SR Bancorp (SRBK) risk factors, FY2026 10-K

Risks Related to Economic Conditions

1. 01A worsening of economic conditions in our market area could reduce demand for our products and services and/or result in increases in our level of non-performing loans, which could adversely affect our operations, financial condition and earnings30% rewritten
2. 02the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us
3. 03Inflation can have an adverse impact on our business and on our customers26% rewritten
4. 04Changes to trade policies and tariffs can have an adverse impact on our business and our customers
5. 05A recession could result in increases in our level of non-performing loans and/or reduce demand for our products and services, which would lead to lower revenue, higher credit losses and lower earnings

Risks Related to Interest Rates

1. 06Changes in interest rates or the shape of the yield curve may adversely affect our profitability and financial condition30% rewritten

Risks Related to Strategy and Growth

1. 07Our business strategy includes moderate growth, and our financial condition and results of operations could be negatively affected if we fail to grow or fail to manage our growth effectively
2. 08New lines of business or new products and services may subject us to additional risks
3. 09A significant portion of our loans are secured by real estate, which could negatively impact our profitability upon a downturn in the local real estate market22% rewritten
4. 10Our reliance on third parties to originate certain loans may negatively impact our financial results if such relationships are discontinued28% rewritten
5. 11Because we intend to increase our multi-family and commercial real estate and commercial loan originations, our lending risk will increase32% rewritten
6. 12If our allowance for credit losses is not sufficient to cover actual credit losses, our earnings and capital could decrease41% rewritten

Risks Related to Our Funding

1. 13Our inability to generate core deposits may cause us to rely more heavily on wholesale funding strategies for funding and liquidity needs, which could have an adverse effect on our net interest margin and profitability25% rewritten

Risks Related to Competition

1. 14Strong competition within our market area may limit our growth and profitability

Risks Related to Operations and Security

1. 15We face significant operational risks because the nature of the financial services business involves a high volume of transactions
2. 16Cyber-attacks or other security breaches could adversely affect our operations, net income or reputation56% rewritten
3. 17Risks associated with system failures, interruptions, or breaches of security could negatively affect our earnings25% rewritten
4. 18Our success depends on retaining certain key personnel
5. 19Our 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 resultsnew
6. 20The regulatory landscape for AI is rapidly evolving. 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 offeringsnew
7. 21We may be subject to risks and losses resulting from fraudulent activities that could adversely impact our financial performance and results of operationsnew
8. 22The cost of additional finance and accounting systems, procedures and controls to satisfy our new public company reporting requirements will increase our expenses65% rewritten
9. 23We 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 performance76% rewritten
10. 24Our risk management framework may not be effective in mitigating risk and reducing the potential for significant losses
11. 25While our Board of Directors takes an active role in cybersecurity risk tolerance, we rely to a large degree on management and outside consultants in overseeing cybersecurity risk management
12. 26Natural disasters, acts of terrorism, global market disruptions and other external events could harm our business

Risks Related to Regulatory Matters

1. 27Changes in laws and regulations and the cost of regulatory compliance with new laws and regulations may adversely affect our operations and/or increase our costs of operations
2. 28Non-compliance with the USA PATRIOT Act, Bank Secrecy Act, or other laws and regulations could result in fines or sanctions
3. 29Monetary policies and regulations of the Federal Reserve could adversely affect our business, financial condition and results of operations
4. 30We are an emerging growth company, and any decision on our part to comply only with certain reduced reporting and disclosure requirements applicable to emerging growth companies could make our common stock less attractive to investors
5. 31We are also a smaller reporting company, and even if we no longer qualify as an emerging growth company, any decision on our part to comply only with certain reduced reporting and disclosure requirements applicable to smaller reporting companies could make our common stock less attractive to investors

Risks Related to Accounting Matters

1. 32Changes in accounting standards could affect reported earnings
2. 33Changes in management’s estimates and assumptions may have a material impact on our consolidated financial statements and our financial condition or operating results

Risks Related to Our Common Stock

1. 34Our return on equity remains low following the stock offering, which could negatively affect our stock price
2. 35Various factors may make takeover attempts more difficult to achieve23% rewritten

Risks Related to the Somerset Regal Charitable Foundation

1. 36Our contribution to the charitable foundation may not be tax deductible, which could reduce our profits