STEELE BANCORP INC Annual Report - How They Did This Year

This guide explains how Steele Bancorp performed this year, stripping away complex financial terms to focus on what matters to you as an investor.

1. What does this company do?

Steele Bancorp (formerly Mifflinburg Bancorp) is a community bank based in Mifflinburg, Pennsylvania. They act as a traditional lender and hold customer deposits. Their main income comes from the difference between the interest they earn on their $890 million loan portfolio and the interest they pay to depositors. They also earn fees from deposit accounts, trust services, and mortgage banking.

The big news this year is their transformation. They merged with Northumberland Bancorp on August 1, 2025, rebranded as Steele Bancorp, and renamed their banking arm Central Penn Bank & Trust. This significantly expanded their reach across the Susquehanna Valley.

2. How big are they now?

This merger was a major growth move. The company more than doubled in size, with total assets jumping from $596.7 million at the end of 2024 to $1.26 billion by the end of 2025. This scale helps them compete with larger regional banks. They now operate 13 branches across four Pennsylvania counties. Their total deposits grew to $1.08 billion, providing a stable, low-cost way to fund their expanded lending.

3. The "Merger Makeover"

Merging two banks is complex and expensive, but it created a unique financial boost:

• Profit Jump: Steele reported a profit of $22.89 million, a 410% increase over last year’s $4.48 million.
• "Bargain" Gain: Because the value of the assets they acquired was higher than the price they paid, they recorded a one-time "bargain purchase gain" of $18.3 million. This accounting windfall strengthens their capital.
• Costs: They spent $5.52 million on merger-related costs, such as legal fees and software integration. They also set aside $4.01 million to cover potential losses on the newly acquired loans.

4. Financial Health: Are they making money?

Beyond one-time gains, the bank is operating more efficiently:

• Profit Margin: The "spread" between what they earn on loans and pay on deposits improved from 3.11% to 3.86%. This shows the combined bank has better pricing power.
• Safety Net: They increased their rainy-day fund for bad loans to $9.9 million. While this is up from $4.4 million last year, it is a smart move for a $1.26 billion bank. Loans that are 90+ days late remain very low at just 0.69% of the total portfolio.
• Dividends: They have paid dividends since 1872. They currently pay $0.3625 per share quarterly, or $1.45 annually, which remains sustainable.

5. Risks to watch

• Cybersecurity: As a digital-first bank, they face risks from data breaches and ransomware, which could lead to fines and reputational damage.
• Stock Liquidity: Their stock (STLE) trades infrequently. Low trading volume means you might experience "slippage," where the price changes between the time you place an order and when it executes.
• Economic Sensitivity: Their success depends on the health of central Pennsylvania. A local economic slowdown could lower loan demand and increase defaults.
• Interest Rate Risk: If the Federal Reserve changes rates, the bank’s profit margin could shrink if deposit costs rise faster than loan interest.

6. Future outlook

The focus for the coming year is "integration." Management is combining back-office functions and optimizing the 13-branch network to cut costs. With merger expenses mostly behind them, the bank is positioned for steady growth. They now have a larger capital base, allowing them to pursue larger commercial loans that were previously out of reach.

Investor Takeaway: Steele Bancorp has successfully transitioned into a larger, more competitive entity. When considering an investment, weigh their long history of dividend payments and improved profit margins against the risks of low stock liquidity and the challenges of integrating two distinct branch networks.