Breaking Down PB Bankshares, Inc. (PBBK) Financial Health: Key Insights for Investors

You're looking at PB Bankshares, Inc. (PBBK) and wondering if the recent earnings jump is real or just pre-merger window dressing. Honestly, it's a bit of both. The core business is defintely stronger: for the first nine months of 2025, net income hit $1.6 million, a nearly 50% increase over the same period last year, and the Net Interest Margin (NIM) surged 40 basis points to 2.97% in Q3, which shows excellent liability management. But you can't ignore the strategic pivot, which is the real story here. The pending merger with Norwood Financial Corp. sets a clear exit price-a fixed consideration of $19.75 per share in cash or stock-and the bank is already incurring costs, like the $335 thousand in merger expenses that ate into Q3's $519 thousand net income. Here's the quick math: those expenses consumed 64% of the quarter's profit. Plus, the balance sheet, while stable at $456.4 million in total assets, saw a 12% year-to-date jump in Commercial Real Estate loans, which introduces a concentration risk we need to map out. This is a classic case of strong operations meeting a high-stakes strategic play. Let's break down what this means for your investment decision.

Revenue Analysis

You need to know where PB Bankshares, Inc. (PBBK) makes its money, especially with the shifting interest rate environment. The direct takeaway is that PBBK's revenue growth is strong in 2025, driven almost entirely by its core banking function-lending-with a nine-month year-over-year revenue growth of approximately 18.38%.

As a community bank, PBBK's revenue streams are overwhelmingly concentrated in Net Interest Income (NII), which is the difference between the interest earned on assets (like loans and securities) and the interest paid on liabilities (like deposits). For the first nine months of 2025, NII was the dominant segment, totaling $9.7 million. This means PBBK is defintely a classic spread-lender, relying on managing its cost of funds against its yield on assets. It's a simple model, but the execution is everything.

Here's the quick math on the revenue breakdown for the nine months ended September 30, 2025:

• Net Interest Income: $9.7 million
• Noninterest Income: $0.778 million (calculated from $535,000 for H1 2025 and $243,000 for Q3 2025)

What this estimate hides is the quality of the loan portfolio driving that NII. For a deeper dive into who is investing in this strategy, you should look at Exploring PB Bankshares, Inc. (PBBK) Investor Profile: Who's Buying and Why?

Segment Contribution and Growth Drivers

The contribution of the different business segments to the overall revenue profile is highly skewed, which is typical for a community bank. For the first nine months of 2025, Net Interest Income contributed approximately 92.58% of the estimated total revenue of $10.478 million, with Noninterest Income making up the remaining 7.42%. This concentration means their profitability is highly sensitive to interest rate fluctuations and credit quality.

The 2025 year-over-year revenue growth is significant. Based on the first nine months of the fiscal year, total revenue grew from an estimated $8.851 million in 2024 to $10.478 million in 2025, representing an approximately 18.38% increase. This growth is a huge jump from the 1.44% annual revenue growth PBBK saw in the full fiscal year 2024. The primary driver for this acceleration is the 17.9% increase in Net Interest Income for the nine-month period, which was fueled by higher interest income on loans and securities.

Analysis of Revenue Stream Changes

There are two key shifts in PBBK's revenue streams you need to track. First, the bank has strategically shifted its focus from traditional residential lending toward a more diversified commercial lending approach. This strategic change is boosting the yield on their loan portfolio, which directly impacts the NII. Second, while NII is up, Noninterest Income is showing volatility; it decreased by $31,000 to $243,000 in the third quarter of 2025, primarily due to lower gains on equity securities. This tells me that while the core lending business is strong, the non-core revenue-like fees and investment gains-is not providing a consistent buffer. You want to see that Noninterest Income stabilize, or even better, grow, to diversify the revenue base and mitigate interest rate risk. The next concrete step is for the Investment Committee to review the non-interest income strategy, especially the equity securities portfolio, by the end of the quarter.

Profitability Metrics

You want to know if PB Bankshares, Inc. (PBBK) is actually making money, or if its recent growth is just a flash in the pan. The direct takeaway is that while PBBK is showing strong 29% year-over-year net income growth in Q3 2025, its core operational efficiency is lagging the industry, heavily impacted by one-time merger costs.

A Deep Dive into PB Bankshares, Inc. (PBBK)'s Profitability

For a bank, profitability isn't about traditional 'Gross Profit' but rather Net Interest Income (NII) and the Net Interest Margin (NIM). In the third quarter of 2025, PBBK reported Total Interest and Dividend Income of $6.277 million. The critical metric, Net Interest Income, was $3.377 million, which is your 'gross profit' proxy. This NII drove a Net Interest Margin (NIM) of 2.97% in Q3 2025.

This 2.97% NIM reflects a successful strategy of repricing Certificate of Deposit (CD) liabilities, which expanded the margin by 40 basis points quarter-over-quarter. That's a huge win in a tough rate environment. The core profitability engine is accelerating.

• Net Income (Q3 2025): $0.519 million
• Total Revenue (Q3 2025): $3.62 million
• Net Profit Margin (Q3 2025): 14.34% (Calculated)

Operational Efficiency and Cost Management

The Net Profit Margin of 14.34% for Q3 2025 looks solid, but it hides a significant operational drag. You have to strip out the one-time costs to see the true picture. Total Noninterest Expenses for the quarter were $2.9 million, which included $335,000 in expenses related to the pending merger with Norwood Financial Corp. Here's the quick math:

If you back out those merger expenses, the core Noninterest Expenses were about $2.565 million. When you compare this core operating expense to the total revenue of $3.62 million, you get a core efficiency ratio (Noninterest Expense / Total Revenue) of approximately 70.86%. That's defintely high.

For context, the aggregated US banking industry reported an efficiency ratio of 56.2% in Q1 2025. PBBK's high ratio signals that, absent the merger, the bank has significant room for improvement in cost management and operational scale to get closer to the industry average. The merger itself is likely a strategic move to address this, aiming for better scale and lower post-merger costs.

The trend is positive, still. Net Income for the first nine months of 2025 was $1.6 million, a 49.6% increase from the $1.1 million reported for the same period in 2024. This shows the strategic shift to higher-yielding commercial lending is paying off, even with the merger costs suppressing GAAP earnings.

For a complete picture of the company's financial standing, you should also review the asset quality and capital structure, which you can find in our full analysis: Breaking Down PB Bankshares, Inc. (PBBK) Financial Health: Key Insights for Investors.

Debt vs. Equity Structure

You need to know how PB Bankshares, Inc. (PBBK) funds its operations, and the short answer is they use a balanced mix, leaning slightly more on equity than the industry average. As a community bank, their primary funding comes from deposits, but their capital structure-the mix of debt and equity-is what matters for risk.

As of September 30, 2025, the company's stockholders' equity stood at a solid $51.4 million, reflecting a strong financial foundation. The key metric to watch is the debt-to-equity (D/E) ratio, which shows how much debt the company uses for every dollar of shareholder equity.

PB Bankshares, Inc.'s D/E ratio is currently sitting at approximately 0.87. This means for every dollar of equity, the company uses 87 cents of debt to finance its assets. That's a very manageable number. The average D/E ratio for the broader Financials sector in the developed economic region is around 0.751 (or 75.1%), so PB Bankshares, Inc. is using slightly more debt relative to equity than the average peer, but still well within a healthy range.

Here's the quick math: a D/E ratio below 1.0 suggests a company is funding more of its assets with equity than with debt, which generally signals lower financial risk.

The company's debt levels are primarily composed of borrowings, which are typical for a bank. The most concrete example is their borrowings from the Federal Home Loan Bank (FHLB), which increased by $1.1 million in the third quarter of 2025 to a total of $43.6 million. This FHLB debt is a common, stable source of funds for regional banks, used to manage liquidity and fund loan growth.

• Total Equity (9/30/2025): $51.4 million.
• Debt-to-Equity Ratio: 0.87 (Healthy, but above the 0.751 industry average).
• Primary Debt Component: $43.6 million in FHLB borrowings.

PB Bankshares, Inc. balances its funding by relying heavily on customer deposits first, and then using a mix of equity and strategic debt like FHLB borrowings to support its loan portfolio. This is a classic community bank model. The most significant recent event impacting their capital structure isn't a debt issuance, but a strategic move: the planned merger with Norwood Financial Corp, which is expected to close in the first quarter of 2026. This merger will fundamentally change the combined entity's capital base and operational scale. If you want to dive deeper into the strategic direction guiding these financial decisions, you can review the Mission Statement, Vision, & Core Values of PB Bankshares, Inc. (PBBK).

What this estimate hides is the nature of a bank's debt; a large portion of their liabilities are customer deposits, which are not included in the standard D/E calculation but are still a liability. Still, the 0.87 ratio shows management is defintely not over-leveraging the balance sheet with traditional long-term debt.

Next step: Check the Norwood Financial Corp merger terms to see the pro forma capital structure and any associated debt refinancing plans by the end of this year.

Liquidity and Solvency

You need to know how easily PB Bankshares, Inc. (PBBK) can meet its short-term obligations, and honestly, the Q3 2025 numbers show a solid, defintely improving liquidity profile. For a bank, we don't look at the classic Current Ratio (Current Assets / Current Liabilities) like we would for a manufacturer; instead, we focus on the ratio of highly liquid assets to volatile liabilities, like total deposits.

As of September 30, 2025, PB Bankshares, Inc.'s total assets rose to $456.4 million, a 1.1% increase from the end of 2024. The most important sign of strength is the surge in cash: Cash and cash equivalents climbed by $17.5 million, reaching $55.3 million. That's a massive jump in available cash, which serves as the core of their quick ratio, or immediate liquidity position.

Here's the quick math on their core liquidity buffer:

• Cash and Cash Equivalents (Highly Liquid): $55.3 million
• Total Deposits (Primary Liability): $355.0 million
• Liquidity Buffer Ratio: $\approx$ 15.6%

A 15.6% cash-to-deposit ratio is a strong cushion, especially when only approximately 11.5% of their total deposits are uninsured. This low percentage of uninsured deposits reduces the risk of a sudden, large-scale bank run, which is a major liquidity concern in the financial sector.

Cash Flow and Working Capital Trends

The working capital trend for PB Bankshares, Inc. is positive, driven by a strategic shift in their asset base. The growth in total assets to $456.4 million was primarily fueled by the increase in cash and net loans receivable. This suggests strong cash generation from operations (lending activities) and effective balance sheet management.

Analyzing the cash flow statement trends for the first nine months of 2025 shows what's happening under the hood:

The increase in loans and the substantial cash build-up indicate healthy operating cash flow, allowing the bank to grow its primary earning asset (loans). Still, the rise in borrowings from the Federal Home Loan Bank (FHLB) to $43.6 million shows they are using some wholesale funding to support that growth, which is something to monitor, as it's typically a more expensive and less stable source of funds than core deposits. The overall picture is one of controlled expansion supported by internal cash generation.

For a deeper dive into their strategy, check out the full post: Breaking Down PB Bankshares, Inc. (PBBK) Financial Health: Key Insights for Investors.

Valuation Analysis

Looking at the 2025 fiscal year data, PB Bankshares, Inc. (PBBK) appears to be trading at a slight premium to its book value but is priced reasonably relative to its earnings compared to the broader market. The current valuation metrics suggest the stock is neither a deep value play nor grossly overvalued, positioning it in a neutral-to-modestly-overvalued territory, especially after its strong year-long run.

You need to see how the market is pricing the company's core assets and earnings power. For a regional bank like PB Bankshares, Inc., the Price-to-Book (P/B) ratio is defintely a critical starting point. The P/B ratio is currently around 0.93. Since this is below 1.0, it technically means the stock is trading for less than the value of its net assets (book value), which is typically a sign of undervaluation in the banking sector. However, another recent calculation puts the P/B at 1.04, which shows a slight premium.

The Price-to-Earnings (P/E) ratio, which tells you what investors are willing to pay for each dollar of earnings, sits at approximately 20.02 as of late October 2025. This is actually lower than its 12-month average P/E of 21.83, which could suggest the stock is becoming more attractive on an earnings basis. The Enterprise Value-to-EBITDA (EV/EBITDA) ratio, a useful measure for comparing companies with different capital structures, is around 16.88 for the year.

Here's the quick math on where PB Bankshares, Inc. stands on key metrics:

The stock has had a very strong run over the last 12 months. The stock price on November 17, 2025, was $20.12. This is near the high end of its 52-week range of $14.05 to $20.50. Over the last year, PB Bankshares, Inc. stock has increased by a substantial 41.24%. That's a massive move, and it explains why some models are flagging it as modestly overvalued, even with the relatively low P/B ratio.

For income-focused investors, a key detail is that PB Bankshares, Inc. does not currently pay a dividend. This means the dividend yield and payout ratios are 0%, so all your return will come from capital appreciation. This isn't unusual for a smaller, growth-focused regional bank, but it's a factor you must consider for your total return expectation.

Finally, the analyst consensus on the stock is a simple Buy rating. This consensus is based on limited coverage-only one research report in the last 90 days-so you shouldn't treat it as gospel. It's a positive signal, but it lacks the depth of coverage you see with larger cap stocks. The takeaway is simple: the market is rewarding the stock's performance, but the valuation is getting stretched.

What this estimate hides is the potential for earnings growth to catch up to the price. If you want to dig deeper into who is driving this price movement, you should check out Exploring PB Bankshares, Inc. (PBBK) Investor Profile: Who's Buying and Why?

• Stock price is up 41.24% over the last year.
• Current P/E of 20.02 is below its 12-month average.
• Analyst consensus is a Buy, based on minimal coverage.
• No dividend is currently paid to shareholders.

Risk Factors

You're looking at PB Bankshares, Inc. (PBBK) and seeing strong Q3 2025 net income of $519,000, which is defintely a positive sign, but a seasoned analyst knows to look past the top-line growth and map out the near-term risks. The biggest factor right now is the pending strategic merger with Norwood Financial Corp, which is creating both internal costs and external uncertainty.

The operational and strategic risks are front-loaded. For the third quarter alone, the company incurred $335,000 in merger expenses, which is a significant drag on profitability, consuming over 64% of that quarter's net income. This is a necessary cost to complete the transaction, but it's a clear headwind until the deal closes in Q1 2026. Also, the merger introduces integration risk-blending two community banks is never seamless, and if key personnel leave, it could hurt service quality and deposit retention. That's a real, but unquantifiable, risk. Breaking Down PB Bankshares, Inc. (PBBK) Financial Health: Key Insights for Investors

On the financial side, two areas need your attention: liquidity and potential shareholder dilution. Management has been aggressive in restructuring assets to fund growth, which has led to a liquidity squeeze. They liquidated $27.7 million in debt securities, reducing the available-for-sale (AFS) securities portfolio by 40% to just $30.2 million. This reduces the unpledged assets available for contingency funding, especially as a large chunk of Certificates of Deposit mature.

The second financial risk is dilution. The number of dilutive common stock equivalents grew by a massive 203% quarter-over-quarter to 95,910 shares. This is a key factor for shareholders assessing the value they'll receive in the stock portion of the merger consideration. Here's the quick math on the major near-term risks:

To be fair, the credit quality is strong right now. Non-Performing Loans (NPLs) fell 22% year-to-date to $877,000, and the Allowance for Credit Losses (ACL) coverage ratio is exceptionally high at 514% of nonaccrual loans. Still, the bank has shifted to a more diversified commercial lending approach, and they are actively managing their commercial real estate portfolio, which is the industry's current hot spot for potential trouble. This vigilance is a mitigation strategy, but the underlying exposure remains. You need to watch the following closely:

• Monitor CRE loan delinquency rates in Q4 2025 filings.
• Track the cost of deposits; rising rates could reverse the net interest margin (NIM) expansion.
• Watch for any regulatory pushback on the merger timeline or terms.

Finance: Draft a pro-forma balance sheet post-merger, focusing on the combined entity's liquidity ratios, by the end of the month.

Growth Opportunities

You're looking at PB Bankshares, Inc. (PBBK) and seeing strong 2025 financial momentum, but what matters now is whether that growth is sustainable. The direct takeaway is that the company's future is largely defined by a major strategic move: a definitive merger agreement with Norwood Financial Corp, which is set to close in the first quarter of 2026. This acquisition is the primary growth catalyst, but PBBK's organic strategy of shifting to commercial lending is also paying off handsomely.

Key Growth Drivers: Merger and Lending Pivot

The biggest driver for PB Bankshares, Inc. isn't a new product; it's a strategic combination. On July 7, 2025, the company entered into a merger agreement with Norwood Financial Corp, with PB Bankshares, Inc. merging into Norwood. This move is expected to significantly expand its operational footprint and asset base, giving it a much larger platform for growth. Organically, the bank's management has strategically pivoted away from traditional residential lending toward a more diversified commercial lending approach. This focus is driving the increase in net interest income (NII) and improving the net interest margin (NIM).

Here's the quick math on the recent performance:

• Q3 2025 Net Income: $519,000, a 28.5% jump year-over-year.
• Nine-Month 2025 Net Income: $1.6 million, a 49.6% increase from the same period in 2024.
• Q3 2025 Diluted Earnings Per Share (EPS): $0.22.

That's a defintely solid trajectory leading into the merger.

Future Revenue and Earnings Estimates

While specific post-merger projections are complex, the pre-merger run-rate for 2025 sets a strong baseline. The trailing 12 months revenue ending June 30, 2025, was $13.36 million, showing a robust 43.3% year-over-year growth. The nine months ended September 30, 2025, saw Net Interest Income (NII) grow by 17.9% to $9.7 million, which is a clear indicator of the new lending strategy's success. The improved Net Interest Margin (NIM) of 2.97% in Q3 2025 also shows better profitability on their assets. The merger is designed to accelerate this, essentially combining two community bank models to create a larger, more efficient entity. What this estimate hides is the one-time merger expenses, which are already being incurred but should lead to greater scale and profitability long-term.

Strategic Initiatives and Competitive Edge

Beyond the merger, PB Bankshares, Inc. is executing on several key initiatives. They are focused on core operational improvements like deposit growth, cash management, and talent retention. The opening of a new administrative office in Lancaster is a concrete step to support expansion in their Southcentral Pennsylvania market. The bank's core competitive advantage (or what we call a 'moat' in finance) is its deep community roots. They boast over 100 years of history and local marketplace knowledge, which is a significant barrier to entry for larger regional banks. This local focus, coupled with a Bauer Financial 5-Star Rating for financial stability, allows them to maintain a relationship-based, white-glove customer service model that bigger competitors can't easily replicate. You can find more about their guiding principles here: Mission Statement, Vision, & Core Values of PB Bankshares, Inc. (PBBK).

For a clearer view of the key growth drivers, consider this breakdown:

Next step: Check the latest proxy statement for the definitive terms of the Norwood merger, specifically the projected cost synergies and integration timeline.