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Fidelity D & D Bancorp, Inc. Reports Second Quarter 2025 Financial Results

DUNMORE, Pa., July 23, 2025 (GLOBE NEWSWIRE) -- Fidelity D & D Bancorp, Inc. (NASDAQ: FDBC) and its banking subsidiary,听The Fidelity Deposit and Discount Bank, announced its unaudited, consolidated financial results for the three and six-month periods听ended听June 30, 2025.

Unaudited Financial Information

Net income for the quarter ended听June 30, 2025 was $6.9 million, or $1.20 diluted earnings per share, compared to $4.9 million, or $0.86 diluted earnings per share, for the quarter ended June 30, 2024.听 The $2.0 million, or 40%, increase in net income听resulted primarily from a听$2.8 million increase in net interest income coupled with a $0.8 million increase in non-interest income. This was partially offset by听a $1.1 million increase in non-interest expense and a $0.6 million increase in the provision for听income tax.

For the six months ended June 30, 2025, net income was $12.9 million, or $2.23 diluted earnings per share, compared to $10.0 million, or $1.73听diluted earnings per share, for the six months ended June 30, 2024.听 The $2.9 million, or 29%, increase in net income stemmed from the $4.9 million increase in net interest income and听$1.1 million increase in non-interest income. This was partially offset by听a $2.0 million increase in non-interest expense and a $1.0 million increase in the provision for听income tax.

鈥淚 am pleased to share that we delivered another strong quarter, underscoring the continued momentum of our strategy and the dedication of our entire team,鈥� stated Daniel J.听Santaniello, President and Chief Executive Officer. 鈥淪econd quarter 2025 net income increased 40% over last year鈥檚 second quarter to $6.9 million, with diluted earnings per share rising to $1.20. This performance was driven by a 19% increase in net interest income鈥攔eflecting our disciplined loan portfolio expansion and enhanced yields as well as a 16% rise in non-interest income.

Year-to-date, net income has grown 29% to $12.9 million, a clear testament to the strength of our relationship-based deposit strategy and prudent expense management. Our asset quality remains solid, and we further strengthened our capital position, with shareholders' equity up 7% providing a strong foundation for continued growth in the second half of 2025.

These results reflect more than financial performance鈥攖hey speak to the strength of our culture, our commitment to our clients, and our deep roots in the communities we serve. I want to sincerely thank our talented and dedicated team of bankers, whose expertise and focus on service excellence drive our success every day. Together, we continue to听build a stronger, more resilient financial institution鈥攐ne that delivers meaningful value to our bankers, clients, shareholders, and communities.鈥�

Consolidated Second Quarter Operating Results Overview

Net interest income was $17.9 million for the second quarter of 2025, a 19% increase over the听$15.1 million earned for the second quarter of 2024.听 The $2.8 million increase in net interest income resulted听from the increase of听$3.7 million in interest income primarily due to a $213.6 million increase in听the average balance of interest-earning assets and a听19 basis point increase听in fully-taxable equivalent ("FTE") (non-GAAP measurement) yield. The loan portfolio had the most significant impact, producing a $2.8听尘颈濒濒颈辞苍 increase in FTE interest income from $124.6听尘颈濒濒颈辞苍 in higher quarterly average balances and an increase of 24听basis points in FTE loan yield.听Additionally, the Company experienced an increase of $1.1 million in interest earned from interest-bearing deposits with other financial institutions听from $102.0 million in higher average balances. Slightly offsetting the higher interest income, there was a $0.9听尘颈濒濒颈辞苍听increase in听interest expense due to听a听$178.8 million quarter-over-quarter increase in average interest-bearing liability balances. The increase was due to growth of $208.3听尘颈濒濒颈辞苍 in average interest-bearing deposit balances. However, this deposit growth was听partially offset by a $28.5听尘颈濒濒颈辞苍 decrease in average short-term borrowings.

The FTE yield on interest-earning assets was 4.77% for the second quarter of 2025, an increase of 19 basis points from the 4.58% for the second听quarter of 2024.听The overall cost of interest-bearing liabilities was 2.52% for the second quarter of 2025, a decrease of 6 basis points from the 2.58% for the听second quarter of 2024.听 The cost of funds decreased 1 basis point from 1.96% to 1.95% for the second quarters of 2024 and 2025, respectively.听The Company鈥檚 FTE听net interest spread was 2.25% for the second quarter of 2025, an increase of 25听basis points from 2.00% recorded for the second quarter听of 2024.听听FTE net interest margin increased to 2.92% for the three months ended June 30, 2025听from 2.71% for the same period of 2024听primarily due to the growth in higher yielding taxable commercial loans.

For the three months ended June 30, 2025, the provision for credit losses on loans was $300 thousand and the provision for unfunded commitments was $20 thousand compared to a $275 thousand provision for credit losses on loans and a $140 thousand provision for credit losses on unfunded loan commitments for the three months ended June 30, 2024. For the three months ended June 30, 2025, the increase in the provision for credit losses on loans compared to the prior year period was due to $155 thousand in听higher net charge-offs and a higher average total loan balance compared to the same period in 2024. For the three months ended June 30, 2025, the decrease in the provision for unfunded commitments was due to lower levels of听unfunded commitments during the quarter due to increased utilization, specifically commercial construction commitments, compared to the year earlier period.

Total non-interest income increased $0.8听尘颈濒濒颈辞苍, or 16%, to听$5.4 million for the second听quarter of 2025听compared to听$4.6 million for the second quarter of 2024. The increase in non-interest income was primarily attributed听to increases of $0.2 million in trust fees, a $0.2 million BOLI death benefit, $0.2 million in loan service charges, and $0.1 million in interchange fees.听

Non-interest expenses increased听$1.1 million, or 8%, for the second quarter of 2025 to $14.7 million from $13.6 million for the same quarter of 2024. The increase in non-interest expenses was primarily due to听the increases in salaries and benefits expense听of $0.8 million, premises and equipment expense of $0.2 million, and advertising expense of $0.2 million. These increases were partially offset by a $0.2 million decrease in professional services for the three months ended June 30, 2025 compared to the same period of 2024.

The provision for income taxes increased $0.6 million during the three months ended June 30, 2025听compared to the same period in 2024 primarily due to a $2.6 million increase in income before taxes.

Consolidated Year-To-Date Operating Results Overview

Net interest income was $35.0 million for the six months ended June 30, 2025 compared to $30.1 million for the six months ended June 30, 2024.听 The $4.9 million increase in net interest income resulted听from the increase of听$6.4 million in interest income primarily due to a $181.0 million increase in听the average balance of interest-earning assets and a听20 basis point increase听in FTE听yield.听 On the asset side, the loan portfolio interest income growth听resulted from producing $5.3听尘颈濒濒颈辞苍 more in interest income from an increase of 25 basis points in FTE loan yields on $120.5 million in higher average balances. Additionally, the Company experienced an increase of $1.5 million in interest earned from interest-bearing deposits with other financial institutions听from $71.6 million in higher average balances. The increase in interest income was partially offset by a decrease of $0.3 million in interest earned on the investment portfolio due to decreases of听6 basis points in yield and $11.3 million in average balances.听On the funding side, total interest expense increased by $1.5 million primarily due to an increase in interest expense paid on deposits of $2.5 million from听a 2 basis points听higher rates paid on a $194.0 million larger average balance听of interest-bearing deposits, partially offset by a decrease in听interest expense on borrowings of $1.0 million for听the six months ended June 30, 2025 compared to the same period in 2024.

The overall cost of interest-bearing liabilities was 2.51% for the听six months ended June 30, 2025 compared to 2.54% for the six months ended June 30, 2024.听 The cost of funds decreased 1 basis point to 1.94% for the听six months ended June 30, 2025 from 1.95% from the same period听of 2024. The FTE yield on earning assets was 4.75% for the six months ended June 30, 2025, an increase of 20 basis points from the 4.55% year-to-date June 30, 2024.听 The Company鈥檚 FTE听net interest spread was 2.24% for the six months ended听June 30, 2025, an increase of听23 basis points from the 2.01% recorded for the same period of听2024.听听FTE net interest margin increased by 21 basis points to 2.91% for the six听months ended June 30, 2025 from 2.70% for the same 2024听period primarily due to the increase in听yields earned on loans and leases outpacing the rates paid on interest-bearing deposits.

For the six months ended June 30, 2025, the provision for credit losses on loans听was $755 thousand and the provision for credit losses on unfunded loan commitments was a net benefit of $65 thousand compared to a $400 thousand provision for credit losses on loans and a $90 thousand provision for credit losses on unfunded commitments for the six months ended June 30, 2024. For the six months ended June 30, 2025, the increase in the provision for credit losses on loans compared to the prior year period was due to $215 thousand in higher net charge-offs and a higher average total loan balance compared to the same period in 2024. For the six months ended June 30, 2025, the decrease in the provision for unfunded commitments was due to lower growth in unfunded commitments during the period due to increased utilization, specifically commercial construction commitments, compared to the year earlier period.

Total non-interest income for the six months ended June 30, 2025 was $10.3 million, an increase of $1.1 million, or 12%, from $9.2 million for the six months ended June 30, 2024.听 The increase was primarily due to $0.3 million higher fees from trust fiduciary activities. The Company also had $0.2 million more non-interest income resulting from an increase in interchange fees,听a $0.2 million BOLI death benefit, and an increase of $0.2 million in service charges on commercial loans. During the first half of 2025, gains of $0.5 million on the sale of a commercial loan and $0.3 million from the sale of a property were offset by $0.8 million in losses recognized on the sale of securities.

Non-interest expenses increased to $29.3 million for the six months ended June 30, 2025, an increase of $2.0 million, or 7%, from $27.3 million for the six months ended June 30, 2024.听Salaries and benefits expense increased $1.3 million due to an increase in bankers, group insurance costs,听and banker incentives听in the first half of 2025, compared to the same period in 2024.听Additionally, the Company saw an increase of $0.5听尘颈濒濒颈辞苍 in advertising and marketing expenses primarily due to a $0.3 million increase in Neighborhood Assistance Program听donations from which the Company recognized $0.2 million in additional tax credits causing a corresponding decrease in PA shares tax expense. There was also听an increase听of $0.5 million in premises and equipment expense primarily due to higher costs for software licenses, subscriptions, and maintenance.听The increases were partially offset by听$0.3 million less in professional services听expense.

The provision for income taxes increased $1.0 million during the six months ended June 30, 2025 compared to the same period in 2024 primarily due to a $3.9 million increase in听income before taxes and $0.2 million less in tax credits.听

Consolidated Balance Sheet & Asset Quality Overview

The Company鈥檚 total assets had a balance of听$2.7听产颈濒濒颈辞苍 as of June 30, 2025,听an increase of $114.0 million from December 31, 2024.听The increase resulted from $82.1 million in growth in cash and cash equivalents as of June 30, 2025 compared to December 31, 2024.听The loans and leases portfolio increased $37.9 million over the same period. Asset growth was offset by a decrease of $11.4 million听in the investment portfolio primarily due to the sale of $17.5 million in听available-for-sale securities and听$11.3 million in paydowns听partially听offset by $14.7 million in purchases听of securities.

During the same time period, total liabilities increased $100.0 million, or 4%.听Deposit growth of $94.5 million听was utilized to fund loan growth and increase interest-bearing cash balances.听For interest-bearing deposit accounts, the Company experienced increases of $37.2 million in money market deposits, $17.2 million in interest-bearing checking accounts, $14.4 million听in time deposits, and $1.6 million in savings and clubs. The deposit growth is primarily driven by growth in existing account balances from the relationship building strategy along with听targeted direct marketing campaigns driving new client acquisitions and active management of promotional and retention rates. Additionally, the Company experienced an听increase of $24.1听尘颈濒濒颈辞苍 in non-interest-bearing checking accounts.听As听of June 30, 2025, the ratio of insured and collateralized deposits to total deposits was approximately 75%.

Shareholders鈥� equity increased $13.9 million, or 7%, to $217.9 million at June 30, 2025听from $204.0 million at December 31, 2024. The increase was caused by $8.3 million higher retained earnings听from net income of $12.9 million plus a $4.9 million, after tax, improvement in accumulated听other comprehensive income from lower net unrealized losses听recorded on available-for-sale securities, partially offset by $4.7 million in cash dividends paid to shareholders.听An additional $0.9 million was recorded from the issuance of common stock under the Company鈥檚 stock plans and听stock-based compensation expense.听At June 30, 2025, there were no credit losses on available-for-sale and held-to-maturity debt securities.听 Accumulated other comprehensive income (loss) is excluded from regulatory capital ratios. The Company remains well capitalized with Tier 1 capital at 9.16% of total average assets as of听June 30, 2025.听 Total risk-based capital was 14.72% of risk-weighted assets and Tier 1 risk-based capital was 13.57% of risk-weighted assets as of June 30, 2025. Tangible book value per share was $34.25 at June 30, 2025 compared to $31.98 at December 31, 2024.听 Tangible common equity was 7.38% of total assets at June 30, 2025 compared to 7.16% at December 31, 2024.

Asset Quality

Total non-performing assets were $3.5听尘颈濒濒颈辞苍, or 0.13% of total assets, at June 30, 2025, compared to $7.8 million, or 0.30% of total assets, at December 31, 2024. Past due and non-accrual loans to total loans were 0.41% at June 30, 2025 compared to 0.71% at December 31, 2024.听Net charge-offs to average total loans were 0.05% at June 30, 2025 compared to 0.03% at December 31, 2024.

About Fidelity D & D Bancorp, Inc. and The Fidelity Deposit and Discount Bank

Fidelity D & D Bancorp, Inc. has built a strong history as trusted financial advisor to the clients served by The Fidelity Deposit and Discount Bank (鈥淔idelity Bank鈥�).听 Fidelity Bank continues听its mission of exceeding client expectations through a unique banking experience. It operates 21听full-service offices throughout Lackawanna, Luzerne, Lehigh and Northampton Counties and a Fidelity Bank Wealth Management Office in Schuylkill County. Fidelity Bank provides a digital banking experience online at www.bankatfidelity.com, through the Fidelity Mobile Banking app, and in the Client Care Center at 1-800-388-4380. Additionally, the Bank offers full-service Wealth Management & Brokerage Services, a Mortgage Center, and a full suite of personal and commercial banking products and services. Part of the Company鈥檚 vision is to serve as the best bank for the community, which was听accomplished by having provided听over 5,960 hours of volunteer time and over $1.3 million in donations to non-profit organizations directly within the markets听served throughout 2024. Fidelity Bank's deposits are insured by the Federal Deposit Insurance Corporation up to the full extent permitted by law.

Non-GAAP Financial Measures

The Company uses non-GAAP financial measures to provide information useful to the reader in understanding听its operating performance and trends, and to facilitate comparisons with the performance of other financial institutions. Management uses these measures internally to assess and better understand our underlying business performance and trends related to core business activities.听听The Company鈥檚 non-GAAP financial measures and key performance indicators may differ from the non-GAAP financial measures and key performance indicators other financial institutions use听to measure their performance and trends.听Non-GAAP financial measures should be supplemental to GAAP used to prepare the Company鈥檚 operating results and should not be read in isolation or relied upon as a substitute for GAAP measures.听 Reconciliations of non-GAAP financial measures to GAAP are presented in the tables below.

Interest income was adjusted to recognize the income from tax exempt interest-earning assets as if the interest was taxable, fully-taxable equivalent ("FTE"), in order to calculate certain ratios within this document.听听This treatment allows a uniform comparison among yields on interest-earning assets.听 Interest income was FTE adjusted, using the corporate federal tax rate of 21% for 2025 and 2024.

Forward-looking statements

Certain of the matters discussed in this press release听constitute forward-looking statements for purposes of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and as such may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements.听听The words 鈥渆xpect,鈥� 鈥渁nticipate,鈥� 鈥渋ntend,鈥� 鈥減lan,鈥� 鈥渂elieve,鈥� 鈥渆stimate,鈥� and similar expressions are intended to identify such forward-looking statements.

The Company鈥檚 actual results may differ materially from the results anticipated in these forward-looking statements due to a variety of factors, including, without limitation:

The Company cautions readers not to place undue reliance on forward-looking statements, which reflect analyses only as of the date of this release.听听The Company has no obligation to update any forward-looking statements to reflect events or circumstances after the date of this release.

For more information please visit our investor relations web site located through www.bankatfidelity.com.

* Non-GAAP Financial Measures - see reconciliations below