STEELE BANCORP INC

STEELE BANCORP INC: Post-Merger Financials Reveal Transformative Growth and Future Outlook

STEELE BANCORP INC (formerly Mifflinburg Bancorp, Inc.) has unveiled its financial results for the fourth quarter and full year ended December 31, 2025. These results are particularly noteworthy as they mark the first full reporting period since its transformative merger with Northumberland Bancorp on August 1, 2025. The filing offers crucial insights into the financial health, strategic position, and future direction of the newly expanded institution, now known as Central Penn Bank & Trust.

1. What Happened

On August 1, 2025, Mifflinburg Bancorp, Inc. merged with Northumberland Bancorp. Following this acquisition, Mifflinburg Bancorp, Inc. rebranded as STEELE BANCORP INC. Its banking subsidiary, Mifflinburg Bank and Trust Company, and The Northumberland National Bank then combined to form Central Penn Bank & Trust. STEELE BANCORP strategically acquired Northumberland Bancorp for approximately $40.45 million to achieve significant scale, expand its market footprint, and enhance its deposit base. By integrating Northumberland's established customer base and branch network, STEELE immediately gained access to new geographic areas, aligning with its goal of becoming a larger, more influential regional bank. The company has now released financial results that reflect the performance of this newly combined and significantly larger entity.

2. Key Dates

• Merger Completion Date: August 1, 2025
• Financial Reporting Period End: December 31, 2025 (for Q4 and full year results)
• Financial Results Announcement Date: February 3, 2026

3. Who/What is Affected

The merger significantly impacts various stakeholders:

• Employees: Central Penn Bank & Trust now employs 177 individuals. The integration process involved significant organizational restructuring and may have led to job changes.
• Customers: Former Northumberland Bank customers now belong to Central Penn Bank & Trust, gaining access to new services and a larger branch network. The combined entity operates 13 banking offices across four counties, offering greater convenience.
• Investors/Shareholders: STEELE's shareholders now own a stake in a significantly larger bank with a greater market presence. Former Northumberland shareholders received STEELE's common stock in the transaction. The market will closely watch these earnings, particularly how it differentiates between recurring operational performance and the one-time bargain purchase gain.
• Local Communities: Communities previously served by Northumberland Bank now have a Central Penn Bank & Trust branch, potentially benefiting from the resources of a larger institution.

4. Financial Snapshot

The merger dramatically reshaped STEELE BANCORP's financial profile:

• Acquisition Value: Approximately $40.45 million for Northumberland Bancorp.
• Bargain Purchase Gain: The merger resulted in a notable $18.30 million bargain purchase gain. This gain occurs when the fair value of acquired net assets exceeds the purchase price, meaning STEELE BANCORP acquired Northumberland Bancorp at a favorable valuation. This one-time gain significantly boosted 2025 reported earnings.
• Asset Growth: Total assets more than doubled, soaring from $596.7 million at December 31, 2024, to $1.26 billion by December 31, 2025.
• Net Income: Full-year 2025 net income reached $22.89 million, a substantial 410.8% increase from $4.48 million in 2024. Importantly, the $18.30 million bargain purchase gain, a non-recurring event, primarily drove this increase.
• Earnings Per Share (EPS): Fourth quarter 2025 EPS was $1.64, a significant rise from $0.23 in Q4 2024.
• Net Interest Income (NII): Net Interest Income (NII), a core measure of bank profitability, increased 91% for the full year, primarily due to the merger's expanded loan and deposit portfolios.
• Merger-Related Expenses: The company incurred $5.52 million in pre-tax merger-related expenses during 2025, reflecting integration costs.
• Key Ratios (Impacted by Merger):
  • Return on Average Assets (ROAA): The company didn't provide this specific ratio in their filing. It's worth noting that the bargain purchase gain would significantly inflate 2025 ROAA anyway, making it less representative of the bank's core operational profitability for this period.
  • Return on Average Equity (ROAE): This ratio wasn't disclosed in the filing either. Similarly, the one-time gain would substantially increase ROAE, so future reports will give a clearer picture.
  • Net Interest Margin (NIM): We don't have the NIM figure from this filing. While increased NII suggests a potentially healthy NIM for the combined entity, investors should analyze future reports for NIM without the one-time gain's distortion.
  • Efficiency Ratio: This wasn't provided in the filing. Merger expenses will likely weigh on the efficiency ratio in the short term, with improvements expected as synergies are realized.
  • Capital Ratios: The filing didn't include specific capital ratios (like Tier 1 Capital or Total Capital). Maintaining strong capital ratios is crucial for a financial institution, and investors should assess if capital adequately supports the increased asset base in future reports.

5. What Investors Should Keep in Mind

With the merger complete, STEELE BANCORP's immediate focus shifts to seamless integration and realizing the strategic benefits of the acquisition:

• Operational Integration: Combining systems, branding, product offerings, and corporate cultures remains an ongoing priority. Successful integration is key to achieving long-term efficiencies and customer retention.
• Synergy Realization: Management aims to achieve cost savings and operational efficiencies (synergies) from combined operations over the next 12-24 months. While the summary didn't quantify specific targets, investors should seek management's guidance on anticipated annual cost savings.
• Growth Strategy: Beyond integration, STEELE BANCORP will likely leverage its expanded footprint to grow its customer base, increase loan and deposit volumes, and cross-sell a broader range of financial products. This includes potential investments in digital banking capabilities to enhance customer experience.
• Future Earnings Quality: Future earnings reports will be critical for investors to assess the combined bank's performance without the one-time bargain purchase gain, focusing on sustainable revenue growth and expense management.
• Investor Considerations and Risks:
  • Quality of Earnings: While the 2025 net income is impressive, a significant portion stems from the non-recurring bargain purchase gain. Investors should analyze core operational earnings to gauge sustainable profitability.
  • Integration Risks: Mergers inherently carry risks, including challenges integrating disparate systems, potential cultural clashes, higher-than-expected integration costs, and the risk of customer or employee attrition.
  • Financial Risks: As a bank, STEELE BANCORP faces interest rate risk (the impact of changing rates on NIM), credit risk (potential loan defaults), and liquidity risk. Investors should monitor asset quality trends (e.g., non-performing loans, charge-offs) and the bank's interest rate sensitivity.
  • Competition: The expanded market footprint also means increased competition from other financial institutions, which could impact loan and deposit growth and pricing power.
  • Regulatory Environment: Banks operate in a highly regulated environment. Changes in regulations or increased compliance costs could impact profitability.
  • Valuation: The stock's valuation will reflect how the market weighs the immediate boost from the bargain purchase gain against the long-term prospects of the integrated entity and its ability to generate sustainable earnings.
  • Dividend Policy: Investors should monitor the company's dividend policy and its sustainability given the post-merger financial structure.

STEELE BANCORP INC has undergone a significant transformation, emerging as a larger, potentially more robust regional bank. While 2025 financial results show impressive growth, largely driven by the merger and its associated bargain purchase gain, investors should focus on the company's ability to successfully integrate operations, realize synergies, and generate sustainable, recurring earnings in the periods ahead. This will be key to understanding its true long-term value.