Steele Bancorp's Net Income Soars 896% Post-NUBC Acquisition

TL;DR

**STLE just hit the jackpot with the NUBC acquisition, sending net income through the roof, making it a strong buy for growth-hungry investors.**

AI Summary

STEELE BANCORP INC reported a significant increase in net income for the three and nine months ended September 30, 2025, primarily driven by the acquisition of Northumberland Bancorp (NUBC). Net income for the three months surged to $13.677 million from $1.381 million in the prior year, an increase of 896%. For the nine months, net income rose to $17.303 million from $4.060 million, a 326% increase. Total assets more than doubled to $1.253 billion as of September 30, 2025, from $596.702 million at December 31, 2024, largely due to the NUBC acquisition which contributed $43.399 million in cash and significantly increased loans and deposits. Interest and fees on loans increased to $12.232 million for the three months and $25.372 million for the nine months, up from $5.732 million and $16.315 million respectively in 2024. A bargain purchase gain of $17.827 million was recognized from the NUBC acquisition, significantly boosting noninterest income. However, the provision for credit losses also increased substantially to $4.228 million for the three months and $4.390 million for the nine months, compared to $138 thousand and $169 thousand in the prior year, reflecting the expanded loan portfolio and acquisition accounting. Merger-related expenses also rose to $3.873 million for the quarter and $4.120 million for the nine months.

Why It Matters

This filing reveals STLE's aggressive growth strategy through the NUBC acquisition, which has dramatically expanded its balance sheet and profitability. For investors, the 896% surge in quarterly net income and the $17.827 million bargain purchase gain signal strong immediate returns from the merger, potentially indicating a well-executed integration and favorable valuation. Employees and customers of both STLE and the acquired NUBC will experience changes in operations and services as the integration progresses, with STLE's expanded footprint potentially offering new opportunities or challenges. In the broader market, this acquisition highlights ongoing consolidation within the regional banking sector, intensifying competitive pressures for smaller banks and potentially leading to more efficient, larger entities.

Risk Assessment

Risk Level: medium — The risk level is medium due to the substantial increase in the provision for credit losses to $4.390 million for the nine months ended September 30, 2025, up from $169 thousand in the prior year, indicating potential credit quality concerns or a more conservative lending posture post-acquisition. Additionally, merger-related expenses of $4.120 million for the nine months highlight the significant costs and integration risks associated with such a large acquisition, which could impact future profitability if not managed effectively.

Analyst Insight

Investors should closely monitor STLE's integration of NUBC, particularly the trends in credit quality and the realization of synergies. While the immediate financial boost is impressive, a deeper dive into the acquired loan portfolio's performance and ongoing merger expenses is crucial. Consider holding STLE for now, but be prepared to re-evaluate if credit loss provisions continue to escalate or integration costs outweigh benefits.

Financial Highlights

debt To Equity

N/A

revenue

$12.232M

operating Margin

N/A

total Assets

$1.253B

total Debt

$1.147B

net Income

$13.677M

eps

$4.77

gross Margin

N/A

cash Position

$54.018M

revenue Growth

+115.1%

Revenue Breakdown

Key Numbers

• $13.677M — Net Income (3 months) (Increased 896% from $1.381M in 2024)
• $17.303M — Net Income (9 months) (Increased 326% from $4.060M in 2024)
• $1.253B — Total Assets (Increased from $596.702M at Dec 31, 2024, primarily due to NUBC acquisition)
• $17.827M — Bargain Purchase Gain (Recognized from NUBC acquisition, boosting noninterest income)
• $4.390M — Provision for Credit Losses (9 months) (Increased from $169K in 2024, reflecting expanded loan portfolio)
• $4.120M — Merger-Related Expenses (9 months) (Increased from $105K in 2024, reflecting acquisition costs)
• $43.399M — Cash Acquired in NUBC Acquisition (Net of cash paid, contributing to increased cash and cash equivalents)
• $900.610M — Loans (Increased from $436.339M at Dec 31, 2024, due to NUBC acquisition)
• $1.105B — Total Deposits (Increased from $489.529M at Dec 31, 2024, due to NUBC acquisition)
• $4.77 — Basic and Diluted EPS (3 months) (Increased from $0.74 in 2024)

Key Players & Entities

• STEELE BANCORP INC (company) — Registrant
• Northumberland Bancorp (company) — Acquired company (NUBC)
• Central Penn Bank & Trust (company) — Subsidiary of Steele Bancorp, Inc.
• Milestone Insurance Services, LLC (company) — Wholly owned subsidiary of Central Penn Bank & Trust
• Federal Reserve System (regulator) — Supervises the Bancorp
• Federal Deposit Insurance Company (regulator) — Regulates and supervises the Bank
• Pennsylvania Department of Banking and Securities (regulator) — Regulates and supervises the Bank
• $13.677 million (dollar_amount) — Net income for three months ended September 30, 2025
• $17.303 million (dollar_amount) — Net income for nine months ended September 30, 2025
• $17.827 million (dollar_amount) — Bargain purchase gain from NUBC acquisition

FAQ

Risk Factors

• Credit Risk from Expanded Loan Portfolio [high — financial]: The provision for credit losses increased substantially to $4.228 million for the three months ended September 30, 2025, from $138 thousand in the prior year. This increase is directly attributed to the expanded loan portfolio resulting from the NUBC acquisition, which added $900.610 million in loans.
• Integration Risk of NUBC Acquisition [medium — operational]: The acquisition of Northumberland Bancorp (NUBC) led to significant increases in assets and liabilities. Successful integration of NUBC's operations, systems, and personnel is critical to realizing the expected synergies and avoiding operational disruptions. Merger-related expenses of $3.873 million for the quarter highlight the immediate costs associated with this integration.
• Bargain Purchase Gain Volatility [medium — financial]: A bargain purchase gain of $17.827 million was recognized from the NUBC acquisition. While this significantly boosted noninterest income in the current period, such gains are non-recurring and can lead to volatility in future earnings if not managed carefully.
• Increased Regulatory Scrutiny Post-Acquisition [medium — regulatory]: The significant growth in assets to $1.253 billion post-acquisition may subject Steele Bancorp to increased regulatory oversight and compliance requirements. Maintaining compliance with evolving banking regulations is crucial.
• Interest Rate Sensitivity [medium — financial]: As a financial institution, Steele Bancorp is exposed to interest rate risk. Changes in market interest rates can affect net interest income and the fair value of its investment securities. The substantial increase in interest-bearing deposits and loans necessitates careful management of interest rate sensitivity.

Industry Context

The banking industry is characterized by intense competition, stringent regulatory oversight, and sensitivity to economic cycles and interest rate movements. Consolidation through mergers and acquisitions remains a key strategy for growth and efficiency. Banks are increasingly focused on digital transformation, customer experience, and managing credit risk in a dynamic economic environment.

Regulatory Implications

The significant increase in total assets to $1.253 billion post-acquisition may lead to enhanced regulatory scrutiny from the Federal Reserve and FDIC. Steele Bancorp must ensure robust compliance frameworks to manage increased capital requirements, liquidity ratios, and risk management practices.

What Investors Should Do

1. Monitor integration progress of NUBC acquisition.
2. Analyze trends in the provision for credit losses.
3. Evaluate the sustainability of earnings post-acquisition.
4. Assess the impact of interest rate changes on net interest income.

Key Dates

• 2025-09-30: Quarter and Nine Months Ended — Reported significant net income growth driven by NUBC acquisition, with total assets doubling.
• 2024-12-31: Year End — Prior period balance sheet figures used for comparison, showing total assets of $596.702 million.

Glossary

Bargain Purchase Gain

Occurs when the fair value of the net identifiable assets acquired in a business combination exceeds the consideration transferred. This results in a gain being recognized in earnings. (A gain of $17.827 million was recognized from the NUBC acquisition, significantly boosting noninterest income.)

Provision for Credit Losses

An expense recognized by financial institutions to cover potential losses from loans that may not be repaid. It is an estimate of the expected credit losses on the loan portfolio. (Increased substantially to $4.228 million for the three months ended September 30, 2025, reflecting the larger loan portfolio post-acquisition.)

Core Deposit Intangible

An intangible asset representing the value of a bank's stable, low-cost core deposit base. It is typically amortized over its estimated useful life. (A core deposit intangible asset of $14.218 million was recognized on the balance sheet as of September 30, 2025, due to the NUBC acquisition.)

Purchase Credit-Deteriorated (PCD) Loans

Loans acquired in a business combination for which there is more than insignificant evidence of credit deterioration since origination. These are recorded at fair value at acquisition. (The acquisition accounting for NUBC's loan portfolio involved the assessment and valuation of PCD loans.)

Year-Over-Year Comparison

Steele Bancorp has experienced a dramatic transformation in its financial profile compared to the prior year, primarily due to the acquisition of Northumberland Bancorp. Total assets have more than doubled from $596.702 million to $1.253 billion. Net income has surged by 896% for the quarter and 326% for the nine months, largely driven by a significant bargain purchase gain. However, this growth is accompanied by a substantial increase in the provision for credit losses, reflecting the larger loan portfolio, and increased merger-related expenses.

Filing Documents

• miff20250930_10q.htm (10-Q) — 4320KB
• ex_854000.htm (EX-31.1) — 11KB
• ex_854001.htm (EX-31.2) — 12KB
• ex_854002.htm (EX-32.1) — 8KB
• 0001437749-25-035129.txt ( ) — 18305KB
• miff-20250930.xsd (EX-101.SCH) — 78KB
• miff-20250930_cal.xml (EX-101.CAL) — 87KB
• miff-20250930_def.xml (EX-101.DEF) — 621KB
• miff-20250930_lab.xml (EX-101.LAB) — 525KB
• miff-20250930_pre.xml (EX-101.PRE) — 658KB
• miff20250930_10q_htm.xml (XML) — 5071KB

- Financial Information

Part I - Financial Information 3

Financial Statements

Item 1. Financial Statements Consolidated Balance Sheets , September 30, 2025 (unaudited) and December 31, 2024 3 Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2025 and 2024 (Unaudited) 4 Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2025 and 2024 (Unaudited) 5 Consolidated Statements of Changes in Stockholders' Equity for the Three and Nine Months Ended September 30, 2025 and 2024 (Unaudited) 6 Consolidated Statements of Cash Flows for the Nine Months Ended September 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 40

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 56

Controls and Procedures

Item 4. Controls and Procedures 56

- Other Information

Part II - Other Information 56

Legal Proceedings

Item 1. Legal Proceedings 56

Risk Factors

Item 1A. Risk Factors 56

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 56

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 56

Mine Safety Disclosure

Item 4. Mine Safety Disclosure 56

Other Information

Item 5. Other Information 56

Exhibit Index

Item 6. Exhibit Index 57

Signatures

Signatures 58 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) September 30, December 31, 2025 2024 * Assets Cash and due from banks $ 7,215 $ 4,580 Interest-bearing demand deposits 41,776 3,213 Federal funds sold 5,027 1,386 Total cash and cash equivalents 54,018 9,179 Interest-bearing time deposits 7,654 10,369 Debt securities available-for-sale, at fair value 223,633 116,053 Marketable equity securities, at fair value 518 268 Restricted investments in bank stock, at cost 2,780 2,300 Loans 900,610 436,339 Allowance for credit losses ( 9,512 ) ( 4,379 ) Loans, net 891,098 431,960 Premises and equipment, net 18,110 8,251 Accrued interest receivable 3,984 1,804 Core deposit intangible, net 14,218 - Bank owned life insurance 28,070 12,966 Net deferred tax asset 4,570 2,247 Other assets 4,923 1,305 Total Assets $ 1,253,576 $ 596,702 Liabilities and Stockholders' Equity Liabilities Deposits: Noninterest-bearing deposits $ 214,926 $ 69,746 Interest-bearing deposits 891,004 419,783 Total deposits 1,105,930 489,529 Repurchase agreements 1,414 1,143 Federal Home Loan Bank advances 8,000 43,050 Subordinated debt, at fair value 9,808 - Accrued interest payable 2,051 1,736 Other liabilities 11,473 5,327 Total Liabilities 1,138,676 540,785 Commitments and Contingencies Redeemable Common Stock Held By Employee Stock Ownership Plan 4,162 1,877 Stockholders' Equity Common stock, par value $ 1.00 per share; authorized 5,000,000 shares; issued 3,706,725 (2025) and 2,160,000 (2024) shares; outstanding 3,405,061 and 1,858,536 shares as of September 30, 2025 and December 31, 2024, respectively. 3,707 2,160 Capital surplus 40,595 1,899 Retained earnings 79,941 64,013 Accumulated other comprehensive loss ( 1,187 ) ( 4,424 ) Unearned ESOP shares ( 425 ) - Treasury stock, at c

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 thirteen 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

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (Unaudited) The most significant assessment of fair value in the Company's accounting for business combinations relates to the valuation of an acquired loan portfolio. At acquisition, loans are classified as either (i) purchase credit-deteriorated ("PCD") loans or (ii) non-PCD loans and are recorded at fair value on the date of acquisition. PCD loans are those for which there is more than insignificant evidence of credit deterioration since origination. Fair values are determined primarily through a discounted cash flow approach which considers the acquired loans' underlying characteristics, including account types, remaining terms, annual interest rates, interest types, timing of principal and interest payments, current market rates, and remaining balances. Estimates of fair value also include estimates of default, loss severity, and estimated prepayments. At acquisition, an allowance for credit losses ("ACL") for PCD loans is determined based upon the Company's methodology for estimating the ACL on loans. This allowance is credited to the ACL on loans with a corresponding adjustment to the amortized cost basis of the loan on the date of the acquisition. The difference between the new amortized cost basis and the unpaid principal balance is either a noncredit discount or premium that is amortized or accreted to interest income over the remaining life of the loan. Disposals of PCD loans, which may include sale of loans to third parties, receipt of payments in full or in part from the borrower or foreclosure of the collateral, result in removal of the loan from the loan portfolio at its carrying amount. For non-PCD loans, an ACL is established in a manner that is consistent with the Company's originated loans. The ACL is determined using the Company's methodology and the related ACL for non-PCD loans is recorded through a charge to the provision for credit losses in the period in which the loans are purchased or acquired

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, specified information about certain costs and

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (Unaudited) 2. Business Combinations On August 1, 2025 (the "Acquisition Date"), the Company completed the acquisition of Northumberland Bancorp ("NUBC"), in accordance with the definitive agreement that was entered into on September 24, 2024, as amended on December 4, 2024, by and among the Company and NUBC. The primary reasons for the merger included: expansion of the branch network and increased market share positions in central Pennsylvania; attractive low-cost funding base; strong cultural alignment and a deep commitment to shareholders, customers, employees, and communities served by Steele and NUBC, meaningful value creation to shareholders; and increased trading liquidity for both companies and increased dividends for NUBC shareholders. In connection with the completion of the merger, former NUBC shareholders received 1.185 shares of the Company's common stock. The value of the total transaction consideration was approximately $ 40.4 million. The consideration included the issuance of 1,546,725 shares of the Company's common stock, which had a value of $ 26.00 per

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