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PB

PB Bankshares, Inc. (PBBK)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 EPS was $0.27, up 35% QoQ ($0.20) and 69% YoY ($0.16), as net interest margin expanded to 2.88% (from 2.85% in Q1 and 2.54% a year ago) and noninterest income rose on higher swap fees .
  • Net income increased to $0.64M from $0.47M in Q1 and $0.37M in Q2 2024; net interest income improved to $3.27M, while noninterest expense ticked up to $2.70M .
  • Credit metrics strengthened: NPL ratio fell to 0.25% (0.31% in Q1; 0.37% in Q2’24) and ACL/loans held at 1.25%; liquidity remained robust with available funding at 541.8% of uninsured/unsecured deposits; uninsured/unsecured deposits were $39.1M (10.8% of total) .
  • Post-quarter, the Company announced a merger with Norwood Financial: PBBK holders may elect 0.7850 NWFL shares or $19.75 cash per share (80% stock/20% cash, subject to proration), targeting close in 4Q25/1Q26—an important valuation and stock-catalyst event .

What Went Well and What Went Wrong

  • What Went Well

    • Margin expansion and earnings growth: NIM rose to 2.88% and net income to $0.64M, with noninterest income higher on swap fees; management cited increased interest income on loans/securities and reduced funding costs as drivers .
    • Asset quality and reserves: NPL ratio improved to 0.25%, ACL/loans steady at 1.25%; the Company continued to receive payments on all non-performing loans during H1 2025 .
    • Liquidity, capital, and book value: Available funding equaled 541.8% of uninsured/unsecured deposits; book value per share rose to $19.73; AOCI was essentially flat at $(12)K (<0.1% of equity) .

  • What Went Wrong

    • Operating leverage headwind: Noninterest expense increased to $2.70M, driven by higher salaries/benefits and occupancy/equipment costs .
    • Provision normalization: Provision for credit losses was $40K (vs. $17K in Q2’24), reflecting loan mix/growth and higher required allowance for unfunded commitments .
    • Mixed deposit trend QoQ: Deposits declined to $363.4M from $367.6M in Q1 (though up vs. year-end), reflecting ongoing funding competitiveness despite reduced deposit costs .

Financial Results

MetricQ2 2024Q4 2024Q1 2025Q2 2025
Net interest income ($M)$2.79 $2.85 $3.07 $3.27
Noninterest income ($M)$0.19 $0.66 $0.25 $0.28
Noninterest expense ($M)$2.49 $2.66 $2.66 $2.70
Provision for credit losses ($M)$0.02 $(0.00) $0.06 $0.04
Net income ($M)$0.37 $0.68 $0.47 $0.64
Diluted EPS ($)$0.16 $0.29 $0.20 $0.27
Net interest margin (%)2.54% 2.59% 2.85% 2.88%
ROAA (annualized, %)0.33% 0.61% 0.43% 0.55%
ROAE (annualized, %)2.80% 5.62% 3.89% 5.13%

Balance sheet and credit KPIs

KPIQ2 2024Q4 2024Q1 2025Q2 2025
Total assets ($M)$449.05 $451.32 $467.11 $464.13
Deposits ($M)$346.96 $354.19 $367.63 $363.42
Loans, net ($M)$340.00 $344.81 $346.69 $353.32
Cash & equivalents ($M)$54.73 $37.78 $62.75 $55.91
Book value per share ($)$18.15 $19.07 $19.40 $19.73
AOCI ($K)$(1,080) $(305) $(59) $(12)
ACL / loans (%)1.30% 1.25% 1.26% 1.25%
NPLs / total loans (%)0.37% 0.32% 0.31% 0.25%
Uninsured & uncollateralized deposits ($M)—$38.1 $40.6 $39.1
Uninsured & uncollateralized deposits (% of total)—11.0% 11.1% 10.8%
Available funding / uninsured & uncollateralized deposits (%)—544.9% 563.3% 541.8%

Notes and drivers

  • Net interest income included $41K of interest recognized on two nonaccrual loans paid off in Q2; H1 also benefited from a $149K prepayment penalty on a loan payoff .
  • Noninterest income improvement was driven primarily by higher swap fees; expenses increased on salaries/benefits and occupancy/equipment .
  • Management continues to emphasize CRE lending while monitoring concentrations and stress testing non-owner-occupied portfolios .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Financial guidance (revenue/margins/OpEx/tax/dividends)FY25None issuedNone issuedMaintained – no formal guidance
Transaction update (merger)Close targetedN/A4Q25 or early 1Q26 expected closeNew – deal announced 7/7/25

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024 and Q1 2025)Current Period (Q2 2025)Trend
Net interest margin/cost of fundsFocus on improving NIM via lower deposit costs and higher loan yields (CEO) ; NIM 2.59% in Q4’24; 2.85% in Q1’25 NIM rose to 2.88%; lower rates paid on deposits/borrowings and higher loan/securities income Improving
Liquidity & uninsured depositsAvailable funding 544.9% of uninsured deposits at YE’24; 563.3% in Q1’25 541.8%; uninsured/unsecured 10.8% of deposits Stable/Strong
AOCI/securities durationAOCI fell to $0.31M at YE’24; AFS WAL 1.29 yrs AOCI $(12)K; AFS WAL 2.86 yrs AOCI de minimis; duration modestly longer
Credit qualityNPL ratio down to 0.32% at YE’24; ACL 1.25% NPL 0.25%; ACL 1.25%; benign delinquencies Improving
CRE concentration managementMonitoring/stress testing highlighted Continued focus; CRE growth drove loan increases Ongoing emphasis
M&A/Strategic—Merger with Norwood announced (0.785x NWFL or $19.75 cash; 80% stock) New strategic path

Management Commentary

  • “The increase for the three and six months ended June 30, 2025 compared to the same periods in 2024 was primarily due to increases in interest income on loans and securities and decreases in interest expense on borrowings and deposits...” (Company press release) .
  • “Interest income on loans for the three months ended June 30, 2025 included recognition of interest on two nonaccrual loans that were paid off for $41,000 during the current quarter.” (Company press release) .
  • “Improving our net interest margin will continue to be our emphasis for 2025,” said Janak M. Amin, President and CEO. (Q1 press release) .

Q&A Highlights

  • No earnings call transcript or Q&A was available for Q2 2025; the Company furnished results via press release/8-K (no transcript documents found).

Estimates Context

  • Wall Street consensus coverage (S&P Global) for EPS and revenue was not available for Q2 2025; no EPS or estimate counts were returned. Revenue shows only the actual value ($3.514M)* with no estimate data. As a result, we cannot assess beat/miss vs. consensus for EPS or revenue this quarter [Values retrieved from S&P Global].
MetricQ2 2025 EstimateQ2 2025 Actual
Primary EPS Consensus MeanN/A*$0.27
Revenue Consensus Mean ($M)N/A*$3.514*

Key Takeaways for Investors

  • Margin expansion is tracking to plan; NIM rose again to 2.88% as deposit/borrowing costs eased and asset yields improved, supporting EPS growth QoQ/YoY .
  • Quality and liquidity are clear strengths: NPL ratio at 0.25%, ACL/loans at 1.25%, AOCI effectively neutral, and liquidity coverage at 541.8% of uninsured/unsecured deposits .
  • Operating expense pressure persisted (higher salaries/benefits and occupancy/equipment), tempering operating leverage; watch for expense discipline as the year progresses .
  • One-offs were modest tailwinds (nonaccrual interest recognition, prepayment penalty in H1); underlying trend remains driven by pricing/spread actions rather than one-time items .
  • CRE lending remains the growth focus with ongoing stress testing—monitor concentration and macro sensitivity into 2H25 .
  • Strategic path shifts with Norwood merger (0.785x NWFL or $19.75 cash; 80% stock); near-term catalysts include regulatory approvals and the shareholder vote, potentially anchoring valuation toward deal terms .
  • With limited sell-side coverage and no formal guidance, quarterly press releases and merger milestones will likely drive stock narrative near term .