Editor’s note: This is the latest edition in the “Company Notes Series”, where we periodically share our notes on companies we’ve studied in the recent past but currently have no vested interest in (we may invest in or sell shares in the companies mentioned at any time). The notes are raw and not updated, and the “as of” date for the data is given at the start of the notes. The first 11 editions in the series can be found here, here, here, here, here, here, here, here, here, here, here, and here. Please share your thoughts on the series through the “Contact Us” page; your feedback will determine if we continue with it. Thanks in advance!

Start of notes for SR Bancorp

Data as of 2025-04-24

General background on SR Bancorp

SR Bancorp (ticker symbol “SRBK”) is the holding company for Somerset Regal Bank.
Somerset Regal Bank was established in 1887 as The Bound Brook Building and Loan Association; it became Somerset Regal Bank in 2023.
Somerset Regal Bank conducted a standard conversion that was completed in September 2023; trading of SR Bancorp shares on the NASDAQ exchange started on 20 September 2023. When the IPO was completed, SR Bancorp had 9.50793 million shares outstanding.
A day prior to the conversion, SR Bancorp acquired Regal Bancorp and its subsidiary, Regal Bank. The Somerset Regal Bank of today is thus the combination of Somerset Savings Bank and Regal Bank.
SR Bancorp’s branches are under either the Somerset Savings Bank banner or the Regal Bank banner; all the branches are in the North Eastern part of the state of New Jersey in the USA.

SR Bancorp engages primarily in the lending of fixed-rate and adjustable-rate commercial real estate and residential mortgage loans to individuals. Within commercial real estate loans, most of them are in multi-family loans, which are still related to residential real estate (see Figure 2). Loan-to-value ratios for the loans are acceptable: generally no more than 75% for commercial loans, 80% for multifamily loans and 80% for residential loans (residential mortgage loans granted in excess of the 80% loan-to-value ratio criterion generally require private mortgage insurance). Nearly all of SR Bancorp’s loan portfolio is in New Jersey.

*Figure 2; Source: SR Bancorp FY2025 Q2 10-Q*

Investing information on SR Bancorp

SR Bancorp is a thrift conversion – see here for how to invest in thrifts
As of 31 December 2024, SR Bancorp had total assets of US$1.065 billion and shareholders’ equity of US$0.198 billion, giving a total equity to assets ratio of an excellent 18.6%. SR Bancorp’s total assets include securities held-to-maturity at amortized cost of US$148.8 million as of 31 December 2024; these securities have a marked-to-market value of US$122.6 million. If SR Bancorp’s shareholders’ equity is adjusted for the marked-to-market value, it would be US$0.172 billion, which would give a total equity to assets ratio of a still-robust 16%.
As of 24 April 2025, SR Bancorp has a stock price of US$13.23. Its latest financials (for the 3 months ended 31 December 2024) has its adjusted tangible shareholders’ equity (adjusted for mark-to-market value of securities and intangible assets) at US$0.144 billion, and its share count as 9,255,948, giving an adjusted tangible book value per share of US$15.56, and thus a price-to-tangible book (PTB) ratio of 0.85. If tangible shareholders’ equity was used, the tangible book value per share would be US$18.45 and the PTB ratio would be even better at 0.72
On 20 September 2024, SR Bancorp adopted a program to repurchase up to 950,793 shares, which was around 10% of its outstanding share count back then. Since the adoption of the buyback programme, SR Bancorp’s management has led buybacks of 347,067 shares, as of 31 December 2024, at an average price of US$11.29 each. Considering SR Bancorp’s low PTB ratio, the buybacks are accretive to shareholder value. Moreover, the adoption of the repurchase program happened exactly on the 1st anniversary of the thrift’s IPO, which is the earliest date on which a converted thrift can start repurchasing shares; this is a sign that management understands capital allocation and is trying to do the right things for shareholders.
SR Bancorp has no non-performing assets as of 31 December 2024. Non-performing assets were 0.00% and 0.03% of total assets in FY2024 (fiscal year ended 30 June 2024) and FY2023. This points to well-run lending practices.
SR Bancorp’s annualised return on average equity in the first half of FY2025 was a decent (relative for a thrift!) 2.47%.
SR Bancorp’s three senior-most leaders are:
- William Taylor, CEO of SR Bancorp and Somerset Regal Bank, and Chairman of Somerset Regal Bank; Taylor has been CEO since 2013, and Chairman since 2018; Taylor is already 67
- Christopher Pribula, President and COO of SR Bancorp and Somerset Regal Bank; Pribula has been COO since 2013; Pribula is already 60
- David Orbach, Executive Chair of SR Bancorp and Executive Vice Chair of Somerset Regal Bank; Orbach had been Executive Chairman of Regal Bancorp since its formation and of Regal Bank since 2011; Orbach is only 51
The compensation of Taylor, Pribula, and Orbach, are reasonable, as shown in Figure 3 below. As of 12 February 2024, Taylor, Pribula, and Orbach control 49,269 shares, 30,166 shares, and 133,919 shares respectively; based on SR Bancorp’s share price of US$13.23 as of 24 April 2025, the value of their stakes are US$0.652 million, US$0.399 million, and US$1.77 million, respectively. For Orbach, who has the most shares among the leadership team, his equity value significantly outstrips his annual compensation.

*Figure 3; Source: SR Bancorp FY2024 proxy filing*

Taylor, Pribula, and Orbach have compensation plans that include change in control provisions. In the event that SR Bancorp or Somerset Regal Bank is acquired and the trio’s employment ends, they are each entitled to a severance payment that is equal to 3x the sum of (1) their highest base salary in the three years before their termination, and (2) their average annual total incentive bonus for the three years before their termination. In addition, the terminated executive would also receive a lump sum payment equal to the value of the cost of 36 months of health care.
Putting everything together, it appears that SR Bancorp is a thrift with (1) a low valuation, (2) a management team that understands capital allocation, (3) well-run lending operations, (4) a management team with reasonable capability in running a profitable banking operation, and (5) a management team with reasonable compensation and some incentive to sell the bank. SR Bancorp’s standard conversion was completed in September 2023, so the earliest it can sell itself will be September 2026. The ages of Taylor and Pribula suggest that they would be very open to sell SR Bancorp, but Orbach is still relatively young so Orbach’s age could be a “risk” of SR Bancorp choosing to remain independent – the saving grace is that Orbach’s equity value significantly outstrips his annual compensation, as mentioned earlier
Assume that SR Bancorp (a) has a return on equity of 2.5% each year, (b) has a P/TB ratio that consistently hovers at 0.7, (c) uses up its repurchase program by April 2026, and subsequently buys back 5% of its outstanding shares annually, (d) gets acquired at a P/TB ratio of 1.4 eventually. Under such a scenario, the returns we could theoretically earn are shown in Table 1

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