SR Bancorp, Inc. 2026 Form 10-K Summary
Business Context and Reporting Period
SR Bancorp, Inc. is the Maryland-based holding company for Somerset Regal Bank, a New Jersey-chartered community bank operating 14 branches across six northern and central New Jersey counties. The Bank provides residential, multifamily, commercial real estate, commercial and industrial, consumer, and deposit products. The filing covers the fiscal year ended June 30, 2026, with comparative information for fiscal 2025.
At June 30, 2026, the Company reported $1.19 billion of assets, $926.4 million of deposits, and $181.8 million of stockholders’ equity. The common stock trades on Nasdaq under the symbol SRBK. Baker Tilly US, LLP issued an unqualified opinion on the consolidated financial statements.
Key Financial Metrics
| Metric | 2026 | 2025 | Change |
|---|---|---|---|
| Total assets | $1.192 billion | $1.086 billion | Up 9.7% |
| Total loans, gross | $904.5 million | $800.2 million | Up 13.0% |
| Loans receivable, net | $901.2 million | $797.2 million | Up $104.0 million |
| Total deposits | $926.4 million | $846.0 million | Up 9.5% |
| FHLB borrowings | $65.0 million | $30.0 million | Up $35.0 million |
| Net interest income | $31.2 million | $29.6 million | Up 5.6% |
| Net interest margin | 3.04% | 2.93% | Up 11 basis points |
| Provision for credit losses | $575,000 | $133,000 | Up $442,000 |
| Noninterest income | $2.2 million | $3.7 million | Down 40.7% |
| Noninterest expense | $28.5 million | $27.1 million | Up 5.2% |
| Net income | $3.4 million | $5.1 million | Down 34.7% |
| Basic diluted earnings per share | $0.45 / $0.44 | $0.61 / $0.61 | Lower year over year |
Interest income increased to $49.6 million from $46.3 million, primarily due to higher average loan balances and a 24-basis-point increase in the yield on interest-earning assets. Interest expense increased to $18.3 million from $16.7 million as the Bank paid more on interest-bearing demand deposits and carried higher borrowings.
Cash and cash equivalents increased to $71.5 million from $57.8 million. Operating activities generated $10.7 million of cash, while investing activities used $95.6 million, principally for loan growth. Financing activities provided $98.6 million through deposit growth and borrowings, partially offset by share repurchases and dividends.
Material Changes Versus the Prior Comparable Period
- Loan growth was concentrated in residential mortgages, multifamily loans, and other commercial real estate. Residential mortgage loans increased $48.5 million, multifamily loans increased $33.0 million, and other commercial real estate loans increased $20.1 million.
- Commercial loans represented 45.7% of the loan portfolio and residential mortgages represented 52.6% at June 30, 2026. Approximately 97.9% of loans were secured by real estate.
- Deposits grew $80.4 million. Interest-bearing demand deposits increased $70.0 million, while savings and club accounts declined $15.2 million.
- Certificates of deposit totaled $279.7 million, including $257.4 million maturing within one year. Core deposits represented 69.8% of total deposits, compared with 68.3% in 2025.
- Noninterest income declined primarily because fiscal 2025 included a $1.5 million gain from life insurance proceeds. Fiscal 2026 included $749,000 of net acquisition-related accretion income, compared with $2.8 million in 2025.
- Noninterest expense increased mainly because salaries and employee benefits rose $1.8 million, reflecting a full year of stock-based compensation and annual compensation increases.
- Stockholders’ equity declined $12.0 million to $181.8 million. The Company repurchased 978,778 shares for approximately $16.3 million and paid $1.6 million of dividends, partially offset by $3.4 million of net income and $2.3 million of stock-based compensation.
- The Company completed the prior repurchase authorization in May 2026 and approved a new authorization for up to 801,320 shares, approximately 10% of then-outstanding shares, expiring May 21, 2027 unless suspended or discontinued.
Asset Quality, Liquidity, Capital, and Risk
- The Bank reported no nonperforming assets, nonaccrual loans, classified loans, special mention loans, or real estate owned at June 30, 2026. Total loans past due 30 days or more were $2.2 million, compared with $2.0 million in 2025.
- The allowance for credit losses increased to $5.9 million from $5.4 million, but declined to 0.65% of total loans from 0.67%. There were no charge-offs in either year. Management noted that future additions could be required if economic conditions, borrower performance, collateral values, or regulatory assessments deteriorate.
- Liquidity assets were 7.7% of deposits, within the Company’s stated 4% to 15% target range. The Bank had $135.0 million of additional FHLB borrowing capacity and $23.5 million of available Federal Reserve Bank borrowing capacity.
- The Bank was classified as well capitalized and reported a Tier 1 capital-to-average-assets ratio of 13.81%, compared with the 9.00% well-capitalized threshold under its community bank leverage framework.
- Interest-rate sensitivity modeling indicated that an immediate 200-basis-point increase in rates would reduce estimated economic value of equity by 12.12% and first-year net interest income by 3.15%. A 200-basis-point decrease would increase estimated economic value of equity by 8.81% but reduce first-year net interest income by 0.81%.
- Held-to-maturity securities totaled $131.2 million at amortized cost but had an estimated fair value of $113.6 million, including $17.6 million of unrealized losses. No allowance for credit losses was recorded for the securities portfolio.
Outlook, Management Commentary, Risks, and Unusual Items
Management’s strategy is to pursue moderate growth by expanding residential and commercial lending, increasing multifamily, commercial real estate, commercial and industrial, and SBA lending, growing transaction deposits, and using technology to improve operating efficiency and customer service. The filing does not provide quantitative earnings, revenue, margin, or balance-sheet guidance.
- Growth is increasing exposure to multifamily and commercial real estate credit risk, particularly because lending is concentrated in New Jersey and approximately 97.9% of loans are secured by real estate.
- Competition for loans, deposits, employees, and technology capabilities may pressure pricing, growth, and profitability. Larger institutions and nonbank financial technology providers have greater resources.
- Funding risk is elevated by the volume of certificates of deposit maturing within one year, uninsured deposits of $191.6 million, and increased reliance on FHLB borrowings.
- Interest-rate changes could compress net interest income, reduce the value of securities, alter mortgage prepayments, and affect adjustable-rate borrowers’ repayment capacity.
- Cybersecurity, third-party technology providers, operational failures, fraud, and emerging artificial-intelligence risks could cause financial, regulatory, legal, or reputational losses. The Company stated that it had not detected a significant cybersecurity compromise or material related financial loss to date.
- The Company’s material weakness related to the untimely recognition of fiscal 2025 bank-owned life insurance income was reported as remediated as of June 30, 2026 through a new reconciliation control. Management concluded that disclosure controls and internal control over financial reporting were effective at year-end.
- Fiscal 2025 results benefited from a $1.5 million life insurance proceeds gain and higher acquisition-related accretion income, making the year-over-year decline in 2026 net income less representative of recurring operating trends.
- The Company had $71.0 million of unfunded loan-related commitments, consisting of $40.8 million of unused equity lines and $30.2 million of commitments to originate or purchase loans. The filing states that no material litigation was pending.
Most Important Facts for Investors to Verify
- Whether rapid loan growth, especially in multifamily and commercial real estate, remains consistent with underwriting standards and produces deterioration in delinquencies, classified assets, or credit losses.
- The retention and repricing of the $257.4 million of certificates of deposit maturing within one year and the resulting effect on funding costs and net interest margin.
- Actual regulatory capital ratios, liquidity availability, and collateral capacity if deposit outflows or market stress increase.
- The sustainability of earnings after excluding the prior-year life insurance gain and acquisition-related accretion income.
- The effect of continued share repurchases and dividends on tangible capital, book value per share, and future growth capacity.
- The valuation and duration risk associated with the $131.2 million held-to-maturity securities portfolio and its $17.6 million unrealized loss.
- Whether the remediated bank-owned life insurance reconciliation control continues to operate effectively and whether any additional control deficiencies arise.
- Future provisions for credit losses, particularly under adverse New Jersey real estate, employment, inflation, tariff, or interest-rate scenarios.