Financial Performance - For the six months ended June 30, 2024, net income was $10.0 million, or $1.73 diluted earnings per share, compared to $12.4 million, or $2.18 diluted earnings per share for the same period in 2023[144]. - For Q2 2024, the company reported net income of $4.9 million, or $0.86 per diluted share, down from $5.4 million, or $0.94 per diluted share in Q2 2023, reflecting a $0.5 million decline primarily due to a decrease in net interest income[155]. - Non-interest income for the six months ended June 30, 2024, was $9.2 million, an increase of $0.2 million, or 2%, from $9.0 million for the same period in 2023, primarily due to higher trust fiduciary fees[181]. - Total shareholders' equity increased by $6.2 million, or 3%, during the six months ended June 30, 2024, primarily due to $10.0 million in net income added to retained earnings[283]. - The Company's dividend payout ratio for the six months ended June 30, 2024, was 44.1%[283]. Asset and Liability Management - The total assets as of June 30, 2024, were $2,500.645 million, compared to $2,441.232 million as of June 30, 2023[150]. - Total liabilities increased to $2,263,966 thousand, with interest-bearing liabilities accounting for $1,707,430 thousand and a cost of funds at 1.95%[172]. - The Company maintained a one-year cumulative gap of negative $185.6 million, or -7% of total assets, indicating a liability-sensitive position[265]. - The total assets amounted to $2,500.645 million, with interest-sensitive assets totaling $1,190.822 million[267]. - The Company’s interest sensitivity gap was reported at negative $354.587 million, reflecting a mismatch that may expose the Company to interest rate risk during rising rate periods[267]. Interest Income and Expenses - Interest income adjusted to fully-taxable equivalent (FTE) for the six months ended June 30, 2024, was $53.162 million, up from $46.802 million for the same period in 2023[147]. - Net interest income for Q2 2024 was $15.1 million, a 2% decrease from $15.5 million in Q2 2023, driven by a $3.4 million increase in interest expense[158]. - The overall cost of interest-bearing liabilities increased to 2.58% for Q2 2024, up 74 basis points from 1.84% in Q2 2023[160]. - The net interest margin for the six months ended June 30, 2024, was 2.70%, down from 2.97% in the same period of 2023[172]. - The net interest spread for the six months ended June 30, 2024, was 2.01%, down from 2.50% in the same period of 2023[172]. Credit Quality and Losses - The provision for credit losses on loans was $0.3 million for the three months ended June 30, 2024, a decrease of $0.4 million compared to the same period in 2023 due to lower growth in the loan portfolio[177]. - The total allowance for credit losses as of June 30, 2024, was $18,975 thousand, with commercial real estate comprising 47% of the total allowance[232]. - Non-performing assets represented 0.28% of total assets as of June 30, 2024, compared to 0.13% at December 31, 2023, reflecting a 109% increase in non-performing assets[239]. - Net charge-offs for the six months ended June 30, 2024, were $231 thousand, compared to $578 thousand for the same period in 2023[225]. - Loans 30-89 days past due and accruing decreased to $2.166 million as of June 30, 2024, from $4.487 million on December 31, 2023[225]. Market and Economic Conditions - The unemployment rate in the Scranton - Wilkes-Barre – Hazleton area was 4.3% as of June 30, 2024, an increase of 0.8 percentage points from December 31, 2023[143]. - The median home values in the Scranton-Wilkes-Barre-Hazleton metro increased by 8.0% year-over-year, with expectations of a further increase of 1.1% in the next year[143]. - The Federal Open Market Committee (FOMC) increased interest rates by 425 basis points in 2022 and an additional 100 basis points in 2023, with no changes since then[143]. - The company expects to operate in a modestly declining interest rate environment for the remainder of 2024, with potential acceleration in 2025[163]. - The company plans to manage net interest income through disciplined loan pricing and managing deposit costs to maintain a reasonable spread[163]. Strategic Initiatives - The Company continues to focus on diversifying earning assets and increasing core deposits through enhanced commercial lending strategies[141]. - The Company is evaluating balance sheet hedging opportunities to mitigate interest rate risks on net interest income[273]. - Fidelity D & D Bancorp plans to expand its market presence by opening two new branches in underserved areas by the end of 2024[302]. - The company is investing in new technology to enhance its digital banking services, with a budget allocation of $500,000 for the upcoming year[302]. - The company is focused on strategic market expansions and potential acquisitions as part of its growth strategy[293].
Fidelity D & D Bancorp(FDBC) - 2024 Q2 - Quarterly Report