Unaudited Financial Information
Net income for the quarter ended September 30, 2025 was $7.3 million, or $1.27 per diluted share, compared to $5.0 million, or $0.86 per diluted share, for the quarter ended September 30, 2024. The $2.3 million, or 48%, increase in net income resulted primarily from a $3.0 million increase in net interest income coupled with a $0.5 million decrease in provision for credit losses on loans and unfunded commitments. This was partially offset by a $0.8 million increase in non-interest expense and a $0.4 million increase in the provision for income taxes.
For the nine months ended September 30, 2025, net income was $20.3 million, or $3.50 per diluted share, compared to $15.0 million, or $2.59 per diluted share, for the nine months ended September 30, 2024. The $5.3 million, or 35%, increase in net income stemmed from the $7.9 million increase in net interest income and $1.3 million increase in non-interest income. This was partially offset by a $2.8 million increase in non-interest expense and a $1.4 million increase in the provision for income taxes.
"We are pleased to report very strong results for the third quarter, paced by the effectiveness of our long-term targeted relationship strategy that has generated a 48% year over year net income growth to $7.3 million, driven by a $3.0 million increase in net interest income, resulting in $1.27 per diluted share," stated Daniel J. Santaniello, President and Chief Executive Officer. "Year-to-date net income reached $20.3 million, supported by disciplined loan portfolio expansion, strong deposit growth, and enhanced yields across interest-earning assets. These results reflect the strength of our business model and the momentum across the organization to achieve our targets for 2025."
Consolidated Third Quarter Operating Results Overview
Net interest income was $18.4 million for the third quarter of 2025, representing a 19% increase over the $15.4 million earned for the third quarter of 2024. The $3.0 million increase in net interest income resulted from the increase of $3.4 million in interest income primarily due to a $196.9 million increase in the average balance of interest-earning assets and a 15 basis points increase in fully-taxable equivalent ("FTE") (non-GAAP measurement) yield. The loan portfolio had the most significant impact, producing a $2.6 million increase in FTE interest income from $129.2 million in higher quarterly average balances and an increase of 16 basis points in FTE loan yield. Additionally, the Company experienced an increase of $0.8 million in interest earned from interest-bearing deposits with other financial institutions from $78.8 million in higher average balances. The higher interest income was offset by a $0.4 million increase in interest expense due to a $161.4 million quarter-over-quarter increase in average interest-bearing liability balances. The increase was due to growth of $199.0 million in average interest-bearing deposit balances. However, this deposit growth was partially offset by a $37.2 million decrease in average short-term borrowings.
The FTE yield on interest-earning assets was 4.83% for the third quarter of 2025, an increase of 15 basis points from 4.68% for the third quarter of 2024. The overall cost of interest-bearing liabilities was 2.55% for the third quarter of 2025, a decrease of 15 basis points from the 2.70% for the third quarter of 2024. The cost of funds decreased 10 basis points from 2.08% to 1.98% for the third quarters of 2024 and 2025, respectively. The Company's FTE net interest spread was 2.28% for the third quarter of 2025, an increase of 30 basis points from 1.98% recorded for the third quarter of 2024. FTE net interest margin increased to 2.95% for the three months ended September 30, 2025 from 2.70% for the same period of 2024 due to the growth in higher yielding taxable commercial loans.
For the three months ended September 30, 2025, the provision for credit losses on loans was $200 thousand and the provision for unfunded commitments was $110 thousand compared to a $675 thousand provision for credit losses on loans and a $135 thousand provision for credit losses on unfunded loan commitments for the three months ended September 30, 2024. For the three months ended September 30, 2025, the decrease in the provision for credit losses on loans and the provision for unfunded commitments compared to the prior year period was due to improved asset quality, specifically non-performing assets and non-accrual loans, compared to the same period in 2024.
Total non-interest income increased $0.1 million, or 3%, to $5.1 million for the third quarter of 2025 compared to $5.0 million for the third quarter of 2024. The increase in non-interest income was primarily attributed to increases of $0.1 million in trust fees and $0.1 million in interchange fees. The increases were partially offset by a $0.1 million lower gains on sold loans and $0.1 million less in loan service charges.
Non-interest expenses increased $0.8 million, or 6%, for the third quarter of 2025 to $14.6 million from $13.8 million for the same quarter of 2024. The increase in non-interest expenses was primarily due to the increases in salaries and benefits expense of $0.6 million primarily due to higher banker incentives and premises and equipment expense of $0.2 million. These increases were partially offset by a $0.1 million decrease in advertising expense for the three months ended September 30, 2025 compared to the same period of 2024.
The provision for income taxes increased $0.4 million during the three months ended September 30, 2025 compared to the same period in 2024 primarily due to a $2.8 million increase in income before taxes.
Consolidated Year-To-Date Operating Results Overview
Net interest income was $53.4 million for the nine months ended September 30, 2025 compared to $45.5 million for the nine months ended September 30, 2024. The $7.9 million increase in net interest income resulted from the increase of $9.8 million in interest income primarily due to a $186.4 million increase in the average balance of interest-earning assets and a 19 basis point increase in FTE yield. On the asset side, the loan portfolio interest income growth resulted from producing $8.0 million more in interest income from an increase of 22 basis points in FTE loan yields on $123.5 million higher average balances. Additionally, the Company experienced an increase of $2.3 million in interest earned from interest-bearing deposits with other financial institutions from $74.0 million higher average balances. The increase in interest income was partially offset by a decrease of $0.5 million in interest earned on the investment portfolio due to decreases of 5 basis points in yield and $11.3 million in average balances. On the funding side, total interest expense increased by $1.9 million primarily due to an increase in interest expense paid on deposits of $3.4 million from $195.7 million larger average balance of interest-bearing deposits, partially offset by a decrease in interest expense on borrowings of $1.4 million for the nine months ended September 30, 2025 compared to the same period in 2024.
The overall cost of interest-bearing liabilities was 2.52% for the nine months ended September 30, 2025 compared to 2.60% for the nine months ended September 30, 2024. The cost of funds decreased 3 basis points to 1.96% for the nine months ended September 30, 2025 from 1.99% for the same period of 2024. The FTE yield on earning assets was 4.78% for the nine months ended September 30, 2025, an increase of 19 basis points from the 4.59% year-to-date September 30, 2024. The Company's FTE net interest spread was 2.26% for the nine months ended September 30, 2025, an increase of 27 basis points from the 1.99% recorded for the same period of 2024. FTE net interest margin increased by 22 basis points to 2.92% for the nine months ended September 30, 2025 from 2.70% for the same 2024 period primarily due to the increase in yields earned on loans and leases along with a decline in the rates paid on interest-bearing deposits.
For the nine months ended September 30, 2025, the provision for credit losses on loans was $955 thousand and the provision for credit losses on unfunded loan commitments was $45 thousand compared to a $1.1 million provision for credit losses on loans and a $225 thousand provision for credit losses on unfunded commitments for the nine months ended September 30, 2024. For the nine months ended September 30, 2025, the decrease in the provision for credit losses on loans and the provision for unfunded commitments compared to the prior year period was due to improved asset quality, specifically non-performing assets and non-accrual loans, compared to the same period in 2024.
Total non-interest income for the nine months ended September 30, 2025 was $15.4 million, an increase of $1.2 million, or 9%, from $14.2 million for the nine months ended September 30, 2024. The increase was primarily due to increases of $0.4 million in trust fees and $0.3 million in interchange fees. The Company also had $0.2 million more non-interest income resulting from a BOLI death benefit gain. During the nine months ended September 30, 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 $43.9 million for the nine months ended September 30, 2025, an increase of $2.8 million, or 7%, from $41.1 million for the nine months ended September 30, 2024. Salaries and benefits expense increased $1.9 million due to an increase in bankers, group insurance costs, and banker incentives during the nine months ended September 30, 2025, compared to the same period in 2024. Additionally, the Company saw an increase of $0.4 million in advertising and marketing expenses primarily due to a $0.3 million increase in Neighborhood Assistance Program 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 an increase of $0.7 million in premises and equipment expense primarily due to higher costs for software licenses, subscriptions, and maintenance. The increases were partially offset by $0.3 million less in professional services expense.
The provision for income taxes increased $1.4 million during the nine months ended September 30, 2025 compared to the same period in 2024 primarily due to a $6.7 million increase in income before taxes and $0.1 million less in tax credits.
Consolidated Balance Sheet & Asset Quality Overview
The Company's total assets had a balance of $2.7 billion as of September 30, 2025, an increase of $152.1 million from December 31, 2024. The increase resulted from $113.5 million growth in the loans and leases portfolio as of September 30, 2025 compared to December 31, 2024. Cash and cash equivalents increased $58.8 million over the same period. Asset growth was offset by a decrease of $28.0 million in the investment portfolio primarily due to the sale of $40.0 million in available-for-sale securities and $17.6 million in paydowns partially offset by $20.2 million in purchases of securities.
During the same time period, total liabilities increased $126.9 million, or 5%. Deposit growth of $126.1 million was utilized to fund loan growth and increase interest-bearing cash balances. For interest-bearing deposit accounts, the Company experienced increases of $95.3 million in money market deposits, $16.5 million in time deposits, $8.6 million in interest-bearing checking accounts, and $0.5 million in savings and clubs. The deposit growth is driven by new primary households, an increase in existing account balances and a retention strategy with targeted marketing in support of building client relationships. Additionally, the Company experienced an increase of $5.2 million in non-interest-bearing checking accounts. As of September 30, 2025, the ratio of insured and collateralized deposits to total deposits was approximately 74%.
Shareholders' equity increased $25.3 million, or 12%, to $229.3 million at September 30, 2025 from $204.0 million at December 31, 2024. The increase was caused by $13.3 million higher retained earnings from net income of $20.3 million plus a $11.0 million, after tax, improvement in accumulated other comprehensive income from lower net unrealized losses recorded on available-for-sale securities, partially offset by $7.0 million in cash dividends paid to shareholders. An additional $1.1 million was recorded from the issuance of common stock under the Company's stock plans and stock-based compensation expense. At September 30, 2025, there were no credit losses on available-for-sale and held-to-maturity debt securities. Accumulated other comprehensive income (loss) is excluded from regulatory capital ratios. The Company remains well capitalized with Tier 1 capital at 9.27% of total average assets as of September 30, 2025. Total risk-based capital was 14.52% of risk-weighted assets and Tier 1 risk-based capital was 13.39% of risk-weighted assets as of September 30, 2025. Tangible book value per share was $36.23 at September 30, 2025 compared to $31.98 at December 31, 2024. Tangible common equity was 7.69% of total assets at September 30, 2025 compared to 7.16% at December 31, 2024.
Asset Quality
Total non-performing assets were $3.0 million, or 0.11% of total assets, at September 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 0.59% at September 30, 2025 compared to 0.71% at December 31, 2024. Net charge-offs to average total loans were 0.03% at September 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 ("Fidelity Bank"). Fidelity Bank continues its mission of exceeding client expectations through a unique banking experience. It operates 21 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's vision is to serve as the best bank for the community, which was accomplished by having provided over 5,960 hours of volunteer time and over $1.3 million in donations to non-profit organizations directly within the markets 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 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. The Company's non-GAAP financial measures and key performance indicators may differ from the non-GAAP financial measures and key performance indicators other financial institutions use to measure their performance and trends. Non-GAAP financial measures should be supplemental to GAAP used to prepare the Company's operating results and should not be read in isolation or relied upon as a substitute for GAAP measures. 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. This treatment allows a uniform comparison among yields on interest-earning assets. 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 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. The words "expect," "anticipate," "intend," "plan," "believe," "estimate," and similar expressions are intended to identify such forward-looking statements.
The Company's actual results may differ materially from the results anticipated in these forward-looking statements due to a variety of factors, including, without limitation:
■
local, regional and national economic conditions and changes thereto;
■
the short-term and long-term effects of inflation, and rising costs to the Company, its customers and on the economy;
■
the risks of changes and volatility of interest rates on the level and composition of deposits, loan demand, and the values of loan collateral, securities and interest rate protection agreements, as well as interest rate risks;
■
securities markets and monetary fluctuations and volatility;
■
disruption of credit and equity markets;
■
impacts of the capital and liquidity requirements of the Basel III standards and other regulatory pronouncements, regulations and rules;
■
governmental monetary and fiscal policies, as well as legislative and regulatory changes;
■
effects of short- and long-term federal budget and tax negotiations and their effect on economic and business conditions;
■
the costs and effects of litigation and of unexpected or adverse outcomes in such litigation;
■
the impact of new or changes in existing laws and regulations, including laws and regulations concerning taxes, banking, securities and insurance and their application with which the Company and its subsidiaries must comply;
■
the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Financial Accounting Standards Board and other accounting standard setters;
■
the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds and other financial institutions operating in our market area and elsewhere, including institutions operating locally, regionally, nationally and internationally, together with such competitors offering banking products and services by mail, telephone, computer and the internet;
■
the effects of economic conditions of any other pandemic, epidemic or other health-related crisis such as COVID-19 and responses thereto on current customers and the operations of the Company, specifically the effect of the economy on loan customers' ability to repay loans;
■
the effects of bank failures, banking system instability, deposit fluctuations, loan and securities value changes;
■
technological changes;
■
the interruption or breach in security of our information systems, continually evolving cybersecurity and other technological risks and attacks resulting in failures or disruptions in customer account management, general ledger processing and loan or deposit updates and potential impacts resulting therefrom including additional costs, reputational damage, regulatory penalties, and financial losses;
■
acquisitions and integration of acquired businesses;
■
the failure of assumptions underlying the establishment of reserves for loan losses and estimations of values of collateral and various financial assets and liabilities;
■
acts of war or terrorism; and
■
the risk that our analyses of these risks and forces could be incorrect and/or that the strategies developed to address them could be unsuccessful.
The Company cautions readers not to place undue reliance on forward-looking statements, which reflect analyses only as of the date of this release. 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.
FIDELITY D & D BANCORP, INC.Unaudited Condensed Consolidated Balance Sheets(dollars in thousands)
At Period End:
September 30, 2025
December 31, 2024
Assets
Cash and cash equivalents
$
142,161
$
83,353
Investment securities
529,263
557,221
Restricted investments in bank stock
4,301
3,961
Loans and leases
1,914,893
1,800,856
Allowance for credit losses on loans
(20,218
)
(19,666
)
Premises and equipment, net
45,422
35,914
Life insurance cash surrender value
58,995
58,069
Goodwill and core deposit intangible
20,303
20,504
Other assets
41,630
44,404
Total assets
$
2,736,750
$
2,584,616
Liabilities
Non-interest-bearing deposits
$
539,118
$
533,935
Interest-bearing deposits
1,927,795
1,806,885
Total deposits
2,466,913
2,340,820
Short-term borrowings
20
-
Secured borrowings
6,059
6,266
Other liabilities
34,511
33,561
Total liabilities
2,507,503
2,380,647
Shareholders' equity
229,247
203,969
Total liabilities and shareholders' equity
$
2,736,750
$
2,584,616
Average Year-To-Date Balances:
September 30, 2025
December 31, 2024
Assets
Cash and cash equivalents
$
127,263
$
55,773
Investment securities
549,402
557,537
Restricted investments in bank stock
4,137
3,960
Loans and leases
1,846,171
1,741,349
Allowance for credit losses on loans
(20,260
)
(19,391
)
Premises and equipment, net
38,118
35,580
Life insurance cash surrender value
58,628
56,455
Goodwill and core deposit intangible
20,390
20,641
Other assets
42,874
41,755
Total assets
$
2,666,723
$
2,493,659
Liabilities
Non-interest-bearing deposits
$
541,733
$
527,825
Interest-bearing deposits
1,869,162
1,697,529
Total deposits
2,410,895
2,225,354
Short-term borrowings
16
32,446
Secured borrowings
6,160
6,830
Other liabilities
35,805
32,471
Total liabilities
2,452,876
2,297,101
Shareholders' equity
213,847
196,558
Total liabilities and shareholders' equity
$
2,666,723
$
2,493,659
FIDELITY D & D BANCORP, INC.Unaudited Condensed Consolidated Statements of Income(dollars in thousands)
Three Months Ended
Nine Months Ended
Sep. 30, 2025
Sep. 30, 2024
Sep. 30, 2025
Sep. 30, 2024
Interest income
Loans and leases
$
26,660
$
24,036
$
76,583
$
68,685
Securities and other
4,022
3,263
12,172
10,278
Total interest income
30,682
27,299
88,755
78,963
Interest expense
Deposits
(12,158
)
(11,297
)
(35,083
)
(31,697
)
Borrowings and debt
(95
)
(571
)
(281
)
(1,775
)
Total interest expense
(12,253
)
(11,868
)
(35,364
)
(33,472
)
Net interest income
18,429
15,431
53,391
45,491
Provision for credit losses on loans
(200
)
(675
)
(955
)
(1,075
)
Net provision for credit losses on unfunded loan commitments
(110
)
(135
)
(45
)
(225
)
Non-interest income
5,105
4,979
15,437
14,167
Non-interest expense
(14,632
)
(13,840
)
(43,896
)
(41,146
)
Income before income taxes
8,592
5,760
23,932
17,212
Provision for income taxes
(1,246
)
(793
)
(3,674
)
(2,252
)
Net income
$
7,346
$
4,967
$
20,258
$
14,960
Three Months Ended
Sep. 30, 2025
Jun. 30, 2025
Mar. 31, 2025
Dec. 31, 2024
Sep. 30, 2024
Interest income
Loans and leases
$
26,660
$
25,328
$
24,596
$
24,584
$
24,036
