4 unchanged sentences
Local economic conditions have a significant impact on the ability of our borrowers to repay loans and the value of the collateral securing loans.
−Removed: A deterioration in economic conditions, especially local conditions, could
−Removed: have the following consequences, any of which could have a material adverse effect on our business, financial condition, liquidity and results of operations, and could more negatively affect us compared to a financial institution that operates with more geographic diversity:
+Added: A deterioration in economic conditions, especially local conditions, could have the following consequences, any of which could have a material adverse effect on our business, financial condition, liquidity and results of operations, and could more negatively affect us compared to a financial institution that operates with more geographic diversity:
demand for our products and services may decline;
loan delinquencies, problem assets and foreclosures may increase;
+Added: our allowance for credit losses may increase;
+Added: the value of our securities portfolio may decrease;
+Added: inflation may accelerate, which may increase our operating costs and also may increase real estate costs and lower customer buying power, thereby reducing loan demand;
collateral for loans, especially real estate, may decline in value, thereby reducing customers’ future borrowing power, and reducing the value of assets and collateral associated with existing loans;
3 unchanged sentences
Inflation can have an adverse impact on our business and on our customers.
−Removed: Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the value of money.
+Added: Inflation risk can negatively impact the value of assets or income from investments as inflation decreases the value of money.
As discussed below under “— Risks Related to Interest Rates – Changes in interest rates or the shape of the yield curve may adversely affect our profitability and financial condition, ” as inflation increases and market interest rates rise the value of our investment securities, particularly those with longer maturities, decrease, although this effect can be less pronounced for floating rate instruments.
1 unchanged sentence
Furthermore, our customers are also affected by inflation and the rising costs of goods and services used in their households and businesses, which could have a negative impact on their ability to repay their loans with us.
−Removed: Sustained higher interest rates by the FRB to tame persistent inflationary pressures could decrease asset prices and weaken economic activity.
Changes to trade policies and tariffs can have an adverse impact on our business and our customers.
−Removed: Changes in trade policies, including the imposition of tariffs or the escalation of a trade war, could negatively impact the economic conditions in the markets we serve.
+Added: Changes in trade policies, including the imposition of tariffs or the escalation of a trade war and any retaliatory responses, could negatively impact the economic conditions in the markets we serve.
Our customers—particularly local businesses engaged in manufacturing and retail—may face higher costs for imported goods and materials, reduced export demand and supply chain disruptions due to increased tariffs.
−Removed: These challenges could lead to lower revenues, reduced profitability and potential layoffs, all of which may impair our customers’ ability to meet their financial obligations.
+Added: These challenges could lead to lower revenues, reduced profitability and potential layoffs, any of which may impair our customers’ ability to meet their financial obligations.
Furthermore, prolonged trade tensions and economic uncertainty could lead to market volatility, declining asset values and weakened consumer confidence.
−Removed: If our customers experience financial stress, we could see loan delinquencies and credit losses, negatively affecting our asset quality and overall financial performance.
−Removed: Additionally, any decline in local economic activity could reduce loan demand and deposit growth, which are critical to our long-term success.
+Added: If our customers experience financial stress, we could see loan delinquencies and credit losses, negatively affecting our financial performance.
+Added: Additionally, a decline in local economic activity could reduce loan demand and deposit growth, which are critical to our long-term success.
While we actively monitor economic and policy developments, we cannot predict the outcome of trade negotiations or the full impact of tariffs and trade restrictions on our business, customers, and the broader economy.
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Our business activities and earnings are affected by general business conditions in the United States and in our local market area.
−Removed: These conditions include short-term and long-term interest rates, inflation, unemployment levels, real estate values, monetary supply, consumer confidence and spending, fluctuations in both debt and equity capital
−Removed: markets, and the strength of the economy in the United States generally and in our market area in particular.
+Added: These conditions include short-term and long-term interest rates, inflation, the imposition of tariffs and any retaliatory responses, unemployment levels, real estate values, monetary supply, consumer confidence and spending, fluctuations in both debt and equity capital markets, and the strength of the economy in the United States generally and in our market area in particular.
If the national economy experiences a recession, which might include rising unemployment levels, declines in real estate values and/or an erosion in consumer confidence, the ability of our borrowers to repay their loans in accordance with their terms could be impaired.
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This imbalance can create significant earnings volatility because market interest rates change over time.
+Added: Generally, in a period of declining interest rates, the interest income we earn on our interest-earning assets may decrease more rapidly than the interest we pay on our interest-bearing liabilities, as borrowers prepay mortgage loans and as mortgage-backed securities and callable investment securities are called, requiring us to reinvest those cash flows at lower, prevailing interest rates.
+Added: Conversely, in a period of rising interest rates, the interest income we earn on our interest-earning assets may not increase as rapidly as the interest we pay on deposits and other interest-bearing liabilities.
+Added: In addition to these factors, if market interest rates rise rapidly, interest rate adjustment caps may limit increases in the interest rates on adjustable-rate loans, thus reducing our net interest income.
+Added: In a period of rising interest rates, increases in interest rates may adversely affect the ability of our borrowers to make loan repayments on adjustable-rate loans, as the interest owed on such loans would increase as interest rates increase.
Furthermore, increases in interest rates may adversely affect our ability to originate loans and/or the ability of our borrowers to make loan repayments on adjustable-rate loans, as the interest owed on such loans would increase as interest rates increase.
−Removed: In a period of declining interest rates, the interest income we earn on our assets may decrease more rapidly than the interest we pay on our liabilities, as borrowers prepay mortgage loans, and mortgage-backed securities and callable securities are called, requiring us to reinvest those cash flows at lower interest rates.
In addition, changes in interest rates can affect the average life of loans and mortgage-backed and related securities.
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A significant portion of our loans are secured by real estate, which could negatively impact our profitability upon a downturn in the local real estate market.
−Removed: At June 30, 2025, approximately $787.9 million or 98.5% of our loan portfolio was secured by real estate, most of which is located in our primary lending market area of Essex, Hunterdon, Middlesex, Morris, Somerset and Union Counties, New Jersey and surrounding areas.
+Added: At June 30, 2026, approximately $885.7 million or 97.9% of our loan portfolio was secured by real estate, most of which is located in our primary lending market area in New Jersey and the surrounding areas.
Future declines in real estate values in our primary lending markets and surrounding markets because of an economic downturn could significantly impair the value of the collateral securing our loans and our ability to sell the collateral upon foreclosure for an amount necessary to satisfy the borrower’s obligations to us.
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These third parties are used to supplement the originations made by in-house staff.
−Removed: In each case, Somerset Regal Bank separately underwrite each loan before it is either purchased or closed.
+Added: In each case, Somerset Regal Bank separately underwrites each loan before it is either purchased or closed.
Should these broker relationships be discontinued or the Bank is otherwise unable to use these companies in the future, our ability to originate residential mortgage loans or multi-family real estate loans may be reduced unless and until we are able to find a suitable replacement or have the capability to originate such loans through our lending staff.
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Because the repayment of multi-family and commercial real estate and commercial loans depends on the successful management and operation of the borrower’s properties or related businesses, repayment of such loans can be affected by adverse conditions in the real estate market or the local economy.
−Removed: Multi-family and
−Removed: commercial real estate and commercial loans may also involve relatively large loan balances to individual borrowers or groups of related borrowers.
+Added: Multi-family and commercial real estate and commercial loans may also involve relatively large loan balances to individual borrowers or groups of related borrowers.
A downturn in the real estate market or the local economy could adversely impact the value of properties securing the loan or the revenues from the borrower’s business thereby increasing the risk of non-performing loans.
+Added: Commercial business and commercial real estate loans are more susceptible to a risk of loss during a downturn in the business cycle.
+Added: These types of loans involve larger loan balances to a single borrower or groups of related borrowers.
+Added: These loans also expose us to greater credit risk than loans secured by residential real estate because the collateral securing these loans typically cannot be liquidated as easily as residential real estate.
+Added: If we foreclose on these loans, our holding period for the collateral typically is longer than for a single or multi-family residential property because there are fewer potential purchasers of the collateral.
Also, many multi-family and commercial real estate and commercial business borrowers can have more than one loan outstanding with us.
7 unchanged sentences
Our allowance for credit losses was 0.65% and 0.67% of total loans at June 30, 2026 and June 30, 2025, respectively.
−Removed: The implementation of the Current Expected Credit Losses accounting standard or "CECL" was effective for SR Bancorp on July 1, 2023.
−Removed: CECL requires financial institutions to determine periodic estimates of lifetime expected credit losses on loans and recognize the expected credit losses as allowances for credit losses.
−Removed: This changed the method of providing allowances for loan losses that are incurred or probable, which increased the types of data we need to collect and review to determine the appropriate level of the allowance for credit losses.
+Added: The Current Expected Credit Losses accounting standard or “CECL” requires financial institutions to determine periodic estimates of lifetime expected credit losses on loans and recognize the expected credit losses as allowances for credit losses.
+Added: If the evaluation we perform in connection with establishing credit loss reserves is wrong or the assumptions on which we rely provide to be incorrect, our allowance for credit losses on loans may not be sufficient to cover our losses and adjustments may be necessary to address different economic conditions or adverse development in the loan portfolio, which would have an adverse effect on our operating results.
In addition, Somerset Regal Bank regulators periodically review our allowance for credit losses and, based on their judgments and information available to them at the time of their review, may require us to increase our allowance for credit losses or recognize further loan charge-offs.
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Moreover, deposit balances can decrease if customers perceive alternative investments as providing a better risk/return tradeoff.
−Removed: If we are not able to increase our lower-cost transactional deposits at a level necessary to fund our asset growth or deposit outflows, we may be forced seek other sources of funds, including other certificates of deposit, Federal Home Loan Bank advances, brokered deposits and lines of credit to meet the borrowing and deposit withdrawal requirements of our customers, which may be more expensive and have an adverse effect on our net interest margin and profitability.
+Added: If we are not able to increase our lower-cost transactional deposits at a level necessary to fund our asset growth or deposit outflows, we may be forced to seek other sources of funds, including other certificates of deposit, Federal Home Loan Bank advances, brokered deposits and lines of credit to meet the borrowing and deposit withdrawal requirements of our customers, which may be more expensive and have an adverse effect on our net interest margin and profitability.
Risks Related to Competition
26 unchanged sentences
Mobile phishing, a means for identity thieves to obtain sensitive personal information through fraudulent e-mail, text or voice mail, is an emerging threat targeting the customers of financial entities.
−Removed: A failure in or breach of our operational or information security systems, or those of our third-party service providers, as a result of cyber-attacks or information security breaches or due to employee error, malfeasance or
−Removed: other disruptions could adversely affect our business, result in the disclosure or misuse of confidential or proprietary information, damage our reputation, increase our costs and/or cause losses.
+Added: A failure in or breach of our operational or information security systems, or those of our third-party service providers, as a result of cyber-attacks or information security breaches or due to employee error, malfeasance or other disruptions could adversely affect our business, result in the disclosure or misuse of confidential or proprietary information, damage our reputation, increase our costs and/or cause losses.
Although we employ a variety of safeguards to protect confidential and proprietary information from mishandling, misuse or loss, these safeguards do not provide absolute assurance that mishandling, misuse or loss of the information will not occur, and that if mishandling, misuse or loss of information does occur, those events will be promptly detected and addressed.
8 unchanged sentences
Although we rely on security systems to provide the security and authentication necessary to effect the secure transmission of data, these precautions may not protect our systems from compromises or breaches of security.
+Added: While the Company has not, to date, detected a significant compromise, significant data loss or any material financial losses related to cybersecurity attacks, its systems and those of its customers and third-party service providers are under constant threat.
+Added: It is possible that the Company could experience a significant cybersecurity event.
+Added: The Company expects risks and exposures related to cybersecurity attacks to remain high for the foreseeable future.
In addition, we outsource a majority of our data processing to third-party providers.
9 unchanged sentences
Our continued ability to compete effectively depends on our ability to attract new employees and to retain and motivate our existing employees.
+Added: Our reliance on and integration of artificial intelligence (“AI”) technologies expose us to various risks, including operational, data, regulatory, and reputational risks, which could materially affect our business and financial results.
+Added: Many participants in the finance industry, including us and our vendors, have begun incorporating AI software and AI applications into business activities to increase productivity.
+Added: While AI presents opportunities and efficiencies, reliance on AI also creates new risks and challenges.
+Added: AI systems process sensitive customer data.
+Added: Security breaches or unauthorized access to these systems could result in data theft, loss of intellectual property, and significant penalties against us, damaging customer trust.
+Added: Misuse of AI, biased outcomes, or privacy violations can harm our brand, erode customer confidence, and attract negative public attention, potentially affecting demand for our services and resulting in legal or regulatory consequences.
+Added: Additionally, errors, biases, or generating false information in the use of AI for credit scoring, fraud detection, customer service, and investment decisions could lead to flawed decisions, financial losses, compliance failures, or degraded customer experiences, impacting profitability and client retention.
+Added: The regulatory landscape for AI is rapidly evolving.
+Added: New laws could impose costly compliance burdens, restrict AI use, or introduce liabilities, particularly concerning algorithmic bias and fair lending practices (e.g., “digital redlining”), potentially increasing operational costs and limiting service offerings.
+Added: If we cannot effectively manage these challenges, including adapting to rapid technological change, attracting and retaining experienced personnel, and ensuring responsible AI governance, our reputation, competitive position, regulatory status, and financial performance could be significantly harmed.
+Added: We may be subject to risks and losses resulting from fraudulent activities that could adversely impact our financial performance and results of operations.
+Added: We are susceptible to fraudulent activity against us, our clients or our vendors, which may result in financial losses or increased costs to us or our clients or our vendors, disclosure or misuse of our information or our client information, misappropriation of assets, privacy breaches against our clients, litigation or damage to our reputation.
+Added: We are most subject to fraud and compliance risk in connection with the origination of loans, ACH transactions, wire transactions, ATM transactions, checking transactions, and debit cards that we have issued to our customers and through our online banking portals.
+Added: We maintain a system of internal controls and insurance coverage to mitigate against such risks, including data processing system failures and errors, and customer fraud.
+Added: If our internal controls fail to prevent or detect any such occurrence, or if any resulting loss is not insured or exceeds applicable insurance limits, it could have a material adverse effect on our business, financial condition and results of operations.
The cost of additional finance and accounting systems, procedures and controls to satisfy our new public company reporting requirements will increase our expenses.
1 unchanged sentence
We have made, and will continue to make, changes to our internal controls and procedures for financial reporting and accounting systems to meet our reporting obligations as a public company.
−Removed: Section 404 of the Sarbanes-Oxley Act of 2002 requires annual management assessments of the effectiveness of our internal control
−Removed: over financial reporting.
+Added: Section 404 of the Sarbanes-Oxley Act of 2002 requires annual management assessments of the effectiveness of our internal control over financial reporting.
Any failure to achieve and maintain an effective internal control environment could have a material adverse effect on our business.
−Removed: At June 30, 2025, management identified a material weakness in our internal control over financial reporting related to the untimely recognition of income from life insurance contracts resulting from the death of a former employee, which originated from differences in the contract balances reported by our bank owned life insurance ("BOLI") administrator as compared to the underlying insurance carriers.
−Removed: See Item 9A, ”Controls and Procedures.” If we neglect to implement and maintain effective internal control over financial reporting, it could result in material misstatements in our financial statements, which could result in a restatement of our financial statements or cause investors to lose confidence in our reported financial information, adversely affecting our stock price.
−Removed: Any such failure could also adversely affect the results of periodic management evaluations regarding the effectiveness of our internal control over financial reporting required under Section 404 of the Sarbanes-Oxley Act of 2002 and the rules promulgated by the SEC under Section 404.
−Removed: These obligations have increased our operating expenses and could divert our management’s attention from our operations.
We are a community bank and our ability to maintain our reputation is critical to the success of our business and the failure to do so may materially adversely affect our performance.
2 unchanged sentences
As such, we strive to conduct our business in a manner that enhances our reputation.
−Removed: This is done, in part, by recruiting, hiring and retaining employees who share our core values of being an integral part of the communities we serve, delivering superior service to our customers and caring about our customers.
−Removed: If our reputation is negatively affected by the actions of our employees, by our inability to conduct our operations in a manner that is appealing to current or prospective customers, or otherwise, our business and operating results may be materially adversely affected.
+Added: Threats to our reputation can come from many sources, including adverse sentiment about financial institutions generally, unethical practices, employee misconduct, failure to deliver minimum standards of service or quality, compliance deficiencies, cybersecurity incidents, errors in the use of artificial intelligence and questionable or fraudulent activities of our customers.
+Added: In addition, third parties with whom the Company has relationships may take actions over which the Company has limited control that could negatively impact perceptions about the Company or the financial services industry.
+Added: The proliferation of social media may increase the likelihood that negative information about the Company, whether or not accurate, could impact the Company’s reputation and business.
+Added: Negative publicity regarding our business, employees, or customers, with or without merit, may result in the loss of customers and employees, costly litigation and increased governmental regulation, all of which could adversely affect our business and operating results.
Our risk management framework may not be effective in mitigating risk and reducing the potential for significant losses.
13 unchanged sentences
Natural disasters can disrupt our operations, result in damage to our properties, reduce or destroy the value of the collateral for our loans and negatively affect the economies in which we operate, which could have a material adverse effect on our results of operations and financial condition.
−Removed: A significant natural disaster, such as a tornado,
−Removed: hurricane, fire or flood, could have a material adverse impact on our ability to conduct business, and our insurance coverage may be insufficient to compensate for losses that may occur.
+Added: A significant natural disaster, such as a tornado, hurricane, fire or flood, could have a material adverse impact on our ability to conduct business, and our insurance coverage may be insufficient to compensate for losses that may occur.
Acts of terrorism, war, civil unrest, violence or human error could cause disruptions to our business or the economy as a whole.
11 unchanged sentences
As a smaller institution, we are disproportionately affected by the ongoing increased costs of compliance with banking and other regulations.
−Removed: Any change in such regulation and oversight, whether in the form of regulatory policy, new regulations, legislation or supervisory action, may have a material impact on our operations.
+Added: Any change in such regulation and oversight, whether in the form of regulatory policy, new regulations, executive orders, legislation or supervisory action, may have a material impact on our operations.
Further, changes in accounting standards can be both difficult to predict and involve judgment and discretion in their interpretation by us and our independent accounting firm.
42 unchanged sentences
Certain provisions of our articles of incorporation and bylaws and state and federal banking laws, including regulatory approval requirements, could make it more difficult for a third party to acquire control of SR Bancorp without our Board of Directors’ approval.
−Removed: Under applicable regulations, for a period of three years following completion of the conversion, no person may acquire beneficial ownership of more than 10% of our common stock without prior approval of the Federal Reserve.
Under federal law, subject to certain exemptions, a person, entity or group must notify the Federal Reserve before acquiring control of a bank holding company.
8 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.