SR Bancorp, Inc. (SRBK) Stock Analysis and Metrics

SR Bancorp

NASDAQ: SRBK

$19.19 ▲ +0.02 (+0.10%)

At close: Jul 24, 2026 · 3:59 PM UTC

Financial Ratios

Market Cap160.05 Mn

P/E57.14

P/S6.26

Div. Yield0.01

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About

SR Bancorp, Inc. is a Maryland chartered company and the holding company for Somerset Regal Bank. Its primary business activity is owning the outstanding common stock of Somerset Regal Bank, which provides banking services through 14 full service branches located in Essex, Hunterdon, Hudson, Livingston, Middlesex, Morris, Somerset and Union counties in northern and central New Jersey. The bank offers a full suite of deposit products including checking, savings, money market accounts and certificates of deposit, as well as a variety of loan products such as residential mortgages, commercial real estate loans, multi family loans, commercial and industrial loans and consumer loans. Somerset Regal Bank was formed through the combination of Somerset Bank and Regal Bank on September 19, 2023, and later acquired Regal Bancorp, Inc. and merged its subsidiary bank into the combined entity. This history gives the bank a deep roots in the community, with some branches tracing their origins back to 1887.

SR Bancorp generates revenue through the banking operations of its subsidiary, Somerset Regal Bank. The bank earns interest income on its loan portfolio, which at June 30, 2025 consisted of residential mortgages representing 53.4% of total loans, commercial real estate loans at 16.0%, multi family loans at 27.5%, commercial and industrial loans at 1.5% and consumer loans at 1.6%. In addition to interest, the bank collects fees on deposit accounts, charges for services such as wire transfers and ATM usage, and earns income from its investment securities portfolio, which includes holdings in U. S. government sponsored enterprise securities and subordinated debentures. These revenues are distributed to the holding company as dividends, providing SR Bancorp with its primary source of income.

SR Bancorp operates in a highly competitive banking market in northern and central New Jersey. Its main competitors include large national banks, regional banking organizations, savings institutions, credit unions, and non depository lenders such as mortgage companies and fintech firms. Despite being smaller than many of these rivals, the company benefits from a strong local presence, deep community relationships, and the ability to make credit decisions quickly at the regional level. In Somerset County, the bank held $364.6 million in deposits as of June 30, 2025, giving it a 2.1% market share and ranking it as the ninth largest among twenty financial institutions in the county. The recent merger with Regal Bank expanded the bank’s footprint into Essex, Morris and Union Counties and added complementary lending expertise in both commercial and residential real estate, enhancing its ability to serve a broader range of customers.

The bank’s customers consist primarily of individuals, households, small to medium sized businesses, and local municipal entities within its service area. It maintains deposit relationships with a variety of towns and cities, holding approximately $31.8 million in municipal accounts as of June 30, 2025. Retail customers include individuals seeking checking and savings accounts, mortgages, home equity loans and personal loans, while commercial borrowers range from small proprietors to mid size firms needing working capital, equipment financing and commercial real estate loans. The bank also offers online and mobile banking services, allowing customers to manage accounts, pay bills and apply for credit remotely. No specific customer names are disclosed in the filing.

Investment Thesis

▲ Bull case

SR Bancorp's core operating performance shows meaningful improvement when excluding the non-recurring accretion income from the Regal Bancorp acquisition, with adjusted net income rising to $784,000 in Q1 FY26 from $124,000 in Q1 FY25, representing a 532% year-over-year increase driven by organic growth in net interest income and disciplined expense management. This underlying profitability trend, masked by GAAP results inflated by acquisition-related accounting, indicates the bank is successfully executing its post-integration strategy and generating sustainable earnings power from its expanded franchise in Northern and Central New Jersey.
The company is benefiting from a favorable interest rate environment where asset yields are rising faster than liability costs, evidenced by a 30 basis point expansion in net interest rate spread to 2.55% in Q1 FY26 from 2.25% in the prior year period, supported by a 29 basis point increase in yield on interest-earning assets and a 22 basis point increase in cost of interest-bearing demand deposits only partially offsetting the 40 basis point decline in certificate of deposit costs. This improving spread, combined with loan growth of 7.8% year-to-date to $859.1 million, positions SRBK to capture additional margin expansion as the Federal Reserve maintains higher rates longer, directly boosting core profitability without relying on one-time accretion benefits.
Despite headwinds in noninterest income, SRBK is actively enhancing shareholder value through capital return initiatives, having authorized a third stock repurchase program for up to 10% of outstanding shares (801,320 shares) while maintaining a quarterly cash dividend of $0.05 per share, signaling management's confidence in the bank's strong financial position and liquidity. With $184.5 million in tangible equity and a conservative allowance for credit losses at 0.66% of loans, the bank retains substantial capacity to deploy excess capital through buybacks and dividends, creating a floor for stock price appreciation that the market may be overlooking amid focus on headline earnings volatility.
SRBK's loan portfolio is experiencing robust, diversified growth with commercial loans up $33.9 million, residential mortgages up $27.0 million, and consumer loans up $1.0 million since June 30, 2025, reflecting strong market demand across its Northern and Central New Jersey footprint and reducing reliance on any single loan segment. This balanced expansion, funded primarily through core deposit growth ($48.3 million increase) and supplemented by $20.0 million in FHLB borrowings, demonstrates the bank's ability to attract and retain customers in a competitive landscape while maintaining prudent liquidity levels, with cash and cash equivalents rising to $63.7 million at March 31, 2026.

SR Bancorp's core operating performance shows meaningful improvement when excluding the non-recurring accretion income from the Regal Bancorp acquisition, with adjusted net income rising to $784,000 in Q1 FY26 from $124,000 in Q1 FY25, representing a 532% year-over-year increase driven by organic growth in net interest income and disciplined expense management. This underlying profitability trend, masked by GAAP results inflated by acquisition-related accounting, indicates the bank is successfully executing its post-integration strategy and generating sustainable earnings power from its expanded franchise in Northern and Central New Jersey.
The company is benefiting from a favorable interest rate environment where asset yields are rising faster than liability costs, evidenced by a 30 basis point expansion in net interest rate spread to 2.55% in Q1 FY26 from 2.25% in the prior year period, supported by a 29 basis point increase in yield on interest-earning assets and a 22 basis point increase in cost of interest-bearing demand deposits only partially offsetting the 40 basis point decline in certificate of deposit costs. This improving spread, combined with loan growth of 7.8% year-to-date to $859.1 million, positions SRBK to capture additional margin expansion as the Federal Reserve maintains higher rates longer, directly boosting core profitability without relying on one-time accretion benefits.
Despite headwinds in noninterest income, SRBK is actively enhancing shareholder value through capital return initiatives, having authorized a third stock repurchase program for up to 10% of outstanding shares (801,320 shares) while maintaining a quarterly cash dividend of $0.05 per share, signaling management's confidence in the bank's strong financial position and liquidity. With $184.5 million in tangible equity and a conservative allowance for credit losses at 0.66% of loans, the bank retains substantial capacity to deploy excess capital through buybacks and dividends, creating a floor for stock price appreciation that the market may be overlooking amid focus on headline earnings volatility.
SRBK's loan portfolio is experiencing robust, diversified growth with commercial loans up $33.9 million, residential mortgages up $27.0 million, and consumer loans up $1.0 million since June 30, 2025, reflecting strong market demand across its Northern and Central New Jersey footprint and reducing reliance on any single loan segment. This balanced expansion, funded primarily through core deposit growth ($48.3 million increase) and supplemented by $20.0 million in FHLB borrowings, demonstrates the bank's ability to attract and retain customers in a competitive landscape while maintaining prudent liquidity levels, with cash and cash equivalents rising to $63.7 million at March 31, 2026.

▼ Bear case

SR Bancorp's reported earnings remain heavily dependent on non-recurring accretion income from the Regal Bancorp acquisition, which accounted for $647,000 of the $2.4 million in net income for the nine months ended March 31, 2026, meaning that without this boost, adjusted earnings would have been only $1.9 million – a figure that represents a decline from the $1.2 million adjusted baseline in the prior year period when adjusting for similar items. This reliance on acquisition-related accounting to flatter results raises concerns about the sustainability of profitability once the accretion benefit fully rolls off, particularly as the bank faces persistent pressure on noninterest income which fell 13.9% year-to-date to $1.7 million.
The bank's efficiency ratio has deteriorated to 86.12% for the nine months ended March 31, 2026, up from 85.01% in the prior year period, driven by a 14.5% surge in salaries and employee benefits expense due to the full-period recognition of stock-based compensation and annual merit increases, which only partially offset by savings in data processing, insurance, and other expenses. This rising cost base, coupled with only modest 5.4% growth in net interest income, suggests operating leverage is deteriorating and management may be struggling to control expenses amid investments in technology and talent, potentially constraining future margin expansion.
SRBK's balance sheet shows increasing reliance on wholesale funding and uninsured deposits, with borrowings rising to $50.0 million from $30.0 million since June 30, 2025 and uninsured deposits representing 18.4% of total deposits ($164.6 million) at March 31, 2026, up from 19.4% at December 31, 2025 but still reflecting a material portion of funding that could become volatile or expensive in a stress scenario. This trend, combined with a decrease in tangible common equity to tangible assets to 14.19% from 16.05% a year ago due to share repurchases and equity erosion, reduces the bank's buffer against adverse credit events or liquidity shocks, particularly if commercial real estate conditions weaken in its lending footprint.
Despite loan growth of 7.8% year-to-date, SRBK's asset quality metrics are showing subtle deterioration, with the allowance for credit losses as a percentage of total loans holding steady at 0.66% but non-performing loans remaining at zero only because of the specific definition used – the bank reported one non-performing loan of $176,000 at December 31, 2025 that has since been resolved, yet the provision for credit losses increased to $305,000 for the nine months ended March 31, 2026 from a recovery of $105,000 in the prior year period, indicating management is setting aside more reserves against potential losses in a growing loan book amid uncertain economic conditions, which could directly impact future earnings if losses materialize.

SR Bancorp's reported earnings remain heavily dependent on non-recurring accretion income from the Regal Bancorp acquisition, which accounted for $647,000 of the $2.4 million in net income for the nine months ended March 31, 2026, meaning that without this boost, adjusted earnings would have been only $1.9 million – a figure that represents a decline from the $1.2 million adjusted baseline in the prior year period when adjusting for similar items. This reliance on acquisition-related accounting to flatter results raises concerns about the sustainability of profitability once the accretion benefit fully rolls off, particularly as the bank faces persistent pressure on noninterest income which fell 13.9% year-to-date to $1.7 million.
The bank's efficiency ratio has deteriorated to 86.12% for the nine months ended March 31, 2026, up from 85.01% in the prior year period, driven by a 14.5% surge in salaries and employee benefits expense due to the full-period recognition of stock-based compensation and annual merit increases, which only partially offset by savings in data processing, insurance, and other expenses. This rising cost base, coupled with only modest 5.4% growth in net interest income, suggests operating leverage is deteriorating and management may be struggling to control expenses amid investments in technology and talent, potentially constraining future margin expansion.
SRBK's balance sheet shows increasing reliance on wholesale funding and uninsured deposits, with borrowings rising to $50.0 million from $30.0 million since June 30, 2025 and uninsured deposits representing 18.4% of total deposits ($164.6 million) at March 31, 2026, up from 19.4% at December 31, 2025 but still reflecting a material portion of funding that could become volatile or expensive in a stress scenario. This trend, combined with a decrease in tangible common equity to tangible assets to 14.19% from 16.05% a year ago due to share repurchases and equity erosion, reduces the bank's buffer against adverse credit events or liquidity shocks, particularly if commercial real estate conditions weaken in its lending footprint.
Despite loan growth of 7.8% year-to-date, SRBK's asset quality metrics are showing subtle deterioration, with the allowance for credit losses as a percentage of total loans holding steady at 0.66% but non-performing loans remaining at zero only because of the specific definition used – the bank reported one non-performing loan of $176,000 at December 31, 2025 that has since been resolved, yet the provision for credit losses increased to $305,000 for the nine months ended March 31, 2026 from a recovery of $105,000 in the prior year period, indicating management is setting aside more reserves against potential losses in a growing loan book amid uncertain economic conditions, which could directly impact future earnings if losses materialize.

Peer Comparison

Companies in the Banks - Regional

S.No.	Ticker	Company	Market Cap	P/E	P/S	Total Debt (Qtr)
1	KB	KB Financial Group Inc.	42,090.38 Bn	0.00 Bn	0.01 Mn	56.66 Bn
2	SHG	Shinhan Financial Group Co Ltd	33,919.15 Bn	0.00 Bn	0.00 Mn	40.46 Bn
3	BCH	Bank Of Chile	4,123.52 Bn	368.17 Bn	1.57 Mn	0.00 Bn
4	LYG	Lloyds Banking Group plc	360.83 Bn	0.00 Bn	0.00 Mn	42.37 Bn
5	FCAP	First Capital Inc	204.17 Bn	0.00 Bn	0.03 Mn	-
6	LARK	Landmark Bancorp Inc	187.97 Bn	0.00 Bn	0.00 Mn	0.00 Bn
7	NWG	NatWest Group plc	144.82 Bn	0.00 Bn	0.00 Mn	94.66 Bn
8	PNC	Pnc Financial Services Group, Inc.	101.80 Bn	0.00 Bn	0.00 Mn	21.42 Bn

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