends: Monitor the cost of interest-bearing demand deposits, which rose to 1.95% in Q2 2026, to assess pressure on the Net Interest Margin in a competitive rate environment.
- Commercial Loan Concentration: Confirm the stability of the commercial real estate portfolio, which comprises 45.8% of total loans, with a significant portion in multi-family assets.
- Share Repurchase Program: Track the remaining capacity of the share repurchase program (434,237 shares remaining as of Dec 31, 2025) and its impact on earnings per share.