Steele Bancorp's Net Income Jumps 37% on Strong Loan Growth

Ticker: STLE · Form: 10-Q · Filed: Aug 14, 2025 · CIK: 779227

Sentiment: mixed

Topics: Regional Banking, Earnings Growth, Loan Portfolio, Credit Risk, Interest Rate Risk, Financial Performance, Asset Growth

Related Tickers: STLE

TL;DR

**STLE is crushing it with loan growth and profit, but watch that credit loss provision – it's a red flag.**

AI Summary

STEELE BANCORP INC reported a significant increase in net income for the three months ended June 30, 2025, reaching $1.82 million, up 37.6% from $1.323 million in the prior year. For the six months, net income rose 35.3% to $3.626 million from $2.679 million. Total assets grew to $629.239 million as of June 30, 2025, a 5.45% increase from $596.702 million at December 31, 2024. This growth was primarily driven by a substantial increase in loans, net, which rose to $462.977 million from $431.960 million, and a surge in cash and cash equivalents to $21.016 million from $9.179 million. Net interest income after provision for credit losses increased to $4.832 million for the quarter, up from $3.991 million, and to $9.568 million for the six months, up from $7.821 million. The provision for credit losses increased significantly to $156,000 for the quarter and $162,000 for the six months, compared to $30,000 in both prior periods, reflecting potential credit quality concerns. Total liabilities also increased to $570.173 million from $540.785 million, mainly due to a rise in total deposits to $514.608 million and Federal Home Loan Bank advances to $47.085 million. The company's accumulated other comprehensive loss improved to $(3.526) million from $(4.424) million, driven by unrealized holding gains on debt securities available-for-sale.

Why It Matters

Steele Bancorp's robust net income growth and significant loan expansion signal strong operational performance in a competitive regional banking landscape. For investors, this indicates potential for increased shareholder value, especially with earnings per share rising to $0.98. Employees may see enhanced job security and growth opportunities as the bank expands its asset base and services. Customers could benefit from increased lending capacity and potentially more competitive deposit rates. The broader market will observe how regional banks like Steele Bancorp navigate rising interest rates and credit risk, particularly with the notable increase in provision for credit losses, which could be a bellwether for the sector.

Risk Assessment

Risk Level: medium — The risk level is medium due to the significant increase in the provision for credit losses, which jumped from $30,000 in Q2 2024 to $156,000 in Q2 2025, and from $30,000 to $162,000 for the six-month period. This 420% increase suggests management anticipates higher loan defaults or a deterioration in credit quality, despite overall loan growth. Additionally, the company holds $4.613 million in gross unrealized losses on debt securities available-for-sale as of June 30, 2025, indicating exposure to interest rate fluctuations.

Analyst Insight

Investors should closely monitor STLE's future credit loss provisions and non-performing loan ratios to assess the sustainability of its loan growth. While the earnings are strong, the increased provision for credit losses warrants caution. Consider holding existing positions but delay new investments until there's clearer guidance on credit quality trends.

Financial Highlights

debt To Equity
9.65
revenue
$7,707,000
operating Margin
N/A
total Assets
$629,239,000
total Debt
$570,173,000
net Income
$1,820,000
eps
$0.98
gross Margin
N/A
cash Position
$21,016,000
revenue Growth
+20.3%

Revenue Breakdown

SegmentRevenueGrowth
Interest and fees on loans$6,735,000+24.3%
Interest-bearing deposits in banks$121,000-13.6%
Federal funds sold$4,000-75.0%
Taxable securities$486,000+3.4%
Tax-exempt securities$292,000-5.5%
Dividends$69,000+32.7%

Key Numbers

Key Players & Entities

FAQ

What were Steele Bancorp's net income figures for Q2 2025 and the first six months of 2025?

Steele Bancorp's net income for the three months ended June 30, 2025, was $1.820 million, a 37.6% increase from $1.323 million in the same period of 2024. For the six months ended June 30, 2025, net income was $3.626 million, up 35.3% from $2.679 million in the prior year.

How did Steele Bancorp's total assets change from December 31, 2024, to June 30, 2025?

Total assets for Steele Bancorp increased to $629.239 million as of June 30, 2025, from $596.702 million at December 31, 2024. This represents a growth of $32.537 million or 5.45%.

What was the change in Steele Bancorp's provision for credit losses in Q2 2025 compared to Q2 2024?

The provision for credit losses for Steele Bancorp increased significantly to $156,000 for the three months ended June 30, 2025, compared to $30,000 for the same period in 2024. This is a 420% increase.

What were Steele Bancorp's earnings per share for Q2 2025?

Steele Bancorp reported basic and diluted earnings per share of $0.98 for the three months ended June 30, 2025, an increase from $0.71 in the same period of 2024.

What is the status of Steele Bancorp's debt securities available-for-sale?

As of June 30, 2025, Steele Bancorp held debt securities available-for-sale with a fair value of $107.137 million and gross unrealized losses of $4.613 million. This is an improvement from December 31, 2024, when unrealized losses were $5.655 million.

How much did Steele Bancorp's loans, net, increase by in the first six months of 2025?

Steele Bancorp's loans, net, increased by $31.017 million, rising from $431.960 million at December 31, 2024, to $462.977 million at June 30, 2025.

What new accounting pronouncements might impact Steele Bancorp?

Steele Bancorp noted two recent accounting pronouncements: ASU 2023-09, 'Improvements to Income Tax Disclosures,' effective for annual periods after December 15, 2024, and ASU 2024-03, 'Disaggregation of Income Statement Expenses,' effective for annual periods after December 15, 2026. The company does not expect a material impact from either.

What was the total interest and dividend income for Steele Bancorp in Q2 2025?

For the three months ended June 30, 2025, Steele Bancorp's total interest and dividend income was $7.707 million, an increase from $6.403 million in Q2 2024.

How did Steele Bancorp's total deposits change from December 31, 2024, to June 30, 2025?

Steele Bancorp's total deposits increased to $514.608 million as of June 30, 2025, from $489.529 million at December 31, 2024, representing a $25.079 million increase.

What is the significance of the 'Redeemable Common Stock Held By Employee Stock Ownership Plan' on Steele Bancorp's balance sheet?

The 'Redeemable Common Stock Held By Employee Stock Ownership Plan' is classified as temporary equity because the shares are redeemable at the option of the participant and could be put to the Company for cash. As of June 30, 2025, this amounted to $1.950 million.

Risk Factors

Industry Context

Steele Bancorp operates within the highly regulated U.S. banking industry, characterized by intense competition from larger national banks, regional institutions, and community banks. Key industry trends include evolving customer preferences towards digital banking, increasing interest rate volatility impacting net interest margins, and ongoing regulatory scrutiny. The sector is also navigating economic uncertainties and the need for robust risk management frameworks.

Regulatory Implications

As a U.S. bank holding company and state-chartered bank, Steele Bancorp is subject to stringent oversight from the Federal Reserve, FDIC, and state banking authorities. Compliance with capital adequacy, liquidity, and consumer protection regulations is paramount. Any shifts in monetary policy or new regulatory directives could significantly influence the bank's operations and profitability.

What Investors Should Do

  1. Monitor the trend in the provision for credit losses.
  2. Analyze the impact of interest rate changes on the securities portfolio.
  3. Evaluate the growth drivers of net interest income.
  4. Assess the company's reliance on wholesale funding.

Key Dates

Glossary

Provision for credit losses
An expense set aside by a financial institution to cover potential losses from loans that may not be repaid. (An increase in this provision, as seen in Q2 2025, signals management's expectation of future loan defaults or deterioration in credit quality.)
Debt securities available-for-sale
Investments in debt instruments (like bonds) that are not held to maturity and can be sold before maturity if needed. Their value fluctuates with market conditions. (The company has a significant portfolio of these securities, and their fair value changes due to market interest rates impact the company's other comprehensive income.)
Accumulated other comprehensive loss
A component of equity that includes unrealized gains and losses on certain investments and other items not yet recognized in net income. (An improvement in this figure, from $(4.424) million to $(3.526) million, indicates that unrealized losses on investments have decreased, likely due to favorable market movements.)
Federal Home Loan Bank advances
A source of funding for member financial institutions, typically used to support lending and liquidity. (An increase in these advances suggests the company is relying more on this wholesale funding source, which can be more volatile than deposits.)
Allowance for credit losses
A contra-asset account that reduces the carrying amount of loans to their estimated net realizable value. (This reserve is directly impacted by the provision for credit losses and is a key indicator of the bank's assessment of potential loan losses.)

Year-Over-Year Comparison

Compared to the prior year's comparable periods, Steele Bancorp has demonstrated strong top-line growth, with net interest income increasing significantly. Net income has also seen a substantial rise of 37.6% for the quarter and 35.3% for the six months. Total assets have grown by 5.45% since year-end 2024, driven by loan expansion and a surge in cash. However, a notable concern is the more than quadrupled provision for credit losses, indicating potential headwinds in loan portfolio quality. The company's investment portfolio shows a reduction in unrealized losses, improving accumulated other comprehensive loss.

Filing Stats: 4,774 words · 19 min read · ~16 pages · Grade level 16.8 · Accepted 2025-08-14 11:47:48

Filing Documents

- Financial Information

Part I - Financial Information 3

Financial Statements

Item 1. Financial Statements Consolidated Balance Sheets , June 30, 2025 (unaudited) and December 31, 2024 3 Consolidated Statements of Income for the Three and Six Months Ended June 30, 2025 and 2024 (Unaudited) 4 Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2025 and 2024 (Unaudited) 5 Consolidated Statements of Changes in Stockholders' Equity for the Three and Six Months Ended June 30, 2025 and 2024 (Unaudited) 6 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2025 and 2024 (Unaudited) 7

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) 8

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 32

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 46

Controls and Procedures

Item 4. Controls and Procedures 46

- Other Information

Part II - Other Information 46

Legal Proceedings

Item 1. Legal Proceedings 46

Risk Factors

Item 1A. Risk Factors 46

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 46

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 46

Mine Safety Disclosure

Item 4. Mine Safety Disclosure 46

Other Information

Item 5. Other Information 46

Exhibit Index

Item 6. Exhibit Index 47

Signatures

Signatures 48 2 Table of Contents

- Financial Information

Part I - Financial Information

Financial Statements

Item 1. Financial Statements Steele Bancorp, Inc. and Subsidiary Consolidated Balance Sheets (in thousands, except share and per share data) (Unaudited) June 30, December 31, 2025 2024 * Assets Cash and due from banks $ 7,224 $ 4,580 Interest-bearing demand deposits 4,681 3,213 Federal funds sold 9,111 1,386 Total cash and cash equivalents 21,016 9,179 Interest-bearing time deposits 8,646 10,369 Debt securities available-for-sale, at fair value 107,137 116,053 Marketable equity securities, at fair value 265 268 Restricted investments in bank stock, at cost 2,533 2,300 Loans 467,613 436,339 Allowance for credit losses ( 4,636 ) ( 4,379 ) Loans, net 462,977 431,960 Premises and equipment, net 7,989 8,251 Accrued interest receivable 1,903 1,804 Other real estate owned 78 - Bank owned life insurance 13,092 12,966 Net deferred tax asset 2,068 2,247 Other assets 1,535 1,305 Total Assets $ 629,239 $ 596,702 Liabilities and Stockholders' Equity Liabilities Deposits: Noninterest-bearing deposits $ 81,741 $ 69,746 Interest-bearing deposits 432,867 419,783 Total deposits 514,608 489,529 Repurchase agreements 1,242 1,143 Federal Home Loan Bank advances 47,085 43,050 Accrued interest payable 1,951 1,736 Other liabilities 5,287 5,327 Total Liabilities 570,173 540,785 Commitments and Contingencies Redeemable Common Stock Held By Employee Stock Ownership Plan 1,950 1,877 Stockholders' Equity Common stock, par value $ 1.00 per share; authorized 5,000,000 shares; issued 2,160,000 shares; outstanding 1,858,536 shares as of June 30, 2025 and December 31, 2024 2,160 2,160 Capital surplus 1,899 1,899 Retained earnings 66,264 64,013 Accumulated other comprehensive loss ( 3,526 ) ( 4,424 ) Treasury stock, at cost: 2025: 301,464 shares; 2024: 301,464 shares ( 7,731 ) ( 7,731 ) Total Stockholders' Equity 59,066 55,917 Less maximum cash obligation to ESOP shares 1,9

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (Unaudited) 1. Description of Business and Summary of Significant Accounting Policies Steele Bancorp, Inc. (the Bancorp) is a Pennsylvania Corporation organized as the holding company of Central Penn Bank & Trust (the Bank) (collectively, the "Company"). The Bank is a state chartered commercial bank located in Mifflinburg, Pennsylvania, whose principal sources of revenues are derived from its commercial, mortgage, residential real estate, and consumer loan financing as well as a variety of deposit services provided to customers serviced by its seven offices. Milestone Insurance Services, LLC (Milestone) was formed in 2003 and is a wholly owned subsidiary of the Bank. Milestone is licensed to sell title insurance. The Bancorp is supervised by the Board of Governors of the Federal Reserve System while the Bank is subject to regulation and supervision by the Federal Deposit Insurance Company and the Pennsylvania Department of Banking and Securities. Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with Generally Accepted Accounting Principles ("GAAP") for interim reporting and with applicable quarterly reporting regulations for the U.S. Securities and Exchange Commission ("SEC"). They do not include all of the information and notes required by GAAP for complete financial statements. As such, these consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto as of and for the year ended December 31, 2024 , included in the Company's Special Financial Report on Form 10 -K for the year ended December 31, 2024 ( "2024 Form 10 -K"). Application of the principles of GAAP and practices within the banking industry requires management to make estimates, assumptions and judgements that affect the amounts reported in the financial statements and accompanying notes. These estimates, assumptions, and ju

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (Unaudited) Recent Accounting Pronouncements In December 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023 - 09, "Income Taxes (Topic 740 ): Improvements to Income Tax Disclosures." The amendments in this ASU require an entity to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold, which is greater than five percent of the amount computed by multiplying pretax income by the entity's applicable statutory rate, on an annual basis. Additionally, the amendments in this ASU require an entity to disclose the amount of income taxes paid (net of refunds received) disaggregated by federal, state, and foreign taxes and the amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions that are equal to or greater than five percent of total income taxes paid (net of refunds received). Lastly, the amendments in this ASU require an entity to disclose income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign and income tax expense (or benefit) from continuing operations disaggregated by federal, state, and foreign. This ASU is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied on a prospective basis; however, retrospective application is permitted. The Company does not expect the adoption of ASU 2023 - 09 to have a material impact on its consolidated financial statements. In November 2024, the Financial Accounting Standards Board (FASB) issued ASU 2024 - 03, "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220 - 40 ): Disaggregation of Income Statement Expenses." ASU 2024 - 03 requires public companies to disclose, in the notes to the financial statements, specific information about certain costs and e

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (Unaudited) 2. Securities The amortized cost and fair value of debt securities available-for-sale along with gross unrealized gains and losses as of the dates indicated are summarized as follows (in thousands): June 30, 2025 December 31, 2024 Gross Gross Gross Gross Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair Cost Gains Losses Value Cost Gains Losses Value U.S. Treasury $ 2,202 $ 21 $ - $ 2,223 $ 2,194 $ 9 $ ( 1 ) $ 2,202 U.S. government agencies 20,942 41 ( 184 ) 20,799 25,865 11 ( 427 ) 25,449 Taxable state and municipal 6,066 - ( 401 ) 5,665 6,142 - ( 511 ) 5,631 Tax exempt state and municipal 54,162 9 ( 3,480 ) 50,691 55,696 3 ( 3,903 ) 51,796 U.S. government sponsored enterprise mortgage-backed 25,197 79 ( 432 ) 24,844 27,723 31 ( 656 ) 27,098 Corporate 3,031 - ( 116 ) 2,915 4,034 - ( 157 ) 3,877 Total debt securities available-for-sale $ 111,600 $ 150 $ ( 4,613 ) $ 107,137 $ 121,654 $ 54 $ ( 5,655 ) $ 116,053 Accrued interest receivable on available-for-sale securities totaled $ 570,000 and $ 620,000 at June 30, 2025 and December 31, 2024 , respectively and is included in Accrued Interest Receivable on Consolidated Balance Sheets. Amount was excluded from the estimate of credit losses. The deferred tax asset for the net unrealized loss on securities available for sale was $ 937,000 as of June 30, 2025 and $ 1,176,000 as of December 31, 2024. The deferred tax asset is included in net deferred tax asset on the Consolidated Balance Sheets. The amortized cost and estimated fair value of debt securities available-for-sale at June 30, 2025 , by expected maturity for mortgage-backed securities and debt securities with call features and by contractual maturity for all other securities, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligation

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (Unaudited) The following tables show the Company's debt securities available-for-sale gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of June 30, 2025 and December 31, 2024 (in thousands): June 30, 2025 Less than 12 Months 12 Months or Longer Total Unrealized Unrealized Unrealized Fair Value Losses Fair Value Losses Fair Value Losses U.S. Treasury $ - $ - $ 250 $ - $ 250 $ - U.S. government agencies 9,945 82 5,235 102 15,180 184 Taxable state and municipal - - 5,165 401 5,165 401 Tax-exempt state and municipal 5,712 55 43,043 3,425 48,755 3,480 U.S. government sponsored enterprise mortgage-backed 7,024 69 9,270 363 16,294 432 Corporate - - 2,916 116 2,916 116 Total debt securities available-for-sale $ 22,681 $ 206 $ 65,879 $ 4,407 $ 88,560 $ 4,613 December 31, 2024 Less than 12 Months 12 Months or Longer Total Unrealized Unrealized Unrealized Fair Value Losses Fair Value Losses Fair Value Losses U.S. Treasury $ - $ - $ 248 $ 1 $ 248 $ 1 U.S. government agencies 11,650 235 10,169 192 21,819 427 Taxable state and municipal - - 5,631 511 5,631 511 Tax-exempt state and municipal 6,646 96 43,673 3,807 50,319 3,903 U.S. government sponsored enterprise mortgage-backed 11,450 140 9,492 516 20,942 656 Corporate 498 - 3,379 157 3,877 157 Total debt securities available-for-sale $ 30,244 $ 471 $ 72,592 $ 5,184 $ 102,836 $ 5,655 At June 30, 2025 , the $ 206,000 unrealized loss (less than 12 months) was attributed to 32 different securities. The $ 4,407,000 unrealized loss ( 12 months or more) was attributed to 174 securities. At December 31, 2024 , the $ 471,000 unrealized loss (less than 12 months) was attributed to 42 different securities. The $ 5,184,000 unrealized loss ( 12 months or more) was attributed to 19

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (Unaudited) The Company considers payment history, risk ratings from external parties, financial statements for municipal and corporate securities, public statements from issuers and other available credible published sources in evaluating credit risk. No credit risk was found and no Allowance for Credit Loss on securities available for sale was recorded as of June 30, 2025 and December 31, 2024 . The unrealized losses are attributed to noncredit-related factors, including changes in interest rates and other market conditions. The Company did not sell or recognize any gain or loss for any securities for the three and six months ended June 30, 2025 and 2024 . Securities with a carrying value of $ 71,687,000 and $ 73,585,000 at June 30, 2025 and December 31, 2024 , respectively, were pledged to secure public deposits and for other purposes as required by law. As of June 30, 2025 and December 31, 2024 , the Company had $ 265,000 and $ 268,000 , respectively, in marketable equity securities recorded at fair value. The following is a summary of unrealized and realized gains and losses recognized in net income on marketable equity securities during the three and six months ended June 30, 2025 and 2024 (in thousands): Three Months Ended June 30, 2025 Three Months Ended June 30, 2024 Six Months Ended June 30, 2025 Six Months Ended June 30, 2024 Net change in the unrealized gain (loss) recognized during the period on marketable equity securities $ ( 10 ) $ ( 83 ) $ ( 3 ) $ ( 32 ) Add: Net realized gain (loss) recognized on marketable equity securities sold during the period - - - - Net gain (loss) recognized in net income during the period on marketable equity securities still held at the reporting date $ ( 10 ) $ ( 83 ) $ ( 3 ) $ ( 32 ) Restricted Investments in Bank Stock Restricted investments in bank stock represent required investments in the common stock of correspondent banks and consist of common st

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (Unaudited) 3. Loans and Other Real Estate Owned ("OREO") Major categories of loans are summarized as follows as of June 30, 2025 and December 31, 2024 (in thousands): 2025 2024 Commercial $ 87,496 $ 87,990 Commercial real estate 243,121 212,595 Residential mortgage 121,913 121,345 Home equity 8,423 7,186 Consumer, other 1,169 1,526 Consumer, automobile 6,387 6,516 468,509 437,158 Less: net deferred loan fees ( 896 ) ( 819 ) Total loans net of deferred loan fees 467,613 436,339 Less: allowance for credit losses ( 4,636 ) ( 4,379 ) Net Loans $ 462,977 $ 431,960 The Company has elected to exclude accrued interest from the amortized cost basis in its determination of the allowance for credit losses for loans, as well as elected the pol

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