Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF STEELE BANCORP, INC.

Management's Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, represents an overview of the financial condition and results of operations of Steele Bancorp, Inc. ("Steele"). Please refer to the financial statements and other information in this report as well as the Company's Form SP 15D2 for an understanding of the following discussion and analysis.

Subsequent events have been considered through the date of this filing on Form 10-Q.

Steele is a financial holding company that, through its sole subsidiary Central Penn Bank & Trust "CPBT", provides full-service banking to individual, municipality and corporate customers. CPBT operates thirteen offices spanning the counties of Union, Snyder, Northumberland and Centre in Northcentral Pennsylvania. Gathering deposits and making loans are the major lines of business. The deposits are mainly deposits of individuals and small businesses and include various types of checking accounts, statement savings, money market accounts, interest checking accounts, individual retirement accounts, and certificates of deposit. Milestone Insurance Services, LLC (Milestone) was formed in 2003 and is a wholly owned subsidiary of the CPBT. Milestone is licensed to sell title insurance. Steele is supervised by the Board of Governors of the Federal Reserve System while CPBT is subject to regulation and supervision by the Federal Deposit Insurance Company and the Pennsylvania Department of Banking and Securities.

Steele's core strategy is to further its mission of being an independent bank which strives to be the community bank that bridges communities and builds your future by providing quality financial services to its customers, a rewarding work environment for its employees, exceptional long-term value for its shareholders and an unwavering commitment to community reinvestment.

Steele's revenues consist primarily of interest income it earns on loans and investments. Interest income is partially offset by interest expense incurred on deposits, borrowings and other interest-bearing liabilities. Net interest income is affected by the balances of interest-earning assets and interest-bearing liabilities and their relative interest rates. Net interest income is typically further reduced by Steele's provision for credit losses.

Non-interest income also contributes to Steele's operating results, consisting of service charges and fees, interchange fees, brokerage, and gains and losses on the sales of securities and loans. Non-interest expenses, which include salaries and employee benefits, occupancy and equipment costs, data processing, professional services, advertising and other general and administrative expenses, are Steele's primary expenditures incurred as a result of Steele's operations.

Financial institutions like Steele are significantly affected by economic conditions, competition, and the monetary and fiscal policies of the federal government. Lending activities are influenced by the demand for and supply of housing and commercial real estate, competition among lenders, interest rate conditions, and funds availability. Steele's operations and lending are concentrated in Northcentral Pennsylvania in Union, Snyder, Northumberland, and Centre Counties, and Steele's operations are influenced by local economic conditions. Deposit balances and cost of funds are influenced by prevailing market rates on competing investments, customer preferences, and levels of personal income and savings in Steele's primary market area. Operations are also significantly impacted by government policies and actions of regulatory authorities. Future changes in applicable law, regulations or government policies may materially impact Steele.

To operate successfully, Steele must manage various types of risk, including but not limited to: interest rate risk, credit risk, liquidity risk, operational and information technology risk, reputation risk, and compliance risk.

Cautionary Note Regarding Forward Looking Statements

This quarterly report on Form 10-Q contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward -looking statements are not statements of current or historical fact and involve substantial risks and uncertainties. Words such as "anticipates," "believes," estimates," "expects," "forecasts," "intends," "plans," "projects," "may," "will," "should" and other similar expressions can be used to identify forward-looking statements. Such statements are subject to factors that could cause actual results to differ materially from anticipated results. Among the risks and uncertainties that could cause actual results to differ from those described in the forward-looking statements include, but are not limited to the following: costs or difficulties associated with newly developed or acquired operations; risks related to the merger with Northumberland Bancorp; changes in consumer demand for financial services; our ability to control costs and expenses; adverse developments in borrower industries and, in particular, declines in real estate values; changes in and compliance with federal and state laws that regulate our business and capital levels; our ability to raise capital as needed; and the other factors discussed in other reports Steele may file with the U.S. Securities and Exchange Commission (the "SEC") . We do not undertake and specifically disclaim any obligation to publicly revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements, expect as required by law. Accordingly, readers should not place undue reliance on forward-looking statements.

Market Conditions

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP") requires management to measure Steele's financial position and operating results primarily in terms of historic dollars. Changes in the relative value of money due to inflation or recession are generally not considered. The primary effect of inflation on Steele's operations is related to increases in operating expenses. Management considers changes in interest rates to impact our financial condition and results of operations to a far greater degree than changes in prices due to inflation. Although interest rates are influenced by changes in the inflation rate, they do not necessarily change at the same rate or in the same magnitude as the inflation rate. Steele manages interest rate risk in several ways. There can be no assurance that Steele will not be materially adversely affected by future changes in interest rates, as interest rates are highly sensitive to many factors that are beyond its control. Additionally, inflation may adversely impact the financial condition of Steele's borrowers and could impact their ability to repay their loans, which could negatively affect Steele's asset quality through higher delinquency rates and increased charge-offs. Management carefully considers the impact of inflation and rising interest rates on Steele borrowers in managing credit risk related to the loan portfolio.

Critical Accounting Policies

Critical accounting policies are most important to the portrayal of the Company's financial condition or results of operations and require management's most difficult, subjective, and complex judgements about matters that are inherently uncertain. If conditions occur that differ from our assumptions, depending upon the severity of such differences, the Company's financial condition or results of operations may be materially impacted. The Company has designated the governing of the allowance for credit losses on loans as the critical accounting policy. The Company evaluates its critical accounting estimates and assumptions on an ongoing basis and updates them as needed. Please refer to the Company's Note 1: Description of Business and Summary of Significant Accounting Policies in the Financial Statements included in Item 1 of this report for information on these and other accounting policies.

Goodwill and Bargain Purchase Gain

Goodwill represents the excess of the cost of an acquisition over the fair value of the net assets acquired. Determining fair value is subjective, requiring the use of estimates, assumptions and management judgment. Goodwill is tested at least annually for impairment, usually during the fourth quarter, or on an interim basis if circumstances dictate. Impairment testing requires a qualitative assessment or that the fair value of each of the Company's reporting units be compared to the carrying amount of its net assets, including goodwill. If the fair value of a reporting unit is less than book value, an expense may be required to write down the related goodwill to record an impairment loss.

A bargain purchase gain represents the excess of the fair value of net assets acquired over the cost of an acquisition. Determining fair value is subjective, requiring the use of estimates, assumptions and management judgement. Bargain purchase gain is recorded within noninterest income in the period it was generated. An acquirer has a measurement period not to exceed 12 months from the acquisition date to finalize the accounting for a business combination which could adjust bargain purchase gain if material facts or circumstances arise.

Loans Acquired in a Business Combination

Acquired loans are classified as either (i) purchase credit-deteriorated ("PCD") loans or (ii) purchased performing 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. When determining fair value, PCD loans are aggregated into pools based on common risk characteristics as of the date of acquisition such as loan type, date of origination, and evidence of credit quality deterioration such as internal risk grades and past due and nonaccrual status. At the acquisition date, the ACL is determined and added to the fair value of the loan to determine the new amortized cost basis. The difference between the new amortized cost basis and the unpaid principal balance is either a noncredit discount or premium that will be amortized or accredited into the interest income over the remaining life of the loan. Disposals of 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 PCD loan portfolio at its carrying amount.

The Company accounts for purchased performing loans using the contractual cash flows method of recognizing discount accretion based on the acquired loans' contractual cash flows. Purchased performing loans are recorded at fair value, including a credit discount. The fair value discount is accreted as an adjustment to yield over the estimated lives of the loans. Purchased performing loans do not have a more-than-insignificant deterioration in credit quality since origination and have an ACL established in a manner that is consistent with the Company's originated loans. The allowance for PCD loans is determined based upon the Company's methodology for estimating the allowance under CECL, and is recorded as an adjustment to the acquired loan balance on the date of acquisition. Additionally, upon the purchase or acquisition of non-PCD loans, the Company measures and records a reserve for credit losses based on the Company's methodology for determining the allowance under CECL. The allowance for non-PCD loans is recorded through a charge to provision for credit losses in the period in which the loans were purchased or acquired.

Non-GAAP Financial Measures

This report refers to certain financial measures that are computed under a basis other than GAAP ("non-GAAP"). The Company uses certain non-GAAP financial measures, including tax-equivalent net interest income and efficiency ratio, to provide meaningful supplemental information regarding the Company's operational performance and to enhance investors' overall understanding of such financial performance. The methodology for determining these non-GAAP measures may differ among companies. Non-GAAP measures are supplemental and not a substitute for, or more important than, financial measures prepared in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies.

Merger with Northumberland Bancorp

The Company's merger with Northumberland Bancorp ("NUBC") was completed on August 1, 2025. NUBC was a Pennsylvania corporation that conducted its business primarily through its wholly owned subsidiary The Northumberland National Bank, which operated from a main office in Northumberland, Pennsylvania, and had six branches throughout Central Pennsylvania.

At the effective time of the merger, NUBC's shareholders received a fixed exchange ratio of 1.185 shares of the Company's common stock for each NUBC common share they owned, except to the extent of cash received for fractional shares at $24.30 per share. Total purchase consideration was $40,405,000, including common stock with a fair value of $40,215,000, cash of $3,000 paid for fractional shares, and cost of dissenter's shares of $187,000. Holders of NUBC common stock prior to the consummation of the merger held approximately 45.4% of the Corporation's common stock outstanding immediately following the merger.

In connection with the acquisition, effective August 1, 2025, the Company recorded a bargain purchase gain of $17.8 million and a core deposit intangible asset of $14.7 million. Assets acquired totaled $688.2 million, including gross loans valued at $427.1 million, available-for-sale debt securities valued at $165.7 million, bank-owned life insurance valued at $14.8 million and premises and equipment, net, valued at $9.2 million. Liabilities assumed totaled $630.0 million, including deposits valued at $597.1 million and borrowings valued at $20.1 million. The fair value adjustments made to the acquired assets and liabilities of NUBC are considered preliminary at this time and are subject to change as the Corporation finalizes its fair value determinations. The assets purchased and liabilities assumed in the acquisition were recorded at their preliminary estimated fair values at the time of closing and may be adjusted for up to one year subsequent to the acquisition.

For the year-to-date ended September 30, 2025, the Company incurred pre-tax merger-related expenses related to the NUBC transaction of $4.1 million. Merger-related expenses include voluntary severance and similar expenses as well as expenses related to conversion of NUBC's core banking system into the Corporation's core system and legal and other professional expenses. Also during the third quarter 2025, the Company recorded a one-time provision for credit losses of $4.0 million for acquired non-Purchase Credit Deteriorated ("non-PCD") loans.

Performance Summary

The following table presents CPBT's key ratios and other performance data year-to-date as of the periods indicated.

($ in thousands)		September 30, 2025				December 31, 2024				September 30, 2024
Average Balances
Cash and due from banks		$	6,506			$	5,510			$	5,618
Interest-bearing deposits			19,846				15,540				16,417
Securities available for sale, at fair value			145,832				125,023				124,467
Mortgage loans held for sale			122				48				50
Loans, gross			556,485				405,159				399,296
Loans, net of allowance for credit losses			551,079				401,292				395,450
Total assets			753,186				573,353				566,683
Noninterest bearing deposits			113,548				81,328				80,439
Interest-bearing and savings deposits			343,705				282,389				278,989
Time deposits			182,327				117,729				116,321
Total deposits			639,580				481,446				475,749
Stockholders' equity		$	70,833			$	56,129			$	55,496
Financial Ratios
Return on average assets			3.07	%			0.78	%			0.96	%
Return on average equity			32.66	%			7.98	%			9.77	%
Efficiency ratio			48.47	%			70.08	%			64.03	%
Allowance for Loan Credit Losses
Beginning balance		$	4,379			$	3,861			$	3,861
Merger adjustments		$	725			$	-			$	-
Provision for credit losses			4,490				569				117
Charge-Offs			(97	)			(62	)			(37	)
Recoveries			15				11				10
Ending balance		$	9,512			$	4,379			$	3,951

Comparison of Financial Condition at September 30, 2025 and December 31, 2024

Total assets at September 30, 2025, were $1.3 billion, an increase of $656.9 million, or 110.1 percent from $596.7 million at December 31, 2024. The increase in assets was primarily due to the NUBC merger. The increase in total assets was primarily due to the net increase in gross loans receivable of $464.3 million, an increase in interest-bearing demand deposits of $38.6 million, and an increase of $107.8 million in securities available-for-sale, all increases primarily related to the merger.

Total average assets increased 31.4 percent from $573.4 million at December 31, 2024 to $753.2 million at September 30, 2025. Average earning assets were $550.5 million at December 31, 2024 and $723.9 million at September 30, 2025. Average interest-bearing liabilities were $429.2 million at December 31, 2024 and $560.9 million at September 30, 2025.

Cash and cash equivalents increased $44.8 million or 488.5 percent from $9.2 million at December 31, 2024 to $54.0 million at September 30, 2025. The increase is primarily related to increased correspondent bank balances of approximately $43.6 million being acquired in the merger.

Loans increased 106.4 percent to $900.6 million at September 30, 2025 from $436.3 million at December 31, 2024. The increase is related to NUBC merger as well as strong new loan origination in 2025.

Interest bearing deposits increased 112.3 percent to $891.0 million at September 30, 2025 from $419.8 million at December 31, 2024. Noninterest-bearing deposits increased 208.2 percent from $69.7 million at December 31, 2024 to $214.9 million at September 30, 2025. The increases were primarily the result of NUBC merger.

Total stockholder's equity increased by $59.0 million, or 105.5 percent, from $55.9 million at December 31, 2024, to $114.9 million at September 30, 2025. The increase is primarily attributable to the merger with NUBC. Accumulated other comprehensive loss decreased from $4.4 million as of December 31, 2024 to $1.2 million as of September 30, 2025.

The loan-to-deposit ratio is a key measurement of liquidity. Our loan-to-deposit ratio was 81.4% as of September 30, 2025 compared to 89.1% at December 31, 2024.

It is our opinion that the asset/liability mix and the interest rate risk associated with the balance sheet are within manageable parameters. Constant monitoring using asset/liability reports and interest rate risk scenarios are in place along with quarterly asset/liability management meetings on the committee level by the Bank's Board of Directors.

Investment Securities

Debt Securities - Available for Sale

Debt securities available-for-sale increased by $107.6 million or 92.7 percent to $223.6 million at September 30, 2025 from $116.1 million at December 31, 2024. The increase is primarily related to the merger with NUBC. Within the portfolio U.S. government agencies increased $24.1 million, U.S. government sponsored enterprise mortgage-backed securities increased $18.4 million, tax exempt state and municipal bonds increased $35.6 million, and taxable state and municipal securities increased $28.5 million. Gross unrealized losses decreased from $5.7 million as of December 31, 2024 to $3.2 million as of September 30, 2025. The fair value of these securities was influenced by market interest rates, prepayment speeds on mortgage securities, bid to offer spreads in the market place and credit premiums for the various types of agency debt. Steele did not consider the debt securities to be impaired since it had both the intent and ability to hold the securities until a recovery of fair value, which may be maturity.

The following tables summarize the maturity distribution and yields of available-for-sale securities as of September 30, 2025 and December 31, 2024:

As of September 30, 2025		Due in one year or less				Due after 1 through 5 years				Due after 5 through 10 years				Due after 10 years				Total
Securities available for sale:
U.S. Treasury			4.68	%			4.42	%			0.00	%			0.00	%			4.55	%
U.S. Government Agencies			3.75	%			4.45	%			5.13	%			5.16	%			4.37	%
Taxable state and municipal			3.77	%			3.88	%			4.34	%			0.00	%			3.97	%
U.S. government sponsored enterprise mortgage-backed			3.52	%			4.09	%			4.63	%			5.25	%			4.07	%
Corporate			1.09	%			2.02	%			5.61	%			0.00	%			3.04	%
Total taxable			3.57	%			4.16	%			4.69	%			5.18	%			4.13	%
Tax exempt state and municipal (1)			2.48	%			3.40	%			3.37	%			2.51	%			3.31	%
Total			3.42	%			3.89	%			3.87	%			3.49	%			3.80	%

(1)

Yields on tax-exempt securities have been computed on a tax-equivalent basis using a federal tax rate of 21%.

As of December 31, 2024		Due in one year or less				Due after 1 through 5 years				Due after 5 through 10 years				Due after 10 years				Total
Securities available for sale:
U.S. Treasury			3.16	%			4.55	%			0.00	%			0.00	%			4.39	%
U.S. Government Agencies			2.16	%			3.52	%			0.00	%			0.00	%			3.15	%
Taxable state and municipal			0.86	%			1.47	%			2.95	%			0.00	%			1.48	%
U.S. government sponsored enterprise mortgage-backed			4.37	%			3.73	%			3.79	%			6.78	%			3.77	%
Corporate			2.66	%			1.56	%			2.49	%			0.00	%			2.09	%
Total taxable			2.47	%			3.40	%			3.44	%			6.78	%			3.23	%
Tax exempt state and municipal (1)			1.24	%			2.15	%			2.98	%			2.76	%			2.59	%
Total			2.31	%			3.03	%			3.02	%			2.64	%			2.94	%

(1)

Yields on tax-exempt securities have been computed on a tax-equivalent basis using a federal tax rate of 21%.

Equity Securities

At September 30, 2025 and 2024, Steele had $518,000 and $171,000 in marketable equity securities recorded at fair value, respectively. At December 31, 2024 Steele had $268,000 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 equity securities during the three and nine months ended September 30, 2025 and 2024:

($ In Thousands)		For the Three Months Ended September 30,								For the Nine Months Ended September 30,
		2025				2024				2025				2024
Net change in the unrealized gains and (losses) recognized during the period on marketable equity securities		$	60			$	(80	)		$	57			$	(112	)

See Note 3 within Steele's Notes to the Consolidated Financial Statements for more information regarding Steele's Investment portfolio as of September 30, 2025 and December 31, 2024.

Loans

Gross loans receivable increased 106.2 percent from $437.2 million at December 31, 2024 to $901.6 million at September 30, 2025. The increase was primarily related to the merger with NUBC, which included $427.1 million of gross loans being acquired. The percentage change and distribution of the loan portfolio is shown in the table below:

($ In Thousands)										Change
		2025				2024				Amount				%
Commercial		$	161,695			$	87,990			$	73,705				83.8	%
Commercial real estate:
Commercial mortgages			216,096				129,036				87,060				67.5
Other construction and land development loans			31,468				16,649				14,819				89.0
Secured by farmland			94,031				66,910				27,121				40.5
Residential mortgage:
Multifamily			14,319				4,725				9,594				203.0
1-4 family residential mortgages			335,156				115,311				219,845				190.7
Construction			4,595				1,309				3,286				251.0
Home Equity			31,224				7,186				24,038				334.5
Consumer, other			4,442				1,526				2,916				191.1
Consumer, automobile			8,598				6,516				2,082				32.0
Gross loans		$	901,624			$	437,158			$	464,466				106.2	%

Allowance for Credit Losses on Loans ("ACLL")

The allowance for credit losses was $9.5 million at September 30, 2025, compared to $4.4 million at December 31, 2024. This allowance equaled 1.06 percent and 1.00 percent of total loans, net of unearned income, as of September 30, 2025 and December 31, 2024, respectively. The Bank's provision for credit losses for the third quarter of 2025 was $4.2 million and consisted of $4.0 million related to the acquisition of NUBC non-purchase credit deteriorated ("PCD") legacy loans and $219,000 related to third quarter activity. The Bank recorded a CECL allowance credit loss adjustment of $725,000 for the acquisition of PCD accruing loans. The credit loss reserve is analyzed quarterly and reviewed by the CPBT's Board of Directors. No concentration or apparent deterioration in classes of loans or pledged collateral was evident. Regular loan meetings with the CPBT's Board of Directors are held to review new loans. Delinquent loans, loan exceptions and certain large loans are addressed by the full Board no less than monthly to determine compliance with policies. Allowance for credit losses was considered adequate based on delinquency trends and actual loans written off as it relates to the loan portfolio.

Individually Evaluated Loans

Individually evaluated loans were $2,225,000 as of September 30, 2025, an increase from $2,105,000 as of December 31, 2024. As of September 30, 2025, there was a required reserve of $21,000 for individually evaluated loans, as compared to the reserve of $20,000 at December 31, 2024. Please see Note 5 within Steele's Notes to the Consolidated Financial Statements for more information regarding Steele's loan portfolio as of September 30, 2025 and December 31, 2024.

Collectively Evaluated Loans

Collectively evaluated loans totaled $899,399,000, with an ACL of $9,491,000 as of September 30, 2025 and $435,053,000 with an ACL of $4,359,000 as of December 31, 2024.

Collectively evaluated loans are divided into pools based upon risk characteristics, management has elected to use the FDIC call report loan codes to group loans. Utilizing a discounted cash flow (DCF) model, the Company calculates the sum of expected losses via a gross loss rate and recovery rate assumption based on call report loan codes to determine its allowance for credit losses. Management has elected to perform cash flow modeling without the present value component due to lack of loan loss history and simplification of the model. Call report loan codes are allocated additional loss estimates based upon Management's analysis of qualitative factors including changes in lending policies, procedures, and strategies, economic conditions, changes in nature and volume of portfolio, credit and lending staff, changes in delinquencies, changes in quality of the loan review system, trends in underlying collateral, concentration risk, and external factors.

The allowance for collectively evaluated loans increased $5,132,000 when compared to December 31, 2024 primarily due to the increase in loan balances as a result of the acquisition of NUBC.

Conclusion

Based upon the calculation, management's current judgements about the credit quality of the loan portfolio, and after considering all known relevant internal and external factors that affect loan collectability, management believes the level of ACLL is reasonable for the credit risk in the loan portfolio as of September 30, 2025 and December 31, 2024.

Deposits

The average balance and average rate paid on deposits year-to-date for the periods ending September 30, 2025 and December 31, 2024 are summarized as follows:

		September 30, 2025								December 31, 2024								Change
		Average				Average				Average				Average				Amount				%
($ In Thousands)		Balance				Rate				Balance				Rate
Non-interest bearing		$	113,548				-	%		$	81,328				-	%		$	32,220				39.6	%
Savings			88,843				0.19				67,256				0.21	%			21,587				32.1
Now deposits			204,564				1.80				180,064				1.99	%			24,500				13.6
Money market deposits			50,298				1.17				35,069				1.06	%			15,229				43.4
Time deposits			182,327				3.97				117,729				3.81	%			64,598				54.9
Total deposits		$	639,580				2.22	%		$	481,446				2.15	%		$	158,134				32.8	%

Borrowed Funds

The average balance of borrowed funds increased $5.8 million to $34.9 million as of September 30, 2025 from $29.1 million as of December 31, 2024 due to the following:

●

Securities sold under agreements to repurchase (short-term) average balance decreased $30,000 to $1,530,000 in 2025 from $1,560,000 in 2024.

●

Federal funds purchased (short-term) average balance decreased $18,000 to $19,000 in 2025 from $37,000 in 2024.

●

Federal Reserve Bank Borrowing average balance decreased $9.2 million to $-0- in 2025 from $9.2 million in 2024.

	●	Federal Home Loan Bank Advances average balance increased $12.8 million to $31.1 million in 2025 from $18.3 million in 2024.
	●	Subordinated Debt average balance increased $2.2 million to $2.2 million in 2025 from $-0- million in 2024.

Total borrowed funds consisted of the following year-to-date at September 30, 2025 and December 31, 2024:

		September 30, 2025
		Ending				Average				Average Rate
($ In Thousands)		Balance				Balance				At Quarter End
Securities sold under agreements to repurchase		$	1,414			$	1,530				4.54	%
Federal funds purchased			-				19				7.04	%
Federal Reserve Bank Borrowings			-				-				0.00	%
Federal Home Loan Bank Advances			8,000				31,089				4.64	%
Subordinated Debt			9,808				2,222				4.51	%
Total Borrowed Funds		$	19,222			$	34,860				4.63	%

		December 31, 2024
		Ending				Average				Average Rate
($ In Thousands)		Balance				Balance				At Year End
Securities sold under agreements to repurchase		$	1,143			$	1,560				5.26	%
Federal funds purchased			-				37				5.41
Federal Reserve Bank Borrowings			-				9,189				4.90	%
Federal Home Loan Bank Advances			43,050				18,339				3.86	%
Total Borrowed Funds		$	44,193			$	29,125				4.26	%

See Note 7 within Steele's Notes to the Consolidated Financial Statements for more information regarding Steele's borrowed funds as of September 30, 2025 and December 31, 2024.

Stockholders' Equity and Capital Adequacy

Details concerning capital ratios at September 30, 2025 and December 31, 2024 are presented in Note 9, "Regulatory Matters," to the consolidated financial statements for the three and nine months ended September 30, 2025 and year ended December 31, 2024 included elsewhere in this document. Steele meets the conditions of the Federal Reserve's small bank holding company policy statement and is therefore excluded from consolidated capital requirements. CPBT is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material adverse effect on Steele's financial statements. Management believes, as of September 30, 2025, that CPBT met all capital adequacy requirements to which it was subject.

Future dividend payments and repurchases of common stock will depend upon maintenance of a strong financial condition, future earnings and capital and regulatory requirements. In addition, CPBT is subject to restrictions on the amount of dividends that may be paid without approval of banking regulatory authorities. Further, although Steele is not subject to the specific consolidated capital requirements, its ability to pay dividends, repurchase stock or engage in other activities may be limited by the Federal Reserve if it fails to hold sufficient capital consistent with its overall risk profile.

CPBT's total Tier 1 Capital increased $44.4 million to $102.0 million at September 30, 2025 from $57.5 million at December 31, 2024. The Bank's resulting Tier 1 Leverage Ratio increased to 9.93% at September 30, 2025 from 9.67% at December 31, 2024.

Comparison of Earnings for the Three and Nine Months Ended September 30, 2025 and 2024

Three Months Ended September 30,

General: Net income was $13.7 million for the three months ended September 30, 2025, or $4.77 per share, an increase of $12.3 million, or 890.4 percent, compared to net income of $1.4 million, or $0.74 per share, for the three months ended September 30, 2024. Net income for the three months ended September 30, 2025, reflected an increase in net interest income after provision for credit losses of $1.5 million, an increase in non-interest income of $18.7 million and an increase in non-interest expenses of $8.0 million. The increase in non-interest income is the result of a $17.8 million bargain purchase gain that resulted from the merger with NUBC. The increase in non-interest expense is the result of a $3.8 million increase in merger related expenses and by a $2.5 million increase in salaries and benefits resulting from the merger.

Net Interest Income: Net interest income before provision for (recovery of) credit losses increased by $5.6 million, or 129.4 percent, to $9.9 million for the three months ended September 30, 2025, compared to $4.3 million for the three months ended September 30, 2024. Interest income and interest expense both increased for the three months ended September 30, 2025 when compared to the three months ended September 30, 2024, due to increased average balances in loans due to merger and higher rates on loans and investment securities, offset by the increased deposit and other borrowing expense due to an increase in balances and rates. Yield on earning assets increased quicker than the cost of funds, resulting in an increase in net interest income. Net interest margin (tax equivalent) increased from 3.17% for the three months ended September 30, 2024 to 3.97% for the same period in 2025.

Interest Income: Interest income increased $7.6 million, or 111.8 percent, to $14.4 million for the three months ended September 30, 2025, compared with $6.8 million for the three months ended September 30, 2024. The average yield on the earning assets increased 80 basis points from 4.98 percent for the three months ended September 30, 2024 to 5.78 percent for the three months ended September 30, 2025. This increase in rates was in addition to the growth in average balance of earning assets from the merger which increased $450.0 million to $1.0 billion for the three months ended September 30, 2025 compared to $552.8 million for 2024.

Interest Expense: Interest expense increased by $2.0 million or 81.6 percent to $4.6 million for the three months ended September 30, 2025, compared to $2.5 million for the three months ended September 30, 2024. The increase was the result of an increase in rates paid on interest bearing deposits of 8 basis points from 2.19 percent for 2024 to 2.27 percent in 2025. The increase is also the result of an increase in average balance of interest-bearing deposits of $333.4 million as result of the merger to $736.1 million for the three months ended September 30, 2025 compared to $402.6 million for 2024. The increase in expense is also attributed to an increase in average balance of borrowings of $1.0 million to $28.4 million for the three months ended September 30, 2025 compared to $27.4 million for 2024. Rates paid on borrowings increased 66 basis points from 4.21 percent for 2024 to 4.87 percent in 2025.

Nine Months Ended September 30,

General: Net income was $17.3 million for the nine months ended September 30, 2025, or $7.87 per share, an increase of $13.2 million, or 326.2 percent, compared to net income of $4.1 million, or $2.18 per share, for the nine months ended September 30, 2024. Net income for the nine months ended September 30, 2025, reflected an increase in net interest income after provision for credit losses of $3.2 million, an increase in non-interest income of $18.8 million and an increase in non-interest expenses of $8.6 million. The increase in non-interest income is the result of a $17.8 million bargain purchase gain that results from the merger with NUBC. The increase in non-interest expense is the result of a $4.0 million increase in merger related expenses and by a $2.7 million increase in salaries and benefits resulting from the merger.

Net Interest Income: Net interest income before provision for (recovery of) credit losses increased by $7.4 million, or 61.3 percent, to $19.6 million for the nine months ended September 30, 2025, compared to $12.2 million for the nine months ended September 30, 2024. Interest income and interest expense both increased for the nine months ended September 30, 2025 when compared to the nine months ended September 30, 2024, due to increased average balances in loans due to the merger and higher rates on loans and investment securities, offset by the increased deposit and other borrowing expense due to an increase in balances and rates. Yield on earning assets increased quicker than the cost of funds, resulting in an increase in net interest income. Net interest margin (tax equivalent) increased from 2.98% for the nine months ended September 30, 2024 to 3.69% for the same period in 2025.

Interest Income: Interest income increased by $10.2 million, or 52.5 percent, to $29.5 million for the nine months ended September 30, 2025, compared with $19.4 million for the nine months ended September 30, 2024. The average yield on the earning assets increased 69 basis points from 4.84 percent for the nine months ended September 30, 2024 to 5.53 percent for the nine months ended September 30, 2025. This increase in rates was in addition to the growth in average balance of earning assets due to the merger, which increased $180.0 million to $723.9 million for the nine months ended September 30, 2025 compared to $543.9 million for 2024.

Interest Expense: Interest expense increased by $2.7 million or 37.9 percent to $9.9 million for the nine months ended September 30, 2025, compared to $7.2 million for the nine months ended September 30, 2024. The increase was the result of an increase in rates paid on interest bearing deposits of 10 basis points from 2.12 percent for 2024 to 2.22 percent in 2025. The increase is also the result of an increase in average balance of interest-bearing deposits due to merger of $130.7 million to $526.0 million for the nine months ended September 30, 2025 compared to $395.3 million for 2024. The increase in expense is also attributed to an increase in average balance of borrowings of $5.9 million to $34.9 million for the nine months ended September 30, 2025 compared to $29.0 million for 2024. The increase is also due to an increase in rates paid on borrowings of 36 basis points from 4.27 percent for 2024 to 4.63 percent in 2025.

Analysis of Net Interest Income

Net interest income represents the difference between the interest Steele earns on its interest-earning assets, such as loans and investment securities, and the expense Steele pays on interest-bearing liabilities, such as deposits and borrowings. Net interest income depends on both the volume of Steele's interest-earning assets and interest-bearing liabilities and the interest rates Steele earns or pays on them.

Average Balances, Interest and Average Yields: The following table sets forth certain information relating to Steele's average balance sheets and reflects the average yield on interest-earning assets and average cost of interest-bearing liabilities, interest earned and interest paid for the years indicated. Such yields and costs are derived by dividing income or expenses by the average balance of interest-earning assets or interest-bearing liabilities, respectively, for the years presented. Average balances are derived from daily balances over the years indicated. The loan yields include net amortization of certain deferred fees and costs that are considered adjustments to yields.

AVERAGE BALANCE SHEET AND RATE ANALYSIS

Three Months Ended September 30,

($ In Thousands)		For the Three Months Ended September 30,
		2025												2024
		(1)												(1)
		Average Balance				Interest				Average Rate				Average Balance				Interest				Average Rate
ASSETS :
Tax-exempt loans		$	30,166			$	222				2.92	%		$	18,057			$	134				2.95	%
All other loans			735,825				12,059				6.50	%			389,569				5,627				5.75	%
Total loans (2)(3)(4)			765,991				12,281				6.36	%			407,626				5,761				5.62	%
Taxable securities			114,730				1,224				4.23	%			60,794				471				3.08	%
Tax-exempt securities (3)			77,613				635				3.25	%			56,813				378				2.65	%
Other securities (7)			5,112				101				7.84	%			3,688				51				5.50	%
Total securities			197,455				1,960				3.94	%			121,295				900				2.95	%
Federal funds sold			3,994				45				4.47	%			9,109				123				5.37	%
Interest-bearing deposits			35,422				316				3.54	%			14,784				132				3.55	%
Total interest-earning assets			1,002,862				14,602				5.78	%			552,814				6,916				4.98	%
Other assets			43,191												23,236
TOTAL ASSETS		$	1,046,053											$	576,050
LIABILITIES :
Savings		$	132,720				61				0.18	%		$	69,329				38				0.22	%
Now deposits			237,738				1,103				1.84	%			179,239				902				2.00	%
Money market deposits			83,388				242				1.15	%			34,825				97				1.11	%
Time deposits			282,205				2,800				3.94	%			119,222				1,181				3.94	%
Total deposits			736,051				4,206				2.27	%			402,615				2,218				2.19	%
Securities sold under repurchase agreement			1,411				16				4.50	%			1,383				18				5.18	%
Fed Funds purchased			2				-				0.00	%			-				-				0.00	%
Federal reserve bank borrowings			-				-				0.00	%			9,500				117				4.90	%
Federal Home Loan Bank advances			20,345				258				5.03	%			16,500				155				3.74	%
Subordinated debt			6,667				75				4.46	%			-				-				0.00	%
Total borrowings			28,425				349				4.87	%			27,383				290				4.21	%
Total interest-bearing liabilities			764,476				4,555				2.36	%			429,998				2,508				2.32	%
Demand deposits			176,336												83,106
Other liabilities			8,940												6,696
Stockholders' equity			96,301												56,250
TOTAL LIABILITIES AND STOCKHOLDERS ' EQUITY		$	1,046,053											$	576,050
Interest rate spread (6)											3.42	%											2.66	%
Net interest income/margin (5)						$	10,047				3.97	%						$	4,408				3.17	%

(1)	Average volume information was compared using daily averages for interest-earning and bearing accounts.

(2)	Interest on loans includes loan fee income.

(3)	Tax exempt interest revenue is shown on a tax-equivalent basis using a statutory federal income tax rate of 21 percent for 2025 and 2024.

(4)	Nonaccrual loans have been included with loans for the purpose of analysis. Nonaccrual loans totaled $1,591 and $493 as of September 30, 2025 and 2024, respectively.

(5)	Net interest margin is computed by dividing tax-equivalent net interest income by total interest earning assets.

(6)	Interest rate spread represents the difference between the average rate earned on interest-earning assets and the average rate paid on interest-bearing liabilities.
(7)	Average balance includes restricted investments in bank stock and money market funds.

AVERAGE BALANCE SHEET AND RATE ANALYSIS

Nine Months Ended September 30,

($ In Thousands)		For the Nine Months Ended September 30,
		2025												2024
		(1)												(1)
		Average Balance				Interest				Average Rate				Average Balance				Interest				Average Rate
ASSETS :
Tax-exempt loans		$	21,626			$	476				2.94	%		$	18,254			$	401				2.93	%
All other loans			534,859				25,000				6.25	%			381,042				15,999				5.61	%
Total loans (2)(3)(4)			556,485				25,476				6.12	%			399,296				16,400				5.49	%
Taxable securities			78,731				2,244				3.81	%			62,733				1,414				3.01	%
Tax-exempt securities (3)			62,463				1,378				2.95	%			57,903				1,158				2.67	%
Other securities (7)			4,638				215				6.20	%			3,831				150				5.23	%
Total securities			145,832				3,837				3.52	%			124,467				2,722				2.92	%
Federal funds sold			1,691				55				4.35	%			3,718				147				5.28	%
Interest-bearing deposits			19,846				553				3.73	%			16,417				420				3.42	%
Total interest-earning assets			723,854				29,921				5.53	%			543,898				19,689				4.84	%
Other assets			29,332												22,785
TOTAL ASSETS		$	753,186											$	566,683
LIABILITIES :
Savings		$	88,843				129				0.19	%		$	67,833				104				0.20	%
Now deposits			204,564				2,750				1.80	%			176,154				2,638				2.00	%
Money market deposits			50,298				439				1.17	%			35,002				271				1.03	%
Time deposits			182,327				5,411				3.97	%			116,321				3,268				3.75	%
Total deposits			526,032				8,729				2.22	%			395,310				6,281				2.12	%
Securities sold under repurchase agreement			1,530				52				4.54	%			1,686				66				5.23	%
Fed Funds purchased			19				1				7.04	%			3				-				0.00	%
Federal reserve bank borrowings			-				-				0.00	%			9,500				348				4.89	%
Federal Home Loan Bank advances			31,089				1,078				4.64	%			17,770				511				3.84	%
Subordinated debt			2,222				75				4.51	%			-				-				0.00	%
Total borrowings			34,860				1,206				4.63	%			28,959				925				4.27	%
Total interest-bearing liabilities			560,892				9,935				2.37	%			424,269				7,206				2.27	%
Demand deposits			113,693												80,439
Other liabilities			7,768												6,479
Stockholders' equity			70,833												55,496
TOTAL LIABILITIES AND STOCKHOLDERS ' EQUITY		$	753,186											$	566,683
Interest rate spread (6)											3.16	%											2.57	%
Net interest income/margin (5)						$	19,986				3.69	%						$	12,483				2.98	%

(1)	Average volume information was compared using daily averages for interest-earning and bearing accounts.

(2)	Interest on loans includes loan fee income.

(3)	Tax exempt interest revenue is shown on a tax-equivalent basis using a statutory federal income tax rate of 21 percent for 2025 and 2024.

(4)	Nonaccrual loans have been included with loans for the purpose of analysis. Nonaccrual loans totaled $1,591 and $493 as of September 30, 2025 and 2024, respectively.

(5)	Net interest margin is computed by dividing tax-equivalent net interest income by total interest earning assets.

(6)	Interest rate spread represents the difference between the average rate earned on interest-earning assets and the average rate paid on interest-bearing liabilities.
(7)	Average balance includes restricted investments in bank stock and money market funds.

Reconcilement of Taxable Equivalent Net Interest Income

		For the Three Months Ended September 30,								For the Nine Months Ended September 30,
($ In Thousands)		2025				2024				2025				2024
Total interest income (GAAP)		$	14,419			$	6,809			$	29,528			$	19,359
Total interest expense (GAAP)			4,555				2,508				9,935				7,206
Net interest income (GAAP)			9,864				4,301				19,593				12,153
Tax equivalent adjustment			180				107				389				330
Net interest income (fully taxable equivalent) (Non-GAAP)		$	10,044			$	4,408			$	19,982			$	12,483

Rate/Volume Analysis

To enhance the understanding of the effects of volumes (the average balance of earning assets and costing liabilities) and average interest rate fluctuations on the balance sheet as it pertains to net interest income on a tax equivalent basis, the tables below reflects these changes for September 30, 2025 versus 2024:

($ In Thousands)		For the Three Months Ended September 30,												For the Nine Months Ended September 30,
		2025 vs 2024												2025 vs 2024
		Increase (Decrease)												Increase (Decrease)
		Due to												Due to
		Volume				Rate				Net				Volume				Rate				Net
Interest income:
Loans, tax-exempt		$	90			$	(2	)		$	88			$	74			$	1			$	75
Loans			5,345				1,087				6,432				6,821				2,180				9,001
Taxable investment securities			497				256				753				408				422				830
Tax-exempt investment securities			155				102				257				96				124				220
Other securities			24				26				50				31				34				65
Federal funds sold			(63	)			(15	)			(78	)			(77	)			(15	)			(92	)
Interest bearing deposits			184				-				184				92				41				133
Total interest-earning assets			6,232				1,454				7,686				7,445				2,787				10,232
Interest expense:
Savings			32				(9	)			23				31				(6	)			25
Now deposits			283				(82	)			201				404				(292	)			112
Money market deposits			138				7				145				126				42				168
Time deposits			1,618				1				1,619				1,906				237				2,143
Securities sold under repurchase agreements			1				(3	)			(2	)			(6	)			(8	)			(14	)
Federal funds purchased			-				-				-				1				-				1
Federal Reserve Bank borrowings			(117	)			-				(117	)			(348	)			-				(348	)
Federal Home Loan Bank advances			43				60				103				397				170				567
Subordinated debt			75				-				75				75				-				75
Total interest-bearing liabilities			2,073				(26	)			2,047				2,586				143				2,729
Change in net interest income (fully taxable equivalent)		$	4,159			$	1,480			$	5,639			$	4,859			$	2,644			$	7,503

Provision for (Recovery of) Credit Losses: During the third quarter of 2025, Steele recorded a $4.2 million provision to the allowance for credit losses. For the nine months ended September 30, 2025, Steele recorded a $4.4 million provision to the allowance for credit losses. The provision included a $4.5 million provision for credit losses on loans, offset by a $100 thousand recovery of credit losses on unfunded commitments. The provision recorded in the third quarter of 2025 included a one-time $4.0 million provision for credit losses on loans for acquired non-PCD loans. The provisions for credit losses on loans for the three and nine months ended September 30, 2025, are primarily due to the acquisitions of loans due to the merger with NUBC. As of the three and nine months ended September 30, 2024 Steele recorded a $138 thousand and $169 thousand provision to the allowance for credit losses, respectively.

Steele completes a comprehensive quarterly evaluation to determine its provision for (recovery of) credit losses on loans. The evaluation reflected analyses of individual borrowers and historical loss experiences, and changes in net loan balances, supplemented as necessary by credit judgment that considers observable trends, conditions, and other relevant environmental and economic factors.

See Note 5 within Steele's Notes to the Consolidated Financial Statements for more information regarding Steele's provision for (recovery of) credit losses as of September 30, 2025.

Non-interest Income for the Three Months Ended: Non-interest income increased by $18.7 million, or 4,550.0%, to $19.1 million for the three months ended September 30, 2025, from the $410 thousand recognized during the same period of 2024. Bargain purchase gain of $17.8 million was recognized in association with the merger with NUBC in the third quarter of 2025. (See Note 2 within Steele's Notes to the Consolidated Financial Statements for more detail.) Service charges on deposit accounts increased by $112 thousand to $225 thousand for the three months ended September 30, 2025 compared to $113 thousand recognized during the same period of 2024. ATM fees and debit card income increased $167 thousand and marketable equity security gain increased by $140 thousand from ($80) thousand for the three months ended September 30, 2024 to $60 thousand for the three months ended September 30, 2025.

($ In Thousands)		Three Months Ended
		September 30, 2025								September 30, 2024								Change
		Amount				% Total				Amount				% Total				Amount				%
Service charges on deposit accounts		$	225				1.2	%		$	113				27.6	%		$	112				99.1	%
ATM fees and debit card income			368				1.9				201				49.0				167				83.1
Mortgage banking revenue			134				0.7				52				12.7				82				157.7
Trust and investment fee income			129				0.7				19				4.6				110				578.9
Loss on sale of securities			(8	)			0.0				-				-				(8	)			100.0
Net marketable equity security gains (losses)			60				0.3				(80	)			(19.5	)			140				(175.0	)
Earnings on bank owned life insurance			130				0.7				65				15.9				65				101.0
Bargain purchase gain			17,827				93.4				-				-				17,827				100.0
Other			203				1.1				40				9.7				163				407.5
Total non-interest income		$	19,068				100.0	%		$	410				100.0	%		$	18,658				4550.7	%

Non-interest Income for the Nine Months Ended: Non-interest income increased by $18.8 million, or 1351.6%, to $20.1 million for the nine months ended September 30, 2025, from the $1.4 million recognized during the same period of 2024. Bargain purchase gain of $17.8 million was recognized in association with the merger with NUBC in the third quarter of 2025. (See Note 2 within Steele's Notes to the Consolidated Financial Statements for more detail.) Included in non-interest income for the nine months ended September 30, 2025, is a gain on sale premises of $52 thousand, for which there was no comparable gain during 2024. Service charges on deposit accounts increased by $156 thousand to $486 thousand for the nine months ended September 30, 2025 compared to $330 thousand recognized during the same period of 2024, marketable equity security loss increase by $169 thousand from ($112) thousand as of September 30, 2024 to $57 thousand as of September 30, 2025, and ATM fees and debit card income increasing $159 thousand during 2025.

($ In Thousands)		Nine Months Ended
		September 30, 2025								September 30, 2024								Change
		Amount				% Total				Amount				% Total				Amount				%
Service charges on deposit accounts		$	486				2.4	%		$	330				23.7	%		$	156				47.3	%
ATM fees and debit card income			738				3.7				579				41.7				159				27.5
Mortgage banking revenue			243				1.2				187				13.5				56				29.9
Trust and investment fee income			207				1.0				64				4.6				143				223.4
Gain on sale of premises			52				0.2				-				-				52				100.0
Loss on sale of securities			(8	)			0.0				-				-				(8	)			100.0
Net marketable equity security gains (losses)			57				0.3				(112	)			(8.1	)			169				(150.9	)
Earnings on bank owned life insurance			256				1.3				192				13.8				64				101.0
Bargain purchase gain			17,827				88.3				-				-				17,827				100.0
Other			323				1.6				150				10.8				173				115.3
Total non-interest income		$	20,181				100.0	%		$	1,390				100.0	%		$	18,791				1351.9	%

Non-interest Expense for the Three Months Ended: Non-interest expenses increased $8.0 million or 275.3 percent, from $2.9 million for the three months ended September 30, 2024, to $10.9 million for the three months ended September 30, 2025. The increase was largely due to a $3.8 million increase in merger related expenses and an increase of $2.5 million in salaries and employee benefit expenses due to the merger with NUBC, an increase in amortization of core deposit intangible of $444 thousand as result of the merger with NUBC for which there was no comparable expense during 2024, and by a $842 thousand increase in other expenses due to the merger.

($ In Thousands)		Three Months Ended
		September 30, 2025								September 30, 2024								Change
		Amount				% Total				Amount				% Total				Amount				%
Salaries and employee benefits		$	4,310				39.5	%		$	1,779				61.1	%		$	2,531				142.3	%
Net occupancy and equipment expense			442				3.9				270				9.3				172				63.7
Amortization of core deposit intangible			444				4.1				-				-				444				100.0
Data processing fees			252				2.3				171				5.9				81				47.4
Pennsylvania shares tax			108				1.0				114				3.9				(6	)			(5.3	)
Professional fees			112				1.0				30				1.0				82				273.3
Advertising expense			67				0.6				32				1.1				35				109.4
FDIC deposit insurance			127				1.2				64				2.2				63				98.4
Merger-related expenses			3,873				35.5				105				3.6				3,768				3,588.6
Other			1,187				10.9				345				11.9				842				244.1
Total non-interest expense		$	10,922				100.0	%		$	2,910				100.0	%		$	8,012				275.3	%

Non-interest Expense for the Nine Months Ended: Non-interest expenses increased $8.6 million or 100.2 percent, from $8.6 million for the nine months ended September 30, 2024, to $17.1 million for the nine months ended September 30, 2025. The increase was largely due to $4.0 million in merger related expenses and an increase of $2.7 million in salaries and employee benefit expenses due to the merger with NUBC, an increase in amortization of core deposit intangible of $444 thousand as result of the merger with NUBC for which there was no comparable expense during 2024, and by a $982 thousand increase in other expenses due to the merger.

($ In Thousands)		Nine Months Ended
		September 30, 2025								September 30, 2024								Change
		Amount				% Total				Amount				% Total				Amount				%
Salaries and employee benefits		$	7,997				46.6	%		$	5,303				61.9	%		$	2,694				50.8	%
Net occupancy and equipment expense			1,040				6.1				871				10.2				169				19.4
Amortization of core deposit intangible			444				2.6				-				-				444				100.0
Data processing fees			598				3.5				514				6.0				84				16.3
Pennsylvania shares tax			332				1.9				335				3.9				(3	)			(0.9	)
Professional fees			191				1.1				108				1.3				83				76.9
Advertising expense			141				0.8				97				1.1				44				45.4
FDIC deposit insurance			263				1.5				190				2.2				73				38.4
Merger-related expenses			4,120				24.1				105				1.2				4,015				3,823.8
Other			2,023				11.8				1,041				12.2				982				94.3
Total non-interest expense		$	17,149				100.0	%		$	8,564				100.0	%		$	8,585				100.2	%

Provision for Income Taxes: Steele recorded income tax expense of $105 thousand in the third quarter of 2025, a decrease of $177 thousand, or 62.8%, compared to $282 thousand in the third quarter of 2024. Steele recorded income tax expense of $932 thousand for the nine months ended September 30, 2025, an increase of $182 thousand, or 24.3 percent, compared to $750 thousand for the nine months ended September 30, 2024. The increase in income tax expense was due to higher taxable income in 2025 as compared to 2024. Steele's effective tax rate decreased to 5.11% at September 30, 2025, compared to 15.59% at September 30, 2024, which resulted primarily from non-taxable income and nondeductible merger expenses in 2025 as compared to 2024. Included in non-interest income is the bargain purchase gain of $17.8 million, which is non-taxable as result of the tax-free exchange associated with the acquisition of NUBC.

Management evaluates the carrying amount of its deferred tax assets on a quarterly basis, or more frequently, as necessary, in accordance with guidance set forth in ASC Topic 740 "Income Taxes," and applies the criteria in the guidance to determine whether it is more likely than not that some portion, or all, of the deferred tax asset will not be realized within its life cycle, based on the weight of available evidence. If management determines based on available evidence, both positive and negative, that it is more likely than not that some portion or all of the deferred tax asset will not be realized in future periods, a valuation allowance is calculated and recorded. These determinations are inherently subjective and depend upon management's estimates and judgments used in their evaluation of both positive and negative evidence.

Liquidity

The Company's liquidity, represented by cash and due from banks, is a product of its operating, investing and financing activities. The Company's primary source of funds are deposits, securities sold under agreements to repurchase, principal repayments of securities and outstanding loans, funds provided from operations, federal fund borrowings from Atlantic Community Bankers Bank and short and long term Federal Home Loan Bank ("FHLB") advances. In addition, the Company invests excess funds in short-term interest earning assets such as overnight deposits or U.S. agency securities, which provide liquidity to meet lending requirements. While scheduled payments from the amortization of loans and securities and short-term investments are relatively predictable sources of funds, general interest rates, economic conditions and competition greatly influence deposit flows and repayments on loans and mortgage-backed securities.

The Company strives to maintain sufficient liquidity to fund operations, loan demand and to satisfy fluctuations in deposit levels. The Company is required to have enough investments to qualify as liquid assets in order to maintain sufficient liquidity to ensure safe and sound banking operations. Liquidity may increase or decrease depending upon the availability of funds and comparative yields on investments in relation to the return on loans. The Company attempts to maintain adequate but not excessive liquidity, and liquidity management is both a daily and long-term function of its business management. The Company manages its liquidity in accordance with a board of directors-approved asset liability policy, which is administered by its asset-liability committee ("ALCO"). ALCO reports interest rate sensitivity, liquidity, capital and investment-related matters on a quarterly basis to the Company's board of directors.

The Company reviews cash flow projections regularly and updates them in order to maintain liquid assets at levels believed to meet the requirements of normal operations, including loan commitments and potential deposit outflows from maturing certificates of deposit and saving withdrawals. While deposits and securities sold under agreements to repurchase are its primary source of funds, when needed it is also able to generate cash through borrowings from the FHLB. At September 30, 2025, the Bank had remaining available capacity with FHLB, subject to certain collateral restrictions, of $472.4 million.

Liquidity management is required to ensure that adequate funds will be available to meet anticipated and unanticipated deposit withdrawals, debt service payments, investment commitments, commercial and consumer loan demand, and ongoing operating expenses. Funding sources include principal repayments on loans, sale of assets, growth in time and core deposits, short and long-term borrowings, investment securities coming due, loan prepayments and repurchase agreements. Regular loan payments are a dependable source of funds, while the sale of investment securities, deposit growth and loan prepayments are significantly influenced by general economic conditions and the level of interest rates.

The Company manages liquidity on a daily basis. Management believes that the liquidity is sufficient to meet present and future financial obligations and commitments on a timely basis.

Interest Rate Risk Management

Interest rate risk is the risk to earnings or capital arising from movements in market interest rates. When interest-earning assets and interest-bearing liabilities reprice at different times or in different degrees or when call options are exercised, in response to change in market interest rates, future net interest income is impacted. When interest-earning assets mature or re-price more quickly than interest-bearing liabilities, the balance sheet is considered "asset sensitive". An asset sensitive position will produce relatively more net interest income when interest rates rise and less net interest income when rates decline. Conversely, when interest-bearing liabilities mature or re-price more quickly than interest-earning assets in a given period, the balance sheet is considered "liability sensitive". A liability sensitive position will produce relatively more net interest income when interest rates fall and less net interest income when rates increase. The Company considers interest rate risk to be a significant risk and manages its exposure through policies approved by its Asset Liability Committee ("ALCO") and Board of Directors. ALCO reviews periodic reports of the Company's interest rate risk position, including results of simulation analysis. Simulation analysis applies interest rate shocks, hypothetical immediate shifts in interest rates, to the Company's financial instruments and determines the impact to projected one-year net interest income and other key measures. The following table shows the results of rate shocks on net interest income projected for one year from the reporting date. For purposes of this analysis, noninterest income and expenses are assumed to be flat.

		Changes in Projected Net Interest Income
		as of September 30,
Rate Shift (basis points)		2025				2024
400			-4.85	%			-14.47	%
300			-3.30	%			-10.46	%
200			-1.77	%			-6.42	%
100			-0.62	%			-2.98	%
(-)100			1.05	%			3.43	%
(-)200			-0.31	%			3.26	%
(-)300			-3.73	%			0.47	%
(-)400			-4.54	%			0.10	%

Results of the net interest income simulation indicate that the Company is liability sensitive as of September 30, 2025 and September 30, 2024. The simulation process requires certain estimates and assumptions including, but not limited to, asset growth, the mix of assets and liabilities, the interest rate environment and local and national economic conditions. Asset growth and the mix of assets can, to a degree, be influenced by management. Other areas, such as the interest rate environment and economic factors, cannot be controlled. In addition, competitive pressures can make it difficult to price deposits and loans in a manner that optimally minimizes interest rate risk. Actual results will differ from simulated results due to the timing, magnitude, and frequency of interest rate changes; changes in market conditions and customer behavior; and changes in management strategies.

While the asset/liability management program is designed to protect the Company over the long term, it does not provide near-term protection from interest rate shocks, as interest rate sensitive assets and liabilities do not by their nature move up or down in tandem in response to changes in the overall rate environment. The Company's profitability in the near-term may be temporarily negatively affected in a period of rapidly rising or rapidly falling rates, because it takes some time for the Company's portfolio to reflect changes to offering rates in response to a new interest rate environment.